The Bombay High Court has, in the past few weeks, decided two important issues: one pertaining to direct taxation, and the other to indirect. A Division Bench headed by Justice D.Y. Chandrachud has upheld the constitutional validity of service tax on renting of immovable property, as reported by Legally India. The arguments raised by the Petitioners were primarily that a “service” tax on...
Patni Computer Systems: Transfer Pricing and “International Transaction”
The Pune Bench of the Income Tax Appellate Tribunal recently clarified several aspects of the law in relation to transfer pricing, as well as some issues in relation to the position in relation to Section 10A of the Income Tax Act, 1961. The elaborate decision, Patni Computer Systems v. DCIT, is available here. Insofar as the issues in relation to Section 10A are concerned, the principle issue...
Rule 10b-5 and the “Maker” of a statement: Janus Capital v. First Derivative
Last week, in a 5-4 verdict, the US Supreme Court once again narrowly interpreted Rule 10b-5, this time holding that only the “maker” of a false statement could incur 10b-5 liability: “maker” in this context being defined as “person or entity with ultimate authority over the statement.” The case, Janus Capital Group Inc. v. First Derivative Traders, reversed the Fourth Circuit’s holding...
MAT: Some Legal Issues
One of the changes sought to be introduced through the Budget this year was the imposition of alternate minimum tax on Limited Liability Partnerships. This is sought to be achieved by the introduction of Section 115JC into the Income Tax Act, 1961. Section 115JC provides: 115JC. Special provisions for payment of tax by certain limited liability partnerships.—(1) Notwithstanding anything contained...
The Bhopal Case: Supreme Court’s order on CBI’s Curative Petition
We had previously highlighted discussions on the Law and Other Things blog pertaining to the decision of the Chief Judicial Magistrate in the Bhopal gas leak case. The CJM had purported to follow a 1996 judgment of the Supreme Court; in which, the Supreme Court had quashed charges under Section 304 (Part II) of the Indian Penal Code. Last week, a Constitution Bench of the Supreme...
Regulation of Foreign Contributions: New FCR Act in Force
The Foreign Contribution (Regulation) Act, 2010 has been notified by the Central Government to come into effect from 1st May, 2011. The Act replaces the Foreign Contribution (Regulation) Act, 1976. The FCRA 2010 extends to the whole of India and also applies to citizens of India outside India, and to foreign associate branches or foreign subsidiaries of Indian companies/bodies. The FCRA prohibits...
Parent Company’s duty to employees of its Subsidiary
In an interesting judgment delivered earlier this month, Chandler v. Cape Plc. [2011] EWHC 951 (dt. 14/4/2011), it has been held that a parent company owes a duty of care to employees of its subsidiary. The decision contains a detailed analysis of the scope of the duty of care in such situations; and provides some indication that the existence of the corporate veil between the parent and its...
Territorial Nexus Revisited: GVK Industries v. Union of India
We have previously discussed issues surrounding the application of the “territorial nexus” doctrine to income tax law in several posts (here, here, here and here). In its recent decision in GVK Industries v. Union of India, a Constitution Bench of the Supreme Court has confirmed that the doctrine applies to Parliamentary laws. The precise question of the constitutionality of Section 9(1)(vii) of...
Exclusion of Jurisdiction of Civil Courts under the SEBI Act
Legally India has made available certain expert witness statements filed before US Courts in the class action litigation concerning Satyam, which was recently settled. One of the witness statements, by Mr. Sandeep Parekh, makes an interesting point; but I am not entirely sure of the tenability in law of that point. Mr. Parekh’s declaration / statement as an expert witness is available here...
Developments in Delaware: poison pill upheld
Readers may find this decision of the Delaware Court of Chancery, Air Products v. Airgas (judgment dated 15th February, 2011) interesting. The Court has discussed in detail the (Delaware) law on the legality of the ‘poison pill’. The Court summarised its ruling thus: “This case poses the following fundamental question: Can a board of directors, acting in good faith and with a reasonable...
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