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P. 16
LEGAL UPDATE
LEGAL
CASES
SC stays penalty on Tata Family accord to prevail over law suits
Sons The Supreme Court has given thumbs Meanwhile, the parties filed settle-
up to settlement of disputes against ment deeds before the Bombay and
The Supreme Court has restrained the litigation among business family mem- Rajasthan high courts.
Maharashtra government from im- bers when it ended three-decade row
in the case, Rajni Sanghi vs Western In- The disputes continued over technical
posing a pen- dian State Motors Ltd. The court ruled details. Ultimately, the Supreme Court
alty on the that if the parties settled their differ- upheld the settlement arrived at by
sales tax lev- ences amicably, their agreement shall the various family branches. "An
ied on Tata prevail though there were
Sons over the other proceedings like arbi- award will acquire the status
use of the tration. Even if there is an of a decree only when it is
TATA brand arbitration award, which has made a rule of the court af-
name by its subsidiaries. A bench of not been made into a decree ter rejection of all objec-
Chief Justice H.L. Dattu and Justice of the court, the family arrangement tions," the judgment
Amitava Roy stayed the levy of pen- will override it. emphasised.
alty on the sales tax after senior ad-
vocate Harish Salve, appearing for This was a case of partition of business It also reiterated that once there is an
Tata Sons, said the firm has "already among four branches of a family whose agreement by elders, "junior members
paid the entire tax (Rs 300 crore) leav- head died in 1961. Differences cropped of the family are bound by the decisions
ing a small amount of penalty". up in the 1980s and there was litiga- of Karta in matters of family business
tion in three high courts with compli- unless it can be proved that he acted
The sales tax demand relates to the cated questions of fact and law. There fraudulently or for immoral purposes."
royalty amount collected by the com- was also an arbitration award which Ignoring this traditional Hindu law has
pany on the use of the 'TATA' brand was not made decree of the court. put unnecessary burden not only on
name by its subscribing firms. The the larger family but also on the
apex court admitted the company's courts, the judgment observed.
appeal against the Bombay High
Court order in the case. CBDT defines 'charity' under I-T Act
Tata Sons had approached the apex With a view to weed out commercial activities under the guise of charity, the
court challenging a Bombay High tax department has said any public service that involves trade, commerce or
Court order which had ruled in favour business for a consideration will not be treated as charity under the I-T Act.
of the Maharashtra sales tax depart-
ment, upholding its decision to col- The explanatory note also provides details of rates of direct taxes, applicability
lect tax from Tata Sons under the of MAT on foreign entities, tax benefits for Swachh Bharat Kosh and Clean Ganga
state's 'Transfer of Right to Use Any Fund, besides other provisions of the Finance Act, 2015, approved by Parliament
Goods for Any Purpose Act, 1985'. in May.
16 | 2016 | JANUARY | BANKING FINANCE
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