ICAI to take action for Allahabad HC order

Court Order on VAT Act in State of U.P. - (09-08-2014)

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ATTENTION OF MEMBERS ANNOUNCEMENT ON COURT VERDICT PRONOUNCED ON 6 AUGUST 2014, BY THE LUCKNOW BENCH OF THE ALLAHABAD HIGH COURT ON VAT

This is with reference to the order passed by the Lucknow Bench of the Allahabad High Court in the matter of Tax Lawyers Association & Anr. v/s State of U.P. & Ors. whereby only registered advocates are permitted to appear before the Authority under the VAT Act in the State of U.P. The Institute is seized of the matter and taking all steps to ensure that the status quo ante is restored in the matter and interest of the profession is preserved. As a first step, it is proposed to implead ICAI in the aforesaid matter as ICAI is not a party to the said case.

Lawyers in Important positions in Cabinet

The following was Statement released by itatonline team with regards to Lawyers taking charge of important ministries in new Modi led Cabinet.

We are proud to announce that the appointees to the post of Finance Minister, Shri. Arun Jaitley, and the post of Law Minister, Shri. Ravi Shankar Prasad, are eminent senior advocates who are extremely well versed with income-tax law and have appeared as counsel in several leading matters.

Shri. Arun Jaitley has appeared in several leading cases such as Municipal Corporation of Delhi vs. Batra 121 CTR 92 (SC) (stay of demand), SRF Finance Ltd vs. CBDT 211 ITR 861 (Del) (TDS u/s 194C) etc. Shri. Ravi Shankar Prasad has appeared in leading cases such as J. Jayalalitha vs. ACWT 309 ITR 217 (Mad) (prosecution for non-filing of return), Sushil Kumar Modi In Re 104 TM 666 (Pat) (tax implications of animal husbandry scam) etc.

Apart from a flourishing practice in income-tax law, both professionals have an excellent grasp of civil law.

Further, Shri. Arun Jaitley has a special affinity towards the Tribunal. During his previous tenure as Law Minister (1998 to 2004), he had taken special interest to ensure that more Benches & Members for the ITAT was sanctioned. He has even visited the premises of the ITAT in Mumbai to inaugurate the new court rooms.

In fact, on that momentous occasion, Shri. Arun Jaitley delivered a speech which is fondly remembered even today by the members of the Bar. He said “There is good rationale why these appeals filed before the Tribunal should be disposed of expeditiously (within a matter of months). If there is no liability of the assessee, there is no reason that a sword should hang on his head. And if there is a liability, then the Revenue should not suffer“. The learned jurist made several other perceptive remarks about the functioning of the Tribunal.

Apart from an expert understanding of income-tax law, both Ministers are sensitive to the needs and concerns of tax payers. They have made it clear in their public speeches that while taxpayers engaging in nefarious activities of tax evasion and generating black money will not be spared, honest taxpayers will not be harassed and all their problems will be resolved. They have also stated that steps shall be taken to ensure that the income-tax department functions in an efficient manner and accountability is brought in to rein in over-zealous officers.

The ITAT Bar Association shall formally approach both Hon’ble Ministers with a request that the following long-standing issues raised by the Bar be addressed at the earliest:

(i) Appointment of a permanent President for the Tribunal as well as filling up the vacancies in the posts of Sr. Vice Presidents and Vice Presidents;

(ii) Removal of the proposal regarding appointment of ITAT Members for an initial period of only 5 years;

(iii) Increase in the age limits for Judges & Tribunal Members from 62 years to 65 years.

We are very confident that all these long-standing issues will be speedily resolved under the dynamic leadership of the said two Hon’ble Ministers.

We wish the Hon’ble Ministers good luck in their new postings.

Consideration received by an advocated in form of land to undertake patta and layout of properties is taxable as capital gains and not as professional receipts

Facts of the case:

A. The assessee, an practising advocate, entered into an agreement as per which he had to undertake the job of obtaining patta and design the layout of the properties and for the services rendered the owners agreed to transfer 3 plots of land to him;

B. In pursuance of the agreement, possession of the property was handed over to the assessee and General Power of Attorney was executed in his favour;

C. Sale agreement was executed in respect of three plots of land for a consideration of Rs. 1.5 crores out of which the assessee received a consideration of Rs. 90 lakh as ‘confirming party’.

D. The AO held that such receipt was to be assessed as income from professional services. On appeal, the CIT(A) reversed the order of AO and held that the receipt could only be taxed as capital gains. The Tribunal upheld the order of AO.

The High Court held as under:

1) The agreement entered between the assessee and the owners made no reference at all to the professional status of the assessee for taking his services. There was no mention about his being an Advocate and that his services were being taken only in that capacity;

2) The possession given of the entire 5 plots of land to the assessee was with the specific object of getting patta and layout of the property. The sale agreement made it very clear that the transfer of 3 plots of land to the assessee was intended by way of consideration for securing patta and layout and, as such, the original owners had entrusted the entire land to the assessee;

3) The assessee had rightly placed his reliance on section 2(47)(v) of the Income-tax Act, 1961, read with section 53A of the Transfer of Property Act, 1882, that the receipt would attract capital gains at his hands. There was nothing on record to show that the services to be rendered were taken in the capacity as a lawyer. Therefore, the Consideration received by an advocated in form of land to undertake patta and designing of layout of properties is taxable as capital gains and not as professional receipts – CIT V. J. MAHALINGAM (2013) 37 taxmann.com 38 (Madras)