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Dear User,
We are once again with you with our Newsletter for March 2001. As usual we have incorporated latest judgements, circulars etc received by us in the month of february in this newsletter. Mr. Yashwant Sinha has presented Union Budget on Wednesday 28-2-20001. We have given summary of important provisions of Union Budget 2001 in this Newsletter. You can visit our portal and read the analysis of the BUDGET at our portal. If you have any query on the budget you can email the same. For the purpose of queries on the Budget our email ID is budget@laws4india.com.
We have covered many subjects in this newsletter, apart from budget. You may select only those subjects in which you are interested by clicking against the relevant subjects given below : -
Union Budget 2001
Income Tax Law
Corporate Law
Securities and Exchange Board of India
(SEBI)
Stamp Act
Foreign Exchange (Reserve Bank of India)
Consumer Protection Act
Arbitration and Conciliation Act
Other Laws
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Direct Tax Proposals
Definitions
Tax Exemption
Charitable Trust
Income from Salary
Income from House Property
Income from Business or Profession
Capital Gain
Income from Other Sources
Business Losses and Unabsorbed Depreciation
Deduction under Chapter VI A
Tax Rebates
Transfer Pricing Legislation
Return of Income and Assessment
Miscellaneous Provisions (Income Tax)
Wealth Tax
Service Tax
Excise Duties
Custom Duties
- National Long Distance Operators
- Basic Service Providers
- Cellular Mobile Service Providers
- Radio Paging Service Providers
- Public Mobile Radio Trunking Service Providers
"lottery" includes winnings, from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever, under any scheme or arrangement by whatever name called.
- "card game and other game of any sort" includes any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game.
This explanation has been inserted to clarify that income from television game shows such as Kaun Banega Crorepati will be treated as income and will be subject to income tax.
Infrastructure FacilitiesIndividuals and HUFs could claim deduction u/s 80 L of the Income Tax Act upto Rs.12000 on certain types of interest such as bank interest, interest on government securities, post office interest, etc. An additional deduction of Rs.3000 was allowable in respect of interest on government securities. The budget proposes to reduce this deduction to Rs.9000 per annum.
The budget proposes a ten-year tax holiday for the core sectors of infrastructure namely, roads, highways, rail system, water treatment and supply, irrigation, sanitation and solid waste management systems which may be availed of during the initial twenty years. In the case of airports, ports, inland ports and waterways, industrial parks and generation and distribution of power, a tax holiday of ten years is being proposed to be availed of during the initial fifteen years. The period of commencement of business for power and industrial parks is also being extended up to 31, March 2006.
The budget proposes to extend the five-year tax holiday and 30 % deduction for next five years, retrospectively to the telecommunications sector for units commencing their operations on or before 31, March 2003. These concessions will also be extended to internet service providers and broadband networks.
The budget proposes to provide a tax holiday for five years and 30% deduction of profits for the next five years to the enterprises engaged in the integrated business of handling, transportation and storage of food-grains.
Currently, the tax rebate applicable under section 88 of the ITA is @ 20 % for most assessees in respect of investments made in providend funds, National Savings Certifcates, life insurance premium, etc. Budget 2001 proposes to increase the rebate rate from 20 % to 30 % in respect of those individuals and HUFs whose income is less than Rs.100000 per annum.
The budget proposes to extend the tax incentives allowed u/s 88 of life insurance premium to all insurance companies that have been approved by the Insurance Regulatory and Development Authority.
Important ConceptsThe presence of multinational enterprises in India and their ability to allocate profits in different jurisdictions by controlling prices in intra-group transactions has made the issue of transfer pricing a matter of serious concern. The Finance Minister proposes to substitute section 92 of the ITA with a new section to provide that ‘any income arising from an international transaction shall be computed having regard to the arm’s length price.’ It is being provided that the costs or expenses allocated or apportioned between two or more associated enterprises shall be determined having regard to the arm’s length price of the relevant benefit, service or facility.
