The Inaugural Study Circle
Meeting of our Association was held on Thursday, the 16th August, 2007 at 1.30
p.m. at our Library, Mazgaon. The President of the Maharashtra Sales Tax
Tribunal, Shri G.D. Parekh was the Chief Guest.
The President of the
Association Shri Deepak Bapat welcomed the Chief Guest and the speaker Shri
B.K. Khare, a Senior Partner of M/s. B.K. Khare & Co., Chartered Accountants.
In his welcome speech, Shri Bapat explained in brief, the objectives of our
Association and importance of such study circle meetings with special
reference to professional competence by increasing the knowledge of Laws
through Study Circle Meetings, Conferences, Seminars, and various Workshops.
Shri Bapat quoted late Shri Nani Palkhivala who in his book “We the People”
wrote in the chapter “The Mess we are in” the prescription for a sick man in
Asia. "A Sick man will come up healthy and go well only if our political
leaders will understand that there is no substitute for knowledge in public
life”. Further in the opinion of Late Shri Palkhivala, education must fulfil
two aspects. (1) It must enlighten the understanding and (2) It must enrich
the Character.
Introducing Chief Guest
Hon'ble Shri G.D. Parekh, the Secretary of the Association, Shri Pankaj Parekh
said that we were fortunate enough to have Shri G.D. Parekh to inaugurate our
Study Circle Meetings for a consecutive period of 6 years. He explained in
brief, Shri Parekh’s varied experiences, his various work-places and
designations held by him such as Practising Advocate, District Session Judge
in Maharashtra, Daman & Silvassa, City Civil Judge at Bombay, Additional
Registrar at High Court, Bombay and at present the President of the Sales Tax
Tribunal, Maharashtra since 2001.
The Convenor of Law &
Representation Committee Shri Pramod Surte introduced the Speaker Shri B.K.
Khare. Shri Surte said that for inaugural Study Circle Meeting, we needed a
Speaker who is “Guru” in the profession and were therefore lucky to have Shri
B.K. Khare who is like Guruji as he is the Senior most professional Advocate
and a Chartered Accountant too, who is practising since 1955. He also said
that the learned Speaker’s varied experience in the matter of preparation,
appearing and pleading before Tax Tribunals will be of immense help and
guidance to us.
Hon’ble Shri G.D. Parekh then
inaugurated the meeting by lighting the lamp. In his inaugural speech, he
stressed the need of such Study Circle Meetings in order to understand the
provisions of Laws clearly. He further expressed his happiness over the
presence of Shri B.K. Khare, the day’s speaker. He said that from Shri Khare’s
speech all of us will enrich our knowledge regarding functioning of Tribunals
and we can improve the working to a large extent.
Admiring our Association, the
Hon'ble Chief Guest said that this Association is really an exceptional one,
and that he has noticed tremendous continuity in its functioning. Through
RRCs, NRRCs, Research Papers and other activities, it has given great guidance
and assistance not only to its members but also to Tribunal.
Before Shri Khare started his
speech, the President of the Association Shri Bapat informed the audience that
Shri Khare was awarded “Sanman” for being highest income tax-payer. He further
said that Shri Khare is very well known for his Budget Publication, about
5,000 copies of which, he is distributing free of charge since last 27 years.
At the outset, the learned
Speaker Shri B.K. Khare observed that it had never happened that the members
of Hon. Income Tax Tribunal had attended any Study Circle Meeting. He was
therefore very happy to see the attendance of all the members of Hon. Sales
Tax Tribunal of Maharashtra. Regarding SANMAN for highest tax- payer, he very
politely said that there are many professionals who are paying income tax much
more than that what he had paid.
Coming to the subject proper,
the learned Speaker said that he started his practice in 1955 in Sales Tax
because Sales Tax was a ready made field to start with. But he did not last
long. His appearance in Sales Tax ended with Berar Oil’s case when Special
Bench was constituted. His last case was Victor Gas India Ltd. wherein the
question was disallowance of sale against declaration in Form 15 in part. The
learned Speaker opined that Tribunal gives correct judgments but sometimes
High Courts do not. He cited an example of I.T.Act, 1922 wherein it was only
business loss which was set-off against income under any other head and then
the balance loss was allowed to be carried forward. This means that if there
is no set-off of business loss, because there is no income under any other
head, entire business loss was not allowed to be carried forward. This was
held even by the Supreme Court. But then an Ordinance was issued by the
Central Govt. and loss was allowed to be carried forward.
