TMI Tax Updates - e-Newsletter
April 25, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI Short Notes

1. Enhancing Certainty and Compliance in Transfer Pricing through Advance Pricing Agreements : Clause 168 of the Income Tax Bill, 2025 Vs. Section 92CC of the Income-tax Act, 1961

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2. Special provisions concerning the avoidance of tax, specifically empowering to Board to make "safe harbour" rules : Clause 167 of the Income Tax Bill, 2025 Vs. Section 92CB of the Income-tax Act, 1961

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3. Role of the Transfer Pricing Officer in Ensuring Arm’s Length Compliance : Clause 166 of the Income Tax Bill, 2025 Vs. Section 92CA of the Income-tax Act, 1961

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4. Reframing Arm's Length Pricing in India's Evolving Transfer Pricing Regime : Clause 165 of the Income Tax Bill, 2025 Vs. Section 92C of the Income-tax Act, 1961

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5. Meaning of Specified Domestic Transactions under Clause 164 of Income Tax Bill, 2025 Vs. Section 92BA of Income-tax Act, 1961

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6. Meaning of International Transaction : Clause 163 of the Income Tax Bill, 2025 Vs. Section 92B of the Income-tax Act, 1961

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Articles

1. FILING OF INCOME TAX RETURN ITR-B UNDER Section 158BC(1)(a) OF Income Tax Act, 1961

   By: DR.MARIAPPAN GOVINDARAJAN

2. Handbook on Input Service Distributor (ISD) under GST- As Amended till FY 2024–25

   By: RAHUL MODI

3. 🌍 Averting Climate CatastropheA Global Call for Urgent Action

   By: YAGAY andSUN

4. Import of software through data communication channels

   By: YAGAY andSUN

5. Export of Mangoes from India.

   By: YAGAY andSUN

6. Import of goods for research and development (R&D)

   By: YAGAY andSUN

7. Export of Glass and Glassware

   By: YAGAY andSUN

8. Export of Banana Leaves from India: A Comprehensive Guide.

   By: YAGAY andSUN

9. Export of Garlic from India

   By: YAGAY andSUN

10. Shrimps Exports from India

   By: YAGAY andSUN

News

1. South Africa scraps proposed tax increase after pushback from coalition partners, opposition

2. Frequently Asked Question on Notification No. 36/2025 dated 22.04.2025, Regarding TCS on Luxury Goods.

3. Minutes of the Monetary Policy Committee Meeting, April 7 to 9, 2025 [Under Section 45ZL of the Reserve Bank of India Act, 1934]

4. Inflation near RBI target, MPC opted for rate cut to push growth: Policy meeting minutes

5. Pahalgam attack aimed to derail peace, economic growth in Kashmir: Tripura CM

Notifications

Customs

1. 28/2025 - dated 23-4-2025 - Cus (NT)

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

2. 27/2025 - dated 22-4-2025 - Cus (NT)

Amendment in Notification No. 64/1994-Customs (N.T.) dated the 21st November, 1994 - Coastal ports for carrying of trade in coastal goods with all ports in India

GST - States

3. 25/2024-STATE TAX - dated 22-4-2025 - Delhi SGST

Amendment in Notification No. 50/2018-State Tax, dated 05-09-2019

4. 09/2024-State Tax (Rate) - dated 22-4-2025 - Delhi SGST

Amendment in Notification No. 13/2017- State Tax (Rate), dated 30th June, 2017

Income Tax

5. 38/2025 - dated 23-4-2025 - IT

The Central Government notifies that no deduction shall be allowed for any expenditure incurred in settling proceedings initiated in connection with any contravention or default.

SEBI

6. F. No. SEBI/LAD-NRO/GN/2025/241 - dated 22-4-2025 - SEBI

Securities and Exchange Board of India (Real Estate Investment Trusts) (Amendment) Regulations, 2025

Circulars / Instructions / Orders

FEMA

1. 04/2025-26 - dated 24-4-2025

Amendments to Directions - Compounding of Contraventions under FEMA, 1999

2. 04/2025-26 - dated 22-4-2025

Master Directions - Compounding of Contraventions under FEMA, 1999 (Updated as on April 24, 2025)

DGFT

3. 03/2025-26 - dated 24-4-2025

Fixation of one new Standard Input Output Norms (SIONs) at SION A-3685 under 'Chemical and Allied Product' (Product Code 'A').

4. Trade Notice No. 03/2025-2026 - dated 23-4-2025

Inputs on Amendments for Export of SCOMET Items for 'Testing and Evaluation' purposes

Highlights / Catch Notes

GST

• Electronic Service via Common Portal Legally Valid Under GST Act, Section 169(1)(d) Enables Direct Digital Notification Without Additional Requirements

  Case-Laws - HC : HC held that service of notice/order via common portal is valid under GST Act. Section 169(1)(d) independently provides for electronic service through common portal, without requiring additional notification under Section 146. The statutory provision explicitly enables serving decisions, orders, summons, and notices electronically. The petitioner's contention challenging portal-based service was rejected. The court set aside impugned orders, directing petitioner to deposit 25% of disputed taxes within four weeks. The judgment affirms the legal validity of electronic service mechanisms in GST proceedings.
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• Supplier Status Challenge: GST E-Way Bill Penalty Reduced from Rs.7,36,490 to Rs.25,000 Under Section 2(105)

  Case-Laws - HC : HC ruled that the petitioner, not being a 'supplier' under GST Act Section 2(105), was improperly penalized Rs.7,36,490/- for failing to generate Part-B of E-Way Bill during goods transportation for job work. The court found the penalty disproportionate, considering the petitioner had generated Part-A of E-Way Bill and provided a valid Delivery Challan. The impugned order was modified, reducing the penalty to Rs.25,000/- and directing respondents to refund the excess amount through Electronic Cash or Credit Ledger, thereby partly allowing the petition and rectifying the unjustified punitive action.
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• IGST Refund Dispute Remanded: Tax Authority Must Provide Hearing and Reconsider Order Under Rule 96B

  Case-Laws - HC : HC remanded the matter concerning IGST refund dispute, setting aside the Deputy Commissioner's order dated 30.08.2024. The court directed the petitioner to file response to the show cause notice by 02.05.2025, mandating the tax authority to provide personal hearing and issue a fresh order in compliance with legal principles. While rejecting jurisdictional challenges, the court set aside the demand order under Rule 96B due to non-retrospective application and insufficient administrative consideration, effectively providing the petitioner an opportunity to present legal arguments before the tax authority.
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• Zero-Rated Services Refund Upheld: Registration Gaps Cannot Block Input Tax Credit Claim Under Sections 54(1) and 16(3)

  Case-Laws - HC : HC allows petitioner's claim for input tax credit (ITC) refund on zero-rated services, holding that registration without specific service category details does not invalidate refund eligibility. The court interpreted Sections 54(1) and 16(3) of CGST and IGST Acts harmoniously, determining that a registered person can claim refund irrespective of service category omissions in registration application. The court directed the tax authority to verify and process the ITC refund claim, setting aside previous rejection orders and emphasizing procedural flexibility in tax credit claims.
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• Criminal Proceedings Under CGST Act Require Prudent Evaluation of Evidence and Proportionality Before Arresting Taxpayers

  Case-Laws - HC : HC held that CGST authorities must exercise prudence before initiating criminal proceedings against a taxpayer. In this case, the arrest for alleged fraudulent Input Tax Credit was premature and disproportionate, as no prior adjudication or quantified demand under Section 74 of CGST Act was established. The court emphasized that government authorities must balance revenue protection with protecting taxpayers' reputation and personal liberty. Considering the lack of evidence tampering risk and petitioner's cooperation, the court granted bail with two sureties of Rs. 10,000 each, subject to ACJM Siliguri's satisfaction, effectively ruling the arrest was unwarranted and procedurally flawed.
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• Leasehold Rights Transfer of Industrial Plot Not Taxable Under GST, Exempt from Levy per CGST Act Provisions

  Case-Laws - HC : HC ruled that assignment of leasehold rights for an industrial plot, involving transfer of land and constructed buildings to a third party for a lump-sum consideration, does not constitute a taxable supply under GST regulations. The court determined that Section 7(1)(a) of CGST Act, read with Clause 5(b) of Schedule II and Clause 5 of Schedule III, shall not apply to such transactions. Consequently, the transfer is exempt from CGST levy under Section 9 of the CGST Act. The judgment effectively clarifies the tax treatment of leasehold rights transfer in industrial land allocation scenarios, providing significant relief to lessees undertaking such property assignments.
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Income Tax

• Multinational Tech Firm Wins Major Tax Battle: Royalty Receipts and Service Charges Deemed Non-Taxable Under Section 9(1)(vi)

  Case-Laws - AT : The ITAT adjudicated a tax dispute involving multiple service charges, systematically examining the taxability of royalty receipts under section 9(1)(vi) and DTAA Article 12. Following consistent precedents from previous assessment years, the Tribunal comprehensively ruled in favor of the assessee, directing the Assessing Officer to delete additions related to Infrastructure Data Centre (IDC) services, Consumer CRM Development Charges, Other Services Charges (referral fees), Management Service Fee, and Member Login Fees. The Tribunal emphasized the recurring nature of these issues and adherence to prior coordinate bench decisions, ultimately allowing the assessee's appeal and eliminating proposed tax additions across multiple service categories.
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• Government Grants Tax Exemption to National Mission for Clean Ganga Under Section 10(46A) for 2024-25 Assessment Year

  Notifications : The Central Gov't issued a notification exempting the National Mission for Clean Ganga from income tax under Section 10(46A) of the Income-tax Act, 1961. The exemption is effective for the assessment year 2024-25, contingent upon the organization maintaining its status as an authority constituted under the Environment (Protection) Act, 1986. The notification specifically applies to the specified entity with PAN AABAN3769K, providing tax relief subject to continued compliance with statutory requirements related to environmental protection objectives.
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• Tax Collection Mandated on High-Value Luxury Goods Exceeding 10 Lakhs Under Section 206C Income-tax Act

  Notifications : The GoI notification mandates tax collection at source (TCS) for specific high-value goods exceeding ten lakh rupees, including luxury and collectible items such as wrist watches, art pieces, sunglasses, boats, sportswear, home theatre systems, and horses for racing. The notification, issued under section 206C of the Income-tax Act, requires sellers to collect tax at the time of sale for ten enumerated categories of goods. The directive will become effective upon publication in the Official Gazette, imposing new tax collection obligations on sellers of these specified luxury and specialized items.
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• Luxury Goods Sales Now Subject to Enhanced Tax Collection Under Section 206C with Expanded Reporting Categories

  Notifications : The CBDT issued a notification amending Income-tax Rules, 1962, specifically Form 27EQ, to expand Tax Collection at Source (TCS) provisions under section 206C. The amendment introduces new categories for TCS collection, including sales of luxury and specialized items such as wrist watches, art pieces, collectibles, yachts, sunglasses, bags, shoes, sportswear, home theatre systems, and horses for racing. Each category is assigned a specific code (MA through MJ) for reporting purposes. The amendment becomes effective from the date of publication in the Official Gazette, enhancing tax collection mechanisms for high-value and niche product transactions.
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• Centralized Income Tax Reporting System Launches Automated CAP-I and CAP-II Reports for Jurisdictional Assessment Officers

  Circulars : The document details an administrative instruction (No. 01 of 2024) from the Directorate of Income Tax (Systems) regarding the centralized generation of Provisional CAP-I and CAP-II reports for Jurisdictional Assessing Officers (JAOs). Effective April 2024, these reports will be centrally generated and accessible through the BO Portal (CAP-I) and BI Module of Insight Portal (CAP-II). The instruction provides comprehensive step-by-step user guides for accessing these reports, including detailed workflow charts (Annexure I and II) and extensive data field descriptions covering various aspects such as tax collection, return filing, refund issues, scrutiny assessments, penalty proceedings, and grievance management. The reports aim to provide systematic tracking and analysis of income tax department's operational metrics across different jurisdictions.
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• Trust Validates Income Accumulation for Charitable Purposes Under Section 11(2), Ensuring Long-Term Community Development Strategy

  Case-Laws - AT : ITAT affirmed the trust's claim for income accumulation under Section 11(2), finding the AO's rejection unsubstantiated. The tribunal determined that the trust's Form 10 adequately demonstrated the accumulation's alignment with its charitable objectives, specifically targeting women and adolescent girls in underserved communities. The accumulation was deemed consistent with the trust's established purposes. The Revenue's appeal was consequently dismissed, upholding the trust's right to set aside funds for future charitable projects within its defined organizational framework.
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• Corporate Taxation Challenge Rejected: Counsel's Concession Stands Firm Under Strict Procedural Scrutiny of Legal Representation

  Case-Laws - SC : SC dismissed the Special Leave Petition, affirming the High Court's concession on taxation principles. The court emphasized that if the Corporation believed its counsel wrongly conceded a legal point, it should have immediately sought clarification from the High Court. The tribunal condemned the practice of challenging counsel's concessions belatedly, ruling that such post-facto challenges are procedurally inappropriate. The decision underscores the importance of timely legal interventions and the binding nature of counsel's representations before judicial forums.
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• Reasonable Salary to Related Party Does Not Invalidate Charitable Trust's Tax Exemption Under Section 13(1)(c)

  Case-Laws - HC : HC determined that salary paid to a related party was reasonable and commensurate with qualifications and services rendered. The court interpreted Section 13(1)(c) to mean that if compensation is objectively reasonable for services performed, it cannot be deemed as improper diversion of trust income to a prohibited person. Payments meeting standard market rates for legitimate services do not automatically trigger tax liability or disqualify charitable trust exemptions. The court rejected Revenue's argument that any payment to a related party inherently constitutes income diversion, instead focusing on the substantive reasonableness of compensation. Consequently, the ruling favored the assessee, maintaining the trust's tax-exempt status.
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• Sale of Rice Mill Deemed Complete on Agreement Date, Transfer Tax Triggered by Possession and Full Consideration Paid

  Case-Laws - HC : HC determined that the transfer of a rice mill occurred upon execution of the sale agreement on 13.12.2016, not the registered sale deed on 21.3.2018. Relying on SC precedent in a similar case, the court held that the transaction enabling enjoyment of immovable property constitutes a transfer under section 2(47)(vi). The tribunal's initial conclusion was incorrect, as the entire sale consideration was paid at agreement execution, and the assessee was put in possession of the property. Consequently, the HC allowed the appeal, set aside the tribunal's order, and answered substantial legal questions in favor of the assessee.
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• Tax Dispute: Partial Stay Denied as Petitioner Fails to Demonstrate Compelling Reasons for Full Tax Demand Suspension

  Case-Laws - HC : HC rejected Petitioner's application for unconditional tax demand stay, affirming the requirement to deposit 20% of the contested tax amount. The court found the deposit condition appropriate based on assessment order findings related to cash deposits during demonetization. Despite acknowledging potential procedural irregularities in the original deposit requirement, the HC declined to interfere with the existing orders. The court critically noted the Petitioner's apparent strategy of prolonging tax payment and lack of financial transparency, ultimately maintaining the conditional stay order with the 20% deposit prerequisite.
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• Taxpayer Wins: Genuine Business Expenses Upheld Despite Vendor's Non-GST Registration Under Section 37(1)

  Case-Laws - AT : ITAT allowed the taxpayer's appeal, reversing the disallowance of expenses under Section 37(1). Despite vendors not being GST-registered, the tribunal found the expenses genuine, as payments were made through banking channels with TDS deducted. The Assessing Officer's rationale of disallowing expenses solely on GST registration status was deemed incorrect. The tribunal emphasized that the Income Tax Act does not mandate expenses be incurred only with GST-registered entities. By examining submitted invoices and payment evidence, the tribunal concluded the expenses were legitimate and directed the AO to delete the addition, thereby providing relief to the assessee.
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• Seized Third-Party Documents Trigger Section 153C: ITAT Invalidates Reassessment Notice Due to Procedural Noncompliance and Jurisdictional Overreach

  Case-Laws - AT : ITAT held that where documents seized during a search pertain to a third party, the mandatory procedure is to proceed under Section 153C, not Section 147. The AO's reassessment notice was deemed invalid due to significant procedural irregularities, specifically: (1) deviation from original reassessment grounds, (2) making additions on unrelated grounds, and (3) improperly assuming jurisdiction. The tribunal emphasized that utilizing seized third-party documents requires strict adherence to statutory provisions, rendering the assessment order unsustainable and lacking legal sanctity.
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• Transfer Pricing Triumph: Tribunal Strikes Down Arbitrary Adjustments, Validates Arm's Length Transactions Under Comprehensive Review

  Case-Laws - AT : ITAT adjudicated multiple transfer pricing (TP) issues involving associated enterprises (AEs) transactions. The Tribunal comprehensively deleted TP adjustments related to external commercial borrowing (ECB) interest, royalty payments, and trade receivables/payables. Key holdings include: (1) ECB interest at LIBOR+500 basis is arm's length, (2) royalty payment determination at Nil is arbitrary, and (3) netting off notional interest considering both receivables and payables is appropriate. The Tribunal set aside CPC's mechanical adjustments, directing the Assessing Officer to verify suo-moto disallowances and employee contribution issues in accordance with established legal principles and recent judicial precedents.
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• Tax Dispute Resolved: Assessee Wins on Speculation Loss, Gift Taxation, and Trust Income Challenges Under Multiple Sections

  Case-Laws - AT : ITAT adjudicated multiple tax-related issues, ultimately ruling in favor of the assessee. The tribunal rejected the AO's disallowance of speculation loss, finding no regulatory requirement for off-market transaction reporting. Regarding gift taxation, ITAT upheld the assessee's claim that a father from a HUF can be considered a relative under Section 56(2). Additionally, for the trust-related income, ITAT determined that since the trust had already paid taxes on the transferred amount, further addition was unwarranted. Consequently, the tribunal set aside the AO and CIT(A) orders, directing deletion of all contested additions.
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• Software Development Services Pricing Dispute: ITAT Mandates Comprehensive Comparability Analysis and Recalibration of Transfer Pricing Assessment

  Case-Laws - AT : ITAT adjudicated transfer pricing dispute regarding software development services benchmarking. The Tribunal comprehensively examined functional comparability, rejecting assessee's internal Transactional Net Margin Method (TNMM) due to insufficient evidence demonstrating comparable enterprise characteristics. Key determinations included: 1. Excluding five major IT companies based on turnover disparities 2. Retaining three initially contested comparable companies 3. Directing inclusion of eight previously considered companies 4. Mandating exclusion of two specific companies per Dispute Resolution Panel (DRP) directions The Tribunal ultimately directed Transfer Pricing Officer to recalibrate comparable company analysis, emphasizing strict adherence to statutory requirements under Section 92CA(3) and Rule 10B(5), thereby substantially modifying the original transfer pricing assessment.
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• Trust's 12AB Registration Denied: Object Clause Inconsistencies Trigger Rejection Under Income Tax Act Provisions

