This week, the author suggests that a Anna Hazare style crusader is needed to explain to the CBDT the irrationality of its stand that the monetary limits for filing appeals will apply only to fresh appeals and not to pending appeals. Also, on the issue whether software income is assesable as “royalty”, the CBDT should abandon its ostrich-like stance and take a firm stand one way or the other like its Australian counterpart says the author
Legislature Proposes; Judiciary Disposes
Old timers will recollect the excitement that the judgement of the Tribunal in Pranav Constructions 61 TTJ (Mum) 145 had created. The Tribunal had done the unthinkabale. It held that the hafta or protection money paid by the assessee to local politicians and goons could be claimed as “business expenditure” on the footing that without such payments, business could not be conducted. Till then, unsavoury issues like hafta were meant to be confined to a fiction writer’s imagination without official cognizance.
The judgement obviously upset somebody high up in the department because in the very next Budget a retrospective amendment “for the removal of doubts” was inserted in the form of Explanation to s. 37(1) to provide that a payment for a purpose which is an offence or which is prohibited by law was not incurred for business purposes. In the Memorandum as well in the Explanatory Circular it was made clear that “The amendment will result in disallowance of the claim made by certain tax payers of payments on account of protection money, extortion, hafta, bribes, etc. as business expenditure“. The amendment was made effective from the date of commencement of the Act, 1.4.1962 to ensure that all traces of Pranav Construction was removed.