TMI Tax Updates - e-Newsletter
March 24, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy FEMA Law of Competition PMLA Service Tax Central Excise Indian Laws

Articles

1. Analysis of Sub Section 16(4) of the CGST Act 2017 in the backdrop of Sub Section 16(5)

   By: K Balasubramanian

2. PROVISIONS ON OFFENCES UNDER GST LAW (PART-2)

   By: Dr. Sanjiv Agarwal

3. PART CAUSE OF ACTION

   By: DR.MARIAPPAN GOVINDARAJAN

4. Learning from reported judgment and practical support:Addition due to valuation differences cannot be made in intimation or order u.s. 143.1 – proper course for AO is to issue notice u.s 143.2, in case of need to make reference to Departmental Officer for valuation, and then pass order u.s. 143.2.Assesse must challenge addition made u.s.143.1 as beyond scope of S. 143.1. In case of addition is made after valuation made by DVO, the valuation alos need to be challenged if it is excessive.

   By: DEVKUMAR KOTHARI and CA UMA KOTHARI

5. Top 10 Reasons Why Online Brand Registration is Important

   By: Ishita Ramani

6. LRS (Liberalized Remittance Scheme) – Limit Breach: In Depth Analysis.

   By: YAGAY andSUN

7. Types of Board Resolutions under the Companies Act, 2013

   By: YAGAY andSUN

8. Annual General Meeting (AGM): An Introduction

   By: YAGAY andSUN

9. Corporate Identity Number (CIN): An Introduction

   By: YAGAY andSUN

10. Export of Electric Kitchen Appliances from India

   By: YAGAY andSUN

11. Export of Kitchen Utensils from India

   By: YAGAY andSUN

12. Export of Pressure Cookers from India

   By: YAGAY andSUN

13. Export of Bicycle's Components from India

   By: YAGAY andSUN

News

1. Issue in filing applications (SPL 01/SPL 02) under waiver scheme

2. Women's economic empowerment, Yamuna cleaning, waterlogging in focus of Viksit Delhi budget: CM

3. Cong govt presented realistic budget ensuring development, welfare: T'gana Dy CM

4. Odisha approves Rs 27,019-cr budget for health insurance schemes for 5 years

5. Govt withdraws 20 pc export duty on onion effective April 1

6. Govt withdraws 20 pc export duty on onion from April 1

7. GI-Tagged Jaggery Exported from Shamli, Muzaffarnagar to Bangladesh

8. First-ever export of Anthurium Flowers from Mizoram to Singapore, a fillip to India's Floriculture Potential

9. Maharashtra legislature clears bill to increase vehicle tax

Notifications

Customs

1. 05/2025 - dated 21-3-2025 - ADD

Seeks to impose Anti-dumping duty on import of ‘Poly Vinyl Chloride Paste Resin’ from China PR, Korea RP, Malaysia, Norway, Taiwan and Thailand for a period of five years

GST - States

2. 09/2025-State Tax - dated 19-3-2025 - Maharashtra SGST

Seeks to bring rules 8, 24, 27, 32, 37, 38 of the MGST (Amendment) Rules, 2024 in to force

3. 8/2025-State Tax - dated 18-2-2025 - Mizoram SGST

State Tax Notification for waiver of the late fee

4. 7/2025-State Tax - dated 18-2-2025 - Mizoram SGST

Mizoram Goods and Services Tax (Amendment) Rules, 2025

SEBI

5. SEBI/LAD-NRO/GN/2025/238 - dated 20-3-2025 - SEBI

Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Second Amendment) Regulations, 2025

6. SEBI/LAD-NRO/GN/2025/237 - dated 20-3-2025 - SEBI

Securities and Exchange Board of India (Intermediaries) (Second Amendment) Regulations, 2025

7. SEBI/LAD-NRO/GN/2025/236 - dated 20-3-2025 - SEBI

Securities and Exchange Board of India (Credit Rating Agencies) (Amendment) Regulations, 2025

Highlights / Catch Notes

GST

• GST Appeals: Filing Order Copy Before Rule 108 Amendment Sufficient, Certified Copy Not Mandatory

  Case-Laws - HC : The HC held that the requirement to file a certified copy of an appealed order under GST Rules is procedural rather than mandatory. The petitioner had filed their appeal on 15.11.2022 with a copy of the order, before Rule 108 was amended on 16.12.2022. Following the Delhi HC decision in Chegg India Private Limited, the Court determined that when an appeal is filed with all necessary documents including a copy of the appealed order, a certified copy is not required. The Court ruled that the amendment to Rule 108 applies retrospectively as it is procedural in nature. The petition was allowed and the matter remanded to the Additional Commissioner (Appeal) for consideration on merits.
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Income Tax

• Assessment Orders Quashed as Time-Barred; Special Audit Under Section 142(2A) Found Void; Additions Under Section 69 for Unexplained Payments Upheld

  Case-Laws - AT : The ITAT quashed assessment orders for AYs 2014-15 and 2015-16 as time-barred, finding that the AO's reference to special audit under s.142(2A) was void ab initio since statutory conditions were not satisfied. Consequently, the extended time limit under s.153A was inapplicable, rendering the assessments invalid due to limitation. However, regarding additions under s.69 for unexplained payments, the Tribunal upheld the CIT(A)'s decision sustaining the AO's additions, noting the 4-year gap between alleged advance receipts and payments, and the appellant's failure to establish the source of payments from known income sources.
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• Partial Relief for Taxpayer: Section 35CCC Deduction Reduced While Section 14A and Depreciation Revision Orders Quashed

  Case-Laws - AT : ITAT partially allowed the appellant's appeal against revision proceedings under section 263. Regarding excess deduction under section 35CCC, the Tribunal upheld the revision but modified the disallowance amount to INR 8,03,76,735 instead of INR 10,68,11,066 as directed by PCIT. On the section 14A disallowance issue, ITAT found that the AO had properly examined the matter during assessment proceedings, making revision unwarranted. The Tribunal noted that CBDT Circular No. 5 of 2014 was inapplicable as the appellant had actually earned exempt dividend income. Similarly, regarding depreciation on land value, ITAT held that the AO had made proper inquiry after considering the appellant's submissions and litigation history.
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• Share Valuation Using DCF Method Valid Under Rule 11UA; AO Cannot Dispute Without Expert Opinion

  Case-Laws - AT : In this ITAT ruling, the Tribunal held that the DCF method for share valuation was validly applied per Rule 11UA(2)(b), accepting the Chartered Accountant's certification of fair market value at Rs. 106 per share. The AO's attempts to find discrepancies in the CA's report were deemed improper as they lacked basis in acceptable principles or approved standards. The Tribunal determined that valuation can only be disputed by another legally recognized expert, thus the s.56(2)(viib) addition was erroneous. Regarding the s.68 addition, the Tribunal ruled that the proviso only permits scrutiny of immediate subscribing companies, not secondary funding sources. The s.14A disallowance was upheld as the assessee failed to rebut findings about expenditure incurred for earning dividend income.
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• Intra-group IT services to Singapore affiliate not taxable as FTS; demonstration assets' ALP to be redetermined

  Case-Laws - AT : The ITAT ruled on two transfer pricing issues. Regarding intra-group services, the Tribunal deleted the adjustment, holding that IT and administrative services provided to the Singapore affiliate did not constitute Fees for Technical Services under the India-Singapore DTAA, following precedent from earlier assessment years. On purchase of fixed assets used for demonstration purposes, the ITAT remanded the matter to the AO/TPO for redetermination of arm's length price. The Tribunal directed that ALP should be determined based on input cost of traded goods, noting that the assessee had capitalized demonstration assets and claimed depreciation, which was already factored into the trading margin previously accepted as arm's length by the TPO. The AO/TPO must verify costs and redetermine the ALP after giving the assessee proper hearing.
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• SRF Limited Wins Appeal: Transfer Pricing Adjustments Deleted, Corporate Guarantee Fee Fixed at 0.25%, Goodwill Depreciation Allowed as Intangible Asset

  Case-Laws - AT : ITAT allowed the assessee's appeal on multiple transfer pricing adjustments. The Tribunal ruled that reimbursements received at cost from Associated Enterprises require no mark-up, following the assessee's own precedent and OECD guidelines. Corporate guarantee fee was upheld at 0.25%. Adjustments related to inter-unit transfers for Technical Textile and Chemical & Polymer businesses were deleted, with the Tribunal preferring CUP method over TNMM. Issues regarding electricity transfers were remitted for rebenchmarking following Jindal Steel. Deduction under s.32AC was remitted for fresh consideration. Disallowance under s.14A was deleted following the assessee's precedents. Weighted deduction under s.35(2AB) was partially allowed for approved facilities. Depreciation on goodwill was allowed as an intangible asset, while inventory write-offs were disallowed.
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• PF Contributions Deposited Late Not Deductible, But Interest on Strategic Investment Loans Allowed Under Income Tax Act

  Case-Laws - AT : ITAT allowed the Department's appeal regarding late deposit of employees' PF contributions, following the Supreme Court's Checkmate Services precedent. The Tribunal dismissed Revenue's grounds concerning disallowance of interest on unneeded loans, finding the investment in Ethiopotash B.V. was directly linked to the assessee's business to control raw material supply. ITAT upheld CIT(A)'s findings against rejection of books under s.145(3), determining the AO failed to properly verify submitted information before estimation. The Tribunal allowed full-year depreciation despite partial plant operation, following precedent on the wear and tear concept. ITAT also dismissed Revenue's appeals regarding additions under s.68 for alleged bogus share applications and unsecured loans, as the assessee adequately established identity, creditworthiness, and transaction genuineness.
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• Taxpayer Wins: Advance Payment Deduction, Security Deposit Write-off, and Transfer Pricing Adjustment Favorable Under Taparia Tools Precedent

  Case-Laws - AT : The ITAT ruled in favor of the assessee on three issues. First, regarding "Advance received from Customers," the Tribunal followed its earlier order and Supreme Court precedent in Taparia Tools Ltd., allowing deduction of the entire expenditure in the year of payment. Second, the ITAT permitted the security deposit written off to be allowed as business loss, considering the small amount relative to assessee's income and its nature as a revenue expense for tender participation. Finally, on transfer pricing adjustments for "commission received" from Associated Enterprises, the Tribunal found that after excluding dissimilar comparables, the operating profit/sales margin was 13.98%, noting that in subsequent years the TPO had accepted the commission as being at arm's length.
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• Depreciation on Goodwill Acquired Through Amalgamation Allowed Despite Nil Value in Amalgamating Company's Books

  Case-Laws - AT : The ITAT ruled in favor of the assessee regarding depreciation claimed on goodwill acquired through amalgamation. The Tribunal found that neither the AO nor CIT(A) had questioned the valuation of goodwill created pursuant to the amalgamation scheme approved by the P&H HC, though the CIT(A) had assigned nil value to the goodwill since no value was recorded in the amalgamating company's books. Relying on Eltek SGS Pvt. Ltd. (Del HC), the ITAT held that depreciation on acquired/created goodwill following amalgamation for AYs 2015-16 and 2016-17 was justified, thereby reversing the revenue's disallowance.
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• Donations to Unregistered Trust Not Exempt Under Section 11(1)(a), But Various Expenses Allowed as Valid Application of Income

  Case-Laws - AT : The ITAT dismissed the assessee's appeal regarding donations made to an unregistered trust under section 12A, affirming that exemption under section 11(1)(a) requires the recipient entity to be registered. The assessee failed to provide evidence that expenditures were for charitable purposes. However, the Tribunal allowed various expenses as valid application of income, including interest on TDS, statutory penalties, gifts, cultural expenditures, and ITC write-offs, considering them incidental to charitable activities based on precedents including CIT v. Trustee of H.E.H. the Nizam's Supplemental Religious Endowment Trust and CIT v. Surat Art Silk Cloth Manufacturers Association. The ITAT also permitted accumulation of income under section 11(2), ruling that bank deposits and lien-free FDRs qualify as investments under section 11(5).
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Customs

• Customs Act Section 137: Compounding Rejected Due to Discrepancies in Applicant's Statements Without Retraction

  Case-Laws - HC : The HC upheld the rejection of petitioner's application for compounding an offense under Section 137 of the Customs Act, 1962. The court determined that compounding applications require scrutiny and the compounding officer's subjective satisfaction that the disclosure was full and true. In this case, substantial variance existed between petitioner's statements under Section 108 and in the Panchnama compared to the compounding application, without any retraction of earlier statements. The court emphasized that compounding is not a routine entitlement and dismissed the petition, finding the rejection justified due to petitioner's failure to make full and true disclosure of facts as required by applicable circulars.
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• Mining Radial Tires Import Classification Dispute Hinges on IRMRA Testing Under Notification 12/2015-20

  Case-Laws - HC : The HC examined whether Brand New All Steel Radial Mining tires fall within the scope of N/N. 12/2015-20, which amended the import policy for goods under CTH 4011 from 'Free' to 'Restricted'. The court found that 2024 tests by IRMRA were conducted based on DRI's undisclosed assumptions, testing "D" marking tires (speed <=65 km/hr) as "J/K" category (speed <=100-110 km/hr), and not following IS 15636:2022 standards. The HC ordered new tests by IRMRA to determine whether the tires qualify as "Special-use" or "Normal-road-use," noting that IRMRA's 2022 tests had certified similar tires for mining applications. The matter was adjourned to April 15, 2025, pending test results that will determine the tires' import classification status.
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• Customs penalties reversed: F-card holder cleared of overvaluation allegations due to insufficient evidence under sections 114(iii) and 114AA

  Case-Laws - AT : CESTAT set aside penalties imposed under s.114(iii) and s.114AA of the Customs Act against the F-card holder of a Custom House Agent. The Tribunal found that allegations of improper export through overvaluation were based solely on the appellant's retracted statement without corroborative evidence. The appellant, as authorized CHA, had prepared shipping bills based on documents provided by exporters, maintained proper KYC documentation, and had no definitive knowledge of goods valuation. The Tribunal determined that the department failed to establish the appellant's culpability, as his confession was retracted and statements from other parties failed to meet the evidentiary standards under s.138B of the Customs Act. Appeal allowed.
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• Remand Ordered in Dispute Over License Fee and Advertising Expense Additions to Imported Goods' Assessable Value

  Case-Laws - AT : CESTAT remanded the case concerning additions of 'license fee' and 'advertising expenses' to imported goods' assessable value. The tribunal found that while the appellant had been importing from overseas affiliates since 2006, their renewal declarations remained pending until 2015 when additions were ordered. The first appellate authority's order was unclear about limiting additions to five years without specifying which imports were covered or excluded. CESTAT determined that the appeal had not been properly examined in terms of differential duty outcomes or evaluation of declared values in specific bills of entry. Without this analysis, the legality and propriety of the additions could not be determined. Appeal allowed by way of remand for fresh decision.
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• Fiber Optic Transmitters Classified as Optical Terminal Equipment Under CTH 85176290, Not Eligible for Exemption Under Notification 57/2017

  Case-Laws - AT : CESTAT ruled that fiber optic transmitters/receivers/transceivers are properly classifiable under CTH 85176290 as Optical Terminal Equipment rather than CTH 854230, upholding denial of exemption under Notification 57/2017. The Tribunal partially allowed the appeal by setting aside extended period invocation, confiscation, and penalties under Sections 112(a) and 114A, finding no evidence of deliberate suppression or fraud. However, penalty under Section 114AA was sustained as appellant knowingly entered classification different from supplier documentation. The matter was remanded for redetermination of duty demand quantum, with instructions to credit amounts already paid by appellant.
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IBC

• Secured Creditor Loses Right to Haldia Property in Liquidation for Failing to Pay Under Regulation 21A(2)

  Case-Laws - AT : The NCLAT affirmed that the Haldia property was correctly included in the corporate debtor's liquidation estate due to the appellant secured creditor's failure to comply with Regulation 21A(2). The secured creditor neither requested estimation of required payment nor made payment within 90 days from liquidation commencement date. The Tribunal rejected the appellant's argument that Regulation 21A(2) was inapplicable because the liquidator didn't communicate the estimated amount, noting that when obligations are time-bound, the secured creditor cannot rely on the liquidator's non-communication. The second proviso adequately protects secured creditors by allowing adjustment of any difference between estimated and actual amounts. While Halder Venture Ltd. was declared successful bidder for the Haldia Unit, they were permitted to complete the purchase by depositing the balance amount with interest.
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• Tribunal Orders Demat Account Defreeze to Aid Liquidator's Duties Under IBC Section 53(1), Overriding SEBI LODR Regulations

  Case-Laws - Tri : The Tri directed the defreezing of the Corporate Debtor's demat account, which had been frozen due to non-compliance with SEBI LODR regulations. The Tribunal determined it had jurisdiction over the matter under Section 60(5) of IBC, finding a clear nexus between the dispute and the insolvency process. The Tribunal emphasized that continued freezing would impede the Liquidator's statutory duty to expeditiously liquidate assets and maximize recovery for stakeholders under Section 53(1) of IBC. The Tribunal held that IBC provisions have overriding effect over conflicting SEBI regulations when they obstruct the time-bound liquidation process, particularly when compliance by defaulting entities under liquidation is impossible.
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Indian Laws

• Private Agreements Cannot Override Government's Eminent Domain Power to Acquire Land for Public Purpose

  Case-Laws - SC : The SC held that a statutory board cannot nullify the State's eminent domain power by entering into a private agreement to return compulsorily acquired land. The Court emphasized that without a formal conveyance document transferring the land from the government to the Board, the Board had no absolute rights over the property. The agreement dated 30.09.1988 was deemed contrary to the fundamental policy of Indian law as it attempted to reverse a sovereign acquisition for public purpose. The Court noted suspicious circumstances surrounding the agreement's preparation before Board approval. The arbitral award upholding this agreement was invalid, and lower courts erred in not setting it aside under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. Appeal allowed.
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• Taking Possession Beyond SARFAESI Act's 30-Day Timeline Is Valid As Time Limit Is Directory, Not Mandatory

