Just a moment...

Top
Help
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedback

Contact Us At :

E-mail: [email protected]

Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
Make Most of Text Search
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
  6. Text Search
  7. The system will try to fetch results that contains ALL your words.
  8. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
  9. Text Search
Add to...
You have not created any category. Kindly create one to bookmark this item!
Create New Category
Hide
Title :
Description :
❮❮ Hide
Default View
Expand ❯❯
Close ✕
🔎 TMI Notes - Adv. Search
TEXT SEARCH:

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In:
Main Text + AI Text
  • Main Text
  • Main Text + AI Text
  • AI Text
Law:
---- All Laws----
  • ---- All Laws----
  • Benami Property
  • Bill
  • Central Excise
  • Companies Law
  • Customs
  • DGFT
  • FEMA
  • GST
  • GST - States
  • IBC
  • Income Tax
  • Indian Laws
  • Money Laundering
  • SEBI
  • SEZ
  • Service Tax
  • VAT / Sales Tax
Types:
---- All Types ----
  • ---- All Types ----
  • Act Rules
  • Case Laws
  • Circulars
  • Manuals
  • News
  • Notifications
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
RelevanceDefaultDate
    Cash Transaction Penalties under Indian Tax Law : Clause 450 of the Income Tax Bill, 2025 Vs. Sectio...
    Evolution of Penalty Provisions for Failure to Collect Tax at Source : Clause 449 of the Income Tax ...
    Practical and Legal Implications of Penalty for TDS Defaults in Complince under Indian Income Tax La...
    Practical Dimensions of Penalty for Non-Submission of Accountant's Report in Indian Taxation : Claus...
    Audit Compliance and Penalty Provisions under Indian Income Tax Law : Clause 446 of the Income Tax B...
    Penalties for defeating the policy objective of fostering genuine charitable activities by Related P...
    Penalizing False Accounting Entries : Clause 444 of the Income Tax Bill, 2025 Vs. Section 271AAD of ...
    Legal and Practical Dimensions of Penalties for Undisclosed Income in Indian Taxation : Clause 443 o...
    Legal Framework for Documentation Penalties under Indian Tax Law : Clause 442 of the Income Tax Bill...
    Penalty Provisions for Non-maintenance of Books under Indian Income Tax Law : Clause 441 of the Inco...
    Immunity from Penalty and Prosecution in Income Tax Law : Clause 440 of the Income Tax Bill, 2025 Vs...
    Penalty Provisions for Under-Reporting and Misreporting of Income under Income-tax Law : Clause 439 ...
    Section 269T of the Income-tax Act, 1961 : Clause 189 of Income Tax Bill, 2025 Vs. Explanation to Se...
    Evolution of Cash Transaction Controls in Indian Tax Law : Clause 188 of the Income Tax Bill, 2025 V...
    Change in India's Digital Payment Mandate : Clause 187 of the Income Tax Bill, 2025 Vs. Section 269S...
    Restricting High-Value Cash Transactions in India : Clause 186 of the Income Tax Bill, 2025 Vs. Sect...
    Restricting Cash Transaction Regime : Clause 185 of Income Tax Bill, 2025 Vs. Section 269SS of Incom...
    Defining the High Court for Tax Matters : Clause 374 of the Income Tax Bill, 2025 Vs. Section 269 of...
    Monetary Limits of Filing of Appeals by Income-tax Authorities : Clause 373 of the Income Tax Bill, ...
    Continuity and Evolution of computation of limitation periods for filing appeals or applications in ...
❯❯
MaximizeMaximizeMaximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

    +

    Are you sure you want to delete "My most important" ?

