TMI Tax Updates - e-Newsletter
March 13, 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. Computation of capital gains in case of depreciable assets.: Clause 74 of Income Tax Bill, 2025 vs. Section 50 of Income-tax Act, 1961

  Bill:

2. Cost of acquisition for capital gains tax purposes: Clause 73 of the Income Tax Bill, 2025 vs. Section 49 of the Income Tax Act, 1961

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3. Mode of computation of capital gains: Clause 72 of the Income Tax Bill, 2025 vs. Section 48 of the Income-tax Act, 1961

  Bill:

4. Withdrawal of Exemption in Certain Cases: Clause 71 of the Income Tax Bill, 2025 vs. Section 47A of the Income-tax Act, 1961

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5. Capital Gains Tax Exemptions: Clause 70 of the Income Tax Bill 2025 vs. Section 47 of the Income Tax Act 1961

  Bill:

Articles

1. Failure to register under the GST law amounts deliberate tax evasion

   By: Bimal jain

2. Latest Trends in Online Trademark Registration Services for Startups

   By: Ishita Ramani

3. PROPOSED AMENDMENTS TO INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (INSOLVENCY RESOLUTION PROCESS FOR CORPORATE PERSONS) REGULATIONS, 2016

   By: DR.MARIAPPAN GOVINDARAJAN

4. Letter of Credit (LC) Sample format / Draft format

   By: YAGAY andSUN

5. Registration process and procedure for organic products under the National Program for Organic Production (NPOP) in India

   By: YAGAY andSUN

6. Branding & Digital Marketing for Women Entrepreneurs & Women Professionals in Global, International, National Trade and Business.

   By: YAGAY andSUN

7. Foreign Direct Investment (FDI) in India: An In-Depth Overview.

   By: YAGAY andSUN

8. Prior Product Approval under the FSSAI Act, 2006 and Regulations.

   By: YAGAY andSUN

9. Heavy Metals and Food Safety: A Detailed Analysis

   By: YAGAY andSUN

10. The Consumer Protection Act, 2019 (Replacing the 1986 Act)

   By: YAGAY andSUN

News

1. R'than Assembly passes GST Amendment Bill by voice vote

2. Parliamentary panel raises concern over underutilisation of funds by rural development ministry

3. Budget session of Tripura Assembly to start on March 21

4. Madhya Pradesh Budget outlay increases 15 pc to Rs 4.21 lakh crore, no new taxes

5. Ahead of MP budget, Congress MLAs chain themselves to protest against state's 'rising' debt

6. CPI(M) terms Manipur budget 'inadquate' amid eithnic violence, JD(U) says 'not fully satisfactory'

7. MP budget to be around Rs 4.21 lakh crore, says CM before presentation

8. Dharamshala mayor presents annual budget of Rs 141.51 crore

9. LS nod for Rs 51,463 cr extra spending this fiscal, Manipur Budget

10. Manipur MPs urge Centre to address budget inequality, accuse it of overlooking state

11. BRISKPE gets RBI in-principle authorisation for cross-border payments

12. Inflation slips below RBI's target of 4 pc; factory output up 5 pc

13. Annual Survey of Unincorporated Sector Enterprises (ASUSES)

14. National Housing Bank releases report on Trends and Progress of Housing in India 2024

15. Competition Commission of India (CCI) approves the acquisition of certain shareholding in Greenko Energy Holdings of ORIX Corporation by AMG Green Power B.V. and subscription of certain convertible notes of AM Green (Luxembourg) S.À.R.L by ORIX Corporation

16. CCI approves the proposed combination involving acquisition of Ayana Renewable Power Private Limited (Target) by ONGC NTPC Green Private Limited (Acquirer)

17. RBI and National Centre for Financial Education (NCFE) have Launched Nationwide Campaigns to Boost Financial Literacy

18. Overall Credit disbursement to Priority Sectors Jumps 85% from ₹23 Lakh Crores in 2019 to ₹42.7 Lakh Crores in 2024

19. Total digital payment transactions grow by 46% from 8,839 crore in FY 2021-22 to 18,737 crore in FY 2023-24

20. Digital Payment Transactions Surge With Over 18,000 Crore Transactions in 2024-25

21. Government has taken several measures to increase credit access and finance for MSMEs

22. MSME Sector Sees Continued Growth as NPAs Decline Sharply Over the Past 5 Years

23. Adequate provisions under the Companies Act, 2013 (Act) for strengthening corporate governance and transparency in the management of companies

24. Government Implements Key Initiatives to Boost Industrial Growth and Investments

25. 'Vital' for economic growth: Mauritian PM seeks Indian investment

26. China's shipbuilding dominance poses economic, national security risks for US: Report

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/CFD-PoD-1/P/CIR/2025/31 - dated 11-3-2025

Faster Rights Issue with a flexibility of allotment to specific investor(s)

DGFT

2. Trade Notice No. 33/2024-25 - dated 12-3-2025

Inputs on Draft Amendments in Procedures for Export Authorization for "Stock and Sale" of SCOMET items

Highlights / Catch Notes

GST

• Minor Typographical Errors in Tax Invoices and E-way Bills Don't Justify Harsh Penalties Under CGST Act Section 129(1)(b)

  Case-Laws - HC : The HC ruled that when a taxpayer produces tax invoices and e-way bills with minor typographical errors (such as incorrect vehicle number HR-46C-4623 instead of HR-58C-4623), goods should be released under Section 129(1)(a) rather than 129(1)(b) of the CGST Act. Following precedent established in Halder Enterprises v. State of U.P. & others and the circular dated 31.12.2018, the Court held that when documents establish ownership despite minor errors, penalties under Section 129(1)(b) are inappropriate. The authorities were directed to expedite the release of goods under Section 129(1)(a). Petition allowed.
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• Assessment Orders Under GST Section 73(9) Quashed as Target Company Ceased to Exist After Merger

  Case-Laws - HC : The HC quashed three assessment orders issued under Section 73(9) of the GST Act against MVIL, as they were passed after MVIL had already merged with the petitioner company and ceased to exist. Following the Supreme Court's precedent in Maruti Suzuki India Limited and Delhi High Court's ruling in HCL Infosystems Ltd., the court held that proceedings against a non-existent entity are fundamentally invalid. The court determined that Section 87 of the GST Act does not permit continuation of proceedings against an entity that has legally ceased to exist due to merger. The assessment orders dated 29.11.2023, 27.04.2024, and 26.08.2024 were accordingly set aside.
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• GST Proceedings Revived: Court Allows Filing of Objections to Show Cause Notice Under Section 73 Due to Medical Grounds

  Case-Laws - HC : The HC allowed the petition by remanding the matter back to the stage of filing objections to the show cause notice issued under Section 73 of GST Act. Despite the petitioner's appeal being rejected solely on grounds of delay, the Court determined it retained jurisdiction to examine the ex-parte order. The Court found that the petitioner's inability to participate in the original proceedings was justified by documented medical evidence of heart ailment requiring surgery. Following precedent established in M/S. CHAMARAJNAGAR TALUK MSPC, the Court held that the petitioner deserved an opportunity to participate in the proceedings by filing objections to the show cause notice.
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• GST Show Cause Notices Uploaded Only on Portal Without Physical Service Violates Natural Justice Principles

  Case-Laws - HC : The HC set aside the impugned order dated 28.08.2024 due to violation of principles of natural justice. The respondents had uploaded show cause notices only on the GST Portal under "Additional Notice" tab without physical service, which went unnoticed by the petitioner. Although the petitioner's former consultant filed a reply on 20.06.2024, the respondents passed an order raising tax/interest/penalty demands without providing an opportunity for the petitioner to present their case. The petitioner only became aware of the rejection of their reply on 04.01.2025 when receiving a notice dated 02.01.2025. The Court remanded the matter to the first respondent for fresh consideration, allowing the petition.
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• IGST Refund Ordered for Zero-Rated Supply as Departmental Circulars Cannot Override Rule 96 of CGST Rules

  Case-Laws - HC : The HC directed the refund of IGST paid under Section 16(3) of IGST Act read with Section 54 of CGST Act and Rule 96 of CGST Rules for zero-rated supply. The court determined that departmental circulars cannot override Rule 96, relying on precedent established in Amit Cotton Industries (Gujarat HC). The court ordered the respondent to refund Rs. 12,72,827 with applicable interest to the petitioner within eight weeks from receipt of the order. The petition was allowed, confirming that administrative circulars cannot supersede statutory rules governing IGST refund procedures for zero-rated supplies.
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• Appellate Authority Wrong to Reject GST Appeal When 10% Tax Deposit Made Within Limitation Period Under Section 107

  Case-Laws - HC : The HC held that the Appellate Authority erroneously rejected appellant's appeal under Section 107 of the 2017 Act. While the appellant did not deposit the required 10% tax amount simultaneously with filing the appeal, they did make the payment within five days, which was still within the statutory limitation period prescribed by Section 107(1). The Court determined that Section 107(6)(b) should receive liberal interpretation, and when statutory deposit is made within the overall limitation period, it satisfies the requirement of deposit "along with appeal." Since both the appeal filing and statutory deposit occurred within the prescribed limitation period, the appeal should have been considered on its merits rather than dismissed on technical grounds. Petition allowed.
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Income Tax

• Power Finance Corporation's Ten Year Zero Coupon Bond Specified Under Section 2(48) of Income-tax Act

  Notifications : The Central Government has specified the Ten Year Zero Coupon Bond of Power Finance Corporation Ltd. as a zero coupon bond under section 2(48) of the Income-tax Act, 1961. The bond has a lifespan of ten years and one month, with issuance scheduled on or before March 31, 2027. Each bond will be redeemed at Rs. 100,000 with a discount of Rs. 49,546. The total issue comprises ten lakh bonds. This notification was issued pursuant to the powers conferred by clause (48) of section 2 of the Income-tax Act, read with relevant provisions of the Income-tax Rules, 1962.
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• Share Premium Valuation Under Section 56(2)(viib): DCF Method Cannot Be Rejected Without Examining Details

  Case-Laws - HC : The HC upheld the ITAT's deletion of addition under section 56(2)(viib) regarding share premium collected by a closely held company. The court found that lower authorities improperly rejected the DCF valuation method without examining its details or calling for additional information. The rejection was based on objective satisfaction rather than subjective assessment of case facts. Following Town Essential Pvt. Ltd. (ITAT Bangalore, 2021), the HC ruled that valuation reports cannot be rejected without recording contrary findings. The authorities' reasoning that the company's loss-making status precluded share premium valuation was deemed insufficient, and the addition was accordingly deleted in the assessee's favor.
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• Transfer Order Under Section 127(2) of Income Tax Act Upheld for Pacific Group Investigation Centralization

  Case-Laws - HC : The HC upheld a transfer order under s.127(2) of the Income Tax Act relocating the petitioner's case from Mumbai to New Delhi. The court found substantial compliance with statutory requirements, noting proper consultation and agreement between Principal Commissioners and Chief Commissioners. The transfer was justified on merits to facilitate centralization of cases connected to the Pacific Group, where revenue evasion necessitated consolidated investigation. The court declined to exercise its extraordinary jurisdiction under Article 226, emphasizing that such discretionary power is reserved for promoting justice rather than addressing mere legal technicalities, particularly when jurisdictional parameters have been satisfied. The writ petition was accordingly dismissed.
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• Reassessment Under Section 147 Invalidated: No New Material Found to Justify Reopening of Settled Assessment

  Case-Laws - HC : The HC invalidated the reassessment proceedings under Section 147, finding no tangible material indicating escaped income. The court determined that the Assessing Officer merely reconsidered the same material that had already undergone scrutiny during the original assessment, where Section 10A deductions were already reduced from the claimed amount. The reasons furnished for reopening failed to demonstrate any failure by the assessee to disclose true and full material facts-a prerequisite under Section 147. The court concluded that the reassessment constituted an impermissible change of opinion rather than discovery of new information, as no new material or undeclared income was identified that wasn't available during the original assessment process.
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• Approvals Under Section 153D Quashed: JCIT's Mechanical Endorsement Without Application of Mind Deemed Procedurally Defective

  Case-Laws - AT : The ITAT quashed approvals granted under section 153D, finding them procedurally defective. The approving JCIT had mechanically approved draft assessment orders without demonstrating application of mind, merely stating "Following draft assessment orders are being approved" without reasons or evidence of examining the material. The Tribunal noted that protective and substantive assessments against the company and its Director were approved in separate letters rather than together, with the protective addition approval preceding the substantive one, further indicating mechanical processing. The JCIT's subsequent letter revealed a misconception that approval was "only a formal culmination" rather than a substantive requirement. The ITAT emphasized that approval letters must be speaking orders demonstrating proper application of mind. Approvals were vitiated and quashed in favor of the assessee.
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• Section 56(2)(vii)(b) not applicable to partners when partnership firm purchases land at below stamp duty value

  Case-Laws - AT : The ITAT allowed the assessee's appeal against the PCIT's revision order under s. 263 directing addition under s. 56(2)(vii)(b) for difference between stamp duty value and actual sale consideration of land. The Tribunal held that s. 56(2)(vii)(b) applies only to individuals/HUFs who "received" capital assets at lower prices, but here the partnership firm M/s Goyal Sons was the actual purchaser, not the individual assessees who were merely partners. The ITAT noted that s. 56(2)(x), which extends to "any person" including partnership firms, was introduced prospectively from 01.04.2017 and not applicable to AY 2016-17. The assessment order was neither erroneous nor prejudicial to Revenue's interests, thus failing to satisfy conditions precedent for s. 263 revision.
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• TDS Credit Under Section 194C Allowed for Firm Despite Back-to-Back Transfer of Receipts to Partners

  Case-Laws - AT : The ITAT ruled in favor of the appellant, allowing credit for TDS deducted under Section 194C. The Tribunal determined that despite transferring gross contract receipts to constituent partners on a back-to-back basis, the appellant properly reported the profit/loss in its own returns. The AO erroneously invoked Section 238(1) to deny TDS credit, overlooking that the appellant had disclosed relevant profits and claimed corresponding TDS in accordance with Section 199(1) and Rule 37BA(1). Since payments were made to the appellant and TDS was remitted to the government in the appellant's name as evidenced by Form 26AS, the appellant alone was entitled to claim the TDS credit.
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• Reassessment Under Section 147 Quashed: AO's "Blind Approach" Invalidates Notice and UK Film Tax Relief Additions

  Case-Laws - AT : ITAT quashed the reassessment proceedings initiated under s.147, finding the AO adopted a "blind approach" without proper appreciation of facts. The notice dated 31/03/2019 under s.148 and subsequent assessment order under s.143(3) read with s.147 were invalidated. The Tribunal upheld CIT(A)'s deletion of additions related to UK Film Tax Relief, noting these amounts had already been accounted for by EMIL in net realization figures. Regarding payments to Winford Production Ltd (UK), ITAT determined these were mere reimbursements of expenses for shooting arrangements and not fees for technical services under Indo-UK DTAA, as no technical knowledge was "made available" to the assessee. Consequently, no TDS obligation arose under s.195, and disallowance under s.40(a)(i) was deleted.
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• CIT(A) Enhancement Order on LTCG and Section 54F Deduction Set Aside for Lack of Proper Show Cause Notice

  Case-Laws - AT : The ITAT set aside the enhancement order issued by CIT(A) under s.251(2) regarding LTCG and denial of s.54F deduction on sale of gold, ornaments, and silver utensils. The Tribunal held that s.251(2) provisions are mandatory, requiring reasonable opportunity of show cause before enhancement, relying on precedents from SC and other ITAT benches. Despite Revenue's contention that the appellant had failed to appear when the case was called and opportunities were granted, the Tribunal determined that sufficient opportunity was not provided before enhancement. The matter was remanded for fresh adjudication on merits after providing fair opportunity of hearing to the assessee.
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• Tax Authority Must Verify Disbursements to Retailers Before Accepting Reimbursement Claims Under Section 263

  Case-Laws - AT : ITAT upheld the PCIT's order quashing the assessment under section 263 regarding TDS liability on payments to sales promoters claimed as reimbursements. The Tribunal found that the Assessing Officer failed to verify whether the transactions constituted genuine reimbursements as previously mandated. The AO merely accepted documentation without proper verification or reconciliation of whether sales promoters actually redistributed funds to retailers. Critical issues remained unaddressed, including how sales promoters were compensated and whether month-wise reconciliation statements existed to demonstrate actual disbursement to retailers. The ITAT directed the AO to verify disbursements by sales promoters against respective debit notes through proper reconciliation, dismissing the assessee's appeal.
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• AO's Failure to Issue Mandatory Show-Cause Notice Before Rejecting Exemption Under Section 10(23C)(vi) Proves Fatal

  Case-Laws - AT : The ITAT rejected the Revenue's appeal concerning disallowance of exemption under s.10(23C)(vi). The Tribunal accepted the assessee's contention that the AO failed to comply with the mandatory procedural requirements of s.143(3) first proviso, which requires specific show-cause notice before rejecting an exemption claim. The ITAT determined it had jurisdiction to decide this fundamental question under Rule 27 of the Appellate Tribunal Rules, 1963, despite the Revenue's technical objection. Finding no evidence that the AO had fulfilled the statutory requirements of providing proper opportunity to the assessee, the Tribunal upheld the assessee's legal arguments and dismissed the Revenue's appeal.
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Customs

• Customs Department Cannot Issue Two Show Cause Notices Under Different Subsections of Section 28 for Same Facts

  Case-Laws - HC : The HC determined that issuing two show cause notices (SCNs) under different subsections of Section 28 for identical factual matrices is impermissible. The impugned SCN under Section 28(4) was issued just six weeks after a Section 28(1) notice concerning similar goods with similar alleged "mis-declaration," constituting an improper change of opinion. The court found the second notice failed to substantiate allegations of collusion, willful misstatement, or suppression of facts required under Section 28(4), containing merely an "incantation" of statutory provisions without supporting substance. Furthermore, the respondent's contention that the impugned notice was a "supplementary notice" was rejected, as the Customs Act contemplates issuance under either Section 28(1) or 28(4), not both. Petition allowed.
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• Squid Liver Powder Classified Under CTH 2309 9090 as Animal Feed Preparation, Not Fish Waste Under CTH 2301 2011

  Case-Laws - AT : CESTAT dismissed the appeal concerning classification of imported Squid Liver Powder, upholding its classification under CTH 2309 9090 rather than CTH 2301 2011. The Tribunal rejected appellant's request to keep proceedings pending, citing the Supreme Court's ruling in Union Territory of Ladakh that courts must decide matters based on existing law. Following precedent established in Avanti Feeds Limited, CESTAT confirmed the product's classification under CTH 2309 9090. The Tribunal determined that Rule 3(b) regarding essential character was unnecessary as classification under CTH 2309 was clearly established by Customs Tariff and HSN. The appeal was dismissed as lacking merit.
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• Gillette Goods Undervaluation Case: Proprietor's Confession of Fraudulent Invoices Shifts Burden of Proof Despite Procedural Violations

  Case-Laws - AT : The dispute involved two containers of Gillette brand goods where CESTAT addressed issues of undervaluation. The tribunal found that the goods were not prohibited under Customs Act SS11, but there was clear mis-declaration of transaction value, as admitted by the proprietor of M/s Royal Trades who confessed to filing fraudulent invoices to evade duty. While this admission shifted the burden of proof to the appellant per SC precedent in United India Insurance, CESTAT determined that principles of natural justice were violated due to non-disclosure of essential documents in the Show Cause Notice. Though this procedural defect was curable, it necessitated remand. Accordingly, CESTAT disposed of the appeal by remanding the matter to the Original Authority for de novo adjudication.
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• Customs Valuation: Rejection of Declared Horse Value Valid, But Improper Use of Irish Auction Prices Under Rule 8

