Bhandari's frankness

by DR RAMESH KHATRY

Dashain swallowed the rage over Defence Minister Sarat Singh Bhandari’s statement on September 26—no law could stop 22 Tarai districts from seceding if they didn’t get their due. The Baidya faction of UCPN (Maoist) held torch rallies and effigy-burning functions to demand Bhandari’s resignation. Mohan Baidya complained that Bhandari’s outburst could lead to “sikkimization” of the Tarai. In other words, India can annex these 22 Tarai districts as it did Sikkim, making the former kingdom its 22nd state in 1975. Upendra Yadav, who can never explain the logic behind his Mechi to Mahakali “One Madesh, One Pradesh” slogan hypocritically joined in the condemnation.

CLOSE CALLS TOWARD ANNEXATION WITH INDIA

Nepal almost became part of India at least four times. In 1801, the mad king Rana Bahadur Shah went on pilgrimage to Benares. Historian Stiller (The Rise of the House of Gorkha, pp 260-1) tells us that Rana Bahadur could’ve sold our country to the British East India Company had he received a monthly salary of Rs 30,000. In 1951, King Tribhuvan asked Pandit Jawaharlal Nehru three times to annex Nepal (Sanu Bhai Dangol, The Palace in Nepalese Politics, pp 66-7). Quoting the late Nepali Congress leader Bal Bahadur Rai, Author Surya Bahadur Sen wrote in his Nepali publication (Brain Bomb, pp 126, 218) that Tribhuvan offered our country to Nehru for Rs 30,000,000. During Panchayat years, we grew up guessing which country would ultimately annex Nepal, the mama (maternal-uncle China) or the kaka (uncle India). Sarat Singh Bhandari merely articulated openly what others whisper.

NEPAL’S “SIKKIM” BACKGROUND

When India gained independence from Britain in 1947, political parties began their activities in the kingdom of Sikkim. They wanted the abolition of feudalism and a popularly elected government. Chogyal (god-king) Palden Thondup Namgyal with his American wife resisted such liberalities. In 1950, Sikkim and India signed a treaty that made the former an Indian protectorate. India handled Sikkim’s external relations, defence, and strategic communications.

History after the removal of the Rana yoke in 1951 tells us that India wanted to maintain a similar relationship with Nepal. King Tribhuvan, grateful to Jawaharlal Nehru for his throne, and PM Matrika Prasad Koirala, whom Nehru favored over the brash B P Koirala, mostly danced to Indian tunes. On January 31, 1952, Matrika sent a letter to Nehru, and asked for an Indian military mission to help Nepal streamline its own army (A Role in Revolution, pp 205-6). India wanted to handle Nepal’s foreign relations as well. On April 25 of the same year, Nehru wrote to Tribhuvan to suggest that Nepal should coordinate its foreign policy in consultation with India and also seek her advice before hiring foreign personnel.

His letter to Matrika on that very date suggests that direct link with the US can cause confusion! On June 21, Nehru complains to Matrika that foreigners have poured into Nepal without India’s knowledge. After discussions between foreign ministers of both countries on May 8, 1954, India says that its missions overseas can represent Nepal if the latter so desires. That very year, Nehru declared, “What Tibet is to China, Nepal is to India.” India almost managed to make Nepal another protectorate like Sikkim. Nepali prime ministers and kings, mainly Mahendra, very carefully maintained our country’s independence.
What shall we do with our Defence Minister Sarat Singh Bhandari? Ask him to resign? Burn more of his effigies? No, rather felicitate him for his frankness.
Sikkim didn’t show such resistance. Kaji Lendup Dorji, the chief minister, led the 1973 anti-Chogyal demonstrations. In the April 1974 elections, Dorji’s Sikkim Congress Party won 31 out of 32 assembly seats; and engineered the 1975 referendum’s 97 percent vote to accede to India. Perhaps, Sikkim would’ve remained an independent state had the Chogyal been more democratic.

WARNING TO UCPN (MAOIST)

Sarat Singh Bhandari’s frank confession should serve as a warning to the biggest party in our country. If the UCPN (Maoist) doesn’t deliver soon enough, it may find that all 75 districts of Nepal want to become India’s latest state rather than remain under the proposed autocratic, dictatorial Maoist rule. No other than Mohan Baidya Kiran should take this caution very seriously.

So far, Baidya has resisted whatever “democratic” moves PM Bhattarai has made. (Bhattarai still appears a wolf in sheep’s clothing, but let’s give him the benefit of doubt.) Baidya doesn’t want to return Maoist-looted properties. He resents handing over the key of the Maoist armaments to the government. Critics say that this symbolic action has no meaning because the Maoist army still remains under the former rebels’ control. Baidya’s crony C P Gajurel asks for a “third people’s revolt”, as if the impoverished Nepali population has nothing better to do. In 2008, Baidya opined that our country had too much press freedom; and his party would act to curtail it. It did try in vain that very year.

