Appellate order should be issued within 15 days

CHAT ROOM

You should make a written request to the Commissioner of Income Tax (Appeals) quoting instruction No 20/2003 (File No. 279/Misc.53/2000 ITJ) dated December 20, 2003 from the Central Board of Direct Taxes (CBDT), for immediate passing of the appellate order.

In this order, the CBDT said "appellate orders by commissioners of income tax (Appeals) should be issued within 15 days of the last hearing".

The CBDT has said in this instruction that 'any lapse on this account shall be viewed adversely'. If, even after this letter, the order is not received, the matter should be brought to the notice of the CBDT for expediting the order.

Appeals to the high courts can be filed only in cases where "substantial question of law" is involved. How it should be decided whether a question of law was substantial or not?

Section 260A of the Income Tax Act, 1961 provides for appeal where "substantial question of law" arises - not on a mere question of law. The expression "substantial question of law" is not defined in the Act. Though a similar expression appears in Section 100 of the Code of Civil Procedure, it is not defined there either. But its connotation is well settled by the judicial pronouncement.

In the Sir Chunilal Mehta & Sons Ltd vs Century Spg & Mfg Co Ltd case, AIR 1962 (SC) 1314, the Supreme Court held that a question of law would be a substantial question of law if it directly or indirectly affected the rights of the parties and/or there was some doubt or difference of opinion on the issue.

But if the question was settled by the apex court or the general principles to be applied in determining the question are well-settled, mere application of it to a particular set of facts would not constitute a substantial question of law.

In what situations a tax clearance certificate (TCC) is necessary for a person going abroad in terms of Section 230 of Income Tax Act, 1961.

Section 230 of the Income Tax Act, 1961, relating to tax clearance certificates was amended by the Finance Act, 2003. The section was amended, inter-alia, by way of insertion of a new sub-section (1A), which provides for the information to be furnished by persons domiciled in India at the time of leaving India.

As per the said sub-section, persons who are domiciled in India are only required to furnish permanent account number, purpose of visit and estimated period of stay abroad.

But persons, in respect of whom circumstances exist, which, in the opinion of an income-tax authority, make it necessary for such person to obtain a tax clearance certificate, will be required to obtain such certificate. A person can be asked to obtain a tax clearance certificate only after taking approval from the chief commissioner of income tax.

In this context, the CBDT has issued instruction 1 of 2004 (File No. 142/34.2003-TPL) dated February 5, 2004 mentioning the circumstances when the certificate would be necessary for a person of Indian domicile going abroad. The circumstances are :

Where the person is involved in serious financial irregularities and his presence is necessary in investigation of cases under the Income Tax Act or the Wealth Tax Act and it is likely that a tax demand will be raised against him, or

Where the person has direct tax arrears exceeding Rs 10 lakh outstanding against him, which have not been stayed by any authority.

The chief commissioner of income tax, after satisfying himself that the departure of such persons from India will prejudicially affect the interest of revenue, may authorise the assessing officer to require that such persons obtain a tax clearance certificate. The assessing officer, thereafter, shall inform the immigration officials, accordingly.

We are four partners in a firm. For the assessment year 2002-03, the return of income of the firm was filed under my signature. Subsequently, differences cropped up with one of the partners in regard to certain financial transactions, which have been duly shown in the annexures to the return of income. To prove my point, I applied to the assessment officer to permit me to take a copy of the return and its annexures. Citing Section 138 of the Income Tax Act, 1961, the assessment officer refused the request. Is the assessment officer right?

No. The legal position is that when a partner files the return, the same shall be deemed to be made on behalf of the firm itself and hence, the assessment officer cannot refuse to furnish a copy quoting Section 138, which bars the authority to furnish copies relating to the assessee except when the same is required in the public interest.

The provisions of Section 138 is to maintain the secrecy of the income tax of the assessee and any information relating to the returns of the assessee shall not be furnished to third parties.

But when a person himself is competent to sign and verify the returns of the firm in his capacity as an existing partner of the firm, he is entitled to a copy of the returns of the firm, in which case, the question of refusing to furnish copies of the returns of the firm on an alleged ground, want of public interest, is no more available to the income tax authorities as Section 138 itself is not attracted in such cases.

Is a cooperative bank entitled to deduction under Section 80P (2)(a)(1) of the Income Tax Act, 1961 in respect of interest and dividend income, derived out of investment of its surplus or reserves during the course of its ordinary banking business?

Yes, in view of the decision of the Karnataka High Court in the case of Commissioner of Income Tax vs Sri Ram Sahkari Bank Ltd, (2004) 138 Taxman 45 (Karnataka).