Encroachment on public land cannot be retained citing right to shelter: Gujarat High Court - The Daily Guardian
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Encroachment on public land cannot be retained citing right to shelter: Gujarat High Court

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While dismissing a PIL that was seeking to restrain the Railway authority from evicting slum dwellers until rehabilitation, the Gujarat High Court in an extremely commendable, courageous, cogent, composed and convincing judgment titled Bandhkaam Mazdoor Sanghathan vs State of Gujarat in R/Writ Petition (PIL) No. 59 of 2021 delivered on February 1, 2022 has minced just no words in holding that the right to shelter is not a ground to continue encroachment on a public land. Those who encroach on public land must pay heed to what the Gujarat High Court has held in this leading case. This will be in their own best interest if they do so.

To start with, this learned, laudable, landmark and latest judgment authored by Justice Ashutosh J Shastri for a Bench of Gujarat High Court comprising of himself and Chief Justice Aravind Kumar lays bare in para 2 that, “Petitioner claims to be a Trade Union registered under the provisions of Indian Trade Unions Act, works for the protection of human rights, legal rights and socio-economic welfare of the workers engaged in the construction industry, brick manufacturing process etc. It has been asserted that by way of this petition, the petitioner – Union is espousing the cause of slum dwellers in question, who are mostly poor workers and are residing at J.P. Ni Chali slum for about three decades. The place at which the workers are stated to have been residing is at Jayantilal Pranlal ni Chali (for short J.P. Ni Chali) at Sabarmati area, near Railway Bridge in Ahmedabad. It has been asserted that this petition is filed for rehabilitation of more than 318 poor landless, shelter-less slum dwellers in the aforementioned Chali, popularly known as J.P. Ni Chali at Sabarmati who are not being provided any alternative accommodation as per various State Government Policies.

2.1. It has been further stated in the petition that in the year 1991, Slums/Chali of J.P. Ni Chali set up at Sabarmati area near Ahmedabad came in existence by intra-State migrants from different districts of State of Gujarat. Upto year 2021, said Chali is comprising of 68-70 houses having population of more than 350 slum dwellers who are mainly daily rated employees or earning on daily basis. Since these slum dwellers are in possession they are entitled to have the benefit of the policy floated by the State of Gujarat known as ‘Rehabilitation and Re-development of the Slums 2010’ and detailed policy has been formulated in the name of ‘Gujarat Slum Rehabilitation Policy 2013. One Mukhya Mantri GRUH (Gujarat Rural Urban Housing ) Yojna as well as Mukhya Mantri GRUH Regulations’ for aforesaid rehabilitation Policy of 2010 has been formulated and Gujarat Slum Rehabilitation Policy – PPP – 2013 shall apply to the Slums on lands or plots or part of the lands or plots irrespective of the ownership.

2.2. According to the petitioner, a Resolution also came to be passed by the respondent – State Government on 18.07.2013 and the list of beneficiaries was to be prepared by the implementing agency on the basis of any two of the four identity proofs namely, electricity bill, voter identity card, slum survey card or ration card. According to the petitioner, no such list was prepared by the respondent authorities for rehabilitating these persons who are residents of J.P. Ni Chali.

2.3. The petitioner has asserted that on 15.03.2021, demolition took place in J.P. Ni Chali at Sabarmati near Railway Bridge in Ahmedabad. For 30 years or more, some 318 persons of different classes have been living in the huts with their respective families. It is further the case of the petitioner itself that first illegal demolition took place in the year 2018 for the purpose of setting up Ahmedabad-Mumbai Bullet Train and slum dwellers were removed from the area and those who were inside the railway wall/coat towards where the bullet train work was to begin. These slum dwellers/Jhuggis were removed and the wall was built up by the authorities. It is further the case of the petitioner that the residents of J.P. Ni Chali informed the petitioner Union that an agency of National High Speed Rail Corporation Limited i.e. respondent no. 4 herein, then surveyed the slum dwellers and Jhuggis and took necessary documents from the workers. Some photographs were also taken and it was conveyed that the houses would be allotted to them under the Pradhan Mantri Avas Yojna, but no action was finalized and the process rests as it is.

