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Is provision of Sec 194C applicable to payment for water supplied by tanker for manufacturing activity?

WHETHER LIABLE TO TDS U/S 192 OR 194J IRRESPECTIVE OF THEIR OTHER INCOME ?

WHETHER LIABLE TO TDS U/S 194-I AFTER THIS SECTION IS AMENDED ?

LEGISLATURE ENJOYS DISCRETION IN TAX MATTERS, COURTS SHOULD KEEP OFF: SC
The Supreme Court has said that the legislature enjoys wide discretion in taxation matters and judiciary should keep their hands off unless the exercise of such discretion is palpably arbitrary. The apex court on Thursday set aside the order of the Gujarat High Court which had held the provision of governments Kar Vivad Samadhana Scheme, 1998, as illegal as it had prescribed a cut-off date which had excluded certain category of the assessees from availing the benefits of the scheme of settlement of tax arrears. A power to classify being extremely broad and based on diverse considerations of executive pragmatism, the judicature cannot rush in where even the legislature warily treads. All these operational restraints on judicial power must weigh more emphatically where the subject is taxation, said a bench comprising justices HL Dattu and CK Prasad in its judgement. It said: Discrimination resulting from fortuitous circumstances arising out of particular situations, in which some of the tax payers find themselves, is not hit by Article 14 (Constitutional Right to Equality) if the legislation as such is of general application and does not single them out for harsh treatment. Advantages or disadvantages to individual assesses are accidental and inevitable and are inherent in every taxing statute as it has to draw a line somewhere and some cases necessarily fall on the other side of the line. The legislature has a broad discretion in the matter of classification. In taxation, there is a broader power of classification than in some other exercises of legislation. When the wisdom of the legislation while making classification is questioned, the role of the courts is very much limited. It is not reviewable by the Courts unless palpably arbitrary, the bench said. It said: It is not the concern of the courts whether the classification is the wisest or the best that could be made. However, a discriminatory tax cannot be sustained if the classification is wholly illusory. –

I-T - Whether deduction u/s 80HHE is to be worked out before computing book
profit u/s 115JA or on basis of profits computed under regular provisions -
Apex Court upholds Special Bench decision in Syncome

Increase costs on frivolous litigation to Rs 1 lakh: Supreme Court

November, 02nd 2011
The Supreme Court has suggested a 3,000% hike in the cost imposed on a person indulging in frivolous and vexatious litigation, saying unless it is raised from the current Rs 3,000 to Rs 1 lakh, the system will fail to control false cases being foisted to victimize innocent citizens.

A bench of Justices R V Raveendran and A K Patnaik, in a judgment delivered last month but made available on Tuesday, said, "At present, courts have virtually given up awarding any compensatory costs as such a small sum of Rs 3,000 will not make much difference. We are of the view that the ceiling in regard to compensatory costs should be at least Rs 1 lakh." It referred to Section 35A of the Civil Procedure Code, which provides for compensatory cost in respect of false or vexatious claims or defence. The maximum amount to be levied on a person indulging in false litigation was amended in 1977 from Rs 1,000 to Rs 3,000.

Justice Raveendran expressed dismay at the cost remaining unchanged for 34 years and said, "Unless the cost is brought to a realistic level, the provision authorizing the levy of an absurdly small sum by present day standards may, instead of discouraging such litigation, encourage false and vexatious claims."

The bench also did not approve of the current tendency of courts not to award even normal litigation cost-different from exemplary cost-to the litigant who wins a case. "The prosecution and defence of cases is a time-consuming and costly process. A plaintiff/petitioner/appellant who is driven to the court by the illegal acts of the defendant/respondent or denial of a right to which he is entitled, if he succeeds, is to be reimbursed his expenses in accordance with law," it said.

 
The court made it clear that it was talking of normal litigation cost and it should not be calculated on the basis of the actual cost of fighting a case. For, it said, a wealthy person may engage five senior advocates paying fees running into lakhs per day and the other side cannot be asked to reimburse such astronomical amounts.

Appreciating the assistance rendered to the court by Dr Arun Mohan and senior advocate A Mariarputham, the bench said there was a misconception among people that court fees for litigation were high. It said in the Supreme Court, the maximum court fee payable was Rs 250, be it a suit or a special leave petition. However, it added that it was time the courts sought fees commensurate with that spent by them on high-value litigation. "Arbitration matters, company matters, tax matters, for example, may involve huge amounts. There is no reason why a nominal fee should be collected in such cases. While we are not advocating ad valorem fee with reference to value in such matters, at least the fixed fee should be sufficiently high to have some kind of quid pro quo to the cost involved," Justice Raveendran, who authored the judgment, said.

