TMI Tax Updates - e-Newsletter
March 3, 2025

Case Laws in this Newsletter:

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

Articles

1. How To Deal with Section 114AA (Customs Act) Penalty; Drafting Grounds forArguments: Part 1

   By: Ansh Mishra

2. National Agriculture Policy of India: Doubling the Income of Indian Farmers through Exports to the World.

   By: YAGAY andSUN

3. Step-through-Step Guide to LLP Annual Return Filing in India

   By: Ishita Ramani

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

   By: YAGAY andSUN

5. CONDITIONS REQUISITE FOR INITIATION OF CRIMINAL PROCEEDINGS

   By: DR.MARIAPPAN GOVINDARAJAN

6. Difference Between Shares and Debentures - An Introduction.

   By: YAGAY andSUN

7. CHANGES IN GST ON OLD OR USED VEHICLES

   By: Dr. Sanjiv Agarwal

8. Restrictions on Advertisements Depicting High-Sugary, Salty, Unhealthy, and Harmful Junk Food in India: Legal Context

   By: YAGAY andSUN

9. WTO and Subsidies on Exports - Whether sustainable or not?

   By: YAGAY andSUN

10. World Trade Organization (WTO) and protectionism in International Trade.

   By: YAGAY andSUN

News

1. Modi urges agri-stakeholders to suggest ways for effective budget implementation

2. Andhra CM calls FY 26 budget 'transformative'; key to state's rebuilding

3. PM Modi to address post-budget webinar on agricultural, rural prosperity

4. NC, Cong legislature party to meet separately in Jammu on Sunday

5. Andhra govt presents Rs 3.22 lakh crore welfare-focused budget for 2025-26

6. J’khand assembly passes Rs 5,508 crore supplementary budget

7. Maharashtra Budget session: Fadnavis-Shinde 'rift', embattled ministers to feature in MVA attack

8. RBI says 98.18 pc of Rs 2000 notes returned

9. 88th Meeting of Network Planning Group under PM GatiShakti evaluates key Infrastructure projects

10. Pakistan's tax shortfall widens to PKR 606 billion this fiscal year: Report

11. Pakistan's tax shortfall widens to Rs 606 billion this fiscal year: Report

12. Centre's bid to cut states' tax share an 'attack' on federal structure: Karnataka CM

13. Semiconductor sector vital for economic growth and technology: US Consulate official

Notifications

Customs

1. 12/2025 - dated 28-2-2025 - Cus (NT)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

SEBI

2. SEBI/LAD-NRO/GN/2025/232 - dated 28-2-2025 - SEBI

Notification under clause (u) of sub-section (1) of Section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/OIAE/OIAE_IAD-3/P/ON/2025/0027 - dated 28-2-2025

Amendments and clarifications to Circular dated January 10, 2025 on Revise and Revamp Nomination Facilities in the Indian Securities Market

2. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/28 - dated 28-2-2025

Industry Standards on Key Performance Indicators (“KPIs”) Disclosures in the draft Offer Document and Offer Document

Customs

3. Instruction No. 01/2025 - dated 28-2-2025

Admissibility of AIR of duty drawback on export goods manufactured from inputs, some of which are non-duty paid

Highlights / Catch Notes

GST

• Detention Order and Penalty Quashed: Minor E-way Bill Error Not Tax Evasion When Goods Moved for Exhibition Display

  Case-Laws - HC : HC quashed detention order and penalty imposed due to minor E-way bill discrepancy where goods were transported for exhibition display. Genuine delivery challans under Section 55(1) were issued for both dispatch and return, with only technical error in listing dispatch location as Ghaziabad instead of New Delhi. No evidence of tax evasion intent was established by authorities. Court found proceedings unjustified where goods were accompanied by legitimate documentation, despite technical discrepancy. Following precedent requiring proof of tax evasion intent for penalty imposition, and recognizing substantial compliance with documentation requirements, petition was allowed and proceedings invalidated.
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• Directors Accused of GST Fraud Through Fake Invoices Get Bail After 5 Months Under Section 70 CGST Act

  Case-Laws - HC : HC granted regular bail to directors accused of GST fraud involving fraudulent Input Tax Credit (ITC) through multiple firms. The accused allegedly arranged fake invoices and ITC claims, receiving cash commissions. While prosecution claimed 1,267 beneficiaries were involved, specific details and commission amounts remained undisclosed. The primary evidence was confessions under Section 70 CGST Act. Given that investigation was complete, chargesheet filed, offenses carried maximum 5-year punishment, and accused spent over 5 months in custody with no immediate trial prospects, HC deemed continued detention unjustified. Bail was granted subject to furnishing bonds and sureties to trial court's satisfaction.
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• Service Tax Liability Order Challenge Must Follow Appeal Process After 7.5% Pre-deposit Made, 8-week Filing Window Granted

  Case-Laws - HC : HC declined to entertain writ petition challenging Principal Commissioner's ex parte Service Tax liability order, directing petitioner to pursue statutory appeal remedy. Court noted petitioner had previously withdrawn similar petition (CWJC 9292/2010) and already deposited 7.5% pre-deposit for appeal. While HC retained discretionary power to hear writs despite alternative remedies, circumstances warranted relegation to appellate process. Petitioner granted 8 weeks to file appeal, with Appellate Authority directed to consider limitation period excluding time spent in current proceedings since 19.08.2024. Previous liberty to file fresh writ petition held immaterial given available statutory remedy. Matter disposed with appellate pathway preserved.
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• Appellate Authority's Decision Upholds Natural Justice Under Section 107(9) After Granting Full Hearing to Petitioner

  Case-Laws - HC : HC found no violation of natural justice principles in the appellate proceedings. The authority had fully complied with Section 107(9) by granting the petitioner adequate hearing opportunity. Upon examination, all procedural requirements were properly followed, and the appellate authority had thoroughly considered every ground raised by the petitioner in its decision dated 22nd November 2024. The Court determined there was no oversight of material aspects or breach of procedural fairness in the appellate authority's decision-making process. The petition challenging the appellate order on grounds of natural justice violation was accordingly dismissed.
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• GST Audit Completion Timeline Valid as Three-Month Period Starts from Date of Final Document Submission under Section 65

  Case-Laws - HC : HC determined GST audit completion timeframe was compliant with Section 65 of CGST Act. Petitioner challenged SCNs under Sections 73 and 74, claiming audit exceeded statutory timeline. Court found additional documents were submitted by petitioner on 09.04.2024, which marked commencement of audit per Section 65 Explanation. Three-month completion requirement ran from this date, not initial notice. Final audit report was filed within prescribed period. While question of whether timeline is mandatory or directory remained open, Court dismissed petition finding audit was timely completed based on actual document submission date. Writ petition dismissed with no merit.
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• Gold Release Ordered Upon Property Security and Non-Alienation Bond Execution for SGST Fine Reduction Appeal

  Case-Laws - HC : HC directed release of seized gold to petitioner upon execution of bonds as required by Senior Enforcement Officer, SGST Department, Palakkad. Property measuring 6 Ares and 7 sq. meters in Survey No.73/4-435 of Potta village, Chalakkudy Taluk, accepted as security pending Tribunal adjudication. Property owner (petitioner's father) required to file affidavit undertaking non-alienation and non-encumbrance of property until conclusion of Tribunal proceedings. Matter concerned reduction of fine in lieu of confiscation by Appellate Authority. Petition disposed of with conditions for release of seized gold against property security.
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• Contractors Cannot Claim Additional GST Beyond Quoted Rates When Tender Terms Specify "GST-Inclusive" Pricing

  Case-Laws - HC : HC held that a contractor cannot claim GST payment beyond rates quoted in government contracts where tender explicitly states "rates inclusive of GST & other taxes." The court dismissed petitions challenging this interpretation, emphasizing that allowing additional GST claims would undermine tender process integrity. Using an illustrative example, if a contractor quotes Rs. 100 with GST-inclusive terms, they cannot later demand Rs. 118 (additional 18% GST), as other bidders might have quoted higher base rates (e.g., Rs. 105) accounting for inclusive GST. The court found circulars cited by petitioner pertained to estimate preparation, not final tendering, and were inapplicable where agreements explicitly specified GST-inclusive rates. Petitions dismissed in limine.
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Income Tax

• Tax Assessment Order Void After Denial of Personal Hearing Under Section 144B Despite One-Day Response Delay

  Case-Laws - HC : HC invalidated final assessment order due to violation of natural justice principles under s.144B of IT Act. Assessee's one-day delay in responding to draft assessment order and requesting video conference hearing was deemed insufficient grounds to deny procedural rights. Court rejected revenue's argument regarding alternate remedies, holding that jurisdictional defect required immediate intervention. Assessment order declared void ab initio for failing to grant mandatory personal hearing. Consequential demand notice under s.156 and penalty notices under s.274, 270A read with s.271AA(1) also quashed as they stemmed from invalid assessment. Court emphasized that orders with civil consequences must strictly adhere to natural justice principles, including right to be heard.
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• Income Tax Notice Under Section 148 Valid Despite Wrong Attachment, Revenue Must Rectify Error Within Week

  Case-Laws - HC : HC held that erroneous attachment of another taxpayer's information to section 148 notice due to inadvertence does not invalidate reassessment proceedings. However, the subsequent order dated 03.02.2025 was deemed unsustainable as it overlooked this apparent error, indicating lack of proper consideration of petitioner's objections. Court directed revenue authorities to rectify notice by providing correct Insight Portal information and Specified Authority approval within one week, allowing petitioner to file fresh objections. The procedural error was treated as rectifiable rather than fatal, balancing administrative efficiency with taxpayer rights under reassessment provisions.
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• Call Center Services with Basic Operations and Non-Technical Staff Fall Under TDS Section 194C Instead of 194J

  Case-Laws - HC : HC determined payments made to IGSPT for call center services were subject to TDS under section 194C, not 194J. The agreement between parties involved basic call center operations performed by undergraduates/graduates following prescribed guidelines, rather than professional/technical services. Service executives handled subscriber complaints without requiring specialized expertise. CIT(A) and ITAT's concurrent findings established the services were routine operational support, not technical/professional in nature. Additionally, service providers had already paid appropriate taxes through advance tax/self-assessment. HC found no question of law arose, as factual findings were supported by agreement terms, staff qualifications, and work nature documentation. Original assessment order requiring TDS under section 194J was not sustained.
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• Property Transfer Date for Capital Gains to be Counted from Allotment Date, Not Registration Date Under Section 2(47)

  Case-Laws - HC : HC allowed the appeal regarding determination of property acquisition date for capital gains calculation. The court held that transfer date should be considered as allotment date (1.8.2006) rather than agreement registration date (18.3.2008). The ruling established that property rights accrued to assessee upon allotment, evidenced by initial payment made before allotment and subsequent adherence to payment schedule. HC emphasized that 'transfer' under Income Tax Act should be interpreted distinctly from Transfer of Property Act, and allotment created direct interest in property. Matter remanded to AO for reassessment considering 1.8.2006 as transfer date.
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• Income Tax Reassessment Under Section 147 Invalidated Due To Vague Notice And Procedural Lapses In 148A

  Case-Laws - HC : HC quashed reassessment proceedings initiated under s.147 due to procedural deficiencies and lack of specific information. AO failed to provide essential details including bank name in s.148A(b) notice, making it impossible for assessee to respond effectively. Despite assessee's objections and proof of closed ICICI account, AO proceeded hastily without proper verification. Department's failure to deny bank's confirmation of account closure and inability to establish prima facie connection between disputed account and assessee demonstrated non-compliance with s.148A procedural requirements. Court found reassessment notice invalid due to vague information, rushed decision-making, and department's failure to substantiate claims even during proceedings.
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• Penalties Deleted Under Section 271(1)(c) and 270A as TDS Non-Deduction on EDC Payments Found Non-Malicious

  Case-Laws - AT : ITAT upheld deletion of penalties under s271(1)(c) and s270A regarding non-deduction of TDS on External Development Charges paid to HUDA. While assessee did not contest the s40(a)(ia) disallowance, they provided reasonable explanation that legal clarity was lacking on TDS applicability to EDC payments at the relevant time. No evidence suggested non-genuine payments or income concealment. Mere non-compliance with TDS provisions does not constitute concealment or furnishing inaccurate income particulars. Making incorrect legal claims does not amount to providing inaccurate details, following Reliance Petroproducts precedent. CIT(A)'s order deleting both penalties was upheld, ruling in assessee's favor.
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• Assessment Order Under Section 143(3) Quashed As Proceedings Should Have Been Under Section 153C For Block Period

  Case-Laws - AT : ITAT determined that for proceedings under section 153C, the relevant assessment years should be AY 2017-18 to 2022-23, based on the satisfaction note recorded by AO on 10-10-2022. The assessment year in which search was conducted was AY 2023-24. Since the disputed AY 2021-22 falls within this block period, assessment should have been completed under section 153C rather than section 143(3). The assessment order dated 28.12.22 passed under section 143(3) was quashed. The Tribunal relied on established precedents regarding determination of six assessment years and proper procedure for assessment. Appeal allowed in taxpayer's favor.
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• Share Premium Rounding Difference of Rs. 0.09 Per Share Not Taxable Under Section 56(2)(viib) for Rights Issue

  Case-Laws - AT : ITAT ruled in favor of assessee regarding addition under s. 56(2)(viib) for alleged excess share premium. The disputed amount arose from a nominal rounding difference of Rs. 0.09 per share on allotment of 1 crore equity shares to existing shareholders in proportion to their shareholding ratio. The Tribunal found the CIT(A)'s order unsustainable as the share allotment maintained original shareholding patterns without substantive premium excess. The technical rounding difference did not constitute premium warranting addition under s. 56(2)(viib). Addition deleted based on assessee's submission demonstrating proportional allotment to existing shareholders with unchanged shareholding ratios.
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• Share Application Money and Premium Addition Deleted as Assessee Proves Genuineness Through Bank Records Under Section 68

  Case-Laws - AT : ITAT upheld deletion of addition under section 68 regarding unexplained share application money and premium. Assessee established initial burden of proof through banking channel transactions. While AO confirmed service of section 133(6) notices to investor companies, subsequent doubts about company addresses based on IT Inspector's inquiry lacked specific inspection dates. AO failed to produce concrete evidence disproving transaction genuineness or demonstrating undisclosed income. Non-appearance of investor company directors alone insufficient to invalidate transactions. ITAT found CIT(A)'s deletion of addition justified as assessee satisfied section 68 requirements through proper documentation and banking records. Revenue's appeal dismissed.
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• Trust Denied Section 12AB Registration Due to Missing State License Gets Relief After Proving Independent Operation

  Case-Laws - AT : ITAT overturned denial of registration under s.12AB despite trust's non-registration under Rajasthan Public Trust Act 1959. Tribunal held RPT Act registration not mandatory for tax registration as statutes operate independently without overriding effect. On FCRA compliance, matter remanded to CIT(E) with direction for trust to amend deed requiring prior MHA approval for foreign contributions. Regarding genuineness of activities, ITAT found CIT(E)'s observations self-contradictory and unsupported, noting trust had purchased land for hostel construction as new entity. Following precedent, mere lack of extensive operations at initial stage cannot justify registration denial. Registration granted subject to FCRA compliance amendment.
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• Interest on Government Loans Must Be Recorded Under Mercantile System Even If Payment Pending, Rules Authority

  Case-Laws - AT : ITAT held disallowance of interest on government loans invalid where assessee followed mercantile accounting system. Interest payable on UP Government loans must be recorded despite non-payment, as revenue authorities failed to demonstrate any loan conversion to non-interest bearing status or interest waiver by the government. Without evidence showing loan modification or questioning assessee's consistent accounting method, disallowance contradicts established accounting principles. Interest allowability not determined by loan appropriation, especially when AO did not establish existence of non-interest bearing funds. CIT(A)'s decision sustaining disallowance overturned in assessee's favor, maintaining principle of accounting consistency.
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• Transfer Pricing: No Penalty Under 271(1)(c) for Interest-Free Loans to AE When Facts Fully Disclosed

  Case-Laws - AT : ITAT reversed penalty under s.271(1)(c) regarding transfer pricing adjustment on interest-free loans to associated enterprises. While TPO made upward adjustment at SBI PLR, later restricted to LIBOR+200bps, assessee had disclosed all relevant facts in returns. Bombay HC admitted appeal on substantial questions of law, indicating debatable nature of issue. Given that two reasonable interpretations were possible and necessary disclosures were made, penalty for furnishing inaccurate income particulars was deemed unjustified. The tribunal emphasized that when legal interpretations are genuinely disputable and pending higher court review, s.271(1)(c) penalties cannot be sustained. Revenue's grounds dismissed.
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• Trust's Interest Expenditure and Lease Rent Valid; Section 13(3) Inapplicable as ABET Not "Specified Person"