Some of the relevant aspects of transfer pricing are :-
If during assessment proceedings, the tax authorities on the basis of material or information or documents in their possession are of the opinion that the transactions are not on the basis of arm’s length price, the total income may be recomputed accordingly after giving the assessee an opportunity of being heard. No deduction under section 10A /10 B or under Chapter VI-A shall be allowed in respect of income by which the total income of the assessee is enhanced.
Penalties
(i) Corporate assesses October 31 of the assessment year (ii) Non-corporate assessees having October 31 of the assessment year ‘Nil’ taxable income and falling
under ‘one-by-six’ criteria(iii) Other assesses July 31 of the assessment year
The budget proposes to remove the discretion presently available in deciding the quantum of penalties under various provisions of the ITA . Henceforth, a fixed amount of penalty will be leviable for most of the defaults.
Surcharge has been abolished on all assessees except for 2 percent which has been recently leived for Gujarat Earthquake Relief Fund
SERVICE TAX NET EXPANDED
The Finance Minister, Shri Yashwant Sinha, announced inclusion of many services to the list of taxable services. Presenting the Union Budget for the year 2001-2002 in Lok Sabha today, Shri Sinha proposed to add specified banking and financial services, authorized service stations for servicing of vehicles including two wheelers, port services, broadcasting services, photographic services, convention services, sound recording services, scientific and technical consulting services, telex services, telegraph services, facsimile services, on-line information & data base retrieval services, video tape production services and services auxiliary to insurance to the list of taxable services.
Specified Banking and Financial Services, Authorized Service Stations for servicing of vehicles including two wheelers, Port Services, Broadcasting Services, Photographic Services, Convention Services, Sound Recording Services, Scientific and Technical Consulting Services, Telex Services, Telegraph Services, Facsimile Services, On-line Information & Data Base Retrieval services, Video Tape Production Services, Services auxiliary to Insurance and service provided to lease circuit line holders being brought under tax net.
Non-Objection u/s 230A
The Petitioner, a chit fund company, registered documents obtained from its prized subscribers and their guarantors charging their immovable properties in favour of petitioner. After receipt of dues in full, discharge receipts were executed and registered. The Petitioner claimed that section 230A was inapplicable to registration of such discharge receipts. It was held that express language used in section 230A is clear and it gives overriding effect to that provision and specifically mandates that certificate provided for therein is an essential pre-requisite for registration of documents falling within scope of section 17(1)(a) to (e) of the Indian Registration Act. Hence section 230A was applicable to discharge receipts executed by the Petitioner - Sree Visalam Chit Funds Limited v/s CIT 114 Taxman 135 (Mad ).
Payment to Non-residents
The assessee applied for no-objection certificate for remitting airfare, boarding, lodging and local expenses of foreign technicians to foreign company. The Tribunal held that assessee was only required to provide basics on which technicians did not derive any benefit and hence no part of expenses could be treated as payment in lieu of fees and as such, assessee was entitled to no-objection certificate. The Tribunal also clearly observed that its decision under section 195(2) should not be treated as a conclusion in determination of income in case of foreign company. It was held that no substantial question of law arose and appeal by revenue deserved to be dismissed – CIT v/s Telco 114 Taxman 141 ( Bom ).
Valuation of Immovable Property
The assessee who was member of family of the Nizam had the right to live in a house constructed by a trust created by the late Nizam for benefit of his heirs, during his lifetime without being required to pay any rent. It was held that right to reside, though it be personal and inalienable, was property under the Act. It was further held that even if rule 1B did not apply for it is applicable only to income yielding life interest, the said life interest must be assessed upon assumption that the assessee’s personal right to reside in property during his lifetime was saleable. It was also held that in absence of a rule which can apply to valuation of a particular asset, that asset must be valued in the ordinary way ( i.e. by determining what it would fetch if it were sold in an assumed market, value being what an assumed willing purchaser would pay for it ). CWT v/s Prince Muffakham Jah Bahadur Chamlijan – 114 Taxman 231 (SC)
Apparent Consideration in purchase of immovable properties u/s 269UA
It was held that for the purpose of discounting of consideration, relevant date is date of agreement and if consideration under agreement is payable on any date or dates falling after the date of agreement, apparent consideration will be amount stated in agreement less discount to be calculated for period between date of agreement and date or dates on which consideration or part thereof is payable - Ramesh Bhai J Patel v/s Union of India – 114 Taxman 236 (SC).
