In the first part, I outlined the conflict between the ‘same goods’ and ‘inextricable connection’ test, witness in applying section 5(3) of the Central Sales Tax Act. The resolution of this conflict, mandated a reference to a Constitution Bench in Azad Coach Builders. On facts, the seller (Azad Coach Builders) has sold bus bodies to the exporter (TELCO), which were mounted on chassis made by the...
The Taxation of Sales Preceding Export Transactions – Part I
Last week, the Supreme Court decided an interesting issue relating to statutory interpretation, very similar to the issue which had arisen in Daga Capital, discussed earlier. The question which the Court in State of Karnataka v. Azad Coach Builders was the extent to which States may tax sales transactions which immediately precede an export/import transaction. The controversy arises because the...
Depreciation on Intangible Assets
A year ago (almost to the date), we had discussed the decision of the Bombay High Court in CIT v. Techno Shares, observing that it appeared at odds with section 32 of the Income Tax Act. Last week, the Supreme Court overruled the Bombay High Court. However, while the conclusion arrived at by the Court seems appropriate on the facts of the case, it is slightly disappointing that the basis on which...
Some Thoughts on the Vodafone Judgment: A Case for Reconsideration?
The blog has discussed the Vodafone controversy in some detail, and commented on important extracts from the Bombay High Court’s judgment yesterday. This post discusses parts of the judgment in more detail, and suggests, with respect, that the judgment is incorrect. For the convenience of our readers, the paragraph number in question is indicated in brackets where appropriate. Chandrachud J...
Vodafone’s Petition Dismissed by the Bombay High Court
It appears that the Bombay High Court has dismissed Vodafone’s writ petition challenging the jurisdiction of the Indian income tax authorities. Reports – the Wall Street Journal, ET, Reuters and Indian Express – are sketchy on the precise basis of the decision. We will discuss the implications in detail once a copy of the judgment is available.
Service Tax on Software Upheld
In 2005, the Supreme Court held that the transfer of branded software constitutes a sale and is exigible to sales tax, levied by State Governments under Entry 54, Schedule VII of the Constitution (Tata Consultancy Services v. State of AP). I have argued elsewhere that this decision may, with respect, require reconsideration on the question of whether the typical software transfer accompanied by a...
Direct Taxes Code Bill, 2010
The Direct Taxes Code Bill, 2010 was introduced in Parliament earlier today. A copy of the Bill can be downloaded from here. Over the next few days, we will discuss some of the provisions of the Bill in greater detail. For now, some news reports on the DTC are linked below: Corporate India Cautious in welcoming DTC (Economic Times) DTC may boost investment flow into capital markets: Analysts...
Event Announcement: Mr. Soli Dastur’s Lecture on the DTC
Mr. S.E. Dastur, Senior Advocate, will be delivering the 1st K.A. Sathe Memorial Lecture at Symbiosis Institute of Management, Range Hills, Khadki, Pune on Sunday, August 22, 2010 at 9.45 a.m. Mr. Dastur, the country’s foremost tax expert, will be speaking on the Direct Taxes Code. The lecture is being organized by the Pune Income Tax Appellate Tribunal Bar Association. Readers who are in...
Bombay High Court Upholds Section 14A and Rule 8D – Part II
In a previous post, the outline of the propositions in Godrej & Boyce v. DCIT was provided, followed by a discussion of the first issue before the Court. The other two issues, and the Court’s conclusions are discussed below. Section 14A(2) and (3) and Rule 8D are Constitutionally valid The next question posed by the case was whether the discretion granted to the AO by section 14A(2) and (3)...
Bombay High Court Upholds Section 14A and Rule 8D – Part I
Earlier posts discussed the decision of the Mumbai Special Bench of the ITAT in Daga Capital, and exceptions to the seemingly assessee-adverse ruling that had been carved by other tribunals and courts. The issue was then heard by the Bombay High Court, which finally pronounced judgment yesterday. The decision in Godrej & Boyce v. DCIT, has not provided as much of a reprieve to assessees as...
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