TMI Tax Updates - e-Newsletter
April 1, 2025

Case Laws in this Newsletter:

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

Articles

1. Influential, Networked, Defensive, Inclusive and Active (I-N-D-I-A)

   By: Subbiah Sridhar

2. BINDING NATURE OF AN APPROVED RESOLUTION PLAN ON STATUTORY DUES

   By: DR.MARIAPPAN GOVINDARAJAN

3. Consequences of Late LLP Annual Return Filing & How to Avoid Penalties

   By: Ishita Ramani

4. LEGAL TERMINOLOGY IN GST LAW (PART 13)

   By: Dr. Sanjiv Agarwal

5. Disposal of materials like cold drink/Beer metal cans, perfume bottles, refrigerant cans, and packaging materials (plastic, paper, and plastic-coated paper).[Environment and Climate Change]

   By: YAGAY andSUN

6. Tariff Trouble Worldwide: Understanding the Global Impact

   By: YAGAY andSUN

7. Hedge Funds: An Overview

   By: YAGAY andSUN

8. CAPEXIL (Chemical and Allied Products Export Promotion Council)[Export Promotion Councils of India]

   By: YAGAY andSUN

9. Apparel Export Promotion Council (AEPC)[Export Promotion Councils]

   By: YAGAY andSUN

10. The Investor Education and Protection Fund Authority (Form of Annual Statement of Accounts) Rules, 2018

   By: YAGAY andSUN

11. How to determine whether an Inverted Duty Structure (IDS) applies to any Goods, Product or Items under GST Laws of India?

   By: YAGAY andSUN

12. Import of Services from Related Parties.

   By: YAGAY andSUN

News

1. Haryana amnesty scheme to provide relief on penalty under GST Act

2. Kerala set to achieve Rs 2 trillion budget size: Finance Minister Balagopal

3. Target of 'Viksit Goa' will be achieved by 2037 with Centre's help: CM Sawant

4. India-U.S. Trade Talks in New Delhi Concludes

5. Arbitration and mediation mechanisms crucial for India's emergence as a global manufacturing hub: Union Commerce and Industry Minister Shri Piyush Goyal

6. NFRA and IIT Kanpur jointly organize a Hackathon on Large Language Models (LLM) and Generative AI

7. President Murmu to grace closing ceremony of 90th year of RBI's commemoration on Apr 1

8. RBI allowing banks to charge for ATM withdrawals 'institutionalised extraction,' alleges CM Stalin

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/DDHS-PoD-2/P/CIR/2025/43 - dated 28-3-2025

Amendment to Master Circular for Real Estate Investment Trusts (REITs) dated May 15, 2024

2. SEBI/HO/DDHS/DDHS-PoD-2/P/CIR/2025/44 - dated 28-3-2025

Amendment to Master Circular for Infrastructure Investment Trusts (InvITs) dated May 15, 2024

3. SEBI/HO/ ITD-1/ITD_CSC_EXT/P/CIR/2025/45 - dated 28-3-2025

Extension towards Adoption and Implementation of Cybersecurity and Cyber Resilience Framework (CSCRF) for SEBI Regulated Entities (REs)

Highlights / Catch Notes

GST

• GST Assessment Order Set Aside for Lacking Document Identification Number as Required by CBIC Circular

  Case-Laws - HC : The HC set aside the GST assessment order that lacked a Document Identification Number (DIN). Following precedent established in Pradeep Goyal v. Union of India (SC) and M/s. Cluster Enterprises v. The Deputy Assistant Commissioner (ST)-2, Kadapa, the court determined that absence of a DIN renders the order non-est and invalid. The judgment relied on CBIC Circular No.128/47/2019-GST dated 23.12.2019, which mandates DIN inclusion for validity of proceedings. The court concluded that since the impugned order uploaded to the portal did not contain a DIN, it could not be sustained and must be set aside. The petition was accordingly disposed of.
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• Refund of Unutilised Input Credit Allowed After Shipping Bills Properly Certified by Customs Superintendent

  Case-Laws - HC : The HC set aside the appellate authority's order dated February 28, 2023, to the extent it pertained to three shipping bills (nos. 607682 and 607685 dated October 1, 2020, and 607467 dated October 22, 2020). The court ruled that petitioner should be permitted to rely on shipping bills now properly certified by the Superintendent of Customs, rejecting the administrative denial of unutilised input credit refund that had been based primarily on the technicality that six shipping bills were signed by the Customs Inspector rather than the Superintendent. The application was disposed of accordingly, allowing petitioner to proceed with the refund claim using the properly certified documentation.
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Income Tax

• Karnataka Urban Water Supply & Drainage Board receives tax exemption under Section 10(46) for specified income streams until 2028-29. (46)

  Notifications : The CBDT has notified the Karnataka Urban Water Supply & Drainage Board, Bangalore (PAN AAATK5837F), a state government trust, for exemption from income tax under section 10(46) of the Income-tax Act, 1961. The specified exempt income includes establishment charges, administrative fees, supervision fees, water charges, rent, forfeited earnest money deposits, penalties, sale of scrap, and interest earned on bank deposits. The exemption applies for assessment years 2024-2025 to 2028-2029 (financial years 2023-2024 to 2027-2028) subject to conditions that the Board shall not engage in commercial activity, maintain unchanged activities and income nature, and file returns as required under section 139(4C)(g).
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• Income-tax Rules Amended: Form 3CD Gets Major Overhaul with New Reporting Requirements Under Section 44AB

  Notifications : The CBDT has issued the Income-tax (Eighth Amendment) Rules, 2025, effective April 1, 2025, significantly modifying Form 3CD used for tax audit reports under Section 44AB. Key amendments include: insertion of Section 44BBC references; removal of obsolete deduction rows; addition of reporting requirements for settlement expenditures related to contraventions; comprehensive restructuring of MSME payment reporting requirements; modifications to Section 43B reporting; elimination of clauses 28 and 29; introduction of coded classifications for loan/deposit transactions with a detailed 12-category coding system; and new disclosure requirements for share buyback transactions, including amounts received and acquisition costs of shares bought back.
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• CBDT Authorizes Waiver of Interest on Delayed TDS/TCS Payments Due to Technical Glitches Under Section 119

  Circulars : CBDT has issued an order under section 119 of the Income-tax Act, 1961, authorizing CCIT, DGIT, or PrCCIT to waive interest charged under section 201(1A)(ii)/206C(7) in cases where taxpayers initiated TDS/TCS payments and amounts were debited from their accounts before the due date, but credited to the government after the due date due to technical glitches beyond taxpayer control. Applications for waiver must be submitted within one year from the end of the financial year for which interest is charged and will be decided within six months. The order is final with no further appeals permitted to the Board. The directive is effective March 28, 2025.
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• Penalty Under Section 271C Deleted For Bona Fide Short TDS Deduction On LFC Reimbursements To Employees

  Case-Laws - AT : The ITAT deleted the penalty imposed under s.271C for short deduction of TDS on LFC reimbursements to employees. The Tribunal found that the assessee, a public sector undertaking, acted under a bona fide belief that reimbursements for journeys with ultimate destinations in India would be exempt under s.10(5), a position temporarily supported by an interim order from the Madras HC. The ITAT determined this was a genuinely debatable issue ultimately settled by the SC, not a deliberate attempt to evade tax obligations. Applying the principle from Pricewaterhouse Coopers that penalties are unwarranted for inadvertent, bona fide errors absent intent to conceal income, the Tribunal also opined that the CIT(A) should have condoned the 961-day appeal delay given the recurring nature of the issue.
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• Additions Under Section 68 Invalid When Based on Undisclosed Investigation Reports Despite Documented Share Transactions

  Case-Laws - AT : The ITAT allowed the assessee's appeal against additions made under section 68 read with section 115BBE regarding alleged bogus long-term capital gains. The Tribunal held that the AO's addition was untenable as it was based solely on an investigation report that was never shared with the assessee. The assessee had substantiated the legitimacy of the share transactions by providing evidence that shares were originally purchased in cash, physically delivered, later dematerialized, and eventually sold through proper channels with consideration received through banking channels. Following the precedent in Krishna Devi, the ITAT concluded that additions cannot be made merely on assumptions when transactions are properly documented through banking and demat accounts.
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• Reassessment Order Set Aside: AO's Failure to Follow Procedure and Computational Errors Render Infrastructure Fund Additions Invalid

  Case-Laws - AT : The ITAT set aside the assessment order under section 147, holding that the AO failed to comply with mandatory conditions under sections 147-151A. Regarding infrastructure fund additions, the Tribunal noted the AO issued a cryptic, non-speaking order without explaining the legal basis for additions. The assessment contained patent calculation errors, with incorrect column totals and misidentified infrastructure fund components. Following precedent from the assessee's own cases for AYs 2013-14 and 2014-15, the Tribunal determined that even if accretions to the infrastructure fund were taxable income, they would remain exempt under section 11. The assessment was vitiated by computational errors and lack of proper reasoning. Appeal allowed.
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• Tribunal Excludes Three IT Giants as Comparables for Transfer Pricing Adjustments, Remands Receivables Interest Issue

