SUPREME COURT

• EXCISE LAWS

Commissioner of Central Excise, Jaipur v. M/s. Rajasthan Spinning and Weaving Mills Limited (Decided on 09.07.2010)

Excise - Claim of MODVAT credit in respect of steel plates and M.S. channels used in the fabrication of chimney for the diesel generating set, by treating these items as capital goods in terms of Rule 57Q of the Central Excise Rules, 1944

The steel plates and M.S. Channels, used in the fabrication of chimney would fall within the ambit of "capital goods" as contemplated in Rule 57Q. It is not the case of the Revenue that both these items are not required to be used in the fabrication of chimney, which is an integral part of the diesel generating set, particularly when the Pollution Control laws make it mandatory that all plants which emit effluents should be so equipped with apparatus which can reduce or get rid of the effluent gases. Therefore, any equipment used for the said purpose has to be treated as an accessory in terms of serial No.5 of the goods described in column (2) of the Table below Rule 57Q. The Tribunal was correct in law in holding that the assessee was entitled to avail of MODVAT credit in respect of the subject items viz. steel plates and M.S. channels used in the fabrication of chimney for the diesel generating set, by treating these items as capital goods in terms of Rule 57Q of the Rules. Appeal preferred by the Revenue dismissed accordingly.

• DIRECT TAXATION

Commissioner of Income Tax, Gujarat v. M/s. Saurashtra Cement Limited (Decided on 09.07.2010)

Nature of Receipt - Whether the liquidated damages received by the assessee from the supplier of the plant and machinery on account of delay in the supply of plant is a capital or a revenue receipt?

The delay in supply could be of the whole plant or a part thereof but the determination of damages was not based upon the calculation made in respect of loss of profit on account of supply of a particular part of the plant. It is evident that the damages to the assessee was directly and intimately linked with the procurement of a capital asset i.e. the cement plant, which would obviously lead to delay in coming into existence of the profit making apparatus, rather than a receipt in the course of profit earning process. Compensation paid for the delay in procurement of capital asset amounted to sterilization of the capital asset of the assessee as supplier had failed to supply the plant within time as stipulated in the agreement and clause No.6 thereof came into play. The amount received by the assessee towards compensation for sterilization of the profit-earning source, not in the ordinary course of their business, was a capital receipt in the hands of the assessee. The amount received by the assessee from the suppliers of the plant was in the nature of a capital receipt. Appeal dismissed.

• CONSUMER LAWS

Managing Director, Maharashtra State Financial Corporation and Ors. v. Sanjay Shankarsa Mamarde (decided on 09.07.2010) MANU/SC/0463/2010

Deficiency in service - Section 2(g) of the Consumer Protection Act, 1986 - Disbursement of loan amount - Examination of administrative decision of the Corporation to recall the loan in view of the past conduct of the complainant - Whether the Commission was correct in holding that there has been deficiency in service provided by the Corporation to the complainant on account of their failure to release the balance loan amount

There was no shortcoming or inadequacy in the service on the part of the Corporation in performing its duty or discharging its obligations under the loan agreement. The Corporation was constrained not to release the balance instalments and recall the loan on account of stated defaults on the part of the complainant himself. Non-release of loan amount was not because of any deficiency on the part of the Corporation but due to complainant's conduct and therefore, the failure of the Corporation to render 'service' could not be held to give rise to claim for recovery of any amount under the Act. Appeal accordingly allowed.

• MOTOR VEHICLE LAWS

Shyamwati Sharma and Ors. v. Karam Singh and Ors. (decided on 13.07.2010) MANU/SC/0468/2010

Enhancement of Compensation - Computation thereof based on principle relating to 'addition to income' towards future prospects - Applicability of suitable Multiplier

As held in Sarla Verma v. Delhi Transport Corporation MANU/SC/0606/2009 has stated the principles relating to 'addition to income' towards future prospects. The Apex Court has held that wherever the deceased was below 40 years of age and had a permanent job, the actual salary (less tax) should be increased by 50% towards future prospects, to arrive at the monthly income. It also held that where the number of dependants of a deceased is in the range of 4 to 6, the deduction towards personal and living expenses of the deceased should be 25%. It further held that in regard to persons aged 36 to 40 years, the appropriate multiplier should be 15. Accordingly, while ascertaining the income of the deceased, any deductions shown in the salary certificate as deductions towards GPF, life insurance premium, repayments of loans etc., should not be excluded from the income. The deduction towards income tax/surcharge alone should be considered to arrive at the net income of the deceased.

