TMI Tax Updates - e-Newsletter
April 28, 2025

Case Laws in this Newsletter:

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

TMI Short Notes

1. "Curbing aggressive tax avoidance strategies" under the General Anti-Avoidance Rule (GAAR) : Clause 179 of the Income Tax Bill, 2025 Vs. Section 96 of the Income-tax Act, 1961

  Bills:

2. Countering the tax avoidance through codification of the General Anti-Avoidance Rule (GAAR) : Clause 178 of the Income Tax bill, 2025 Vs. Section 95 of the Income Tax Act, 1961

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3. limitation on Debt interest deduction as expenses in cross-border transactions : Clause 177 of Income Tax Bill, 2025 Vs. Section 94B of Income-tax Act, 1961

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4. Comprehensive framework for dealing with transactions with any notified jurisdictional areas : Clause 176 of the Income Tax Bill, 2025 Vs. Section 94A of the Income Tax Act, 1961

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5. Anti-Avoidance Provisions in Securities Transactions : Clause 175 of the Income Tax Bill, 2025 Vs. Section 94 of the Income-tax Act, 1961

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Articles

1. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

2. Form 8 and Form 11: LLP Annual Return Filing

   By: Ishita Ramani

3. SMUGGLING OF FOREIGN MADE CIGARETTES IN THE GUISE OF IMPORTING ELECTRONIC GOODS AND COMPUTER PARTS

   By: DR.MARIAPPAN GOVINDARAJAN

4. Clarifying the GST Landscape on Vouchers: Andhra Pradesh Issues Pivotal Circular

   By: YAGAY andSUN

5. Retrospective Extension of ITC Availment Period: A Progressive Ruling by Sikkim High Court

   By: YAGAY andSUN

6. Mandatory Compliance of Complete E-Way Bill Under GST: A Judicial Reiteration by Allahabad High Court

   By: YAGAY andSUN

7. Misleading Advertisements in India: A Legal and Ethical Overview

   By: YAGAY andSUN

8. 📊 Comparative Analysis: Indian vs. International Credit Rating Agencies

   By: YAGAY andSUN

9. 🌍 International Credit Rating Agencies

   By: YAGAY andSUN

10. India’s Credit Rating Agencies

   By: YAGAY andSUN

11. India China Trade - 100 Billion Dollars India's Trade Deficit: Wake up India and Indians - Stop importing unwarranted, needless goods from China. Ministry of Commerce & Industry, DGFT, Ministry of Revenue need to take appropriate actions.

   By: YAGAY andSUN

News

1. Continuous dialogue, communication between India and US over bilateral trade agreement: MoS Jitin Prasada

2. CBI arrests two accused including an IRS Officer and a private person on allegations of involvement in sabotaging the Faceless Scheme of Income Tax Assessment

3. CBI arrests two accused including an IRS Officer and a private person on allegations of involvement in sabotaging the Faceless Scheme of Income Tax Assessment.

4. National Industrial Corridor Development Corporation (NICDC) honoured with Udyog Vikas Award

5. Higher taxes on millionaires? Trump says he's open, but many in his party are not

6. Direct tax mop up for 2024-25 fiscal misses target owing to higher refunds

7. Direct tax mop up for 2024-25 fiscal hits target; record refunds issued: Data

Notifications

Customs

1. 29/2025 - dated 24-4-2025 - Cus (NT)

Central Board of Indirect Taxes and Customs, appoints the Commissioner of Customs Adjudication), Mumbai

Money Laundering

2. G.S.R. 261(E) - dated 25-4-2025 - PMLA

Amendment in Notification No. G.S.R. 381(E), dated the 27th June, 2006

Circulars / Instructions / Orders

Customs

1. Instruction No. 05/2025 - dated 25-4-2025

Requirement of CITES Export permit or CITES Reexport certificate for agarwood products

Highlights / Catch Notes

GST

• GST Appellate Tribunal Procedure Rules 2025 Streamline Dispute Resolution with Electronic Filing and Clear Judicial Protocols

  Notifications : The GSTAT Procedure Rules, 2025 comprehensively regulate the procedural framework for the Goods and Services Tax Appellate Tribunal, establishing comprehensive guidelines for filing appeals, conducting hearings, maintaining records, and managing tribunal proceedings. Key provisions include electronic filing mechanisms, detailed procedural requirements for appeals, standards for document submission, rules governing authorized representatives, and protocols for case disposal. The rules emphasize transparency, efficiency, and structured judicial processes, providing a systematic approach to resolving GST-related disputes through a specialized appellate mechanism with clearly defined operational parameters.
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• Taxpayer Challenge Rejected: Rule 86A(1)(a) Upholds ITC Blocking with Procedural Safeguards for Administrative Review

  Case-Laws - HC : HC upheld the blocking of Input Tax Credit (ITC) under Rule 86A(1)(a) of Bihar GST Rules, 2017, finding sufficient material justifying the interim measure. The court confirmed the administrative order's validity while preserving the taxpayer's procedural remedy to challenge the ITC blockage. The respondent was directed to expeditiously consider and pass a reasoned order if the petitioner submits a request, ensuring principles of natural justice are maintained during the administrative process. Application disposed of with procedural guidance for potential future challenges.
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• Tax Refund Challenge Rejected: Petitioner Must First Exhaust Statutory Appeals Under Section 107 of CGST Act

  Case-Laws - HC : HC dismissed the writ petition challenging tax refund rejection, holding that the petitioner must first exhaust statutory appellate remedies under Section 107 of CGST Act before seeking judicial intervention. The court found the challenge premature, as the underlying adjudication order comprehensively addressed factual issues. The petitioner was directed to pursue the prescribed administrative appeal mechanism, thereby maintaining procedural propriety and preventing premature judicial interference in tax dispute resolution.
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• GST Assessment Order Valid: Statutory Time Limit Extended Through Government Notifications for Fiscal Year 2017-18

  Case-Laws - HC : HC held that the assessment order dated 13.12.2023 was not time-barred due to successive government notifications extending the statutory time limit for GST assessment proceedings for FY 2017-18. Specifically, notifications dated 21.07.2022 and 24.04.2023 extended the time limit to 31.12.2023, rendering the impugned order legally valid. Since the order was passed within the extended timeline and the notifications were not challenged, the writ petition was deemed non-maintainable, with the statutory remedy of appeal being the appropriate recourse. Consequently, the HC dismissed the petition.
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• Goods Seized After Supplier Proves Non-Existent, GST Proceedings Upheld Under Section 130 with Full Legal Validity

  Case-Laws - HC : HC dismissed the petition challenging GST proceedings involving goods transportation. The court found that the supplier (M/s. Sunrise Enterprise) was a non-existent entity, and the petitioner obtained goods with a bill from an invalid supplier. Based on physical verification confirming the supplier's non-existence, the court upheld the confiscation of goods under Section 130 of the GST Act. Neither the goods supplier nor the truck owner attempted to secure release, leading to the petition's rejection and maintaining the original GST authority's order.
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Income Tax

• Tax Proceedings Halted: Systemic Errors Expose Administrative Lapses, Mandate Judicial Oversight for Fair Assessment

  Case-Laws - HC : HC found systemic administrative deficiencies in tax proceedings where petitioner's adjournment request was not properly recorded due to software synchronization issues. The court identified twin factors of portal technical errors and human negligence. Recognizing the constitutional mandate of tax collection, HC directed mandatory involvement of CIT(Judicial) as a nodal officer in future tax petitions. The court quashed penalty and demand orders dated 21.12.2021 that were passed despite existing stay orders, emphasizing the need for a just and humane tax administration system that balances departmental responsibilities with assessee rights.
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• Legal Challenge Resolved: Section 153C(1) Limitation Period Starts from Document Collection Date, Not Search Date

  Case-Laws - HC : HC held that for calculating the 6-year limitation period under Section 153C(1), the relevant date is 30.06.2022, when documents were collected from the petitioner, not the search date of 10.11.2020. The show cause notice dated 30.12.2024 is within limitation. The petitioner retains the right to respond to the notice and contest proceedings. Despite a prior settlement, the Department retains liberty to pursue further action if new materials emerge. The writ petitions were consequently dismissed, finding no merit in the petitioner's limitation arguments.
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• Investment vs. Loan Dispute: ITAT Partially Allows Appeal, Deletes Interest Expense Disallowance and Directs Specific Tax Treatment

  Case-Laws - AT : ITAT partially allowed the appeal, holding that the transaction with Kamineni Health Care Pvt. Ltd. was an investment, not a loan, thereby deleting the disallowance of interest expenses. For the loan to United Steel Allied Ind Private Limited, the Tribunal upheld the CIT(A)'s view, directing the AO to levy interest for the actual loan period. The Tribunal found the assessee failed to substantiate claims of commercial exigency or business connection between the companies, thus treating the advances as loans under section 36(1)(iii) of the Income Tax Act. The appeal was consequently partly allowed with specific directions to the Assessing Officer.
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• Legal Win: Tax Deduction Claim Transparently Made Before Amendment Leads to Penalty Reversal Under Section 270A Decision

  Case-Laws - AT : ITAT held that penalty u/s 270A is unsustainable where deduction claim was made transparently based on existing legal interpretation prior to retrospective amendment. The assessee voluntarily surrendered the claim upon becoming aware of amendment and fully disclosed facts during assessment proceedings. No allegation of concealment or suppression existed. Relying on judicial precedent, the tribunal concluded that bona fide interpretation of law, even if subsequently found incorrect, does not attract penalty. The assessee's appeal was allowed, restricting penalty imposition.
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• Tax Deduction Triumph: Appellate Authority Validates Interest Income Inclusion and Retroactive Claim Under Sections 40(a)(ia), 80IB/80IA

  Case-Laws - AT : ITAT allowed the assessee's appeal on two key grounds: (1) No disallowance under Section 40(a)(ia) was warranted since the payee offered the interest income to tax in their return, consistent with Supreme Court precedent; (2) Deduction under Section 80IB/80IA was permissible despite not being initially claimed in the original return, with the appellate authority empowered to consider such claims. The tribunal set aside the lower authority's order and directed the Assessing Officer to delete the addition and allow the deduction, effectively providing relief to the assessee on both disputed issues.
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• Distributors' Commissions and CSR Donations Upheld: Tax Tribunal Provides Clarity on Deduction Principles and Transfer Pricing Adjustments

  Case-Laws - AT : ITAT adjudicated multiple taxation issues: (1) Rejected transfer pricing adjustment on commission paid to local distributors, finding it not an AMP expense and consistent with prior assessment years. Tribunal set aside TPO/AO/DRP order and deleted the adjustment. (2) Allowed deduction under Section 80G for CSR contributions, holding that Explanation 2 to Section 37 cannot deny deductions for donations made by charitable trusts registered under 80G. (3) Remanded the 80G deduction claim back to AO for verification, directing assessee to submit donation receipts and substantiate eligibility conditions. The ITAT's rulings emphasized procedural fairness and consistent interpretation of tax provisions.
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• Taxpayer Wins Partial Relief in Transfer Pricing Dispute, Securing Arm's-Length Deductions and Preventing Double Taxation

  Case-Laws - AT : ITAT partially allowed assessee's appeal, affirming arm's-length royalty payments and consultancy service expenses based on consistent prior year rulings. The tribunal directed deletion of transfer pricing adjustments related to expatriate costs and reimbursements. Regarding income tax liability provision, the tribunal accepted the assessee's contention that reversal of previously disallowed provision should not result in double taxation, allowing the ground subject to AO's verification. The decision upholds procedural fairness and prevents duplicative tax treatment of contingent liabilities.
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• Technical Services Fees Under Section 9(1)(vii) Deemed Non-Taxable as Department Fails to Prove 'Make Available' Condition

  Case-Laws - AT : ITAT adjudicated a tax dispute concerning technical services fees under Section 9(1)(vii) of the Income Tax Act and India-Netherlands Tax Treaty. The tribunal determined that the Department failed to establish the "make available" condition for Fees for Technical Services (FTS) across multiple service categories including recruitment, external information, corporate travel, health ecotox, and IT services. Consequently, the tribunal ruled that these services do not qualify as FTS under the India-Netherlands tax treaty, effectively finding in favor of the taxpayer by negating the tax liability for the specified technical service fees.
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• Hydraulic System Replacement of Second-Hand Imported Machine Classified as Capital Expenditure Qualifying for Depreciation

  Case-Laws - AT : ITAT adjudicated expenditure classification for machinery hydraulic system replacement. The tribunal determined that replacement of hydraulic system with electrical control panel for a second-hand imported machine constitutes capital expenditure rather than revenue expenditure. Despite partial machine component replacement, the tribunal concluded the expenditure provides enduring benefit and enhances machine functionality. The expenditure was deemed capital in nature, rendering the assessee eligible for depreciation under applicable statutory provisions. The tribunal relied on precedential interpretation and upheld the capital expenditure classification, effectively deciding against the assessee's revenue expenditure claim.
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• Charitable Trust Wins Appeal: ITAT Allows Reconsideration of 12AB Registration for Dharmshala Operations

  Case-Laws - AT : ITAT allowed the assessee trust's appeal for statistical purposes, remanding the matter back to CIT(E) for reconsideration of 12AB registration. The tribunal found that operating a Dharmshala since 1962 should not automatically disqualify the trust from charitable status. The appellant was granted an opportunity to contest the original rejection of registration by presenting additional evidence and arguments regarding the nature of its activities, with the tribunal recognizing that running a Dharmshala does not inherently constitute commercial activity.
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• Tribunal Resolves Multiple Tax Challenges, Provides Nuanced Guidance on Depreciation, Expenses, and Income Calculations

  Case-Laws - AT : The ITAT addressed multiple taxation issues for the assessee across assessment years. Key outcomes include: directing deletion of depreciation disallowance related to demerger, allowing software expenses as revenue expenditure, permitting travel expenses for foreign executives, restricting section 14A disallowance to 2% of dividend income, and restoring certain issues to the Assessing Officer for fresh examination. The Tribunal consistently followed precedent decisions from earlier years, modifying the CIT(A)'s order on several grounds and providing specific directions for computational adjustments in various tax-related matters.
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• Surface Rights Valuation: Tribunal Allows Partial Amortization While Rejecting Free Share Depreciation Claims

  Case-Laws - AT : ITAT adjudicated a tax dispute involving surface rights and intangible asset depreciation claims. The tribunal partially allowed the assessee's appeal, permitting amortization of surface rights based on evidence that the mining rights acquisition did not confer tangible benefits to the transferor entity. Regarding depreciation on equity shares issued free of cost, the tribunal rejected the claim, finding no demonstrable business advantage or documentary proof of technical support. The tribunal sustained lower authorities' orders, dismissing the assessee's claim for depreciation on the purported intangible asset. The decision emphasized the necessity of substantive evidence to support tax deduction claims related to business rights and asset acquisitions.
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• Judicial Scrutiny Highlights Systemic Delays in Appeals, Urges NFAC to Proactively Streamline Administrative Bottlenecks and Enhance Efficiency

  Case-Laws - HC : The HC addressed systemic delays in appeals at the National Faceless Appeal Centre (NFAC), acknowledging the significant backlog of pending statutory appeals. While recognizing the need for expeditious resolution, the court refrained from issuing specific directives. The HC expressed confidence that NFAC would implement internal remedial measures to accelerate appeal disposals. Ultimately, the petition was disposed of without mandating explicit procedural interventions, leaving NFAC to independently address its administrative challenges and reduce pendency through its own strategic mechanisms.
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Customs

• Customs Transshipment Regulations Updated: No More Fees for Importers Under Regulation 5 Amendments

  Notifications : The CBIC issued Notification No. 30/2025-Customs (N.T.) amending the Goods Imported (Conditions of Transshipment) Regulations, 1995. The amendment modifies Regulation 5 to eliminate fees for transshipment applications across all customs stations. Enacted under sections 157, 54(3), and 158 of the Customs Act, 1962, the regulation becomes effective upon official gazette publication. The amendment simplifies administrative procedures by removing transshipment application fees, potentially reducing financial barriers for importers and facilitating smoother goods movement through customs stations.
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• Customs Circular Cuts Red Tape: Free ULD Movement, Zero Transshipment Fees, Enhanced Air Cargo Logistics Efficiency

  Circulars : The CBIC issued Circular No. 15/2025-Customs to simplify air cargo movement and transhipment procedures. Key modifications include eliminating the Rs. 20 transshipment permit fee and harmonizing Unit Load Device (ULD) movement regulations. Carriers can now temporarily import ULDs outside customs areas by executing a "Continuity Bond" with specific requirements for tracking devices. The circular aims to enhance trade facilitation, reduce compliance burdens, and streamline customs protocols for air cargo transportation. Tracking devices must comply with aviation security guidelines, and carriers bear responsibility for proving ULD export within specified timeframes. The directive supports the government's objective of improving infrastructure and making customs processes more user-friendly.
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• Contract Labour Ban at Central Warehousing Corporation Upheld: Perennial Work Deemed Essential for Full-Time Employment

  Case-Laws - HC : HC upheld the Ministry of Labour and Employment's notification prohibiting contract labour at Central Warehousing Corporation's Inland Clearance Depot. The court found the work was perennial, necessary for the enterprise, and sufficiently substantial to employ full-time workers. The CACLB's analysis demonstrated proper application of mind under Section 10(2) of the Customs Act, 1962. Specifically, the consistent deployment of approximately 300 contractual labourers over 18 years and similar work performed by regular employees at comparable establishments substantiated the prohibition. The impugned notification was consequently validated, and the petition was disposed of.
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• Authorized Sea Agent Must Release Goods and Waive Detention Charges as Per Regulation 10(1)(l) Without Additional Penalties

  Case-Laws - HC : HC ruled that the delivery agent (Respondent No. 4), registered as an Authorized Sea Agent, is bound by the waiver letter issued by Respondent No. 2. Under Regulations, 2018, the agent cannot demand container detention charges when customs verifies entries and finds them correct. The court directed Respondent No. 4 to release the goods and implement the waiver for detention charges from 24.12.2024 to 10.01.2025, as per Regulation 10(1)(l). The petitioner is exempted from paying detention charges, and the petition was disposed of accordingly.
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• Policy Circular 06/2018 Challenge Rejected: Premature Intervention Blocked, Legal Recourse Remains Open for Future Action

  Case-Laws - HC : HC dismissed the petition challenging Policy Circular No. 06/2018 and subsequent Show Cause Notice as premature. The court held that the Show Cause Notice was a consequential proceeding related to an original order by DGFT, and therefore, premature judicial intervention was unwarranted. No interim relief was granted, and the petition was dismissed in limine, leaving the petitioner free to challenge the original DGFT order through appropriate legal channels.
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• Gold Seizure Invalidated: Customs Department Fails to Prove Smuggling Claims Under Section 110

  Case-Laws - AT : CESTAT examined the seizure of 3998.83 grams of gold from two individuals traveling by bus, determining the legality of the customs action. The tribunal found the department failed to establish reasonable belief for seizure under Section 110 of Customs Act, 1962. Critical procedural deficiencies were identified, including non-compliance with Section 138B and lack of concrete evidence proving smuggling. The absence of foreign markings on gold and failure to substantiate smuggling claims led the tribunal to conclude that the seizure was unsustainable. The burden of proof under Section 123 was not effectively discharged by the revenue authorities. Consequently, the tribunal allowed the appeal, quashing the seizure and potential penalties.
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• Silicon Steel Scraps Classified as Waste, Importer Wins Appeal Against Revenue's Reclassification Attempt Under CTH 7204 49 00

  Case-Laws - AT : CESTAT allowed the appeal, holding that silicon steel scraps were correctly classifiable under CTH 7204 49 00 as waste and scrap. The tribunal rejected the revenue's alternative classification under CTH 7225 19 00, finding no basis for value redetermination from $400 to $650 per MT. The court determined that no misdeclaration occurred, BIS certification was inapplicable, and Para 2.17 of Foreign Trade Policy did not apply. Consequently, the goods were not liable for confiscation, and no penalties could be imposed. The impugned orders were set aside, vindicating the importer's original classification and transaction value.
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IBC

