When Multiple Agreements Are Not Interconnected, Arbitration Clause In Any One Agreement Can't Justify Referring All Disputes To Arbitration: Telangana HC

The Telangana High Court bench of Chief Justice Alok Aradhe and Justice Sreenivas Rao, affirmed that where multiple agreements are interconnected and form part of a single commercial transaction then only the presence of an arbitration clause in one or more agreements can justify referring all disputes, involving all agreements and parties, to arbitration. This is true even if some agreements lack an arbitration clause. In this case, the court found that agreements were not interconnected.Brief...

Amount Received By Assessee Under Agreement To Not Carry On Competitive Business Is In Nature Of 'Capital Receipt', Not Exigible To Tax: Telangana HC

The Telangana High Court has held that the amount received by the developer of Hepatitis-B vaccine, under a co-marketing agreement with PFIZER Company, is a capital receipt not liable to tax. A division bench of Chief Justice Alok Aradhe and Justice J. Sreenivas Rao reasoned that the developer-assessee's right to promote, market, distribute or sell the vaccine or a new competitive product to a third party was taken away under the agreement. “The payment of the amount under the...

[Deemed Dividend] Accumulated Profits Of Company U/S 2(22)(e) Of Income Tax Act Are Computed After Adjusting Depreciation: Telangana HC

The Telangana High Court has held that for purposes of taxation, “accumulated profits” of a company are to be calculated after adjusting depreciation as per the Income Tax Act, 1961. In ruling so, a division bench of Chief Justice Alok Aradhe and Justice J. Sreenivas Rao cited two rulings of the Bombay High Court which held that “depreciation as granted in accordance with the rates prescribed by the Income-tax Act would have to be deducted for ascertaining the accumulated profits.” ...

Hotel Replacing Damaged Furniture, Carpets Is Current Expenditure Allowable U/S 37 Income Tax Act: Telangana HC

The Telangana High Court has held that the expenditure incurred by a hotel on replacement of damaged items is a current expenditure, allowable under Section 37 of the Income Tax Act, 1961. Section 37 of Income Tax Act states that any business expenditure, excluding capital expenditure and the individual's personal expenses, that is spent for the business's operations shall be applicable for deduction from business income. A division bench of Justices Sujoy Paul and Namavarapu ...

Telangana High Court Reiterates Limited Scope For Interference With Arbitral Awards U/S 34 Of Arbitration & Conciliation Act, 1996

The Telangana High Court bench comprising Chief Justice Alok Aradhe and Justice J. Sreenivas Rao has held that an interim order passed by an arbitral tribunal under section 17 of the Arbitration and Conciliation Act, 1996, restraining the encashment of a bank guarantee does not warrant interference under section 34 of the Act. The court also held that section 34 does not permit the court to act as an appellate body or correct errors of law or fact. Brief Facts: The Andhra Pradesh...

Court U/S 11 Of Arbitration Act Only Checks For Existence Of Agreement, Jurisdictional Questions To Be Decided By Arbitrator: Telangana HC

The Telangana High Court Bench of Chief Justice Alok Aradhe affirmed that Sub-section (1) of Section 16 provides that the Arbitral Tribunal may rule on its own jurisdiction, “including any objections” with respect to the existence or validity of the arbitration agreement. Section 16 is an inclusive provision, which would comprehend all preliminary issues touching upon the jurisdiction of the Arbitral Tribunal. The issue of limitation is a jurisdictional issue, which would be required to...

Parties To Lis Should Not Be Appointed As Receiver Without Consent Of Other Parties: Telangana High Court

The Telangana High Court Bench of Chief Justice Alok Aradhe And Justice J.Sreenivas Rao held that impartiality is an essential attribute of a Receiver. Therefore, normally one of the parties to a lis should not be appointed as Receiver without consent of the other parties unless a very special case is made out. Brief Facts This appeal under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the 1996 Act') has been filed against the order ...

S.10(23G) IT Act | Capital Invested To Purchase Shares Of 'Infrastructure Facility' Before June 1998 Can't Be Included In Total Income: Telangana HC

The Telangana High Court has held that the capital expenditure made prior to June 1998, for purchasing shares in any 'infrastructure facility', cannot be included in an assessee's total income. A division bench of Justices Sujoy Paul and Namavarapu Rajeshwar Rao reasoned, “The capital expenditure for purchasing shares falls under the category of infrastructure facilities and shall not be included in total income. This is because merely purchasing shares does not contribute to the...

Arbitral Tribunal Is The Fulcrum And The Facilitator For Taking Evidence Under Section 27 Of Arbitration And Conciliation Act: Telangana High Court

The Telangana High Court division bench of Justice Moushumi Bhattacharya and Justice M.G. Priyadarshini, while dismissing a Civil Revision Petition (CRP), has held that the Arbitral Tribunal is the fulcrum and the facilitator under Section 27 of the Arbitration Act. The Bench further held that only Arbitral Tribunal can make a representation before a Court under Section 27(5). Section 27 of the Arbitration Act pertains to the assistance of the Court in taking evidence. The Arbitral...

Section 11 Can't Be Entertained Without A Notice Under Section 21 of Arbitration Act: Telangana High Court

The Telangana High Court Bench comprising Chief Justice Alok Aradhe has held that a valid notice under Section 21 of the Arbitration and Conciliation Act, 1996, is a mandatory requirement for invoking arbitration, and its absence renders an arbitration application under Section 11 of the Act non-maintainable. Brief Facts: The parties entered into a Franchise Agreement on 26.06.2019, which contained an arbitration clause. Disputes arose, and the applicant sought a refund of...

Telangana High Court Quashes Tax Authority's Show Cause Notices To Assessee As Demand Was Settled Under State's One Time Settlement Scheme

The Telangana High Court recently quashed two show cause notices issued by the tax authority to a company, demanding tax which was already settled under the state government's One Time Settlement (OTS) scheme, while noting that there was "no allegation of fraud" committed by the company in the notices. A division bench of Justice Sujoy Paul and Justice Namavarapu Rajeshwar Rao in its August 28 order said, that in the "peculiar facts and circumstances of this case", after the petitioner...

Commercial Courts Empowered To Hear Commercial Original Petition Arising From Section 37 Of Arbitration Act: Telangana High Court

The Telangana High Court division bench of Justice Moushumi Bhattacharya and Justice M.G. Priyadarsini has held that commercial courts are competent courts to hear the Commercial Original Petition arising from Section 37 of the Arbitration and Conciliation Act, 1996 in terms of specified value, territorial jurisdiction and the nature of the dispute i.e., commercial dispute. Brief Facts: The matter pertained to a Civil Revision Petition which arose from an order passed by Special...