[Fun] Definition of Designations

Project Manager is a Person who thinks nine women can deliver a baby in One month.

Developer is a Person who thinks it will take 18 months to deliver a Baby.

Onsite Coordinator is one who thinks single woman can deliver nine babies in one month.

Client is the one who doesn't know why he wants a baby.

Marketing Manager is a person who thinks he can deliver a baby even if no man and woman are available.

Resource Optimization Team thinks they don't need a man or woman; they'll produce a child with zero resources.

Documentation Team thinks they don't care whether the child is delivered, they'll just document 9 months.

Quality Auditor is the person who is never happy with a delivered baby.

Tester is a person who always tells that this is not the Right baby.

HR Manager is a person who thinks that...

a Donkey can deliver a Human Baby - if given 9 Months !!!

Vote for nobody - A myth

Web: www.bombaybar.com

Over the last week, many of us have been inundated with emails encouraging us to “vote for nobody”, claiming, among other things, that this is a way of driving out electoral candidates. As our member, and Senior Advocate, Chander Uday Singh points out, this is a complete myth. Many thanks to Chander for this timely advice. A postscript has been contributed by Mr Parag Kabadi, of Doijode Associates. There is also a link to a fairly good article on Wikipedia, to the same effect. Please circulate and forward this widely.


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“Vote for Nobody”: A Myth
by Chander Uday Singh
Senior Advocate, Bombay High Court

This chain mail (one version is at the foot of this message) has been doing the rounds for some time now, but is based on a complete misunderstanding of the statutory provisions.

Neither the Consitution of India nor the Representation of the People Act, 1950 contain any provision to suggest that failure or refusal to vote can have any bearing on the outcome of an election at which other people have duly voted for the candidate of their choice. The provision in question, “49-O”, is actually a mere Rule which has been enacted in order to deal with a peculiarity of the electronic voting system which India pioneered.

“The Conduct of Election Rules, 1961” have been framed under the Representation of the People Act, 1950, and make detailed provisions for everything from filing of nomination papers to casting of votes, counting of votes, and the like. Separate provisions are made for direct elections such as to Parliament and State Assemblies, and for indirect voting such as in electoral colleges. Part IV of the Rules covers “Voting in Parliamentary and Assembly Constituencies”, while Part V covers “Counting of Votes in Parliamentary and Assembly Constituencies”. Part IV has two Chapters, with Chapter I (Rules 28 to 48) applying to “Voting by Ballot”, and Chapter II (Rules 49-A to 49-X), which was added in 1992 to deal with the new phenomenon of electronic voting, applying to “Voting by Electronic Voting Machines”.

Rule 49-O, which is part of Chapter II, has been introduced in order to account for all electors who have attended and signed into the polling station. In the case of voting by ballot, the actual number of ballot papers issued are required to be tallied with the votes cast in order to avoid any malpractice, and this account includes ballot papers which have been properly marked, ballot papers which have been accidentally torn/defaced, ballot papers which are seized from electors who refuse or fail to put them into the ballot boxes, and so on. Since ballot papers are physically verifiable and can be counted (whether from the ballot boxes or from sealed envelopes containing defaced/torn/misused ballot papers), there was no need prior to 1992 to have any special Rule to obtain the signature of an elector who attended the polling process but refused or failed to cast her/his vote.

However, when voting is done by electronic voting machines, there is no physical manifestation of the vote. Hence, all accounting has to be done by verification of the registers which are signed by the electors before going behind the screen and punching a button on the voting machine. There being no such thing as a blank or defaced or torn ballot, it became necessary to provide that if an elector, after coming to the polling station and signing in, refuses or declines to cast her/his vote, then a remark has to be made in the register and the signature/thumb impression of the elector has to be obtained against such remark. This remark/entry is then relied upon while counting votes under Rule 66-A, which is a special Rule for counting of votes cast in electronic voting machines, since the machine only records the votes actually cast, and has no means of knowing how many people signed in but failed/refused to cast their votes.

