India Legal News on Arbitration in India: SC Disapproves of Retired Judges Charg

 

India Legal News on Arbitration in India: SC Disapproves of Retired Judges Charging Heavy Fees

The Supreme Court of India disapproved of the exorbitant fees charged by retired judges in arbitration cases. Are you wondering what an arbitration case is? Typically, it is an effective alternative for those parties who want to resolve and end their dispute speedily. In fact, the arbitration process in India applies to domestic as well as international arbitration disputes.

India Legal News on Arbitration in India: Crunch up Your Disputes and Resolve it Within Manageable Time

Those who have a dispute are typically impatient till the issue can be resolved with a meaningful outcome. Let's face it – we have a demanding client who wants quick relief. Arbitration in India helps to do that. Through arbitration, two disputing parties can present their dispute before two retired judges of their choice, who will hear the matter as it is done in a court of law and resolve the disagreement based on the merits of the case, without procedural or any other types of delays or postponements.

For the same reason, corporate and other entities tend to insert an arbitration clause in contracts that state clearly, "In the event of a dispute, arbitration proceedings shall apply." Watch out for this clause because it means that you cannot raise this dispute contrary to the provisions of the agreement you have signed.

Arbitration in India on Arbitration in India: Process of Appointing Retired Judges Comes under Heavy Criticism by SC

Coming back to arbitrations in India, let's not forget that the process involves appointment of a retired judge by each party. With expertise and experience in the judiciary, the value that a retired judge brings to research, understand and resolve important disputes cannot be captured in words. For a change, look at their perspective and understand how much effort, analysis and professional inputs are required to resolve an issue of dispute and pass an award.

Typically, the judges in arbitration hear the arguments of each party and then come up to a decision. Their decision is binding. The difficulty is that many retired judges charge extensive amounts, sometimes in lakhs, for these cases. For the same reason, foreign companies have expressed reluctance to invest in India because in case of disputes, they will be forced to get involved with the process of international arbitration. They are worried about the costs involved than the time taken to resolve the dispute.

India Legal News on Arbitration in India: SC Demands Urgent Solution to the `High Fee Problem'

Coming back to the news pertaining to the Supreme Court bench, comprising of Justices R V Raveendran and H L Dattu, dismissed the Center's appeal in challenging a Delhi High Court order on the appointment of a retired High Court judge as sole arbitrator in a dispute between the Railways and a contractor.

The SC Bench objected to a practice of the court on appointing an arbitrator on the warring parties because they have no option but to pay the high fee demanded by the arbitrator. The Supreme Court bench said, "It is necessary to find an urgent solution for this problem...'

There seems to be a good solution if one looks at the model of institutional arbitration, wherein case-to-case fees is not fixed by an arbitrator himself, but follows a uniform rate approved by the supervising institution.

Another way to limit the arbitration fees is to have the fees fixed by the court, with the approval of the concerned parties, when arbitrators are being appointed. Parties to a dispute can also make their selection of an arbitrator by considering the fee structure that is submitted by retired judges to the Registry of their respective High Court.

Arbitration in India is a great endeavor for disputing parties who want speedy resolutions but not approved of by the recently appointed Chief Justice of India, Justice SH Kapadia, who is reportedly in favor of stopping it.

The question is whether we need to incorporate better practices in the process or scrap the process altogether,

TDS refundable not shown/claimed in return of income Merely because assessee h

 

TDS refundable not shown/claimed in return of income

Merely because assessee has not claimed refund in return form itself, it cannot be said that assessee is not entitled to refund.