  Case-Laws - AT : The ITAT directed exclusion of three companies (Wipro Limited, Infosys Ltd., and Tata Elexi Limited) as comparables for transfer pricing adjustments, relying on precedents from Delhi HC in Agnity India Technologies and Avaya India cases. Regarding interest on outstanding receivables from AEs, the Tribunal remanded the issue to AO/TPO to examine industry practices and any mutual payment agreements. The ITAT held that if receivables are within industry average holding periods or contractual terms, adjustment may not be warranted. The Tribunal found LIBOR plus 425 basis points excessive for computing interest, suggesting that a rate based solely on LIBOR would be more appropriate. The appeal was allowed for statistical purposes.
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• Tribunal Excludes Non-Comparable Companies in Transfer Pricing Case and Allows Section 10A Deductions for Multiple Units

  Case-Laws - AT : ITAT directed exclusion of several comparables for transfer pricing adjustments in software development services (Infosys Ltd, Persistent Systems Ltd, Tata Elexi Ltd, Bodhtree Consulting Ltd) and ITeS (Eclerx Services Ltd, Cosmic Global Ltd, Accentia Technologies Ltd, Infosys BPO Ltd) due to functional differences and lack of segmental information. The Tribunal allowed deductions under s.10A for UB Plaza Unit, Titanium STPI Unit, and the unit acquired from Reuters India, following previous favorable decisions. The issue of depreciation on goodwill was restored to AO for de novo adjudication. ITAT upheld DRP's direction to exclude communication and travel expenses from both export and total turnover while computing s.10A deduction, following HCL Technologies Ltd precedent, and affirmed deletion of software disallowance under s.40(a)(ia) per Tally Solutions ruling.
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• TDS Credit Must Follow Beneficial Owner: Sole Beneficiary Entitled to Credit Despite Trust's Form 26AS Listing

  Case-Laws - AT : The ITAT allowed the appellant's claim for TDS credit that was denied because it appeared in the trust's Form 26AS rather than the appellant's, despite the appellant being the trust's sole beneficiary. The tribunal noted that an inequitable situation had arisen where the Department neither granted credit to the trust nor the appellant, while still raising a demand against the appellant. The ITAT directed the AO to transfer the TDS credit from the trust's Form 26AS to the appellant's and allow the credit in accordance with law, acknowledging that while procedural compliance is important, the substantive right to tax credit cannot be denied when tax has been legitimately deducted and remitted to the government.
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• Director's Surrendered Diary Income Treated as Gross Amount, 10 Lacs Added Instead of Full 1.35 Crores

  Case-Laws - AT : ITAT partially allowed the assessee's appeal regarding amounts found in a diary and surrendered by a director. The Tribunal held that since the surrendered amount represented gross undisclosed income rather than net profit, a lump sum addition of 10 lacs (out of 1.35 crores) was appropriate to cover potential revenue leakage while acknowledging expenditures incurred. Regarding accounting methods, ITAT ruled in favor of the assessee's use of the project completion method rather than percentage completion method. The Tribunal noted this method had been consistently followed and previously accepted by revenue authorities. The Tribunal recognized that immovable property transfers are governed by the Transfer of Property Act, where transfers are complete only upon full payment and possession, making the project completion method appropriate for revenue recognition.
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• Tribunal Allows 0.5% Rate for Corporate Guarantee Commission and Directs Fresh AMP Expense Examination in Transfer Pricing Case

  Case-Laws - AT : The ITAT partially allowed the assessee's appeal regarding transfer pricing adjustment for corporate guarantee, directing AO to adopt guarantee commission at 0.5% instead of 2%. On AMP expenses, the matter was remanded for fresh examination to determine existence of international transaction. The Tribunal confirmed TP adjustment for royalty income, finding the deferment was an afterthought to postpone tax liability. Disallowance under SS14A was partly allowed, directing recalculation under Rule 8D(2)(iii) based only on dividend-yielding investments. Export agency commission was held not subject to TDS as it didn't constitute technical services. The Tribunal allowed deduction of amortized premium on forward contracts and foreign exchange loss on ECB repayment. Additional depreciation claim on assets put to use in previous year was also allowed.
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Customs

• Customs Duty Rates Under India-UAE CEPA to Change from April 2025 Through Section 25(1) Amendment

  Notifications : Notification No. 21/2025-Customs amends the India-UAE Comprehensive Economic Partnership Agreement (CEPA) as previously established under Notification No. 22/2022-Customs. The amendment, issued under Section 25(1) of the Customs Act, 1962, substitutes TABLE I in the principal notification with a revised version. The Central Government determined these modifications necessary in the public interest. The amendments will take effect from April 1, 2025. This represents a further modification to the CEPA framework, following the most recent amendment via Notification No. 08/2025-Customs dated February 1, 2025.
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• Government Amends India-Mauritius CECPA Tariff Structure with New Duty Rates for Seafood and Floral Products

  Notifications : The Central Government has amended Notification No. 25/2021-Customs dated March 31, 2021, pertaining to the India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA). The amendment, effective March 28, 2025, through Notification No. 22/2025-Customs, substitutes the original TABLE 1 with a revised tariff structure. The modification establishes new customs duty rates for various tariff items, primarily affecting seafood products (tariff codes 0302-0305) and floral goods (0603). The revised rates range from complete exemption (0.00%) for certain fish species to 30.00% for cut flowers. This amendment was enacted under Section 25(1) of the Customs Act, 1962, upon determination of public interest necessity.
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• CBIC Revises Tariff Values Under Section 14(2) for Edible Oils, Brass Scrap, Gold, Silver and Areca Nuts

  Notifications : CBIC, exercising powers under Section 14(2) of the Customs Act, 1962, has revised tariff values for specified imported goods through Notification No. 17/2025-Customs (N.T.) dated March 28, 2025. The notification amends the earlier Notification No. 36/2001-Customs (N.T.) by substituting new tariff values in three tables covering: edible oils (including palm oil variants and soya bean oil), brass scrap, precious metals (gold at US$984 per 10 grams and silver at US$1102 per kilogram), and areca nuts. These revised valuations, which serve as the base for calculating customs duties, will take effect from March 29, 2025.
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• Sea Cargo Manifest Regulations: CBIC Extends Transitional Provisions Until May 2025, Suspends Penalties Under Regulation 13

  Circulars : CBIC has extended the transitional provisions for the Sea Cargo Manifest and Transhipment Regulations (SCMTR) until May 31, 2025. While arrival messages by carriers have been mandated, export and transhipment messages require further testing. During this extension period, customs officers are directed not to impose penalties under Regulation 13 (which authorizes penalties up to fifty thousand rupees for non-compliance) against stakeholders making good-faith efforts to implement electronic declarations. Chief Commissioners must conduct weekly outreach programs in coordination with DG Systems to facilitate full implementation by all maritime cargo stakeholders.
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• CBIC Implements Electronic Processing for Personal Carriage of Gems, Jewellery, Samples and Prototypes from May 2025

  Circulars : CBIC has established a harmonized procedure for import/export through personal carriage, effective May 1, 2025, focusing on gems and jewellery, samples, and prototypes. The circular introduces electronic processing of Bills of Entry/Shipping Bills for personal carriage at specified airports, including Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, and Jaipur. For gems and jewellery, the procedure includes pre-filing documentation with passenger details, customs examination, and temporary detention facilities. For samples/prototypes, eligible exporters may opt for factory examination instead of port examination. The streamlined process aims to reduce time and costs while maintaining regulatory compliance, with specific roles outlined for importers/exporters, passengers, and customs officers to facilitate seamless transactions.
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• Customs Act Section 28 Case Remanded Due to Adjudication Delay Violating Natural Justice Principles

  Case-Laws - HC : The HC remanded the matter to CESTAT due to delay in adjudication of the SCN under s.28 of the Customs Act, 1962, which constituted a violation of natural justice principles by denying the appellant opportunity to respond on merits. Considering the appellant had already deposited Rs. 2.80 crores under provisional assessment, the Court granted the appellant opportunity to file a reply addressing substantive issues. The petition was disposed of with directions to list the matter before CESTAT for further proceedings on May 5, 2025.
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DGFT

• Diamond Imprest Authorisation Form Updated with Four New Declarations for Applicants Under Foreign Trade Policy 2023

  Circulars : The DGFT has amended ANF-4J form for Diamond Imprest Authorisation (DIA) under FTP 2023 by adding four new declarations (numbered 7-10) after the existing declaration number 6. These new declarations require applicants to certify they hold Two Star or higher status, have filed all required ITR and GST returns, will abide by Pre-Import and Actual User Conditions, and confirm it's their first application for the current financial year. The existing declaration 7 has been renumbered as 11. This amendment enhances compliance requirements for entities seeking DIA under the Handbook of Procedures 2023.
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Indian Laws

• Vicarious Liability Under Section 141 NI Act Requires More Than Mere Awareness of Transactions

  Case-Laws - HC : The HC denied leave to appeal against Sumit's acquittal while granting it against Anubhav in a dishonored cheque case. Regarding Sumit (Vice President of Finance), the court held that mere awareness of transactions was insufficient to establish vicarious liability under s.141 NI Act. The complainant failed to discharge the initial evidentiary burden to prove Sumit was "in charge of and responsible to the company." For Anubhav, the court found the appellate judge had improperly emphasized absent documents rather than evaluating available evidence holistically. The HC clarified that when reviewing acquittals, courts should proceed cautiously as the presumption of innocence is reinforced, applying different standards of inquiry at leave stage versus final appeal determination.
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PMLA

