• SERVICE LAWS

State of Gujarat and Ors Vs. Arvindkumar T. Tiwari and Anr. (Decided on 14.09.2012) MANU/SC/0742/2012

Compassionate Appointment - Relaxation of eligibility criteria - Xth standard pass was the basic requirement for appointent at relevant post (Class IV) - Applicant not even Class 8th Pass - - Whether eligibility criteria can be relaxed in the circumstances when it was also condiered that there was some notification which provided for the minimum qualification requirement of 10th standard pass as the eligibility criteria for employment of a Class IV post

Held, this Court observed that since 1991, the eligibility criteria for a Class IV post was set as the passing of the 10th standard, and since the Respondent-Applicant to Post in question was not even 8th standard pass, he was most certainly not eligible to apply for the post in question. It was accordingly held that it was neither desirable, nor permissible in law to issue any direction to relax the eligibility criteria merely on humanitarian grounds.

• CRIMINAL LAWS

Kunal Majumdar Vs. State of Rajasthan (Decided on 12.09.2012) MANU/SC/0736/2012

Confirmation of death sentence - Reference - Conviction under Sections 376 and 302 of the Indian Penal Code,1860 (IPC) - Appeal against impugned finding holding that based on the evidence available on record conviction and thus the death sentence was not sustainable - Guidelines which Court is expected to follow while exercising powers under Section 366 of the Code of Criminal Procedure, 1973

Held, it was observed that in a case for consideration for confirmation of death sentence under Section 366 (1) of the Code of Criminal Procedure (Code), the High Court is bound to examine the Reference with particular reference to the provisions contained in Sections 367 to 371 of the Code. Under Section 367, Code of Criminal Procedure., when Reference is submitted before the High Court, the High Court, if satisfied that a further enquiry should be made or additional evidence should be taken upon, any point bearing upon the guilt or innocence of the convict person, it can make such enquiry or take such evidence itself or direct it to be made or taken by the Court of Sessions. The ancillary powers as regards the presence of the accused in such circumstances have been provided under Sub-clauses (2) and (3) of Section 367 of the Code.

Under Section 368, while dealing with the Reference under Section 366, it inter alia provides for confirmation of the sentence or pass any other sentence warranted by law or may annul the conviction itself and in its place convict the accused for any other offence of which the Court of Sessions might have convicted the accused or order for a new trial on the same or an amended charge. It may also acquit the accused person.

Under Section 370, when such Reference is heard by Bench of Judges and if they are divided in their opinion, the case should be decided in the manner provided under Section 392 as per which the case should be laid before another Judge of that Court who should deliver his opinion and the judgment or order should follow that opinion. Here again, under the proviso to Section 392, it is stipulated that if one of the Judges constituting the Bench or where the appeal is laid before another Judge, either of them, if so required, direct for rehearing of the appeal for a decision to be rendered by a larger Bench of Judges.

The High Court has been given such a special and onerous responsibility while dealing with a Reference under Section 366 (1) of the Code it was held as shocking to note that in the order impugned, the Division Bench merely recorded to the effect that the counsel for the Appellant pleaded for sympathy to commute the death sentence into one for life for the offence falling under Section 302, Indian Penal Code (IPC) while praying for maintaining the sentence imposed for the offence under Sections 376/511, IPC and that there was no opposition from the learned Public Prosecutor. The Division Bench on that sole ground and by merely stating that there was no use of force of severe nature on the victim at the hands of the Appellant and that the commission of offence of murder cannot be held to be brutal or inhuman and consequently the death sentence was liable to be altered as one for life for the offence under Section 302, Indian Penal Code.

The High Court did not exercised its jurisdiction vested in it under Section 366(1) of the Code read with Sections 368 to 370 and 392 in letter and spirit and thereby, shirked its responsibility while deciding the Reference in the manner it ought to have been otherwise decided under the Code of Criminal Procedure.

