TMI Tax Updates - e-Newsletter
January 27, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. GST on Advance Received in Case of Service Providers

   By: Tushar Malik

2. DGFT - NORM COMMITTEE

   By: YAGAY andSUN

3. Risk Management Systems in Customs

   By: YAGAY andSUN

4. LIABLITY TO PAY INTEREST AND LATE FEE FOR THE BELATED REMITTANCE OF TDS

   By: DR.MARIAPPAN GOVINDARAJAN

5. Delay of 285 days in filing of Appeal Condoned in case where no hard copy of the order was served to the Assessee

   By: Bimal jain

6. Taxation in LLP vs Pvt. Ltd: Which is More Beneficial?

   By: Ishita Ramani

7. Quality Control Orders and Import/Export under the Provisions of Customs Laws

   By: YAGAY andSUN

8. Export of Bicycles and Part thereof from India

   By: YAGAY andSUN

News

1. No. 1 Sridhar Rao Shines at the 55th World Economic Forum in Davos: A Visionary Leader in Technology and Innovation

2. Trump proposes 'getting rid of FEMA' while touring disaster areas

3. Trump proposes 'getting rid of FEMA' while visiting North Carolina

4. Egypt, Eni-Total consortium to sign deal on processing Cypriot natural gas for export

Notifications

GST - States

1. 06/2025–C.T./GST - dated 16-1-2025 - West Bengal SGST

Seeks to extend the due date for furnishing FORM GSTR-8 for the month of December, 2024.

2. 05/2025–C.T./GST - dated 16-1-2025 - West Bengal SGST

Seeks to extend the due date for furnishing FORM GSTR-7 for the month of December, 2024.

3. 04/2025–C.T./GST - dated 16-1-2025 - West Bengal SGST

Seeks to extend the due date for furnishing FORM GSTR-6 for the month of December, 2024

4. 03/2025–C.T./GST - dated 16-1-2025 - West Bengal SGST

Seeks to extend the due date for furnishing FORM GSTR-5 for the month of December, 2024

5. 02/2025–C.T./GST - dated 16-1-2025 - West Bengal SGST

Seeks to extend the due date for furnishing FORM GSTR-3B for the month of December, 2024 and the quarter of October to December, 2024, as the case may be.

6. 01/2025–C.T./GST - dated 16-1-2025 - West Bengal SGST

Seeks to extend the due date for furnishing FORM GSTR-1 for the month of December, 2024 and the quarter of October to December, 2024, as the case may be.

Circulars / Instructions / Orders

GST - States

1. TRADE CIRCULAR No. 01/2025 - dated 8-1-2025

Clarification in respect of input tax credit availed by electronic commerce operators where services specified under Section 9(5) of the West Bengal Goods and Services Tax Act, 2017 are supplied through their platforms.

2. TRADE CIRCULAR No. 02/2025 - dated 8-1-2025

Clarification on availability of input tax credit as per clause (b) of sub-section (2) of section 16 of the West Bengal Goods and Services Tax Act, 2017 in respect of goods which have been delivered by the supplier at his place of business under Ex-Works Contract.

3. TRADE CIRCULAR No. 03/2025 - dated 8-1-2025

Clarification on place of supply of Online Services supplied by the suppliers of services to unregistered recipients.

4. TRADE CIRCULAR No. 04/2025 - dated 8-1-2025

Clarification on various issues pertaining to GST treatment of vouchers

Highlights / Catch Notes

GST

• Government Waives Excess Late Fees for GSTR-9C Reconciliation Statement Filing u/s 47 Until March 2025.

  Notifications : The Central Government has waived excess late fees u/s 47 of CGST Act for registered persons who failed to file GSTR-9C reconciliation statements alongside GSTR-9 annual returns for FY 2017-18 through 2022-23. This waiver applies to late fees exceeding the prescribed amount u/s 47, provided the pending GSTR-9C is filed by March 31, 2025. The notification, issued u/s 128 of CGST Act upon GST Council's recommendation, specifically excludes refunds of any late fees already paid for delayed GSTR-9C submissions during these financial years. The waiver aims to facilitate compliance for taxpayers who have outstanding reconciliation statement obligations.
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• Central Government Introduces Rule 16A in CGST Rules for Temporary GST Numbers to Unregistered Taxpayers Making Payments.

  Notifications : The Central Government amended the CGST Rules 2017 through Notification 07/2025-CT dated January 23, 2025. Key modifications include insertion of Rule 16A enabling proper officers to grant temporary identification numbers to persons not registered but required to make payments under the Act. The amendment updates Rule 19(1) to include references to Form GST CMP-02 and modifies Rule 87(4) regarding common portal payments. A new comprehensive Form GST REG-12 is introduced for temporary registration/identification numbers, containing detailed sections for personal information, address, bank details and jurisdictional requirements. The changes aim to streamline registration processes for non-registered persons needing to make GST payments while maintaining regulatory oversight.
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• High Court Stays Tax Recovery Order u/s 107(6), Requires 10% Payment Within Two Weeks Pending Final Hearing.

  Case-Laws - HC : HC granted interim stay on appellate order demanding tax recovery. Stay conditional on petitioner paying 10% of disputed tax balance within two weeks, in addition to amounts already deposited u/s 107(6). Court noted absence of constituted Appellate Tribunal as material factor. Petitioner established prima facie case warranting temporary relief. Initial unconditional stay granted for two weeks, with extension contingent on additional payment. Stay to continue until writ petition disposal or further orders. Respondents directed to file opposition within six weeks, with one week allowed for reply. Matter to be heard on merits given institutional gaps in appellate mechanism.
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• High Court Nullifies Tax Assessment Order Over Natural Justice Violations, Permits Fresh Hearing Under Due Process for ITC Claims.

  Case-Laws - HC : HC set aside assessment order due to violation of natural justice principles, specifically addressing non-speaking order deficiency in tax proceedings involving output tax underdeclaration and irregular input tax credit claims. Issues included ITC reversals for non-business transactions, exempted supplies, and credits claimed from cancelled dealers and defaulters. Court permitted revenue authorities to conduct fresh assessment following due process, mandating reasonable opportunity of hearing to the assessee. Matter remanded for de novo proceedings in accordance with law, emphasizing procedural fairness and proper reasoned order requirements.
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• High Court Orders Fresh Review of Input Tax Credit Denial Under GST Section 16, Following M. Trade Links Precedent.

  Case-Laws - HC : HC set aside the denial of input tax credit u/s 16(2)(c) and 16(4) of CGST/SGST Acts. The court directed reconsideration of petitioner's ITC claim in accordance with relevant circulars discussed in M. Trade Links case if factual circumstances are similar. The first respondent was instructed to pass fresh orders within two months from receipt of certified judgment copy. The decision established that blanket denial of ITC solely based on statutory provisions without considering applicable circulars and similar precedents is not sustainable. The matter was disposed of with specific directions for fresh assessment of the ITC claim.
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Income Tax

• CBDT Guidelines Clarify Principal Purpose Test Application Under Tax Treaties, Preserving Grandfathering For Cyprus, Mauritius, Singapore Agreements.

  Circulars : CBDT issued guidance on applying the Principal Purpose Test under India's DTAAs, effective from MLI's entry into force on October 1, 2019. The PPT provision enables denial of treaty benefits where obtaining such benefits was a principal purpose of any arrangement, unless aligned with the DTAA's object and purpose. The guidance clarifies prospective application timeframes - from the effective date for bilateral PPTs, and as per MLI Article 35 for MLI-modified treaties. Notably, existing grandfathering provisions in Cyprus, Mauritius and Singapore DTAAs remain outside PPT's scope. Tax authorities may reference BEPS Action 6 Report and UN Model Tax Convention Commentary for case-specific application, subject to India's reservations.
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• Supreme Court Allows Petitioner to Challenge Black Money and FEOA Proceedings Before Designated Authority u/ss 4, 10, 12.

  Case-Laws - SC : SC granted liberty to petitioner to raise all legal and factual contentions before concerned authority under Black Money Act and Fugitive Economic Offenders Act, 2018. The challenge pertained to summoning order and proceedings under s.482 CrPC seeking quashing of miscellaneous application filed under ss.4, 10, and 12 of FEOA. Court directed that when petitioner raises contentions, authority shall consider them on merits per FEOA provisions without being influenced by HC's observations in disposed writ petition. Impugned Delhi HC order [2024 (11) TMI 649] shall not impede petitioner from presenting available defenses before designated authority.
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• Tax Court Waives Section 271B Penalty: Delayed Audit Report Filing Justified Due to Raids, Seizures, and Genuine Compliance Efforts.

  Case-Laws - HC : HC determined that penalty u/s 271B for delayed filing of tax returns and audit report was not warranted. Though delay in Appellant's case exceeded that of sister concerns, legitimate circumstances justified it. Post-filing of accounts for AY 1985-86, raids and seizures impeded timely submission of audit report. Appellant demonstrated diligence by obtaining seized books and engaging chartered accountants. Report was prepared on December 8, 1988, and filed next day. Court considered additional mitigating factors beyond those accepted in sister concerns' cases. Revenue's acceptance of returns indicated no fiscal loss. Mere delay, when explained by genuine difficulties and eventual compliance, does not merit penalty imposition. Appeal allowed in assessee's favor.
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• High Court Invalidates Section 270A Penalty Order Due to Department's Failure to Consider Pending Appeal Status.

  Case-Laws - HC : HC set aside penalty order u/s 270A and notice of demand u/s 156 due to procedural oversight. Department acknowledged they weren't informed about pending appeal proceedings where notice was issued after delay condonation. Matter remitted to National Assessment Unit, NFAC for fresh consideration. Court determined penalty proceedings should have considered existing appeal status before proceeding. Case highlights importance of disclosing concurrent proceedings and proper procedural sequence in tax penalty matters, particularly when appellate authority has already taken cognizance of the main appeal.
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• High Court Quashes Inflated Tax Demands Under Direct Tax Vivad Se Vishwas Act Due to Lack of Documentary Evidence.

  Case-Laws - HC : HC determined that certificates and orders demanding elevated tax amounts from the petitioner under Direct Tax Vivad Se Vishwas Act, 2020 were unlawful and arbitrary. The demands contravened both documentary evidence and statutory provisions of DTVSV Act. The court found no sustainable basis for the inflated tax assessment and concluded that the respondents' actions exceeded their jurisdictional authority under the tax dispute resolution framework. Accordingly, the orders were quashed, with specific directives issued to the respondents for compliance. The appeal against the petitioner's position was dismissed for lack of substantive merit, affirming the principle that tax demands must align with documentary evidence and statutory parameters.
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• High Court: Property Tax Liability Requires Proof of Actual Ownership Benefits, Not Just Signatures on Conveyance Documents - Section 26.

  Case-Laws - HC : HC ruled that mere signatory status on property conveyance does not automatically establish ownership or tax liability under Income Tax Act. Section 26 and 27 require clear determination of defined shares and actual beneficial ownership. Tax authorities erred by assuming 50% ownership solely based on appellant's signature without examining actual benefits derived from the property. Court emphasized that taxability must be determined based on who genuinely receives benefits from the property, not just documentary signatures. Absence of findings regarding appellant's actual beneficial ownership led to reversal of Tribunal's order. Appeal allowed in favor of assessee, rejecting presumptive attribution of property income based solely on documentary signatures.
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• Power Supply Transfer Pricing: ITAT Upholds TPO's Internal Comparable Analysis u/s 92BA Over State Utility Rates.

  Case-Laws - AT : The ITAT ruled against the assessee regarding applicability of section 92BA in a power supply transaction case. The Tribunal held that claiming deduction u/s 80IA is not prerequisite for invoking section 92BA provisions. The assessee's captive thermal plant transactions with related parties required arm's length price determination. The TPO correctly used internal comparables (power supply to 14 independent consumers) rather than state utility rates for benchmarking. The average rate of Rs. 2.97 per unit charged to other units, compared to assessee's transfer price of Rs. 7.85 per unit based on GSEB tariff, demonstrated significant price variation. The ITAT rejected assessee's argument that state electricity board rates should be the benchmark, affirming TPO's use of arithmetic mean from actual third-party transactions.
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• Income Tax Tribunal Directs Fresh Verification of Sikkimese Individual's Exemption Claim u/s 10(26AAA) Following Rule 46A(3).

  Case-Laws - AT : ITAT set aside CIT(A)'s order regarding exemption u/s 10(26AAA) for Sikkimese individual's income. CIT(A) had deleted additions u/ss 69A and 69 based solely on identification certificate without following Rule 46A(3) of IT Rules, which requires AO verification. ITAT restored assessment proceedings before AO for fresh consideration, allowing assessee opportunity to present evidence supporting exemption claim. Both Revenue's counsel and assessee's representative agreed to this approach. Revenue's appeal allowed for statistical purposes. Matter remanded for verification of whether conditions u/s 10(26AAA) were fulfilled, ensuring procedural compliance and fair hearing.
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• Capital Gains From Pre-2017 Shares Under India-Mauritius DTAA Remain Tax Exempt Despite Post-2017 Losses, Rules ITAT.

  Case-Laws - AT : ITAT ruled that capital gains from shares acquired before 01/04/2017 by a Mauritius resident are exempt under India-Mauritius DTAA Article 13(3)/(4), being taxable only in the state of residence. The AO's action of netting off post-2017 losses against pre-2017 gains was incorrect. The tribunal held that pre-2017 gains remain fully exempt per original DTAA provisions, while losses from shares acquired post-01/04/2017 can only offset future gains from post-2017 acquisitions. The carried forward losses from AY 2020-21 cannot be set off against exempt foreign income but must be preserved for future eligible gains. The assessee's appeal was allowed, maintaining separation between pre and post-2017 DTAA treatment.
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• Tax Audit Report Penalty Upheld: ITAT Confirms Section 271B Penalty for Rs.8.5 Crore Turnover Firm Missing Audit Deadline.

  Case-Laws - AT : ITAT upheld penalty under s271B for failure to furnish tax audit report per s44AB requirements. Assessee's turnover of Rs.8,53,66,166/- exceeded statutory threshold, mandating tax audit. Claims of substantial losses, creditor payments, and partners being senior citizens were rejected as insufficient reasonable cause for non-compliance. A purported tax audit report dated 23.09.2013 submitted later was dismissed as not previously presented to lower authorities. Assessee's incomplete documentation, lacking profit-loss statements and balance sheets, undermined their position. The contradictory claim of timely audit completion was rejected. Precedents cited by assessee were distinguished on facts. Penalty order sustained as assessee failed to demonstrate reasonable cause for non-compliance with statutory audit requirements.
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• Tax Tribunal Allows Weighted Deduction for Domestic R&D Expenses u/s 35(2AB), Separates Foreign Research Cost Treatment.

