Over 22 crore high-value dealings under I-T lens

In a major crackdown, the income tax department has under its scanner more than 22 crore instances of high-value transactions in the country and abroad which include unreported credit card operations and real-estate deals. The department has obtained, through its data mining and intelligence tools, instances of unreported transactions involving an estimated amount of over Rs 2,000 crore. "The department is verifying details of these unreported deals and a major operation is already underway in the country," a top I-T official said.

The total deals under the probe lens are 22,52,06,979, the official said. The step is seen as a major drive to garner as much revenue as possible by the department before the fiscal closes and the budgetary target of Rs 5.32 lakh crore is achieved.

According to the official data of the tax department, its officials are working on sale and purchase of house property by 6,23,384 individuals worth Rs 30 lakh each. These transactions were made during 2009-10 and 2010-11 financial years. The department is also working on 27,50, 545 individual cases where cash deposits aggregating to Rs 10 lakh or more were made in savings bank account during the same fiscal. Under the I-T scanner are 15,23,728 individuals who made payments of Rs 2 lakh or more against their credit cards in the same fiscal while 32,21,695 individuals who acquired mutual fund schemes of Rs 2 lakh or more, bonds or debentures of Rs 5 lakh and above, shares issued by companies worth Rs 1 lakh and RBI issued bonds worth Rs 5 lakh and more. "These high value transactions have not been reflected on the I-T returns. "The department has asked tax offices to get in touch with these taxpayers or individuals urging them to file the returns or revise them," the official said.

Panel wants a couple’s assets to be treated as joint property

NEW DELHI: A high-level government panel has suggested that all movable and immovable assets acquired by a married couple or a couple living together be classified as joint property which would be divided equitably in the event of separation or desertion.

The Planning Commission's working group on Women's Agency and Empowerment wants a comprehensive legislation - 'Right to Marital Property Act' - to be brought in which would be applicable to all communities.

The panel, which wants a complete re-look at family laws, argued that all assets acquired by a couple should be viewed as joint property, regardless of who bought it. It said the law needed to recognize a woman as an equal partner with the husband and her contribution to the household should be appreciated.

The panel noted that apart from some reforms in the 1950s in Hindu law and some struggles around the issue of maintenance rights for Muslim women, family law reform had been totally neglected. "There is thus an urgent need to consider the enactment of a standalone comprehensive legislation, which will ensure that all assets that have been acquired by the family are divided in an equitable manner," the group, headed by secretary, women and child development ministry, said in its report.

The committee, which had representative from the ministries of law and home, also suggested a review of laws related to maintenance to ensure that separated women and children got an adequate amount of maintenance and custody rights. It suggested removing all discriminatory provisions in existing laws that link a woman's conduct with the grant of maintenance.

The panel argued that laws should be framed with a view to place the onus on the husband to prove his income and the quantum of maintenance awarded should enable the wife and children to live at the same standard of living that they have been used to.

It suggested that government should be made responsible for recovery of the maintenance amount, along with creation of a fund to pay the maintenance awarded by the court, particularly to poor litigants.

Orissa High Court

SC cancels bail of convicted BJP MLA

January 29, 2011 | ET Bureau

NEW DELHI: The Supreme Court has set aside the bail of Orissa BJP MLA Mohan Kumar Pradhan, convicted to seven years imprisonment for involvement in the 2008 Kandhamal communal riots. The Supreme Court asked the Orissa High Court, which granted bail, to decide the matter afresh, saying the high court was impressed that the convict was an MLA though the law made no such distinction. "The impugned order is set aside and the matter is remitted to the High Court for its fresh consideration in accordance with law," said a bench comprising Justice B Sudershan Reddy and Justice SS Nijjar . "The order clearly reflects that the High Court was mainly impressed by the fact that Manoj Kumar Pradhan is a sitting MLA In the circumstances, we find it difficult to sustain the order.Essar Steel IndiaLargest Single Location Flat Steel Producer in India.Visit to KnowMore www.Essar.com/Steel

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SC allows Gridco to charge more from some users

September 2, 2010 | Sanjay K Singh , ET Bureau

NEW DELHI: The Supreme Court has upheld the legality of notification of Grid Corporation of Orissa (Gridco) prescribing differential tariffs for different categories of consumers of electricity in the state. The apex court set aside an Orissa High Court order which had said that the corporation cannot increase rate of tariff beyond 17% for any categories of consumers. The high court had passed the order on the plea of several industries which were bulk consumers of power and Utkal Chamber of Commerce.

NEWS

SC stays probe into derivative losses of Rs 25 lakh crore

February 20, 2010 | Sanjay K Singh , ET Bureau

NEW DELHI: In a major relief to the Fixed Income Money Market and Derivatives Association (Fimmda), the Supreme Court on Friday stayed the Orissa High Court order, which had directed the Central Bureau of Investigation (CBI) to conduct an inquiry into the alleged mis-selling of derivative contracts in 2007 and 2008 resulting in nation's forex loss of about Rs 25 lakh crore. The association of banks, financial institutions , primary dealers in forex and insurance companies told the apex court, such derivatives losses were result of the global financial crisis and not conspiracy.

NEWS

Refund sales tax to bidi makers; SC tells Orissa

May 3, 2007 | PTI

NEW DELHI: The Supreme Court has asked the Orissa government to refund sales tax collected from bidi manufacturers on sale of tendu leaves. A bench comprising Justice Arijit Pasayat and Justice L S Panta dismissed the Orissa government's appeal seeking to set aside the Orissa High Court order, which had asked it to refund the excess sales tax collected in 2001. The High Court had also directed the state government to refund the money within two months of its order, failing which it would have to pay interest at the rate of 16 per cent.

NEWS

SC admits Vedanta's varsity plea

January 29, 2011 | ET Bureau

NEW DELHI: The Supreme Court on Friday admitted petitions of Anil Agarwal Foundation and the Orissa government challenging the Orissa High Court , which ruled acquisition of over 6,000 hectares for an international university in Puri was illegal. The high court had directed UK-based company to return the land to its owners. Billionaire Anil Agarwal had planned to build his Vedanta University on a sprawling campus which would have a capacity to admit over a lakh students.

NEWS

Orissa may challenge HC's order on Vedanta varsity

November 26, 2010 | Nageshwar Patnaik , ET Bureau

BHUBANESWAR: Orissa Chief Minister Naveen Patnaik has denied violation of forest or environment laws to facilitate land acquisition for the Vedanta University and indicated that the state would challenge the high court's order in the Supreme Court. Replying to an adjournment motion moved by Congress leader Prasad Harichandan on the Vedanta University issue in the assembly, Mr Patnaik said his government had sought the Advocate-General's opinion for appropriate steps to be taken in accordance with law whether or not to challenge the recent Orissa High Court in the apex court.

NEWS

Tribal bodies move Orissa High Court against ban on Vedanta

November 16, 2010 | Nageshwar Patnaik , ET Bureau

BHUBANESWAR: At least eight leading tribal organisations from Kalahandi and Rayagada districts have moved the Orissa High Court against the recent verdict of the Union ministry of environment and forests to deny permission to Vedanta Aluminium's plan to expand its refinery project in Lanjigarh, Kalahandi. In a public interest litigation, the organisations said the denial of permission to the refinery project would affect the livelihood of local people who are directly or indirectly dependent on the '10,000-crore project for their survival.

NEWS

Orissa High Court orders Jindal Stainless Steel to sell surplus power to state

May 22, 2009 | Nageshwar Patnaik , ET Bureau

BHUBANESWAR: The Orissa High Court on Thursday asked Jindal Stainless Ltd [JSL] to sell surplus power generated from its captive power plant at Kalinganagar to the state grid. The energy department had challenged an order of Central Electricity Regulatory Commission [CERC] allowing JSL to evacuate its surplus power of 75 MW to its sister company at Hissar, Haryana. Earlier on April 6 last, the High Court had stayed the order of CERC. In its petition, the energy department had pointed out that the Company had entered into an agreement with the state government in 2005, which stipulated in clear terms that the surplus power generated by it would first be sold to the state government.

