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The Bombay High Court has pulled up the Income Tax (IT) office for the 'casual approach' of its staff in not acknowledging letters received by them and their refusal to put therein the inward registration numbers.

Justice S J Kathawala, in a recent order, asked the IT authorities to take action against the erring clerks.

The judge also asked the department to forthwith issue a circular to the Commissioners of Income Tax of all the wards making it compulsory for the clerks to sign and put a serial or registration number on copies of letters received by them before handing them over to the bearer of the original letter.

"If such is the attitude of the clerk receiving mails of the ward offices of the Income Tax Office, it would cause grave inconvenience to the persons addressing letters to the Ward Officer, more particularly, a common man, since he would not have the registration number qua the letter forwarded by him to the Income Tax authorities," the judge said

http://www.mumbaimirror.com/mumbai/crime/HC-pulls-up-IT-staff-for-not-acknowledging-letters/articleshow/20789161.cms

This letter from Justice Gyan Sudha Misra is in response to an article by Dhananjay Mahapatra titled 'In Vacation, SC Bench late by an hour' published in Times of India on June 15. The article had a shoulder headline: Justice G S Misra and CJI are habitual late comers. We are reproducing the letter in verbatim.


Dear Sir,

I have been instructed to communicate to you that your newspaper and your Sr. Editor/Reporter Mr. Dhananjay Mahapatra have once again indulged in irresponsible and contemptuous reporting by getting the news story published in all the daily editions (15th June 2013) of the Times of India relating to Court timings of the Vacation Bench obviously to hog limelight denigrating the image of the Institution.

Your report clearly reflects that small-minded people neither have the vision nor the understanding to appreciate a larger issue in the functioning of an Institution but have the audacity to publish mischievous reports as per their perception without disclosing full facts perhaps at the behest of a motivated lobby which needs to be investigated. Fortunately, wide and wiser section of the media do not follow your special trait.

While writing irresponsibly on the subject in a derogatory style with enthusiasm, ignoring its negative impact on the judicial system, your newspaper and the Sr. Editor/Reporter Mr Dhananjay Mahapatra were expected to apprise themselves of full facts that while the Court during the vacation resorted to some flexibility in fixing its time schedule for taking up the matters, it also functioned beyond the Court hours to cater to the heavy Cause List mentioned at the last minute by the counsels to take up matters out of turn in view of their urgency, due to which it had to sit late in the evening daily atleast upto 7 p.m. in order to clear the orders for their dispatch as the orders were of urgent nature. Thereafter, the Judges also had to go through the next day's heavy paper books till late in the night and mornings for long hours. In the process, if the Court exercised some discretion by keeping the time schedule flexible during the vacation, without scarifying on the output, as judges also ultimately are human beings and cannot be expected to behave like robots, it was surely not expected to print irresponsible and misleading stories with half-baked facts It is high time to realize that while the time of lawyers and litigants are precious, the time of Judges also are not dirt cheap who go out of their way to tackle loads of matters and work for much longer hours besides what they devote beyond the working hours in Court and yet expect them to give an account of every single minute or else face derogatory publicity.

You need to remind yourself that you have indulged in this exercise of irresponsible reporting for the second time targeting the Judge in particular as you had published an irresponsible and misleading story regarding the socalled 'daughters liability' in the year 2010 making a mockery of yourself and the newspaper in the estimation of the public at large but that has not deterred you from publishing another story which indicates your prejudice and penchant for cheap publicity. We have thus reasons to infer that you have been deliberately indulging in this exercise to intimidate the Judiciary in general and composure of the Judge in particular which is clearly contemptuous putting the judicial restraint to test.

When you have the audacity to print a news story on any item creating a negative impact on the highest judicial institution, you are surely expected to have printed the entire facts relating to the story after checking the full facts as to how many hours the Court had been devoting to the matters as Vacation Judges reducing even the time of the lunch break to half an hour and very often skipping it over. Perhaps, you need to be reminded that a newspaper and the scribe cannot be allowed to exercise control or disciplinary jurisdiction over the functioning of an Institution in this manner howsoever discreet it may be, merely because you are able to denigrate the image by misusing the power of print or any other media violating all norms of ethics of journalism itself which is also equally expected to exercise restraint considering its influence on the mindset which cannot be taken lightly.

You and some of your interviewees would do well to remind themselves before sermonizing that the exterior form or upper crust of an institution is surely not the greatest virtue more so in the Judiciary as wisdom, substance, content and comfortable disposition of a judge is far more important than indulging in rigidity of any form while discharging judicial functions.

You are expected to publish this response to your story forthwith in your newspaper as prominently as you published your story, failure of which will follow consequence.

Dhananjay Mahapatra replies:

The story was based on facts and I stand by it.

http://timesofindia.indiatimes.com/india/Judges-time-not-dirt-cheap/articleshow/20658201.cms

Congress spokesperson and Rajya Sabha MP Abhishek Manu Singhvi has moved the Income Tax Settlement Commission (ITSC), seeking immunity from levy of penalty or institution of proceedings for prosecution.

Singhvi has disclosed "undeclared income" of around Rs 11 crore and paid Rs 3.26 crore as tax on the amount after receiving notices from the Income Tax Department about his returns.

The additional income had not been included in the returns as "there was an error in computation and laxity on the part of those who maintain my accounts," Singhvi told The Indian Express.The Income Tax Department, however, has said the additional income disclosed by Singhvi is not true and complete and has estimated the amount at Rs 22.86 crore, taking his total tax liability to Rs 7 crore. But Singhvi has contested this.