Times View
We have consistently maintained that the judiciary needs to take a tough stance against frivolous litigation. The Supreme Court's observation should go a long way towards curbing the menace, at least as far as individual litigants are concerned. It remains to be seen whether the much stiffer monetary penalty becomes a serious deterrent also for organizations out to earn cheap publicity. If this too fails to rein them in, the court should think in terms of going beyond just monetary fines for dealing with the problem. That step, however, can wait till the current measure has had a fair trial.

In a decision which may give lawyers a run for their money, the Supreme Court has said non-advocates can represent litigants in the country's consumer courts as their authorised agents.
The decision by a three-judge Bench led by Justice Dalveer Bhandari is a blow to the lawyer community, which challenged competition from persons without law degrees.The Consumer Protection Act, a compact statute, says that a complainant can either personally appear or be represented by an authorised agent or an advocate.The court refused to intervene, saying that it cannot question or change the original legislative intent of the Act.
Justice Bhandari said the legislature would have thought that the poor litigants who come to the consumer court may not be able to afford the heavy lawyers fee.The court turned down the Bar Council of India plea, that only advocates should be allowed to appear before a consumer forum.
But it said that the National Consumer Commission, the highest consumer redressal forum in the country, has framed guidelines for conduct of these non-advocates.

COMMISSION-BASED LAWYERS' FEEThe word 'commission' invites instinctive, knee-jerk revulsion to the average Indian psyche. It is a dirty word to an average mind. It envisions images of its recipient being an accomplice to a crime. It smacks of something done on the stealth by both its recipient and its giver. It also envisions images of one earning his sinecure for favours done. But howsoever detestable the word may be to many, smacking as it does of a pejorative, commission rules the roost in many walks of life. Working directors of profitable companies pine for a commission. Distributors and retailers earn their commission. Brokers earn commission. An architect typically takes two per cent of the project cost. And why even civil courts take a percentage of the suit amount as court fees which practically amount to commission. The exchequer collects income-tax as a percentage of one's income. But the legal profession in India is barred from taking remuneration which is based on the results of the case taken up. It boils down to this: a civil court trying a property suit can take say one per cent of the suit amount as court fee but the lawyer arguing for the petitioner cannot take the same percentage or more or less as his fee for his labours, skills or sophistry lawyers are justly famed for. In the US, there is no bar on lawyers' taking their remuneration in the form of fees. In the famous McDonald case, a lady got a whopping $3.5 million as compensation from the company when hot coffee scalded her thighs to bones requiring extensive medical treatment at considerable expenses besides causing tremendous mental agony. This arguably might not have been possible but for the perseverance and hard work of the lawyer representing her in addition of course to her own doggedness.

MERITS

The merits of the system cannot be lost on anyone - no financial burden on the person engaging the services of brilliant lawyers and positively speaking the lawyer smelling a major windfall would bring his entire competence to bear on the case and not work in a hand washing spirit which would be the case if he were to be compensated say per hour or per case as in India. S/he would allow the case to proceed apace smoothly without adopting delaying tactics like adjournment. There is of course a downside as well. There may not be takers for a weak case where defeat is staring at one's face. In that case, s/he would demand an hour or a day or a case fee irrespective of its outcome like a dour worker. In fact, insistence on an alternative form of remuneration other than commission would be a sure indicator to the litigant that he is pursuing a hopeless case and might in the wake of such dawning wisdom either sue for peace by asking for a compromise or beat a total retreat both of which would be conducive to reduction of litigation.

DOWNSIDE

One wonders why the law in India frowns on result-based remuneration for professionals. To be sure, a chartered accountant doing the audit of a company should not be compensated on the basis of the profit earned by the company because he would be in that case playing ball with the management in window dressing the accounts to show greater profits than warranted by the applicable GAAP even though the same is considered kosher in the context of directors' remuneration despite the same danger staring at one's face. Again when a CA is contesting a tax case or initiating one, he cannot take his remuneration based on the outcome just as a lawyer cannot. It seems there is no rationale explanation for the prohibition from taking outcome related recompense by lawyers and CAs except in the case of audit of accounts. If a lawyer is comfortable with commission rather than with a fixed recompense, so be it so long as the client too is comfortable with the percentage. The main advantage as pointed out earlier is the calibre of professional services offered would be of the highest order with the lawyer stretching himself in terms of time, efforts and resources. At the macro level, the commission-based regime could well have the effect of reducing the bulge of court dockets but its downside could be a fresh impetus to judicial corruption which is no longer a taboo in media discourse and discussions. A clever judge might cozy upto an advocate in a spirit of accommodation secure in the knowledge that at the end of the day both are going to win. In other words, there is a distinct possibility of the spoils being shared with a judge with a supple conscience. This is too real a possibility to be shrugged off. Imagine a tax case: the department would go for high-pitched assessment as always and the lawyer representing the taxpayer would press for a high-pitched refund.

