TMI Tax Updates - e-Newsletter
January 15, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax CST, VAT & Sales Tax Indian Laws

Articles

1. Legal Interpretation of Section 16 of the CGST Act

   By: Kamal Aggarwal and Aditi Vishnoi

2. SUPREME COURT ON GST LEVY ON ONLINE GAMING COMPANIES

   By: Dr. Sanjiv Agarwal

3. Gujarat High Court sent case back to reconsider refund request as per CBIC's circular on adjusted total turnover calculation

   By: Bimal jain

4. Types of Directors in a Private Limited Company

   By: Ishita Ramani

5. Ratification cannot substitute recommendation

   By: Bimal jain

News

1. Advisory for Waiver Scheme under Section 128A

2. Generation Date for Draft GSTR 2B for December 2024

3. After economic meltdown, war with Israel, Lebanon's new prime minister vows to rebuild

4. Why Spain considering 100 per cent tax on homes bought by non-EU residents?

5. Index Numbers of Wholesale Price in India for the Month of December, 2024 (Base Year: 2011-12)

6. Union Minister for Commerce and Industry Shri Piyush Goyal launches National Turmeric Board

7. Wholesale price inflation rises to 2.37 pc in Dec; all eyes on RBI's rate decision next month

8. Net direct tax kitty swells 16 pc to Rs 16.90 lakh crore so far in FY25

Notifications

GST - States

1. 07/GST-2 - dated 13-1-2025 - Haryana SGST

Notification to extend due date for furnishing of FORM GSTR-8 for the month of December, 2024 under the HGST Act, 2017

2. 06/GST-2 - dated 13-1-2025 - Haryana SGST

Notification to extend due date for furnishing of FORM GSTR-7 for the month of December, 2024 under the HGST Act, 2017

3. 05/GST-2 - dated 13-1-2025 - Haryana SGST

Notification to extend due date for furnishing of FORM GSTR-6 for the month of December, 2024 under the HGST Act, 2017

4. 04/GST-2 - dated 13-1-2025 - Haryana SGST

Notification to extend due date for furnishing of FORM GSTR-5 for the month of December, 2024 under the HGST Act, 2017

5. 03/GST-2 - dated 13-1-2025 - Haryana SGST

Notification to extend due date for furnishing of FORM GSTR-3B for the month of December, 2024 and for the quarter of October to December, 2024, as the case may be under the HGST Act, 2017

6. 02/GST-2 - dated 13-1-2025 - Haryana SGST

Notification for amendment of Notification No. 101/GST-2, dated 15.12.2020 to extend the due date for furnishing of FORM GSTR-1 for the month of December, 2024 and for the quarter of October to December, 2024, as the case may be under the HGST Act, 2017

7. 32/GST-2 - dated 29-10-2024 - Haryana SGST

Haryana Goods and Services Tax (Second Amendment) Rules, 2024.

Highlights / Catch Notes

GST

• CBIC mandates explaining specific grounds of arrest, obtaining acknowledgment.

  News : GST officers must explain 'grounds of arrest' to offenders, obtain written acknowledgement: CBIC modified guidelines. As per Delhi HC order in Kshitij Ghildiyal vs DGGI case, following SC judgments, CBIC mandated explaining specific grounds of arrest to accused, not just general reasons, and obtaining written acknowledgment in arrest memo annexure, distinguishing grounds from reasons as per SC.
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• Court Rules Solar Power System Not a Works Contract Under GST Act, Section 2(119); Not Immovable Property.

  Case-Laws - HC : The HC held that the supply of a Solar Power Generating System by the petitioner is a composite supply and does not amount to a works contract u/s 2(119) of the GST Act. The solar power plant is not immovable property as the solar modules are not attached to the civil foundation for permanent beneficial enjoyment. The civil foundation is embedded for beneficial enjoyment of the Solar Power Generating Station itself. The HC relied on the SC judgment in Duncans Industries Limited to distinguish immovable property. The transaction does not qualify as a works contract, and the petition was allowed.
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• Silver Value in Old Batteries to Naval Formations is Taxable for GST; Section 15(1) Inapplicable, Section 9(3) Applies.

  Case-Laws - AAR : The AAR held that the value of silver supplied free of cost by the Naval formations in the form of old batteries is to be included in the taxable value adopted by the applicant on the batteries manufactured and supplied to the Naval formations for the purpose of payment of GST. The provisions of Section 15(1) of the CGST Act, 2017 to adopt the transaction value are not applicable. The supply of old used batteries by the Naval formations attracts GST liability u/s 9(3) of the CGST Act or Section 5(3) of the IGST Act. The circular and advance rulings relied upon by the applicant were distinguished as inapplicable.
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Income Tax

• ITAT Rules Interest on Tax Refund Payable Until Actual Release of Funds, Not Just Order Date.

  Case-Laws - AT : ITAT held that interest on refund is payable till the date funds are released to assessee, not till date of order accepting refund claim. Relying on Delhi HC's Nokia ruling, ITAT directed AO/CPC to grant interest to assessee till 30-01-2024 when refund was actually released after order u/s 154, as 'refund granted' in Sec 244A means refund payment, not just order accepting refund claim. Interest compensates for time value of money.
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• ITAT Annuls Reassessment Under Sec 148; Allows Various Deductions, Disallows Depreciation on Projectors, Remits UPR Issue for Re-adjudication.

  Case-Laws - AT : The ITAT quashed the reassessment proceedings u/s 148 as being bad in law, holding that the reasons recorded did not demonstrate any failure by the assessee to disclose true facts, and it was a case of "change of opinion" or "review of the assessment order" which is impermissible. The ITAT allowed the claim for deduction of reinsurance premiums paid to non-residents, depreciation on UPS at 60%, and payments made to motor vehicle dealers for services rendered. It upheld the disallowance of depreciation on projectors and addition of long-term insurance premiums received. The ITAT allowed deduction for IBNR and IBNER provisions, and held Section 14A disallowance inapplicable to insurance companies. It remitted the issue of disallowance of UPR for re-adjudication, deleted the addition u/s 14A for computing book profits, and dismissed the claim for deduction of education cess.
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• ITAT Rules Leave Encashment for Retired Employee from DoT and BSNL Exempt u/s 10(10AA.

  Case-Laws - AT : Assessee received leave encashment amount upon retirement, bifurcated into sums from Department of Telecommunications (Govt. of India) and BSNL. ITAT held amount from DoT exempt u/s 10(10AA)(i) as Central Govt. employee. Remaining BSNL amount, being less than Rs. 3 lakh, also exempt u/s 10(10AA)(ii) for non-govt employees. Denial of exemption u/s 10(10AA) reversed; appeal allowed.
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• PCIT Lacks Jurisdiction to Revise Assessment Order u/s 263 When TDS Issue Is Under CIT(A) Appeal.

  Case-Laws - AT : The PCIT lacked jurisdiction to pass an order u/s 263 revising the assessment order when the issue of unpaid TDS was already the subject matter of an appeal before the CIT(A). As per Explanation 1(c) to s.263, the PCIT is barred from initiating revision proceedings when an appeal is pending before the CIT(A). The CIT(A)'s powers are co-terminus with the AO's, allowing redressal. The decisions in Smt. Renuka Philip, Golden Vats Pvt. Ltd., and CIT vs. Shalimar Housing affirmed this statutory bar on the PCIT's revisionary jurisdiction when the matter is already under appeal before the CIT(A). The assessee's case was decided in their favor.
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• ITAT Invalidates TPO's ALP Adjustment for Non-Qualifying Transactions Post-Agreement; Upholds No Tax on Hypothetical Income.

  Case-Laws - AT : The ITAT held that the TPO erred in deeming international transactions and determining arm's length price (ALP) for the period after cessation/expiry of the service agreement between the assessee and its associated enterprise (AE). The assessee carried out international transactions only during the service agreement period. TPO cannot determine ALP on presumption or notional income for transactions not technically qualifying as international transactions. Comparables selected by TPO were rejected as the assessee's financials were prepared on a non-going concern basis, unlike the comparables. ALP adjustment was deleted as tax cannot be levied on hypothetical income, relying on Supreme Court's decisions in Excel Industries Ltd. and Ravi Kumar Sinha cases.
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• Section 14A Disallowance Allowed from AY 2022-23; GST Input Credit Deductible Based on Cost Inclusion. Limited Remand Ordered.

  Case-Laws - AT : No exempt income earned, hence no disallowance u/s 14A permissible up to AY 2021-22; however, from AY 2022-23 onwards, disallowance relating to exempt income allowable even if no exempt income earned due to inserted Explanation. GST input credit allowable as deduction if not embedded in cost of goods/services; else revenue neutral. AO directed to allow GST deduction after verifying not claimed in P&L with corresponding cost entries, subject to Wipro and Shri Ram Investments decisions of SC. Assessee's appeal allowed for limited remand to AO on GST issue.
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• ITAT Approves ESOP Expenditure Deduction, Criticizes Assessing Officer for Ignoring Precedents and Judicial Discipline.

  Case-Laws - AT : The ITAT allowed the assessee's claim for deduction of ESOP expenditure, directing the AO to follow the binding precedents of the Karnataka HC and ITAT Special Bench on this issue. It held that the AO violated judicial discipline by rejecting the claim without considering these higher judicial precedents, disrespecting principles of judicial precedents. The ITAT reprimanded the lower authorities for grossly rejecting the assessee's claim to keep the issue alive despite the coordinate Bench remanding it for fresh examination, when the ESOP matter was pending before the Supreme Court.
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• Interest on enhanced land compensation is taxable under 'Income from Other Sources' per ITAT, not exempt u/s 10(37).

  Case-Laws - AT : The ITAT held that interest received on enhanced compensation for compulsory acquisition of land u/s 28 of the Land Acquisition Act, 1894 is taxable as 'Income from Other Sources' u/s 56(2)(viii) of the Income Tax Act. This is in line with the Delhi HC's decision in PCIT vs. Inderjit Singh Sodhi HUF, distinguishing the Supreme Court's ruling in CIT vs. Ghanshyam HUF which treated such interest as capital gains. The assessee's claim for exemption u/s 10(37) was rejected.
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• CIT(A) Deletes Additions u/s 68; ITAT Upholds Decision, Citing Admissible Evidence u/r 46(4.

  Case-Laws - AT : CIT(A) did not violate Rule 46A by admitting evidence not produced before AO, as Rule 46(4) permits Appellate Authority to call for evidence. CIT(A) rightly deleted addition of Rs. 60 lakh unsecured loan from mother u/s 68, after examining relevant material. CIT(A) correctly deleted addition of sundry creditors u/s 68, as most were paid in subsequent years and formed part of business transactions. No addition tenable u/s 41(1) for sundry creditors. CIT(A) rightly restricted income estimation to 6% of turnover. Revenue's appeal dismissed by ITAT.
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Customs

• AAR Lacks Jurisdiction on Duty Drawback for MOOWR Goods; Exemptions Require Home Consumption Bill of Entry.

  Case-Laws - AAR : The AAR held that it lacks jurisdiction to rule on duty drawback issues under the Customs and Central Excise Duties Drawback Rules, 2017 for goods manufactured in MOOWR premises and exported. To avail Notification No. 21/2023 exemption, filing a home consumption Bill of Entry is mandatory, and goods imported under Advance Authorization cannot be considered warehoused goods. The Applicant cannot debond capital goods imported under MOOWR using EPCG authorization or avail Notification No. 26/2023 exemption. Goods cannot be imported duty-free in MOOWR under Advance Authorization as MOOWR and private bonded warehouses have different provisions. Supply to third-party customers can be considered exports if directly exported.
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• CESTAT Upholds Confiscation of Seized Gold; Appellants Fail to Prove Non-Smuggling, Appeals Dismissed Due to Inconsistent Arguments.

  Case-Laws - AT : The appellants failed to discharge the burden of proving that the seized gold was not smuggled. Their submissions were contradictory and unrelated to the seized gold. The CESTAT upheld the confiscation and penalties imposed, finding no procedural violations warranting interference with the original orders. The appeals were dismissed.
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DGFT

• Notification of Updated Export Policy Schedule-II Under FT Act 1992 (HS)2022.

  Notifications : The Central Government notified Schedule-II (Export Policy) of ITC(HS) 2022, in sync with Finance Act 2024, exercising powers under Foreign Trade (Development & Regulation) Act 1992 and Foreign Trade Policy 2023. The updated Schedule-II contains current export policy for all ITC(HS) Codes with specific conditions. Updated General Notes to Export Policy were also notified. The notification is effective immediately.
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IBC

• Court Upholds IBC Supremacy, Rejects One Time Settlement Challenge After CIRP Begins; Alternatives Under IBC Unexplored.

  Case-Laws - HC : The HC dismissed the petition filed by the petitioner challenging the rejection of its One Time Settlement (OTS) proposal and seeking relief after commencement of the Corporate Insolvency Resolution Process (CIRP) of its step-down subsidiary/Borrower Entity. The HC held that the petitioner failed to approach the court immediately after the OTS rejection, and the delay clouded its bona fides. The RBI Framework must give way to the CIRP once initiated, as the IBC is a self-contained Code. The HC ruled that it cannot compel the sole Financial Creditor to accept an OTS proposal once the CIRP commences, as it replaces bipartite negotiations with multi-party resolutions involving the Committee of Creditors (CoC). The petitioner had an alternative statutory remedy under the IBC but failed to avail it. The withdrawal from CIRP after the CoC's approval of the Resolution Plan would unsettle the binding settlement with the Successful Resolution Applicant. The power to withdraw u/s 12A is subject to the CoC's approval.
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Indian Laws

• ICAI's Suggestions for DTC: Higher Thresholds, Reduced TDS Rates, Relief for Genuine Delays Business.

  News : ICAI's Suggestions for Review of Income Tax Act, 1961: Tax Deducted at Source (TDS) prosecution proceedings are appropriate only where deductors deliberately do not deposit TDS, as mens rea is required. Relief from prosecution u/s 276B should be extended to deductors who pay tax after the prescribed time limit but before service of any notice. For secondary adjustments u/s 92CE, the threshold for primary adjustment may be increased from Rs. 1 crore to Rs. 2 crore to align with FEMA limits. Provisions should allow reversal of advances in books when AE relationship ceases or excess money is repatriated. Section 94A should prevail over section 206AA for withholding tax rates on payments to notified jurisdictional areas. To reduce compliance burden: - Reconsider introducing section 194T for 10% TDS on partner remuneration, or reduce the rate to 2%. - Increase the threshold u/r 37BB for filing Part A of Form 15CA from Rs. 5 lakh to Rs. 10 lakh. - Increase the threshold for obtaining tax clearance certificate u/s 230(1A) from Rs. 10 lakh to Rs. 50 lakh. - Extend the due date for filing belated/revise returns.
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• Supreme Court: Limitation Act Applies to Arbitration Under ACA Section 34; General Clauses Act Section 10 Not Applicable.