Mercantile System of Accounting
During the assessment year 1975-76, the assessee-company claimed deduction of provision for wages and bonus payable to workers in terms of Beedi and Cigar Workers (Conditions of Employment) Act, 1966 for accounting years relevant to assessment years 1973-74 to 1975-76 on grounds that liability crystallized during the year in question. However, the claim was rejected by the Assessing Officer except to extent of that relating to assessment year 1975-76. It was held that in view of Supreme Court’s decision in Kedarnath Jute Mfg. Co. Ltd. v/s CIT (1971) 82 ITR 363, an assessee, who was following mercantile system of accounting, was entitled to deduction of liability pertaining to assessment year 1975-76 only - CIT v/s Delhi Tambaku Udyog (P) Ltd 114 Taxman 240 ( Del )
Business Expenditure
During assessment year 1974-75, the assessee claimed deduction on account of fee paid for use of designs and drawings supplied by foreign collaborator for a period of five years. The assessee company’s claim for deduction for fee paid for technical know-how was disallowed by Assessing Officer on the grounds that the same was of capital nature since no technical know-how was obtained during relevant previous year and no production was carried out. The assessee’s claim was partially allowed by Tribunal holding that only part of liability accrued to assessee in assessment year in question. It was held on facts that the Tribunal was correct in rejecting assessee’s claim for deduction of dull amount of liability in question. It was further held that the matter was to be remitted back to the Tribunal for the limited purpose of determining period for which benefit of technical know-how was to be availed of. CIT v/s Printpak Machinery Limited – 114 Taxman 243 ( Del ).
Companies ( Profits ) Surtax Act
Loan Redemption Reserve is not a reserve so as to be included in computation of capital for the purposes of the Second Schedule to Companies (Profits) Surtax Act, 1964 with reference to A.Y. 1985-86 – CIT v/s Travancore Titanium Products Limited –114 Taxman 249 (SC)
Charitable or Religious Trust
It was held that intimation required under section 11(2), read with rule 17, has to be furnished before assessing authority completes concerned assessment because such requirement is mandatory. CIT v/s Nagpur Hotel Owner’s Association – 114 Taxman 255 ( SC )
Business Income
The assessee was managing director of a private limited company. He took premature retirement and transferred his shareholding in company. In lieu of that, he was paid compensation of Rs.95,000. The assessing officer held that this was nothing but payment in lieu of salary within meaning of section 17(3)(i). It was held that the Tribunal was right in law in holding that amount received by assessee was to be assessed only under section 28(ii). CIT v/s D.R.Sondhi – 114 Taxman 259 (Del)
Capital Assets – Personal Effects
The assessee’s contention was that silver items of dinner set sold by him were his personal effects and hence were to be excluded from definition of ‘capital asset’ by virtue of section 2 (14) (ii). The alleged capital gain was claimed to be exempt from income tax. It was held that though silver dinner items were not frequently used, that was a totally irrelevant fact and they would nonetheless be personal effects of the assessee. It was further held that there was no justification for the Tribunal to remand the matter to the Assessing Officer to ascertain total number of members of the assessee’s family and identify dependent members of his family. It was further held that there is nothing in provisions of section 2 (14) to assign such restricted meaning to the words ‘personal effects’ used in clause (ii) of section 2 (14). Himatlal C Valia v/s CIT 114 Taxman 269 ( Guj )
Deemed Gift
It was held that when there is dissolution of partnership or a partner retires and obtains in lieu of his interest in firm, an asset of the firm, no transfer is involved but distribution of assets by firm to one of its partners during subsistence of partnership amounts to transfer and if consideration thereof is less than its market value, then there is deemed gift to extent of difference under provisions of section 4(1)(a). B.T.Patil & Sons v/s CGT 114 Taxman 301 (SC).
