The Supreme Court has ruled that Khoday Distilleries Ltd was not liable to pay gift tax on the allotment of rights issue to its shareholders following a board resolution. The decision of the Karnataka High Court to the contrary was set aside on the appeal of the company. The allotment, said the Supreme Court, meant creation of shares and did not amount to transfer.
The judgment also remarked that the tax department has “messed up the entire case”, and had no clear focus on the invocation of income tax, gift tax, wealth tax. “There is utter confusion and its contention is conflicting,” the court observed. For instance, it had not kept the vital difference between ‘allotment’ and ‘renunciation’. The liability to pay gift tax would be on the shareholder (donor) who exercises the option to renounce and not on the company. Still the department has not invoked the gift tax law on the renouncers despite the clarification from the appellate body.
Insurer liable to pay interest in worker’s injury case
An insurance company would be liable to pay interest on the amount insured if there was no contract to the contrary in the context of the Workmen’s Compensation Act. The Supreme Court thus set aside the ruling of the Madhya Pradesh High Court in the case, Kamla Chaturvedi vs National Insurance Company. The high court had ruled that the insurance company was not liable to pay interest on the award of Rs 2.21 lakh made by the labour court under the Act. On appeal, the Supreme Court held the high court wrong. The accident occurred due to a motor vehicle and therefore the provisions of the Motor Vehicles Act would apply and the policy did not contain any exception to the rule that the insurer must pay interest also.
Tax relief for film producers
The Supreme Court has set aside the ruling of the Madras High Court which had denied income tax benefits in terms of Section 32AB, Section 80HH and Section 80I of the Income Tax Act to cine film manufacturers. In this case, India Cine Agencies vs Commissioner of Income Tax, the court dealt with the process of conversion of jumbo rolls of photographic films into small rolls of desired sizes. The cine traders argued that they were entitled to the benefits as they were manufacturing or producing a new product. The high court had denied the benefits and therefore the traders appealed to the Supreme Court. It reversed the high court ruling.
Nagarjuna case: SC asks Andhra Pradesh HC to reconsider decision
The Supreme Court has asked the Andhra Pradesh High Court to reconsider its decision in the appeals led by Nagarjuna Construction Co Ltd as the companies were not given the documents which were relevant to the cases. The company was awarded contracts by Bharat Heavy Electricals Ltd (Bhel) for executing its work with NTPC like levelling and grading. The earth and gravel for this purpose had to be excavated from quarry lease holders. Demand notices were issued by the Director of Mines and Geology to Bhel and the contractors for the fee with penalty five times that.
When the demand was challenged in the high court, it passed an order against the company. It appealed to the Supreme Court arguing that certain vital documents like the mining reports and inspection notes were not given to it before deciding the case. Therefore, the Supreme Court asked the high court to hear the case again after the company was given the documents by the state government.
AS Anand to arbitrate in Visa-Continental dispute
Former Chief Justice of India AS Anand has been appointed as sole arbitrator in the dispute between Visa International and Continental Resources. The two companies had executed a MoU in 2005 agreeing to incorporate a company in the name of “VISA Aluminum Ltd” for setting up an integrated Aluminum complex in Gandhamardan area with the help of Orissa Mining Corporation. Dispute arose between the two parties and Visa International moved the Supreme Court for appointment of an arbitrator.
Schools fees cannot be taxed by a panchayat: SC
The Supreme Court has ruled that the fees collected from students by a school could not be taxed by the panchayat. In this case, Vivekanand School vs President of Zila Panchayat, the school was imposed tax under the Uttarakhand panchayat law on student fees. The high court upheld the tax holding that the school was a commercial body. On appeal, the Supreme Court set aside the high court decision and asked the authorities to reassess the income of the school.