  Case-Laws - SC : SC held that the Limitation Act applies to proceedings u/s 34 of the ACA, with specific exclusions. Section 4 applies only to the 3-month period, and Section 10 of the GCA does not apply. While the ACA prescribes different limitation periods, it does not exclude the Limitation Act's provisions unless the nature and language necessarily exclude them. The mere prescription of a different period is insufficient to displace the Limitation Act's applicability. The SC dismissed the appeal.
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• High Court Upholds Acquittal in Cheque Bounce Case; Complaint Dismissed as Time-Barred, No Adequate Delay Explanation Given.

  Case-Laws - HC : The HC dismissed the appeal against acquittal in a case concerning dishonor of cheque. It held that the complaint was barred by limitation as the delay in filing was not properly explained or condoned by the Trial Court. The HC found the Trial Court's view reasonable and declined to interfere with the acquittal, applying the principles for appeals against acquittal laid down by the Supreme Court.
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• High Court Halts Cheque Bounce Cases During IBC Moratorium; Section 96 IBC Applies to Section 138 NI Act Proceedings.

  Case-Laws - HC : Interim-moratorium u/s 96 IBC applies to proceedings against petitioner u/s 138 NI Act. HC set aside revisional court order, allowed petition directing stay on Section 138 proceedings till NCLT moratorium in Section 96 IBC proceedings against petitioner remains operational. Ratio of P. Mohanraj followed, overriding effect of IBC provisions reiterated.
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VAT

• Supreme Court Confirms Jammu & Kashmir's Authority to Impose Excise Duty on Spirits for Medicinal Use Under State Excise Act.

  Case-Laws - HC : The HC upheld the legislative competence of the erstwhile State of Jammu and Kashmir to impose excise duty on rectified spirit/alcohol/denatured spirit used in medicinal and toiletry preparations under the State Excise Act. It held that the excise duty and GST are distinct levies and can coexist without constituting double taxation. The imposition of excise duty at Rs. 10 per litre on such substances for use in medicinal and toiletry preparations, other than manufacture of liquor, was declared valid and constitutional.
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• Court Rules Appellant Must Pay Regular Tax, Not Compounded, Per KGST Act Section 7; Eligible for Concessional Rate.

  Case-Laws - HC : The HC held that the appellant could not be treated as permitted to pay tax on compounded basis u/s 7 of KGST Act. Despite applying for compounded tax, there was no express permission granted by the department within the stipulated period. The appellant's conduct showed intent to pay regular tax u/s 5, not compounded tax. As actual payment was u/s 5 during the assessment year, the appellant was entitled to the concessional tax rate announced for bar attached hotels. The department erred in accepting the compounding application post assessment year and completing assessment based on it.
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Service Tax

• Co-owners Entitled to Separate Service Tax Exemptions on Rent, Not Combined as Association: CESTAT Ruling.

  Case-Laws - AT : The appellants, as individual co-owners of a jointly owned immovable property, are eligible for service tax exemption individually on rent received from leasing the property. They are entitled to separate threshold exemptions under Notification No. 6/2005-S.T. dated 1-3-2005 and cannot be considered an association of persons for combined service tax recovery. The CESTAT held that co-owners receiving rent individually are eligible for separate threshold exemptions. The appeal was allowed.
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• Supreme Court: Non-Disclosure in Tax Returns Isn't Evasion Without Clear Intent u/s 73(1) Finance Act 1994.

  Case-Laws - AT : The SC held that mere non-disclosure of receipts in service tax returns doesn't mean intent to evade tax payment. To invoke extended limitation period u/s 73(1) proviso of Finance Act 1994, deliberate and willful attempt to evade duty must be evident from assessee's conduct or records. Mere interpretation dispute doesn't justify extended period. Bona fide belief in non-liability, even if wrong, doesn't render it malafide. In self-assessment, assessee determines liability based on judgment; facts coming to light later doesn't prove evasion intent. The Department couldn't invoke extended period against the assessee for April 2008-March 2013 as no evasion intent was assigned. Appeal allowed.
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• High Court rules services to state government for civic amenities not taxable; unjust enrichment rule u/s 11B inapplicable.

  Case-Laws - HC : The HC held that the services rendered by the assessee to Kerala Water Authority, a state government undertaking for providing civic amenities, did not constitute taxable 'Commercial and Industrial Construction Service' or 'Works Contract Service'. The amount paid by the assessee under mistaken impression was not payable under the Act, hence Section 11B of Central Excise Act, 1944 regarding unjust enrichment did not apply. The Tribunal rightly allowed assessee's appeal against demands of service tax.
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Case Laws:

• GST

• 2025 (1) TMI 663
  Classification of supply - transactions undertaken by the petitioner in setting up Solar Power Generating Systems - to be classified as composite supply or works contract under the GST Act? - rate of GST - HELD THAT:- In the present case, the solar power plant is not trees or shrubs, which are rooted in earth or a structure embedded in the earth. The appellate authority also accepts that the solar power module is attached to the civil foundation, which is embedded in the earth. The property, which is attached to a structure embedded in the earth, would also become immoveable property only when such attachment is for the permanent beneficial enjoyment of the structure, which is embedded in the earth. In this case, the civil foundation is embedded in the earth. However, the solar modules and the Solar Power Generating System have not been attached to the civil structure for the purpose of better enjoyment or beneficial enjoyment of the civil foundation. On the contrary, the civil foundation has been embedded on earth for better permanent and beneficial enjoyment of the Solar Power Generating Station. The property in question, viz., the Solar Power Generating System would not answer the description of immoveable property. The transaction in question would not fall within the meaning of works contract as defined under Section 2 (119) of the GST Act. The appellate authority relied upon the judgment of the Hon ble Supreme Court in Duncans Industries Limited vs. State of Uttar Pradesh and Ors. [ 1999 (12) TMI 857 - SUPREME COURT] , wherein the Hon ble Supreme Court had taken the view that any property embedded in the earth with an intention of keeping the same embedded permanently, would have to be treated as immoveable property. This view was taken by the Hon ble Supreme Court, on the finding of the High Court that the plant and machinery, in that case, was embedded in the earth. The Hon ble Supreme Court also held that the earlier judgment in Sirpur Paper Mills Limited v. The Collector of Central Excise [ 1997 (12) TMI 109 - SUPREME COURT] would not be applicable as the facts are different. Conclusion - The supply of the Solar generating Power Station, is a composite supply, it would not amount to a works contract. Petition allowed.

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• 2025 (1) TMI 662
  Valuation of GST - Inclusion of value of the Silver supplied free of cost by the Naval Formations (in the form of old batteries) in the taxable value adopted by the applicant on the batteries manufactured by the applicant and supplied to the Naval Formations - HELD THAT:- It is found in the instant case that the supplier i.e the applicant and the recipient i.e. the naval formations obviously are not related persons, as per the Explanation to Section 15. Whereas, as observed from the facts of the case in the case on hand as discussed, it is seen that the consideration is not paid wholly in money. On perusal of the agreement it is inferred that the contract is for the supply of Silver Oxide - Zinc Torpedo propulsion Battery Type A-187M3-Complete with Hardware. Whereas the main input namely Silver is supplied free of cost against Bank Guarantee in the form of old and used batteries by the recipient, in addition to the consideration in money value for the supply of said Silver Oxide Zinc Torpedo propulsion Battery. Hence, the provision of Section 15 (1) of the CGST Act, 2017 i.e to adopt the transaction value as the value of supply of goods or services or both is not applicable for determining the value of supply in the applicant's case. In the instant case, old and used batteries are supplied by the naval formations i.e., by the Central Government Department to the applicant. For the said supply, unless otherwise exempted, the recipient of the said old used goods, that is the applicant is liable for payment of Central tax and State Tax or as the case may be the Integrated Tax, as envisages under Section 9(3) of the CGST Act or Section 5 (3) of the IGST Act, read with corresponding Notifications issued, viz., Notification No. 36/2017-Central Tax (Rate), dated 13/10/2017 and Notification No. 37/2017 Integrated Tax (Rate) dated 13/10/2017, respectively. With regard to the circular No. 47/21/2018-GST relied upon by the Applicant, on perusal of the said Circular, it would show that it was confined to that specific subject material of moulds and dies which are being supplied by the Original Equipment Manufacturer (OEM) to a Component Manufacturer free of cost. The clarification issued by the Board relates to Moulds and Dies which are tools used for manufacture, where as Silver in the instant case is one of the essential ingredients used as input in the process of manufacture of batteries. Therefore, the analogy put forth by the applicant is not applicable in the instant case - It is also seen that in the case of M/s Lear Automotive India Private Limited [ 2018 (12) TMI 766 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] the Maharashtra Advance Ruling Authority by placing reliance on the said Circular, had ruled that the amortized value of tool received on FOC basis from the customer is not required to be included in the value of finished goods manufactured and supplied by the applicant to the customer. Where as in the case on hand from the used batteries supplied by the recipient, Silver has been extracted, which is the main input for the manufacture of the Silver Oxide-Zinc battery and hence the above said Circular as well as the Advance Rulings have no relevance on the subject issue. Conclusion - The value of silver supplied free of cost by the Naval formations (in the form of old batteries) is to be included in the taxable value adopted by the applicant on the batteries manufactured and supplied by them to the Naval formations for the purpose of payment of GST as discussed in para 8.0 to 8.12.

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• Income Tax

• 2025 (1) TMI 661
  Proceedings for an offence u/s 276B - non-payment/belated remittance of the TDS - Failure to pay tax to the credit of Central Government - interpretation given to term reasonable cause - As decided by HC 2024 (6) TMI 1070 - ANDHRA PRADESH HIGH COURT] the reason provided by the Petitioner for the delay in remitting the amount to the Central Government is sufficient to constitute reasonable cause in view of Section 278AA of the I.T. Act and hence criminal prosecution against the Petitioners is not warranted - HELD THAT:- We are not inclined to exercise our jurisdiction under Article 136 of the Constitution of India. Special leave petition is, accordingly, dismissed.

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• 2025 (1) TMI 660
  Maintainability of appeal on low tax effect - limit for challenging orders before this Court - Validity of Reopening of assessment - validity of reasons to believe - change of opinion - disallowance of improvement cost of land claimed by the assessee and the assessee had shown the sale of the land under the head of short term capital gain - As decided by HC [ 2020 (7) TMI 573 - MADRAS HIGH COURT] law does not require the assessee to state the conclusion that could reasonably be drawn from the primary facts and if there were, in fact, some reasonable grounds for thinking that there had been any non-disclosure as regards any primary facts, which could have a material bearing on the question of under assessment , that would be sufficient to give jurisdiction to the ITO to issue notices under Section 34 (1922 Act) and whether these grounds are adequate or not for arriving at a conclusion that there was a non-disclosure of material facts could not be opened for the Court's investigation. Tribunal was right in allowing the assessee's appeal. HELD THAT:- From the listing proforma and from the synopsis, it is very clear that the tax effect is in the sum of Rs.62,52,661/- (Rupees Sixty Two Lakhs Fifty Two Thousand and Six Hundred and Sixty One). Our attention is invited to circulars dated 15th March, 2024 and 17 th September, 2024. The threshold limit for challenging orders before this Court is Rs.5 crores. In view of the said circulars, the Special Leave Petition is disposed of. However, question of law, if any, is kept open.

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• 2025 (1) TMI 659
  Certificate for deduction at lower rate u/s 197 - India Netherlands DTAA read with the Protocol and MFN clause - as decided by HC [ 2021 (10) TMI 1212 - DELHI HIGH COURT] a certificate u/s 197 of the Act will be issued in favour of the Petitioner, indicating therein, that the rate of tax, on dividend, as applicable qua the Petitioner is 5% under India-Netherlands DTAA - HELD THAT:- The writ petition filed by the respondent was allowed by the High Court by relying upon a decision of Concentrix Services Netherlands B.V.[ 2021 (4) TMI 1051 - DELHI HIGH COURT] and Nestle SA vs. Assessing Officer, Circle (International Taxation)[ 2021 (6) TMI 1158 - DELHI HIGH COURT] . The relied upon judgments have been set aside by this Court in the case of Assessing Officer (International Taxation) vs. Nestle SA,[ 2023 (10) TMI 981 - SUPREME COURT] . As this Court has held in favour of Revenue, the impugned order of HC is set aside and Writ Petition filed by the respondent stands dismissed. The appeal is accordingly allowed.

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• 2025 (1) TMI 658
  Validity of Revision u/s 263 - as per CIT AO had not verified the necessary relevant facts relating to the taxability of sale of certain immovable property - As decided by HC [ 2024 (10) TMI 207 - DELHI HIGH COURT] no merit in the appellant s contention. Concededly, the audit report could not have commented upon the dishonour of cheques, as the report was issued prior to the date of the cheques. AO had accepted the said report. The assessment order does not indicate any enquiries in this regard. Thus, CIT has rightly held that the Assessment Order was passed without making the necessary inquiries and verification. HELD THAT:- Having heard the learned counsel appearing for the petitioner and having gone through the materials on record, we see no reason to interfere with the impugned order passed by the High Court. Special Leave Petition is, accordingly, dismissed.

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• 2025 (1) TMI 657
  Validity of assessment u/s 153C - Statutory imperatives of incriminating material - as decided by HC [ 2024 (5) TMI 1468 - DELHI HIGH COURT] Absent any material that may either cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers conferred by Section 153C. It would only be consequent to such satisfaction being reached that a notice would be liable to be issued and thus resulting in the abatement of pending proceedings and reopening of concluded assessments Impugned action u/s 153C of the Act, pertaining to AYs 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 and 2020-21 are hereby quashed and set aside and as AY 2019-20 is concerned, the same is left untouched. HELD THAT:- As having gone through the materials on record, we see no reason to interfere with the impugned order passed by the High Court. The Special Leave Petition is, accordingly, dismissed.

