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TRANSCRIPT
DTRTI NEWSLETTER Issue No.18/Chennai October 05, 2018
TRAINING NETWORK RELATED NEWS
Industrial visit to Daimler India Commercial Vehicles as part of training for DR ITIs
Shri G.R.Reddy, IRS, Pr.CIT, inaugurated
the Doorstep program at Coimbatore
Shri Benny John, IRS, CIT(A) delivering the
Valedictory address of the door step program
CONTENTS
- 612
Take care not to give up exertion in the midst
of a work; the world will abandon those who
abandon their unfinished work.
, எ எ
. .
Training network related news Topic for the week
FAQs on ITBA
IT world this week Learn the subject through a puzzle
(Crossword)
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TOPIC FOR THE WEEK HOW TO READ A JUDGEMENT WHILE HANDLING A SCRUTINY ASSESSMENT
The Assessing Officers as well as
other authorities dealing with assessment
and related assignments need to have
clarity as to how to read a judgement
(popularly termed as case law) cited or
relied on by the assessees before them. The
said skill set shall also be helpful to them
when they rely on a judgement to bring an
issue for taxation. In this context, two
phrases that are required to be understood
clearly are
Ratio Decidendi & Obiter dictum
The Hon’ble Supreme Court’s
judgement in the case of CIT vs. Hapur
Pilkhuwa Development Authority should
certainly sensitize the departmental officers
about the seriousness with which judicial
work of the department need to be handled
and reading and understanding of
judgement or case law is the first step in
this direction.
It is observed that some time
revenue officers tend to ignore case laws
cited by assessees and go ahead and make
addition thereby exposing themselves to
contempt of Court.
It is also true that tax bar is not
absolved of mis-citing of case laws. With
Google era in place and search of “key
word” the fashion of the day, enthusiastic
authorized representatives push large
number of irrelevant case laws into their
written submissions either by ignorance
or by design thereby obfuscate the
assessing authorities to err in their
favour. Discharging quasi-judicial
function wherein appreciating the case
law is one of the fundamental skill set
that is required to be cultivated to
perform the role effectively. Coming to
the two terms mentioned earlier viz.,
Ratio Decidendi and Obiter dictum, it
is to state that these Latin words need not
be remembered if one understands the
import of the said terms.
Ratio decidendi plays a very
important role in judicial precedents as
it is the legal principle underlying the
decision in a particular case. Therefore, it
creates the precedent for future cases
and is considered the most important
part of a judge's speech. Readers of court
judgements can recall that while
delivering the judgement, after narrating
the facts of the case and grounds of
appeal the judge goes on to render
judgement. In the course of rendering
judgement the judges most often make
certain remarks which are not Ratio
decidendi but are Obiter dictum.
Obiter dictum, Latin phrase
meaning “that which is said in passing,”
an incidental statement. Specifically, in
law, it refers to a passage in a judicial
opinion which is not necessary for the
decision of the case before the court.
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When it comes to reading a
judgement relied upon by the assessee, the
revenue authorities need to study whether
the point of the judgement which is relied
upon by the assessee is Ratio Decidendi of
the judgement or Obiter dictum. If it is the
former, then the judgement has binding
precedence and accordingly the AO should
proceed further as per the laid down
departmental guidelines. If it is the latter,
the assessing officers or any other
authorities can highlight the said fact and
proceed with taking a decision as the ratio
decidendi of the judgement is not directly
applicable to the facts of the case.
While it is easier to exhort the
revenue authorities to examine with
reference to a judgement as to the point
relied upon by the tax payer is ratio
decidendi or obiter dictum of the
judgement, it requires systematic
approach to reading the judgement to
delineate the finer difference which is
material. The Officer embarking on this
exercise, in case of doubt, can reach out to
higher authorities in the hierarchy to
obtain clarity.
One more important issue that
requires to be reckoned while
reading a judgement of Hon’ble
Supreme Court is whether the
judgement is dismissal of SLP or
the said judgement is a speaking
order of the Hon’ble Supreme
Court.