Also, the IT Department's notices — which were sent starting in late 2011 — and its estimate of Rs 22.86 crore additional income is for just the one assessment year of 2010-11 (financial year 2009-10). Income Tax Department sources said investigators looking into his returns for other years suspect that his undeclared income could be much higher. Singhvi, however, has said that the Rs 11 crore he has disclosed as undeclared income is for three assessment years starting 2010-11. "I have paid around Rs 3.26 crore towards tax liability and my application is held to be valid. The investigation report for the one year (2010-11) talks about income to be added back, subject to final investigation, is Rs 22.86 crore, which means additional tax of Rs 7 crore, but denied by us. The investigation report itself is indicative and asks for further investigation," Singhvi said.

But the Commissioner of Income Tax, Jodhpur, where Singhvi is assessed, has told the ITSC that the "additional income declared by the applicant is much less than likely to be computed. There are also doubtful nature of various expenses claimed in the light of huge cash withdrawals (sic)". The disclosure is not true and full and therefore his application should be rejected, the commissioner has said.

Singhvi's troubles with income tax authorities, sources said, started after the Financial Intelligence Unit of the finance ministry in 2011-12 generated 17 suspicious transaction reports related to what were said to be huge cash withdrawals of over Rs 120 crore that were traced to Singhvi's bank accounts. The Income Tax Department, after receiving the reports and a complaint, investigated the case and issued a notice to Singhvi, seeking his clarification on the withdrawals. Sources in the Central Board of Direct Taxes also alleged that investigation of the huge withdrawals showed irregularities in billing/expenses which were not explained. A major part of these expenses is shown as having been paid in the last three months of each financial year, they said. They also said that they are looking into Singhvi's agriculture income and payments to lawyers and have decided to reopen his income tax returns for six years starting with the assessment year 2006-07 under section 148 of the Income Tax Act. This provision gives the department power to reassess returns if it feels taxable income has escaped assessment and accordingly, notices have been issued to Singhvi.

But Singhvi has countered the claims in his ITSC application."Huge withdrawals do not ipso facto amount to suspicious transaction in the light of definition of the term STR under Prevention of Money Laundering Act," Singhvi has said. He also told The Indian Express that he has questioned his returns for six years being reopened. "We have questioned and objected to that, there is no reasoning for reopening of IT returns and I will challenge that," he said.

Under income tax guidelines, the penalty for failing to make a full and true disclosure could go up to 300 per cent of the tax which was sought to be evaded along with rigorous imprisonment of seven years.

The ITSC is a quasi-judicial body for alternate dispute resolution. It allows a one-time tax evader or an unintending defaulter to make a clean breast of his or her affairs and the benefit of the settlement mechanism can be availed by a tax-payer only once in a lifetime, the commission says.The settlement mechanism allows taxpayers to disclose additional income over and above what has been already disclosed before the Income Tax Department. The applicant has to pay full tax and interest on the additional income disclosed before the commission, before filing the application. The commission then decides on the admissibility of the application.

On May 10, the ITSC declared Singhvi's application to be valid for seeking a report from the Income Tax Department. The ITSC is required to pass the final settlement order within 18 months of the application."The matter is still unadjudicated, unproved and contentious. There will be full investigation, only then orders shall be passed," Singhvi told The Indian Express.

http://www.indianexpress.com/news/abhishek-singhvi-moves-it-settlement-commission-over-undeclared-income/1130437/0

NEW DELHI: Punctuality, an important defining character of Judges, is the latest casualty in the Supreme Court, the role model for high courts and the subordinate courts.

Old timers recount there was a time when litigants used to set their watches to 10.30 am when Judges of the Supreme Court assembled to begin proceedings. But, no longer, they lament.

Lawyers and litigants grumble under their breath when Judges sit late. But, they dare not comment openly as they do not want to risk the wrath of the Judges and affect the fate of their cases and clients.

Chief Justice of India (CJI) Altamas Kabir, who sits in court no. 1, is usually late to the court every day and the bench headed by him seldom commences judicial work at scheduled 10.30 am. But, Justice Gyan Sudha Misra appears to be setting a record of her own in coming late to the court.

During normal working days, she too comes late to the court. But, during the ongoing summer vacation, punctuality in the SC appears to have lost its meaning as the bench headed by her, which was sitting from May 30 to June 14, assembled at least 60 minutes late on every working day.

Three days ago, the bench headed by her assembled at 12 noon instead of 10.30 am. On entering the court room packed with lawyers and litigants waiting patiently, she sported a wry smile and said - "Thanks for your patience!" Justice R S Sodhi, who is practicing in the SC after retiring as a HC Judge, responded - "Thanks for coming!"

ToI sought views of retired CJIs, SC Judges and lawyers about sanctity of punctuality in judiciary. Former CJI V N Khare said, "The Supreme Court Judges are the role model for High Court Judges and presiding officers of subordinate courts. If they are not punctual then it would set a very bad precedent for others."

"Punctuality is the first and foremost thing which is in the hands of the Judges. If for some exceptional urgent situation which delayed a Judge, it should be notified so that the lawyers and litigants are not made to wait unnecessarily," Justice Khare said.