• CRIMINAL LAWS

State of A.P. v. Gourishetty Mahesh and Ors. (Decided on 15.07.2010) MANU/SC/0473/2010

Quashing of criminal proceedings - Illegal transportation of black Jaggery and Alum - Case registered under Sections 34(e), 41 and 42 of the Andhra Pradesh Excise Act, 1968 - Impugned finding of High Court quashing the proceedings under challenge

Exercise of power under Section 482 of the Code, particularly, in a case of present nature is an exception and not the rule. The provision only saves inherent power which the Court possessed before the enactment of the Code and does not confer any new powers on the High Court. While exercising jurisdiction under Section 482 of the Code, the High Court would not ordinarily embark upon an enquiry whether the evidence in question is reliable or not or whether on a reasonable appreciation of it accusation would not be sustained. That is the function of the trial Judge/Court. Though High Court may exercise its power relating to cognizable offences to prevent abuse of process of any Court or otherwise to secure the ends of justice, the power should be exercised sparingly. If the allegations set out in the complaint do not constitute the offence of which cognizance has been taken by the Magistrate, it is open to the High Court to quash the same in exercise of inherent powers under Section 482.

In the instant case, apart from specific allegations about the transportation of Jaggery for preparation of illicit distilled liquor, prosecution also placed reliance on laboratory analysis report which mentions that the transported Jaggery is fit for fermentation, producing alcohol unfit for consumption. In those circumstances, whether the raw material in existence would be sufficient for holding the accused persons concerned guilty or not has to be considered only at the time of trial. Further, at the time of framing the charge, it can be decided whether prima facie case has been made out showing the commission of offence and involvement of the charged persons. It is immaterial whether the case is based on direct or circumstantial evidence.

High Court was held to be not justified in quashing the FIR and accordingly the impugned judgment of the High Court was set aside.

HIGH COURT

• SERVICE LAWS

DELHI HIGH COURT

Government of NCT of Delhi and Ors. v. Mahavir Singh and Anr., Decided on 12.07.2010

Recruitment Rules for the post of Drivers in Delhi Administration - Regular Appointment - Direction of Central Administrative Tribunal (CAT) to consider regular appointment as per law subject to availability of regular vacancies and without insisting upon their clearing the skill test again - Sustainability thereof challenged

A person who has undergone a skill test, one of the requirements for regularization and who is continuously working as driver since he cleared the test, may be on adhoc basis, becomes eligible for regularization once vacancy arises. Whereas a person who though qualified a skill test but was not working continuously as driver would stand on a different footing and could not claim the benefit of undergoing a skill test at the time of his selection for adhoc appointment. The writ petition disposed of with a direction that the Petitioners in the instant case will consider the case of regularization of both the Respondents without insisting for skill test so far as the first Respondent is concerned. However, as far as the second Respondent is concerned he would be regularized subject to his undergoing a skill test.

• RENT/ TENANCY LAWS

DELHI HIGH COURT

Madhu Bala v. Prem Bahadur Saxena (Decided on 19.07.2010)

Delhi Rent Control Act, 1958 - Power of High Court under Section 25B (8) of the Act

Powers of High Court under S 25B(8) of the Act not appellate. This Court has only to see that the Trial Court had acted in accordance with law and not transgresses the limits of its jurisdiction. The Petition was dismissed with the finding that Trial Court had taken all relevant factors into consideration while dismissing the application of the petitioner under Section 25B(8) of the Act seeking leave to defend.

CALCUTTA HIGH COURT

Lawrence and Mayo (India) Pvt. Ltd. v. Life Insurance Corporation of India and Ors.  (Decided on 09.07.2010) MANU/WB/0321/2010

Eviction proceeding under the Public Premises (Eviction of unauthorized occupants) Act, 1971 - Order passed by the Estate Officer challenged under Article 227 of the Constitution of India

The tenancy was terminated by notice and thus, the concerned tenant became an unauthorized occupant in the said premises in view of the provision contained in Section 2(g) of the Act. Since the said tenant did not vacate the said premises in spite of determination of its tenancy, an eviction proceeding was initiated. It was claimed that the Petitioner in the instant case was inducted in a portion of the said premises as a sub-tenant in 1938 by the then tenant and since has been in possession as sub-tenant. Though the tenancy right was changed on different occasions creating new tenancy right in favour of different companies but the Petitioner's possession therein was never disturbed by the subsequent tenants; rather, the Petitioner was recognized as sub-tenant by all the subsequent tenants.

