TMI Tax Updates - e-Newsletter
January 7, 2025

Case Laws in this Newsletter:

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

Articles

1. ANALYSIS OF NOTIFICATION NO.20/19-CT (R) DATED 30.09.2019 VIZ-A-VIZ RECOMMENDATIONS OF 55TH  GST COUNCIL MEETING IN RESPECT OF HOTEL  &  RESTAURANT SERVICES

   By: KASTURI SETHI

2. FILING FIRST APPEAL UNDER INCOME TAX ACT, 1961

   By: DR.MARIAPPAN GOVINDARAJAN

3. Importance of Trademark Search Before Registration

   By: Ishita Ramani

4. Condonation of delay in filing Form 9A/10/10B/10BB for NPOs and 10IC and 10ID for Corporates for availing lower rate of tax

   By: Vivek Jalan

5. Orders issued under Section 73 of the CGST/SGST Acts must carry the digital or manual signature

   By: Bimal jain

News

1. Jharkhand CM launches 'Abua' portal, mobile app to seek suggestions from people for budget

2. Govt should lower GST on cement at 18 pc, frame policy to boost demand: JK Lakshmi

3. Extension of the Proposal Due Date: Empanelment of Survey Institutions for the National Statistics Office, MoSPI

4. Revolutionizing Digital Commerce: The ONDC Initiative

5. Prime Minister Shri Narendra Modi inaugurates the Grameen Bharat Mahotsav 2025

6. Simultaneous polls needed, will eliminate economic losses caused by frequent elections: Goyal

7. Agarwal community has made significant contributions to India's socio-economic transformation: Om Birla

8. RBI Bhubaneswar branch holds financial literacy programme for visually challenged persons

Notifications

DGFT

1. 49/2024-25 - dated 4-1-2025 - FTP

Amendment in Import Policy and Import Policy Condition of Synthetic Knitted Fabrics Covered under Chapter 60 of the ITC (HS), 2022

SEBI

2. SEBI/LAD-NRO/GN/2025/223 - dated 2-1-2025 - SEBI

Notification under Securities and Exchange Board of India (Certification of Associated Persons in the Securities Markets) Regulations, 2007

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2025/1 - dated 6-1-2025

Measure for ease of doing business - Settlement of Account of Clients who have not traded in the last 30 days

DGFT

2. 39/2024-25 - dated 5-1-2025

Procedure for export of certified organic products

Customs

3. PUBLIC NOTICE No. 01/2025 - dated 2-1-2025

Roll out of Automated Out of Charge for AEO T2 and T3 Clients - Reg.

Highlights / Catch Notes

GST

• Court Upholds GST Limitation Extensions Due to COVID-19; Validates Broad Interpretation of "Actions" for Past Cases.

  Case-Laws - HC : The HC upheld the validity of notifications extending the limitation period u/s 73(10) of the GST Act through Section 168A, which allows the government to extend time limits due to force majeure like COVID-19. The words "in respect of actions" were interpreted broadly to cover previous incomplete actions during the pandemic. The HC held that the Council's recommendation enables an informed decision by the government in line with cooperative federalism. The petitions were disposed of, allowing the petitioners to pursue statutory appeals.
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• Telecom Provider Wins Case Against Unconstitutional Entry Tax on Operations Due to Invalid Notice Based on Arbitral Award.

  Case-Laws - HC : Petitioner challenged SCN as ultra vires Sections 66B and 65B(44) of Finance Act, 1994 and violative of Articles 14, 265 and 300A of Constitution. HC held SCN based on arbitral award in petitioner's favor against DMRC, which was partly set aside by Division Bench, no longer survived. Petition allowed.
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• Court Orders Immediate Refund Disbursement with Interest Due to Delay; Respondents Must Issue Payment Advice Promptly.

  Case-Laws - HC : HC directed respondents to disburse remaining sanctioned refund amount along with applicable interest for delayed disbursement. Respondents cannot retain refunded amount per refund sanction order. Respondent directed to issue payment advice to petitioner forthwith. Petition disposed.
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• Court Upholds Time Limit on Input Tax Credit Under GST Act; Allows Petitioners to Seek Further Remedies Elsewhere.

  Case-Laws - HC : The HC disposed of the writ applications challenging the constitutional validity of section 16(4) of the Central Goods and Services Tax Act, 2017 imposing time limit for availing Input Tax Credit, and the amendment to Rule 61(5) related to GSTR-3B. The Court noted the recommendations of the 53rd GST Council Meeting addressing the petitioners' claims, giving due weightage to the Council's recommendations in accordance with law. The petitioners were granted liberty to pursue remaining matters before the appropriate forum.
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• GST Evasion Penalty Upheld; Appeal Restored for Technical Issues Allowing Reconsideration on Merits.

  Case-Laws - HC : Petitioner's appeal against penalty imposed for detention u/s 129 of Bihar GST Act, 2017 and finding of attempted tax evasion dismissed. HC set aside Annexure-9 on technical grounds; appeal restored before first Appellate Authority for consideration on merits after hearing petitioner. Petitioner paid entire penalty; despite Annexure-9/A not showing disputed amount, appeal to be entertained due to procedural irregularity.
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Income Tax

• Tax Authority Can't Add Income Without Proof, ITAT Rules in Favor of Taxpayer Over Alleged Bogus Transactions.

  Case-Laws - AT : AO determined commission from alleged bogus purchases and sales, made addition. ITAT held AO should have either rejected books of account and determined actual profit, or retained returned income without making presumptive addition. AO cannot presume additional income without being actually earned by assessee. Gross taxable income cannot be less than returned income filed u/s 139(1). ITAT deleted AO's additions, decided in favour of assessee.
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• Tax Assessments Invalidated for Non-Compliance with Hearing and Reason Recording Requirements.

  Case-Laws - HC : HC quashed best judgment assessments made by Income Tax Officer, Baddi without complying with Section 127 transfer of jurisdiction requirements of giving reasonable opportunity of hearing to assessee and recording reasons for transfer from Income Tax Officer, New Delhi. Assessments set aside, permitting fresh proceedings by following proper transfer procedure or continuing through jurisdictional Income Tax Officer.
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• Tax Tribunal Rules for Assessee: Deductions Allowed, Unexplained Investments Cleared, Creditor Disallowance Rejected.

  Case-Laws - AT : The ITAT held: Long term capital gain was to be computed allowing deduction for indexed cost of acquisition and exemption u/s 54B. Addition u/s 68 for unexplained investment in immovable property was deleted as assessee furnished sufficient evidence regarding source. Addition u/s 69 for unexplained investment was also deleted as source for purchase of property from sale proceeds was duly explained. Disallowance of sundry creditors was rejected as assessee proved genuineness and creditworthiness of lenders. Order was decided in favour of assessee.
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• Reassessment Void: Violation of Natural Justice as Assessee Denied Cross-Examination Opportunity in Tax Case.

  Case-Laws - AT : Reassessment proceedings initiated u/s 147 were quashed by ITAT for violation of principles of natural justice due to lack of opportunity for cross-examination of statements relied upon for making unexplained investment addition u/s 69. ITAT held that assessee must be provided materials/statements used against them and given adequate opportunity to explain. Mere retraction statements obtained later cannot cure initial violation. AO failed to conduct further enquiries to unearth circumstantial evidence supporting impugned statements. Reassessment order passed in violation of natural justice, assessee's appeal allowed.
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• Appellate Authority Reassesses Tax Penalty on Short-Term Capital Gains; Tribunal Calls for CIT(A) Review.

  Case-Laws - AT : Assessee earned long-term and short-term capital gains on share transactions. Tax demand of Rs. 1.45 crores was finally raised on recomputed short-term capital gains of Rs. 40.33 crores. CIT(A) deleted penalty levied u/s 271(1)(c) without considering arguments and precedents. ITAT set aside CIT(A)'s order and restored penalty issue for de novo adjudication by CIT(A).
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• Tax Tribunal Excuses Penalty for Late Audit Filing Due to Reasonable Cause, No Penalty Imposed for Initial Non-Compliance.

  Case-Laws - AT : Assessee's appeal allowed by ITAT against penalty u/s 271B for non-compliance with Section 44AB. Assessee demonstrated reasonable cause for failure to file return and tax audit report within due date. Assessee had honest belief of not being required to file return due to nil taxable income after deductions. Upon receiving notice u/s 142(1), assessee immediately appointed CA firm, conducted tax audit, and filed return. ITAT held assessee's conduct showed reasonable cause u/s 273B for initial non-compliance.
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• Employer's Leave Encashment Fund Contribution Non-Deductible Unless Paid in Same Year, Per Income Tax Act Section 43B.

  Case-Laws - HC : The amount of contribution made by the assessee towards the fund for payment of leave encashment to its employees does not qualify for deduction as expenses u/s 43B of the Act. The proviso to Section 43B relates only to the liability incurred by actual payment in the previous accounting year. As per Section 43B, deduction is allowed where the liability to pay such sum was incurred according to the accounting method employed, and the sum was actually paid by the employer in the previous year. The assessee cannot derive benefit from the Bharat Earth Movers case, as Section 43B(f) applies prospectively post its enactment. The HC rightly disallowed the deduction, as the liability incurred did not qualify u/s 43B(f).
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• ITAT Clarifies India-USA DTAA: Tax Rates Include Surcharge, Surtax, and Education Cess for US Citizens' Income in India.

  Case-Laws - AT : The assessee, a US citizen residing permanently in India, claimed that the tax rates specified in the India-USA DTAA include surcharge, surtax, and education cess would be applicable only for income earned in India. The ITAT held that as per Article 2(1)(b)(i) & (ii) of the DTAA, surcharge and surtax are included in the maximum rates specified under Articles 10 and 11. Since cess is an additional surcharge, the prescribed tax rates under the DTAA shall be deemed to include cess as well. Relying on precedents, the ITAT directed the CPC to recompute the assessee's tax liability by including education cess in the DTAA rates.
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• Black Money Act Applies from AY 2016-17; Tribunal Deletes Penalties for Unintentional Lapses in Initial Implementation.

  Case-Laws - AT : The ITAT held that the Black Money Act, 2015 would be applicable from AY 2016-17 onwards. Hence, the AO lacked jurisdiction to assess income or levy penalty under the Act for AYs 2014-15 and 2015-16. Regarding AY 2016-17, the dividend income reinvested in the Non-Retirement Fund (NRF) did not constitute undisclosed foreign income/asset as the tax was withheld as per USA laws. The penalty u/s 41 was deleted consequentially. The penalty u/s 43 was also rightly deleted by the CIT(A) considering it was the first year of the Act's implementation, the assets were from known sources with taxes paid, and the lapse was unintentional. The revenue's appeals were dismissed.
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• Third-party statements require cross-examination for tax additions, says ITAT; unsupported disclosures insufficient.