  Case-Laws - HC : The HC held that the time limit for Chief Metropolitan Magistrate or District Magistrate to act under Section 14 of the SARFAESI Act is directory, not mandatory. These authorities do not become functus officio upon expiry of the statutory period of thirty days or extended period of sixty days. The Court reasoned that interpreting the timeline as mandatory would frustrate the Act's primary objective of timely debt recovery, leaving secured creditors remediless due to administrative delays and unjustly enriching defaulting borrowers. The borrower has no right to object to recovery steps when liable to repay the loan. The petition was allowed, directing the District Magistrate to dispose of the bank's application within four weeks.
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• DRAT Failed to Exercise Appellate Authority by Remanding 20-Year Case to DRT Under Recovery of Debts Act

  Case-Laws - HC : The HC determined that DRAT erred in remanding the matter to DRT for fresh consideration of jurisdiction and debt status under Section 2(g) of the Recovery of Debts and Bankruptcy Act, 1993. The DRAT failed to fulfill its appellate authority role by not addressing substantive legal issues raised before it, despite having sufficient factual material to decide HDFC's claims against Ashima and BBK. The court emphasized that remand orders should not be issued lightly, particularly in cases pending for nearly 20 years. The HC directed DRAT to decide the appeals on merits without further remand to DRT, noting that remand is only justified when re-trial is necessary or evidence is insufficient for disposition.
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• Borrowers Must Be Heard Before Fraud Classification: RBI Directions Require Personal Hearings Beyond Written Submissions

  Case-Laws - HC : The HC affirmed that principles of natural justice, specifically audi alteram partem, apply to proceedings under RBI Directions regarding fraud classification. Following Rajesh Agarwal (SC), the court held that borrowers must be afforded an opportunity of hearing before their accounts are classified as fraud, given the significant civil consequences that follow such classification. The court clarified that this principle requires not only allowing written representations but also providing personal hearings to affected parties. The impugned direction by the Single Judge mandating such hearings was upheld as proper implementation of natural justice principles. The Letters Patent Appeal challenging this direction was accordingly dismissed.
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Law of Competition

• Allegations of Bid-Rigging and Abuse of Dominance in Procurement Process Dismissed Under Sections 3 and 4

  Case-Laws - CCI : The CCI dismissed allegations of anti-competitive agreements and abuse of dominant position under Sections 3 and 4 of the Competition Act, 2002. Regarding Section 3, the Commission found no evidence of bid-rigging or cartel behavior between the opposing parties despite allegations of a tacit agreement in tender awarding. For Section 4 claims, the Commission determined that appointment of a Project Management Consultant and issuance of an allegedly faulty Request for Proposal fell within the procurer's legitimate discretion and were not inherently abusive without supporting evidence of statutory violations. Finding no prima facie case of contravention, the Commission closed the matter under Section 26(2) of the Act and rejected the request for interim relief under Section 33.
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SEBI

• SEBI's Attachment Orders Against Unregistered Collective Investment Scheme Upheld; Statutory Appeal Remedy Must Be Exhausted First

  Case-Laws - HC : The HC dismissed a writ petition challenging SEBI's attachment orders against an unregistered Collective Investment Scheme, ruling that the petitioner must exhaust the statutory appellate remedy under the SEBI Act before seeking judicial review. The Court determined that all grounds raised could be addressed by the Appellate Authority. While acknowledging that the limitation period for appeal had expired, the HC granted the petitioner a 30-day extension from the judgment date to file an appeal, directing that any such appeal should not be rejected on grounds of limitation given the case's unique circumstances.
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• Company's IPO Cancelled Due to Material Misstatements in Prospectus and Inadequate Due Diligence in Vendor Selection

  Case-Laws - AT : AT upheld the cancellation of the IPO due to material misstatements in the prospectus regarding software procurement. The Tribunal determined that the appellant company failed to conduct proper due diligence when selecting a vendor with questionable credentials, approving the purchase within two days without verifying the vendor's capabilities or following its own procurement policy requiring three quotes. The merchant banker also failed to conduct adequate due diligence. The Tribunal emphasized that protecting retail investors is paramount, and disclosure adequacy in public offerings cannot be compromised. The company's alternative plea to proceed with the IPO under regulatory monitoring was rejected as the disclosure was deemed non-genuine and misleading.
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Service Tax

• Refund of CENVAT Credit Denied for Services Provided by Overseas Subsidiaries to Foreign Clients Under Rule 5

  Case-Laws - AT : CESTAT denied refund of accumulated CENVAT credit to the appellant under Rule 5 of CENVAT Credit Rules, 2004. The Tribunal held that services provided by overseas subsidiaries to their foreign clients did not qualify as input services for the appellant, despite invoices being raised between the holding company and subsidiaries. The appellant had incorrectly paid service tax on reverse charge basis and claimed CENVAT credit for transactions occurring outside India's territorial jurisdiction. Regarding service tax refund claims under Section 11B of Central Excise Act read with Section 83 of Finance Act, 1994, the Tribunal rejected appeals due to insufficient information and lack of proper bifurcation of refund claims, rendering potential relief unimplementable. Appeals dismissed.
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• Service of Show Cause Notice After One-Year Limitation Period Under Section 111 of Finance Act 2013 Deemed Time-Barred

  Case-Laws - AT : CESTAT held that the show cause notice issued under Section 111 of the Finance Act, 2013 was time-barred. The appellant had filed a declaration on 31.12.2013 under the Voluntary Compliance Encouragement Scheme, but the notice was only served on 02.01.2015, beyond the statutory one-year limitation period. The Tribunal emphasized that "service" of notice must comply with statutory provisions, and neither issuance of the show cause notice nor pasting it on factory premises constituted proper service as required by law. Since the notice was not served within the prescribed time limit, all subsequent proceedings including demand confirmation were deemed non-maintainable. The appeal was allowed without examining the second ground regarding false declaration.
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• TTK Logo Registered Under Copyright Act Cannot Be Taxed as Intellectual Property Right Under Section 65(55a)

  Case-Laws - AT : CESTAT ruled in favor of the appellant, holding that the "ttk" logo used by group companies was a "house mark" registered under the Copyright Act, not a trademark. The Tribunal determined that the logo merely identified the manufacturer/distributor without establishing a relationship between the mark and products, thus not making the products patent or proprietary. Since the definition of "Intellectual property right" under Section 65(55a) explicitly excludes copyrights, and the "ttk" logo was registered under the Copyright Act, the service tax demand under IPR services was invalid. Following precedent from an earlier decision involving the same appellant and the Supreme Court's ruling in Astra Pharmaceuticals, the impugned order was set aside and the appeal allowed.
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Central Excise

• Fireworks Firms Win Appeal as Department's "Group" Classification Fails Legal Test Under Notification No.8/2003-CE

  Case-Laws - AT : CESTAT ruled in favor of three fireworks firms, setting aside the order that clubbed their clearances under SSI exemption notification No.8/2003-CE. The Tribunal found fundamental flaws in the Department's approach, noting they failed to identify a principal entity as required by law before aggregating clearances, instead creating a fictional "group" with no legal basis. Additionally, the adjudicating authority improperly denied cross-examination of the investigating officer and relied on inadmissible statements. The evidence for alleged clandestine removals was deemed "woefully inadequate," with the Department's quantification methodology being arbitrary, particularly for periods where no evidence existed. The appeals were allowed, with each firm maintaining separate eligibility for SSI exemption.
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Case Laws:

• GST

• 2025 (3) TMI 1092
  Retrospective application of amendment to Rule 108 of the GST Rules, 2017, which altered the requirements for submitting a certified copy of the order appealed against - failure to submit a certified copy of the order within the specified period, as per the unamended Rule 108 - differences in various returns - HELD THAT:- It is admitted that the appeal against the order dated 16.08.2022 passed by the Proper Officer was preferred on 15.11.2022. It is also not in dispute that along with the appeal, copy of the order appealed against was also filed. The said fact has specifically been mentioned in paragraph no. 22 of the writ petition, which has not been denied by the State in paragraph no. 11 of the counter affidavit. During the pendency of the appeal, subsequent amendment to rule 108 came on 16.12.2022. As per the unamended rule 108 (3) of the Rules, the time of filing certified copy of the order appealed against was within 7 days of submission of appeal; whereas, as per the amended rule 108(3) of the Rules, where the decision and order against is not uploaded on the common portal, then the party shall submit certified copy of the said decision within 7 days - Bare conjoint reading of the aforesaid provisions clearly shows that in the event certified copy of the order appealed against is not uploaded along with the appeal through e-mode, then within 7 days of filing of the appeal, a self-certified copy of the order was supposed to be filed within 7 days. The issue in hand has already been decided by the Delhi High Court in Chegg India Private Limited [ 2024 (12) TMI 1354 - DELHI HIGH COURT ] wherein, the Court has held that the condition for physically filing the certified copy is not mandatory, but procedural in nature. If an appeal is preferred along with all documents and the copy of the appeal, the filing of certified copy is not required. Similarly, in the case in hand, it is not in dispute that the appeal, which was preferred on 15.11.2022, was without order appealed against. Once this fact is not in dispute, the issue in hand is covered by the judgement of the Delhi High Court in Chegg India Private Limited. Conclusion - i) The condition for physically filing the certified copy is not mandatory, but procedural in nature. ii) The amendment to Rule 108 is procedural and applies retrospectively, allowing appeals filed electronically within the limitation period to be considered valid despite delays in submitting a certified copy. The matter is remanded back to the appellate authority, i.e., the Additional Commissioner, Grade - 2 (Appeal), State Tax, Noida, for considering the appeal on merit - petition allowed.

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• 2025 (3) TMI 1091
  Dismissal of appeal on technical grounds - non-constitution of Tribunal - failure to comply with the legal mandate of making the pre-deposit - HELD THAT:- Noting that the petitioner s appeal has been rejected on technical grounds and at present the Appellate Tribunal under Section 112 of the said Act is yet to be constituted, one more opportunity should be granted to the petitioner to make payment of the pre-deposit as required under Section 107(6) of the said Act. The order dated 22nd May, 2024 passed by the Appellate Authority rejecting the petitioner s appeal is set aside - Petition disposed off.

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• Income Tax

• 2025 (3) TMI 1090
  Condonation of delay in filing these Special Leave Petitions - HELD THAT:- No reasons to be satisfactory nor sufficient in law so as to condone the delay of 467 days in filing these special leave petitions. Hence, the application(s) seeking condonation of delay is dismissed. Consequently, the Special Leave Petitions are also dismissed. However, all contentions which are available to the petitioner(s) herein may be advanced before the concerned Magistrate s Court in accordance with law. It is needless to observe that if the relevant contentions are advanced by the petitioner(s) herein, the same shall be considered and adjudicated upon by the learned Magistrate. We also clarify that the observations of the High Court in the impugned order(s) are restricted to the consideration of the case under Section 482 of the CrPC only. The Court before which the prosecution against the petitioner(s) is/are pending shall endeavour to dispose of the said case as expeditiously as possible with the cooperation of the parties. Assessment u/s 153A - pendency of re-assessment proceedings - Offence punishable u/s 276CC - unaccounted receipt of money by the petitioner towards remuneration for directing movies - Whether assessment order was barred by limitation? - as per HC [ 2022 (6) TMI 88 - MADRAS HIGH COURT] this Court is of the considered view that respondent/complainant made out prima-facie case to proceed against the petitioner for the offences alleged in the complaint. Section 278 (e) of the Income Tax Act, 1961, empowers the Court to presume culpable mental state of the accused, unless, the accused shows that he had no such mental state with respect to the act charged as an offence in the prosecution. In this view of the matter, this Court finds that petitioner shall necessarily face the trial. Criminal Original Petitions dismissed - HELD THAT:- As respondent(s) sought some time to file Vakalatnama. Accepting his submission, three weeks time is granted to file Vakalatnama. We dispose of these Special Leave Petitions by reserving liberty to the petitioner(s) herein to take up all contentions regarding the maintainability of the prosecution before the concerned Trial Court. It is needless to observe that if such contentions regarding the maintainability of the prosecution are raised by the petitioner(s) herein, the same shall be considered in light of the relevant case law and in accordance with law and facts of the present cases.

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• 2025 (3) TMI 1089
  Addition u/s 68 - Addition in respect of share and share premium - ITAT deleted addition - HELD THAT:- Tribunal has elaborately considered the factual position and faulted the manner in which the assessment was completed by observing that it was a cryptic order without discussing the facts of the matter nor the submissions made by the assessee nor the documents produced by the assessee to prove the three factors, namely, identity, genuineness of the transactions and creditworthiness of the subscribers. Tribunal also found that though such documents were once again produced before the CIT(A), but the same were not referred to nor any defect or discrepancy was pointed out under the said documents. Apart from that, Tribunal has also pointed out that there are factual mistakes by the CIT(A) while passing the order which are contrary to the conclusion arrived at by the AO. Tribunal took note of the decision of NRA Iron Steel (P) Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] noted that the principles which were summed up in the said decision when a case is considered under Section 68 of the Act. After noting the said decision, Tribunal examined the factual position and found that the initial burden casted upon the assessee has been discharged inasmuch as the assessee had produced the documents to prove the identity of the subscribers, the genuineness of the transaction and creditworthiness of the subscribers - Decided against revenue.

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• 2025 (3) TMI 1088
  Validity of the notice issued u/s 148 - notice issued by non-jurisdictional officer - as argued notice was issued by the one A.O i.e. ITO, Ward-1(3), Raipur who was not having valid jurisdiction over the assessee to issue such notice at the relevant point of time HELD THAT:- As notice u/s 148 of the Act, dated 30.03.2019 which had been issued by the ITO, Ward-1(3), Raipur who had no valid jurisdiction over the assessee at the relevant point of time, therefore, it is held invalid, bad in law and all subsequent proceedings thereafter are accordingly held as void ab initio, non-est in law. The re-assessment framed by the ITO-2(1) Raipur passed u/s. 147 r.w.s.143(3) in absence of an order of transfer u/s. 127 of the Act having been passed by the Ld. Pr.CIT and without issuance of notice u/s. 148 of the Act, is held to be without any jurisdiction and thus, held as bad in law and the same is quashed. Decided in favour of assessee.

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• 2025 (3) TMI 1087
  Estimation of income - bogus purchases - AO has treated the purchases declared by the assessee as bogus and proceeded to make the addition on estimate basis @ 10% - HELD THAT:- Assessee is dealing in trading in steel and scraps and in various cases coordinate benches have estimated the income in this line of business @ 5%. Therefore, the assessee has already declared profit @ 3.5% and direct the AO to make the addition of difference of 1.5% on the bogus purchases as income of the assessee. Unexplained cash deposits u/s 68 - As bank account as well as ledger copies of Goyal Trading Company and Sagar Enterprises and we observe that there is no cash deposits in any of the ledger accounts submitted by the assessee and also there is no cash deposits in any of the bank accounts submitted before us to the extent of Rs. 3 lakh each from both the parties. In the case of Goyal Trading Company, observe that there is a credit balance of Rs. 3 lakhs and at the same time observe that there was also a debit of Rs. 3 lakhs, which shows that it is a contra entry for dishonour of the cheque deposit by the assessee. Therefore, in absence of any cash deposits and all the transactions recorded in the bank account are only through cheques, therefore, no reason to sustain the addition. Decided in favour of assessee.

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• 2025 (3) TMI 1086
  TP Adjustment - intra-group services (IGS) received by the assessee - Cost allocation methodology for intra-group services availed by Appellant - HELD THAT:- We observed that similar issue was considered by the coordinate Bench in AYs 2018-19 and 2019-20[ 2023 (1) TMI 42 - ITAT DELHI] as held service recipient of the assessee is unable to make use of the said technology only by itself in its business or for its own benefit without recourse to the assessee year after year - The receipts of the assessee on account of provision of information technology and other administrative services to its affiliate in India are not in the nature of Fees for Technical Services under the India Singapore Double Taxation Avoidance Agreement and we, accordingly, direct the Assessing Officer to delete the same. Purchase of fixed assets - HELD THAT:- As assessee purchased similar equipments for the purchase of resale, however a part of the abovesaid capital assets were also used for demonstration purposes. The assets which are used for demonstration purposes were capitalized by the assessee. The transaction is closely inter-linked and aggregated with the trading segment of the assessee for the purpose of determination of ALP, we observed that assessee has also claimed depreciation on these assets on the assessee s trading margin was determined after claim of the depreciation on abovesaid assets which are used for demonstration purposes. Further it is brought to our notice that the TPO has accepted the ALP of the trading segments which is at arms length. Since the assessee has capitalized the same traded assets, in our considered view, the ALP of the purchase of fixed assets to be determined based on the value of input cost of traded goods which assessee has traded during the year and shown relevant profits. The assessee has submitted a comparative purchase chart of traded and the assets utilized for demonstration purposes which was already reproduced in the submissions of the ld. AR. Thus, remit this issue back to the file of AO/TPO with a direction to verify the cost of assets utilised for demonstration purposes and also the cost of input of traded goods. We direct TPO to redo the ALP adjustment after giving proper opportunity of being heard to the assessee and determine the ALP as per law. Accordingly, ground allowed for statistical purposes.