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• 2025 (1) TMI 656
  Disallowance u/s 14A with regard to interest expenditure - HELD THAT:-Disallowance cannot exceed the exempt income and as they themselves have disallowed more than the exempted income, disallowance should be restricted to the extent of the exempted income. Upfront fees and brokerage fees for issuing non-convertible debentures should be allowed fully in the assessment year 2004-05 or should be spread over two years for which non-convertible debentures were issued - There is no dispute between the parties that expenses have to be allowed as a deduction, but the only issue is whether it should be allowed fully in one year or it should be spread over a period of two years. The rate of tax for the assessment years 2004-05 and 2005-06 is same. This Court in the case of CIT Vs. Nagri Mills Co. Ltd. [ 1957 (9) TMI 30 - BOMBAY HIGH COURT] has observed that if the tax rate is uniform for two years then, the deduction whether claimed by the assessee in the year one or two is of no consequence to the revenue. In the present case, since there is no dispute that the expenditure incurred is revenue and the respondent-assessee has opted to claim it in assessment year 2004-05 itself, the appellant-revenue cannot compel the respondent-assessee to claim it over a period of two years. Therefore, even on this count, no substantial question of law arises.

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• 2025 (1) TMI 655
  Denial of exemption u/s 10(23C)(iiiad) - Addition of cash deposited in the bank account - registration u/s 12A was not granted - HELD THAT:- There is merit in the argument of the Ld. AR that for getting exemption u/s 10(23C)(iiiad) of the Act for the receipt being less than the amount of the annual receipts as prescribed, no registration u/s 12A was required as the exemption u/s 10(23C)(iiiad) of the Act is granted to the universities and other educational institutions existing only for educational purposes and not for the purposes of profit while the exemption u/s 11 of the Act is granted to a charitable institution established for charitable purposes. Hence, the order of the CIT(A) dismissing the appeal on the ground that no evidence for registration was filed by the assessee or the other assessee viz Bharali Education Foundation (BEF) is not justified. Assessee being an educational institution is justified in claiming exemption u/s 10(23C)(iiiad) of the Act as no evidence has been brought on record that it was not existing solely for educational purposes. Hence, the order of the Ld. CIT(A) is set aside, ground nos. 1 2 are allowed and the deposits in bank account are deemed to be out of the fees received from the students and the AO is directed to delete the addition made to the income of the assessee. Decided in favour of assessee.

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• 2025 (1) TMI 654
  Addition of bogus expenditure/ purchases - addition in the absence of entries in the stock register - Estimation of income - HELD THAT:- AR submitted that the gross profit margin/element in the motor spirit I.e Diesel Petrol business range between 2% to 3% and both the revenue authorities has over looked the factual aspects of the purchase transactions substantiated with material evidences filed in compliance to the notices. AR highlighted the clauses of Tax Audit report in Form. no 3CD in particular clause 35(a) and 40. We considering the facts, circumstances, gross profit margin, and omission of entries by the assessee and to meet the ends of justice, restrict the addition @ 5% of the purchase transactions. Accordingly, we set-aside the order of the CIT(A) and direct the assessing officer to estimate the income@5% of disputed purchase value. Appeal filed by the assessee is partly allowed.

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• 2025 (1) TMI 653
  Penalty u/s 271D - non recording of satisfaction is a prerequisite condition for initiation of penalty - HELD THAT:- The observations of AO referred to by the CIT(A) in his order to hold that there was proper satisfaction recorded by the learned Assessing Officer, on the observations in the penalty order, but not the satisfaction forming foundation to initiate the penalty proceedings. Requirement of law, as observed in the case of Jai Lakshmi rice Mills [ 2015 (11) TMI 1453 - SUPREME COURT] and Sreenivasa ready Reddeppagari [ 2022 (12) TMI 1446 - TELANGANA HIGH COURT] is that prior to the initiation of the penalty proceedings the learned Assessing Officer shall record his satisfaction to initiate the penalty proceedings, which is admittedly absent in this case. Thus direct AO to delete the penalty and the issue decided in favour of the assessee.

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• 2025 (1) TMI 652
  Revision u/s 263 - PCIT jurisdiction to pass an order u/s 263 when the issue is already the subject matter of an appeal before the CIT(A) - addition in respect of unpaid TDS on the payment made to ECL Finance Ltd. - PCIT proposed to revise the order holding that the disallowance should have been at 30% of the total payment as per provisions of section 40(a)(ia) - HELD THAT:- When the entire issue of unpaid TDS is under dispute and subject matter of appeal before the CIT(Appeals) the Ld. PCIT is precluded from making any revision of assessment order since the issue is in appeal before the CIT(Appeals) and in such a situation the assessee would be covered under clause (c) of Explanation 1 to section 263 of the Act which puts a bar on initiation of proceedings u/s 263 of the Act when an appeal is pending before the Ld.CIT(A). Even otherwise also the powers of CIT(A) are co-terminus with those of the Assessing Officer and the Ld.CIT(A) can do what AO could do and can also direct the Assessing Officer to do what he has failed to do so. As decided in Smt. Renuka Philip [ 2018 (12) TMI 129 - MADRAS HIGH COURT ] when the larger issue was pending before the Ld.CIT(A) and in such circumstances the Ld. CIT could not exercise powers u/s 263 of the Act on account of statutory bar. The Hon ble High Court held that assumption of jurisdiction u/s 263 of the Act was wholly erroneous. Similar view has been taken in the case of Golden Vats Pvt. Ltd. [ 2024 (1) TMI 550 - ITAT CHENNAI ] Hon ble Madhya Pradesh High Court in the case of CIT vs. Shalimar Housing and Finance Ltd. [ 2009 (4) TMI 406 - MADHYA PRADESH HIGH COURT ] the issue taken up by the Commissioner was already dealt with by Commissioner (Appeals) and the AO s order merged with Commissioner (Appeals) and Commissioner is not competent to assume jurisdiction in terms of clause (c) of Explanation 1 of section 263 of the Act. Decided in favour of assessee.

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• 2025 (1) TMI 651
  Proceedings initiated u/s 153C r.w.s. 153A - Validity of approval granted u/s.153D - HELD THAT:- We quash the entire proceedings initiated under section 153C r.w.s. 153A of the Act in the absence of a valid approval granted by the Ld. ACIT, Central Range-4, New Delhi. Decided in favour of assessee.

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• 2025 (1) TMI 650
  Disallowance u/s 14A - Expenditure incurred on earning exempt income - HELD THAT:- When the assessee declares income which consists of exempt income and claims the expenditure which may include the expenditure relating to exempt income. In case of non-satisfaction of the AO he may proceed to disallow the relevant expenditure which relates to earning of exempt income. From the record submitted before us, we observed that the assessee is an individual and runs a book shop and the details of expenditure clearly indicate that all the expenditures incurred are directly linked to the running of book shop and there is no indication that the expenditures include the expenses incurred for earning the exempt income. Therefore, the provisions of section 14A(2) is not applicable. The presumption u/s 14A(3) can be brought in the cases of a company which is an artificial person which are run by the actual persons representing the artificial person. There are implied expenditures which are incurred for both kinds of income i.e. regular as well as exempt income. In the case of individuals, they are not claiming any expenditure for conducting investment activities which are purely personal time and experience. Therefore, presumption u/s 14A (3) cannot be invoked in the case wherein the assessee is not claiming any of the expenditure which are directly or indirectly linked to the investment activities. Therefore we observed that assessee has not claimed any expenditure relating to exempt income and the provisions of section 14A(2) are not applicable in the present case. Accordingly, the grounds taken by the assessee are allowed.

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• 2025 (1) TMI 649
  Validity of reopening of assessment - case was reopened after the expiry of four years - Reason to believe or suspect - tangible material for the purpose of reopening the assessment - as alleged assessee is a beneficiary in the penny-stock cases HELD THAT:- Bald statement of AO in the reasons recorded that based on information received from office of CCIT, Coimbatore that assessee is a beneficiary in the penny-stock cases cannot be considered as a tangible material for reopening the assessment. No details about the contents of the purported information received from the office of CCIT, Coimbatore is stated in the reasons recorded . There is no mention about which all shares were classified as penny-stock; and what is the link between the shares that assessee sold and the alleged bogus claim made by assessee in this regard; and whether the stock-exchange found any mischief on the part of the assessee/broker regarding sale of shares; whether SEBI carried out any enquiry etc; No relevant information is discernable from reading of the reasons recorded, to connect assessee with any wrong doing to claim LTCG from one line statement given by the AO of his reasons recorded, which is cryptic and is extremely scanty and vague; and abruptly holds assessee to have dealt with penny-stock to claim bogus LTCG. Thus we find that there is absolutely no relevant details available in the reasons recorded to form such adverse conclusion; and in the light of the same, the initiation of proceedings u/s. 147 of the Act by the AO cannot be held to be valid and justified in law. According to us, the information given by the Office of the CCIT can only be at the most a basis to ignite/trigger an enquiry. The information given by CCIT only constitutes the starting point of AO to enquire; and such an information can only be termed as a foundation to form reason to suspect and not reason to believe escapement of income which is the jurisdictional fact law required to enable the AO to successfully assume jurisdiction to reopen an assessment as per section 147 of the Act. Thus the material/information referred to by the AO in his reasons recorded cannot be held to be a tangible material for reopening the assessment. Furthermore, the information referred to in the reasons recorded at the most can trigger only reasons to suspect ; and it is settled position that reason to suspect cannot be the basis for usurping jurisdiction to reopen u/s. 147 of the Act, and enable the AO to conduct roving/further examination in order to strengthen the suspicion to an extent which can later transform the suspicion to create the belief in his mind that income chargeable to tax has escaped assessment. Moreover, we find that the reasons recorded by the AO is riddled with factual inaccuracies. It would be gainful to refer to the decision of CIT v. Avadh Transformers (P.) Ltd. 5 [ 2013 (3) TMI 645 - ALLAHABAD HIGH COURT] wherein holding that in absence of failure on the part of the assessee in disclosure of material facts, the reassessment proceedings could not be initiated after expiry of four years. Appeal filed by the assessee is allowed.

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• 2025 (1) TMI 648
  Penalty levied u/s. 271D - justification to invoke provisions of Sec.269SS - assessee company had carried out unaccounted scrap sales and this entry was booked in its book as credit in the advance from Director s account - HELD THAT:-This Tribunal in several cases [T Shiju v. JCIT [ 2019 (6) TMI 603 - ITAT CHENNAI ] has held that recording of satisfaction by the AO in the assessment order regarding the violation of the provisions of section 269SS is a mandatory requirement for valid initiation of penalty proceedings us 271D of the Act and no penalty could be levied if the AO failed to record such satisfaction in the assessment order. In the present case, on perusal of the assessment order u/s 143(3) it is seen that no such satisfaction has been recorded by the AO in the said assessment order. Hence, having regard to the failure of the AO to record his satisfaction in the assessment order with regard to the violation of the provisions of Sec. 269SS, it is held that the penalty proceedings u/s. 271D of the Act have not been validly initiated and consequently, the penalty order passed by the Addl. CIT is held to be bad in Law. Decided against revenue.

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• 2025 (1) TMI 647
  Short Term Capital Gain - real owner of capital asset - As argued additional documents are not entertained - as per DR assessee has not produced any materials in support of the expenses claimed towards conversion into non-agricultural purpose and payments made to farmers - CIT(A) held no iota of evidence in the form of documents placed before the Authorities that the assessee is a name lender not real owner and real owner is Shri Mansukhbhai Dobariya. HELD THAT:- As per the statement of Shri Mansukbhai Dobariya, he was operating as a Real Estate Agent for the company CLPL in procuring lands and purchased the properties in the name of his son Shri Piyush M Dobariya and Shri Ajay Reghubhai Bharwad are not within the provisions of law. As per the Indian Registration Act, if Shri Mansukbhai Dobariya purchases the land he could have engaged his son Shri Piyush M Dobariya and Shri Ajay Reghubhai Bharwad as his Power of Attorney Agent and registered the immovable properties then the contention of the assessee may hold it good but that legal proceeding has not been done in this case. The Conveyance Deeds makes it clear that the properties were purchased by Shri Piyush M Dobariya and Shri Ajay Reghubhai Bharwad in their individual capacities and sale of the same will certainly attract Capital Gains. There were no evidences placed by the assessee before any of the Lower Authorities regarding the expenses incurred by the assessee in converting the agricultural lands into Non-Agricultural lands. Thus the additional documents are without necessary evidences and invalid in the eyes of law. Thus the registered Sale Deeds makes it abundantly clear that the properties belongs to the two assessees here in. The assessees failed to produce expenses relating to the land as well as non-agricultural conversion expense and payments made to the farmers. In the absence of the same, we do not find any infirmity in the orders passed by the Lower Authorities in treating the sale as Short Term Capital Gain. Thus we do not find any merits in the submissions of the assessee. We are also in concurrence in the findings of the Ld. CIT(A) namely the alternative view of treating the transactions in the nature of adventure in trade. Therefore the Grounds raised by the assessee are devoid of merits.

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• 2025 (1) TMI 646
  TP adjustment - International Transaction to be deemed - as submitted that there is no provision in the Act or in the relevant rules to deem an international transaction in the manner in which the TPO has deemed the revenue for the 3 month s period after cessation/expiry of the service agreement between the AE and assessee - TPO observed that the assessee has booked more expenditure post service agreement i.e. 01.01.2012 to 31.03.2012 and has not booked any income. Accordingly, he rejected the TP study submitted by the assessee and he selected 18 comparables and computed the average comparable price of 20.92% and he proceeded to determine the ALP for whole assessment year. HELD THAT:- The assessee has actually provided software services only during the period April 2011 to December 2011 and subsequent to that period, it has carried out effectively operations to shut down the business. In this case, assessee has effectively carried on the international transaction only during period of service agreement. TPO has to determine only the ALP for such international transactions carried on by the assessee. TPO selected various comparables for which various financial statements of comparable comparison were prepared on the basis of going concern whereas financial statements of the assessee are prepared not on the basis of going concern. This was disclosed in appropriate places in the audited Balance Sheet itself. TP study has to be carried on comparable basis on equal terms. This itself makes all the comparables selected by the TPO are liable to be rejected. TPO has determined the ALP on the basis of presumption. No tax can be levied on notional income which was determined on the basis of transactions which are not technically international transaction. All funds remitted to India will not fall under services or under international transaction having economic impact. No doubt holding company has set up infrastructure in India to do business in order to receive services, no doubt for captive services still the ALP has to be on the basis of services provided by the Indian entity and as per the agreement it can charge mark-up only on the services provided by the assessee not for the negative services for which the holding company already by investing in India eroded the capital by such decision to create facility in India and on the top of it Revenue authorities cannot presume and impose further mark-up on the expenses which are incurred technically to shut down the business. On similar ground, the Hon ble Supreme Court held in the case of Excel Industries Ltd. [ 2013 (10) TMI 324 - SUPREME COURT] and in the case of Ravi Kumar Sinha [ 2024 (8) TMI 939 - DELHI HIGH COURT] expressed similar view that the tax levied on actual income that has accrued or received and not on the notional or hypothetical income. Accordingly, we are inclined to delete the ALP adjustment made by the TPO in the present case and accordingly, grounds raised by the assessee are allowed.