  Case-Laws - AT : The ITAT held that a statement/document received from a third party cannot be relied upon for making an addition u/s 69A, without giving the assessee an opportunity to contradict the same and cross-examine the person who gave the statement/document. The suo-moto disclosure made by the assessee before the Settlement Commission, without corroborative material/evidence, cannot be the basis for making an addition. In the present case, except for a letter filed before the DCIT/Settlement Commission, there was no other corroborative material/evidence for sustaining the addition. Moreover, no opportunity was given to the assessee to cross-examine the person who made the disclosure/issued the letter relied upon for the addition. Consequently, the addition was held unsustainable and deleted in favor of the assessee.
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• Tribunal Rules Against Adding Notional Interest on Interest-Free Advances with Sufficient Funds for Business Purposes.

  Case-Laws - AT : No notional interest was added on interest-free advances as assessee had ample interest-free funds for business purposes. Real income earned can be assessed, not presumptive income without evidence. No interest income could be established on short-term loans and advances from debtors' replies or assessee's accounts. ITAT decided in assessee's favor, disallowing the addition of notional interest.
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• Tax Tribunal Upholds Decision: Unexplained Cash Deemed Surrendered Income; Penalty Notice Dismissed on Technical Grounds.

  Case-Laws - AT : The ITAT dismissed the Revenue's quantum appeal. It upheld the CIT(A)'s finding that the unexplained cash found during search was part of the income surrendered by the assessee u/s 132(4), based on the statement recorded. Regarding the penalty u/s 271AAB(1)(a), the ITAT deleted it on technical grounds, as the penalty notice did not specify clear charges against the assessee for not fulfilling the conditions and not divulging the source of income, violating natural justice principles.
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• Tribunal Supports Government Entity's Interest Income Recognition on Actual Receipts Amid Borrower Settlement Uncertainty.

  Case-Laws - AT : CIT(A) deleted addition of interest income, accepting assessee's audited accounts following mercantile system. ITAT upheld CIT(A)'s order, allowing assessee to recognize interest income based on actual receipts as per AS-9 due to uncertainty from NCLAT proceedings involving borrowers RGPPL and KLNG undergoing OTS. Assessee being government entity, accounts approved by CAG audit. ITAT relied on MMTC Ltd. case, holding AS-9 appropriate for revenue recognition under uncertainty. AO failed to establish assessee received impugned interest during the year.
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Customs

• Intermediary Denied Petition to Release Containers Without Charges; Entitled to Recover Costs from Consignees.

  Case-Laws - HC : Petitioner, an intermediary procuring containers for lease, sought release of empty containers without charges like ground rent, storage, handling from Customs Authority. HC held Petitioner entitled to recover dues, higher charges from consignees for using containers as per law. Prayers under Article 226 cannot be granted. Petition dismissed.
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• Tribunal Confirms MCPCBs Classified as Standard PCBs, Rejects Revenue Appeal on LED Lamp Parts Classification.

  Case-Laws - AT : MCPCBs should be classified under CTH 8534 as standard PCBs, not under CTH 94054090 as parts of LED lamps. CESTAT dismissed Revenue's appeal, holding that MCPCBs cannot be classified differently from Tribunal's view on identical facts that they merit classification under Tariff Item 8534 0000. Department cannot rely on IGST Notification to determine classification under Customs Act.
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• Ruling Confirms Extended Period Inapplicable for Interpretative Disputes on Import Duty Concessions.

  Case-Laws - AT : Appellant filed bill of entry correctly declaring imported goods as Composite Long Rod Insulators on 9-2-2017. Issue involved interpretation of 'composite' and 'polymer' to determine applicability of concessional duty under Notification. No mis-declaration or intent to evade duty. Extended period for demand cannot be invoked for mere interpretative dispute. Show cause notice issued after three years barred by limitation. CESTAT allowed appeal, holding extended period requires clear evidence of suppression or intent to evade duty.
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• Telematics Control Units from Japan get zero customs duty with origin certification under India-Japan CEPA Rules 2011.

  Case-Laws - AAR : The subject goods 'Telematics Control Unit (TCU)' are classifiable under CTH 8517 62 90. The Applicant is eligible to avail concessional rate of Basic Customs Duty @ 0% on import from Japan as per Sl. No. 666 of N/N. 69/2011-Customs, dated 29-7-2011, provided the goods originate in Japan as per Customs Tariff (Determination of Origin of Goods under the Comprehensive Economic Partnership Agreement between India and Japan) Rules, 2011.
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DGFT

• India Approves Export of 200,000 Metric Tons of Wheat to Nepal for Food Security Under Foreign Trade Policy 2023.

  Notifications : The Central Government, exercising powers under the Foreign Trade (Development & Regulation) Act, 1992 and Foreign Trade Policy 2023, permitted export of 200,000 metric tons of wheat (HSN 1001) to Nepal through National Cooperative Exports Limited (NCEL).
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SEZ

• Central Government Reduces Telangana IT SEZ by 3.167 Hectares Following Approval and Compliance with SEZ Act 2005.

  Notifications : The Central Government de-notified an area of 3.167 hectares from the Special Economic Zone for Information Technology and Information Technology Enabled Services at Nanakramguda Village, Serilingampally Mandal, Ranga Reddy District in the State of Telangana, established by M/s. Phoenix Tech Zone Private Limited, thereby reducing the total area of the SEZ to 2.614 hectares. The de-notification was approved by the State Government of Telangana, recommended by the Development Commissioner, Visakhapatnam SEZ, and fulfilled the requirements under the Special Economic Zones Act, 2005 and Rules.
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FEMA

• Court Dismisses Grievance on Export Credit; Clarifies Subvention Eligibility and Reversal Rules for Delayed Exports.

  Case-Laws - HC : HC dismissed the grievance. Interpretation of RBI's Master Circular on export credit: Advances financing exports within 450 days constitute "export credit" eligible for subvention. Delay in submitting export documents after 450 days requires reversal of subvention for delayed period. If exports don't materialize within 450 days, domestic lending rate applies; subvention unavailable. First Lot exports within 450 days eligible for subvention except delayed period. Second Lot exports didn't materialize within 450 days, hence ineligible for subvention. HDFC Bank to rectify First Lot subvention reversal, provide statement of dues as per HC's interpretation. RBI/Ministry to reimburse HDFC Bank for corrected First Lot subvention.
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IBC

• NCLAT Confirms Operational Creditor's Application Valid; Debt Acknowledgment Extends Limitation Period Under IBC.

  Case-Laws - AT : The NCLAT rejected the preliminary objections raised by the Corporate Debtor that the application u/s 9 filed by the Operational Creditor was barred by limitation. It held that the last payment was made on 26.08.2019, which was within three years, and there was an acknowledgment by the Corporate Debtor in writing reflected in the reply to the demand notice. As both conditions u/s 19 of the Limitation Act were fulfilled, the Operational Creditor was entitled to the benefit of extension of limitation. Consequently, the Section 9 application was well within the limitation period. The NCLAT dismissed the appeal.
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• NCLAT Upholds Insolvency Process for Guarantor: Debt Acknowledged, No Repayment Evidence, Appeal Dismissed.

  Case-Laws - AT : The NCLAT held that the application for initiating the IRP against the personal guarantor u/s 95 of IBC was admissible. The guarantor acknowledged the debt and did not deny liability or furnish evidence of repayment as required u/s 99(2). The bank served a demand notice, and the application was filed after expiry of 14 days as per procedure. The RP's independent verification and report confirming the default was critical. The appeal was dismissed.
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Indian Laws

• Limitation Period for Arbitral Award Objections Begins Upon Awareness, Not Formal Notice, Rules Supreme Court of India.

  Case-Laws - SC : The SC held that the limitation period for filing objections to an arbitral award under Article 119(b) of the Limitation Act, 1963 commences from the date the parties become aware of the existence of the award, not necessarily from the formal notice of filing. The respondents were aware of the award's filing on 21.09.2022 when the District Court directed them to clear fees for furnishing the award. Hence, the limitation expired on 20.10.2022, rendering the appellant's application u/s 17 on 10.11.2022 valid. The parties must scrutinize the award upon becoming aware of its accessibility, and the formal notice date of 18.11.2022 held no significance. The appeal was allowed.
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• Supreme Court overturns decision granting extra cross-examination time, citing misuse of supervisory jurisdiction.

  Case-Laws - SC : The SC held that the HC has incorrectly exercised its supervisory jurisdiction under Article 227 in granting the respondent/claimant one more opportunity to cross-examine the appellant/respondent's witness, despite the Arbitral Tribunal rejecting such a prayer. The Tribunal had given full opportunity to all parties, and the respondent/claimant had already cross-examined the witness for over 12 hours. The SC observed that interference under Articles 226/227 is permissible only if the order is completely perverse, and the HC's order lacked justification in interfering with the Tribunal's directions. Consequently, the appeal was allowed.
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VAT

• Tax Liability Upheld for Goods Seized in Transit Due to Improper Documentation; Civil Revision Dismissed.

  Case-Laws - HC : HC dismissed civil revision u/s 86 of Rajasthan Sales Tax Act, 1994. Exercising jurisdiction u/s 22A, HC held that as per Explanation II, "goods in transport" means goods handed over to carrier but not delivered. Since none of 5 consignees confirmed purchase and one filed complaint against petitioner, goods were in transit at time of seizure, covered u/s 22A. Proper documentation essential to avoid penalties. Civil revision dismissed.
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Case Laws:

• GST

• 2025 (1) TMI 300
  Relaxation of the eligibility criteria for the appointment of a Technical Member (State) in the State Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) in Himachal Pradesh - HELD THAT:- Interim order to continue till the next date. List on 27.02.2025.

