Supreme Court
Non-Compete Fee Can Be Deducted As Revenue Expenditure Under Section 37(1) Income Tax Act: Supreme Court
The Supreme Court has held that payment of non-compete fee does not result in acquisition of a capital asset or alteration of the profit-making structure of the business, and is allowable as revenue expenditure under Section 37(1) of the Income Tax Act, 1961.“Thus non-compete fee only seeks to protect or enhance the profitability of the business, thereby facilitating the carrying on of the business more efficiently and profitably. Such payment neither results in creation of any new asset nor...
S. 37 Arbitration | Arbitral Awards Not Liable To Set Aside On Mere Error In Law Or Misappreciation Of Evidence : Supreme Court
The Supreme Court on Thursday (December 18) overturned the Chhattisgarh High Court's judgment, holding that the High Court had exceeded its jurisdiction under Section 37 of the Arbitration and Conciliation Act, 1996 by effectively acting as an appellate court, re-appreciating the evidence, and substituting its own interpretation in place of the arbitral award. “High Court, in exercise of limited jurisdiction under Section 37, impermissibly re-appreciated facts and substituted its own...
Issues About Party's Capacity To Invoke Arbitration And Maintainability Issues Fall Within Tribunal's Domain : Supreme Court
The Supreme Court on Wednesday (December 17) reiterated that the questions related to whether an individual is a veritable party to an arbitration agreement, eligible to invoke the arbitration clause, shall be referred for the Arbitral Tribunal's consideration. A Bench comprising Justice P.S. Narasimha and Justice Atul S. Chandurkar declined to interfere with the Telangana High Court's decision referring the dispute to arbitration and rejected the appellant's objection that Respondent No. 1 was...
Income Tax | Foreign Companies' Head Office Expenses For Indian Business Subject To Deduction Limit Under S. 44C : Supreme Court
In a set-back to foreign companies doing business operations in India, the Supreme Court on Monday (December 15) held that all head office expenditure incurred by them outside India, whether common or exclusively for their Indian business operations, must be subjected to the statutory ceiling prescribed under Section 44C of the Income Tax Act, 1961, thereby ruling out any claim for full deduction.A Bench comprising Justice JB Pardiwala and Justice KV Viswanathan allowed the Revenue's appeal and...
Supreme Court Rejects CA's Plea Against Mutual Funds 'Sahi Hai' Ads
The Supreme Court today dismissed a challenge to Bombay High Court's dismissal of a PIL against endorsement of mutual funds through advertisements like 'Mutual Funds Sahi Hai' and 'Mutual Funds mein SIP sahi hai'.A bench of Justices Vikram Nath and Sandeep Mehta passed the order, after hearing petitioner-Chandrakant C Shah in-person.The petitioner argued that the High Court found an element of public interest at first and issued notice in the matter, but subsequently, it "hastily" dismissed the...
NCLT Can Order Forfeiture Of Entire Deposit If Purchaser Of Liquidation Assets Defaults In Payments : Supreme Court
The Supreme Court held that if a purchaser defaults on payment for assets acquired in liquidation under a judicially supervised sale, the entire amount already deposited may be forfeited. It further clarified that Section 74 of the Indian Contract Act, 1872 cannot be invoked to seek a refund, as no contract exists between the purchaser and the liquidator, the sale being conducted under the authority and supervision of the Adjudicating Authority. “the appellant had no justifiable claim to seek...
Income Tax | Statutory Corporation Can Claim Deduction Under S 36(1)(viii) Only For Income Directly Derived From Long-Term Finance : Supreme Court
The Supreme Court on Wednesday (December 10) held that any income earned by a statutory corporation outside its core activity of providing long-term finance for industrial, agricultural, or infrastructure development in India cannot qualify for the 40% deduction available under Section 36(1)(viii) of the Income Tax Act, 1961 (“Act”). A bench of Justice P.S. Narasimha and Justice Atul S. Chandurkar dismissed National Cooperation Development Corporation's appeal, reiterating that only profits...
S. 29A Arbitration Act | Arbitrator's Mandate Terminates On Expiry Of Time; Substituted Arbitrator Must Resume After Extension : Supreme Court
The Supreme Court on Wednesday (December 10) held that once the statutory 18-month period for delivering an arbitral award expires, the arbitrator's mandate automatically comes to an end as per Section 29A(4) of the Arbitration and Conciliation Act, 1996, when no application for extension is made. Therefore, when an extension of time is granted by the Court after the mandate of the arbitrator is terminated, then the substitution of the arbitrator is mandatory under Section 29A(6) of the...
Supreme Court Flags Failure Of New Arbitration Bill In Providing Statutory Appeal Against Arbitral Tribunals' Termination Orders
The Supreme Court criticised the new Arbitration and Conciliation Bill for failing to address the ambiguity regarding the relief against an arbitral tribunal terminating the proceedings, noting that the new Bill made no effort to remedy this gap in the law."It is indeed very sad to note that even after these many years, procedural issues such as the one involved in the case at hand, have continued to plague the arbitration regime of India. The Department of Legal Affairs has now, once again...
Non-Signatory Which Isn't A Veritable Party Cannot Invoke Arbitration Clause : Supreme Court
The Supreme Court on Tuesday (December 9) held that a non-signatory to an arbitration agreement cannot invoke the arbitration clause against a party with whom it shares no legal relationship and where there is no indication of any intention to bind the non-signatory to the main contract. A bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan heard the matter, where the Respondent, admittedly a non-signatory to the primary contract between HPCL and AGC Networks Ltd., sought to invoke the...
If Arbitral Tribunal Terminates Proceedings For Not Paying Fees, Remedy Is To Seek Recall & Then Invoke S.14(2) : Supreme Court
The Supreme Court has held that an arbitral tribunal is legally empowered to terminate proceedings under Section 38(2) of the Arbitration and Conciliation Act, 1996 when a party fails to pay its share of the arbitrator's fees.Once such a termination occurs, the remedy available to the party is to seek the recall of the order before the Tribunal itself. If the recall application is dismissed, then the party has to approach the Court under Section 14(2).A bench of Justice JB Pardiwala and Justice...