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S i n g h a n d A s s o c i a t e s

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Manoj K. Singh Founding Partner

ForewordIt gives me immense pleasure to introduce the latest February 2014, edition of our Newsletter “Indian Legal Impetus”. The entire team of Singh and Associates thank its readers for their overwhelming response towards fulfilling our endeavor in making the legal information more accessible to you all.

At the outset we would like to inform our readers to surely visit us at Booth No. 331 and 333 at the International Trademark Associations’ [INTA] 136th Annual meeting to be held in HKCEC in Hong Kong during May 10-14, 2014.

Also, at this juncture it shall be of utmost importance to inform that Patent (Amendment) Rules, 2014 have been notified by the Government of India, vide which Fee structure has been revised for filing of patent application as well as other proceedings before the Patent Office. For details, kindly read our newsbyte section.

Moving forward to the present edition of our newsletter, first of all we have tried to provide the key highlights on the Interim Budget 2014-2015 announced by the Hon’ble Finance Minister on 17th Feb, 2014.

Then covering the most debatable issues on the Tax, we have tried to pen down the latest judicial pronouncements on the issues including whether an Indian subsidiary of a Foreign Company providing back office support would constitute a PE or not; whether the fees for supply of design and engineering drawings is subject to income tax, in case preparation and delivery takes place outside India and whether the salary received by an Assessee for rendering services outside India are taxable in India or not.

The present issue also deals with the various lacunae’s in the Credit Information Companies [Regulation] Act, 2005 and the competence of Indian Copyright law on the concept of ‘Fair Dealing’.

Merger and Acquisition (M&A) has always been a sought for transaction in India. The Present edition of our newsletter would also bring to you the various changes and transformations in the Companies Act 2013 with regards Mergers and Acquisition through our Article “Merger and Acquisition- Transformed Rules of the Game”

Coming up with answering the query as to what happens when a part of trademark is misused? And how the proprietor can take action against the infringer? we would request our readers to must read our article on “Validity of part of Trademarks”.

This edition will then follow articles on “IPAB’s quibble Indian patent office on rejecting Schering’s crystalline form patent of Vorapaxar” and “CONCURENT DELAYS IN CONSTRUCTION WORK”

Then we have our regular section of newsbytes for our readers, which provide a brief overview of some recent developments in the legal world.

We, sincerely hope that our readers find the articles provided herein useful and informative. Any comments, suggestions, opinions or comments from our readers would be highly welcome. Please send us your valuable insights and reviews on [email protected].

Foreword

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Singh & Associates Advocates & Solicitors

“Indian Legal Impetus”Volume VII, Issue II

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Co

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Managing Editor Manoj K. Singh

Published by Singh & Associates

Advocates and Solicitors

EditorMs.Shipra Makkar Devgun

Mr. Ankit Shrivastava

1. Budget HigHligHts 2014-15 4

2. New dimeNsioN to tHe coNcept oF “permaNeNt estaBlisHmeNt” 7

3. tHe credit iNFormatioN compaNies (regulatioNs) act, 2005: ameNdmeNt, Need oF tHe Hour! 10

4. Fees For supplY oF desigN aNd eNgiNeeriNg drawiNgs Not Be suBJected to iNcome taX iN case preparatioN aNd deliVerY taKes place outside iNdia 13

5. "Fair dealiNg” iN copYrigHts : is tHe iNdiaN law competeNt eNougH to meet tHe curreNt cHalleNges? 15

6. merger aNd acquisitioN- traNsFormed rules oF tHe game 17

7. ValiditY oF part oF trademarKs 20

8. salarY receiVed BY aN assessee For reNderiNg serVices outside iNdia are Not taXaBle iN iNdia 22

9. pateNtiNg oF geNeticallY modiFied crops iN iNdia Vis-À-Vis iNterNatioNal decisioNs 25

10. ipaB quiBBle iNdiaN pateNt oFFice oN reJectiNg scHeriNg’s crYstalliNe Form pateNt oF VorapaXar 27

11. coNcurreNt delaYs iN coNstructioN worK 29

12. NewsBYtes 32

CoNTeNTS

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Budget HigHligHts 2014-15Megha Kapoor

Finance Minister Mr. P Chidambaram has announced the Interim Budget 2014 on 17th February, 2014. The key Highlights of the budget are as follows:

eXcise dutY In order to encourage the growth in capital

goods and consumer non-durables, it has been proposed to reduce the excise duty from 12 percent to 10 percent on all goods falling under chapter 84 and chapter 85 of the Schedule to the Central Excise Tariff Act for the period up to 30.6.2014.

Excise duty on small cars, motorcycles and commercial vehicles have been proposed to cut from 12% to 8%; appropriate cut to be done on chassis, trailers.

Excise duty on SUVs has been reduced from 30% to 24%, in large and mid-segment cars from 27-24% to 24-20%

To encourage domestic production of mobile handsets and reduce the dependence on imports, excise duty on mobile handsets will be 6% with CENVAT credit or 1 percent without CENVAT credit.

customs dutY/ cVd With a view to encourage domestic

production of soaps and oleo chemicals, it has been proposed to rationalise the customs duty structure on non-edible grade industrial oils and its fractions, fatty acids and fatty alcohols at 7.5 percent.

In order to encourage the domestic production of specified road construction machinery, it has been proposed to withdraw the exemption from Countervailing Duty (CVD) on similar imported machinery

serVice taX It has been proposed to exempt loading,

unloading, packing, storage and warehousing of rice from the ambit of service tax.

The services provided by cord blood banks being the healthcare services have been proposed to be exempted from the levy of service tax.

FiNaNcial sector It has been proposed to provide 11,200 crore

for capital infusion in public sector banks. An amount of 6,000 crore provided to the

Rural Housing Fund and 2,000 crore to the Urban Housing Fund.

A target of 8,00,000 crore has been set up for 2014-15 towards the agreicultural credit being provided by the banks.

agriculture Foodgrain production in 2012-13 was 255.36

million tonnes and the estimate for the current year is 263 million tonnes.

Agriculture exports in 2012-13 stood at USD 41 billion versus imports of USD 20 billion.

In 2013-14, agriculture exports are likely to cross USD 45 billion. Agricultural credit is likely to touch 735,000 crore, exceeding the target of 700,000 crore.

maNuFacturiNg The National Manufacturing Policy has set the

goal of increasing the share of manufacturing in GDP to 25 percent and to create 100 million jobs over a decade.

Additional capacities are being installed in major manufacturing industries such as steel, cement, refinery, power and electronics.

ecoNomic iNitiatiVes The Foreign Direct Investment (FDI) policy

was liberalized with a view to attract larger investments in telecommunication, pharmaceuticals, civil aviation, power trading exchanges and multi-brand retail.

About 50,000 MW of thermal and hydel power capacity is under construction after receiving all clearances and approvals and 78,000 MW of power capacity has been assured coal supply.

Seven nuclear power reactors are under construction with the aim of achieving an installed capacity of 10,080 MW by the end of the Twelfth Plan


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It is proposed to take up four ultra mega solar power projects each with a capacity of over 500 MW in 2014-15.

social sector iNitiatiVes In order to promote entrepreneurship among

the scheduled castes and to provide them concessional finance, IFCI will set up a Venture Capital Fund for Scheduled Castes. Consequently, it has been proposed to provide an initial capital of 200 crore, which can be supplemented every year.

The restructured Integrated Child Development Services (ICDS) has been implemented in 400 districts and will be rolled out in the remaining districts from 1.4.2014.

National Agro-Forestry Policy 2014 having multiple objectives including employment, productivity, conservation and adaptation has been approved by the Government.

An amount of 444.59 crore towards marketing of minor forest produce has been allocated in the Budget.

To promote community radio stations, a new plan scheme with an allocation of 100 crore has been approved.

Ministry of Health and Family Welfare has delivered new technologies to the people: the JE vaccine, a diagnostic test for Thalassaemia, and a Magnivisualizer for detection of cervical cancer.

In order to ensure the dignity and safety of women, it has been proposed to set up the Nirbhaya Fund and propose 1000 crore for the same. Accordingly, an initial non-lapsable grant of 1000crore has been declared. This will be followed by a further sum of 1000 crore next year.

iNterim Budget oVerView Plan expenditure for the coming fiscal has

been fixed at Rs 555,322 crore, unchanged from current year, and non-Plan expenditure at Rs 12,07,892 crore, marginally higher than 2013-14. The following are the individual estimates:

Budgetary support to Railways has been increased from 26,000 crore in 2013-14 to 29,000 crore in 2014-15.

Non-plan expenditure in 2014-15 is estimated at 12,07,892 crore. Of this, the expenditure on subsidies for food, fertilizer and fuel will be 246,397 crore.

The allocation for defence has been enhanced by 10 percent from `203,672 crore in 2013-14 to 224,000 crore in 2014-15.

The principle of One Rank One Pension for the defence forces has been accepted and will be implemented prospectively from the financial year 2014-15. Further, it has been proposed to transfer a sum of INR 500 crore to the Defence Pension Account in the current financial year.

A modernisation plan at a cost of 11,009 crore has been approved to strengthen the capacity of Central Armed Police Forces and to provide them state-of-the-art equipment and technology.

It has been proposed to infuse capital amounting to 11,200 crore in public sector banks for 2014-15.

Further, a target of 800,000 crore for agricultural credit by banks has been set up for 2014-15

With respect to Education Loans, a moratorium period has been proposed for all education loans taken up to 31.3.2009 and outstanding on 31.12.2013. Government will take over the liability for outstanding interest as on 31.12.2013, but the borrower would have to pay interest for the period after 1.1.2014. Accordingly, a sum of 2,600 crore will be transferred to the Canara Bank, the designated CSIS banker.