Justice (retired) B N Srikrishna said, "When I became a Judge of the Bombay High Court, then Chief Justice P D Desai had told me that the least a Judge can do is to sit on dot at the scheduled time. That is what I have done in my entire life and I think it is the duty of every Judge to be scrupulously punctual".

Senior advocate and BJP leader Ravishankar Prasad said, "Punctuality is the hallmark of judicial discipline. It is also an essential ingredient of the functioning of all courts, especially the Supreme Court."

In the first M C Setalvad Memorial Lecture in 2005, former CJI R C Lahoti had said, "Four qualities are needed in a judge which are symptomatic of functional excellence. They are punctuality, probity, promptness and patience."

One of the legal luminaries and former CJI M Hidayatullah too had placed great importance on Judges being punctual. According to him a Judge who does not observe punctuality of time does not believe in rule of law, Justice Lahoti had recounted.

Former CJI Y K Sabharwal too had stressed the importance of punctuality for Judges. "A Judge has to be punctual and regular in adhering to the court hours. The need for punctuality and regularity is not only to hve full control over the work but also to have a moral authority to check indiscipline amongst those who are expected to play a role in the functioning of the court, including the court staff, members of the bar, the litigants, witnesses etc."

http://timesofindia.indiatimes.com/india/In-vacation-Supreme-Court-bench-is-late-by-an-hour-every-day/articleshow/20599333.cms

http://moneylife.in/article/goas-advocate-general-is-the-highest-paid-across-the-country-reveals-rti/32698.html

Goa's Advocate General Atmaram Nadkarni is being paid Rs8 lakh per month excluding other perks, the highest amount paid to an AG across the country. Even the Attorney General of India is paid Rs90,000 per month. Nadkarni's fees were increased by the Parrikar government in Goa through an order last month, says a RTI activist

The Advocate General (AG) of a state is a Constitutional post and authority duly appointed as per Article 165 of the Constitution of India. He is the principal law officer of a state who advises the government on legal matters, defends and protects the interest of the state government and gives full legal guidance to the state government in the form of its policy and execution of its decisions. He is assisted by a team of law officers and office staff.

The Advocate General of any state of India is offered monthly remuneration in the form of fees for appearance in the high court with a defined upper limit (the appearances could be as frequent as being daily), fees for appearance in Supreme Court on behalf of the state government, as well as perks in the form of house accommodation, conveyance and staff.

In most of states, the monthly remuneration of an AG is not more than Rs1 lakh per month, excluding the perks. There is no hard and fast rule for fixing the monthly fees/remuneration of an AG though as Article 165 of the Constitution of India states that, "The Advocate-General shall hold office during the pleasure of the governor, and shall receive such remuneration as the governor may determine."

However, in the case of Goa, which happens to be the smallest state of the country, the AG seems to be overtly pampered, at the cost of the public exchequer. Advocate Aires Rogrigues, a Goa based lawyer and RTI (Right to Information) activist, procured documents through RTI pertaining to the fee hike sanctioned by chief minister Manohar Parrikar and implemented through a government order last month. Documents reveal that the AG of Goa is perhaps the highest paid public servant of the country.

Now, Atmaram Nadkarni who is presently the AG of Goa has been awarded Rs10,000 per appearance before the high court as professional fees with the upper limit of Rs8 lakh per month (it was Rs5 lakh per month earlier). He gets paid Rs75,000 as fees for every appearance before the Supreme Court (earlier it was Rs25,000 per month) as well as Rs75,000 for every official visit to New Delhi for conferences, special leave petitions; writ petitions and civil applications. He also gest fully furnished rent free government accommodation or Rs20,000 per month for it and staff on par with the rank of a Cabinet minister. This is with retrospective effect from 1 April 2012.

Strangely, the documents also reveal that chief minister Manohar Parrikar by a note moved on 30th July last year directed that henceforth no senior counsel be engaged by the government in any matter whatsoever before the Supreme Court or Green tribunal. The chief minister further directed that the Advocate General would represent the state government in all matters before the Supreme Court.

States Rodrigues, "the Advocate General is supposed to represent cases only regarding constitutional matters but Nadkarni has been given the sole authority to appear for any matter before Supreme Court or Green Tribunal, obviously to help him fatten his fees."

Nadkarni, who is allegedly also a legal expert for some controversial mining companies has been blessed by this meteoric increment in remuneration through personal interest shown by chief minister Parrikar, who is otherwise praised for good governance in the state. In a file noting dated 31 Dec 2012, Parrikar overrules the state law department's stay (which directed that the fee structure should be upto only Rs5 lakh per month which is incidentally very high in comparision of other states). Parrikar's file noting states thus: "there appears to be some errors in the cabinet approved, based on the directions that were issued may be due to communication gap. In view of the same following corrections may be incorporated:

1. Maximum limit to fees be increased to Rs8.00 lakh in place of Rs5.00 lakh which were decided three to four years back

2. We may include per official visit to New Delhi for 'conferences' in addition to 'per appearance per day'

3. We may replace the staff pattern by 'as applicable to the cabinet minister'

With above correction modified, draft may be put up to Cabinet for approval.

Manohar Parrikar, 31.12.12."

As per the chief minister's direction, the revised fees were placed once again before the Cabinet on 27th February this year which approved the hike to a maximum of a monthly Rs8 lakh for appearances before the high court and in addition Rs75,000 for every visit to Delhi for conferences or appearance before the Supreme Court.