We needn’t even consider Pushpa Kamal Dahal who bungled his nine month rule so badly that he remains forever licking his wounds. In that vein, we can take his latest remark that he had to make Baburam Bhattarai the PM. However, Nepal’s first PhD PM Baburam Bhattarai seems no different than other Maoist leaders. His recent US visit inspired him to lie on his return that he hadn’t promised to conclude the peace process in 45 days. On September 2, he pledged to end impunity. Instead, his latest action seems to award Maoist crimes immunity. Just before Dashain, his cabinet almost requested the president to pardon Maoist murderer-”lawmaker” Balkrishna Dhungel.

Frankly speaking, the average Nepali doesn’t care who rules over the country provided the government grants the basic needs and fundamental rights. On that regard, one prefers Sikkim to Tibet. Writers and artists languish in Chinese prisons merely for expressing themselves. Modelling itself on Mao’s China, the UCPN (Maoist) has shared long enough rosy dreams—making Nepal into Switzerland within 10 years, performing miracles, and delivering leap-frogging economic growth.

Now face the hard reality—after three years we don’t even have a democratic constitution because at heart the UCPN (Maoist) wants a North Korean model, the peace process hasn’t concluded because the Maoists still dream of “capturing the state”, and our economy limps below 3 percent mainly because of Maoist trade unionism. Being the largest party, the UCPN (Maoist) didn’t allow a Nepali Congress- or a UML-led government to succeed because it wanted all the credit. Now, you’re leading the government; walk the talk.

If the UCPN (Maoist) dilly-dallies, November 30, the last legal deadline for a draft constitution, may blankly stare at the nation as it did on August 31. In the inevitable confusion, many Kaji Lendup Dorjis may arise. Meanwhile, what shall we do with our Defence Minister Sarat Singh Bhandari? Ask him to resign? Burn more of his effigies? No, rather felicitate him for his frankness.
source:myrepublica.com

SIKKIM: CS heads committee to study Income Tax exemption to ‘Left Outs’

July 22, 2009


FROM SIKKIM EXPRESS

GANGTOK: The State government has constituted a six member committee headed by chief secretary ND Chingapa to consider exemption the left out individuals of Sikkim from the purview of Central Income Tax.

The other members of the committee are additional chief secretary TT Dorji, law secretary RK Purkhayastha, Chief Minister’s principle secretary RK Basnet and transport secretary KN Bhutia.

HB Rai, additional commissioner, commercial taxes division is the member secretary of the committee.

The high level committee has been tasked to examine all matters relating to grant of exemption of Central Income Tax (Direct Tax Law) to the ‘left out’ individuals in Sikkim and make recommendation to the State government for taking up the issue with the Centre. The committee has also been directed to submit its report at the earliest.

It may be added that the ‘left outs’ as referred by the State government implies those persons living in Sikkim for generations and had not been granted exemption from paying income taxes as provided to people with Sikkim Subject Certificates.

The Union government had last year exempted Sikkim Subject holders from paying Direct Income Tax by passing an amendment in the Finance Bill of 2008.

People of Sikkimese origin having Sikkim Subject Certificates have been exempted from Direct Taxes as per the 26AAA clause paving way for the Act to be enforced in the state.

However, the old business community who has been living in the State for generations but without Sikkim Subject certificates have expressed their objections for being left out of the Act.
The old business community had also expressed their objections for being bracketed into ‘Non Sikkimese’ category by the Union government in the Finance Act.

The old business community living here for generations had demanded to be defined as ‘Left out Sikkimese’ and not as ‘Non Sikkimese’.

Income tax Paid in Sikkim- not to be included in India's Return

" the assessee has paid the income tax at source in the State of Sikkim as per law applicable at the relevant time in Sikkim, the same income was not includible in the assessee's total income"

Ghisalal Agarwala vs Commissioner Of Income Tax on 3
January, 2001

Equivalent citations: (2001) 165 CTR Gau 667

Author: C M Jain

JUDGMENT

M C. Jain, C. J.

At the instance of the assessee Ghisalal Agarwala under section 256(1) of the Income Tax Act, the following question of law has been referred by the Tribunal by its order dated 2nd Dec., 1996, to this court for our opinion. The question of law reads as follows -

"Whether in the facts and in the circumstances of the case, the learned Tribunal did not err in law in holding that tie amount of Rs. 76,912 received by the assessee from the Sikkim lottery is includible in the assessee's total income ? "

2.