• Bail Denied Under PMLA Section 45 in Liquor Scam Case Despite Long Detention and Trial Delays

  Case-Laws - HC : HC denied bail in a money laundering case, finding the applicant failed to satisfy the twin conditions under Section 45 of PMLA. The Court determined there was substantial evidence of the applicant's active participation in orchestrating a liquor scam, acquiring proceeds of crime, and maintaining strong nexus with co-accused. Despite the applicant's lengthy incarceration and trial delays, the Court held that the serious nature of allegations, completed investigation resulting in prosecution complaints spanning 20,000 pages, and the applicant's role as the orchestrator of the scheme outweighed considerations for bail. The bail application under Section 483 BNSS read with Section 45 PMLA was rejected.
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SEBI

• SEBI Amends REIT Regulations: Relaxed Lock-in Rules for Sponsors and New Guidelines for Follow-on Offers

  Circulars : SEBI has amended the Master Circular for REITs dated May 15, 2024, implementing two key regulatory changes. First, lock-in provisions for preferential unit issuances have been modified to require only 15% of sponsor/sponsor group units to be locked-in for three years, with remaining units locked-in for one year. Inter-se transfers of locked-in units among sponsor group entities are now permitted, subject to continuation of lock-in periods. Second, comprehensive guidelines for follow-on offers by REITs have been introduced, including filing requirements, minimum public unitholding of 25%, allotment timelines, and disclosure requirements. These amendments, effective immediately, aim to promote ease of doing business while maintaining investor protection standards.
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Case Laws:

• GST

• 2025 (3) TMI 1472
  Challenge to assessment order - the proceedings did not contain a DIN number - HELD THAT:- The question of the effect of non-inclusion of DIN number on proceedings, under the G.S.T. Act, came to be considered by the Hon ble Supreme Court in the case of Pradeep Goyal Vs. Union of India Ors [ 2022 (8) TMI 216 - SUPREME COURT] . The Hon ble Supreme Court, after noticing the provisions of the Act and the circular issued by the Central Board of Indirect Taxes and Customs (herein referred to as C.B.I.C. ), had held that an order, which does not contain a DIN number would be non-est and invalid. A Division Bench of this Court in the case of M/s. Cluster Enterprises Vs. The Deputy Assistant Commissioner (ST)-2, Kadapa [ 2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT] , on the basis of the circular, dated 23.12.2019, bearing No.128/47/2019-GST, issued by the C.B.I.C., had held that non-mention of a DIN number would mitigate against the validity of such proceedings. In view of the aforesaid judgments and the circular issued by the C.B.I.C., the non-mention of a DIN number in the order, which was uploaded in the portal, requires the impugned order to be set aside. Petition disposed off.

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• 2025 (3) TMI 1471
  Refund of unutilised input credit - rejection primarily based on the ground that the six shipping bills in question were signed by the Inspector of Customs rather than by the Superintendent of Customs - HELD THAT:- The petitioner should be allowed to rely on the shipping bills that have now been certified by the relevant Superintendent of Customs. The order of the appellate authority dated February 28, 2023, is set aside to the extent that it pertains to the three shipping bills numbered 607682 dated October 1, 2020, 607685 dated October 1, 2020, and 607467 dated October 22, 2020. Application disposed off.

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• 2025 (3) TMI 1470
  Rejection of appeal on the ground of limitation as the appeal should have been filed by 10.05.2023 whereas the appeal had been filed with a delay of 26 days which cannot be condoned - HELD THAT:- The Government of Andhra Pradesh, under G.O.Ms.No.551, dated 16.11.2023, had extended the period of limitation, for filing of an appeal, against any order passed before 31.03.2023, under Section 73 or 74 of the G.S.T Act, up to 31st January, 2024. In view of G.O.Ms.No.551, dated 16.11.2023, this Writ Petition is allowed setting aside the order of rejection of appeal, dated 24.08.2023, and remanding the matter back to the appellate authority for consideration of the question of delay, in filing of the appeal, in terms of G.O.Ms.No.551, dated 16.11.2023, and to pass the orders thereon.

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• 2025 (3) TMI 1469
  Conclusion of proceedings referable to Section 73 of Central Goods and Services Tax Act, 2017 - under-declaration of output tax and ineligible Input Tax Credit (ITC) - HELD THAT:- The authority has failed to assign or accord any reasoning or even allude to the response which had been submitted pursuant to the Show Cause Notice [SCN] which was issued. In view of the above, it is opined that the said order, being unreasoned, would not sustain. The impugned order dated 20 August 2024 is quashed - petition allowed.

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• 2025 (3) TMI 1468
  Cancellation of registration of petitioner - petitioner was unable to furnish a reply to the same within the time that had been stipulated - HELD THAT:- The ends of justice would warrant the petitioner being accorded an opportunity to furnish a response to the SCN and for proceedings being taken thereafter and in accordance with law. Petition disposed off.

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• Income Tax

• 2025 (3) TMI 1467
  Validity of proceedings u/s 153C r.w.s. 143(3) - challenge to validity of the impugned assessments framed u/s 143(3) than that under section 153C or under section 148 - HELD THAT:- We find no reason to sustain the impugned section 153C assessment. We first of all deem it appropriate to quote section 153C(1) 1st proviso stipulating that reference to the date of initiation of search under section 132 or making of requisition, shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the AO having jurisdiction Hon ble jurisdictional high court s recent various landmark decisions, CIT-7 Vs. RRJ Securities Ltd. [ 2015 (11) TMI 19 - DELHI HIGH COURT] , PCIT Vs. Ojjus Medicare (P) Ltd., [ 2024 (4) TMI 268 - DELHI HIGH COURT] and CIT Vs. Jasjit Singh [ 2023 (10) TMI 572 - SUPREME COURT] have already settled the issue that the reference in such an instance u/s 153C is the date when the Assessing Officer records his corresponding 153C satisfaction. We, therefore, are of the considered view that the given fact that the learned lower authorities have framed section 243(3) assessments in these twin assessee s cases based on the seized materials, without either taking recourse to section 153C or section 148 of the Act, as the case may be, the same are not sustainable in law. We accordingly quash the impugned twin assessments in very terms

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• 2025 (3) TMI 1466
  Levy of penalty u/s 271C - short deduction of tax on LFC reimbursements to its employees - CIT(A) rejected the ground as this issue has ultimately been held against the assessee by Hon ble Supreme Court [ 2022 (11) TMI 426 - SUPREME COURT] holding that the assessee was required to deduct tax at source on such reimbursements, also did not condone the delay of 961 days in the appeal - Aggrieved, the assessee is in further appeal before us - HELD THAT:- The assessee, following consistent stand as taken earlier, did not deduct tax at source on impugned reimbursements under a bona-fide belief that irrespective of en-route journeys, when the ultimate destination was in India, such reimbursements would be exempt u/s 10(5). The same is also supported by the fact that the Hon ble High Court of Madras granted interim order favoring the assessee. Finally, the issue has been put to rest by Hon ble Apex Court holding that the assessee would be required to deduct TDS on such reimbursements. On these facts, it could very well be said that deduction of TDS on impugned reimbursements was not free from doubt and it was a debatable issue which has ultimately been settled by Hon ble Apex Court. However, the assessee could not be visited with impugned penalty for short deduction of TDS. The cited case law in the case of Pricewaterhouse Coopers P. Ltd [ 2012 (9) TMI 775 - SUPREME COURT] duly supports the case of the assessee. It was held by Hon ble court that imposition of penalty was not warranted since the assessee had committed an inadvertent and bona fide error and not intended to conceal its income. We delete the impugned penalty. CIT(A), in our opinion, considering the recurring nature of issue, should have condoned the delay considering the fact that the assessee was a public sector undertaking and it would not stand to gain by filing the first appeal with such a delay.

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• 2025 (3) TMI 1465
  Penalty u/s 271(1)(c) - addition u/s 68 and 69 - HELD THAT:- The penalty provisions act independently and while invoking the penalty u/s 271(1)(c), both the limbs can be invoked jointly or separately with the additions made by the AO, but while invoking Section 271(1)(c) of the Act, the AO has to categorically mention in the assessment order as well as in the notice issued u/s 274 r.w.s. 271(1)(c) of the Act that why there is a component of concealment of income or why there is a component of furnishing of inaccurate particulars on the part of the assessee. By not giving any reason or any finding of the assessee s conduct, the invocation of penalty u/s 271(1)(c) fails and in the present case the AO has not given the details in the penalty order as to how the assessee has made concealment of income related to addition u/s 68 and to the addition u/s 69 as these components were already there in the bank account transactions maintained by the assessee and therefore it cannot be treated as concealment of income. Penalty imposed by the AO u/s 271(1)(c) of the Act is not justified - Decided in favour of assessee.