  Case-Laws - AT : CESTAT determined that while rejection of declared transaction value of imported thoroughbred horses under Rule 10A of Customs Valuation Rules, 1988 was justified due to significant discrepancies with auction prices, the subsequent valuation method was flawed. After rejecting transaction value, authorities applied Rule 8 directly, using Irish auction prices with adjustments. However, Rule 8(2)(iii) explicitly prohibits basing valuation on domestic prices in the country of export. Since the SCN acknowledged Rules 4-7A were inapplicable, and Rule 8 was improperly applied using auction prices, the demands for duty, confiscation, fines, and penalties were set aside. Appeal allowed.
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DGFT

• DGFT Introduces One-Year General Authorization for Export After Repair of SCOMET Items Under Para 10.12(D)

  Circulars : DGFT has amended Para 10.12(D) of the Handbook of Procedures 2023 to introduce General Authorization for Export after Repair (GAER) for SCOMET items. The amendment allows exporters to re-export imported SCOMET items to related entities and repair supply chain partners after repair in India under a one-time authorization valid for one year, subject to quarterly post-reporting requirements. Key conditions include: no change to original specifications during repair, compliance with Internal Compliance Programme requirements, mandatory AEO certification for certain transfers, and prohibition of exports to UNSC-sanctioned destinations. The revised procedure eliminates the need for separate authorizations for each shipment, streamlining the process for compliant exporters while maintaining export control safeguards.
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• Government Extends Free Import Policy for Urad Beans Under ITC(HS) Code 07133110 Until March 31, 2026

  Notifications : Pursuant to powers under Sections 3 and 5 of the Foreign Trade (Development and Regulation) Act, 1992, read with paragraphs 1.02 and 2.01 of the Foreign Trade Policy 2023, the Central Government has extended the "Free" import policy for Urad [Beans of SPP Vigna Mungo (L.) Hepper] under ITC(HS) code 07133110. The notification amends the import policy condition by extending the free import period from the previous deadline of March 31, 2025, to March 31, 2026. The amendment was issued with ministerial approval and enables unrestricted importation of this agricultural commodity for an additional year.
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• Import Policy for Yellow Peas Extended: "Free" Status Continues Without Minimum Import Price Until May 31, 2025

  Notifications : The DGFT has extended the import policy conditions for Yellow Peas (ITC(HS) Code 07131010) from February 28, 2025, to May 31, 2025. This extension maintains the "Free" import status without Minimum Import Price conditions or port restrictions. Importers must register through the online Import Monitoring System, and the policy applies to all import consignments with Bills of Lading issued on or before May 31, 2025. The notification was issued under Sections 3 and 5 of the Foreign Trade (Development & Regulation) Act, 1992, read with paragraphs 1.02 and 2.01 of the Foreign Trade Policy 2023, continuing previous notifications on the same subject.
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IBC

• Liquidation Auction Upheld: Section 230 Scheme Filed 224 Days Late, Sale Certificate Already Issued

  Case-Laws - AT : NCLAT dismissed the appeal challenging the auction notice and denied stay of the impugned order. The Tribunal found no procedural flaws in the liquidation process, noting that appellant's Section 230 scheme was filed with a 224-day delay after the Stakeholders Committee had already rejected it. The liquidator properly conducted valuation according to IBC provisions and regulations, and the auction had attained finality with sale certificate issuance on 17.07.2023. The Tribunal affirmed that completed auction proceedings with issued sale certificates cannot be revisited based on belated procedural challenges, particularly when the appellant failed to establish any procedural irregularities in the auction process.
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• Aryan Spaces Transaction Deemed Preferential Under Section 49 of Insolvency and Bankruptcy Code, Pending Further Investigation

  Case-Laws - AT : The NCLAT upheld that the transaction involving Aryan Spaces constituted a preferential transaction under Section 49 of the Insolvency and Bankruptcy Code, 2016, subject to further investigation by the Resolution Professional. The Tribunal had previously considered the reply filed by the Appellant despite inadvertently recording that no reply was filed. The Tribunal clarified this error in its subsequent order dated 17.08.2023, noting that the Appellant's arguments regarding the MOU dated 15.11.2018 had been duly considered. The appeal was dismissed on grounds of limitation as the Appellant failed to file within the statutory period, and the application for condonation of delay was not pursued by the Appellant who was absent during the hearing.
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• Scheme of Arrangement under Section 230 upheld as shareholders with minimal stake lack standing to challenge corporate restructuring

  Case-Laws - AT : The NCLAT dismissed an appeal challenging a Scheme of Arrangement between ICICI Bank Ltd and ICICI Securities Ltd. The Tribunal held that appellants lacked standing to object as they did not meet the shareholding threshold under s.230(4) of Companies Act, 2013. The NCLAT found no conflict between s.230 and Regulation 37 of SEBI Delisting Regulations, ruling that no separate meeting of public shareholders was required as the scheme uniformly affected all equity shareholders. The scheme had received approval from 93.82% of equity shareholders and 71.89% of public shareholders. The appellants' minimal 0.08% shareholding was insufficient to maintain the appeal as "aggrieved persons," with the Tribunal noting that their objections were impeding shareholder democracy.
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Indian Laws

• Dishonored Cheque Case Proceeds Despite Date Overwriting and Incomplete Amount; Technical Defects Deemed Inadvertent Under Section 138

  Case-Laws - HC : The HC set aside the lower court's order and allowed the petition to proceed to trial in a dishonored cheque case. Despite discrepancies in the cheque (overwriting of date and incomplete amount in words showing "Four lac sixty five" instead of "Four lac sixty five thousand" while the numerical figure showed Rs. 4,65,000/-), the court found these to be inadvertent errors rather than material defects. The court determined that the legal notice clearly specified the cheque amount, and the respondent never replied to refute liability. Technical grounds alone were insufficient to dismiss the complaint under Section 138 of the NI Act without affording parties the opportunity to prove their respective cases at trial.
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• Cheque Dishonor Conviction Upheld: Court Rejects Authorization Challenge and Finds Contradictory Defenses Undermined Credibility

  Case-Laws - HC : The HC upheld the conviction of the revision petitioner for dishonor of cheques, rejecting claims regarding complaint maintainability. The Court distinguished this case from A.C. Narayanan, finding proper authorization existed for filing the complaint as evidenced by corporate resolutions and the Memorandum and Articles of Association. The petitioner's contradictory defenses-claiming cheques were security deposits while also alleging coercion-undermined credibility. The petitioner's reply notice (Ex.P.46) acknowledged receipt of diamond jewelry and requested patience for payment, constituting admission of the transaction. Finding no perversity in the lower courts' findings based on documentary evidence, the HC dismissed the revision petition, concluding the complaint was maintainable and conviction justified under the NI Act.
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• Director in Cheque Dishonour Case Gets Relief as Court Finds Magistrate Failed to Establish Prima Facie Grounds Under Section 138

  Case-Laws - HC : The HC set aside the issuance of process against the director in a cheque dishonour case under s.138 of the NI Act. While the complaint lacked verbatim reproduction of s.141 language regarding "in charge of" the company, the court clarified that exact reproduction is unnecessary if substantive allegations fulfill statutory requirements. However, the magistrate failed to conduct proper inquiry to establish prima facie grounds against the petitioner who claimed prior resignation. The court directed the trial court to conduct a proper inquiry to determine whether prima facie case exists against the petitioner before proceeding further. The petition was disposed of accordingly.
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VAT

• Input Tax Credit Claims: Rectification of Bona Fide Mistakes Allowed Through Representation When Return Contains Foundational Facts

  Case-Laws - HC : The HC held that Input Tax Credit (ITC) claims must typically be made in the Return or Revised Return, with exceptions requiring demonstrated bona fides. Rectification of underclaimed ITC due to bona fide mistakes in tax rates is permissible through representation when foundational facts are available in the Return/Revised Return. No rectification is permitted after assessment/reassessment proceedings conclude or limitation period expires. During reassessment, ITC claims cannot be disallowed merely because they disadvantage the State Exchequer. If reassessed tax exceeds payable amount, recovery with interest/penalty is warranted; conversely, if payment exceeds reassessed liability, ITC claims made before conclusion of reassessment proceedings must be honored. Petition dismissed.
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• Nomination Does Not Confer Ownership: Court Upholds Tax Attachment Under Section 34 of MVAT Act Despite Nominee's Claim

  Case-Laws - HC : The HC dismissed a petition challenging an attachment order issued under Section 34 of the Maharashtra Value Added Tax Act for unpaid tax dues. The court found that the petitioner's claim of exclusive ownership through nomination was legally untenable, as nomination does not confer full title to property. Despite being nominated after the intestate death of Madhusudan, the petitioner held the property in trust for all legal heirs per succession laws. The purported transfer of interest to the petitioner by her sons in June 2017 occurred after tax arrears accrued (FY 2008-09 and 2012-13), making the undivided share of her son Jayesh subject to Section 38 of the Act.
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Service Tax

• Interest Charges for Delayed Payments by Stockbroker Clients Not Subject to Service Tax Under Section 67

  Case-Laws - AT : CESTAT ruled that Delayed Payment Charges (DPC) received by the appellant stockbroker from clients are not includible in the taxable value for service tax purposes. The Tribunal determined that DPCs constitute penal charges for delayed payments rather than consideration for providing a separate service. Applying principles established in Bhayana Builders and other precedents, CESTAT emphasized that "consideration" under Section 67 of the Finance Act must flow from the service recipient to the service provider as payment for services rendered. The Tribunal noted that Circular 137/25/2011 specifically clarifies that DPCs are not chargeable to service tax as they represent penalties rather than service fees. The impugned order was set aside and the appeal allowed.
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• Foreign University Recruitment Services Qualify as Export, Not Intermediary Services Under Rule 6A When Provided Directly to Overseas Institutions

  Case-Laws - AT : CESTAT held that services provided by appellant to overseas educational institutions constituted export of services, not intermediary services. The appellant rendered services directly to foreign universities/colleges and received commission upon successful student admissions. These services satisfied all conditions under Rule 6A for classification as export services, including direct provision to foreign recipients with payment in foreign exchange. Following precedent established in Sunrise Immigration Consultants Private Limited, the Tribunal determined that referral services for foreign universities qualify as export services when the provider acts on its own account rather than as an intermediary. Appeal allowed.
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• CENVAT Credit Eligible for Input Services Used in Setting Up Cement Plant Under Rule 2(l)

  Case-Laws - AT : The CESTAT ruled in favor of the appellant, holding that CENVAT credit of Rs.57,68,603/- on input services used in setting up a cement plant was eligible despite the removal of "setting up" from the definition of "input service" effective April 2011. The Tribunal found the appellant properly availed credit for banking, management, legal consultancy, and installation services under Rule 2(l) of CENVAT Credit Rules. Additionally, CENVAT credit of Rs.32,557/- based on debit notes for rent was deemed valid as they contained all details required by Rule 4A of Service Tax Rules. The demand for interest of Rs.24,88,246/- was set aside since the appellant maintained sufficient CENVAT credit balance. Penalties under Section 78 of Finance Act were also vacated.
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• Demand for Service Tax Based Solely on IT Department's Form 26AS and ITR Data Ruled Unsustainable

  Case-Laws - AT : CESTAT held that service tax demand based solely on Form 26AS and ITR data without corroborative evidence linking income to taxable services was legally unsustainable. The Tribunal found multiple errors in the adjudicating authority's assessment: failure to grant exemption for pre-March 2015 contracts, incorrect computation of taxable value for 2017-18 by considering receipts beyond the relevant period (April-June 2017), and unjustified invocation of the extended limitation period. The Tribunal relied on M/s Piyush Sharma precedent, emphasizing that service tax demands cannot be raised solely on Income Tax Department data without proper investigation establishing taxability. Appeal allowed with direction to reassess liability considering these findings.
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Central Excise

• CENVAT Credit Allowed for Business Auxiliary and Import Services but Denied for AMC and Warranty Charges

  Case-Laws - AT : The CESTAT partially allowed the appellant's appeal regarding CENVAT credit eligibility for various input services. The Tribunal upheld the denial of credit for AMC and warranty charges as these services were not integrally connected to manufacturing and occurred beyond the point of removal. However, it allowed credit for Business Auxiliary Services (based on previous unchallenged rulings), Import Services (qualifying as sales promotion activities), Club and Association Services (following precedents), and Storing and Warehousing charges (due to minimal amounts involved). The Tribunal rejected the invocation of the extended period of limitation, finding no deliberate attempt to evade duty or evidence of guilty intention. The ruling emphasized that input services must be integrally connected to manufacturing to qualify for CENVAT credit.
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• Inter-connected Undertaking in IT Form 3CD Doesn't Establish "Related Person" Status Under Section 4(3) of Central Excise Act

  Case-Laws - AT : CESTAT ruled that merely listing an inter-connected undertaking in Income Tax Form 3CD does not establish a "related person" relationship under Central Excise law. Without specific determination that the appellant and M/s Shree Vaishnav Ispat Private Limited were related under Section 4(3) of the Central Excise Act, 1944, they cannot be treated as related parties for valuation purposes. The Tribunal cited precedents establishing that inter-connected undertakings are not automatically related persons, and valuation should be determined under Rule 10 rather than Rules 8 & 9 of the Central Excise Valuation Rules, 2000. The impugned order was set aside and the appeal allowed.
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• Copper Drawing Process Not "Manufacture" Under Central Excise Act as No New Product Created

  Case-Laws - AT : CESTAT held that drawing and re-drawing copper products did not constitute "manufacture" under the Central Excise Act as it did not create a new and distinct product. The Tribunal determined that thickness above 0.15mm was the key factor for classification under heading 7409, not weight or dimensional reduction. Drawing/re-drawing is not specified as manufacturing for heading 7409 products, only for heading 7411. The adjudicating authority improperly relied on selective portions of panchanama evidence while ignoring contradictory parts. Following Technoweld Industries (SC), which established that drawing wire from wire rods does not amount to manufacture, the Tribunal set aside the impugned order and allowed the appeal.
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Case Laws:

• GST

• 2025 (3) TMI 614
  Validity of Section 16(4) of the Central Goods and Services Tax Act, 2017 - extension of time limit for passing the orders under Section 73 of the CGST Act - HELD THAT:- The impugned order dated 22.12.2023 passed by the respondent No.8 is set aside. The matter is remitted to the respondent No.8 to decide the matter afresh in accordance with the provisions of Section 16 of the CGST Act, as amended, after providing an opportunity of hearing to the petitioner, within a period of 2(two) months from the date of production of a certified copy of this order. Petition disposed off.

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• 2025 (3) TMI 613
  Levy of penalty u/s 129(1)(b) of the Central Goods and Services Tax Act, 2017 - inadvertent typographical error - vehicle number in the e-way bill was indicated as HR-46C-4623 instead of HR-58C-4623 - HELD THAT:- In M/s. Halder Enterprises v. State of U.P. others [ 2023 (12) TMI 514 - ALLAHABAD HIGH COURT] , a co-ordinate Bench of this Court, based on the circular dated 31.12.2018 came to the conclusion that wherever the said circular is applicable and when the tax invoice and the E-way bill are produced by the assessee, the goods shall be treated as belonging to the assessee, who comes before the authorities as the owner of the goods and produces the documents and it was further held that in such cases that the security is required to be in terms of Section 129(1)(a) and not under Section 129(1)(b) of the Act and therefore, the goods are required to be released under Section 129(1)(a) of the Act. In the present case, the principle laid down in the case of M/s. Halder Enterprises would apply and the goods have to be released under Section 129(1)(a) of the Act. Conclusion - The goods should be released under Section 129(1)(a), and the authorities were directed to expedite this process, based on the circular dated 31.12.2018. Petition allowed.

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• 2025 (3) TMI 612
  Validity of assessment orders issued under Section 73(9) of the Goods and Services Tax Act, 2017 against Max Ventures and Industries Limited (MVIL) - continuation of proceedings against a non-existent entity - HELD THAT:- Undisputed facts are that before the three assessment orders were passed, the company MVIL stood merged with the petitioner company and, therefore, the orders in question were passed against a non-existent company. The Hon ble Supreme Court in the case of Maruti Suzuki India Limited [ 2019 (7) TMI 1449 - SUPREME COURT ], in a case pertaining to income tax, came to the conclusion that the issuance of notice to a non-existent entity was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation, the judgment applies to the present case as well. Delhi High Court in the case of HCL Infosystems Ltd. [ 2024 (11) TMI 1331 - DELHI HIGH COURT ] in similar circumstances, after taking note of provisions of Section 87 of the Act, reiterated the same principles and came to the conclusion that the provision does not enable the respondents to continue proceedings against a non-existent entity. Conclusion - i) The assessment orders issued against a non-existent entity, post-merger, are invalid. ii) The provisions of the GST Act, including Section 87, do not permit the continuation of proceedings against an entity that has legally ceased to exist due to merger. The orders dated 29.11.2023, 27.04.2024 and 26.08.2024 passed under Section 73(9) of the Act are quashed and set aside - Petition allowed.

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• 2025 (3) TMI 611
  Waiver of interest or penalty or both relating to a demand under Section 73 of CGST Act - main grievance of the petitioner is that since the appeal was affected by the limitation, it was automatically rejected by the authority without considering the bona fide reasons for the delay - HELD THAT:- Taking into consideration the fact that subsequent to the impugned order dated 30.12.2023, the authorities have passed a rectification order under Section 161 of the TNGST Act, on 28.02.2025, the petitioner is directed to challenge the rectification order, if aggrieved by it, by following the due process of law. Petition disposed off.

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• 2025 (3) TMI 610
  Rejection of petitioner s appeal only on the ground of delay - ex-parte order - opportunity to participate in the proceedings - HELD THAT:- The petitioner ought to be given an opportunity to participate in the proceedings initiated under Section 73 of 2017 Act, as he could not participate in the proceedings pursuant to show cause notice dated 31.12.2023 issued under Section 73 (1) of 2017 Act, due to ill-health suffered by him which is established by placing medical records on record. A co-ordinate Bench of this Court in M/S. CHAMARAJNAGAR TALUK MSPC [ 2024 (3) TMI 1266 - KARNATAKA HIGH COURT ] has observed that merely because appeal preferred by the petitioner was dismissed by the Appellate Authority, it cannot be said that this Court is denuded of its power and jurisdiction to examine the claim of the petitioner under Article 226 of the Constitution of India or to examine the legality, validity and correctness of the order passed by the original authority. In the instant case also, though the appeal filed by the petitioner is rejected solely on the ground of delay, this Court is denuded of its power to examine the original order dated 30/31.03.2024 (Annexure-f) passed under Section 73 of 2017 Act. On examination of the original order passed under Section 73 of 2017 Act, it is forthcoming that the said order is ex-parte order and without participation of the petitioner. The petitioner was not in a position to participate in the proceedings under Section 73 of 2017 Act due to his ill-health. The medical records placed on record would indicate that (Page 53 of writ petition) petitioner was suffering from heart ailment since 2011 and since his heart was functioning 40%, subsequently on 09.12.2024 the petitioner has undergone heart surgery. The above circumstances would justify the petitioner s request for an opportunity to participate in the proceedings by filing objections. Conclusion - The petitioner ought to be given an opportunity to participate in the proceedings initiated under Section 73 of 2017 Act, as he could not participate in the proceedings pursuant to show cause notice due to ill-health. The matter is remitted back to the stage of filing objections to show cause notice dated 30.12.2023 issued under Section 73 of 2017 Act - petition allowed by way of remand.