    NOTE:

    Notes
    Showing Results for :
    Reset Filters
    Results Found:
    Show All SummariesHide All Summaries
    Act RulesBills
    Show AI Summary
    Cash transaction penalty: acceptance of prohibited loans or deposits triggers penalty equal to amount received under the new clause.
    Clause 450 imposes a penalty equal to the amount of any loan, deposit or specified sum taken or accepted in contravention of the substantive prohibition, centralizes authority to impose that penalty with the Assessing Officer, and leaves key interpretive and procedural questions-such as the definition of "specified sum", the availability of a reasonable cause exception, and limitation and hearing procedures-to be clarified elsewhere in the Bill or by administrative guidance.
    Act RulesBills
    Show AI Summary
    Penalty for failure to collect tax at source: Assessing Officer may impose penalty equal to uncollected tax, discretion noted.
    Clause 449 provides that any person required under Chapter XIX-B who fails to collect the whole or part of tax may be liable to a penalty equal to the amount of tax not collected, with the Assessing Officer empowered to impose that penalty; the clause covers total and partial failures, fixes the penalty quantum as equal to the uncollected tax, and does not expressly provide a reasonable cause exception.
    Act RulesBills
    Show AI Summary
    Penalty for failure to deduct tax at source: equal to unpaid tax, imposed at Assessing Officer's discretion.
    Clause 448 penalises failure to deduct, pay, or ensure payment of tax at source under Chapter XIX-B and specified notes, imposing a penalty equal to the tax unpaid and vesting discretion to impose that penalty in the Assessing Officer; the clause covers partial failures and obligations to ensure payment but is silent on an explicit reasonable cause defence.
    Act RulesBills
    Show AI Summary
    Failure to furnish accountant's report under section 172 may attract fixed statutory penalty; procedural safeguards need clarification.
    Clause 447 authorises the Assessing Officer to impose a fixed penalty of one lakh rupees for failure to furnish an accountant's report as required by section 172; the provision mirrors Section 271BA in structure and intent, emphasising a uniform fixed penalty to enforce documentary compliance, while raising issues about the scope of section 172, the absence of an explicit reasonable cause exception, and procedural safeguards such as show cause notice and opportunity to be heard.
    Act RulesBills
    Show AI Summary
    Audit compliance penalty: failure to obtain or file mandated audit reports may attract a capped percentage-based sanction.
    Clause 446 penalizes failure to obtain a mandatory audit or to furnish the audit report under s.63 by authorizing the Assessing Officer to impose a penalty equal to the lesser of a percentage of total sales, turnover or gross receipts for the relevant tax year(s) or a fixed monetary cap, thereby targeting both non-audit and non-filing conduct and centralizing enforcement discretion under a proportional, capped sanction.
    Act RulesBills
    Show AI Summary
    Penalty for diversion of charitable funds: escalating sanctions for benefits to related persons under the new income tax framework.
    Clause 445 links penalties to the charging of "specified income" under section 337 where a registered non-profit applies income for the benefit of a related person. It covers direct and indirect benefits, vests discretion in the Assessing Officer to impose a monetary penalty during proceedings, prescribes an equal-amount penalty for the first violation and a doubled penalty for subsequent violations, and does not require proof of mens rea.
    Act RulesBills
    Show AI Summary
    Penalty for false accounting entries: false or omitted entries made to evade tax attract a penalty equal to the entry amount.
    Penalty for false or omitted accounting entries applies where entries are material to computation of total income and made with intent to evade tax; penalty equals the aggregate amount of the false or omitted entry, extends to anyone who causes such entries, and covers use or intention to use forged documents, invoices without actual supply/receipt, and invoices involving non existent persons, with Assessing Officer and specified appellate officers empowered to impose the sanction.
    Act RulesBills
    Show AI Summary
    Penalty for undisclosed income: fixed tax-based sanction added to assessed tax for unexplained income, with limited exceptions.
