Taxation Law - Transfer Pricing – International Transaction – AMP Expenses – Absence of Agreement – No Adjustment Required – The Transfer Pricing Officer (TPO) treated AMP expenses incurred by the assessee as an "international transaction" for brand-building for its Associated Enterprise (AE) and made an adjustment – The ITAT held that the Revenue failed to establish the existence of an "international transaction" as defined under Section 92B of the Income Tax Act – Held: The existence of an international transaction cannot be inferred merely based on high AMP expenditure, and there must be an arrangement, agreement, or understanding between the parties to trigger transfer pricing provisions – ITAT's decision upheld [Paras 4, 10, 29-30].

Transfer Pricing – Benchmarking Analysis – Revenue’s Burden to Prove International Transaction – The Revenue contended that excessive AMP expenditure resulted in a transfer pricing adjustment – The Court held that before undertaking benchmarking analysis, the Revenue must first establish the existence of an international transaction with tangible evidence – Mere comparison with industry standards or other entities' AMP expenditures does not justify a transfer pricing adjustment – ITAT’s decision to quash the addition upheld [Paras 7, 23-24].

Bright Line Test – Not a Valid Basis for Transfer Pricing Adjustment – The TPO applied the "Bright Line Test" (BLT) to determine excess AMP expenditure benefiting the AE – The Court referred to the decision in Maruti Suzuki India Ltd. v. CIT and Sony Ericsson Mobile Communications India (P.) Ltd. v. CIT, reaffirming that BLT has no statutory basis and cannot be used to determine the existence of an international transaction – The Revenue's approach of inferring a transaction based on excess AMP expenditure rejected [Paras 26-27, 60, 62].

Transfer Pricing – Relationship with AE Alone Not Sufficient to Presume International Transaction – The Revenue argued that AMP expenditure benefited the foreign AE and thus should be considered an international transaction – The Court rejected this argument, holding that the mere existence of a parent-subsidiary relationship does not automatically imply an obligation to incur AMP expenses on behalf of the AE – The Tribunal's finding that no agreement or arrangement existed was upheld [Paras 9, 11, 29].

Decision: Appeals dismissed – ITAT’s order upheld – Transfer pricing adjustment on AMP expenditure deleted – Revenue failed to establish the existence of an international transaction.

Taxation Law - Reassessment Proceedings – Requirement of Failure to Disclose Material Facts – Jurisdictional Condition – Section 147 of the Income-tax Act – Reassessment notice issued after four years from the end of the relevant assessment year must satisfy the condition that income escaped assessment due to failure to disclose fully and truly all material facts – In the present case, reassessment proceedings were initiated without establishing such failure – Held: Reassessment proceedings are invalid and without jurisdiction [Paras 20-23].

Reassessment Proceedings – Bar Under Third Proviso to Section 147 – Where the subject matter of reassessment is pending in appeal before the appellate authority, reassessment proceedings on the same issue are barred – In the present case, the issue of "guarantee fee" was already under appeal before the Tribunal – Held: Reassessment proceedings initiated on the same issue are without jurisdiction and liable to be quashed [Paras 24-25].

Reassessment Proceedings – Absence of Fresh Tangible Material – Change of Opinion Not Permissible – Reassessment cannot be initiated based on the same material that was already considered during original assessment – The reasons for reopening did not rely on any new material – Held: The reassessment proceedings amount to a mere change of opinion, which is impermissible in law [Paras 22-23, 26].

Notice under Section 148 – Compliance by Treating Original Return as Response – An assessee is not barred from challenging reassessment proceedings merely for not filing a fresh return in response to Section 148 notice – If the assessee requests the department to treat the previously filed return as a response, it constitutes substantial compliance – Held: Petitioner complied with Section 148 notice requirements, and the reassessment order remains challengeable [Paras 28-29].

Quashing of Reassessment Proceedings – Absence of Jurisdictional Grounds – Section 147 & 148 of the Income-tax Act – Since there was full disclosure, the issue was already under appeal, and no fresh tangible material existed, the jurisdictional conditions under Section 147 were not satisfied – Held: The reassessment notice under Section 148 and the subsequent reassessment order are quashed as without jurisdiction [Paras 27, 30-31].

Service Law – Delay in Pension and Gratuity Payment – Writ Allowed – The petitioner’s husband, a former Civil Judge (Senior Division), was dismissed from service on 28.02.2001, but his dismissal was quashed by the High Court on 09.03.2018 – Despite this, pension and gratuity were not released until March 2024 – Held: Denial of pension and gratuity despite the setting aside of dismissal was arbitrary and illegal – Pension is not a bounty but a right under Article 300-A of the Constitution – Interest on delayed payment ordered [Paras 3.1-4.4].

Administrative Lapses – Failure to Release Provisional Pension – Unjustified Hardship to Widow – Despite the High Court’s 2018 ruling quashing the dismissal, neither provisional pension nor family pension was released until 2024 – Held: Delay in pensionary benefits caused undue hardship to the widow of the deceased officer – Pension rules mandate that provisional pension must be paid immediately after retirement – Withholding pension without legal justification is impermissible [Paras 3.2-4.2].