  Case-Laws - AT : ITAT denied registration u/s 12AB for trust due to non-compliance with statutory requirements. The tribunal found that the trust's object clause contained provisions inconsistent with section 11(1)(a) of the Income Tax Act. Despite being granted provisional registration, the final registration was rejected because the assessee failed to demonstrate amendment of objects or compliance with legal mandates. The Finance Act, 2022 amendments expanded grounds for registration denial, requiring strict adherence to legal frameworks. Consequently, both the primary registration application and the 80G registration were dismissed, with the tribunal rejecting all grounds raised by the assessee's authorized representative.
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Customs

• Safeguard Duty Imposed on Steel Flat Products to Protect Domestic Industry Under Section 8B of Foreign Trade Act

  Notifications : The GoI's Ministry of Finance issued a notification imposing a provisional 12% ad valorem safeguard duty on "Non-Alloy and Alloy Steel Flat Products" imported into India. The duty is based on DG (Trade Remedies) findings of a sudden, significant import increase causing serious injury to domestic industry. The safeguard measure applies to specific steel product categories under tariff headings 7208-7212 and 7225-7226, with exemptions for certain steel types and imports from designated developing countries. The provisional duty will be effective for 200 days from the notification's publication, with specific CIF price thresholds determining duty applicability for different steel product subcategories.
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• Streamlining Export Logistics: New Direct Port Entry SOP Reduces Cargo Dwell Time and Enhances Operational Efficiency

  Circulars : The public notice establishes a Standard Operating Procedure (SOP) for Direct Port Entry (DPE) of export containers at VOC Port, aimed at reducing cargo dwell time and export costs. The procedure involves generating an Equipment Interchange Receipt, customs verification of container seals, potential examination or scanning of containers, and final Let Export Order (LEO) issuance. The facility becomes operational from 11.04.2025, enabling streamlined export processes with specific protocols for container entry, verification, and clearance, while ensuring compliance with customs regulations and facilitating ease of doing business.
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• Customs Zone Reconfiguration: NTUT1 Master Site, INTUT6 Child Site Transition Planned for Operational Efficiency

  Circulars : The public notice details the reconfiguration of Trichy Zone Site (INKAR6) and the rollout of NTUT1 as master site and INTUT6 as child site for Tuticorin Customs Commissionerate. The DG Systems aims to enhance administrative efficiency by separating INTUT1 and INTUT6 from INKAR6. During the reconfiguration, there will be a complete shutdown of Tuticorin Port, impacting trade operations for approximately 6-8 hours. Officer roles will be temporarily removed and subsequently remapped to the new site configuration. The notice serves to inform authorized sea carriers, agents, and stakeholders about the upcoming technical transition and potential operational disruptions on 14.04.2025.
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• Bilateral Food Safety Pact: Nepal's NFFRL Authorized to Issue Import Certificates for Specific Food Products to India

  Circulars : The CBIC issued an instruction recognizing the National Food & Feed Reference Laboratory (NFFRL) in Kathmandu, Nepal, following an MoU between FSSAI and Nepal's Department of Food Technology and Quality Control. The recognition permits NFFRL to issue analysis certificates for specific food products including juices, jams, jellies, pickles, candies, ginger, fresh produce, and instant noodles. These certificates will be accepted by Indian authorities dealing with food imports, valid until the laboratory obtains ISO/IEC17025 accreditation from NABL. Customs and relevant authorities are instructed to implement this recognition and facilitate smooth food import processes.
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• Pre-deposit Mandatory: No Waiver Allowed for Customs Act Appeals Under Section 129E After 2014 Amendment

  Case-Laws - AT : CESTAT held that after the 2014 amendment to section 129E of the Customs Act, 1962, neither the Tribunal nor the Commissioner (Appeals) possess the power to waive pre-deposit requirements. Multiple judicial precedents, including SC, Delhi HC, and MP HC decisions, consistently affirmed that statutory pre-deposit conditions are mandatory and cannot be circumvented due to financial constraints. The appellant failed to satisfy the mandatory pre-deposit provision, resulting in the direct dismissal of the appeal, with courts emphasizing that when a statute prescribes specific appeal conditions, those conditions must be strictly complied with as a prerequisite for appeal admission.
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• Toshiba Multi-Split AC Units Classified as Parts Under CTH 8415 9000, Affirming Technical Interpretation of Complex HVAC Components

  Case-Laws - AT : CESTAT adjudicated classification dispute for imported Toshiba air conditioning units, determining indoor and outdoor multi-split units operating on Variable Refrigerant Flow technology are classifiable under CTH 8415 9000 as 'parts'. The tribunal rejected revenue's contentions and confirmed classification under the specified customs notification, thereby allowing benefit of the classification. Appeal was ultimately allowed, affirming the importer's classification approach and providing clarity on technical classification of complex air conditioning system components.
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• Tribunal Corrects Typographical Errors in Lithium Ion Battery Customs Exemption Case Under Notification No. 50/2017

  Case-Laws - AT : CESTAT rectified typographical errors in a final order involving a dispute over customs exemption for lithium ion battery manufacturing. The tribunal acknowledged inadvertent incorporation of facts from a similar concurrent appeal, primarily involving overlapping procedural details about Notification No. 50/2017. After careful review, the tribunal determined the errors were purely typographical and not substantive, arising from simultaneous hearings on related matters. The application for rectification was consequently allowed, with corrections made to ensure accurate representation of the specific appeal's factual matrix without altering the fundamental legal determination.
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• Provisional Customs Attachment Order Invalidated: Lack of Jurisdiction and Procedural Defects Render Bank Account Freeze Unlawful

  Case-Laws - HC : HC held that the provisional attachment order under Section 110(5) of Customs Act was issued without jurisdiction during the investigation stage, as no show cause notice was issued. The court quashed the impugned intimation dated 03.12.2024 and directed immediate defreezing of petitioners' bank accounts. The court found no alternative remedy available under Section 110A during investigation, rendering the writ petition maintainable. The order of attachment was deemed invalid as it preceded any formal adjudication proceedings, thereby violating procedural requirements of the Customs Act.
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• Officials Face Accountability as High Cost Penalty Highlights Complex Legal Proceedings and Institutional Responsibility Under Judicial Review

  Case-Laws - HC : HC upheld the imposition of INR 50,000/- costs against DRI officials, finding the procedural delays arose from complex legal and jurisdictional uncertainties rather than administrative negligence. While recognizing the Department's procedural lapses, the court viewed the costs as a measured judicial response to institutional accountability. The court specifically set aside directions mandating cost recovery from individual officers, partially allowing the petition and maintaining the principle of institutional responsibility without penalizing specific personnel.
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• Authorities Cannot Exploit Procedural Discretion: 10-Year Delay in Show Cause Notice Renders Adjudication Order Invalid

  Case-Laws - AT : CESTAT nullified the adjudication order due to inordinate delay in processing a show cause notice. The tribunal held that the statutory provision "where it is possible to do so" does not provide unlimited discretion to authorities for delaying adjudication. The show cause notice issued in 2013 was adjudicated only in 2023, spanning approximately ten years. The court emphasized that such administrative indifference cannot be condoned, and the delay lacks justifiable circumstances. Consequently, the order dated 19.01.2023 was set aside, effectively rendering the decade-long proceedings invalid, with the appeal being allowed in favor of the appellant.
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• Digital Still Image Video Cameras Qualify for Customs Duty Exemption Under Notification 25/2005 and Amendment 15/2012

  Case-Laws - AT : CESTAT determined digital still image video cameras qualify for basic customs duty (BCD) exemption under Notification No. 25/2005-Cus dated 01.03.2005, as amended by Notification No. 15/2012 dated 17.03.2012. Following a larger bench reference on 14.06.2024 in Customs Appeal No. 52218 of 2019, the tribunal held that the imported digital cameras are entitled to the exemption. The impugned order dated 28.10.2016 was set aside, and the customs appeals were allowed, granting relief to the appellants regarding the BCD exemption claim.
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DGFT

• Synthetic Knitted Fabric Import Restrictions: MIP Set at $3.5/kg for Specific HS Codes Until March 2026

  Notifications : The GoI's Directorate General of Foreign Trade issued Notification No. 05/2025-26 imposing Minimum Import Price (MIP) on specific synthetic knitted fabric HS codes. The notification restricts imports of codes 60019200, 60053600, 60053790, and 60053900, with imports permitted "Free" only when CIF value exceeds 3.5 USD per kilogram. Exemptions apply for Advance Authorisation holders, Export Oriented Units, and Special Economic Zone units, provided imported inputs are not sold in the Domestic Tariff Area. The MIP condition remains effective until 31.03.2026, implementing trade regulation measures to protect domestic textile manufacturing interests.
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FEMA

• RBI Enables Seamless Export Transactions for Indian Traders in UAE Warehouses Under FEMA Sections 10(4) and 11(1)

  Circulars : RBI issued a circular providing regulatory relaxations for exports through warehouses in 'Bharat Mart' in UAE. The circular allows authorized dealer banks to permit exporters with valid Importer Exporter Code to: (a) realize and repatriate full export value within nine months from warehouse sale date, (b) open/hire warehouses in UAE, and (c) make remittances for initial and recurring business expenses without preconditions. These instructions are implemented immediately under FEMA 1999 sections 10(4) and 11(1), facilitating Indian traders' access to UAE and global markets through a multimodal logistics network marketplace.
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• RBI Revamps FEMA Compounding Guidelines, Introduces Independent Assessment and Enhanced Disclosure Requirements for Contravention Applications

  Circulars : RBI amended FEMA compounding guidelines, modifying key procedural aspects for contravention applications. The amendment eliminates linking of compounding amounts to prior orders, ensuring each application is treated independently. Additional mandatory details now required include applicant's mobile number, specific RBI office receiving payment, and application submission mode. These modifications aim to streamline processing, enhance reconciliation accuracy, and reduce administrative delays in handling contraventions. The changes apply to all Authorized Dealer Category-I banks, mandating comprehensive disclosure and precise payment tracking for FEMA-related compounding procedures.
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Corporate Law

• Property Rights Challenge Fails: Plaintiff's Injunction Rejected Due to Insufficient Legal Standing Under Section 241

  Case-Laws - HC : HC dismissed the appeal, rejecting the plaintiff's plaint for permanent injunction. The court found critical deficiencies in the plaintiff's legal standing, specifically a non-disclosure of legal rights to the subject property. The plaintiff failed to establish a clear cause of action and proper legal basis for the suit. The court determined that any grievances regarding company mismanagement should be addressed under Section 241 of the Companies Act, 2013, rather than through the current litigation. The judgment emphasized procedural inadequacies and lack of substantive legal grounds, rendering the suit non-maintainable. Consequently, the appeal was dismissed without interference.
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IBC

• Corporate Insolvency Resolution Plan Nullifies Prior Arbitral Award, Extinguishing Claims Outside Approved Restructuring Framework

  Case-Laws - SC : SC adjudicated a dispute concerning the executability of an arbitral award post-corporate insolvency resolution plan. The Court held that upon NCLT's approval of the resolution plan, the respondent's claim stood extinguished, rendering the Facilitation Council's arbitral award dated 06.07.2018 non-executable. The Court rejected the HC's interpretation that the Facilitation Council retained jurisdiction to pronounce the award after the resolution plan's approval. Consequently, the SC allowed the appeal, declaring the award void and unenforceable, emphasizing that claims outside the resolution plan cannot be pursued post-NCLT approval.
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Indian Laws

• Arbitration Proceedings: Party Joinder Based on Consent and Conduct, Not Strict Procedural Formalities Under Section 16

  Case-Laws - SC : SC held that service of Section 21 notice and joinder in Section 11 application are not absolute prerequisites for impleading a party in arbitration proceedings. The arbitral tribunal's jurisdiction derives from consent under the arbitration agreement, and the tribunal must determine party status under Section 16 of the Arbitration and Conciliation Act. Non-signatory parties can be impleaded based on their conduct and contractual relationship, even if not originally named in the initial arbitration notice. The tribunal retains discretion to join parties who have effectively consented to be bound by the arbitration agreement through their actions.
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SEBI

• Overnight Mutual Fund Schemes Get New NAV Calculation Rules with Updated Cut-Off Times for Investor Transactions

  Circulars : SEBI issued a circular modifying cut-off timings for repurchase/redemption of units in overnight mutual fund schemes. For applications received up to 3:00 PM, the closing NAV of the day immediately preceding the next business day will apply. Applications received after 3:00 PM will be processed at the closing NAV of the next business day. For online applications, a 7:00 PM cut-off time is established for overnight fund schemes. The modifications aim to facilitate upstreaming of client funds to clearing corporations and will be effective from June 01, 2025, implemented under SEBI's regulatory powers to protect investor interests and regulate securities markets.
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• Market Surveillance Circular Strengthens Trading Transparency, Insider Disclosure Rules and Intermediary Compliance Mechanisms

  Circulars : SEBI Master Circular on Securities Market Surveillance consolidates provisions for market intermediaries, focusing on three key areas: trading rules, market communication protocols, and insider trading disclosure requirements. The circular introduces system-driven disclosure mechanisms, establishes comprehensive guidelines for trading window restrictions, and mandates strict internal controls for market intermediaries to prevent unauthorized information circulation. Key regulatory objectives include enhancing market transparency, protecting investor interests, and preventing potential market manipulation through structured surveillance and reporting frameworks.
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• SEBI Mandates Automated Trading Window Closure for Designated Persons and Immediate Relatives Under New Regulatory Framework

  Circulars : SEBI issued a circular extending automated trading window closure to immediate relatives of Designated Persons (DPs) for listed companies. The framework mandates restricting trading during sensitive periods, particularly around financial results, through a systematic PAN-ISIN freeze mechanism. Implementation will occur in two phases: top 500 companies by July 01, 2025, and remaining listed companies by October 01, 2025. Depositories and stock exchanges must develop systems to automatically freeze trading for DPs and their immediate relatives during specified trading window closure periods, with detailed procedural guidelines for identification, notification, and execution of trading restrictions.
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Service Tax

• Cable Operator Wins Partial Relief in Service Tax Case, Limited to Normal Limitation Period with Credit Claims Scrutinized

  Case-Laws - AT : CESTAT partially allowed the appeal concerning service tax liability for a cable operator. The tribunal held that the extended period of limitation could not be invoked, and the demand should be restricted to the normal limitation period. The matter was remanded to the Original Authority for quantum determination of taxes for the standard period. While rejecting CENVAT credit claims, the tribunal directed the Adjudicating Authority to evaluate credit documentation against prescribed Rule 4(7) conditions during remand proceedings. The decision affirmed that local cable operators are independently liable for service tax, subject to threshold exemptions and compliance with regulatory requirements.
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Central Excise

• Manufacturer Wins Comprehensive Cenvat Credit Claim for Franchise-Related Services Under Rule 2004 Input Service Provisions

  Case-Laws - AT : CESTAT held that the appellant is eligible for Cenvat credit in three key aspects: (1) outward transportation to franchisee outlets as place of removal, (2) sales commission paid to franchisees for product marketing, and (3) commercial rent for retail outlets. The tribunal determined that services related to goods movement, sales promotion, and storage up to the point of removal are integral to manufacturing process. The input service credits were consequently allowed, recognizing the broader interpretation of input services under Cenvat Credit Rules, 2004. The appeal was ultimately allowed in favor of the appellant, affirming the eligibility of input service credits across multiple service categories.
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Case Laws:

• GST

• 2025 (4) TMI 1308
  Service of SCN - whether service of notice/order by making available in the Common Portal is valid? - HELD THAT:- Submission of petitioner that Section 146 of the GST Act does not enable notifying common portal for serving notice/ orders/ communications, thus service of notice/ order by making it available in the common portal would not constitute valid mode of service is untenable. Section 146 of GST Act, provides that common portal may be notified for carrying out various functions and purpose of the Act. While the Government may in excersise of its power under Section 146 of GST Act, identify the portal and notify the purpose for which it is to be employed, however, the purpose/ functions for which the common portal may be employed in terms of notification issued under Section 146 of the Act is not exhaustive. Sub-clause (d) to sub-section(1) to Section 169 of the GST Act, while providing that the decision, order, summon, notice shall be served by making it available in the common portal does not contemplate a notification under Section 146. Section 169 of the Act is a standalone independent provision, its operation is not dependent on any notification under Section 146 of the Act. Any doubts as to whether notice or order may be served in the above GST portals as well, is unfounded and hypothetical. Conclusion - The construction that service by making it available on the Common Portal is not a valid mode of service is contrary to the express provisions under GST Act. The impugned orders are set aside - The petitioner shall deposit 25% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent, within a period of four weeks from the date of receipt of a copy of this order - petition disposed off.

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• 2025 (4) TMI 1307
  Levy of penalty u/s 129(1)(a) of the GST Actfailure to generate Part-B of the E-Way Bill - non-application of mind - violation of principles of natural justice - HELD THAT:- It appears that it is not in dispute that the petitioner has issued the Delivery Challan for job work dated 07.08.2018 and E-Way Bill was also generated but only Part-B of the E-Way Bill was not generated by the petitioner which stipulates for mentioning of the vehicle number in which the goods were to be transported. From bare perusal of the reasons assigned by the Appellate-Authority, it is opined that the same are totally without application of mind in the facts of the case and the petitioner, who is not a supplier as defined under Section 2(105) of the GST Act and who has only transported the goods other than by way of supply for job work, could not have been saddled with the penalty of Rs.7,36,490/- for not generating Part-B of the E-Way Bill - the respondent-Authorities have passed the impugned order without considering the facts of the case that the contravention of the Rule 138 of the GST Rules is lineal and technical for not generating Part-B of the E-Way Bill, more particularly, when the goods (in question) were accompanied by a valid Delivery Challan for job work which is not in dispute and only non-generation of Part-B of the E-Way Bill by the petitioner stating the vehicle number, cannot be considered as a gross negligence on part of the petitioner and the penalty as prescribed in clause (a) of Section 129(1) of the GST Act could not have been levied but the same as per the Circular No.64 of 2018 dated 14th September, 2018 issued by the CBIC. Considering the above circular issued by the CBIC, it is true that the case of the petitioner does not fall in any of the situations specified in clauses (a) to (f) of the paragraph No.5 of the said Circular. However, in the facts of the case, as the petitioner has generated Part-A of the E-Way Bill which also contains the GST Number and name of the transporter accompanied by the Delivery Challan for job work stating the vehicle number which is not disputed by the respondent-Authorities, it is opined that the benefit of the Circular No.64/38/2018-GST is required to be given to the petitioner too. Conclusion - The petitioner, who is not a supplier as defined under Section 2(105) of the GST Act and who has only transported the goods other than by way of supply for job work, could not have been saddled with the penalty of Rs.7,36,490/- for not generating Part-B of the E-Way Bill. The impugned order passed in Form GST MOV-9 is hereby modified by reducing the penalty to Rs.25,000/- only and the respondents are directed to refund the balance amount paid by the petitioner either in Electronic Cash Ledger or by Electronic Credit Ledger in accordance with the provisions of the Act and Rules - the petition is partly allowed.

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• 2025 (4) TMI 1306
  Seeking grant of regular bail - availment of ineligible Input Tax Credit by utilizing the fake firms - HELD THAT:- This Court finds that the entire case of the prosecution is based upon the documentary material and the investigation in the alleged crime is also complete. Further, during the course of hearing, it is not disputed by Mr. Parv Agarwal, learned counsel that the complaint against the applicants, as well as the other complaints dated 14th November, 2024 and 13th December, 2024 filed against the Shivam Goyal and Vikrant Singhal, etc. respectively, are part of same transactions and the said co-accused have already been extended the concession of regular by this Court. Admittedly, the alleged offences are triable by Magistrate and provide for a maximum punishment of five years imprisonment, and trial is likely to consume considerable time to conclude, therefore, this Court has no hesitation in holding that the further detention of the applicants behind the bars would not serve any useful purpose, who are confined in judicial custody. Further, the prosecution witnesses are official witnesses and presently there does not appear to be any possibility of their being won over, therefore, considering the nature of the trial as well as period of more than six months undergone by the applicants as an undertrial, this Court deems it appropriate to extend the concession of regular bail to the applicants on the ground of parity. Conclusion - Admittedly, the alleged offences are triable by Magistrate and provide for a maximum punishment of five years imprisonment, and trial is likely to consume considerable time to conclude, therefore, this Court has no hesitation in holding that the further detention of the applicants behind the bars would not serve any useful purpose. The bail applications are allowed.

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• 2025 (4) TMI 1305
  Jurisdiction to adjudicate issues related to Integrated Goods and Services Tax (IGST) refunds and demands - HELD THAT:- The plea sought to be raised by the petitioner based on the CBITC Circular dated 18.11.2019 as well as the fact that the provisions of Rule 96B of the Rules were introduced by a Notification dated 23.03.2020 and the same being not retrospective, had no application to the case of the petitioner, despite being legal pleas, having not been examined/could not have been examined by the Assessing Authority, which aspect does require a determination by this Court at this stage, when the Authority under the Act has not applied its mind to the said issues. In view of the peculiar circumstances of the case wherein the plea raised essentially is legal and its implication needs to be examined by the Authority in the circumstances of the case, it is deemed appropriate and, therefore, the order dated 30.08.2024 passed by the Deputy Commissioner, State Tax, Jurisdiction Bijnor, Sector 1, Bijnor, Moradabad set aside and the matter remanded back to the said Authority. The petitioner shall file its response to the show cause notice dated 17.05.2024 by 02.05.2025 and on filing of the said reply, respondent no.2 shall afford opportunity of personal hearing to the petitioner and thereafter pass fresh order in accordance with law. Conclusion - i) The plea challenging jurisdiction of State Tax Authority is rejected. ii) The demand order under Rule 96B is set aside on the ground of non-retrospectivity and lack of consideration by the Authority. Petition disposed off by way of remand.

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• 2025 (4) TMI 1283
  Refund of input tax credit (ITC) paid on zero rated supply of services exported outside India - petitioner had voluntarily sought amendment of his registration to include supply of services, after the relevant period was over - HELD THAT:- Section 54(1) states that any person can claim refund of any tax, or other amounts paid by the person. Section 16 (3) of the IGST Act permits refund to be claimed, in relation to zero rated supply of services only by a registered person. At first blush, there appear to be a conflict between Section 54 of the CGST Act and Section 16 of the IGST Act. However, Section 16 (3) of the IGST Act read with Section 54 (3) of the CGST Act, narrows down the general provision of Section 54 (1) of the CGST Act, by stipulating that it is only a registered person, who can claim refund in relation to zero rated supplies made with or without payment of tax. In the present case, the petitioner is claiming, refund of tax paid, in relation to zero rated supply of services. The provisions of section 16(3) of the IGST Act and Section 54 (3) of the CGST Act would be applicable. A claim for refund can be made by the petitioner, only if it is a registered person. Since Section 25(1) of the CGST Act states that the registration is to be done in such a manner and subject to such conditions as may be prescribed, it would be necessary to look at the Rules regulating registration. The Rules for such purpose are the Central Goods and Services Tax Rules, 2017 (for short the Rules ). Rule 8 requires the person seeking registration to submit an application in Part-B of Form GST REG-01. After verification of the application, and after obtaining such clarification or information as required, the appropriate authority would issue a registration certificate, under Rule 10 of the Rules, in Form GST REG-06 - no importance is given to the details of the goods or services the person would be supplying. The only requirement is that any person, who would have to pay tax on such supply, whether of goods or services, would have to be registered. Non-mention of the categories of supply being undertaken by the applicant / registered person, in the application form, cannot preclude grant of refund to such persons. By extension, the petitioner would be entitled to a refund, in relation to zero rated services, once the petitioner is a registered person. The petitioner would not be precluded from claiming such refund on the ground that the certificate of registration does not contain the details of the services which are being supplied. Conclusion - Non-mention of the categories of supply being undertaken by the applicant / registered person, in the application form, cannot preclude grant of refund to such persons. Both the writ petitions are allowed setting aside the orders of rejection of refund as well as the appellate orders, with a direction to the 2nd respondent to refund the input tax credit claimed by the petitioner, subject to verification of the claim and quantum of the claim.

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• 2025 (4) TMI 1282
  Legality of arrest of the petitioner under Section 132(1)(c) read with Section 132(1)(i) and Section 132(5) of the Central Goods and Services Tax Act, 2017 (CGST Act) - absence of a prior adjudication or quantified demand under Section 74 of the CGST Act - fraudulent availment of Input Tax Credit (ITC) on the basis of allegedly fake invoices and non-physical receipt of goods - HELD THAT:- The service Tax Authorities before proceeding against the tax payer either for recovery of tax due or penalty or before deciding to lodge a criminal complaint must consider all the relevant documents in relation to receipt of goods and services and in case of contravention of Section 132 (1) (c) of Central Goods and services Tax Act if the Authorities are of the view that on offence under the said section is committed should either cause inspection at the business premises of the tax payer to satisfy themselves or ask the tax-payer for clarification before deciding to proceed against the tax-payer under Section 132 of CGST Act. It is to be remembered that the reputation of a business man tarnishes when a complaint is lodged against him and he is arrested in connection with his business activity. As CGST Authority is not an individual but Government Authority and State within the meaning of Article 12 of the Constitution it is not only their duty to ensure revenue of the state in accordance with law but also to see that business men, tax payers are not unnecessarily harassed and their reputation is not tarnished and personal liberty is not unnecessarily infringed. Thus the Authority should proceed in a reasonable manner and apply their mind before deciding to set the criminal law in motion against a tax-payer. In the instant matter the CGST Authority upon receiving the report of panchanama dated 30/03/2025 ought to have applied their mind and could have conducted further enquiry or give an opportunity to the petitioner of being heard before lodging the complaint on 31/03/2025 and arresting the petitioner. However as the CGST Authority has on enquiry collected some information and documents before lodging the complaint it would not be proper to make any further observation with regard to the merits of the case but it is necessary to decide as to whether petitioner should be granted bail. In the instant case the petitioner is charged with committing an offence the maximum punishment of which, is five years. Now considering the materials on record, it appears that the relevant documents and information is with the respondent authority thus there is no scope for tampering evidence. As the petitioner has his business there is no chance to abscond. Moreover it appears from record that the petitioner has-co-operated with the respondent authority. As a question of law is raised that once the petitioner has filed bail application before the Learned Sessions Court the bail application before this Court is not maintainable and the Learned Advocate for the petitioner submits that the bail application before Sessions Court is filed due to miscommunication and petition before session court will be withdrawn as not pressed, it is necessary to address on this issue - In this regard it is to be noted that although Section 439 CrPC read with Section 483 of Bharatiya Nagarik Suraksha Sanhita 2023 confers special power upon High Court and Court of Session to grant bail but once an application is filed before Court of Session another should not be filed in High Court, without withdrawal from sessions Court However as bail applications are not affirmed by the accused and the accused simply executes vokalatnama being in custody without having knowledge what specific steps are taken he cannot be made to suffer for no laches on his part. The petitioner be released on bail with 2 sureties of Rs. 10,000/- each subject to satisfaction of Learned ACJM Siliguri. Conclusion - The arrest was effected without any judicial warrant and significantly before any formal complaint had been filed before the Learned Magistrate. No adjudication proceedings show cause notice or quantification of demand under Section 74 of the CGST Act preceded the arrest, nor was there any material indicating culpable intent. The arrest therefore is not only disproportionate but wholly unjustified in law and facts. Bail application allowed.

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• 2025 (4) TMI 1281
  Levy of GST - assignment of leasehold rights of a plot of land allotted on lease by the Maharashtra Industrial Development Corporation (MIDC), and the buildings constructed thereon by the lessee, to a third party, on the payment of a lump-sum consideration - HELD THAT:- The Division Bench of the Gujarat High Court in the case of Gujarat Chambers of Commerce and Industry and Others v/s Union of India and Others [ 2025 (1) TMI 516 - GUJARAT HIGH COURT ] has taken a view that the assignment by sale or transfer of leasehold rights of the plot of land allotted by the Gujarat Industrial Development Corporation (GIDC) to the lessee or its successor (assignor) in favour of the third party (assignee) for consideration shall be an assignment/sale/transfer of benefits arising out of immovable property by the lessee-assignor in favour of a third party (assignee) who would then become a lessee of GIDC in place of the original allottee-lessee. In such circumstances, the Gujarat High Court held that the provisions of Section 7 (1) (a) of the CGST Act providing for scope of supply read with Clause 5 (b) of Schedule II and Clause 5 of Schedule III would not be applicable to such a transaction and the same would not be subject to levy of CGST as provided under Section 9 of the CGST Act. The Gujarat High Court held that the provisions of Section 7 (1) (a) of the CGST Act providing for scope of supply read with Clause 5 (b) of Schedule II and Clause 5 of Schedule III would not be applicable to such a transaction and the same would not be subject to levy of CGST as provided under Section 9 of the CGST Act. In the facts of the present case, what is challenged by the Petitioner is the adjudication order passed by Respondent No.4 dated 30th August 2024 and the Rectification Order dated 24th December 2024 passed by the very same Respondent - Place the Writ Petition along with Writ Petition No. 14434 of 2023 and other connected Writ Petitions on 28th April 2025.

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• Income Tax

• 2025 (4) TMI 1304
  Taxability of income in India or not - Royalty receipts taxable in India u/s 9(1)(vi) and Article 12 of the DTAA - Infrastructure Data Centre (IDC) Services Consumer CRM Development Charges - HELD THAT:- As relying in assessee s own case for AY 2019-20 [ 2022 (12) TMI 1563 - ITAT MUMBAI] IDC and CRM Development Charges are not taxable in India and accordingly direct the AO to delete the addition made in this regard. Grounds 2 3 raised by the assessee are allowed. Other Services Charges taxed as Royalty - We notice that the impugned issue is recurring in nature and that the Co-ordinate Bench while considering the same for AY 2019-20 [ 2022 (12) TMI 1563 - ITAT MUMBAI] as held this issue is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of the Tribunal for the preceding assessment years. The learned DR could not show us any reason to deviate from the aforesaid decision and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following the order passed by the coordinate bench of the Tribunal in assessee s own case cited we uphold the plea of the assessee and direct the AO to delete the addition on account of other service charges (referral fees). Management Service Fee taxed as Royalty - We notice that an identical has been considered by the Co-ordinate Bench in assessee s own case for AY 2010-11 to AY 2013-14 has considered similar issue and held the same in favour of the assessee. For the year under consideration the revenue did not bring any new material on record and therefore direct the AO to delete the addition made in this regard. Member Login Fees - An identical issue has been considered by the Co-ordinate Bench in assessee s own case for AY 2019-20 [ 2022 (12) TMI 1563 - ITAT MUMBAI] uphold the plea of the assessee and direct the AO to delete the addition on account of member login fees. Assessee appeal allowed.

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• 2025 (4) TMI 1302
  Reopening of assessment u/s 147 - case re-opened after a period of four years - reasons to believe - HELD THAT:- On a perusal of the reasons recorded which are reproduced above, there is no allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Even on a perusal of the reasons recorded, the said pre-condition cannot be discerned with even in the absence of such allegation. Reasons are based on verification of the profit and loss account and the other relevant records. If that be so, we fail to understand how the pre-condition specified in first proviso to Section 147 is satisfied. Therefore, on this short ground itself, the re-opening notice u/s 148 is required to be quashed and set aside. Eligibility of interest u/s 80P was a subject matter of investigation in the course of the regular assessment proceedings and same is evident of the original assessment order, wherein the issue of deduction u/s 80P is discussed. Disallowance u/s 40(a)(ia) a query was raised by the Respondents in the course of the assessment proceedings vide notice dated 18.07.2016 and same was replied by the assessee vide letter dated 09.11.2016, wherein all the details with respect to the TDS were furnished. The details are also filed along with this Petition from page 125 to 135. Therefore, on both these grounds i. e. deduction under Section 80P and disallowance for non-deduction of TDS, the issue was examined during the course of the assessment proceedings and therefore, any attempt to re-open the case would amount to re-opening on the basis of change of opinion and review of the earlier order passed u/s 143 (3) of the Act. This is not permissible under the Act which confers the power to re-open the case under Section 147 of the Act. Decided in favour of assessee.

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• 2025 (4) TMI 1301
  Assessment order passed in violation of the principles of natural justice - not granting the Petitioner an opportunity of personal hearing - Violation of the provisions of Section 143 (3) r/w. 144B - HELD THAT:- As this was indeed a clear case of violation of principles of natural justice, we set aside the impugned assessment Order and remand the matter to the assessing officer with a direction to carry out the assessment afresh after giving an opportunity of hearing to the Petitioner and also providing a draft assessment Order. This exercise must be completed within three months from the date of uploading of this order.

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• 2025 (4) TMI 1300
  Validity of re-assessment Order - Petitioner submits that this is a case of gross and apparent violation of principles of natural justice - HELD THAT:- We are satisfied that this Petition can be entertained despite the Petitioner having invoked the alternate statutory remedy of Appeal. This is because the undisputed facts indicate a clear violation of the principles of natural justice and fair play. Petitioner was issued a Show Cause Notice and granted time to file a response by 23.59 hours of 30.03.2022. Such response was filed by the Petitioner at 17.59 hours on 30.03.2022. Even before the time limit indicated in the Show Cause Notice would expire, the second Respondent made the impugned re-assessment Order dated 30.03.2022 at 17.22 hours. Thus, the Petitioner s response filed within the time line indicated was not even considered. Such non-consideration vitiates the impugned Order and constitutes violation of the principles of natural justice. We set aside the impugned re-assessment Order and remit the matter back to the assessing officer for considering the Petitioner s response for granting the Petitioner a personal hearing and making a fresh re-assessment Order on its own merits and in accordance with law. This entire exercise must be completed within three months of the uploading of this order.

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• 2025 (4) TMI 1299
  Reopening of assessment - Bogus long term capital gains - information received from the Insight Portal regarding price manipulation in scrip of Tilak Venture Ltd. to provide accommodation entry of bogus long-term capital gains to its beneficiaries, proceedings u/s 147 of the Act were initiated in the case of the assessee - HELD THAT:- As in the present case, the proceedings u/s 147 of the Act were initiated based on the information received from the Insight Portal. Since the impugned additions were made pursuant to proceedings initiated u/s 147 of the Act, therefore, they can be either based on the information received by the AO or the information as obtained by the AO pursuant to an independent enquiry. Once the AO has failed to prove in the present case that the assessee was involved in the alleged bogus transaction of accommodation entry on the basis of either of the aforesaid information, nor is there any vague reference against the assessee, the Revenue cannot now plead that the CIT(A) while adjudicating the assessee s appeal failed to conduct the inquiry. Further, apart from raising the aforesaid plea, the Revenue has not specifically pointed out which inquiry the CIT(A) failed to conduct. Therefore, we do not find any merits in the aforesaid submissions of the learned DR. Thus, no infirmity in the impugned order passed by the CIT(A). Accordingly, the deletion of the additions made u/s 68 and section 69C of the Act is upheld, and the grounds raised by the Revenue are dismissed.

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• 2025 (4) TMI 1298
  Denial of the deduction claimed u/s 54B - assessee has failed to substantiate its claim that the land sold was agricultural land - HELD THAT:- What is relevant for claiming deduction u/s 54B is a transfer of a capital asset being a land which was used for agricultural purposes and not transfer of an agricultural land as there may be a case where the land may be used for the agricultural purpose, however, the same being covered under one of the clauses of section 2(14)(iii) of the Act be considered as a capital asset. Therefore, from the careful perusal of the provisions of section 54B we do not find any merits in the findings of the lower authorities that since the land sold by the assessee was a capital asset and not an agricultural land, therefore, the deduction u/s 54B of the Act is not available to the assessee. We find that the lower authorities have not examined the 7/12 extract as relied upon by the learned AR before us to substantiate the claim that the land sold was used for agricultural purposes. Find from the orders passed by the lower authorities that there is no such reference by the assessee to these documents. Since the necessary documentary evidence for complete adjudication of this issue was not examined by the lower authorities even in the second round of proceedings, we have no option but to again restore this issue to the file of the Jurisdictional AO for de novo adjudication with a direction to the assessee to furnish documents to substantiate the fulfilment of the conditions for claim of deduction u/s 54B of the Act. Appeal by the assessee is allowed for statistical purposes.

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• 2025 (4) TMI 1297
  Addition u/s. 68 - unexplained credit in the books of accounts - assessee had submitted details of stock and contended that it has already offered such amount as sales and regularly complied with requirement of laws like Gujarat VAT Act - AO had not accepted the explanation of assessee and relied upon investigation report wherein it was found that cash were collected from various persons by Shri Sanjay Soni and others and were deposited in various dummy accounts with Axis Bank and part of such amount was ultimately transferred to assessee - HELD THAT:- CIT(A) held that the assessee was a trader of bullion and in the year under consideration, he had made sales to Green Traders, Shri Jitendra Patel and DPS Commodities against which amount was received through banking channel. CIT(A) held that the though the assessee had submitted copy of relevant bills issued to SVP Corporation, stock register and VAT report no contrary evidence was brought by the AO. CIT(A) held that the assessee had sufficient stock before making any sales. CIT(A) in unequivocal terms held that when assessee was a trader in bullion, having sufficient stock before making any sale, the AO not doubting any purchases made by assessee including its quantitative records, there was no reason for treating entire cheque amount received from above concerns as unexplained credit u/s 68 of the Act. Decided against revenue.