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• 2025 (1) TMI 645
  Disallowance of expenditure u/s 14A - HELD THAT:- Investment made by an assessee may result in both type of income exempt, as well as taxable. The expenditure incurred for earning such income may be either separately accounted for or may be mixed. The onus is on the assessee to identify expenditure which relates to exempt income. AO can reject such suo-moto disallowance only after recording satisfaction that claim of disallowance made by the assessee as per accounts maintained by him are not correct. The finding that the disallowance is to be restricted to exempt income means that the disallowance cannot be done if there is no exempt income. Admittedly, there was NO EXEMPT INCOME. We are of the considered view that if there is no exempt income, no disallowance u/s 14A of the Act can be made upto AY 2021-22. However, after insertion of Explanation to section 14A of the Act from AY 2022-23, the disallowance u/s 14A of the Act relating to exempt income can be made even though no exempt income was earned during the relevant year. Revised computation of income furnished by it during the assessment proceedings - payment of the GST as Input Credit on asset side of the Balance Sheet (not routed through the Profit Loss Account), has decided to claim the same (GST Input Credit) as expenditure against the Income (to route through the Profit Loss Account) - HELD THAT:- The claim of GST Input Credit is held allowable if the effect of such GST Input Credit is resulting revenue receipts chargeable to tax; otherwise not. The corollary of the same is that the said GST input credit is not embedded in the cost of goods and or services constituting the stock-in-trade and or similar entries on the credit side of the Profit Loss Account of the appellant/assessee. Undisputedly, the income has to be charged to tax; not a single penny more not a single penny less. The GST paid by the appellant/assessee has to be allowed subject to the above and in accordance with the provisions of section 30 to 43D of the Act. Since the GST of INR 28,979,544 was not routed through the Profit Loss Account of the appellant/assessee; therefore, it cannot be ruled out that the effect of the GST of INR 28,979,544 is reflected/embedded in the cost of goods and or services constituting the stock-in-trade and or services or similar entries on the credit side of the Profit Loss Account of the appellant/assessee. We are therefore, direct the AO to verify the same. In case the GST was not claimed as expenditure in the Profit Loss Account with corresponding contra entries duly reflected/embedded in the cost of goods and or services constituting the stock-in-trade and or services or similar entries on the credit side of the Profit Loss Account of the appellant/assessee, the effect of the GST will become revenue neutral if corresponding cost of goods and or services constituting the stock-in-trade and or services or similar entries are on the credit side of the Profit Loss Account of the appellant/assessee. Subject to the above and decisions of the Hon ble Supreme Court in the cases of Wipro Ltd. [ 2022 (7) TMI 560 - SUPREME COURT] and Shri ram Investments [ 2024 (10) TMI 313 - SUPREME COURT] we hereby direct the AO to allow the deduction of GST subject to the verification and observations as above. For this limited purpose, this issue is restored back to the AO. Appeal of the assessee is allowed.

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• 2025 (1) TMI 644
  Allowability of Employee Stock Option Plan (ESOP) expenditure - AO observed that the assessee had neither claimed this expenditure in the return of income filed nor during the course of assessment proceedings / appeal proceedings before the CIT(A). HELD THAT:- As fact on record that on account of Nil expenditure charged to profit loss account for the year under consideration for ESOP expenditure, no deduction was claimed by the assessee in the return of income. Considering the fact that this issue was raised first time before ITAT, the same needs examination at the lower level, therefore, the coordinate Bench has remitted back the issue to the file of AO. AO has rejected the claim of the assessee without considering the decision of the ITAT, Special Bench, Bangalore [ 2013 (8) TMI 629 - ITAT BANGALORE] and Hon ble Karnataka High Court [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT] . In our considered view, as far as the lower authorities are concerned, the abovesaid two decisions are binding on the authorities below as well as for us. After the decision of higher wisdom, still the authorities are not respecting the same. It is clearly disrespecting the principles of judicial precedents and judicial discipline. Violating the principles of judicial discipline - Assessing Officer has applied his lower wisdom and rejected the claim of the assessee without considering the higher wisdom of Hon ble High Court and ITAT Special Bench. The coordinate Bench felt that this issue needs examination and gave one opportunity to the Revenue, but lower authorities does not care for the opportunity and in order to keep the issue alive since the ESOP issue was pending before Hon ble Supreme Court, they have grossly rejected the claim of the assessee. Therefore, respectfully following the decision of Hon ble High Court in Biocon Ltd. [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT] , we direct the Assessing Officer to allow the claim of the assessee

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• 2025 (1) TMI 643
  Income from Other Sources - Addition of interest u/s. 28 of the Land Acquisition Act, 1894 on enhanced compensation received by the assessee on compulsory acquisition of land - assessee claimed interest as part of the compensation and exempt from tax u/s. 10(37) - AO treated the interest awarded to the assessee on enhanced compensation, as Income from Other Sources - HELD THAT:- Hon'ble Apex Court in the case of CIT vs Ghanshyam HUF [ 2009 (7) TMI 12 - SUPREME COURT] has held that interest received on compensation/enhanced compensation is part of compensation, hence, exigible to tax u/s. 45(5) of the Act. In the case of Mahender Pal Narang vs CBDT [ 2020 (3) TMI 1115 - PUNJAB AND HARYANA HIGH COURT] after considering amended provisions of section 56(2) of the Act distinguished the decision rendered in the case of Ghanshyam HUF (supra) and held that interest received on compensation or enhanced compensation is to be treated as Income from Other Sources and not under the head Capital Gains . Recently, in the case of PCIT vs. Inderjit Singh Sodhi HUF [ 2024 (4) TMI 408 - DELHI HIGH COURT] held that interest whether on compensation or enhanced compensation received on acquisition of land u/s. 28 or u/s. 34 of the Land Acquisition Act, 1894 shall be exigible to income tax as Income from Other Sources u/s. 56(2)(viii) of the Act. Decided against assessee.

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• 2025 (1) TMI 642
  Violation of Rule 46A by accepting evidences not produced before AO - whether CIT(A) / First Appellate Authority erred in passing the impugned order without following Rule 46A? - HELD THAT:- assessee didn t file any additional evidence on its own during the appellate proceedings, but the Ld. First Appellate Authority exercising his co-terminus as that of AO has called for evidence and in such an event, there is no violation of Rule 46A of the Rules, because Rule 46(4) permits such a course of action by the Appellate Authority and in such an event, Rule 46A (1)to (3) are not applicable. As relying on the case of CIT Vs. Sanu Family Trust [ 2011 (12) TMI 337 - KARNATAKA HIGH COURT] we do not find any infirmity in the action of the.CIT(A) calling for relevant documents in respect of both the aforesaid issues and admitting the same and adjudicating the grounds of Appeal, and hold that in this case, there is no violation of Rule 46A of the Rules; and therefore, we don t find any merit in Ground No.2 of the Revenue and therefore, it stands dismissed. Addition of sundry creditors and unsecured loans u/s. 68 - Addition as the business income which was estimated at 8% of the gross receipts - HELD THAT:-CIT(A) after going through relevant the ROI as well as the Tax Audit Report expressed his satisfaction about the nature and source of the loan taken from his mother and was pleased to hold that the same can t be treated as unexplained cash credit u/s. 68 of the Act which action of the CIT(A) can t be held to be perverse, in the light of the supporting relevant materials which were produced by the assessee before the AO as well before the CIT(A) who called for it exercising his co-terminus power. Therefore, there is no infirmity in the action of Ld.CIT(A) holding that unsecured loan of Rs. 60 lakhs couldn t be added u/s. 68 of the Act. Addition u/s. 68 of the Act as unexplained sundry creditors - Assessee produced the ledger extracts (of sundry creditors) and from perusal of which, CIT(A) found that most of the sundry creditors were paid the amounts due in the subsequent years by the assessee. In such a scenario CIT(A) rightly found that there was no justification to make addition of sundry creditors u/s. 68 which action we concur; and also repel the contention of the Revenue that the impugned addition was sustainable u/s. 41(1) of the Act; and thus, we find no infirmity in the action of CIT(A) holding that the assessee succeeded on merits on these two issues/additions erroneously made by the AO. CIT(A) rightly noted that since the sundry creditors formed part of the business transaction of the assessee (trading of the assessee), therefore, no separate addition either u/s. 68 of the Act or u/s. 41(1) of the Act was legally tenable and therefore rightly deleted by the Ld.CIT(A) as held in the case of Indwell Constructions [ 1998 (3) TMI 121 - ANDHRA PRADESH HIGH COURT] No infirmity in the action of the Ld.CIT(A) deleting the two additions and restricting the estimated income @6% of the turnover of the assessee. Appeal filed by the Revenue is dismissed.

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• 2025 (1) TMI 641
  Computation of interest on refund - Intimation appear to have been made u/s 143(1) - CIT(A) denied the same on the ground that refund is granted the moment the concerned officer has signed the order regarding the payment of interest u/s 244A - HELD THAT:- Refund has ultimately been granted to the assessee only after an order u/s 154 was passed by CPC on 30-01-2024. The Hon ble High Court of Delhi in the case of Nokia Solutions and Networks India (P) Ltd [ 2024 (9) TMI 1683 - DELHI HIGH COURT] has held that interest on refund is to be calculated till the date the funds are released to the assessee and not till the date of order accepting the assessee s claim for grant of refund. The expression refund is granted would necessarily mean refund of payment of the amount. The interest is paid to compensate the payee for time value of money. Therefore, it is difficult to accept that the date on which refund is granted as used in Sec. 244A is to be read as the date on which an order accepting the assessee s claim of grant of refund is passed and not the date on which the funds are released. Applying the same principle, we direct Ld. AO / CPC to grant the interest to the assessee in accordance with law till 30-01-2024.

