10.06.2014
Tuesday
IT has all the elements of a revolting drama.
The ITAT Bar Association addressed a letter to the President that the Bar has decided not to appear before an Accountant Member. This letter was later presented before a Bench in which the Accountant Member was a judge. Another Association of the Bar supported the Accountant Member, but made some complaints against the judicial Member, especially on his judicial indiscipline.
The Judicial Member filed a contempt petition against the Advocate who made the second complaint which was read out in the open court while arguing an adjournment application. The Judicial Member initiated contempt proceedings and sent the file to the Accountant Member for his approval. But he did not concur with the proposal. In the absence of unanimity in the Bench, the Judicial Member made the contempt application individually to the High Court.
While going through the case, the High Court noticed some startling facts:
One Bar Association passes a resolution against the conduct of one member of ITAT whereas members of another Bar Association condemn the same and lodge the complaint against the other member of the ITAT.
Both the members of the Tribunal did not concur in their views on various occasions. The complainant who is the Judicial Member of the ITAT has gone even to the extent of saying in his order dated 06.09.2012 that the Tribunal will not hear any appeal unless and until Bar Association passes the resolution condemning the particular act of an Advocate (i.e. moving the representation dated 28.08.2012 by the opposite party No.1). The complainant has even observed in the said order that Bar Association should pass the resolution in a particular manner giving assurance that in case of decision in any case, no such type of representation or complaint will be made to the President of ITAT and further that the protection be given from President of the ITAT with the assurance that such type of complaint/representation would not be entertained and erring Advocate will be dealt with severely. The said view expressed by the complainant- who is Judicial Member of the ITAT, though was not agreed to by the other member, namely, Accountant Member.
The High Court found such observations, as the one made by the complainant in a judicial order, unacceptable.
The High Court observed that the proceedings under the Contempt of Courts Act are quasi-criminal in nature and hence, no action under the Act can be taken unless a clear case of criminal contempt is made out.
The High Court did not agree with the complainant, the senior Member of the ITAT that opposite parties have committed criminal contempt so as to attract punishment therefor under the Contempt of Courts Act. Accordingly the High Court discharged the contempt notices.
Before parting, the High Court quoted the Supreme Court - "It is the duty of lawyers to protect the dignity and decorum of the judiciary. If lawyers fail in their duty, the faith of the people in the judiciary will be undermined to a large extent. It is said that lawyers are the custodians of civilization. Lawyers have to discharge their duty with dignity, decorum and discipline".
Please see 2014-TIOL-944-HC-ALL-CONTEMPT
It is unfortunate that such things are happening in the premier tax tribunal!
I am unable to resist the temptation to carry here excerpts from earlier DDT 2261 - Bar vs Bench:
"All of us, i.e. judicial officers, departmental representatives and assessee's representatives, are like a large joint family, in pursuit of a common goal of the cause of justice, and all of us have an equal stake in well-being of this institution, and, therefore, whatever be the provocation, all of us should desist from invoking these extreme measures and in washing dirty linen in full public gaze ." -Pramod Kumar, Member (A) of ITAT in 2013-TIOL-570-ITAT-LKW .
Generally, our Courts and Tribunals are exemplary models of good behaviour, though sometimes to the extent of ridiculous courtesy. "We are much obliged " when the Bench most unreasonably asks us to make a huge pre-deposit of not only duty outrageously demanded by the Commissioner, but also interest on the duty (not) payable and penalty, so illegally imposed. All the judges are honourable and "my lords"; all the lawyers are learned - so are all the Commissioners who pass those patently illegal orders. All our arguments are " humble submissions " and what we ask the bench is not a demand of what is ours by right, but a "humble prayer". And we are all in black robes, perhaps symbolising the inherent tragedy couched in all these artificial courtesies.
Even in such a sea of tranquillity (which as you know does not exist on Earth), sometimes fissures are bound to develop.
In recent times, this has been quite visible in the Income Tax Appellate Tribunal. Some Bar Associations have boycotted some Members and sent complaints against Members to the President. The ITAT has no regular President for the last more than three years and many in Income Tax Circles feel that all the troubles are because there is no President, but in some other Tribunals, they feel that all the troubles are because of the president and they recall the happier times when there was no President.
