TMI Tax Updates - e-Newsletter
April 18, 2025

Case Laws in this Newsletter:

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

TMI Short Notes

1. Tax Incentives for Start-ups in India : Clause 140 of Income Tax Bill, 2025 and Comparative Analysis with Section 80IAC of Income-tax Act, 1961

  Bills:

2. Protecting SEZ Developers' Tax Incentives : Clause 139 of the Income Tax Bill, 2025 Vs. Section 80IAB of the Income-tax Act, 1961

  Bills:

3. Assessing the Continuity and Reform of Infrastructure Tax Incentives under the Evolving Income Tax Framework : Clause 138 of Income Tax Bill, 2025 Vs. Section 80-IA of Income-tax Act, 1961

  Bills:

4. Reforming Political Contribution Deductions for Transparency and Accountability : Clause 137 of Income Tax Bill, 2025 Vs. Section 80GGC of Income-tax Act, 1961

  Bills:

5. Transparency and Tax Incentives in Political Funding : Clause 136 of the Income Tax Bill, 2025 Vs. Section 80GGB of the Income-tax Act, 1961

  Bills:

6. Redefining Tax Deductions for Scientific and Rural Advancement : Clause 135 of the Income Tax Bill, 2025 vs. Section 80GGA of the Income Tax Act, 1961

  Bills:

7. Modernising Charitable Tax Incentives : Clause 354(1) of Income Tax Bill, 2025 Vs. Section 80G(5) of Income Tax Act, 1961

  Bills:

Articles

1. INFORMATION SHARING UNDER GST LAW

   By: Dr. Sanjiv Agarwal

2. KERALA HIGH COURT ON GST ON Indian Medical Association

   By: K Balasubramanian

3. ASSESSMENT BASED ON AUDIT REPORT – PREVIOUS AUTHORISATION REQUIRED?

   By: DR.MARIAPPAN GOVINDARAJAN

4. FSC Certification - Whether helpful in Afforestation or not?{Environment Protection and Healing Climate Change}

   By: YAGAY andSUN

5. Sustainable Packaging Materials for FMCG Sector can save our jungles and forests - A supportive and critical analysis in Details.{Environment Protection and Healing Climate Change}

   By: YAGAY andSUN

6. Modified Bullet Motor Cycles - Cracker Sound and Noise Pollution - A gross violation of Motor Vehicle Act.

   By: YAGAY andSUN

7. Why Indian Citizens/Consumers are not able to quit the habit of using Polythene Bags?

   By: YAGAY andSUN

8. Municipal Corporations and Resident Welfare Associations, together can make their Cities greener and Pollution Free - A supportive but critical analysis.

   By: YAGAY andSUN

9. Extended Producer Responsibility (EPR) and Extended Consumer Responsibility (ECR), outlining their roles, challenges, and limitations.

   By: YAGAY andSUN

10. Extended Producers Responsibility Vs. Extended Consumers Responsibility - Ironically Both are failing our Environment! {Environment Protection and Healing Climate Change}{Reuse, Recycle, Repair and Reduce to Stop Plastic Pollution}

   By: YAGAY andSUN

11. The proper disposal of plastic waste generated after the consumption of Fast-Moving Consumer Goods (FMCG) in India.{Environment Protection and Proper Disposal of Plastics Waste}

   By: YAGAY andSUN

News

1. Hospitality stakeholders hail GST rebate for hotels in Goa's hinterland

2. Parliamentary panel on I-T Bill seeks suggestions from experts

3. Won't interfere in finance department, says new economic advisor to Maharashtra CM

4. FIU-IND and RBI sign MoU for enhanced coordination and information exchange

5. MOSPI continues its endeavor to reduce timelines in release of its statistical products; Index of Industrial Production will now be released on 28th of every month reducing its release timeline from 42 days to 28 days.

6. CCI imposes monetary and non-monetary sanctions on UFO Moviez India Pvt. (along with its subsidiary Scrabble Digital Ltd.) and Qube Cinema Technologies Pvt. Ltd., for indulging in anti-competitive conduct

7. India poised to become a trusted bridge of global connectivity through India-Middle East-Europe Economic Corridor (IMEC): Shri Piyush Goyal

8. YSRCP seeks increased tax share from Finance Commission

9. Exports from Indore SEZ decline by over 9 pc to Rs 12,948 cr in FY25

Notifications

GST - States

1. 38/1/2017-Fin(R&C)(293)/28017 - dated 15-4-2025 - Goa SGST

Goa Goods and Services Tax (Second Amendment) Rules, 2025

2. S.R.O. No. 449/2025 - dated 15-4-2025 - Kerala SGST

Amendment in Notification G.O.(P) No. 124/2017/TAXES. dated 21st October, 2017

3. F.12 (5)FD/Tax/2025 - 01 - dated 17-4-2025 - Rajasthan SGST

Rajasthan Goods and Services Tax (Second Amendment) Rules, 2025

4. 298/XI-2–25-9(47)-17-T.C.- 281-U.P.Act-1-2017-Order (345)-2025 - dated 28-2-2025 - Uttar Pradesh SGST

Seeks to bring in force provisions of various rules Uttar Pradesh Goods and Services Tax (Sixty-fourth Amendment) Rules, 2024

5. 86/XI-2–25-9(47)-17-T.C.-280-U.P. Act-1-2017-Order(344)-2025 - dated 13-2-2025 - Uttar Pradesh SGST

Amendment in Notification No. KA.NI.-2-848/XI–9(47)/17-U.P. Act-1-2017-Order (15)-2017, dated June 30, 2017

6. 581–F.T. - dated 9-4-2025 - West Bengal SGST

Seeks to notify the date on which the provisions of the rule 3 of the WBGST (Amendment) Rules, 2025 shall come into force.

7. 580–F.T. - dated 9-4-2025 - West Bengal SGST

Seeks to notify different dates on which the different provisions of the WBGST (Second Amendment) Rules, 2024 shall come into force.

Circulars / Instructions / Orders

Central Excise

1. Order No. 2/2025 - dated 8-4-2025

Re-assignment of appeals pending in kolkata Zone.

2. Order No. 03/2025 - dated 8-4-2025

Setting up of office for operationalising Interim Boards for Settlement

3. Order No. 1/2025 - dated 31-1-2025

Re-assignment of appeals pending in Nagpur Zone

Highlights / Catch Notes

GST

• Taxpayer's Challenge Rejected: Appellate Remedies Mandated for CGST Penalty Dispute Under Section 107

  Case-Laws - HC : HC dismissed the writ petition, directing the petitioner to pursue appellate remedies under Section 107 of CGST Act. The court held that factual issues regarding penalty imposition, transaction benefits, and financial year challenges should be adjudicated through the appellate process. The petitioner retains the right to contest the CGST Department's penalty under Section 122(1A) through appropriate appellate channels, with the appellate authority deemed most suitable to comprehensively examine the matter.
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• Transfer Development Rights Not Taxable Under GST When Developer Exchanges Construction Rights for Built-Up Units

  Case-Laws - HC : HC held that the transfer development rights (TDR)/floor space index (FSI) under entry 5-B cannot be interpreted to include development agreements where a developer obtains construction rights in exchange for transferring certain built-up units. The specific development agreement dated 07.4.2022 between the parties did not fall within the scope of the GST notification dated 28.6.2017 as amended. Consequently, the show cause notice and subsequent order were quashed, effectively invalidating the tax demand and allowing the petitioner's challenge against the taxation assessment.
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• GST Registration Cancellation Can Be Revoked by Filing Pending Returns and Clearing Outstanding Tax Dues Under Section 29(2)(c)

  Case-Laws - HC : HC held that GST registration cancellation under Section 29(2)(c) of CGST Act, 2017 for non-filing of returns for six continuous months can be revoked. The court directed the petitioner to approach the empowered officer within two months, submit pending returns, pay tax dues, interest, and late fees. Upon compliance, the officer has discretionary authority to drop proceedings and restore GST registration, effectively providing an opportunity to rectify the administrative non-compliance and reinstate the registration.
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• Exporters Can Seek IGST Refund by Submitting Representation and Providing Copy to Respondent Within 2 Weeks

  Case-Laws - HC : HC determined that the petitioner seeks refund of IGST paid on export goods, with a representation submitted on 03.10.2022 pending consideration. The court directs the petitioner to submit a copy of the representation to the 2nd respondent within 2 weeks of receiving the order. The petition is disposed of, mandating administrative review of the refund claim and providing procedural guidance for further action on the IGST refund request.
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Income Tax

• Territorial Jurisdiction Denied: Petitioner Directed to Refile in Appropriate Forum with Substantive Rights Preserved

  Case-Laws - HC : HC declined territorial jurisdiction over the petition, finding that a minuscule part of the cause of action in Mumbai is insufficient to invoke Article 226 discretionary powers. The court determined that the interests of justice would be better served by directing the petitioner to pursue remedies in Kolkata. While acknowledging principles of forum conveniens, the HC explicitly left all substantive contentions open, effectively permitting the petitioner to refile the petition in the appropriate territorial jurisdiction without prejudicing the underlying legal arguments.
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• Legal Battle Over Telecom Tax Deductions Explores Circuit Accrual Charges and License Fee Amortization Under Section 1941

  Case-Laws - HC : HC determined key tax adjustment issues involving intra-group services and telecommunications licensing expenses. The court recognized unresolved questions regarding revenue share-based payments and circuit accrual charges. Specifically, the court found no leasing equipment element precluding TDS application under section 1941. The appeal was admitted on two primary legal questions: (1) validity of disallowances related to circuit accrual charges without documentary evidence, and (2) treatment of amortized revenue-share license fees considering the enduring nature of telecom service rights. The matter was scheduled for further hearing, with potential implications for similar telecommunications tax assessment cases.
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• Tax Reassessment Invalidated: AO Fails to Substantiate Escaped Income Claims Under Section 147

  Case-Laws - HC : The HC held that the Assessing Officer's (AO) reopening of assessment under Section 147 was invalid. The AO's notice under Section 148A(d) exceeded the scope of original information, which suggested potential escaped income. The Assessee provided satisfactory explanations regarding TCS collection, cash deposits during demonetization, and time deposits. The court found no substantive evidence to support the reopening of assessment, thus setting aside the impugned notice and order. The decision emphasizes procedural fairness and the need for precise jurisdictional basis when reassessing tax liabilities.
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• Unexplained Sundry Creditors Additions Struck Down: Procedural Flaws Invalidate Tax Authority's Amendment Under Section 154

  Case-Laws - HC : HC held that the CIT(A)'s order directing deletion of additions relating to unexplained sundry creditors was valid. The AO's amendment under Section 154 was procedurally flawed as no notice was issued to the assessee, violating statutory requirements of Section 154(3). The court found a clear violation of natural justice principles by not providing an opportunity of hearing. Consequently, the order dated February 7, 2025 was set aside, and the authorities were directed to implement the previous order dated January 3, 2024 within four weeks, effectively reinstating the original appellate order deleting the contested additions.
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• Reassessment Notice Under Section 148 Upheld: Limitation Period Calculation Validated by Excluding Specific Timeframe

  Case-Laws - HC : The HC upheld the validity of a reassessment notice under Section 148 of the Income Tax Act, determining that the notice issued on 30.07.2022 was within the prescribed limitation period. The court excluded the period from 31.03.2021 to 02.06.2022 for limitation computation, based on Supreme Court precedents in Rajeev Bansal and Ashish Agarwal cases. The notice for Assessment Year 2015-2016 was deemed timely, as the original notice dated 31.03.2021 transformed into a valid notice under the new regime effective 01.04.2021, with the extended limitation period being applicable. Consequently, the court rejected all challenges to the reassessment proceedings.
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• Cooperative Banking Societies Must Comply with TDS Deduction Under Section 194N, No Blanket Exemption Allowed

  Case-Laws - HC : HC ruled that Section 194N of the Income Tax Act, 1961 applies comprehensively to cooperative banking societies, rejecting the petitioner's claim for exemption under Section 80P(2). The court determined that TDS deduction on loans and subsidies is mandatory, irrespective of the society's specialized agrarian service mandate. The court distinguished prior precedents based on factual variations and found the respondents' procedural actions legally sound. Consequently, the writ petition was dismissed, upholding the 2% TDS deduction and affirming the statutory interpretation that no blanket exemption exists for cooperative banking entities.
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• Taxpayer's Challenge Rejected: Show Cause Notice Upheld, Personal Hearing Granted, Reply Opportunity Confirmed

  Case-Laws - HC : HC dismissed the writ petition challenging the show cause notice, finding no procedural irregularity in the transfer of case from faceless to jurisdictional Assessing Officer. The Court granted liberty to the petitioner to file reply to the show cause notice within two weeks, directing the first respondent to provide a 14-day personal hearing and decide the matter in accordance with law. The jurisdictional AO's notice referencing the earlier faceless AO notice was deemed sufficient to prevent confusion, rendering the petitioner's contention of perplexity baseless.
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• TDS Non-Deduction Dispute: Assessing Officer Ordered to Reexamine Evidence and Verify Tax Payment Compliance

  Case-Laws - AT : ITAT remanded the matter back to the Assessing Officer (AO) to re-examine the TDS non-deduction dispute. The tribunal directed the AO to provide the assessee an opportunity to present evidence regarding Form 15G/H and Form 27BA, and verify the tax payment status. The bench emphasized a merit-based assessment, allowing the assessee to substantiate claims of tax compliance. The appeal was allowed for statistical purposes, with instructions for the assessee to cooperate during proceedings and avoid frivolous adjournments. The AO must conduct a comprehensive review, ensuring fair consideration of the factual aspects raised by the assessee.
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• Tax Tribunal Validates Commercial Loan Transactions and Melting Charges, Upholds Assessee's Accounting Practices Under Sections 36(1)(iii)

  Case-Laws - AT : ITAT adjudicated two key issues involving tax treatment of commercial transactions. First, regarding interest disallowance under section 36(1)(iii), the Tribunal held that loans advanced to third parties constituted genuine commercial transactions. Despite non-recovery of interest, the Tribunal found no evidence of fund diversion, ruling in favor of the assessee. Second, concerning melting charges, the Tribunal set aside the addition based on estimated melting gain, directing the Assessing Officer to delete the addition, respecting the assessee's maintained accounting records and following precedent from a prior assessment year. Both substantive issues were resolved in the assessee's favor, emphasizing commercial reasonableness and proper accounting practices.
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• Technical Services Fees Defined: Specialized Knowledge Transfer Beyond Generic Operational Instructions Determines Taxability in Cross-Border Logistics

  Case-Laws - AT : ITAT adjudicated a dispute regarding Fees for Technical Services (FTS) in cross-border logistics services. The tribunal comprehensively analyzed the nature of services, emphasizing that FTS requires specialized knowledge transfer beyond mere service provision. The court distinguished between standard regulatory compliance and genuine technical expertise. Crucially, the tribunal determined that generic operational instructions, customs clearance procedures, and workforce standardization do not constitute FTS. The software development aspect was referenced with precedential principles from Supreme Court jurisprudence. Ultimately, the appellate tribunal allowed the assessee's appeal, rejecting the revenue department's contention of taxable FTS, thereby narrowing the interpretation of technical services under domestic tax regulations and bilateral tax treaty frameworks.
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• Trust Tax Exemption Upheld: Section 11 Protects Income, Limits Penalty Scope to Specific Violations, Preserves Depreciation Claims

  Case-Laws - AT : ITAT ruled on a trust's tax exemption under section 11, addressing multiple key issues: The tribunal held that exemption denial under section 13 should be limited only to the specific income violating provisions, not the entire trust income. The maximum marginal rate shall apply exclusively to the contravened income portion (Rs. 1,80,000), not the complete trust income. Regarding section 69A, impounded unverified documents were deemed insufficient for making unexplained income additions. The tribunal allowed exemption under section 11, permitted depreciation claim as an application of income, and confirmed that the trust could claim either depreciation or capital expenditure application, ensuring statutory compliance while preventing potential administrative overreach.
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• US Company's Passenger System Services to Indian Airline Not Taxable as Technical Fees Under India-USA Tax Treaty

  Case-Laws - AT : ITAT held that passenger system services provided by a US-based company to an Indian airline do not constitute Fees for Technical Services (FTS) under Article 12 of India-USA DTAA. The tribunal determined that no specific technology was made available to the Indian entity, and the services were rendered using standard software supported by the service provider's data center. Consequently, the tribunal upheld the CIT(A)'s order, finding the receipts non-taxable in India, effectively dismissing the revenue department's contentions regarding taxation under section 9(1)(vii) of the Income Tax Act as procedurally academic.
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• Tribunal Validates Singapore Company's Short-Term Capital Loss Carry Forward Rights Under Section 74, Blocking Retrospective Revenue Challenge

  Case-Laws - AT : ITAT adjudicated a dispute regarding carry forward of Short Term Capital Loss (STCL) for a Singapore-incorporated company. The tribunal examined the computation of income and found that the assessee did not avail treaty benefits and correctly computed STCL after setting off Short Term Capital Gains. The tribunal held that the revenue cannot retrospectively deny loss carry forward through a rectification order in a subsequent assessment year. The right to carry forward losses under Section 74 is determined in the assessment year when the loss is first computed, with an eight-year restriction. The CIT(A)'s decision was upheld, and the matter was decided against the revenue, affirming the assessee's right to carry forward capital losses from previous assessment years.
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• Tax Treatment of Security Receipts: Asset Reconstruction Company Wins Case on RBI Guidelines and Accounting Methodology

  Case-Laws - AT : ITAT adjudicated a dispute involving an Asset Reconstruction Company's tax treatment of security receipts. The tribunal held that the assessee correctly followed RBI guidelines by writing off unrealized security receipts after eight years. The ITAT rejected the AO's assessment that trust realizations constituted the assessee's income, drawing parallels with mutual fund investments. The tribunal found no infirmity in the assessee's accounting methodology and directed deletion of protective additions related to upside income. Consequently, the ITAT dismissed the Revenue's appeal, affirming the assessee's tax treatment of security receipts and rejecting unauthorized income additions by the tax authorities.
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• Tax Deduction Dispute Resolved: Service Payments Exempt from TDS Under Section 194C, No Withholding Tax Liability Confirmed

  Case-Laws - AT : ITAT adjudicated a tax deduction at source (TDS) dispute under Section 194C, addressing contract manufacturing payment characterization. The tribunal followed its prior coordinate bench ruling for the same assessment year, determining that payments under service agreements did not fall within Section 194C's scope. Consequently, the assessee was not obligated to deduct tax at source. The revenue's challenge was comprehensively dismissed, with the CIT(A)'s original decision upholding the absence of TDS liability and associated interest under Sections 201(1) and 201(1A) being affirmed.
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• Shipping Company Wins Tonnage Tax Scheme Appeal, Secures Partial Tax Benefits and Expense Deductions

  Case-Laws - AT : ITAT Decision: Taxation of Shipping Company's Income The ITAT allowed the assessee's claim for Tonnage Tax Scheme (TTS) by confirming that the company satisfied the "qualifying ship" conditions. The tribunal upheld the auditor's certification of shipping income and allowed partial TTS benefits. Victualling expenses were accepted as legitimate business expenses. Sundry expenses disallowance was restricted to non-TTS income. Interest income from fixed deposit margins was directed to be netted off and taxed separately under other sources. Regarding deemed dividend under section 2(22)(d), the tribunal restored the matter to the AO for fresh assessment, referencing the Tata Sons Limited precedent on capital loss treatment for share capital reduction. The overall decision was substantially in favor of the assessee, with nuanced adjustments to tax computation.
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• Insurance Company Wins Major Tax Battle: Multiple Deductions Upheld, Exemptions Confirmed, Gross Income Principles Clarified

  Case-Laws - AT : The ITAT adjudicated multiple tax issues for an insurance company. Key holdings include: (1) dividend income must be offered on gross basis; (2) payments to auto dealers were legitimate and cannot be disallowed based on Central Excise findings; (3) exemption under section 10(38) for long-term capital gains is available to insurance companies; (4) section 14A is inapplicable to insurance companies governed by section 44; (5) amortization of securities premium is permissible; and (6) disallowances under section 14A cannot be added to book profits under section 115JB. Predominantly decided in favor of the assessee, with the tribunal directing deletion of various disallowances and upholding the insurance company's tax treatment.
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• External Development Charges Tax Dispute Resolved: ITAT Quashes Assessment Order Beyond Statutory Limitation Period Under Section 201(3)

  Case-Laws - AT : ITAT adjudicated a tax dispute regarding TDS non-deduction for external development charges. The tribunal examined the limitation period under Section 201(3) and found the assessment order dated 30.03.2021 for AY 2014-15 was beyond the prescribed time limit. Relying on precedent in a similar case involving an entertainment network company, the tribunal quashed the impugned order, accepting the assessee's argument that the order could not be passed after the statutory limitation period. The assessee's appeal was allowed, effectively setting aside the demand raised under Section 201(1) read with Section 201(1A).
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• Tax Dispute Resolved: Internal Development Expenses Validated Through Comprehensive Documentary Evidence and Substantive Transaction Authenticity

