Foreign law firms or foreign lawyers cannot practice the profession of law in India either on the litigation or non-litigation side, unless they fulfil the requirement of the Advocates Act, 1961 and the Bar Council of India Rules. As rightly held in Lawyers Collective vs. Bar Council 112 BLR 32 establishing liaison office in India by the foreign law firm and rendering liaisoning activities is not permissible. However, given that the foreign law firms have to give legal advise to their clients in India regarding foreign law or their own system of law and on diverse international legal issues, there can be no bar in their visiting India for a temporary period on a "fly in and fly out" basis, for such purpose. Also, having regard to the aim and object of the International Commercial Arbitration introduced in the Arbitration and Conciliation Act, 1996, foreign lawyers cannot be debarred to come to India and conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration (Vodafone International Holdings B.V referred)

The clear legislative intent of s. 36(1)(vii) & 36(1)(viia) together with the circulars issued by the CBDT demonstrate that the deduction on account of provision for bad and doubtful debts u/s 36(1)(viia) is distinct and independent of s. 36(1)(vii) relating to allowance of bad debts. The legislative intent was to encourage rural advances and the making of provisions for bad debts in relation to such rural branches. The functioning of such banks is such that the rural branches were practically treated as a distinct business, though ultimately these advances would form part of the books of accounts of the head office. An interpretation which serves the legislative object and intent is to be preferred rather than one which subverts the same. The deduction u/s 36(1)(vii) cannot be negated by reading into it the limitations of s. 36(1)(viia) as it would frustrate the object of granting such deductions. The Revenue's argument that this would lead to double deduction is not correct in view of the Proviso to s. 36(1)(vii) which provides that in respect of rural advances, the deduction on account of the actual write off of bad debts would be limited to excess of the amount written off over the amount of the provision which had already been allowed u/s 36(1) (viia) (Southern Technologies 320 ITR 577 (SC) & Vijaya Bank 323 ITR 166 (SC) referred)

S. 271 AAA makes a paradigm shift on the imposition of penalty in respect of unaccounted income unearthed as a result of search operation. Unlike s. 271(1)(c), s. 271 AAA penalty is imposable on undisclosed income without "concealment" or "furnishing inaccurate particulars" having to be shown. S. 271AAA(2) grants immunity from penalty if (i) in the s. 132(4) statement, the undisclosed income is admitted and the manner of deriving it is specified; (ii) the manner in which the undisclosed income was derived is substantiated; and (iii) the tax & interest on the undisclosed income is paid. While payment of taxes & interest is a condition precedent for availing immunity u/s 271AAA(2), there is no time limit for such payment. In the absence of a time limit for payment of tax & interest in the statute, the AO's stand that it ought to have been paid at the time of filing the ROI is not acceptable. Further, though in the context of Explanation 5 to s. 271(1)(c) it has been held in Mahendra Shah 299 ITR 305 (Guj) that the conclusion of the assessment proceedings is the outer limit for making payment of tax & interest, that was in the context of s. 271(1)(c) which required the AO to record his satisfaction in the course of the assessment proceedings itself. As there is no such requirement in s. 271 AAA, there is no outer limit for payment of the due tax & interest. On facts, as the assessee had paid the due tax & interest within the time specified in the s. 156 notice of demand, s. 271AAA penalty was not imposable

Vide Notification dated 21.02.2012 issued u/s 252 of the Income Tax Act, 1961, the Central Government has appointed the following persons as Judicial Member / Accountant Member of the Income Tax Appellate Tribunal with effect from the dates as mentioned against their names and until further orders. Consequent to their joining as Members, the said persons have been posted to the paces mentioned against their names vide Order dated 21.02.2012

In February 2012, the Institute of Chartered Accountants of India (ICAI) has issued three important Guidance Notes that have considerable relevance for income-tax practitioners. For the importance of such Guidance Notes in income-tax matters see CIT vs. Virtual Soft Systems Ltd (Delhi High Court)

NOTIFICATION NO 9/2012, Dated: February 17, 2012   In exercise of the power conferred by sub-section (IC) of section 139 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby exempts the following class of persons, subject to the conditions specified hereinafter, from the requirement of furnishing a return of income under sub-section [...]

In Vodafone International Holdings B.V. vs. UOI the Supreme Court has laid down several important and far-reaching principles of law on tax planning vs. tax avoidance, interpretation of s. 9, applicability of s. 163, TDS obligations u/s 195, etc. Our expert editorial team has carefully analyzed the entire judgement and identified all the core principles therein

The authors have compiled a list of the most-important judgements on the taxation of real estate development contracts. The article will prove invaluable to busy professionals who like having access to important case laws at their finger tips

In Reuters, the Tribunal held that a dependent agent would be a “Permanent Establishment” even if it did not have the power to conclude contracts on behalf of the enterprise. The author, a former Vice-President of the Tribunal & now a practicing advocate, argues that this verdict is not correct

