TaxTMI 
TaxTMI 
2016 (4) TMI 593
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....rned Standing Counsel for the Income Tax Department. 3. Since there are three writ petitions challenging the Constitutional validity of Section 94-A(1), there are three writ petitions challenging the validity of the Notification bearing No.86/2013 and three writ petitions challenging the press release, we deem it fit to extract Section 94-A in entirety, the Notification dated 1.11.2013 as well as the press release in entirety before we proceed to consider the grounds of challenge. 4. Section 94-A of the Income Tax Act reads thus : 94-A. Special measures in respect of transactions with persons located in notified jurisdictional area.- (1) The Central Government may, having regard to the lack of effective exchange of information with any country or territory outside India, specify by notification in the Official Gazette such country or territory as a notified jurisdictional area in relation to transactions entered into by any assessee. (2) Notwithstanding anything to the contrary contained in this Act, if an assessee enters into a transaction where one of the parties to the transaction is a person located in a notified jurisdictional area, then- ....
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....any person located in a notified jurisdictional area is entitled to receive any sum or income or amount on which tax is deductible under Chapter XVII-B, the tax shall be deducted at the highest of the following rates, namely:- (a) at the rate or rates in force; (b) at the rate specified in the relevant provisions of this Act; (c) at the rate of thirty per cent. (6) In this Section,- (i) "person located in a notified jurisdictional area" shall include,- (a) a person who is resident of the notified jurisdictional area; (b) a person, not being an individual, which is established in the notified jurisdictional area; or (c) a permanent establishment of a person not falling in Sub-Clause (a) or Sub-Clause (b), in the notified jurisdictional area; (ii) "permanent establishment" shall have the same meaning as defined in Clause (iiia) of Section 92F." 5. The Notification dated 1.11.2013 reads as follows : "Ministry of Finance (Department of Revenue) (Central Board of Direct Taxes) Notification New Delhi the 1st November 2013 No.86/2013 [Income Tax] S.O.3307(E) - In exercise of t....
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....I/13. The implications of such a Notification are summarized as under: - If an assessee enters into a transaction with a person in Cyprus, then all the parties to the transaction shall be treated as associated enterprises and the transaction shall be treated as an international transaction resulting in application of transfer-pricing regulations including maintenance of documentations [Section 94-A(2)]. - No deduction in respect of any payment made to any financial institution in Cyrus shall be allowed unless the assessee furnishes an authorization allowing for seeking relevant information from the said financial institution [Section 94-A(3)(a) read with Rule 21AC and Form 10FC]. - No deduction in respect of any other expenditure or allowance arising from the transaction with a person located in Cyprus shall be allowed unless the assessee maintains and furnishes the prescribed information [Section 94-A(3)(b) read with Rule 21AC]. - If any sum is received from a person located in Cyprus, then the onus is on the assessee to satisfactorily explain the source of such money in the hands of such person or in the hands of the beneficial owner, ....
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.... to show cause as to why each one of them should not be treated as an assessee in default, warranting the initiation of proceedings under Section 201(1)/201(1A) of the Income Tax Act. 10. In response to the show cause notices, the petitioners appeared before the Assessing Officer through their authorised representative and filed written submissions along with a legal opinion that they claimed to have obtained on 16.10.2014, the date on which, they entered into the Securities Purchase Agreement. 11. The main contention of the writ petitioners before the Income Tax Officer was that they would have had an obligation to deduct tax at source, only if there was chargeability of a payment under Section 195. The petitioners claimed that they had in fact purchased the securities at a rate below their face value and that the Cyprus company had in fact suffered a loss. 12. But, overruling the objections, the Income Tax Officer passed three separate orders dated 27.4.2015 under Section 201(1)/201(1A), directing the petitioners to pay tax and interest, as determined. A notice of demand under Section 156 was also issued. 13. It appears that the petitioners immediately filed statutory....
