Saturday, June 20, 2015

ITAT makes Sec. 43B disallowance even when assessee opts for presumptive taxation scheme

IT: Non-payment of statutory liability before due date of filing of return would attract disallowance under Section 43B even if assessee had offered his income on presumptive basis.


Whether disallowance of Section 43B could be made even when assessee opted for presumptive taxation Scheme?

The Tribunal held in favour of revenue as under:

a)Under the presumptive taxation scheme, income of an assessee is computed at a fixed percentage of turnover and it would be deemed that that all deductions allowable under the head business or profession have already been allowed to assessee. In other words deductions allowable under Sections 28 to 43C are deemed to have been granted to assessee.

b)Perusal of provisions of Section 43B shows that said provision is a restriction on allowance of particular expenditure, inter-alia, statutory liability, as it allows deduction of such liability on actual payment basis, i.e., expenditure shall not be allowed to be deducted unless same has been paid before the due date of filing the return.

c)Section 44AF starts with the words “notwithstanding anything to the contrary contained in Sec. 28 to 43C”, whereas section 43B starts with the words “notwithstanding anything contained in any other provisions of this Act”.

d)The non-obstante clause in Sec. 43B has a far wider amplitude because it uses the words “notwithstanding anything contained in any other provisions of this Act”. Therefore, even assuming that the deduction is permissible or the deduction is deemed to have been allowed under any other provisions of this Act, still the control placed by the provisions of Sec. 43B in respect of the statutory liabilities still holds precedence over such allowance.

e)Hence, disallowance could be made by invoking the provisions of Sec. 43B in respect of the statutory liabilities, even though the assessee offered his income to tax on presumptive basis.

Editor’s Note:

In the instant case, assessee has offered his income to tax on presumptive basis under Section 44AF. Provisions of Section 44AF are not applicable from assessment year beginning on or after the April 1, 2011. Thus, it can be inferred that the principal laid down by the ITAT would squarely apply when taxpayer has opted for presumptive taxation scheme under Section 44AD or Section 44AE.

Tax returns of MPs/MLAs can't be disclosed under RTI to compare them with info in election affidavit

Income-Tax Returns filed by MPs/MLAs are exempted from disclosure under RTI Act.Copies of the same cannot be furnished for comparing the information therein with disclosures made by MPs/MLAs in election affidavits.


a)The Petitioner made an application under the RTI Act requesting certain information, more particularly the Income Tax Returns of one of the Member of Parliament (respondent).

b)The information was sought to crosscheck the affidavit filed by the respondent to the Election Commission. The Petitioner sought information on the ground of larger public interest.

c)The RTI application was dismissed by lower authorities on the ground that information sought for had no relationship with any public activity or interest and, therefore,would not qualify in view of the provisions of Section 8(1)(j) of the RTI Act.

d)The instant writ was filed to challenge the order of lower authorities.

The High Court dismissed the writ petition by holding as under:

1)As per Section 8(1)(j) of the RTI Act, personal information of an individual has no relationship to any public activity or interest and could not be disclosed unless larger public interest was involved.However, the proviso to said section carves out an exemption that the information which cannot be denied to the Parliament or the State Legislature shall not be denied to any person.

2)It was held by the Apex Court in the case of GirishRamchandra Deshpande v. Central Information Commission &Ors. (2013) 1 Supreme Court Cases 212 that the details disclosed by a person in his Income Tax returns is a personal information which stands exempted from disclosure under Section 8(1)(j) of the RTI Act, unless larger public interest is involved.

3)As per Section 33A and 33B of the Representation of the People Act, 1950, a candidate standing for the elections has to submit an affidavit to the Election Commission. Further, Section 125-A of the said Act provides for prosecution if the candidate fails to furnish the information or gives false information which he knows to be or has reason to believe to be false.

4)As the Parliament has deemed it appropriate to limit the information in respect of the candidate to the extent mentioned in Section 33A of the Representation of the People Act, 1950, it is not open for a citizen to contend that he seeks certain information to cross check the information which has been revealed by the candidate at the time of filing of his nomination.

5)In the instant case, the petitioner sought information furnished by respondent in his income-tax return to cross check the information furnished by the respondent at the time of filing of his nomination with Election Commission. Therefore, the said reason can hardly said to satisfy the test of the same being in public interest.

6)The petitioner also placed reliance on proviso to section 8(1)(j) to contend that the information couldn’t be denied to him as same could not be denied to the Parliament. In this regard, it is important to note that the Parliament has its own rules of business and, therefore, it cannot be presumed that the information in respect of the Income Tax Returns of a Member of Legislature would be sought by the Parliament. Hence, the proviso to section 8(1)(j) of RTI Act cannot be extended to mean that each and every information is to be provided to the Parliament or to the State Legislature as same would render the enactment of section 8(1)(j) meaningless-SHAILESH GANDHI V. CENTRAL INFORMATION COMMISSION[2015] 58 147 (Bombay)

Govt. issues ordinance to allow filing of complaint on cheque bouncing at place where payee maintains the account

Recently, there had been a dispute relating to the place of jurisdiction for filing complaint against dishonouring of cheque. The dispute arose mainly in those cases where complaint was filed in jurisdiction of that Court where cheque was presented even if drawer-bank was located in different jurisdiction.

The Supreme Court in case of Dashrath Rupsingh Rathod v. State of Maharashtra [2014] 49 497 (SC) cleared air on this issue and it interpreted provisions of Negotiable Instrument Act relating to place of jurisdiction for filing complaint. It ruled that complaint for dishounouring of cheque can be filed only at territorial jurisdiction of that Court where cheque is dishonoured by bank on which it is drawn.

Various stakeholder expressed difficulties on Supreme Court’s verdict with regard to the legal interpretation regarding place of jurisdiction in case of dishonouring of cheque. In order to address the difficulties of stakeholders the Government has issued Negotiable Instrument (Amendment) Ordinance, 2015 (‘NI Ordinance, 2015’).

The NI Ordinance, 2015 provides that the offence of cheque dishonour shall be enquired into and tried only by a court within whose local jurisdiction –

(a)the bank branch of the payee (viz, the place where the payee presents the cheque for payment) is situated, if the cheque is delivered for collection through an account; or

(b)the branch of the drawee bank where drawer maintain the account is situated, if the cheque is presented for payment by the payee or holder in due course otherwise through an account.

Further, all cases arising out of Section 138* which are pending in any court before the commencement of the Negotiable Instruments (Amendment) Ordinance, 2015 shall be transferred to the court having jurisdiction as per revised position. Also, in case of more that one prosecution filed by the same payee against the same drawer of cheques is pending before different courts, upon bringing the said fact to the notice of court, such court shall transfer the case to the court having jurisdiction under norms. *The Section 138 of the Negotiable Instrument Act, 1881 (‘NI Act’) deals with the offence relating to cheque dishonour for insufficiency, etc., of funds in the drawers account on which the cheque is drawn for the discharge of any legally enforceable debt or other liability. The section 138 of the NI Act provides for penalties in case of dishonour of cheques due to insufficiency of funds in the account of the drawer of the cheque.