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• 2025 (3) TMI 1464
  Reopening of assessment u/s 147 - case has been reopened beyond 4 years - non-filing of a return by the assessee - HELD THAT:- In view of the assumption by Ld. AO that the assessee has not filed Income Tax Return, this fact has led to absence of necessary nexus between the tangible material and formation of belief which would vitiate the reassessment proceedings as held in the case of Sagar Enterprises[ 2001 (12) TMI 18 - GUJARAT HIGH COURT] holding that the factor of non-filing of return of income has overbearingly weighed with the AO for arriving at satisfaction about the failure on the part of the assessee about escapement of income. Therefore, the assessment stood vitiated. Similar is the analogy in the decision of Ritika Gupta [ 2022 (8) TMI 796 - ITAT LUCKNOW] which referred to the decision of Sunil Kumar Rastogi [ 2019 (12) TMI 1612 - ALLAHABAD HIGH COURT] We would hold that the jurisdiction of AO to reopen the case stood vitiated since the same has proceeded on wrong presumption that the assessee had not filed her return of income. Consequently, the assessment order stands quashed. Assessee appeal allowed.

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• 2025 (3) TMI 1463
  Levy of late filing fess u/s 234E qua TDS returns for various quarters - CIT(A) confirmed the same in the absence of any explanation from the assessee - HELD THAT:- We find that this issue stand covered in assessee s favor by the decision of Fatehraj Singhvi vs UOI [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] holding that the amendment in section 200A came into effect only on 01-06-2015 and the same would have prospective effect. Therefore, there could not be any levy of fee for late filing fee u/s 234E of the Act while issuing intimation u/s 200A prior to 01-06-2015. It was thus held that amendment u/s 200A was prospective in nature and therefore, no computation of fee for demand or intimation u/s 200A could be made for the TDS deducted for the respective Assessment Years prior to 01-06-2015. Since no decision of jurisdictional high court is been shown to us, we follow the analogy of decision of Hon ble Supreme Court rendered in CIT V/s Vegetable products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] to hold that in case of two reasonable constructions of taxing statutes, the one that favors the assessee must be adopted. Accordingly, we direct Ld. AO to delete the impugned fees and revise thd demand as raised against the assessee. Assessee appeal allowed.

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• 2025 (3) TMI 1462
  Addition u/s 68 - unexplained cash credits in the form of share application money - addition of commission paid for taking accommodation entries - CIT(A) deleted addition - HELD THAT:- In the case of PCIT vs. Narang Construction and Finance Pvt. Ltd. [ 2018 (8) TMI 1552 - DELHI HIGH COURT] relied upon the judgment delivered by the Hon ble Supreme Court Lovely Exports [ 2008 (1) TMI 575 - SC ORDER] held at the relevant extracts have been reproduced in the order of the AO as well as the CIT(A) which disclosed that the share applicants were entering into proper commercial transactions and were not per se forged, bogus or sham investors. In the case Lovely Exports [ 2008 (1) TMI 575 - SC ORDER] as mentioned hereinabove, the Hon ble Supreme Court held that if the share application money is received by the assessee company from alleged bogus shareholders whose name is given to the Ld. AO then the Department is free to reopen individual assessment in accordance with law. After hearing both and bare perusal of the impugned order, CIT(A) rightly observed that the assessee / appellant company furnished all necessary documents to prove the genuineness of the transaction and creditworthiness of the investor s companies, we find material substance in the submissions advanced on behalf of the assessee / respondent. There is no any ground exists to interfere with the finding given by the Ld. CIT(A) and hence the appeal of the revenue liable to be dismissed, devoid of any substance. Appeal of revenue is hereby dismissed.

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• 2025 (3) TMI 1461
  Bogus LTCG - Addition of unexplained cash credit u/s 68 r/w sec 115BBE - HELD THAT:- AR correctly relied upon the judgment of Smt. Krishna Devi [ 2021 (1) TMI 1008 - DELHI HIGH COURT] in which held that if there was no dispute that shares of said companies were purchased by assessee online and payments were made through banking channel and shares were dematerialized and sales were routed from demat account and consideration was received through banking channels, then the Ld. AO could not make addition only on assumption and conjecture by treating impugned LTCG as bogus. Addition in question made without confronting any direct material / statement collected against the assessee. As during the assessment proceedings on being enquired, assessee / appellant duly submitted that shares were originally purchased in cash and were physically delivered on 28.04.2011, and then bonus share were also issued to the appellant and all of them were dematerialized in the demat account ledger, transaction account statement with the registered broker namely M/s Quest Securities Ltd. and copies of the bank statement etc. Perusal of abovementioned documents the legitimacy of the transaction is clearly proved and the Ld. AO only on the basis of some investigation report, made the aforesaid addition and it is relevant to mentioned here that the assessee has not been provided the copy of said investigation report. Thus, we find material substance in the submissions advanced on behalf of the assessee / appellant and have thoughtful consideration that addition in question deserves to the deleted by allowing the appeal. Assessee appeal allowed.

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• 2025 (3) TMI 1460
  Reassessment proceedings against non-existent company which is already amalgamated with another company - HELD THAT:- Notice u/s 148 of the Act, has been issued in the name of the non-existent company and it is established principle of law that assessment framed in the name of non-existent company based on an issuance of notice is of no consequence. As mentioned herein before, Hon ble Supreme Court in the case of PCIT vs. Maruti Suzuki India Pvt. Ltd. [ 2019 (7) TMI 1449 - SUPREME COURT] held that the amendment made in the name of Suzuki Power Train India Ltd. is in resulting since the entity has been amalgated with the Maruti Suzuki India Ltd. Revenue relied upon the case of Mahagun Realtors (P) Ltd. [ 2022 (4) TMI 347 - SUPREME COURT] does not apply in this case as amalgamation was complete and notice u/s 148 was issued and also that prior information regarding amalgamation was submitted before competent authority. Hence, assessment framed in the instant case in the name of non-existing camp, suffers from vice of jurisdictional effect and which cannot be cured. Decided in favour of assessee.

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• 2025 (3) TMI 1459
  Reopening of assessment u/s 147 - non complying with mandatory conditions u/s 147 to 151A - addition on account of infrastructure funds - HELD THAT:- As decided in favour of the assessee in assessee s own case for AY 2013-14 [ 2025 (3) TMI 1416 - ITAT DELHI] and for AY 2014-15 [ 2025 (3) TMI 1417 - ITAT DELHI] on comparison of both the charts it will be noted that besides the components of Infrastructure fund having been wrongly identified in the assessment order even the TOTALS of the columns were wrong. Only on this basis of this patent mistake the impugned assessment order needs to be set aside and the addition deleted. Addition on account of Infrastructure Fund AO has made the addition by a very cryptic and non-speaking order without mentioning anything about the issue involved, facts of the matter or any legal and accounting provision under which the same has been added. Appellant has tried to bring to my knowledge the inference drawn from the assessment order, pointing the para that might be relevant for the basis of this addition. A perusal of the para shows that AO has in fact calculated sum in every column, incorrectly. In fact if it is presumed that the table made by AO is correct then appellant has in fact credited more in P L Account and not less. Secondly even if it is to be held that the accretion to his fund namely Infrastructure fund received can be added to the income of the assessee then also the same shall be free of taxation because of the fact that appellant enjoys the exemption u/s 11 of the IT Act. Appeal of the assessee is allowed.

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• 2025 (3) TMI 1458
  TP Adjustment - comparable selection - HELD THAT:- As relying on Agnity India Technologies Pvt. Ltd. [ 2013 (7) TMI 696 - DELHI HIGH COURT ] M/s. Avaya India Pvt. Ltd. [ 2019 (7) TMI 1279 - DELHI HIGH COURT ] we direct to exclude the three companies Wipro Limited, Infosys Ltd. and Tata Elexi Limited. Addition relating to interest on outstanding receivables - HELD THAT:- Assessee has not filed any Balance Sheet or any financial statement to support its contention. We observed that whether there is a debt free entity, it is normal and logical to not collect the outstanding from its AEs. As per the trade practice, the terms of payment depend upon mutual agreement between the parties and it is also depend upon the market practice in this line of business. Since assessee has not submitted any agreement to submit the terms of payment already agreed between them. Therefore, we are inclined to permit this issue back to the file of AO/TPO to consider the industry practice in this line of business and in case there exists mutual agreement to show that the assessee has allowed to give terms of payment as per the agreement or determined the industry average in this line of business. If the terms of payment are average period holding of the debtors within the industry average or within the mutual terms of agreement, the same may be allowed. As far as interest rate is concerned, in our considered view, LIBOR plus 425 basis is on the higher side and may be determined upon the terms of payment agreed between parties, it can be proper if the rate of interest on the basis of LIBOR may be computed - Ground is allowed for statistical purposes.