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.... 18. Admittedly, India has entered into an 'Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital', with the Republic of Cyprus in December 1994. The Agreement entered into force on 21.12.1994 and the Central Government also issued a notification bearing No.G.S.R. 805(E) dated 26.12.1995 in exercise of the powers conferred by Section 90 of the Income Tax Act, 1961. The Agreement also contains a provision in Article 28 for 'Exchange of Information' and a provision in Article 27 prescribing a 'Mutual Agreement Procedure' to address any difficulties or doubts arising as to the interpretation or application of the Agreement. 19. Therefore, the contention of Mr.Arvind P.Datar, learned Senior Counsel appearing for the petitioners is that once India has entered into a Treaty with another country and such Treaty has also been notified under Section 90 of the Income Tax Act, 1961, the Treaty becomes a law under Article 253. Therefore, the Parliament is not competent to enact any law by invoking Article 245(1), as the power under Article 245(1) is subordinate to the power under Article ....
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....I and III of the 7th Schedule. 26. The scheme of Chapter I of Part XI of The Constitution, contained in Articles 245 to 255, (excluding those relating to repugnancy and the one relating to Article 253) can be best understood in simple terms as follows : (i) Parliament has exclusive power to make laws with respect to matters enumerated in List I of the Seventh Schedule. (ii) Parliament also has the exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List. (iii) Both Parliament as well as the State Legislature would have power to make laws with respect to any of the matters enumerated in List III. (iv) The Legislature of a State will have the exclusive power to make laws for the State, with respect to any of the matters enumerated in List II. (v) The Parliament would also have the power to legislate with respect to a matter enumerated in the State List, subject to the fulfillment of certain conditions stipulated in Article 249. The Parliament would have a similar power whenever a Proclamation of Emergency is in operation. 27. Keeping in mind the scheme of Chapter I of Part XI, let....
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....a) to the matters with respect to which Parliament has power to make laws; and (b) to the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue of any Treaty or Agreement: Provided that the executive power referred to in Sub-Clause (a) shall not, save as expressly provided in this Constitution or in any law made by Parliament, extend in any State to matters with respect to which the Legislature of the State has also power to make laws." 31. The law making power of the Parliament in relation to international Treaties, Agreements and Conventions can be traced to Entries 10, 12, 13 and 14 of List I of the 7th Schedule to The Constitution. Entry 10 relates to foreign affairs and all matters, which bring the Union into relation with any foreign country. Entry 12 deals with United Nations Organisation. Entry 13 relates to participation in international conferences, associations and other bodies and implementing of decisions made there at. Entry 14 relates to 'entering into Treaties and Agreements with foreign countries and implementing of Treaties, Agreements and Conventions with foreign countries'. 32. Hence, A....
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....ed into by the country with one or more countries on one-to-one basis. 36. Unless the distinction between (i) an international Treaty or Convention ratified by India and (ii) a bilateral or multilateral Treaty or Agreement entered into by India with one or more specific countries on one-to-one basis is understood clearly, the legal implications of these two types of Treaties cannot be understood. This point can be well understood, if we have a look at the case law that has developed on the question of enforcement of the rights arising out of Conventions or Treaties ratified by India. 37. In Jolly George Varghese Vs. The Bank of Cochin [AIR 1980 SC 470], the Supreme Court held that the executive power of the Government of India to enter into international Treaties does not mean that international law, ipso facto, is enforceable upon ratification. The Supreme Court observed that the Indian Constitution followed the 'dualistic' doctrine with respect to international law. Consequently, the Court held that international Treaties do not automatically form part of international law, unless incorporated into the legal system by a legislation made by the Parliament. In that ca....
