TMI Tax Updates - e-Newsletter
March 15, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. OFFENCES UNDER GST LAW (PART-1)

   By: Dr. Sanjiv Agarwal

2. GST Composition Scheme: Simplified Taxation or a Hidden Revenue Generator?

   By: Aratrik Banerjee

3. Demand notice issued and signed without valid order or without order is void. Officers must be careful and taxpayers need to be vigilant to find out existence of valid order.

   By: DEVKUMAR KOTHARI and CA UMA KOTHARI

4. THE MORATORIUM UNDER SECTION 96 OF THE INSOLVENCY AND BANKRUPTCY CODE DOES NOT EXTEND TO REGULATORY PENALTIES FOR NON-COMPLIANCE

   By: DR.MARIAPPAN GOVINDARAJAN

5. Empowering Women in Global Trade

   By: YAGAY andSUN

6. key differences between Anti-Dumping Duty, Safeguard Duty, and Countervailing Duty

   By: YAGAY andSUN

7. Anti-Dumping Duty: An Introduction

   By: YAGAY andSUN

8. Safeguard Duty: How It Works – A Complete Analysis

   By: YAGAY andSUN

9. Countervailing Duty on Saccharin Imports from China PR Dated: Notification No. 01/2025-Customs (CVD) 25th February 2025

   By: YAGAY andSUN

10. Finance for MSME Exporters: Understanding Guidelines and Processes

   By: YAGAY andSUN

11. Opportunities in International Trade

   By: YAGAY andSUN

12. Letter of Credit – Legal and Regulatory Frame Work in Indian Context.

   By: YAGAY andSUN

13. Best Practices for Letter of Credit - (i.e. what exactly needs to be done and taken care of).

   By: YAGAY andSUN

14. Letter of Credit (LOC): An Overview

   By: YAGAY andSUN

News

1. Karnataka CM Siddaramaiah defends budget, promises revenue surplus in 2026

2. NEP showdown: Hindi vs Tamil; Stalin govt changes Rupee symbol with Tamil letter in budget logo

3. Punjab Budget Session from Mar 21-28; budget to be presented on Mar 26

4. Chhattisgarh Budget looks to give 'GATI' to development

5. TN govt replaces Rupee symbol in budget logo with Tamil letter, draws BJP's ire

6. South Africa plans to spend more on health, defence after US cuts aid

7. Goa CM to present state budget on Mar 26

8. Arunachal Assembly passes 2025-26 Budget by voice vote

9. No sitting of Himachal assembly on Mar 15, budget to presented on Mar 17 at 2 pm: Speaker

10. Budget will give new direction to development of MP, says Union minister Chouhan

11. Assam aims to utilise 90 pc of budget estimates in FY'26

12. Congress calls MP budget full of ‘empty promises’, silent on raising ‘Ladli Behna’ aid

13. Himachal growth improves to 6.7pc in 2024-25, per capita income rises by 9.6 pc: Survey

14. Progressive social policies, robust infra, placed TN on economic growth trajectory: Economic Survey

Highlights / Catch Notes

GST

• GST Demand Quashed: Authorities Wrongly Combined Turnover of Two Firms Under Same PAN Number

  Case-Laws - HC : HC quashed the show cause notice and demand raised against the petitioner (Jindal Communication) due to an erroneous assessment based on GST turnover discrepancies. The Court determined that the respondent authorities could not dispute the petitioner's explanation that the alleged turnover difference resulted from two separate firms (Jindal Communication and Jindal Marketing Company) being registered under the same PAN number. The authorities had incorrectly attributed the combined turnover to a single entity, leading to an unsustainable demand. The petition was accordingly allowed, invalidating both the notice and subsequent assessment order.
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• Assessment Orders Nullified After Tax Officer Denied Requested Personal Hearing, Violating Natural Justice Principles

  Case-Laws - HC : The HC set aside assessment orders due to violation of principles of natural justice, as the Assessing Officer failed to grant personal hearing despite the petitioner's request in their reply notice. The Court held that when an assessee opts for personal hearing in their reply, the Assessing Officer must grant it, even if "no" was marked in the form. Following precedent from Assistant Commissioner of State Tax v. Commercial Steel Limited, the Court determined that writ petitions are maintainable against assessment orders when principles of natural justice are violated. The matter was remitted back to the Assessing Officer with specific direction to verify the bank realization certificate uploaded in the GST portal.
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• 60-Day Limitation Under GST Act Section 62(2) Is Directory, Not Mandatory for Filing Returns

  Case-Laws - HC : The HC held that the 60-day limitation period under Section 62(2) of the GST Act is directory rather than mandatory. Where a registered person fails to file returns within the prescribed timeframe, resulting in best judgment assessment orders, the right to file returns cannot be denied merely because the 60-day period has elapsed. If the taxpayer demonstrates valid reasons beyond their control for the delay, such delay can be condoned upon application. The petitioner was directed to file a delay condonation application within 15 days, which the second respondent must consider on merits before permitting revised returns. The petition was accordingly disposed of.
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• Improper GST Notice Service Through Portal Only Violates Natural Justice Under Section 161 of GST Act

  Case-Laws - HC : The HC set aside orders passed under Section 161 of the Tamil Nadu/Central Goods and Service Tax Act, 2017 due to violation of natural justice principles. The Department failed to serve notices through physical means, instead making them available only in the GST Portal under "View of additional notices and orders" column, which petitioner was unaware of. The Court determined the impugned orders were passed ex parte without affording the petitioner opportunity of hearing. The matters were remanded to the first respondent for fresh consideration with direction to provide proper notice and hearing opportunity to the petitioner.
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• GST Appeal Rejection Overturned: Small Business Owner Gets Second Chance Despite Form Error and 19-Day Delay

  Case-Laws - HC : The HC quashed the order rejecting the petitioner's GST appeal due to time limitation. Despite the petitioner erroneously writing "NA" in the delay explanation section of GST APL-04 form, the Court found no lack of bona fide, noting the petitioner had made the required pre-deposit of Rs. 10,900/- when filing the appeal. Considering the petitioner's status as a small businessman, the 19-day delay, and that no advantage was gained by filing a belated appeal, the Court directed the appellate authority to allow the petitioner to file a condonation of delay application, thereby providing an opportunity for the appeal to be heard on merits.
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• GST Registrations Restored After Cancellation Orders Set Aside for Procedural Violations Under Section 29(2)

  Case-Laws - HC : The HC set aside orders cancelling GST registrations under CGST/SGST Acts 2017, finding procedural violations by the Proper Officer. The court determined that cancellation under Section 29(2) requires proper notice and meaningful opportunity for hearing per Rule 22, not mere formality. Despite petitioners' failure to respond to show cause notices, the impugned orders erroneously referenced non-existent replies, rendering the proceedings defective. While revocation applications were time-barred (exceeding 270 days under Rule 23), the court intervened due to jurisdictional errors. The registrations were restored with conditions, including extended deadlines for filing annual returns except for 2024-2025, which remains governed by Section 44 requirements.
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• Customs Order Set Aside: Authority Failed to Consider Reply to Show Cause Notices, Violating Natural Justice Principles

  Case-Laws - HC : The HC set aside the impugned Order-in-Original due to procedural irregularities that violated principles of natural justice. The order had incorrectly proceeded on the premise that the petitioner had not filed any reply to the Show Cause Notices, when in fact a response had been submitted. This factual error constituted a fundamental breach of procedural fairness, as the adjudicating authority failed to consider the petitioner's submissions before reaching its determination. The writ petition was accordingly allowed, invalidating the original order.
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Income Tax

• Asset Reconstruction Cost Qualifies as Present Obligation Under AS 29, Not Contingent Liability; Section 36(1)(iii) Interest Deduction Clarified

  Case-Laws - HC : The HC ruled in favor of the assessee regarding Asset Reconstruction Cost (ARC) provisioning, holding it qualified as a present obligation under AS 29 rather than a contingent liability. The Court determined the contractual obligation to repair and restore premises constituted an ascertainable liability that was properly provisioned for. The HC rejected the tax authorities' view that only ascertained liabilities could be provisioned. Regarding interest deduction under Section 36(1)(iii), the Court clarified that the provision's proviso merely disallows interest during the period between borrowing and when an asset is put to use for business extension. The matter was remanded to the AO to examine whether cell sites were actually put to use and whether funds came from a common pool.
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• Reassessment Notice Under Section 148 Quashed Due to Improper Sanction by PCIT After Three-Year Limitation Period

  Case-Laws - HC : The HC quashed reassessment proceedings for AY 2016-17 initiated via notice u/s 148 issued on July 29, 2022. The Court found that since the reassessment action commenced more than three years after the end of the relevant assessment year, sanction should have been accorded by the Principal Chief Commissioner rather than the Principal Commissioner of Income Tax (PCIT). This jurisdictional defect rendered the reassessment proceedings invalid, as the PCIT lacked competent authority to sanction the action after the three-year limitation period had elapsed. The Court allowed the writ petition on this procedural ground alone.
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• Refund Delays Under Vivad se Vishwas Act Require Interest Payment Despite No Express Provision

  Case-Laws - HC : The HC affirmed that despite no express provision in the Direct Tax Vivad se Vishwas Act, 2020, the Revenue is obligated to refund excess amounts within reasonable time following acceptance of declaration. In this case, the ACIT unreasonably delayed refund action from December 2021 until November 2023. The court determined it has authority to grant interest under Section 3 of the Interest Act, 1978, notwithstanding provisions in the Income Tax Act or the Vivad se Vishwas Act, when delay is solely attributable to Revenue's fault. Concurring with precedent that the State must compensate for wrongfully retaining and using funds, the HC upheld the Single Judge's decision ordering interest payment on the delayed refund amount.
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• Unexplained Investment Addition Under Section 69 Overturned Where Funds Came From Disclosed Bank Accounts and Presumptive Taxation Applied

  Case-Laws - AT : ITAT overturned an addition made under Section 69 for unexplained investment. The AO had computed an 8% shortfall of profit based on bank deposits and total turnover under Section 44AD. The Tribunal found that the assessee had properly filed returns on presumptive basis, disclosed all bank statements from three banks, and reported business receipts of 39,48,887/- as the source of investment. Since payments were made from disclosed bank accounts that were available to the AO during assessment, no addition under Section 69 was sustainable. The AO also failed to invoke Section 56(2)(vii). The assessee's appeal was allowed.
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• Capital Gains Tax Relief: Improvement Costs Allowed Despite Documentation Gaps When Payment Evidence Is Genuine

  Case-Laws - AT : In a LTCG computation case, the ITAT allowed the assessee's appeal regarding disallowance of improvement costs on a property transfer. The tribunal held that payments made to the original seller, the developer (Jayabheri Properties), and contractor (Nagabasi Reddy) should be included in cost of acquisition/improvement. The AO and DRP had rejected these claims because some payments weren't mentioned in the sale deed and the contractor's bill lacked VAT registration. The ITAT reasoned that cheque payments with confirmation from recipients established the genuineness of transactions, ruling that proper evidence had been furnished to prove these payments were legitimate property costs for LTCG calculation purposes.
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• Assessment Orders Invalidated Under Section 153A Due to Mechanical Approval Without Proper Examination of Records

  Case-Laws - AT : The ITAT allowed the assessee's appeals, invalidating assessments under section 153A due to improper prior approval under section 153D. Following precedents from Orissa HC in ACIT v. Serajuddin & Co. and Delhi HC in PCIT v. Anuj Bansal, the Tribunal determined that the approval was granted mechanically without proper examination of assessment records or search materials. The approval merely contained a perfunctory statement without demonstrating application of mind by the Additional Commissioner. As the approval was procedurally defective and granted without substantive review, the resulting assessment orders were deemed legally vitiated and invalid.
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• Reassessment Under Section 147 Quashed: Reopening Based on Change of Opinion Without New Material Invalid

  Case-Laws - AT : The ITAT quashed reassessment proceedings initiated under s.147 for five assessment years, finding the AO's reopening was based on mere change of opinion rather than new tangible material. The Tribunal noted that information regarding profits from sales made on behalf of UBL had been disclosed in Notes to Accounts during regular assessment proceedings. The reopening was primarily influenced by audit objections and the Chamundi Winery case, demonstrating the AO lacked independent judgment. On merits, the ITAT concurred with the CIT(A)'s determination that the appellant functioned solely as a contract manufacturer for UBL, entitled only to reimbursement of expenses and bottling charges, with UBL being the de facto earner of income from manufacture and sale of liquor.
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• Block Assessment Under Section 158BD Quashed Due to Defective Satisfaction Note Despite Timely Recording

  Case-Laws - AT : The ITAT allowed the assessee's appeal, setting aside the block assessment order due to improper assumption of jurisdiction under section 158BD. The Tribunal found that although the satisfaction was recorded within a reasonable timeframe after completion of the searched person's assessment (within 1 month and 10 days), the AO failed to demonstrate proper mental application in the satisfaction note. The satisfaction merely contained casual references to seized documents without revealing the requisite dispassionate thought process. Consequently, the notice issued under section 158BC read with 158BD and the subsequent assessment order were held legally unsustainable due to the jurisdictional defect in the satisfaction recorded by the AO.
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• Penalties Under Black Money Act Deleted: Technical Breach Not Sufficient for Sections 42 & 43 Penalties

  Case-Laws - AT : The ITAT deleted penalties imposed under Sections 42 and 43 of the Black Money Act. Regarding Section 43 penalty for non-disclosure of foreign investments, the Tribunal relied on SC's ruling in Hindustan Steel that penalties should not be imposed unless there was deliberate defiance, dishonesty, or conscious disregard of obligations. The Tribunal emphasized that penalty imposition requires judicious exercise of discretion considering all relevant circumstances. For Section 42 penalty for late filing, the ITAT found it was merely a technical breach as the assessee had disclosed foreign assets in the belated return, which, though treated as non-est, was considered during assessment. The Tribunal also noted that the return filed under Section 153C would substitute the regular return, making the penalty unwarranted.
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• Interest on PFC Loans Disallowed Under Section 43B While Bonus Payment and Capital Grants Write-backs Upheld

