Chief Justice F. I. Rebello

The ITAT Bar Association organized a felicitation function on 24th August 2010 in honour of Justice F. I. Rebello on his elevation as Chief Justice of the Allahabad High Court.

The occasion was graced by the Hon’ble Justice V. C. Daga, Hon’ble Justice Dr. D.Y. Chandrachud, Hon’ble Justice Sawant, Hon’ble President of the ITAT Shri. R.V Easwar, Hon’ble Vice President Shri. D.M. Manmohan. Other Hon’ble Members & dignitaries also graced the function.

On behalf of the ITAT Bar Association, Shri DIneh Vyas, Sr. Advocate, President of the Bar Association, whole-heartedly praised the contribution of Justice Rebello for delivering several land mark judgements in taxation and other fields. The contribution of Justice Rebello in reducing the pendency of matters in the High Court was also highly appreciated. Justice Rebello has disposed of 7476 matters in 180 working days which amounts to an average of 180 judgements per day! (source AIFTP Journal April 2008 page 50). This has helped the Court to reduce the pendency in tax matters.

In return, Justice Rebello was appreciative of the contribution of the tax bar for helping the Court.

All present on the occasion wished his lordship all success as Chief Justice of the Allahabad High court.

A few photographs taken on the occasion are here.

In CIT vs. Samsung Electronics 320 ITR 209, the Karnataka High Court held that u/s 195 the payer was not entitled to consider whether the payment was chargeable to tax in the hands of the non-resident recipient or not.

A batch of appeals challenging the said judgement was heard by a Supreme Court Bench of the Hon’ble Chief Justice S. H. Kapadia and Hon’ble Mr. Justice K. S. Radhakrishnan. After extensive hearing, judgement was reserved today (19.8.2010).

The assessees were represented by S/ Shri. F. S. Nariman, Harish Salve, S. Ganesh & M. S. Syali, Sr. Advocates while the department was represented by Shri. Vivek K. Tankha, Addl. Solicitor General.

The sitting list and assignment of Judicial Work on the Original side of the Bombay High Court on and from Monday, the 23rd August 2010 until further orders will be as under:

The Bombay High Court today (12.8.2010) pronounced judgement in Godrej & Boyce vs. DCIT, the lead matter challenging the judgement of the Special Bench of the Tribunal in ITO vs. Daga Capital 117 ITD 169 on the applicability of s. 14A & Rule 8D.

The core aspects of the judgement are the following:

(a) The argument that s. 14A does not apply to shares and units because (i) the income there from is not “tax-free” in view of the ‘dividend distribution tax’ paid by the payer & (ii) the potentiality of taxable income arising on sale thereof is not acceptable because the dividend distribution tax is paid by the company u/s 115-O on its own account and not on behalf of the shareholder;

 

(b) Section 14A(2) & (3) are constitutionally valid;

 

(c) Rule 8D is NOT ultra vires s. 14A;

 

(d) As Rule Rule 8D was introduced w.e.f. 24.3.2008, it is prospective and applies for AY 2008-09 and onwards;

 

(e) For assessment years where Rule 8D is not applicable, the AO has to apply s. 14A on a “reasonable basis”;

 

(f) On facts, the matter was remanded to the AO for reconsideration in the light of the law laid down.

After extensive hearing spread over several days, the Bombay High Court today (4.8.2010) reserved judgement in Godrej & Boyce vs. DCIT, the lead matter challenging the judgement of the Special Bench of the Tribunal in ITO vs. Daga Capital 117 ITD 169 on the applicability of s. 14A & Rule 8D.

The core arguments, inter alia, of the assessee were the following:

(a) That s. 14A does not apply to shares and units because (i) the income there from is not “tax-free” in view of the ‘dividend distribution tax’ paid by the payer & (ii) the potentiality of taxable income arising on sale thereof;

(b) Rule 8D is not retrospective because (i) s. 14A (2) was enacted w.e.f. 1.4.2007 and (ii) it is substantive law and not procedural law;

(c) If Rule 8D is not retrospective, then for the earlier years, the term “expenditure in relation to” in s.14A has to be confined to expenditure which has a nexus / proximate connection with the tax-free income and not all expenditure;

(d) The application of Rule 8D is not automatic. It can be invoked only where the AO shows that he is not satisfied with the correctness of the assessee’s claim and the reasons for his non-satisfaction cannot be addressed by an adjustment in figures;

(e) Rule 8D is unconstitutional as it makes an arbitrary and unreasonable disallowance and imposes undue burden on the assessee.

The assessee was represented by S/Shri. S. E. Dastur & P. J. Pardiwalla, Sr. Advocates and S/Shri. Nitesh Joshi & A. K. Jasani, Advocates while the department was represented by S/Shri. Darius Khambatta, ASG & J. S. Saluja, Advocate.