TMI Tax Updates - e-Newsletter
March 31, 2025

Case Laws in this Newsletter:

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

TMI Short Notes

1. The chargeability of income in the context of the transfer of assets with Exception in Clause 97 of Income Tax Bill, 2025 vs. section 61 & 62 of Income-tax Act, 1961

  Bill:

2. Prevention of tax avoidance strategies "transfer of income without a corresponding transfer of the asset" in Clause 96 of the Income Tax Bill, 2025 Vs. Section 60 of the Income-tax Act, 1961

  Bill:

Articles

1. Why More Taxpayers Are Getting ITR Notices in 2025 & How to Avoid Scrutiny

   By: Nanne Parmar

2. INFORMATION RETURN UNDER GST LAW

   By: Dr. Sanjiv Agarwal

3. Arbitrary Cancellation of GST Registration across India

   By: K Balasubramanian

4. Input Service Distributor Registration applicable w.e.f. 1st April 2025

   By: Lokesh Aggarwal

5. Need for reforms in External Affairs Ministry

   By: Subbiah Sridhar

6. Due Dates and Late Fees for OPC Annual Return Filing

   By: Ishita Ramani

7. PROVISIONAL ATTACHMENT UNDER PROHIBITION OF BENAMI TRANSACTIONS ACT, 1988

   By: DR.MARIAPPAN GOVINDARAJAN

8. Digital Contracts/Agreements: Evolution and Enforceability of E-Contracts in Indian Contract Law Context

   By: YAGAY andSUN

9. Import of Cosmetics into India: Role of Customs Department and Customs Laws.[Part 2 of 2]

   By: YAGAY andSUN

10. Import of Cosmetics into India: Role of CDSCO, Drugs and Cosmetics Act, and Legal Metrology Laws.(Part -1 of 2)

   By: YAGAY andSUN

11. India's Defence self-reliant from Net Importer to emerging exporter.

   By: YAGAY andSUN

12. Dhokra Art – Let’s Buy it to Support our Tribal Artisans[Vocal for Local][One District One Product]

   By: YAGAY andSUN

13. ChannaPatna Toys - Let's Buy it to Support our Arcticians.[Vocal for Local]{One District One Product}

   By: YAGAY andSUN

14. Tackling of Embedded Subsidies in International Trade - SCM Agreement in Context with USA, UK, EU, China, and India.

   By: YAGAY andSUN

15. REACH (Registration, Evaluation, Authorization, and Restriction of Chemicals).

   By: YAGAY andSUN

News

1. Two held near UP-Uttarakhand border for collecting money by showing fake GST bills to truck drivers

2. SGPC passes Rs 1,386 crore budget

3. Six bills passed on the last day of the Haryana Vidhan Sabha budget session

4. Trump endorses budget fix that would restore Washington, DC, shortfall, urges House to pass it

5. Rs 35k of MMRDA's Rs 40k budget, or 87 pc, to be spent on infra works: Dy CM Shinde

6. Sikkim Assembly passes Rs 16,196 crore budget for 2025-26

7. MMRDA presents Rs 40k cr budget for FY26, deficit at Rs 3,249 cr

8. Tripura allocated substantial portion of budget for tribal welfare, says CM

9. Haryana: ED attaches mall shops in environment pollution-linked PMLA case

10. ADB-Funded SMILE Program to Boost India's Logistics Efficiency, Cut Costs, and Strengthen Multimodal Infrastructure

11. Auction for Sale (re-issue) of (i) ‘6.64% GS 2027’ and (ii) ‘6.79% GS 2034’

12. Governor sends Karnataka Tax Bill for President's assent

13. Rajasthan: Two officers of Commercial Tax Department in Churu held for taking Rs 1 lakh bribe

Notifications

Customs

1. 22/2025 - dated 28-3-2025 - Cus

Seeks to amend Notification No. 25/2021-Customs, dated the 31st March, 2021 - Amends India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA)

2. 21/2025 - dated 28-3-2025 - Cus

Seeks to amend Notification No. 22/2022-Customs, dated the 30th April, 2022 - Amends first tranche of India UAE CEPA

3. 20/2025 - dated 28-3-2025 - Cus (NT)

Sea Cargo Manifest and Transshipment (Second Amendment) Regulations, 2025

4. 19/2025 - dated 28-3-2025 - Cus (NT)

Appointment of Common Adjudicating Authority

5. 18/2025 - dated 28-3-2025 - Cus (NT)

Postal Imports Regulations, 2025

6. 17/2025 - dated 28-3-2025 - Cus (NT)

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

Income Tax

7. 24/2025 - dated 28-3-2025 - IT

Exemption from specified income U/s 10(46) of IT Act 1961 - 'Karnataka Urban Water Supply & Drainage Board, Bangalore'

8. 23/2025 - dated 28-3-2025 - IT

Income-tax (Eighth Amendment) Rules, 2025 - Tax Audit Report - Amends 3CD Statement of particulars required to be furnished under Section 44AB

Circulars / Instructions / Orders

Income Tax

1. 05/2025 - dated 28-3-2025

Order under section 119 of the Income-tax Act, 1961 for waiver on levy of interest under section 201(1A)(ii)/206C(7) of the Act, as the case maybe, in specific cases

Customs

2. 09/2025 - dated 28-3-2025

Procedure for import/export through Personal Carriage

3. 10/2025 - dated 28-3-2025

Implementation of the Sea Cargo Manifest and Transhipment Regulations (SCMTR)

Highlights / Catch Notes

GST

• CGST Rules Amended: Rule 164 Changes Affect Tax Payment, Refund Process, and Appeal Withdrawal Options

  Notifications : The Central Government amended the CGST Rules, 2017 through Notification No. 11/2025-Central Tax dated March 27, 2025. The amendments modify Rule 164 regarding tax payments and refunds. Key changes include: (1) clarification that no refund shall be available for tax, interest, and penalties already discharged prior to these amendments where notices include demands partially within and partially outside specified periods; (2) introduction of a procedure allowing appellants to partially pursue appeals by intimating appellate authorities they do not wish to pursue appeals for specific periods (July 1, 2017 to March 31, 2020). Such intimations will be deemed as partial withdrawal of appeals. The amendments took effect upon official publication.
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• CBIC Clarifies Section 128A Waiver Eligibility for Pre-November Payments and Split Period Demands

  Circulars : The CBIC clarifies two key issues regarding Section 128A of CGST Act, which provides waiver of interest/penalty for demands under Section 73 for July 2017-March 2020 period. First, taxpayers who made payments through GSTR-3B before November 1, 2024 (when Section 128A came into force) are eligible for the benefit, though payments after this date must follow prescribed modes under Rule 164. Second, for notices/orders covering periods partially within and partially outside Section 128A's scope, taxpayers can file Form SPL-01 or SPL-02 after paying tax liability for the covered period only, and may inform the appellate authority of their intent not to pursue appeals for the 2017-20 period while continuing litigation for other periods.
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• Transfer of Development Rights Constitutes Consideration for Developer with GST Liability at Property Transfer

  Case-Laws - AAAR : The AAAR dismissed the appellant's appeal, upholding the original ruling. The Authority determined it lacked jurisdiction to decide on taxability under Finance Act, 1994 (service tax), as the appellant sought ruling on pre-GST TDR transactions. The AAAR also declined to consider new grounds introduced in appeal that weren't raised before the original authority, citing precedent from Commissioner of Cust & C Ex, Goa vs Dempo Engineering Works Ltd. The ruling confirmed that transfer of development rights constitutes receipt of consideration by the developer, and GST liability arises at the time of transfer of possession or rights in the constructed property, not when development rights are received. The appeal was dismissed accordingly.
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• GST Fraud Mastermind Denied Bail Under Sections 132(1) of CGST Act for Rs. 59 Crore Tax Evasion Scheme

  Case-Laws - DSC : The DSC dismissed the first regular bail application of the accused under Sections 132(1)(b), 132(1)(c), and 132(1)(i) of CGST Act, 2017. The accused was identified as the mastermind in defrauding the government exchequer by creating and operating multiple firms, issuing fake tax invoices for Copper Scrap without actual supply of goods, and fraudulently availing Input Tax Credit. The court determined this constituted a grave economic offense with GST evasion amounting to Rs. 59,00,98,178/-. Considering the gravity of the offense, ongoing investigation, risk of evidence tampering, potential witness influence, and flight risk, the court found it inappropriate to grant bail at this stage.
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Income Tax

• Inherited Agricultural Land: LTCG Calculation with Rs. 150/sq. yard Base Rate and Section 54F Deduction Allowed

  Case-Laws - AT : In a case concerning LTCG on sale of inherited agricultural land, the ITAT determined that the appropriate cost of acquisition as on 01.04.1981 should be Rs. 150 per sq. yard, calculated by applying a 57% increase to the 1962 value of Rs. 85. The AO was directed to recalculate the indexed cost accordingly. Regarding deduction u/s 54F, the Tribunal allowed the assessee's claim for property purchased in his widowed mother's name, noting the peculiar inheritance circumstances. The Tribunal recognized that under Hindu Succession Act principles, apportioning the sale consideration would result in tax neutrality since the mother's portion was invested in property qualifying for deduction u/s 54F. The assessee's appeal was partly allowed.
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• Transfer Pricing Adjustments for Power Supply and Steam Rejected; Section 80G Deduction Denied for CSR Contributions

  Case-Laws - AT : The ITAT allowed the assessee's appeal regarding transfer pricing adjustments for power supply, ruling that the assessee's method for determining arm's length price was correct and the AO's adjustments were inconsistent with Income Tax Act provisions. Similarly, on steam transfer pricing, the Tribunal rejected the AO's Cost-Plus Method approach, finding it inconsistent with case facts and noting the AO erroneously reduced losses already considered by the assessee. The Tribunal disallowed the assessee's claim for deduction under section 80G for CSR contributions, holding that allowing such deductions would defeat the fundamental purpose of CSR expenditure. However, regarding deemed income under section 41(1), the ITAT allowed the appeal, finding that disallowance would constitute double taxation as the assessee had already deducted the amount in the subsequent year's return.
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• Tax Return Invalidated By AI Order For Missing Audit Report Under Section 44AB Despite Receipts Below Threshold

  Case-Laws - HC : The HC declined to entertain a petition challenging an AI-generated order that declared the petitioner's tax return invalid for non-filing of an audit report under Section 44AB. The court criticized the impugned order as a "nonspeaking order" that violated principles of natural justice by failing to provide minimal reasoning for rejecting the petitioner's claim that its gross receipts (Rs. 6.15 crores) were below the threshold requiring audit (Rs. 10 crores). While acknowledging the efficiency of automated systems, the HC emphasized that AI cannot supersede fundamental principles of natural justice. Nevertheless, the court directed the petitioner to pursue the alternate statutory remedy of revision under Section 264 of the Income Tax Act rather than exercising extraordinary jurisdiction.
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• Reopening Assessment Under Section 147 Quashed: Tax Authorities Failed to Examine Records Before Recording Reasons

  Case-Laws - HC : The HC quashed the reopening of assessment under section 147, finding that the tax authorities recorded reasons without examining the assessee's records or addressing objections. Regarding wage revision provisions under section 115JB, the Court noted that CIT(A) had already deleted this addition with the AO's concurrence before reopening was initiated. On interest on non-performing investments, the Court held that banking companies are governed by Banking Regulation Act, not Schedule III of Companies Act, 2013. Concerning deductions under section 36(1)(viia), the Court found this issue was previously examined during original assessment proceedings. The Court concluded the reopening constituted an impermissible review based on change of opinion, and the order disposing of objections lacked proper reasoning.
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• Time Limit for Reopening Assessments Under Section 153C Must Be Calculated From End of Assessment Year When Notice Issued

  Case-Laws - HC : The HC held that the period of limitation for reopening assessments under Section 153C read with Section 153A must be calculated from the end of the assessment year relevant to the financial year in which the reopening action was initiated (i.e., when the Section 148 notice was issued). Since the assessment year in question (AY 2014-15) fell beyond the ten-year limitation period contemplated in these provisions, the Court allowed the petition and set aside the impugned notice as time-barred. This ruling clarifies how the block period for reopening assessments should be determined when applying limitation provisions.
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• Rough slip cannot constitute valid property agreement for tax purposes; addition based on conjectures set aside

  Case-Laws - AT : The ITAT allowed the appellant's appeal against additions made by the AO regarding an alleged unexplained investment in a Sagar Plaza flat. The Tribunal found that the "kachi parchi" (rough slip) relied upon by tax authorities could not be treated as a valid agreement to sell immovable property as it lacked essential legal requirements - no signatures of parties or witnesses, no mention of the appellant's name, and was not proven to be in the appellant's handwriting. The ITAT held that both lower authorities erroneously ignored basic legal principles regarding valid property agreements, and the addition was made merely on surmises and conjectures, rendering it legally unsustainable.
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• Tax Tribunal Allows Assessee's Appeal on Intra-Group Services, Fixed Asset Mark-ups, and Royalty Payments Under Transfer Pricing Rules

  Case-Laws - AT : ITAT dismissed grounds 1 and 2 regarding validity of assessment order, relying on Aztec Software precedent. The Tribunal allowed ground 3 concerning Intra Group Services, following a coordinate Bench decision in assessee's own case for AY 2010-11, as Revenue failed to demonstrate distinguishing features in the current assessment year. Similarly, ground 4 regarding disallowance of mark-up charged by AEs on fixed asset purchases was allowed, directing deletion of the ALP adjustment. Regarding royalty payments, ITAT rejected Revenue's appeal, citing EKL Appliances which negated the need-benefit test, and Magneti Marelli Powertrain which established that TPO cannot segregate transactions already aggregated and benchmarked under TNMM to reduce their ALP to nil under CUP method.
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• Well Engineering Services for Mineral Oil Exploration Taxable Under Section 44BB, Not as FTS Under Section 115A

  Case-Laws - AT : The ITAT allowed the assessee's appeal, ruling that services related to well engineering and other activities in connection with mineral oil exploration fall under the presumptive taxation scheme of section 44BB rather than being taxed as Fee for Technical Services (FTS) under section 115A. The Tribunal clarified that s.44BB constitutes a special provision for computing profits and gains in mineral oil exploration businesses. Relying on the ONGC Ltd Supreme Court decision (2015) and CBDT Circular No. 1862 (22.10.1990), the ITAT held that the lower authorities erred in rejecting the assessee's claim for assessment under section 44BB. The presumptive taxation scheme was deemed applicable to the assessee's activities.
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• Assessee Entitled to Foreign Tax Credit for US State Taxes Under Section 91 Despite India-USA DTAA

  Case-Laws - AT : The ITAT allowed the assessee's appeal regarding foreign tax credit for state taxes paid in the United States under Section 91, despite the existence of an India-USA DTAA. The Tribunal rejected Revenue's contentions, noting that the issue was no longer res integra following the Karnataka HC decision in Wipro Ltd., which established that both federal and state taxes stand on equal footing for foreign tax credit claims. Although Revenue cited a contrary ITAT Delhi ruling in Manpreet Singh Gambhir, the Tribunal held that judicial discipline required following the higher judicial forum's decision. The AO was directed to compute the consequential relief accordingly.
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• Transfer Pricing Adjustments: Comparable Selection Criteria and Foreign Exchange Gains Treated as Operating Income