States Adv Rodrigues, "Goa despite being the smallest state is not only hosting India's highest paid Advocate General but the country's highest paid public servant.  The president of India is paid Rs1.50 lakh a month while the Chief Justice of India Rs1 lakh. A Supreme Court judge earns Rs90, 000 and a high court judge takes home Rs80,000 a month. The Attorney General of India is paid equivalent to the salary of a Supreme Court judge which is Rs90,000. However, the Advocate General of Goa Atmaram Nadkarni out beats them all, while he gets paid upto a whopping Rs8 lakh a month. Besides this he also pockets Rs75,000 for every official visit to New Delhi."

Ever since Nadkarni has taken over as AG on 8 March 2012, he has appeared in the High Court on an average of 3-5 hearing per day, even more, as he appears and gets paid Rs10,000 even for an adjournment. The earlier AGs were paid appearance fees in the High Court on an "effective hearing". Also, their fee of Rs25,000 per appearance in the Supreme Court was included in the Rs5 lakh maximum remuneration paid per month.

Rodrigues has demanded a CAG scrutiny. He says, "This gross anomaly defies all logic and is a fit case to be examined by the Comptroller and Auditor General (CAG). Public funds cannot be allowed to be squandered in this high-handed manner.''

The controversy over Goa AG's monthly remuneration is not new. Rodrigues had similarly procured documents under RTI of the earlier AG, Subodh Kantak who had been paid Rs5.13 crore for the period from 14 February 2005 to May 2011.''

Rodrigues is campaigning for bringing down the monthly earnings of Goa's AG on par with other States.

 The Income Tax department has detected alleged tax evasion to the tune of Rs. 7 crore in the business transactions of Purti group of companies related to former BJP president Nitin Gadkari.

Probing the alleged dubious transactions of the Purti Power and Sugar Limited (PPSL) since last year, the department has completed assessments pertaining to the last two financial years and has found evasion to the tune of more than Rs 7 crore, top official sources said.

The Purti group, in its reaction, said it has not received any notice in this regard. A notice is not any indicator of any wrongdoing, it said, adding that Mr. Gadkari was not associated with the Purti group for the last two years.

"Our attention has been drawn to reports in a section of media that the Income Tax department is serving a tax assessment notice to the Purti Group for the last two assessment years. We would like to make it clear that neither the Purti group nor any functionary of the Purti group has received any notice so far," Nitin Kulkarni, PRO of Purti Group said in a statement.

"If any tax assessment notice is received, our MD Sudhir Dive in consultation with our tax advisors will give an appropriate response. However, a tax assessment notice is a routine procedure. There are different levels of appeal at various stages. The Purti group will deal with the matter.

"The tax assessment notice is certainly not any indication of wrong doing. We would like to place on record the fact that Nitin Gadkari has not associated with the Purti group from last two years," Mr. Kulkarni added.

The I-T department has begun the final scrutiny of documents of all the Purti group companies and the other assessments would be completed by the year end, the official sources said.

While preparing the final assessment orders, the department has taken into cognisance the statement of Mr. Gadkari and other senior officials of Purti group.

http://www.thehindu.com/news/national/it-dept-detects-rs-7-crore-evasion-in-gadkaris-companies/article4685956.ece

Speech by the President of India, Shri Pranab Mukherjee at the Valedictory Ceremony of the 65th Batch of Indian Revenue Services

Good Morning.

1. I am happy to be amidst you on this occasion of Valedictory Ceremony of the 65th Batch of IRS. At the outset, I would like to congratulate the officers, who have successfully completed their professional training.

2. I have had decades of association with the department from my days as MOS in Finance Ministry in the 70`s. I have visited National Academy of Direct taxes (NADT), on a number of occasions. I am therefore witness to the evolution and growth of this premier academy.

3. The Income Tax Act is one of the oldest Acts in India. It was introduced in 1860 as a punitive tax by the British after the rebellion of 1857. Since Mr. James Wilson introduced Income Tax in British India, the Department has come a long way.

4. You will find it interesting to know that the collection of direct taxes in 1860-61 was just Rs. 30 lakhs. In contrast, the revised target for 2012-13 was Rs. 5,65,835 crores. As per the budget estimates for the direct taxes for the year 2013-14, the direct tax collection is likely to be around Rs. 6 lakh 68 thousand crore, which is around 54 percent of the gross tax revenue receipts of the Central Government. Not only has there been a quantum increase in the collection of direct taxes, but it now accounts for the majority of tax collections. Direct taxes are anti inflationary compared to indirect taxes. They are still below the target we want to reach but the rise to over 50 percent of revenue is a positive feature.

5. Tax collection is neither a simple nor popular task. Tax collectors should be conscious of the rights and duties of citizens. The tax payer should be seen as an important partner in generating revenue for all our national endeavours. It is the tax they provide which funds welfare schemes, helps maintain law and order, protect our borders etc. Many empires have collapsed in the past because Governments did not have money to pay their soldiers. Kautilya`s words 'Kosh Moolo Dandah' i.e. "revenue is the backbone of administration" continues to be as relevant today as it was thousands of years ago.

6. In a globalized world, more than two-thirds of trade is between related group entities. The inter-group transactions offer an opportunity for multinational enterprises to locate their profits in favourable tax jurisdictions with low taxes or no taxes. Issues like Transfer Pricing are also very complicated. Taxation has thus acquired new complexities with political, legal as well as international ramifications. India has been taking measures in the form of Double Taxation Avoidance Agreements and Tax Information Exchange Agreements to safeguard its interests. Earlier, countries were very reluctant to share information. One of the indirect benefits of the 2008 financial crisis was that recalcitrant countries have been compelled to share information.