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....w. In Kesavanandhabharathi Vs. State of Kerala [1973 Supp. SCR 1], Sikri,C.J., stated: "It seems to me that in view of Article 51 of the Directive Principles, this Court must interpret the Constitution, if not intractable, which is after all, an intractable law, in the light of the United Nations Charter and the solemn declaration subscribed to by India." In A.D.M., Jabalpur Vs. Shivakant Shukla [AIR 1976 SC 1207], the Supreme Court referred to Articles 862 and 963 of the Universal Declaration of Human Rights, for projecting the scope of Article 21. 42. In M.V.Elizabeth Vs. Harwan Investment & Trading Private Limited [1993 Supp. (2) SCC 433], the Supreme Court was concerned with a very tricky situation relating to the Admiralty Jurisdiction of a High Court. Though several international Conventions were relied upon, some of them had not even been ratified by India. But, the Supreme Court pointed out that such international Conventions contained the unified rules of law drawn from different legal systems and that they embody the principles of law recognized by States. As a consequence, those Conventions were held by the Supreme Court to be regarded as part of the common law. Never....
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.... for the purpose of interpretation of guarantee of gender equality, right to work with human dignity in Articles 14, 15, 19(1)(g) and 21 of The Constitution." The Court further held that "any international Convention not inconsistent with the fundamental rights and in harmony with its spirit must be read into those provisions to enlarge the meaning and content thereof to promote the object of the Constitutional guarantee." 46. In Pratap Singh Vs. State of Jharkhand [2005 (3) SCC 551], the Supreme Court reiterated that "the Courts can refer to and follow international Treaties, Covenants and Conventions, to which, India is a party, although they may not be part of our municipal law." In this case, the Court held that the Juvenile Justice (Care and Protection of Children) Act, 2000 should be interpreted in the light of the Universal Declaration of Human Rights as well as the United Nations Standard Minimum Rules for the Administration of Juvenile Justice 1985 (Beijing Rules). 47. In Entertainment Network (I) Ltd. Vs. Super Cassette Industries [2008 (9) Scale 69], the Court once again affirmed that international Covenants can be pressed into service for interpreting domestic leg....
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....auritius by alienation of shares of an Indian company shall be taxable only in Mauritius according to the tax laws of that country. This resulted in a large number of foreign institutional investors, resident in Mauritius, investing large amounts of capital in Indian companies. But, after finding that most of those companies incorporated in Mauritius happened to be mere shell companies, the Income Tax Authorities started issuing show cause notices for taxing the profits and dividends accrued to them in India. When the Mauritius companies retaliated by withdrawing their investments, political compulsions made the Central Board of Direct Taxes to issue a clarificatory circular bearing No.789 dated 13.4.2000. 52. The above circular was challenged before the High Court of Delhi, by a non governmental organisation by name Azadi Bachao Andolan, by way of a public interest litigation. In a second writ petition, they also prayed among other things, for declaring and delimiting the powers of the Central Government under Section 90 of the Income Tax Act, in the matter of entering into an Agreement with the Government of any country outside India. 53. The High Court of Delhi allowed the....
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.... effect to the Agreement or Treaty." 56. In other words, the Court opined that Treaties could be of two types, one restricting the rights of citizens or modifying the law of the State and the other not affecting the rights of citizens. Treaties, which fall under the first type, require legislation, to have binding force upon the citizens and those, which fall under the second type, do not require any legislation. 57. Having identified two types of Treaties and the essential difference between them, the Supreme Court held in paragraph 19 that though in the United States, a Treaty becomes part of the municipal law upon ratification by the Senate and though in the United Kingdom, such a Treaty would have to be endorsed by an order made by the Queen-in-Council, the position in India is that such a Treaty would have to be made into an Act of Parliament. The Court also held in paragraph 19 of the report in Azadi Bachao Andolan that since the procedure of translating a Treaty into an Act of Parliament would be time consuming and cumbersome, a special procedure was evolved by enacting Section 90 of the Income Tax Act. 58. But, the difficulty in reconciling the opinion contained in....