  Case-Laws - AT : ITAT adjudicated a tax dispute involving internal development expenses and documentary evidence. The tribunal upheld the CIT(A)'s findings, dismissing revenue's appeal grounds. Key determinations included: (1) Assessee sufficiently substantiated expenses through ITR acknowledgments, TDS certificates, bank transaction records, and contractor details; (2) Non-personal appearance of contractors does not automatically invalidate transaction genuineness; (3) AO's disallowance based solely on procedural non-compliance was deemed inappropriate. The tribunal emphasized that documentary evidence submitted was adequate to establish transaction authenticity, and the revenue's contentions lacked substantive merit. Consequently, the appeal was comprehensively dismissed, affirming the lower appellate authority's order.
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• Income Tax Tribunal Upholds Taxpayer's Position on Contingent Liability, Rejects Revenue's Appeal for Disallowance

  Case-Laws - AT : ITAT dismissed Revenue's appeal, finding no merit in challenging the CIT(A)'s findings. The tribunal confirmed that the assessee had already added back the disputed amount while computing total income, rendering subsequent disallowance improper. The contingent liability was appropriately disclosed in financial statements without impacting profit and loss account. The tax auditor's inadvertent error in reporting was noted, but did not alter the fundamental tax treatment. The tribunal emphasized that the assessee did not claim the contingent liability as an expense, and the departmental records substantiated this position. Consequently, the grounds raised by Revenue were comprehensively rejected.
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• Tribunal Finds Business Profits at 2.21%, Rejects Unreliable Accounts and Prevents Double Taxation Under Section 143(3)

  Case-Laws - AT : The ITAT rejected the assessee's books of accounts as unreliable and estimated business profits at 2.21% instead of the 0.47% originally returned. The Tribunal upheld the CIT(A)'s decision based on identical circumstances found in a sister concern's case. The Tribunal rejected the Revenue's argument for a higher profit rate and found the proposed comparable entity to be in a different business line. The Tribunal clarified that the estimated income should subsume previous disallowances to prevent double taxation, ensuring the total income computation matches the 2.21% of turnover estimation. Consequently, the Tribunal upheld the CIT(A)'s order, rejecting separate additions for unaccounted sales and unexplained expenditure as these were already incorporated in the profit estimation.
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Customs

• Dholera Customs Airport Expansion Enables Enhanced International Trade Logistics Under Section 7 of Customs Act

  Notifications : The CBIC issued Notification No. 25/2025-Customs (N.T.) amending the previous Notification No. 61/94-Customs (N.T.) to expand customs airport operations in Gujarat. Specifically, the amendment adds Dholera as an authorized location for unloading imported goods and loading export goods. The modification was executed under section 7 of the Customs Act, 1962, expanding the designated customs airport capabilities in the specified state, thereby facilitating international trade and logistics infrastructure development through formal regulatory adjustment.
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• Updated Customs Tariff Values Revised for Edible Oils, Metals, and Areca Nuts Under Section 14(2) of Customs Act

  Notifications : The MoF issued Notification No. 24/2025-Customs (N.T.) amending tariff values for various commodities under Sections 14(2) of Customs Act, 1962. The notification establishes new tariff values for edible oils (palm oil, palmolein, soya bean oil), brass scrap, precious metals (gold and silver), and areca nuts. Specific tariff values are prescribed for different categories and grades of goods, with US dollar per metric ton or per 10 grams as the measurement standard. The amended notification becomes effective from 16th April 2025, providing updated customs valuation guidelines for specified import categories.
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• Gold Import Violation: Seizure Upheld as Court Rejects Fine Option and Confirms Confiscation Under Customs Act Section 125

  Case-Laws - HC : HC dismisses writ petition challenging seizure of gold bars exceeding permissible import limit. The court upheld lower authorities' decision denying option to pay fine under Section 125 of Customs Act, 1962. Distinguishing prior precedents, the court noted the instant case involved gold bars significantly over legal limit, unlike previous cases with jewelry within permissible quantum. The court found no merit in petitioners' arguments and rejected interference under Article 226, thereby confirming the original confiscation order and declining alternative fine payment option.
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• Customs Goods Auction Dispute: Sale Proceeds Allocation Confirmed with Freight Charges and Procedural Verification Validated

  Case-Laws - AT : CESTAT adjudicated a customs goods auction dispute involving sale proceeds apportionment under Section 150(2) of Customs Act, 1962. The tribunal confirmed the Commissioner (Appeals)'s authority to remand proceedings for verifying freight and warehouse rent charges. The key holdings established that: (1) sale proceeds must prioritize auction costs, (2) freight charges of Rs.74,65,099/- were validly allowable, and (3) the Commissioner possessed legitimate power to remand matters for documentary verification. Consequently, the Revenue's appeal was dismissed, upholding the lower authority's procedural approach and substantive findings regarding goods sale proceeds distribution.
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• Importer Wins Melamine Import Dispute, Tribunal Rejects Revenue Department's Claims of Undervaluation and Duty Evasion

  Case-Laws - AT : CESTAT addressed a dispute regarding melamine import valuation from Chinese origin. The tribunal found no evidence of deliberate undervaluation or misdeclaration by the importer. The revenue department failed to substantiate claims of over-invoicing or evasion of anti-dumping duty. Published price data and mere suspicion were deemed insufficient to challenge the declared transaction value. The tribunal emphasized that proof of misdeclaration requires direct evidence, which was absent in this case. Consequently, the reimposition of anti-dumping duty was deemed unsubstantiated and illegal. The revenue's appeal was dismissed, upholding the original declared value of imported melamine.
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• Iron Ore Export Duty Calculation Upheld: Fe Content Below 62% Triggers Rs. 50 per Metric Ton Liability

  Case-Laws - AT : CESTAT determined custom duty liability based on iron ore's Fe content measurement. Under identical precedential cases, the Tribunal found the Fe content on wet metric ton (WMT) basis was less than 62%, rendering appellants liable to pay export duty at Rs. 50 per metric ton. Authorized inspection agency certificates confirmed the Fe content measurement. Given the consistent factual circumstances across multiple cases, the Tribunal upheld the custom duty assessment, finding no substantive grounds to challenge the original order. Appeal was consequently allowed, affirming the duty payment obligation.
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DGFT

• Govt Revamps Coal Import Monitoring System Fee Structure, Introduces Flexible Registration Mechanism Under Notification 04/2025-26

  Notifications : The GoI's DGFT issued Notification No. 04/2025-26 amending Import Policy Condition No. 07 (i) of Chapter-27 in ITC (HS), 2022. The amendment modifies the Coal Import Monitoring System (CIMS) registration fee structure, replacing the previous fixed fee calculation (Rs. 1 per thousand, min. Rs. 500, max. Rs. 1 Lakh on CIF value) with a new fee schedule referenced in Appendix 2K. Importers must continue submitting advance import information online and obtain an Automatic Registration Number, but under the revised fee mechanism. The modification takes immediate effect, streamlining the coal import registration process with a more flexible fee determination approach.
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• Importers Required to Pay INR 500 Registration Fee for Monitoring Systems Under Updated Trade Policy

  Circulars : The DGFT issued Public Notice No. 02/2025-26 amending Appendix 2K of the Foreign Trade Policy 2023, introducing a registration fee of INR 500 for Import Monitoring Systems (SIMS/CIMS/NFMIMS/PIMS). The amendment provides a standardized fee structure for various import and export-related services, including application fees for licenses, authorizations, and certifications. The changes include online payment mechanisms, specific refund conditions, and detailed procedures for fee management, effective immediately across all DGFT jurisdictional authorities.
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IBC

• Limitation Period Paused: IBC Proceedings Deemed Bona Fide, Time Exclusion Granted Under Section 14

  Case-Laws - HC : HC ruled that the period from 13th March 2018 to 26th November 2019 shall be excluded in computing the limitation period for suit filing under Section 14 of Limitation Act, 1963. The court found the IBC proceedings were bona fide, noting operational creditors routinely file such proceedings due to corporate debtor's potential inability to satisfy debts. The defendant could not challenge the plaintiff's good faith in initiating IBC proceedings, and no assertion was made that such proceedings could not be maintained. The exclusion of this time period was consequently permitted, effectively extending the limitation timeline for the suit's filing.
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Indian Laws

• Supreme Court Clarifies Design Protection Criteria, Mandates Comprehensive Trial for Assessing Proprietary Engineering Drawings Infringement

  Case-Laws - SC : SC upheld the HC's decision rejecting the application under Order VII Rule 11 of CPC. The court established a two-pronged test for determining whether a work qualifies as a 'design' under the Designs Act, focusing on: (i) the nature of the artistic work and its industrial application, and (ii) the functional utility of the work. The Commercial Court was directed to conduct a comprehensive trial within one year, independently assessing the infringement claims and the true nature of the Proprietary Engineering Drawings, and to decide on the interim injunction application within two months.
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PMLA

• High Court Upholds PMLA Arrest Order, Ruling Territorial Jurisdiction Rests Where Scheduled Offence Was Registered

  Case-Laws - HC : HC dismissed the writ petition challenging an arrest order under PMLA, finding no territorial jurisdiction. The scheduled offence was registered in Saharanpur, UP, with the Special Court passing the remand order. Despite initial investigative activities in Himachal Pradesh, the primary cause of action and subsequent proceedings were located in UP. The court held that mere preliminary investigative steps do not confer jurisdictional rights, and the trial of money laundering offences should follow the predicate scheduled offence's jurisdiction. Consequently, the HC determined it lacks competence to examine the merits of the arrest order, resulting in the petition's dismissal.
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Service Tax

• Club Membership Services Face New Tax Liability as Mutuality Principle Shifts for Post-2012 Incorporated Clubs

  Case-Laws - AT : CESTAT adjudicated a service tax refund dispute involving a club's membership services. The tribunal determined that post-01.07.2012, the principle of mutuality no longer applies to incorporated clubs. While recognizing the Supreme Court's earlier interpretation in a precedent case, the tribunal held that service tax levied on club-member transactions remains valid. The key ruling mandates that any potential refund claims must undergo strict unjust enrichment scrutiny, ensuring only legitimate tax burden bearers receive reimbursement. Unrecoverable amounts shall be credited to the Consumer Welfare Fund. The revenue department's appeal was partially allowed, establishing a nuanced framework for tax treatment of club-member interactions.
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Central Excise

• Duty Refund Allowed: CIF Value Calculation Upheld, Extended Limitation Period Rejected for Transparent Valuation Process

  Case-Laws - AT : CESTAT held that the respondent's rebate claim based on CIF value was permissible under Central Excise law. The tribunal determined the respondent is eligible for full duty refund on CIF value, rejecting revenue's contention. The extended period of limitation was deemed inappropriate since the department was previously aware of the valuation issue. The tribunal emphasized that inclusion of freight and insurance in transaction value does not constitute fraud or intent to evade duty. Consequently, the revenue's appeal was dismissed, affirming the original adjudicating authority's order and ensuring revenue neutrality in the duty calculation process.
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• Refund Claim Succeeds: Tribunal Overrules Time Limitation for Excise Duty Payments Made Under Mistake of Law

  Case-Laws - AT : CESTAT allowed appellant's refund claim for EC and SHEC paid during July 2004 to December 2013, overruling time limitation under Section 11B of Central Excise Act, 1944. The Tribunal determined that amount was paid under mistake of law, rendering statutory one-year limitation period inapplicable. Relying on precedential rulings from jurisdictional HC, the Tribunal held that refund claim cannot be dismissed as time-barred when payment was made erroneously. The impugned order was set aside, effectively granting the appellant's refund petition.
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• Legal Win: Coal Extraction Returns Show Good Faith, Extended Limitation Period Invalidated Under Section 11A(4)

  Case-Laws - AT : CESTAT allowed the appeal, finding that the appellant acted in good faith by disclosing all relevant facts in coal extraction returns. The tribunal held that the extended period of limitation under Section 11A(4) of the Central Excise Act was improperly invoked, as the appellant did not intentionally suppress information or evade duty. The demand for the period March 2011 to February 2015 was set aside, with the tribunal emphasizing that a bona fide interpretation of legal provisions does not constitute deliberate suppression of facts, consistent with Supreme Court precedent on self-assessment principles.
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Case Laws:

• GST

• 2025 (4) TMI 933
  Imposition of penalty by the CGST Department under Section 122(1A) of the CGST Act - vailability of an appellate remedy under Section 107 of the CGST Act - HELD THAT:- The stand of other entities and individuals against whom demands have been raised and penalties have been imposed may also be necessary in the adjudication in the present case. The appellate jurisdiction would be the appropriate jurisdiction to comprehensively adjudicate the matter. In so far as the stand of the Petitioner that he has not retained the benefit of any transaction is concerned, the same would also be a factual issue which cannot be gone into in writ jurisdiction by this Court. The Petitioner would be free to raise this issue in appeal. Further, the argument that penalty could not have been imposed on the Petitioner for the Financial Years from 2017 can also be raised in appeal by the Petitioner. Conclusion - Considering that all the issues which have been raised can be clearly raised before the appellate authority, this is a fit case for directing the Petitioner to avail of his remedies under Section 107 of the CGST Act. Entertaining the present writ petition would in fact mean that all the factual issues would have to be gone into by this Court which would not be permissible. The Petitioner had full knowledge of the proceedings in the SCN. Petition disposed off.

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• 2025 (4) TMI 932
  Challenge to assessment order - proceedings did not contain a DIN number - HELD THAT:- The question of the effect of non-inclusion of DIN number on proceedings, under the G.S.T. Act, came to be considered by the Hon ble Supreme Court in the case of Pradeep Goyal Vs. Union of India Ors [ 2022 (8) TMI 216 - SUPREME COURT] . The Hon ble Supreme Court, after noticing the provisions of the Act and the circular issued by the Central Board of Indirect Taxes and Customs (C.B.I.C.), had held that an order, which does not contain a DIN number would be non-est and invalid. A Division Bench of this Court in the case of M/s. Cluster Enterprises Vs. The Deputy Assistant Commissioner (ST)-2, Kadapa [ 2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT] , on the basis of the circular, dated 23.12.2019, bearing No.128/47/2019-GST, issued by the C.B.I.C., had held that non-mention of a DIN number would mitigate against the validity of such proceedings. Another Division Bench of this Court in the case of Sai Manikanta Electrical Contractors Vs. The Deputy Commissioner, Special Circle, Visakhapatnam [ 2024 (6) TMI 1158 - ANDHRA PRADESH HIGH COURT] , had also held that non-mention of a DIN number would require the order to be set aside. Conclusion - In view of the aforesaid judgments and the circular issued by the C.B.I.C., the non-mention of a DIN number in the order, which was uploaded in the portal, requires the impugned order to be set aside. This Writ Petition is disposed of, setting aside the impugned proceedings, dated 29.07.2024, issued by the 5th respondent, with liberty to the 5th respondent to conduct fresh assessment, after giving notice to the petitioner and assigning a DIN number to the said order.

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• 2025 (4) TMI 931
  Challenge to notice by which the petitioner has been asked to pay the amount of tax as ascertained upon the transaction as contemplated by the agreement of sale - scope and ambit of clause (5-B) so as to attract G.S.T. - HELD THAT:- The TDR / FSI as contemplated by entry 5B, cannot be related, to the rights which a developer derives from the owner under the agreement of development for constructing the building for the owners, in lieu of the owner agreeing to permit the developer to transfer certain built up units for consideration to be appropriated by the developer. In the instant case, the agreement dated 07.4.2022 (page 27) is an agreement of development entered into between the petitioner and the land owner, in terms of which, the petitioner, has been granted right to develop the property in question by utilizing its present FSI or any increases thereof. Conclusion - The transaction as contemplated in terms of the agreement dated 07.4.2022 does not fall within entry 5B of the Notification dated 28.6.2017, as it stand amended by the Notification dated 29.3.2019, in view of which, neither the show cause notice dated 14.08.2023 nor the consequent order dated 10.12.2024 (page 137), can be sustained and are hereby quashed and set aside. Petition allowed.

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• 2025 (4) TMI 930
  Violation of principles of natural justice and fair play - settlement of dispute by applying in Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- The impugned order is quashed and set aside. Petition allowed.

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• 2025 (4) TMI 929
  Cancellation of GST registration under Section 29(2)(c) of the CGST Act, 2017 - non-filing of returns for a continuous period of six months - HELD THAT:- As per Section 29[2][c], an officer, duly empowered, may cancel the GST registration of a person from such date, including any retrospective date, as he deems fit, where any registered person, has not furnished returns for a continuous period of 6 [six] months. Rule 22 of the CGST Rules, 2017 has laid down the procedure for cancellation of the registration. Having regard to the fact that the GST registration of the petitioner has been cancelled under Section 29[2][c] of the CGST Act, 2017 for the reason that the petitioner did not submit returns for a period of 6 [six] months and more; and the provisions contained in the proviso to sub-rule [4] of Rule 22 of the CGST Rules, 2017 and cancellation of registration entails serious civil consequences, this Court is of the considered view that in the event the petitioner approaches the officer, duly empowered, by furnishing all the pending returns and make full payment of the tax dues, along with applicable interest and late fee, the officer duly empowered, has the authority and jurisdiction to drop the proceedings and pass an order in the prescribed Form. This writ petition is disposed of by providing that the petitioner shall approach the concerned authority within a period of 2 [two] months from today seeking restoration of his GST registration.

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• 2025 (4) TMI 928
  Refund of IGST paid on export of goods - HELD THAT:- In the case on hand, according to the petitioner they are entitled to claim refund of IGST, which was paid by them during the export of goods. In this regard, a representation dated 03.10.2022 has also been filed by the petitioner for sanction of refund. However, the same was not considered by the 2nd respondent till date. This Court directs the petitioner to furnish a copy of the representation dated 03.10.2022 before the 2nd respondent within a period of 2 weeks from the date of receipt of copy of this order - Petition disposed off.

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• 2025 (4) TMI 927
  Violation of principles of natural justice - reply filed by the petitioner not considered - Cancellation of the registration of the petitioner under section 29 of the Central Goods and Service Tax Act, 2017 - registration obtained by means of fraud, willful misstatement or suppression of facts as per section 29(2)(e) of the Act - HELD THAT:- There is a breach of the principles of natural justice by not considering the reply filed by the petitioner and observing in the impugned order that no reply to the show cause notice was submitted in absence of any reason assigned for alleged fraud, willful misstatement or suppression of facts as stated to be the reason for cancellation of registration. In view of the decision of this Court in the case of M/s. Aggrawal Dyeing Printing [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] , the impugned show cause notice and the order of cancellation of registration is quashed and set aside and the matter is remanded back de novo after providing opportunity of hearing to the petitioner in accordance with law. Petition disposed off.

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• Income Tax

• 2025 (4) TMI 943
  Territorial jurisdiction of the Bombay High Court to entertain this petition - HELD THAT:- In this case, even if we proceed on the basis that the minuscule part of the cause of action may have arisen in Mumbai, that will not be a determinative or compelling factor to exercise the discretion under Article 226 for entertaining this petition. In Wills India Insurance Brokers (P.) Ltd. [ 2011 (3) TMI 1807 - BOMBAY HIGH COURT] the court found that a part of the cause of action had significantly arisen in Bombay, and based on that finding, the petition was considered. Kusum Ingots [ 2004 (4) TMI 342 - SUPREME COURT] has been clarified by the Full Bench of the Delhi High Court. Kusum Ingots (supra) itself discusses the principles of forum conveniens, which is applicable in the present case. In the context of appeals under Section 260A of the Income-tax Act, the Hon ble Supreme Court, in the case of ABC Papers ltd. [ 2022 (8) TMI 863 - SUPREME COURT] has held that the appellate jurisdiction of the High Court is exercisable by the High Court within whose territorial jurisdiction the assessing officer is located. Thus, even the location of ITAT is held not to be determinative. The location of the assessing officer is crucial. However, this was the decision in the context of an appeal u/s 260A and not a Writ petition under Articles 226 and 227 of the Constitution. Still, for all the above reasons, we are satisfied that the interest of justice will be met if the petitioner is relegated to avail of the remedies at Kolkata. Accordingly, we decline to entertain this petition but leave the petitioner free to avail of the remedies at Kolkata. All parties contentions on merits are left open.