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• 2025 (1) TMI 640
  Reopening of assessment - Reasons to believe - change of opinion V/S review of the assessment order - non-deduction of TDS - HELD THAT:- During the original assessment proceedings u/s 143(2), the issues qua which reassessment proceedings were initiated for non-deduction of TDS, were examined and considered by the Ld. AO. Thus it is crystal clear that full application of mind was made to the facts of the case surrounding determination of taxable income of the assessee. In view of the elaborate enquiries and discussions made in the assessment order in respect of impugned transactions the AO is precluded from changing his opinion subsequently and reopening the case u/s 148. The reasons recorded by the AO and as approved by his supervisory authorities, reproduced herein above do not in any way demonstrate that there was any failure on part of the assessee to have not fully and truly disclosed true facts of the case. The action of the AO in initiating proceedings u/s 148 is thus hit by the concept of change of opinion or a case of review of the assessment order and the same cannot be approved. As from the reasons recorded in the case extracted herein above, there is not even a whisper that the assessee is in any way guilty of suppressing any disclosure of any material. It is a certain position of law that reasons recorded in a case must be viewed on a stand alone basis and that nothing can be added or subtracted therefrom. Besides there is no mention as to source of information except a vague assertion of details of information received . We have noted that all the documents comprising Balance sheet and P L account of assessee discussed by the AO in the impugned reasons were very much before him during original assessment proceedings. Thus, no case of any valid escapement of income falling within the tenets of section 147 rws 148 is made out against the assessee. As the reasons u/s 147/148 themselves are not supported by valid legal authority, consequent reassessment order arising therefrom would be a case of nullity and an order being void ab initio. We are of the view that the proceedings u/s 148 are bad in law and deserves to be quashed. We therefore quash the proceedings u/s 148 as being bad in law and allow the grounds of appeal No.1 raised by the assessee. TDS u/s 195 - disallowance of insurance premium paid to Non-Resident Insurers - case of the revenue that the amounts remitted by the assessee to Non-resident entities is exigible to TDS deduction u/s 40(a)(i) of the act - HELD THAT:- In respectful compliance to the decision of United India Insurance Limited. [ 2024 (7) TMI 1556 - ITAT CHENNAI] the order of lower authorities is set aside and the Ld.AO is directed to delete the additions made towards disallowance of reinsurance premium conceded to NRRs u/s. 40(a)(i). Disallowance of excess depreciation claimed on projectors and UPS - As relying on Cholamandalam General Insurance Company Limited [ 2022 (9) TMI 1178 - ITAT CHENNAI] we set aside the order of the lower authorities and direct the Ld. AO to allow depreciation @ 60% on UPS. As regards claim of depreciation on projectors, we do not find any infirmity with the findings of the CIT(A) that a projector is neither nor an output device or a computer and can be used independently also as an electronic gadget. Consequently, the decision of the Ld. CIT(A) on the issue of the projector is confirmed. Disallowance of payment made to motor vehicle dealers - revenue contended that no services were rendered and hence disallowed the expenses incurred by the assessee company - HELD THAT:- We have noted that identical controversy had come up for consideration in the case of Cholamandalam general Insurance Company Limited [ 2022 (9) TMI 1178 - ITAT CHENNAI] claim of the assessee before the CIT(Appeals) was that the services were actually rendered by the motor car dealers by providing space, computer stationeries, etc. in their showroom for enabling software integration with the assessee company. Assessee claimed before the AO that tax was deducted at source and paid to the Government account. From the material available on record it appears that the assessee company in order to propagate its insurance business, had arrangement with motor car dealers in their showroom for providing space, computer stationeries, etc. Assessee appears to have made the payment. The assessee has filed copies of invoice, confirmation letters from service providers and details of premium collected by the motor vehicle dealers from the customers. There is no doubt about the genuineness of service rendered by the car dealers . Also United India Insurance Company Limited. [ 2024 (7) TMI 1556 - ITAT CHENNAI] addition was made as sequel to information received from the service tax department whose own enquires had not reached finality. The Hon ble High Court laid down that the Revenue would be free to exercise its authority under the Act in the event of Service tax department holding against the assessee. We confirm the order of the CIT(A) on the issue of infra payments made by the assessee to motor car dealers and reject the grounds raised by the Revenue. Addition of UPR to book profit u/s 115JB - assessee company had reduced insurance premium amount from the profit of the business being related to premium for the purposes of reserve for unexpired risks - AO held the view that the above amount is in effect but the reserve made from insurance premium collected and hence eligible for adding back for computation of book profit u/s 115JB - HELD THAT:- The order of the lower authorities is set aside and the AO is directed to delete the additions made towards UPR to book profits u/s 115JB of the act. The ground of appeal raised by the assessee on the issue of non-inclusion of UPR to book profits u/s 115JB of the act is therefore allowed. Addition of insurance premium received in respect of long term policy - assessee argued that it is offering the income on receipt basis in subsequent years and that the addition tantamount to double taxation - HELD THAT:- We have considered the order of CIT(A) and are of the view that no interference is required in the same at this stage. Accordingly, in respectful compliance to the decisionof Hon ble Apex Court in the case of British Paints India Limited [ 1990 (12) TMI 2 - SUPREME COURT] we hold the view that the Ld.AO is fully empowered to determine the correct taxable income by making correct interpretation of books results. Accordingly the order of the Ld. First Appellate Authority in making the impugned addition is sustained and the grounds of appeal raised by the assessee pertaining to addition of insurance premium received in respect of long term policy is dismissed. Allowance of depreciation on computer software - whether computer software taken on lease by an assessee would be eligible for 60% depreciation or not? - HELD THAT:- As been noted that the Hon ble Coordinate Bench of this tribunal in the case of TNQ Books and Journal Pvt Ltd [ 2016 (6) TMI 1493 - ITAT CHENNAI] has comprehensively dealt the subject so as to conclude admissibility of depreciation @ 60% in similar situations. As the facts of the case are identical, we do not find any need to interfere with the findings of the Ld. First Appellate Authority. Accordingly, the decision of Ld. CIT(A) is sustained and grounds of appeal raised by the appellate revenue is dismissed. Disallowance of provisions for claims incurred but not reported (IBNR) and incurred but not enough reported (IBNER) - HELD THAT:- The impugned liability principally arising in view of guidelines formulated by IRDA and calculated by a IRDA approved actuarial valuer fulfills the ratio laid down by Hon ble Apex Court mandating the that as long as a liability is properly ascertainable on the basis of empirical data or a known methodology, the same cannot possibly be held to be a contingent liability. Hon ble Supreme Court in Vegetable Products [ 1973 (1) TMI 1 - SUPREME COURT] held that it is the right of an enterprise to make provisions for a liability which could be measured by a substantial degree of estimation and consequently that its allowance as an valid expenditure would be permissible. We have noted that facts of the case as existing in the present appeal are identical to those as in the cases adjudicated by the Hon ble Coordinate Benches of Kolkata, Delhi and Mumbai Tribunals. No distinguishment of facts could be pointed out by the appellant revenue. Accordingly, we hold that IBNR and IBNER are ascertained liability and therefore allowable as a deduction. Accordingly we hold that the order of the Ld. First Appellate Authority does not requires any interference at this stage. The order of the Ld.CIT(A) is confirmed and the grounds of appeal raised by the revenue are dismissed. Disallowance of 14A - HELD THAT:- The position of applicability of section 14A qua insurance company is thus now finally settled. It has been clearly postulated in the statute that as the taxability of insurance companies is governed by provisions of 44 of the act, section 14A would not apply therein. Disallowance of UPR - HELD THAT:- The order of the Ld. AO as well as Ld. First Appellate Authority on the subject controversy suffers from the deficiency of a non-speaking order in as much as facts and figures have not been clearly brought out on records. The amounts of money credited to profit and loss account would include amount of UPR disallowed by the assessee in earlier years. Within the meanings of proviso to Rule 6E, the amount disallowed in earlier years cannot be included in the current year, as the same would tantamount to double taxation. It is trite law that double taxation of income is not permitted under the income tax act. Be that as it may be we are of the view that ends of justice would met if the Ld. AO is given one more chance to readjudicate the matter. Accordingly, we set aside the order of the lower authorities and direct the Ld. AO to verify whether the amounts disallowed in earlier year have been credited to profit and loss account and if yes to reduce them from the amounts of the present year, in accordance with provisions of rule 6E. Addition of 14A under section 115JB - HELD THAT:- Assessee is covered in its favour by the decision of Special Bench of the Tribunal in the case of ACIT vs. Vireet Investments (P) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] Eligible for claim of education cess and higher secondary education cess while computing the tax liability - HELD THAT:- Contemporaneous law clearly mandates that no deduction of any amount partaking the nature of any tax or rate or levy shall be allowed while computing income under the head profit and gains from business or profession. There is no doubt that the amounts comprising education cess and higher secondary education cess would thus be ineligible for any allowance since they are a part of the tax. There exists a catena of cases laying down that when provisions of statute are clear and unambiguous there cannot be any scope for their different interpretations. Consequently the assessee do not succeeds qua merits of additional ground of appeal raised by it and therefore the additional ground of appeal raised by assessee is dismissed.

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• 2025 (1) TMI 639
  Denying exemption u/s. 10(10AA) - Receipts towards Leave Encashment on his retirement - HELD THAT:- The assessee has given the bifurcation of the Leave Encashment which comprises of sum received from Department of Telecommunications (Govt. of India) which is eligible for exemption u/s. 10(10AA) of the Act and the remaining amount received from BSNL. While filing the application u/s. 154 of the Act, the assessee has enclosed the letter dated 04.05.2012 regarding Leave Encashment amount, issued by Taxation section of BSNL, New Delhi. Copy also provided of the pay-slip regarding Leave Encashment period (DOT BSNL) issued by BSNL which indicates the receipt of Leave Encashment for DOT BSNL period separately. These facts remain uncontroverted at the end of the Revenue authorities at any stage. Section 10(10AA)(i) of the Act applies to the Central and State employees and section 10(10AA)(ii) to Non-Government employees. Leave Encashment for Central/State Govt. is fully exempt and therefore the amount received by the assessee from Department of Telecommunications (Govt. of India) deserves to be exempt from taxation u/s. 10(10AA)(i) of the Act. As far as the remaining amount is concerned, the same being less than Rs. 3.00 lakh is also exempt u/s. 10(10AA)(ii) of the Act. Therefore, the impugned order denying exemption u/s. 10(10AA) of the Act is reversed. Grounds of appeal raised by the assessee are allowed.

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• Customs

• 2025 (1) TMI 638
  Jurisdiction - power of Directorate of Revenue Intelligence (DRI) officers to issue a SCN u/s 28 of the Customs Act, 1962 - smuggling of Gold - burden to prove - denial of cross-examination of opportunities to the appellants - violation of principles of natural justoce - Confiscation - penalty - HELD THAT:- The burden under the Section 123 of Customs Act, 1962 which is only of a reasonable belief is effectively discharged by the Department who initiated the action on the basis of the seizure and the recorded statements of the concerned person. Then the onus to prove that the gold was not smuggled, so as to reasonable belief entertained by the Department shifted and is squarely rested on his shoulder. But, in this case, appellants are failed to prove that seized gold is not smuggled. Since, their submissions are not co-related, contradictory and documents which were produced to prove also un-related to seized gold. The appellants in these appeals failed to prove that the seized gold is not smuggled. Impugned order based on facts and law and proper appreciation of evidence. No any interference required in the impugned order. Conclusion - i) The appellants failed to prove the gold was not smuggled and found no procedural violations warranting interference with the original orders. ii) Confiscation and penalties upheld. Appeal dismissed.

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• 2025 (1) TMI 637
  Valuation of imported goods - import of old and used worn clothing - enhancement of the declared value - confiscation - redemption fine - penalty - HELD THAT:- This issue came up before this Tribunal in the case of VENUS TRADERS, RAINBOW INTERNATIONAL, AL-YASEEN ENTERPRISES, GLOBE INTERNATIONAL, KRISHNA EXPORT CORPORATION, PRECISION IMPEX, BMC SPINNERS PVT. LTD., SHIVAM TRADERS, LEELA WOOLEN MILLS, M.U. TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) MUMBAI [ 2018 (11) TMI 625 - CESTAT MUMBAI] , wherein this Tribunal has observed ' the paucity of evidence and the negligible scope for ascertainment at this stage deters us from doing so. In the light of the admitted failure to comply with the licensing requirements, we uphold the confiscation of the goods under Section 111(d) of Customs Act, 1962. However, it is our opinion that the ends of justice would be served by reducing the redemption fine to 10% of the ascertained value and penalty to 5%.' Against the confirmed duties and the Redemption Fine and penalty imposed by the Adjudicating Authority, the Respondent had not filed any appeal, nor have they filed any appeal against the order of the Ld. Appellate authority. Conclusion - The redemption fine and penalty imposed on the respondents by the appellate authority is sufficient to meet the ends of justice. Therefore, the redemption fine and penalty confirmed by the appellate authority are upheld. The appeal filed by the Revenue is dismissed.

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• 2025 (1) TMI 636
  Jurisdiction of Advance Ruling - Duty drawback under Rule 6/Rule 7 of the Customs and Central Excise Duties Drawback Rules, 2017 (notified vide Notification No. 88/2017, dated 21st September 2017) for goods manufactured in the MOOWR premises (Manufacturing and Other Operations in Warehouse Regulations, 2019) and exported therefrom - requirement of import of duty paid raw materials consumed for manufacture of exported goods - import of bonded premise without payment of customs duty under Advance Authorization in accordance with Notification No. 21/2023-Customs, dated 1st April 2023 - supply of manufactured goods by the Applicant to third party customer would be considered as a DTA Sales or Exports. Whether any such jurisdiction of pronouncing ruling as to the question of duty drawback is vested in this Authority or otherwise? - HELD THAT:- It is understood that in the clause (d) of the sub-section (2) of the Section 28(H) of the Customs Act, 1962 there is not any mention of the word drawback; or refund with the words duty or tax. However, it is amply clear that the words chargeable and leviable are expressly mentioned in the same clause and it is observed that these words are associated with the words duty and tax. Therefore, addition of the word drawback with the words duty or tax would be unwarranted and extraneous. Further, in the case of Harshad Chiman Lal Modi v. DLF Universal Ltd. [ 2005 (9) TMI 588 - SUPREME COURT] , the Hon ble Supreme Court held that where a court has no jurisdiction over the subject-matter of the suit by reason of any limitation imposed by statute, charter or commission, it cannot take up the cause or matter. An order passed by a Court having no jurisdiction is a nullity. The questions related to duty drawback involved in the present application do not fall within the ambit of any parameter, on which Advance Ruling can be sought. Benefit of exemption Notification No. 21/2023, dated 1-4-2023 - HELD THAT:- To avail the benefit of exemption Notification No. 21/2023, dated 1-4-2023, filing a Bill of Entry for home consumption is mandatory. Once the benefits of the Advance Authorisation scheme are claimed by the applicant, then, the goods imported under said Advance Authorisation shall not be considered as warehoused goods in terms of Section 60 of the Customs Act - The Applicant believes that it can debond the capital goods warehoused into the MOOWR unit by using EPCG authorization. The applicant has clarified that the query does not pertain to admissibility of depreciation benefits at the time of debonding as is admissible to EPCG Scheme, rather, the query is only whether at the time of de-bonding of capital goods imported under the MOOWR Scheme, when the applicant is required to pay appropriate customs duties, whether the benefit of exemption notified vide Notification No. 26/2023-Customs, dated 1st April 2023 can be availed by the Applicant. Whether the Applicant can import goods in bonded premises without payment of customs duty under Advance Authorization and use such goods in the manufacture of exported products? - HELD THAT:- All the three warehouses are set up under different provisions of the Act and they have their own procedures. Public and Private Bonded warehouses are set up to only deposit the goods and not any manufacturing process or other operations are specifically provided in these two warehouses in relation to the goods warehoused therein, whereas, owner of the MOOWR units are allowed to carry on any manufacturing process or other operations in the MOOWR unit in relations to the goods warehoused therein. Therefore, the provisions of the Private Bonded warehouses licensed under Section 58 of the Act and Private Bonded warehouses licensed under both Section 58 and Section 65 are on different footings and cross utilisation of the benefits, granted to the owners of the such warehouses does not appear to be specifically provided in the statute - clause (b) of para 2.36 of the FTP is only about Private Bonded warehouse and Public Bonded warehouse licensed under section 58 and section 57 respectively wherein goods are warehouses/deposited and not any manufacturing process or other operations are carried in relations to such goods. However, in the case at hand, activity is different inasmuch as MOOWR unit of the applicant is licensed not only under section 58 but also under section 65 wherein any manufacturing process or other operations may be carried on in relations to the goods warehoused therein. Conclusion - i) There no such jurisdiction vested in this authority as per the mandate of Chapter VB of the Customs Act, 1962. ii) Subject to the fulfilment of the conditions stipulated in the Notification No. 21/2023-Customs, dated 1st April 2023 and current Foreign Trade Policy, the Applicant can import the goods into the MOOWR unit, upon filing a bill of entry for home consumption and clearance, at the customs station of import. Such goods shall not be considered as warehoused goods in terms of section 60 of the Act. iii) The capital goods, on which the benefits of deferral of Customs duty have already been availed/claimed under the MOOWR Scheme, cannot be further de-bonded by using/utilising EPCH license. iv) Supply of manufactured goods by the Applicant to third party customer can be considered as Exports in case the third-party customer exports such goods as it is outside India and in case the goods are directly delivered to the port of Export.