  Case-Laws - AT : ITAT affirmed weighted deduction eligibility u/s 35(2AB) for in-house scientific research expenditure. While R&D expenses incurred within India qualify for weighted deduction, foreign R&D capital expenditure is allowable u/s 35(1)(iv). The Tribunal distinguished between domestic and international research expenses, maintaining that revenue R&D expenditure incurred outside India was already permitted in the assessment. Product development expenses were classified as revenue expenses. The ruling establishes clear parameters for tax treatment of research expenditure based on geographical location and nature of expense, overturning AO's blanket disallowance of foreign expenditure.
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• Tax Tribunal Orders Fresh Review of Transfer Pricing Methods and Trade Payables Documentation for AY 2021-22 Expense Allocation.

  Case-Laws - AT : ITAT remanded transfer pricing adjustments for reassessment regarding expense allocation and segmental reporting. Tribunal directed AO/TPO to verify assessee's allocation methodology consistent with AY 2021-22 practices and analyze internal CUP method for benchmarking book purchase transactions with AE. Examination to include comparison of AE discounts in controlled versus uncontrolled transactions. On trade payables enhancement issue, matter remitted to AO for verification of creditor confirmations and supporting documentation. Both grounds allowed for statistical purposes, with directive to provide assessee reasonable hearing opportunity during reassessment. AO to determine final position after examining additional evidence per legal requirements.
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• Tax Tribunal Rejects Revenue's Appeal on Unexplained Money, Rules Registered Sale Deed Value Prevails Over Agreement Amounts.

  Case-Laws - AT : ITAT dismissed Revenue's appeal concerning unexplained money under s.69A, rejecting additions based on difference between agreement to sale and final sale deed values. The Tribunal upheld that registered sale deed value prevails over unregistered agreement amounts. Additions under s.69A based on loose papers were deleted as these were deemed "dumb documents" lacking corroborative evidence. Regarding undisclosed cash receipts, ITAT found transactions were properly accounted through partner's capital account. Unexplained expenditure additions under s.69C were deleted as Revenue failed to establish alleged payments. Following precedent, Tribunal held loose sheets/diaries inadmissible as evidence for additions. ITAT emphasized registered sale deeds' sanctity over mere agreements to sale without contrary evidence.
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• Tax Tribunal Upholds DVO's Property Valuation Over Registered Valuer's Report u/s 56(2)(vii) and 50C.

  Case-Laws - AT : ITAT upheld the valuation report of the Departmental Valuation Officer (DVO) over the registered valuer's assessment. The appellant failed to provide substantive evidence to challenge the DVO's valuation, which they claimed was arbitrary and unreasonable. The assessee's invocation of section 56(2)(vii) read with section 50C lacked supporting documentation, and no such claim was initially raised during rectification proceedings u/s 154. The CIT(A)'s decision was sustained as the appellant presented mere averments without cogent documentary evidence to invalidate the revenue authorities' determinations. The tribunal found the DVO's report valid and reasonable, dismissing the appeal against the assessee.
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• Bank Deposits During Demonetization: ITAT Remands Case for Fresh Assessment Following CBDT Guidelines u/s 69, 69A.

  Case-Laws - AT : The ITAT set aside CIT(A)'s order regarding unexplained investments under s.69 and additions under s.69A during the demonetization period. The case involved disputed bank deposits in Party A's account and statements recorded under s.131(1A). While the AO made additions based on partner statements and survey reports, they failed to follow mandatory CBDT SOPs and guidelines for demonetization cases. The Tribunal directed the AO to conduct fresh assessment following prescribed verification procedures, examine all evidence, and consider the assessee's claims in accordance with law. The ruling emphasized binding nature of CBDT circulars on tax officers and the necessity for uniform approach in handling demonetization-related assessments. Matter remanded for fresh consideration.
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• Tax Tribunal Invalidates Reassessment Based on Uncorroborated Digital Evidence from Third-Party Search in Property Purchase Case.

  Case-Laws - AT : ITAT quashed reassessment proceedings regarding alleged undisclosed "on-money" payments to builder for residential property. AO's reliance on pen drive and documents seized during third-party search operation deemed insufficient without corroborative evidence. Assessee consistently denied making cash payments above agreement value. Critical procedural deficiencies noted: seized materials not confronted with assessee, statements under s.131 not shared, and no explicit mention of assessee in seized documents. ITAT emphasized that uncorroborated digital evidence from third-party searches cannot constitute credible basis for reassessment. Violation of natural justice principles where adverse materials not provided to assessee. Addition deleted as AO failed to establish authenticity of digital evidence or verify reliability of pen drive data.
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• Tax Commissioner's Revision Powers Upheld in Section 263 Case Over Undisclosed Property Sales and Capital Gains.

  Case-Laws - AT : ITAT upheld revision proceedings u/s 263 regarding undisclosed property transactions discovered during recovery proceedings. The assessee had failed to report capital gains from three properties and subsequently acknowledged these transactions. Though initially captioned as a proposal u/s 263, the AO's information was deemed valid grounds for PCIT's intervention. The jurisdictional challenge regarding PCIT-21 versus PCIT-12's authority was rejected, as current jurisdiction lay with PCIT-12 when proceedings were initiated on 22.02.2021. The assessee's prior agreement to settle and subsequent failure to provide documentation within the stipulated timeframe further supported PCIT's findings. Appeal dismissed.
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• Income Tax Officer's 5-Day Notice Period for Section 148A(b) Response Deemed Inadequate, Violating Natural Justice Principles.

  Case-Laws - AT : ITAT quashed reassessment proceedings where AO provided only 5 days to assessee for filing explanation under s.148A(b). Following judicial precedent that established 7 days as unreasonably short notice period violating natural justice principles, the Tribunal determined 5-day period was inadequate. Matter remanded to AO with directions to provide proper opportunity of being heard to assessee firm per s.148A(b) requirements before proceeding with fresh assessment. Tribunal emphasized compliance with procedural fairness in reopening assessments, particularly regarding reasonable time for response. Appeal allowed for statistical purposes.
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• Tribunal Rules No Double TDS Required When Acquiring Lending Rights After Original Borrower Already Deducted Tax Under 193/194A.

  Case-Laws - AT : Appellate Tribunal held that when interest income was credited to PEL's account by original borrowers, TDS obligations u/ss 193/194A were already fulfilled. The appellant, who later acquired PEL's lending rights, was not required to deduct TDS again on the same interest payments. No lender-borrower relationship existed between appellant and PEL, making appellant not a "person responsible" for TDS under the Act. Payments exceeding principal value of ICDs/NCDs/Term Loans cannot be classified as 'interest' u/s 2(28A)/2(28B). ITAT deleted demand raised u/s 201(1)/201(1A), noting that income characterization can differ between recipient and payer. Appeal allowed.
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• Tribunal Remands Case After Tax Authorities Failed to Address Assessee's Arguments on Property Valuation u/s 56(2)(x)(b).

  Case-Laws - AT : ITAT set aside additions made under s.56(2)(x)(b) regarding alleged undervaluation of immovable properties purchased below stamp duty value. The Tribunal found both lower authorities passed non-speaking orders without addressing assessee's submissions or providing reasoned findings. CIT(A)'s order demonstrated lack of application of mind, seeking reasons for delayed registration without previously requesting such information from assessee. The rejection of assessee's explanation and invocation of s.56(2)(x) lacked substantive reasoning, violating principles of natural justice under audi alteram partem. Matter remanded to AO for fresh consideration with proper opportunity for assessee to present case.
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• Debenture Interest Becomes Taxable Upon Share Conversion, Not Sale - ITAT Rules u/s 263 and 47(x.

  Case-Laws - AT : ITAT upheld revision under s.263 regarding taxation of accumulated interest on debentures converted to equity shares. Assessee's contention of following cash system and deferring interest taxation to share sale was rejected. Upon conversion, entire interest amount of Rs.61.97 Lacs deemed received when debentures converted to shares at face value plus accumulated interest. While conversion itself not transfer per s.47(x), accrued interest component taxable in conversion year. Cost of acquisition for future capital gains would include both face value and interest per s.49(2A). Assessee's double taxation argument rejected as fundamentally flawed. AO's acceptance of return deemed erroneous and prejudicial to revenue interests, making revision order valid.
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Customs

• Chennai Customs Commissioner Launches Month-Long Drive for Exporters to Submit Bank Realization Certificates or Repay Drawback.

  Circulars : The Commissioner of Customs, Chennai-VII announced a BRC Compliance Drive from January 6-31, 2025, requiring exporters to submit pending Bank Realization Certificates. The notice addresses non-realization of export proceeds beyond mandated periods, necessitating recovery of drawback amounts u/r 18 of Customs, Central Excise Duties Drawback Rules, 2017, with interest per Section 75A(2) of Customs Act, 1962. Exporters must submit e-BRCs or repay drawback with interest by January 31, 2025. Non-compliance will trigger system alerts and legal proceedings for recovery. A dedicated BRC Cell has been established for verification. ICEGATE Portal functionality allows exporters to verify realization details and raise rectification queries. The directive aims to reconcile pending export proceeds and ensure compliance with drawback regulations.
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• High Court Grants Bail in Gold Smuggling Case, Citing Weak Evidence Links and Need for Independent Corroboration u/s 108.

  Case-Laws - HC : HC granted bail in a currency and gold smuggling case under Customs Act 1962, FEMA 1999, and FEMR 2000. While DRI intercepted accused at airport and recorded conversations with co-accused, prosecution lacked strong evidence linking conversations to specific transactions. Court emphasized that confessional statements u/s 108 of Customs Act, though admissible, require independent corroboration for conviction. Considering accused's clean criminal record, jail time since arrest, and undertaking to cooperate with trial, HC allowed bail application. Court noted need to examine whether seized gold falls under prohibited or restricted category during trial. Bail granted with conditions preventing evidence tampering and witness intimidation.
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• CESTAT Upholds Reclassification of Copper Bus Bars Under CTI 7407 10 30, Reduces Penalties While Maintaining Confiscation.

  Case-Laws - AT : CESTAT upheld reclassification of imported high conductivity copper bus bars from CTI 7407 21 20 to CTI 7407 10 30, resulting in denial of FTA benefits under N/N. 46/2011-Customs. The Tribunal found confiscation justified u/s 111(m) due to incorrect tariff classification and improper FTA benefit claims. While maintaining liability for confiscation and penalties, the Tribunal reduced redemption fine from Rs.2,00,000/- to Rs.50,000/- u/s 125 and penalty from Rs.50,000/- to Rs.10,000/- u/s 112(a), considering appellants had described goods as per invoice and origin certificates. Appeal partially allowed with modified penalties.
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DGFT

• DGFT Extends Minimum Import Price of Rs. 1289/kg for Glufosinate Technical Under HS Code 38089390 Until January 2026.

  Notifications : The DGFT has extended the Minimum Import Price (MIP) condition for Glufosinate Technical under HS Code 38089390 for one year from 24.01.2025 to 23.01.2026. The import policy has been modified to classify imports of Glufosinate and its salts (95% w/w purity minimum) as "Restricted" for CIF values below Rs. 1289/- per kg, while maintaining "Free" status for imports at or above this threshold. The amendment modifies previous notifications 58/2023 and 14/2024-25, exercising authority u/ss 3 and 5 of FT(D&R) Act, 1992. Imports must comply with registration requirements under the Insecticides Act, 1968.
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State GST

• E-Commerce Operators Can Keep Input Tax Credits While Paying GST on Sec 9(5) Services Through Cash Ledger.

  Circulars : ECOs liable for tax under Sec 9(5) of WBGST Act are not required to reverse input tax credit on inputs and input services proportionately for specified services supplied through their platforms. While ECOs must pay full tax liability for Sec 9(5) supplies through electronic cash ledger only, they can utilize their ITC for tax obligations on their own account services like platform fees. The clarification extends the principle previously established for restaurant services to all specified services under Sec 9(5). ECOs operate in dual capacity - as deemed suppliers for notified services and as platform service providers charging commission. Their ITC remains valid for platform operations but cannot offset Sec 9(5) tax liabilities.
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IBC

• Tax Claims Under IBC Resolution Plan Classified as Operational Debt, NCLAT Upholds Section 30(2)(b) Treatment.

  Case-Laws - AT : NCLAT dismissed appeal challenging treatment of tax claims as operational debt under IBC resolution plan. Tribunal affirmed that Section 11E of Central Excise Act and Section 82 of CGST Act create explicit exceptions regarding IBC provisions. The appellant's tax claims were correctly classified as operational debt, eligible for payment u/s 30(2)(b). No violation found as payment exceeded liquidation value u/s 53(1) waterfall mechanism. Tribunal distinguished this from Gujarat VAT precedent, noting Central Excise Act's distinct provisions. Resolution plan approval upheld as compliant with statutory requirements for operational creditor treatment of tax claims.
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Indian Laws

• Supreme Court: High Court Cannot Comment on Case Merits Before Delay Condonation Decision in Appellate Tribunal Appeals.

  Case-Laws - SC : SC ruled on procedural grounds regarding delay condonation in appeals. The Court held that when the HC determined delay should have been condoned under normal circumstances, it exceeded its scope by commenting on case merits before the Appellate Tribunal addressed them. The proper procedure required setting aside the delay condonation rejection, condoning the delay, and returning the matter to the Appellate Tribunal for merit consideration. The SC emphasized that examining case merits is only appropriate after delay condonation. Consequently, the Appellate Tribunal's order dated 01.12.2022 refusing to condone delay was set aside, allowing the appeals to proceed on merits.
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SEBI

• Direct Demat Transfer Rules Relaxed for Index Derivatives with Cash Margins, No DP License Needed.

  Case-Laws - HC : HC ruled on securities payout circular requiring direct transfer to client demat accounts. Trading members not engaged as depository participants do not require DP license. For index derivatives with cash margins, clients need not maintain demat accounts, provided they deal exclusively in index derivatives without physical delivery requirements. Broker must ensure compliance. For all other trades, original circular mandating demat accounts remains applicable. Court disposed petition after petitioner acknowledged clarifications addressed their concerns. Ruling maintains regulatory framework while providing specific exemption for index derivative transactions with cash-only margins.
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Service Tax

• Tribunal Rules Trailer Services Are 'Deemed Sale' Not 'Supply of Tangible Goods', Exempting from Service Tax Liability.

