(67.3 KiB, 141 DLs) 
Fact that payment is used for ‘illegal’ purpose does not attract Expl to s. 37(1)
<> The assessee exported tea to Iraq under the ‘Oil for Food Program’, as sanctioned by the United Nations. It paid commission of Rs 1.28 crores to one Alia Transportation, a Jordanian company. The Volcker Committee, which was set up to expose the ‘Oil for Food scam’ found that this company was a front company for the Iraqi regime, meant to receive illegal kickbacks, and did not render any services. The AO, acting on the report, held that the commission paid by the assessee was “illegal” .......
See also Article on scope of Explanation to s. 37(1). Contrast with Confederation of Indian Pharma (HP)
<> May 7, 2013 at 6:51 am
“………The Volcker Committee, which was set up to expose the ‘Oil for Food scam’ found that this company was a front company for the Iraqi regime, meant to receive illegal kickbacks, and did not render any services. The AO, acting on the report, held that the commission paid …….”
It appears that, the finding of facts by the special committee, as per the above narration, were, as such, not disputed by the assessee . If so, in essence, the disputed payment has been conceded (implicitly, though not explicitly), to be one made gratis- that is, with no ‘consideration’ (or lawful return / benefit) within the meaning of the law on contract.
The only other comparable instance one can readily think of is that involving payment of so-called ‘secret commission’. But then, if one remembers right, in those cases, the ground/the factual matrix on which a favourable judicial view was taken, was that the recipient , though with identity not disclosed, did render identifiable service to the benefit of the business.
In the instant case, from the name and style of the party, the assessee is a closely held company. One is left wondering whether, instead, if it were a company in which the public are substantially interested, could a similar view have been taken, subjectively and ignoring the vested interests of its stakeholders.
The other angle for consideration is, whether, any such expenditure, more so of this very kind, will be allowable without going into the aspect of its excessiveness or otherwise.
Perhaps, these are some of the aspects which could be exected to be gone into, in the likely event of further proceedings in the instant or other similar cases.
Needless to add: Over to tax experts for further deliberation.
<Per contra >????!!!!
SG
Suspension of membership of CA by ICAI valid for having two wives
<> Impromptu:
In rejecting the contention of the appellant , -“that involvement of a person in an offence of bigamy is not coming within the purview of “moral turpitude”-, the court is seen to have gone into and mainly relied on the very wide dictionary meaning of the said concept (Para 23).
According to an independent but impartial view, however, the point of instant and spontaneous concern, which could have been more sufficiently stressed and persuasively urged by the aggrieved CA, – is this: Whether, in the context/for the purposes of the subject enactment for CA profession , the concept of ‘moral turpitude’ ought to be construed in a restricted sense; that is, not so widely as to bring within its ambit / mischief any or all such unrelated matters profoundly of ‘personal’ nature. Especially,if it has no direct nexus or correlation or whatever, to the ideological concepts- such as,”Disabilities’ (Para 8), or professional ethics, or misconduct, within the parameters/realm of the prescribed code of conduct. Further that, a CA is not a‘public servant’ or a ‘government servant’, in the true sense,and certainly not in the given context, as appears to have been the case in some of the court judgments relied on by the OP.
As may be readily foreseen or visualized, the view the court has taken has the obvious potentials for far-reaching unpalatable consequences to the CAs in practice, particularly in the modern day environments.
Of course, one has to wait for the outcome of further proceedings, in the instant case itself and / or in other like cases not to be ruled out, for knowing better what is in store for the future.
<><> Hastening to add: All said, but that there could be no two views that any social evil of the kind, such as ‘bigamy’, is a product of a obnoxiously sick mindset, hence must be eschewed at all cost – by one and all, not excluding a member of any august profession. Ought to be so, whatever be the surrounding compulsions of the times.
>>>>
www.taxmann.com Monday, May 6, 2013
Taxmann Daily A Tax & Corporate Laws Daily
CA lost his membership for having two wives; ‘Bigamy’ comes within the meaning of moral turpitude
Moral turpitude means anything contrary to honesty, modesty or good morals. It means vileness and depravity. As the appellant married another woman, while the first marriage was subsisting, and acted contrary to the law and against expectation of his "estranged wife", the offence of bigamy had been committed within the meaning of "moral turpitude"
In the instant case, matrimonial dispute arose between the appellant, a qualified Chartered Accountant, and his wife, which had resulted in granting of divorce decree by the first Additional Family Court, Chennai. The said divorce decree was confirmed by Madras High Court. On a complaint by his estranged wife, under Section 21 of the Chartered Accountants Act, 1949, appellant's name was removed from the Register by the ICAI on the grounds of bigamy charges. The appellant contended that the allegation of bigamous marriage would not come within the meaning of moral turpitude. Therefore, the disqualification attached to Section 8 of the Act would have no application to the facts of his case. Thus, appellant filed the instant writ to quash the order passed by the ICAI.
