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    Interpreting "Or": The Disjunctive Mandate for Personal Hearing in Tax Matters
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    Navigating the Registration Process u/s 80G: Insights from the ITAT Ruling
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    Ensuring Fair Proceedings: The Importance of Proper Notice Service in Income Tax Matters
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    Case LawsGST
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    Personal hearing mandate in tax proceedings: failure to afford hearing requires reconsideration and a reasoned decision.
    Section 75(4) of the UPGST Act mandates that an opportunity for personal hearing be granted either upon a written request by the person chargeable with tax or penalty or whenever an adverse decision is contemplated; the disjunctive word "or" must be given its plain meaning, creating independent triggers for the hearing obligation. The court concluded the authorities failed to comply with this requirement and directed that a personal hearing be afforded and a reasoned order issued thereafter to ensure procedural fairness in tax adjudication.
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    Section 80G registration: provisional approval permits subsequent final registration, with commencement dated from provisional grant.
    The tribunal construed the proviso-based registration mechanism to permit institutions granted provisional approval to apply for final registration, counting the date of commencement of activities from the grant of provisional approval; administrative circulars extending renewal deadlines apply to specified renewal applications and do not curtail the availability of final registration for provisionally approved institutions, while a view excluding applicants who commenced activities prior to provisional approval was considered inconsistent with the proviso scheme.
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    Proper service of notice: portal-only publication cannot substitute direct communication and mandates a fresh hearing.
    Proper service of notice in income tax proceedings is essential to safeguard the right to be heard and facets of natural justice. Placing notices on an electronic portal without direct communication does not, by itself, satisfy statutory methods of service, and cannot be presumed to give the taxpayer effective notice. Where service in terms of the Act and Rules is not shown, affected parties are entitled to a fair opportunity to file replies and be heard, and the tax administration must provide a fresh hearing and issue an independent speaking order after considering the reply.
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    Jurisdictional limits of GST officers: no proceedings against assessees assigned to counterpart authority absent cross-empowerment notification.
    The judgement clarifies that appointment and delegation of powers under the Central and State GST regimes are confined to officers appointed under each statute, and that assessees allocated administratively to Central or State authorities may be lawfully proceeded against only by those authorities unless a formal cross-empowerment notification permits otherwise; no general cross-empowerment notification exists except for limited refund purposes.
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    Taxability of marketing contributions: non taxable where receipts are fiduciary and subject to mutuality, not royalty.
    Where receipts from hotels are received with a corresponding obligation to expend them for agreed common purposes and are held in a fiduciary capacity, such marketing contributions, reward program receipts, reservation contributions and central reservation system fees are not consideration for use of intellectual property or fees for technical services and thus do not qualify as royalty or fees for included services under the India-US DTAA, particularly in the absence of a permanent establishment and where coordinate precedent on identical facts supports non taxability under the principle of mutuality.
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    Royalty characterization: marketing and reservation contributions treated as non-royalty under DTAA when tied to agreed-use obligations.
    Whether marketing and reservation contributions from Indian hotels to a US company qualify as Royalty or Fees for Included Services under the India-USA DTAA turns on their substantive nature: the presence of a corresponding contractual obligation to apply funds for agreed marketing, advertising and reservation activities and supporting auditor evidence indicates such receipts are not consideration for making available intellectual property or technical services, distinguishing them from factual scenarios where contributions increase brand value or transfer intangible know how.
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    Section 13A compliance: failure to meet proviso conditions bars political party exemption and informs stay assessment approach.
    A registered political party's claim of exemption under Section 13A was rejected for failure to meet proviso conditions, including receipt of donations in breach of the cash donation prohibition; the tribunal treated non exempt voluntary contributions as income from other sources, disallowing deductions; allegations of mala fides were dismissed due to the party's procedural delays; and the tribunal's prima facie framework for stay applications-assessing merits, undue hardship, and likelihood of success-was upheld, with liberty to apply afresh to the tribunal given changed circumstances.
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    Burden of Proof under section sixty eight: genuineness of share transactions must be established or treated as accommodation entries.
    The dispute concerned alleged bogus long term capital gains from penny stock trading characterised as an accommodation entry; revenue contested genuineness, identity and creditworthiness of parties while assessees relied on expert and market information. Applying the doctrine of preponderance of probabilities, the court reiterated that the initial burden to prove identity and genuineness lies with the assessee, criticised inadequate enquiries by authorities, rejected expert and media reliance as a substitute for due diligence, and described the accommodation entry modus operandi leading to findings that the transactions were not satisfactorily proved.
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    Strict compliance with exemption conditions: declaration and filing deadline mandatory; revised returns cannot introduce new exemption claims.
    The Court held that both conditions for claiming the exemption-furnishing a written declaration to the assessing officer and submitting it before the due date for the original return-are mandatory and must be strictly complied with. It rejected treating the time limit as directory, distinguished deduction-related authorities, and held that a revised return cannot introduce new exemption claims or claim carry-forward benefits not made in the original return.
    Case LawsIncome Tax
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    Retrospectivity of tax amendment: amendment held prospective; prior rule barring disallowance where no exempt income applies.