Ministry of Minority Affairs: 3,711 crore

Ministry of Tribal Affairs: 4,379 crore

Ministry of Housing & Poverty Alleviation: 6,000 crore

Ministry of Social Justice & Empowerment: 6,730 crore

Ministry of Panchayati Raj: 7,000 crore

Ministry of Drinking Water & Sanitation: 15,260 crore

Ministry of Women & Child Development: 21,000 crore

Ministry of Health & Family Welfare: 33,725 crore

Ministry of Human Resource Development: 67,398 crore

Ministry of Rural Development: 82,202 crore

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Budget estimates The current financial year will end with the

fiscal deficit at 4.6 percent (below the red line of 4.8 percent) and the revenue deficit at 3.3 percent.

The budget for receipts and expenditure in 2014-15 have been so prepared so as to leave a fiscal deficit of 4.1 percent, which will be below the target set by the new fiscal consolidation path. The revenue deficit is estimated at 3.0 percent.


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New dimeNsioN to tHe coNcept oF “permaNeNt estaBlisHmeNt

Smeeksha Bhola

iNtroductioN: One of the most important and widely debated concept of Double Taxation Agreements is that of “Permanent Establishment”[hereinafter referred as PE]. Time and again courts have given interpretations and clarifications on its multi aspects. Recently the Delhi High Court in the case of DIT v. E Funds Corporation and DIT v. E Funds IT Solutions1 has held that Indian Subsidiary of a foreign company providing back office support operations does not constitute a PE in India. The High court has rightly observed that a wholly owned Indian company of a foreign company would not create a permanent establishment for the Assessee, despite of the MAP [Mutual Agreement Procedure] finding to the contrary. There was no authority with the Indian Subsidiary to take any decisions or conclude contracts, etc. on behalf of its Foreign Holding Company and hence such Indian subsidiary cannot be termed as agency PE of its Foreign Holding Company.

Facts oF tHe case:e-fund Corp Corporation, USA and e-Fund IT Solutions Group Inc., USA (hereinafter collectively referred as taxpayers) were residents of USA. The businesses of taxpayers included electronic payments, ATM management service, decision support and risk management and professional services, e-fund India performed certain back-office operations in respect of some these services, which included data entry operations etc. in respect of decision and risk management.

issue:Whether the taxpayers had a permanent establishment in India under Articles 5(1), 5(2)(1) and 5(4) of the India- US DTAA? And Whether any income of e-funds International India Pvt. Ltd. Can be assessed in hands of taxpayers?

oBserVatioNs oF tHe HoN’Ble HigH court2 : 1. The Court observed that business connection

of taxpayers in India with e-fund was established, as e-Funds India was providing information and details to the taxpayers in USA for the purpose of entering into contracts with third parties and subsequently the said contracts were performed fully or partly by e-funds India as an assignee or sub-contractee . Analyzing and observing the said transactions and the manner in which contracts were executed and where the taxpayers had assumed and agreed to third party claims and risks; business connection was established. However, it was held that when provisions of tax treaty and provisions of the Act are applicable to the taxpayer, which one of the two is more beneficial or advantageous to the taxpayer should apply.

2. Hon’ble Court discussed at length whether a subsidiary per se would constitute a PE, after discussing and analyzing definition of PE as given under Article 5 of the India- US Double Taxation avoidance Agreement. A write up from Bulletin for International Taxation , February 2011 titled ‘The subsidiary as a Permanent Establishment” was quoted by the Hon’ble Court, which states as follows:

“A PE is, however, not always easy to identify. This is particularly true where a PE is hidden behind a dependent operating company, i.e. if an operating company in addition to its own business also carries on another company‘s business as a PE of the latter. In this regard, the 2010 OECD Model Tax Convention (the –OECD Model ) states in Art. 5(7) that:

the fact that a company which is a resident of a Contracting State controls or is controlled by a

1. ITA 738/2011 and ITA No. 736/2011 & 737/2011

2. References taken from KPMG issue titled “ Indian subsidiary of a Foreign company providing back office support operations does not constitute a PE in India dated 11th February, 2014

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company which is a resident of the other Contracting State, or which carries on business in that other state (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other

This follows from the principle that, for the purpose of taxation, such a subsidiary constitutes an independent legal entity. Accordingly, both companies are subject to unlimited tax liability in the state in which they are resident or where their place of management is located.

However, by using the wording –not of itself , the provision clarifies that a parent company (parent) can have an (agent) PE in its subsidiary‘s state of residence if the general requirements for a PE set out in Art. 5(1) to (5) of the OECD Model are met. Accordingly, any space or premises belonging to the subsidiary that is at the disposal of the parent (the –right-to-use test ) and that constitutes a fixed place of business (the –location test and the –duration test ) through which the parent carries on its own business (the –business activity test ), gives rise to a PE of the parent under Art. 5(1), subject to Art. 5(3) and (4), of the OECD Model. In addition, under Art. 5(5) of the OECD Model, a subsidiary constitutes an agency PE of its parent if the subsidiary has the authority to conclude contracts in the name of its parent and habitually exercises this authority, unless these activities are limited to those referred to in Art. 5(4) or unless the subsidiary does not act in the ordinary course of its business as an independent agent within the meaning of Art. 5(6)........

3. Subsidiary as a Permanent Establishment: Hon’ble Court after analyzing the definition of PE as contained under Article 5 of the DTAA observed that a subsidiary per se does not constitute a PE. The Hon’ble court further observed that there was not sufficient material to prove that the taxpayers

(i) had a fixed place of business of enterprize was wholly or partly carried on and

(ii) had right to use any of the premises belonging to efund India. Therefore Article 5(1) of the tax treaty cannot be evoked to constitute a PE in India.

4. Factors such as e-fund provides various services to the taxpayers and was dependent on them for earning, e-fund was reimbursed the cost of the cell Centre operations with a certain margin of profit, or fund did not bear sufficient risk, direct or indirect costs, and corporate allocations in software development Centre or BPO, etc. are not relevant to determine and decide location of PE. Only due to the fact that the subsidiary company was performing the core activities as were required to be performed by the foreign taxpayer does not create a fixed place PE. All the requirements of Article 5 of the DTAA need to be satisfied to term a subsidiary as a PE of its foreign holding company and merely because an enterprize enters into contracts, assign or sub-contract works or render services to third party on behalf of the principal, by itself would not lead to a subsidiary becoming a PE.

5. Service PE under Article 5(2)(1) of the DTAA: In respect of e-Fund employees the Hon’ble High Court observed that the Employees of E-Fund India were their employees, i.e. employees of an Indian entity and not employees of the assesse. The employees of e-fund India did not become ―other personnel of the two assesse, once and if the said persons were defacto and dejure employed by the Indian entity/enterprise, i.e., e-Fund India. The words ―employees and ―other personnel have to be read along with the word ―through and furnishing of services by the foreign enterprise within India. Thus the employees and other personnel must be of the non-resident assesse to create a service PE. Any other interpretation or treating employees of the Indian entity, i.e., e-Fund India as ―other personnel of the foreign assesse would lead to incongruities and irrational result, for every subsidiary which engages an employee, would always become a PE of the controlling foreign company.

The High Court relied on the Supreme Court decision in the case of Morgan Stanley and held that merely because the non - resident taxpayer to protect their interest, for ensuring quality and confidentiality has sent its employees to provide stewardship services,


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will not make the Indian subsidiary or another entity, a PE of the non-resident company even if the employees of the non – resident taxpayer were taken on deputation.

6. Agency PE under Article 5(4) and (5) of DTAA: Paragraphs 4 and 5 of Article 5 relate to creation of agency PE in the second contracting country. Agency replaces fixed place with personal connection. Subsidiary by itself cannot be considered to be a dependent agent PE of the Principal. Transactions between a foreign enterprise and an independent agent, do not result in establishment of a Permanent establishment under 5 to Article 5 if the independent agent is acting in ordinary course of their business. The expression –ordinary course of their business has reference to activity of the agent tested by reference to normal customs in the case in issue. It has reference to normal practice in the line of business in question. However as per paragraph 5 of Article 5, an agent is not considered to be an independent agent if his activities are wholly or mostly wholly on behalf of foreign enterprise and the transactions between the two are not made under arm‘s length conditions. The twin conditions have to be satisfied to deny an agent character of an independent agent. In case the transactions between an agent and the foreign principal are under arm‘s length conditions the second stipulation in paragraph 5 of Article 5 would not be satisfied, even if the said agent is devoted wholly or almost wholly to the foreign enterprise. The transactions between the taxpayers and e -Fund India were at arm‘s length and were taxed on arm‘s length principle and therefore, requirements of Article 5(5) are not satisfied. Consequently, there was no Agency PE of the taxpayer in India.

coNclusioN: India is day by day becoming a preferred destination for investment by foreign companies, with increase in foreign investment, back office operations by foreign companies have increased considerable and are bound to increase in future also. Taxability of such foreign companies have back office operations in India time

and again been debated over in courts of India, above ruling of Delhi High Court in such background has been welcomed and looked upon. The said Ruling of High Court has made it clear that mere presence of a subsidiary of a foreign entity does not make such subsidiary o PE of the foreign entity. For a subsidiary to be termed a PE, all the conditions mentioned in Article 5 of the DTAA are required to be satisfied. The underlying principle being that such subsidiary, if acting/ performing on just behalf of its Foreign Holding Company may constitute a PE of its foreign holding company, but a subsidiary cannot be per se tagged as PE just by virtue of its being a subsidiary of its Foreign Holding Company.

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1. 4th Year Student, Symbiosis Law School, Noida

tHe credit iNFormatioN compaNies (regulatioNs) act, 2005: ameNdmeNt, Need oF tHe Hour!

