The views expressed herein are personal to the writer and do not necessarily represent the views of the Bar Association

Practice Law, We Must

October 15th, 2010
Hon'ble Shri. D. Manmohan

Practice Law, We Must

Hon’ble Shri. D. Manmohan, Vice-President (Mumbai Zone)

Hon’ble Shri. D. Manmohan, practiced as a lawyer for more than 15 years before his elevation to the Bench. The author makes the impassioned plea that young lawyers should take to practicing law. He allays fear in the young minds by citing the example of Nani Palkhivala and makes the point that if one practices law with diligence and perseverance, success is guaranteed


Distinguished dignitaries on the dais, my distinguished colleague brothers of the Appellate Tribunal, distinguished invitees and my dear young law students,


I deem it a privilege to be invited as a Guest of Honour on the opening ceremony of the Moot Court Competition being held in memory of late and legendary jurist Mr. Nani Palkhivala. Mr. Patodi, sitting next to me on the dais, has just confided in me the stark reality that most of the brilliant students, produced from reputed Law Colleges – most of their representatives are participating here -, are not choosing to join the profession as Advocates; lured by the high salaries being offered to them by certain big companies/firms.


In the past few decades number of private Law Colleges have been imparting legal education and, probably to attract the students, minimum yard sticks are maintained to award marks thereby such colleges are producing large number of students who are eligible to enter the legal profession. Lawyers are the back bone of this country. Many young and eminent lawyers of the yester years are known to have taken active part in the freedom movement and one should feel proud to belong to such august body rather than being lured by the immediate gains in the form of a fixed monthly remuneration which may initially be attractive but beyond a particular stage the growth is staggered.


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Shri. M. A. Bakshi

Don’t Make CJ, High Court, President, ITAT!

Shri M. A. Bakshi, Vice President (Retd), ITAT

The author is well known for his landmark judgements, several of which have been upheld by higher courts. The author now carefully ponders over the pros and cons of the controversial provision in DTC 2010 seeking to appoint a Chief Justice of the High Court as President of the Tribunal and concludes that it is a mis-conceived provision. The author also finds fault with the hurried manner in which the change is sought to be made.

Many suggestions made by professional bodies and Industry have been found meritorious and accepted and incorporated in the recently tabled Direct Tax Code Bill 2010. However in the Direct Tax Code Bill 2010 certain provisions relating to the INCOME-TAX APPELLATE TRIBUNAL have been incorporated which were not in the earlier draft and therefore we do not have the benefit of any intelligent or meaningful debate in the hands of stake holders. The professional bodies such as trade associations, chambers of commerce and industry, Bar associations , lawyers, chartered accountants etc are yet to come out with their opinions on these provisions but I assume, considering the importance of these provisions, the Bar associations connected with ITAT at least are debating them and may come out with their view point shortly.


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Shri. K. C. Singhal

S. 14A & Rule 8D: A comprehensive analysis

Shri. K. C. Singhal, Advocate

S. 14A & Rule 8D have been the source of unending controversy. The author, a former Vice President of the Tribunal who delivered the dissenting judgement in ITO vs. Daga Capital, has studied the controversy in great depth. With his usual clarity of thinking, the author has provided valuable guidance on the prevailing legal position and as to how assessees can defend themselves from an arbitrary application of s. 14A & Rule 8D



Right from inception, the scope of section 14A of I.T. Act 1961 ( the Act) has been a subject matter of litigation between the tax payers and the tax collectors. Divergent views had been expressed by various benches of the Tribunal on this subject. In order to resolve certain controversies, special benches of the Tribunal were constituted which resolved certain disputes between the parties. Subsequently, various High Courts have also expressed there views on this subject. Some observations have also been made by the Apex Court. In this Article, my endeavour would be to highlight the findings recorded by the tribunal and various courts and to reconcile the legal position as on today along my personal views.


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The Law On Taxation Of Gifts

August 10th, 2010
Shri. K. C. Devdas

The Law On Taxation Of Gifts

CA K. C. Devdas

Clauses (v) to (viia) of s. 56(2) incorporate the law on taxation of gifts. The author, an eminent Chartered Accountant, has meticulously analyzed the provisions of law and identified numerous problems therein. Using his vast experience in the subject, the author has proposed a number of credible solutions as well.



1. An attempt is made to highlight some of the salient features of Taxability of Gifts as Income under sections 56(vii) and (viia) of the Income Tax Act, 1961 (‘the Act’) i.e., mainly gifts received after 1-10-2009.


1.1 The charging section of the Gift Tax Act, 1957 was suspended w.e.f. 1-10-98 to say that Gifts made after 1-10-98 would not be chargeable to Tax. It is a misnomer to state that the Gift Tax Act has been abolished as it is only the Charging Section which has been kept in abeyance. In short it can be revived if the Legislature deems it fit.