    The court held that the Finance Act amendment described as "for removal of doubts" cannot be given retrospective effect where it alters prior law; the Finance Bill memorandum fixing commencement determined prospectivity, and existing Division Bench precedent that no disallowance can be made if no exempt income was earned was applied, subject to the ultimate outcome of the pending higher court challenge.
    Case LawsIncome Tax
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    Charitable purpose clarified: statutory public bodies generally exempt; commercial receipts taxed under quantitative proviso, with annual scrutiny required.
    The judgement narrows the scope of charitable purpose under Section 2(15) by treating statutory public utility bodies as generally exempt while excluding income from commercial activities beyond core regulatory or public-interest functions. Trade-promotion and non-statutory bodies may qualify if charges are nominal, but ancillary fee-generating services and high-fee providers produce taxable commercial receipts. Private trusts' advertisement income is commercial. Assessing authorities must perform yearly scrutiny and apply the proviso's quantitative limits to determine exemption eligibility.
    Case LawsIncome Tax
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    Deduction 80P eligibility turns on whether a cooperative society's banking status classifies it as a cooperative bank; AO to verify.
    A cooperative society carrying on deposit-taking and lending, issuing cheques and providing banking services may fall within the banking business definition under the Banking Regulation Act; whether it qualifies as a cooperative bank under that Act-affected by its bye-laws and membership rules-must be determined by fact-specific examination to decide entitlement to the cooperative deduction.
    Case LawsIncome Tax
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    Condonation of Delay in Filing Form Ten: reasonable professional oversight accepted, delay condoned and rectification allowed.
    Condonation of delay in filing Form Ten was granted where the auditor's bona fide oversight-reporting accumulation in the audit report (Form Ten B) and misconstruing separate filing requirements-led to a 361 day delay; the court found the lapse inadvertent amid pandemic conditions, accepted the explanation, quashed the refusal order and permitted rectification steps, treating the delay as condoned.
    Case LawsIncome Tax
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    Advance tax obligation: absence of taxable income prevents dismissal of appeal for non-payment of advance tax.
    The Tribunal held that the advance tax payment condition for appeal maintainability applies only when the assessee had a legal obligation to compute and pay advance tax; in the absence of taxable income no such obligation exists, and an appeal cannot be dismissed solely for non-payment of advance tax. The Tribunal directed that the matter proceed to merits with an opportunity to be heard, stressing that the payment requirement must be applied in light of factual circumstances.
    Case LawsIncome Tax
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    Vested rights preserved against retrospective tax amendments; filings made before enactment remain effective for settlement consideration.
    The court addressed whether a retrospective Finance Act amendment prohibiting settlement applications from a specified date could divest a taxpayer who filed earlier of its vested right to have the application considered. It held that retrospective legislation cannot take away rights already accrued by actions completed before enactment unless clearly intended; that section 119 confers time-extension power but cannot impose new substantive eligibility conditions; and that administrative delay by revenue does not justify denying access where an application was already filed.
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    Reasonable classification principle: differential deadline for charitable trust tax recognition cannot lack rational basis or equality protection.
    A departmental circular extended a filing deadline for tax recognition to mitigate hardship but excluded newly formed charitable trusts without offering reasons; the exclusion lacked an intelligible differentia and rational nexus to the circular's object, making the differential treatment arbitrary and ultra vires the constitutional guarantee of equality, requiring the excluded applications to be treated as within time and decided on merits.
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    ITSC jurisdiction extends beyond application disclosures, while full and true disclosure and narrow judicial review govern settlement oversight.
    The Income Tax Settlement Commission may inquire into and decide issues disclosed in the application and any other matters relating to the case as reflected in the Commissioner's report or uncovered by further inquiry; full and true disclosure is mandatory and amendments or contradictory positions that undermine that requirement are impermissible, yet contesting taxability before the Commission does not automatically negate disclosure; judicial review is limited to statutory contravention, prejudice, fraud, bias or malice, while sufficiency of materials placed before the Commission is generally beyond routine court scrutiny.
    Case LawsIncome Tax
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    Delay condonation denied where litigant's evasive conduct and non participation failed to constitute sufficient cause for appeal filing.
    The court refused condonation of delay for filing an appeal where a best judgment assessment treated cash bank deposits as unexplained after the assessee failed to file returns or participate in proceedings; reliance on transition to a faceless e filing regime and lack of alerts was held insufficient, as the assessee's evasive and habitual non participation did not amount to sufficient cause warranting condonation under the applicable doctrine.
    Case LawsIncome Tax
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    Sufficient cause for delay in filing appeals rejected where faceless scheme migration did not excuse prolonged inaction.
    The court held that migration to a faceless appeal system did not, without persuasive evidence, constitute sufficient cause to condone a lengthy delay in filing an appeal, finding the explanation reflective of litigant inaction rather than unavoidable impediment. On tax deduction, the court applied authority that a non-obstante clause does not negate the employer's obligation to deposit employees' statutory contributions by the due date as a condition for claiming the deduction, and treated the appeal as meritless and barred by limitation.
    Case LawsIncome Tax
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    Source of source doctrine used to pierce the corporate veil where share capital appears round tripped among related entities.
    The assessee must prove identity, genuineness and creditworthiness of investors under section 68; examination extends to the true origin of funds where bank records show circular transfers, related party directorships, lack of business operations, and arbitrary share premium, permitting lifting the corporate veil and application of the source of source doctrine to treat such receipts as not satisfactorily explained.