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• 2025 (4) TMI 1296
  Disallowing the claim of accumulation u/s. 11(2) - there is no specific reason mentioned in Form 10 how the amount accumulated going to be spent for - HELD THAT:- AO does not have case that accumulation u/s. 11(2) of the Act is for purpose outside the objects of the assessee trust. The only reason stated by the AO in denying the claim of accumulation of income u/s. 11(2) of the Act is that the amount set aside for accumulation has not been specifically mentioned or categorised. We find from Form 10 that the assessee had enumerated the reasons for accumulation of income which is well within the objects of the assessee trust. As decided MAMTA HEALTH INSTITUTE FOR MOTHER AND CHILDREN [ 2007 (5) TMI 88 - HIGH COURT, DELHI] in annual report as well as the overview of these projects clearly shows that the projects were in consonance with the objectives sought to be achieved by the assessee, which were for the benefit of women and adolescent girls particularly in the slums or in a community which was not particularly well off. On-going through the objects of the society, it is clear that the assessee sought to accumulate funds for a charitable purpose. Appeal filed by Revenue is dismissed.

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• 2025 (4) TMI 1280
  Reopening of assessment against non non-existent company - Validity of notices issued under the unamended Section 148 post-01.04.2021 - Scope of new provision section 148A - As decided by HC [ 2025 (1) TMI 820 - DELHI HIGH COURT] notice is in the name of the petitioner and, therefore, cannot be faulted on account of the impugned notice having been issued in the name of a non-existent company. HELD THAT:- Having heard the learned Senior counsel appearing for the petitioner and having gone through the materials on record, we find no reason to interfere with the impugned order passed by the High Court. Special Leave Petition is, accordingly, dismissed.

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• 2025 (4) TMI 1279
  Revision u/s 263 - whether in the second round of litigation Commissioner of Income Tax was justified in invoking his power u/s 263? - as decided by HC [ 2024 (8) TMI 119 - CALCUTTA HIGH COURT] Tribunal was fully justified in concluding in favour of the assessee after noting that the assessing officer had conducted extensive enquiry on issues and directions mentioned in the order passed u/s 263 of the Act. Thus we find no grounds have been made out to interfere with the order passed by the learned Tribunal. HELD THAT:- Delay condoned. In the facts to the case, no interference is called for with the view taken by the Income Tax Appellate Tribunal as well as the High Court. The Special Leave Petition is, accordingly, dismissed.

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• 2025 (4) TMI 1278
  Stay the recovery of tax demands - Appellant is a loss-making company - Whether unconditional stay should be granted? - disturbing the profit and loss account when capital expenditure is debited to the profit and loss account to avoid book profit tax in a manner not permitted by the Companies Act - HC [ 2025 (2) TMI 243 - BOMBAY HIGH COURT] though some arguable issues have been raised, we do not think that this is a case where the decisions relied upon concerning a strong prima facie case would be attracted and entitle the Appellant to an unconditional stay on demand. Each case would turn on its facts. The arguments based on high-pitched assessment, CBDT circulars and the decisions relied upon in that regard were mainly in the context of the first appeal against the assessment order. Today, the Income Tax Appellate Tribunal has decided the matter, confirming the demands. The usual rule would be a deposit of the entire demanded amount. However, since the rectification application is pending and Appellant/Applicant has urged that if the same is allowed, the tax liability will be reduced to Rs. 68.91 Crores, some departure can be made from this usual rule. But no case is made out for an unconditional stay. HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petitions are accordingly dismissed.

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• 2025 (4) TMI 1277
  Concession on law before the High Court - Taxation of income actually accrued under mercantile system of accounting - Whether income in respect of unclaimed goods stored at CFS / ICD s maintained by the Assessee can be said to accrue merely because the goods continue to be stored indefinitely? - Whether ITATs direction to merely telescope income already offered for tax on receipt basis against Income taxable on accrual basis is misconceived / perverse on the facts of the case, and on an interpretation of section 150 (2) of the Customs Act 1962? - High Court has recorded that the aforesaid aspects came to be decided on concession HELD THAT:- If the Corporation believes that its counsel wrongly conceded before the High Court on a point of law, it was expected of the Corporation to immediately prefer an appropriate application before the High Court and get the matter clarified. Its too late in the day to level such allegations. We condemn this practice which we have been noticing over a period of time in various litigations.Special Leave Petition is dismissed accordingly.

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• 2025 (4) TMI 1276
  Proceedings u/s 153C - issuance of the notice was preceded by the drawl of a Satisfaction Note by the jurisdictional AO - importance of material recovered in the course of a search or a requisition made and a right to reassess u/s 153A and 153C - HC [ 2024 (4) TMI 461 - DELHI HIGH COURT] held invocation of Section 153C in respect of AYs for which no incriminating material had been gathered or obtained denied. Satisfaction Notes also fail to record any reasons as to how the material discovered and pertaining to a particular AY is likely to have a bearing on the determination of the total income for the year which is sought to be abated or reopened in terms of the impugned notices. Respondents have erroneously proceeded on the assumption that the moment any material is recovered in the course of a search or on the basis of a requisition made, they become empowered in law to assess or reassess all the six AYs years immediately preceding the assessment correlatable to the search year or the relevant assessment year as defined in terms of Explanation 1 of Section 153A. The said approach is clearly unsustainable and contrary to the consistent line struck by the precedents noticed HELD THAT:- There is a delay of 142/149 days in filing the Special Leave Petitions which has not been satisfactorily explained by the petitioners. Even otherwise, we see no good reason to interfere with the impugned orders passed by the High Court. Special Leave Petitions are, accordingly, dismissed on the ground of delay as well as merits.

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• 2025 (4) TMI 1275
  Order u/s 127 (2) transferring the petitioner s case from the jurisdictional officer in Mumbai to the counterpart in New Delhi - as decided by HC [ 2025 (1) TMI 461 - BOMBAY HIGH COURT] convenience of the assessee is adverted to, but the impugned order observes that this aspect is secondary and may have to yield to the more significant interest of centralised and coordinated investigation. The order also records that the centralisation is for a limited period, and once the assessment concludes as per the norms, then there would be de-centralization. The impugned order also refers to certain precedents of the Hon ble Supreme Court and the jurisdictional High Courts.The charge that the impugned order is unreasoned must fail. At least prima facie, the reasons cannot be considered irrelevant or extraneous. T HELD THAT:- Heard the learned counsel appearing for the petitioner. No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is, accordingly, dismissed. Pending application also stands disposed of.

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• 2025 (4) TMI 1274
  Determination of expenses as percentage of receipt based on Contract - Entitlement to only 5% of the receipts of the appellant and not 5% of the gross advertising bills raised - HELD THAT:- Under clause-3 of the said agreement, the assessee had to pay 5% of the total receipts of STARTIME from the advertising. As per the profit and loss account annexed by the assessee, it is evident that the assessee has disclosed his income for the period ending 31st March 1993 at Rs. 63,43,480/- (Rupees sixty-three lac forty-three thousand four hundred eighty only). AO therefore, in accordance with the terms of the agreement, found that the assessee had to pay PRIMETIME only 5% of the receipts i.e. receipt of Rs. 58,77,412/- (Rupees fifty-eight lac seventy-seven thousand four hundred twelve only). As per the terms and conditions of the agreement, the assessee was required to pay 5% of the receipt of the assessee and not on 5% of the gross advertising bills. Though the order was passed against the revenue, it did not challenge the order of appellate authority before the Tribunal. However, the assessee filed an appeal before the Tribunal, which has been dismissed. The findings of fact recorded by the Assessing Officer, Commissioner of Income Tax (Appeals) and the tribunal with regard to the income from the advertisement i.e. sum of Rs. 63,43,480/- (Rupees sixty-three lac forty-three thousand four hundred eighty only), which is evident from the profit and loss account of the assessee, does not, by no stretch of imagination, can be said to be either perverse or based on no evidence. The aforesaid findings of fact do not call for any interference in this appeal. Decided against the assessee.

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• 2025 (4) TMI 1273
  Validity of Assessment Order and the Show Cause Notices based upon which the Assessment Order was ultimately issued - Rule of exortion of alternate remedies - deposit of 20% of the tax demand as a pre-condition for interim relief pending the Appeal - HELD THAT:- Extra ordinary jurisdiction of this Court cannot be invoked to avoid any pre-deposit requirements or requirements for deposit of some amounts as a pre-condition for interim relief. Besides, this Court, cannot be flooded with Petitions of this nature on the spacious plea that such Petitions are decided faster than the statutory Appeals provided under the law. Petitioner has alleged breach of natural justice. Since we propose to relegate the Petitioner to avail the alternate remedy, we do not wish to make any observations on the merits or de-merits of such a claim. However, record does not show that this was a case of no notice or no opportunity but instead, the allegations in the Petition concern no adequate notice or no sufficient opportunity. This would require investigation into factual aspects. No extra ordinary circumstances have been shown to deviate from the normal rule requiring exortion of alternate efficacious remedies. In Oberoi Constructions Limited vs. Union of India [ 2024 (11) TMI 588 - BOMBAY HIGH COURT ] we have considered several decisions on the issue of exortion of alternate remedies. By applying the reasoning in the said decision and the decisions referred to therein, we decline to entertain this Petition but leave it open to the Petitioner to avail of alternate statutory remedy provided under the law. All contentions of all parties are left open to be decided by the Appellate Authority should the Petitioner avail of such alternate remedy.

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• 2025 (4) TMI 1272
  Denial of benefit of the exemptions u/s 11/12 - payment of salary to a related party - HELD THAT:- There is no cavil that the salary paid to Ms Rai was not excessive or unreasonable considering her educational qualifications and the functions performed by her. ITAT had examined the evidence as to her qualifications as well as her contribution. Revenue also did not contest the said findings. As noted above, he had advanced submissions on the sole ground that if any part of the income of the trust is diverted for benefit of any of the prohibited person referred to in sub-section (3) of Section 13 of the Act, the entire income of the trust would be chargeable to tax. If a person specified under sub-section (3) has rendered any service and the amount or allowance paid to such person is such, that is, reasonably paid for such services, the same cannot be deemed to have been applied for the benefit of the said person for the purposes of clauses (c) or (d) of Section 13(1) of the Act. This is apparent from the plain language of clause (c) of sub-section (2) of Section 13 of the Act. The opening words of the said clause must be read in conjunction with the last words of the said clause If any amount is paid by way of salary, allowance or otherwise in excess of what may be reasonably paid for such services . Thus, if the amount paid for services is such as is reasonably payable for such service, the same cannot be construed as applied for the benefit of a prohibited person notwithstanding that it is paid to such a person. Consequently, such payment would not fall within the exception of clause (c) of sub-section (1) of Section 13 of the Act. The observations made by this Court in Director of Income Tax (Exemption) v. Charanjiv Charitable Trust [ 2014 (3) TMI 760 - DELHI HIGH COURT ] must be read in the context of the facts of that case. Decided in favour of the Assessee and against the Revenue.

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• 2025 (4) TMI 1271
  Denial of grant registration u/s 12AA - activities of the trust is in the nature of trade, commerce or business and covered by proviso to Section 2 (15) - HELD THAT:- Principal Commissioner or the Commissioner has to satisfy himself about the objects of the trust or institution and the genuineness of its activities as required under sub-clause (i) of clause (a) and compliance of the requirements under sub-clause (ii) of the said clause, and has to pass an order in writing registering the trust or institution and a copy of the order so passed will be sent to the applicant. As in the matter of Ananda Social and Educational Trust [ 2020 (2) TMI 1293 - SUPREME COURT ] held that newly registered trust on basis of its objects, without any activity having been undertaken, is entitled for registration u/s 12AA. In the matter of Gujarat Cricket Association [ 2019 (11) TMI 35 - GUJARAT HIGH COURT ] the High Court of Gujarat has categorically held that the nature of the activities of the assesse i.e. Gujarat Cricket Sangh cannot take its colour from the nature of activities of the donor. Considering the categorical finding recorded by the ITAT that the object of the assessee is charitable in nature, which could not be contradicted competently by learned counsel appearing for the appellant/Revenue during the course of arguments, we are of the opinion that the ITAT is absolutely justified in holding that the assessee Society is entitled for registration u/s 12AA of the Act, which is pure and simple finding of fact based on the evidence available on record and is neither perverse nor contrary to law. Decided against Revenue.

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• 2025 (4) TMI 1270
  Addition under the provision of section 56(2)(x) - year of assessment - purchase/sale/transfer of the said rice mill took place in the previous year OR this year - whether the assessee was right in contending that they purchased the assets in question namely, a rice mill should be taken to be on the date when they entered into the agreement for sale of the property which was made on 13.12.2016 or when the registered sale deed was executed and registered on 21.3.2018? HELD THAT:- A similar view was taken by the Hon ble Supreme Court in Commissioner of Income Tax vs. Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT ] In the said case, the Hon ble Supreme Court took note of the various clauses in section 2 (47) of the Act and what was relevant in the said case was clause (vi) and the Hon ble Supreme Court did not agree with the view taken by the High Court and held that under section 2 (47) (vi), any transaction which has the effect of transferring or enabling the enjoyment of any immovable property should come within its purview. Therefore, the legal issue is well settled and the view taken by the tribunal that on execution of the agreement for sale no right accrues in favour of the assessee does not lay down on the correct legal principle. That apart, the sale transaction was assessed to tax for the assessment year 2017-18 and the said assessment was subject matter of reopening u/s 147 of the Act and the re-assessment was completed. In fact, the learned tribunal while considering the second issue as to the applicable circle rate of the property has held in favour of the assessee by taking note of the fact that the entire sale consideration has been paid at the time of execution of the agreement of sale and, therefore, the stamp duty value/circle rate as applicable on 30.12.2016 has to be applied in the assessee s case. Therefore, this finding on the second issue is contrary to the finding rendered by the tribunal on the first issue which is the preliminary issue. Thus, Tribunal committed an error in coming to the conclusion that the transfer did not take place in favour of the assessee on and from the date of execution of the agreement of sale pursuant to which the entire sale consideration was paid and the assessee was put in possession of the property which was purchased by them. The appeal is allowed. The order passed by tribunal is set aside and the substantial questions of law are answered in favour of the assessee.

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• 2025 (4) TMI 1269
  Rejecting the Petitioner s applications for unconditional stay - Both orders grant stay but are subject to a deposit of 20% of the tax demand - HELD THAT:- Upon due consideration of the Petitioner s case, we find that the direction for a deposit of 20% of the tax demand as a pre-condition for stay was appropriate and warrants no interference. In the assessment order, an addition has been made on account of cash deposited in a bank account during the demonetisation period. The reasons given in the assessment order do lend support for at least depositing 20% of demand, and no prima facie case is made out for the Petitioner s unconditional stay before us. As it is, even though the applications for unconditional stay were denied in 2020, the Petitioner has not paid any amount towards the tax demand. When the appeal pending, which the stay was sought, was disposed of Appellant states that such disposal was ex parte, and now the appeal has been restored, and it is pending. This means that the Petitioner has not paid any amount towards the tax demand for about five years. The Petitioner does not bother to furnish documents concerning its financial health today. The objective appears to be to delay the payment of taxes for as long as possible. We decline to interfere with the impugned orders though, we agree with Appellant that the two authorities should have indicated some reasons for requiring the Petitioner to deposit 20% of the tax demand as pre-condition for a stay.

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• 2025 (4) TMI 1268
  Reopening of assessment u/s 147 as barred by limitation - extension granted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 ( the TOLA ) - HELD THAT:- Hon ble Supreme Court in Union of India v/s Rajeev Bansal[ 2024 (10) TMI 264 - SUPREME COURT (LB)] held that the surviving time under the Act read with the TOLA will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notice, including issuance of re-assessment notice u/s 148 of the Act under the new regime. Therefore, the surviving/balance time limit can be calculated by computing the number of days between the date of issuance of the deemed notice and 30/06/2021. Since, in the present case, the period of 4 years from the end of the relevant assessment year expired on 31/03/2021, which falls within the time period from 20/03/2020 to 31/03/2021, in order to compute the surviving/balance time as per the decision of the Hon ble Supreme Court. Since the relief has been granted to the assessee on the aforenoted jurisdictional aspect, the other grounds raised by the assessee in the appeal are rendered academic, and therefore, are left open. Appeal by the assessee is allowed.

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• 2025 (4) TMI 1267
  Benefit of deduction u/s 80P - AO treated the interest income received from banks as income from other sources and denied the benefit of deduction - HELD THAT:- We are of the view that the money kept in the commercial and co-operative banks was not on account of money withheld which was due to its members. We note that the money deposited in the bank account of the assessee was out of the funds available from day-to-day operation of the society therefore, the assessee is entitled to deduction u/s 80P(2)(a) of the Act as the interest income from deposits with banks is a business income. Appeal of the assessee is allowed.

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• 2025 (4) TMI 1266
  TP adjustment - interest on outstanding receivables from Associated Enterprises (AEs) by imputing interest thereon - HELD THAT:- On perusal of the audited financial statements of the assessee company, we find that the entire invoices are raised by the assessee on its AEs in foreign currency and realization were made in foreign currency and receivables are also reflected in foreign currency which got ultimately restated in Indian currency as per the Accounting Standard-11 issued by ICAI. Hence, LIBOR plus 400 points should be applied in the instant case. AR prayed for grant of working capital adjustment to be applied on the comparable margin, which in either case, if granted, there would no need to separately impute interest on outstanding receivables as the same would get subsumed - Reliance in this regard was placed on the decision of Kusum Healthcare [ 2017 (4) TMI 1254 - DELHI HIGH COURT] - We find that the DRP had also directed the ld TPO / AO to grant working capital adjustment to the assessee which has not been followed by the ld TPO. Hence, the order passed by the TPO had to be considered as not passed in consonance with the binding directions u/s 144C(10) of the Act of ld DRP. On this limited count itself, the order of TPO deserves to be quashed and is hereby quashed. Accordingly, original Ground Nos. 2 and 3 raised by the assessee are hereby allowed. Action of the AO in enhancing the income and the tax liability in the final assessment order which was not even proposed by him in the draft assessment order - The draft assessment order gets merged with the order of the ld DRP and the final assessment order is merely giving effect to the directions of the ld DRP. As per section 144C(10) of the Act, directions given by the DRP are binding on the ld AO. Hence, AO could not carry out even arithmetical exercise in the final assessment order proceedings which is passed pursuant to the directions of the ld DRP. Accordingly, any issue that was not subject matter of consideration in the draft assessment proceedings or before the ld DRP, cannot take its birth strangely for the first time in the final assessment order. The alternative recourse is provided in the statute for the same. Hence, the Ground No. 4 raised by the assessee is allowed. Chargeability of interest u/s 234A AO is directed to verify the extended due date of filing of return u/s 139(1) of the Act for AY 2020-21. Accordingly, the ld AO is directed to decide the chargeability of interest u/s 234A of the Act. Chargeability of interest u/s 234B is consequential in nature. Interest u/s 234C the law is settled that the same has to be charged only on the returned income and not on the assessed income.