7. The Income Tax department has been one of the front runners in taking technological initiatives with a view to handle the expectations of our tax payers. A series of steps have been taken - Centralisation of tax collection, simplification of tax forms, improvements in the method of submitting taxes, simplification of tax laws etc. The modernisation of our tax laws is very important.

8. The Government depends on you to collect taxes from the people in an efficient manner. I have no doubt you will discharge your responsibilities to the motherland with competence and confidence.

9. Before I conclude, I would like to remind you about Father of our Nation Mahatma Gandhi's Talisman:

"Whenever you are in doubt, or when the self becomes too much with you, apply the following test. Recall the face of the poorest and the weakest man [woman] whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him [her]. Will he [she] gain anything by it? Will it restore him [her] to a control over his [her] own life and destiny? In other words, will it lead to swaraj [freedom] for the hungry and spiritually starving millions? Then you will find your doubts and yourself melt away."

I wish all of you a bright future.

Jai Hind

[On account of right connections, CA gets VIP treatment in jail]

On account of right connections, CA gets VIP treatment in jail

Though the jail in Patiala has quite a line-up of VIP inmates - a former deputy commissioner, senior superintendent of police, former MLA and powerful Akali leaders, besides a top taxman - the one whose special treatment overshadows others' is Ashwani Gupta, a chartered accountant arrested by the CBI on April 3 from Jalandhar for allegedly being the middleman in a bribery deal.

Gupta has served on the board of the State Bank of Patiala, where he led the audit committee, is a member of the steel consumers' council of the union government, and is a special invitee to the direct taxes committee of the Institute of Chartered Accountants of India (ICAI). But perhaps most importantly, the Doaba-based CA, in judicial custody since April 8, is a financial adviser to six current and former ministers of Punjab, two of whom are learnt to have called the jail superintendent to ensure he gets VIP treatment.

Hence, there's no limit of visitors or outside food, he gets mineral water, and the deputy superintendent visits him daily, according to a high-ranking officer who provided the information on the condition of anonymity.

Ironically, even income tax deputy commissioner TK Bhattacharya, who was arrested along with Gupta at Jalandhar for taking a bribe of Rs. 6 lakh from an industrialist to hush up a tax evasion case, only has his family visiting him. At the time of arresting Gupta and the Indian Revenue Service (IRS) officer Bhattacharya from Gupta's house, the police had found Rs. 67.5 lakh there.

So sound is Gupta's proximity to the political circle that aides of a cabinet minister reportedly visited the jail to meet him and oversee the VIP facilities, sources told HT.

Others who have met him - without making an entry in the register - include an additional director general of police (ADGP)-level officer posted at the headquarters in Chandigarh, two inspectors-general, several industrialist and politicians.

"He is the CA of almost all big industrial houses in Doaba in which politicians have invested their money directly or indirectly. They must be worried what he could have told the CBI," remarked a jail officer, who said he was surprised how he gets even better treatment and more visitors than former Patiala DC and IAS officer Vikas Garg, accused in a Rs. 200-crore land scam, and former MLA and Akali leader Mangat Rai Bansal, who was recently handed seven-year jail in a fraud case.

Though jail superintendent Bhupinderjit Singh denied giving any VIP treatment to Gupta, he added, "Yes, many people come to see him, and now we have decided to curtail the limit."

http://www.hindustantimes.com/Punjab/Patiala/On-account-of-right-connections-CA-gets-VIP-treatment-in-jail/SP-Article1-1049874.aspx

 After Nokia and Royal Dutch Shell, the Income Tax department has sent a demand notice to Microsoft's Indian arm, which said it has challenged the same.

I-T department reportedly sent notice to Microsoft seeking details of its income from Indian operations for four years beginning with the 2005—06 fiscal.

Details have been sought about income from work done at Microsoft's Indian research and development sites on several softwares, which were marketed globally.

When reached for comments, Microsoft India said it has approached appellate forums for the resolution of the issue.

"Microsoft complies with the tax laws in each jurisdiction in which we operate. We are seeking relief against the transfer pricing (TP) adjustments through the appropriate appellate forums," it said in an e—mail statement.

The I-T department notice reportedly does not quantify the amount of profits earned by its US—based parent Microsoft Corporation that are attributable to the work performed at its R&D centres in India.

The company said: "Since the matter is sub judice, we are unable to provide further details or comments regarding the same. We are hopeful that the Rangachary Committee recommendations on R&D Centres and Safe Harbours will help facilitate resolutions to TP litigations in the IT industry."

Last year, the government had set up a panel, headed by former Central Board of Direct Taxes (CBDT) Chairman N Rangachary, to address issues like approach to taxation of development centres, tax treatment of 'onsite services' of domestic software firms and those related to finalising Safe Harbour provisions.

Safe Harbour principles are international disclosure practices to check litigations in transfer pricing - an accounting mechanism undertaken by MNCs to reduce their tax liabilities.

In March this year, the Indian subsidiary of the Finnish mobile phone maker Nokia was served the IT notice asking it to pay over Rs 2,000 crore for alleged evasion of taxes in its business transactions in the country.

