*Title changed from “Ashamed To Be Indian” as the context appears to have been misunderstood by readers

Survival as top law officer was a “sheer miracle”

Mohan Parasaran did not mince any words in expressing his unhappiness at the way the Government functioned. He said it was a “sheer miracle” that he survived 10 years as the top law officer of the Country. He pointed out that appearing for the Government is like facing a fast bowler in a cricket match without the basic safeguards like pads, gloves, helmet etc. He lamented that the briefs get delivered at the last minute and there are no instructions on what is required to be done. There is a communication gap between the various ministries and the concerned ministry would not even be aware that its’ matter is coming up for hearing on a particular date, he said.
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1. S. 56(2)(vii) does not apply to bonus & rights shares offered on a proportionate basis even if the offer price is less than the FMV of the shares.

Sudhir Menon HUF vs. ACIT – Mumbai ITAT – “A” Bench – ITA no. 4887/Mum/2013 dated 12-3-2014 for Assessment Year 2010-11. (www.itatonline.org).

1.1. The synopsis of the decision is reproduced as under:-

“Section 56(2)(vii)(c) (ii) provides that where an individual or a HUF receives any property for a consideration which is less than the FMV of the property, the difference shall be assessed as income of the recipient. Section 56(2) (vii) does not apply to the issue of bonus shares because there is a mere capitalization of profit by the issuing-company and there is neither any increase nor decrease in the wealth of the shareholder as his percentage holding remains constant. The same argument applies pari material to the issue of additional shares to the extent it is proportional to the existing share-holding because to the extent the value of the property in the additional shares is derived from that of the existing shareholding, on the basis of which the same are allotted, no additional property can be said to have been received by the shareholder. The fall in the value of the existing holding has to be taken into account. As long as there is no disproportionate allotment, i.e., shares are allotted pro-rata to the shareholders, based on their existing holdings, there is no scope for any property being received by them on the said allotment of shares; there being only an apportionment of the value of their existing holding over a larger number of shares. There is, accordingly, no question of Section 56(2) (vii) (c) getting attracted in such a case. A higher than proportionate or a non-uniform allotment though would attract the rigor of the provision to the extent of the disproportionate allotment and by suitably factoring in the decline in the value of the existing holding.”

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This article deals with Income-tax Issues, though some parts of it will be applicable to Indirect tax issues also.

RTI & Professionals

Citizens in general and professionals alike in the financial fields are more often than not stuck in a major traffic jam of bureaucrats, red tapism, ‘babudom’, corrupt officials, unconcerned staff, rude misbehaviour, etc. There is almost no way to wade through this. There are a lot of tiny issues that are present in the government departments which are so deeply imbibed into their system that they are almost synonymous with the department in itself. The common man too has this fixed negative notion towards these departments but has never tried to change it since he thinks that his individual effort would go entirely futile and that a mass movement is required to extract this absorbed venom from the veins of our democracy. October 2005 was the lucky time when the Government came up with the anti-venom, the Right to Information Act. Read more ›

1. Introduction.

1.1. One may recollect that in the year 1991, when the Chamber of Income-tax Consultants had organised the second All India Tax Conference, one of the session was regarding tax payers’ education programme. It was the first time in the history of taxation that the Chamber of Income tax Consultants had produced a “skit on Search and seizure”. The skit (play) was informative about how a search was conducted, the common mistakes committed by assessees and the like. In the year 1991, the Chamber of Tax Consultants also had a unique programme held at Baidas Hall, where the high income-tax payers of Mumbai were honoured. In this programme also, the play was enacted and was appreciated by all including the Chairman of the CBDT, the Commissioners of Income-tax of Mumbai and the officials of the search team. It is worth considering, subject to permission and precautions, if this play can be posted in the website of the Chamber of Tax Consultants or could be re-enacted during seminars like this.

(1) Business Income :- [Section 28 (1)] – Security deposit collected in sales invoice towards possible levy of sales tax on packing charges is not trading receipt.
Dalmia Cement {Bharat} ltd. vs. CIT [2013] 36 taxmann.com 358 (Delhi)
In the case before the Delhi High Court, the assessee had collected refundable security deposits from its trade customers towards possible levy of sales tax on packing charges. At the time of collection, levy of sales tax on packing charges was a pending dispute before Courts. The security deposit was collected by the assessee  in the invoice with a specific citation therein that the amount collected would be paid to Government, if the  issue of levy of sales tax was upheld in Supreme Court and otherwise returned to the payer, if the levy was not sustained.

Introduction

Taxation is a concept which is based on the sovereignty of nations, whereby each nation taxes income derived from businesses within its sovereign control. Universally, the world recognises each nation’s right to tax the economic activity within its jurisdiction.1 International issues are addressed, to some extent, through a number of bilateral treaties, many based on an international model2 or convention, mutual understandings, and practice. Taxation of international transactions by individual nations often results in confusion, disagreement, double or multiple taxation of same income,3 and, also taxable income which is not taxed by any of the nations. Concurrently, the fragmentation of taxation of international transactions into a number of national systems provides a significant opportunity to business entities for tax avoidance, evasion, or mistake.4

Finance Act, 2013 has inserted a new section 43CA under the Income Tax Act, 1961 which is applicable from Financial Year 2013-14, introducing the provisions for taxability of transfer of immovable property (land or building or both) held in the nature of stock in trade, on the same lines which are applicable for immovable property held in the nature of “capital asset” under section 50C of the Act.

Shri A.P.Sathe, President, ITAT Bar Association, Mumbai, Shri S.K.Poddar, National President, All India Federation of Tax Practitioners, Dr.K.Shivaram, Past President, ITAT Bar Association, Mumbai & Past National President, All India Federation of Tax Practitioners, Shri R.B.Malik, Principal, Government Law College, Mumbai, Prof. Sanjay V.Kadam, Chairman, Moot Court Association, Government Law College, today’s Guest of Honour brother Shri D.Manmohan, Vice President (Mumbai Zone), ITAT, my colleagues, law students participating in the Moot Court Competition, ladies and gentlemen.

The Chief Guest of today’s evening, Hon’ble President of ITAT Shri Karwaji, Principal of Government Law College Shri R.B. Malik, President and Immediate Past President of ITAT Bar Association Mr. Arun Sathe and Dr. K. Shivaram, President of AIFTP Mr. Poddar from Ranchi, Chairman and General Secretary of Moot Court Association Prof. Sanjay Kadam and Mr. Raghav Dev, Members of ITAT Bar Association, my colleagues from ITAT and my young friends,

Casual and non recurring receipts were exempted from payment of Indian Income Tax since 1918 [end note 1] except where such receipts arose from business or exercise of profession, vocation or occupation. The Indian Courts have held that winnings from horse races amount to casual and non recurring income, however, whether such income qualifies as business income of the taxpayer or not is a question of fact [end note 2]. Resultantly, winnings from horse races were brought to tax where horse racing constituted a business of the taxpayer else exempted where the same constituted hobby. In order to bring uniformity in taxing such winnings, the legislature amended [end note 3] the Income Tax Act, 1961 (‘ITA’) and deemed, winnings from horse races, as income [end note 4] on the basis of the suggestions [end note 5] of various committees [end note 6].