    Clause 443 authorises tax officers and appellate commissioners to impose a fixed additional penalty on tax computed in respect of income determined from specified unexplained sources, while exempting amounts voluntarily disclosed and taxed within the relevant year, and barring a duplicate penalty under an alternate penalty provision; procedural safeguards in designated procedural sections apply to the imposition and appeal of the penalty.
    Act RulesBills
    Show AI Summary
    Documentation penalties: new clause preserves ad valorem and flat penalties, reinforcing strict transfer pricing compliance for cross border transactions.
    Clause 442 establishes penalties for failures to maintain, report, or furnish accurate documentation for international transactions and specified domestic transactions, comprising an ad valorem penalty imposed by the Assessing Officer or Commissioner (Appeals) for non maintenance, non reporting or incorrect information, and a prescribed authority's power to levy a flat monetary penalty for failure to furnish required information; the provision largely mirrors Section 271AA but omits an explicit "without prejudice" clause and does not address reasonable cause or proportionality concerns.
    Act RulesBills
    Show AI Summary
    Record keeping obligation triggers fixed penalty for non maintenance or non retention of prescribed tax records, raising proportionality concerns.
    Clause 441 imposes a fixed penalty for failure to keep, maintain, or retain prescribed books of account and documents as required by the statutory reference provision, and vests authority to impose the penalty in the Assessing Officer and appellate officers. The clause applies an objective standard of liability, omits an explicit savings clause preserving other penalty provisions, and contains no express exception for reasonable cause, raising issues of cumulative penalties and proportionality.
    Act RulesBills
    Show AI Summary
    Immunity from penalty: mechanism to obtain protection from penalty and prosecution when tax is paid and no appeal is filed.
    Clause 440 permits an assessee to apply for immunity from penalty and prosecution where tax and interest under the assessment/reassessment order are paid within the notice period and no appeal is filed; the application must be made within one month in prescribed form, the AO must decide within three months after giving opportunity of being heard, immunity is granted only after the appeal period expires and excludes cases of aggravated defaults, and an order on immunity is final and bars appeal or revision if accepted.
    Act RulesBills
    Show AI Summary
    Penalty for under-reporting: preserves formula-based computation and differential rates for misreporting, and procedural safeguards.
    Clause 439 establishes a formula-based penalty framework empowering a defined Competent Authority to impose penalties for seven specified scenarios of under-reporting, prescribes quantified computation methods for first assessments, reassessments and deemed income, preserves exceptions for bona fide explanations and documented transfer pricing adjustments, requires written orders and bars double penalisation, and differentiates penalties by imposing a higher sanction for misreporting defined by a specified list of misrepresentation and suppression acts.
    Act RulesBills
    Show AI Summary
    Mode of payment restrictions for property linked receipts expanded to include any monetary receipt related to proposed transfers.
    Clause 189 of the Income Tax Bill, 2025 defines "banking company", certain rural finance institutions, "specified sum", and "specified advance" to frame non cash payment rules for receipts and repayments linked to immovable property. It mirrors the Explanation to Section 269T in several respects-notably the definition of "specified advance"-but adds an explicit "specified sum" to capture any monetary receipt related to a proposed property transfer whether or not the transfer occurs, thereby potentially broadening regulatory coverage and creating interpretative issues where payments overlap the two terms.
    Act RulesBills
    Show AI Summary
    Mode of repayment restrictions: non cash repayment mandated for covered loans and advances to ensure traceability and compliance.