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• 2025 (3) TMI 1085
  TP Adjustment - allocation of software cost received from its Associated Enterprises - HELD THAT:- We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee s own case for A.Y. 2014-15 [ 2021 (12) TMI 1428 - ITAT DELHI ] wherein the coordinate Bench upheld that the reimbursement received at cost does not require any mark-up. Further it is noted that Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT ] had also upheld the reference to OECD guidelines being persuasive in nature. In view of the aforesaid discussions and respectfully the aforesaid precedents, we deem it fit and proper to direct the AO/TPO to delete adjustments in respect of reimbursement received. Accordingly, Ground are allowed. Adjustment u/s. 92CA(3) - allocation of reimbursement received from its Associated Enterprises - HELD THAT:- We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order in assessee s own case for A.Y. 2014-15 [ 2021 (12) TMI 1428 - ITAT DELHI ] wherein upheld that the reimbursement received at cost does not require any mark-up. It is noted that in this case the assessee relied on OECD guidelines which support that no mark-up is chargeable in reimbursements. Thus, we deem it fit and proper to direct the TPO to delete such adjustment in respect of reimbursement received. Adjustment u/s. 92CA(3) on account of Corporate Guarantee Fee from AE - HELD THAT:- We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee s own case for A.Y. 2014-15, wherein the coordinate Bench upheld the corporate guaranteed rate @0.25%. Adjustment on account of Inter unit Transfer Technical Textile Business, Kashipur Division - assessee submitted that assessee s methodology was rejected without providing any reason - HELD THAT:- We find considerable cogency in the contention that assessee s methodology was rejected without providing any cogent reason. In our view, in various judicial precedents, CUP method has been preferred over TNMM. Segmental margin of TTB segment computed by TPO @6.28% is incorrect as the segmental margin from the segmental results of assessee is 12.14% and hence no adjustment is warranted in any case. Accordingly, we direct the TPO to delete the adjustment. Adjustment on account of Chemical Polymer Business - HELD THAT:- Assessee s methodology was rejected without providing any cogent reason. In various judicial precedents, CUP method has been preferred over TNMM. Segmental margin of CPB segment computed by TPO@ (-) 1.37% is incorrect as the segmental margin from the segmental results of assessee is reported at 33.34%. As further noticed that the PLI of eligible unit as computed by TPO is 16.32% which is again lower than the CPB segment s correct PLI. We further find force in the contention of the Ld. AR that DRP erred in computing the adjustment twice Rs. 40.23 lacs on cost side and Rs. 17.82 lacs on revenue side, thus incorrectly applying the TNMM method. This issue needs proper verification by the TPO on the basis information supplied by the assessee, we direct the TPO to determine the ALP on the basis of CUP method. Transfer of power by Captive Power Plant (CPP) at Bhiwadi - HELD THAT:- Various judicial pronouncements advocated the adoption of SEB rates for benchmarking the electricity transfer and Rule of Consistency has also been followed by the assessee before Ld. DRP. The data of various discom rates obtained u/s 133(6) were not available in public domain, hence cannot be used. It is also noted that no opportunity was given to examine and rebut the data. In view of the Tribunal decision in the case of Technimont ICB P Ltd. [ 2012 (7) TMI 1172 - ITAT MUMBAI ], we observed that assessee s internal CUP to be preferred over an external CUP, which was not done. It is brought to our notice that in AY 2014-15 and AY 2015-16, similar bench marking was carried by the assessee adopting the CUP method based on SEB rates, which was accepted by the AO in AY 2014-15 and on the basis of CBDT instruction no 3/2016 in AY 2015-16. Hence, for the sake of bench marking the correct ALP on the electricity charges, we are inclined to remit this issue back to the file of AO/TPO to redo the bench marking based on the decision of Jindal Steels and others [ 2023 (12) TMI 417 - SUPREME COURT ] and as per law. Purchase of Electricity from VRETPL - HELD THAT:- Copy of sample invoices of power purchase by assessee from Tamil Nadu State Electricity Board (SEB) as an evidence to depict that the purchase rate of SEB is way higher than the rate charged by VREPL. We further note that detailed note explaining the basis of pricing of electricity and the benchmarking of the same in contrast to the rate of electricity purchase by the assessee from the SEB and the date of various discom rates obtained u/s 133(6) not available in public domain, hence it cannot be used. Tribunal decision in the case of Technimont ICB P Ltd. [ 2012 (7) TMI 1172 - ITAT MUMBAI ] assessee s internal CUP to be preferred over an external CUP, which was not done, hence no adjustment is warranted in any case. Hence, for the sake of bench marking the correct ALP on the electricity charges, we are inclined to remit this issue back to the file of AO/TPO to redo the bench marking by following the decision of Hon ble Supreme Court in the case of Jindal Steel and others [ 2023 (12) TMI 417 - SUPREME COURT ] case and as per law. Sale of Electricity by WPP unit at Tamilnadu - HELD THAT:- It is brought to our notice that in AY 2013-14 and 2014-15, the assessee had bench marked by adopting CUP method based on EB purchased by assessee for other units from Tamil Nadu State Electricity Corporation, the same was accepted by the TPO and in AY 2015-16 accepted on the basis of CBDT instruction no 3/2016. Hence, for the sake of bench marking the correct ALP on the electricity charges, we are inclined to remit this issue back to the file of AO/TPO to redo the bench marking based on the decision of Jindal Steel and others [ 2023 (12) TMI 417 - SUPREME COURT ] case and as per law. Hence, Ground Nos.40 to 43 are allowed as indicated above. Disallowance of deduction u/s. 32AC - assessee submitted that there is no requirement of certificate for claiming the deduction u/s 32AC - HELD THAT:- We find that the assessee has submitted the relevant information on the claim of investment in new plant and machinery during the year. We direct the AO to consider the various information de novo after giving the proper opportunity of being heard to the assessee. The claim made by the assessee cannot be rejected mechanically and the assessee has made huge investments in the plant and machinery in order to claim the benefit u/s 32AC of the Act. Therefore, we are remitting these grounds back to file of AO. Disallowance u/s. 14A - HELD THAT:- We find considerable cogency in the contention of the AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee s own case for 2006-07, 2007-08, 2008-09, 2010-11 2012-13 wherein the Bench deleted the similar additions. Disallowance of weighted deduction u/s. 35(2AB) - HELD THAT:- Coming to the final assessment order, the AO has wrongly disallowed all the deductions claimed by the assessee including the old 4 approved facilities. Therefore, we direct the AO to allow the genuine claim of the assessee relating to approved facilities and disallow the excess deductions claimed by the assessee for the Gurgaon facility alone. In the result, grounds raised by the assessee are partly allowed. Disallowance of all the deductions claimed by the assessee including the old 4 approved facilities - HELD THAT:- As we direct the AO to allow the genuine claim of the assessee relating to approved facilities and disallow the excess deductions claimed by the assessee for the Gurgaon facility alone. In the result, grounds raised by the assessee are partly allowed. Disallowance of depreciation of goodwill - HELD THAT:- We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee s own case for years 2009-10, 2012-13, 2014-15 2015-16 wherein, the Bench upheld that goodwill is an intangible asset and eligible for depreciation. Disallowance on account of inventories written off - HELD THAT:-The assessee has failed to submit the rationale for claiming separately the write off of inventory. Therefore, the submissions of the assessee are not appealing to us and we are inclined to sustain the additions made by the AO. Case relied by the assessee are on the facts that the relevant assessee s claimed the revaluation of inventory for reduction in the value of closing stock and the AO has rejected the same on the basis of non submission of item wise details or for other reasons. The Courts have decided the issues in favour of the assessee. The facts in the present case is distinguishable to facts of those decisions relied by the assessee. In the result, grounds raised by the assessee are dismissed. Disallowance on account of software expenses - HELD THAT:- We find considerable cogency in the claim of the assessee. It is settled law that the software expenses are allowable expenses, which are recurring in nature and are meant to renew every year. Therefore, we are inclined to direct the AO to delete the above software expenses. In the result, the grounds raised by the assessee are allowed. Additional claim made with respect to allowance of additional depreciation @ 10% u/s. 32(1)(iia) - HELD THAT:- We find considerable cogency in the contention of the AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee s own case for different assessment years specifically Assessment Year 2015-16 wherein the Bench remitted back the issue to the file of the AO and AO had allowed / granted its appeal effect order dated 22.03.2023 - we deem it fit and proper to remit back the issue to the file of the TPO with the similar directions.

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• 2025 (3) TMI 1084
  Late deposit of employees contribution to PF - HELD THAT:- We observed that the issue under consideration is against the assessee based on the decision of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] . Accordingly, first ground of appeal raised by the Department is allowed. Disallowance of interest on unneeded loans - HELD THAT:- Just because assessee has not earned any income during the year, the AO proceeded to disallow the proportionate interest relating to the above said investment. After careful consideration, we are of the view that assessee has invested for exploration of Potash Project in Ethiopia. The assessee has invested 32.43% stake which in turn has invested 12.5 million USD in M/s. Ethiopotash B.V. company. The controlling of the raw material supply is key to any organization and assessee has invested to control the supply of raw material from Ethiopia. Therefore, the investment made by the assessee is directly linked to the business of the assessee. Therefore, we do not see any reason to disturb the findings of the ld. CIT (A) and accordingly, ground no.2 raised by the Revenue is dismissed. Rejection of books of account u/s 145(3) - AO relying on the variation in the GP recorded by the assessee in the past three years and in remand proceedings, the AO has accepted the various details submitted by the assessee and has not made any negative observations on the details furnished by the assessee - HELD THAT:-CIT (A) has elaborately discussed that AO has not made preliminary verification of the information submitted by the assessee and rejected the books of account and proceeded to estimate the income. After careful consideration of the findings of the CIT (A) and also remand proceedings submitted by the AO, we are inclined to agree with the findings of the ld. CIT (A). Accordingly, ground no.3 raised by the Revenue is dismissed. Disallowance of depreciation - Since the assessee has carried out the business only for seven months, accordingly he disallowed the depreciation for the proportionate period in which the plant was not functional and treated the claim of the depreciation as excess claim - HELD THAT:- We observed that the assessee has claimed depreciation for the whole year based on the concept of wear and tear and in the similar situation, assessee has given lay off for the plant in the AY 2000-01 and the coordinate Bench has decided the issue in favour of the assessee. Respectfully following the above decision, we are inclined to allow the claim of the assessee in the year under consideration also. Accordingly, ground no.4 raised by the Revenue is dismissed. Addition u/s 68 - bogus share application money - HELD THAT:- As assessee represented the case of the sister concern and filed the relevant information as called for. CIT (A) has appreciated the fact that both these companies are sister concerns of assessee company wherein common promoters were promoted these companies and the summons issued by the AO were complied through authorized representative. CIT (A) appreciated the relevant documents submitted by the assessee during the assessment proceedings as well as during appellate proceedings and has found that the documents submitted by the assessee are proper and accordingly gave relief to the assessee. Considering the facts on record, we are inclined to dismiss the ground raised by the Revenue and we are inclined to agree with the findings of the ld. CIT (A). Accordingly, ground no.5 raised by the Revenue is dismissed. Addition on account of unsecured loan - HELD THAT:- We observed that the assessee has submitted the details of taking unsecured loan - As submitted before the ld. CIT (A) that M/s. Maneesha Finlease Limited is a sister concern of the assessee company and being a sister concern, assessee has already proved identity and established creditworthiness. With regard to genuineness of the transaction, assessee has submitted relevant confirmation and actual transactions of receiving unsecured loan. We observed that AO has added the outstanding balance at the end of the year without properly verifying actual transactions during the year. - Ld. CIT (A) has appreciated the complete facts on record and found that the genuineness of the transaction was already proved by the assessee. - Ground no.6 raised by the Revenue dismissed.

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• 2025 (3) TMI 1083
  Disallowance of u/s. 40(a)(ia) - As argued as per the provisions of Section 201(1) of the Act, when the recipient of income has paid tax on such income, the assessee cannot be treated as an assessee in default - As submitted that the assessee is willing to furnish a Chartered Accountant s certificate in Form 26A to confirm that the interest income has been offered to tax by the recipient - HELD THAT:- In view of the above, the matter is restored to the AO for verification of Form 26A as per the provisions of Section 201(1) of the Act. If the assessee furnishes a valid Form 26A demonstrating that M/s H J Associates has paid tax on the interest received, the AO shall delete the disallowance made u/s 40(a)(ia) of the Act. Accordingly, this ground is allowed for statistical purposes. Disallowance of interest Expenses - assessee failed to deduct TDS on these payments, as required u/s 194A - AR contended that all the lenders are agriculturalist having agricultural income and their other income is below taxable limit - DR contended that the interest is not paid and only credited to the account of parties from whom the amounts have been borrowed - HELD THAT:- As in the interest of justice, we deem it appropriate to restore the matter to the file of the AO for the limited purpose of verifying the validity and correctness of Form 26A and to examine whether the recipients have duly filed their returns of income, disclosing the interest income and paying tax thereon as per the provisions of Section 201(1) of the Act. Addition u/s 43B - assessee had an outstanding VAT liability at the end of the financial year - AO held that the unpaid amount was outstanding as of the balance sheet date and was not cleared before the return filing due date, the disallowance u/s 43B of the Act was considered justified - HELD THAT:- Considering the submissions made and the decision of SDCE Projects Pvt. Ltd [ 2019 (10) TMI 309 - ITAT AHMEDABAD] we deem it appropriate to restore this issue to the file of the AO for verification. The AO is directed to examine whether the VAT liability was indeed reversed in the subsequent year and whether it was ever claimed as a deduction in the profit and loss account. AO shall verify to which account the VAT liability has been reversed and whether it has impacted the taxable income of the assessee. If it is found that the liability was merely carried forward as a current liability without being claimed as an expense, the disallowance under Section 43B of the Act shall be deleted. Addition of unsecured loan u/s 68 - AO observed that the assessee failed to establish the creditworthiness of the lenders and the genuineness of following loan transactions - HELD THAT:- Considering the submissions and the judicial pronouncement relied upon by the AR, we deem it appropriate to restore the matter to the file of the Assessing Officer for fresh verification. The AO is directed to verify whether the loans in question were repaid in part or full and to reconsider the addition made under Section 68 of the Act, after examining the genuineness of transactions and the creditworthiness of the lenders in light of the ratio laid down in the case of CIT Vs. Apex Therm Packaging (P.) Ltd [ 2013 (12) TMI 1541 - GUJARAT HIGH COURT] Accordingly, this ground is allowed for statistical purposes. Addition u/s 69 - treating the opening cash balance as unexplained investment, citing the assessee s failure to substantiate the source of funds - HELD THAT:- We find that the assessee has relied on the certified personal balance sheet as on 31-03-2014, which reflects the opening cash balance. The assessee has contended that this balance was duly carried forward from the preceding year and does not represent any fresh credit during the year under consideration. We deem it appropriate to restore the matter to the file of the AO for fresh verification. The AO is directed to examine the certified balance sheet and other supporting documents, including the cash book, to verify the genuineness of the opening cash balance. If it is found that the cash balance was genuinely carried forward from earlier years and is duly reflected in the books of accounts, the addition under Section 69 of the Act shall be deleted. This ground is allowed for statistical purposes.

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• 2025 (3) TMI 1082
  Addition u/s 14A r.w.rule 8D - As argued no expenditure was incurred by the appellant to earning exempt income - HELD THAT:-Section 14A is applicable if the assessee has income which is not includible in its total income and further assessee has incurred certain expenditure to earn such income. In the instant case, the assessee has not incurred any expenditure which could be related to earning exempt income though it had exempt income. The language of section 14A is not at all ambiguous and in fact very clear and by virtue of the same, only expenditure actually incurred in relation to income not includible in total income shall be disallowed. In no way, it could be interpreted that it seeks to disallow expenses on assumption basis. Therefore, disallowance u/s 14A can be made only when assessee has actually incurred any expenses in relation to such exempt income. The Hon ble Supreme court in the case of Maxopp Investment [ 2018 (3) TMI 805 - SUPREME COURT] also expressed this view. Looking to the fact that assessee has not claimed any expenditure which was incurred in relation to earn exempt income and further before invoking the provision of section 14A along with Rule 8D, the AO has failed to record satisfaction with respect to expenses claimed as related to earn exempt income, thus in our considered opinion the addition made made by invoking the provisions of section 14A r.w. rule 8D of the IT Rules, 1962 is not sustainable. Appeal of the assessee is allowed.

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• 2025 (3) TMI 1081
  Additions of Advance received from Customers - HELD THAT:- The issues are covered by order in [ 2024 (10) TMI 32 - ITAT DELHI ] for A.Y. 2009-10 in assessee s own case as relying on Taparia Tools Ltd. [ 2015 (3) TMI 853 - SUPREME COURT ] assessee would be entitled to deduction of the entire expenditure in the year in which the amount was actually paid. Decided in favour of assessee. Disallowance of Security Deposit written off debited under the accounting head advances written off - HELD THAT:- As in view smallness of the amount vis- -vis income of the assessee, the assessee claim for disallowance to be allowed as business loss as it pertains to revenue field on account of security deposit for participating in tenders. TP adjustments in respect of international transactions of commission received with its Associated Enterprise - comparable selection - HELD THAT:- Once the companies selected were dissimilar comparable are excluded then the operating profit/sales margin works out to 13.98. Moreover in subsequent years the TPO has accepted commission as Arm s Length and has not made any addition vide order dated 29.01.2015. Accordingly, Ground of assessee s appeal is allowed.

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• 2025 (3) TMI 1080
  TP Adjustment - corporate guarantee given by the appellant on behalf of its Associated Enterprises falls within the definition of international transactions u/s 92B - HELD THAT:- We find that the issue is a recurring one in the assessee own case and has been decided by the co-ordinate Bench in assessee s own case [ 2023 (2) TMI 523 - ITAT KOLKATA] , wherein it has been held that the corporate guarantee transactions are international transactions and accordingly, ground no. 2 raised by the assessee is dismissed. As relying on [ 2023 (2) TMI 523 - ITAT KOLKATA] in assessee s own case, wherein the Arm s Length Price corporate guarantee fee has been restricted to 0.5%. Addition u/s 14A r.w.s Rule 8D of the Rules - assessee has suo moto disallowed as expenses u/s 14A relating to earning of exempt income - HELD THAT:- CIT (A) deleted the addition by following the decision [ 2023 (2) TMI 523 - ITAT KOLKATA] as most of the investments held by the assessee are brought forward from preceding year and also the major portion of the investment is in the sister/group concerns of the assessee and thus, reverse the finding of ld. CIT(A) and delete the disallowance made by ld. AO and accept the suo moto disallowance offered by the assessee.

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• 2025 (3) TMI 1079
  Disallowance of depreciation on goodwill acquired/created as a result of amalgamation - HELD THAT:- In the present cases, there is no dispute on the valuation of acquired/created goodwill pursuant to the scheme of amalgamation in the books of account of the appellant assessee as neither the AO nor the CIT(A) has ever questioned the valuation of the said goodwill though the Ld. CIT(A) has held that the value of goodwill in the hands of the appellant company should be NIL as there was no value assigned to the goodwill in the books of account of amalgamating company; i.e. North Star Apartment Pvt. Ltd. Admittedly, the amalgamation has taken place in pursuant of the order dated 07.03.2015 of the Hon ble Punjab and Haryana High Court. We are of the considered view that this case is squarely covered by the decision of Eltek SGS Pvt. Ltd.[ 2023 (8) TMI 681 - DELHI HIGH COURT] . Thus, hold that the claim of depreciation on acquired/created goodwill pursuant to the scheme of amalgamation in AY 2015- 16 and 2016-17 respectively is justified. Decided in favour of assessee.

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• 2025 (3) TMI 1078
  Assessment of trust - Disallowing the donation and other expenses - AO disallowed the donation made by the assessee to another trust on the ground that the recipient trust was not registered u/s 12A - HELD THAT:- The provision of section 11(1)(a) allows a charitable trust to claim an exemption if at least 85% of its income is applied for charitable or religious purposes. Benefit of application is available only if the recipient entity is a registered charitable trust under Section 12A, as clarified in Explanation 2 to section 11(1). Moreover, the assessee failed to provide any documentary evidence proving that the amounts were spent for charitable purposes. The burden of proof lies with the assessee to demonstrate that the expenditure qualifies for exemption u/s 11 of the Act. In the absence of such proof, the AO was justified in making the disallowance. Accordingly, we concur with the decision of the lower authorities. The assessee has neither substantiated that the payments were made for charitable purposes nor demonstrated that the recipient entity fulfilled the requirements of section 12A of the Act. Accordingly, the ground of appeal of the assessee is dismissed. Addition by treating certain expenses as not allowable as an application of income - whether the disputed expenditures qualify as an application of income for the purposes of section 11? - Role of the AO regarding the determination of income of a trust is limited to the provision of section 11 of the Act. In the present case, the authority below has not doubted regarding payment of expenses but only had a doubt regarding the expenses incurred in connection to charitable purposes or not. In this regard, we referred the judgment of CIT Vs. Trustee of H.E.H. the Nizam s Supplemental Religious Endowment Trust [ 1978 (2) TMI 7 - ANDHRA PRADESH HIGH COURT] where it was held that expenses which are incidental to carrying out the charitable purpose cannot be excluded from the exemption. As in view of above it clear that any incidental expenses incurred in carrying out the activity of charitable purpose, it should be excluded from the income of a trust. Now we need to determine that such expenses are of incidental nature of the trust or not. Interest on TDS - Expenses on which TDS was deducted has not been doubted by the authorities therefore it is clear that such expenses incurred in connection of charitable purpose but the delay in compliance the assessee paid an extra cost. Thus, it does not mean that such excess cost is not allowable. Penalty - ESI and Professional Tax - Penalties levied for delayed statutory payments should not be treated as personal in nature but as incidental to business operations. Since these payments relate to employer obligations, they are incidental to the charitable objectives of the assessee. Gifts - It is well settled that expenses incurred for social and charitable activities aligned with the trust s objects and therefore the same is qualified as an application of income. In CIT Vs. Surat Art Silk Cloth Manufacturers Association [ 1979 (11) TMI 1 - SUPREME COURT ] it was held that any expenditure contributing towards achieving the trust s objectives must be considered an application of income. DKA Statue Expenses - The expenditure on the statue pertains to promoting the cultural and educational objectives of the trust. Input Tax Credit Write-off - The assessee had to write off unutilized Input Tax Credit (ITC), which is a recognized accounting expense. As decided in CIT Vs. Munjal Showa Ltd. [ 2008 (2) TMI 19 - SUPREME COURT ] has held that any write-off required due to legal and operational reasons must be considered a valid deduction. Accumulation of income u/s 11(2) - assessee claimed having made an investment under the provisions of section 11(2) - whether the assessee has made the investment in the manner provided under the provisions of section 11(5) of the Act to claim the benefit of the application of income as provided under section 11(2)? - HELD THAT:- We are of the opinion that the amount lying in the bank account of the assessee can be treated as an investment as per the provisions of section 11(5) of the Act. Thus, in view of the above, it transpires that there was sufficient compliance by the assessee in keeping the money set apart as invested in the mode specified under section 11(5) of the Act. As existing FDRs, which is free from any lien can also be treated as investments or deposit as per the provision of section 11(2)(b) of the Act. Hence, the ground of appeal of the assessee is allowed.

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• 2025 (3) TMI 1077
  Refusal to grant registration u/s 12AB - assessee has failed to satisfy about the genuineness of the activities - HELD THAT:- We note that the Manager of the trust is an old and illiterate man, and don t well conversant with the registration of Trust laws and the person who was working with the assessee, who is looking after this issue, has left the job, and the assessee could not avail the opportunity of being heard before the Ld. CIT(E). We further note that, according to the order, notices were only sent to the assessee and the order does not speak about the services of notice upon the assessee. It is settled law that principles of natural justice and fair play require that the affected party should be given an opportunity to represent case, before the authority. In the interest of justice, we set aside the order of CIT(E) restore the matter back to the file of Ld. CIT(E) for de novo adjudication in this matter and pass a speaking order after affording due opportunity of being heard to the assessee, who in turn, is also directed to submit the relevant documents before the Ld. CIT(E). Appeal filed by the assessee is allowed for the statistical purpose.

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• 2025 (3) TMI 1052
  Demands for income tax that were raised after the date of approval of the Resolution Plan - binding nature of an approved Resolution Plan on statutory dues - HELD THAT:- In view of the declaration of law made by this Court, all the dues including the statutory dues owed to the Central Government, if not a part of the Resolution Plan, shall stand extinguished and no proceedings could be continued in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval u/s 31 of the IB Code. In this case, the income tax dues of the CD for the assessment years 2012-13 and 2013-14 were not part of the approved Resolution Plan. Therefore, in view of sub-section (1) of Section 31, as interpreted by this Court in the above decision, the dues of the first respondent owed by the CD for the assessment years 2012-13 and 2013-14 stand extinguished. In view of the above discussion, the Resolution Plan approved on 21st May 2019 is binding on the first respondent. Therefore, the subsequent demand raised by the first respondent for the assessment years 2012-13 and 2013-14 is invalid. Once the Resolution Plan is approved by the NCLT, no belated claim can be included therein that was not made earlier. If such demands are taken into consideration, the appellants will not be in a position to recommence the business of the CD on a clean slate. The additional demands made by the first respondent in respect of the assessment years 2012-13 and 2013-14 will operate as roadblocks in implementing the approved Resolution Plan, and appellants will not be able to restart the operations of the CD on a clean slate. We, therefore, hold that the demands raised by the first respondent against the CD in respect of assessment years 2012-13 and 2013-14 are invalid and cannot be enforced.

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• 2025 (3) TMI 1051
  We are not inclined to entertain this writ petition under Article 32 of the Constitution of India and leave it open to the petitioners to approach the jurisdictional High Court by way of a writ petition under Article 226 of the Constitution of India. However, we make no comment on the merits, either way, of the assertions made by the petitioners. Petitioners, states that they would be filing a writ petition under Article 226 of the Constitution of India within one week. The respondents are restrained from taking any coercive action against the petitioners for a period of one week. Recording the aforesaid, the writ petition is disposed of along with pending application(s), if any.

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• 2025 (3) TMI 1050
  Addition u/s 68 - loans taken from friends and relatives - HELD THAT:- On perusal of the returns of income filed by the brother of the assessee, in our view, the creditworthiness of Assessee s brother stands duly established. Assessee s brother, also filed confirmation before the AO, giving details of his business, PAN number and Income Tax Return filing details. Accordingly, in our view in the case of Shri Piyush B. Rajput, the assessee has been able to established the identity and creditworthiness of the said party. Assessee has been able to duly establish the source of the loan amount taken from the parties and has also established their creditworthiness. Therefore, in our considered view, this is a fit case where no addition is called for u/s 69A. Accordingly, addition is hereby directed to be deleted. Addition u/s 68 - cash deposits unexplained - HELD THAT:- Assessee has not filed certain details like return of income filed by the assessee before the relevant Tax Authorities in Angola declaring income from such incentives. The assessee did not file details of passport before the AO/ CIT(A) for the impugned year under consideration and the assessee has also not furnished copy of bank statement before the Tax Authorities, for their perusal. However, we also note that the assessee had furnished name and address of the concerned person who had exchanged the USD received by the assessee into INR, however, despite this is no independent enquiry was made by the AO to verify the genuineness of such party. Accordingly, as assessee had furnished employment letter from his employer based out of Angola, letter of confirmation that the assessee had received a sum of Rs. USD 20,190 from his employer and also the details of the person who had exchanged the USD into INR, we are of the considered view that in the interest of justice, the matter may be restored to the file of AO for fresh appreciation of evidence placed on record by the assessee - Ground allowed for statistical purposes.

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• 2025 (3) TMI 1049
  Addition towards profit from sale of immovable property - HELD THAT:- Sum has already been offered to tax, sustaining of the impugned addition in the hands of assessee will only tantamount to double addition and that too when the alleged sum has not been received by the assessee in his bank account and complete details have been filed before us to prove that the alleged sum has been offered to tax by different assessee s in their income-tax returns at different point of time when they sold the property to other person. We thus fail to find any infirmity in the finding of the CIT(A) deleting the impugned addition. Therefore, all the grounds of appeal raised by the Revenue are dismissed.

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• 2025 (3) TMI 1048
  Special audit u/sec.142(2A) - extended time limit for completion of the assessment - HELD THAT:- AO has made an attempt to extend the time limit for passing the assessment order by a reference to special auditor u/sec.142(2A) whereby, the AO gets extended time limit for completion of the assessment. We are, therefore, of the considered view that, reference to special audit u/sec.142(2A) without satisfying the conditions provided therein, is arbitrary, illegal and void ab initio. Therefore, in our considered view, once the reference to special audit is illegal and void ab initio, then, the Assessing Officer will not get extended time limit for completion of assessment as per sec.153A) of the Act and consequently, the final assessment orders passed by the AO for the assessment years 2014-2015 and 2015-2016 are barred by limitation and thus, we quash the assessment orders passed by the AO for assessment years 2014-2015 and 2015-2016. Addition u/sec.69 towards payment made as unexplained - HELD THAT:- On perusal of cash flow statement filed by the assessee, AO has recorded a categorical finding that there is time gap of more than 4 years when compared to advance received in the year 2012 and payment made in the year 2016. Even before us, the assessee could not explain the source, except reiterating the very same arguments made before the AO and the CIT(A). Therefore, we are of the considered view, that assessee could not establish the source of payment to Shri Shoukat Ali from known source of income. CIT(A) after considering the relevant material on record, sustained the addition made by the AO. Thus, we uphold the findings of the learned CIT(A) on this issue and reject the ground taken by the assessee.

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• 2025 (3) TMI 1047
  Addition for suppression of receipts - HELD THAT:- As reason to doubt the version of the assessee that the amounts were carried to the balance sheet as sundry debtors, pending measurements and acknowledgement of the amounts due. We further note that the Hon ble Courts have held that where rates of taxes are same, the assessee does not derive any benefit by seeking to offer its receipts to tax in a later year rather than in an immediately preceding year and the Revenue also does not gain any benefit by taxing it earlier than when it is required to be taxed. We also observe that the assessee has disclosed certain amounts as excess on account of enhancement of work. No justification for any addition to be made on account of suppression of receipts without examination of whether the amounts had actually accrued and were unaccounted for. Estimation of income after rejection of the books of account - decision of the CIT(A) to estimate profit @ 5% of net receipts - HELD THAT:- AO has pointed out several discrepancies in the books of the assessee which would make it evident that the books of the assessee were not complete and correct in all respects. Therefore, his decision to reject the books u/s 145(3) of the Act is upheld. Keeping in mind this fact and the nature of inconsistencies observed in the books, we believe that the ends of justice would be served if the net profit declared @ 2.87% is increased to 3.5% of contractual receipts (excluding sales, on which there is no controversy). Accordingly, we order that the net profit of the assessee be assessed @3.5% on contractual receipts of Rs. 4, 79, 52, 517/-. For the balance receipts from sale, the declared profits of the assessee can be accepted.

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• 2025 (3) TMI 1046
  Denial of Foreign Tax credit claimed u/s 90/90A - directory v/s mandatory obligation - HELD THAT:- The claim of FTC is allowable to the assessee on the facts of the case as Form No. 67 was filed along with the return of income and the filing of the Form is held to be directory and not mandatory in nature and the provisions of DTAA override the provisions of the Income Tax Act, 1961. Since the provision of DTAA override the provision of Section 90 of the Act as they are more beneficial to the assessee, in view of judicial pronouncements in this regard and since Rule 128(a) does not preclude the assessee from claiming credit for FTC in case of delay in filing the required Form No. 67 as the credit for FTC is a vested right of the assessee and since Form No. 67 was filed along with the return of income and was available at the time of processing the return of income u/s 143(1)(a) of the Act as contended by the assessee, therefore, there was no justification for not allowing the credit for FTC. Assessee appeal allowed.

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• 2025 (3) TMI 1045
  Addition u/s 68 - penny stock transaction - information emanating from the search action conducted by the Investigation Wing - assessee argued and stated that the assessee has not claimed any short term or long term capital gain related to sale of these scrips - HELD THAT:- In the impugned assessment order AO discussed various analysis made by the investigating wing of Kolkata and SEBI. In none of the statements or reports of Investigation Wing or orders of SEBI the name of the assessee was mentioned for manipulation. CIT(A) acknowledged the documents filed by the assessee in both the stage which are demat account, contract notes, ledger and details of sales and purchases. None of the documents are duly rejected by the Ld.AO during the assessment proceedings and the veracity of the documents are never been challenged. Assessee is trading share regularly with huge volume and may be the assessee has dealt with suspicious scrips, merely on the basis of movement of share price and there is nothing on record to prove that the assessee has in no way involved in price rigging or in any irregularities. Decided against revenue.

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• 2025 (3) TMI 1044
  Levy of penalty u/s 221(1) - assessee has not paid an outstanding tax demand - assessee submitted that he had no money to make the payment of the entire amount of tax liability - HELD THAT:- AO did not consider the good and sufficient reasons available with the assessee to make the payment of the due tax arrears at the time of filing the return of income and levied a penalty at 100% of the tax in arrears. We find that as per the Explanation to section 221(1) of the Act, the assessee shall not cease to be liable to any penalty merely by reason of the fact that before the levy of such penalty he has paid the tax. Therefore, in view of the express provisions of section 221(1) of the Act, we do not find any merits in the submissions of AR that till the levy of penalty u/s 221(1), the assessee has made partial payment of tax on various occasions, which were not considered by the AO. During the hearing, apart from reiterating the submissions made before the lower authorities, AR did not bring any material on record to show that the exercise of discretion by the AO to levy a penalty at 100% of the amount of tax in arrears is not as per the provisions of the Act. Further, in light of the income declared by the assessee in his return of income for subsequent years as noted in the foregoing paragraphs, we do not find that the assessee has good and sufficient reasons for the default in making the payment of tax in arrears. CIT(A) has already granted partial relief to the assessee by reducing the penalty by the amount of interest, we do not find any basis for quashing the remaining penalty upheld by the CIT(A) u/s 221(1) of the Act. Accordingly, the impugned order passed by the learned CIT(A) is upheld and the grounds raised by the assessee are dismissed.

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• 2025 (3) TMI 1043
  Revision u/s 263 - excess deduction @50% has been allowed under section 35CCC leading to under-assessment of income, 1% of the investments capable of fetching exempt dividend income was not disallowed u/s 14A r/w rule 8D and AO has allowed depreciation claimed on the value of land leading to excess allowance of depreciation Excess deduction @50% has been allowed under section 35CCC - HELD THAT:- From the perusal of the impugned order, we further find that the assessee filed an application under section 154 requesting the AO to rectify the mistake apparent from the record and restrict the deduction u/s 35CCC to the actual expenditure claimed in its return of income. Since the revision proceedings were initiated, the learned PCIT treated the rectification application filed by the assessee as redundant. During the hearing, assessee, submitted that the excess amount allowed as a deduction by the AO is only INR 8, 03, 76, 735 (i.e., INR 32, 04, 33, 197, claimed in the return of income, minus INR 24, 00, 56, 462, actual expenditure incurred by the assessee). Thus, it was submitted that the disallowance should be restricted to only INR 8, 03, 76, 735 instead of INR 10, 68, 11, 066 directed by the learned PCIT. Having considered the submissions and perused the material available on record, we are of the considered view that revision proceedings u/s 263 have been correctly initiated in respect of this issue. However, the AO is directed to disallow an amount of INR 8, 03, 76, 735 being the excess amount allowed to the assessee as a deduction under section 35CCC of the Act. Accordingly, to this extent, the impugned order passed under section 263 of the Act is upheld. Disallowance u/s 14A - From the multiple notices issued by the AO on this issue from time to time during the assessment proceedings, it cannot be concluded that this aspect was not examined by the AO or there was no application of mind. We find that in Reliance Communication Ltd [ 2016 (4) TMI 173 - BOMBAY HIGH COURT] held that the fact that the AO did not make any reference in the assessment order cannot make the order erroneous when the issues were indeed looked into. As regards the non-compliance with the CBDT s Circular No. 5 of 2014, we find that the said Circular was issued in the backdrop of controversy as to whether disallowance can be made by invoking the provisions of section 14A even in those cases where no income has been earned by the assessee which has been claimed as exempt during the financial year. Accordingly, the CBDT clarified that Rule 8D r.w.s.14A of the Act provides for disallowance of the expenditure even where a taxpayer in a particular year has not earned any exempt income. However, in the present case, there is no dispute regarding the fact that the assessee received dividend income during the year under consideration, which was claimed as exempt. Thus, the aforesaid Circular, relied upon by the learned PCIT, has no relevance to the facts of the present case, and therefore, we find no merits in the findings of the PCIT that the assessment order has not been made in accordance with the aforementioned CBDT s Circular. Thus, we are of the considered view that the provisions of clause (c) of Explanation-2 to section 263 of the Act are not applicable to the present case. Depreciation claimed on the value of land leading to excess allowance of depreciation - Assessee made specific reference to the findings in the assessment orders for the earlier years, and the AO was completely apprised of the litigation history as well as the relevant facts pertaining to this issue. Thus, once the AO after considering the submissions filed by the assessee has allowed the claim of depreciation, it cannot be said that the assessment order was passed without proper enquiry and application of mind rendering the same to be erroneous insofar as it is prejudicial to the interest of the Revenue. Therefore, this issue was duly examined by the AO during the scrutiny assessment proceedings. Appeal by the assessee is partly allowed.

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• 2025 (3) TMI 1042
  Addition u/s 56(2)(viib) - whether the valuation of shares at a premium of Rs. 90/- per share is representative of the fair market value? - HELD THAT:- DCF method could be applied for valuation purposes for the assessments pending at that time. Besides, the Circular stated that Rule would apply from the date of its publication. This assessment was pending on that date. The benefit of the DCF method of valuation was thus even otherwise available to the Assessee as per the Circular. Rule 11UA(2)(b) provides for the acceptance of the valuation made by Chartered Accountant as an acceptable mode for determining the fair market value of shares. Assessee has filed a report of CA, Sh. V.P. Tyagi which certifies the fair market value, higher than Rs. 100/- at Rs. 106/- per share. We notice that the attempt of the AO to locate and establish discrepancies or errors in that report of the Chartered Accountant is not based on any acceptable principle or approved standards. The discrepancies as pointed out by the AO are not relevant in the context of capital restructuring in the case of group companies. Valuation by itself is a specialized exercise which can be disputed only on the basis of the findings of another expert as recognized in law for that purpose. The valuation as proposed by the DCF method cannot, therefore, be faulted. There is no over valuation of shares over the fair market value. Accordingly the invocation of the provisions of Sec.56(2)(viib) of the Act by the AO being erroneous cannot be upheld. Addition u/s 68 - addition of share capital amount as collected by way of premium from the Subscribing Companies - We are of the view that the proviso provides for the scrutiny and assessment of the funds of the immediate subscribing Company. The proviso does not extend that power to scrutinise the financial capacity of the secondary source which has provided funds to the Subscribing Companies. Also the fact that the investments as made by the Subscribing Companies were out of funds which they possessed at the beginning of the year and no fresh infusion of funds by the Subscribing Companies during the assessment year under consideration and the source of funds are all proceeds of investments made in earlier years in the course of business and have been recalled/encashed was corroborated by the Subscribing Companies, in his statement recorded on oath. Therefore with these facts remaining uncontroverted no addition could have been even otherwise validly made u/s 68 of the Act by the AO. invocation of the proviso to Sec.68 of the Act by the AO was, therefore, erroneous and not justified. The basic ingredients of Sec.68 of the Act of identity, creditworthiness and genuineness of the transactions are, in the circumstances of the case, apparently beyond doubt. Disallowance made u/s. 14A r/w rule 8D - HELD THAT:- It is the finding of the Assessing Officer that the Assessee has made fresh investment during the year under consideration. It is also the finding that the assessee sold shares out of the opening investments. Therefore the AO held that the assessee might have incurred expenditure for earning dividend income. These findings were not rebutted with evidences by the Assessee before us and only asserted that no expenditure was incurred to earn dividend income. No good reason to reverse the findings of the authorities below. Hence, the disallowance made by the AO U/s 14A r.w. Rule 8D2(iii).

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• 2025 (3) TMI 1041
  Validity of Reassessment u/s 147 - whether no addition can be made to other issues for which reasons were not recorded while issuing notice u/s 148 of the Act if no addition has been made on the issues for which reasons were recorded for re-opening of the assessment ? - HELD THAT:- The issue in appeal has already been settled in case of Ranbaxy Laboratories Ltd.[ 2011 (6) TMI 4 - DELHI HIGH COURT] and again reiterated the said position of law in its recent judgement in M/s Mideast Integrated Steels Ltd [ 2024 (9) TMI 1711 - DELHI HIGH COURT] to hold that reassessment shall stand confined to items which had been mentioned or taken note of by the AO while forming the opinion that income had escaped assessment. Ranbaxy had principally held that unless additions are made on that score, no further additions would be sustained.- Decided in favour of assessee.

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• 2025 (3) TMI 1040
  Denial of exemption u/s 11 and/or section 10(23C)(iiiad) - delayed filing of Form 10B - HELD THAT:- We note that this ground was not pressed by the assessee before the Ld. Addl./JCIT(A). The impugned issue is covered by the favourable order of the Co-ordinate Bench of Pune Tribunal in the case of Dr. Sukumar J. Magdum Foundation [ 2023 (8) TMI 1627 - ITAT PUNE] wherein the Tribunal under the similar set of facts had set aside the matter to the file of the Ld. AO holding that the total income needs to be computed in accordance with the regular provisions of the Act in case the benefit of exemption u/s 11 is not available. We set aside the impugned order of the Ld. Addl./JCIT(A) and restore the matter back to the file of the Ld. jurisdictional AO with a direction to verify whether the assessee is eligible for claim of exemption u/s 10/23(C)(iiiad)/11 of the Act and grant relief to the assessee as per the provisions of law as a result of such verification thereof. In case the assessee is found to be not eligible for claim of exemption u/s 10/23(C)(iiiad) jurisdictional AO is hereby directed to examine/verify the claim of expenditure made by the assessee trust against the gross receipts for the relevant AY and modify the assessment accordingly as a result of such examination/verification as per the fact and law after giving adequate opportunity of hearing to the assessee. Appeal of the assessee is treated as allowed for statistical purposes.

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• Customs

• 2025 (3) TMI 1076
  Restricted import or not - Scope of N/N. 12/2015-20 dated 12th June, 2020 - Brand New All Steel Radial Mining tires fall within the purview of said notification or not - amendment to import policy by the notification for various goods falling under Customs Tariff Heading (CTH) 4011 from Free to Restricted - HELD THAT:- In 2024, the disputed goods were tested by IRMRA. However, the tests were carried out on specific assumptions / requests of the DRI. The letter by DRI requesting the IRMRA to test the subject goods as per specific assumptions is neither on record nor provided to the Respondents when specifically asked. As per the tests reports of the IRMRA, the tests were not conducted on the basis of IS 15636:2022. In other words, despite the tires being categorized as D marking (i.e., speed not to exceed 65 km/hr), the disputed goods were tested as J/K category (i.e., speed not to exceed 100 km/hr or 110 km/hr). The tests shall be conducted by Indian Rubber Manufacturers Research Association ( IRMRA ). This is on account of the fact that in 2022, similar tests were conducted by IRMRA (in terms of IS 15636:2022) when samples were drawn and forwarded by Central Intelligence Unit ( CIU ). IRMRA vide the test reports dated 15th September 2022, certified that the intended use of the tires was mining applications. Apart from the above tests, the IRMRA shall carry out any other test that it deems fit to determine whether the imported tires are of a kind used on construction, mining or industrial handling vehicles and machines. In the event the IRMRA also decides to do a speed test on the tires, the test report should indicate clearly that at what speed the tires were tested and the duration of the test as well as the wear and tear, if any, on the said tires. Conclusion - IRMRA shall conduct specific tests to determine the classification of the tires as Special-use or Normal-road-use . The results of these tests will inform the final determination of whether the tires fall under the restricted import category. Stand over to 15th April, 2025.

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• 2025 (3) TMI 1075
  Levy of penalties u/s 114(iii) and section 114AA of the Custom Act, 1962 - Penalty on F -card holder of Custom House Agent (CHA) - export of Led Flash Torch light by gross over-valuation and mis-declaration with an intention to avail higher export incentive benefit - corroboration to the confession of appellant - admissible evidence or not - HELD THAT:- The allegations of attempt to export goods improperly have been confirmed against the appellant solely relying upon his statement alleging the same as the admission on part of the appellant. The copy of the said statement is produced by the department. Perusal thereof reveals that the appellant is admittedly the authorized CHA of the exporting firm, the main appellant. He produced all the requisite documents when demanded as that of packing list, invoices etc. as were provided to him by the respective exporters or their representatives. He also deposed that his firm prepared check lists of shipping bills on the basis of said documents and thereafter filed the same with the customs authority at ICD, TKD. This deposition clarifies that none of the ingredients of attempt appears to be fulfilled as against the appellant. There is no denial of the department that the detained consignment was tallying in quantity with the packing lists submitted along with the shipping bills. Overvaluation - HELD THAT:- The appellant in his statement has deposed that he is not aware regarding the actual value of the goods, however he accepted that supplier had overvalued the exported goods. In addition, he deposed that he was getting 1% of the IGST/Drawback from the exporters in cash in lieu of preparing export documents of the goods which were overvalued by them. However, except the said deposition, there is no corroborative evidence produced by the department to show the receipt of the said amount by the appellant as an additional amount to his professional charges and nor to show that the appellant had knowledge of overvaluation being done by the exporters prior filing the shipping bills. No doubt the department has taken the stand that admissions need not to be proved but it has also been the settled proposition of law that such admissions which are voluntary and does not get vitiated on account of any of the premises envisaged Section 24 of the Evidence Act are admissible as cogent evidence. As per department, the statement of Shri Mali Ram Agarwal is a corroboration to the confession of the appellant. However, testimony of any statement recorded in the present case cannot be relied upon for the imposition of penalty unless it stands the test of Section 138B of the Customs Act, 1962 which is para materia to sub-section (1) of Section 9D of the Central Excise Act. The plain reading of both these provisions makes it clear that clause (a) and (b) of the said sub-section set out the circumstances in which a statement made and signed by a person before the officer of a gazetted rank, during the course of enquiry or proceeding under the act, shall be relevant for the purpose of proving the truth of the facts contained therein provided that the person making the said statement has been examined by the adjudicating authority. Section 9D came in for detailed consideration and examination by Hon ble Delhi High Court in the case titled as J.K. Cigarettes Ltd. Vs. CCE [ 2009 (8) TMI 64 - DELHI HIGH COURT] , it has been held that in absence of the circumstances specified in Section 9D(1), the truth of the facts contained in any statement recorded by the gazetted officer is not admissible into evidence. The statement of Shri Mali Ram Agarwal has not stood the test of Section 138B of the Customs Act, also that the appellant has objected his statement recorded under Section 108A as involuntary, recorded under pressure. Resultantly, the statements on record are miserably insufficient to prove the alleged act of attempt to export improperly and to use the false information is wrong. For appellant s alleged admission also since same stands retracted subsequently no evidentiary value can be attached that too in absence of any corroborative evidence. Conclusion - The department has failed to prove the guilt of the appellant who otherwise was the authorized CHA, had all the KYC documents and had filed the shipping bills based on the documents provided to him by the respective exporter or their representative and that he was not personally sure about the value of the goods imported. The order of imposition of penalty upon the appellant set aside - appeal allowed.

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• 2025 (3) TMI 1074
  Additions of license fee and advertising expenses to the assessable value of imported goods - Lack of SCN - HELD THAT:- On a perusal of the records, it is found that the appellant herein had been importing from their overseas affiliates, and admittedly related parties, since 2006 and their original declarations, accepted by order of 29th March 2006, were, thereafter, sought to be renewed by communications of 23rd March 2009, 4th January 2011, 12th October 2012 and 24th June 2013 but it appears, in the absence of explanation in the orders of the lower authorities, that those, kept pending, were taken up for disposal only in July 2015 leading to the order for addition of specific components of recompense to overseas entities and which, but for the modification in the impugned order, were upheld by the first appellate authority. It also transpires from the records, inasmuch as that the order of the original authority, directing loading for the imports covered for the period 2003-04 to 2013-14, was found to be unjustifiable to the extent of imports beyond five years from the relevant date, that the specific imports intended to be covered and those to be excluded, consequent upon the impugned order, remains unknown. The impugned order is far from clear about to the reasons for limiting the additions to five years if, as stated in the order impugned before that authority, intent was to enable finalisation of provisional assessments. On the other hand, if the intent was to recover duty short-paid by reasons of evidence of the ingredients enumerated in section 28 of Customs Act, 1962 for invoking the period beyond the normal period of limitation, there should have been a finding of evidence to that effect consequent upon the importer being placed on notice of intent to invoke extended period of limitation as well as the consequential penalties specifically noted in such finding. Conclusion - It would appear that the appeal before the first appellate authority had not been examined in terms of outcome of differential duty or evaluation of correctness of declared value in specific bills of entry which alone could have been cause of grievance. The correctness of the legality and propriety of the additions cannot be determined. Matter remanded back to the first appellate authority for a fresh decision - appeal allowed by way of remand.

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• 2025 (3) TMI 1073
  Classification of imported goods - Fiber Optic Transmitters/Receivers/Transceivers - classifiable under CTH 85176290 or CTH 854230? - applicability of exemption under S.No.20 of N/N.57/2017 - Extended period of limitation - confiscation - penalties. Whether the impugned goods imported by the appellant are classifiable under CTH 85176290 or under CTH 854230 as contended by the appellants? - HELD THAT:- The adjudicating authority has gone through the details furnished by the appellant as well as various other documents referred to supra to come to the conclusion that goods are clearly classifiable under CTH 85176290 and the goods are also in the nature of OTE, in view of their actual function. He has also categorically ruled out the possibility of its classification as simple electrical integrated circuit, keeping in view the HSN explanatory note, according to which, essentially, at least one of the components are required to be present, which incidentally was not found to have been used in the said impugned goods. The adjudicating authority has taken into account the statements recorded from technical expert of the appellant as well as expert opinion and felt that these are in the nature of apparatus or devices meant for certain specific functions like conversion of, inter alia, electrical signal into optical signal and vice versa, using optical fiber cable and therefore, they are more in the nature of OTE. The fact that OTE has been categorically classified under CTH 85176290 in the notification itself also supports that if the impugned goods are in the nature of OTE then it would obviously fall under CTH 85176290. Applicability of exemption under S.No.20 of N/N. 57/2017 - HELD THAT:- The impugned order is a well reasoned order, where after going through the detailed submissions and other evidence on record, the adjudicating authority has rightly held the impugned goods to be classifiable under CTH 85176290 and has also rightly held that these are in the nature of OTE and therefore, they shall not be entitled for the benefit under notification 57/2017. In view of the same, the classification as well as denial of benefit under S.No.20 of the notification 57/2017 upheld. Invocation of extended period - HELD THAT:- There is nothing wrong for the appellant to have a bonafide belief to choose a heading which may be more beneficial to them even though, ultimately, it may not be found to be correct classification. However, this, per se, cannot become ground for invoking extended period of limitation. There has to be much more evidence on record to prove their deliberate plan or deliberate suppression in order to hoodwink the department into believing something else. Merely because they chose to claim classification under a heading, which they thought was more appropriate, it cannot be a ground for invoking extended period. Further, though the adjudicating authority has tried to bring in the concept of fraud for invoking extended period in the sense that they were deliberately misleading the department, it has neither been alleged in the SCN nor has been explained in what way the appellants were indulging in fraud. Therefore, invocation of extended period is not tenable and therefore, to that extent the impugned order is liable to be set aside. Wrong calculation of duty demanded - HELD THAT:- There are no discussion on this issue and therefore, the matter needs to be remanded back to the adjudicating authority to examine this aspect and allow the benefit of this amount if it has already been paid, as submitted by the appellant. Confiscation - HELD THAT:- When the issue is primarily that of classification, the confiscation cannot sustain and therefore, on that count itself, the impugned order to the extent of confiscation of impugned goods and imposition of fine is also not tenable. Penalty u/s 114A - HELD THAT:- In view of the fact that the extended period cannot be invoked in the present case, as also there is no element of fraud, suppression or misstatement, etc., therefore, the penalty under this section is not sustainable. Penalty u/s 114AA - HELD THAT:- In this case, whenever they have used a different classification than the classification which was indicated in the invoice, they knew that they are entering wrong classification in the bills of entry and therefore to that extent, the appellants knowingly and intentionally made the said entries. Their bonafide belief will not be of much help as here, it is an established fact that the classification mentioned in the bills of entry was different than the classification indicated by the supplier of the said goods. Therefore, there are no infirmity in the imposition of penalty under section 114AA. Conclusion - The goods are classified under CTH 85176290, the exemption under Notification No.57/2017 is denied, the extended period for demand set aside, penalties under sections 112(a) and 114A are dismissed, the penalty under section 114AA is upheld, and the confiscation of goods is overturned. Appeal partly allowed by way of remand for redetermination of quantum of demand.

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• 2025 (3) TMI 1039
  Rejection of the petitioner s application for compounding of the offence under Section 137 of the Customs Act, 1962 - failure to follow the instructions and guidelines issued by the respondents themselves - HELD THAT:- In the instant case, after the applicant had submitted his application, the application was first got scrutinized by the compounding officer within the Department and thereafter the petitioner was called for personal hearing. The petitioner had availed the opportunity of personal hearing, appeared before the compounding officer, accepted his guilt and offence and prayed for allowing the compounding application and also expressed his willingness to pay the compounding fees. There is no need for another show-cause notice to be issued to the petitioner or the applicant seeking compounding of an offence. Secondly, what also weighs more in the minds of this Bench is the fact that, every application for compounding of offence need not be accepted as a matter of routine. There has to be an element of scrutiny to be done and in addition there has also to be the subjective satisfaction of the compounding officer for reaching to the conclusion that the contents of the compounding application is full and true disclosure of the relevant facts. It would be difficult to accept the situation where the petitioner at the first instance takes a different stand both in his statement under Section 108 and also in the statement at the time of preparation of Panchnama and later to take a somersault and take an entirely different version while applying for compounding of the offence. In the instant case, admittedly there is a vast variance in the contents in the statement under Section 108 that which is recorded in the Panchnama when compared to the contents made in the application for compounding of the offence - Surprisingly, there has been no statement available on record to show that the petitioner had retracted from the statement that he had given under Section 108 as also in the Panchnama. If the compounding officer found substantial variance in the statements so made by the petitioner, the rejection of the compounding application cannot be held to be bad in law or being contrary to the circulars governing the field of determining the compounding application. Conclusion - The rejection of the compounding application was justified due to the petitioner s failure to make a full and true disclosure of facts. It is held that every application for compounding of offence need not be accepted as a matter of routine. Petition dismissed.