• Liquidator Wins Right to Disclaim Unprofitable Leave and License Agreement Under Regulation 10 Liquidation Rules

  Case-Laws - AT : NCLAT addressed a dispute regarding an onerous Leave and License Agreement under Regulation 10 of Liquidation Regulations. The Tribunal unanimously held that the transaction dated 07.06.2019 was unprofitable and burdensome, qualifying as an onerous property. Both Technical and Judicial Members concurred that the liquidator could disclaim the contract. The Tribunal definitively ruled that Regulation 10 is not ultra vires to the Insolvency and Bankruptcy Code, as it was validly enacted under Section 35(1)(o). Consequently, the NCLAT dismissed the appeal, upholding the adjudicating authority's original order and confirming the liquidator's power to disclaim the onerous property.
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• Corporate Directors Illegally Withdraw Funds During Insolvency Moratorium, Ordered to Repay Full Amount with Interest

  Case-Laws - AT : NCLAT affirmed the lower tribunal's order regarding unauthorized withdrawal of Rs. 32 lakhs from corporate debtor's account during moratorium period under Section 14 of IBC. The appellants demonstrated persistent non-cooperation and brazen disobedience of prior orders. The tribunal held that the withdrawal violated IBC provisions, rendering the suspended directors liable to deposit the entire amount with 12% per annum interest into the liquidation estate. The appeal was summarily dismissed as lacking substantive legal merit, with the order becoming final due to non-challenge of previous judicial determinations.
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• Corporate Debtor's Appeal Rejected: Liquidated Damages Deductions Upheld Based on Original Contract Terms and Purchase Order Provisions

  Case-Laws - AT : NCLAT dismissed the appeal challenging liquidated damages deduction from corporate debtor's invoices. The Appellate Tribunal held that liquidated damages deducted during contract performance per purchase order terms remain valid, and the approved resolution plan does not retrospectively invalidate such deductions. The tribunal affirmed the Adjudicating Authority's decision, emphasizing that contract terms prevail and no refund is mandated for damages legitimately assessed during contract execution, even after corporate insolvency resolution process initiation.
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• Real Estate Developer's Insolvency Petition Upheld: Section 7 IBC Claim Validated, Homebuyers Recognized as Financial Creditors

  Case-Laws - AT : NCLAT addressed a Section 7 IBC petition involving a real estate developer's insolvency proceedings. The Appellate Tribunal held that the petition was not time-barred due to continuing default and debt acknowledgment. Homebuyers were deemed valid financial creditors, satisfying the statutory threshold for initiating Corporate Insolvency Resolution Process (CIRP). The tribunal rejected allegations of fraudulent intent, finding no substantial evidence to support such claims. The Corporate Debtor's objections regarding limitation, threshold, and malicious intent were comprehensively dismissed. The appeal was ultimately rejected, confirming the Adjudicating Authority's order to admit the insolvency petition and commence resolution proceedings against the developer.
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• Operational Creditor's Section 9 Petition Dismissed for Fabricated Documentation and Ulterior Motives of Personal Dispute

  Case-Laws - AT : NCLAT dismissed the appeal, rejecting the operational creditor's Section 9 application for initiating corporate insolvency resolution process. The tribunal found significant irregularities in the documentation, including potential forgery of signatures and evidence of personal matrimonial disputes masquerading as legitimate operational debt claims. The court determined the petition was filed with ulterior motives, not genuine commercial grievances, and upheld the adjudicating authority's decision. The tribunal imposed a cost of Rs. 10 lakhs on the petitioner for filing a frivolous petition, emphasizing the need to prevent misuse of insolvency proceedings for settling personal disputes.
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• Resolution Applicant Loses Appeal as Performance Bank Guarantee Invoked for Failure to Implement Approved Insolvency Plan

  Case-Laws - AT : NCLAT upheld the Committee of Creditors' (CoC) invocation of Performance Bank Guarantee (PBG) against the Successful Resolution Applicant (SRA) for failure to implement the approved Resolution Plan. The Appellate Tribunal found the PBG invocation valid under the Process Memorandum, rejected SRA's arguments about equity infusion, and determined that non-disclosure of Transaction Audit Report did not vitiate the Resolution Plan. The Tribunal directed refund of Rs. 22.09 crores to SRA from the fixed deposit after paying Rs. 20.9 crores to Interim Trade Creditors, denied SRA's 12% interest claim, and dismissed the Bank of Baroda's compensation application. The appeal was disposed of with the Resolution Plan implementation deemed unsustainable by the SRA.
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• Corporate Debt Challenge: Operational Creditor's Claim Dismissed for Falling Below Statutory Minimum Threshold of Rs 1 Crore

  Case-Laws - AT : NCLAT held that the operational creditor's Section 9 application was not maintainable due to failure to meet the statutory threshold limit of Rs 1 crore. The tribunal found prima facie evidence of suppressed payments and manipulated ledger accounts. By factoring in subsequent payments made by the corporate debtor after the critical date, the outstanding debt fell below the prescribed minimum limit. The appellate tribunal determined that the adjudicating authority was misled into initiating corporate insolvency resolution process (CIRP) ex parte. Consequently, the appeal was admitted, and the CIRP triggering was deemed unwarranted, effectively setting aside the earlier order.
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• Workers' Salary Claim of Rs.185,62,360 Validated by NCLAT Under Insolvency Resolution Process

  Case-Laws - AT : NCLAT affirmed the Resolution Professional's calculation of worker's salary claim at Rs.185,62,360/- for layoff period. The tribunal determined that the Resolution Professional correctly admitted the claim without challenging its quantum. The Adjudicating Authority explicitly noted that determining workers' entitlements under Industrial Dispute Act falls outside its jurisdictional scope. Consequently, no procedural errors were found in the original order, and the appeal was summarily dismissed, upholding the initial claim calculation and maintaining the Resolution Professional's original determination.
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Indian Laws

• Luxury Goods Over 10 Lakh Now Subject to 1% Tax Collection at Source Under Section 206C(1F)

  News : CBDT Notification No. 36/2025 expands tax collection at source (TCS) provisions under section 206C(1F) of Income Tax Act, 1961, introducing TCS on luxury goods exceeding ten lakh rupees. The notification identifies ten categories of luxury items including wrist watches, art pieces, collectibles, watercraft, sunglasses, bags, shoes, sportswear, home theatre systems, and racing/polo horses. TCS will be levied on sale of individual items meeting the specified value threshold, effective from 22.04.2025. The amendment broadens the existing motor vehicle TCS provision to encompass a wider range of high-value luxury goods, aiming to capture additional tax revenue from premium consumer transactions.
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• Customs Eases Air Cargo Logistics with New Transhipment Rules, Simplifying ULD Import and Reducing Operational Barriers

  News : CBIC implemented significant trade facilitation measures for air cargo and transhipment, effective 24th April 2025. Key changes include waiving transhipment permit fees, introducing simplified procedures for temporary import of Unit Load Devices (ULDs) outside Customs Area, and enabling an All-India National Transhipment Bond at air cargo complexes. Air carriers/console agents can now temporarily import ULDs by executing a Continuity Bond, shifting re-export responsibility from individual importers. These regulatory modifications aim to streamline customs protocols, reduce logistical complexities, and enhance operational efficiency in air cargo and transhipment movements, aligning with international best practices and supporting ease of doing business.
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• Government Achieves Direct Tax Collection Target, Hits Rs 22.26 Lakh Crore with Record Refunds and Steady Growth

  News : Direct tax collection for 2024-25 fiscal narrowly achieved target, reaching Rs 22.26 lakh crore with 13.57% growth. Despite issuing record refunds of Rs 4,76,743 crore (26.04% increase), net collections were 100.78% of initial budget target. Corporate tax net collection grew 8.30% to Rs 9,86,719 crore, while non-corporate tax net collection increased 17% to Rs 11,82,875 crore. Tax buoyancy factor improved marginally from 1.54 to 1.57, indicating stable revenue performance relative to GDP growth. Provisional figures suggest potential minor adjustments may occur during final reconciliation.
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• L&T Loses Arbitration Appeal: Development Agreement Upheld Despite Supplementary Agreement Failure Under Sections 34 and 37

  Case-Laws - SC : SC affirmed the arbitral award, holding that the Development Agreement remained binding after the Supplementary Agreement failed to meet its conditions precedent. The court found L&T committed fundamental breaches by abandoning the project, failing to pay External Development Charges, and not fulfilling contractual obligations. The termination by PCL was justified. The court emphasized its limited powers under Sections 34 and 37 of the Arbitration Act, confirming it cannot modify arbitral awards but only set aside or remand under specific circumstances. The appeal was dismissed, upholding the original arbitral tribunal's findings of coercion and breach of contract by L&T.
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• Partners of Unregistered Firm Blocked from Monetary Recovery Suit Under Section 69(1) of Partnership Act

  Case-Laws - SC : SC upheld the jurisdictional bar under Section 69(1) of the Indian Partnership Act, 1932, rendering the suit by partners of an unregistered partnership firm for money recovery non-maintainable. The Court conclusively determined that since the partnership firm was unregistered, the plaintiffs were legally precluded from filing a suit against another partner for monetary recovery. The High Court's order was affirmed, and the Special Leave Petition was dismissed, establishing that an unregistered partnership firm cannot pursue such legal proceedings without first registering the partnership.
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SEBI

• SEBI Revamps REIT Regulations: Stronger Governance, Enhanced Transparency, and Expanded Investment Scope for 2025

  Notifications : The SEBI (Real Estate Investment Trusts) (Amendment) Regulations, 2025 introduces comprehensive amendments to the existing REIT regulations, focusing on enhancing governance, disclosure, and operational transparency. Key modifications include: Key Amendments: - Expanded definition of "common infrastructure" - Enhanced trustee responsibilities with detailed oversight mechanisms - New investment conditions for REITs, including provisions for infrastructure assets - Stricter disclosure requirements in Key Information Statement (KIS) and Key Information Trust (KIT) - Modifications in unit transfer, leverage, and investment strategies - Comprehensive guidelines for Small and Medium (SM) REIT schemes Procedural Changes: - Introduced detailed regulatory compliance mechanisms - Specified new reporting and documentation requirements - Established more rigorous asset management and valuation protocols Effective Date: The regulations come into force upon publication in the Official Gazette, with certain provisions having specific implementation timelines.
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Service Tax

• Municipal Corporation's Service Tax Challenge Rejected: Individual Cases Scrutinized, Procedural Flaws Noted for Reconsideration

  Case-Laws - HC : HC dismissed the writ petition challenging service tax adjudication against municipal corporation services. Despite arguments regarding exemption under Notification No. 25/2012-ST, the court found the petitioners' request for a common adjudicator as an afterthought. The original adjudication orders were set aside for procedural irregularities and remanded for fresh consideration, while maintaining the individual nature of each petitioner's case. The court emphasized that the KMC's exemption claim remains subject to detailed scrutiny and has not been automatically accepted.
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• Amway Distributor Faces Service Tax on Group Sales Commission Under Business Auxiliary Service Provisions

  Case-Laws - AT : CESTAT held that an Amway distributor is liable for service tax on commission received from sales group performance, categorizing it as Business Auxiliary Service. The tribunal upheld service tax demand while granting cum-duty benefits and rejecting extended limitation period of 5 years. The court recognized the distributor's lack of intentional tax evasion and set aside penalties under Sections 78 and 77. The appeal was partially allowed, modifying the original order to reflect these nuanced determinations regarding service tax liability and procedural considerations.
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• Business Correspondent Wins Service Tax Dispute, Exempted for Rural Banking Services Under Entry 29(g) with Reduced Penalties

  Case-Laws - AT : CESTAT adjudicated a service tax dispute involving a business correspondent's tax liability. The tribunal held that the appellant was eligible for exemption under entry 29(g) for services provided to rural banking branches during 01.04.2015 to 30.06.2017. No short payment of service tax was found for services to Rajcomp Info Services Ltd. The extended period of limitation was deemed non-invocable, and most penalties were set aside, with only a Rs.10,000 penalty under Section 77(2) upheld for non-filing of service tax returns. The tribunal effectively reduced the original tax demand, finding the appellant's actions were in good faith and not intentionally evasive.
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Case Laws:

• GST

• 2025 (4) TMI 1467
  Blocking of ITC in terms of Rule 86A (1) (a) of the Bihar Goods Service Tax Rules, 2017 - mandatory requirement of recording reasons to believe before blocking the ITC under Rule 86A - Principles of natural justice - HELD THAT:- The respondent no. 3 had before him sufficient materials to satisfy himself with regard to necessity of passing an order under Rule 86-A (1) of the CGST/BGST Rules of 2017. There is no illegality or infirmity may be found with the impugned order (Annexure P/2 ) which is in the nature of an interim measure taken by respondent no. 3. The respondent no. 4 has acted on the basis of Annexure P/2 , however, the order, if any of respondent no. 4 is not under challenge specifically. The petitioner has a remedy available against the blocking of ITC. If so advised, the petitioner may avail it s remedy in terms of paragraph 3.4 of the guidelines. If any such request is made by the petitioner, the respondent no. 4 shall consider the same as expeditiously as possible and pass a reasoned order after hearing the petitioner/its authorized representative. Application disposed off.

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• 2025 (4) TMI 1466
  Seeking grant of regular bail - offence under Sections 132(1)(b), 132(1)(c), 132(1)(i) of Central Goods and Services Tax Act, 2017 - availing ineligible Input Tax Credit on the basis of invoices issued by non-existent firms, and without receipt of concomitant goods the fake Input Tax Credit was further passed on to various buyers - Admissibility of Applicant s Statement under Section 70 CGST Act - HELD THAT:- This Court finds that the prosecution case is primarily based upon the documentary evidence relating to alleged involvement of M/s Aadya Trading Company in availing ineligible Input Tax Credit and further passing it on to three other beneficiary firms noticed above. During the course of hearing, it is fairly stated by learned Counsel that as per records of M/s. Aadya Trading Company, Ghanshyam Aggarwal is the proprietor of the said firm, but according to him, the applicant is the person who is actually managing the affairs of the said firm. Learned counsel for the opposite party has also not disputed this fact that the applicant is at least not involved in creation of the alleged 21 non-existent firms, which were utilized for availment and further passing on ineligible Input Tax Credit. As far as the statement of applicant recorded under Section 70 CGST Act 2017, is concerned, its admissibility or evidentiary value would be tested during trial. A perusal of the zimni orders passed by the trial court would show that after filing of the charge-sheet in January, 2025, the case is being adjourned for recording pre-charge evidence and no witness has been examined so far by the prosecution. Thus, it is evident that the trial has not yet started. 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 applicant behind the bars would not serve any useful purpose, who has already spent more than five months in judicial custody since his arrest on 19.11.2024. 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 five months undergone by the applicant as an undertrial, this Court deems it appropriate to extend the concession of regular bail to the applicant. It is ordered that the applicant- Ankur Garg be released on regular - Bail application allowed.

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• 2025 (4) TMI 1465
  Demand in respect of late fee and wrongful availment of input tax or short payment of tax - rejection of refund claim on the ground of being time barred - HELD THAT:- In the impugned order dated 7th January, 2025, the reply and the written submissions of the Petitioner have been considered. A perusal of the adjudication order would show that there is a detailed adjudication of various factual issues. At this stage, a writ petition would not be entertainable. The Petitioner ought to avail of the appellate remedy under Section 107 of the CGST Act in accordance with law. Petition disposed off.

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• 2025 (4) TMI 1464
  Principles of natural justice - challenge to ex-parte order - contention of the petitioner s counsel was that order is time barred - HELD THAT:- Though by virtue of the Central Board of Direct taxes and Customs Notification dated 03.02.2018 the date for filing annual return for the financial year 2017-18 which would normally be 31.12.2018 stood extended till 05.02.2020 and based on the said notification the period of three years mentioned in Sub-section 10 of Section 73 would end on 05.02.2023, meaning thereby, an order under Sub-Section 9 of Section 73 could have been passed by 05.02.2023 for the financial year 2017-18, however, in view of the Notification dated 21.07.2022 which came into effect from 01.03.2020 the said time limit specified under Sub-section 10 of Section 73 for issuance of order under Sub-section 9 of Section 73 of the U.P. GST Act, 2017, for recovery of taxes not paid or short paid or of input tax credit wrongly availed or utilized, in respect of a tax period for the financial year 2017-18, stood excluded up to the 30th day of September, 2023 and by the subsequent notification of the State Government dated 24.04.2023 which has been given effect from 31.03.2023 the said time limit stood extended till 31.12.2023 for the financial year 2017-18. In the case at hand, the impugned order has been passed on 13.12.2023, therefore, it has been passed within the time limit as extended by the Notifications referred hereinabove. The said notifications are not under challenge. Conclusion - The impugned order of assessment dated 13.12.2023 is not barred by time, therefore, the writ petition is not maintainable as remedy of appeal is prescribed against such an order. Petition dismissed.

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• 2025 (4) TMI 1463
  Challenge to SCN - jurisdiction of appellate authority to entertain the appeal - prayer for provisional release of the goods and conveyance - HELD THAT:- On perusal of the impugned show-cause notice passed in GST MOV-10 and order passed in FORM GST MOV-11 prima facie, it appears that the supplier of the petitioner-M/s. Sunrise Enterprise is a non-existent entity. However, neither the supplier of the goods to the petitioner nor the transporter, who is owner of the truck in question have made an attempt for release of the goods or conveyance. On perusal of the impugned order passed in FORM GST MOV-11, it appears that the petitioner has purchased the goods from some other person and obtained the bill in name of M/s. Sunrise Enterprise who is a non-existent entity. On perusal of the details provided in FORM GST MOV-11, it also appears that the said M/s. Sunrise Enterprise was found to be a non-existent on physical verification carried out by respondent No. 4 at Surat and therefore, the goods purchased by the petitioners are liable to be confiscated under the provision of section 130 of the GST Act. No interference is made in the impugned order to challenge the impugned show-cause notice dated 11.11.2024 in FORM GST MOV-10 as well as order in FORM GST MOV-11 passed by respondent No. 4 - Petition dismissed.

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• Income Tax

• 2025 (4) TMI 1462
  Revision u/s 263 - addition on account of sale of fly ash and cenosphere - Assessee claimed that it had not earned any income as it had deposited the entire sale proceeds of fly ash, which was received from NTPC in a fly ash utilization fund and had also furnished the same - HELD THAT:- There is no question of the Assessee having earned any income. The fly ash did not belong to the Assessee, but to its holding company NTPC. The Assessee had only sold the fly ash and utilized part of the funds as mandated and made over the balance funds to NTPC. No infirmity with the decision of the ITAT that the Assessee had not earned any income on account of sale of fly ash, which was provided by NTPC. In New Horizon Sugar Mills Pvt. Ltd [ 1998 (4) TMI 41 - MADRAS HIGH COURT] Madras High Court had upheld the decision of the learned ITAT holding that the amount set apart towards Molasses Storage Reserve Fund is required to be excluded from the total income of the assessee. The said decision was rendered bearing in mind the Molasses Control (Amendment) Order dated 06.02.1972, which required that the amount for construction of molasses storage tank was to be kept separately. The assessee had no power to spend the said amount, the same was required to be spent only in accordance with the directions issued by the Government. The appeal preferred against the said order was also dismissed by the Supreme Court, in view of the orders passed in similar matter permitting the Revenue to withdraw the appeals. As Assessee was not free to utilize the sale proceeds of fly ash as the same was required to be used for specified purposes, which as stated above, did not result in the Assessee acquiring any asset. No substantial questions of law.