There is a fundamental difference
in the use of the word ‘dismissed’ in
the two situations -- that is,
dismissal of an SLP and of an appeal
filed under Article 133. A non-
speaking dismissal order in the case
of an SLP under Article 136 does
not pronounce any law, it merely
means that the court does not
consider the application for special
leave to be a fit case for exercise of
jurisdiction
But when an appeal is dismissed
under Article 133, the order of the
High Court or the Tribunal
appealed against becomes the order
of the Supreme Court on the
doctrine of merger and, hence,
tantamount to be the law of the
land in terms of Article 141.
The revenue authorities may
examine the Hon’ble Supreme Court
judgement relied upon by the tax payers
before them as to whether it is a dismissal
of SLP in which case the said judgement
does not pronounce any law or a speaking
order in which case it amounts to
pronouncement of law.
Finally, whenever the taxpayer
relies on a judgement in their favour, the
revenue authorities need to find out
whether the Income Tax Act has been
amended thereafter. Quite often it is found
that the tax payer relies on the judgements
which are no more law due to subsequent
amendment of the Income Tax Act.
4
QUESTIONS CORNER – FAQs ON ITBA –Shri THIRUVARASAN, SR. TA
Q 1. How to update extension of limitation period for assessment, if the categories for extension are more than one? A 1. In case of more than one category of extension, then the AO has to enter the new limitation date manually. In case of extension in one category, then system will extend the limitation date automatically by calculating extended period (standard period).
Navigate to ITBA - Assessment – Worklist - Assessment Proceeding - Initiate Other Action-
Extension of Limitation Period.
In special cases like stay granted by Court, etc., in which the date of extension is varying, the AO has to enter the start date and end date provided in the same screen, to enable the system to calculate the period extended. Q 2. What are the orders/returns for which the Data Migration from Legacy ITD-AST systems to ITBA is mandatory? A 2. For AY 2016-17, all orders have to be passed in ITBA only (AST option is not available). Only for AY 2015-16 & AY 2014-15(if pending) cases, where the AO wants to pass the order in ITBA, it is mandatory for AO to initiate migration of data. For all such migrated cases, the assessment order can no longer be passed in AST and can only be passed in ITBA. Navigate to Legacy AST systems-Assessment-Others-Migration Screen to ITBA. (The message will be displayed as “Data will be successfully migrated to ITBA in 30 minutes”). Once the data migration is successful all further actions will have to be done in the ITBA only. Q 3. What are the scenarios for Manual Order Upload in ITBA? A 3. The AO will be able to upload Income Tax as well as Wealth Tax orders relating to Assessment, Giving effect, Rectification, ITR processing, Penalty and FBT. There can be the following scenarios for manual order to be uploaded: (i) Demand Order
(ii) Refund Order (already issued manually) (iii) Refund Order (but refund pending to be issued) (iv) No demand/no refund order.
The AO has the facility to select the
previous demands to be nullified against the latest order. The AO can enter the refund approval details if refund has already been issued against the current order being uploaded. Q 4. What are the demands displayed in the Demand Analysis screen in ITBA Recovery? A 4. The demand details displayed in this screen will be from CPC-FAS under the following head: (i) CPC processed demand u/s.143(1) and consequential rectification orders passed by CPC. (ii) ITBA passed/processed 143(1), Assessment, Rectification, Give Effect, Penalty orders. (iii) Demand updated through Manual Order Upload functionality in ITBA (iv) Legacy AST passed orders after 01.04.2010.
(v) CPC-AO Demand Portal demand (Manually uploaded by AO- Legacy demand before 01.04.2010 including those passed in AST or otherwise was required to be uploaded by OA in CPC-FAS.
Note: The demand details are in-warded/synchronized through regular interface between ITBA with CPC-ITR on scheduled daily basis. The updates will be displayed in demand analysis screen on the next day. Click “Refresh Data” button on Demand Summary screen to view updated demand. Q 5. How to update the recoverability status of a demand if there exist multiple categories of parameters against the same demand?
A 5. In this circumstance, the demand in
these multiple categories will be reset to zero
and the AO will have to enter the portion of
Stay or installment as per the fresh demand
again.