No hard and first rule regarding order of leading of evidence by the parties in a proceeding under the Act, can be laid down as the requirement of giving evidence in such a proceeding by the parties differs from case to case. On plain reading of Section 5 of the Act, only the noticee is required to give reply to the show cause notice and he is also required to prove his defence by evidence unlike in the civil suit where the Plaintiff is required to prove his case by evidence and the Court can pass a decree in his favour only on proof of the plaint case by the plaintiff and such decree cannot be passed on the basis of the defence weakness only. Thus, if the literal meaning is given to Section 5 of the said Act in the manner as aforesaid then the trial may be vitiated in some cases. The Estates Officer did not committed any illegality in rejecting the Petitioner's prayer for issuance of direction upon the opposite party No. 1 to lead evidence first before the witness of the Petitioner goes to the box for giving evidence.

• INTELLECTUAL PROPERTY RIGHTS

BOMBAY HIGH COURT

Raymond Limited v. Raymond Pharmaceuticals Pvt. Ltd. (Decided on 13.07.2010) MANU/MH/0704/2010

Use of a registered trademark as part of trade name - Whether such usage amounts to infringement - Relief of injunction sought

The Claimant has to establish that the alleged infringing party is dealing in the goods in respect of which the mark is registered and if the goods were different than those in respect of which the trademark is registered, the use of registered trademark as a part of trade name would not amount to infringement. In the present case the Party alleged of infringement was not dealing in the goods in respect of which the trademark of the Claimant is registered and therefore, Claimant not entitled to interim injunctive relief, as sought.   

DELHI HIGH COURT

Grant of Patent - When can a patent be said to be granted under the Patents Act, 1970 - Dismissal of pre-grant oppositions by the Controller of Patents Controller on the ground that they were time-barred under Section 21 of the Act

For the purposes of Section 43 (1) of the Act, the patent is granted on the date on which the Controller passes a final order to that effect on the file. the patent has to be granted once it is found that either the application has not been refused in terms of Section 25(1) read with Rule 55 (6) or it has not been found in contravention of any provision of the Act. In other words, at this stage the Controller is not expected to delay the pronouncement of the final decision. The thrust of Section 43 (1) and Rule 55 (6) is that of expeditious decision making by the Controller. Section 43 (1) indicates that the "patent shall be granted.....with the seal of the patent office and the date on which the patent is granted shall be entered in the Register". When read continuously, the language of Section 43 (1) does appear to indicate that it is the decision taken by the Controller on file which is the determining event for ascertaining "the date of grant of patent.? The sealing of the patent and the entering of the patent in the Register obviously follows the act of the Controller passing an order to the effect that the patent has been granted. In other words, the sealing of the patent and the entering of the patent in the Register are, given the language of Section 43 (1) of the Act, intended to be ministerial acts evidencing the grant of patent, which is at a stage anterior to those ministerial acts.

• CRIMINAL LAWS

ALLAHABAD HIGH COURT

Sartaj S/o Mohd. Husain and Anr. v. State of U.P. through Secretary Home and Ors. (Decided on 14.07.2010) MANU/UP/0400/2010

Unlawful detention - Whether a lady or a minor girl not being accused in a criminal case may be detained or permitted to stay at police station on any ground whatsoever?

The law as well settled states that in case the authorities want to do certain things, then that should be done in the manner provided in the Act or statutory provisions and not otherwise. The authorities cannot be permitted to use the premises of the police station for any purpose except for what it has been meant for. In case, they are permitted to do so, then it shall create a gallery to abuse the process of law keeping in view the moral devaluation in our system. The detention was held to wrongful and directions mentioned as under was issued in the nature of Mandamus :