Rule 66-A read with Form 17-C make it clear that the purpose of Rule 49-O is only to ensure that electors who fail to vote ater signing into the pollking station have done so of their own accord and not due to any force or coercion. Form 17-A is the form in which the polling booth register is to be maintained, which is signed by all electors when they enter the polling booth and are identified against the list of valid voters at that booth. Form 17-C records the final count of votes as per Rule 66-A, and this has to be signed by the election agents of all the candidates as it reflects the final result of the tally. Column 6 of Form 17-C requires that the number of electors who actually cast their votes as per the voting machine, be added to the number of those who declined/refused to vote, i.e. those in respect of whom a remark is entered against their names in the voting register (Form 17-A) under Rule 49-O, and that the total of these two figures should tally with the total who signed the voter’s register. In case of any discrepancy in this total, the polling agents have to explain the discrepancy in Form 17-C. This is nothing but an accounting procedure devised in order to ensure that there is neither any bogus voting, nor any force used to prevent valid electors from casting their votes.

Importantly, there is nothing whatsoever in the Act or Rules to suggest that if electors either individually or collectively decline to cast their votes and get this fact recorded under Rule 49-O, then this would have any effect whatsoever on the election. Elections are won (or lost) on the basis of votes cast in favour of different candidates, and not on abstentions. The Greek definition of “idiot” remains as valid as ever, and Rule 49-O has done nothing to elevate a person who refuses to vote out of that category.

Parag Kabadi adds:

Although Rule 49 O provides that an elector may refuse to vote after he has been identified and necessary entries made in the Register of Electors and the marked copy of the electoral roll, the secrecy of voting is not protected inasmuch as the polling officials and the polling agents in the polling station get to know about the decision of such a voter.

The Election Commission has therefore recommended that the law should be amended to provide that in the ballot paper and the particulars on the ballot unit, in the column relating to names of candidates, after the entry relating to the last candidate, there should be a column, “None of the above”, to enable a voter to reject all the candidates, if he chooses so.


Such a proposal was earlier made by the Election Commission in December, 2001 and reiterated in July, 2004 (vide letter dated 10.12.2001). Text of the recommendations is available here.

Interestingly, nothing is provided in the Election Commission’s recommendations, regarding re-election or invalidation of the current candidates. If such a consequence is really provided it will be great, until then, as Chander indicated, don’t be an “idiot”"!

See also: Wikipedia on Rule 49-O

RBI circular on bank charges

There seems to be some relief for the common man who has availed of loan from the banks / financial institutions and was being charged with "fees", "charges", etc. over and above what was made known to him before disbursement of loan. These "hidden costs" aggregated to a big amount which imposed additional burden on the poor person availing of loan.

RBI has rightly stated that levying such charges subsequent to the borrowing of loan, without disclosing the same to the borrower initially, is an unfair practice.

The relevant notification is set out below:

RBI / 2008-09 / 296
DBOD.No.Leg.BC. 86 /09.07.005/2008-09

November 25, 2008

All Scheduled Commercial Banks / All India Financial Institutions
(Excluding RRBs)

Dear Sir,

Guidelines on Fair Practices Code for Lenders- Disclosing
all information relating to processing fees / charges


Please refer to our Circular DBOD.No.Leg.BC.65 /09.07.005/2006-07 dated March 6, 2007 wherein banks / FIs were advised that loan application forms in respect of all categories of loans irrespective of the amount of loan sought by the borrower should be comprehensive. It should include information about the fees/charges, if any, payable for processing, the amount of such fees refundable in the case of non acceptance of application, pre-payment options and any other matter which affects the interest of the borrower, so that a meaningful comparison with that of other banks can be made and informed decision can be taken by the borrower.

2. It has come to our notice that some banks levy in addition to a processing fee, certain charges which are not initially disclosed to the borrower. It may be mentioned that levying such charges subsequently without disclosing the same to the borrower is an unfair practice.

3. Banks / FIs are therefore advised to ensure that all information relating to charges /fees for processing are invariably disclosed in the loan application forms. Further, the banks must inform ‘all-in-cost’ to the customer to enable him to compare the rates charged with other sources of finance.

Yours faithfully
(Prashant Saran)
Chief General Manager-in-Charge

Reverse Mortgage Scheme, 2008

Reverse Mortgage Scheme, 2008

Ministry : Ministry of Finance
Department / Board : CBDT
Notification No : 93/2008
Date : 30.09.2008

In exercise of the powers conferred by clause (xvi) of section 47 of the Income -tax Act, 1961 (43 of 1961), the Central Government hereby makes the following scheme, namely:

1. Short title, commencement and application -

(1) This scheme may be called the Reverse Mortgage Scheme, 2008.
(2) It shall be deemed to have come into force from the 15th day of April, 2008.
(3) Save as otherwise provided in the Scheme, it shall be applicable to all eligible persons.