Its' that time of the year when Tax Officers across the Country go into a frenzy to collect taxes by fair or foul means. And with the CBDT Chairman's brazen promise to link promotions and postings to the quantum of tax recovered, it will be a no-holds barred blood fest between the assessees and the Tax department apprehends the author. The absence of an accountability mechanism to punish the Officer in case the tax demands are held to be untenable means that there is no deterrent to prevent frivolous high-pitched assessments muses the author

On the occasion of the "Foundation Day" of the Tribunal, the author ponders over what can be done to improve the functioning of the Tribunal. Using his vast experience, he makes a check-list of the known problem areas which invariably result in adjournments & delays. The author implores professionals to be proactive in ensuring that speedy justice is delivered to the assessees. The author also gently reminds the Hon'ble Members of the immense power vested in them to do justice to the parties

The author goes ballistic over the Rolls Royce Plc vs. DDIT case and claims that Rolls Royce's “timid surrender” against the damning findings of the AO proves that even marquee companies like Rolls Royce are not averse to pinching a few dollars from the exchequer of third world countries if they think nobody's looking. Rolls-Royce must be prosecuted for tax fraud demands the author

Vide Notification dated 21.02.2012 issued u/s 252 of the Income Tax Act, 1961, the Central Government has appointed the following persons as Judicial Member / Accountant Member of the Income Tax Appellate Tribunal with effect from the dates as mentioned against their names and until further orders. Consequent to their joining as Members, the said persons have been posted to the paces mentioned against their names vide Order dated 21.02.2012

Foreign law firms or foreign lawyers cannot practice the profession of law in India either on the litigation or non-litigation side, unless they fulfil the requirement of the Advocates Act, 1961 and the Bar Council of India Rules. As rightly held in Lawyers Collective vs. Bar Council 112 BLR 32 establishing liaison office in India by the foreign law firm and rendering liaisoning activities is not permissible. However, given that the foreign law firms have to give legal advise to their clients in India regarding foreign law or their own system of law and on diverse international legal issues, there can be no bar in their visiting India for a temporary period on a "fly in and fly out" basis, for such purpose. Also, having regard to the aim and object of the International Commercial Arbitration introduced in the Arbitration and Conciliation Act, 1996, foreign lawyers cannot be debarred to come to India and conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration (Vodafone International Holdings B.V referred)

The clear legislative intent of s. 36(1)(vii) & 36(1)(viia) together with the circulars issued by the CBDT demonstrate that the deduction on account of provision for bad and doubtful debts u/s 36(1)(viia) is distinct and independent of s. 36(1)(vii) relating to allowance of bad debts. The legislative intent was to encourage rural advances and the making of provisions for bad debts in relation to such rural branches. The functioning of such banks is such that the rural branches were practically treated as a distinct business, though ultimately these advances would form part of the books of accounts of the head office. An interpretation which serves the legislative object and intent is to be preferred rather than one which subverts the same. The deduction u/s 36(1)(vii) cannot be negated by reading into it the limitations of s. 36(1)(viia) as it would frustrate the object of granting such deductions. The Revenue's argument that this would lead to double deduction is not correct in view of the Proviso to s. 36(1)(vii) which provides that in respect of rural advances, the deduction on account of the actual write off of bad debts would be limited to excess of the amount written off over the amount of the provision which had already been allowed u/s 36(1) (viia) (Southern Technologies 320 ITR 577 (SC) & Vijaya Bank 323 ITR 166 (SC) referred)

In February 2012, the Institute of Chartered Accountants of India (ICAI) has issued three important Guidance Notes that have considerable relevance for income-tax practitioners. For the importance of such Guidance Notes in income-tax matters see CIT vs. Virtual Soft Systems Ltd (Delhi High Court)

S. 271 AAA makes a paradigm shift on the imposition of penalty in respect of unaccounted income unearthed as a result of search operation. Unlike s. 271(1)(c), s. 271 AAA penalty is imposable on undisclosed income without "concealment" or "furnishing inaccurate particulars" having to be shown. S. 271AAA(2) grants immunity from penalty if (i) in the s. 132(4) statement, the undisclosed income is admitted and the manner of deriving it is specified; (ii) the manner in which the undisclosed income was derived is substantiated; and (iii) the tax & interest on the undisclosed income is paid. While payment of taxes & interest is a condition precedent for availing immunity u/s 271AAA(2), there is no time limit for such payment. In the absence of a time limit for payment of tax & interest in the statute, the AO's stand that it ought to have been paid at the time of filing the ROI is not acceptable. Further, though in the context of Explanation 5 to s. 271(1)(c) it has been held in Mahendra Shah 299 ITR 305 (Guj) that the conclusion of the assessment proceedings is the outer limit for making payment of tax & interest, that was in the context of s. 271(1)(c) which required the AO to record his satisfaction in the course of the assessment proceedings itself. As there is no such requirement in s. 271 AAA, there is no outer limit for payment of the due tax & interest. On facts, as the assessee had paid the due tax & interest within the time specified in the s. 156 notice of demand, s. 271AAA penalty was not imposable