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COURSE OUTLINE
Course Objectives:
1. To gain expert knowledge of the provisions of direct tax laws under the Income Tax Act.
2. To acquire the ability to apply the knowledge of the provisions of laws to various
situations in actual practice.
3. To introduce practical aspects of tax planning as an important managerial decision-
making process and to expose students to real life situations involving taxation and to
equip them with techniques for taking tax-sensitive decisions.
UNIT- I: Introduction, Constitutional Provisions & Basic concept of Income under Income
Tax Act 1961.
General understanding of Income Tax Law, A glance at the early practices of taxation, Concept
of Tax, and Allocation of taxing powers to union and state, Distribution of Legislative Powers
with special reference to Taxing Powers, legislative competence for taxation, residuary powers
of the union, Benefits of direct taxation, scheme of taxation, Tax v Fee (difference in concepts),
application of quid pro quo theory.
Readings:
● The Commissioner, Hindu Religious Endowments, Madras vs. Sri Lakshmindra Thirtha
Swamiar of Sri Shirur Mutt. (16.04.1954 - SC) : MANU/SC/0136/1954
● Sreenivasa General Traders and Ors. vs. State of Andhra Pradesh and Ors. (06.09.1983 -
SC) : MANU/SC/0278/1983
(ii) Pith and Substance v. Aspect Theory
● Federation of Hotel & Restaurant Association of India, etc., vs. Union of India (UOI) and
Ors. (02.05.1989 - SC) : MANU/SC/0180/1989
(iii) Constitutional Scheme
● Constitution of India, Part XII Chapter I of the Constitution of India : Article 264-291,
366, 246 and the seventh schedule.
● Jain, M.P, Indian Constitutional Law (extracts) pp 598-665.
● Singh, N., 1988. Fiscal federalism. In The Oxford Handbook of the Indian Constitution.
(iv) Additional Readings:
● The Ideology of Taxation: The fiscal stimulus in Palkhiwala, and We the People, 89 -100.
● Snape, J., 2017. The" sinews of the state": historical justifications for taxes and tax law.
● State of Himachal Pradesh and Ors. vs. Shivalik Agro Poly Products and Ors.
(14.09.2004 - SC) : MANU/SC/0751/2004 (For Tax v Fee)
● Singh, N., 2007. Fiscal federalism and decentralization in India.Sections 1.4, 1.5, 4.3.
● A. Venkata Subba Rao v. State of A.P. (For Tax v Fee)
● Arvind Datar, The Constitution, Federalism and GST, Available on youtube.
Definitions: Income, Total Income, Agriculture income, Assessee, Person, Assessment year,
Previous Year, Capital Asset, Tax, Charge of Income Tax (Section 4), agriculture income and its
tax treatment, persons who are entitled to claim exemption , rationale for exemption from tax etc.
( section 21(A) and 10(1), Provisions relating to concept and scope of total income (section 5),
residence in India in context of HUF, Individuals and Companies (section 6), concept of place of
effective management (POEM), its critical analysis and adverse implications, and concept of
notional income deemed to accrue or arise or received in India under provisions of Section 7, 8,
9.
● Section 4 , IT Act.
● Kanga and Palkhiwala 177- 179
Income, Agricultural Income and Total Income
Readings:
Employer-Employee Relationship
Readings:
● CIT v/s. Podar Cement (P) Ltd 226 ITR 625 (SC)
III:Profits and Gains of Business and Profession (Sections 28 to 44) –
(a) Applicability
(b) Deductions
(c) Business Expenditure – Allowability
(d) Tests of distinctions between Business expenditure and Capital expenditure [section
37(1)].
(Here the meaning of business or profession, deduction under this head of income vis-à-vis
capital expenditure and revenue expenditure would be dealt).
Concept of capital assets, what constitutes capital assets and their taxability, Difference between
long term and short term capital gains , what is excluded from capital assets, transfer of capital
asset and resultant tax liability would be broadly discussed.)
UNIT -III: Clubbing of income, Set Off, Carry forward and Set off of Losses.
Concept of clubbing of income, what are the circumstances under which income can be clubbed
for assessment so as to claim exemption, persons who are entitled for benefits, Tax exemption
for losses, how it is calculated and what exemptions are allowed (section 70-74A), Deductions to
be made in computing Total Income (Section 80A-80GGC).
TDS
● Japan Airlines v CIT. (SC) (2015)
UNIT- IV: Administration and Procedure & Withholding Tax (Tax Deduction at
Source)
● U.P Pollution Control Board v. Kanoria Ind. Ltd. 259 ITR 321 (SC)
● Kishanchand Chellaram v. CIT 125 ITR 713 (SC)
● Navnitlal C. Javeri v. K.K.Sen, Appellate Assistant 56 ITR 198 (SC)
● Das-Gupta, A., Ghosh, S. and Mookherjee, D., 2004. Tax administration reform and
taxpayer compliance in India. International Tax and Public Finance, 11(5), pp.575-600.
● Gaur, K.D., 1979. Civil and Criminal Sanctions Under the Indian Income Tax Act.
Journal of the Indian Law Institute, 21(4), pp.464-511.
● Singh, V., 2015. DIRECT TAX CODE: THE METAMORPHOSIS (With special
reference to the Income Tax Statute). Humanities & Social Sciences Reviews, 2(1),
pp.102-107.
● Acharya, S., 2005. Thirty years of tax reform in India. Economic and Political Weekly,
pp.2061-2070. (Excerpts)
● McDowells
● Azadi Bachao
● Vodafone. (BHC +SC)
● Chakraborty, A., 2014. Double Taxation Avoidance Agreements In India.
● Levey, M.M., Brodersen, C., Gerdes, I. and MacLachlan, J., 2012. Vodafone: An
analysis under internationally-recognized tax principles. Intertax, 40, p.477.
(b) GAAR (General Anti Avoidance Rules, scope and implication of GAAR, the pros and
cons of introducing GAAR, Is India prepared for GAAR and whether control check is
required on the tax administration)
● Mukhopadhyay, S., 2012. General Anti-Avoidance Rule in Income Tax Law.
Economic and Political Weekly.
(c) Introduction to Transfer Pricing.
(Here the basic concepts of transfer pricing including the meaning of associated
enterprise, international transaction, arm length price etc. would be discussed).
Save as otherwise provided in the TNNLS Rules or elsewhere, ‘Law of Direct Taxation’ course
at TNNLS shall carry a total of 100 marks.
1. On the successful completion of this course the student will be able to interpret
and analyze personal income tax and understand direct tax laws as prescribed under
different provisions of the Income-tax Act, 1961.
2. A study of this paper will be helpful in taking different financial/managerial
decisions after evaluating and reviewing the impact of direct tax laws.
3. Students of the course will be able to explain different types of incomes and their
taxability and expenses and their deductibility.
4. Students who complete this course will be able to learn various kinds of direct
taxes and their implication in practical situations. Students of the course will able to state
the use of various deductions to reduce the taxable income.
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