Monday, July 28, 2008
Sunday, July 27, 2008
GOLDEN RULES OF INVESTMENT
CONITNUED FROM YESTARDAY......
Greatest lesson to be learnt from Warren Buffet:-
The greatest lesson you can glean from Warren Buffett?
To learn from him without desiring to be like him.
It is important to use these articles to learn, but don’t use these articles to
be like Warren Buffett. You can’t be Warren Buffett and, if you try, you
will suffer. Use these articles to understand Buffett’s ideas and then take
those ideas and integrate them into your own approach to investing.
It is only from your own ideas that you create greatness.
The insights in this these articles are only useful when you ingest them into your own persona rather than trying to twist your persona to fit the insights.
The Warren Buffett Way describes what is, at its core, a simple approach.
There are no computer programs to learn, no two-inch-thick Investment manuals to decipher. Whether you are financially able to purchase 10 percent of a company or merely a hundred shares, this book can help you achieve profitable investment returns.
If you’re a young reader, the greatest investment lesson is to
find who you really are. If you’re an old reader, the greatest lesson is
that you really are much younger than you think you are and you
should act that way—a rare gift. Were that not possible, then Mr. Buffett
wouldn’t still be ably evolving at what for most people is postretirement
age. Think of Warren Buffett as a teacher, not a role model,
and think of these articles as the single best explanation of his teachings,
well stated and easily learned. You can learn an enormous amount from
these articles and that can be the foundation for developing your own successful
investment philosophy.
GOAL OF INVESTOR
“Your goal as an investor should be simply to purchase, at a rational
price, a part interest in an easily understood business whose earnings are
virtually certain to be materially higher, five, ten, and twenty years from
now. Over time, you will find only a few companies that meet those
standards—so when you see one that qualifies, you should buy a meaningful
amount of stock.”
Be small man with a big mind
Mr. Buffett evolved as investor without compromising any of his core principles.
Every decade, Mr. Buffett has done things no one would have predicted
from reading about his past, and done them well. Within professional investing,
most people learn in craft-like form some particular style of investing
and then never change. They buy low P/E stocks or leading tech
names or whatever. They build that craft and then never change, or
change only marginally. In contrast, Warren Buffett consistently took
new approaches, decade-after-decade—so that it was impossible to predict
what he might do next.
TO BE CONTINUED TOMORROW.......
“ENJOY TODAY ,WAIT FOR BEAUTIFUL TOMORROW ”
what are weakness and strength you find while reading this article/section ?
please give your comment below (in comment label) as how can this article/section be improved further ? it will GIVE THE OPPORTUNITY TO MEMBERS OF “ jab we met CA “ BLOG TO IMPROVE THEMSELVES. WAITING FOR YOUR REPLY....
SATBIR SINGH
PRESIDENT
JAB WE MET CA
REDEFINING PROFESSIONALISM......
“LEADERS ARE READERS, READERS ARE THE LEADERS”
CA STUDENT HELP DESK
No service- no service tax
Charges in lieu of interest should also not be taxed.
Banking and financial services:
The bank levy several type of charges to customers when there is in fact any service is not rendered. Such charges are in fact in nature of damages or penalty for customers failure in performing his duties fully or partly. For example charges may be levied for:
Minimum commitment charges for not utilizing borrowing facilities charges.
Cheque returning charges.
Delayed payment-- this is in nature of interest so it will be exempt as per valuation Rules.
Loan prepayment charges- this is not for any service rendered by the money lender, rather it is in nature of damages.
Balance transfer charges:
In relation to credit cards most of card issuers provide facility of balance transfer(BT) and levies some charges (1.5 -2.5%) for 90 days. No interest is charged for this period. The fact is that a money is lent as a loan named BT facility. Instead of charging interest, the bank charges BT processing charges, this is nothing but interest. Therefore, such charges should not be burdened with service tax. This is also clear when we consider other schemes of BT in which card issuer/ bank charge interest fro the period of using of BT, and any processing charges are not charged or nominal charges are levied. Therefore suppose in case of a BT of Rs.50000/- if 2% BT processing fees that is Rs.1000 is charged, it is wrong to say that BT processing charges is not interest. Because under other scheme the card issuer/ bank may not charge BT processing fees but interest for a minimum period or for actual period as per terms and conditions.