- Ankit Shrivastava and Shiva Bhasin1

A good credit score of a person/company is a sine qua non for good credit health and is crucial for a person to avail financial assistance. So maintaining a good credit score is an indispensable activity. A credit information company (CIC) collects and maintains records of an individual’s payments and dues pertaining to loans and credit cards. These records are submitted by the respective banks and other credit institutions to the CIC. This information is then used to create credit information report which is provided to credit institutions in order to access the credit worthiness and capacity of a borrower to repay his loan and advances and discharge his other obligations in respect of credit facility availed or to be availed by him. Inaccurate record of information of a person maintained by credit institutions and CIC may have dire consequences and so it is imperative that accurate reporting be done. Hence, it is important that inaccurate information be rectified according to the procedure prescribed by the law in force.

The Credit Information Companies (Regulations) Act, 2005 was therefore passed to regulate credit information companies and to facilitate efficient distribution of credit rating of an individual. The CIC Act, 2005 further provides for the functioning of CIC, its registration procedure, settlement of dispute, privacy principles and furnishing of credit information. The RBI has further issued Credit Information Companies Regulations, 2006 to facilitate the smooth working of CIC.

However, this act needs to undergo significant amendments to get purge of its lacunae’s. Some of such lacunae’s are highlighted and discussed below: -

• Differential treatment of de-registration/cancellation of registration of CIC: - Section 5 of the CIC Act, 2005 talks about grant of registration certificate to a credit information company by RBI for carrying of business of credit information. It brings down that RBI has the power to grant the registration certificate on fulfilling of certain conditions mentioned

therein. Further, if CIC fails to fulfill any of the mentioned conditions then RBI has the power to reject its application. Provided that no application will be rejected without giving the opportunity of being heard.

Sec. 6 throws light on cancellation of registration certificate to a granted company if it: -ceases to carry on the business of credit information, or has failed to comply with the conditions to which certificate of registration was granted, or has failed to fulfill any directions which RBI might have issued, or fails to submit books of accounts and other documents when so demanded by officer. Provided if RBI is of the view that stipulated time be given to company to comply with the conditions or if RBI is of the view that delay in cancelling of registration certificate will be prejudicial and detrimental to public interest, it may then cancel the registration without granting time to company. Further, RBI has to give reasonable opportunity of being heard to a company before cancelling its registration.

Sec 15 of the act provides that credit institution is to be a member of a credit information company. It lays down that every credit institution in existence on commencement of this act shall become member of a CIC within 3 months of commencement of this act and every credit institution which comes into existence after the commencement of this act, shall become a member of a CIC before the expiry of three months from its coming into existence. Further it lays down that no CIC shall refuse to register a credit institution or another credit information company as its member without providing reasonable opportunity of being heard to such credit institution or credit information company, whose application it proposes to reject and recording reasons for such rejection and a


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2. 4th Year Student, Symbiosis Law School, Noida

copy of such order of rejection shall be forwarded to the Reserve Bank.

The lacunae in this section is that under sec 5 and 6, transparency is maintained for cancelling or refusing to grant certificate of registration to CIC. The RBI under sec. 6 gives reasonable opportunity of being heard to CIC before cancelling or refusing to grant registration certificate. However, sec. 15 nowhere describes about cancelling of membership of credit institution which is already a member of a CIC and the act is also silent that a reasonable opportunity of being heard to be given to the credit institution before cancelling its membership. So, since the act is silent on this aspect, the CIC may cancel the membership of a credit institution without giving reasonable opportunity which in turn may cause colossal losses and may also jeopardize the image of the credit institution. So, this lacuna has to be filled by amending the act wherein a rational provisions regarding cancelling of membership of credit institution should be laid down.

• Settlement of dispute under Sec 18: - Sec 18 of the act provides that if any dispute arises amongst credit information companies, credit institutions, borrowers and clients on matters relating to business of credit information and for which no remedy has been provided under this Act, such disputes shall be settled by conciliation or arbitration as provided in the Arbitration and Conciliation Act, 1996. It thus lays down that only those disputes should be settled down under this section for which no remedy has been provided under the act. However, in the recent judgment of the Hon’ble Calcutta High Court in Sunil Agarwal v. LIC Housing Finance Limited,2 the petitioner and respondent both erred an error because when there was a remedy available under sec 21, remedy under sec 18 would not have come into picture because recourse of this section can only be taken when no other

remedy is available under the act. The facts of the case were that petitioner was a director of a company and one of the employee showing petitioner as a guarantor obtained loan from the LIC housing finance ltd. The employee defaulted in paying the loan and thus LIC supplied inaccurate credit information of petitioner to CIBIL. The petitioner thus moved an application to RBI for settlement of inaccurate credit information but was not entertained by them. The petitioner being aggrieved by this moved to Hon’ble High Court and thus court disposed off the petition by issuing the writ of mandamus directing RBI to settle the dispute.

The high court was of the view that counsel for LIC Housing Finance Ltd, Credit Information Bureau (India) Ltd, and the Reserve Bank of India have not argued that the petitioner’s application under sec. 18(1) referring the dispute between him and the Credit Information Bureau (India) Ltd., was not entertainable by the Reserve Bank of India. On the contrary, counsel for the Reserve Bank of India has submitted that the bank will need at least four weeks for taking a decision in terms of section 18(2) of the Act. For these reasons, the court disposes of the petition.

So it is to be noted since there was a remedy

available to rectify the inaccurate information under sec. 21 read with rule 25 of the Credit Information Companies rules 2006, so how can one encroach upon the other remedies which are to be exhausted only when no remedy for same is available under the act. Furthermore, in the event the concerned credit institution or the CIC, does not take steps to redress the grievances of the borrower with respect to his inaccurate credit information, then the said credit institution or the CIC shall be subject to penalties as prescribed under Sec 23 and 25 of the act. Therefore, a dispute pertaining to inaccurate credit information, for which a specific remedy has been provided under the act, cannot be resolved by taking recourse to sec.

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18 of the act. Thus, even if a petitioner erred in initiating proceedings under sec. 18 of the act because there were expressed remedies available under the sec 21 of the act, the high court has erred in permitting the initiation of proceedings under sec. 18.

• Issue of power of attorney can authorize a person to receive credit information on behalf on another: - Sec 17(2) and 17(4) of the act brings about furnishing of credit information only to a credit information company and to specified user. Now the question here arises is that if bank gives credit information to third person not being for illegal purpose is it against the provisions of the act? If an agreement agrees to one person to collect information on its behalf will it be held valid? The answer to these arose that though such an agreement is legal but act doesn’t provide for it, so information cannot be given.

Further more to this, whether a power of attorney authorizes a person to hold information under this act. The act is again silent to it and thus no information can be given even if a person is authorized by way of power of attorney.

Thus to conclude, this act though has helped to regulate the credit information of person/companies and the privacy principles which needs to be adhered to, but at the same time it has a number of lacunae’s which needs to be rectified for smooth functioning of credit institutions, CIC.

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Fees For supplY oF desigN aNd eNgiNeeriNg drawiNgs Not Be suBJected to iNcome taX iN case preparatioN aNd deliVerY taKes place outside iNdia

Shipra Makkar Devgun

It has always been an issue under surveillance by the Income Tax Authorities in India to catch hold of transactions which amount to income raised, received or being accrued in India. Section 9 of the Income Tax Act, 1961 deals with the issue of 'arising or accruing or receiving of income in India' resulting in the taxation of such income in India.

Furthermore, Section 9(1) (vii) specifies that fees for technical services are deemed to accrue or arise in India, which includes fees for technical services received from a resident.

Here, at this juncture it is important to understand what exactly the term means. The term “Fees for technical services” means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personal) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head “Salaries”. Furthermore, for a particular stream of income to be characterized as “Fees for technical service”, it is necessary that some sort of “managerial”, “technical” or consultancy service have been rendered for a consideration. Here, it shall be important to mention that the word technical would have to be construed as a service involving the human element.

In the recent case of Director of Income Tax [International Taxation] Vs. M/s Nisso LwaiCorporation, japan reported in I.T.A No. 612/2013, the Assessee company i.e Nisso Japan had provided design and engineering services, manufacture, delivery, technical assistance through supervision of erection and commissioning etc., to establish compressor house-I for M/s RINL. There was a single issue which was raised as to whether the fees for design and engineering documentation received by the Assessee Company is taxable in India.

The facts of the case which are important to be taken note of were that the payments were made by M/s RINL separately for each of the services/equipments provided/supplied by the Assessee. And these payments also included the payments made towards the supply of design and engineering drawings.

coNteNtioNs made BY tHe assessee:According to the Assessee the payments received by them were not taxable under the Indian Income tax Act as the said transaction was a transaction of sale and had taken place outside India. In support of the contention of the Assessee that the supply of the design and drawings documents have taken place outside India, they reproduced the relevant clauses of the agreement entered into by them with RINL which read as follows:

“a) 1.2 Supply of drawing and documentation: The Prime Contractor shall supply the drawings and

documentation as detailed in Article-11 of the Purchaser’s General Conditions of Contract.

b) 2.4.1. The Prime Contractor shall transfer, deliver and impart the designs and drawing to the representative designated for that purpose by Purchaser in Japan or at the request of the Purchaser by transmitting the same either by surface mail or air mail or through a carrier in which case the post office or such carrier in Japan shall be the agent of the Purchaser.

c) 3.5.1.1 Property in the designs and drawings shall vest with the Purchaser on the same being transferred, delivered and imparted to the representative of the Purchaser in Japan or when the packet containing the design and drawings is delivered either to the post office or to a carrier designated by the Purchaser in Japan as the case may be.”

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It was furthermore submitted by the Assessee that design and drawing constitutes a PLANT and the payments have been made for outright purchase of design and engineering drawing , and hence it cannot be taken as a fee for technical services as provided u/s 9(1)(vii) of the Act.

oBserVatioNs BY tHe HoN’Ble HigH court:The Hon’ble High Court of Andhra Pradesh observed that there was no dispute that the supply had taken place in Japan and also that the clauses in the agreement were very clear on the fact that the preparation and delivery of design and drawings had to take place in Japan.