  Case-Laws - AT : CESTAT ruled in favor of appellant regarding service tax liability on trailer services. The tribunal determined that since effective control and possession of trailers were transferred to clients for fixed payments, the activity constituted 'hiring' rather than 'Supply of Tangible Goods'. The transfer of right to use with possession and control placed the transaction under 'deemed sale', removing it from service tax purview. The department failed to prove retention of control by appellant. Additionally, since appellant's clients were GTAs who had already paid service tax, and appellant was not a GTA, the activity qualified as transfer by hire/rent of trucks, falling outside service tax scope. The original classification and tax demand were deemed incorrect, and appeal was allowed.
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Central Excise

• CBIC Appoints Additional Director Generals as Central Excise Officers to Handle Appeals Under Notification 13/2017-CE(NT.

  Notifications : CBIC appointed Principal Additional Director General and Additional Director General as Central Excise Officers with jurisdiction aligned to Principal Chief Commissioner or Chief Commissioner's territories per notification 13/2017-CE(NT). These officers are empowered to adjudicate appeals filed under s.35 of Central Excise Act 1944 and s.85 of Finance Act 1994 submitted on or after July 1, 2017. The notification, issued under s.2(b) of CE Act 1944 and s.65B(55) of Finance Act 1994, vests comprehensive powers under both acts and related rules. This reassignment specifically addresses appeals originally meant for Commissioner (Appeals) within respective territorial jurisdictions, ensuring continuity for matters predating GST implementation.
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• CESTAT Awards 12% Annual Interest on Investigation Deposits Refund, Overturning Lower Authority's 6% Rate Decision.

  Case-Laws - AT : CESTAT determined appellant's entitlement to 12% per annum interest on refund amounts deposited during investigation, overruling Commissioner (Appeals) order of 6%. The ruling aligned with established precedents from multiple High Courts, particularly the jurisdictional High Court decisions that consistently awarded 12% interest in similar refund cases. The Original Authority was directed to recalculate interest at 12% instead of 6%. This determination reflects the standardized approach to interest computation on investigative deposits when refunded, ensuring consistency with judicial precedent. The appeal succeeded, establishing appellant's right to the higher interest rate on their deposited funds.
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Case Laws:

• GST

• 2025 (1) TMI 1199
  Recovery of outstanding dues - Challenge to impugned appellate order dated 24th October, 2024 passed by the respondent no.3 - reliance placed upon Circular No.224/18/2024-GST dated 11th July, 2024 issued by the Ministry of Finance - non-constitution of Tribunal - HELD THAT:- Having heard the learned advocates appearing for the respective parties and having considered the materials on record as also taking note of the fact that the Appellate Tribunal is yet to be constituted, the petition should be heard. Since, the petitioner has been able to make out a prima facie case, there shall be an unconditional stay of the demand of the Appellate order dated 24th October, 2024, for a period of two weeks from date - In the event, the petitioner makes payment of 10% of the balance amount of tax in dispute, in addition to the amount already deposited in terms of Section 107(6) of the said Act, within two weeks from date, the interim order passed herein, shall continue till the disposal of the writ petition or until further order, whichever is earlier. Let affidavit-in-opposition to the present writ petition be filed within a period of six weeks from date, reply, if any, be filed within one week thereafter.

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• 2025 (1) TMI 1198
  Permission for withdrawal of appeal - exhaustion of statutory remedies - HELD THAT:- Since the appellant seeks to pursue the statutory remedy by submitting the reply to the show cause notice, the time spent during the pendency of the writ petition as well as the date from which this appeal was filed till it is disposed by this order, has to be excluded. Instead of making an arithmetical calculation in this regard, we extend the time for submitting the reply to the show cause notice by a period of sixty days from the date of receipt of the server copy of this judgment and order. It is made clear that the Court has not gone into the merits of the matter and it will be well open to the appellant/assessee to canvass all points before the Adjudicating Authority. The learned Single Bench has also not gone into the facts but to make things clear, even assuming that there were certain observations made by the learned Single Bench touching upon the facts, those observations stand deleted and the appellant/assessee would be entitled to raise all contentions, both factual and legal, before the Adjudicating Authority. In the light of the above order extending the time for submitting the reply to the show cause notice, the hearing which was fixed by the Adjudicating Authority, shall stand deferred. Appeal dismissed as withdrawn.

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• 2025 (1) TMI 1197
  Challenge to impugned order on the premise that the same are made in gross violation of procedure contemplated under the GST Act and violation of principles of natural justice - mismatch between GSTR 1 and GSTR 3B - discrepancy in discharge of the tax liability - HELD THAT:- The impugned orders dated 24.08.2024 and 30.08.2024 are set aside. The petitioner shall deposit 10% of the disputed taxes i.e. Rs. 9,00,166/- as admitted by the learned counsel for the petitioner and the respondents, within a period of four weeks from the date of receipt of a copy of this order. Petition disposed off.

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• 2025 (1) TMI 1196
  Violation of principles of natural justice - challenge to impugned order on the premise that the same is not a speaking order - Under declaration of output tax - Under declaration of Ineligible Input Tax Credit - Input Tax credit not reversed in respect of non business transaction and exempted supplies - Input Tax Credit claimed in respect of supplies effected by cancelled dealers, return defaulters and tax non payer - HELD THAT:- This Court is of the view that the impugned proceedings suffers from the vice of being a non-speaking order. At this juncture the learned counsel for the respondent would submit that they may be granted liberty to reconsider the issue afresh. The impugned order is set aside. It is open to the respondent to proceed and complete the assessment in accordance with law, after affording the petitioner a reasonable opportunity of hearing. Petition disposed off.

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• 2025 (1) TMI 1195
  Denial of input tax credit on the basis of Section 16(2)(c) and Section 16(4) of the CGST/SGST Acts - HELD THAT:- There will be a direction to the 1st respodnent to consider the observations in the judgment in M. Trade Links case [ 2024 (6) TMI 288 - KERALA HIGH COURT ] and extend the benefit of the directions issued in that case to the petitioner also, if the factual situation is similar. As regards the claim of the petitioner for input tax credit, denied as per Section 16(2)(c) of the CGST/SGST Acts is concerned, it is directed that the claim of the petitioner shall be considered in terms of the Circulars referred to in Paragraph No.101 of M. Trade Links case. To enable the consideration of the matter as directed above, Ext.P4 order will stand set aside to the extent it denies credit on account of the provisions contained in Section 16(2)(c) and Section 16(4) of the CGST/SGST Acts. The first respondent shall endeavour to pass fresh orders as directed above, within a period of two months from the date of receipt of a certified copy of this judgment. Petition disposed off.

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• 2025 (1) TMI 1194
  Imposition of penalty - mismatch of place of dispatch in the invoice and E-way bill without taking into account that the transaction was in nature of bill from ship model - HELD THAT:- Let affidavit-in-opposition be filed within four weeks, reply, if any, be filed within two weeks thereafter. Let this matter again appear in the Monthly list of February, 2025 under the heading Hearing.

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• Income Tax

• 2025 (1) TMI 1202
  Disallowance for depreciation claim on machinery - AO completed the assessment u/s 144 - HELD THAT:- When the Director of the appellant had given a statement admitting to complete the assessment by disallowing the depreciation claim, the appellant cannot be an aggrieved person to file an appeal as against the assessment. Might be only to overcome the same, the appellant would have made a futile submission before the Tribunal that the statement was obtained by coercion. Counsel by placing reliance on the decision of Avasarala Technologies Ltd.[ 2015 (8) TMI 521 - SC ORDER] submitted that once the purchase of machinery itself was found to be false and the transaction was sham, the claim of depreciation cannot be sustained. In the instant case also, from the fact that the seller was only dealing with textiles and was not in manufacture of any machinery, the sworn statement recorded to the effect that the invoice was prepared without actual supply of the machinery for the purpose of availing finance, the machineries were not available on the date of visit by the AO and no records were submitted to substantiate the supply of machineries and the appellant taking contrary stands at different points of time, it is clear that no actual supply of machinery was made through the invoice. Further inspite of sufficient opportunities, the assessee failed to submit any records in respect of the usage of the machinery and therefore the Tribunal had rightly allowed the appeal and deleted the disallowance made by the appellate authority. Substantial questions of law are answered as against the appellant and in favour of the Revenue.

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• 2025 (1) TMI 1201
  TDS u/s 195 - disallowance u/s 40(a)(i) - applicability of the DTAA between India and the USA - Whether services rendered satisfies the definition of Fees for Included Services ? - HELD THAT:- Services emanating from the Agreement dated 28.11.2016 was not placed in legible from before the AO, therefore, AO could not look at correct nature of services. The issue that identical matter has been examined in AY 2017-18 were emanating from the same Agreement or not was also not known to the AO nor the ld. CIT(A). The No PE certificate submitted by the assessee now was also not available with lower authorities. It is contended that except agreement, nothing else was asked for by the ld. AO. Now it has been submitted before us, legible agreement, no PE certificate of Tevlon LLC USA, therefore, we restore the whole issue back to the file of ld. AO with a direction to the assessee to show that the income of Tevlon LLC USA is business income as per Article 5 7 of the DTAA as business income applies to it. Alternatively, the Assessee may also prove that provisions of Article 12(4) of that including make Available test applies to the facts of the case - Appeal filed by the assessee is allowed for statistical purposes.

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• 2025 (1) TMI 1200
  Unexplained cash deposits - treating the deposits with the bank unexplained - HELD THAT:- During the course of appeal proceedings, the assessee had filed details of land records before the ld. CIT(A) as well as bank statements. It was claimed by the assessee before the ld. CIT(A) that cash deposit to the tune of Rs. 10 lakhs was arising either out of cash withdrawals from the bank accounts and/or withdrawal from KCC(Kisan Credit Card)and/or from the sale of crops. Assessee had also enclosed bank statements and land records. Assessee claimed that his only son Mrityunjay was looking after the record keeping, who was suffering from prolonged illness (who ultimately died), and the assessee was not aware of the assessment proceedings. The assessee being an aged person and illiterate farmer was not having smart phone and the assessee was not aware of the proceedings before the AO. Assessee also claimed that the assessee s only source of income is from agriculture, which is exempt from tax. Despite all the information as well evidences furnished by the assessee, CIT(Appeals) did not consider the aforesaid evidences in proper perspective, which were in the nature of additional evidences filed for the first time before ld. CIT(A) as the CIT(A) did not made any verification and/or enquiry wrt additional evidences filed by the assessee, nor does the CIT(A) called for any remand report from the AO, and dismissed the appeal of the assessee. CIT(Appeals) of his own even did not deem it necessary to conduct any enquiry/verification as is required u/s. 250(4) of the Act, despite that land records as well bank statements were filed by the assessee before ld. CIT(A) as additional evidences, nor it was considered fit by ld. CIT(A) to direct AO to make necessary verifications /enquiries as to the claims, contentions and additional evidences filed by the assessee. contentions and additional evidences filed by the assessee ought to have been admitted by the ld. CIT(A) and proper verification/enquiry ought to have been done by the CIT(A) as is required u/s 250(4), or the CIT(A) ought to have directed the Assessing Officer to make proper enquiry with respect to additional evidence filed by the assessee such as records of land holding, details of sale of crops, bank statements etc. and furnish remand report to the ld. CIT(A)(Rule 46A) - Appeal of the assessee is allowed for statistical purposes.

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• 2025 (1) TMI 1193
  Permission to take all contentions legal as well as factual, available to the petitioner herein before the concerned authority under the provisions of the Black Money - as submitted that consequently the impugned order passed by the Delhi High Court 2024 (11) TMI 649 - DELHI HIGH COURT] may not come in the way of the petitioner raising all such contentions that are available to him before the concerned authority. Assessment under the Black Money Act - Miscellaneous Application filed u/s 4, 10 and 12 of the Fugitive Economic Offenders Act before the Court of Ld. Special Judge - as perused the impugned order passed by the High Court [ 2024 (11) TMI 541 - DELHI HIGH COURT ] wherein a challenge was made to Summoning Order and the proceedings emanating therefrom in a petition filed u/s 482 of the Code of Criminal Procedure, 1973 (CrPC) seeking quashing of the Misc. Application filed under Sections 4, 10 and 12 of the Fugitive Economic Offenders Act, 2018 - HELD THAT:- We dispose of this Special Leave Petition by reserving liberty to the petitioner herein to raise all contentions, legal as well as factual, available to the petitioner herein before the concerned authority If such contentions are raised by the petitioner herein, the same shall be considered in accordance with law on their own merits and having regard to the provisions of the 2018 Act, referred to above. When the relevant contentions are raised by the petitioner herein before the concerned authority, the same shall be considered on their own merits and without being influenced by any of the observations made by the High Court in the writ petition disposed of by the High Court.

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• 2025 (1) TMI 1192
  Penalty u/s. 271B - tax returns and audit report filled with some delay - Failure to to follow its own order in a similar case involving the Appellant s sister concerns wherein penalty was deleted - as per revenue delay in the Appellant s case was longer than the delay in the case of the sister concerns - Determination of quality of the cause shown for delay - HELD THAT:- Besides Appellant pointed out that after the accounts were filed for Assessment Year 1985-1986, again, there were raids and seizures. Due to this, the Appellant couldn t file the audit report within the prescribed period. Still, it is not as if the Appellant was indolent. All steps were possible in the circumstances that were being taken and were taken. The Appellant applied for copies of the books and, upon receiving them, submitted them to their chartered accountants. The Chartered Accountants naturally took some time to prepare the audit report. The audit report was prepared only on 8 December 1988 and filed on the next date. In our judgment, the factors above should have been considered. These factors were additional to the factors that the Tribunal already accepted in the case of the Appellant s sister s concerns. These additional factors were sufficient to explain the length of the delay in the Appellant s case. Based on the material on record, it does not appear that the Appellant was completely indolent or avoiding the filing of audit reports. There were genuine difficulties, and after overcoming them, the audit report was filed. Also Revenue accepted the Appellant s returns. In that sense, there was no loss to the Revenue. There was a delay. However, merely because there was a delay there is no case for imposition of penalty. Thus, we agree with Appellant that the impugned orders warrant interference. Decided in favour of assessee.

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• 2025 (1) TMI 1191
  Delay in filing Form 10B with the original return of income - sufficient cause for condonation of delay given or not? - HELD THAT:- The delay in Assessment Year 2021-2022 and 2022-2023 was only 2 and 16 days, respectively. So far as Assessment Year 2019-2020 is concerned, the Petitioner was under the bona fide delay, and they would benefit from the extended timeline for filing a revised return. The return was filed within the extended period. However, since Form 10B had to be filed with the original return, there is a delay. For this delay, the Petitioner has shown sufficient cause. Delay is not mala fide, and the Petitioner has not derived any undue advantage from such a delay. Learned counsel for the Respondent submits that the Petitioner is habitually late in such matters. There is no material to sustain this contention. In any event, even if we accept this contention, we must focus on the cause shown for the relevant Assessment Years. As noted, there is sufficient cause for all the three Assessment Years, which we must now consider in this Petition. Petitioner is not some business venture but an educational institution. Even this aspect is relevant. The impact of Covid-19 Pandemic on the functioning of the Petitioner is required to be taken into consideration. Thus condone the delay in filing Form 10B for the Assessment Year 2019-2020, 2021-2022 and 2022-2023. Further, we grant the Petitioner liberty to pursue the issue of condonation for the Assessment Year 2020-2021 before the CBDT.

