In this 94^th edition of ours, we bring you our inquisitive analysis on the judgment of Delhi ITAT in the matter of Young Indian. The story of Young Indian is quite popular and am saving your time from detailing the facts. The ITAT has made a detailed analysis of taxation of the value of assets under Section 28(iv) in the hands of Young Indian and a must read. Though the judgment deals with a total of 16 grounds, we have concentrated in the article, only the grounds that deal with the taxation. It would be as curious as any other commercial movie sequel as to what happens to the fate of tribunal’s decision in the higher courts. Let’s wait and see.

The next article is on the routine usage of the draconian powers under Section 83 of CT Act, 17. We have witnessed the usage of the Section 83 in a routine and absurd manner in one of our client’s cases, which is a large taxpayer. The Commissioner went ahead and issued a provisional attachment order attaching 6 to 7 bank accounts, without any basis in the middle of inspection proceedings, thereby creating hardship for the client. We have advised the client to file a writ petition and the matter is currently before the High Court. The same procedure is followed by authorities dehors the circular issued by CBIC, all over the country, which is evident from the judgments used in our article. The only way to restrict the powers under Section 83 is to amend it by incorporating certain conditions for its usage.

Read more: SBS Wiki E Journal May 2022

The powers to provisionally attach the properties of tax payer to protect the interests of revenue comes from Section 83 of CT Act[1]. The power is to be exercised by Commissioner, if he is of the opinion that it is necessary for the purposes of protecting the interest of Government. Though it was held on numerous occasions that such a power cannot be exercised without application of mind, the tax authorities continue to use in the same manner. The Honourable Supreme Court in the matter of Radha Krishna Industries vs. State of Himachal Pradesh[2] has held in detail the scope and guidelines to be followed for the exercise of power under Section 83. CBIC has also issued a circular detailing the modus operandi to use the provisions of Section 83. However, as stated earlier, the said guidelines either by Supreme Court or CBIC are not being followed and for all such actions by the tax authorities, the tax payers does not have any option except to invoke the writ jurisdiction and call for interreference of High Courts. In this article, we shall deal with various issues arising qua Section 83. Before proceeding to discuss the issues, we will deal with the guidelines prescribed by Supreme Court in Radha Krishna Industries (supra) and CBIC Circular.

Read more: Various Issues - Provisional Attachment – Section 83 - GST Laws

Certain amendments made to Foreign Contribution (Regulation) Act, 2010 were made vide Foreign Contribution (Regulation) Amendment Act, 2020 and the same were given effect from 29.09.2020. The Government has proposed the said amendments after taking into the consideration the rampant misusage and abuse of the Foreign Contribution (Regulation) Act, 2010 (for brevity ‘FCRA’).

Read more: Validity of Amendments Proposed to FCRA – Supreme Court Upholds in Noel Harper

The recent Delhi Tribunal judgment in the matter of Young Indian[1] is the second in the series for Young Indian (for brevity ‘YI’). The first was the cancellation of registration under Section 12AA of Income Tax Act, 1961 (for brevity ‘ITA’). The article on that particular judgment is available at here. In this article, we deal with the recent judgment wherein the tax was levied on YI in terms of Section 28(iv) of ITA.

The judgment of tribunal is contained in 571 pages, wherein YI has challenged the Commissioner of Income Tax (Appeal)’s order on 16 counts. In this article, we are only dealing with the taxation of the income in the hands of YI and its corresponding valuation issues. We recommend the readers to read the entire judgment for a holistic understanding of the matter. The facts that are relevant to the current issue dealt in the article are narrated hereunder for the benefit of the reader.

Read more: Taxation of Benefits in Young Indian – Value of Assets of AJL – Delhi Tribunal in Young Indian