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• 2025 (4) TMI 942
  Validity of proceedings u/s 154 as barred by limitation - proceedings issued after a lapse of four months from the date on which the reassessment order was passed along with the notice of demand - HELD THAT:- Any amendment to Form ITNS-150 would clearly fall within the scope of an amendment as contemplated under Section 154 (1)(a) of the Act. Thus, in terms of sub-section (7) of Section 154 of the Act, no amendment of such an order can be made after expiry of four years from the date of the said order. The record also does not support the contention that the impugned order has not been passed under Section 154 of the Act. This is so because the impugned order was passed pursuant to a show cause notice issued in respect of proceedings under Section 154 of the Act and the impugned order expressly indicates that it has been passed under Section 154 of the Act read with Section 143 (3) /147 of the Act. We are also not persuaded to accept that the figure of interest under Section 234A of the Act, which is sought to be corrected, was a clerical error. As noted above, the reassessment order dated 11.12.2018 expressly stated that the interest under Section 234A, 234B, 234C and 234D, if any, has been charged . AO had signed the assessment order. Thus, confirming that the interest chargeable under any of the aforesaid Sections, had been charged. The Form ITNS-150 was also signed by the AO and the same indicated that the interest amounting Rs. 6,92,90,301/- was determined as payable u/s 234B of the Act; an amount of Rs. 5,682/- was determined as payable under Section 234C of the Act; and the interest under Section 234A of the Act was determined as 0 . It follows that the AO was of the view that no interest under Section 234A of the Act was chargeable. This is not a case where the AO had directed the levy of interest under Section 234A of the Act and by an inadvertent error, the same was not mentioned in the computation of tax payable (in Form ITNS-150). The assessment order itself clearly specified that the interest if any had been charged. It must follow that the AO was aware of the interest that was determined as payable in the income tax computation form (Form ITNS-150). It is also material to note that the Assessee disputes that any interest under Section 234A of the Act is payable. It is the Assessee s contention that the return filed pursuant to the notice under Section 148 of the Act, was a mere reiteration of return that was originally filed. Therefore, it could not be faulted for the delay in filing its return of income. It is not necessary to examine the merits of the said contention in this proceeding, however, it is clear that the issue involved is a contentious one and the Assessee s claim in this regard cannot be considered as unsubstantial which merits no consideration. It is clear that the impugned order and the impugned demand notice had been issued beyond the prescribed period and are thus set aside. WP allowed.

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• 2025 (4) TMI 941
  Undisclosed investments - addition was premised on the estimated value of certain works of arts which were found at the Assessee s residential premises during the search proceedings and which the Assessee claimed were gifted to him - HELD THAT:- Quantum of addition made by the AO and as upheld by the learned CIT(A) in respect of works of art found during the search proceedings, is not based on any valuation or cogent evidence as to their market value. Neither the AO nor any other authority had made any reference to the Valuation Officer or obtained the value of the said artworks from any independent valuer. On this ground alone, the additions made by the AO and as upheld by other authorities is unsustainable. It is well settled that additions cannot be made on unfounded surmises. Whether the Assessee had established the genuineness of the transaction? - Assessee had stated that he knew the artists in question for several years and some of them are also his friends/ acquaintances of his mother. There is no material to controvert this assertion as well. In the given circumstances, where the donors have confirmed that they have gifted the works of art to the Assessee and that they are the friends and acquaintances of the Assessee; there is also no reason to doubt the genuineness of the transactions. Any addition to the income of the Assessee is required to be based on cogent material and not on mere surmises and conjectures. It is also material to record that Assessee is a constituent partner of a firm that is engaged in running an art gallery. This also clearly establishes that the Assessee would be acquainted with the artists in question. There is no reason to suspect that they have not given their personal works of art as gifts to the Assessee. We find that the finding of the AO, learned CIT(A) and ITAT are based on surmises and completely unjustified and thus are liable to be set aside - Decided in favour of assessee.

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• 2025 (4) TMI 940
  Apparent mistake regarding the PAN number of the assessee - HELD THAT:- We find that there is indeed an apparent mistake in the Tribunal s order in respect of PAN of the assessee and HUF. Accordingly, the error is rectified and the correct PAN of the HUF is replaced in place of incorrect PAN.

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• 2025 (4) TMI 939
  Reopening of assessment u/s 147 - reasons to believe- non-compliance of strict conditions of jurisdictional provision of sec 147 r.w.s. 151 - HELD THAT:- There is no reference or particulars about the date on which the information was received by the AO. There is also no reference of any objective particulars which led the AO to believe towards escapement of chargeable income. AO has merely quoted the entries routed through banking channels from various parties which were alleged to be accommodation entries. No basis has been referred to show his application of mind on the material if any, to implicate the assessee with such vicious allegation. A plain reading of reasons would clearly show that re-opening proceedings have been initiated based on some generalized and uncorroborated information. There does not appear any application of mind on the so-called information (contents not available) collected by the AO. The circumstances narrated in the reasons recorded would show that the AO has proceeded on dotted lines as dictated in the information received. The reasons recorded apparently vouches for the fact that no immediate nexus or live link is reflected between any tangible material and the corresponding belief thereon towards escapement. In the instant case, there is not even a line of reason which may justify the formation of belief. The AO in the instant case observes that the name of the assessee figures in the list of beneficiaries on share capital premium/loan. AO is not privy to even the nature of transaction whether the assessee is a beneficiary towards share capital premium or towards loan. Besides, in the absence of any specific information of reliable character referred in the reasons, the reasons are required to be construed as vague, indefinite, far-fetched and remote. The AO has also not bothered to take cognizance of basic facts such as income reported, date of return filed or any assessment carried out earlier. The reasons recorded are apparently stereo-typed without any emphasis on the relevant facts. We thus find potency in the plea of the assessee that the reasons recorded and approval granted thereon u/s 151 do not meet the requirement of law at all and thus the issuance of notice u/s 148 based on cryptic and non-descript reasons combined with a mechanical approval thereon under s. 151 do not pass the test of judicial scrutiny. CIT(A), in our view, has committed blatant error in endorsing the reasons recorded which are clearly plagued by the vice of being vague, indefinite, non-descript and distant and that too without providing an iota of sound reasoning. A solitary observation that the re-opening has been carried in the light of Investigation Report can be no basis to fasten the jurisdiction for re-assessment of completed assessment. Such findings of the CIT(A) against the assessee on the jurisdictional aspect cannot be countenanced in law. Consequently, the notice under s. 148 to re-open the assessment is held to be void ab-initio and thus consequential re-assessment order is bad in law and therefore stands quashed. We notice that material collected from the Investigation Wing if any, was never confronted to the assessee at any stage of the assessment. The assessment in the instant case was earlier carried out under s. 143(3) of the Act. As per the reasons recorded, the AO has alleged that tangible material showing escapement of income seeks to dislodge the position taken by the assessee as per the return of income. However, having not disclosed the information collected, the onus continued to remain on the Revenue and was never discharged and therefore, never shifted on the assessee. The process of reasoning adopted by the CIT(A) while affirming the stance of the assessee and reversing the additions appear to be on sound principles. We do not see any infirmity in the process of reasoning so adopted. Decided in favour of assessee.

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• 2025 (4) TMI 938
  Deduction u/s 80P - denial of claim as assessee is carrying on the activity in violation of provisions of cooperative society and thereby the concept of mutuality is missing - CIT(A) disallowed the deduction of interest income earned from surplus funds invested in banks and government securities - HELD THAT:- We find that this statutory requirement imposes a legal obligation on the assessee society to maintain such deposits, thereby restricting its ability to freely use or withdraw these funds for its business operations without prior approval from the Registrar of Co- operative Societies. Given this statutory compulsion, we find that the interest income arising from these deposits cannot be equated with interest income derived from surplus funds voluntarily parked in banks for earning a return. Therefore, we hold that the interest income earned from such statutory deposits should be considered as operational income derived in the course of the assessee s business and consequently qualifies for deduction u/s 80P(2)(a)(i). We in the interest of justice and fair play, are inclined to set aside the issue to the file of the AO with direction to compute the required quantum of amount needs to be deposited as per statutory requirement and allow the claim of the deduction under section 80P(2)(a)(i) of corresponding interest income. We are also inclined to consider the alternative plea raised by the assessee. In the event that the AO found that the any amount of investment over and above the required statutory limit and classify the interest income from such deposits as Income from Other Sources, then it is imperative that the corresponding cost incurred in earning such income must be deducted while computing taxable income. It is a well-established principle of taxation that only net income should be brought to tax, and any expenditure directly attributable to the earning of such income should be allowed as a deduction. Therefore, we direct the AO to grant a proportionate deduction of the corresponding cost, if any, while assessing the interest income under the head Income from Other Sources. We hold that the assessee is entitled to deduction u/s 80P(2)(a)(i) on the interest income earned from deposits made in compliance with statutory requirements. AO is directed to re-examine the taxability of such interest income in accordance with this finding, as per law and grant appropriate relief to the assessee. Appeal of the assessee is allowed for statistical purposes.

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• 2025 (4) TMI 937
  Nature of expenditure/payment - Commercial rights acquired under an agreement for providing commercialisation services across the globe for underlying Intellectual Property Rights (IPR) for technologies identified - asset eligible for depreciation u/s. 32 or as revenue expenditure eligible for deduction u/s. 37(1) - HELD THAT:- Assessee has capitalized the consideration under this agreement payable to EADS as an Intangible asset claiming depreciation on the same which the AO as disallowed. Recognition of business or commercial rights of similar nature as its peculiar nuances. In the present case, facts of undertaking business transaction by the assessee with EADS in terms of aforesaid agreement is not in dispute. As already analysed the contents of the agreement entered by the assessee with EADS for rendering commercialisation services cooperation in technology licensing initiative for specified time period upto 31.12.2021, commencing from 28.07.2011. Assessee has demonstrated generation of revenue under this agreement over the period from 01.04.2010 to 31.03.2017, tabulated above. In terms of section 37(1), assessee has incurred the expenditure which is laid out wholly and exclusively for the purposes of the business. Keeping the above terms and conditions in the agreement in perspective with the alternate claim made by the assessee of treating the amount payable under the aforesaid agreement as a revenue expenditure allowable u/s. 37(1) of the Act, we find it proper to allow the said alternate claim. Ld. Assessing Officer is directed to recompute the total income while giving effect to the aforesaid finding of considering the claim allowable u/s 37(1). Accordingly, ground no. 3(e) raised by the assessee is allowed. Alternative claim towards foreign exchange loss actually paid as revenue expenditure which it has considered as part of cost of intangible - This ground is covered by our above stated observations and finding since it stems from the same transaction of impugned agreement under which assessee had recognized it as an intangible asset, having consequential effect. Accordingly, in terms of our aforesaid finding, ground no. 4(c) is allowed. AO is directed to give appropriate effect in computing the total income. Appeal of the assessee is allowed.

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• 2025 (4) TMI 926
  Reopening of assessment u/s 147 - TCS collected by various entities under Section 206CA, Deposits during the demonetization period and time deposit - HELD THAT:- In regard to the TCS, the Assessee explained that same was related to the transaction of purchase of liquor, which was duly accounted for in its books of account. In regard to the cash deposit, the Assessee had explained that the cash deposited during the demonetization period was the sale proceeds of goods. It is material to note that the Assessee disclosed that it had deposited Rs. 18,74,14,600/- during FY 2016-17 which was much larger than a sum of Rs. 7,03,20,600/- information of which was available with the AO. Thus, the allegations of bulk cash deposit by the Assessee during the demonetization period was contested. The said allegation was premised on the basis that the total cash deposit during the period was Rs. 7,03,20,600/-, however, the Assessee had clarified that said figure was much higher. There is also no cavil as to the explanation regarding the time deposit of Rs. 10,00,000/-. AO had considered said responses and accepted the Assessee s explanation regarding the reconciliation of TCS with proceeds of sales reflected in the books of account and the time deposit made under PM-GKY. The AO had held that no adverse inference is to be drawn on account of such information. With regard to the deposit of cash in the bank account, concededly, there was no allegation in the notice issued under Section 148A (b) of the Act that the cash deposited by the Assessee in its bank account during the demonetization period was disproportionately higher in comparison with the cash deposited during the corresponding period in the previous financial year. Thus, the Assessee had no opportunity to provide any explanation in respect of such allegation. We find merit in the contention that the impugned order passed u/s 148A (d) of the Act had travelled beyond the information furnished to the Assessee, which, according to the AO, was suggestive of its income escaping the assessment. Thus, the impugned order passed u/s 148A (d) of the Act cannot be sustained and is set aside. The impugned notice is set aside.

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• 2025 (4) TMI 925
  Petitioner should avail the alternate remedies available - Petitioner has adequately pleaded the non-availability or inefficacy of alternate remedies as required for entertaining such a petition - HELD THAT:- The limitation issue presents a mixed question of law and fact, which this Court, exercising its extraordinary jurisdiction, would prefer not to adjudicate. The additions are based on incriminating material, and this Court cannot examine such material to settle the disputes regarding the extent of the additions. These are routine grounds addressed by the appellate authorities, and no extraordinary circumstances exist to deviate from the standard practice of exhaustion of statutory alternate remedies. Almost all the grounds that were tried to be urged before us concern the merits or demerits of the assessment order. It is not as if these grounds cannot be urged before the appellate authority. This is an instance where the party has tried to take chances with the court procedures and consumed disproportionate Court time. In the case of Oberoi Constructions Limited Vs Union of India Ors [ 2024 (11) TMI 588 - BOMBAY HIGH COURT] this Court has considered several precedents on the issue of exhaustion of alternate remedies. By adopting the reasoning in the said decision, we decline to entertain this Petition. The Petitioner is free to Appeal the impugned assessment order if the Petitioner so desires. The observations made in this order are not intended to prejudice the Petitioner s Appeal when instituted. The observations are only prima facie for deciding whether any case is made out to bypass the salutary practice of exhaustion of alternate remedies. Therefore, if an Appeal is instituted, the appellate authority need not be influenced by any observations.

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• 2025 (4) TMI 924
  Validity of order passed by CIT(A) - addition was made towards unexplained sundry creditors which was outstanding as on March 31, 2014 - CIT(A) directing the AO to delete the additions subject to certain conditions - HELD THAT:- This Court is, therefore, of the considered view that the order of the CIT(A) directing the Assessing Officer to delete the addition of amount on account of unexplained sundry creditors was not set aside by the Hon ble Division Bench. The portion of the order of CIT(A) directing the AO to delete the addition, stands. The resultant effect is that the order of the AO stood set aside. Upon a conjoint reading of subsection (1), (2), (3) and (4) of Section 154, this Court holds that the authority has the power to make an amendment u/s 154 (1) of its own motion but if such amendment has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, the authority concerned is under a statutory obligation to issue a notice upon the assessee and give a reasonable opportunity of hearing before passing an order of amendment for rectification of any mistake apparent from the record. In the case on hand, the assessing officer made the amendment of its own motion. It is not in dispute that notice in terms of Section 154 (3) of the Income Tax Act was not served upon the petitioner. No opportunity of hearing was afforded to the petitioner before passing the order dated February 7, 2025. This Court holds that there has been a violation of the provision laid down u/s 154 (3) of the 1961 Act and for such reason the order dated February 7, 2025 calls for interference. AO while passing the order dated February 7, 2025 held that the impugned Assessment Order of the AO passed under Section 143 (3) of the Income Tax Act dated August 31, 2016 remains uninterfered and still remains in force. This Court has already observed that the effect of the order of the Hon ble Division Bench is that the order of the appellate authority directing the Assessing Officer to delete the additions, stands. This Court holds that the observation made in the order dated February 7, 2025 to the effect that the order of the AO dated August 31, 2016, is still in force, calls for interference. The order is set aside and quashed. Consequently the order stands revived. The authorities are directed to take all consequential steps in terms of the order dated January 3, 2024 within a period of four weeks from the date of receipt of a server copy of this order.

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• 2025 (4) TMI 923
  Reopening of assessment u/s 147 - period of limitation - notice issued under the old regime - scope of new regime u/s 148A - normal period of limitation of 4 years u/s 149 - HELD THAT:- As per decision of the Hon ble Supreme Court in Rajeev Bansal s case [ 2024 (10) TMI 264 - SUPREME COURT (LB) ] the period from the date of issuance of deemed notice dated 31.03.2021 till the supply of relevant material / information by the Assessing Officer to assess the income in terms of the directions of the Hon ble Supreme Court in Ashish Agarwal s case [ 2022 (5) TMI 240 - SUPREME COURT ] has to be excluded for the purpose of computation of period of limitation. Only requirement to be followed is u/s 153(2) of the Income Tax Act, 1961 as in force with effect from 01.04.2021. Thus, an Assessment Order has been passed within a period of 9 months from the end of the Financial Year in which the Notice was under Section 148 of the Income Tax Act, 1961 as in force with effect from 01.04.2021. The Impugned Notice dated 31.03.2021 for the Assessment Year 2015-2016 under Section 148 of the Income Tax Act, 1961 as it stood till 31.03.2021 was issued within the extended period of limitation, as 5 years had already expired from the end of the said Assessment Year. If the said notice is pigeonholed as a notice under Section 149(1)(a) of the Income Tax Act, 1961 as in force with effect from 01.04.2021, for the purpose of computation of period of limitation, the entire proceedings initiated under Section 148 as it stood till 31.03.2021 for the purpose of Section 148 as in force with effect from 01.04.2021 will be a still-born i.e., at the time of its issuance. This is not what was intended by either of the decision of the Hon ble Supreme Court. Therefore, it has to be held that a Notice under Section 148 of the Income Tax Act, 1961 as in force with effect from 01.04.2021 was issued within the extended period of limitation prescribed u/s 149(1)(b) after the said Notice dated 31.03.2021 issued u/s 148 as it stood till 31.03.2021 transformed itself into a Notice u/s 148-A(b) of the Income Tax Act, 1961 under the new regime as in force with effect from 01.04.2021 in the light of the decision of the Hon ble Supreme Court in Ashish Agarwal s Case [ 2022 (5) TMI 240 - SUPREME COURT ] Therefore, computation of limitation for issuance of a Notice under Section 148 of the Income Tax Act, 1961 under the new regime with effect from 01.04.2021, the period of limitation up to 02.06.2022 being the date of issuance of the Show Cause Notice and Reply dated 11.06.2022 of the petitioner, assessment has to be excluded even if it has to be construed that the case falls under Clause (a) to Section 149(1) of the Income Tax Act, 1961. However, the present case falls under Clause (b) to Section 149(1) of the Income Tax Act, 1961 as in force with effect from 01.04.2021. If the aforesaid period is excluded as per the decision of the Hon ble Supreme Court, conclusion in Paragraph 114(g) in Rajeev Bansal s case ( cited supra ), read with 1st Proviso and 3rd Proviso to Section 149(1) of the Income Tax Act, 1961 as amended, it has to be necessarily concluded that the Impugned Notice issued on 30.07.2022 is in time. Only if the Impugned Notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, 1961 as it stood till the said date was already time barred under the old regime as it stood till 31.03.2021, it can be said that the Notice was time barred. Since there were ingredients for invoking the extended period of limitation under the Proviso to Section 147 of the Income Tax Act, 1961 as it stood till 31.03.2021, it cannot be said that the Impugned Notice dated 30.07.2022 is time barred. Therefore, there is no merits in the challenge to the Impugned Notice issued to the petitioner on 31.03.2021 under the old regime or the Impugned Order passed by the respondent under Section 148-A(d) of the Income Tax Act, 1961 on 30.07.2022 or the Impugned Notice issued under Section 148 of the Income Tax Act, 1961 on 30.07.2022 under the new regime.

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• 2025 (4) TMI 922
  Entitlement to Exemption to cooperative societies engaged in banking activities from the purview of Section 194N - petitioner emphasizes that deducting 2% TDS on loans would severely impact the society s financial sustainability, jeopardizing its purpose of serving marginalized agrarian members - petitioner s claim for exemption under Section 80P(2) - HELD THAT:- Section 194N of the Income Tax Act, 1961 applies to the petitioner s transactions, including loans and subsidies, irrespective of the cooperative society s nature. This Court is of the view that the legal provisions and amendments are clear and no exemption applies in this case as claimed by the learned Senior Counsel for the petitioner. The respondents have followed the procedures properly and passed the impugned orders in accordance with law. This Court distinguishes the precedents cited by the learned Senior Counsel for the petitioner, noting that the factual circumstances of those cases differ from the present case. Therefore, this Court upholds the actions of the respondents, including the deduction of TDS as lawful and procedurally correct. WP dismissed.