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.....1. Since the tax Treaties are intended to grant tax relief and not put residents of a contracting country at a disadvantage vis-à-vis other taxpayers, Section 90 of the Income-tax Act has been amended to clarify that any beneficial provision in the law will not be denied to a resident of a contracting country merely because the corresponding provision in the tax Treaty is less beneficial." 61. In paragraphs 21 and 22 of its decision in Azadi Bachao Andolan, the Supreme Court indicated that the provisions of Sections 4 and 5 of the Income Tax Act, are expressly made subject to the provisions of the Act. As a consequence, they are subject to Section 90 and by necessary implication, they are also subject to the terms of Double Taxation Avoidance Agreement. After having pointed out the same, the Supreme Court held in paragraphs 28 and 29 as follows : "A survey of the aforesaid cases makes it clear that the judicial consensus in India has been that Section 90 is specifically intended to enable and empower the Central Government to issue a notification for implementation of the terms of a Double Taxation Avoidance Agreement. When that happens, the provisions of such a....
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....as follows : "90. (1) The Central Government may enter into an Agreement with the Government of any country outside India or specified territory outside India,- (a) for the granting of relief in respect of- (i) income on which have been paid both income-tax under this Act and income-tax in that country or specified territory, as the case may be, or (ii) income-tax chargeable under this Act and under the corresponding law in force in that country or specified territory, as the case may be, to promote mutual economic relations, trade and investment, or (b) for the avoidance of double taxation of income under this Act and under the corresponding law in force in that country or specified territory, as the case may be, or (c) for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under this Act or under the corresponding law in force in that country or specified territory, as the case may be, or investigation of cases of such evasion or avoidance, or (d) for recovery of income-tax under this Act and under the corresponding law in force in that country or specified territory, as the ca....
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....ssee, to whom such an agreement applies, would have the benefit of the application of the other provisions of the Income Tax Act, to the extent they are more beneficial to him. 67. In other words, the Parliament empowered the Central Government under Sub-Section (1) to enter into an agreement and simultaneously it conferred a benefit upon the assessee under Sub-Section (2). This Section 90 did not say either expressly or by necessary implication, that the law made by Parliament would stand eclipsed or excluded, to the extent it is inconsistent with the terms of the Agreement. 68. As a matter of fact, the observation made by the Supreme Court in paragraph 28 (shown by us in bold letters in the extract given in para 61 above) that the provisions of such an Agreement, with respect to cases to which where they apply, would operate even if inconsistent with the provisions of the Income Tax Act, cannot be viewed in isolation. If viewed in isolation, it would result in mutually inconsistent results. This can be demonstrated in the following paragraph. 69. First of all, Section 90(2) does not use a non obstante clause to say that the provisions of an agreement entered into by the ....
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....ccording to whom, only those Treaties affecting private rights, require legislation to become enforceable. 73. The followers of Alexandrowicz propound that the following Treaties may have to be translated into legislation, so as to have binding force : "(a) Treaties involving cession of territory; (b) Treaties, whose implementation requires addition to, or alteration of, the existing law; (c) Human rights Covenants and other instruments (d) If the Treaty calls for any legislation to facilitate its implementation within the country or any specific allocation of financial resources; (e) Treaties affecting private rights (f) Further, where the Constitution expressly mandates that a particular act can be done by legislation only, the Executive cannot transgress upon that competence of the legislature; (g) Also, the Executive cannot act contrary to the provisions of the law or cause prejudice to a person except by some legislative authority." 74. It is needless to point out that the Executive cannot acquire new rights against citizens merely by concluding Treaties. No new offences can be created merely by concluding a ....
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....l Government and the Government of a foreign country for avoidance of double taxation, as envisaged under Section 90. The Court further held that if a tax liability is imposed by the Act, the agreement may be resorted to either for reducing the tax liability or for altogether avoiding the liability. 78. There cannot be a quarrel with the proposition of law laid down in paragraph 8 of Kulandagan Chettiar. But, as we have indicated earlier, Section 90(2) does not deal with the question of conflict between a Treaty and the provisions of a statute. It merely deals with the option given to an assessee, to whom an agreement referred to in Section 90(1) applies, to choose either the provisions of the Treaty or the provisions of the Act, whichever is more beneficial to him. 79. No question arose directly either in Azadi Bachao Andolan or in Kulandagan Chettiar as to whether or not the Parliament has the power to make a law in respect of a matter covered by a Treaty. Therefore, the observations found in these two decisions, to the effect that the provisions of the Treaty will have effect even if they are in conflict with the provisions of the statute, cannot be stretched too far to co....