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• 2025 (1) TMI 299
  Legality, validity and propriety of notification Nos. 13/2022, dated 05.07.2022, 9 and 56/2023, dated 31.03.2023 and 28.12.2023, respectively - Extension of maximum period of limitation prescribed under Section 73 (10) of the GST Act - repeated extensions given in purported exercise of Section 168A of the GST Act are arbitrary and violative of Article 14 of the Constitution or not - HELD THAT:- A plain reading of Section 168A makes it clear that it gives power to the Government to the extend time limit in special circumstances . The provision begins with a non-obstante clause and provides that on the recommendation of the Council, the time limit specified in or prescribed or notified under this Act can be extended. It is noteworthy that the time limit can be extended in respect of actions which cannot be completed or complied with due to force majeure . Sub-section (2) of Section 168A enables the Government to issue notification with retrospective effect. The explanation defines the expression force majeure . In the instant case, it is not in dispute that COVID-19 Pandemic falls within the ambit of force majeure . The contention of the petitioners is that the letter of the Home Department to Chief Secretaries issued on 22.03.2022 shows that COVID-19 Pandemic came to an end on 23.02.2022 and therefore restrictions imposed under the Disaster Management Act, 2005 were decided to be lifted. Thus, when impugned notifications were issued, the Pandemic was no more there and therefore force majeure conditions are not satisfied. The argument on the first blush appears to be attractive, but, lost much of its shine when minutely examined in the light of language employed in Section 168A of the GST Act. Section 168A in no uncertain terms makes it clear that the time limit can be extended in respect of actions which could not be completed or complied with, due to force majeure. The purpose behind using the phrase on the recommendation of Council is to equip the Government with the expert opinion of an expert constitutional body i.e., GST Council. This enables the Government to take an informed decision based on such opinion of Council. Since all the States have participation in the Council, the recommendation of Council will certainly be in consonance with doctrine of cooperative federalism. The decision of Government on such recommendation in the shape of notification will certainly has serious impact on taxpayers. Section 73 (10) prescribes period of three years from due date for issuing order and Section 75 (10) is pregnant with a deeming clause that if order is not passed within three years as per Section 73 (10) the proceeding shall be deemed to be concluded. Hence, notification extending time limit issued under Section 168A can impact the tax payer for the purpose of conclusion of proceedings as per conjoint reading of Section 73 (10) and 75 (10) of the GST Act. Conclusion - The validity of most notifications extending limitation periods under Section 168A upheld. The words in respect of actions are very wide and bring within its ambit the previous actions of COVID-19 period, which could not be completed or complied with, due to force majeure. These Writ Petitions are accordingly disposed of by reserving liberty to the petitioners to avail the remedy of statutory appeal.

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• 2025 (1) TMI 298
  Direction to respondents to hear the petitioner and allow him to tender his explanation or in the alternative to permit the petitioner to file appeal by extending 15 days time over and above the period granted in amnesty for filing of the appeal after providing correct credentials to the petitioner - HELD THAT:- The respondents have filed the response. The respondents, in the response, though denying the allegations, however, have submitted that the petitioner has liberty to claim new login and password on the GST Portal provided he is willing to file the appeal. Taking into consideration the averments made in Para 12 of the response filed by the respondents that the petitioner can claim new login and password on the GST Portal, provided he is willing to file the appeal, the present writ petition is disposed off by permitting the petitioner to apply afresh with the respondents within the period of 15 days from today for issuance of login ID and password and after the same is granted, the petitioner shall be at liberty to prefer an appeal within 15 days and in the event, such appeal is filed, the respondents shall consider the same in accordance within law. Petition disposed off.

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• 2025 (1) TMI 297
  Rejection of application of the petitioner (co-owner) for cancellation of the GST registration granted to the respondent no.5 (another co-owner) - petitioner argues that in terms of clause(c) of the requirement extracted above, apart from the consent letter, other documents such as Municipal Khata or Electricity Bill was required and in the absence of the consent letter, sole reliance on the electricity bill, was wrongly admitted to be the sufficient requirement of the Rules. HELD THAT:- The said contention of the counsel for the petitioner deserves to be rejected for the sole reason that the issue would be governed by clause (a), which prescribes that a document in support of the ownership of the premises is required in case of the owner, there is no mention of the resident being sole owner. Petition dismissed.

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• 2025 (1) TMI 296
  Rejection of request of the petitioner to allow re-credit of the amount of tax paid by the petitioner on reversed charged basis as recipient of royalty services from the Government - Section 142 (3) of the Central Goods and Sales Tax (CGST) Act, 2017 would not come to the rescue of the petitioner or not - HELD THAT:- Although the petitioner was not entitled to cash refund under Section 142 (3) of CGST Act, 2017, the petitioner is entitled to recredit by virtue of the aforesaid Order. The respondent is directed to allow the petitioner to take recredit of the amount paid by the petitioner on reverse charge basis belatedly on 30.12.2017 as the Input Tax Credit in its Electronic Credit Ledger. Petition allowed.

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• 2025 (1) TMI 295
  Challenge to Notice dated 11.08.2022 - SCN without jurisdiction - ultra vires the provisions of Sections 66B read with 65B(44) of the Finance Act, 1994 or not - violation of fundamental rights and protections secured to the Petitioners under Article 14, 265 and 300A of the Constitution of India - HELD THAT:- From a perusal of the recital which appears therein, it would appear that the respondents had taken the position that the compensation which had come to be awarded by the Arbitral Tribunal in favour of the writ petitioner would be exigible to tax under the 1994 Act. The arbitral proceedings culminated in an Award dated 11 May 2017 which came to be rendered in favour of the writ petitioner and against the Delhi Metro Rail Corporation. The validity of that Award came to be assailed in a petition under Section 34 of the Arbitration and Conciliation Act, 1996 and which came to be dismissed by a learned Single Judge of this Court on 06 March 2018. However, the appeal under Section 37, which came to be preferred by DMRC, thereafter came to be partly allowed by a Division Bench of this Court in DELHI METRO RAIL CORPORATION LTD. VERSUS DELHI AIRPORT METRO EXPRESS PRIVATE LIMITED [ 2019 (1) TMI 2058 - DELHI HIGH COURT] . Conclusion - The very foundation of the SCN and which had proceeded on the basis of the compensation which had come to be awarded to the writ petitioner under that Award, no longer survives. Petition allowed.

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• 2025 (1) TMI 294
  Condonation of delay of eight days in filing the appeal - Seeking quashing of order dated 06.08.2024 passed by the Appellate Authority dismissing the appeal as time barred - Appellate Authority has dismissed the appeal without providing an opportunity of hearing - violation of principles of natural justice - HELD THAT:- From perusal of the Appellate order it is forthcoming that the limitation was counted from the date of the order. There is no finding recorded with regard to the date of communication of order to the petitioner. As per Section 107(1) of the CGST Act the limitation shall start running from communication of the order. The impugned orders are set aside and the matter is remitted back to the Appellate Authority to decide the appeal in accordance with law after providing an opportunity of hearing. Petition allowed by way of remand.

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• 2025 (1) TMI 293
  Direction upon the respondents to forthwith disburse the remaining amount of sanctioned refund along with applicable rate of interest for delayed disbursement of claim of refund - HELD THAT:- The CGST authorities cannot be permitted to retain or hold back the amount which has been directed to be refunded in terms of the refund sanction order dated 25th September, 2019 - the respondent no.2 directed to forthwith take steps for issuance of payment advice in favour of the petitioner. Petition disposed off.

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• 2025 (1) TMI 292
  Challenge to SCN - Cancellation of GST registration of petitioner - client is ready and willing to pay the tax, interest, late fee, penalty and any other sum required to be paid - HELD THAT:- Reliance placed in the case of M/s. Mohanty Enterprises [ 2022 (11) TMI 1521 - ORISSA HIGH COURT] where it was held that In that view of the matter, the delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc., due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. . Petition disposed off.

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• 2025 (1) TMI 291
  Seeking to issue a direction and declare section 16 (4) of the Central Goods and Services Act, 2017 as ultra vires - Imposition of time limit for the availment of Input Tax Credit being violative of Article 14, Article 19(1) (g) and Article 300 A of the Constitution of India and also being violative of the basic structure of the Central Goods and Services Tax Act, 2017 - direction to declare the amendment carried under Rule 61 (5) of the Central Goods and Services Rules, 2017 inserted vide Notification 49/2019-CT dated 09.10.2019 as ultra vires under which GSTR-3B - HELD THAT:- The questions which were involved in the present writ applications has been considered by the G.S.T. Council Meeting and there is a recommendation made by 53rd G.S.T. Council Meeting on 22nd of June, 2024, wherein the G.S.T. Council has taken note of the claim made in the present writ applications. Consequent thereon, the recommendation of the G.S.T. Council has to be given due weightage in accordance with law, as a result of which, these writ applications stand disposed of in view of the recommendations of 53rd G.S.T. Council Meeting and, if any, other matter remaining for consideration, it is open to the petitioners to pursue the remedy in accordance with law before the appropriate Forum. Application disposed off.

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• 2025 (1) TMI 290
  Dismissal of appeal filed against a penalty imposed, on detention under Section 129 of the Bihar Goods and Services Tax Act, 2017 and the finding of attempt to evade tax - HELD THAT:- In the present case, admittedly, the petitioner has paid the entire penalty. In such circumstances, though there is a procedural irregularity in Annexure-9/A having not shown the amount under dispute, it is opined that the appeal has to be entertained. Annexure-9 set aside only on the technical reasons - the appeal will stand restored before the first Appellate Authority which shall consider the same on merits after affording an opportunity of hearing to the petitioner.

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• Income Tax

• 2025 (1) TMI 289
  Validity of Reopening of assessment - case of the petitioner is not selected for scrutiny for the year under consideration - scope of amended provisions of the Income Tax Act - delay filling SLP - As decided by HC [ 2024 (4) TMI 1214 - GUJARAT HIGH COURT] on same material only because the year under consideration being A.Y. 2018-19 no scrutiny assessment is undertaken by AO and this being a new regime of reassessment after 1st April, 2021, no different treatment can be given for reopening only because the scope is enlarged by the amended provisions for reopening - when the earlier assessment years which are subjected to reopening for which the notice is already quashed on the same material, there cannot be a reopening for the year under consideration - HELD THAT:- There is a gross delay of 123 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioner. Even otherwise, we see no reason to interfere with the impugned order passed by the High Court. Special Leave Petition is, accordingly, dismissed on the ground of delay as well as merits.

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• 2025 (1) TMI 288
  Jurisdiction of Income Tax Officer, Barotiwala road, Baddi to issue notice u/s 143(2) r/w Section 142 (1) and finalize the assessment of the appellant/petitioner without transferring his case file u/s 127 - transfer of jurisdiction from the Income Tax Officer at New Delhi to the Income Tax Officer at Baddi - Validity of best judgment assessments made u/s 144 in the absence of compliance with Section 127 - HELD THAT:- The twin conditions to be complied with by the respondents for transferring the case of the appellant/petitioner from respondent No.4 to respondent No.5 are: (i) the assessee should have been given a reasonable opportunity of being heard and (ii) the reasons for transfer should have been recorded. Admittedly, the above procedure has not at all been complied with and the only explanation offered for the same is that Section 127 was not attracted to the instant case as it was respondent No.5 alone, who had the authority to issue notices u/s 143(2) r/w Section 142 (1) of the Act. A valuable right of assessee is clearly involved in the matter, when he objected to jurisdiction of the assessing officer and transfer of his case, which obviously could not have been adjudicated upon without affording an opportunity of hearing and disclosing to him the reasons for not accepting his point of view. Accordingly, we find merit in both the appeal as well as writ petition. Consequently, the impugned order(s) framing the best judgment assessment for the respective assessment years are quashed and set aside. However, this judgment shall not prevent the respondents for initiating proceedings afresh by either resorting to Section 127 of the Act or by initiating or continuing the proceedings through respondent No.4.