NEWS

Orissa High Court orders Jindal Stainless Steel to sell surplus power to state

May 22, 2009 | Nageshwar Patnaik , ET Bureau

BHUBANESWAR: The Orissa High Court on Thursday asked Jindal Stainless Ltd [JSL] to sell surplus power generated from its captive power plant at Kalinganagar to the state grid. The energy department had challenged an order of Central Electricity Regulatory Commission [CERC] allowing JSL to evacuate its surplus power of 75 MW to its sister company at Hissar, Haryana. Earlier on April 6 last, the High Court had stayed the order of CERC. In its petition, the energy department had pointed out that the Company had entered into an agreement with the state government in 2005, which stipulated in clear terms that the surplus power generated by it would first be sold to the state government.

NEWS

Vedanta aims to achieve 3,615 MW at Jharsuguda by end-next year

June 12, 2011 | PTI

MUMBAI: Vedanta Aluminium Ltd (VAL), a unit of Anil Agarwal-led Vedanta Resources PLC , on Sunday said it has invested Rs 40,000-crore in its Orissa projects and is aiming to achieve 3,615 MW capacity at its Jharsuguda power plants by end-next year. "So far we have achieved 2,415 MW in our two power plants at Jharsuguda. We hope to achieve 3,615 MW by 2012," a senior VAL official told PTI over phone. Presently, the company is supplying around 400-500 MW power to the state grid and using the rest for its own requirements, he said.

CHIEF JUSTICE

The Supreme Court’s judgment today in Vodafone is of enormous importance to a number of branches of Indian law. The majority judgment has been delivered by the Chief Justice and Swatanter Kumar J. A concurring judgment delivered by K.S. Radhakrishnan J. in some respects goes even further. A copy of the judgment is available on the Supreme Court’s website. A detailed analysis of the judgment will follow. This post reproduces key extracts from the two judgments with brief comments, on some of the issues before the Court.

1. Azadi Bachao Andolan and McDowell

Both judgments hold that Azadi Bachao Andolan is good law. The Chief Justice holds that there is no conflict between Azadi and McDowell because the observations of Reddy J. are confined to cases in which a colourable device is used. Radhakrishnan J. appears to have gone even further and has expressly said that the “ghost” of the Duke of Westminster has not been exorcised. We will analyse this in detail in the coming days.

[para 64] The words “this aspect” [ed: referring to the majority’s observation that they “on this aspect” agree with Reddy J.’s judgment] express the majority’s agreement with the judgment of Reddy, J. only in relation to tax evasion through the use of colourable devices and by resorting to dubious methods and subterfuges. Thus, it cannot be said that all tax planning is illegal/illegitimate/impermissible. Moreover, Reddy, J. himself says that he agrees with the majority. In the judgment of Reddy, J. there are repeated references to schemes and devices in contradistinction to “legitimate avoidance of tax liability” (paras 7-10, 17 & 18). In our view, although Chinnappa Reddy, J. makes a number of observations regarding the need to depart from the “Westminster” and tax avoidance – these are clearly only in the context of artificial and colourable devices. Reading McDowell, in the manner indicated hereinabove, in cases of treaty shopping and/or tax avoidance, there is no conflict between McDowell and Azadi Bachao or between McDowell and Mathuram Agrawal.

JUSTICE K.S RADHAKRISHNAN

[paras 110, 112] Justice Reddy has, the above quoted portion shows, entirely agreed with Justice Mishra and has stated that he is only supplementing what Justice Mishra has spoken on tax avoidance. Justice Reddy has also opined that the ghost of Westminster (in the words of Lord Roskill) has been exorcised in England. In our view, what transpired in England is not the ratio of McDowell and cannot be and remains merely an opinion or view. 112. Justice Reddy, we have already indicated, himself has stated that he is entirely agreeing with Justice Mishra and has only supplemented what Justice Mishra has stated on Tax Avoidance, therefore, we have go by what Justice Mishra has spoken on tax avoidance

2. Corporate Veil

Both the Chief Justice and Radhakrishnan J. hold that the existence of a holding-subsidiary relationship is no reason to suppose that the two entities are not separate in law. The Chief Justice sets out circumstances in which the Revenue may appeal to India’s “judicial anti-avoidance rule”. Justice Radhakrishnan cites with approval Adams v Cape Industries.

THE CHIEF JUSTICE

[paras 67, 68] However, the fact that a parent company exercises shareholder’s influence on its subsidiaries does not generally imply that the subsidiaries are to be deemed residents of the State in which the parent company resides

In the application of a judicial anti-avoidance rule, the Revenue may invoke the “substance over form” principle or “piercing the corporate veil” test only after it is able to establish on the basis of the facts and circumstances surrounding the transaction that the impugned transaction is a sham or tax avoidant…the concept of participation in investment, the duration of time during which the Holding Structure exists; the period of business operations in India; the generation of taxable revenues in India; the timing of the exit; the continuity of business on such exit. In short, the onus will be on the Revenue to identify the scheme and its dominant purpose. The corporate business purpose of a transaction is evidence of the fact that the impugned transaction is not undertaken as a colourable or artificial device. The stronger the evidence of a device, the stronger the corporate business purpose must exist to overcome the evidence of a device

JUSTICE K.S. RADHAKRISHNAN

[paras 58, 61] Legal relationship between a holding company and WOS is that they are two distinct legal persons and the holding company does not own the assets of the subsidiary and, in law, the management of the business of the subsidiary also vests in its Board of Directors

3. Shareholders’ Agreements and Rangaraj

Justice Radhakrishnan has expressed the view that Rangaraj v Gopalakrishnan, which we have discussed on several occasions, may have been wrongly decided because shareholders have the freedom to contract unless there are specific restrictions in legislation.

[paras 63, 64] The nature of SHA was considered by a two Judges Bench of this Court in V. B. Rangaraj v. V. B. Gopalakrishnan and Ors. (1992) 1 SCC 160 … This Court has taken the view that provisions of the Shareholders’ Agreement imposing restrictions even when consistent with Company legislation, are to be authorized only when they are incorporated in the Articles of Association, a view we do not subscribe

64. Shareholders can enter into any agreement in the best interest of the company, but the only thing is that the provisions in the SHA shall not go contrary to the Articles of Association. The essential purpose of the SHA is to make provisions for proper and effective internal management of the company

4. Controlling Interest and Extinguishment

Both the Chief Justice and Justice KS Radhakrishnan have held (on this aspect affirming the legal conclusion of the Bombay High Court in the impugned judgment) that “controlling interest” is not a distinct capital asset.

THE CHIEF JUSTICE

[para 88] As a general rule, in a case where a transaction involves transfer of shares lock, stock and barrel, such a transaction cannot be broken up into separate individual components, assets or rights such as right to vote, right to participate in company meetings, management rights, controlling rights, control premium, brand licences and so on as shares constitute a bundle of rights

JUSTICE K.S. RADHAKRISHNAN

[para 144] Further, the High Court failed to note on transfer of CGP share, there was only transfer of certain off-shore loan transactions which is unconnected with underlying controlling interest in the Indian Operating Companies. The other rights, interests and entitlements continue to remain with Indian Operating Companies and there is nothing to show they stood transferred in law

5. Section 9

THE CHIEF JUSTICE

[para 71] Hence, it is not necessary that income falling in one category under any one of the sub-clauses [ed: of section 9] should also satisfy the requirements of the other sub-clauses to bring it within the expression “income deemed to accrue or arise in India” in Section 9(1)(i)… The said sub-clause consists of three elements, namely, transfer, existence of a capital asset, and situation of such asset in India. All three elements should exist in order to make the last sub-clause applicable [emphasis added].

JUSTICE K.S. RADHAKRISHNAN

[paras 171-174] Section 9, therefore, covers only income arising from a transfer of a capital asset situated in India and it does not purport to cover income arising from the indirect transfer of capital asset in India. Section 9 has no “look through provision” and such a provision cannot be brought through construction or interpretation of a word ‘through’ in Section 9. In any view, “look through provision” will not shift the situs of an asset from one country to another. Shifting of situs can be done only by express legislation

6. Situs of the CGP Share

Although both the Chief Justice and Justice K.S. Radhakrishnan hold that the situs of the CGP share is the place of incorporation/register of shares, they appear to have adopted different approaches: the Chief Justice applies the Indian Companies Act, while Justice KS Radhakrishnan applies the well-known conflict of laws rules on situs of shares. This will be discussed in more detail in a subsequent post.