On the basis of the facts and the clauses of the contract, the Hon’ble High Court took a view that the amount received by the Assessee for supply of design and engineering drawings was in the nature of the plant and since the preparation and delivery had taken place outside the Indian territories, the same was not subject to tax in India.

The Hon’ble Court while observing the view also relied on the judgment of the Hon’ble Supreme Court of India in the case of Ishikawajimma Harima Heavy Industries Ltd.’ Vs. Dir. of IT reported in IT [288 ITR 408] wherein it was held that “in the case of offshore supply of goods, if all the parts of the transaction, i.e the transfer of property in goods as well as the payment, were carried on outside the Indian soil, the transaction could not have been taxed in India. In the instant case also, all the parts of the transactions have taken place outside the Indian soil and hence the impugned transaction falls outside the purview of Indian taxation.”


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“Fair dealiNg” iN copYrigHts : is tHe iNdiaN law competeNt eNougH to meet tHe curreNt cHalleNges?

By- Vaibhavi Pandey

Fair dealing is a limitation and exception to the exclusive right granted by copyright law to the author of a creative work. It permits reproduction or use of copyrighted work in a manner, which, but for the exception carved out would have amounted to infringement of copyright. It has thus been kept out of the mischief of copyright law.1 The defense of “fair dealing” initially originated and emanated as a doctrine of equity which allows the use of certain copyrightable works, which would otherwise have been prohibited and would have amounted to infringement of copyright. The main idea behind this doctrine is to prevent the stagnation of the growth of creativity for whose progress the law has been designed.

This doctrine is one of the most important aspects of Copyright Law which draws a line between a legitimate, bonafide fair use of a work from a malafide blatant copy of the work. This is the reason why this doctrine was explicitly enshrined in Article 13 of the TRIPS (Trade Related Aspects of Intellectual Property Rights) which runs as follows- “Members shall confine limitations or exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder”. As we all know, all the member countries of WTO are obliged to comply with the Berne Convention on Copyright as well as the articles of TRIPS. Consequently, this doctrine has been given place in almost all the Territorial Copyright legislations of the member countries. However, there still remains a difference if the individual laws of fair dealing enacted in different countries are compared. While some of the legislations are keeping a rigid approach, the others have kept their doors open to embrace any new act which can be treated as fair dealing. The Indian and UK copyright laws regarding fair dealing are often characterized as very limited and restrictive as they work in accordance with an exhaustive list of actions which come under the scope of fair dealing. Whereas the US laws of “fair use” provide a wide and open ambit for the fair users of a copyright work. While on one hand the Indian and UK laws of fair

dealing work strictly within the framework of the enlisted actions which constitute fair dealing, the American laws of fair use is open for interpretation and works with the help of only certain guideline factors which help in determining the extent of “fairness” involved in the work.

It is to be noted that the US doctrine of “fair use” is considered to be the fairest of all as it is the most closely designed law with the TRIPS.

With the passage of time, India has gone through tremendous technological ameliorations but still procures a very limited scope in the law of fair dealing. But if we look towards the west, continuous advancements through innovative interpretations and judicial activism have been introduced in this field.

Fair dealiNg laws Vis-À-Vis iNdia –The laws relating to fair dealing have been incorporated in Section 52 of The Copyrights Act, 1957. As the Indian Copyright Act does not defines the term “fair dealing” , the courts have on various occasions referred to the authority English case Hubbard v Vosper2 on the subject matter. The words of Lord Denning in this case lay down a much descriptive outline of fair dealing-

“It is impossible to define what is “fair dealing”. It must be a question of degree. You must first consider the number and extent of the quotations and extracts….then you must consider the use made of them....Next, you must consider the proportions…other considerations may come into mind also. But, after all is said and done, it is a matter of impression.”

The Indian laws related to “fair dealing” is always considered rigid and conventional as it provides an exhaustive list and any use falling out of the statutory list is considered as an act of infringement. Unlike this, the US doctrine of “fair use” keeps its doors open for any new exception which constitutes fair and bonafide use of a copyright work. As the Indian courts have explored and unveiled the various facets of fair dealing,

1 SK DUTT v. LAW BOOK CO. & Ors. AIR 1954 ALL 750 2. (1972) 1 All ER 1023 p. 1027.

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they have said that their cannot be a definite or exhaustible list of uses which can come within the purview of fair dealing but it has to be decided depending upon the facts and circumstances of each case. Apparently, such conclusions have been drawn more from the US and UK approaches and less from the Indian statutory laws.

But apparently, the Indian courts have also started paying attention to the same. The best example of this development is the case of (INDIA TV) INDEPENDENT NEWS SERVICES Pvt. Ltd vs YASHRAJ FILMS PRIVATE LIMITED & SUPER CASSETTES LTD VS..3, where one of the various grounds of dispute was that the defendants “India TV” broadcasted a TV show wherein a documentary is shown on the life of singers and they perform their own songs. While the singer sings, clips of scenes from the movies are shown in the background. The plaintiffs claimed that such acts of the defendants amounted to infringement of their copyright. However, the defendants claimed that such use of the plaintiff’s copyrighted material constituted fair dealing within the meanings of section 52 of The Copyrights Act. The Delhi High Court in its judgment restrained the defendants from distributing, broadcasting or otherwise publishing or in any other way exploiting any cinematograph film, sound recordings or part thereof that is owned by the plaintiff. However, if we look at the present case from a slightly different perspective, there are certain questions which still remain unanswered. In my opinion the argument of the counsel for defendant stating that “the singer who has recorded a song which has gone on to become a hit has a sense of ownership over such a song, and that it would be very unreasonable-to the point of being unfair and cruel to the said singer, to say that he/she cannot sing the said song in a TV or other interactive program in front of an audience, only because the copyright in the underlying literary and musical works resides in some other person(s)” also withholds a valid point. But since such use does not come within the exhaustive list provided under section 52 of the act, they were deprived of any remedy in the fair dealing laws.

But, after a long litigation saga, in the appeal from the above order, the Hon’ble bench of the Delhi High Court also felt the need of a diversion from the conventional

approach and thus the decision of the single judge was set aside and the restrictions thus imposed were accordingly removed. However, the Appellants were still prohibited from displaying any cinematographic films without permission.

This judgment indicates that the courts also have started feeling that there is still much left to look upon, to consider to keep the legislations hand in hand with the technological and scientific developments going across the world.

coNclusioN-Undoubtedly, “fair dealing” is a necessary doctrine, not only in the Copyright laws but also in strengthening the protection given to the citizens under Article 19 of the Constitution of India. But the Indian law related to fair dealing is very limited and confined as compared to the US fair dealing laws which is more elaborate and keeps a flexible approach. Perhaps, the Indian legislators wanted more certainty in the provisions that is the reason behind the conservative approach which reflects in Section 52 of The Indian Copyright Act. Though the courts have adapted the US approach from time to time in its decisions, the author here likes to submit that the overall defense of fair dealing available in our country is yet to be examined, enlarged and defined.

3. FAO (OS) 583/2011


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merger aNd acquisitioN- traNsFormed rules oF tHe game

By: Yogesh Malhan & Gopal Bageria1

Merger and Acquisition (M&A) has always been a sought for transaction in India, as more and more M&A deal is being carried out each and every day in the Indian market. As per Grant Thorton, there have been a total of 480 deals amounting to $27.4 billion during 2013 involving Indian companies. However, Indian companies were involved in 598 M&A deals worth $35.4 billion in 2012 and 644 transactions worth $44.6 billion a year ago in 20112. But, it is predicted that the improvement of the economy in the year 2014 and the coming in force of the provisions of Companies Act 2013, will pave the way for a number of M&A transactions in the country in all the sectors. Apart from this, M&A rules for the telecom industry have also been given a nod during the month of February 2014 which shall induce various telecom companies to broaden their market share.

As we know the Companies Act 2013 (“2013 Act”) has come into force, the sections related to M&A is yet to be notified and the Ministry of Corporate Affairs (MCA) is striving hard to notify the aforesaid sections and the rules thereon. Section 230-240 of the 2013 Act contains the provision related to M&A as compared to Section 390- 396A of the Companies Act 1956 (“1956 Act”), which is still in presence. As the MCA notifies the sections of the new Act, the 2013 Act will replace the 1956 Act. The coming in force of the 2013 Act will help in reducing shareholders’ litigation and make corporate restructuring process smooth and efficient. The new act also promises to bring easy and efficient ways of doing business in India with better governance and improved level of transparency. Accountability and making corporate’s socially responsible is also one of the main factors to scrap out approximately 60 years old Act.

The 2013 Act has surely wide amplitude as various other forms of M&A have also been allowed.

CroSS Border Merger:The 1956 Act prohibited the merger/ demerger of Indian company with the foreign company, however,

the vice versa was possible. But as per the 2013 Act, both types of mergers have been allowed with only those foreign entities which have been notified by the government. RBI approval is also required to be taken for concluding these types of deals. RBI will also notify the regulation which has to be complied to enter into this transaction. The payment in the scheme can be done through cash or through depository receipts or both.

Short ForM Merger/ FASt trACk Merger: This type of mergers includes merger between- (a) two or more small companies (b) parent and wholly owned subsidiary company.

“Small Company means a company, other than a public company

(i) paid-up share capital of which does not exceed 50 lakh rupees or such higher amount as may be prescribed which shall not be more than 5 crore rupees; or

(ii) Turnover of which as per its last P&L account does not exceed 2 crore rupees or such higher amount as may be prescribed which shall not be more than 20 crore rupees3”

Therefore, in this form of mergers/ demergers no prior approvals of NCLT is required and even the approval of various other regulatory bodies is not needed. However, the Central Government, ROC, OL approval is necessary along with the approval of shareholders holding 9/10th portion of total shares and majority creditors representing 9/10th in value. Moreover, the auditor’s certificate for compliance with applicable accounting standards is also not required to be provided. But the benefit of this fast track merger/demerger is not available to small public companies where there is merger/demerger between two or more small companies, (Benefit only applicable to private

1. CS Intern2. As per 9th annual edition 2013 of Grant Thorton report on Deal

tracker.