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• 2025 (4) TMI 1461
  Reopening of assessment u/s 147 - Reopening on a protective basis - as alleged that the Petitioner assessee has received cash for assessment year 2010-11 based on the findings recorded in the assessment order for assessment year 2011-12 - HELD THAT:- The issue of addition on the basis of the allegation of cash received was not the subject matter of inquiry during the course of the assessment proceedings u/s 143 (3). The case is reopened based on the findings for assessment year 2011-12, wherein the officer has worked out the addition on account of cash received for various years, but has added the full amount in assessment year 2011-12, even though certain agreements for sale pertained to assessment year 2010-11. Since the amount was already added in assessment year 2011-12 on a substantive basis and certain transactions pertain to assessment year 2010-11, the AO on a protective basis has reopened the case for assessment year 2010-11. The jurisdiction to reopen the case has to be examined based on the facts prevailing on the date of recording the reasons, and on the date of recording the reasons the order of the CIT(A) for assessment year 2011-12 was not in existence and therefore the argument made by Petitioner, that since the CIT (Appeal) s order for the assessment year 2011-12 was available on the date of rejecting the objection, the AO ought to have consider it is to be rejected. In any case the CIT(Appeal) s order was not final and was subject matter of appeal before the Tribunal, and therefore even on this ground the submission made by the Petitioner has to be rejected. No infirmity in the proposed reopening of the case, since the issue of the alleged cash received was not the subject matter of investigation during the course of the original assessment proceedings, and the reopening is made within a period of four years from the end of the relevant assessment year and that constitutes sufficient material based on the findings and reasons given in assessment year 2011-12 and further the proposed proceedings are taken only on protective basis. Hon ble Supreme Court in the case of NDTV Ltd. [ 2020 (4) TMI 133 - SUPREME COURT] has held that reassessment proceedings can be initiated based on findings in subsequent assessment years order. In our view, the ratio of this decision is squarely applicable to the facts of the present.

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• 2025 (4) TMI 1460
  Delays in disposal of the appeals by the National Faceless Appeal Centre [NFAC] - HELD THAT:- This court by an order dated 24.02.2025 had observed that it was cognizant of the large number of statutory appeals which are pending disposal before NFAC and had also expressed concern regarding the delay in disposal of the same. The court further observed that NFAC would endeavour to implement remedial measures in all earnest. Undoubtedly, there are large number of appeals which are pending adjudication before NFAC. It is necessary for the NFAC to take remedial steps for early disposal of the appeals. Nonetheless, we do not consider it apposite to issue any further directions in this regard. The petition is disposed of.

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• 2025 (4) TMI 1459
  Fees for technical services as defined u/s 9(1)(vii) or Fees for Included Services as covered under Article 12 (4) (a) of the DTAA - payments received by the Assessee on account of providing certain centralised services including marketing services and reservation services - HELD THAT:- Admittedly, the said issue is covered in favour of the Assessee and against the Revenue by several decisions of this court including Sheraton International Inc. [ 2009 (1) TMI 27 - DELHI HIGH COURT] Sheraton International LLC. [ 2023 (5) TMI 1435 - DELHI HIGH COURT] Westin Hotel Management LP [ 2024 (4) TMI 1250 - DELHI HIGH COURT] and Shangri-La International Hotel Management Pte Ltd. [ 2023 (9) TMI 1683 - DELHI HIGH COURT] In the case of Radisson Hotel International Incorporated [ 2022 (11) TMI 641 - DELHI HIGH COURT] this court had referred to the earlier decisions and dismissed the case holding that no substantial questions of law arise for consideration by this court. The present appeal must bear the same fate.

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• 2025 (4) TMI 1458
  Addition u/s 68 - bogus purchases - Whether ITAT erred in upholding addition of entire amount of the alleged bogus purchases to the income of the Appellant, instead of only gross profit margin embedded in the purchases? - HELD THAT:- Assessee s appeal was rejected by the CIT(A) on the basis that the additions were made by the AO u/s 68. Assessment order does not mention that the additions have been made under the said Section. Respondent also earnestly contended that the AO had not made additions under Section 68 of the Act. It is material to note that this was one of the contentions advanced by the Assessee before the learned ITAT but the same was not considered. Further as noted above, it was Assessee s case that since its sales as recorded in the books of accounts was accepted, some allowance was necessary to be made on account of purchases even if the AO was of the view that the suppliers in question had not supplied goods. Plainly, this contention was neither examined by the learned CIT(A) nor learned ITAT. We set aside the impugned order and remand the matter to ITAT to consider afresh. ITAT will examine whether the additions were made under Section 68 of the Act as held by the CIT(A) and if so whether the same are sustainable. ITAT shall also consider the question whether any allowance is required to be made for purchases in the event it is held that the sundry creditors as reflected by the Assessee in the books, had not supplied the goods on credit.

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• 2025 (4) TMI 1457
  Denial of principles of natural justice by passing the final assessment order without granting or rejecting the petitioner s request for adjournment and opportunity to respond to the show cause notice - HELD THAT:- As relevant extract from the affidavit of Shri Sanjeev Jain, Principal CIT(OSD)(EXEMPTION) shows as relevant point of time when the Petitioner had made application dated 02.03,2021 for adjournment, the entries of adjournment in the hearing module were not synchronized in Case History Noting/ order sheet, on account of gap in software development due to which the said adjournment request made by the petitioner did not reflect in the Case History Noting / order sheet. As humbly say and submit that such shortcoming in software came to be noticed subsequently and accordingly in the year 2023, the software was updated so that adjournment entries in the hearing module get synchronized in Case History Noting /order sheet module. Department had taken us through the files, which inter alia, contained questionnaires to the concerned officers and their written responses to their respective Superiors. From the same, it is apparent that the failure of the administration rested on the twin factors: issues with the portal and human error. This Court deems it appropriate not to venture in the area of errors and the degrees of negligence in the performance of duties by the concerned officers. It is up to the Department to deal with the same on the administrative side. As far as issues with the portal are concerned, we find that these portals have become silent stakeholders in the Justice Delivery System. On the last hearing, we were pleased to note that there is an acknowledgment on behalf of the Department, coupled with a sincere effort to rectify the issues. Given such a situation, the Department, whose avowed objective being to participate in the economic growth of the country through the Tax collection system as mandated and circumscribed by Parliament in Article 265 of the Constitution of India, has to ensure that at all times, every wing of the Department including the portal is attuned and fine tuned to the imminent needs of the functioning of the Department. Likewise, it is bounden duty of this Court to strike a balance between the competing rights of the Assessee and the duty of the Department to collect tax to ensure that the Constitutional mandate is carried out in the best possible manner. Department intends to position the CIT(J) as a Nodal Officer to be connected with each jurisdictional High Court. The further functions elaborated under the Head Work Domain under paragraph No.4 of the aforesaid instruction No.1/2024, if implemented, should go a long way in mitigating lapses of the kind, forming the subject matter of the present proceedings. This Court, therefore, passes the following directions :- (1) In all future Income Tax petitions (Special Civil Applications and Tax Appeals), apart from the usual respondents, the CIT (Judicial) is to be mandatory made a party respondent by the Assessee petitioners and a co-petitioner by the Income Tax Department, where the Tax Appeals are filed by the Department. The postal address and E-mail address for CIT (Judicial) given (2) Once the CIT (Judicial) stands impleaded in the petition, the sole responsibility for implementation of the Orders of this Court and to follow Instruction No. 1/2024 to the hilt, shall be upon the CIT (Judicial), as a representative of the Income Tax Department. The buck shall stop there. The present proceedings were being continued beyond the immediate reliefs claimed in personam by the Petitioner herein because in the course of the hearings, this Court had become aware of the systemic deficiencies in the administration of the Income Tax Department which has resulted in egregious violation of the rule of law.With the aforesaid steps taken by the Department in consultation with the Chairman, CBDT and the directions passed by us in the foregoing paragraphs, we are buoyant and optimistic that the deficiencies recorded in the Orders of this Court, of which the Department is now alive to and both pro-active and re-active, the administration of the provisions of the Income Tax Act will be optimized to ensure that a powerful engine of our economy can maximize its potential and at the same time remain just and humane to the Assessee. It is the need of the hour. Lastly, it brings us to the individual case of the little man who had knocked the doors of this Court for his own statutory and Constitutional rights. Denial of Exemption u/s 11 and 12 - allegedly violated the conditions prescribed under Section 12A of the Act by not filing the return of income and Form No.10B within the prescribed time limit - Penalty imposed ignoring stay orders - In view of the fact that the penalty and demand orders, both dated 21.12.2021, were passed in the teeth of the order dated 06.04.2021 by which Assessment Order dated 04.03.2021 came to be stayed, the penalty order under Section 270-A dated 21.12.2021 and the Demand Notice u/s 156 of the Act dated 21.12.2021 are hereby quashed and set aside.

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• 2025 (4) TMI 1456
  Reopening of assessment u/s 147 - notice in the name of a non-existent entity - HELD THAT:- From the perusal of the records, it will be seen that in response to the notice cum draft Assessment Order u/s 147 r.w.s. 144B addressed to the Assessee in question the Petitioner had responded on 29.03.2022 (uploaded on the same day), stating the factum of amalgamation and specifically uploading the certified copy of the Scheme of Amalgamation Order passed by the NCLT and other annexures. Additionally, on 29.03.2022, further detailed submissions on facts and law including a detailed reply on merits was uploaded along with copies of several decisions of the Hon ble Supreme Court, etc. The Petitioner also sought a video conference reserving its right to make further submissions. Therefore, in such circumstances the Respondent could not have assumed the jurisdiction to issue a notice in the name of a non-existent entity. Following the ratio laid down in the case of PCIT Vs. Maruti Suzuki India Ltd[ 2019 (7) TMI 1449 - SUPREME COURT] the Assessment Order and the consequent notice of demand u/s 156 deserves to be and are hereby quashed and set aside. Assessee appeal allowed.

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• 2025 (4) TMI 1455
  Validity of notice issued u/s 153C as barred by limitation - Reckoning of limitation period of 6 years - HELD THAT:- In the cases on hand, the search was conducted on 10.11.2020. Thereafter, on 30.06.2022, the documents/materials were collected from the petitioner, who is the other person. In terms of 1st proviso to Section 153C(1), the limitation would start from the date on which the materials were collected from the other person, viz., petitioner. In this case, the search was conducted on 10.11.2020. Thereafter, the documents or assets were seized or requisitioned by the Assessing Officer on 30.06.2022 and the show cause notice dated 30.12.2024 was issued. The claim of the petitioner is that the date of issuance of show cause notice should be considered as the date of initiation of proceedings as far as other person is concerned, and hence, the limitation period of 6 year has to be calculated from the said date, in which case, the present proceedings are barred by limitation. In this case, on 10.11.2020, the search was not conducted in the petitioner s premises. The petitioner is the other person, from whom the documents or assets were seized or requisitioned on 30.06.2022 and thus, the said date, i.e., 30.06.2022, only has to be considered for calculating the limitation period of 6 years. With regard to all other aspects, i.e., for initiation or completion of proceedings, it is left open for the petitioner to give suitable reply to the show cause notice dated 30.12.2024 and contest the same in accordance with law, if so advised. As far as the settlement arrived at IBS is concerned, even though the case was settled before the IBS, the liberty is granted to the Department to proceed further, in future, if any new material is found. When such being the case, this Court finds no substance in the submissions made by the petitioner on this aspect. This Court does not find any merits in the submissions made by the petitioner on the aspect of limitation and thus, this Court is not inclined to interfere with either the impugned notices. Writ petitions are liable to be dismissed.

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• 2025 (4) TMI 1454
  Claim of weighted deduction u/s. 35(2AA) - donations made to a scientific research institution - CIT(A) allowed deduction - HELD THAT:- The arguments of the CIT-DR is devoid of merits for the simple reason that, when donation was given for specific purpose i.e., for construction of state-of- the-art Auditorium which is also eligible for deduction u/sec.35(1)(ii) of the Act as per the letter issued by the IISc, Bangalore, in our considered view, the AO cannot deny deduction for the said donation only on the ground that it is capital in nature and used for construction of state-of-the-art Auditorium in the name of father of the Director of appellant-company. Moreover, even if the amount is spent for construction of state-of-the-art Auditorium,, in our considered view, the Auditorium may be used for the purpose of scientific research of conducting seminars, workshops and other activities which means the said purpose is for the prosecution or the provision of facilities for the prosecution of scientific research and, therefore, the appellant-company is entitled for deduction u/sec.35(1)(ii). CIT(A) after considering the relevant facts has rightly allowed the donation given by the appellant-company to the IISc, Bangalore u/sec.35(1)(ii) of the Act. Thus, we are inclined to uphold the order of the learned CIT(A) and dismiss the appeal filed by the Revenue.

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• 2025 (4) TMI 1453
  Disallowance of interest expenses u/s 36(1)(iii) - CIT(A) observed that it is not the business of assessee company to give share application money to sister concern from borrowed funds and further, the assessee-company do not have any surplus to invest in shares of sister concern and entire investment has been funded through interest bearing borrowings - HELD THAT:- From the details filed by the assessee, it is undisputedly proved that, the impugned sum considered by the AO as loan for the purpose of sec.36(1)(iii) of the Act is in fact, an investment in another group company, but, not a loan. Therefore, AO is erred in invoking the provisions of sec.36(1)(iii) of the Act for the amount invested in M/s. Kamineni Health Care Pvt. Ltd. Assuming for a moment it is a loan and advance for the purpose of sec.36(1)(iii) but, the fact remains that the assessee has given said loan and advance out of it s own interest free funds available in the form of fresh investment received from two of it s Directors. No interest bearing funds have been used for the purpose of giving amount to M/s. Kamineni Health Care Pvt. Ltd. and, therefore, on this count also, the addition made by the AO towards disallowance of interest u/sec.36(1)(iii) cannot be sustained. We, therefore, delete the addition made by the AO towards interest on amount given to M/s. Kamineni Health Care Pvt. Ltd. Coming back to loan and advances given. There is no dispute with regard to the fact that the appellant-company had given loan to above company on 31.03.2016. AO has computed interest for the whole year. Although, CIT(A) has restricted the disallowance of interest for the actual period of loan i.e., for one day, but, uphold the reasons given by the AO to treat the said transaction as loans and advances for the purpose of sec.36(1)(iii) of the Act. Before us Assessee claims that it is not a loan or advance, but, a current account between the two group companies in the ordinary course of business. We find that, although, Assessee brings in the theory of business exigency or commercial exigency, but, failed to prove the theory of commercial exigency by bringing on record any evidence to prove that there is a business connection between the two companies. Although, the appellant-company claims that it is a holding company of appellant-company, but, in our considered view, except making a oral statement, no evidence has been placed on record to prove the claim that the transaction is between the holding company and subsidiary company in the ordinary course of business and such transactions are carried-out under commercial expediency. Since the appellant-company fails to prove commercial/business exigency in advances given to the other company, in our considered view, there is no error in the reasons given by the learned CIT(A) to treat the said advances as loans and advances within the meaning of sec.36(1)(iii). We, therefore, direct the AO to levy interest for the actual period of loan. Thus, we uphold the reasons given by the learned CIT(A) on this issue. We direct the AO to delete addition made towards disallowance of interest on investment with M/s. Kamineni Health Care Pvt. Ltd. and sustain the addition made toward interest on loan given to M/s. United Steel Allied Ind Private Limited, but, restrict the interest disallowance as per the directions of the learned CIT(A). Appeal of the Assessee is partly allowed.

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• 2025 (4) TMI 1452
  Deduction u/s 80IB(10) - due to a typographical error, the claim of deduction was not mentioned in the I.T. Return - HELD THAT:- A perusal of the Audit Report in Form No.10CCB shows the date of approval by the local authority as 30.03.2007 and the date of completion of the housing project as 31.03.2012. The deduction u/s 80IB(10) of the Act is also determined at Rs. 6,12,05,192/-. Although the assessee can claim a deduction which was not claimed in the original return filed or through a revised return and the Ld. CIT(A) can entertain such a new claim, in view of the various judicial precedents relied on by CIT(A), however, he has to adjudicate the issue as to whether the assessee is entitled to the claim of certain deductions / exemptions without claiming the same in the return of income as per the provisions of section 80A(5). However, he has not done the same. We deem it proper to restore the issue to the file of the Ld. CIT(A) with a direction to adjudicate the issue of allowability of the claim in absence of claiming the same in the return of income as per provisions of section 80A(5) of the Act and pass a speaking order on this issue. The grounds raised by the Revenue are accordingly allowed for statistical purposes.

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• 2025 (4) TMI 1451
  Penalty levied u/s 270A - disallowance of the deduction Claimed towards Health and Education Cess - HELD THAT:- The claim for deduction was made based on existing legal interpretation available at the time of filing return. Judicial pronouncements clearly supported such a view. There is no allegation of concealment, falsification, or suppression of facts. Assessee voluntarily surrendered the claim immediately upon being made aware of the retrospective amendment. The facts were fully disclosed by the assessee during the course of assessment proceedings. It is relevant to note that both the Assessing Officer and the CIT(A) accepted that the case does not involve misreporting under section 270A(9) of the Act. Accordingly, penalty was restricted to 50% of tax on underreported income. However, once it is found that the claim was bona fide and all facts were disclosed, even such penalty under section 270A(1) read with section 270A(2)(a) of the Act becomes unsustainable in law. Mere making of a claim based on a bona fide interpretation of law, subsequently found unsustainable by retrospective amendment, does not attract penalty under the Act. This position is fortified by case of Yahoo India (P.) Ltd. [ 2013 (3) TMI 704 - BOMBAY HIGH COURT] wherein it was reiterated that where a claim is made transparently and based on legal interpretation, even if not accepted, it does not amount to furnishing inaccurate particulars or under-reporting. Thus, relying on the principles laid down therein, we hold that the assessee s claim towards deduction of cess, made prior to the retrospective amendment and disclosed in full, cannot trigger penalty under section 270A of the Act. Appeal of the assessee is allowed.

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• 2025 (4) TMI 1450
  Addition u/s 40(a)(ia) - form 26A was not filed by the assessee in respect of amount of interest paid on which no TDS was deduction at source - HELD THAT:- We observe this fact from the appellate order passed in the first round passed by the ld CIT(A) that the payee of the interest has offered the sum to tax by incorporating the same in his return of income and therefore, case is clearly covered by the decision of Hindustan Coc Cola Beverages (P) Ltd. [ 2007 (8) TMI 12 - SUPREME COURT] wherein it is held that no disallowance has to be made u/s 40(a)(ia) of the Act if the receiver/ payee of income has offered same to tax in the return of income. Therefore, there cannot be any disallowance on this account. Moreover, the finding of the CIT (A) that assessee has not filed the form no.26A read with 31ACB a certificate from Chartered Accountant, certifying the payee had fulfilled all the conditions mentioned in the First Proviso to Sub Section 1 to Section 201 but after perusing the said section along with Rule 31ACB of the Income Tax Rules, 1962, we note that the form 26A was not applicable during the impugned assessment year as the same was brought by IT(11th Amendment) Rules, 2012 with effect from 12.09.2012, which provides that under Rule 31ACB, the assessee is required to obtain a certificate from Accountant under First Proviso to Section 201 (1) and that certificate should be in form no.26A. Accordingly, we set aside the order of ld. CIT (A) and direct the AO to delete the addition. Deduction u/s 80IB - AO noted that the assessee has not made his claim in the return filed u/s 139(1) - AO observed that the assessee has also not made its claim by filing a revised return of income and therefore, the same is not allowable to the assessee - HELD THAT:- We note that the assessee has filed the return of income within time on 26.09.2008, originally declaring total income without claiming the deduction u/s 80IA of the Act in respect of rail and infrastructure system. In our opinion, if the assessee is not made any claim in the return filed u/s 139(1) of the Act, then the same could be made before the appellate authority for the first time. CIT (A) in the first round has rightly given the finding while allowing the appeal of the assessee by admitting the additional ground which has been extracted above, whereas in the impugned appellate order, the CIT (A) has given a perverse finding by misconstruing the facts. In our opinion, the assessee is entitled to claim u/s 80IA. Accordingly, we set aside the order of ld. CIT (A) and direct the AO to allow the deduction u/s 80IA. The ground raised by the assessee is allowed.