- Vide Indglonal Investment & Finance Ltd. v. Income Tax Officer (2012) 43 (I) ITCL 529 (Del-HC)

(ITR (TRIB) Volume 17 : Part 2 (Issue dated : 16-07-2012) : SUBJECT INDEX TO CASES REPORTED IN THIS PART

ITR’S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 17 : Part 2 (Issue dated : 16-07-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Agricultural income --Fact of ownership of agricultural land not disputed--Claim for deduction of expenses for agriculture allowed--No evidence that agricultural operations were not performed--Income was agricultural--Income-tax Act, 1961, s. 10(1)-- Thangamani Vinodhagan v. Asst. CIT (Chennai) . . . 230

----Rose plants grown in green house--Mother plants grown in agricultural land using human labour --Income from rose flowers exempt as agricultural income--Income-tax Act, 1961, ss. 2(1), 10(1)--Circular No. 1, dated 27-3-2009-- CIT (Dy.) v. Best Roses Biotech P. Ltd. (Ahmedabad) . . . 211

Appeal to Appellate Tribunal --Powers of Tribunal--Power to admit additional ground of appeal--Question regarding limitation can be raised for first time before Tribunal--Income-tax Act, 1961-- Crompton Creaves Ltd. v. Dy. CIT (Mumbai) . . . 151

Business expenditure --Expenditure for purpose prohibited by law--Assessee exporting rice to Iraq under oil for food programme of United Nations--Paying commission to company for services in connection with export from procurement to final realisation of proceeds--Report by U. N. committee probing irregularities that company to which assessee paid commission was front company for Iraqi regime and payment used as kickback--Payment to Iraqi regime by agent not under assessee™s control--No denial that services rendered--No material to show assessee knew and was part of scheme to pay kickbacks to Iraqi regime--Payment deductible--Income-tax Act, 1961, s. 37, Expln. -- CIT (Dy.) v. Rajrani Exports P. Ltd. (Kolkata) . . . 239

Cash credits --Amounts repaid by debtors--Debtors not denying transaction--Amount not includible in assessee™s total income--Amount claimed to be advanced by sister--No evidence of such advance--Amount includible in total income of assessee--Income-tax Act, 1961, s. 68-- Thangamani Vinodhagan v. Asst. CIT (Chennai) . . . 230

Company --Book profits--Computation--Minimum alternate tax--Deduction from net profit on account of foreign exchange fluctuation--No adjustment available except as provided in Explanation --Reduction of amount while computing book profit--Not permissible--Income-tax Act, 1961, s. 115JB-- City Gold Media Ltd. v. ITO (Ahmedabad) . . . 192

Deduction of tax at source --Payment to non-resident--Failure to deduct tax at source--No assessment proceedings against non-resident for four years--Assessee cannot be treated as assessee in default under section 201--Income-tax Act, 1961, ss. 195, 201-- Crompton Creaves Ltd. v. Dy. CIT (Mumbai) . . . 151

Heads of income --Capital gains or business income--Proprietary concern of assessee taken over by company as going concern--Consideration for transfer is taxable as long-term capital gains--Assessee employed by company on salary and other terms of employment--Not a case of compensation for not engaging in similar business--Income-tax Act, 1961, ss. 28(va), 50B-- CIT (Asst.) v. Sangeeta Wij (Smt.) (Delhi) . . . 162

Income --Computation of income--Disallowance of expenditure relating to non-taxable income from firm--Borrowed amount invested as capital of firm--Interest relating to share of profit to be disallowed--Income-tax Act, 1961, s. 14A-- CIT (Asst.) v. Vinay Singal (Chandigarh) . . . 146

Penalty --Concealment of income--Capital gains--Claim for exemption--Investment of net consideration in residential property--Shortfall in amount invested due to wrong advice by counsel--No concealment of income--Penalty cannot be imposed --Income-tax Act, 1961, ss. 54, 271(1)(c)-- Majorjit Singh v. Asst. CIT (Chandigarh) . . . 183

----Failure to respond to notice under section 143(1) and (2)--Bona fide belief that income was non-taxable--Not reasonable explanation--Penalty imposable--Income-tax Act, 1961, s. 271(1)(b)-- Thangamani Vinodhagan v. Asst. CIT (Chennai) . . . 230

Rectification of mistakes --Depreciation--Withdrawal of deprecation on ground of non-user--Question debatable--Depreciation cannot be withdrawn in rectification proceedings--Income-tax Act, 1961, ss. 32, 154-- Thangamani Vinodhagan v. Asst. CIT (Chennai) . . . 230

