Finance Bill 2010: Judgement of the Supreme Court in Ishikawajima-Harima Heavy Industries 288 ITR 408 superseded by the Explanation to section 9 (1) (vii)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

The author slams the Government for repeatedly trying to scuttle the settlement mechanism. He argues that a statutory provision designed to bring taxpayers who have gone astray onto the right path must be implemented in a pragmatic manner. He lauds the Bombay High Court for reading down the ill-conceived amendments to the settlement provisions by the Finance Act, 2007 and exhorts the Government to accept the judgement of the Bombay High Court in the right spirit and not exacerbate the matter by filing an appeal. The author also uses his rich experience to set out a road map to be followed by all the stake-holders for a speedy disposal of the settlement applications.

The author does some soul-searching to discover the reasons why fellow-Indians do not pay their taxes honestly even though they know it is their constitutional duty to do so. He argues that the poor policies of the tax administration are responsible for this sorry state of affairs and suggests a few solutions to set things right.

The author endorses the stand of the Swadeshi Brigade and argues that while Indian lawyers can tackle the stiff competition put up by the foreign lawyers, their sense of values, tradition and ethics will be compromised by the business-like approach of such lawyers.

The author expresses dismay that justice from the Supreme Court is beyond the reach of common citizens of our Country. He makes out a strong case for setting up of four zonal benches of the Supreme Court and also argues that the use of tele-conferencing by the judiciary is imperative to save time and costs.

The author is severely critical of the Government for the failure of the Settlement Commission to achieve its desired objects. He blames bad administration, lack of transparency in the process of appointment and failure of the Government to appoint Members from the profession as the root causes of the problem. He has identified a few critical areas and makes a fervent plea for reforms.

The author laments that the Government is losing crores of rupees due to delay in filing of tax appeals by the tax department. He makes out a fervent case for accountability