2. Definitions - In this Scheme, unless the context otherwise requires,-

(a) "Act" means the Income -tax Act, 1961 (43 of 1961);

(b) "approved lending institution" means -
(i) National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 of 1987);
(ii) a scheduled bank included in the second schedule to the Reserve Bank of India Act, 1934; or
(iii) a housing finance company registered with the National Housing Bank;

(c) "Board" means the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963);

(d) "Capital asset" means a residential house property which is located in India;

(e) "eligible person" means
(i) any person, being an individual, who is of, or above, the age of sixty years; or
(ii) any married couple, if either of the husband or wife is of, or above, the age of sixty years;

(f) "Reverse Mortgage" means mortgage of a capital asset by an eligible person against a loan obtained by him from an approved lending institution;

(g) "reverse mortgagor" means the eligible person who has mortgaged the capital asset for the purpose of obtaining loan;

(h) "reverse mortgage transaction" means a transaction in which the loan may be disbursed to the reverse mortgagor but does not include transaction of sale, or disposal, of the property for settlement of the loan;

(i) All other words and expressions used herein, but not defined and defined in the Act, shall have the meanings respectively assigned to them in the Act.

3. Application and processing for reverse mortgage transaction -

(1) Any eligible person may enter into a reverse mortgage transaction by applying in writing to the approved lending institution, if the capital asset, being mortgaged, is-
(i) owned by him; and
(ii) free from any encumbrances.

(2) The application under sub-rule, (1) shall be processed by the approved lending institution and for this purpose the institution may charge nominal amount as processing fees.

4. Sanction of reverse mortgage loan -

(1) The approved lending institution, before taking mortgage of capital asset and before disbursing any loan under reverse mortgage, shall-

(a) enter into a loan agreement in writing with the reverse mortgagor; and

(b) obtain and maintain the following particulars from the reverse mortgagor, namely:-
(i) Name and address of the owner of the capital asset;
(ii) Permanent Account Number of the owner of the capital asset;
(iii) Total area, including built up or covered area, of the capital asset;
(iv) Cost of acquisition and the year of acquisition of the capital asset;
(v) Cost of improvement and the year of improvement of the capital asset;
(vi) Name, address and Permanent Account Number of all the legal heirs and estate of the owner of the capital asset;
(vii) A copy of the registered will of the owner of the capital asset including any changes made therein during the currency of the term of the loan.

5. Disbursement of loan -

(1) The approved lending institution may disburse the loan to the
reverse mortgagor by any one or more of the following modes, namely:-
(i) periodic payments to be decided mutually between the approved lending institution and the reverse mortgagor;
(ii) lump-sum payment in one or more trenches, to the extent that the aggregate of the amount disbursed as lump sum payments does not exceed fifty per cent. of the total loan amount sanctioned.
6. Period of reverse mortgage loan -

The loan under reverse mortgage shall not be granted for a period exceeding twenty years from the date of signing the agreement by the reverse mortgagor and the approved lending institution.

7. Repayment of loan -

The reverse mortgagor, or his legal heirs or estate, shall be liable for repayment of the principal amount of loan along with the interest to the approved lending institution at the time of foreclosure of the loan agreement.

F.No.142/06/2008-TPL

Sd/-
(Kamlesh C. Varshney)
Director (TPL)

Directory of firms operating in India

Directory of firms operating in India


Source


• A V Dave & Associates/M/s Dave registration services in Bhavnagar and Ahmedabad

• A.R.A. LAW in Bangalore and Mumbai

• A.Y.Chitale & Associates in New Delhi

• ALMT Legal in Mumbai and Bangalore

• ARSS Legal in New Delhi, Mumbai, Kolkata, and Bangalore

• AZB & Partners in Mumbai, New Delhi, and Bangalore

• Abhay Ahuja & Associates in Mumbai

• Aditya Sondhi Law Chambers in Bangalore

• Advani & Co in Mumbai

• Advani & Co. in Pune and New Delhi

• Akash Chittranshi & Associates in New Delhi

• Amarchand & Mangaldas & Suresh A. Shroff & Co in Kolkata, Bangalore, Mumbai, New Delhi, Hyderabad, and Kolkata

