Principles of Taxation

Code: BALAW7001C04 Course Title:Principle of Taxation L T P C
3 1 0 4
Pre-requisites//Exposure Basics of Commercial/ Business Laws
co-requisites None
Semester VII
Teacher Incharge Dr. S. P. Srivastava
1.0. Course Description:

Power to tax had been described as the power to destroy. This idea is being floated often whenever
the state introduces a new tax. In order to raise revenue and place the economy on solid foundation,
it is necessary that the taxing power should be conferred on the state. The power to tax shall not
go unregulated. In the context of a federal structure the distribution of the taxing powers assumes
added significance. A study of the constitutional framework on taxation is also important for all
these abovementioned reasons. Along with this, this course aims at an analysis of the different
laws enacted in exercise of these powers with their safeguards and remedies sheds light on the
mechanics of the taxation by the Union and the States.
2.0. Course Objectives:

1. To provide students with an understanding of the general principles of taxation from a
multidisciplinary perspective: legal, social and economic.
2. To familiarize students with the concepts of direct and indirect taxation.
3. To understand the procedure for imposing tax and scope of reformation, if any.
3.0. Course Outcomes
On completion of this course, the students will be able to
1. Understand the tax system prevailing in India.

2. Understand the co relation between tax and development, in a country.
3. Apply the knowledge of the provisions of direct and indirect tax laws to various situation
in actual practice.
4.0. Pedagogy
A various learning methods will be used which will emphasize a cooperative learning format.
Student led discussions and presentations will be combined with instructor facilitated
experiences and lectures. Specific methods include:
• Class Room Discussion
• Lecture Method
• Presentations
• Case Studies
• Projects
• Court Room Exercise
• Seminar, presentations by students,
• Individual and group drills.
• Group Discussion Method
• Case Presentation and Analysis (Socio-Legal & political)
• Moot Court Exercise
5.0. Evaluation Scheme:
• 30% - Continuous Internal Assessment (Formative in nature but also contributing to the
final grades).
• 70% - End Term External Examination (University Examination).
6.0. Course Content
Unit I:
1. General Perspective/ Genesis
• History of tax law in India