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• 2025 (4) TMI 921
  Validity of show cause notice issued u/s 144 (8) by the first respondent - petitioner submitted that prior to the issuance of the impugned show cause notice by the first respondent/JAO, the second respondent/faceless Assessing Officer has already issued a show cause notice and when the faceless proceedings were going on, the second respondent abruptly and arbitrarily transferred the case to the first respondent/jurisdictional officer, without any intimation or communication to the petitioner stating the reason for transfer, therefore, the petitioner was in a perplexed state as to which show cause notice, he is required to file reply HELD THAT:- It is no doubt true that initially, a show cause notice dated 28.02.2025 was issued by the second respondent, however, since the said show cause notice was issued by a faceless AO, the case was transferred to the file of the jurisdictional AO, viz., the first respondent, who issued the impugned show cause notice dated 12.03.2025, and called for reply/objections from the petitioner. In the said show cause notice itself, a reference was made to the show cause notice issued by the Faceless Assessment Officer dated 28.02.2025, stating that the case of the petitioner has been transferred to the jurisdictional/AO, first respondent, therefore, the contention of the petitioner that the petitioner got perplexed as to which show cause notice, they have to file reply/objection is baseless, as rightly pointed out by the learned Standing Counsel for the respondent. Though this Court is not inclined to entertain the Writ Petition, however, grants liberty to the petitioner to file reply to the show cause notice issued by the first respondent, Jurisdictional Assessing Office which is impugned herein within a period of two weeks from the date of receipt of a copy of this order. Thereafter, the first respondent is directed to consider the reply and shall issue a clear 14 days notice affording an opportunity of personal hearing to the petitioner and shall decide the matter in accordance with law.

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• 2025 (4) TMI 920
  Exemption u/s 11 - whether the assessee having incurred more expenditure than income and even then, the benefit u/s. 11(1)(a) be claimed by the assessee and that claim be rejected? - HELD THAT:- Since the issue is related to the provision of section 11(1)(a) it would be appropriate to reads the said provision -Income from property held for charitable or religious purposes. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income - (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property. That provision, being very clear as vanilla the claim of the assessee is very much within the law. Not only that the issue which the revenue raised has already been settled in the case of Krishi Upaj Mandi Samiti [ 2016 (7) TMI 707 - RAJASTHAN HIGH COURT ] held that where assessee, a charitable trust, incurred expenditure in excess of income in previous year relevant to assessment year for charitable purposes, out of accumulated charity fund, it could not be denied benefit of exemption under section 11(1)(a) in respect of income of previous year relevant to assessment year, which had been admittedly applied for charitable purposes. We direct the ld. AO to allow the claim as claimed in the return of income. Appeal of the assessee is allowed.

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• 2025 (4) TMI 919
  Orders passed u/s 201(1)/201(1A) - short or non deduction of TDS on interest payment - HELD THAT:- Assessee submitted that assessee being the branch of the bank, has to file the relevant evidence as to availing of Form no. 15G/H or 27BA so prove that the payee has paid the tax. From the order it is also revealed that in some case PAN number was not mentioned but in fact branch may have the same and the assessee might have submitted those details along with the form 15G/H in the alleged default of the short deduction or non-deduction cases as listed in the order under challenged. Based on that set of facts assessee prayed to grant an opportunity to the assessee to present those facts on merits of the disputes as the assessee has sufficient reason to establish the non-deduction of tax by filing 27BA also that the tax to that interest paid by the branch has already subjected to tax by the payee. Considering the specific prayer of the assessee the bench is of the view that lis between the parties has to be decided on merits so that nobody s rights could be scuttled down without providing an opportunity of being heard to the assessee. Therefore, based on those facts we deem it fit to remand the matter to the file of the ld. AO who will consider the factual aspect of the matter as raised by the assessee after due verification of the facts and charge the correct income in hands of the assessee after affording due opportunity to the assessee and dealing with the evidence placed on record. However, the assessee will not seek any adjournment on frivolous ground and remain cooperative during proceedings before the ld. AO. Appeal filed by the assessee is allowed for statistical purposes.

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• 2025 (4) TMI 918
  Disallowance of interest u/s 36(1)(iii) - borrowed funds are utilized by paying huge interest and the assessee had advanced the loans to third parties without any commercial exigency - as alleged assessee has diverted the interest bearing funds without charging any interest - HELD THAT:- It is an admitted fact that the two concerns to whom advances made were not related parties. It is also an admitted fact that the assessee was charging interest from the above concerns from assessment year 2013-14 till assessment year 2015-16 and was offering the same to tax although the above two concerns have failed to pay any interest to the assessee company. It is also an admitted fact that the assessee, during the assessment year 2016-17, did not charge any interest from the said companies on the ground that when the recovery of the principal is in doubt, there is no point in charging any interest from the said companies. We find merit in the arguments of assessee that the assessee could have charged interest and could have claimed the same as bad debt. However, as a prudent businessman, the assessee has not recognized the interest on such doubtful debts. In our opinion, merely because the assessee has not recognized the interest income in respect of the outstanding amount from these two concerns, it cannot change the colour of such advance which is a commercial transaction . Since the impugned loans / advances were given in the course of business and are commercial transactions for which the assessee was charging interest from assessment year 2013-14 till 2015-16 and only because of non-payment of interest from the said parties, the assessee stopped charging interest for the impugned assessment year and to recover the principal and interest, the assessee has entered into a Joint Venture Agreement with the said concerns, therefore, such commercial transactions cannot be termed as diversion of interest bearing funds. Provisions of section 36(1)(iii) of the Act are not applicable to the facts of the present case. Decided in favour of assessee. Addition on account of melting charges - Addition by estimating the melting gain at 4% of metal issued as against 1.70% shown by the assessee - HELD THAT:- Since, admittedly the assessee in the instant case has maintained books of account which were not rejected by the Assessing Officer, therefore, respectfully following the decision of the Tribunal in assessee s own case for assessment year 2017-18 [ 2023 (3) TMI 1569 - ITAT PUNE] and in absence of any contrary material brought to our notice, we set aside the order of the CIT(A) / NFAC and direct the Assessing Officer to delete the addition on account of melting charges - Decided in favour of assessee.

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• 2025 (4) TMI 917
  Income deemed to accrue or arise in India - Addition on account of sale of logistic services treating the same as FTS under the Act as well as India-USA DTAA - HELD THAT:- The Hon ble Delhi High Court deciding the appeals [ 2025 (2) TMI 712 - DELHI HIGH COURT] and others, filed by the Department in the assessee s own case held as we had explained in International Management Group, FTS is firstly concerned with rendition of specialized knowledge, skill, expertise and know-how. It is principally concerned with a transfer of knowledge, skill and expertise. Those three attributes must be those which are possessed by the service provider and are distinctive and special qualities that it possesses, Second facet of FTS is the make available condition and which envisions an enablement or transfer of specialized knowledge and skill. As was explained in International Management Group, the mere furnishing of service would not be sufficient to categorise the service as FTS. It would have to be necessarily accompanied by a transfer of expertise and which would consequently enable the recipient of service becoming skilled in its own right and empowered to perform those functions independently. When tested on those precepts we firstly find that rules and regulations pertaining to clearance of customs frontiers was clearly not specialized skill or knowledge acquired or possessed by the assessee. These rules are in the public domain and have been framed by competent authorities operating in different jurisdictions. A fortiori, imparting instructions in respect of those statutory regulations would also not qualify FTS. Similarly, we fail to appreciate how the creation of a global of a global ethos or a workforce which is expected to follow a common code could he said to constitute FTS. Development of software - We need not render any independent observations except to remind the appellant of the principles which the Supreme Court had come to authoritatively lay down in Engineering Analysis Centre of Excellence (P) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] No ground to interfere with the view as expressed above. Appeal filed by the assessee is allowed.

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• 2025 (4) TMI 916
  Disallowance on account of the claim of bad debts - HELD THAT:- Even though the assessee has not proved to have carried out the business of money lending business/loans and advances on interest but even if it is considered that the expenditure which has been wrongly claimed for the impugned assessment year but then we cannot ignore the fact that the income of Rs. 10.00 lakh has been offered out of the alleged claim of bad debts in the return for A.Y. 2005-06. Therefore, to this extent, the assessee deserves relief since it has been taxed in A.Y. 2005-06 because the facts are of mixed nature, not giving the clear cut picture of the actual nature of business carried out by the assessee as well as the observation of the AO for the one taken for A.Y. 2002-03 and for the one taken for A.Y. 2005-06 accepting the recovery of bad debts. We therefore partly allow the grounds of appeal raised by the assessee and affirm the disallowance of bad debts of Rs. 11.20 lakh and delete the addition of Rs. 10.00 lakh solely on the ground that the same has been offered to tax in A.Y. 2005-06. Effective grounds of appeal raised by the assessee are partly allowed.

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• 2025 (4) TMI 915
  Denial of Exemption u/s 11 - addition received on rent a violation of 13(1)(c)/13(1)(d) of the I.T. Act. - Sole reason that in charging of rent in reduced rate, AO has opined that the assessee trust has applied income of the trust for the benefit of assessee trustee - whether entire income of trust will be stripped of entire exemption u/s 11 of exemption will be denied only to the extent of the violation of provisions of section 13(1)(c)(ii) ? - HELD THAT:- The section 164(2) is statute provides application of Maximum Marginal rate only on the relevant income and not on the entire income. The computation section clearly stated that the denial of exemption under section 11 should be limited only to the amount which was connected in violation of section 13. Therefore, the statute has unambiguously stated that only relevant income which is not exempt under section 11 can be brought to tax, as the income of an AOP and the balance income of the charitable trust, will be entitled to exemption. CIT(A) rightly relied on the CBDT Circular No.387, dated 06/07/1984 [152 ITR (St)1]: issued by the CBDT, under the heading Levy of income-tax at the maximum marginal rate in the case of charitable and religious trusts which forfeit tax exemption is relevant. The aforesaid Circular, clarifies the stand of the CBDT as to where such a trust contravenes the provisions of section 13(1)(c) or 13(1)(d) of the Act, the maximum marginal rate of income-tax will apply only to that part of income, which has forfeited exemption under the said provisions. If the interpretation sought by the Revenue is accepted, it would lead to grave injustice as any mistake minor or contravention of provisions will lead to complete denial of the benefit of exemption which otherwise a trust registered under section 12A is legally allowed to claim. The maximum marginal rate shall be levied to the extent of relevant income, which has contravened provisions of section 13 and in the present case as contravention is of Rs. 1,80,000 only. AO erred in denying entire claim of exemption under section 11 and 12. Therefore, we uphold the impugned order passed by the learned CIT(A) and the grounds no.1 and 2, raised by the Revenue are dismissed. Addition of interest income as unexplained income u/s 69A - We are of the opinion that impounded documents which were found in the possession of third party, are neither signed nor authenticated by anyone cannot be simply relied to make an addition under section 69A of the Act. Insofar the application of provisions of section 69A of the Act is concerned, the addition was based on the impounded documents marked as Annexure B/4, which is in our opinion is not a sufficient material to make an addition in the absence of any independent corroborative evidence. Provisions of section 69A of the Act being a special provision can be invoked only when in any financial year the assessee is found to be owner of any money, bullion, jewellery or any other such valuable articles and there is doubt about source of same and the explanation offered by the assessee in the opinion of the Assessing Officer is not satisfactory. In the given case, it is the case of the Assessing Officer, that the assessee trust has received interest income. Therefore, as the source is known, provisions of section 69A cannot be invoked. Therefore, invoking provisions of section 69A of the Act is unwarranted. Even though we held that the document on the basis of which addition is made is not a speaking or dumb document and worthy of making an addition, however, the assessee has not challenged the addition by way of cross appeals, confirming the addition by the learned CIT(A) was indeed justified and it is rightly allowed as interest income to the tune of Rs. 43,50,000. Such addition shall be subject to normal rate of taxation and need not be governed by the provisions of section 115BBE of the Act. Accordingly, ground no.3, raised by the Revenue is dismissed. Exemption under section 11 allowed. Allowance of depreciation - submissions of the assessee trust that it only claimed depreciation as an application of income and has not claimed the capital as an application of income - HELD THAT:- The assessee trust during the year has only claimed depreciation as an application of income and the capital expenditure towards fixed assets were not claimed as an application of income. The statute provides allowance of either depreciation or application of income towards capital expenditure. Therefore, if the AO disallows depreciation, he is duty bound to allow benefit of allowance towards application of income vis- -vis capital expenditure. CIT(A) was absolutely correct in in allowing the depreciation in holding that the assessee trust cannot be devoid of claiming at least one as an application of income, doing so will defeat the mandate of the Act, which provides either capital investment or depreciation as an application of income.

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• 2025 (4) TMI 914
  Addition made towards Passenger System Solutions treating same as taxable in the hands of the assessee as Fees For Technical Services (FTS) u/s 9(1)(vii) of the Income Tax Act as well as under Article 12 of the DTAA between India and USA - assessee is a company incorporated in the USA and is a tax resident of USA - main contention of the AR before us is that these services are standard services rendered using the software technology and that they are not the technical services - HELD THAT:- A particular service will be considered as fees for included services only when the person acquiring the service is enabled to apply the technology. It is also clear that even if the provision of the service requires technical input by the person providing the service, it may not fall within the ambit of Article 12(4)(b) unless the technical knowledge, skills, etc., are made available to the person purchasing the service. In assessee s case from the perusal of the nature of Passenger Services, it is clear that no technology per se is made available to NACIL and that the services are rendered using the software supported by the data centre of the assessee in USA. Accordingly there is merit in the contention of the ld AR that these services are rendered using the technology and are not in the nature of technical services. Further we notice that there are plethora of judicial pronouncements where it has been held that unless the technical knowledge, skills etc., are made available by the service provider, the same cannot be held as FTS to be taxed in India under the DTAA which specifically provides so. We see no infirmity in the order of the CIT(A) in holding that the impugned receipts are not taxable in the hands of the assessee in India. Since we have dismissed the ground of the revenue for the reason that the receipts towards Passenger Services are not taxable under Article 12 of the DTAA between India and USA, the contention of the revenue that the same is taxable under section 9(1)(vii) of the Act has become academic and not adjudicated separately.

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• 2025 (4) TMI 913
  Carry forward of Short Term Capital Loss (STCL) whereas the assessee has taken the benefit of the DTAA between India and Singapore with respect to the Short Term Capital Gains (STCG) - assessee is a company incorporated in Singapore and is a tax resident of Singapore - HELD THAT:- On perusal of the computation of income we notice that the assessee during the year under consideration has not availed any Treaty benefits and has computed the net the STCL after setting off the STCG and claimed the carried forward of STCL under the Act. Hence in our view the ground raised by the revenue is based on the incorrect understanding of facts. On perusal of the rectification order u/s 154 passed by the AO we notice that the brought forward loss was not allowed to be carried forward based on a rectification order pertaining to AY 2013-14 in which the loss of AY 2011-12 and AY 2012-13 was not allowed to be carried forward. AR during the course of hearing drew our attention to the returns filed for AY 2011-12 and AY 2012-13 to substantiate the brought forward loss was incurred during the said assessment years - DR did not controvert the submission of the ld AR that these losses were allowed to be carried forward in the respective AYs. In our view the revenue cannot deny the benefit of carry forward of loss under the head capital gains pertaining to earlier years by an order passed in the subsequent year and that the right to carry forward can be denied only in the year in which the loss is first incurred. This is so for the reason that the section 74 of the Act has a restriction eight years during which the loss under the head capital gains can be carried forward and for this purpose the loss pertaining to each AY are to be determined in the assessment year in which the loss is first computed. Therefore in our view the CIT(A) has correctly held that the right to carry forward the loss of AY 2011-12 and AY 2012-13 cannot be denied by a rectification order passed in AY 2013-14. Decided against revenue.

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• 2025 (4) TMI 912
  Ex parte orders passed u/s 144 - applications for condonation of delay of 1716 days in filing appeals against assessment and penalty orders - income under presumptive taxation provisions (Section 44AD of the Act) at 8% of total incomes for the relevant assessment years - HELD THAT:- It is crystal clear that appellant/assessee had failed to comply with the several notices during the assessment proceedings. CIT(A) vide order dismissed the applications for condonation of delay of 1716 days in filing appeals. Appellant/assessee claims that due to custody and mental illness, he could not file appeals within period of limitation. In applications dated 24.03.2024, appellant/assessee requested condonation of delay in filing appeals due to custody and mental health, setting aside ex parte order under Section 144 of the Act and reassessment income as per section 44AD of the Act and to compute total income at 8% of Rs. 43,00,550/- and Rs. 17,86,580/- for AYs 2016-17 and 2017-18 respectively.

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• 2025 (4) TMI 911
  Disallowance of claim of write off of security receipts - assessee had written off Security receipts during the year under consideration and claimed the same as deduction - When questioned about the same by the AO, the assessee submitted that, as per RBI guidelines, the unrealised security receipts have to be written off within a maximum period of 8 years. Hence the assessee claimed deduction of amount so written off as business loss - HELD THAT:- It appears that the assessing officer has not correctly appreciated the business model and the manner of functioning of the assessee company. The assessee herein is a Asset reconstruction Company registered under SARFAESI Act. We notice that section 7 of SARFAESI Act permits the assessee to issue security receipts for raising funds. The concerned trusts have made provision for bad debts in order to determine the quantum of its income. Hence, the provision for bad debts, if any, created by the Trusts is for the purpose of determining the income of the trusts as per the accounting principles and hence, it is nothing to do with the accounting methodology followed by the assessee. So far as the assessee is concerned, it has treated the investment made in Security Receipts as a separate investment and the income generated there from is offered to tax. Unrealised Security receipts were written off after the expiry of eight years. If any amount is realised after it was so written off, such realisation is offered to tax. As noticed earlier, the AO has misdirected himself in understanding the concept of forming trusts, the accounting system followed by the trusts and assessee. There is no dispute with regard to the fact that the assessee has to follow the guidelines issued by the RBI for accounting the Security Receipts and it has to treat the Security receipts as Loss assets if it is not realised within five years. Accordingly, the assessee has chosen to write it off the unrealised portion of the security receipts after expiry of eight years. There should not be any dispute that, if any security receipts was not realised within a period of eight years, then its recovery is doubtful. Accordingly, we do not find any infirmity in the claim made for deduction of Security receipts written off by the assessee. Accordingly, we confirm the order passed by Ld CIT(A) on this issue. Addition of upside income not offered to tax by the assessee - A.R submitted that the upside income would consist of Income by way of management fees/incentive and income from investments - HELD THAT:- The assessee cannot be considered as the owner of the entire investments made in the Trusts or the financial assets acquired through trusts. In view of the above said position, and also as per the requirements of the SARFAESI Act, the Trusts are required to be considered as separate entities notionally for accounting purposes. Hence, the realisation of NPAs made by the trusts cannot be considered to be the income of the assessee. We notice that the tax authorities have misdirected themselves in understanding the manner of functioning of the assessee and the trusts. We are of the view that the assessee was right in comparing the investments made by it in Security receipts with the investments made by general public in Mutual fund investments. The investors of mutual funds are not concerned with the financial activities carried on by the mutual fund and the incidence of tax shall arise in the hands of investors, only when they receive any money from the Mutual fund. In our view, the position of the assessee in respect of Security receipts is akin to the investment made in the mutual funds for the purpose of accounting and taxation, in view of the requirements provided under SARFAESI Act. AO was not right in assessing any realisation made by the concerned trusts as income of the assessee and the Ld.CIT(A) was not justified in partially confirming a part of the said additions. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition relating to upside income recovery. Protective addition in respect of upside income relating to other Security receipt holders, viz., the other beneficiaries of the Trust - The reasoning given by us for deleting the addition of upside income of Rs. 153.77 crores would equally apply to this addition also. The realisation made by the trusts cannot be considered as income of either the assessee or other investors. In any case, any income pertaining to other investors cannot be considered as income of the assessee. Hence, we are of the view that the AO was not justified in making protective addition of upside income relatable to the other investors in the hands of the assessee, since the realisations made by the Trusts cannot be considered as income of either the assessee or other investors, unless they are distributed between the security receipts holders. Accordingly, we affirm the decision rendered by the Ld.CIT(A) on this issue on the above said reasoning also. Appeal filed by the Revenue is dismissed

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• 2025 (4) TMI 910
  Entitlement for deduction u/s. 11 and 12 - charitable activity or not? - HELD THAT:- We have perused the order passed by the Coordinate Bench of this Tribunal in [ 2025 (2) TMI 863 - ITAT BANGALORE] in which a similar dispute arose in respect of the A.Ys. 2014-15, 2016-17 and 2017-18 which were decided by the Coordinate Bench by following the earlier order passed in the case of Bangalore Development Authority [ 2019 (6) TMI 429 - ITAT BANGALORE ] hold that the denial of exemptions under Sections 11 and 12 of the Act is unjustified. The assessee s activities are undeniably charitable, and the provisions of the Act support its exemption claim. The addition made by the AO and upheld by the CIT(A) is, therefore, quashed. Thus, assessee is entitled for deduction u/s. 11 and 12 of the Act.