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Shri. Anant Pai

Analysis of four important judgements (April to June’10)

CA Anant N. Pai

No practitioner can afford to be unaware of latest judgements & whether experts view the judgement as being right or wrong. Towards that end, the author has agreed to take time out of his busy schedule to make an analysis of landmark judgements every quarter. In the third part, the author has identified four landmark judgements analyzed them with a critical eye and identified their strengths & shortcomings.



The fortunes of tax litigations can be akin to the outcomes of a war. Though elements of luck cannot be totally ruled out, the role of stratagems in shaping its outcomes can never be undermined. If a case is well pleaded or the law is ‘finely’ applied by the court – even an elephant can pass through the eye of a needle and whereas if it is not, even an ant may not so pass. An analysis of decisions can provide us valuable insights and critical inputs about the role stratagems have played in leading tax disputes to its logical ends.


In selection of important decisions for this article by the author, the criteria of ‘importance’ are the decisions in which law has been ‘finely’ applied. Further, discussion of recent important decisions on dividend stripping, 80-HHC issues, MAT etc., though widely affecting, have been avoided in this article as the same are, by now, easily accessible in popular tax journals and websites and any further discussions here would be wasteful duplication.


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Shri. K. C. Singhal

Penalty u/s 271(1)(c): A Comprehensive Analysis

Shri. K. C. Singhal, Advocate

Penalty u/s 271(1)(c) is one of the most hotly contested provisions in the Act. There has been a bewildering array of judgements from the apex court on the issue, several of them inconsistent with each other. The author, a former Vice President of the Tribunal, has used his rich experience at the Bench and the Bar to meticulously analyze the controversies in the law and provided clear-cut answers to the problems.



Requirement for "Satisfaction":


A bare look at the provisions of the section 271(1)(c) of I.T. Act 1961 ( in short ‘1961 Act) shows that satisfaction of the concerned tax authority to the effect that the assessee (in short ‘A’) has either concealed the particulars of income or furnished inaccurate particulars of income is the condition precedent for levy of penalty and such satisfaction must be arrived at in the course of any proceeding under the Act. This view was taken by the apex court long back in the case of CIT vs. Angidi Chettiar 44 ITR 739 while construing the similar provisions of section 28(1)(c) of I.T. Act 1922 (in short ‘1922 Act) and reiterated in the case of D.M. Manasvi 86 ITR 557 (SC) while construing the provisions of section 271(1)(c) of 1961 Act. Full Bench of Punjab & Haryana High court, in the case of CIT vs. Mohinder Lal 168 ITR 101, held that it is the satisfaction of the ITO in the course of assessment proceedings regarding the concealment of income which constitutes the basis and foundation of the proceedings for levy of penalty. Thus, this condition must be satisfied.


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Hon'ble Shri. R. V. Easwar

Effective Dispensation Of Justice: Role Of The Tribunal

Hon’ble Shri. R. V. Easwar, President

The new President of the Tribunal does some plain-talking on a variety of issues facing the Tribunal today such as Judicial Accountability, Ethics, Delay in Disposal of Matters, Complicated Procedure and Criticism of judgements. While the Learned Judge provides a number of invaluable suggestions, he requests readers to think and come up with suggestions on how the working of the Tribunal can be improved.


 I am grateful for the opportunity so kindly give to me by the organizers of the conference to speak on the subject “Effective dispensation of Justice” It is an onerous task and I stand before you in all humility shamefully aware of my limitation and lack of credentials to speak on the subject, and my only hope is that I will be excused for carrying coal to Newcastle.


Dharma & Justice


If ever there was a place on earth in which justice and fair play thrived without any threat, and was administered with utmost efficacy, it was our own country since time immemorial our ancestors adopted the principle of “dharma” in all their thoughts, words and deeds. Now the word “dharma” is not the same thing as “Justice” and this is quite a complicated subject, beyond the scope of the present speech and much more beyond the reach of intellectual faculties of the speaker but for the present purposes I am assuming that both words denote the same concept Justice Rama Jois in his book on legal and constitutional History of India (1984 ed) say that word "dharma” has no corresponding word in any other language and that it can only be explained, not defined Justice corresponds more with “nyaya” which in one of the several shades of meaning of the word “dharma”. Thus, loosely “dharma” can be taken to conform to what is referred to as justice in the Anglo-Saxon jurisprudence. It is necessary for all of us to keep this in mind.