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      Enhancing Maritime Security and Transparency: The Introduction of Body-Worn Cameras for Customs Boarding Officers in India

      16 January, 2024

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      Circular No. PUBLIC NOTICE NO. 13/2023-24 - Dated: 26-4-2023 - Jacket with camera for use by the vessel Boarding Officer- pilot at Custom House Cochin-procedure-reg.

      The Indian Customs Authority, as outlined in Public Notice No. 13/2023-24 dated 26 April 2023, has implemented a significant procedural change aimed at enhancing maritime security and transparency. This article will delve into the key aspects of this new directive, which mandates the use of Body Worn Cameras (BWCs) by Boarding Officers during their duties on board vessels.

      Background and Key Directive The Customs Board of Indirect Taxes and Customs (CBIC) issued Circular no. 07/2022-Customs dated 07.03.2023, directing the use of BWCs fitted with audio and video recording facilities by Boarding Officers​​. This decision reflects an increasing global trend towards greater accountability and transparency in maritime operations.

      Operational Procedures for Boarding Officers The implementation of this directive involves several procedural steps:

      1. Preparation and Equipment: Boarding Officers must wear a jacket displaying their name and badges, with the BWC placed on the right side in a specially designed space. The camera's position ensures clear capture of interactions with the vessel's crew and the verification process​​.

      2. Perspective and Recording: The camera is positioned to reflect the officer's perspective, providing an authentic view of onboard activities. The recording begins as the officer approaches the vessel's gangway and continues uninterrupted until they de-board​​.

      3. Communication with Stakeholders: Boarding Officers are required to inform the Shipping Agent/Line in advance about the mandatory recording of boarding functions. The Shipping Agent/Line, in turn, communicates this to the Master of the Vessel to ensure smooth operations​​.

      4. Safety Considerations and Compliance: Given the nature of maritime operations, particularly with vessels carrying hazardous cargo, safety considerations are paramount. The BWCs are standalone devices without Wi-Fi or SIM functionality. If a vessel's Safety Officer deems the use of BWC unsafe in certain areas, this must be endorsed, and the Boarding Officer will refrain from using the BWC in those areas. This decision is subject to cross-verification by higher authorities in the customs department​​.

      Implications and Impact This initiative by the Indian Customs Authority holds significant implications:

      • Enhanced Transparency and Accountability: The use of BWCs ensures a transparent record of interactions and procedures, promoting accountability among customs officials.
      • Safety and Compliance: With provisions for safety considerations, the initiative respects the operational integrity of vessels, especially those carrying hazardous materials.
      • Stakeholder Communication: Mandatory pre-boarding communication fosters a cooperative environment between customs officials and vessel personnel.

      Conclusion The introduction of BWCs for customs Boarding Officers in India marks a significant step towards modernizing maritime security protocols. By leveraging technology, the Customs Authority aims to ensure a transparent, accountable, and safe environment for maritime operations. This move aligns with global best practices and positions India at the forefront of maritime customs security and operational transparency.

       

      Generated by DALL·E

       

      Here is an image depicting a customs boarding officer equipped with a body-worn camera, as described in the Public Notice No. 13/2023-24. This visual representation shows the officer interacting with the ship's crew during a verification process, set against the backdrop of a busy port. The image aims to convey the professionalism and transparency in maritime operations introduced by this new directive.

       


      Full Text:

      Circular No. PUBLIC NOTICE NO. 13/2023-24 - Dated: 26-4-2023 - Jacket with camera for use by the vessel Boarding Officer- pilot at Custom House Cochin-procedure-reg.

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      ActsIncome Tax