Wednesday, December 23, 2015

Officer can have a Camp Office at taxpayer's house to examine him on oath after search and seizure


In the appellate proceedings, the Single Judge held that the Assessing Officer was not vested with the power to have a camp office at the residence of the assessee and get his attendance in connection with the proceedings under the Act and, therefore, the impugned notice issued under section 131 was one without authority of law.

The Karnataka High Court held as under:

1)  Sub-section (1) of section 131 confers the power on the authorities the powers of a Court under the Code of Civil Procedure in respect of matters mentioned in the said provision. One such provision is enforcing the attendance of any person including any officer of a banking-company and examining him on oath.

2)  Sub-section (1A) vests an officer to exercise the power conferred under section 131(1) even before initiating any proceedings with respect to such person under the provisions of the Act.

3)   Once such power is vested, the authorized officer has an option to summon the person to appear before him at his office or he can go to the place of such person and examine him on oath. The said provision enables the authorized officer to enforce attendance if the person is not willing to appear before him.

4)  The examination of such person on oath may be at the place of the authorized officer or at the place of person who has to be examined.

5)  Nothing could be read out of that phrase 'camp at your residence'. All that it means is, as he has already entered the premises of the residence, in order to comply with the legal requirement, he has served summons on him calling upon him to depose. To show the place where he should depose, the phrase, 'camp at your residence' is mentioned.

6) In that view of the matter, the Single Judge was not justified in his view that the authorized officer has no right to enter the premises of the residence. The observation of the Single Judge that the authorized officer has trespassed into the house of the assessee and it deserves to be prosecuted before the competent criminal Court, has no legal basis. - Dy. DIT(I) v. Prakash V. Sanghvi [2015] 64 221 (Karnataka)

Reporting requirements of foreign payments - Distinctive features of Old Rules vs New Rules

Earlier remitter was required to report foreign remittances in Form 15CA only if such payment was chargeable to tax. Due to such requirement the income-tax department was not able to collect the information in respect of foreign remittances on which tax was deductible but was not deducted by the payer. The mechanism of obtaining of information in respect of remittances fulfilled twin objectives of ensuring deduction of tax at appropriate rate from taxable remittances as well as identifying the remittances on which the tax was deductible but the payer had failed to deduct the tax. Therefore, obtaining of information only in respect of remittances which the remitter declared as taxable defeated one of the main purposes of obtaining information for foreign remittances, i.e., to identify the taxable remittances on which tax was deductible but was not deducted.

In view of this fallacy, provisions of section 195 have been amended to provide that the person responsible for paying any sum, whether chargeable to tax or not, to a non-resident shall be required to furnish the information of the sum paid. However, Rule 37BB of income-tax Rules was not amended accordingly at that time.

Now, the Government has finally substituted old Rule 37BB with new Rule 37BB. It shall come into force with effect from April 1, 2016. Similarly, old Forms 15CA and 15CB have also been substituted with new Form 15CA and 15CB.

Job given to wife on accidental death of husband isn't pecuniary advantage under Motor Vehicle Act


a)   Raghbir Singh (the deceased) died in road accident.

b)   Tribunal awarded compensation of Rs. 21,52,000 which was calculated on the basis of salary of deceased.

c)   The appellant (i.e., Insurance Company) argued that the compensation awarded by the Tribunal was very high as the wife of the deceased was given compassionate appointment and she was getting a salary besides the pension.

The High Court held as under:

1) In case of Vimal Kanwar v. Kishore Dan  [2013] 35 545/216 Taxman 300 the Supreme Court held as under:

"Compassionate appointment" can be one of the conditions of service of an employee, if a scheme to that effect is framed by the employer. In case, the employee dies in harness, i.e., while in service leaving behind the dependents, one of the dependents may request for compassionate appointment to maintain the family of the deceased employee dies in harness. This cannot be stated to be an advantage receivable by the heirs on account of one's death and have no correlation with the amount receivable under a statute occasioned on account of accidental death. Compassionate appointment may have nexus with the death of an employee while in service but it is not necessary that it should have a correlation with the accidental death. An employee dies in harness even in normal course, due to illness and to maintain the family of the deceased one of the dependents may be entitled for compassionate appointment but that cannot be termed as "Pecuniary Advantage" that comes under the periphery of Motor Vehicles Act and any amount received on such appointment is not liable for deduction for determination of compensation under the Motor Vehicles Act.

2)   In aforesaid judgment, the Supreme Court held that Provident Fund, Pension, Insurance and similarly any cash, bank balance, shares, fixed deposits, etc. are all a "pecuniary advantage" receivable by the heirs on account of one's death but all these have no correlation with the amount receivable under a statute occasioned only on account of accidental death. Thus, such an amount will not come within the periphery of the Motor Vehicles Act to be termed as "pecuniary advantage" liable for deduction.

3)  Following the ratio of law laid down by Supreme Court in aforesaid case, the instant appeal was to be dismissed. - NATIONAL INSURANCE CO. LTD. V. LAKHWINDER KAUR [2015] 64 308 (Punjab & Haryana)