2.4. It is further the case of the petitioner that on 19.03.2021, after two years of waiting period to be rehabilitated, the railway employees verbally instructed the slum dwellers to vacate the huts without giving any proper notice and the slum dwellers in a fearful state of mind apprehended that they would be rendered homeless after verbal notice, wrote a letter to the Ahmedabad office of respondent no. 4 – General Manager on 22.02.2021 informing that when the survey was conducted as stated above, the surveyors at that time stated that rehabilitation measures would be taken under the RFCTLARR Act, 2013, instead, these slum dwellers were asked to vacate their houses verbally by the railway authorities and according to the petitioner when an inquiry was made from National High Speed Rail Corporation Limited, they have denied that they have not undertaken any survey. On 22.02.2021, a common notice was issued by the railway administration informing that if the huts are not removed and railway land is not vacated, latest by 28.02.2021, these occupants/slum dwellers would be removed with the help of JCB machine by the railway administration on 01.03.2021 and in a short time, it was not possible for these slum dwellers to find any shelter and further in the recent past on account of pandemic corona situation, the workers could not find any adequate work nor any shelter, as they could not be move from where they are and as such, petitioner submitted representations before the Ahmedabad Municipal Corporation seeking rehabilitation who informed that the railway authorities have issued written notice to vacate the huts after a lapse of seven days, but no accommodation was given. By taking support of the decision delivered by the Hon’ble Apex Court as mentioned in para 4.13, that homeless families should be considered for a separate policy or separate category in Pradhan Mantri Awas Yojna Scheme (hereinafter referred to as the PMAY Scheme). On 24.02.2021 a further representation in writing was submitted to the Divisional, Railway Management as well as General Manager of National High Rail Speed Corporation Limited. A further communication in turn was forwarded by the Railway administration on 12.03.2021 indicating them that by 14.03.2021 if the huts are not being vacated, same would be removed with the help of JCB Machine by the railway administration. The grievance of the petitioner is that none of the representations submitted by them to the authorities were responded to by the authorities and on 15.03.2021 at 9:30 a.m., all Slums/huts were removed with the help of JCB machine by railway administration and on 17.02.2021, the railway administration according to the petitioner have started digging pits and have commenced construction work and in such a situation for the present, the workers left with no open space between the wires and the wall even after demolition on 15.03.2021 a further representation was submitted on 16.03.2021 to the District Collector, Ahmedabad in person demanding that their homeless families may be given immediate shelter and it was further highlighted that after demolition, the slum dwellers of J.P. Ni Chali are without any temporary or even permanent shelter, food, water and basic human needs and since none of the representations were responded to by any of the authorities, left with no other alternate, the present petition is brought before the Court under the banner of Public Interest Litigation which is numbered as WP(PIL) No. 59 of 2021.”

As we see, the Bench then observes in para 3 that, “From the record it appears that on 07.06.2021, the Court after hearing, called upon the respondents and then various orders have been passed and lastly upon pleadings having been completed, since a request was made by the learned advocates appearing for the respective parties to take up the matter for Final Hearing, in view of the aforesaid circumstances, we have heard the learned advocates appearing for the respective parties at length on 07.12.2021.”

Most significantly, the Bench then briefly states in para 13 that, “Apart from that, we have also perused the decision of the coordinate Bench recently delivered on 20.02.2021 in the case of group of Letters Patent Appeal headed by Letters Patent Appeal No. 661 of 2021, wherein, in terms, on the basis of several decisions delivered by the Hon’ble Apex Court including the High courts, it is held that no person has got right to encroach and erect structures on any public places and mere continuous possession and possessing of documents like voter card, ration card, electricity bill etc., is sufficient to contend that they would not be liable to be evicted since right to shelter is a constitutional right. On the contrary, the encroachers in the case on hand have attempted to retain the land by repeatedly encroaching. As a result of this, no case is made out. Coordinate Bench of this Court in somewhat similar circumstances has held :