  Case-Laws - AT : ITAT ruled on several transfer pricing adjustments in the comparable selection process. The Tribunal excluded Cosmic Global for failing the 75% export sales filter and Eclerx Services due to functional dissimilarity. TCS e-Serve was directed to be included as functionally comparable. The Tribunal allowed foreign exchange gains to be treated as operating income, finding them directly related to the assessee's ITES services to AEs. The AO/TPO was directed to examine and consider correct working capital adjusted margins of Interglobe. ICRA Online was retained as a suitable comparable with 87% export earnings. Motif India Infotech was also directed to be included in the comparable set for TP analysis.
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• Interest on Enhanced Land Acquisition Compensation Taxable Under Section 56(2)(viii), Not Exempt Under Section 10(37)

  Case-Laws - AT : ITAT upheld the PCIT's revision under section 263, confirming that interest received on enhanced compensation under section 28 of the Land Acquisition Act is taxable under section 56(2)(viii) read with section 145B(1) as "income from other sources," not exempt under section 10(37). The AO's order was deemed erroneous and prejudicial to revenue as it failed to follow binding precedents established in Mahender Pal Narang and Puneet Singh decisions. The Tribunal confirmed that section 10(37) applies only to compensation, not interest on compensation, and that the PCIT correctly directed re-computation allowing deduction under section 57(iv).
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• Failure to Verify TDS Compliance on Rs.31 Crore Expenses Leads to Section 263 Revision; Section 50C Addition Upheld

  Case-Laws - AT : The ITAT upheld the PCIT's revision under s.263, finding the AO's assessment order erroneous and prejudicial to revenue interests. The Tribunal confirmed the AO failed to conduct proper inquiry regarding TDS compliance on expenses exceeding Rs.31 crore potentially covered under ss.194C, 194J, and 192, and did not examine s.40(a)(ia) implications. However, the ITAT modified the PCIT's direction for blanket 30% disallowance of expenses, instructing the AO to verify whether TDS was required on daily wages and labor charges, allowing expenses below threshold limits. The Tribunal also confirmed the addition under s.50C as the difference between stamp duty value and sale consideration was 9.02%, exceeding the then-applicable tolerance limit of 5%. The assessee's appeal was partly allowed.
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• Rejection of Books Under Section 145 Leads to Income Estimation That Includes All Deductions Under Sections 30-43D

  Case-Laws - AT : The ITAT upheld the CIT(A)'s decision to reject the assessee's books of accounts under section 145 and estimate income under section 144. The Tribunal clarified that when income is estimated through best judgment assessment, such estimate substitutes the business income computation under sections 30-43D as prescribed by section 29. All deductions referenced in sections 30-43D are deemed incorporated within this estimate. The Tribunal rejected the Revenue's plea, finding no infirmity in the CIT(A)'s approach of rejecting the books and estimating total income based on best judgment assessment principles.
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• Approval Under Section 153D Valid; Additions Must Be Based on Incriminating Search Material; Matter Remanded for Evidence

  Case-Laws - AT : The ITAT rejected the appellant's contention that approval under section 153D was granted mechanically, finding sufficient application of mind by the Approving Authority. While affirming that additions for unabated assessment years must be based on incriminating material found during search, the Tribunal remanded the matter to CIT(A) to allow the appellant opportunity to present documentary evidence. The CIT(A) was directed to delete additions that appellant could demonstrate were not based on incriminating search material. The Tribunal rejected appellant's argument that no additions could be made regarding items in books of accounts after rejection under section 145(3), noting that additions were based on both books of accounts and incriminating search material.
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Customs

• Government exempts Bengal gram from AIDC and SWS under Customs Act, setting 10% consolidated import duty effective April 2025.

  Notifications : The Central Government has amended Notification No. 11/2018-Customs and Notification No. 11/2021-Customs to exempt Bengal gram (desi chana) under HS code 0713 20 20 from both Agriculture Infrastructure and Development Cess (AIDC) and Social Welfare Surcharge (SWS). These amendments, exercised under s.25(1) of the Customs Act, 1962, read with s.124 of the Finance Act, 2021 and s.110 of Finance Act, 2018, effectively establish a consolidated import duty of 10% on Bengal gram imports. The notification specifically inserts "0713 20 20" after "0713 10" in the first notification and substitutes the entry against Sl. No. 3 with "Nil" in the second notification. These provisions take effect from April 1, 2025.
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• Voluntary Duty Deposit Under Advance Authorization Scheme Eligible for Refund Under Section 142(3) of CGST Act

  Case-Laws - HC : The HC quashed and set aside the order rejecting the petitioner's refund claim of Rs. 45,84,371/- for CVD and SAD paid after failing to fulfill export obligations under Advance Authorization and EPCG schemes. The Court determined that Section 142(8)(a) of CGST Act was inapplicable as the petitioner had voluntarily deposited duties rather than through recovery proceedings. The refund claim must be processed under Section 142(3) read with Section 142(6)(a) of CGST Act, which requires application of Central Excise Act, 1944 and Cenvat Credit Rules, 2004. The matter was remanded to the authorities for determination on merits under the appropriate legal provisions. The petition was partially allowed.
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• Exporters Eligible for Duty Drawback on Unlocked Mobile Phones; Unlocking Not Considered "Taking into Use"

  Case-Laws - HC : HC ruled that exporters are entitled to duty drawbacks when exporting unlocked mobile phones. Following M/s AIMS Retail Services Private Limited precedent, the court determined that merely unlocking a mobile phone does not constitute "taking into use" under the Duty Drawback Rules, as phones can be utilized in multiple ways. The court noted that configuring products for foreign jurisdictions cannot be grounds for denying legitimate duty drawback claims, especially as mobile manufacturing and exports from India increase. The petition challenging the rejection of duty drawback claims was accordingly disposed of in favor of the petitioner.
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IBC

• Resolution Plan Approval Under IBC Section 31 Extinguishes All Unincluded Dues, Including Statutory Government Claims

  Case-Laws - SC : The SC held that upon approval of a resolution plan under Section 31 of the Insolvency and Bankruptcy Code, all dues not included in the plan are extinguished, including statutory dues owed to government authorities. The Court determined that authorities' attempts to recover pre-resolution plan dues were contemptuous, as these claims were not submitted during the resolution process despite public notice. While finding the respondents' actions contemptuous for continuing recovery proceedings after the Ghanshyam Mishra judgment was brought to their attention, the Court declined to impose penalties, giving them the benefit of doubt. The demand notices and subsequent proceedings were quashed as illegal, and the contempt petition was disposed of after accepting the contemnors' unconditional apology.
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Indian Laws

• Supreme Court Reduces Interest Rate from 15% to 9% for Home Buyer's Refund in Construction Delay Case

  Case-Laws - SC : The SC set aside the High Court's order awarding 15% interest on refund amount to a home buyer and restored NCDRC's order granting 9% interest. The Court found that while the buyer was entitled to refund due to significant construction delays, the 15% interest rate was excessive. Applying precedent from Bangalore Development Authority v. Syndicate Bank, the Court determined that purchasers deserve reasonable interest when possession is delayed, but distinguished this case from Rohit Chaudhary v. Vipul Ltd., noting different circumstances. The compensation was reduced from 10,00,000 to 7,50,000, balancing justice considerations and the appellant's status as a state instrumentality. The appeal was partly allowed.
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PMLA

• Prolonged Pre-Trial Detention Without Trial Commencement Warrants Bail Under PMLA Section 45 Despite Stringent Provisions

  Case-Laws - HC : The HC granted regular bail to the applicant in a money laundering case related to the AgustaWestland helicopter scam. Despite the stringent bail provisions under PMLA SS45, the court ruled that the applicant's six-year pre-trial detention-approaching the maximum seven-year sentence-without trial commencement violated his constitutional right to speedy trial under Article 21. The court emphasized that statutory restrictions cannot justify indefinite incarceration, particularly when investigation remains incomplete after such prolonged custody. The HC noted the applicant had already received bail in the predicate offense from the SC on similar grounds. Bail was granted on a 5,00,000 bond with surrender of passport, acknowledging that with over 100 witnesses awaiting examination, trial completion within the maximum punishment period was unrealistic.
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SEBI

• SEBI Introduces New Governance Rules for High Value Debt Listed Entities Requiring Debenture Trustee Approval for Related Party Transactions

  Notifications : The amendment to SEBI's Listing Obligations and Disclosure Requirements Regulations introduces comprehensive corporate governance requirements for High Value Debt Listed Entities (HVDLEs) effective April 1, 2025. Material related party transactions will require prior No-Objection Certificates from Debenture Trustees, who must obtain approval from unrelated debenture holders holding at least 50% of debenture value. The regulations mandate independent director requirements, including special resolution appointments, prohibition of alternate directors, and mandatory D&O insurance. HVDLEs must establish audit committees, stakeholder relationship committees, and risk management committees. Additional provisions address secretarial audits, management vacancies, and enhanced disclosure requirements. Exemptions apply to transactions between government companies and wholly-owned subsidiaries whose accounts are consolidated with holding companies.
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• SEBI Eases ESG Compliance: New Green Credit Indicator, Flexible Verification, and Revised Value Chain Reporting Timelines

  Circulars : SEBI has modified ESG disclosure requirements to facilitate ease of doing business. The circular introduces an eighth leadership indicator in BRSR for voluntary disclosure of green credits generated by listed entities and their top ten value chain partners, applicable from FY 2024-25. It provides flexibility by allowing either "assessment" or "assurance" for BRSR Core verification, making the process profession-agnostic. ESG disclosures for value chain partners have been deferred by one year, with voluntary reporting for top 250 listed entities from FY 2025-26 and voluntary assessment/assurance from FY 2026-27. The threshold for value chain partners has been revised to those comprising 2% or more of purchases/sales, with disclosure limited to covering 75% of total value.
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• SEBI Pauses Penalties for Intraday Index Derivatives Position Limit Breaches Until Further Notice

  Circulars : SEBI has modified the implementation of intraday position limit monitoring for index derivatives effective April 1, 2025. While stock exchanges will monitor position limits with minimum 4 random snapshots daily as mandated in the December 30, 2024 Master Circular, no penalties will be imposed for intraday breaches until further notice. This temporary relief addresses industry concerns regarding system readiness and potential redundancy of implementing current notional-based monitoring systems when proposed delta-based or futures equivalent limits are pending finalization. Exchanges must prepare a joint SOP to inform market participants about monitoring procedures and communicate breaches to clients and trading members for risk management purposes. End-of-day position limit monitoring and penalties remain unchanged.
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• Portfolio Managers Given Extended Timeline of 15 Days to Submit Quarterly Inspection Data Starting April 2023

  Circulars : SEBI has extended the timeline for Portfolio Managers to submit quarterly offsite inspection data from 10 to 15 calendar days from the end of each quarter. Additionally, the requirement for submission of such data will now be applicable from April 1, 2023 onwards, rather than the previous date. Day-wise data must be furnished for "Client Folio AUM" and "Client Holding Master" table headings. These modifications to Clauses 5.4.3 and 5.4.4 of the Master Circular for Portfolio Managers dated June 7, 2024 took immediate effect upon issuance of the circular, which was implemented under SEBI Act provisions to regulate securities markets.
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• SEBI Extends Mutual Fund Quarterly Inspection Data Submission Deadline from 10 to 15 Days

  Circulars : SEBI has extended the timeline for submission of offsite inspection data by mutual funds from 10 to 15 calendar days from the end of each quarter. This modification to Clause 5.27.2 of the Master Circular for Mutual Funds dated June 27, 2024 was implemented following industry feedback to facilitate ease of business operations. The requirement for RTAs to submit data on an ongoing basis remains unchanged. The directive, issued under Section 11(1) of the SEBI Act, 1992 read with Regulations 58(1) and 77 of SEBI (Mutual Funds) Regulations, 1996, took immediate effect upon circular publication.
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• Court Overturns Automatic Forfeiture of EMD in SEBI E-Auction Case, Orders Reconsideration Under Rule 58 and Order XXI Rule 86

  Case-Laws - HC : The HC partially allowed the appeal against the cancellation of property sale through e-auction initiated by SEBI. While upholding the cancellation due to non-payment of balance consideration within the specified time, the HC set aside the automatic forfeiture of the entire Earnest Money Deposit (EMD). The court found that Rule 58 of the Second Schedule of Income Tax Act and Order XXI Rule 86 of CPC confer discretionary power on authorities regarding EMD forfeiture, requiring consideration of actual damages suffered. The HC directed SEBI to reconsider the extent of EMD forfeiture after providing the appellant an opportunity of hearing and to determine the appropriate forfeiture amount within 8 weeks.
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Service Tax

• Service Tax Notice for Self-Assessed Returns Deemed Invalid Under Section 73(1B) of Finance Act

  Case-Laws - AT : The CESTAT ruled that issuance of SCN for self-assessed tax already declared in ST-3 returns was legally incorrect, as Section 73(1B) of Finance Act, 1994 does not require notice when tax is self-assessed and returns furnished. The Tribunal rejected service tax demands based solely on balance sheet figures without proper investigation, following Lord Krishna Real Infra precedent. The case involved revenue neutrality regarding RCM services claimed as CENVAT credit, making differential duty demands unsustainable per V.E. Commercial Vehicles and Mahindra & Mahindra SC judgments. Services used for business promotion qualified as input services eligible for credit. Penalties under Section 78 were not warranted since service tax was deposited before SCN issuance, and personal penalties against the Assistant Vice President were unjustified absent established evasion.
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Central Excise

• # Refund Claims Rejected Under Unjust Enrichment Doctrine as Appellant Failed to Prove Duty Burden Not Passed to Consumers

  Case-Laws - AT : CESTAT held that the appellant's refund claims following provisional assessment finalization were barred by unjust enrichment doctrine. While the appellant demonstrated they bore the duty burden and did not pass it to dealers through credit notes and CA certificates, they failed to establish that dealers did not subsequently transfer this burden to ultimate motorcycle consumers. Following Addison & Co. Ltd., there exists a presumption that duty incidence passes to buyers, and refunds are permissible only to those who ultimately bear the burden. The Original Authority's verification was inadequate as it only examined the first stage of transactions. Appeals were allowed by remand for proper verification of the complete duty burden trail.
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Case Laws:

• GST

• 2025 (3) TMI 1443
  Receipt of consideration by the developer as per N/N. 04/2018-CT (Rate) dt.25.01.2018 or not - transfer of land or transfer of development rights to the developer by the landowner - Whether the liability to pay GST or service tax as applicable arises on the developer immediately on receipt of development rights or immediately on conveyance of the flats to be constructed by way of an allotment letter? Whether GST is applicable when consideration for the service was received prior to enactment of CGST Act, 2017 in the light of clause (b) of Section 142 (11) of GST Act, 2017? - HELD THAT:- The appellant is of opinion that since the JDA was entered on 01.01.2016 i.e., before introduction of GST, TDR attracts service tax for transfer of land by the appellant to the builder for the purpose of construction (para 14.3 of their appeal). It is observed that Advance Ruling Authority or Appellate Authority are constituted under the CGST/SGST Act, 2017 to provide clarification on matters under GST Act and Rules made thereunder. Section 97 (2) of the Chapter XVII provides for spectrum of issues on which the advance ruling can be sought for under the Act. Neither the Advance Ruling Authority nor this Appellate Authority have any jurisdiction to decide on the taxability under Finance Act, 1994. Therefore, the attempt of the appellant to seek a ruling to the effect that, in the facts of this case, the supply of TDR attracted Service Tax cannot be countenanced. Whether GST is required to be paid when the developer has paid GST on the entire value of construction complex including the cost incurred for construction of flats to the landowner appellant? - HELD THAT:- The appellant has raised a query which is not posed before the Advance Ruling Authority. In terms of Section 101 (1) of CGST Act, 2017, the Appellate Authority can, after giving the parties to the appeal or reference an opportunity of being heard, pass such order as it thinks fit, confirming or modifying the ruling appealed against or referred to. Further, it is not open to the appellant to introduce new grounds in an appeal when admittedly these grounds were not raised before the original authority. Hon ble Supreme Court has in the case of Commissioner of Cust C Ex, Goa vs Dempo Engineering Works Ltd. [ 2015 (4) TMI 961 - SUPREME COURT ], held that Tribunal cannot allow an appeal on new grounds when the same were neither raised in reply to the show cause notice nor were argued before the Adjudicating Authority - Thus, when a question is not raised before the Advance Ruling Authority, the Appellate Authority cannot entertain the same in appeal. Conclusion - i) The transfer of development rights is considered as receipt of consideration by the developer. ii) GST liability arises at the time of transfer of possession or rights in the constructed property, not at the time of receipt of development rights. The appeal is dismissed and the impugned ruling of Advance Ruling Authority is upheld.