  Case-Laws - AT : ITAT held that ABET does not qualify as a "specified person" under section 13(3), invalidating the AO's disallowance of interest expenditure and lease rent under section 13(2). The Tribunal upheld CIT(A)'s order on these matters, dismissing Revenue's grounds 1-4. Regarding standard deduction under section 24, ITAT directed AO to disallow the 30% deduction claimed on house property income, reversing CIT(A)'s findings. On the issue of hybrid accounting for interest income, ITAT ruled in favor of the assessee, confirming that following cash system for Income from Other Sources was consistent with section 145 requirements. The Tribunal referenced precedents from Madras HC and Calcutta HC supporting income computation from trust property in normal commercial manner without section 14 provisions.
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• Insurance Company Wins Appeal on IBNR Claims, Reinsurance Premium, and Foreign Agent Commission Under Section 40(a)(i)

  Case-Laws - AT : ITAT resolved multiple grounds of appeal concerning insurance-related tax matters. The Tribunal allowed provisions for IBNR/IBNER claims, holding them as ascertainable liabilities based on empirical data rather than contingent liabilities. Amortization of premium paid on securities was decided in favor of revenue, following prior coordinate bench orders. Regarding reinsurance premium to foreign insurers under Section 40(a)(i), ITAT deleted additions and rejected the 15% restriction on NRR payments. Commission paid to non-resident agents was held non-taxable as no direct payments were made. Survey fees to non-residents were deemed non-taxable reimbursements for services performed outside India with no business connection in India, ruling against revenue's Section 40(a)(ia) disallowance.
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• Transfer Pricing: Four Companies Excluded from Comparable Array Due to Acquisitions and Rule 10B(4) Compliance Issues

  Case-Laws - AT : ITAT excluded four entities (Eclerx Services Ltd., TCS E-serve Ltd., Infosys BPO Ltd., and Tech. Mahindra Ltd.) from the comparable array in transfer pricing adjustment. Two entities (Infosys BPO and Tech Mahindra) underwent extraordinary acquisitions within the prescribed two-year period under Rule 10B(4) and failed to meet the related party transaction filter of less than 25%. The tribunal rejected Revenue's argument regarding turnover filter, citing Bombay HC precedent in Pentair Water India Pvt. Ltd. case which had previously upheld exclusion based on turnover filter. ITAT directed TPO to recompute transfer pricing adjustment excluding all four entities, noting that assessee's IT-enabled services segment remained unchanged across assessment years 2010-11 to 2013-14.
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• Tax Revision Rejected: Multiple Cash Deposits of Rs. 25,000 Each Explained Through Previous Year's Opening Balance

  Case-Laws - AT : ITAT quashed revisionary proceedings under section 263 initiated by PCIT regarding unexplained cash deposits. While assessee had deposited Rs. 16 lacs in multiple transactions of Rs. 25,000 each, these amounts originated from opening cash balance pertaining to AY 2012-13. During reassessment under section 147, AO had conducted proper inquiries and obtained necessary explanations from assessee regarding bank deposits. ITAT held that since AO had taken a plausible view after due application of mind and specific verification, PCIT's revision order alleging non-application of mind was not sustainable. The tribunal emphasized that department could separately initiate proceedings under section 147 for AY 2012-13 if income had escaped assessment for that year.
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Customs

• Russian Tourist Wins Release of Gold Chain After Court Rules Personal Jewelry Falls Under Baggage Rules Section 124

  Case-Laws - HC : HC ruled in favor of a Russian tourist regarding customs detention of a gold chain. The court established three key principles: (1) bona fide personal jewelry falls under "personal effects" in Baggage Rules, requiring customs to distinguish between general jewelry and personal jewelry; (2) Baggage Rules have limited applicability to foreign tourists; and (3) the standard waiver form for show cause notice violates Section 124 of Customs Act and natural justice principles. The detention was deemed unlawful, and the court ordered release of the gold chain subject to applicable charges within four weeks. The ruling emphasizes that customs officials must evaluate tourist belongings case-by-case rather than applying mechanical detention procedures.
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• Shipping Bills Conversion from DEEC to Drawback Scheme Approved Despite Classification Dispute Between CTH 6204-6104

  Case-Laws - AT : CESTAT allowed conversion of shipping bills from DEEC scheme to drawback scheme, overturning the denial based on tariff classification dispute between CTH 6204 and 6104. Following earlier precedent in appellant's case, Tribunal held that proper verification of fabric nature and market value could determine appropriate drawback rate. Authority directed to calculate and sanction drawback claim within one month of order receipt. Matter remanded for fresh adjudication with specific instruction to process conversion request and determine applicable drawback under correct industry rate schedule. Original rejection based on fabric classification deemed unsustainable.
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• Delayed Customs Refund Credit: Company Wins Interest Under Notification 25/2003, Extra Compensation Claim Denied

  Case-Laws - AT : CESTAT determined appellant's entitlement to statutory interest under Notification No. 25/2003-Cus(N.T.) for delayed refund credit, following precedent set in Ranbaxy Laboratories Ltd. case. While interest was granted as compensatory relief under statutory provisions, additional compensation claim was rejected due to dispute between Resolution Professional and Official Liquidator. Tribunal clarified its limitations as statutory body under Customs Act, 1962, noting inability to grant extra-statutory compensation. Interest payment ordered specifically for delay period in crediting refund amount to appellant's account, with appeal partially allowed. Decision reinforces distinction between statutory interest entitlement and non-statutory compensation claims in customs matters.
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• Aluminum Scrap Importer Wins Appeal Against Price Enhancement Based on LME Rates and Coerced Consent Letters

  Case-Laws - AT : CESTAT ruled in favor of appellant regarding valuation dispute of imported aluminum scrap. Commissioner (Appeals) erroneously based reassessment on related party transactions, incorrectly applying findings from an unrelated case of Sanjeevani Non-Ferrous Trading. Enhancement of declared value based on LME prices and coerced consent letters was deemed invalid. The Tribunal found procedural violations and non-application of mind in the reassessment process. Following precedents from SC and Delhi HC in similar cases, CESTAT held that mere acceptance under duress cannot bar appeal rights. The original valuation declared by appellant was restored, and reassessment order was set aside as legally unsustainable. Appeal allowed with consequential relief.
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• SEZ Unit's Unauthorized DTA Sales Face Duty Demands Under Section 28(4), Basic and Additional Duties Upheld

  Case-Laws - AT : CESTAT partly allowed appeal concerning duty demands on DTA sales by SEZ unit. Court held Commissioner of Customs has jurisdiction to demand duty on unauthorized DTA clearances, as SEZ is considered outside customs territory only for authorized operations. Extended period invocation under Customs Act s.28(4) upheld due to willful misstatement in claiming ineligible exemption. Basic customs duty and additional duty demands sustained as appellant failed to meet manufacturing condition under Notification 12/2012-Cus. Penalty under s.114AA set aside due to absence of factual misdeclaration, while s.114A penalty maintained. Matter remanded for SAD determination based on state tax exemption status. Appeal by Prestige partially allowed regarding penalty, partially rejected on duty demands, and partially remanded for SAD reassessment.
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IBC

• IBC Section 10-A COVID Moratorium Protection Does Not Cover Defaults Continuing Beyond Specified Period

  Case-Laws - HC : HC determined that a petition under IBC Section 10-A was not maintainable where default continued beyond the COVID-19 moratorium period. While Section 10-A prohibits CIRP initiation for defaults occurring between March 25, 2020, and subsequent six months (extendable up to one year), this protection does not extend to continuing defaults beyond the moratorium. The proviso barring future CIRP applications applies strictly to defaults during the specified period. Where default persisted after moratorium expiry, NCLT retained jurisdiction to entertain CIRP petitions. The court rejected the argument that Section 10-A bars proceedings even for continuing defaults and found no jurisdictional error in NCLT entertaining such matters. Petition dismissed, affirming NCLT's authority.
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• Electricity Supply Must Continue During Corporate Insolvency Process Despite Pending Dues Under IBC Section 14(2)

  Case-Laws - AT : NCLAT upheld that electricity supply cannot be discontinued during CIRP period under Section 14(2) of IBC, even if payment is pending. The tribunal determined electricity as an essential supply within Regulation 32 of CIRP Regulations, requiring protection during moratorium. While unpaid electricity dues form part of CIRP costs, the Resolution Professional must endeavor to clear outstanding payments, potentially through interim finance. The tribunal directed continuation of electricity supply necessary for manufacturing facilities, emphasizing that non-payment cannot justify discontinuation. IBBI was advised to expedite proposed amendments to Regulation 32 to address operational issues regarding essential services during CIRP. The appeal was disposed of with directions to maintain power supply to the corporate debtor.
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• Soya Bean Price Dispute Not Grounds for IBC Section 9 Action When WhatsApp Messages Show Pre-existing Negotiations

  Case-Laws - AT : NCLAT upheld dismissal of Section 9 IBC application concerning outstanding payment dispute between parties. WhatsApp communications evidenced pre-existing dispute regarding Soya Bean price fluctuations, where Appellant acknowledged waiting for market improvement before goods receipt. Tribunal found legitimate pre-existing dispute based on documented conversations between parties regarding price negotiations. NCLAT determined IBC proceedings were inappropriately pursued for debt recovery rather than genuine insolvency resolution. Appeal dismissed as evidence clearly established existence of genuine commercial dispute, making IBC jurisdiction inapplicable. Case reinforces principle that IBC cannot be used as alternate recovery mechanism where bona fide commercial disputes exist.
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Indian Laws

• Insurance Company Cannot Deny Claim When They Were Already Aware of Policyholder's Other Insurance Policies

  Case-Laws - SC : SC ruled in favor of appellant, overturning insurer's repudiation of policy claim. While insurance contracts require uberrima fides and disclosure of material facts, failure to disclose existence of other insurance policies did not constitute material suppression in this case. Court noted insurer was aware of policyholder's existing higher-value policy with another company and still chose to issue coverage, demonstrating acceptance of insured's premium payment capacity. The insurer's knowledge of other policies and subsequent policy issuance negated their repudiation grounds. Material facts must influence prudent insurer's risk assessment, which was not established here. Appeal granted with policy benefits to be paid to appellant.
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• Gift Deed to Daughter-in-Law Valid Despite Lease Clause, as Donor's Clear Intention and Family Support Establish Authenticity

  Case-Laws - HC : HC allowed appeal against trial court's decision invalidating a gift deed and granting permanent injunction. While trial court focused solely on fraud allegation without conclusively establishing it, HC found the gift deed valid based on intrinsic evidence showing donor's clear intention and explanation for the transfer. Though Clause II(6) of lease deed required written consent for property transfer, its violation would only affect lease renewal, not invalidate the transfer itself. Donor's explicit statement of love and affection for donee (daughter-in-law), coupled with confirmation by other family members, established deed's validity. Trial court's judgment declaring gift deed void and granting injunction was set aside, and original suit dismissed without costs.
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• Cheque Bounce Case: Admission of Debt in Meeting Minutes Validates Section 138 Presumption for Rs. 30 Lacs Payment

  Case-Laws - HC : HC overturned acquittal under Section 138 of Negotiable Instruments Act, finding Magistrate misapplied statutory presumptions under Sections 118(a) and 139. Respondent failed to rebut presumption that cheques were issued for consideration and to discharge debt. Defense claim of cheques being mere security was invalidated by documented admission of Rs. 94 lacs debt in Minutes of Meeting and subsequent letter, justifying encashment of Rs. 30 lacs cheques as partial payment. Magistrate erred in requiring complainant to establish legally enforceable debt despite clear statutory presumptions. Appeal allowed, setting aside dismissal of criminal complaints.
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Service Tax

• Service Tax Show Cause Notice Quashed as Extended Limitation Period Under Section 73(1) Lacks Proof of Willful Suppression

  Case-Laws - HC : HC determined that invoking extended limitation period under First Proviso to Section 73(1) of Finance Act 1994 was unjustified. Following P&B Pharmaceuticals and L&T precedents, court held that when relevant facts were previously disclosed to authorities through earlier notices, allegations of fraud, collusion, willful misstatement or suppression are unsustainable. Mere statutory language reproduction cannot justify extended limitation without substantive proof of willful suppression. Since assessee's position was known from prior proceedings and no new material evidenced deliberate concealment, the show cause notice was quashed for failing to establish grounds for extending limitation period under Section 73(1).
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Case Laws:

• GST

• 2025 (3) TMI 59
  Challenge to validity of Section 16(2)(aa) of the CGST Act, 2017/Assam Goods and Services Tax Act, 2017 as well as the validity of Section 16(2)(c) of the said Acts - Revenue has submitted that he has no objection if the challenge to the Section 16(2)(c) of CGST Act/AGST Act is decided in terms of the decision dated 05.08.2024 [ 2024 (8) TMI 836 - GAUHATI HIGH COURT] - HELD THAT:- The matter requires consideration. List the matter for hearing in due course.

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• 2025 (3) TMI 58
  Challenge to detention order and penalty - discrepancies in the E-way bill - HELD THAT:- It is not in dispute that by either of the parties that the goods were dispatched along with genuine documents for display in Aahar Exhibition organized at Pragati Maidan, New Delhi to which a delivery challan as prescribed under Section 55 (1) was issued along with E-way bill and material entry slip at Pragati Maidan and when on 18.03.2023, the goods were returned, again a delivery challan along with exit material slip and the E-way bill was issued as per the provision of the Act. Only a technical error was creeped out i.e. the place of dispatch of goods was mentioned as Ghaziabad in place of New Delhi. This Court in the case of The Commissioner Commercial Tax U.P. Lucknow Vs. S/S Saurabh Traders Railway Bus Stand Pilkhuwa Hapur [ 2020 (1) TMI 752 - ALLAHABAD HIGH COURT ] has held the Officer managing the check post after verifying the goods on the basis of other documents available at that point of time and have filled up the blank column of Form 38 and there was no occasion for imposing penalty, as has been done by the Assessing Officer. Further, the record shows that the authorities have not recorded any finding that the petitioner had intention to evade payment of tax, which is mandatory under the Act. This Court in the case of Vacmet India Ltd. [ 2023 (10) TMI 863 - ALLAHABAD HIGH COURT ] has held that if the goods are not taxable and accompanied with genuine documents, the proceedings are not justified. The proceedings cannot be justified in the eyes of law - Petition allowed.

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• 2025 (3) TMI 57
  Seeking grant of regular bail - fraudulent availment of Input Tax Credit - passing of ITC through five firms/companies without supply of relevant goods - offences under Section 132(1)(b) (c) Central Goods and Services Tax Act, 2017 - HELD THAT:- This Court finds that as per the prosecution, the accused-applicants are directors of M/s Siwon Enterprises Pvt. Ltd. and M/s MS Singhal Trading India Pvt. Ltd., who were allegedly involved in arranging fake invoices for various buyers or end-users in order to pass on fake Input Tax Credit to them, and they also arranged availment of fake Input Tax Credit in the fake firms, and in return the accused-applicants had been receiving commission in cash. A perusal of the complaint/charge sheet dated 13.12.2024 would show that the applicants were associated in investigation on 16.10.2024 and their statements under Section 70 Central Goods and Services Act, 2017 were recorded, and as per these statements the accused had given the separate lists of suppliers and recipients of their above noticed two firms. The complaint/ charge sheet dated 13.12.2024 though is silent about number of the beneficiaries, but according to the additional counter affidavit dated 10.2.2025, total 1267 persons received the benefit of fraudulent Input Tax Credit, however neither their particulars have been given in the additional counter affidavit nor the amount of commission received by the applicants has been disclosed. The sole piece of evidence relied upon by prosecution regarding involvement of accused-applicants with fake firms is the confession of the applicants recorded under Section 70 Central Goods and Services Tax Act, 2017, but the truthfulness of the same would be tested during trial, which is yet to commence. Admittedly, the alleged offences are triable by magistrate and carry a maximum punishment of five years. As far as the investigation relating to the applicants is concerned, the same has been completed, as the complaint/ charge sheet dated 13.12.2024 has been filed against the applicants and their firms, whereupon the cognizance order dated 13.12.2024 has also been passed. However, the charges against the accused-applicants have not been framed and trial is yet to start - keeping in view the nature of the trial, period of more than five months undergone by the applicants as an undertrial as well as the fact that there is no likelihood of conclusion of trial in near future, this Court deems it appropriate to extend the concession of regular bail to the applicants, as their further detention behind the bars would not serve any useful purpose. Conclusion - Bail is granted holding that detention was not justified given the completion of the investigation and the lack of immediate trial commencement. The bail application is allowed and it is ordered that the applicants Vikrant Singhal and Sachin Singhal be released on regular bail in the above case subject to their furnishing the requisite bail bonds and surety bonds to the satisfaction of the trial court.