(1) No person who is a witness in a case, female or male shall be permitted to reside or be detained in the police station awaiting medical check-up or medical report or for any other reason for more than 24 hours. For medical examination, such person may be permitted to stay for limited period to the maximum of three days in the hospital/Primary Health Centre or other statutory home or shelters. If necessary, appropriate police protection may be provided during such stay at a place other than police station; (2) The Government shall ensure that the medical examination of the prosecutrix or a witness or the person involved in a criminal case be done on the same day or within the maximum period of 24 hours and the hospital/Primary Health Centre shall ensure to submit the report by the next 24 hours to the police station concerned. Let appropriate circular be issued accordingly forthwith; (3) The Chief Secretary, Government of U.P. Is directed to appoint a Committee of experts which shall frame appropriate guidelines for medical examination/submission of the report to the police/investigating agency keeping in view the time involved in such medical or pharmacological examination, expeditiously and preferably within a period of two months from the date of receipt of a certified copy of this order; In the instant case since the Petitioner was kept in the premises of the police station for about two weeks without justifiable reason causing mental pain and agony and her stay has been held to be violative of Article 21 of the Constitution of India, she was held to be entitled for the compensation/cost from the state Government and the Petition was allowed accordingly.

Shailesh Tewari & Ors. v. State Of U.P. & Ors. (Decided on 05.07.2010)

Quashing of Proceedings - Complaint Case under section 406 of the Indian Penal Code, 1860 - Divorce as stated by Applicant already taken place between the parties and it was mutually resolved by the parties that proceedings under section 406 would be withdrawn, further applicants have already been acquitted from a case under section 498-A/323/149/504 I.P.C. & 3/4 Dowry Prohibition Act

As observed in Pashaura Singh v. State of Punjab, all subsequent criminal proceedings instituted with malafide intention need to be quashed. In the present case the applicants were already been acquitted in a case under section 498-A/323/149/504 I.P.C. & 3/4 Dowry Prohibition Act and the present criminal proceedings under section 406 I.P.C. was nothing but prosecution with malafide intention, as such, is liable to be quashed. Application seeking quashing thus was allowed

• ENVIRONMENT LAWS

V.M. Thankachan v. Bharanicavu Grama Panchayat and Ors. (Decided on 07.07.2010) MANU/KE/0500/2010

Contamination and Pollution - Well and other drinking water sources used by Petitioner - Respondent conducting a bakery and restaurant alleged of releasing waste into the well used as source of drinking water

The disputes between the parties settled by way of compromise under terms and conditions namely, (1) All the existing tanks including septic tanks existing in the property where the Respondent is conducting business and septic tanks or other tanks near to the property which is being used by the Respondent, his associates, staff or others to be cleaned and thereafter completely closed; (2) New tanks with proper safeguards to prevent leakage or pollution that may result in contamination of the Petitioner's well to be newly constructed by the Respondent at his cost; (3) Adequate steps to be taken to prevent dumping waste or flow of waste to the tanks even if it is not caused by Respondent; (4) Other necessary steps to be taken to ensure that Petitioner's well is not polluted in any manner;

Once all the above terms are fulfilled, intimation in this regard to be sent by Petitioner to Panchayat. The water from the Petitioner's well to be tested once in three months in an approved laboratory.

TRIBUNALS AND COMMISSIONS

• CONSUMER LAWS

National Consumer Disputes Redressal Commission

Rajasthan State Industrial Development And Investment Corporation Ltd. v. M/s Diksha Enterprises (Decided on 09.07.2010)

Allotment related to the allocation of an industrial plot for setting up of a factory for the manufacturing of S.O. Dyes. - Whether dispute outside the purview of the consumer forum - Determination thereof

As clear from this provisions of Consumer Protection Act after the Amendment Act 62 of 2002, any person who buys any goods or avails any service for a consideration, if it relates to a commercial purpose, except on the ground of earning his livelihood by means of self employment, would not fall within the definition of a 'consumer' and, therefore, any such dispute would not be a consumer dispute and the consumer fora would have no jurisdiction to entertain any complaint for such dispute. In the instant case, industrial plot was allied for the purpose of setting of a factory for manufacturing S.O. Dyes. The intention was far from earning any livelihood by self-employment but purely intended to set up a manufacturing unit to earn profit. Thus, the service obtained even for a consideration was for a commercial purpose and the dispute does not fall within the domain of consumer fora.