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• Insolvency & Bankruptcy

• 2025 (1) TMI 635
  Rejection of petitioner s One Time Settlement (OTS) Proposal - commencement of the CIRP - rejection of the petitioner s OTS without following the Reserve Bank of India Framework for Compromise Settlements and Technical Write-offs dated 08.06.2023 (RBI Framework). Is the petitioner entitled to relief after commencement of the CIRP? - HELD THAT:- Section 12 of the IBC contemplates completion of the Insolvency Resolution Process within 180 days which can be extended by another 90 days. The petitioner s OTS proposal was rejected by R.1 on 30.10.2023 (impugned in the present writ petition). The petitioner has however waited almost 6 years after admission of the Borrower Entity into insolvency and almost a year from the impugned rejection and filed the present writ petition on 30.07.2024 - It is clear from the above that the petitioner failed, for reasons unaccounted for, to immediately approach this Court after the impugned rejection. The petitioner has not given any credible reason for the intervening delay in filing the writ petition which includes a delay of almost a year from the impugned rejection. The petitioner has not given any explanation, credible or otherwise, as to why the petitioner failed to approach the Court in 2018 or immediately after the rejection of the OTS in October, 2023. The petitioner s delay would have the effect of upending the Resolution Process. The delay thus clouds the petitioner s bona fides in filing the writ petition - the multiple OTS proposals given by the petitioner during pendency of the writ petition may be seen as an attempt to derail the CIRP and defeat realization of the funds through the CIRP. In any event, the Court cannot compel the respondent No. 1 to accept any OTS proposal made by the petitioner on behalf of its step-down subsidiary/Borrowing Entity. Can the RBI Regulations create new rights which are not contemplated under the IBC - which is a self-contained Code? - HELD THAT:- The petitioner s contention that the RBI Circular would apply to the facts of the case notwithstanding the ongoing CIRP would also attract the Supreme Court s decision in Bharti Airtel Limited [ 2024 (1) TMI 187 - SUPREME COURT ] which considered whether the principle of set-off under Order VIII Rule 6 of The Code of Civil Procedure, 1908, can apply to claims against an entity undergoing insolvency. The Supreme Court held that the principle of set-off/insolvency cannot be made applicable as it is not permitted under the IBC. The notable aspect is that a right which has not specifically been provided for in the IBC cannot be applied to a Company undergoing insolvency. The Court is hence of the view that the mandate of the RBI Framework must give way to the CIRP of the Borrower Entity once the process has been initiated. It is further relevant that paragraph 14 of the RBI Circular provides that the compromise settlements with the borrowers under the above framework shall be without prejudice to the provisions of any other statute in force which indicates that the RBI Framework recognizes the precedence of the relevant statute (the IBC in this case) and that any settlement must be done within the statutory framework of the IBC. Was the Rejection of the Petitioner s OTS vitiated by reason of R.1 not having a Board-Approved Policy as on 30.10.2023? - HELD THAT:- The RBI Circulars/Frameworks constitute a regimented procedure for resolution of stressed assets as opposed to a duty cast on the lenders to consider OTS proposals given by the Borrowers. Hence, in the absence of such a duty, there cannot be a corresponding right on the part of a borrower to be considered for OTS. In any event, a Writ Court does not have the power to issue a writ of Mandamus directing a financial institution to positively grant the benefit of OTS to a borrower. - The RE s request to the petitioner to extend the EMD of the OTS offer for 3 months cannot be equated to an acceptance of the petitioner s OTS. In any event, the respondent No. 1 was dealing with a Borrower which was already in CIRP as on 10.10.2020 (the date of the mail by which the request was made) and would hence be under an obligation to act in terms of the law, i.e., the provisions of the IBC. Is the writ petition maintainable in the face of the alternative remedy under section 60 (5) of the IBC? - HELD THAT:- The appropriate remedy of the petitioner, insofar as R.1 or R.3 are concerned, is to apply before the NCLT for appropriate relief. The petitioner cannot upend the insolvency process by invoking the writ jurisdiction of the High Court under Article 226 of the Constitution of India. The IBC also provides for challenging any order passed by the NCLT before the National Company Law Appellate Tribunal (NCLAT) under section 61 of the IBC - The petitioner has not given any explanation for not approaching the NCLT, and filing the present writ petition instead. The turn of events is all the more significant since the petitioner previously invoked the remedies provided under the IBC in relation to the petitioner being included in the CoC. The IBC has overriding effect in view of the non-obstante clause in section 238 of the IBC - The Court is therefore of the view that the petitioner has an alternative remedy within the framework of the IBC and has fallen short of giving reasons for refusing to avail of the effective statutory remedy. Can R.1, as the sole Financial Creditor, entertain an OTS once the Corporate Debtor enters CIRP? - HELD THAT:- A CIRP replaces bipartite negotiations with multi-party resolutions. The other parties, which would include the respondent No. 2 and the other members of the CoC, cannot be made to vanish from the advanced stage of the CIRP by clearing the stage for a re-raising of the curtains for replay of Act I when the stage is set for the denouement - Notably, the petitioner unilaterally submitted an OTS offer on 29.07.2020 to the respondent No. 1 for Rs.90 Crores and furnished an earnest money deposit of Rs. 4.5 Crores during pendency of the CIRP. The petitioner made OTS proposals on 26.08.2023, 15.02.2023, 21.07.2023, 29.08.2023, 30.09.2023 and on 17.10.2023. The petitioner s 3 additional offers on 26.07.2024, 31.07.2023 and 24.09.2024 - The petitioner in effect wants the super structure to collapse when the substratum itself has crumbled. Can an application for withdrawal from CIRP be entertained after the CoC approves the Resolution Plan? - HELD THAT:- The CoC approved the Resolution Plan of R.3 on 01.08.2024 with the requisite majority. Therefore, the Resolution Plan approved by the CoC has become binding on the stakeholders including R.1 and R.3. The petitioner cannot be allowed to achieve indirectly what it could not have done under the IBC regime - the petitioner s argument that an applicant (the petitioner herein/Corporate Debtor) can withdraw from the CIRP at any point of time without any strings attached is simplistic, to say the least. The effect of the withdrawal would undo what cannot be undone before the NCLT. The withdrawal would also unsettle a binding settlement between the CoC and the Successful Resolution Applicant (R.3). Is the writ petition maintainable in the absence of a necessary party/the borrowing entity? - HELD THAT:- The petitioner is not entitled to the relief prayed for under Article 226 of the Constitution of India. The petitioner should have taken recourse to the provisions of the IBC and approached the NCLT for appropriate relief. The writ petition is also not maintainable in view of the efficacious statutory remedy under section 60 (5) of the IBC which is a comprehensive Code envisaging all possible scenarios and modes of redress within the four corners of the IBC. The first respondent, as the sole Financial Creditor, is also divested of powers to entertain an OTS once the CIRP of the Corporate Debtor is set in motion. The power to withdraw the applications under section 12A of the IBC post-admission must also be subject to the approval of the CoC in the manner prescribed in the said provision. Conclusion - i) The Court cannot compel the respondent No. 1 to accept any OTS proposal made by the petitioner on behalf of its step-down subsidiary/Borrowing Entity. ii) The mandate of the RBI Framework must give way to the CIRP of the Borrower Entity once the process has been initiated. iii) The respondent No. 1 was dealing with a Borrower which was already in CIRP as on 10.10.2020 (the date of the mail by which the request was made) and would hence be under an obligation to act in terms of the law, i.e., the provisions of the IBC. iv) The petitioner has an alternative remedy within the framework of the IBC and has fallen short of giving reasons for refusing to avail of the effective statutory remedy. v) A CIRP replaces bipartite negotiations with multi-party resolutions. The other parties, which would include the respondent No. 2 and the other members of the CoC, cannot be made to vanish from the advanced stage of the CIRP by clearing the stage for a re-raising of the curtains for replay of Act I when the stage is set for the denouement. vi) The effect of the withdrawal would undo what cannot be undone before the NCLT. The withdrawal would also unsettle a binding settlement between the CoC and the Successful Resolution Applicant (R.3). vii) The power to withdraw the applications under section 12A of the IBC post-admission must also be subject to the approval of the CoC in the manner prescribed in the said provision. Petition dismissed.

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• 2025 (1) TMI 634
  Liability to pay the pre-Corporate Insolvency Resolution Process (CIRP) electricity dues of the Corporate Debtor - waterfall mecahnism - payment of dues in accordance with Section 53 of the IB Code - HELD THAT:- It is relevant to notice that Judgment of the Hon ble Supreme Court in K.C. Ninan [ 2023 (5) TMI 1251 - SUPREME COURT ] was not in reference to liquidation proceeding where electricity authority has filed any claim. The above Judgment thus is not attracted in the facts of the present case and does not help the Appellant in any manner. The Judgment of the Hon ble Supreme Court in the matter of Paschimanchal Vidyut Virtan Nigam Limited Vs. Raman Ispat Private Limited Ors. [ 2023 (7) TMI 831 - SUPREME COURT ] and in the matter of Tata Power Western Odisha Distribution Ltd. Vs. Jagannath Sponge Private Limited [ 2023 (9) TMI 1071 - SC ORDER ] fully covers the issue - It was held in the said case that 'the issue of corporate debtor s dues falls within the fold of the phrase arising out of or in relation to insolvency resolution under section 60(5)(c) of the Code.' Conclusion - The pre-CIRP dues are to be addressed through the liquidation process under the IBC, not through imposing liability on auction purchasers. No error has been committed by the Adjudicating Authority - Appeal dismissed.

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• Service Tax

• 2025 (1) TMI 633
  Refund of service tax - contrary to the Provisions of Section 11B of Central Excise Act, 1944 or not - principles of unjust enrichment - classification of service under Commercial and Industrial Construction Service and later under works Contract Service . Whether the services rendered by the respondent/assessee is liable for payment of service tax? - HELD THAT:- It is not disputed by the revenue that the Kerala Water Authority is not a wing of the Government or a Government of Kerala Enterprise. The allegation in the show cause notice was that the assessee did not produce supporting documents for exemption of service tax. The reply given by the assessee ought to have been accepted by the adjudicating authority as the assessee, in no uncertain terms, stated that the question of claiming exemption does not arise since the service involved does not fall within the scope and ambit of taxable service - The Circular dated 15th September 2009 was issued on a reference being received by the Board with regard to the issues as to what would be the correct meaning of the commercial or industrial construction services as per Section 65 (25b) of the Finance Act, 1994. It was clarified by the Board that the essence of the definition is that the commercial or industrial construction service is chargeable to service tax if it is used, occupied or engaged either wholly or primarily for the furtherance of commerce or industry. As the canal system built by the Government or under Government project is not falling under commercial activity, the canal system built by the Government will not be chargeable to service tax. This Circular was taken note of by the Tribunal in yet another Circular dated 24.5.2010. When the factual position is not in dispute namely, that the assessee has performed the work for the Kerala Water Authority, which is undoubtedly a Government/Government undertaking and the project was aimed at providing civic amenities to the public at large, it can never be termed to be a commercial or an industrial project. Furthermore, the revenue does not dispute the fact that the Kerala Water Authority is the State Government authority under the Public Health and Engineering Department of Kerala State Government and the project was aimed to provide civic amenities to the public at large, namely the citizens of Thiruvananthapuram city and if that be the admitted factual situation, the Water Supply Board cannot be said to be a project for the purpose of profit - The learned Tribunal holding that the service, which was rendered by the assessee to the Kerala Water Authority, will not be a taxable service under Works Contract Services. Whether the other issues regarding the applicability of provisions of Section 11B of the Central Excise Act, 1944, is a case of unjust enrichment? - HELD THAT:- Admittedly, the amount which was paid by the assessee on a mistaken impression that the activity undertaken by them would attract service tax was not a payment under the Act and therefore, the question of Section 11B getting attracted would not arise. Identical issues arose for consideration before the High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE (APPEALS), BANGALORE VERSUS KVR CONSTRUCTION [ 2012 (7) TMI 22 - KARNATAKA HIGH COURT ] . The Hon ble Division Bench after noting several decisions held ' When once there was no compulsion or duty cast to pay this service tax, the amount of Rs. 1,23,96,948/- paid by petitioner under mistaken notion, would not be a duty or service tax payable in law. Therefore, once it is not payable in law there was no authority for the department to retain such amount. By any stretch of imagination, it will not amount to duty of excise to attract Section 11B. Therefore, it is outside the purview of Section 11B of the Act.' - the question of Section 11B of the Central Excise Act, 1944 would not stand attracted to the facts and circumstances of the case. Principles of unjust enrichment - HELD THAT:- It was never the case of the department that the assessee had opposed on the tax liability. In any event, when tax was not payable under the Act and when Section 11B of the Act would not apply, the theory of unjust enrichment would not stand attracted. Conclusion - The taxes paid by mistake are not subject to Section 11B and that unjust enrichment does not apply when the tax was not legally owed. The learned Tribunal was right in allowing the assessee s appeal and setting aside the order passed by the adjudicating authority as well as the first Appellate Authority - Appeal dismissed.

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• 2025 (1) TMI 632
  CENVAT Credit - failure to consider the fact that the respondent had never taken registration under Rule 3 of Service Tax (Registration of Special Category of persons), 2005 and as such disputed its own observation that the respondent is an Input service distributor - non-consideration of fact that the respondent have taken credit on the basis of internal statements which is not a valid document for taking credit under Rule 9 (I) of the Cenvat Credit Rules, 2004 - levy of penalty u/s 78 of FA. HELD THAT:- The adjudicating authority found that there is no need to dispute input service credit and therefore, there cannot be any requirement to take registration as Input Service Distributor . More importantly, the Tribunal noted that the bank is a nationalized bank and a Government of India Undertaking and therefore, there cannot be any malafide intention to evade payment of duty. Moreover, the respondent bank is registered with the Service tax Department and is paying service tax on the various services provided by them. They have always paid the taxes as and when applicable on time and all the returns have been filed on time and all the activities are known to the department and in the draft show cause notice it is no where mentioned that the assessee has ever defaulted in the past or is a regular defaulter in respect of the payment of service tax on the services provided by them. Furthermore, the Tribunal found that the Superintendent, Service Tax having jurisdiction over the respondent/assessee has categorically stated that since the credit is availed by the Braches and Regional offices based on invoices provided by service provider, there is no irregular availment of CENVAT credit. Furthermore, the Tribunal noted that there were audit conducted in the past and the audit team scrutinized the records of the bank and the department was fully aware of the bank s activities. Levy of penalty u/s 78 of FA - HELD THAT:- The Tribunal found that there was no allegation of any non-levy or non-payment or short-levy or short-payment and/or erroneous refund of service tax and none of the activities of the respondent/assessee is hit by any of the clauses (a) to (e) of Section 78 of the Act. Thus, on facts the Tribunal was satisfied that the finding rendered by the adjudicating authority was categorical and the same does not call for interference. Conclusion - The procedural requirements like registration should not impede the substantive rights of entities to claim Cenvat credit when there is no evidence of malafide intent or procedural non-compliance. Appeal dismissed.

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• 2025 (1) TMI 631
  Short payment of service tax - Cargo Handling Service - Manpower Recruitment and Supply Agency Service - Time limitation - HELD THAT:- The SCN is categorical in stating that during 2003-04 to 2006-07, the appellants surrendered Cargo Handling Service to M/s PACL, Naya Nangal and rendered the service of Manpower Recruitment and Supply Agency during the period 2007-08, it was incorrect on the part of the learned Commissioner to confirm the demand on Manpower Recruitment and Supply Agency Service for the period 2003-04 to 2006-07. Extended period of limitation - HELD THAT:- Nothing has been brought forth as evidence to show that the appellants have indulged in suppression of facts etc. with intent to evade payment of duty so as to necessitate the invocation of the extended period. It is also the case of the Revenue that the appellants were registered with them and were paying service tax and therefore, there was short payment of service tax; in the light of the fact that the appellants have been paying service tax and were filing the Returns and in the absence of any evidence to allege suppression etc., the Revenue has not made any case for invocation of extended period. Conclusion - i) The demand for Manpower Recruitment and Supply Agency Service for 2003-04 to 2006-07 was set aside. ii) Revenue has not made any case for invocation of extended period. Appeal allowed.