Revision --Commissioner--Reassessment--Financial charges paid on funds borrowed for purchase of property--Part of closing stock--No finding that Assessing Officer applied his mind to facts of case--Direction to Assessing Officer to examine issue--Proper--Income-tax Act, 1961, s. 263-- Devi Developers P. Ltd. v. CIT (Delhi) . . . 187

Transfer pricing --Depreciation--Method of computing depreciation--No difference in result as a result of applying any of methods--Income-tax Act, 1961, s. 92C-- Lason India P. Ltd. v. Asst. CIT (Chennai) . . . 203

----Draft assessment order incorporating proposals of Transfer Pricing Officer--Draft assessment order erroneously termed final order--Assessing Officer has power to issue corrigendum to correct error--Income-tax Act, 1961, s. 144C-- Lason India P. Ltd. v. Asst. CIT (Chennai) . . . 203

Unexplained expenditure --Addition based on statement of director recorded by Central excise authorities--Addition not supported by evidence--Addition not justified --Additions under section 69C set aside by Tribunal in assessment year 2004-05--No new facts in assessment year 2008-09--Addition not valid--Income-tax Act, 1961, s. 69C -- ITO v. Arora Alloys Ltd. (Chandigarh) . . . 133

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(1) --Agricultural income--Rose plants grown in green house--Mother plants grown in agricultural land using human labour --Income from rose flowers exempt as agricultural income--Circular No. 1, dated 27-3-2009-- Deputy CIT v. Best Roses Biotech P. Ltd. (Ahmedabad) . . . 211

S. 10(1) --Agricultural income--Fact of ownership of agricultural land not disputed--Claim for deduction of expenses for agriculture allowed--No evidence that agricultural operations were not performed--Income was agricultural-- Thangamani Vinodhagan v. Asst. CIT (Chennai) . . . 230

Agricultural income--Rose plants grown in green house--Mother plants grown in agricultural land using human labour --Income from rose flowers exempt as agricultural income--Circular No. 1, dated 27-3-2009-- Deputy CIT v. Best Roses Biotech P. Ltd. (Ahmedabad) . . . 211

S. 14A --Income--Computation of income--Disallowance of expenditure relating to non-taxable income from firm--Borrowed amount invested as capital of firm--Interest relating to share of profit to be disallowed-- Asst. CIT v. Vinay Singal (Chandigarh) . . . 146

S. 28(va) --Heads of income--Capital gains or business income--Proprietary concern of assessee taken over by company as going concern--Consideration for transfer is taxable as long-term capital gains--Assessee employed by company on salary and other terms of employment--Not a case of compensation for not engaging in similar business-- Asst. CIT v. Sangeeta Wij (Smt.) (Delhi) . . . 162

S. 32 --Rectification of mistakes--Depreciation--Withdrawal of deprecation on ground of non-user--Question debatable--Depreciation cannot be withdrawn in rectification proceedings-- Thangamani Vinodhagan v. Asst. CIT (Chennai) . . . 230

S. 37, Expln .-- Business expenditure--Expenditure for purpose prohibited by law--Assessee exporting rice to Iraq under oil for food programme of United Nations--Paying commission to company for services in connection with export from procurement to final realisation of proceeds--Report by U. N. committee probing irregularities that company to which assessee paid commission was front company for Iraqi regime and payment used as kickback--Payment to Iraqi regime by agent not under assessee™s control--No denial that services rendered--No material to show assessee knew and was part of scheme to pay kickbacks to Iraqi regime--Payment deductible-- Deputy CIT v. Rajrani Exports P. Ltd. (Kolkata) . . . 239

S. 50B --Heads of income--Capital gains or business income--Proprietary concern of assessee taken over by company as going concern--Consideration for transfer is taxable as long-term capital gains--Assessee employed by company on salary and other terms of employment--Not a case of compensation for not engaging in similar business-- Asst. CIT v. Sangeeta Wij (Smt.) (Delhi) . . . 162