Therefore, when a charge is levied, which is in lieu of interest, service tax should not be levied.
Loan processing charges- this is levied as a percentage of loan. Therefore, charges can be considered as service charge to some extent and the rest can be considered as a part of interest on loan. For example suppose a loan of Rs.ten lakh is processed and a processing charges of say minimum or 1% of loan amount that is Rs.Ten thousand are collected. In another loan of Rs. One crore processing charges are levied @ 0.50% amounting to Rs.50,000. In this case it cannot be said that the entire amount is for services in relation to processing of loan document. Charges for such services can be say Rs.10,000/- as minimum and Rs.5000 for extra efforts. Thus charges for service is Rs.15,000 and balance Rs. 35000 is in fact not for any service but it is a collection because the bank is in a position to collect extra sum and it can be considered as a part of miscellaneous charges in nature of interest.
Pre payment charges TRU directs to charge service tax:
There is no service rendered by bank when a borrower prepay loan. Therefore pre-closure charges received by the banks / financial institution on pre-payment/ for closure of loan should not be taxable. Prepayment charges are in fact in nature of damages for the loss of interest suffered by the money lender for the period of early payment. However, as discussed later on, TRU says otherwise in its circular of 11.06.08.
Service tax is a tax on value of service:
It is needless to mention that service tax is leviable only when a person renders a service and other person receive service. Thus rendering and receiving of service for a consideration is a precondition for levy of service tax. Besides this precondition, other conditions relating to nature of service, service receiver and service provider, relationship between two parties and nature of consideration are also important. All conditions laid down in relevant provisions must be satisfied to make a service charge taxable. As per the Finance Act 1994 vide section 65 (105) taxable services are defined as follows;
"taxable service" means any 1[service provided or to be provided], -
Xxxx
Thus, the precondition for levy of service tax is that there must be a service provide or to be provided by one person to another person.
Pre closure charges of loan are not for any service:
While granting a loan the bank lent money and in consideration of use of money charge interest. Thus, the function is of a money lender and reward is in nature of interest. In fact 'interest' cannot be called a consideration for service or service charge or fees. It is not necessary to go into this controversy because as per present Rules interest on loan is excluded from taxable service.
In case of a pre-closure of a loan, the borrower payback loan before its scheduled re-payment dates. To keep a check on pre-closures of loan banks charge certain percentage (present range is 3-6%) of principal amount which is repaid earlier than schedules repayment date, as pre-payment charge. For example, suppose a loan of Rs. ten lakh was granted for a period of five years. The borrowers have repaid EMI's for 30 month and now want to prepay entire amount which would otherwise be repayable in 30 months in 30 EMI. Suppose, the principal portion outstanding after payment of 30 EMI's is Rs.640000/-.
If the borrower prepay this amount, the bank will loose further interest earnings. Again it may take some time to redeploy Rs.6,40,000/- in fresh loan. If rate of interest has fallen, then the bank will be able to redeploy this money at lower rate. Suppose bank can charges prepayment charge @ 3% that is Rs.19200/-. However, the borrower insists to reduce it and bank agrees to Rs.15,000/-. This sum of Rs.15,000/- is nothing but a charge in nature of interest for the non-utilization of credit facility granted by way of loan, it is also in nature of damages for early termination of contract for loan by the borrower. Thus it is clear that the banks do not render any service when a borrower prepay loan.
Reasons for pre-payment:
Generally pre-payments takes place when:
a. market rate of interest falls.
b. The borrower receives extra fund inflow and he is unable to earn interest or other return or reward on surplus money which are better than the interest payable on loan.
