TMI Tax Updates - e-Newsletter
February 15, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy Service Tax Central Excise

Articles

1. Royalty is not a tax but a contractual payment

   By: Bimal jain

2. Exporting Goods from India to Nepal

   By: Tushar Malik

3. Proposed an amendment in Section 17(d) in GST act.

   By: Jasbir Uppal

4. RECENT AMENDMENTS TO CORPORATE INSOLVENCY RESOLUTION PROCESS REGULATIONS

   By: DR.MARIAPPAN GOVINDARAJAN

5. Maximizing Export Incentives under GST, FTP and Customs Law: A Comprehensive Guide

   By: Pradeep Reddy

6. Deemed Exports under GST and Foreign Trade Policy

   By: Pradeep Reddy

7. Inventory of Existing Chemical Substances Produced or Imported in China (IECSC) and its' impact on Indian Exporters.

   By: YAGAY andSUN

8. Forklifts – Compliances & Guidelines under various Laws.

   By: YAGAY andSUN

9. IPR Enforcement Toolkit for Police

   By: YAGAY andSUN

10. Regulations on Dark Patterns

   By: YAGAY andSUN

News

1. Disruptions in Parliament over US deportations, Waqf panel report in first part of Budget Session

2. J-K CM holds consultations with public representatives ahead of Budget Session

3. MCD presents Rs 17,000 crore budget, sanitation receives highest allocation

4. India cuts customs duty on bourbon whiskey to 50 pc

5. Unity is essential for progress, Karnataka 'lodestar' of India's economic growth: Tharoor

6. DPIIT partners with Rukam Capital and Bootstrap Incubation to boost India’s startup ecosystem

7. Public Sector General Insurance Companies(PSGICs)- Achieve Strong Financial Turnaround, become profitable again

8. Trump signs plan for reciprocal tariffs on US trading partners, ushering in economic uncertainty

9. I-T Bill powers taxmen to override computers, virtual digital space access codes in search, seizure

10. 'Mandatory to consider twin conditions for bail in PMLA cases': SC sets aside HC order

11. 2.78 lakh tonnes of soymeal exported from India in January

Notifications

Customs

1. 14/2025 - dated 13-2-2025 - Cus

Seeks to amend Notification 11/2021-Customs dated 01.02.2021 to amend AIDC rate (Agriculture Infrastructure and Development Cess) on Bourbon whiskey

GST - States

2. F.No. 3240/CTD/GST/2025/6 - dated 20-1-2025 - Puducherry SGST

Extend the due date for furnishing FORM GSTR-8 for the month of December, 2024

3. F.No. 3240/CTD/GST/2025/5 - dated 20-1-2025 - Puducherry SGST

Extend the due date for furnishing FORM GSTR-7 for the month of December, 2024

4. F.No. 3240/CTD/GST/2025/4 - dated 20-1-2025 - Puducherry SGST

Extend the due date for furnishing FORM GSTR-6 for the month of December, 2024

5. F.No. 3240/CTD/GST/2025/3 - dated 20-1-2025 - Puducherry SGST

Extend the due date for furnishing FORM GSTR-5 for the month of December, 2024

6. F.No. 3240/CTD/GST/2025/2 - dated 20-1-2025 - Puducherry SGST

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

7. F. No. 3240/CTD/GST/2025/1 - dated 20-1-2025 - Puducherry SGST

Amendment in Notification No. 3240/CTD/GST/2024/1, dated the 18th April, 2024

8. G.O.Ms.No. 12 - dated 13-2-2025 - Telangana SGST

Amendment in Notification G.O.Ms No. 87, Revenue (CT-II) Department, Dated. 24-08-2024

9. 1665/XI-2–24-9(47)-17-T.C.-272-U.P. Act-1-2017-Order (335)-2024 - dated 8-1-2025 - Uttar Pradesh SGST

Notifies the special procedure for rectification of for Input Tax Credit Orders issued under Section 73, 74, 107, 108 which confirming demand for wrong availment of input tax credit

SEBI

10. FMRD.DIRD.14/14.03.042/2024-25 - dated 7-2-2025 - SEBI

Amendment in Notification No. S.O. 2192(E) dated 8th January, 2010 - To prevent undesirable speculation in securities in the whole of India

SEZ

11. S.O.736 (E) - dated 12-2-2025 - SEZ

Central Government re-notifies an area of 10.9368 hectares at Village Ognaj, Taluka Dascroi, District Ahmedabad in the State of Gujarat

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD/PoD1/CIR/P/2025/16 - dated 14-2-2025

Revised timelines for issuance of Consolidated Account Statement (CAS) by Depositories

2. SEBI/HO/AFD/PoD-1/P/CIR/2025/17 - dated 14-2-2025

Relaxation in timelines for holding AIFs’ investments in dematerialised form

DGFT

3. Trade Notice No. 31/2024-25 - dated 13-2-2025

Guidelines for availing Import Authorisation for Import of Premium Frozen Duck Meat into India under ITC HS Code 0207 4200 & 0207 4500

Highlights / Catch Notes

GST

• Partnership Firm Wins Appeal Delay Condonation After Authority's Mechanical Rejection Due To Time Limitation Grounds

  Case-Laws - HC : HC condoned delay in filing appeal by small partnership firm, setting aside appellate authority's rejection. Court found appellate authority erroneously limited condonation to one-month period beyond prescribed time, contradicting precedent in S.K. Chakraborty case. Considering petitioner's bona fide intent and absence of deliberate delay, HC directed appellate authority to hear appeal on merits within eight weeks. Court emphasized appellate authority's failure to properly exercise jurisdiction in mechanically rejecting appeal on limitation grounds without adequately considering explanation for delay. Appeal to be heard after giving petitioners opportunity of hearing.
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• Tax Department Must Share Documents Requested by Assessee Before Proceeding with GST Notice Under Form DRC-01A

  Case-Laws - HC : HC addressed procedural challenge regarding timing of notice issued before expiry of response period to Form GSTR DRC-01A. While petitioner initially contested DRC-01A validity, scope narrowed to requesting underlying materials from authorities. Court affirmed petitioner's right to request documentation and raise jurisdictional objections in response to DRC-01A. Authorities directed to consider such requests per law, ensuring reasonable hearing opportunity. Notably, court preserved petitioner's right to raise all available defenses while maintaining procedural safeguards. Matter disposed with directive to authorities to process any subsequent requests in accordance with statutory provisions.
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Income Tax

• Validity of Assessment Order Under Section 147 Upheld as Range Head and CIT Properly Approved AO's Reasons

  Case-Laws - HC : HC upheld validity of assessment order under s.147 read with s.144B, finding proper approval under s.151. Court confirmed Range Head and CIT/PCIT had appropriately endorsed AO's recorded reasons for scrutiny notice under s.148. Review of computerized order details demonstrated requisite approvals obtained at each stage of faceless assessment. Finding no jurisdictional error, HC declined to exercise writ jurisdiction. Petitioner directed to pursue statutory appeal remedy for AY 2013-14, with time spent in writ proceedings eligible for consideration in any delay condonation application.
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• Transfer Pricing Adjustments Under US-India MAP Cannot Be Extended to Non-US Transactions Under Section 92C

  Case-Laws - HC : HC ruled that Transfer Pricing adjustments framework agreed under Mutual Agreement Procedure (MAP) between US and India cannot be applied to non-US transactions. The court emphasized that MAP resolutions are based on consensus between competent authorities of contracting states and cannot be extrapolated to transactions outside its scope. Arm's Length Price for non-US transactions must be determined under Section 92C and Rule 10B. The ITAT's direction to apply US MAP framework to non-US transactions was overturned as it effectively imposed a negotiated settlement where no consensus existed with other countries' tax authorities. The framework's application would improperly foreclose an assessee's right to dispute TP adjustments in materially different situations.
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• Reassessment Notice Under Section 148 Quashed: Lease Payments, Foreign Currency, and Goodwill Depreciation Claims Valid

  Case-Laws - HC : HC quashed reassessment notice under s.148 concerning lease payments, foreign currency transactions, and goodwill depreciation. Court found no valid grounds for reopening as lease transactions were consistently accepted since 2012-13, foreign currency claims were properly explained with unrealized gains/losses appropriately reflected in income computation, and goodwill depreciation claim was valid as s.43(6)(c) amendment denying such depreciation became effective only from 01.04.2021. AO's attempt to reopen assessment demonstrated mere change of opinion without fresh tangible material, failing to establish income escapement. Court held AO lacked jurisdiction to reopen assessment, ruling in assessee's favor.
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• Section 153A Additions Quashed: No Incriminating Evidence Found During Search, Invalid Approval Under 153D

  Case-Laws - AT : ITAT quashed additions made under section 153A for AY 2013-14 to 2015-16 due to absence of incriminating material found during search proceedings. The Tribunal emphasized that in unabated assessments, additions require supporting incriminating evidence discovered during search. Additionally, the approval granted under section 153D was deemed invalid as Additional CIT failed to demonstrate proper application of mind, merely providing symbolic approval without substantive review. The approval memo revealed delegation of statutory duty to subordinate AO, contrary to legal requirements. Following Abhisar Buildwell precedent, ITAT invalidated the assessment orders, holding them legally unsustainable due to procedural defects in both search-based additions and supervisory approval process.
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• Trust Income Taxable at Normal Rates Despite Undefined Trustee Shares Under Section 167B(1) of Income Tax Act

  Case-Laws - AT : ITAT determined that a registered charitable trust's income should be taxed at normal rates rather than maximum marginal rates, despite undefined trustee shares. While Sec 167B(1) mandates maximum marginal rates for associations of persons or bodies with indeterminate member shares, this applies only to non-company and non-cooperative society entities. The tribunal held that registered charitable trusts engaged in charitable activities per trust deed constitute a distinct category warranting normal tax treatment. The CIT(A)'s order was set aside, directing revenue authorities to recalculate tax liability using normal rates, providing relief to the appellant trust.
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• Section 68 Addition Upheld: Rs 78 Lakh Cash Deposits Unexplained, Presumptive Tax Relief Denied Due to High Turnover

  Case-Laws - AT : ITAT upheld addition under section 68 regarding unexplained cash deposits of Rs. 78,00,000/- as assessee failed to provide satisfactory explanation or supporting documentation despite opportunities from AO and CIT(A). Assessee's alternative plea to apply 8% presumptive taxation under section 44AD was rejected as turnover exceeded eligible threshold of Rs. 60 lakh. However, ITAT deleted AO's addition of 8% presumptive tax on remaining turnover of Rs. 28,14,676/-, accepting explanation that deposits originated from assessee's business profits and father's savings/business accruals. Tribunal found father's business history with turnover between Rs. 51-62 lakh made explanation plausible. Appeal partially allowed with respect to smaller cash deposits while maintaining primary addition under section 68.
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• Profit Margins Revised: 40% for Hotel Business and 13% for Real Estate Under Section 68 Tax Assessment

  Case-Laws - AT : ITAT modified profit margins for undisclosed income in hotel/restaurant and real estate businesses following search and seizure action. For hotel/restaurant operations, tribunal reduced profit margin from 50% to 40% based on historical book profits ranging from 31-47%. For real estate transactions, margin lowered from 17% to 13% considering actual profit ratios. Regarding unsecured loans under Section 68, ITAT reversed CIT(A)'s deletion and upheld AO's additions, citing absence of incriminating materials during search and applying Abhisar Buildwell precedent. Court emphasized that seized materials must be considered in totality, rejecting selective interpretation, and maintained that only real income can be taxed following Godhra Electricity principles.
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• Property Broker Avoids Section 271D Penalty as Intermediary Not Liable for Cash Transactions Above Legal Limit