The HC dismissed appellant’s writ with following observations:
1) The appellant and his estranged wife were Hindus, governed under the provisions of the Hindu Marriage Act, 1955. Section 17 of the Act states that marriage between two Hindus is void if two conditions are satisfied, viz., (a) the marriage is solemnized after the commencement of the said Act, and (b) at the date of such marriage, either party has a husband or wife living and the provisions of Sections 494 and 495 shall apply accordingly. Thus, it is evident that if a Hindu marries with a person having a spouse living or he or she has a spouse alive and, marries any person, he would be liable for bigamy charges;
2) The expression "moral turpitude" isn’t defined anywhere. But it means anything done contrary to justice, honesty, modesty or good morals. It implies depravity and wickedness of character or disposition of the person charged with the particular conduct. If the individual charged with a certain conduct he owes a duty, either to another individual or to the society in general, to act in a specific manner. If he acts contrary to it and does so knowingly, his conduct might be held to be due to vileness and depravity;
3) In fact, the conviction of a person in a crime involving moral turpitude and impeaches upon his credibility as he would be deemed to have indulged in shameful, wicked and base activities. The offence of bigamy comes within the meaning of "moral turpitude". The appellant had married another woman, while the first wife was alive, he had acted contrary to the law and to expectation of his "estranged wife";
4) The appellant had attracted disqualification by operation of law, viz., Section 8 of the Chartered Accountants Act, 1949, due to his committing an offence involving moral turpitude. For the above reasons, the writ appeal was dismissed - P. MOHANASUNDARAM V. PRESIDENT, ICAI [2013] 33 taxmann.com 80 (Madras)
<> The point of instant and spontaneous concern, which could have been urged with greater force and gone into the root of the whole matter, in-depth, but not so done, is this: Whether, in the context of the subject enactment, the concept of 'moral turpitude' ought not to be construed in a restricted sense; that is, not so widely as to bring within its ambit / mischief any such matter of 'personal' nature, despite its having no direct nexus or correlation to the ideological concepts- such as, professional ethics, or misconduct, within the parameters/realm of the prescribed code of conduct.
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Fact that payment is used for ‘illegal’ purpose does not attract Expl to s. 37(1)
<> The assessee exported tea to Iraq under the ‘Oil for Food Program’, as sanctioned by the United Nations. It paid commission of Rs 1.28 crores to one Alia Transportation, a Jordanian company. The Volcker Committee, which was set up to expose the ‘Oil for Food scam’ found that this company was a front company for the Iraqi regime, meant to receive illegal kickbacks, and did not render any services. The AO, acting on the report, held that the commission paid by the assessee was “illegal” .......
See also Article on scope of Explanation to s. 37(1). Contrast with Confederation of Indian Pharma (HP)
<> May 7, 2013 at 6:51 am
“………The Volcker Committee, which was set up to expose the ‘Oil for Food scam’ found that this company was a front company for the Iraqi regime, meant to receive illegal kickbacks, and did not render any services. The AO, acting on the report, held that the commission paid …….”
It appears that, the finding of facts by the special committee, as per the above narration, were, as such, not disputed by the assessee . If so, in essence, the disputed payment has been conceded (implicitly, though not explicitly), to be one made gratis- that is, with no ‘consideration’ (or lawful return / benefit) within the meaning of the law on contract.
The only other comparable instance one can readily think of is that involving payment of so-called ‘secret commission’. But then, if one remembers right, in those cases, the ground/the factual matrix on which a favourable judicial view was taken, was that the recipient , though with identity not disclosed, did render identifiable service to the benefit of the business.
In the instant case, from the name and style of the party, the assessee is a closely held company. One is left wondering whether, instead, if it were a company in which the public are substantially interested, could a similar view have been taken, subjectively and ignoring the vested interests of its stakeholders.
The other angle for consideration is, whether, any such expenditure, more so of this very kind, will be allowable without going into the aspect of its excessiveness or otherwise.
Perhaps, these are some of the aspects which could be exected to be gone into, in the likely event of further proceedings in the instant or other similar cases.
Needless to add: Over to tax experts for further deliberation.
<Per contra >????!!!!
SG
Suspension of membership of CA by ICAI valid for having two wives
<> Impromptu:
In rejecting the contention of the appellant , -“that involvement of a person in an offence of bigamy is not coming within the purview of “moral turpitude”-, the court is seen to have gone into and mainly relied on the very wide dictionary meaning of the said concept (Para 23).
According to an independent but impartial view, however, the point of instant and spontaneous concern, which could have been more sufficiently stressed and persuasively urged by the aggrieved CA, – is this: Whether, in the context/for the purposes of the subject enactment for CA profession , the concept of ‘moral turpitude’ ought to be construed in a restricted sense; that is, not so widely as to bring within its ambit / mischief any or all such unrelated matters profoundly of ‘personal’ nature. Especially,if it has no direct nexus or correlation or whatever, to the ideological concepts- such as,”Disabilities’ (Para 8), or professional ethics, or misconduct, within the parameters/realm of the prescribed code of conduct. Further that, a CA is not a‘public servant’ or a ‘government servant’, in the true sense,and certainly not in the given context, as appears to have been the case in some of the court judgments relied on by the OP.
As may be readily foreseen or visualized, the view the court has taken has the obvious potentials for far-reaching unpalatable consequences to the CAs in practice, particularly in the modern day environments.
Of course, one has to wait for the outcome of further proceedings, in the instant case itself and / or in other like cases not to be ruled out, for knowing better what is in store for the future.
<><> Hastening to add: All said, but that there could be no two views that any social evil of the kind, such as ‘bigamy’, is a product of a obnoxiously sick mindset, hence must be eschewed at all cost – by one and all, not excluding a member of any august profession. Ought to be so, whatever be the surrounding compulsions of the times.
>>>>
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