New Delhi: The Supreme Court has provided a major tax income to bank revenues from investment in bonds, securities and shares and suggests the government to maintain a simple tax regime to prevent tax avoidance of tax liabilities.
In giving advice, justice bench Sanjay K Kaul and Hrishikesh Roy quoted 18th-century economist Adam Smith, who in ‘Nation’s Wealth Nation’ said, “Taxes that each individual will definitely pay must be sure and not arbitrarily.
Time Payment, payment method, quantity that must be paid should be clear and simple to contributors and everyone “.
“Just as the government does not want to avoid taxes equally, it is the responsibility of the regime to design a tax system that can be budgeted and plan.
If the right balance is achieved between these, unnecessary litigation can be avoided without sacrificing generation revenue,” said Justice Roy, Write a verdict for the bench.
Judge Roy said, “It needs to be observed here that in the tax regime, there is no room for the assumption and nothing can be intended.
The tax of an individual or company must pay, is a planning problem for taxpayers and the government must try to remain comfortable and simple for achieving maximization of compliance.
“Bank assessors have increased the following questions before SC -” whether the proportional flower prohibition paid by banks is called under the 14A Income Tax Act for investment made in tax-free bonds / effects that produce tax-free dividends and interest in bank assessment when the assessor has its own interest-free funds that are more than made by investment.
“Appraiser is a bank scheduled and in carrying out their banking business, they are also involved in the investment business in bonds, securities and shares that produce them, interest from securities and bonds j UGA revenue dividends about company investment and from the unit from UTI etc.
which is tax free.
Section 14 of the income tax law classifies various income under salary, income from home properties, profits & profits from business or professions, capital advantages & income from other sources.
Section 14A is related to expenditures arising with respect to income which is not included in the total income and which is released from taxes.
Therefore there is no tax that income is excluded.
Section 14A has been included in the law to ensure that expenditures that occur in generating income excluded taxes are not allowed as a reduction while calculating total income for the appraisers concerned.
Banks clarify that none of them retains separate accounts for investments made in bonds, securities and shares where tax-free income is obtained so that it can be banned to be limited to the actual expenditure generated by an assessor.
In other words, expenditures issued on interest paid on borrowed funds such as deposits used for investment in securities, bonds and shares that generate tax-free income, cannot be easily related to that goal.
The decision for the bank, Bench said, “shares and securities held by the Bank are shares in trade, and all income received in such stocks and securities must be considered as business income.
That is why section 14a will not be interested in such income.
“” Revenues have failed to refer to any legal provisions that require assessors to maintain a separate account that can justify proportional.
The framed problems in this appeal are answered and the assessment of the appraiser in accordance with the assessor.
Allowed, “said Bench.