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• 2025 (3) TMI 1457
  TP Adjustment - Comparable selection - whether the assessee is a software product company or provides contract software development services? - HELD THAT:- Infosys Ltd. - As having considered the functions performed, assets employed and risks assumed by both entities, we are of the considered view that being a contract software development service provider, the assessee cannot be compared with the company as giant in its operations as Infosys Ltd. Accordingly, we direct the TPO/AO to exclude Infosys Ltd while benchmarking the international transaction pertaining to Provision of Software Development Services . Persistent Systems Ltd be excluded while benchmarking the international transaction pertaining to Provision of Software Development Services in the absence of relevant segment information of Persistent System Ltd, which is comparable to the assessee s international transaction under consideration. Tata Elexi Ltd. (Segmental) is not functionally comparable to the assessee. Hence, we direct the TPO/AO to exclude Tata Elexi Ltd.(segmental) while benchmarking the international transaction pertaining to Provision of Software Development Services Bodhtree Consulting Ltd. company is earning revenue from various streams, therefore, in the absence of relevant segmental information, this company cannot be said to be functionally comparable to the assessee. Further, as regards the submission of the learned DR that the assessee is seeking exclusion of its own comparable, as noted in the foregoing paragraphs, there is no estoppel on the taxpayer from pointing out that a particular company has been wrongly taken as a comparable. Accordingly, we direct the TPO/AO to exclude Bodhtree Consulting Ltd. while benchmarking the international transaction pertaining to Provision of Software Development Services . TP Adjustment in relation to the international transaction of Provision of ITeS - Eclerx Services Ltd be excluded as not functionally comparable. Cosmic Global Ltd. be excluded while benchmarking the international transaction pertaining to Provision of ITeS . Accentia Technologies Ltd. develops its own software and renders medical transcription services, while the assessee, as noted in the foregoing paragraph, compiles data from various publicly available sources, which is used as an input by the associated enterprises in its various products and databases, which are created, maintained and owned by the associated enterprises. Thus, we direct the TPO/AO to exclude Accentia Technologies Ltd. while benchmarking the international transaction pertaining to Provision of ITeS . Infosys BPO Ltd be excluded as a comparable on the basis of its high brand value and consequent higher profitability. Denial of deduction claimed u/s 10A in respect of the UB Plaza Unit - Since the year under consideration is the 3rd year of claim of deduction u/s 10A of the Act by the assessee in respect of the UB Plaza Unit, which has been allowed by the coordinate bench in the first year of claim, in absence of any change in facts and law AO is directed to allow the deduction claimed u/s 10A of the Act in respect of the UB Plaza Unit in the year under consideration. As a result, Ground No.9, raised in the assessee appeal, is allowed. Denial of deduction claimed u/s 10A in respect of the Titanium STPI Unit - Since the year under consideration is the second year of the claim of deduction u/s 10A in respect of the Titanuim Unit, Bangalore, therefore respectfully following the decision of the coordinate bench cited supra, AO is directed to allow the deduction claimed by the assessee u/s 10A with respect to the Titanium Unit, Bangalore. Accordingly, Ground raised in assessee s appeal, is allowed. Denial of deduction claimed u/s 10A with respect to the unit acquired from Reuters India Pvt. Ltd.- HELD THAT:- The issue arising in the present appeal is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of the Tribunal. Accordingly, we direct the AO to allow the deduction claimed under section 10A of the Act with respect to the unit acquired from RIPL. Denial of the claim of depreciation on goodwill - whether the assessee is entitled to claim depreciation on goodwill which arose on account of merger/amalgamation, being the excess amount of consideration over the value of net assets of the entity acquired, came up for consideration before various Courts/Tribunals? - HELD THAT:- As in the present case, it is evident that neither the AO nor the learned DRP considered the details filed by the assessee, as one of the reasons for rejecting the assessee s claim was that the same was made by way of a letter instead of filing the revised return of income by placing reliance on the decision in Goetze India Limited [ 2006 (3) TMI 75 - SUPREME COURT] We further find that vide letter dated 25/06/2021, the Revenue requested for verification of factual details with respect to the claim of depreciation on goodwill. Therefore, we are of the considered view that this issue be restored to the file of the jurisdictional AO for de novo adjudication, in light of the decisions cited supra, after examining the details filed by the assessee. Since this issue is restored to the AO for consideration afresh, it is needless to mention that the AO can seek any other information from the assessee for complete adjudication of this issue and the assessee can also furnish any other documents in support of its claim. Exclusion of communication expenses and travel expenses from both export turnover as well as the total turnover while computing deduction u/s 10A - HELD THAT:- We find that this issue is now decided in favour of the taxpayer in CIT v/s HCL Technologies Ltd, [ 2018 (5) TMI 357 - SUPREME COURT ] Accordingly, respectfully following the aforesaid decision, we do not find any infirmity in the directions of the learned DRP in excluding the communication expenditure and travel expenditure from the total turnover also to the extent it was excluded from the export turnover. As a result, the impugned final assessment order on this issue is upheld and Grounds No. 2 and 3, raised in Revenue s appeal, are dismissed. Disallowance on software items u/s 40(a)(ia) - HELD THAT:- We find that the learned DRP while issuing the directions to the AO to delete the disallowance of depreciation on computer software made under section 40(a)(ia) of the Act, followed the aforesaid decision of the Hon ble Karnataka High Court in Tally Solutions Pvt. Ltd. [ 2020 (12) TMI 1160 - KARNATAKA HIGH COURT ] Thus, in the absence of any contradictory decision on this issue being placed on record, we do not find any infirmity in the directions issued by the learned DRP. As a result, the impugned final assessment order on this issue is upheld.

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• 2025 (3) TMI 1456
  Denial of TDS credit claimed in the return of income only on the basis that the same did not appear in the 26AS of the Appellant - assessee, who is the sole beneficiary of a trust, on the ground that the tax was deducted in the name of the trust and, consequently, was reflected in Form No. 26AS of the trust rather than in the Form No. 26AS of the assessee. HELD THAT:- It is the settled position that the Department grants credit for TDS only if the said amount appears in the Form No. 26AS of the relevant assessee. Since the TDS credit in the present case was not appearing in the Form No. 26AS of the assessee, the AO, relying strictly on procedural compliance, declined to grant such credit. Ideally, the assessee ought to have ensured that the deductor deducted tax in the hands of the assessee rather than in the name of the trust. However, the crux of the matter is that the Department has neither granted credit for the TDS in the hands of the trust nor in the hands of the assessee. As a result, the tax deducted at source continues to remain with the Government, while, at the same time, a demand has been raised against the assessee. This amounts to an inequitable situation, which cannot be countenanced in law. We note that the Ld. CIT(A) has already directed the Assessing Officer to verify the assessee s claim and grant TDS credit in accordance with the provisions of the Income-tax Act, 1961. If such credit has not been granted till the date of passing of this order, we hereby direct the AO to take necessary steps to address the request of both the assessee and the trust for the transfer of TDS credit from the Form No. 26AS of the trust to the Form No. 26AS of the assessee and, thereafter, to allow the credit in accordance with law. The grounds of appeal of the assessee are accordingly allowed for statistical purposes.

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• 2025 (3) TMI 1455
  Treatment to amount found in diary and surrendered by the director - HELD THAT:- As no exercise has been made by the Assessing Officer as to hold that the surrender made by the assessee was not proper. No explanation was offered by the assessee before the AO, but the same was made before the Ld. CIT (A), which was also considered by the CIT (A) and in the first round of the litigation same was partly accepted also, who too was partly satisfied with the explanation and sustained addition by giving relief to the tune of Rs. 1.16 crores. It was the claim of the assessee that the surrender made in the assessment year under consideration was a gross revenue figure and not the net undisclosed income and thus there is a scope for allowing expenditure incurred to earn the undisclosed gross revenue. Therefore, in our considered opinion a lump sum addition of Rs. 10 Lacs can be applied to cover all the possibilities of revenue leakage as well as to satisfy the claim of the assessee about the expenditure incurred. Once it is settled that the amount surrendered is a gross undisclosed income, there can t be a full amount addition and only the element of profit can be added into the same. Thus, addition to the extent of Rs. 10 Lacs out of Rs. 1.35 Cr. is sustained in addition to the income already disclosed voluntarily by the assessee. In these terms Ground No. 3 raised by the assessee is partly allowed. Method of accounting followed by the assessee - as categorically asked by the AO that by the assessee is not following percentage completion method. In response to this the assessee submitted that companies consistently following the completed contract method there was a discussion w.r.t. ICDS also as provided in section 145 of the Act - HELD THAT:- The facts of case are being governed by the accounting standard 9. It is further observed that the method of accounting adopted by the assessee is being followed consistently since in section and the same has been accepted by the revenue in past. In view of this on the one hand AS-7 is not applicable in the case of the assessee on the other hand as per AS-9 the assessee is consistently following the method and calculating its profits on project completion method this fact is not under challenged either by the revenue or by the assessee. It is also being to our notice that the assessee had already offered to tax the income earned from the Project Completion Method in subsequent A.Y 2016- 17 and A.Y 2017-18. In view of the above it is transpired that the transactions of the immovable property transfer are governed by the special provisions of the Transfer of Property Act, 1882 ( TPA for short) where under, every transfer of an immovable property requires compulsory registration under the provisions of the Registration Act, 1917 and the transfer is considered completed only when the entire consideration is received by the seller from the buyer and thereafter possession is handed over to him. Even the cases of part performance u/s. 53A of TPA, 1882 cannot be considered to be a complete transfer in the context of the present case. Further no title can be validly transferred to the buyer by merely entering into a Sale Agreement in as much as the Sale Agreement cannot confer any legal title of ownership to the proposed buyer. The buyer may make the payment and comply with the conditions of the Agreement or may not. There is no prohibition upon a buyer to complete the transaction. Pertinently, the so called binding Agreement does not provide for forfeiture of money and therefore the amounts have been refunded in full because of the right of the buyer to get the booking cancelled and also keeping in mind the commercial ground realities. In view of these peculiar facts circumstances therefore, it will not be logical and justifiable to recognize the revenue by a prudent businessmen until the transaction come to a conclusion by receiving of the entire payment. AO has not brought any special reason as to why he is taking a departure from the past settled history between the assessee and the Department in as much as all along in the past, the assessee declared the results (Net Profit) by consistently following the Project Completion Method only and the policy as stated above and accordingly the ROI was filled. In view of the above, the facts of the matter and the ratio as laid down in the case CIT v. Excel Industries Limited [ 2013 (10) TMI 324 - SUPREME COURT ] are similar. The facts discussed (supra) are not under challenge by either of the parties to the disputes and legal position goes in favour of the assessee.