3. As per Section 2 (85) of Companies Act 2013

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small companies). However, in case of merger/demerger between a parent company and its wholly owned subsidiary, these provisions are applicable for both public and private companies.

The rules as was prescribed in 1956 Act have also been modified in the 2013 Act.

• Thepowerofsanctioningtheschemehasbeentransferred from the High Court to NCLT (National Company Law Tribunal). This can slash the huge number of pending cases from the High court to a specialized body.

• The M&A scheme have to be sanctioned byvarious statutory authorities- the Central Government, RBI, official liquidator, ROC, SEBI, Competition Commission of India etc… These authorities have been given a strict timeline to work under. With the involvement of all these parties, the M&A process are sure to be more cumbersome.

• Normally on amalgamation, based on judicialdecisions, the authorized capital of the transferor company is added to the authorized capital of the transferee company. Now it is expressly provided that fees, if any, paid by the transferor company on its authorized capital shall be allowed to be set-off against fees, if any, payable by the transferee company on its authorized capital subsequent to the amalgamation.

• TheBoardofDirectoralso is required topassthe M&A in the meeting of the board and not by circulation.

• Theapprovalofthemembersand/orcreditorscan also be taken through postal ballot. It will ensure more number of members to take part in M&A process.

• Theshareholdersarealsorequiredtobegiventhe report on valuation of shares along with the scheme which will ensure the shareholders to take informed decision. Such valuation report has to be prepared by the registered valuer. Although, this report was also given to the shareholders in the 1956 Act, but it was not mandatory.

• The objections for the M&A can be raised byonly those shareholders who hold not less than 10 per cent of shares in the company. Creditors can object to the scheme if and only if they hold not less than 5 per cent of the outstanding

debt which will reduce the frivolous litigations filed by various stakeholders.

• Theshareholders/groupofpersonsholding90per cent or more shares have also been granted the authority to compulsorily notify their intention to acquire minority shares and can subsequently acquire those shares. This is known as minority squeeze out. This leads to majority shareholders easily acquiring the shares of minority shareholders and reducing the lengthy process of litigation.

• Buy back as per the 2013 Act needs to becomplied with, if the M&A results in purchase of shares by the company. In the erstwhile act, a mechanism of single window clearance was present, wherein the scheme which was presented to the High court acted as a scheme which could comply with almost all the regulations of the act (if necessary) and separate procedure for every other sections was not necessary to be complied with.

• The concept of treasury shares has also beenremoved as earlier the investment in intercompany in the form of shares had to be kept as a treasury stock. But the 2013 Act requires such shares to be cancelled and holding shares in name of trust will not be allowed.

reverSe Merger:The merger of a company with a financially weak company, in order to get various tax exemptions is known as reverse merger. It is also a kind of merger of listed company with an unlisted company (private or public) by which the unlisted company gets listed in the stock exchange wherein the listed company has already been listed earlier. In this kind of merger, as per 1956 Act, the unlisted company automatically gets a back door entry to become a listed company without an IPO. It means the unlisted company can enjoy all the benefits of becoming a listed company without diluting its shares in the public. However, as per Section 232 (h), if the transferee company is an unlisted company, it shall not automatically become a listed company by merging with a listed company. It has to follow the process of listing as per SEBI (ICDR) Regulation 2009 in order to become listed. During merger the unlisted company also has to grant an exit opportunity to the existing shareholders of the listed company. Therefore,


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the process of backdoor listing will end as soon as these provisions of 2013 Act are notified.

coNclusioN: India is a big market having world class companies and the recent amendment in the laws favoring the corporate’s and shareholder’s at the same time relating to M&A surely will entice foreign companies to merge amongst themselves and grab the benefits of Synergy.

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ValiditY oF part oF trademarKsBy Himanshu Sharma & Bharat Nagpal1

A registered trademark provides the exclusive rights to use a trademark against others. The rights provided under the Act come with a condition that it should be safeguarded in the form in which it is applied and registered. In case of a composite trademark, which has various distinctive and non-distinctive elements, the right to take action against an infringer is limited to the extent that the distinctive part of the trademark is misused by the infringer. Therefore, the questions to be answered here are, what happen when a part of trademark is misused? and how the proprietor can take action against the infringer?.

parts oF trademarKs A trademark at various occasions is a composite trademark having various elements in it, when the same is registered under the law, then protection is provided to the mark as a whole but when it comes to claiming the right over the part of trademark the same is dealt as per the provisions of Sec.15 & Sec.17 of the trademarks act.

Section 15 under Trademark Act 1999 covers the registration of parts of trademarks and of trademarks as a series, where a trade mark applied for registration consist of more than one feature, and if the proprietor claims exclusive right of all such features separately, he may have to seek registration for each such part as a separate trademark.

Sub-section (2) states that each such separate trademark shall fulfill all the conditions of an independent trademark and shall be examined independently to determine whether it can be registered or not and will be subject to all the subsequent procedures.

As said by Lord Esher in Pinto v. Badman (8 R.P.C. 181):

"The truth is that the label does not consist of each particular part of it, but consists of the combination of them all."

In the case of Three-N-Products Private Limited Vs. Emami Limited2 it was observed by the learned single judge that "the registration thereof shall not confer any exclusive right" appearing towards the end of Section 17 (2) have to be understood in the context and the import of such word is that the registration of the composite mark will not by itself confer any exclusive right as to the part of the composite mark.

Section 17 states the effect of registration of parts of a mark and states the general proposition that registration confers on the proprietor exclusive right to the use of the trademark taken as a whole.

The rights of the registered proprietor are very clearly defined in Section 17(1), which explicitly state that the exclusive right is in respect of the use of the trademark as a whole. If the proprietor desires statutory protection to the exclusive use of any part of the trademark, then he has to apply to register that part as a separate trademark. Further it is clear, that any part of the trademark containing a matter which is common to the trade or is of non-distinctive character will not be allowed registration. Whereas, if the applicant of the trade mark is able to adduce evidence of acquired distinctiveness for such part, he may then rightly claim exclusive right for the part of the trade mark, but if the part of the trade mark has not been separately registered and is nevertheless itself of a distinctive character, there should be no difficulty for the proprietor to secure a separate registration for such part.

In the case of Uttam Chemical Udyog v. Shri Rishi Lal Gupta3, the registered trade mark was “5-Bhai”, wherein numeral “5” had been disclaimed. The registrar further concluded that the word “Bhai” had become publici juris and as such passed an order imposing a disclaimer in respect of the word “Bhai”. On appeal, the High Court held that they had the exclusive right to use the combination of the words “5-Bhai” in relation to the goods, but however, they could not restrain others from either using the numeral 5 or the word “Bhai” independently or in combination with other words.

1. Student of Amity law School Final Year 2. A.P.O. No. 248 of 2008 in C.S. No. 204 of 20073. 1981 PTC 137(Del)


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In the case of Registrar of Trade Marks v. Ashok Chandra Rakhit Ltd4., the apex court observed “It is true that where a distinctive label is registered as a whole, such registration cannot possibly give any exclusive statutory right to the proprietor of the trade mark to the use of any particular word or name contained therein apart from the mark as a whole.”

As held by the apex court “That is to say, the special advantages which the Act gives to the proprietor by reason of the registration of his trade mark do not extend to the parts or matters which he disclaims. In short, the disclaimed parts or matters are not within the protection of the statute”.

In the case of Charan Das & Veer Industries (India) v. M/s. Bombay Crockery House5., where the plaintiff’s mark was ‘PERFECT’ and ‘SWASTIC PERFECT’ and it had disclaimed the word ‘Perfect’.

After the amendment of the Trademarks Act in 1999, section 17 seeks to omit the provision relating to requirement of disclaimer. This requirement has been discontinued now as under the present law the disclaimed matter at a particular time may become distinctive if the proprietor acquires any right by long use of those parts or matters in relation to his trade, he may, on proof of the necessary facts, claim his rights by a passing off action.

The scope and effect of disclaimer has been explained by the apex court in the case of Registrar of Trade Marks v. Ashok Chandra Rakhit Ltd (Supra)

"The real purpose of requiring a disclaimer is to define the rights of the proprietor under the registration so as to minimise, even if it cannot wholly eliminate, the possibility of extravagant and unauthorised claims being made on the score of registration of the trade mark. The disclaimer is only for the purposes of the Act. It does not affect the rights of the proprietor except such as arise out of registration.” Therefore it’s a well settled law that the trademark should be considered as a whole and the absence of the disclaimer after the amendment meant that the registration gave no separate rights in matter which only formed part of the trade mark.

coNclusioNReferring to the above provisions of the act, it is a settled law that the proprietor gets exclusive right to the use the trademark taken as a whole. He has to apply to register the whole and each such part as separate trademarks in order to claim right over any part of the mark, also they cannot restrain others from either using any part or word independently or in combination with other words. But if the proprietor acquires any right by long use of those parts or words in relation to his trade, he may, claim his right by a passing off action and prevent exploitation of his mark.

4. AIR 1955 SC 5585. 1984 PTC 102

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salarY receiVed BY aN assessee For reNderiNg serVices outside iNdia are Not taXaBle iN iNdia Shipra Makkar Devgun and Shiva Bhasin1

i. BacKgrouNd Taxation of any person, in any Country, is dependent on his residential status. Under the Income Tax Act, 1961, the total income of a person who is a resident includes all income which is received or is deemed to be received in India or accrues or arises or is deemed to accrue or arise to him in India or accrues or arises to him outside India.