• RIGHT TO INFORMATION

APPELLATE AUTHORITY, SEBI

Nandanavanam Venkateswarlu v. CPIO, SEBI, Mumbai (Decided on 15.07.2010)

Right to Information - Appeal against reply of the CPIO stating that query was in the nature of seeking advice/clarification from SEBI and the same cannot be construed as 'information' under section 2(f) of the RTI Act

Appellant had asked the question as to "whether he can proceed against the some Companies in a Court of Law?" Such request was held to be beyond the scope of definition of 'information' under the RTI Act. The question began with prefix 'whether' and ended with question mark. Definition of information does include advices and opinions, but the 'opinions' refers to form in which material is available.

• DIRECT TAXATION

ITAT, HYDERABAD

Rain Commodities Limited v. Dy. Commissioner of Income (Decided on 02.07.2010) MANU/IH/0037/2010

Re-computation of the Book profit - Appeal under Section 263 of the Income Tax Act, 1961 - Sustainability of direction whereby CIT by invoking provisions of Section 263, directed the assessing officer to re-compute under Section 115JB of the Income Tax Act 1961 by considering the profit and loss account prepared in accordance with Part II & III of Schedule VI of the Companies Act, 1956 on account of gains arising out of the transfer of assets to wholly owned subsidiary as part of book profit without considering the provisions of Section 47(iv] of the IT Act

Merely because the long term capital gain is exempt under section 47 [iv] of the Act under the normal provision of the Act, it is not correct to say that it is also to be reduced from the net profit for the purpose of computing book profit under S.115JB of the Act when the Explanation to section 115JB does not provide for any deduction in terms of section 47 [iv] of the Act. In other words, we hold that section 47 [iv] of the Act has no application in the computation of book profit under S.115JB of the Act. Thus, the book profits have to be calculated on the net profits computed as per Parts II and III of Sch. VI to the companies Act 1956 and as adjusted by the amounts mentioned in the explanation. No further rebates or deductions after such adjustments, notwithstanding the fact whether any income is taxable or no under the normal provisions of the Income tax Act. Computation of income under the normal provisions and the Book profits are two parallel computations. While normally followed method of accounting in the books may also be taken for the purpose of computing income under the income tax Act, the actual computation of Book profits will not affect or be governed by the computation of income under the normal provisions of the Income tax Act. In fact only because the Government felt that companies availing of various deductions permitted under the Income tax Act showed a low income for the purpose of Income tax but was able to show healthy profits as per books on the basis of which dividends were distributed and to tax these types of Companies that tax on book profits were introduced. By again importing deductions allowed under the normal provisions of income tax into computation of book profits, we will be negating the very purpose for which these sections were introduced.

Accordingly, in the absence of any provision for exclusion of capital gains exempted in the computation of book profit under the provisions contained in Explanation to section 115JB of the Act, the assessee is not entitled to the exclusion thereof as claimed.

• ITAT, MUMBAI

Linklaters LLP v. Income Tax Officer International Taxation, Ward 1(1)(2), Mumbai (Decided on 16.07.2010)

Connotations of Profits indirectly attributable to Permanent Establishment - Cross Appeals in the matter of Assessment under section 143(3) read with Section 250 of the Income Tax Act, 1961 - Assessment year 1995-96 - India UK tax treaty

The connotations of "profits indirectly attributable to permanent establishment" do indeed extend to incorporation of the force of attraction rule being embedded in Article 7(1). In addition to taxability of income in respect of services rendered by the PE in India, any income in respect of the services rendered to an Indian project, which is similar to the services rendered by the permanent establishment, is also to be taxed in India in the hands of the assessee - irrespective of the fact whether such services are rendered through the permanent establishment, or directly by the general enterprise. There cannot be any professional services rendered in India, which are not, at least indirectly, attributable to carrying out professional work in India. This indirect attribution, in view of the specific provisions of India UK tax treaty, is enough to bring the income from such services within ambit of taxability in India. The twin conditions to be thus satisfied for taxability of related profits are (i) the services should be similar or relatable to the services rendered by the PE in India; and (ii) the services should be 'directly or indirectly attributable to the Indian PE' i.e. rendered to a project or client in India. In effect thus, entire profits relating to services rendered by the assessee, whether rendered in India or outside India, in respect of Indian projects is taxable in India. That is precisely what the Assessing Officer had done. The grievance of the Assessing Officer is indeed justified and we uphold the same. Therefore, the relief granted by the Commissioner (Appeals) is vacated and order of the Assessing Officer in this regard restored.