Similarly, tax authorities in February 2012 charged Shell India, part of Anglo—Dutch oil major Royal Dutch Shell, of under—pricing a share transfer within the group by Rs 15,220 crore and consequently evading taxes.

The order relates to the issue of 8.7 crore shares by Shell India to an overseas company Shell Gas BV in March 2009.

http://www.thehindubusinessline.com/industry-and-economy/info-tech/it-dept-issues-notice-to-microsoft-for-understating-income/article4647303.ece

The Aditya Birla Group has hit back at the revenue authorities attempts to tax a demerger struck in 2009, wherein Aditya Birla Telecom Limited (ABTL) transferred its telecom licences for the Bihar circle, along with other assets and liabilities, to its parent, Idea Cellular. Idea CellularBSE 2.54 % and ABTL have both moved the first appellate authority i.e CIT (Commissioner of Income Tax), Appeals and challenged the demand orders seeking a total of Rs 3900 crores in taxes, two sources familiar with the development told ET NOW. The CIT (Commissioner of Income Tax), Appeals is an independent judicial authority that can either confirm, enhance or reduce the quantum of the tax demand under appeal. ET NOW was the first to report the development.

" The appeals were filed last week and seek a stay on the demand orders. The ABTL appeal says the de-merger was done at nil consideration and hence no capital gains arose on the transfer. Idea has argued that it acquired a capital asset as part of a demerger scheme approved by the high court and therefore there was no additional income," said one of the two individuals cited above. When contacted, an AV Birla group spokesperson declined to comment on the development.

The I-T department has treated the transfer of licence, assets and liabilities from ABTL to Idea Cellular as a slump sale, which is subject to capital gains tax and subsequently ABTL was served with a tax demand of Rs2,400 crore. Idea Cellular was issued a tax demand order of Rs1,500 crore on business income arising out of the transfer of telecom licences and other assets from ABTL as part of the demerger.

In an earlier email response to ET NOW's queries on the demand orders being issued, the company said "The transaction involves a scheme of restructuring between a wholly owned subsidiary and a parent company with the sole objective of administrative consolidation of a telecom licence of one service area in the parent company, without any financial transaction or transfer of funds."

Tax experts feel attempts by the income tax department to bring such corporate demergers under the tax net could make internal restructuring risky and increase transaction costs.

http://economictimes.indiatimes.com/news/news-by-industry/telecom/aditya-birla-group-challenges-rs-3900-crore-tax-bill/articleshow/19698057.cms

Sir, pl see this:

The following second proviso shall be inserted in sub-clause (ia) of clause (a) of section 40 by the Finance Act, 2012, w.e.f. 1-4-2013 :

Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso.

You can argue that this is clarificatory and upholds the M/S AMIRTHAM TRANSPORT law of Chennai Bench of ITAT referred to above.

[Of course, where the payeehas already paid tax and if the same amount is disallowedin the payer's case, it will certainly amount to taxing thesame amount twice. However, the legislature has taken careto remedy this situation by providing that the sumdisallowed will be allowed as a deduction in the year ofpayment. This is exactly what the CIT(A) has held and weare in agreement with it.]

Sir there is a judgement of the Hon'ble Chennai Bench on the point. Also see the recent amendment in Finance Act 2013 which provides that no s. 40(a)(ia) disallowance would be made if the recipient has paid the tax.

IN THE INCOME TAX APPELLATE TRIBUNAL
BENCH 'B' CHENNAI
ITA No.1699/Mds/2009
Assessment Year: 2006-07
M/S AMIRTHAM TRANSPORT
OOD NO 18, NEW NO 28
ANDIAPPA GRAMANI STREET
ROYAPURAM, CHENNAI-600013
PAN NO:AAFFA8550L
Vs
DEPUTY COMMISSIONER OF INCOME TAX
CIRCLE-X, CHENNAI
Pradeep Parikh, VP and Hari Om Maratha, JM
Dated: April 16, 2010
Appellant Rep by: Shri K Ramagopal
Respondent Rep by: Shri P B Sekaran
Per: Pradeep Parikh:
The assessee is in appeal before us against the order of the
ld. CIT(A), dated 10.8.2009 for assessment year 2006-07.
The grievance of the assessee is against the disallowance of
Rs.15,98,454/- made under sec.40(a)(ia) of the Income-tax
Act, 1961 (the Act) on account of non-deduction of tax at
source under sec.194C of the Act.

2. The assessee firm is engaged in the business of
transportation and it returned a total income of
Rs.3,96,540/-. In the course of assessment proceedings, it
was noticed that the assessee had paid a sum of
Rs.15,98,454/- to Smt. Amirthammal as hire charges and
no tax was deducted at source therefrom. The explanation
of the assessee was due to his own ill health, the transport
orders were executed to his wife, Smt. Amirthammal and
therefore, no TDS was deducted. The Assessing Officer did
not accept the contention of the assessee and made the
impugned disallowance. The CIT(A) noted that the
assessee has paid the TDS amount of Rs.22,825/- to the
Government on 5.8.2009 and has also filed the copies of
challans in support of the same. He therefore, observed that
the assessee was entitled to get the deduction in assessment
year 2010-11 and directed the Assessing Officer to give the
deduction in the relevant year. Accordingly, the ground
raised by the assessee was dismissed.

