A five-judge Constitution bench of the Supreme Court last week ruled that the settlement commission under the Income Tax Act cannot reopen concluded proceedings under Section 154 (‘rectification of mistakes’) so as to levy interest on default in payment of advance tax. Assessment in law is different from assessment by way of settlement. “Every order of settlement passed under Section 245D(4) shall be final as to the matters contained therein and the same shall not be re-opened except in case of fraud and misrepresentation,” the bench headed by Chief Justice S H Kapadia stated in a unanimous decision. The Constitution bench was answering three questions referred to it by other benches in a large number of cases, the leading case being Brij Lal vs Commissioner of Income Tax. The court further held that the terminal point for the levy of interest under Section 234B would be up to the date of the order allowing the application of the assessee to proceed. The date of the order of disposal of the application is not the relevant point for computing interest.
Beneficiary cannot have say in compensation hearing
A corporation for whose benefit premises are requisitioned by the government or to whom the requisitioned premises are transferred does not have any standing in the proceedings for fixing compensation or in the matter of appointment of an arbitrator or reference of case to the arbitrator or nomination of an assessor, the Supreme Court ruled last week in the case, West Bengal State Warehousing Corporation vs Indrapuri Studio Ltd. The government took over the property of the studio for giving it to the state corporation. The land owner challenged the compensation, and the dispute was referred to an arbitrator who gave an award. The state corpora-tion challenged it before the division bench of the Calcutta high court. It rejected its petition. On appeal the Supreme Court upheld the high court view and stated that the corporation could neither submit opinion as to the fair amount of compensation nor the arbitrator is obliged to give notice and opportunity of hearing to it.
Calculating value of plant for sales tax exemption
While calculating the value of plant and machinery for purposes of sales tax exemption, only the cost price/purchase price of the equipment invested by the assessee will have to be taken into account, the Supreme Court clarified last week in its judgment in the case, Bhai Jaspal vs Asst Commissioner. The small scale unit manufacturing fruit products sought exemption under the West Bengal Sales Tax Act arguing that thought its initial investment in plant and machinery was above the exemption limit, but due to depreciation, the ‘investment’ has come down to make it eligible to claim the benefit. The Calcutta high court rejected the claim and stated that expression ‘investment’ in machinery was not subject to the impact of depreciation. Since the assessee’s investment was more than the prescribed limit, it was not entitled to the exemption, the Supreme Court ruled, affirming the high court view.
Trademark infringement claim dismissed
The Delhi high court last week dismissed a petition moved by Kamadhenu Ispat Ltd alleging infringement of its trademark by another firm, Kamadhenu Picles & Spices Ltd. The court stated that the firms were making different products and the consumer would not be confused by the name, Kamadhenu. One was producing steel products while the other was making food items. “If a trader or manufacturer uses words that acquire some distinctiveness, he is undoubtedly entitled to protection, at least in respect of similar marks, in respect of the goods he deals in.” The steel firm’s reputation in its mark may at best be said to contain an association with steel and allied goods, even in somewhat related fields such as cement. However, there is nothing suggestive that such association extends to pickles and such like packaged products manufactured and sold by the other firm. This aspect is crucial as they are not selling competing goods. The court stated that there was no linkage between the products so as to cause detriment or undue advantage to the parties.
HC dismisses petitions of polluters
The Madras high court has dismissed a large number of petitions, led by the Southern India Chamber of Commerce and Industries, challenging the Tamil Nadu government order affecting the functioning of leather, dyeing and other industries which allegedly polluted the water sources in the state. The state government order in 1989 imposed restrictions on locations of industries within one kilometre from the embankment of rivers, streams, dams etc. In 1998, another order was issued extending the prohibition. It stated that there shall not be any industry of the red category within 5 km of certain rivers mentioned in the notification. The industries challenged the power of the government to ban the operation while they were treating their effluents and not polluting water. However, the high court rejected their petitions, citing the Supreme Court order on this question. “When the Supreme Court had directed the government to implement the 1989 order in letter and spirit, it cannot be argued that the said government order was illegal and that the state government had no power to pass the order. The dictum of the Supreme Court is the law of the land,” the high court emphasised.