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• 2025 (3) TMI 1442
  Seeking grant of bail - availing Input Tax Credit (ITC) fraudulently - issuance of fake tax invoices of Copper Scrap to various manufacturer - HELD THAT:- The intention of the accused is of having transactions without actual supply of goods, for claiming input tax credit (ITC) and for the aforesaid purpose fake invoices and bills were prepared. Thus the applicant/accused Chandan Sharma appears to be the mastermind in defrauding the Government exchequer by availing and utilizing ineligible ITC of GST without any concomitant supply of goods and also by creating and operating firms which are not owned by him. The offence in the present is affecting the public interest at large - The present case relates to economic offences. Such offence like large scale fraud, money laundering and corruption, are often viewed seriously because they affect the economic fabric of the society. The Courts may deny bail in such cases especially if the accused holds a position of influence or power. The present case is a grave economic offence. The total GST evasion has so far workout amounts to Rs. 59,00,98,178/-. The investigation is under progress. The applicant if released on bail will definitely try to destroy the evidence and influence the witnesses and there is his high flight risk considering his role. Considering these facts, as well as gravity of the offence, it would not be proper to enlarge him on bail at this stage. The bail application, preferred by the applicant is liable to be rejected at this stage. Conclusion - i) Chandan Sharma is the mastermind behind the fraudulent operation of multiple firms, leading to significant ITC fraud. ii) The procedural requirements under Section 69 of the CGST Act were duly followed in the arrest of Chandan Sharma. First regular bail application of Chandan Sharma son of Shri Bhramdutt sharma, u/s 132 (1) (c), 132 (1) (b), 132 (1) (i) of C.G.S.T. Act, 2017 D.G.G.I, Ghaziabad, Meerut Commissionerate, is hereby dismissed.

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• Income Tax

• 2025 (3) TMI 1441
  AI-generated order by the CPC or the computer portal - Return was declared invalid for non-filing a compulsory audit report u/s 44AB - Petitioner responded to the defects notice by pointing out that it had claimed gross receipts or income under the head of Profits and Gains of Business or Profession amounting to Rs.6.15 crores only, which was much less than the threshold limit of Rs.10 crores. Hence, the Petitioner submitted that there was no requirement to obtain and e-file a tax audit report. HELD THAT:- The AI-generated impugned order contains no reasons in this case. The argument that the software is not programmed to record elaborate reasoning or that the previous system was too cumbersome may not be the answer. The new system certainly offers numerous advantages and is efficient. However, it must evolve to include what was essential in the earlier system. For example, while no detailed judgment is expected when declaring a return invalid, the order must provide minimal reasoning so that the affected party can take corrective action or effectively challenge the reasoning. Such minimum compliance with the principle of natural justice cannot be dispensed with on the grounds of expediency or due to the machine s limitations. Nothing in the impugned order explains why the cause presented by the Petitioner was deemed unacceptable. There is no indication that the cause shown by the Petitioner was given due consideration despite the order s format stating that a response was considered. The impugned order indeed resembles the inscrutable face of a sphinx. Therefore, based upon the violation of principles of natural justice or because the impugned order is a nonspeaking order, we could have set aside the order and remanded the matter for fresh consideration. However, our apprehension is that the CPC or the portal, which is programmed in a particular manner, may be able to do no better, even upon remand. Therefore, a remand may not solve the problem. However, where the Petitioner has an alternate and effective remedy in the form of a revision under Section 264 of the IT Act, we see no reason to entertain this Petition or investigate issues of compliance with the requirements of Section 44AB in the specific facts of each case. Such investigation would, as noted earlier, involve scrutiny of the returns, interpretation of the documents accompanying the returns, and not merely interpreting the provisions of Section 44AB. There would also be the question of interpreting the guidance note and other matters. In the present case, we are concerned with the alleged non-compliance with the requirements of Section 44AB. However, returns can be declared invalid under Section 139 (9) of the IT Act for various reasons. In each such case, it would not be possible to exercise extraordinary jurisdiction and undertake such an elaborate exercise bypassing the alternate and statutory remedy under Section 264 of the IT Act. If such a remedy is resorted to, an official of the Commissioner of Income Tax rank would examine whether declaring the return as invalid was legal and proper. The factual matters which invariably arise could also be effectively investigated by the Commissioner exercising revisional jurisdiction in the first instance. Petitioner is best placed to avail of the alternate remedy under Section 264 of the IT Act. At the same time, we believe that the Respondents must create a system in which their CPC or portal demonstrates thoughtful consideration, and the essence of the orders is not like the inscrutable face of a sphinx. Resorting to Artificial Intelligence (AI) is certainly welcome. However, when the application of thoughtful consideration through actual intelligence is required, it cannot be cast aside simply because AI and automation represent the expedient future. The principles of natural justice and fairness are too valuable to be sacrificed at the altar of AI and automation expediency. We decline to entertain this Petition but relegate the Petitioner to avail of the alternate remedy under Section 264 of the IT Act.

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• 2025 (3) TMI 1440
  Reopening of assessment u/s 147 - reopening notice is issued within the period of four years from the end of relevant assessment year - HELD THAT:- Respondents have recorded reasons without looking at the records of the Petitioner and on the same being pointed out by the Petitioner in its objections have not been rebutted. Therefore the reasons recorded are without any application of mind and without perusing the records of the Petitioner and therefore on this short ground itself, the impugned proceedings are required to be quashed and set aside. For the sake of completeness, we examine each of the issues on which the reopening is sought to be initiated independently on what we have observed above. Adding on account of provision of wage revision while computing the book profit u/s 115JB - As in the reasons recorded it is stated that this figure was disallowed under normal provisions of the Act in the assessment order on the ground that it is a contingent liability but however same was not added back while computing the book profit. In an appeal proceedings before CIT (A), on remand, the AO has admitted that this provision ought not to have been disallowed and accordingly CIT (A) based on this admission of the AO in the remand report has given relief to the Petitioner and deleted the addition. This order of the CIT (A) was available to the AO while recording reasons for reopening the case on 27 March 2021. Therefore, on the date of recording the reasons which were based on the findings in the assessment order which findings were reversed by the CIT (A) and on the basis of admission in the remand proceedings by the Assessing Officer there could not have been any reasons to believe that any income has escaped assessment. The base of reopening falls to ground, therefore on this account, the reopening on the issue of provision for wage revision to be added while computing the book profit is required to be quashed and set aside. Adding interest on non-performing investment while calculating book profit, the officer in the reasons recorded proceeds on footing that the profit and loss account is not prepared in accordance with Schedule III of the Companies Act, 2013. The Petitioner is banking company and the provisions of Schedule III of the Companies Act is not applicable. As per the second provision to Section 129 of the Companies Act 2013, the banking company is required to prepare its financials as per the Banking Regulation Act and not as per Schedule III of the Companies Act. Secondly, the issue of computation of book profit was examined during the assessment proceedings and the AO added various other items and calculated revised book profit. Therefore it cannot be said that the AO has not examined the issue of computation of book profit, qua interest on non-performing investment. Petitioner is justified in relying upon the decision in the case of Century Textiles Industries Ltd. [ 2018 (10) TMI 379 - SC ORDER ] wherein it is held if certain aspects were examined in the course of the assessment proceedings, then reopening is not permissible on the ground that other aspects were not considered. Therefore, even on this count there could not have been any reasons to believe that income has escaped assessment. Deduction u/s 36 (1) (viia), a specific query was raised in the course of the assessment proceedings on this issue and the Petitioner vide letter dated 30 November 2018 filed its detailed submissions. In the assessment order, sum was disallowed u/s 36 (1) (vii)/36 (1) (viia) of the Act. The said issue was also subject matter of appeal before the CIT (A). Therefore, in our view the issue of deduction under Section 36 (1) (vii) and 36 (1) (viia) was examined during the course of the original assessment proceedings and therefore any attempt to reopen the case on this issue would result into conferring power of review on the AO based on change of opinion which is not permissible u/s 147 of the Act. The order disposing the objection does not give any reasoning for rejection of objection except reproducing the extracts of various case laws. In our view, this was not the correct approach. Therefore, even on this count the objection raised by the Petitioner goes unrebutted. We have no hesitation in holding that the impugned proceedings are required to be quashed and set aside.

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• 2025 (3) TMI 1439
  Rejection of the Rectification Petition - entire alleged TDS default are covered by Form 26 AS and relevant circulars, notification, issued under the Act - Stay petition - HELD THAT:- As petitioner is a state Owned Corporation and it plays an anchor role to the development of Power Sector Projects in the State of Tamil Nadu, and it is the specific claim of the petitioner that the money/funds received by the petitioner-Corporation from various depositors such as Universities, Temples, Government Companies, are all Statutory Bodies, exempted from payment of TDS, and also taking into consideration of the suggestion made by the learned Senior Counsel for the petitioner that the petitioner has voluntarily come forward to deposit Rs. 30 Crores, passed a conditional order, staying the operations of the Assessment Order passed by the Assessing Officer, till the disposals of the Appeals filed by the petitioners before the Appellate Authority. Thus, present Writ Petition is disposed of granting liberty to the petitioner to agitate the issue with regard to the rejection of the Rectification Petition filed by the petitioner before the Appellate Authority, which shall entertained by the Appellate Authority, while dealing with the Appeals and pass orders in accordance with law.

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• 2025 (3) TMI 1438
  Reopening of assessment beyond the period of limitation as stipulated u/s 149(1) - manner in which a block of six or ten assessment years for which assessments could be reopened in terms of Section 153C - HELD THAT:- The period of limitation of ten years is required to be reckoned from the end of the assessment year relevant to the financial year in which the decision to take action for re-opening the assessments was initiated, that is, the date on which the notice u/s 148 of the Act was issued. The relevant assessment year in question (AY 2014-15) is beyond the period of ten years as contemplated u/s 153C r.w.s. 153A of the Act from the end of the assessment year. The petition is, accordingly, allowed and the impugned notice is set aside.

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• 2025 (3) TMI 1437
  Maintainability of appeal before High Court on low tax effect - appellant would submit that the Government of India, Ministry of Finance has issued a new circular dated 17.09.2024, in which monetary limits for filing Income Tax Appeals by the department before the High Court has been enhanced to Rs. 2 Crores, whereas in the present case the tax liability of assess is less than Rs. 2 Crore HELD THAT:- In view aforesaid submission of appellant where monetary limit (tax liability) in the present case is less than Rs. 2 Crores therefore, in light of aforesaid circular (Para-5) dated 17/09/2024, the instant Tax Case stands disposed of.

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• 2025 (3) TMI 1436
  Validity of order passed u/s 143(3) - allegation of violation of the principles of natural justice due to a lack of opportunity for the petitioner to be heard - as argued petitioner has no source of income other than salary earned from 2005 onwards and the tax payable by her for each assessment year would be deducted at source by the respective employer and after such deduction, no further income tax was payable by her, therefore, there was no necessity for the petitioner to pay to file return of income, hence, the petitioner was not aware as to when the notice regarding re-assessment proceedings was caused by the respondent-Department. HELD THAT:- As notices have been issued to the petitioner through all modes of service, viz., Online Portal, E-mail and RPAD. Insofar as notice sent through online portal is concerned, since the petitioner is not a regular income tax payer, she cannot be expected to view the Portal then and there. Notice sent via. E-mail is concerned, since the same was stated to have bounced back, the same could not be known to the petitioner. Finally, the notice that was sent through RPAD is concerned, the same was returned with an endorsement, No such Addressee, as the petitioner is no longer resident of India, there is no possibility for her to respond to such notice. In the said scenario, it is sheer clear that the petitioner is totally unaware of the proceedings being initiated by the respondent-Income Tax Department. That apart, the sale with regard to which, reassessment proceeding were initiated, was made in the year 2015-16, whereas, impugned proceedings were initiated in the year 2023- 24, therefore, the petitioner, being a non-tax payer, cannot be expected to view the Portal after a lapse of 8 eight years. Thus, the ignorance pleaded by the petitioner appears to be genuine. Thus, this Court, in the interest of justice, is inclined to set aside the impugned orders as the order has been passed in violation of principles of natural justice, however, the same is subject to the payment of Rs.7,500/- to the Cancer Institute Adyar, Chennai.

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• 2025 (3) TMI 1435
  Rejecting the application for grant of registration u/s 12A and approval u/s 80G - HELD THAT:- We find since the order of the Tribunal setting aside the issue to the file of the Ld. CIT(E) is still pending and the assessee filed another appeal before the Tribunal on the basis of extension of due date for filing of Form 10A/10AB vide CBDT Circular No.7/2024, dated 25.04.2024, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(E) with a direction to decide the issue afresh along with earlier order of the Tribunal setting aside the issue to his file. Appeals filed by the assessee are allowed for statistical purposes.

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• 2025 (3) TMI 1434
  Reopening of assessment - Addition u/s 68 - AO based on the statements and findings of respective accommodation providers assessments, came to conclusion that the assessee has taken accommodation entries from the dummy or paper companies controlled by the accommodation providers - HELD THAT:- Merely because the assessee has taken the unsecured loan from the companies controlled by them, the addition was made rejecting the various supporting documents provided by the assessee relating to transactions. In our considered view, the additions were made only on the basis of alleging that the loan taken by the assessee from the above said two companies are only accommodation entries and assessee s own money was routed through these companies with the help of accommodation entry providers. On careful note, the accommodation entries are taken which will remain in the books of account and they will ultimately written off over the period of time. These loans were normally not repaid. In the given case, it is brought to our notice that the assessee has received the unsecured loan through the banking channel and repaid through the banking channel. Assessee has repaid the loan even before the assessment was reopened. When the assessee takes the loan and repaid along with the interest clearly shows that the transactions are genuine. By returning the loan, the assessee has only utilised the loan for the purpose of business and repaid the same. Merely because some operator has managed the affairs and all the transactions cannot be labelled as non-genuine. Every transaction has to be evaluated on its merit rather than on the basis of suspicion. Therefore, in this case, the assessee has submitted all the documents in support of the transaction before the AO and he has merely rejected the same on the basis of information available with him as the same on the basis of suspicion. Decided in favour of assessee.

