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Top 10 Landmark Tax Judgements Of 2012 (… and a few honourable mentions)

There have been a number of landmark judgements in the year 2012 and making a short-list of just 10 of them is not an easy task. Yet, the author, thanks to his experience and expertise, achieves this task. Of course, he can’t resist the temptation to make a “honourable mention” of several other important judgements. See, if you agree with his choice of the top-10 and his analysis of the judgements

1. Vodafone International Holdings B.V. vs. UOI (Supreme Court)

(Please, can we now end this soap opera)

Vodafone enjoys the pride of place as the numero uno landmark judgement of the year though it has now, despite its path-breaking and revolutionary stance over tax-planning and substance vs. form, attained the dubious status of a never ending soap opera.

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Dear Dr. Shome, We’ll Help You Solve Taxpayer Problems. Please Listen To Us!

The appointment of Dr. Parthasarthy Shome as advisor to the Finance Minister augers well for tax payers in the Country because Dr. Shome is a man of wisdom and experience and is committed to creating a tax-payer friendly administration and simplified law and procedure, says the author. The author urges all tax payers & tax professionals to support Dr. Shome in his endeavor and starts off by listing 13 critical issues that need Dr. Shome’s immediate attention

Hon’ble Finance Minster speaking at the Delhi Economics Conclave on 14/12/2012 stated that “We have made it clear that our objective is to have clarity in tax laws, a stable tax regime, a non-adversarial tax administration, a fair mechanism for dispute resolution, and an independent judiciary.” I am of the opinion that by appointing Dr. Parthasrthy Shome as advisor to Hon’ble Finance Minister will achieve the goal of the Hon’ble Finance Minister. Dr. Parthasarthy Shome is a man of action, knowledge, integrity and has rich experience to understand the business laws of world.

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Dear Law Minister, Please Appoint A Judge To Probe Alleged Corruption In ITAT

The author agonizes that though four long years have elapsed since the controversy over the alleged corruption in the Tribunal broke out, nothing tangible appears to have been achieved. He warns that an important issue like this cannot be left unresolved for too long as it will otherwise begin to undermine the taxpayer’s confidence in the great Institution. Instead, the Government should take proactive steps to bring the truth in the open and the best way to do it is to appoint an experienced Judge to conduct an impartial probe, he says. He also implores the Law Minister to take a speedy decision over the long-pending issue of appointment of a permanent President and filling up vacancies in the posts of Sr. Vice Presidents

(a) To initiate the proposal of appointing, permanent President of ITAT, Senior Vice President, and Vice-Presidents by the selection panel:

The Income Tax Appellate Tribunal, which was founded on 25th January, 1941 will be entering into 73 years of its existence, by 25h January, 2013. The Income tax Appellate Tribunal is also referred as mother Tribunal of all the Tribunals of our country. However, it is very unfortunate that ever since, the former President Shri Vimal Gandhi retired on 3-6-2010, the Ministry of Law and Justice of Government of India, for reasons best known to them has not initiated the proposal to appoint a Permanent President to this premier institution.

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Does The Vodafone Verdict Deserve So Much Contempt?

The debate over whether the Supreme Court’s verdict in Vodafone International is right or wrong will never cease. While some hail the verdict as “revolutionary“, others can’t conceal their contempt for it for permitting India to become a “banana republic” where foreigners can “loot its resources” without even paying due taxes. We are now at a critical juncture where the Govt is debating whether the retro amendments should be rolled back or not.

This issue is important now because Prime Minister Manmohan Singh announced that a decision would be taken soon on whether the retrospective amendments seeking to supersede the Vodafone verdict would be implemented or not.

Joining the chorus of respected voices who consider the Vodafone verdict to be wrong are two respected voices. That of Ex Chief Justice of India J. S. Verma and Ex Additional Solicitor General Bishwajit Bhattacharyya.

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The PWC Case: So, You Can Just Plead “Some Confusion” & Escape Penalty?

The author goes ballistic over the recent judgement of the Supreme Court in PWC‘s case that s. 271(1)(c) penalty cannot be imposed if the assessee carelessly makes a wrong claim. He argues that the judgement neutralizes the deterrent effect of s. 271(1)(c) and is prone to abuse in the present regime of no scrutiny assessments. He fears that in the absence of a deterrent effect, assessees will be encouraged to ‘take a chance’ with bogus claims

The judgement of the Supreme Court in Price Waterhouse Coopers vs. CIT makes for startling reading and leads to unsatisfactory consequences. An assessee caught red-handed trying to smuggle in an untenable claim for deduction is able to escape penalty u/s 271(1)(c) for concealment/ filing inaccurate particulars of income by putting on a sheepish face and pleading that the untenable claim was because of some confusion at his end.

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Dear Stalwarts Of The Bombay Bar, We Salute You & We Shall Emulate You!