  Case-Laws - AT : ITAT ruled against penalty under Section 271D for alleged violation of Section 269SS regarding cash transactions in property transfer. The Tribunal held that while Section 269SS applies broadly to property transfers beyond simple buy-sell transactions, it targets actual recipients of funds, not intermediaries. The appellant, acting as a broker, merely facilitated payments between principals and wasn't the true recipient. Additionally, ITAT found reasonable cause under Section 273B, noting the relevant amendment to Section 269SS occurred after the transaction date. The appellant's limited education and role as middleman demonstrated absence of malafide intent. The Tribunal directed deletion of penalty, allowing the appeal.
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• Tax Appeal Ex-parte Order Invalid: CIT(A) Failed To Provide Hearing And Reasoned Order Under Section 250(6)

  Case-Laws - AT : ITAT set aside CIT(A)'s ex-parte order for failing to comply with Section 250(6) requirements. The CIT(A) neither provided proper hearing opportunity nor issued a reasoned order addressing appeal grounds. Following judicial precedents establishing that appeals cannot be dismissed for non-prosecution and require speaking orders with substantive findings, ITAT remanded the matter back to CIT(A). The tribunal directed CIT(A) to pass a fresh speaking order after giving the assessee reasonable opportunity of being heard, considering submitted documents, and adjudicating all grounds of appeal in accordance with law and Rule 46A of Income Tax Rules. Appeal allowed for statistical purposes.
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• Tax Deductions Allowed For Bank's NPA Provisions, RBI Penalties And Interest On Perpetual Debt Instruments

  Case-Laws - AT : ITAT ruled favorably on multiple issues for the banking assessee. The tribunal allowed deduction under s.36(1)(viia) for NPA provisions, holding them equivalent to provisions for bad and doubtful debts. For s.14A disallowance, matter was remanded to examine administrative expenses allocation despite interest-free funds exceeding investments. Deduction under s.36(1)(vii) was permitted following prior precedent. RBI penalty payment was deemed allowable under s.37 as not being for legal infraction. Interest on Innovative Perpetual Debt Instruments (IPDI) qualified for deduction under s.36(1)(iii), recognizing these hybrid instruments as legitimate business borrowings despite their perpetual nature and discretionary payout features. The ruling primarily followed established banking sector precedents and emphasized substance over form.
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• Share Capital Additions Under Section 68 Rejected as Cash Credits Were Recorded in Previous Assessment Year

  Case-Laws - AT : ITAT ruled in favor of the appellant regarding share capital additions under Section 68. The tribunal found that since cash receipts and corresponding credits occurred in the previous assessment year, no additions could be made in the current year based on share allotment. For AY 2017-18, the issuance of 1,50,000 shares to A Co. was deemed legitimate as the company demonstrated sufficient operational revenue (Rs. 15.49 Cr), trading activities, and adequate shareholder funds. The shares were issued at the same premium rate as existing shareholders, supported by a Rule 11UA valuation report. The appellant satisfied all requirements under Section 68, establishing the nature and source of share capital. The appeal was allowed, reversing the AO's additions.
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Customs

• Customs Broker License Revocation Reversed After Proper Verification of Import Documents Under CBLR 2018 Rules 10

  Case-Laws - AT : CESTAT overturned the revocation of appellant's Customs Broker License and associated penalties. The Tribunal found no violations of CBLR 2018 Regulations 10(d), 10(m), and 10(n). The appellant had properly verified importer documentation, including genuine signatures validated by bank authorities. The importer's credentials (IEC, GSTIN, PAN) were legitimate, and the Customs Broker fulfilled verification duties within reasonable expectations. The Tribunal determined physical premises verification wasn't mandatory for every importer. The adjudicating authority's order lacked sufficient grounds to reject the Inquiry Officer's findings that cleared the appellant of misconduct. Consequently, license revocation and penalties were deemed unsustainable.
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• Stainless Steel Imports Before February 2017 Exempt From BIS Marking Under Quality Control Order 2016

  Case-Laws - AT : CESTAT ruled in favor of the appellant regarding BIS marking requirements on imported Stainless Steel products. The shipment occurred on January 13, 2017, before the Stainless Steel Products (Quality Control Order) 2016 came into effect on February 7, 2017. As per Foreign Trade Policy 2015-2020, import date is considered as the shipment date. The tribunal rejected the argument that prior knowledge of upcoming regulations created an obligation to affix BIS marks. Following precedent from Metro Bright Bar India case, CESTAT held that since shipment predated the Quality Control Order's implementation, BIS marking was not required. The confiscation, redemption fine, and penalties were set aside, and the appeal was allowed.
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• Light Green Float Glass with UV-Fluorescent Tin Layer Classified Under CTI 7005 10 10 for Customs Duty Exemption

  Case-Laws - AT : CESTAT ruled on classification dispute regarding Light Green Float Glass imports. The appellant sought classification under CTI 7005 10 10 of Customs Tariff Act, 1975, qualifying for basic customs duty exemption under 01.06.2011 notification. Examining test reports from CSIR Kolkata confirming presence of absorbent layer on tin side (fluorescent under UV illumination), CESTAT upheld previous Commissioner (Appeals) order classifying goods under CTI 7005 10 10. The Tribunal determined that goods satisfied conditions of Note 2(c) of Chapter 70, rejecting department's contention for classification under CTI 7005 21 10. Appeal dismissed, confirming classification under CTI 7005 10 10 with applicable duty exemption benefits.
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IBC

• MSME's Pre-Packaged Insolvency Resolution Process upheld despite delayed filing under Section 54C of IBC

  Case-Laws - AT : NCLAT upheld the admission of Pre-Packaged Insolvency Resolution Process (PPIRP) for the Corporate Debtor (CD), a registered MSME. While acknowledging that the Section 54C application was filed beyond the 14-day statutory period after the Section 7 application, the Tribunal determined it would not serve stakeholder interests to invalidate the completed resolution. The CD's resolution involved three consortium bank members, with SBI (47.21%), IDBI (26.70%), and Bank of Baroda (26.09%) vote shares. The Tribunal directed the Successful Resolution Applicant to pay any differential amount due to the dissenting financial creditor within 30 days, in accordance with Section 30(2)(b) of IBC. The resolution plan's implementation was maintained, prioritizing the special protection afforded to MSMEs under Chapter III-A of the IBC.
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• Financial Creditor's Project Monitoring Role Does Not Absolve Corporate Debtor From Payment Under IBC Section 7

  Case-Laws - AT : NCLAT upheld the admission of Section 7 application under IBC, confirming the existence of financial debt and default by corporate debtor. The tribunal rejected appellant's contention that Project Monitoring Committee (PMC) controlled by financial creditor was responsible for default. NCLAT emphasized that PMC's constitution to monitor project execution did not diminish corporate debtor's payment obligations. Following precedents in E.S. Krishnamurthy and Innoventive Industries, NCLAT confirmed Adjudicating Authority's jurisdiction was limited to determining debt existence and default occurrence. The appeal was dismissed as corporate debtor failed to honor repayment obligations despite acknowledging debt multiple times, satisfying Section 7 requirements for CIRP initiation.
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SEBI

• Company Gets 90-Day Extension for Stock Exchange Listing After Showing Valid Reasons for Previous Delays Under Article 226

  Case-Laws - HC : HC granted a 90-day extension to the Company for listing shares on the nationwide stock exchange, overriding SEBI's earlier orders. The ruling emphasized courts should adopt a liberal approach in time extension matters rather than a pedantic stance. The decision considered that no shareholders had raised grievances, and the Company provided reasonable explanations for previous delays, which SEBI and NSE had accepted until 30.09.2023. The extension was granted under Article 226, with the condition that failure to comply within the stipulated timeframe would result in reinstatement of SEBI's original orders. The judgment prioritized shareholder protection while balancing regulatory compliance requirements.
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Service Tax

• Service Tax Notice Quashed After 20-Year Delay in Adjudication Under Section 65(95)(ZZZA) of Finance Act

  Case-Laws - HC : HC quashed show cause notice due to unreasonable delay in adjudication spanning two decades. Department's internal CERA audit objection and conflicting views among Central Excise Officers led to prolonged inaction until January 2021. Court found petitioner had properly discharged service tax liability under works contract service per Section 65(95)(ZZZA) of Finance Act, 1994. Department's own Statement of Facts acknowledged disagreement with CERA audit findings. HC ordered refund of excess amounts deposited during investigation with 6% interest from payment date. Court affirmed petitioner's right to modify valuation method for service tax payment under Finance Act provisions.
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Central Excise

• Bank Guarantee Charges for VAT Refund on Exports Qualify as Input Services for CENVAT Credit Under Rule 2(l)

  Case-Laws - AT : CESTAT held banking charges paid for obtaining bank guarantee related to VAT refund on exported goods qualified as eligible input services for CENVAT credit. The services were found to satisfy both the 'means' and 'inclusion' parts of Rule 2(l) definition of input services, being connected to procurement of raw materials used in manufacturing. The Tribunal rejected the department's contention that services were not directly related to manufacturing, ruling that indirect connection through raw materials was sufficient. Extended period limitation and penalties were struck down as the matter involved interpretation of law. The appeal was allowed, setting aside the original order denying CENVAT credit.
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• Technical Specifications and Drawings Shared During RFQ Process Not Additional Consideration for Excise Duty Valuation

  Case-Laws - AT : CESTAT determined specifications, drawings and designs supplied by Company M during request for quotations (RFQ) do not constitute additional consideration for sale under Central Excise Act and Valuation Rules. The Tribunal reasoned that for elements to qualify as consideration under Contract Act, they must be provided at promisor's desire, which wasn't the case here. The documents were merely articulation of Company M's requirements to elicit proposals, not consideration flowing from promisee to promisor. Following precedent in similar cases, CESTAT held such technical documentation supplied free of cost cannot be included in assessable value for excise duty calculation. Appeal allowed with impugned order set aside.
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Case Laws:

• GST

• 2025 (2) TMI 550
  Condonation of delay in filing appeal - Rejection of petitioner s appeal on the ground that the same was barred by limitation - whether appellate authority is competent only to condone the delay provided the appeal is filed within the period of one month beyond the time prescribed? - HELD THAT:- Taking into consideration that the petitioners are a small partnership firm and there is no lack of bona fide on the part of the petitioners and one do not stand to gain by filing a belated appeal, I am of the view that in the instant case, the appellate authority ought to have appropriately considered the application for condonation of delay filed by the petitioners. The appellate authority, however, appears to have rejected the appeal on the ground of limitation by, inter alia, holding that the delay can only be condoned provided the same is filed within the period of one month of the time prescribed. The aforesaid observation made by the appellate authority runs counter to the observation made by the Hon ble Division Bench of this Court in the case of S. K. Chakraborty Sons v. union of India Ors. [ 2023 (12) TMI 290 - CALCUTTA HIGH COURT] . The delay in preferring the appeal is condoned - The appellate authority is directed to hear and dispose of the appeal, on merit, upon giving an opportunity of hearing to the petitioners, within a period of eight weeks from the date of communication of this order. Conclusion - The appellate authority had failed to exercise the jurisdiction vested in it. Having regard to the above and taking note of the explanation given by the petitioners while setting aside the appellate order dated 18th September, 2024, the delay in preferring the appeal is condoned. Petition disposed off.

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• 2025 (2) TMI 549
  Challenge to impugned notice on the limited ground that the same came to be issued even before the time granted to the petitioner to respond to Form GSTR DRC-01A dated 23.08.2023 had expired - HELD THAT:- It may be relevant to note that though the petitioner had challenged DRD-01 A, he would confine his prayer that the respondent may furnish copy of the materials sought to be relied upon by the respondent. It is always open to the petitioner to make a request of the copy of the materials sought to be relied upon by the authority. If any request is made, the same would be considered in accordance with law. It is also open to the petitioner to raise all contentions in response to DRC-01A including jurisdictional issues. The Respondent authorities would consider such request/ reply if any filed and pass orders in accordance with law after affording the petitioner a reasonable opportunity of hearing. Petition disposed off.

