Bangalore, March 07 : Noting that industry has a role in reducing tax disputes in the country, on Finance Secretary TV Somanathan on Monday said that there is a general tendency in the country to not leave any loopholes unexplored in the law to evade tax. He said that both government and the industry need to make attitudinal change to cut disputes. “On tax disputes in general, I would make a suggestion that I think industry also has a role in terms of reducing tax disputes. I think there is a tendency in this country to not leave any loopholes unexplored. That is a sort of philosophy with which it is approached by the accounting profession and this advice is tendered at a high expensive cost to industry. Industry buys the advice,” Somanathan said at a post-Budget interaction with industry. He pointed out that that in one of the famous cases of so-called retrospective taxation (which has been scrapped) the advice to the company was that this is the strategy which may work or may not work but it should be tried. “…and that is the one that caused a lot of grief to a lot of people. So I think I would just appeal (that) while there are many genuine problems and many things government needs to correct, obviously I don’t deny that in any way, but there are also cases where industry seeks very deep loopholes on some very speculative interpretation and says let’s try this because if we win then it will be good,” he said. The Finance Secretary said that attitudinal changes were needed on both sides, government and industry. Revenue Secretary Tarun Bajaj endorsed the view of his colleague and cited the recent case of some of the corporates insisting that cess should be considered an expenditure. “Recently some of the corporates have got a favourable ruling from some High courts that cess is an expenditure while the Supreme Court has also held that cess and surcharges are income tax and are obviously not an expenditure. So what happened was that once this ruling came we found that in all the disputes which were going on, one additional point was taken by the lawyers in every court saying cess is an expenditure and not an item after profit before tax (PBT),” Bajaj said. The Revenue Secretary suggested that as government plugs one loophole, the industry finds another one and it goes on and on making the law complex in the process. “I make a lock on my door, there is a key that opens it. Then I do another lock, and I create so much of complexities in the law just to close this loophole,” he said. NK