“25. Deciding a litigation of the present nature is quite painful. The weaker sections of the society like the writ applicants in the present case, no doubt, have the basic human and constitutional right to shelter and it becomes the paramount duty of the State to fulfill those. However, it gives no person the right to encroach and erect structures or otherwise on footpaths, pavements or public space or at any place reserved or earmarked for a public utility. This is exactly what seems to have happened in the case on hand. It may be true that the writ applicants were residing at the place in question past couple of years, but, still, as a Court of Law, we should not be oblivious of the fact that it was nothing, but encroachment over the government land over a period of time. We are not impressed with the submission canvassed on behalf of the writ applicants that the writ applicants cannot be said to be encroachers as they have a right to shelter being both a fundamental as well as a human right. The debate as regards the rights of encroachers over public land vis a vis the right to shelter should come to an end. This debate should not go on for a indefinite period of time. Mere long possession, over public land by way of encroachment by itself, is not sufficient to say that the encroachers are not liable to be evicted as they have a right to shelter. The right to shelter and encroachment are two different facet. An encroacher may save himself from being forcibly evicted only if during his period of stay over the encroached public land any enforceable legal right has crystallized in his favour. Otherwise, merely by asserting the Right to Shelter , an encroacher, over public land, cannot say that he cannot be evicted. There is no way that an encroacher can enforce the Right to Shelter for the purpose of protecting his unlawful possession. The right to shelter, which the writ applicants are talking about, is an obligation of the State. It is the State which has to discharge its obligation in this regard. The documents like voter card, ration card, electricity bill, etc. do not confer upon encroachers any vested legal right in their favour to hold the possession. Such document, at the most, may evidence of only one thing and that is possession. We may reiterate that the right to shelter does not mean right to retain the government land encroached upon. The right to shelter may be a fundamental right under the Constitution, but, certainly, no person has any right to retain the land encroached upon under the purported right to shelter. It is to be enforced under the provisions of the Constitution.

26. It is also necessary to refer to paragraph 9 of the Apex Court s judgment in the case of Ahmedabad Municipal Corporation vs. Nawabkhan Gulabkhan and others [AIR 1977 SC 152], which reads as under: The Constitution does not put an absolute embargo on the deprivation of life or personal liberty but such a deprivation must be according to the procedure, in the given circumstances, fair and reasonable. … …. … No inflexible rule of hearing and due application of mind can be insisted upon in every or all cases. Each case depends upon its own backdrop. The removal of encroachment needs urgent action. .. Sooner the encroachment is removed when sighted, better would be the facilities or convenience for passing or re passing of the pedestrians on the pavements or foot paths facilitating free flow of regulated traffic on the road or use of public places. On the contrary, the longer the delay, the greater will be the danger of permitting the encroachers claiming semblance of right to obstruct removal of the encroachment. If the encroachment is of a recent origin the need to follow the procedure of principle of natural justice could be obviated in that no one has a right to encroach upon the public property and claim the procedure of opportunity of hearing which would be a tardious and time consuming process leading to putting a premium for high handed and unauthorised acts of encroachment and unlawful squatting. On the other hand, if the Corporation allows settlement of encroachers for a long time for reasons best known to them, and reasons are not far to see, then necessarily a modicum of reasonable notice for removal, say two weeks or 10 days, and personal service on the encroachers or substituted service by fixing notice on the property is necessary. If the encroachment is not removed within the specified time, the competent authority would be at liberty to have it removed. That would meet the fairness of procedure and principle of giving opportunity to remove the encroachment voluntarily by the encroachers. On their resistance, necessarily appropriate and reasonable force can be used to have the encroachment removed. Thus considered, we hold that the action taken by the appellant Corporation is not violative of the principal of natural justice. Before expressing opinion in paragraph 9, the Apex Court pointed out in paragraph 7 as under: 7. It is for the Court to decide in exercise of its constitutional power of judicial review whether the deprivation of life or personal liberty in a give case is by procedure which is reasonable, fair and just or it is otherwise. Footpath, street or pavement are public property which are intended to serve the convenience of general public. They are not laid for private use indeed, their use for a private purpose frustrates the very object for which they carved out from portions of public roads. ……. No one has a right to make use of a public property for the private purpose without the requisite authorisation from the competent authority. It would, therefore, be but the duty of the competent authority to remove encroachments on the pavement or footpath of the public street obstructing free flow of traffic or passing or re passing by the pedestrians. Thus, it is clear that no one has a right to make use of public property for private purposes.””