Income from other sources
It was held that in view of decision of the Supreme Court in Tuticorin Alkali Chemicals and Fertilizers Limited v/s CIT (1997) 227 ITR 172 / 93 Taxman 502, items of income from interest and house property, derived by assessee during formation period of main business, would be taxable as income from other sources. CIT v/s Bongaigaon Refinery & Petrochemical Limited –114 Taxman 311 (Gau)
Assessment u/s 143
Intimation under section 143 (1) (a) does not amount to assessment. Failure to take steps under section 143(3) is not material. At the time of notice of reassessment reasonable, belief that income has escaped is sufficient. In case of belief that allowance for expenditure was excessive, notice of reassessment was valid. Mahanagar Telephone Nigam Limited v/s Chairman, Central Board of Direct Taxes and Another 246 ITR 173 (Del)
Assignment of Trade Marks
Amount received for user of trademark is a revenue receipt. CIT v/s H. Miller’s Co. Limited 246 ITR 316 ( Mad )
Advance Tax
Estimate of income was lower than actual annual income. On finding by the Tribunal that estimate was based on honest belief pursuant to position in law as understood at that time, it was held that the Tribunal was justified in cancelling penalty. No question of law arose. CIT v/s Gujarat Alkalies and Chemicals Limited – 246 ITR 462 ( SC ).
Dissolution of Firm
Assets of firm are owned by partners. Dissolution of firm and subsequent unequal distribution of assets between partners does not lead to transfer of property and consequently there is no gift. Jagatram Ahuja v/s CIT 246 ITR 609 (SC)
Nomination Forms for investors amended to safeguard interest of shareholders, debenture holders and depositors
Vide press release, dated 9-11-2000, issued by the Press Information Bureau, the Department of Company Affairs has issued a notification amending Form 2B of nomination form in the Companies (Central Government’) General Rules and Forms, 1956. The amending notification has been issued under clauses (a) and (b) of sub-section (1) of section 642, read with sub-section (11) of section 58A and section 109A of the Companies Act, 1956. Under the amendment, the nomination can be made only by individuals, applying or holding shares or debentures on their own behalf singly or jointly. Non-individuals including society, trust, body corporate, partnership firm, karta of Hindu undivided family, holder of power of attorney cannot nominate. If the shares are held jointly, all joint holders must sign the nomination form. In the amended form, space has been provided as a specimen, if there are more joint holders, more sheets can be added for signatures of holders of shares or debentures and witness. A minor can be nominated by a holder of shares, debentures or deposits and in that event the name and address of the guardian shall be given by the holder. The nominee cannot be a trust, society, body corporate, partnership firm, karta of Hindu undivided family or a power of attorney holder. A non-resident Indian can be a nominee on repatriable basis. Nomination will stand rescinded upon transfer of share or debenture or repayment or renewal of deposits made. Transfer of share or debenture in favour of a nominee and repayment of amount of deposits to nominee shall be a valid discharge by a company against the legal heir. The intimation regarding nomination or nomination form shall be filed in duplicate with the company or Registrar and share transfer agents of the company who will return one copy thereof to the share or debenture or deposits holder.
Managerial Remuneration not to be paid in excess of limit under Schedule XIII without necessary approval
Vide press release dated 10-11-2000 issued by the Press Information Bureau, the Department of Company Affairs (DCA) has advised the corporate sector in general that from this financial year onward, companies should adhere to the relevant provisions of the Companies Act 1956, in the matter of payment of remuneration to managerial personnel both in letter and spirit. In a circular issued to all Chambers of Commerce, Regional Directors, Registrars of Companies, the Institute of Company Secretaries of India, the Institute of Chartered Accountants of India and the Institute of Cost and Works Accountants of India, the Government has said that if for any justifiable reasons, it is proposed to pay remuneration in excess of Schedule XIII of the Companies Act, it should be timely resolved in a board meeting. The board resolution should clearly justify the increase giving sustainable adequate reasons for payment of remuneration in excess of the amount indicated in the Schedule. The companies have been advised further that the applications for Government approval should also be submitted well in time. No payment of remuneration in excess of the limit under the Schedule XIII should be made till the Government order is received. In this connection, the Department has directed the statutory auditors of companies, to ensure that remuneration to managerial personnel is not paid in excess of the limit under Schedule XIII without necessary approvals. The company secretary has been asked to play a constructive role in ensuring that the matters relating to managerial remuneration are dealt with in the company within the stipulated time frame.