• Amarjit & Associates in New Delhi

• Anand and Anand in New Delhi and Mumbai

• Apurva Vakil in Ahmedabad

• Archer & Angel in New Delhi

• Ashurst LLP in New Delhi

• Asia Trademark Ltd in New Delhi

• Associated Law Advisers in New Delhi

• Bajla, Iyer & Associates, Advocates in Mumbai

• Bhasin & Co in Mumbai and New Delhi

• Bhatt & Saldanha in Mumbai

• Bimal B. Bhaskar, Advocate, Corporate Lawyer in Hyderabad

• Chadha & Chadha in New Delhi

• Chandrakant M. Joshi in Mumbai

• Crawford Bayley & Co in Mumbai

• Crestlaw Partners in Bangalore

• D H Law Associates in Mumbai

• D P Ahuja & Co in Bangalore, New Delhi, Chennai, and Kolkata

• DM Harish & Co in Mumbai

• DSK Legal in New Delhi and Mumbai

• Daniel and Gladys in Chennai

• Daulet-Singh & Associates in New Delhi

• Dave & Girish & Co in Mumbai and Bangalore

• De Penning & De Penning in Chennai and Mumbai

• DeHeng Law Office in New Delhi

• Desai & Chinoy in Mumbai

• Desai & Diwanji in Bombay

• Dhir & Dhir Associates in New Delhi

• Dua Associates in New Delhi, Bangalore, and Mumbai

• Dubey & Partners in New Delhi

• Dutt Menon Dunmorr Sett in Bhubaneshwar, New Delhi, and Mumbai

• Economic Laws Practice in New Delhi and Mumbai

• Federal & Rashmikant in Mumbai

• Fox Mandal Little in Mumbai, Hyderabad, Chennai, Chandigarh, Bhubaneswar, Bangalore,Kolkata, Mumbai, New Delhi, Cochin, and New Delhi