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• 2025 (1) TMI 1190
  Penalty order u/s 270A during the pendency of an appeal - as submitted penalty proceedings should have awaited the outcome of the appeal which had already been entertained and the appellate authority was in seisin of the matter - HELD THAT:-Department, submits that in course of the penalty proceeding, the competent authority was not informed that the appeal preferred by this petitioner before the appellate authority has been entertained and notice has been issued after condonation of delay. Had this been brought to the notice of the competent authority, who was in seisin of the penalty proceeding, that would have been definitely considered and an appropriate view would have been taken. Having regard to the aforementioned submissions on behalf of the petitioner as well as the Department, we set aside the Order under Section 270A and the notice of demand under Section 156. The matter is remitted to the National Assessment Unit, NFAC for passing a fresh order.

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• 2025 (1) TMI 1189
  Determination of disputed tax under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act) - HELD THAT:- Certificates and orders passed by the respondents demanding much higher sums from the petitioner are clearly illegal, arbitrary and contrary to the material on record and law as well as the provisions of the DTVSV Act and the same deserve to be quashed and necessary directions are to be issued to the respondents in this regard. This appeal being devoid of merits, is liable to be and accordingly dismissed.

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• 2025 (1) TMI 1188
  Stay the demand raised with regard to the Valuation of a property, till the disposal of appeal by the First Appellate Authority - AO directed the Petitioner to pay 20% of the demand - HELD THAT:- On a very similar situation in the Petitioner s own case for the AY 2015-2016, the PCIT has stayed the demand. We direct the PCIT to decide the stay application filed with him for the Assessment Year under consideration within a period of four weeks from the date of uploading the present order. PCIT to grant the personal hearing to the Petitioner and after hearing the Petitioner would pass a detailed speaking order deciding the stay application. Since in Assessment Year 2015-2016, the department has stayed the recovery of the demand, by way of an interim order we direct the Respondents not to take any coercive action for recovery for a period of four weeks from the date of uploading the present order. Petitioner is directed to appear before the PCIT on 28 January 2025 and file an authenticated copy of this order so that the stay application can be taken up for hearing as directed above.

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• 2025 (1) TMI 1187
  Income from house property - appellant is an equal owner of the property or not? - both the Tribunal as well as the authorities below have proceeded merely on the assumption that since the appellant was a signatory to the instrument, the income would be deemed to arise in her hands to the extent of 50%. HELD THAT:- We note that Section 26 speaks of apportionment and ascertainment of the extent of income that can be held to arise in the hands of an assessee in cases where the respective shares are defined or are ascertainable. Section 27 also and while defining as to what meaning is to be ascribed to the expression owner of house property . As is manifest and evident from a reading of those provisions, the Act fails to raise any presumption in law, of income necessarily arising or being liable to be assessed in the hands of an individual merely because it be a signatory to an instrument of conveyance. In our considered opinion, the question of taxability would necessarily have to be answered bearing in mind the individual who had in fact obtained benefits from the property. In the absence of any finding in tune with the above having been rendered insofar as the appellant is concerned, we find ourselves unable to sustain the order of the Tribunal. Decided in favour of the assessee.

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• 2025 (1) TMI 1186
  Denial of exemption u/s 11 and 12 - Assessee has received voluntary contributions which is an income of the assessee - HELD THAT:- The assessee has made application for registration on 25-10-2019 and the approval was granted on 30-01-2020. The proviso to section 11 subsection 2 will apply on the date of approval of pending proceeding and since the CPC proceeded on the date of 27-06- 2023, the approval was already granted and thus the proviso will apply in the present assessee s case. These submissions of the ld. A.R. appears to be justifiable as there was no change of any objects and activities of the trust for assessment year 2020-21 and that also of assessment year 2019-20. Thus, the decisions cited by the ld. A.R., when the entire process of assessment starts from the stage of filing of return u/s. 139 or issuance of notice u/s. 142(1) till the making of the assessment order u/s. 143(3) of section 144 will be applicable in assessee s case vis- -vis the assessment proceedings when pending before the Assessing Officer on the date of registration u/s. 12A of the Act in terms of section proviso of section 12A(2) of the Act which provides for the grant of registration for preceding assessment year. The corpus of donations i.e. voluntary donations are considered a capital receipts which are not chargeable to the Income Tax Act and therefore the same cannot be considered as income - Appeal of the Revenue is dismissed.

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• 2025 (1) TMI 1185
  Occasion of application of section 92BA when the assessee has not claimed deduction u/s 80IA - as per AO assessee has set up a captive thermal plant, which is eligible for deduction u/s 80IA - HELD THAT:- The assessee, by purchasing the power at a higher rate, has increased its expenditure and thereby entered into reducing its income/profit. In our view, the relationship between the two is squarely covered by the provision of sections 80IA(8) and 80IA(10). Hence, the transaction is a qualified transaction within the meaning of section 92BA. It is amply clear that for the invocation of section 92BA, there is no necessity for the assessee for opting the deduction u/s. 80IA during the AY under consideration. The option is with the assessee to claim the deduction u/s. 80IA for any 10 consecutive assessment years out of the 15 years, as per section 80IA(2) of the Act. Merely because the assessee has not exercised the option will not make the eligible transaction falling either in section 80IA(8) or section 80IA(10) become ineligible. The eligible business is defined in section 80IA(4) which is not dependent upon the exercise of option by the assessee. As held by us the determination of ALP adjustment under Section 92BA is not dependent upon seeking the direction under Section 80IA by the assessee. Both provisions operate in different fields and were inserted for different reasons. The argument of the assessee that the assessee has not claimed deduction u/s. 80IA, therefore, the provisions of section 92BA are not attracted, are devoid of any merit and the objection is dismissed. Arm s Length Price - Assessee itself has taken the CUP method as most appropriate method in terms of 92C read with 92F of the Income Tax Act and has benchmarked the transactions. Thus, it is not the case of the assessee that the transaction is to be benchmarked on the basis of (i) of Explanation to Section 80IA(8) of the Act. Whether the electricity sold by the assessee to 14 consumers would be the market value of the goods or services supplied by the assessee or not? - In the present case, assessee has not given the value of the electricity sold in open market and had merely relied upon the prices charged by the State Distribution Company namely, GSEB. Admittedly, the assessee has not sold the electricity in the open market either to the State Utility or the Electricity Power Exchange or to any other person through the open access as per Section 42 of the Electricity Act. Quiet contrary to this, the assessee had sold the surplus electricity to 14 individuals by way of a Power Purchase Agreement with them. In the absence of any availability of price of the electricity in the open market, the best alternative available with the TPO was to benchmark the transactions under the Act in accordance with the computation of Arm Length Price Principle as mentioned in Section 92C r.w. Rule 10B of Income Tax Rules. There is another reason to apply the principle as referred in Section 92C r.w. Rule 10B of I.T. Rules is that the prices charged by the State Distribution Utility from the consumer is dependent upon to various factors and are not comparable on FAR analysis. The assessee is a power generator, and the prices charged by the assessee are required to be compared with the prices charged by an independent third party having the thermal power plant and not with the transmission company or the distribution company. We are of the opinion that the learned lower authorities were right in computing the arm-length price on the basis of the internal comparable available in the form of supplying electricity to 14 electricity consumers. Whether electricity tariff charged by the State distribution utility cannot be compared with the tariff charged by the assessee for supplying the electricity to itself? - Assessee has brought to our notice that the tariff charged by any power generator company who has set up the thermal power plant to show that the prices charged by the said thermal power plant can be comparable with the price of Rs. 7.85 per unit benchmarked by the assessee. In view of the above, we found that the argument of the assessee that State Utility which is supplying the electricity at Rs. 7.85 paise is not comparable with the assessee and therefore, the argument of the ld.AR is rejected. Assessee was supplying the power to the other units at an average of Rs. 2.97/- whereas in the TP study, the assessee has adopted the rate at Rs. 7.85/- per unit as per GSEB tariff. The argument that the rate of electricity as charged by the State Electricity Board is required to be considered for benchmarking the power supply between the related parties, is not applicable to the facts of the present case, as the internal comparable in the form of the power supply to the 14 companies were available with the Ld. TPO and therefore, TPO had rightly applied the arithmetic mean of power supply by it to 14 consumers. Decided against assessee.

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• 2025 (1) TMI 1184
  Exemption u/s 10(26AAA) - income accruing to a Sikkimese individual from sources within the state of Sikkim or by way of dividend or interest on securities - addition treated as undisclosed and unexplained income u/s 69A and 69 - CIT(A) admitting fresh evidence deleted addition without calling for a remand report - HELD THAT:- CIT(A) accepted the additional evidence being the certificate of identification and allowed the relief only on the basis of the certificate without allowing an opportunity of being heard to the AO of verifying whether the conditions of section 10(26AAA) were fulfilled. Therefore, the order of the CIT(A) being in contravention of Rule 46A(3) of the I.T. Rules, 1962 is liable to be set aside. Both the Ld. DR as well as the Ld. AR were agreeable to the proposal. Hence, in the interest of justice and fair play, since the assessee could not file the required evidence for claiming exemption before the Ld. AO, both the orders of the Ld. CIT(A) as well as of the Ld. AO are hereby set-aside and the assessment proceedings are restored before the Ld. AO to be done afresh. Appeal filed by the Revenue is allowed for statistical purposes.

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• 2025 (1) TMI 1183
  Late fee levied u/s.234E - delay in filing the TDS quarterly returns - HED THAT:- Late fee u/s.234E has been imposed for the delay in furnishing the statements for quarters, in the returns processed u/s.200A of the Act prior to 01.06.2015 and post 01.06.2015. As regards the fate of fees levied u/s.234E of the Act for the returns filed and processed before 01.06.2015, we find the Coordinate Benches of this Tribunal after considering the judicial pronouncements have been taking a consistent view that the amendment brought in Finance Act, 2015 w.e.f. 01.06.2015 under Section 200A (clause (c)] of the Act is prospective in nature thereby empowering the Revenue authorities to charge fee u/s.234E of the Act only after 01.06.2015. In that view of the matter, Revenue authorities are empowered to impose such late fee u/s.234E only for the default committed after 01.06.2015 and not prior to that. Late fee u/s.234E has been imposed for the delay in furnishing the statements and the returns have been processed u/s.200A of the Act after 01.06.2015 - Penalty u/s.234E is leviable since amendment brought in Finance Act, 2015 w.e.f. 01.06.2015 under Section 200A (clause (c)] of the Act is prospective in nature and Revenue authorities are empowered to levy penalty u/s.234E. However, penalty u/s.234E has to be computed from 01.06.2015 till the processing of the return for which necessary calculation to be made at the end of the concerned Revenue authority.

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• 2025 (1) TMI 1182
  Income deemed to accrue or arise in India - exclusive right to tax the gains as per the state of residence of the recipient - India Mauritius DTAA - restricting exemption under Article 13(3)/(4) of India Mauritius DTAA after setting off the short-term and long-term capital losses against the short-term and long-term capital gain - HELD THAT:- Any capital gain arising out of sale of shares acquired prior to 01/04/2017 was exempt under article 13(3)/(4) of DTAA as it was taxable based on the residency of the recipient. In the present facts the assessee is admittedly a resident of Mauritius as defined under Article 4 of DTAA. Thus the gain earned by the assessee upon sale of shares /derivatives acquired prior to 01/04/2017 cannot be subjected tax in India. In the year 2016 Article 13 of DTAA was amended which was notified on 10/08/2016 wherein, any gains on sale of shares of an Indian company acquired after 01/04/2017 is liable to be taxed on full rate under the provisions of the Income Tax Act. Admittedly, the losses in the present facts of the case suffered by the assessee arises out of sale of shares of Indian company acquired post 01/04/2017. AO while computing the exemption under Article 13(3)/(4) netted off the losses against the gains, thereby taxing the gains which, otherwise is exempt as per the pre-amended Article 13(3)/(4) of India Mauritius DTAA. Computation of capital gains earned will have to be as per the provisions of DTAA prior to amendment and will be taxable as per the residency of the assessee as India had given up its right to tax such gains prior to 01/04/2017. As there is no dispute that assessee is resident of Mauritius, the question of taxing capital gains earned on sale of share/derivatives acquired prior to 01/04/2017, cannot arise to be in India, as they do not enter into the computation of income as per the Income Tax Act. Brought forward losses from A.Y. 2020-21 are concerned, these are from the sale of share/derivatives acquired post 01/04/2017 and can only be set of against any gains that would arise from sale of share /derivatives acquired after 01/04/2017. Assessee will have to be allowed the carry forward losses and cannot be set off against the foreign income. Accordingly, as the gain is not chargeable to tax, no loss can be set off against such exempt income. As relying on GOLDMAN SACHS INVESTMENTS (MAURITIUS) LIMITED [ 2020 (9) TMI 1049 - ITAT MUMBAI] and PATNI COMPUTER SYSTEMS LIMITED. [ 2007 (6) TMI 277 - ITAT PUNE-B] no hesitation in holding that the assessee is entitled to claim benefit of carry forward of, the brought forward losses of the earlier years and it cannot be set off against the capital gains earned by the assessee during the year, that is exempt in present facts. Assessee appeal allowed.

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• 2025 (1) TMI 1181
  Validity of penalty order u/s 271B - Allegation of non-furnishing audit report under the provisions of Section 44AD - HELD THAT:- As the reasons given by the assessee that there was substantial loss in the first year of operation, that it was busy in payment of creditors and that partners are senior citizens are not reasonable cause for failure to get the accounts audited u/s 44AB of the Act. It is seen from the order that assessee had turnover of Rs. 8,53,66,166/-, which is substantially higher than the limit prescribed u/s 44AB of the Act. We also find that the purported tax audit report dated 23.09.2013 enclosed in submission dated 25.11.2024 had not been submitted before the lower authorities. This is clear from orders of both AO and CIT(A). We further find that the assessee has not any enclosed copies of profit and loss account and balance sheet in the submission dated 25.11.2024. It has enclosed Annexure 4 (fixed assets), Annexure 1 (profit sharing ratio), Annexure 2 3 (books of account), Annexure 6 (quantitative details of principle items) and Annexure 7 (accounting ratios). Hence, the contradictory stand taken by the assessee in the present proceedings that it has got its accounts audited and furnished before/by the specified date deserves to be rejected at the threshold itself. The decisions relied upon by the assessee are also based on different set of facts and hence the ratio is not applicable to the facts of the present case - Decided against assessee.