Provisions Governing the
Tribunals:– A comparison
The learned Speaker then said
that the Income Tax Tribunal is working as independent authority under the Law
Department, and not under the Finance Department. But the Sales Tax Tribunals
are working directly under the State Governments. They work under the Finance
Department and not under the Law Department and therefore their power and
functions are bracketed with Finance Department.
Similarity & Dissimilarity
The learned Speaker then said
that what is important in life is not similarity but dissimilarity. Now what
is dissimilarity? He noticed one dissimilarity so far as Sales Tax is
concerned is that the Tribunal has got power to enhance. This is absent in
Income-tax Act. He opined that the Tribunal’s powers are equated with the
Sales Tax Authority as per Chapter III. The learned Speaker then referred to
sec. 35 of the I.T. Act which is regarding deduction of expenditure incurred
which is of capital nature. If full deduction for such expenditure is claimed,
then depreciation is not allowed in the same year. Narrating his experience in
such a case, the learned Speaker said, he preferred an Appeal which was not
allowed by the three members’ bench of Madras Tribunal. The President of the
Tribunal appointed five members’ bench and the decision was given in favour of
the assessee, of course the I.T. Act was in the meantime amended.
Bringing to the notice of the
audience the recent decision of Gujarat High Court, the learned Speaker said
that the question involved therein was whether interest paid by a debtor for
delayed payment was an income of the undertaking exempt u/s. 80I? The Tribunal
had held that yes, the same is exempt. But the High Court said
this question is not a case of substantial law.
Case of Nirma Industries
Ltd.: 282 ITR 402
Three members bench of
Ahmedabad Income Tax Tribunal held that such an interest income is not
eligible for deduction u/s. 80-I. The Tribunal refused to form a question of
law. However the Gujarat High Court took a view that there is no question of
not admitting any petition. However it said that the Tribunal’s judgment will
be merged on the point with its judgment and it will get the dignity of High
Court judgment. This the learned Speaker felt little funny.
Advance Ruling: Sec. 55 of
MVAT Act, 2002
The Sales Tax Tribunal can
also now give Advance Ruling u/s 55. Five Members’ Special Bench is to be
formed. However, the section has not still become operative, but when it
starts functioning, in the opinion of the learned speaker, it is a unique
innovation. The Advance Ruling is restricted only to a Registered Dealer.
This, the learned Speaker felt, should have been extended even to Unregistered
Dealer.
In the opinion of the learned
Speaker, there will be a conflict between section 55 and section 56. Section
56 gives power to the Commissioner to decide a disputed question (DDQ) and
therefore there may be a conflict between Advance Ruling (sec. 55) and DDQ
(sec. 56). The learned speaker raised a categorical question whether the power
given to the Commissioner be hijacked by opening a way to go to Tribunal for
Advance Ruling? The learned Speaker suggested that u/s. 55 there should be a
“proposed” transaction, whereas u/s. 56 there should be a “concluded”
transaction. In the opinion of the learned speaker, both secs. 55 & 56 are
overlapping inasmuch as the “Registered Dealer” and “Unregistered Dealer” are
concerned. This situation, the learned speaker compared with the provisions of
sec. 245N of Income-tax Act viz. Authority for Advance Ruling. There the
Tribunal has no participation in such matters. The Ruling given by the
Authority does not become binding. The same is binding between the two parties
only. But here u/s. 55 of the Sales Tax Act, there is a further travel u/s.
27, to High Court. Under the IT Act, there is no High Court appeal against
Advance Ruling u/s. 245-N. Thus there is a wider scope under Sales Tax Act
which is really judicial. Under the IT Act, the scope is narrow as there is no
appeal to High Court. The learned Speaker therefore appreciated Maharashtra
Government for bringing Sec. 55 for Advance Ruling.
The meeting then ended with a
hearty vote of thanks to the Chief Guest, the learned Speaker, all the members
of the Tribunal and all those who attended in large number.