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• 2025 (3) TMI 1038
  Seeking grant of regular bail during the pendency of the trial - smuggling of Gold - bailable or non-bailable under Section 104 of the Customs Act, 1962, in view of value of gold - admissibility and relevance of the statements recorded under Section 108 of the Customs Act, 1962 - applicant argued that the complaint is confined only to the alleged recovery of 2000 gms of gold and the recovery effected from the house of Ankit Jindal being in the nature of ornaments is not the subject matter or case property for his prosecution for violation of the provisions of Customs Act, 1962 - HELD THAT:- This Court finds that the officials of the DRI had intercepted a roadways bus wherein accused persons Anil Kumar Sharma and Sudhir Kumar were travelling and from them 1 kg gold each was recovered. Of course, the value of the recovered gold individually is below 1 Crore whereas collectively, it is more than 1 crore, but while deciding the prayer for bail, this Court is not inclined to make any comment on the nature of offence whether it is bailable or non-bailable. No doubt, in the case of Mohd. Tufial [ 2023 (3) TMI 1293 - ALLAHABAD HIGH COURT] , this Court has observed that the recovery effected from each accused is to be considered to determine the nature of the offence, but this Court is not inclined to comment upon the nature of the alleged offence, if, it would fall under section 104(6) or 104(7) Customs Act, 1962 as the charges against the accused have also not been framed so far. Otherwise also, this issue can be effectively decided by the trial court on the strength of the evidence of the parties. The admissibility of the statements of the accused recorded under section 108 Customs Act, 1962 would also be tested during trial. However, considering the stand of the accused, who claim that the recovered material was acquired by them in legitimate manner, this Court is of the opinion that further detention of the applicants may not be necessary for any useful purpose. Concededly the investigation in the matter is complete and after filing of the complaint/ charge-sheet even the charges have not been framed against the accused, therefore, it is clear that the trial is yet to start. Keeping in view the nature of the crime as well as the period undergone by the applicants and the punishment provided for the alleged offences, this Court deems it proper to extend the concession of regular bail to them, as the conclusion of trial is likely to consume considerable time. Further, the material witnesses are the officials of DRI and at present there does not seem to be any possibility of their being won over. Conclusion - Thus, without meaning any expression of opinion on the merits of the case, the bail application is allowed and it is ordered that the applicants Ankit Jindal, Anil Kumar Sharma and Sudhir Kumar be released on regular bail, subject to fulfilment of conditions imposed. Bail application allowed.

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• Securities / SEBI

• 2025 (3) TMI 1072
  Operating schemes/plans in the nature of Collective Investment Scheme ( CIS ) without obtaining prior registration from SEBI - attachment orders - existence of an alternate statutory remedy under the SEBI Act - HELD THAT:- In the opinion of the Court, all the grounds urged in the present petition can be urged before the Appellate Authority under the SEBI Act. Thus, in view of the of the fact that an alternate statutory remedy is available to Petitioner, the Court is not inclined to entertain the present writ petition under Article 226 of the Constitution. At this juncture, it is noted that there is a limitation period to challenge the impugned orders, which has lapsed. However, considering the peculiar facts of this case, in case the Petitioner would prefer an appeal against the impugned orders within thirty days from today, the said appeal shall not be rejected on the ground of limitation.

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• 2025 (3) TMI 1071
  Cancellation of IPO - misstatement in the prospectus regarding the procurement of software from a vendor with questionable credentials - Refund the subscription amounts to the successful investors and to cancel shares allotted to them pursuant to the Initial Public Offer (IPO) of the company - HELD THAT:- In our considered view, safeguarding the interests of the public shareholders particularly the retailers, is of paramount importance for all stakeholders of the capital market in a large country like India with significant asymmetry in capital and financial literacy. In view of this, adequacy and correctness of disclosure in Public Offers cannot be compromised. The appellant Company while going for Initial Public Offer for inviting subscription from public at large, was duty bound to obtain quotation from a genuine software provider entity for the purpose of vendor selection for an important software, which in their scheme of things, was going to be integral object of the Issue. Despite being in the ITS sector, the company did not make desired professional efforts to evaluate whether the quotation by OCPL was genuine or not. We find that the quotation was received on May 16, 2024 and within two days on May 18, 2024, the Board of directors of the Company noted and approved procurement of ICCC software from the said vendor, even though in the DRHP dated May 30, 2024, in the notes to the Deployment of proceeds segment, it has been qualified that no definitive agreement was signed with the said vendor and the Company may change vendor or quotation per se. We also note that the decision of the Board of directors of the Company in approving the purchase of software without due verification of credentials of the vendor and in utter disregard to its own purchase policy, which provides for taking at least three quotes for such an indent, did not the desired corporate governance norms. Surprisingly the purchase committee of the company, which ought to have examined the credentials of the vendor in details and assessed whether the vendor had deserved capability to provide ICCC software in the given time-frame, cleared the quote merely on the basis of GST returns filed for last two months, which obviously are of no technical assistance for deciding purchase of software. The committee also ignored that there was no business of OCPL during the FY 2020 and FY 2021 for which financials were available and turned blind eye on the absence of financials for the last 2 financial years i.e. FY2022 and FY 2023. We find that even the merchant banker has not done proper due diligence and has merely gone by the decision of the Board of directors for carrying out due diligence with regard to the Oasis. If an established software player follows such a methodology to reach out to an entity with doubtful credentials, with an offer of commission of Rs. 50 lakhs for procuring quote from a Third Party, in our considered view, it cannot be treated as genuine quotation and therefore we are not persuaded to accept the argument that the Company had made the disclaimer that such a quote was for budgetary estimate only. Therefore, we hold that the company s claim with regard to its adequacy and correctness of disclosure in the prospectus was not bonafide and satisfactory. In the disclaimer section of the prospectus, it is stated that the Company is responsible for adequacy, correctness and accuracy of the facts disclosed . Considering the above, we of the view that the respondent is right in holding that the said disclosure in respect of quotation from an entity such as OCPL, was a mis-statement. A listed entity has additional responsibility to its shareholders and when it comes with an Issue for public at large, it is required to ensure that the disclosures made in the prospectus are not only adequate and correct but genuine. The appellant Company has failed to meet the said requirements. Therefore, we do not find merit in the alternative plea that the IPO may be allowed to proceed further subject to monitoring of the deployment of proceeds by an agency to be appointed by SEBI/ BSE.

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• Insolvency & Bankruptcy

• 2025 (3) TMI 1070
  Objection to the decision of Liquidator to include the Haldia property in the Liquidation Estate - HELD THAT:- The present is a case where no steps were taken by the Appellant under Regulation 37 and at no point of time, even a communication was sent by the Appellant to the Liquidator for informing about the estimated amount required to be paid under Regulation 21A (2) (a). As noted above, the Applicant as a secured creditor was to make payment under sub- regulation (2) of Regulation 21A, within 90 days from the liquidation commencement date. When obligation is linked with the time period, the Appellant cannot fall back on the argument that the Liquidator has not communicated the estimated amount to the secured creditor. When secured creditor at no point of time even asked for estimated amount from the Liquidator and no steps were taken under Regulation 37 by the Appellant, it is not open for the Appellant to contend that Regulation 21A, sub-regulation (2) shall not apply, since he was not communicated the estimated amount by the Liquidator. The second proviso clearly protects the interest of the secured creditor to the extent that if there is any difference between the amount payable under sub-regulation (2) and the amount paid under the first proviso, the Liquidator or the creditor, as the case may be, is to do the needful. Thus, even if, a secured creditor, who does not write to the Liquidator for any estimation or Liquidator does not send any estimate and any amount is paid by the secured creditor, he is well protected by second proviso and thus, the secured creditor cannot fall back on the argument that Liquidator having never communicated the estimated amount, sub- regulation (2) of Regulation 21A is not attracted. The view taken by the Liquidator as well as by the Adjudicating Authority that by virtue of sub-Regulation 2 of Regulation 21A, Haldia Unit is also part of the Liquidation Estate of the CD, is correct and cannot be faulted. It appears that SCC in its Meeting dated 03.02.2024 has declared the Halder Venture Ltd. as successful bidder. Halder Venture has submitted the EMD of Rs.5,71,00,000/- on 30.01.2024. We have already noticed that as per the SCC decision, auction of Haldia Unit was subject to order passed by NCLT in MA 03 of 2023, which MA remained pending till the order was passed by the Adjudicating Authority on 16.02.2024. It is further relevant to notice that Liquidator on non-payment of entire amount by Halder Venture, has proceeded to issue fresh Sale Notice for auction to be held on 30.08.2024. It has been submitted before us that no bidder came forward and no auction has yet taken place of the units. Conclusion - i) The Appellant s failure to comply with Regulation 21A resulted in the Haldia property becoming part of the Liquidation Estate, affirming the Liquidator s actions. ii) The secured creditors must actively comply with the requirements of the IBBI regulations to retain their security interests during liquidation. iii) The successful bidder, Halder Venture Ltd., is allowed to complete the purchase of the Haldia property by depositing the balance amount with interest, recognizing the bidder s readiness to fulfill its obligations. Appeal dismissed.

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• 2025 (3) TMI 1069
  Seeking de-freezing of demat account of the Corporate Debtor, frozen due to non-compliance with SEBI regulations - waterfall mechanism under Section 53(1) of the Insolvency Bankruptcy Code, 2016 (IBC) - jurisdiction of the National Company Law Tribunal (NCLT) extends to adjudicating matters related to the freezing of demat accounts under SEBI regulations, in light of Section 60(5) of the IBC - HELD THAT:- SEBI issued a circular in order to ensure effective enforcement of the SEBI LODR. Further, it was the obligation of all the recognized stock exchanges to intimate the depositories of non-compliance of SEBI LODR on part of any listed entity, and on receipt of such intimation, it is the obligation of the depositories to freeze or unfreeze, as the case may be, the entire shareholding of the promoter and promoter group in such non- compliant listed entity as well as all other securities held in the demat account of the promoter and promoter group. Further, due to non-compliance of various regulations of SEBI (LODR) Regulations, 2015, demat accounts of Cox and Kings Limited, Cox and Kings Financial Services Limited and Tulip Stars Hotels Ltd., were put on freeze on 19.11.2019 and 31.12.2019. Since, Liz Traders and Agents Private Limited/ Corporate Debtor was disclosed as Promoter of the above mentioned companies in the shareholding pattern filed by them, demat account of Corporate Debtor was also put on freeze on 19.11.2019 and 25.02.2020. Since the Corporate Debtor is under liquidation and Liquidator s request to defreeze the demat account has not yielded any result, the Applicant has filed the present application seeking directions against Respondent nos. 1, 2 and 3 to defreeze the demat account of the Corporate Debtor, in order to enable the Applicant to take immediate custody of the shares to sell the same and distribute the proceeds as per the waterfall mechanism under section 53(1) of the Code, to the stakeholders of the Corporate Debtor. In the facts and circumstances of the case it does not bar the jurisdiction of this Tribunal. Further, the aforementioned shares of 6 companies are assets of the Corporate Debtor, and under liquidation, it s the duty of the liquidator to liquidate the Corporate Debtor expeditiously and maximise the recovery. The Hon ble Supreme Court in Gujrat Urja Vikas [ 2021 (3) TMI 340 - SUPREME COURT ] have observed that if a nexus with the insolvency of the Corporate Debtor exists then this Tribunal have jurisdiction to decide the dispute. The CIRP or liquidation process is a time-bound process. The continued freezing of demat accounts would cause delay in the liquidation process, especially in the facts when the two defaulting listed entities are also under liquidation and compliances expected of them for defreezing of the Demat account of the Corporate Debtor is an impossibility. Further, for an entity under liquidation, this dispute or impasse cannot be of any benefit to anyone, including the concerned regulators. Accordingly, there is clear connection of the issue/dispute involved with insolvency of Corporate Debtor. The protection of the corporate debtor s property from attachment and restraint in proceedings related to offenses committed before the initiation of the CIRP continues even during the liquidation process, where the successful sale of assets is affected. In the present case, the freezing of demat account is obstructing the Liquidator from selling the shares and obtaining their best value. In light of the aforesaid judgement, such attachment and restraint cannot be allowed to be continued during the proceedings of liquidation under IBC. The Respondent No. 1, 2 and 3 is directed to defreeze the demat account of the Corporate Debtor. Further Respondent no. 4 is directed to extend its co-operation to the Applicant by ensuring the proper functioning of the trading account. Conclusion - i) The IBC s provisions, particularly regarding liquidation, have an overriding effect over conflicting SEBI regulations when they impede the liquidation process. ii) The CIRP or liquidation process is a time-bound process. The continued freezing of demat accounts would cause delay in the liquidation process, especially in the facts when the two defaulting listed entities are also under liquidation and compliances expected of them for defreezing of the Demat account of the Corporate Debtor is an impossibility. Application allowed.

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• FEMA

• 2025 (3) TMI 1037
  Guilty of the offence u/s 6(4), 6(5) 8(1), 9(1)(a) and 9(1)(f)(i) of Foreign Exchange Regulation Act, 1973 - fine imposed - Court [ 2014 (9) TMI 1085 - DELHI HIGH COURT] is of the view that the AO dated 24th March, 2004, and the impugned order of the AT to the extent they hold the appellant liable for contravention of Section 8(1) of FERA, cannot be sustained in law - HELD THAT:- We are not inclined to interfere with the impugned judgment and order of the High Court; hence, the special leave petition is dismissed.

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• Law of Competition

• 2025 (3) TMI 1068
  Anti-competitive agreements - abuse of dominant position - contravention of the provisions of Section 3 and 4 of Competition Act, 2002 - engaging in non-transparent and arbitrary processes in the awarding of contracts and issuance of a Request for Proposal (RFP) - HELD THAT:- With regard to the violation of Section 3 of the Act, the Commission notes that it prohibits anti-competitive agreements which include but are not limited to cartel and bid-rigging. The Commission notes that the Informant has alleged tacit agreement between OP-1 and OP-2 in awarding tender, however, it has not provided any evidence or material which could indicate bid rigging in violation of Section 3 of the Act. Accordingly, the Commission deems it appropriate not to proceed further on the basis of such unsubstantiated allegations. As far as allegations under Section 4 is concerned, the Informant has alleged that OP-1 awarded the Work Order to OP-2, despite it having no prior experience or relation whatsoever with the PM SHRI Scheme and abused its dominant position under Section 4 of the Act. Further OP-2 abused its dominant position by issuing an RFP which is faulty, restrictive and defective. The Commission is of the view that the alleged conduct of OP-1 in appointing OP-2 as PMC and further issuance of faulty RFP by OP-2 themselves are not amenable under the province of Section 4 of the Act without any supporting evidence. Simply selection or non-selection of an agency as PMC or issuance or non-issuance of RFP or issuance of defective RFP by an entity cannot be said to be abusive in terms of Section 4 of the Act unless and until there are availability of ingredients of the same as required under the Act. As stated, these issues lie within the precinct of the freedom of the procurer. The Commission, based on the facts and circumstances and analysis carried out, does not find it appropriate to examine the conduct of OP-1 and OP-2. Accordingly, the Commission has refrained from delineating relevant market and assessment of dominance, as required under the provisions of the Section 4 of the Act. Conclusion - The Commission is of the view that no prima facie case of contravention of either Section 3 or Section 4 of the Act is made out in the present matter against OP-1 and OP-2. Accordingly, the Information is ordered to be closed forthwith in terms of the provisions contained in Section 26(2) of the Act. Consequently, no case for grant for relief(s) as sought under Section 33 of the Act arises and the same is also rejected. Application disposed off.

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• PMLA

• 2025 (3) TMI 1067
  Seeking grant of interim bail under the Prevention of Money Laundering Act, 2002, due to the alleged medical conditions of his family members and the inability of his wife - it was held by High Court that there is no ground to enlarge the applicant on interim bail. HELD THAT:- There are no ground to interfere with the impugned order passed by the High Court. However, the High Court is requested to decide the pending bail application on its own merit, without being influenced by the impugned order. SLP dismissed.

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• 2025 (3) TMI 1036
  Money Laundering - seeking grant of interim bail due to the alleged medical conditions of his family members and the inability of his wife to care for them adequately - HELD THAT:- It is admitted that the applicant was arrested by the police on 29.05.2024, when he had returned to India on 25.04.2024. He was abroad for many years prior to that. It is stated that the age of the father of the applicant is 80 years and the age of the mother is 70 years. They both are old patients. The wife of the applicant is looking after them. She has soft tissue issue. She is walking around. Conclusion - Having considered, this Court is of the view that there is no ground to enlarge the applicant on interim bail. Accordingly, the interim bail application deserves to be rejected. The interim bail application is rejected.

