When a company acquires the plant of another, intellectual property such as brand name, copyright and know-how are of capital nature and it can claim deduction or depreciation in income tax, the Supreme Court has ruled. In this case, Mangalore Ganesh Beedi Works vs CIT, the partnership was dissolved and a new company consisting of association of persons was formed to continue the business. The new entity claimed depreciation under of the Income Tax Act towards acquisition of IPR. In the alternative, it claimed depreciation on capitalising the value of IPR by treating them as 'plant'. The tax authorities rejected the claim. After appeals in forums below and the Karnataka high court, the question was raised by the firm in the Supreme Court: Would intellectual property come within the definition of 'plant'? The court answered yes, "for the reason that there can be no doubt that for the purposes of a large business, control over IPR is absolutely necessary." Further, the judgment explained that "the acquisition of such rights and know-how is acquisition of a capital nature. Therefore, it cannot be doubted that so far as the firm is concerned, the trademarks, copyrights and know-how acquired by it would come within the definition of 'plant' being commercially necessary and essential as understood by those dealing with direct taxes." The definition of plant in the Act mentions "vehicles, books, scientific apparatus and surgical equipment purchased for the purposes of the business, profession or vocation." But the definition must be given an expanded meaning including IPR, the court said.
Exporters entitled to twin rebates
An exporter is entitled to rebate in excise duty both on the inputs and on the manufactured product, when excise duty is paid on a manufactured product and also on the inputs. The Supreme Court stated so while allowing several appeals by exporters against the ruling of the Bombay high court and the appellate tribunals in the leading case, Spentex Industries vs CCE. The revenue department had taken the stand that according to the relevant rules, rebate is admissible in respect of one duty alone, i.e., either on the duty paid on excisable goods or duty paid on materials used in the manufacture of such goods but not on both the final as well as intermediate products. The authorities below in all these cases accepted the department's version. Reversing the view, the Supreme Court stated that "the high court has not taken the correct view, which we feel is myopic and ignores the overall scheme pertaining to grant of rebate in respect of goods exported. There are multiple reasons for arriving at this conclusion."
Authorities can cancel tenders
The Supreme Court has quashed the Delhi High Court order and upheld the cancellation of the tender by South Delhi Municipal Corporation for civil works stating that the corporation, "being the custodian of public finance, took its decision objectively with bona fide intention to serve the best interest of the public in general. It has not committed any wrong in cancelling its earlier tender notice and ordering e-tender afresh." Two contractors bid the lowest in the first tender, but it was cancelled for "administrative reasons" and to fetch better price. The high court ruled that the cancellation was illegal and arbitrary. The Supreme Court stated that the corporation has the power to do so and there was no favouritism.
Exchange rate in compensation
Long judicial delay in deciding a compensation claim and working out the amount in Indian rupees have resulted in an American citizen receiving a lower amount for the injuries he received while joining a peace rally from Ahmedabad to Raj Ghat in 1988 (Rajasthan SRTC vs Alexix Sonier). A Rajasthan state bus hit him near Jaipur during the international rally and he was admitted to one hospital in that city, and later shifted to an Ahmedabad hospital and then to US for further treatment there. His mother moved the motor vehicle accident tribunal in Rajasthan claiming Rs 20,236,000. It sent a commissioner to California to examine 11 witnesses. Ultimately, the tribunal awarded Rs 12,515,002. It also awarded US $ 125,348, at the exchange rate of Rs 14 prevailing at that time as 'special damages'. The high court disallowed the special damages. Both the transport corporation and the lady appealed to the Supreme Court. The appeal of the corporation was dismissed, but the appeal of the mother, claiming the current exchange rate for expenses incurred in the US, was rejected as the application was made in rupees. Though the current rate is several times high, the demand was made in rupees; therefore, the prevailing rate was not applicable to this case, the judgment said.
PF for construction workers
The nettlesome problem of provident fund for casual construction workers returned to the Delhi High Court with the Builders Association of India and several construction firms alleging that they should not be compelled to pay their contribution because the workers change places and could not be traced. The court had in the past asked the government to put in place a workable scheme to benefit the labourers who change employers and work place very often. Since this has not been done satisfactorily, the employers should not be compelled to contribute to the fund, they argued. The high court dismissed their petitions stating that the problem of logistics in finding the workers and paying them is different from the liability of the employers. The argument that unless the provident fund authorities and the government could show that they had a "mechanism as per which the workmen whose job was portable could avail the benefit of the money lying to their credit all over India, no liability could be fastened upon the firms has no legs to stand on."
Suzuki cannot move consumer forum
The National Consumer Commission has dismissed the petitions of Suzuki Motorcycles India Ltd and its insurer, Iffco Tokio General Insurance Co against a Gujarat transport firm, Nagana Roadlines, stating that the petitioner companies were not 'consumers' as they were engaged in commercial activities. The Japanese firm shipped consignments to Nhava Sheva port in Mumbai from where the transporter took them to Gurgaon, Haryana. There was an accident on way which damaged some of the goods. Suzuki and its insurer moved the commission seeking damages. The commission pointed out that it could grant relief only to 'consumers' who are not engaged in commercial activities for profit. Therefore, commercial firms are excluded from approaching consumer forums. The only exception in the Consumer Protection Act is a person who bought goods or services "exclusively for earning his livelihood by means of self-employment."