Details of Employees
Vide press release dated 13-11-2000 issued by the Press Information Bureau, every report of the board of directors, which is to be attached to the balance sheet of companies should give details of employees who have been paid remuneration beyond the limits prescribed under the Companies ( Particulars of Employees ) Rules, 1975
Appointment of Official Liquidators
Vide notification no. SO 1145(E) dated 21-12-2000, issued by the Department of Company Affairs, u/s section 448 of the Companies Act, 1956, the Government has appointed Official Liquidators for liquidation of companies in the States of Chhattisgarh, Uttaranchal and Jharkhand. The Official Liquidators at Indore, Allahabad and Patna have been appointed as the Official Liquidators for the states of Chhattisgarh, Uttaranchal and Jharkhand respectively.
Registrar of Companies
Vide notification no. SO 1144(E) dated 21-12-2000 issued by the Department of Company Affairs, u/s section 609 (1) and (2) of the Companies Act, 1956, the Registrar of Companies at Gwalior, Kanpur and Patna shall also be the Registrar of Companies for purposes of registration of companies in the States of Chhattisgarh, Uttaranchal and Jharkhand respectively.
Scheme of Amalgamation
The Petitioner sought approval of amalgamation of petitioner-company and transferee-company u/s 394. The scheme was conditional to injection of large amount of loan money and external commercial borrowings to petitioner-company by transferee-company. It was held that the court has basically supervisory jurisdiction in such cases but if it is found that the scheme in question is not fair or what is projected is not true, the court can refuse permission. Exedy Ceekay Limited 29 SCL 203 (P&H)
Securities and Exchange Board of India (SEBI)
Renewal of recognition to Vadodara Stock ExchangeVide Notification No. SO 1174 (E) dated 29-12-2000 issued by SEBI, SEBI has granted renewal of recognition of Vadodara Stock Exchange.
Venture Fund Regulations
SEBI has amended the SEBI (Venture Capital Funds) Regulations, 1996 to provide for the following :-
"Associate Company" means a company in which a director or trustee or sponsor or settler of the venture capital fund or asset management company holds either individually or collectively, equity shares in excess of 15% of the paid-up equity share capital of venture capital undertaking".
"13. No venture capital fund shall be entitled to get its units listed on any recognized stock exchange till the expiry of three years from the date of the issuance of units by the venture capital fund".
Takeover Code
SEBI has amended the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 vide notification No. SO 1178(E) dated 30-12-2000. In regulation 3, in sub-regulation (1) after clause (i) the following new clause (ia) shall be inserted, namely:
"(ia) Transfer of shares from venture capital firms or foreign venture capital investors registered with the Board to promoters of a venture capital undertaking or venture capital undertaking pursuant to an agreement between such venture capital fund or foreign venture capital investors with such promoters or venture capital undertaking"
Use of Digital signatures on Contract Notes
SEBI has clarified that brokers are allowed to issue contract notes authenticated by means of digital signatures provided that the broker has obtained digital signature certificate from Certifying Authorities under the Information Technology Act, 2000. Mode of confirmation by the client may be specified in the agreement between brokers and clients. – SMDRP / Policy / Cir 56 / 2000 dated 15 December 2000 issued by Secondary Market Depository, SEBI.