3. The contention of the learned counsel was that whenever
there was shortage of vehicles, third party vehicles were
hired and this hiring of vehicles had nothing to do with the
business of partnership. It was also submitted that the payee
has filed the return and paid tax on the hire charges
received by her. The contention was that there was nothing
like contract and hence sec.194C was not attracted. The
learned counsel brought to our notice the newly substituted
sec.194C with effect from 1.10.2009 which, inter alia,
provides that TDS need not be deducted from any payment
made to a contractor in the course of business of plying,
hiring or leasing goods carriages on furnishing of his
Permanent Account Number (PAN). The contention was
that this provision was curative in nature and it was to
remove the hardship faced by transporters. Therefore,
though the new section is effective from 1.10.2009, this
part of the provision should be held to be operative
retrospectively. The learned counsel referred to the Board's
Circular No.93 dated 26.9.1972 and also to certain
commentaries by Chaturvedi and Pithisaria as well as
Sampath Iyengar.

4. The ld. D.R., besides supporting the orders of the lower
authorities, submitted that while applying the provisions of
sec.194C, relationships did not matter and if the sum was
liable to TDS, the same should be deducted.

5. We have duly considered the rival contentions and the
material on record. Firstly, we are not able to comprehend
the argument of the learned counsel that hiring of vehicles
has nothing to do with the business of the partnership. As
per the material on record, the assessee firm is a transport
contractor. The submission before the Assessing Officer
was that Smt. Amirthammal is the wife of one of the
partners of the assessee and due to poor health of that
partner, the orders were executed by Smt. Amrithammal. In
other words, the orders which were supposed to be
executed by the assessee firm, were executed by the wife of
a partner which in our view, constitutes sub-contracting of
the work. Another contention of the learned counsel is that
there is nothing like contract. This is quite a vague
argument. When the work is done on behalf of the
contractor, there is a contract between the contractor and
the sub-contractor. Thus, there is no force in the argument
of the learned counsel that there is no contract at all.
Sec.194C is wide enough to include oral contracts as well.
The learned counsel has then referred to Circular No.73
dated 26.9.1972. In this Circular it has been mentioned that
a transport contractor cannot ordinarily be regarded as
contract for carrying out any work and hence, no TDS is
required to be made. It needs to be appreciated that
sec.194C was brought on the statute book with effect from
1.4.1972. In the original provision there was no reference
specifically to carriage of goods and passengers by any
mode of transport other than by railways. Therefore, the
Circular of 1972 has to be considered in the light of the
provision existing at that point of time. The provision that
the expression "work" will also include carriage of goods
and passengers was inserted in sec.194C by way of
Explanation 3 with effect from 1.7.1995. Thus, from that
date, it was specifically provided that carriage of goods
would be within the expression "work" and hence will be
liable to the provisions of sec.194C. Therefore, the reliance
of the learned counsel on Circular No.73 is misplaced.
He has then referred to the commentary of Sampath and
Iyengar in paragraph 14 on page 9530 (Vol.6, 10th Edition).
It is true that the paragraph starts by saying that sec.194C is
not applicable to contracts for mere carriage of goods
which do not include any other services like loading or
unloading. However, the same paragraph mentions later
that before amendment in 1995, sec.194C was not
applicable to transport contractors, meaning thereby that
after the amendment, it is applicable. Therefore,
considering the legal position as it is applicable to the year
under consideration, we are of the view that the assessee
was liable to deduct tax at source from the payment made
to Smt. Amrithammal.

6. Another argument taken by the learned counsel is that
where the payee has filed the return and paid tax on the
payment received, no disallowance can be made. Perhaps,
the learned counsel is mixing up two issues viz.,
disallowance under sec.40(a)(ia) and demand raised by an
order under sec.201(1) of the Act. Where the payee has
already paid tax, no demand can be raised against the payer
under sec.201(1) of the Act. But, non-deduction of tax
where it is statutorily required, will certainly invite all the
consequences under the Act irrespective whether tax has
been paid by the payee or not. Of course, where the payee
has already paid tax and if the same amount is disallowed
in the payer's case, it will certainly amount to taxing the
same amount twice. However, the legislature has taken care
to remedy this situation by providing that the sum
disallowed will be allowed as a deduction in the year of
payment. This is exactly what the CIT(A) has held and we
are in agreement with it.

7. Three more arguments of the learned counsel remained
to be dealt with. One is that if the payer is under a bona fide
belief that no tax is deductible, it will be a reasonable cause
for non-deduction of tax. Principally, we do not have any
dispute over this proposition. However, nowhere it has
been spelt out by the assessee as to what is the basis of such
a bona fide belief. Therefore, the judgments relied upon by
the learned counsel in connection with "bona fide belief"
cannot help the assessee. The second argument of the
assessee is that if the assessee acts on the advice of a legal
cell and does not deduct tax, no penalty is leviable. For this
proposition, the learned counsel has relied on the judgment
of the Supreme Court in the case of T. Ashok Pai v. CIT
292 ITR 11. The fact in that case was that the assessee had
relied on the legal cell of his banker viz., Syndicate Bank
and the advice given by the Bank was found to be incorrect.
In this context, inter alia, the Court held that penalty was
not leviable. In the present case, admittedly, the assessee
did not deduct tax on the basis of the advice given by its
own legal cell. Its own legal cell cannot be divorced from
the assessee itself and it has to be considered that the
assessee itself believe that no tax is deductible. But as
mentioned earlier, there is no basis to form such a belief.
Accordingly, the argument is rejected. The next argument
is that in the substituted sec.194C, sub-sec.(6) provides that
TDS need not be made where the payee furnishes his PAN.
The learned counsel wants this provision to be treated as
retrospective in operation. Had it been a simple amendment
in the existing provision, then perhaps, we would have
accepted the contention of the learned counsel. However,
the entire sec.194C has been substituted by a new sec.
194C with effect from 1.10.2009. When the complexion of
the entire provision has undergone a change, it is not
justifiable to treat a small part of it as retrospective in
operation. Moreover, had it been the intention of the
legislature to make it operative retrospectively, it would
have specifically mentioned it. That not being the case, we
cannot accept the argument of the learned counsel.