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• 2025 (4) TMI 1449
  Rejection of application for registration u/s 12A - even there is a clause in the Trust deed for paying Honorarium or salary to the trustee against his/her services or involvement in any of the project or programs run by the trust, which is in violation of section 13(3) of the Act regardless of the fact that whether any payment in honorarium or salary is made to specified persons, the applicant is ineligible for registration u/s 12A HELD THAT:- If the functionary is a salaried employee under an employment contract and therefore, is being paid salary which is a contractual obligation on the part of the Trust then such remuneration is permissible. There has to be a reason or cause of action to infer and conclude that any benefit was provided to the functionary. A benefit implies payment of anything which is not legally due to a person, therefore, the salaries paid cannot be treated as a benefit. It may also be noted that payment of salary per se is not a benefit. To establish that some benefit was passed u/s 13(1)(c) of the Act, it will be incumbent on the AO to have reasons to believe that the remuneration were legally not due to the employees/functionaries. Once the legal eligibility of the trustees/board members to receive salary as full time employee is not disputed, then the only option available is to see the reasonableness of the salaries under section 13(2)(c) of the Act. Therefore, we agree with the contention of assessee that the provision of section 13(3) of the Act cannot be pressed into play to decide the eligibility of registration of the Trust. In view of the above discussion, we set aside the order of the rejection passed by the ld. CIT(E), Kochi and direct to grant the registration to the assessee as sought vide application in form 10AB dated 30/09/2023. Appeal filed by the assessee is allowed.

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• 2025 (4) TMI 1448
  Income tax demand against company dissolved - HELD THAT:- In the case of Rishi Ganga Power Corporation Ltd. [ 2023 (11) TMI 201 - DELHI HIGH COURT] held that where National Company Law Tribunal admitted insolvency petition against assessee but revenue in terms of Insolvency and Bankruptcy Code, 2016 had not lodged its claim with RP, revenue could not enforce assessment order and demand notice. In the instant facts, we observe that the assessment was completed and demand was raised on the assessee on 01.12.2017, whereas the order of NCLT u/s 30(6) r.w.s. 31 of IBC was passed on 06.12.2023. In the Resolution Plan, the Department had not filed any claim for recovery of tax demand with respect to outstanding demand against the assessee. Therefore, assessee s case and the judicial precedents cited above, the Department cannot now claim and recover from the assessee an amount of arrears that accrued prior to approval of Resolution Plan u/s 31 of IBC. Appeal of the Department is dismissed and the appeal of the assessee is allowed.

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• 2025 (4) TMI 1447
  Penalty u/s. 271(1)(c) - Addition u/s 68 - HELD THAT:- As evident that the addition has been made on a debatable issue. The decisions relied upon by the assessee heavily support its contention that where the High Court has admitted substantial question of law on issue of quantum proceedings, on the basis of which penalty was levied, it shows that the concealment is not final and the issue is debatable. Therefore, there is no case for levy of penalty. We hold that the penalty levied in the present case being on a debatable issue, is not sustainable and we direct the deletion of the same. Appeal of assessee allowed.

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• 2025 (4) TMI 1446
  Reopening of assessment u/s 147 - validity of consolidation approval by JCIT for various years and cases - Addition u/s 68 - HELD THAT:- It is evident that the approval is in respect of 111 cases of reassessment. It is a general order of approval for all the cases. The ACIT in its approval has failed to mention the assessment year wise income returned and assessed by the AO. It is established from the record that the approval was granted mechanical manner without applying the mind and verifying the record. The requirement of approval cannot be treated as mere formality and the mandate of the Act that the Approving authority has to act in a judicious manner by due application of mind in a manner of a quasi- judicial authority. Thus we hold that the approval granted by the Joint Commissioner of Income Central Range 61 New Delhi is not valid. Accordingly, we quashed the assessment order. Assessee appeal allowed.

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• 2025 (4) TMI 1445
  Addition on account of cash deposit in to bank u/s 69A - HELD THAT:- Assessee has source for cash deposits made during the pre-demonetization and also subsequently. AO proceeded to make the addition merely on the basis of sales recorded by the assessee comparatively less during previous assessment year and he has completely overlooked the fact that assessee has sales of cash of selling the fabric during festival season mainly in October and November. They do not deny the fact that the assessee has recorded huge cash sales and credit sales during the festival season and the sales recorded during the current assessment year cannot be compared with previous assessment year due to increase of business recorded only during the current assessment year. The details of two incomparable years cannot be compared. Therefore, assessee has a source of cash deposits. Hence, the addition made by the AO is not justified and for the sake of overall justice, we are inclined to direct the assessee to submit a quantity-wise details of opening purchases and sales recorded of credit as well as cash sales during the year matching with the closing stock declared in the financial statement. AO is directed to verify the same and if the quantity details are properly recorded in the financials statement, the additions proposed by him should be deleted. We are inclined to delete the addition after due verification of the quantity details by the AO. Assessee appeal allowed. Appeal of the assessee is allowed.

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• 2025 (4) TMI 1444
  Validity of the assessment framed u/s 147 - Disallowance of assessee s claim of deduction of its income u/s 80P - HELD THAT:- AO while framing order under Section 147 of the Act in the present case did not make any addition on the income which he believed had escaped assessment, which in the present case was the cash withdrawals of Rs. 1.13 crores from its bank account the source of which was found to be unexplained, the AO hold, could not have made addition or disallowance on any other account, in the present case being disallowance of deduction claimed u/s 80P of the Act, since Courts have time and again reiterated that the moment the AO finds no escapement of income of the assessee on the basis of which he had assumed jurisdiction u/s 147 of the Act he loses jurisdiction to proceed further and make any other addition or disallowance to the income of the assessee. Disallowance of deduction u/s 80P of the Act made in the present case by the AO is not sustainable being not in accordance with law, beyond the jurisdiction of the AO and accordingly, direct deletion of the same. Appeal of the assessee is allowed

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• 2025 (4) TMI 1443
  Assessment u/s 153A - absence of any incriminating material belonging to the assessee being found during the course of the search - HELD THAT:- From the perusal of the impugned order of AO, we find that the AO referred one pen drive seized from the premises of the proprietorship firm of the assessee containing Trial balance of the assessee. In the said trial balance, an entry of unsecured loan of Rs. 30.00 lacs taken from M/s Destiny Gems Jewellers Pvt. Ltd. is appearing. The trail balance is prepared from the regular books of accounts and in the Balance Sheet, this loan of Rs. 30,00 lacs taken from M/s Destiny Gems Jewellers Pvt. Ltd. is duly appearing. Therefore, this document could not be hold as incriminating material. As seen that besides pen drive, the AO has relied upon the statements of various directors of the loaner company wherein they accepted that the said company is paper/ shell company and concluded that the loan taken from the said company is bogus. It is admitted position that search was simultaneously carried out in the case of assessee as well as in the case of SRS group of cases, however, both the entities are independent and separate entities. AO cannot allowed to assume jurisdiction to assess the assessee u/s 153A on the statements of third parties in whose cases, search was also carried out and such persons were not related to the assessee. AO should have proceeded to assess the income of the assessee for such statements u/s 153C after following the procedure of recording of satisfaction to this effect in the case of CIT vs. Culcutta Knitwears [ 2014 (4) TMI 33 - SUPREME COURT] Any material/ statements pertaining / relating to a person other than the person searched, was first to be handed over by the AO of the searched person after recording his satisfaction, to the AO of other person to whom such material/ statements belonged, who after recording his satisfaction, has to proceed against such other person by issuing a notice u/s 153C and then to assess / re- assess income of such other person for such material/ statements. As by respectfully following the decisions of Anand Jain, HUF [ 2021 (3) TMI 8 - DELHI HIGH COURT] and coordinate benches of the Tribunal in various cases, we hold that no addition could be made in the assessment completed u/s 153A on the basis of statements of third party recorded during the search in their own case. Therefore, the addition made in the hands of the assessee on account of unsecured loan taken from M/s Destiny Gems Jewellers Pvt. Ltd. solely on the basis of statements of third party is hereby deleted. Assessee appeal allowed.

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• 2025 (4) TMI 1442
  TP Adjustment - challenge to inclusion of commission paid to local distributors in AMP expenses for working out the adjustment on account of AMP adjustments and not followed the settled history of the assessee of preceding assessment years - HELD THAT:- Commission paid was not AMP expenses and further looking to the past history of the assessee and by following the principle of the consistency and by respectfully following the aforesaid judgements of various Courts on this principle, we hold that AMP expenses including the amount of commission paid to distributors are not international transaction. Accordingly, we set aside the order of TPO/AO/DRP and delete the addition made made by TPO/AO toward AMP adjustment. The Ground of appeal No.1 of the assessee is allowed. Deduction u/s 80G when the said sum was not allowed being part of CSR expenses - whether the same can be allowed as deduction u/s 80G when it is part of CSR expenses? - HELD THAT:- Explanation 2 inserted in Section 37 to deny the deduction for CSR expenses incurred by companies as normal business expenditure and the same applies only to the extent of computing business income under Chapter IV-D. The said Explanation cannot be extended or imported to CSR contributions which are otherwise eligible for deduction under any other provision or Chapter, to say donations made by a charitable trust registered u/s 80G and if the same denied merely because such payment forms part of CSR, it would lead to double disallowance, which is not the intention of Legislature. Accordingly, we allow the deduction as claimed by the assessee u/s 80G of the Act. This ground of appeal of the assessee is allowed. Disallowance of deduction claimed u/s 80G - AO has disallowed the claim of the assessee for the sole reason that assessee has field to produce the receipts of the donation - AR requested that the matter may be sent back to the AO for submission of the receipts which was misplaced earlier and now is available - HELD THAT:- We are remitting this issue back to the file of AO for making verification of the fact whether the conditions necessary to claim deduction under section 80G of the Act are fulfilled or not after obtaining the receipt of donation from the assessee. Assessee is directed to file all requisite details in order to substantiate its claim before AO who is directed to grant deduction to the extent of eligibility.

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• 2025 (4) TMI 1441
  Addition made on account of bogus purchase and profit estimation on sales - AO made addition @8% on these 3 sales treating that actual sales had been made in the grey market and accordingly would have earned grey market premium on sales - HELD THAT:- Merely because there was some cash deposit in its bank account prior to the issuance of cheques to the assessee towards payment of purchase consideration, it cannot be concluded that the source of said cash deposit represent the unaccounted income of the assessee. Similarly, with regard to sales made by the assessee to M/s. Bhagya Laxmi Gems and Jewellers Pvt. Ltd, the said company is a Pvt ltd company registered under Companies Act at Secunderabad, Telengana and assessed to income tax. The said party had filed its confirmation that it had made purchase from the assessee and had directly responded to the notice issued u/s 133(6) of the Act before the AO, which fact is also mentioned by the AO in the assessment order. For all the sales made to these 3 parties, i.e. Bombay Gold Lab, Dharneesh Gold Pvt. Ltd and Bhagya Laxmi Gems and Jewellers Pvt. Ltd, the assessee had already declared the same in its profit and loss account and in the income tax returns. There is absolutely no evidence brought on record that assessee had made cash sales in grey market at a huge premium. Hence, there is absolutely no question of bringing to tax any amount on account of profit of premium at grey market. Hence, the addition made again @8% by the ld AO which was reduced to 2% by the CIT(A) does not deserve to survive at all. Accordingly, the grounds raised by the assessee in this regard are allowed and grounds raised by the revenue in this regard are dismissed. Addition made on account of purchase made from Bombay Gold Lab - The said party Bombay Gold Lab had duly responded to the notice issued u/s 133(6) of the Act by furnishing the requisite details directly before the ld AO. The assessee had even given the PAN details and GST details of the said party before the lower authorities. Hence, purchase transaction made from the said party cannot be treated as bogus. Once corresponding sales made out of disputed purchase stands accepted, the purchase cannot be doubted. The books of account of the assessee have not been rejected by the ld AO or by the ld CIT(A). With regard to the Inspector report that Bombay Gold Lab does not exist at the address given, the assessee had already pleaded that said Inspector s Report was never furnished to the assessee for its rebuttal over the purchase made by the assessee which includes the disputed purchase, the closing stock, sales which are reflected in the books of account already cannot be doubted as they are not rejected by the ld AO. CIT(A) duly appreciated all these facts and erroneously proceeded to make an ad hoc addition @1% of the value of purchase treating it as an accommodation entry on account of claim of expenditure. Once, the transaction from Bombay Gold Lab is held to be genuine, there is no question of treating the same as accommodation entry. Accordingly, the addition made on account of commission expenditure stands deleted as it was not incurred at all and it was not required to be incurred by the assessee.

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• 2025 (4) TMI 1440
  Deduction u/s 80P - addition of interest received by the assessee from fixed deposits - HELD THAT:- We find that the present issue is squarely covered by the various judicial precedents. In the decision of Gunja Samabay Krishi Unnayan Samity Ltd. [ 2023 (1) TMI 783 - CALCUTTA HIGH COURT] held that interest earned by the cooperative society on surplus funds deposited in bank and Govt. securities is qualified for deduction u/s 80P(2)(a)(i) of the Act. Similarly in the case of Yendagandhi Large Sized Co-operative Society Ltd. [ 2023 (12) TMI 61 - ITAT VISAKHAPATNAM] allowed the deduction for interest income from deposits with the cooperative society and nationalised banks. Thus, we direct the AO to delete the disallowance u/s 80P of the Act and therefore, the deduction u/s 80P claimed is allowed. Addition on account of overdue interest provisions made by the assessee - HELD THAT:- The provisions for overdue interest was not an issue raised in the limited scrutiny assessment. Therefore, the ld. CIT(A) erred in confirming this addition without proper justification and the addition is hereby deleted since the limited scrutiny had done in the case of the assessee was only related to the specific issues and the AO cannot go beyond the scope of limited scrutiny on an issue which was never for limited scrutiny assessment. Moreover, provision was made relating to overdue interest as amount in question had not been recovered for a continuous period of six years. Additions on miscellaneous income and rental income - HELD THAT:- CIT(A) cannot make an addition on an issue which is not raised in the original assessment order without giving the assessee an opportunity to respond. In the present issue, without giving notice to the assessee, the alleged addition was made by the ld. CIT(A) suo moto which is not in accordance with law. Consequently, the additions on miscellaneous income and rental income are hereby deleted.

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• 2025 (4) TMI 1439
  Addition on issue other than the issue mentioned in the notice u/s 143(2) where the case of the assessee has been selected for limited scrutiny - HELD THAT:- During the hearing, the Bench had requested the DR to submit the copy of the reasons for selection of the case for scrutiny under CASS. DR has submitted a copy of CASS Selection Reason and Issue from which it is seen that the case was selected for scrutiny with Reason Code EI02.02 and DM01.15A on issue of Agricultural income and Cash deposit during demonetization period . It is clear from the above that the AO has passed the order as per the mandate given to him by the CBDT for limited scrutiny under CASS. He has not exceeded the jurisdiction as contended by the ld. AR. Accordingly, the ground No.1 is dismissed. Unexplained cash credit being cash deposits in bank account - HELD THAT:- The amounts of withdrawal are substantial. The appellant has not filed confirmation or affidavit from Shri Vijay J. Ramani that he withdrew the impugned amounts in cash and gave it to the appellant. He has not confirmed that the amount was not utilized by him for personal purposes or investment. Copy of the bank account of Shri Vijay J. Ramani has not been submitted to prove that the above withdrawals were not credited to his account. The copies of PAN, Aadhar and Passport of Shri Vijay J. Ramani mentioned the name of his father as Jashubhai Manjibhai Ramani and not Jashubhai Manjibhai Patel, the appellant herein. The name of the assessee in the PAN is Jashubhai Manjibhai Patel, and not Jashubhai Manjibhai Ramani. Since no supporting and corroborative evidence has been filed by the appellant to support the claim that the cash withdrawal by Shri Vijay J. Ramani, was part of cash available with the appellant, we do not find any infirmity in the order of AO. The order of AO has been rightly upheld by the CIT(A). Accordingly, the ground No.2 is dismissed. Taxing the addition by taking the rate @77.25% by attracting Sec 115BBE instead of taxing as per normal tax slab - HELD THAT:- The provisions of section 115BBE of the Act was enacted on 15.12.2016 and hence cannot be applied for the year under consideration. As relying on Punjab Retail Pvt. Ltd. [ 2021 (11) TMI 405 - ITAT INDORE] and Sandesh Kumar Jain [ 2022 (11) TMI 126 - ITAT JABALPUR] held that applicability of amended provision of Section 115BBE of the Act is not retrospective. There is no reason not to follow above decisions. Thus, the AO is directed to tax the addition at normal rate of tax and applicable surcharges and cess, if any. The assessee is, accordingly, allowed relief against taxing the addition at higher rate u/s 115BE of the Act.

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• 2025 (4) TMI 1438
  Disallowance of labour expenses made u/s 36(1)(va) on account of employee s contribution to the Labour Welfare Fund - HELD THAT:- The assessee in the statement of facts filed before CIT(A) had also stated that due date was further extended to 30.06.2020 by the Welfare Commissioner, Haryana Labour Welfare Board vide letter dated 02.06.2020. Assessee had duly remitted the Labour Welfare Fund dues within the due date prescribed thereon. The said due dates were beyond the due date of filing of income tax return u/s 139(1) of the Act. Hence, the ld CPC, Bengaluru while processing the return had erroneously construed this employees contribution to have not been remitted within the due date prescribed under the respective Labour Act and made addition u/s 36(1)(va) of the Act in the sum which was also confirmed by the assessee CIT(A). We find that in view of section 9 of Haryana Labour Welfare Board Act, the labour welfare fund dues in the instant case had been duly remitted within the respective dates prescribed under the Labour Laws. Hence, the decision in the case of Checkmate Services [ 2022 (10) TMI 617 - SUPREME COURT] relied by the NFAC is not applicable to the facts of the instant case. Hence, we direct the ld AO to delete the addition in the sum u/s 36(1)(va). Accordingly, Ground No. 2 raised by the assessee is allowed. Disallowing the Employee State Insurance Corporation fund u/s 43B by making double addition - HELD THAT:- Assessee had made suo moto disallowance being the employees contribution to ESI in the return of income which is evident from the tax audit report enclosed at page 19 of the paper vide Sl. No. 7 thereon. This fact was ignored by the ld ld CPC while processing the return and addition was made by the CPC. The assessee had brought this point to the knowledge of the CIT(A)/ NFAC. The fact was ignored by the ld NFAC thereby resulting in double addition. We are convinced with this fact that there was indeed double addition. Upward adjustment - inconsistency between amount reported in the tax audit report and the deduction claimed in the income tax return towards gratuity component and other comprehensive income - HELD THAT:- The entire addition has been made by the lower authorities without understanding the requirement of IND-AS which has been duly explained by the assessee before the lower authorities. Further, the ld AR also submitted that in AY 2017-18, CIT(A) granted relief on this issue and revenue did not challenge the same before the Tribunal which goes to prove that the revenue had accepted the same in AY 2017-18. The copy of the said CIT(A) order for AY 2017-18. The relevant observation of the CIT(A) in order where these issues were deleted by the CIT(A. It is pertinent to note that the ld CIT(A) while addressing this issue for the year under consideration had erroneously looked at clause 26(i)(A)(a) in Form 3CD instead of clause 26(i)(B)(a) which had lead the ld NFAC to arrive at the conclusion. Accordingly, ground No. 4 raised by the assessee is allowed. Chargeability of interest u/s 234C - The law is very well settled that the interest u/s 234C of the Act could be charged only on the returned income and not on the assessed income. Credit of advance relating to company which got merged with the assessee with an appointed date of 01.04.2021 - HELD THAT:- Amalgamating entities paid an advance tax of Rs. 1.50 crores. Later the two amalgamating entities got amalgamated with the assessee. The appointed date is 01.04.2021. The fact of advance tax payment made by the amalgamating entity in the sum of Rs. 1.35 crores and Rs. 0.15 crores are reflected in Form 26AS. Since the entire transactions of the amalgamating entities are reflected in the hands of the assessee, credit for advance tax paid by the amalgamating entity should be given to the assessee. We direct the ld AO accordingly and allow Ground No. 4 raised by the assessee.

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• 2025 (4) TMI 1437
  Deduction u/s 80IC - assessee has failed to file the Audit Report in Form 10CCB within stipulated time period provided under the Act - extension of the period of limitation falling under Covid-19 period - HELD THAT:- In the instant case, the due date of filing of return of income was extended upto 15.02.2021. However, the Audit Report was filed only on 15.02.2021, simultaneously alongnwtih return of income filed on the same day. Thus, the assessee has failed to comply with the provisions of Rule 18BBB of the Rules. However, in view of the judgement of Hon ble Supreme Court in the case of Suo Moto Writ Petition [ 2022 (1) TMI 385 - SC ORDER] the period of limitation was extended by the Hon ble Supreme Court upto 31.05.2022. Therefore, there was no delay in filing the Audit Report by the assessee in Form 10CCB. Co-ordinate Bench of the Tribunal in the case of Sanjay Kukreja [ 2024 (2) TMI 41 - ITAT DELHI] has also expressed the view that filing of Audit Report alongwith return of income is not mandatory but directory and if the Audit Report is filed at any time before framing the assessment, it would be sufficient to hold that the assessee has complied with the provision of filing of Audit Report. We are of the view that there is no delay in filing the Audit Report in Form 10CCB in the instant case. Therefore, we allowed the said Audit Report to be considered for deduction u/s 80IC however, we are not aware whether the other conditions for claiming deduction u/s 80IC have been coupled with or not. Therefore, the AO is directed to verify all such conditions and if it is found that the assessee has duly complied with all conditions, the deduction claimed u/s 80IC be allowed. Appeal of the assessee is allowed.

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• 2025 (4) TMI 1436
  TP Adjustment - payment of royalty/consideration for use of trademark and knowhow - HELD THAT:- We find that the Tribunal for the immediately preceding AY i.e. 2017-18 [ 2024 (8) TMI 277 - ITAT DELHI] in so far as royalty addition is concerned decided the issue in favour of the assessee wherein the payment of royalty was held to be at arm s-length by coordinate benches of this Tribunal. Addition on account of consultancy services, reimbursement of advertisement expenses and IT cost allocation - HELD THAT:- On perusal of the Tribunal s order for the AY 2017-18 [ 2024 (8) TMI 277 - ITAT DELHI] assessee has availed consultancy services from an employee based out of Hong Kong and has reimbursed the salary and related expenses of this employee to its AE. Since this is similar to the issue of expatriate cost in previous years, we find no reason to take a different view for this assessment year. While respectfully following the consistent view taken by the Tribunal in Assessee s own case for the AY 2007-08, 2008-09 and 2009-10, we hold that the impugned addition cannot be sustained. We, therefore, direct the TPO/AO to delete the adjustment made on this issue. Thus, Ground and sub-grounds are partly allowed in favour of the assessee. Not allowing deduction on account of reversal of provision for contingent Income tax liability credited to profit and loss account and disallowed earlier in the year of creation that the time it was debited to profit and loss account - HELD THAT:- As Counsel submits that thus the provision which was created in AY 2016-17 was never claimed as deduction since it was added back in the computation of income. Since in the assessment year under consideration the provision was reversed in the books consequent adjustment was made in the tax computation otherwise it would have resulted in a double addition. We find considerable merit in the submissions of the Ld. Counsel for the assessee. Therefore, the issues in ground nos. 5 6 are in principle allowed subject to verification by the Assessing Officer. The Assessing Officer while passing the consequential order may verify the contentions of the assessee before allowing claims of the Assessee.

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• 2025 (4) TMI 1435
  Income from other sources - deduction of interest expenditure u/s 57(iii) against the interest income earned under the head Income from Other Sources - Assessee had earned interest income from loans and advances and had simultaneously claimed interest expenses u/s 57(iii) - assessee had failed to establish a clear nexus in respect of the interest-bearing borrowings and the corresponding advances before the lower authorities HELD THAT:- In the present case, the nexus, at least indirect if not direct, between the interest-bearing borrowings and the interest-earning advances is sufficiently established by the assessee by furnishing cogent documentary evidence. AO and the CIT(A) have disregarded the evidence placed on record without pointing out any specific defect therein. Disallowance cannot be sustained on mere conjecture or suspicion, without any tangible adverse material. AR has brought to our attention that in the subsequent Assessment Year 2018 19, the assessee had claimed deduction of similar interest expenditure against interest income earned on loans and advances, and the same was allowed by the CIT(A). As there is no change in facts or law, and a particular view has been taken in the assessee s own case for a different year, consistency demands that the same view should ordinarily be followed, unless there is a distinguishing feature brought on record. We are of the considered opinion that the assessee is entitled to claim deduction u/s 57(iii) and the disallowance made by the AO and confirmed by the CIT(A) is not sustainable in law. Accordingly, the disallowance is directed to be deleted.

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• 2025 (4) TMI 1434
  Unexplained cash credits u/s 68 - AO rejected the books of account u/s 145(3) - CIT(A) deleted addition - HELD THAT:- While the CIT(A) has extensively relied on the books of accounts and the availability of cash-in-hand, there is no independent verification of the crucial aspects raised by the AO. The issue of related party purchases from M/s. Veeram Spiritual Energies Pvt. Ltd. and the complete absence of disclosure of such transactions in the Annual Report and Audit Report has been overlooked. No attempt was made to verify the genuineness of the purchases, which is a critical factor in cases where sales are cited as the source of cash deposits, particularly when no sale is possible without genuine purchases. We also note that during the course of hearing before us, when queried specifically, the Learned AR was unable to confirm whether the quantitative details of stock, including opening stock, purchases, sales, and closing stock, had been disclosed by the assessee s tax auditor in the annexure to the audit report in Form 3CD as required. The absence or insufficiency of audited quantitative particulars further necessitates independent verification of the quantitative records maintained by the assessee to corroborate the genuineness of the transactions. In addition, it is pertinent to observe that significant purchases were recorded by the assessee from M/s. Veeram Spiritual Energies Pvt. Ltd., an entity primarily engaged in monetary intermediation and not in the business of trading in gold or jewellery. The genuineness of such purchases, the actual delivery of goods, and their reflection in stock movement records assume greater importance in the facts of the present case and require detailed verification. AO s findings regarding recording of purchases during festival closure days, lack of detailed invoices, and failure of third parties to respond to notices under section 133(6) were material and went to the root of the issue. CIT(A) did not call for any remand report from the AO or undertake any factual verification to rebut these discrepancies but accepted the assessee s explanation solely based on audited books. The judicial precedents relied upon by the CIT(A) are distinguishable on facts, as in those cases there was no finding of suppressed related party transactions, unverified stock entries, or complete failure of independent verification. In the present case, the factual matrix is materially different. We also observe that although the CIT(A) noted that the AO had rejected the books of account u/s 145(3) CIT(A) did not independently adjudicate whether the said rejection was justified in the facts of the case. CIT(A) merely proceeded on the basis that the books of account were audited and relied upon the cash book and stock records submitted by the assessee, without critically examining the serious discrepancies recorded by the AO. No independent verification of quantitative stock records, purchases, sales, or cash movements was undertaken by the CIT(A). CIT(A) also did not address the material inconsistencies relating to related party purchases and unverified sales. In the absence of reconciliation of discrepancies or independent verification, the CIT(A) could not have accepted the assessee s explanation at face value after lawful rejection of the books of account by the AO. The failure of the CIT(A) to properly deal with the rejection of books vitiates the appellate order and necessitates restoration of the matter for fresh adjudication. Thus, CIT(A) has not passed a sufficiently reasoned and comprehensive order dealing with the serious discrepancies highlighted by the AO. The order of the CIT(A) suffers from lack of factual verification and examination of critical issues necessary to establish the genuineness of the cash deposits. Accordingly, we deem it appropriate to set aside the order of the CIT(A) and restore the matter back to his file for fresh adjudication to Verify the quantitative stock details with reference to purchase and sale records maintained by the assessee and Verify the genuineness of purchases and correlation with the sales shown. Examine the issue of unverified sales and non-responded 133(6) notices. Revenue s appeal is accordingly allowed for statistical purposes.

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• 2025 (4) TMI 1433
  Addition as commission income in the hands of an auto-rickshaw driver - HELD THAT:- Assessee is an auto-rickshaw driver, who was lured by Shri Raju Bhimrajka to carry on the business in the name of M/s. Aqua Trading Company. The assessee was offered Rs. 2,000/- per month for his name. It is beyond one s imagination as to how an auto-rickshaw driver can do transactions of Rs. 103,33,86,100/-. AO was in possession of the complete information of all the three companies mentioned elsewhere. The AO was also in possession of the transactions done through RTGS inter-se bank transfers by the three companies but the AO did not make any verifications from the real culprits and taxed the entire amount in the hands of the autorickshaw driver i.e., the assessee. AO ought to have considered the transactions, once the assessee has stated on oath that he is not doing any business but the entire business is done by Shri Raju Bhimrajka, there is no evidence on record that the AO made any effort to trace the real business behind the alleged transactions and instead chose to make addition in the hands of the assessee. We are of the considered view that such action of the AO cannot be justified on any count. Therefore, considering the peculiarity of the case, being that of an auto-rickshaw driver, the impugned addition cannot be sustained in his hands and is accordingly directed to be deleted. It is made clear that considering the peculiarity of the case and considering that the assessee is an auto-rickshaw driver, our decision should not be considered as precedence in any other case. The AO is free to take action against real culprits and bring them to tax-net. In the interest of justice and fairplay, appeal of the assessee is allowed.

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• 2025 (4) TMI 1432
  Disallowance of claim of deduction u/s 80P - return was not filed u/s 139(1) - intimation u/s 143(1) - HELD THAT:- Intimation issued under section 143(1) of the Act is without jurisdiction, as it was based on a return that was already held invalid by CPC itself. A foundational requirement for processing a return u/s 143(1) of the Act is that such return must be a valid return as per the Act. Once the updated return filed under section 139(8A) of the Act was declared invalid by CPC for non-compliance with procedural requirements, it ceased to exist for legal purposes, and therefore could not form the basis for any further intimation or adjustment under section 143(1) of the Act. Where no valid return exists, any disallowance of claims must be undertaken through regular assessment proceedings under section 144, not through summary processing under section 143(1) of the Act. Accordingly, the impugned intimation dated 29th December 2023 issued by CPC is held to be bad in law and void ab initio. The disallowance made therein is therefore liable to be set aside.Appeal of the assessee is hereby allowed.

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• 2025 (4) TMI 1431
  Accrual of income in India - fee for technical services u/s 9(1)(vii) of the Act read with Article 12 of Tax Treaty of India-Netherlands - Taxability of CHR Recruitment Fees, Taxability of External Information Services, Taxability of Real Estate Corporate Travel Services, Taxability of Health Ecotox Services and Taxability of IT Services - HELD THAT:- As in view of observations made we are of the considered view that in respect of the aforesaid services, the condition of make available is not satisfied and the Department has not brought anything on record to demonstrate that in the instant case, the technology was made available to the recipient of services, so as to fall within the ambit/definition of FTS under the India-Netherlands tax treaty. Accordingly, in our considered view, the aforesaid services do not qualify as FTS under the India Netherlands tax treaty. Taxability of Health Ecotox services as FTS under the Act, read with taxability of IT Services - We are of the considered view that in respect of the aforesaid services, the condition of make available is not satisfied and the Department has not brought anything on record to demonstrate that in the instant case, the technology was made available to the recipient of services, so as to fall within the ambit/definition of FTS under the India-Netherlands tax treaty.

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• 2025 (4) TMI 1430
  Reopening of assessment u/s 147 - Notice issued beyond four years - reopening of assessment can be sustained on the basis of audit objection - HELD THAT:- As to a specific query, specific reply was filed and proper disclosure was made in the financial accounts and also in the computation of income. We have no hesitation in setting aside the impugned notice u/s 148 of the Act thereby quashing the resultant assessment order. Since we have quashed the assessment order, we do not find it necessary to delve into the merits of the case. Whether audit objection by the revenue audit party constitutes information on tangible material that justifies reopening? - We are of the considered view that decision P.V.S. BEEDIES PVT. LIMITED [ 1997 (10) TMI 5 - SUPREME COURT] apply when an audit party points out facts not in the knowledge of the AO originally whereas the facts discussed elsewhere clearly show that the basis for the re-opening was examined by the AO during the original assessment proceedings and the facts relating to the impugned payment of commission claimed this year have been extensively disclosed in the audited financial statement of accounts and also in the computation of income. Therefore, the decision relied upon by the ld. D/R are not applicable on the facts of the case. Decided in favour of assessee.

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• 2025 (4) TMI 1429
  Rejecting the application seeking registration u/s 12A(1)(ac)(iii) - nature of the activities carried out by the Trust are religious or charitable in nature - HELD THAT:- We find that the assessee in its application in Form No. 10AB specifically mentioned that its nature of activities are religious in nature. This is evident from Form No. 10AB. The assessee gave evidence to the fact of commencement of religious activities along with the reply. Assessee also furnished the salary register together with the photos as evidence in support of religious activity carried out by it since the inception. Despite all these documents, CIT (Exemptions), Lucknow on perusal of the financial statements of the assessee made a remark that assessee had not incurred any expenditure on the charitable activities carried out by the assessee. Hence it could be safely concluded that the CIT (E) had proceeded on the premise that the activities carried out by the assessee trust are charitable in nature whereas factually they are only religious in nature and even the assessee sought registration only as a religious trust and not as a charitable trust. Hence the entire rejection order of the CIT (E), Lucknow had proceeded on incorrect assumption of facts and not understanding the predominant purpose for which the assessee trust was even formed. Hence we have no hesitation to cancel the said rejection order of the CIT(E) and direct CIT(E) to grant registration to the assessee trust - Assessee appeal allowed.

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• 2025 (4) TMI 1428
  Classification of expenditure incurred - replacement of Hydraulic system with electrical control panel of the main machine - Revenue or capital expenditure - HELD THAT:- Assessee fairly accepted that the machine consists of 3 parts, out of which 2/3rd parts have been replaced. We note from the order of the ld. CIT(Appeals) that he has noted that SMG Feintool Germany Fine Blanking 630 Ton Press is second hand machine and imported alongwith its hydraulic system. Since this second hand machine is imported, it cannot be denied that assessee was not knowing the fact that after the purchase of old machinery to put the main machinery to working condition, Hydraulic system with electrical control panel are required to be replaced. After replacing Hydraulic system with electrical control panel to maintain the working capacity of the machine, the assessee has incurred expenditure. Therefore, it cannot be said that it is a revenue expenditure which gives enduring benefit to the assessee. As relying on [ 2023 (8) TMI 373 - ITAT DELHI] we uphold that the expenditure incurred by the assessee is a capital expenditure and the assessee is eligible for depreciation as per law. Decided against assessee.

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• 2025 (4) TMI 1427
  Denial of benefit of section 11 on no registration u/s 12AA/12AB - chargeability of tax on the income computed by AO at MMR instead of calculating tax as if it were an individual assessee - HELD THAT:- AO has levied tax on an income of Rs. 1,92,751/- whereas the appellant out of said income has claimed deduction u/s 11 of the Income tax Act, 1961 for 15% of the gross income calculated at Rs. 1,04,581/-. Considering the fact that the assessee trust was not registered u/s 12AA of the Income Tax Act,1961 we are of the opinion that correct assessable income is Rs. 1,92,751/- and hence we dismiss this ground of the appellant. Chargeability of tax on the income computed by Assessing Officer at MMR - We agree to the same but here we are dealing with the issue of rate of tax chargeable in case of a trust which is not registered u/s 12AA/12AB whether it is to be charged at MMR or at normal rate as applicable to individual. We find that in case of charitable trust wherein there is no provision of share of any surplus and there is no provision of distribution of assets, provisions of section 164(2) can only be applied and we, therefore, following the decision of Shri Digambar Jain Mandir Trust [ 2024 (4) TMI 661 - ITAT JODHPUR] allow ground of the appeal of the assessee and hold that the tax rate as applicable to section 164(2) will apply to the rate of the AOP/Individual and the initial exemption is also available to such assessee.

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• 2025 (4) TMI 1426
  Rejection of its application seeking registration u/s. 80G(5) - copy of regular registration u/s 12A/12AA of the Act prior to 01-04-2021 has not been furnished - HELD THAT:- Assessee couldn t submit the certificate so sought by the ld CIT(E) and had submitted other certificates inadvertently. However, given that these certificates have been issued earlier by the Revenue and are part of the records and a copy thereof has since been placed on record, we deem it appropriate that the matter is set aside to the file of the ld CIT(E) to examine the same. Further, the ld AR has pointed out the amendment which has been brought in by the Finance Act 2024 which apparently has not been taken into consideration by the ld CIT(E) while examining the application so filed by the assessee.

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• 2025 (4) TMI 1425
  Rejection of Grant of registration u/s 12AB - Assessee contended that Impugned Order of Ld. CIT(E) is in violation of principles of natural justice and is therefore bad in law, illegal and not proper - HELD THAT:- AR fairly conceded that no doubt donation details were sought by Ld. CIT(E) at the material time but since the same were not available at the material time it could not be supplied however the same are available now and if this Tribunal is pleased to set aside the impugned order then in the proposed remand proceedings before CIT(E) they would submit the same without any demur. Revenue did not strongly oppose the contention of the Ld. AR and finally left it to this Tribunal to take appropriate call on this issue in accordance with law. In rejoinder Ld. AR submitted that they indeed regret non compliance on part of the assessee but asserted that in Audit Report donation amount could be seen as having been received through normal banking channels. The assessee has now compiled the details and that they are ready to submit the same. In the premises impugned order is set aside as and by way of remand on denova basis.

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• 2025 (4) TMI 1424
  Eligibility of the assessee trust for registration u/s 12AB - application of the assessee was rejected on the pretext non maintaining separate set of books of account and alleging that the assessee is engaged in commercial activities - HELD THAT:- As is evident from the record that the trust runs Dharmshala since 1962 and that activities cannot be compared as commercial activities. Considering all the aspect of the matter the Bench feels that the assessee should represent the case and contested the written submission placed before the CIT(E). Considering the fact that running of dharmshala cannot be termed as charitable activities and thereby the assessee cannot be denied registration merely on that count and since the assessee has prayed before us that they may given one more chance to contest the issue raised before the Ld. CIT(E) and its merit and therefore, considering that of aspect of the matter, the assessee should be given one more chance to contest the case before the ld. CIT(E) - Appeal of the assessee is allowed for statistical purposes.

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• 2025 (4) TMI 1423
  Eligibility of Registration u/s 80G(5)/12A - HELD THAT:- The registration u/s 80G(5) is available to the Trust who are either registered under section 12A of the Act or 10(23C) of the Act. It is also noted that Assessee had filed necessary details along with provisional application for 12A registration. CIT(E) has rejected the registration of the assessee under section 12A of the Act, only on one ground that assessee failed to submit the details called-for. However, it is also a fact that primary details like, copy of trust deed, copy of financials were already available with the ld.CIT(E), and ld.CIT(E) has not commented on it. Respectfully following the decision of Torna Rajgad Parisar Samajonnati Nyas [ 2025 (1) TMI 1473 - ITAT PUNE] we set-aside the order of ld.CIT(E) to ld.CIT(E) for denovo adjudication. Ld.CIT(E) shall provide opportunity to the assessee. Grounds of appeal raised by the assessee are allowed for statistical purpose.

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• 2025 (4) TMI 1422
  Disallowance of Depreciation on the assets pursuant to the scheme of demerger - concept of grouping all assets having similar rate of depreciation in a single block - assessee continued to claim depreciation on the WDV of various block of assets, without excluding the assets so transferred under the scheme of demerger to the above said company - HELD THAT:- Identical issue was considered by the co-ordinate bench in AY 2003-04 [ 2024 (5) TMI 1563 - ITAT MUMBAI] noticed that it is a recurring issue every year. Further, it noticed that another co-ordinate bench has reached a compromise formula in AY 2008-09 [ 2022 (12) TMI 168 - ITAT MUMBAI] wherein the AO was directed to treat the opening WDV of assets transferred to the above said company as loss of assets. Hence, the co-ordinate bench held in AY 2003-04 that, in order to give effect to the above said direction given by the Tribunal in AY 2008-09, the depreciation claimed by the assessee in AY 2003-04 should be allowed. Accordingly, the co-ordinate bench deleted the disallowance of depreciation made by the AO in AY 2003-04. Accordingly, we also direct the AO to delete the disallowance of depreciation made on the assets transferred to M/s Ciba Specialty Chemicals (India) Ltd in this year also. Addition made by enhancing the value of closing stock as on 31.3.2004 by the amount of estimated secondary freight cost - HELD THAT:- The co-ordinate bench, vide its order passed [ 2024 (3) TMI 1438 - ITAT MUMBAI] has deleted this addition as held that the consistently followed method of valuation of stock, which has been accepted by the departmental authorities earlier, should not be disturbed, since a stray departure in one year tends to upset the calculations. Following the above said decision, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this addition. Disallowance of claim relating to Voluntary Retirement Scheme compensation - HELD THAT:- As the provisions of sec. 35DDA are related to lump sum compensation paid, since the question of amortization shall arise only in respect of lump sum payments. The purpose of spreading the deduction into five years is to avoid distortion of the profits in one year and also collection of income tax. Accordingly, we are of the view that the provisions of sec.35DDA shall not apply to the pension payments. In the instant case, the incremental liability is related to pension payments. Hence, we are of the view that the provisions of 35DDA shall not be applicable to pension payments, which are recurring in nature. Accordingly, we reject the view taken by the tax authorities on the applicability of sec. 35DDA to the case of the assessee. Claim for deduction of incremental liability - We notice that the Ld CIT(A) has also taken different stand in the earlier years, i.e,, in some years, the Ld CIT(A) has confirmed the disallowance of provision for VRS compensation and in some other years, it has been deleted. A provision for expenses is created for a known liability under the accounting principles. Hence, the said claim made by the assessee is in principle allowable as deduction, since it is a provision created for a known liability. Hence the AO was not right in treating it as a contingent liability. Hence the Ld CIT(A) was right in allowing the same as deduction. However, if the provision so made is not allowed as deduction in any of the years by the AO or the appellate authorities, then the actual payment made out of that provision is allowable as deduction. It is the submission of the assessee that Rs. 3,89,26,463/- represents actual payment made in this year. Hence, if the relevant provision amount had been disallowed in any of the prior years, then the actual payment should be allowed as deduction. However, the relevant details are not available on record. Hence the claim of the assessee requires verification at the end of the AO. Accordingly, we restore this alternative ground of the assessee in all the three years under consideration to the file of the assessing officer for examining the same in the light of discussions made supra. Nature of expenditure - software expenses - revenue or capital expenditure - HELD THAT:- We set aside the order passed by Ld CIT(A) on this issue in all the three years and direct the AO to allow software expenses as revenue expenses. Disallowance of travel expenses on visit of foreigners - HELD THAT:- We notice that disallowance of identical expenses has been made in the earlier years also. The Tribunal has deleted the identical disallowance made in AY 2002-03 [ 2024 (3) TMI 1438 - ITAT MUMBAI] wherein it has followed the decision rendered by the co-ordinate bench in the assessee s own case in AY 1997-98 [ 2016 (1) TMI 1491 - ITAT MUMBAI] . In all these years, the Tribunal noticed that the foreigners are the executives specializing in the business carried on by the assessee and they visit India for business purposes only. Accordingly, the Tribunal has deleted the identical disallowance made in the earlier years. Thus direct the AO to delete the disallowance made in both the years mentioned above. Disallowance u/s 14A - CIT(A) has confirmed disallowance to the extent of 2% of dividend income in AY 2004-05 - HELD THAT:- We set aside the order passed by Ld CIT(A) on this issue in AY 2007-08 and direct the AO to restrict the disallowance u/s 14A to 2% of the dividend income. Addition made by loading unutilized Modvat credit amount to the value of closing stock - as submitted that the AO should be directed to adopt the same method for the opening stock as on 1.4.2004 and that the method of determining the value of stock should be identical both for closing stock and opening stock of any year - HELD THAT:- Accordingly, we direct the AO to adopt the value of closing of one year as the opening stock of the succeeding year. Disallowance of advances written off - HELD THAT:- We notice that the amount so written off is allowable as deduction u/s 28 or u/s 37(1), if the said advances had been given for revenue purposes. In our view, the question of examining the amount so written off u/s 36(1)(vii) shall not arise in this case. A.R submitted that the assessee is having relevant details relating to the advances so written off. This issue requires fresh examination at the end of the AO in both AY 2004-05 and 2006-07. Accordingly, we set aside the order passed by CIT(A) on this issue in both the years under consideration and restore the same to the file of the AO for examining afresh. The assessee is also directed to furnish the details of advances and show that those advances were given for revenue purposes. Determination of Profits of business for the purposes of deduction u/s 80HHC - HELD THAT:- In the instant case, in our view, the royalty receipts are independent source of income. Accordingly, we are of the view that the Ld CIT(A) was justified in confirming the action of the AO in excluding 90% of royalty income from profits for the purpose of computing profits of business as per Explanation (baa) to sec.80HHC of the Act. With regard to other receipts, the Ld A.R submitted that they are covered by the decisions rendered by the Tribunal in earlier years. Accordingly, we direct the AO to follow the decisions rendered by the Tribunal in respect of other receipts. The order passed by Ld CIT(A) is modified accordingly. The matter is restored to the file of the AO for computing deduction u/s 80HHC. Assessment of notional value of rent for the property used by the demerged company - HELD THAT:- We notice that the AO has adopted adhoc rate for determining the Annual letting value. We notice that the said methodology is not in accordance with law laid down by Hon ble Bombay High Court in some of the cases. We also notice that the assessee has also raised similar contentions before the tax authorities. Accordingly, we are of the view that the determination of Annual Letting value (ALV) requires fresh examination. Accordingly, we restore this issue to the file of AO in AY 2004-05 and 2006-07 for determining ALV in accordance with the decisions rendered by Hon ble Bombay High Court. LTCG - determination of fair market value as on 1.4.1981 for the land sold by the assessee - HELD THAT:- We notice that an identical issue has been considered by the co-ordinate bench in AY 2002-03 and 2003-04. When the appeal of AY 2002-03 was pending, the DVO report was brought to the notice of the Tribunal. The DVO had determined the fair market value as on 1.4.1981 at Rs. 71.12 per sq ft. Accordingly, the Tribunal directed the AO to compute the long term capital gains on sale of land by adopting the fair market value as on 1.4.1981 as per the rate determined by the DVO. There should not be any dispute that the long term capital gains has to be computed for the area of land, which is actually sold by the assessee. Accordingly, we direct the AO to compute the long term capital gains on the actual area sold by the assessee and for that purpose, the AO should adopt the fair market value of rate per square feet as on 1.4.1981 as determined by the DVO. Disallowance of adjustment by way of excess/short amount in respect of the year end provision made for expenses - HELD THAT:- There is no dispute that the provision for expenses were made on the basis of estimates made with reliable data. Whatever may be the degree of estimation, there bound to be some difference when the actual bill is received and hence the same would require adjustment on account of excess/short provision. Such adjustment would be a recurring feature and they are considered as current year s expenses as per the accounting principles. Hence, there is no reason to disallow the same. Accordingly, following the order passed by the co-ordinate bench in the hands of the assessee in AY 2008-09 [ 2022 (12) TMI 168 - ITAT MUMBAI] we set aside the order passed by Ld CIT(A) on this issue in all the three years, viz., AY 2004-05, 2006-07 and 2007-08 and direct the AO to delete this disallowance made. Interest u/s 234C is required to be computed on the returned income. Accordingly, we restore this issue to the file of the AO for computing interest u/s 234C as per the provisions of the Act. Charging of Dividend Distribution Tax - contention of the assessee that the rate prescribed under relevant DTAA shall be applicable to Dividend distribution tax also - HELD THAT:- We notice that the above said claim of the assessee is against the decision rendered in the case of DCIT vs. Total Oil India (P) Ltd [ 2023 (4) TMI 988 - ITAT MUMBAI (SB)] Accordingly, we reject this ground of the assessee. Addition made u/s 50C - HELD THAT:- As all the relevant factual aspects, which are necessary for the purposes of sec.50C, have not been furnished by the assessee to the tax authorities. Hence, we are of the view that this issue requires fresh examination at the end of the AO. If the assessee is able to show that it has received part consideration on the date of the entering of agreement for sale in the manner provided in the proviso to sec.50C of the Act, then the assessee would get the benefit of the proviso. In that case, the stamp duty value as on the date of agreement should be compared with the actual consideration.

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• 2025 (4) TMI 1421
  TDS u/s 194H - discounts allowed to its distributors on sale of starter kits and recharge vouchers (RCVs) - HELD THAT:- As relying on Tata Teleservices Limited [ 2018 (5) TMI 703 - ITAT DELHI ] and Bharti Cellular Ltd. [ 2024 (3) TMI 41 - SUPREME COURT ] we hold that no TDS u/s 194H is deductible in case of discounts allowed to the distributors on sale of starter Kits and recharge vouchers. Assessee in default u/s 201 - non-deduction of tax at source under the provisions of section 194J on inter connect usage charges paid by the assessee to the other telecom operators - HELD THAT:- As relying on M/S TATA Teleservices Ltd. [ 2018 (5) TMI 703 - ITAT DELHI ] we hold that no TDS u/s 194J is deductible in case of roaming charges paid. Grounds raised by the assessee are allowed.

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• 2025 (4) TMI 1420
  Disallowing the claim of amortization of surface rights - as submitted what the assessee acquired by incurring the expenditure was an enduring business right in respect of mining the lignite and not acquisition of any fixed asset - HELD THAT:- In the set aside proceedings the assessee brought on record the fact that M/s. RSMML has not claimed any expenditure in relation to acquisition of surface rights of Kapurdi mines on behalf of the assessee for which attention was drawn to Note No.11.6 of Notes to Accounts of M/s. RSMML in its annual report for F.Y. 12-13 where it disclosed that it has not treated the amount received from the assessee for acquiring the mining right for the assessee as its asset or liability in the financial statements but since the title of land at Kapurdi is mutated to M/s. RSMML Ltd., the same is shown at a nominal value of Rs. 1 in its balance sheet. This fact is also confirmed by M/s. RSMML vide letter dt.10.07.2018 (PB 65-68). The AO at para 3.3 of its order for A.Y. 2012-13 has accepted that no benefit has accrued to M/s. RSMML in respect of the said land. Thus, when this fact is on record and not disputed by the AO read with the direction of the coordinate bench, the claim of amortization of surface rights are allowable. Hence by not following the direction of coordinate bench, addition confirmed by both the lower authorities is illegal bad in law and therefore, the same be directed to be allowed. Allowability on account of depreciation on intangible asset in the nature of business right acquired on account of issue of equity shares free of cost - Whether mining lease transfer deed does not involve payment of any consideration? - HELD THAT:- The assessee is failed to demonstrate any visible benefit accrued to it by virtue of this free allocation of shares to M/s. RSSML. There is no documentary evidence furnished before us which confirms any sort of technical or other support being drawn by the assessee out of this transaction. As an appropriate amortization charge where the benefit to the assessee was visible in the form mining lease charges paid are duly allowed, but on this issue we are not convinced with the claim of the assessee that any intangible asset came into existence which benefited the assessee in terms of its business operation. Assessee is not entitled to claim the depreciation on this show called intangible asset. Hence the orders of authorities below are sustained and ground raised by the assessee is dismissed.

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• Customs

• 2025 (4) TMI 1419
  Prohibiting the employment of contract labour at the Central Warehousing Corporation s Inland Clearance Depot (ICD) - Challenge to notification dated 17 November 2006 issued by the Ministry of Labour and Employment, Government of India, whereby employment of contract labour in the petitioner s establishment was prohibited - non-application of mind, as required by, and in accordance with, Section 10 (2) of Customs Act, 1962. Whether Incidental or Necessary, the Nature of Work Carried Out by Contractual Labourers at CWC s ICD, Patparganj? - HELD THAT:- From interpretation of Section 10 (2) (a), it appears that the argument of work carried out being incidental to, rather than a core function of the enterprise, holds no water. Furthermore, keeping in mind the language of the section incidental to, or necessary for the industry, , the finding of the committee that contract labour has been carried on by the same workers despite changes in contractors since 1985 speaks to a certain necessary nature of the work being carried out. Whether the Work is of a Perennial nature - HELD THAT:- The CACLB s findings on the subject are that the work is of perennial nature, and that the same is evidenced by the continued hiring of the same workmen since 1985. Their analysis confirms the argument of the UOI that regardless of trends of mechanisation, a manpower element will always be required given the nature of work - This drastic decline in total staff employed by the CWC from the year 2000 until 2020 does not reflect in the fluctuations of contract labourers deployed, which were largely similar over 18 years out of the 20-year period for which data was produced. Whether work is done ordinarily through regular workmen in that establishment or an establishment similar thereto? - HELD THAT:- The UOI echoes the unequivocal finding of the CACLB in its 53rd MoM that similar work is being carried out by regular employees at a similar establishment of the CCI. Whether the work is sufficient to employ a considerable number of whole time workmen? - HELD THAT:- The deployment of around 300 contractual labourers each year over 18 years out of a 20-year timeframe speaks to a sufficiency of work. This number is no small one, and cannot be brushed aside as being insignificant. Conclusion - i) There has been no error committed by the Government in the passing of the impugned notification and that the CACLB s 53rd MoM shows application of mind to the factors enshrined within Section 10 (2) (a) with specific consideration of data pertaining to the ICD at Patparganj. ii) The impugned notification 17 November 2006 issued by the Ministry of Labour and Employment, Government of India, under Section 10 (1) of the Act in respect to the prohibition of employment of contract labour at the CWC s ICD at Patparganj is upheld. Petition disposed off.

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• 2025 (4) TMI 1418
  Classification of imported Roasted Areca Nuts - to be classified under Chapter Heading 2008 19 20 (Chapter 20) or under Chapter Heading 080280 (Chapter 8) of the Customs Tariff Act, 1975 for the purpose of levy of Basic Customs Duty (BCD)? - HELD THAT:- Considering the submissions made by learned advocates for the respective parties, without entering into the merits of the matter, the petition is disposed of by issuing the directions in the interest of justice - The petitioner shall deposit Rs.3,25,000/- being 15% of 30% Basic Customs Duty and 10% SWS on BCD on declared value of the goods imported. Petition disposed off.

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• 2025 (4) TMI 1417
  Waiver of detention and demurrage charges on imported goods detained by Customs - respondent No. 4 is a delivery agent of the shipping line - respondent No. 4 is bound by the waiver letter issued by respondent No. 2 to deliver the Cargo to the petitioner or not - Authorized Sea Carrier or an Authorized Carrier under the SCMTR, 2018 - HELD THAT:- As per the provisions of the Regulations, 2018, the Authorized Carrier means an Authorized Sea Carrier, authorized train operator or a custodian, registered under Regulation 3 and postal authority. Respondent No. 4 is registered under sub-regulation (3) as Authorized Sea Agent which is apparent from the inquiry made by respondent Nos. 1 and 2 on the portal of the regulation. Therefore, the contention of the respondent No. 4 that the Regulations are not applicable to respondent No. 4 cannot be accepted. The contention raised on behalf of respondent No. 4 that the respondent No. 4 is only a delivery agent appointed by authorized Sea Carrier as per the definition of section 2 (1) (d), respondent No. 4 is neither the authorized Carrier nor Authorized Sea Carrier nor an authorized train operator or a custodian as defined under section 2 (1) (e) and 2(1) (f) and therefore, the Regulations are not applicable to the respondent No. 4 who is only the owner of the containers and was asked to deliver the goods to the petitioner as a delivery agent of the Authorized Sea Carrier and therefore, the contention that, the impugned waiver letter dated 17.01.2025 is not binding upon the respondent No. 4, is not tenable in view of the fact that respondent No. 4 is already registered as an Authorized Sea Agent and was an agent of the Authorized Sea Carrier who has filed the Bill of Lading in question. The provision of Regulation 10 (1) (l) of Regulations, 2018 makes it clear that the Authorized Carrier is not permitted to demand any container detailed charges if the containers are detained by the customs for the purpose of verifying the entries made under section 46 and section 50 of the Act, if the entries are found to be correct. In the facts of the case by letter dated 10.10.2025, respondent No. 2 has granted No Objection Certificate for release of the goods as the Bill of Entry was found correct and accordingly waiver letter dated 17.01.2025 was issued and accordingly, the petitioner is exempted from making payment of detention charges from 24.12.2024 to 10.01.2025. Conclusion - i) The waiver order/letter dated 17.01.2025 issued by respondent No. 2 is binding upon respondent No. 4 and respondent No. 4 is required to implement waiver order passed by the respondent No. 2 as per the provisions of the Regulation 10 (1) (l) of the Regulations,2018. ii) The respondent No. 4 is hereby directed to release the goods which is under their custody and not under the detention of the Customs authority by implementing waiver letter dated 17.01.2025 for waiver of the detention charges under Regulation 10 (1) (l) Regulations, 2018 for the period from 24.12.2024 to 10.01.2025 as stated in the waiver letter. Petition disposed off.

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• 2025 (4) TMI 1416
  Vires of Impugned Policy Circular No. 06/2018 dated 22.05.2018 - unlawfully inserting additional conditions - benefits under the Service Export from India Scheme (SEIS) - issuance of SCN to cancel the scrips issued to the petitioner under the scheme notified as Service Export from India Scheme (SEIS) - HELD THAT:- On perusal of Section 28AAA of the Customs Act, 1962, it is clear that the impugned show cause notice is in nature of recovery of consequential proceedings to the order passed by the DGFT which still holds the field and as such the respondent authorities are required to adjudicate the show cause notice in the facts of the case and no interference is called for at this stage. The Hon ble Supreme Court in catena of decisions has held that the Court should not interfere at the stage of issuance of show cause. Whereas in the facts of the case when the impugned show cause is consequential to the order in original passed by the DGFT, any observation or interference by this Court may hamper further challenge to such order-in-original passed by DGFT before appropriate forum. No interference is made at this stage as the petition is filed at a premature stage in view of the fact that the very issue of challenge to the impugned Circular No. 6 of 2018 shall be the subject matter of challenge by the petitioner or to challenge the order-in-original passed by the DGFT and therefore in such circumstances, the petition is not entertained and accordingly dismissed in limine. Conclusion - i) The petition challenging Circular No. 06/2018 and the Show Cause Notice dated 21.06.2024 is dismissed in limine as premature. ii) No interim relief restraining the respondents from adjudicating the Show Cause Notice is granted. Petition dismissed.

