Frivolous Appeals - High Court imposes Costs of Rs 3 Lakhs on Income Tax Department
30.07.2014
Wednesday
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Why higher officials do not have the courage to take bold decisions?
Higher courts do not have to deal with Tax and Revenue matters only but all those involving life and liberty of citizens.
Revenue officers must realize that an executive power is in the nature of a Trust. They hold office as trustees of the public at large. They deal with public revenue and public money and that cannot be wasted in such frivolous litigation.
It would be open for the superior/competent authority to recover the costs personally from the officer responsible and equally take disciplinary action against him.
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THE Bombay High Court recently came down heavily on the Income Tax Department for filing a frivolous appeal in the High Court against an order of the ITAT setting aside the penalty imposed by the adjudicating authority.
In doing so, the Tribunal merely followed the dictum of the Supreme Court in several decisions and in the case of Commissioner of Income Tax v/s Reliance Petroproducts Pvt Ltd reported in 2010-TIOL-21-SC-IT.
The High Court was not amused and it had some strong words for the Revenue. These are words that should be made into posters and pasted in the offices of all authorities who are concerned with litigation.
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The High Court's observations:
We are surprised if not shocked that such appeals are being brought before us and precious judicial time is being wasted that too by the Revenue. The least and minimum that is expected from the Revenue officers is to accept and abide by the Tribunal's findings in such matters and when they are based on settled principles of law. If they are not deviating from such principles and are not perverse but consistent with the material on record, then, we do not find justification for filing of such appeals. We have found that merely expressing displeasure orally is not serving any purpose.
We do not understand why higher officials do not have the courage to take bold decisions particularly of not pursuing such matters upto this court or higher.
Higher courts do not have to deal with Tax and Revenue matters only but all those involving life and liberty of citizens, their property rights, Rights of Children, Women and Senior Citizens. These rights are also precious and the legitimate expectations of such persons or groups of easy and expeditious justice also have to be fulfilled by the higher judiciary.
The biggest litigant, namely, the State ought to be aware of the Pendency of Cases in High Courts of Bombay, Madras, Calcutta and Allahabad for example. If their policies particularly on litigations are not aimed at reducing frivolous and speculative litigations, then, the least that can be said is that the State has failed to act for public good and in Public Interest. The State is expected to act as a Model Litigant. It must set an example for the Public to follow and we hope that this order acts as a reminder for all concerned to atleast now take remedial steps and measures.
The Revenue officers must realize that just like other powers an executive power conferred in them is in the nature of a Trust. They hold office as trustees of the public at large. They deal with public revenue and public money and that cannot be wasted in such frivolous litigation.
Every case must be dealt with on its merit and no routine exercise ought to be undertaken merely because the Revenue impact is higher or the status or financial position of the Assessee is influential and strong. That cannot be the only yardstick or criteria.
We, therefore, dismiss these appeals with costs quantified at Rs.1,00,000/each.
It would be open for the superior/competent authority to recover the costs personally from the officer responsible and equally take disciplinary action against him if the power to decide about filing such appeals is abused or the decision making authority is utilized to harass innocent Assessees.
At least now, the Revenue officers should behave like responsible revenue officers and not waste the Public Revenue in filling up court dockets.
Please see 2014-TIOL-1226-HC-MUM-IT
Anti Dumping Duty on ‘Purified Terephthalic Acid' (PTA)
GOVERNMENT has imposed a provisional Anti Dumping Duty on ‘Purified Terephthalic Acid' (PTA) including its variants - Medium Quality Terephthalic Acid (MTA) and Qualified Terephthalic Acid (QTA) falling under tariff item 2917 36 00 of the First Schedule to the Customs Tariff Act, originating in, or exported from the People's Republic of China, European Union, Korea RP and Thailand, and imported into India.
The Notification emphatically states that the anti dumping duty imposed under this notification shall be levied for a period not exceeding six months (unless revoked, amended or superseded earlier) from the date of publication of this notification.
The notification does not specify as to what happens if the Board forgets to revalidate it after six months.
Notification No. 36/2014-Cus (ADD) , Dated: July 25, 2014
CBDT Clarification on 'Alternate Investment Funds' (AIF) having status of non-charitable trusts - CBDT respects High Court Orders
CBDT clarifies that in the situation where the trust deed either does not name the investors or does not specify their beneficial interests, provisions of sub-section (1) of section 164 would come into play and the entire income of the Fund shall become liable to be taxed at the Maximum Marginal Rate of income-tax in the hands of the trustees of such AIFs in their capacity as 'Representative Assessee'. It is also clarified that in such cases, provisions of section 166 of the Act need not be invoked in the hands of the investor, as corresponding income has already been taxed in the hands of the 'Representative Assessee' in accordance with sub-section (1) of section 164 of the Act.
