9911796707
TMI Blog2024 (11) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... residential building with a total area of 315.08 Sq.m. It is stated that the assessment was completed by Ext.P1 proceedings dated 14-08-2014 levying luxury tax on the building and the petitioner continued to pay luxury tax on the building. 2. According to the petitioner, by registered document No. 1356/2018 of SRO Mathamangalam, the 1st floor of the residential building has been settled/transferred to the wife of the petitioner (One Kaniyeri Sreekala) and she is the owner of the 1st floor of the building. It is the case of the petitioner that with the transfer of the 1st floor of the building to his wife, the area of the building in occupation of the petitioner has been reduced to 162.30 Sq.m, which is below the limit for levy of luxury ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by transferring a portion of the building to his near relatives. It is submitted that if such a device is permitted, every person who is liable to pay luxury tax under the provisions of Section 5A of the 1975 Act could transfer/settle a portion of their residential building in the name of their close relatives and escape from the liability to pay luxury tax. 5. Having heard the learned counsel for the petitioner and the learned Senior Government Pleader, I am of the view that the petitioner has not made out any case for grant of relief. It is not disputed before me that the residential building of the petitioner as it originally stood had an area in excess of the limits specified in Section 5A of the 1975 Act, and thus it was liable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es from the observations of Shah, J. and similar observations made elsewhere. The evil consequences of tax avoidance are manifold. First there is substantial loss of much needed public revenue, particularly in a Welfare State like ours. Next there is the serious disturbance caused to the economy of the country by the piling up of mountains of black-money, directly causing inflation. Then there is "the large hidden loss" to the community (as pointed out by Master Wheatcroft [18 Modern Law Review 209] ) by some of the best brains in the country being invloved in the perpetual war waged between the tax-avoider and his expert team of advisers, lawyers, and accountants on one side and the tax-gatherer and his perhaps not so skilful, advisers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proval to it. A hint of this approach is to be found in the judgment of Desai, J. in Wood Polymer Ltd. and Bengal Hotels Limited, In re [47 Com Cas 597 (Guj HC)] where the learned Judge refused to accord sanction to the amalgamation of companies as it would lead to avoidance of tax. 18. It is neither fair nor desirable to expect the Legislature to intervene and take care of every device and scheme to avoid taxation. It is up to the Court to take stock to determine the nature of the new and sophisticated legal devices to avoid tax and consider whether the situation created by the devices could be related to the existing legislation with the aid of "emerging" techniques of interpretation (sic as) was done in Ramsay [1982 AC 300 : (1981) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendments to our Income Tax Code which aim at nullifying the effectiveness of such schemes."
45. Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by resorting to dubious methods. It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges."
7. The device adopted by the petitioner was not an effort at tax planning; it was clearly an attempt to evade tax.
8. Therefore, I am of the view that the petitioner is not entitled to the reliefs sought in the writ petition. The writ petition fails, and it is accordingly dismissed. X X X X Extracts X X X X X X X X Extracts X X X X
|
