Google-'AirDroid' trademark row; Blackberry & Cisco sign patent cross-licensing agreement
Google-'AirDroid' trademark row; Blackberry & Cisco sign patent cross-licensing agreement
The author expresses concern over the proposal of the Income-tax department to launch prosecution proceedings against taxpayers without waiting for the outcome of the appeals filed by them. He argues that this proposal is ill-advised and will result in grave miscarriage of justice In recent days, some assessees have received the show cause notices for […]
Can Revenue Launch Prosecution Without Waiting For The Outcome Of Appellate Proceedings?
The author expresses concern over the proposal of the Income-tax department to launch prosecution proceedings against taxpayers without waiting for the outcome of the appeals filed by them. He argues that this proposal is ill-advised and will result in grave miscarriage of justice
In recent days, some assessees have received the show cause notices for launching of the prosecution as soon as the penalty is confirmed by the Tribunal.
With respect, mere confirmation of penalty by the Tribunal cannot be a ground to initiate prosecution proceedings. Assessee may otherwise be filing returns regularly and paying the taxes and only in one year, unable to substantiate the claim of deduction. Can such an assessee be considered as tax evader?
Many times penalties are confirmed because the facts are not properly presented before the tax authorities and the appellate authorities.
The Economic Times on 8-6-2015 carried a news reporting that "The Apex policy making body of the I-T department, in a strategy paper for recent conference of top tax officials, told tax sleuths that the "need of the hour" is to effectively launch prosecution cases in wilful evasion cases at the earliest even "without" waiting for the outcome of any other appellate processes."
With respect, it may not be appropriate for the revenue to launch prosecution even without waiting for the outcome of appellate proceedings. Under the Income-tax Act, the Income Tax Appellate Tribunal is final fact finding authority. In majority of the cases, though the quantum order making additions may be confirmed, but still they are not fit cases for levy of penalty. Assuming the penalty is confirmed by the Tribunal, the assessee may be filing an appeal to the High Court which may admit the appeal. High Court admits the appeal only when there is a substantial question of law is involved. When a substantial question of law is involved qua the penalty, such a case may not be fit for launching of prosecution. In K. C. Builders & Anr. v. ACIT [2004] 265 ITR 562 (SC) (573), the Apex Court held that once the penalties are cancelled on the ground that there is no concealment, quashing of prosecution under section 276C is automatic.
It may be worth noting that the Revenue has launched prosecution in some matters more than 20 years back. But, still the matters have not been taken up for final hearing. If this is the state of affairs, launching of prosecution will not serve as a deterrent and it will be a waste of taxpayers' money.
When a show-cause notice for prosecution is issued against a company, the directors are also made party in the prosecution proceedings. In an appropriate case it may be desirable for the company to opt for compounding of the offences, so that the precious time of directors can be saved from attending to the Court proceedings for decades. CBDT has prescribed the guidelines for compounding of offences under Direct Tax Laws {Guidelines dated 23-12-2014 [2015] 371 ITR 7 (St.)}. However, the compounding fee fixed by the CBDT is very exorbitant. It may be desirable to fix a reasonable amount of compounding fee so that more assessees can opt for compounding in order to avoid the prolonged litigation.
In an appropriate case, it may be desirable for an assessee to approach the Commissioner for waiver of penalty under section 273A. Even if the penalty is waived off partly, the Revenue is debarred from launching prosecution under section 279 of the Income-tax Act.
It may even be desirable for assessees to approach the Settlement Commission so as to obtain immunity from penalty as well as prosecution.
Having said that, as tax practitioners, one must caution assessees against very adventurous tax planning. We do hope that the tax administration does not initiate the prosecution against honest taxpayers who may be victims of penalty due to various technical reasons.
Taxpayers' education and better tax compliance can save the assessee from penalty and prosecution.
Readers may send their valuable suggestions on the issues of prosecution in Direct Tax matters and compounding of offences which may help the Federation to make representation to the Government.
Jai hind
Dr. K. Shivaram
Editor-in-Chief, AIFTP Journal
Reproduced with permission from the AIFTP Journal
Distinguishes civil suit from Sec 397/398 petition; Rejects res judicata as issues 'detachable'
CLB allows Sec 397 / 398 petition filed by founder for oppression against his brother & co-founder (respondent), holds that resignation letter used by respondent director to show that petitioner ceased to be director as invalid & oppressive, as not filed before RoC; Rejects respondent's contention that petition was not maintainable as founder-petitioner had earlier filed a suit before Civil Court alleging resignation letter forgery & did not seek permission to file fresh proceedings, CLB holds that Civil Judge had dismissed the suit as petitioner could not produce proof of forgery, however, the issue was not foreclosed from final hearing; Observes that issue like forgery need to be put to trial, which was not done in petitioner's case, thus, present case not hit by res judicata or forum shopping; Further observes that in civil suit, forgery was the subject matter, however, in instant proceedings it is resignation which caused oppression to petitioner, and is detachable from allegation of forgery; Distinguishes respondent's reliance on Madras HC rulings in K.R.S. Mani & Ors vs Anugraha Jewellers & Ors and Jacob Cherian vs K.N. Cherian on facts, relies on Madras HC ruling in S.V.T. Spinning Mills to hold that a party is under no obligation to obtain liberty before withdrawal of suit from civil court to approach CLB u/s 398/398 as it is statutory right of member to avoid oppression & mismanagement, which a civil court can't grant:New Delhi CLB
The order was passed by Shri. B.S.V. Prakash Kumar.
Advocate U.P. Mathur argued on behalf of the petitioner, while respondents were represented by Advocate Rajath Bhalla.
RBI permits AD Category -I banks to borrow from multilateral financial institutions without approval
RBI permits AD Category - I banks to borrow from international / multilateral financial institutions without approaching RBI for a case by case approval, providing flexibility in seeking access to overseas funds; Such institutions shall include International / Multilateral Financial Institutions of which Government of India is a shareholding member or which have been established by more than one government or have shareholding by more than one government and other international organizations; Such borrowings should be for general banking business and not for capital augmentation
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RBI releases Master Circular on External Commercial Borrowings and Trade Credits
RBI releases Master Circular on External Commercial Borrowings and Trade Credits
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RBI releases Master Circular on Import of Goods and Services
RBI releases Master Circular on Import of Goods and Services
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Non-deposit taking NBFCs allowed as sub-agents under Money Transfer Service Scheme
RBI allows non-deposit taking NBFCs to act as sub-agents under Money Transfer Service Schemes without prior approval of RBI; However, deposit accepting NBFCs are not permitted to undertake such activity
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RBI releases its Financial Stability Report (FSR) June 2015
RBI releases its Financial Stability Report (FSR) June 2015; The Report discusses issues relating to development and regulation of the financial sector; It talks about Securities and commodities markets, Banking sector, Global & domestic environment; States that India's relatively stronger macroeconomic fundamentals in terms of growth, inflation etc provide resilience to Indian financial system in the event of spill-over effects from global factors; However, points out that with "continued uncertainty over global growth and in the absence of effective international monetary policy coordination, there can be no room for complacency"
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RBI allows 'bank-wise', 'online' submission of BEF statement
RBI allows bank-wise online submission of BEF statement (Statement showing details of remittances effected towards import in respect of which documentary evidence has not been received) from July 1, 2015; Currently, such statement is submitted manually, branch-wise to the respective Regional Offices of RBI
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MF agent's guaranteed returns to Flipkart violate Sebi norms; CCI rejects complaint against Standard Chartered
MF agent's guaranteed returns to Flipkart violate Sebi norms; CCI rejects complaint against Standard Chartered
RBI permits AD Category -I banks to borrow from multilateral financial institutions without approval
HYDERABAD, JUNE 26, 2015: THE issue before the Bench is - Whether merely because assessee receives subsidy from State Govt and it sells flats at lesser costs to buyers, it becomes a charitable body. NO is the answer.
