GAAR will backfire
M/s P Chidambaram & Co. who seemingly worked as a limited liability partnership have earned much laurels in plucking leakages in revenue when they announced annual amendments in the Income tax Act provisions drawing conclusions from the rulings of the Courts side by side. Often any favourable ruling in its earliest pronounces were converted into an amendment so that the assessee hardly could benefit from the same. Retrospective amendments have been made year after year negating the advantage pronounced in assessee’s favour. It is quite a pity that once after the Income tax Act has been flirted with amendments one after the another year after year and even within a year has been announced as a complex book thereby fulfilling one’s own dreams to rewrite it once again.
It had been indeed a difficult time for assessee to defend their viewpoint. Recently I witnessed a case before the Income Tax Appellate Tribunal where the counsel for the assessee only came to the Tribunal with folded hands seeking only a proper opportunity from the A O when his client’s claim stood overturned in the middle course only by virtue of a retrospective amendment. In fact the new code is only a further step in the same direction to deface all other decisions of the Courts/Tribunal that have held a view in favour of the assessee at some point or the other.
Definitely this will provide a clarity in the minds of the assessee but at the same time this kind of jugglery would reflect badly on the part of the government as any assessee would never ever attempt a claim outside the code. This would mean you are preventing someone to plan his affairs in a manner as would save taxes. Everyone has a fundamental right to do his business and arrange his affairs. Equally one should not forget that interests, penalties etc. do add to the kitty of the government.
Take for instance the terms ‘impermissible avoidance arrangement’ or the term ‘lack of commercial substance, in whole or in part’ in the context of General Anti Avoidance Tax Rule which is taking away assessee’s fundamental right to do business in the manner he wants. This kind of provision is subjective and kind of lending trouble both for the assessee and the department and