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Shri. Narayan Jain & Shri. Deepak Jain

Law on Taxability of Gifts: A Comprehensive Analysis

Narayan Jain & Deepak Jain, Advocates

The law on taxation of gifts as embodied in clauses (v) to (viia) of s. 56(2) has wide ramifications and given rise to numerous controversies. The authors have meticulously analyzed the law, identified the problem areas and provided comprehensive answers, supported by extensive reference to landmark judgements.



1. Hitherto provisions relating to gifts:


Up to September, 1998 any amount received without consideration was taxable as gift under Gift Tax Act. From October, 1998 to August, 2004 any amount received as gift or without consideration no tax was leviable either for giver or receiver.


Thereafter, in Section 56(2), a Clause (v) was inserted vide Finance (No.2) Act, 2004 to provide that a sum of money exceeding Rs.25,000 received by an individual or HUF from any person after 01.09.2004 without consideration will be deemed to be income. In this provision amount was chargeable only if a single receipt was more than Rs.25,000. Hence, gifts became legalized as before this it was always debatable and issue before A.O. was that whether particular amount is gift or unexplained credit by the assessee in the form of gift. Such sums of money received as gifts, other than those in circumstances covered in exceptions in section 56(2), are to be treated as income from other sources. Such sum will not be treated as income from other sources if such receipt falls in those exceptions.


Amount received from any relative, as defined in explanation to section 56(2)(v)/(vi) is also not chargeable to tax.


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Shri. Deepak Jain

Interpretation of Statutes: A Treatise

Deepak Jain LLM

The importance of ‘Interpretation of statutes’ cannot be overemphasized because a matter is won or lost depending on the ‘interpretation’ placed by the Court on the law. The author has done deep research into the subject and explained the numerous concepts therein in a crisp and clear manner. The author has cited numerous landmark judgements to support the various important concepts.



1. Interpretation of statutes – Importance of subject For understanding the provisions of a statute, knowledge to apply the ‘correct’ interpretation, is an essential prerequisite.


In the case of taxing statutes, as in different type of statutes, there are certain bedrock principles on which the interpretation or construction of the particular statute is done by the Courts and Tribunals; and the tax practitioners are required to have the knowledge of these basics in their catalogue to understand the statute and implications of its provisions. Some important aspects relating to ‘Interpretation’ of Taxing Statutes are dealt herein.


2. ‘Interpretation’ and ‘Construction’ – Meaning of


Statutes are embodiments of authoritative formulae and the very words which are used constitute part of law. The interpretation or construction means the process by which the Courts seek to ascertain the intent of the Legislature through the medium of the authoritative form in which it is expressed. The law is deemed to be what the Court interprets it to be. The very concept of ‘interpretation’ connotes the introduction of elements which are necessarily extrinsic to the words in the statute. Though the words ‘interpretation’ and ‘construction’ are used interchangeably, the idea is somewhat different. The term ‘construction’ has been explained in CWT vs. Hashmatunnisa Begum [1989] 176 ITR 98 (SC) to mean that something more is being got out in the elucidation of the subject-matter than can be got by strict interpretation of the words used. Judges have set themselves in this branch of the law to try to frame the law as they would like to have it.


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Hon'ble Chief Justice of India Shri. S. H. Kapadia

Why tax reforms fail to meet their objective

Hon’ble Shri. S. H. Kapadia, Chief Justice of India

The Learned Judge gives ample proof of why he is regarded as a finance whiz. He speaks his mind out on a wide range of drawbacks plaguing the economy. He minces no words in criticizing the tax reforms proposed by the Government and calls them “cosmetic” and “meaningless” for not addressing the root causes of the problems. Using his immense experience, he makes wide ranging suggestions on how the economy can be set right.


Shri Pranay Marfatia, Chairman of All India Federation of Tax Practitioners, Western Zone, Shri N. M. Ranka, President, of the Federation, Shri K. Shivaram, Deputy President Shri M. K. Chaturvedi, Vice President, ITAT, esteemed personalities on the dais, ladies and gentlemen. I feel honoured and privileged for having been invited to inaugurate the 12th National Convention in this great commercial city of Mumbai, particularly when such Conventions and Seminars are held when Budget Preparation is in the offing and particularly when as of date, there is throughout the country, great enthusiastic response to the Report of the Task Force on Direct & Indirect Taxes.




The topic from “Tax Evolution to Economic Revolution” is intricate. Economic Revolution is the goal, whereas Tax Evolution is one of the means to achieve that goal. I am not a certified Economist. However, as a citizen of this country, I would like India to be known as a secure Nation. As a citizen, I am concerned with GDP growth. We must discover ways and means to achieve GDP growth at the rate of 8% p.a. Too many young peoples’ future and too many poor peoples’ hopes rest on this achivement.


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