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• 2025 (3) TMI 1454
  TP adjustment - corporate guarantee and letter of comfort provided by the appellant to its AEs - HELD THAT:- AR had brought to our notice that this Tribunal in their own case for AY 2013-14, by relying on the decision in the case of CIT v. Everest Kento Cylinders Ltd [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] had ascertained the ALP guarantee commission at 0.5%. Respectfully following the same, we direct the AO to adopt the guarantee commission @ 0.50% as against 2% and accordingly re-compute the transfer pricing adjustment. This ground therefore stands partly allowed. Brand promotion expenses incurred during the year was in the nature of international transaction and thereafter making TP adjustment - HELD THAT:- Hon ble Delhi High Court has held in the case of Maruti Suzuki Ltd [ 2015 (12) TMI 634 - DELHI HIGH COURT] that the Revenue needs to establish the existence of international transaction before undertaking benchmarking of AMP expenses. Hence, applying this ratio decidendi laid down in these judgments, we agree with the assessee that the approach of the TPO cannot be upheld. We note that the aforesaid judgments of Hon ble Delhi High Court (supra) had not been considered by this Tribunal in assessee s own case for AY 2011-12 Even the assessee has not brought on record all the relevant facts concerning the Indonesian AE, AMP expenses incurred by the latter and if not, then whether can it be said that the assessee had indeed incurred expenses on its behalf etc. Also, the nature of AMP expenses incurred by the assessee, reasons for such excessive AMP costs vis- -vis sales etc. have also not been explained before the TPO. Without these facts being brought on record, one cannot objectively ascertain and decide as to whether there exists any arrangement between the parties at all or not. For the aforesaid reasons and in fitness of the matters, we set aside the order passed by the AO on AMP expenses and restore the same to the file of AO/TPO for examining it afresh. TP adjustment on account of royalty - HELD THAT:- In this case, assessee following the mercantile system of accounting, there is no question of deferment of receipt of income since the assessee was in a position to create the document as the transaction with AE which cannot be appreciated. It is only afterthought so as to postpone the liability of taxation. Accordingly, we are of the opinion that lower authorities were justified treating the accrued royalty as income of assessee. Disallowance of u/s.14A read with Rule 8D - HELD THAT:- We note from the factual matrix discussed supra, that assessee had total own funds more than Rs 1121 crores and the total investment made only to the tune of Rs. 930 crores, therefore, the presumption in the cases of Reliance Utilities Power Ltd supra is clearly applicable and the Ld. DR could not demonstrate that this presumption is factually incorrect, therefore, the disallowance made under section 14A read with Rule 8D(2)(ii) of the Rules, was not warranted and is directed to be deleted. Coming to disallowance under Rule 8D(2)(iii), it is noted that in the case of ACIT v. Vireet Investment (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] has held that only the dividend yielding investments are to be considered in computation of disallowance under this Rule. Assessee also referred to the revised computation of disallowance in terms of Rule 8D(2)(iii) with reference to dividend yielding investments. Respectfully following the decision of Special Bench (supra), the AO is directed to verify the computation provided by the assessee and re-compute the disallowance under section 14A read with Rule 8D(2)(iii) accordingly. This ground is therefore partly allowed. Disallowance of export agency commission paid to non-residents u/s.40(a)(i) - HELD THAT:- We note that this issue has already come up before this Tribunal in the assessee s own case for earlier assessment year 2011-12, wherein, this Tribunal was pleased to allow the contentions of the assessee by relying on the decision of this Tribunal in AY 2008-09. It is noted that the Tribunal has relied on the decision in the case of CIT v. Faizan Shoes Pvt. Ltd. [ 2014 (8) TMI 170 - MADRAS HIGH COURT] wherein held opening of letters of credit for the purpose of completing the export obligation was an incident of export and, therefore, the non-resident agent was under an obligation to render such services to the assessee, for which commission was paid. The non-resident agent did not provide technical services for the purposes of running of the business of the assessee in India. Therefore, the commission paid to the non resident agents would not fall within the definition of fees for technical services and the assessee was not liable to deduct tax at source on payment of commission. Disallowance of loss on actual re- payment of External Commercial Borrowings ( ECB ) loan during the year - HELD THAT:- In the present case, the assessee is noted to have obtained ECBs for acquiring indigenous fixed assets. It had accordingly entered into forward contracts to hedge the foreign exchange fluctuation at the time of repayment of loan. For this, it had paid an upfront premium to the seller of the contract. Further, the assessee had also incurred foreign exchange loss at the time of repayment of such ECBs. The assessee is noted to have amortized the premium cost over the life of contract, which along with the loss incurred on repayment of foreign currency loan was claimed as deduction from business profits. The first claim in dispute before us relates to amortized portion of premium paid on foreign exchange forward contracts entered into by the assessee. These foreign exchange forward contracts were entered for the purposes of repayment of foreign exchange loan/external commercial borrowing taken by the assessee for acquiring indigenous fixed assets. We find that this identical issue had come up for consideration in the case of CLP Wind Farm (India) Ltd [ 2022 (9) TMI 299 - ITAT AHMEDABAD] wherein it was held that the premium paid on foreign exchange forward contracts entered into by assessee for purpose of repayment of loan was to be amortized as revenue expenditure over life of contract. Thus we direct the AO to allow the deduction for the amortized sum of forward premium claimed by way of hedging cost. Disallowance is the loss arising upon repayment of ECBs which were used for acquiring indigenous fixed assets in India - HELD THAT:- In the relevant FY 2011-12, the ICAI had modified Para 46A of AS-11 in December 2011, in terms of which the company now had an option to either debit such foreign exchange loss to the Profit Loss Account or capitalize the same to the cost of assets. The assessee, in the present case, chose the latter option. Merely because the assessee chose the latter option would not be determinative of the character of the cost. It is by now trite in law that, the entries whether the assessee is entitled to a particular deduction or not depends upon the provision of law relating thereto. The existence or absence of entries in the books of account be decisive or conclusive in the matter. As the reasoning given by the AO for making the impugned disallowance is found to be unjustified. Overall therefore, we hold that the impugned disallowance was untenable and is therefore directed to be deleted. This ground is allowed. Denying the claim of balance additional depreciation on the assets which were put to use in the earlier FY 2011- 12 - HELD THAT:- In this case, the intention of the legislation is absolutely clear, that the assessee shall be allowed certain additional benefit, which was restricted by the proviso to only half of the same being granted in one assessment year, if certain condition was not fulfilled. But, that, in our considered view, would not restrain the assessee from claiming the balance of the benefit in the subsequent assessment year. The Tribunal, in our view, has rightly held, that additional depreciation allowed under Section 32(1)(iia) of the Act is a one time benefit to encourage industrialization, and the provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting additional allowance. We are in full agreement with such observations made by the Tribunal. We direct the AO to delete the impugned disallowance and allow this ground of appeal.

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• Customs

• 2025 (3) TMI 1453
  Delay in adjudication of the SCN u/s 28 of the Customs Act, 1962 - denial of opportunity to respond to the merits of the SCN - violation of principles of natural justice - HELD THAT:- The Respondent has now obtained instructions and submits that the matter may be remanded to CESTAT. In the opinion of this Court, considering the fact that a provisional assessment was done and the Appellant has in fact deposited a sum of Rs. 2.80 crores, the Court is inclined to give the Appellant an opportunity to file a reply on merits. List before the CESTAT for further proceedings on 5th May, 2025. Petition disposed off.