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• Income Tax

• 2025 (2) TMI 548
  Reopening of assessment u/s 147 - rejecting the petitioner s objection to reopening of the assessment made by the first respondent - HELD THAT:- On perusing the reasons, we find no allegation regarding any failure on the petitioner s part to fully and truly disclose any material facts necessary for the assessment. Without such an allegation, let alone some material to support such allegation, one of the jurisdictional parameters for reopening of the assessment beyond 4 years could not be said to have been fulfilled. The records show that along with the return of income filed by the petitioner for the assessment year 2014-15, the petitioner had once again submitted a letter dated 16 July 2015 regarding its status as a resident company. The records also show that from 1995-96 onwards, the petitioner has been assessed as a resident company. The department could not reasonably allege any failure on the petitioner s part to disclose the material facts regarding the petitioner s status. Therefore, the reasons do not even contain any allegation of failure to disclose material facts. The assessment order for 2016-17 was made on 31 December 2019. Accordingly, there is no question of the petitioner referring to this assessment order or even imagining that such an order would be made in the future. Thus, based on the reasons furnished to the petitioner as also the other material on record, we are satisfied that the jurisdictional parameter about failure to disclose fully and truly all material facts necessary for assessment are missing. Without compliance with these jurisdictional parameters, the respondents had no jurisdiction to issue impugned notice and proceed with the reopening of the assessment. Merely because there is some change in the tax rate for the future assessment years, the provisions of Section 148 cannot be invoked without the jurisdictional parameters of these Sections being fulfilled. When an assessment is sought to be reopened beyond the period of four years, there must be a failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment. The retrospective amendment of law by Parliament would negate the inference that is sought to be drawn from the failure to disclose material facts. The facts in the present case are even stronger than those in DIL Ltd. [ 2012 (2) TMI 85 - BOMBAY HIGH COURT] Although the reasons do not allege a failure to disclose material facts, the other material on record shows that, in fact, there was no failure to disclose material facts.

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• 2025 (2) TMI 547
  Validity of assessment order passed u/s 147 r.w.s. 144B - No due approval u/s 151 accorded - HELD THAT:- A perusal of the documents would show that in the proposal for scrutiny, reasons for selection are duly recorded. Range Head and CIT/PCIT have also stated in their approval order that they are satisfied with the reasons recorded by the assessing officer and it is a fit case for issuing notice u/s 148. We, therefore, find that there is a due approval u/s 151 of the Act of 1961. On perusal of the details as available in the computersheet of order detail, we find that in course of faceless assessment at every stage approval from competent authorities have been obtained. Prima-facie, we do not find it a case of jurisdictional error, hence this Court would refrain from exercising it s extraordinary writ jurisdiction in the present case. Petitioner has already chosen to avail alternative remedy in respect of the assessment year 2013-14. If so advised, he may avail the remedy of appeal, subject, however, to the limitation. While considering any application for condonation of delay, the period spent by the petitioner before this Court in the present writ application shall be liable to be condoned.

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• 2025 (2) TMI 546
  TP adjustment relating to Non-US Transactions on the same framework as adopted for determining the TP adjustment in respect of US Transactions - It is the Assessee s case that MAP (Mutual Agreement Procedure) is based on consensus between the competent authorities of the contracting states and the basis for TP adjustments under the MAP cannot be applied to international transactions, which are not subject of negotiations under the MAP. Whether it is apposite to use the framework agreed by competent authorities of the US and India under the MAP in terms of Article 27 of the Indo-US DTAA, for deciding transfer pricing issues that are not covered under the said framework? - HELD THAT:- MAP is a resolution process by competent authorities of contracting states by negotiations and consensus. In a case of a transfer pricing adjustment, an assessee may not be aggrieved by an upward revision if the overall taxation between the assessee and its AE is acceptable to it. A multi-national group may accept a situation where an upward TP adjustment by a taxing authority of one country has a corresponding mitigating effect on the taxable revenue of its constituent entity in the other contracting state. It may do so even though it considers the same to be incorrect as the adverse effect in one jurisdiction may even out in another. However, this would not justify a TP adjustment in respect of transactions which are disputed and not subjected to MAP. MAP procedure is based on an agreement between the competent authorities of the contracting states, which is accepted by the Assessee. The effect of imputing a framework arrived at between competent authorities of India and the US in respect of US Transactions to Non-US Transactions has an effect of imposing a consensual and negotiated settlement regarding one set of transaction to another where there is no such consensus. This in effect seeks to foreclose a right of an assessee to dispute a TP adjustment on the basis of the assessee s acceptance of an agreement in a situation, which is materially different. It is of vital importance to note that there is no agreement between the tax authorities of other Non-US countries regarding the determination of the ALP of Non-US Transactions. Thus, the TP adjustments made on the basis of MAP under the Indo-US DTAA, does not bind the tax authorities of the non-US countries. Resolution under MAP is by consent and negotiations; such resolution cannot be imposed in a contested case where there is no consensus. An agreement arrived at by the competent authorities of two contracting states under MAP cannot substitute the determination of ALP under the Act and the Rules in cases which are not covered under the MAP. The ALP in such cases must necessarily be determined in accordance with Section 92C of the Act and Rule 10B of the Rules. MAP is a specific procedure for addressing issues arising out of DTAA and must necessarily be confined to those issues and the subject transactions. The Agreement under MAP cannot be extrapolated as a determination of ALP of international transactions, which are not subject to MAP, under Section 92C of the Act or Rule 10B of the Rules. Thus, decision of the ITAT to direct the determination of the ALP for Non-US Transactions on the basis of framework as agreed to by the competent authorities under MAP for US Transactions, is not in accordance with law and thus, the said decision cannot be sustained. Decided in favour of the Assessee

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• 2025 (2) TMI 545
  Reopening of assessment u/s 147 - change of opinion - claims regarding lease payments, foreign currency transactions, and depreciation on goodwill HELD THAT:- Claim of lease rent which is stated to be principal plus interest is concerned, the petitioner has explained the same in the objections raised in response to the impugned notice and submitted that the same is in form of the financed lease transactions entered into by the petitioner with CISCO and such transactions are accepted by the Revenue as the petitioner has taken equipment on financial lease since 2012-13. Petitioner has also placed on record the notices issued during the regular course of assessment for AY 2012-13, 2013- 14 and 2014-15 and assessment orders for earlier years accepting the same as expenditure. Thus, the AO ought to have taken into consideration the nature of repetitive nature of transactions in form of the lease rent which is claimed by the assessee from year to year from 2012-13 onwards and no addition was made since then. Claim on account of the applicable gain / loss on foreign currency transactions , the petitioner has explained in detail in the objections with regard to the nature of claim by making to the effect that the petitioner had unrealized loss which was added as income and on the other hand, the petitioner has deducted the unrealized gain and also claimed net expenses in the profit and loss for computation of the book profit and it cannot be disputed that the petitioner has explained that the claim of the assessee for bank charges for raising foreign currency is required to be considered as a part of the revenue expenditure. Thus, in effect, the petitioner has claimed Rs. 46,45,115/-, i.e. Rs. 37,78,154 plus Rs.8,86,961 (Rs. 6,90,80,060 Rs. 6,81,93,099) by giving effect to the said amount in the computation of income. Thus, it cannot be said that there is escapement of income on the part of the petitioner as the petitioner has neither claimed profit / gain or loss of unrealized foreign exchange and therefore, the reasons recorded by the respondent Assessing Officer to form prima facie conclusion that there is likelihood of any gain on account of revenue expenses incurred by the petitioner is also without any basis in the absence of any fresh tangible material available with the respondent Assessing Officer as the fact remains that the petitioner has unrealized gain and unrealized loss which is not claimed and duly reflected in the computation income as the petitioner has claimed only bank charges expenditure for hedging of foreign currency. Depreciation on goodwill, the provision of section 43 (6) (c) of the Act was not amended at the relevant point of time for AY 2017-18 and therefore, the amended provision denying the depreciation on goodwill which came into effect from 01.04.2021 could not have formed the basis for re-opening to come to the conclusion that there is escapement of income by claiming of depreciation on goodwill. AO could not have assumed the jurisdiction to re-open the assessment. Therefore, this petition succeeds and is accordingly allowed. The impugned notice issued u/s 148 is hereby quashed and set aside. Decided in favour of assessee.

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• 2025 (2) TMI 544
  Reopening of assessment - Notice issued time barred - HELD THAT:- Revenue has written instruction from the Department to the effect that the notices u/s 148 have incorrectly been issued and the claim of the petitioner that the same was time barred is correct, therefore, he says that the notice should be set aside as referred to the decision of Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB) ] The written instruction dated 15.1.2025 is taken on record. The petition is allowed. The impugned notice issued under Section 148 quashed.

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• 2025 (2) TMI 543
  Assessment u/s 153A - additions dehors incriminating material found in the course of search from the premises of the assessee in concluded assessment - as argued assessment for AYs 2013-14 to AY 2015-16 in question for captioned assessee were not pending and stood concluded either u/s 143(1) or u/s 143(3) at the time of initiation of search on 19.11.2018 and thus remained unabated - HELD THAT:- As observed that there does not appear to be any reference to any incriminating material found in the course of search of the assessee per se. The alleged incriminating material referred are primarily in the nature of Financial capacity of donor evaluated subsequent to search/survey proceedings. Guided by the schematic interpretation of sec 153A rendered in Abhisar Buildwell (P.) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] we find force in the legal plea placed on behalf of the assessee. Hence, in the absence of any incriminating material in an unabated assessment, additions/ disallowances made by the AO in all captioned appeals requires to be quashed. Propriety of approval u/s 153D to the respective draft assessment orders placed before him by the AO - As discernible from the combined approval memo, the sanctioning authority (Addl. CIT) has, in fact, relegated his statutory duty to the subordinate AO, whose action the Addl. CIT, was supposed to supervise as per the scheme of the Act. Manifestly, the Addl. CIT, without any consideration of factual and legal position in proposed additions and without ensuring the availability of incriminating material collected in search etc. has buckled under statutory compulsion and proceeded to grant a symbolic approval to meet the statutory requirement. This approach of the Addl. CIT has ipso facto rendered the impugned approval to be a mere ritual or an empty formality to meet the statutory requirement and is thus incapable of being sustainable in law. CIT(A) has brushed aside the legal objection summarily merely on an inept indifferent premise that the assessment order makes mention of the approval from Addl. CIT under 153D and such powers are in the nature of administrative powers and a purely internal matter. The cryptic conclusion drawn by the CIT(A) is bereft of any plausible reasons whatsoever and thus cannot be reckoned to be a judicial finding on the point. The observations so made runs contrary to position of law expounded in the judicial precedents and hence not tenable in law. We are unhesitatingly disposed to hold that the integrity and propriety of impugned assessments under captioned appeals based on such combined approval memo under s. 153D in question cannot be countenanced in law. Legal objection answered in favour of the Assessee on maintainability of additions on touchstone if sec 153A and sec 153D. Invalid approval accorded u/s 153D - AY 2019-20 - Additional CIT has accorded approval without showing his own involvement and application of mind to facts emanating and law involved. The approval so accorded was thus held to be in the nature of a technical approval in symbolic exercise of powers u/s 153D. In sync with the delineations made on approval without meeting pre-requisites of application of mind, the consequential assessment orders based on such repugnant approval u/s 153D are bad in law and thus stands quashed.