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• 2025 (3) TMI 56
  Maintainability of petiiton - availability of alternative remedy - Validity of ex parte order passed by the Principal Commissioner declaring the petitioner liable for Service Tax - violation of principles of natural justice - HELD THAT:- In the facts of the present case, what is evident to this Court is that learned counsel for the petitioner had withdrawn CWJC No. 9292 of 2010 with liberty to take recourse to such alternative remedies as are otherwise available in accordance with law. No doubt, this Court granted liberty to the petitioner to file a fresh writ petition on the same and subsequent cause of action if the need so arise, that would not have any bearing on the present case where admittedly the petitioner has got an alternative remedy of appeal and in fact, in order to avail that remedy, the petitioner had already deposited 7 percent of the pre-deposit requisite amount. In the case of Godrej Sara Lee Ltd. vs. Excise and Taxation Officer-cum-Assessing Authority and Others [ 2023 (2) TMI 64 - SUPREME COURT] , the Hon ble Supreme Court has taken a view as to the circumstances under which the petitioner may be relegated to the alternative remedy of appeal. In the totality of the facts and circumstances, it is refrained from entertaining the writ application at this stage and relegate the petitioner to statutory remedy of appeal, if so advised - If a duly constituted appeal is preferred by the petitioner within a period of eight weeks from today, the same shall be considered by the Appellate Authority and in case, a question of limitation arises for consideration, the Appellate Authority shall consider the same keeping in view the fact that the petitioner was pursuing this writ application since the date of its presentation in the Registry on 19.08.2024. The period spent before this Court would be liable to be excluded. Conclusion - The High Courts have discretion to entertain writ petitions based on policy, convenience, and discretion. The Court may relegate parties to statutory remedies if an effective alternative remedy exists. Application disposed off.

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• 2025 (3) TMI 55
  Violation of principles of natural justice - appellate authority has failed in granting opportunity of hearing to the petitioner - HELD THAT:- The appellate authority has strictly adhered to the principles of natural justice by providing the petitioner with opportunity of hearing, as mandated under Section 107(9). This Court finds that the procedural requirements laid down in the said provision have been duly complied with before passing the impugned order. Moreover, this Court notes that all the grounds raised by the petitioner, have been thoroughly examined and considered by the appellate authority while rendering its decision dated 22nd November 2024. There is nothing on record to suggest that any material aspect has been overlooked or that there has been any violation of procedural fairness. Petition dismissed.

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• 2025 (3) TMI 54
  Challenge to SCN issued u/s 73 and 74 of the Central Goods and Services Tax Act, 2017/Kerala State Goods and Services Tax Act, 2017 - non-compliance with the period stipulated for completing the audit - HELD THAT:- The audit contemplated under Section 65 of the CGST Act stipulates that it shall be completed within a period of three months from the date of commencement of the audit. The Commissioner is given the power to extend the said period by a further period not exceeding six months. However, the explanation to the aforesaid provision stipulates that the commencement of the audit shall mean the date on which the records and other documents called for by the Tax Authorities are made available or the actual institution of audit at the place of business whichever is later. Though a question can arise whether the time limit is mandatory or only directory in view of the use of the word shall , the said question is left open for consideration in appropriate case, considering the circumstances of this case. The hearing notice dated 26.03.2024 and 02.04.2024 have not been produced. However, it is evident from the Ext.P5 communication issued by the petitioner itself that additional evidences were called for by the respondents from the petitioner. The said additional records are stated to have been produced on 09.04.2024, as seen from Ext.P5. Therefore, it can safely be concluded that the date on which the documents called for by the respondents were produced by the petitioner on 09.04.2024. It is necessary to refer to the Explanation to Section 65 which stipulates that the expression commencement of audit shall mean the date on which the records and documents called for by the Tax Authorities are made available by the registered person . Viewed in the above perspective, the documents called for by the Tax Authorities were made available by the petitioner on 09.04.2024 and the audit ought to have been completed within three months from the aforesaid date. Since the final report was filed within time, the contention raised by the petitioner on the basis of limitation stipulated in Section 65(4) of the GST Act has no application. Conclusion - The audit was completed within the prescribed period - The petitioner s argument regarding the audit s timeliness under Section 65(4) of the GST Act was deemed inapplicable. There are no merit in this writ petition and it is dismissed.

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• 2025 (3) TMI 53
  Imposition of fine in lieu of confiscation - allegation is that the Appellate Authority had wrongly reduced the fine in lieu of confiscation - HELD THAT:- The entire quantity of gold seized (presently in the custody of the Department) shall be released to the petitioner on the petitioner executing bonds in the manner and form required by the Senior Enforcement Officer, Enforcement Squad, State Goods Services Tax Department, SGST Complex, Palakkad. The property having an extent of 6 Ares and 7 Sq. metres in Survey No.73/4-435 of Potta village, Chalakkudy Taluk, Thrissur District shall be accepted as security for the release of the seized gold pending adjudication of the matter by the Tribunal - The owner of the property (father of the petitioner in W.P.(C.) No.20073 of 2024) will file an affidavit and undertake that he will not alienate or further encumber the property referred to above until culmination of proceedings before the Tribunal. Petition disposed off.

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• 2025 (3) TMI 52
  Can a person who enters into a contract with the Government or its agencies that contains a specific clause that the rate quoted shall be inclusive of GST other taxes turn around and claim that he is entitled to Goods Services Tax (GST) over and above the rate quoted by him? - HELD THAT:- A reading of the letters/instructions referred to in the writ petitions clearly show that, those Circulars/letters/instructions do not apply in a case where the Notice Inviting Tender or the agreement executed between the contractor and the tendering agency clearly specified that the rates quoted shall be deemed to be inclusive of GST. Though certain portions of the letter dated 07.05.2024 and the illustrations given therein, at first blush, appear to support the case of the petitioner, on closer scrutiny, it must be held that even those instructions do not support the case of the petitioner. The Circulars/instructions referred to above deal with the preparation of estimate and not with the final tendering process. It clarifies that while preparing estimates for the purpose of administrative/financial sanction, the estimates must be prepared without including GST element. The submission of the learned Government Pleader that if the contention of the petitioner were to be accepted, the sanctity of the tendering process itself will be affected is only to be accepted. This can be illustrated by means of an example. When the tender document/agreement contemplated that the rates quoted shall be deemed to be inclusive of GST and the successful bidder quotes Rs. 100/- for a particular item of work, he cannot be permitted to, thereafter, turn around and claim that he must be given Rs. 100/- plus 18% GST (total of Rs. 118) as there may have been situations where another bidder, after noticing the conditions in the tender document would have quoted Rs. 105/- inclusive of GST and would not have become successful on account of the fact that the successful bidder has quoted only Rs. 100/-. In such a situation, if the successful bidder is allowed to claim 18% GST over and above the rate of Rs. 100/- quoted by him, the Government/its agencies would end up paying Rs. 118/- which obviously, cannot be accepted. Conclusion - The contractor was not entitled to claim GST over and above the quoted rates specified in the contract agreements. There are no merit in these writ petitions and they are dismissed in limine.

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• Income Tax

• 2025 (3) TMI 51
  Validity of Final assessment order due to non-compliance with the principles of natural justice - failure to grant a personal hearing as required u/s 144B - HELD THAT:- We are unable to agree with the submissions advanced by Respondents, one on the ground of availability of alternate statutory remedy to the petitioner which ought to have been exhausted before approaching this Court in writ jurisdiction. Such submission, in the given facts, would fall foul of the statutory mandate u/s 144B of the IT Act, which embraces the right to be heard, failing which the order would be without jurisdiction and non est. In the given facts and circumstance, it would be unfair and unjust to the petitioner to be left entangled in litigation before the appellate authority and thereafter, in further appeals which are available, as the foundational illegality in a situation like the present, would have to be nipped in the bud. In such situation, the appellate remedy may not be effective or efficacious, considering the patent illegality in the impugned final assessment order. We express our inability to agree with the submission of Respondents to the effect that the petitioner in this case did not comply with the timelines clearly set out in draft assessment order to submit its response on the e-filing portal on or before 18:00 hours of 26 August 2022. Petitioner did submit such response with a categorical reques to be heard through video conferencing. Thus, according to Respondents when such specific timelines are not adhered to by the petitioner, the consequences ought to follow. The sequel to such submissions would mean shutting the doors of this Court to the petitioner merely because of a delay of merely one day in submitting its response as provided in the show cause notice-cum-draft assessment order. Also, accepting such submissions would tantamount to bypassing the clear statutory mandate u/s 143 (3) read with 144B of the IT Act, as interpreted by the decisions cited above. We, therefore, cannot accept justice becoming a casualty to technicalities by adopting a hyper-technical approach. 38. We may now refer to Section 156 of the IT Act which provides for the demand notice to be issued in case of any failure to pay tax by the assessee. In the present case, it is pertinent to note that such demand notice is issued pursuant to the impugned final assessment order of the said date. Therefore, when such demand notice is premised upon the impugned assessment order which itself is without jurisdiction and non est as observed any actions including issuance of consequential notices would not stand legal scrutiny. Penalty notices u/s 274, 270A r/w Section 271AA (1) - We note that notice/order under a statutory provision which would entail civil consequences causing prejudice to the person, ought to be passed in strict adherence to the principles of natural justice to include opportunity of being heard. As decided in UMC Technologies Private Limited v. Food Corporation of India and Another [ 2020 (11) TMI 966 - SUPREME COURT ] to state that it is the first principle of civilized jurisprudence that a person against whom any action is sought to be taken or interest are being affected should be given a reasonable opportunity to defend himself to include the right to be heard, before an order entailing such consequence is passed. Thus, we are unable to accept the submission of Respondents on the penalty notices issued by the respondents - WP allowed.

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• 2025 (3) TMI 50
  Reopening of assessment u/s 147 - reasons to believe - relaince on information collected by virtue of the procedure prescribed under the scheme notified u/s 135A - cash deposit is unverified on account of the assessee having failed to submit any valid justification or satisfactory documentary evidences for the same - HELD THAT:- While issuing the impugned notice u/s 148 the respondents by pure inadvertence have annexed/attached the information pertaining to some other individual/assessee and not the petitioner. The said aspect appears to be an error or mistake and neither deliberate nor wilful. On account of such error/mistake or inadvertence, no fatality can be said to attach to the issuance of the impugned notice u/s 148 of the Act. However, at the same time, the passing of the impugned order dated 03.02.2025 is absolutely unsustainable in overlooking the error apparent on the face of the record. It can be safely presumed that the authority did not apply its mind to the objections raised by the petitioner. We are of the considered opinion that the impugned notice issued u/s 148 to the extent that it reflects information of some other person, shall be rectified by the respondents. The appropriate and correct information available on the Insight Portal as also the Approval accorded by the Specified Authority alongwith the relevant information shall be made available to the petitioner within a week from date to enable him to file his reply/objections which may be considered strictly in accordance with law.

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• 2025 (3) TMI 49
  TDS u/s 194C OR 194J - payments made by the assessee to IGSPT for services received - ITAT justiciation in not upholding the order of the A.O. that tax was deducted at source by the assessee from the above payments u/s 194J wherein services received by the assessee is technical and professional in nature. HELD THAT:- In this case, the CIT (Appeals) and ITAT have recorded concurrent findings that the agreement entered into by the assessee with the IGSPT did not involve providing any professional / managerial / technical expertise services to the assessee. The two authorities have recorded concurrent findings of fact that the agreement concerned providing a call centre. The service executives were generally undergraduates or graduates of any stream who would act in a particular manner consistent with the prescribed guidelines when attending to the subscribers complaints. The above findings of fact are supported by the terms of the agreement between the assessee and IGSPT and the other material on record, such as the details of the call service executives, their qualifications, and the nature of work they discharged. Therefore, the concurrent findings of fact cannot be said to suffer from perversity either because they are based on no evidence or because they are contrary to the weight of the evidence on record. ITAT has recorded that the service providers to whom the assessee made the payments have already paid the appropriate taxes by way of advance tax / self-assessment tax. Thus, the ITAT has held that the law laid down by the Hon ble Supreme Court in the case of Hindustan Coca-Cola Beverage (P.) Ltd. [ 2007 (8) TMI 12 - SUPREME COURT] has also been substantially complied with by the assessee. Accordingly, we are satisfied that this case does not involve any question of law.

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• 2025 (3) TMI 48
  Validity of reopening notice - according to the petitioner, the notice lacked jurisdiction and impugned notice was ex facie without jurisdiction and not deserving of any response - HELD THAT:- Given the facts of the present case and considering the Petitioner s attitude of not responding to the notices, no case is made to exercise our extraordinary jurisdiction and interdict further assessment proceedings. If the Petitioner is confident about his version, he may possibly get relief in the assessment proceedings. In any event, he can always question the assessment orders through the regular channels of appeals, etc., available under the IT Act. Accordingly, no case is made to entertain this Petition. In this matter, an investigation into disputed facts would also be necessary. Even the limitation issue, in the peculiar facts of this case, would be a mixed question of law and fact. As noted earlier, this is not a fit case to exercise our discretion and interdict the proceedings. Any such stalling of proceedings will impact the assessments of various assessees covered by the allegations in the communication dated 12 March 2021. This communication refers to the vast amount of monies stacked in Shri Renuka Mata Multi-State Urban Cooperative Credit Society Ltd and the modus operandi adopted by various assesses in hoarding and laundering these amounts. We are satisfied that the Petitioner will have ample opportunities to defend himself during the assessment proceedings. Should the assessment proceedings prejudice the Petitioner, then, in the regular remedies provided under the IT Act, question such assessment proceedings. We dismiss this Petition and vacate the ad interim relief for all the above reasons.

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• 2025 (3) TMI 47
  Revision u/s 264 - claim of long term capital gains made - whether the AO was right in rejecting the stand taken by the assessee and holding that the date of acquisition of the subject property should be reckoned as 18.3.2008, when the agreement for sale was executed and registered in terms of the Maharashtra Apartment And Ownership Act and not from the date of allotment, namely, 1.8.2006. HELD THAT:- The definition of transfer as defined under the Transfer of Property Act should not be emerged while considering whether a transaction is a transfer under the provisions of the Income Tax Act. Undoubtedly, on the date of allotment, namely, 1.8.2006 a right has accrued in favour of the appellant/assessee. This is more so because the developer has accepted that the assessee has paid a sum of Rs.3,13,000/- by cheque dated 29.7.2006 which was prior to the allotment order dated 1.8.2006. The revenue does not dispute the fact that the payment schedule has been adhered to by the assessee and ultimately on the date when the agreement for sale was executed, namely, 27.12.2007, 82.5% of the entire sale price payable has been paid by the assessee. Prior to the date of sale in favour of the third party which took place on 29.4.2010 the entire consideration has been paid by the assessee which has been acknowledged by the developer. All these payments are a consequence of an allotment made on 1.8.2006 and, therefore, it has to be held that the right over the property in question accrued in favour of the assessee as on the date of allotment i.e. 1.8.2006. Undoubtedly, the letter of allotment and the payment made thereafter has created in favour of the assessee an interest in the asset directly and it was by way of an agreement/or otherwise. It would be beneficial to take note of the decision of the Hon ble Supreme Court in Saraswati Devi v. Delhi Development Authority and Others [ 2013 (1) TMI 1058 - SUPREME COURT] for the purpose of understanding as to what would the term encumbrance mean. The word encumbrance imports within itself every right or interest in the land, which may subsist in a person other than the owner; it is anything which places the burden of a legal liability upon property. Further it was held that the word encumbrance in law has to be understood in the context of the provision under consideration but ordinarily its ambit and scope is wide. Thus, apart from the definition of the word encumbrance as explained in the aforementioned decision, it should be understood in the context of the provision under consideration which, in our instant case, is the Income Tax Act. Undoubtedly, a direct interest on the property stood created in favour of the assessee as and when the letter of allotment was issued, namely, 1.8.2006 because prior to the date of letter of allotment, the payment was made by the assessee in July, 2006 which has been acknowledged in the letter of allotment. Therefore, we are of the view that the order passed by the PCIT as well as the assessment order calls for interference. Accordingly, this appeal is allowed. The order passed in the writ petition is set aside and the writ petition is allowed. The matter is remanded back to the assessing officer with the direction to take note of the date of allotment, namely, 1.8.2006 as the date of transfer of the subject asset in favour of the assessee and accordingly, the assessment shall be completed.

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• 2025 (3) TMI 46
  Reopening of assessment u/s 147 - Reason to believe - lack of specific information, such as the name of the bank - information relied upon for reassessment and outcome of enquiry if conducted any, is to be supplied - HELD THAT:- From perusal of the reasons annexed with the notice issued under Section 148A(b) of the Act, it is evident that name of the bank in which the account was maintained is not mentioned. Inspite of the mandate of Section 148A of the Act, circulars and guidelines issued by the department that material relied upon should be supplied to the assessee, the casualness in which the reasons are supplied, is evident. Vague information was supplied and in absence of name of bank it becomes impossible for the assessee to file response. AO s decision to proceed with the notice despite the petitioner s objections - The petitioner filed objections denying that the account number does not belong to it, giving details of the bank account with the ICICI Bank which was closed, the proof thereof was annexed. The AO issued notice to the bank on 25.03.2022 and without waiting for reasonable time or giving reminder or making any efforts to verify the fact from the bank, brushed aside the objections stating that no response has been received from the bank. In the reply filed by respondent before this court, the e-mail received from the bank that the account of the petitioner with the ICICI Bank was closed in the year 2010 and further that the account number mentioned in the notice does not exist with the ICICI Bank has not been denied. The e-mail was of April and May, 2022 and respondent filed reply on 22.02.2023 i.e. almost eight months after receipt of the e-mail. In reply filed, there is no pleading that the bank account number mentioned in the notice was of some other bank than ICICI or that there is even a prima-facie material with the department that the bank account mentioned in the notice belonged to the petitioner. There is no reason put-forth for hurriedly passing the impugned order within five days of sending email. The objections were not decided in accordance with Section 148A and the guidelines issued for procedure to be followed in proceedings under Section 148A of the Act. Even before this Court, the department miserably failed to put an iota of evidence to even prima-facie show that the bank account mentioned in the notice belonged to the petitioner and even at this stage, the name of the bank of which account number belongs is not disclosed. WP allowed.

