Mere non framing of charge under Section 149 IPC will not vitiate conviction in absence of any prejudice to accused: SC - The Daily Guardian
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Mere non framing of charge under Section 149 IPC will not vitiate conviction in absence of any prejudice to accused: SC

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In a significant development, we saw how just recently on April 1, 2022, the Apex Court in a recent, remarkable, robust and rational judgment titled State of Uttar Pradesh vs Subhash @ Pappu in Criminal Appeal No. 436 of 2022 cited in 2022 LiveLaw (SC) 336 observed that non-framing of a charge under Section 149 of the Indian Penal Code would not vitiate the conviction in the absence of any prejudice caused to the accused. The Apex Court also made it clear that mere defect in language, or in narration or in the form of charge would not render conviction unsustainable, provided the accused is not prejudiced thereby. It also held that if ingredients of the section are obvious or implicit in the charge framed then conviction in regard thereto can be sustained, irrespective of the fact that said section has not been mentioned. [Referred to Annareddy Sambasiva Reddy Vs. State of Andhra Pradesh, (2009) 12 SCC 546] (Para 7).

To start with, this brief, brilliant and balanced judgment authored by Justice MR Shah for a Bench of Apex Court comprising of himself and Justice BV Nagarathna first and foremost puts forth in para 1 that, “Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court of Judicature at Allahabad in Criminal Appeal No. 1462 of 1985 by which the High Court has allowed the said appeal preferred by the respondent – original accused and has acquitted the respondent for the offences under Section 302 and 148 of Indian Penal Code (IPC), the State of Uttar Pradesh has preferred the present appeal.”

To put things in perspective, the Bench then while elaborating on the facts of the case stipulates in para 2 that, “The facts leading to the present appeal in nutshell are as under:-

.1 One Hari Singh (PW-5) lodged the F.I.R. on 04.12.1980 at 05.15 PM at P.S. Firozabad (South) District, Agra, against the respondent herein – Subhash @ Pappu, Pramod, Munna Lal and three unknown boys. It was alleged in the F.I.R. that on 04.12.1980 at 2:00 PM, Subhash @ Pappu, Pramod and Munna Lal along with three unknown persons came to the shop of one Hari Om situated in Gallamandi Firozabad, armed with sticks, hockey stick and knife. They demanded to provide them sugar and kerosene oil without having any ration card but Bangali (the deceased) present at the shop in the capacity of a servant, refused to provide them those articles, then one of the persons gave him a knife blow and some other a hockey stick blow. Therefore, it was alleged that the named accused persons and other three unknown persons have committed the offence under Sections 147, 148, 323, 324 IPC. Bengali, the victim made his dying declaration on 05.12.1980 at 11:40 AM before Additional City Magistrate Agra at S.N. Hospital Agra, where the victim Bengali was taking treatment. That the injured Bengali died on 04.01.1981.

2.2 After the conclusion of the investigation, the Investigating Officer filed the charge sheet against all the accused persons on 25.01.1981 for the aforesaid offences. However, Subhash @ Pappu and other coaccused named in the F.I.R. were shown absconding. The accused Subhash @ Pappu thereafter surrendered before the Court on 06.02.1981. As the case was exclusively triable by the Court of Sessions, the case was committed to the court of IVth Additional Sessions Judge, Agra, which was numbered as Sessions Case No. 361 of 1982. All the accused came to be tried by the Sessions Court for the aforesaid offences. Accused Subhash @ Pappu was charged for the offences under Section 148 and Section 302 of IPC. The other coaccused Pramod and Munna Lal were charges for the offences under Sections 147, 149 and 302 IPC. As all the accused denied having committed any offence and denied the charges, they were put to trial. To bring home the charges, the prosecution examined in all 10 witnesses as under:-

NameDeposition

PW-1 Dr. Vijay Kumar Who conducted the medical examination of the deceased Bengali

PW-2 Head Constable, Shri Gajendra Who had written the First Information Report as stated by Hari Singh, PW-5

PW-3 Shri V.N. Saxena Technician, S.N Hospital, Agra

PW-4 Shri Ram Ratan Ojha Pharmacist, N.N.M. Hospital, Firozabad

PW-5 Hari Singh Informant

PW-6 Munna Lal

PW-7 Shri Bhopat Singh

PW-8 Dr. Surendra Kumar Agrawal Doctor, who certified Bengali was in his senses and fit at the time of recording of the dying declaration

