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S. 147: A Treatise On The Law Of Reopening Of Assessments

CA Vidhan Surana & CA Sunil Maloo

S. 147: A Treatise On The Law Of Reopening Of Assessments

CA Vidhan Surana & CA Sunil Maloo
S. 147 confers wide powers on the AO to reopen completed assessments and bring to tax income which has escaped assessment. However, there are several technical rules that have to complied with by the AO. The authors have carefully studied the entire law on the subject and presented it in a clear and succinct manner so that it can be ensured that the reopening is as per the law

The assessing officer is empowered under section 147 of the Income Tax Act, 1961 to assess or reassess the income escaping assessment. This is popularly known as ‘reopening of the assessment’.

In following cases, it would be deemed that income chargeable to tax has escaped assessment:

– Where no return is furnished for the relevant A.Y.

– Where return has been furnished but assessment is not done and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return;

– where the Assessee has failed to furnish a report in respect of any international transaction which he was so required under  section 92E

– where an assessment has been made, but—

– income chargeable to tax has been underassessed ; or

– such income has been assessed at too low a rate ; or

– such income has been made subject of excessive relief under this Act ; or

– excessive loss or depreciation allowance or any other allowance under this Act has been computed.

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The Duties And Accountability Of Lawyers

Sohrab Erach Dastur

The Duties And Accountability Of Lawyers

Sohrab Erach Dastur, Senior Advocate
Eminent Jurist Soli Dastur draws upon his rich experience of the past five decades to lay down the duties and accountability of lawyers and how they should deal with several ethical problems and areas of conflict that arise in day-to-day practice. With his usual candour and clarity of expression, he examines the issues threadbare and provides invaluable and authoritative guidance on what they should do in difficult situations so as to keep their professional integrity intact at all times. Though written in the context of lawyers, the article provides guidance to professionals in all fields

A story going the rounds is that the Chairman of a company after referring to the next speaker as a lawyer added “he is nevertheless a nice person.” But is the jibe deserved? Before passing judgement it would be appropriate to consider the duties a lawyer owes to his client, to his profession and to the Court, his accountability therefor and the conflicts which arise in discharging the separate and distinct duties. Recently, the emphasis has shifted to the lawyer’s duty to Society. Though one cannot ignore this duty it is a duty subordinate to his primary duties of accountability to his client, profession and to the Court. The meticulous performance of these duties with care and precision is itself the performance of his duty to Society. Though not normally referred to, there is a fifth and equally – if not more – important duty – his duty to himself.

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S. 263: Guide To The Law On Revision Of Assessments

CA Rahul Sarda

S. 263: Guide To The Law On Revision Of Assessments

CA Rahul Sarda
Section 263 of the Income-tax Act, 1961 confers wide powers on the Commissioner to revise any assessment which is “erroneous and prejudicial to the interests of the revenue”. While the section is widely worded, Courts have read in a number of checks and balances to ensure that the said power is not abused by the Commissioner. The author has carefully analyzed the entire law on the subject and identified all the core legal principles

Section 263 of the Income-tax Act, 1961 (the “Act”) confers the power upon the Commissioner to call for and examine the records of a proceeding under the Act and revise any order if he considers the same to be erroneous and prejudicial to the interests of the revenue. These are wide powers and have been subject to reasonable checks and balances to prevent their arbitrary use. For example, requirement of notice, opportunity of hearing etc. Section 263 of the current Act corresponds to section 33B of the Income-tax Act, 1922 and has been on the statute book since 1961, albeit with certain modifications. The law of section 263 has been comprehensively laid down by the judicial authorities in a number of decisions. The following paragraphs contain a gist of the law on the subject.

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S. 56(2)(vii)(b): Controversies Arising After Amendment By Finance Act 2013

Dr.  Raj K. Agarwal & Dr.  Rakesh Gupta

S. 56(2)(vii)(b): Controversies Arising After Amendment By FA 2013

Dr. (CA) Raj K. Agarwal & Dr. Rakesh Gupta, Advocate
S. 56(2)(vii)(b), as substituted by the Finance Act 2013, provides that if immovable property is transferred for a consideration which is less than the stamp duty value, the difference is assessable as income in the transferee’s hands. The authors have carefully studied this provision and raised several thought-proving questions as to its implications in the hands of the transferor and the transferee

Finance Act, 2013 has substituted clause (b) of section 56(2)(vii) w.e.f. 1.4.2014 providing, inter alia, that where an individual or Hindu Undivided Family receives, in any previous year, from any person or persons any immovable property-

(i) Without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;

(ii) For a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration

shall be chargeable to income tax under the head “Income from Other Sources”.

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How To Ensure Expenditure On Director’s Relative’s Education Is Deductible

CA-Somil-Agarwal

How To Ensure Expenditure On Director’s Relative’s Education Is Deductible

CA Somil Agarwal
There are several judgements on the question of deductibility of expenditure incurred on education of a director’s relative. While some have held the expenditure to be incurred for business purposes, others have held it to be in the nature of personal expenditure. The author has carefully analyzed the judgements and culled out the core principles that need to be borne in mind to ensure that the expenditure is deductible

Section 37(1) of the Income Tax Act, 1961 allows such expenses against the taxable business profits, which inter alia are not personal expenses and are incurred wholly and exclusively for the purpose of business. There are certain types of expenses which on the face of it appear to be personal expense or at least an expense not incurred wholly and exclusively for the purpose of business. Such expenses invite incisive inquiry during the course of assessment proceeding. One such expense is the expense incurred by an assessee carrying on the business, on the higher education of the son(s)/daughter(s) of the directors/partners/proprietor and which is claimed as deduction by that assessee against the taxable business profits. Attempt of the Revenue remains to find holes in the explanation furnished by the assessee during the course of assessment proceeding showing the business nexus of the said expenditure and to disallow it. Once the expenditure so claimed is disallowed in assessment, matter is taken into appeals at various stages with all sorts of uncertainties creeping in. In fact such claim is a sensitive claim from the stand point of the Revenue and if such claim is disallowed, such situation is fraught with severe consequences for the assessee.