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• 2025 (4) TMI 1265
  Revision u/s 263 - exemption u/s 11 and 12 denied to assessee only on account of late filing of Form No. 10B - HELD THAT:- In the case of Brahmchari Wadi Trust [ 2025 (3) TMI 1012 - GUJARAT HIGH COURT] held that where delay in filing Form No. 10 by assessee-trust had occurred due to internal administrative problems of assessee-trust, since assessee-trust for past many years had substantially satisfied conditions for claiming exemption u/s 11, exemption u/s 11 could not be denied for non-filing of Form No. 10 in time. Delay in filing of Form 10B in the instant case has caused no prejudice to the interest of the Revenue, since such delay is only a procedural lapse. Accordingly, we are of the view that the present 263 order is liable to be set-aside. Appeal of the assessee is allowed.

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• 2025 (4) TMI 1264
  Disallowance of expenses u/s 37(1) - vendors were not registered under GST, was justified - discrepancy in invoice furnished by the Appellant - HELD THAT:- In the present case in hand the assessee has submitted the expenses bills before the CIT(A) and AO. The expense bills payments were made through the banking channels after duly deducting the TDS. AO was not justified to disallow the expenses on the sole ground that the subcontracts were not registered under GST without considering the fact that there is no requirement under the Act that expenses must be incurred only with GST registered parties. The assessee has proved the expenses were genuine by submitting the bill invoices. The additions have been made merely on the basis that the parties were not registered under GST but at the same time it cannot be said that expenses are bogus. We therefore, set aside the findings of the NFAC/CIT(A) and direct the AO to delete the addition. Appeal of the assessee is allowed.

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• 2025 (4) TMI 1263
  Deduction u/s 80-IC - assessee s claim for 100% deduction based on substantial expansion - HELD THAT:- We noticed that the assessee, engaged in manufacturing in Himachal Pradesh, claimed 100% deduction u/s 80IC for the 10th year on the basis of substantial expansion. AO restricted the claim to 25%, but the Supreme Court in Aarham Softronics [ 2019 (2) TMI 1285 - SUPREME COURT] has clearly held that units undergoing substantial expansion are eligible for 100% deduction for another five years, within the overall 10-year period. It was also noticed that the assessee s claim has already been accepted by the Coordinate Bench in earlier years i.e AY 2014 15 and 2015 16, therefore there is no reason to take a different view on this issue. Accordingly, we hold that the assessee is entitled to 100% deduction u/s 80IC for AY 2016 17, and the appeal of the assessee is allowed.

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• 2025 (4) TMI 1262
  Unexplained investments u/s. 69 - HELD THAT:- To substantiate this claim, the assessee has submitted the bank statements from Cosmos Co-Op Bank evidencing the amounts received from Sanghvi Infotech as repayment of loan and the amounts paid to Sanghvi Infotech as a consideration against 28,00,000 Right Shares. These bare facts could not be disputed on facts or on any other material by the DR. We hold that no addition is called for on account of investments in shares. Appeal of the assessee on this ground is allowed. Gift received from anonymous - HELD THAT:- We are still searching for appropriate words in the English dictionary to appreciate the dedication, neutrality, objectivity and judicious nature of the AO and CIT(A) while dealing with this issue. Having unable to find appropriate words, we at least found the reasons why the taxpayer detests the tax authorities. We hold that the Revenue Authorities have failed to appreciate the issue in the right perspective and hence we hold that no addition on account of gift of shares received by the assessee from his brother can be treated as unexplained investment u/s 69 of the Act. Appeal of the assessee on this ground is allowed. Deduction u/s 57 - assessee has earned interest against the amount advanced (loans) to various parties - assessee has also paid interest from whom the amounts (loans) have been received - AO disallowed the deduction of interest claimed by the assessee u/s 57 - CIT(A) upheld the action - HELD THAT:- The details of the name, address and PAN numbers from whom the amounts have been received and interest paid has been duly given before the Revenue Authorities. The ledgers of all the 48 parties have been submitted before the Revenue Authorities. The ledgers reveal opening balances, payment of the principal made during the year, payment of receipt during the year and the interest payments. We also find on record, the flow of money as advances and extending of loans to other parties. Hence, it shall be treated as business activity of the assessee and claim of interest paid has to be allowed from the interest received. In the result, appeal of the assessee on this ground is allowed.

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• 2025 (4) TMI 1261
  Disallowance u/s 28(iv) towards share application money - CIT(A) (NFAC) deleted the additions - as submitted though the share premium was received in the F.Y. 2011-12 2012-13, no shares were allotted against them as late as March 2021 - CIT(A) deleted addition - HELD THAT:- Assessee had received share application money from its existing shareholders. In this respect, provisions of section 68 were not urged upon by the AO. Thus, accepting the identity and creditworthiness of the investors and genuineness of the transaction, addition made by the ld. AO is by way of invoking provisions of section 28(iv) to bring this amount to tax under the head profit and gains business or profession on account of assessee receiving benefit or perquisite. The most clinching fact for the assessee is that it has ultimately issued the shares and allotted the same to the respective investors which is not in dispute. This fact establishes that impugned transaction is on capital account and thus the receipt in the hands of the assessee is a capital receipt, not liable to be taxed under the provisions of section 28(iv). No reason to interfere with the findings arrived at by the ld. CIT(A), deleting the addition made u/s 28(iv) by the ld. AO. Accordingly, ground raised by the Revenue in this respect is dismissed.

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• 2025 (4) TMI 1260
  Undisclosed income - Difference between the business income as per the Profit Loss Account submitted during the survey and the income declared in the return - use of approximate profit and loss account prepared during the survey - actual audited accounts were later on submitted which were different as income declared during the survey was based on incomplete accounts - HELD THAT:- As during the assessment proceedings and also before this Bench, the assessee submitted a reconciliation statement, explaining that the earlier declaration was based solely on information drawn from unaudited books of account. Upon finalization of the accounts, the assessee observed a reduction in the turnover initially declared at the time of the survey. Specifically, the turnover was revised resulting in a difference of Rs. 38,04,310/-. AR confirmed that the assessee had declared a net profit rate of 7.76% during the relevant assessment year. It was fairly conceded by the Ld. AR that the net profit margin should be applied to the difference in gross receipts, since certain expenses were necessarily incurred to earn those receipts and cannot be disregarded. The issue being entirely factual, and the turnover computed by the survey team having been duly accepted, the difference between the gross receipts declared in the return of income and those determined during the survey amounts to Rs. 38,04,310/-. Accordingly, applying the net profit rate of 7.76% to this difference, the resultant income to be added comes to Rs. 2,95,214/-, which is rounded off to Rs. 2,95,300/-. Consequently, the addition made by the Ld. AO to the extent of Rs. 85,88,540/- is hereby deleted, and the addition is sustained only to the extent of Rs. 2,95,300/-, which is directed to be added to the total income of the assessee. Decided partly in favour of assessee.

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• 2025 (4) TMI 1259
  Unexplained cash credit u/s 68 - bogus short term loss claimed by the assessee by way of transacting in penny stocks - HELD THAT:- We note that transactions were undertaken through the SEBI registered broker on the stock exchange platform on which STT was levied and the consideration was routed through normal banking channel. The entire flow of these transactions is corroborated by relevant documentary evidences placed on record. While making the addition, there are no discrepancies pointed out by the AO in the documents and the details furnished by the assessee. Ld. AO has not bothered to discuss or point out any defect or deficiency in the documents furnished by the assessee. These evidences furnished have been neither controverted by the Ld. AO during the assessment proceedings nor anything substantive brought on record to justify the addition made by him. Revenue has not brought on record any material about participation of the assessee with any such dubious transactions relating to accommodation entry, price rigging or exit providers. AO could have taken an adverse view only if he could point out the discrepancies or insufficiency in the evidence and details furnished in his office. Once the assessee has produced documentary evidence to establish the veracity of his claim, the burden would shift on the Revenue to establish its case. AO had proceeded on the basis of analysis of the financials of the company. According to him, sharp movement in the share prices of the aforesaid scrip is not justified. He has relied upon the search and survey operations conducted by the investigation wing of the Department at various locations in respect of alleged penny stock which sets out the modus operandi adopted in the business of providing entries for bogus capital gains. The conclusion drawn by AO of implicating the assessee is un-supported by any cogent material on record. It is also a fact on record that assessee is a regular investor, transacting and holding shares in several scrips. The finding arrived at by the ld. AO is thus purely an assumption based on conjectures and surmises. In our thoughtful considerations to the facts and circumstances of the case, it is not in controversy that assessee has discharged his burden by submitting the relevant documents, details of which are already noted above, forming part of the paper book. Thus, we have no reason to interfere with the first appellate order whereby addition made towards short term capital loss on the share transactions of two scrips which was set off from the short-term capital gains on other scrips. Accordingly, grounds taken by the revenue in this respect are dismissed. Addition on estimate basis towards commission for arranging alleged artificial capital loss - Since we have upheld the deletion of the said addition towards short-term capital loss on the aforesaid two scrips in terms of above stated observations and findings, this consequential addition also receives the same fate, affirming the finding of ld. CIT(A) to this effect. Accordingly, grounds taken by the revenue in this respect are dismissed.

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• 2025 (4) TMI 1258
  Assessment u/s 153A/153C or 147 - documents found during the search on third party - HELD THAT:- As per the express scheme of the Act, where documents seized in a search pertain to or belong to a person other than the searched party, the appropriate and mandatory course of action is to proceed u/s 153C and not u/s 147. The documents cited in the assessment order clearly form part of the material seized from the premises of the Ameya Group. No new or independent information was unearthed by the AO in the normal course of assessment proceedings. AO, despite initiating the reassessment on the basis of alleged cash receipts, ultimately made additions on an entirely different ground, namely cash payments thus deviating from the recorded reasons. Such divergence between the recorded reasons and the eventual addition undermines the very jurisdiction assumed under Section 147. Thus, the assumption of jurisdiction u/s 147 by the issuance of notice under Section 148 dated 30.03.2019 is invalid and without legal sanction.

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• 2025 (4) TMI 1257
  Penalty u/s 271(1)(c) - mistake in making of a claim in the return of income -assessee has claimed excess carry forward loss - Assessee in the revised return had claimed remuneration and interest paid to the partners twice which was rectified only in the return filed in response to the notice issued u/s 148 - HELD THAT:- A perusal of the computation statement shows that no such claim of carry forward of loss has been made by the assessee. What the assessee has done is that he has claimed the same without adding interest and remuneration paid to the partners and then claimed the same as has been done in the original computation of income. The assessee has inadvertently omitted to add the same in the revised return of income but claimed the salary and interest paid to the partners. We, therefore, find some force in the arguments of assessee that it was an inadvertent human error and there is no deliberate attempt on the part of the assessee to evade taxes. It is also an admitted fact that the assessee has not claimed the benefit of carry forward of such loss on account of interest and remuneration paid to the partners. We are of the considered opinion that this is not a fit case for levy of penalty on account of human error. CIT(A) / NFAC and delete the penalty levied by the AO. The grounds raised by the assessee are accordingly allowed.

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• 2025 (4) TMI 1256
  TP adjustment - interest payment on external commercial borrowing ( ECB ) - assessee company entered into three ECB transactions vide three separate loan agreements with its Associated Enterprises( AEs ) - TPO has determined the ALP of interest on ECB by adopting LIBOR+200 basis points for bench marking the interest paid by the assessee at LIBOR+500 basis and consequently proposed adjustment - HELD THAT:- By following the earlier decisions of this Tribunal in the case of DCIT Vs. Devgen Seeds Crop Technology (P) Ltd. [ 2017 (3) TMI 1333 - ITAT HYDERABAD] we hold that the interest payment of ECB @ LIBOR+500 basis is at arms length and consequently no adjustment is warranted. Hence, the TP adjustment made and confirmed by the DRP on this account is deleted. TP adjustment on account of royalty payment - assessee owned and developed engineering and technical know-how and information, experience and expertise in respect of manufacture, marketing and sale of different kinds of high speed doors -only reason given by the TPO for determining the ALP at Nil is that the assessee failed to substantiate with any documentary evidence, the benefit derived by it in quantifiable term - HELD THAT:- A consistent view has been taken by the Tribunal on the point that when the payment is made as per the legally binding agreement between the parties, which is duly approved by the RBI for the purpose of remittance of royalty, then the tax authority cannot intervene in the realm of intricacies of commercial expedience involving in the arrangements between the parties. By following the order of M/s Aban Offshore Ltd [ 2016 (10) TMI 807 - ITAT CHENNAI] we hold that applying the benefit test by the TPO and determining the ALP of royalty at Nil is highly arbitrary and unjustified. Consequently, addition / adjustment made on this account is deleted. TP adjustment towards interest on receivable - AR contended that when the payables are almost 4 times more than the receivables and the assessee is not paying any interest on the payables to the AE, then adjustment made by the TPO on account of trade receivables without considering the trade payables is not justified - HELD THAT:- The outstanding receivables and payables are not in dispute though the receivables and payables are from different AEs. The assessee has stated that the payables are in respect of the purchases made by the assessee from AEs, which was subsequently sold to another AE and therefore, the transactions are inter connected and when the assessee is not paying any interest on the payables to the AEs, which are more than the receivables from the AEs, then the adjustment made on this account is uncalled for. Tribunal, in assessee s own case [ 2021 (5) TMI 356 - ITAT HYDERABAD] held that it will be appropriate for netting off the notional interest with respect to debit and credit transaction with the assessee s AEs and only on the net receivables, the notional interest can be benchmarked for transfer pricing purpose. We further note that when the assessee is purchasing raw material from the AEs and selling the goods to the AEs, then the transactions of purchase and sale are directly connected with each other. Therefore, it will be appropriate to consider both the trade receivables as well as payables from the AEs, while bench marking the transactions of notional interest on the receivables. By following the earlier order of this Tribunal, adjustment made by the TPO/AO on this account is deleted as the payable for the year under consideration is substantially higher than the receivables. TP adjustment on account of trade receivables for the year under consideration - HELD THAT:- As it is clear that the trade payable in the year under consideration is 7 times more than the trade receivables from the AEs. This issue is common as raised the for the A.Y.2017-18 and in view of our finding on this issue for A.Y.2017-18, the addition made by the TPO/AO on this account is deleted. Scrutiny assessment - adjustment made by the CPC while processing the return u/s 143(1) - suo-moto disallowance made by the assessee - HELD THAT:-The assessment was taken up for scrutiny by issue of notice u/s 143(2) on 23.09.2019, whereas, the CPC has processed the return u/s 143(1) vide order dated 02.12.2019 and therefore, once the assessment proceedings were already pending, the assessee was not supposed to challenge the intimation u/s 143(1) separately. Even otherwise, processing of return merges with the assessment proceedings and therefore, once the assessee has objected to the adjustments made by the CPC, the AO ought to have examined and verified the same from the relevant record. It is the duty of the AO to ensure that there should not be any double addition, even on account of adjustment made by the CPC. Therefore, in the facts and circumstances of the case and in the interest of justice, we set aside these non TP issues, where the CPC has made adjustment, to the record of the AO to verify about suo-moto disallowance made by the assessee and determine the correct amount of disallowance if any. Disallowance made on account of belated payment towards employees contribution, though this issue is decided by the DRP in favour of the assessee, however, the AO has not given effect to the directions of the DRP. Now this issue is covered by the judgement of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] and therefore, the AO is directed to verify and decide this issue as per law.

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• 2025 (4) TMI 1255
  Denial of foreign tax credit (FTC) u/s 90 - filing Form No. 67 after the due date for filing the return u/s 139(1) - HELD THAT:- We observe that Section 90, in conjunction with the India-Canada DTAA, confers a substantive right to claim FTC for taxes paid abroad, subject to conditions prescribed under the Income Tax Rules. Rule 128(9), as applicable for A.Y. 2022-23, required Form No. 67 to be filed by the due date of the return under Section 139(1). Neither the Act nor the Rules explicitly mandate disallowance of FTC for delayed filing of Form No. 67. Consistent with decisions in Brinda RamKrishna [ 2022 (2) TMI 752 - ITAT BANGALORE] Sonakshi Sinha [ 2022 (10) TMI 107 - ITAT MUMBAI] and Nirmala Murali Relwani [ 2022 (12) TMI 395 - ITAT MUMBAI] we hold that filing Form No. 67 is a directory requirement, not mandatory, and a procedural lapse does not extinguish the substantive right to FTC, especially when the form was filed on 27.08.2022, well before the processing of the return on 26.10.2022. The amendment to Rule 128(9) effective from 01.04.2022, allowing filing until the end of the assessment year, further indicates a legislative intent to liberalize procedural compliance, though not directly applicable here. CIT(A) s dismissal of non-jurisdictional precedents is not tenable, as these rulings reflect a consistent judicial interpretation favouring the assessee. Decided in favour of assessee.

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• 2025 (4) TMI 1254
  Disallowance of Speculation loss - Addition u/s 68 by treating that the transaction was bogus - HELD THAT:- We can be said that commodity income made by the assessee cannot be treated as a bogus as there is no rules, regulations which states that the off market transaction needs to be reported to the exchange. As a result of, the order passed by the AO confirmed by the CIT(A) on speculation loss as well as addition u/s 68 of the Act cannot be said to be legal. Accordingly, the same is hereby directed to be deleted. Addition u/s 56(2) - assessee received gift of the amount from M/s Anand Akash Sureka, being the father and a member of Hindu undivided family - AO disallowed by upholding that the father did not come under the definition of relatives - submission of the assessee is that family was HUF and each of HUF family members have a separate legal status so the father should be considered as a relative - HELD THAT:-We find force in the argument of assessee that the assessee is entitled to claim deduction u/s 56(2) of the Act even the gift received from the father. Accordingly, the order passed by the AO confirmed by the Ld. CIT(A) is set aside and addition made under the same section is hereby directed to be deleted. Addition of amount from Aakash Sureka Educational Trust u/s 56(2) - HELD THAT:- The present facts of the case are concerned trust had duly filed its return of income and he paid taxes. The amount transferred to the beneficiary had already subjected to the taxation. The trust was formed as per the provision of Indian Trust Act. Once trust has paid taxes was earned in earlier years it means beneficiary has paid the said taxes and therefore, the addition made in the present case is liable to be deleted. Keeping in view, the above discussion the addition made by the AO confirmed by the Ld. CIT(A) is hereby deleted.

