SUPREME COURT

• DIRECT TAXATION

National Hydroelectric Power Corpn. Ltd. Vs. Commissioner of Income Tax (Decided on 05.01.2010) MANU/SC/0002/2010

Direct Taxation - Advance Against Depreciation (AAD) - Determination of Accounting treatment - Assessment year 2001-02 - Applicability of Explanation I to Section 115JB of the Income Tax Act, 1961

Amount of AAD since reduced from sales, there is no debit in the profit and loss account - Amount did not enter the stream of income for the purposes of determination of net profit at all, hence Clause (b) of Explanation-I was not applicable - Further, "reserve" as contemplated by Clause (b) of the Explanation-I to Section 115JB of the Act required to be carried through the profit and loss account - AAD is an amount under obligation, right from the inception, to get adjusted in the future, hence, cannot be designated as a reserve - AAD is nothing but an adjustment by reducing the normal depreciation includible in the future years in such a manner that at the end of useful life of the Plant, the same would be reduced to nil - Assessee cannot use the AAD for any other purpose except to adjust the same against future depreciation so as to reduce the in the future years - AAD is a timing difference, and not a reserve - AAD is not carried though profit and loss account and is an "income received in advance" subject to adjustment in future - Therefore, Clause (b) of Explanation-I to Section 115JB not applicable.

• LIMITATION

Daya Singh & Anr. Vs. Gurdev Singh (Dead) by L.Rs. & Ors. (Decided on 07.01.2010)

Limitation - Dismissal of Suit for declaration and injunction on the ground of being barred by limitation under Article 58 of the Limitation Act, 1963 - Whether suit filed after Eighteen years of entering into compromise amongst the parties could be held to be barred by limitation - Whether the mere existence of an adverse entry in the revenue records had given rise to cause of action as contemplated under Article 58 or it had accrued when the right was infringed or threatened to be infringed?

Held, Article 58 of the Limitation Act clearly states that to obtain any other declaration, the limitation would be three years from the date when the right to sue first accrues - In the instant case it was clearly averred in the plaint that the right to sue accrued when such right was infringed by the Respondents about a week back when the Appellants had for the first time come to know about the wrong entries in the record of rights and refusal by Respondents to admit the claim of the Appellants - Right to sue accrues when a clear and unequivocal threat to infringe that right by the Respondents when they refused to admit the claim of the Appellants, i.e. only seven days before filing of the suit - Therefore, within three years from the date of infringement, the suit was filed and thus it cannot be held to be barred by limitation - High Court was not justified in holding that mere existence of a wrong entry in the revenue records does not, in law, give rise to a cause of action within the meaning of Article 58 of the Act - Judgment of the High Court set aside and the matter may be remitted back to the High Court for decision on merits - Appeal allowed

• CONSTITUTION

State of Rajasthan and Ors Vs. Heritage Crafts (Decided on 10.11.2009) MANU/SC/1938/2009

Constitution - Imposition of additional tax by State - Tax imposed on transfer of ownership of vehicle - Second proviso to Section 4(1)(b) of the Rajasthan Motor Vehicles Taxation Act, 1951 - Imposition of additional tax on transfer of ownership of a vehicle under the second proviso to Section 4(1)(b) of the Rajasthan Motor Vehicles Taxation Act, 1951 by State of Rajasthan challenged in High Court - High Court struck down impugned provision as violative of Constitution - Hence, present appeal -Whether imposition of additional tax on transfer of ownership of a vehicle under the second proviso to Section 4(1)(b) of the Rajasthan Motor Vehicles Taxation Act, 1951 is beyond the legislative competence of the State?

Held, power of Parliament and the Legislatures of the States to make laws including laws imposing taxes is subject to the provisions of the Constitution and hence it will come under the purview of Article 301. In each case, the court has to find out whether the impugned law puts a restraint in the form of taxation on the movement of trade and if so, only then, such law falls under Article 301 and it is only in such an event that State can take the plea as to the nature of impugned levy, viz., that the levy is compensatory/regulatory in nature (Ratio in Atiabari Tea Company Limited v. State of Assam and Ors applied).

Whenever the law is impugned as violative of Article 301, the courts have to examine the effect of the operation of the impugned law on the inter- State and the intra-State movement of goods which has not been done in the present case. Therefore, judgment of the High Court set aside and cases remitted back to it for de novo consideration in accordance with law. 