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• 2025 (3) TMI 1035
  Money Laundering - proceeds of crime - Challenge to provisional attachment order - prayer for appropriate writ/direction for redrafting of the definition of value as provided under Section 2(1)(zb) of the Prevention of Money-Laundering Act, 2002 - HELD THAT:- As per Section 2(u) of the PMLA Act defines the Proceeds of Crime , if any property is derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence or the value of any such property comes under the proceeds of crime. Therefore, the definition of value as defined under Section 2(1)(zb) cannot be read in isolation. It has to be read along with the definition of property and proceeds of crime in order to achieve the aims and objectives of the PMLA Act. If all three definitions are read conjointly, there would be no need to redraft the definition of value , as prayed by the petitioner by way of this petition. A definition is not to be read in isolation. Conclusion - The definition of value as defined under Section 2(1)(zb) cannot be read in isolation. It has to be read along with the definition of property and proceeds of crime in order to achieve the aims and objectives of the PMLA Act. The petition challenging the provisional attachment order and the constitutional validity of the definition of value under Section 2(1)(zb) was dismissed.

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• Service Tax

• 2025 (3) TMI 1066
  Non-reversal of proportionate Cenvat credit availed on common input services namely, Chartered Accountant services, telephone services, Legal services, etc., used in relation to Redemption of Mutual Funds by considering it to be Trading of Goods which is an exempted service - HELD THAT:- The activity to classify as exempted service under Rule 2(e) of the Cenvat Credit Rules, 2004 needs to be qualified as service , as defined under Section 65B (44) of the Act, meaning thereby that service is an activity carried out by a person for another for consideration and includes a declared service but excludes a transfer of title in goods or immovable property by way of sale, gift, etc. The activity of investment in mutual funds does not involve the presence of a service rendered by a service provider towards a recipient of service for some consideration. Following the principles in the case of the appellant, the activity undertaken would not amount to service service in terms of Section 65B(44) of the Act. The impugned orders deserve to be set aside - Appeal allowed.

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• 2025 (3) TMI 1065
  Refund of accumulated cenvat credit under the provisions of Rule 5 of Cenvat Credit Rules, 2004 - Refund of service tax under Section 11B of Central Excise Act, 1944 made applicable to service tax matters through Section 83 of Finance Act, 1994. Refund of accumulated cenvat credit under the provisions of Rule 5 of Cenvat Credit Rules, 2004 - HELD THAT:- As a transaction between the appellant company and subsidiary company or the appellant who is a holding company, invoices are raised between the two and money is transferred to the holding company irrespective of the value of service provided by subsidiary outside the territorial jurisdiction of India to overseas clients. The services provided by overseas subsidiary to their overseas clients are treated by the appellant as having provided by them on the strength of invoices which are for financial transactions between the holding company and subsidiary company where the appellant has no role in providing services by their subsidiary to their clients. Appellant has paid service tax on these transactions on reverse charge basis and availed cenvat credit of the same. Contention of Revenue is that those services are provided by subsidiaries and the appellant has nothing to do with them and, therefore, they are not input services for the appellant and, therefore, cenvat credit of service tax paid on the transactions that took place between overseas subsidiaries and their overseas clients does not satisfy the definition of input service under Rule 2(l) of Cenvat Credit Rules, 2004, thereby holding that the authorities below have denied refund of accumulated cenvat credit of such cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 - The said cenvat credit is cenvat credit of service tax paid on transactions that completely took place beyond the territorial jurisdiction of India and under the provisions of Section 64 of Finance Act, 1994, service tax was not leviable on the same. Therefore, there are no infirmity in denial of refund of the said cenvat credit through the above stated orders-in-appeal. Refund of service tax under Section 11B of Central Excise Act, 1944 made applicable to service tax matters through Section 83 of Finance Act, 1994 - HELD THAT:- The said claim for refund is in respect of service tax paid by the appellant in respect of transactions that took place beyond the territorial jurisdiction of India and, therefore, that service tax was not payable - The affidavit has not given bifurcation in respect of refund claim dealt with in each appeal. Therefore, even if the appeals in Batch-II appeals are allowed, the refund sanctioning authorities will not be in a position to decide the quantum of refund to be allowed to the appellant in each individual refund claim dealt with in each appeal of Batch-II appeals. Therefore, such an order will be unimplementable order and an unimplementable order is not sustainable in law and, therefore, for want of sufficient information, we are not able to pass orders for allowing refund in case of Batch-II appeals. Thus in the absence of complete information required to pass orders, we are not able to allow appeals in Batch-II appeals. Conclusion - The services provided by subsidiaries directly to overseas clients do not qualify as input services for the appellant, thus not eligible for Cenvat credit refund under Rule 5 of the Cenvat Credit Rules, 2004. ii)The denial of the refund of Cenvat credit affirmed. ii) In case of refund of service tax, appeals rejected due to insufficient information to substantiate the refund claims, despite acknowledging the appellant s partial withdrawal of claims. Appeals dismissed.

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• 2025 (3) TMI 1064
  CENVAT credit on service tax paid on input services related to passenger service fee, development fee, and user development fee - appellant is engaged in providing air transportation services - HELD THAT:- The ruling by Hon ble Bombay High Court in the case of CCE, Pune V/s. Ajinkya Enterprises [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] was passed in the year 2012 and appellant had not chosen to rely on the same in the year 2016 before original authority. By following above stated ruling by Hon ble Bombay High Court, it is held that even if someone has involved in any activity which does not amount to provision of service, still if Service tax paid on such activity is accepted by Revenue then CENVAT credit of service tax paid on input services going into such activity cannot be denied. The contention of appellant that service tax was paid was not denied by the Revenue during the hearing but details of the service tax paid by appellant during the period of dispute is not readily forthcoming from the appeal record. Therefore, it cannot be ascertained as to whether service tax paid by the appellant was more than or equal to cenvat credit availed. Conclusion - The matter needs to be remanded to original authority with a direction to the appellant to file a copy of ruling by Hon ble Bombay High Court in the case of CCE, Pune V/s. Ajinkya Enterprises before the original authority who shall verify whether service tax paid by the appellant during the relevant period was equal to or more than the cenvat credit availed by the appellant. Appeal allowed by way of remand.

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• 2025 (3) TMI 1063
  Refund of the service tax paid under protest - construction project undertaken by the appellant qualifies as a Residential Complex under Section 65(91a) of the Finance Act, 1994, thereby subjecting it to service tax or not - HELD THAT:- Perusal makes it clear that Residential Complex would be a complex comprising of a building or buildings, having more than twelve residential units, thus, independent buildings having twelve or less than twelve residential units would not be covered by the definition of Residential Complex . In the present case, the appellant had constructed independent duplex houses having one residential unit only. Thus, even if the appellant had constructed more than 12 independent buildings, the nature of activity would not be Construction of Residential Complex and, therefore, the service tax cannot be levied. This issue is otherwise no more res integra as being already decided by the Principal Bench of the Tribunal in Macro Marvel Projects Ltd. v/s Commissioner of Service Tax, Chennai [ 2008 (9) TMI 80 - CESTAT, CHENNAI] wherein the demand of service tax was for the period 16 June, 2005 to November, 2005 under Construction of Complex service under Section 65(30a) of the Act. The Bench examined the scope of Construction of Complex and the meaning of Residential Complex under section 65(91a) of the Act and observed Admittedly, in the present case, the appellants constructed individual residential houses, each being a residential unit, which fact is also clear from the photographs shown to us. In any case, it appears, the law makers did not want construction of individual residential units to be subject to levy of service tax. Unfortunately, this aspect was ignored by the lower authorities and hence the demand of service tax. In this view of the matter, we are also not impressed with the plea made by the appellants that, from 1-6-2007, an activity of the one in question might be covered by the definition of works contract in terms of the Explanation to section 65 (105)(zzzza) of the Finance Act, 1994 as amended. According to this Explanation, construction of a new residential complex or a part thereof stands included within the scope of works contract . But, here again, the definition of residential complex given under section 65(91a) of the Act has to be looked at. By no stretch of imagination can it be said that individual residential units were intended to be considered as a residential complex or a part thereof. It is also found that the definition of Residential Complex as per Section 65(91a) of the Act is applicable for both the entries under Section 65(105)(zzzza) for works contract. Therefore, there cannot be an argument that the expression Residential Complex has to be interpreted in one manner for works contract and in a different manner of levy of tax on construction of a residential complex. Conclusion - The appellant is entitled for claiming refund of the amount which was deposited under protest specifically for the reason that appellant is not liable to pay tax while constructing independent residential duplex houses. Appeal allowed.

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• 2025 (3) TMI 1062
  Time Limitation u/s 111 of the Finance Act 2013 - notice served within the statutory period of one year from the date of the declaration filed by the appellant under the Voluntary Compliance Encouragement Scheme (VCES), 2013 or not - HELD THAT:- On going through the show cause notice, it is amply clear that the demand has been raised in terms of provisions under Section 111 of the Finance Act 2013 read with Section 73 of the Finance Act 1994. Therefore, the charge for issuing the show cause notice is Section 111. There is no separate ground or provision which has been relied by the Department to invoke extended period etc., in terms of Section 73 and therefore, the maintainability of the show cause notice has to be examined within the provisions contained under Section 111 of the Finance Act itself. As can be seen that the provision is very clear that where the Commissioner of Central Excise has reasons to believe that the declaration made by the declarant under the Scheme was substantially false , he may serve notice in respect of such declaration requiring him to show cause why he should not pay the amount not paid or short paid. In this case, the date of declaration is clearly and admittedly 31.12.2013 when the appellant had filed their Declaration bearing no. 1500/2013 dated 31.12.2013 for an amount of Rs. 37, 59, 354/-. When was the notice served on the declaration in respect of such declaration? - HELD THAT:- In this case, as per the factual and admitted position, the notice was served only on 02.01.2015. Further, even though the terms used is serve in the Section 111(1), it has to be covered in terms of statutory provisions cited, supra. Even going by other actions namely issuance of show cause notice, as well as pasting of notice on the factory premises etc., it would not amount to serving of the notice in view of various case laws cited by the appellant. Therefore, the Department has clearly failed to serve the notice within the time limit permissible as per the provisions under Section 111 of Finance Act and therefore any subsequent proceedings including confirmation of demand on the basis of this show cause notice itself would not be maintainable and therefore the order is liable to be set aside. The appellants have contested the impugned order on two grounds namely that the show cause notice itself is time barred and secondly that there is no substantially false declaration made by them in the facts of the case and submissions made by them and therefore the impugned order is not maintainable - the show cause notice has not been served within the time limit prescribed under the provision under which the show cause notice has been issued. Since, the show cause notice itself is non-maintainable, the other ground taken by the appellant for non-maintainability of the impugned order not examined. Conclusion - i) No action shall be taken under Section 111 of the Finance Act 2013 after the expiry of one year from the date of declaration. ii) The show cause notice was not served within the statutory period, rendering it time-barred. Appeal allowed.

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• 2025 (3) TMI 1061
  Nature of transaction - deemed sale or Supply of Tangible Goods service - transaction between the respondent and its customers involves transfer of effective control and possession to the customers or otherwise - HELD THAT:- If these agreements are merely an agreement allowing customers to use their goods and the respondents are keeping effective control of said goods then it would fall within the category of SOTG service, however, if the transfer of goods on lease involves both transfer of effective control and possession to the customer, then it would be covered within the category of deemed sale and therefore, not liable to service tax. It is also noted that both the sides have argued that whether the transaction is that of deemed sale or that of service can be decided based on the BSNL judgment [ 2006 (3) TMI 1 - SUPREME COURT ] by Hon ble Supreme Court and the parameters enumerated therein to come to the conclusion as regards transfer of effective control and possession. While the department has highlighted some provisions to say that effective control rests with the respondents, the respondents have tried to justify the factual position as apparent from the terms and conditions to support their submission that the control and possession is with the customers. The Chennai Bench in the respondent s own case, [ 2020 (11) TMI 14 - CESTAT CHENNAI ], keeping in view the judgment of Hon ble Supreme Court in the case of BSNL and the terms and conditions of the agreement, as also the decision by the Chandigarh Bench in the respondent s own case, as also the Order-in-Appeal dt.26.12.2017 of the Commissionerate of Hyderabad, which had set aside the demand observing that appellant has actually transferred the possession, right to use and effective control of the workwear and therefore, the activity was not taxable under the category of SOTG service, came to the conclusion that the transaction is not in the nature of service. There is no dispute that the terms and conditions of the agreement discussed by the Chandigarh Bench as well as Chennai Bench are different than the terms and conditions in the present appeal. It is also not in dispute that in both these orders, the concerned Bench had examined the terms and conditions of the agreement, as also the BSNL judgment, to come to the same conclusion that the transactions are not in the nature of service and therefore, not liable to service tax both prior to 30.06.2012 as well as thereafter. There are no substantive ground to differ with the views expressed by the Coordinate Benches in respect of the similar agreements in respect of same appellant. Conclusion - The transaction is a deemed sale, not a service, based on the transfer of effective control and possession as per the decision in BSNL case. The appeal of the department is not maintainable and the impugned order is sustained - Appeal dismissed.

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• 2025 (3) TMI 1060
  Levy of service tax - IPR service or not - ttk logo used by the Appellant s group companies was an artistic work registered under the Copyright Act or a trademark? - HELD THAT:- The logo `ttk were only used to project the image of the manufacturer generally and did not establish any relationship between the mark and the products manufactured/ distributed by the group companies of the Appellant. It only is a house mark which is usually devised in the form of an emblem, word or both and it is for identification of the manufacturer/distributor. Therefore, this monograph which only identifies the manufacturer/distributor would not make the product patent or proprietary. The House mark is used generally as an emblem of the manufacturer/distributor projecting the image of the manufacturer, whereas Brand name is a name or trademark either unregistered or registered under the Act. Therefore, it is not necessary that Brand name should be compulsorily registered - it is found that the definition of service under IPR excludes copyrights and as the ttk logo is registered under the copyrights act, service tax demand is questionable. The issue is settled in favor of the Appellant by this Tribunal s earlier decision involving the same Appellant for an earlier period following the decision of the Hon ble Supreme Court in M/s. Astra Pharmaceuticals [ 1994 (12) TMI 77 - SUPREME COURT] where it was held that the Dextrose injections manufactured by the appellant were not patent and proprietary medicines subject to duty under Tariff Item 14E. Conclusion - Intellectual property right under Section 65(55a) excludes copyrights, and the ttk logo s registration under the Copyright Act exempts it from service tax under IPR services. The impugned order set aside - appeal allowed.

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• 2025 (3) TMI 1034
  Rejection of the SVLDRS declaration filed by the petitioner - initiation of an investigation after the statutory cut-off date - violation of of principle of natural justice - HELD THAT:- In the present case, admittedly, the investigation was initiated by a issuance of a summon only on 18.09.2019 and thus the rejection/withdrawal of the SVLDRS declaration dated 29.10.2020, is unsustainable. Conclusion - The impugned order dated 29.10.2020 rejecting the declaration/application under the Scheme is set aside. Petition disposed off.

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• 2025 (3) TMI 1033
  Invocation of extended period of limitation - Recovery of service tax with interest and penalty - suppression of value - Repair and Maintenance Service - HELD THAT:- No explanation is coming forth for not declaring the said value, appellant also do not dispute with regards to levibility of tax on merits. In the absence of any such explanation with regards to the differential taxable value, intention to evade payment of service tax is quite clear and visible by suppressing the provisions of Section 73 (1) for invoking the provisions of extended period have been invoked for demanding this service tax. The fact that appellant was filing ST-3 return do not leave him from the responsibility to declare the correct value of taxable services provided. The mis-declaration has come to the knowledge only on the basis of information provided from Income Tax authorities for comparison with ST-3 returns. Conclusion - There are no merits in the submission made in the appeal that extended period should not have been invoked. The demand for service tax by invoking extended period is upheld. The demand by invoking the extended period upheld, penalty imposed under Section 78 is also upheld - appeal dismissed.

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• Central Excise

• 2025 (3) TMI 1059
  100% EOU - duty not paid properly on DTA clearances - it is alleged that the appellant needs to pay CVD on Tariff Rate and not on Effective Rate as per Notification No.01/2011 dated 01.03.2011 - liability to pay interest and penalty thereon - HELD THAT:- A 100% EOU must meet the following conditions : (i) that the unit must be a 100% EOU as defined under Chapter 6 of the Foreign Trade Policy (FTP); (ii) the unit must have obtained the necessary permissions and approvals from the relevant authorities. In this regard, Notification No. 52/2003-Central Excise (NT) outlines the concessional Excise Duty rates applicable to EOUs. Further, clearance of goods into Domestic Tariff Area under Paragraph 6.8 of the Export and Import Policy shall be allowed only when the unit has achieved positive Net Foreign Exchange Earning. Further, the DTA clearances of finished goods covered under GST, EOUs are required to pay CGST/SGST/UTGST/ IGST, as the case may be, besides payment of whole of the Duty of Customs specified under the First Schedule to the Customs Tariff Act, 1975 (BCD) availed as exemptions on inputs used in manufacture of such finished goods. In respect of DTA clearances of finished goods covered under Fourth Schedule of the Central Excise Act, 1944, the EOUs would be required to pay Central Excise Duty equal to the aggregate of Duties of Customs in terms of proviso to Section 3(1) of the Central Excise Act, the effective rate of such duties being covered by Notification No. 23/2003 CE, which has also been amended by Notification No.16/2017 CE dated 30.06.2017. In other words, the excisable goods are liable to effective excise duty as it existed before GST. It is clear that the EOUs are generally eligible for a concessional rate of excise duty on goods cleared to the DTA, with rates determined based on the effective rate of CVD applicable to similar imports. Conclusion - The appellants were entitled to discharge CVD on the effective rate of duty as envisaged under N/N.01/2011-CE dated 01.03.2011. Appeal allowed.