Investments in Indian Venture Capital Undertakings by Registered Foreign Venture Capital Investors
A.P.(Dir Series) Circular No.24, dated 6-1-2001, issued by the Exchange Control Department, RBI
The RBI has decided to permit registered Foreign Venture Capital Investors to invest in Indian Venture Capital Undertakings / Venture Capital Funds in accordance with the regulations framed. Accordingly, Foreign Exchange Management ( Transfer or Issue of Securities by persons resident outside India ) Regulations, 2000 have been amended vide notification no. FEMA 32 / 2000 RB dated 26 December 2000 to include investment by foreign venture capital investors. Accordingly, the said regulations have been amended as follows :-
1. In Regulation 2,
"(iia)" "Foreign Venture Capital Investor" means an investor incorporated and established outside India which proposes to make investment in Venture Capital Fund(s) or Venture Capital Undertakings(s) in India and is registered with SEBI under SEBI (Foreign Venture Capital Investors) Regulations, 2000"
"(va)" "Indian Venture Capital Undertaking" means a company incorporated in India whose shares are not listed on a recognized stock exchange in India and which is not engaged in an activity under the negative list specified by SEBI."
"(xia)" "Venture Capital Fund" means a fund established in the form of a trust, a company including a body corporate and registered under the Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996 which has a dedicated pool of capital raised in a manner specified under the said Regulations and which invests in Venture Capital Undertaking in accordance with the said Regulations;"
2. In Regulation 5, after sub-regulation (4) the following sub-regulation shall be added, namely :-
"(5) A Foreign Venture Capital Investor registered with SEBI may make investment in a Venture Capital Fund or an Indian Venture Capital Undertaking, in the manner and subject to the terms and conditions specified in Schedule 6."
3. In the Principal Regulations, after Schedule 5, the following Schedule 6 shall be added, containing the following details :-
Vide notification no. SO 8(E) dated 4-1-2001, issued by the Department of Revenue, in exercise of the powers conferred by clause (a) of sub-section (1) of section 9 of the Indian Stamp Act, 1899, the Central Government has remitted the stamp duty on Indian Millennium Deposits (IMD) issued by State Bank of India, Central Office, Mumbai.
Foreign Exchange (Reserve Bank of India)
Guidelines for Indian Direct Investment in Joint Ventures and wholly owned subsidiaries abroadNotification no. (F.No. 1/2/94-I.C.(Vol.IV) dated 1-1-2001, issued by the Department of Economic Affairs
The guidelines for Indian direct investment in joint ventures and subsidiaries abroad issued by the Ministry of Finance have been liberalized from time to time. In pursuance of the announcement made by the Finance Minister in his Budget Speech 2000-01 the policy on overseas direct investment was further liberalized and the ceiling under the automatic route for overseas investments was raised from US$ 15mn to US$ 50mn for Indian companies. A special dispensation was provided in the guidelines for neighbouring countries where higher ceilings were applicable for overseas investments. In order to continue the special dispensation for Indian direct investments in neighbouring countries, the Guidelines for Indian direct investments in joint ventures and subsidiaries abroad shall be amended as under with effect from 31st July, 2000 in supersession of the department’s notification of even number dated 31st July, 2000.
Paragraphs 5.1 and 5.9 shall be substituted as under :-
"5.1 A private / public limited company will be eligible for direct investment in a joint venture / wholly owned subsidiary abroad on an automatic basis, without prior reference to RBI up to a total value of investment not exceeding:-
- US$ 50mn (not applicable to Indian investments in neighbouring countries, namely Bangladesh, Maldives, Myanmar, Sri Lanka, Pakistan, Nepal and Bhutan)
- in respect of Indian investment in neighbouring countries, total value of investment not exceeding US$ 75mn and
- in respect of rupee investment in Nepal and Bhutan, the total value of investment not exceeding Rs.350 crores, provided"
Guidelines for approval of foreign / technical collaboration under the automatic route with previous ventures / tie-ups in India
Press note no. 1 ( 2001 series ) ; dated 2 January 2001 ; issued by the Department of Industrial Policy and Promotion.