Whose side would a corrupt judge take? The answer is obvious.

The 1991 amendment says even if tax was collected in excess for any reason, the refund would not go to the taxpayer, because having passed the tax burden down the line, the refund does not belong to him as it would amount to his undue enrichment, but to the amorphous customers, to Consumer Welfare Fund maintained by the Ministry of Consumer Protection. Companies have realized the futility and stupidity of fighting a case for an altruistic cause. The short point is it is the promise of monetary gains that encourages litigation both on the part of the litigant and his lawyer who eggs him on. - www.thehindubusinessline.com

IT : Where assessee could not prove genuineness of transaction of sale of
shares, income from which was claimed to be exempted under section 54F, amount
of sale consideration was to be added to assessee's income as his income from
undisclosed sources
2011] 11 taxmann.com 382 (PUNJ. & HAR.)
Can someone give full text ??

Post s. 43(5) amendment, pre-AY 2006-07 derivatives "speculation" losses have to
be treated as "non-speculation" business losses for purposes of set-offGajendra Kumar T Agarwal vs. ITO (ITAT Mumbai)

IS THIS CASE LAW REPORTED ???? CAN ANYONE PROVIDE FULL CASE  ?
[2011] 10 taxmann.com 206 (Gau. - ITAT)(TM)

Amended tax laws not retrospective unless specified
Amended tax laws not retrospective unless specified
this case was published in ET on 3-6-2009
and argued by Bhupendra Shah

In what would come as relief to assessees who have sought stays on tax demand by
income tax authorities before October 1, 2008, the income tax appellate tribunal
ruled that any amendment made to a tax law by the government is not
retrospective unless specified in the amended law, reports Ram Narsinghdev
Sahgal from Mumbai. The tribunal ruling came in connection with a case between
Mumbaibased Ronuk Industries (assessee) and the I-T department, which made a tax
demand of Rs 36.11 lakh of the former for assessment year 2004-05. The
government amended the relevant section of the I-T Act, Sec 254 (2A), on October
1, 2008, which says that a stay cannot be extended beyond 365 days. The tribunal
ruling came in connection with a case between Mumbai-based Ronuk Industries
(assessee) and the I-T department, which made a tax demand of Rs 36.11 lakh of
the former for the assessment year 2004-05

CJI Kapadia laments lawyers' disinterest in law
TNN, Mar 13, 2011, 07.20am ISTAHMEDABAD: Chief Justice of India S H Kapadia on Saturday rued the fact that neither senior lawyers nor students of law take any real interest in their subject - law.

"Senior lawyers are not contributing to development of law, as they used to do in the past. Even young students do not take interest in this pursuit. Earlier in the Supreme Court, such students used to come, sit in courtrooms and take notes. But now they disappear in five minutes. They are more interested in transaction matters. There is nothing wrong in it. But how many can now argue on reasonableness?," said Justice Kapadia.

Justice Kapadia advised students from various universities present at the function not to rely totally on information downloaded from internet. "Please do not go by guides and internet. You have to put in hard work. Money will not make you happy, but it's the learning that will," he said adding that the future generation of lawyers should be able to argue on doctrine of reasonableness and principles.

The CJI praised India for its vastness of opportunities by citing his own example as how he began his career as a peon in a Parsi trust and how he reached the top post of judiciary. "Ability may take you to the top, but you require character to remain on the top," he said advising young lawyers to maintain integrity in their profession.

Justice Kapadia also advised judges not to lecture society. "The problem is that sometimes we judges impose our own values, our own likes or dislikes on the society. The judges should keep in mind that we cannot judge the wisdom of legislatures. We have to work for constitutional principles. I have no right to say what others should do, but I have to perform the duty on constitutional principles," he said.

The CJI also said that courts these days faced the challenge of balancing the rights and the society's interests. Without mentioning the recent SC's ruling in CVC P J Thomas appointment case, Justice Kapadia said "Now take the case of balancing points. What is more important to the appointment of higher office? Presumption of innocence or presumption of institutional integrity and competence?"

He discussed the issue of maintaining balance between environment and development. He also spoke about objectivity and inter-generational equity.

