Hindu Law has been discussed by various authors in the light of various judgments of courts. The said law stands amended by various enactments. This discussion would deal with the various aspects of Hindu Law which are relevant for the purpose assessment of income and wealth in the status of Hindu Undivided Family (HUF) as well as the impact of the provisions of Hindu Succession Act 1956 as amended by Hindu Succession (Amendment) Act 2005 which are relevant for the purpose of assessment of income and wealth in the status of HUF under Income Tax Act 1961. Firstly, would be discussing the legal position under the original Hindu law and then discuss the impact of the relevant provisions of Hindu Succession Act 1956.

1. Introduction
In the present paper, I propose to deal with some of the cases decided in India in last couple of years by High Courts and Income Tax Tribunal on the issue which I am expected to deal, namely, the comparability of secret comparables by TPO while determining ALP.
I should inform you, the fellow members, that there are very few decided & reported cases yet from higher appellate & Constitutional Courts like Supreme Court of India at Delhi and 24 High Courts, from one of which, Rajasthan High Court, Jodhpur from where I come.

1. Background

Business presence of a foreign entity in India creating a business connection attracts tax on the profits earned by such presence to the extent they are attributable to operations carried out in India (Section 9 of the Income tax Act, 1961). Where such business presence constitutes a permanent establishment (PE) of a foreign entity, then even the relevant Double Taxation Avoidance Agreement (‘DTAA’ or ‘tax treaty’) recognizes the right of the PE state (India) to tax the profits attributable to the PE.

Today, organizations realize that they have to go that extra mile to make their employees stay. Sharing their wealth and helping employees create wealth in the form of ‘Employee Stock Option Plan (ESOP)’ is one such initiative, which is gaining immense popularity in recent times.

An employee stock ownership plan (ESOP) is an employee-owner scheme that provides a company’s workforce with an ownership interest in the company. This is the latest trend in the industry. This is a very important tool in almost all industries. Where, the greatest assets are the employees and their knowledge. The organization loses on this if the employee were to leave. So in order to retain the employees they are offered direct participation in the form of shares of the company.

President, AP Tax Bar Association and its office bearers as well as distinguished invitees from the bar, Senior Departmental Representatives and distinguished special invitees and colleague brothers on the dais,

Good Morning

The Income tax Appellate Tribunal was established on 25.1.1941. Originally, it had only three benches, whereas it has now 63 benches at 27 cities. In 1995 the pendency all over of India crossed three lakhs, and because of sanctioning of new benches by the Government, we were able to stick to our logo i.e. Sulabh Nyay and Satwar Nyay’. Now the pendency is hovering about 80,000.

Finance Act, 2013 has inserted Explanation 2 to section 132B which reads as under:-

“For the removal of doubts, it is thereby declared that the “existing liability’’ does not include advance tax payable in accordance with the provision of part C of chapter XVII ”.

Section 132B of the Income Tax Act prescribes the provisions regarding the application of seized assets including cash seized during the course of income tax search conducted u/s 132 or requisitioned or 132A of the Act. It prescribes, inter alia, that the seized assets/cash can be utilized for the purpose of recovery and adjustment of  the amount of any  existing  tax liability and the amount  of the  liability determined  on completion of the assessment in  pursuance to search u/s 153A.

The assessing officer is empowered under section 147 of the Income Tax Act, 1961 to assess or reassess the income escaping assessment. This is popularly known as ‘reopening of the assessment’.

In following cases, it would be deemed that income chargeable to tax has escaped assessment:

– Where no return is furnished for the relevant A.Y.

– Where return has been furnished but assessment is not done and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return;

– where the Assessee has failed to furnish a report in respect of any international transaction which he was so required under  section 92E

– where an assessment has been made, but—

– income chargeable to tax has been underassessed ; or

– such income has been assessed at too low a rate ; or

– such income has been made subject of excessive relief under this Act ; or

– excessive loss or depreciation allowance or any other allowance under this Act has been computed.

A story going the rounds is that the Chairman of a company after referring to the next speaker as a lawyer added “he is nevertheless a nice person.” But is the jibe deserved? Before passing judgement it would be appropriate to consider the duties a lawyer owes to his client, to his profession and to the Court, his accountability therefor and the conflicts which arise in discharging the separate and distinct duties. Recently, the emphasis has shifted to the lawyer’s duty to Society. Though one cannot ignore this duty it is a duty subordinate to his primary duties of accountability to his client, profession and to the Court. The meticulous performance of these duties with care and precision is itself the performance of his duty to Society. Though not normally referred to, there is a fifth and equally – if not more – important duty – his duty to himself.

Section 263 of the Income-tax Act, 1961 (the “Act”) confers the power upon the Commissioner to call for and examine the records of a proceeding under the Act and revise any order if he considers the same to be erroneous and prejudicial to the interests of the revenue. These are wide powers and have been subject to reasonable checks and balances to prevent their arbitrary use. For example, requirement of notice, opportunity of hearing etc. Section 263 of the current Act corresponds to section 33B of the Income-tax Act, 1922 and has been on the statute book since 1961, albeit with certain modifications. The law of section 263 has been comprehensively laid down by the judicial authorities in a number of decisions. The following paragraphs contain a gist of the law on the subject.

Finance Act, 2013 has substituted clause (b) of section 56(2)(vii) w.e.f. 1.4.2014 providing, inter alia, that where an individual or Hindu Undivided Family receives, in any previous year, from any person or persons any immovable property-

(i) Without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;

(ii) For a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration

shall be chargeable to income tax under the head “Income from Other Sources”.