• Gagrats in Mumbai and New Delhi

• Gandhi & Associates in Mumbai

• General Law Partners in Hyderabad

• Global Business Solutions in Chennai

• Gopakumar Nair Associates (GNA) in Mumbai

• H. K. Acharya & Company in Ahmedabad

• HSB Partners in Chennai

• Haresh Jagtiani & Associates in Mumbai

• Hariani & Co in Mumbai

• Hemant Sahai Associates - Advocates in Goa, Bangalore, Mumbai, and New Delhi

• Holla & Holla in Bangalore

• India Juris in New Delhi

• India Law Services in Bangalore and Mumbai

• IndoJuris Law Offices in New Delhi, Chennai, and Bangalore

• Indus G&D Law in New Delhi and Bangalore

• Iyer & Thomas Advocates in Chennai

• J Sagar Associates in New Delhi, Hyderabad, Mumbai, and Bangalore

• JM Sharma & Co in New Delhi

• Jafa & Javali in New Delhi

• Jehangir Gulabbhai & Bilimoria & Daruwalla in Mumbai

• Juris Corp in Mumbai

• K & S Partners in New Delhi and Bangalore

• K R Chawla & Co in Bangalore

• K. R. Chawla in New Delhi

• KSB Partners in Haryana

• Kachwaha & Partners in Chennai and New Delhi

• Kainth & Associates in Bangalore

• Kanga & Co in Mumbai

• Karanjawala and Company in New Delhi

• Kelley Drye & Warren LLP in Mumbai

• Kesar Dass B. & Associates in New Delhi

• Khaitan & Co. in Bangalore, Kolkata, New Delhi, and Mumbai

• King & Partridge Advocates in Madurai and Chennai

• King, Stubb & Kasiva in New Delhi, Chennai, and Bangalore

• Kochhar & Co in Bangalore, Chennai, Mumbai, and New Delhi

• Koura & Company in New Delhi

• Kris & Kolloth in New Delhi and Bangalore

• Krishna & Saurastri in Mumbai and Bangalore

• Krishnamurthy and Co in Bangalore

• L P Agarwalla & Co in Kolkata

• Lakshmikumaran & Sridharan in New Delhi

• Lall & Sethi Advocates in New Delhi, Bangalore, and Mumbai

• Lall Lahiri & Salhotra in Gurgaon

• Lex Nexus Advocates & Solicitors in Mumbai, Mumbai, and New Delhi

• Lexindia in New Delhi

• Lexygen in Bangalore

• Link Legal in New Delhi

• Luthra & Luthra in New Delhi, Bangalore, and Mumbai

• M Dhruva & Co in Mumbai

• M S Oberoi & Co in New Delhi

• MD&T Partners in Bangalore

• Majmudar & Co in Bangalore and Mumbai

• Mallar Law Consulting in Mumbai

• Manilal Kher Ambalal & Co in Mumbai

• Mars & Partners in New Delhi

• Mason & Associates in New Delhi

• Mehta & Mehta Associates in Gurgaon

• Mkono & Co in Bombay

• Mulla & Mulla & Craigie Blunt & Caroe in Bangalore and Mumbai

• NDLO South in Haryana

• Nanavati Associates in Ahmedabad

• Narasappa, Doraswamy & Raja in Bangalore

• Nishith Desai Associates in Bangalore and Mumbai

• O.P. Khaitan & Co. Solicitors and Advocates in New Delhi

• Obhan & Associates in New Delhi

• Office Of Parasaran in Chennai

• P & A Law Offices in Mumbai and New Delhi

• P H Parekh & Co in New Delhi

• PSA Legal Counsellors in New Delhi

• Paras Kuhad & Associates in Jaipur, Jodhpur, Mumbai, Ahmedabad, New Delhi, Kolkata,Pune, and Chennai

• Parker & Parker Company in Ahmedabad

• Pavan Duggal Associates Advocates in New Delhi

• Poovayya & Co in Bangalore and New Delhi

• Preconcept in Noida

• Premnath Rai Associates in New Delhi

• Puthran & Associates in Chennai

• R Ginodia & Co in Kolkata

• R Murari, Advocate in Chennai

• R. Subrahmanyam & Associates in Chennai

• Radhakrishnan & Company in Cochin

• Rajani Associates, Advocates & Solicitors in Mumbai

• Rajinder Narain & Co in Mumbai and New Delhi

• Ranjan & Narula Associates in Gurgaon

• Remfry & Sagar in Gurgaon

• S Jalan & Company in Kolkata and New Delhi

• S Majumdar & Co in Kolkata and Mumbai

• S&R Associates in New Delhi

• S. Venkateshwaran in Mumbai

• S.K. Tulsiyan & Co in Kolkata and Mumbai

• S.N. Gupta & Co in New Delhi and Mumbai

• SKS Law Associates in Haryana and New Delhi

• Saikrishna & Associates in Noida

• Sandersons & Morgans in Kolkata

• Seth Dua & Associates in Bangalore and New Delhi

• Sewak and Associates in New Delhi

• Sharma & Sharma in New Delhi

• Sibal and Eradi in New Delhi

• Singh & Associates in New Delhi

• Singhania & Co in Mumbai, Hyderabad, Chennai, Kolkata, Bangalore, New Delhi, and Chandigarh

• Singhania & Partners in Mumbai, Mumbai, Hyderabad, New Delhi, and Bangalore

• Singhi & Co in Ahmedabad

• Sinha & Company, Advocates in Kolkata

• Solomon & Co. in Mumbai

• Suman Khaitan & Co in New Delhi

• Sunil Kansal & Associates in Mumbai and New Delhi

• Surana & Surana International Attorneys in Chennai

• Swarup & Company in New Delhi

• Talwar Thakore & Associates in Mumbai

• Thakker & Thakker in Bangalore, New Delhi, Mumbai, and Hyderabad

• Thiru & Thiru in Hyderabad, Chennai, and Bangalore

• Thomas & Krishnaswami Law Associates in Chennai

• Titus & Co in New Delhi

• Trilegal in Andhra Pradesh, Mumbai, Bangalore, and New Delhi

• Tuli & Co in Mumbai and New Delhi

• Tyabji Dayabhai in Mumbai

• Udwadia & Udeshi in Bangalore and Mumbai

• V J Mathew & Co in Cochin, Coimbatore, Bangalore, New Delhi, Tuticorin, and Chennai

• VNS Legal in Chennai

• Vaish Associates in New Delhi and Mumbai

• Victor Moses & Co in Kolkata

• Vigil Juris in Mumbai

• Viswanathan & Co in New Delhi

• W.S. Kane and Co/Law & Prudence in Mumbai

• Wadia Ghandy & Co in Mumbai, Pune, Ahmedabad, Bangalore and New Delhi

• White & Case LLP Liaison Office in Mumbai

Do a Ctrl + F to find the law firm you are looking for.

