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DTC Bill 2010: Anomalies in Charities Law & Suggestions

Shri. M. A. Bakshi

DTC Bill 2010: Anomalies in Charities Law & Suggestions

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

The author, using his vast experience as Lawyer & Judge, has not only meticulously & critically examined the provisions of the Direct Tax Code Bill relating to charities and identified several anomalies and loopholes therein, but also made several valuable suggestions on how the law should be amended to make it just & effective.

Suggestion No. 1:-

Charitable trust/institutions carrying out “any other object of public utility” not to carry on any business etc.

It would be relevant to mention that under the Income Tax Act, 1961 following are the broad principles of law relating to taxation of charitable/religious trusts/institutions:

Income derived from the property held under Trust wholly for charitable or religious purposes is exempt from taxation subject to fulfillment of certain conditions laid down under the Act. The relevant provisions are contained in Section 11 to 13. Section 2 (15) of the Income Tax Act, 1961 is also relevant as it defines” charitable purposes.”

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Cross Border Business Reorganization: Indian Law Implications

Aniket Singhania & Vaibhav Shukla

Cross Border Business Reorganization: Indian Law Implications

Aniket Singhania & Vaibhav Shukla

Cross-Border transactions like Mergers, Acquisition, Joint Venture, Takeovers and Slump sale have serious legal implications. The authors have, in this succinct analysis, identified all the legal implications that one must be aware of whilst effecting cross-border transactions and also cited landmark judgements in support of their analysis

Economic Liberalization in India” started from 1991 which aimed at integration of national economy with “market oriented globalised economy”. The real opening of the economy started with the industrial policy 1991 whereby “continuity with change” was emphasized and main thrust was on relaxation in industrial licensing, foreign investments, transfer of foreign technology, joint ventures etc.

 

Historically, capital has flown to countries offering better returns, protection and certainty in terms of policies and regulations. Recently, emerging markets are not just experiencing outbound deals; there is also a lot of hindrance by western firms in acquiring targets in these markets. fnThis will be the century of the emerging market”, Goldman Sachs, Chief Financial Officer, David Viniar, told investors. The whole concatenation depicting a shift of economic activities and capital flow constitutes the much talked about abstraction known as “Globalization”. Globalization is one of the serious challenges for tax policy makers, as the consequences of globalization are not restricted by the physical boundaries of countries and domestic legislation. With globalization Indian companies are looking forward to drive cost lower, innovate speedily and increase their international presence, which may help insulate from the vagaries of domestic market and to spread the risk.

 

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The Art Of Advocacy

Hon'ble Shri. R. V. Easwar

The Art Of Advocacy

Hon’ble Shri. R. V. Easwar, President

Hon’ble Shri. R. V. Easwar, qualified as a CA and a lawyer, was a very successful practicing lawyer before his elevation to the Bench. The author uses his unique experience at the Bar and the Bench and draws on the example of Nani Palkhivala and other stalwarts at the Bar to give some inspirational tips on the art of advocacy

Dr. Smt. Kagalkar, Principal of the GLC, Dr. Shivaram, Mr. Arun Sathe, Mr. Patodi, Mr. Dinesh Vyas, Mr. Ranka, Mr. Manmohan, the Vice-President of the Tribunal, my esteemed colleagues, participants in the moot court competition and students of law.

I consider it to be a privilege to deliver the inaugural address of the 7th Palkhivala Moot Court Competition to be held from tomorrow. I am grateful for the opportunity.

It is a fitting tribute to the memory of the legendary Nani Palkhivala that a Moot Court Competition should be held in his city for the benefit of students of law. Though these days there are several avenues open to the new entrants to the legal profession, lawyering as it is traditionally and popularly known has always laid emphasis on the performance in courts which field is now referred to as “litigation”. Dictionaries define an “advocate” as “one who pleads the cause of another, generally in courts of law”. After joining the legal profession, one is expected to take up the client’s brief and plead for him in the courts and the Tribunals. This involves arguments before the judges, legal research, a thorough knowledge of the facts of the case, the law applicable, the precedents bearing on the case, good anticipation of the arguments of the opponent, a deep insight into the strengths and weakness of one’s case and the ability to think on one’s feet. In addition, you are expected to be prepared for the questions coming from the bench. All these are collectively known as skills of advocacy. Nani Palkhivala was widely considered to be the best in court performance and advocacy and every one knows that Justice H. R. Khanna said that the arguments of Mr. Palkhivala in the Supreme Court before the full court of 13 judges constituted to review the Keshavananda Bharati’s case were “rarely equaled and seldom surpassed” in the history of the Supreme Court. A Moot Court Competition affords a platform where you as students of law start honing your skills of advocacy.

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Practice Law, We Must

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

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

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

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

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

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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Effective Dispensation Of Justice: Role Of The Tribunal

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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