Dear Friends,
We professionals keenly wait for the Budget Speech of the Hon’ble Finance Minister, irrespective of the dispensation which is in power, to know the Policy thrust of the government . After listening to Hon’ble Finance Minister we eagerly wait for the fine print, as the devil lies in the details. The experts, more or less, even those who are in the opposition block qualified the policy thrust of the Budget 2023-24 as consistent. After looking into the fine print of the Finance Bill, 2023, to certain extent, I agree with this qualification. It is difficult for the North Block to give up the temptation to amend the law to neutralize the impact of Apex Court decisions. Old habits die hard. The proposed Clause 11of the Finance Bill, 2023 wants to replace the existing Section 28(iv) which reads as “the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession;” with the following.
(iv.) The value of any benefit or perquisite arising from business or the exercise of a profession, whether;-
- convertible into money or not; or
- in cash or in kind or partly in cash and partly,
Thus, the Finance Bill proposes to over come the decision of the Apex Court in the case of CIT v. Mahindra and Mahindra ltd (2010) 93 Taxmann.com 32 (SC.) wherein it was held that “ on a plain reading of section 28(iv), prima facie, it appears that for the applicability of the said provision, the income which can be taxed shall arise from the business or profession. Also, in order to invoke the provision of section 28(iv), the benefit which is received has to be in some other form rather than in the shape of money. By doing this the Hon’ble Supreme Court up held the finding of the Hon’ble Bombay High Court in the case of the same assessee reported in (2003) 261 ITR 501 (Bom.) that “The income which can be taxed under section 28(iv) must not only be referable to benefit or perquisite, but it must be arising from business. Secondly, section 28(iv) does not apply to benefits in cash or money”
The Finance Bill, 2023 has been consistent with the earlier practices of reversing the decisions of Hon’ble Supreme Court in favour of Assessee through legislative might with retrospective amendments. As a professional I expect from the present Government to do away with this practice of overturning the judicial pronouncements through legislative might and be gracious in accepting the same.
In this issue of the Journal, we have attempted to cover and explain the important changes proposed in the Finance Bill, 2023 to the Income Tax Act, 1961 and its implications. I thank all the
esteemed professional colleagues for accepting to contribute to this issue of the Journal inspite of a short period of time is provided to them. I am grateful to all my friends in the Journal committee, specifically, the Chairman CA Mitesh Kotech for the constant support and guidance. I once again thank all the friends for the encouragement given to me and my team.
K. Gopal,
Editor