This is not a complete list and there are several firms who have offices at places other than those mentioned above.

Limited Liability Partnership Bill, 2008

The new Limited Liability Partnership Bill, 2008 - Download here

Comments / discussion on the bill are welcome

Upcoming articles

I am planing to write articles on the following subjects and would appreciate inputs (which will be included in the article) from the readers.

The topics are -

1. Whether a non agriculturist can purchase agricultural land? If yes, how;

2. Whether a company can purchase agricultural land in Maharashtra

If anyone has a suggestion / topic to recommend, please post a comment and I will update the list.

Seven new services under Service Tax net

With the Finance Bill 2008 receiving Presidential assent, Seven new taxable services will come under the Service Tax net w.e.f May 16. These new services include Information Technology, Software services, investment management services, ULIP, Internet Telecommunication services, stock exchange services, Commodity Exchanges and Clearing houses.

The revenue department has also extended the scheme of refund of service tax paid by exporters to three additional services, taking the total number of services for which service tax refund is available to exporters to 19.

Exporters can now get service tax refund on purchase or sale of foreign currency by authorised dealers or foreign exchange brokers.

However, exporters have to produce evidence to show that the services utilised by them for purchase or sale of foreign currency is related to export of goods.

So if you fall under any of the new services, remember to comply with the provisions of the Service Tax Act

Post Budget rate of CST

Post Budget rate of CST

Though the Hon'ble Finance Minister has announced reduction of Central Sales Tax Act (CST) from 3% to 2%, notification regarding the same has not been issued till today. So in such a situation, it is suggested that dealers should continue charging CST @ 3%. In case there is a notification on later date with retrospective effect, excess of 1% can be adjusted against future bills or as per discretion or settlement reached between the parties.

Trade Circular

CAs can audit; Sales Tax Lawyers can't: HC

In a decision that will affect the lawyers specialising in Sales Tax laws as well as former Sales Tax officers' who work as sales tax practitioners, Bombay High Court has held that only Chartered Accountants (CAs) can audit and certify accounts for traders.

Hitherto, traders had to hire only sales tax lawyers or former sales tax officers as advisors in tax matters. But a recent amendment to Maharashtra Value Added Tax Act made it mandatory for traders with sale of over Rs 40 lakhs to get their accounts audited and certified by a professional CA.

The amendment specifies that only a CA can audit the account. It allows lawyers and other sales tax practitioners to represent traders before sales tax commissioner and tribunals, but not to audit accounts.

Various organisations, including Bar Council of Maharashtra and Goa, the Sales Tax Practitioners Association of Maharashtra and Bombay Small Scale Industries Association moved High Court, claiming that this restraint violated right to equality enshrined in the Constitution.

Also, it would force traders to cough up extra money for engaging CAs, they contended. But division bench of Justices F I Rebello and R S Mohite rejected these arguments. "Auditing is a specialised job which can be undertaken by the person professionally competent and trained to audit," judges said, holding that advocates and other sales tax practitioners were not qualified for this job.

SOURCE

SEBI Circular on Mutual Fund Warning

Taking a note of the hasty and unintelligible manner in which the Mutual Fund advertisers warn about the market risks associated with Mutual Funds, the SEBI has issued a circular bearing no. SEBI/IMD/CIR No.12/118340/08 Dated 26.02.2008 setting guidelines for the manner in which such warning/message is to be conveyed.

The circular states that -

- The time for display of the standard warning be over a period of five seconds in case of audio advertisements and shall be read in an easily understandable manner.

- In case of audio visual advertisements the time for display and voice over of the standard warning be enhanced to five seconds.

All mutual funds are required to comply with the above requirements in letter and spirit.

So with effect from April 1, 2008, expect the statement - "Mutual Fund investments are subject to market risks, read the offer document carefully before investing" to be recited in an intelligible manner . This step of SEBI is definitely appreciable.