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• 2025 (4) TMI 1253
  TP Adjustment - rejection of internal TNMM for the purpose of benchmarking the international transaction of the assessee-company with its AE - HELD THAT:- Assessee-company has not filed any evidence, except a Certificate from the Accountant to prove it s claim. From the details filed by the assessee-company, we are of the considered view that, the assessee-company has failed to demonstrate that the AEs and Non-AEs are functionally comparable. Further, the nature of the transactions with AEs and Non-AEs along with terms were not produced to substantiate the functional comparability. Non- Associated Enterprises transactions were predominantly from Indian operations, whereas Associated Enterprises transactions were outside India. No explanation was given for the assessee-company s geographical differences in it s transactions and how much material difference was adjusted for the purpose of comparability. The assessee- company failed to prove segmental allocation on actual basis. Therefore, we are of the considered view that, when there is no evidence to prove the argument of the assessee- company in respect of Internal-TNMM, it is difficult for us to accept the contention of the assessee-company that Internal-TNMM is an appropriate parameter for benchmarking the international transaction with it s AEs. Thus, we reject the argument of the assessee-company and reject ground nos.2 and 3 of the assessee s appeal. Rejection of TP study conducted by the assessee-company and fresh TP study conducted by the TPO - In the present case, going by the reasons given by the TPO and by the DRP, we find that TP study conducted by the assessee-company is not in accordance with provisions of sec. 92CA(3) of the Act, because, the assessee-company has failed to prove with relevant evidences that it applied appropriate filters while selecting comparable companies and also maintain relevant data to prove the comparability analysis of comparable companies. We further note that, Rule-10B in this regard requires to use of current year data, even if it is subsequently available at the time of determination of ALP during the course of assessment proceedings. From the words of Rule-10B(5), it is very clear that the current year data has to be necessarily considered for the purpose of comparable analysis. Since the assessee-company had not considered current year data for its comparability analysis, in our considered view, the filters adopted by the assessee- company for selection of comparable companies is not in accordance with sec. 92CA(3) of the Income Tax Act, 1961 and Rule 10B(5) of the Income Tax Rules 1962. Therefore, there is no merit in the grounds taken by the assessee-company challenging the reasons given by the TPO/DRP for rejection of TP analysis conducted by the assessee-company. Exclusion of 13 comparables on the ground of functional dissimilarity, superior profit and turnover and other appropriate filter etc. - Although, the assessee-company contended for application of Rs. 0 to Rs. 200 crore turnover is appropriate turnover filter for exclusion of certain companies, but, in our considered view, going by the settled principle of law by the decisions of various Tribunals, application of 10 times upper and lower limit of turnover at a company is appropriate for exclusion of companies for the purpose of comparability of analysis. If we apply 10 times lower or upper turnover limits for companies, then, in our considered view, going by the revenue earned by the assessee-company of Rs. 34 crores approximately, in our considered view, the above 05 companies viz., Cybage Software Pvt. Ltd., Tata Elxsi Ltd., Persistent Systems Ltd., Larsen Toubro Infotech Ltd., and Infosys Ltd., are having turnover of above the tolerance range fixed for inclusion of companies. Therefore, we are of the considered view, that Cybage Software Pvt. Ltd., Tata Elxsi Ltd., Persistent Systems Ltd., Larsen Toubro Infotech Ltd., and Infosys Ltd., are definitely not comparable to assessee-company on turnover filter itself. Thus, we direct the TPO to exclude the above 05 companies for the purpose of benchmarking the ALP of international transaction of the assessee-company with its AE. Coming back to Thirdware Solution Ltd., Aspire Systems (India) Pvt. Ltd., and Nihlent Ltd., although, the assessee-company seeks to exclude these 03 companies on Rs. 0 to Rs. 200 crore turnover filter, but, in our considered view, since we have applied 10 times upper and lower limit for exclusion of companies and if we apply the said limit, the above 03 companies are coming within the range of turnover fixed for comparable analysis and thus, on this ground, these 03 companies cannot be excluded from the list of comparables. Therefore, we reject the argument of the Counsel for the assessee-company. When it comes to software development services, it has a bundle of services which includes project engineering, enterprise solution, independent testing services and application of support services and these are services comes under one segment of software development services, although, may be in a different business segments. Therefore, going by the description provided in the annual report of the relevant companies, it cannot be said that these 03 companies are engaged in a different or diversified activities and there is no segmental data available in respect of each segments. Since the functions performed by the assessee-company are similar that of the functions carried-out by the above 03 companies, in our considered view, the above 03 companies are functionally similar to the assessee-company and comparable to the assessee-company. We are, therefore of the considered view that the DRP has rightly included the above 03 in the list of final set of comparables. We, therefore, uphold the findings of DRP and reject the ground taken by the assessee-company. Exclusion of R S Software (India) Ltd - Once the company is engaged in providing software development services which may be in respect of other segments of business, but, when said services comes under one umbrella of software development services, then, the question of segmental information for comparison purpose does not arise. Since the assessee itself has selected the company in it s TP study and further the assessee failed to make-out a case that it is functionally dissimilar from the assessee-company, in our considered view, based on certain decisions, the said company cannot be excluded. Thus, we reject the arguments of the Counsel for the Assessee and uphold the reasons given by the DRP for inclusion of R S Software (India) Ltd., in the final set of comparables. Inclusion of 08 companies which were earlier considered in the TP study of the assessee - Once the company is engaged in providing software development services, even if it is providing said services to multiple segments of business, in our considered view, once the services rendered by the companies is comes under one umbrella of software development services, then merely for the reason of said companies providing services to diversified segment businesses, those companies cannot be excluded for the purpose of comparison of analysis. In the present case, going by the reasons given by the TPO, in our considered view, the TPO has given stereotype reasons for all companies even though the evidences filed by the assessee clearly demonstrates that the said companies are providing software development services and derived 100% revenue from one segment. Further, the assessee had also proved with evidences that all these companies have passed the filters applied by the TPO. Therefore, TPO was erred in excluding the said companies from the list of comparables. The DRP without appreciating the relevant facts, simply upheld the reasons given by the TPO and excluded the above 08 companies from the list of comparables. Thus, we set aside the order of DRP/TPO and direct the AO/TPO to include the above 08 companies in the list of final set of comparables for the purpose of comparison of international transactions of the assessee-company with it s AEs. Exclusion of Kals Information Systems Private Limited and Cigniti Technologies Limited from the final list of comparable companies - Although, the DRP has directed the TPO to exclude the above 02 companies, but, the Learned Counsel for the Assessee submitted that the TPO has not given full effect to the directions of the DRP to exclude the above 02 companies. In our considered view, once the DRP has given a direction to the TPO/AO to exclude or include any company, the Assessing Officer/TPO is bound to give full effect to the directions of the DRP without any modifications. Therefore, we direct the Assessing Officer/TPO to verify the fact and give effect to the order of the DRP in toto and exclude the above 02 companies viz., Kals Information Systems Private Limited and Cigniti Technologies Limited from the final list of comparable companies.

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• 2025 (4) TMI 1252
  Denial of registration u/s. 12AB - assessee has not established whether this object is in compliance with any other law for the time being in force as are material for the purposes of achieving its objects - primary contentions of the Ld.AR was that, the assessee was granted provisional registration in Form 10AC, and therefore the assessee may be granted registration u/s. 12AB - HELD THAT:- According to Sub-section 4 and 5 of section 12AB inserted by Finance Act, 2022, with effect from 01/04/2022, Ld.PCIT/CIT may cancel the registration (after providing reasonable opportunity of being heard) if it is found that, the activities are not genuine or are not carried out in accordance with the objects of trust/institution. At this juncture, we note the fact that provisions of sub sections are applicable to the present assessee based on the date of application filed seeking registration under section 12B of the Act. Registration will also stand cancelled u/s 12AB, if the authorities notice that, the activities of the trust or institution are carried out in a manner that the provisions of section 11 and 12 do not apply due to operation of section 13(1), or, the trust or institution has not complied with the requirement of any other law for the time being in force as is material for the purpose of achieving its objects etc. In case there is a specified violation as mentioned in Explanation to sub section 4, the Registration under section 12AB would be denied or stand cancelled, as the case may be. One of the intention of Legislature to introduce sub clause (4) and (5) to the section 12AB is to address the issue related to the process of approval or cancellation or withdrawal thereof. Thus, we do not agree with the argument advanced by the Ld.AR that since provisional registration is granted to the present assessee before u/s.12AB, final registration cannot be denied. In the present facts, the assessee s objects include clause 12, which is not in consonance with the main purpose to grant exemption u/s 11(1)(a) of the Act for sale of convenience, the relevant portion are excluded as under. As noted that, the assessee was offered opportunity of being heard, is apparent from the paper book filed before us. However, nothing on record is filed, to demonstrate that, the assessee took necessary steps to amend the objects which is in contravention to section 11(1)(a) of the Act. Admittedly it is not the case that, the assessee has already applied its funds as per object clause 12 of the memorandum. By insertion of sub section 4 5 inserted by Finance Act, 2022 widened the scope of violations by including violations specified in explanation therein. This was not the legal position u/s. 12A/12AA prior to amendment. The condition to satisfy that the objects of the trust are not in violation to compliance under any other law for time being in force towards achieving the material purposes of the objects is now become necessary to be established by the assessee at the time when its application is scrutinised for converting provisional to final registration. The explanation (f) to sub clause (4) of 12AB mandates compliance with the requirement of any other law as referred to item (B) of sub-clause (i) of clause (b) to subsection (1) of 12AB. With such compliance required at the stage of registration, pertaining clause 12 in the memorandum of the assessee trust will be an hurdle to grant final registration. We therefore do not find any merit in the arguments advanced by AR and the same stands rejected based on the discussions and analysis of the relevant provisions and decisions on the issue. As a consequence, the application seeking 80G also stands rejected. Accordingly, the Grounds raised by the assessee in both appeal stands dismissed.

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• Customs

• 2025 (4) TMI 1303
  Non-compliance of the statutory requirement of pre-deposit - authority to waive or reduce the pre-deposit requirement after the 2014 amendment to section 129E of the Customs Act, 1962 - HELD THAT:- It would be seen from a bare perusal of section 129E of the Customs Act that after 6.8.2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit, unlike the situation which existed prior to the amendment made in section 129E on 06.08.2014 when the Tribunal, if it was of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship, could dispense the said deposit on such conditions as it deemed fit to impose so as to safeguard the interest of the Revenue. The Supreme Court in Narayan Chandra Ghosh vs. UCO Bank and Others [ 2011 (3) TMI 1478 - SUPREME COURT] , examined the provisions contained in section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 relating to pre deposit in order to avail the remedy of appeal. The provisions are similar to the provisions of section 129E of the Customs Act. The Supreme Court emphasised that when a Statue confers a right to appeal, conditions can be imposed for exercising of such a right and unless the condition precedent for filing appeal is fulfilled, the appeal cannot be entertained. The Supreme Court, therefore, held that deposit under the second proviso to section 18(1) of the Act, being a condition precedent for preferring an appeal, the Appellate Tribunal erred in law in entertaining the appeal. The Supreme Court also held that the Appellate Tribunal could not have granted waiver of pre-deposit beyond the provisions of the Act. It will also be appropriate to refer to a decision of the Delhi High Court in Dish TV India Limited vs. Union of India Ors. [ 2020 (8) TMI 183 - DELHI HIGH COURT] , wherein the requirement of pre-deposit under section 129E of the Customs Act, came up for consideration. The High Court held that when the Statue itself provided wavier of pre-deposit to the extent of 90% or 92.5% of the duty amount and made it mandatory to deposit 7.5% or 10% of duty amount, the Courts cannot waive this requirement of deposit. The Madhya Pradesh High Court in Ankit Mehta v/s Commissioner, CGST Indore [ 2019 (3) TMI 1342 - MADHYA PRADESH HIGH COURT] also dismissed the Writ Petition that had been filed against the order of the Tribunal dismissing the appeal for the reason that the required pre-deposit was not made. The contention that was advanced before the Tribunal and before the Madhya Pradesh High Court was that the appellant was not in a position to make the pre-deposit due to financial constraints. After examining the provisions of section 129E of the Customs Act, the Madhya Pradesh High Court observed section 129E does not empower the Tribunal or the Commissioner (Appeals) to waive the pre-deposit or to reduce the pre-deposit, this Court is also not inclined, keeping in view the aforesaid statutory provisions of law to waive or reduce the pre-deposit and, therefore, no case for interference is made out in the matter. Conclusion - The appellant has not made the pre-deposit. In view of the aforesaid decisions of the Supreme Court, the Delhi High Court and the Madhya Pradesh High Court, it is not possible to permit the appellant to maintain the appeal without making the required pre-deposit. As the mandatory statutory requirement of pre-deposit has not been satisfied by the appellant, the appeal stands dismissed.

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• 2025 (4) TMI 1295
  Classification of imported goods - Toshiba Air conditioner Outdoor unit - Toshiba Air Conditioner Indoor units - to be classified under CTH 8515 9000, thereby availing the benefit of Customs Notification No.46/2011 Sl. No. 1103(1) or under CTH 8415 8110? - HELD THAT:- After going through the orders, that the Tribunal has considered the contentions of the Revenue for denying the benefit of notification and ordering re-classification per OIO for the reasons given thereunder and it has been clearly laid down that the goods in question would fall under CTH 84159000 as parts . In view of the above and following the judicial discipline, there are no merit in the impugned order, which calls for setting aside the same. Conclusion - Indoor and outdoor units of multi-split air conditioners operating on Variable Refrigerant Flow technology, imported together as a combination, are classifiable as parts under CTH 8415 9000. Appeal allowed.

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• 2025 (4) TMI 1294
  Rectification of the mistake - typographical errors - errors occurred due to incorporation of the facts of another appeal on the similar controversy about manufacture of lithium ion battery or Power Bank and the exemption available under Notification No. 50/2017 dated 30.06.2017 Entry No. 512 - HELD THAT:- It is observed to to be an acknowledgement that the facts in the present final order are similar to the facts of some other appeal which probably would have been decided at the similar point of time. Hence the record of the orders pronounced and that of hearing got checked. It came to notice that another appeal titled as XOR Technologies LLP Vs. Principal Commissioner of Customs (Preventive), New Delhi [ 2024 (10) TMI 297 - CESTAT NEW DELHI] . It involved the same issue of benefit of Notification No. 50/2017 dated 30.06.2017 and whether the product manufactured by the appellant is Lithium Ion Battery Pack or Power Bank. Except that in present case, it is Lithium Ion Battery instead of Lithium Ion Battery Pack. The present appeal was heard on 25.06.2024 and the impugned final order is dated 18.10.2024. The perusal of final order dated 30.09.2024 in said the appeal shows that the appellant therein were also availing the benefit of Notification No. 50/2017 dated 30th June 2017 entry at Sr. No. 512 being importing raw material for manufacture of Lithium-ion battery Packs - keeping in view that the defects pointed out are nothing but the typographical errors which have occurred due to overlapping of facts of two appeals heard simultaneously with respect to the same subject matter. Conclusion - The identified errors are typographical and their rectification ordered as per the appellant s submissions and the factual matrix. With incorporations of such typographical correction in respective paragraphs of the final order, as mentioned the application seeking rectification of typographical errors in the said final order stands allowed.

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• 2025 (4) TMI 1251
  Classification of Receivers - to be classified under CTH 85177090 or CTH 85181000? - Classification and eligibility of Microphones for exemption under various notifications - Classification of Battery Cover, Back Cover, Camera Lens, and Front Cover and their eligibility for concessional duty - HELD THAT:- It is stated at the bar that identical matters have been dismissed by this Court in the case of Padget Electronics Pvt. Ltd. and M/s Samsung India Electronics Pvt. Ltd. [ 2024 (7) TMI 1220 - SC ORDER ] - Following the orders passed by this Court, these Civil Appeals also dismissed.

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• 2025 (4) TMI 1250
  Maintainability of petition - availability of alternative remedy - Validity of Provisional Attachment under section 110(5) r/w section 28BA of the customs act at a stage which is anterior to finalization of an assessment or raising of the Demand - basic order on the basis of which impugned intimation dated 03.12.2024 has been issued, not challenged - Jurisdiction to issue impugned intimation/attachment order - alternative remedy under Section 110A of Customs Act, 1962 - Colourable exercise of power by Respondents in provisionally attaching the bank accounts of the petitioners - time barred attachment order. Basic order on the basis of which impugned intimation dated 03.12.2024 has been issued, not challenged - HELD THAT:- A bare perusal of so called basic order dated 02.12.2024 would reveal that it is merely a note-sheet wherein approval has been obtained for issuing the intimation under Section 110(5) of Customs Act, 1962 and the same was not even communicated to the Petitioners for them to be able to challenge the same. Even otherwise, in the considered opinion of this court, there is no need for separate challenge to the note-sheet dated 02.12.2024 as the same stood merged with impugned intimation dated 03.12.2024. Maintainability of the petition in view of availability of alternative efficacious remedy - HELD THAT:- It has been settled by catena of decisions that the availability of alternative remedy is not an absolute bar for granting relief in the exercise of power under Article 226 of the Constitution of India as the same is a rule of convenience and self imposed restriction and there are certain exceptions to the said rule. In the case at hand, learned counsel for the petitioners has tried to persuade this court that the present petition is maintainable as the availability of alternative remedy provided under Section 110A of Customs Act is only available during the pendency of adjudication and not during the pendency of investigation - If this court comes to conclusion that the impugned intimation dated 03.12.2024 is without jurisdiction as the same has been issued during investigation and not during any proceedings which is impermissible in accordance with provisions of law, then certainly this petition would be maintainable and liable to be entertained by this court . Whether the impugned intimation/attachment order dated 03.12.2024 issued under Section 110(5) of Customs Act, 1962 has been issued without jurisdiction or not? - HELD THAT:- A bare reading of Section 28, or Section 28AAA or Section 28B would reveal that the proceedings under the said Sections would commence only after issuance of Show Cause Notice as provided under the said Sections. Furthermore, as per Circular No. 10/2008-Customs and F.No.401/7/2004-Cus.III(Pt.) dated 30.06.2008 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise Customs also, it has been specifically instructed that the proceedings for provisional attachment can be initiated only after issuance of SCN under Section 28, 28AAA or 28B of Customs Act, 1962. In the case at hand, it is an admitted fact that investigation is still pending and no show cause notice has been issued to the petitioners under the aforesaid provisions. Hence, in the considered opinion of this court, when there is no proceeding pending against the petitioners within the meaning attached to the said word under the provisions of Customs Act, 1962, Respondents had no jurisdiction/authority in law to pass an order of provisional attachment under Section 110(5) of Customs Act, 1962 pending investigation. Whether the petitioners have alternative remedy under Section 110A of Customs Act, 1962 or not? - HELD THAT:- The remedy under Section 110A is not available to the petitioners during the stage of investigation but is only available after the proceedings are initiated before the adjudicating authority. Therefore, in view of the above, this court is of the considered opinion that the present petition challenging impugned intimation is maintainable as no alternative remedy is available to the petitioners under Section 110A of Customs Act, 1962 against impugned intimation dated 03.12.2024. Colourable exercise of power by Respondents in provisionally attaching the bank accounts of the petitioners - HELD THAT:- The said question does not require consideration for the adjudication of the present petition and the same is left open in peculiar facts and circumstances of the present case. Whether the impugned attachment order is time barred? - HELD THAT:- The petitioner has neither pleaded specifically nor established as to what is the relevant date from which the limitation would start to run in terms of Section 28. Even otherwise the said question also does not warrant consideration for the adjudication of the present petition as the said limitation has been provided for initiation of proceedings under Section 28 by issuance of Show Cause Notice and in the case at hand, no proceedings have been initiated as no show cause notice has been issued to petitioners and since this court has already held that the provisional attachment during investigation is itself without jurisdiction, the said question is also left open in peculiar facts and circumstances of the present case. Ex Consequenti, impugned intimation dated 03.12.2024 issued under Section 110(5) of Customs Act, 1962 is hereby quashed for it being issued without jurisdiction and Respondents are directed to defreeze the bank accounts of the petitioners which have been provisionally attached vide impugned intimation dated 03.12.2024 with immediate effect - This court is constrained to observe that though the impugned intimation dated 03.12.2024 had been stayed by this court vide interim order dated 16.01.2025 but the Respondents have not defreezed the bank accounts of the petitioners which is a clear cut case of contempt of this court s interim order. However, since the petition is being allowed and disposed off finally, it is expected from Respondents to comply with this order immediately and any non-compliance thereof, would be viewed seriously by this court. Conclusion - i) The impugned provisional attachment order dated 03.12.2024 was issued without jurisdiction as no adjudication proceedings were pending. ii) The petitioners had no alternative remedy under Section 110A at the investigation stage; hence, the writ petition was maintainable. iii) The attachment order dated 03.12.2024 is quashed, and Respondents are directed to defreeze the petitioners bank accounts immediately. iv) The Court refrained from deciding the question of colourable exercise of power and limitation under Section 28, leaving those issues open. This petition deserves to be allowed and is hereby allowed.

