TIOL-DDT 2681 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3"><s><strong><font size="2"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3"><s><strong><font size="2"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=23157"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2015_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="300" height="148" hspace="5" border="0" align="right" ></a></font></strong></font></strong></font></strong></font></strong></font></strong></s></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></s></font></strong></font><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 2681</font><font size="3" face="Verdana, Arial, Helvetica, sans-serif"></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> 09 09 2015<br> Wednesday</font></strong></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Falling Standards of CAs - ITAT Tones Down</font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> an order dated 20.08.2014 <strong>(<a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTYwNjQ=" target="_blank">2014-TIOL-629-ITAT-MUM</a>)</strong>, the ITAT came down heavily on the chartered accountants. The Tribunal observed,</font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Falling Standards of CAs</font></strong></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are aware that the Chartered Accountancy profession commands high respect and value with one and all, because of their core expertise and knowledge. Their domain expertise and practical approach adopted by them to address the problems enable them to give near perfect advice in a given situation and hence tax payers and tax gatherers repose confidence in them. These kind of domain expertise could be achieved by a C.A due to strict training methodologies adopted by and also high level of standards maintained by the Institute of Chartered Accountants of India (ICAI), its vast and versatile curriculum, tough examination pattern, continuous updating of curriculum etc.. Most of all, the practical on-site training obtained by the students from a practicing Chartered Accountant that too during the period of study itself, makes the C.A course a unique one. The cumulative effect of these methodologies makes the students a perfect Chartered Accountant having high caliber, ability, high standards etc., and hence they are enabled to set up their own practice from day one itself. Though the Chartered Accountants are having domain expertise in accountancy and auditing areas, yet the training they undergo as well as the curriculum of C.A course makes them a best tax professional also. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Noticing that a CA might have given patently wrong advice to an assessee regarding filing of an appeal, the Tribunal observed, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>...it may be showing signs of deteriorating standards with some of the Chartered Accountants in profession, which needs to be stopped on war footing by the ICAI. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">...if it is presumed for a moment that all the C.A.s have concurred with the said view, then it only shows that the C.A profession is losing its grip over the Income tax matters, which is another cause of concern for ICAI. The self-study model coupled with ‘on-site articled clerk training' embedded in the Chartered Accountancy course aims to achieve high quality education and training through undergoing practical training, inculcating the habit of thinking, self-introspection, application of mind, analytical ability etc. and they enable the C.A students to have strong grip over the subjects and also to attain expertise in them. The commendable feature of the C.A course is that, as stated earlier, the C.A students are trained by the practicing Chartered Accountants during their articled clerk training program. Thus, the methodology adopted by the ICAI enabled the C.A. students to become a thorough professional with versatile knowledge and innovative mind. We notice that, in the recent past, the methodology of self-study is given a go-by by some of the C.A students and they have started depending more and more on the Commercial Coaching Centers, who undertake coaching of various subjects in the class room model. We notice that the ICAI does not appear to have taken steps to contain mushrooming growth of such coaching institutes, which indulge in manufacturing of Chartered Accountants through class room model, which may ultimately have undesirable effect on the quality of Chartered Accountants, since the habit of thinking, introspection, application of mind is replaced by spoon feeding, which kind of teaching discourages independent thinking. There should not be any controversy on the fact that the Chartered Accountants, till date, have occupied pioneer position vis-à-vis their counterparts in other parts of the World. They also contribute a lot to the building, sustenance and growth of our National economy. Any compromise on the quality of Chartered Accountants would not only affect our Country very badly, but is also expected to endanger the pioneer position enjoyed by the Indian C.A fraternity vis-à-vis their counter parts in other parts of the world. In our view, the ICAI should seriously take note of these alarming practices slowly emerging in our Country and should take appropriate corrective steps, lest the confidence reposed in C.A.s by the public should get diluted. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CAs were obviously not happy.The Institute of Chartered Accountants of India (ICAI) filed a miscellaneous application with the submissions that some of the observations made by the Tribunal in its order dated 20th August, 2014 has resulted in a mistake apparent from record and hence the same needs rectification u/s 254(2) of the Act. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Counsel for ICAI submitted that the Tribunal has made certain observations about the Chartered Accountancy (C.A.) profession, the conduct of some of the students pursuing the C.A courses and also about ICAI in the impugned order. The observations made by the Tribunal in paragraphs 9 to 9.6 were not warranted and were not necessary or required to dispose of the grounds urged by the above said appellant before the Tribunal. The Counsel placed reliance on some of the decisions rendered by the Supreme Court to submit that the observations which are not relevant to the issues under consideration should be avoided by the Courts. Accordingly, he submitted that the observations made by the Tribunal has given unintended results affecting the reputation of ICAI. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This application came up before the same Bench which made the unwelcome observations about CAs. The Tribunal disposed of the Rectification petition last week. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#B6C4D1" span="span">Is ICAI competent to file this application? </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When it was pointed out that the ICAI was not a party to the appeal and accordingly when it was questioned about the competency of the ICAI to file this miscellaneous application, the Counsel submitted that the Tribunal has inherent powers to rectify its own orders and since these observations have been made without hearing the ICAI, the Tribunal may rectify the order by using its inherent power. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#B6C4D1" span="span">Can the Tribunal make observations not relevant to the issues under consideration? </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal agreed that the observations made by the Tribunal about the C.A profession and conduct of the students pursuing the C.A courses, were not necessary to adjudicate the issues that were urged before the Tribunal, but the Tribunal observed, </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In our view, the Income tax Appellate Tribunal, being a part of Government of India, should not shut its eyes when it is noticed that certain developments occurring in the Country may affect the Country as a whole, more particularly when the reputation of particular profession, from whom the Tribunal is getting assistance in the dispensation of justice, is at stake. Accordingly, we sincerely believe that it is the bounden duty of not only the Tribunal, but also the duty of one and all to point out and discuss about such kind of developments, when it is noticed that the same may affect the public at large. There cannot be any controversy that the interest of our Country is Supreme and no citizen can or should compromise on the same. We may clarify here that the observations were made by the Tribunal in the impugned order in that context only and it was not the intention of the Tribunal to target any particular person or the ICAI. Accordingly, none of the observations made in the order was intended to criticize should be construed as criticizing the functioning of the ICAI. In fact, the Tribunal has only applauded the strict standards followed by ICAI in imparting the education and training. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, as the observations made have not conveyed the message as intended by the Tribunal and as it was submitted that the said observations have given room for misinterpretation and resultant controversies, by exercising its inherent powers, the Tribunal, modified the disputed paragraph as </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"9.6 However, if it is considered for a moment that the above said C.A. firm has really given such advice to the assessee herein and accordingly it has furnished the letter and affidavit, then it is a cause of concern to one and all. We have already noticed that the self study model coupled with 'on-site articled clerk training' embedded in the Chartered Accountancy course aims to achieve high quality education and training. The articled clerk training conceptualized in the C.A education inculcate the habit of thinking, self introspection, application of mind, analytical ability etc and they enable the C.A students to have strong grip over the subjects and help achieving expertise in the domain fields. The commendable feature of the C.A Course is that, as stated earlier, the C.A students are given training by practicing Chartered Accountants during their articled clerk training program. Thus the methodology adopted by the ICAI enables the C.A. students to become thorough professionals with versatile knowledge and innovative mind. The practical training given by the practicing Chartered Accountants during the articled clerk period, in our view, is the fulcrum centre of the study module of the C.A course and the students pursuing the C.A course should and must utilize the opportunities provided to them or encountered by them during the articled clerk training period to the maximum possible extent. In the recent past, a number of Coaching institutes have been established to give coaching to the students pursuing C.A course. While the self study model and articled clerk training may be supplemented with the coaching given by such institutes, any compromise on the practical training intended during articled clerk period or mere obtaining a C.A degree without practical training would not make the students full fledged chartered accountants and the same would go against the self study model conceptualized by ICAI and there should not be any doubt that it may have undesired results, which may affect the Country as a whole." </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal dismissed the miscellaneous application filed by the ICAI, but they really got what they wanted - the offending para was modified. Was it really necessary? </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <u><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA2NDAw" target="_blank">2015-TIOL-1421-ITAT-MUM</a></strong></font></u></font></strong></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Income Tax - Beneficial Amendment to Section 40 (a) (ia) - retrospective? </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Section 40(a)(ia) of the Income Tax Act, if TDS is not deducted on any<em> interest, commission or brokerage, fees for professional services etc.,</em> the entire expenditure is not allowed as deduction. This is a very harsh provision as if you pay a commission of say 1 crore rupees and you don't deduct TDS, the entire expenditure of 1 crore rupees is not allowed to be deducted for calculating your income tax. This provision came into existence in 2005. As this was a very harsh provision, some relief was given by an amendment in 2012 to the effect that the disallowance under section 40(a)(ia) shall not be attracted in the situations in which even if the assessee has not deducted tax at source from the related payments for expenditure but the recipient of the monies has taken into account these receipts in computation of his income, paid due taxes, if any, on the income so computed and has filed his income tax return under section 139(1). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the question is whether this amendment is prospective or retrospective. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The ITAT made a scholarly analysis of this provision and passed a landmark order in <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTQyMTk=" target="_blank"><strong>2014-TIOL-289-ITAT-AGRA</strong> </a>holding that the amendment<strong> is declaratory and curative in nature and it has retrospective effect from 1st April, 2005</strong>, being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> had carried a detailed report on this issue in <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjA2NDI=" target="_blank"><strong>DDT 2373 12.06.2014</strong></a><strong>. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a recent judgement by the Delhi High Court in another case, the above Tribunal Order came for commendation. The High Court noted that the Tribunal has undertaken a thorough analysis of the provision and also sought to explain the rationale behind its insertion. The High Court extracted this para from the Tribunal order: </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"On a conceptual note, primary justification for such a disallowance is that such a denial of deduction is to compensate for the loss of revenue by corresponding income not being taken into account in computation of taxable income in the hands of the recipients of the payments. Such a policy motivated deduction restrictions should, therefore, not come into play when an assessee is able to establish that there is no actual loss of revenue. This disallowance does deincentivize not deducting tax at source, when such tax deductions are due, but, so far as the legal framework is concerned, this provision is not for the purpose of penalizing for the tax deduction at source lapses. There are separate penal provisions to that effect. Deincentivizing a lapse and punishing a lapse are two different things and have distinctly different, and sometimes mutually exclusive, connotations. When we appreciate the object of scheme of section 40(a)(ia), as on the statute, and to examine whether or not, on a "fair, just and equitable" interpretation of law- as is the guidance from Hon'ble Delhi High Court on interpretation of this legal provision, in our humble understanding, it could not be an "intended consequence" to disallow the expenditure, due to non deduction of tax at source, even in a situation in which corresponding income is brought to tax in the hands of the recipient. The scheme of Section 40(a)(ia), as we see it, is aimed at ensuring that an expenditure should not be allowed as deduction in the hands of an assessee in a situation in which income embedded in such expenditure has remained untaxed due to tax withholding lapses by the assessee. It is not, in our considered view, a penalty for tax withholding lapse but it is a sort of compensatory deduction restriction for an income going untaxed due to tax withholding lapse. The penalty for tax withholding lapse per se is separately provided for in Section 271 C, and, section 40(a)(ia) does not add to the same. The provisions of Section 40(a)(ia), as they existed prior to insertion of second proviso thereto, went much beyond the obvious intentions of the lawmakers and created undue hardships even in cases in which the assessee's tax withholding lapses did not result in any loss to the exchequer. Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective effect from the point of time when the related legal provision was introduced. In view of these discussions, as also for the detailed reasons set out earlier, we cannot subscribe to the view that it could have been an "intended consequence" to punish the assessees for non deduction of tax at source by declining the deduction in respect of related payments, even when the corresponding income is duly brought to tax. That will be going much beyond the obvious intention of the section. Accordingly, we hold that the insertion of second proviso to Section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from 1st April, 2005, being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004." </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court is of the view that the above reasoning of the Agra Bench of ITAT as regards the rationale behind the insertion of the second proviso to Section 40(a) (ia) of the Act and its conclusion that the said proviso is declaratory and curative and has retrospective effect from 1st April 2005, merits acceptance. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The ITAT judgement was written by Mr. Pramod Kumar, Member (A), who is known for his incisive and erudite judgements. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see</strong> <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA2MjUy" target="_blank"><strong>2015-TIOL-2026-HC-DEL-IT</strong></a></font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Import of Float Glass - Anti Dumping Duty - No Resurrection </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ANTI</strong> Dumping Duty on Float Glass of thickness 2 mm to 12 mm (both inclusive) of clear as well as tinted variety (other than green glass) but not including processed glass meant for decorative, industrial or automotive purposes, originating in, or exported from, the Peoples' Republic of China and Indonesia, and imported into India, was imposed vide Notification No. 165/2003-Customs, dated the 12th November, 2003. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Notification No. 4/2008-Customs, dated the 4th January, 2008, this was extended till 6th January 2009. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Come 6th January, 2009 and this time around they had not forgotten this.The Notification No. 165/2003-Customs was superseded and the Anti Dumping duty was re-imposed with renewed vigour for another five years with effect from 06.01.2009 by Notification No. 4/2009 - Cus dated 06.01.2009, which expired on 05.01.2014. On 23.01.2014, they resurrected it and extended it till 05.01.2015 by Notification No.7/2014. This has been dead for the last nearly eight months. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, they have not gone for the resurrection route, but re-imposed the duty with effect from 8th September for another five years. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTg1MDE=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 47/2015-Customs (ADD), Dated: September 08, 2015 </font></strong></a></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Global Investors Meet at Chennai today - Customs Initiative </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Global Investors Meet, 2015 is scheduled to be held on 9th and 10th September, 2015 in Chennai, Tamil Nadu. A number of important initiatives have been taken by the Chennai Customs Zone for the facilitation of the investors and to pave the way for smooth flow of investments for the development of Tamil Nadu.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chennai Customs Principal Commissioner KR Chary informs: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• Customs Help Desks are functional round the clock in the International and Domestic Arrival halls, which are manned by dedicated Customs Officers to assist the delegates of the Global Investors Meet, 2015. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• "<em>Soft Skills</em>" training programme has been imparted to the officers of Air Customs to extend courtesy and to have professional approach towards facilitation of delegates and to improve their communication, behavioural and inter-personal skills. The Custom Officers posted at the Airport have been trained to be professional and pro-active so that the delegates view the Customs Officer as a friend who will guide them in their clearances at International Airport. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• Further 24x7 Customs Cargo Clearance Facilities are made available at the International Cargo Complex and Courier Terminal for the benefit of the trade and investors. Many top importers and accredited clients are already making use of this facility. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• Indian Customs endeavors to provide smooth and expeditious Customs clearance for the Delegates and to facilitate the Global Investors. </font></p> </blockquote> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT </strong></font></p> <p align="justify"><strong><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></strong></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@tiol.in"><strong>vijaywrite@tiol.in</strong></a></font></p> </body> </html>