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On the occasion of the 150th Anniversary of the Bombay High Court, the author pays rich tribute to the stalwarts of the Bombay Bar who were fearless in their fight for the Country’s independence and also in the fight for preserving the basic structure of the Indian Constitution. The Tax Bar has contributed in its own little way towards the development of tax laws and the process of building the Nation while keeping the flag of the Bombay High Court flying high, says the author, and implores all professionals to emulate the Stalwarts and work for the benefit of the Nation.

Bombay High Court  which  was established on 14th  August 1862 has celebrated its 150 years Anniversary.  On this memorable occasion a publication was  published by  Maharashtra Judicial Academy & Indian Mediation Centre and Training Institute, titled “ A Heritage of Judging”. The Bombay High Court through one hundred and fifty years.   An  Exhibition is being held from  14th August  2012 to 2nd October 2012. The historical items, patriotic  pictures  which were displayed in the exhibition  made me  and many of our fellow lawyers feel proud that we are  Advocates  of Bombay High Court wherein our  father of Nation  Shri  Mohandass  Karmchand   Gandhi, Mr.  M.A. Jinnah, founding father of Pakistan, Dr B.R. Ambedkar  who drafted the Constitution of India , and many more  legal luminaries   practiced. I thanked the destiny   for making me a lawyer of Bombay High Court.

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Why Chidu Should Grab Vodafone’s Settlement Offer & Run

The author argues that Vodafone’s offer to settle the controversy on payment of tax and waiver of interest & penalty is a god-sent opportunity for the Government to salvage the situation. It will save the Government the ignominy of the retrospective amendments being struck down in Court and also boost its image in the International community. If handled properly, even Manmohan Singh can be made to look like a real Statesman with vision and courage, adds the author

Vodafone’s Chairman Analjit Singh went on record yesterday that Vodafone was open to settle with the Government pursuant to which it would pay tax of Rs. 8,000 crores if the Government waived the levy of interest and penalty.

Here’s why the deal makes immense sense and why Finance Minister P. Chidamabaram should immediately grab it.

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Dear Prime Minister, We’ll Help You Reform Taxation law. Pls Listen To Us

The author suggests to the Prime Minister, who is now also in charge of the Finance Ministry, that if the Government is serious about reforming taxation law, it should listen to professionals who practice the subject day-in and day-out. Professionals know where the problem areas are and why citizens are loath to comply with the law. The author lists out a few burning issues that are crying out for reform. If these are addressed, the taxpayers confidence in the administration will be restored and there will be a marked improvement in compliance with the law, and collection of taxes, promises the author

Our respected hon’ble Prime minster is holding the charge of Ministry of Finance, hence I have made an attempt to put forward the views of tax professionals for his consideration. I am of the opinion that it is the professional organizations and professionals, who  make the suggestions  objectively, in the interest of nation without  any fear, favour or vested interest, therefore if  an opportunity is given, they will make a presentation to the Hon’ble Finance Minster and  his team, if it is considered  objectively, it will benefit the nation. Some of the thoughts which can be debated and considered are:

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Dear Advocates, How You Can Go On Strike When Supreme Court Has Banned It?

The author argues that it is hypocritical that advocates, who represent the elite of society & who are supposed to be the defenders of legal values, should openly flout the law by defying the verdicts of the Supreme Court. Such conduct is symptomatic of the utter lawlessness that our Society has degenerated into in all walks of life rues the author and claims that stern action ought to be taken against the perpetrators for contempt of court

Pursuant to a resolution of the Bar Council of India, advocates across the Country are on a strike yesterday and today (11th & 12th July 2012). The result is that 1.25 lakh lawyers across the Country have abstained from work and Courts have come to a grinding halt.

Let’s understand what the strike is all about and to what extent it is permitted by the law.

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Dear Prime Minister, Scrap GAAR & Vodafone Law & Redeem Yourself

The author suggests that now that Prime Minister Manmohan Singh is also the Finance Minister, he should live up to the promise he made to Vodafone that the Supreme Court’s verdict will be honoured and scrap the retrospective amendments. This, says the author, will boost his stature as the Country’s leader and also improve sentiment amongst the taxpayer and investor community and lead to an inflow of billions of dollars into the Indian economy

Respected Prime Minister Manmohan Singh ji, welcome back to the Finance Ministry. You may recollect, Sir, that when you first became the Finance Minister in 1991, you were regarded as the “poster boy” for Indian reforms because you ushered in the “revolutionary” reforms that transformed India into the powerhouse that it is today. On that back of that success, you rode the wave of popularity and rightly became the Prime Minister. Sadly, since then, however, much of that sheen has rubbed off and you have been under fire in the recent past for so-called indecisiveness, silence on important policy matters and generally for being “remote controlled”. We know, Sir, that the biggest embarrassment must have been when some political leaders contemptuously suggested that you be “elevated” to the post of President. The less said about that, the better.

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