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• 2025 (1) TMI 1180
  Denial of deduction u/s 80P(2)(a)(i) - interest income under the head income from other sources received from cooperative banks - interest on FDs with scheduled banks, interest from cooperative banks and interest on savings bank account used by the assessee in scheduled banks for day to day business operations - HELD THAT:- Assessee cooperative society is not eligible for deduction u/s 80P(2)(a) in respect of interest earned from fixed deposits with scheduled banks. Contention of the assessee that if the income is assessed u/s 57 proportionate deduction towards expenditure u/s 57 is to be allowed was neither examined by the AO nor by the CIT(Appeals). Thus, we consider it appropriate to restore this aspect of the matter back to the AO for redetermination of taxable income for considering the appropriate deductions u/s 57 of the Act in the light of the decision of Mantola Cooperative Thrift Credit Society Ltd. [ 2014 (9) TMI 833 - DELHI HIGH COURT] . Interest earned by the assessee from cooperative banks - We observe that recently in the case of PCIT Vs. Ashwin Kumar Urban Cooperative Society Ltd. [ 2024 (11) TMI 971 - GUJARAT HIGH COURT] held that deduction u/s 80P(2)(d) is allowable to cooperative societies on income earned on investments made with cooperative banks. Delhi Bench of the Tribunal is consistently took the same view in the cases of Mantola Cooperative Thrift Credit Society Ltd.[ 2016 (6) TMI 1499 - ITAT DELHI] , Janta Adarsh Cooperative Thrift Credit Society Ltd. [ 2024 (8) TMI 275 - ITAT DELHI] We also find that in the case of M/s Veer Cooperative Group Housing Society [ 2018 (9) TMI 287 - ITAT DELHI] the cooperative bench of the Delhi Tribunal held that the interest earned by the assessee a cooperative society from its investment with other cooperative societies would be entitled for deduction u/s 80P(2)(d). Thus, assessee is entitled for deduction u/s 80P(2)(d) in respect of interest income earned by the assessee from cooperative bank/societies other than scheduled and nationalized banks. Interest income earned by the assessee on the savings bank accounts which were operated for day to day operations of the assessee is concerned in one view Assessee is entitled for deduction u/s 80P since such interest income was earned by the assessee from out of day to day operations of its business activities and not from any fixed deposits out of surplus funds. Thus, we direct the Assessing Officer to allow deduction u/s 80P on the interest income earned by the assessee on its regular savings bank accounts which were used for day to day business activities. Disallowance made towards ESI and PF - contribution as paid beyond the due date - It is the submission of assessee itself had added back this PF ESI contribution which was paid beyond the due date - HELD THAT:- As we direct the Assessing Officer to examine the contention of the assessee and make appropriate correction while passing consequential orders.

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• 2025 (1) TMI 1179
  Disallowance of weighted deduction claimed u/s 35(2AB) - expenditure on in-house scientific research expenses - AO made disallowance on expenditure incurred outside India - HELD THAT:- As decided in own case of assessee [ 2021 (9) TMI 139 - ITAT PUNE] 2011-12 the entire amount of R D expenditure incurred in India is eligible for weighted deduction u/s 35(2AB) revenue R D expenditure incurred outside India as claimed by the assessee got allowed in the assessment itself total of capital R D expenditure incurred outside India will be eligible for deduction u/s 35(1)(iv) . Allow product development expenses as revenue expense.

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• 2025 (1) TMI 1178
  TP Adjustment - allocation of expenses and the segmental report prepared by the assessee based on the accepted method of allocation - benchmarking the transactions of purchase of books from its AEHELD THAT:- Since the books of account maintained by the assessee are exactly similar, it is only a re-appreciation of facts and allocation of expenses following allocation key of respective sales. In our considered view, the above additional evidences are relevant and accepted. We are inclined to remit this issue to the file of AO/TPO to verify the allocation of expenses and the segmental report prepared by the assessee based on the accepted method of allocation in AY 2021-22 and also the details of discount offered by its AE and may be compared with the discount offered by the AE in the uncontrolled transactions and directed to compare the internal CUP available in this case to benchmark the transactions of purchase of books from its AE. We direct the AO/TPO to benchmark the international transactions based on the additional evidences brought on record by the assessee as per law after giving proper opportunity of being heard to the assessee. Accordingly, ground no.3 raised by the assessee is allowed for statistical purposes. Sundry creditors outstanding shows that there is an enhancement in the trade payables/creditors from the preceding years - We observed that the relevant confirmations and explanations were not readily available during assessment proceedings. However, it is brought to our notice that all the confirmations and other details are available, accordingly ld. AR of the assessee prayed that the same may be accepted and remitted the same before the Assessing Officer to verify the relevant information available on record. In this view of the matter, we remit the issue to the file of the AO to verify the relevant information available on record and then decide the issue as per law after giving proper opportunity of being heard to the assessee. Accordingly, ground no.4 raised by the assessee is allowed for statistical purposes.

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• 2025 (1) TMI 1177
  Unexplained expenditure u/s 69C - assessee had not explained the source of the funds for each item of expenditure - HELD THAT:- We are in agreement with the logical analysis of telescoping the additional surrender without any specific incriminating evidences against the additions made by the AO including but not limited to unexplained expenditure u/s 69C and other items recorded in ground no.4, raised by the Revenue. CIT(A) was absolutely right in considering that the said addition is a covered by the declaration made by the Assessee and consequently no separate additions are warranted and in our considered view correctly deleted the additions made. We accordingly hold that the CIT(A) rightly deleted the additions and further on the ground that the same are already covered in the declaration of income made by the assessee and in view of separate taxation of the above issues as well as ad hoc surrender will be a travesty of justice which is not conscionable as per Article 265 of the Constitution of India, no separate addition is warranted under law. Thus, grounds no.1 to 4, are dismissed in line of our above observations. Addition on account of excess Stock - Correct valuation of stock - Determination of gross profit on alleged deficit stock - HELD THAT:- It is beyond doubt that there is no difference in physical quantity. The books of account have never been rejected and no discrepancies have been pointed out u/s 145(3) of the Act. The difference in valuation at the midst of financial year cannot give rise to any income particularly when the year end valuation has been accepted without any grain of salt. We accordingly hold that the addition made by the AO towards the excess stock was not justified and the same has correctly been deleted by the learned CIT(A). We further hold that the addition as confirmed by the learned CIT(A) considering the gross profit on alleged deficit stock also deserves to be telescoped against the ad hoc surrender and hence directed to also be deleted. The grounds no.5 and 6, are also hereby accordingly dismissed.

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• 2025 (1) TMI 1176
  Unexplained money u/s 69A - difference between agreement to sale value and final sale deed value which has been framed as unexplained money - CIT(A) deleted addition - HELD THAT:-Assessee had stated that on the request of customer agreement to sale were prepared for 36,73,500, so that the customer can avail maximum possible housing loan amount. The agreement to sale was not registeredWe further find that the assessee had mentioned the same during the assessment proceedings, but the same was not been considered by the AO while passing the assessment order and resultantly the addition was made to the income of the assessee. DR could not bring any material or evidence to take a view other than the view taken by the learned CIT(A). The evidentiary value of registered sale deed cannot be dislodged whimsically. Hence, keeping this in view, we do not find any infirmity in the impugned order passed by CIT(A) which is hereby upheld by deleting the addition. Ground no.1, raised by the Revenue is hereby dismissed. Addition u/s 69A based on loose paper seized during the search - HELD THAT:- No addition ought to have been made on account of amount mentioned on loose paper. Assessee had mentioned the same during the assessment proceedings but the AO failed to considered the same while passing the assessment order and resultantly the addition was made to the income of the assessee. W Assessee has enclosed therewith the photocopy of Document, and the same entries are reconciled in the books of account and yet the addition was made. Addition to the income cannot be made by the Assessing Officer based on the dumb documents, loose paper containing scribbling, rough/vague notings in the absence of any corroborative material, evidence on record and finding that such dumb documents had materialized into transactions giving rise to income of the assessee which had not been disclosed in the regular books of account by the assessee. No effective arguments could be made by DR to rebut the arguments. Decided against revenue. Undisclosed cash receipts - Addition based on document found and impounded from the business premises of M/s.Tirupati Developers, which was framed as unexplained money under section 69A - HELD THAT:- We find that the transactions are duly accounted in the books of Tirupati Developers through the capital account of Shri Prashant Bongirwar, the common Partner in both the firms. The assessee had mentioned the same during the assessment proceedings, but had not been considered by the Assessing Officer while passing the assessment order and addition of 26 lakh was added to the income of the assessee. We also find that the assessee has furnished copy of Capital Account in respect of Shri Prashant Bongiwar, who also said to be a common Partner in M/s. Tirupati Developers, and the assessee firm, where the entries are accounted. Additions to be deleted. Unexplained expenditure u/s 69C - HELD THAT:- The transactions are duly accounted in the books of Tirupati Developers through the Capital Account of the common partner in both the firms. Hence, no addition ought to have been made on account of unexplained expenditure by the assessee. The assessee had mentioned the same during the assessment proceedings also, but the Assessing Officer did not consider the same which resulted in addition of 10 lakh. Even otherwise also, we find that the burden squarely lies on the Revenue to establish that the assessee had made alleged payments so as to warrant addition u/s 69C. In fact, the Revenue failed discharge the said burden - Additions to be deleted. Whether loose sheets are admissible as evidences on the basis of which the addition is sustainable? - HELD THAT:- As decided in Sunil Kumar Sharma [ 2024 (2) TMI 116 - KARNATAKA HIGH COURT ] loose sheets/diaries are contrary to law, which require to be set aside in these writ appeals, as the same are void and illegal. Thus ground dismissed holding that loose sheets are dumb documents. Transactions in agreement to sale are sacrosanct vis a vis registered sale deeds no account that some cheque payments are tallying - HELD THAT:- It is manifest from the order that the assessee had duly explained the circumstances explaining the difference in case of Narendra Deshmukh as regards to the difference in cheque payment. No contrary evidences have been placed on record to dislodge the explanations. The contents of registered sale deed cannot be doubted on mere ipse discit of the AO without any corroborate the evidences. Accordingly, we are not inclined to interfere in the findings of the learned CIT(A). Consequently, grounds is dismissed.

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• 2025 (1) TMI 1175
  Valuation of the property by the Departmental Valuation Officer (DVO) - whether report of DVO is a valid and reasonable report than the report of registered valuer? - HELD THAT:- Assessee has challenged the basis of valuation by the DVO, stating that the same is highly arbitrary and have no legal or other basis, however, there was no whisper about any corroborative support to substantiate that the report of DVO was arbitrary or unreasonable. Assessee s reference to 1st proviso of section 56(2)(vii) r.w.s. 50C and its applicability in the present case , nothing has been submitted before us to support such claim, in terms of corroborative evidence, also apparently no such claim was made before the AO while seeking rectification u/s 154, therefore, we are unable to consider and to persuade with such contention of the assessee under the grounds of appeal in the present case. As described by the CIT(A) allegations by the assessee are only averments with no cogent documentary support. Before us also the assessee has not placed any documentary evidence, so as to dislodge the decisions taken by the revenue authorities. Thus, we find substance in the decision of CIT(A) that the appellant has not pointed out any real defect in the valuation report of DVO, hence the report of DVO is valid and reasonable as against the report of registered valuer, we, thus, there was no error in the findings of Ld. CIT(A) which needs our indulgence to correct the same. Decided against assessee.

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• 2025 (1) TMI 1174
  Bogus LTCG/STCG - Addition u/s 68 - assumption made by AO about jacking of prices and booking of capital gains - HELD THAT:-We find that on similar set of facts in assessees group case, the SMC bench of this Tribunal in Neelu Mahansaria [ 2023 (8) TMI 1611 - ITAT SURAT] held that assessee made sale of shares through BSE and paid security transaction tax and there is no allegation against the share broker through whom assessee has made sales that they were indulging any price manipulation. Therefore, no justification in treating the LTCG as unexplained cash credit in absence of any cogent evidence. Addition of undisclosed income under section 68 is deleted. Ground of assessee is allowed.

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• 2025 (1) TMI 1173
  Unexplained investment u/s 69 - addition provisions of Section 115BB - Reliance on statement recorded u/s 131(1A) - as argued statement recorded u/s.131 at the of the survey cannot be used partially and it should be accepted in toto meaning thereby that deposits in the bank account of M/s Nirav Co. represented the sales made by the assessee Whether statement recorded u/s 131(1A) under coercion and duress? - HELD THAT:- CIT(A) has dismissed the ground by holding that the assessee and Mr. Nirav Co. operated the impugned bank account for mutual benefit and hence statement of assessee was not under any coercion or duress. No specific details or evidences were given to the CIT(A) to support the above ground. Addition u/s 69A - CIT(A) has partly allowed the issue adopting the theory of peak credit to sustain the addition - appellant claimed to have sold the bullion during the demonetization period and the demonetized currency was deposited in the bank account of Nirav Co - survey team of the Investigation Wing and the AO have made detailed enquiry in the case - AO had added these amounts based on the statement of one of the partners of the assessee-firm - HELD THAT:- CBDT has issued the above SOPs/Instructions/Internal guidelines note for handling cases related to demonetization. A verification check list - cash deposit was given for providing assistance to AO for verification of cash deposits and framing of assessment in demonetization related cases. It is found from the assessment order that the AO has not followed the above SOP/Guidelines/Instruction issued by the CBDT while passing the assessment order. It is well-settled that the Instruction /Circulars issued by the CBDT are binding on all officers and persons employed in the CBDT. Hon ble Supreme Court in case of Navnitlal C. Jhaveri vs. K. K. Sen, [ 1964 (10) TMI 16 - SUPREME COURT] held that Circulars issued by CBDT are binding on all officers and persons employed in execution of the IT Act, even if they deviate from the provisions of the Act. As stated earlier, the AO has made various additions primarily on the basis of statement of one of the partners of the assessee-firm, and the survey/inquiry report of the Investigation Wing. He has not followed the SOP / Instruction / Guidelines issued by CBDT. In order to ensure uniformity in approach of AOs in handling OCM cases, it was incumbent upon the AO to follow such SOP/Instruction etc. As decided in M/s Bhavana Co-operative Credit Society Niyamita [ 2022 (9) TMI 1606 - ITAT BANGALORE] has, under similar circumstances, set aside the matter to the AO for verification and to pass fresh assessment after hearing the assessee. Thus we deem it proper to set aside the order of CIT(A) and restore the matter to the file of AO for verification of all the details and evidences as mandated under the said SOP/ Guidelines etc. The AO is also directed to verify all details filed by the assessee before the lower authorities and the Tribunal and to consider claim of the assessee in accordance with law - Accordingly, the ground is allowed for statistical purpose.