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• 2025 (3) TMI 45
  Addition u/s 68 - cash deposited in banks during the demonetization period - specific case of the Assessee that the cash deposited during the demonization was out of the cash withdrawal from the bank and the entirety of the cash withdrawals were from the regular bank account maintained in the usual course of business - HELD THAT:- AO has accepted the books of accounts of the Assessee and no defects or discrepancies of any source in the purchase and sales and stocks have been pointed out by the AO, further the A.O. has also not doubted the fact that the source cash as enduring to the Assessee from its business activities, further it is not the case of the A.O. that the inflow of cash from any activity other than business of the Assessee. A.O. failed to look into the history of the Assessee wherein it is found that the Assessee used to deposit the cash in the bank in the months preceding demonization. CIT(A) has committed error in upholding the addition made by the A.O., accordingly, we delete the addition - Appeal filed by the Assessee is allowed.

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• 2025 (3) TMI 44
  Revision u/s 263 - As per CIT AO has not conducted enquiries with regard to valuation at which the Compulsorily Convertible Preference Shares ( CCPS ) were issued to holding company of the Appellant - HELD THAT:- As relying on FIS PAYMENT SOLUTIONS[ 2024 (10) TMI 182 - DELHI HIGH COURT] , M/S. BLP VAYU [ 2023 (6) TMI 209 - ITAT DELHI] and M/S. KISSANDHAN AGRI FINANCIAL SERVICES PVT. LTD. [ 2023 (3) TMI 769 - ITAT DELHI] Provisions of s. 56(2)(viib) would not apply in the present case where the transaction is between the assessee (subsidiary company) with its 100% holding company as issuance of share to the holding company cannot be seen to involve circulation of any unaccounted money of the assessee company per se. Thus, twin conditions of sec 263 do not simultaneously exist in the present case. The deeming fiction of s. 56(2)(viib) would not apply in the present case and consequently, the assessment order cannot be regarded as erroneous per se. Hence jurisdiction un/s 263 is not available to the revisional authority. Appeal of the assessee is allowed.

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• 2025 (3) TMI 43
  Penalty u/s 271(1)(c) and 270A - assessee has not deducted TDS on EDC [External Development Charges] charges paid by the assessee to HUDA - CIT(A) deleted the penalty - HELD THAT:- We find as far as disallowance of the EDC payment u/s 40(a)(ia), it is stated that the assessee has not contested the disallowance made. However, with respect to penalty, we find that the assessee has given reasonable plausible explanation before us that at that point of time, there was confusion and difference of opinion on this issue. We therefore hold that the explanation that the issue of TDS being deducted on EDC payment was not having legal clarity and there was a difference of opinion on this issue which needed clarification from the CBDT, is a valid explanation. No evidence on record that payment of EDC charges is non-genuine or that the assessment order has demonstrated that there is any concealment of income or there is any inaccurate particulars of the income. Mere noncompliance with the TDS provisions do not imply concealment or furnishing of inaccurate particulars to encompass the assessee with the mischief of section 271(1)(c)/270A.We are of the considered view that by making an incorrect claim in law, would not tantamount to furnishing of inaccurate particulars. In such a scenario, following the ratio in the case of Reliance Petroproducts [ 2010 (3) TMI 80 - SUPREME COURT] we hold that the learned CIT(A) has correctly deleted the penalty u/s 271(1)(c) Also order of CIT(A) deleting the penalty u/s 270A of the Act needs no interference. Appeal decided in favour of assessee.

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• 2025 (3) TMI 42
  Rectification u/s 154 - Disallowance contemplated u/s 14A r.w. Rule 8D - Suo-motto disallowance made by assessee - HELD THAT:-In the absence of recording any dissatisfaction, invocation of sec 14A read with Rule 8D of the Rules is jurisdictionally defective and legally unsustainable as held in judgements delivered in the case of U K Paints India Pvt. Ltd [ 2024 (12) TMI 650 - DELHI HIGH COURT] and H. T. Media Ltd.[ 2017 (8) TMI 962 - DELHI HIGH COURT] Sec 154 of the Act empowers the AO to rectify the mistake of apparent nature. A mistake if any, which requires long drawn process of reasoning or involves any kind of debate is ousted from the jurisdiction available u/s 154 of the Act. In the instant case, suo-motto disallowance carried out u/s 14A of the Act by the assessee was sought to be modified and enhanced in the proceedings u/s 154 of the Act. Such disallowance on the face of it, cannot be regarded as apparent mistake contemplated under s. 154 of the Act. The first appellate order thus requires to be set aside and the rectification order passed u/s 154 is liable to be quashed. Appeal of the assessee is allowed

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• 2025 (3) TMI 41
  Revision u/s 263 - interest on enhanced compensation received by the Assessee should be classified as Income from Other Sources u.56(2)(viii) - HELD THAT:- The opinion of the AO considering the interest on the enhanced compensation as not taxable also cannot be called as plausible view. Once the Jurisdictional High Court reiterates the law considering the amendment to the provision and also the previous Judgments, the law laid down by the Jurisdictional High Court becomes binding precedent and the authorities or the Tribunal cannot ignore the same and take different view. The Jurisdictional High Court in the case of Inderjit Singh Sodhi (HUF) [ 2024 (4) TMI 408 - DELHI HIGH COURT] considered the insertion of Clause (viii) to Sub Section 2 of Section 56 of the Act w.e.f 01/10/2010, wherein also considered the case of Ghanshyam (HUF) [ 2009 (7) TMI 12 - SUPREME COURT] and held that the interest on compensation and enhanced compensation shall be considered as income from other sources and taxable. Thus, in our opinion, the view taken by the A.O. that the interest on enhanced compensation is part of the compensation and not the interest per-se and allowing the same as exempt u/s 10(37) of the Income Tax Act cannot be called as plausible view . Thus, the interest on the compensation or interest on the enhanced compensation shall be considered as income from other sources and taxable accordingly. Ld. PCIT committed no error in setting aside the assessment order and directing the A.O. to frame fresh assessment. Decided against assessee.

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• 2025 (3) TMI 40
  Assessment u/s 153C v/s 143(3) - six assessment years determination - date of receiving seized documents for determining the assessment period - HELD THAT:- As relying on Aakansha Gupta [ 2024 (7) TMI 1133 - ITAT DELHI] as in the case of the assessee also the satisfaction note for initiating the proceedings u/s 153C were recorded by the AO of the assessee on 10-10-2-2022 thus assessment year relevant for previous year in which search was conducted in the case of the assessee should be the Assessment Year AY 2023-24 and the six assessment years immediately preceding the assessment year relevant for the previous year in which search was conducted for initiating proceeding u/s 153C of the Act will be AY 2017-18 to 2022-23 and the impugned year i.e. AY 2021-22 is fallen in such block period thus the assessment should have been completed u/s 153C and not u/s 143(3) as has been done in the present case. Also in the case of Jasjit Singh [ 2014 (11) TMI 1012 - ITAT DELHI] which has been affirmed by the Hon ble jurisdictional high court as reported in [ 2015 (8) TMI 982 - DELHI HIGH COURT] the assessment order passed u/s 143(3) dt. 28.12.22 is hereby quashed. Appeal of the assessee is allowed.

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• 2025 (3) TMI 39
  Addition u/s 56(2)(viib) - equity shares were allotted to the existing shareholders - excess amount (as excess shares premium) received on account of rounded off difference @ Rs. 0.09 Paisa on allotment of 1.00 crore equity share - AR submitted that shares were allotted to the existing shareholders in their existing share holding ratio and the shareholding allotment of the aforesaid shareholders remained the same HELD THAT:- We find material substance in the submission advanced on behalf of the assessee and there is strong ground exist to interfere with the order passed by the Ld. CIT(A) and accordingly, the order passed by the Ld. CIT(A) not sustainable in eyes of law and addition in question deserves to be deleted. Decided in favour of assessee.

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• 2025 (3) TMI 38
  Addition u/s 68 - unexplained entries in bank account - assessee has failed to produce any concrete and any additional evidences in support of its contention - CIT(A) deleted addition - HELD THAT:- The case of the assessee for the above mentioned AYs is squarely covered by the decision of Zed Enterprises (P) Ltd [ 2024 (1) TMI 1442 - ITAT DELHI] held the assessee company has received funds from various concerns as mentioned above and thereafter amounts were transferred to the above-mentioned companies/concerns immediately, thus the appellant company is not beneficiary company. CIT(A) also obtained the remand report from the AO and held that the AO has verified the fund flow statement depicting the source of funds and utilization of the same for payments to beneficiaries submitted by the assessee. CIT(A) held that it was found which established that the Sh. Anand Jain and Sh. Naresh Kumar Jain were operating bank accounts in the names of various concerns/companies through which accommodation entries were being provided and the appellant company was one of such shell concerns. Further the beneficiaries of such accommodation entries were also identified and information to their respective AOs was also disseminated as mentioned in the assessment order as well as the remand report. CIT(A) held that as far as charging of commission is concerned in the case of the assessee, it has been held by the AO in the assessment order that Sh. Anand Jain and Sh. Naresh Jain were entry operators who were managing and controlling various shell concerns including the appellant for providing accommodation entries in lieu of commission and taking that logic there is no question of charging of commission income in the hands of the appellant company arises, since nothing has been earned by the company, being the shell concern. Since, the commission already stands taxed in the hands of the entry operators in their individual capacity, no separate commission can be charged in the hands of the pass through/ companies floated by the entry operators. As the assessee is found to be one of such pass-through entity, we decline to interfere with the order of the ld. CIT(A) in deleting the commission charged. We therefore, are in agreement with the above extracted observations/findings in present case are squarely covered by this case.Decided against revenue.

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• 2025 (3) TMI 37
  Rejection of application for grant of registration u/s 12AB - charitable purposes or not? - CIT(E) rejecting the application seeking permanent registration of the assessee on the ground that the assessee does not possess the registration for running charitable activities of hospital - HELD THAT:- Advance made to The Central Park Hotel is for acquisition of new hospital. Accordingly, we have no hesitation to hold that assessee had not diverted its funds for non-charitable activities by advancing to parties who are related either to the office bearers or to their concerns. Professional payments made by the assessee - Assessee from its side before us had filed an affidavit from the doctors and income tax returns of the doctors for FY 2021-22 (AY 2022-23) together with TDS certificates issued by the assessee. In any case, non submission of supporting evidences, if any, for professional fees payment cannot be a ground for rejection of permanent registration u/s 12AB. If there is any infirmity in those professional fees payment, the same could be looked into at the time of assessment proceedings. In any event, the ld CIT(E) does not even whisper or even doubt that the said professional payments were made to the parties specified u/s 13(3) of the Act. Hence, drawing adverse inference on this account and rejecting the permanent registration u/s 12AB, in our considered opinion, is not in order. Other receipts shown which was found to be excessive by the ld CIT(E) when compared to that in the earlier two years - Since, the receipts were actually received during the FY 2022-23 in respect of services rendered earlier, the same were accounted in FY 2022-23. There is absolutely no dispute to the fact that the assessee is following cash system of accounting. Hence, adverse inference drawn by the ld CIT(E) for rejecting registration on this count, in our considered opinion, cannot be upheld. Payment of incentives expenses - Depending upon the number of treatments completed by him, incentives would be paid to him. These facts are evident from the appointment letter of Dr. Sandeep Saraf itself. In any event, both salary as well as incentive paid to Dr. Sandeep Saraf had been duly subjected to deduction of tax at source by the assessee. The finding given by us with regard to payment of professional charges supra shall apply to payment of incentive expenditure also. Accordingly adverse inference drawn by the ld CIT(E) on this account for rejecting the registration, in our considered opinion, cannot be upheld. Income from college fees - AR before us duly clarified that assessee still runs the hospital and affiliation has been cancelled only for running the nursing college. Nowhere the activities of running hospital was construed to be non charitable by the ld CIT(E). We find force in the said arguments advanced by the ld AR and accordingly, we hold that cancellation of registration on this count cannot be held to be justified. The treatment of college fees received had to be looked into at the time of assessment proceedings and that does not stand as a hindrance while considering the recognition for registration u/s 12AB of the Act. Salary paid during the last three financial years by the assessee - The assessee had indeed furnished the complete details of employees and doctors together with their designations in a separate annexure before the ld CIT(E). In any event, this can never be a relevant consideration for the purpose of grant of registration u/s 12AB of the Act. The activities of running a hospital is certainly charitable in nature and during the course of such charitable activity, payment to doctors and employees had to be made. Hence, adverse inference drawn by the ld CIT(E) on this count is hereby dismissed. Assessee has accumulated huge profit hence, working for profit motive and not for charitable purpose - There is always a huge difference between the concept of public profit and private profit and grant of exemption u/s 11 of the Act would be in jeopardy only when there is private profit i.e. profit being distributed to the trustees as dividend or in any other form. Once there is public profit i.e. profit/ surplus earned by a trust which are being ploughed back into coffers of the trust for future charitable activities are certainly permitted. Even the provisions of section 11 to 13 permit earning of profit of 15% and in the event of any trust deriving profit in excess of 15%, then the Income Tax Act itself permits for accumulation in terms of section 11(2) of the Act to be utilized in future. Hence, in our considered opinion, surplus earning is not a sinful activity and in any manner does not hinder the concept of charity or charitable activities. Accordingly, the observations made by the ld CIT(E) in this regard are hereby dismissed as devoid of merit. Affiliation of nursing college has been cancelled and accordingly genuineness of the activity of the assessee is not established - The assessee society has been running the hospital with proper approvals from the competent authorities and cancellation of affiliation of nursing college would not in any way hamper the continuation of charitable activities of the assessee society in running the hospital. Hence, the genuineness of the activities cannot be doubted at all qua the hospital. This issue has already been addressed by us while giving out findings with regard to yet another query raised by the ld CIT(E) supra. Assessee had paid monthly rent to Kantialal Saraf HUF who happened to be related person u/s 13(3) - CIT(A) had not even bothered to bring comparable instances to drive home the point that the monthy rent paid by the assessee to Kantilal Saraf HUF is excessive or unreasonable. CIT(E) had not brought any evidence on record to even state that the fair market value of the rent for the infrastructure taken on rent by the assessee was less than the amount paid by the assessee to the related person. Without this finding being brought on record, there cannot be any allegation that could be leveled on the assessee. In any event, this issue has got absolutely no relevance in any manner whatsoever for the purpose of grant of registration u/s 12AB of the Act. Hence, the observation made by the ld CIT(E) is hereby dismissed as devoid of merit. Thus, no hesitation to conclude that the assessee should be granted registration u/s 12AB of the Act. The grant of exemption u/s 80G of the Act would be consequential to the grant of registration. Accordingly grounds raised by the assessee are allowed.

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• 2025 (3) TMI 36
  Validity of assessment u/s 153A - as argued incriminating material was found during the search operation - HELD THAT:- In the case of Abhisar Buildwell [ 2023 (4) TMI 1056 - SUPREME COURT] held that in case no incriminating material is found during the search conducted u/s 132 of the Act, the Ld. AO will have no jurisdiction to make an assessment As there is no any such incriminating material was found during the search operation which may persuade or authorized to the Ld. AO to proceed with the assessment u/s 153A and by following judicial precedents mentioned hereinbefore, assessment proceedings invalid and not authorized by law and hereby quashed and set aside. Decided in favour of assessee.

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• 2025 (3) TMI 35
  Bogus LTCG - addition made on account of share capital and share premium - HELD THAT:- As correctly decided by CIT(A) AO has himself mentioned in the order that details like copy of accounts, income tax particulars, bank statement and balance sheet of all the companies from whom share capital and share premium was received were filed during the course of assessment proceedings. The AO has primarily made additions for the reason that the directors of the said companies were not produced although opportunity was provided. AO has cited a number of case laws to support his contention. The AO has, however, not mentioned any of the alleged evidence found or seized during the course of search in the case of S.K. Jain even though he had re-opened the assessment for that reason. In absence of the same the AO s case is primarily built on the non-appearance of the directors of the investing companies. Details regarding share capital and share premium received were furnished during the course of the original assessment which was completed u/s 143(3) of the Act, on 15.12.2009, accepting the sources of share capital introduced. Even during the course of reassessment proceedings, the appellant filed all the necessary details to discharge its onus to prove genuineness of share capital and share premium received. In the instant case the said onus enjoined upon the appellant company stands discharged in as much as the identity and creditworthiness of the investors stands proved and the genuineness of the transactions stands evidenced by the confirmations and the bank accounts which have been filed before the AO, which has been acknowledged in the assessment order. Decided in favour of assessee.

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• 2025 (3) TMI 34
  Addition u/s 68 - unexplained cash credit in the garb of share application money/premium - CIT(A) deleted addition - HELD THAT:- Considering the fact that the transactions have been done through banking channel, one cannot doubt the genuineness of the transaction. Assessee has established the initial onus as required u/s 68 of the Act, therefore, it is for the AO to bring the material on record to controvert the claim of the Assessee or to discredit the evidence produced by the Assessee. In the assessment order in one breath A.O. confirmed that all the notices issued u/s 133(6) of the Act were served on the Investor Companies and contrary to the same, the existence of those Companies in the address have been doubted based on enquiry conducted by Income Tax Inspector, however, no date of inspection report and no reference of date of inspection has been mentioned in the assessment order. AO has not collected any evidence to prove that the transactions in questions were not genuine or the share application money/share premium received by the Assessee during the year was its own undisclosed income. It is well settled law that mere non production of Directors of share applicant cannot be termed that the entire transactions are not genuine as held in the case of CIT vs. Orissa Corporation Pvt. ltd.[ 1986 (3) TMI 3 - SUPREME COURT] Appeal of the Revenue is dismissed.

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• 2025 (3) TMI 33
  Disallowance of interest paid on Government loans - such interest was never paid in any year since such loan was taken from the State Government - HELD THAT:- Assessee is bound to record the interest payable on loans taken from the UP Government as the assessee has followed mercantile system of accounting. The appropriation of the loan here will not determine the allowability of interest expenditure as the AO has not commented on the fact that the appellant assessee s balance-sheet has not have non-interest bearing fund/surplus. Revenue (AO/CIT(A)/Sr. DR) has not brought anything on the record to demonstrate that either the nature of the said interest-bearing loan has been changed by the lender; UP Government or the appellant assessee is not required to pay any interest on the said loan. As not brought on the record by the Revenue (AO/CIT(A)/Sr. DR) that either the UP Government has waived the interest on the said loan or the UP Government has converted the said loan into non-interest-bearing loan/grant-in- aid, etc. Here, we not find any material on the record which supports the AO s stand on the disallowance of interest when the AO, without questioning the accounting method of the appellant assessee followed over the years, has acted against the principle of consistency. We are of the considered view that the Ld. CIT(A) is not justified in sustaining the disallowance - Decided in favour of assessee.

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• 2025 (3) TMI 32
  Disallowance u/s 14A - assessee is having interest free income in the shape of dividend, capital gain etc which did not form part of the total income and therefore, he invoked the provisions of Section 14A of the Act read with Rule 8D - HELD THAT:- We find that the assessee has made fresh investment in the year under appeal as against which it has sufficient own interest free funds in the shape of reserve and capital. Therefore, respectfully following the judgment of the Tribunal in the case of the assessee for preceding year [ 2019 (1) TMI 36 - ITAT DELHI ], we direct the AO to delete the addition. However, since the assessee has made suo moto disallowance of Rs. 6,30,937/- therefore, the disallowance to this extent be restricted. Disallowance made towards exemption u/s 10B and exemption u/s 10AA by not treating the other income (misc income, compensation, profit on exchange gain) earned from export activities - HELD THAT:-This Tribunal in the case of assessee for AY 2007-08 [ 2019 (1) TMI 36 - ITAT DELHI ] and such order was followed by the Tribunal further in Assessee s won case for AY 2010-11 to 2012-13 [ 2021 (10) TMI 1455 - ITAT DELHI] wherein considered the fact that with respect to the miscellaneous income and compensation being part of eligible profit for the purpose of computing the deduction u/s 10B and revenue has already accepted this issue. Tribunal has set aside the matter to the file of AO for verification of the nature of income and then allow the claim. Thus by following the principle of consistency in this year also we set aside the issue to the file of the AO for making verification of the nature of income and compute the deduction u/s 10B of the Act in terms of directions given by tribunal for Ay 2007-08. Reduction in export turnover towards the amounts which have been received in foreign currency , AO has reduced such amount from the export turnover however, the same is also required to be reduced from the total turnover because the total turnover comprises of export turnover and legal turnover. The Tribunal in its order for AY 2010-11 to 2012-13 following the judgment in case of CIT Vs. Genpact India [ 2011 (11) TMI 119 - DELHI HIGH COURT ] has directed the AO to recomputed the exemptions u/s 10B of the Act by reducing the said amount from the total turnover also. The facts in this year are identical. Therefore, we direct the ld AO accordingly. As a result, this ground of appeal are allowed for statistical purposes as per the direction given herein above. Disallowance of bad debts - HELD THAT:- We find that during the year under appeal the assessee has claimed expenses on account of provision for doubtful debt and no deduction on account of amount written off out of such provision is claimed in the profit and loss account. Under these circumstances no disallowance could be made for the expenses on account of bad debt which was not claimed in Profit and loss Account and was adjusted against the provisions made. It is further relevant to state that when the assessee itself has added back the provision for bad and doubtful debt to the total income as per the computation of income therefore, any disallowance made may lead to double taxation of income. Disallowance of payment made in foreign currency without deducting tax at source as provided u/s 195(2) read with Section 40(a)(ia) - HELD THAT:- The facts for the year under appeal are similar to the facts in earlier year [ 2021 (10) TMI 1455 - ITAT DELHI] where the Tribunal has confirmed the addition and assessee has also not controvert such finding before us. Thus, by respectfully following the observation made by the Tribunal supra, the disallowance made in this year is hereby confirmed. Disallowance of interest related to funds involved the capital work in progress - HELD THAT:- Tribunal vide its common order for AY 2010-11 to 2012-13 [ 2021 (10) TMI 1455 - ITAT DELHI] has decided the issue and sent the matter back to the file of the AO for making verification of secured and unsecured loans and further verified whether any part of the loan were utilized in respect of expenses forming part of capital work in progress. After considering the facts we find that there is no quarrel about the facts which was similar to the earlier years. Disallowance towards leave encashment u/s 43B(f) - HELD THAT:- We direct the AO to allow the claim of the assessee in the year when actual payment is made towards the leave encashment.

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• 2025 (3) TMI 31
  Addition u/s 56(2)(viib) - shares have been issued at premium by the subsidiary company to its 100% holding company - HELD THAT: The Hon ble High Court in FIS Payment Solutions Services India Pvt.Ltd. [ 2024 (10) TMI 182 - DELHI HIGH COURT] endorsed the construction of s.56(2)(viib) rendered in the case of BLP Vayu (P.) Ltd. [ 2023 (6) TMI 209 - ITAT DELHI] Kissandhan Agri Financial Services (P.) Ltd. [ 2023 (3) TMI 769 - ITAT DELHI] . As per judgements quoted, it was observed that deeming fiction of s.56(2)(viib) could not apply in the case of such transactions between holding company and wholly owned subsidiary in the absence of any purported benefit occurring to any outsider. Significantly, the Hon ble High Court noted that the Revenue has acquiesced with the judgement of Co-ordinate Benches before the Hon ble High Court. No error in the order of CIT(A) which is resulted in reversal of the addition under s.56(2)(viib) of the Act. Appeal of the Revenue is dismissed.

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• 2025 (3) TMI 30
  Penalty u/s. 271(1)(c) - TP Adjustment on interest-free loans given to associated enterprises - According to the assessee, issue of notional interest on interest free loans given to associated enterprise is highly debatable issue, more particularly when appeal by the assessee against the aforesaid order of Coordinate Bench has been admitted by the Hon ble High Court of Bombay on substantial question of law and is pending for disposal - HELD THAT:- In this case, upward adjustment was made by TPO at SBI PLR which was confirmed by the ld. DRP but was restricted to LIBOR + 200 bps by the Coordinate Bench on appeal by the assessee. Facts of the case are undisputed. We note that although AO has levied penalty for furnishing of inaccurate particulars of income, fact of the matter is that assessee had disclosed necessary facts required for computation of total income in the return of income filed for the year. It is also a fact on record that appeal by the assessee before the Hon ble High Court of Bombay on the quantum assessment has been admitted on substantial question of law and is pending for disposal. Admission of appeal by the Hon ble High Court indicates that the question is an arguable point in law on which two views are possible. Therefore, we are of the considered view that it is not a case for penalty under section 271(1)(c). When the issue is debatable and two views are possible, then on such issue, penalty under section 271(1)(c) cannot be levied by charging the assessee with the charge of furnishing inaccurate particulars of income. Accordingly, considering the facts on record, pendency of appeal by the assessee before the Hon ble High Court on quantum addition which forms the basis for levy of penalty by admitting substantial question of law as well as judicial precedents referred above, we hold that penalty under section 271(1)(c) is not leviable. Grounds raised by the Revenue are dismissed.

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• 2025 (3) TMI 29
  Denial of exemption u/s 11 - diversion of funds for the benefit of the related parties mentioned in section 13(3) are not for charitable activities of the assessee and are not for the benefit of public at large - disallowance of interest expenditure made u/s 13(2)(a), 13(2)(b) and 13(2)(g) - HELD THAT:- From a detailed analysis of various clauses of section 13(3) vis- -vis the facts of the present case, we of the considered view that ABET does not fall within the purview of the specified person under section 13(3) of the Act. Accordingly, we are of the view that the AO erred in invoking the provisions of section 13(2) r.w. section 13(3) of the Act for disallowing the interest expenditure on the term loan u/s 13(2)(a), 13(2)(b) and 13(2)(g). Accordingly, we find no infirmity in the impugned order passed by the CIT(A) on this issue, and therefore, the same is upheld. Similarly, we also do not find any merit in the disallowance of lease rent paid by the assessee for a building which was provided free of charge to ABET to enable them to start Aditya Birla World Academy School . Accordingly, the impugned order passed by the learned CIT(A) on this issue is also upheld. As a result, Grounds No.1 to 4 raised in Revenue s appeal are dismissed. Allowance of standard deduction u/s 24 while computing the income under the head income from house property - whether the assessee, claiming exemption u/s 11, is entitled to claim a deduction of a sum equal to 30% of the annual value u/s 24(a) ? -We find that in CIT vs Rao Bahadur Calavala Cunnan Chetty Charities, [ 1979 (8) TMI 17 - MADRAS HIGH COURT] held that the income from property held under trust would have to be arrived at in a normal commercial manner without reference to the provisions which are attracted by section 14. Also in Girdhari Lal Shewnarain Tantia Trust [ 1991 (6) TMI 8 - CALCUTTA HIGH COURT] rendered similar findings and held that the income from the property held under trust has to be arrived at in a normal commercial manner and when the income from property held under trust as such is excluded, there is no scope for computing the income from house property by applying the provision of section 14 of the Act. We direct the AO to disallow the deduction of 30% claimed by the assessee on income declared under the head income from house property . Accordingly, we do not concur with the findings of the learned CIT(A) on this issue. Interest accrued but not received - AO held that the system of hybrid accounting or mixed accounting has been done away with. Thus, the taxpayers have to follow either the cash or mercantile system consistently. Accordingly, the interest income was worked out by invoking the provisions of section 144 in accordance with the provisions of section 145 and added to the total income of the assessee - HELD THAT:- We find that a similar issue pertaining to following the hybrid system of accounting came up for consideration before the co-ordinate bench of the Tribunal in assessee s own case in ITO vs. M/s. Vaibhav Medical and Education Foundation [ 2024 (3) TMI 1414 - ITAT MUMBAI] deciding the issue in favour of the assessee as held that the assessee has been offering Income from Other Sources by following cash system of accounting i.e. on receipt basis consistently from inception. Therefore, in our view there is merit in the contention there is no violation of section 145 since for the purpose computing income from Other Sources the assessee is not following hybrid system of accounting but has been consistently following cash system of accounting. Decided against revenue.

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• 2025 (3) TMI 28
  Estimation of income - bogus Expenses - AO had estimated the profit derived by the assessee from the two sub-contracts @25% - CIT(A) submitted that the addition sustained by him @16% was comparable with the GP of 15.49% as disclosed by the assessee - HELD THAT:- We find that identical issue was involved in the assessee s own case in A.Y. 2009-10 [ 2023 (2) TMI 1390 - ITAT AHMEDABAD] In that year, on the basis of information received from Maharashtra Sales Tax Department that the assessee had claimed bogus purchase of materials, the AO had disallowed the entire purchases, which was reduced to 25% by the Ld. CIT(A). On further appeal, the Co-ordinate Bench of this Tribunal has restricted the disallowance to 12.5% of the bogus purchases. The same basis was followed to restrict the disallowance in respect of bogus sub-contract expenses in A.Ys. 2012-13 to 2018-19. Thus, we restrict the disallowance in the current year to 12.5% of the subcontract amount as awarded by the assessee to AIL KNRCL. Accordingly, the assessee gets part relief in the matter.

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• 2025 (3) TMI 27
  Addition on account of sale of sugar on concessional rate - HELD THAT:- Sugar Commissioner Maharashtra Government gave the directions to all sugar factories as per Section 79(A) of Maharashtra Co-operative Societies Act, 1960. The Sugar Commissioner gave the direction that Sugar Factories shall sale maximum 5 kgs of sugar per month at concessional rate to its members only. The rate shall be @ levy sugar (+) excise duty. The sale of sugar at concessional rate shall be applicable only to those members who have supplied their Sugar Cane to the factory. We set-aside the order of ld.CIT(A), qua sale of sugar at concessional rate to the CIT(A) for denovo adjudication. The ld.CIT(A) shall bring on record the specific facts mentioned by us in earlier paragraphs. Ld.CIT(A) shall also bring on record the specific facts mentioned in the Krishna SSK Ltd.,[ 2012 (11) TMI 669 - SUPREME COURT] . The Assessee shall file all necessary details before the CIT(A). Accordingly, grounds of appeal raised by the Revenue are allowed for statistical purpose.

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• 2025 (3) TMI 26
  Disallowance of provision towards IBNR/IBNER claims - HELD THAT:- Right of an enterprise to make provisions for a liability which could be measured by and as the Supreme Court in Rotork Controls India Private Limited [ 2009 (5) TMI 16 - SUPREME COURT ] described a substantial degree of estimation . It was thus held that as long as a liability is properly ascertainable on the basis of empirical data or a known methodology, the same cannot possibly be held to be a contingent liability. A lucid explanation of the concept of contingent liabilities is then found in Whirpool of India Ltd. [ 2011 (1) TMI 657 - DELHI HIGH COURT] wherin this Court found that the assessee there had been consistently making provisions on the basis of actuarial valuation in respect of machines sold and warranty claims lodged. Both the AO as well as the CIT(A) in that case had taken the view that claims pertaining to unexpired periods of warranty could be considered only when actual claims may arise and that the assessee would not be justified in estimating a warranty liability. As relying on M/s Royal Sundaram General Insurance Company Limited [ 2025 (1) TMI 640 - ITAT CHENNAI] we also decide this ground in favour of the assessee. Accordingly, this ground of assessee is allowed. Amortization of premium paid on securities - As respectfully following the Co-ordinate bench order in assessee s own case up to AY 2019-20, we decide this ground in the favour of the revenue as decided the issue of amortization of premium paid on purchase of securities against the assessee. Disallowance u/s 40(a)(i) on reinsurance premium paid to foreign insurers - As following the Co-ordinate bench order in assessee s own case up to AY 2019-20, we decide this ground in the favour of the assessee as set aside order of the CIT(A) in restricting the claim of the assessee to 15% of payment made to NRRs of other countries and direct the Assessing Officer to delete the additions made towards disallowance of reinsurance premium ceded to NRRs u/s. 40(a)(i). Disallowance u/s 40(a)(i) in respect of commission paid to non-resident agents - This ground has been decided in favour of assessee by the co-ordinate bench of the Tribunal in assessee s own case [ 2024 (7) TMI 1556 - ITAT CHENNAI ] wherein held assessee is not paying any commission to insurance companies and such commission was deducted by respective insurance companies themselves from reinsurance premium. Therefore, when the assessee is not making payment, the assessee is not liable to deduct tax. Disallowance of expenditure incurred for the purpose of survey fees paid to non-residents. u/s. 40(a)(ia) - This ground has been decided in favour of assessee in [ 2024 (7) TMI 1556 - ITAT CHENNAI ] wherein held whenever there was damage or claim, surveyors examined the insured property and estimated damages and entire services were outside India and the non-residents have no business connection in India. Further, the income of the surveyors is not liable for taxation in India, thus, the assessee is not liable to deduct tax, which is nothing but reimbursement of expenditure incurred by surveyors. Decided against revenue.

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• 2025 (3) TMI 25
  Capital gains arising from the transfer of capital assets into stock-in-trade for the JDA, as well as business income - HELD THAT:- We note that the issue of capital gains arising from the transfer of capital assets into stock-in-trade for the JDA, as well as business income, has already attained finality through the Tribunal s order in the first round of litigation in [ 2022 (5) TMI 1487 - ITAT BANGALORE] . The issue of capital gains and business income has reached finality. Addition u/s 14A - Issue was remanded by the Tribunal to the file of the learned CIT(A) for fresh adjudication on merits. CIT(A) inadvertently rendered a finding on the issue of capital gains and business income, against which the Revenue has filed the present appeal. Revenue s second round of appeal on an issue that has already attained finality in the first round of litigation is not maintainable. Hence, the same stands dismissed.

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• 2025 (3) TMI 24
  Rejection of registration u/s 12A and rejection of approval u/s.80G(5) - As in the absence of the copy of provisional registration granted u/s12A(1)(ac)(vi) of the Act, the application was non-maintainable - HELD THAT:- CIT(E) had rightly noticed that the registration u/s 12A(1)(ac)(iii) could have been granted only if the assessee had a provisional registration certificate u/s 12AB. The assessee had enclosed provisional registration granted u/s 10(23C)(vi) of the Act in Form No. 10AC along with the application. Accordingly, the Ld. CIT(E) had issued a show cause notice to the assessee to rectify this defect, which was not complied. Therefore, he had rejected the application for registration u/s.12A of the Act. It is found that the provision of section 12A(1)(ac)(iii) of the Act has since been amended w.e.f. 01.10.2024 as per which the registration u/s.12A of the Act can be allowed on the basis of provisional approval u/s 10(23C)(vi) of the Act. We deem it proper to set aside the matter to the file of the Ld. CIT(E) with a direction to allow another opportunity of being heard to the assessee to rectify the defect in the application as noticed by him. The Ld. CIT(E) is also free to consider the application of the assessee on the basis of provisional approval u/s 10(23C)(vi) of the Act filed by the assessee along with the application, in accordance with the amended provisions of the section. Application for registration u/s. 80G(5)(iii) - Since, the matter regarding registration u/s.12A of the Act has been set aside to the file of the Ld. CIT(E), we deem it necessary to set aside the present matter as well to the file of the Ld. CIT(E), who will re-adjudicate the issue of approval u/s.80G of the Act after deciding the matter of registration u/s.12A of the Act.

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• 2025 (3) TMI 23
  TP Adjustment - comparable selection - inclusion of the four entities herein i.e. Eclerx Services Ltd.; TCS E-serve Ltd.; Infosys BPO Ltd.; and Tech. Mahindra Ltd. - HELD THAT:- We see no reason to sustain the learned lower authorities action to this effect. We wish to make it clear that although the Revenue s foregoing vehement contention that each and every assessment year involves its own set of facts could not be simply brushed aside, the fact however remains that it is incumbent for the department only to pin point specific distinction in light of the corresponding change in the specified segment involved in such an instance. We further deem it appropriate to emphasize here that right from A.Y. 2010-11 to A.Y. 2013-14 before us, the assessee s corresponding segment of IT-enabled services has not witnessed any change at all which could take us to a different conclusion as it is projected at the Revenue s behest. Two of the four entities in question herein i.e. Infosys BPO Ltd.; and M/s Tech. Mahindra Ltd. had witnessed extraordinary event of acquisition in the relevant prescribed time period of two years prior to the relevant financial year as per Rule 10B(4) 1st proviso as well and, therefore, these two entities do not deserve to be included in the array of comparables. The Revenue could further not dispute that these latter two entities i.e. Infosys BPO Ltd.; and Tech. Mahindra Ltd. do not satisfy the corresponding relevant related party transaction filter of less than 25% adopted by the TPO himself as well. CIT(DR) at this stage sought to buttress the point that the assessee s vehement contentions seeking to exclude the foregoing comparable entity by applying turnover filter do not deserve to be accepted. We find in this factual backdrop that in case of M/s Pentair Water India Pvt. Ltd. [ 2016 (5) TMI 137 - BOMBAY HIGH COURT ] has already rejected the Revenue s very argument involving M/s Infosys BPO Ltd., thereby upholding the tribunal s order directing exclusion thereof on turnover filter. The Revenue s instant last argument fails in very terms therefore. We accordingly accept the assessee s instant third substantive ground to the limited extent seeking exclusion of these four entities namely Eclerx Services Ltd.; TCS E-serve Ltd.; Infosys BPO Ltd.; and Tech. Mahindra Ltd. and direct the learned TPO to finalize his afresh computation as per law in very terms.

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• 2025 (3) TMI 22
  Denial of registration u/s.12AB - lack of registration under the Rajasthan Public Trust Act, 1959 (RPT Act) - HELD THAT:- There is no law which is required to be complied with for achieving the objects of the assessee trust. Section 17 of the RPT Act, 1959 requires that trustees of the trust has to apply for registration of a public trust, however, there is no section in the RPT Act, 1959 which prohibits a trust to carry out its objects if it is not registered under the RPT Act, 1959. Both the statutes have their own provisions and implications and none of them have overriding effect. Even if, the assessee trust is not registered with the RPT Act, 1959 and the concerned officials under the RPT Act, 1959 deems it necessary to get the entity registered u/s 17 of the RPT Act, 1959, appropriate action can be taken and against the trustees of the trust. But this issue can t be a hurdle in getting registration before the Income Tax Department u/s. 12AB of the Act. No force in the findings of the Ld. CIT (E), Jaipur while holding registration application untenable in the absence of registration under the RPT Act, 1959. Violation of Foreign Contribution Regulation Act, 2010 (FCRA) - Considering the provisions of relevant statute we restore the matter back to the file of the Ld. CIT (E), Jaipur and simultaneously directed the assessee trust to incorporate the relevant amendment in the trust deed mentioning that prior to receiving any foreign remittance whatever may be the form or nomenclature, prior approval will be taken from the Ministry of Home Affairs, Govt. of India and produce the same for verification (In original) before the Ld. CIT (E), Jaipur. On this issue ground raised by the assessee is allowed for statistical purposes. Question on genuineness of activities of the assessee trust - as submitted that other than purchase of land for hostel building construction, no other activity was carried out - Its beyond our understanding what else a newly established society/trust can furnish in response to the letter of Ld. CIT (E), Jaipur. Rather, observations on genuineness of the trust observations, made by the Ld. CIT (E), Jaipur are either wrong or self-contradictory in nature. On the one hand the Ld. CIT (E), Jaipur is claiming that no I/E accounts for the F.Y. 2023-24 furnished by the assessee, on the other hand he is commenting on various aspects, which can be fetched only from the financials of the assessee. The copy of the financials were produced before us also vide page nos. 31-35 of the paper book and the same was placed before the Ld. CIT (E), Jaipur also. As per case of Rural Education and Women Welfare Society Sas Nagar [ 2019 (11) TMI 1148 - SC ORDER] we are of the opinion that the observations of the Ld. CIT (E), Jaipur are baseless and can t be used against the assessee to refuse registration u/s. 12AA - it is found that the observations of the CIT (E), Jaipur has no legs to stand and the activities of the assessee are not under any challenge, which warrants rejection of registration.

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• 2025 (3) TMI 21
  Validity of assessment framed u/s.143(3) r.w.s. 147 in absence of notice u/s.143(2) - HELD THAT:- As in the present case before us remained well within his right to assail the validity of the jurisdiction that was assumed by the AO for framing of assessment u/s. 143(3) r.w.s. 147 in absence of notice u/s. 143(2) of the Act. Apropos the maintainability of the aforesaid claim of the assessee, we find that in the cases of Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] ] and Laxman Das Khandelwal [ 2019 (8) TMI 660 - SUPREME COURT ] had held that pursuant to the return of income filed by the assessee, the A.O remains under a statutory obligation to issue notice u/s. 143(2) of the Act for framing the assessment. Our aforesaid view is further fortified by Shri Jai Shiv Shankar Traders (P) Ltd. [ 2015 (10) TMI 1765 - DELHI HIGH COURT ] held that absence of notice u/s.143(2) of the Act impregnates the proceeding with a jurisdictional defect, and hence, renders it as invalid in the eyes of law. Thus, order passed u/s. 143(3) r.w.s. 147 in absence of a notice u/s. 143(2) of the Act having been issued by him cannot be sustained and is liable to be quashed. Decided in favour of assessee.

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• 2025 (3) TMI 20
  Revision u/s 263 - unexplained money u/s 69A r.w.s. 115BBE - non-application of mind by the AO to reach on the conclusion leading thereby an erroneous order u/s 147 - HELD THAT:-Reopening assessment u/s 147, assessee was required to furnish necessary information and explanations qua the cash deposited in her bank account to the tune and interest income. The reopening was done for the reason that as per available information with the department huge cash amounts were deposited by the assessee, whereas ROI for the relevant AY was not submitted. During the course of reassessment proceedings notice u/s 142(1) were issued twice and the onus to respond towards such notices was duly complied by the assessee. No further explanations were sought by the AO, shows that the AO was satisfied with the submissions of the assessee and, therefore, the assessment was completed accepting the returned income of the assessee. Revisionary proceedings u/s 263 were initiated, which were led only for the reason that the assessee has a surplus of Rs. 16 lac as opening cash balance which was subsequently deposited in the bank account in piecemeal manner on 92 occasions @ Rs. 25,000/- each. Such deposits surely have the reason for Ld. PCIT to revisit the assessment, however the amount proposed to be treated as unexplained money u/s 69A was mostly emanating from the opening cash balance. The amount escaped assessment pertains to AY 2012-13 and not relevant for the year under consideration. On the basis of such information, the department may have adopted the recourse available with them to reopen the income escaping assessment u/s 147 for the AY 2012-13. However, in the present case wherein enquires are made, explanations are offered, and a plausible view has been adopted, which cannot be set to be without application of mind by the Ld. AO, who had initiated the revisionary proceedings by issuing the notice u/s 148 and completed the assessment u/s 147. In such a scenario, we observed that specific inquiries, as expected from the Ld. AO were made and after receipt of necessary information, explanation and compliances by the assessee, a plausible view have been taken and the retuned income was accepted, therefore, the initiation of revisionary proceedings u/s 263 are not according to settled principle of law as laid down in the case of PCIT vs Mukesh Chand [ 2023 (10) TMI 1064 - GUJARAT HIGH COURT ] Thus, order of Ld. PCIT u/s 263 was under misconception that the Ld. AO had not conducted necessary inquiries on the issue or there was non-application of mind by the AO to reach on the conclusion leading thereby an erroneous order u/s 147, thus, the order passed u/s 263, being bereft of merits cannot sustain in the eyes of law, hence, quashed. Appeal of the assessee stands allowed.

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• Customs

• 2025 (3) TMI 19
  Seeking release of the gold chain of foreign origin which was detained by the Customs Department - undertaking in a standard format for wavier of show cause notice and personal hearing signed by the concerned tourist. Detention of jewellery or personal effects of a tourist, especially those of foreign origin, under the Baggage Rules, 2016 - HELD THAT:- The Indian Customs Declaration Form (hereinafter Declaration Form ) issued by the CBIC as part of the Guide for Travellers has also been perused by the Court, which would show that gold and gold jewellery is being treated as prohibited articles where the same is beyond the prescribed limits under Rule 5 of Baggage Rules, including gold bullion. The Supreme Court in Pushpa Lekhumal Tolani [ 2017 (8) TMI 684 - SUPREME COURT] has considered whether jewellery being carried by a tourist as part of her baggage would qualify as smuggling under the Act read with the Baggage Rules, 1998, that was in force during the relevant period. The Supreme Court clearly holds that it is not permissible to completely exclude jewellery from the ambit of personal effects . Accordingly, the Court declared that the seized jewellery items therein were the bona fide jewellery of the tourist for her personal use and was intended to be taken out of India. In Saba Simran v. Union of India Ors. [ 2024 (12) TMI 19 - DELHI HIGH COURT] this Court was seized with the issue of deciding the validity of the seizure of gold jewellery by the Customs Department from an Indian tourist. The Court considered the ambit of personal effects vis- -vis jewellery under the Baggage Rules in effect from time to time. A conspectus of the above decisions and provisions would lead to the conclusion that jewellery that is bona fide in personal use by the tourist would not be excluded from the ambit of personal effects as defined under the Baggage Rules. Further, the Department is required to make a distinction between jewellery and personal jewellery while considering seizure of items for being in violation of the Baggage Rules. Thus, it is now settled law that the Customs Officials are required to consider the facts of each case and apply their mind before detaining the goods of a tourist, either of Indian or foreign origin. The Customs Officials have to be conscious of the fact that personal effects including jewellery of tourists are protected by the law from detention and same cannot be detained in a mechanical manner. Applicability of the Baggage Rules qua tourists of foreign origin - HELD THAT:- It is noted that the Petitioner is a Russian passport holder and thus, the extent of applicability of the Baggage Rules to a tourist of foreign origin has to be kept in mind. This issue has also been discussed by various decisions of the of this Court including in Nathan Narayansamy vs. Commissioner of Customs, [ 2023 (9) TMI 1549 - DELHI HIGH COURT] , wherein the Co-ordinate Bench of this Court was dealing with a similar situation wherein certain jewellery was recovered and seized from the baggage items of a tourist holding Malaysian passport. Further, the predecessor Bench of this Court in Farida Aliyeva v. Commissioner of Customs, [ 2024 (12) TMI 755 - DELHI HIGH COURT] while relying upon the decision in Nathan Narayansamy, directed release of jewellery seized from a tourist who was travelling from Azerbaijan to India. It is an undisputed fact that the Petitioner is a Russian passport holder. In view of the law discussed above, on the ground of limited applicability of the Baggage Rules to the tourist of foreign origin and as jewellery is part of personal effects, the detention of Petitioner s gold chain would have to be set aside. However, there is another aspect of this case which has bearing on the validity of the detention of the Petitioner s gold chain. Undertaking in a standard format for wavier of show cause notice and personal hearing signed by the concerned tourist - HELD THAT:- The undertaking signed by the Petitioner in the present case cannot be sustained in law. Accordingly, the Customs Department has failed to satisfy the requirements of Section 124 of the Act in the present case. Therefore, the detention of the Petitioner s gold chain has to be set aside. Conclusion - i) Jewellery bona fide in personal use by a tourist is not excluded from personal effects under the Baggage Rules, and the Customs Department must distinguish between jewellery and personal jewellery. ii) The Baggage Rules have limited applicability to foreign nationals, and the detention of the Petitioner s gold chain was unjustified. iii) The standard form used by the Customs Department for waiving show cause notice and personal hearing does not satisfy the requirements of Section 124 of the Customs Act, violating principles of natural justice. The detention of the Petitioner s gold chain would be contrary to law and accordingly, the same is set aside - The gold chain of the Petitioner shall be released to the Petitioner subject to payment of any charges within four weeks - Petition disposed off.

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• 2025 (3) TMI 18
  Denial of conversion of shipping bills from DEEC scheme to drawback scheme - rejection of claim on the purported ground that drawback serial number 6204 was meant for woven fabric and exports were done under CTH 6104, which were for knitted fabric - HELD THAT:- The said issue has been decided by this Tribunal in the appellant s own case [ 2001 (10) TMI 181 - CEGAT, KOLKATA] has held that We find that the samples have been drawn and due verification of the nature of fabric and the market value etc. can be got conducted and drawback claim determined under appropriate All Industry Rate schedule. We find no force in the reasons for denying the conversion of the S/Bills into drawback claim of S/Bills. The order is therefore, required to be set aside. Conclusion - The appellant is entitled for conversion of their shipping bills from DEEC scheme to drawback scheme. The adjudicating authority shall within one month of receipt of this order, shall calculate the drawback claim of the appellant and pass an appropriate order for sanctioning of drawback claim in accordance with law - Appeal disposed off by way of remand.

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• 2025 (3) TMI 17
  Interest on refund of SAD - Section 27A of the Customs Act, 1962 - compensation on account of the delay in credit of the refund amount - HELD THAT:- The interest paid under physical statute are compensatory in nature but is statutory prescribed for any delay in refunding the amounts due to the appellant. In the case of M/s RANBAXY LABORATORIES LTD. Vs M/s UNION OF INDIA [ 2011 (10) TMI 16 - SUPREME COURT ] Hon ble Supreme Court has held that the only interpretation of Section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under sub-section (1) of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11BB of the Act becomes payable. There are no merit in the impugned order, rejecting the claim of interest made by the appellant for the delay in crediting the amount to the account of beneficiary. As the entire delay has been on the account of the dispute between the Resolution Professional earlier appointed in the matter and the Official Liquidator appointed subsequently, we are in agreement with the findings recorded in the impugned order to the effect that appellant is not entitled to any compensation. Compensation claimed would also not be admissible under Customs Act,1962 as the statute do not provide for any such compensation to be paid in any manner. Commissioner (Appeals) nor this Tribunal, being creature of Customs Act, 1962, can grant any compensation as claimed by the appellant. Conclusion - Appellant should be paid interest as prescribed under Notification No. 25/2003-Cus(N.T.) dated 21.09.2003 to the appellant for the period of delay in crediting the amount to his account. Appeal allowed in part.

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• 2025 (3) TMI 16
  Valuation of imported aluminum scrap - rejection of declared value - enhancement of declared value on the basis of related party transaction and LME prices as bench mark based on contemporaneous import data which indicates the undervaluation done by the Appellant - impugned order passed without properly appreciating the facts and the law - violation of principles of natural justice. Related party transaction - HELD THAT:- The departmental officers never even claimed the re-assessment done by them on the basis of related party transaction and it is the Commissioner (Appeals) who, for the first time, has made out a new case of related party transaction in order to distinguish the binding precedents in favour of the assessee. Further, it is found that the Commissioner (Appeals) has unilaterally and erroneously relied upon the Order-in-Original dated 14.12.2017 to come to a conclusion that CMR America LLC, USA is a related party of the Appellant. This finding of the learned Commissioner (Appeals) is perverse for the reason that the said OIO was rendered in the case of M/s Sanjeevani Non-Ferrous Trading Pvt Ltd and not in the case of the Appellant and imported the said OIO without assessing the facts of the present case reflects complete non-application of mind. Whether the enhancement of value, solely on the basis of coerced consent letters, DGoV Circular and in the absence of contemporaneous import data, is legal and valid? - HELD THAT:- This issue has been considered by various benches of the Tribunal and also, in the Appellant s own case which has gone upto the Supreme Court and has been decided in favour of the assessee in [ 2019 (5) TMI 1152 - SUPREME COURT] . Further, the Hon ble High Court of Delhi, in a bunch of appeals, has considered the identical issue in detail after considering the various judgments of the Tribunal as well as of the Supreme Court. After considering all the judgments, the Hon ble High Court of Delhi in the case of Hanuman Prasad Sons Vs Commissioner of Customs [ 2024 (11) TMI 1361 - DELHI HIGH COURT] , has decided the issue in favour of the importer-assessee by setting aside the Tribunal s order dated 20.10.2020. Conclusion - i) The related party transaction argument was unfounded and could not justify the reassessment. ii) The appellant s acceptance under duress did not bar them from appealing the reassessment. iii) The procedural lapses rendered the reassessment invalid. The impugned order is not sustainable in law - Appeal allowed.

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• 2025 (3) TMI 15
  Jurisdiction of Commissioner to adjudicate the demand of duty against DTA sales made by an SEZ unit under section 30 of the SEZ Act, 2005 - jurisdiction of Additional Commissioner to issue the SCN demanding duty against DTA sale made by SEZ unit under section 30 of the SEZ Act, 2005 - pecuniary jurisdiction to issue SCN at the relevant date where the demand of duty is more than Rs. 50 lakhs - jurisdiction to confirm demand under section 28(4) of the Customs Act - suppression of facts or not. Jurisdiction of the Commissioner to adjudicate the matter relating to the demand of duty where the sale was under section 30 of the SEZ Act - HELD THAT:- Section 51 read with section 53 of the SEZ Act makes it clear that to the extent of authorised operations, SEZ will be treated as outside the Customs territory of India - no more and no less. Thus, the Commissioner of Customs will not have jurisdiction only to the extent of the authorised operations within the SEZ. The words of both section 51 and 53 are fully in consonance with the object of the Act as is evident from its long title- to promote exports. SEZ cannot be treated as outside the Customs territory of India to carry on unauthorised operations and activities. In case of such activities, SEZ itself will be treated as Customs port, airport, ICD, etc. under section 7 of the Customs Act. Sub-section (2) of Section 53 makes this position explicit. Once the goods are imported into the DTA, all duties as applicable have to be paid and if there is any short payment in such duties appropriate action can be taken. The goods in this case have been brought into the DTA falling under the jurisdiction of the Commissioner of Customs, Indore. If any duty is short paid, he has both the authority and duty to recover it. Merely because the goods were removed from SEZ unit as provided under section 30 of the SEZ Act and not directly imported from outside India would make no difference. The specified officer, i.e., the Joint/Deputy/Assistant Commissioner posted in the SEZ has certain functions and they do not include issuing notices under section 28 - neither any provision of SEZ Act nor any provision of Customs Act excludes the jurisdiction of the Commissioner of Customs under section 28 in respect of the goods sold from an SEZ unit in DTA. There is therefore, no force in the submission of the learned counsel that the Commissioner of Customs lacks jurisdiction to adjudicate the matter and to issue a notice under section 28. Jurisdiction of the Additional Commissioner to issue a notice under section 28 in a matter where the sale was under section 30 of the SEZ Act - HELD THAT:- In view of the findings on the question of jurisdiction of the Commissioner to adjudicate the matter, there are no reason to take a different view regarding the jurisdiction of the Additional Commissioner to issue the SCN. Jurisdiction of the Additional Commissioner to issue SCN demanding duty in excess of Rs. 50,00,000/- - HELD THAT:- There are nothing in section 28 to support this argument. Commissioner confirmed the demand under section 28(4) of the Customs Act when the SCN was issued under section 28(1) and no corrigendum was issued to the SCN - HELD THAT:- The SCN was clearly not issued under section 28(1) as asserted by the learned counsel but was issued under the proviso to section 28(1). Instead of quoting the amended provision of section 28(4) in the SCN, the Additional Commissioner quoted the unamended provision [proviso to section 28(1)]. In the impugned order, the Commissioner quoted correctly the amended provision of section 28(4). Mere mentioning of the old provision [proviso to Section 28(1)] instead of the provision applicable to the relevant period [section 28(4)] in the SCN and mentioning of the correct provision [section 28(4)] in the impugned order does not in any way invalidate the impugned order - the submission of the learned counsel that the impugned order is invalid on the ground that it confirmed the demand under section 28(4) while the SCN demanded duty under section 28(1), therefore, has no force. Misconstruction/ misinterpretation of the provision of the notification does not amount to suppression of facts to invoke demand enlarging the period for issuing the SCN under section 28(4) of the Customs Act - HELD THAT:- Section 28(4) can be invoked in case duty is short paid by reason collusion, wilful misstatement or suppression of facts. According to the learned special counsel for the Revenue, Prestige had indulged in wilful misstatement and suppression of facts while claiming the benefit of the notification which was available subject to the condition that the goods would be used in manufacture after following the procedure prescribed in the Rules - Trading in SEZ does not mean importing goods and selling in domestic market. Prestige did not use the imported goods either to manufacture or to export. Instead, it cleared and sold them in the DTA. Even in the Bills of Entry which it filed to clear the goods to DTA, Prestige claimed the benefit of the Notification No. 12/2012-Cus which was available only for goods to be used in manufacture of final goods following the procedure under ICGR, 1996. Prestige sold the goods to traders in the DTA. There are no reason for Prestige to have claimed the benefit available to goods to be used in the manufacture when it neither had any such facility to manufacture and it simply imported the goods and within a few days sold them to another trader in DTA. The wilful misstatement or suppression of facts with an intention to evade can only be inferred from the circumstances and we find it in the facts of this case. It is found in favour of the Revenue and against Prestige on the question of confirming demand under section 28(4). Misconstruction/ misinterpretation of the provision of the notification does not amount to suppression of fact and misstatement for imposition of penalty under section 114AA of the Customs Act - HELD THAT:- The expressions suppression of fact and misstatement do not even find place in this section. Learned counsel appears to have confused this section with the provision under section 28(4) to issue a demand invoking extended period of limitation. Section 114AA is attracted if any person knowingly makes signs or uses, or causes to be made, signed or used, false or incorrect declaration statement or document in the transaction of any business under the Customs Act - the submission that penalty under section 114AA could not have been imposed because there is no suppression of facts is without any force and deserves to be rejected. However, the allegation in the SCN and the finding in the impugned order is that Prestige had wrongly claimed the benefit of an ineligible exemption notification in the Bills of Entry and NOT that there was any factual mis-declaration in the Bills of Entry. Therefore, the penalty under section 114AA deserves to be set aside. Penalty under section 114A of the Customs Act cannot be imposed, if the demand has been raised under section 28(1) of the Customs Act - HELD THAT:- The correct provision applicable during the relevant period was 28(4) which is the same as the old provision of proviso to section 28(1) . It is also found that the well settled legal position is that merely citing a wrong provision will not vitiate the SCN or the order. Therefore, there are no force in this submission of Prestige that penalty under section 114A could not have been imposed because the demand was under section 28(1). The adjudicating authority failed to deal with the Notification No. 18/2011 which amended earlier Notification No. 45/2005-Cus dated 16.5.2005 since the Notification No. 18/2011 has substituted the words produced or manufactured in with the words cleared from - HELD THAT:- Learned counsel is correct in her submission that the SAD was exempted by this Notification on all goods cleared from an SEZ unit. However, this is subject to the condition that if the goods which are sold in the DTA are not exempted from the Sales tax by the State Government. This is a fact to be verified in respect of each of the invoices and the issue needs to be remanded to the Commissioner for examination and re-determination of SAD, if any. Since Prestige was the exporter and not the importer in the DTA Bills of Entry, no duty can be demanded from it - HELD THAT:- As per section 28, the short paid duty can be demanded from the person chargeable with duty or interest. The person who is chargeable with duty or interest is the one who had allegedly short paid the duty and cleared the goods to DTA. In the facts of this case, Prestige paid duty and cleared the goods. The entities to which Prestige had sold the goods after clearing them from customs at their places neither filed the Bills of Entry nor paid the duty. They bought them from Prestige after they were cleared and the sale took place at their premises. Therefore, if Prestige short paid any duty and cleared the goods, such short paid duty can only be demanded from Prestige and not from the entities to which it had, after clearing them, sold the goods. Since SEZ is treated as outside the customs territory of India, bringing goods into DTA from SEZ area is the import. Once such goods are cleared for consumption in the DTA, they cease to be imported goods. Therefore, there cannot be any assessment of duty under section 17 after they are cleared for consumption in the DTA - Prestige, as the owner of the goods, as the one who filed the Bills of Entry, as the one who paid the duty and cleared the goods to DTA, was also the importer in the case. It was responsible for paying the duty short paid and therefore, demand under section 28 has been correctly made on Prestige - In respect of the DTA Bills of Entry, Prestige was not only the exporter but was also, for the reasons stated before, the importer. The demand of duty short paid by Prestige can only be made from Prestige by issuing a notice under section 28. Notification no. 12/2012-Cus dated 17.3.2012 (S.No.432) exempts BCD unconditionally and Additional Duty of Customs subject to the condition indicated therein and Prestige had paid the additional duty of customs as it had not fulfilled the condition - HELD THAT:- Notification No. 21/2002-Cus had, in turn, replaced its predecessor mega Notification No. 17/2001-Cus which had, until then, prescribed the effective rates of duties for all goods. All these three Notifications are worded similarly and have tables with similar columns viz., S. No., Chapter heading or sub-heading, description of goods, standard rate, additional duty rates and condition no. against each entry where the exemption is subject to a condition, the condition number is indicated and the conditions under each S. No. were described at the end. The ambiguity in Notification No. 12/2012-Cus created by lack of an extra line space between the second clause and the clause pertaining to the condition must be interpreted in favour of the Revenue. It is held by the Constitution Bench of Supreme Court in Commissioner of Customs (Import), Mumbai versus Dilip Kumar and Company [ 2018 (7) TMI 1826 - SUPREME COURT (LB) ] that in case of any ambiguity in a Notification, it should be interpreted in favour of the Revenue and against the assessee. In this case, the ambiguity is only on account of typographical mistake in not leaving an extra line space in the Notification. Therefore, condition no. 5 at S. No. 432 of the exemption Notification No. 12/2012-Cus, as amended, must be fulfilled to avail the benefit of exemption from basic customs duty also. The remark of the Commissioner in paragraph 28 of the impugned order is not correct and his final order confirming the demand of basic customs duty is correct. Penalties imposed on Manish and Chirag - HELD THAT:- Nothing in the section confines its application to only mis-declarations in exports. Evidently, it applies to both imports and exports. In this case, in the Bills of Entry filed by Prestige, a wrong exemption Notification was claimed which it was not entitled to because on the very face of the Notification, it is clear that it is subject to a condition of the imported goods being used for manufacture following a procedure. Neither Prestige nor its buyers had any manufacturing facilities, let alone, manufacturing goods after following the proper procedure. However, no facts were mis-declared in the Bills of Entry. Therefore, penalty under section 114AA on Manish and Chirag canCnot be sustained. Conclusion - i) SEZ is treated as outside the customs territory of India only for authorized operations. For unauthorized operations, SEZ is treated as a customs port. ii) The Commissioner of Customs has jurisdiction to demand duty on goods cleared from SEZ to DTA. iii) Misstatement or suppression of facts justifies invoking the extended period of limitation under section 28(4). iv) The exemption from basic customs duty under Notification No. 12/2012-Cus is conditional upon the use of goods for manufacturing, which was not met by Prestige. v) Penalty under section 114AA was set aside due to lack of factual mis-declaration. vi) The demand of duty and penalty under section 114A were upheld, subject to re-examination of SAD exemption. Appeal filed by Prestige is partly allowed to the extent of setting aside the penalty under section 114AA, partly rejected to the extent of confirmation of demand of basic customs duty and additional duty of customs and partly remanded to determine if there is any evidence of the imported goods being exempted from VAT or Sales Tax by the State Government and accordingly determine if any SAD is required to be paid and also to consequently re-determine the quantum of penalty under section 114A.

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• Insolvency & Bankruptcy

• 2025 (3) TMI 14
  Maintainability of petition u/s 10-A of the Insolvency and Bankruptcy Code, 2016 - jurisdiction of NCLT to entertain the Company Petition given the default period in question - HELD THAT:- Section 10-A of IBC, 2016 is only a moratorium temporarily suspending initiation of CIRP. It is true that Section 10-A prohibits an application for initiation of CIRP of a Corporate Debtor, for any default arising on or after 25.03.2020 for a period of six months. The proviso also indicates that no application can ever be filed for initiation of CIRP of a Corporate Debtor for the said default occurring during the said period, i.e., on or after 25.03.2020 for a period of six months or such further period not extending one year from such date. In the instant case, though the default commenced after the period specified in Section 10-A, it is not in dispute that it continued even after the moratorium period. The intention of the legislature is to give relief by suspending initiation of CIRP. This Court, from the plain reading of Section 10-A is unable to agree with the learned Senior Counsel that even in a case where the default continued after the period of moratorium, no application can be filed. Since proviso to Section 10-A mandate that no application shall ever be filed for initiation of CIRP of the Corporate Debtor for the default occurring during the moratorium period, the above judgment relied upon by the learned Senior counsel is in tune with the statutory provision. However, the proviso cannot be extended to cases where the default is continued beyond the moratorium period. Therefore, there is no jurisdictional error to entertain a writ bye-passing an effective alternative remedy. Conclusion - The writ petition was not maintainable, as the NCLT had jurisdiction to entertain the petition due to the continued default beyond the moratorium period. Petition dismissed.

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• 2025 (3) TMI 13
  Obligation to pay for electricity consumed during the CIRP period - Termination of electricity supply to the corporate debtor during the Corporate Insolvency Resolution Process (CIRP) under Section 14(2) of the Insolvency and Bankruptcy Code (IBC) - HELD THAT:- Section 14(2A) was inserted by Act 1 of 2020 w.e.f. 28.12.2019. Sub-section (2A) contemplates that where the interim resolution professional or resolution professional considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern when the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period. The goods or services which are critical to protect and preserve the value of the corporate debtor is thus dependent on the decision taken by the IRP and the resolution professional. Sub-section (2) and (2A) uses two expressions i.e. essential goods or supply (which may be specified). The essential supply thus has need to be specified by the Board as per Regulation and Regulation 32 of the CIRP Regulations specified the essential supplies . Thus, essential supplies have to be treated in a manner and to the extent as provided in Regulation 32. It is thus clear that the electricity which is not a direct input to the output produced is essential supply within the meaning of Section 14(2) read with Regulation 32 of the CIRP Regulations and it is clearly covered by the protection extended by legislature under Section 14(2). The Hon ble Supreme Court again in Madanlal Fakir Chand Dudhediya vs. Shree Changdeo Sugar Mills Ltd. and Ors. [ 1962 (3) TMI 33 - SUPREME COURT ] had held that first rule of construction is that the words used in the section must be given their plain grammatical meaning and the two sub- sections must be read as parts of an integral whole and an attempt should be made in construing them to reconcile them. The fact that payment to essential supplies can be made as per the decision of the resolution professional even during currency of the CIRP when the costs is incurred by the resolution professional. The statutory scheme, however, as contained in Section 14(2) prohibits the supplier of essential goods from terminating/ discontinuing the supply during moratorium period. As per statutory scheme, the corporate debtor is entitled to receive the essential goods and services during moratorium and even the payment is not made of essential goods and services that shall form part of the CIRP costs. The above Discussion Paper highlights the issue of operational difficulty with regard to supply of electricity under Section 14(2) read with Regulation 32. The illustration which is now sought to be amended, amending the regulation now contemplate that if the corporate debtor operates a manufacturing facility that may be treated as critical service by the insolvency professional for which current dues for such services must be paid. In M/s Power Mech Projects Ltd. vs. Essar Power (Jharkhand) Ltd. Anr. [ 2025 (2) TMI 217 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB ] the effect and consequences of Discussion Paper considered. It is already held that the Discussion Paper has no effect on statutory scheme operating in the field and Discussion Paper only can be basis for amending regulation. The Discussion Paper, thus highlights the issues and the amendment in statutory scheme, if any, may take place only when the regulation are amended and notified. The resolution professional, as assured to the appellant, need to take steps to clear the electricity dues, however, non-payment of electricity dues cannot be a ground to discontinue the electricity which is a clear mandate by Section 14(2). The IBBI has already taken notice of the operational issues and having proposed Regulation 32 of the CIRP Regulations, need to expedite its process and amendment, if any, which may be carried out at an early date to mitigate the hardship of the supplier of essential services. Conclusion - i) The order of the Adjudicating Authority directing Appellant not to discontinue the electricity connection necessary for running the manufacturing facilities of the corporate debtor is not interfered with. ii) The resolution professional shall endeavour to pay the electricity dues as assured by it through various letters to the Appellant by taking steps including raising interim finance, if any. iii) IBBI in furtherance of its Discussion Paper dated 04.02.2025 which proposes amendment in Regulation 32 may expedite its steps regarding amendment, if any, which amendment may redress several operational issues as noticed by the IBBI itself. Appeal disposed off - Let Registry communicate the copy of this order to Insolvency and Bankruptcy Board of India (IBBI).

