This article summarizes a recent ruling of the Mumbai Income Tax Appellate Tribunal (ITAT) [2009-TIOL-707-ITAT-MUM] in the case of Cipla Investments Ltd. (Taxpayer) on taxability of waiver of loan. The ITAT held that since the loan received was on capital account, its subsequent waiver too was on capital account. Hence, the loan waived was not liable to be taxed as profits and gains from its business (business income) under the provisions of the Indian Tax Law (ITL). The ITAT also held that waiver would not be taxable as business income if a taxpayer was not allowed deduction of the loan amount earlier.
As per section 17 of the Indian Registration Act, 1908 any documents related to immovable property exceeding worth Rs.100/- needs to be compulsorily registered. This being a central Act and is being implemented by the state government as per the special power given to the state government. Further, the state government is also empowered to levy the registration fees by issuing necessary notifications. The registration fee is charged as a service charge and not as a part of taxes to increase the revenue.
The Reserve Bank of India (RBI) advisory to banks for limiting their mutual fund (MF) exposure has prodded the lenders to put in place a detailed investment norm. While large banks were capping their MF exposure at 20 per cent of total investment, smaller banks were limiting such investments to Rs 1,000 crore, executives at public sector banks said.
To Confiscate means to appropriate private property to public treasury. Thus after confiscation the goods becomes a property of the government and the government candeal with it as it wants. Through option of redemption fine, government offers to some person to take ownership of the goods. Redemption fine is not a penalty and it has no penal connotation. In Blue Dart Express v. Commissioner of Customs the Tribunal observed that redemption fine in lieu of confiscation is not a fine as understood in criminal jurisprudence. Redemption fine is not a penalty in that sense. It is only an option to the person to pay an amount in lieu of confiscation. It contains no penal connotation.
“Mens Rea” literally means a guilty mind. It is a cardinal principle of English Common Law is that a persons cannot be convicted and punished in a proceeding of a criminal nature unless it can shown that he had a guilty mind. The principle is self explanatory. A person should be punished for deliberate defiance of law, rather than something which didn’t do intentionally or something which happened accidently etc. Nevertheless, the principle is most misunderstood.
TDS rates in case of Section 194-C and 194-I gets simplified this year. With several deductors requesting the department to ease the rates in these cases, department has finally take a call to streamline these rates.Contract Payments:Earlier, contract payments were attracting 2% TDS rate. If such contract is an advertisement contract then it was charged at 1%. Also all sub contracts were charged at 1% TDS rate.
Finance Act (2) of 2009 comes with major amendment in TDS provisions, where it withdraws additional deductions of surcharge and cess for Non-Salaried, Resident Payments. This would give a slight relax to the deductors in calculating the rate of tax. Applicable only on Non-Salaried, Resident Payments.The withdrawal of Surcharge and Cess is applicable only for Non Salaried payments, made to Indian Residents.
In the present scenario, tax is a burden imposed by law. Since our present state rest on the Principles of Rule of Law, the tax administration does not remain a mere revenue collection exercise, it take the shape of administration of a branch of law. Thus the ideal taxation is execution of a well defined law with defined burden, legal-procedural-financial, on the subjects. When such law is administered by an inefficient and corrupt institution, it does not result in merely less collection of revenue but erosion of subject’s faith in the existence of Rule of Law.
Under Indian tax regime, disputed taxes amounting to hundreds of crores is collected by the state, goods worth crores of rupees is confiscated by the state, penalties worth hundred of crores are imposed on citizens by the state through the process of departmental adjudication. I was thinking whether there is any procedure, which the adjudicator is required to follow before he can demand a tax of crores of rupess or deprive people of their property by confiscating goods or imposing penalty on citizens.
They are called “Public Servants”, for they are expected to serve the public. But what is being done in the name of serving the public is not even an “open secret”, it is available live on electronic media. Everyday we see some or the other so called public servants extracting money from the hapless citizens in the name of suvidha shulka, that is what bribe is called euphemistically. In customs, there is another name, speed money. If you wont pay this, you will end up paying huge amount of demurrage as your files, and consignment consequently will not move.