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• 2025 (3) TMI 609
  Violation of principles of natural justice - proper service of SCN or not - Seeking to de-freeze the petitioner s Bank Account - HELD THAT:- Since all the notices pertaining to the show cause notice dated 22.05.2024 were sent only on the GST Portal, under the column Additional Notice tab, the same were unnoticed by the petitioner, however, the petitioner s erstwhile Consultant noticed the same and filed a reply on 20.06.2024 and was expecting for response, however, nearly for three weeks, nothing was updated and hence, the petitioner assumed that the issue was solved and thereafter, the petitioner discontinued the service of the tax consultant. However, the respondents, all of a sudden, passed the impugned order dated 28.08.2024, raising demand for tax/interest/penalty, without even giving an opportunity to the petitioner to putforth their contentions. Added to that, the said impugned order was not served on the petitioner through any physical mode of service but was merely uploaded in the GST Portal, which the petitioner was not aware. Only on 04.01.2025, when the petitioner received a notice dated 02.01.2025 sent by the second respondent, the petitioner came to know that the reply filed by the erstwhile tax consultant was not accepted. Thus, it is clear that the fact that the reply filed by the petitioner s ex-Consultant was not accepted by the respondents was came to the notice of the petitioner only on 04.01.2025, i.e. much later to the passing of the impugned order, hence, the petitioner was not in a position to file any detailed/better reply. However, the first respondent without even providing an opportunity of personal hearing, passed the impugned order, which suffers from violation of principles of natural justice. Conclusion - The principles of natural justice require that parties affected by an order must be given a fair opportunity to present their case, including clear communication of proceedings and orders. The impugned order suffers from violation of principles of natural justice and is liable to be set aside. The matter is remanded to the first respondent for fresh consideration - Petition allowed by way of remand.

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• 2025 (3) TMI 608
  Refund of the IGST account paid by invoking Section 16(3) of IGST Act read with Section 54 of the CGST Act read with Rule 96 of CGST Rules - Zero Rated Supply - HELD THAT:- The issue raised in the writ petition is no longer res integra . The Hon ble Division Bench of Gujarat High Court in M/s.Amit Cotton Industries Through Partner, Veljibhai Virjibhai Ranipa Vs Principal Commissioner of Customs [ 2019 (7) TMI 472 - GUJARAT HIGH COURT ] had categorically held that the aforesaid circular cannot prevail over Rule 96. The Hon ble Division Bench observed that the circular will not save the situation for the Department. The first respondent is directed to refund a sum of Rs. 12,72,827/- together with applicable interest to the petitioner within a period of eight weeks from the date of receipt of a copy of this order - Petition allowed.

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• 2025 (3) TMI 607
  Appeal of petitioner rejected solely on the ground that the statutory deposit of 10% is not deposited along with appeal - HELD THAT:- Section 107 of the 2017 Act provides for appeal against decision or order passed under the Act and it also prescribes three months time to file appeal from the date of communication of the order. Further, one month extended time is provided under Section 107 (4) of 2017 Act to file appeal and the said period could be condoned if acceptable cause is shown - Section 107 (6) (b) of 2017 Act states that no appeal shall be filed under Section 107 (1) of 2017 Act, unless the appellant pay a sum equal to 10% of the remaining amount of tax in dispute arising from the order under appeal. In the instant case, though the petitioner has not deposited the amount as required under Section 107 (6) (b) of 2017 Act along with appeal, but deposited the said 10% of the amount within five days from the date of filing of the appeal. Both filing of the appeal and deposit as required under Section 107 (6) (b) of 2017 Act was within the period of limitation prescribed under Section 107 (1) of 2017 Act. A liberal interpretation is to be given to Section 107 (6) of 2017 Act and if the statutory deposit as required is made within the limitation prescribed under Section 107 (1) of 2017 Act, then it shall be treated as deposit made along with appeal. The petitioner filed an appeal as well as deposited the statutory deposit within the period of limitation prescribed under Section 107 (1) of 2017 Act. Conclusion - The Appellate Authority s rejection of the appeal on the sole ground of timing of the deposit was erroneous. The statutory deposit, being made within the limitation period, fulfilled the legal requirements, and the appeal should be considered on its merits. Petition allowed.

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• 2025 (3) TMI 606
  Challenge to assessment order in Form GST DRC-07 - said proceedings did not contain a DIN number - HELD THAT:- The question of the effect of non-inclusion of DIN number on proceedings, under the G.S.T. Act, came to be considered by the Hon ble Supreme Court in the case of Pradeep Goyal Vs. Union of India Ors [ 2022 (8) TMI 216 - SUPREME COURT] . The Hon ble Supreme Court, after noticing the provisions of the Act and the circular issued by the Central Board of Indirect Taxes and Customs (C.B.I.C.), had held that an order, which does not contain a DIN number would be non-est and invalid. A Division Bench of this Court in the case of M/s. Cluster Enterprises Vs. The Deputy Assistant Commissioner (ST)-2, Kadapa [ 2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT] , on the basis of the circular, dated 23.12.2019, bearing No.128/47/2019-GST, issued by the C.B.I.C., had held that non-mention of a DIN number would mitigate against the validity of such proceedings. Conclusion - The non-mention of a DIN number in the order, which was uploaded in the portal, requires the impugned order to be set aside. This Writ Petition is disposed of, setting aside the impugned proceedings, dated 31.01.2024, issued by the 1st respondent, with a liberty to the 1st respondent to conduct fresh assessment, after giving notice to the petitioner and assigning a DIN number to the said order.

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• Income Tax

• 2025 (3) TMI 621
  Assessment order titled in the name of a non-existent entity due to its merger - HELD THAT:- Question on which this appeal came to be admitted stands conclusively answered in favour of the assessee in light of our judgment of Vedanta Ltd [ 2025 (1) TMI 912 - DELHI HIGH COURT] held notice u/s 143(2) under which jurisdiction was assumed by the assessing officer was issued to a non-existent company. The assessment order was issued against the amalgamating company. This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292-B. Decided in favour of assessee.

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• 2025 (3) TMI 620
  Addition in respect of on-money receipt - estimation of profit margin - separate addition in respect of unaccounted receipts as well as unaccounted expenses - as submitted that the assessee is engaged in the real estate business and the seized material in question contained noting in respect of unaccounted receipts and unaccounted expenses Whether addition was not based on any incriminating material found during the search? - HELD THAT:- No merit in this ground. The Assessing Officer had referred to seized materials found during the search on the basis which the on-money receipts as well as cash expenses have been worked out. The details of seized material based on which the on money receipts was quantified in the Assessment Order is duly found mentioned in Assessment Order number of the seized documents is also mentioned. Thus, it is found that the addition in respect of on money receipts as well as cash expenses were based on the seized material found during the search. AO had made addition for the entire on-money receipts as well as the unaccounted expenses as per the seized documents in the two years to which it pertained - The assessee in the written submission before the CIT(A) had given detailed working of extrapolation of on-money receipt by taking into account the area and the agreement value. The extrapolated on-money was worked out @ Rs. 1575/- per square feet which was about 50% of the agreement value and the real income of extrapolated on-money amount was estimated by applying profit rate of 6%. The fact that the assessee had received on money receipts which had crystallized during the A.Ys. 2020-21 to 2023-24 has not been denied. Therefore, we do not find any merit in the ground no.3 as taken by the assessee and the same is dismissed. While upholding the deletion of addition in respect of on-money receipts in the A.Y. 2018-19 and 2019-20 by the ld. CIT(A), we direct the AO to tax the on-money receipts crystallized in the A.Ys. 2020-21 to 2023-24, as per own admission of the assessee, by applying the profit rate as decided in this appeal. Estimation of profit margin @ 14% in respect of on money - receipts - According to the assessee, profit was estimated at the rate of 12.5% in other group cases of the assessee. We find that no universal rate of 12.5% was applied in other group cases. In the case of Sankalp in decided [ 2024 (9) TMI 1707 - ITAT AHMEDABAD] profit rate of 13% was upheld in respect of on-money receipts. Accordingly, we find it reasonable to apply the profit rate of 13% in this case also. Accordingly, the ground taken by the assessee in this regard is partly allowed.

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• 2025 (3) TMI 619
  Exemption claimed u/sec. 10(10AA)(ii) - claim of the assessee for leave encashment received at the time of retirement - HELD THAT:-The limit of leave encashment to be claimed by the assessee was revised to Rs. 25,00,000/- as specified vide notification No. 31/2023/F. NO. 200/3/2023- ITA-1 dated 24th May, 2023 and therefore, the assessee is eligible to to claim Rs. 9,60,409/- as claim eligible for deduction of the said amount of Rs. 9,60,409/- and Id. AO is directed to allow the claim of the assessee within the revised limit as prescribed. Since the issue has already been decided by the bench [ 2023 (6) TMI 1476 - ITAT JAIPUR] and same was followed in [ 2023 (10) TMI 1506 - ITAT JAIPUR] Thus, we direct the Id. AO to allow the claim to the extent of the revised limit as per the circular as referred herein above. Appeal of the assessee is allowed.

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• 2025 (3) TMI 618
  Disallowance of interest u/s 36 - interest payment to NCR Planning Board - HELD THAT:- CIT(A) considering the submission and documentation filed by the assessee recorded her finding wherein she has stated that it is an undisputed fact that the appellant has been following mercantile system of accounting and from the submission alongwith the basis of calculation filed by the appellant, it is observed that the interest amount under consideration represents the interest on installment which accrues till the last date of the F.Y. However the due date of which falls in the subsequent year therefore the interest expenses booked by the assessee is an actual and ascertained liability of the assessee corporation. We find that the findings of the Ld. CIT(A) wherein she has stated that the amount represents the actual and ascertained liability and not the provision remains unrebutted before us. Therefore in light of the same we do not see any infirmity in the findings of the CIT(A) wherein she has allowed the necessary deduction towards the liability in respect of the interest which has accrued during the financial year relevant to the impugned assessment year. In the result ground of appeal so taken by the Revenue is dismissed. Disallowance made u/s 14A - HELD THAT:- Admittedly, the assessee has not earned any exempt income during the financial year relevant to impugned assessment year 2017-18, in such a situation, the question of disallowance of any expenditure under section 14A r.w. Rule 8D does not arise for consideration - the addition so made and upheld by the Ld. CIT(A) is hereby directed to be deleted. Disallowance u/s 36(i)(iii) - amount of interest so capitalized has been done after carrying out the calculation on scientific basis following the well accepted accounting policy which is in consonance with the provision of Section 36(1)(iii) - HELD THAT:- Nothing has been brought on record to rebut the findings of the CIT(A) who has rightly taken into consideration the accounting policy so adopted by the assessee in terms of allocation of interest expenditure, the actual expenditure so allocated by the assessee and further, there is nothing on record to demonstrate the basis of allocation as so determined by the AO which is clearly arbitrary and without any sound basis. In the result, we upheld the findings of the CIT(A) and the ground of appeal so taken by the Revenue is dismissed.

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• 2025 (3) TMI 617
  Determination of nature of forex fluctuation loss as to capital or revenue - HELD THAT:- The appellant strictly complied with mandatory operational norms of EEFC a/c and operated solitarily for the purpose of receipt of sales proceeds from its export s sale and their utilization either for current account transaction or withdrawal therefore in INR. This in our considered view is sufficient to establishes that, the very character of closing balance held as trading receipts. The said closing balance remained unutilized thus represents noting other than a circulating capital more precisely the working capital. On the other hand, the Revenue could hardly bring any deprecative evidence on records to dismantle the appellant s claim and these findings emerged in the course of physical hearing. Having determined the character of balance held in EEFC a/c, now turning to deductibility of losses arising therefore - The issue of deductibility of fluctuation of forex loss arising out of trading transactions came for consideration before in CIT Vs Vinergy International Pvt. Ltd. [ 2016 (8) TMI 1041 - BOMBAY HIGH COURT] wherein their lordship following the decision in Woodward Governor [ 2009 (4) TMI 4 - SUPREME COURT] upheld the adjudication of Ld. Co-ordinate bench in allowing deduction for forex fluctuation losses in relation to monetary items u/s 37(1) of the Act. The appellant recognised the losses on forex fluctuation in relation to closing balance held in EEFC a/c on a regular basis in accordance with the AS-11 and method of accounting regularly employed u/s 145 of the Act. The same was consistently followed by the appellant in all immediate proceeding later years which the Revenue accepted in regular scrutiny assessments. Thus, there was no scope for the Revenue to take a swap to treat the same as notional now and outdo the aforestated binding judicial precedents. Accordingly, guided precedentially by aforestated decisions whereby the Revenue has already accepted the claim of fluctuation loss as the real revenue in nature , hence deductible u/s 37(1) so must be here. Per contra in the absence of compelling reasons, it much less necessitates a diversion from the settled position of law. Assessee appeal allowed.

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• 2025 (3) TMI 616
  Rejection of grant of registration u/s 80G - assessee s failure to respond to notices and discrepancies pointed out in the application process - HELD THAT:- Since the assessee did not furnish any explanation to the discrepancies communicated to it, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue back to the file of the CIT(E) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details and decide the issue on merit as per fact and law. Appeal filed by the assessee is allowed for statistical purposes.

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• 2025 (3) TMI 615
  Reopening of assessment u/s 147 - notice u/s. 148 sent prior to the end of the limitation period to issue notice u/s.143(2) - addition u/s. 68 by treating the share capital and share premium received by the assessee as income of the assessee from unexplained sources - HELD THAT:- Issue has been directly dealt with by the Hon ble Supreme Court in the case of HHE The Nizam s Supplemental Family Trust [ 2000 (2) TMI 4 - SUPREME COURT] wherein as held that unless the return of income already filed is disposed of, notice for reassessment u/s. 148 cannot be issued, i.e. no reassessment proceedings could be initiated as long as assessment proceedings pending on the basis of the return already filed are not terminated. Further, the Hon ble Delhi High Court in the case of KLM Dutch Airlines[ 2007 (1) TMI 138 - DELHI HIGH COURT] by following the decision of the Hon ble Supreme Court has categorically held that the recourse can be taken to section 147 after the expiry of the limitation fixed for framing the original assessment. It has been held in the case of CIT vs Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] that if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. In view of this, the reopening of the assessment by issue of notice u/s. 148 of the Act in this case was not valid and, therefore, consequential assessment framed u/s. 147 of the Act is not sustainable - Decided in favour of assessee.

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• 2025 (3) TMI 605
  Addition u/s 56 (2) (viib) towards share premium collected from closely held company - ITAT deleted addition - HELD THAT:- As correctly decided by ITAT we notice that the lower authorities have rejected the DCF method of valuation on the ground that the same is not based on any scientific method and that since the assessee is making a loss, there is no possibility of valuing the shares of the assessee at a premium. Lower authorities have not gone into the details used by the assessee under DCF method to arrive at the valuation and rejected the entire methodology as adopted by the assessee We are unable appreciatr reasons as quoted by the AO for not considering the valuation report is that the Director during the survey proceedings has stated that there is no valuation report as this reason for rejection as the satisfaction to be recorded by the AO should not be objective satisfaction exercised at his discretion, but a subjective satisfaction based on the facts of the case. The lower authorities have not examined the basis on which the valuation is done and from the perusal of facts, no details in this regard have been called for by the lower authorities. The valuation report is rejected based on the objective satisfaction and not based on detailed examination. As following the decision of Town Essential Private Limited Ltd. [ 2021 (7) TMI 17 - ITAT BANGALORE] we hold that the valuation done by the assessee cannot be rejected without recording any finding to the contrary by the lower authorities and therefore we delete the addition made in this regard - Decided in favour of assessee.

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• 2025 (3) TMI 604
  Transfer order u/s 127 (2) - transferring the petitioner s case from the jurisdictional officer in Mumbai to his counterpart in New Delhi - HELD THAT:- Here, the records show that the proposal for transfer was first received from the PCIT, Central -II, New Delhi, on 7 October 2022. Based on such a proposal, a show cause notice was issued by the PCIT, Mumbai, on 24 January 2023. After that, as discussed in our order dated 7 January 2025, there were consultations followed by agreement even between the Chief Commissioners. Thus, records substantially bear out that there were agreements between the Principal Commissioners inter se and the Chief Commissioners inter se. The other requirements of section 127 (2) were also complied with. Besides, in this case, we cannot lose sight of the fact that centralisation was deemed essential in matters belonging to the Pacific Group or in matters where parties had nexus with the evasion carried out by the Pacific Group, resulting in considerable loss of revenue to the Exchequer. Therefore, consolidation was necessary on merits, and transfers were ordered with a view to such consolidation. By attempting to elevate the plea now raised to the status of the jurisdictional bar, we are not persuaded to exercise our extraordinary jurisdiction under Article 226 and stall or interfere with the transfer. Apart from the fact that the jurisdictional parameters have been complied with in this case, we must add that our extraordinary and discretionary jurisdiction under Article 226 is generally not exercised merely upon making out of some legal points. Such jurisdiction is to be exercised only to promote justice. If justice is a by-product or even an erroneous exercise, it is not necessary that in every case, the writ court must interfere. Reliefs under Article 226 of the Constitution are essentially ex-debito justitiae. WP dismissed.

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• 2025 (3) TMI 603
  Specified bank notes exchange for legal tender after the demonetization deadline - seizure of currency notes in the denomination of Rs.500/- by police authorities occurred before the deadline, and the notes were returned only after the deadline had passed - whether petitioners entitled to deposit specified bank notes of Rs. 20,00,000/- with the Reserve Bank of India after the deadline of 30th December 2016, given that the notes were seized by police authorities before the deadline and returned after it had passed? HELD THAT:- The serial numbers of these currency notes in the denomination of Rs.500/- have been stated in Annexure-I to the said affidavit. Since the serial numbers of the specified bank notes that were seized from the petitioners and returned thereafter are now available, the apprehension expressed on behalf of the Reserve Bank of India that the value of the aforesaid specified currency notes could not be paid to the petitioners in the absence of such serial numbers is taken care of. The availability of the serial numbers of the specified bank notes would also satisfy the requirement of Rule 2(a) of the Rules of 2017. We therefore do not find any reason to deny the petitioners the benefit of receiving the value of the aforesaid specified bank notes. As stated above, the seizure of the said specified bank notes was on 26th December 2016 which is prior to the permissible date of deposit which was 30th December 2016. Income Tax Department having indicated that it did not intend to seize the said specified bank notes pursuant to which the Police Authorities returned the same to the petitioners on 14th January 2017, we find that the petitioners can be permitted to deposit the aforesaid specified bank notes for the value of Rs. 20,00,000/- bearing the serial numbers indicated in Annexure- I to the affidavit dated 24th October 2018 with the 4th respondent. This would facilitate receipt of legal tender for the same value by the petitioners.

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• 2025 (3) TMI 602
  Validity of reassessment - Reason to believe or suspect - Deduction u/s 10A - tangible material indicating that income had escaped assessment or not? - HELD THAT:- It is settled position of law that an error found on reconsideration of the same material which was put to assessment does not give the AO the power to re-open a concluded assessment. However, the assessee is required to make a true and full disclosure of primary facts at the time of original assessment. Reasons furnished for re-opening indicates that the material on which reopening is sought is the same material which has undergone assessment and in fact, final assessment order is passed. There is no new material or income which was not declared at the time of assessment or scrutiny under Section 143 (2) of 1961 Act. While assessing the income, Section 10A deductions were reduced from the claimed amount. Moreover, the reasons would not indicate the failure of the petitioner to disclose any information or that he has not disclosed true and full material facts which is one of the ingredients of Section 147 of 1961 Act. Thus, it is a change of opinion and on the basis of changed opinion, proceedings u/s 147 for re-opening of assessment on the allegation of escaped income is initiated, which is not permissible. Decided in favour of assessee.

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• 2025 (3) TMI 601
  Validity of Order of assessment under the provisions of the Income Tax Act, 1961 issued by the ACIT - allegation of violation of the principles of natural justice - as submitted petitioner was not served with any communication regarding the draft assessment order. Therefore, complaining that the completion of assessment is against the provisions of Section 144B the petitioner approached this Court in the writ petition. Single Judge refused to exercise the discretion and entertain the writ petition as found that the question raised in the writ petition falls within the realm of disputed questions of fact and directed the petitioner to approach the statutory authority with an appeal within a period of two weeks from the date of the judgment. HELD THAT:- On consideration of the rival submissions raised across the bar, we are of the view that there is no merit in the contentions raised by the writ appellant. As rightly observed by the learned Single Judge, the question as to whether there was a proper notice or not is certainly a disputed question of fact, which cannot be gone into in a proceedings under Article 226 of the Constitution of India. Hence, we see no reason as to why we should interfere with the judgment of the learned Single Judge. Accordingly, the appeal lacks merit and the same is dismissed. We might observe that this Court by order dated 24.5.2023 had admitted the appeal and granted interim stay of all further proceedings pursuant to Ext.P2. Since, we have declined to interfere with the judgment of the learned Single Judge, necessarily, the appellant/petitioner will have to resort to the alternate remedy of preferring an appeal. Thus, we permit the appellant to file the appeal against the assessment order within a period of one month from the date of receipt of a copy of this judgment, and in such event, the appellate authority shall treat the appeal as one filed within the time and decide the same on merits, in accordance with law, after hearing the parties.

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• 2025 (3) TMI 600
  Additional purchase price towards the purchase of sugarcane sanctioned by the Managing Committee of the Asseessee - Disallowing the excess payment paid for purchasing of sugar cane, treating it as appropriation of profit - Assessee disallowed the sugarcane purchase price paid by the assessee being the difference between the SNP and price determining under Clause 5A of the Sugarcane Control Order 1966 - ITAT deleted addition - HELD THAT:- Tribunal has arrived at finding of fact to the effect that the Respondent-Assessee has paid the amount of sugarcane purchase price on the basis of agreed price between the parties. Tribunal has therefore rightly referred and relied upon the decision in case of State of M.P. Vs. Jaora Sugar Mills Ltd. and others [ 1996 (10) TMI 511 - SUPREME COURT] wherein the dispute arose on account of fixation of price under the M.P. Sugar (Regulation of Supply and Purchase) Act, 1958 and came to conclusion that the sugarcane price paid by the Assessee which was approved by the Managing Committee of the Assessee having representations of the State Government as per the statutory provision of State Co-operative Society Act cannot be termed as distribution of profit. In view of the above factual finding arrived at by the Tribunal, we are of the opinion that the expenditure claimed by the Assessee on payment of sugarcane price cannot be considered as distribution of profit as the addition price paid by the Assessee is an expenditure allowable u/s 37 incurred wholly and exclusively for the purpose of business carried out by the Assessee in light of the findings arrived at by the Tribunal. Tribunal was therefore right in law in deleting the additions made by way of disallowance on the additional purchase price towards the purchase of sugarcane sanctioned by the Managing Committee of the Asseessee. No substantial questions of law.

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• 2025 (3) TMI 599
  Legality of approval granted u/s 153D - allegation of perusing the records for each assessment year separately - HELD THAT:- We find that only draft assessment orders were sent to JCIT without any assessment or search record. The approvals establishes that approving authority has granted the approvals, without reasons or depicting having applied an active mind to the issue involved and the material relied by the AO, but by merely mentioning Following draft assessment orders are being approved , the impugned approval is granted. Now more particularly in the present set of facts where substantive additions were made in the hands of respondent and protective assessment were made in the hands of its Director respondent, had the competent authority been even aware of the fact of the protective and substantive assessments being made, then it was more likely to have been granted in one letter. Rather if the sequence number of letters granting approval is considered the approval was first granted in case of protective addition and then of substantive addition in case of the company . This certainly shows that unmindful of nature of material relied and nature of additions the approvals have been mechanically granted by the JCIT. What ever attempt is now being made by the department to fill in the lacuna by filing letters of then JCIT who granted the approval is dong more damage to the case of the department because when we take into consideration the letter of then JCIT, with the submission, we find that the said JCIT seems to be still under impression that grant of approval is mere formality and for that reasons the JCIT has stated in this letter that, It is further noted that Approval letter U/s 153D is only a formal culmination of application of mind, which takes place throughout the assessment period. On the contrary law as stands crystallized is that the approval letter should be speaking one and show that approval was granted by application of mind. There is inherent fallacy in the belief of JCIT as mentioned in this letter that there is no requirement in law creating any evidence for discussions before granting the approval u/s 153D. On the contrary this bench is of firm view that not only as quasi-judicial authority but even in administrative capacity, if an approval is to be granted under a statute for initiating any quasi judicial proceedings then such approval should be self contained piece of evidence that due process of law was followed in grant of approval. Which certainly is not the case here. Thus, approvals granted in case of both the assessee to be vitiated and deserve to be quashed - Decided in favour of assessee.

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• 2025 (3) TMI 598
  Penalty u/s. 271(1)(b) - default on the part of the assessee in responding to notices issued u/s. 142(1) - HELD THAT:- Although the provision of Section 271(1)(b) is of deterrent nature and not for earning revenue. Any other view taken shall lead to the imposition of penalty for any number of times (without limits) for the same default. This does not seem to be the intention of the legislature in enacting the provisions of Section 271(1)(b) of the Act. In case of failure of the assessee to comply with the notice u/s. 142(1) of the Act, the remedy with the AO lies with framing of best judgement assessment under the provisions of Section 144 of the Act, as has been rightly done in the instant case but not to impose penalty u/s. 271(1)(b) of the Act again and again for the same default. We hold that the authorities below were not justified in levying penalty for each default in not responding to the notices issued u/s. 142(1) of the Act. We therefore set aside the order of CIT(A) and restrict the penalty levied u/s. 271(1)(b) of the Act to the first default of the assessee in not complying with the notice u/s. 142(1)

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• 2025 (3) TMI 597
  Reopening of Assessment - reason to believe - borrowed satisfaction - Denial of exemption claimed u/s 11 taxing its income in status of AOP - AY 2010-11 HELD THAT:- In this case, there is no whisper in the recorded reasons about assessee applying its income for the benefit of any particular religious or caste in violation of Section 13(1)(a) of the Act. Even the reference to the information stated and conclusion thereafter, has got no nexus whatsoever basis which any prudent person properly instructed in law could draw a linkage that the AO was in possession of tangible material that there is an escapement of income from assessment to the tune. AO simply on the basis of the letter from DCIT(E) has jumped into conclusion that there is an escapement of income which is erroneous since it does not satisfy the jurisdictional fact and law for reopening as envisaged u/s. 147. AO simply taking note of the DCIT(E) letter has borrowed the satisfaction without independent application of mind to form reason warrant holding a belief that income chargeable to tax has escaped assessment. Just because a letter has been received from the DCIT(E) the AO cannot reopen the assessment even if original assessment was u/s. 143(1) of the Act. Thus, reasons recorded by the AO to justify reopening the assessment u/s. 147 fails and, therefore, the very assumption of jurisdiction to reassess the assessee falls. AY 2011-12 - AO did not satisfy the requisite requirement of law to validly reopen the assessment and therefore, it is held to be bad in law. As held above, the AO had taken the information of Special Audit of donor, M/s CBV and that too for AY 2013-14 as gospel truth and has reopened the assessment based on borrowed satisfaction, without independently applying his mind to the information and forming his own view, which is found absent in this case. According to us, the information given by the DCIT(E) can at best trigger reason to suspect and not reason to believe escapement of income and that, in the absence of any tangible material or enquiry as discussed in appeal of AY 2010-11, we have no other alternative but to hold that the reopening of the assessment for AY 2011-12 is also bad in law and we thus quash the impugned reopening proceedings and consequential reassessment. Appeals of the assessee are allowed.

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• 2025 (3) TMI 596
  TDS u/s 194A - Disallowance u/s. 40(a)(ia) - non-deduction of tax on the interest payments made by the assessee towards VIP deposits - HELD THAT:- In the instant case, since assessment year concerned is 2010-11 and amendment to section 194A is applicable for and from AY 2015-16, the said amendment will not have application to concerned assessment year. Therefore, recurring deposit cannot be understood as time deposit and its interest payments are not liable for TDS u/s. 194A of the Act during the relevant assessment year. Appeal filed by the Revenue is dismissed.

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• 2025 (3) TMI 595
  Revision u/s 263 - Addition u/s 56(2)(vii)(b) regarding the difference between the stamp duty value and the actual sale consideration of land . HELD THAT:- In light of the PCIT s revision directions that the addition which is sought to be made herein is that u/s 56(2)(vii)(b) of the Act which is applicable in case of an individual or an HUF; as the case may be, is found to have received a capital asset at a lower price than that adopted by the stamp authorities in clause (b) sub-clauses (i) (ii) thereof. That being the case, we notice that it is not these twin assessee s but their partnership firm M/s Goyal Sons, which had in fact acted as the purchaser of the capital asset representing a share in an orchard measuring 585 bhigas, adjacent to National Highway No. 58. Faced with this situation, we invite the CIT DR s kind attention to the impugned revisionary directions indicating share holding in the said partnership firm who has actually acted as the purchaser or received the asset(s) in the relevant previous year. This clinching fact has gone un-rebutted from the departmental side. All what the learned CIT DR has reiterated is that once these assessee s have routed their impugned purchases through the partnership firm, the addition herein u/s 56(2)(vii)(b) of the Act ought to be made in their hands only. We find no merit in the Revenue s instant arguments. This is for the precise reason that both these individuals/assessee happen to be partner of the partnership firms M/s Goyal Sons, they could not be themselves treated as the actual purchaser for the purpose of involving the relevant statutory provisions u/s 56(2)(vii)(b) of the Act. We wish to reiterate here that the legislature has inserted section 56(2)(x) of the Act dealing with any person including a partnership firm, to cover such a mischief 01.04.2017 onwards by the Finance Act, 2017 which admittedly does not carry any retrospective effect as the case in A.Y. 2016-17 only. We conclude in light of all these facts that even if the learned Assessing Officer had failed to verify all the relevant facts for the purpose of making impugned section 56(2)(vii)(b) addition in assessee s hands, his twin search assessments could neither be held to be erroneous ones nor those causing prejudice to the interest of the Revenue, which forms a condition precedent for exercise of section 263 revision jurisdiction as held in Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] We accordingly reverse the learned PCIT revisionary directions in both these cases for this precise reason alone. Assessee appeal allowed.

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• 2025 (3) TMI 594
  Deduction u/s 80(P)(1) - assessee is a Cooperative Agricultural Society and not a Cooperative Bank - assessee has claimed deduction u/s. 80P(2)(a)(i) of the Act on the interest accrued and received by the assessee - contention of the Ld. AO is that as per section 80P(2)(d), the assessee is eligible to claim deduction u/s. 80P(2)(a)(i) of the Act only when it is invested with any other cooperative society HELD THAT:- In the instant case, the original source of investments made by the assessee in Nationalized Banks is admittedly the income of the assessee derived from the activities listed in sub-clauses (i) to (vii) of clause (a). The character of such income must be last, especially when the statute uses the expression attributable to and not any one of the expressions viz., derived from or directly attributable to . Considering the ratio laid down in the case of Vavveru Cooperative Rural Bank Limited [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] and also Kakateeya Mutually Aided Thrift and Credit Cooperative Society [ 2023 (9) TMI 211 - ITAT VISAKHAPATNAM] no hesitation to come to the conclusion that the facts in the case of Totgars Cooperative Sale Society Limited [ 2008 (9) TMI 493 - KARNATAKA HIGH COURT] as the ratio laid down by the Hon ble Supreme Court is not applicable to the present case in hand and, therefore, AO as well as CIT(Appeals) are not correct to disallow the amount on the ground that the assessee had earned interest income from savings bank accounts other than cooperative bank. Therefore, the grounds raised by the assessee are allowed.

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• 2025 (3) TMI 593
  Addition u/s 68 - assessee failed to discharge the onus of proving the nature and source of cash credits - primary contention of the Revenue is that the cash sales reported during the demonetization period were abnormally high and were not supported by complete buyer details, such as PAN and the addresses of customers. HELD THAT:- Regarding the Revenue s allegation that the PAN and address of customers were not mentioned on invoices, we note that the requirement to mention PAN applies only when the transaction value exceeds 2 lakhs. In the present case, the assessee claimed that all invoices for cash sales were below this threshold, thereby making it unnecessary to mention PAN details. AO did not identify any specific invoice where the transaction value exceeded 2 lakhs. Assessee s submitted that the assessee had conducted cash sales before November 2016, and those invoices also did not contain PAN details; however, Revenue did not dispute those sales at the same time. We note that the DR has not controverted the claim of the learned AR. In our considered opinion, consistency should be maintained, and the Revenue cannot be allowed to take different positions on similar transactions conducted on different dates in the same financial year. Regarding the absence of customer addresses on invoices, which is required under Rule 29 of the Karnataka VAT Act, we note that the statutory requirements should generally be followed. However, the circumstances under which the requirement was not met must be considered before drawing an adverse inference against the assessee. As noted that after the announcement of demonetization on the evening of November 8, 2016, effective from November 9, 2016, the people rushed to general stores, jewellery shops, fuel stations, etc., to spend their cash before it became invalid for general transactions. Furthermore, it is important to note that the requirement to record the buyer s address is a VAT regulation and not under the Income Tax Act. VAT Department accepted the invoices raised by the assessee as genuine without any dispute. Therefore, in our considered opinion, solely for the reason that the buyers addresses were not mentioned on invoices, the sales made by the assessee cannot be held bogus or sham transaction. Invoices issued by the assessee contained a barcode. A barcode on a tax invoice serves as a verification mechanism, ensuring that the sale is recorded in the system and adds a layer of authenticity. Tax authorities or businesses can scan the barcode to verify transaction details, reducing the chances of tampering or post issuance alteration. While the presence of a barcode does not automatically validate every sale, it does enhance transparency and accuracy in accounting and tax records. However, the AO, without verifying this aspect or pointing out any specific defects, mechanically treated the sales as bogus and sham transactions which in our considered opinion is unjustified. AO, without considering the extraordinary event of demonetization, concluded that the cash sales on November 8, 2016, were bogus solely due to their unusually high volume compared to average monthly cash sales. In our considered opinion, applying a normal monthly cash sales average to an extraordinary event like demonetization is incorrect. The approach of the AO in treating cash sales exceeding the average as bogus is both flawed and unjustified. Decided against revenue.

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• 2025 (3) TMI 592
  Denial of credit for TDS - application of provisions of Section 238(1) - HELD THAT:- From the evidence filed by the assessee, there is no dispute that the profit or loss from the contracts, on which TDS has been deducted u/s 194C of the Act and remitted in the name of the assessee, has been considered in the hands of the assessee alone and not in the hands of the constituent partners, as alleged by the AO. AO merely because the assessee has transferred the gross contract receipts on back to back basis to constituent partners, has assumed that the profit from such contracts, is also transferred to the constituent partners. However, the fact remains that the said profit or loss should be understood in the context of the nature of the business carried out by the particular assessee. In the present case, the assessee has followed a method, whereby the gross contract receipts have been considered, as its income and the back-to-back payments made to constituent partners as its expenses and therefore, from the above project, the assessee has reported a nil profit. However, it does not mean that the assessee has not reported any profit or loss from the project. Therefore, we are of the considered view that, going by the provisions of Section 238(1) of the Act, and facts of the present case, the Assessing Officer is completely erred in invoking Section 238(1) of the Act, to deny the credit for TDS to the assessee. Assessee itself has disclosed the relevant profit or loss from the above contract in its hands and also claimed corresponding TDS deducted, in terms of Section 199(1) of the Act and Rule 37BA(1) of the I.T. Rules, 1962. Further, as per Section 199(1) of the Act, any deduction made, in accordance with the foregoing provisions of this Chapter and paid to the Central Government, shall be treated as payment of tax on behalf of the person in whose name the deduction was made and in the present case, going by the facts available on record, there is no dispute with regard to the fact that NFR has deducted TDS on the payment made to the assessee and also remitted TDS to the Central Government account in the name of the assessee, which is evident from Form 26AS filed by the assessee. As per Rule 37BA(1) of I.T. Rules, 1962, it is abundantly clear that credit for tax deducted at source and paid to the Central Government account shall be given to the person to whom payment has been made or credit has been given. Since the payment has been made to the assessee and credit has been given to the assessee towards TDS deducted on gross contract receipts, in our considered view, the assessee alone is eligible to claim credit for TDS in accordance with Section 199(1) and Rule 37BA(1) of the I.T. Rules, 1962. Therefore, AO and CIT(A) have erred in withdrawing the TDS credit claimed by the assessee in the return of income filed for the impugned assessment year. Assessee has rightly claimed credit for TDS deducted by NFR and remitted to the Central Government in the name of the assessee and said claim is in accordance with Section 199(1) of the Act and Rule 37BA(1) of I.T. Rules, 1962. Appeal of the assessee is allowed.

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• 2025 (3) TMI 591
  Validity of Reopening of assessment u/s 147 - addition made on account of incentive received from UK without properly appreciating the facts of the case that the UK Film Tax Relief is available to Film Production companies(FPC s) only - HELD THAT:- AO in his reasons for reopening has also alleged that an amount has been paid to Mr. Shahrukh Khan but the said income is not shown in his books. However, no such addition was made in the assessment order as the said observation of the AO lacked merit. Thus, this further shows the blind approach adopted by the AO while re-opening the instant case. Thus, we hold that in the facts and circumstances of the present case, the initiation of reassessment proceedings by the Assessing Officer can t be sustained. Accordingly, we quash the notice dated 31/03/2019, issued u/s 148 of the Act as well as the Assessment Order passed u/s 143(3) read with Section 147 of the Act. Addition on account of incentive received from UK without properly appreciating the facts of the case that the UK Film Tax Relief is available to Film Production companies - As seen that the assessee company is entitled to receive Rs. 130 crores irrespective of success or failure of the film. Further as per business statement provided by EMIL, it is seen that the credit of tax as alleged by the AO has been received and accounted for EMIL while arriving at Net Realisation figure. Therefore, in our opinion CIT(A) has rightly deleted the addition as the same receipt cannot be added again in the hands of assessee company. TDS u/s 195 - Disallowance u/s 40(a)(i) - assessee company has reimbursed expenses to one Winford Production Ltd (UK based company) - AO held that since the Rights and Title of the movie vest with the assessee company, such payment partakes the character of fees for technical services subject to tax - CIT(A) deleted the disallowance by concluding that no TDS obligation would arise in respect of reimbursement of expense - HELD THAT:- It also cannot be said that the services have been made available to the assessee to be taxable in India. Reference in this regard reliance was made before us to the judgement of IDS Software Solutions (India (P) Ltd. [ 2009 (1) TMI 363 - ITAT BANGALORE-A ] In this case of an employee of U.S. Company was seconded to the Indian Company under secondment agreement to provide managerial services in the business of the Indian Company. The seconded employee was reportable and responsible to the Indian Company and was required to devote the whole of his time, attention and skills to the duties required by the secondment agreement. The Indian company had the right to approve or reject the employee and if necessary to request the US Company to replace the employee if such employee is found not qualified to meet the requirements of the seconded arrangements. The seconded employee was required to act and serve as officers , authorized signatories, nominees and in other lawful capacity on behalf of the Indian company etc. Thus in the absence of make available technical knowledge, expertise, skill, know-how or process etc. it cannot be held that the payment is FTS as per article 13(4) of Indo UK DTAA. Merely providing the services such as arrangement of shooting locations, obtaining necessary permits/ licenses, arranging for customs clearance, make up cost and local commuting, food lodging, hire of local artist would not constitute make available of the services of any technical or consultancy in nature. Thus in view the decision of De Beers India Minerals (P.) Ltd. [ 2012 (5) TMI 191 - KARNATAKA HIGH COURT ] we hold that the said payment in question does not fall under the term fee for technical services as per provisions of Indo-UK DTAA. Having held that the payment in question is not fees for technical services the same has to be examined in the light of relevant provisions of the Act and DTAA. Even, under the Income Tax Act, if the payment is only reimbursement of expenses the same cannot be regarded as income in the hand of the payee/recipient. In view of the above discussions, we do not find any error or illegality in the impugned order of CIT (A). Decided against revenue.

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• 2025 (3) TMI 590
  Enhancement notice u/s 251(2) - LTCG - Denial of deduction u/s 54F on sale of gold, ornaments and silver utensils and deduction already allowed u/s 54F in the intimation on the sale of shop - HELD THAT:- Provisions of section 251(2) of the Act are mandatory in nature and CIT(A) was to provide reasonable opportunity of show cause before enhancing the assessment and in this regard found reliance on the decision of Rai Bahadur hardutroy Motialal Chamaria, [ 1967 (4) TMI 8 - SUPREME COURT] and the decision of Apeejay Shipping Limited [ 2023 (6) TMI 117 - ITAT KOLKATA] and also from the decision of Edelwiess Asset management Ld [ 2024 (1) TMI 650 - ITAT MUMBAI] . Although DR submitted that assessee had not appeared when the case was taken up and proper opportunities were granted by the revenue authority before making enhancement. Thus, sufficient opportunity should have been granted by Ld. CIT(A) before making enhancement and in the present case it has been specifically argued that no opportunity of hearing was provided by Ld. CIT(A). Therefore the interest of justice would be met in case the issue between the parties is decided on merits after providing fair opportunity of hearing to the assessee.

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• 2025 (3) TMI 589
  Rejection of approval u/s 80G and registration u/s 12AB - Incomplete Form 10AB, Rajasthan Public Trust Act, 1959 and Genuineness of Activities - CIT(E) has cancelled the provisional registration of the assessee for the reason that the assessee trust had failed to give proper justification for regularization of provisional registration HELD THAT:- As assessee submitted that the assessee trust has applied for registration under RPT Act, 1959 before the competent authority and the assessee trust is likely to get the same. Therefore, in these circumstances, we restore the matter back to the file of the ld. CIT(E) with the direction that as and when the assessee trust produces the copy of the Registration under RPT Act, 1959 then the application of the assessee trust for registration u/s 12AA of the Act be decided afresh in accordance with law. The assessee trust is also directed to produce the complete Form 10AB and produce the documents relating to the genuineness of the activities before the ld CIT(E) - Appeals of the assessee are allowed for statistical purposes.

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• 2025 (3) TMI 588
  Revision u/s 263 - TDS liability on Payments made to sales promoters claimed as reimbursements - PCIT quashed the assessment order and directed the assessing officer to pass the proper speaking order - PCIT on perusal of the data provided in Pen Drive observed that the terms of services agreed with the sales promoters by the assessee do not show that the reimbursement to retailers/distributors have to be made through sales promoters - As per CIT assessee failed to produce necessary documentary evidences to show that the payments made to the sales promoters were purely on account of reimbursements under its trade schemes HELD THAT:- We observed from the submissions that there is no documented scheme available and it is decided by the marketing team and sales promoters. Assessee has maintained the debit notes month wise from the sales promoters and relevant disbursements to the sales promoters. With regard to disbursements to the retailers, they have demonstrated few payments from the sales promoters to the retailers by bringing on record the bank statements. In our view, no doubt the assessee has documented the trade scheme payments at the same time, the AO has not fulfilled the mandate given to him by the coordinate bench to verify whether this transaction falls within the ambit of reimbursement. He has not passed a speaking order and was of the view that certain documents are suffice to demonstrate the scheme is reimbursement like, agreement, debit notes and disbursement by the assessee and further payments by the sales promoters to the retailers. He merely accepted the documents as submitted by the assessee and he has not made a case how the above documents are sufficient to grant the relief. No doubt he has allowed to the extent the assessee submitted the debit notes which are relevant to the respective assessment years. He has not made up a case how it is sufficient to give relief. There are certain unanswered issues which are: a. It is not demonstrated how the sales promoters are compensated for their services. b. In case the scheme is devised by the marketing team with the concurrence of the sales promoters, the sales promoters no doubt raised the debit notes and collected the discount from the assessee month wise, in case the assessee intend to claim the same as reimbursement, redistributed by the sales promoters to the respective retailers, they have to submit the reconciliation statement month wise tallying with the debit notes and relevant disbursement to the retailers. No doubt there may be delay in distribution, but the assessee has to demonstrate the month wise disbursement by the sales promoters. Without the above reconciliation, it cannot be claimed as the reimbursement. Mere verification on the basis of the documents before the AO, which he has, no doubt, allowed only 33% to 50% in the respective years, cannot it be called verification, he has only verified whether the relevant discount are relevant for the respective assessment year and accordingly he allowed the same. This is not the mandate given to him. He was directed to verify the payments to sales promoters are falling under the category of reimbursement or not. In case he is satisfied with the documentation he has to demonstrate by passing a speaking order. He has miserably failed in that aspect. He has given relief without proper verification and application of mind. Since Ld. PCIT has rightly quashed the assessment order and directed the assessing officer to pass the proper speaking order, we do not see any reason to disturb the same and there will not be any prejudice caused to the assessee since the same documentation it has to file before the AO. Accordingly, we direct the AO to verify the disbursement by the sales promoters to retailers with the respective debit notes raised by them. May be in the form of reconciliation debit note wise. This direction is only a compliment to the directions given by the Ld PCIT. In the result, appeal filed by the assessee against the order passed u/s 263 is dismissed.

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• 2025 (3) TMI 587
  Disallowance of claim of exemption u/s 10(23C) (vi) - Non-compliance of Section 143(3) in scrutiny assessment - AO in his assessment order has highlighted that the assessee has not fulfilled the conditions prescribed by Chief Commissioner of Income Tax, Pune which mainly included non-following of condition of admission being open to members of public on the basis of merit without any protectionism - Appellant has contended that he was not given proper opportunity to put forth his submission and no show-cause notice was given to him to this effect HELD THAT:- We find no merit in Revenue s instant technical objection going by Rule 27 of Appellate Tribunal Rules, 1963 that this tribunal could indeed decide such a fundamental question on an issue which is decided against a respondent; followed by the main lower appellate order going in it s favour subject to a limitation that the maximum relief in such an instance is that of rejection of appeal only as per B.R. Bamasi vs. CIT [ 1970 (2) TMI 45 - BOMBAY HIGH COURT] . There is also no indication in the Revenue s instant appeal about the foregoing compliance of sec.143(3) 1st proviso (i) and (ii) by the AO. We thus accept the assessee s foregoing legal arguments in principle and reject the Revenue s instant appeal in very terms. Ordered accordingly.

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• Customs

• 2025 (3) TMI 586
  Validity of issuance of subsequent SCN when a prior SCN under Section 28 (1) had already been issued on a similar factual matrix - the requirements of Section 28 (4) of the Customs Act satisfied or not - change of opinion - impugned notice is supplementary notice or not. Validity of issuance of subsequent SCN when a prior SCN under Section 28 (1) had already been issued on a similar factual matrix - HELD THAT:- A bare perusal would show that the two SCNs are identical in almost every respect except for the differences as highlighted. Apart from the more obvious differences relating to the Notices being under Sections 28 (1) and 28 (4) and the corresponding penalty provisions being Sections 112 and 114A which are consequential upon the Section under which the notices are issued, some of the differences, inter alia, are the periods to which they pertain, the invoices and quantities of the goods therein. Notices under Section 28 (1) and Section 28 (4) operate in different scenarios and even by an exaggerated stretch, cannot possibly be said to be interchangeably issued - In the present case, a prior notice under Section 28 (1) of the Act had already come to be issued, in respect of similar goods, with a similar alleged mis-declaration . Both notices have the benefit of the reports dated 29 November 2022 and 05 January 2023 by the Chartered Engineer engaged by the Respondents. The issuance of the impugned Show Cause Notice, under the said facts and circumstances, is clearly unsustainable. Change of opinion - HELD THAT:- The fact that the same officer, within a span of just 6 weeks, presented with an almost identical set of facts, has chosen to issue the two notices under different Sections, would also taint the impugned SCN with the vice of a change of opinion and for that reason too, render it unsustainable. The requirements of Section 28 (4) of the Customs Act satisfied or not - HELD THAT:- It would appear that in the present case, there is a mere incantation of the provisions of the Section without any substance to back it up leading to the issuance of two SCNs under sub-sections (1) and (4) of Section 28 - Since it is held that the impugned SCN does not fulfill the requirements of the Section, the Respondent would also cease to have the benefit of an extended period of limitation for the purpose of its issuance. Impugned notice is supplementary notice or not - HELD THAT:- In view of the abject failure on behalf of the Respondents to state either in the SCN itself or even specify as to which of the four heads enumerated in the counter, the alleged impugned notice is being issued as a Supplementary Notice , the said contention needs to be rejected - Additionally, Section 28 of the Act, by its very nature posits, in a given set of facts and circumstances, the issuance of a SCN either under Section 28 (1) or under Section 28 (4) of the Act and not under both. Under the circumstances, we are unable to agree that the impugned SCN under section 28 (4) of the Act post the issuance of the SCN under Section 28 (1) could be termed a Supplementary Notice . Conclusion - i) The issuance of two SCNs under different subsections for the same factual matrix is not permissible. ii) The impugned SCN did not satisfy the requirements of Section 28 (4) regarding collusion, wilful misstatement, or suppression of facts. iii) The issuance of the impugned SCN constituted a change of opinion by the authorities. iv) The impugned SCN could not be considered a supplementary notice under the 2019 notification. The impugned SCN under Section 28 (4) is liable to be set aside - Petition allowed.

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• 2025 (3) TMI 585
  Classification of imported Squid Liver Powder - to be classified under Customs Tariff Heading (CTH) 2301 2011 or under CTH 2309 9090? - request to keep the hearing and decision pending in the present Appeal. Request to keep the hearing and decision pending in the present Appeal - HELD THAT:- Hon ble Supreme Court in UNION TERRITORY OF LADAKH ORS. Vs JAMMU AND KASHMIR NATIONAL CONFERENCE ANR [ 2023 (9) TMI 1407 - SUPREME COURT] , has laid down the position in law that, Courts will proceed to decide matters on the basis of the law as it stands. It is not open, unless specifically directed by the Apex Court, to await an outcome of a reference or a review petition, as the case may be. The matter is also proceeded which would also be advantageous to the appellant as they have raised an additional point of law. Imported product merit classification under CTH 2301 20 11 of the Customs Tariff Act, 1975 or under CTH 2309 90 90 of the Customs Tariff Act, 1975? - HELD THAT:- The issue decided in the case of M/S. AVANTI FEEDS LIMITED AND M/S. GODREJ AGROVET LIMITED VERSUS COMMISSIONER OF CUSTOMS (IMPORT) , CHENNAI [ 2023 (6) TMI 960 - CESTAT CHENNAI] where it was held that the classification of the Squid Liver Powder has been correctly done under CTH 23099090 and hence the impugned orders are upheld. As the goods are a mixture, it should be classified only by supplying essential character as mandated under Rule 3(b) or not? - HELD THAT:- It is the appellants contention that the essential issue in the present Appeal is a classification dispute with respect to the item under import. In such view of the matter, the General Rules of Interpretation of Tariff would have to be factored and taken into account for a correct decision. This cannot be done only with reference to Rule 1. Rule 3 should also be applied. As the goods are a mixture, it should be classified only by applying essential character as mandated under Rule 3(b). As per the Rules, classification of a product is required to be done based upon the major constituent of the product or which gives it the essential character. When the OIO and OIA relies only upon the Chemical Examiner report (which was not provided to the Appellant) and the earlier consignments cleared by the appellant under 2309 and on both these contentions the findings in the Final order are in favor of the Appellant, the said order ought not to have upheld the / on some extraneous basis, which were never part of the original or appellate proceedings below - when the data as per the appellants own documents was made the bed rock of the discussion, they were not at a disadvantage and no fault could be found on the final discussion and decision on this score. Conclusion - i) The classification under CTH 2309 90 90 upheld. ii) The classification under CTH 2309 was clear based on the Customs Tariff and HSN, making the application of Rule 3(b) unnecessary. There are no fresh merit in the averments made by the appellant - appeal dismissed.

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• 2025 (3) TMI 584
  Valuation of imported goods - two Containers containing assorted Gillette brand goods - undervaluation/suppression of value - prohibited goods or not - principles of natural justice - HELD THAT:- The dispute pertains only to the valuation of the goods since the Original Authority at para 29 of the OIO has held that the impugned goods cannot be treated as prohibited goods under section 11 of the Customs Act 1962 read with the Trade Marls Act, 1999 and Intellectual Property (Imported Goodfs) Enforcement Rules, 2007. This is a case where investigations revealed that there was a mis-declaration of the transaction value. The proprietor of M/s Royal Trades has in his statement admitted that the invoices shown to him were the actual invoices received by him and that he had filed fraudulent invoices along with the impugned Bills of Entry to avoid payment of duty. It is also seen that the MRP values accepted by the appellant for assessment tallied with the market enquiries conducted. Hon ble Supreme Court in United India Insurance Co. Ltd. and Anr. Vs Samir Chandra Chaudhary, [ 2005 (7) TMI 701 - SUPREME COURT] has held that the effect of admission is that it shifts the onus on the person admitting the fact on the principle that what a party himself admits to be true may reasonably be presumed to be so, and until the presumption is rebutted, the fact admitted must be taken to be established. An admission is the best evidence that an opposing party can rely upon, and though not conclusive is decisive of matter, unless successfully withdrawn or proved erroneous. There has thus been a violation of the principles of natural justice, but it is curable. In such a case it would be appropriate, to set aside the order and require the Original Authority to decide the cases de novo after providing the requisite documents relied upon in the SCN. Conclusion - The principles of natural justice were violated due to the non-disclosure of essential documents in the SCN. The admission of undervaluation by the appellant was binding, but the lack of consideration for the retraction warranted a remand for de novo adjudication. Matter remanded back to the Original Authority for de novo adjudication - appeal disposed off by way of remand.

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• 2025 (3) TMI 583
  Valuation of imported goods - thoroughbred horses - rejection of declared value - to be valued under Rule 10A of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 or as per Rule 8 of the 1988 Rules? - levy of penalty - HELD THAT:- In determination of value of the imported goods through the residual method, the explicit prohibition on basing it on the domestic price in the country of export is as per an international agreement. It is part of Rule 8 of the 1988 Rules and also its successor Rule 9 of the 1997 Rules. In the impugned order, after rejecting the transaction value under Rule 10A of the 1988 Rules, it was re-determined under Rule 8 of 1988 Rules as per the auction prices of those horses in Ireland with some adjustments. It is found that if the declared value is rejected under Rule 10A of the 1988 Rules, it has to be re-determined sequentially under Rules 4,5,6,7,7A and 8 of 1988 Rules. The SCN has specifically recorded in paragraph 7.4 that Rules 4,5,6,7,and 7A cannot be applied to this case and for that reason proceeded to determine the value under Rule 8 of the 1988 Rules. Therefore, remanding the matter to the Commissioner would serve no purpose whatsoever because the only Rule which could have been applied in the facts of the case as per the SCN itself is Rule 8 but in view of the prohibition in sub-rule (2) (iii) of this Rule, the value cannot be determined based on the auction prices. The entire allegation of undervaluation is only based on the auction prices. The proposals for demand of duty, confiscation, fine and penalties are solely based on the re-determination of the values of the horses based on the auction prices. Conclusion - i) The rejection of the declared transaction value under Rule 10A was justified due to significant discrepancies with auction prices. ii) The imposition of penalties and fines was set aside as they were based on the flawed re-determination of value. Appeal allowed.

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• Insolvency & Bankruptcy

• 2025 (3) TMI 582
  Consolidation of the Corporate Insolvency Resolution Process (CIRP) for KSK Mahanadi Private Limited, KSK Water Infrastructures Private Limited, and Raigarh Champa Rail Infrastructure Private Limited should be mandated by the court - HELD THAT:- Admittedly, the petitioner herein has not filed any appeal or sought for any direction either from the NCLT or NCALT. Since the petitioner has not filed any application either before the NCLT or NCALT, it is not having any right to question the withdrawal of the appeal by the Financial Creditor. This Court deems it appropriate of this Writ Petition by relegating the petitioner to file an appropriate application on the file of the NCLT and raise all grounds available under law. Upon filling such application, the NCLT is directed to examine the same and pass appropriate orders, in accordance with law, within a period of two weeks from the date of receipt of such application. Until such time, the Resolution Process shall be deferred. Conclusion - The petitioner should file an application with the NCLT to address the consolidation of CIRP, and the NCLT should decide on this within two weeks of receiving the application. Petition disposed off.

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• 2025 (3) TMI 581
  Prayer for grant of stay of operation of the impugned order - condonation of delay in submitting the scheme under Section 230 of the Companies Act, 2013 mandated under Regulation 2B of IBBI ( Liquidation process) Regulations, 2016 - prayer for condonation of delay of 224 days in re-filing the instant appeal - Challenge to Auction notice - HELD THAT:- Owing to the specific stand taken by the Respondent that there was no procedural flaw, coupled with the fact that the question of considering the so-called proposal under Section 230 of the Companies Act, 2013, since having been filed belatedly could not have created at all any obstacle as such for the Respondent from discharging his statutory function of the completion of the liquidation process particularly when the Stakeholders Committee in the SCC meeting, has categorically rejected the said scheme. Owing to the fact that the valuation was already done by the Respondent in terms of the provisions of the code and the regulations, since there was no procedural flaw established by the Appellant to have chanced, in conducting the auction till the stage it was finalized by the issuance of the sale certificate on 17.07.2023, and since apparently, and admittedly too, the proposal of the scheme under Section 230 of the Companies Act, 2013, was preferred by the Appellant at a much belated stage, there was no error on part of the liquidator to proceed further to finalize the liquidation process by auctioning the property which had now attained finality after the distribution. Conclusion - i) The finality of auction proceedings, once completed and a sale certificate issued, cannot be revisited based on belated procedural challenges. ii) The fact remains the valuation was done by this Respondent in terms of provisions of the Code and the Regulations. Appeal dismissed.

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• 2025 (3) TMI 580
  Preferential transaction under Section 49 of the Insolvency and Bankruptcy Code, 2016 - it is alleged that the transaction related to sale of land to CD by the proprietorship concern of the Appellant was misutilised - condonation of delay in filing appeal - HELD THAT:- The transaction involving Aryan Spaces was preferential under Section 49 of the Code, subject to further investigation by the Resolution Professional. The grievance of the Appellant has been looked into by the Tribunal about the wrong recording of the fact that no reply has been filed by the Appellant and in this regard the Tribunal has categorically recorded in its order that the non-filing of the reply was in respect of Respondent No. 1 to 5 which was inadvertently recorded in respect of Respondent No. 6 but reply filed by Respondent No. 6/Appellant was duly considered while passing the order dated 02.05.2023 particularly qua the MOU dated 15.11.2018 entered amongst the Applicant, CD and the proprietorship firm of director of CD. All these facts have been considered already by the Tribunal in the order dated 17.08.2023 and the application was not even pursued by the Appellant because he was not present at the time of hearing. Conclusion - i) The transaction involving Aryan Spaces was preferential under Section 49 of the Code, subject to further investigation by the Resolution Professional. ii) The limitation period for filing an appeal upheld, dismissing the Appellant s appeal on grounds of delay. Appeal dismissed.

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• 2025 (3) TMI 579
  Rejection of objections filed by the appellants to the Scheme of Arrangement proposed between ICICI Bank Ltd and ICICI Securities Ltd. - threshold limit for minimum number of shares for filing objection was not met with - Section 230 of the Companies Act, 2013 - HELD THAT:- There is no conflict between Section 230 of the Act and Regulation 37. There is no provision in Section 230 of the Act specifically requiring a separate meeting of public shareholders of a company. Section 230(1) refers to a scheme between a company and its members or class of members. Correspondingly, Section 230(3) refers to power of the Ld. NCLT to convene a meeting of members or a class thereof, as the case may be. At any rate, there is no specific provision in the Act specifically requiring a meeting of public shareholders in listed companies. Indeed, Section 230 only requires a meeting to be held between the members and the company or such classes of members and the company, where the scheme of arrangement is between the company and a specific class of members. In the present case, the scheme is a uniform scheme for all equity shareholders, namely a uniform scheme of delisting; the delisting in the present case being feasible only through the vehicle of a wholly owned subsidiary and not through an amalgamation in view of the extant regulatory regime applicable to ICICI Bank. The Companies Act, prescribes only two classes of shareholders, i.e., preference and equity shareholders. Ordinarily, the courts does not favor a further sub-classification in the case of shareholders per Alstom(Supra). Thus the contention viz. the SEBI Regulation 37 itself recognizes the public shareholders constitute a separate class is wholly misconceived. As stated above, for the purposes of Section 230, class is a uniform class, being one of equity shareholders. SEBI in exercise of its exclusive jurisdiction over matters of listing and delisting imposes an additional safeguard in such schemes - the Scheme is a delisting scheme, as contemplated under the provisions of Regulation 37 of the Delisting Regulations. The provisions of Regulation 37 thus ought to be given full effect along with the provisions of the Act especially when there is nothing inconsistent between the two statutes. The Ld. NCLT had correctly appreciated the provisions of Section 230 and Regulation 37 of the Delisting Regulations and has applied the said provisions harmoniously to the facts and circumstances at hand. The Ld. NCLT s finding viz no separate meeting of public shareholders is required in the circumstances, is in consonance with the object and purpose of Regulation 37 and in no way conflicting to the provisions of Section 230 of the Act. If the Appellants submission regarding a separate meeting is accepted, then every scheme under Regulation 37 will need to be approved by meeting of separate class of shareholders (promoters and public) thereby rendering the provisions of Regulation 37(2)(d) completely otiose, as has also been observed by the Ld. NCLT in its impugned order. The Appellants are not entitled to object to the Scheme and not entitled to maintain an appeal as an aggrieved person . Consequently, in view of proviso to Section 230(4) too, the present appeal is also not maintainable at the instance of the appellants. Notably, the Scheme has been approved by 93.82% of equity shareholders and 71.89% of public shareholders. The Appellants who hold merely 0.08% shareholding are depriving the majority shareholders of the benefits of the Scheme by filing frivolous objections and derailing its implementation. This militates the very principle of shareholder democracy. Conclusion - i) The Scheme of Arrangement complies with Regulation 37 of SEBI (Delisting of Equity Shares) Regulations, 2021, and any procedural relaxation granted by SEBI is within its regulatory authority. ii) The voting process was conducted legally, and SEBI found no evidence of coercion or undue influence. iii) The appellants do not meet the requisite shareholding threshold to object to the Scheme under Section 230(4) of the Companies Act, 2013. Appeal dismissed.

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• Service Tax

• 2025 (3) TMI 578
  Levy of service tax - transportation charges collected by the respondent-assessee for the transport of natural gas through their pipeline to M/s GAIL Trombay - HELD THAT:- The transaction of supply of natural gas by the respondent-assessee is a simple transaction of sale of goods . Further, in the post negative list regime, though all services are included in the Service Tax net, other than those specified in the negative list, as stated above, the charge of service tax under Section 66B ibid remains the same i.e., tax is levied on services provided or agreed to be provided, by one person to another, and collected in such manner as prescribed. As there is no change in the pattern of sale and the transaction in the present case remained as sale of natural gas by respondents-assessee to GAIL, there is no element of service in the transaction of sale by the respondents-assessee, even in the post-negative list regime. In the Finance Act, 2012 w.e.f. 01.07.2012, inter-alia, a definition was provided for the phrase service under interpretation clause in Section 65B ibid. The said definition further provides that Service does not include any activity that constitutes only a transfer in title of (i) goods or (ii) immovable property by way of sale, gift or in any other manner. Further, Guidance Note issued by the Ministry of Finance in explaining the provisions of negative list regime of service tax, states about the various ingredients and aspects of the definition of service - In careful reading of the definition/explanation given to interpret the term service , it is found that the phrase provided by one person to another signifies that services provided by a person to self are outside the ambit of taxable service. In the case of Oil India Ltd. [ 2008 (3) TMI 235 - CESTAT KOLKATA] , the facts of the case related to the provision of service fully in connection with transport as a clearing and forwarding agent directly or indirectly for movement of goods from one place to other, and it was held by the Tribunal that transport of crude oil through pipeline having been brought to tax specifically w.e.f. 16.06.05, taxation thereof on the clearing and forwarding agency service relating to transportation through pipelines prior to enactment of law is inconceivable. As the services dealt therein are different from the present case, the above decision of Tribunal is not relevant for the case in hand. Conclusion - The transportation charges collected by the respondent-assessee are part of the sale transaction and not subject to service tax. The appeal filed by the appellants-department is dismissed by upholding the impugned order.

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• 2025 (3) TMI 577
  Refund of amount paid under protest - reversal of CENVAT credit involved in respect of alleged exempted services demanded in terms of Rule 6(3A)(c)(iii) of the CENVAT Credit Rules, 2004, on which subsequently show cause proceedings initiated and the same was dropped by the adjudicating authority - applicability of principles of unjust enrichment - HELD THAT:- The facts involved therein being germane to the issue of refund, these should have been dealt with by the first appellate authority in the impugned order, when the same were specifically brought to his attention during the personal hearing. On the other hand, the impugned order did not examine this aspect by specifically stating that the core issue of demand of CENVAT credit is legally sustained or not, is not being taken up for consideration by him in the impugned order. From the above it clearly transpires, that the impugned order has not followed the legal tenets laid down under Section 11B ibid in dealing with the claim for refund of duty/tax. Therefore, the impugned order is liable to be dismissed on this ground alone. The Co-ordinate Bench of the Tribunal in the case of Persistent Systems Limited Vs. Commissioner of C. Ex. S.T., Pune-III [ 2016 (3) TMI 141 - CESTAT MUMBAI] has held that eligibility for refund should have been decided taking into consideration the taxability of the service and the procedures laid down in law relating to tax collection and refund. The Tribunal while remanding the case to the original authority for fresh adjudication had further observed that the duties and responsibility reposed to an authority under the law cannot be brushed aside without discharging the same as provided under the statute, which showed lack of responsibility on such authorities in proper handling the refund claim. The Tribunal in the case of Chambal Fertilizers Chemicals Ltd. [ 2023 (2) TMI 10 - CESTAT NEW DELHI] have by following the various decisions of the High Courts and Tribunal have held that voluntary deposits made during the pendency of adjudication is pre-deposit of duty and unjust enrichment would not apply while dealing with refund of such duty. Conclusion - The amounts paid under protest during adjudication or investigation are considered deposits, not payments towards duty or tax. Consequently, the principles of unjust enrichment do not apply to such refunds. The refund claim application restored to the original authority for disposal on merits of the case, as per law - appeal allowed by way of remand.

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• 2025 (3) TMI 576
  Recovery of service tax with interest and penalty - demand of service tax based on gross receipts as reflected in Form 26AS - to availability of deductions from the total turnover for the supply of goods, which were assessed under VAT, thereby reducing the taxable value for Service Tax - penalties - HELD THAT:- Service Tax is not leviable on the transactions treated as sale of goods and subjected to levy of Sales Tax/VAT - the Appellant had produced VAT assessment order and have paid VAT. This evidence was produced before the Original Authority and after going through the same, it is found that this can be considered as sufficient evidence. Moreover, it is the responsibility of the Department to establish that the Appellant has rendered taxable services, which obligations have also not been fulfilled in this case. It is also found that the Revenue has not made any enquiries with regard to supplies made by the Appellant and subsequent assessment in respect of the same by the VAT Department. The Revenue has only relied upon form 26AS of the Income Tax Department and has found it more authentic and reliable as compared to the assessment order passed by the VAT Department. This observation of the Revenue is not based on sustainable sound footing. The Tribunal from time to time have observed that demand of tax cannot be confirmed solely on the basis of 26AS without making any enquiry in this regard. The Hon ble Supreme Court in the case of Bharat Sanchar Nigam Limited vs. Union of India [ 2006 (3) TMI 1 - SUPREME COURT ] and also the Tribunal in the case of Idea Mobile Communication Ltd. vs. Commissioner of Central Excise, Trivendram [ 2006 (5) TMI 17 - CESTAT, BANGALORE ] have observed that transaction held that sale of goods under assessment order of the State Authorities will be treated as sales - Service Tax has been demanded only on the basis of Form 26AS statement of the Income Tax Department which is not sustainable. Penalties - HELD THAT:- The penalties imposed were not justified. Conclusion - i) Service Tax demanded only on the basis of Form 26AS statement of the Income Tax Department, which is not sustainable. ii) The Appellant was entitled to deductions for the supply of goods, reducing the taxable value. iii) The penalties imposed were not justified. Appeal allowed.

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• 2025 (3) TMI 575
  Demand notice under proviso to Section 73 when tax liabilities have already been accepted by the Appellant by filing ST-3 Returns - demand of Service Tax on cancellation charges, miscellaneous charges and cheque return charges - demand of Service Tax on services covered under RCM, when the same is claimed as Cenvat credit by the Appellant - demand of inadmissible credit in respect of which invoices were not produced but duly accounted for in the Books of Accounts is justified or not - penalties. Whether demand notice is justified under proviso to Section 73 when tax liabilities have already been accepted by the Appellant by filing ST-3 Returns? - HELD THAT:- As per provisions of Section 73(1B) of the Finance Act, 1994, which provides the circumstances in which notice of demand was not required to be issued, reveal that where tax was self assessed and returns were furnished, no notice of demand was required to be issued under Section 73(1) - In the present case, tax was self assessed and service tax liability was declared in returns as already admitted in the SCN as well as impugned order. So, issuance of SCN for recovery of self assessed tax is patently unwarranted and legally incorrect. It is also found that the service tax liability declared in the ST-3 returns was deposited before issuance of SCN. As per provisions of Section 73(3), if any short levied or short paid service tax is deposited before issuance of the SCN, no notice under Section 73(1) in respect of the amount so paid was required to be issued. As regard, imposition of equal penalty under Section 78 of the Finance Act, 1994, it is imposable when any notice has been issued under Section 73(1) of the Finance Act, 1994, but in this case, as there was no requirement to issue notice under Section 73, the imposition of penalty under Section 78 is unwarranted. In this regard, the Tribunal in the case of M/s Mass Marketing and Advertisement Services P. Ltd. [ 2006 (2) TMI 20 - CESTAT BANGALORE] where it has been held that no penalty is imposable if service tax is deposited before issuance of SCN. The same view has also been taken in the case of M/s Impress AD-ADIS and Displace [ 2004 (8) TMI 3 - CESTAT, BANGALORE] where the Tribunal has held that no penalty is imposable if service tax is deposited before issuance of SCN. Whether demand of Service Tax on cancellation charges, miscellaneous charges and cheque return charges is legally correct? - HELD THAT:- In the present case, nothing is being tolerated by the party. The buyer entered into an agreement to buy flat and as per the agreement, if the buyer cancels the deal, he has to pay certain amount of the value of flat. The charge of the said amount is a legal consequence as defined in the Indian Contract Act. It is a kind of penalty which is being charged without any activity/service. Hence, no service tax would be chargeable on the said amount - there is no element of service in respect of cheque bouncing/return charges collected by the party. No service has ever been provided by the party against such charges. The charging of cheque bouncing charges is in the form of imposition of a penalty. It is not being charged towards any service. Under Section 66E(e) of the Finance Act, 1994, service tax is payable on the activity for tolerating an act. Cheque bouncing is not covered under the said clause. Hence no service tax is payable on the same. In respect of the income recorded under the head Miscellaneous income , it is found that only bank interest received on account of deposits has been booked under the said head. As per Section 66D(n)(i) of the Finance Act, 1994, interest accrued on deposits is a service classified in the Negative list. It means no service tax would be chargeable on the amount of interest. The demand of Service Tax on the Miscellaneous Income which represents interest earned by the party is not sustainable. Whether demand of Service Tax on services covered under RCM is justified when the same is claimed as Cenvat credit by the Appellant? - HELD THAT:- It is found that whatever service tax was paid thereon could have been taken back by the Appellant in the form of CENVAT credit as the Appellant was registered as service tax assessee and was eligible to avail credit on input services. The above services were undoubtedly input services for the Appellant. Thus, it is a case of revenue neutrality net revenue gain would be nil. Hence, at the end, there is no loss of revenue to the Exchequer. It has been settled law that in case of revenue neutrality, demand of any differential duty would not be sustainable - In this case the Court has enunciated that demand of differential duty as not sustainable on the ground of revenue neutrality in as much as differential duty would be available as credit to the assessee - the demand in the present case is not sustainable. Whether demand of late fee for filing ST-3 returns beyond the due date specified under Section 70 of the Finance Act, 1994? - HELD THAT:- There are no provisions to raise any demand notice for late fees. It is provided that a return can be filed with late fees of maximum amount of Rs.20,000/-. It does not prescribe that incase of non- payment of late fees, any demand notice is required to be issued. In the lack of any provision for issuing show cause notice for demand of late fee, we refrain to confirm any such demand. A careful consideration of the provision of Section 75 of the Finance Act, indicates that it is a type of provision of compensatory nature where an assessee withholds it s tax liability. Interest is chargeable on the actual amount of tax withheld by the assessee. When an assessee is holding sufficient balance in Cenvat credit account which is to be utilized only for payment of due taxes, no interest would be chargeable - In the case of Avo Carbon India Pvt. Ltd. vs. Commissioner Of GST CE (Chennai) [ 2024 (8) TMI 1205 - CESTAT CHENNAI] , it has been held that if the party had sufficient credit balance, the demand of interest in this regard cannot sustain and requires to be set aside. Penalty - HELD THAT:- Penalty under Section 77(2) of the Finance Act, 1994, was of residual nature. In the SCN and also in the impugned order, nothing was discussed to impose the penalty. Conclusion - i) The issuance of the SCN for recovery of self-assessed tax was unwarranted. ii) The imposition of penalties under Sections 78 and 77(2) was not justified. iii) The demand for service tax on cancellation charges, cheque return charges, and miscellaneous income was not legally sustainable. iv) The penalties for breach of contract are not services and do not attract service tax. The impugned order cannot be sustained and the same is set aside - Appeal allowed.

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• 2025 (3) TMI 574
  Valuation of service tax - inclusion of Delayed Payment Charges (DPC) received by the appellant, a stockbroker, from their clients in the assessable value - whether consideration for providing a separate service of settling the account of clients with stock exchanges as different from the service of stock broking for the purpose or is not the amount of consideration which is liable to be taxed? - HELD THAT:- Section 67 of the Finance Act deals with the concept, what constitutes consideration for service. Service tax is leviable only when an activity is considered to be a service. There has to be a consideration for the provision of such service. Only an amount payable for the service would be consideration. Consideration must flow from the service recipient to the service provider and should accrue to the benefit of the service provider. There is a marked distinction between conditions to a contract and consideration. A ruling by the Larger Bench of the Tribunal Bhayana Builders (P) Limited Vs. Commissioner of service tax [ 2013 (9) TMI 294 - CESTAT NEW DELHI-LB] , wherein it was observed that any consideration (whether monetary or otherwise), should have flown or should flow from the service recipient to the service provider and should accrue to the benefit of the latter. Larger Bench of Tribunal in Service Tax Appeal No. 511 of 2011-LB with Service Tax Cross Application No. 40320 of 2018 [ 2020 (7) TMI 472 - CESTAT CHENNAI] holds that foreclosure charges collected by banks and NBFCs on premature termination of loans is not leviable to service tax; analyses what constitutes consideration for service and damages for breach of contract. The Tribunal observed that the banks and NBFCs are promisors and they would not desire premature termination of the loan, as it is in their interest that it runs the entire agreed tenure. Thus, any income which gets generated up to the settlement of the agreement of rendering services which shall form the part of the taxable value of Section 67 of the Finance Act the service of stock broker gets completed when the terms and conditions of the contract entered with the client for sale/purchase of securities are completely accomplished. Thus the payment of outstanding amount to the stock exchange on behalf of the clients is the part of service relating to stock broker service which gets completed when the transaction for the same are finally settled. Circular 137/25/2011 dated 03.08.2011 clarifies that, Delayed Payment Charges (DPC) received by the stock brokers are not includible in taxable value as the same are not be charged for providing taxable services. Such charges are on account of delay in making payments by the service recipient to the service provider and are in the nature of a penal charge for not making the payment within stipulated time. Such amounts are not includible in the taxable value for charging service tax. The issue of Delayed Payment Charges (DPC) arising in the context of purchase of shares has been addressed by the Co-ordinate Bench of this Tribunal in the case of Religare Securities Limited Vs. Commissioner of Service Tax, Delhi [ 2014 (4) TMI 588 - CESTAT NEW DELHI] by holding that the same is not liable to service tax. The adjudicating authority having ignored the department s own circular about the collection of DPC has wrongly held the amount to be the consideration for providing a separate activity. It has absolutely been ignored that there was only one contract of appellant with their client for sale/purchase of security and the said contract itself has talked about penal charges to have been collected from the clients in case the payments are delayed. DPC are wrongly held to be taxable. Demand is held to have been wrongly confirmed. Conclusion - Penal charges for delayed payments, such as DPCs, do not constitute consideration for a separate service and are not includible in the taxable value under Section 67 of the Finance Act. The impugned order set aside - appeal allowed.

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• 2025 (3) TMI 573
  Classification of service - export of service or an intermediary service? - services provided by the appellant to overseas educational universities/colleges - HELD THAT:- The appellant is rendering services to foreign universities/colleges and is getting commission when the students get admission. Further, the services rendered by the appellant comply with the conditions prescribed under Rule 6A ibid which lays down the criteria for determining whether a service is an export of service or not. An identical issue has been considered by the Chandigarh Bench of the Tribunal in the case of M/s Sunrise Immigration Consultants Private Limited [ 2018 (5) TMI 1417 - CESTAT CHANDIGARH] wherein the Tribunal has held that the service provided by the appellant who is providing services of referral for foreign universities is an export of service not an intermediary service . Conclusion - The services provided directly to a foreign recipient, with payment in foreign exchange and meeting the conditions of Rule 6A, qualify as export services. The services do not qualify as intermediary services when the service provider acts on its own account. Appeal allowed.

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• 2025 (3) TMI 572
  CENVAT Credit - denial of credit on setting up of cement plant as irregular on the ground that the expression setting up has been omitted from the definition of input service w.e.f. 01.04.2011 - credit availed on the basis of Debit Notes for rent (reimbursement of electricity charges) under Rule 4A of the Service Tax Rules, 1994 - demand of service tax given the appellant s claim of having already paid the amount - levy of interest and penalty. Whether the appellant is eligible for the availment of CENVAT Credit of Rs.57,68,603/- on input services used in setting up a cement plant, given the removal of the term setting up from the definition of input service effective 01.04.2011? - HELD THAT:- This amount has been confirmed in the impugned order by denying the CENVAT Credit availed by the appellant on the input services used setting up of cement plant, on the ground that the words setting up have been removed from the definition of input service w.e.f. 01.04.2011. However, the appellant has not availed credit in respect of civil works undertaken by them for setting up of the plant. They have only availed the credit in respect of services such as banking and other financial services, management, maintenance and repair services, rent-a-cab services, GTA services, legal consultancy services, erection, commissioning and installation services, etc., which are all input services in terms of Rule 2(l) of the CENVAT Credit Rules, 2004. Thus, the appellant is eligible to avail CENVAT Credit in respect of the above said services - the denial of CENVAT Credit on the input services used in setting up of the plant, is not sustainable. Whether the appellant is entitled to the CENVAT Credit of Rs.32,557/- availed on the basis of Debit Notes for rent (reimbursement of electricity charges) under Rule 4A of the Service Tax Rules, 1994? - HELD THAT:- The appellant have already paid Service Tax of Rs.2,34,520/- and enclosed a Chartered Accountant certificate to that effect. Regarding the balance amount of Rs.32,557/-, the appellant submitted that they have availed Cenvat credit of Rs.32,557/- on Debit Notes for rent ( reimbursement of electricity charges). The Debit Notes contain all details as prescribed under Rule 4A of Service Tax Rules, 1994. Accordingly, the Cenvat credit availed by the appellant on the basis of Debit Notes cannot be denied - the appellant are eligible for the availment of the balance CENVAT Credit to the extent of Rs.32,557/-. Whether the demand of Service Tax of Rs.85,692/- is sustainable given the appellant s claim of having already paid the amount? - HELD THAT:- The same has already been paid by the appellant and therefore, the same is appropriated against the demand confirmed. No penalty is imposable on the appellant on this count. Whether the demand for interest amounting to Rs.24,88,246/- is justified when the appellant had an excess CENVAT Credit balance? - HELD THAT:- The appellant was having sufficient balance in their CENVAT Credit account. Further, we observe that the service tax demand confirmed in the impugned order is not sustained. Accordingly, the demand of interest confirmed in the impugned order is not sustainable. Thus, the demand of interest of Rs.24,88,246/- confirmed in the impugned order set aside. Whether the imposition of a penalty of Rs.61,21,372/- under Section 78 of the Finance Act, 1994, is warranted? - HELD THAT:- Since the demands confirmed in the impugned order are not sustainable, no penalty is imposable on the appellant. Accordingly, the penalty of Rs.61,21,372/- imposed in the impugned order under Section 78 of the Finance Act, 1994 is set aside. Conclusion - i) The appellant is eligible for the CENVAT Credit of Rs.57,68,603/- availed in respect of setting up of the cement plant. ii) The demand of Rs. 2,34,520/-, being already paid by the appellant, is upheld and appropriated. The balance amount of credit of Rs.32,557/- availed on the basis of debit notes is held as eligible and accordingly, the demand to this extent is set aside. iii) Regarding the demand of Rs.85,692/-, the amount being paid by the appellant, is appropriated against the liability confirmed. iv) The demand of interest of Rs.24,88,246/- is set aside. v) No penalty is imposable on the appellant. Appeal disposed off.

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• 2025 (3) TMI 571
  Exemption from payment of service tax - Government Construction Contracts entered into after 01.03.2015 - demand for service tax based on the income reflected in Form 26AS and Income Tax Returns - computation of service tax liability was correctly assessed for the period in question or not - extended period of limitation. Exemption from payment of service tax - Government Construction Contracts entered into after 01.03.2015 - Whether in view of Notification No. 06/2015 dated 01.03.2015, the exemption was withdrawn with prospective effect, hence, benefit of Entry 12 in terms of Notification No.25/2012-ST dated 20.06.2012, cannot be extended to the appellant? - HELD THAT:- The Ld. adjudicating authority observed that the appellant has availed the benefit of exemption available to construction services rendered to Government under Notification No. 06/2015 dated 01.03.2015, however the said exemption was withdrawn with prospective effect and hence, the benefit of Entry 12 in terms of Notification No.25/2012-ST dated 20.06.2012, cannot be extended to the appellant. However, it is found that the appellant has received the consideration for the contracts entered prior to 15.03.2015 also during the period under dispute, but the adjudicating authority has not allowed the exemption available to them and considered the entire amount as taxable value received during the period under dispute, which is legally not sustainable. Whether the demand for service tax based on the income reflected in Form 26AS and Income Tax Returns is legally sustainable without corroborative evidence linking the income to taxable services? - HELD THAT:- The Ld. adjudicating authority has construed all the receipts during the period as amount received in connection with taxable supplies during the said period. However, it is observed that the Learned Adjudicating Authority failed to appreciate that such amounts reflect merely the payment received during the period. It cannot be construed as outward supplies since such amount could have been received in lieu of contracts which were entered into prior to 01.03.2015 against which payments were released as and when portion of the works under contract was being completed. The Department cannot straightaway take in account the amount shown in the ITR for the purpose of demanding Service Tax, without verifying the nature of such amount received, as to arrive at a conclusion whether service tax is payable on the said amount or not. In support of this view, reliance placed upon the decision of this Tribunal, in the case of M/s Piyush Sharma vs. Commissioner of CGST CX, Patna I [ 2023 (10) TMI 736 - CESTAT KOLKATA] , wherein it has been held Admittedly, no investigation has been conducted in this case at the end of the Appellant by the Adjudicating Authority. Being the appellant a registered service provider and filing their service tax returns, in that circumstance, the demand cannot be raised on the basis of Form 26AS obtained from the Income Tax Department. Whether the computation of service tax liability was correctly assessed for the period in question? - HELD THAT:- For the purpose of computation of their service tax liability for the financial year 2017-18 (till June, 2017), the Learned Adjudicating Authority has taken the entire amount received by the Appellant during the period April 2017 to March 2018, as per 26AS as the taxable value, whereas, service tax was leviable only for the 1st quarter of the FY 2017-18 i.e. from April, 2017 to June 2017. Thus, the submission of the appellant is agreed upon that the computation of taxable value for the Financial Year 2017-18 is erroneous. Whether the invocation of the extended period of limitation for demanding service tax is justified? - HELD THAT:- The Show Cause Notice was issued on the basis of materials available on record, ie, from the returns furnished by the appellant and not on account of any discovery of new facts by the department. Hence, the entire demand confirmed by invoking extended period of limitation is not sustainable. Conclusion - i) The appellant has received the consideration for the contracts entered prior to 15.03.2015, the benefit of exemption cannot be denied. ii) The demands cannot be confirmed solely on data from Income Tax Returns/26AS without establishing that the amounts relate to taxable services. iii) There are errors in the computation of service tax liability, as the adjudicating authority considered the entire amount received during April 2017 to March 2018 as taxable, whereas service tax was applicable only for April to June 2017. iv) The entire demand confirmed by invoking extended period of limitation is not sustainable. Appeal allowed.

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• 2025 (3) TMI 570
  Valuation of services - inclusion of expenses incurred for stationary, reimbursed by electricity authorities - Section 67 of the Finance Act, 1994 - exemption from service tax under N/N. 45/2010-ST - Business Auxiliary Service - Extended period of limitation. Includability of reimbursed expenses - HELD THAT:- The issue of includability of reimbursed expenses, incurred in the course of provision of service, has been decided by the Hon ble Apex Court in the case of Intercontinental Consultants Technocrats Pvt. Ltd. [ 2018 (3) TMI 357 - SUPREME COURT ]. Hon ble Apex Court held that Sub-section (4) of Section 67 empowers the rule making authority to lay down the manner in which value of taxable service is to be determined. However, Section 67(4) is expressly made subject to the provisions of sub-section (1). Mandate of sub-section (1) of Section 67 is manifest, as noted above, viz., the service tax is to be paid only on the services actually provided by the service provider. There are no doubt, whatsoever, that the issue is squarely covered in favour of the appellants. Further, as the appellants are not agitating the taxability of the service, we are not going into the exigibility of the service. There was no infirmity in the non-inclusion of the value of the stationary reimbursed by the electricity authorities. Invocation of extended period of limitation - HELD THAT:- The Department has not made out any case for invocation of extended period. In view of the same, the issue is settled in favour of the appellants. Conclusion - i) The reimbursed expenses are not part of the assessable value for service tax purposes. ii) The Department has not made out any case for invocation of extended period. Appeal allowed.

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• Central Excise

• 2025 (3) TMI 569
  CENVAT Credit - input services - Business Auxiliary Services, Clubs and Association, Storing and Warehousing, Maintenance and Repair etc. - period from May 2011 to September 2013, August 2015 to August 2016 and January 2017 to June 2017. AMC Warranty Charges - HELD THAT:- The AMC may have a nexus to the sale of Office Machines (traded goods) but it is not integrally connected with the business of the manufacture of the appellants machines, up to the place of removal. Service Tax paid on AMC charges, does not represent tax paid on the input service in relation to its manufacturing unit as no such input service is availed by the manufacturing unit. Hence the cost of the input service does not form a part of the assessable value of the final product cleared from the manufacturing unit, to be eligible for the benefit of CENVAT Credit. Extending the credit of tax paid on a service, which is not a cost incurred by the manufacturing unit, and is rendered beyond the point of removal of the final product, would be contrary to the scheme of CENVAT Credit Rules - CENVAT credit is not eligible on input services attributable to exempted goods / trading activity and is a principle in built into the very structure of the CENVAT scheme. Goods after manufacture and clearance from the place of removal become traded goods, hence the responsibility is all the more on the appellant to prove the eligibility of the input service as credit for the manufacturing unit. The Ld. Original Authority has therefore rightly held that AMC is not an eligible input service for the manufacturing unit at Puducherry. Denial of credit due to a lack of separate charge/ break up of tax paid on warranty services for manufactured goods and AMC services for traded goods between the manufacturing unit and the HO - HELD THAT:- The grant of tax credit impacts revenue collection, hence an assessee who claims a tax benefit must show not only eligibility but also that he adheres to the provisions of the said scheme. Entitlement means rights of certain benefits and privileges. This entitlement to credit follows from complying with the conditions and is subject to the restrictions contained in the Act and Rules. In the case of Competent Authority Vs Barangore Jute Factory [ 2005 (11) TMI 490 - SUPREME COURT] , it has been held by the Hon ble Apex Court that where statute requires an act to be done in a particular manner, the act has to be done in that manner alone. The onus of proof while claiming the benefit of a scheme provision is on the assessee. It is for him to show that he is compliant to the same. The appellant has failed to establish its case on this issue and hence its appeals in this regard fails and the confirmation of demand relating to AMC and warranty charges [Management, Maintenance or Repair Services] with respect to the manufacture unit is sustained. Business Auxillary Service - HELD THAT:- The issue is squarely covered by assessee s own identical case for the previous period, which has not been appealed against and hence the disputed issue has attained finality. Import of Services and Blanks - HELD THAT:- The services received from the Appellant from dealers situated outside India in the form of market research data and consultancy services has been held to be sales promotion activity and is covered under the inclusive part of the definition of input service as defined under Rule 2(l) of CCR 2004. Reliance in this regard is placed on Essar Steel India Ltd. vs Commissioner of C. Ex. S.T., Surat-I [ 2016 (4) TMI 232 - CESTAT AHMEDABAD] . The service is hence eligible for input service credit. Club and Association Service - HELD THAT:- The appellant has submitted that the issue of availment of CENVAT credit on Service Tax paid on corporate membership with various chambers and associations has been decided in favour of the assessee. Reliance is placed on decisions wherein CENVAT credit on membership obtained in chambers and association has been allowed. Reference can be made to M/S RELIANCE INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, LTU, MUMBAI [ 2016 (8) TMI 123 - CESTAT MUMBAI] and ITC LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE NORTH, COMMISSIONER OF CENTRAL EXCISE, SERVICE TAX AND CUSTOMS, BANGALORE-IV [ 2022 (3) TMI 501 - CESTAT BANGALORE] . Storing and warehousing - HELD THAT:- The demand has been raised in the first SCN and not subsequently and the amount involved is very paltry. The credit is hence allowed. Extended period of limitation - HELD THAT:- Although there was no major interpretative issue involved regarding the issue of AMC it forms a part of many input services that were contested and where suppression was alleged in the SCNs. However, these services except the issue of AMC were finally decided in favour of the appellant. There does not appear to be any deliberate attempt to evade duty. Nothing has been shown from which an inference of guilty intention can be discerned and hence the extended period cannot be invoked. The demand for the extended period does not survive and is set aside. Conclusion - i) The input services must be integrally connected to the manufacturing process to qualify for CENVAT credit. ii) The appellant s claim for CENVAT credit on Business Auxiliary Services accepted, due to the finality of the issue in previous orders. iii) CENVAT credit for Import of Services and Blanks allowed, recognizing them as sales promotion activities. iv) The appellant s claim for CENVAT credit on Club and Association Membership Services accepted, despite noting the lack of specific evidence on their use. v) The credit for Storing and Warehousing Charges allowed, due to the minor amount involved. vi) The demand for the extended period set aside, finding no deliberate attempt to evade duty. Appeal allowed in part.

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• 2025 (3) TMI 568
  Method of valuation - to be valued under Rule 8 9 or Rule 10 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000? - clearance of goods to inter-connected undertakings - HELD THAT:- The appellants had mentioned the name of the inter-connected undertaking M/s Shree Vaishnav Ispat Private Limited, in the Form 3CD of Income Tax return for the year 2008-09 at Sl. No.18 being the person specified in terms of the requirement of Section 40A(2)(b) of the Income Tax Act, 1961. Therefore, the appellants and M/s Shree Vaishnav Ispat Private Limited have become related persons and the value for the purpose of central excise duty is 110% of the cost of production as per Rule 8 9 of the Rules of 2000. In this regard, we find that Section 40A of the Act of 1961 deals with Expenses or payments not deductible in certain circumstances . This sub-section (1) to Section 40 ibid provides the powers for the Assessing officer when he determines that any expenditure is excessive or unreasonable and beyond the legitimate needs of the business or profession of the assessee, then he may disallow such deduction - There is no provision under which mention of a name of a legal person under the Income Tax Act, would enable such persons to be treated as related person under the Central Excise law. In the absence of specific determination of the relationship between the appellants and the interconnected undertaking, being related to each other in terms of Section 4(3) of the Central Excise Act, 1944, there are no merits in the impugned order insofar as it has treated the transaction between these two, as related party transaction. It is nowhere discussed in the impugned order or any evidence produced by the authorities below to state that the appellants and their interconnected undertaking are related in terms of the above provisions of the Central Excise statute. Therefore, on this ground alone the impugned order is liable to be set aside and it does not stand the scrutiny of law. In the case of Gajra Gears Private Limited [ 2015 (2) TMI 1090 - CESTAT NEW DELHI] , the Co-ordinate Bench of the Tribunal has held that valuation of goods between inter-connected undertaking shall be determined as prescribed under Rule 10. In the case of Ramsons Casting Private Limited [ 2016 (12) TMI 908 - CESTAT MUMBAI] , the Co-ordinate Bench of the Tribunal has held that in the absence of evidence, even if two companies are operated as interconnected undertakings , they cannot be treated as related person for valuation purpose and the transaction value cannot be rejected. Conclusion - i) The inter-connected undertakings are not automatically related persons for valuation purposes unless they meet the specific criteria outlined in the Central Excise Act. ii) The valuation of goods between inter-connected undertaking shall be determined as prescribed under Rule 10. The impugned order is set aside - appeal allowed.

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• 2025 (3) TMI 567
  Process amounting to manufacture or not - applicability of Note 1(g) to Chapter 74 for classification of the product - HELD THAT:- For goods are to be classified taking into consideration the scope of headings / sub-headings, related Section Notes, Chapter Notes and the General Rules for the Interpretation (GIR) of the First Schedule to the Central Excise Tariff Act, 1985. Rule 1 of the GIR provides that the classification of goods shall be determined according to the terms of the headings of the tariff and any relative Section notes or Chapter notes and thus gives precedence to this while classifying a product. Rules 2 to 6 provide general guidelines for classification of goods under the appropriate sub-heading. In the event of the goods cannot be classified solely on the basis of GIR 1, and if the headings and legal notes do not otherwise require, the remaining Rules 2 to 6 may then be applied in sequential order. Further, while classifying goods, the foremost consideration is the statutory definition , if any, provided in the Central Excise Tariff Act. In the absence of any statutory definition, or any guideline provided by the statute, the trade parlance theory is to be adopted for ascertaining as to how the goods are known in the common trade parlance for the purpose of dealing between the parties. It is found that the weight of the product, or the reduction of dimensions from a particular size to another size, is not the pre-requisite for classification of the product under chapter heading 7409. Thickness of the product, being above 0.15mm is the key determinative factor for classification of the product under chapter heading 7409. It is also found process of drawing or re-drawing is not mentioned as a process amounting to manufacture for the product of chapter heading 7409 and such process would amount to manufacture of products only in respect of chapter heading 7411. Hence, the conclusion arrived at by the learned Commissioner does not have any legal basis for classification of the disputed goods under chapter heading 7409. Nothing specific has been mentioned about the machinery, processes undertaken to treat the activity of drawing to be treated as a process and to state that manufacturing has been undertaken by the appellants, to treat the same as independent evidence. Further, the adjudicating authority cannot depend on part of such panchanama which is convenient to the department and leave the other part where it is factually incorrect, to dismiss it as an inadvertent mistake. since it is not supporting their case. In other words, any evidence in order to rely upon the same for proving a case, has to be taken in its entirety. In view of the above, the impugned order did not examine the issues in proper perspective and failed to prove the allegation of clandestine removal for confirmation of demands raised in the SCNs. In the case of Collector of Central Excise Vs. Technoweld Industries [ 2003 (3) TMI 123 - SUPREME COURT] , the Hon ble Supreme Court have held that there is no manufacture of a new product, It was also held that the process of drawing wire from wire rods did not amount to manufacture. Conclusion - i) The process of drawing and re-drawing copper products did not constitute manufacture under the Central Excise Act, as it did not result in a new and distinct product. ii) The classification of the products under heading 7409 was incorrect, as the process did not amount to manufacture for that heading. iii) The denial of cross-examination of witnesses was unjustified, rendering the statements inadmissible as evidence. The impugned order set aside - appeal allowed.

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• 2025 (3) TMI 566
  Process amounting to manufacture or not - packing, repacking, and labeling of spare parts of earthmoving equipment by the respondents-assessee - earthmoving equipment and their parts can be classified as automobiles under the Central Excise Tariff Act for the purpose of levying excise duty or not - HELD THAT:- The issue involved in this appeal was decided by the Larger Bench of the Tribunal in M/S. ACTION CONSTRUCTION EQUIPMENT LTD [ 2023 (6) TMI 1320 - CESTAT MUMBAI (LB) ] where it was held that As the word automobile has not been defined in the Central Excise Act, the Central Excise Tariff Act or the Notifications issued by the Central Government, it would be permissible to refer to the dictionaries to find out the general sense in which the word is understood in common parlance and it will not be appropriate to refer to the definition of the word automobile occurring in the Air (Prevention and Control of Pollution) Act, 1981 or the Motor Vehicles Act, 1988 . On careful reading of the decision given by the Larger Bench of the Tribunal on the disputed issues, it is found that the amendment carried out w.e.f. 29.04.2010 makes it abundantly clear that a legislature did not intend to tax the parts, components and assemblies of earthmoving equipment etc. under the Head Automobiles ; therefore, to this extent, the adjudged demands for the period prior to 29.04.2010 cannot be sustained. It is further noted that the respondents-assessee have paid Central Excise duty for the period post 29.04.2010, and such duties paid have also been appropriated by the Department vide Order-in-Original dated 13.07.2012. Thus, there is no dispute in this regard for the period post 29.04.2010, which is required to be examined in this case. The adjudged demands for the period prior to 29.04.2010 is not sustainable. Conclusion - The respondents-assessee s activities did not constitute manufacture prior to 29.04.2010, and earthmoving equipment parts were not automobiles under the Central Excise Tariff Act. The appeal filed by the appellants-department is dismissed.

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• 2025 (3) TMI 565
  Invocation of extended period of limitation - undervaluation while stock transferring the goods to its related units - allegation in SCN is that the excise duty paid by the Appellant under Section 4(1) (a) of the Excise Act was lower than the amount payable under Rule 8/9 of the Valuation Rules - revenue neutrality - demand of interest and penalty - HELD THAT:- The issue is no longer res integra, as this Tribunal has already decided this issue in the Appellant s own case Steel Authority of India v. Commissioner of Central Excise Service Tax, Ranchi I, [ 2025 (3) TMI 258 - CESTAT KOLKATA ] pertaining to a different unit of the same assessee and concerning the same issue pertaining to valuation of inter-unit transfer of refractory material had held that no demand is sustainable since the issue is revenue neutral. The same proposition has been held by this Tribunal in the case of Hindalco Industries Ltd. v. Commissioner of Central Excise, Bhubaneswar-II [ 2023 (5) TMI 720 - CESTAT KOLKATA ] where it was held that The Appellant has argued that the entire exercise is revenue neutral as the duty paid by them will be available as credit for their sister unit. We agree with this view of the Appellant. The duty paid by the Appellant would be available as credit to their sister unit. This the entire exercise is revenue neutral. Demand of interest and penalty - HELD THAT:- Since the demand of duty is not sustained, the question of demanding interest and imposition of penalty does not arise. Conclusion - The principle of revenue neutrality was reaffirmed, emphasizing that when duty paid on inter-unit transfers is available as credit, additional demands are unsustainable. The impugned order is set aside - appeal allowed.