Consequences of pre-payment of loan:
The money lender find that a profitable loan deployed has been repaid causing shrinkage in loan portfolio. The money lender may not be able to utilize fund flown by prepayment, immediately, by granting fresh loan and therefore, for some time the funds may remain idle. The new loan to be granted may be at lower rate of interest, if there is fall in interest rates. Funds may remain idle for some time or may earn lower returns by way of temporary investments in commercial paper, inter bank loan or by way of keeping funds with RBI or in government securities etc.
Therefore, on a prepayment the money lender- bank suffers loss due to idleness of funds or lower earnings for some time.
In pre-payment by borrower there is no service by money lender:
When a borrower prepays a loan, the banker or moneylender does not render any service to the borrower. The borrower approaches the banker and offer to prepay the loan, the banker charges prepayment charges as per agreement or as per negotiation, and receives prepayment of loan. Therefore, there is no service rendered by banker/ money lender. When a charge is not for a service, the charge cannot be subject to service tax.
Pre-payment charge is in nature of damages or compensation:
As discussed earlier, prepayment charges is in nature of damages or compensation for loss or likely loss which the bank or money lender may suffer. This is on account of loss of interest which the bank or money lender may suffer during intervening period of repayment and redeployment of funds. Therefore, prepayment charges is in nature of damages and not a charge for service. In any case as prepayment charge is in nature of damages for loss of interest on loan, it will assume character of interest on loan as it is for nonavailment of loan for the full period of loan and is for early termination of contract of loan by the borrower.
View taken in Circular:
Department has issued show cause notices and demanded tax therefore Banks and financial institutions are facing uncertainty on issue about Service Tax on pre-payment charges collected on pre-payment of loans from borrowers. Though matters are pending before adjudicating authorities and appellate authorities. The departmental circular has been issued as clarification holding the view that such charges received by the banks / financial institutions can not be treated as interest on loan and therefore, liable to service tax. The circular dated 11.06.08 vide file no. F No 345/6/2008-TRU issued by Tax Research unit reads as follows ( high lights provided):
Subject: Service Tax on pre-closure under banking and other financial Services - regarding Commissioner (Service Tax), Chennai has brought to the notice of the Board that divergent practices are being followed in respect of levy of service tax on services provided by banks and other financial institutions on the amount collected as pre-closure / fore-closure charges in relation to lending.
2. Services provided by a banking company or a financial institution or any other body corporate or any commercial concern in relation to banking or other financial services is leviable to service tax under Section 65(105)(zm) of Finance Act, 1994. 'Banking and other financial services' defined under Section 65(12) include lending. Any amount collected by the service provider on account of lending is either interest or service charges. Pre-closure / fore-closure charges are not charges collected for delayed payment. These charges not being 'interest' are to be appropriately treated as consideration for the services provided and accordingly leviable to service tax under Section 65(105)(zm).
3. Field formation may be advised to take appropriate action. This is issued with the approval of Member (Budget).
Unmesh Wagh, Under Secretary (TRU)
Analysis:
It appears that the view taken is that if there is any charge levied by bank etc. in respect of loan or credit facility, it is charge for a service which is taxable unless it is interest on loan. This appears from the highlighted sentences in the circular given above.
Whether the charge is for any service or not has not been considered, rather merely because there is a levy of a charge, a service has been presumed in Circular of TRU. Merely because a service provider has levied a charge, it cannot be said that it is for a taxable service rendered.
In case of prepayment of loan, the service provider (money lender) does not render any service.
The view taken by revenue is therefore not at all in accordance with the concept of levy of tax on value of a service rendered as envisaged in the charging and other provisions.
Secondly the purpose of prepayment charge has not been considered. As discussed earlier, prepayment charge is nothing but a damage or compensation for earlier than scheduled repayment time. For the period subsequent to the prepayment date the borrower would have paid interest, if prepayment was not made. Again new borrower, to whom funds may be lent, will start payment of interest after some time, and therefore prepayment charge is nothing but a compensation of loss of interest caused due to early repayment of loan.