As a corollary, the Bench then stipulates in para 14 that, “A conjoint reading of the aforesaid circumstances unfolded in the said case and the facts involved in the instant matter, we would have considered the case of the persons represented by the petitioner to ascertain R & R policy would be extended to them or any other policy of the State Government can be extended. Having found from the assertion of the State authorities in its reply affidavit dated 13.09.2021 vide paragraph 4.4 that pursuant to the final declaration vide notification dated 12.10.2020 the land sought to be acquired in Village Acher was reduced from 351 sq.mtrs., only to 22 sq.mtrs., and such persons being represented by the petitioner not residing in such land, we cannot compel the State authorities to apply the scheme. We are of the view that petition is meritless and in the peculiar background of facts, the decisions which are sought to be relied upon by petitioners would not come for their rescue as they are quite distinct and same cannot be applied as a straight-jacket formula to the facts on hand.”

For clarity’s sake, the Bench then clarified in para 15 that, “However, while parting with the present order, we may make it clear that it would be open for the petitioner to avail any other remedy to ventilate their grievance by making specific representations, in which case the State authorities with sympathetic approach consider their claim and find out if it fits in any other policy, and if the answer is in the affirmative, the authorities would be at liberty to pass such orders as they deem fit. We make it clear that we have not expressed any opinion on merits and present petition is being dismissed as devoid of merits.”

Finally, the Bench then holds in para 15 that, “Accordingly, the present petition stands dismissed. Notice stands discharged with no order as to costs.”

In sum, the Gujarat High Court has made it crystal clear that encroachment over public land can’t be retained somehow or anyhow by citing the pretext of right to shelter. Of course, those who indulge in such encroachments must mend their ways now. It goes without saying that they must realize that they can’t hide now behind the pretext of right to shelter any more as has been made absolutely clear by the Gujarat High Court in this leading case also! It merits no reiteration that the earlier they do, the better it shall be in their own long term interests also!

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NCLT BAR ASSOCIATION’S PLEA CHALLENGING 3-YEAR TENURE OF NCLT MEMBERS IN JUNE: A PLEA IN SUPREME COURT

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The Supreme Court in the case National Company Law Tribunal Bar Association Vs Union Of India observed in a petition filed by the NCLT Bar Association challenging the notification of the Ministry of Corporate Affairs fixing the tenure of the members of National Company Law Tribunal as 3 years, while adjourning the hearing.

It was being argued before the court that the discharge of full five years is necessary for Tribunals to functions effectively and efficiently and by the time the members achieve the required knowledge, efficiency and expertise and a term of three years is very short as one term will be over.

On April 5, a notice is being issued on the petition to the Centre by the bench comprising of Justice L Nageswara Rao.

Further it was argued that the Notification is contrary to the judgments passed by the Supreme Court in Madras Bar Association v. Union of India & Anr. (2010) and Madras Bar Association v. Union of India & Anr. (2021) The Court held that the term of members should be 5 years. It was also being observed in the Madras Bar Association Case in which the Supreme Court observed that a longer term was necessary to ensure independence and the Court disapproved the shorter term.

It was being argued by the Association that the said notification is contrary as according to Section 413 of the Companies Act, 2013 which clearly prescribes the term of members for 5 years and even also the early expiration of the tenure will create a void and will add to the pendency of cases before Tribunals.

The Committee is considering all aspects of the matter including the verification report, assessment of suitability etc As on June 20, one of the members is due to retire and it was being submitted by Solicitor General the matter can be considered on June 15.

Solicitor General Tushar Mehta submitted that a meeting was held by the committee On April 20.

The term prescribed by Companies Act, 2013 is 5 years was being submitted before the court by Senior Advocate Tushar Malhotra, Appearing for the Petitioner.

The Bench comprising of Justice DY Chandrachud and the Justice Bela M Trivedi observed deferred the hearing to June 15 as the bench was being told that a committee chaired by the Chief Justice of India and consisting of Justice Surya Kant and the Secretary of the MCA is holding a meeting to deliberate on the term of 23 NCLT members appointed in 2019 by the Solicitor General of India.