THE CHIEF JUSTICE

[para 82] Be that as it may, under the Indian Companies Act, 1956, the situs of the shares would be where the company is incorporated and where its shares can be transferred. In the present case, it has been asserted by VIH that the transfer of the CGP share was recorded in the Cayman Islands, where the register of members of the CGP is maintained.

JUSTICE K.S. RADHAKRISHNAN

[para 127] Situs of shares situates at the place where the company is incorporated and/ or the place where the share can be dealt with by way of transfer. CGP share is registered in Cayman Island and materials placed before us would indicate that Cayman Island law, unlike other laws does not recognise the multiplicity of registers

Vodafone: Key Points

Vodafone's appeal allowed

It has been reported that Vodafone’s appeal has been allowed, the Supreme Court inter alia rejecting the Revenue’s “extinguishment” argument and holding that section 9 is not a “look-through” provision.

We will have an opportunity to discuss this judgment in detail over the coming days once a copy is available.

Vodafone's appeal allowed

Second Week of Arguments: Constitution Bench on Bhatia International

Arguments continued this week before the Constitution Bench comprising the Chief Justice, and Justices Jain, Nijjar, Khehar and Desai. As we noted, counsel for the appellants in the first week concentrated principally on whether the courts of the seat of arbitration have exclusive jurisdiction to test the validity of an arbitral award even when the proper law of the contract is the law of another country.

This week, Mr Gopal Subramanium developed the submissions he had outlined last week. It is easiest to describe counsel’s contentions by dividing his case into two parts: a negative case, which sought to establish that the “seat of arbitration” is not the basis on which the jurisdiction of the courts has been defined under the Indian Arbitration Act; and a “positive” case, which consisted of certain propositions on the correct approach to jurisdiction under the Indian Act, drawing from the principle of party autonomy, the significance of choice of law, English law and from the travaux préparatoires to the UNCITRAL Model Law on International Commercial Arbitration. In his negative case, counsel submitted that the primacy accorded to the “seat of arbitration” in England is in fact judge-made law; that the drafters of the Model Law in 1985 were fully aware of the contesting views, and yet defined “international commercial arbitration” in article 1(3) not only with reference to the seat of arbitration but also the places of business of the parties; and that the Indian legislature went even further because it omitted all references to the seat in section 2(1)(f) of the 1996 Act. Counsel further submitted that it is possible that parties to an arbitration with a foreign seat expressly designate the 1996 Act as applicable, in which event the 1996 Act must ex hypothesi apply even though the seat of arbitration is outside India. Counsel also relied extensively on the judgment of the UK Supreme Court (particularly Lords Mance and Collins) in Dallah Real Estate v Government of Pakistan, which we have discussed here, to suggest that a court must always have jurisdiction to examine matters which are “fundamental” to an arbitration, such as arbitrability of the dispute, whether there was a valid arbitration agreement etc. Counsel then relied on section 48(1)(e) of the Act, which corresponds to art. 5(2)(e) of the New York Convention, to suggest that Parliament clearly contemplates that not only the court of the seat of the arbitration (captured by the words “country in which the award was made”) but also the court of the country whose law governs the arbitration agreement has jurisdiction to set aside the award.

Counsel then argued that the test of jurisdiction under the 1996 Act is therefore not seat, but “subject matter”, for section 2(1)(f) defines an “international commercial arbitration” without reference to its seat, and section 2(1)(e) the jurisdiction of a “court” by reference to the subject matter of the arbitration. Counsel reiterated that section 2(2) only indicates when the Indian court has jurisdiction, and not when it does not, and submitted as a consequence that a Convention award under Part II may be enforced either under Part II or under Part I because the provisions of Part II are “additional” to those in Part I. As an example, counsel pointed out that although sections 8 and 45 deal with similar issues, the right of the defendant to have the parties referred to arbitration is lost under section 8 if he takes the objection after the written statement is filed, but is never lost under section 45. There are of course other differences. The Chief Justice put to counsel that this results in duplication and that it may not have been necessary for Parliament to enact Parts I and II separately, to which counsel said that these provisions are additional for those awards that fall within Part II. Counsel therefore submitted that it is open to an Indian court to exercise the power to appoint an arbitrator under section 11 in respect of a Convention arbitration agreement. Justices Nijjar and Khehar put to counsel the possibility that this is wholly unnecessary since the court under section 45 also has the power to appoint an arbitrator, to which counsel said that this would have the effect of rendering section 11 otiose, for such a power must ipso facto also exist under section 8 as well.

On Thursday, Dr Abhishek Singhvi briefly outlined his submissions, which will be developed next week. In contrast to the submissions of counsel before him, he stated that his case is confined to section 9, and argued that the court is entitled to take an independent view of section 9 – that is, it is possible that section 9 may be invoked in respect of a foreign arbitration even if section 34 or any other provision of Part I cannot be. He started by suggesting that a party may be left entirely remediless if a section 9 power is not available, and gave the example of an arbitration with its seat in Brussels involving a party whose major asset is a castle in the State of Rajasthan. Counsel submitted that the claimant in the Brussels arbitration has only three remedies: (i) obtaining interim relief from a court in Brussels (under its arbitration legislation); (ii) obtaining interim relief from the Tribunal and (iii) obtaining interim relief in respect of property situated elsewhere (for example in America). Counsel submitted that as far as the castle in Rajasthan is concerned, none of these remedies is “worth the paper” it is written on. The Bench put to counsel the possibility that a party may not be entirely remediless, for a civil suit may be maintainable, to which counsel said that it may not be correct to hold that a suit is maintainable despite the existence of an arbitration agreement. In short, counsel’s submission was that “the core of Bhatia” is correct, and the fact that it has engendered other decisions on other sections of Part I should not lead one to conclude that Bhatia is itself incorrect as far as section 9 is concerned.

Articles

I once had a friend who grew to be very close to me.

Once when we were sitting at the edge of a swimming pool, she

filled the palm of her hand with some water and held it

before me, and said this:

"You see this water carefully contained on my hand? It

symbolizes Love."

This was how I saw it:

As long as you keep your hand caringly open and allow it to

remain there, it will always be there. However, if you

attempt to close your fingers round it and try to posses it,

it will spill through the first cracks it finds

This is the greatest mistake that people do when they meet

love...they try to posses it, they

demand, they expect... and just like the water spilling out

of your hand, love

will retrieve from you. For love is meant to be free, you

cannot change its nature. If there are people you love, allow

them to be free beings.

Give and don't expect.

Advise, but don't order.

Ask, but never demand.

It might sound simple, but it is a lesson that may take a

lifetime to truly practice. It is the secret to true love. To

truly practice it, you must sincerely feel no expectations

from those who you love, and yet an unconditional caring."

Noida double murder case

On May 16, 2008, Aarushi Talwar, a 14-year-old Class IX student of Delhi Public School in Noida and the daughter of a successful dentist couple, was found dead with her throat slit in her parents' home at Jalvayu Vihar in [Noida, Uttar Pradesh]. Suspicion immediately fell on the f-wing the trail of blood, Noida police found the dead body of the missing domestic help, Hemraj, on the terrace. K.K. Gautam said that he saw some clues in Arushi Talwar’s bedroom. However, he did not reveal the full extent of what he understood he saw. Police investigations were on-going and details could not be revealed for fear of hampering the investigation. After a disorganized investigation, the police arrested Dr. Rajesh Talwar, the father of the deceased girl (works at Fortis Hospital in Noida) on May 23, 2008, charging him with having committed the double murder. He confessed to killing Aarushi and Hemraj to the Police on the night of his arrest but later retracted his confession. His wife, Dr. Nupur Talwar(Arushi Talwar’s mother, runs a dental clinic), accused the Noida police of framing him, and requested Uttar Pradesh chief minister Mayawati to transfer the case to the Central Bureau of Investigation (CBI).This was done at the behest of the media attention on the case. Furthermore there were reports of the case being handed over to the CBI.
The Central Bureau of Investigation took over the investigation into the murders of Aarushi and Hemraj on June 1, 2008, forming a 25-member team in an attempt to crack the case. Soon after the CBI took over the case, Uttar Pradesh chief minister Mayawati gave transfer orders to senior police officers who were part of the Special Investigation Team (SIT) that had previously been in charge of the investigation, including the Noida Senior Superintendent of Police, Satish Ganesh, and Meerut Inspector General, Gurdarshan Singh. and family In addition, the deputation of CBI officer Arun Kumar, formerly a member of the Uttar Pradesh Police, who was in charge of the investigation also ended in July, 2008.^[1]