PW-9 Shri Yudhishthir Sharma Additional Divisional Transport Officer, who recorded the dying declaration

PW-10 Police Constable, Daya Ram

2.3 PW-5, the informant turned hostile. Thereafter the statement of the accused under Section 313 of Code of Criminal Procedure (Cr.P.C.) was recorded. In the statement under Section 313 Cr.P.C., it was the case on behalf of the accused that in the dying declaration, the name of Pappu s/o Baijnath is mentioned and he is Subhash @ Pappu. However, it was not his case that in the village, there is one other person named Pappu s/o Baijnath. It is not in dispute that Subhash @ Pappu is son of Baijnath. Relying upon the dying declaration, the Trial Court convicted the accused Subhash @ Pappu for the offences punishable under Section 302 and 148 IPC. The Trial Court, however, acquitted the accused Pramod and Munna Lal. The Trial Court awarded the sentence of life imprisonment for the offence punishable under Section 302 IPC and three years R.I. for the offence under Section 148 IPC so far as accused Subhash @ Pappu is concerned.

2.4 Feeling aggrieved and dissatisfied with the judgment and order of conviction and sentence convicting the accused Subhash @ Pappu, the accused Subhash @ Pappu preferred the Criminal Appeal before the High Court. By the impugned judgment and order, the High Court has acquitted the accused Subhash @ Pappu for the offence punishable under Section 302 IPC as well as Section 148 IPC mainly on the ground that in the dying declaration it was not stated, who inflicted the knife blow in the stomach of the deceased and on the contrary, it was stated that Pappu s/o Baijnath hit him by a hockey stick. Therefore, the High Court opined that as there is no allegation against Subhash @ Pappu that he inflicted the knife blow in the stomach of the deceased and that there are contradictions in the deposition of the witnesses examined on who gave the knife blow in the stomach of the deceased, the high Court has acquitted the accused.

2.5 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court, the State has preferred the present appeal.”

Truth be told, the Bench after hearing the learned counsel for the respective parties at length as stated in para 5 then envisages in para 6 that, “At the outset, it is required to be noted that as per the dying declaration recorded by Assistant Divisional Transport Officer on 05.12.1980, six/seven persons attacked the deceased. Even in the F.I.R., lodged by Hari Singh (PW-5), it was specifically mentioned that six persons attacked his brother Bengali, who assaulted him with hockey stick and knife. It is true that Hari Singh (PW-5) – informant turned hostile. However, at the same time, we see no reason to doubt the dying declaration recorded by Assistant Divisional Transport Officer on 05.12.1980. The submission on behalf of the accused relying upon the decision of this Court in the case of Laxman (supra) that the day on which the dying declaration was recorded, there was no extreme emergency and/or his condition was not so serious or there was any danger to his life and therefore there was no reason and/or cause to record the dying declaration and therefore the dying declaration is not believable, has no substance. In the case of Laxman (supra), which has been relied upon by learned counsel appearing on behalf of the accused there is no absolute proposition of law laid down by this Court that, in a case when at the time when the dying declaration was recorded, there was no emergency and/or any danger to the life, the dying declaration should be discarded as a whole. In the present case, as the deceased was having a stab injury by a knife, there was a possibility of danger to his life and therefore, by way of prudence, if the dying declaration was recorded on 05.12.1980, there is no reason to doubt the dying declaration, which was recorded by Assistant Divisional Transport Officer. Therefore, in our view the Trial Court has rightly relied upon and/or believed the dying declaration recorded by Assistant Divisional Transport Officer on 05.12.1980.

6.1 From the dying declaration it emerges that six to seven persons attacked the deceased including Pappu s/o Baijnath. Thus, from the dying declaration, prosecution has been successful in establishing and proving that Subhash @ Pappu s/o Baijnath was present at the time of the incident; he was part of the unlawful assembly and that he participated in the commission of offence.”