In a Reference made Under Section 366 (1) of the Code there is no question of the High Court short-circuiting the process of Reference by merely relying upon any concession made by the counsel for the convict or that of counsel for the State. A duty is cast upon the High Court to examine the nature and the manner in which the offence was committed, the mens rea if any, of the culprit, the plight of the victim as noted by the trial Court, the diabolic manner in which the offence was alleged to have been performed, the ill-effects it had on the victim as well as the society at large, the mindset of the culprit vis-…-vis the public interest, the conduct of the convict immediately after the commission of the offence and thereafter, the past history of the culprit, the magnitude of the crime and also the consequences it had on the dependants or the custodians of the victim.

The High Court was oblivious of the above vital factors while disposing of the Reference in such a cursory manner.

The matter was remitted back to the High Court with a direction to dispose of the Reference along with the Appeals expeditiously within the time given.

• CONSTITUTIONAL LAWS

Sahara India Real Estate Corporation Ltd. and Ors. Vs. Securities and Exchange Board of India and Anr. (Decided on 11.09.2012) MANU/SC/0735/2012

Reporting of court matters while they are still sub-judice before the Court - Freedom of press - Striking a constitutional balance between free press and administration of justice - Whether constitutional limitations on free speech could be imposed by Judiciary if the situation so requires

Held, the right to negotiate and settle in confidence is right of a citizen and has been equated to a right of the Accused to defend himself in a criminal trial. In this case, Apex Court was sought the Apex to frame guidelines or give directions which are advisory or self-regulatory In such circumstances, constitutional adjudication on the above points were required. Hence, this Court reiterated that the exposition of constitutional limitations has been done under Article 141 read with Articles 129 and Article 215 of the Constitution of India. When the content of rights was considered by the Court, this Court also considered the enforcement of the rights as well as the remedies available for such enforcement. In such circumstances, Court expounded the constitutional limitations on free speech under Article 19(1)(a) in the context of Article 21 and under Article 141 read with Article 129 and Article 215 which preserves the inherent jurisdiction of the Courts of Record in relation to contempt law.

• EXCISE LAWS

Salora International Ltd. Vs. Commissioner of Central Excise, New Delhi (Decided on 07.09.2012), MANU/SC/0726/2012

Classification of goods - Whether the goods manufactured by the Appellant are liable to be taxed as 'Parts of Television Receivers' falling under Tariff Entry 8529 of the Central Excise Tariff contained in the First Schedule to Central Excise Tariff Act, 1985 or as 'Television Receivers' under Tariff Entry 8528 of the Tariff

Held, This Court found that the goods of Appellant might not be said to be 'parts' as per Section Note 2 to Section XVI of the Tariff. The Appellant not only used to assemble all parts of the Television Receivers and make complete television sets, but the said Television Receivers were also operated in the manufacturing unit of the Appellant and thoroughly checked and only upon it being confirmed that the Television Receivers were complete in all respects, they were disassembled and along with relevant material and individual serial numbers, sent to the various satellite units. Once the Television Receivers were assembled or were made completely finished goods, the manufacturing process was over . Moreover, it was not in dispute that complete Television was manufactured by the Appellant and therefore the Revenue had rightly classified the goods-product as complete Television set even though it was subsequently disassembled. Further at the time of the parts of the television set being transported from the factory of the Appellant, the parts manufactured by it were already identified as distinct units. Once the question of applicability of Section Note 2 to Section XVI of the Tariff was answered , there might be no bar to the application of Rule 2 of the Rules for Interpretation to the goods transported by the Appellant. Consequently, the only question that remained was with respect to whether such goods shall fall foul of the said Rule. In this regard, despite the attempts of the Appellant to establish otherwise, Court was unable to see how the goods transported by them shall not be covered by the Rule, especially as a complete or finished article, 'presented unassembled or disassembled'. The terminology of the Rule was wide enough to cover the goods transported by the Appellant, and Court was not convinced that the processes required to be carried out at the satellite units were so vital to the manufacture of the Television Receivers so as to render the goods transported by the Appellant lacking the 'essential character' of Television Receivers.