Those who attended the function included former SC judges, Chief Justice of Gujarat high court S J Mukhopadhaya, other sitting judges and senior lawyers.

Income-tax --General principles--Rule of consistency--Loss on sale of shares treated as business loss though stock of shares shown as investment--Assessment after enquiry--Different view not to be taken for subsequent year--Income-tax Act, 1961-- CIT v. Darius Pandole (Bom) . . 330 ITR  485

In earlier years before amendment unregistered agreement not liable u/s 50CITA 2216/m/9

no penalty when only MAT was payable u/s 115JB after additions. ITA 6940/6941/M/2008 D BENCH

The department is mulling over an increase in limits above which it files
appeals in the tribunal or courts, an official familiar with the development
told The Indian Express.

The department is planning to change the limits for appeals. Now, for filing an
appeal in Income Tax Appellate Tribunal (ITAT), the tax effect should be Rs 3
lakh, for high courts it has been increased to Rs 10 lakh and for Supreme Court
it is Rs 25 lakh, the official said.
As of now, if the tax effect is Rs 2 lakh, the department can file an appeal in
Income Tax Appellate Tribunal. If the tax effect is Rs 4 lakh, the appeal can be
filed in high court and if the tax effect is Rs 10 lakh, appeal can be filed in
the Supreme Court.

With the move, the income tax department expects to reduce up to 13 per cent
cases at ITAT level and 25-30 per cent cases at high court and Supreme Court
level each, the source added.

Even if the case is strong enough to be taken to the tribunal, the department
will not do so. This will cut down the wastage of resources in unnecessary
litigation and reduce the burden of overburdened courts while at the same time
assess would also benefit from this policy, the official added.

According to the National Litigation Policy, the government should work towards
reducing litigation in courts so that valuable court time would be spent in
resolving other pending cases. This will help in achieving the goal in the
National Legal Mission to reduce average pendency time from 15 years to 3 years.

The policy envisages that government and its various agencies, which are the
pre-dominant litigants in courts and tribunals in the country, should become
efficient and responsible litigant.

The initiative by the income tax department comes in the backdrop of criticism
by finance minister Pranab Mukherjee that the I-T department has emerged as the
largest litigant in the country.

Last year, the Comptroller and Auditor General of India (CAG) had stated in its
report that the disputed tax amount can wipe off the revenue deficit of the
government in 2008-09.
The total amount of direct tax stuck at the commissioner (appeals) level is Rs
2.2 lakh crore for 2008-09, the CAG had pointed out.

Apart from that, Rs 12,757.59 crore is stuck at Income Tax Appellate Tribunal,
Supreme Court and high court levels, the finance minister had told the
Parliament last year.

Income Tax - Income Limits for Assigning Cases to ITO, AC/DC


CBDT has received representations from taxpayers, especially from moffussil
areas that the existing monetary limits for assigning cases for ITOs and DCs /
ACs is causing hardship to the taxpayers, as it results in transfer of their
cases to a DC/AC who is located in a different station which increases their
cost of compliance.

The kind Board has favourably considered the matter and has fixed new monetary
limits as:

Income Declared
(Mofussil areas)
Income Declared (Metro Cities)

ITOs
ACs/DCs
ITOs
DCs/ACs

Corporate returns
Upto Rs. 20 lacs
Above Rs. 20 lacs
Upto Rs. 30 lacs
Above Rs. 30 lacs

Non-corporate returns
Upto Rs. 15 lacs
Above Rs. 15 Lacs
Upto Rs. 20 lacs
Above Rs. 20 Lacs


Metro Cities are Ahmedabad, Bangalore, Chennai, Delhi, Kolkata, Hyderabad,
Mumbai and Pune.

CBDT Instruction No. 01/2011; Dated January 31, 2011

SC: Do not drag case for yrs, go for mediation

New Delhi: The Supreme Court on Friday asked advocates to follow Mahatma Gandhi
and persuade their clients not to go in for litigation and instead resolve the
disputes through arbitration and mediation.
A bench of Justices Markandey Katju and Gyan Sudha Mishra said court cases
drag on for years ruining both parties. "Lawyers should advise their clients to
try for mediation for resolving disputes, especially where family and business
relationships are involved," it said. The bench asked two brothers, B S Krishna
Murthy and B S Nagaraj, to appear before the Bangalore mediation centre for
settlement. A few passages of Mahatma Gandhi's book, `My Experiments With
Truth', on the futility of litigation impressed the bench. TNN

After the introduction of Sec. 111-A having concessional rate of tax on STCG of 10%, lots of cases are decided in favour and against the assessees.
To resolve this controversy, why not a special bench?