Book on misuse of taxation treaty timely: Prashant Busan

Shiv Kant Jha's 'On the loom of time' was released in the national capital on Monday

GN Bureau | October 11, 2011



Former income tax chief commissioner Shiva Kant Jha's 'On the loom of time' turns the lens on the double taxation avoidance treaty India signed with Mauritius, exposing loopholes in it which allow the treaty's misuse. Jha had earlier taken on thquestioned the constitutionality of the government in entering such treaties.

In the backdrop of the drubbing the government has received on the black money issue, noted activist and Jan Lokpal champion Prashant Bhusan lauded the "timely" entry of the book at its release in the national capital on Monday.

The book is an autobiographical account by Jha, a leading authority on taxation in the country and a former union revenue service officer who has held many important posts in the government.

The book, apart from dealing with Jha’s growing up years and his tenure with the IRS, gives a detailed account of his fight against the misuse of taxation treaty with Mauritius.

Jha, after retiring in 1998, practiced law at the supreme court and filed a number of PILs. The most important of these was on the misuse of the taxation treaty (Shiva Kant Jha vs Union of India (2002) 175 CTR (Del) 371), filed with the Delhi high court.

Filed in 2002, the PIL questioned the union government's authority to enter into such treaties. The high court upheld Jha’s plea and came up with a landmark observation: “Several hundred foreign institutional investors have been trading in the share market in India, many of which are said to be post-box companies based in Mauritius; although in effect and substance, they are managed and controlled from India, or from their parent countries.”

The observation indicated that the tax treaty should be reviewed immediately to stop the illegal favour being bestowed to various Indian and foreign institutional investors using Mauritius as a conduit at a cost to the revenue of India.

However, the high court order was overturned by the supreme court after the government of India appealed against the high court order.

“The supreme court let down the nation by quashing the PIL,” Jha said, recounting the SC order.

The double taxation avoidance treaty that India signed with Mauritius was aimed at avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and capital gains and for encouragement of mutual trade and investment between India and Mauritius. However since Mauritious is also a tax haven, majority of the companies get registered their and the direct investment to India thus avoiding capital tax gain. 

How blatantly this treaty is being misused to save tax can be gauged from the fact that nearly 43 percent of FDI into India is routed through Mauritius. Again, 40 percent of the FII fund flow into the country is believed to be routed through the island nation.

The book is in three parts: first, ‘The fragrance years’ deals with the growing up years of the author; second, ‘A cog in the machine’ delineates his years as a tax man; and the third, ‘Illusion and reality,’ as the title suggests deals with illusions and realities of the world.
 

Comments

 

Other News

Centralising secrets: How organizations can manage identity and credentials

For many organizations, maintaining consumer trust is paramount. The more users trust an organization, the more that organization can grow its services and revenue. Should a data breach occur, that trust can be compromised. This is especially true for organizations handling highly sensitive data, such as t

With Modi wave, BJP breaks Gujarat record

The BJP has been in power in Gujarat since 1998, and the state proved to be its springboard for the national sweep in 2014. Yet, it never came even close to the highest tally of 149 seats (out of the total 182) that the Congress had recorded in 1985. This time it has finally broken past the 150-mark, aided

Reality As It Is: The Buddha`s advice on overcoming bias, prejudices

‘See Things As They Are’: Life Lessons from the Buddha Edited by Nanditha Krishna Aleph, 98 pages, Rs 399 There is a wonderful idea behin

World growth expected to face inflation pressures

World GDP forecasts for 2023 have been revised down again as central banks intensify their fight against inflation and the outlook for China’s property market deteriorates, says Fitch Ratings in its latest Global Economic Outlook (GEO) report. Fitch now expects world GDP to grow by 1.4

200+ bird species documented in Chhattisgarh’s first-ever survey

Nine species of owls (including the magnificent spot-bellied eagle-owl), 10 birds of prey, 11 species of Woodpeckers (including white-bellied woodpecker – the largest woodpecker in peninsular India), and many other species have been documented during a first-ever bird survey in Chhattisgarh.

Cyclists plan ‘memorial ride’ to press demand for infrastructure

Cycling is a passion for many, and it is a way to fitness too. With rising numbers of vehicles on the road, the government encourages this environment-friendly mode of transportation, but it comes with numerous challenges. An accident last month on the Mahipalpur flyover of south Delhi, which took the life

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now


Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter