TMI Tax Updates - e-Newsletter
February 28, 2025

Case Laws in this Newsletter:

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

TMI Short Notes

1. A Comparative Analysis of "Profits in Lieu of Salary" Under the New Tax Regime: Clause 18 of Income Tax Bill, 2025 vis-a-vis Section 17(3) of Income-tax Act, 1961.

  Bill:

2. A Comparative Analysis of Perquisite Provisions: Income Tax Bill, 2025 vs Income Tax Act, 1961

  Bill:

3. A Comparative Analysis of Salary Definition: Income Tax Bill, 2025 vs. Income-tax Act, 1961

  Bill:

4. Analysis of Changes in Deductions from Salaries: Comparing Clause 19 of Income Tax Bill, 2025 with existing sections 16 and 10 of the Income Tax Act, 1961.

  Bill:

5. Judicial Recall and Tax Implications in Trust Settlements: Using AI-generated citations without proper verification

  Income Tax:

Articles

1. Common Mistakes to Avoid During LLP Registration Online

   By: Ishita Ramani

2. INCOME TAX NEW RULES 2025 ACT

   By: Vikrant sharma

3. US Dominates India's Almond and Pistachio Imports Amid California's Groundwater Crisis: A Closer Look at Trends and Challenges.

   By: YAGAY andSUN

4. INFRASTRUCTURE DEBT FUND

   By: DR.MARIAPPAN GOVINDARAJAN

5. Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations, 2018[M.F (D.R) Notification No. 36/2018-Cus (N.T.) dated 11-5-2018]

   By: YAGAY andSUN

6. International Chamber of Commerce (ICC) and Protectionism in International Trade.

   By: YAGAY andSUN

7. India's Rice Exports and the Underground Water Crisis: A Critical Analysis and the Need for a Concrete National Water Policy in context with National Agricultural Policy.

   By: YAGAY andSUN

8. Passenger Name Record (PNR) Information Regulations, 2022[Notification No. 67/2022-Customs (N.T.), dated 8th August 2022]

   By: YAGAY andSUN

9. India's Exports to MERCOSUR Countries – SWOT Analysis.

   By: YAGAY andSUN

News

1. Persons can seek anticipatory bail in cases related to GST, Customs even in absence of FIR:SC

2. Waqf bill to come up in Parliament during second part of Budget Session after Cabinet nod: Sources

3. More Savings, Better Coverage: How Budget 2025-26 Puts More Money in Your Pocket & Expands Insurance for All

4. Budget session: Jayant Patil downplays lack of numbers, says Oppn will put govt on mat

5. Union Budget step towards realising vision of self-reliance: BJP leader Rudy

6. Protein Day 2025 Calls for Smarter Protein Consumption with the #RightWayToProtein

7. Union Minister for Commerce and Industry, Shri Piyush Goyal, inaugurates ‘Bharat Calling Conference 2025’ organized by IMC Chamber of Commerce and Industry

8. Quality Council of India (QCI) brings Gunvatta Sankalp to Nagaland to propel quality-backed growth in the state

9. Union Finance Minister Smt. Nirmala Sitharaman to preside over as Chief Guest for the 49th Civil Accounts Day celebrations in New Delhi on 1st March 2025

10. D&B's City Vitality Index (CVI) Redefines Urban Analytics to Assess Economic Impact

11. Understanding Long-Term Capital Gains Tax on Property and How Real Estate Developers Can Assist

12. Commerce and Industry Minister Piyush Goyal joins Maharashtra CM Devendra Fadnavis for key distribution ceremony of 15 self-redeveloped housing societies in North Mumbai

13. DPIIT and Paytm join hands to drive innovation and scale India’s manufacturing & fintech startup ecosystem

14. Trump cuts financial lifeline for Venezuela's government by ending permit to export oil to US

15. Ukraine's Zelenskyy says framework economic deal with US ready but security guarantees undecided

16. One nation, one election will bring economic efficiency in country: Tripura CM

17. Ukraine's Zelenskyy says framework economic deal with US ready

18. US, Ukraine have agreed on preliminary economic deal: Ukraine's prime minister

19. MP: ISO certificate awarded to Principal Chief Income Tax Commissioner Office

20. $1.4 bn tax demand on Volkswagen: HC asks Customs to file affidavit on time limitation

Notifications

Customs

1. G.S.R. 149 (E) - dated 27-2-2025 - Cus

Corrigendum - Notification No. 04/2025-Customs, dated the 1st February, 2025

GST - States

2. 04/2025-Puducherry GST (Rate) - dated 4-2-2025 - Puducherry SGST

Amendment in Notification No. 8/2018-Puducherry GST (Rate), dated 25th January, 2018,

3. 03/2025-Puducherry GST (Rate) - dated 4-2-2025 - Puducherry SGST

Amendment in Notification No. 39/2017-Puducherry GST (Rate), dated 25th October, 2017

4. 02/2025-Puducherry GST (Rate) - dated 4-2-2025 - Puducherry SGST

Amendment in Notification No. 2/2017- Puducherry GST (Rate), dated 29th June, 2017

5. 01/2025-Puducherry GST (Rate) - dated 4-2-2025 - Puducherry SGST

Amendment in Notification No. 1/2017-Puducherry GST (Rate), dated 29th June, 2017

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/23 - dated 27-2-2025

Timelines for deployment of funds collected by Asset Management Companies (AMCs) in New Fund Offer (NFO) as per asset allocation of the scheme

Highlights / Catch Notes

GST

• Tax Assessment Orders Set Aside Due to Natural Justice Violation; Petitioner to Deposit 10% Amount Within 4 Weeks

  Case-Laws - HC : HC found merit in petitioner's challenge regarding violation of natural justice principles and non-application of mind in the impugned orders. Court directed petitioner to deposit 10% of disputed tax amount within four weeks from order receipt, as mutually agreed by both parties' counsel. The impugned orders dated 24.08.2024 and 07.12.2024 were set aside. Matter remanded back to adjudicating authority, granting petitioner final opportunity to present objections. Petition disposed of with these directions, ensuring procedural fairness while safeguarding revenue interests through partial tax deposit requirement.
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• Input Tax Credit Limited to 105% of Verified Invoices Under Rule 36(4) CGST Rules Upheld as Constitutional

  Case-Laws - HC : HC upheld validity of Rule 36(4) of CGST Rules, dismissing constitutional challenge. Court determined Rule 36(4) derives authority from Section 16 of CGST Act and general rule-making powers under Section 164, not from unenforced Section 43A. Since Section 43A was never notified and later omitted by Finance Act 2022, it cannot be source of Rule 36(4)'s authority. Court also declined to examine specific orders challenged by petitioner due to available statutory appeal remedy. Ruling affirms Rule 36(4)'s legitimacy in governing input tax credit eligibility procedures under GST framework.
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• Gold Dealer Faces Confiscation Under GST Act Section 130 for Rs.47.73 Crore Undocumented Sales Without Registration

  Case-Laws - HC : HC dismissed petition challenging gold seizure under GST Act. Petitioner conducted unregistered sales of old gold worth Rs.47.73 Crores, with transactions lacking proper tax documentation. Time extension for investigation granted under Section 67 proviso nullified petitioner's limitation argument. Court found confiscation proceedings under Section 130 prima facie valid, directing petitioner to participate in proceedings. Petitioner retains right to seek provisional release of seized gold under Section 130(2) during confiscation proceedings. Investigation revealed unauthorized procurement and supply between entities without mandatory GST documentation. Dismissal upholds administrative authority's jurisdiction while preserving statutory remedies available to petitioner.
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• GST Show Cause Notices Hidden in Portal's Additional Tab Violates Natural Justice; Section 73 Order Set Aside

  Case-Laws - HC : HC held that uploading GST show cause notices solely in the 'Additional Notices and Orders' portal tab without clear navigation instructions constituted improper service. The taxpayer's unawareness of notices was justified as the portal's earlier scheme was confusing and vague regarding notice placement. The court found that absence of explicit directions on the main 'Notices and Orders' tab about checking additional tabs amounted to ineffective information dissemination. Given this procedural defect violated natural justice principles, the determination order under Section 73 was set aside. The petitioner was granted 30 days to respond to the notices, with the court emphasizing that proper service requires clear portal instructions for accessing statutory notices.
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• Penalty Payment Under GST Section 129(1) Concludes Detention Proceedings Without Need for Formal MOV-09 Order

  Case-Laws - HC : HC dismissed petition challenging non-issuance of GST MOV-09 order following detention of goods and payment of penalty. Per Section 129(5) of GST Act, payment of penalty amount under Section 129(1) automatically concludes proceedings initiated through detention notice under Section 129(3). Once petitioner paid calculated penalty following truck detention, proceedings stood concluded by operation of law. Court held adjudication on requirement of formal order under Section 129(3) post-penalty payment was unnecessary since statute deems matter concluded upon payment. Petition seeking mandatory order for issuance of Form GST MOV-09 rejected as legally untenable given statutory deeming provision.
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• AAAR Reject Advance Ruling Application Under Section 98(2) Due to Ongoing DGGI Investigation into Same Matter

  Case-Laws - AAAR : AAAR upheld rejection of advance ruling application due to pre-existing proceedings under CGST Act. The appellant filed for advance ruling on 30.12.2022, after receiving summons from DGGI on 30.11.2022 and 20.12.2022. The term "any proceedings" in first proviso to Section 98(2) was interpreted broadly to include all scrutiny, inquiry, investigation, and assessment activities. AAAR distinguished this case from Radha Krishan Industries, noting that Section 83's restrictive interpretation of "proceedings" did not apply here. Since DGGI investigation preceded advance ruling application and concerned identical issues, the application was correctly rejected under Section 98(2) of CGST/TNGST Acts, 2017. Appeal dismissed.
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• GST Advance Ruling Application Rejected Due to Ongoing Investigation Under Section 98(2) of CGST Act

  Case-Laws - AAAR : AAAR upheld rejection of advance ruling application filed by appellant on 28.06.2022 regarding taxability of fees collected. Prior investigation by DGGI commenced with summons issued on 12.04.2022, followed by recorded statements and incident report concerning non-payment of GST on collected charges. First proviso to Sec 98(2) of CGST/TNGST Acts prohibits advance ruling pronouncement when investigation on same issue is pending. Since investigation preceded advance ruling application and addressed identical subject matter of tax liability on fees, application was correctly rejected as proceedings were already initiated under CGST Act. Appeal dismissed as investigation constituted valid "proceeding" barring advance ruling.
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Income Tax

• Income Tax Tribunal Recalls Order on Rs. 669 Crore Trust Investment Taxability Under Section 56(2)(x)

  Notes : ITAT Bangalore recalled its order dated 30.12.2024 concerning the taxability of investments worth Rs. 669.27 crores in Buckeye Trust under Section 56(2)(x) of Income Tax Act. The recall was necessitated due to reliance on four non-existent case law citations, potentially generated through AI tools. The original order had determined that trust benefits extending beyond relatives made it ineligible for exemption under Section 56(2)(x), interpreted "shares and securities" expansively, and classified partnership interests as taxable property. The recall order underscores critical procedural requirements for judicial citation verification and establishes precedent regarding trust settlement scrutiny, particularly concerning beneficiary scope and partnership interest treatment under tax regulations.
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• Income Tax Order Recalled Under Section 254(2) After Discovery of Non-Existent Case Laws Cited in Original Ruling

  Case-Laws - AT : ITAT recalled its earlier order due to discovery of inadvertent errors, specifically the reliance on non-existing case laws identified during suo-moto review. Exercising powers under s.254(2) of the Act, the Tribunal vacated the entire order and scheduled a fresh hearing. The matter involves jurisdictional authority to rectify mistakes apparent from record, which extends to substantive errors in legal reasoning. The recall order demonstrates ITAT's inherent power to correct decisions based on erroneous application of non-existent precedents. Fresh notices issued to
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• Tax Authorities Must Refund Rs. 6.05 Lakh Excess Adjustment and Process Appeal Under Section 250(6A) Within Timeline

  Case-Laws - HC : HC ruled in favor of the petitioner regarding tax refund and appeal processing. The court ordered respondents to refund Rs. 6,05,030/- within four weeks, recognizing this as excess adjustment against the 2015-2016 assessment year demand. The HC determined that respondents improperly failed to consider prior adjustments when calculating the 20% outstanding demand requirement. Citing Sec. 250(6A), the court mandated expeditious processing of the pending appeal, directing the CIT(A) to resolve it preferably by May 31, 2025. The judgment emphasized that authorities cannot benefit from their own delay in processing stay applications and must adhere to statutory timelines for appeal resolution.
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• Partners' Trade Advances and Reimbursements Not Deemed Dividend Under Section 2(22)(e) as Transactions Show Regular Business Operations

  Case-Laws - AT : ITAT dismissed Revenue's appeal against CIT(A)'s order regarding deemed dividend addition under section 2(22)(e). The assessee, a converted LLP, maintained ledger accounts showing loan transactions with a company where partners held substantial interest. The transactions reflected regular business operations with trade advances taken and returned, along with expense reimbursements, forming a running account for mutual benefit. The AO's treatment of peak credit as deemed dividend was rejected as they failed to establish that payments were made for individual shareholder benefits. While CIT(A) ruled based on LLP's non-shareholder status, ITAT upheld the order considering the regular business nature of transactions predating LLP conversion.
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• Share Sale Proceeds Cannot Be Fully Taxed Under Section 68 Without Proving Entire Chain of Tax Evasion

  Case-Laws - AT : ITAT ruled against treating entire share sale proceeds as undisclosed income under section 68. While penny stock transactions require scrutiny, price volatility alone doesn't invalidate trades. Revenue must prove the entire transaction chain was fabricated to introduce unaccounted income. Though initial burden lies on assessee to prove genuineness through documentation, revenue must demonstrate specific evidence of tax evasion scheme. AO failed to conduct detailed investigation proving assessee's involvement in price manipulation. Even if transaction validity is questioned, disallowing entire purchase cost violates established judicial principles. The tribunal allowed assessee's appeal, holding that taxing full sale value without cost consideration is legally unsustainable. Addition deleted accordingly.
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• Tax Authorities Cannot Apply 8% Gross Receipt Estimation When Highway Construction Costs Are Deferred Revenue Expenditure

  Case-Laws - AT : The ITAT ruled against the AO's 8% gross receipts estimation and treatment of highway construction costs as capital work-in-progress. The Tribunal determined that infrastructure assets belonged to NHAI, with the assessee merely having toll collection rights post-completion. Expenses incurred were classified as business assets or deferred revenue expenditure, to be proportionately debited during toll operation period. The ITAT rejected additions under Section 40(a)(ia) since no revenue expenditure was claimed in P&L. Similarly, Section 43B disallowances were invalidated as expenses were transferred to work-in-progress account without P&L claims. The ruling aligned with CBDT Circular dated 23.04.2014, confirming no taxable income accrual during the assessment year.
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• Transfer Pricing Adjustment Deleted After Assessee Proves Equipment Purchase Authenticity Through Laboratory Bills and Documentation

  Case-Laws - AT : TPO's adjustment on equipment purchases from associated enterprise was deleted. Tribunal found assessee had produced all relevant bills for laboratory equipment purchases before DRP and TPO, establishing transaction authenticity. Since documentary evidence conclusively proved actual equipment purchases occurred, no grounds existed for transfer pricing adjustment. TPO's basis for adjustment was invalidated as bills clearly demonstrated genuine equipment procurement transactions with AE. ITAT ruled adjustment was unwarranted when supporting purchase documentation had been furnished, thereby nullifying the entire TP addition made by TPO.
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• Telecom Company Wins Appeal: Section 263 Revision Order Invalid for License Fee, Demerger, and Transfer Pricing Issues

  Case-Laws - AT : ITAT overturned PCIT's revision order under s.263 concerning multiple issues in a telecom company's assessment. Key rulings: Interest/penalty on delayed license fee payments held as revenue expenditure, being compensatory rather than capital in nature. Carry forward of accumulated losses under s.72A allowed as demerger conditions were satisfied. No s.56(2)(x) implications arose on business acquisition through court-approved demerger. Transfer pricing adjustment directive rejected as AO had followed jurisdictional High Court precedent. Claims regarding TDS on bandwidth charges to non-residents, s.14A disallowance, depreciation verification, and s.269SS compliance were found to have been adequately examined during original assessment. ITAT emphasized that PCIT's revision powers cannot be exercised where AO has conducted proper inquiry, even if conclusions differ.
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• TDS Credit Must Be Granted Per Form 26AS Despite Software Glitch Limiting Initial Claim Under Section 199

  Case-Laws - AT : ITAT affirmed CIT(A)'s directive to grant TDS credit per Form 26AS despite taxpayer's initial failure to claim full credit in tax return due to software technical issues. Taxpayer had deducted Rs. 1,32,68,202 but system only uploaded Rs. 52,95,646. AO was instructed to verify and allow credit under Section 199 as no evidence suggested incomplete tax deposit. However, ITAT rejected taxpayer's claim for interest on delayed refund since taxpayer hadn't initially claimed full credit or promptly notified authorities about technical issues. Tribunal emphasized that taxpayers shouldn't face harassment due to technical glitches while maintaining proper verification procedures for tax credits.
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• High-Powered Sale Committee Members' Honorarium Restructured: Chairperson and Former HC Judge to Receive Monthly Fixed Compensation

  Case-Laws - SC : SC modified honorarium structure for High-Powered Sale Committee (HPSC) members due to infrequent meetings creating compensation disparity. Initially, Member Secretary received Rs.7,00,000 monthly while Chairperson and members received per-sitting amounts of Rs.2,00,000 and Rs.1,50,000 respectively. Court revised compensation effective February 2025: Chairperson to receive Rs.13,00,000 monthly and Member (former HC Judge) to receive Rs.10,00,000 monthly, plus travel and incidental expenses. Committee directed to expedite auction process to facilitate investor refunds. Modification addresses anomaly where Member Secretary's compensation exceeded other members due to limited committee meetings over seven months.
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Customs

• Countervailing Duty of 20% Imposed on Chinese Saccharin Imports Under Tariff Item 2925 11 00 for Five Years

  Notifications : DGTR imposed a 20% countervailing duty on imports of Saccharin (tariff item 2925 11 00) from China PR following an anti-subsidy investigation. The duty applies to all forms of Saccharin produced by any manufacturer in China PR and will remain in effect for five years from notification date. This supersedes previous notification 2/2019-Customs (CVD). The decision was based on findings that cessation of duty would likely lead to continued subsidization and injury to domestic industry. CIF value determination follows Customs Act provisions, with duty payable in Indian currency at applicable exchange rates specified under Section 14 of Customs Act, 1962.
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• Show Cause Notice Under Customs Act Section 28 Must Follow Due Process and Grant Personal Hearing Rights

  Case-Laws - HC : HC addressed procedural challenge regarding SCN issuance under Section 28 of Customs Act, 1962. While examining propriety of officer authority and adherence to natural justice principles, court mandated petitioner be granted opportunity to file reply and receive personal hearing before Adjudicating Authority. Court noted parallel matters in connected batch of writ petitions, previously adjourned sine die, could be resolved based on precedent established in Cannon-II ruling. Emphasizing due process requirements, court ensured administrative fairness through proper hearing mechanism. Petition disposed with directive to follow established procedural safeguards.
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FEMA

• Foreign Contribution NGOs Must Maintain Valid FCRA Registration Before Conducting Any Financial Transactions Under Section 11

  Circulars : MHA issued directive regarding FCRA accounts management, emphasizing that NGOs/associations must maintain valid FCRA registration for receiving or utilizing foreign contributions. Any credit or debit transactions in FCRA accounts without valid registration, including expired or cancelled certificates, constitutes a violation of FCRA 2010. The directive clarifies that foreign contributions must be utilized exclusively for approved purposes as per Section 11. Organizations must renew certificates within six months before expiry under Section 16. Non-compliance with these provisions triggers penal action. The notice mandates strict adherence to FCRA 2010 rules, addressing concerns about unauthorized foreign contribution transactions by entities lacking valid registration status.
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Bill

• Expenditure Disallowance Rules Simplified: Section 14A Gets Modern Language and Clearer Structure in Tax Bill 2025

  Notes : Comparative analysis of expenditure disallowance provisions between Income Tax Bill 2025 and Income Tax Act 1961 reveals significant modernization while maintaining core principles. The 2025 Bill restructures Section 14A with clearer language, replacing "Notwithstanding" with "Irrespective of" and streamlining the Assessment Officer's powers into two distinct scenarios. Key changes include removal of reassessment provisions, elimination of retrospective application clause, and adoption of simplified terminology using "tax year." The Bill enhances administrative efficiency by maintaining fundamental disallowance principles while reducing interpretational ambiguity through more direct language and clearer structuring. Notable omissions include specific references to Sections 147 and 154, and the removal of the Explanation section, indicating a shift toward prospective application.
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• Income Tax Bill 2025 Modernizes Salary Taxation Language While Preserving Core Section 15 Treatment and Compliance Framework

  Notes : Clause 15 of Income Tax Bill 2025 restructures salary taxation provisions while maintaining core principles of Section 15 of ITA 1961. Key modifications include replacement of "previous year" with "tax year," streamlined employer definitions incorporating former employers, and elevation of advance salary provisions and partner's remuneration exclusions to distinct subsections. The reorganization enhances statutory clarity without altering fundamental tax treatment or compliance obligations. Notable improvements include systematic arrangement of provisions, simplified terminology, and clearer statutory positioning of advance salary and partnership remuneration provisions. The amendments align with international tax legislation standards while preserving existing substantive tax implications for salary income.
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• Political Parties and Electoral Trusts Get Updated Tax Framework Under Clause 12, Schedule VIII of Income Tax Bill

  Notes : The Income Tax Bill, 2025 consolidates and modernizes tax provisions for political parties and electoral trusts through Clause 12 and Schedule VIII, replacing Sections 13A and 13B of Income Tax Act, 1961. The legislation maintains existing tax exemptions for income from house property, other sources, capital gains, and voluntary contributions while introducing stricter compliance requirements. Key modifications include a structured tabular format for provisions, retention of Rs. 2,000 cash donation limit, expanded electronic payment modes including electoral bonds, and mandatory 95% distribution requirement for electoral trusts. The bill strengthens documentation requirements, introduces explicit penalties for non-compliance, and enhances transparency through mandatory return filing deadlines and audit requirements. This reform represents a comprehensive overhaul of political funding taxation framework with emphasis on accountability and clean political funding mechanisms.
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IBC

• Insolvency Appeal Rejected: 104-Day Refiling Delay Not Justified Despite Medical Grounds Under IBC Limitation Rules

  Case-Laws - AT : Appeal dismissed by NCLAT due to unjustified delay of 104 days in refiling. While initial e-filing was within 45-day limitation period, subsequent defect rectification took excessive time without adequate explanation. Though medical condition of advocate's father was cited for late September, no justification was provided for delay between July-September 2024. In time-sensitive IBC proceedings, such prolonged refiling delays without sufficient cause cannot be condoned. The tribunal found explanation inadequate and unconvincing, leading to rejection of condonation application. Mere medical grounds for partial period deemed insufficient to justify entire delay period.
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Indian Laws

• Directors Not Liable Under Section 141 NI Act For Dishonored Cheques Due To Lack Of Direct Business Involvement

  Case-Laws - HC : HC ruled in favor of company directors, quashing criminal proceedings under NI Act for dishonored cheques. Court determined petitioners successfully demonstrated they were not responsible for company's business conduct when offense occurred. Following precedent from Rathish Babu Unnikrishnan case, HC found unimpeachable evidence at pre-trial stage showing directors lacked involvement in cheque transactions. Complaint failed to establish specific roles of directors or their control over business operations. Mere directorship was insufficient to trigger vicarious liability under Section 141 NI Act. Court emphasized requirement for clear evidence of direct responsibility in company management for criminal liability to attach. Petition allowed, proceedings against directors terminated.
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VAT

• Tax Department Must Refund Excess Deposits During Appeals When Final Assessment Shows Lower Tax Liability Under Articles 14, 265

  Case-Laws - HC : HC ruled that tax authorities cannot retain excess deposits made during appellate proceedings when final assessment is lower than deposited amount. Such retention constitutes unjust enrichment and violates Articles 14 and 265 of Constitution. Authorities directed to refund excess amounts for AY 2013-14 and 2014-15 with 9% interest from 09.01.2021 until payment. Additionally ordered Rs. 2,00,000 as costs for wrongful retention over four years. Both refund and costs payable within six weeks of order receipt. Court emphasized that retention of excess deposits beyond actual tax liability violates constitutional principles of equality and taxation authority.
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Service Tax

• Tax Authority Must Accept Rs. 11.26 Lakh Payment Under Sabka Vishwas Scheme Despite Earlier Wrongful Rejection

  Case-Laws - HC : HC determined petitioner's eligibility under Sabka Vishwas Scheme was wrongfully denied through unreasoned disqualification orders, with no evidence of ongoing investigation at application time. Despite scheme expiry, court directed acceptance of declared tax liability of Rs. 11,26,937/-. Petitioner granted one month to deposit amount, upon which impugned show cause notice would be quashed. Failure to deposit within deadline would automatically revive show cause notice dated December 31, 2020, with petitioner retaining right to respond. Department instructed to proceed legally if payment deadline not met. Petition disposed with conditional relief balancing administrative compliance and taxpayer rights.
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• Manpower Supply Services from Foreign Entities Attract Service Tax Under Reverse Charge for Cost Reimbursement Agreements

  Case-Laws - AT : Service tax liability was confirmed on manpower supply services received from overseas entities during 2008-2013, following precedent set in Northern Operating Systems case. Tribunal held that overseas personnel deployment constituted taxable manpower supply services under reverse charge mechanism based on analysis of cost reimbursement agreements. However, extended period of limitation was not invokable for demand computation. Since appellant had already paid service tax with interest on ITSS and training services before show cause notice, penalties were set aside. Matter remanded to adjudicating authority to recalculate liability within normal limitation period. Appeal allowed partially through remand for revised assessment.
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• Service Tax Demand Quashed Due to Improper Value Determination Under Section 67 of Finance Act 1994

  Case-Laws - AT : CESTAT allowed the appeal against service tax demand, setting aside the original order. The demand was found unsustainable as proper determination of taxable value under Section 67 of Finance Act, 1994 was absent. The adjudicating authority failed to consider crucial elements including the nature of services rendered, specific activities under negative list (Section 66D), exemptions under mega notification, and applicable abatements under Service Tax (Determination of Value) Rules, 2006. The tribunal held that merely relying on profit and loss accounts and Form 26AS data without analyzing the actual taxable value and service nature violated principles of natural justice. A comprehensive reassessment considering all relevant service tax provisions was directed.
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Central Excise

• Locomotive Components Classified as Railway Parts Under Chapter 8607 Based on Principal Use Test

  Case-Laws - AT : CESTAT affirmed classification of locomotive components (fuel filter assembly, water pump assembly, cylinder head sub-assembly, cylinder liner stud assembly) under Chapter Heading 8607 as railway locomotive parts. Applying Note 3 of Section XVII and General Rules for Tariff Interpretation Rule 3(a), coupled with precedent from Westinghouse Saxby case, the Tribunal determined classification based on sole/principal use test. Extended period limitation under Section 11(4) CEA rejected due to complexity of parts classification as acknowledged in Customs Advisory 01/2022. Respondent entitled to concessional duty rate under N/N. 12/2016-CE. Revenue's appeal dismissed, upholding lower authority's reliance on Board Circular dated 20.10.2000.
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Case Laws:

• GST

• 2025 (2) TMI 1101
  Rejection of application moved for amendment of the Principal Place of Business, under Rule 9 (4) of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- This Court is sanguine that the authorities shall look into the matter in the right earnest. And the appropriate orders, assigning reasons in support thereof, shall be passed, at the earliest. Petition disposed off.

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• 2025 (2) TMI 1100
  Challenge to impugned SCN issued u/s 73 of CGST Act, 2017 - certain discrepancies were noticed in the return filed - HELD THAT:- The petition is disposed of. This Court is sanguine that the competent authority shall re-visit the matter in issue in the right earnest, and pass a comprehensive order assigning reasons in support thereof.

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• 2025 (2) TMI 1099
  Cancellation of GST registration by Sales Tax Officer - appeal dismissed on the ground that the same was barred by limitation - invocation of Article 226 of the Constitution of India - HELD THAT:- The Judgment passed in Sheikh Mohammad Yousuf s case [ 2024 (8) TM I 893 - JAMMU AND KASHMIR AND LADAKH HIGH COURT] covers the case of the present Petitioner as well, where it was held that this petition is disposed of by directing the petitioner to approach the Competent Authority for registration of his GST number within a period of seven days from today. This Petition is, accordingly, disposed of with a direction to the Petitioner to approach the Competent Authority for registration of his GST Number within a period of seven days from today. The Competent Authority shall restore the GST Number of the Petitioner immediately, subject to completion of all requisite formalities. The Petitioner shall file the returns and deposit the taxes as well as penalty, along with interest, within seven days. In the event needful is not done by the Petitioner within the stipulated period of time, this Order shall cease to be in operation.

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• 2025 (2) TMI 1098
  Overstatement of Input Tax Credit (ITC) - total tax reflected in the order is in excess of 50,00,000/-Interest and penalty are in addition to the same - HELD THAT:- Impugned proceeding against petitioner for financial year 2019-20 resulting in demand order under annexure-6 are all set aside and quashed. Petition disposed off.

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• 2025 (2) TMI 1097
  Challenge to impugned order - Levy of IGST - Ocean Freight - HELD THAT:- The issue involved in this writ petition stands covered by the judgment of the Hon ble Supreme Court in the case of Union of India vs. Mohit Minerals Private Limited [ 2022 (5) TMI 968 - SUPREME COURT] where it was held that The IGST Act and the CGST Act define reverse charge and prescribe the entity that is to be taxed for these purposes.The specification of the recipient - in this case the importer - by Notification 10/2017 is only clarificatory. The Government by notification did not specify a taxable person different recipient prescribed in Section 5(3) of the IGST Act for the purpose of reverse charge. The present petition is also disposed of in same terms.

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• 2025 (2) TMI 1096
  Challenge to impugned order - non application of mind - violation of principles of natural justice - petitioner is ready and willing to pay 10% of the disputed tax and that they may be granted one final opportunity before the adjudicating authority to put forth their objections - HELD THAT:- The petitioner shall deposit 10% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent, within a period of four weeks from the date of receipt of a copy of this order. The impugned orders dated 24.08.2024 07.12.2024 are set aside - Petition disposed off.

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• 2025 (2) TMI 1095
  Claiming Input Tax Credit without payment - Violation of provision of CGST Act - invocation of court s jurisdiction under Article 226 of the Constitution - HELD THAT:- As is ex facie evident from the record, the petitioner has a private grievance against the third respondent. Even if it were the case of the third respondent having violated the provisions of the Central Goods and Services Tax Act, 2017, the only remedy that was available for the petitioner to pursue was to make a complaint before the competent authority. None of the facts which are alleged would have possibly constituted sufficient ground to invoke the jurisdiction of this Court under Article 226 of the Constitution. Petition dismissed with costs quantified at INR 50,000/-.

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• 2025 (2) TMI 1093
  Maintainability of petition - availability of alternative remedy of appeal - Constitutional validity of Rule 36(4) of the Central Goods and Services Tax/Assam Goods and Services Tax Rules, 2017. Maintainability of petition - HELD THAT:- Since a statutory remedy is available to the petitioner to challenge the validity of the order dated 12.02.2024 as well as the order dated 31.03.2023, passed by the Commissioner (Appeals), i.e. respondent No.3 and Additional Commissioner, i.e. respondent No.2, respectively, the challenge of the petitioner to the aforesaid orders cannot be entertained in this writ petition and it is confined to examine the question regarding the validity of Rule 36(4) of the CGST Rules. Validity of Rule 36(4) of the CGST Rules - Whether Section 43A of the CGST Act has been enforced before enactment of the Finance Act, 2022 with effect from 01.10.2022 whereby Section 43A is omitted? - HELD THAT:- It is to be noticed that in sub-section (2) of Section 1 in the CGST (Amendment) Act, 2018, whereby Section 43A is enacted, it is provided that the provisions of the Amendment Act of 2018 shall come into force on such date the Central Government may, by Notification, in the Official Gazette, appoint. The proviso to sub-section (2) of Section 1 says that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as reference to the coming into force of that provision - it is clear that the Central Government in its discretion can appoint different dates for different provisions of the CGST (Amendment) Act, 2018 for their enforcement by issuing Notification in Official Gazette. Section 43A has never come into operation because the Central Government has never notified any date for its enforcement till it was omitted. Whether Rule 36(4) of the CGST Rules draws its power only from Section 43A or in particular sub-section (4) of Section 43A? - HELD THAT:- Section 16 of the CGST Act and Rule 36 of CGST Rules are in relation to eligibility of a registered person who can avail input tax credit by furnishing required documents, whereas Section 43A of the CGST Act is defining procedure for furnishing returns for availing input tax credit - Rule 36 of CGST Rules is relatable to Section 16 of the CGST Act and as such, sub-rule (4) of Rule 36 of the said Rules is also relatable to Section 16 of the CGST Act only. Sub-section (1) of Section 164 of the CGST Act enables the Government to make rules for carrying out the provisions of the said Act. Sub-section (2) of Section 164 clarifies that the Central Government may make rules for all or any of the matters which by CGST Act are required to be or may be prescribed without prejudice to the generality of the provisions of sub-section (1) of Section 164. It means that provisions of sub-section (2) of Section 164 are not restrictive of sub-Section (1) and after careful scrutiny of the CGST Act, there are no doubt that Rule 36 or in particular sub-rule (4) of Rule 36 is framed as per the objects of the CGST Act and falls within the scope of general power conferred by sub-section (2) of Section 164 of the said Act. Rule 36 of CGST Rules and in particular sub-Rule (4) of Rule 36 derives power from Section 16 of the CGST Act as well as from the general powers conferred by the CGST Act. Another simple reason for not accepting the contention of the learned counsel for the petitioner that sub-rule (4) of Rule 36 derives power from subsection (4) of Section 43A is that since Section 43A has not been enforced at any point of time till its omission vide Finance Act, 2022, with effect from 01.10.2022, it is impossible to conclude that a rule or sub-rule derives power from a provision which has never been enforced - when a provision of an Act never comes into operation, it cannot be treated as a source of power of a provision of a rule. Conclusion - Rule 36(4) of the CGST Rules is valid and derives its authority from Section 16 of the CGST Act and the general rule-making powers under Section 164, not from the non-enforced Section 43A. There are no merit in the challenge of the petitioner to the validity of sub-rule (4) of Rule 36 of CGST Rules - petition dismissed.

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• 2025 (2) TMI 1092
  Challenge to Exhibit-P3 notice - time limitation - seeking for a direction to provisionally return the gold seized - HELD THAT:- The time limit for completing the investigation has been extended in exercise of the power under the proviso to Section 67 of the Act. Hence, the contention of the petitioner based on the limitation prescribed under Section 67 of the GST Act is not legally tenable. A perusal of Exhibit-P3 notice of confiscation indicates that, on verification of the registers recovered from the petitioner s shop/residence, it was prima facie observed that he had carried out sale of old gold worth Rs.47.73 Crores, without having any valid GST registration and that majority of the gold were procured from another entity and supplied to another jewellery without the support of any tax invoice/other relevant documents as mandated by the Goods and Services Tax statutes. The initiation of proceedings under Section 130 cannot prima facie be said to be without any authority. It is for the petitioner to participate in the said proceedings. Based upon the orders to be passed thereon, appropriate proceedings can be initiated. Conclusion - The initiation of proceedings under Section 130 was not without authority, and the petitioner should participate in those proceedings. The petitioner was granted the option to utilize Section 130(2) of the GST Act for seeking the release of goods during the confiscation proceedings. Reserving the liberty of the petitioner to have recourse to Section 130 (2) of the GST Act during the pendency of the proceedings, this writ petition is dismissed.

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• 2025 (2) TMI 1091
  Challenge to SCN and the consequential order issued u/s 73 of the Central Goods and Services Tax Act, 2017/State Goods and Services Tax Act, 2017 - no proper service of SCN - petitioner was unaware of the proceedings until the intimation of the recovery proceeding was uploaded in the portal - HELD THAT:- In the instant case, concededly, the notice that preceded the order of determination under section 73 of the GST Act was posted in the portal of the petitioner in the tab meant for Additional Notices and Orders . There was yet another tab for Notices and Orders . Normally, every person will access the tab meant for Notices and Orders to check whether any notices have been issued. In the absence of any notices uploaded in the tab for Notices and Orders , a person may not check the tab for Additional Notices and Orders , unless there are proper instructions on the same page itself, indicating expressly, the manner in which the portal should be navigated. Of course, while accessing the portal, every taxpayer is bound to peruse every window. However, for all practical purposes, a taxpayer will not read through every user information given in all the windows to comprehend the mode in which the pages should be navigated. In the absence of specific notes or instructions given on the same page meant for Notices and Orders or Additional Notices and Orders it cannot be assumed that there has been an effective dissemination of information to taxpayers that the first notice regarding determination under section 73 or 74 of the GST Act will be uploaded only in the tab meant for Additional Notices and Orders . In the instant case, Ext. P3 and Ext. P4 notices were issued on 03.07.2023 and 16.11.2023, both of which are before the decisions in M/s. Sabari Infra Private Limited [ 2023 (9) TMI 501 - MADRAS HIGH COURT] as well as that in Anhad Impex [ 2024 (2) TMI 1070 - DELHI HIGH COURT] . It is therefore evident that the web portal as it now stands is different from what existed earlier. The scheme of arrangement of the portal was confusing and vague earlier, to identify where the notices for determination would be posted. This Court is satisfied that the petitioner was unaware of the notice and was even not properly served with the notices due to the vagueness of the system. The lack of knowledge of the notice issued to the petitioner is therefore attributable to the respondents. Thus, there was neither any proper service of notice nor was sufficient opportunity granted to the petitioner to contest the matter. Therefore, it is essential that the order of determination dated 06.03.2024 be set aside and the petitioner be granted an opportunity to file response to Ext.P3 and Ext.P4 notices. Conclusion - The petitioner s lack of awareness of the notices was attributable to the respondents failure to effectively serve the notices, leading to a violation of natural justice. Therefore, the Court set aside the order of determination and granted the petitioner an opportunity to respond to the notices within 30 days. Petition allowed.

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• 2025 (2) TMI 1090
  Illegal detention of a truck carrying a consignment - Seeking passing of order in Form GST MOV-09 - HELD THAT:- Sub-section (5) under section 129 says, on payment of amount referred in sub-section (1), all proceeding in respect of the notice specified in sub-section (3) shall be deemed to be concluded. Proceeding under sub-section (3) was initiated by the notice, received by petitioner. This happened on detaining his truck. There was calculation of penalty to be paid. It was in the proceeding commenced by the notice. Petitioner paid the penalty. Sub-section (5) came into operation. It is not necessary to adjudicate on whether in spite of payment of the required penalty an order was required to be made under sub-section (3) because on the payment, by operation of sub-section (5), the proceeding was deemed to be concluded. There are no merit in the writ petition. It is dismissed.

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• 2025 (2) TMI 1089
  Maintainability of Advance ruling application - whether the issuance of a summons under Section 70 of the CGST Act constitutes a proceeding under the first proviso to Section 98(2) of the CGST Act? - HELD THAT:- While the term any proceedings contained in the phrase in proviso to Section 98 (2) of the CGST Act, 2017, viz., in any proceedings in the case of the applicant under any of the provisions of this Act , by itself conveys an exhaustive picture, the additional usage of the words under any of the provisions of the Act , makes it all the more broader and all encompassing. It is opined that the usage of the words any proceeding in the proviso to Section 98 (2) of the CGST Act, 2017, will encompass within its fold all the proceedings involving scrutiny, inquiry, investigation, cancellation or suspension of registration, audit, inspection, search and seizure, assessment, adjudication, recovery, etc., as well. It becomes imperative to note here that the first proviso to Section 98 (2) of the CGST Act, 2017, discusses about any proceedings in the case of the applicant under any of the provisions of this Act . On the other hand, Section 83(1) of the Act, ibid, talks about a situation, viz., Where during the pendency of any proceedings under Section 62 or Section 63 or Section 64 or Section 67 or Section 73 or Section 74, the Commissioner is of the opinion It is quite clear from the above that the term proceeding referred to in Section 83 is restrictive in nature, in as much as it gets related to Sections 62 / 63 / 64 / 67 / 73 / 74 only, whereas the said term referred to in the first proviso to Section 98 (2) applies to any of the provision of this Act. It is further noticed that even in the case of Section 83, the proceedings under Section 62, 63 and 64 all relate to assessment proceedings that precede the issue of any show cause notice. Accordingly, it is opined that the dynamics of the instant case of the appellant is different and distinguishable from the case involving Radha Krishan Industries, and thereby it does not come to their aid. While the application for advance ruling in the instant case was filed by the applicant online on 30.12.2022, the first summon issued by the Senior Intelligence Officer, DGGI, Chennai Zonal Unit is dated 30.11.2022 for appearance on 07.12.2022. It is seen that the date of issue of the second summon is 20.12.2022 for appearance on 09.01.2023. It is quite clear from the above, that the initiation of proceedings by way of issue of both the summons that seeks the details/documents in relation to the issue involved in the instant case, precedes the date of filing of advance ruling application by the applicant. Further, the letter dated 19.12.2022 which also precedes the application, of the appellant furnishing the details of fees collected, unambiguously proves the case in point. An advance ruling is not required to be pronounced once an investigation is initiated against the appellant under the provisions of the CGST Act, or the GST Act of the respective State or Union Territory, involving the same issue on which the query for advance ruling has been raised, and accordingly, the application for advance ruling filed online on 30.12.2022 by the appellant is liable for rejection under the first proviso to Section 98 (2) of the CGST /TNGST Acts, 2017. Conclusion - The AAR s decision to reject the advance ruling application upheld, due to the ongoing investigation by the DGGI, which constituted a proceeding under the CGST Act. Appeal dismissed.

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• 2025 (2) TMI 1088
  Maintainability of Advance ruling application - whether the issuance of a summons under Section 70 of the CGST Act constitutes a proceeding under the first proviso to Section 98(2) of the CGST Act? - HELD THAT:- It becomes imperative to analyse as to whether the query raised in the application for advance ruling is the same on which the investigation was initiated, and whether the investigation proceedings precedes the application for advance ruling. Accordingly, it is seen that while the application for advance ruling in the instant case was received on 28.06.2022, the first summon issued by the Senior Intelligence Officer, DGGI, Chennai Zonal Unit is dated 12.04.2022 based on which a statement has been recorded from Dr. S. Ani Grace Kalaimathi, Registrar of Tamil Nadu Nurses and Midwives Council on 18.04.2022, wherein the details of charges/fees collected by Tamil Nadu Nurses and Midwives Council for the period from 01.07.2017 to 31.03.2022, through their letter in Ref. No.1538/NC/2022 dated 18.04.2022 is seen to have been communicated. Through another statement dated 14.06.2022, the legalities relating to taxability in the instant issue, is seen to have been discussed. Apart from the same, perusal of the Incident Report No. 89/2022 dated 24.06.2022 issued by the DGGI, Chennai Zonal Unit, clearly brings out the fact that the issue relating to non-payment of taxes under GST on the charges/fees collected by the appellant has already been taken up for investigation. An advance ruling is not required to be pronounced once an investigation is initiated against the appellant under the provisions of the CGST Act, or the GST Act of the respective State or Union Territory, involving the same issue on which the query for advance ruling has been raised, and accordingly, the application for advance ruling dated 28.06.2022 by the appellant is liable for rejection under the first proviso to Section 98 (2) of the CGST / TNGST Acts, 2017. Conclusion - The rejection of the advance ruling application upheld on the basis that the issue was already subject to an ongoing investigation, which constituted a proceeding under the CGST Act. Appeal dismissed.

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• Income Tax

• 2025 (2) TMI 1102
  Recalling of Earlier order - Inadvertent Error in relying upon non-exisitng case laws - HELD THAT:- On suo-moto perusal of the ITAT order it is found that there are certain inadvertent errors in the order, therefore, as per the provisions of section 254(2) of the Act, the above order is recalled in its entirety and fixed for hearing afresh on 19.02.2025. Notice be issued to both parties.

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• 2025 (2) TMI 1094
  Validity of Proceedings u/s 153C - addition u/s 69A - Reliance on documents seized during the search and seizure operations - CIT(A) deleted addition - HELD THAT:- The impounded documents have been verified by us from the assessment order wherein the name of the assessee is clearly visible. Assessee failed to give any information as to whether the transactions were at all recorded in the books of account. In fact, she did not submit any documentary evidences to buttress her case. CIT(A) has merely relied on certain case laws, but without realising that how the same are applicable in assessee s case. CIT(A) failed to perform his statutory function to act judiciously by not correlating the additions made with the corresponding assessment orders of AVC Homes, Saptagiri Builders. He was swayed that there is no exchange of money as submitted by the learned Counsel for the assessee. But here it is beyond comprehension that why cash details are mentioned in the print out obtained which is stark reality glaring at the face. It is also surprising that there has been no participation by the assessee before the AO to effectively explain the documents in its entirety. Addition made u/s 69A has been assailed that the circumstances are not applicable. Nevertheless, the same is undisclosed income, which has been rightly added. There is no requirement that the assessee has to sign these documents because they are designed to be hidden and shrouded. Mere mentioning an inapplicable proviso will hardly dislodge the addition and the logic adopted by the learned CIT(A) is palpably erroneous. Assessee has tried to create a confusion that in view of multiple entities with prefix unique relationship with Unique Realities Builders and Developers is not established. We fail to understand that how such an issue can be raised once the challenge to 153C proceedings is absent. The diametric opposite stand of the assessee is ergo jettisoned. The recalcitrant stand of the assessee before the Assessing Officer further creates doubt that perhaps the assessee is not coming with clean hands. It is worthwhile to note that even before the remand proceedings, the assessee failed to make any submissions to improve his case. Assessee failed to justify that additions are not sustainable based on impounded documents. More denial of the transaction by raising a cobweb of nebulous assertions without backing up by strong evidence to repudiate the same is unconscionable. Hence we set aside the impugned order passed by the learned CIT(A) and inclined to uphold the assessment order passed by the Assessing Officer. - Decided against assessee.

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• 2025 (2) TMI 1087
  Tax deductions obligations and the auctioning process of properties - obligation of the High-Powered Sale Committee (HPSC) to deduct tax at source on interest accruing on deposits in Fixed Deposit and Savings Bank Accounts u/s 194 HELD THAT:- As informed by learned counsel for the parties that the HPSC has been able to meet on 13 occasions in almost 7 months. We find that this has led to creation of an anomalous situation. We say so for the reason that we have fixed the honorarium of the Member Secretary-cum-Nodal Officer of the Committee, who is a whole-time officer, at Rs.7,00,000/- per month (instead of Rs.75,000/- per sitting day). However, the Chairperson and other member of the Committee continue to draw honorarium of Rs.2,00,000/- and Rs.1,50,000/- per sitting date. Since there have not been many sittings, it is well understood that their honorarium is far less than that of the Member Secretary. Taking into consideration all the attending circumstances, we deem it appropriate to modify paragraph 12(i) and 12 (ii) of our judgment [ 2024 (7) TMI 935 - SUPREME COURT ] and consequently to direct that the Chairperson of the HPSC shall be entitled to a lump-sum honorarium of Rs.13,00,000/- per month w.e.f. February, 2025, besides the travelling, boarding and other miscellaneous expenses as may be incurred in discharging the assigned responsibilities. Similarly, learned Member, who is a former Judge of the High Court, shall be entitled to a lump-sum honorarium of Rs.10,00,000/- per month, in addition to travelling, boarding and other miscellaneous expenses as may be incurred in discharging the assigned responsibilities. We request the HPSC to evolve some more measures to expedite the process so that the actual auctioning can commence giving a ray of hope to the investors for the refund of their amount.

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• 2025 (2) TMI 1086
  Recovery of more than 20% of the tax demand from the Petitioner - HELD THAT:- Respondents cannot take the advantage of their own delay in disposing the stay application. The effect of adjustment of refund for assessment year 2022-2023 while processing the return on 6 October 2022 would be that the Petitioner has made a payment of Rs.13,63,340/- against the demand for assessment year 2015-2016 and the said amount of Rs. 13,63,340/- is in excess of 20% of the demand which the Respondents have directed the Petitioner to pay vide order dated 17 April 2024. When this was pointed out even before the stay order was passed by the Petitioner vide letter dated 14 November 2023, the Respondents ought to have refunded the said amount of Rs. 6,05,030/- either on the Petitioner making application dated 14 November 2023 or at least while passing the stay order on 17 April 2024. Non consideration of this adjustment while arriving at the 20% outstanding demand for assessment year 2015-2016 is unjustified moreso in the present case when the assessee himself voluntarily made a payment of 20% much before filing of the stay application for assessment year 2015-2016. Provision of Section 250 (6A) of the Act which states that every appeal filed before the first appellate authority where it is possible may be heard and decided within a period of one year from the end of the financial year in which such appeal is filed. This provision was introduced with effect from 1 June 1999 and although it is a directory provision, in the absence of any justifiable reason for not disposing the appeal filed before the CIT (A) for a period of more than six years same would run contrary to the objective for which Section 250 (6A) has been introduced. ORDE :- Respondent to refund sum of Rs. 6,05,030/- being excess adjustment made against the demand for assessment year 2015-2016 within a period of four weeks from the date of uploading of the present order. Petitioner to make an application to the first appellate authority for taking up his appeal for hearing and if such an application is made, the Commissioner (Appeal) would hear and decide the appeal keeping in mind the provisions of Section 250 (6A) of the Act. The concerned Commissioner (Appeal) to dispose the Petitioner s appeal as expeditiously as possible preferably by 31 May 2025.

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• 2025 (2) TMI 1085
  Reopening of assessment u/s 147 - change of opinion - reasons recorded for reopening of the assessment pertaining to exemption u/s 2(14)(iii)(b) of the Act for sale of the agricultural land beyond 8 Kms from the Municipal Limit - HELD THAT:- Issue with regard to exemption as claimed by the assessee relying upon the provision of section 2(14)(iii)(b) has already been considered by the AO and the reference was also made to the higher authorities u/s 144A for opinion and considering the order passed under section 144A of the Act. AO did not make any addition while passing assessment order under section 143(3) of the Act. In view of the undisputed facts, merely by recording the same reasons on verification of records that the assessee had sold the agricultural land claiming exempt income on the ground that such land was beyond 8 Kms from the municipal limit, cannot be a ground to reopen as it would amount to a mere change of opinio As in case of CIT vs. Kelvinator of India Ltd [ 2010 (1) TMI 11 - SUPREME COURT] held Assessing Officer could not have assumed jurisdiction to reopen the assessment on mere change of opinion. Decided in favour of assessee.

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• 2025 (2) TMI 1084
  Addition u/s 69A - assessee during the demonetization period deposited cash out of cash balance maintained by him in the regular course - HELD THAT:- The assessee during the demonetization period deposited 11 lakh on 15/12/2016 out of cash balance maintained by him in the regular course, as per statement of affairs and details are maintained by him in his own handwriting. Entire cash deposit was withdrawal from bank which could be seen from the bank account and statement of affairs already furnished by the assessee and are available on record from the respective financial year 2011 12 to 2016 17. As stated by AR that the members of the HUF are regularly assessed to tax on their separate individual income since last many years prior to the year 1998-99. The copies of Bank accounts in support of withdrawals, copies of Balance Sheet and Capital Account maintained by the late Rameshkumar then Karta in his own Hand writing were also furnished during the course of assessment proceedings and are placed on record. CIT(A) was not justified in making addition Total addition made by AO depending upon the past savings and keeping in view the old age of the then Karta of Late Shri Rameshkumar Parasdas, HUF and balance 50%of the total addition is added as business income only. Thus, the assessee gets part relief of 50%.

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• 2025 (2) TMI 1083
  Addition u/s 56(2)(x) - difference between the DVO s valuation and the set forth value - DR contended that the Ld. CIT(A) erred in treating the allotment letter as an agreement for sale, and that, accordingly, the value should not be deemed as at the financial year 2009-10 - scope of amendment to section 56(2)(x) of the Act brought in Finance Act, 2020 of increasing tolerance limit from 5% to 10% with effect from 01/04/2021 under section 56(2)(X)(b)(B). HELD THAT:- With respect to Unit No. 103, the incremental difference exceeds 10%, i.e. 10.01%. The Ld. AR contended that any excess over 10% should be added We hold that the provision of section 56(2)(x)(b)(B) has retrospective effect and is applicable to the impugned assessment year. Accordingly, we uphold the view adopted by the Ld. CIT(A) in reducing the addition under section 56(2)(x). With respect to section 56(2)(x)(b)(B), we remit the matter to the file of the Ld. AO for allowing the assessee the incremental differences as per the said Act for the alleged properties. In the case of Unit No. 103, the excess over 10% shall be considered for addition. Consequently, the appeal of the assessee is allowed.

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• 2025 (2) TMI 1082
  Revision u/s 263 - Addition under the head income from house property as per Section 22 - HELD THAT:- It is true that provisions of Section 23(5) of the Act are effective from 01/04/2018 whereby notional annual value of property/part of the property held as stock-in-trade has been brought to tax subject to conditions specified in that Section. The amendment is substantive and prospective. As relying on Ansal Housing Finance Leasing Co. Ltd.[ 2012 (11) TMI 323 - DELHI HIGH COURT] we hold that the annual let-out value (ALV) has to be taxed in respect of unsold property. Determination of ALV by the AO is not tenable in law as he has taken 8% of the bank FD during the period under consideration and calculated the ALV - ALV should be the actual rent or the fair rent which a property may fetch from the open market in the same locality. Therefore, we direct the AO to re-compute the ALV as per the market rate prevalent in and around the same locality and decide the issue afresh after affording a reasonable and adequate opportunity of being heard to the assessee. Accordingly, appeal of the assessee is partly allowed. Whether addition made as per the provision of Section 56(2)(viib) is beyond the jurisdiction of the AO when the ld. Pr. CIT has cancelled the original assessment order with a direction to decide the case afresh? - We have carefully perused the order of the ld. Pr. CIT framed u/s 263 of the Act and find that no such addition was proposed by the ld. Pr. CIT. Only issue which prompted the ld. Pr. CIT to assume jurisdiction u/s 263 of the Act was applicability of the provisions of Section 22 of the Act in respect of finished unsold inventory of the assessee and deciding this issue the ld. Pr. CIT cancelled the assessment order and restored the matter to the AO for fresh examination of the issue. As decided in Royal Western India Turf Club Ltd [ 2019 (2) TMI 241 - BOMBAY HIGH COURT] Assessing Officer on his own examined said issue. The Commissioner, undoubtedly, has powers under Section 263 of the Act to annul the entire assessment and required passing of fresh assessment order. However, when the Commissioner, as in the present case, requires the Assessing Officer to carry out inquiries with respect to specified issues, the jurisdiction of the AO to pass fresh order must be confined to such issues, failing which we would be giving the power to the Assessing Officer to make reassessment. We find that the ld. CIT(A) has followed the aforementioned binding decision of the Hon ble Jurisdictional High Court. Therefore, no interference is called for. Accordingly, effective grounds raised by the revenue are dismissed.