  Case-Laws - AT : The ITAT partially allowed the assessee's appeal against revision under section 263. Regarding bonus payment of Rs. 2.02 crores, the Tribunal found that the AO had properly examined this issue during assessment proceedings, and the assessee had demonstrated payment before the return filing due date in compliance with section 43B. However, concerning interest expenses on PFC loans amounting to Rs. 17.91 crores, the Tribunal upheld the PCIT's finding that the AO erred in allowing unpaid interest without proper examination, violating section 43B requirements. On the third issue of Capital Grants & Subsidies and Consumer Contribution write-backs, the Tribunal rejected the PCIT's contention of shortfall, accepting the assessee's demonstration that the correct amounts were properly accounted for.
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• The Impact of Notional Costs on PLI Calculation in Transfer Pricing and Interest Rate Benchmarking for AE Receivables

  Case-Laws - AT : The ITAT ruled against treating notional costs of services provided by the associated enterprise as part of operating expenses when calculating the assessee's PLI. The Tribunal noted that Rule 10TA (which includes share-based compensation as operating expenses) applies prospectively from April 1, 2017, and only when safe harbor rules are opted for, which was not the case here. The ITAT also applied the principle of consistency since no such adjustments were made in previous assessment years under similar circumstances. Regarding comparable selection, the matter was remanded to the TPO for fresh adjudication. For overdue receivables from AE, the Tribunal held that LIBOR+200 points should apply rather than PLR rates. The ITAT allowed interest expenses on CCDs but upheld disallowance of delayed PF contributions following the Supreme Court's Checkmate Services judgment.
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Customs

• Commissioner's Review Order Dismissed as Time-Barred Under Section 129D(3) of Customs Act for Exceeding 90-Day Limitation Period

  Case-Laws - AT : CESTAT upheld the Commissioner of Customs (Appeals)'s decision dismissing the Revenue's appeal as time-barred. The review order was passed 20 days beyond the 90-day limitation period prescribed under Section 129D(3) of the Customs Act, 1962. The Revenue failed to demonstrate that sufficient cause was shown to the Board to obtain the mandated extension of 30 days under the proviso to Section 129D(3), nor did it file any application for condonation of delay before the Commissioner (Appeals). The Tribunal ruled that non-compliance with statutory time limitations cannot be mechanically condoned without adherence to legal mandates, particularly when no justifiable reasons were presented.
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• Synthetic Casting Tapes Classified Under CTH 30059040 Following Johnson & Johnson Precedent, Not Eligible for CTH 9021

  Case-Laws - AT : CESTAT held that synthetic casting tapes are properly classifiable under CTH 30059040 rather than CTH 9021. The Tribunal relied on precedent from Johnson & Johnson case which established that Deltalite Casting Tapes fall under sub-heading 3005.10. The Tribunal determined that the goods were not devices/instruments/appliances that would warrant classification under Heading 90.21. Regarding limitation period, CESTAT upheld the invocation of extended period under Section 28(4) of Customs Act, finding that appellant could not claim ignorance of relevant precedential orders from 1999-2000 when filing Bills of Entry. The appeal was dismissed for lack of merit.
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• Customs Tribunal Upholds Confiscation of Undeclared Imports, Rejects Value Enhancement and Limits Penalties Under Section 114A

  Case-Laws - AT : CESTAT upheld confiscation of undeclared and excess imported goods while setting aside confiscation of properly declared items. The tribunal rejected Revenue's enhancement of transaction value, finding no evidence supporting contemporaneous import values or allegations of extra payments. The appellant-company was held liable for penalty under Section 114A equal to the duty on mis-declared quantity only, while penalties under Section 114AA were deemed inapplicable as documents were genuine. Penalties against the company's Director under both Sections 114A and 114AA were set aside. The matter was remanded for recalculation of duty on excess/undeclared goods and determination of appropriate redemption fine, with previous deposit of Rs.7,20,695 to be adjusted against confirmed duty.
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• Customs penalty enhancement for missing E-Waste EPR certificate reversed due to lack of show cause notice under Section 128A(3).

  Case-Laws - AT : The CESTAT set aside the Commissioner (Appeals)'s enhancement of redemption fine and penalty imposed on the appellant for failing to produce an EPR certificate when importing toner for multifunction printers under E-Waste Management Rules 2016. The Tribunal noted that while the appellant imported goods in 2017 shortly after the rules were implemented in 2016, they were likely unaware of the requirement. More significantly, the Commissioner (Appeals) violated principles of natural justice by enhancing penalties without issuing a show cause notice as mandated under the First Proviso to Section 128A(3) of the Customs Act, depriving the appellant of the opportunity to present a defense. Appeal allowed.
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DGFT

• DGFT Proposes Amendments to SCOMET Export Authorization Rules for "Stock and Sale" Under Para 10.10

  Circulars : The DGFT has issued draft amendments to Para 10.10 of the Handbook of Procedures 2023 regarding export authorization for "Stock and Sale" of SCOMET items. The revised policy expands eligibility for bulk exports to stockists abroad, now including subsidiaries, parent companies, affiliates, OEMs, and contract manufacturers. The amendments establish a two-tier approval system: initial authorization for export to stockist with in-principle approval for specified countries, followed by post-reporting requirements for transfers within approved jurisdictions. For countries not pre-approved, separate authorization is required. The policy mandates annual inventory reporting and requires transfers to final end-users within the validity period of the authorization. Stakeholders have 10 days to submit feedback on these proposed changes.
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Corporate Law

• Amalgamation of Non-Insurance Companies with Insurance Companies Doesn't Require Prior Approval Under Section 35(1) of Insurance Act

  Case-Laws - AT : The NCLAT upheld the amalgamation of non-insurance transferor companies with insurance transferee companies, ruling that prior approval under Section 35(1) of the Insurance Act was not required. The Tribunal noted that post-merger, shareholders would maintain identical ownership percentages in the insurance companies, thus not triggering Section 6A requirements. The amalgamation process strictly followed Sections 230-232 of the Companies Act, with proper notices issued to authorities inviting objections. Finding no statutory prohibition in the Insurance Act mandating prior compliance with Section 35 before amalgamation under the Companies Act, the NCLAT determined the merger orders contained no legal errors warranting appellate intervention under Section 421. Appeal dismissed.
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• Interim Injunction Upheld: Shareholders Barred from Transferring Shares During Arbitration Under Section 37(2) of A&C Act

  Case-Laws - HC : The HC upheld an interim injunction restraining appellants from alienating their shareholding in a company pending arbitration. The court emphasized its limited role in appeals under Section 37(2) of the A&C Act, particularly for discretionary interlocutory orders, following the principle of least intervention. While appellants argued the Share Purchase Agreement was a contingent contract incapable of enforcement, the court found this argument meritless as appellants themselves alleged breach by respondent to terminate the agreement. The AT's injunction was justified as respondent demonstrated readiness to perform the agreement, and the order was necessary to preserve the subject matter (shares) pending arbitration. Appeal dismissed as the AT's discretion was exercised properly.
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IBC

• Director Who Resigned After Filing Petition Cannot Maintain Appeal Under IBC; Shareholder Cannot Be Substituted

  Case-Laws - AT : The NCLAT dismissed a recall application, confirming that the Appellate Tribunal's power of recall is limited to exceptional circumstances as established in Union Bank of India case. The Tribunal held that a director who resigned after filing a petition on behalf of the corporate debtor cannot maintain the appeal, as their resignation nullified their capacity to represent the corporate debtor. Furthermore, a shareholder cannot be substituted in place of the suspended director due to their statutorily distinct status. The Tribunal emphasized that recall applications under Section 151 of CPC are not universally maintainable before Appellate Tribunals. Consequently, the recall application was deemed misconceived and dismissed, with the original order of 14.10.2024 confirmed.
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• Resolution Plan Approval Extinguishes All Claims Under IBC Section 31(1), Court Rejects Challenge to Protect Corporate Revival Process

  Case-Laws - Tri : The Tribunal dismissed the application challenging extinguishment of claims under an approved resolution plan. The Tri emphasized that IBC's primary objective is revival of the Corporate Debtor through time-bound restructuring, not liquidation. Once a resolution plan is approved by the CoC based on their commercial wisdom regarding feasibility and viability, the Adjudicating Authority cannot direct changes contingent on future arbitration proceedings. Under Section 31(1), an approved resolution plan freezes all claims and binds all stakeholders including the Corporate Debtor, creditors, governments, and guarantors. Consequently, the Applicant's prayer that their claim should not be extinguished was deemed legally untenable and rejected.
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SEBI

• Rights Issue Framework Streamlined: 23-Day Completion, 7-Day Subscription Period, and Automated Validation System Effective April 2025

  Circulars : SEBI has introduced a new framework for Rights Issues, effective April 7, 2025, requiring completion within 23 working days from board approval. The circular establishes expedited timelines for various stages of the Rights Issue process, reduces minimum subscription period to seven days, and introduces flexibility for allotment to specific investors. Stock Exchanges and Depositories must develop an automated validation system for applications within six months. The framework includes detailed timelines for pre-issue activities (Board approval to issue closure) and post-issue activities (closure to listing and trading). Consequential amendments to the Master Circular on ICDR Regulations have been made to align with this streamlined process.
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Service Tax

• Mutuality Doctrine Shields Club from Service Tax; Pure Agent Status and Threshold Exemption Also Apply

  Case-Laws - AT : CESTAT held that service tax demands against the appellant were unsustainable on multiple grounds. The doctrine of mutuality applies to club/association services, eliminating service provider-recipient relationship between an association and its members, following precedent in Ranchi Club Ltd. and Supreme Court's decision in State of West Bengal v. Calcutta Club Limited. The Business Auxiliary Services demand failed as authorities neither controverted appellant's "pure agent" claim nor specified which limb of the BAS definition applied. Regarding renting of immovable property, the taxable value (Rs.1,45,875/- for 2013-2014) fell below the threshold limit specified in Notification No.33/2012. Appeal allowed in toto.
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• Commissioner Cannot Confirm Tax Demand on New Grounds After Finding Against Original Issue in Show Cause Notice

  Case-Laws - AT : CESTAT ruled that the Commissioner erred in confirming service tax demand on grounds not specified in the show cause notice after finding against the Department on the original issue. The Tribunal held that reimbursements received by the appellant from licensees for electricity, telephone, and maintenance charges do not constitute "consideration" for renting of immovable property services and are therefore not includable in the assessable value for service tax purposes. These amounts represented pure reimbursements rather than expenditures incurred by the appellant while providing services. Consequently, the service tax demand, along with associated interest and penalties, was set aside and the appeal was allowed.
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Central Excise

• Eco Bath Towelette Classified as "Other Bath Preparation" Under 3307 3090, Not 3402 9091 as Claimed

  Case-Laws - AT : The CESTAT determined that Eco Bath Towelette should be classified under Chapter Heading 3307 3090 (Other Bath Preparations) rather than Chapter Heading 3402 9091 as claimed by the appellant. The Central Revenue Control Laboratory report conclusively established that the product failed to satisfy Chapter Note 3 of Chapter 34, making classification under Chapter 34 untenable. However, the Tribunal found that extended period of limitation under Section 11A and penalties under Section 11AC were unjustified, as the appellant had disclosed all relevant information in packaging and marketing materials, and had relied on legal opinion. The reclassification resulted from technical test results rather than willful misstatement or suppression of facts. The appeal was partially allowed, limiting the demand to the normal period of limitation.
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Case Laws:

• GST

• 2025 (3) TMI 670
  Cancellation of the registrations under Central Goods and Service Tax Act, 2017 and State Goods and Service Tax Act, 2017 - whether this Court should exercise its jurisdiction under Article 226 of the Constitution to interfere with the orders of cancellation of the registration? - HELD THAT:- The combine reading of Sections 22, 24, 25 and 122 of the Central Act is that the person who is categorized in Sections 22 and 24 is compulsorily liable to be registered in the manner stipulated in Section 25 of the Central Act. It is further seen that if a person is not registered, the Proper Officer can suo moto register him by following the mandate of Rule 16 of the Central Rules. Additionally, Section 122 imposes penalty, if a person fails to obtain registration. From a conjoint reading of Section 29 with Rule 22 and the FORMS GST REG-17, GST REG-18, GST REG-19 and GST REG-20 would show that the Proper Officer can cancel the registration under Sub-Section (2) of Section 29 only on the grounds stipulated in Sub-Clauses (a) to (e) of Section 29(2) and before doing so, an opportunity of hearing has to be given to the person. Sub-Section (3) of Section 29 further stipulates that till the date of cancellation of the registration, the person in whose favour the registration was, has to pay tax and other dues under the Act or to discharge any obligations under the Act or the Rules made thereunder. It would also transpire from a reading of Rule 22 of the Central Rules that not only show cause notice is required to be issued in the format as stipulated in FORM GST REG-17 but also a date of hearing is required to be fixed. Therefore, it would be seen that the opportunity which is to be granted has to be an opportunity in real sense and not a mere formality. Section 30 provides an avenue to the person whose registration has been cancelled to seek revocation of the cancellation of registration in the prescribed manner within 30 days from the date of service of the cancellation order. This was the position prior to 01.10.2023 but subsequently with effect from 01.10.2023, the person whose registration is cancelled may apply to such officer for revocation of the cancellation of registration in such manner, within such time and subject to such conditions and restrictions as may be prescribed. In the instant batch of writ petitions, there was no application filed for revocation in view of the mandate of Rule 23 as it stood post 01.10.2023 whereby it has been mandated that the period within which such an application can be filed cannot be filed beyond 270 days. Under such circumstances, the avenue of revocation of the cancellation of the registration certificate was not available to the petitioners in the batch of writ petitions as no steps were taken within the period of 270 days. This Court has also perused the orders of cancellation impugned in the present proceedings. It is also relevant to take note of that admittedly the petitioners have not submitted any reply but most surprisingly the Proper Officer referred in the impugned orders of cancellation of the registration about replies being filed - It is trite principle of law that when a jurisdiction is conferred upon the Authority with a specific mandate how the jurisdiction is to be exercised and if the authority fails to exercise his jurisdiction as per the stipulated mandate, it is to be deemed that the said Authority had not exercised the jurisdiction at all. This Court had in the previous segments of the instant judgment referred to the third proviso to Rule 23 (1) of the Central Rules which categorically stipulates that upon revocation of the cancellation of registration, the assessee is required to file his returns within 30 days for the period from the date of cancellation to the date of revocation of the cancellation. In view of this Court opinioning that the orders of cancellation of registration are required to be interfered with, the petitioners herein would now be required to file their annual returns for the various financial years till date - it is the opinion of this Court that in order to balance the equities, it is required that the date of furnishing the annual return be appropriately extended. In that view of the matter, this Court declares that in respect to the Petitioners in the present batch of writ petitions, the period for submission of the annual returns would be the date of the instant judgment except for the period 2024-2025 which would be in terms with Section 44 of the Central Act/State Act. Conclusion - It is trite that if the said show cause notice is vague, the very initiation of the proceedings on the basis of the said show cause notice would become redundant.The order of cancellation of registration is set aside, subject to fulfilment of conditions imposed. Petition disposed off.