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• 2025 (1) TMI 287
  Contribution made by a corporate employer towards fund for payment of leave encashment to its employees disallowed as deduction from profit and loss account under the Act - HELD THAT:- The amount of contribution made by the assessee towards the fund for payment of leave encashment to its employees qualifies to be deductible as expenses, subject, however, to the conditions imposed under Section 43-B of the Act. The proviso to Section 43-B of the Act deals with any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-Section (1) of Section 139 of the Act, in respect of the previous year in which, the liability to pay such sum was incurred and instance of such payment is furnished by the assessee along with such return. The argument raised on behalf of the assessee deserves to be rejected for the reason that the proviso to Section 43-B relates only to that liability as was incurred by actual payment of the sum in the previous accounting year, which in the instant case is 2001-02. Thus, exception carved out by the aforesaid proviso only derives the limitation from end of accounting year to the date of submission of return as per Section 139 (1). As per Section 43-B only that sum payable by the assessee as an employer in lieu of any leave at the credit of his employees shall be allowed as deduction where firstly the liability to pay such sum was incurred by the assessee according to method of accounting regularly employed by him and secondly the sum was actually paid by the employer in the previous accounting year. Whether the assessee in the instant case had incurred the liability to pay a sum to its employees for the previous year in which such sum is actually paid ? - In Excide Industry Ltd [ 2020 (4) TMI 792 - SUPREME COURT] had the occasion to adjudicate the constitutional validity of Section 43-B (f) of the Act and one of the grounds of such challenge was that the proviso had been incorporated to undo the effect of judgment passed by the Hon ble Supreme Court in Bhart Earth Movers [ 2000 (8) TMI 4 - SUPREME COURT] While rejecting the challenge on said ground it has been held that the judgment in Bharat Earth Movers was rendered keeping in view the then applicable statutory regime. Adhering to the constitutional validity of Section 43-B (f), the Hon ble Supreme Court held that the said provision will apply prospectively meaning thereby that the period prior to period of enactment of Section 43-B (f), would be governed by the law laid down in Bharat Earth Movers. In view of such exposition, the assessee cannot derive any benefit from the verdict in Bhart Earth Movers, as he has to independently tackle the obstacles raised by incorporation of Section 43-B (f) w.e.f. 1.4.2002. It will also be gainful to reproduce Excide Industries Ltd case [ 2020 (4) TMI 792 - SUPREME COURT] to support our view that the liability incurred by the assessee did not qualify the requirement of Section 43-B(f) of the Act and hence were rightly disallowed by the revenue.

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• 2025 (1) TMI 286
  Reopening of assessment - denial of claim u/s 10B - allegations of under-invoicing exports as well as illegality in carrying the mining activities by the petitioner - HELD THAT:- We find that the claim u/s 10B was restored to the file of the CIT(A) by an order of the Tribunal [ 2015 (9) TMI 1437 - ITAT PANAJI ] CIT(A) was directed to examine the same in the light of the letter dated 17.07.2014 from respondent no. 1. In our opinion, as the proceedings are still pending on the file of the CIT(A), we find force in the submission of present petitioners as squarely covered by the decision of this Court in Sesa Sterlite Limited [ 2024 (9) TMI 1061 - BOMBAY HIGH COURT ] We, therefore, have no hesitation in allowing these petitions in view of the third proviso to Section 147 of the Act. Assessee appeal allowed.

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• 2025 (1) TMI 285
  Addition of Long Term Capital Gain Without allowing deduction for indexed cost and exemption u/s 54B - HELD THAT:- As decided in order passed by CIT(A) in the hands of the co-owner A.O. has added total sale consideration without giving effect of the indexed cost of acquisition of the said property. The appellant has submitted the sale deed, valuation report, proof of agricultural activity. In view of the above documents and the remand furnished by the AO, it is held that the appellant is entitled to get benefit of the indexed cost of acquisition while computing the capital gain arose with regard to sale of the aforementioned property - Decided in favour of assessee. Addition u/s 68 - investment in purchase of immovable property unexplained - HELD THAT:- As assessee has furnished various details in support of the loan the name of the parties, their address, their return of income, confirmation of the parties, extract of the relevant passbook to show the creditworthiness of the parties etc. Accordingly, we are of the considered view that the assessee has been able to discharge the onus regarding the source from Shri Devraj Harshadrai Patel and Ms. Reshmaben Vikrambhai Patel and accordingly addition is not liable to be sustained in the hands of the assessee u/s 68 of the Act. Addition u/s 69 - unexplained investment - HELD THAT:- The assessee has been able to duly explain the source of investment in the aforesaid property and accordingly, we are of the view that the balance investment of Rs. 32.96 lakhs has been that explained by the assessee - addition is not liable to be sustained as unexplained investment in the hands of the assessee u/s 69 since the assessee has duly explained source of investment in purchase of immovable property, as having been sourced out of sale of immovable property, during the impugned year under consideration. Unexplained sundry creditors - HELD THAT:- We observe that the assessee had furnished various details of parties viz. their names, addresses, PAN numbers, copy of confirmation, banks statement, ITR-V of all the parties and the relevant bank statement. Accordingly, in light of the elaborate supporting documents produced by the assessee, we find no infirmity in the order of CIT(A) in granting relief to the assessee by holding that the assessee has been able to prove the genuineness and creditworthiness of the lenders. Accordingly, we find no infirmity in the order of Ld. CIT(A) so as to call for any interference.

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• 2025 (1) TMI 284
  Delay of 503 days in filing the appeal before the CIT (A) - cause of delay as the order passed by the CPC u/s 143(1) as well as u/s 154 were not received by the assessee, despite repeated efforts and only on 14/10/2023 the said order passed u/s 154 was supplied to the assessee - HELD THAT:- Prima facie, it appears that the CPC has made addition on account of the amount of Rs. 50.00 lakhs received by the assessee against which TDS u/s 194C was deducted. In the subsequent year, the said amount was refunded by the assessee to the payer which is duly reflected in the bank account statement of the assessee. Therefore, if the assessee s case is not examined on merit, it would result in gross injustice for assessing the income which was not earned by the assessee. Accordingly, when the reasons explained by the assessee are not disputed by the Department that the impugned orders of the CPC passed u/s 143(1) as well as u/s 154 of the I.T. Act, 1961 were not served on the assessee physically and the assessee has explained that he could not even receive these orders digitally, then we find that the assessee has explained a sufficient cause for the delay in filing the appeal before the learned CIT (A). Accordingly, in the facts and circumstances of the case and in the interest of justice, we condone the delay of 503 days in filing the appeal before the learned CIT (A). Matter is hereby remanded to the record of the AO to verify the fact regarding the receipt of the said amount as well as refund of the same by the assessee. Appeal of the assessee is allowed for statistical purposes.

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• 2025 (1) TMI 283
  Reopening of assessment u/s 147 - mere change of opinion - deduction claimed u/s 80IA - HELD THAT:- AO re-computed the income under the normal provision of the Act. During the original assessment the assessing company has produced the relevant documents and filed the details of deduction claimed u/s 80IA. Perusal of the original assessment order reveals that the assessee company has disclosed all the material facts fully and truly at the time of the original assessment proceedings and the Assessing officer was well aware about the primary facts and the deduction claimed u/s 80IA of the Act. In the re-assessment proceedings no new material was provided by the assessee, the re-assessment cannot be re-opened merely because subsequently the assessing officer changes his opinion. Because the assessee company has furnished full and truly particulars at the time of original assessment and the assessing officer applied his mind to the material and accepted the view canvassed by the assessee, then mere change of opinion the assessment cannot be re-opened - Re-opening of assessment of the assessee company is bad in law and liable to be quashed. Appeal of the assessee is allowed.

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• 2025 (1) TMI 282
  Reopening of assessment u/s 147 - addition u/s 69 - assessee did not comply to the notices issued - HELD THAT:- In the appellant proceedings before CIT(A), three opportunities of hearing were provided which remained unattended. Due to non-prosecution of appeal and failure to support the grounds of appeal by corroborative submissions, the appeal was dismissed. Before us, the appellant was provided four opportunities of hearing. The assessee did not respond to the calls and reminders of his Counsel. He also did not respond to the notices issued by us nor any written submission was made. Thus, we find that assessee has no material to support the grounds raised by him; otherwise, there was no reason for the silence of the assessee before the AO, CIT(A) and the Tribunal. In absence of explanation regarding nature and source of investment, the addition u/s 69 of the Act by the AO, which has been confirmed by CIT(A), does not require any interference. Hence, the grounds are dismissed.

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• 2025 (1) TMI 281
  Reassessment proceedings initiated u/s 147 - violation of the principles of natural justice due to the lack of opportunity for cross-examination - unexplained investment u/s 69 - HELD THAT:- Admittedly the materials that were relied on by the assessing officer to make addition in the hands of the assessee were not provided to the assessee and the statements of the persons that was recorded were not subjected to cross objection to the assessee. Subsequently for assessee obtains a retraction statement of those individuals who were subjected to search, will not lead to the presumption that assessee was already aware of the statement recorded. Rejection of deeply is totally untenable. It is a bounden duty of the assessing authority to provide the materials that has been used against assessee to make addition in the hands of such assessee. There is nothing other than the statement recorded of the partner and the accountant of methods evergreen Enterprises in the possession of the revenue to justify the addition made in the hands of the assessee it is also noted that no further enquiries has been carried out by the AO to unearth any other circumstantial evidence is to support the statements that was relied upon to make addition in the hands of the assessee. It is no doubt a settled rule that the CIT(A) or the assessing officer is not bound by the technical rules of the Law of Evidence and that, it is open to them to collect materials, record statements etc, to facilitate an assessment even through private enquiry. But if the assessing officer desires to use such materials/statements against the assessee, the assessee must be informed of the material and must be given adequate opportunity to explain the same. Reassessment order passed in the present facts of the case is in violation of principles of natural justice, and deserves to be quashed. Assessee appeal allowed.