• SERVICE

Satyapal Singh Vs. Union of India (UOI) and Anr (Decided on 23.11.2009) MANU/SC/1946/2009

Service - Transfer of employee - Order of eviction to vacate residential premises held by employee on transfer - Petitioner-employee filed appeal against same and granted interim stay in regard to order of eviction - Appeal pending for several years and thereafter, dismissed - Dismissal of appeal challenged through writ petition by employee - High Court dismissed writ petition and imposed exemplary costs on employee - Whether High Court justified in imposing exemplary costs on Petitioner-employee?

Exemplary costs are levied where a claim is found to be false or vexatious or where a party is found to be guilty of misrepresentation, fraud or suppression of facts. In the absence of any such finding, it will be improper to punish a litigant with exemplary costs. When the appellate court did not choose to levy any costs while dismissing the appeal filed by the petitioner after nine years of pendency with interim stay, the High Court, while dismissing the writ petition at preliminary hearing, ought not to have levied exemplary costs with reference to the period of pendency before the Appellate Court. Levy of exemplary costs on ordinary litigants, as punishment for merely for approaching courts and securing an interim order, when there was no fraud, misrepresentation or suppression is unwarranted. In fact, it will be bad precedent

Therefore, direction for payment of exemplary costs of Rs. 50,000/- deleted and Special leave petition dismissed.

HIGH COURT

• INTELLECTUAL PROPERTY RIGHTS

Delhi High Court

Pernod Ricard, SA and Anr. Vs. Real House Distillery Pvt. Ltd. and Anr (Decided on 15.12.2009) MANU/DE/3429/2009

Intellectual Property Rights - Trademark - Infringement thereof - Trademarks Act, 1999 - Plaintiffs claimed infringement of Plaintiff's registered trademark by Defendants by use of deceptively similar trademark by Defendants - Whether Defendants infringed Plaintiffs' trademark?

Held, in an action for an alleged infringement of a registered trade mark, it has first to be seen whether the impugned mark of the defendant is identical with the registered mark of the plaintiff. If the mark is found to be identical, no further question arises, and it has to be held that there was infringement (Ruling in Atlas Cycle Industries Lid. v. Hind Cycle Limited applied).

In view of the above stated law on the subject, there is no hesitation in coming to the conclusion that the logo and label used by the defendants is almost similar and is a slavish copy of the plaintiffs. logo and label. It appears that the defendants have copied the plaintiffs label feature by feature, except that the trademark is different in the present case. In the present case, as alleged earlier, the plaintiff No. 1 has the exclusive rights by virtue of registered mark and in case they are violated by the party, the case of infringement is made out.

• CRIMINAL

HIGH COURT OF BOMBAY

Dev Cyrus Colabawala Vs. The State of Maharashtra (Decided on 18.11.2009) MANU/MH/1341/2009

Criminal - Offence of gang rape - Existence of common intention to commit said offence - Section 376(2)(g) read with Section 34 of Indian Penal Code, 1860 - Applicant-accused was arrested on complaint filed by Complainant that she was molested and gang raped by Applicant-accused - Applicant-accused resisted same contending that there was no common intention to commit said offence and filed application for grant of bail - Whether there existed common intention on part of Applicant to commit said offence?

Held, common intention has to be gathered from the circumstances which existed and which are brought on record and it is not necessary that common intention should exist from the beginning and that it can develop at the last minute before commission of the offence. In the present case, there is sufficient material on record to indicate that there existed common intention on the part of the Applicant. Application for bail is, therefore, rejected.

• COMMERCIAL

HIGH COURT OF BOMBAY

Lawyers Collective, a Society Registered under the Societies Registration Act and under the Bombay Public Trusts Act Vs. Bar Council of India, Established under the Provisions of the Advocates Act, 1961 and Ors (Decided on 16.12.2009) MANU/MH/1467/2009

Commercial - Carrying out non- litigious work in India by Foreign Law Firms - Permission sought to open liason offices in India to carry out non-litigious matters - Permission granted by Reserve Bank of India - Section 29 of Foreign Exchange Regulation Act, 1973 - Whether foreign law firms could carry on practise in non litigious matters in India by obtaining permission from R.B.I. under Section 29 of the 1973 Act?

Held, Section 29 of the 1973 Act provides that without the permission of RBI, no person resident outside India or a person who is not a citizen of India but is resident in India or a Company which is not incorporated in India shall establish in India a branch office or other place of business, for carrying any activity of a trading, commercial or industrial nature. Foreign law firms engaged in practising the profession of law in the foreign countries cannot be said to be engaged in industrial, commercial and trading activities. The liaison activities of respondent Nos. 12 to 14 in India being activities relating to the profession of law, no permission could be granted to the foreign law firms under Section 29 of the 1973 Act. Therefore, RBI was not justified in granting permission to the foreign law firms to open liaison offices in India under Section 29 of the 1973 Act.