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• 2025 (3) TMI 1433
  Addition u/s 68 - Unexplained cash deposit - CIT(A) deleted addition - HELD THAT:- We find no reason to interfere with the well-reasoned order of the CIT(A). Endorsing the decision of the ld. CIT(A), the grounds taken by the Revenue stand dismissed and we direct the Assessing Officer to delete the additions. Decided against revenue.

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• 2025 (3) TMI 1432
  Unexplained investment - Sagar Plaza flat having been sold at value 14.29% above the circle rate - AO strangely concluded kachi parchi is not rough jotting but an agreement to sell for the immovable property writing down all the conditions for transfer of property - HELD THAT:- There is material substance in the submissions advanced on behalf of the assessee / appellant that hand written kaccha Slip did not exist as not found and seized by the search party and even upon the same, no mention of name of assessee and such a slip is can t said to be in the handwriting of the assessee / appellant. The contention of the AR having force that upon the slip in question, there is no any name mentioned of witness or also no signature of any witness in order to endorse / establish the veracity of alleged document and above all there is no any signature of the assessee upon it. Strangely, the Ld. CIT(A) confirms the observation of the Ld. AO by treating kachi parchi as agreement to sell and both the lower authorities ignored the basic principles of law, that for a valid agreement to sell of immovable properly, it needs to be in writing include key details like parities, property description, price, payment terms and timelines, and be signed by both parties, ideally with witnesses and registered with the sub-register s office and in present case it is admitted fact that there is no signature of parties and witnesses upon it. Unless and until, the contents of the documents are proved against a person, the possession of the document or hand writing of that person, on such document by itself cannot prove the contents of the documents. On the basis of above fact situation, we are of the considered opinion that the Ld. AO made addition in question only on the basis of surmises and conjectures, which was erroneously confirmed by the Ld. CIT(A) in quite unsustainable, in the eye of law and deserves to be deleted. Appeal of assessee is allowed

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• 2025 (3) TMI 1431
  Addition u/s 68 r . w.s. 115BBE - unexplained cash credit - cash deposits made by the assessee during the demonetization period - HELD THAT:- The pattern of cash sales and cash deposits are consistent and same trend of cash sales and deposits thereof in bank account continues in the later period as well. There is no remarkable difference in the pattern of business in pre-demonetization period or in the post demonetization period. The survey operation carried out by the Revenue as a surprise check also confirms the fact that assessee carried out cash sales and makes deposits thereof in the wake of absence of any discrepancy in the closing stock, cash in hand etc. The books of accounts are audited and not rejected by the AO which further gives an assurance towards bonafide of cash sales. The receipts against cash sales have found its way in the bank account in the ordinary course of business. The consignment sale agreement and working of commission and service tax returns etc. yet again provide sound basis to the submissions propounded on behalf of the assessee. In the absence of any anomaly detected either in the course of survey or in the books of account, the source of cash deposit during demonetization recorded to be out of cash sales of tobacco products in ordinary course could not have been treated as unsatisfactory by the AO. CIT(A), to our mind has rightly discredited the action of the AO on appraisal of factual matrix. CIT(A) has examined the issue threadbare and has dealt with factual aspects in a very cogent and precise manner. The process of reasoning adopted by the CIT(A) resonates with the facts on record. We, thus, do not consider it expedient to reiterate and repeat each observations made by the CIT(A). We fully endorse the process of reasoning adopted by the CIT(A) and conclusion derived thereon in the matter. CIT(A) has rightly obliterated and reversed the additions made u/s 68 r.w.s. 115BBE towards cash deposits and rightly held that the source of cash deposits have live link and clear nexus to the cash sales carried out in a routine manner by the assessee. The adverse action of the AO is devoid of any weight whereas the direct and circumstantial evidences placed by the assessee carries overwhelming rationale and probative value and hence cannot be brushed aside. Decided against revenue.

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• 2025 (3) TMI 1430
  Excess stock found in Survey - addition u/s 68 - Appellant prays to cancel the applicability of Sec.115BBE accepting the same as Business Income to which Normal Tax rate will be applicable. Whether the value of excess stock found at the premises of the assessee during the course of survey u/s 133A is to be treated as business income or income from other sources ? - HELD THAT:- Excess stock found during the course of survey is from regular business income of assessee firm having no other source of income and has been rightly disclosed at business income in the audited financial statements as well as computation of income as business income and both the learned lower authorities erred in treating it as income from other sources and further erred in invoking section 68 r.w.s. 115BBE. Under similar set of facts and circumstances, this Tribunal in plethora of decisions have consistently held that if the unexplained income is from business sources then section 115BBE cannot be invoked. Accordingly, finding of Ld. CIT(A)/NFAC is set-aside and the excess stock offered by the assessee in its books of accounts is held to be from business income and therefore Ld. Assessing Officer erred in invoking section 68 r.w.s. 115BBE of the Act. Effective grounds of appeal raised by the assessee are allowed.

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• 2025 (3) TMI 1429
  Disallowance u/s 14A r.w.r. 8D - HELD THAT:- In the present case admittedly assessee was having exempt income in the shape of dividend and also claimed interest on borrowed funds. It is a case where mixed funds were available for making investments and AO has failed to make out a case where interest bearing funds are directly applied in making such investments. Disallowance made u/s 14A should be restricted to the exempt income earned by the assessee. Therefore, we uphold the addition. Depreciation claimed @ 100% on temporary structures - The Assessing Officer has disallowed 10% of such depreciation claimed without appreciating the fact that the scraps, if any, generated had also used in the other work sites. Therefore, no such ad hoc disallowance could be made. It is further seen that depreciation is a statutory allowance and it is not a case where AO alleged that the assets created were not used or there were no temporary structures created by the assessee. CIT DR has failed to controvert the finding of the Ld. CIT(A) in this regard. Thus, we find no occasion to interfere in the order of the Ld. CIT(A) on this score. Accordingly this ground of appeal of the Revenue is dismissed. Disallowance of the remuneration paid to one of the Director Smt. Vinita Guliani @ 10% of the total remuneration paid - While making the disallowance the Assessing Officer observed that the assessee has failed to substantiate the services rendered by her with credible documentary proof he thus invoked the provisions of section 40A(2)(b) and made disallowance of only 10% of total payment made to her. CIT(A) has followed the order of preceding assessment year while deleting the disallowance. During the course of hearing, the Ld. CIT DR has not controverted the findings of the Ld. CIT(A). Thus, we are not inclined to interfere in the order of CIT(A) more particularly when the AO himself has accepted the fact of services rendered though no documentary evidences were filed by the assessee. Further the fact remained that otherwise the AO has accepted the services of Smt. Vinita Guliani and, therefore, the disallowance made is rightly deleted by the Ld. CIT(A) which order is hereby upheld. Disallowance being 2% of total purchases of shuttering and scaffolding - HELD THAT:- From the perusal of the facts and the details filed by the assessee on this issue, we find that the expenditure includes purchases of some items such as wooden frames, plywood, sawn timber, imported pine sawn timber, shuttering pine wood, etc. and the nature of which was such that they have to be consumed within a short period of time. It is also a matter of fact that assessee is having multiple sites where such consumables are required on regular basis. It is also seen that a total revenue generated was of 65.07 crroes on contractual work as against which the expense on consumables were claimed as 7.78 crores which is around 12% of the total revenue. We are in conformity with the order of the Ld. CIT(A) that consumable items are inevitable part for execution of the contract work and, therefore, we uphold the order of the Ld. CIT(A) confirming the deletion of the disallowance so made. Thus, this ground of Revenue is dismissed. Addition observing that assessee has made earnest money deposited with its subsidiary and no interest is received - HELD THAT:- AO applied 10% interest rate and made addition of Rs. 3 lakhs as notional interest. Ld. CIT(A) has deleted the addition by placing reliance on the decision of Tribunal in the case of assessee for AY 2003-04, 2004-05 and 2005-06. CIT DR during the course of hearing placed reliance on the order of AO on this issue and failed to controvert the findings given by Ld. CIT(A). Disallowance of sub contract charges paid and job, labour and other cite expenses - AO has made the disallowances u/s 69C of the Act all these expenditures as un-explained - HELD THAT:- CIT(A) by observing that the AO has failed to provide an opportunity of cross-examination of such parties and further observed that when the assessee has filed all the necessary details such as bills, etc. and payments were made through banking channel has deleted the disallowance. However, the fact remained that the assessee has failed to controvert the observations made by AO with plausible evidences so as to prove the genuineness of the expenses claimed. Under the circumstances, in our considered view these two issues need further examination on the part of the AO. Accordingly we remand these issues back to the file of the AO with the direction that assessee be provided an opportunity of cross examination of the persons whose statements are relied upon by the AO and also the assessee is directed to file all the necessary details and evidences.

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• 2025 (3) TMI 1428
  Penalty u/s 271(1)(c) - non specification of clear charge - defective notice u/s 274 - AR submit that from the perusal of the notice, it could be seen that it was not specified whether the penalty proceedings were initiated for concealment of particulars of income or for furnishing inaccurate particulars of income - HELD THAT:- The penalty provisions of section 271(1)(c) are attracted where the assessee has concealed the particulars of income or furnished inaccurate particulars of such income. It is also a well-accepted proposition that the aforesaid two limbs of section 271(1)(c) of the Act carry different meanings. Therefore, it was imperative for the Assessing Officer to strike- off the irrelevant limb so as to make the assessee aware as to what is the charge made against him so that he can respond accordingly. Hon ble Supreme Court in the case of Dilip N. Shroff [ 2007 (5) TMI 198 - SUPREME COURT] has also noticed that where the AO issues notice under section 274 of the Act in the standard proforma and the inappropriate words are not deleted, the same would postulate that the Assessing Officer was not sure as to whether he was to proceed on the basis that the assessee had concealed the particulars of his income or furnished inaccurate particulars of income. According to the Hon ble Supreme Court, in such a situation, levy of penalty suffers from non application of mind. In the background of the aforesaid legal position and having regard to the manner in which the Assessing Officer has issued notices under section 274 r.w.s. 271(1)(c) of the Act without striking off the irrelevant words, as reproduced above, the penalty proceedings shows the non-application of mind by the Assessing Officer and is, thus, unsustainable. Appeal of the assessee is allowed.

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• 2025 (3) TMI 1427
  LTCG on sale of agricultural land (inherited from late father of the appellant) - AO observed that the land was ancestral land which the assessee has inherited and the relevant value as on 01.04.1981 is Rs. 20 per sq.yds - HELD THAT:-the solatium was awarded for other purposes that cannot be considered. Therefore, the assessee can adopt the value of Rs. 85 per sq.yds. as on 1962 and assessee has to determine the value as on 01.04.1981. We noticed that there is a gap of 19 years between 1962 to 1981. Since there is no data available on record in order to dispense the justice, however even if we take 3% year on year increase of index cost, the total index cost for 19 years would be 57%. By adopting the same, the cost of acquisition as on 01.04.1981 would be Rs. 150/- (i.e. Rs. 85 57 x 100). Therefore even though the cost of acquisition determined by Hon ble Supreme Court for compulsory acquisition, however the rate determined by Hon ble Supreme Court for the lands within the vicinity of the lands of the assessee. Therefore, nothing wrong in adopting the same rate as on 1962. We are inclined to direct the Assessing Officer to determine the value of Rs. 150 as on 01.04.1981 and direct the AO to recalculate the index cost of acquisition and allow the difference. Deduction u/s 54F on purchase of one house in the name of his widow mother - This is a peculiar case wherein assessee has declared as a single owner and sold the property, however purchased two properties and registered one property in the name of his mother on the basis of inheritance. This fact cannot be denied. Considering the peculiar facts on record, we are inclined to allow the claim of the assessee based on the facts brought on record. The AO has not disputed the fact nor brought any material to dispute the above facts on record. Therefore, we are inclined to allow the claim of the assessee in Ground No.3 and additional grounds. Even otherwise, if we consider the inheritance as per Hindu Succession Act, the property sold by the assessee has to be apportioned on the basis of inheritance and the portion of sale consideration in the name of the mother of the assessee will have tax neutral considering the fact that the relevant sale consideration is already invested in the property and the same would be available for deduction u/s 54F. Therefore, it will lead to tax neutral and considering the peculiar facts on record, we are inclined to allow the claim of the assessee. Appeal filed by the assessee is partly allowed.

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• 2025 (3) TMI 1426
  TP Adjustment - validity of the assessment order on the ground that the AO had no recorded any reasons to refer the matter to the TPO - HELD THAT:- The issue has been answered by the decision of Aztec Software Technology Services Ltd. [ 2007 (7) TMI 50 - ITAT BANGALORE ] against the assessee. In view of the same the ground 1 and 2 are dismissed. Intra Group Services - We are of the considered view that the coordinate Bench of the ITAT Delhi in assessee s own case [ 2023 (11) TMI 804 - ITAT DELHI ] has decided the issue in favour of the assessee. DR has argued at length on the validity of ALP adjustment but has not been able to controvert the submission of the assessee that there is no material distinguishing feature in facts of the case for the instant year compared to the facts available in AY 2010-11. The action of the TPO and the CIT(A) in making/sustaining the adjustment to the ALP is not sustainable. We therefore direct the AO to delete the addition on Intra Group Services. Ground no 3 and its sub-grounds are allowed. Disallowance of mark-up charged by AEs on purchase of fixed assets - DR has argued at length on the validity of ALP adjustment but has not been able to controvert the submission of the assessee that there is no material distinguishing feature in facts of the case for the instant year compared to the facts available in AY 2010-11 - HELD THAT:- The action of the TPO and the CIT(A) in making/sustaining the adjustment to the ALP is not sustainable. We therefore direct the AO to delete the ALP adjustment on account of purchase of fixed assets . Ground no 4 and its sub grounds are allowed. Addition on account of ALP adjustment of payment of royalty -We find that in EKL Appliances [ 2012 (4) TMI 346 - DELHI HIGH COURT ] has negatived the application of need-benefit test and ruled in favour of the assessee s on this issue. We also find that when the assessee has aggregated the transaction of payment of royalty with other closely linked transactions and benchmarked them under TNMM, the TPO can not segregate some transaction out of the aggregated whole and reduce their ALP to NIL under CUP as held in Magneti Marelli Powertrain India (P.) Ltd. [ 2016 (11) TMI 123 - DELHI HIGH COURT ] The basis for reducing the ALP of royalty transaction to NIL itself does not hold ground in light of the judicial precedent cited above and therefore, we are of the considered view that the appeal of the Department on this issue can not succeed. In view of the above discussion the appeal of the Revenue is dismissed.

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• 2025 (3) TMI 1425
  Rectification u/s 154 - Deduction in respect of Provision created on account of litigation u/s 43B - HELD THAT:- As substantive ground seeking to allow its deduction representing provision created on account of litigation, which has been disallowed by the learned lower authorities by quoting section 43B of the Act. The assessee s case before us is that it has already filed section 154 rectification before the Assessing Officer on 6th of August, 2024, which is yet to be decided. Faced with this situation, we deem it appropriate to accept the assessee s instant second substantive ground for statistical purposes with a direction to AO to finally decide the foregoing section 154 rectification as per law within three effective opportunities. Ordered accordingly. Beneficial withholding rate of 5% pertaining to the Dividend Distribution Tax DDT involving various overseas payees going by the Most Favoured Nation MFN clause(s) in the respective DTAA - As submits very fairly that this tribunal s special bench in DCIT Vs. Total Oil India Pvt. Ltd. [ 2023 (4) TMI 988 - ITAT MUMBAI (SB) ] has already decided the issue against the assessee and in the department s favour that such an application of MFN clause is not automatic. We accordingly reject the assessee s instant third and fifth substantive grounds in very terms. Deduction of Education Cess EC and secondly Higher Education Cess HEC - Ld concel submits very fairly that the same is no more allowable in light of Section 40(2) Explanation- III inserted by Finance Act, 2022 with retrospective effect from 01.04.2005. Rejected accordingly. Assessee s appeal is partly allowed for statistical purposes.

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• 2025 (3) TMI 1424
  Presumptive taxation scheme of section 44BB v/s Fee for Technical Services (FTS) u/s 115A - services related to well engineering and other related activities - HELD THAT:- We make it clear first of all that section 44BB is indeed in the nature of a special provision for computing profits and gains in connection with the business of exploration etc. of mineral oils which is not even doubted by the both learned lower authorities in their respective findings. This being the clinching factual backdrop, it is noticed that in Oil Natural Gas Corporation Ltd [ 2015 (7) TMI 91 - SUPREME COURT] has already settled the instant issue in assessee s favour. As per CBDT Circular No. 1862, dated 22.10.1990 to conclude that the learned lower authorities have erred in law and on facts in rejecting the assessee s impugned claim seeking assessment under section 44BB of the Act in very terms. Assessee appeal allowed.

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• 2025 (3) TMI 1423
  Revision u/s 263 - lack of enquiry regarding genuineness of the source of cash deposit and in old SBNs during demonetization period - HELD THAT:- No information has been brought on record that the figure of SBNs that was obtained by the AO from the assessee, was inaccurate or incomplete. Nothing has been brought on record to show that the assessee did not make the sales that it claimed to have made. Assessee, in the course of its reply to the Ld. PCIT had submitted that the nature of the trade is such that sales are unverifiable being mostly made in cash and bills are not drawn up and even if bills are drawn up the names and address of the parties are not recorded in such bills and it has brought on record instances of the cases where the Hon ble Courts and Tribunal have held that since liquor trade is a controlled commodity, lack of bills will not make a difference to determining sales because the sales are determined with regard to the quantity of purchases and the closing stock. We observe that the AO has verified the purchases from the figure recorded in Form 26AS and also obtained statement of closing stock from the assessee. Thus, failure to produce sales vouchers does not materially alter the fact that sales were duly explained by the utilization of stock. Therefore, we are not able to agree with the PCIT that the AO had not done enquiries with regard to the genuineness of the cash deposits that were sought to be explained out of cash sales. AO did not enquire about the details of licences issued to the assessee for trading of liquor - As license fees were duly recorded in the books of account of the assessee and these books of accounts have been produced before the AO. Thus, the source of payment of licence fees stood explained from the books of accounts, in which no infirmity has been pointed out. As observed that the payment of licence fee for the running of excise shops is not immediately relevant to the reasons for selection of the case for scrutiny. Therefore, even though, the books of accounts have been produced and examined and to that extent the license fee has been considered by AO, this observation of the PCIT would not, in our opinion, constitute an item of lack of inquiry, given the reasons for selection of case for scrutiny. AO had failed to obtain the ledgers/confirmation from the parties through which the assessee had made purchases - The assessee has submitted that the liquor is a controlled commodity and all purchases were made from distilleries and excise was paid by the assessee to the distilleries during the purchases of liquor from them. It was the distiller which was deposited the excise to the credit of the Government on the amount of liquor distilled/manufactured. Since the entire extent of purchases stood confirmed by Form 26AS of the assessee, further verification from the distilleries with regard to the extent of purchase was not necessary. We would agree that, for this reason, the failure to cross verify the purchases from the distilleries cannot support the conclusion of the PCIT, that the purchases stood unverified. PCIT has held that enquiries have not been made was the failure to examine the genuineness and creditworthiness of persons who have been given unsecured loans to the assessee and sundry creditors - Examination of expenses primarily pertains to the second issue on which account the case was picked up for scrutiny i.e. abnormal increase in sales with lower profitability and we find that the AO vide his notice dated 24.03.2019 has examined the gross profit/net profit shown in corresponding turnover for the current year and the past year, wherein he has asked the assessee to furnish details of turnover, gross profit, G.P ratio, net profit, and N.P ratio and after such examination, the AO has observed that net profit ratio of the assessee was much higher than previous years and therefore, the AO has not drawn any adverse inference on this account. Therefore, we are not able to agree with the PCIT that the AO has not examined the major expenses incurred by the assessee. Payment of rent expenses in cash stating that the said issue had not been examined by the AO - We note that vide his notice dated 04.07.2019, the AO had asked for details of TDS liability discharged on payment of rent salary and vide his notice dated 20.12.2019, he has asked the assessee to furnish a copy of rent agreement and the details of TDS made along with documentary evidences. We, further, notice that in response to these notices, the assessee furnished copies of rent agreement to the AO along with ledger accounts and stated that TDS, wherever necessary, was deducted and deposited in Central Government Account. This is not a case where Explanation-2(a) of Section 263 of the Act is applicable because all enquiries which in the opinion of the Ld PCIT ought to have been made, were made by the Assessing Officer, albeit in not exactly the same manner as desired by the Ld. PCIT, but very substantially and towards verifying the very same set of facts. After considering the facts of the case and the law as laid down by the courts, we hold that the Ld. PCIT was not justified in holding that the order of the AO was erroneous and prejudicial to revenue and therefore we quash the order of the Ld. PCIT u/s 263 of the Act and restore the order of the Ld. AO passed u/s 143(3) of the Act. Accordingly, all the grounds of appeal of the assessee are allowed.

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• 2025 (3) TMI 1422
  TP Adjustment order passed in the name of a non-existing company - HELD THAT:- We find an identical issue had come up in the case of M/s. Allscripts (India) LLP (As a successor in interest of Allcripts India Pvt. Ltd.) vs. NFAC [ 2023 (5) TMI 1044 - ITAT AHMEDABAD] wherein the Tribunal while deciding the issue of validity of the order passed by the TPO on a non-existing company. The Tribunal after relying on the various decisions held that the order passed on a non-existing company is a nullity. We find some force in the arguments of the Ld. Counsel for the assessee that the TPO is not given any concession under the Act to pass any order as per his choice and once he fails to do so, it is a nullity. The provisions of section 292BB of the Act in our opinion cannot come to the rescue of the TPO this being a jurisdictional issue. Since in the instant case, despite number of letters addressed by the assessee to the TPO to drop the proceedings on the ground that the same are being proposed on a non-existing company, the TPO passed the order in the name of a non-existent company, therefore, we hold that such order of the TPO passed in the name of a non-existing company is a nullity. Decided in favour of assessee.

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• 2025 (3) TMI 1421
  Foreign tax credit for state taxes paid in the United States under Section 91 - existence of a Double Taxation Avoidance Agreement (DTAA) between India and the USA - HELD THAT:- We find no merit in the Revenue s either of the twin vehement contentions raised herein. This is for the precise reason that this tribunal s in Tata Sons Ltd. [ 2011 (2) TMI 1528 - ITAT MUMBAI] has already rejected the Revenue s case seeking to invoke section 91. We find that the same is no more res-integra in light of M/s. Wipro Ltd. [ 2015 (10) TMI 826 - KARNATAKA HIGH COURT] deciding the very issue in assessee s favour and against the department that for the purpose of such foreign tax credit claim, both federal as well as state taxes stand on an identical footing. Faced with this situation, the Revenue quotes Manpreet Singh Gambhir [ 2008 (9) TMI 411 - ITAT DELHI-B] that a learned coordinate bench has already settled the issue in the department s favour as well. We are of the considered view that the given fact that hon ble Karnataka high court has already adjudicated the issue in assessee s favour, the tribunal s foregoing order must make way for the hon ble higher judicial forum s wisdom by following judicial discipline. We accordingly accept the assessee s instant sole substantive grievance in principle and direct the AO to frame his consequential computation as per law. Assessee appeal allowed.

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• 2025 (3) TMI 1420
  TP Adjustment - Comparable selection - HELD THAT:- Exclusion of Cosmic Global from the final list of comparables company earns overseas revenue only from medical transcription, translation and consultancy services. Hence, it is clear that revenue from BPO is only from domestic operations. Thus, Cosmic s export revenue from BPO services is 0%, therefore, fails Ld. TPO s own filter of having at least 75% export sales. In fact, Cosmic was rejected by the co-ordinate bench in assessee s own case for AY 2009-10 [ 2023 (2) TMI 1103 - ITAT DELHI] on the ground that it fails export filter of 75% and hence cannot be considered. Eclerx Services excluded on the ground of functional dissimilarity. TCS e-Serve company is functionally comparable. We, therefore, direct the Assessing Officer to include this company in the set of comparables. Recomputing the profit level indicator of the assessee by erroneously considering foreign exchange gain/loss as a non-operating item, even though the same has been considered as operating in prior assessment years - We are of the considered view that considering the business profile of the assessee, this contention raised on behalf of the assessee about inclusion of foreign exchange gains in operating revenue finds merit. We are inclined to agree with the assessee that the foreign exchange gain earned by the assessee is in relation to the revenue earned from its AE in connection with provision of ITES. We find that foreign exchange gain directly results from consideration received from rendering ITES to AE and therefore, we fail to understand how such foreign exchange fluctuation gain should be considered as non-operating. Thus, we allow this ground of appeal raised by the assessee and direct the Assessing Officer/TPO to treat the forex gains as operating income of the assessee. Ground No. 5 is allowed. Computation of working capital adjusted margins of comparable companies - We find that the CIT(A) even directed TPO to consider the correct working capital adjusted margins but this was not done by the TPO in the appeal effect order. We accordingly, direct the Assessing Officer/TPO to examine and consider the correct margins of Interglobe in the case of the assessee. Ground No. 6 is allowed for statistical purposes. Inclusion of comparables rejected by the TPO viz. Axis-IT T Ltd. ICRA Online - ICRA passes the export earnings filter of 75%. The earnings from outsourced services fees segment as on March 31, 2010 is Rs. 128,046,000 and the export earnings are Rs. 111,409,000 which are almost 87% of the total revenue from the BPO services. Therefore, ICRA should be retained as a suitable comparable. This Ground No. 2 is dismissed. Motif India Infotech - Annual report of the company is available. The TPO has not put forward any other argument for the rejection of this comparable. Accordingly, Motif India Infotech Pvt Ltd should be considered for the purposes of TP analysis. Therefore, we are of the considered opinion that the ld. CIT(A) rightly directed inclusion of Motif India Infotech Pvt. Ltd.

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• 2025 (3) TMI 1419
  Revision u/s 263 - Setting aside the assessment order U/s 147 r.w.s. 144B - assessee was reopened u/s 147 on the basis of information that the assessee had received as interest on enhancement of compensation on compulsory acquisition during the year which he had claimed exempt income 10(37) - whether the interest received under section 28 of the Land Acquisition Act on enhanced compensation for acquisition of land, is exempt u/s 10(37) or will be exigible to tax under the income from other sources in view of amendment w.e.f 01.04.2010 in the provisions of section 56(2)(viii) and 57(iv) of the Act. ? HELD THAT:- From the perusal of the facts and circumstances of the case and the position of law as on date, we are of the considered view that the language in section 56(2)(viii) and 145B(1) are plain, simple and unambiguous and that the correct legal position is that the interest received during the year on enhanced compensation under section 28 of the Land Acquisition Act, 1894 is exigible to tax u/s 56(2)(viii) r.w.s 145B(1). The assessee s claim of the same as exempt u/s10(37) of the Act is unsustainable as the provisions of section 10(37) deals with compensation only and not interest on compensation or enhanced compensation . The argument of the Ld. DR that the AO s order which ignored the decisions of Mahender Pal Narang [ 2020 (3) TMI 1115 - PUNJAB AND HARYANA HIGH COURT ] and Puneet Singh [ 2019 (1) TMI 1068 - PUNJAB AND HARYANA HIGH COURT ] becomes erroneous and prejudicial to the revenue as per the clause (d) of Explanation 2 to section 263 of the Act, needs to be endorsed. Thus, we are of the considered opinion that the AO s order is not legally compliant and is clothed with flawed appreciation of law. The AO has not made any inquiry into the legal position regarding taxability of the said receipt. We further hold that the PCIT has correctly held that the AO order is erroneous and prejudicial as it has defied the binding decisions of Mahender Pal Narang [ 2020 (3) TMI 1115 - PUNJAB AND HARYANA HIGH COURT ] and Puneet Singh [ 2019 (1) TMI 1068 - PUNJAB AND HARYANA HIGH COURT ] We further hold that the ld. PCIT was within his legal competence and has validly assumed jurisdiction u/s 263 to order re-computation of the interest on enhanced compensation in accordance with section 2(28A)r.w.s.56(2)(viii) and 145B(1) and allowing deduction u/s 57(iv).We also find that the order of the Ld. PCIT is in accordance with the ratio laid down in the cases of Sham Lal Narula [ 1964 (4) TMI 10 - SUPREME COURT ] and Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT ] and Mahender Pal Narang (supra), Puneet Singh (supra) and Inderjit Singh Sodhi (HUF) [ 2024 (4) TMI 408 - DELHI HIGH COURT ] Thus, we decline to interfere with the impugned order passed by the PCIT under section 263 of the Act holding that the order passed by the AO is erroneous and prejudicial to the interest of the Revenue. Grounds raised by the assessee are, accordingly, dismissed.

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• 2025 (3) TMI 1418
  Adjustment in absence of approval u/s 12A and 10(23C)(i) rws 10(23C)(vi) done in the processing of ITR u/s 143(1) - HELD THAT:- In principle, we are in agreement of the finding of the Ld. Addl/JCIT(A)-9, Mumbai as the impugned order is well reasoned. But the anomaly has arisen after the approval vide order dated 08.07.2024 under section 10(23C)(i) rws 10(23C)(vi) of the Act for the relevant year as the assessee s entire income having derived from the educational institution is fully exempted even after the said adjustment as the tax cannot be levied on the exempted income. We have no option except to restore the matter back to the AO to give effect to the order passed u/s 10(23C)(i) rws 10(23C)(vi) of the Act for relevant year as the assessee is entitled for claiming exemption under section 10(23C). We, therefore, direct the AO to allow the benefit of section 10(23C) of the Act and allow consequential relief to the assessee. Appeal of the assessee is allowed for statistical purposes.