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• 2025 (4) TMI 909
  TDS u/s 194C - non-deduction of tax on contract manufacturing of goods/products as per terms of agreements - interest levied by the AO u/s 201(1) and u/s 201(1A) - HELD THAT:- During the course of hearing the revenue did not bring anything on record to controvert the above findings of the coordinate bench in assessee s own case for AY 2017-18 [ 2023 (7) TMI 1075 - ITAT MUMBAI ] holding that the payments made under the SOR agreements did not fall within the ambit of Section 194C of the Act and therefore the assessee did not have any liability to deduct tax at source on such payments u/s 194C of the Act. Accordingly, all the grounds raised by the Revenue stands dismissed Accordingly, respectfully following the decision of the coordinate bench, we hold that there is no infirmity in the decision of the CIT(A) in deleting the tax under section 201(1) and interest under section 201(1A) levied by the AO. The grounds raised by the revenue are thus dismissed.

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• 2025 (4) TMI 908
  Denial of Tonnage Tax Benefit - whether the conditions of qualifying ship is satisfied in the case of the assessee according to the provision of the Act? - HELD THAT:- For computing income, audit report has to be filed u/s.115VW which provides for filing of Form No.65 duly certified by the Auditor, which here in this case, auditor has duly filed and certified the tax tonnage income. Nowhere, it has been disputed or brought on record that assessee s income is not from time charter. In fact there is a categorical finding by the ld. CIT (A) wherein hiring income from time charter of vessels given on hire to M/s. USCL and other companies have been given. Such hiring income from time charter falls in the category of core activities. It is not necessary that only carrying any cargo passengers alone is to qualify for the TTS. What is to be required to be seen before giving benefit of TTS is that, it should be a qualifying ship and Section 115VI defines the relevant shipping income to compute the tax tonnage for which Auditor has to certify the relevant shipping income under the head tax tonnage whether it is qualified as a tax tonnage or does not qualify. Here in this case, assessee has also offered its income partly under TTS and also under non-TTS which is duly certified by the auditor in Enclosure B( 2) in Form 66. Accordingly, we hold that the claim of the assessee qua the income for tax tonnage scheme has to be allowed and to that extent finding of the ld. AO is reversed and order of the ld. CIT (A) is confirmed. Thus this issue is decided in favour of the assessee. Victualling expenses which AO had added - These payments are made for man day at fixed amount to meet the victualling cost. The purchase of victualling materials are made directly from the vendors and delivered on board to the vessels and the funds are transferred to the bank accounts of the agencies appointed for marine base office activities. The agents were appointed to withdraw the amount from the bank account and cash advances to the base Managers / vessel masters to use cash for purchasing victualling material from the vendors. It is also seen that assessee has furnished vessel-wise monthly summary of material details. It is also seen that before the ld. AO, detailed submissions in respect of said expenses were also made vide letter dated 30/11/2019 for the A.Y. 2016-17 which is also impugned before us. The said submission also contained the attendant sheet of the crew on board and the amounts paid to them alongwith documentary evidences. Once these expenses are part of a normal business activity and is prevalent in the shipping industry where the company provides food, snacks and beverages to the crew members on board, it cannot be held that it is for non-business purpose. Accordingly, we upheld the order of the ld. CIT(A) in deleting the said addition. Disallowance of sundry and sales promotion expenses - AO noted that assessee has debited sundry expenses and sales promotion expenses for which assessee has not filed any submissions - assessee had suomoto disallowed 50% and the ld. Counsel sated that disallowance has to be restricted only to that part of income, which not eligible to the part under TTS - HELD THAT:- We do not find any infirmity in the order of the ld. CIT (A) because even if the disallowance has to be made then, the same has to be restricted to the part of income which is completed under those incomes which is not eligible to be taxed under TTS. Thus, any way disallowance has been confirmed albeit, it has been restricted to be disallowed from the income from non-TTS income. Accordingly, the ground raised by the Revenue is dismissed. Interest of FD margin not allowed as tonnage income - AO while passing the order u/s 153A of the Act did not provide netting off of the interest expenses which was part of tonnage income calculation - HELD THAT:- Though there is a nexus of fund deployed for the business purpose, i.e., for acquiring ships and for placing performance guarantee margin vis-a-vis each contract with the banking and financial institutions. Since these margin deposits are integral part of core activities of operating qualifying ships and it is the part of the business requirement to provide the bank guarantees. However the part of the assessee s income is chargeable to tax under tonnage tax and where tax is levied under presumptive rate, accordingly, it presume that all the expenses has been subsumed in the calculation and will have no impact on calculating the taxable income. Thus, any interest claimed for the calculation for tonnage tax scheme cannot be allowed because once the presumptive tax is applicable on tonnage tax then, no separate interest expenses can be allowed. The interest income has to taxed separately under the head income from other sources and any interest expenses which is directly related to interest income has to be netted and accordingly, we direct the ld. AO to net off interest income from interest expenses and balance should be taxed as income from other sources. In the result, ground No.3 raised by the assessee is partly allowed. Disallowance made for deemed dividend u/s. 2(22) (d) - HELD THAT:- Cost of shares invested was USD 300 and money received was USD 300 thereby being no income or gain in the hands of the assessee and hence, no capital gain. There is no income arising out of reduction in the share capital up to the value of principal invested. We find that this issue has neen discussed in the decision of Tata Sons Limited [ 2024 (1) TMI 1036 - ITAT MUMBAI] wherein assessee s shareholding in Tata Telecom Services Ltd. was reduced pursuant to the scheme of arrangement and restructuring and no consideration was paid by TTSL to the assessee and long term capital loss arising to the assessee on account of deduction of capital was allowed to the set off against the other long term capital gain. Since the facts have not been discussed properly by the ld. AO or by CIT (A) accordingly, this matter is restored back to the file of the ld. AO and to decide afresh in line with the principle laid down in the decision of Tata Sons Ltd., (supra) wherein, it was held that reduction of share capital is to be treated as capital loss . Accordingly, the ground is partly allowed for statistical purposes.

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• 2025 (4) TMI 907
  Addition invoking the provisions of section 41(1) adding the sundry creditors - AR sought admission of additional evidence - HELD THAT:- This is a fit case for admission of additional evidence filed by the assessee. Since it is evident from the record that these evidences were not considered by any of the lower authorities, therefore, we deem it appropriate to restore the matter to the file of the jurisdictional AO for de novo consideration after due examination and verification of the details/evidences furnished before us by the assessee. Accordingly, the impugned order is set aside and the matter is restored to the file of the AO for consideration afresh. Grounds raised by the assessee are allowed for statistical purposes.

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• 2025 (4) TMI 906
  Revision u/s 263 - AO, while framing the reassessment, had failed to properly verify the assessee s claim for exemption u/s 54F - HELD THAT:- Admittedly, it is a matter of fact that the AO, while framing the reassessment, had failed to verify the assessee s claim of exemption u/s 54F of the Act by making enquiries or verifications which should have been made. We, say so, for the reason that as observed by Pr. CIT that though it was the claim of the assessee that he had purchased Villa No.48 vide an agreement to purchase , dated 18-04-2016, but thereafter, he had in the course of the revisional proceedings come up with a new claim, i.e due to certain internal problems he was allotted Villa No.4. Also, it transpires that Villa No.4 that was allotted to the assessee and claimed to be in his possession was not backed by any registered deed/agreement. Although it was, inter alia, the assessee s claim that as pursuant to the agreement to purchase , dated 18-04-2016, he was put into possession of the subject property i.e Villa No. 4, therefore, the said purchase transaction would fall within the meaning of transfer as contemplated u/s 2(47) of the Act, but we concur with the Pr. CIT that the same is not supported by the mandate of law. Although Section 2(47)(v) of the Act, contemplates that any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882, (Act No. IV OF 1882) will fall within the meaning of transfer , but the same, we are afraid, does not come to the rescue of the assessee before us. We, say so, for the reason that, as per the post-amended Section 17(1-A) of the Registration Act, 1908, any document containing contracts to transfer for consideration, any immovable property for the purpose of Section 53A of the Transfer of Property Act, 1882, shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001, and if such documents are not registered on or after such commencement, they shall have no effect for the purpose of Section 53A of the Act. As the agreement to purchase , dated 18-04-2016 is an unregistered document, therefore, as observed by the Pr. CIT, and rightly so, the assessee cannot claim to have purchased the subject property i.e Villa No. 4 as required per the mandate of law. AO had failed to carry out necessary verifications, which he was required to make while framing the reassessment vide his order passed under Section 147 r.w.s. 144B of the Act, dated 22-03-2022, therefore, we are of a firm conviction that no infirmity emerges from the order of Pr. CIT, who in exercise of his revisionary jurisdiction under Section 263 of the Act had rightly held the order so passed by the AO as erroneous in so far it is prejudicial to the interest of the revenue,. Accordingly, finding no reason to dislodge the well-reasoned order passed by the Pr. CIT u/s 263 we herein approve the same. Decided against assessee.

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• 2025 (4) TMI 905
  Addition towards Foreign dividend income - assessee offered to tax the net dividend i.e. the amount received after deducting TDS while filing the return of income - AO held that the dividend income has to be offered on gross basis and accordingly made the addition - HELD THAT:- The impugned issue is already considered by the coordinate bench in assessee s own case [ 2015 (2) TMI 1323 - ITAT MUMBAI ] for AY 2006-07 where it is decided against the assessee because taxed paid do not qualify as expenditure for the purpose of business and entire gross dividend should have accounted for in the P L account. Decided against assessee. Disallowance of payment made to auto dealers - AO has received information from Addl. DG of Central Excise Intelligence that the General Insurance companies are selling insurance policies through auto dealers and that the commission towards soliciting the insurance is paid in the guise of payment towards infrastructure, placement of banners, advertisement etc which are not genuine - HELD THAT:- We see merit in the submission of the ld AR that disallowance cannot be made on the ground that the impugned payments are against the IRDA regulation. Further we notice that findings of the Central Excise authority alleging that the insurance companies are paying commission in the guise of reimbursement of expenses is reversed by different benches of CESSTAT and Hon ble Madras High Court in the case of other insurance companies and therefore the disallowance by placing reliance on the findings of the Central Excise is no longer applicable. Section 44 r.w. Schedule I of the Act, provides that the insurance companies are required to prepare the profit and loss account in accordance with the provisions of the Insurance Act, 1938 (4 of 1938) or the rules made there under or the provisions of the Insurance Regulatory and Development Authority Act, 1999 (4 of 1999) or the regulations made there under. In assessee s case we notice that the accounts are prepared as per the provisions as mentioned herein above and the same is approved by the Controller and Auditor General of India. The contention of the revenue that the payments made to auto dealers are not genuine and that the same is actually commission paid in the guise of reimbursement is solely based on findings of Central Excise which is subsequently reversed by the higher judicial forums. Accordingly the disallowance cannot be sustained on that ground. Further the submissions of the assessee that the payments are towards outsourced activities as per the IRDA guidelines which gets periodically reported is well substantiated. Therefore expenses claimed towards reimbursement of expenses for the outsourced activities as per the IRDA guidelines, cannot be disallowed. Accordingly we direct the AO to delete the disallowance made in this regard. The ground raised by the assessee is allowed. Profit on Sale of Investment exempt u/s 10(38) - AO denied exemption u/s 10(38) on the ground that the assessee s income is computed u/s 44 of the Act read with First Schedule which is special regime applicable to the insurance companies for computation of total income and that entire income earned by insurance companies, including income taxable under House property, capital gains and income from other sources are taxed as business income - AO further held that the exemption under section 10(38) is available only to income which chargeable under the head capital gains - HELD THAT:- Impugned issue stands decided in favour of the assessee by the decision of Bombay High Court in assessee s own case for AY 2006-07 [ 2018 (3) TMI 589 - BOMBAY HIGH COURT ] wherein the Bombay High Court while deciding the issue had relied on clarificatory letter bearing F No. 153/24/2006-TPL dated 21 February 2006 issued by the CBDT to IRDAI regarding exemption under section 10(38) available to all General Insurance Companies. Exemption available to any other assessee under clause 10(38) relating to long term capital would also be available to a person carrying on non-life Insurance business. Disallowance u/s 14A - AR contended that section 14A is not applicable in the case of insurance companies which are governed by section 44 - HELD THAT:- Identical issue for AY 2012-13 [ 2020 (12) TMI 434 - ITAT MUMBAI ] held that it has been consistently held that, provision of section 14A is not applicable in the cases of Insurance company which are governed by section 44, because it is non obstante provision wherein the income is to be computed as per P L account prepared under the Insurance Act 1938 Section 14A contemplates exception for deduction allowable under the act, whereas section 44 creates special application of provision of computation of profit as per the Insurance Act. Thus, no disallowance u/s 14A can be made and accordingly, ground allowed in favour of the assessee. Amortization of Premium on Securities - AO disallowed the same stating that the same is in the nature of capital expenditure - HELD THAT:- We notice that the coordinate bench while considering identical issue in the case of AIG General Insurance Co. Ltd. [ 2010 (10) TMI 764 - ITAT, MUMBAI ] wherein the issue of Amortization of Premium on Securities has been explained by way of example. Even if the debit for amortization is considered as an expenditure or allowance, there being so specific prohibition against the expenditure or allowance in section 30 to 43B, the departmental authorities were not justified in adding back the amount of the balance of the profits. The judgment of the Supreme Court in the case of General Insurance Corporation of India [ 1999 (9) TMI 3 - SUPREME COURT ] takes care of all the arguments advanced on behalf of the Revenue. We, therefore, delete the addition. Applicability of provisions of Section 115JB on disallowance u/s 14A - We notice that the ground of the revenue is not factually correct. We further notice that the AO has added the disallowance made u/s 14A to the book profits while completing the assessment and that the CIT(A) has held the issue in favour of the assessee by holding that the AO is not correct in adding the disallowance to the book profits. It is a settled legal position that the disallowance under section 14A cannot be added to the book profit under section 115JB of the Act. Therefore we see no infirmity in the order of CIT(A). Accordingly the ground of the revenue is dismissed.

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• 2025 (4) TMI 904
  Deduction claimed u/s 36(1)(iii) - interest expenses on borrowed capital - AO disallowing the expenditure claimed on the ground that assessee allegedly did not carry out any business activity during the year under consideration - whether actual receipt of revenue from the principal business activity could be considered as indication or a barometer to suggest the continuity of business which in turn would qualify the assessee to claim expenditure in its return of income? - CIT(A) allowed claim - HELD THAT:- Stance adopted by AO is not justifiable as assessee had been into the business which includes costs which are fixed in nature and other wise. Merely not having revenue receipts cannot be the yard stick to decide allowability of the expenditure. Section 36(1)(iii) states that the amount of interest paid in respect of capital borrowed for the purpose of business or profession would be allowable as a deduction. Proviso to the said section provides that any amount of interest paid in respect of capital borrowed for acquisition of an asset or extension of existing business or profession or any period beginning from the date on which the capital was borrowed for acquisition of the asset, till the date on which such asset was put to use, shall not be allowed as deduction. In the present case, before us, the proviso to the said section does not apply since, assessee has undertaken a project which forms part of its stock in trade and not a fixed asset. On these facts, the questions which were considered by the Hon ble Court was on the allowability cost of interest paid on the loans borrowed by the assessee and whether it would fall within the scope of section 36(1)(iii), as examined by the Tribunal. We also take note of the observations and findings of ld. CIT(A), who on similar view has deleted the disallowance made by AO. No reason to interfere with the findings arrived at by CIT(A), in allowing the claim of the assessee. Accordingly, grounds raised by the Revenue are dismissed.

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• 2025 (4) TMI 903
  Addition u/s 68 - unexplained cash credits - a ssessee has admitted that he has not maintained books of accounts - HELD THAT:- From a plain reading of section 68 of the Act, it is clear that the addition can be made U/s. 68 of the Act in cases where any sum is found credited in the books of account maintained by the assessee, where the assessee offers no explanation about the nature and source of such credits in the books of account or such explanation is not in the opinion of the Assessing Officer being satisfactorily explained. In the instant case, the addition has been made U/s. 68 of the Act even though it was acknowledged by the Ld. AO that the assessee has not maintained books of account. See KAMAL KUMAR MISHRA [ 2014 (1) TMI 71 - ITAT LUCKNOW] and SMT. MADHU RAITANI VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-3 [ 2010 (10) TMI 905 - ITAT GAUHATI] It is a settled decision of law that the addition made by the Ld. AO in respect of the cash deposits by invoking the provisions of section 68 of the Act fails for the simple reason that the bank statements or bank pass books cannot be considered as books maintained by the assessee for any previous year and therefore, the addition made by the Ld. AO U/s. 68 of the Act is bad in law and deserves to be deleted. Decided in favour of assessee.

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• 2025 (4) TMI 902
  Non-deduction of TDS u/s 194C - Demand u/s 201(1) read with Section 201(1A) - assessee, a private limited company, made payment for external development charges (EDC) to Haryana Urban Development Authority (HUDA) who had merely received payment for and on behalf of Department of Town and Country Planning (DTCP), which is admittedly a government department and as per the assessee is not liable to deduct TDS on the said EDC - HELD THAT:- It appears that by Finance Act, 2014, Sub-Section (1) of Section 2014 w.e.f. 1.10.2014 by substituting the earlier provision and earlier provision with a uniform limitation period of seven years from the end of relevant financial year wherein payments made or credit given was made applicable. It further appears from the above that while making amendment by Finance Act, 2012, the provision of Section 201(3) has been given retrospective effect from 1.4.2010. Thus, it is quite clear that in the event the legislature intended to apply the amended provision of sub-Section (3) brought in by the Finance Act 2014 w.e.f. 1.10.2014 for such retrospective effect, then they would have certainly mentioned the same a date prior to 1.10.2014 and not w.e.f. 1.10.2014, as has been specifically mentioned by the Finance Act, 2014. Therefore, the argument advanced by the learned counsel for the assessee that the amended provision made by the Finance Act, 2014 in respect of the limitation prescribed in Section 201(3) of the Act cannot at all be made applicable to the instant case in hand as for the particular reason that the assessee s case was much before than that of the amendment made and the assessee since filed their TDS statement under Section 200 in due time, the order under Section 201(1) read with Section 201(1A) could not have been passed on 30.03.2021 rather the same ought to have been passed within two years from the end of the financial year in which the statement was filed particularly having regard to the provisions of Section 200 of the Act, is found to be acceptable. We also note that the DR has not been able to bring on record anything contrary to the facts made available before us. We also find that the identical issue has been considered in the case of Turner General Entertainment Net Works India Limited Mahipalpur, Delhi [ 2024 (11) TMI 866 - ITAT DELHI] wherein under identical facts and circumstances of the case the assessment order completed on 28.03.2018 for F.Y. 2010-11 was found to be beyond the prescribed time limit and therefore quashed. We find no reason to deviate from the stand taken therein and respectfully relying upon the same we find that the order impugned dated 30.03.2021 for A.Y. 2014-15 is beyond limitation in view of the amended provision of Section 201(3) of the Act and the same is not found to be sustainable and thus, quashed. Assessee s appeal is allowed.