    Clause 188 mandates non cash repayment of loans, deposits and specified advances by account payee cheque, bank draft, electronic clearing or other prescribed electronic modes when the amount or the aggregate held by the person equals or exceeds twenty thousand rupees, with a higher threshold of two lakh rupees for primary agricultural credit societies and related rural banks. It exempts repayments to Government and regulated banking or notified entities, allows intra branch crediting by banks, broadly defines "loan or deposit," covers advances related to immovable property, and emphasizes aggregation to prevent splitting transactions.
    Act RulesBills
    Show AI Summary
    Digital payment mandate requires businesses to provide prescribed electronic modes, promoting traceability and reducing cash transactions.
    Clause 187 mandates that every person carrying on business whose sales, turnover, or gross receipts exceed the prescribed monetary threshold in the immediately preceding tax year shall provide facilities for accepting payment through prescribed electronic modes, in addition to any other electronic modes offered; rule-making will specify the required modes, and compliance carries operational, record-keeping and penal implications while raising interpretive issues around prescription, group aggregation, and regulatory harmonization.
    Act RulesBills
    Show AI Summary
    Restriction on high value cash transactions: mandatory use of prescribed banking or electronic modes to enhance traceability and compliance.
    Clause 186 prohibits receipt of cash at or above the specified monetary threshold except through account payee cheque, bank draft, electronic clearing, or other prescribed electronic modes, applying the ban to aggregated daily receipts from the same person, single transactions, and transactions linked to a single event or occasion; exemptions include government and specified banking entities and further classes as notified by the Central Government, while interpretive ambiguities and delegated rulemaking on permissible modes may require administrative clarification.
    Act RulesBills
    Show AI Summary
    Cash transaction restriction: acceptance of loans, deposits and advances must be made only through traceable banking or electronic modes.
    Clause 185 prohibits accepting loans, deposits or specified sums in cash when the current transaction, the unpaid balance of prior transactions with the same person, or their aggregate reaches the prescribed threshold, and permits receipt only by account-payee cheque, account-payee bank draft, electronic clearing through a bank account or other prescribed electronic modes; exceptions cover the Government, specified banking and statutory entities, notified bodies, a rural higher threshold for primary agricultural credit societies and a narrow agricultural income exception.
    Act RulesBills
    Show AI Summary
    Definition of High Court clarifies appellate forum for States and Union Territories in tax law, reducing jurisdictional ambiguity.
    Clause 374 of the Income Tax Bill, 2025, provides a comprehensive, enumerated definition of "High Court" by designating the specific High Court applicable to each State and Union Territory, updating nomenclature, reflecting post reorganization realities (including Jammu & Kashmir and Ladakh), and replacing reliance on piecemeal adaptation orders; this consolidation reduces jurisdictional uncertainty, aids administrative and judicial efficiency, and highlights the need for legislative updates or transitional provisions if future territorial changes occur.
    Act RulesBills
    Show AI Summary
    Monetary limits on tax appeals: Board may set filing thresholds; non filing does not amount to departmental acquiescence.
    Clause 373 authorises the Board to fix monetary limits and other criteria for filing appeals by income tax authorities, permits the Board to revise those limits, and provides that non filing of an appeal in one case does not preclude filing in other years or against other assessees. The clause bars assessees from claiming departmental acquiescence due to non filing and directs tribunals and courts to have regard to the Board's instructions and the circumstances of filing or non filing while leaving the weight of those instructions to judicial discretion.
    Act RulesBills
    Show AI Summary
    Exclusion of time to obtain copy suspends limitation for appeals and applications when copy not provided, subject to diligence.
    Clause 372 excludes the day of service and, where a copy was not provided with the notice, the time required to obtain that copy from computation of limitation for appeals and applications; the exclusion is subject to the assessee's reasonable diligence and requires documentary proof of application and receipt, with electronic service and portal access raising specific interpretive issues.