Briefly stated, the Bench then enunciates in para 7 that, “It is true that while framing the charge, the respondent accused was not specifically charged for the offence under Section 302 r/w Section 149 IPC. However, it is to be noted that while framing the charge, the Trial Court specifically observed that accused did commit murder by knowingly and intentionally causing death of Bengali and thereby committed the offence punishable under Section 302 IPC (vide charge framed on 06.10.1983). It also appears from the record that the respondent – accused was also charged for the offence under Section 148 IPC, vide charge framed on dated 04.05.1983, in which it has been mentioned that the accused and others were members of an unlawful assembly and in carrying out the common object of that assembly i.e. to murder Bengali, committed the offence of rioting with a deadly weapon, namely, knife to stab Bengali and thereby committed an offence punishable under Section 148 IPC.”

Be it noted, the Bench then holds in para 7.1 that, “From the aforesaid charges framed it can safely be said that the ingredients for the offence under Section 302 r/w Section 149 and Section 148 of IPC were specifically brought to the notice of the accused. Therefore, at the most, it can be said to be a defective framing of the charge by not specifically charging under Section 149 IPC. Therefore, Section 464 Cr.P.C. is attracted to the instant case. Section 464 Cr.P.C. reads as under: –

“464. Effect of omission to frame, or absence of, or error in, charge.– (1) No finding, sentence or order by a Court of competent jurisdiction shall be deemed invalid merely on the ground that no charge was framed or on the ground of any error, omission or irregularity in the charge including any misjoinder of charges, unless, in the opinion of the Court of appeal, confirmation or revision, a failure of justice has in fact been occasioned thereby.

(2) If the Court of appeal, confirmation or revision is of opinion that a failure of justice has in fact been occasioned, it may-

(a) in the case of an omission to frame a charge, order that a charge be framed and that the trial be recommended from the point immediately after the framing of the charge;

(b) in the case of an error, omission or irregularity in the charge, direct a new trial to be had upon a charge framed in whatever manner it thinks fit:

Provided that if the Court is of opinion that the facts of the case are such that no valid charge could be preferred against the accused in respect of the facts proved, it shall quash the conviction.”

Adding more to it, the Bench then observes in para 7.2 that, “While interpreting Section 464 of Cr.P.C., this Court in the case of Fainul Khan (supra) has observed and held that in case of omission or error in framing a charge, the accused has to show failure of justice/prejudice caused thereby.”

Most significantly, the Bench then minces no words to hold in para 7.3 that, “In the case of Annareddy Sambasiva Reddy (supra), it was submitted on behalf of the accused that in the absence of a specific charge under Section 149, accused persons cannot be convicted under Section 302 r/w Section 149 as Section 149 creates a distinct and separate offence. This Court negated the said submission and observed and held that mere non-framing of a charge under Section 149 on face of charges framed against appellant would not vitiate the conviction in the absence of any prejudice caused to them. Considering Section 464 Cr.P.C. it is observed and held that mere defect in language, or in narration or in the form of charge would not render conviction unsustainable, provided the accused is not prejudiced thereby. It is further observed that if ingredients of the section are obvious or implicit in the charge framed then conviction in regard thereto can be sustained, irrespective of the fact that said section has not been mentioned.”

As a corollary, the Bench then holds in para 8 that, “Applying the law laid down by this Court in the aforesaid decisions to the facts of the case on hand and on noting the contents of the charges framed against the accused on 04.05.1983 and on 06.10.1983 it shows that the ingredients of Section 149 IPC are satisfied. Therefore, it cannot be said that the accused is prejudiced by non-mention of Section 149 IPC in the charge.”

Notably, the Bench then maintained in para 9 that, “Now, so far as the submission on behalf of the accused that as the weapon – hockey stick alleged to have been used by the accused is not recovered and therefore he may not be convicted is concerned, the aforesaid has no substance. Merely because the weapon used is not recovered cannot be a ground not to rely upon the dying declaration, which was recorded before the Executive Magistrate, which has been proved by the prosecution.”