As discussed earlier, large scale prepayments take place only when interest rates have fallen. In case of firming up of rate of interest, pre-payment are rare. Therefore, in case of prepayment, there is generally also loss of interest to the money lender due to lower rates of interest at which he can deploy funds.
In view of these commercial aspects and business realities it can be said that clause for prepayment charge is inserted in agreements due to contingencies of borrower returning money before scheduled repayment, fall in rate of interest and period required for redeployment of funds etc. Therefore, pre-payment charges is nothing but in nature of damages for loss of interest, and therefore it is not in nature of charges for any service.
In any case prepayment charges is in nature of charge for underutilization of loan and therefore it will partake character of interest on loan, and therefore it is not to be included in the taxable value of service as per relevant Rule which reads as follows:
Definition of interest: There appears no definition of 'loan' and 'interest' in the law relating to service tax. We find meaning or definition of 'interest' in the income-tax Act, 1961 in section 2 (28A) which reads as follows:
Definitions.
2. In this Act, unless the context otherwise requires,—
[ (28A) "interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised ;]
As per section 2 of the Interest Act the meaning is as follows:
(7) "interest" means interest on loans and advances made in India and includes—
(a) commitment charges on unutilised portion of any credit sanctioned for being availed of in India; and
(b) discount on promissory notes and bills of exchange drawn or made in India, but does not include—
(i) interest referred to in sub-section (1B) of section 42 of the Reserve Bank of India Act, 1934 (2 of 1934);
(ii) discount on treasury bills;]
Some relevant definitions from Britannica ready referencer:
Loan:
1 a : money lent at interest b : something lent usu. for the borrower's temporary use 2 a : the grant of temporary use
hire purchase: purchase on the installment plan.
Interest
a charge for borrowed money generally a percentage of the amount borrowed
b : the profit in goods or money that is made on invested capital
c:an excess above what is due or expected
Analysis:
On perusal of the above definitions we find that 'interest', has been defined in a wider manner and it specifically includes items like any charge for relevant obligation, charge for unutilized facility, commitment charge on unutilized portion of any credit etc. The prepayment charge, as discussed is nothing but a charge for non-utilization of loan facility for entire period or entire amount. Pre-payment charge is also levied as a percentage of principal outstanding, which is prepaid. Therefore, such charges are in nature of 'interest' as defined in the two fiscal enactments, as well as general meaning in dictionaries.
Service Tax (Determination of Value) Rules, 2006
We also find that as per Rule 6 of the above Rules the interest on any loan is to be excluded from the value of taxable service. The relevant portion of the Rule is reproduced below:
6. Cases in which the commission, costs, etc., will be included or excluded.- (1) Subject to the provisions of section 67, the value of the taxable services shall include‚-
XXXXXXX - there is no specific clause to include prepayment charges.
(2) Subject to the provisions contained in sub-rule (1), the value of any taxable service, as the case may be, does not include-
XXXXX
(iv) interest on loans."
*****
In these rules there is no definition of interest, therefore we have to adopt a wider meaning to include any payment in nature of and in lieu of interest also.
Keeping in view the above discussion it appears that the circular issued is not correct for the following reasons:
(a) prepayment charges is not for any service rendered,
(b) prepayment charge is nothing but damages for early termination of contract by the borrower and
(c) in any case the prepayment charges are also 'interest' or in nature of interest and in any case they partake character of interest receivable from borrowers.
Therefore, the circular appears to be incorrect.
About the Author: -
Uma Kothari
Applicability of Service Tax
Applicability of Service Tax on photography Service - Whether cost of goods / material used is deductible from the value.?
There is very long history to determine the real nature of photography service. Photography service is neither sale nor works contract as held by the honorable Supreme Court in its earlier judgments.