Advocacy - Decay: Mr. Pramod Kumar also observed, "The profession of law and accountancy, which had earned so much of well deserved respect and dignity for their outstanding contribution to the larger interests and good causes, cannot always be said to be absolutely beyond general decay in society. There are bar associations which have fought legal battles to protect independence of our institution and, in the process, have helped us earn, as indeed everyone associated with this Tribunal, the respect and credibility. Many of the learned representatives appearing before us, which included, for long decades, legendry and great lawyers like late Shri N A Palkhivala, have helped us do our job in a more meaningful and satisfying manner, and have helped this institution emerge as an institution of distinction and eminence."
Please also see:
1. ITAT Bar Association boycotts Member - DDT 2089 - 22.04.2013
2. ITAT Bar Association withdraws Boycott of Member - DDT 2100 - 08.05.2013
3. Bar vs Bench - DDT 2261 - 30.12.2013
Companies Act 2013 - Appointment of Independent Directors - Clarifications
GOVERNMENT has received representations from Industry Chambers, Professional Institutes and other stakeholders seeking clarifications inter alia about appointment of Independent Directors (IDs) under the relevant provisions of the Companies Act, 2013 (Act) read with relevant rules with effect from 1st April, 2014.
Q. Section 149(6)(c): "pecuniary interest in certain transactions":- (a) This provision inter alia requires that an 'ID' should have no 'pecuniary relationship' with the company concerned or its holding/subsidiary/associate company and certain other categories specified therein during the current and last two preceding financial years. Clarifications have been sought whether a transaction entered into by an 'ID' with the company concerned at par with any member of the general public and at the same price as is payable/paid by such member of public would attract the bar of 'pecuniary relationship' under section 149(6)(c).
Government Clarifies : in view of the provisions of section 188 which take away transactions in the ordinary course of business at arm's length price from the purview of related party transactions, an 'ID' will not be said to have 'pecuniary relationship' under section 149(6)(c) in such cases.
Q. Whether receipt of remuneration, (in accordance with the provisions of the Act) by an 'ID' from a company would be considered as having pecuniary interest while considering his appointment:
Government Clarifies : 'pecuniary relationship' provided in section 149(6)(c) of the Act does not include receipt of remuneration, from one or more companies, by way of fee provided under sub-section (5) of section 197, reimbursement of expenses for participation in the Board and other meetings and profit related commission approved by the members, in accordance with the provisions of the Act.
Q. If 'IDs' appointed prior to April 1, 2014 may continue and complete their remaining tenure, under the provisions of the Companies Act, 1956 or they should demit office and be re-appointed (should the company so decide) in accordance with the provisions of the new Act.
Government Clarifies : it would be necessary that if it is intended to appoint existing 'IDs' under the new Act, such appointment shall be made expressly under section 149(10)/(11) read with Schedule IV of the Act within one year from 1st April, 2014, subject to compliance with eligibility and other prescribed conditions.
Q. Whether it would be possible to appoint an individual as an ID for a period less than five years.
Government Clarifies :section 149(10) of the Act provides for a term of "upto five consecutive years" for an 'ID'. As such while appointment of an 'ID' for a term of less than five years would be permissible, appointment for any term (whether for five years or less) is to be treated as a one term under section 149(10) of the Act. Further, under section 149(11) of the Act, no person can hold office of 'ID' for more than 'two consecutive terms'. Such a person shall have to demit office after two consecutive terms even if the total number of years of his appointment in such two consecutive terms is less than 10 years. In such a case the person completing 'consecutive terms of less than ten years' shall be eligible for appointment only after the expiry of the requisite cooling-off period of three years.
Q. With reference to Para IV(4) of Schedule IV of the Act (Code for IDs) which requires appointment of 'IDs' to be formalized through a letter of appointment, clarification has been sought if such requirement would also be applicable for appointment of existing 'IDs'?
Government Clarifies :In view of the specific provisions of Schedule IV, appointment of 'IDs' under the new Act would need to be formalized through a letter of appointment.
Ministry of Corporate Affairs General Circular No. 14/2014, Dated: June 09, 2014
Posting of Government employees who have differently abled dependents
THERE has been demand that a Government employee who is a caregiver of the disabled child may not have to suffer due to displacement by means of routine transfer/rotational transfers. This demand has been made on the ground that a Government employee raises a kind of support system for his/her disabled child over a period of time in the locality where he/she resides which helps them in the rehabilitation.