Facts of the case
The assessee is a Board constituted by the legislature under A.P. Housing Board Act, 1956. All along assessee had been filing its return of income treating itself as a local authority and claimed exemption u/s 10(20). However, once assessee lost the benefit of exemption after amendment of section 10(20) w.e.f. 01/04/2003, assessee made an application seeking registration u/s 12A. In course of proceeding for grant of registration, DIT(E) called upon assessee to furnish certain information/evidences to substantiate its claim that it was engaged in charitable activity. After verifying the information submitted as well as considering the submissions made by assessee, DIT(E) held that exemption u/s 11 cannot be a substitute or alternative for exemption earlier granted u/s 10(20) to a local authority. Further, DIT(E) held that assessee was merely engaged in construction of housing projects and selling them to prospective buyers, therefore, the activity of assessee is more or less like any other real estate developer/builder, hence, the activity/object of assessee cannot be considered to be a charitable in nature. Thus, it had decided that assessee was not eligible for registration u/s 12A.
Being aggrieved of the order of DIT(E), assessee filed appeal before the ITAT. However, appeal was filed with a delay of 1013 days. Though, assessee before the Tribunal pleaded for condonation of delay, but, the ITAT on considering submissions of assessee along with the cause shown for delay were not satisfied with the reason shown and accordingly dismissed the appeal of assessee without condoning the delay. The aforesaid order of the ITAT was challenged by assessee before the A.P. High Court. The HC after considering the submissions of the parties condoned the delay and directed ITAT to decide the appeal of assessee on merit. Thus, at the direction of the A.P. High Court, the appeal was being reheard by the Tribunal.
Having heard the matter, the Tribunal held that,
++ assessee is principally engaged in a commercial activity wherein no charity is involved. DIT(E) has denied registration to assessee basically for two reasons. Firstly, because assessee earlier was availing exemption as a local authority u/s 10(20), hence, it cannot make alternative claim u/s 11 for claiming exemption as trust or institution. The second reasoning is, the activity carried on by assessee being purely commercial nature, it cannot be considered as a charitable activity. As far as the first reasoning of DIT(E) is concerned, we do not agree with the same. On careful reading of the relevant statutory provisions we do not find any bar either u/s 12A or u/s 11 to prevent an institution like assessee from getting registered u/s 12A. However, for becoming eligible for registration u/s 12A assessee has to fulfill the conditions mentioned therein, the first of which is assessee must have been created for charitable purpose. The expression 'charitable purpose' has been defined u/s 2(15) and it is inclusive one. As per the said provision, charitable purpose includes education, medical relief, relief to poor or advancement of any other object of general public utility. In the present case, as held by DIT(E) assessee is merely engaged in the activity of building housing projects and selling them to the prospective buyers having a different economic status. Thus, the activities of assessee is in no way different from the activities carried on by a private builder/developer engaged in similar activity of building housing projects and selling them to prospective customers;
++ though, it may be a fact that assessee is able to sell housing projects at a lesser cost due to some concessions granted by Government, but, that itself cannot be considered to be a charitable activity as assessee is deriving profit from such activity of selling housing projects. It is not the case of assessee that it is providing such housing projects either free of cost or on cost to cost basis. That being the case, assessee has to be treated at par with any other private builder/developer involved in such activity. Moreover, the activity of the assessee if at all can be considered to be for charitable purpose, it will come within the residuary clause 'advancement of any object of general public' utility. However, the 1st proviso to section 2(15) debars advancement of any other object of general public utility from being considered to be a charitable purpose, if it involves carrying of any activity in the nature of trade, commerce or business or any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a cess or fee or consideration. Further, on going through the materials on record there cannot be any doubt that assessee is engaged in a purely commercial activity and the predominant object of the assessee is to earn profit. Therefore, restrictions imposed under the first proviso to section 2(15) clearly apply to assessee. In fact, ITAT, Hyderabad Bench while considering refusal of registration u/s 12A of the Act to AP Housing Corporation Ltd., which is more or less involved in similar activity as assessee, followed its own decision in case of Tirupathi Urban Development Authority and upheld the rejection of assessee's application for grant of registration u/s 12A.