S. 54 --Penalty--Concealment of income--Capital gains--Claim for exemption--Investment of net consideration in residential property--Shortfall in amount invested due to wrong advice by counsel--No concealment of income--Penalty cannot be imposed-- Majorjit Singh v. Asst. CIT (Chandigarh) . . . 183

S. 68 --Cash credits--Amounts repaid by debtors--Debtors not denying transaction--Amount not includible in assessee™s total income--Amount claimed to be advanced by sister--No evidence of such advance--Amount includible in total income of assessee-- Thangamani Vinodhagan v. Asst. CIT (Chennai) . . . 230

S. 69C --Unexplained expenditure--Addition based on statement of director recorded by Central excise authorities--Addition not supported by evidence--Addition not justified--Additions under section 69C set aside by Tribunal in assessment year 2004-05--No new facts in assessment year 2008-09--Addition not valid-- ITO v. Arora Alloys Ltd. (Chandigarh) . . . 133

S. 92C --Transfer pricing--Depreciation--Method of computing depreciation--No difference in result as a result of applying any of methods-- Lason India P. Ltd. v. Asst. CIT (Chennai) . . . 203

S. 115JB --Company--Book profits--Computation--Minimum alternate tax--Deduction from net profit on account of foreign exchange fluctuation--No adjustment available except as provided in Explanation --Reduction of amount while computing book profit--Not permissible-- City Gold Media Ltd. v. ITO (Ahmedabad) . . . 192

S. 144C --Transfer pricing--Draft assessment order incorporating proposals of Transfer Pricing Officer--Draft assessment order erroneously termed final order--Assessing Officer has power to issue corrigendum to correct error-- Lason India P. Ltd. v. Asst. CIT (Chennai) . . . 203

S. 154 --Rectification of mistakes--Depreciation--Withdrawal of deprecation on ground of non-user--Question debatable--Depreciation cannot be withdrawn in rectification proceedings-- Thangamani Vinodhagan v. Asst. CIT (Chennai) . . . 230

S. 195 --Deduction of tax at source--Payment to non-resident--Failure to deduct tax at source--No assessment proceedings against non-resident for four years--Assessee cannot be treated as assessee in default under section 201-- Crompton Creaves Ltd. v. Deputy CIT (Mumbai) . . . 151

S. 201 --Deduction of tax at source--Payment to non-resident--Failure to deduct tax at source--No assessment proceedings against non-resident for four years--Assessee cannot be treated as assessee in default under section 201-- Crompton Creaves Ltd. v. Deputy CIT (Mumbai) . . . 151

S. 263 --Revision--Commissioner--Reassessment--Financial charges paid on funds borrowed for purchase of property--Part of closing stock--No finding that Assessing Officer applied his mind to facts of case--Direction to Assessing Officer to examine issue--Proper-- Devi Developers P. Ltd. v. CIT (Delhi) . . . 187

S. 271(1)(b) --Penalty--Failure to respond to notice under section 143(1) and (2)--Bona fide belief that income was non-taxable--Not reasonable explanation--Penalty imposable-- Thangamani Vinodhagan v. Asst. CIT (Chennai) . . . 230

S. 271(1)(c) --Penalty--Concealment of income--Capital gains--Claim for exemption--Investment of net consideration in residential property--Shortfall in amount invested due to wrong advice by counsel--No concealment of income--Penalty cannot be imposed-- Majorjit Singh v. Asst. CIT (Chandigarh) . . . 183

(ITR) Volume 345 Part 5 (Issue dated 16-7-2012) : SUBJECT INDEX TO CASES REPORTED IN THIS PART

INCOME TAX REPORTS (ITR)

Volume 345 Part 5 (Issue dated 16-7-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Business expenditure --Capital or revenue expenditure--Expenditure on renovation of business premises taken on lease--Deductible--Amount paid to lessor not deductible--Income-tax Act, 1961-- CIT v . Lucent Technologies Hindustan Ltd .
(Karn) . . . 407