Judicial Review – Recovery of Subsistence Allowance Illegal – Violation of Rules – Respondents attempted to recover subsistence allowance paid during the deceased’s suspension from 17.08.1996 to 30.06.1999 – Held: Such recovery is illegal under Punjab Civil Services Rules, as the suspension period was later regularized – Government cannot recover subsistence allowance unless misconduct is proven, which was not the case here [Paras 3.5-3.6].

Final Decision – Writ Allowed – Compensation and Interest Granted – High Court directed the respondents to:

•    Pay interest at 10% per annum on delayed pension from 01.07.1999 till payment.
•    Pay interest at 10% per annum on delayed family pension from 03.10.2021 till payment.
•    Pay interest at 10% per annum on delayed gratuity from 09.03.2018 till realization.
•    Consider representation for retrospective promotion within 30 days.
•    Pay ₹25,000 as exemplary costs to the petitioner within 60 days.

Civil Writ - Public Employment – Prescribed Qualification vs. Equivalent Qualification – KPSC’s Inconsistent Approach Struck Down – The petitioners contended that their qualifications, recognized by government institutions, were equivalent to the prescribed qualification in the recruitment notification – The Court found that the KPSC had arbitrarily excluded them despite initially considering them eligible – Held: Once KPSC accepted the qualifications and included the petitioners in the shortlist, their later exclusion was unjustified [Paras 9-10].

Recruitment Process – Equivalence of Qualifications – Supreme Court’s Observations on KPSC’s Inconsistency – The Supreme Court in Anoop M v. Gireeshkumar T.M. emphasized that equivalence applied to institutions rather than qualifications themselves – The Kerala High Court reiterated that KPSC could not reject candidates possessing qualifications from government-approved institutions when the same were accepted in previous selections – Held: KPSC’s rejection of candidates without a proper assessment was arbitrary and violative of settled principles of public employment [Paras 7-8].

KPSC’s Duty – Transparent and Fair Selection Process – Non-Speaking Orders on Exclusion Invalid – The Court noted that KPSC had sent official messages to candidates confirming their eligibility, only to later exclude them without valid reasoning – Held: The rejection of the petitioners’ names from the final rank list was arbitrary, and they must be reinstated in accordance with merit [Paras 8-9].

Final Decision – Writ Petitions Allowed – Petitioners to be Included in Rank List – The Court directed KPSC to include all petitioners who were originally shortlisted and whose qualifications were accepted, ensuring their placement in the final rank list according to merit – Held: Writ petitions allowed, and all interlocutory applications closed [Para 10].
 

Labour Law – Delay in Raising Industrial Dispute – Void Orders Must Be Challenged Within Limitation – Labour Court Award Set Aside – Punishment orders passed in 1996, 1999, and 2000 were set aside by Labour Court on reference raised by Union in 2006 – Held: As per State of Punjab v. Gurdev Singh, even void orders must be challenged within prescribed limitation – Labour Court wrongly ignored binding precedent and entertained stale claim [Paras 2–4, 7–10].

Industrial Dispute – Reference by Union vs. Workman – Challenge Must Be Personal – Court observed that reference was raised by the Union and not by the affected workman – Prayer in reference was for salary increment restoration, not direct challenge to punishment orders – Tribunal erred in granting substantive relief beyond scope of reference [Paras 6–7].

Judicial Discipline – Binding Precedent of Supreme Court Ignored – Court found the Labour Court acted contrary to the ratio in Gurdev Singh (1991), which mandates a 3-year limitation even for void orders – Held: Failure to follow binding precedent renders award perverse and unsustainable [Paras 8–10].

Decision: Writ petition allowed – Award of Labour Court dated 28.03.2016 set aside – Orders of punishment reinstated – Court held that claim was barred by limitation and Labour Court exceeded its jurisdiction [Para 11].

Civil Procedure – Injunction Against Title Holders – Maintainability – Petitioner sought an interim injunction restraining respondents (title holders) from alienating the suit property, claiming a contractual right based on an unregistered sale agreement – Trial Court and Appellate Court rejected the claim, holding that an injunction cannot be granted against the rightful owners – Held: A person in wrongful possession is not entitled to an injunction against the true owner – Mere existence of an agreement to sell does not create any ownership rights – Petition dismissed [Paras 14-16].

Professional Misconduct – Advocates Act – Ethical Violations – Counsel for the petitioner, Ms. Preethi Basker, was found to have engaged in professional misconduct, including conflict of interest, unethical financial dealings, and misrepresentation before the court – Held: Prima facie case of misconduct established – Direction issued to the Bar Council of Tamil Nadu and Puducherry to initiate disciplinary proceedings against the advocate – Matter referred for further inquiry [Paras 27-29].

Fraud and Misrepresentation – Sale Agreement – Suppression of Material Facts – Petitioner and his associates allegedly manipulated legal proceedings to extort money from respondents – Evidence of falsified transactions, fraudulent agreements, and intimidation tactics presented – Held: Such conduct amounts to abuse of judicial process – Proceedings directed to be scrutinized by the appropriate authorities [Paras 30-32].