However, in cases of funds where names of the beneficiaries and their interests in the Fund are determined i.e. stated in the trust deed, the tax on whole of the income of the Fund - consisting of or including profits and gains of business, would be leviable upon the Trustees of such AIF, being 'Representative Assessee' at the Maximum Marginal Rate in accordance with sub-section (1A) of section 161 of the Act.
The Board has given a more important clarification that the above clarification shall not be operative in the area falling in the jurisdiction of a High Court which has taken or takes a contrary decision on the issue.
This is the Law, but obviously such clarifications are necessary for the ‘more loyal than the king' officers of the Department.
CBDT Circular No. 13/2014, Dated July 28, 2014
Tax Audit - CBDT prescribes new Forms - 3CA, 3CB and 3CD
CBDT has amended the Income Tax Rules to substitute the old Forms 3CA, 3CB and 3CD relating to mandatory audit of the accounts of certain assessees.
3CA = Audit report under section 44AB of the Income - tax Act, 1961, in a case where the accounts of the business or profession of a person have been audited under any other law.
3CB = Audit report under section 44AB of the Income - tax Act 1961, in the case of a person referred to in clause (b) of sub - rule (1) of rule 6G. (a person not covered under Form 3A - Rule 6G prescribes these forms.)
3CD = Statement of particulars required to be furnished under section 44AB of the Income Tax Act, 1961.
As per Section 44AB,
Every person,-
(a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year; or
(b) carrying on profession shall, if his gross receipts in profession exceed twenty-five lakh rupees in any previous year; or
(c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or
(d) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year,
get his accounts of such previous year audited by an accountant.
CBDT Notification No.33/2014, Dated: July 25, 2014
Jurisprudentiol - Thursday's cases
Service Tax
Telecom Infrastructure Services are more appropriately classifiable under Business Support Service - demand under BAS is not sustainable: CESTAT
THE contention is that in respect of Passive Telecom Infra Services, the applicants were charged under Business Auxiliary Services whereas the Tribunal in the case of B.S.N.L. Vs. Commissioner of Central Excise, Jaipur-I held that the activity undertaken by the assessee, which is similar to the applicant, is taxable under the category of Business Support Service. Hence, the demand in respect of Passive Telecom Infra Services is not sustainable.
Income Tax
Whether profit relatable to sale of unutilized FSI is also eligible for Sec 80IB(10) benefits - NO: HC
THE assessee, a builder and developer of real estate, filed e-return declaring income after claiming deduction under section 80IB(10). The total income was declared as Rs. NIL. During the assessment proceedings, it was found that the assessee firm had carried out construction activity on a land without fully utilizing the permissible floor space index (FSI). It was found that the assessee had total plot area of 10539.69 sq. mtrs. for development, after reduction on account of common plot and roads etc. It was further found that the assessee was eligible to construct super build up area of 16863.5 sq. mtrs. @ 1.6 FSI. It was found that the assessee had constructed the housing project by deploying construction of 3665.39 sq.mtrs. of FSI.
The issue before the Bench is - Whether profit relatable to the sale of unutilized FSI is also eligible for Sec 80IB(10) benefits. NO is the High Court's answer.
Customs
If a statutory provision is capable of two interpretations, taking one such interpretation cannot give rise to an error apparent from record even if one is of view that other interpretation is more correct in context - ROM dismissed: CESTAT
AN application for rectification of mistake in the final order was filed by the applicant.
The proceedings started on an unsavoury note. This is because the applicant submitted that although the order was reserved, the same had been issued without pronouncement.
Perhaps aghast at such an occurrence, the Bench directed the Deputy Registrar to look into the matter and fix responsibility of the officials concerned and report the matter within four weeks.
On the ROM application, the applicant submitted that there is a mistake apparent on record in the final order which requires rectification. Inasmuch as it is submitted that in the final order there is a finding that the goods are for industrial consumers and not for retail sale and, therefore, the benefit of Notf. 29/2010-Cus has been denied. The applicant submits that there is no evidence on record that the goods in question are for industrial use; that they are registered under the Legal Metrology Act, 2009.
See our Columns Tomorrow for the judgements
Until Tomorrow with more DDT
Have a nice day.
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