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• 2025 (1) TMI 280
  Penalty u/s 271(1)(c) - disallowance of additional depreciation claimed by the assessee on plant and machinery and leasehold improvements - AO noted that assessee claimed depreciation on cost of machinery after September, 2005 (i.e., in second half of the year) and claimed additional depreciation @20% on machinery - HELD THAT:- We find that both the disallowances were made on the basis of details furnished by assessee. Admittedly all details were available on record. Merely the assessee could not substantiate its claim would not lead to a conclusion that the assessee furnished inaccurate particulars of income. Even otherwise, it is a debatable issue and no penalty is leviable on debatable issue. Apex Court in the case of Reliance Petro Products Ltd [ 2010 (3) TMI 80 - SUPREME COURT] held that the words used u/s 271(1)(c) are plain and simple, and unless the case of the assessee is strictly covered by words in this provision, no penalty can be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing in accurate particulars. Merely because the assessee claimed deduction of interest expenditure has not been accepted by the revenue, penalty under section 271(1)(c) is not attracted. If the contention of the revenue is accepted, the assessee would be liable to penalty under section 271(1)(c) in every case where the claim made by the assessee is not accepted by the AO for any reason. Appeal of the assessee is allowed.

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• 2025 (1) TMI 279
  Penalty levied u/s 271(1)(c) - chargeability of Short-Term Capital Gains (STCG) on sales of shares of an entity - HELD THAT:- The assessee has earned Long Term Capital Gains as well as Short Term Capital Gains (STCG) on these transactions. Initially, an assessment was framed wherein STCG was computed at Rs. 52.10 Crores raising tax demand of Rs. 479.08 Lacs. The order was rectified and the STCG were recomputed and corresponding tax demand was reduced to Rs. 283.75 Lacs in rectification order passed u/s 154 on 31-03-2016. The matter reached up-to Tribunal wherein the matter was restored back to the file of AO for re-computation of capital gains since there was error in the computation of STCG. Pursuant to the same, another assessment order was passed on 31-12-2018 wherein STCG has been re-computed at Rs. 40.33 Crores and finally, tax demand of Rs. 1.45 Crores has been raised against the assessee which has thus attained finality. The primary liability to compute correct taxes was on assessee and the assessee could not absolve himself by shifting this burden to the remitter banker. Even otherwise if this argument was to be accepted, it would be pertinent to note that the assessee has never reflected aforesaid transactions in Income Tax Returns. Even assuming that the banker had deducted due taxes, still the assessee was obligated to reflect this income in the return of income. Having not done so, the argument thus raised by Ld. AR could not be accepted. We order so. Though it has been submitted that the assessee has settled the final tax liability and paid due taxes forthwith as finally determined by Ld. AO, no evidence thereof has been adduced before us to support the same - CIT(A) has deleted the penalty merely by extracting observations of Hon ble Supreme Court in the case of Hindustan Steels Ltd [ 1969 (8) TMI 31 - SUPREME COURT] - The arguments as well as case laws being put before us by revenue as well as by AR have nowhere been considered by first appellate authority. No finding has been rendered on the alternative submissions made by the assessee. We deem it fit to set aside the impugned order and restore the issue of levy of penalty back to the file of Ld. CIT(A) for de novo adjudication.

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• 2025 (1) TMI 278
  Education cess applicability to DTAA between India and the USA - assessee is citizen of USA and residing permanently in India - assessee submitted that the rates as specified in DTAA include surcharge and surtax and education cess would be applicable only for income earned in India - CIT(A) has denied the claim on the ground that the assessee has claimed relief u/s 90 - HELD THAT:- Tax rates are computed first and thereafter, applicable relief is granted to the assessee. As per Article 2(1)(b)(i) (ii) of India-USA DTAA, surcharge and surtax are included in the maximum rates as specified under Articles 10 and 11 of DTAA. Therefore, when Article-2 states that surcharge is included in Income Tax and the Tax Rate as prescribed under Article 10 / 11 shall be deemed to include tax surcharge and since cess is nothing but an additional surcharge, the prescribed tax rates under DTAA shall be deemed to include the cess also. In the decision of The BOC Group Ltd. [ 2016 (1) TMI 414 - ITAT KOLKATA] it was held that surcharge and education cess is not leviable when the tax rates are prescribed under DTAA. Similar is the decision of M/s M. Far Hotels Ltd. [ 2013 (4) TMI 339 - ITAT COCHIN] and Motiani [ 2013 (12) TMI 1105 - ITAT MUMBAI] No contrary decision has been shown to us. Accordingly, we hold that the tax rates as prescribed under DTAA would embed education cess as well. The CPC is directed to re-compute the tax liability of the assessee.

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• 2025 (1) TMI 277
  Penalty u/s 271B - non compliance to provision of Sec. 44AB - assessee claims that due to honest and bonafide belief and under the impression that they are not required to file return of Income u/s 139 of the Act along with the tax audit report couldn t filed the ROI audit report within the due date. HELD THAT:- Assessee submitted that even the internal auditors from the co-operative department also not appraised the management about the matter. It is only after getting the notice u/s 142(1) assessee sought opinion from a professional who advised them to get their accounts audited and file return of income at the earliest. Acting upon immediately, they appointed a CA firm to carry out the tax audit and file their return of income which were ultimately filed on 13/03/2018. Reading of the relevant provisions of 273B r.w.s. 271B and r/w Section 44AB we are of the considered opinion that assessee demonstrated that there was a reasonable cause for the said failure as per the provisions contained in section 273B of the Act. We are also of the opinion that an honest belief founded upon reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinary prudent and cautious man, placed in the position of the person concerned, to come to the conclusion that the same was the right thing to do. Our above view finds support from the various decisions cited by the assessee. From the conduct, behavior and attitude of the assessee, it is clear that as soon as notice u/s 142(1) was served on the assessee, the assessee sought opinion from a professional who advised them to get their accounts audited and file return of income at the earliest. Immediately on advice, they appointed a CA firm to carry out the tax audit and file their return of income which was ultimately filed on 13/03/2018. As the assessee society s total income after deduction u/s 80P of the Act was NIL and hence, they on an honest and bonafide belief and under the impression that they are not required to file return of Income u/s 139 of the Act along with the tax audit report cannot be said to be without a reasonable cause within the meaning of Section 273B. Assessee appeal allowed.

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• 2025 (1) TMI 276
  Imposition of tax and penalty under Black Money Act - Effective date of implementation of Black Money Act, 2015 - AY 2014-15 AY 2015-16 - HELD THAT:- The first previous year under the provisions of Black Money Act, 2015 would be FY 2015-16 and the corresponding AY will be AY 2016-17. Therefore, the AO could not have assessed the income of the assessee for AYs 2014-15 and 2015-16. Similarly, there would not have any jurisdiction to impose penalty for AYs 2014-15 and 2015-16 before coming into force the Black Money Act, 2015. Assessee was not supposed to comply the provisions of Black Money Act, 2015, before it has come into force and, therefore, the assessee cannot be held liable for non-compliance of any provisions of the Black Money Act, 2015 in relation to AY 2014-15 and 2015- 16 and penalty levied u/s. 41 43 of the Black Money Act, 2015 and would also be not sustainable for AY 2014-15 and AY 2015-16. Therefore, there is no force in the appeals of the revenue relating to action of the Ld. CIT(A) in deleting the tax imposed u/s. 10 of the Black Money Act, 2015 and penalty levied u/s. 41 43 of the Black Money Act, 2015 for AYs 2014-15 and 2015- 16. Non-Retirement Fund (NRF) held by the assessee - dividend income reinvested in the NRF - AY: 2016-17 - AO calculated the equivalent currency in Indian value of the undisclosed foreign income at Rs. 1,95,537/- and imposed tax @ 30% - HELD THAT:- Undisclosed foreign income and asset are to be assessed by the AO under the Black Money Act, 2015 in the year in which it has come to the knowledge of the AO. Admittedly, there was no undisclosed asset of the assessee in the foreign country. Regarding the dividend income earned on the NRF fund, the plea of the Ld. AR of the assessee is that the same would not fall in the definition of income as the assessee had invested in a fund, wherein, the dividend, if any, earned on such fund would automatically form part of the fund and was not separately taxable. The assessment year 2016-17 was the first year when the Black Money Act, 2015 came into force. The foreign income earned by the assessee was taxable, otherwise, in that country.. The tax on the said dividend income was withheld as per the USA Tax Law as such dividend income formed part of the investment/fund itself. The Ld. Counsel in this respect has explained that the Black Money Act, 2015 had come into force for the first time in AY 2016-17 only and that the provisions of the Black Money Act, 2015 were not so clear and it was not ascertainable as to whether the dividend earned by the assessee on the fund, which had become part of the investment fund, itself, was required to be disclosed in the return of income filed u/s. 139 of the Act. As per the provisions of section 3 of the Act, the undisclosed asset was to be taxed in the year in which the information regarding the same comes to the knowledge of the AO which of course came to his knowledge in November, 2018, relevant to AY 2019-20. No infirmity in the order of the Ld. CIT(A) in deleting the impugned addition made by the AO. This appeal of the revenue is accordingly, dismissed. Penalty imposed u/s. 41 of the Black Money Act, 2015 on the addition made u/s. 10(3) of the Black Money Act, 2015 on account of foreign income assessed deleted as we have upheld the order of the Ld. CIT(A) in quashing the assessment and, therefore, by deleting the addition made by the AO u/s. 10 of the Black Money Act, 2015. Penalty levied u/s. 43 of the Black Money Act, 2015 - the assessee s foreign assets and foreign income during the year, which the assessee had not disclosed in the income tax return filed u/s. 139(1) of the Act, were of the value, which was more than Rs. 5,00,000/- - CIT(A) deleted penalty observing that the AO has not properly dealt with the issue and the order passed by the AO u/s. 10(3) of the Act did not indicate on which basis the decision has been reached that the assessee had undisclosed foreign income/asset - HELD THAT:- Provisions of section 43 do not suggest that the aforesaid penalty is mandatory, rather, as per the provisions, AO may direct that such person shall pay, by way of penalty, a sum of Rs. 10 lakhs . It has been held time and again that the word may also include may not . Since this was the first year of the implementation of the Black Money Act, there was no undisclosed assets of the assessee, the assets in question have been earned by the assessee from known sources of income (salary) and due taxes paid thereupon as per USA Tax Laws and not taxes were payable by the assessee on such assets in India and further that the provisions of Black Money Act, 2015 were new and it was very difficult even for tax Practitioners, what to say of the ordinary assessees, who are not conversant with such complicated provisions to differentiate between the assets and undisclosed assets. Hence, the procedural lapse occurred on the part of the assessee was not intentional rather the assessee has been caught unawares of such lapse. Under the circumstances, in our view, the Ld. CIT(A), considering the overall facts and circumstances of the case was justified in deleting the impugned penalty. Appeals of the revenue are hereby dismissed.

