The Supreme Court (SC) last week set aside the judgement of the division bench of the Madras high court in a case raising the question of the power of the Income Tax authorities to ‘rectify mistakes’ in assessment under Section 154 of the Income Tax Act.
In this case, Mepco Industries Ltd vs Commissioner of Income Tax, the company received power subsidy from the Puducherry government for two years. The company filed returns on the basis that the subsidy was revenue receipt. Later, it claimed that it was capital receipt and therefore sought revision of the assessment. After that there was a change in the interpretation of the law by the SC. The revenue authorities sought to ‘rectify’ their earlier order.
The company moved the high court, which allowed the authorities to rectify the order. On appeal, the Supreme Court accepted the argument of the company.
It explained that a ‘rectifiable mistake’ is one which is obvious. In this case, it was a change of opinion; therefore Section 154 cannot be invoked by the authorities.
Geo vs IOL Broadband
The SC last week appointed retired Bombay high court justice D R Dhanuka as the sole arbitrator in the dispute between Geo-Group Communications Inc of the US and Indian company IOL Broadband Ltd over ‘share subscription and shareholders’ agreement’. Geo is a telecommunications company. IOL is a local company engaged in delivery of television and video signals over broadband communication. Geo entered into the agreement with Exatt Technologies Ltd. Under the contract, Geo agreed to supply equipment to Exatt in lieu of issue of equity shares. But, disputes arose over the working of the contract. Geo approached the court for appointment of a sole arbitrator in the international contract under Section 11 of the Arbitration and Conciliation Act. The application was allowed. ‘Total disability’ if worker cannot pursue his job
Under the Workmen’s Compensation Act, if an employee is permanently disabled due to an injury at workplace, it would be called ‘total disability’ and the insurance company should compensate according to that criterion. In the case decided by the Supreme Court last week in S Suresh vs Oriental Insurance Co Ltd, a truck driver met with an accident and his right leg had to be amputated.
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He moved the commissioner under the Act for compensation, pleading that he would not be able to work as a driver throughout his life. The commissioner accepted his plea and awarded Rs 5.2 lakh, estimating his earnings from his employer. The insurance company moved the Karnataka high court which reduced the amount by half, holding that his disability was only 50 per cent. The worker appealed to the Supreme Court. It restored the commissioner’s order. The judgment stated that if a worker had been disabled from all work which he was capable of performing at the time of the accident, it would amount to 100 per cent, or total disability. This applies to artisans like carpenters and masons also.
Regularisation of workers
The SC has remanded to the Calcutta high court the claim of a section of contract workers employed in railway and track laying of Calcutta Port Trust for regularisation. When they moved the high court, it asked the ministry of labour to consider their case as they had worked for eight years. After a committee had considered their case, contract labour in that sector was abolished. The port trust challenged the order.
The high court asked the ministry to study their case again. On further appeal by the workers, the SC remitted the matter to the high court observing that the government had already taken its decision and abolished contract labour and therefore there was no need to ask the government to consider the status of the concerned workers again.
Award of cost for delaying trial of suit
When witnesses are harassed by taking repeated adjournments in a suit, what can the court do? It can impose cost on the guilty party for the expenses incurred by the witness, but the court cannot dismiss the suit altogether. Ruling so, the Supreme Court set aside the judgement of the Delhi high court involving the award of cost for deliberately delaying the prosecution of the case between NTPC and a former general manager.
Witness came from Durgapur to Delhi for cross examination, but the case got adjourned repeatedly. The trial court imposed cost on the party harassing the witness. On appeal, the high court dismissed the whole case. On further appeal, the Supreme Court stated that the suit cannot be dismissed; only the cross examination can be dispensed with after payment of the cost.