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• 2025 (4) TMI 901
  CIT(A) admitting additional evidence under Rule 46A of the Income-tax Rules, 1962 without giving the AO a reasonable opportunity to examine and rebut the same during remand proceedings - HELD THAT:- Not only that the evidence with the ld. CIT(A) has entertained are all those bills as AO noted that he made the disallowance merely on account of not submitting the bills. CIT(A) the bills were not submitted. CIT(A) having co-terminus power has entertained that evidence AO choose to remain silent and has not provided the remand report even after so many reminders the CIT(A) passed the order as on 12.04.2024, based on facts and records available. As is evident that the assessee had filed the appeal before the CIT(A) on 28.08.2018 and the appeal order was passed on 12.04.2024 which means the appeal was pending before the CIT(A) for approximately six years and sufficient opportunity was granted to the ld. AO. Without prejudice to that rule 46A(4) provide that Nothing contained in this rule shall affect the power of CIT(A) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty . As regards the filling of the audit report belatedly, AO has already considered the audited accounts and made the addition there from and there being no further grievance on that delayed filling of audit report and therefore, they contention has no effect either on merit or that of the admitting the evidence on those accounts. Thus, when the ld. CIT(A) has considered those evidence giving equal chance to ld. AO for providing his comments he has considered those evidence in furtherance to the records already on record. Therefore, we do not find any merits on the grounds of appeal of the revenue and thereby the ground of appeal 1 2 raised by the revenue are dismissed. Addition on account of purchases and development expenses claimed by the assessee in profit and loss account contending that the assessee failed to submit the books of accounts, bills or vouchers etc. to substantial its claim during the assessment proceedings - HELD THAT:- We note that AO had observed that the assessee had debited purchase and internal development expenses in respect of the lands transferred to M/s M.M. Reality. As per the details furnished before the AO, the said expenses had been paid to seven parties / contractors. The assessee had furnished the details of TDS deducted u/s 194C, copy of ITR acknowledgments and computation of income of the parties / contractors. However, the relevant books of accounts, bills and vouchers verifying the expenses were not produced before the Ld. AO as contended by him while making the addition. While in proceeding before him the AO in order to verify the genuineness of the expenses issued summons u/s 131 to the parties. None of the parties appeared, however, they sent reply by post the relevant details to the Ld. AO forwarding the details as called for. In case of M/s Flexible Machine Tools, Faridabad and Shri Arun Sharma, Faridabad the summons the summons so issued were not served and came back as unserved. AO deputed his inspector for site verification and upon report of that inspector so deputed he stated that the land in questions is uneven, rugged and having no constructions except a room. There was no agriculture activity on the land. That also made reasons to disbelieve the expenditure claimed by the assessee. While arguing the case ld. DR in its submission dated 23.12.2024 has mentioned point no. 3.1 Failure to produce books and supporting evidence that in spite of AO s specific request on 26.02.2016 for books of accounts, bill and vouchers, the assessee only provided partial reply through dak and also the assessee has failed to submit primary records substantiating the payment to seven contractors. In this matter we note that in the assessment proceeding in the very first reply of the assessee submitted on 13.07.20215, he had provided the following major documents as required by the ld. AO i.e.PAN Card, ITR Ack. and Computation of A.Y.2013-14, Audited Balance sheet and Profit Loss of the A.Y.2013-14, Sales ledger in the book of Ascent Buildhome Developers Limited, Transfer deeds, Bank account statement of Punjab National Bank, Jaipur, Kotak Mahinda Bank, Raja Park, Jaipur and Kotak Mahindra Bank, Raja Park, Bhiwadi. The assessee also submitted the details of the payments made to the seven contractors, the assessee had provided the details in its reply dated 02.03.2016 showing details of internal development expenses, Copy of ITR Computation of those contractors and Form 26AS of those contractors. The assessee also submitted the copy of ledgers and bills were also duly submitted at the time of appeal proceeding but the ld. AO remained silent in the remand proceedings. DR in its submission dated 23.12.2024 has mentioned vide point no. 3.1.2 Evasions of Summons by Key Contractors and point no. 3.2.3 Non-compliance by Outstation Contractors stating that the AO had issued summons U/s 131 to the contractor but the contactors failed to attend hearings provided responses by post and also that some contractors did not submit their responses. On this issue as we note that the creditors of the assessee have duly filed their submission in response to the summons issued by the AO U/s 131. The creditors could not attend the hearing personally but they have duly provided letter confirming the nature and details of transaction undertaken between them and the assessee, their ITR Computation and Copy of their PAN. This basic documents related to the creditors were submitted at the assessment proceeding but the contention of the AO was that the assessee had failed to produce the party so as to establish genuineness of the transaction. Neither these creditors were related party of the assessee nor they have completely neglected the summon. Also, subsequent payments have also been made those creditors. AO concluded that the internal development expenses are bogus solely based on the non-appearance of the creditors/contractors which is not the correct. The bench noted that the ld. CIT(A) while dealing with the appeal of the assessee has dealt with all the aspect of the matter and categorically held that the assessee submitted all the necessary details in respect of the expenses incurred by them. All the ledger accounts, bills and vouchers have been produced. The TDS has been paid u/s 194C, the copy of ITR acknowledgments have been provided, all the transaction have been carried out through the banking channels. Hence, the said expenses cannot be held to be bogus in nature. The appellant cannot be forced/compelled to produce its parties to prove genuineness of the transactions. By submitting the necessary documents, the appellant had discharged the onus cast upon him to prove the genuineness of the transactions quite sufficiently. Further, since all the details were available with the Ld. AO necessary inquiries could have been conducted by the Ld. AO to determine the genuineness of the expenses. Also, in respect of the report of the Patwari that no agricultural activity has taken place on the land, it is pertinent to mention that the appellant has never claimed that he has done agriculture on the said land. Since, the land was rugged that is why land filling and landscaping were required to be made for the land to be sold. Therefore, we also do not find any infirmity in the finding so recorded by the ld. CIT(A) while allowing the appeal of the assessee on its merits. Thus, we do not find any merit of the ground number three raised by the revenue and the same is dismissed.

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• 2025 (4) TMI 900
  Addition of Expenditure by way of penalty or fine for violation of any law for the time being in force u/s. 37 - HELD THAT:- Admittedly, it is a fact on record that assessee had already added back this amount while computing its total income. Accordingly, yet another disallowance made while processing the return is not justified as it amounts to double addition. We, thus do not find any infirmity in the findings arrived at by the CIT(A) in this respect. Liability of contingent nature - Assessee has evidently demonstrated that this amount has been reported in its financial statements as part of its disclosure requirements and does not have any bearing on the profit and loss account to arrive at total income for the year and reported in its return. CIT(A) has taken note of the inadvertent error made by the tax auditor while reporting it in column 21(g) of the tax audit report. Based on his examination of the records, he has noted that assessee did not claim the contingent liability as an expense, neither in the profit and loss account nor in the return of income as a deduction while computing its total income. This is a verifiable fact from the records which were already available with the Department when the assessee filed its return of income on its portal. No infirmity in the fact based findings arrived at by CIT(A) in granting relief to the assessee. Accordingly, grounds raised by the Revenue are dismissed.

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• 2025 (4) TMI 899
  Unexplained cash credit u/s 68 - share application money received by the assessee - Onus to prove - HELD THAT:- The provision of section 68 as prevailing for year under consideration the ld. AO can make addition u/s 68 only under two circumstances, (i) the assessee does not offer any explanation about nature and source of such credit or (ii) Explanation offered by Appellant is not up to the satisfaction of Ld. AO. Therefore, here we note that the assessee provided so as prove the identity, credit worthiness and genuineness of the transaction by placing all the records such as PAN, Application made for Shares, Board Resolution and Confirmations, Financial Statement and Bank statement of the investor company which were not at all doubted by ld. AO. But all such vital evidence has been ignored solely on the basis of statements of third party recorded by some other officials during the course of search operation conducted. As argued by the ld. AR of the assessee relying on the decision of Padmavati Agrico(India) Private Limited [ 2024 (9) TMI 1312 - ITAT JAIPUR] it is clear that Shri Praveen Jain has retracted from his statement and as held by our jurisdictional Hon ble Rajasthan High Court stating that on the retracted statement no addition can be made in the hands of the assessee. This has been held by our High Court in the case of PCIT Vs. M/s. Esspal International P. Ltd [ 2024 (9) TMI 652 - RAJASTHAN HIGH COURT] stating that the merely based on the retracted statement no addition can be made. Decided against revenue.

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• 2025 (4) TMI 898
  Denial of final registration u/s 12AB / final approval u/s 80G(5) - HELD THAT:-Provisions of law clearly show that even if any object or activity of assessee, out of various multiple objects and activities, has element of commerciality, that would result in denial of exemption u/s 11/12 to that extent and in that particular previous year only but the CIT(E) in exercise of power u/s 12AB, cannot deny registration to assessee. The decisions in East India Industries (Madras) Pvt. Ltd. [ 1967 (4) TMI 2 - SUPREME COURT ] and Yogiraj Charity Trust [ 1976 (3) TMI 5 - SUPREME COURT ] relied by Ld. CIT(E) are not related to grant of registration but are for computation of total income by Assessing Authority. In present case, we are concerned with grant of registration by CIT(E), therefore those decisions are not relevant. It also remains a fact, as shown by AR with reference to the documents in Paper-Book, that the assessee has done only charitable activities till now and not undertaken any activity contemplated by object No. 2 3. Therefore, as and when the activity of Object No. 2 3 is actually undertaken by assessee in future, it would be a prerogative of Assessing Authority in that particular year, to ascertain the quantum of exemption u/s 11/12 available to assessee. Being so, we are inclined to hold that the CIT(E) is not justified in denying registration to assessee on the footing that by means of object No. 2 3, the assessee had intention to carry out commercial activity. Consequently, we direct the CIT(E) to grant registration u/s 12AB to assessee as applied. Denial of approval u/s 80G - In so far as first reasoning for denial of approval u/s 80G is concerned, we have already directed the CIT(E) to grant registration u/s 12AB to assessee in foregoing part of this order. Therefore, the first reasoning for denial of approval u/s 80G does not survive. The second reasoning that the application filed by assessee was belated, is already addressed by CBDT Circular No. 7/2024 and the Ld. AR has also informed that the assessee has already filed a fresh application to CIT(E) before the designated deadline of 30.06.2024 which is pending before CIT(E). In that view of matter, we remand this matter back to the file of CIT(E) for an appropriate adjudication

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• 2025 (4) TMI 897
  Rejecting the books of accounts holding it to be unreliable - estimated the profits from this business at 2.21% as opposed to 0.47% returned by the assessee - HELD THAT:- Identical facts and circumstances were also involved in the case of assessee s sister concern, M/s Beach Minerals Company [ 2023 (11) TMI 732 - ITAT CHENNAI] which was also in the same line of business and was also searched along with the assessee. Like the assessee, two parallel books of accounts were unearthed from the electronic data viz., tally software titled ori and IT . Upon comparison, the AO noted that, the accounts titled IT were the accounts maintained for income-tax purposes wherein the expenses debited were higher than the expenses found debited in the books maintained in ori and therefore made disallowance on account of inflated expenses. On appeal, the coordinate bench of this Tribunal upheld the Ld. CIT(A) s action of rejecting the books of accounts holding it to be unreliable but estimated the profits from this business at 2.21% as opposed to 0.47% returned by the assessee. CIT(A) had rightly followed the ratio decidendi laid down in the above decision (supra) for rejecting the books of accounts and estimating the profits of the assessee at 2.21%, as the facts involved were similar. Accordingly, we do not see any reason to take a different view in the present case before us. Likewise, the argument of the Ld. CIT, DR urging that the net profit rate ought to be adopted at 53% instead of 2.21% as estimated by this Tribunal in assessee s sister concern (supra) cannot be countenanced. Also, we note that, the entity viz., Industrial Mineral Company urged by the Revenue to be comparable to the assessee, was demonstrated before us to be in different line of business and hence, this entity identified by the Revenue is held to be not comparable. Whether income estimated upon rejection of books of accounts ought to be added over and above the addition/disallowance already made in the original assessments which were completed u/s 143(3) of the Act in AYs 2014-15 2015-16? - From the facts placed before us, it is noted that the AO s predecessor had made ad-hoc disallowance of Rs.90 lacs Rs.40 lacs out of expenses for want of verification in AYs 2014-15 and 2015-16 respectively. In the preceding paragraphs, we have already upheld the CIT(A) s action of rejecting the books of accounts for being unreliable and upheld the estimation of the total income with reference to the turnover of the assessee. Having done so, we find that the Ld. CIT(A) had rightly held that, the total income so estimated ought to subsume the disallowances made in the original assessment and if the disallowance made in original assessment is added to the total income so estimated, then it would effectively amount to double addition. In our considered view also, the net addition to be made to the income originally assessed is to be quantified in such a manner to ensure that the total income so computed upon making such addition shall result in the same figure as estimated upon rejection of the books viz., 2.21% of the turnover, in the facts of the present case. For these reasons, this plea of the Revenue is also rejected. 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. Addition on account of unaccounted sales and unexplained expenditure - No reason to interfere with the Ld. CIT(A) s finding directing the AO to assess the profit element of 2.21% embedded in these unaccounted sales. Addition made on account of unexplained expenditure we find ourselves in agreement with the Ld. AR that, the unaccounted sale proceeds could be telescoped towards the source of such unaccounted expenditure and therefore no separate addition on this account was permissible. In the facts of the present case, we have already upheld the estimation of profits from the unaccounted business above, i.e., net of sales and purchases/expenses, and thus the unexplained expenditure in question stands subsumed in the estimation exercise. In our considered view therefore, no separate addition on this count was warranted. For these reasons, we uphold the Ld. CIT(A) s action of deleting the impugned addition.

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• 2025 (4) TMI 896
  Bogus purchases - HELD THAT:- From the perusal of the documents submitted it is seen that in so far as Emirates Shipping Line, the same is agent of Emirates Shipping Agencies India Pvt. Ltd and the services availed by assessee are, carriage handling charges, terminal handling charges, export document fees for which assessee had made payment through cheques and also deducted TDS. In light of these documents, it cannot be held that it is a bogus party or the purchases are not genuine. If a party has not filed return of income for the year under consideration that does not mean the transaction undertaken by the assessee is bogus so as to disallow the entire payment. If the assessee has deducted TDS and also reflected the transaction in the GST return alongwith bills in support of nature of services used, then how can the transaction be treated as bogus to disallow the expenses debited and thus, addition made on account of bogus purchases cannot be sustained and same is deleted. With regard to other three parties also the same reasons have been given by the ld. AO. It is seen that assessee had received freight services from Namaste India Aviation Private Limited; road transport services from Lakshmanan Ramchandran; and ocean freight, bunker charges, sea charges, port handling charges from Sea Bridge Maritime Agencies Private Limited and for availing these services, assessee has deducted TDS and also filed complete invoices and bank statement to evidence the payment which was there in the DRP also. In light of these documents, it is difficult to hold that these are bogus expenses. Simply because these parties might not have filed the return of income but that does not lead to inference that transaction is bogus. Thus, the addition made by the ld. AO is directed to be deleted. Disallowance pertaining to reversal of provision of lease rent - assessee whenever creates a provision pertaining to the earlier years, the same has been disallowed while computing taxable income for those assessment years. Once in the computation, provision has been disallowed and offered to tax in the preceding year then, the assessee is correct in reducing it from business income of the current year on reversal and the same has been claimed as deduction in the current year by taking the net amount of difference between closing balance and the opening balance. Once these details have been furnished, we do not find any reason to make the disallowance on the reversal of the provision. When same has already been disallowed in the earlier years, accordingly, this issue is decided in favour of the assessee. Disallowance pertaining to reversal on profit on sale of asset - HELD THAT:- The assessee had reduced the sale consideration from the block of assets as per Section 50 and the block of asset did not cease to exist and hence, it was not required to consider short term capital gains while computing its taxable income. Accordingly, amount which has been credited to the profit and loss account has been reduced while computing the business income because it is a capital receipt. The only manner in which it could have taxed was as per Section 50 however, once assessee has reduced from the block of asset and said block of asset does not ceased to exist therefore, there is no requirement to consider it for short term capital gains. Accordingly, we do not find any reason for such disallowance made by the ld. AO and the same is allowed. Addition u/s.43B - leave encashment liability which was not paid during the captioned year - HELD THAT:- DRP remanded back this issue to the ld. AO for verification. The ld. AO issued notice to the assessee to provide its response, however, while submitting the response assessee by mistake could not attach the annexure which was relevant for the submission is now being annexed before us. Since this annexure was not there before the ld. AO, therefore, the matter is remanded back to the ld. AO only for a limited purpose to consider the above factual aspect and grant appropriate relief. Accordingly, ground is partly allowed for statistical purposes. Non-grant of self- assessment tax - It has been stated that assessee had already filed rectification application before the ld. AO. Accordingly, we direct the ld. AO to verify the same and grant credit accordingly.

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• 2025 (4) TMI 895
  Validity of reopening of assessment - non-compliance with the statutory requirement of obtaining approval from the specified authority - HELD THAT:- In the instant case, the assessment year involved is AY 2016-17 and the order u/s. 148A(d) of the Act has been passed on 30-06-2022, i.e., after expiry of three years after the end of the assessment year 2016-17. Hence, in terms of sec. 151 read with 148A(d) of the Act, the approval should have been obtained by the AO from Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. On the contrary, in the instant case, the AO has obtained approval from Principal Commissioner, which is contrary to the requirement of sec. 151 of the Act. In the case of Siemens Financial Services Pvt. Ltd., [ 2023 (9) TMI 552 - BOMBAY HIGH COURT] the concerned AO had issued notice/passed order u/s 148A(d) after expiry of three years from the end of the relevant assessment year. AO had obtained approval from Principal CIT. The Hon ble jurisdictional Bombay High Court has held that the notice and also the order are bad in law. Since the facts of the present case are identical to the one decided by the Hon ble Bombay High Court, respectfully following the same, we hold that the order passed u/s 148A(d) and also the notice issued u/s. 148 in the present case are bad in law and is liable to be quashed. Consequently, the impugned assessment order was bad in law and accordingly, the impugned orders passed by both the lower authorities are liable to be quashed. Appeal of the assessee is allowed.

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• 2025 (4) TMI 876
  TP Adjustment - addition on account of Intra-group services - whether payment made for Intra-group services was for commercial expediency? - HELD THAT:- As we find that the same would appear to be covered against the appellant in light of our order in AT T Global Network Services (India) Pvt. Ltd [ 2024 (7) TMI 1623 - DELHI HIGH COURT] . We further note that this issue was also not canvassed in the other appeals which formed subject matter of the batch which was posted before us today. Revenue share based payment pertains to amortization of revenue share based license fee and would have to be examined in light of the decision of Bharti Hexacom Ltd.[ 2023 (10) TMI 786 - SUPREME COURT] The aforesaid question would thus merit further consideration. Non-Deduction of TDS on Lease line expenses - Assessee was neither in possession nor control of the equipments which were used for providing internet and communication facilities and, therefore. there was a clear absence of the element of leasing of equipments and, therefore, the provisions of section 1941 cannot be applied. Disallowance of unascertained circuit accruals which has already been admitted by us for consideration while passing orders in AT T Global Network Services (India) Pvt. Ltd. [ 2024 (7) TMI 1623 - DELHI HIGH COURT] . This appeal shall be admitted on the following questions of law:- A. Whether the Tribunal has in the facts and circumstances of the case and in law erred in deleting the disallowances on the ground that the provision for other than circuit accrual charges was made on a scientific and automated basis, without appreciating that no documentary evidence/invoices were provided in support of the said accruals? B. Whether the Tribunal has in the facts and circumstances of the case and in law erred in deleting the disallowance on account of amortized revenue-share based license fee paid to the department of telecommunication by observing that such expenses were of recurring nature and benefit thereof was not of enduring nature, without appreciating that the respondent-assessee is acquiring a substantial right to establish, maintain and operate the mobile cellular/telecom service, which is a right of enduring nature? List again on 25.02.2025.

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• 2025 (4) TMI 875
  Rectification u/s 154 - adjustment made u/s. 143(1) which is on account of income deemed u/s. 41 - HELD THAT:- Pending this application, assessee preferred an appeal before CIT(A), challenging the adjustment made u/s. 143(1) which is on account of income deemed u/s. 41. The amount of adjustment was picked up from Part A-O of the return wherein the information is reported from the tax audit report, in clause 25 of Form No.3CD. In this clause, assessee had reported amount of recovery of bad debts which has been picked up while processing the return taking it as income u/s.41(4) giving rise to an upward adjustment. Assessee at the outset pointed out that subsequently CPC, Bengaluru has passed an order u/s.154 whereby the mistake apparent from record has been rectified accepting the claim of the assessee, thereby total income reported in the return was accepted. Copy of the said order is placed on record for ready reference. From the perusal of the order passed u/s.154, it is noted that the grievance of the assessee, by way of the present appeal before the Tribunal has been addressed. Fact of this was brought to the knowledge of CIT(A), however, the appeal was dismissed. Since CIT(A) did not take cognisance of the order u/s 154 rectifying the mistake, under the compelling reasons, assessee had to come up in appeal before the Tribunal to get the first appellate order set aside so as to avoid conflict on passing of effect giving order. We find that the issue raised by the assessee, in the present appeal has been addressed by rectification order passed u/s.154. In order to avoid any conflict which may arise on account passing of effect giving order, ground no. 1 raised by the assessee is allowed

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• 2025 (4) TMI 874
  Miscellaneous application u/s 254(2) - since ground of Appeal Nos. 10 to 22 has not been resolved pursuant to the provisions of the VSV Act, therefore, assessee seeks to resolve the said dispute under the normal provisions of the Act - assessee submitted that issues / grounds filed by NTT GDS, the successor company, could not be settled under Vivad Se Vishwas Scheme necessitating present misc. application under section 254(2) requesting for reinstitution of the appeal with respect to grounds pertaining to transfer pricing adjustment in relation to non-US transactions and corporate tax issues which were dismissed with a liberty to reinstitute. HELD THAT:- We find considerable cogency in the contention of the Ld. AR that since ground of Appeal Nos. 10 to 22 has not been resolved pursuant to the provisions of the VSV Act, therefore, assessee deserve to resolve the issues/dispute under the normal provisions of the Act. Accordingly, we recall the Tribunal s order [ 2020 (11) TMI 1127 - ITAT DELHI] qua the following ground nos. 10 to 22 only and direct the Registry to fix the appeal for hearing in the normal course. Miscellaneous application of the assessee is allowed.