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....onstitutional scheme. 84. In Tractor Export Vs. Tarapore & Co. [AIR 1970 SC 1168], the Supreme Court pointed out that if the terms of the legislative enactment do not suffer from any ambiguity, they must be given effect to, even if they do not carry out the Treaty obligations. 85. As pointed out by the Supreme Court in Azadi Bachao Andolan, Section 90 of the Income Tax Act, 1961 (as it was originally adopted) was a reproduction of Section 49A of the 1922 Act. The 1922 Act was a colonial Act. Therefore, it would be useful to look at the views of the Privy Council, as propounded in Attorney General of Canada Vs. Attorney General of Ontario [AIR 1937 P.C. 82], which read as follows : "Within the British Empire, there is a well established rule that the making of a Treaty is an Executive act while the performance of its obligations, if they entail alteration of the existing domestic law, requires legislative action. Unlike some other countries, the stipulations of a Treaty duly ratified, do not within the Empire, by virtue of the Treaty alone, have the force of law. If the National Executive, the Government of the day decide to incur the obligations of a Treaty, which in....
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....on 90(1), is for the exchange of information. If one of the parties to the Treaty fails to provide necessary information, then such a party is in breach of the obligation under Article 26 of the Vienna Convention. The beneficiary of such a breach of obligation by one of the contracting parties (like the assessee herein) cannot invoke the Vienna Convention to prevent the other contracting party (India in this case) from taking recourse to internal law, to address the issue. 89. It will be of interest to note that in Ram Jethmalani, the Supreme Court took note of the Vienna Convention as well as the decision in Azadi Bachao Andolan and came to a conclusion towards the end of paragraph 70 of the SCC report, which reads as follows : "The Government cannot bind India in a manner that derogates from the Constitutional provisions, values and imperatives." The above observation, in our considered view, is a complete answer to the challenge of the petitioners to the power of the Parliament to enact Section 94A, despite the existence of an agreement entered into under Section 90(1). 90. Therefore, we are of the considered view that the challenge to the Constitutional validi....
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..... We believe that the only sure foundation for sustainable globalisation and rising prosperity for all is an open world economy based on market principles, effective regulation, and strong global institutions. 4. We have today therefore pledged to do whatever is necessary to: . restore confidence, growth, and jobs; . repair the financial system to restore lending; . strengthen financial regulation to rebuild trust; . fund and reform our international financial institutions to overcome this crisis and prevent future ones; . promote global trade and investment and reject protectionism, to underpin prosperity; and . build an inclusive, green, and sustainable recovery. By acting together to fulfil these pledges we will bring the world economy out of recession and prevent a crisis like this from recurring in the future. 5. The Agreements we have reached today, to treble resources available to the IMF to $750 billion, to support a new SDR allocation of $250 billion, to support at least $100 billion of additional lending by the MDBs, to ensure $250 billion of support for trade finance, and to use the additional resources from ....
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....hakeable commitment to work together to restore growth and jobs, while preserving long-term fiscal sustainability, will accelerate the return to trend growth. We commit today to taking whatever action is necessary to secure that outcome, and we call on the IMF to assess regularly the actions taken and the global actions required. 11. We are resolved to ensure long-term fiscal sustainability and price stability and will put in place credible exit strategies from the measures that need to be taken now to support the financial sector and restore global demand. We are convinced that by implementing our agreed policies we will limit the longer-term costs to our economies, thereby reducing the scale of the fiscal consolidation necessary over the longer term. 12. We will conduct all our economic policies cooperatively and responsibly with regard to the impact on other countries and will refrain from competitive devaluation of our currencies and promote a stable and well-functioning international monetary system. We will support, now and in the future, to candid, even-handed, and independent IMF surveillance of our economies and financial sectors, of the impact of our pol....
