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Wednesday 21 October 2015

Every assessee has right to plan its affairs in such a manner which may result in payment of least tax possible, albeit, in conformity with the provisions of Act. It is also permissible to the assessee to take advantage of the gaping holes in the provisions of the Act and to see whether these provisions allow the assessee to arrange their affairs to ensure lesser payment of tax

Every assessee has right to plan its affairs in such a manner which may result in payment of least tax possible, albeit, in conformity with the provisions of Act. It is also permissible to the assessee to take advantage of the gaping holes in the provisions of the Act and to see whether these provisions allow the assessee to arrange their affairs to ensure lesser payment of tax. -Naresh Kumar Trehan ITA No. 3882/Del/2013 Dated: 10/01/2014

Porrits & Spencer (Asia) Ltd. Vs. Commissioner of Income Tax [(2010) 190 Taxman 174 to the effect that if the transaction was otherwise valid in law and a part of tax planning then merely because it has resulted in reduction of tax, it cannot be ignored on the ground that the underlying motive of entering into such a transaction by the assessee was to reduce its tax liability to the State.

Every assessee has right to plan its affairs in such a manner which may result in payment of least tax possible, albeit, in conformity with the provisions of Act. It is also permissible to the assessee to take advantage of the gaping holes in the provisions of the Act. The job of the Court is to simply look at the provisions of the Act and t see whether these provisions allow the assessee to arrange their affairs to ensure lesser payment of tax. If that is permissible, no further scrutiny is required and this would not amount to tax evasion.[Para 54]-Rajan Nanda(Delhi High Court)16-12-2011

In case of Key man Insuance policy surrender value at the time of assignment is taxable as salary in the hands of assignee [Para 48]. However if sum equal to surrender value is paid by asignee to assignor, nothing is taxable in the hands of assignee[para 49]- Rajan Nanda(Delhi High Court)16-12-2011 ITA 400/2008