9911796707
TMI Blog2024 (9) TMI 1570X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the acquisition/purchase of a Trade Mark registered in India, namely, of a Health Food Drink of the brand Horlicks ("India HFD IP"), by the petitioner from the foreign/non-resident group entities of GlaxoSmithKline Plc. who assigned such rights in favour of the petitioner under an Assignment Deed dated 1 April, 2020. The petitioner paid the foreign assignors an amount of Rs.3045.14 crores (EUR 375.6 million), which was remitted by the petitioner against the invoice raised by Horlicks Ltd., a British Company(HUK). 2. On 7 October, 2022, a notice under section 133 (6) of the Act was issued by the Deputy Commissioner of Income-tax/Assessing Officer to the petitioner calling upon the petitioner to furnish a detailed note of the nature of transaction qua the foreign remittance. Between the period October, 2022 and January, 2023, multiple notices under section 133 (6) were issued seeking details of the transactions. Such notices were duly responded by the petitioner and also at times, seeking extension of time. 3. It is the case of the petitioner that on 28 February, 2023, a notice under section 201 of the Act was issued to the petitioner inter alia recording that in connection w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at further two notices were issued to the petitioner, on 18 March, 2024. On 22 March, 2024, the petitioner filed reply to the show cause notice dated 11 March, 2024 intending to establish its bona fides with regard to non-taxability of the payments. The petitioner inter alia contended that the issue qua the basis of the demand stood covered in favour of the petitioner by the decision of the Delhi High Court in the case of CUB PTY Ltd. (formerly known as Foster's Australia Ltd.) vs. Union of India & Ors. (2016) 388 ITR 617 as also the decision of this Court in Mahyco Monsanto Biotech (India) Pvt. Ltd. vs. Union of India & Ors. 2016 SCC OnLine Bom 5274. 6. The petitioner has contended that another notice dated 27 March, 2023 under section 201 of the Act was issued by the Deputy Commissioner to the petitioner granting additional time to make submissions on or before 12 April, 2024. On 8 April, 2024, the petitioner filed a reply clarifying that no additional time was sought by the petitioner as petitioner's submissions were already on record. 7. It is on the aforesaid conspectus, the Deputy Commissioner of Income-tax passed the impugned order dated 23 August, 2024 under section 201 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Court. It is Mr. Mistri's submission that the decision of the Delhi High Court in fact settles the issue that such acquisition/ purchase of Intellectual Property Rights as involved in the present case would not attract the provisions of Section 201 of the Act and as there was no obligation whatsoever on the petitioner to deduct tax considering it to be a domestic transaction. 10. Mr. Mistri would next submit that the impugned order would be also required to be held to be illegal when tested on limitation, inasmuch as the same is not passed within a period of one year from the date of initiation of the proceedings, which according to Mr. Mistri needs to be on 28 February 2023 when a notice under Section 201 was issued to the petitioner. It is submitted that the limitation of one year is held to be reasonable period by the Income Tax Appellate Tribunal in the case of Mahindra and Mahindra Limited, which came to be accepted by this Court in the decision of Director of Income Tax (International Taxation) Vs. Mahindra and Mahindra Limited 2014 SCC OnLine Bom 693. It is therefore Mr. Mistri's submission that the petition needs to be admitted and interim relief is required to be gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is submitted that this principle has been recognized by the Deputy Commissioner/Assessing Officer in initiating action against the petitioner under Section 201. 13. Mr. Venkatraman would next submit that the petitioner's reliance on the decision of the Delhi High Court, is not correct, inasmuch as the Delhi High Court has not considered the effect of registration of a Trade Mark and the applicability of the provisions of the Trade Mark Act. It is his submission that in any event, all these issues are issues of facts and law which can be appropriately considered in the appellate proceedings and for such reason the extraordinary jurisdiction of this Court under Article 226 of the Constitution ought not to be exercised. Accordingly, Mr. Venkatraman has submitted that the petition be dismissed. 14. On Mr. Mistri's submission on the tenor and irresponsible language used by the Deputy Commissioner in commenting on the decision of the Delhi High Court in CUB PTY Ltd. (supra), Mr. Venkatraman would submit that there cannot be any justification to such observations. He agrees that apart from being totally unwarranted, such observations wholly lacked propriety. He is apologetic about su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of Section 195 being attracted requiring the petitioner to deposit tax at source and consequently for any action to be initiated against the petitioner under Section 201 of the Act. It is submitted that the decision of the Delhi High Court in CUB Pty Limited (supra) is followed by Division Bench of this Court in Mahyco Monsanto Biotech (India) Private Limited (Supra), squarely covered the issue. Hence, the Deputy Commissioner had no jurisdiction or he has illegally exercised jurisdiction to pass the impugned order. 