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UNDER COMMERCIAL COURTS ACTS, SC ORDERS EXCLUDING PERIOD FROM 15.03.2020 TILL 28.02.2022 AS PRESCRIBED UNDER THE ACT

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The Supreme Court in the case Babasaheb Raosaheb Kobarne vs Pyrotek India Private Limited observed with respect to the limitation prescribed under the Commercial Courts Act, 2015. The Court observed that for the purposes of limitation the period from 15.03.2020 till 28.02.2022 is also applicable.

In an order dated 10.01.2022, The Supreme Court had issued the following directives:

It is directed from 15.03.2020 till 28.02.2022 the period shall extend stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings and the order dated 23rd March, 2020 is restored and in continuation of the subsequent orders dated 8th March 2021, 27th April 2021 and 23rd September 2021.

It shall become available with effect from 1st March 2022 Consequently, the balance period of limitation remaining as on 3rd October 2021, if any

In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply and in cases where the limitation during the period between 15th March 2020 till 28th Feb 2022, would have expired all persons shall have a limitation period of 90 days from 01.03.2022, notwithstanding the actual balance period of limitation remaining.

The Sections which prescribe the outer limits i.e., within which the court or tribunal can condone delay and the period(s) of limitation for instituting proceeding includes Section 12 A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and as prescribed Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996 including the termination of proceedings and any other laws and it is further being clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods, The court observed while referring to the case Centaur Pharmaceuticals Pvt. Ltd. And Anr. v. Stanford Laboratories Pvt. Ltd

Therefore, the bench directed the Trial Court to take on record the written statement filled by the appellant-respondent.

The Commercial Courts Act, 2015 being a Special Law, the said order shall also be applicable with respect to the limitation prescribed under the Commercial Courts Act, 2015 also and the period from 15.03.2020 till 28.02.2022, in the view of this matter and for the purposes of limitation as may be prescribed under any General or SPECIAL LAWS shall have to be excluded as may be prescribed under any General or SPECIAL LAWS with respect to all quasi-judicial or judicial proceedings.

The Bench comprising of Justice MR Shah and the Justice BV Nagarathna observed while allowing the appeal filled by the defendant the purpose of filing the written statement and ought to have permitted to take the written statement on record as the High Court ought to have excluded the aforesaid period.

In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply and in cases where the limitation during the period between 15th March 2020 till 28th Feb 2022, would have expired all persons shall have a limitation period of 90 days from 01.03.2022, notwithstanding the actual balance period of limitation remaining.

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Supreme Court expresses disapproval of judicial officer for not releasing accused despite order granting bail

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The Supreme Court in the case Gopal Verma v State of UP observed the recently deprecated act of a judicial officer on the release of the accused despite Court’s order of directing his release against whom FIR was registered u/s 498A, 304B of IPC and section 3/4 of Dowry Prohibition Act.

Since October, 2020 the appellant has been in custody and the bench had granted bail to the accused after being apprised of the fact that the charge of the accused was as under Sections 304B and 498A, Indian Penal Code, 1860

In December, 2021, the charge sheet was filed and as yet only one witness had been examined whereas the prosecution had cited 64 witnesses, the counsel argued before the Court.

the bench while considering criminal appeal assailing Allahabad High Court’s order of refusing to grant bail to the accused on 17.05.202, the bench granted bail to the appellant on terms and conditions to the satisfaction of the Trial court and upon hearing learned counsel for both the parties.

The bench comprising of Justice SK Kaul and the justice MM Sundresh while observing in their order said:

the appellant was not released and that should have been the matter of concern by the trial court as from December 2021, only one witness has been examined rather than what is sought to be raised ad the bench have no hesitation in adding those provisions to the order but don’t appreciate the conduct of the judicial officer whereby despite the orders of this Court.

on the pretext that while the order mentions the charges under Sections 304B and 498A, IPC it does not mention Sections 3/4 of the Dowry Prohibition Act, The Judicial Officer refused to release the accused.

The bench further added that the bench has no hesitation in adding those provisions to the order but the conduct of the judicial officer won’t be appreciated despite the order of this courts the appellant was not released.

Further the court added that only one witness has been examined by the trial Court from December 2021 and that should have been the matter of concern rather than what is sought to be raised by the trial Court.