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• 2025 (2) TMI 542
  Penalty u/s 271F - assessee was non-filer and has not filed return for AY 2013-14 u/s 139 - HELD THAT:- We find that the assessee has filed its Return of Income for AY 2013-14 on 21.02.2014, a fact recorded by the AO in its assessment order u/s 143(3)/147 dated 31.03.2022. Assessee filed the return of income as per the provision of the section 139 within the time limit provided under the Act. CIT(A) wrongly held the assessee to be a non filer. We find that as the assessee has filed its Return of Income u/s 139(5) within time prescribed under the Act, the assessee can not be visited with the mischief of penalty u/s 271F. We, therefore, allow the grounds of appeal raised by the assessee and delete the penalty. Decided in favour of assessee.

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• 2025 (2) TMI 541
  Denial of benefit of exemption u/s 11 - delay in filing of audit report in Form 10B - HELD THAT:- Since the assessee has furnished income tax return in time and subsequently the audit report in Form 10B was filed, the UDIN Number of which was generated at the time of filing of return itself, therefore, we are inclined to hold that the assessee deserves to succeed on ground and the Jurisdictional Assessing Officer is directed to grant the claim of exemption u/s 11 of the Act. Findings of Ld. CIT(A) is set-aside and ground nos.1, 2 and 3 are allowed.

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• 2025 (2) TMI 540
  Income of the assessee is chargeable to Normal Tax rates or the Maximum Marginal Tax rates - Charge of tax where shares of members in association of persons or body of individuals unknown, etc. HELD THAT:- Section 167B(1), only the Company or Cooperative Societies registered under the Societies Registration Act are excluded and the remaining association of persons or body of individuals where individual share of the members are not known are indeterminate, tax is leviable at the Maximum Marginal Rate. Before us assessee has stated that assessee is a registered Charitable Trust and it is carrying out the charitable activity as per the Trust deed and even if share of the trustees are not defined, still the assessee being a Charitable Registered Trust engaged in the charitable activity is liable to taxed at the Normal Tax rate. The income of the assessee is not chargeable to tax at Maximum Marginal Rate but is chargeable to tax at Normal Rate.L Revenue authorities are directed to calculate the tax liability of the assessee as per the Normal Tax rates. Accordingly, we set aside the impugned order of CIT(A) and allow the grounds of appeal raised by the assessee.

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• 2025 (2) TMI 539
  Addition u/s 68 - profit over suppressed sales - cash credits are not credited in the books of the assessee - whether the assessee has furnished any explanation about the nature and source thereof or has offered satisfactory explanation before the AO with respect to cash deposit? - HELD THAT:- We find that the assessee has given an explanation, but to consider the same as source of cash deposit in assessee s bank account can not be held as satisfactory explanation as the same is without any support of any cogent documents/evidence. Assessee has claimed that sufficient time was not provided by the AO. CIT(A) gave adequate opportunity to the assessee to offer evidence regarding cash deposit of Rs 78,00,000/- just before transferring the fund to TAHA Traders. However, no further details to corroborate his submission were furnished before the CIT(A). Even before us no further evidence/documents were produced, apart from documents that were filed before the AO/CIT(A). Assessee alternate plea that the cash deposit may be considered as turnover and the presumptive percentage of 8% be applied to determine the profits of the business is also misleading. If it is considered that the entire cash deposit is coming out of business sales, then the assessee can no longer avail the benefit of section 44AD as he no longer remains engaged in the eligible business as per Explanation(b)(ii) of section 44AD of having a turnover of Rs 60 lakh being the threshold limit for the instant year. We hold that the assessee has failed to offer a satisfactory explanation with regard to the cash deposits. We therefore hold that the decision of the CIT(A) needs no interference and accordingly we sustain the addition u/s 68. Ground no 1,2 and 4 are dismissed. Addition of presumptive tax @ 8% - Assessee s father had a turnover ranging from Rs 51 lakh in FY 2011-12 to Rs 62 lakh in FY 2013- 14, therefore it may be plausible that some portion of cash belonging to the father may have been deposited in assessee s bank account. The balance cash deposit of Rs 28,14,676/- is explained as out of assessee s own capital cash savings, profit from business as also cash savings and business accruals and profit of Mr. Satanand Gupta (Father). In view of this we hold that the addition made by the AO at 8% on the remaining turnover is not justified and the same is accordingly deleted.

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• 2025 (2) TMI 538
  Addition u/s 68 - entity, creditworthiness, and genuineness of transactions involving unsecured loans not proved - HELD THAT:- With respect to the mentioned parties, there is no basis for Ld. CIT(Appeals) to grant relief to the assessee since the creditworthiness of parties have not been proved by the assessee and therefore, it is incorrect to state that the onus has shifted to the Department. It is a well settled law that judicial precedents are applicable to the particular facts of each case and cannot have general applicability. It is also a wellsettled principle of law the fact that amount has been received through banking channels does not show the genuineness of the transaction and the complete facts of the case need to be analysed. In respect of the parties, in our considered view, the assessee has not been able to show the creditworthiness of the parties and once it is seen that the assessee has taken substantial amounts of loan from these parties, the primary onus is on the assessee to prove the genuineness of the transaction and creditworthiness of the parties. Therefore, for these parties in our considered view, Ld. CIT(Appeals) erred in facts and in law in allowing relief to the assessee. We have only taken note of few apparent cases, where the assessee has not been able to clearly prove the creditworthiness of the parties or the genuineness of the transaction, in our considered view. In other cases, where the assessee has responded to notice issued under section 133 (6) of the Act or has furnished ITR declaring a reasonable amount of income or furnished further evidences of genuineness of transactions, we are of the considered view that Ld. CIT(Appeals) has correctly allowed relief to the assessee. In cases where assessee has specifically filed reply in response to notice under Section 133(6) of the Act i.e. in cases of Hanuman Prasad P. Jain, Ketan V. Tembhurkar, J.P. Co. P.J. Patel, Varsha Mohanlal Nagar, Nitinbhai K. Shah, Sarveshdevi Sureshkumar Chauhan and Ashok as given in Annexure A filed before us, we are of the view that relief may be granted to the assessee and additions confirmed by Ld. CIT(A) may be deleted. However, with respect to other unsecured loans taken by the assessee, with respect to other parties as provided in Annexure A referred to above, in the interest of justice, the matter may be restored to the file of Assessing Officer for de-novo consideration, after giving due opportunity of hearing to the assessee. Appeal of the assessee is partly allowed for statistical purposes.

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• 2025 (2) TMI 537
  Validity of assessment framed u/s 153A - invalid approval u/s 153D - HELD THAT:- Considering the fact that the Ld. ACIT accorded the approval u/s 153D of the Act on the very same day of the office letter written by the A.O./DCIT, central Circle, Ghaziabad and also considering the fact that consolidated single approval has been granted for different Assessment Years, by following the ratio laid down in the case of SEH Realtors Pvt. Ltd. [ 2024 (7) TMI 1562 - ITAT DELHI] we allow the Ground challenging the assessment order which was framed based on the invalid approval accorded u/s 153D. Assessee appeal allowed.

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• 2025 (2) TMI 536
  Addition u/s 68 - treating the share capital / share premium as unexplained cash credit on the ground that summons issued u/s 131 were not complied with besides making other additions - HELD THAT:- The case of the assessee is squarely covered by the decisions of Crystal Networks Pvt. Ltd. [ 2010 (7) TMI 841 - KOLKATA HIGH COURT] wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the loan transactions, the fact that summon issued were returned un-served or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. As relied on Orchid Industries (P) Ltd. [ 2017 (7) TMI 613 - BOMBAY HIGH COURT] by holding that provisions of section 68 cannot be invoked for the reasons that the person has not appeared before the AO where the assessee had produced on records documents to establish genuineness of the party such as PAN, financial and bank statements showing share application money. The facts of the assessee are squarely covered by the above decisions, wherein it has been held that addition u/s 68 cannot be made merely on the ground of non-compliance to summon issued u/s 131 of the Act when the assessee and subscribers have filed all the evidences. Pertinent to mention that the AO has not submitted the remand report before the ld. CIT(A) despite repeated reminders. Appeal of the Revenue is dismissed.

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• 2025 (2) TMI 535
  Unaccounted receipts and Unaccounted payments in relation to hotel and restaurant business carried out by the assessee - During the course of search action certain incriminating material was found and seized - whether the entire unaccounted receipts should be taxed as income or whether only the profit element embedded in these receipts should be considered? HELD THAT:- Percentage of profit as per the books of accounts is ranging from 47.69% to 31.16% for the asst. years 2015-16 to 2019-20 and the average of the same is 36.21% whereas the CIT[A] estimated the profit margin at 50% on the unaccounted sales, which in our considered view is a higher figure when the Revenue failed to prove any evidence of undisclosed investments by the assessee in terms of Assets. After the search and seizure action the profit margins as per books are 33.57% and 31.16% respectively. We deem it to estimate 40% as profit margin will be found reasonable considering the facts and figures in the present case. Thus the Jurisdictional Assessing Officer is directed to adopt 40% profit margin in the place of 50% as directed by the Ld CIT[A] . Unaccounted receipts as well as unaccounted expenses in relation to the Real-estate business - It is well settled principle of law laid down in case of Navjivan Oil Mills [ 2001 (7) TMI 81 - GUJARAT HIGH COURT ] that seized material has to be read and accepted as a whole and it is not permissible to Pick and Choose theory or make further estimates therefrom unless and until there is cogent material in support of undertaking such an exercise. As in the case of Godhra Electricity Co. Ltd. [ 1997 (4) TMI 4 - SUPREME COURT] held that only real income has to be taxed in the hands of the assessee. No income can be brought to tax as of now for the simple reason that the amounts received by the assessee are only advances, which does not fall under the category of income accrued or due and no agreements have been executed till date. It is undisputed fact that till the date of search and seizure action, no formal agreement for purchase of land has been entered into or any approvals for construction activities have been received by the assessee. Considering the actual profit ratio as per the books of accounts at 12.98% as well as profit ratio on actual unaccounted transactions at 6.75%. Therefore in the interest of justice, we deem it to estimate 13% as the reasonable profit margin considering the facts and figures in the present case. Thus the Jurisdictional Assessing Officer is directed to adopt 13% profit margin on real estate business in the place of 17% as directed by the Ld CIT[A]. Addition of unsecured loan made u/s.68 - Sh. Jigar Trivedi, has filed affidavit of having paid commission @ of 0.60% on the unsecured loan - absence of incriminating material found during the search - CIT(A) deleted addition - HELD THAT:- It is undisputed fact that the Ld AO made entire addition of addition on the unsecured loan u/s.68 of the Act and on account of bogus commission payments though there is no seized material during the course of search proceedings. The Hon ble Supreme Court in the case of Abhisar Buildwell [ 2023 (4) TMI 1056 - SUPREME COURT ] has held that no addition can be made in respect of completed assessments in the absence of any incriminating material. In the present case, during the search action certain incriminating materials were found and seized which revealed there were certain unaccounted receipts and unaccounted payments in relation to hotel, restaurant and real estate business carried out by the assessee firm. The present additions made on account of unsecured loans and commission thereon are other materials available with the AO, including the income declared in the returns for the Asst. years 2015-16 and 2016-17. Thus the findings arrived by the Ld CIT[A] is against the verdict of Hon ble Supreme Court in Abhisar Buildwell. Therefore the findings arrived by the CIT[A] is liable to be reversed and the additions made by the Ld AO is to be upheld, since assessee failed to make any submissions on merits of the case. Decided against assessee.