18. Responding to the above submissions of Mr. Mistri, Mr. Venkataraman has relied on the provisions of Section 38 of the Trade Marks Act, 1999 which provides for assignability of Trade Mark to contend that Section 38 begins with a non-obstante clause to the effect "notwithstanding anything in any other law to the contrary a registered trade mark shall, subject to the provisions of Chapter V (Assignment and Transmission), be assignable and transmissible, whether with or without the goodwill of the business concerned and in respect either of all the goods or services". It is thus his submission that the trademark in question as dealt / acquired by the petitioner nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout which the opportunities for abuse are simply increased, and further uncertainty created" 33. The overwhelming judicial and academic opinion all over the globe, therefore, seems to be in favour of the territoriality principle. We do not see why the same should not apply to this Country. 34. To give effect to the territoriality principle, the courts must necessarily have to determine if there has been a spill over of the reputation and goodwill of the mark used by the claimant who has brought the passing off action. In the course of such determination it may be necessary to seek and ascertain the existence of not necessarily a real market but the presence of the claimant through its mark within a particular territorial jurisdiction in a more subtle form which can best be manifested by the following illustrations, though they arise from decisions of Courts which may not be final in that particular jurisdiction. 38. The next exercise would now be the application of the above principles to the facts of the present case for determination of the correctness of either of the views arrived at in the two-tier adjudication performed by the High Court of Delhi. Indeed, the trade m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior user so as to successfully maintain an action of passing off even against the registered owner. In any event the core of the controversy between the parties is really one of appreciation of the evidence of the parties; an exercise that this Court would not undoubtedly repeat unless the view taken by the previous forum is wholly and palpably unacceptable which does not appear to be so in the present premises. 40. If goodwill or reputation in the particular jurisdiction (in India) is not established by the plaintiff, no other issue really would need any further examination to determine the extent of the plaintiff's right in the action of passing off that it had brought against the defendants in the Delhi High Court. Consequently, even if we are to disagree with the view of the Division Bench of the High Court in accepting the defendant's version of the origin of the mark 'Prius', the eventual conclusion of the Division Bench will, nonetheless, have to be sustained. We cannot help but also to observe that in the present case the plaintiff's delayed approach to the Courts has remained unexplained. Such delay cannot be allowed to work to the prejudice of the defendants who had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the Court in the writ jurisdiction. To accept such proposition would be too extreme, as issues of jurisdiction and more particularly, as arising in the present proceedings, cannot be tested in such manner, so as to come to a conclusion that the Assessing Officer has acted in patent lack of jurisdiction merely because he holds that a particular decision would not cover the issue in the facts of the case. 22. We may also observe that this is certainly not a case where the Assessing Officer has conferred upon himself a jurisdiction which is not vested in him in law, in passing the impugned order, so that the Court needs to hold that the authority lacked jurisdiction to pass the impugned order. Certainly, if the Assessing Officer was to exercise jurisdiction not vested in him or in a patently illegal manner or ex facie contrary to the substantive provisions of the Income Tax Act, then certainly following the well settled principles of law as laid down in catena of judgments of the Supreme Court, the Court would unhesitatingly interfere in writ proceedings. However, the petitioner's contention that the Deputy Commissioner in view of the decision of the Delhi High Court in CUB Pty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emain to be a paper provision and every order passed by the Assessing Officer, on the considerations as canvassed before us, would be amenable to challenge in writ proceedings. In our opinion, this is certainly not an acceptable proposition. 24. We may usefully refer to the decision of this Court in Kharghar Co-op. Housing Societies Federation Ltd., through General Secretary & Anr. vs. Municipal Commissioner, Panvel Municipal Corporation & Ors. 2023 SCC Online Bom 775 to which one of us is a member (G.S. Kulkarni, J.) wherein referring to the decision of the Supreme Court in Shivram Poddar vs. Income Tax Officer, Central Circle II, Calcutta and Anr. AIR 1964 SC 1095 as also a decision of three Judge Bench of the Supreme Court in Income-Tax Officer, Lucknow vs. M/s. S.B. Singar Singh & Sons & Anr. (1976) 4 SCC 325, this Court had held that it may not be appropriate for the Writ Court to short circuit or circumvent statutory procedures and it is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating to assessment, levy and collection of income-tax may be permitted only when questions of infringement of fundamental rights arise, or where on undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess. In attempting, to bypass the provisions of the Income-tax Act by inviting the High Court to decide questions which are primarily within the jurisdiction of the revenue authorities, the party approaching the court has often to ask the court to make assumptions of facts which remain to be investigated by the revenue authorities. 