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The Unresolved Issue of AMP Expenses in Transfer Pricing – India

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One of the most perplexing yet significant concepts within the Transfer Pricing Dispute Resolution is with regards to the Advertisement, Marking and Promoting (AMP) Expenses that are drawn by the Indian Entities of a company for the products of its foreign Associate Entity. This concept has been surrounded by controversy and confusion since its inception within the practice and study of Transfer Pricing and this is because of the absence of any statutes or regulations dealing with it and its jurisprudence is built purely on the judicial precedents that have been delivered by the Tribunals and High Courts, however, interestingly even the courts appear to have a tough time dealing with issues pertaining to AMP expenses.

The origin of this dispute can be traced back to the United States Tax Court in the case of United States v. DHL Corporation, after the introduction of the US Regulations of 1968 which introduced an important concept pertaining to “Developer Assister Rules” as per which the entity which has incurred the AMP Expenses (Developer) would be treated as the economic owner of the brand which is being marketed even though it might not be its legal owner, and the legal owner of the Brand i.e., the Assister need not pay any compensation for the use of the brand by the developer. These regulations were grounded on the notion of equitable ownership of a brand on the basis of the fiscal expenditure and the risk incurred by them, and the legal ownership of the brand has not to be taken as one of the criteria for ascertaining who would be considered as the developer of the Brand or the intangible property in question.

However, it is pertinent to consider that the Transfer Pricing Rules in America create a clear distinction between “Routine” and “Non-Routine” expenditure, which is essential to understand the issue of the monetary remuneration that is given to the domestic associated entity for marketing intangibles. In DHL, the court framed the Bright Line Test (BLT) which created a distinction between the routine and non-routine expenses that were incurred by the companies. According to the Bright Line Test, it is necessary to ascertain the non-routine expenses that have been incurred i.e., for marketing purposes in contrast to the routine expenses that the incurred by the brand’s distributor for product promotion while ascertaining the economic ownership of the intangible in question.

The issue pertaining to AMP expenses was first dealt with in the case of Maruti Suzuki India Ltd. v. Additional Commissioner of Income Tax [(2010) 328 ITR 210] before the Delhi High Court, where the Bench held that the Advertisement, Marketing and Promoting Expenses will be considered as an international transaction only in cases where it exceeds the costs and expenses that have been incurred by comparable domestic entities which are similarly situated. However, the Delhi High Court’s judgement was remanded following which it was challenged before the Honourable Supreme Court in Maruti Suzuki v. Additional Commissioner of Income Tax [2011] 335 ITR 121 (SC) where it was overturned by the Apex Court.

In LG Electronics India Pvt. Ltd. v Assistant Commissioner of Income Tax [(2013) 140 ITD 41 (Delhi) (SB)], the Delhi Bench of the ITAT referred to the precedent by the Delhi High Court in Maruti Suzuki and held that the as per Chapter X of the Income Tax Act, 1961 the Assessing Officer has the right to make an adjustment for Transfer Pricing vide application of the Bright Line Test in issues pertaining to the AMP expenses that have been drawn by the Indian Entity, since this would fall within the ambit of an international transaction, and this would be deduced from the proportionally higher AMP expenses that were incurred by the Domestic Entity in contrast to two similarly situated domestic entities. The Revenue’s understanding that the AMP expenses which are incurred by the Domestic Associated Entity will inevitably result in a benefit to the Foreign Associated Entity in terms of increasing its brand value along with the lack of lack adequate compensation to the latter for the same, is the primary reason behind its attempt to bring all expenses pertaining to advertising, marketing and promotion within the ambit of the country’s Transfer Pricing Laws, thus it takes the job of applying an Arm’s Length Prince on such transactions which are used for AMP and the test that is most widely employed for this purpose is the Bright Line Test which used by the court in the case of LG Electronics, where it looked at the Bright Line, which is a line drawn within the total expenditure for the purposes of AMP which signified the average spending for the same purpose by comparable entities and any amount which would exceed the line would be considered as an international transaction which would represent the expenses that were drawn by the domestic entity for the building the brand value of the Foreign Associated Entity’s product.