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• 2025 (4) TMI 873
  Validity of reassessment proceedings u/s. 147 - no independent application of mind and no independent enquiry by the AO and that no proper approval u/s. 151 was obtained - HELD THAT:- Assessee failed to place credible evidence to support his legal ground. Therefore dismiss the legal grounds raised by the assessee. Accordingly, Grounds of appeal No.1 to 3 are dismissed. Addition u/s. 68 for unsecured loans and disallowance of the interest expenditure - HELD THAT:- The nature and source can be explained by way of placing evidence to prove the Identity, Creditworthiness of the alleged loan creditors and genuineness of the transactions. The assessee is carrying out the business in the name of M/s. Krishna Road Carriers and books of accounts are regularly maintained and audited u/s. 44AD of the Act. The gross freight during the year is approximately Rs. 12.55 crore and net income is declared at Rs. 15.66 lakh. It gives an overview that assessee is into the genuine business activity. Now the assessee has taken the unsecured loans in the course of business from the alleged three parties. The details of the parties are duly reflected in the Form No.3CD attached to the Tax Audit Report. The assessee has furnished the loan confirmations, ITRs, Audited financial statements, relevant pages of bank statement, source of alleged sum available in respect of all the three cash creditors. It is also not in dispute that all the three cash creditors named above have replied to the notices issued u/s. 133(6) of the Act. So the identity is not in dispute as all the cash loan creditors are Private Limited Companies and provided their identity details. So far as the creditworthiness of the loan creditors are concerned, all the three cash creditor companies are having sufficient credit worthiness and have given the alleged loans through banking channel to the assessee for its business purposes. Genuineness of the transactions, have gone through the confirmation of accounts for succeeding year also which are placed and find that the alleged loans have been fully repaid during the subsequent financial year. Interest paid during the year as well as subsequent year has been duly accounted for in the books of account. It thus proves the genuineness of the transaction also. Now since all the three ingredients have been fulfilled, in my considered opinion, assessee has successfully explained the nature and source of the alleged sums. There remains no room for invoking section 68 of the Act in the present state of affairs. Addition made by the AO u/s. 68 of the Act is hereby deleted. Further since the unsecured loans have been found to be genuine, the interest expenditure also deserves to be allowed.

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• Customs

• 2025 (4) TMI 936
  Grant of an option to pay fine as per the provisions of Section 125 of the Customs Act, 1962 in lieu of confiscation of the seized goods - gold bars weighing more than the permissible limit - prohibited item or not - HELD THAT:- All the authorities below have rightly held that the petitioners are not entitled for payment of fine in lieu of confiscation by exercising the power conferred under Section 125 of the Act. Since the decisions relied upon by the learned counsel for the petitioners cited supra are per-incuriam as it has not considered the well settled legal position as held by the Division Bench of this Court in P. Sinnasamy [ 2016 (9) TMI 879 - MADRAS HIGH COURT] , this Court is not bound to follow the said decision of the learned Single Judge relied upon by the learned counsel for the petitioners. It is also to be noted that in the decisions relied upon by the learned counsel for the petitioners referred to supra, goods involved were gold jewelery imported within the permissible limit, and it was not a case of gold bars weighing more than legally permissible limit as in the instant case. Conclusion - The petitioners are not entitled to the option to pay fine under Section 125, given the concealment of gold bars exceeding the permissible limit. The scope of interference by this Court under Article 226 of the Constitution of India does not arise and accordingly, the writ petition is dismissed.

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• 2025 (4) TMI 894
  Apportionment of sale proceeds of goods auctioned under the Customs Act, 1962 - goods were already time expired warehouse goods - whether the goods were required to be sold under the provisions of Section 63(2) of the Customs Act, 1962 or Section 150 (2) of the Act? - HELD THAT:- In view of the law as laid down in terms of Section 150 of the Customs Act, 1962, the apportionment of the sale proceeds after defraying payment of the auction caused is the first priority, the next element to be considered is the freight and other charges payable in respect of the goods sold to the carriers. There is nothing wrong in the order of the ld.Commissioner (Appeals) allowing payment of freight expenses. The ld.Commissioner (Appeals) was, however, handicapped for want of each and every bills and therefore, remanded the matter to the lower authorities for examining the authenticity and applicability of the said category of other charges via provisions of Section 150(2)(b) of the Customs Act, 1962. The respondent has challenged this remand pointing out that the ld.Commissioner (Appeals) was not vested with the power of remand. This premise of the respondent is not agreed upon. It is settled law that the ld.Commissioner (Appeals) in terms of power vested upon him is permitted to pass appropriate order as deemed fit, including the power to remand Section 128A (3) of the Customs Act, 1962. The law clearly provides, as may be seen from the aforesaid words of law, besides confirming, modifying or annulling the decision or order appealed against in terms of Sub-Section (3)(a) of Section 128A of the Act, the ld.Commissioner (Appeals) is also vested with power to remand vide Sub-section (3)(b) thereto - Even in the interregnum, the Court has given Commissioner (Appeals) the power for modifying the order including the power of remand. Conclusion - i) The apportionment of sale proceeds for auctioned time-expired warehouse goods must follow Section 150(2) of the Customs Act, 1962. ii) The respondent is entitled to freight charges of Rs.74,65,099/- as per Section 150(2)(b), supported by unchallenged documentary evidence. iii) The Commissioner (Appeals) validly remanded the matter concerning warehouse rent charges for detailed verification due to incomplete documentation. The appeal filed by the Revenue is therefore dismissed.

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• 2025 (4) TMI 893
  Misclaration of value of Melamine of Chinese Origin - over invoicing to evade payment of incidence of ADD - redetrmination of value based on NIDB and ICIS data - rejection for ADD assessment - alleged contravention of Rule 3 (2) of CVR, 2007 - HELD THAT:- There is nothing on record to suggest that the respondent had resorted to under valuation and deliberately suppressed real transaction value of Melamine of Chinese origin imported by them, under third country invoices, raised by the suppliers based out of Malaysia and Hong Kong. The fact that the respondent has claimed that the price of Melamine imported by them from other countries like, Japan, Qatar, Indonesia and New Zealand, were also in the same bandwidth has not been disputed by the Department. The Revenue has not been able to controvert the arguments in respect of the market forces and chemical/technical considerations driving imports of Chinese Origin Melamine through Malaysia and Hong Kong. It is on record that the seller of Malaysia and Hong Kong of subject consignments were not related to the respondent and all payments were made to suppliers by them through Letter of Credit/through Banking Channels. There is no evidence for payment of extra sums over and above the declared values. Thus it does not come out that the invoice price was not the sole commercial consideration. The Department has not produced even a single piece of evidence to suggest any parallel invoicing to prove that the goods were misdeclared to evade ADD or the backflow of the alleged variation in prices made to overseas suppliers. Suspicion howsoever grave is no substitute for proof. It is settled law that published price data like Price List or a Financial Journal is no ground to justify valuation and is required to be buttressed by hard evidence in respect of contemporaneous import data at the same level of comparable commercial parlance. Notification of prices is a well accepted norm in international trade but serves as a mere guide the real test being invoice value, in the absence of any other evidence to contradict it. Mere reliance of NIDB Data for valuation of imported melamine cannot be the sole consideration for fixing and burdening the respondent for payment of ADD. Further, non-supply of hardproof of NIDB Data, also vitiates the case of the Revenue. The re-determination of the value of the subject goods imported under cover of 17 Bills of Entry during the relevant period and imposing ADD of Rs.1,81,87,239/- is completely unsubstantiated. In order to establish its contention of suspected over- valuation, direct evidence by way of parallel invoice or any authentic communication between the importer and the suppliers to the said effect or proof of squaring up of accounts etc. is necessary. Knowledge or the lack of it in respect of another case, cannot be imputed to other rival trading partner. Suppression has to be established by way of positive action and not merely presumption, specific and explicit averments are required in order to establish the same. In the present case, there is no such finding by the Department. Conclusion - The rejection of declared value is ex-facie illegal and arbitrary and not sanctioned in law. There is no contravention of Rule 3 (2) of CVR, 2007. Appeal of Revenue dismissed.

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• 2025 (4) TMI 892
  Liability to pay custom duty on determination of Fe content in iron ore on WMT basis or DMT basis - HELD THAT:- The said issue has been decided by this Tribunal in M/s. Bagadiya Brothers Private Limited v. Commissioner of Customs (Port), Kolkata and Commissioner of Customs (Preventive), Bhubaneswar [ 2023 (9) TMI 827 - CESTAT KOLKATA ] and Commissioner of Customs (Prev.), Bhubaneswar v. M/s. Jindal Steel Power Limited [. 2024 (6) TMI 914 - CESTAT KOLKATA ]. Under identical facts and circumstances this Tribunal after considering the certificates issued by authorized inspection agency, held that export duty was payable at the rate of Rs. 50/- per MT as the Fe content of iron ore fines on WMT basis was less than 62%. Admittedly, in all the three cases the Fe content on WMT basis is less than 62%, therefore, the appellants are liable to pay custom duty at the rate of Rs. 50/- per MT. In that circumstances there are no merit in the impugned order. Conclusion - The Fe content on WMT basis is less than 62%, therefore, the appellants are liable to pay custom duty at the rate of Rs. 50/- per MT. Appeal allowed.

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• Corporate Laws

• 2025 (4) TMI 891
  Rightful shareholder of 100 equity shares in the respondent company or not - rectification of register of members to reflect the appellant as a shareholder holding 100 shares - time limitation - HELD THAT:- It is observed that Section 59 of the Companies Act, 2013, does not specify a limitation period. However, Section 433 makes the Limitation Act, 1963, applicable. Therefore, Article 137 prescribes a three-year period from the date of knowledge of the cause of action. In the present case the share transfer was recorded in 2016. The Appellant s failure to act until 2020, when he issued a notice, and subsequently filing the appeal in 2021, is beyond the three-year limitation period. The Appellant s argument of fraud lacks corroborative evidence. Shareholding details in the Annual Return for 2016 were publicly available, and no objections were raised within a reasonable time. The challenge to the share transfer through this Appeal filed by the Appellant is barred by the limitation in view of the orders of the of the Hon ble Supreme Court and the order of the Hon ble NCLAT as referred above the shares were transferred in the name of the Respondent on the basis of the share transfer deed dated 02.05.2009 on 20.02.1016. Any Appeal was to be filed for the Share Transfer under section 59 of the Companies Act, 2013 within the 3 years as per the Article 137 of the Limitation Act, 1963. Whereas the present Appeal is filed on 29.01.2021 which is beyond the period of 3 years of Limitation. Conclusion - The present Appeal is time barred as it was filed beyond the three-year limitation period prescribed under Article 137 of the Limitation Act, 1963. Appeal dismissed.

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• Insolvency & Bankruptcy

• 2025 (4) TMI 890
  Suit for recovery - Period of limitation - Exclusion of period spent before NCLT under IBC - Seeking to exclude the period from 13th March 2018 to 26th November 2019, basis Section 14 of the Limitation Act, 1963, in computing the period of limitation applicable to filing of the suit - HELD THAT:- A dismissal on the ground of presence of a pre-existing dispute need not be assessed by this Court, as to, whether it was on merits or under jurisdiction, but the fact that it is abortive, suffices for the purpose of this assessment. What is more important is that whether the proceeding was made in good faith and prosecuted with diligence. There is no assertion by the defendant that such a proceeding could not have been maintained. It would be quite specious for the defendant to state that, only in order to stay the limitation, the plaintiff had proceeded under the IBC. Proceedings under the IBC are routinely filed by operational creditors, fearing the inability of the corporate debtor to satisfy their debts. Section 8 of the IBC, itself allows an operational creditor to send a demand notice, on the occurrence of default [defined under Section 3(12) of IBC], in respect of a debt which has become due and payable, unless the corporate debtor brings to attention, existence of a prior dispute which would prevent further proceedings under the IBC - A perusal of the petition under Section 8 of IBC, filed before the NCLT by the plaintiff, shows that there were amounts outstanding and demand notices were sent, pursuant to the default. Therefore, there is no reason to arrive at a conclusion that the proceedings before the IBC were not bona fide. Conclusion - The time period from 13th March 2018 to 26th November 2019, be excluded in computation of limitation period applicable for filing of the present suit. Application allowed.

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• PMLA

• 2025 (4) TMI 889
  Money Laundering - scheduled offence - Challenge to arrest order under PMLA - territorial jurisdiction of Himachal Pradesh High Court to entertain the writ petition - reasonable grounds for arrest or not - HELD THAT:- A perusal of the complaint (Annexure P-62) would go on to show that allegations as such in the complaint are against the petitioner and various other accused, who are residents of Uttar Pradesh, including one Deepak Chaudhary, who is partner in Star Mines, one of partnership firm, apart from other accused like Bhanu Karnwal and Ravinder Kumar Malik. The allegations as such mentioned about the fact that Rs.1.60 crores was paid in cash generated from sale of illegal mined mineral/sand of Jai Maa Jawala Stone Crusher situated within the jurisdiction this Court and tentative funds as such were invested in Uttar Pradesh. Details as such had been given of the companies involved in the money laundering including Ambey Stone crusher and Time Builder stone crusher, in which the petitioner has been associated either as partner or as proprietor of Jai Maa Jawala Stone crusher. In Kaushik Chatterjee vs. State of Haryana and Others [ 2020 (9) TMI 1305 - SUPREME COURT ], the prayer was to seek transfer of three criminal cases pending on the files of Court of Additional Judicial Magistrate, Gurugram to a competent Court at New Delhi. The plea as such was raised that no part of cause of action arose in Gurugram for lodging a complaint in the Police Station at Gurugram since the loan had been sanctioned in Delhi and other loans had been sanctioned in Indore and Gujarat. Nothing had happened at Gurugram to invoke the jurisdiction and resultantly challenge as such had been laid to the criminal proceedings with an objection as such taken by the respondents/complainant that it was a question of fact to be established by evidence, which would not be gone into in a transfer proceedings and accordingly while placing reliance on Sections 177 to 184 of the erstwhile Cr.P.C, the petition was dismissed by holding that these questions have to be raised before the Court trying the offence and the Court is bound to consider the same and since it goes to the root of the matter. The said principle as such would also apply to the facts of this case. The Apex Court in similar circumstances in the case of Rana Ayyub [ 2023 (2) TMI 236 - SUPREME COURT ] also has held that for the trial of the offence of money laundering, the same should take place before the Special Court, which has taken cognizance of the offence and the trial of the scheduled offences insofar as the question of territorial jurisdiction is concerned, should follow the trial of the offence of money-laundering and not vice versa. The scheduled offence had been lodged in District Saharanpur in FIR No. 360 of 2024 and the Special Court had passed the remand order, we are of the considered opinion that this Court as such would be denuded of jurisdiction to entertain the arrest having taken place at New Delhi and ECIR having been lodged in Delhi, merely because initially there was some notice of FIRs in the jurisdiction of this Court and a raid was carried out which has led to the trail of proceeds of crime, as such would not bring it within the ambit of part of cause of action by which this Court would test the merits as such of the arrest order as contended by Mr. Chaudhari. Conclusion - There is a lack of jurisdiction to entertain the writ petition due to the location of the predicate offence and subsequent proceedings in Uttar Pradesh. Petition dismissed.

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• Service Tax

• 2025 (4) TMI 935
  Eligibility of a club to claim refund of Service Tax paid on services provided to its members during the period from 01.04.2016 to 30.09.2016 - applicability of principles of mutuality - HELD THAT:- The Apex Court after considering various facts of the levy held that principle of mutuality applies between the club and its members vide decision reported in the case of state of West Bengal other Vs. Calcutta Club Ltd. [ 2019 (10) TMI 160 - SUPREME COURT] - Hon ble Supreme Court also held that post amendment in Finance Act, 1994 vide amendment carried out on 1st July, 2012, the definition of service contained in Section 65B(44) was still wide enough to include the doctrine of mutuality at least in relation to incorporated clubs or association to claim exemption from Service Tax. The basis of principle propounded was that there cannot be a service and therefore the levy between the club and members, inter-se, as the member collectively constitute the club and cannot be stated to be providing service mutually. There are force in the arguments advance by the Learned Commissioner (AR) who pointed out that the doctrine of mutuality cannot be extended beyond the scope of levy provisions and if the same is done absurd consequence shall follow. As a club will be able to claim tomorrow that all assets of its members are the assets of the club. The levy collected without force of law too is an asset of the member and enriching club by extending principle of mutuality beyond levy will amount to interpreting law in a manner that promotes misappropriation of members funds as well as probably the consumer Welfare Fund . His argument that the prayer of the department to subject the refund claim to unjust enrichment must be allowed even if silence on this aspect was maintained by the appellate authority, while allowing the refund due to levy provision having been interpreted by the Hon ble Supreme Court in the matter of Calcutta Club - The provision of unjust enrichment enjoins upon the person who collects a tax which is refunded as not being covered by lawful levy to either pay back the same to the person from whom the same was recovered or if it cannot be paid back for any reason then the department has the right to apply provisions of unjust enrichment and recover the amount which could not be paid back and credit it to the Consumer Welfare Fund etc. Any interpretation that can encourage misappropriation, defiance of rightful claims has to be eschewed. In the instant case, it is not doubted that levy was collected from the members initially treating them as separate. Now even if levy is not sustainable on principle of mutuality, the examination of unjust enrichment for refund cannot be allowed to be ignored, as the same was applied by the Apex Court even for captive consumption within the same entity. Conclusion - i) Refund claims must be subjected to the test of unjust enrichment to ensure that only those who bore the tax burden receive refunds, failing which amounts should be credited to the Consumer Welfare Fund. ii) The principle of mutuality does not apply post 01.07.2012 for incorporated clubs, and the levy of Service Tax on services provided by the club to its members is valid. Appeal of Revenue Partly allowed.

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• 2025 (4) TMI 888
  Challenge to order dated 07.11.2024 issued by the Assistant Commissioner (Adjudication) under Section 73(2) of the Finance Act, 1994, concerning a demand for service tax on services categorized as Outdoor Catering - exemption from service tax under N/N. 25/2012 and Circular No. 172/7/2013-ST. - HELD THAT:- The mandate of Section 73 of the Act, 1994 is very clear wherein the Central Excise Officer is required to determine the amount of service tax within six months from the date of notice where it is possible to do so, in respect of cases falling under sub-section (1) and within one year from the date of notice where it is possible to do so, in respect of cases falling under proviso to sub-section (4A). The Bombay High Court in the case of UPL Limited [ 2023 (8) TMI 1152 - BOMBAY HIGH COURT] observed that even in absence of provisions of sub-section (4B) of Section 73 of the Act, 1994, the Authority could not have acted oblivious to the settled principle of law that a show cause notice would be required to be adjudicated within a reasonable time depending on facts of each case and consequently, quashed the show cause notice. A perusal of the order impugned (Annexure-1) would reveal that the respondent no.2, while passing the order impugned, without providing for any justification in keeping the show cause notice pending for over 9 years, has passed the order impugned concerning to demand of service tax, which order passed by the respondent no.2 being in teeth of provisions of Section 73 (4B) of the Act, 1994 and the settled legal proposition, cannot be sustained. Conclusion - The impugned order and the show cause notice quashed, due to the failure to comply with statutory adjudication timelines, without reaching a conclusive determination on the service tax exemption claim. Petition allowed.

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• 2025 (4) TMI 887
  Eligibility for abatement of 75% as provided under N/N. 26/2012 dated 20.06.2012 - contracts entered only for GTA services - HELD THAT:- There is no truth in the allegation of the Department that the respondent had raised a single bill for transportation charges and Custom House Agent charges. In the instant case, it is observed that the respondent who issued consignment notes in terms of Rule 4B of the Service Tax Rules, 1994 ought to be regarded as the GTA service provider and accordingly, they are entitled to avail the 75% abatement in terms of N/N. 26/2012-S.T. dated 20.06.2012. It is further noted that in respect of GTA service, the liability is on the recipient of service under reverse charge mechanism and wherever the respondent had rendered the service in the capacity of a goods transport agency, they have paid Service Tax after availing abatement. The respondent cited the specimen declarations submitted by the service recipients confirming payment of service tax on reverse charge. It is observed that under Section 68(2) of the Act read with Notification 30/2012-ST dated 20.06.2012, specified persons paying freight were liable to pay service tax on GTA services received. In the instant case, the respondent- GTA was liable to tax only for providing services to non-specified persons, in which cases it duly charged and paid the applicable service tax. The ld. adjudicating authority has given a categorical finding after examining all the contracts and records available before him. Thus, there are no reason to disagree with the above findings of the ld. adjudicating authority. Conclusion - i) The GTA services rendered by the Respondent are distinct and independent from CHA services. ii) The Respondent is entitled to the 75% abatement on GTA services under Notification No. 26/2012-S.T. iii) The demands raised by the Department for the disputed periods are not sustainable and are barred by limitation to the extent applicable. There are no infirmity in the impugned order dropping the demand of service tax raised in the notice - appeal of Revenue dismissed.