20. In the instant case, the High Court had assumed jurisdiction on the assumption that a certain ground had been urged before the Income-tax Appellate Tribunal which had arbitrarily refused to consider the same and record a finding thereon. This assumption, in our opinion, stood thoroughly discounted by the concomitant circumstances of the case, including the dilatory and questionable conduct of the assessee. This was therefore not a fit case for the exercise of its special jurisdiction under Article 226 by the High Court." 31. In Assistant Collector of Central Exicse, Chandan Nagar, West Bengal Vs. Dunl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it will ordinarily be exercised subject to certain self-imposed limitations. Resort to that jurisdiction is not intended as an alternative remedy for relief which may be obtained in a suit or other mode prescribed by statute. Ordinarily the Court will not entertain a petition for a writ under Article 226, where the petitioner has an alternative remedy which, without being unduly onerous, provides an equally efficacious remedy. Again the High Court does not generally enter upon a determination of questions which demand an elaborate examination of evidence to establish the right to enforce which the writ is claimed. The High Court does not therefore act as a court of appeal against the decision of a court or tribunal, to correct errors of fact, and does not by assuming jurisdiction under Article 226 trench upon an alternative remedy provided by statute for obtaining relief. Where it is open to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit, by entertaining a petition under Article 226 of the Constitution, the machinery created under the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te stage, if at all the decision of the Tribunal is adverse to its interest, it would not be prudent in the judicious exercise of discretion to derail the procedure ignoring the law contained in the MVAT Act." 25. Insofar as the issue of limitation is concerned, it appears to be an admitted position that Section 201 ipso facto has not provided for any limitation of one year. In our opinion also the decision of this Court in Director of Income Tax Vs. M & M Limited (Supra) although affirms the decision of the tribunal when the tribunal, observed that maximum time limit for passing an order under section 201 (1) or section 201 (1A) would be the same as prescribed under section 158(2) that is one year from the end of the financial year for which proceedings under section 201 (1) are initiated. The High Court has not conclusively and categorically held that the Tribunal was correct in laying down such limitation when the legislature itself has not prescribed any limitation. We also have a quarrel on the proposition as to whether the Tribunal could at all prescribe and / or lay down any period of limitation, which is wholly within the domain of the legislature, when the legislature its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 256 (Delhi), wherein the Division Bench held that the legislature has consciously not prescribed any time limit for an order under Section 201 (1) of the Act insofar as non-resident is concerned; the reason being that deductee is a non-resident, it may not be administratively possible to recover the tax from the non-resident. The following observations of the Telangana High Court are required to be noted which reads thus: "26. With utmost respect, we are unable to agree with the views expressed by the Delhi High Court. As we have already seen, initially the statute did not provide for any limitation, be it a resident Indian or a non-resident Indian. Subsequently, by way of amendment, sub-section (3) was inserted in Section 201 of the Act. Presently, the limitation for passing of an order under Section 201 (1) of the Act post the last amendment is seven years insofar a person resident in India is concerned. The present case covers the assessment year 2016-2017, which is well after the last of the amendments were made and when limitation period qua resident Indians is seven years. 27. We have also seen that the legislature has consciously not prescribed any time limit for an orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fresh order along with stay application including to make appropriate prayers in regard to penalty proceedings. Till appropriate orders are passed on the stay application, the demand be not enforced against the petitioner. 29. Before parting, we record that we have taken a serious note of the observations as made by the Deputy Commissioner in dealing with the decision of the Delhi High Court in CUB Pty Ltd. (supra). Such observations were totally unwarranted. The Deputy Commissioner could not have commented on the decision of the Delhi High Court in such irresponsible manner. We accept Mr. Venkatraman's contention that such observations can in no manner, have any sanctity. In this view of the matter, we direct that, within two days from today, all such observations as made by the Deputy Commissioner in the impugned order, be expunged and after such deletion a fresh copy of the order be made available to the parties. We also warn the concerned officer to be extremely cautious and careful in future so as to remain within the limits of propriety, in the discharge of his quasi-judicial role, conferred under the provisions of the Income Tax Act. We also urge the learned ASG that in ..... 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