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• 2025 (3) TMI 669
  Challenge to notice issued on account of difference in GST turnover and PAN turnover - HELD THAT:- The respondents based on the material produced by the petitioner, indicating the return filed in relation to Jindal Marketing Company wherein the return etc. have been shown identical to the difference which was alleged in relation to the petitioner firm, i.e. Jindal Communication, is not in a position to dispute the plea raised by the petitioner regarding issuance of show cause notice and passing of the final order on account of the fact that both the firms were registered under the GST through the same PAN number. In view of the above fact situation, the issuance of show cause notice and raising of the demand against the petitioner firm cannot be sustained. Petition allowed.

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• 2025 (3) TMI 668
  Validity of Order-in-Original, given the procedural irregularities - failure to consider the reply filed by the petitioner in response to the SCNs -principles of natural justice complied with or not - HELD THAT:- In view of the recitals and which concededly proceed on the incorrect premise of the writ petitioner having filed no reply, the order cannot be sustained which is impugned here. The present writ petition is allowed.

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• 2025 (3) TMI 667
  Challenge to order issued under Section 73 (9) of the Central Goods and Services Tax Act/Kerala Goods and Services Tax Act, 2017 - availment of excess input tax availed by the petitioner - opportunity of hearing was granted or not - violation of principles of natural justice - HELD THAT:- On a perusal of the impugned order Exhibit-P7, it is evident that petitioner was given opportunities to respond in the form of a show cause notice followed by three reminders. Petitioner is a business establishment carrying on regular business activities. The show cause notice issued in 2024, even if it be only in the portal, is a mode of notice prescribed the statute. As a private limited company, petitioner cannot feign ignorance of such a notice or the reminder notices which were issued over a period of three months. In such circumstances, it cannot be stated that the petitioner was not granted an opportunity of hearing. Conclusion - Failure to avail the opportunity granted is different from failure to grant an opportunity of hearing. In the instant case, petitioner cannot agitate that he was not granted an opportunity of hearing. If the opportunity was not availed by the petitioner, it is due to its own default. The blame cannot be put upon the respondents. Therefore, this Court is of the view that this is not a fit case to invoke the remedy under Article 226 of the Constitution of India. This petition is dismissed.

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• 2025 (3) TMI 666
  Seeking to quash the assessment orders and consequently, to direct the respondent to reopen the proceedings by granting opportunity to the petitioner to produce all the documents - Assessing Officer has failed to grant an opportunity of personal hearing - principles of natural justice - HELD THAT:- This Court is of the considered opinion when the assessee has opted for personal hearing, while submitting the reply, even though the assessee has ticked no in the Form, then the Assessing Officer ought to grant personal hearing by relying on the reply notice. Whenever two opinions are possible, the opinion which is advantageous to the assessee should be taken. The Learned Single Judge has relied on the above cited judgment rendered in the case of Assistant Commissioner of State Tax and others Vs. Commercial Steel Limited 2021 (9) TMI 480 - SUPREME COURT] , wherein it has been stated that the writ petitions are maintainable under Article 226 of the Constitution of India against the assessment orders, if there is breach of fundamental rights or violation of principles of natural justice or excess jurisdiction or there is challenge to the vires of the statute or delegated legislation. This Court has held there is violation of principles of natural justice and therefore, the said judgment is squarely applicable to the present case. The assessment orders passed by the respondent are set aside and the matter is remitted back to the Assessing Officer. The Assessing Officer is specifically directed to verify the bank realization certificate that has been uploaded in the GST portal - Appeal allowed.

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• 2025 (3) TMI 665
  Seeking to quash the impugned proceedings of the second respondent - failure to file the monthly returns in GSTR - 3B for the months of February 2023 and April 2023 within the due date - HELD THAT:- In the present cases, the returns were not filed by the petitioner for the months of February 2023 and April 2023 within the prescribed time limit. Hence, the impugned orders dated 19.04.2023 and 28.06.2023 have been passed by the second respondent under Section 62(1) of the GST Act. Thereafter, the returns were filed by the petitioner for the month of February 2023 on 04.01.2024 and for the month of April 2023 on 09.01.2024. A reading of the provision of Section 62 of the GST Act, would make it clear that if any registered person fails to furnish the returns under Section 39 of the Act, a proper officer may proceed to assess the tax liability of the said person to the best of his judgment taking into account all the relevant materials, which are available or which he has gathered and pass an assessment order, within a period of 5 years from the date specified under Section 44 of the Act for furnishing of the annual return for the financial year, in which the tax was not paid. In the present cases, since the petitioner had not filed the returns for the months of February 2023 and April 2023 within the prescribed time limit, the assessment orders have been passed by the second respondent under Section 62(1) of the GST Act on 19.04.2023 and 28.06.2023 - In terms of the provisions of Section 62(2) of the GST Act, if a registered person furnishes the valid returns within a period of 60 days of the service of assessment order under sub-section (1) of Section 62 of the GST Act, the said assessment order would be deemed to have been withdrawn. However, the liability for payment of interest of sub-section (1) of Section 50 of the GST Act or for payment of late fee under Section 47 of the GST Act shall continue. What will be the situation, if the petitioner failed to furnish the returns within a period of 60 days as prescribed under Section 62(2) of the GST Act? - HELD THAT:- The second respondent can make the best judgment assessment order within a period of 5 years from the end of financial year, for which the registered person is liable to file the annual returns. In the present cases, the relevant financial year is pertaining to 31.03.2023, in which case, the petitioner is liable to file the annual returns on or before 31.12.2023. Therefore, the said period of 5 years to make the best judgment assessment order for the second respondent will start on 01.01.2024 and ends on 31.12.2029. In such case, if the best judgement assessment order is passed by the second respondent on 31.12.2029, which is permissible under Section 74 of the GST Act, the petitioner can file his returns within a period of 60 days therefrom i.e ., on or before 30.01.2030. Hence, the time limit is available up to 30.01.2030 for the petitioner to file her returns - If the best judgment assessment order has not been passed on the earlier date, the petitioner can file her returns even without paying any interest or penalty. The limitation of 60 days period prescribed under Section 62(2) of the Act appears to be directory in nature and if the assessee was not able to file the returns for the reasons, which are beyond his/her control, certainly the said delay can be condoned and thereafter, the assessee can be permitted to file the returns after payment of interest, penalty and other charges as applicable. At any cost, the right to file the returns cannot be taken away stating that the petitioner has not filed any returns within a period of 60 days from the date of best judgment assessment order. Thus, if any application is filed before the authority concerned with sufficient reasons for non-filing of returns within the prescribed time limit as per section 62(2) of the Act, the same shall be considered on merits. The petitioner is directed to file an application for condoning the delay in filing the returns within a period of 15 days from the date of receipt of copy of this order - Upon filing of the application for condonation of delay, the second respondent is directed to consider the said application and pass orders by taking into consideration of the reasons provided by the petitioner for non-filing of returns within a period of 60 days from the service of best judgment assessment order and thereafter, permit the petitioner to file the revised returns. Conclusion - The limitation of 60 days period prescribed under Section 62(2) of the Act appears to be directory in nature and if the assessee was not able to file the returns for the reasons, which are beyond his/her control, certainly the said delay can be condoned. Petition disposed off.

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• 2025 (3) TMI 664
  Challenge to order passed first respondent under Section 161 of the Tamil Nadu Goods and Service Tax Act, 2017 /Central Goods and Service Tax Act, 2017 - Service of notice - principles of natural justice - HELD THAT:- On perusal of records, it is crystal clear that the impugned orders came to be passed against the petitioner, behind their back, as the respondent-Department has not taken any steps to serve any notices/communications, which culminated in the impugned orders directly through physical mode of service and made it available only in the GST Portal under the View of additional notices and orders column, which, the petitioner was not aware and ultimately, the impugned orders came to be passed against the petitioner without even affording any opportunity of hearing to the petitioner, which is in total violation of principles of natural justice. Therefore, this Court is of the view that the impugned orders are nothing but an ex parte orders and the same have to be set aside. The orders are set aside - the matters are remanded back to the first respondent for fresh consideration. Petition allowed.

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• 2025 (3) TMI 663
  Rejection of appeal on the ground of time limitation - petitioner while filling up the form under GST APL-04 instead of explaining the period of delay and the reason of delay wrote NA in the portal by mistake - HELD THAT:- Admittedly, in this case the petitioner had filed an appeal challenging the order passed under Section 73(9) of the said Act. Simultaneously, with the filing of the appeal, the petitioner had also made a pre-deposit of Rs. 10,900/- as is required for maintaining the appeal. As such there is no lack of bona fide on the part of the petitioner in preferring the appeal. There appears to be a delay of 19 days in filing the appeal. Taking into consideration that the petitioner is a small businessman and there is no lack of bona fide on the part of the petitioner and one does not stand to gain by filing a belated appeal, this Court quash the order dated 15th July, 2024, the appellate authority shall allow the petitioner to file an application of condonation of delay. Petition disposed off.

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• 2025 (3) TMI 662
  Maintainability of petition - availability of alternative remedy - Seeking to quash the impugned orders passed by the respondent - seeking further direction to re-do the assessment afresh after providing an opportunity of personal hearing to the petitioner as per the provisions of the GST Act, 2017 - HELD THAT:- The petitioner is directed to first exhaust the statutory remedy available under law before approaching this Court. The petitioner shall prefer an appeal within one month from the date of receipt of a copy of this order. Upon filing of the appeal, the Appellate Deputy Commissioner (GST), Madurai, shall dispose of the same on merits and in accordance with law, within a period of two months thereafter. Petition disposed off.

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• 2025 (3) TMI 661
  Cancellation of the petitioner s GSTIN registration - whether the petitioner is entitled to have their registration reinstated? - HELD THAT:- Reliance placed in the decision in Tvl. Suguna Cutpiece Center Vs. Appellate Deputy Commissioner (ST) (GST) and others [ 2022 (2) TMI 933 - MADRAS HIGH COURT] , wherein, under identical circumstances, this Court has directed the revocation of registration subject to conditions. Thus, the benefit extended by this Court vide its earlier order in Suguna Cutpiece Centre s case, may be extended to the petitioner. Petition disposed off.

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• 2025 (3) TMI 660
  Cancellation of petitioner s registration on the ground of non-filing of return - HELD THAT:- This writ petition is disposed of by setting aside the impugned orders of both the concerned authorities and by directing the respondent CGST/WBGST authority to restore the petitioner s registration and open the portal for a period of 45 days from date of communication of this order by the counsel of the respondent authority to enable the petitioner to make the payment of revenue due as well as any other due including penalty to be indicated by the respondent authority concerned within a period of 15 working days. Petition disposed off.

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• Income Tax

• 2025 (3) TMI 659
  Disallowance of depreciation claimed on account of Asset Reconstruction Cost [ ARC ] being an ascertained liability - provision itself was made in light of Accounting Standard 29 [AS 29] on the basis of the same constituting a present obligation and which could be reasonably estimated - AO proceeded to disallow the said provision holding that it was not in the nature of an ascertained liability distinction between the words extension and expansion as well as how the phrase extension of business itself should be understood HELD THAT:- We are of the firm view that the usage of the phrase if any damage is caused in the lease agreement cannot be construed as detracting from the right of the assessee to provision for a liability which flowed from an existing obligation and the occurrence of which was not liable to be viewed as an improbability. In our opinion, the phrase if any damage is caused as it occurs in the agreement would only be germane to the issue of actual computation of the expenditure that would be incurred in the course of restoration. The obligation to repair and restore forms the core of the contractual obligation which stood placed upon the assessee. It was therefore entitled to provision for such an expense provided it was considered probable and could be quantified on the basis of a reasonable estimation. The usage of the phrase if any damage is caused did not transform that obligation into a contingent liability. We thus find ourselves unable to countenance the view expressed by the AO and the Tribunal in this respect. The usage of the expression probable is equated to more likely than not . Thus, it is the reasonable likelihood of the outflow as opposed to a remote or uncertain possibility which is deemed to be germane and relevant. It thus has to be viewed as distinct from unforeseen liabilities and obligations. As we view the contract term, we have no hesitation in recognising the same as being the manifestation of a positive commitment to repair and restore. The duty to repair and restore stands attached to the removal of equipment as well as the liability to restore the premises to its original condition. The contract thus constitutes the past event and which in turn creates an obligation in praesenti pertaining to a liability which is probable and ascertainable. Thus, the only facets which are left to conjecture are the exact timing and the amount of outflow that may occur. We are thus of the considered opinion that the provisioning for ARC qualified the prescriptions of AS 29 and the assessee was thus justified in accounting for the same. The ARC obligation clearly met the test of a positive obligation flowing from a past event, being a conceivable probability as well as being measurable. In any event, both the AO as well as the Tribunal appear to have proceeded on the basis that only an ascertained liability could have been provisioned for. That view is not only erroneous but also unsustainable in law. Tribunal in any case failed to notice or engage with the contention of the assessee in the alternative and which was based on Section 37 of the Act. By placing its case within the ambit of Section 37, the assessee stood relieved of getting into the quagmire of actual cost and other related issues. All that it was left to establish was that the expenditure had been laid out. As the Madras High Court correctly explains in Vedanta [ 2020 (2) TMI 890 - MADRAS HIGH COURT] , the usage of the expression laid out and expended in Section 37 are indicative of that section not being confined to immediate expenditure but also factoring for situations where an amount may be set apart for a determined or specified objective. The appellant was thus clearly entitled to succeed on this point. Addition u/s 36 (1) (iii) - whether the interest burden borne by the assessee in respect of the capital borrowed was liable to be permitted as a deduction in computing its income? - On a reading of the principal part of Section 36 (1) (iii), it becomes evident that such a deduction could be validly claimed as long as capital has been borrowed and interest burden has been shouldered coupled with the capital itself having been obtained for the purposes of business. The distinction which was sought to be canvassed for our consideration and the arguments based thereon would clearly distract us from discerning the true intent and purpose underlying the insertion of the Proviso to Section 36 (1) (iii). We express our hesitation in founding our judgment on the perceived distinction between the words extension and expansion especially since etymologically both appear to have been employed interchangeably and on many occasions, deemed to be synonyms of each other. Authoritative work explains that the word extend is clearly flexible, lending itself to a variety of meanings dependent upon the context in which it may be used. While so explaining the meaning of the word extend , it also significantly states that it would also imply increase, amplify as well as any action which would be in tune with its well-known synonyms such as expand including the extension of business . Thus, it leads to the inevitable conclusion of both expand and extend , essentially seeking to convey enlargement or expanding over and above what may have originally existed. We also contemplate both words envisaging the spread of or addition to what may exist, both in its vertical as well as horizontal forms. It is this synonymous and similar meaning ascribed to the words extend and expand which weighs upon us and convinces us to desist from toeing this line of reasoning. We are thus of the considered opinion that the question which stands posited would have to answered on an independent evaluation of the scheme of Section 36 (1) (iii) read along with the Proviso and the legislative intendment underlying the insertion of that amendment in the Act. We are thus of the firm view that it would be imprudent and unwise to base our answer solely on the purported difference which Mr. Jolly sought to advocate based on the usage of word extension in Section 36 (1) (iii) as contrasted with expansion as appearing in other parts of the statute. In order to underline the core and essence of that provision, suffice it to note that Section 36 (1) (iii) enables an assessee to claim a deduction on interest paid in respect of capital borrowed for purposes of business. Judicial precedents have consistently held that the said provision is clearly not concerned with whether the intendment of borrowing is for the creation of a capital or a revenue asset. The Proviso, however, seeks to carve out an exception in respect of the acquisition of an asset which may be utilized for or in the course of extension of an existing business and thus disables the assessee from deducting interest paid on that borrowing during the period when the capital was first borrowed and till such time as the asset is put to use. Thus, the interest borne on borrowed capital during this period alone is sought to be removed from the ambit of Section 36 (1) (iii). We thus recognize the principal purpose of the Proviso as being merely to exclude a claim of interest paid on borrowed capital as a deduction and borne during the period identified above. The submissions, therefore, based on a conceived difference between extension or expansion of an existing business are of little relevance or import. Tribunal, unfortunately has confounded the issue by thereafter alluding to the recitals appearing in the Directors Report relating to the enhancement of the appellant s network on account of the addition of 5096 cell sites during the year in question. The findings of the Tribunal rendered in this regard are not only contradictory but also clearly convoluted. This since the cell sites could have either been works in progress or completely constructed. While at one place it holds that they had not been put to use, it does a complete turnaround by resting its decision on the Directors Report and which clearly refers to completed and operationalised cell sites. These observations are thus clearly incompatible. Therefore and in our considered opinion, the scope of the remand would necessarily entail the AO not only examining the aspects pertaining to a common pool of funds as framed by the Tribunal but also whether the cell sites had been actually brought into use. The exercise which the AO would thus be obliged to undertake would have to cover the twin issues that we have identified above bearing in mind the construction that we have placed on Section 36 (1) (iii) of the Act. We would thus answer Question A in the affirmative and in favour of the assessee. Insofar as Question B is concerned, we direct the AO to re-examine the issues emanating from Section 36 (1) (iii) bearing in mind the enunciation of the scope of that provision as explained by us in terms of this judgment. We also expand the scope of the remand in light of the observations which appear hereinabove and to thus include the twin issues of a common pool of funds as well as cell sites having been put to use. Question C concededly stands concluded by the decision of the Supreme Court in Bharti Cellular [ 2024 (3) TMI 41 - SUPREME COURT ] and thus needs no further elaboration.

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• 2025 (3) TMI 658
  Reassessment proceedings - validity of the sanction which was accorded to the reassessment action by the Principal Commissioner of Income Tax [PCIT] - HELD THAT:- Undisputedly, we are in this writ petition concerned with Assessment Year [AY] 2016-17 and in respect of which the notice u/s 148 of the Act ultimately came to be issued on 29 July 2022. It is thus apparent that the action had come to be initiated after the expiry of three years from the end of the relevant AY. It is in the aforesaid context that the petitioner contends that the sanction accorded by the PCIT would not sustain. In cases where reassessment is sought to be commenced after the lapse of three years from the end of the relevant AY, undisputedly, it would be the Principal Chief Commissioner who would be liable to be recognised as being the competent authority. Viewed in that light, it is apparent that the reassessment action would not sustain. We are unable to sustain the reassessment action on this short score alone.Accordingly, the writ petition is allowed.

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• 2025 (3) TMI 657
  Entitlement to interest on the refund amount under the Direct Tax Vivad se Vishwas Act, 2020 - HELD THAT:- Appellants were clearly under fault in not releasing the amount in due time. The declaration was accepted by Ext.P3 on 24.11.2021. Going by Section 5, if any amount was liable to be paid by the assessee, the assessee was bound to pay the same within fifteen days. We are inclined to think that, since an obligation is created on the assessee to pay the amount within fifteen days, though not expressly provided, the Department is also equally bound under law to refund the excess amount within a reasonable time. In the present case, the fifteen-day period calculated from Ext.P3 order expired on 8.12.2021. ACIT, Central Circle-I, Kozhikkode, unreasonably sat over the matter after Ext.P3 order and took consequential action only on 29.11.2023. The power of the court to grant interest is always available under the provisions of Section 3 of the Interest Act, 1978. Notwithstanding the provisions of the Income Tax Act, 1961 and also the Direct Tax Vivad se Vishwas Act, 2020, the Court can always grant reasonable interest if it is satisfied that the delay occurred is solely due to the fault of the Revenue. We are fortified in our views in the light of the provisions contained under Section 4 of the Interest Act, 1978. As decided in UPS Freight Services India Pvt. Ltd. [ 2023 (9) TMI 34 - BOMBAY HIGH COURT] held that interest is leviable since the State having received the money without right and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. We are in respectful agreement with the view expressed by the Division Bench of the Bombay High Court and therefore, cannot find fault with the findings of the learned Single Judge in the impugned judgment. Hence, we see no reason to interfere with the findings rendered by the learned Single Judge.

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• 2025 (3) TMI 656
  Stay of demand - petitioner argued that they had already deposited 15% of the disputed tax thus condition imposed by the first respondent requiring the petitioner to pay 20% of the disputed tax may be reduced to 15% - HELD THAT:- There is no dispute on the aspect that challenging the assessment order passed by the first respondent dated 30.09.2021, the petitioner has filed an Appeal before the respondent/CIT(Appeals) and the petitioner also filed a Petition for stay. However, in the interregnum, since the petitioner has been insisted to pay 20% of the disputed tax, failing which, the petitioner would be faced with recovery proceedings, the petitioner requested the first respondent to adjust the payment of 20% from and out of the refund payable to the petitioner, however, the first respondent without considering such request, rejected the Petition for Stay. However, considering the fact that the petitioner has already deposited 15% of the disputed tax and finds the conditional order requiring them to pay 20% as onerous, this Court is inclined to modify the condition imposed on the petitioner from 20% into 15%. Accordingly, the impugned order passed by the first respondent directing the petitioner to pay 20% of the disputed tax stands modified to 15%, which the petitioner has already deposited.

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• 2025 (3) TMI 655
  Rejection of application filed u/s. 12A(1)(ac)(iv) in form 10AB - assessee had not chosen the correct provision and therefore he has rejected the application filed in form 10AB - SCN informing the assessee trust that they have obtained provisional registration u/s. 12A(1)(ac)(vi) in form 10AC on 28/02/2023 whereas the present application for registration was filed u/s.12A(1)(ac)(iv) of the Act instead of filing the application under the correct provision 12A(1)(ac)(iii) HELD THAT:- The only mistake committed by the assessee is that instead of mentioning the provision 12A(1)(ac)(iii), the assessee had mentioned the provision as 12A(1)(ac)(iv) and the assessee also explained the reason for committing such mistake while filing the application through online. CIT(E) had not offered any personal hearing to the assessee before rejecting the application in form 10AB of the Act. We are satisfied that the earlier orders relied on by the assessee equally applies to the facts and circumstances of the case on hand. We are therefore following the orders of [ 2024 (6) TMI 1050 - ITAT KOLKATA] and [ 2024 (6) TMI 527 - ITAT SURAT] and set aside the order of the Ld.CIT(E) with a direction to the Ld.CIT(E) to consider the application filed by the assessee in the correct provision or allow the assessee to amend the said form 10AB filed on 14/11/2023 and decide the same on merits and also in accordance with the principles laid down in the above said orders of the Kolkata and Surat Tribunals. The Ld.CIT(E) may also grant a personal hearing to the assessee before passing the order. Appeal filed by the assessee is allowed for statistical purposes.

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• 2025 (3) TMI 654
  Addition u/s 69 - unexplained investment - addition on account of shortfall of profit as said short fall was computed by the AO by applying 8% on total turnover on presumptive basis u/s 44AD of the Act based on the deposits in the assessee bank account HELD THAT:- Assessee filed all the details comprising the bank statements of all these three banks with the ld. AO which has been dealt with by the ld. AO. The gross turnover of the assessee was shown at 39,48,887/- and the source of investment was out of receipts from business which were duly reported by the assessee in the ITR. During the year, the assessee has returned the income on presumptive basis at 8% on the total turnover u/s 44AD of the Act. Therefore, in our opinion, the addition made by the ld. AO u/s 69 of the Act is wrong and cannot be sustained as this is not unexplained investment u/s 69 of the Act. As undisputed that the payments were made from the bank accounts of the assessee which were before the ld. AO and even the ld. AO has extracted the details of the bank accounts at page no.5 and 6 of the assessment order. Therefore, no addition can be made u/s 69 of the Act. Pertinent to state that the ld. AO has not invoked the provisions of Section 56(2)(vii) - CIT (A) simply upheld the order on the ground that the assessee has failed to substantiate the sources of investment with supporting documents, however, we find that all these documents including bank statements of three banks were before the ld. Assessing Officer. Appeal of the assessee is allowed.

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• 2025 (3) TMI 653
  Validity of Assessment Order u/s 147 without the issue of Notice u/s 143(2) - HELD THAT:- The issuance of notice u/s 143(2) of the Act was mandatory for the AO to assume jurisdiction under the Act and framed the assessment accordingly. It was also pertinent to state that the DR admitted during the course of hearing that no notice u/s 143(2) of the Act was issued by the AO. We are inclined to quash the order of the ld. Assessing Officer as without jurisdiction. The case of the assessee is squarely covered by the decision Oberoi Hotels (Pvt) Ltd. [ 2018 (6) TMI 1472 - CALCUTTA HIGH COURT] wherein it has been held that assessment framed without issuing notice u/s 143(2) was legally unstainable and same could not be justified by invoking the provisions of section 292BB of the Act. The appeal of the assessee is accordingly allowed on legal issue.

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• 2025 (3) TMI 652
  LTCG computation - Disallowance of cost of improvement while computing the long term capital gains from transfer of property - AO and the DRP disbelieved the claim of the assessee only on the ground that the bills submitted by the contractor is on a plain paper and does not contain sales tax and VAT registration - HELD THAT:-Merely for the reason that the said sum was not referred to in the sale deed, it cannot be said that the amount paid by the assessee is not for the purpose of purchase of the property. Similarly, the assessee has paid a sum to Jayabheri Properties who is the original developer of the property. Although, the assessee has purchased the property from Smt. Atluri Laxmi Surya Kumari, but, the property was under the maintenance from the developer Jayabheri Properties and while transferring the property to the assessee, whatever dues payable to Jayabheri Properties has been cleared by the assessee by paying a sum of Rs. 13,36,199/- by cheque and the same has been adjusted against the consideration payable to the seller. This fact has been confirmed by Jayabheri Properties. Therefore, we are of the considered view that, once relevant evidences has been filed to prove payment for infra expenses related to the impugned property to the developer, in our considered view, merely for the reason of not referring the said payment in the sale deed dated 19.02.2010, it cannot be said that the payment is not for the purpose of purchase of the property. Likewise, the assessee claimed that she has paid a sum to Nagabasi Reddy brothers for carrying-out further interior works to the flat after she purchased from Smt. Atluri Laxmi Surya Kumari. To support her contention, the assessee has furnished a bill from the contractor. The Assessing Officer and the DRP disbelieved the claim of the assessee only on the ground that the bills submitted by the contractor is on a plain paper and does not contain sales tax and VAT registration. Thus, when the payment is made by cheque and the person who carried-out the work has confirmed the payment for the purpose of interior works, merely for the reason of no VAT registration for the vendor, the genuineness of payment cannot be doubted. Since the assessee has furnished relevant evidences to prove payment to Nagabasi Reddy brothers for carrying-out interior works, in our considered view, the said payment partakes the nature of cost of improvement to the building and the same needs to be allowed as cost of acquisition and improvement while computing long term capital gains from the sale of property. AO and the DRP erred in not allowing the claim of additional payments made to Smt. Atluri Laxmi Surya Kumari, Jayabheri Properties and to Nagabasi Reddy brothers. Thus, we direct the Assessing Officer to delete the additions made towards disallowance of cost of improvement while computing the long term capital gains from transfer of property. Appeal of the Assessee is allowed.

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• 2025 (3) TMI 651
  Reopening of assessment - validity of notice issued u/sec.148 Mandation to get approval must be obtained from the Principal Chief Commissioner or Principal Director General. HELD THAT:- Respectfully following the decision of Union of India vs. Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB)] and also the decisions of Manish Financial [ 2024 (12) TMI 1539 - ITAT MUMBAI] and Manish Jagdish Joshi 2024 (9) TMI 347 - ITAT MUMBAI] , we are of the considered view that the notice issued by the Assessing Officer u/sec.148 of the Act dated 30.07.2022 by obtaining prior approval from the Principal Commissioner of Income Tax-1, Hyderabad dated 27.07.2022 and consequential final assessment order dated 02.03.2024 passed by the Assessing Officer u/sec.147 r.w.s.144C(13) of the Act is illegal, void ab initio and thus, we quash the final assessment order dated 27.07.2022 passed by the Assessing Officer. Appeal of the Assessee is allowed.

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• 2025 (3) TMI 650
  Assessment u/s 153A - No proper Prior approval u/s 153D as granted mechanically - HELD THAT:- Hon ble Orissa High Court in its judgment in the case of ACIT vs. Serajuddin Co. [ 2023 (3) TMI 785 - ORISSA HIGH COURT ] considered a similar question of Approval , wherein the draft assessment orders were placed by the AO before the ld. Addl.CIT on 27/29.12.2010 for seven assessment years. The approval was granted by the Addl. Commissioner for seven assessment years u/s 153D on 30.12.2010 by merely saying that the draft orders submitted by the officer in the above case for the seven assessment years are hereby approved. The Hon ble Orissa High Court took note of this fact and quashed the search assessment and decided the issue in favour of the assessee. As in case of PCIT vs. Anuj Bansal [ 2023 (7) TMI 1214 - DELHI HIGH COURT ] affirmed the decision of held that the approval was granted without examining the assessment record or the search material and thus, was held as invalid and bad-in-law. Thus, the impugned approval given u/s 153D has been granted in a mechanical manner and without application of mind and thus it is invalid and bad in law and consequently vitiated the assessment order for want of valid approval u/s 153D of the Act. Appeals of the assessee are allowed.

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• 2025 (3) TMI 649
  Addition u/s 40A(3) - deduction claimed in respect of expenditure on fuel and remuneration to the Directors payment of which is no made by cross cheques or bank drafts - HELD THAT:- We perused the provisions of section 40A(3) of the Act. In our considered opinion the provisions of section 40A(3) are not absolute, as evident from rule 6DD of Income Tax Rules. These provisions of section 40A(3) cannot be read in isolation. This section must be read along with rule 6DD enumerating the exception circumstances under which the provisions of section 40A(3) has no application, which included, inter alia, payments made to the agencies for procuring material could not be disallowed. The press note dated 02.05.1969 issued by the Ministry of Finance clarified that the provisions of section 40A(3) has no application in respect of payments made to agents who solely acting as commission agent. The dealers of petroleum products only acts only as commission agents of petroleum companies. Case of Sri Laxmi Satyanarayana Oil Mill [ 2014 (8) TMI 486 - ANDHRA PRADESH HIGH COURT] and Smt. Harshila Chordia [ 2006 (11) TMI 117 - RAJASTHAN HIGH COURT] and Suresh Kumar Agarwal [ 2001 (1) TMI 51 - ALLAHABAD HIGH COURT] are clearly applicable where in took the view that when the genuineness of the expenditure is not in question, provisions of section 40A(3) has no application. Similarly with regard to the Directors remuneration, Directors have offered the remuneration in their respective hands and it is tax neutral transaction and the payees are identified and genuineness of the expenditure is also not in doubt. Therefore, the reasoning adopted by the us in respect of expenditure incurred on fuel, equally hold, good in respect of Directors remuneration. Thus having due regard to the circumstances under which the cash payments exceeding Rs. 20,000/- were made, the claim for allowance on expenditure is not hit by section 40A(3) of the Act. Accordingly the AO is directed to allow the deduction. Appeal filed by the assessee stands allowed.

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• 2025 (3) TMI 648
  Reopening of assessment u/s 147 - reason to believe - basis of audit objection - HELD THAT:- It is worthwhile to point out that reopening was initiated with respect to alleged profit generated on account of sales made on behalf of UBL. Disclosure to this effect had categorically been made by the assessee in its Notes to Accounts attached with the Balance Sheet which were duly before the AO during the course of regular assessment proceedings. Thus, apart from the audit objections and in the case of M/s Chamundi Winery Distillery[ 2018 (10) TMI 65 - KARNATAKA HIGH COURT] AO had no new tangible material which could justify the reopening. However, as stated by us also in the preceding paragraphs, the AO had specifically refused to accept the audit objections and even the judgment of M/s Chamundi Winery Distillery [supra] was accepted by the AO as having a bearing on the sales and income of the assessee only after being pointed out by the Office of the PCIT, Bareilly, which again would demonstrate that the opinion of the AO was not an independent opinion, but was borrowed and that it was a change of opinion. Therefore, in view of the settled judicial precedents and specially the factual matrix in this case, we have no hesitation in holding that the reopening in all the five years was based on mere change of opinion by the AO and, therefore, such reopening is invalid in the eyes of law and, therefore, we quash the reassessment proceedings in all the five years under appeal. Accrual of income - income from the manufacture and sale of beer under the agreement between the assessee and United Breweries Limited (UBL) - nature of Agreement was empirical to that of a job work and that the right, title and interest over receipts/expenses attributable to such Agreement/ arrangement was exclusively belonging to UBL - HELD THAT:- In the present case, undisputedly, the assessee has only acted as a manufacturing agent for other party, i.e., UBL and as per terms of the Agreement and various documents, which are on record, nothing more than being a contract manufacturer can be attributed to the assessee. Here, in the present case, the assessee has been obligated by virtue of Agreement to divert the income/revenue at source and is entitled only towards reimbursement of expenses and bottling charges and nothing less nothing more. Therefore, on the facts of the case and the documents produced before us, we have no hesitation in concurring with the order of the CIT(A) insofar as holding of assessee as a contract manufacturer is concerned. The Ld. First Appellate Authority has rightly deleted the impugned additions on merits by holding that UBL was the de facto earner of income arising from manufacture and sale of its brands of liquor manufactured and bottled at the facility of the assessee. Decided against revenue.

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• 2025 (3) TMI 647
  Addition u/s 68 r.w.s.115BBE - unexplained cash deposits in the bank account of the appellant company during the period of demonetization - HELD THAT:- The books of accounts of the assessee are subject to audit and from the perusal of the financial statement, we find that neither the auditor has pointed out any deficiency in the maintenance of the books of accounts nor the Assessing Officer has pointed out any defects in the same who has accepted the books of accounts and had not disturbed the trading results declared by the assessee. It is also seen that the assessee is having substantially amount of cash sales throughout the year under appeal as well in preceding year also. It is also seen that the assessee has filed regular returns under the VAT Act where the sales declared by the assessee were accepted. Once the AO has accepted the books and not raised any doubts on the day to day stock register maintained and sales made thereon, it is not correct to say that the cash deposited out of such cash sales which duly reflected in the books of accounts is unexplained. The Assessing Officer failed to find any error in the details and evidences filed by the assessee. The realization of cash sales is duly recorded in the cash book maintained on day to day basis which is evident from the perusal of the cash book submitted during the course of assessment proceedings. AO has tried to support his finding merely on the basis of incorrect comparison of daily cash sales and cash deposits in the bank accounts in the year before us as well as in preceding year and such observations have already been answered by the assessee and not controverted by Revenue Thus we are of the considered view that when the AO has accepted the entire sales no addition could be made on account of cash deposit in the banks which is part of such sales and is tantamount to double taxation of income which has already been offered to tax sales. Addition u/s 68 of the Act on account of unexplained income towards the cash deposit in the bank account during demonetization is hereby deleted.

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• 2025 (3) TMI 646
  Addition on account of commission paid on sale of Flat bookings Disallowance of expenses incurred on selling and promotions - HELD THAT:- As in decision of M/s Hiranandani Palace Gardens P. Ltd. Mumbai [ 2015 (12) TMI 1649 - ITAT MUMBAI ] wherein the Tribunal after deliberating upon the various clauses of Accounting Standard AS-2 and AS. 7 and the provisions of section 145A of the act has held that as per the accounting method consistently followed by the assessee and thereby excluding the indirect expenses such as office employees salary, administrative expenses and marketing and selling expenses was as per the recognized principles of accountings and as such the claim of the assessee deserved to be allowed. Thus addition /disallowances made by the AO and confirmed by the Ld. CIT(A) on account of commission paid on sale of Flat bookings and disallowance of expenses incurred on selling and promotions are deleted. Decided in favour of assessee. Nature of expenses - Disallowance of loan processing fee by treating the same as capital in nature - HELD THAT:- In the instant case the assessee has failed to prove that the loan processing fees was the revenue expenditure CIT(A) relying the decision of the Bilt Power Ltd. New Delhi [ 2015 (3) TMI 319 - ITAT DELHI ] rightly held that the loan processing fees expenses is capital in nature. Thus we find that the assessee has failed to prove that loan processing fees was the revenue expenditure. Decided against assessee.

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• 2025 (3) TMI 645
  Rejection of application for approval u/s 10(23)(vi) - insufficient evidence of educational purposes - HELD THAT:- It is not in dispute that the application was dismissed on the basis that the assessee failed to furnish the sufficient material required for formation of satisfaction that the assessee was carrying out its activity for educational purposes. As stated by assessee that this was being the first year of its incorporation and the assessee was not afforded sufficient opportunity. It is further stated that the allegation that huge profit was made by running an commercial institute on commercial lines and channelizing the profits earned for augmenting the business without giving any element of charity is without any basis since the activities were yet to be commenced. It is not in dispute that the assessee foundation was incorporated on 06.04.2018 and an application for registration was made 16.04.2018. CIT(E) erred in rejecting the application without bringing any material suggesting that the assessee was not carrying out its activity in accordance with its objects. Moreover, it is not the case of Revenue that the proposed activities are not genuine and such activities are not for educational purposes.CIT(E) ought to have recorded specific finding in this regard. Therefore, the impugned order is hereby set aside and the application is restored to the Ld. CIT(E) to decide it afresh.

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• 2025 (3) TMI 644
  Block assessment - Assumption of jurisdiction by AO by issuing notice u/s 158BD - pendency of the proceedings by issue of initial notice u/s 158BC in case of the assessee, on account of lack of proper satisfaction recorded by the AO before assumption of jurisdiction u/s 158BD on account of delayed timing of the satisfaction so recorded (matter remitted back by the Hon ble High Court) and on account of the fact that no order under section 127 is available on record for the transferring the jurisdiction of the case to the AO who has passed the impugned order. As during the pendency of the proceedings u/s 158BC, the fresh proceedings u/s 158BD had been initiated for the same block period - HELD THAT:- For the purpose of determining the limitation period of completion of proceedings and passing of the assessment order under section 158BC, if we consider the aforesaid day on which last of the search warrant was executed, the proceedings get time barred on 31/08/1996 as per the provisions of Section 158BE wherein it has been provided that the order under section 158BC can be passed within one year from the end of the month in which the last of the authorization for search u/s 132 was executed. Subsequently, the satisfaction u/s 158BD was recorded by the AO on 10/09/1996 and thereafter, notice u/s 158BC rw.s 158BD was issued on 13/09/1996. Therefore, as on the date of recording of satisfaction u/s 158BD of the Act and subsequent issuance of notice under section 158BC r/w 158BD, the earlier proceedings u/s 158BC were not pending and stands barred by limitation. In view of the same, even though no formal order has been passed dropping the proceedings u/s 158BC, it cannot be held that the proceedings so initiated by issuance of notice u/s 158BC continue to remain alive and pending before issuance of notice u/s 158BD as so contended by the ld AR. The various authorities relied upon by the AR thus stand distinguishable and doesn t support the case of the assessee and the contention so advanced by the AR therefore cannot be accepted. Since there was no order u/s 127 either available on record or supplied to the assessee for transferring the jurisdiction to the AO who has passed the impugned order, the order so passed by the AO is without jurisdiction and therefore deserves to be set aside - All the assessee had asked was to ascertain the correct jurisdiction by the AO as he was not the person searched and in response, the AO has stated that even though the assessee was not the person searched, he continues to hold the jurisdiction over the case as necessary order has been passed u/s 127 of the Act. Therefore, it is not a case where the AO has acquired the jurisdiction without passing of order u/s 127 of the Act. The order u/s 127 has clearly been passed by the Commissioner of Income-tax, Patiala and the factum thereof cannot be denied. At this stage, given the afflux of time and the matter almost three decades old, the Revenue has not be able to retrieve the order so passed u/s 127 of the Act, however, the same cannot be basis to challenge the jurisdiction of the AO at this stage and the contention so advanced by the Ld. AR cannot be accepted. Assumption of jurisdiction by AO by issuing notice u/s 158BD is vitiated in law for the reason that the purported satisfaction u/s 158BD has been recorded after the completion of assessment in the case of person who were put to search u/s 132(1) - In the instant case, admittedly, the first two stages are not relevant and it is at the third stage, after the assessment proceedings are completed u/s 158BC of the Act of the person against whom search was conducted, the satisfaction has been recorded and the question that arise for consideration is whether the satisfaction so recorded is immediately after the assessment proceedings are completed under Section 158BC of the person against whom search was conducted and how to interpret the phrase immediately after and apply the same in the facts of the present case. In the instant case, the assessment u/s 158BC in hands of the searched persons, namely Shri Sunil Gupta, was completed on 30/07/1996 and the satisfaction for initiating of proceedings u/s 158BD in hands of the assessee was recorded by the AO on 10/09/1996 and thereafter, the notice u/s 158BD was issued to the assessee on 13/09/1996. We therefore find that the satisfaction has been recorded by the AO within a period of one month and 10 days of completion of assessment in case of searched persons and the said period cannot be held as unreasonable involving substantial delay taking into consideration the fact that the AO was holding the charge as ACIT, Investigation having jurisdiction over various search cases involving complex issues where the search was carried out which involves enormous work responsibility which were undertaken along with handling the case of the assessee. In the instant case as well, we find that as soon the AO has recorded the satisfaction u/s 158BD on 10/09/1996, the notice has been issued to the assessee on 13/09/1996 and thereafter, the assessment proceedings have been completed on 28/10/1996 and therefore, there is as such no delay on part of the AO in carrying out subsequent action in terms of issue of notice and completion of assessment proceedings which has been done in real quick time soon after recording of the satisfaction. In light of the aforesaid discussions, we are unable to accede to the contention so advanced by the ld AR and on this count as well, the order so passed by the AO cannot held to be vitiated. Assumption of jurisdiction by the AO - It is for the AO to disclose and open his mind through the satisfaction so recorded by him and he has to speak through the same and the same has to be read as so recorded by the AO and the same cannot be supplemented by subsequent conduct/action of the AO including issue of notice dated 04/10/1996, which is evidently subsequent to recording of satisfaction on 10/09/1996. As held by the Courts, the proceedings under Section 158BD have financial implications for the assessee and therefore, such satisfaction must reveal the mental and the dispassionate thought process of the AO in arriving at a conclusion and satisfaction so recorded must contain reasons which should be the basis of initiating the proceedings u/s 158BD and should not be based merely on causal reference to the seized documents which apparently has happened in the instant case. We agree with the contentions of the AR in this regard and are of the considered view that the mandate of the statute for acquiring jurisdiction u/s 158BD has not been satisfied in the instant case and in absence of requisite satisfaction so recorded by the AO, the issue of notice u/s 158BC r/w 158BD dated 13/09/1996 cannot be sustained in the eyes of law and the notice so issued and subsequent assessment order dated 28/10/1996 is hereby set-aside. Appeal of the assessee is allowed.

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• 2025 (3) TMI 643
  Levy of penalty u/s 43 of The Black Money Act - failure in furnishing information of the investments made by the appellant in the return of income filed for the assessment year under consideration without assigning proper reasons and justification - HELD THAT:- Hon ble Supreme Court s judgment in the case of Hindustan Steel [ 1969 (8) TMI 31 - SUPREME COURT ] observes that penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. The penalty will not also be imposed merely because it is lawful to do so. Whether a penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose a penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute . Essentially, therefore, the overall conduct of the assessee, and materiality of the lapse as also its being in the nature of a technical or venial breach of law, is the most critical factor so far as taking a call on the question of whether or not a penalty should be imposed for the assessee s failure to discharge a statutory obligation. The imposition of penalty under Section 43 is surely at the discretion of the Assessing Officer, but the manner in which this discretion is to be exercised has to meet the well-settled tests of judicious conduct by even quasi judicial authorities. The bench also considered the objective of BMA legislation and finally confirmed the order of first appellate authority in deleting the impugned addition as imposed by Ld. AO. Similar favorable view has been taken in Ocean Driving Centre Ltd. [ 2023 (12) TMI 54 - ITAT MUMBAI ] wherein deleted similar penalty on the ground that it was not a case of total defiance or mala fide or dishonest breach on the part of the assessee. Penalty u/s 42 initiated on the ground that the assessee failed to file the return of income within prescribed time limit - AY 2017-18 - Assessee has filed return of income belatedly which is treated as non-est return since it was filed beyond statutory time limit. However, in this return of income, the assessee has duly disclosed the details of foreign assets. The late filing of return of income is mere technical breach. Similar details have been filed in return of income filed in response to notice issued u/s 153C. AO has adopted the income admitted by the assessee in the regular return of income and made further addition in the same. In other words, the regular return of income, though treated as non-est return, the same has been considered while framing the assessment. We are also of the opinion that the return field u/s 153C would substitute the regular return of income as filed by the assessee. As in the case of Pr. CIT v. JSW Steel Ltd. [ 2020 (2) TMI 307 - BOMBAY HIGH COURT ] held that returns filed u/s 153A was to be treated to be returns of income furnished u/s 139 - Thus penalty would not be leviable.

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• 2025 (3) TMI 642
  Revision u/s 263 - as per CIT AO failed to verify and examine the claim of Bonus, interest accrued but not due on loans from PFC and Amount transferred to Profit Loss Account in respect of Capital Grants Subsidies and Consumer Contribution - HELD THAT:- It is clearly evident from the facts noted by us regarding the enquiry conducted by the AO on the issue of bonus, that the finding of the Ld.PCIT that the assessee has now furnished certain fresh details which were not considered by the AO is blatantly incorrect and false. All explanations with evidences demonstrating the fact of bonus having been paid before due date of filing of return of income was furnished to the AO during assessment proceedings itself. Therefore, the finding of the PCIT that the assessee has now furnished fresh details which needed to be looked into by the AO and verified, is found to be incorrect by us. We agree with the assessee that even on merits, no disallowance of bonus amounting to Rs. 2.02 crores was called for since the assessee had established both to the AO and the PCIT that the assessee had not claimed the said amount as an expense in violation of provisions of section 43B, having paid the same before the due date of filing the return of income, which fact was certified by the Tax Auditor in its Tax Audit Report. The bonus was clearly demonstrated to be not unpaid. DR was unable to controvert the factual contention of the Ld.Counsel for the assessee b, both with regard to the examination of the impugned issue by the AO and the fact of the assessee having demonstrated both to the AO and the Ld.PCIT of the bonus not remaining unpaid, but in fact paid before the due date of filing of return of income. DR was unable to point any infirmity accordingly in the allowance of claim of Bonus of Rs. 2.02 Crs by the AO in terms of the provisions of section 43B of the Act. Therefore, we hold that the AO had taken a legally correct view by not making any disallowance of bonus expenses. Allowance of interest expenses paid on PFC loan (RAPDRP) against in alleged violation of provisions of section 43B on account of the same, having remained unpaid - Only explanation given by the assessee vis a vis the unpaid interest expense not being disallowable u/s 43B of the Act is that it had not become due for payment and therefore could not be disallowed on account of remaining unpaid. We fail to understand how this explanation justifies the case of the assessee of the unpaid interest not being disallowable u/s 43B. There is no dispute with regard to the position of law u/s 43B of the Act allowing such interest payments only on payment basis . In the light of the clear position of law, we fail to understand how an unpaid interest, even if not accrued for payment, is allowable. No judicial decisions to support the contention of the assessee was filed at any stage, i.e the AO, the Ld.PCIT or even before us. Therefore it is evident that the AO had not examined the issue of allowability of unpaid interest in the light of the provision of law u/s 43B of the Act and neither has the assessee been able to demonstrate allowability of the same u/s 43B of the Act. The findings of the Ld.PCIT therefore of the assessment order being erroneous so as to cause prejudice to the Revenue for allowing unpaid interest on PFC loans in violation of the provisions of section 43B of the Act, is therfore upheld. Capital Grants Subsidies and Consumer Contribution written back by the assessee on account of which addition was made by the AO but was found to be short by the Ld.PCIT - We do not find any merit in the finding of error by the Ld.PCIT on the issue of write back of capital grants and consumer contribution being short. The assessee, we have noted, has not furnished any fresh detail to the Ld.PCIT but, in fact, he has pointed out to him the incorrect facts noted by him while arriving at this finding of the error on this issue. He had categorically pointed out from the facts on record the incorrect fact noted by him of the amount written back by the assessee in its Profit and loss account and had demonstrated the correct figures from the records itself . The assessee had also demonstrated that factually there was no shortfall in the amount of grants and contribution written back. DR was also unable to controvert the factual contention of assessee. Thus, we uphold the order of the PCIT finding error in the order of the AO causing prejudice to the Revenue only on the issue of unpaid interest on PFC amounting to Rs. 17.91 Crs being allowed without not being examined by the AO - Decided in favour of assessee Partly.

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• 2025 (3) TMI 641
  Exemption u/s 11 - cancellation of its registration u/s 12A during the relevant assessment year - HELD THAT:- The assessee had filed the return of income u/s 139(1), one, as per extended date, on 31.01.2021. The second application for registration, under section 12A, in Form No. 10A was filed by the assessee -trust, under amended law, on 08.10.2021. The order of registration u/s 12A(1)(ac)(i) of the Act, granting registration, u/s 12A to the assessee- trust, from assessment year 2022-23 to A.Y. 2026-27, was granted on 15.10.2021. The assessment order u/s 143(3) of the Act, (impugned order) was framed by the assessing officer on 09.09.2022 and on this date, the registration of the trust was effective, (in-force). Hence, we note that the registration was effective, at all the times, therefore, we are of the view that the assessee-trust, is eligible to take the exemption under Sections 10, 11 12 of the Act. On merit, we note that before AO, as well as before Ld. CIT(A), the assessee has not submitted the sufficient evidences to prove its claim. Therefore, we are of the view that the matter may be remitted back to the file of the AO for limited purpose to examine the receipts of the assessee for the purpose of claiming exemption Sections 10, 11 12 of the Act. We make it clear that since we have already taken the view that assessee- trust, is eligible to take the exemption u/s 10, 11 12 of the Act, in the assessment year 2020 21, under consideration. Aappeal filed by the assessee is allowed for statistical purpose.

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• 2025 (3) TMI 640
  TP Adjustment - treating services (tangible and intangible) provided by the AE, free of cost, as a part operating cost to the assessee - whether the notional cost is to be treated as part of operating cost of the assessee to work out the PLI of the assessee - HELD THAT:- As we can safely conclude that the stand of the lower authorities for including the notional cost in calculating the PLI of the assessee in the given facts and circumstances is not sustainable. It is necessary to take a note of the amendment brought under the Income Tax Amendment Rule 2017, where under rule 10TA in the definition of operating expense, share based compensation has been included in the definition of operating expenses and such amendment was applicable from 1st April 2017 with prospective effect. Regarding the applicability of rule 10TA, we note that such rule is applicable if the assessee opts for safe Harbour rules. But in the present case, the assessee has not opted such rule, therefore the impugned transaction of share-based compensation cannot be treated as operating expenses in the year under consideration in terms of such rule. Assessee has also incurred similar cost in the earlier assessment years i.e 2015-16 and 2016-17 but there was no such adjustment made by the lower authorities in the PLI of the assessee. Accordingly, we are of the view that the principles of consistency in the present case also needs to be applied as there is no change in the facts and circumstances of the case in the year under consideration viz a viz the earlier assessment years. We direct the TPO not include the notional cost discussed above while calculating the PLI of the assessee. Hence, the ground of appeal of the assessee is hereby allowed. Comparable selection - Based on the above findings of the ITAT in the case of different companies being comparables, we are inclined to set aside the issue to the file of the TPO for fresh adjudication in the light of above discussion and as per the provisions of law. It is pertinent to note that there was no submission filed by the ld. AR for the exclusion of the comparable namely Tech Mahindra Business Services Ltd. Nevertheless, in the interest of justice and fair-play, we also set-aside the issue to the file of the TPO for fresh adjudication as per the provisions of law. Hence, the ground of appeal of the assessee is partly allowed for statistical purposes. Addition on account of notional interest to be charged on overdue receivables from the AE - whether or not the outstanding receivables is an international transaction? - HELD THAT:- This issue is no longer res integra. We took a view in the case of CIT v. Patni Computer Systems [ 2013 (10) TMI 293 - BOMBAY HIGH COURT] on the amendment to Section 92B of the Act by way of Finance Act, 2012 with retrospective effect from 01/04/2002 that, the interest on outstanding receivables is an international transaction, and it certainly requires separate benchmarking. Rate of interest - We hold that the PLR rate, therefore, would not be applicable and should not be applied for determining the interest rate and the PLR rates are not applicable to loans to be re- paid in foreign currency. We are of the considered opinion that the ends of justice would be met by accepting the interest rate on similar foreign currency receivables/advances as LIBOR+200 points, by applying the credit period of thirty days or as per agreement or invoice. Accordingly, we direct AO/TPO to re-compute the same. Hence, the grounds of appeal of the assessee is hereby allowed for statistical purposes. Disallowing the interest expenses incurred on the CCD on the reasoning that such CCD represents the investment in the equity of the company - At the outset, we note that the issue raised on hand stands covered in favour of the assessee by the order of the ITAT cited above in the own case of the assessee as held deduction claimed by the assessee has to be allowed. We may also clarify that the Thin Capitalisation principle was neither invoked by the AO or the CIT(Appeals) in the present case nor were those rules part of the statute for the relevant AY in this appeal. Disallowance of delayed contribution under the PF Act - HELD THAT:- The issue on hand stands covered against the assessee by virtue of the judgement of Checkmate Services Private Limited [ 2022 (10) TMI 617 - SUPREME COURT] as held it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non- obstante clause under section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee s contribution on or before the due date as a condition for deduction. Decided in favour of revenue. Denial of benefit of TDS in toto - AR before us prayed to issue a direction to the AO to grant the benefit of TDS as per the provisions of law after necessary verification - DR could not submit anything contrary to the arguments advanced by the ld. counsel for the assessee - Thus we direct the AO to verify the claim of the assessee for the credit of the TDS amount and allow the same as per the provisions of law. Hence the ground of appeal of the assessee is hereby allowed for statistical purposes.

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• Customs

• 2025 (3) TMI 639
  Seeking release of fresh garlic which has been imported by the Petitioner from Afghanistan without any condition of furnishing of a bank guarantee - HELD THAT:- This Court is inclined to grant an opportunity to the Petitioner to clarify the actual position before the Respondent/Department. Accordingly, let the present writ petition and the documents annexed therein be submitted by the Petitioner to the Commissioner of Customs (Preventive) NCH, New Delhi and let the said official examine all the documents. If there is any document which is missing, the Petitioner shall produce the same and satisfy the said Department with respect to all the other relevant aspects including the actual country of origin and applicability of SAFTA provisions to the impugned consignment. Considering the perishable nature of the goods seized, the Department shall take a decision by the next date of hearing. The Petitioner to appear before the Custom Department on 13th March, 2025.

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• 2025 (3) TMI 638
  Dismissal of appeal on the ground of time limitation - sufficient cause for delay or not - appeal passed beyond the period of 90 days prescribed under Section 129D(3) of the Customs Act, 1962 - HELD THAT:- The proviso to Section 129D(3) mandates that the Board may, on sufficient cause being shown extend the said period(the period for passing the review order) by another thirty days and even before this Tribunal the appellant has not evidenced that the appellant has shown sufficient cause to the Board and had obtained the sanction of the Board as mandated in the proviso to Section 129D(3) ibid for preferring the appeal before the Commissioner Appeals beyond the statutorily prescribed period provided in sub-section (3) of Section 129D. Further, the appellant has also not evidenced that in the absence of any such order of the Board providing the extension sought on sufficient cause being shown, the appellant had filed an application seeking condonation of delay of 20 days stating justifiable reasons before the Commissioner Appeals. As can be seen from the grounds of the appeal before this Tribunal reproduced supra, the appeal is only on the grounds that the rejection of the appeal on the ground of limitation by the Lower Appellate Authority would be a loss for the Revenue and the Appellate Authority has not decided the case on merits. There is no explanation or justification provided for not adhering to the mandate of proviso to Section 129(D)(3) nor any explanation provided for not preferring an application for condonation of delay for filing the review order beyond the period prescribed in Section 129 D(3) before the Commissioner of Appeals in the absence of any sanction obtained/permission accorded by the Board as per proviso to Section 129D(3). In this case, neither has any evidence been let in that an application showing sufficient cause has been preferred to the Board to extend the period for filing of review order nor has any such order of the Board extending the period for filing of the review order been produced. It has also not been shown that the appellant had preferred any application for condonation of non- filing of the extension order of the Board or seeking condonation of delay of 20 days in passing the review order, in the absence of such sanction/permission of the Board before the learned Appellate Authority. The appellant has no right to any preferential consideration to get its delay or non-compliance of the mandate of law condoned mechanically and without adhering to the mandate of law. Conclusion - The appellant has no right to any preferential consideration to get its delay or non-compliance of the mandate of law condoned mechanically and without adhering to the mandate of law. In view of our aforesaid discussions, there are no justifiable reason shown to interfere with the impugned Order-in-Appeal of the Commissioner of Customs (Appeals) and the same is upheld. Appeal dismissed.

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• 2025 (3) TMI 637
  Classification of the imported goods - Synthetic Casting Tapes - to be classified under CTH 9021 or under CTH 30059040 - invocation of extended period of limitation under Section 28(4) of the Customs Act, 1962 - HELD THAT:- The issue involved in the present appeal is no more res-integra. In the case of Johnson Johnson [ 1998 (9) TMI 184 - CEGAT, NEW DELHI] it was held that the Deltalite Casting Tapes imported by the appellants herein fall for classification under sub--heading 3005.10 of the Customs Tariff Act. Extended period of limitation - HELD THAT:- There is also no dispute that at least 2 of the orders of other Benches where the classification was decided, were available when the Bills of Entry came to be filed. The appellant had also relied upon on order of Mumbai Bench in C. Natwarlal Co. [ 2005 (4) TMI 331 - CESTAT, MUMBAI] , reported in the year 2005 and, hence, the appellant cannot plead ignorance of the above orders which were reported much earlier, in the years 1999 2000. The larger period has been correctly invoked and hence, the appellant has to suffer the consequence. Conclusion - i) The goods in question are not in the nature of a device/instrument/appliance and hence cannot be considered as coming within the coverage of Heading 90.21. ii) The larger period has been correctly invoked and hence, the appellant has to suffer the consequence. There are no merit in the appeal - appeal dismissed.

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• 2025 (3) TMI 636
  Lawful possession of Gold seized - discharge of burden of proof under Section 123 of the Customs Act, 1962 or not - HELD THAT:- The learned Commissioner (Appeals) has very clearly established through his impugned order, particularly para 5.9 and 5.10 that the gold which was seized was lawfully possessed by the respondent and the respondent has discharged the burden of proof required under Section 123 of Customs Act, 1962. The appeal filed by Revenue dismissed.

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• 2025 (3) TMI 635
  Mis-declaration of quantity of imported goods - rejection of declared value - redetrmination of value - recovery of differential duty with interest and penalty - Confiscation - penalties. Mis-declaration of quantity and non declaration of goods - HELD THAT:- The appellant has failed to produce any evidence to show that the goods loaded in excess were due to mistake of the supplier. The letter dated 22.03.2014 issued by the supplier accepting their mistake cannot absolve the appellant from the mis-declaration and excess quantity of goods found on examination - the goods found to be in excess are liable for confiscation. However, from the impugned order it is observed that confiscation has been ordered even in respect of the quantity of goods declared in the Bills of Entry, which is not correct. Thus, the goods found in excess and the undeclared goods alone are liable for confiscation. Accordingly, the confiscation of the goods found to be in excess than the declared quantities in the bills of Entry and the non declared goods, upheld and the confiscation of the goods declared in the bills of entry set aside. Confiscation of the goods on account of mis-declaration of value - HELD THAT:- The ld. adjudicating authority has admitted that the value of identical goods were not available and therefore, the he has adopted the value of similar goods in contemporaneous imports. However, it is observed that no documentary evidence such as copies of invoices, Bills of Entry and relevant invoices were supplied to the appellants, in support of the higher value of contemporaneous imports of similar goods cited by the Revenue. It is the settled position of law that transaction value cannot be rejected on the basis of assumptions and presumptions. There should be cogent evidence for contemporaneous imports to substantiate the rejection of transaction value. Rule 3(2) of the Customs Valuation Rules, mandates that if the transaction value is to be rejected, there must be evidence available on record to justify the same. However, it is seen that there is no allegation of extra payment made by the appellant over and above the transaction value declared in the invoices. Thus, the transaction value declared by the appellant cannot be rejected in the absence of any allegation of extra payment thereof. The differential duty demanded on account of enhancement of value is not sustainable. Therefore, the transaction value declared by the appellant is found to be acceptable and the value declared in the invoices is to be adopted for the purpose of determination of Customs Duty payable by the importer. Thus, the confiscation of the impugned goods on account of mis-declaration in value is not warranted. Penalty imposed on the appellant importer - HELD THAT:- It is observed that penalty equal to the differential customs duty which is confirmed on account of mis declaration in quantity/ non declaration, if at all, is liable to be imposed under section 112(a) of the Customs Act, 1962. However, it is observed that the said section has not been invoked in the impugned order and hence penalty under Section 112(a) of the Act is not imposable in this case. Penalties imposed on the appellant-company and its Director under Sections 114A of the Customs Act - HELD THAT:- Section 114A provides imposition of mandatory penalty on the person who is liable to pay the duty and in this case the importing company is liable to pay duty. Hence, penalty equal to the differential customs duty which is confirmed on account of mis declaration in quantity/ non declaration is liable to be imposed on the appellant-company under section 114A of the Customs Act, 1962. Even though the appellant-company has claimed that the mis-declaration has occurred on account of the mistake of the supplier, the contention of the appellant cannot be agreed upon in the absence of any evidence in support of their claims - the appellant-company is liable to be penalized for mis-declaration of the goods, under Section 114A. However, such penalty should commensurate with the quantity mis-declared only. Penalty imposed on the Director of the appellant company under Section 114A ibid. - HELD THAT:- The penalty under section 114A is not imposable on the Director of the appellant company. Penalty can be imposed on the Director of an importing company under Section 112(a) of the Customs Act, 1962 only on the charge of abatement of commission / omission of some act which would render the imported goods liable to confiscation under Section 111 of the Customs Act, 1962. However, since there was no proposal for imposing penalty on him under Section 112(a) in the show cause notice, we observe that penalty under Section 112(a) is not imposable on the Director. Penalties imposed on both the appellants under Section 114AA - HELD THAT:- The said section is applicable when there is no existence of goods but the documents are filed fraudulently. In this case, the supplier has agreed that the documents issued by him are genuine, Accordingly, Section 114AA of the Customs Act, 1962 cannot be invoked in the instant case to impose penalty either on the appellant importer or on the Director of the appellant importer. Consequently, no penalties are imposable on the appellants under Section 114AA ibid., in the facts and circumstances of the case. Conclusion - i) The confiscation of the goods found to be in excess than the declared quantities in the bills of Entry and the non-declared goods, upheld. The confiscation of the goods declared in the bills of entry set aside. ii) The differential duty demanded on account of enhancement of value is not sustainable. Thus, the confiscation of the impugned goods on account of mis-declaration in value is not warranted. iii) The transaction value declared by the appellant is found to be acceptable and the value declared in the invoices is to be adopted for the purpose of determination of Customs Duty payable by the importer. iv) The appellant-company is liable to be penalized for an amount equal to the duty confirmed at Sl. No. (iii) supra, under Section 114A of the Customs Act, 1962. No penalty is imposable on the appellant-importer under section 114AA of the Customs Act. v) Penalties under section 114A and 114AA ibid. are not imposable on the Director of the appellant company. vi) Redemption fine is liable to be imposed in consonance with the excess quantity found. The matter remanded to the adjudicating authority for recalculating the duty payable in respect of the excess quantity of goods found on the declared goods and the non-declared goods and the quantum of redemption fine imposable in consonance with the same. The amount of Rs.7,20,695/- already deposited by the appellant is to be adjusted against the duty demand confirmed. Appeal disposed off by way of remand.

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• 2025 (3) TMI 634
  Enhancement of Redemption Fine and penalty by the Commissioner (Appeals) - requirement to produce an Extended Producer Responsibility (EPR) certificate at the time of import of toner for multifunction printers under the E-Waste Management Rules 2016 - HELD THAT:- E-waste Rules were implemented from 2016 and the appellant has imported in 2017. Probably, they were not even aware that they are required to file the same - the adjudicating authority was correct in taking a lenient view and imposing a Redemption Fine of Rs.13,600/- and penalty of Rs.10,000/-. There are force in the argument of the Learned Advocate that the Commissioner (Appeals) has exceeded the brief available to him and has not followed the correct procedure while enhancing the Redemption Fine and the penalty. The First Proviso to Section 128A(3) of the Customs Act clearly states that in case if any enhancement of the penalty or fine is being considered by the Commissioner (Appeals), he is required to give a proper notice to the importer/assessee. This would enable the assessee to put forth their arguments in defense of their case. In this case, this procedure was not adopted, which means that principles of natural justice have not been fulfilled. Conclusion - The enhancement of Redemption Fine and penalty without issuing a Show Cause Notice violated principles of natural justice, as articulated in the First Proviso to Section 128A(3) of the Customs Act. The impugned order is set aside - appeal allowed.

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• Corporate Laws

• 2025 (3) TMI 633
  Grant of an interim injunction restraining the Appellants from alienating their shareholding in the company pending arbitration - Share Purchase Agreement, a contingent contract - HELD THAT:- This Court while dealing with an appeal under Section 37 (2) of the A C Act, especially one arising from discretionary orders passed at an interlocutory stage, has to be circumspect in its approach, keeping in view the principle of least intervention. The A C Act is intended to provide an alternative avenue for dispute resolution and any interpretation of the act which tends to multiply disputes must be avoided. An appellate court will ordinarily not interfere with the discretion exercised by the AT in the first instance, unless the said discretion is proved to have been exercised arbitrarily, capriciously, perversely or ignoring the settled principles of law regulating grant or refusal of interlocutory injunctions. In Bakshi Speedways v. Hindustan Petroleum Corpn. [ 2009 (8) TMI 1306 - DELHI HIGH COURT ], this Court imported the principles governing appeals arising from interim injunctions given under Order 39 Rules 1 and 2 CPC to the appeals under Section 37 (2) (b) A C Act, holding that The principles applicable to an appeal under Section 37 (2) (b) in my view ought to be the same as the principles in an appeal against an order under Order 39 Rules 1 and 2, CPC i.e., unless the discretion exercised by the Court against whose order the appeal is preferred is found to have been exercised perversely and contrary to law, the appellate Court ought not to interfere with the order merely because the appellate Court in the exercise of its discretion would have exercised so otherwise . The SPA in question pertains to an ostensible sale of shares, though, for all intent and purpose, the underlying Plot, which is the only immoveable property, in which Appellant No 1 has interest, is being conveyed, in favour of Respondent, by ceding ownership and control over the Appellant No 1 Company in favor of the Respondent by the Appellant Nos. 2 and 3 - There is no provision for termination of SPA until the sale is consummated. Appellant s have alleged breach of SPA by the Respondent and resorted to termination, which is disputed by the Respondent. The adjudication of underlying dispute is pending before the AT and pending the adjudication, the AT has passed the impugned order to ensure that the subject matter of the SPA i.e. the shares, are not lost by way of sale to a third party by the Appellant Nos. 2 and 3 - the impugned order passed by AT does not suffer from any legal vice for this court to overturn the same in this appeal. The Appellant s objection that the SPA being a contingent contract and not capable of being enforced because the contingent event of sale of the Plot in favor of the Appellant by the OL, did not occur, is without any merit. The Appellant is alleging breach of the SPA by the Respondent to terminate the SPA and not on the ground that the Plot in question is no longer capable of being acquired by the Appellant No 1 for reasons, beyond its control, thereby frustrating the objective of the SPA. Conclusion - i) The Respondent s actions demonstrated readiness to perform the SPA, justifying the interim injunction. ii) The AT cannot be said to have exercised its discretion arbitrarily, capriciously, perversely or ignoring settled principles of law. Appeal dismissed.

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• 2025 (3) TMI 632
  Requirement of prior approval under Section 35(1) of the Insurance Act, 1938, at the stage of amalgamation of the Respondent Companies - HELD THAT:- The Transferor Companies were holding major portion of the Transferee Companies which are in Life Insurance and Non-life Insurance business respectively. It has been held by respective Tribunals that upon merger / amalgamation the Shareholders of the Holding Companies will hold Shares of the Transferee Companies which are Insurance Companies, the same number and same per centage and hence, this will not attract, the provisions contained under Section 6A of the Insurance Act. There is another important aspect, which is required to be considered that in all these Company Appeals, by virtue of the Impugned Orders, the Transferor Companies, which were not engaged in Insurance Business have been permitted to be merged with the Transferee Companies, which are Insurance Companies and it has been done strictly in accordance with the provisions contained under Section 230 to 232 of the Companies Act, which prescribes for an amalgamation and which is not in contravention to or in consistent with any of the provisions of the Insurance Act. In accordance to the provisions contained under Section 230 to 232 of the Companies Act as referred to hereinabove, there are certain prescribed procedures, which are required to be followed in accordance with the rules as framed thereunder i.e. Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 before it is contemplated to sanction a Scheme of Arrangement for amalgamation of the two Companies irrespective of the fact that whether it is between two Insurance Companies or only one of them being engaged in insurance business. On perusal of the respective notices, it is quite clear that the notices thus published, had specifically invited, from the concerned Authorities, objection if any, as against the proposed Scheme of Arrangement for Amalgamation - The Petitioner Companies had also filed the Affidavit of Compliance through their Authorized Signatories, along with the relevant documents. As there happens to be no statutory bar created under the Insurance Act, which could have called for a prior compliance of Section 35 of Insurance Act, for Amalgamation in the instant cases to be carried under Section 230 to 232 of the Companies Act, 2013, the Amalgamation as made by the Impugned Orders do not suffer from any apparent legal error which could call for an interference in the exercise of our Appellate powers under Section 421 of the Companies Act, 2013. Conclusion - The amalgamations were conducted in compliance with the Companies Act and did not contravene the Insurance Act. Appeal dismissed.