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• 2025 (3) TMI 1417
  Assessment of trust - Additions of surplus raised through commercial activities - Addition on account of credited infrastructure Development fund Addition on account of depreciation HELD THAT:- CIT(A) has examined the issues in the correct prospective and rightly deleted the additions made by the A.O as held 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 11A.O has denied the claim of depreciation holding that assessee is enjoying exemption u/s 11 since inception and the assets was created out of exempt Income and thus claiming depreciation on such assets which was acquired from exempted income is amount to double deduction. Claim made for depreciation is for use of the assets while claim of capital outgo as an application is on a different footing, just because capital expenditure was considered as application of income, it could not be said that the assessee would not be entitle to claim of depreciation thereon. A.O has denied the claim of depreciation holding that assessee is enjoying exemption u/s 11 since inception and the assets was created out of exempt Income and thus claiming depreciation on such assets which was acquired from exempted income is amount to double deduction. Claim made for depreciation is for use of the assets while claim of capital outgo as an application is on a different footing, just because capital expenditure was considered as application of income, it could not be said that the assessee would not be entitle to claim of depreciation thereon. The reasoning and findings of the Ld. CIT(A) granting relief is on proper appreciation of law expounded by the judicial dicta. We do not find any reasons to interfere with the findings of the Ld. CIT(A). The appeal of the revenue is liable to be dismissed. Appeal of the revenue is dismissed.

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• 2025 (3) TMI 1416
  Eligibility for exemption u/s 11 and 12 - HELD THAT:- The grounds raised by the assessee are decided in the favour of the assessee. Addition on account of infrastructure funds - HELD THAT:- In the instant case the Infrastructure Funds are received by the assessee under the order of Government of Uttar Pradesh which was required to use as per the directions of the high-powered committee. The case of the assessee is squarely covered from the above sited case and the infrastructure funds are not taxable in the hands of the assessee. We decided the grounds in the favour of the assessee.

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• 2025 (3) TMI 1415
  TP Adjustment - addition made by AO concerning the variation in the arm s length price of power, where the AO, following the directions of the Dispute Resolution Panel (DRP), reduced the sales value of power from the assessee s reported value - AR submitted that the price at which surplus power is supplied by producers to the Indian Energy Exchange (IEX) is determined by state regulations and contracts and, therefore, cannot be considered the market value for the purposes of Section 80-IA(8) - HELD THAT:- We are of the considered view that the method adopted by the Assessee for determining the arm s length price was correct, and the adjustments made by the AO were not in line with the applicable provisions of the Income Tax Act. Therefore, in this situation, and in our opinion, the addition made by the AO on this account cannot be sustained. Accordingly, the Assessee s appeal on this issue is allowed. Arm s length price of steam - MAM selection - TPO in his order, has held that the Cost-Pius Method (CPM) is the most appropriate method for determining the arm s length price for the transaction pertaining to the transfer of steam, as opposed to the Transactional Net Margin Method (TNMM) adopted by the assessee - HELD THAT:-We are of the considered view that the AO s approach to the adjustments regarding the transfer of steam and the arm s length pricing is not consistent with the facts and circumstances of the case. Moreover. A.O. erred in reducing the loss @ 20.50% which have already been considered by Assessee. Therefore, in this situation, and in our opinion, the addition made by the Assessing Officer on this account cannot be sustained. Accordingly, the Assessee s appeal on this issue is allowed. Deduction u/s 80G for CSR contributions - As we are of the considered view that CSR contribution / expenditure, if claimed u/s 80G would defeat the very basic requirement of CSR expenditure (on total amount), Therefore, claim of 80G on CSR expenditure is not tobe allowed as per se. Accordingly, AO s action of rejecting the claim of 80G on CSR expenditure is justified. Hence, Assessee s appeal on this Ground is dismissed. Deemed income u/s 41(1) - HELD THAT:- We find that as the Assessee itself has deducted the same amount in the next years return of income, therefore, disallowing the same in this year would be tantamount to double taxation. Accordingly, Assessee s appeal on this ground is allowed.

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• 2025 (3) TMI 1414
  Addition u/s 56(2)(x) - difference between stamp duty and transaction value - Assessee submitted that the provisions of section 56(2)(x) as quoted by the AO are applicable to the purchasers whereas the assessee in the instant case is the seller - As argued since the AO has not given any finding on this issue and CIT(A) / NFAC has merely sustained the addition made by the AO without giving any finding regarding the applicability of the said provisions, therefore, he has no objection if the matter is restored to the file of the AO HELD THAT:- Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one opportunity to the assessee to substantiate his case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to make his submissions, if any, before the Assessing Officer on the appointed date.

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• 2025 (3) TMI 1413
  Reopening of assessment u/s 147 - addition u/s 69 of the Act as unexplained source of income and taxed as per the provision of section 115BBE - AO made the addition under consideration on the reason that there is difference in the claim of the Assessee in original and new return filed in response to notice u/s 148 and no proof regarding the same was submitted, whereas the Assessee has claimed that he has duly submitted the relevant details as submitted before the Tribunal - HELD THAT:- Assessee no doubt is entitled to get the statutory deductions under chapter VIA of the Act as per limit prescribed and cannot be denied benefit of the same simply on the reason that earlier in the original return of income, the Assessee has claimed lower amount than the claimed amount in the subsequent return of income filed in response to notice u/s 148 of the Act, especially when the subsequent return is accepted. And therefore in order to cut short the controversy and for substantial justice, the addition is also deleted, however, subject to verification of the relevant documents and clarification pertaining to the issue under consideration, by the AO. Appeal filed by the Assessee is allowed.

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• 2025 (3) TMI 1412
  Revision u/s 263 - lack of proper inquiry and verification regarding the deduction of Tax Deducted at Source (TDS) and the classification of income - HELD THAT:- It is clear from the order u/s 143(3) r.w.s 144B of the Act that the AO has passed a cryptic order in a perfunctory manner. He has not passed a speaking order containing the conclusion and the reasons that have led to such conclusion; especially considering the fact that the case was selected for complete scrutiny. The assessee was engaged in the business of construction of water supply projects and underground drainage projects. The main issues of the complete scrutiny were refund claim, contract receipts or fees and income from house property. The main issues of the complete scrutiny were refund claim, contract receipts or fees and income from house property. The assessee had filed two submissions vide letters dated 03.02.2021 and 02.03.2021. The details as per reply dated 03.02.2021 include unsecured loans, sundry creditors, other liabilities, interest payments details of expenses party-wise such as sub-contractor purchases, labour charges and wages etc. In the reply dated 02.03.2021, the assessee had furnished reply in respect of unsecured loan, other liabilities, professional fees etc. It is, therefore, clear that details of TDS on various expenses, as pointed out by the PCIT in the show cause notice and the order u/s 263, have not been called for by the AO. He has not examined as to whether TDS provisions u/s 194C, 194J and 192 of the Act were duly complied with by the assessee. The AO has not even seen the audit report of the assessee, where in the Annexure to Form No.3CD, all the columns of details of deduction or collection of tax as per provisions of Chapter XVII-B or XVII-BB of the Act are blank. It is, therefore, evident that the AO has not conducted even the basic inquiry and verification before passing the assessment order. He was required to put specific query to the assessee on the issue of TDS because huge expenses of more than Rs. 31 crore has been claimed by the assessee on various expenses, which are prima facie covered under provisions of section 194C, 194J and 192 of the Act. It is well settled that the AO performs dual role, i.e., he is not only an adjudicator but also an investigator. He is supposed to carry out proper inquiry and investigation and pass the order after confronting the assessee about the result of enquiry, which emerge from the investigation and scrutiny carried out by him during the assessment proceedings. As discussed earlier, the AO has not properly inquired about the non-compliance of the assessee regarding the provisions of Chapter XVII-B and XVII-BB. He has also failed to examine the issue in terms of provisions of section 40(a)(ia) of the Act. It is also seen that the assessee has shown income from house property, which was actually required to be offered as capital gain u/s 45 of the Act. The difference between the value determined by the SVA and declared consideration which was 9.02% and was more than the tolerance limit of 5% for the subject assessment year. The assessment order and the details called for and submitted during assessment proceedings are totally silent on these issues. In view of these facts, the order of the AO was certainly erroneous in so far as it is prejudicial to the interests of revenue within the meaning of section 263 of the Act. The ld. PCIT has rightly invoked provisions of section 263 of the Act, which is upheld. Whether the direction issued by the ld. PCIT to disallow 30% of various expenses due to alleged failure of assessee to deduct TDS and addition u/s 50C is correct in the given facts and circumstances of the case? - It is not clear from the submission of the appellant that the daily wages and labour charges were for daily wage labourers or labour on contract basis. Therefore, the direction of the ld. PCIT is modified accordingly. In other words, the order of ld. PCIT to set aside the assessment order of AO is upheld but the AO is directed to verify requirement of TDS deduction on daily wage and labour charges. If there is no requirement of deduction due to the amount being less than the threshold limit of Rs. 30,000/- for single payment or Rs. 1 lakh in aggregate during the financial year, then such expenses should be allowed and only the remaining expenditure should be disallowed and added to the total income. This ground is partly allowed. Difference between the stamp duty value and sale consideration - The percentage of variation is 9.02% [(16,06,112 / 1,78,06,112) x 100]. The appellant submitted that the variation is less than 10% and hence no addition is needed. We find that during the subject AY.2018-19, the permissible limit was 5% and not 10%. The words five per cent were substituted by the words ten per cent by the Finance Act, 2020 w.e.f. 01.04.2021. Hence, it is applicable for AY.2021-22 and the subsequent assessment years. The order of ld. PCIT on this issue is accordingly upheld. This ground is dismissed. Appeal of the assessee is partly allowed.

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• 2025 (3) TMI 1411
  Rejection of application for grant of final registration U/s 12A(1)(ac)(iii) and 80G(5)(iii) for want of proper submission - HELD THAT:- The principle of audi alteram partem which envisage that parties be are eligible for fair hearing or that no one should be condemned unheard. Thus, considering the prayer of assessee that he undertook on behalf of assessee-trust to be more vigilant in future in making compliance, this appeal of assessee is restored back to the file of ld. CIT(E) to pass the order afresh in accordance with law. Needless to direct that before deciding the application afresh, the ld. CIT(E) shall grant reasonable and fair opportunity of hearing to the assessee - Appeal of assessee is allowed for statistical purposes.

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• 2025 (3) TMI 1410
  LTCG - valuation of the property as on 01.04.1981 - valuation of the property as determined by the Departmental Valuation Officer (DVO) - HELD THAT:- The Government approved valuer has considered nearest data comparable considered by him was 10.04.1981 whereas the DVO has considered from the period January 1990 to March 1990 and he dragged back rates from 31.03.1990 to 01.04.1981. There is basic difference of valuation adopted by the DVO which is clearly visible that he has considered leasehold property against the freehold property and we observed that ld. CIT (A) has tabulated the various variation for the purpose of valuation adopted by the DVO which are (a) adopted properties involving leasehold property; (b) considered the comparables for the leasehold properties dated 31.03.1990 and dragged back the valuation to 01.04.1981 i.e. 9 years later than the date of valuation; (c) ignored size of the property; (d) ignored the location advantage and frontage of the existence of the property and date of inspection of the property is 13.11.2017 on which the property was not in possession of the assessee and building was demolished at the time of valuation. Considering the major issues involved in valuation report submitted by the DVO, ld. CIT (A) gave relief to the assessee by observing that the fair market value of the property determined by the Government approved valuer is closer and correct fair market value and can be adopted for computation of capital gain. Therefore, he directed the AO to delete long term capital gain and rejected the fair market value of the property by the DVO in its report on 01.12.2017 - Decided against revenue.

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• 2025 (3) TMI 1409
  Rejection of books of accounts - estimating the total income of the assessee - HELD THAT:- Once the books of account are rejected by invoking the provisions of section 145 of the Act and the income is estimated to the best of judgment as per the provisions of section 144 of the Act, the said estimate is made in substitution of the business income that is to be computed in accordance with the provisions contained in sections 30 to 43D as laid down in section 29 of the Act. Consequently, all the deductions which are referred to in sections 30 to 43D of the Act are deemed to have been taken into account while making such an estimate. Useful reference in this regard may be made to the decision of Indwell Constructions [ 1998 (3) TMI 121 - ANDHRA PRADESH HIGH COURT] and Banwari Lal Banshidhar [ 1997 (5) TMI 37 - ALLAHABAD HIGH COURT] For these reasons, we do not agree with this plea of the Revenue. No infirmity in the order of the Ld. CIT(A) in rejecting the books of accounts and estimating the total income of the assessee. We accordingly uphold the same.

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• 2025 (3) TMI 1408
  Approval granted u/s 153D - as argued that the approval obtained was done in a mechanical manner, i.e. approval was granted without due application of mind and without reviewing the essential documents by the approving authority - HELD THAT:- We are of the considered view that the approval has not been granted in a mechanical manner by the Approving Authority, and therefore, this legal ground of the assessee is hereby rejected. Assessment u/s 143(3) r.w.s. 153A/153C must strictly be based on incriminating material that is found during the course of a search in case of unabated assessment year - The legal proposition, that in case of search cases relating to unabated assessment years, addition can be made only on the basis of incriminating material found during the course of search, is a well-settled / well-accepted legal proposition. There is no dispute so far as this legal proposition is concerned. Therefore, this brings us to the question whether in the instant case, the additions have been made on the basis of incriminating material found during the course of search or not. Assessee has stated that all the additions for all the assessment years before us (seven in total) have not been made on the basis of any incriminating material found during the course of search. It has stated that all the additions have been made only on the basis of recommendation of special auditor and therefore, no addition is liable to be sustained. Addition made in absence of any incriminating material found during the course of search - Additions have been made during the course of assessment in the case of the assessee, and evidently some of which is on the basis of incriminating material found in the course of search as pointed out by us in the preceding paragraphs, in interest of justice, the matter is restored to the file of CIT(Appeals) so as to allow one more opportunity to the assessee to file documentary evidence in support of its case and thereafter, in light of the evidence produced by the assessee, decide each of the disallowances/additions on merits of the case. If however, with respect to any particular addition/disallowance, the assessee is able to substantiate/ demonstrate that the particular addition does not have any reference to any incriminating material found during the course of search, then keeping in view the legal principle that in case of search cases for unabated assessment years, no additions can be made in absence of any incriminating material found during the course of search, such addition may be deleted in the hands of the assessee. Once books of accounts were rejected u/s 145 (3) no addition can be made in respect of items reflected in the books of accounts - As in light of these facts, certain information was sought from the assessee during the course of assessment proceedings by the Special Auditor, but the assessee was found to be absolutely non-cooperative. The assessee took every step to thwart/stonewall the assessment proceedings, including filing of writ petition challenging the validity of search proceedings as well as challenging the validity of appointment of special auditor in this case. Taking into consideration the assessee s particular set of facts, dismissed both the writ petitions filed by the assessee, thereby validating the initiation of search proceedings as well as appointment of special auditor, looking into assessee s particular set of facts. As mentioned above, the additions have not been made only taking into consideration the books of accounts of the assessee but also taken into consideration the incriminating material found during the course of search. Therefore, the above legal argument does not come to the support of the assessee and the case laws/judicial precedents on which reliance has been placed by the assessee are found to be distinguishable on facts. This legal argument of the assessee is hereby rejected.