• DIRECT TAXATION LAWS

M/s. Drilcos (India) Pvt. Ltd Vs. Commissioner of Income Tax (Decided on 06.09.2012) MANU/SC/0754/2012

Validity of claim of deduction under Section 37 of Income Tax Act, 1961 - Whether the concerned amount could be claimed by the Assessee as a deduction under Section 37 of Income Tax Act, 1961?

Held, The Court observed that if one carefully analyzed Section 35AB of the Income Tax Act,1961 (Act) it was clear that prior to 1st April, 1986, there was some doubt as to whether such expenditure could fall under Section 37 of the Act. To remove that doubt, Section 35AB of the Act stood inserted. In sub- section (1) of Section 35AB of the Act, there was a concept of amortization of expenditure. In the present case, it was true that on account of certain disputes, which arose between the parties, the balance amount was not paid by the Assessee to the American company. However, the word `for' in Section 35AB of the Act has to be emphasised while interpreting Section 35AB of the Act. In the present case, the Technical Assistance Agreement was entered into between the Assessee and the American company for acquiring know-how which was, in turn, to be used in the business of the Assessee. Once Section 35AB of the Act comes into play, then Section 37 of the Act had no application.

Assistant Commissioner of Income Tax Vs. M/s. Gebilal Kanhaialal HUF, Through Karta (Decided on 04.09.2012) MANU/SC/0755/2012

Waiver of penalty - Entitlement for immunity in terms of clause (2) of Explanation 5 to Section 271(1)(c) of the Income Tax Act, 1961 - Whether the Assessee was entitled to such immunity?

Held, In present case, Court was concerned with interpretation of clause (2) of Explanation 5 to Section 271(1)(c) of the Income Tax Act, 1961(Act). Three conditions had to be satisfied by the Assessee for claiming immunity from payment of penalty under clause (2) of Explanation 5 to Section 271(1)(c) of the Act. The first condition is that the Assessee must make a statement under Section 132(4) of the Act in the course of search stating that the unaccounted assets and incriminating documents found from his possession during the search have been acquired out of his income, which has not been disclosed in the return of income to be furnished before expiry of time specified in Section 139(1) of the Act. Such statement was made by the Karta during the search which concluded on August 1, 1987. Therefore, it was not in dispute that condition No.1 was fulfilled. The second condition for availing of the immunity from penalty under Section 271(1)(c) of the Act is that the Assessee should specify, in his statement under Section 132(4), the manner in which such income stood derived. Admittedly, the second condition, in the present case also stood satisfied. However, according to the Department, the Assessee was not entitled to immunity under clause (2) as he did not satisfy the third condition for availing the benefit of waiver of penalty under Section 271(1)(c) as the Assessee failed to file his return of income on 31st July, 1987 and pay tax thereon particularly when the Assessee conceded on August 1, 1987 that there was concealment of income. The third condition under clause (2) is that the Assessee had to pay the tax together with interest, if any, in respect of such undisclosed income. However, no time limit for payment of such tax stood prescribed under clause (2). The only requirement stipulated in the third condition was for the Assessee to "pay tax together with interest". In the present case, the third condition also stood fulfilled. Clause (2) did not prescribe the time limit within which the Assessee should pay tax on income disclosed in the statement under Section 132(4) of the Act. Hence, it was held that the Assessee was entitled to immunity under clause (2) of Explanation 5 to Section 271(1)(c) of the Act.