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• 2025 (2) TMI 534
  Levy of penalty u/s. 271AAB(1A) - non specification of clear charge - allegation of vague notice - HELD THAT:- A bare perusal of provision of section 271AAB would show that the penalty under aforesaid section can be levied under different circumstances for different violations. Although, while recording satisfaction, AO mentioned that penalty is being initiated u/s. 271AAB(1A) however, no specific offence as mentioned under sub-section (1A) has been ambiguously specified by the AO. The vagueness and ambiguity in mind of the AO is writ large even while issuing notice u/s. 274 r.w.s 271AAB. While issuing notice the AO has not even bothered to mention sub section under which penalty has been levied. Hence, specific charge for levy of penalty in the notice is missing in the notice. This makes the notice vague. In the case of Jaina Marketing Associates [ 2024 (3) TMI 1007 - ITAT DELHI] while dealing with similar issue deleted penalty levied u/s. 271AAB of the Act. The notice has been issued by the AO in mechanical manner. For parity of reasons, penalty levied u/s. 271AAB is directed to be deleted. Decided in favour of assessee.

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• 2025 (2) TMI 533
  Revision u/s 263 - cash deposit unexplained - AR contended that source of cash deposit was advance received in respect of agreement to sale which his faster had entered into on 30.4.2015. That sale deed was not finally executed in lieu of the buyers agreed to cultivate the land for three years - It is a case of PCIT in his impugned order that this document was unregistered document and further AO has failed to conduct third party verification, on genuineness of transaction leading to availability of cash in the hand of Assessee - HELD THAT:- Assessee brought to the Notice of the ld. PCIT that both the documents i.e. FARD in respect of land holdings and agreement to sell were duly furnished before the ld. A.O. and that both the document s besides others were examined and verified by the ld. A.O. in manner known to law and that assessment order was passed u/s 143(3) accepting the return of income without making any addition. Thus, we hold that very basis and foundation of Show Cause Notice was successfully assailed by the Assessee and ld. PCIT erred in passing the impugned order u/s 263 of the Act. We conquer with the contention canvassed by the Ld. AR and we hold that it is now fairly settled that orders cannot travails beyond the scope of Show Cause Notice. We, therefore, hold order to be illegal and not proper on this score. It is passed in violation of principle of natural justice too. PCIT has erred in law by holding that queries raised during Revision proceedings u/s 263 remained unverified and the order was passed by the AOwithout making enquiries or verification which should have been made and has resulted in claim being allowed without enquiring into it. We hold that said findings is erroneous and not proper as Assessee had furnished all documents before AO in support of his case and that the same were examined and verified. PCIT had failed and omitted to state that which documents produced before ld. A.O. went unverified and was not examined. The very foundation of impugned order was Show Cause Notice and absence of two documents on record of ld. A.O. i.e., FARD and Agreement to sell which successfully has been established before us was on record of ld. A.O. Hence, we have no hesitation in holding that entire eddifice of impugned order collapses and it deserves to be set asides. Appeal of Assessee is allowed.

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• 2025 (2) TMI 532
  Penalty levied u/s. 271D - violation of provisions of Sec.269SS - Cash paid to assessee towards purchase of the land parcel - Revenue s argument that, there was no explicit language used in Section 269SS of the Act that, it would apply only to buyer and seller of immoveable property - HELD THAT:- The lower authorities failed to appreciate that the provision would apply in relation to transfer of immovable property and that is broad enough to encompass not only vanilla transaction of buy sell of immovable property, but even extinguishment of rights in immovable property viz., where occupier or tenant is vacated therefrom, or where there is a longterm lease in the nature of transfer between lessor and lessee etc., Hence, there can be several situations of transfer of immovable property which can be envisaged, apart from simple conveyance of immovable property between a buyer and seller. The provisions of Section 269SS would apply to recipient of monies in relation to transfer of immovable property viz., who actually receives the monies in his own independent right. We are therefore unable to countenance the Revenue s argument that even a broker, who receives from a principal and immediately pays the monies to the other principal, shall be regarded as recipient of monies in relation to transfer of immovable property. We also find that there is a reasonable cause as mandated u/s 273B of the Act, as Section 269SS of the Act was amended by the Finance Act 2015, wherein the term specified sum was introduced to include amount received for transfer of immoveable property, whereas the MoU pursuant to which the advances were paid, in the present case, admittedly was entered into on 03.07.2014 viz., prior to the introduction of the aforesaid amendment, we agree with the Ld. AR that this amendment would not have come to the knowledge of the assessee who is a middle man having elementary education and no knowledge of tax laws. Assessee would have not been under a belief that there was any contravention of any provision of the Act. Further, since the assessee was only the middleman and was never the recipient of the monies in real sense, his conduct cannot be treated to be contumacious or malafide. We are of the considered opinion that penalty u/s 271D of the Act was not imposable on the assessee and therefore we direct the AO to delete the same. Appeals of the assessee stand allowed.

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• 2025 (2) TMI 531
  CIT(A) passing an ex-parte order without providing the assessee a proper opportunity to be heard - HELD THAT:- We note that Section 250(6) casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and a decision as well as the reason for arriving at such decision. In the present case before us, even though the assessee had made its submissions along with supporting documents before the Ld. AO which are on record, CIT(A) has not mentioned the reasons after examining the records while disposing of the appeal. CIT(A) has neither adjudicated upon various grounds of appeal nor has passed a reasoned order for arriving at the decision, as is required u/s 250(6) of the Act. As in Ajji Basha [ 2019 (12) TMI 320 - MADRAS HIGH COURT] it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee s appeal; he cannot dispose assessee s appeal merely by holding that AO s order is a self-speaking order which requires no interference. It has also been held in the case Premkumar Arjundas Luthra (HUF) [ 2016 (5) TMI 290 - BOMBAY HIGH COURT] that the law does not empower the Ld. CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. We deem it appropriate to remit the matter back to the Ld. CIT(A) for disposal of the grounds taken by the assessee on merits, by passing a speaking order. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of various grounds of appeal and the Ld. CIT(A) shall decide the appeal in accordance with law and after following Rule 46A of the Income-tax Rules, 1962, if required. Appeal filed by the assessee is allowed for statistical purposes.

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• 2025 (2) TMI 530
  Deduction claimed u/s 36(1)(viia) - Disallowance of claim as this provision was made by the assessee for NPA as per RBI guidelines which cannot be equated with provision for bad and doubtful debts as required to be made as per the provisions of section 36(1)(viia) - CIT(A) concluded that NPAs qualify as bad debts because such assets do not generate income, and their categorization as provision for non-performing assets is essentially equivalent to a provision for bad and doubtful debts - HELD THAT:- The Act permits such deductions, considering that unrealized debts should be allowed based on the provision made in the books of account. The nomenclature of the provision, though referred to as NPAs, in essence and substance, constitutes a provision for bad and doubtful debts, as recognized in Davangere District Central Co-operative Housing Society Ltd. [ 2020 (11) TMI 654 - KARNATAKA HIGH COURT ] Decided in favour of assessee. Disallowance u/s 14A - assessee had not allocated expenses related to the earning of exempt income as required under Section 14A r.w. Rule 8D - HELD THAT:- Section 14A of the Act, read with Rule 8D of the Rules, is applicable where the assessee is unable to determine or allocate the correct expenses incurred to earn exempt income. In the present case, CIT(A) relied solely on the judicial precedents and allowed the issue in favor of the assessee without duly considering the relevant facts. As per the ratio laid down in various case laws, the disallowance u/s 14A is required to be made, when the assessee has earned any exempt income. In the instant case, it is submitted that the interest free funds available with the assessee is more than the value of investments. In that case, no disallowance out of interest expenses is called for. However, disallowance may be called for from out of administrative expenses in terms of sec.14A - assessee may be provided with an opportunity to present the relevant facts before the AO. Accordingly, we set aside the order passed by Ld CIT(A) and restore this issue to his file for examining this issue afresh. After providing adequate opportunity of being heard to the assessee, the AO may take appropriate decision. Ground of revenue s appeal is allowed for statistical purposes. Deduction u/s 36(1)(vii) - CIT(A) decided issue in favor of the assessee and held that the proviso to Section 36(1)(vii) pertains only to actual debts and, therefore, only actual (realized) debts need to be adjusted against the provisions of Section 36(1)(viia) - HELD THAT:- We find that the Ld. CIT(A) has correctly examined and adjudicated the issue. The matter is squarely covered by the decision of the co-ordinate bench of the ITAT Bengaluru in the assessee s own case [ 2022 (3) TMI 1131 - ITAT BANGALORE ]. We see no infirmity in the order passed by the Ld. CIT(A). Penalty paid to RBI disallowed u/s 37 - HELD THAT:- CIT(A) considered the submission of the assessee and found that penalty is not sustainable as it is not against the infraction of law and same issue has already been taken care in the appeal order for A.Y. 2017-18 where the Ld.CIT(A) allowed the claim of the assessee. The Ld. CIT(A) followed the precedence in the earlier year and doctrine of consistency was followed. As decided in M/s Stock Bond Trading Co. [ 2011 (10) TMI 172 - BOMBAY HIGH COURT ] payments made by the Assessee to the Stock Exchange for violation of their regulation are not an account of an offence or which is prohibited by law. Hence, the invocation of explanation to section 37 of the Income Tax Act, 1961 is not justified. Interest on Perpetual Bond - AO held that the said interest is not admissible for deduction under section 36(1)(iii) for the reason that the bonds are (a) perpetual nature; (b) high loss absorption capacity provision for write down of principal; or conversion of equity on tracker and (c) discretionary pay out with existence of full coupon discretion - HELD THAT:- Innovative Perpetual Debt Instruments (IPDI) are hybrid instruments that exhibit characteristics of both debt and equity. These bonds are typically issued by banks to meet capital adequacy requirements under Basel norms. Although perpetual in nature and subordinated to other debt, the interest on IPDI is payable periodically unless deferred by the issuer under specific circumstances (e.g., insufficient profits). Section 36(1)(iii) of the Act allows for a deduction of interest on borrowings if such borrowings are utilized for business purposes. The interest paid on IPDI, despite the instrument s hybrid nature, has been held to be deductible as it represents a cost of funds incurred in the ordinary course of banking business. As in case of State Bank of India [ 2022 (9) TMI 1640 - ITAT MUMBAI ] held that the interest on IPDI is an allowable deduction under Section 36(1)(iii), as the borrowings are directly linked to the business activities of the bank. In the present case, the Ld. CIT(A) upheld this view and rightly concluded that the addition of interest on IPDI under Section 36(1)(iii) is not warranted. Decided in favour of assessee.

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• 2025 (2) TMI 529
  Addition u/s 68 - share capital received from the shareholders whose nature and source have been not explained - HELD THAT:- As per the provisions of section 68 of the Act, where any sum found credited in the books of assessee maintained for any previous year and the assessee offered no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the AO is satisfied, the sum so credited may be charged to income-tax. In the given case, the assessee has received the cash during the previous assessment year and the same was credited in the previous assessment year, therefore, no addition can be made during the current assessment year under consideration based on the allotment of shares. Accordingly, the appeal filed by the assessee is allowed. With regard to AY 2017-18, we observed that assessee has issued fresh shares of 1,50,000 shares to Acquatic Exim Pvt. Ltd. at the same rate as issued to the existing shareholders. The assessee also submitted the confirmation, audited Balance Sheet of Acquatic Exim Pvt. Ltd. which is placed on record. From the record, we observed that Acquatic Exim Pvt. Ltd. is having revenue from operation of Rs. 15,49,75,300/- and having trading activities and declared a profit of Rs. 1,43,641.80. At the same time, we also observed that they have sufficient shareholders found. Therefore, we are inclined to allow the grounds raised by the assessee for the reason that the shares were issued at premium at the same rate which was issued to the existing shareholders. Assessee has submitted the valuation report under Rule 11UA of the Income-tax Rules, 1962. Therefore, the assessee has subtitled all the conditions specified u/s 68 of the Act. Accordingly, the appeal filed by the assessee is allowed.

