Category: legislation

The author expresses concern over the rampant use of rough-neck techniques for recovery of tax dues. Despite severe reprimand by Courts, there is no improvement in the Department’s behaviour muses the author. The author advises the department to adopt Chanakya’s techniques for recovery and assures that this will benefit the department in the long run

The DTC 2010 has had its fair share of criticism. Before DTC 2010 is steam-rolled into Law, its detractors have a last chance to voice their grievances before a Select Committee which promises to look into all issues objectively. The author urges all tax payers to make the most of this opportunity and starts off by listing a litany of grievances

The Author rues that the Direct Tax Code 2010 is a golden opportunity gone waste. What could have been a revolutionary exercise in tax reforms has been reduced to a pedestrian re-numbering of sections, agonizes the author. But, eternal optimist that he is, all is not lost, says the author and sets out an 11-point agenda to salvage the DTC 2010. Is the draftsman listening?

The author argues that non-residents dread the ‘Force of Attraction’ rule in Double Taxation Avoidance Agreements because it permits the taxation of income arising outside the Contracting State. The ‘Force of Attraction’ rule can also create an anomalous situation where an assessee may be better off under the domestic law than under the tax-treaty law, says the author

The Finance Minister publicly expressed his anguish at the mounting number of frivolous cases filed by the department which are choking the Courts. The author, a public-spirited citizen ever eager to help the FM in such matters, puts on his thinking cap and formulates a 12-point agenda to cure the malaise. If implemented in real earnest, the mindless filing of departmental appeals will cease, assures the author. Is the FM listening?

However, the larger issue that still remains to be addressed is the gross negligence by the department in filing appeals to the High Court. It is common experience that even in matters involving huge revenue implications, appeals are routinely filed after a gross delay. The delay is not just a few days or weeks but several months and even years! Several appeals are dismissed because the officer concerned cannot even think of reasons to justify the delay on his part. Imagine the loss to the public exchequer!

Finance Bill 2010: Judgement of the Supreme Court in Ishikawajima-Harima Heavy Industries 288 ITR 408 superseded by the Explanation to section 9 (1) (vii)

The author is full of appreciation at the stellar roles played by the ITAT and the Bombay High Court in reducing arrears. He argues that the dwindling pendency of matters has rendered the concept of the NTT redundant. He makes out a strong case for increasing the role of the ITAT by making non-appeallable orders appeallable to the ITAT

Higher wisdom has to prevail over better wisdom” is the mantra judges mumble when they are forced to follow a precedent that they don’t quite agree with. However, judges do find ways of getting out of having to follow a judgement of a higher court. The latest salvo on this front is the Third Member judgement in Kanel Oil which shows that a High Court judgement, though superior in status to the Tribunal, may have to yield to the latter. In this case, the Bench was faced with a piquant situation. It had to decide whether an assessee liable to pay Minimum Alternate Tax (“MAT”) under section 115JA of the Act was also liable to pay advance tax under sections 234B and 234C for default in paying advance tax. The issue as such was covered against the assessee by the decision of the Special Bench in Ashima Syntex 117 ITD 1 but the assessee must have been very smug during the hearing because there was a subsequent judgement of the Bombay High Court in Snowcem India 313 ITR 170 which held, following the judgement of the Supreme Court in Kwality Biscuits 284 ITR 434, that assessees paying tax on book profits u/s 115JA were not liable to pay advance tax. The Judicial Member did oblige and decided in favour of the assessee by following the judgement of the Bombay High Court. However, the Accountant Member wrote a detailed dissenting judgement and followed the judgement of the Special Bench. This is how the matter landed up before the Third Member.

Circular No. 23 dated 23rd July 1969 held the fort valiantly for 40 years but in the end met an unceremonious death. The Circular, issued in an era where fair play was still respected, was a masterful analysis of section 9 which provided a tax liability on non-residents from income accruing or arising through or from business connection in India. The Circular was essentially a series of illustrative instances and guidelines designed to guide befuddled taxpayers from the labyrinth of tax laws. Written in a simple and easy-to-understand style, it told you in clear terms whether your transaction was taxable or not and the reasons for the same.