• EXCISE LAWS

BOMBAY HIGH COURT

M/s. Tata Motors Ltd Vs. Union of India (Decided on 07.09.2012) MANU/MH/1457/2012

Validity of Circular No. 643/34/2002-CX dated 1st July, 2002 - Whether Clause 7 of Circular dated 1st July, 2002 is in excess of the provisions of Section 4(1)(a) and 4(3)(d) of Central Excise Act,1944(Act) as amended by Section 94 of the Finance Act of 2000

Held, This Court observed that after the amendment to Section 4 of the Central Excise Act,1944 (Act), the Respondents issued Circular No. F B-10/1/2000/TRU dated 12th May, 2000 as also Circular letter F. No. 354/81/2000/TRU dated 30th June, 2000. A reading of these two Circulars would clearly go to show that the Respondents wanted to clarify the term transaction value and these two Circulars were to be used as guidelines while arriving at the assessable value. Considering these Circulars, Court was inclined to accept the submission advanced by the concerned Counsel that the expenses incurred towards pre-delivery inspection and said services could not be included in the assessable value. It was peculiar to note that after issuing Circular dated 1st July, 2002, the Respondents issued Circular dated 12th December, 2002 and in the said Circular, the Respondents clearly admitted that the expenses incurred towards pre delivery inspection and free after sales services provided by the dealer to a vehicle during the warranty period would not be included in the assessable value. However, this assertion was at variance from Circular dated 1st July, 2002. Thus, The Clause 7 of Circular dated 1st July, 2002 wrongly proceeded to hold that the expenses incurred by the dealer towards pre-delivery inspection and said services were on behalf of the Assessee. Hence, Clause No. 7 of Circular dated 1st July, 2002 was not in conformity with the provisions of Sections 4(1)(a) read with Section 4(3)(d) of the Act.

• PROPERTY LAWS

Board of Industrial and Financial Reconstruction Vs. M/s. Hindustan Transmission Products Ltd. (In Liquidation) (Decided on 05.09.2012) MANU/MH/1453/2012

Validity of sale of property - Whether sale of suit property be declared as null and void

Held, In the present case, it is an admitted position that no written contract was entered into between the Company and the occupant. Though the occupant had been found to be in possession of the suit property, the circumstances in which occupant was so placed were unclear. The occupant had not produced any possession receipt that may have been executed between the parties which would indicate the basis on which the possession was handed over. In fact, in Shravan Jayaram Patil vs. Garbad Ukha Nhavi where an application was made by a Plaintiff to have the Defendant's name entered in the mutation register in respect of certain land on the ground that it had been sold by him to the Defendant orally and setting out the terms of the sale, it was held not to be sufficient to satisfy the requirements of Section 53A of the Act. Hence, reliance placed by the occupant on Section 53A of the Transfer of Property Act (Act) also lent no assistance to the occupant and the Advocate appearing for the Official Liquidator was correct in his submission that Section 53A of the Act had no application in the present case in the absence of any agreement in writing from which the terms of the alleged transaction is capable of being ascertained with reasonable certainty. Hence, the occupant had not made out any case for validating the alleged transfer of the said property in her favour by the Company in liquidation.

• DIRECT TAXATION LAWS

DELHI HIGH COURT

Commissioner of Income Tax Vs. M/s. Maruti Insurance Distribution Services Ltd. (Decided on 04.09.2012) MANU/DE/4130/2012

Quashing of rectification order - Appeal filed challenging order passed by Income Tax Appellate Tribunal whereby it concluded that the number of dealerships and workshops remained constant and that by its order for 2005-06 it upheld the commission expenditure to an extent of 70%. - This resulted in the rectification Application being allowed and reversal of the earlier order