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• 2025 (3) TMI 564
  Determination of assessable value - discounts which were known to the buyers at the time of clearnace of goods and passed on to the buyers - eligible as deduction for the purpose of determination of the assessable value or not - interest and penalties - HELD THAT:- The Appellant cleared the goods provisionally upon payment of excise duty during the relevant period and all the provisional assessments have been made final vide issuing of finalisation orders. The said final assessments have been accepted by the department. It is observed that the assessments finalized for the relevant period were not challenged by the department by way of filing an appeal before Commissioner (Appeals) as provided under Section 35A of the Act. Therefore, the final assessment orders had attained finality. In such circumstances, it is not open to the revenue to issue SCN to the Appellant for the same period for which assessments have been finalized. Interest and penalty - HELD THAT:- The demands confirmed in the impugned order without challenging the final assessment orders is not sustainable and are accordingly, set aside. Since the demand of Central excise duty is not sustained, the question of demanding interest and imposing penalty does not arise. Conclusion - i) The discounts known and passed on to buyers are deductible for excise duty assessment. ii) The final assessments, if not appealed, are conclusive and preclude further departmental action for the same period. The impugned order are set aside - appeal allowed.

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• 2025 (3) TMI 563
  Dismissal of appeal for want of pre-deposit - failure to consider the pre-deposit made through DRC-03 as proper pre-deposit - HELD THAT:- As Commissioner (Appeals) has dismissed both the appeals for want of pre-deposit which is now been made by the Appellants before the Tribunal, the matters are fit to be remanded back to the Commissioner (Appeals) for decision on merits. In case of D D Interiors [ 2025 (3) TMI 7 - DELHI HIGH COURT] Hon ble Delhi High Court has held that the appeal could not have been rejected merely on the ground that it was deposited on a wrong account especially when the said integrated portal was not even available for the Petitioner at the time of the initial deposit. Matter is remanded back to Commissioner (Appeals) for decision on merits without revisiting the issue of mandatory pre-deposit - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2025 (3) TMI 562
  Rejection of his rectification application - Karnataka Appellate Tribunal raised an issue, which had not been raised by the lower authorities and also not argued at the time of final hearing by both the sides - exemption of turnover under section 5 (3) of the CST Act - amendments to section 5 of the CST Act effective from 13-5-2005 - HELD THAT:- Section 5 is intended to promote export business of the country and therefore grants certain concessions exemptions in respect of sale of goods that are exported or intended to be exported. Sub-section (3) grants exemption from tax in respect of last sale of goods provided that some tangible evidentiary material as prescribed in law is produced to prove the intended onward transaction of export. Sub-section (3) of Sec.5 of the Act r/w Rule 12 (10) (a) of the subject rules, which is much pressed into service by both the sides has been construed by the Coordinate Bench in A.R. ASSOCIATES [ 2001 (1) TMI 948 - KARNATAKA HIGH COURT] wherein it was held that Undoubtedly, the law does make an exception in those of the instances where very valid and cogent reasons are set out for the default or for those cases where the aggrieved party is able to demonstrate that but for the absence of appearance, the chances of success were almost certain and that it would really be a miscarriage of justice if the party is not afforded a second opportunity. None of those principles apply to the present case and consequently, we are of the view that no second opportunity can be afforded to the present appellants. Learned AGA is more than justified in contending that sub-section (3) of Sec. 5 is a qualified provision to sub-section (1) and that in addition to what it requires, the Assessee has to comply with other requirement prescribed under Rule 12 (10) (a) coupled with Form-H. Conclusion - The denial of tax exemption upheld due to non-compliance with statutory requirements and evidentiary standards. Petition dismissed.

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• 2025 (3) TMI 561
  Wrongful denial of Input tax credit - Grant of deduction of Input Tax Credit at the rate admissible in law although what was claimed in the Returns filed by him, was less than that - HELD THAT:- Ordinarily, the claim for Input Tax Credit has to be made in the Return or Revised Return only. A claim otherwise is an exception and bona fide of the same has to be demonstrated - However, when underclaim is made in the Return/Revised Return due to bona fide mistake of adopting inapplicable rates of tax only, it is permissible to seek rectification by making a representation provided that the foundational fact matrix is already available in the Return/Revised Return - Further, no rectification whatsoever can be sought for, once the assessment/reassessment proceedings are concluded or that the limitation period otherwise has expired. Whether a claim for ITC can be rectified under Section 39 of the 2003 Act even if it is disadvantageous to the State Exchequer? - HELD THAT:- If the Assessee during the course of reassessment proceedings makes a claim for Input Tax Credit, the same cannot be disallowed only on the ground that the claim of the Assessee is disadvantageous to the State Exchequer - If the reassessed tax is more than what is payable, then the same has to be recovered from the Assessee along with admissible interest/penalty; as a corollary of this, what is paid is more than what is payable on reassessment, then the claim for Input Tax Credit has to be favoured if that is made before the conclusion of reassessment proceedings. Conclusion - Claims for ITC rectification must be made before reassessment proceedings conclude or the limitation period expires. Petition dismissed.

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• 2025 (3) TMI 560
  Challenge to attachment order - attachment of flat for non payment of tax dues - Section 34 of the Maharashtra Value Added Tax Act, 2002 - HELD THAT:- Section 34 (1) (v) of the said Act empowers the Respondent No. 1 to perform duties of Tahsildar under the Code, for the purpose of effecting recovery of amount of tax and its dues as arrears of land revenue. Perusal of Form No.15 submitted by the Petitioner to the Cooperative Housing Society, affidavit by the Petitioner and her three sons including Mr. Jayesh dated 30/06/2017 and indemnity bond executed by the Petitioner dated 01/07/2017 shows that it is clearly stated in all these three documents, that the Petitioner is claiming to be a nominee after the death of late Madhusudan and the Petitioner is one of his legal heirs and there are three other legal heirs i.e. her sons. It is settled law that mere nomination in favour of one of the legal heirs does not make that nominee the exclusive owner holding full title to the property and the nominee holds it in trust of all the legal heirs as per applicable succession rules. As per the averments in petition itself (paragraph no. 3.3) late Madhusudan has passed away intestate . Therefore, the laws of succession would squarely apply. The affidavit in reply filed by the Respondent State is not countered by filing any rejoinder. From the said affidavit, it is clear that the arrears under the said Act are in respect of period FY 2008-09 and FY 2012-13. If this period is considered along with dates of earlier notices issued, it is evident that the alleged transfer in favour of the Petitioner by her sons is subsequent in point of time, being effected in June 2017 and therefore, undivided share of Mr. Jayesh in the title therein is hit by Section 38 of the said Act. Whether the said transfer was with an intent to defraud revenue is a disputed question of fact, that will have to be considered in accordance with law, including enquiry under Section 38 of the said Act. The affidavit in reply filed by the Respondent State is not countered by filing any rejoinder. From the said affidavit, it is clear that the arrears under the said Act are in respect of period FY 2008-09 and FY 2012-13. If this period is considered along with dates of earlier notices issued, it is evident that the alleged transfer in favour of the Petitioner by her sons is subsequent in point of time, being effected in June 2017 and therefore, undivided share of Mr. Jayesh in the title therein is hit by Section 38 of the said Act. Conclusion - It is settled law that mere nomination in favour of one of the legal heirs does not make that nominee the exclusive owner holding full title to the property and the nominee holds it in trust of all the legal heirs as per applicable succession rules. Petition dismissed.

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• Indian Laws

• 2025 (3) TMI 559
  Dishonour of Cheque - over writing in the date of cheque - discrepancy in mentioning of the amount in words and figures - invalid notice - what are the legal requirement for holding a legal Demand Notice issued under Section 138 B NI Act valid? - HELD THAT:- In Central Bank of India Anr. v. M/s. Saxons Farms Ors., [ 1999 (10) TMI 718 - SUPREME COURT ] the Apex Court held that the object of the Notice is to give a chance to the drawer of the cheque to rectify his omission. Though in the Notice demand for compensation, interest, cost etc. is also made, drawer will be absolved from his liability under Section if he makes the payment of the amount covered by the cheque of which he was aware, within 15 days from the date of receipt of the Notice or before the Complaint is filed. Now coming to the facts of the present case, the Legal Notice dated 28.09.2017 clearly mentioned about the dishonour of the cheque in the sum of Rs. 4,65,000/-. Legal Notice specifically and clearly specified the cheque amount. The problem has arisen because though figure in numerical has been clearly written as Rs. 4,65,000/-, but unfortunately while writing in words it was written as Rs. Four lac sixty five . It is quite evident that though after word Sixty Five there has been inadvertence in not mentioning the word thousand . Prima facie, the error appears to be inadvertence rather than depicting different amounts. Though it is correct that Section 18 of NI Act, states that when there is a discrepancy in the amount of cheque as mentioned in figures and words, the words shall prevail. However, as has already been mentioned above, such discrepancy did not weigh with the Bank which clearly stated in the Return Memo that the cheque amount was Rs. 4,65,000/-. Likewise, overwriting of the date on the cheque, has not been considered as a material interpolation meriting dishonour of the cheque. In these circumstances, it would not be appropriate to dismiss the Complaint under Section 138 of the NI Act on technical ground, without putting the parties to trial and without affording opportunity to prove their respective cases. Conclusion - The error in writing the correct figure in words, would not at this stage, make the cheque invalid especially when no Reply has been given by Respondent No. 2 to the Legal Notice to refute his liability and has not questioned the Notice making a demand. The Complaint is sought to be defeated on the technical ground of inadvertent error in mentioning the correct figure of the cheque in words, which cannot be a justiciable ground for discharge, but merits a Trial. The impugned order is set aside - petition disposed off.

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• 2025 (3) TMI 558
  Dishonor of cheque - conviction of revision petitioner without examining the issue of maintainability of the complaint. Whether both the Courts have committed an error in convicting the revision petitioner without examining the issue of maintainability of the complaint, as contended and requires interference of this Court by exercising the revisional jurisdiction? - HELD THAT:- The complaint was filed by an authorized person and resolution was passed on 24.10.2008 and the said resolution was issued by the Managing Director of the Company consequent upon the resolution passed by the Board of Directors. Hence, it is clear that authorization was given to the Regional Manager of the Company to initiate the proceedings against the petitioner - No doubt, the learned counsel for the petitioner relied upon the judgment of the Apex Court in the case of A.C. Narayanan [ 2015 (4) TMI 847 - SUPREME COURT ], wherein the Apex Court held that the complaint was not signed either by the Managing Director or Director of Company and subsequently Deputy General Manager of the Company gave evidence on behalf of the Company though he does not know anything. Nothing on record to suggest that he was authorized by Managing Director or any Director. Hence, the acquittal of the accused was held proper. But in the case on hand, the factual aspect is different and before initiating the proceedings, general body meeting was held and resolution was passed in terms of Ex.P.49 and when the person who was authorized left the Company, authorization was given to P.W.1 by the Managing Director in terms of Ex.P.50 and also powers are conferred to the Director and Managing Director in terms of Articles 163 and 164 of Ex.P.52 i.e., Memorandum and Articles of Association of the complainant Company and hence the said judgment is not applicable to the facts of the case on hand. This Court having considered the merits also, it is not in dispute that cheques Exs.P.1 to 10 have been issued. In one breath the petitioner says that those cheques are issued as security and in other breath says that the cheques were obtained by coercion in the police station. The issuance of cheques is not disputed and the same is signed by the petitioner is also not in dispute. The petitioner cannot blow hot and cold. The fact that there were business transactions between the complainant and the accused is not in dispute. It is important to note that the Trial Court relied upon Ex.P.46 reply notice issued by the accused - It is also stated that the complainant must be aware of the fact that for this type of transaction by the accused with third parties there is due consent and permission by the complainant and acknowledges the receipt of diamond jewellery articles supplied by the complainant and therefore requests the patience of the complainant by waiting for some time till all the payments are received by the accused from third parties and repay them to the complainant. Hence, this averment made in paragraph No.4 of the reply notice is clear that reply was given and notice was served and admitted the transaction. Having considered all these materials on record, both the Trial Court and the Appellate Court comes to the conclusion that the complainant has proved the case. No doubt, the revision petitioner examined himself as D.W.1 and got marked the documents at Exs.D.1 to 12, but no material is placed on record to show that the accused has repaid the amount of Rs.67 lakhs. He gave admission in the cross-examination regarding transaction is concerned, particularly admitted the memorandum of agreement in terms of Ex.P.47 with regard to the business and also categorically admits that earlier he was having good and cordial relationship with the Company and also admits that he did not take any action in respect of issuance of reply notice in terms of Ex.P.46 as against the advocate. Having taken note of all these admissions and evidence on record, it is not a case for exercising of revisional jurisdiction and no perversity is found in the findings of the Trial Court and the Appellate Court. Both the Courts have given detailed consideration and meticulously examined the documents of Exs.P.1 to 10, 46, 47, 49, 50, 51 and 52 and hence the order of both the Courts not suffers from its legality and correctness and the same is based on material on record and question of law not involved in the matter and hence it is not a case for interference by exercising the revisional jurisdiction. Conclusion - The complaint was maintainable and the conviction was justified based on the evidence and legal presumptions under the NI Act. The criminal revisional revision is dismissed.

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• 2025 (3) TMI 557
  Refusal of an ad interim prayer of injunction made by the plaintiff in a suit, inter alia, for declaration that the plaintiff/appellant is having 50% ownership right, title and interest in the suit property - jurisdiction of Civil Court has jurisdiction to grant injunction - competence of the signatory under Order XXIX Rule 1 of the Code of Civil Procedure. Refusal of ad interim injunction - HELD THAT:- The learned Trial Judge, in a single sentence, held that considering the nature of the case, it appeared to him that in this nature of case, injunction should not be granted without hearing the other side. Under Order XXXIX Rule 3-A, it is incumbent upon the court to record its reasons for its inability to dispose of an injunction application within Thirty (30) days from the date on which ex parte injunction is granted without giving notice the opposite party. However, such reasons are confined to the inability of the court to dispose of the application within Thirty (30) days in case an ad interim ex parte injunction is granted. The said provision does not necessarily mean that either while granting or refusing ad interim injunction, independent reasons for such grant or refusal is not required to be given. It is well-settled that reason is the soul of any judgment and any judicial order without cogent reasons is, on the face of it, bad in law. The order impugned herein suffers from such malady. Whether a triable issue has been made out by the plaintiff? - HELD THAT:- It transpires from the purported declaration/letter issued by Hari Ram along with the appellant, which is produced by the Bank, that the Bank had obtained a magisterial declaration from the owners, including the appellant. However, such declaration has not been produced by the respondent no. 1-Bank, thereby constraining the court to draw adverse inference against the Bank on such count. That apart, the appellant has alleged in his pleadings that the documents produced by the Bank are forged and manufactured insofar as any continuing guarantee having been granted by the appellant is concerned - sufficient doubt as to be veracity of the Bank s claim of the appellant being either a borrower or a guarantor has been raised. The recurring notices issued by the Bank under Section 13(2) of the SARFAESI Act also indicate the extreme urgency involved. In the event coercive measures under Section 13(4) of the SARFAESI Act are taken by the Bank against the appellant, the appellant might suffer irreparable injury - the balance of convenience and inconvenience is, thus, in favour of the appellant since if the suit property is disposed of in favour of third parties or the appellant is ousted from the suit property prior to the disposal of the suit, it would affect the plaintiff/appellant irreversibly, whereas the suffering of the Bank would not be of such magnitude even if its action for recovery of the loan is deferred - all the ingredients for grant of ad interim injunction are satisfied in the present case. Maintainability of the suit - HELD THAT:- It is an admitted position that the suit was filed on November 5, 2024, whereas the first notice under Section 13(2) of the SARFAESI Act was received by the appellant only subsequently, on November 6, 2024. In any event, the said first notice was waived by the respondent no.1-Bank by issuance of a subsequent notice under the self-same provision on December 24, 2024, that is, after the filing of the suit. Importantly, the remedy of a borrower and/or any person aggrieved by the actions of the Bank under Section 17 of the SARFAESI Act is available only upon measures being taken under Section 13(4) of the said Act. In the present case, there is nothing on record to show that any such measure has been taken by the Bank till date or at least that any such measure had been taken till the date of passing of the impugned order - the remedy of the appellant under Section 17 of the SARFAESI Act is not only illusory but also non-existent. Locus standi of the signatory to the affidavit- in-opposition of the injunction application - HELD THAT:- Rule 1 of Order XXIX clearly stipulates that in a suit by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the Secretary or by any Director or other Principal Officer of the corporation who is able to depose on the facts of the case. As per the averment in the affidavit- in-opposition, the signatory thereto merely claims herself to be a constituted attorney of the Bank and not a Secretary/Director/Principal Officer thereof. Hence, the necessary ingredients of Order XXIX Rule 1 are not satisfied. There is no reason as to why the principle incorporated in Order XXIX, although applicable in terms to a suit, should not also be borrowed in connection with an application filed in an appeal arising out of a suit. Conclusion - i) The refusal of the ad interim injunction by the Trial Court was unjustified due to the lack of reasons. ii) The Civil Court has jurisdiction to entertain the suit and grant the reliefs sought, as the principal reliefs fall outside the DRT s jurisdiction. iii) The appellant had established a prima facie case for an injunction, with the balance of convenience and potential irreparable harm favoring the appellant. Application disposed off.

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• 2025 (3) TMI 556
  Dishonour of Cheque - vicarious liability of director, when he claims to have resigned before the cause of action arose - Section 141 of the NI Act - HELD THAT:- It is true that section 141 of the N.I. Act mandates that when the person committing an offence under section 138 is a company every person who at the time of offence was in charge of and was responsible to the company for the conduct of the business of the company, as well as the company shall deemed to be guilty of the offence and in the present context in the averments made in the complaint, the words in charge of as required under section 141 of the N.I. Act is missing from the petition of complaint and in respect of which the learned counsel strenuously argued that the petition of complaint is not maintainable. However it is settled law that reproduction of section 141 in verbatim in the complaint is not necessary, if the substance of the allegations made in the complaint fulfils requirements of section 141 and in such cases even if in the absence of verbatim reproduction of the language of section 141, the complaint has to proceed and is required to be tried. Before issuing process against the present petitioner Anil Bhutoria, the court below ought to have made an inquiry inter alia to get answer to the aforesaid questions either from the materials available from the record or even putting questions to the complainant by himself to elicit answers to the aforesaid questions, to find out whether there are grounds for proceeding against the present petitioner or not. As it is quoted above neither the initial deposition nor the order issuing process dated 08.09.2015 reflects that the magistrate on being prima facie satisfied about the questions raised herein came to a finding that there are reasons to believe that the petitioner has committed the alleged offence. Thus, the order of issuance of process against the present petitioner on 08.09.2015 has not been made in compliance with either chapter XV or chapter XVI of the Code of Criminal Procedure. Conclusion - The issuance of process by the court below under section 204 of Cr.P.C. against the present petitioner Anil Bhutoria by the order dated 08.09.2015 is not sustainable in the eye of law and therefore, set aside. The trial court is directed to conduct an inquiry to determine whether a prima facie case exists against the petitioner. Petition disposed off.

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