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• 2025 (1) TMI 630
  Liability of service tax - CENVAT Credit of service tax paid by ART on the services which it had rendered to PJL - time limitation. Whether PJL had rendered taxable services to Shrawan and hence was liable to pay service tax as required? - HELD THAT:- PJL was registered as a cement manufacturer and had been filing excise returns but it had not disclosed to the Department the fact that it was providing mining services nor did it obtain the service tax registration. Scrutiny of returns by the excise officers or by the excise audit teams naturally will be confined the excise part of its work. When PJL had not even intimated the department about the services which it was rendering nor had it taken any registration nor paid service tax nor filed the service tax returns, PJL had clearly suppressed all facts related to rendering of mining services to Shrawan and not paying service tax on them. The services were rendered by PJL to Shrawan whose final product was limestone which was an exempted good. Shrawan was not rendering any service. Thus, the service tax which PJL had to pay would have had to be borne by PJL or Shrawan. Shrawan could not have availed credit of the service tax, if it was paid, because its final product- limestone- is an exempted good - the demand of service tax from PJL along with interest and penalties need to be sustained. Whether CENVAT credit is available of service tax paid by ART on the services which it had rendered to PJL, treating them as input services for manufacture of cement? - input services - HELD THAT:- While dealing with the service tax issues in this order, nobody can quarry or mine except under a licence given under the MMD Act. In case of minor minerals, including limestone, the licence can be granted by the State Government. Government of Madhya Pradesh granted the mining lease to Shrawan stipulating that it cannot be transferred without consent of the Government. We have already found that it was not transferred and the lease continued to be with Shrawan. Therefore, Shrawan alone was authorized to mine limestone, which he could do by himself or using contractor - The cement manufactured by PJL is an excisable product and PJL is entitled to take CENVAT credit of inputs and input services used in or in relation to manufacture of cement. The services rendered by ART to PJL were in relation to the services which PJL had rendered to Shrawan and the exempted goods limestone produced by Shrawan. The services rendered by ART clearly had no correlation to the manufacture of cement. Therefore, the finding in the impugned order that CENVAT credit was wrongly availed by PJL on the services rendered by ART treating it as input service for manufacture of cement is correct and needs to be sustained. Time limitation - HELD THAT:- CENVAT credit irregularly taken can be recovered under Rule 14 of CCR and the provisions of section 11Aof the Excise Act apply mutatis mutandis to such recovery. Therefore, the time limits prescribed under section 11A of Excise Act also apply to recovery of irregularly availed CENVAT credit under Rule 14 of CCR. It provides for invoking extended period of limitation of five years if duty was not levied or not paid or short levied or short paid or erroneously recovered by reason of fraud or collusion or wilful misstatement or suppression of facts or violation of the provisions of the Act or Rules with an intent to evade payment of duty. To recover irregularly availed CENVAT credit by invoking extended period of limitation under Rule 14 of CCR, one of these aggravating factors must be established. There is also no obligation to disclose to the department the details of the invoices or services on which credit was taken. It was open to the officer who is mandated to receive the ER1 return to call for further information and details and if he had sought and PJL had concealed the details, it would have been a different case. Nothing in the records suggests that the officer scrutinizing the Returns had sought any information which was not given. Therefore, PJL had no obligation to disclose the details which it is said to have not disclosed. This cannot be termed suppression of facts to invoke extended period of limitation. Penalty under Section 11AC read with Rule 15 of CCR - HELD THAT:- The legal requirement to impose penalty under section 11ACof Excise Act is the same as the requirement to invoke extended period of limitation, i.e., the wrong availment of CENVAT credit is because of fraud or collusion or willful mis-statement or suppression of facts or violation of Act or Rules with intent to evade payment of duty. Since it is found that extended period of limitation was wrongly invoked, we also set aside the penalty imposed under Section 11AC of the Excise Act read with Rule 15 of CCR. There is no dispute that ART had provided services to PJL, issued tax invoices and paid service tax on such services. Therefore, there was nothing improper, let alone illegal or irregular in ART issuing such invoices to PJL. In fact, it was required to pay service tax and issue invoices. The fact that PJL used such invoices to take CENVAT credit wrongly treating it as an input service for manufacture of cement is an altogether different matter. Neither the issue of invoices by ART was incorrect nor can Pradeep, Manish and Ashish be accused of abetting issue of such an invoice. Clearly, the penalties imposed on them under Rule 26(2)(ii) of Excise Rules cannot be sustained and need to be set aside. Conclusion - i) Shrawan was and continued to be the lease holder of Ramasthan mines and this lease was neither consented to be transferred by the Government of MP, nor was it actually transferred to PJL. ii) The sale of the limestone for each consignment took place when PJL issued purchase orders and Shrawan supplied the limestone at the crushing site of the PJL. iii) PJL neither paid service tax on the services which it had rendered to Shrawan nor filed any return nor had it taken registration under service tax. It thus, suppressed these facts with an intent to evade paying service tax. iii) The demand of service tax , interest and penalties on PJL must be sustained. Considering the role played by Pradeep, Manish, Ashish and Shrawan, the penalties imposed on them under sections 77 and 78Aof the Finance Act must be upheld. iv) The services rendered by ART to PJL were not in or in relation to the manufacture of cement by PJL. Therefore, no CENVAT credit of the service tax paid by ART is admissible as 'input service' to manufacture of cement by PJL. v) The irregularly availed CENVAT credit must be recovered but only within the normal period of limitation as the ingredients to invoke extended period of limitation are not present. vi) Penalties imposed on Pradeep, Ashish and Manish under Rule 26(2)(ii) of the Excise Rules, 2002 cannot be sustained and need to be set aside. Appeal disposed off.

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• 2025 (1) TMI 629
  Liability of appellants, as individual co-owners of a jointly owned immovable property to pay service tax - rent received from leasing the property - benefit of the threshold exemption limit under Notification No. 6/2005-S.T., dated 1-3-2005 - HELD THAT:- Though, learned Authorized Representative submits that the impugned case is different from the cases decided by the Tribunal inasmuch as both the appellants are Kartas in the same HUF - It is found that this fact will not alter the position of the appellants being joint owners and receiving rent separately. This Bench has decided the issue in the case of RAMESH KUMAR CHAUDHARY, SANTOSH CHAUDHARY, SANJAY CHAUDHARY, VIJAY CHAUDHARY VERSUS COMMISSIONER OF SERVICE TAX, DELHI-IV [ 2024 (12) TMI 1025 - CESTAT CHANDIGARH] where it was held that 'service tax cannot be recovered from the appellants in a combined fashion. If considered individually, the appellants are eligible for the benefit of exemption contained under Notification. No. 06/2005-S.T dated 01.03.2005.' Conclusion - i) The appellants are eligible for the service tax exemption individually; they are not an association of persons. ii) Co-owners receiving rent individually are entitled to separate threshold exemptions. Appeal allowed.

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• 2025 (1) TMI 628
  Recovery of wrongfully availed CENVAT Credit with interest and penalty - input service or not - Commissions/Brokerage paid to Commission Agents on sale of flats - violation of Rule 2(1) and 3 of the Cenvat Credit Rules, 2004 - invocation of Extended period of limitation - HELD THAT:- The issue is no longer res integra and has been decided in series of decisions by this Tribunal. One of such decision is in favour of the asessee itself in the case titled as CGST, C CE, Alwar Vs. Krish Icon [ 2018 (7) TMI 97 - CESTAT NEW DELHI] . In the said case, the learned Member considered the earlier decision of the Tribunal in the case of Essar Steel India Ltd. Vs. Commissioner of Central Excise ST, Surat-I [ 2016 (4) TMI 232 - CESTAT AHMEDABAD] , which was passed holding that Explanation to Rule 2(l) of the Rules inserted vide Notification No.2/2016-CX (NT) dated 03.02.2016) is declaratory in nature and retrospectively effective. Revenue also placed on record the latest decision of this Tribunal in The Commissioner, Central Goods Service Tax, Jaipur Vs. M/s.Bharti Hexacom India Ltd. [ 2023 (5) TMI 520 - CESTAT NEW DELHI] , where also the Department s appeal was rejected observing that the assessee is entitled to avail the cenvat credit of service tax discharged on the Commission paid by the respondent to the Collection Agents for collection of dues of post-paid plans from the subscribers, relying on the provisions of Explanation inserted to Rule 2 (l) on 03.02.2016. Conclusion - The respondent is entitled to avail the cenvat credit on service tax paid as Commission Agents on sale of flats. Appeal dismissed.

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• 2025 (1) TMI 627
  Valuation of service tax - addition of certain reimbursable expenses in the value of taxable services provided by the appellant - HELD THAT:- The issue with regard to the addition of such reimbursable expenses in the value of the taxable services provided for the period prior to 2015 has been considered by Hon ble Delhi High Court and then by Hon ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT ]. By the said decision Hon ble Supreme Court have quashed the provisions of Rule 5 provided for addition of such reimbursable expenses in value of taxable services is beyond the power conferred under Section 67. Conclusion - The reimbursable expenses should not be included in the taxable value unless explicitly provided by statute. Appeal allowed.

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• 2025 (1) TMI 626
  Invocation of extended period of limitation under the proviso to section 73(1) of the Finance Act, 1994 for demanding service tax for the periods April 2008 to March 2012 and April 2012 to March 2013 - willful suppression of facts or not - HELD THAT:- Mere suppression of facts is not enough and there must be a deliberate and wilful attempt on the part of the assessee to evade payment of duty. In the absence of any intention to evade payment of service tax, which intention should be evident from the materials on record or from the conduct of the assessee, the extended period of limitation cannot be invoked. Thus, mere non disclosure of the receipts in the service tax return would not mean that there was an intent to evade payment of service tax. In THE COMMISSIONER, CENTRAL EXCISE AND CUSTOMS AND ANOTHER VERSUS M/S RELIANCE INDUSTRIES LTD. AND COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS M/S RELIANCE INDUSTRIES LTD. [ 2023 (7) TMI 196 - SUPREME COURT ] , the Supreme Court held that if an assessee bonafide believes that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would not render such a belief of the assessee to be malafide. If a dispute relates to interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it is the responsibility of the assessee to determine the liability correctly and this determination is required to be made on the basis of his own judgment and in a bona-fide manner. An assessee may genuinely believe that duty is not leviable, while the department may believe that duty is leviable. The assessee may, therefore, not pay duty in the self-assessment carried out by the assessee, but this would not mean that the assessee has wilfully suppressed facts. To invoke the extended period of limitation, atleast one of the five necessary elements must be established and their existence cannot be presumed merely because the assessee is operating under self assessment - merely because facts came to light only during the audit does not prove that there is an intent on the part of the assessee to evade payment of duty. There is, therefore, no reason as to why the show cause notice should have been issued beyond the normal period of limitation for the period from April 2008 to March 2012, nor there is any justification for issuing the show cause notice dated 22.10.2014 for the subsequent period from April 2012 to March 2013. It is, therefore, clearly a case where the facts were in the knowledge of the department and the department cannot allege that facts had been suppressed. In any case, even if it is assumed that facts were suppressed by the appellant then too no reason has been assigned in the orders passed by the Joint Commissioner or the Commissioner (Appeals) that such suppression was with an intent to evade payment of service tax. Conclusion - The extended period of limitation contemplated under the proviso to section 73 (1) of the Finance Act could not have been invoked in the facts and circumstances of the case. Appeal allowed.

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• CST, VAT & Sales Tax

• 2025 (1) TMI 625
  Constitutional validity of sub-clause (B) of Clause 14 Excise Duty-Civil of Excise Policy 2019-20 (Excise Policy 2019-20) to the extent it provides for the levy of excise duty at the rate of Rs. 10 per litre in respect of rectified spirit/alcohol and denatured spirit used in medicinal and toiletry preparations, other than in manufacture of liquor - legislative competence of Jammu and Kashmir to impose a levy of excise duty on the rectified spirit etc. for use in medicinal and toiletry preparations and also that the raw material procured by the petitioners i.e rectified spirit etc. - imposition of excise duty on these substances amounts to double taxation or not. Legislative competence of Jammu and Kashmir to impose a levy of excise duty on the rectified spirit etc. for use in medicinal and toiletry preparations and also that the raw material procured by the petitioners i.e rectified spirit etc. - HELD THAT:- The State Excise Act was indisputably within the legislative competence of the State when it was enacted and continues to remain so even as on date. Otherwise also, there is no challenge to the vires of the State Excise Act. The impugned clause in the policy has been framed by the Government of Jammu and Kashmir in the exercise of powers vested in it under Section 16, read with Section 5, of the State Excise Act. So long as we do not find any fault with the State Excise Act, and in particular, with Sections 5 and 16 thereof, the impugned clause in the Excise Policy cannot be declared bad and unconstitutional for being beyond the legislative competence of the State Legislature. There are substance in the submission of the learned counsel appearing for the petitioners who are not using in their units rectified spirit/alcohol and denatured spirit etc. for medicinal and toiletry preparations. This so because the impugned clause itself makes it clear beyond any doubt that what is sought to be levied as the duty of excise at the rate of 10 per litre is only on the rectified spirit/alcohol/denatured spirit imported in the State of Jammu and Kashmir for its use in medicinal and toiletry preparations. The expression other than in manufacture of liquor is redundant appendix and needs to be ignored. As a matter of fact, the import of rectified spirit/alcohol/denatured spirit in the State of Jammu and Kashmir for its use in the manufacture of liquor or any other preparations, excluding the medicinal and toiletry preparations, is not leviable under the impugned clause with the duty of excise at the rate of 10 per litre. Whether the imposition of excise duty on these substances amounts to double taxation, given the applicability of the Goods and Services Tax (GST)? - HELD THAT:- May be it is true that rectified spirit, alcohol, or denatured spirit supplied in the State of Jammu and Kashmir (now UT of J K) from other State/States is exigible to tax under Section 7 of IGST Act, 2017, except when used for the manufacture of liquor fit for human consumption. However, that does not take away the power of the State to levy a duty of excise under Section 16 of the State Excise Act when such goods are imported by a unit for use in medicinal and toilet preparations. The IGST is charged by the Center on inter-State supply of goods and services, as per nature of such goods or services, as the case may be. The duty of excise impugned is on the quantity of goods imported for a particular use. The two levies, being legally distinct, can be levied simultaneously, and such a levy is not hit by the double taxation, as urged by learned counsel appearing for the petitioners. Conclusion - i) The legislative competence of the State of Jammu and Kashmir to impose excise duty on rectified spirit/alcohol/denatured spirit used in medicinal and toiletry preparations was upheld. ii) The excise duty and GST are distinct levies and can coexist without constituting double taxation.

