The sitting list and assignment of Judicial Work on the Original side of the Bombay High Court on and from Monday, the 15th November 2010 until further orders will be as under:

Hon’ble Mr. Justice Anil R. Dave, Judge, Supreme Court of India has released the publication on 3rd July, 2010 in a National Tax Conference at Hyderabad published by All India Federation of Tax Practitioners titled “151 Frequently Asked Questions on Survey – Direct Taxes”.

This publication is an unique publication in a questions answers format explaining the provisions and various controversies relating to Survey under Direct Taxes. In this publication 151 questions of practical importance are answered in a simple and lucid language. It is divided into 20 Chapters. It deals with all important issues relating to Survey, such as TDS Survery, Powers of Survey officials, recording of statements during survey, penalties, prosecution, duties of assessees, precautions to be taken while giving statement in the course of survey, advantages of filing a settlement application, practical issues, Direct Tax Code provisions, important case laws, circulars, notifications, accounting aspects, Sales Tax, VAT and Central Excise, etc.

This publication will be a useful guide to tax payers, tax consultants, as well as tax department.

This publication is authored by Mr. M. V. Purushottama Rao, Chartered Accountant from Hyderabad and is edited by Mr. N. M. Ranka, Sr. Advocate, Dr. K. Shivaram, Advocate, Mr. S. R. Wadhwa, Advocate Settlement Commission and Mr. Kishor B. Karia, Chartered Accountant.

The price of publication is Rs. 200/-. For subscribers of itatonline.org, the price is Rs. 160/-. Outstation members are requested to add Rs. 40/- per publication as courier charges. Please make all drafts payable to “All India Federation of Tax Practitioners”.

For further details please contact:
ALL INDIA FEDERATION OF TAX PRACTITIONERS
215, Rewa Chambers, 31, New Marine Lines, Mumbai – 400 020
Tel.: 2200 6342 Telefax: 2200 6343 E-mail: aiftp@vsnl.com

Hon’ble Mr. Justice Dalveer Bhandari and Hon’ble Mr. Justice G. S. Singhvi, Judges, Supreme Court of India released the publication on 19th December, 2009 in a 15th National Convention at Jaipur published by All India Federation of Tax Practitioners titled “Media & Entertainment Industry“.

The Publication encapsulates various tax, legal, accounting and commercial aspects of the multiple segments of the Indian Media and Entertainment industry. This is an unique publication on Media & Entertainment Industry in questions and answers format (Over 400 FAQs) with exhaustive coverage on subjects of Accounting, Costing, Dispute Resolutions, Entertainment Laws, Entertainment Policies, Entertainment Tax, FEMA & RBI Guidelines, IFRS, Income Tax, International Taxation, Management, Overview on GST, Prevailing Practices, Service Tax, Transfer Pricing, Value Added Tax and Sales Tax. The diverse issues addressed in this book by 34 authors, would benefit almost everyone who is a partaker in the industry – the industry and professionals alike. This book may also be a useful reference to the Revenue authorities and facilitate an enhanced understanding of the constantly evolving media and entertainment industry.

This publication will be a useful guide to tax-payers and tax consultants.

The price of the publication is Rs. 350/- for Normal Bound & Rs. 450/- for Hard Bound. For subscribers of itatonline.org, the same is available at a price of Rs. 280/- & Rs. 360/- respectively. Outstation members are requested to add Rs. 70/- and Rs. 90/- per publication as courier charges for Normal Bound and Hard Bound respectively. Please make all drafts payable to “All India Federation of Tax Practitioners”.

For further details please contact:-
All India Federation of Tax Practitioners
215, Rewa Chambers, 31, New Marine Lines, Mumbai – 400 020 Tel.: 2200 6342 E-mail: aiftp@vsnl.com

1.Foreign Exchange derivative transactions entered into by the corporate sector in India have witnessed a substantial growth in recent years. This combined with extreme volatility in the foreign exchange market in the last financial year is reported to have resulted in substantial losses to an assessee on account of trading in forex-derivatives. A large number of assesses are said to be reporting such losses on ‘marked to market’ basis either suo motu or in compliance of the Accounting Standard or advisory circular issued by the Institute of Chartered Accountants. The issue whether such losses on account of forex-derivatives can be allowed against the taxable income of an assessee has been considered by the Board. In this connection, I am directed to say that the Assessing Officers may follow the guidelines given below:

‘Marked to Market Losses’:

2. “Marked to Market” is in substance a methodology of assigning value to a position held in a financial instrument based on its market price on the closing day of the accounting or reporting record. Essentially, ‘Marked to Market’ is a concept under which financial instruments are valued at market rate so as to report their actual value on the reporting date. This is required from the point of view of transparent accounting practices for the benefit of the shareholders of the company and its other stakeholders. Where companies make such an adjustment through their Trading or Profit/Loss Account, they book a corresponding loss (i.e the difference between the purchase price and the value as on the valuation date) in their accounts. This loss is a notional loss as no sale/conclusion/settlement of contract has taken place and the asset continues to be owned by the company.