5
IT WORLD THIS WEEK
US IRS proposes to withdraw
controversial Section 385 debt-equity
documentation regulations
by Julie Martin, Editor, MNE Tax (Disclaimer: This article has been reproduced purely for academic
purposes and there is not commercial utility involved)
The US IRS on September 21 proposed to remove the hotly contested Section 385 debt-equity documentation regulations and work toward developing replacement guidance. Finalized in 2016 during the last weeks of the Obama administration, the regulations require multinationals that issue related-party debt to provide information to the IRS that establishes that the instrument should be treated as debt for tax purposes, rather than as equity. The documentation requirement is a minimum requirement for an instrument to be considered debt; the IRS can still reclassify an instrument as stock if the documentation shows such classification is appropriate. Differing opinions
The regulations, which have yet to enter into effect, have been hailed by some as a needed tool to shut down a tax avoidance technique known as interest stripping, used by multinationals. At the same time, the regulations have been denounced by multinationals and their advisors as being overbroad and hitting many ordinary business transactions. Citing these opposing views, the IRS
proposes to withdraw the Section 385
debt-equity documentation regulations
and further study the problems that the
regs sought to remedy. When that study is
complete, the government may propose a
modified version of the documentation
regulations, the Service said.
“Any such regulations would be substantially simplified and streamlined to reduce the burden on US corporations and yet would still require sufficient documentation and other information for tax administration purposes,” the government said. Moreover, the Service promised that any new regulations would bear a prospective effective date, giving taxpayers ample time to put in place systems needed to comply. Friday’s action does not affect portions of final Section 385 regulations that treat as stock certain debt that is issued by a corporation to a controlling shareholder in a distribution or in another related-party transaction that achieves an economically similar result. Business opposition
Since their introduction as proposed rules in April 2016, the Section 385 debt-equity documentation regulations have been vigorously opposed by multinational groups for adding unacceptable levels of complexity, cost, and burdens. Despite this chorus of opposition, the rules were finalized with some taxpayer-favorable modifications in October 2016 and were set to enter into effect January 1, 2018. The final regulations were subsequently identified by Treasury in July 2017 as qualifying for revision under President Trump’s executive order mandating a reduction in regulatory burden, however. One month later, in Notice 2017-36, the
regs’ effective date was delayed by one
year to January 1, 2019, as Treasury
reassessed the rules and solicited
additional taxpayer feedback.
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…Earnings stripping concerns
According to the Service, while business groups again responded to its request for feedback asking the government to limit or remove the Section 385 debt-equity documentation regulations, almost 500 public interest groups and other associations and more than 68,000 individual taxpayers urged Treasury to retain or strengthen the regulations. “[T]hese commenters view the Section 385 Regulations as an important step in leveling the playing field for small, domestic businesses that cannot take advantage of earnings stripping tax planning, thus allowing such domestic businesses to compete with large multinational companies based solely on their products and services, and not their ability to take advantage of tax planning. Also, these commenters argued that allowing large multinational corporations to shift earnings offshore does not create jobs or economic growth in the United States and only serves to disadvantage domestic companies,” the Service said. Interest stripping occurs when a multinational group member located in a low-tax country issues a debt instrument to a related group company located higher-tax country, such as the US. The company located in the low tax rate country receives taxable interest income on the debt, while the entity located in the high tax rate country can take interest deductions in an equivalent amount. Because of the mismatch in tax rates, the scheme reduces overall taxes paid the group, shifting income from the higher tax country to the lower tax country, and, at the same time, does not otherwise change the group’s overall financial situation. The Service has asked for public feedback
on its proposal to withdraw the Section
385 debt-equity documentation
regulations by late December.
US IRS reorganizes APMA program assisting multinational taxpayers The US IRS on 25/09/2018 announced that its Advance Pricing and Mutual Agreement (APMA) program is undergoing a reorganization intended, in part, to allow economists to be more heavily involved in cases. APMA handles cross-border tax disputes concerning the US, multinational taxpayers, and other countries brought by taxpayers through a tax treaty’s mutual agreement procedure (MAP). APMA also handles multinational firm requests for advance pricing agreements (APAs), which are agreements between the IRS, multinationals, and sometimes a third country designed to settle ahead of time a multinational’s transfer pricing arrangements. “The move will consolidate APMA’s resources in ways that are designed to improve internal processes, resolve disputes, and increase taxpayer service,” the IRS said, announcing the reorganization. According to the IRS, APMA will be organized into three groups, groups A, B, and C, each led by an assistant director. Country inventories will generally be aligned at the group level. Each group will be further divided into two teams, teams 1 and 2. Each of the six teams will be headed by a team manager, responsible for particular APAs or MAP cases. Each team will also be staffed with economists, the Service said. The Service said that the integration of
economists into the teams is a noteworthy
feature of APMA’s new organization. “The
program believes this integration will
foster collaboration among APMA team
members and optimize economist
involvement in case analysis, development
& negotiation,” the Service said.