The precedent in Sony Ericsson proved to be a gamechanger wherein the court went to the extent of overruling all of the abovementioned judgements with regards to whether AMP Expenses by the Domestic Entity would be considered as an internal transaction. In this case, the court did not face any issues in determining whether it would constitute an international transaction since the entities had submitted that the international between the Foreign Associated Entity and the Domestic Entity also included the money for the purposes of AMP. While the Revenue had relied on the precedent in LG Electronics to show cause for their application of the Bright Line Test in determining the part of the expenses towards AMP that would be considered as an international transaction. However, the court reject the Revenue’s submissions and reasoning while holding that the Bright Line Test did not have legislative or statutory backing and thus the precedent in LG Electronics was overruled with regards to the use and applicability of the Bright Line Test for ascertaining international transactions since this would be considered as an outcome of judicial legislation.

After the precedent in Sony Ericsson there has been a drastic change in the judicial approach towards issues pertaining to AMP expenses within the realm of transfer pricing. However, since the Court has failed to elaborate upon what would constitute an international transaction in Sony Ericsson, the courts and tribunals have gone back to the phase of drowning in confusion to deal with cases pertaining to AMP expenses and have struggled with determining a proper method for the same.

A transfer pricing adjustment can only be made when it has met the statutory framework of highlighting the existence of an international transaction, determination of the price and fixing an ALP in compliance with Section 92 C of the Income Tax Act. While the element of the international transaction was not disputed in all of the aforementioned cases, the primary issue was with regards what would constitute an international a transaction. The definition of an international transaction as per the Income Tax Act includes the parties to have an agreement between themselves for such a transaction and a shared understanding with regards to the transaction and its purpose. In LG Electronics and other cases prior to Sony Ericson, the primary criteria that were adopted by the courted in ascertaining international transactions and unsaid understanding, were on the basis of proportionally higher expenses with reference to comparable i.e. the courts had adopted the Bright Line Test which had been deemed incompatible with the Income Tax Act of 1961

At a glance at most of the cases pertaining to this issue, the Revenue has resorted to proving the existence of international transactions on the basis of the Bright Line Test, and most of the revenue’s judgements also fail to highlight or prove the same, otherwise except for the unique cases in which the Assessee Domestic Associated Entity and the Foreign Associated Entity had a written agreement between the two of them. This issue is purely because of the lack of any regulatory or statutory provisions within the Income Tax Act, and this was also brought to attention by the court in Maruti Suzuki(2011). In the absence of Statutory provisions and the inability to apply the Bright Line Test because of the precedent in Sony Ericsson, it becomes impossible for the revenue in such cases, especially in the absence of a written or express agreement between the Domestic and Foreign Associated Entities, where it is forced to assess the Domestic Entity’s subjective intentions however this method was also rejected in Maruti Suzuki(2011).

While the decision in Sony Ericsson has left the Revenue and Courts baffled with regards to the method, they should use to ascertain international transactions in matters pertaining to AMP expenses, hopefully, this will finally come to a conclusion since it is currently being heard by the Country’s Apex Court. It is of the utmost importance for the Apex Court to elaborate upon the method and procedure that must be followed by the revenue in determining cases pertaining AMP expenses and issue guidelines for the same.

The origin of this dispute can be traced back to the United States Tax Court in the case of United States v. DHL Corporation, after the introduction of the US Regulations of 1968 which introduced an important concept pertaining to “Developer Assister Rules” as per which the entity which has incurred the AMP Expenses (Developer) would be treated as the economic owner of the brand which is being marketed even though it might not be its legal owner, and the legal owner of the Brand i.e., the Assister need not pay any compensation for the use of the brand by the developer. These regulations were grounded on the notion of equitable ownership of a brand on the basis of the fiscal expenditure and the risk incurred by them, and the legal ownership of the brand has not to be taken as one of the criteria for ascertaining who would be considered as the developer of the Brand or the intangible property in question.

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INSURANCE COMPANY SHOULD NOT SEEK DOCUMENTS WHICH ARE BEYOND THE CONTROL OF INSURED TO FURNISH, SAYS SUPREME COURT WHILE SETTLING CLAIM

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The Supreme Court in the case Gurmel Singh vs Branch Manager, National Insurance Co. Ltd observed that due to circumstances which is beyond the insured control and which the insured is not in a position to produce while settling the claims, the insurance company need not be too technical and ask for documents.