Government has considered the matter and observes,
Considering that the Government employee who has disabled child serves as the main care giver of such child, any displacement of such Government employee will have a bearing on the systemic rehabilitation of the disabled child since the new environment/set up could prove to be a hindrance for the rehabilitation process of the child. The support system comprises of preferred linguistic zone, school/academic level, administration, neighbours, tutors/special educators, friends, medical care including hospitals, therapists and doctors, etc. Thus, rehabilitation is a continuous process and creation of such support system takes years together.
So, Government has directed that a Government servant who is also a caregiver of disabled child may be exempted from the routine exercise of transfer/rotational transfer subject to the administrative constraints .
Why can't the Government be more emphatic and clear in its instructions? Why can't they give clear instructions that Government servants with disabled children SHOULD NOT BE transferred against their will?
DOPT No. 42011/3/2014-Estt.(Res), Dated: June 06 2014
Hunger has no creed
POVERTY has no religion, hunger has no creed, and despair has no geography. The greatest challenge before us is to end the curse of poverty in India. My government will not be satisfied with mere "poverty alleviation"; and commits itself to the goal of "poverty elimination". With a firm belief that the first claim on development belongs to the poor; the government will focus its attention on those who need the basic necessities of life most urgently. It will take necessary steps to provide security in its entirety to all citizens; through empathy, support and empowerment.
From the President's address to the Joint Session of Parliament
Jurisprudentiol - Wednesday's cases
 Service Tax
Tax collected from clients but not deposited with exchequer - finding by Commr(A) that there is no suppression involved as assessee has mentioned above factum in their books of accounts and balance sheet lacks merit - Revenue appeal allowed: CESTAT
DURING the period 2006-07 and 2008-09 the respondent was providing photography services. On enquiry it was found that the respondent collected the service tax from the customers but did not deposit the same with the Government treasury and it was also found that they have not filed the service tax returns regularly.
In his statement, the proprietor admitted that they were collecting service tax but not paying the same to the government exchequer due to financial crisis. Thereafter, they paid the service tax through their CENVAT credit account but did not pay the interest.
Income Tax
Whether expenditure incurred on premium paid for political risk insurance policy for safeguarding interest in its wholly owned subsidiary against unstable political environment in foreign country is allowable as business expenditure - YES: ITAT
ASSESSEE incurred expenses toward risk insurance premium for obtaining a political risk insurance policy for safeguarding its interest, in its wholly owned subsidiary against unstable political environment in Sudan. Assessee contended that premium is in the nature of revenue expenditure. The insurance policy was taken at the specific directions issued by the Ministry of Petroleum and Natural Gas, Govt. of India. Assessee contended that mere fact that the investment in Sudan has been made through a Subsidiary does not make the expenditure, as expenditure of the Subsidiary.
The issue before the Bench is - Whether expenditure incurred on premium paid for political risk insurance policy for safeguarding interest in its wholly owned subsidiary against unstable political environment in a foreign country is allowable as business expenditure. And the answer is YES.
Central Excise
Valuation - s.4(1)(b) of CEA, 1944 - Rule 6 of Valuation Rules, 2000 - appellant manufacturing and selling set-top boxes to M/s THIPL who in turn had an agreement to sell STBs to Tata Sky - value of remote control, smart card and software includible in value of STB - demand of Rs.10.78crores upheld but penalty reduced to Rs.50 lakhs: CESTAT
THE appellant manufactured and sold set-top boxes to M/s Thompson Holding India Pvt. Ltd. M/s THIPL had in turn an agreement to sell the STBs to Tata Sky. M/s Tata Sky supplied remote controls and viewing cards to the appellant through M/s Thompson. M/s NDS is a foreign collaborator of Tata Sky and NDS had given access to the appellant to download certain types of software from their server. M/s Tata Sky had agreement with NDS for the use of the software. The software was downloaded into a flash memory by the appellant which was then soldered to the populated printed circuit board of the set top boxes which were cleared to M/s Thompson. Tata Sky had paid royalty/licence fee to NDS for supply of the aforesaid software. The case of the department is that the value of remote control and viewing card supplied by Tata Sky should be included in the assessable value of STBs as they form an essential part of the STB. Further the amount of royalty/licence fee paid by Tata Sky to NDs for the download of the software by the appellant should also form part of the assessable value of the STBs.
See our Columns Tomorrow for the judgements
Until Tomorrow with more DDT
Have a nice day.
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