Banks have to share details with the taxman

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SummaryThe Supreme Court has left open the question whether foreign companies registered in India are eligible for revival package under the

Revival of foreign cos registered in India

The Supreme Court has left open the question whether foreign companies registered in India are eligible for revival package under the Sick Industrial Companies (Special Provisions) Act (SICA), 1985, saying that the decision may be taken for “appropriate case as and when the occasion would arise”.

The case of Yash Deep Trexim Ltd and Namokar Vinimay Ltd was brought before the SC after the Calcutta High Court held that the law doesn’t apply to foreign companies. It allowed the implementation of a revival scheme framed by the Board for Industrial and Financial Reconstruction (BIFR) for Baranagore Jute Factory Plc. The HC said that the provisions of SICA would be applicable to the company as its only factory is located in India at Baranagore; 90% of its shareholders are Indians and 3,700 workers are working in the jute factory in West Bengal. This was contrary to the single judge’s January 2011 view that the SICA is not applicable to the company as it was incorporated outside India.

Finally, SC found that about 24 acre of the company land was acquired way back in 1988 for building a bridge across the river Hoogly. The company received around R170 crore as compensation from NHAI after going through many litigations. The acquisition compensation still left a surplus of R50 crore with the company after meeting all its losses and liabilities. The apex court, therefore, said that the Baranagore Jute Factory Plc was not a sick company under the Act and “the question(s) arising in the appeals have surely become academic and redundant.”

Banks must give information to Income Tax authorities

SC has ruled that no financial institution can refuse to disclose details of their customers on the ground of confidentiality to the income tax authorities.

It said that the Financial Act, 1995, has expanded the power of the revenue authorities to requisition information which will be useful for or relevant to any enquiry or proceedings under the Income Tax Act. Besides, the income tax officers can now gather general particulars of customers in the nature of a survey and store information in computers to check any tax evasion, the apex court said in a batch of petitions led by the one in the case of Kathiroor Service Cooperative Bank Ltd vs Commissioner of Income Tax.

In these cases, the Income Tax Officer (ITO) had issued notice seeking information from customers who have made either

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