Nagpur News: In Finance Act, 2013, insertion of new Section 43CA and amendment in Section 53(2)(vii) in Income Tax Act 1961 has generated a situation which is clearly leading to ‘Double Taxation’ and also shattering fundamental principles of taxation policy and also squarely violating fundamental rights of Constitution of India.
Seeking appropriate remedy Vidarbha Taxpayers Association (VTA) had sent appeal to Central Government in August 2013, wherein various illustrations were also submitted for immediate redressal, however no response has so far acknowledged by the ministries as well as departments.
Consequently VTA had sent recently another appeal by registered AD with stringent request to Dr. Man Mohan Singh – Prime Minister, P. Chidambaram – Minister of Finance, Sudha Sharma – Chairperson, Central Board of Direct Taxes, Dr. Brahm Avtar Agrawal – Secretary, Department of legal affairs, Ministry of law and justice and also to Member-secretary, Law Commission of India, New Delhi for early address to the issue hitting the taxpayers adversely for no justified reasons.
VTA in its recent memorandum is specifically seeking reply on two specific questions; can two persons be taxed for same transaction and on same incident? As in event of any sale purchase of flat or land, either new or old, if the consideration is less than Market (ready reckoner) value than both seller and buyer would be taxed on the difference amount. For example, X (an individual) purchases a flat from Y at Rs.100 lakhs and ready reckoner value of the said flat is Rs.125 lakhs on which stamp duty is paid, then as per these amendments, Y will be taxed on Rs.125 lakhs as business income and Y would be taxed as Rs.25 lakhs as income from other sources. Therefore, there is ‘Double Taxation’ at the point of sale (as in said example, wherein both seller as well as purchaser is taxed for additional Rs.25 lakhs each).
And can Government Reckoner Value is so full proof that it can make major impact on tax figures? As Ready Reckoner Valuation system was adopted for mere calculation and deriving of Stamp Duty while executing agreement or sale deed. Moreover reckoner values are of block areas and in reality, rates vary from plot to plot depending of its location, legal hassles, tenancy, encroachments, attachments, etc thus it cannot be linked with so many tax policies in our country as even Municipal Corporations are making policy to assess house tax on reckoner value, Income Tax had already linked it with so many sections.
J. P. Sharma, President of VTA specifically raised the issue that the proposed provisions creating charge on deemed/notional basis have shattered the fundamental principles of taxation of business income and this is leading to multiple taxation, which shall also create complexities and also increases additional tax burden on the taxpayers.
VTA secretary Tejinder Singh Renu requested Government that nationwide procedure should be adopted by the department responsible for fixing ready reckoner value of the properties in their region, because we strongly feel that the currently adopted procedure is not by any means full proof and authentic, hence reckoner value shouldn’t be linked with major tax sections making grave additions in tax value of the assessee, who is for no reason taxed due to the same.
Vidarbha Taxpayers Association (VTA) appealed to the Union Government to take this issue of double taxation for reconsideration and delete Section 43CA and Section 56(2)(vii)(b) in Income Tax Act with retrospective effect in the interest of natural justice.
