The Supreme Court last week asked the Karnataka high court to reconsider a question relating to income tax on credit societies in the case, Totgars' Cooperative Sale Society Ltd v Income Tax Officer. The cooperative credit society in this instance had surplus funds which they invested in short-term deposits with banks and in government securities. These societies provided credit facilities to its members and also marketed agricultural produce of its members. The question which arose was whether such interest income would qualify for deduction as business income under Section 80P(2)(a)(i) of the Income Tax Act. According to the high court such interest would fall under the head 'income from other sources' and therefore the assessee was not entitled to the benefit of deduction. Since this question was not discussed and directly answered in the high court judgment, the Supreme Court asked the high court to interpret Sections 56 and 57 of the Income Tax Act and pass a new judgment.
Claim for customs duty exemption rejected
The Supreme Court has dismissed the appeal of M/s Sanghvi Reconditioners Ltd against the ruling of the Bombay high court in which the firm had claimed exemption in customs duty. The company is an importer and ship repair unit registered with the director general of shipping. During an investigation the customs officials found that it had clandestinely availed of benefit of import duty exemption under a 1983 notification on the import of multiple consignments of engineering cargo as 'ship spares'. It was later found that the firm was not eligible for the exemptions in certain transactions. The settlement commissioner found that there was suppression of facts and confirmed the demand of duty. The high court confirmed the finding and denied opportunity to raise further objections. This judgment has been upheld by the Supreme Court.
Nestle wins appeal on Chinese food trade mark
A division bench of the Delhi high court last week allowed the appeal of Nestle India Ltd in a trade mark case against Mood Hospitality Ltd. According to the latter, the marks ·Yo! and ·Yo! China have become distinctive of its company. Therefore, it claimed exclusive right to use the trade marks in its business of establishing and running Chinese food restaurants. It claimed that it has a chain of about 40 such restaurants operating in 15 cities across India. A single judge bench had restrained Nestle from using the trade marks. Its appeal was allowed by the division bench. Setting aside the order of the single judge bench, the division bench said: "There was no material before the judge with regard to the use, by Mood, of the mark ·Yo! It must also be remembered that the dispute here is with the use of the mark ·Yo (with or without the exclamation mark) and, therefore, the comparison has to be made with Mood's registered trade mark ·Yo! and not ·Yo! China which, taken as a whole, cannot be confused with ·Y."
Supply of inquiry report to delinquent staff not essential
The Supreme Court last week ruled that denial of the inquiry report to a bank employee who faces punishment for misconduct by itself would not render the punishment illegal. The delinquent employee has to show, in addition, that the denial had caused prejudice to him and led to miscarriage of justice. The Supreme Court thus set aside the judgment of the Allahabad high court in the case, Sarv UP Gramin Bank vs Manoj Kumar, and approved of the conduct of the bank in imposing 'reduction of pay by six stages'. The employee's argument was that a copy of the inquiry report was not served on him. Since this violated the basic principles, the action against him was illegal. The Supreme Court stated that he could not show that it had caused prejudice to him.
Stay on 'King' trade mark vacated
The Delhi high court last week vacated the stay on the trade mark using the word 'King' which was disputed by JK Oil Industries and Adani Wilmar Ltd. JK Oil was aggrieved because Adani allegedly adopted a trade mark (label) King's Label in relation to its goods and services which are similar to that used by it, namely, Oil King. It was argued that Adani's trade mark was "identical and deceptively similar" to its trade mark (label) in all respects. Moreover, it carried on the same basis, idea and essential features as that of JK Oil. Though the court had earlier granted a stay, it was later vacated as it found that there were other business entities which have used the word King as part of their trade names and obtained registration. King is an ordinary word in English language, and it cannot be claimed as distinctive to JK Oil's products, the court observed. The court also rejected the charge of passing off.