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• 2025 (4) TMI 886
  CENVAT Credit on Service Tax paid on cargo handling services provided by a third party (DPCL) in respect of imported coal sold on a high sea sales basis - extended period of limitation - HELD THAT:- The appellant is engaged in trading of coal. In case of imported coal, sometimes the appellant sells whole or part of the consignment on high sea sales basis. Even for the coal sold on High Sea sales basis, the appellant has undertaken the responsibility of clearance of the imported cargo on behalf of the high sea sales purchasers. Wen the appellant sold the imported goods on high sea sales basis, the required cargo handling services were provided by DPCL on their behalf. It is observed that against such services pertaining to high sea sales also, DPCL used to raise service bills upon the appellant which they paid and subsequently, the appellant availed CENVAT Credit of the Service Tax paid on the said amount. The Cargo Handling charges were paid by the appellant to DPCL on the basis of the cargo handling services rendered by them to SUPL / appellant in the port area. Thus, we find that DPCL has rendered cargo handling services to the appellant and the appellant has availed the Cevat credit of service tax paid on the cargo handling services received by them. The high sea sales purchasers have no agreement with DPCL for clearance of the cargo in the port area - there are no merit in the observations of the ld. adjudicating authority in the impugned order that in respect of high sea sales purchasers, the cargo handling services have been provided by DPCL to the high sea sales purchasers, since the purchasers have no agreement with DPCL for rendering of cargo handling service in the port area. The appellant has paid the said bills along with Service Tax to DPCL for the cargo handling services rendered and have availed CENVAT Credit on the basis of the bills so raised by DPCL to the appellant. Therefore, the appellant is eligible to avail CENVAT Credit and utilize the same for the purpose of payment of their output services. Thus, the impugned order disallowing the credit availed and utilized by the appellant is legally not sustainable. Extended period of limitation - HELD THAT:- The demands have been raised on the basis of scrutiny of their records viz. CENVAT Credit documents and S.T.-3 Returns filed. Since the appellant have not suppressed any information from the Department, the demand raised in this case by invoking extended period of limitation is not sustainable. Conclusion - i) The demand of Rs.5,10,82,374/- confirmed in the impugned order under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 73(2) of the Finance Act 1994, is set aside. ii) Since the availment of the above credit is found to be legal and proper, the demand of interest and imposition of penalty are set aside. iii) The demand of Service Tax of Rs.71,337/- along with interest of Rs.10,921/- confirmed in the impugned order, is upheld. Appeal disposed off.

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• 2025 (4) TMI 885
  Challenge to penalty imposed and proper appropriation of the Service Taxes already payable - HELD THAT:- The appellant has been able to reconcile the confirmed duty demand vis- vis the payments made by them under various headings. The reconciliation is properly backed up by documentary evidence placed by the appellant. In the present case, it is not disputed that the appellant has paid excess service tax and which is clearly certified by the Chartered Accountant. Therefore, the beneficial provisions should be interpreted in such a way that the very benefit which is sought to be given to the assessee is not denied. The appellant has fulfilled the requirement of completing the entire payment of Service Tax as per the confirmed demand - penalties set aside - appeal allowed.

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• Central Excise

• 2025 (4) TMI 934
  Availment of Cenvat Credit on the strength of invoices issued by various traders which were investigated by the Director General of GST Intelligence, Ludhiana - fake invoices without the supply of material mentioned therein - Revenue has not afforded the opportunity of cross-examinations of the witnesses whose statements were relied upon by the Revenue against them - Violation of principles of natural justice - prayer for remand of matter back to the original authority with the direction to original authority to afford an opportunity to the appellant - HELD THAT:- In the present case, the department has made out the case on the basis of statement of Director of the company who has admitted the factum of fake invoices issued by M/s Blue Star Exports, Ludhiana and has also reversed the Cenvat Credit availed wrongly by them. Further, it is found that Director of the company had never retracted his statement made before the authorities below. The request for cross-examination made by the appellant will not serve any purpose as the case was not built on the basis of statements of dealers rather it was on the basis of various documents recovered during investigation such as ICC Barrier Report, VAT 23 Returns of the traders, Replies of source manufacturers, Invoices of traders, Details of invoices of source manufacturers etc. and finally the admitted statement of Director of the appellant in all the cases. The documents were shown to Director of the appellant, Sh. Anil Kumar Jindal who in his statement clearly admitted the facts that Cenvat Credit was not admissible to them. On the basis of documents produced before him, he had also stated that they had reversed the Cenvat Credit in all the cases. Further, the appellants have also failed to prove the admissibility of Cenvat Credit in terms of Rule 9(5) of the Cenvat Credit Rules. Tribunal in identical facts in the case of M/s Unipearl Alloys [ 2024 (8) TMI 8 - CESTAT CHANDIGARH] , has dismissed the appeal of the assessee when the department had sufficient proofs to prove the wrong availment of Cenvat Credit on the basis of fake invoices. Conclusion - Cenvat Credit cannot be availed on the basis of fake invoices without actual supply of goods and that admitted statements of the parties and documentary evidence are sufficient to establish such fraud. The right to cross-examination is not absolute and may be denied where the case is not solely dependent on witness statements and where the party has failed to raise such a plea before the lower authorities. There is no infirmity in the impugned orders passed by the learned Commissioner (Appeals) - Appeal dismissed.

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• 2025 (4) TMI 884
  Rebate claim filed by the respondent on the basis of CIF (Cost, Insurance, and Freight) value instead of FOB (Free on Board) value was permissible under the Central Excise law and related notifications - invocation of extended period of limitation - HELD THAT:- The SCN was issued on the ground that A.R.E.-1 value was higher than the FOB value due to inclusion of insurance and freight in the Transaction Value, in terms of Section 4 of the Central Excise Act, 1944 read with Para 4.1 of Chapter 8 of the C.B.E.C. s manual, which states that the value for the purpose of central excise duty under the rebate procedure shall be the transaction value and the same may be less than, equal to or more than FOB value indicated by the exporter in the corresponding Shipping Bill. The Revenue is of the view that the issue regarding transaction value may be less than, equal to or more than the FOB Value is only for the purpose of taking care of the variation of exchange rate on the preparation of Shipping Bills and actual clearance of the goods for export, but not for inclusion of other elements like insurance and freight. The respondent is eligible for the entire amount of duty paid on the CIF value by way of refund, in cash, as well as by way of re-credit of the balance amount. Extended period of limitation - HELD THAT:- The SCN has been issued by invoking the extended period of limitation. In this regard, it is an admitted position that the issue of payment of duty on CIF value was known to the Department as the very same issue had been adjudicated vide order dated 31.03.2014. Thus, for the subsequent period, the demand cannot be raised by invoking suppression clause for the extended period of limitation, as has been held by the Hon ble Supreme Court in the case of Nizam Sugar Factory v. Collector of Central Excise, A.P. [ 2006 (4) TMI 127 - SUPREME COURT] . Conclusion - i) Rebate claims must be based on FOB value, but excess duty paid on CIF value is refundable or re-creditable, ensuring revenue neutrality. ii) Extended period of limitation under Section 11A can be invoked only in cases of wilful suppression, fraud, or intent to evade duty; prior adjudication and departmental knowledge negate such invocation. iii) Mere inclusion of freight and insurance in transaction value without intent to evade duty does not constitute suppression or fraud. There are no infirmity in the impugned order passed by the ld. adjudicating authority - appeal of Revenue dismissed.

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• 2025 (4) TMI 883
  Clandestine removal - shoratge of finished goods and raw materials detected during stock verification - issuance of SCN after payment of duty and interest, and beyond one year from the date of detection of shortages - existence of mens rea or not - levy of penalty - HELD THAT:- The Officers of the D.G.C.E.I., Kolkata had visited the factory of the appellant- company on 07.03.2008 and verified the stock of finished goods and raw materials present. Upon verification, they had found a shortage of finished goods as well as raw materials. It is observed that the shortage has been worked out on the basis of eye- estimation and no actual weighment was conducted to verify the quantity of the finished goods and raw materials available in the factory. However, with a view to end the litigation, the appellant accepted the shortage of finished goods and raw materials as alleged and paid the duty involved on the finished goods and the amount equivalent to the CENVAT Credit availed on the raw materials. The said payment was done even before issuance of the Show Cause Notice. Where an assessee agrees to pay the differential duty before issuance of Show Cause Notice, Show Cause Notice need not be issued. In this case, it is observed that the duty along with interest has already been paid before issuance of the notice and the same stands appropriated in the impugned order. Levy of penalty - HELD THAT:- The investigation has not brought in any evidence to establish that the finished goods and raw materials have been cleared clandestinely. However, with a view to end the litigation, the appellant accepted the shortage of finished goods and raw materials as alleged and paid the duty involved on the finished goods and the amount equivalent to the CENVAT Credit availed on the raw materials. Just because the appellant has accepted the liability and paid the duty, it cannot be presumed that the appellant has suppressed the facts from the department with an intention to evade the duty. As the appellant has paid the entire amount immediately after the detection of the shortage, much before the issuance of the Show Cause Notice and there is no evidence of any clandestine removal of the goods, the submission of the appellants that there is no mens rea or intention to evade the duty established in this case, agreed upon. Accordingly, no penalty is imposable on both the appellant-company and its Director on this issue. Reliance placed on the decision of the Hon ble Karnataka High Court in the case of Commissioner of C.Ex., Bangalore-II v. Pushpadeep Enterprises [ 2012 (10) TMI 496 - KARNATAKA HIGH COURT] , wherein, under similar facts and circumstances, the Hon ble High Court has held that penalty is not imposable. Conclusion - i) Where an assessee agrees to pay the differential duty before issuance of Show Cause Notice, Show Cause Notice need not be issued. ii) In the absence of any evidence of clandestine removal of goods and where the duty is paid immediately after detection of shortage, no penalty is imposable on the appellant-company or its Director. Appeal disposed off.

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• 2025 (4) TMI 882
  Seeking refund of EC and SHEC paid on OID Cess during the period July 2004 to December 2013 - time limitation - refund claim filed much beyond the permissible time limit of 1 year from the date of payment of EC and SHEC per Section 11B of the Central Excise Act, 1944 - failure to establish whether burden of EC and SHEC was passed on or not. HELD THAT:- The appellant relied on the decision of the Hon ble Delhi High Court in the case of National Institute of Public Finance Policy [ 2018 (8) TMI 1524 - DELHI HIGH COURT] , wherein the Hon ble High Court has observed the limitation contemplated under section 118 of the Excise Act would not be attracted in a case where any amount, even though it is not payable as service tax, is paid under a mistaken notion. When the matter was referred to the Third Member Bench of this Tribunal in the case of M/s Credible Engineering Construction Projects Limited [ 2024 (4) TMI 1041 - TELANGANA HIGH COURT ], the Hon ble Third Member Bench, held that the view expressed by the jurisdictional High Court would be binding on this Tribunal and the Hon ble High Court has clearly held that when the refund claim of any amount deposited under mistake of law, the limitation provided in Section 11B of the Central Excise Act, 1944, would not be attracted. Conclusion - In the case in hand, the EC SHEC was paid by the appellant under the mistake of law, therefore, the time limit in terms of Section 11B of the Central Excise Act, 1944 is not applicable to the facts and circumstances of the case. Therefore, the refund claim filed by the appellant, cannot be dismissed as time barred. The impugned order is set asise - appeal allowed.

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• 2025 (4) TMI 881
  Calculation of Excise Duty - inclusion of total quantity of Washed coal and Middlings supplied to the JSPL plant as Washed coal so as to raise the differential demand of central excise duty - invocation of extended period of limitation. Inclusion of total quantity of Washed coal and Middlings supplied to the JSPL plant as Washed coal so as to raise the differential demand of central excise duty - HELD THAT:- There is substance in the submission advance by the learned counsel for the appellant that till 24.03.2011 there was exemption available in respect of all coal raised in mines. It is thereafter that upon withdrawal of the exemption levy was introduced. This fact has been overlooked in the show cause notice as well as in the impugned order while confirming the demand raised for the quantity cleared in the month of March 2011. Even otherwise, the Principal Commissioner could not have ignored the returns filed by the appellant before the Coal Controller. These returns clearly bifurcate the ROM coal, Washed coal and Middlings. A conjoint reading of both the ER-1 returns and the returns filed before the Coal Controller leave no manner of doubt that the appellant had disclosed all the relevant facts. Invocation of Extended period of limitation - HELD THAT:- In the present case, the Principal Commissioner merely observed that since the appellant had not reflected the correct transaction value in the ER-1 returns, the appellant suppressed material facts from the department and deliberately did not pay central excise duty on the appropriate transaction value of the coal extracted from mines. It needs to be pointed out that the appellant had, according to it s wisdom and bona-fide belief, reflected the correct transaction value. According to the appellant, the value of Middlings was not be included in the value of Washed coal and, therefore, it cannot be alleged that merely because the value of Middlings was not included, the appellant had suppressed facts with intention to evade payment of central excise duty. It would be pertinent to refer to the judgment of the Supreme Court in Commissioner of C. Ex. Customs vs. Reliance Industries Ltd. [ 2023 (7) TMI 196 - SUPREME COURT ]. The Supreme Court held that if an assessee bona-fide believes that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would not render such a belief of the assessee to be malafide. If a dispute relates to interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it is the responsibility of the assessee to determine the liability correctly and this determination is required to be made on the basis of his own judgment and in a bona-fide manner. It is, therefore, clear that the appellant had not suppressed relevant facts from the department and in any case it cannot be alleged that suppression was with an intent to evade payment of duty. The extended period of limitation as contemplated under section 11A(4) of the Central Excise Act could not have been invoked in the facts and circumstances of the case. Conclusion - The show cause notice was issued on 08.04.2016. It pertains to the demand from March 2011 to March 2015. Except for the period of one month i.e. March 2015, the rest of the demand is for the extended period of limitation. Thus, the demand for the period from March 2011 to February 2015 also deserves to be set aside as the extended period limitation could not have been invoked. It has also been found as a fact that central excise duty could not have been confirmed. Appeal allowed.

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• 2025 (4) TMI 880
  CENVAT Credit on the Countervailing Duty (CVD) paid at a reduced rate of 2% on imported steam coal - HELD THAT:- The issue as to whether the appellant is eligible to take the credit of 2% CVD paid or the coal is no more res integra - This Bench, in the case of Shyam Steel Industries Ltd. v. CCE CGST Bolpur [ 2021 (12) TMI 956 - CESTAT KOLKATA] , affirmed by the Hon ble High Court at Calcutta in [ 2022 (9) TMI 230 - CALCUTTA HIGH COURT] has held that taking into consideration Notification No. 12/2012-Cus, there is no bar for availment of Cenvat credit in terms of the Rule 3(7) where duty paid under Notification No. 12/2012-Cus. And Cenvat credit cannot be denied. Circular No. 41 by 2013 CUS dated 21-10-2013 was issued by CBIC on this issue. This Circular clarifies that the CENVAT Credit can be availed on 2% CVD. Conclusion - The appellant is eligible to avail CENVAT Credit on the 2% CVD paid on imported steam coal. Appeal allowed.

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• 2025 (4) TMI 879
  Entitlement to continue with the Appeal and claim relief after order of NCLT approving the Resolution Plan has been passed - HELD THAT:- The Mumbai bench of this Tribunal in the case of M/s Alok Industries Ltd [ 2022 (10) TMI 801 - CESTAT MUMBAI] analysed in detail Rule 22 of CESTAT (Procedure) Rules, 1982 and the case laws on the issue including those cited by the learned Advocate for the appellant, observed that aforesaid Rule 22 should be applicable the moment the successor-in-interest with sufficient rights is appointed by NCLT to make an application for continuation of the proceeding. Conclusion - The appeals abate once the Interim Resolution Professional (IRP) is appointed, and no application is filed by the IRP for continuance of the proceedings pending before the Tribunal. The appeals abate as per Rule 22 of CESTAT (Procedure) Rules, 1982.

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• Indian Laws

• 2025 (4) TMI 878
  Allotment of flats on payment of balance due to the builder and also requisite registration charges to be paid to the Competent Authority - HELD THAT:- It is almost 2 years and 10 months and according to the learned counsel for the builder not a single flat has been sold by the Court Commissioner so appointed by the NCDRC. The submission made by the learned counsel on behalf of the builder is that in case liberty is granted to the builder to sell the flats directly and the direction contained in the order dated 18th April 2022 of not permitting the builder to sell and further provide that the sale to take place through Court Commissioner be modified as the same is not benefitting either of the parties. He further submitted that the builder would sell the apartments within one year and deposit the entire sale consideration with the NCDRC for being disbursed to the claimants. The above liberty may be granted subject to terms and conditions as may be fixed by this Court. There are substance in the submission of the builder. However it is not inclined to fix any terms and conditions and would leave it for the NCDRC to determine the same. Accordingly, the order dated 18th April 2022 is modified and withdraw the directions to the NCDRC to put the sale of flats through Court Commissioner and further we withdraw the direction restraining the builder or any associate from selling the flats. Conclusion - The NCDRC is empowered to regulate the sale of flats, impose appropriate conditions, and monitor the proceedings to protect the rights of buyers and the builder alike. Application disposed off.

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• 2025 (4) TMI 877
  Copyright infringement - parameters for determining whether a work or an article falls within the limitation set out in Section 15(2) of the Copyright Act - setting aside the order of the Commercial Court and rejecting the application under Order VII Rule 11 of the CPC. What are the parameters for determining whether a work or an article falls within the limitation set out in Section 15(2) of the Copyright Act, thereby classifying it as a design under Section 2(d) of the Designs Act? - HELD THAT:- A two-pronged approach is formulated in order to crack open the conundrum caused by Section 15(2) of the Copyright Act so as to ascertain whether a work is qualified to be protected by the Designs Act. This test shall consider: (i) whether the work in question is purely an artistic work entitled to protection under the Copyright Act or whether it is a design derived from such original artistic work and subjected to an industrial process based upon the language in Section 15(2) of the Copyright Act; (ii) if such a work does not qualify for copyright protection, then the test of functional utility will have to be applied so as to determine its dominant purpose, and then ascertain whether it would qualify for design protection under the Design Act. The courts, while applying this test, ought to undertake a casespecific inquiry guided by statutory provisions, judicial precedents, and comparative jurisprudence. It must be kept in mind that the overarching objective is to ensure that rights granted under either regime serve their intended purpose without unduly encroaching upon the domain of the other. Whether the High Court erred in setting aside the order of the Commercial Court and thus rejecting the application under Order VII Rule 11 of the CPC? - HELD THAT:- The Commercial Court allowed LNG Express s application on the ground that the Proprietary Engineering Drawings qualified as a design under Section 2(d) of the Designs Act, and therefore, no suit for copyright infringement could be maintained in favour of Inox - However, the High Court, having disagreed with the finding of the Commercial Court, initially remanded the matter for reconsideration. When the Commercial Court reiterated its earlier conclusion, the High Court again intervened and rejected LNG Express s application, with a direction to the Commercial Court to consider Inox s plea for an interim injunction under Order XXXIX Rules 1 and 2 of the CPC. The reasoning of the High Court is agreed upon that the question as to whether the original artistic work would fall within the meaning of design under the Designs Act cannot be answered while deciding an application under Order VII Rule 11 of the CPC. This stage would involve only a prima facie inquiry as to the disclosure of cause of action in the plaint. The question pertaining to ascertaining the true nature of the Proprietary Engineering Drawings involves a mixed question of law and fact and could not have been decided by the Commercial Court at a preliminary stage based upon such a casual appraisal of the plaint averments. The Commercial Court is directed to consider the issue afresh and conduct trial by adopting an Occam s Razor approach to ascertain the true nature of the Proprietary Engineering Drawings . Additionally, the Commercial Court would also need to independently assess the claims related to infringement of the Literary Works, confidential information, know-how etc. so as to resolve the matter comprehensively. Conclusion - i) The decision of the High Court rejecting the application under Order VII Rule 11 of the CPC is upheld. ii) The Commercial Court is directed to deliver its decision on the pending application seeking interim injunction preferred by Inox, within a period of two months. iii) The Commercial Court is further directed to conduct trial and discern the true nature of the Proprietary Engineering Drawings based upon the test laid down in paragraph 60 of this judgement, as also the other related IP right infringements claimed by Inox, within a period of one year, given that it has already wasted significant judicial time on this issue. Petition disposed off.

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