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• 2025 (1) TMI 275
  Unexplained money u/s 69A - reliance on third party statement - Whether the statement/document made by/received from third party can be relied on making the addition, without giving an opportunity to contradict the same and/or the opportunity to cross examine the person who gave the statement/document? - HELD THAT:- The statement/document made by/received from third party cannot be relied on making the addition, without giving an opportunity to contradict the same and/or the opportunity to cross examine the person who gave the statement/document. Thus, the question no. 1 is answered accordingly. Suo-moto disclosure made before the Settlement Commission made base for making the addition - As decided in Smt. Renu Sehgal [ 2019 (8) TMI 990 - ITAT JAIPUR] has ultimately held that addition made merely on the basis of suo-moto disclosure made by the Assessee before the ITSC, is not sustainable in the eyes of law. Therefore on the aforesaid analyzations and discussions, we are of the considered view that the suo-moto disclosure made before the Settlement Commission without corroborative material/evidence cannot be made base for making the addition. Hence the question no.2 is answered accordingly. In the present case admittedly except a letter filed before the DCIT, Central Circle-6(4)/Settlement Commission; there is no other corroborative material/documents for making and sustaining the addition in hand. Even otherwise, no opportunity was given by the AO or the Commissioner to the Assessee to cross examine the person who gave the statement/made disclosure/issued the letter as relied on for making the addition. Hence, the addition in hand is unsustainable, hence the same is deleted. Decided in favour of assessee.

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• 2025 (1) TMI 274
  Addition of notional interest on the interest free advances - chargeability to tax founded on real income or not? - undisclosed interest income on short term Loans and Advances - HELD THAT:- No justification for adding any notional interest on the interest free advances as the assessee had ample interest free funds out of which such advances were made for business purposes. In the case of S.A. BuildeRs [ 2006 (12) TMI 82 - SUPREME COURT] even interest paid on borrowings was allowed as a deduction if the same were advanced for business purposes. There is merit in the arguments of the assessee that only real income which had accrued to it could be assessed and no income could be presumed to have been earned in the absence of any evidence. Even in the case of the three debtors whose replies have been considered by the Ld. AO, no evidence could be ascertained by him that any interest was payable or paid by them to the assessee and the amounts had been reduced from the total advances for calculating the notional interest. The observation of the Ld. AO confirmed by the Ld. CIT(A) that the assessee had paid 9% interest on the funds borrowed is also not borne out of analysis of the facts of the case as reported in the balance sheet and audited accounts and no interest was debited during the year while calculating its income. No justification for presuming notional interest on the amounts advanced merely because replies were not received from the debtors, though the assessee counters that argument by stating that confirmations/replies from eight of the debtors comprising 69.56% of the total advances in value were uploaded. Hence no income could be presumed nor any disallowance out of interest debited could be made when the assessee had not claimed any interest as a deduction. Decided in favour of assessee.

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• 2025 (1) TMI 273
  Unexplained cash found during search over and above the income surrendered by the assessee u/s 132(4) - CIT(A) held the addition will lead to double addition - HELD THAT:- Assessee has categorically admitted in the statement recorded u/s 132(4) that the advance is part of the surrendered income of Rs. 9.00 Crores in the relevant year. The probability of stating truth in the statement recorded u/s 132(4) is always more for usual reasons. Prima-facie, the statement recorded u/s 132(4) of the act has to be considered true and complete unless proved otherwise. Since the Revenue has not brought any material on the record to contradict the finding of the CIT(A) and the inference emerged from the statement recorded under section 132(4) therefore, we are of the considered view that there is no need to interfere with the findings of the Ld. CIT(A). Consequentially, the Quantum appeal filed by the Revenue stands dismissed. Penalty @ 30% u/s 271AAB(1)(a) - assessee surrendered the income during the course of search proceedings - non specification of clear charge - as per revenue assessee did not fulfill the terms and conditions laid down under section 271AAB(1)(a) and the assessee has also not divulged the source and manner of earning such income - HELD THAT:- As no specific charge has been mentioned in the penalty notice issued u/s 271AAB following the decision in the case of Jaina Marketing Associates [ 2024 (3) TMI 1007 - ITAT DELHI] we delete the penalty imposed by the AO on the technical ground. Merely issuing notice in general proforma will negate the very purpose of natural justice. Hon ble Apex Court in the case of Dilip N Shrof [ 2007 (5) TMI 198 - SUPREME COURT ] held that the quasi-criminal proceedings u/s 271(1)(c) ought to comply with the principles of natural justice - Decided in favour of assessee.

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• 2025 (1) TMI 272
  Income recognition - mercantile system of accounting - interest income liable to be taxed on accrual basis or not? - CIT(a) deleting the addition and accepting the income of the assessee as per its audited annual report ignoring the assessee is following the mercantile system of accounting - HELD THAT:- RGPPL and KLNG has settled the loan as per the one time settlement scheme (OTS) pursuant to the Hon ble NCLAT order and the assessee has received part of the principal and interest component even before the settlement was effected. CIT(A) has accepted the assessee s contentions that it has not received any principal or interest subsequent to the settlement of loan post the order of Hon ble NCLAT. CIT(A) held that AO s contentions that the assessee has not followed a consistent method for revenue recognition is also negated for the reason that due to the uncertainty that prevailed because of the Hon ble NCLAT proceeding in the case of RGPPL, application of AS-9 is justified where the revenue recognition is based on the actual interest received during the year under consideration which is NIL during the impugned year. To corroborate further the assessee being a government entity is subjected to statutory audit by Comptroller and Auditor General of India (CAG) along with supplementary audit which has approved the revenue recognition adopted by the assessee in considering AS-9 to be appropriate in case of uncertainties arising subsequent to preparation of the balance sheet. Assessee relied on the decision of M/s. MMTC Ltd. [ 2024 (2) TMI 785 - ITAT DELHI] to substantiate that Accounting Standard AS-9 on revenue recognition issued by ICAI in case of uncertainty is most appropriate. It is also pertinent to point out that the ld. AO has also not brought on record any fact to establish that the assessee has received the impugned amount during the year under consideration in his remand report. The revenue has nothing to controvert assessee s contentions. Decided in favour of assessee.

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• 2025 (1) TMI 258
  Estimation of income - Bogus purchases - result declared by the assessee in their return of income relied upon - AO Determined the commission from the alleged bogus parties relating to purchases and sales and made the addition - HELD THAT:- AO should have either rejected the books of account and determined the actual profit earned by the assessee. He chose to proceed with the result declared by the assessee in their return of income and also proceeded to make the presumed commission income which assessee must have paid and received. We are not able to understand that the AO has retained the returned income as per the ROI and also made the commission income on top of the retuned income. Strictly speaking he has to determine the actual income earned by the assessee not on the basis of presumption. In that case, he has to rework the actual income earned by the assessee. As discussed above, the AO may have to reduce the bogus purchases and sales to the extent it is booked in the financial statements and must have added the commission income which is the payment presumed to have been made. The net result would have been lesser than the retuned income AO has already proved that the purchases and sales as bogus based on the material found during the search and has already chose to treat them as bogus and cannot play hot and cold. As discussed above, he has to determine the actual income earned by the assessee and can charge to tax only the actual returned income. It is allowed to make penalties as per the law and cannot presume or make additional income as the income of the assessee without their being actually earned by the assessee. It is different if the AO has not come to conclusion that the transactions are not genuine. Therefore, after considering the factual matrix on this case, we are of the view that the gross taxable income cannot be less than the returned income filed by the assessee u/s 139(1) of the Act. In our view, the addition made by the Assessing Officer of commission and the elimination of bogus purchases and sales will reduce the taxable income. Therefore, we are inclined to delete the additions made by the Assessing Officer - Decided in favour of assessee.

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• Customs

• 2025 (1) TMI 271
  Release of empty containers of Petitioner within a time frame to be fixed by this Hon ble Court - charging ground rent, storage, handling or related charges from the Petitioners while releasing the empty containers to the Petitioner - HELD THAT:- It appears that the petitioner is only an intermediary of procuring containers and giving the same on lease to the consignees and it is for the consignees to get the material released and in absence thereof the Custom Authority may take appropriate action in accordance with law. The petitioner is not at loss as the petitioner is entitled to recover the dues of higher charges and other charges which may be payable for using the containers by the consignees in accordance with law. The prayers made in this petition cannot be granted while exercising extra ordinary jurisdiction under Article 226 of the Constitution of India. Petition dismissed.

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• 2025 (1) TMI 270
  Seeking rectification of mistake - Re-determination of value of polyester carpets - confiscation - redemption fine - penalty - HELD THAT:- The original authority (Joint Commissioner ) confiscated both the carpets and threading bars and allowed their redemption on payment of Rs. 30,00,000/- under section 125 of the Customs Act, 1962 [The Act]. He also imposed penalty of Rs.7,00,000/- under section 114(iii) of the Act. In the impugned order, the Commissioner (Appeals) upheld the confiscation of carpets but set aside the confiscation of the threading bars. He reduced redemption fine to Rs. 1,00,000/- and penalty under section 114 (iii) also to Rs.1,00,000/-. In the Final Order, this Tribunal reversed the reduction of redemption fine and penalty with respect to carpets but did not specify by how much these have been enhanced. It is not possible to infer it from the order of the original authority because he did not give a breakup of how much was the redemption fine for the carpets and how much was for threading bars. Similarly, he did not indicate how much was the fine under section 114(iii) for the carpets and how much was for threading bars. It is found that the market value of the carpets as per the order in original was Rs.99,38,300/-. As per section 125 the redemption fine cannot exceed the market value of the goods but no minimum amount of fine is prescribed. Similarly section 114 (iii) provides for imposition of penalty not exceeding the value of the goods as declared by the exporter or the value as determined under this Act whichever is greater. No minimum penalty has been prescribed. Conclusion - Errors apparent on the record must be rectified to ensure clarity and compliance with legal standards. It also establishes that fines and penalties should be proportionate to the market value of the goods and within the statutory limits. Appeal allowed in part.

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• 2025 (1) TMI 269
  Classification of imported goods - Metal Core Printed Circuit Boards (MCPCBs) - whether these MCPCBs should be classified under Customs Tariff Heading (CTH) 85340000 as standard Printed Circuit Boards (PCBs) or under CTH 94054090 as parts of LED lamps, which carry different duty implications? - HELD THAT:- Department has relied heavily on the IGST Notification 1/2007-I.T(rate) dated 28.06.2017 to decide the classification of the MCPCB cannot be accepted as the same was for the specific purpose of inter-State supply of goods. This cannot supplant the responsibility of the assessing officer under Section 12 of the Customs Act, 1962 to determine the classification of goods. The issue arising out of the present dispute is no more res integra in view of various orders passed by this Tribunal on identical set of facts. Since the Tribunal has taken the view that the product in question i.e., MCPCB should be classifiable under Tariff Item 8534 0000, different view cannot be taken to sustain classification of the same goods under Tariff Item 9405 9900, as claimed by the Revenue. Conclusion - MCPCBs should be classified under CTH 8534. There are no merits in the impugned appeal - appeal dismissed.