Before we answer the aforementioned question of law, it is necessary to have a brief look at the facts of the case. The assessee had received Rs. 76,912 as a result of winning of prize from Sikkim lottery and it remains undisputed before us that a sum of Rs. 8,088 was deducted at source under the Sikkim Income Tax Rules.

3.

The assessee while giving its income-tax return, did not include the income earned in Sikkim. The assessing officer vide his order dated 23-3-1990, Annexure-A, assessed the assessee for that income also which was earned by him by way of Sikkim. lottery ticket. The assessment order was subjected to a challenge by the assessee before the Dy. Commissioner (Appeals), Guwahati Range, and he vide order dated 23-10-1990, deleted the income derived from Sikkim lottery and reversed the order of the assessing officer. The revenue filed an appeal before the Tribunal which reversed the judgment of the Dy. Commissioner (Appeals) and held the assessee liable for the income derived by him from the Sikkim lottery. It was held by the Tribunal while following the judgment given by Jaipur Bench of Tribunal in the case of Mahaveer Kurnar Jain v. Income Tax Officer (1993) 45 ITD 634 (Jp-Trib) that the income-tax deduction made for winnings from Sikkim lotteries would debar the assessment of that income as per provisions of the Income Tax Act and that such assessment would not suffer from double taxation on the ground of income-tax having been charged by the Sikkim income-tax authorities. It has further been held that the payment of tax at Sikkim would not make any material difference in the instant case as the assessee is a resident of India and governed by the Income Tax Act, 1961.

4.

It is in the light of the aforementioned decisions of the tax authorities that the question of law has been referred to us by the Tribunal Before determining the precise questions of law which has been referred to us, we must make a note of certain undisputed facts. It has remained undisputed before us that Sikkim was not a part of India in 1975 and initially, the State of Sikkim under a hereditary monarch, subject to British Paramountancy. Later, a treaty was entered into between Sikkim and the Government of India and the latter took responsibility with regard to defence, external affairs and communications of Sikkim. Thus Sikkim became a protectorate of the Union of India. Thereafter, the Constitution (Thirty-sixth Amendment) Act, 1975, was passed whereby Sikkim was admitted into the Union of India as a State. The said amendment inserted article 375F in the Constitution of India incorporating special provisions with respect to the State of Sikkim. By virtue of the powers under clause (n) of article 371F of the Constitution, the President vide Notification dated 7-11-1988 extended the Income Tax Act, 1961, to the State of Sikkim and later, the Central Government issued Notification dated 23-2-1989, appointing 1-4-1989, as the date on which the Income Tax Act came into force in the State of Sikkini in relation to the previous year relevant to the assessment year commencing on 1-4-1989. However, the Income Tax Act was later extended to the State of Sikkim with effect from 1-4-1990, in relation to assessment year 1990-91 and subsequent years.

The law corresponding to the Income Tax Act, 1961, which immediately was in force in the State of Sikkim was to continue to be in force for and upto the previous year beginning with 1-4-1988, and ending on 31-3-1989. Before the extension of the Income Tax Act, 1961, Sikkim State Income Tax Manual of 1948 was applicable in Sikkim and under that Manual of 1948. income-tax of Rs. 8,088 was deducted at source from the Sikkim lottery in case of the petitioner.

5.

It is in the light of the aforementioned factual data that we have to decide the precise question referred to us. Although this court is not bound by the decision given by the Tribunal on the precise question involved herein, yet we do intend to take note of the two decisions referred to us during the course of argument by the counsel for the assessee and by the counsel for the revenue . The Tribunal Bench at Delhi in Anuj (Toffee) Garg v. Income Tax Officer (1990) 84 CTR (Del-Trib) 83, has taken a decision in favour of the assessee. The relevant observations of the Delhi Bench are as follows :

"The result, therefore, is that, while undoubtedly section 5 would be applicable, the existing notifications of Sikkim also would be applicable. Thus, on the same income, it would appear that income-tax would be payable under the notification of the Government of Sikkim as well as under Income Tax Act, 1961. But such a position would not be acceptable in law. Since Sikkim is part of India for the accounting year, there would appear to be, on the same income, two types of income taxes. The Supreme Court has observed in Lakshmipat Singhania v. CIT (1969) 72 ITR 291 (SC), 'It is a fundamental rule of law of taxation that, unless otherwise expressly provided, income cannot be taxed twice.' The Patna High Court in the case of Tata Iron & Steel Co. Ltd. v. Union of India (1970) 75 ITR 676 (Pat) had stated, 'A taxing statute should not be interpreted in such a manner that its effect will be to cast a burden twice over for the payment of tax on the taxpayer unless the language of the statute is so compelling that the court has no alternative than to accept it. In a case of reasonable doubt, the construction most beneficial to the taxpayer is to be adopted.'