Now, the issues are arising in Service Tax and different Courts / Tribunal has taken different stands in different situations.
A brief reference of these cases with departmental clarifications is as follows:
Clarification / Letter No. F.No.B.11/1/2001-TRU, Dated 9th July, 2001
In this letter, department clarified that,
The value of taxable service is the gross amount charged from the customer for the service rendered. However, the cost of unexposed photography films sold to the customer is excluded. The service provider claiming benefit of the cost of film should be advised to show them clearly on the invoices along with description and particulars of the film. Otherwise, the claim will not be considered as admissible. No other cost (such as photographic paper, chemicals, etc.) is excluded from the taxable value.
Decision of Apex Court in the matter of C K Jidhees versus Union of India reported in 2006 Supreme Court
In this case, Apex Court held that cost of material used in providing photograph service is not deductible.
Clarification / Letter M.F. (D.R.) Letter F. No. 233/2/2003-CX. 4, dated 3-3 -2006
On the issue of deduction of cost of goods / material from the value of photography service in view of notification no. 12/2003, board clarified that,
The matter has been examined by the Board. The intention of the Notification No. 12/2003-S.T., dated 20-6-2003 is to provide exemption only to the value of goods and material sold subject to documentary evidence of such sale being available. Therefore, in case, the goods are consumed during the provision of service and are not available for sale, the provision of the said notification would not be applicable. Therefore, in supercession of clarification to contrary, it is clarified that goods consumed during the provision of service, that are not available for sale, by the service provider would not be entitled to benefit under Notification No. 12/2003-S.T., dated 20-6-2003.
Tribunal decision dated 6-6-2006 in the matter of LAXMI COLOR (P) LTD. versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II reported in 2006 CESTAT, NEW DELHI
CESTAT held that there is no element of sale of goods in photography service. In this case, CESTAT has following the judgment of Apex Court in the matter of C. K. Jedees (Supra)
Tribunal decision dated 30-10-2006 in the matter of SHILPA COLOR LAB Versus COMMISSIONER OF C. EX., CALICUT reported in 2007 CESTAT,BANGALORE
In this case, CESTAT overruled the circular dated 3-3-2006 (supra) and judgment of Apex Court in the matter of C. K. Jedees (Supra). But, it has followed the judgment of Larger Bench of honorable Supreme Court in the matter of Bharat Sanchar Nigam Ltd. and Anr. v. UOI & Others - reported in 2006 . Accordingly, tribunal has allowed the deduction of value of goods / material used for providing photography service.
While delivering the judgment, CESTAT discussed and relied upon certain other decisions of honorable Supreme Court.
Tribunal decision dated 17-9-2007 in the matter of COMMISSIONER OF C. EX., MYSORE Versus EXPRESS COLOR LAB. Reported in 2008 CESTAT, BANGALORE
In this case, CESTAT followed the decision of Shilpa Color Lab (Supra) and allowed the deduction of value of goods / material sold while providing the photograph services.
High Court of Rajasthan delivered its order dated 20-7-2007 in the matter of WESTERN RAJASTHAN COLOUR LAB ASSOCIATION Versus UNION OF INDIA reported in 2008 HIGH COURT RAJASTHAN
In this matter, honorable HC followed the decision of honorable Supreme Court in the matter of C. K. Jedees (Supra) and denied the deduction of value of goods / material from the gross value.
Tribunal decision dated 28-11-2008 in the matter of JYOTI ART STUDIO Versus COMMISSIONER OF CENTRAL EXCISE, HYDERABAD reported in 2008 CESTAT, BANGALORE
In this matter, CESTAT allowed the deduction of value of goods / material from the gross value.
Moreover, CESTAT held that, deduction is available even if the details of inputs used need not be mentioned in the invoices/bills issued by them, as there is no specific clause in the Notification no. 12/2003.