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• Customs

• 2025 (2) TMI 528
  Revocation of the Customs Broker License - Levy of penalty - role of the Customs Broker/appellant in the diversion of the Bond to Bond transfer of the impugned goods - CB failed to verify the registered address and antecedents of the importer - CB failed to check the KYC and functioning of the company at the registered address - violation of the provisions of Sections 10(d), 10(m), and 10(n) of the CBLR 2018. Violation of Regulations 10(d) - HELD THAT:- It is observed that the importer has himself signed the bond papers. The signature available on the documents were verified by the bank authorities and found to be genuine. Accordingly, the new Customs Broker i.e., the appellant, submitted the documents for bond to bond transfer, which was on the basis of the documents submitted by the importer. Thus, there is no evidence on record to establish that the appellant has wrongly advised the importer and violated the provisions of Regulation 10(d) of the CBLR, 2018. Accordingly, the appellant has not violated the Regulation 10(d) of the CBLR, 2018. Violation of Regulation 10(m) - HELD THAT:- The Inquiry Officer, after examining the facts and evidences available on record, has arrived at the conclusion that the appellant has not violated the provisions of Regulation 10(m) of the CBLR, 2018. The ld. adjudicating authority has not given any reason for rejection of this finding of the I.O. It is observed that the appellant has discharged his duties with efficiency and no delay observed. Accordingly, the findings of the I.O is agreed upon and it is held that the violation of Regulation 10(m) as alleged in the impugned order is not substantiated. Violation of Regulation 10(n) - HELD THAT:- The importer was in existence at the time of initial filing of the Warehousing (Into-Bond) Bills of Entry and at the time of bond to bond transfer, the importer himself has signed the bond and his signature has also been found to be genuine, as verified by the Bank officials. Documents like IEC, GSTIN and PAN card submitted by the importer were also found to be genuine and the Customs Broker has verified the genuineness of the importer based on the available documents. Thus, the submission of the Customs Broker that the Customs Broker is not expected to physically visit the premises of each and every importer to verify their existence at the address agreed upon. Accordingly, the appellant has not violated Regulation 10(n) of the CBLR, 2018. Conclusion - The violation of Regulations 10(d), 10(m) and 10(n) of the CBLR, 2018 as alleged against the appellant in the impugned order are not substantiated. Accordingly, the revocation of their Customs Broker Licence based on the above said allegations is also not sustainable. As the allegations against the appellant is not sustained, the penalty imposed on the appellant is not sustainable. The impugned order set aside - appeal allowed.

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• 2025 (2) TMI 527
  Refund claim - refund allowed on the ground that respondent was able to pass the bar of unjust enrichment - goods were sold by the respondent on M.R.P. basis - the amount of excess duty paid by the respondent has been shown as receivable - domestically procured goods have suffered less duty and imported goods have suffered more duty. HELD THAT:- The said issue as to whether on M.R.P. based goods, the bar of unjust enrichment is applicable or not has been dealt with by this Tribunal in the case of M/s. Birla Corporation Ltd. [ 2017 (8) TMI 785 - CESTAT ALLAHABAD] wherein the Tribunal observed that it is an admitted fact that the appellant have received the same price/MRP for clearances of goods on 6 December, 7 December, 8 December, and so on. Accordingly I hold that there can be no presumption that the appellant have passed on the excess duty deposited erroneously on 7 December, to the buyer of the goods. Accordingly, I hold that the doctrine of unjust enrichment has been satisfied by the appellant assessee and I hold them entitled to refund of the amount in question. Conclusion - The duty burden was not passed on to buyers, and therefore, the refund claim was not barred by unjust enrichment. There are no merit in the appeal filed by the Revenue and accordingly, the same is dismissed.

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• 2025 (2) TMI 526
  Confiscation - redemption fine - penalty - requirement to affix BIS mark on the product imported - adjudicating authority failed to consider the submissions made by the appellant during the course of hearing - violation of principles of natural justice - HELD THAT:- There is no controversy in so far as the shipment of goods on 13.01.2017 is concerned. On that date, Stainless Steel Products (Quality Control Order) 2016 had not come into force. The provisions of Stainless Steel Products (Quality Control Order) 2016 came into effect from 7th February, 2017. Therefore, in view of para 2.17 of the Foreign Trade Policy, 2015-2020, the date of import shall be reckoned as the date of shipment/ dispatch of goods. The Bill of Lading contains the date of January- 2017 when the Stainless Steel Products (Quality Control Order), 2016 was not in force. Therefore, in these circumstances, the appellant was not duty bound to affix BIS mark on the Stainless Steel imported by them. The submission of the Authorised Representative that as the appellant was having full knowledge regarding the provisions of Stainless Steel Products (Quality Control Order) 2016 at the time of shipment/dispatch of the goods from the supplying country, therefore, they were duty bound to affix the BIS mark on the Stainless Steel, is not tenable and does not appear convincing. It is pertinent to note here that in M/s. METRO BRIGHT BAR INDIA PVT. LTD. [ 2020 (5) TMI 227 - CESTAT AHMEDABAD ], the Hon ble CESTAT Ahmedabad has held that the Stainless Steel Products (Quality Control Order) 2016 come into force on 07.02.2017. This order was not in force in the month of January- 2017, when the goods in question were shipped. Therefore, the appellant was not required to affix BIS mark on the product imported by them. Conclusion - The BIS mark was not required for goods imported before the Quality Control Order came into force. The impugned order is set aside - appeal allowed.

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• 2025 (2) TMI 525
  Classification of imported goods - Light Green Float Glass [Light Green Float Glass] - to be classified under Customs Tariff Item [CTI] 7005 10 10 of the First Schedule to the Customs Tariff Act, 1975 or under CTI 7005 21 10? - benefit of exemption from payment of basic customs duty under the Exemption Notification dated 01.06.2011? - HELD THAT:- It is not in dispute that this issue was examined at length by the Commissioner (Appeals) in the order dated 20.07.2022 passed in Appeal Nos. 861-863/2022-23. This order was passed pursuant to the judgment dated 11.02.2022 of the Supreme Court that disposed of three appeals that had been filed by Asahi India Glass. The issue involved before the Commissioner (Appeals) was classification of Light Green Float Glass. After referring to the Customs Tariff and the competing entries and the test reports, the Commissioner (Appeals) held that Light Green Float Glass imported by Asahi India Glass would merit classification under CTI 7005 10 10 and consequently would be entitled to claim exemption under the Notification dated 01.06.2011. The order dated 14.12.2023 passed by the Commissioner (Appeals) that has been impugned in this appeal takes cognizance of the earlier order dated 20.07.2022 passed by the Commissioner (Appeals) in favour of Asahi India Glass and also notes that the said order was accepted by the department. Once the order passed by the Commissioner (Appeals) classifying Light Green Float Glass under CTI 7005 10 10 has been accepted by the department, it is not permissible for the department to contend in this appeal that Light Green Float Glass should be classified under CTI 7005 21 10. The Circular dated 14.11.2024 deals with the question whether the presence of a tin layer (which is present by default in all float glass) on one side can be treated as the absorbent, reflective layer. The Board clarified that issue was examined in consultation with CSIR-Central Glass Ceramic Research Institute, Kolkata. On examination, the Board found that Getting tin layer on the one side of the glass by default does not mean that it satisfies the condition under Note 2(c) of Chapter 70, that the expression absorbent, reflecting or non-reflecting layer means a microscopically thin coating of metal or of a chemical compound (for e.g. metal oxide) . It was, therefore, clarified that clear float glass, which is not wired, not coloured, not reflective, not tinted and only has a tin layer on one side with no other metal oxide layer on it, will be said to be having no absorbent layer and consequently classifiable under CTI 7005 2990. The test reports issued by CSIR Kolkata, also relied upon by the Commissioner of Customs (Appeals) in the impugned order, record that the tin side is detected under UV illumination using tin detector , and an absorbent layer is observed on tin side of the glass which is fluorescent under UV illumination . The Circular cannot provide for a stand which is contrary to the settled position determined by the Tribunal. Once the disputed goods satisfy all the conditions of Note 2(c) of Chapter 70, they deserve to be classified under CTI 7005 10 10 of the Customs Tariff Act. Conclusion - The Light Green Float Glass imported by Asahi India Glass should be classified under CTI 7005 10 10. Appeal dismissed.

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• Securities / SEBI

• 2025 (2) TMI 524
  Steps to be taken for listing the shares on the nationwide stock exchange - de-recognition of MSE - whether the Company has to be granted a reasonable extension to get itself listed with the 5th respondent? - HELD THAT:- It is trite, even in cases governed by statutes where specified periods are fixed, the courts should adopt a liberal and pragmatic approach in considering requests for extension of time or to condone the delay, rather than a hyper-technical or pedantic approach. The underlying principle of the various circulars issued by SEBI to the ELCs, is to get listed on a nationwide stock exchange or provide an exit option to the shareholders, with the intention to protect the interests of the shareholders. There is no material on record that shows that the Company s shareholders have any grievance or have raised any complaint against the Company. True, there has been some delay on the part of the Company, for which they have given a reasonable explanation, which has been accepted by SEBI and NSE atleast till 30.09.2023. After considering the facts, the materials on record, and the rival submissions made across the Bar, Company can be granted one last opportunity to get listed with the fifth respondent. In the aforesaid circumstances, notwithstanding Exts.P26 and P34 orders passed by SEBI, in the exercise of the extra-ordinary jurisdiction of this Court under Article 226 of the Constitution of India, extend the time period fixed in Ext.P22 by a further period of 90 days from the date of this judgment, to enable the Company to get itself listed with the 5th respondent. If the Company fails to adhere to the above time frame, Exts.P26 and P34 will stand confirmed.