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• PMLA

• 2025 (3) TMI 1452
  Seeking grant of regular bail - Money Laundering - scheduled/predicate offence - proceeds of crime - collecting commissions and supplying unaccounted liquor to government liquor shops - twin conditions under Section 45 of the PMLA, 2002, are satisfied or not - delay in trial proceedings - HELD THAT:- It appears that the applicant had actively participated in the commission of predicate offence; had acquired proceeds of crime and had substantial share in proceeds of unaccounted liquor cannot be ignored. The investigation against 11 persons including the applicant is complete and three prosecution complaints against 11 accused persons spanning to nearly 20,000 pages with over 30 witnesses and 250 documents have been filed by the investigating agency and the investigation is going on. Despite the alleged huge scam, prosecution complaint has been filed against 11 persons. Even as per allegations made in the complaint filed by the ED, role of other individuals have also been surfaced. + There is no attachment of property against accused persons being distillers despite quantifying the same at over 200 crores and no proceedings under Section 8 of the PC Act has been initiated against them. Though it is true that the applicant has suffered long period of incarceration and the trial has not yet commenced and is not likely to conclude but the right to bail in cases of delay, coupled with incarceration for a long period, depending on the nature of the allegations, should be read into Section 439 of the Code of Criminal Procedure and Section 45 of the PML Act. there is substantial material indicating a strong nexus between the applicant and the other accused persons in the commission of the crime. Records show that the grounds of arrest was communicated to the applicant by the ED in writing. Thus, without giving any observation as to whether the statement recorded under Section 50 of the PMLA are admissible in evidence, but their thorough consideration should be reserved for the trial court. It emphasized that at the bail stage, these statements can be examined to ascertain whether there are reasonable grounds to believe that the applicant is not guilty. There is a difference between the admissibility of a statement of an accused recorded under Section 50 of the Prevention of Money Laundering Act (PMLA) and its evidentiary value. It can be foreseen that while the High Court in the specific facts and circumstances (where there was prima facie material against the petitioner) came to the conclusion that mere possession of proceeds of crime and upholding such proceeds as untainted would be sufficient to invoke the provisions of PMLA, however, the ratio of the said judgment may have the potential to have an unintended fallout in a different set of facts. Depending on the facts of the case, such an interpretation may include persons who might have no genuine knowledge and connection with the predicate offence and/ or the tainted money circulated by the actual accused persons and may have to go through the rigours of trial for no fault - Mens rea is a critical ingredient for any criminal offence and therefore requires its presence in any action or consequence which arises out of or in relation to an offence. It is important that to prosecute someone for mere possession of purported proceeds of crime, there should be an equal burden on the prosecution to prove at least a prima facie link to the proceeds of crime as defined under the Act. Money laundering is understood to encompass a scenario in which an individual commits an offense outlined in the PMLA schedule, leading to the generation of property. This property subsequently qualifies as the proceeds of the crime. Furthermore, the individual engaged in activities such as concealment, possession, or utilization of said proceeds of crime, shall be deemed to have committed the offense of money laundering - the quantification of the Proceeds of Crime involves a multifaceted approach. It begins with the identification of initial assets stemming from criminal activity, subsequently encompassing any assets obtained through these initial proceeds. Conclusion - It is thus held that in the investigation conducted during the predicate offence, the applicant being the orchestrator of the entire liquor scam in the State of CG, was involved in money laundering and proceeds of crime along with other co-accused therefore, the entitlement of the applicant to get bail under PMLA, 2002, is not acceptable and considering the entirety of the matter, this Court is of the opinion that the applicant is unable to satisfy twin conditions for grant of bail under Section 45 of the PMLA, 2002, as such, it is not a fit case for grant of bail to the applicant for the reasons. The prayer for bail made by the applicant under Section 483 of the Bhartiya Nagrik Suraksha Sanhita, 2023 (BNSS) read with Section 45 of the PMLA, for the alleged offence punishable under Sections 3 4 of the PMLA, 2002 is hereby rejected.

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• Service Tax

• 2025 (3) TMI 1451
  Liability of appellants to pay service tax under the reverse charge mechanism on the services rendered outside India by service provider situated abroad - HELD THAT:- The issue is no more res integra as this Tribunal had on the same issue involving the same Appellant for earlier periods, in M/S. SUNDARAM INDUSTRIES LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE, MADURAI [ 2023 (6) TMI 591 - CESTAT CHENNAI] decided the issue in favor of the Appellant. Conclusion - The appellant is not liable for the service tax demand, as the services are performed outside India and fall under the exclusion provided by Rule 3(ii). Appeal allowed.

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• 2025 (3) TMI 1450
  Scope of service and declared service - whether the supply of food and beverages in the cinema complex falls within the definition of service and declared service in terms of Section 65B(44) and Section 66E of the Finance Act, 1994? - HELD THAT:- The issue is no longer res integra and has been decided in the case of the appellant themselves in the case of M/s. PVR Limited, Shri Nitin Sood, Shri Ajay Bijli and Shri Brijesh Arora Vs. CST, New Delhi [ 2023 (12) TMI 81 - CESTAT NEW DELHI ] holding that the supply of food and beverages in the cinema hall does not involve any service element and is merely transaction of sale. The period involved in the said order was from 2013-2014 to 2015 and the present appeal involves the subsequent period from 2015-16 to June, 2017. The facts and the issue being same, the present appeal is squarely covered by the aforesaid decision of this Bench. Conclusion - The sale of food and beverages in cinema complexes, when limited to pre-packaged or reheated items without additional service elements, is not a service under the Finance Act. There is no reason to differ with the aforesaid order - Appeal allowed.

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• Central Excise

• 2025 (3) TMI 1449
  Entitlement to exemption under N/N. 12/2012-CE for goods supplied against International Competitive Bidding (ICB) and to Mega Power Projects - reversal of an amount equal to 6% of the value of exempted goods under Rule 6 of the Cenvat Credit Rules, 2004 - HELD THAT:- In the instant case, there is no dispute that the goods have been supplied against International Competitive Bidding. Therefore, it is prudent to examine if these goods, when imported in India, are exempt from duties of customs and the additional duty leviable under sub-Section 1 of Section 3 of the Custom Tariff Act, 1975. It is not in dispute that the goods have been supplied by the appellant to Mega Power Project(s) as certified by the Joint Sectary to the Government of India in the Ministry of Power. We find that the lower authority have ruled that the Electrical Power Cables are not covered under Chapter Heading 98.01 of the Customs Tariff Act, hence, these are not exempt from basic Customs Duty as well as Additional Customs Duty. This reasoning seems incorrect as the Central Excise Tariff Act does not have any corresponding Tariff entry as it exists in Customs Tariff Act, 1985. This issue has already been decided by the Tribunal in the case of Cords Cable Industries Pvt. Ltd. Vs. Commissioner of C. Ex., Jaipur-I [ 2016 (9) TMI 1126 - CESTAT NEW DELHI] , wherein it was held that electrical wires, cables supplied to Mega Power Projects are fully exempt under the corresponding Central Excise Notification read with Customs Notification. However, Condition No. 93 to the Notification No. 12/2012-CUS dated 17.03.2012, also prescribes certain requirements to be fulfilled, for availment of the exemption from Customs Duty as well as Additional Customs Duty. These conditions are factual in nature as to whether Power Purchasing State has constituted the Regulatory Commission with full powers to fix Tariffs and whether the Power Purchasing States have undertaken to carry out distribution reforms as laid down by the Ministry of Power. It also needs to be seen whether procurement Certificates have been issued by the designated Authorities as per Sr. No. (b) and (c) of the Condition No. 93. The documents submitted along with appeal, do not contain all the relevant details which are to be seen in the matter. It is fit to remand the matter to the adjudicating authority to see fulfilment of Condition No. 93 of Notification No. 12/2012-CUS dated 17.03.2012. If these Conditions are satisfied, then the appellant will not be required to reverse an amount as demanded by the department. The Bench directs the Appellant to produce relevant documents/Certificates in respect of supplies involved in the case before the adjudicating authority within one month for determining whether the Condition No. 93 of the said Customs Notification is satisfied in the case. The adjudicating authority also directed to decide the issue within 3 months from the date of production of above documents, as the matter is quite old. The appeals are disposed off by way of remand to the adjudicating authority.

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• 2025 (3) TMI 1448
  Cenvat Credit on the Goods Transport Service (GTS) for outward transportation of cement from the depot to the buyer s premises on a FOR (Free on Road) basis - Extended period of limitation - HELD THAT:- It is not in dispute in this present appeal that wherever the sale has been on FOR basis, as evidenced from record, the credits have allowed and it has not been disputed by the Department any further. However, in the case of Rs. 3,44,228/-, the appellant could not produce sufficient documents to satisfy the Adjudicating Authority that the ex-depot sales were also in the nature of FOR or that they were essentially FOR sale. The documents being cited as evidence before this Bench to prove that sales were on FOR basis pertains to the month of April as pointed by the Learned AR and that also is not very categorical as to whether the sale was on FOR basis or otherwise. There is no other corroborative evidence that it is on FOR basis. The Adjudicating Authority has gone through various case laws as well as evidence adduced by the appellant at para 22 and observed that the documents furnished by the assessee related to the clearance of final products directly through the factory to the buyers premises and that they have not produced any documents / information evidencing (i) the sale from Depot/Premises of Consignment Agent to the customer s premises was on FOR destination basis, (ii) transfer of property at buyer s premises and (iii) inclusion of the freight charges in the assessable value and payment of Excise duty on the said freight charges. Therefore, essentially, the Adjudicating Authority has held that the Assessee had clearly failed to determine place of removal with reference to the points of sale and therefore the credit taken at outward freight on transportation of finished goods were clearly beyond the place of removal in relation to sale ex-depot. Extended period of limitation - HELD THAT:- The show cause notice has not adduced any substantive ground to invoke the ingredients required for invoking the extended period. Conclusion - While on merit the demand is sustainable in the impugned order as the appellant have clearly failed to bring on record the evidence substantiating that sales were on FOR basis even in the case of ex-depot, however, as far as invocation of extended period is concerned, that it is not sustainable. Therefore, while on merit it is upheld, but on limitation, the demand is not sustained. Since, the entire demand is barred by limitation, the appeal to the extent of setting aside the demand and penalty by Adjudicating Authority is set aside on this count itself. Appeal allowed.