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• 2025 (2) TMI 1081
  Deemed dividend addition u/s 2(22)(e) - loan was taken the partners in their individual capacity has substantial interest in the company -assessee is a LLP converted from the partnership firm - HELD THAT:- The assessee maintained the ledger account of the company, the transactions starts with the opening balance of loan/advance of Rs. 50.61lakhs and during the year, the assessee has taken several amounts and also paid certain amount back. The transactions are in our view, are in the nature of business transactions like trade advances taken and returned during the year and also certain expenses are incurred on behalf of the company. It looks like a running account maintained by the assessee for the mutual benefits. AO merely stopped with the ledger account and not established how the transactions are carried out for the individual benefits of the shareholders. In this case, two shareholders have substantial interest and also found to be having substantial controlling interest in the firm (assessee). AO preferred to capture the peak credit and proceeded to treat the same as deemed dividend. He has not further verified whether they are regular business transactions or diverted to the individual benefits of the shareholders, further, whether above said payments were in turn paid by the assessee to the individual shareholders or to the family members of such shareholders. The definition is very clear that such payments are made for the individual benefit of shareholders. After careful consideration, we are of the view that CIT(A) has given benefit to the assessee based on shareholder i.e., the assessee not a shareholder and the deeming fiction is attracted only to the payments made to the shareholder, since the assessee is not a shareholder after incorporation as LLP. However, in our view, the assessee had regular transaction during the whole year even before it was converted into LLP. Therefore, we are inclined not to disturb the findings of Ld CIT(A). Hence, we are inclined to dismiss the grounds raised by the revenue

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• 2025 (2) TMI 1080
  Penalty u/s. 272A(1)(d) - unexplained expenditure made by the assessee through his credit card - HELD THAT:- The provisions of Section 272A(1)(d) are deterrent in nature and not for the purpose of earning revenue. The remedy available with the AO lies in framing of best judgment assessment under the provisions of Section 144 of the Act, as he did in the present and not to impose multiple penalties under Section 272A(1)(d) of the Act, again and again. Accordingly, levy of penalty is directed to be restricted to Rs. 10,000/-. In the case of Tarlok Singh Through Legal Heir Gurnam Singh vs. ITO Ward Gurdaspur [ 2023 (6) TMI 479 - ITAT AMRITSAR] restrict the penalty levied under section 272A(1)(d) of the Act to one default as against multiple defaults on non compliance with these notices under section 142(1) of the Act. Appeal of the assessee is partly allowed.

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• 2025 (2) TMI 1079
  Addition of rental income on unsold inventories held by the Assessee under the head income from house property - as argued If the property is shown as stock-in-trade, then the said property would partake the charcter of stock of the assessee and income derived from stock would be income from business and not income from house property - HELD THAT:- We are of the considered view that for the impugned year under consideration there was no spedific charging section which could subject notional value of unsold stock/inventory as income under the head income from other sources. We note that sub-section (5) to Section 23 of the Act was introduced w.e.f. 01.04.2018 to tax income from property held as stock-in-trade. Accordingly, for the impugned year under consideration, there was no specific charging section which could subject this income in the hands of the assessee. As in Ahmedabad Tribunal in the case Takshshila Realties [ 2023 (9) TMI 219 - ITAT AHMEDABAD ] has held that where assessee, a builder and developer had unsold flats in various building which were shown as closing stock and no rental income was earned, in view of the amendment to Section 23 effective from A.Y. 2018-19 providing that if an assessee holds house property as stock-in-trade and does not let out for the whole or part of the year, annual value will be considered NIL up to one year from Financial Year in which a completion certificate is obtained any addition made on account of notional ALV is liable to be deleted. Thus the aforesaid amount is not liable to be added as income of the assessee under the head income from house property . Appeal of the assessee is allowed.

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• 2025 (2) TMI 1078
  Reopening of assessment u/s 147 - Addition u/s 68 - bogus Long-Term Capital Gains (LTCG) from the sale of shares - primary contention of the assessee is that the shares were acquired through preferential allotment from the company itself and not through off market transactions, thereby ruling out the possibility of price rigging by the assessee. HELD THAT:- The issue of penny stock transactions and their taxability u/s 68 of the Act requires a comprehensive and well-founded approach. The mere fact that a stock has exhibited significant price fluctuations or has been categorized as a penny stock does not by itself, render transactions in such shares non-genuine. The stock market operates under a regulatory framework where shares, irrespective of their financial fundamentals, are allowed to be traded on stock exchanges. Additionally, if the sale or purchase is alleged to be non-genuine, the revenue must demonstrate that the entire money trail, from the purchase to the final realization of sale proceeds, was a fa ade used to introduce unaccounted income. It is settled principle of law that the primary onus lies on the assessee to substantiate the genuineness of the transaction by furnishing documentary evidence. If the fundamental aspects are satisfied, the burden then shifts to the revenue to bring on record specific material evidence proving that the transactions were merely a colourable device aimed at tax evasion. The mere fact that a share has been subject to price manipulation does not automatically lead to addition under section 68 of the act unless it is conclusively demonstrated that the assessee was part of the scheme, and the transactions were structured to generate artificial gains or losses. In the present case such detailed investigation by AO is absent. Assessee s grounds challenging the addition u/s 68 on account of bogus LTCG and penny stock transactions allowed. Treating the entire sale consideration as undisclosed income without allowing the purchase cost - We find merit in the assessee s contention. Even if the transaction was to be doubted, the entire sale consideration cannot be taxed as undisclosed income. Taxing the full sale value without allowing for the cost of acquisition is contrary to established judicial principles. Since the AO s approach in making the addition is against settled legal principles, the addition of the entire sale consideration is deleted.

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• 2025 (2) TMI 1077
  Denial of Exemption u/s 11 - delay in filing the report - HELD THAT:- We note that the assessee filed a condonation petition u/s 119(2)(b) before the CIT(Exemption) for failing to meet the timeline specified in Section 12A(ba) of the Act. Assessee also pursued an alternative remedy by filing an appeal before the ITAT. In its appeal order, CIT(A) held that the issue should be remitted back to the jurisdictional AO, instructing him to treat the assessee as not being in default of tax until the petition for condonation u/s 119(2)(b) is resolved by the Ld. CIT(Exemption). Additionally, the assessee contended that no reasonable opportunity was provided u/s 143(1) of the Act during the processing of the intimation. We find that the assessee has indeed taken an alternative remedy. Therefore, we direct the AO to consider the assessee as not being in default of tax until the petition for condonation u/s 119(2)(b) is disposed of by the CIT(E). Accordingly, the matter is remitted back to the file of the AO with the above instruction. Appeal of the assessee allowed for statistical purpose.

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• 2025 (2) TMI 1076
  Addition made being 8% of gross receipts as per provisions of section 28 - assessee did not produce books of accounts and in absence of documentary evidence to verify bills/vouchers and TDS etc., and the variations between the 26AS and P L A/c gross receipts, the impugned estimation @ 8% made by the AO common in line of construction activities - HELD THAT:- The assessee was allowed to construct highway and on completion of the work, the assessee is allowed to collect the amount by way of Toll. Therefore, till the completion of the national high way, the assessee could not receive any sum in his hands and as such, it is not a capital work-in-progress in the hands of the assessee as no asset is owned by the assessee in it s name. The capital asset infrastructure facility belongs to the NHAI and the amount is payable by the NHAI to the assessee. NHAI instead of making payment to the assessee, it has facilitated the assessee to open the toll gate on completion of the work and recover the amount. Therefore, till such time, the amount will be retained as business asset in the books of the assessee and the said amount actually cannot be considered as a capital work-in-progress but represents the work in progress of the assessee or deferred revenue expenditure of the assessee and would be debited to the P L A/c proportionately during the period of operation of the toll gate. AO s presumption that it has to be treated as capital work-in-progress is not correct. We find force in the submissions of the assessee to the effect that the matter in issue in the instant appeal is squarely covered by the aforesaid CBDT Circular dated 23.04.2014. Assessee has shown only the matching entries in the P L A/c and not derived any income for the impugned assessment year. As rightly noted by the CIT(A), when there is no income accrued in the hands of the assessee, then there is no question of estimation of income @ 8% out of total gross receipts in the hands of assessee does not arise. Addition u/s 40(a)(ia) - addition being 30% of expenses for non-depositing of TDS before due date - CIT(A) noted that the assessee has capitalized all the expenses incurred in construction of high-way and no expenses are claimed during the impugned assessment year - HELD THAT:- As the assessee has not claimed the revenue expenditure and it is settled position of law that when no expenses debited to the P L A/c and no deduction claimed by the assessee under the head profits and gains of business or profession, then, no disallowance can be made by invoking the provisions of sec.40(a)(ia) of the Act. Disallowance u/sec.43B - It is settled position of law that expenditure can be disallowed only if it is claimed by the assessee. If there is no claim of expenditure, then there should not be any disallowance. CIT(A) noted that the impugned expenses though incurred by the assessee but are not charged to P L A/c account as all these expenses are transferred to work-in-progress account and no expenses are claimed. No infirmity in the order of CIT(A) in deleting the addition made u/sec.43B.

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• 2025 (2) TMI 1075
  Unexplained cash credit u/s 68 - Bogus share capital / share premium - HELD THAT:- CIT (A) instead of commenting on the evidences filed by the assessee as well as the replies of the subscribers available in the assessment records chose a very cryptic and wrong manner while disposing off the appeal. In our opinion, the assessee has filed all the evidences before the AO as well as before the ld. CIT (A) and both the authorities below have failed to carry out any meaningful and purposeful enquiry and draw any legal conclusion based on the said enquiry. For the aforesaid reasons, we are not in a position to sustain the order of the ld. CIT (A). Assessee has discharged its burden by furnishing all the evidences and both the authorities below have failed to conduct any enquiry intio the same despite the tribunal specific direction. Accordingly, we set aside the order of ld. CIT (A) on this issue and direct the ld. AO to delete the addition. The appeal of the assessee is allowed.

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• 2025 (2) TMI 1074
  Suppression of sale by the assessee - during the impugned financial year the assessee has executed certain contractual works for his clients and certain discrepancies were noted in the said documents - other addition in respect of expenses relating to exempt income u/s 14A also made - HELD THAT:- We find that in this case the ld. AO has passed a very cryptic order and making addition by comparing the opening and closing WIP and then recording a conclusion in two lines that assessee has suppressed sales recorded outside the books of account. We have perused the appellate order in which the ld. CIT (A) has dealt with the receipts from each party for which the assessee executed contracts during the impugned financial year. Therefore, no infirmity in the order of ld. CIT (A) and same is upheld by dismissing the appeal of the Revenue. The appellate order has already been affirmed by the Tribunal while deciding the assessee s appeal. Consequently, the appeal of the Revenue is dismissed.

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• 2025 (2) TMI 1073
  Revision u/s 263 - assessee has incurred CSR expense which were suo moto disallowed in the computation of income at the time of filing of return of income - HELD THAT:- We find that in this case the assessee has incurred CSR expense which were suo moto disallowed in the computation of income at the time of filing of return of income. However, simultaneously claiming 50% of the eligible donations u/s 80G of the Act as made during the year. In our opinion, there is no bar in the Act for the assessee to claim the deduction u/s 80G of course subject to satisfaction of conditions as envisaged in Section 80G of the Act. The case of the assessee is squarely covered by the aforesaid decision in the case of M/S JMS Mining Pvt. Ltd. [ 2021 (7) TMI 907 - ITAT KOLKATA ] as held since the assessee satisfies the condition u/s. 80G of the Act of the donees, the assessee s claim for deduction of CSR expenses/contribution u/s 80G of the Act was allowed after enquiry by the AO. Thus we are of the opinion that the action of the AO allowing the claim u/s. 80G of the Act is a plausible view. Therefore we find that the PCIT has not been able to make out a case that on this issue raised by him, the AO s order is erroneous as well as prejudicial to the revenue. So the jurisdictional fact as well as law is absent for invoking revisional jurisdiction. Therefore, the usurpation of jurisdiction by Ld. PCIT u/s 263 of the Act is bad in law. Appeals of the assessee are allowed.

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• 2025 (2) TMI 1072
  Treatment to the profit from sale of shares - under the head income from business or section 68 - HELD THAT:- The entire transaction of sale was through BSE and the payment was received through banking channel. We notice that the investigation report prepared by the Investigation Wing, Kolkata is a disclosed report with modus adopted for manipulation of prices of certain shares and generation of bogus capital gains. AO has placed reliance on the said report without bringing any material on record to show that the transactions entered into by the assessee were found to be a bogus and manipulated transaction. It was not proved that the assessee has carried out this transaction of purchase and sale of shares in connivances with the people who were in the alleged rigging of price. Finding the report of the SEBI, we do not find any such adverse report against the assessee. Decision rendered in case of PCIT vs Ziauddin A Siddiqui [ 2022 (3) TMI 1437 - BOMBAY HIGH COURT ] shall apply to the present case, since the Ld.AO has not established that the assessee was involved in price rigging and further, the AO did not find fault with any of the documents furnished by the assessee. AO has assessed the amount as unexplained cash credit under section 68 of the Act. It is pertinent to note that the purchase of shares made in earlier year was accepted by the revenue. The sale of share has taken place in on-line platform of BSE and the consideration has been received through stock broker through banking channel. So these transactions cannot be taken as unexplained cash credit under section 68 of the Act. Related to payment of brokerage, no such evidence was established by the Ld.AO, as to whether the assessee has paid the amount to the broker or not. So the addition under section 69 is deleted - Appeal of assessee allowed.

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• 2025 (2) TMI 1071
  Disallowance u/s. 14A - it was a claim of the assessee that it had not incurred any expenditure to earn exempt income - HELD THAT:- The disallowance u/s. 14A is restricted to the extent of exempt income and this issue now stands covered in the case of Nirved Traders Pvt. Ltd. [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT ] and also this issue stands covered by the decision of the Tribunal in assessee s own case for A.Y.2012-13 wherein disallowance has been limited to the extent of exempt income. Nature of expenses - Disallowance of consultation charges - assessee made payment to consultants / institutions for consultancy services rendered by them - CIT (A) has reversed the treatment of these expenses as being capital in nature and has allowed them as revenue expenses and consequently allowed the ground of the assessee - HELD THAT:- In view of the fact that this issue has been decided in favour of the assessee by the Tribunal in assessee s own case for A.Y.2007-08 and 2004-05 and also in the subsequent year, no disallowance has been made by the AO, therefore, the addition on account of disallowance of consultancy charges is deleted. TP adjustment - purchases of equipment which was on account of purchases of following laboratory equipment by the assessee from its AE - HELD THAT:- Here in this case the adjustment has been made on the ground that the bills produced by the assessee were not for the equipment purchases whereas the assessee has produced all those bills before the ld. DRP and also before the ld. TPO as noted above. Once these bills have been produced there cannot be any doubt for the purchases and accordingly, no adjustment should have been made on this issue. Accordingly, the addition adjustment made by the ld. TPO is deleted.

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• 2025 (2) TMI 1070
  Revision u/s 263 - allowability of payment of license fee, spectrum usage charges (SUC), interest, and penalty thereon - HELD THAT:- Interest and penalty clauses are enshrined in the license agreement as compensatory mechanism for delayed payment of three components i.e entry fee, license fee and charges. Charges is not specifically defined but when we take into consideration the aforesaid clauses we find that apart from entry fee and license fee the Licensee was supposed to pay Radio Spectrum Charges and royalty for the use of spectrum for point to point links and access links. These charges admittedly were considered as revenue expenditure. It is very much apparent from the clauses of license agreement that the interest is payable on the quantum of delayed payment of license fee determined as per the license agreement. Penalty is payable in case the total amount paid as quarterly License Fee for the 4 (four) quarters of the financial year, falls short by more than 10% of the payable License Fee. Delayed payment of penalty shall also be liable to interest. In the absence of rights of revocation/termination of the agreement for default in payment of penalty/interest cannot be equated with consequences arising out of default in payment of the license fee which as per the judgement of Bharti Hexacom [ 2023 (10) TMI 786 - SUPREME COURT] was similar to one time entry fee. Therefore, the interest/penalty payment arising out of default in payment of the license fee is merely compensatory in nature. Delayed payment of license fee would result in benefitting the assessee in terms of availability of the funds available for use in its own business and that in turn lead to payment of compensatory cost of the delayed payment of the license fee in the form of interest or penalty. The license here was to grant services as defined. Thus it is the right to provide services in lieu of entry free, license fee or charges, formed the intangible asset and interest or penalty were only by way of default in payment in time as per agreement. So there could have been no situation like loan borrowing. The reasoning given by the ld. PCIT as followed by the ld. AO in the effect giving order is that the interest and penalty will take the colour of license fee to hold that the same is capital expenditure. We consider the same to be not a justified manner of determining the taxability of an expenditure. Every expenditure or income giving rise to a tax incidence should be categorically defined either in the statute or be otherwise impliedly decipherable from the transaction. It is not justified to draw any inferences about the nature of an expenditure being revenue or capital on the basis of another expenditure without analyzing the surrounding circumstances and the context in which the liability of expenditure arises. On the one hand the assessee has established that the issue was genuinely examined by the AO before passing of the assessment order and on the other hand, it is established that the conclusion drawn by the PCIT and as followed by the AO at the time of effect giving order to colour the interest and penalty component similarly to license fee, and hold them to be of capital expenditure is not sustainable under law. This issue no. 1 is decided in favour of the assessee. Allowability of carry forward of accumulated business loss and unabsorbed depreciation relatable to the consumer wireless undertaking - PCIT in his order u/s 263 of the Act had directed the AO to deny the benefit of section 72A and withdraw the allowance of brought forward business loss and unabsorbed depreciation relatable to the consumer wireless undertaking of TTSL - HELD THAT:- Ld. Sr. Counsel has sufficiently established on the basis of the queries which were raised by the AO that a comprehensive response was submitted to the AO explaining the scope and terms of the schemes of arrangement. The details of the accumulated business loss and unabsorbed depreciation of consumer wireless mobile undertaking of TTSL were provided to the AO. Still, PCIT has held that the AO had not conducted in-depth inquiries. On the contrary we are of the firm view that if this all was part of assessment record then PCIT was supposed to take that first into consideration and then examine the issue. Rather, from the conclusions which have been drawn by the PCIT, it appears that more than analysis of questions of facts on the basis of material available from assessment record by the queries raised by the AO and response of the assessee, the PCIT has gone on a different tangent discussing more about the manner in which the provisions of section 2(19AA) of the Act can be interpreted. However, that cannot be a basis to hold the assessment order to be erroneous so far as prejudicial to the interest of revenue. Thus we firmly hold that at one end there was sufficient examination of the issue by the AO at time of assessment. Then on merits the case as made out by the PCIT is not sustainable as all the conditions u/s 2(19AA) r.w Section 72A(4) of the Act stood fulfilled and there was erroneous conclusion to hold assessment to be erroneous so far as prejudicial to the Revenue. Taxation of difference of asset over liability with TTSL u/s 56(2)(x) - The provisions of section 56 of the Act, are deeming income provisions and come into effect where there is some sort of allegation that the transaction of acquisition of an asset is without consideration or the consideration is less than the fair market value. The consumer mobile business undertaking of TTSL was acquired by the appellant on a wholesome basis without valuation of an individual asset and a lumpsum consideration through the process of demerger was paid. It has been established before us that the valuation of this demerger was done by professional valuers and the valuation was accepted in the scheme of arrangement by NCLT and High Court. That being the case, on the one hand, it was erroneous on the part of the PCIT to have gone beyond the scope of notice u/s 263 of the Act, on the other hand, to allege that there was a deemed capital gain on acquisition of consumer wireless business of the TTSL. Therefore, we are inclined to allow this issue in favour of the assessee and corresponding ground nos. 10 to 10.4 are allowed. TP adjustment - PCIT had directed an adjustment on account of alleged incorrect reduction of proportionate adjustment allowed by the TPO - HELD THAT:- We are of the considered view that only for the reason that an issue is pending before the Hon ble Supreme Court that cannot be a basis for interference into an assessment order and direct for an adjustment in the transfer pricing while exercising powers u/s 263 of the Act. The assessment order being erroneous so far prejudicial to the interest of the Revenue is to be examined in the light of the existing state of affairs including the settled provisions of law so far and only for the reason that Revenue is contesting the settled provision before the Hon ble Supreme Court cannot be the basis for invoking exceptional jurisdiction of Section 263. Here the AO had sufficiently examined the issue and benefitted assessee on basis of decision of Hon ble Jurisdictional High Curt, so a contrary direction is rather not appreciable. Rather it is established before us on the basis of a decision of Mumbai benches in the case of M/s Damco India Pvt. Ltd [ 2019 (3) TMI 2080 - ITAT MUMBAI] Hon ble Supreme Court is merely dealing with the issue of disallowance u/s 14A of the Act, in M/s Firestone case [ 2015 (6) TMI 1123 - BOMBAY HIGH COURT] SLP. Thus that all the more requires setting aside the directions of PCIT on this issue. AO has not examined the issue of disallowance u/s 40(a)(i) of the Act while huge payments were made without deduction of tax - HELD THAT:- As decided in Bharti Airtel Ltd.[ 2024 (10) TMI 699 - ITAT DELHI] has held that the appellant is not liable to deduct tax at source on payment of bandwidth charges to non-residents including where payees are from non-treaty countries. Thus, the said issue squarely covers the case of the appellant. On the basis of aforesaid, we are of the considered view that not only the issue was duly examined by the AO during the assessment but the law, at time of assessment, stood settled that when the payments are not in regard to royalty or FTS under the Act, then also, in respect of non-treaty countries the payments on account of bandwidth charges to non-residents are not subject to TDS provisions. Thus the issue did not require any fresh enquiry by AO by interference u/s 263 of the Act. Consequently, we are inclined to decide this issue in favour of the assessee. Disallowance u/s 14A - HELD THAT:- We find that during the year, the assessee has received exempt dividend from its subsidiary company Bharti Infratel Ltd. only and there was no other source of exempt income nor fresh investment was made during the year in the shares of Bharti Infratel Ltd.. Still a suo-moto disallowance was made. There were no borrowed funds used for investments and no disallowances u/s 14A were made in the past. However, as during the consequential assessment ld. AO has not given any adverse findings on the issue, the aforesaid submissions become academic. AO did not investigate the issue concerning non-availability of depreciation - HELD THAT:- No depreciation on good will was claimed by appellant during the year and as with regard to tangible assets detailed enquiry was conducted by the AO vide notice dated 06.09.2023 and 11.09.2023 as replied by assessee by reply dated 16.09.2023, copy available. Though, in the consequential proceedings, no adverse inference has been drawn by the AO. Thus, the grievance of the assessee on the directions issued by the ld. PCIT as challenged do not survive, but certainly as the issue was duly examined by the AO, we are of considered view that issue did not deserved to be interfered u/s 263. AO has not verified the relevant transactions from the perspective of section 269SS and thereby did not initiate penal action u/s 271E - The case of the assessee was that the issue was extensively examined and all transactions were through banking channel only. The ld. Sr. Counsel has pointed out various notices and replies communicated between the AO and the assessee during the assessment proceedings. In the effect giving order, no adverse inference was drawn by the AO and he was satisfied by the evidences of the assessee and upon verification of the same, therefore, as such, no grievance of the assessee survives substantially. In any case, we are satisfied that as issue was considered duly by AO vide notice dated 06.09.2023 and response of assessee dated 16.09.2023 copies of which are part we are of considered view that issue did not deserved to be interfered u/s 263. Genuineness of claim with regard to huge expenses were not examine by the AO and no supporting documentary evidences were called - The assessee had provided party wise details of five major expenses along with supporting documents like invoices, Form 16A, etc. In the effect giving proceedings, the assessing officer was satisfied and no addition has been made. Thus, substantively, no grievance of the assessee is left. In any case, we are satisfied that as issue was considered duly by AO so the issue did not deserved to be interfered u/s 263 of the Act. Allegation of Ld. PCIT that during the assessment proceedings the AO has failed to make inquiries to ascertain the genuineness of liabilities claimed - Counsel has also pointed out that the issue was set aside by the ld. PCIT without minimal inquiries and for that reason, the directions were not sustainable in the light of the decision in the case ITO vs. DG Housing Projects Ltd.[ 2012 (3) TMI 227 - DELHI HIGH COURT] . As a matter of fact, in the effect giving proceedings, no adverse inference has been drawn. Thus, substantially, no grievance survives. In any case, we are satisfied that as issue was considered duly by AO so the issue did not deserved to be interfered u/s 263.

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• 2025 (2) TMI 1069
  Not giving the TDS credit as per 26AS statement - As per CIT(A) AO is directed to allow the credit of the prepaid taxes after due verification of the Form 26AS as per the provisions section 199 - HELD THAT:- We do not see any infirmity in the impugned order. The tax-payer should not be subjected to harassment merely on the basis of some mistake occurred due to technical glitch of software. Undisputedly, in this case, the assessee had not claimed credit of tax in its Income Tax Return. As per the assessee, the assessee had deducted tax during the year amounting to Rs. 1,32,68,202/- but due to technical glitches TDS deducted to the tune of Rs. 52,95,646/- was only updated by the software in the return of income. Therefore, the assessee had made an application for seeking rectification of mistake. Undisputedly, it is not the case of the revenue that the tax deducted as per Form No. 26AS was only Rs. 52,95,646/- as uploaded by the assessee. It is incumbent upon the assessing authority to ensure that the credit of tax deducted at source has been given as per Form No. 26AS. AO has not brought any materials to rebut this fact. Even otherwise also, it is not the case of AO that tax so deducted was not deposited in government account. It is apparently a mistake that could not have been the basis of denial of credit of tax under the facts and circumstances of the present case. Thus, looking to the material placed before us and the finding of the Ld. CIT(A), we are of the view that the Ld. CIT(A) was justified in directing the Assessing Officer to give credit to the tax deducted at source. Therefore, we do not see any reason to interfere in the finding of the Ld. CIT(A). The grounds of appeal of the Revenue are hereby dismissed. Non-payment of interest on the refund due - Undisputedly, the assessee himself had not claimed credit of taxes in the return of income. The case of the assessee is that due to the technical glitches entire claim could not be uploaded in the return of income. Under these facts, we do not see any fault on the part of the assessing authority for not granting refund along with interest thereon. Moreover, no material has been placed before us that any effort was made by the assessee for bringing to the notice of the assessing authority about the technical glitches. Grounds raised by the assessee in cross objection are hereby rejected.

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• 2025 (2) TMI 1068
  Rejection of application for registration in Form No.10AB under clause (iii) of section 12A(1)(ac) - sole contention of the assessee in the grounds of appeal that if CIT, Exemption, Pune was not satisfied with the compliance made by the assessee trust he should have had provided at-least one further opportunity to the assessee to explain his case - HELD THAT:- In the interest of justice without going into the merits of the case, we set-aside the order passed by Ld. CIT, Exemption, Pune and remand the matter back to him with a direction to decide the application for registration afresh as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to comply with the notices issued by Ld. CIT, Exemption, Pune and produce requisite/ desired documents/information in support of the application for registration without taking any adjournment further. Grounds of appeal raised by the assessee are partly allowed.

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• 2025 (2) TMI 1067
  Denial of exemption u/s 11 - assessee failed to file original registration certificate u/s 12A - HELD THAT:- In the Return of Income, assessee has specifically mentioned that assessee is registered u/s 12A. As during the assessment proceedings, AO was aware about the registration number of the 12A certificate. 12A Certificate is issued by Commissioner of Income Tax, Kolhapur in those days. The Department is custodian of all these documents. ITO-Kolhapur, who passed the assessment order sits in Income Tax Office, Kolhapur, and Commissioner of Income- Kolhapur also sits in the same. However, the ITO did not bother to visit the Commissioner of Income Tax-Kolhapur to verify the registration number issued by Commissioner of Income Tax, Kolhapur in 1991. Subsequently, during the appellate proceedings before ld.CIT(A), assessee filed copy of registration certificate under section 12A of the Act. The ld.CIT(A) called-for a remand report from the Assessing Officer. The ITO in his remand report stated that additional evidence is not admissible, ITO further stated that assessee has not produced original copy of registration certificate under section 12A of the Act. Thus, the entire allegation of the Department in denying exemption claim under section 11 of the Act to the assessee is that original registration certificate under section 12A of the Act, was not filed. Thus, it is an admitted fact that copy of registration certificate was filed by the assessee. When Department is custodian, the Department cannot blame assessee for not filing original certificate. We have also observed that for A.Y.2017-18, assessee was granted exemption under section 11 of the Act. Thus, AO had erred in denying Assessee s claim of exemption u/s 11. Decided in favour of assessee.

