If the assessing officer under the Wealth Tax Act is of the opinion that the value of a property shown by the owner under self-assessment is absurd or has no correlation to the fair market value or otherwise not practical, he has the discretion to invoke Rule 8 of Schedule III and proceed with other methods of evaluation of the assets. However, the discretion must be judicially exercised and it must be reasonable, based on subjective satisfaction; "the power must be shown to be objectively exercised and is open to judicial scrutiny." The Supreme Court stated so while dismissing an appeal titled, Amrit Vanaspati vs Commissioner of Wealth Tax, against the judgment of the Allahabad High Court. The court rejected the arguments of the company because there was wide variation between the market value and valuation done for municipal taxes.
The value of the building was grossly understated as evidenced in the sale agreement, the judgment noted.
Arbitration even without clause
The Supreme Court last week approved of the appointment of an arbitrator in the dispute between Kaikara Construction Company and the Kerala government, though earlier the high court had rejected the request of the company to appoint an arbitrator under the Arbitration and Conciliation Act. There was a term in the contract that "arbitration shall not be a means of settlement of dispute or claims or anything on account of the contract." Instead, there was a provision for appointing a 'dispute review expert'. When disputes arose over payment and completion of road construction, the company sought appointment of the expert, but it got no response. So it moved the high court for arbitration. The high court dismissed it on the ground that there was no arbitration clause in the agreement. In the appeal, the Supreme Court noted that in the bidding document, a standard arbitration clause was included. After the court reserved its judgment, the parties agreed to arbitration. Therefore, the high court order was quashed and a retired high court judge was appointed the sole arbitrator.
Compensation for accidental death
The Supreme Court last week laid down that for purposes of compensation a person continued to be in employment even if he takes a break for some reason. In this case, Manju Sarkar vs Mabish Miah, a young driver was taking grains from Agartala to Dharmanagar. During night he left the truck, entrusting it to the helper, telling him that he would return. However, the driver met with a fatal accident. His wife and minor daughter approached the commissioner under the Workmen's Compensation Act. He dismissed their application. They moved the Guwahati High Court, which also dismissed the appeal. However, the Supreme Court awarded Rs 5 lakh with 9 per cent interest. It rejected the argument of the truck owner that the driver died while he had left the vehicle for his own personal errand. The court stated that the employment can be deemed to have extended till his assignment was over. The insurance company, which had to pay, argued that it was obliged to pay only the award amount but not the interest on it. The court rejected the contention.
Director's college fees not deductible
The Bombay High Court last week ruled that the expenditure on remuneration and training of a working director is not allowable under the Income Tax Act unless it directly benefits the business. The high court thus dismissed two appeal cases, Shreenath Motors Ltd vs Commissioner of Income Tax, moved against the decision of the Income Tax Appellate Tribunal. The company had paid fees for an advanced course in management to SP Jain Institute of Management and Research on behalf of one of the directors, who was himself the son of another director.
Salary was also paid to him who was a 26-year-old commerce graduate. In the returns, the company deducted these expenses, which was not approved by the tax authorities. They maintained that the boy with little business experience was taken on the board only to finance his education with company funds. No other director or employee had that benefit. Moreover, he could not be a director and student at the same time. The company argued that the expense was incurred legitimately for the efficient management and conduct of its business and for further expansion. Therefore, the expenditure had a direct nexus with its business and therefore allowable as a deduction under section 37. The Supreme Court rejected these contentions and upheld the view of the appellate tribunal.
Legal scrap over whisky name
The Delhi High Court last week passed a permanent injunction against the use of the trade mark, "Collector's Choice" for Indian Made Foreign Liqour as it could be confused with the popular whisky brand "Officer's Choice".
The injunction was passed on a petition by Allied Blenders and Distillers, makers of Officer's Choice, against Shree Nath Heritage Liquor Ltd, which manufactured Collector's Choice. The court stated that the names were likely to confuse or fool the consumers. Collector and officer are high officers for an ordinary person. Even the mother of Rajendra Prasad blessed him and wished he would one day become a 'Collector' when she was told that he was raised as the first President of India. The judgment recalled this legend to point out the possibility of confusion in the market.
Shampoo that wiped out girl's hair
The National Consumer Commission last week dismissed the appeal of Procter & Gamble Home Products Ltd against the award of compensation to a girl who lost her hair after using a shampoo manufactured by the cosmetics company. It also indicted the company for dragging the girl up to the apex commission for five years instead of paying Rs 25,000 in compensation. The shampoo could not undergo lab test as during the five years, it had crossed the expiry date. The damage to the hair was total and it "certainly caused cosmetic embarrassment to the complainant who is a girl." The judgment further stated that the company had failed to prove why there was such extensive damage to the hair and the product was of good quality.