    TMI Notes

    Back

    All TMI Notes

    Showing Results for :
    Reset Filters
      No Records Found

      TMI Notes

      Back

      All TMI Notes

      whatsappJoin Channel
      Showing Results for : Reset Filters

      Introduction of concept of mediation and Advance Ruling System for Residents to reduce tax litigation and more clarity

      15 September, 2020

      Contents
      Plus +
      Summary
      Note

      Note

      -

      Bookmark

      Print

      Print

      2020 (9) TMI 496 - Supreme Court

      While decided an issue pertaining to AY 1976-77, honorable Supreme Court has wrote two postscript with the following note:

      We have been persuaded to write two postscripts on account of the backbreaking dockets which are ever increasing and as a move towards a trust between the Tax Department and the assessee, and we hope that both the aspects meet consideration at an appropriate level. [Para 21]

       

      Postscript 1:

      1. The Indian legal system is reeling under a docket explosion.

      The Government and public authorities are active contributories to this deluge. To top it, a number of litigations arise inter se the Government and its bodies and, thus, the only question, as stated in the beginning, is which pocket of the Government will be benefitted?

      2. The aforesaid position resulted in a judicial innovation with the Supreme Court passing orders in Oil and Natural Gas Commission & Anr. v. Collector of Central Excise [1991 (10) TMI 58 - Supreme Court] requiring that such cases must be referred to a Committee to be appointed by the Government to facilitate a resolution of such disputes and that no case should be filed without the approval of this Committee. This system was a failure as is apparent from the facts of the present case, where the SLP filed by the appellant-Corporation was initially dismissed with liberty to revive the same in case the High Powered Committee granted such a permission which was so granted in a meeting held on 14.08.2009. The said Committee discussed the legal ramifications, and in some way opined in favour of the appellant-Corporation, as is apparent from the discussion aforesaid. But the ball was again lobbed back into the Court to adjudicate the said issue rather than a resolution being reached. The result was only the revival of the appeal, and the consequent decision which has seen the light of the day only now.

      3. The aforesaid failure of the system resulted in the Supreme Court recalling its orders in the ONGC cases vide Electronics Corporation of India v. Union of India. [2011 (2) TMI 3 - Supreme Court].

      4. The Central Government and the State authorities have been repeatedly emphasising that they have evolved a litigation policy. Our experience is that it is observed more in breach. The approach is one of bringing everything to the highest level before this Court, so that there is no responsibility in the decision-making process – an unfortunate situation which creates unnecessary burden on the judicial system. This aspect has also been commented upon in a judgment of this Court in Union of India & Ors. v. Pirthwi Singh & Ors., [2018 (4) TMI 1586 - Supreme Court]   albeit between the Government and the private parties, where the question of law had been settled and yet the appeal was filed only to invite a dismissal. The object appears to be that a certificate for dismissal is obtained from the highest court so that a quietus could be put to the matter in the Government Departments. Undoubtedly, this is complete wastage of judicial time and in various orders of this Court it has been categorized as “certificate cases”, i.e., the purpose of which is only to obtain this certificate of dismissal.

      5. The 126th Law Commission of India Report titled ‘Government and Public Sector Undertaking Litigation Policy and Strategies’ debated the Government versus Government matters which weighed heavily on the time of the Courts as well as the public exchequer. This was as far back as in 1988. It was only in the year 2010 that the National Litigation Policy (for short ‘NLP’) was formulated with the aim of reducing litigation and making the Government an efficient and responsible litigant. Five (5) years later it reportedly saw a revision to increase its efficacy, but it has hardly made an impact. In the year 2018, the Central Government gave its approval towards strengthening the resolution of commercial disputes of Central Public Sector Enterprises (for short ‘CPSEs’)/ Port Trusts inter se, as well as between CPSEs and other Government Departments/Organisations. The aim was and is to put in place a mechanism within the Government for promoting a speedy resolution of disputes of this  kind, however it excluded disputes relating to Railways, Income Tax, Customs and Excise Departments. It has now been made applicable to all disputes other than those related to taxation matters. This was pursuant an order passed in The Commissioner of Income Tax (Exemptions) v. National Interest Exchange of India -SLP (C) Diary No. 35567 of 2019 [2020 (3) TMI 1250 - SC ORDER] by a bench of which one of us (Sanjay Kishan Kaul, J.) was a part.

      6. Insofar as non-taxation matters are concerned, the Administrative Mechanism for Resolution of CPSEs Disputes was conceptualised to replace the Permanent Machinery of Arbitration and to promote equity through collective efforts to resolve disputes. It has a two-tiered structure.