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• 2025 (4) TMI 1415
  Reasonable belief to seize 3998.83 grams of gold or not - evidences available on record prove that the seized gold bars were smuggled into India from Bangladesh without any legal documents - discharge of burden of presumption under section 123 of Customs Act, 1962 - failure to follow the procedure prescribed under section 138B vitiated the proceedings in the impugned case - reliability of statements of Manoj Kumar Nishad Shri Rajan Kumar Sahni, later retracted. Whether Department could establish the Reasonable belief to seize 3998.83 grams of gold valued at Rs 2,12,79,096, from Shri Manoj Kumar Nishad Shri Rajan Kumar Sahni, travelling by Bus No UP-22AT-0568, on 04-05/09/2020, from Gorakhpur to Delhi? - Whether evidences available on record prove that the seized gold bars were smuggled into India from Bangladesh without any legal documents? - HELD THAT:- The power bestowed in Section 110 of the Customs Act, 1962, places a pre-condition for such seizure. The essential pre-condition being that the proper officer should have reasons to believe that that such goods are liable to confiscation under the Act; once such seizure is done, Section 123 of the Customs Act, 1962 shifts the burden of proof to prove that goods are not smuggled on the person from whom the goods are seized - he impugned Gold was seized from Shri Manoj Kumar Nishad Shri Rajan Kumar Sahni, travelling by Bus No UP-22AT-0568, on 04-05/09/2020, from Gorakhpur to Delhi. Understandably, seizure took place at a place far away from Customs Station, Air or Sea port, in an area not specified under a Section 111(H), as notified under Section 6 of the Customs, Act,1962; there were no foreign markings on the gold pieces seized; the purity was found to be 99.92, 97.81,99.26 and 89.34 and not 99.99 % by weight. It was not established that the persons apprehended were coming to India, form as place outside India. Hon ble Delhi High Court in the case of Shanti Lal Mehta v. UOI and Others [ 1982 (11) TMI 56 - HIGH COURT OF DELHI] . The Hon ble High Court reviewed the jurisprudence on the matter till then and set aside the confiscation and penalty on the ground that there was lack of reasonable belief on part of the proper officer before the seizure was affected and section 123 was not to be invoked. There is no document available on record to establish that gold bars/pieces were smuggled into India from a place outside India. The analysis of CDR only indicates that Shri Sharad Chandra Agrahari was in touch with Shri Manoj Kumar Nishad Shri Rajan Kumar Sahni at various places and on various dates in India - The impugned order has concluded that the said gold bars/pieces were smuggled into India only on the basis of retracted statements without any concrete evidence to substantiate this claim. Hence, we hold that material evidence available on record that establishes that the officers had reasonable belief to seize the goods. Whether the appellants Shri Sharad Chand Agrahari of M/s Bajrang Billion Traders, in the facts and circumstances of this case, discharged the burden of presumption under section 123 of Customs Act, 1962? - HELD THAT:- No critical details about the persons who carried the gold from across the border, what was place of crossing the international borders, what was the mode of transport and how the finances were arranged etc. were neither asked by officers nor stated by the accused. The facts claimed to have been confessed regarding the alleged smuggling of the impugned Gold are very general in nature. It would be very na ve to expect that the accused would confess the most minute details, even if they actually smuggled the impugned goods. What is intriguing is that the officers did not even put the relevant and pertinent questions to unearth or establish the act of smuggling. As such, it is not open for the department to draw conclusions from a general statement to particularize the details about the impugned goods. As admittedly, the gold having no foreign markings, the onus would be on department to prove the smuggled nature of the same. This onus was not discharged. Moreover, the provisions of Section 138B of the Customs Act have not been complied with and therefore, the sanctity of the statement recorded under section 108 has been lost and consequently, they cannot be conclusively relied upon. Whether not-following the procedure prescribed under section 138B vitiated the proceedings in the impugned case? - HELD THAT:- In the instant case the Adjudicating Authority did not follow the procedure, laid down under Section 138B, in order that he could rely on the statements of Shri Manoj Kumar Nishad Shri Rajan Kumar Sahni, who are co-accused, to conclude that the impugned gold was liable for confiscation. The mandate not having been followed statements of the Shri Sharad Agrahari etc. cannot be held to be voluntary in nature and hence reliable. The provisions of Section 123 are not invited. Even assuming that the same are attracted, the appellants have discharged the burden which is not negated by the department. The proceedings were vitiated for not following the procedure laid down under Section 138B of the Customs Act,1962. Principles of Natural Justice have been violated in not examining the witnesses as per Section 138B. Whether the statements of Manoj Kumar Nishad Shri Rajan Kumar Sahni, later retracted, can be relied upon to establish that the goods are liable for confiscation and the persons are liable to pay penalty Section 112(b) of the Customs Act,1962? - HELD THAT:- No case has been made by Revenue, for seizure or confiscation of the impugned gold, Pithu Bag and packing material. Consequently, no case has been made for imposition of penalties. Conclusion - i) The Department failed to establish reasonable belief at the time of seizure; hence, the seizure was not sustainable and Section 123 could not be invoked. ii) The appellants discharged their burden of proof under Section 123 by producing credible documentary evidence, which was not effectively negated by the Department. iii) Non-compliance with Section 138B vitiated the reliance on statements recorded during investigation. iv) The retracted confessional statements of co-accused cannot be relied upon for confiscation or penalty. Appeal allowed.

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• 2025 (4) TMI 1414
  Classification of imported silicon steel scraps - classifiable under Customs Tariff Heading (CTH) 7204 49 00 as claimed by the appellants or under CTH 7225 19 00 as held by the adjudicating and appellate authorities - requirement of import authorization under Para 2.17 of the Foreign Trade Policy (FTP) - redetermination of value of impugned goods from 400$ PMT to 650$ PMT - confiscation - penalty. Whether the silicon steel scraps imported by the appellants is classifiable under CTH 72044900 as declared by the appellants are under CTH 72251900 as arrived at by the impugned order and as to whether the appellants require import authorization from DGFT in terms of Para 2.17? - HELD THAT:- The report of the Chartered Engineer appointed by the Department itself is categorical in holding that the impugned goods are not scrap in view of the Para 8A of Section XV of the Customs Tariff Act, 1975 which states that metal waste and scrap from manufacture or mechanical working of metals and metal goods definitely not usable as such because of breakage, cutting up, wear and other reasons. The original authority finds that there is variation between the Chartered Engineer certificate and the re-examination report by customs officers; Chapter Head 72.04 excludes articles which can be used for their former purposes or can be adopted for other uses with or without repair or renovation. Though the classification of the goods shall not depend on the end use, it will be in the fitness of things to view the claim of the importer in the facts and circumstances of each case. In the instant case, the fact that the Chartered Engineer has reported that the such kind of goods cannot be are not re-used directly in the present condition for original purposes and are used as scrap cannot be ignored. Also, the request of the appellant for mutilation gives credence to the claim. Moreover, the impugned goods fulfill the condition of Note 8(a) of Section XV of the Tariff Act, that metal waste and scrap from the manufacture or mechanical working of metals, and metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons, in view of the Chartered Engineer Certificate. The Appellate Authority is not a metallurgical expert to give a finding of this nature, when the Chartered Engineer and the Shed Officer have given categorical report on the condition of the impugned goods. In view of this, we find that the impugned goods are rightly classifiable as other waste and scrap falling under CTH 7204 49 00. In any case, the classification determined in the Impugned Order is incorrect as the goods have a width of 0.20 mm to 0.30 mm, i.e. less than 600 mm and mostly grain oriented, taking them out of the ambit of CTH 7225 19 00 - the Impugned Order is liable to be set aside, both the rejection of classification under CTH 7204 49 00 and classifying the same CTH 7225 19 00 are without any basis, reason and evidence. Re-determination of value as done by the impugned order - HELD THAT:- There was no misdeclaration of classification, no grounds arise for redetermination of the value. The appellants submit that the value of the impugned goods cannot be rejected under rule 12 of the valuation rules and arbitrarily valued at USD 650 per MT; transaction value is not liable to be rejected as it is in consonance with the contract; essential element in valuation is that each transaction has to be assessed independently. The transaction value, under Section 14 of the Customs Act, 1962, is the price actually paid or payable. As per Rule 3(2) of the Valuation Rules, transaction value cannot be rejected except when the circumstances mentioned in the proviso to Rule 3(2) exist. It is not proved that the exceptions exist in this case - there is force in the appellants submission that enhancing the value of the imported goods solely on the basis of the CE report is not one of the methods provided in Valuation Rules, 2007 - the original authority as well as first appellate authority have arbitrarily determined the value at 650 USD per metric ton (C F) without showing any basis to arrive at the valuation. Whether the impugned goods are rendered liable for confiscation and the appellant are rendered liable for penalty? - HELD THAT:- On the issue of applicability of BIS certificate for the impugned goods, as per CBEC iinstructions read with the Quality Control Order, 2012, it applies to CTH 7225 1100 or CTT 7226 1100 and not to the impugned goods falling under CTH 7204 49 00. We are of the opinion that for the same reasons, Para 2.17 of the FTP 2009-14 is also not applicable to the impugned goods which are in the nature of Scrap and not second-hand Goods. As there is no mis-declaration of either the classification or the value of the goods, the question of imposing fines and penalties does not arise and therefore, it is not found necessary to discuss the appellants submissions in this regard. Conclusion - i) The impugned goods are rightly classifiable as other waste and scrap falling under CTH 7204 49 00. ii) The declared transaction value cannot be rejected merely on suspicion or on the basis of the Chartered Engineer s report which does not provide a basis for valuation. The Revenue has failed to discharge the burden of proof to establish undervaluation. iii) There being no misdeclaration or violation of law, the goods are not liable for confiscation under Section 111(d) or 111(m), and no penalty or redemption fine is imposable on the appellants. The impugned orders are not sustainable and are liable to be set aside - Appeal allowed.

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• Corporate Laws

• 2025 (4) TMI 1413
  Investigation into the affairs of the respondent company - eligibility to file an application under Section 213 of the Companies Act, 2013 - Illegal allotments of convertible debentures at a discount - illegal increase in authorized share capital of company - conversion of Respondent No. 1 Company from a private to a public entity - Illegal borrowing of funds based on fraudulent documentation - HELD THAT:- Admittedly the appellant is not a member of the Respondent No.1 company, hence cannot allege the business of Respondent No.1 company is being conducted in a manner oppressive to its members; or the company is guilty of fraud, misfeasance or other misconduct towards its members; or members of the company have not been given due information etc. The only argument of appellant is the business of the respondent company is being conducted with an intent to defraud its creditors, though the appellant was unable to substantiate his allegations the creditors of the company are being defrauded. Admittedly the appellant and the Respondent are in money dispute and arbitration proceedings are pending between two. It appears to circumvent such proceedings and to create pressure upon Respondent company, the appellant had filed the present Company Petition seeking investigation into its affairs. The Ld. NCLT has held the petition is not maintainable under sub-section (a) of Section 213 of Companies Act, 2013 - petition disposed off.

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• Insolvency & Bankruptcy

• 2025 (4) TMI 1412
  Admission of section 7 application - initiation of CIRP against Corporate Debtor - existence of debt and default by the Corporate Debtor or not - HELD THAT:- The Adjudicating Authority in the impugned order has recorded a categorical finding of existence of debt and default . The Adjudicating Authority also noted in its order that settlement proposal submitted by the CD was rejected by the Financial Creditors - The proceedings in this Appeal also indicate that there has been acknowledgment and acceptance of debt and default and the amount deposited before this Tribunal by the Appellant is also towards the acknowledgment and acceptance of debt and default. There being admitted debt and default, there are no error in the order of Adjudicating Authority initiating the CIRP. The Hon ble Supreme Court in GLAS Trust Company LLC vs. BYJU Raveendran Ors. [ 2024 (10) TMI 1185 - SUPREME COURT (LB) ] has laid down the law that for withdrawal of CIRP, the appropriate course open for the parties to initiate proceedings under Section 12A with Regulation 30A. Thus, for withdrawal of the proceedings, appropriate measures have to be taken under Section 12A and Regulation 30A of the CIRP Regulations before the Adjudicating Authority. By interim order passed by this Tribunal on 18.10.2024, the Committee of Creditors (CoC) could not be constituted by the IRP. In the facts of the present case, the CoC needs to be constituted to find out the claim of the Financial Creditors and to permit the Financial Creditors and other claimants to file their claims and the IRP to collate the claims. Any proposal submitted by the Appellant, may also include the payment of amount of Rs.369.11 crores deposited in this Tribunal for payment to the Lenders, can be placed by the IRP/ RP before the CoC to obtain the decision. The Members of the CoC at that stage needs to take a decision with requisite vote share, as to whether withdrawal of the proceedings is to be done or not. In the facts of the present case, we are of the view that the amount deposited in this Tribunal of Rs.369.11 crores may await the decision of Adjudicating Authority. In event the CoC does not accept the settlement proposal of the Appellant, liberty granted to the Appellant to file an Application for withdrawal of the amount deposited in this Tribunal. Conclusion - i) The Adjudicating Authority s order admitting the Section 7 Application and initiating CIRP is upheld. ii) The CIRP shall proceed with constitution of the CoC and consideration of claims. iii) The Appellant may submit a settlement proposal to the CoC, including the deposited amount, for consideration under Section 12A and Regulation 30A. The order passed by Adjudicating Authority dated 15.10.2024 admitting Section 7 Application filed by the Financial Creditors is upheld - appeal dispose doff.

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• 2025 (4) TMI 1411
  Onerous contract under Regulation 10 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (Liquidation Regulations) - Leave and License Agreement - divergence of the opinion between the parties holding the transaction as onerous under Regulation 10 of the Liquidation Regulations, 2016 - Regulation 10 of the Liquidation Regulations, 2016 is beyond the provisions of the IBC and ultra vires to IBC or not. Divergence of opinion between the two judgements delivered by the Hon ble Technical Member and Judicial Member - HELD THAT:- udicial Member after considering the submissions of the parties and noticing all relevant facts have come to the conclusion that Leave and License Agreement 07.06.2019 is unprofitable and burdensome and affects the provision of Regulation 10 of the Liquidation Regulation 2016. The facts as noticed above clearly indicates that Leave and License Agreement was entered for rent of Rs.5,000 p.m. On a letter sent by liquidator asking the appellant to vacate, appellant himself came with the proposal that he is ready to enter into Leave and License Agreement for amount of Rs.2.25 lakhs p.m - The submission which has been pressed by the appellant is that although Technical Member has declared the transaction to be covered by Regulation 10 of the Liquidation Regulations, 2016, however, the Ld. Judicial Member has not found the transaction as onerous. Regulation 10(1)(b), includes unprofitable contracts thus, Judicial Member has also come to the conclusion that transaction is covered by one of the illustrations given under onerous property in Regulation 10. In paragraph 10 Ld. Judicial Member has obviously referred to Regulation 10(1)(d), which mentioned unprofitable contracts which can be basis for disclaimer of onerous property - the submission of the appellant that there is divergence of opinion between Technical Member and Judicial Member. Ld. Judicial Member has given detailed reason, including the conduct of the corporate debtor and come to the conclusion that the transaction 07.06.2019 was not bona fide and good faith transaction, not accepted. Thus, both the Ld. Members have expressed the opinion that transaction of Leave and License Agreement dated 07.06.2019 was an onerous transaction covered under Regulation 10, hence there is no error in partly allowing the I.A.2012/2022 by the adjudicating authority. Regulation 10 is beyond the provisions of the IBC and is ultra vires to the IBC or not - HELD THAT:- Regulation 10 of the Liquidation Regulation, 2016, is thus regulation specified and is fully covered by Section 35(1)(o). Liquidation Regulation has been framed in exercise of powers conferred under various sections of the IBC including Section 34 and Section 35, thus regulations have been clearly framed under Section 35 and as per Section 35(1)(o) liquidator can perform such other function as maybe specified by the board. The power vested in the liquidator by Regulation 10 i.e., disclaimer of the onerous property is thus fully covered by provisions of the IBC and cannot be held to be beyond IBC or ultra vires to the IBC as contented by counsel for the appellant. Regulation 10 has been framed in accordance with the provisions of the IBC and the Regulation 10 empowering the liquidator to disclaim a contract is well within the statutory powers and the Regulation 10 is fully inconsonance with and is in accordance with the provisions of the IBC and has been enacted to give effect to the provisions of the IBC - thus there are no substance in the submission of the appellant that Regulation 10 is beyond the provisions of IBC. Conclusion - i) Both the Ld. Members have expressed the opinion that transaction of Leave and License Agreement dated 07.06.2019 was an onerous transaction covered under Regulation 10, hence there is no error in partly allowing the application by the adjudicating authority. ii) There are no substance in the submission of the appellant that Regulation 10 is beyond the provisions of IBC. There are no error in the order passed by the adjudicating authority - appeal dismissed.

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• 2025 (4) TMI 1410
  Admission of Section 7 application filed by the IDBI Trusteeship Services Limited - existence of financial debt and default are sufficient to initiate the CIRP or not - requirement of Adjudicating authority to apply his mind - HELD THAT:- The facts indicate that for last more than five years, no payment towards interest or principal has been made. It was principal borrower who has issued debentures and the liability to pay the principal and interest cannot be washed of on the ground that project accounts were to be operated by IDBI Trusteeship Services Ltd. Reliance placed on the judgement of this Tribunal in Sandeep Jain Vs. IDBI Trusteeship Services Ltd. Anr. [ 2025 (2) TMI 522 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI - LB ], which was also an appeal filed by suspended director of M/s. Shree Vardhaman Infra Heights Pvt. Ltd., challenging an order admitting Section 7 application filed by the same financial creditor. The submission was raised on behalf of the appellant in the said case that there was project managing committee constituted to monitor the project and project monitoring committee consists of financial creditor who were in majority, hence the corporate debtor could not have been held liable to discharge of the debt. It was held by this Tribunal that the constitution of project managing committee to assist and improve the operation and construction in no manner diminish the obligation of the corporate debtor to fulfil its payment obligation. Conclusion - There are no substance in the submission that the project account was to be operated under the instruction of IDBI Trusteeship, hence the corporate debtor is not liable for its payment obligation. The present is a case where after receiving the amount by virtue of issuance of debentures in the year 2016 and again in 2021 no payment towards principal and interest have been made. The adjudicating authority has not committed any error in admitting Section 7 application against the principal borrower and the corporate guarantor by the impugned orders dated 29.04.2024 and 07.05.2024. There are no merit in any of the appeals. Both the appeals are dismissed.

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• 2025 (4) TMI 1409
  Withdrawal of amount from the Corporate Debtor s bank account during the moratorium period under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) - continuing non-cooperation of the Appellants as well as the brazen disobedience of the Appellants - only plea that has been taken by the Appellants to rebut the allegation of abject non-cooperation is illness of the Appellants - HELD THAT:- The Appellant is hit very hard by res judicata with respect to raising the appeal to deposit of Rs.32,00,000. The matter has been well settled by the Adjudicating Authority and there are no infirmity in the order. CA 1253/2020 was preferred during the CIRP stage. Through the filing of IA 2021/2022 by the liquidator the fact of continuing non-cooperation of the Appellants as well as the brazen disobedience of the Appellants vis-a -vis Orders passed by the AA and this Appellate Authority qua wrongful utilisation of Rs. 32 lakhs during the CIRP moratorium are once again reinforced. The IA 2021/2022 was heard and was decided by the Impugned Order dated 16.01.2025 - the Appellants had shown continued non-cooperation during the CIRP and during the liquidation process, and the same is continuing as on date. The order dated 9th November 2021 has not been challenged before the Appellate Authority and has thus attained finality - there are no infirmity in the orders of the Adjudicating Authority in allowing IA No 2021 of 2022 which prays to direct the suspended Directors to deposit to the account of the Corporate Debtor an amount of Rs. 32 lakhs along with interest at the rate of 12% per annum from the date of withdrawal, in compliance of orders dated 9 th November 2020. Conclusion - The withdrawal of Rs. 32 lakhs during the moratorium declared under Section 14 of the IBC was in violation of the provisions of the Code and the amount along with interest @12% per annum from the date of withdrawal is liable to be deposited into the liquidation estate. The appeal of the suspended directors dismissed as it is devoid of any merits.