• Fundamental principles relating to tax laws
• Governmental financial policy, tax structure and their role in the national economy.
• Concept of tax:
• Nature and characteristics of taxes
• Distinction between:
i. Tax and fee
ii. Tax and cess
iii. Direct and indirect taxes
iv. Tax evasion and tax avoidance
Legislative power to levy taxes:
• Constitutional Provisions
• Distribution of Legislative Powers between the Union and States with particular reference to
Taxing Powers
• General Scheme of Distribution of Legislative Powers (Articles 245 – 254)
• Distribution of Taxing Powers
• Entry 97 and Entry 86 of List I (Union List)
• Entry 49, List II (State List)
Cases:
1. Bacha F. Guzdar vs C.I.T. Bombay AIR (1955) SC 74
2. C.I.T. vs Sunil J. Kinariwala (2003) 1 SCC 660
3. C.I.T. vs Benoy Kumar Sahas Roy AIR (1957) SC 768
4. V.V.R.N.M. Subbayya Chettiar vs C.I.T. AIR (1951) SC 101
5. K. Lakshman & co vs CIT (1999) 239 ITR 596 SC
6. In Re: Pfizer Corporation Vs Respondent 2004(271) ITR 101 (AAR)
7. CIT Vs R. D. Aggarwal & Co. (1965) 56 ITR 20 (SC)
8. Clifford chance Vs DCIT (2009) 176 TAXMAN 458 (Bom HC)
9. CIT Vs Soundarya Nursery (2000) 241 ITR 530 (MAD)
10. Vodafone International Holdings B.V. v.UOI (2012) 1 Comp LJ 225 (SC)
11. Linklaters LLP Vs ITO, International Taxation 2010 ITAT Mumbai
12. Pradip J. Mehta Vs CIT (2008) 300 ITR 231 (SC)
13. GVK Industries Vs ITO 2011 3 SCALE 111
14. UOI v H.S. Dhillon AIR 1972 SC 1061
Unit II:
Income Tax
• Basic Concepts:
• Income [Definition : S. 2(24) ]
• Capital Receipt v. Revenue Receipt -Tests to distinguish
• Agricultural Income – Meaning of Agricultural Income[S. 2(1A), 10(1)]
• Income not included in total income
• Deemed income
• Clubbing of income
• Assessee- Assessment year- Previous Year (S. 3)
• Residential status of Assessee (S. 6)
• Incidence of tax varies with residential status of an assessee
• Total income of assessee (Ss. 4 and 5)
• Income deemed to accrue or arise in India (S. 9)
• Person
• Tax Planning
• Chargeable income: Basis of charge (Receipt, Accrual, and Arisal)
• Heads of income: (S. 14), Rationale- Heads, whether mutually exclusive
• Salaries : (Ss. 15 to 17) – Chargeability - Meaning of Salary;
• Perquisites; Profits in lieu of salary
• Income from house property: (Ss. 22 to 27) - Ingredients of section
• Annual Value how to be determined - Deductions under section 24 -
• Deemed owner (S. 27)
• Income from business or profession: (Ss. 28 to 44) –Applicability –
• Deductions - Bad debts
• Capital gains: (S. 45 to 55)
• Income from other sources: (Ss. 56 to 59)
• Income of other Persons included in Assessee’s Total Income (Ss.60-64)-clubbing of
income –justifiability - throwing of separate property intothe common stock of Joint Hindu
Family and subsequent partition of the same.[ S. 64(2)]
• Deductions, relief and exemptions
• Set Off, Carry Forward and Set off of Losses (Ss. 70-71B, 72-74A)
• Rate of income tax
Cases:
1. CIT Vs Woodward Governor (2009) 312 ITR 254 (SC)
2. ACIT Vs Elecon Engineering (2010) 189 TAXMAN 83 (SC)
3. Ram Prasad Vs C.I.T. (1972) 2 SCC 696
4. East India Housing& Land Development Trust Ltd V CIT (1961) 42 ITR SC
5. Bharat Earth Movers Vs CIT (2000) 245 ITR 428 (SC)
6. Grace Collis and others Vs CIT (2001) 248 ITR 323 (SC)
7. CIT Vs Madras Auto Services Ltd. (1998) 233 ITR 468 SC
8. CIT Vs National Storage (P) Ltd. (1967) 66 ITR 596 (SC)
9. CIT Vs Travencore Suger & Chemicals Ltd AIR 1973 SC 982
10. ONGC Vs CIT AIR 2010 SC 1927
11. Attukal Shopping Complex P. Ltd Vs C.I.T.(2003) 259 ITR 567 SC
12. CIT Vs Infosys Technology (2008) 237 ITR 167 (SC)
13. CIT Vs Macdowell & Co. (2009) 314 ITR 167 SC
14. CIT Vs Doom Dooma India Ltd (2009) 310 ITR 392 SC
15. Navin Jindal Vs ACIT (2010) 320ITR 708 SC
16. CIT Vs Ghanshyam (HUF) (2009) 315 ITR 1 SC
17. Techno Shares & Stocks Ltd Vs CIT 2010 SC
18. Guffic Chem P.Ltd. Vs CIT 2011 (332) ITR 602 SC
19. CIT v BC Srinivasa Setty AIR 1981 SC 972
20. CIT v Rajendra Prasad Moody (1978) 115 ITR 519 SC
Unit III:
Income Tax Authorities:
• Power and functions
• Search and Seizure (Ss.132, 132A, 132B)
• Best Judgment Assessment; Income escaping assessment
• (Ss. 139, 142, 143, 144, 145(2), 147, 148, 149, 150, 151 and 153)
• Offences and penal sanctions:
• Settlement of grievances:
• Authorities, powers and functions
Cases:
1. D.I.T. vs.Diamondstar Exports Ltd.; (2007) 293 I.T.R. 438 SC
2. Manish Maheshwari vs.A.C.I.T.; (2007) 289 I.T.R. 341 SC
3. Rajesh Kumar. vs. Dy.CIT.; (2006) 157 Taxman 168 (SC)
4. GKN Driveshafts (India) ltd vs ITO (2003) 259 ITR 19 SC
5. ITO vs Seth Bros (1969) 74 ITR 836 SC
6. Sahara India Vs CIT (2007) 289 ITR 473 SC
Unit IV:
Goods and Services Tax Act- .
A. Overview of Goods and Services Tax, Implementation of GST, Liability of the Tax Payer,
GST Network and GST Council.
B. Levy of an Exemption from Tax, Levy of GST, Composition Scheme, Remission of Tax /
Duty.
C. Registration, Registration Procedure, Amendments / Cancellation.
D. Meaning and Scope of Supply, Taxable Supply, Supply of Goods and Supply of Services,
Course or Furtherance of Business, Special Transaction, Time of Supply.\
E. Valuation in GST, Payment of GST, Input Tax Credit, Input Service Distributors.
7.0. Text Books
1. Kanga, Palkiwala and Vyas, The Law and Practice of Income Tax, 10th Edition, 2014, Vol.I
& II, Lexis Nexis Butterworths.
2. V.K. Singhania, Direct Tax Law & Practice, 2013-14 Taxmann.
Reference Books
1. Dr.V.Gaurishanker, Principle of Taxation, First Print, 2007 Wolters Kluwer, New Delhi.
2. Dr. Girish Ahuja & Ravi Gupta; Professional Approach to Direct Taxes, Law and
Practice, 19 th edition 2012-13 Bharat Publication, New Delhi
3. S.Rajratanam, “Tax Planning(Issue,Ideas,Innovations), 2009 Bharat Publication, New
Delhi
4. Sampat Iyenger’s “Income Tax Law”. 11 editions 2012, Bharat Publication.
5. Geoffrey Morse and David Williams, “Davies: Principles of Tax Law”2010 Sweet &
Maxwell Publication.
6. Chaturvedi & Pithisaria Income Tax Law, 5th Editon Reprint 2010 Wadhwa & Company.
7. V.K. Singhania, Direct Tax Law & Practice, 2013-14 Taxmann.

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Code: BALAW7001C04 Course Title:Principle of Taxation L T P C

1.0. Course Description:

2.0. Course Objectives:

1. Understand the tax system prevailing in India.

6.0. Course Content

• History of tax law in India

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