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• 2025 (1) TMI 1520
  Denial of claim of the assessee to be taxed at the lower rate u/s 115BAA - Form 10IC, which was required to be also filed to opt for simplified tax regime which was not submitted by the assessee - HELD THAT:- Admittedly, the assessee intended to opt for beneficial regime u/s 115BAA as it clear from the return as well as the tax audit report. The only omission was not filing the requisite Form 10IC by due date. In this regard, genuine hardship was experienced by numerous assessees due to the fact that section 115BAA had come into effect from 01.04.20220 during the period of Covid Pandemic when it had become difficult to make statutory compliances for the assessees in general. In view of representation received in this regard, the CBDT belatedly issued a circular on 23.10.2023 condoning the delay in filing of Form 10IC on or before 31.01.2024 subject to few conditions. Since the circular was issued on 23.10.2023 and at the time of filing of return for AY 2022-23 in 2022, there was no such provision for filing belated Form-10IC for AY 2021-22, the assessee thought it prudent to file the requisite form for AY 2022-23 on 22.09.2022. Subsequently, in view of the circular, the assessee attempted to file Form 10IC for AY 2021-22 as well, but the system did not accept it for the reason that one Form 10IC had already been uploaded for AY 2022-23. We are of the considered view that the assessee deserves to get the benefit of lower tax rate prescribed by section 115BAA for AY 2021-22 as well, considering that the CBDT itself had relaxed the condition regarding filing of Form 10IC and provided a window for late submission of the same. The assessee having filed Form 10IC for AY 2022-23 on 22.09.2022 i.e. much before the issue of CBDT circular dated 23.10.2023, was not able to file another Form 10IC on the system. Simply because of the technical glitch in the system, the assessee cannot be denied the benefit of the circular when all other conditions are satisfied. Appeal of the assessee is allowed.

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• Customs

• 2025 (2) TMI 1066
  Condonation of gross delay of 544 days in filing and 44 days in refiling the appeals - delay not satisfactorily explained - Classification of imported goods - plastic trigger sprayer for plastic bottles lotion pump for plastic bottle and fine mist sprayer for plastic bottles - whether classifiable under 84242000 as held by the Commissioner (Appeals) in the impugned order or under CTH 96161000 as claimed by the Revenue? - it was held by CESTAT that The fact that the mounts were used on bottles of toilet sprays in Reckitt and Coleman and in this case they are used for sanitizers makes no difference. HELD THAT:- There is a gross delay of 544 days in filing and 44 days in refiling the appeals which have not been satisfactorily explained - there are no good reason to interfere with the impugned order passed by the Customs Excise Service Tax Appellate Tribunal, New Delhi. The appeals are, therefore, dismissed on the ground of delay as well as on merits.

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• 2025 (2) TMI 1065
  Maintainability of appeal - appellant states that the appeal may be disposed of due to its low tax effect - HELD THAT:- The appeal is disposed of, without deciding the question of law, due to low tax effect. Appeal disposed off.

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• 2025 (2) TMI 1064
  Classification of imported goods - defatted coconut - to be classified under CTH 08011990 or under CTH 23065020? - Benefit of Notification No.50/2017- Customs dated 30.06.2017 Sl. No. 114 - it was held by CESTAT that Revenue is directed to classify the goods as per the declaration made by the respondent by extending the benefit of notification as applicable. HELD THAT:- In view of the factual finding recorded by the Customs, Excise and Service Tax Appellate Tribunal, Bengaluru, that the fat content in the product in question was less than 55%, there are no error or mistake in the impugned judgment. Hence, the present appeal is dismissed.

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• 2025 (2) TMI 1063
  Challenge to SCN - SCN has not been issued by a proper officer in terms of the Section 28 of the Customs Act, 1962 - opportunity of hearing - principles of natural justice - HELD THAT:- The Petitioner shall be given an opportunity to file a reply and a personal hearing shall also be afforded by the concerned Adjudicating Authority - The Court notices that the remaining matters in the connected batch of writ petitions which were adjourned sine die on 25th September, 2023 could also be decided on the basis of the decision of the Supreme Court in Cannon - II [ 2024 (11) TMI 391 - SUPREME COURT (LB) ]. Petition disposed off.

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• Insolvency & Bankruptcy

• 2025 (2) TMI 1062
  Admissibility of Section 7 Application - interim order in this Appeal is continuing from 21.02.2024 and a period of one year has elapsed and Appellant has not agreed to all Terms of Settlement - HELD THAT:- The letter dated 18.01.2025, which is a Amendatory Settlement Letter, which was issued by ICICI Bank and the Clause-e, existing clause and amended clause, where both the clauses contemplate that on or before the due date, the entire Settlement Amount shall be released from the Fund Escrow Account to the Collection Account of the ICICI Bank. The settlement between the parties can be arrived only when both the parties agrees with all terms and conditions. No direction can be issued to modify or change the Terms of Settlement as proposed by the ICICI Bank. The Appeal was disposed of on 22.11.2024, permitting Financial Creditor to file 12A application within the time allowed, which time was extended from time to time. From the facts brought on record, it is clear that as on date, both the parties have not agreed and signed any Settlement Agreement, so that an application under Section 12A can be filed for withdrawal of the CIRP. It is already noticed the submission of the learned Counsel for the Canara Bank, who has claimed that it has also dues on the Corporate Debtor, who also contends that no further indulgence be granted to the Appellant. Conclusion - The Appellant was not entitled to further extensions for settlement and application rejected. Application dismissed.

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• 2025 (2) TMI 1061
  Condonation of 104 days delay in refiling the appeal - sufficient cause for the delay in refiling the appeal provided or not - HELD THAT:- In the present case, the impugned order was passed on 30.04.2024. The Appeal was e-filed on 13.06.2024 which was well within period of 45 days including condonation of delay. However, when the defects were notified by the NCLAT registry on 04.07.2024, the Appeal was finally refiled on 23.10.2024 after rectification of defects, with a delay of 104 days. From the explanation we find no reasons except for medical condition with the father of one of the Advocates which occurred sometime on end September. There is total silence from July to end September, 2024. Explanation provided doesn t inspire much confidence. There are no sufficient justification to condone the refiling delay of 104 days in time bound IBC proceedings. Conclusion - Such delay of 104 days in refiling is not reasonable and justifiably explained. The application is therefore dismissed. Application dismissed.

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• Service Tax

• 2025 (2) TMI 1060
  Disqualification under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- Since there is no proof on record that there was any investigation on the date when the Petitioner applied to avail the benefit under the Scheme and the fact that the orders disqualifying the Petitioner which have been passed are also completely unreasoned and one-line orders, this Court is of the opinion that the Petitioner is entitled to relief. However, the scheme is no longer operational. Under these circumstances, it is directed that the declaration of tax liability of Rs. 11,26,937/- be accepted by the Department. Subject to the said amount being deposited within a period of one month, the impugned show cause notice dated 31st December, 2020 shall stand quashed. If the said amount is not deposited within one month, the impugned show cause notice dated 31st December 2020 shall automatically revive and the Petitioner is permitted to file a reply to the same. The proceedings under the impugned show cause notice would then proceed in accordance with law. Petition disposed off.

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• 2025 (2) TMI 1059
  Validity of demand for service tax based solely on the data from Form 26AS - exemption to services provided by the appellant to local government bodies - applicability of Entry No. 12A of N/N. 25/2012-ST - invocation of Extended period of Limitation. HELD THAT:- The entire show cause notice is based on the data received from Income Tax Department in Form 26AS. Revenue has not examined the data received by them to know whether any service was rendered by the appellant which attracted service tax. When the exemptions were claimed by the appellant before the original authority, he has simply ignored the submissions and confirmed the entire demand as raised in the show cause notice. Therefore, both show cause notices and order-in-original put together have solely relied on the information received in Form 26AS which is the amount received by the appellant. The issue is no more res integra and it has been decided that only on the basis of data in Form 26AS, Revenue cannot issue show cause notice demanding service tax. Here it is noted that charging Section 66B of Finance Act, 1994 provides for levy of service tax at a specific percentage on the value of service. Section 67 of Finance Act, 1994 provides that where service tax is chargeable on a taxable service with reference to its value, then such value shall be the consideration in money charged by the service provider - it is clear that while determining value of taxable service under Section 67 ibid, such aspect as to the activities which are covered by negative list and which are mentioned in the definition of service as those which are not covered by such definition become important. Conclusion - The demand cannot be raised merely on the basis of the data received from the Income Tax Department, without any corroborating evidence to substantiate that the value received were in connection with taxable service rendered by the Appellant. The impugned order set aside - appeal allowed.

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• 2025 (2) TMI 1058
  Non-payment of service tax - appellant had collected amount as service tax but did not deposit the same with the exchequer - failure to properly verify the facts - violation of principles of natural justice - HELD THAT:- The entire demand is based on the information available in profit and loss account and receipts as per Form 26AS. The nature of service rendered by the appellant and the quantum of amount received for rendering a particular service are absent in the proceedings. The value of service is to be determined in accordance with Section 67 and Service Tax (Determination of Value) Rules, 2006 and the same is absent in the entire proceedings. The charging Section 66B of Finance Act, 1994 provides for levy of service tax at specific rate on the value of service. Section 67 of Finance Act, 1994 provides that where service tax is chargeable on any taxable service with reference to its value, then such value shall be the consideration in money charged by the service provider. Therefore, it is primarily important to determine the value on which service tax shall be levied on a specific percentage and such value should be value of taxable service. Clause (44) of Section 65B of Finance Act, 1994 has provided for definition of service and it has elaborately dealt with a list of activities which shall not be included in such definition. Further, Section 66D of Finance Act, 1994 has provided for negative list of services where activities covered by such negative list do not qualify to be taxable service. Therefore, it is clear that while determining the value of taxable service under Section 67 ibid, such aspect as to the activities which are covered by negative list and activities which are mentioned in the definition of service as those which are not covered by the said definition, become important. Therefore, for arriving at the amount of service tax not paid or not levied arriving at correct value of taxable service which has not suffered service tax needs to be determined - Further, there are services where entire or part of service tax is to be paid by service recipient. Further, there is a mega notification which provided conditional exemptions to various activities from payment of service tax. In addition, there are Service Tax (Determination of Value) Rules, 2006 which provide abatement to services such as works contract service. Unless all these aspects of Service Tax law are taken into consideration, the allegations of service tax not paid or not levied are not sustainable - No such exercise was done in this case. Conclusion - The allegations of service tax non-payment or underpayment were not sustainable due to the lack of a comprehensive assessment of these factors. The matter requires detailed verification on all aspects. The impugned order set aside - appeal allowed.

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• 2025 (2) TMI 1057
  Eligibility to claim interest on the refund granted - refund was sought from the Haryana Housing Board - intere st denied on the ground that refund has been given within 90 days of the application - HELD THAT:- In this case, the refund has been sanctioned in time. As there is no delay in sanctioning the refund, there are no provisions in the statute to grant interest. Tribunal being a creature of statute cannot travel beyond the provisions of Law or statute. It is found that the appellants have cited so many decisions on the issue of payment of interest. However, the facts of all the cases are different as all the cases involve delayed sanction of refund. The instant case is not about the delay in sanction of refund and consequential payment of interest. Therefore, the cases cited are not applicable as the facts and circumstances are different. Hon ble High court also took cognizance of the peculiar circumstances of the case. In view of the same, the appellants have not made out any case for grant of interest on the amount refunded. Conclusion - The refund was processed within the statutory period, and no interest is payable as per the statutory provisions. Appeal dismissed.

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• 2025 (2) TMI 1056
  No-payment of service tax - appellants were treating the services provided to various institutions like Administrative Training Institute, MCRHRD etc. as Educational Institutions and they have not paid the requisite Service Tax - Section 11B of the Central Excise Act, 1944. Non-payment of Service Tax - HELD THAT:- The issue about the non-payment of Service Tax on various exempt services has already reached finality. The Department has quantified the same as Rs. 6,48,577/- which has been paid by the appellant before the issue of show-cause notice along with interest of Rs. 1,27,119/-. The appellant has not litigated this amount at the lower appellate stage. Since the amount has been paid along with interest before the issue of show-cause notice, there are no reason to apply Section 78 provisions to impose the penalty on them. The penalty of Rs. 6,48,577/- in respect of this demand set aside. Quantification of CENVAT reversal - HELD THAT:- Revenue has taken the stand that the appellant is providing taxable service and they have paid Service Tax of Rs. 6,48,577/- towards the same after being pointed out by Audit team. In such cases, the appellant would be eligible for cenvat credit. Therefore, there are force in the submissions of the appellant that while quantifying the cenvat reversal, the turnover towards such taxable service (which was earlier treated as exempt by the appellant) have to be considered to come for the final quantification. For this purpose, the matter is required to be remanded to the adjudicating authority. The appellant is directed to file all their documentary evidence and calculation sheets to fortify their arguments as to what should be the quantification for cenvat reversal. The final quantification if held to be taxable has to be paid by the appellant along with interest. However, considering the facts of the case, the penalty on such Service Tax set aside. Payment of excess Service Tax during the previous period - it is submitted that appellant has paid some excess Service Tax during the previous period and Department has to adjust the net Service Tax liability is concerned - HELD THAT:- There are no reason to entertain this submission of the appellant. In case they had paid more Service Tax during the earlier years, it was for them to quantify the same and to file a proper refund claim within the framework specified under Section 11B of the Central Excise Act, 1944. The adjudicating authority has correctly held that there is no statutory provision to carry out this kind of adjustment at the adjudication stage. Therefore, this prayer of the appellant is rejected. Conclusion - i) The appellant had already paid the demanded Service Tax along with interest before the show-cause notice was issued, leading to the penalty under Section 78 being set aside. ii) The appellant should be eligible for cenvat credit. The matter was remanded to the adjudicating authority for a proper quantification of the cenvat reversal, considering the turnover of taxable services previously treated as exempt by the appellant. iii) The appellant s claim of having paid excess Service Tax in previous periods and seeking an adjustment was rejected by the Tribunal, emphasizing the need for proper refund claims under the Central Excise Act, 1944. The matter is remanded to the adjudicating authority. The adjudicating authority should follow the principles of natural justice and pass a considered decision within 4 months from the date of this order - appeal disposed off by way of remand.