Contents

Significance of the Case

The case received nationwide attention, and has become symptomatic of what most people believe are recent unsavoury tendencies in the Indian media, such as sensationalism , the urge to "overkill" and to carry out a public trial-by-media.^[2] The Union Minister for Women and Child Development, Renuka Chowdhury, condemned the police for what she called the "character assassination" of a child victim and called for a commission of legal experts to investigate whether specific legislation existed or needed to passed in order to allow filing of defamation suits against the Noida police, a government agency.^[3] In addition, the focus by 24-hour cable news on speculative aspects of the personal lives of the father and his dead daughter, and the media frenzy that compromised the privacy of the families involved in the case has caused comparisons to be made to the JonBenet Ramsey case in the United States.^[4] The case has also attracted a lot of public attention as a bizarre whodunit,^[5] with the CBI reporting that the agency had been receiving a large number of telephone calls from members of the general public, giving investigators ideas and advice on how to solve the case.^[6] I n addition, the story hit the blog-o-sphere in a major way with many Indian bloggers avidly and enthusiastically blogging about the murder mystery^[7]

The remainder of this article (content appearing below) may require cleanup to meet Wikipedia's quality standards. Please improve this article if you can, and move or remove this notice if appropriate. (July 2010)

CBI: Getting there

This article contains too many or too-lengthy quotations for an encyclopedic entry. Please help improve the article by editing it to take facts from excessively quoted material and rewrite them as sourced original prose. Consider transferring direct quotations to Wikiquote. (July 2010)

CBI Investigation

CBI investigators charged the Noida police with a shoddy investigation, which, it claimed, had resulted in the destruction of 90% of the evidence on the crime scene. The reasons for this shoddy investigation should be investigated. Perhaps, the reasons lie in the lack of trained staff to conduct a full proof investigation, not only in Uttar Pradesh but in the entire country.^{[citation needed]}
Aside from not capturing the finger prints on the whisky bottles in Hemraj's room, the police allowed the media to freely roam the crime scene rather than restricting access to the flat.
In addition, the police allowed doctors, not specifically trained in forensic pathology, to conduct the autopsies of Hemraj and Aarushi. While it is established procedure to lift fingerprints (of both murderers and victims) from the skin of the victims.^[8] the doctors entrusted with the autopsies neglected to call forensic scientists to lift fingerprints from the cadavers. On August 11, 2008, the CBI reported that it had evidence pointing to the presence of a fifth person in the house at the time of the murders, as finger prints not matching any of the suspects or occupants of the house were found on the whisky bottles.
Experts at the All India Institute of Medical Sciences (AIIMS), who are working closely with the CBI, have raised questions over one entry in Arushi’s post mortem report. The report, dated May 16 and prepared by Sunil Dore for the Noida police, mentions “whitish discharge” from the vagina which AIIMS doctors say wasn’t investigated. They have raised this issue with the CBI.
“It is the duty of the doctors and the investigating officer to collect all biological evidence. As per law, it is mandatory to write about it in the post mortem report which is legal evidence. But in this case no further investigation was done on the evidence that they got from natural orifices,” Sudhir Gupta, associate professor, forensic medicine, AIIMS, told The Indian Express.
The post mortem report says that various organs including stomach with contents, samples from small intestine, gall bladder, spleen and one kidney were preserved, sealed and sent for examination to rule out poisoning.
“However, the report doesn’t mention whether a vaginal swab was sent for further investigation,” said Gupta. “The whitish discharge could be attributed to several causes, from a fungal infection, common at this age, to even sexual assault. But in a murder case, this was a serious biological finding which required deliberation. No such type of biological evidence was collected and sealed by the doctor who prepared the autopsy,” he added.
Sources in the agency emphasised that unlike in an "unoccured case" where a closure report is filed because the incident under investigation was not found to have occurred, the report filed in the Aarushi case does not shut the possibility of renewed investigation if a new, strong evidence comes up. Pinaki Mishra, Dr Talwar's counsel, strongly reacted to the closure report, calling it a pack of innuendos. "This is the most unfair verdict that could have been given. They (Talwars) are being pronounced guilty until proved innocent. Without having filed a chargesheet, the CBI is condemning them to live the life of a guilty. I have no doubt that the entire investigation is derailed by taking the line of UP police - just damn them without evidence," he said.
The CBI does not debunk the defence of Talwars completely, with sources acknowledging that the probe failed to establish the motive behind the murder. They also said the dummy run conducted by them to verify Talwars' claim that they could not have heard of what was happening in the next room because of noise from their AC, shows that they could have slept through the crime. It also says the narco tests run on the couple show only "minor deceptions". But the report lists "circumstantial evidence" to say why they continue to treat Dr Rajesh Talwar as the prime suspect in the case. Sources claim the "circumstantial evidence" is so strong that Dr Talwar could have been chargesheeted had he not been a parent. The closure report says the crime scene was "dressed up" before the police was called—something that is not associated with a regular criminal.
Sources said that Noida police's failure to secure the crime scene was another reason why the agency was left only with circumstantial evidence. Blood stain on the whisky bottle found in Talwars' house did not match the samples of either Aarushi or Hemraj. The report asserts that both Aarushi and Hemraj died of injuries from a blunt weapon, and that the cuts on their neck were inflicted when they were already dead.

Timeline of the Case

May 16, 2008

• Aarushi Talwar, daughter of a dentist couple, found dead with her throat slit in the bedroom of her flat in Jalvayu Vihar.
• Based on the Talwars' claim, missing domestic help Hemraj (Nepalese national) suspected of murder.

May 17, 2008

• Hemraj's body found on the terrace of Talwar's house.
• Noida Sector-20 police Station Officer (S.O.) Dataram Nauneria shifted for lapses in investigations.
• Autopsy report rules out sexual assault.

May 18, 2008

• Delhi Police join murder probe; police say murder committed by a "doctor or a butcher".

May 22, 2008

• Family under suspicion; honor killing angle probed
• Police quiz Aarushi's close friend, whom she spoke to 688 times in the 45 days preceding her murder.

May 23, 2008

• Aarushi's father Dr. Rajesh Talwar arrested for the two murders.

June 13, 2008

• The Nepalese compounder of Dr. Rajesh Talwar, Krishna (alias Kishan) arrested by CBI. The arrest follows polygraph test and Narco Analysis test at Forensic Science Laboratory (FSL), Bangalore the day before. He was earlier subjected to polygraph test twice at Central Forensic Science Laboratory (CFSL), Delhi as well as psychological assessment test at AIIMS, New Delhi on June 9, 2008; based on the test results, CBI arrested Krishna.

June 14, 2008

• Krishna the compounder of Dr. Rajesh Talwar produced before the duty magistrate, district courts, Ghaziabad. CBI requests for 14 days police custody of Krishna for further investigation. The Magistrate grants 3 days police custody remand. He is to be produced before the Special Magistrate for CBI cases at Ghaziabad on June 17, 2008. A CBI team had earlier conducted a search at Krishna's former premises at Jalvayu Vihar, Noida and seized some clothing and other materials for forensic examination. Rajkumar, the Nepalese domestic help of the Duranis, was subjected to polygraph test at CFSL, Delhi.

June 19, 2008

• Judicial custody of Dr. Rajesh Talwar extended up to July 2, 2008. An application is moved for a second lie detection test of Dr. Rajesh Talwar, as his first lie detection test remained inconclusive. A lie detector test is also conducted on Vijay Mandal, the domestic help of a neighbor of the Talwars.

June 17, 2008

• Krishna produced before special magistrate, CBI court, Ghaziabad. CBI applies for further 11 days police custody remand to continue the investigation. The magistrate grants 6 days police custody. He is to be produced before the CBI magistrate, Ghaziabad on June 23, 2008.
• A team accompanied by a forensic expert search the room where Rajkumar used to live in Sector 53, Noida. Material seized from the room on June 13, 2008 is forensically examined.

June 20, 2008

• Lie detection test of Dr. Rajesh Talwar conducted at CFSL, Delhi.