Tribunal decision dated 13-8-2007 in the matter of SHRI ROOPCHHAYA COLOUR STUDIO Versus COMMR. OF C. EX., HYDERABAD reported in 2008
In this decision also, tribunal has allowed the deduction of value of goods / material from the gross value.
Section 268A must be omitted
Section 268A must be omitted otherwise the revenue will have restricted rights of appeal in some circumstances
Departmenal appeals a review in view of recent judgment dated 21.07.08
Recent judgment:
Recently in the context of provisions of the Income Tax Act, 1961 also the Supreme court (larger Bench of three judges on a reference) has in case of C.K. Gangadharan & Anr. Versus CIT Cochin held that an appeal can be filed in another year or in another case, even though revenue did not challenge judgment on similar issue at an earlier instance, if there was just cause for not filing an appeal.The para 13 of the judgment reads as follows:
13. In answering the reference, we hold that merely because in some cases the revenue has not preferred appeal that does not operate as a bar for the revenue to prefer an appeal in another case where there is just cause for doing so or it is in public interest to do so or for a pronouncement by the higher Court when divergent views are expressed by the Tribunals or the High Courts.
Thus the court has laid down three circumstances namely:
When there is just cause for filing appeal,
When it is in public interest to do so.
When a pronouncement from higher court is desirable when divergent views are taken by Tribunals or High Courts.
In which an appeal before further higher forum can be filed on an issue which was decided against the revenue in any earlier order/ judgment and it was not challenged.
The Supreme Court has also not doubted the law laid down in earlier judgments in which it was held that when the revenue has accepted judgment in another case, on the same issue revenue cannot be permitted to agitate the issue as the precedence has attained finality.
The order of reference as appears in the preamble of the judgment of the larger bench reads as follows:
"xxx xxx xxx In view of the aforesaid position, we are of the opinion that matter requires consideration by a larger Bench to the extent whether revenue can be precluded from defending itself by relying upon the contrary decision. We make it clear that we are not doubting the correctness of the view taken by this Court in the cases of Union of India v. Kaumudini Narayan Dalal (2001)10 SCC 231, CIT v. Narendra Doshi (2004) 2 SCC 801 and CIT v. Shivsagar Estate (2004) 9 SCC 420 to the effect that if the revenue has not challenged the correctness of the law laid down by the High Court and accepted it in the case of one assessee, then it is not open to the Revenue to challenge its correctness in the case of other assesses, without just cause. Registry is directed to place the papers before the Hon'ble Chief Justice of India for appropriate orders."
Thus it is seen that in earlier judgments as above referred by the Supreme Court as well as in the case of Berger Paints, the supreme Court always used the expression "without just cause". Therefore, non filing of an appeal for some just cause, will not prevent the revenue or the assessee to file appeal on similar issue in another year or in another case.
Supreme Court considered some of earlier judgments on similar issues, important excerpts with high lights are given below::
The case of Bharat Sanchar Nigam Ltd. and Anr. v. Union of India and Ors. (2006 (3) SCC 1), in which it was noted as follows:
that res judicata does not apply in matters pertaining to tax for different assessment years because res judicata applies to debar Courts from entertaining issues on the same cause of action whereas the cause of action for each assessment year is distinct. The Courts will generally adopt an earlier pronouncement of the law or a conclusion of fact unless there is a new ground urged or a material change in the factual position. The reason why Courts have held parties to the opinion expressed in a decision in one assessment year to the same opinion in a subsequent year is not because of any
principle of resjudicata but because of the theory of precedent or the precedential value of the earlier pronouncement. Where facts and law in a subsequent assessment year are the same, no authority whether quasi judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision or where the earlier decision is per incuriam. However, these are fetters only on a coordinate bench which,failing the possibility of availing of either of these gateways, may yet differ with the view expressed and refer the matter to a bench of superior strength or in some cases to a bench of superior jurisdiction.