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• 2025 (2) TMI 1055
  Liability of M/s Semi Conductor Laboratory, a Government of India entity, to pay service tax on the Franchisee Services provided to Eon Infotech Ltd for conducting VLSI education and training courses - invocation of extended period of limitation - suppression of facts or not - HELD THAT:- The entire demand has been confirmed by invoking the extended period; it is also found that the additional commissioner has observed that the appellant being a part of Ministry of Space under Union of India, and as such there could have been no malafide intention to evade payment of tax on the part of their official, as none of the employee severally or jointly is benefited by evading the service tax, and none has any personal gain. The Ld. Additional commissioner has also observed that the discrepancy has come to the knowledge of the Department during investigation subsequent to Audit of the appellant conducted by the Departmental officers for the period 16.07.2001 to 31.03.2005 on 13/31.12.2005. The Order-in-Original, the additional Commissioner has dropped the penalty under Section 76,77 and 78 by holding that malafide intention cannot be inferred on the part of the appellant which is a government of India undertaking. This finding of the Additional Commissioner has not been challenged by the Department and hence has attained finality; once the said finding has attained finality, therefore there is no reason for the Commissioner (Appeals) to come to the conclusion that there is a suppression of fact with intend to evade payment of duty and invokes extended period to confirm the demand. Moreover, the entire facts were in the knowledge of the department because a lot of correspondences were exchanged during that time when the audit was conducted therefore, alleging suppression of facts with intend to evade duty cannot be alleged against government undertaking. Conclusion - The Department was well-informed about the appellant s activities, and there was no basis for alleging evasion of duty against a government entity. The entire demand is barred by limitation - the appeal is allowed only on limitation.

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• 2025 (2) TMI 1054
  Classification of service - Manpower Recruitment and Supply Agency Service or not - assignment of employees by Overseas Entities to the Appellant during the period April 2008 to March 2013 - invocation of Extended period of limitation. Whether the appellant is required to discharge Service Tax under Reverse Charge Mechanism for services received under the category of Management Consultancy Services , Manpower Recruitment and Supply Agency Service during the relevant period involved in this appeal in the light of the judgment of Hon ble Supreme Court in Northern Operating Systems Pvt. Ltd. [ 2022 (5) TMI 967 - SUPREME COURT] ? - HELD THAT:- In the Cost Reimbursement Agreement for Assignment referred above between the Appellant and their Overseas Company reveals that the terms and conditions are more or less similar to the one referred to in para 3 of the judgment of the Hon ble Supreme Court in Northern Operating Systems Pvt. Ltd - In the present case also, the appellant was in need of personnel for facilitating the business operations in India and the overseas company, which has such personnel, who possesses the requisite qualification and skill desired to employ such persons on exclusive basis and the overseas company has duly consented to depute such personnel to India. The deputed personnel while under employment with the appellant was not in any manner subjected to any kind of instruction or control or direction or supervision of the overseas company and required to report to the appellant s management in India. They function solely under the control, direction and supervision of appellant and in accordance with the policy, rules, guidelines applicable to the employees of the appellant. The appellant shall have the sole right to take punitive steps against misconduct, negligence, fraud or unsatisfactory performance of work by the seconded personnel during employment with the appellant company and also have the right to terminate the employment. The details of the salary to be paid by the appellant to the assignees are enumerated in the said agreement. A careful reading of the sample Reimbursement Agreement and also the contract of the employment, letter of employment etc., there are no major difference from the facts stated in the judgment of Hon ble Supreme Court in Northern Operating Systems Pvt. Ltd. s case, where it was held that it is held that the assessee was, for the relevant period, service recipient of the overseas group company concerned, which can be said to have provided manpower supply service, or a taxable service, for the two different periods in question (in relation to which show cause notices were issued). Whether Extended period of limitation is invokable in confirming demand for the period from April 2008 to March 2013 and penalty is imposable when the service tax demand along with interest is paid before issuance of show-cause notice on ITSS and Commercial Training or Coaching Services? - HELD THAT:- The service tax is applicable on the amount paid by the Appellant to M/s. Tesco, Bangalore for providing manpower during the relevant period April 2008 to March 2013; however, it was also held by the Hon ble Supreme Court in the said case that extended period of limitation cannot be invoked and hence, demand has to be computed for the normal period of limitation. Further, since the Appellant had paid the amount of service tax, on being pointed out relating to ITSS service and commercial training and coaching service, before issuance of show-cause notice with interest, there are no reason for invoking extended period of limitation against the appellant. Consequently, penalties imposed on all the appellants are unsustainable and accordingly, set aside. Conclusion - i) The Service tax is applicable on the amount paid by the appellant for manpower supply during the relevant period, but only for the normal period of limitation. ii) The extended period of limitation could not be invoked, aligning with the Supreme Court s decision in Northern Operating Systems Pvt. Ltd. Matter remanded to the adjudicating authority to redetermine the liability for the normal period of limitation - appeal allowed by way of remand.

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• Central Excise

• 2025 (2) TMI 1053
  Clandestine removal - Fraudulent availment of CENVAT Credit - Area based exemption - it is alleged that the claim of procurement of mentha oil by the manufacturers situated in Jammu Kashmir and North East were bogus - denial of cross-examination of witnesses - violation of princiles of natural justice - HELD THAT:- It is found that the evidence available in this regard has already been discussed by the Tribunal in the series of cases and it has been concluded that the evidences are not enough to sustain the demands. When the allegation of bogus procurement of raw material, manufacture and clearance by the Jammu based units cannot be established, allegation of bogus procurement from these units by Meerut based manufacturers cannot be sustained. The allegation leveled against the appellants do not sustain. The averment by the learned Authorized Representative that some of the supplies made may be fake is of no help at this stage. It was open to the Department to collect all the evidences and make precise allegations while issuing the Show Cause Notice. The bus having been missed, Revenue cannot open a new front to continue the litigation on the facts and records which were not part of the impugned proceedings. The charge of clandestine removal is a grave one. It has to be leveled with accuracy though mathematical precision cannot be expected. Co-ordinate Bench of the Tribunal, in the matter of Nova Petrochemicals v. CCE, Ahmedabad-II, [ 2013 (11) TMI 626 - CESTAT AHMEDABAD] held There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions. Appeal allowed.

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• 2025 (2) TMI 1052
  Classification of goods - Fuel Filter assembly, Water Pump Assembly, Cylinder Head Sub-Assembly and Cylinder liner stud Assembly which are sub-assemblies and components of High Horse Power locomotives for Railways - yo be classified under Chapter Heading 8607 as parts of railway locomotives or under other headings as suggested by the Department? - applicability of Exemption N/N. 12/2016-CE dated 01.03.2016 - time limitation. Classification of goods - HELD THAT:- Section 37B Order issued earlier on 01.09.1993 instructing classification of Steel/Aluminium Water Tanks for supply to Railways either under Chapter 73 or Chapter 76 of the CETA, 1985 was withdrawn consequent to the Order of the Tribunal in M/s. Sri Ram Metal Works [ 1997 (11) TMI 265 - CEGAT, MADRAS] that the provision of water in a coach was a necessity and the water tank became part of the coach after fitment. The decision is in keeping with the relevant Section Notes and Rules for Interpretation of Tariff as well as judgments of the Hon ble Supreme Court and decision of the Tribunal in identical cases. Therefore, the Lower Appellate Authority did not commit any error in falling back upon Board s Circular dated 20.10.2000. In the case of M/s. G.S. Auto International Ltd. [ 2003 (1) TMI 700 - SUPREME COURT ], a question arose as to whether items such as Sprint Centre Bolts with Nuts, Spring U Bolt with Nuts, Spring U Clamps with nuts and plates, Spring Shackle Pin (Shackel Bolt) with Nuts and Spring Shackle Pin (Spring Pin) specifically designed for use in automobile vehicles merited classification as parts of general use under CH 73.08 or as parts and accessories of motor vehicles under CH 87.08. CETA 1985 is enacted on the basis and pattern of the HSN. For resolving any dispute with reference to classification, reference to HSN is needed. However, when Section or Chapter Notes are clear and unambiguous, resorting to HSN Notes is not required. The principles governing classification are given in the General Rules of the Interpretation of Tariff. As per Rule 1 of the said General Rules, the classification is to be determined in terms of the headings and any relevant Section or Chapter Notes. If determination of classification is still elusive, recourse can be taken to Rules 2 to 6. If the dispute cannot be resolved in the manner said above, reference to HSN Notes is required. In this case, applying Note 3 of Section XVII coupled with the judgment of the Hon ble Supreme Court in the case of M/s Westinghouse Saxby and Rule 3(a) of the General Rules for Tariff Interpretation, the issue has been resolved by classifying the products under CH 8607. Therefore, any further reference to HSN Notes is not legally warranted. The products manufactured and supplied by the respondent are rightly classifiable under CH 8607 of CETA and the ratio of the decision of this Bench in the case of M/s. Shakthi Tech Manufacturing India Pvt. Ltd. applies to this case entitling the respondent to avail concessional rate of duty under the amending Notification No. 12/2016-CE dated 01.03.2016. Time limitation - HELD THAT:- Even in the Customs advisory contained in Instruction No. 01/2022-Customs dated 05.01.2022 to which a reference is made in Para 26 of the appeal memo, in Para 3 the Board says that In the context of the divergent practises arisen, it is noted that the classification of parts of goods falling under Section XVII of the Customs or Central Excise Tariff is a complex issue. Thus, the factum of admission in Board s circular that the classification of parts is a complex issue confirms the view that the issue is not free from doubt. Therefore, there are no hesitation to hold that the demand raised invoking extended period of limitation under Section 11(4) CEA, 1944 is wholly without any basis. Conclusion - i) The classification of the respondent s products under Chapter 8607 affirmed, based on the sole or principal use test as articulated in Note 3 to Section XVII and supported by the Supreme Court s decision in Westinghouse Saxby Farmer Ltd. ii) The demand raised invoking extended period of limitation under Section 11(4) CEA, 1944 is wholly without any basis. Appeal of Revenue dismissed.

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• 2025 (2) TMI 1051
  CENVAT Credit - denial on the ground of non-submission of required documents i.e. STTG Certificates which according to the Department is a primary and essential documents to avail the Cenvat credit - extended period of limitation - HELD THAT:- This issue was considered by the Division Bench of Mumbai Bench, CESTAT in the case of JSW Steel Ltd. [ 2022 (3) TMI 913 - CESTAT MUMBAI] wherein after considering the Rule 9 of the Cenvat Credit Rules the Tribunal has held If the requirements of Rule 3 are satisfied, the credit could not have been denied. Further, Rule 9(2) read with Rule 4A of the Service Tax Rules provides that any document which contains the details as prescribed under Rule 4A shall be considered as a proper duty paying document for all the purposes including availment of cenvat credit. The Ld. Commissioner (Appeals), Ludhiana in the case of M/s Salasar Steel Structural Pvt. Ltd. on identical issue has allowed the Cenvat Credit and has held that Cenvat credit cannot be denied merely on account of non production of STTG Certificates. Extended period of limitation - HELD THAT:- The Revenue has not been able to establish any of the ingredients mentioned in Section 11A(4) - extended period cannot be invoked. Conclusion - i) The denial of Cenvat credit based on the absence of STTG Certificates was not valid. ii) Extended period cannot be invoked. Appeal allowed.

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• CST, VAT & Sales Tax

• 2025 (2) TMI 1050
  Refund of excess tax deposited during appellate proceedings - infringement of Articles 14, 19(1)(g), and Article 265 of the Constitution of India or not - HELD THAT:- The respondents cannot retain the amounts deposited by the petitioner pursuant to condition imposed by the appellate authority for stay of the assessment order and contend that there is no necessity to refund the same. If the actual tax assessed from the petitioner is much less than the amount which the petitioner had deposited at the time of filing the appeal and seeking stay, retention of the balance after the assessing officer, post remand, reduced the demand drastically, would undoubtedly amount to unjust enrichment on the part of the respondents and would be violative of Article 14 and Article 265 of the Constitution of India. The respondents are directed to refund the amounts deposited by the petitioner after adjusting the same towards the tax finally assessed post remand by the assessing authority for the Assessment Year 2013-14 and Assessment Year 2014-15 with interest at the rate of 9% per annum from 09.01.2021 till the date of actual payment. The respondents shall also pay cost of Rs. 2,00,000/- to the petitioner for unjustly retaining the said amount for the last four years. The cost as well as the refund shall both be paid to the petitioner within six weeks from the date of receipt of a copy of this order. Petition allowed.

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• Indian Laws

• 2025 (2) TMI 1049
  Dishonour of Cheque - vicarious liability of directors of the accused company - whether the petitioners had knowledge or were involved in the transaction alleged in the complaint? - HELD THAT:- It is relevant to note that this Court can quash complaints under the NI Act at the pretrial stage in the exercise of its inherent jurisdiction under Section 482 of the CrPC if such unimpeachable material is brought forth by the accused persons which indicates that they were not concerned with the issuance of the cheques or that no offence is made out from the admitted facts. The Hon ble Apex Court in the case of Rathish Babu Unnikrishnan v. State (NCT of Delhi) [ 2022 (4) TMI 1434 - SUPREME COURT ] had discussed the scope of interference by the High Court against the issuance of process under the NI Act and held that Situated thus, to non-suit the complainant, at the stage of the summoning order, when the factual controversy is yet to be canvassed and considered by the trial court will not in our opinion be judicious. Based upon a prima facie impression, an element of criminality cannot entirely be ruled out here subject to the determination by the trial Court. Therefore, when the proceedings are at a nascent stage, scuttling of the criminal process is not merited. In line with the dictum of the Hon ble Apex Court in Rathish Babu Unnikrishnan v. State (NCT of Delhi), thus, while exercising the power under Section 482 of the CrPC to quash a complaint at the pre-trial stage, it is pertinent for this Court to examine whether the factual defence is of such impeachable nature that the entire allegations made in the complaint is disproved. In accordance with Section 141 of the NI Act, in instances where the principal offender under Section 138 of the NI Act is a company, every person who at such time when the cheque was dishonoured, and no subsequent payment was made, was in charge of the business of the company, and was responsible for the conduct of business, is deemed to be guilty of the offence under Section 138 of the NI Act. It is trite law that a person cannot be arrayed as an accused person merely due to association with the accused company in capacity of a Director. In the present case, the evidence presented by the petitioners was sufficient to disprove the allegations without the need for a trial, as the complaint lacked specific averments about the petitioners roles - the petitioners were not in charge of and responsible for the conduct of the business of the company at the time the offence was committed. Therefore, they could not be held vicariously liable under Section 138 read with Section 141 of the NI Act. Conclusion - The evidence presented was sufficient to demonstrate that the directors were not responsible for the conduct of the business of the company at the time of the offence. Petition allowed.

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