June 23, 2008

• Krishna produced before the special magistrate, CBI courts, Ghaziabad. CBI requests further custody of Krishna for 4 days for further interrogation and recovery of weapon. The magistrate passes an order extending his police custody by 4 days. He is to be produced before the Court on June 27, 2008.

June 25, 2008

• Second lie detection test conducted on Dr. Nupur Talwar. Her first lie detection test was found inconclusive.

June 26, 2008

• The CBI declares the case to be a "blind case". Dr. Rajesh Talwar refused bail by the special magistrate, CBI courts, Ghaziabad.

June 27, 2008

• Krishna taken to Talwars' residence by the CBI and thereafter produced before the special magistrate, where his bail plea is rejected once again. The Talwars' family friends Duranis' Nepalese domestic help Rajkumar arrested on the suspicion of involvement in the murder. Washed T-shirts with faint human blood stains seized and sent for DNA matching. However, the Duranis (doctors themselves) maintain that the stains could be from the boils that Rajkumar had on his body. Rajkumar had already been subjected to polygraph test, psychological assessment, brain mapping and narco analysis at FSL, Gandhinagar from June 23 to June 26, 2008.

June 28, 2008

• Rajkumar produced before special magistrate, CBI court, Ghaziabad and is sent to police custody for 14 days.

June 30, 2008

• Krishna's lawyer approaches a Ghaziabad court for bail. Bail is refused as the court that was approached does not have sufficient powers in this case.
• CBI joint director in charge of the investigation, Arun Kumar, is recalled to his original cadre in Uttar Pradesh.

June 31, 2008

• News channel AAJ TAK, airs reports that Vijay Mandal, a new face, is also involved in the Noida double murder.

July 2, 2008

• Dr. Rajesh Talwar is produced before special magistrate, CBI court, Ghaziabad again. His bail plea is rejected and his judicial custody extended till July 11, 2008. CBI says he is still among the suspects.

July 3, 2008

• The Supreme court of India rejects a public interest litigation (PIL) case challenging the administration of narco-analysis test on the accused. A bench headed by Justice Altamas Kabir refuses to hear the petion, as the petitioner, a lawyers' body, was an unregistered entity.

July 6, 2008

• An English daily ^[9] reveals that on the night the murders were committed, the couple Dr. Rajesh and Dr. Nupur left their flat around midnight and came back around 5 AM. They were at a high society party for which 12 suites were booked in a posh South Delhi hotel.

July 7, 2008

• Dr. Nupur Talwar refuses the allegations regarding their absence on the night of the murders. She also expresses her intention to take legal action against the media house.
• CBI releases an official statement on their site, stating, "A section of media has reported quoting CBI sources that Dr. Rajesh Talwar and Dr. Nupur Talwar were not present in their house on the night of 15th May, 2008 and more than a dozen rooms were booked in a hotel in Delhi. It is clarified that the news item is speculative and not true. Investigation of the case is progressing diligently."
• Some other TV channels debate the merits of her and CBI's affirmations in the light of glaring gaps in the Talwars' story.

July 9, 2008

• Rajkumar, the domestic help of the Durranis, is subjected by CBI to a second narco-analysis test at FSL^{[disambiguation needed ]} Bangalore.

July 10, 2008

• News reports on some TV channels suggest that the CBI has had a breakthrough on Rajkumar as the culprit and has confessed during the narco-analysis test. He is learned to have committed the murder along with Krishna, Sambhu and Hemraj. The reason for the first murder, as told by Rajkumar, was lust and Hemraj was killed for fear that he might have disclosed information.

July 11, 2008

• Vijay Mandal (alias Sambhu) the servant one of the neighbors of the Talwars is arrested by the CBI.
• In a press conference, Arun Kumar, Joint Director CBI, states that the CBI is awaiting DNA matching of washed blood stains on Rajkumar's T-shirts. He confirms that the CBI still considered this a blind case and expresses the hope that the case will be solved soon.
• Dr. Rajesh Talwar and Krishna appear before a special CBI court, Ghaziabad to seek bail. Their petitions are heard and Dr. Rajesh Talwar is released on bail, for lack of evidence. Eminent criminal lawyer R. K. Anand undertakes the defence of Krishna.
• CBI believes two or three domestic helps and Krishna to be the prime suspects. However, the forensic evidence is not admissible as evidence in the court.
• The murder weapon and the two cellphones respectively of Aarushi and Hemraj are still missing.

July 12, 2008

• Dr. Rajesh Talwar is freed on bail from the Dasna Jail in Ghaziabad. The news of his release brings back widespread media attention to the case.
• Vijay Mandal is sent to 3-days' CBI custody by the court of additional chief judicial magistrate Dinesh Kumar in Ghaziabad.^[10] Vijay Mandal has been accused under 302, 201, 120(B) of the Indian Penal Code (IPC).

July 15, 2008

• Vijay Mandal's police custody extended for four more days.^[11] The CBI expected to find the murder weapon and the cellphones of Aarushi and Hemraj with Mandal's help.

July 16, 2008

• An association of Nepalese citizens alleges that Krishna and Rajkumar are being pressurized to make confessional statements.^[12]

July 18, 2008

• CBI has not seized any evidence and is yet to receive a crucial forensic report on accused Rajkumar, according to media reports. It has weakened the case against the three prime suspects — Krishna, Rajkumar and Vijay Mandal. The CBI claims near closing of the case when preliminary reports from Hyderabad's Centre for DNA Fingerprinting and Diagnostics, suggests that identifying the blood on the T-shirt "may or may not be possible", according to media reports.^[13] Separating DNA from garments after a lapse of two months is not always possible, because of the disintegration of the red blood cells on the cloth.

July 19, 2008

• Vijay Mandal sent into police custody for four more days.

July 21

• Rastriya Jana Morcha (RJM) chairman Chitra Bahadur K.C. alleges that the two Nepalese nationals Krishna Thapa and Rajkumar were falsely accused by the CBI in the case,^[14] in order to save Dr. Rajesh Talwar. The party has decided to raise the issue in the Nepalese parliament. The party will also approach the Nepalese government and the national human rights commission to save the two.

July 22, 2008

• A bench comprising Justice Altmas Kabir and Justice Markandey Katju of the supreme court of India instructs the media to be careful^[15] in the context of the hearing of a public interest lawsuit that has raised questions on the media coverage of the high-profile murder case. In the probe, the character of the victim's parents was hotly debated, especially that of Aarushi's father Rajesh Talwar who was arrested initially as the main accused. However, no adverse observations were made about the compounder Krishna and the other two domestic helps Rajkumar and Vijay Mandal. A distinction seems to have been made according to the accused persons' class and national identities.

July 25, 2008

• The Police custody of the accused Krishna, Rajkumar and Vijay Mandal is extended till August 8. The three accused are brought to the Ghaziabad court handcuffed and linked by a rope. The judge objects to the inhuman treatment of the accused and the police officer tenders his apologies.^[16]

July 31, 2008

• A Hindi channel Aaj Tak airs a news report alleging that Vijay Mandal was drilled with leading information, prior to the narco-analysis tests. Further, there are allegations that Mandal's confessions during the narco-analysis tests have many gaps.

August 8, 2008

• The Police custody of the accused Krishna, Rajkumar and Vijay Mandal is extended for 14 more days, as they are now considered the prime accused.

August 9, 2008

• CBI director Ashwani Kumar says ^[17] the case is still unsolved, as many important corroborative pieces of evidence are yet to be found. However, he fully accepts that it is important that Dr. Rajesh Talwar be exonerated or the sanctity of our family structure will be been challenged.

September 4, 2009
The Central Forensic Laboratory in Hyderabad releases a report that Aarushi's vaginal samples were substituted with those of an unknown woman. The correct samples could have helped to establish who killed the teenager, and whether she was sexually assaulted before being stabbed. The clothes that Aarushi was found in were soaked in blood. But the forensic lab received clean clothes.
September 14, 2009
Delhi police recovers Aarushi's mobile phone in Bulandshahr. (ref) India TV news 16/7/09 ^[18]
Jan 5, 2010.

• CBI Moves Court to conduct Narco test on Talwar Couple.

May 16, 2010.

• A prayer meet is conducted by the Talwars in remembrance of their dead daughter Aarushi who was killed on May 16, 2008.

July 21, 2010.

• Dr.Rajesh Talwar moves the court to have a restraint order passed against the unethical and misleading information being published by some print media outlets.
• CBI reportedly seeking help of foreign forensic labs to crack the two year old case.