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• 2025 (1) TMI 268
  Classification of imported goods - Composite Long Rod Insulators - to be classified under Chapter Tariff Heading 85469090 of Customs Tariff? - benefit of the concessional rate of duty under Notification No. 12/2012-Cus. - extended period of limitation. HELD THAT:- This matter can be disposed of on limitation without entering into the issue on merit. The appellant have filed the bill of entry on 9-2-2017 and declared the goods correctly as per the document i.e. Composite Long Rod Insulators, therefore, there is no mis-declaration. The issue was only of interpretation of the words composite and polymer , the word composite was used whether the goods imported falls under the description i.e. Polymer Long Rod Insulators as appearing in the Notification. Therefore, the issue involved is clearly an interpretation of the entry provided under the Notification - The appellant have very strong prima facie case on merit also as decided by the adjudicating authority. There is no change of circumstances from date of filing of bill of entry till the issue of show cause notice, therefore, nothing prevented the department to issue show cause notice within the normal period from the date of filing of bill of entry i.e. 9-2-2017. Therefore, there is no reason for invoking the extended period upto three years, when there is no change in the facts of the case. In the similar type of facts in various judgments, the Hon ble Supreme Court has taken a view that the extended period cannot be invoked - Relaince can be placed in Northern Plastic Ltd. v. Commissioner [ 1998 (7) TMI 91 - SUPREME COURT] where it was held that the appellant had not misdeclared the imported goods either by making a wrong declaration as regards the classification of the goods or by claiming benefit of the exemption notifications which have been found not applicable to the imported goods. We are also of the view that the declarations in the Bill of Entry were not made with any dishonest intention of evading payment of customs and countervailing duty. Conclusion - The extended period for demand under the Customs Act requires clear evidence of suppression or intent to evade duty, not merely an interpretative dispute. The show cause notice issued after almost three years is clearly barred by limitation. Appeal allowed.

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• 2025 (1) TMI 267
  Classification of imported goods - Telematics Control Unit (TCU) - to be classified under the Customs Tariff Heading 8517 62 90 of the First Schedule of the Customs Tariff Act, 1975 or not - eleigibility to avail concessional rate of Basic Customs Duty under Sl. No. 666 of the N/N. 69/2011-Customs, dated 29-7-2011. Classification of goods - HELD THAT:- Classification of goods covered under the Customs Tariff is done as per the General Rules of Interpretation ( GRI ). GRI 1 to 5 lay down the principles determining classification of goods under a specific Heading whereas GRI 6 is applicable if the objective is to determine the classification of goods in the Sub-headings of a Heading. The Larger Bench of the Hon ble Tribunal in the matter of Saurashtra Chemical, Porbandar v. Collector of Customs [ 1985 (8) TMI 183 - CEGAT, NEW DELHI-LB ] had held that the tariffs must be interpreted in the light of relevant Section and Chapter Notes which are statutorily binding like the Headings themselves. It appears that CTH 8517 covers such apparatus which is used in transmission and reception of data and wherein the data is transmitted by way of electromagnetic waves in a wireless network. As discussed in Annexure 1 of this application, where the subject good provides for transmission and reception of data in the RF form in the wireless network, by application of the GRI Rule 1 and considering the HSN explanatory notes, the subject good appears to merit classification under CTH 8517 at four-digit level. It is apparent that all the electrical machinery or equipment covered under Chapter 85 are not regarded as parts or accessories of motor vehicles classifiable under Chapter 87, as they stand excluded from the purview of Section XVII. Applicability of the benefit of the notification - HELD THAT:- The benefit provided under the notification is subject to the condition that the goods being imported from Japan should be originating in Japan and the provisions laid down in Customs Tariff (Determination of Origin of Goods under the Comprehensive Economic Partnership Agreement between the Republic of India and Japan) Rules, 2011 are complied with. So long as the imported goods are rightly classifiable under CTH 8517 62 90 and are originating in Japan, the Applicant is eligible to avail concessional duty benefit @ 0% BCD. Conclusion - The subject goods i.e. Telematics Control Unit (TCU) is rightly classifiable under Customs Tariff Heading (CTH ) 8517and more specifically under 8517 62 90 - The applicant is eligible to avail concessional rate of Basic Customs Duty on import of the subject goods as per SI. No. 666 of Notification No 69/2011 - Customs, dated 29-7-2011.

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• Insolvency & Bankruptcy

• 2025 (1) TMI 266
  Rejection of preliminary objections raised by the Corporate Debtor that application under Section 9 filed by the Operational Creditor is barred by time - HELD THAT:- It is an admitted fact between the parties that invoices were raised from January, 2018 to August 2018. The copy of ledger has also been brought on the record which indicates that payments were made by the Corporate Debtor from time to time. As per ledger, last payment was received by the Operational Creditor on 26.08.2019 through bank receipt. The only question which needs consideration is as to whether the Operational Creditor was entitled for the benefit of Section 19 of the Limitation Act to enable it to seek extension of time from 26.08.2019 i.e. the last date of receipt of the payment. The Adjudicating Authority has treated the date of default as 26.08.2019 which is a date of the last payment receipt. In the present case, last payment was admittedly made on 26.08.2019 i.e. within the period of three years and there is also acknowledgment by the Corporate Debtor in writing which is reflected from the reply to demand notice. When there is clear acknowledgment by the corporate debtor of last payment made on 26.08.2019 which payment was within the period of three years, the operational creditor was clearly entitled for the benefit of extension of limitation under Section 19 of the Limitation Act and both the conditions which are required to be fulfilled under Section 19 were fulfilled. There are no error in the order of the Adjudicating Authority rejecting the objection of the corporate debtor that application under Section 9 was barred by time. Giving the benefit of last date of payment on 26.08.2019, the application was well within limitation. Conclusion - Section 9 application was not barred by limitation, as the acknowledgment of the last payment extended the limitation period. Appeal is dismissed.

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• 2025 (1) TMI 265
  Seeking approval of the resolution plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 ( the Code ) read with Regulation 39 (4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- It is satisfied that all the requirements of Section 30 (2) of the Code are fulfilled and no provision of the law appears to have been contravened. Section 30(6) of the Code enjoins the Resolution Professional to submit the Resolution Plan as approved by the CoC to the Adjudicating Authority. Section 31 of the Code deals with the approval of the Resolution Plan by the Authority if it is satisfied that the Resolution Plan, as approved by the CoC under section 30(4), meets the requirements provided under section 30(2) of the Code. Thus, it is the duty of the Adjudicating Authority to satisfy itself that the Resolution Plan, as approved by the CoC, meets the above requirements. In K Sashidhar v. Indian Overseas Bank Others [ 2019 (2) TMI 1043 - SUPREME COURT] the Hon ble Apex Court held that if the CoC has approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan, as approved by the CoC, meets the requirements specified in Section 30(2). The Hon ble Apex Court further observed that the role of the NCLT is no more and no less . The Hon ble Apex Court further held that the discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan as approved by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matters specified in Section 30(2) when the Resolution Plan does not conform to the stated requirements. The Hon ble Supreme Court in the matter of Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited [ 2021 (4) TMI 613 - SUPREME COURT] held that on the date of the approval of the Resolution Plan by the Adjudicating Authority, all such claims which are not a part of the Resolution Plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim which is not a part of the Resolution Plan. Conclusion - The instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A), and 39 (4) of the Regulations. The Resolution Plan is also not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law. Application allowed.

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• 2025 (1) TMI 264
  Admissibility of application - initiation of the Insolvency Resolution Process (IRP) against the personal guarantor u/s 95 of IBC - HELD THAT:- There is no dispute that the Appellant stood as a guarantor for the loan availed by the CD. A supplementary deed of guarantee was executed on 05.09.2017. There is also no dispute that the CD has already been admitted into CIRP. The Respondent Bank has proceeded in accordance with law by filing the application under Section 95 through the RP appointed by it. The Respondent served a demand notice dated 25.08.2020 on the Appellant about the unpaid debts of the CD in terms of Rule 7(1) of the Rules and evidence has been led that the said notice was duly delivered to the Appellant on 19.09.2020 to which there is no response to deny its liability. The application under Section 95 was filed after the expiry of 14 days after the date of service of demand notice and was duly served upon the Appellant who did not file any response. The judgment relied upon by the Appellant in the case of Mr. Ravi Ajit Kulkarni [ 2021 (9) TMI 60 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] may be of some help to the Appellant had the RP not given independent finding in its report dated 23.07.2021 which is already reproduced in the earlier part of this order, for a quick reference, in which it has been categorically said that in the virtual meeting organized on 19.06.2021, the Appellant acknowledged the existence of debt and stated that he has not made any payment in capacity of guarantor towards the debt due by the CD of the Respondent Bank Section 99(2) provides that the debtor has to prove repayment of the debt claimed as unpaid by the creditor by furnishing evidence of electronic transfer of the unpaid amount from the bank account of the debtor, evidence of encashment of a cheque issued by the debtor or a signed acknowledgment by the creditor accepting receipt of dues whereas in the present case the Appellant categorically denied to have made payment which was sufficient to hold that there is a default. Conclusion - The procedural compliance with Section 95 and the independent verification by the RP are critical for admitting insolvency applications against personal guarantors. Appeal dismissed.

