I had earlier promised to come out with some academic input. Subsequently, there was substantial and valuable contribution from others. Contributors I therefore thought that I would concentrate more on the observations as there is ample text and enough text books. Because it is too late in the day to get confused any further. These observations are the result of my 20 plus years’ experience in the field. I am against preaching of all kind per se. if you don’t find the useful , kindly ignore them . But kindly don’t use four letters expletives as many of my younger friends have done. Removal of such remarks is an additional burden for the administrators, who have provided us with such a wonderful platform to interact. .
Please avoid the traps like improve your handwriting. What cannot be done surely cannot be done at this stage. JUST TRY TO BE LEGIBLE.
Be precise. SOME TIMES IT IS INEVITABLE TO WRITE NONSENSE IN EXAMS BUT WRITE NONSENSE SENSIBLY.
SEE SOME EXAMPLES:
1. There was a specific question (not for finals) what happens to a company where the ALL two directors and shareholders perish in a car crash. I am particularly taking this case as it was asked differently way back in Nov. 1976 when I was appearing in CA inter.
The problem was a direct illustration from Prof David Gower’s company Law (British) and he jovially observed that NOT EVEN A HYDROGEN BOMB WOULD KILL A COMPANY because of its separate entity and perpetual succession independent of the members. In fact only these 14 words are enough to get FULL marks I repeat full marks. Now the gentleman while replying have travelled from Solomon’s case to what not and came to the same conclusion. In my humble opinion, such answer is not expected to put it mildly. On the other hand, if you forget Solomon’s name in the exam hall, it will spoil your joyride and make you tense.
2. Take second illustration, in forums, someone asked about the status of interest income from funds deposited in a bank under the order of a court of law for the benefit of a minor girl in the custody of her estranged mother. The answer lies in simple comprehension of the fact that first there should be income. If Income is diverted at the soured itself under a court order, Where is the question of clubbing provision. Now if one writes a long answer on clubbing provisions, what will be the use? The problem is camouflaged as minor’s income but this in fact is a problem on income accruing or arising and diversion of income by overriding title.
3. Just I extend this problem to a NRI income where there is a mandatory foreign levy, now the problem will appear to be NRI problem and many will faint. The question is simply grasping the root cause and the principle,if one has to remain cool.
4. In my original article I had taken a riddle of a company agreeing to half of the assessed income but disputing the remaining half but having no money. The underlying principle was :
· There could be no appeal , if undisputed tax not paid ( it would be dismissed in limini or at the threshold without being admitted
· Since quantum is in dispute , there can be no rectification S. 154 – Rectification can be only WHEN NO LONG DRAWN REASONING PROCESS IS REQUITRED : Re: Volkart Bros – in four years
· Then only remedy is Revision U/s 264 within one year and the fact that revision petition is at the instance of the assessee, it cannot be against him.264 / and 246 Appeal ARE MUTUALLY EXLUSIVE. One has to make a choice between the two.
· Supposing the CIT want to go against the assessee, even then he cannot do so in 264, he will have to go for 263 for an order prejudicial to the interest of the revenue or direct the A.O. to commence reopening proceedings u/s 147. But if the A.O. has taken a considered decision, 263 will fail. Merely taking a view that benefits the assessee is not necessarily prejudicial to revenue.263 is appealable directly to ITAT. 264 is not appealable only a writ will lie before the High court
· Again, Reopening cannot be for change of opinion or failure of appraising the record already produced. Nor a retrospective amendment not existing on the date of order amounts to ESCAPING THE INCOME.
· However, a retrospective amendment is only calrificatory or explanatory nature, it would be a mistake apparent from the record and if it is to do away with some interpretation mischief, it would not be a mistake apparent from record.
· Company in extreme cases can approach the High court directly but it would be hard pressed to plead that the circumstances warrant that the HC must exercise its wit jurisdiction to make the ends of justice meet.
· The above 300 words take care of entire procedure of rectification /appeal and revision / assessment and return is simple. Supplement it by suitable case laws.
5. Take yet another case, an assessee file a return of ` 150Cr. AO assesses it for ` 200Cr. Both the CIT and the assesses are unhappy. What should be done. Please apply the principles in point 5 above.
6. Gift by an employer is salary . Gift by a client is Business income and other gifts are for other sources. To remember the list remember line up and down and brothers/ sisters of all kind {so father, son, grandson uncles- maternal and paternal – Just see the list / It will be comprehensive without learning by heart. Consider particularly the gift of property – where inadequate CONSIDERATION will not BE A GIFT.
7. A common mistake in excise likewise is a product with ZERO duty is still EXCISABLE. Only a product not in CETA alone is NOT Excisable. I once again repeat that VS Date in his Website datevs.com has given entire Excise, Customs and service tax , so brief yet so comprehensive. I consider Date be Guru Drona although I do not consider myself worthy of being an Eklavya.
8. I am separately posting a PPT Law and languages, which deals a controversy of one house for S 54/54F . There are hardly 10 slides. Will be helpful in understanding the conceptual interpretation of law.
9. Transfer Pricing, the OECD countries have changed the whole lot of guidelines. Of course they are not in course but surely they provide additional focus to the topic.
10. Don’t forget to refer to WIRC references at WIRC-ICAI.org.
11. Feel free to direct your queries to me. If personal in nature use PM from my profile. Send me a friendship request for this purpose .
Next time I will try to deal with the auditing and then costing and Corporate Laws. I am afraid I may not be of much help in MICS
God bless you. All
Paras Jain
CAclubindia