December 29, 2010

• CBI files closure report in Aarushi murder case. The closure report filed in Ghaziabad court says Rajesh Talwar is the sole suspect, and that Krishna, Raj Kumar and Mandal are completely cleared.

January 3, 2011

• Ghaziabad court examines the validity of the closure report by CBI citing inadequate evidence against the suspects in the double murder case.^[19] As per CBI, the prime suspect is still Rajesh Talwar however the motive of this killing is still unknown.

January 25, 2011

• Arushi's father, Dr. Rajesh Talwar, is attacked outside court with a cleaver by a youth called Utsav Sharma in protest against CBI's decision to recall the case and that Utsav was upset that Talwar was not convicted. Utsav had also in protest attacked former police chief S.P.S. Rathore of the Ruchika Girhotra case in February 2010 .^[20]

January 30, 2011

• People from all walks of life get together to protest at Jantar Mantar, Delhi to press for Justice in the case.

February 9, 2011

• The special CBI court on Wednesday made Rajesh Talwar and Nupur Talwar accused in the Aarushi murder case. The Court has also issued summons against Aarushi's parents, accusing them of murder and criminal conspiracy under IPC 302 and 34. The next date for hearing has been fixed as February 28.

March 8, 2011

• The mother of Dr. Talwar's attorney is found murdered in her home.

March 18, 2011

• Supreme Court stays High Court order against the Talwars.

March 21, 2011

• The Talwars surrender passports to the Ghaziabad District Court.

March 25, 2011

• Hemraj's widow files application in Ghaziabad Court claiming Talwars killed him and Aarushi.

April 08, 2011

• SC pulls up Talwars for not submitting their original plea.

April 11, 2011

• Talwars due in court April 15,2011.

April 15, 2011

• Supreme Court seeks CBI's response in Aarushi Talwar case.

April 22, 2011

• CBI charges Rajesh Talwar with forgery and concealing facts.

April 23, 2011

• CBI says "Only parents could have killed Aarushi".

April 27, 2011

• Aarushi's hearing in CBI court on July 20.

June 15, 2011

• Mayawati suspends police officer citing the unsolved three-year-old Aarushi Talwar murder case.

Jan 6, 2012

• SC dismisses Talwars' plea, says trial will resume

Jan 9, 2012

• Rajesh Talwar to remain on bail, asked to appear before trial court on Feb 4

Income Tax in India

Every individual who earns an income in India is supposed to pay Tax on the Income earned by him during that financial year to the government of India. Calculation of the Income Tax to be paid by an individual is a cumbersome process. The government of India provides certain benefits to its citizens who earn an income in the country by means of deductions, exemptions etc. Before going into the details below are the items that would be covered in this article.


1. Heads of Income
a. What exactly qualifies to be an income, for which you need to pay Tax.
b. Salary Perquisites that are taxable
2. Deductions
a. House Rent Allowance – HRA
b. Leave Travel Allowance – LTA
c. Medical Allowance
d. Transportation Allowance
e. Interest paid on Housing Loan
3. Exemptions
a. Under Section 80C
b. Under Section 80D
c. Under Section 80DD
d. Under Section 80DDB
e. Under Section 80E
f. Under Section 80U
4. Clubbing of Minor Income

Heads of Income:
The Heads of Income includes the types of income earned by an individual that would qualify as Income for which he/she needs to pay tax. These include the components that would be earned by an individual through employment with an organization/company. They are:
1. Salaries & Wages
2. Bonus & Commissions
3. Other Perquisite benefits

According to the IT laws Perquisites include the following:
a. Rent free accommodation or concessional rate accommodation received from the employer
b. Any other benefit given by the employer either in cash or material (Apart from monthly Salary)
c. Any Fringe benefits provided by the employer (This would include Mobile bill reimbursement, Petrol expenses etc)

Deductions on Income:

As per the IT regulations, there are certain deductions that are allowed on the income earned by an individual. These amounts can be subtracted while arriving upon the net taxable salary of an individual.

They include:
1. Housing Rent Allowance (HRA)
The HRA is usually a part of the salary/wages paid out to an employee by the employer. The deduction on HRA is eligible to any individual who is residing in a rented house and is paying rent to the house owner. There are some rules that govern the limit till which HRA can be deducted from your taxable income. Out of the below mentioned 3 items whichever is LEAST will be considered for the purpose of deduction under the HRA component.
a. Actual amount of the HRA paid by the employer (As part of Salary) Or
b. 50% of Basic salary in case of Metros (Delhi, Bombay, Calcutta & Chennai) or 40% of Basic salary in case of non Metros. Or
c. Actual rent paid by the individual – 10% of Basic salary
For e.g., your monthly Basic salary is Rs. 12,000/- and the HRA component as per your salary is Rs. 6000/- and the actual rent you are paying is Rs. 6000/- in Chennai then the amount you would be eligible for HRA exemption is Rs. 4800/- (Actual rent – 10% of Basic salary) per month.

2. Leave Travel Allowance (LTA)
LTA also is usually a part of the salary paid out to an employee as part of his employment. As per the Indian tax laws you are eligible to claim an amount that less than or equal to the total LTA paid out to him by his employer. This would cover the expenses incurred in travel of self with/without dependents. (Dependents would include spouse, children and dependent parents) There are some conditions which need to be satisfied for an individual to claim exemption under LTA. They are:
a. LTA can be claimed only twice in a block of 4 financial years. You cannot claim LTA every year.
b. Only Transportation expenses would be considered for LTA. Accommodation & food expenses are not considered.
c. For an employee to be eligible for claiming LTA, he/she should have taken at least 3 days of earned leave from the employer

3. Medical Allowance
Medical allowance is also a part of the salary paid out to an employee. The maximum amount eligible for this component is either Rs. 15,000/- or the actual amount paid out to you as part of Salary. To claim exemption under this you need to provide medical bills to substantiate your claim of having incurred medical expenditure. The medical bills can be in the name of the individual or his spouse or children or dependent parents.

4. Transportation Allowance
The IT laws permit a deduction of Rs. 9,800/- as a standard transportation allowance to all resident individuals who pay income Tax. This amount is standard irrespective of the job/industry the individual is employed. Also this amount does not change irrespective of the means of transport you use to commute to your office.

5. Interest Paid on housing loan
The IT laws permit an individual who has taken a home loan from a recognized bank for the purpose of construction or purchase of a residential property to claim exemption on tax on the interest part of the loan taken by the individual. There is a limit to this exemption which is as follows.
a. If the property is occupied by the individual then the maximum eligible amount under this is Rs. 1,00,000/-
b. If the property is rented out and the rental income is included in the total income earned by the individual then there is no maximum amount. The actual interest paid on the home loan can be used for deduction from total salary considered for the purpose of income tax.
Note: Exemption is available on home loans taken to purchase residential property only. Home loans taken to purchase land do not qualify for income tax exemption.


Income Tax Exemption:

The Income Tax laws allow all individuals who are assessed for income tax to claim exemption from income tax under the following heads.
1. Section 80C

The section 80C of the IT laws provide exemption from income tax on amounts that are invested by the individual. This usually includes the amount the individual invests in certified instruments that are exempt from tax. They are:
a. PF – Provident Fund (A portion of your salary is deducted by your employer as PF and would be remitted to the PF house that is maintained by the government of India. A maximum of 12% of your basic Salary is eligible for exemption from income tax)
b. PPF – Public Provident Fund – A maximum of Rs. 70,000/- per financial year.
c. ELSS – Equity Linked Savings Scheme (Mutual funds)
d. NSC – National Savings Certificate
e. KVP – Kisan Vikas Patra
f. Life Insurance (Insurance provided by LIC & Other registered Insurance companies)
g. Tax Saving ULIP’s – Unit Linked Insurance Plans
h. Principal amount repaid as part of the Home loan
i. 5 year bank fixed deposits
A point to be noted here is that the sum total of all these components can be a maximum of Rs. 1,00,000/- per financial year.

2. Section 80D

This section of the IT laws provide exemption on the premium paid towards Medical insurance of the individual, spouse & children and also dependent parents. The maximum eligible amount under this section is Rs. 15,000/- per financial year.

