The Supreme Court has declared that an application for settlement of an income tax case cannot be revised and the settlement commission has to go by the original application and annexure filed in the prescribed form. Revision of annexure tantamount to revision of application and cannot be allowed under the scheme of settlement in Chapter XIX-A of the Income Tax Act, the judgment in Ajmera Housing Corporation vs Commissioner of Income Tax clarified. The chapter was introduced in 1975 whereby a tax evader could make a “full and true disclosure” of his income to the commission and arrive at a compromise. In this case, the Supreme Court upheld the order of the Bombay high court which had remitted the dispute to the commissioner. “The manner in which the disclosures of additional income at different stages of proceedings were entertained by the commission, rubbishing the objection of the commissioner that the assessee had not made a full and true disclosure in the application, leaves much to be desired,” the Supreme Court said.
Court cannot order payment of interest against the contract
If an arbitration agreement says that no interest would be payable for an award amount from the date when the cause of action arose and the date of the award, the court cannot order a party to pay interest, the Supreme Court clarified in the case, Sree Kamatchi Amman Constructions vs Divisional Railway Manager. In this case, the contract stated that no interest would be payable on amounts payable to the contractor.
Based on this clause, the arbitral tribunal refused to order interest from the date of the cause of action to the date of the award. This was upheld by the Madras high court. The Supreme Court dismissed the appeal of the contractor.
Demand for electricity bill arrears cannot be raised again
The demand for electricity bill arrears cannot be raised once again against the buyer of an industrial unit which had cleared the dues, the Supreme Court ruled in the appeal case, Haryana State Electricity Board vs Hanuman Rice Mills. Hanuman mills had bought the Durga Rice Mills and had cleared the electricity bills due to the board. After three years, the board demanded some more arrears due to it. The courts below rejected this demand. The board appealed to the Supreme Court unsuccessfully. It said that the liability of an old industrial consumer to pay charges for consumption of electricity cannot be fastened on a subsequent auction purchaser of the property unless there was a specific provision for it.
Voltage stabilisers are electronic goods
The Supreme Court has held that voltage stabilisers are electronic items which attracted lesser sales tax. Dismissing a batch of appeals from Uttar Pradesh, Commissioner of Trade Tax vs Parikh Gramodyog Sansthan, the court ruled that stabilisers are not electric goods. A voltage stabiliser might have many components some of which use electricity. That cannot be the sole reason for classifying it as an electrical item, the judgment said.
Injunction against ex-director of firm
The Bombay high court last week passed an injunction against a former whole-time director of Bombay Dyeing and Manufacturing Ltd preventing him from divulging confidential information he obtained from the company to its competitors. Mehar Karan Singh, who has since left the company, was stated to have divulged confidential information to a competitor, Dawnay Day India Land by forwarding on e-mail a manual of a customised software for real estate business of Bombay Dyeing obtained by it by payment of consideration from the software producer Oracle. Singh was also shown to have taken up, and later left, the post of executive director on the board of various companies of Dawnay Day group.
Software is a good
The Madras high court last week dismissed the writ petition of Infotech Software Dealers’ Association raising the question whether a software would amount to goods and if so, when it is supplied to a customer pursuant to the End User Licence Agreement (EULA), the transaction is liable to be treated as sale or service. It also raised the constitutional validity of the new provision in the Finance Act 2009, Section 65(105)(zzzze), arguing that it was the state government which had the power to impose duty. Dismissing the challenge, the division bench of the high court stated that software is goods and whether the transaction would amount to sale or service would depend upon the individual transaction. The new provision cannot be held to be unconstitutional so long as Parliament has the legislative competency to enact law in respect of tax on service in exercise of powers under Entry 97 of List I, the judgment said.