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• 2025 (1) TMI 1172
  Reopening of assessment - Unexplained investment - additions on account of on-money paid by the assessee to the builder for allotment of the residential unit - action taken by the AO of relying on the pen drive and some documents seized during search and seizure operation u/s 132 from third party - HELD THAT:- Throughout the proceedings, the assessee categorically denied having paid any amount in cash over and above the agreement value. AO has neither confronted assessee with any of the material found during the search on Kamla Group and even no evidence or seized document has been referred to where any name of the assessee has been explicitly mentioned of paying on-money. Although it has been claimed in the order of assessment that summons u/s 131 of the Act were issued to gather further details, but again no such statement has been confronted, neither the seized material /documents /pendrive was confronted to the assessee nor the copy of statement of Nilesh Gavade or Mahendra Rawal was confronted. Therefore, information if any found in the pendrive etc., cannot be considered as credible evidence , unless they have been corroborated with any other evidence. In my humble opinion, since the assessee was not provided with the adverse material, if any, based on which notice u/s 148 of the Act, was issued, it hampers the primary and fundamental requirement of natural justice. Information claimed in pendrive - The same was not found from the possession of the assessee but was found as per order of assessment, during search and seizure conducted in the case of third party therefore, in the absence of corroborative evidence to establish that the contents of pendrive are correct and authenticated to the extent assessee paid on-money in cash. No addition can be made and even otherwise during the entire reassessment proceedings the veracity and reliability of the data recorded in the pendrive was not checked or tested. Therefore, in such a scenario no addition is warranted in the case of assessee - Decided in favour of assessee.

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• 2025 (1) TMI 1171
  Best judgment assessment - AO has made additions towards net profit from business by estimating 10% profit on total turnover of the assessee - HELD THAT:- Unless the AO reject the books of accounts with valid reasons, he cannot resort to estimation of profit even in case of best judgement assessment. Although in best judgement assessment, there is certain degree of guess work, but the said guess work cannot arbitrary and without any basis. In the present case, the assessee claims that profit margin in this line of business is very low and compared to net profit rate adopted by the AO, it is on higher side. In our considered view, although no evidences have been filed to justify its argument that the net profit adopted by the AO is on higher side, in our considered view, since the AO has not given any reasons for rejection of books of accounts and also estimated 10% net profit on turnover without any basis, the matter needs to be set aside to the file of the lower authorities for reconsideration of the issue. Additions made u/s 68 towards liabilities - The assessee has filed unaudited, unsigned copy of balance sheet, but as per the said balance sheet, the total non-current liabilities under the long-term borrowings. The assessee claims that it has received loans and advances from related parties and obtained all the information including confirmation letters from the parties and requested to give another opportunity to explain its case. Since the assessment order passed by the AO is ex-parte and there is no occasion for the assessee to file relevant evidences, in our considered view, this issue also needs to go back to the file of the lower authorities for reconsideration. Addition u/s 69A - unexplained money towards cash deposited in the bank account during the demonetisation period - AO has made additions towards total cash deposited during demonetization period without any analysis, whether it is recorded in the books of accounts of the assessee or it is unexplained money, not recorded in the books of accounts of the assessee, to make additions u/s 69A of the Act. In our considered view, in order to make additions u/s 69A of the Act, the AO has to give a clear finding that the assessee is owner of the money and could not explain the source of the said money to the satisfaction of the AO. Since the AO has not recorded any findings as to how the money is as in the nature of unexplained money and made additions only on the basis of bank statements, in our considered view, this issue also needs to go back to the file of the lower authorities for re-examination of the facts. Since the assessment proceedings are ex-parte u/s 144 of the Act and further during the appellate proceedings, the assessee could not file relevant evidences to justify its case, the matter needs to be set aside to the file of the CIT(A) for fresh examination and to give another opportunity of hearing to the assessee. Penalty levied u/s 270A for under reporting of income as a consequence of misreporting and Penalty levied u/s 271AAC towards additions made u/s 69A - Since the addition made by the Assessing Officer on both the issues has been set aside to the file of the Ld.CIT(A) for denovo consideration, in our considered view, the consequent penalty levied by the AO u/s 270A and 271AAC of the Act and confirmed by the CIT(A) also needs to be set aside to the file of the CIT(A) for reconsideration.

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• 2025 (1) TMI 1170
  Penalty u/s 271(1)(c) - AO found that the appellant-assessee had not commenced business and hence disallowed the expenses AND also treated the interest income (received from fixed deposit) as income from other sources and not income from profits and gains from business or profession - HELD THAT:- It is a matter of record and it is not even in dispute that net loss, which was returned, is the same as loss assessed by the Assessing Officer. The only concurrent finding by the Assessing Officer as well as the CIT(A) in the earlier round of litigation is about the treatment of interest income, which the authorities below found is to be treated as income from other sources and not as income from profits and gains from business or profession as claimed by the assessee. In our opinion, this cannot lead to any conclusion about assessee having furnished inaccurate particulars of income or even of its concealment or evasion of any tax. The order imposing penalty stands deleted. Decided in favour of assessee.

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• 2025 (1) TMI 1169
  Revision u/s 263 - computation of short term/long term capital gain in respect of three properties - HELD THAT:- Considering the behavior of the assessee and also the relevant facts on record, we observed that the AO stumbled upon the information during the course of recovery and subsequently on verification, the assessee herself accepted the fact that the relevant transaction was in fact carried on by the assessee and failed to offer the same and agreed to offer the same in due course. Therefore, the information stumbled upon by the AO is found to be correct and the information submitted by the AO even though captioned as proposal u/s 263, however in actual, the same was the information brought to the notice of the ld. PCIT for further course of action. After considering the overall facts on record, we do not see any reason to disturb the findings of ld. PCIT in this regard and the proceedings u/s 263 is properly initiated and concluded. Accordingly, the submissions made by the ld. AR on the validity of the 263 based on the information supplied by the AO are found to be defective and accordingly the above submission is dismissed. Prayer of the assessee that the initiation of proceedings u/s 147 of the Act was sanctioned by the ld. PCIT-21 whereas the present proceedings were initiated by ld. PCIT-12 - As observed that from the order passed by the ld. PCIT and the proposal was submitted by the Assessing Officer before present ld. PCIT-12, it shows that the ld. PCIT has initiated proceedings u/s 263 with the clear observation that during recovery proceedings, the AO found that the assessee had sold immovable properties and also leased out the property at Gurgaon. The abovesaid facts were found to be correct and also the same was accepted by the assessee before the authorities. AO has brought to the notice of ld. PCIT-12 and accordingly, the proceedings initiated show that the jurisdiction of the AO lies with ld. PCIT-12. The relevant assessment order was passed on 28.12.2018 and at that point of time, jurisdiction may be with ld. PCIT-21 and accordingly the same was approved and now the present proceedings were initiated on 22.02.2021. AO has approached ld. PCIT-12 to initiate the proceedings shows that the jurisdiction of the AO lies with ld. PCIT-12, therefore, the proceedings were initiated by the ld. PCIT-12. Therefore, now the assessee cannot raise this issue as critical and seeking for cancellation of the proceedings u/s 263 of the Act, in our view, is not justified and also we observed that even before ld. PCIT, the assessee has agreed to settle the dispute and still failed to submit any proper documents within the time frame allowed by the authorities and even before ld. PCIT, assessee has herself submitted a calculation determining the tax liability and failed to substantiate by filing the relevant documents. Therefore, considering the factual matrix on record, we do not see any reason to disturb the findings of the ld. PCIT u/s 263 of the Act. Appeal filed by the assessee is dismissed.

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• 2025 (1) TMI 1168
  Cancellation of provisional registration granted u/s 12AB r.w.s. 12A(1)(ac)(vi) - HELD THAT:- In recent decision of this Tribunal in the case of Sovo Foundation [ 2024 (12) TMI 1521 - ITAT PUNE] has remanded the matter involving the issue of 12AB registration back to the file of Ld. CIT, Exemption to decide the issue afresh since the application was decided ex-parte i.e. for want of prosecution. Accordingly, in the instant case also we deem it appropriate to set-aside the order passed by Ld. CIT, Exemption, Pune and remand the matter back to him with a direction to decide the issue afresh - Grounds of appeal raised by the assessee in this appeal are partly allowed.

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• 2025 (1) TMI 1167
  Addition u/s 68 - excess of SBNs deposited in the bank account of assessee charged to tax u/s. 115BBE - As argued assessee has received the above cash on account of his business of Bar Restaurant - HELD THAT:- As decided in Sreelekha Bannerjee [ 1963 (3) TMI 47 - SUPREME COURT ] whole issue will depend in the manner in which the evidences brought by the taxpayer are viewed. The issue would be quite different when the assessee has maintained books of account which are accepted and there is a credit balance sufficient to cover the deposit of SBNs. All these facts would have to be examined. Thus, if in this case, the assessee establishes that the amount of cash deposit is generated out of its business, no addition deserves to be made, because the AO has accepted the book results of Bar Restaurant business. Therefore, it is for the assessee to establish that the cash deposit by the assessee is business income, profit of which is already offered for taxation. If the assessee is able to establish that there is sales recorded in the books of accounts in cash and source of deposit is available with the assessee out of such sales, naturally no addition can be made in the hands in the Assessee. Assessee is directed to show the above details before ld AO, which may be examined by him and then decide the issue afresh. Appeal filed by the assessee is allowed for statistical purposes.

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• 2025 (1) TMI 1166
  Validity of Reopening of assessment - shorter time period of only 5 days given to file his explanation - HELD THAT:- As relying on M Wonder Park Private Limited vs. Union of India Others [ 2022 (6) TMI 1523 - CHHATTISGARH HIGH COURT] wherein held that the time period of 7 days provided to the assessee vide notice u/s 148A(b) of the Act was unreasonably short, and thus, violative of principles of natural justice. Thus, we quash the order passed by the A.O. u/s 148A(d) and also notice u/s 148 and restore the matter back to the file of the A.O. with a direction to afford a proper opportunity of being heard to the assessee firm as per the mandate of section 148A(b) of the Act, and thereafter, decide the matter afresh in accordance with law. Ground of appeal allowed for statistical purposes.

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• 2025 (1) TMI 1165
  TDS u/s 194A/193 - Assessee-in-Default for non-deduction of TDS - failure to deduct tax at source from accrued interest on ICDs and Term Loans in terms of Section 194A and accrued interest on NCD s in terms of Section 193 - order passed u/s 201(1)/201(1A) - HELD THAT:- The provisions of Section 193/194A of the Act having already been triggered and complied with at the time of credit of interest income to the account of PEL in the books of accounts of the borrowers [i.e. the person responsible for making payment of such interest income at the relevant time], would not again get triggered on payment of the same interest income by the Appellant to PEL. In case the contention of the Revenue is accepted it would amount to subjecting same interest income to deduction of tax at source once at the time of credit and then again at the time of payment. Whereas Section 193/194A provide for deduction of tax at source at the time of credit or payment, whichever is earlier. Therefore, we hold that, given the facts and circumstances of the present case, the provisions contained in Section 193/194A of the Act were not attracted and therefore, the question of Appellant committing default in complying with the same does not arise. It is also admitted position that when the interest income had accrued to PEL, there existed lender-borrower relationship between PEL and the borrowers. Subsequently, the Appellant stepped into the shoes of PEL and as a result, lender- borrower relationship between the Appellant and the borrowers came into existence. The borrowers continued to be under contractual obligation to make payment of interest/accrued interest while the Appellant acquired the right to receive the same. There is no dispute as to the fact that no lender-borrower relationship existed between the Appellant and PEL at any point in time. Therefore, in absence of any statutory/contractual obligation on the part of Appellant to discharge the borrowers obligation to make payment towards interest/accrued interest to PEL, the Appellant cannot be regarding as person responsible for paying income by way of interest/interest on securities to PEL in terms of Section 194A/193 of the Act. We accept the contention of the Appellant that in absence of any moneys borrowed or debt incurred, payments made by the Appellant to PEL in excess of the principle value of the ICDs/NCDs/Term Loans recorded in the books of accounts of PEL cannot be regarded as interest / interest on securities as defined in Section 2(28A)/2(28B) of the Act. As held in the case of State Bank of India [ 2024 (5) TMI 1176 - ITAT MUMBAI ] the nature of income in the hands of the recipient and the nature of expenditure of the said sum in the hands of the payer need not be the same. Accordingly, delete the demand raised upon the Appellant vide order passed under Section 201(1)/201(1A). Assessee appeal allowed.

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• 2025 (1) TMI 1164
  Bogus purchases - HELD THAT:- We delete the addition made by the ld. AO in respect of purchases made from the 10 parties which were held as non-genuine purchases, since nothing cogent have been brought on record to controvert the corroborative documentary evidences placed on record and pointing out any discrepancies or defects in the same. Accordingly, ground no.1 taken by the assessee is allowed. Disallowance u/s. 40(a)(ia) for not furnishing Form-15G/H - as submitted Forms-15 G/H produced by the assessee during the remand proceedings - HELD THAT:- Since authorities below have recorded non furnishing of these documents before them, we find it appropriate to remit this issue before the file of ld. Jurisdictional Assessing Officer (JAO) for the limited purpose of verification of Form - 15G/H in respect of the disallowance made u/s. 40(a)(ia). Ld. JAO is directed to verify and examine the same and if found proper in accordance to the provisions of the law, consider the claim of the assessee, accordingly. Thus, ground no.2 raised by the assessee is allowed for statistical purposes.

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• 2025 (1) TMI 1163
  LTCG - denial of exemption u/s 54F - Multiple house property owned by assessee - HELD THAT:- We hold that the assessee was not owning more than one house property on the date of transfer of original capital asset and accordingly would be entitled for claim of exemption under section 54F of the Act in the sum of Rs. 3,83,55,102/-. Accordingly, ground raised by the assessee are allowed.