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• FEMA

• 2025 (1) TMI 263
  Interpretation of the RBI s Master Circular on Rupee/Foreign Currency Export Credit Customer Service to Exporters ( Master Circular ) - Banking Ombudsman dismissed the Petitioners grievance against the very same interpretation that had been taken by HDFC Bank Limited (Respondent No. 4, HDFC Bank ) - according to HDFC Bank, since the Subvention Scheme provides Government-sponsored discount only to export credit , the exporter would not be entitled to any benefit of the Subvention Scheme where the advance ceases to be export credit ab initio - exports actually having been effected within 450 days HELD THAT:- In our opinion, the Master Circular and the Subvention Scheme, are both instruments of law that seek to implement the stated economic policy objectives. When such instruments fall for interpretation, they ought to be read purposively, contextually, and in a manner that has due regard to the text as well as context, without inflicting violence on the policy objective. Master Circular on Export Credit - The Master Circular is explicit in terms of its purpose and objective. The Master Circular seeks to make short-term working capital finance available to exporters at internationally comparable interest rates . The crux of the Master Circular is that export credit at competitive interest rates must be made available to exporters in the form of short-term working capital. The very same Master Circular requires banks to keep a close watch on the end-use of funds advanced and to ensure that the credit supplied at special rates under the Master Circular are genuinely used for the purposes of exports. Crux of the Master Circular is that the maximum period of the export credit would be 360 days (extended to 450 days); one of the multiple means of liquidating it may be used; and the exports so financed would need to be performed within 360 days (extended to 450 days). Within such period, if the exports financed have indeed materialised, banks may purchase the export bills or discount the export bills, and thereby adhere to the period, simply converting the pre-shipment credit into a post-shipment credit (which is also another form of export credit ). So also, if the exports did not materialise at all in 360 days, the credit extended to the exporter would have to be charged interest at the domestic lending rate and not at the special rate applicable to exports, for the entire period of the credit. First Lot - We hold that the advances that financed the exports forming part of the First Lot clearly constitute export credit and are fully eligible for the subvention under the Subvention Scheme. Any subsequent period of the credit before its redemption i.e. the period of delay in submission of the export documents after the expiry of the maximum period of export credit, would be the period for which the Borrower enjoyed subvention despite the expiry of the maximum permissible period under the Master Circular. The Subvention Scheme is very clear that the subvention would be available only until the date on which the export credit becomes overdue. Reversal of any subvention for such period of delay would be a natural requirement, and we hold that HDFC Bank s first reaction on October 4, 2021 i.e. of reversing the subvention only for such delayed period was the correct approach that would get support under the Master Circular. HDFC Bank must compute the precise period of delay under each of the underlying exports and charge and effect the reversal of the subvention only for such period of delay insofar as export credit that financed the First Lot is concerned. Second Lot - The application of the domestic lending rate along with penal interest can only come into effect, if exports do not materialise at all within 450 days. The special rate applicable to export credit, and the benefits flowing from the Subvention Scheme would not be available to the Borrower in relation to the Second Lot. In any case, HDFC Bank had cash collateral in the form of the fixed deposits for the entire amount, and on the instructions of the Borrower, the cash collateral was to be liquidated and the loan was to be closed out. Any effect of the subvention becoming inapplicable would indeed need to be charged to the Borrower. It was the subvention reversal on the First Lot that led to a mismatch of figures between the two parties. Consequently, we are of the opinion that just as the subvention ought to be made available to the Borrower in relation to the First Lot, HDFC Bank was justified in reversing the subvention amount applicable to the exports underlying the Second Lot. We are unable to agree with Mr. Sridharan, who moulded his argument to submit that as and when the export eventually took place, at least the subvention for the first 450 days ought to be available. Principle for Drawing a Line - The controversy is only about whether the export documents should be submitted within 450 days and whether the exports should materialize within 450 days. We have articulated above that in our view, considering the objective of the Master Circular, the core requirement is for exports to have materialised within 450 days and the export documents evidencing the same ought to be submitted. If the export documents, even if submitted later, demonstrate that the exports indeed took place within 450 days, the fact that they were filed a few days late would not be fatal. One would be compelled to hold that the First Lot reasonably falls on the right side of the line. However, where not only have the exports not taken place at all within 450 days, but also the exporter himself has foreclosed the export credit within the 450-day period stating that it is unlikely to be completed within the period, we have no hesitation in holding that Second Lot does not reasonably fall on the right side of the line. Conclusions and Directions - a) The Master Circular is required to be read purposively, and is to be implemented in letter and spirit, in a manner that does not undermine its very objective and reason for introduction. It must not be read in a narrow, technical and literal sense and that too with one of its many provisions being read in a manner that undermines its objective; b) The maximum tenure of pre-shipment credit under the Master Circular is 360 days (extended to 450 days during the Covid-19 pandemic) and exports have to materialise within such period; c) If exports materialise within such period and export documents demonstrate that the exports have materialised, the credit advanced to the exporter would indeed not be disqualified for being treated as export credit , merely on the ground that the export documents that prove the timely materialisation of exports were submitted late; d) The period of delay in submission of export documents would not be fatal to the treatment of the advances as export credit what is vital is that the export documents ought to prove that exports took place within the stipulated period; e) The credit enjoyed after the maximum permissible period of export credit i.e. during the period of the delay in submitting the export documents, would attract interest at the normal interest rate along with penal interest in terms of the bank s policy (published pursuant to the Master Circular); f) If exports did not materialise within the stipulated period (360 days, extended to 450 days), for purposes of the Master Circular, it would be treated as exports not materialising at all. In such event, the very purpose of providing short-term working capital to finance successful exports would be undermined if the credit extended were to be treated as export credit despite exports not having materialised. Therefore, the credit advanced ought not to be treated as export credit ; g) Consequently, subvention would be available to the Borrower in respect of the finance provided in relation to the First Lot; h) Subvention would not be available to the Borrower in respect of the finance provided in relation to the Second Lot; i) HDFC Bank shall rectify the reversal of the subvention pertaining to the First Lot within a period of four weeks from the date this judgement is uploaded on this Court s official website; j) Consequently, the RBI and the Ministry of Commerce and Industry shall reimburse HDFC Bank with the funds that correspond to the subvention reversal in relation to the First Lot having been corrected as above; k) HDFC Bank shall within a period of four weeks from today, provide to the Borrower, a detailed statement of account and the computation of the manner in which it has worked out the dues owed and owing between them, in accordance with the declaration of the law in this judgement; l) There shall be no change to the reversal of subvention in relation to the advances made in connection with the Second Lot.

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• CST, VAT & Sales Tax

• 2025 (1) TMI 262
  Civil revision under Section 86 of the Rajasthan Sales Tax Act, 1994 challenging the order of Rajasthan Tax Board - exercise of jurisdiction under Section 22 A of the Rajasthan Sales Tax Act - HELD THAT:- Evidently, explanation II of Section 22 A of the Rajasthan Sales Tax Act, 1954, makes it abundantly clear that goods in transport means goods which have been handed over to a carrier and complete delivery thereof has not taken from such carrier. In the case on hand, none of the five asserted consignee claimed that in fact they had purchased the goods as claimed by the petitioner. The addressee Satyam Enterprises gone to the extent of making complaint against act of the petitioner. Therefore, at the time of seizure, the goods was with the carrier as such was in transit and covered by the explanation of Section 22A. Conclusion - The goods are considered in transit until delivery is confirmed by the consignee, and proper documentation is essential to avoid penalties. This Court does not find any merit in this Civil Revision. Accordingly, this Civil Revision stands dismissed.

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• 2025 (1) TMI 261
  Maintainability of appeal - requirement of 7.5% pre-deposit as a condition for appeal can be waived or interfered with by the court - HELD THAT:- It is clear from Manoranjan Chakraborty [ 2000 (11) TMI 1079 - SUPREME COURT] that the provisions were upheld by the Supreme Court. So much so, there was no exercise of power under article 142 in the Constitution to do complete justice, to permit the respondent to pay any lesser amount than 50%. Nevertheless, the Court said, it was clear that if gross injustice is done and it can be shown for good reason Court should interfere then notwithstanding alternative remedy, a writ Court can in an appropriate case exercise its jurisdiction to do substantive justice. Conclusion - Statutory pre-deposit requirements are generally binding unless gross injustice is clearly demonstrated. Petition disposed off.

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• Indian Laws

• 2025 (1) TMI 260
  Relevant time for filing an application - whether the time for filing a Section 17 application commences when the party seeking to challenge the award receives a formal notice (18.11.2022) of the making of the award, or from the date such party is aware of the existence of the award? - HELD THAT:- The respondents had notice of filing of the award due to the order dated 21.09.2022, wherein the District Court had directed the respondents to hand over the balance fee to the arbitrators, following which the award shall be furnished. The respondents were completely aware of this direction, which sufficiently states that clearing the fees will result in the court notifying the filing of award. The limitation for filing objections to the award is 30 days, and is governed by Article 119(b) of the First Schedule to the Limitation Act, 1963. The trigger for the limitation to start running specified therein is the date of service of notice of the filing of the award. Section 14(2) of the 1940 Act requires that the court of relevant jurisdiction should give notice to the concerned parties when an award is filed. While Art. 119(b) of the Limitation Act requires that there be a service of notice for the limitation to start running, Section 14(2) of the 1940 Act merely states that court give notice to the parties. The precise form of what constitutes as a notice of filing the award is unspecified. However, interpreted reasonably, what must be required is that the parties come to know about the existence of the award so that any objections to it may be filed. What appears from the usage of the word notice is that the parties merely reach a state of awareness about the award and plan their next steps accordingly, and not the imposition of another procedural step. The District Court and the High Court fell into error that the limitation for filing objections was still running when the appellant filed an application under Section 17 of the Act on 10.11.2022. The formal date of notice of filing of the award on the respondents, that is, 18.11.2022 holds no significance as they were made sufficiently aware of the award s filing on 21.09.2022 itself. The court directing the respondents to clear the fees was a clear intimation about its filing. Holding otherwise would not only be departing from precedents of this Court, but also allowing the respondents to take advantage of their own inaction. Hence, the limitation is to be treated as expired on 20.10.2022, and the appellant s application seeking pronouncement of judgment in terms of the award was valid and well beyond the period for filing objections to the award. Conclusion - The parties have to take steps to scrutinise the award themselves as soon as it becomes accessible and they are aware of its accessibility. The limitation period was deemed to have started on 21.09.2022, making the appellant s application under Section 17 timely and valid. Appeal allowed.

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• 2025 (1) TMI 259
  Principles of natural justice - whether the High Court has correctly exercised its supervisory jurisdiction under Article 227 in granting the respondent/claimant one more opportunity to crossexamine appellant/respondent s witness, despite the Arbitral Tribunal rejecting such a prayer? - HELD THAT:- Section 11 application was allowed by the High Court on 08.05.2023 leading to the constitution of the Tribunal which held the first hearing on 19.05.2023. It is evident that the cross-examination of the appellant/respondent s witness RW-1 commenced on 09.12.2023 when the respondent/claimant s counsel asked 9 questions on that very day and the cross was adjourned for 10.02.2024. On 10.02.2024, the record shows that the crossexamination commenced at 11 am and concluded by 7 pm during which time the respondent/claimant s counsel asked as many as 104 questions to the said witness. After a long lapse of almost 8 months, during which period the mandate of the Arbitral Tribunal was exhausted, the cross-examination commenced on 01.10.2024. Even on that day the cross-examination was commenced at 5.35 pm and concluded at 7.40 pm, which is more than two hours. The Arbitral Tribunal seems to have given full opportunity to all parties, which is amply evident from the record. On the other hand, the unrestrained cross-examination of RW-1 by the respondent/claimant has already exceeded 12 hours, but the respondent/claimant does not seem to be satisfied with it. Even as per the quote hereinabove interference under Article 226/227 is permissible only if the order is completely perverse i.e. that the perversity must stare in the face. Condition (vi) to (x) underscores the reason why High Courts ought not to interfere with orders passed by the Arbitral Tribunals for more than one reason. Conclusion - There are no justification in the order passed by the High Court in interfering with the directions of the Arbitral Tribunal holding that full and sufficient opportunity to cross-examine RW-1 has already been given and no further extension of time is warranted. Appeal allowed.

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