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• Insolvency & Bankruptcy

• 2025 (3) TMI 631
  Seeking recall of the order - resignation of a director affects the maintainability of an appeal filed by that director on behalf of the corporate debtor or not - HELD THAT:- There are a few facts which emerges for consideration by us are that the power of recall is not the power which is specifically vested with the Appellate Tribunals. Except for owing to the exceptional circumstance, as carved out in Union Bank of India Vs Mr. Dinkar T. Venkatasubramaniam Ors. [ 2023 (7) TMI 209 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ], wherein the powers to recall has been confined to be applied, subject to certain embargos as contained in it, that Judgment on recall does not have universal applicability and more particularly when the recall in itself, though it may not be significant, since the same has been preferred under Section 151 of Code of Civil Procedure, 1908, it will not be maintainable. Exclusively, owing to the fact that on the date of passing of the order i.e., 14.10.2024, it is an admitted case that Mr. S. Baaskaran, who had then filed the Company Petition in the capacity of being the Suspended Director, since has admittedly resigned as a director from the Company of the Corporate Debtor, could not have been permitted to be continued and furthermore, the recall which has been preferred by the shareholder, he cannot be permitted to be substituted in place of the Suspended Director of the Corporate Debtor as his status is statutorily distinct, to the director. Hence the recall application is misconceived and the same is accordingly dismissed and the order passed by us on 14.10.2024 is confirmed. Conclusion - i) The resignation of a director nullifies their capacity to maintain an appeal on behalf of the corporate debtor, leading to the dismissal of the appeal. ii) Shareholders cannot substitute directors in legal proceedings due to their distinct statutory roles and rights. iii) The power to recall orders is limited and not universally applicable, requiring specific conditions to be met. The recall application is misconceived and the same is accordingly dismissed.

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• 2025 (3) TMI 630
  Extinguishment of claim under the approved resolution plan - direction to Respondent to disclose the treatment of Applicant s claim under the resolution plan - determination of the tenability/validity of a contractual agreement falls in the realm of a civil dispute or not - scope and jurisdiction of this Adjudicating Authority - HELD THAT:- It is relevant to examine the main objective of the CIRP is the revival of the Corporate Debtor. This Objective of the IBC code is based on two paramount factors i.e the restructuring of the Corporate debtor and that such restructuring is carried out in a time bound manner. Reliance is placed on the judgment of Hon ble Apex Court in the case of Swiss Ribbons Pvt. Ltd. and Anr. v. Union of India and Ors [ 2019 (1) TMI 1508 - SUPREME COURT ] where it was held that Timely resolution of a corporate debtor who is in the red, by an effective legal framework, would go a long way to support the development of credit markets. Since more investment can be made with funds that have come back into the economy, business then eases up, which leads, overall, to higher economic growth and development of the Indian economy. What is interesting to note is that the Preamble does not, in any manner, refer to liquidation, which is only availed of as a last resort if there is either no resolution plan or the resolution plans submitted are not up to the mark. Even in liquidation, the liquidator can sell the business of the corporate debtor as a going concern. The entire code is consolidated to foresee the effective implementation of the Resolution Plan by provisioning various principles that have to be satisfied to the CoC before the approval of a Resolution Plan. The burden shifts to the commercial wisdom of a COC to foresee any contingency and to satisfy the feasibility and viability of the plan. Once the Plan has been approved by the CoC, we do not find it legally tenable to direct any such changes in the plan that will be effective only in the future and will be contingent to the adjudication of Arbitration Proceedings. Moreover, it is pertinent to point out that even in the NCLAT order in the case of Shaapoorji Pallonji Co (P) Ltd v. Kobra West Power Co. Ltd [ 2023 (3) TMI 70 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] relied upon by the Applicant herein, the Hon ble Appellate Tribunal has not disturbed the Resolution Plan, and only observed that the Applicants are at liberty to pursue all the contentions available to them. Conclusion - i) Once a resolution plan is duly approved by the Adjudicating Authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including Central Government, any State Government or any local authority, guarantors and other stakeholders. ii) The prayer of the Applicant that the claim should not be allowed to be extinguished is not tenable in law, hence is not acceptable. Application dismissed.

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• Service Tax

• 2025 (3) TMI 629
  Valid service of notice - impugned order has been served on Ms.Vaibhavi, daughter of one of the partners - whether such service would be a valid service for the purposes of Section 83 of the Finance Act, 1994, read with Section 37C of the Central Excise Act, 1944? - HELD THAT:- On a reading of sub- Clause (a) to sub-Section (1) of Section 37C of the Central Excise Act, 1944, which stands incorporated into the Finance Act, 1994 by virtue of Section 83 of the Finance Act, 1994, it is clear that for a service to be valid, tender must be to the person to whom it is intended, which in the present case is M/s.Procclaim (Partnership Firm) or his authorised agent, if any. It is relevant to bear in mind that a partnership firm is not a legal entity but a compendious name for the partners. While a partner is an agent of the firm in a partnership and each partner acts as the agent of other partners, and thus service on any of the partners would be adequate and valid service on the appellant firm, however, the service on the daughter of a partner cannot be a valid service unless she is an authorised agent of the Firm in terms of Sub-section (1) to Section 37 C of the Central Excise Act, 1944. Conclusion - The order served after a delay of almost four months, that too on the daughter of a partner of the firm, certainly, cannot be termed as effective service in the absence of any finding that the daughter Ms. Vaibhavi is an authorised agent of the appellant for the purposes of Section 83 of the Finance Act, 1994, read with Section 37C of the Central Excise Act, 1944. The order of the First Appellate Authority - Appeal allowed.

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• 2025 (3) TMI 628
  Levy of service tax - Club or Association Services - Business Auxiliary Services - renting of immovable properties. Levy of service tax - Club or Association Services - doctrine of mutuality - HELD THAT:- The said taxable service is defined under Section 65(105)(zzze) of the Finance Act, 1994 to read as any service provided or to be provided to its members, by any club or association in relation to provision of services, facilities or advantages for a subscription or any other amount . The said definition was amended w.e.f. 16.05.2011 and reads as any service provided or to be provided to its members, or any other person, by any clubs or association membership service in relation to provision of services, facilities or advantages for a subscription of any other amount . The relationship of a member with its association and vice versa is hit by the doctrine of mutuality. There is no service provider and service recipient relationship. The issue as to whether the subscription / entrance fees collected by the association from its members can be subjected to levy of service tax under the said category was considered by the Tribunal in the case of M/s. Ranchi Club Ltd. The Hon ble Apex Court in the case of State of West Bengal Vs. Calcutta Club Limited [ 2019 (10) TMI 160 - SUPREME COURT] ] has also held that the demand of service tax on this count cannot sustain. Following these decisions, the demand under this heading made on the appellant cannot sustain and requires to be set aside. Levy of service tax - Business Auxiliary Services - HELD THAT:- The appellant has contested that such commission collected is as pure agent and the said contention has not been controverted by the adjudicating authority as well as the appellate authority. The Show Cause Notice is also not clear as to how this amount is to be treated as business auxiliary services or under which limb of the definition the said activities of the appellant would be covered. The adjudicating authority also after reproducing the definition of BAS and the various limbs has not slotted the appellant under any particular limb. The demand under BAS cannot sustain and requires to be set aside. Levy of service tax on renting of immovable properties - HELD THAT:- It is seen from the annexure to the statement of demand No.64/2014 dated 06-06-2014 that the taxable value under the category of renting of immovable property services for the period 2013-2014 is Rs.1,45,875/- which is below the threshold limit as specified in notification No.33/2012 dated 20.06.2012. The impugned OIO also has taken the said taxable value of Rs.1,45,875/- to arrive at the tax liability demanded under the category renting of immovable property services. Conclusion - i) The doctrine of mutuality applies to club or association services, negating the service tax liability on subscription fees collected from members. ii) The lack of clarity and specificity in the categorization of services under BAS led to the setting aside of the demand under this category. iii) The rental income received by the appellant was below the threshold limit, exempting it from service tax liability. Appeal allowed in toto.

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• 2025 (3) TMI 627
  Calcutaion of service tax - Service Tax calculated on 20% of the contract value while paying VAT on 80% - in accordance with the amended Rule 2A of the Service Tax (Determination of Value) Rules, 2006 or not - proper SCN or not - third SCN was for the period from 01.04.2013 to 31.03.2014 and the subject matter of the present appeal is show cause notice from 01.04.2014 to 31.03.2015 - HELD THAT:- The issue is decided in OTIS ELEVATOR COMPANY (INDIA) LTD. VERSUS COMMISSIONER OF SERVICE TAX MUMBAI II [ 2020 (4) TMI 105 - CESTAT MUMBAI] where it was held that in the absence of show cause notice for the period after the substitution of the definition of taxable service in section 65 (105) by section 65B of Finance Act, 1994 in 2012-13 and 2013-14 invalidates the demands in the respective impugned orders. Conclusion - By following the precedent decision of this Tribunal in appellants own case wherein demands for the period from 01.07.2012 to 31.03.2014 were set aside, the demand raised and confirmed for the period from 01.04.2014 to 31.03.2015 set aside. Appeal allowed.

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• 2025 (3) TMI 626
  Valuation of taxable services - inclusion of amounts reimbursed by the licensees for electricity, telephone, and maintenance charges in the assessable value - Recovery of service tax with interest and penalty - service tax recovered from the clients but not deposited the same to Govt. exchequer. Recovery of service tax with interest and penalty - service tax recovered from the clients but not deposited the same to Govt. exchequer - HELD THAT:- The Ld. Commissioner has given the finding that the appellant has not collected the service tax from the licensees - after having found against the Department on the ground on which the show cause notice was issued, the Ld. Commissioner should not have confirmed the demand on any other ground. Accordingly, the demand confirmed in the impugned is not sustainable abd the same is liable to be set aside on this ground alone. Valuation of service tax - inclusion of amounts reimbursed by the licensees for electricity, telephone, and maintenance charges in the assessable value - HELD THAT:- The payments received by them are the reimbursements and they were not expenditure or cost incurred by them in the course of providing renting of immovable property service. The amounts reimbursed by the licencees for electricity, telephone and maintenance were not consideration for any service provided by the appellant in the course of providing renting of immovable property service - the reimbursements received by the appellant on account of electricity, telephone and maintenance charges are not includable in the assessable value - demand with interest and penalty set aside. Conclusion - i) After having found against the Department on the ground on which the show cause notice was issued, the Ld. Commissioner should not have confirmed the demand on any other ground. ii) The reimbursements received by the appellant on account of electricity, telephone and maintenance charges are not includable in the assessable value. Appeal allowed.

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• Central Excise

• 2025 (3) TMI 625
  Validity of SCN which is issued in favour of the respondent making a demand for Rs. 4.70 crore by the appellant herein - HELD THAT:- On fair reading of the said notice, it appears that there is no whisper as to how Rs. 4.7 crore the respondent company need to pay or the appellant-herein is entitled to the said claim by way of service tax. Though it is reflected in the show cause appended with the appeal, the said show cause notice pertains to imposition of Rs. 4.7 crore but no ground is mentioned. This court is of the opinion that the appeal needs no interference from this Court and hence the appeal stands dismissed being devoid of merit. As a sequel, stay, if any, stands vacated. Application closed.

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• 2025 (3) TMI 624
  Classification of goods - Eco Bath Towelette - Whether the classification of Eco Bath Towelette is under Chapter Heading 3402 9091 as classified by the Appellant or as Other Bath Preparations under Chapter Heading 3307 3090 as contended by the Department? - invocation of Extended period of limitation - HELD THAT:- Though the appellant was all along contending that its products are also based on organic surface-active agents, but the CRCL report clearly indicate that provisions of Chapter Note 3 are not satisfied. As such, its classification under Chapter 34 is ruled out. Further, examination of the test reports by the IIT, Madras and PSGTECHS could not throw any light as to the satisfaction of the conditions specified in Chapter Note 3 of Chapter 34. The CRCL report is very categorical that the product had not satisfied the conditions of Chapter Note 3 of Chapter 34. The product is to be classified under CETH 3307 in terms of the above test report. As such, there is nothing much left for us to dwell upon the classification dispute and accordingly, the classification of the impugned goods under CTH 3307 as proposed by the Department upheld. Invocation of Extended period of limitation - imposition of penalty under Section 11 AC of the Central Excise Act, 1944 - HELD THAT:- It is a well settled principle that invocation of larger period is not a rule but an exception, wherein, there should be ample justification to invoke the same. That too, while dealing with an indirect tax, it has to be exercised with utmost caution - It is also on record that the Appellant has disclosed all relevant information in their packaging, marketing brochures etc. It is only upon a highly technical test result, despite rival claims from both sides, the re-classification has been proposed and re-determined. The Appellant has also taken a legal opinion initially, a fact deposed before the investigation itself and taken due cognisance in the impugned order. Thus, the appellant has discharged the onus, if any, at their end and cannot be saddled with an allegation that they have suppressed any fact or wilfully mis-stated to attract invocation of proviso to Sec. 11A of the Act or the penalty under Sec. 11AC of the Act. Conclusion - i) The CRCL report is very categorical that the product had not satisfied the conditions of Chapter Note 3 of Chapter 34. The product is to be classified under CETH 3307 in terms of the above test report. ii) The extended period for demand and penalties was unjustified, limiting the demand to the normal period of limitation. Appeal allowed in part.

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• 2025 (3) TMI 623
  Eligibility to avail CENVAT credit, while transferring the capital goods which are cleared as such in the same financial year - HELD THAT:- As per Rule 4(2)(a) of CENVAT Credit Rules, 2004, CENVAT credit in respect of capital goods is permitted of the whole amount of duty paid on such capital goods in the same financial year, if such capital goods are cleared as such in the same financial year. Following the above, the Appellant is eligible for claiming the entire CENVAT credit as claimed by them. Hence the impugned order confirming demand and imposing penalty is unsustainable and is set aside. Appeal allowed.

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• Indian Laws

• 2025 (3) TMI 622
  Initiation of arbitration proceedings under Section 18(3) of the Micro Small Medium Enterprises Development (MSMED) Act, 2006 and the Arbitration Conciliation Act, 1996 - HELD THAT:- This Court is of the view that Section 18 of the MSMED Act, 2006 is not akin to Section 11(6) of the Arbitration and Conciliation Act, 1996. It is pertinent to mention that while the power under Section 11(6) is exercised by a referral court, the reference under the MSMED Act is exercised by the council. Further, the Supreme Court in Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods (P) Ltd. [ 2022 (11) TMI 91 - SUPREME COURT] has categorically held that the issue of lack of inherent jurisdiction can be decided by the Arbitral Tribunal appointed under the MSMED Act, which by virtue of Section 18(3) of MSMED Act is competent to rule on its own jurisdiction as also the other issues in view of Section 16 of the Arbitration and Conciliation Act, 1996. Consequently, the sequitur is that the decision of the Arbitral Tribunal on the issue of jurisdiction would be amendable to challenge under Section 34 of the Arbitration and Conciliation Act, 1996. Conclusion - MSEFC has the jurisdiction to refer disputes to arbitration under the MSMED Act, and the arbitral tribunal is competent to rule on its own jurisdiction. Appeal dismissed.

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