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• 2025 (3) TMI 1447
  Denial of utilization of CENVAT Credit for payment of duty during the defaulted period in terms of Rule 8(3A) of Central Excise Rules, 2002 - levy of interest and penalty - HELD THAT:- Hon ble High Court in [ 2024 (7) TMI 814 - CALCUTTA HIGH ] has held that matter should be kept pending and is to be taken only after the Special Leave to Appeal No. 16523/2015 is decided by the Hon ble Apex Court. However, during the course of hearing, it has been brought to the knowledge of the Bench that the Hon ble Supreme Court has already disposed of the matter and the Department has already withdrawn the appeal. The issue in the case of Indsur Global Ltd. has already been decided by the Hon ble Supreme Court. In these circumstances, it is found that the issue is presently not pending before the Hon ble Supreme Court. Thus, in our view, there is no bar in taking up the issue for a decision based on the available documents. Considering the fact that the provisions of Rule 8(3A) of Central Excise Rules, 2002 have been declared ultra vires by the Hon ble Gujarat High Court in the case of Indsur Global Ltd. and also by the Hon ble Punjab and Haryana High Court in the case of Sandley Industries [ 2015 (10) TMI 2455 - PUNJAB HARYANA HIGH COURT ], the CENVAT Credit cannot be denied to the appellant for utilization in payment of duty during the defaulted period. Thus, there is no infirmity in utilization of CENVAT Credit for payment of duty during the defaulted period. Conclusion - Since the denial of utilisation of CENVAT Credit by invoking Rule 8(3A) of the Central Excise Rules, 2002 has been declared ultra vires by Courts, utilisation of CENVAT Credit during the impugned period by the appellant was not irregular. Accordingly, no amount can be demanded from the appellants either for using the CENVAT accruals of subsequent months or for using the CENVAT account for payment of duty during the said period for the alleged contravention of Rule 8(3A) of the Central Excise Rules, 2002. The demand confirmed in the impugned order by denying the payment made by the appellant through CENVAT Credit is not sustainable and accordingly, the same is set aside - Since the demand raised against the appellant does not survive, the question of demanding interest or imposing penalty does not arise. Appeal allowed.

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• CST, VAT & Sales Tax

• 2025 (3) TMI 1446
  Levy of composition rate of tax on construction contract - covered by Part B of the Notification dated 30th February 2006 or not - whether the contract entered into by the Respondent herein with M/s. Sahara Hospitality Ltd was a works contract which fell within the Notification dated 30th November 2006? - HELD THAT:- The MSTT, after carefully going through and analyzing the context of the documents available before it, came to the conclusion that the works contract executed by the Respondent, was basically air conditioning work in a centralized Air Conditioned building mostly inside the building. All the wiring, cabling had to be concealed. It had to be done along with civil work, if a new building was being constructed, or if the work was being given along with other repairs and maintenance of the building. Finally, the said work had to be completed before finishing, plastering and civil work of the building. In a nutshell, the MSTT came to the conclusion that the work was basically going hand in hand with the civil work and the completion of the civil work was dependent on the completion of the air conditioning work. It is on this basis that the Tribunal came to the conclusion that the works carried out by the Respondent (the Appellant before the MSTT) had a direct nexus with the ongoing construction work of M/s. Sahara Hospitality Ltd, and therefore, the contract entered into by the Respondent with M/s. Sahara Hospitality Ltd was squarely covered under the Notification dated 30th November 2006. The Tribunal, being the last fact finding authority, has come to the conclusion that the work carried out by the Respondent was going on hand in hand with the civil work of M/s. Sahara Hospitality Ltd and completion of civil work was dependent on the completion of the air conditioning work. Once this is the case, the order of the MSTT in so far as it relates to applying the Notification dated 30th November 2006 to the works contract executed by the Respondent with M/s. Sahara Hospitality Ltd does not give rise to any substantial question of law. Even as far as the penalty is concerned and which was deleted by the impugned order, is correctly done so because if the principal challenge succeeds there is no question of any penalty being levied on the Respondent. Conclusion - Works contracts ancillary to building construction, executed before completion, fall within the Notification s scope, qualifying for a reduced tax rate. Service tax is excluded from the total contract value under the MVAT Act. Appeal dismissed.

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• Indian Laws

• 2025 (3) TMI 1445
  Dishonour of Cheque - legally recoverable debt or not - grant of leave to appeal against the acquittal of accused. Leave to Appeal Against Accused No. 4, Sumit. Provisions for grant of leave - HELD THAT:- When there is judgment of acquittal, Court should be slow in interfering. Because presumption of innocence is reinforced. When the acquittal judgment is challenged on certain grounds, substance of those grounds is to be tested. However, standard of inquiry (expected for testing those grounds) to be carried out at the stage of grant of leave and that inquiry carried out while deciding the appeal, finally differs. Same standard of inquiry cannot be carried out at the stage of grant of leave. Meaning of the phrase in charge of and responsible to the company for conduct of business of the company - HELD THAT:- There are certain other Acts which holds Company responsible or guilty. The list of few of the Acts given in para no. 19 of the said judgment. Such as the Prevention of Food Adulteration Act, the Drugs and Cosmetics Act, the Employees Provident Fund Act, Payment of Gratuity Act and so on. But for understanding the meaning of the phrase, we have to bank on the provisions of Companies Act. There is reference of the provisions of Sections 5, 291 and few of the definition clauses in the Companies Act. The list of such persons is also enumerated therein. The Managing Director is such kind of post which falls in that category. Necessary averment in the complaint - HELD THAT:- Mere bald statement is not sufficient. One cannot presume every director is supposed to know about the transaction. However, category of Managing Director, Joint Managing Director or a director who has signed the cheque stands excluded. They will certainly liable and there need not be specific pleading in charge of and responsible in the complaint. In Gunmala Sales Private Ltd. [ 2014 (12) TMI 1116 - SUPREME COURT ], this principle is further elaborated. Any particular director may produce incontrovertible or unimpeachable evidence to show his disconnection to the transaction. The High Court can quash such proceeding. That is why there is further necessity of pleading necessary averment with particular details - The complainant is supposed to know only generally as to who were in charge of the affairs of the company. Other administrative matters would be within the special knowledge of the company. When it can be said there is consent, connivance or neglect - HELD THAT:- In present case, the evidence is already adduced. Every party has opened his cards. The principles are still applicable. But evidence has to be seen. Evidence - HELD THAT:- Mere averments are not sufficient. It needs to be substantiated. There will be onus on the accused, only when the complainant will discharge initial burden. It is for the complainant to prove, accused no. 4 was involved in the transaction in either of the capacity. The Accused no. 4 is described as Vice President of Finance and Taxation. The correspondence which is referred above was in between the accused no. 4 and Morries. This correspondence relates to the previous cheques and not to the present 16 cheques. On the basis of that correspondence, it can certainly be said that accused no. 4 is aware about some transaction. But this is not enough, to hold him vicariously liable. Something more is required. The Complainant ought to have adduced certain evidence to show his complicity in the manner laid down under Sections 141 (1) and 141 (2) of the Negotiable Instruments Act. The learned Additional District Judge has correctly appreciated the evidence, and he rightly acquitted the accused no. 4. So, no case for grant of leave is made out. This is such type of acts, wherein the detailed scrutiny is not required. But at the threshold, we can decide the issue of vicarious liability. Leave to Appeal Against Accused No. 2, Anubhav It is true there are no documents showing incurring of expenses by Morries on account of professional expenses to advocates and other expenses (except debit note), but it is matter of record that rate of interest is subsequently enhanced by Debt Recovery Tribunal. It is very well true the evidence has to be appreciated on the basis of the documents produced and also on the basis of documents which could have been produced but not produced. The learned Appellate Judge has given more stress on the documents which are neither mentioned nor produced. The cross-examination of the witness also needs to be considered. It is admitted fact that accused has not given any evidence. This Court is required to ascertain the correctness of the findings by the Appellate Court while acquitting the accused no. 2. It needs to be seen whether the findings on the point non proof of the liability is correct or not. The documents which are already on record are to be given weightage or documents which are not produced are to be given weightage. This has to be considered in totality of the evidence on the basis of the cross-examination. No doubt the Complainant by examining the Chartered Account has offered an explanation for not showing the amount in income tax returns. It is also true that Constitutional Courts have opined in certain judgments that reflecting the amount in income tax returns has got different connotation and it cannot be the factor to disbelieve the claim of the Complainant. Conclusion - The evidence against Anubhav warranted further examination, while the evidence against Sumit did not justify granting leave to appeal. Leave to prefer an appeal is refused against the accused no. 4-Sumit - Leave to prefer an appeal against accused no. 2-Anubhav is granted - appeal admitted.

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• 2025 (3) TMI 1444
  Challenge to order from the Judicial Magistrate No. 2, North, Kota, which refused to convert a non-bailable warrant into a bailable warrant - HELD THAT:- Taking into consideration the totality of the facts and circumstances of the case and the limited prayer made on behalf of the accused petitioner so also the observations made by the Coordinate Bench of this Court and the Apex Court in the orders referred, the present criminal misc. petition is disposed of. The non-bailable warrant dated 07.12.2004 issued against the accused petitioner is converted into bailable warrant and the petitioner is directed to appear before the Court below within a period of 15 days from the date of passing of this order. Application disposed off.

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