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• 2025 (3) TMI 12
  Dismissal of Application filed by the Appellant under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Respondent, seeking resolution of an outstanding amount - existence of Pre-Existing Dispute between the Parties or not - HELD THAT:- On candidly asking the Appellant as to whether the Appellant has denied the conversation in the grounds of Appeal to have ever happened or in the manner it has happened, to which he could not answer in negative. Thus, once there is no dispute that there has been conversation between the Parties, even on WhatsApp which is a common mode of communication these days, it does not lie in the mouth of the Appellant to contradict the same on the basis of the Judgment in the case of M/s. Kashyap Infraprojects Pvt. Ltd. [ 2024 (11) TMI 1288 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB ]. The Learned Tribunal has categorically observed that there was conversation between the Parties that the rates of Soya Bean have gone down and further recorded the conversation between the Parties to the effect that Appellant wanted to wait for the market to improve and did not receive the goods. The same conversation has been noticed by the learned Tribunal in Para 23 of the Impugned Order. Therefore, the Tribunal has rightly come to the conclusion that there was a Pre-Existing Dispute between the Parties and the process under the Code is being used for recovery for which it is not the appropriate forum. Conclusion - The dismissal of the application upheld, concluding that there was a pre-existing dispute between the parties and that the Code was not the appropriate forum for the claim. There are no reason to interfere in the Impugned Order and hence the present Appeal is hereby dismissed

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• Service Tax

• 2025 (3) TMI 11
  Invocation of extended period of limitation under the First Proviso to Section 73 (1) of the Finance Act, 1994 - service tax not levied or paid due to fraud, collusion, willful misstatement, or suppression of facts by the petitioner - HELD THAT:- As is evident from the proposition which came to be propounded by the Supreme Court in P B Pharmaceuticals and Larsen Toubro [ 2007 (5) TMI 1 - SUPREME COURT] , it was held that once necessary facts had already been brought to the notice of the authorities at different points in time, the same would clearly be a circumstance destructive of any allegation of the First Proviso to Section 73 (1) being applicable. The Supreme Court held that once the stand of the assessee was known and formed the subject matter of earlier notices, it would be impermissible for the respondents to allege suppression of facts. When those principles are applied to the facts of the present case, it becomes apparent that it was wholly impermissible for the respondents to resort to the First Proviso to Section 73 (1) of the Act. As is ex facie apparent from a reading of the above, there is no material on the basis of which the allegation of a wilful suppression of facts is sought to be sustained. Regard must be had to the fact that the extended period of limitation cannot be justified by a mere reproduction or incantation of the language of the statute. A wilful suppression of facts, and which may have allegedly lead to a failure to pay tax, would have to rest on material which constitutes proof of the allegation levelled. Conclusion - The invocation of the extended period of limitation under the First Proviso to Section 73 (1) was unjustified, as the facts were already known to the respondents from previous proceedings. The impugned SCN is quashed - petition allowed.

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• 2025 (3) TMI 10
  Withdrawal of appeal - Refund of accumulated CENVAT credit - transition to GST regime - HELD THAT:- The appeal is dismissed as withdrawn without commenting and expressing any opinion on the merits of the case.

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• 2025 (3) TMI 9
  Classification of service - Works Contracts Service (WCS) or Construction of Residential Complex Service (CRCS) - HELD THAT:- Upto 1.7.2010, the classification of service would remain the same as declared by the service provider but however, post-1.7.2010 the tax would be chargeable under Construction of Complex Service if it is service simpliciter and under Works Contract Service if it is a composite works contract. From the discussions in the respective Orders-in-Original, there is no dispute that (i) the nature of work was under composite contract and (ii) in respect of ongoing projects commenced prior to 1.6.2007 for which the appellant had already remitted the service tax under SCS, though no service tax in respect of a composite contract was leviable in view of decision in L T Ltd. [ 2015 (8) TMI 749 - SUPREME COURT ]. In any case, it is an admitted fact on record that during the periods under dispute, the appellant continued to remit the service tax under WCS and hence there was no reason for the Revenue not to accept the same. Hence in the light of decision of Larsen Toubro Ltd, which has been followed by various Benches of Tribunal across India, the liability as under CRCS cannot sustain. Since the issue of interpretation was involved, there cannot be any scope of to allege suppression or whatsoever and hence no penalty could be exigible and hence demand and penalties are set aside. Conclusion - The liability for service tax under CRCS cannot sustain for the period before 1-7-2010. Appeal disposed off.

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• 2025 (3) TMI 8
  Dismissal of appeal holding the appeal to be time-barred in terms of proviso to (3A) of Section 85 of Finance Act, 1994 - HELD THAT:- The appellant has not come present to contest the findings nor any evidence contrary to these findings has been brought on records. The grounds of appeal are silent to this effect. Resultantly, there are no reason to differ from the findings as arrived by the Commissioner (Appeals). The Hon ble Supreme Court in Singh Enterprises [ 2007 (12) TMI 11 - SUPREME COURT] has already held that the Commissioner (Appeals) has the power to condone the delay only up to 30 days after the expiry of 60 days from the date of receipt of the order in original. In the present case, the order in original dated 23.02.2015 was duly dispatched by the department to the appellant on the date of order itself and the same address on which the show cause notice was served to the appellant which was duly received. The presumption of service is very much attached to the said dispatch. Though, the presumption was rebuttable but the appellant has not produced any document on record to rebut the same. He has not even appeared in person to make any submission in rebuttal thereof. There are no infirmity in the impugned order. The same is hereby upheld - appeal dismissed.

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• Central Excise

• 2025 (3) TMI 7
  Dismissal of appeal due to non-compliance of the pre-deposit condition mandated under Section 35F of the Central Excise Act, 1944 - HELD THAT:- There is no dispute about the fact that 7.5% was initially deposited before the Commissioner (Appeals) at that time when the integrated portal did not exist. Thereafter, while approaching the CESTAT, the remaining 2.5%has been deposited by the Petitioner. Thus, in effect the entire 10% which is the pre-deposit amount, stood deposited. The appeal could not have been rejected merely on the ground that it was deposited on a wrong account especially when the said integrated portal was not even available for the Petitioner at the time of the initial deposit. Following the decision of the Bombay High Court in Sodexo India Services Pvt. Ltd. vs. Union of India [ 2022 (10) TMI 264 - BOMBAY HIGH COURT] , this Court is, therefore, inclined to direct that the appeal would now be heard by CESTAT on merits without any further deposit being insisted upon. The deposit already made shall be treated as satisfaction of the pre-deposit condition. Conclusion - The appeal would be heard by CESTAT on merits without any further deposit being insisted upon. The deposit already made was deemed sufficient to satisfy the pre-deposit condition. The order dated 08th November, 2024 passed by CESTAT is set aside - petition allowed.

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• 2025 (3) TMI 6
  Dismissal of appeal due to non-compliance with the pre-deposit condition under Section 35F of the Central Excise Act, 1944 - HELD THAT:- Admittedly, the pre-deposit was made by the Appellant way back on 13th August, 2018 and 17th August, 2018 itself for a sum of Rs. 1,60,600/- and Rs. 4,750/- respectively. The Petitioner has also submitted the challans showing the deposit. The ground taken in the impugned order is that the same was deposited in a wrong account and therefore credit cannot be given of the pre-deposit and hence the appeal does not deserve consideration on merits. A mere deposit in the wrong account, that too, when the integrated portal might not have been fully functional or the existence of the same was not within the knowledge of the Petitioner, cannot result in a rejection of the appeal on the ground of defects. The matter in the opinion of this Court deserves consideration on merits by the CESTAT. Let a competent official from the Respondent-Department be present on the next date of hearing with the instructions - List on 21st February, 2025.

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• 2025 (3) TMI 5
  Method of valuation - whether the valuation of goods sold by the appellant from their depot during the period from 01.04.2004 to 31.12.2012 is covered under Rule 7 of the Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000? - HELD THAT:- It is an admitted fact that 90% of the sales are carried at the factory gate to unrelated customers and as per the Rule 7 of the Central Excise Valuation (Determination of price of Excisable goods) Rules, 2000, it is very clearly stated that, where excisable goods are not sold by the assessee at the time and place of removal, Rule 7 can be invoked. Considering the decisions relied by the learned Consultant for the appellant, the demand by invoking the Rule 7 of the Central Excise Valuation (Determination of price of Excisable goods) Rules, 2000 is unsustainable. Appeal allowed.

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• 2025 (3) TMI 4
  CENVAT Credit - fuel oil in engine parts of the vessel brought for breaking purposes - Whether the fuel oil in the engine parts of the vessel is considered part of the ship and thus not eligible for Cenvat Credit? - HELD THAT:- Division Bench of this Tribunal in the decision of Navyug Ship Breaking Company [ 2023 (3) TMI 636 - CESTAT AHMEDABAD] has held that It has been rightly held by Learned Commissioner (Appeals) that removal of fuel and oil is the initiation of ship breaking activity and cannot be said as separate activity. Conclusion - The Cenvat Credit on the oil brought in the ship engine when used for ship breaking purposes to the extent of 85%. Appeal allowed.

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• Indian Laws

• 2025 (3) TMI 3
  Rejection of appeal on account of suppression of material facts - whether there was any material suppression of fact on the part of the appellant s father while obtaining an insurance policy or not? - HELD THAT:- In the case of Satwant Kaur Sandhu [ 2009 (7) TMI 1375 - SUPREME COURT ], there was suppression of material fact relating to health of the insured and in those circumstances, the respondent insurance company was held to be justified in repudiating the insurance contract. An insurance is a contract uberrima fides. It is the duty of the applicant to disclose all facts which may weigh with a prudent insurer in assuming the risk proposed. These facts are considered material to the contract of insurance, and its non-disclosure may result in the repudiation of the claim. The materiality of a certain fact is to be determined on a case-to-case basis. The aforementioned judgements illustrate instances of material facts, wherein the non-disclosure of certain medical conditions was held to be material in the context of a Mediclaim policy. In Rekhaben Nareshbhai Rathod [ 2019 (4) TMI 1454 - SUPREME COURT ], the repudiation of the policy by the insurer was within a period of two years from the commencement of the insurance cover on the ground of nondisclosure of a material fact and suppressing/non-disclosing a pre-existing life insurance. In the said case, the expression material , in the context of insurance policy, was defined as any contingency or event that may have an impact upon the risk appetite or willingness of the insurer to provide insurance cover. In the facts of this case the respondent-insurer decided to issue a policy to the father of the appellant herein even though it was aware that there was another policy for a higher sum assured which was taken by the insured from Aviva. Thus, the insurer was also aware of the fact that the insured had capability and capacity to pay the premium for the policy obtained from Aviva and was confident that the insured had the capacity to pay the premium in respect of the policy which was issued to the insured by the respondent-insurer for a sum lesser assured being Rs.25 lakh only. Consequently, the repudiation of the policy, in the facts and circumstances of the present case, was improper. Therefore, the appellant herein is entitled to the benefit of the policy which was issued by the respondent herein. Conclusion - The concept of material facts in insurance contracts requires disclosure of information that would influence a prudent insurer s decision to accept the risk. Failure to mention about other policies does not amount to a material fact in relation to the policy availed and consequently, the claim could not have been repudiated by the respondent company. Appeal allowed.

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• 2025 (3) TMI 2
  Gift Deed - Valid instrument or not - time limitation - seeking grant of permanent injunction restraining the defendants/appellants from selling, mortgaging, encumbering or alienating the suit property on the strength of the said document - HELD THAT:- The entire impugned judgment does not reflect formulation of any issue at all, although issues have been supposedly decided by their respective numbers. The issues originally framed in the suit, which are a part of the paper book, also do not reflect any issue on violation of Clause II (6). Rather, the learned Trial Judge observed in her judgment that the only bone of contention between the parties was fraud, whereas she does not adjudicate in favour of the plaintiff on such count by holding that the deed was vitiated by fraud at all. By such observation regarding the only bone of contention being fraud, the learned Trial Judge made it explicitly evident that she did not formulate the alleged violation of Clause II (6) as an issue for the parties to address. Clause II (6) provides that the lessees shall not assign or transfer in any way or mortgage the subject land without the previous consent in writing of the Chairman of the Board of Trustees of the CIT. However, we do not find any clause within the four corners of the lease deed which invalidates such a transfer, even if made without such written prior permission. The maximum consequence which might have visited the lessees in the event of breach of any of the covenants of the lease deed, including Clause II (6), would be non-renewal of the lease after the expiry of its normal tenure of 99 years - the violation of Clause II (6) is not otherwise fatal to the validity of such transfer, made without any prior written consent of the CIT. In the gift deed itself, sufficient explanation for transfer of the property in favour of the donee in exclusion of the donor s children was given. The donor stated that she had great love and affection for the done, who happened to be her daughter-in-law and the donee maintained great regards and esteem in her behaviour and dealings with the donor. It was further stated that the sons and daughters of the donor were well established in their lives. The husband of Rama, who subsequently shot off a letter which has been relied on by the respondent, was a confirming party to the deed and endorsed the transfer of the said land and premises in favour of the donee by way of gift by reason of natural love and affection for the donee, which is also recorded in the deed itself - in view of the intrinsic evidence available in the disputed deed itself, there is no reason why the court should go behind the deed and try to read into the mind of the donor any intention contrary to the execution of the deed. Conclusion - The learned Trial Judge acted patently contrary to the law and materials on record in declaring the disputed gift deed to be void and not binding on the plaintiff and granting permanent injunction against the defendants from selling, mortgaging, encumbering, alienating the suit property on the strength of the said document dated May 22, 1985. Appeal is allowed on contest without costs, thereby setting aside the impugned judgment and decree dated February 8, 2017 passed by the learned Judge, Second Bench, City Civil Court at Calcutta in Title Suit No. 1738 of 1992 and dismissing the said suit.

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• 2025 (3) TMI 1
  Dishonour of Cheque - respondent has been acquitted of the offence under section 138 of the Negotiable Instruments Act, 1881 - misinterpretation and misapplication of the statutory presumption contained in sections 118 and 139 of the NI Act - complainant was competent to depose in relation to the matter or not - HELD THAT:- As per section 118 (a) of the NI Act, a statutory presumption must be drawn in favour of a complainant that every negotiable instrument (such as a cheque) is made or drawn for consideration until the contrary is proved by the accused person - Section 139 of the NI Act goes further to cast the onus on the accused of proving that a cheque was not received by a holder in discharge of a debt or other liability owed. The learned Magistrate has opined that the defence sought to be raised by the respondent that the subject cheques were being held by the appellant as security was a sham defence . Furthermore, the learned Magistrate has, in so many words, also recorded that the respondent admits to the issuance of the subject cheques and the signatures appearing thereon. However, in what is evidently a complete misinterpretation, misconstruction and misapplication of the statutory presumption contained in sections 118 (a) and 139 of the NI Act, and as interpreted by the courts, the learned Magistrate then proceeds to hold that the appellant (complainant) had failed to establish that there was a legally enforceable debt. In the opinion of this court, this inference drawn by the learned Magistrate is at complete odds with the foundational presumptions contained in sections 118 (a) and 139 of the NI Act, which presumptions hold good unless and until the contrary is proved by the accused person. The fact that the cheques were issued as security is answered in the MoM dated 17.10.1997 and letter dated 08.11.1997, whereby the respondent has admitted to owing a debt of about Rs. 94 lacs to the appellant, which would entitle the appellant to encash the subject cheques for the sum of Rs. 30 lacs towards part-payment of the debt. Therefore, the respondent cannot be heard to say that the subject cheques, which were admittedly issued as security towards a possible future debt, cannot be encashed to satisfy a part of such debt, which debt stands admitted in the afore-noted MoM and letter. Conclusion - i) The statutory presumption under Sections 118 and 139 of the NI Act was not rebutted by the respondent, and the Magistrate s judgment was based on a misinterpretation of these provisions. ii) The defense of blank signed cheques as security is invalid, as the cheques were issued towards a debt acknowledged by the respondent. The dismissal of the criminal complaints by the learned Magistrate is unsustainable in law and deserves to be set aside - Appeal allowed.

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