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• Customs

• 2025 (3) TMI 1407
  Challenge to non-grant of relief in terms of drawback under Instruction No. 4/2019 issued by Central Board of Indirect Taxes and Customs - Petitioner s case is as soon as the Instruction No. 4/2019 was issued, within a period of three months, the representations have been made - HELD THAT:- The reason for rejection, if any, ought to be spelt out and the order cannot be simply a cryptic order stating that the same has not been considered favourably. This Court is of the opinion that the CBIC, Drawback Division ought to look into the matter and pass a reasoned order on the representations of the Petitioner while considering the purpose and the rationale behind issuance of the said Instruction No. 4/2019 dated 11th October 2019. Conclusion - The CBIC, Drawback Division, must reconsider the Petitioner s applications and issue a reasoned order. The present writ petition may be treated as a representation and a reasoned order may be passed by the CBIC, Drawback Division within three months - Petition disposed off.

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• 2025 (3) TMI 1406
  Entitlement to duty drawbacks when exporting mobile phones, which have been unlocked and accordingly they had availed of the drawbacks - HELD THAT:- As per the judgement in M/s AIMS Retail Services Private Limited v. Union of India Ors. [ 2025 (2) TMI 596 - DELHI HIGH COURT] , this Court has held that duty drawback may be claimed in respect of unlocked mobile phones being exported, as the mere act of unlocking does not constitute the phones being taken into use within the meaning of the applicable provisions. Given that a mobile phone is capable of being utilized in several ways, the mere unlocking thereof cannot be deemed as the Petitioners having taken it into use. Furthermore, this Court has observed that with the expansion of mobile phone manufacturing and assembly in India, the volume of exports is expected to increase. The mere fact that the said products are configured for use in foreign jurisdictions cannot operate as a ground to deprive the Petitioners of their rightful claim to duty drawback under the prevailing legal framework. The present case also pertains to the Respondents rejection of the Petitioner s request for duty drawback on unlocked mobile phones being exported. Conclusion - The unlocking of mobile phones for export does not constitute use under the Duty Drawback Rules. Exporters are entitled to duty drawbacks unless explicitly restricted by law. Petition disposed off.

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• 2025 (3) TMI 1405
  Refund of the Countervailing Duty (CVD) and Special Additional Duty (SAD) paid after failing to fulfill export obligations under the Advance Authorization and Export Promotion Capital Goods (EPCG) schemes - failure to fulfill export obligation - HELD THAT:- On perusal of Section 142, it is apparent that the respondent authorities could not have referred to and relied upon the provisions of section 142(8)(a) as the same would not be applicable to the facts of the case as the petitioners did not deposit the amount of duties in any recovery proceedings but the petitioners had voluntarily deposited the amount of duties on reconciliation of the imports made by the petitioners with the Advance Authorisation and EPCG license entitlement. Therefore, the case of the petitioners would be squarely covered by provisions of section 142(3) of the CGST Act which provides for considering the refund claim of the petitioners as per the existing law at the relevant time when import was made in the year 2016. As held by Telangana High Court in case of Principal Commissioner of Customs v. M/.s Granules India Limited [ 2024 (12) TMI 725 - TELANGANA HIGH COURT ], the respondents were required to process the refund claim under section 142(3) read with section 142(6)(a) of the CGST Act. The Hon ble Telangana High Court held that The Tribunal, by taking into account the provisions of sub sections (3), (5) and (8A) of Section 142 of the CGST Act, has held that the assessee is entitled to claim refund of CVD and SAD paid after the appointed day. Accordingly, the assessee had been held to be entitled to refund of central value added tax credit of Rs. 3,28,75,733/-. This Court in case of Indo-Nippon Chemicals Co. Ltd. v. Union of India [ 2002 (2) TMI 136 - GUJARAT HIGH COURT ], has also held that assessee would be entitled to the refund claim as per the proviso of section 11B of the Central Excise Act, 1944 and clause(c) of proviso could not be construed as enlarging the scope of the main provision in sub-section (1) of section 11B read with Cenvat Credit Rules,2004. Conclusion - Refund claim filed by the petitioners is required to be processed under the provisions of Central Excise Act, 1944 read with Cenvat Credit Rules, 2004 as per the provisions of section 142(3) read with 142(6)(a) of the CGST Act,2017. Therefore, without disturbing the order rejecting Form TRAN-1 passed by the respondent authorities, so far as order-in-original dated 10.10.2019 rejecting the refund claim of the petitioner for Rs. 45,84,371/- is concerned, is herby quashed and set aside and the matter is remanded back to the respondent authorities so as to decide the refund claim of the petitioners on merits as per the provisions of Central Excise Act, 1944 read with Cenvat Credit Rules, 2004 in view of provisions of section 142(3) read with section 142(6)(a) of the CGST Act, 2017 The petition is partly allowed by way of remand.

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• Securities / SEBI

• 2025 (3) TMI 1404
  Setting aside of the cancellation of sale of landed properties in pursuance of e-auction initiated by SEBI upon acceptance of the remaining consideration money and/or appropriate writ for refund of earnest money was dismissed HELD THAT:- Proceeding whereby e-auction of the properties, confirmation and cancellation of the auction sale was taken in accordance with relevant provisions of the Rules contained in the Second Schedule of Income Tax Act with necessary modifications. Rule 58 of the Second Schedule of Income Tax Act and the provision contained in Order XXI Rule 86 of the Civil Procedure Code has extended a discretion upon the tax recovery officer/authorities to decide whether to forfeit the EMD or not and if so to what extent. The facts and circumstances obtaining in the case at hand, no such discretion was exercised by the respondent and the respondent proceeded to forfeit the entire deposit amount in a manner as if it was automatic. Needless to say, no opportunity of hearing was afforded to the appellants. The entire EMD was directed to be forfeited without taking into consideration the loss and damage suffered by the respondent owing to the default on the part of the appellants in making the payment of balance consideration money. In course of hearing of the instant appeal, the appellants never endeavored to challenge the finding of learned Single Judge whereby learned Single Judge disbelieved the case of the appellant to the effect that he was prevented by the intervention of COVID-19 in making payment of the balance consideration money within time specified in the contract. We, therefore, have no justification to interfere with such finding of learned Single Judge. Accordingly, we uphold the same. Set aside the impugned judgment and order so far as it relates to the rejection of the prayer of the appellant for return of EMD. The respondent shall proceed to determine the nature and extent of forfeiture of the EMD amount afresh. In doing so, the respondent shall provide sufficient opportunity of being heard to the appellant. The respondent is at liberty to hear any other parties and consult any document as it deems necessary. The respondent shall take a decision in this regard within 8 weeks from date and communicate its decision to the party it heard forthwith thereafter.

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• Insolvency & Bankruptcy

• 2025 (3) TMI 1403
  Wilful disobedience - binding nature of Resolution Plan, on any creditor including the Central Government, State Government or any local authority, once it is approved by an adjudicating authority under sub-section (1) of Section 31 of the Insolvency and Bankruptcy Code, 2016 - amendment to Section 31 by Section 7 of Act 26 of 2019 is clarificatory/declaratory or substantive in nature? - initiation of any proceedings for recovery of any of the dues from the Corporate Debtor, hich are not a part of the Resolution Plan approved by the adjudicating authority, after approval of resolution plan by the Adjudicating Authority a creditor including the Central Government, State Government or any local authority. HELD THAT:- All the dues of any of the stakeholders including the statutory dues owed to the Central Government, any State Government or any local authority, which were not part of the Resolution Plan, stood extinguished from the date on which the Resolution Plan stood approved. This Court has held that a successful resolution applicant cannot suddenly be faced with undecided claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor. It has also been held that all claims must be submitted to and decided by the RP so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. There are no hesitation in holding that the demands raised by the respondents/authorities for a period prior to the date on which the learned NCLT has approved the Resolution Plan were totally contemptuous in nature. The respondents could not have raised the said demands inasmuch as they are not part of the Resolution Plan. Undoubtedly, in the present case, in spite of public notice, neither the State of Chhattisgarh nor its authorities raised any claim before the CoC. In that view of the matter, the case of the present Petitioner is specifically covered by the judgment of this Court in the case of Ghanshyam Mishra, which judgment was brought to the notice of the respondents/authorities, the respondents/authorities could not have proceeded with the recovery proceedings - When the law laid down by this Court in the case of Ghanshyam Mishra is clear and unambiguous and specifically when the Petitioner s own case was part of the batch which is specifically dealt with by this Court, the respondents/alleged contemnors ought not to have proceeded further with the recovery proceedings and ought to have dropped them forthwith. The continuation of such proceedings despite the judgment and order of this Court being pointed out to their notice is nothing but contemptuous in nature. There are no hesitation in holding that the continuation of the proceedings by the respondents/authorities even after the judgment of this Court in Ghanshyam Mishra was specifically brought to their notice is contemptuous in nature. However, we do not propose to proceed against the respondents/contemnors inasmuch as they are entitled to benefit of doubt. Conclusion - The act of the alleged contemnors is contemptuous in nature, it is not proposed to take any action against them. The demand notices issued by the contemnors on the Petitioner Company and all proceedings pursuant thereto are held to be illegal and the same are quashed and set aside. The contempt petition accepting unconditional apology of the contemnors disposed off.

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• PMLA

• 2025 (3) TMI 1402
  Seeking grant of regular bail - prolonged detention - right to speedy trial - Money Laundering - proceeds of crime - alleged AgustaWestland VVIP helicopter scam - routing illicit funds through shell companies - alleged bribe payments through middlemen - HELD THAT:- This Court notes that the learned counsel for the applicant primarily argued the present bail application on the ground of delay in concluding investigation and consequently the trial, and placed reliance on the order of the Hon ble Supreme Court whereby the applicant herein has been granted bail in the predicate offence on the ground of delay in trial itself - this Court has given consideration to the material placed on record as well as the stage of the investigation and the fact that in the present case, though the applicant has been in judicial custody for more than six years, investigation in the case has yet not been concluded, charges have not been framed and the trial has not begun. This Court while deciding the present bail application, in the backdrop of the fact that applicant has been granted bail by the Hon ble Supreme Court in the predicate offence, has considered the issue of grant of bail to the applicant viz-a-viz the delay in conclusion of investigation and initiation of trial, especially the fact that the applicant has almost completed the period of judicial custody equivalent to the maximum punishment attracted in the present case i.e. under Section 4 of PMLA. Considering these circumstances, the merits of the allegations against the applicant were not considered at this stage. In cases under PMLA, while the legislature has incorporated stringent provisions such as Section 45 to regulate the grant of bail, by prescribing the twin test, the Hon ble Supreme Court has also held that such provisions must be harmoniously interpreted with Article 21 of the Constitution of India. It has also been held that the statutory bar under such bail provisions cannot be permitted to override an accused s right to speedy trial, nor can statutory restrictions be construed as a tool for indefinite incarceration. In Prem Prakash v. Union of India [ 2024 (8) TMI 1412 - SUPREME COURT ], the Hon ble Supreme Court has reiterated the fundamental right to speedy trial enshrined under Article 21 of the Constitution of India, and held that keeping persons behind bars for unlimited periods of time, in the hope of speedy completion of trial, would deprive the fundamental right of persons under Article 21. This Court is of the view that while Section 45 of PMLA imposes stringent conditions for the grant of bail, constitutional courts, including the Hon ble Supreme Court, have also emphasized time and again that this provision cannot be interpreted in a manner, to confine the accused in judicial custody for an indefinite period of time. As noted above, the Hon ble Supreme Court, in multiple decisions, has held that the right to bail must be read into such provisions where there is an inordinate delay in the completion of trial which effectively converts pre-trial custody into a punitive sentence. The present case presents an exceptional situation where the applicant has already been in custody for over six years and two months, yet the trial has not even commenced due to the incomplete investigation. Such prolonged incarceration, without any foreseeable conclusion of trial, would infringe upon the applicant s fundamental right to a speedy trial under Article 21 of the Constitution. Section 436A of the Cr.P.C. is a statutory safeguard designed to prevent excessive and disproportionate pre-trial detention. It provides that an accused, who has undergone detention for a period equivalent to one-half of the maximum sentence prescribed for the offence, shall ordinarily be released on bail unless the court, for reasons recorded in writing, directs otherwise. In the context of offences under PMLA, where the maximum sentence is ordinarily seven years, the one-half threshold would be three and a half years. Although the proviso to Section 436A of Cr.P.C. allows the court to extend the period of detention beyond the one-half threshold based on the facts of the case, yet such extended detention cannot be indefinite and the Courts must assess the necessity of continued incarceration in light of the specific facts, the stage of the trial, and the overall interests of justice. While the proviso to Section 436A allows courts to extend detention beyond this period in exceptional circumstances, the present case is not one where the applicant s custody is only marginally beyond the halfway mark. Instead, the applicant has been in custody for over six years and two months which is alarmingly close to the maximum punishment without even being adjudicated guilty. It was pointed out that more than 100 witnesses are to be examined in the present case and there are more than 1000 documents relied upon by the prosecution. Given that the trial is unlikely to conclude before the applicant completes even seven years in jail, further incarceration would render the entire purpose of a trial meaningless. In this Court s opinion, the prolonged incarceration of the accused, of about six years and two months, and the fact that investigation is not yet complete and trial has not yet begun, and there are more than 100 witness to be examined in this case, would entitle him to grant of regular bail, thereby overriding the statutory bar under Section 45 of PMLA and proviso to Section 436A of Cr.P.C. Considering the period of incarceration of about six years and two months undergone by the applicant, and in view of the fact that he has also been granted bail in the case pertaining to predicate offence by the Hon ble Supreme Court on the ground that the investigation has not been completed and the trial has not even begun, and considering that there seems to be no possibility of trial in this case concluding too within the remaining duration of the maximum prescribed sentence under Section 4 of PMLA, inasmuch as the same has not even begun as of now, this Court is inclined to grant regular bail to the present applicant, on furnishing a personal bond and surety in the sum of Rs.5,00,000/- each and on surrendering the passport before the learned Trial Court, which be not released without permission of this Court, considering that investigation qua the present applicant is still pending. Conclusion - The applicant s prolonged detention without trial violates his right to a speedy trial under Article 21. Application allowed.