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....e FSF's tough new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms; . to take action, once recovery is assured, to improve the quality, quantity, and international consistency of capital in the banking system. In future, regulation must prevent excessive leverage and require buffers of resources to be built up in good times; . to take action against non cooperative jurisdictions, including tax havens. We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over. We note that the OECD has today published a list of countries assessed by Global Forum against the international standard for exchange of tax information. . to call on the accounting standard setters to work urgently with supervisors and regulators to improve standards on valuation and provisioning and achieve a single set of high quality global accounting standards; and . to extend regulatory oversight and registration of Credit Rating Agencies to ensure they meet the international code of good practice, particularly to prevent unacceptable....
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....d unless the assessee furnishes an authorization, in the prescribed form, authorizing the Board or any other Income-tax authority acting on its behalf, to seek relevant information from the said financial institution; (iv) that no deduction in respect of any other expenditure or allowance (including depreciation) arising from the transaction with a person located in a notified jurisdictional area shall be allowed under any provision of the Act unless the assessee maintains such other documents and furnishes the information as may be prescribed: (v) that if any sum is received from a person located in the notified jurisdictional area, then, the onus is on the assessee to satisfactorily explain the source of such money in the hands of such person or in the hands of the beneficial owner, and in case of his failure to do so, the amount shall be deemed to be the income of the assessee; (vi) that any payment made to a person located in such area shall be liable to deduction of tax at the higher of the rates specified in the relevant provision of the Act or rate or rates in force or a rate of 30 per cent. Applicability - These amendments have been made effective....
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....ctions. 2. Special withholding tax rules. 5 Colombia Legislative 1. Disallowing deductions or credits with respect to certain transactions. 2. Special withholding tax rules. 3. The application of transfer pricing rules to transactions between unrelated parties/increased transfer pricing documentation requirements. 4. Increased information reporting requirements. 5. Other measures -Colombian citizens tax resident in a "tax haven" considered tax resident in Colombian, unless at least 50% of their income sourced or assets located in that jurisdiction. 6 Czech Republic Legislative 1. Special withholding tax rules. 7 Denmark Legislative 1. The current taxation of domestic shareholders on (certain) income of a controlled foreign company. 2. The denial of benefits on income/capital gains associated with shares in certain companies. 3. Disallowing deductions or credits with respect to certain transactions. Non-legislative 4. Increased audit risk for tax payers who engage in transactions with certain "high risk" jurisdictions. 8 France Legislative 1. The current taxation of domestic shareholders on (cert....
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....income of a controlled foreign company. 2. Disallowing deductions or credits with respect to certain transactions. 3. Special withholding tax rules. 4. The application of transfer pricing rules to transactions between related parties/increased transfer pricing documentation requirements. 5. Increased information reporting requirements. Non-legislative 6. Additional question(s) on tax returns as to the ownership of foreign assets. 7. Increased substantial requirements in respect of transactions involving certain jurisdiction. 14 Spain Legislative 1. The current taxation of domestic shareholders on (certain) income of a controlled foreign company. 2. The denial of benefits on income/capital gains associated with shares in certain companies. 3. Special withholding tax rules. 4. The application of transfer pricing rules to transactions between unrelated parties/increased transfer pricing documentation requirements. 5. Increased information reporting requirements. Non-legislative 1. Increased substantial requirements in respect of transactions involving certain jurisdictions. 15 UK Legislative 1. Increased penalties for use ....
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....urposes of the said Section." 97. The first ground of challenge to the above Notification is that it is ultra vires Section 94A(1). 98. But, we have already extracted Section 94A(1). This provision empowers the Central Government to specify by Notification in the official gazette, any country or territory outside India, as a notified jurisdictional area, in relation to transactions entered into by any assessee. This exercise may be done, by the Central Government, having regard to the lack of effective exchange of information with such a country or territory outside India. 99. The plain language of Sub-Section (1) of Section 94A leaves no room for any doubt that the Central Government has the power to issue a Notification, of the type impugned in these writ petitions. The power conferred by the Section cannot also be said to be uncontrolled and unbridled, as the Central Government has to exercise the power only in circumstances where there is lack of effective exchange of information. 100. In paragraph 9 of the counter affidavit filed on behalf of the Union of India, it is stated that the provisions of DTAA entered into by India with Cyprus on 21.12.1994, contain an obl....