While settling the claim, it is found that the insurance companies are refusing the claim on flimsy grounds and/ or technical grounds further which the insured is not in a position to produce due to circumstances beyond his control, While settling the claims, the insurance company should not be too technical and ask for the document As the insurance company ought not to have become too technical and ought not to have refused to settle the claim on non­ submission of the duplicate certified copy of certificate of registration as due to the circumstances beyond his control, the appellant could not produce on payment of huge sum by way of premium and the Truck was stolen, once there was a valid insurance. As the appellant was asked to produce the documents which are beyond the control of the appellant to produce and furnish those documents.

An amount of Rs. 12 lakhs along with interest @ 7 per cent from the date of submitting the claim, the appellant is entitled to the insurance and to pay the litigation cost of Rs. 25,000 to the appellant, the court held while allowing the appeal.

the insurance company has become too technical while settling the claim and the insurance company has acted arbitrarily, observed by the court in this case.

As when an appellant produced the registration particulars which has been provided by the RTO and further the appellant had produced the photocopy of certificate of registration and was just being solely on the ground that the original certificate of registration i.e., which has been stolen is not produced and the non-settlement of claim can be said to be deficiency in service. Therefore, the Insurance companies are refusing the claim on flimsy grounds and/or technical grounds, the facts and circumstances of the case. Furthermore, the appellant had tried his best to get the duplicate certified copy of certificate of registration of the Truck. the insurance company must have received the copy of the certificate of registration, even at the time of taking the insurance policy and getting the insurance.

the appellant has not produced either the original certificate of registration or even the duplicate certified copy of certificate of registration issued by the RTO, mainly on the ground the insurance company has not been settled in an appeal before the Apex Court. The bench further noted that the photocopy 5 of certificate of registration and other registration particulars as provided by the RTO, was being produced by the appellant.

The bench comprising of Justice MR Shah and the justice BV Nagarathna observed and contended that, in many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds.

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Supreme Court seeks response of Union and states on plea for guidelines to prevent sexual harassment of students in schools

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The Supreme Court in the case Nakkheeran Gopal v UOI & Or’s observed that any kind of harassment including the sexual harassment being carried out at educational institutions The Court while allowing the writ petition issued a notice seeking protection of children.

The plea stated that there is a vicarious liability upon the State Government to implement any law for the well-being and also for the protection of the children in their respective states.

the petition states that to implement any law for the well-being of children and also for the protection of the children in their respective states, it is the responsibility of the State Government and the plea further mentioned that it the vicarious liability of the State Government and It will be considered the lapse on the part of the State Government if there is Any lapse on the part of the educational institution as it remains a crucial department in the State Government With respect to the relevant organization, including Educational Institution, stated in the plea before the court.

The petitioner argued that till date no specific mandate or the law or the guidelines have been issued by the respective States and inspire of alarming rate in the offence against the children especially at school premises.

The petition further states with this regard that children can also themselves be coerced into becoming tools in furtherance of illegal and dangerous activities and under this circumstance the Increased online time can lead to grooming and both online and offline exploitation.

It is essential to ensure the constitutional right to dignity of children provided under Article 21 of the Constitution of India, while protecting children against sexual abuse when they are exposed to predators, which is compromised, stated by the petitioner in the plea.

The petition states that it indicates immediate concerns and measures for intervention are of paramount significance and further the court stated that this calls for the implementation of legislative actions and community-based interventions through virtual media to prevent a further rise in the statistics and to ensure child protection and when the safety of the children is at stake especially at educational institutions which is supposedly to be the safest shelter, and that too during this tough time. As it is necessary to Protecting the basic rights of children and is of utmost concern as otherwise there will be a posting of a substantial threat to the future and this would leave a regressive impression.

It is the fundamental right of the children under Constitution of India to engage and study in an environment when he/ she feels safe from any kind of emotional or physical abuse and is free, further being argued in the petition.

The bench comprising of Justice Indira Banerjee and the Justice CT Ravikumar observed and sought responses of the Union and the States for guidelines for the educational institutions for the protection of the children and also for the enforcement of the fundamental rights of Children at the educational institutions.

It is essential to ensure the constitutional right to dignity of children provided under Article 21 of the Constitution of India, while protecting children against sexual abuse when they are exposed to predators, which is compromised, stated by the petitioner in the plea.

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