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• 2025 (3) TMI 1058
  SSI Exemption - clubbing of clearances of three firms - M/s. Meena Fire Works Industries, M/s. Meena Fire Works, and M/s. Meena Sparklers should be treated as a single manufacturer under section 2(f) of the Central Excise Act, read with para 2(v) of Notification No.8/2003-CE. or not - denial of cross-examination of the investigating officer by the adjudicator - demand with penalty - delay in adjudication. HELD THAT:- As per condition (v) and (vii) of para 2 of the exemption notification No.8/2003-CE dated 01-03-2003, there ought to be a manufacturer who has a factory or factories, the clearances of which are to be taken in aggregate for determining the exemption in the event of a manufacturer having clearances from more than one factory. Therefore, for the purposes of clubbing of clearances it is an imperative prerequisite that one unit is identified or determined as the principal entity to which the clearances from the other units or factories then get clubbed and the proposal for demand is then required to be raised on the said principal entity. Evidently, the attempt of the Department here is to deny the benefit of exemption notification individually to the three units, as the Department is of the view that the three brothers have indulged in subterfuge of maintaining separate units while exercising financial and managerial control over all the three. This Tribunal in Amit Talwar v CCE, Delhi-I [ 2018 (5) TMI 667 - CESTAT NEW DELHI] has held that it is well-settled that demand cannot be made jointly and severally. The lack of clarity in determining the manufacturer from whom the demand of duty in the event of clubbing of clearances ought to be made and non-identification of any such principal entity and instead embarking on proposing a demand on a department mooted group of persons comprising of the three brothers / group of firms comprising of the three firms, neither of which proposal has any legal basis in the provisions of Central Excise Act, 1944 or the Rules made thereunder, indicates the indelible taint of non-application of mind that permeates the entire proceedings right from conceptualisation of the demand in the SCN to the confirmation of the demand in the impugned order in original. Such an attempt of foisting a fictional financial entity onto the appellants and pegging a demand thereon, is devoid of any legal backing and vitiates the proceedings in toto. Since the lacunae of lack of clarity in demand exists in the demand proposal in the SCN as well as its confirmation in the impugned OIO, it is a fundamental flaw that cannot be cured and the impugned order in original is liable to be set aside on this count alone. Request of the counsel for the appellant for cross examination of the investigating officer and the officers before whom the statements were recorded was denied stating it will delay the adjudication proceedings - HELD THAT:- In the impugned proceedings, the Adjudicating Authority has not observed the mandate of Section 9D while admitting in evidence the statements given under Section 14 of the Central Excise Act, 1944 and has not deposed the deponents who had given such statements and where deposed and cross-examined has not stated any reason why the statements as originally deposed alone is to be relied on or in other words, the adjudicating authority has not given any reason for discarding the deposition made during cross-examination, such as that he is treating the witness as hostile or that the contradiction/inconsistencies are minor enough to be discarded. The request of the appellant for cross examination of the Investigating Officer, after having given up his request for cross examination of the other Departmental Officer sought, cannot be said to be unreasonable. The denial of cross-examination of the investigating officer by the adjudicator is a violation of the appellant s right in this regard as held by the Honourable High Court of Allahabad in CCE, Allahabad v. Govind Mills Ltd. [ 2013 (8) TMI 649 - ALLAHABAD HIGH COURT] and CCE Meerut I v R.A. Castings Pvt Ltd [ 2010 (9) TMI 669 - ALLAHABAD HIGH COURT] . Also, the appellant s contentions on quantification of the duty demand have not been controverted by the Adjudicating Authority. Admittedly even the long note books relied for quantifying the alleged unaccounted removal contains entries only for the period from April 2007 to September 2009. Admittedly for the period from October 2009 to March 2010 there was no evidence available pertaining to unaccounted clearances and the show cause notice had proceeded to quantify the same adopting the average value of the preceding year s clearances, that is clearance from October 2007 to March 2008 and October 2008 to March 2009 to arrive at an average value of clearances per day and then to presumptively quantify the unaccounted clearance for the period October 2009 to March 2010, as is evident from the remarks in the column in the worksheet at Annexure C(i) and para 15.3 of the SCN at page 84-85. Similarly, for the period 2010-11 and 2011-12 the show cause notice has not even an iota of evidence to rely on for determining the quantification of the alleged clandestine removals. In the instant case the evidence adduced is woefully inadequate, much less clear and convincing evidence . Apart from the reliance placed on the statements, which is determined as inadmissible, the information found in the long and small note books and other records at best would prima facie create a strong doubt about the unaccounted manufacture and clearance of fireworks and sparklers - mere indication of credit entries is of no avail without any explanation as to the nature of such credits. The SCN alleges that the appellants had deposited Rs.17,00,000/- in TMB and such entries were touted as indication of profit earned out of illicit transactions. The appellant in its reply at para 18.8 has categorically rebutted the same stating that no such deposit was made and in evidence enclosed letter dated 24.03.2012 of the Manager of the said Bank and contended that such wrong averments were made to prejudice the mind of the adjudicating authority. In fact, the adjudicating authority has not controverted the categorical rebuttals of these entries which the appellant has stated is misplaced. The reconciliation statement in respect of the bank accounts provided along with the reply to substantiate their defence was also not controverted by the adjudicating authority. Delay in adjudication - HELD THAT:- The decision of this Tribunal in Kopertek Metals Pvt Ltd [ 2024 (12) TMI 269 - CESTAT NEW DELHI ], which turns on the peculiar facts and circumstances of that case, cannot be construed as laying down a blanket proposition that any delay in adjudication beyond the time limit prescribed under sub-section 11 of Section 11A of the Central Excise Act would automatically result in the impugned order being vitiated for non-adherence to the time limit stipulated, dehors an examination of the facts and circumstances or insurmountable exigences which made it impracticable for the adjudication to take place, as has been held by the Delhi High Court in Swatch Group [ 2023 (8) TMI 864 - DELHI HIGH COURT] . Conclusion - i) The finding of the Adjudicating Authority that M/s. Meena Fire Works Industries, M/s. Meena Fire Works and M/s. Meena Sparklers are to be treated as one single manufacturer manufacturing and clearing fireworks from their factories in terms of section 2(f) of Central Excise Act read with para 2(v) of the Notification No.8/2003-CE dated 01.03.2003 as amended, is wholly untenable and cannot sustain. ii) The finding of the Adjudicating Authority that the value of clearances of fireworks including sparklers manufactured and cleared from M/s. Meena Fire Works Industries, M/s. Meena Fire Works and M/s. Meena Sparklers during the period 2007-08 to 2011-12 should be clubbed together in terms of para 2(v) of the Notification No.8/2003-CE dated 01.03.2003 as amended to determine the aggregate value of clearances for demanding duty from the said three firms, is wholly untenable and cannot sustain. Appeal allowed.

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• 2025 (3) TMI 1057
  Process amounting to manufacture or not - activities undertaken at the Central warehouse, where the activity of packing, re-packing and labelling was carried out by the appellant - demand of excise duty on re-packed spare parts on the ground that these goods were parts of motor vehicles (automobiles) and these parts were covered under Sl. No.100 of the Third Schedule to the Central Excise Tariff Act, 1985 - HELD THAT:- The issue involved in this appeal was decided by the Larger Bench of the Tribunal in ACTION CONSTRUCTION EQUIPMENT LTD. [ 2023 (6) TMI 1320 - CESTAT MUMBAI (LB) ]. The present appeal is also covered by such order of the Larger Bench. On careful reading of the decision given by the Larger Bench of the Tribunal on the disputed issues, it is found that the amendment carried out w.e.f. 29.04.2010 makes it abundantly clear that a legislature did not intend to tax the parts, components and assemblies of earthmoving equipment etc. under the Head Automobiles ; therefore, to this extent, the adjudged demands for the period prior to 29.04.2010 cannot be sustained. Further, it is a fact on record that Third Schedule to the Central Excise Tariff Act, 1985 was retrospectively amended vide Finance Act, 2011 read with Finance Act, 2012, with effect from 29.4.2010. Accordingly, from 29.4.2010, the appellant started discharging the excise duty on activity of packing / re-packing and affixing MRP undertaken on spare parts at warehouse, on the basis of MRP-based assessment. This was also confirmed by the jurisdictional Commissioner of Central Excise, Nagpur vide their letter dated 07.01.2014 submitting therewith the verification report dated 30.12.2013 received from the Assistant Commissioner of Central Excise Division-II, Nagpur that the appellant is discharging the Central Excise duty on MRP basis. In finally answering the issues on which reference was made to Larger Bench, on account of difference of opinion between two Co-ordinate Benches of the Tribunal and based on the direction given by the Hon ble Supreme Court, it was held The amendment made in the Third Schedule to the Central Excise Tariff Act by Finance Act, 2011 w.e.f. 29.04.2010 by adding serial no. 100A to the Third Schedule is prospective in nature. Thus, on the basis of the decision given by the Larger Bench, it is concluded that the adjudged demands for the period October, 2006 to 28.04.2010 is not sustainable. Conclusion - i) The term automobile should be interpreted based on common parlance and dictionary definitions rather than definitions from other statutes. ii) The activities undertaken by the appellant did not amount to manufacture for the relevant period, and the classification of the parts as automobiles was not applicable. Therefore, the excise duty demands were not legally sustainable. Appeal allowed.

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• Indian Laws

• 2025 (3) TMI 1056
  Acquisition of land for Public Purpose - Valid agreement or not - Whether the Board, for whose benefit the land was acquired, could have achieved the equivalent of such withdrawal by entering into an agreement with Bhagwan Devi for returning part of the acquired land? - whether the Board could exercise such power when there was no document of conveyance in its favour in respect of this land? - HELD THAT:- he statutory scheme of the laws applicable to the Board at different points of time, set out speaks to the contrary as it manifests that there must be a document of conveyance for the Board to acquire and hold such land. Admittedly, no such document was ever issued by the Government actually transferring the subject land to the Board, whereby it could claim absolute rights over it. When the State uses its sovereign power of eminent domain and acquires land for a public purpose, as in the case on hand, i.e., for establishment of a grain market under the control of a statutory Board, such an exercise cannot be set at naught by the beneficiary of such acquisition, viz., the statutory Board, by entering into a private agreement shortly after the acquisition so as to reverse the usage of the power of eminent domain by the State. Validating this dubious enterprise by a statutory beneficiary of a compulsory acquisition would be nothing short of permitting a fraud on the exercise of such sovereign power by the State. Viewed thus, the agreement dated 30.09.1988 was clearly in contravention of the fundamental policy of Indian law and the Arbitral Award dated 10.07.2007, upholding the said agreement, was equally so. Further, the fact that the preparation of the agreement dated 30.09.1988, by purchase of stamp papers for the same and the drafting thereof, took place even before the matter was considered by the Board in the meeting held on 29.09.1988 clearly revealed that there was something suspect about the transaction. Given the further fact that the only objective of the said agreement was to thwart the compulsory acquisition of the subject land by returning a portion thereof to Bhagwan Devi, the agreement was patently opposed to all tenets of law. Conclusion - There are no hesitation in holding that the Courts exercising jurisdiction under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, erred grievously in not setting aside the Arbitral Award dated 10.07.2007 that had upheld the agreement dated 30.09.1988. Appeal allowed.

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• 2025 (3) TMI 1055
  Time limit for taking action by the Chief Metropolitan Magistrate or the District Magistrate under Section 14 of the Act is mandatory or not - Chief Metropolitan Magistrate or the District Magistrate can proceed to dispose of the application under Section 14 of the Act after expiry of the statutory time period - HELD THAT:- The District Magistrate / Chief Metropolitan Magistrate does not become functus officio if steps under Section 14 of the Act cannot be conclusively taken within the stipulated time period of thirty days or the extended time period of sixty days. The aforesaid authorities will still have jurisdiction to take steps under Section 14 and they do not become functus officio as pleaded by the borrower. The primary object of the Act being recovery of debts owing to banks and financial institutions in a timely manner, a time limit was inserted in the Act by way of an amendment with effect from 1st September, 2016. The secured creditor will be left remediless if the District Magistrate or the Chief Metropolitan Magistrate, for any reason whatsoever, fails to act within the aforesaid time period. The secured creditor will be required to restart the process under Section 14 all over again which, in turn, will lead to further delay in recovery of the loan amount. There is no reason as to why a secured creditor will be made to suffer financially due to inaction or non-action or delayed action on the part of the statutory authorities. The very purpose and object of the Act will be frustrated if the recovery process fails. The same will aid in unjust enrichment of the borrower and financial loss to the secured creditor. The Act prescribes a remedy to the secured creditor to recover the unpaid loan amount by taking possession of the secured asset. If the secured creditor is not able to take possession of the mortgaged asset, then the lender will not be in a position to recover the dues. Merely holding the documents of the mortgaged asset, will not serve the purpose. It is only when the mortgaged property is sold, that the lender will get an opportunity to recover the dues unpaid by the borrower - There cannot be two opinions that the Section 14 authorities ought to have taken steps within the stipulated time period, but in the same breath it has to be held that, failure to take steps within the prescribed timeline, cannot be said to be a fatal one. The right of the secured creditor will be severely impacted if any other interpretation is given to the said provision. A borrower is liable to repay the loan taken from the financial institution and he does not have any right to object to any step taken by the lender to recover its dues. To uphold the sanctity and object of the Act, the writ petition is liable to be allowed and is, accordingly, allowed. The District Magistrate is directed to dispose of the application of the bank made under Section 14 of the Act in accordance with law, at the earliest, but positively within four weeks from the date of communication of this order. Conclusion - i) The time limit under Section 14 of the SARFAESI Act is directory, not mandatory. Failure to act within the prescribed period does not render the District Magistrate functus officio. ii) The primary objective of the SARFAESI Act is the timely recovery of debts, and this objective should guide the interpretation of procedural timelines. iii) The secured creditor should not suffer due to the inaction of statutory authorities, and the recovery process should not be unduly delayed. Petition allowed.

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• 2025 (3) TMI 1054
  Debts Recovery Appellate Tribunal (DRAT) was justified in remanding the matter to the DRT for fresh consideration of jurisdiction and other issues or not - claim made by HDFC Bank constitutes a debt under Section 2(g) of the Recovery of Debts and Bankruptcy Act, 1993 - HELD THAT:- The issue whether the questions like whether the issue of jurisdiction stood concluded either by earlier orders of DRAT or by the order of Gujarata High Court in an appeal against the order disposed of on 28 February 2014, were legal issues that the DRAT was duty bound to address and decide upon. Similarly, even the issue whether HDFC s claim constituted a debt under Section 2(g) of the said Act, was a legal issue squarely raised before the DRAT and which, the DRAT should have itself decided. The DRAT also had sufficient factual material before it to decide the issue of entitlement of HDFC to claim against Ashima and BBK. The DRAT was not at all justified in simply remanding the matter to DRT for deciding the issue of jurisdiction and all other issues in the original application afresh . The DRAT, without discharging its of an first appellate authority, has simply chosen to remand the matter to DRT without recording any cogent reasons for adopting this easy course of action. This was admittedly not a case where the DRT had decided on a preliminary point without recording findings on other issues. In such a case if the appellate court reverses the decree on a preliminary point, the appellate court may remand the matter to the trial court to decide other issues and determine the suit. This is what is provided under Order 41 Rule 23 of the Code of Civil Procedure. Under Order 41 Rule 23-A the appellate court can order a remand even in other cases not covered by Order 41 Rule 23. However, by a catena of decisions, the Hon ble Supreme Court has clarified that the remand cannot be ordered lightly. In a case where the provisions of Order 41 Rule 23 do not apply, the remand can be ordered if considered necessary by the Appellate Court in the interest of justice. The Hon ble Supreme Court has held that as far as possible the Appeal Court should dispose of the appeal finally unless remand is imperative. In Ashwinkumar K Patel [ 1999 (3) TMI 654 - SUPREME COURT] , the Hon ble Supreme Court held that the High Court should not ordinarily remand a case under Order 41 Rule 23 CPC to the lower court merely because it considered that the reasoning of the lower court in some respects was wrong. Such remand orders lead to unnecessary delays and cause prejudice to the parties to the case. When the material was available before the High Court, it should have itself decided the appeal one way or the other. It could have considered the various aspects of the case mentioned in the order of the trial court and considered whether the order of the trial court ought to be confirmed reversed or modified. The DRAT also failed to appreciate that the original application was filed by HDFC in 2005. The DRT rejected the Respondents objection to maintainability on 26 October 2005. The Respondents s appeals instituted in 2006 and 2007 were disposed of only on 11 July 2014. The DRT allowed HDFC s original application on 30 June 2017. The impugned common order has been made on 26 April 2024. Thus, the matter is lingering for last almost 20 years. Still, the DRAT has remanded the matter to DRT without recording any cogent reasons to justify such remand. Conclusion - i) An order of remand prolongs and delays the litigation and hence, should not be passed unless the appellate court finds that a re-trial is required, or the evidence on record is not sufficient to dispose of the matter. ii) The DRAT must now decide the appeals in accordance with law, without remanding them back to the DRT, and all parties contentions remain open for consideration. Petition disposed off.

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• 2025 (3) TMI 1053
  Principles of natural justice - rule of audi alteram partem - whether the principle of audi alteram partem which has been read to have not been excluded by the Hon ble Supreme Court in Rajesh Agarwal [ 2023 (3) TMI 1205 - SUPREME COURT] in respect of the proceedings drawn under the RBI Directions would mean providing right of personal hearing as well or it would only mean permitting the borrower to file reply to the show cause notice and making representation in writing without any personal hearing thereupon? - HELD THAT:- The nature of procedure to be adopted under the RBI Directions and the consequences of passing final order under the said Directions classifying account of a borrower as fraud, as also the extent of application of principle of audi alteram partem in such proceedings have been discussed at length by the Hon ble Supreme Court in Rajesh Agarwal. Underlying the fact that classification of account of a borrower as fraud results in civil consequences against the borrower, it has thus, been concluded in Rajesh Agarwal, that application of principle of audi alteram partem cannot be excluded under the RBI Directions on fraud and that it is reasonably practicable for lender banks to provide for an opportunity of hearing to the borrowers before classifying their accounts as fraud. The impugned direction by the learned Single Judge, which is under challenge herein, does not warrant any interference in this Letters Patent Appeal. Conclusion - The rule of audi alteram partem, including the provision of a personal hearing, applies to proceedings under the RBI Directions on fraud classification due to their civil consequences. The Letters Patent Appeal is hereby dismissed.

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