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LEARN THE SUBJECT THROUGH A PUZZLE
PROHIBITION OF BENAMI PROPERTY TRANSACTION ACT, 1988 ACROSS:
1. The enactment of
the amended
Prohibition of Benami
Transactions is a
major step by the
Government to curb
the flow of _______ (5,5)
5. The term “Benami”
is originated from
___________ compound
word which implies
“without a name” (7)
6.Benami transaction
includes a transaction
or an arrangement in
___________name (10)
1 2
3 4
5
6
7
8
9 10
11
12
13
14
15
16
17
18
7. The Central Government shall, by
notification, establish an Appellate Tribunal to
hear appeals against the orders of the
_____________________ Authority under this Act
(12)
9. ___________ means the prohibition of transfer,
conversion, disposition or movement of
property, by an order issued under this Act
(10)
11. Settlement Commissioner u/s.245H grants
___________ for prosecution under FEMA, PMLA
and Income tax Act but not under Benami
Properties Act (8)
13. The ______________________________ Officer,
after obtaining prior approval of the
Approving Authority, shall have power to
conduct or cause to be conducted any inquiry
or investigation in respect of any person,
place, property, assets, documents, books of
account or other documents, in respect of any
other relevant matters under Benami
Transactions (Prohibition) Act (10)
14. Benami transaction shall not include any
transaction involving the allowing of
possession of any property to be taken or
retained in part performance of a contract
referred to in Section _____ of the Transfer of
Property Act, 1882 (3)
15. The Appellate Tribunal shall not be bound
by the procedure laid down by the Code of
Civil Procedure, 1908, but shall be guided by
the principles of ___________________ and, subject
to the other provisions of this Act, the
Appellate Tribunal shall have powers to
regulate its own procedure (7, 7)
17. __________ Authority means an Additional
Commissioner or a Joint Commissioner as
defined in clauses (1C) and (28C) respectively
of section 2 of the Income-tax Act, 1961 (9)
18. Section ________ of the Income tax Act which
is the effect of failure to furnish information in
respect of properties held benami has been
repealed by the Benami Transactions
(Prohibition) Act, 1988 , w. e. f. 19- 5- 1988
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DOWN:
1. A person or a fictitious person, in whose
name the benami property is transferred or
held is called _____________ and this includes a
person who lends his name (9)
2. Properties held by Benami are liable for
_________ by the Government without payment
of compensation; then all rights and title shall
vest absolutely with Central Government (12)
3. The transaction made by a person standing
in ______________ capacity for the benefits of
others like trustees, executors, partner,
director, a depository will not be regarded as
benami transaction (9)
4. The Appellate Tribunal, shall consist of a
Chairperson and at least two other Members
of which one shall be a Judicial Member and
other shall be an ________________ Member (14)
8. Section 67 of the Benami Properties Act has
____________________effect over any other laws
(4,6)
10. An order made by the Appellate Tribunal
under this Act shall be executable by it as a
_________of civil court and, for this purpose, the
Appellate Tribunal shall have all the powers of
a civil court (5)
12. Whosoever enters into any benami
transactions, in addition to the rigorous
imprisonment for a term which shall not be
less than one year and shall not exceed seven
years, fine of ____________________% of the fair
market value of the property shall be payable
(2)
16. The Prohibition of Benami Property
Transactions Act, 1988 as amended in 2016,
has _______ sections (2)
Please e-mail your answers to [email protected].
And the first correct entry will be rewarded. Answers will follow in the next issue.
Industrial visit to Daimler India Commercial
Vehicles as part of training for DR Inspectors
Sketch by Shri Sandeep Kodam, ITI
Published by: Team DTRTI, Chennai