A recent note discusses the decision of the Supreme Court in Kandimalla Raghavaiah v. National Insurance, concluding that it is being misinterpreted, and lays down dangerous precedent for insurance claims. While the concern highlighted by the abovementioned note, that “consumers will continue to find themselves at the receiving end with genuine complaints being thrown out for being time–barred”...
Insurance policies and the tax/fee distinction
Recently, the Bombay High Court had occasion to consider an important issue regarding the transferability of life insurance policies, and the restrictions that the LIC has the powers to place on such transferability. The background to the facts of this case is provided by another decision of the Bombay High Court in Insure Policy Plus Services v. LIC, decided in 2007. The petitioners in this case...
Insurance Companies and Income Tax
The Bombay High Court, in an important case decided last month, clarified the position on the taxation of insurance companies. This was the decision in ICICI Prudential v. ACIT (2010 Bombay High Court). The controversy stemmed from the implications of the Insurance Regulatory and Development Authority (Actuarial Report and Abstract) Regulations, 2000 and the Insurance Regulation and Development...
Vicarious Liability for a Company’s Offences
The Delhi High Court, in Vishnu Prakash Bajpai v. SEBI, seems to have widened the scope of the vicarious liability of persons for offences by companies, under section 27 of the Act. The issue came before the Court by virtue of a petition for quashing of criminal proceedings, under section 482 of the CrPC filed by Mr. Bajpai. The crux of the matter was the level of involvement required to be...
Commercial Arguments against Corruption
An issue discussed repeatedly in commercial circles is the dilemma between the ethical arguments against corruption, and the commercial arguments in favour of ‘efficient grease’. This dilemma is particularly felt when facing bureaucratic bottlenecks in countries like India (the ‘when in Rome’ argument). The latest edition of the Economist carries an interesting piece, arguing that the commercial...
Meaning of ‘work’ under section 194C
In a decision last delivered last month, the Bombay High Court once again visited the debate over the meaning of ‘sale’, in the process of clarifying the scope of the obligation to deduct tax at source under section 194C of the Income Tax Act. The factual matrix before the Court involved a unique business model adopted by pharmaceutical companies. Pharmaceutical companies adopt three methods for...
The Supreme Court on Penalty
Earlier posts had discussed the decision of the Supreme Court in Dharmendra Textiles, and its subsequent interpretation by the High Courts and Tax Tribunals. One of the most important reading downs was seen in the decision of Mumbai Bench of the ITAT, in ACIT v. VIP Industries. The Tribunal there considered a case where penalty was levied because of an increase in taxable income resulting from a...
The Delhi High Court Departs from Samsung Electronics
One of the most pressing issues pending consideration of the Supreme Court is the appeal from the decision of the Karnataka High Court in Samsung Electronics. Earlier posts have considered whether the interpretation of section 195 proposed by the High Court is appropriate, and also the admission of the appeal by the Supreme Court. However, while the hearing before the Apex Court is due only in...
‘Manufacture’ in Income Tax
The decision of the Supreme Court in CIT v. Oracle Software is set to add another controversy to the many that already exist with respect to taxation. Involving the interpretation of the term ‘manufacture’, which has been a contentious issue in the excise law context, the decision gives rise to a couple of interesting issues. The assessee was a wholly owned subsidiary of Oracle Corporation, USA...
New Development on Section 14A, Income Tax Act
Several prior posts have discussed the decision of the Special Bench of the Mumbai Income Tax Appellate Tribunal in Daga Capital, on the appropriate interpretation of section 14A of the Income Tax Act. It was also observed that the problem was not so much with the provision per se, as with Rule 8D of the Income Tax Rules, which laid down the computation mechanism for the amount to be considered...
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