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....e of information shall be made, including, where appropriate, exchange of information regarding tax avoidance. 2. The exchange of information or documents shall be either on a routine basis or on request with reference to particular cases or both. The competent authorities of the Contracting States shall agree from time to time on the list of the information or documents which shall be furnished on a routine basis. 3. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: (a) to carry out administrative measure at variance with the laws or administrative practice of that or of the other Contracting State; (b) to supply information or documents which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; and (c) to supply information or documents which would disclose any trade, business, industrial, commercial or professional secret or trade process or information the disclosure of which would be contrary to public policy." 103. On the basis of para 3(b) of Article 28, it was contended that certain types of in....
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....Agreement is already entered into under Section 90(1), to be a notified jurisdictional area. 109. But the aforesaid contention loses sight of the express language of Section 94-A(1). It uses the phrase "any country or territory". We cannot read the said phrase to mean "any country or territory other than those covered by Section 90(1)." In a taxing statute, we are not entitled to add or delete any expression. We are not also entitled to re-phrase the provision. Therefore, the challenge to the Notification dated 1.11.2013 is also bound to fail. C. Vires of the Press Release dated 1.11.2013 110. Following the Notification dated 1.11.2013, the Ministry of Finance issued a Press Release dated 1.11.2013. This Press Release actually contains four paragraphs (unnumbered). In the first paragraph, the Press Release speaks about the introduction of Section 94-A and the issue of the Rules thereunder. In the second paragraph, the Press Release speaks about the Agreement entered into with Cyprus. In the third paragraph the Press Release states that Cyprus has not been providing information sought for by the Indian authorities and that therefore, the Notification dated 1.11.2013 came to....
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....o drive home the above point, the learned Senior Counsel drew our attention to various provisions of the Act in which any one of these expressions is used. They are as follows:- Word Used Provision in Chapter XVII Sum 191 [Direct Payment] 194C [Payments to Contractors] 194IA [Transfer of Immovable Property] 194J [Fees for professional or technical services 194L [Acquisition of Capital Asset] 194LA [Acquisition of certain Immovable Property] 195 [Other Sums] 196 [Payable to Government, Reserve Bank or certain corporations] Income 190, 193 [Interest on Securities] 194-I [Rent], 194A [Other Interest] 194B [Winnings from Lottery] 194BB [Winnings from Horse Race] 194D [Insurance Commission] 194DA [Payments for Life Insurance] 194E [Payment to non-resident sportsmen] 194G [Commission on Sale of Lottery Ticket] 194H [Commission/Brokerage] 194K [Income in respect of Units] 194LB [Interest from Infrastruct....
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....rus and (3) the writ petitioners herein, it is contended by Mr.T.Pramod Kumar Chopda, learned Standing Counsel that the petitioners had entered into the transaction in question, with eyes wide open and hence their contentions lack merit. 119. Clause 6.4 of the Securities Purchase Agreement reads as follows:- "6.4 Skyngelor represents, warrants and covenants that the First Tranche Securities are being transferred hereunder at a loss and, thus, there is no obligation on the Buyers to withhold any Tax on the First Tranche Consideration being remitted to Skyngelor for the transfer of the First Tranche Securities. If despite such representation, any tax should be levied, the same shall be borne and paid by Skyngelor." 120. The above Clause in the Securities Purchase Agreement, exposes the frivolity of the contentions of the petitioners. After having taken care to indicate that if a tax is levied, it should be borne by the Cyprus company, the petitioners appear to have indulged in an adventure in making remittances in full. Actually the petitioners should have deducted tax at source in terms of Clause 6.4 of the Securities Purchase Agreement and thereafter fought a legal b....