So it is clear enough that only one tax law would be applicable and not both. By virtue of clause (i) to article 371F, it would be clear that only the Sikkim Regulations on income-tax would be applicable. Therefore, is cannot be brought to tax by applying the rates of Income Tax Act, 1961.

6.

Contrary to the decision of Delhi Bench, the Jaipur Bench in Mahaveer Kumai Jain v. Income Tax Officer (supra) has taken a different view and the relevant observations read as under:

"The provisions contained in clauses (k) and (n) of Art. 371F of the Constitution would not, in our opinion, come into way in this case, once the provisions of section 5 have started their operation. In the application of those provisions of the Constitution it shall have to be kept in mind that what is under consideration is inclusion of such income to the total income as is being received in India by a resident and ordinarily resident of India at a place outside the territories comprising State of Sikkim and to whom the Sikkim Regulation of 1948 and the notifications issued thereunder were not applicable. The assessee herein is to be assessed as per provisions of the Sikkim Regulation, 1948, and the notifications issued thereunder. Therefore, deductions made from winnings from Sikkim lotteries on account of agent's/seller's commission and/or payment of tax called income-tax, would not debar the assessment of that income as per provisions of the Income Tax Act, 1961.

In the instant case, as has been pointed out above Explanation 2 to section 5, which provides safeguard against double taxation does not apply for the obvious reason that the income in question had not earlier been included in the total income of the assessee. The provisions contained in Chapters III and IX are obviously not applicable hereto. Thus, the inclusion of the income in question in the total income of the asses see for the year under consideration does not, in our opinion, suffer from the vice of double taxation."

7.

Forgetting the two decisions of Delhi Bench and Jaipur Bench for a moment, we can bank upon the decision of the Hon'ble Supreme Court in the case of Jain Brothers v. Union of India (1970) 77 ITR 107 (SC). It has been held in the case of Jain Brothers (supra) as under:

It is not disputed that there can be double taxation if the legislature has distinctly enacted it. It is only when there are general words of taxation and they have to be interpreted, they cannot be so interpreted as to tax the subject twice over to the same tax (vide Channell J. in Stevens v. Durban Roodepoort Gold Mining Co. Ltd.). The Constitution does not contain any prohibition against double taxation even if it be assumed that such a taxation is involved in the case of a firm and its partners after the amendment of section 23(5) by the Act of 1956. Nor is there any other enactment which interdicts such taxation. It is true that section 3 is the general charging section. Even if section 23(5) provides for the machinery for collection and recovery of the tax, once the legislature has, in clear terms, indicated that the income of the firm can be taxed in accordance with the Finance Act of 1956 as also the income in the hands of the partners, the distinction a charging and a machinery section is of no consequence. Both the sections have to be read together and construed harmoniously. It is significant that similar provisions have also been enacted, in the Act of 1961. Sections 182 and 183 correspond substantially to section 23(5) except that the, old section did not have a provision similar to sub-section (4) of section 182, After 19b6, therefore, so far as registered firms are concerned the tax payable by the turn itself has to be assessed and the share of each partner in the income of the has to be included in his total income and assessed to tax accordingly. It any double taxation is involved, the legislature itself has, in express words, sanctioned it. It is not open to any one thereafter to invoke the general principles that the subject cannot be taxed twice over."

8.

Once it has been held by the Apex Court that double taxation is permissible provided specific provision has been made by the legislature, the only question remains to be decided is whether in fact there is a specific provision for including the income earned from the Sikkim lottery ticket prior to 1-4-1990 and after 1975, in the income-tax return or not. We have gone through the relevant provisions of the Income Tax Act and the counsel for the revenue could not point out to any provision wherein a specific provision has been made by the legislature for including such an income by an assessee from lottery ticket Since there is no specific provision made in the Income Tax Act, the relevant observation by the Patna High Court in the case of Tata Iron & Steel Ltd. v. Union of India & Ors. (1970) 75 ITR 676 (Pat) can be quoted, and the relevant observations are as under :

"A taxing statute should not be interpreted in such a manner that its effect will be to cast a burden twice over for the payment of tax on the taxpayer unless the language of the statute is so compelling that the court has no alternative than to accept it. In a case of reasonable doubt, the construction most beneficial to the taxpayer is to be adopted. "

9.

In view of the aforementioned discussions, we are of the considered view that once the assessee has paid the income tax at source in the State of Sikkim as per law applicable at the relevant time in Sikkim, the same income was not includible in the assessee's total income and he was not bound to show it in the income tax return. The question of law, thus, stands answered in favour of the assessee and against the revenue .

source:
http://www.indiankanoon.org/doc/322201/