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• 2025 (4) TMI 1249
  Imposition of cost of INR 50,000/- on the DRI officials - Seeking leave to produce additional documents - Jurisdiction of DRI officers had jurisdiction to issue show cause notices under the Customs Act, 1962 - HELD THAT:- For the period subsequent to the amendment, this Court in Mangali Impex Limited v. Union of India [ 2016 (5) TMI 225 - DELHI HIGH COURT ] held that even the newly inserted Section 28(11) of the Customs Act does not empower either the officers of DRI to issue the SCN for the period prior to 8th April, 2011. Since the same issue was pending before the High Court of Bombay and High Court for the State of Telangana, the matter reached the Supreme Court and the decision in Mangali Impex Limited was stayed. Having regard to the factual and procedural history outlined above, this Court is satisfied that the delay in the initiation of prosecution arose not from any wilful default or administrative indifference, but from complex legal and jurisdictional questions that were the subject of extended litigation and legislative intervention. The scope of authority exercised by DRI officers remained unsettled until clarified through multiple judgments and statutory amendments. In this background, the procedural delays, including the timing of the sanction and the belated filing of complaint, are not without explanation. However, the Department cannot be absolved of responsibility altogether - The failure to place relevant documents on record in a timely manner, has undoubtedly impeded the progress of proceedings. In this context, the imposition of costs by the Trial Court does not warrant interference. It operates as a measured judicial response to procedural lapses which, while understandable, cannot be left entirely unaddressed. While the Trial Court was correct in viewing the Department as collectively responsible for the procedural lapse, the mode of enforcing that responsibility is not be warranted. Conclusion - The imposition of costs by the Trial Court does not warrant interference. It operates as a measured judicial response to procedural lapses which, while understandable, cannot be left entirely unaddressed. The cost imposed as a measure of institutional accountability by the Trial Court, is upheld. However, the directions contained in paragraphs No. 18 to 20 of the impugned order, insofar as they mandate recovery of the said cost from specific officers or from the Principal Additional Director General, DRI, are hereby set aside - Petition allowed in part.

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• 2025 (4) TMI 1248
  Challenge to adjudication of the show cause notice as being time barred - Inordinate delay in adjudication of SCN - SCN was issued on 31.07.2013, but it was adjudicated only on 19.01.2023 after a period of about ten years - whether the department can take advantage of expression where it is possible to do so for not adjudicating the show cause notice within one year? - HELD THAT:- The Delhi High Court then relied upon an earlier decision of the Delhi High Court in Sundar System Pvt. Ltd. vs. Union of India [ 2020 (1) TMI 199 - DELHI HIGH COURT] and observed that the legislature in its wisdom has provided a specific period for the authority to discharge its functions and indifference of the concerned officer to complete the adjudication within the time period cannot be condoned to the detriment of the assessee, for such indifference is not only detrimental to the interest of the taxpayer but also to the interest of the exchequer. It would be seen from the aforesaid judgment of the Delhi High Court in Swatch Group that the High Court made it amply clear that the incorporation of words like where it is possible to do so merely give a certain degree of flexibility to the department where there are circumstances or insurmountable exigencies which make it impracticable or not possible for the authorities to adjudicate, and in such cases the authorities can deviate from the time limit provided in the Statute. The High Court further held that when the legislature has specifically provided flexibility only to the extent that it was not practicable/possible to adjudicate within the stipulated time, the period can be extended only on satisfaction of such circumstances. The Delhi High Court specifically observed that the phrase where it is possible to do so would only mean wherever it is not practicable or possible to do a certain act, the period can be extended but the same cannot provide endless time limit to the department without any plausible justification. In the present case, none of the aforesaid situations existed for extension of the time limit. It would also be useful to refer to decisions that hold that even if a time limit is not prescribed for deciding a matter, it would still have to be decided within a reasonable period of time. The factual position leaves no manner of doubt that the adjudicating authority, despite the specific mandate contained in sub-section (9) of section 28 of the Customs Act to adjudicate the show cause notice within one year, completely failed to discharge the statutory obligation cast upon it. The phrase where it is possible to do so , does give a certain degree of flexibility to the adjudicating authority when circumstances are such that make it not possible for the adjudicating authority to decide or there are insurmountable exigencies, but such exceptional circumstances or exigencies do not exist in the present case. In the present case, it is seen that there was no justifiable reason for the department to place the show cause notice in the call book and thereby delay the adjudication contrary to the specific mandate of sub-section (9) of section 28 of the Customs Act. Conclusion - i) The phrase where it is possible to do so would only mean that wherever it is not practicable or possible to do a certain act, the period can be extended. The same, however, cannot be an endless period without any plausible justification. ii) The adjudicating authority failed to discharge the statutory obligation cast upon it under section 28 (9) of the Customs Act to adjudicate the show cause notice within one year and no exceptional circumstances existed to justify the delay. The order dated 19.01.2023 passed by the Principal Commissioner adjudicating the show cause notice dated 31.07.2013 is, accordingly, set aside and the appeal is allowed.

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• 2025 (4) TMI 1247
  Entitlement for BCD exemption under the notification dated 01.03.2005, as amended by the notification dated 17.03.2012, whereby an Explanation was added - import of digital still image video cameras - interpretation of the scope of Explanation - HELD THAT:- The issue as to whether digital still image video cameras would be entitled to basic customs duty exemption under Notification dated 01.03.2005, as amended by Notification No. 15/2012 dated 17.03.2012, is the issue that was involved in Customs Appeal No. 52218 of 2019 [ 2024 (6) TMI 1422 - CESTAT NEW DELHI [LB]] and is also the issue involved in the present four Customs Appeals. Such being the position, the order dated 09.09.2024 passed in Customs Appeal No. 52218 of 2019, following the answer to the reference by the Larger Bench of the Tribunal on 14.06.2024, would govern the issue involved in all the four Customs Appeals. The digital still image video cameras involved in the present Customs Appeals would, therefore, be entitled to exemption from basic customs duty in terms of the Notification dated 01.03.2005, as amended on 17.03.2012. Conclusion - The digital still image video cameras imported by the appellants are entitled to BCD exemption under Notification No. 25/2005-Cus dated 01.03.2005, as amended by Notification No. 15/2012 dated 17.03.2012. The order dated 28.10.2016 impugned in all the present four Customs Appeals deserves to be set aside and is set aside - Appeal allowed.

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• Corporate Laws

• 2025 (4) TMI 1293
  Rejection of the plaint filed by the appellant - decree of permanent injunction from transferring any tenancy right in favour of any new tenant in respect of the property described in Schedule- A of the plaint - Company and its Directors have been mismanaging the assets of the Company - locus standi and a cause of action to seek a declaration of shareholding and related rights without having the transfer of shares recorded under Section 56 of the Companies Act, 2013 - misjoinder of causes of action - HELD THAT:- As rightly enumerated in the impugned judgment and deemed decree, the plaintiff does not disclose clearly in the plaint as to how he became such partial owner of the property - Thus, there is a palpable non-disclosure of the right of the plaintiff to the suit property, which forms an essential component of the bundle of facts which comprise of the cause of action for the suit. For a plaintiff to claim a remedy in a suit, the plaintiff has to essentially disclose a legal right to the subject property as well as an infringement of such right, both of which ingredients are absent from the plaint inasmuch as the immovable property is concerned, which is the only subject-matter of the suit as mentioned in the plaint schedule - the learned trial Judge also proceeded on the premise that if the plaintiff has an axe to grind regarding the alleged mismanagement of the affairs of the Company by inducting third party-tenants, the appropriate remedy would be under Section 241 of the 2013 Act. The reliance of the plaintiff/appellant on the Division Bench judgment of this Court in the matter of Eastern Indian Motion Picture Association [ 2024 (2) TMI 775 - CALCUTTA HIGH COURT ] by the appellant is also misplaced, since in paragraph no.21 thereof, the coordinate Bench categorically observed that it did not find it necessary to go into the issue whether the dispute therein was covered by Section 241 of the 2013 Act. Thus, the said judgment cannot be said to be a binding precedent on the applicability of Section 241 in the facts of the present case - That apart, the said judgment was rendered in the particular factual matrix of the said case, which are not applicable to the present case. There are no reason to interfere with the impugned judgment and deemed decree, both on the basis of the observations arrived at by the learned trial Judge and the additional reasons supplied - it is not inclined to interfere in the present appeal. Conclusion - The suit is not maintainable due to lack of cause of action, misjoinder of causes of action, and bar under the Companies Act and procedural law. Appeal dismissed.

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• Insolvency & Bankruptcy

• 2025 (4) TMI 1292
  Challenge to order admitting Section 95 application filed by the State Bank of India against the Personal Guarantor - Submission is that since the Resolution Plan has changed the quantum of debt, the proceedings under Section 95 ought not to have proceeded with - HELD THAT:- There can be no dispute that Resolution Plan is binding on all including the Financial Creditor. Clause 1.8 F as has been relied by the Counsel for the Appellant only provide that the financial creditors shall have the right to recover any unrecovered financial debt owed by the company to them by recourse to the personal guarantees. Thus, in event under the Resolution Plan any amount is recovered by the financial creditor allowance of the said amount has to be given while preparing a repayment plan with regard to personal guarantors insolvency. Conclusion - There is no error in the initiation of the CIRP against the personal guarantor i.e. Appellant herein and the submission which has been raised by the Appellant regarding the recovery of certain amount by the financial creditor under the Resolution Plan is a question that need to be addressed by the Resolution Plan at the time of finalizing the repayment plan against the personal guarantor. Appeal dismissed.

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• 2025 (4) TMI 1246
  Maintainability of objection to execution of the arbitral award referrable to Section 47 of the Civil Procedure Code, 1908 (CPC) - arbitral award was a nullity and hence non-executable? - Facilitation Council lost its jurisdiction to proceed and pronounce the arbitral award in view of the insolvency resolution plan of the petitioner which was duly approved under Section 31 of the IBC. HELD THAT:- As an independent arbitration agreement existed between the parties, Facilitation Council should not proceed under Section 18(3) of the MSME Act. Already arbitration process was going on as per the arbitration agreement. Facilitation Council in its proceedings dated 31.07.2017 noted that it appeared from newspaper reports and order copy of the NCLT that moratorium was declared under Section 14 of IBC in the matter of State Bank of India Vs. Electrosteel Steels Ltd. It was decided that the matter should be kept in abeyance till the moratorium period was over. The resolution plan was submitted by Vedanta Ltd. as resolution applicant and is dated 29.03.2018. Clause 3 contained the mandatory contents of the resolution plan. Clause 3.2(v) declared that while the liquidation value of the corporate debtor was Rs. 2,899.98 crores, the admitted debts of the financial creditors aggregated to approximately Rs.13,395.25 crores. The liquidation value was not sufficient to cover the debts of the financial creditors in full. Therefore, the liquidation value of the operational creditors or the other creditors or stakeholders of the corporate debtor including dues of the employees (other than workmen), government dues, taxes etc. and other creditors and stakeholders was nil. As such, they would not be entitled to any payment. The dissenting financial creditors would be entitled to receive 21.65 percent of the value of their admitted debt which would be paid in priority to any payment to the assenting financial creditors. On 16.05.2018, Facilitation Council noted that the moratorium period of the corporate insolvency resolution process had expired. The buyer did not appear in the conciliation process as well as in the arbitration proceeding. Thereafter, the Facilitation Council passed the award dated 06.07.2018 holding that claim of the respondent was genuine. The buyer unit was liable to pay the outstanding amount of Rs. 1,59,09,214.33 with interest at the rate of 3 times of the prevailing bank rate. Since the appellant did not file any application under Section 34 of the 1996 Act, the Executing Court dismissed the application of the appellant dated 14.05.2019 observing that the appellant was trying to deprive the decree holder of the fruits of the award by unnecessarily delaying the execution - High Court concluded that the plea of nullity qua an arbitral award can be raised in a proceeding under Section 47 CPC but such a challenge would lie within a very narrow compass. High Court rejected the contention of the appellant that since the award suffered from patent or inherent lack of jurisdiction, objection to the award can be taken at the stage of execution without challenging the award under Section 34 of the 1996 Act. While rejecting the said contention, High Court held that the arbitral proceedings culminating in the award cannot be said to be suffering from inherent lack of jurisdiction. After observing that the respondent was not included in the top 30 operational creditors whose claims were settled at nil, High Court held that the Facilitation Council had the jurisdiction to proceed and pronounce the award even after approval of the resolution plan. The arbitral proceedings were initiated prior to the resolution insolvency date, suspended during the moratorium period and resumed upon expiry of the moratorium period. High Court further observed that the approved resolution plan did not determine the claim of the respondent as nil and that the proceedings before the Facilitation Council was taken note of in the resolution plan - High Court is correct in answering the first issue that a plea of nullity qua an arbitral award can be raised in a proceeding under Section 47 CPC but such a challenge would lie within a very narrow compass. Objection to execution of an award under Section 47 CPC is not dependent or contingent upon filing a petition under Section 34 of the 1996 Act. High Court was not justified in taking the view that since the appellant did not file a petition under Section 34 of the 1996 Act, therefore, it was precluded from filing an application before the Executing Court to declare the award as void and hence nonexecutable. The view taken by the High Court that notwithstanding approval of the resolution plan by the NCLT, the Facilitation Council did not lose jurisdiction to proceed and pronounce the arbitral award, is erroneous and contrary to the law laid down by this Court. Conclusion - There are no hesitation to hold that upon approval of the resolution plan by the NCLT, the claim of the respondent being outside the purview of the resolution plan stood extinguished. Therefore, the award dated 06.07.2018 is incapable of being executed. Appeal allowed.

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• Service Tax

• 2025 (4) TMI 1291
  Classification of services - works contract services or erection, commissioning and installation services? - exemption from payment of service tax for the services rendered to Government authorities such as CPWD - principles of natural justice was not followed either by the adjudicating authority or the appellate authority - HELD THAT:- It is seen that the appellant has not submitted any documents/ records to substantiate their claims before the original adjudicating authority or the Commissioner (Appeals). In fact, one of the grounds of appeal is that the principles of natural justice was not followed either by the adjudicating authority or the appellate authority. Further, the appellant has disputed the computation of service tax liability for the Financial Years 2009-10, 2010-11, 2011-12 and 2013-14. Copies of the Balance Sheets, Challans evidencing payment of service tax etc., has been submitted with the present appeal. The adjudicating authority or the Commissioner (Appeals) were not given the opportunity to examine the said documents and appreciate the submissions of the appellant. Conclusion - The matter requires to be remanded to the original authority for adjudication. The appellant will be given the opportunity to submit all relevant records and documents to substantiate his claims. The adjudicating authority may finalise the case expeditiously. The appeal is allowed by way of remand.

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• 2025 (4) TMI 1290
  Denial of the appellant s claim for interest on delayed refund - Section 11BB of the Central Excise Act, 1944 - HELD THAT:- An assessee is entitled to litigate for securing its legitimate interests and the fact that the assessee has so litigated cannot per se be held against the assessee, or be a ground, to deny it s just dues. As per Section 11BB of the Central Excise Act, 1944, the relevant date for payment of interest hinges only on the date of receipt of the application and if the duty is not refunded within a period of three months from the date of receipt of the application, then the applicant shall be paid interest at the specified rates fixed by the Central Government, on expiry of a period of three months from the date of receipt of the application. The issue is no more res-integra and it is worthwhile to reproduce what the Honourable Supreme Court has held on this aspect in its Judgement dated 21-10-2011, more than a decade ago, in Ranbaxy Laboratories Ltd v. Union of India, [ 2011 (10) TMI 16 - SUPREME COURT] . The Honourable Apex Court, after referring to the relevant provisions of Section 11B of the Act dealing with claims for refund of duty as well as Section 11BB pertaining to interest on delayed refunds, went on to hold that the only interpretation of Section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under sub-section (1) of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11BB of the Act becomes payable. The finding in the impugned OIA by the appellate authority that the appellant s claim for payment if interest is not justified, is decidedly untenable and is liable to be set aside Conclusion - The appellant is entitled to interest on delayed refund under Section 11BB of the Central Excise Act, 1944, from the expiry of three months from the date of receipt of the refund claim. Appeal allowed.