The total income of a person who is a non-resident includes all income which is received or is deemed to be received in India or accrues or arises or is deemed to accrue or arise to him in India. So, the scope of total income of a non resident assessee is limited to income which is received or deemed to be received in India or which accrues or arises or is deemed to accrue or arise to him in India.

ii. iNtroductioNThis article analyses the captioned judgment of Income Tax Appellate Tribunal®2 [Hereinafter referred as ITAT] on an appeal filed by an assessee being aggrieved by the order of Commissioner of Income Tax [Appeals] [Hereinafter referred as CIT (A)]. The CIT(A) had upheld the contentions of the Assessing Officer [Hereinafter referred as AO,] that income of assessee i.e. salary of Rs. 13,34,884 which was transferred from bank account in Singapore to NRE bank account in India is liable to be taxed in India. Further, the CIT (A) has held that Rs. 40,589 on account of bank interest in NRE account of assessee was also liable to be taxed in India. The ITAT allowed the appeal and disposed of the matter by concluding that the salary of assessee has accrued outside India and thereafter by an arrangement, salary is remitted to India and made available to assesse, which is not liable to be taxed in India under sec. 5(2) (a). The ITAT also uphold the grievance of assessee that interest on NRE account is not liable to be taxed under sec. 10(4) (ii).

iii. releVaNt Facts aNd proVisioNs:

Facts The assessee in this case is an employee of Executive Ship Management Pte. Ltd. (Hereinafter referred as ESM-S) and works on merchant vessels and tankers plying on international routes. He receives salary for his services and in addition to it, he also receives bank interest and pension from Indian Army. The assessee has stayed less than 182 days in relevant previous years and thus is a ‘non- resident.’ The aseessee was given a show cause notice by AO as to why his salary received from ESM-S shall not be liable to tax in India. The assessee contented that since his salary is accruing and arising outside India so it is not to be taxed in India and thus is outside the scope of Sec 5(2). The assessing officer also took a note of sec 6(5) of the act, that where a person’s status is resident for any one source of income, his status for all source of income shall be taken as resident and shall be subjected to tax in India. The AO contented that since the assessee is a resident for purpose of pension, his salary from ESM-S shall also be brought to tax. Furthermore, AO was also of the view that assessee has received appointment letter from ESM-S in India and thus his salary was accrued in India. Another issue before the AO was that Rs. 40,589/- being interest on NRE bank account is also liable to be taxed and no exemption can be granted under Sec. 10(4) (ii).

Being aggrieved by this, assessee moved an appeal to CIT (A), and the contentions of AO was upheld by CIT(A) that Rs 13,34,884 is liable to be taxed in India. Further, CIT (A) held that the bank account is not a NRE account and exemptions under sec. 10(4) (ii) can’t be made available. The assessee has then filed an appeal to ITAT.

Furthermore, another appeal was filed by assessee against another order of CIT (A) wherein it held that Rs. 10, 40,411/- is liable to be taxed on the same grounds

1. 4th year student, Symbiosis Law School, Noida.2. Arvind Singh Chauhan v. Income Tax officer, I.T.A. No. : 319

and 320/Agr/2013


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and Rs. 19,738/- on account of bank interest earned and credited in NRE account of assessee.

releVaNt proVisioN oF tHe act Section 5 of the act reads as follows: - “Scope of Total Income: - (1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which – (a) Is received or is deemed to be received in India in such year by or on behalf of such person; or (b) Accrues or arises or is deemed to accrue or arise to him in India during such year; or (c) Accrues or arises to him outside India during such year : Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section (6) of section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India.

(2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which – (a) Is received or is deemed to be received in India in such year by or on behalf of such person; or (b) Accrues or arises or is deemed to accrue or arise to him in India during such year.

Explanation 1: Income accruing or arising outside India shall not be deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India.

Explanation 2 : For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India.”

Section 6(5) of the act reads as follows: - “Residence in India:-

(5) If a person is resident in India in a previous year relevant to an assessment year in respect of any source of income, he shall be deemed to be resident in India in the previous year relevant to the assessment year in respect of each of his other sources of income.”

iV. releVaNt eXcerpts From tHe JudgmeNtThe ITAT was of the view that AO has taken note of assessee being a “non-resident” and yet he has proceeded to treat assessee as a resident for purpose of taxing his pension income and bank interest. And since he is resident for one source of income, he is required to be treated as ‘resident’ for all source of income under sec. 6(5) is based on fundamental conceptual misconceptions of facts as also of law. Thus AO has erred in assuming that since pension income and bank interest are taxable in India and so he is a resident, any income which is received or deemed to be received or accrues or arises in India is taxable irrespective of its being a resident or non-resident. Sec. 6(5) cannot have application in this matter.

Further, an employee has to render services to get a right to receive salary and unless these services are rendered, no such right accrues. So, merely receiving appointment letter does not give a right to receive salary, thus this stand of AO and as approved by CIT (A) is devoid of legally sustainable merits. Also, the salary amount has been received in India but salary income is received in India so the salary cannot be taxed twice. Thus ITAT held that Rs. 13, 34,884/- is not liable to be taxed.

The second ground of the assesse has also been upheld by the ITAT that assesse’s account in HSBC is a NRE account and so interest therein is liable to be exempted under sec 10(4)(ii). Thus both the grounds of the assessee were allowed. Also the second appeal of assessee wherein CIT (A) held that salary income of Rs. 10, 40,411/- and bank interest of Rs 19,738/- is liable to tax was set aside and thus appeal was disposed of accordingly.

V. coNclusioN The taxability of income is based on the principle that it should be received or is deemed to be received in India or accrues or arises in India or is accrues or is deemed to accrue or arise in India. It does not require a recipient of income to have resident status under sec 6 as even a income of non- resident by virtue of sec 5(2), is taxable in India subject to its income being received or accrued or deemed to be accrued in India. In the

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3. (2001) 247 ITR 260 Bom4. (2011) 198 TAXMAN 551

present case, the assessee had paid the tax on interest of savings bank account and pension income accrued and received by him in India.

Furthermore, the salary which has been received by assessee from ESM-S by offering his services are rendered outside India as crew on merchant vessels and tankers plying on International routes. So such cannot be taxed. The same was held in the case of CIT v. Avtar Singh Wadhwan3, wherein the Bombay High Court has held that income from salary, in the case of even an Indian vessel operating in international waters is to be treated as having accrued outside India. Again in the leading case of DIT v. Prahlad Vijendra Rao4, the Karnataka High Court has held that, salary earned by a non resident for services performed during his stay of 225 days outside India, working on board of ship, does not accrue or arise in India. Accordingly, the same is not taxable in India.

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pateNtiNg oF geNeticallY modiFied crops iN iNdia Vis-À-Vis iNterNatioNal decisioNs

BY: PRIYANKA RASTOGI AND ANSHUL BANSAL1

iNtroductioNIndia has been following a very strict IP policy which is evident from its recent decision in Novartis case. The controversy with regard to Genetically-Modified Crops also triggered the debate on India’s position on granting patent for plants or other biological product and processes. The recent move of US farmers against the multinational company Monsanto implies that how granting patent on agricultural produce can adversely affect the masses. In the context of India, the situation will be even worse if the same is granted patent as most of the Indian population depends upon agriculture for their survival.

Important provisions under Indian Patent Act, 1970 [Hereinafter referred to as ‘the Act’] which deals with granting patent over agricultural produce are as follows:

1) Section 3(j) of the Act provides that plants and animals in whole or any part thereof other than micro organisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals are not patentable.

2) Section 3(b) of the Act also points out that the primary or intended use or commercial exploitation of which could be contrary to the public order or morality or which causes serious prejudice to human, animal or plant life or health or to the environment is also not patentable.

3) In addition to the above provision, under section 2(ja) of the Act inventive step is also a pre-requisite for the grant of patent.

It was suspected that GM crops don’t posses any inventive step and is contrary to public order and cause serious prejudice to human health. The utility of GM foods is also in debate, and instances shows that it adversely affects the health of the people at large. In

addition to this, section 3(j) also bars patent on plants including seeds, varieties and species.

iNFereNce From Various iNterNatioNal eVeNts upoN iNdia• Monsanto’s Patent Saga over GMOs and ItsImplication in India

What the Novartis case is to the Right to Health, the Monsanto case is to the Right to Food and Farmers Rights to Seed and Livelihoods.

From the past, it is clear that Monsanto sued over 100 farmers for infringement of its patent and have won all the suits. In the recent decision by US court of Appeals for the Federal Circuit, it was again established by the court that group of organic and non-GMO farmers and other plaintiffs do not have any locus standi to restrict Monsanto from suing them. Monsanto claims that if farmers are using the patented product of Monsanto without giving royalty, this will provide ground for Monsanto to sue farmers or whoever infringes its patent.

As a result, US farmers, seed companies and public advocacy group appealed the decision in the US Supreme court. It is also contended by farmer population that Monsanto’s patent is not in tandom with usefulness requirement under the patent law. The effect of genetically-modified seeds is highly debated and there are ample evidences and instances which suggest that they do have negative economic and health effects. Studies suggest that during the initial stage, GM seeds may provide for high utility against pests but over a period of time pests develop resistant against the GMOs.

In India, Mahyco, the Indian subsidiary of Monsanto, a Bt Brinjal promoter, is facing one more trouble in addition to the existing moratorium on GM-Crops. Recently a case for criminal prosecution of the company officials for biopiracy has been revived. Karnataka High Court dismissed a petition to stay the prosecution. National Biodiversity Board (NBA) and the Karnataka Biodiversity Board (KBB) that had complained that the

1. Student of BBA. LLB (Hons.), 4th Year, National Law University, Odisha, Cuttack.

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company, along with others, had genetically modified local varieties of eggplant without mandatory approval and laid illegal proprietary claim to the genetically modified seeds.2 In addition to this, it was also pointed out that Mahyco entered into an agreement with Agricultural Sciences, Dharwad (UAS) for sub-licensing the Bt gene for use in local varieties of eggplants and further breeding without NBA approval. Under section 3 of the Biodiversity Act, 2002 it is required that approval from NBA should be taken for using India’s biological resources.