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• Insolvency & Bankruptcy

• 2025 (2) TMI 523
  Admission of Pre-Packed Insolvency Resolution Process (PPIRP) against the CD - Corporate Debtor (CD) qualifies as a Micro, Small, and Medium Enterprise (MSME) based on its registration or not - value of its plant, machinery and equipment is more than Rs.50 crores as submitted by the Appellant in the year 2021-22 or not - period of 14 days as referred to in sub-section (3) of Section 11A of the IBC is a directory or mandatory - Appellant has made out a case to set aside the orders dated 19.04.2023, admitting Application under Section 54C or not - payment to the Appellant, i.e. dissenting Financial Creditor in the Resolution Plan is in accordance with Section 30, sub-section (2) (b) of the IBC or not. Whether the CD on the strength of registration dated 21.07.2020 issued by Ministry of Micro, Small and Medium Enterprises, can be treated to be a MSME? - Whether value of its plant, machinery and equipment is more than Rs.50 crores as submitted by the Appellant in the year 2021-22? - HELD THAT:- There are no error in classification of the CD as MSME. Learned Counsel for the Respondent has also placed reliance of the judgment of this tribunal in Amit Guptaq vs. Yogesh Gupta, RP (Company Appeal (AT) (Ins) No.903 of 2019) decided on 20.12.2019 wherein it is held that in the summary procedure under IBC, the Adjudicating Authority is not expected to go into account and investigate if and in which category an application falls under Section 7 examining Notifications under the MSME Act. This Tribunal in Ramesh Shah vs. Central Bank of India Ors. [ 2024 (3) TMI 82 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB ] had occasion to consider the issue and this Tribunal had clearly laid down that the Adjudicating Authority is not expected to go into accounts and examination of certificates issued by the competent authority under MSME Act and notification issued thereunder or modify/ revise/ revoke or interfere in any manner with the MSME registration granted etc. CD had valid MSME registration certificate dated 21.07.2020 and CD as MSME was eligible to file Application under Section 54C. Whether period of 14 days as referred to in sub-section (3) of Section 11A of the IBC is a directory , i.e. whether an Application under Section 54C is filed even after 14 days of filing of Section 7 Application, the Adjudicating Authority can proceed to decide Section 54C Application first?; What is the intent and purpose of 14 days provided in sub-section (3) of Section 11A? - In event it is held that period of 14 days as mentioned in sub- section (3) of Section 11A is mandatory , what is the consequence on the order dated 19.04.2023 passed by Adjudicating Authority, which has been challenged in these two Appeal(s)? - HELD THAT:- The statutory scheme delineated by Section 11A provides the same priorities as recommended by the Insolvency Law Committee. In the present case, the relevant dates for filing of the Application under Section 7 or Section 54C are not disputed. Section 7 Application was filed by the Bank of Baroda on 18.04.2022, whereas Application under Section 54C was filed by the CD on 25.07.2022. The submission, which has been pressed by the Appellant is that Application under Section 7 having been filed on 18.04.2022 and the Application under Section 54C having been filed much beyond 14 days period, Application under Section 7 ought to have been first disposed of, which is mandatory requirement under Section 11A (3) and the Adjudicating Authority erred in first considering Section 54C Application and admitted the same. Provision for PPIRP was inserted in IBC when amendment in Code was found necessary to provide for PPIRP. When Chapter III-A was inserted by Act No.26 of 2021, legislator was well aware that against the CD there might be Applications under Section 7, 9 and 10 pending or will be filed. Chapter III-A and Section 11A, after Chapter II was inserted by the same amending Act No.26 of 2021 - The entire scheme delineated by Section 11A by sub-section (1), (2) and (3) provides for priority of disposal of different Applications under Section 54C in respect of Application under Section 7, 9 and 10. Application under Section 54C was filed after 14 days from filing of Section 7 Application and as per Section 11A, sub-section (3), the Adjudicating Authority was obliged to consider the Application under Section 7 before proceeding to dispose of Section 54A Application. Whether in the facts of the present case, when Resolution Plan has been approved in the PPIRP of the CD, which Plan also stand implemented, the Appellant has made out a case to set aside the orders dated 19.04.2023, admitting Application under Section 54C and order dated 22.08.2023 approving the Base Resolution Plan? - Whether in the facts of the present case, the Appellant has made out a case for directing Section 7 Application (filed by the Appellant on 18.04.2022) to be heard and decided on merits, by setting aside all actions taken in Application under Section 54C? - HELD THAT:- The CD is a MSME. The IBC provide for special protection to the MSME and Chapter III-A, inserted by Act No.26 of 2021 was with purpose and object of quick resolution of MSME - There is no dispute between the parties that Consortium of Lenders, including SBI, IDBI Bank and Bank of Baroda has extended Financial Facilities to the CD. After the accounts having been declared NPA, the CD had submitted the proposal for negotiated settlement to all the three Banks. In the affidavit, which has been filed by the CD dated 31.07.2023 in Company Appeal (AT) (Ins.) No.888 and 890 of 2023, the CD has brought on record a reply Application filed by the SBI to Section 54C Application filed by the CD. The object of the IBC is Resolution of the CD. The present is a case, which consist of three Consortium Members of the Bank SBI being 47.21% vote share; IDBI Bank 26.70% vote share and Bank of Baroda with 26.09% vote share. Both the Lenders, i.e., SBI and IDBI had also granted approval of negotiated settlement much prior to filing of Section 7 Application - no useful purpose shall be served in setting aside order dated 19.04.2023 passed by Adjudicating Authority admitting Section 54C Application and directing for fresh consideration of Section 7 Application - CD having been resolved by making payments to all the Lenders, including the Appellant, it is not in the interest of all the stakeholders or the CD to set aside the entire action taken under Section 54C and direct for hearing of Section 7 Application filed by the Bank of Baroda, which was for the purpose of resolution of the CD. Whether the payment to the Appellant, i.e. dissenting Financial Creditor in the Resolution Plan is in accordance with Section 30, sub-section (2) (b) of the IBC? - HELD THAT:- The Learned Counsel for the Appellant is right in his submission that the Resolution Plan provides for same payment to assenting and dissenting Financial Creditors. The Appellant was thus clearly entitled for payment in the Resolution Plan as per Section 30, sub-section (2) (b) in reference to Section 53(1) (b), i.e. whatever amount was payable to the dissenting Financial Creditor, in event of liquidation, the said amount would be required to be paid - The Bank of Baroda, which has total exposure of 13.61 + 10.09 percentage i.e. 23.70% of outstanding debt of total exposure. The Appellant has already been 30.02 percent of outstanding amount. There may be little difference between amount, if computed as per amount payable to the dissenting Financial Creditor under Section 30, sub-section (2) (b). But whatever may be the difference, if the said amount is greater to the amount paid to the Appellant, the same is entitled to be paid. The ends of justice will be served in directing the SRA to make the payment of differential amount, if any, to the Appellant, as per Section 30, sub-section (2) (b), which payments be made within a period of 30 days from today. Conclusion - i) CD had valid MSME registration certificate dated 21.07.2020 and CD as MSME was eligible to file Application under Section 54C. ii) Application under Section 54C was filed after 14 days from filing of Section 7 Application and as per Section 11A, sub-section (3), the Adjudicating Authority was obliged to consider the Application under Section 7 before proceeding to dispose of Section 54A Application. iii) CD having been resolved by making payments to all the Lenders, including the Appellant, it is not in the interest of all the stakeholders or the CD to set aside the entire action taken under Section 54C and direct for hearing of Section 7 Application filed by the Bank of Baroda, which was for the purpose of resolution of the CD. iv) The ends of justice will be served in directing the SRA to make the payment of differential amount, if any, to the Appellant, as per Section 30, sub-section (2) (b), which payments be made within a period of 30 days from today. Appeal disposed off.

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• 2025 (2) TMI 522
  Admission of Section 7 application - existence of a financial debt - occurrence of default - failure in repayment as per revised terms of the amendment to third Debenture Trust Deed - Financial Creditor by majority controlled the PMC and default subsequent to constitution of PMC is orchestrated by financial creditor - HELD THAT:- The PMC was constituted for the purpose and object to monitor the project, to improve the sales and collections from the project and completing the construction of the project. PMC was constituted to improve the functioning of company qua the construction of the project. PMC in no manner has undertaken the obligation of the obligors towards repayment which is clearly reflected in Clauses 2.6 and 2.22 as extracted above. There are no substance in the submission of Shri Arun Kathpalia that after constitution of PMC in which there are three members of the financial creditors i.e. majority, blame for non-payment of due amount can be put on the financial creditor itself. The PMC was constituted to assist and improve the operations and construction of the project which in no manner diminish the obligation of the corporate debtor to fulfil its payment obligation. The default in repayment of the obligation by obligors cannot in any manner be put on the financial creditor nor constitution of PMC in any manner affect the obligation or absolve the corporate debtor from its default for repayment of the debt. The Respondent is right in his submission that in Section 7 application the Adjudicating Authority was obliged to determine whether default has occurred or whether debt was due as remained unpaid. The Hon ble Supreme Court in E.S. Krishnamurthy and Others vs. Bharath Hi-Tech Builders Private Limited [ 2021 (12) TMI 683 - SUPREME COURT] referring to the earlier judgment of the Hon ble Supreme Court in Innoventive Industries Ltd. vs. ICICI Bank [ 2017 (9) TMI 58 - SUPREME COURT] held in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is due i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise. As per the Settlement Agreement dated 04.11.2019, any action taken by the PMC through its members consisting of nominees of the financial creditor can have no consequence or effect on the obligation and liabilities of the obligor to fulfil their obligation of repayment. Conclusion - There are no infirmity in the findings returned by the Adjudicating Authority that the financial creditor succeeded in proving the debt and default and the ingredients under Section 7 are fulfilled. In view of the facts brought on the record, it is clearly proved that there is a debt and default which has been acknowledged from time to time by the corporate debtor. Corporate debtor has failed to honour its repayment obligations as per financial document. Adjudicating Authority after considering all submissions of the parties have rightly returned the finding of debt and default. No ground has been made out to interfere with the impugned order dated 08.01.2025 passed by the Adjudicating Authority admitting Section 7 application. There is no merit in the appeal. The Appeal is dismissed.

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• Service Tax

• 2025 (2) TMI 521
  Seeking quashing of SCN - Delay in adjudication of SCN - Adoption of different method of valuation of service provided by the petitioner for payment of service tax - HELD THAT:- It is not to be resorted by the department where particular there is a conflicting view of the Central Excise Officer. In event, the Audit objection and decision to raise objection by the department is an internal arrangements between the department. The fact remains that the department itself had concluded in Reply to Statement of Facts. In fact, the respondent had also recommended for closure and dropping of the proposal in the show cause notice. However, the issue is kept alive for over two decades and for the first time the department woke up only on 19.01.2021, pursuant to which the Principal Commissioner has accorded permission for adjudication. The adjudication of the show cause at this distant point of time is unnecessary and unwarranted, particularly in the light of the SoF of the department having difference of opinion with the CERA audit objection. Therefore, the impugned show cause notice ought not to have been issued and not proceeded and in any event ought to have been dropped. The fact remains that the petitioner has discharged service tax liability as a service provided in works contract service as defined in Section 65 (95) (ZZZA) of the Finance Act, 1994. This Court is of the view that the writ petition has to be allowed. The excess amount deposited by the petitioner during the course of investigation by CERA has to be refunded by the respondent within a period of two months together with interest @ 6% from the date of payment till the date of payment. Conclusion - i) The delay in adjudication of the show cause notice warranted quashing of the notice. ii) The petitioner was entitled to alter the basis of valuation for service tax payment as per the Finance Act, 1994. Petition allowed.

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• 2025 (2) TMI 520
  Refund of service tax paid on services used in export of goods during the quarter October-December, 2008 in terms of N/N. 41/2007-ST dated 06.10.2007 - rejecton of refund only on the ground that the services of CHA, taxable under Section 65(105)(h) of the Service Tax Act, 1994, were brought under the category of specified services vide N/N. 17/2009-ST dated 07.07.2009 - HELD THAT:- This finding of the learned Commissioner (Appeals) is wrong because the services of CHA were brought under the category of specified services w.e.f. 01.04.2008 vide Notification No. 17/2008-ST dated 01.04.2008 vide which Notification No. 41/2007-ST dated 06.10.2007 was amended. So, it is wrongly held by the learned Commissioner (Appeals) that the services of CHA were not covered. Further, it is found that otherwise also the impugned services namely DEPB Charges, Terminal Handling Charges, Postage Charges etc. are covered under the specified services as provided in the said Notification. It is also found that service tax on the impugned services has been paid under the category of CHA and therefore, classification of the service cannot be disputed at CHA s end. Conclusion - The disputed services such as DEPB Charges, Terminal Handling Charges, and Postage Charges fell under the specified services as per the notification. Refund remains allowed. The impugned order is set aside - appeal allowed.

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• 2025 (2) TMI 519
  Levy of service tax - restaurant service without air conditioning facility - appellant argued that the air conditioning was removed, as it lacked the power capacity to run AC - HELD THAT:- In his statement recorded under Section 14 of the Central Excise Act, the appellant stated that on 8.7.2010 when he obtained Bar licence he had air conditioning facility in his Restaurant-cum-Bar. However, this facility of air conditioner was removed and instead air coolers was provided by the end of year 2010 till 31.12. 2012. Meanwhile, on enquiry with the State Excise Department, the copy of the application along with the declaration as submitted by the appellant for obtaining the liquor licence was produced, which clearly mentioned that the restaurant is air conditioned. It also appears that this matter was verified by the Central Excise Officer as to whether the appellant had submitted any further communication for removing the air conditioning facility and instead providing air cooler facility at the restaurant. However, the State Excise Officer vide letter dated 09.09.2013 informed that no such communication had been made by the appellant. It is clear that the statement made by the appellant on 28.12.2012 was a mere cover to avoid any service tax liability and there is no substantive proof in support thereof. On the contrary, it is on record that in the initial application made by the appellant on 23.6.2010 for availing the liquor licence the restaurant had air conditioning facility. There is nothing to rebut this documentary evidence and therefore the case of the appellant is not acceptable. In similar facts and circumstances in the case of Gurukripa Yuvraj Veg. Non Veg. Restaurant vs. Commissioner and Additional Director General, Jaipur [ 2023 (8) TMI 1049 - CESTAT NEW DELHI.] , wherein the proprietor was the same, Sh. Charan Pal Singh, has decided the matter and it was held that We, therefore do not agree with the aforesaid order of the Commissioner (Appeals). Unless and until, the appellant is able to produce any cogent and substantive evidence in support of his statement that he does not have the AC facility in the restaurant, he is not eligible to claim the benefit of the exemption notification. The burden lies on the appellant to prove his case that he falls under the exemption Notification as there is no AC facility in his restaurant, which he has failed to do. Conclusion - The statement made by the appellant on 28.12.2012 was a mere cover to avoid any service tax liability and there is no substantive proof in support thereof. There is nothing to rebut this documentary evidence and therefore the case of the appellant is not acceptable. There are no infirmity in the impugned order. Consequently, the appeal is dismissed.

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• Central Excise

• 2025 (2) TMI 518
  Refund/Rebate claim - denial of refund on the ground that appellants exported goods u/r 19 of Central Excise Rules, 2002 under Bond, since the finished product is chargeable to NIL rate of duty for export, CENVAT credit is not admissible in terms of Rule 6(6)(vi) of CENVAT Credit Rules, 2004 - HELD THAT:- The issue is squarely covered by the judgment in the case of M/s Repro India Ltd. [ 2007 (12) TMI 209 - BOMBAY HIGH COURT] and M/s Drish Shoes Ltd. [ 2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT] , wherein it was held that CENVAT credit is admissible even if the raw material is utilized in the manufacture and export of exempted goods. Hon ble Apex Court in COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH VERSUS M/S DRISH SHOES LTD. [ 2016 (7) TMI 1415 - SC ORDER ] the judgment of Hon ble High Court of Himachal Pradesh in the case of M/s Drish Shoes. The principle adopted by the Hon ble Courts was that goods are to be exported and not the taxes. Learned Authorized Representative for the appellant-Revenue submits that, learned Commissioner should not have relied upon M/s Drish Shoes Ltd. as the SLP filed by the Revenue against the order of the Hon ble High Court was pending before the Hon ble Apex Court. Hon ble Apex Court did not stay the operation of the Hon ble High Court s order and therefore to that extent, there is no infirmity in the order passed by the learned Commissioner. Conclusion - CENVAT credit is admissible even if the raw material is utilized in the manufacture and export of exempted goods. The refund is allowed. The appeal filed by the Revenue is dismissed.

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• 2025 (2) TMI 517
  Reversal of CENVAT Credit - fraudulent availment of CENVAT credit - lapse of credit in terms of provisions of Rule11(3) of the CC Rules - HELD THAT:- In terms of Rule 11(3) of CENVAT Credit Rules, 2004, the credit lying with the assessee as on the date on which the final products have been declared exempt shall lapse. The records of the case do not reveal whether the balance that is sought to be held to have lapsed as on 01.03.2010 was after the reversal made in terms of the OIO dated 22.04.2013 or otherwise. It is also not clear as to how the impugned order holds that the amount of Rs.1,09,76,108/- was reversed. The Show Cause Notice dated 06.04.2011 was about fraudulent availment of CENVAT credit and in case the appellant has reversed the demand confirmed vide Order dated 22.04.2013, it is not understood as to how the credit of Rs.1,54,84,494/- is available as on 27.10.2010 i.e. as on the date of issue of Notification No. 10/2010 dated 27.02.2010. Both the impugned Show Cause Notice dated 27.08.2012 and the other Show Cause Notice dated 06.04.2011 have been issued well beyond 01.03.2010. Revenue, in fact, had an opportunity to take up both issues in a single Show Cause Notice. Revenue instead of taking a holistic view has confounded the issue further by issuing multiple Show Cause Notices giving rise to the confusion. Conclusion - It is necessary in the interest of justice that the issue, as far as the allowing of adjustment/ reversal of CENVAT credit of Rs.1,09,76,108/- is concerned, should travel back to the Original Authority to verify as to whether the respondents have reversed the above credit in terms of the Orderin- Original dated 22.04.2013 and if so, what was the actual balance lying in credit as on the date of Notification i.e 27.02.2010. Such credit actually lying in balance as on 01.03.2010 shall lapse. Appeal allowed by way of remand.

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• 2025 (2) TMI 516
  CENVAT credit on certain items purchased by them and exported - interpretation and application of Rule 2(k) of the CENVAT Credit Rules, 2004, and Rule 16 regarding the definition of input - HELD THAT:- The unmissable reading of the Rule 2(k) is that the any item to be qualified as an input for the CENVAT Credit Rules should be used in or in relation to the manufacture. It is not the case of the respondent that the items in question are used in the factory for manufacture. They are purchased by the respondents and exported. It is not the case of the respondents that the items impugned should be treated as bought-out items and the value of the same thereof has been included in the assessable value of goods either exported or cleared in the domestic market. From the facts of the case, it appears that the respondents have simply procured the goods, brought to the factory and exported these goods along with their manufactured products. For this reason, the credit is not admissible to the respondents. The respondents could have claimed rebate of excise duties paid on these items instead of availing CENVAT credit on the same, though they are not used in or in relation to the manufacture of the goods exported by them. However, the same is not the subject matter of the impugned case. Conclusion - From the facts of the case, it appears that the respondents have simply procured the goods, brought to the factory and exported these goods along with their manufactured products. For this reason, the credit is not admissible to the respondents. The impugned order is set aside - appeal allowed.

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• 2025 (2) TMI 515
  CENVAT Credit on the input service - banking charges/commission paid in relation to obtaining bank guarantee related to VAT refund in respect of purchase of raw material, being set off of the sales tax on account of such final products being exported abroad - extended period of limitation - penalty - HELD THAT:- It is an undisputed fact of the case that applicable service tax has been paid on the input services and the Department had no objection for the payment of such service tax, by the input service provider i.e. Bank. There is also no dispute that the appellants are eligible to avail CENVAT Credit of such service tax. The dispute therefore remains to be examined is for consideration of the fact that whether the disputed services are used in or in relation to the manufacture of final products as provided under clause (ii) of the definition of input service under Rule 2(l) ibid. The services which are in dispute are banking commission/charges. Prima facie, when the service tax has been duly paid on the input services which are in relation to the VAT setoff on raw materials used for manufacture of final products, then taking of CENVAT Credit cannot be objected to inasmuch as Rule 3 of CENVAT Credit Rules, 2004 specifically state that a provider of output service to avail such credit of tax paid on input service. The setoff of VAT arising on account of final products being exported does not nullify that the raw materials have been used in manufacture of final products. When these raw materials have been used as inputs, the attendant services of obtaining bank guarantee for claiming VAT refund eligible on account of raw materials having been used for manufacture of final products had arisen, and this does not bring any new ground for making the input service tax as ineligible for taking CENVAT credit. The bank charges/commission paid for obtaining bank guarantee is in connection with raw materials purchased which are used for manufacture of final products. Thus, to this extent, such input services availed by the appellants satisfies the first means part of the definition of input service as per Rule 2(l) ibid. Further, the second inclusion part of the definition also specifically provide for services used in relation to procurement of inputs, legal services, financing, accounting, sales promotion, outward transportation upto the place of removal etc. for being covered in the inclusion part of the definition - Inasmuch as the disputed input services as above are covered under the means and inclusion part of the definition of input service under Rule 2(l) ibid and are not covered by exclusion part of the definition, it is found that there is no legal basis for denial of CENVAT Credit on these services. The grounds for rejection of CENVAT Credit on input services in the order of the adjudicating authority which was upheld by the learned Commissioner (Appeals) is that the input services have not been specifically used by the appellants in or in relation to the manufacture of final products. From the facts of the present case, it clearly transpires that all services that are having a relation with raw materials have been used, either directly or indirectly in manufacture of final products, and only upon such final products having been exported, the VAT setoff was given, and therefore the bank commission/charges for obtaining bank guarantee is with respect to such usage of raw materials in the final products and not per se directly relating to its exports - the grounds on which the input service credit was disallowed in the original order, which was upheld by the impugned order, have no legal basis and accordingly the impugned order is liable to be dismissed as being not legally sustainable. Extended period of limitation - penalty - HELD THAT:- There are no recording of any findings on other submissions made by both sides, in respect of invocation of extended period and imposition of penalty. Further, as rightly held in a number of decisions by the higher judicial forum, in respect of issues concerning interpretation of law, extended period of limitation cannot be invoked and penalty for evasion or for violation of law cannot be imposed. Therefore, in the present case, the adjudged demands having been held as not sustainable on merits, the imposition of penalty against the appellants by invoking extended period of demand is also not legally sustainable. Conclusion - The services indirectly related to the manufacturing process, such as those facilitating VAT refunds on raw materials, qualify as input services under the CENVAT Credit Rules. The impugned order dated 03.12.2020 is set aside - Appeal allowed.

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• 2025 (2) TMI 514
  Valuation of Excise duty - specifications, drawings and designs supplied by Maruti to the appellant when sending requests for quotations (RFQ) - additional consideration for sale of the goods or not - HELD THAT:- It is undisputed that if they form additional consideration for sale , then their value must be included in the assessable value as per section 4(1) (b) of the Central Excise Act,1944 [Excise Act] and Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 [Valuation Rules] and if they do not form additional consideration for sale , then they cannot be included and the assessable value will be the transaction value itself as per section 4(1) (a) of the Excise Act. The question which arises is as to what is consideration and this term is not defined either in the Excise Act or in the Sale of Goods Act but is defined in the Indian Contract Act, 1872 [Contract Act ] the Act which covers all types of contracts including those of sale. Since every transaction of sale or purchase, is also a contract- whether explicit or implicit- it is appropriate to examine the term consideration under the Contract Act in the absence of any other definition of this term under the Sale of Goods Act or the Excise Act. Section 3 of the Sale of Goods Act makes it explicit that the provisions of the Contract Act would apply to sales. For something to be consideration , it must be something done or something abstained from doing at the desire of the promisor. This something could be done or abstained from doing either by the promise himself or by someone else but it must be at the desire of the promisor - It also needs to be noted that consideration could be in cash or some other valuable or simply something done or abstained from doing under the Contract Act but under Sale of Goods Act, only price can be the consideration. Under the Central Excise Act, consideration has to be for cash, deferred payment or some other valuable consideration . For something to be an additional consideration for sale as per Section 4(1) (b) of the Central Excise Act and Rule 6 of the Valuation Rules, it has to be consideration in the first place which, as defined under the Indian Contract Act, has to flow to the promisor from the promisee or anyone else at the desire of the promisor. Before the proposal of the appellant and its acceptance by Maruti, there was no promise, no promisor and no promisee. The specifications or drawings and designs supplied while inviting bids- regardless of its value- cannot be called consideration but can only be called articulation of the needs of Maruti. They were also not provided at the desire of the promisor(the appellant) but by Maruti (the promisee) on its own accord to elicit proposals (quotations). In Denso India Private Limited vs. Additional Director General (Adjudication) [ 2024 (3) TMI 686 - CESTAT NEW DELHI] , the Tribunal decided in favor of the appellants on an identical issue, concluding that the notional cost of drawings and designs supplied free of cost by Maruti to the vendors cannot be included in the assessable value for central excise duty purposes. Conclusion - The specifications, drawings, and designs provided by Maruti to the appellant do not constitute additional consideration for sale under the Central Excise Act and Valuation Rules. The impugned order cannot be sustained - Appeal allowed.

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