      7. At the first level, commercial disputes will be referred to the Committee comprising Secretaries of the Administrative Ministries/Departments to which the disputing parties belong and the Secretary, Department of Legal Affairs. In case the two disputing parties belong to the same Ministry/Department, the Committee will comprise Secretary of Administrative Ministry/Department concerned; the Secretary, Department of Legal Affairs and the Secretary, Department of Public Enterprises. If a dispute is between a CPSE and a State Government Department/Organisation, the Committee will comprise of the Secretary of the Ministry Department of the Union to which the CPSE belongs, the Secretary, Department of Legal Affairs and the Chief Secretary of the State concerned. Such disputes are ideally to be resolved at the first level itself within a time schedule of three (3) months, and in the eventuality of them remaining unresolved, the same may be referred to the Cabinet Secretary at the second level, whose decision will be final and binding on all concerned.

      8. We are of the opinion that one of the main impediments to such a resolution, plainly speaking, is that the bureaucrats are reluctant to accept responsibility of taking such decisions, apprehending that at some future date their decision may be called into question and they may face consequences post retirement. In order to make the system function effectively, it may be appropriate to have a Committee of legal experts presided by a retired Judge to give their imprimatur to  the settlement so that such apprehensions do not come in the way of arriving at a settlement. It is our pious hope that a serious thought would be given to the aspect of dispute resolution amicably, more so in the post-COVID period.

      9. In most countries, mediation has proved to be an efficacious remedy and here we are talking about mediation inter se the Government authorities or Government departments. India is now a signatory to the Singapore Convention on Mediation and we understand that a serious thought is being given to bring forth a comprehensive legislation to institutionalise mediation, in furtherance of this function to which India has committed itself.

      Postscript 2:

      10. We now turn to the issue of matters pertaining to CPSEs and Government authorities insofar as taxation matters are concerned,  because they are consistently sought to be carved out as a separate category of cases. One of the largest areas of litigation for the Government is taxation matters. The petition rate of the tax department before the Supreme Court is at 87%. - See ‘Economic Survey 2017-19 – Volume 1’ by the Department of Economic Affairs, Ministry of Finance, Government of India So, the question is can something be done about it?

      11. In our opinion, a vibrant system of Advance Ruling can go a long way in reducing taxation litigation. This is not only true of these kinds of disputes but even disputes between the taxation department and private persons, who are more than willing to comply with the law of the land but find some ambiguity. Instead of first filing a return and then facing consequences from the Department because of a different perception which the Department may have, an Advance Ruling System can facilitate not only such a resolution, but also avoid the tiers of litigation which such cases go through as in the present case. In fact, before further discussing this Advance Ruling System, we can unhesitatingly say that, at least, for CPSEs and Government authorities, there would be no question of taking this matter further once an Advance Ruling is delivered, and even in case of private persons, the scope of any further challenge is completely narrowed down.

      12. It is as far back as in 1971 that a report was submitted by the Direct Taxes Enquiry Committee under the Chairmanship of Dr. K.N. Wanchoo, recognising the need for providing Advance Ruling System, particularly in cases involving foreign collaboration. The aim was to give advance rulings to taxpayers or prospective taxpayers, which would then considerably reduce the Revenue’s workload and decrease the number of disputes. This finally resulted in a scheme of Advance Ruling being brought into effect in 1993, with the introduction of a new Chapter in the Income Tax Act, 1961 (hereinafter referred to as the ‘IT Act’). A quasi-judicial tribunal was established as the Authority for Advance Rulings (for short ‘AAR’) to provide certainty and avoid litigation related to taxation of transactions involving non- residents. The scope of the transactions on which an advance ruling can be sought from the AAR has gradually increased to now include both residents and non-residents, who can seek the same for issues having a substantial tax impact. Chapter XIX-B of the IT Act deals with advance rulings and it has been defined in Section 245N(a) of the  IT Act. These rulings are binding both on the Income Tax Department and the applicant, and while there is no statutory right to appeal, the Supreme Court has held in Columbia Sportswear Company v. Director of Income Tax Bangalore [2012 (8) TMI 105 - Supreme Court]  that a challenge an advance ruling first lies before the High Court, and subsequently before the Supreme Court. The advance ruling may be reversed in the event a substantial question of general public importance arises or a similar question is already pending before the Supreme Court for adjudication.