Moreover, the complaint said, the UAS, in collusion with Mahyco and Sathguru Management Consultants Private Limited, had carried out breeding to achieve genetic modification of India’s biological resources without permission.3 NBA and KBB explained that “Mahyco technology (the eggplant containing the Bt gene that will be backcrossed with local varieties provided by the UAS) and Monsanto’s technology (the Bt Gene itself) are incorporated into local varieties, [and] these varieties become ‘licensed domestic eggplant products’ and therefore providing Monsanto and Mahyco intellectual property resources that can restrict any making, using or selling of these licensed domestic eggplant products.”4

Hence, the obvious implication of the US current position is that the petition filed by the farmers will further strengthen the Anti-Monsanto case in India.

However, in Canada the situation is little different. In a landmark case Monsanto vs. Schmeiser5, Monsanto sued Schmeiser (farmer) because he grew canola plants that were genetically modified to be resistant to the herbicide Roundup. Monsanto owned the rights to this gene and Schmeiser did not pay a licensing fee. An increase in genetically modified crops and the herbicides that accompany them have a variety of implications for traditional as well as alternative farming practices. In 2004, Supreme Court decided that Monsanto’s patent is valid. The origin of the GM canola seed is still unclear. Therefore, final settlement was done out of the court.

• Bangladesh’sApprovalforFourVarietiesOfTheGenetically-Modified Bt Brinjal For Cultivation: What India Should Do?

"The commercialization of Bt Brinjal in Bangladesh poses a threat to the entire Indo-china region which is considered as the centre of origin and diversity of this vegetable.6"

With the news of Bangladesh giving approval for cultivation of GM-Crops, the debate on BT-Brinjal again triggered with regard to its trans-boundary movement. Article 25 of the Cartegena protocol, an instrument of the Convention on Biological Diversity (to which India is a party) requires the members to take necessary steps to stop any trans-boundary movement of the GM crop. The Convention on Biological Diversity (CBD) to which both India and Bangladesh are parties to, also recommends that all measures should be put in place to protect centres of origin and diversity of crops7. Hence, being a party at CBD, India may restrict Bangladesh from allowing use of Genetically Modified Bt Brinjal for cultivation on the ground of its trans-boundary movement.

coNclusioNIt can be concluded at this time that again India has shown through enough instances that Indian patent law cannot be used as a tool for exploitation of public at large. The existing moratorium on genetically modified Brinjal and also other instances is reflective of the fact that until and unless it is proved that GMOs has no adverse effect, it is difficult to sell and produce GMOs with exclusive right in India. The utility of GM foods would remain in debate, unless it proves that it does not adversely affects the health of the people at large. Moreover Japan and several European countries have restricted the cultivation of GM food crops. But India is permiting its entry without taking adequate precautions. It has also been argued that the boost in productivity does not lessen the possible risk associated with the use of GM plants, and further it has been suggested that there are also other methods like 'organic farming' which can be used to achieve the same objectives.

2. http://www.thehindu.com/todays-paper/tp-national/biopiracy-case-catches-up-with mahyco/article5249853.ece, last accessed on 13/02/2014

3. Ibid.4. Ibid.5. [2004] 1 S.C.R. 902.

6. http://articles.timesofindia.indiatimes.com/2013-10-30/india/43526839_1_bt-brinjal-greenpeace-india-bt-cotton , last accessed on 13/02/2014

7. Ibid


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ipaB quiBBle iNdiaN pateNt oFFice oN reJectiNg scHeriNg’s crYstalliNe Form pateNt oF VorapaXar The importance of following due process when reviewing patent applications was reinforced in the recent Intellectual Property Appellate Board’ (IPAB) decision which has directed the patent office to consider the patent application of US-based Schering Corporation for a crystalline form of a compound for treatment of heart related disease afresh. Schering’s patent (2491/CHENP/2006) claims a crystalline polymorph of a bisulfate salt of a thrombin receptor antagonist, vorapaxar. Vorapaxar is used for the treatment of acute coronary syndrome chest pain caused by coronary artery disease. The parent invention of the crystalline form of vorapaxar itself is yet to be fully developed as a drug.

In 2009, the Assistant Controller of Patents & Designs rejected the application based on lack of therapeutic efficacy of the crystalline form as required by Section 3(d) of the Indian Patents Act, 1970 and lack of inventive step under Section2 (i) (j)(a) of the Patents (Amendment act) 2005.However, the counsel appeared for Schering submitted that there is no data available to be provided for the therapeutic efficacy. The Counsel for the applicant added that the invention is still in the development stage and argued that the claims and contents by the appellants produced were not properly considered by the Controller thereby the order failed to substantiate the reason for refusal of the patent. The counsel for the Controller replied that the reasons for refusals were included in the order and mentioned the Section 3(d) of the Patents Act, in connection to the case.

ipaB’s staNce oN scHeriNg corporatioN Vs asst. coNtroller oF pateNts & desigNs In an order issued by IPAB, the board stated that the Controller had passed a cryptic and wrong speaking order. IPAB also stated that the applicant was not given an opportunity to substantiate and discuss his claims and thereby rendering finding on each and every aspect. Pertinent to the present case, IPAB quoted Section 15 of the Patents Act, which reads hereunder:

“Where the Controller is satisfied that the application or any specification or any other document filed in pursuance thereof does not comply with the requirements of this Act or of any rules made there under, the Controller may refuse the application or may require the application, specification or the other documents, as the case may be, to be amended to his satisfaction before he proceeds with the application and refuse the application on failure to do so.”1

The aforesaid provision clearly indicate that the Assistant Controller resorted to passing judgment superficially rather than exercising his discretion in giving an opportunity to the applicant in making amendments in the application.

“The reading of the above said provisions makes it abundantly clear that the learned Controller ought not to have mechanically refused the application and on the other hand he could have exercised discretion to give opportunity to the applicant/appellant by making amendments in the application. As submitted by the learned counsel for the appellant to the effect that there is no data to be provided, the appellant could have given opportunity to make his submission by clearly stating that there is no question of providing any data and on the other hand, he could have given the opportunity to substantiate his claim on the basis of the documents produced by the applicant”. 2

Further, in substantiating the lack of inventive step ground, the board criticized the Controller for stating bald and vague reasons without getting into the details of the entire document.

tHe eFFicacY coNuNdrumA careful reading of the description of the corresponding PCT application (as the Indian application is not accessible in IPAIRS website) reveals that the bisulfate salt of vorapaxar is more stable, exhibit improved

1. Section 15 of the Indian Patents Act 19702. http://www.ipabindia.in/Pdfs/Order%20No.08-2014.

pdf

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thermodynamic properties and consistent physical properties than its parent compound. It is worthy to note that the patentability of a crystalline polymorph form of a compound was a matter of dispute in relation with the Section 3(d) of the Indian Patent Act, in the matter of Novartis' Glivec patent application.

Keeping in mind, the lack of therapeutic efficacy as one of the reason for refusal of Schering’s patent it is pertinent to discuss in brief on Section 3(d) and interpretation of the term therapeutic efficacy. It is a well known fact that the concept of ‘efficacy’ is very vague under any patent regime in the world. Such an in-determinate status of ‘efficacy’ leaves discretion in application in the hands of the patent authorities which results in misconception, legal uncertainty, corruption thus leading to welfare loss. The Supreme Court’s decision on Novartis’s Glivac case made it crystal clear that efficacy in the context of Section 3(d) should be construed as therapeutic efficacy. . The interpretation of the word ‘efficacy’ is a pivotal factor with regards to Section 3(d). The main section requires ‘enhancement of known efficacy’ and the explanation section requires the derivatives ‘to differ significantly in properties with regards to efficacy’. The standard of proof regarding efficacy is an insurmountable requirement as there is an uncertainty regarding what quantum of ‘enhanced efficacy’ would be ‘significant’ as well as the properties regarding efficacy.

Though the section 3(d) requirements are territorial, the introduction of product patents in India since 2005 requires the foreign applicants via PCT to provide proof for efficacy along with their application. The current standard of proof required by the system is very unclear. Submission of pre-clinical trials or lab tests are easier as standards of proof rather than conducting full fledged clinical trials and generate results by that way (normal method to obtain drug regulatory approval)3. Comparing the efficacy of the substance with an earlier known substance is undependable and unethical.

Information pertaining to the therapeutic efficacy are gathered from clinical trials much later in the developmental process of a drug. Hence to provide information on clinical trails at the stage of filing of patent application is a tedious procedure. Also, carrying out full fledged clinical trials to establish efficacy during

the discovery process before the filing of patent application would jeopardize the novelty aspect of the invention. The public disclosure of the clinical trails restricts the filing of results within a year of its disclosure. One year time is quite impossible to complete many clinical trials and hence makes the process burdensome.

coNclusioNWith regards to Section 15, IPAB has implemented ‘Principle of Natural Justice’ by setting aside the order of the Assistant Controller and directed the Patent office to consider the matter afresh by affording sufficient opportunity to the applicant to substantiate or amend their claims. The second ground of contention in Schering’s case is the crucial therapeutic efficacy which is a serious matter of concern. Efficacy directly determines patentability and other related regimes such as Drugs (Control) Act, etc,. Though it is a cumbersome requirement of Section 3(d) of Indian Patents Act, proof of efficacy for the crystalline form of drugs is required for the applicants to surmount section 3(d) without the trepidation of their patents getting rejected/refused/invalidated in the hands of patent authorities.

