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In spite of several case laws, many orders are passed holding otherwise

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

repoeted at  333 ITR  99 Bombay HC

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)

[2011] 10 taxmann.com 206 (Gau. - ITAT)(TM)

IN THE ITAT GAUHATI BENCH (THIRD MEMBER)

Smt. Madhu Raitani

v.

Assistant Commissioner of Income-tax*, Circle-3

G.D. AGRAWAL, VICE-PRESIDENT
D.K. TYAGI, JUDICIAL MEMBER (AS A THIRD MEMBER)
B.R. KAUSHIK, ACCOUNTANT MEMBER
AND HEMANT SAUSARKAR, JUDICIAL MEMBER

IT APPEAL NOS. 51&104 (GAUHATI) OF 2006
[ASSESSMENT YEAR 2002-03]
OCTOBER 7, 2010
Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 2002-03
- Whether existence of books of account maintained by assessee is a condition
precedent for addition under section 68 - Held, yes - Whether, therefore, where
assessee had not maintained books of account, there was no legal scope to
intervene provisions of section 68 and as such, addition made on such premise
was to be deleted - Held, yes

Section 68, of the Income-tax Act, 1961 - Cash credits - Assessment year 2002-03
- During relevant assessment year, assessee received certain amount of gifts
from seven persons by account payee cheques - Assessing Officer disbelieved
gifts received by assessee from aforesaid persons - According to Assessing
Officer, cash was deposited into respective bank accounts of aforesaid persons
before issuing cheques to assessee and alleged donors were not capable of making
such huge gifts to assessee - Assessing Officer, thus, added back entire amount
of gift as assessee's undisclosed income - Commissioner (Appeals) confirmed
addition - On instant appeal, it was seen that assessee had furnished copies of
acknowledgement of income-tax returns for assessment year 2002-03 of all donors
along with challans evidencing payments of tax, computation of income, balance
sheet, declaration confirming gift, etc., in support of her getting gifts from
respective donors - It was also noted that revenue could not bring any
conclusive evidence to establish that donors from whom gifts were received were
bogus and assessee's own undisclosed, money came back to her en-route bogus
gifts - Whether, on facts, lower authorities were not justified in holding that
gifts were undisclosed income of assessee - Held, yes

Ombudsman to regulate law practice in the offing
Abantika Ghosh, TNN | May 21, 2011, 03.50am IST

Tags:ministry of law and justice|Legal Practitioners Bill 2010|complaints against lawyersNEW DELHI: If your lawyer is taking you for a ride, you can now look beyond the Bar Council for redressal of grievances.

The ministry of law and justice is working on a Bill that envisages an ombudsman to look into complaints against lawyers and a legal services board that will regulate law practice in the country.

The draft of the Legal Practitioners (Regulation and Maintenance of Standards in Profession, Protecting the Interest of Clients and Promoting the Rule of Law) Bill, 2010, is ready, and the ministry has sought comments from various stakeholders ahead of its finalization.

The Act aims at "encouraging an independent, strong, diverse and effective legal profession with ethical obligations and with a strong sense of duty towards the courts and tribunals where they appear."

A ministry official said, "Now, complaints against lawyers are taken up by Bar Councils, but clients are not always satisfied by outcome. Often lay people have a feeling that Bar Councils work for lawyers' interest rather than clients, which is where ombudsman and legal services board come in. But, this Act doesn't aim to make the Bar Councils redundant as the board will act through them, and they would have the option of rejecting the ombudsman's report. It seeks to make an effective framework that protects the interests of both clients and legal professionals, and promotes ethical standards of legal practice."

The Bill lays down the duty of legal professionals to provide honest and true legal advice to consumers/clients. "Every legal professional shall provide full information regarding the legal position to consumer / client relating his case. The services of the legal professional shall be in such a manner as to give an opportunity to the consumer / client to make informed choices about the quality, access and value of the legal services he requires," the draft states.

The legal services board, which will enforce the regulatory functions prescribed in the Act, will constitute a chairman, member-secretary and members from the legal fraternity. The board, via Bar Councils, will levy an Rs 25 contribution from a legal professional. The board will also educate and train legal professionals.

The ombudsman, to be appointed by the board, will hear complaints against lawyers, and then submit a report to the Bar Council's disciplinary committee. There is also a provision for providing financial aid to impoverished clients.

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

Tata Communications Ltd vs. ACIT (ITAT Mumbai – Special Bench)
(



Despite Third Proviso to s. 254(2A), Tribunal has power to extend stay beyond
365 days if delay not attributable to assessee