Taxation in IPR

“The Indian economy is overheated” says the Finance Minister. This comes as a prologue to the fact that the Government of India is bringing more and more sources under the taxation net or is tweaking the existing laws to levy taxes on a number of items/services/incomes, etc. This is being done through changes to existing laws or introduction of new sections in various acts like the Income Tax Act, Central Sales Tax Act, Value Added Tax Act, Profession Tax Act, Service Tax Act, etc. So in such a situation how can an upcoming sector like Intellectual Property Rights (IPR) be left out of purview of taxation?

Under the Intellectual Property Rights, the person assigning his rights to someone else earns an income in the form of Royalty. A person may also totally sell off his “trademark”, “patent”, “design” or “copyright” for a consideration.

TAXATION AND IPR –

1. Service Tax & IPR –

With effect from September 10, intellectual property services (other than copyrights) have been brought under the service tax net. According to the Revenue Department the definition of taxable services includes only such IPRs (except copyright) that are prescribed under law for the time being in force.

The Finance Ministry is of the view that the IPRs esp. Integrated circuits/undisclosed information would not be covered under the Taxable Services as these rights are not covered or prescribed under Indian Law.

Whether Payment of Royalty is a service ?

Payment of Royalty is not a service. It is rather a profit of the owner for permitting another to use his property. Hence payment of royalty should not be treated as a payment for service. IPR is in nature of property and the right to use IPR is a transaction in property and not consultancy or advice

Service Tax and Permanent transfer of IPR –

It has also been made clear by the Revenue Department that IPRs covered under Indian law in force at present alone, are chargeable to service tax. Further, permanent transfer of IPRs would not attract Service Tax because such transfer does not amount to rendering of service.

In cases where cess is levied under the Research and Development Cess Act, the Department has held that the cess amount so paid would be deductible from the total service tax payable.

Temporary transfer or permission to use or enjoy IPR can be classified as transfer of right to use goods, as it involves transfer of right to use movable property. Therefore, a tax on IPR is in pith and substance a tax on transfer of right to use IPR and not a tax on services.

Income Tax and IPR –

Earlier there was a lot of confusion over the provisions of Income Tax Act relating to Income Tax Act. However, over a period of time, various decisions given by the Tribunals, High Courts and Hon’ble Supreme Court and amendments to the Income Tax Act, the picture is quite clear now regarding transactions in IPR and its effect from Income Tax point of view

Purchase of Copyright – Capital or Revenue Expenditure -

Purchase of (c) is capital expenditure. Price paid for purchasing copyright of a book publisher and seller of books is capital expenditure – Hira Lal Phoolchand Vs. CIT [1947] 15 ITR 205 (All.)

Royalty for user of Trademark –
Royalty paid by the assessee for user of TM of another company is allowable as revenue expenditure. (CIT Vs. Raipur Manufacturing CO. [1996] 132 CTR (Guj.) 63

Expenditure on registration of Trademark -

Expenditure on registration of TM is not capital expenditure – The advantages derived by the owner of the TM by registration falls within the class of maintenance of the capital asset. The fact that a TM after regis. could be separately assigned and not as a part of the goodwill of the business only, does not also make the expenditure for registration a capital expenditure – CIT v. Finlay Mills Ltd. [1951] 20 ITR 475 (SC).

Deduction in repect of expenditure on acquisition of Patent -

As the term patent defined under the Patents Act 1970, only inventions can be patented and Beedi rolling or manufacturing, being not an invention, cannot be patented nor any patent right can be created therein. Therefore deduction cannot be claimed of expenditure on acquisition of patent or (c) in Beedi rolling or manufacturing in terms of Section 35A – CIT Vs. Mangalore Ganesh Beedi Works [2003] 128 Taxman 351/264 ITR 142 (Kar.).

Deductions U/s. 80O if the Income Tax Act -

From assessment year 2005 – 2006 and onwards no deduction shall be allowable in respect of income/royalty received from foreign enterprises in consideration for use outside India of any patent, invention, design or registered Trademark.

Conclusion –

Intellectual property laws in India are amongst the best in the world. The real problem is the implementation–the enforcement machinery is inadequate and the judicial process is slow.

So to improve this scenario, India will require great deal of political will, intellectual skill and administrative drill.