++ the principles laid down by the coordinate bench as aforesaid, clearly apply to the facts of the present case. As far as the decisions relied upon by AR are concerned, on careful examination of the same, we find them to be factually distinguishable, hence, will not be of any help to assessee. In case of Rajasthan Housing Board Vs. CIT, registration u/s 12A was granted to assessee earlier. After insertion of first proviso to section 2(15) when registration was cancelled, Tribunal held if to be invalid on the reasoning that finding the object of assessee charitable, department had granted it registration u/s 12A earlier. Similar is the case with Maharashtra Housing & Area Development Authority Vs. ADIT (E). In case of Jodhpur Development Authority Vs. CIT, Tribunal allowed registration u/s 12A being of the view that object of assessee is for general public utility and without profit motive. Whereas in the facts of the present case we are of the view that assessee is engaged in a purely commercial activity with profit motive, hence, ratio of the decisions relied upon by DR are clearly applicable. In the aforesaid view of the matter, we do not find any merit in the submissions of assessee and accordingly uphold the order of DIT(E) by dismissing the grounds raised by assessee. In the result, assessee's appeal is dismissed.
(See 2015-TIOL-919-ITAT-HYD)
Confirms mismanagement of 'sick' company's affairs but re-directs to BIFR for injunction
CLB in a Sec 397/398 petition observes that promoter group of respondent co. mismanaged respondent co's affairs & siphoned off funds for their personal benefit by entering into agreement for sale of co's assets despite SC's stay on such assets; Holds that the promoters attempted to abuse the process of law, took to unethical means for achieving their goals, thus, prima facie case for granting interim injunction was established in favour petitioners (minority shareholders); However, notes that respondent co. being sick co., resolution approving sale of co's properties had to be approved by BIFR & SC, accordingly, holds that resolution would be non-est & void until both the forums approve the resolution, thus, no 'balance of convenience' in favour of petitioners; On respondent's contention that instant petition ought to be dismissed on the ground that provisions of Sick Industrial Cos Act, being special Act, should prevail over Cos Act, holds that "although, the provisions of the SICA would prevail over the provisions of the Companies Act..it would not be appropriate to dismiss the petition on this ground alone"; Thus, directs petitioner to seek permission/ approval of BIFR for further prosecution of present petition:Mumbai CLB
The order was passed by Shri. Ashok Kumar Tripathi.
Senior Counsel Gaurav Joshi alongwith Advocates Raj Panchmatia, Peshwan Jehangir, Ayush Agarwal and Shreya Dua argued on behalf of the petitioner. Senior Counsel Ravi Kadam alongwith Advocates Ashish Kamat, Zal Andhyarujina, Shruti Sardesai, Amit Jajoo, Sushmita Gandhi, Aly Basith and Victor Basu represented the respondents.
Differentiates between 'drug' & 'dietary' supplements; Dismisses trademark injunction application against "Cherry"
HC dismisses plaintiff, Indchemie Health's interim injunction application against defendants, alleging use of mark 'CHERRY' as similar to its registered mark 'CHERI' for similar pharmaceutical/medicinal products; Notes that plaintiff's goods were 'drugs' within the meaning of Drugs & Cosmetics Act, 1940, meant to be therapeutic in nature, were to be used "as directed by the physician", while, defendants' products, were dietary supplement / 'proprietary food' covered under Food Safety and Standards Act and not 'drugs', were to be used 'as directed by the dietician'; Also observes that plaintiff got its mark registered only for pharmaceutical preparations, which could not be extended to medicinal preparations, holds that "plaintiffs got protection for a narrow class of goods.. cannot extend such protection to medicinal or dietetic substances adopted for medical use or meant for general well being"; Rejects plaintiffs' contention that under Trademark Act, 'similarity' of goods / services was a ground to grant injunction, holds "The argument satisfies logic, but merely in form", since petitioners' trademark registration was meant only with reference to a narrow and more sharply defined class of goods, " 'similarity' must also be understood in a more restricted sense.."; Also rejects plaintiffs' contention that trade channels for selling both the goods were same, holds "that by itself is not determinative of the issue", refers to English case of British Sugar PLC Vs. James Robertson & Sons Ltd, American cases in Miller Brewing Company Vs. G. Heileman Brewing Company & Henri's Food Products Co. Inc. Vs. Tasty Snacks:Bombay HC
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