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• 2025 (1) TMI 624
  Benefit of concessional rate of tax - Whether the appellant could indeed be treated as one who had been permitted to pay tax on compounded basis under Section 7 of the KGST Act? - an application was filed for compounded tax under Section 7 of the KGST Act - HELD THAT:- In the absence of any positive action by the State, on the application preferred by the appellant dealer, one has to go by the conduct of the parties in arriving at a finding as to whether or not there was a consensus between the assessee and the department on the method of payment of tax by the assessee - while there was an application preferred by the appellant seeking permission from the department to pay tax on compounded basis in accordance with Section 7 of the KGST Act, there was no permission expressly granted by the department within the period of one year for which the permission was sought by the appellant. In terms of offer and acceptance, the offer made by the appellant was never accepted by the department. Further, looking to the conduct of the appellant assessee during the said period, we find that even that does not support a finding that the assessee intended to pay tax on compounded basis since the assessee had admittedly paid the tax in accordance with the provisions of Section 5 of the KGST Act. This is borne out by the figures showing payment of tax, despite the fact that those figures were inserted in a return that was meant to be used by paying tax under Section 7 of the KGST Act. For the purposes of assessment year 2021-22, there was no consensus between the assessee and the department on the aspect of payment of tax on compounded basis. This being the case and the compounded basis of payment of tax being an alternate method to the regular method of payment of tax envisaged under Section 5 of the Act, in the absence of any express indication that would clearly point to the exercise of an option by the assessee to pay tax on compounded basis, the assessee had only decided to pay tax in accordance with the regular provisions in accordance with Section 5 of the KGST Act. Once it is found that the actual payment of tax by the assessee during the assessment year 2021-22 was in accordance with the provisions of Section 5 of the KGST Act and not in accordance with Section 7 of the KGST Act, the conclusion is inescapable that the benefit of concessional rate of tax, that was announced by the State Government in respect of tax paid by bar attached hotels, would enure to the appellant assessee as well. Conclusion - The department could not after the expiry of the assessment year in question have accepted an application for compounding, which was no longer relevant, and further completed an assessment based thereon against the assessee. Petition allowed.

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• Indian Laws

• 2025 (1) TMI 623
  Applicability of Limitation Act to proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 (ACA) - Whether the benefit of the additional 30 days under the proviso to Section 34(3), which expired during the vacation, can be given when the petition is filed immediately after reopening in exercise of power under Section 4 of the Limitation Act? Do the provisions of the Limitation Act apply to Section 34 proceedings, and to what extent? - HELD THAT:- When Section 29(2) of the Limitation Act already makes Sections 4 to 24 of the Limitation Act applicable to special statutes, including the ACA. It held that the ACA does not prescribe the period of limitation for various proceedings under the Act, and deviates from the Limitation Act in specific instances like Section 34(3) and Sections 43(2) to (4).16 By virtue of Section 29(2), the Limitation Act applies to court proceedings under the ACA. The purpose of Section 43(1) of the ACA is to extend the applicability of the Limitation Act to arbitrations also, as these are private tribunals and not courts. Since the Limitation Act is only applicable to court proceedings, Section 43(1) is necessary to make it applicable to arbitrations in the same manner as it applies to court proceedings. The mere prescription of a period of limitation that is different from the Limitation Act, even if mandatory and compulsory, is not sufficient to displace the applicability of the Limitation Act s provisions.20 However, an exclusion of the Limitation Act s provisions can be inferred if the nature and language of the provisions, and the scheme of the special law necessarily exclude the applicability of one or more of the provisions contained in Sections 4 to 24 of the Limitation Act.21 Thus, as per settled caselaw, an express reference to an exclusion is not essential and the court can examine the language of the special law and its scheme to arrive at a conclusion that certain provisions of the Limitation Act are impliedly excluded. Once the Court commenced disapplying provisions of the Limitation Act to the ACA on the ground of implied exclusions, it is only a matter of interpretation to include or exclude provisions from Sections 4 to 24 of the Limitation Act on a case-to-case basis. Thus, for example, while the Court held that Sections 5 and 17 of the Limitation Act are excluded from Section 34(3), it came to the conclusion that Sections 4, 12, and 14 of the Limitation Act are applicable. In a way, the applicability of provisions from Sections 4 to 24 of the Limitation Act and the manner in which they apply are at the doorstep of the court, rather than being determined by a clear and categorical statutory prescription. Conclusion - The Limitation Act applies to Section 34 proceedings, with specific exclusions. Section 4 applies only to the 3-month period, and Section 10 of the GCA does not apply. Appeal dismissed.

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• 2025 (1) TMI 622
  Jurisdiction of the Facilitation Council in entertaining the reference under Section 18 of the MSMED Act, 2006 - challenge to jurisdiction for the simple reason that it registered itself after the contracts were executed and not before - whether an MSME (Micro, Small, and Medium Enterprise) can make a reference to the Facilitation Council for dispute resolution under Section 18 of the MSMED Act, 2006, if it is not registered under Section 8 of the Act before the execution of the contract with the buyer? HELD THAT:- Having considered the definition of the expression supplier , and also having considered the classification of enterprises into micro, small and medium with respect to each of which there is a separate legal regime to be suggested by the Advisory Committee and notified by the Central and State Governments, and in view of the discretion specifically vested with the micro and small enterprises for filing a memorandum under Section 8 of the Act, the submission that the Facilitation Council cannot entertain a reference under Section 18 if the enterprise is not registered under Section 8 must be rejected. Re: Silpi Industries v. Kerala State Road Transport Corporation [ 2021 (6) TMI 1119 - SUPREME COURT] - This is the lead judgment which has given the impression that this Court has laid down the law that Section 18 cannot be invoked by an Enterprise if it has not filed a memorandum under Section 8 of the Act before entering into a contract. However, the issues that arose for consideration in Silpi Industries are in complete contrast with the present case. In that case, there were two appeals, and they involved different facts and circumstances. The short facts in the first appeal was that the appellants referred the matter to the Facilitation Council which made an award in favour of the appellant under the Arbitration and Conciliation Act. The award was challenged under Section 34 and the same was dismissed. During the pendency of the appeal under Section 37, the High Court decided a preliminary issue as to whether the Limitation Act would apply to arbitral proceedings under the MSME. In the first place, whether an Enterprise is disabled from seeking a reference before filing a memorandum under Section 8 for registration never arose for consideration in Silpi. More importantly, the Court did not examine any provisions of the Act and their implication on the right to seek a reference under Section 18 of the Act. This was natural because the Court did not frame an issue of registration. Even in Mahakali Foods [ 2022 (11) TMI 91 - SUPREME COURT] , the issue which has arisen for our consideration never arose. There was neither an issue, discussion, nor analysis on the applicability of Section 18 for enterprises that have not filed a memorandum. The decision in Mahakali Foods is certainly an authority on the issues that were formulated in paragraph 11 of the said judgment, which have already been extracted hereinabove. Even the concluding paragraph in Mahakali Foods clearly establishes the fact that the Court was only considering the issue of whether the MSMED Act, being a special legislation, overrides the Arbitration Act or not. On the interpretation of the provisions of the Act we have arrived at a clear opinion and have expressed the same. Though it is possible for us to follow the precedents referred to in para 27 to arrive at the conclusion that the judgments in the case of Silpi Industries and Mahakali Foods coupled with the subsequent orders in Vaishno Enterprises [ 2022 (4) TMI 58 - SUPREME COURT] cannot be considered to be binding precedents on the issue that has arisen for consideration, taking into account the compelling need to ensure clarity and certainty about the applicable precedents on the subject, it is deemed appropriate to refer this appeal to a three Judge Bench. Conclusion - i) An MSME can refer a dispute to the Facilitation Council under Section 18 without being registered under Section 8 before the execution of the contract. ii) The Court referred the matter to a larger bench for a definitive ruling to ensure clarity on the issue. The Registry is directed to place the appeal paperbooks along with our detailed judgment before the Hon ble Chief Justice of India for constitution of an appropriate Bench.

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• 2025 (1) TMI 621
  Dishonour of Cheque - complaint barred by time limitation or not - condonation of delay in filing appeal - funds insufficient - challenge to judgment of acquittal. Challenge to judgment of acquittal - HELD THAT:- It was laid down by the Hon ble Supreme Court in Mallappa v. State of Karnataka [ 2024 (2) TMI 1391 - SUPREME COURT] that while deciding an appeal against acquittal, the High Court should see whether the evidence was properly appreciated on record or not; second whether the finding of the Court is illegal or affected by the error of law or fact and thirdly; whether the view taken by the Trial Court was a possible view, which could have been taken based on the material on record. The Court will not lightly interfere with the judgment of acquittal. The present appeal has to be decided as per the parameters laid down by the Hon ble Supreme Court. Appeal barred by time limitation - condonation of delay - HELD THAT:- It was permissible for the complainant to present the complaint himself before the Court as per Section 200 of Cr.P.C., and he did not require the assistance of the counsel for presenting the complaint. Hence, the appellant cannot shift the entire blame on the counsel. He could have filed an application for condonation of delay, giving reasons, but he failed to do so, and it is not permissible for the Court to condone the delay when no such prayer was made before the learned Trial Court. In Praveen Qtarmal Parmar [ 2023 (8) TMI 462 - BOMBAY HIGH COURT] , the Bombay High Court held that the delay was impliedly condoned. It also held that the Court had not given an opportunity to pray for the condonation of delay. There cannot be any implied condonation, as noticed above. It is difficult to see how the Court can grant an opportunity for condonation of delay if no such prayer is made. Conclusion - The complaint was barred by limitation, no implied condonation occurred, the complainant bore responsibility for the delay. The learned Trial Court had taken a reasonable view while deciding the complaint and no interference is required with it while deciding an appeal against acquittal. Appeal dismissed.

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• 2025 (1) TMI 620
  Maintainability of petition - availability of alternative remedy - Removal of name of the petitioner from the Register of Members - violative of Articles 14, 19 and 21 of the Constitution of India - HELD THAT:- The petitioner should invoke the statutory appeal challenging the impugned order passed by the 2nd respondent. Considering the facts and circumstances, the urgency as contended by the learned counsel for the petitioner, there shall be a stay on the publication in the Gazette of India regarding the removal of the petitioner's name from the register of members. This stay is effective from today i.e., on 03.01.2025 till the date of filing an interlocutory application for interim stay along with the statutory appeal before the Appellate authority by the petitioner. Therefore, the petitioner is at liberty to initiate a statutory appeal before the appellate authority within a period of four (04) weeks from today. The petitioner also entitled to file an interlocutory application along with the statutory appeal, seeking interim suspension of the impugned proceedings dated 23.12.2024. Conclusion - In view of the statutory appeal provided under Section 22(G) of the Chartered Accountants Act, 1949 the petitioner should invoke the statutory appeal challenging the impugned order passed by the 2nd respondent. Petition disposed off.

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• 2025 (1) TMI 619
  Rejection of application moved by the petitioner in a pending criminal case seeking stay on the proceedings pending before the trial Court on the basis of interim-moratorium declared by the National Company Law Tribunal, Indore - whether the interim-moratorium declared by the NCLT would be applicable upon the proceedings initiated against the petitioner under Section 138 of the N.I. Act or not? - HELD THAT:- To answer the said question, it is required to see the nature of proceedings initiated against the petitioner by the respondent which are under Section 138 of the N.I. Act and in fact, quasi criminal in nature and indirectly relating to recovery of debt. The said proceedings are initiated by the respondent-complainant against the petitioner for not being able to honour the payment of an amount under the negotiable instruments, which was promised to be paid by the petitioner to the complainant and are indirectly for recovering debt. The proceedings are not considered to be criminal in nature. The case of P. MOHANRAJ ORS. VERSUS M/S. SHAH BROTHERS ISPAT PVT. LTD. [ 2021 (3) TMI 94 - SUPREME COURT ], is relevant in the present case, wherein the Supreme Court has observed 'The Section 138/141 proceedings in this case will continue both against the company as well as the appellants for the reason given as well as the fact that the insolvency resolution process does not involve a new management taking over.' The basic object of the IBC is to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interest of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto. Moreover, the objects of Section 14 of IBC is to ensure that the Corporate Insolvency Resolution Process (CIRP) could proceed unhindered and without any action being taken against the corporate debtor or its assets; it is essentially designed to ensure that the assets and properties of the corporate debtor are duly preserved and no coercive steps are taken against them during the pendency of the CIRP. Here in this case, since one of the creditors i.e. Bank of Baroda has moved an application under Section 95 of the IBC against the present petitioner, who is one of the Board of Directors of the company, as such, when the adjudicating authority has declared interim-moratorium under Section 96, then it is clear that as per sub-section 2 of Section 96, if an application is made in relation to a firm, the interim-moratorium covers the proceedings against not only the firm but also against the partners of the firm. Here in the present case, since the proceedings have been initiated only against the present petitioner that too by one of the creditors, therefore, the interim-moratorium would apply to the proceedings initiated against the petitioner in respect of any of the transactions in which he was involved and proceedings are initiated for recovery of debts from such debtor. The provisions have overriding effect as has already been observed by the Supreme Court because of a special enactment and it is also observed in the case of P. Mohanraj that the moratorium declared under Section 96 of the IBC has also application over the proceedings of Section 138 of the N.I. Act and that ratio of P. Mohanraj has not been disturbed even in the case of Ajay Kumar Radheyshyam Goenka [ 2023 (3) TMI 686 - SUPREME COURT ], but on the contrary, the Supreme Court has followed the ratio of P. Mohanraj and therefore, no question regarding ignoring the legal position as has been settled by the Supreme Court in the case of P. Mohanraj arises. Conclusion - The interim-moratorium under Section 96 of the IBC applies to proceedings under Section 138 of the N.I. Act, providing a stay on such proceedings to facilitate the insolvency resolution process. The order passed by the revisional Court is based upon incorrect interpretation of legal position and as such, not sustainable in the eyes of law. Accordingly, it is set aside - The petition is allowed directing that the proceedings initiated against the petitioner under Section 138 of the N.I. Act, shall remain stayed till the moratorium declared by the NCLT in a pending proceeding of Section 96 of IBC, is in operation.

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