3. Section 80DD

Exemption under sec 80DD is available to any individual who:
a. Incurs any expenditure for the medical treatment, training and rehabilitation of a disabled dependent Or
b. Deposits any amount in schemes of the LIC of India for the maintenance of the disabled dependent.
A deduction of Rs. 50,000/- is available to all individuals who incur any of the above two said expenditures. Where the dependent has a Severe disability a deduction of Rs. 1,00,000/- is allowed. An individual should furnish a copy of the issued certificate by the medical board constituted either by the Central government or a state government in the prescribed form, along with the return of income of the year for which the deduction is claimed.

4. Section 80DDB
An individual, resident in India spending any amount for the medical treatment of specified diseases affecting him or his spouse, children, parents, brothers and sisters and who are dependent on him, will be eligible for a deduction of the amount actually spent or Rs 40,000, whichever is less.

For any amount spent on the treatment of a dependent senior citizen an individual is eligible for a deduction of the amount spent or Rs 60,000, whichever is less is available. The individual should furnish a certificate in Form 10-I with the return of income issued by a specialist working in a government hospital.


5. Section 80E
Under this section, deduction is available for payment of interest on a loan taken for higher education from any financial institution or an approved charitable institution. The loan should be taken for either pursuing a full-time graduate or post-graduate course in engineering, medicine or management, or a post-graduate course in applied science or pure science.

The deduction is available for the first year when the interest is paid and for the subsequent seven years. The maximum deduction that is available is Rs 40,000 a year (Inclusive of both principal and Interest)
6. Section 80U - It is deduction in the case of a person with a disability. An individual who is suffering from a permanent disability or mental retardation as specified in the persons with disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 or the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999, shall be allowed a deduction of Rs 50,000. In case of severe disability it is Rs. 75,000.

The Income tax assessee should furnish a certificate from a medical board constituted by either the Central or the State Government, along with the return of income for the year for which the deduction is claimed.
Note: Section 80U is available only for individuals who are disabled but still earn an income that qualifies for income tax.


Clubbing of Minor Income:
There might be cases where the minor child in the family earns an income that could be through interest earned on deposits in the name of the minor or through dividends on shares held in the name of the minor etc. Under such a situation,
• The minor's income is clubbed with that of the parent with the higher income.
• Only income earned till the year the minor attains age 18 is clubbed.
In excess of Rs. 1,500 earned by a minor, the income is added to the parent with higher income, irrespective of the residential status of either the child or the parent. The clubbing provision is applicable even if the parents are NRI and the minor stays in India or vice-versa.

VAT Scam Dogs Europe's Hot Air Trade

Carbon credit frauds have been the bane of the European Union Emission Trading Schemes (EU ETS) since its inception in 2005. Various forms of frauds that haunt the energy industry include lobbying for excess EU Allowances (EUAs) and the buying of false carbon offsets from third world nations. But tax evasion has really made regulators and governments in Europe hot under the collar and made them change their domestic laws in a hurry. Four people were arrested in Belgium for evasion of VAT. The current scam was detected when a sharp rise in volume sales of the erstwhile dormant EUAs in May 2008 aroused suspicion of the authorities. Several hundred million EUAs changed hands within a few trading sessions in France and Denmark at a price of 12.5 Euro per allowance.
Europe's police, Europol, in a recent press releas claimed that over €5 billion ($7.18 billion) had been lost in Europe from VAT evasion of in the sale of carbon credits during the past 18 months. It estimated that 90 percent of carbon trade volume is due to fraudulent transactions in some of the EU states.
All is not well with EU ETS 2, which has been updated after learning lessons from EU ETS 1 failures. Scam operators keep outwitting the slow-paced EU Government regulations, and spin money out of the "hot air" as the emissions trade is commonly called in the street smart trading circles.
After the failed Copenhagen summit of last month, we began an ongoing ten-part analysis, "Why COP 15 failed." We found that the lack of transparency haunts climate change not only in China and the G77, but in the US and EU too.

Despite tall-talking COP conferences, only 43% of the emissions were measured under the EU ETS 2 scheme in the UK. Nearly 57% of emissions were not within the Kyoto purview due to technology and legislation constraints. The measured emissions mitigated in the EU ETS scheme were a meager 3% as the UK issued 93% of free carbon permits to emitters in 2008. Even such low mitigation is dogged by carbon credit scams! The loser here: planet Earth.

A COMPARATIVE VIEW ON GOODS AND SERVICES TAX

This comparison is based on the recommendations of the First Discussion Paper produced by the Empowered committee of states finance ministers (hereafter referred as EC) and the Report of the Task Force on GST constituted by the Thirteenth Finance commission.

Before going on discussion we should define GST and the Objective behind it.

What is GST?

GST is a tax on goods and services with comprehensive and continuous chain of set-off benefits from the Producer’s point and Service provider’s point upto the retailer level. It is essentially a tax only on value addition at each stage and a supplier at each stage is permitted to set-off through a tax credit mechanism.
Under GST structure, all different stages of production and distribution can be interpreted as a mere tax pass through and the tax essentially sticks on final consumption within the taxing jurisdiction.

Objective behind GST

a) The incidence of tax only falls on domestic consumption.

b) The efficiency and equity of the system is optimized.

c) There should be no export of taxes across taxing jurisdictions.

d) The Indian market should be integrated into a single common market.

e) It enhances the cause of co-operative federalism.

Our comparative discussion will be based only on significant points constructing overall GST.

GST MODEL

A dual structure has been recommended by the EC. The two components are: Central GST (CGST) to be imposed by the center and state GST (SGST) by the states.

The Task Force has also recommended for the dual levy imposed concurrently by the centre and the states, but independently to promote co-operative federalism. Both the CGST and SGST should be levied on a common and identical base.

Both have suggested for consumption type GST, that is, there should be no distinction between raw materials and capital goods in allowing input tax credit. The tax base should comprehensively extend over all goods and services upto final consumption point.

Also both are of the view that the GST should be structured on the destination principle. According to Task Force this will result in the shift from production to consumption whereby imports will be liable to both CGST and SGST and exports should be relieved of the burden of goods and services tax by zero rating. Consequently, revenues will accrue to the state in which the consumption takes place or is deemed to take place.

The Task Force on GST said the computation of CGST and SGST liability should be based on the Invoice credit method. i.e., allow credit for tax paid on all intermediate goods and services on the basis of invoices issued by the supplier. As a result, all different stages of production and distribution can be interpreted as a mere tax pass-through and the tax will effectively ‘stick’ on final consumption within the taxing jurisdiction. This will facilitate elimination of the cascading effect at various stages of production and distribution.

Treatment of Central GST and State GST

Both the EC and the Task Force on GST have recommended treating the Central GST and the State GST separately. The CGST and SGST should be credited to the accounts of the centre and the states separately. Taxes paid against the CGST should be allowed to be taken as input tax credit (ITC) for the CGST and could be utilized only against the payment of CGST. The same principle will be applicable to the SGST. Cross utilization of ITC between CGST and the SGST should not be allowed.

While the Task Force on GST insisted that the full and immediate input credit should be allowed for tax paid (both CGST and SGST) on all purchases of capital goods (including GST on capital goods) in the year in which the capital goods are acquired. Similarly, any kind of transfer of the capital goods at a later stage should also attract GST liability like all other goods and services.

Exemption from GST

The EC favoured the imposition of GST to be based on ‘negative list’ and for few exemptions if necessary but didn’t provide any list of exemption. However, the Task Force also said that there shouldn’t be any exemption from CGST and SGST but if for some reason, it is considered necessary to provide exemption, the centre and states should draw a common exemption which should be restricted to the following: 

a. All public services of Government (Central, state and municipal/ panchayati raj) including civil-administration, health services and formal education services provided by Govt. schools and colleges, Defence, Para-military, Police, Intelligence and Government Departments. Public services will not include the following:

1) Railways;

2) Post and Telegraph;

3) Other commercial departments;

4) Public sector Enterprises;

5) Banks and Insurance;

6) Health and Education services.

b) Any service transactions between an employer and employee either as a service provider, recipient or vice versa.

c) Any unprocessed food article which is covered under the public distribution system should be exempt regardless of the outlet through which it is sold;

d) Education services provided by non-Governmental schools and colleges; and

e) Health services provided by non-Governmental agencies.