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Analysis Of Two Important Judgements (April – May 2013)

Shri. Anant Pai

Analysis Of Two Important Judgements (April – May 2013)

CA Anant N. Pai
No practitioner can afford to be unaware of the 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 this part, the author has identified two landmark judgements analyzed them with a critical eye and identified their strengths & shortcomings

1. Penalty u/s 271 (1)(c) cannot be levied in respect of an addition made u/s 50C – Calcutta High Court decision in the case of CIT vs. Madan Theatres Ltd. (www.itatonline.org).

The facts of this case were that the assessee sold property for a consideration of Rs. 2.50 crore. However, for the purpose of stamp duty, the property was valued at Rs. 5.19 crore and stamp duty was paid on that value. In its return of income, the assessee declared capital gains on the basis of the sale consideration of Rs. 2.50 crore. The Assessing Officer, invoking the provisions of section 50C, held that the transfer consideration has to be taken at Rs. 5.19 crore and computed the assessee’s capital gains on this basis. The Assessing Officer imposed penalty u/s 271(1)(c) in respect of the capital gains’ income enhanced in the assessment. The penalty was however deleted by the Commissioner (Appeals) and the Tribunal.

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Is There No Respite From The Dept’s TDS And Refund Harassment?

Subash-Agarwal

Is There No Respite From The Dept’s TDS And Refund Harassment?

Subash Agarwal, Advocate
The author is irked by the fact that despite severe strictures and clear cut directions by the High Court, the CBDT is not taking any steps to address the problem of non-grant of TDS credit in a case where the deductor/ payer is at fault. He cites several judgements to emphasize that in such cases, the taxpayer/ recipient cannot be denied TDS credit and urges the CBDT to speedily issue suitable directions in the matter

Recently, Hon’ble Delhi High Court was seized of, inter alia, the matter under consideration in a case where one Sri Anand Prakash, FCA addressed a letter to the Hon’ble High Court raising various issues facing the helpless assessees and claimed that because of the fault of the department, assessees are being harassed. The Hon’ble High Court took judicial notice of the letter, converted it into a PIL and made CBDT a party. The said case has now been reported as Court On Its Own Motion vs. CIT 352 ITR 273 (Del.)

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Vodafone Is A Tax Dodger – Don’t Spare It: T. K. Arun

T_K_Arun

Vodafone Is A Tax Dodger – Don’t Spare It: T. K. Arun

Editorial Team
The author, an eminent columnist, is irked that instead of taking steps to recover the tax of Rs. 19,000 crore that Vodafone sought to evade by adopting unfair means, the Government is actually thinking of sparing Vodafone of that liability. He argues that the Government is acting out of the misplaced fear that being firm with tax dodgers will prove detrimental to the Country. Instead, the Country will benefit if tax is recovered from Vodafone, he says

The controversy over whether the Government should spare Vodafone of the tax of Rs. 19,000 crore that the retrospective amendment seeks to recover from it has polarized the intelligentsia. While, on the one hand, Ex Chief Justice S. H. Kapadia has spoken out in favour of Vodafone and suggested that if the Government is harsh on Vodafone, thousands of jobs could be jeopardized, on the other hand, (late) Ex Chief Justice J. S. Verma had expressed the view that Vodafone had attempted to evade taxes and should not be spared.

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Spare Vodafone – Save Thousands of Jobs: Ex-Chief Justice Kapadia

Ex Chief Justice S. H. Kapadia

Spare Vodafone – Save Thousands of Jobs: Ex-Chief Justice Kapadia

Editorial Team
Ex-Chief Justice of India S. H. Kapadia is a man of immense wisdom and learning and is not afraid of speaking his mind. He comes clear on the Vodafone amnesty controversy, GAAR and the problems plaguing the Indian tax administration today and offers valuable suggestions on how to resolve them

Vodafone is destined to be a saga of never-ending controversy. The raging controversy at the moment is whether the newly appointed Law Minister Kapil Sibal was justified in overruling the decision of his predecessor Ashvini Kumar on the grant of amnesty to Vodafone over its’ tax liability of Rs. 19,000 crore.

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Get Ready For Budget 2013 – Chidu Style

P. Chidambaram

Get Ready For Budget 2013 – Chidu Style

Editorial Team
Hon’ble Finance Minister Shri. P. Chidambaram deserves to be complimented for his sensitive and proactive stance towards tax payers. Being a top-notch professional himself, he is reputed to carefully go through the representations sent to him by professional bodies and to implement most of them despite the economic and political compulsions that come in the way. We are confident that he will not disappoint this time

It is worth appreciating that the tax professionals send the pre-budget representations very objectively for the consideration of Honourable Finance Minister, however the Honourable Finance Minster or his team to the reasons best known to them does not interact or send invitation to the tax professional organizations while in the process of preparing the Finance Bill.

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