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• 2025 (4) TMI 1289
  Short payment of service tax - liability of a cable operator for service tax under the Finance Act, 1994 - invocation of extended period of limitation - recovery of service tax with interest and penalty - HELD THAT:- The Chandigarh Bench has in the order relied upon in the case of Alpha Cable Network held that extended period could not have been invoked. As facts of the present case are exactly identical to the case of Alpha Cable Network or that decided by the Chandigarh Bench, there are no merits in the impugned order to the effect it upheld the demand for extended period of limitation. The demand should be restricted to normal period of limitation. Thus the matter needs to be remanded to the Original Authority for determination of the quantum of taxes for normal period. There are no merit in the submissions to the effect that Cenvat credit in respect of these documents should be allowed for computation of the demand. However in the remand proceedings while working out the demand for normal period Adjudicating Authority should take into consideration if any document against which the credit has been claimed was within the period as prescribed by proviso to Rule 4(7) of the Cenvat Credit Rules, 2004 as amended from time to time. Conclusion - The local cable operators are independently liable for service tax, cannot avoid liability by pointing to MSO s tax payment, are entitled to threshold exemption if conditions are met, must comply with registration and return filing requirements to claim CENVAT credit, and that limitation periods and penalties must be applied consistent with statutory provisions and judicial precedents. Matter remanded to the Original Authority for computation of the demand for the normal period of limitation - appeal allowed in part by way of remand.

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• Central Excise

• 2025 (4) TMI 1288
  Inadmissible CENVAT Credit - short payment of service tax on the commission received in advance - taxability - debit card income - Banking and financial services rendered in Jammu and Kashmir - renting of immovable property. HELD THAT:- It appears that the Tribunal looked into the issue as regards the CENVAT credit in detail - there is no discussion as regards the other four issues which were raised by the Revenue. All that has been stated as regards those four issues is that they are covered by case laws. To a certain extent, the learned counsel appearing for the Revenue is right that although there is a finding recorded with regard to the CENVAT credit, yet there is no discussion at the end of the Tribunal with regard to the four issues. It is submitted that let this order be set aside and the matter be remanded to the Tribunal for fresh consideration so far as the untouched four issues are concerned - thus, instead of remanding the matter, liberty should be granted to the Revenue to prefer an appropriate application before the Tribunal saying that these four issues have not been discussed in the impugned order and some finding needs to be given, one way or the other. Appeal disposed off.

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• 2025 (4) TMI 1287
  Rejection of refund claim filed under transitory provision contained in Section 142(3) of the CGST Act, 2017 - rejection on the ground that refund application was barred by limitation since not filed within one year from the relevant date as per provision contained in Section 11B(1) of the Central Excise Act and refund was not allowed on cesses under the said provision of Central Excise Act - HELD THAT:- When the notification that excludes cesses from the expression eligible duties and taxes from the definition has not been notified to make it enforceable and Section 140 of the CGST Act providing transitional arrangement for input tax credit namely CENVAT Credit to be carried-forward to Electronic Credit Ledger for its utilisation opting to pay tax can get the same back in cash if it failed to utilise the same, refund of the said CENVAT Credit that includes education cess and secondary higher education cesses is permissible under Section 142(3) of the CGST Act, which this Tribunal is competent to enforce in view of the decision of the Larger Bench passed in the case of Bosch Electrical Drive India Pvt. Ltd. [ 2023 (12) TMI 1145 - CESTAT CHENNAI-LB ]. Conclusion - Refund of accumulated credit on education cess and secondary higher education cess is permissible under Section 142(3) of the CGST Act since Explanation 3 to Section 140, which excludes such cesses, has not been notified and is therefore not enforceable. The order passed by the Commissioner of Central Tax (Appeals-I), Pune refusing cash refund on education cess and secondary higher education cesses is hereby set aside - Appeal allowed.

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• 2025 (4) TMI 1286
  Entitlement for refund claim - amount inadvertently paid towards National Calamity Contingent Duty (NCCD) by utilisation of CENVAT credit of basic excise duty, the utilisation of which stood expressly prohibited by virtue of amendment Notification 13/2016 CE/NT dated 01.03.2016 - bar of time limitation u/s 11B of the Central Excise Act, 1944 - principles of unjust enrichment. Time limitation - HELD THAT:- The period of dispute is March 2016 to June 2017. The Show cause notice proposing to recover the NCCD is issued on 04.04.2018, in response to which the appellant remitted the payments on 13.06.2018 and 14.06.2018. Vide the letter dated 10.07.2018, the appellant filed Form-R seeking refund of the debit made erroneously towards NCCD, for the period March 2016 to June 2017. From the above, it is clear that the said application for refund is made after the expiry of one year from the relevant date and therefore going by the land mark judgement of the Constitution Bench of Hon ble Apex Court in the case of Mafatlal Industries Ltd. Vs Union of India [ 1996 (12) TMI 50 - SUPREME COURT ] , any application for refund which could only be under Section 11B, has to be filed within the timeframe provided under the said section, which is not the case here and hence, the rejection of refund as barred by limitation, cannot be found fault with. Principles of unjust enrichment - HELD THAT:- The Original Authority has tabulated the sample invoices which reflects the passing on of the duty (NCCD) on their customers, which only reflects that the appellant had, in fact, collected the same from their customers in cash. This fact is based on the analysis of invoices issued and the appellant has not disputed these facts - The appellant s claim that passing on the duty burden was irrelevant is rejected. Conclusion - i) The refund claim is barred by limitation under Section 11B as it was filed beyond the prescribed one-year period. ii) The appellant is not entitled to refund as it had passed on the burden of NCCD to its customers, resulting in unjust enrichment if refund was allowed. Appeal dismissed.

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• 2025 (4) TMI 1285
  Availment of input service credit on outward freight from factory to sales outlets - Input Credit availed by the Appellant on sales commission paid to the franchisee for marketing and selling the products manufactured by the appellants is allowable or not - eligibility to avail input service credit on service tax on rent paid for the Retail outlets. Whether the assessee is eligible to avail input service credit on outward freight from factory to sales outlets? - HELD THAT:- The rent for the franchisee showroom is borne by the Appellant and sales tax in respect of the goods stock transferred to the outlet is suffered by the Appellant as per Clause 7 of the Franchisee agreement. Further we find that as per clause 9 of the said agreement, the appellant bears the cost of transportation of stock transferred to the franchisee outlet and for the unsold stock transferred back to the Appellant by the Franchisee. Besides, as per Clause 10 of the agreement, the insurance coverage for showroom stock is taken by the Appellant. It is also found that the definition of place of removal contained in Section 4(3)(c) of Central Excise Act, 1944 includes the premises of a consignment agent or any other place from where the excisable goods are sold. Under the above circumstances, the Franchisee showroom is the place of removal and therefore the credit availed on outward GTA services for movement of goods from the appellant s unit to Franchisee premises on stock transfer basis is eligible as it is for transportation of goods up to the place of removal. Reference made to the decision of the CESTAT New Delhi in the case of Cantabil Retail India Ltd, Rajesh Rohilla, Ani Bansal, Director Vs. Commissioner of Central Excise, Delhi-I [ 2017 (9) TMI 205 - CESTAT NEW DELHI] wherein it was held The Revenue presumed that the services should be in or in relation to manufacture of ready-made garments, whereas Rule 2(l) clearly talks about services used by manufacturers, whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products up to the place of removal. A plain reading of the said statutory provision will indicate that the presumption of the Revenue is not sustainable. The Appellant is entitled to avail the Cenvat credit of transportation paid on goods stock transferred to the franchisee outlets. Whether the input credit availed on sales commission paid to franchisees for marketing and selling the appellant s products is allowable? - HELD THAT:- The inclusive part of the provisions of Rule 2(l) of Cenvat Credit Rules, 2004 provides for availment of Cenvat credit on sales commission paid to franchisees. The appellant had incurred expenses/paid commission to the franchisees for display of the products and effecting the sale of goods which was attributable to the promotion of sales of the said goods. The CBEC Circular No. 943/04/2011 clarified that the credit would be admissible on the services of sale of dutiable goods on commission basis. The Ld. Counsel placed reliance on the decision of the Tribunal in the case of M/s. Ultratech Cement Ltd. Versus CCE, Jodhpur [ 2017 (12) TMI 882 - CESTAT NEW DELHI] wherein the Tribunal relying on the above said circular had held that there was no bar on availment of Cenvat credit on sales promotion service by way of sale of dutiable goods on commission basis - the Appellant is eligible for Input Credit availed on sales commission paid to the franchisees. Whether the Appellant is eligible to avail input service credit on service tax on rent paid for the Retail outlets? - HELD THAT:- It is not disputed that the goods manufactured were transferred from the factory premises to the franchisee showroom, from where the goods were sold to eventual customers. The issue is no more res integra as there is a catena of judgements delivered by various forums which is applicable to the present appeal. The Tribunal in the case of Commissioner of C.EX., Delhi-III Vs. Mark Exhaust Systems Ltd. [ 2015 (9) TMI 1472 - CESTAT NEW DELHI] , on a similar issue held Since the duty paid vehicles were removed to the depot, from where the same were sold to the customers, such activity squarely falls under the definition of input service under the category of storage up to the place of removal , itemised therein. In the above referred cases, the Tribunal has allowed the services availed for the Go-down/Depot by holding that the services have nexus with the ultimate manufacturer of final product - Thus, the Cenvat Credit on rent paid on immovable property in respect of retail outlets is eligible for Cenvat Credit. Conclusion - i) Cenvat Credit on outward transportation upto the place of removal is allowed and the place of removal is determined to be the sales outlets (franchisees stores). ii) Cenvat Credit on Sales commission paid to the franchisees is allowed. iii) Cenvat credit availed on commercial rent paid for retail outlets/ show rooms is allowed. Appeal allowed.

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• CST, VAT & Sales Tax

• 2025 (4) TMI 1284
  Classifiation of goods - revision in the rate of tax - liquid carbon dioxide - taxable at 5% or 14.5%? - to be classified within Entry-100 (190) in Schedule-IV of the VAT Act or under Entry 100(190)? - time limitation for passing revisional order - revision order was passed after about six years from the date of service of the assessment order. Time limitation for passing revisional order - HELD THAT:- In S. Kasi vs. State through the Inspector of Police, Samaynallur Police Station, Madurai District [ 2020 (6) TMI 727 - SUPREME COURT] , the petitioner had sought statutory bail, available under Section 167 (2) of the Code of Criminal Procedure, on the ground that the charge sheet, in his case, had not been filed within 60 days of his incarceration or of his being placed in judicial custody. The State contended that the period stipulated under Section 167 (2) Cr.P.C., would stand extended by virtue of the judgment of the Hon ble Supreme Court dated 23.03.2020. The Hon ble Supreme Court, after going through the order passed by the Hon ble Supreme Court in IN RE : COGNIZANCE FOR EXTENSION OF LIMITATION [ 2020 (5) TMI 418 - SC ORDER] held that To obviate the difficulties and to ensure that lawyers/litigants do not have to come physically to file such proceedings in respective Courts/Tribunals across the country including this Court, it is hereby ordered that a period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court in present proceedings. In view of the observations of the Hon ble Supreme Court in S. Kasi vs. State through the Inspector of Police, Samaynallur Police Station, Madurai District, which was followed by the Hon ble High Court of Calcutta and High Court of Delhi, it must be held that the extension of time granted by the Hon ble Supreme Court in the order dated 23.03.2020 and order dated 10.01.2022 would only extend limitation to litigants, who are seeking to approach the appropriate Courts and tribunals and such extension of limitation is not available to an authority acting under any statute. In the circumstances, the order of revision is beyond the period available under Section 32 of the VAT Act and is consequently non est. Classification of goods - HELD THAT:- What is required to be seen is whether carbon dioxide, whether in liquid form or in gaseous form, would fall under Heading No.2811. As submitted by the learned counsel for the petitioner, the description of goods in Entry 100(190) of Schedule-IV is other inorganic acids and other inorganic oxygen compounds of non-metals and carbon dioxide definitely would fall within such a category. The fact that there are other products mentioned under the main Heading No.2811 would not mean that carbon dioxide does not fall within Heading No.2811. In any event, Heading No.2811 21 specifically mentions carbon dioxide, it may however be noted that there is no qualification that carbon dioxide should be in a gaseous form. In the absence of any such qualification, carbon dioxide in gaseous form or liquid form, would fall under HSN Heading No.2811 and also in Entry No.100(190) of Schedule-IV of the VAT Act. Conclusion - i) The order of revision is beyond the period available under Section 32 of the VAT Act and is consequently non est. ii) Carbon dioxide in gaseous form or liquid form, would fall under HSN Heading No.2811 and also in Entry No.100(190) of Schedule-IV of the VAT Act. The order of revision requires to be set aside and is accordingly set aside - Petition allowed.

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• Indian Laws

• 2025 (4) TMI 1245
  Maintainability of second complaint - sanction required in view of amended Section 19 and newly inserted Section 17-A of the PC Act - applicability of Aiyappa s [ 2013 (10) TMI 1428 - SUPREME COURT ] judgment - HELD THAT:- As for maintaining judicial discipline a coordinate bench of this Court has refrained from proceeding further in deciding the underlying issue Whether the bar of Section 19 of the PC Act would be applicable on exercise of power under Section 156 (3) of CrPC., which is under reference to a larger bench, it is deemed appropriate to tag these petitions with the referred matter Manju Surana vs. Sunil Arora Ors. [ 2018 (3) TMI 1434 - SUPREME COURT ]. The registry is directed to place these matters before the Hon ble Chief Justice of India for appropriate orders.

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• 2025 (4) TMI 1244
  Appointment of arbitrator - service of notice invoking arbitration under Section 21 of the Arbitration and Conciliation Act, 1996 on a person and joinder of such person in the application under Section 11 - prerequisites for an arbitral tribunal to exercise jurisdiction - source of jurisdiction of an arbitral tribunal over a person/entity - relevant inquiry that the arbitral tribunal must undertake when determining its own jurisdiction under Section 16 of the ACA. HELD THAT:- Section 21 notice was undisputedly issued by the appellant under Clause 40 of the LLP Agreement on 17.11.2020; but the problem arises because this notice was issued only to respondent no. 1. However, there is nothing in the wording of the provision or the scheme of the ACA to indicate that merely because such notice was not served on respondent nos. 2 and 3, they cannot be impleaded as parties to the arbitral proceedings. The relevant considerations for joining them as parties to the arbitration will be discussed at a later stage. It is important to note this Court s decision in State of Goa v. Praveen Enterprises [ 2011 (7) TMI 1313 - SUPREME COURT ] wherein it was held that the claims and disputes raised in the notice under Section 21 do not restrict and limit the claims that can be raised before the arbitral tribunal. The consequence of not raising a claim in the notice is only that the limitation period for such claim that is raised before the arbitral tribunal for the first time will be calculated differently vis-a-vis claims raised in the notice. However, noninclusion of certain disputes in the Section 21 notice does not preclude a claimant from raising them during the arbitration, as long as they are covered under the arbitration agreement. Further, merely because a respondent did not issue a notice raising counter-claims, he is not precluded from raising the same before the arbitral tribunal, as long as such counter-claims fall within the scope of the arbitration agreement. Considering the purpose of a Section 11 application for constitution of an arbitral tribunal and the limited scope of examination into the existence of the arbitration agreement and prima facie finding on who are parties to it, it follows that the court under Section 11 does not conclusively determine or rule on who can be made party to the arbitral proceedings. Therefore, merely because respondent nos. 2 and 3 were not parties before the High Court under Section 11, and disputes against them were not referred to the arbitrator by order dated 24.11.2021, it does not mean that they cannot be impleaded at a later stage on this ground alone. The arbitral tribunal in this case did not delve into the issue of whether respondent nos. 2 and 3 are parties to the arbitration agreement and consequently, whether they can be impleaded in the arbitral proceedings. It is also undisputed that these respondents are not signatories to the LLP Agreement that contains the arbitration agreement in Clause 40. In this light, we are required to examine whether respondent nos. 2 and 3 are parties to the arbitration agreement. In view of the fact that respondent nos. 2 and 3 have, through their conduct, consented to perform contractual obligations under the LLP Agreement, it is clear that they have also agreed to be bound by the arbitration agreement contained in Clause 40 therein. Since they are parties to the underlying contract and the arbitration agreement, the arbitral tribunal has the power to implead them as parties to the arbitration proceedings while exercising its jurisdiction under Section 16 of the ACA and as per the kompetenz-kompetenz principle. Conclusion - i) Service of Section 21 notice and joinder in Section 11 application are not absolute prerequisites for impleading a party or for the arbitral tribunal to exercise jurisdiction. ii) The arbitral tribunal s jurisdiction is derived from consent under the arbitration agreement, and the tribunal must determine party status under Section 16. iii) Respondent nos. 2 and 3, though non-signatories, are parties to the arbitration agreement by virtue of their conduct and relationship, and can be impleaded as parties to the arbitration proceedings. Appeal allowed.

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• 2025 (4) TMI 1243
  Grant of Regular bail - recovery of substantial quantity of narcotics drugs - Applicant has sought bail on the grounds that he has been falsely implicated - HELD THAT:- In the present case, the accused Azeem is the real brother of Shahid Ahmad @ Qazi Wadood, who allegedly sent contra-band to India. NCB/Prosecution has solely relied on the bank transaction between accused Azeem and Razi Haider Zaidi i.e. Rs. 36,500/- on 16.06.2019 Rs. 35,000/- on 22.06.2019 and Rs. 11,500/- on 16.03.2022 to cite the involvement and role of the accused in the alleged conspiracy. Prima facie there is nothing on record to show that the money received by the Applicant on 16.03.2022 was tainted and proximate to the seizure of Heroine seized from Razi Haider 27.04.2022. Further, there is financial transaction of accused Azeem with the wife of co-accused Deepak Khurana of Rs. 6 lakh which is explained as payment for purchase of a Honda City car. Therefore, the character of these transactions and its connection with conspiracy of drug trafficking, is a matter to be proved at stage of Trial. As per the record, the petitioner has been in custody since 05.05.2022, and charges are yet to be framed in the matter. It is evident that trial will take a long time to conclude. There is no likelihood of the Applicant fleeing from justice, as he has his business in India. Further, the Chargesheet stands filed and no purpose would be served in keeping the Applicant under custody. It is opposite to refer to the decision of the Apex Court in Union of India v. K.A. Najeeb (2021) 3 SCC 713 wherein it was observed that courts are obligated to release the undertrial prisoners on bail if there is a delay in trial. Further, it was observed that statutory restrictions do not exclude the discretion of Constitutional Courts to grant bail on the grounds of violation of Fundamental Rights enshrined in Part III of the Constitution of India. In the recent decision of Manish Sisodia v. Central Bureau of Investigation, [ 2023 (11) TMI 63 - SUPREME COURT ], the Apex Court reiterated that that right of liberty guaranteed under Article 21 of the Constitution of India is a sacrosanct right which needs to be accepted even in cases where stringent provisions are incorporated through special laws. It was held that prolonged incarceration before being pronounced guilty of an offence, should not be permitted to become punishment without trial. It was further observed that fundamental right of liberty provided under Article 21 of the Constitution is superior to statutory restrictions and reiterated the principle that bail is the rule and refusal is an exception . Conclusion - The applicant is admitted to regular bail, subject to fulfilment of conditions imposed. Bail application allowed.

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