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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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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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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The author, founder of tax2.me, takes a cynical view of the Government’s decision to initiate an award scheme for officers of the income-tax department. An award scheme without a corresponding accountability scheme to rein in officers who step out of line and breach the law will encourage assessing officers to go on a rampage and spell doom for the taxpayers warns the author. He urges all stake-holders to protest against the proposal.
The Government’s decision to initiate an award scheme for officers of the income-tax department has raised the hackles of taxpayers across the country. While the fine print is waited and the scheme is worded in elegant language (“display of specific acts of exemplary devotion to duty”), the scheme is probably simply this “Collect more revenue by whatever means – fair or foul – and take home your reward”. The bottom-line of the scheme is unlike to be different from the plain words used by Laxman Das, the ex CBDT Chief who, in his missive to his underlings, was brazen enough to say that the officers’ posting and promotion prospects were directly proportional to the quantum of revenue that they brought in.
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The author is enthused by the impending training programme for the Hon’ble Members of the Tribunal on “International Taxation and Transfer Pricing“. It is a step in the right direction he says and adds that the time is opportune for all stake-holders to contribute their thoughts on how to improve the functioning of the Tribunal. On his, part, the author cannot resist the temptation to list a few issues that need to be paid attention to for making the Tribunal’s functioning even better than it is today
Income-tax Appellate Tribunal which was founded on 25th January, 1941 has completed its 72 years of existence, and it is for the first time President of ITAT, has taken initiative to hold a Residential Refresher Course for Hon’ble Members from 11th August to 20th August, 2012 at Maharashtra Judicial Academy & Indian Mediation Centre & Training Institute, Bhayandar. I am pleased to know that the Hon’ble Members will be discussing in details the law relating to International Taxation issues and Transfer Pricing. The Hon’ble Members will also be learning Yoga as well as spiritual knowledge by the guidance of experts in the field. For this innovative Residential Refresher Course contribution of Hon’ble President and Vice-Presidents deserves to be acknowledged. According to me, this should be the annual feature.
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The author compliments Finance Minister Pranab Mukherjee for his deft handling of the Vodafone crises despite relentless pressure from all sides. However, now that the stage has shifted from the political arena to the legal arena, it is time to take stock of the options available to the warring parties, says the author as he evaluates the alternatives and identifies their pros and cons in a succinct manner
Vodafone, to its credit, tried very hard but, in the end, all its machinations were to no avail against Finance Minister Pranab Mukherjee’s steely resolve. Vodafone got people in very high places to put enormous pressure on the Indian government to scrap the retrospective amendments. On the political front, international heavy weights like Tom Geitherner, US Secretary of State, Gordon Brown, Finance Minister of UK and David Gauke, Chancellor of the Exchequer, expressed their strong disapproval of the amendments. On the commercial front, leading industrialists from Adi Godrej to Narayan Murthy and everyone else in between spoke out against the amendments. Even on the legal front, eminent senior counsel Soli Dastur and Dinesh Vyas expressed grave doubt about the constitutional validity of the amendments. Celebrated Senior Advocate Harish Salve lashed out at the Government in public and sent out the dire warning that the retrospective amendments would “ruin” India. Even noted economist Bibek Debroy jumped on the bandwagon and demanded that Pranab Mukherjee should “honourably” withdraw the amendments before it was too late. Pranab Mukherjee was attacked in Parliament as well by the members of the opposition.
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The author clears the misconception in the minds of the public that the verdict of the Supreme Court in Vodafone had delivered a body blow to the Government by deciding in favour of the assessee. Instead, large parts of the verdict, when stripped out of context, are in the tax department’s favour and the Government has shrewdly nullified the parts that were against it whilst retaining the parts that are in its favour says the author
When the judgement of the Supreme Court in Vodafone International vs. UOI 341 ITR 1 came out, a lot of people were shocked and thrown into despondency. How could billions of dollars earned from India be said to be tax-free only because the investments were routed through a shell company in a tax haven perplexed everybody.
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The verdict in B4U International has sent shock waves across the Country because it implies that the retrospective amendments in the Finance Act 2012 to the definition of the term “royalty” so as to rope in software income and equipment hire charges are infructuous in the absence of a corresponding amendment to the definition of that term in the DTAA. The author puts the issue in perspective and explores the way forward for the Government
The verdict of the ITAT Mumbai in B4U International must have come as a nasty shock to the mandarins of North Block because while these worthies thought that by amending s. 9(1)(vi) of the Income-tax Act with retrospective effect, they had accomplished the mission of taxing software receipts, they overlooked one minor detail – the Double Taxation Avoidance Agreement!
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The UK Govt’s not-so-subtle threats to India over the Vodafone retrospective amendments have irked the author. The author cites two controversial retrospective amendments effected in the UK to supersede well settled judicial precedents and fumes that a Government which itself indulges in questionable legislative practices has no moral right to preach to others.
The question whether the Vodafone retrospective amendment is the right thing or not is one issue. The question whether the UK Government has the moral authority to threaten the Indian Government to withdraw the retrospective amendments is a separate issue.
When UK’s Finance Minister Gordon Brown and Chancellor of the Exchequer George Osborne criticized India over the Vodafone retrospective amendments, a lot of people nodded sagely, agreeing with their dire prognosis that the amendments seeking to nullify the judgement of the Supreme Court were improper and ought to be withdrawn forthwith as it would otherwise “dampen enthusiasm about India’s investment climate“.
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The author dares to ask the question that has been troubling tax professionals across the Country. Why is the Government not appointing a President for the Tribunal? It’s been 23 months since the last President retired and the studied indifference of the Government towards filling the vacancy in this august Institution is sending a wrong message to the Members of the Tribunal and the litigating public, says the author. The author urges the Government to wake up from its slumber and get its act together before the prestige that this great Institution commands begins to erode.
The Income-tax Appellate Tribunal which was founded on 25th January 1941 has completed more than 72 years of its existence. In the 72 years of existence it is for the first time that the reasons best known to the Government the appointment of the President is not confirmed, the former senior vice president and Vice president has been appointed to act as officiating president. The former President Shri Vimal Gandhi retired on 3-6-2010, however, till date the Vice President is acting as Officiating President. It is for the first time that for more than 23 months Senior Vice President and Vice President have been functioning as Officiating President .Similarly, the vacant post of senior Vice-President and Vice Presidents have not yet been filled up. The appointment of President, senior Vice President and Vice presidents is done by the Committee headed by the senior Judge of Supreme Court considering the merit, integrity, conduct of members. It is the Ministry of Law and Justice, which has to send the proposal to the designated Judge of the Supreme Court, a list of eligible members for the consideration of Honourable Judge to be appointed as President, senior Vice-President and Vice-presidents and from the eligible candidates most eligible candidate is selected as President.
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