The ITAT’s All-Things-Considered Approach Background This case has all the trappings of a thriller you would find in a Hitchcock movie. From misdeclaration of residential status and address, the discovery of undisclosed foreign assets of huge sums and the sudden vanishing of these amounts, the order of the ITAT, Mumbai makes for a riveting read. That the entire story of alleged evasion revolved around an 86-year old lady makes the issue even more intriguing. It all started with the Income Tax department receiving certain information from Switzerland in Oct 2014 pursuant to treaty provisions. The information was that Renu T. Tharani (Appellant) had a bank account in HSBC Private Bank, Geneva which showed a peak balance of USD 40 M in the FY 2005-06. For that year, the Appellant had returned a paltry sum of Rs. 170,800 as Income in her returns. It was the department’s contention that this bank account in HSBC Bank, Geneva was not considered in the return of income
Among the litany of amendments in the direct tax section in the recent Finance Act, 2014, there is one piece of amendment that has perhaps not received the attention it deserves. The amendment to Sec 2(14) of the Income Tax Act has redefined the term 'Capital Assets' by bringing in all kinds of securities dealt with by Foreign Institutional Investors (FIIs) under the banner of 'Capital Assets'. The implication of this is that after 1st April 2014, securities held by FIIs - even if they have been dealt as stock in trade - shall be considered as Capital Asset and not as Stock in Trade. Is that one more amendment with 'malice'? Read on to find how the differing interpretation of various Judicial Forums on FII investment left no option to the law makers but to bring about this amendment. What are FIIs: Currently there are more than 1450 FIIs registered with SEBI and with garguantuan funds avaiable at their disposal, the FIIs have been able