A decision can be set aside in the same lis on a prayer for review or an application for recall or Under Article 32 in the peculiar circumstances mentioned in Hurra v. Hurra (2002 (4) SCC 388). As we have said overruling of a decision takes place in a subsequent lis where the precedential value of the decision is called in question. No one can dispute that in our judicial system it is open to a Court of superior jurisdiction or strength before which a decision of a Bench of lower strength is cited as an authority, to overrule it. This overruling would not operate to upset the binding nature of the decision on the parties to an earlier lis in that lis, for whom the principle of res judicata would continue to operate. But in tax cases relating to a subsequent year involving the same issue as an earlier year, the court can differ from the view expressed if the case is distinguishable or per incuriam. The decision in State of U.P. v. Union of India (2003 (3) SCC 239) related to the year 1988. Admittedly, the present dispute relates to a subsequent period. Here a coordinate Bench has referred the matter to a Larger Bench. This Bench being of superior strength, we can, if we so find, declare that the earlier decision does not represent the law. None of the decisions cited by the State of U.P. are authorities for the proposition that we cannot, in the circumstances of this case, do so. This preliminary objection of the State of U.P. is therefore rejected."
5. In State of Maharashtra v. Digambar (1995 (4) SCC 683), the position was highlighted by this Court as follows:
" the contention of the appellants could not be rejected. Non-filing of an appeal, in any event, would not be a ground for refusing to consider a matter on its own merits. (See State of Maharashtra v. Digambar 1995 (4) SCC 683).
In State of Bihar and Ors. v. Ramdeo Yadav and Ors. (1996 (3) SCC 493) wherein this Court noticed Debdas Kumar (supra) holding:
In the similar circumstances, this Court in State of Maharashtra v. Digambar, (1995) 4 SCC 633) and in State of West Bengal v. Debdas Kumar,(1991) Suppl. SCC 138), had held that though an appeal was not filed against an earlier order, when public interest is involved in interpretation of law, the Court is entitled to go into the question."
In Chief Secretary to Government of Andhra Pradesh and Anr. v. V.J. Cornelius and Ors. (1981 (2) SCC 347) it was observed that equity is not relevant factor for the purpose of interpretation. It will be relevant to note that in Karam Chari v. Union of India and Ors. (2000 (243) ITR 143) and Union of India v. Kaumudini Narayan Dalal and Anr. (2001 (249) ITR), this Court observed that without a just cause revenue cannot file the appeal in one case while deciding not to file appeal in another case. This position was also noted in Commissioner of Income Tax v. Shivsagar Estate (2004 (9) SCC 420).
The order of reference would go to show that same was necessary because of certain observations in Berger Paints India Ltd. V. Commissioner of Income Tax, Caluctta (2004) 2 SCC 42). The decision in Union of India and Ors. v. Kaumudini Narayan Dalal and Anr. (2001 (10) SCC 231) was explained in Himalatha Gargya v. Commissioner of Income Tax, A.P. and Anr. (2003 (9) SCC 510) at para 14. It has been stated in the said case that the fact that different High Courts have taken different views and some of the
High Courts are in favour of the revenue constituted "just cause" for the revenue to prefer an appeal. This Court took the view that having not assailed the correctness of the order in one case, it would normally not be permissible to do so in another case on the logic that the revenue cannot pick and choose. There is also another aspect which is the certainty in law.
In answering the reference, we hold that merely because in some cases the revenue has not preferred appeal that does not operate as a bar for the revenue to prefer an appeal in another case where there is just cause for doing so or it is in public interest to do so or
for a pronouncement by the higher Court when divergent views are expressed by the Tribunals or the High Courts.
Is section 268A exhaustive:
It can be said that section 268A is exhaustive and it provides scope for filing appeal in another case or another year only when in earlier matter, which attained finality, the revenue did not file appeal due to lower revenue impact.