Decision – Civil Revision Petition Dismissed – Court upheld the findings of the Trial Court and Appellate Court, confirming that the petitioner had no legal right to seek an injunction against the property owners – Directions issued for disciplinary and legal action against concerned individuals – No costs [Paras 68-69].
 

Civil Law - Order 18 Rule 17 CPC – Scope and Purpose – Witness Recall Rejected – Petitioner sought recall of plaintiff witnesses PW-2 to PW-4 for further cross-examination on the ground that certain material questions were omitted earlier – Held: Provisions of Order 18 Rule 17 CPC are meant for clarification of doubts by the Court and not to fill lacunae in a party’s case – Recall of witnesses to cure evidentiary omissions is not permissible – Trial Court rightly dismissed the application [Paras 5–8].

Judicial Discretion – Order 18 Rule 17 CPC – Exercise of Power – Discretionary and Limited – Held: The power under Order 18 Rule 17 CPC is to be exercised sparingly and only to clarify ambiguity, not for re-examination or supplementing cross-examination – Cited precedents include Ram Rati v. Mange Ram and Vadiraj Naggappa Vernekar v. Sharadchandra Prabhakar Gogate – Revision petition found devoid of merit and dismissed [Paras 7–8].

Contempt of Court – No Willful Disobedience – Supervening Circumstances Justified Delay - The petitioner alleged that the respondents failed to distribute the collected ‘Dakshina’ among the three managing families of the temple as per the 2018 High Court judgment – The respondents contended that distribution was temporarily halted due to an internal dispute among family members and the impact of the COVID-19 pandemic – The High Court held that the delay was due to legitimate administrative and legal hurdles, and there was no deliberate violation of the court’s order – Held: Mere delay, without intent to defy the court, does not amount to contempt [Paras 12-13].

Judicial Directives for Temple Administration – Compliance Achieved – Contempt Petition Infructuous - The Court examined records and found that post-2023, the respondents resumed the daily counting and monthly distribution of ‘Dakshina’ as per the 2018 judgment – Evidence of deposits and withdrawals from bank accounts confirmed compliance – Held: Since the court’s directives were now being followed, no further action was necessary, and the contempt petition was closed [Paras 11-13].

Locus Standi in Contempt Proceedings – Petitioner’s Standing Disputed – No Proof of Membership in Managing Families - The respondents argued that the petitioner was not a direct party to the original writ petition and had not proven his status as a beneficiary – The Court noted that a contempt petition can only be filed by a party with a direct grievance regarding non-compliance – Held: Though the petitioner’s membership in the managing families was in dispute, the issue was moot since compliance had already been ensured [Paras 6-7].

Decision – Contempt Petition Dismissed – No Further Action Required - The Court found no willful disobedience of its 2018 judgment and dismissed the contempt petition – Held: The petitioner’s claims were now irrelevant as compliance had been established, and the case was closed [Paras 13-15].
 

Civil Law - Limitation for Specific Performance – No Fixed Date for Performance – Suit Within Time - The trial court dismissed the suit as time-barred under Article 54 of the Limitation Act, holding that the agreement stipulated execution of the sale deed within six months – The High Court found that the six-month period related only to the completion of construction and handing over of possession, not execution of the sale deed – Held: In the absence of a fixed date for performance, the suit was within the three-year limitation period, and the trial court erred in dismissing it as time-barred [Paras 40-50].

Genuineness of Agreement – Allegation of Interpolation Rejected – Validity Upheld - The defendant contended that the agreement was forged or interpolated – The High Court found that all insertions were accompanied by signatures, confirming authenticity – Held: The agreement dated October 16, 1995 was genuine, and the defendant’s contradictory stands regarding its validity were legally untenable [Paras 66-70].

Doctrine of Part Performance – Admission by Co-Owners – Sale Deed Execution Directed - Two out of three co-owners admitted the agreement and executed a registered sale deed for their 2/3rd share – The High Court held that the remaining defendant was bound by the agreement and must execute a deed for her 1/3rd share – Held: The plaintiff is entitled to specific performance for the remaining share, upon payment of the balance amount of Rs.1,667/- [Paras 55-65].

Eviction Decree and Specific Performance – Plaintiff’s Ownership Prevails Over Possession Dispute - The defendant argued that the appeal was not maintainable as the plaintiff did not challenge the counterclaim decree for eviction – The High Court rejected this argument, stating that once the plaintiff becomes the lawful owner, the eviction decree becomes inoperative – Held: The decree for specific performance supersedes the eviction decree, and the defendant must execute the sale deed [Paras 80-85].

Decision – Appeal Allowed – Trial Court’s Order Set Aside – Decree of Specific Performance Granted - The High Court reversed the trial court’s decision and directed the defendant to execute a sale deed for her 1/3rd share in favor of the plaintiff upon payment of Rs.1,667/- – Held: If the defendant fails to comply, the plaintiff is entitled to have the sale deed executed through court [Paras 98-101].