CBDT: Delve deep into info exchange

The Central Board of Direct Taxes recently asked Chief Commissioners and Director Generals to direct their tax officers to utilise effectively the provisions of information exchange such as tax treaties, tax information exchange agreements, and multilateral conventions when seeking information from the tax administration of a foreign jurisdiction. Tax officers have been asked to follow the guidelines in the Manual on Exchange of Information, issued by the CBDT in January 2013, for enquiries and navigating investigations. Similarly, the CBDT directed that clarifications sought by foreign tax administrators should be given due weightage and timely responses. These measures may aid effective and transparent tax administration and lend credibility to the Government's efforts in checking money laundering.

APA applications are pouring in

The enthusiasm for the Advance Pricing Agreement programme is on the rise. Barely eight months into it and sources report there are more than 160 applications for pre-filing consultation (PFC), with over 100 within the past month. APA authorities have displayed a professional, positive and transparent attitude towards PFC, which has restored taxpayers' confidence. During a PFC, there is a marked willingness to understand the issue in an unbiased manner. The authorities have indicated their intention to make site visits to confirm the functional analysis impacting the fact pattern for a five-year period. There is an overwhelming response from taxpayers participating in the PFC on receiving transparent and congenial suggestions. The PFC concludes with a formal memorandum outlining the meeting details and providing a formal approval to proceed with the main application. The first round of PFC suggests that the tax administration would be progressive and mature, paving the way for making APA a success in India.


Divine exemption

In a recent decision by the Nagpur Income-tax Appellate Tribunal, a trust set up to look after a shrine was held to be non-religious in nature and, hence, eligible for Section 80G recognition, which grants tax benefit for donations to certain charitable institutions that do not benefit any particular religious community or caste.

The tax authorities rejected the recognition for the trust on the ground that it catered to Hindus only; the tribunal overruled the tax authorities on the premise that Hinduism is actually not a religion. A religion prescribes certain rituals and observances, ceremonies and modes of worship. Hinduism was considered to lack this dogmatic uniformity and, hence, not considered a religion. Therefore, the trust was considered non-religious and eligible for Section 80G recognition.

Stay plea not meaningless formality

The Bombay High Court recently reprimanded tax authorities for taking coercive action in attaching the assessee's bank account to recover outstanding tax demands. The tax authorities ignored the petitioner's request to keep the demand in abeyance pending disposal of the appeal. The court observed that demand recovery without disposing of the impending stay application was not justified, and that stay applications cannot be treated as meaningless formalities. Disapproving the action of the tax authorities, the court directed them to restore the entire amount to the assessee's bank account. The judiciary's intervention to end undue hardship to taxpayers would aid in transparent and fair tax administration.