This is because a view can be taken that only in the circumstances stated in S. 268A, the revenue can prefer an appeal on similar matter and in no other circumstances. Therefore, in view of S.268A, the revenue may have restricted freedom to file appeal in such circumstances. In absence of S. 268A the freedom could be more extensive. Therefore, it seems that in a case where revenue has not preferred an appeal, though the amount of revenue involved was higher, then on similar issue revenue will not be entitled to prefer appeal in another case or another year on the grounds of just cause, or public interest or to seek final determination of law.
In view of discussion in earlier article and also the latest views expressed by the Supreme Court, the author again re-iterate that it was not necessary to insert new section 268A in the I.T.Act. By insertion of S. 268A, it appears that the freedom of the revenue to file an appeal on similar matter which has attained finality may be restricted. Therefore, S.268A must be omitted.
About the Author: -
DEV KUMAR KOTHARI
In search of CA ?
IN SEARCH OF CHARTERED ACCOUNTANT ?
JAB WE MET CA GROUP CONSIST OF 72 MEMBERS HAVING 42 QUALIFIED AND EXPERIENCED CA'S AND 30 SEMI QUALIFIED CA'S (DOING CA FINAL).
THEREFORE IF ANY OF THE COMPANY/FIRMS IS INTERESTED TO RECRUIT THE CA'S OR SEMI QUALIFIED CA'S (DOING CA FINAL) FOR JOB / INDUSTRIAL TRAINING PLEASE SEND YOUR REQUIRMENT AT MY E-MAIL casatbirgill@gmail.com or contact me at my cell no 09872233989 .
WE HAVE CHARTERED ACCOUNTANTS HAVING FOLLOWING SKILLS:-
- Chartered Accountants with strong academic background
- Experienced CA'S in Taxation , AUDIT , Advisory and compliance ,Merger & Acquisition, Finance.
- Candidates s having reasonable experience in Reserve Bank of India Regulations, Company Law matters and Software Technology Parks of India regulations and vaious other Acts.
- Candidates having experience in making representations before Income Tax and other authorities
- Candidates are mobile and willing to travel.
- Candidates posses good inter personal and teaming skills
- candidates are energetic, enthusiastic and self motivated.
"HUMAN IS THE BIGGEST ASSET OF AN ORGANISATION BUT UNFORTUNATE THING IS THAT THEY DO NOT APPEAR IN THE BALANCE SHEET OF THE COMPANY"
DO NOT BUY ONLY HANDS OF EMPLOYEE , BUY HEAD AND HEART ALSO...........
SATBIR
PRESIDENT
JAB WE MET CA
REDEFINING PROFESSIONALISM......
SEND YOUR CV'S/BIO- DATA
ALL THOSE WHO HAD DONE CA FINAL OR HAD DONE CA INTER CAN SEND THEIR CV'S/BIO DATA TO ME at casatbirgill@gmail.com
COMPANIES ALL OVER THE WORLD ARE DAILY SURFING OUR BLOG AND ARE INTERESTED IN RECRUITING THE CA'S OR SEMI QUALIFIED CA'S WHO WANTS DO JOB /INDUSTRIAL TRAINNING IN GOOD COMPANIES OR MNC'S.
"EVERY JOB IS A SELF -PORTRAIT OF THE PERSON WHO DID IT,THEREFORE AUTOGRAPH YOUR WORK WITH EXCELLENCE."
CA SATBIR
PRESIDENT
JAB WE MET CA
REDEFINING PROFESSIONALISM......
Send me an SMS
 |
Hi, Here is the link to send free SMS to any mobile in India. I use it too :-) http://www.indyarocks.com/register_step1.php?invitor=MTIzNTI2NQ==&emailencryp=Y2FzYXRiaXJnaWxsLmNhc2F0YmlyQGJsb2dnZXIuY29t -satbir singh |
Please note: This message was sent to you by a user at Indyarocks.com. Click here in case you do not wish to receive any invite from this user. Click here if you do not wish to get any invitations from any Indyarocks user. If you have any queries please contact us at privacy@indyarocks.com |