8. In the final analysis, we hold that Smt. Amrithammal
was a sub-contractor who carried out transport work on
behalf of the assessee firm and as per the provisions of
sec.194C, the assessee firm was liable to deduct tax at
source. Not having done so, the Assessing Officer was
justified in making the disallowance of payment under
sec.40(a)(ia). The assessee is entitled to the deduction of
the said amount in the year in which the tax is paid and the
CIT(A) has rightly directed the Assessing Officer
accordingly. We uphold his order.

9. In the result, the appeal of the assessee is dismissed.

Sir, what do you mean by "purchaser made a sale deed for Rs. 3.5 lakhs as per Government prices"? Is the sale consideration shown as Rs. 3.5 lakhs or is the stamp duty value based on Rs. 3.5 lakhs.

I suspect it is the latter. Anyway, the capital gains will be computed on the basis of the amount actually received.

As the capital gains will be offered by your father to tax, the investment in the new property should be by him (though you can be added as a nominee)

Taxindianonline.com has pointed out a joyous outcome of the CBEC draconian circular. The lawyers (on both sides) are reaping in a windfall. Multiple Writ Petitons have been filed in most cities and the lawyers do not have to say anything to get a stay order and charge fees in lakhs. The assessees' have spent about Rs. 300 crores while the department has spent about Rs. 60 crores so far.

Now, this is the kind of new year's gift I would like to receive :) Jai Ho CBEC!

Who has benefitted from this Draconian Circular?

IN the Andhra Pradesh High Court alone, about 50 writ petitions have been filed against this Circular and the threatened recovery, and many more writs are on their way. A consultant who is not even a lawyer told me, "the Board has given a new year gift; I am hiring lawyers to file writs on behalf of my clients and making some good money - unexpected windfall!" Some lawyers have already earned a few lakhs of rupees without even opening their mouths in the Courts.

Even the Standing Counsels of the CBEC are doing fine. They have all become rich suddenly. A rough estimate shows that the CBEC must be spending about Rs. 60 Crores to defend these writs and the assessees must be spending around Rs. 300 Crores. This Circular has generated 360 Crores of business - and with the Government not getting a single paisa!

The Board should seriously consider withdrawing this Circular immediately to end this farce gracefully before it is struck down by a Court.

http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=16807

[The evidence gathered so far clearly indicates that PwC has advised Nokia and they were aware of the tax evaded and accounting practices. PwC are the auditors for Nokia and they may face prosecution from Income-Tax department]

PWC, of "Satyam" Fame, seems to be in the news again for all the wrong reasons. What is damming is the statement that:

"The evidence gathered so far clearly indicates that PwC has advised Nokia and they were aware of the tax evaded and accounting practices. PwC are the auditors for Nokia and they may face prosecution from Income-Tax department"

There is a provision in the Act (I forget the section) which says that even CAs and advisers who abet tax evasion can be punished. So, this may be a test case for that.

CHENNAI: The role of the Indian arm of audit firm PricewaterhouseCoopers in relation to the alleged tax defaults by handset maker Nokia India is being probed by the taxman.

A senior income-tax official, who wished anonymity, told ET that PwC would be called for questioning soon.

"The evidence gathered so far clearly indicates that PwC has advised Nokia and they were aware of the tax evaded and accounting practices. PwC are the auditors for Nokia and they may face prosecution from Income-Tax department," the official said.

"PwC was filing all the audit reports. All the communication between the two parties was through a Gmail account and not the official account," the official said.

Taxmen raided Nokia India's factory near Chennai, the Finnish company's top producer anywhere, as also its offices last week.

The Indian arm of PwC, PW and Company, said, "In the matter of the Nokia case, IT Department has called us as they are seeking our inputs on this. We will extend full cooperation to them on this matter."

Nokia couldn't not be reached for comment.

The tax department has alleged that Nokia changed its accounting policy and was also in the process of re-organising the existing business model to bypass certain direct and indirect tax liabilities.

Earlier Nokia India was one company. Now it has filed before the state and Centre for two companies. So one would be Nokia India and the other would be Nokia Sales (which would cater only to sales).

Taxmen reckon the arrangement would have worked this way: the company would have made handsets in India and sold them directly to the parent company in Finland. The parent company Nokia Corp would have then sold the same handsets in India through their sales company.

"This is a great disadvantage and loss for India," the tax official said. The department has also said that Nokia has not made tax payment for software supplies.

"They have not paid money for six years now. Remittances were made in dollar terms. Tax will be collected on the exchange rate today. Apart from that there would be a penalty for default," said the official, indicating the amount to be around Rs 3,000 crore.

http://economictimes.indiatimes.com/news/news-by-industry/telecom/pricewaterhousecoopers-faces-income-tax-heat-for-role-in-nokia-tax-issue/articleshow/18007309.cms