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• 2025 (1) TMI 1162
  Unexplained credit entries in bank account - DR submitted that it was onus of the assessee to prove that his bank account was misused and some fraud has been committed by some other person because the bank account is in the name of the assessee and therefore, assessee has to explain the nature of credit entries - HELD THAT:- Once there are deposits and corresponding withdrawals through cheques and the transfer of amount from one account to other, the entire deposit cannot be treated as income of the assessee. The corresponding withdrawals has to be seen. Even if assessee s plea is not substantiated that this account was opened fraudulently by some Shri Ashish Agarwal and now that he has already died and assessee cannot prove his bonafide, then also if at all it can be inferred that it could be some kind of undisclosed business. Thus, the proper course would be that whatever withdrawal has been made should have been added or some kind of net profit can be applied. The reason being if the amounts have been deposited through some transfer entry of cheque and same cheque has been issued to some other firm, then without giving benefit of the withdrawals and transfer through cheque, the entire deposit cannot be added. It would be appropriate to apply net profit rate of 1% on the entire deposits. Thus, addition is sustained to the extent of net profit rate of 1%. Appeal of the assessee is partly allowed.

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• 2025 (1) TMI 1161
  Addition of income from other sources u/s 56(2)(x)(b) - addition made to the income of the assessee on account of immovable properties purchased by it for a consideration less than the stamp duty value - Whether orders passed by the lower authorities were in violation of the principles of natural justice due to their non-speaking nature? HELD THAT:- Clearly the ld.CIT(A) s order appears to have been passed without any application of mind at all. Without finding any infirmity in the assesses submissions, CIT(A) appears to be luking for reasons to dismiss assesses appeal when he states that the assessee had given no reason why the sale deed was registered in 2019. This when neither the AO nor the CIT(A) ever asked the assessee the reason why the registration took place after so many years. As both the authorities below have passed non-speaking orders. There is no reason at all in the orders of the authorities below for rejecting assesses explanation and invoking section 56(2)(x) of the Act. Resulting in no clarity as to what finding is to be challenged in appeal against the said orders. Such orders are violative of the principles of natural justice embodied in the maxim audi alteram partem which demand justice not only to be done but also appear to be done. Decided in favour of assessee.

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• 2025 (1) TMI 1160
  Revision u/s 263 - assessee has not offered the interest income - Taxation of accumulated interest on debentures converted into equity shares - HELD THAT:- It is very clear that the assessee has not offered the interest income to tax on the ground that she is following cash system of accounting and the same would be taxable in the year of sale of equity shares. This plea is bereft of any substance. It is very clear that the whole interest amount is deemed to be received by the assessee upon conversion of debentures into equity shares in this year. If the amount of Rs. 61.97 Lacs is not brought to tax, the same would never be brought to tax. Pertinently, the conversion of debentures into shares have happened for face value of debentures for Rs. 2000/- plus accumulated interest of Rs. 1500/- per debenture. The value of shares essentially has two components i.e., face value of debentures of Rs. 2000/- and other component is accumulated interest of Rs. 1500/- per debenture. The capital gains on sale of shares would naturally be computed in the year of sale by adopting cost of acquisition accordingly. Therefore, the plea that if the interest component is taxed in this year, the same would amount to double taxation, is fallacious and hence, not acceptable. The cost shall include both the components in terms of Sec. 49(2A). There is no quarrel on the issue that such conversion of debentures into equity shares would not be regarded as transfer as per Sec. 47(x) so far as the computation of capital gain is concerned. However, here is question is of taxability of interest component of debenture that has accrued to the assessee up-to the date of conversion. Therefore, we conclude that the action of Ld. AO in accepting the return of income was not in accordance with law. The order has errors which is prejudicial to the interest of the revenue. Under these circumstances, the revision of the order could not be faulted with. Decided against assessee.

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• 2025 (1) TMI 1159
  Revision u/s 263 - disallowance of payment made towards transport charges and outward transport charges u/s 40a(ia) of the Act which was subject matter of pending adjudication before the National Faceless Appeal Centre, New Delhi - HELD THAT:- As decided in Renuka Philip [ 2018 (12) TMI 129 - MADRAS HIGH COURT] when the appeal is pending before the Commissioner, the exercise of jurisdiction under Section 263 of the Act is barred. Thus, finding rendered by the Commissioner is wholly unsustainable, since the assessee went on appeal against the re-assessment order stating that his claim for deduction under Section 54 should be accepted. Also in the process of considering as to what relief the assessee is entitled to, the AO held that the assessee is entitled to claim deduction u/s 54F of the Act and assigned certain reasons for that. Therefore, the larger issue was pending before the Commissioner of Appeals, and in such circumstances, the Commissioner could not exercise power under Section 263 of the Act on account of the statutory bar. Decided in favour of assessee.

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• Customs

• 2025 (1) TMI 1158
  Seeking grant of bail - smuggling of currency notes of U.S. Dollars and Gold - violation of provisions of section 77 of the Customs Act, 1962 and Foreign Exchange Management Regulations, 2000 and Foreign Exchange Management Act, 1999 - corroboration of confessional statement - HELD THAT:- The applicant was intercepted by the D.R.I. officials at CCS International Airport, Lucknow and from the other co-accused persons, the gold bullion was recovered, whereas the applicant is connected with the present matter as the D.R.I. is said to be collected the evidence of conversations in between Ratnesh Pandey, one of the co-accused person and the present applicant, but, the fact remains that there is no strong evidence that in consonance with the conversations, any transaction has ever been done or the D.R.I. has failed to place any evidence that those conversations were specifically with respect to the offence, which is said to be committed. Though, it has been held by the Hon ble Apex Court in the case of Romesh Chandra Mehta Vs State of West Bengal [ 1968 (10) TMI 50 - SUPREME COURT ], that the custom officers are not the police officers and the statement recorded under section 108 of the Act,1962, is admissible in evidence, though there seems to be no quarrel regarding the same, whereas the further issue is that can the statement of an accused recorded under section 108 of the Act,1962, blindly be accepted without any corroboration of other evidences ? Infact, the admissibility of an evidence is one aspect of the matter and the conviction can lead only on the basis of the confessional statement recorded under section 108 of the Act,1962 is the other aspect of the matter and the answer would be no. This court is of the opinion that the confessional statement of an accused recorded under section 108 of the Act,1962, cannot blindly be accepted unless it is corroborated by any independent evidence/material as the same would not lead to conviction. The examination of confessional statement of the accused is essentially required so as to find out that the same is not taken under coercion or under extraneous influences. The trial court has also to be conscious enough while examining the correctness and voluntariness of the nature of the statement of the accused. Further whether the alleged smuggled gold is under the prohibited category of gold or the restricted gold,is also one of the question, which is to be looked into by the trial court at the subsequent stage. It has also been noticed that the applicant has no previous criminal history, he is languishing in jail since 09-08-2024 coupled with the fact that he has undertaken that if he is granted bail, he will not misuse the liberty of the same and would cooperate in the trial proceedings. Considering the submissions of learned counsel of both sides, nature of accusation and severity of punishment in case of conviction, nature of supporting evidence, prima facie satisfaction of the Court in support of the charge, reformative theory of punishment and considering larger mandate of the Article 21 of the Constitution of India and, without expressing any view on the merits of the case, this is a fit case of bail. Conclusion - The applicant s confessional statement under Section 108, while admissible, requires corroboration by independent evidence to sustain a conviction. The applicant should be granted bail, subject to conditions to prevent tampering with evidence or intimidating witnesses. Bail application allowed.

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• 2025 (1) TMI 1157
  Classification of imported high conductivity copper bus bars - to be classified under Customs Tariff Item (CTI) 7407 21 20 or under CTI 7407 10 30 - denial of the Free Trade Agreement (FTA) benefit under N/N. 46/2011-Customs - HELD THAT:- The B/Es filed by the appellants did not show the copper content in the imported article, which was detected by the department at the time of examination of the goods. Insofar as confiscation of improperly imported goods are concerned, Section 111 ibid, in clause (m) has dealt with the situation of furnishing the correct particulars in the entry made in the B/E. In the present case, since the appellants had incorrectly mentioned the tariff classification and also claimed the FTA benefit provided under notification dated 01.06.2011, which otherwise was not available to the goods under CTI 7407 10 30, the imported goods, are liable for confiscation and accordingly, the appellants are also exposed to the penal consequences provided under the statute i.e., for payment of redemption fine and penalty. The Orders passed by the Co ordinate Bench of this Tribunal, as relied upon by the learned Advocate for the appellants in SATRON VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) [ 2018 (11) TMI 1700 - CESTAT MUMBAI] and SAHIL INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS (IMPORT) NHAVA SHEVA [ 2019 (5) TMI 1730 - CESTAT MUMBAI] , are distinguishable from the facts of the present case, inasmuch as change in classification of goods by the department and acceptance of the said changed classification by the importer was not the subject matter of dispute before the Co-ordinate Benches. Further, in the case in hand, the appellants have not specifically pleaded that they were not liable to pay the differential duty attributable to the change in classification of goods, which is evident from the fact that the said amount was paid by them suo motto before adjudication of the matter and the amount was also duly appropriated in the adjudication proceedings. Considering the fact that the appellants had filed the B/Es by describing the imported goods as per the invoice and other certificate(s) obtained from the originating country, the quantum of redemption fine and penalty imposed on the appellants can be reduced in the interest of justice. Therefore, imposition of redemption fine of Rs.2,00,000/- under Section 125 ibid and penalty of Rs.50,000/- under Section 112(a) ibid in the original order dated 26.08.2013, and upheld in the impugned order dated 16.06.2014, is modified and the quantum is reduced to the extent of Rs.50,000/- and Rs.10,000/- respectively. Conclusion - Since the composition of the imported article is relevant for consideration of the appropriate tariff classification, the change in classification of the goods made by the department is proper and justified. The reclassification and denial of FTA benefits were upheld. Confiscation and penalties were justified but reduced in quantum to reflect the appellants circumstances. Appeal allowed in part.

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• 2025 (1) TMI 1156
  Maintainability of appeal - appeals dismissed due to non-compliance with the statutory requirement of pre-deposit under Section 129E of the Customs Act - classification of imported facsimile machines of Panasonic Brand into India for onward sale to regional distributors - HELD THAT:- It is noted that another distributor in the case of UNIFAX SYSTEMS VERSUS VERSUS COMMISSIONER OF CUSTOMS (IMPORT AND GENERAL) [ 2014 (4) TMI 909 - DELHI HIGH COURT] importing the same machine had challenged the order of the Tribunal requiring the distributor to make pre-deposit of 50% of the total demand which order was modified by the High Court on 16.04.2014 by requiring the distributor to make deposit of 20% of the amount of duty as a pre-condition for filing the appeal. In view of the aforesaid order of the Delhi High Court passed in connection with an identical machine imported by a distributor, it is considered appropriate to dispose of the modification applications that were filed by the appellant and Jagjeet Singh with a direction that if the appellant makes a deposit of 20% of the total duty amount confirmed and Jagjeet Singh makes a deposit of 20% of the penalty amount confirmed within a period of six weeks from today, the Commissioner (Appeals) shall restore both the appeals and decide them on merits. While determining the amount of pre-deposit to be made by the appellant and Jagjeet Singh, the amount of pre-deposit made before the Tribunal shall be taken into consideration for calculating the amount of 20%. Conclusion - If the appellant deposits 20% of the total duty amount and Jagjeet Singh deposits 20% of the penalty amount within six weeks, the Commissioner (Appeals) must restore and decide the appeals on their merits. Appeal disposed off.

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• 2024 (12) TMI 1523
  Seeking grant of bail - smuggling of cigarettes - challenge to summons issued under Section 108 of the Customs Act, 1962 - HELD THAT:- This Court clearly stated in Annexure A14 judgment that, the petitioners are bound to appear before the Customs Officers based on summons. After the dismissal of W.P(Crl).No.1307/2024 on 02.12.2024 this bail application is filed on the same day. It is opined that, when a notice is issued under Section 108 of the Customs Act, the petitioners are bound to appear before the Customs Officials. After approaching this Court by filing a Writ Petition challenging the notice issued under Section 108 of the Customs Act, which is not entertained by this Court, it is not proper on the part of the petitioners to approach this Court with a bail application. This Court in Annexure A14 judgment clearly stated that the petitioners are bound to appear before the Customs Officer. This bail application need not be entertained - Bail Application is dismissed.

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• Securities / SEBI

• 2025 (1) TMI 1155
  Validity of Circular mandating payout of securities directly to clients demat account by clearing corporations and directed the stock exchanges and clearing corporations to implement the same - Petitioners have challenged the impugned circulars wherein Petitioner is required to obtain and hold a Depository Participant license ( DP Licence ) in order to continue with its business and Each of the Petitioners clients will be required to hold demat accounts in their respective names and the Petitioner is required to provide details of the same to Respondent Nos. 2 to 4. HELD THAT:- Petitioner has not interpreted the impugned circulars correctly. Since the Petitioner is a Trading Member (and not a depository participant), the Petitioner does not need a DP license. The impugned circulars do not mandate the holding of a DP licence by a broker engaged solely in broking activity and not engaged in the activity of a DP. Hence, no grievance survives as far as this issue is concerned. Holding demat accounts in their respective names - Respondent No. 1 has, by an email addressed to the stock exchanges, clarified that clients dealing exclusively in index derivatives and providing their margins through cash only are not required to hold demat accounts in the equity derivative segment. The concerned broker is, however, required to ensure that a client dealing in index derivatives does not deal in any other product which requires physical delivery and that he pays his margin only in the form of cash. Petitioner agrees that in view of the above, none of the grievances raised in the Petition survive and that the Petition may be disposed of in the above terms. The same is accordingly so noted and ordered. It is however made clear that in respect of trades apart from the ones pertaining to the index derivative product of the equity derivative segment as clarified above, the Impugned Circulars shall apply. Petition stands disposed of in the above terms.

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• Insolvency & Bankruptcy

• 2025 (1) TMI 1154
  Cancellation of the lease deed by NOIDA - claim of right within meaning of Section 116 of Transfer of Property Act, 1882 as a tenant holding over - exclusion of Plot No. SC-01/ D1, Sector 79 Noida from Resolution Plan submitted in the CIRP of the Corporate Debtor - it was held by NCLAT that application filed by the RP under Section 30(6) for approval of the Resolution Plan is rejected. HELD THAT:- Issue notice, returnable on 24th March, 2025.

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• 2025 (1) TMI 1153
  Maintainability of Civil suit - bar under Order 7 Rule 11 of CPC - Ownership and possession rights of the Appellant over the disputed land during CIRP proceedings - bar u/s 238 of I B Code - it was held by NCLAT that Having scrutinised the reasons which has been assigned by the Learned Adjudicating Authority in relation to the status of the property and the effect of the pendency of the Civil Suit filed by the Appellant, the rejection of the two applications of the Appellant by the Learned Adjudicating Authority by the Impugned order does not call for any interference in the exercise of the Appellate Jurisdiction under Section 61 of I B Code. HELD THAT:- There are no good ground and reason to interfere with the impugned judgment; hence, the appeals are dismissed.