A ‘Marked to Market’ loss may be given different accounting treatment by different assesses. Some may reflect such loss as a balance sheet item without making any corresponding adjustment in the Profit and Loss Account. Other may book the loss in the Profit and Loss Account which may result in the reduction of book profit. In cases where no sale or settlement has actually taken place and the loss on Marked to Market basis has resulted in reduction of book profits, such a notional loss would be contingent in nature and cannot be allowed to be set off against the taxable income. The same should therefore be added back for the purpose of computing the taxable income of an assessee.

3. Treatment of loss from actual transactions in forex-derivatives. In a case where a loss on a forex-derivative transaction arises on actual settlement / conclusion of contract and is not a notional or marked to market book entry, a further question will arise as to whether such a loss is on account of a speculative transaction as contemplated in Section 43(5) of the Income tax Act. For determining whether loss from a transaction in respect of a forex-derivative is a speculation loss or not, the Assessing Officers may refer to Proviso (d) below sub-section (5) of Section 43 inserted by the Finance Act, 2005, with effect from 1.4.2006. It lays down that any ‘eligible transaction’ in respect of trading in derivatives referred to in clause (ac) of section 2 of the Securities Contracts (Regulation) Act, 1956, that has been carried out in a recognized stock exchange shall not be treated as a speculative transaction. Further, an ‘eligible transaction’ for this purpose would be one that fulfils the conditions laid down in Explanation to Section 43(5)(d). Any loss in a speculative transaction can be set off only against profit from speculative transactions.

As the revenue implications of such transaction are large, the Assessing Officers need to examine the statements of accounts and the notes to accounts with a view to find out any reference to any loss on account of forex-derivatives. In some cases, these losses may be camouflaged under the ‘financial charges’ ‘foreign exchange loss’ or some similar head which may make it difficult to detect them. In such cases, the Assessing Officers should make a specific query asking the assessee to give a break up of any ‘Marked to Market’ loss on a forex-derivatives included in the Profit and Loss Account and examine whether such transactions are ‘eligible transaction’ in terms of Sec.43(5)(d). An adjustment to the taxable income may therefore be made, if necessary, keeping in view the provisions of law referred to above.

Pursuant to the public criticism by the Finance Minister at the mindless litigation undertaken by the department causing loss of crores of rupees to the nation (see Fret Not, Mr. FM, About Appeal-Filing Mania & Grasim superseded .. but whither accountability?), the CBEC issued a Circular to streamline the processing of departmental litigation before the Courts and Tribunal.

The Directorate General of Income Tax (Legal & Research) has now issued a directive to regulate the filing of Special Leave Petition (SLPs) before the Supreme Court. It has been stated:

“3. The objective of the Board is to file SLP in suitable and deserving cases within the period of limitation. Henceforth, the delay in submission of proposal for filing SLP would be analysed in every case in the Directorate and put up to the Member (A&J) for fixation of responsibility. The CIT is primarily responsible to submit the proposal in time. He cannot merely point out delay by the AO or Counsel. He has to explain action taken by him against officers responsible for delay and steps taken by him to prevent recurrence of such delay in future.

 

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5. The compliances requires a little of follow up by officer looking after judicial work and monitoring by the CIT. The CsIT have an obligation to be careful and alert in judicial matters. In case of any doubt, they must get in touch with the DIT (L&R) looking after their charge for assistance preferably through Lotus Note for quick action.”

The directive directs the officers to pay proper attention to avoid any “unpleasant situation“.

In pursuance of the consultations of the collegium of the Income Tax Appellate Tribunal consisting of the President and two senior-most Vice-Presidents, the following Members of the Tribunal are hereby transferred in public interest, in the same capacity, to the Bench/es of the Income Tax Appellate Tribunal as shown against their names with effect from the afternoon of 25th October, 2010

In addition, Hon’ble Shri. B. R. Jain, AM, has been transferred from the Jodhpur Bench to the Panaji Bench with effect from 1st November 2010.

We wish all Hon’ble Members good luck in their new postings.

In Tivoli Investment & Trading the question whether notional income can be taken into account for computing annual value was referred to the Special Bench. However, as the High Court has already admitted the assessee’s appeal on the issue for earlier years, the Hon’ble President has withdrawn the reference to the Special Bench on the ground that it is not proper to continue with the Special Bench when the same issue is pending adjudication for the earlier years before the High Court. It was held that such continuance would not be in conformity with judicial discipline, propriety and decorum.

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