It is worth noting that the Bench then points out in para 10 that, “Now, the question whether the accused can be convicted for the offence punishable under Section 302 with the aid of Section 149 IPC is concerned, it is true that the prosecution has not established and proved, who actually inflicted the knife blow. However, from the medical evidence on record and even from the deposition of the doctors, it has been established and proved by the prosecution that the deceased sustained an injury by knife blow, which is inflicted by one of the six to seven persons, who participated in commission of the offence. From the dying declaration it has been established and proved that the respondent – accused Subhash @ Pappu was part of the unlawful assembly, who participated in the commission of the offence. Pappu s/o Baijnath – respondent herein was specifically named by the deceased in the dying declaration. Therefore, even if the role attributed to the respondent -accused was that of hitting the deceased by a hockey stick, in that case also for the act of other persons, who were part of the unlawful assembly of inflicting the knife blow, the respondent accused can be held guilty of having committed the murder of deceased Bengali, with the aid of Section 149 IPC.”

Simply stated, the Bench then observes in para 11 that, “Now, the next question, which is posed for consideration of this Court is whether respondent -accused can be convicted for the offence punishable under Section 302 IPC r/w Section 149 IPC when the deceased died due to septicemia after a period of thirty days.

11.1 Considering the decision of this Court in the case of Sanjay (supra), the conviction of the respondent accused for the offence punishable under Section 302 r/w Section 149 IPC is not warranted and the case may fall within Section 304 Part I of the IPC.”

While upholding conviction by Trial Court, the Bench then holds in para 12 that, “Now, so far as the conviction of the respondent accused for the offence under Section 148 IPC is concerned, it is the case on behalf of the respondent accused that in the facts and circumstance of the case, Section 148 shall not be attracted as the number of accused chargesheeted/charged/tried were less than five in number, the same has no substance. It to be noted that right from very beginning and even so stated in the dying declaration six to seven persons attacked the deceased. Therefore, involvement of six to seven persons in commission of the offence has been established and proved. Merely because three persons were chargesheeted/charged/tried and even out of three tried, two persons came to be acquitted cannot be a ground to not to convict the respondent accused under Section 148 IPC.

12.1 It is the submission on behalf of the accused that the weapon alleged to have been used by the respondent accused was said to be a hockey stick, which cannot be said to be a deadly weapon and therefore, the respondent – accused cannot be punishable for the offence under Section 148 also has no substance. As per Section 148 of IPC, whoever is guilty of rioting, being armed with a deadly weapon or with anything which used as a weapon of offence, is likely to cause death, can be punished under that Section. The term “rioting” is defined under Section 146 IPC. As per Section 146, whenever force or violence is used by an unlawful assembly, or by any member thereof, in prosecution of the common object of such assembly, every member of such assembly is guilty of the offence of rioting. In the present case, six to seven persons were part of the unlawful assembly and they used force or violence and one of them used a deadly weapon, namely, knife and therefore, being a part of the unlawful assembly, the respondent accused can be held to be guilty for the offence of rioting and for the use of force/violence as a member of such an unlawful assembly. Therefore, the respondent was rightly convicted by the Trial Court for the offence under Section 148 IPC.”

Finally, the Bench then concludes by holding in para 13 that, “In view of the above and for the reasons stated above, present appeal succeeds in part. The impugned judgment and order passed by the High Court acquitting the accused for the offence punishable under Section 302 IPC is hereby quashed and set aside. The respondent accused is held guilty for the offence under Section 304 Part I r/w Section 149 IPC and for the offence under Section 148 IPC. The respondent accused is sentenced to undergo ten years R.I. for the offence punishable under Section 304 Part I r/w Section 149 IPC with a fine of Rs. 5,000/- and in default to undergo further six months R.I. The respondent accused is also sentenced to undergo three years R.I. for the offence under Section 148 IPC with fine of Rs. 5,000/- and in default to undergo further two months R.I. Both the sentences to run concurrently. The respondent to surrender within a period of four weeks to undergo the remaining part of the sentence as per the present judgment and order. Present appeal is allowed accordingly to the aforesaid extent only. However, in the facts and circumstances of the case, there shall be no order as to costs. Pending application, if any, also stands disposed of.”

All said and done, the Apex Court Bench has made it crystal clear in this notable judgment that mere non-framing of charge under Section 149 IPC will not vitiate conviction in absence of any prejudice to the accused. It certainly merits no reiteration that all the courts must definitely follow the key points what have been laid down by the Apex Court Bench comprising of Justice MR Shah and Justice BV Nagarathna so very clearly in this leading case. No denying it!

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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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