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• 2025 (1) TMI 1152
  Approval of Resolution Plan - It is submitted that the amount which has been earmarked to the Appellant is not in accordance with IBC and violates Section 30(2) - claim of the Appellant was treated as operational debt - waterfall mechanism - HELD THAT:- The provisions of Section 11E of the Central Excise Act, 1944 and Section 82 of the Central Goods and Services Tax Act, 2017 clearly carves on exception with regard to provisions of Insolvency and Bankruptcy Code, 2016. In Central Excise Act, 1944, provision of Section 529A of the Companies Act, 1956 was referred. The above provisions came for consideration before this Tribunal in THE ASSISTANT COMMISSIONER OF CENTRAL TAX VERSUS MR. SREENIVASA RAO RAVINUTHALA, M/S RENGANAYAKI AGENCIES [ 2023 (8) TMI 193 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI] where it was held that From the usage of the words save as provided in in Section 11E is in the nature of an exception intended to exclude the class of cases, mentioned in Companies Act, 1956, The Recovery of Debts due to Banks and Financial Institutions Act, 1996 . SARFAESI Act, 2002 and I B Code, 2016 . The Secured Interest as defined under the Code excludes charges created by Operation of law. Section 11E of the Central Excise Act, 1944 is distinct from the provisions of Gujrat VAT Act, 2003 and therefore the decision in the matter of Sate Tax Officer v. Rainbow , (Supra) cannot be made applicable to the facts of this case. Conclusion - There are no error treating the claim of the Appellant as operational debt and operational creditor is entitled for payment as per Section 30(2)(b) and present is not a case where it is contended that the amount which is offered to the Appellant is less than the liquidation value to which the Appellant would have been entitled in event of liquidation under Section 53(1) according to waterfall mechanism. There are no error in the order of the Adjudicating Authority approving the Resolution Plan. Appeal dismissed.

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• Service Tax

• 2025 (1) TMI 1151
  Recovery of service tax along with applicable Cesses, interest and various penalties - classification of services - Management, Maintenance or Repair Service or not - activity of re-treading of used Tyres - applicability of Extended period of Limitation. Classification of services - HELD THAT:- The appellant is using consumables which were purchased from sales tax registered dealers, which was claimed to have suffered sales tax. This fact has not been found to be false. There is a claim of the appellant on record for extending the benefit of Abatement in terms of N/N. 12/2003 ST dated 20.06.2003, since the value of materials used and sold by the appellant were exempted from service tax - This is a case where works contract was involved and hence, the Tyre re-treading is a works contract and the goods used in execution of such contract is clearly liable only to sales tax. Extended period of Limitation - period of dispute is from 2005-06 to 2008-09 for which the SCN was issued on 16.09.2010 by invoking the extended period of limitation - HELD THAT:- The Adjudicating Authority has dropped the demand for the year 2008-09 and hence, the scope of appeal is for the periods 2005-06 to 2007-08, in which event, invoking extended period of limitation stands unjustified. This is because, the AA has only negated the claim of abatement for want of proof/evidence, while accepting the same insofar as 2008-09 is concerned. It could have been different had the sales-tax return was considered requiring the production of supporting documents like the assessment thereon, etc. but in any case, the same cannot amount to suppression or fraud, to invoke the larger period of limitation. There is also no whisper about the acceptance or otherwise, of the sales-tax return by the State authority. Conclusion - i) This is a case where works contract was involved and hence, the Tyre re-treading is a works contract and the goods used in execution of such contract is clearly liable only to sales tax, not service tax under MMR services. ii) The Revenue failed to justify the extended period of limitation, as there was no evidence of suppression or fraud by the appellant. Appeal allowed on limitation.

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• 2025 (1) TMI 1150
  Classification of services - Supply of Tangible Goods services - supply of trailers owned - appellant had not paid service tax due to the reason that their clients had paid the service tax in respect of their further supply/ activity - discharge of burden to prove. Whether M/s Sudhir Road Lines are liable to pay Service Tax under Supply of Tangible Goods Service for supplying their trailers to others for being used for Transportation of Goods and when Service Tax stands already paid by the transfree? - HELD THAT:- The effective control and possession with respect to trailers given by the appellant was not with the appellant. The appellant was getting paid a fixed price per trailer from the respective client. Resultantly, the impunged activity was that of giving trailers on Hire instead of it being wrongly classified as Supply of Tangible Goods . The service tax demand was proposed and has been confirmed based on the allegation that the trucks/trailers were not supplied to GTA. From the above discussion, it is clear that for activity of transfer of vehicles, the nature of transferee is not relevant neither for the activity to fall under Supply of Tangible Goods Service not for the activity to be called as Hire . The relevant criteria for the distinction is whether the right to use is transferred with possession and effective control. In case it is so transferred, the activity will that be of hire else only it shall fall under service of Supply of Tangible Goods - the moment the right to use goods is transferred, the activity gets covered under the concept of deemed sale and gets out of the scope of service tax net. In BUILDERS ASSOCIATION OF INDIA AND OTHERS VERSUS UNION OF INDIA AND OTHERS (AND CONNECTED WRIT PETITIONS AND APPEALS) [ 1989 (3) TMI 356 - SUPREME COURT ], the validity of the Constitution (Forty-sixth Amendment) Act was upheld. But the Apex Court ruled that the States power to levy tax on the goods involved in a works contract is subject to the restrictions in Article 286. As per the definition of Goods Transport Agency in Finance Act, 1994, the issuance of consignment note is mandatory criteria for holding any act of transportation to be an act of GTA. Resultantly, the findings arrived at by the adjudicating authorities below are erroneous on the face of the facts itself. The initial burden to prove the allegations was of the department which has not been discharged. The issue of exemption under Entry No. 22(b) of the Notification No. 25/2012 has wrongly been raised that entry as well as the sub-clause of Section 66D (Negative List of the Finance Act) exempts the transportation of goods by road except it is done by a courier agency or a goods transport agency. The appellant admittedly is not a goods transport agency. His clients have been the GTAs who admittedly have discharged the service tax liability. Resultantly and in view of the above discussion about Article 366 (29A), the activity rendered by the appellant is held to be of transfer by way of hire/rent of his trucks to the others. Since same is out of scope of the service tax net, hence, the finding arrived at by the authorities below are incorrect. Conclusion - i) The effective control and possession of the trailers were with the transferees, not the appellant. ii) The activity rendered by the appellant is held to be of transfer by way of hire/rent of his trucks to the others. iii) The registration of the appellant under the head Supply of Tangible Goods for use service was insufficient to prove the taxable nature of the activity. iv) The department failed to discharge its burden of proof regarding the retention of control by the appellant. v) The impunged activity was that of giving trailers on Hire instead of it being wrongly classified as Supply of Tangible Goods . Appeal allowed.

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• Central Excise

• 2025 (1) TMI 1149
  Rate of interest on the refund amount collected during investigation - whether the appellant is entitled to interest on the refund amount @6% per annum as granted by the Commissioner (Appeals) or @12% per annum as claimed by the appellant? - HELD THAT:- In view of the various decisions of the High Courts and various Benches of the Tribunal wherein it has been consistently held that interest on refund of deposit made during the investigation is required to be computed @12% per annum. The jurisdictional High Court of this Tribunal has already held that rate of interest applicable in such cases is 12% per annum as held in the cases of COMMISSIONER OF CENTRAL EXCISE, PANCHKULA VERSUS RIBA TEXTILES LTD. [ 2022 (5) TMI 1531 - PUNJAB AND HARYANA HIGH COURT ] and M/S. SUNRISE IMMIGRATION CONSULTANTS PVT. LTD. VERSUS UNION OF INDIA AND ORS. [ 2023 (6) TMI 411 - PUNJAB AND HARYANA HIGH COURT ]. In view of the decisions of the Hon ble High Courts in the cases cited wherein the Hon ble High Court has granted the interest @ 12% per annum, following the ratio of the decisions of the High Court and hold that the appellant is entitled to the rate of interest @ 12 % per annum on the amount deposited during investigation. Conclusion - The appellant is entitled to an interest rate of 12% per annum on the refund amount deposited during the investigation. This conclusion was based on the consistent application of this rate in similar cases by various High Courts and the Tribunal itself. The Original Authority is directed to compute the Interest @ 12% instead of @ 6 % as directed by the Commissioner appeal - Appeal allowed.

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• 2025 (1) TMI 1148
  Benefit of exemption under N/N. 67/1995-CE dated 16.03.1995 - process amounting to manufacture or not - activity of preparation of season - product has a shelf life and is marketable - appellant is engaged in the manufacture of finished leather - discharge of obligation in terms of Rule 6 of the CCR, 2001 by appellant or not - Whether the intermediary product season manufactured and captively used by the appellant is eligible for the benefit of exemption under N/N. 67/1995? HELD THAT:- The appellant is engaged in the manufacture and clearance of the goods both dutiable and exempted. From the contents of the notification it is also found that the intermediary product season prepared in the factory of the appellant is covered under Column (1) of the Table and is used in or in relation to the manufacture of both types of final products covered under Column (2) of the Table of the notification. It is also an undisputed position that the appellant had not availed the Cenvat Credit of duty or tax paid on any inputs or input services or capital goods which were used in the manufacture of both exempted and dutiable goods. The fact that the appellant has not availed the Cenvat Credit shows that they had discharged the obligation as prescribed under Rule 6 of the Rules. In arriving at the conclusion, that the appellant had discharged the obligation in terms of Rule 6 as no Cenvat Credit was availed, we are supported by the decisions as referred to by the learned Counsel for the appellant. In the case of AMBUJA CEMENT LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH [ 2015 (11) TMI 1413 - SUPREME COURT] , the Apex Court considered the issue relating to the interpretation of the exemption notification no. 67/1995 with reference to the dutiability of the intermediary product clinker obtained at the intermediary stage in the production of cement , which is exempted from the excise duty under the exemption notification no. 50/2003 dated 10.06.2003. The Apex Court, inter-alia observed The final products may be made out of the same product or out of different products. Clause (vi) does not contemplates that the manufacturer should manufacture only one final product or that if he manufacturers only one product that product itself should be both dutiable and exempted. The basis adopted by the CESTAT that the same final product should be partly dutiable and partly exempt, is neither a requirement of clause (vi) nor a requirement of Rule 6. In the case of M/S. FUNSKOOL (INDIA) LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS, GOA [ 2016 (12) TMI 1267 - CESTAT MUMBAI] the adjudicating authority had denied the exemption under notification no. 67/1995 in respect of packing boxes used captively for manufacture of exempted goods on the ground that the appellant have not discharged the obligation as provided under Rule 6 of the CCR, 2001. In this context, the Tribunal noticed that the appellant therein had not availed the Cenvat Credit in respect of any of the inputs used either in the final product or in the intermediate product, i.e. packing boxes and therefore, concluded that the obligation in terms of Rule 6(1) stood discharged and they were entitled to the benefit of the exemption N/N. 67/195. Similar observations have been made in SPRAY KING AGRO EQUIPMENT PVT LTD AND HITESH P DUDHAGRA VERSUS C.C.E. S.T. -RAJKOT [ 2022 (5) TMI 564 - CESTAT AHMEDABAD] that exemption under notification is available to the intermediary goods even if the final product is exempted, provided the assessee discharges the obligation prescribed under Rule 6 of the CCR, 2001. In the context, it was observed that the appellant during the impugned period was not registered with the Central Excise Department, hence, has not availed the Cenvat Credit in respect of any of the inputs used either in the final product or in the intermediate product i.e. Brass and therefore, the condition of sub-rule (1) of Rule 6 stands complied with. Conclusion - Since the appellant herein had not availed the Cenvat Credit, they had discharged the obligation under Rule 6(1) and were therefore, entitled to the benefit of the exemption notification no. 67/1995. Appeal allowed.

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• CST, VAT & Sales Tax

• 2025 (1) TMI 1147
  Challenge to impugned assessment order as well as the rectification order - rejection of rectification application on the ground that there was no apparent mistake on the record and the grounds in the Rectification Application were actually the grounds of Appeal and not grounds for Rectification - HELD THAT:- In the facts of the present case, it is not in dispute that for the assessment year 2015-16, a show cause notice was issued to the Petitioner on 12th March 2020 fixing a hearing of the case on 23rd March 2020. It is also not in dispute that by 23rd March 2020, due to the Covid-19 pandemic, the entire country was under lock-down. Once this is the case, it was impossible for the Petitioner to attend the hearing that was fixed on 23rd March 2020. Despite this, Respondent No.3 has proceeded ahead and passed the impugned assessment order. Looking at the peculiar facts of the present case we have no hesitation in holding that the assessment order has been passed in complete breach of the principles of natural justice. There are considerable force in the arguments canvassed on behalf of the Petitioner that the impugned assessment order be set aside and the matter be remanded back to the 3rd Respondent for re-adjudicating the show cause notice dated 12th March 2020 after the Petitioner is given an opportunity to file a reply to the show cause notice as well as a personal hearing in the matter. Conclusion - The assessment order has been passed in complete breach of the principles of natural justice. Matter remanded back to Respondent No.3 for re-adjudication. Petition disposed off by way of remand.

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• Indian Laws

• 2025 (1) TMI 1146
  Dismissal of appeals on the grounds of delay without considering the merits of the case - HELD THAT:- Although multiple submissions were raised from both sides touching upon the merits of the case, it is not deemed necessary to refer to them as the present appeals can be allowed on a short ground, which is, that the order impugned before the High Court was of refusal to condone the delay in preferring the appeals before the Appellate Tribunal, Mumbai. Once the High Court opined that in normal circumstances the delay ought to have been condoned, it ought not to have commented upon the merits of the orders dated 23.07.2019 and 16.10.2019, particularly, when the Appellate Tribunal, Mumbai had not dealt with the correctness of those orders. In such circumstances, the High Court should have set aside the order rejecting the delay condonation application, condoned the delay and restored the appeals on the file of the Appellate Tribunal, Mumbai for consideration on merits. The scope of the appeal before the High Court was limited to examining the correctness of the order of the Appellate Tribunal, Mumbai declining condonation of delay. Only when the delay is condoned, the merits of the order could be examined by the Appellate Court. Conclusion - The delay should be condoned when sufficient cause is shown, and that merits should not be commented upon unless the delay is condoned. The order dated 01.12.2022 passed by the Appellate Tribunal, Mumbai, refusing to condone the delay in filing the appeals by the appellants herein against the orders dated 23.07.2019 and 16.10.2019, is set aside. Appeal allowed.

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