As per press note 18 of 1998, automatic route is not open for those foreign investors who have / had a previous financial / technical / trade mark collaboration in existing domestic company engaged in the same or allied activity. All such proposals are considered by FIPB on merits. It has now been decide that the provisions of press note 18 will not apply to investments made by international institutions such as Asian Development Bank, International Finance Corporation, Commonwealth Development Corporation, Deutsche Entwicklungs Gescelschaft (DEG), etc in Indian companies. Such institutions may invest in Indian companies through the automatic route, subject to SEBI / RBI regulations and sector specific caps on FDI.
Foreign Exchange Regulation Appellate Board
U/s 8 read with section 63 of the Foreign Exchange Regulation Act, 1973, there are certain restrictions on dealing in foreign exchange. Penalty of Rs.2000 was imposed on appellant on account of his not offering for sale of left-over foreign exchange of US $670 on return from abroad which foreign exchange was seized by department. It was held that there was violation and penalty imposed was justified. Subires Chakraborty v/s Assistant Director, Enforcement Directorate
Deficiency in Issuing DebenturesThe appellant opted to convert her convertible debentures into non-convertible debentures and sent her Option Form by registered post on 4-2-1993. The respondent-company, however, issued equity shares on the ground that option letter was not received by 10-2-93, the stipulated due date. It was held that, in view of the admission by the respondent regarding receipt of the appellant’s letter, onus was on the respondent to show that said letter had not reached in time and since no material evidence was produced by respondents in this regard, it had to be presumed that option letter had reached in time, i.e. within 3-4 days in the ordinary course. It was therefore held that the respondent was deficient in not complying with the option exercised by appellant and hence liable to compensate for loss sustained by the appellant. Santosh Kumari v/s Chairman, Ispat Alloys Limited 29 SCL 148 (Delhi State Consumer Disputes Commission).
Public Deposits
The appellant finance-company failed to repay, on maturity, amount deposited by the respondent with interest. The appellant contended that respondent was not consumer within the meaning of section 2 (1) (d). It was held that in view of the decision of the apex court in case of Lucknow Development Authority v/s M.K.Gupta ( 1994 ) 1 SCC 243 and that of National Commission in the case of Neela Vasant Raje v/s Amogh Industries ( 1986 – 1995 ) Com 446 (NS), respondent was decidedly a consumer with the meaning of section 2 (1)(d)
Arbitration and Conciliation Act
Appointment of ArbitratorThe District Judge appointed a former Additional Chief Engineer of PWD as arbitrator as against suggestion of the appellant to appoint a former Executive Engineer as arbitrator; but the appellant could not point out any serious objection against the continuation of arbitrator appointed by the court nor was it able to point out whether it was agreeable to the appointment of retired High Court judge as arbitrator. It was held that, in the circumstance of the case, lower court order appointing arbitrator did not warrant any interference. National Heavy Engineering Co-operative Limited v/s King Builders 29 SCL 228 (SC).
Other Laws State Financial Corporation ActThe respondent-corporation sold in auction, assets of certain companies which had defaulted in repayment of loans advanced by it as well as petitioner-bank and another corporation. It was held that the said unit having been sold for a low price, without complying with guidelines laid down by the apex court in Maheshchandra’s case, the said sale had to be set aside. Punjab National bank v/s Orissa State Financial Corporation 29 SCL 231 ( Orissa )
Sales Tax
It has been held that crushing dolomite lumps into chips and powder is not a process of manufacture. No new commercial commodity is produced. Refer Madhya Pradesh General Sales Tax Act, 1958, SS 2(j), ( r ) (ii) - Notification no. 3326-1381 / V-ST dated October 11, 1977 - Central Sales Tax Act, 1956. Divisional Deputy Commissioner of Sales Tax and Another v/s Bherhaghat Mineral Industries – 246 ITR 230 (SC).
National Savings Certificates - Government Savings Certificates Act, 1959
Upon death of holder, nominee is entitled to receive sum under National savings Certificate (NSC) without proof of title. However, the nominee retains such sum for the benefit of persons entitled under law of succession. Vishin N Khanchandani and Another v/s. Vidya Lachmandas Khanchandani and Another 246 ITR 306 (SC).
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