----Loss on account of fluctuation in rate of foreign exchange--Loss whether deductible--Principles laid down by Supreme Court in Woodward Governor India P. Ltd. 312 ITR 254 applicable--Matter remanded--Income-tax Act, 1961-- CIT v. Lucent Technologies Hindustan Ltd . (Karn) . . . 407

Capital gains --Exemption--Scope of section 54F--Investment of net consideration in residential house--Sale of shares and payment of part of net consideration to developer for construction of residential house--Construction almost complete in three years--Assessee entitled to benefit of section 54F--Income-tax Act, 1961, s. 54F-- CIT v. Sambandam Udaykumar (Karn) . . . 389

Depreciation --Scope of section 32(1)(ii)--Meaning of intangible assets--Business or commercial rights not limited to categories enumerated--Commercial rights facilitating business and right to sell products--Assessee entitled to depreciation in respect of such intangible assets--Income-tax Act, 1961, s. 32(1)(ii)-- Areva T and D India Ltd. v. Deputy CIT (Delhi) . . . 421

Double taxation relief --Income from permanent establishment in man taxed under Oman law--Profits therefrom to be excluded--Double Taxation Avoidance Agreement between India and Oman, art. 7-- CIT v . Essar Oil Ltd . (Bom) . . . 443

Foreign projects --Special deduction--Condition that receipts should be brought into India in foreign exchange--Part of receipts used to repay foreign currency loan and balance repatriated--Assessee entitled to deduction in respect of entire foreign currency earnings--Income-tax Act, 1961, s. 80HHB-- CIT v . Essar Oil Ltd . (Bom) . . . 443

Interpretation of taxing statutes --Principle of ejusdem generis-- Areva T and D India Ltd . v. Deputy CIT (Delhi) . . . 421

----Provision beneficial to assessee-- CIT v. Sambandam Udaykumar (Karn) . . . 389

Penalty --Concealment of income--Credit in accounts discovered to be untrue--Notice of reassessment--Return filed including amount representing credit--Admission of concealment--No burden on Revenue to prove concealment--Assessing Officer directing penalty proceedings in order of assessment--Sufficient to prove satisfaction of Assessing Officer--Levy of penalty--Valid--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Sangmeshwara Associates (Karn) . . . 396

Precedent --Effect of decision of Supreme Court in Woodward Governor India P. Ltd. 312 ITR 254-- CIT v . Lucent Technologies Hindustan Ltd. (Karn) . . . 407

Reassessment --Notice--Excess claim of depreciation on plant and machinery--Contentions and issues raised for reopening not examined--Matter remanded--Income-tax Act, 1961, ss. 147, 148-- CIT v . Jagson International Ltd . (Delhi) . . . 414

Revision --Commissioner--Special deduction--Industrial undertaking--Assessee having two units, one entitled to deduction and the other not--Revision on ground deduction wrongly granted on interest--Commissioner holding assessment erroneous for lack of enquiry into bifurcation of interest and remanding matter to Assessing Officer--Tribunal setting aside revision going into merits--Not proper--Matter remanded--Income-tax Act, 1961, s. 263-- CIT v . DLF Power Ltd . (Delhi) . . . 446

----Erroneous and prejudicial to Revenue--Exemption--Assessee making export out of two units, one exempt and the other not--Orders booked abroad executed by both units and purchased by common parties--Commission for booking orders abroad debited entirely in account of unit which was not exempt--Failure by Assessing Officer to inquire whether any part of commission attributable to orders placed on and exports made by exempt unit--Revision justified--Income-tax Act, 1961, ss. 10A, 263-- CIT v. Harsh J. Punjabi (Delhi) . . . 451

Wealth-tax --Valuation of asset--Land in excess of limit permitted by Urban Land Ceiling Act--To be valued taking restriction into account, not at market value--Land acquired in 1960--Department accepting direction for valuation for 1988-89 to 1991-92 on basis of compensation under Land Ceiling Act--Valuation for other years at market value without taking into account restriction--Not permissible--Wealth-tax Act, 1957, s. 7-- Aims Oxygen Pvt. Ltd . v . CWT [FB] (Guj) . . . 456