Tax on SIN goods (Emission fuels, tobacco products and alcohol)

According to EC alcoholic beverages should be kept out of GST. Also crude oil, diesel, petrol and ATF will not attract GST but the states will be free to levy taxes on them. While Tobacco Products will be subjected to GST with input tax credit (ITC).

The Task Force on GST has recommended that the SIN-goods comprising of emission fuels, tobacco products and alcohol should be subject to a dual levy of GST and excise. No input credit should be allowed for excise. However, industrial fuels should be subjected only to GST (both central and state) with the benefit of input credit like any other intermediate good.

Check-Post

The EC has not clarified anything about check-post whereas the Task Force on GST has come out with something new in this area. According to it the function of all state border check-posts should be reduced to checking contrabands by setting up ‘Large scanners’ for trucks to pass through without any need for physical verification. The cost of the scanners should be entirely borne by the central government. All check-posts should be jointly manned by both states so as to reduce the number of check-posts and enhance efficiency in the road movement of goods.

Inter-State transactions

The EC has suggested for adoption of ‘IGST Model’ for taxation of inter-State transaction of Goods and Services. The scope of IGST Model is that centre would levy IGST which would be CGST plus SGST on all inter-State transactions of taxable goods and services with appropriate provision for consignment or stock transfer of goods and services.The Task Force on GST is of the view that all inter-State transactions in goods and services should be effectively zero rated by adopting the Modified Bank Model. (We are not going into the details here.)

Consignment Sales and Branch transfers across States

The EC has not yet provided any provision regarding the consignment sales and branch transfers across States.

The Task Force on GST has said that the consignment sales and branch transfers across States should be subject to treatment in the same manner as if it was an inter-State transaction in the nature of sale between two independent dealers.

Threshold Limit for Goods and Services

The EC has recommended for uniform threshold of annual gross turnover of Rs.10 lakh for all goods and services for SGST applicable for all states and Union Territories . Below this threshold limit, State GST is not applicable. The threshold limit for central GST may be kept at Rs.1.5 crore for goods and central GST may be kept at higher levels for services.

Keeping in view the compliance cost and administrative feasibility, the Task Force on GST proposed that the small dealers (including service providers) and manufacturers should be exempted from the purview of both CGST and SGST, if their annual turnover (excluding both CGST and SGST) does not exceed Rs.10 lakh. However, like in most other countries, those below the threshold limit may be allowed to be registered voluntarily to facilitate sales to other registered manufacturer/dealers, limit competitive distortions and avoid inequalities. Further, the threshold exemption limit should be uniform for both CGST and SGST and across states.

Composition/Compounding scheme

The EC is of the view that composition / compounding scheme for the purpose of GST should have an upper ceiling on gross annual turnover and a floor rate with respect to gross annual turnover. In particular there would be a compounding cut-off at Rs.50 lakh of gross annual turnover and a floor rate of 0.5% across the states. The scheme would also allow option for GST registration for dealers with turnover below the compounding cut-off.

The Task Force on GST with a view to reduce administrative and compliance burden, suggested that small dealers with annual aggregate turnover of goods and services between 10 lakh to 40 lakh may be allowed to opt for a Compounded levy of One percent, each towards CGST and SGST. However, no input credit should be allowed against the compounded levy or purchases made from exempt dealers.

GST on Precious Metals

A provision of special rate for precious metals has been recommended by the EC. While the Task Force on GST is of the view that certain high value goods comprising of gold, silver, platinum ornaments, precious stones and bullions are prone to smuggling due to high tax incidence thereby generating negative externalities in terms of social and economic disorder. So, the Task Force recommended that dealers in such high value items, may subject to the threshold exemption but without the ceiling of Rs.40 lakh, also be allowed to opt the compounded levy of one percent, each towards CGST and SGST.

Special Industrial Area Scheme

The EC has suggested that the tax exemption, remission etc. related to industrial incentive should be converted , if at all needed , into cash refund schemes after collection of tax , so that GST Scheme on the basis of a continuous chain of set-off is not disturbed. Regarding Special Industrial Area Schemes, it is clarified that such exemptions, remissions etc. would continue upto legitimate expiry time both for the centre and the states. Any new exemption, remission etc. or continuation of earlier exemption, remission etc. would not be allowed. In such cases, the central and the state Governments could provide reimbursement after collecting GST.

The Task Force on GST recommended that in case it is considered necessary to provide support to industry for balanced regional development, it would be appropriate to provide direct investment linked cash subsidy, while the area based exemption in respect of CENVAT should not be continued under the GST framework.

Taxes to be subsumed under GST

Both the EC and the Task Force on GST have got same view regarding taxes to be subsumed under CGST whereas they differ on SGST.

The following central taxes should be subsumed in the CGST:

a) Central Excise Duty (including Additional Excise Duty)

b) Service tax

c) Additional Customs Duty (commonly referred as ‘CVD’)d) Surcharges and all cesses.

The following state taxes should be subsumed in the SGST.

a) VAT / Sales tax (including CST)

b) Entertainment tax (other than levied by local bodies)

c) Entry tax no in lieu of Octroi

d) Other Taxes and Duties (includes Luxury tax, Taxes on lottery, betting and gambling, and all cesses and surcharges by states).

The Task Force has recommended for the subsumation of following other taxes levied by the states on goods and services:

a) Stamp duty

b) Taxes on vehicles

c) Taxes on Goods and Passengers

d) Taxes on duties on electricity.

It has also suggested that all entry and Octroi duties levied by the third-tier government should be abolished.

GST Rate Structure

The EC has decided to adopt a two rate structure- a lower rate for necessary items and goods of basic importance and a standard rate for goods in general. There will be also a special rate for precious metals and list of exempted items. They haven’t prescribed the exact value of the SGST and CGST rates including the rate for services.

The Task Force has provided a clear rate structure for GST. According to it the rate of CGST and SGST on all non-SIN goods and services should be fixed at a single positive rate of 5% and 7% respectively. In addition, there should be a zero rate, applicable to all goods and services exported out of the country.

GST and SEZ

The EC is of the view that Exports would be zero-rated. Similar benefits may be given to Special Economic Zone (SEZs). However, such benefits will only be allowed to the processing zones of the SEZs. No benefit to the sales from an SEZ to Domestic Tariff Area (DTA) will be allowed. However, similar is the view of the Task Force on Exports but they are not in the favour of any exemption for the developers of, or units in, the Special Economic Zone.

Tax Administration

According to the EC the administration of GST shall be divided into states and centre with a proposition to have uniform compliance procedures across states under the respective laws.

The Task Force on GST has produced a clear cut picture regarding tax administration.

The CBEC shall be responsible for implementing the CGST and the state tax administrations will be separately responsible for implementing the SGST. The various tax administrative functions such as assessment, enforcement, scrutiny, and audit should be undertaken by the CBEC in respect of CGST and by the state tax administration in respect of the SGST, subject to recommendation on Small Scale Industries.

All compliance and enforcement procedures under CGST and SGST should be uniform (from taxpayer perspective).

The central government should establish a common IT infrastructure which will serve the needs of both CGST and SGST.

The jurisdiction between the CBEC and the state administration may be divided between the two in such manner that the interface of the taxpayer is confined to one tax administration only. The basis of division could be turnover or any other criteria which is considered reasonable so that the compliance and administrative burden is minimized.

All persons with annual aggregate turnover of goods and services exceeding Rs.10 lakh (excluding CGST and SGST) should be required to register and obtain a GST registration number. Person with lower turnover may be allowed an option to register.

The unit of taxation for the purpose of GST should be persons as defined under the Income Tax ACT.

For the purpose of CGST, all production units/ branches of a person located anywhere in the country will be treated as a single taxable entity eligible for CGST input credit across units /branches. Whereas, for the purpose of SGST ,all production units / branches of a person located anywhere within the state will be treated as a single taxable entity eligible for SGST input credit across units/ branches in that state.

Also the Task Force has suggested that the payment of tax and the transaction reporting should be made through a combined payment and transaction reporting statement in Form no. GST-1. This statement should detail all business to business transactions relating to sales. This statement should be common for both CGST and SGST compliance and it should be mandatory to file this statement electronically on a monthly basis while making payment of taxes. The VAT period should be a calendar month.

We have provided you a cursory view on different issues related to GST without going into the details of them. We will try to give you detailed discussions in our further updated papers on GST.