Held, This Court observed that power to rectify an order under Section 254 (2) of the Income Tax Act,1961(Act) was extremely limited. It did not extend to correcting errors of law or re-appreciating factual findings. Those, properly fell within appellate review of an order of court of first instance. What legitimately fell for consideration were errors (mistakes) apparent from the record. In the present situation, whether the dealer commissions remained constant throughout the previous years, or had to dwindle, according to the Tribunal's understanding in its previous order were matters that had to be gone into and were directed to be gone into by the Assessing Officer. However, in the order by which previous order was rectified, the entire basis of its previous reasoning was substituted, and a wholly new result ensued. This Court was clear that such re-appreciation did not amount to rectification of a mistake, but re-appreciation of a process of reasoning, which fell legitimately in the sphere of the appellate forum. The Tribunal took note of its order in respect of the year 2005-06, and was to quite an extent influenced by it. Further, it was also noticed that the correctness of that order was under Appeal before this court and a question of law had been framed. Furthermore, the Tribunal could, in view of clear decisions of this Court, had not entirely substituted and re-written its previous order. Appeal allowed accordingly

• INTELLECTUAL PROPERTY LAWS

Stokely Van Camp Inc & Anr. Vs. Heinz India Private Ltd. (Decided on 03.09.2012) MANU/DE/4172/2012

Grant of stay of proceedings questioning the validity of registration of trade mark - Application filed wherein the Defendant seeks directions to stay the further proceedings in the present suit till the disposal of the rectification petition which is already pending before the Appellate Board

Held, Court found that in instant case, it was concluded that in a suit for infringement of a trademark, the Applicant could not ask for a relief of the stay of the suit until he fulfilled the conditions stated in Section 124(1) of the Trademarks Act, 1999 (Act). If the rectification proceeding was not pending during the institution of the suit, then it was obligatory on part of the Applicant to follow the provision laid down under Section 124(1)(ii) of the Act in order to initiate rectification proceedings before the Appellate Authority. In case Applicant failed to adhere to the same and yet initiated rectification proceedings, then he would not be entitled to the relief of stay of the suit. Hence, the Defendant was not entitled to seek stay of the present suit. Application dismissed

• COMPETITION LAWS

COMPETITION COMMISSION OF INDIA

Shri Saurabh Bhargava Vs. Secretary, Ministry of Agriculture and Cooperation (Decided on 27.08.2012) MANU/CO/0079/2012

Violation of Sections 3 and 4 of Competition Act, 2002 - No prima-facie case made out to establish such violation - Application filed by Informant wherein prayer is made to the Competition Commission of India(Commission) to declare the terms and conditions of Regulations of 2010 framed by the two Opposite Parties under Insecticides Act,1968 to be anti competitive and void and thus wanted the Commission to remove these terms and conditions and open the market of insecticides

Held, The Commission in the instant case was of the view that the impugned conditions prescribed for grant of registration certificate could not be termed either anti-competitive agreement under Section 3 of the Act, or abuse of dominant position in terms of the provisions of Section 4 of the Act. Moreover, the Informant had also not submitted any material to show that insecticide importers and manufacturers were charging exorbitant prices either due to any anti-competitive agreement between them or any dominant player amongst them was abusing its dominance in the relevant market. It was thus evident that Opposite Parties could not be termed as enterprises in terms of Section 2(h) of the Act nor could they be construed as being participants in the market under consideration. The question of violation of Sections 3 or 4 of the Act, therefore, did not arise. Hence, no case of violation of either Section 3 or Section 4 of the Act was made out.

• DIRECT TAXATION LAWS

ITAT KOLKATA

M/s. Suresh Constructions (P) Ltd. Company Vs. Commissioner of Income-Tax, Kolkata-II (Decided on 28.08.2012) MANU/IK/0223/2012

Disallowance in respect of expenditure on labour charges - Appeal filed against the order of Commissioner of Income Tax (Appeals) whereby it directed the Assessing Officer to make disallowance by invoking the provisions of Section 40(a)(ia) of the Income Tax Act, 1961 in respect of expenditure on labour charges including payment to sub-contractors

Held, In the present case the Assessee deducted tax and the same was deposited for the assessment year 2007-08 ,that meant the Tax Deducted at Source (TDS) was paid before due date of filing of return under Section139(1) of the Act by the Assessee. Hence, this Tribunal allowed the Assessee's claim and quashed the revision order passed by CIT(A). Appeal by Assessee allowed.