The Supreme Court last week ruled that ‘Skyline’ is not a specific word on which a company can make a trade mark claim, as it has become a ‘generic’ name. In India 117 companies including software firms are using the word as part of their name. In the US there are 10 educational institutions with the same name as the first word. In the UK also there are two such institutions. Therefore, one company could not stake claim to the word in the name of trademark. The court made this ruling while dismissing the appeal case, Skyline Education Institute (India) Ltd vs S L Vaswani. It affirmed the judgement of the Delhi high court in this case, with minor modifications regarding admission of students to one institution. Both were educational institutions operating around the capital and they were litigating over the word ‘Skyline’.
Advance against depreciation is not reserve, rules SC
The Supreme Court held last week that advance against depreciation (AAD) is ‘income received in advance’ subject to adjustment in future for Income Tax purposes and not ‘reserve’. Allowing the appeal in the case of National Hydroelectric Power Corporation vs Commissioner of Income Tax, the Supreme Court explained that AAD is a ‘timing difference’ and it is not carried through profit and loss account. Therefore, Section 115JB, clause (b) of the Act is not applicable. The court further stated that since the amount of AAD is reduced from the sale of electricity, there is no debit in the profit and loss account. The amount did not enter the stream of income for determination of net profit at all.
Trading loss, not capital loss
The Delhi High Court last week dismissed the appeal of the Commissioner of Income Tax against the ruling of the Income Tax Appellate Tribunal in the case against SMC Credit Ltd. The company claimed loss as trading loss on account of transactions in sales. The revenue authorities held that shares in respect of which the loss was claimed in that particular year were in the nature of investment and so the loss incurred would be capital loss and not business/trading loss. The dispute was decided in favour of the company by the tribunal against which the commissioner moved the Supreme Court.
Winding-up petition dismissed
The Delhi high court last week dismissed the petition of the British company, European Metal Recycling Ltd, for winding up of a Delhi company for non-payment of ‘debt’. The foreign company sent goods to the Indian counterpart, but the latter neither took delivery of it nor did it make payments for it. Therefore, the foreign company sold the goods to another party and then moved the company court for winding up of the Delhi firm under the Companies Act. The Delhi firm did not appear in the case. However, the high court rejected the demand stating that the amount claimed by the British company might be disputed and therefore did not amount to ‘debt’ as interpreted by Indian courts. Therefore the winding up petition was not maintainable.
State governments not bound by all international treaties
The Bombay High Court last week dismissed the writ petition of a wine importer who challenged six notifications issued by the Maharashtra government as violative of international treaties signed by India, like World Trade Agreement. It was also argued in the petition, Karan Dileep vs State of Maharashtra, that the notifications were against Article 253 of the Constitution (enforcement of international treaties). Under one notification, wine produced from domestically grown grapes was offered favoured treatment in comparison with imported wines sold in Maharashtra. Another notification imposed additional levies on foreign liquor. Rejecting the contentions, the high court held that the stipulations of the said treaties duly ratified by the Union government did not automatically gain the force of law. When the treaty restricts the rights of citizens or others or modifies the law of India, it is necessary for Parliament to make a law for that purpose. In this case, Parliament has not made any law under Article 253. Therefore, the provisions in the treaties were not binding on the state government, and the notifications will prevail over international treaties, the high court stated.
Coercively collecting Customs duty not justified
The Bombay High Court has ruled in GKN Sinter Metals Ltd vs Commissioner of Customs, Pune, that the authorities were not justified in coercively collecting the customs duty demand with interest on the ground that the company had not produced the export obligation discharge certificates (EODC for short) when the application for EODC was pending before DGFT. This question is raised repeatedly before the court and therefore, the court made a clarification in this case. The company stated that the action against it was high-handed. Agreeing with it, the high court ordered the return of the amount forcefully collected. It further issued show cause notice to R Sekar, Commissioner of Customs, Pune, for collecting the amount and retaining it.