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• Service Tax

• 2025 (3) TMI 1401
  Process amounting to manufacture - process of drawing wire from wire rod - liability of appellant to pay Service Tax under the transportation of goods by road (GTA) service category when the vehicles were hired from local transporters who did not issue consignment notes - business auxiliary services. Business auxiliary service - HELD THAT:- From the definition of business auxiliary service , it is seen that if the activity undertaken by the appellant amounts to manufacture of excisable goods, then the said activity shall be excluded from the said definition. As the activity of drawing of wire from wire rod supplied by the customer amounts to manufacture , the services undertaken by the appellant do not fall within the ambit of the taxable service of business auxiliary service as defined under Section 65(19) of the Act. Thus, the job work undertaken by the appellant does not amount to business auxiliary services , as held in the impugned order. Consequently, the demand of Service Tax confirmed under this category is not sustainable and hence, the same is set aside. Demand confirmed under the category of GTA service - HELD THAT:- The appellant has hired vehicles from local vehicle providers who have not issued any consignment notes. Hence, they cannot be considered as goods transport agencies within the meaning of Section 65(50b) of the Finance Act, 1994. The liability of the appellant to pay Service Tax under the category of transportation of goods by road (GTA) service arises only when the appellant receives services from a goods transport agency who issues a consignment note, by whatever name it may be called. In these circumstances, the appellant is not liable to pay Service Tax under the category of GTA service in respect of the expenditure incurred by them for transportation of goods during the impugned period as the services were not received from a GTA who issues consignment notes - as the suppliers were not goods transport agencies within the meaning of Section 65(50b) of the Act as they have not issued any consignment notes, the services received by the appellant cannot be held liable to Service Tax under reverse charge mechanism at the hands of the appellant under the category of GTA service. Accordingly, the demand of Service Tax confirmed under this category is not sustainable and therefore, the same is set aside. Interest and penalty - HELD THAT:- As the demands confirmed against the appellant do not survive, the question of demanding interest thereon or imposing penalties does not arise. Conclusion - i) As the activity of drawing of wire from wire rod supplied by the customer amounts to manufacture , the services undertaken by the appellant do not fall within the ambit of the taxable service of business auxiliary service as defined under Section 65(19) of the Act. ii) Service tax under the GTA category requires issuance of consignment notes by a goods transport agency. The impugned order is set aside - appeal allowed.

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• 2025 (3) TMI 1400
  Validity of demand notice under proviso to Section 73 when tax liabilities have already been accepted by the Appellant by filing ST-3 Returns - demand of Service Tax on the basis of figures of turnover in Balance Sheets - demand of Service Tax on services covered under RCM, when the same is claimed as Cenvat credit by the Appellant - demand of inadmissible credit in respect of services, said not to be input services - penalty u/s 78 - personal penalty on Asstt. Vice President - Demand of late fee for filing ST-3 Returns late, beyond the due date, under Section 70 of the Finance Act, 1994. Whether demand notice is justified under proviso to Section 73 when tax liabilities have already been accepted by the Appellant by filing ST-3 Returns? - HELD THAT:- An in-depth reading of tprovisions of Section 73(1B) of the Finance Act, 1994 reveals that where tax was self- assessed and returns were furnished, no notice of demand was required to be issued under Section 73(1). It is further found that in the present case, tax was self- assessed and service tax liability was declared in returns as already admitted in the SCN as well as impugned order. So, issuance of SCN for recovery of self- assessed tax is patently unwarranted and legally incorrect. There should also be no demand of interest under Section 75. It is also found that the service tax liability declared in the ST-3 returns was deposited before issuance of SCN. As per provisions Section 73(3), if short levied or non-paid service tax deposited before issuance of the SCN, no notice under sub Section (1) of 73 in respect of the amount so paid was required to be issued. Whether demand of Service Tax on the basis of figures of turnover in Balance Sheets is legally correct? - HELD THAT:- It indicates that no service tax was chargeable on sale of flats by the Appellant in its own account. Service tax was payable only on the commission amount earned by the Appellant for sale of flats of other builders. The demand of service tax on the turnover shown in Balance Sheets is incorrect. Thus, demand of service tax on differential value, i.e., difference between figure of turnover shown in Balance Sheets and value of service declared in ST-3 is unjustified and is not sustainable. It is a settled legal position that demand raised on the basis of Balance Sheet or Form 26AS is not sustainable as held in M/s Lord Krishna Real Infra P. Ltd., [ 2019 (2) TMI 1563 - CESTAT ALLAHABAD] . It has been held that by raising demand on the value shown in the Balance Sheets without any investigation, the Department had not discharged the onus on them. Following the ratio of the above decision, the demand raised on the figure of Balance Sheet is not sustainable. Whether demand of Service Tax on services covered under RCM is justified when the same is claimed as Cenvat credit by the Appellant? - HELD THAT:- It is a case of revenue neutrality with no loss of revenue to the Exchequer. It is a settled law that in case of revenue neutrality, demand of any differential duty would not be sustainable. In this context, reliance is placed on the judgement of the Hon ble Supreme Court in the case of V.E. Commercial Vehicles Ltd., [ 2019 (9) TMI 887 - SC ORDER] . In the above case, the Hon ble Supreme Court held that the demand of differential duty would not be sustainable as the same is available as rebate to the assessee. So, it is revenue neutrality case. Decision of the Hon ble Supreme Court in the case of Mahindra Mahindra Ltd., [ 2019 (11) TMI 783 - SC ORDER] is also referred to. In this case the Court has enunciated that demand of differential duty is not sustainable on the ground of revenue neutrality in as much as differential duty would be available as credit to the assessee. In view of the above judgments, it is clear that demand in the present case is not sustainable. Whether demand of inadmissible credit in respect of services, said not to be input services, is justified or not? - HELD THAT:- The business of the Appellant to provide real estate agent services whereunder, as commonly known, they arranged customer s meeting, arranged their visits to location, provide free catering to customers and also used to visit abroad for promotional activities of its business. Therefore, any service for undertaking above said activities were covered in the definition of input services - In view of utilisation of the services, it is held that they were covered under the definition of input services and credit availed thereon would be admissible. Whether penalty under Section 78 is imposable? - HELD THAT:- As there was no requirement to issue notice u/s 73, the imposition of penalty u/s 78 is not warranted. In this regard, the Tribunal in the case of Ms Mass Marketing and Advertisement Services Pvt. Ltd., [ 2006 (2) TMI 20 - CESTAT BANGALORE] where it has been held that no penalty is imposable if service tax deposited before issuance of show cause notice. The same view has also been taken in the case of [ 2004 (8) TMI 3 - CESTAT, BANGALORE] where it was held that no penalty is imposable if service tax is deposited before issuance of SCN. Whether personal penalty on Asstt. Vice President is justified? - HELD THAT:- In the present case, evasion of service tax has not been established. There is no case of issuance of fake invoice or challan and also no case of wrong availment of credit. Nothing has been discussed that taxes were collected but not paid. Hence, no penalty is imposable. Demand of late fee for filing ST-3 Returns late, beyond the due date, under Section 70 of the Finance Act, 1994 - HELD THAT:- There are no provisions to raise any demand notice for late fees. It is provided that a Return can be filed with late fees of maximum amount of Rs.20,000/-. It does not prescribe that incase of non- payment of late fees any demand notice is required to be issued. Lack of any provision for issuing SCN for demand of late fee, it is refrained to confirm any such demand. Conclusion - i) Self-assessed tax liabilities declared in returns do not warrant an SCN under Section 73. ii) Service tax demands based on Balance Sheet figures require thorough investigation to establish liability. iii) Revenue neutrality precludes sustainable demands for differential duty. iv) Services related to business promotion and operations qualify as input services for CENVAT credit purposes. v) No penalties imposed. Appeal allowed.

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• 2025 (3) TMI 1399
  Condonation of delay in filing appeal - whether the appeal filed by the appellant was within the permissible time limit as prescribed under Section 85 of the Finance Act, 1994? - HELD THAT:- The fact of the receipt of the order is not in dispute. It is not even the case of the Appellant that the Order of the Adjudicating Authority was not received by the Appellant on 29.07.2022 and Appeal was to be filed within 60 days i.e. up to 29.09.2022. The Commissioner (Appeals) chould have condoned the delay further by one month i.e. upto 29.10.2022. However, the Appeal was filed before the Commissioner (Appeals) on or after that date. That being so Commissioner (Appeals) has rightly held that in view of the Hon ble Supreme Court decision in the case of Singh Enterprises [ 2007 (12) TMI 11 - SUPREME COURT] he could not have condoned the delay and dismissed the Appeal. The Appellant had filed the appeal before the Commissioner (Appeals) beyond the period which could have been condoned by the Commissioner (Appeals) as per Section 35 of the Central Excise Act. Judgment relied upon by Commissioner (Appeals) has clearly laid down that Commissioner (Appeals) has no Authority to condone the delay beyond 30 days. Conclusion - The appeal is filed beyond the permissible period and could not be entertained. Appeal is dismissed.

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• Central Excise

• 2025 (3) TMI 1398
  Levy of penalty for shortages of raw materials and finished goods - appellant paid the duty before the issuance of the SCN - HELD THAT:- Appellant were unable to fully explain the shortage of raw materials and finished goods at the time of stock verification and, in order to put an end to the litigation, they paid the duty and hence, penalty should not have been imposed in respect of these demands. The submission of the appellant agreed that since the appellant had paid the central excise duty along with interest before issuance of the SCN, as per Section 11A(2B) of the Act, there was no necessity to issue the Show Cause Notice for these demands. as the duty involved has already been paid. Accordingly, the SCN for these issues need not have been issued. In these facts and circumstances, the penalties imposed on the appellant on these issues are not warranted and hence, the penalties imposed on the appellant on these demands are set aside. Regarding the liability to central excise duty amounting to Rs.1,21,936/- on transport insurance, the appellant has collected transport insurance charges @ 1% on the value from the customers and deducted the same from the assessable value. However, the actual premium paid by them was found to be less than the 1% collected. In this regard, it is observed that the profit earned by the appellant on the transport insurance is not liable to be included in the assessable value, as has been held by the Tribunal in the case of TCP Ltd. v. Commissioner of C.Ex., Madurai [ 2007 (10) TMI 512 - CESTAT, CHENNAI ]. Conclusion - i) The demands of Rs.40,445/- and Rs.18,031/- (inclusive of cesses), along with interest, confirmed on account of shortage of inputs and shortage of finished goods respectively, already paid by the appellant, are upheld. No penalty is imposable in respect of these demands. ii) The demand of Rs.1,21,936/- confirmed on account of inclusion of transit insurance in the assessable value is set aside. No penalty is imposable on the appellant in respect of this issue. Appeal disposed off.

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• 2025 (3) TMI 1397
  Refund upon finalisation of provisional assessments - requirement to prove conclusively that the incidence of duty burden has not been passed on to the ultimate buyer - compliance to the principle of the doctrine of unjust enrichment - HELD THAT:- It is evident from the records that the Original Authority in the denova Order-in-Original No. 08/2016 dated 05.08.2016 has arrived at the decision that the appellant has borne the excise duty burden and not passed on to the dealers after scrutinizing the credit notes, Chartered Accountant s certificate, extract of ledger for discounts, etc., and ordered for sanction of the refunds. Whereas in the impugned orders dated 14.09.2017, the Commissioner of GST and Central Excise (Appeals), Coimbatore has held that refund claims were hit by the bar of unjust enrichment as the appellant has not conclusively established that the burden of excise duty in relation to which such refunds are claimed has not been passed on by him to any other person (ultimate consumer) and the verification process done by the Original Adjudicating Authority was only confined to the first buyers i.e., Dealers. Whether the incidence of duty was passed on to any other downstream buyer was not verified by the Original Adjudicating Authority and also from the records, it was ascertained that the assessee has not submitted any such evidence. An in-depth examination of the Hon ble Supreme Court s judgment in the case of Addison Co. Ltd. [ 1997 (3) TMI 98 - SUPREME COURT] makes it clear that there is a presumption that the full incidence of duty burden has been passed on to the buyer of the goods. The refund of any duty can be made only to the person who bears the incidence of duty and it is necessary to conduct verification as to ascertain who actually have borne the burden of duty. It has been categorically laid down that refund can be granted only to the person who has paid the duty and borne the duty and not to anyone else. If the ultimate customer cannot be identified the amount should be credited to the Consumer Welfare Fund established under Section 12 C of the Central Excise Act, 1944 to be utilised for the benefit of consumers in general. The appellant would be eligible for refunds sanctioned only when it is proved that incidence of duty has not only been passed on to the dealers but also by the dealers to the ultimate customers. Herein, the appellant has proved that the excise duty burden has been borne by him and not passed on to the dealers. But whether there is any evidence as to their dealers having not passed on the duty incidence to the ultimate customers of Motor Cycles is not forth coming as a second stage verification has not been carried out. As such, the appellant is required to prove conclusively that the incidence of duty burden has not been passed on to the ultimate buyers so as to be eligible for the refund claims arising on account of finalisation of provisional assessment after allowing abatements. The sanction of the refund claims by the Original Adjudicating Authority without conducting verification as to whether the dealers of the Motor Cycles have not passed on the incidence of duty to the ultimate customer is not legal and proper. Refund of excess excise duty paid at the time of provisional assessments, could be legally sanctionable only to those persons which include ultimate customers who must have borne the burden of excise duty paid. Conclusion - The appellant failed to conclusively prove that the duty burden was not passed on to the ultimate consumers, thus affecting their eligibility for refunds. The appeals are allowed by way of remand.

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• Indian Laws

• 2025 (3) TMI 1396
  Modification of National Consumer Disputes Redressal Commission s (NCDRC) order by awarding an increased interest rate of 15% per annum on the refund amount - delay on the part of the respondent in not completing the construction within the agreed period - HELD THAT:- The NCDRC having taken note of the relevant aspects including the factum of delay and the fact that petitioner had opted for refund of money deposited, rightly held that as a home buyer, petitioner cannot be compelled to take possession of the flat after such long time, and as such ordered for refund of entire amount deposited with interest of 9% p.a. Placing reliance on the law laid down by this Court in Bangalore Development Authority v. Syndicate Bank, [ 2007 (5) TMI 565 - SUPREME COURT ] wherein a coordinate Bench of this Court dealing with the question of grant of relief to a consumer in cases of delay of delivery of possession held that when possession of the allotted plot/flat/house is not delivered within the specified time, the allottee is entitled to a refund of the amount paid with reasonable interest thereon from the date of payment till the date of refund. In the present case, the High Court by the impugned order modified the finding of NCDRC and awarded interest @ 15% p.a. primarily relying upon the judgment of this Court in Rohit Chaudhary and another v. Vipul Ltd. [ 2023 (9) TMI 1569 - SUPREME COURT ], wherein this Court in order to balance the equities and to compensate the loss caused to the purchaser/complainant who had booked an office premise for his use, directed the refund of the amount paid along with interest @ 12% p.a. from the date of complaint till the date of payment. However, the issue in the instant case relates to allotment of a 3 BHK flat after payment of sale consideration and delay in delivery of same. As such, the NCDRC considering the entirety of the facts and circumstances of the case, had awarded interest @ 9% p.a., which in our view was fair and reasonable. The interest @ 15% p.a. awarded by High Court is excessive. Therefore, the impugned order hereby is setaside and the order dated 27.07.2022 passed by NCDRC in so far as it relates to award of interest @ 9% on the respective deposit till the date of actual payment is restored. Conclusion - i) The NCDRC s award of 9% interest per annum is deemed fair and reasonable, considering the complainant s choice for a refund and the delay in possession. ii) The High Court s enhancement of interest to 15% per annum is excessive and not justified under the circumstances. iii) The compensation amount is reduced from Rs. 10,00,000 to Rs. 7,50,000 to balance the interests of justice, considering the appellant s status as a state instrumentality. The appeal stands partly allowed.

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