      13. The ground level situation is that this methodology has proved to be illusionary because there is an increasing number of applications pending before the AAR due to its low disposal rate and contrary to the expectation that a ruling would be given in six (6) months (as per Section 245R(6) of the IT Act), the average time taken is stated to be reaching around four (4) years!- See Deloitte Report on Advance Rulings in India: Delivering Greater Tax Certainty (Deloitte Tax Policy Paper 5, 2019)  There is obviously lack of adequate numbers of presiding officers to deal with the volume of cases. Interestingly, the primary reason for this is the large number of vacancies and delayed appointments of Members to the AAR. ibid In view of the time taken, the very purpose of AAR is defeated, resulting in the mechanism being used infrequently as is evident from the ever- increasing tax related litigation.

      14. We may notice a significant development in Section 245N of the IT Act. It was through Notification No.11456 dated 3.8.2000 that public sector companies were added to the definition of ‘applicant’, and in 2014, it was made applicable to a resident who had undertaken one or more transactions of the value of ₹ 100 crore or more.

      15. Insofar as a resident is concerned, the limit is so high that it cannot provide any solace to any individual, and we do believe that it is time to reconsider and reduce the ceiling limit, more so in terms of the recent announcement stated to be in furtherance of a tax friendly face-less regime!

      16. We may refer to the international scenario where there has been an incremental shift towards mature tax regimes adopting advance ruling mechanisms. The increase in global trade puts the rulings system at the centre-stage of a robust international tax cooperation regime. The Organisation for Economic Cooperation and Development (for short ‘OECD’) lists advance rulings as one of the indicators to assess trade facilitation policies, making it an aspirational international best practice standard. For example, Australia and New Zealand have a robust system of advance rulings wherein the decisions (which are public rulings affecting a large number of taxpayers) are given teeth by being made binding on the revenue authorities. New Zealand has gone a step further and innovated “status rulings” under which a taxpayer can apply to the Commissioner for a ruling on how a change in the law impacts an existing ruling.

      17. In the United States, there is a mechanism for the Treasury to authorise guidance in the form of revenue rulings, procedures and notices. The mechanism again, has been bolstered by subsequent practice and interpretations of the United States courts, where rulings have indicated that taxpayers may be penalised if they act inconsistently with legal interpretations set out in the revenue rulings, procedures or notices.

      18. Tax transparency has been a hallmark trait of the Swedish legal system. Swedish law requires public disclosure of ex ante tax administration such as advance rulings. Both the taxpayer as well as the Swedish Tax Agency can request an advance tax ruling, these rulings are published without information identifying the taxpayer that requested them. The Skatterättsnämnden, or the Council for Advance Tax Rulings is the Swedish Government agency which is vested with this power. The advance ruling system has played a crucial role in Sweden’s position as a country with one of the highest tax compliance rates in the world.

      19. The aim of any properly framed advance ruling system ought to be a dialogue between taxpayers and revenue authorities to fulfil the mutually beneficial purpose for taxpayers and revenue authorities of bolstering tax compliance and boosting tax morale. This mechanism should not become another stage in the litigation process.

      20. We, thus, consider it appropriate to recommend to the Central Government to consider the efficacy of the advance tax ruling system and make it more comprehensive as a tool for settlement of disputes rather than battling it through different tiers, whether private or public sectors are involved. A council for Advance Tax Ruling based on the Swedish model and the New Zealand system may be a possible way forward.

       


      Full Text:

      2020 (9) TMI 496 - Supreme Court

      Topics

      ActsIncome Tax