3. http://www2.law.ed.ac.uk/ahrc/script-ed/vol5-2/basheer.asp


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coNcurreNt delaYs iN coNstructioN worKArvind Thapliyal and Badal Kumar Gupta1

iNtroductioN"Time is money" is a settled statement in the construction industry, which drives and motivates every person engaged in an industry. The financial damages caused by project delays are generally substantial and ascertaining apposite legal remedy to effectively compensate for delays caused in projects is a vital aspect. In the recent years, there have been frequent debates in the construction industry with regard to the issues and problems involved in the concurrent delays. The issue involved in such delay is to determine the contractor’s entitlement to extension of time as well as loss suffered from such delay caused by the owner default; and the owner’s recovery of its actual delay or damages where the contractor fails to complete its given work within stipulated period, due to the contractor’s responsible delay that is concurrent to the owner caused delay. Till date there is no settled legal principle to resolve the problems involved in concurrent delays due to the consideration of interaction of many factors involved in different projects. Hence, the aim of this paper is to provide a definition and an in-depth study of the concept of concurrent delay through various case laws and also cover the aspects related to concurrent delays disputes.

deFiNitioNThe Oxford dictionary defines the word ‘concurrent’ as “occurring or operating simultaneously or side by side, or acting in conjunction.” If the owner caused delay and contractor caused delay, affect the same activity or different activities on parallel activity paths which are equally critical, and as such the owner caused delay and contractor caused delay would each have delayed the completion of the project, the delays are said to be concurrent.2 Where there is no definite or universally accepted definition of the concurrent delay but the term ‘concurrent delay’ is usually understood to describe circumstances when different causes of delay overlap during a period of time. The Society of Construction Law, U.K., published its first influential Delay & Disruption Protocol in 2002 in order to guide

parties through common issues or problems involved in a construction projects by which they can resolve issues and avoid disputes. The SCL Protocol, 2002 defines “true concurrent delays” as “the occurrence of two or more delays events at the same time, one an employer risk event, the other a contractor risk event and the effects of which are felt at the same time.”

A very narrow definition was suggested by Judge Seymour in the case of Royal Brompton Hospital NHS Trust v Frederick A Hammond & Ors3 where concurrent delay was defined as “Two or more delay events occurring within the same time period, each independently affecting the Completion Date.”

In the case of City Inn v. Shepherd Construction, Lord Osborne4 concurrent delay was defined as “delay events may be described as being concurrent if they occur in time in a way in which they have common features. Alternatively, events might be said to be concurrent only in the sense that for some part of their duration they overlapped in time. Yet again, events might to be said concurrent if they possessed a common starting point or common end point. It might also be possible to describe events as concurrent that they possessed a causative influence upon some subsequent event, even though they did not overlap in time.”

tYpes oF delaYsDelay can be categorized under following two heads:

Excusable delay- where the claimant is entitled to time extension or compensation, or both under the terms of contract. It is further divided into compensable or non compensable delays. When an excusable delay is compensable, a party can claim time extension as well as compensation for delay caused, and where the excusable delay is non compensable, in such case the party can only claim for time extension but not compensation.

Non-excusable delay- where a party bears the risk of cost consequences including the liability

1. Vth year Student @ Amity Law School, Delhi2. Richard J. Long, Analysis of Concurrent Delays on

Construction Claim, Long International, 2013, p.2.

3. [2000] 76 Con LR 148.4. [2010] BLR 437.

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to pay damages for itself but possibly for the other parties as well.5

Delay can be critical and non critical delays. Critical delay is event which causes the delay to the completion of the work project within stipulated period, whereas non-critical delays affect the work progress but do not cause delay to overall the completion of the project.

Case Laws in respect of concurrent delays and extension of time dealing with the general principle and facts of delays

Claims in concurrent delays are argued as both a sword and shield in fighting delay claims. There have been many cases which have covered the aspects of concurrency, apportionment of delays and extension of time which are as follow:

Henry Boot Construction (UK) Limited v Malmaison Hotel (Manchester) Limited6

In the instant case, Henry Boot contracted with Malmaison under a JCT Standard Form of Building Contract 1980 for the construction of a hotel in Piccadilly, Manchester. The contractor claimed an extension of time as a result of delay said to have been caused by variations and late information. The employer argued that the alleged variations did not cause any delay because they were not on the critical path and that the true cause of the delay was other maters which were contractor-risk events. The contractor contended that the matters pleaded by the employer are not within the jurisdiction of the arbitrator. Dyson J. rejected the argument of the owner and held that:

“It is agreed that if there are two concurrent causes of delay, one of which is a relevant and the other is not, then the contractor is entitled to an extension of time for the period of delay caused by the relevant event notwithstanding the concurrent effect of the other event. Thus, to take a simple example, if no work is possible on site for a week not only because of exceptionally inclement weather i.e. a relevant event but also because the contractor has a shortage of labor i.e. not a relevant event and if the failure to work during that week is likely to delay the works beyond the

completion date by one week, then if it considers it fair and reasonable to do so, the architect is required to grant an extension of time of one week. He cannot refuse to do so on the ground that the delay would have occurred in any event by reason of the shortage of labor.”

smitH V. tHe uNited states7

The government terminated a supply contract for failure to deliver in accordance with the terms of the contract. The contractor contended that its failure to perform was the result of delay and disruption caused by the government. However, the Court found that the contractor had made no attempt to recognize and apportion the amount of delay, for which it was responsible. It was held that:

“A contractor may not collect damages from the government due to delay where that contractor was itself in a state of concurrent delay. Generally, courts will deny recovery where the delays are ‘concurrent or intertwined’. Even where both parties are responsible for delay, a contractor may not recover unless it is able to apportion the delay and expense attributable to each party.”

Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd.8

In the instant case, Jackson J. laid down the following propositions:

“Actions by the employer which are perfectly legitimate under a construction contract may still be characterized as prevention, if those actions cause delay beyond the contractual completion date.

Acts of prevention by an employer do not set time at large, if the contract provides for extension of time in respect of those events.

In so far as the extension of time clause is ambiguous, it should be construed in favor of the contractor.”

coNclusioNTo conclude the discussion on the concurrent delay in the construction work, it can be said that the issues and problems involved in concurrent delays is

5. Barry M. Bramble and Michael T. Callahan, Construction Delay Claims, 3rd Edn., Aspen Publishers, New York, 2000.

6. (1999) 70 Con LR 32

7. 34 Fed. Cl. 313 (25 October, 1995).8. (2007) BLR 195.


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complicated and difficult one. Generally, claims in concurrent delay are contended as both a sword and a shield in order to claim damages or extension of time or, both. But the viability and success of claims or defense availed always depend on the facts, evidences and terms of the contract of each and every case. Inference can be drawn from the judicial pronouncements which are helpful in ascertaining and guiding in the decision of claims.

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NewsBYtes use oF tHe word “NatioNal” iN tHe Name oF compaNies/llp’s

Ministry of Corporate Affairs, Government of India vide its circular no 2/2014 dated 11.02.2014 restricts the use of the word “National” in the names of Companies/ Limited Liability Partnerships (LLPs) unless it is a Government Company and the Central/State Government(s) has a stake in it. Similarly the word “Bank” & “Stock Exchange” or “Exchange” may be allowed in the name of an entity only when such entity/promoters produces a “No objection Certificate” from the Reserve Bank of India (RBI) & Securities and Exchange Board of India (SEBI) respectively.

No serVice taX paYaBle oN serVices proVided BY cord Blood BaNKs aNd serVices BY waY oF loadiNg, uNloadiNg, wareHousiNg etc oF riceEarlier the Central GOVERNMENT vide its notification dated 20.06.2012 exempted certain taxable services from the whole of the service tax leviable thereon under section 66B and the same has been amended from time to time making certain inclusions therein in the public interest. Now, in addition to the same, the Central Government vide its notification no. 04/2014 dated 17.02.2014 has added following two more services which will be exempt from levy of service tax.

• “2A.Servicesprovidedbycordbloodbanksbyway of preservation of stem cells or any other service in relation to such preservation.”

• “40. Services by way of loading, unloading,packing, storage or warehousing of rice.”

Fii/qFi to iNVest upto us$ 2 BillioN iN commercial papersSecurities and Exchange Board of India (SEBI) vide its circular CIR/IMD/FIIC/4/2014 dated February 14, 2014 has modified its earlier circular CIR/IMD/FIIC/6/2013 dated April 01, 2013 whereby SEBI had permitted Foreign Institutional Investors (FIIs) and Qualified Foreign Investors (QFIs) to invest upto US$ 3.5 billion in

Commercial Papers within the Corporate Debt limit of US$ 51 billion. The Reserve Bank of India has reduced the existing sub-limit for FII/QFI investment in Commercial Papers from USD 3.5 billion to USD 2 billion. Accordingly, the eligible investors shall now be permitted to invest upto US$ 2 billion in Commercial Papers within the Corporate Debt limit of US$ 51 billion.

PAtent (AMendMent) ruleS, 2014Government of India, Ministry of Commerce and Industry (Department of Industrial Policy and Promotion) has recently published Patent (Amendment) Rules, 2014 vide notification No. CG/F/Public Notice/2014/307 dated 28/02/2014 and that same is in effect from the date of publication i.e. 28th February, 2014.

The important aspect of amendment Rules are pro-duced below:

1. Fee structure has been revised for filing of patent application as well as other proceedings before the Patent Office.

2. A third category of applicant for patent has been introduced in the form of “small entity” and the fees charged to them has been fixed in between the fees for a natural person and for all persons other than natural persons (except a small entity). The criteria for “small entity” have been elaborated in the amended rules.

3. A new Form-28 has been introduced in the rules, which has to accompany every new application. For subsequent documents for which a fee has been specified and for which the fee applicable for a small entity is claimed, it should be ensured that Form-28 is filed at-least once against the application number.

4. The amended rules provide for 10% additional fee when the applications for patent and other documents are filed through the physical mode, i.e., in hard copy format as opposed to the online mode.

5. A new Form 7 (A) has been provided for filing "Representation Opposing Grant Of Patent" under sub-section (1) of section 25 and sub-rule (1) of Rule 55 of the principal rules. However no fee shall be payable for the same.

As regards above notification the revised Fee Schedule is in effect from 28th February, 2014. Amendment rules can be accessed at www.ipindia.nic.in.


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Notes

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Notes

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