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• 2025 (4) TMI 1408
  Validity of allotments of residential units made by the Corporate Debtor on the date of commencement of the Corporate Insolvency Resolution Process - authority of Interim Resolution Professional (IRP) to cancel such allotments made on the date of CIRP commencement without issuing any show-cause notice or adjudicatory proceedings - HELD THAT:- The present is a case where IRP who was running the CD as a going concern under orders of this Tribunal, while going through the records of the CD, came to know about the units allotted to the Appellant(s). The RP found that allotments were claimed on 19.09.2019, on which date CIRP had already commenced and there was no authority in the CD, to make any allotment on 19.09.2019. When the CIRP has commenced on 19.09.2019, the jurisdiction of the Suspended Director clearly came to an end and no allotment letter could have been issued on 19.09.2019. The allotment, which is claimed on 19.09.2019 appeared to be unusual, since it was made without receiving any payment in the account of the CD and the payments were received in the account of the CD on 07.12.2019 to 15.01.2020 with regard to the Appellant(s) herein. The IRP is duty bound to protect the assets of the CD and if it is found that allotment claimed by the Appellant(s) is void, the allotment was impermissible in view of the moratorium imposed on 19.09.2019 and it required no adjudication for treating the allotment as void and impermissible. The submission of the Appellant is that allotments and payments made by the Appellant are reflected in records of the CD, hence, the allotment was actually made and could not have been declared invalid by the IRP. The materials on the record, including the letter of allotment dated 19.09.2019 in favour of the Appellant without any payment to the designated account, which payment according to the materials on record is claimed to be made only in December 2019 and January 2020, clearly prove that allotment made in favour of the Appellant(s) is non-est and without any authority. Conclusion - i) The allotment letters dated 19.09.2019, the same day CIRP commenced, were issued by the Suspended Management without any approval or consent of the IRP. The Suspended Management had no authority to allot units on or after the date of CIRP commencement. ii) The IRP did not exercise adjudicatory powers but acted within his duty to protect the assets of the Corporate Debtor under the moratorium. The cancellation communicated to the Appellants was a protective administrative act and not an adjudicatory decision. iii) The Applications filed by the Appellants challenging the cancellation of allotments were rightly rejected by the Adjudicating Authority as the allotments were void ab initio and payments made were not in accordance with the terms and moratorium provisions. There are no error in the order of the Adjudicating Authority rejecting Applications filed by the Appellant(s). There is no merit in the Appeal. The Appeals are dismissed.

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• 2025 (4) TMI 1407
  Rejection of Section 7 application - prohibition on deduction of liquidated damages from the final invoices of the Corporate Debtor, in view of approved resolution plan - HELD THAT:- The reliance on the approved Resolution Plan regarding extinguishment of the claim has no effect on the liquidated damages which were already deducted by Hindustan Petroleum Corporation Limited from the invoices as per the terms and conditions of the Purchase Order. When the Resolution Professional was allowed to carry on the contract work after initiation of the CIRP, the said contract has to be carried out as per the terms and conditions and deduction of the liquidated damages from the invoices being part of the terms and conditions for carrying out the contract that cannot be faulted nor any direction after approval of the Resolution Plan can be issued for refund of such liquidated damages. Extension of 12 months is extension for completion of the work and liquidated damages deducted after 16.11.2021 has already been refunded - the Adjudicating Authority did not commit any error in rejecting the application filed by the Appellant. The present is a case where it is not the case of the Hindustan Petroleum Corporation Limited that any claim towards liquidated damages is due on the corporate debtor nor any claim prior to CIRP or during the CIRP was filed. The present is a case where Successful Resolution Applicant after approval of the plan was asking for refund of deducted liquidated damages which deduction was made from invoices during the currency of the contract as per the terms and conditions of the contract - extinguishment of the claims, liquidated damages on account of approval of the plan has no effect on the liquidated damages already deducted as per terms and conditions of the contract. It is true that any claim which was not filed or not part of the Resolution Plan shall stand extinguished on the approval of the Resolution Plan but that does not mean that any liquidated damages deducted during currency of the contract should be allowed to be refunded to the Successful Resolution Applicant. Conclusion - The Adjudicating Authority rightly rejected the application seeking refund of liquidated damages deducted during the CIRP period. Appeal dismissed.

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• 2025 (4) TMI 1406
  Transfer of flats - transfer declared as void and subject to charge - fraudulent transaction under Section 66 of the Insolvency and Bankruptcy Code (IBC), 2016 or not - HELD THAT:- The judgment, which has been relied by learned Counsel for the Respondent in Royal India Corporation Ltd. [ 2024 (5) TMI 999 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] of this Tribunal supports the submission of Respondent that action under Section 66, sub-section (1) can be taken against any person. The judgment of this Tribunal in Tridhaatu Kirti Developers LLPi [ 2023 (1) TMI 455 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI ] also supports the submission of learned Counsel for the Respondent. There are no error in the judgment of Adjudicating Authority insofar as it has held that transaction of payment of consultancy charges to Appellant Nos.1 and 2 were not bona-fide transaction. The present is a case where Adjudicating Authority has also held that payments of consultancy charges to the Appellants is fraudulent and in exercise of power under Section 66(1) has directed the said contribution void. We, however, relying on the judgment of Tripura High Court in Smt. Sudipa Nath agree with the submission of the Appellant that Adjudicating Authority could not have declared the Sale Deed in favour of the Appellants dated 21.08.2017, as void - the Sale Deed was obtained by the Appellants of two Flats by payment of consideration of Rs.69,00,000/- each, out of which Rs.55,20,000/- was obtained by loans, and the Lenders, transferred the said amount in the account of the CD and loans having been taken by the Appellants, the Appellants are still discharging the liabilities of the loans - sale transaction in favour of the Appellants could not have been declared void. Conclusion - The sale transaction in favour of the Appellants could not have been declared void. The sale was made and consideration amount was received in the account of the CD and after receiving the amount, it was transferred. Mere transfer of amount to a related company does not lead to a conclusion of fraudulent sale. Appeal allowed in part.

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• 2025 (4) TMI 1405
  Admission of Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) - application was barred by limitation or not - default date and the date of filing - Petition lacked threshold support or not - fraudulent claims and material suppression. Whether the appeal is time barred or not? - HELD THAT:- The limitation period under the Limitation Act, 1963, is governed by Section 22, which provides that in the case of a continuing breach, limitation runs afresh with each successive instance of default. The Corporate Debtor s failure to hand over possession of the flats and its continuing default in refunding amounts to the allottees constitute a continuous cause of action. The directions issued by UP RERA from time to time, including the refund order dated 13.10.2020, its amendment on 18.06.2022, and the project registration cancellation on 24.12.2022, reaffirm the subsistence of debt and the ongoing breach by the Corporate Debtor. Furthermore, the acknowledgement of debt in the Corporate Debtor s balance sheet on 30.06.2022 extends the limitation period under Section 18 of the Limitation Act, 1963. It is to be noted that an acknowledgement of liability within the limitation period gives rise to a fresh period of limitation. Therefore, the present petition, filed on 09.01.2024, is well within time - the Appellant s contention that the Company Petition is barred by limitation is misconceived. The present Application which was filed on 19.01.2024 is found to have been filed within the limitation period as per Section 18 of the Limitation Act, 1961 and there are no infirmity in the orders of the AA on this count. Threshold required under Section 7(1) of IBC - H ELD THAT:- It is noted that whether they have obtained recovery certificates or not, the Respondents - Allottees remain Financial Creditors under Section 5(8)(f) of the Code, as they have not received possession of the allotted flats, and their deposited amounts have not been refunded in full. The Corporate Debtor s claim that certain Applicants have settled their dues is also unsupported, as their outstanding amounts continue to reflect in the Corporate Debtor s financial statements. Therefore, for the purpose of determining the threshold under the second proviso to Section 7(1) of the Code, Answering Respondent, including those holding recovery certificates, will be considered Financial Creditors. Whether the Company Petition under Section 7 of the Code has been initiated fraudulently and with malicious intent? - HELD THAT:- The Adjudicating Authority has held that the Corporate Debtor failed to produce any documentary evidence to substantiate its claim that the present proceedings were initiated with fraudulent or malicious intent. The mere fact that some applicants may have obtained recovery certificates does not preclude them from initiating proceedings under the Code, as long as the fundamental criteria of debt and default are satisfied, which has been established in this case. This Appellate Tribunal in Monotrone Leasing Pvt. Ltd. v. PM Cold Storage Private Ltd., [ 2020 (8) TMI 386 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ], had held that penal action under Section 65 of the Code can only be taken where there is substantial evidence proving that the insolvency resolution process has been initiated fraudulently or for an ulterior motive. The proceedings under the Code are summary in nature, and the burden of proving fraudulent intent lies upon the party alleging it. In the present case, the Appellant has failed to produce any cogent evidence to support its allegations. The mere assertion that the applicants are engaging in forum shopping or that some allotments are disputed does not meet the rigorous standard required to invoke Section 65 of the Code. Moreover, even if certain allottees are excluded, the number of remaining applicants still satisfies the statutory threshold, rendering the present application maintainable. In view of the above, the allegation of fraudulent and malicious intent is completely baseless and has been rightly rejected by the Adjudicating Authority. We don t find any infirmity in the Impugned Order on this count. The burden of proving fraudulent intent lies with the Appellant and mere assertions by the Appellant cannot be used to invoke penal action under Section 65 of the IBC. There are no material evidence on record to suggest any malicious and fraudulent intent on the part of the Applicants Homebuyers - In the present case, the total number of units in the project is 247, and the Answering Respondent collectively hold 34 allotted units, thereby meeting the statutory threshold. The Appellant s objection regarding the eligibility of certain allottees is without merit as the Answering Respondent satisfy the threshold requirement under Section 7(1) of the Code. Conclusion - i) The petition is not barred by limitation due to continuing default and acknowledgment of debt. ii) The Respondents satisfies the statutory threshold to initiate CIRP. iii) No fraud or malicious intent is established to invoke Section 65 penalties. iv) The Corporate Debtor is liable for pre-existing debts despite conversion. v) The Adjudicating Authority did not err in admitting the petition and initiating CIRP. Appeal dismissed.

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• 2025 (4) TMI 1404
  Dismissal of Section 9 Application filed before the Adjudicating Authority - initiation of CIRP - Existence of debt and default or not - quality of goods or services - breach of a representation or warranty - HELD THAT:- Upon perusal of the Purchase Orders, which form basis of the current Company Petition, annexed as ANNEXURE V-1 to V-8 , we find that all the said Purchase Orders have been signed by Mrs. Ashwini Ghodi or Mr. Gaurang Ghodi, and not a single Purchase Order bears the signature of the Intervener, Mrs. Sheetal Dahanukar. Further it is claimed by the Intervener that all the said purchase orders are post April 2021, which is after the date on which dispute between Mr. Nilesh Dahanaukar and the Intervener grew strenuous and the intervener left her matrimonial house. This disputed nature of the aforementioned facts raises serious doubts about the genuineness of the claim filed by the Petition Firm. Thus, the Intervener s contention with respect to the same holds merit and cannot be ignored. There exists a nexus between the partner of Pan Products, Mr. Gaurang Ghodi, and the Respondent Company and Mr Nilesh who is the Director of Appellant-OC-Om Sai. In view of the aforementioned email dated 03.01.2023 and the Purchase Orders dated 27.10.2021 and 13.06.2022, which are signed by Mr Ghodi, we find that Mr. Gaurang Ghodi is also involved in the day-to-day internal affairs and workings of the Respondent-CD-Plastomax Engineering, to such an extent that Mr. Gaurang Ghodi was in a position to send official emails and even sign Purchase Orders on behalf of the Respondent Company. The allegations of fabrication of documents as alleged by the Intervenor, Mrs. Sheetal Dahanukar who is wife of the Petitioner also noted. The Intervenor has raised serious allegations about the authenticity of the invoices and purchase orders presented by the Petitioner - keeping this offence of forgery committed by Mr. Nilesh Dahanukar in mind and in view of the contentions raised by the Intervener, we have sufficient grounds to believe that it is plausible for Mr. Nilesh Dahanukar to forge signature of his wife, the Intervener and the contention raised by the Intervener with respect to the same holds merit and cannot be brushed aside. The Appellant claims to qualify as an operational creditor under Section 5(20) of the IBC, and accordingly claims that the debt is clearly an operational debt arising from the supply of goods to the Respondent. It claims that the personal and matrimonial disputes raised by the director of the Respondent do not constitute a dispute as per Section 5(6) of the IBC. And the IBC defines a dispute as one related to the existence of the debt, quality of goods/services, or breach of warranty or representation, none of which are applicable to the alleged personal disputes between the parties. The disputes raised by Mrs. Sheetal Dahanukar were personal in nature (e.g., matrimonial issues and shareholder oppression) and not related to the operational debt or quality of goods supplied - It is also claimed that the Respondent did not raise any valid dispute about the debt, and the alleged disputes are related to personal matters such as matrimonial discord and shareholder disputes, which do not qualify as valid disputes under Section 5(6) of the IBC. Conclusion - The company petition has not been filed for insolvency proceedings but is for ulterior motives. There are no infirmity in the findings of the adjudicating authority that the Section 9 application has been filed to settle personal disputes and such an act is reprehensible. In this background, the finding of the adjudicating authority for imposition of a cost of Rs. 10 lakhs on the petitioner for filing frivolous and motivated petition also agreed. Appeal dismissed.

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• 2025 (4) TMI 1403
  Invocation of the personal guarantee by issuance of the demand notice - notice was sent to an address different from that specified in the guarantee deed - application filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 (the Code) for initiating insolvency resolution process against the personal guarantor was barred by limitation or not. Notice was sent to an address different from that specified in the guarantee deed - HELD THAT:- The argument of the Appellant that it has been clearly provided in the guarantee deed that it has to be sent on the address provided in the guarantee deed and can also be sent to a different address with prior intimation of the Appellant is of no consequence because in the entire pleadings, both before the Tribunal and before this Court, the Appellant has not said a word that the said Notice was never received. Rather the Appellant has taken a technical plea that Notice should have been sent on the address provided in the guarantee deed. In the absence of denial on the part of the Appellant that he did not receive the Notice dated 16th January 2017, having been sent on an address different from the one provided in the deed of guarantee, it has to be presumed that the notice was duly received by the Appellant. Moreover, Respondent No.1 sent the Notice dated 9.9.2021, under Rule 7 of the Rules, addressed to Shri Vipin Shersingh Agarwal, Vaishnav Sadan, Bungalow No.2, Vikas Classique CHS, Behind Bansant Cinema, Chembur, Mumbai 400074 which was delivered to the Appellant on the same address by hand. In these circumstances, the Appellant had duly received the Notice of invoking of guarantee deed dated 16th January, 2017 in relation to guarantee deed dated 17th December, 2014. Time limitation - HELD THAT:- The default occurred on 31st January, 2017 for which the application under Section 95 could have been filed up to 31st January, 2020. However, in between while the period of limitation was continuing the Corporate Debtor acknowledged the debt in the balance sheets which further enlarged to period of limitation from every date of acknowledgement - any admission of liability by the borrower shall be deemed to be admission of debt by the guarantor as well, the balance sheets, being part of the record of the Tribunal has to be looked into for the purpose of extension of limitation from the date of acknowledgement. It is needless to mention that as per Section 18, the acknowledgement has to be in writing which of course in this case has been signed by the RP on behalf of the Corporate Debtor as well as the guarantor. Conclusion - i) The invocation of the guarantee by the notice dated 16th January, 2017 is valid and maintainable despite being sent to an address different from that in the guarantee deed. ii) The application under Section 95 is not barred by limitation due to the acknowledgment of debt extending the limitation period. Appeal dismissed. There are no merit in the appeal - appeal dismissed.

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• 2025 (4) TMI 1402
  Seeking direction for payment of operational debts - Power of Committee of Creditors (CoC) was empowered under the Process Memorandum to invoke the Performance Bank Guarantee (PBG) - clear violation of letter of intent and process memorandum by Formation. Whether under the Process Memorandum (March 2018) issued by RP, the action of CoC to invoke PBG on 10.12.2018 was not covered by any of Clauses of Process Memorandum and invocation of PBG was unsustainable? - HELD THAT:- In the facts of the present case, when Resolution Plan was submitted by the SRA, which was considered and approved and the approved Resolution Plan is statutory binding on the SRA by virtue of Section 31, sub-section (1) and as per law laid down by the Hon ble Supreme Court in Ebix Singapore [ 2021 (9) TMI 672 - SUPREME COURT ]. Learned Counsel for the Formation has also referred to Clause 14.2 to 14.6 and 15.1 of the Process Memorandum to submit that invocation of PBG of Rs. 50 crores was made towards the money required for equity component. Thus, there is no question of Clause 14.6(c) being attracted, since the Resolution Plan itself was vitiated. It is submitted that Clause 15.1 was also not attracted, since Resolution Plan submitted by Formation was approved and the said clause applies only when there is withdrawal prior to approval by Adjudicating Authority. Clause 14.6 as noted above empowers the CoC to invoke the Performance Guarantee, if Resolution Plan has not been implemented by the SRA to the satisfaction of the CoC. Clause 14.6, thus, clearly contemplate the situation when Performance Guarantee can be invoked. The present is not a case where CoC has exercised Clause 15.1. Clause 15.1 is neither attracted nor has been invoked by the CoC. However, Clause 15.4 reserve the right to CoC to take any action against the Successful Resolution Applicant including invocation of PBG as well earnest money. It is also noted the email dated 17.01.2020, by which decision of the CoC was communicated to the Formation, which clearly mentions that CoC has invoked the Performance Guarantee since SRA has failed to implement the Resolution Plan. The CoC, thus, has invoked its power under Clause 14.2 to 14.6 and 15.4 for invocation of the PBG, which is fully in accord with the Process Memorandum and the submission of the Formation that CoC could not have invoked the PBG in the facts of the present case is without any substance. Whether the finding of the Adjudicating Authority that CoC and RP had not treated that approved Resolution Plan had been contravened by the Formation are based on materials on record? - Whether sufficient materials were placed by CoC and RP before the Adjudicating Authority to establish that Formation has failed to implement the approved Resolution Plan? - HELD THAT:- The Adjudicating Authority itself has noticed the submission of the CoC that Resolution Applicant has defaulted in making the payment as per the Resolution Plan. The findings returned by the Adjudicating Authority in paragraph 50 that CoC and RP had not treated that the approved resolution plan had been contravened by the applicant-Formation, is unsustainable. There was sufficient material placed by the CoC and RP by means of various applications and affidavits filed before the Adjudicating Authority that the Formation has failed to implement the approved Resolution Plan. The Adjudicating Authority has also observed that Appellant has failed to implement the Resolution Plan. There was sufficient material on record to hold that Applicant Formation failed to implement the Plan which is clearly proved and beyond any pale of doubt. Whether the amount of PBG and earnest money has to be adjusted in the equity infusion, which was required to be made by the SRA under the Resolution Plan, had the PBG lost its nature and character to enable the CoC to invoke the PBG after the RP s treated it towards equity infusion? - HELD THAT:- The Minutes of the Financial Creditor, does not help the Appellant to contend that payment of PBG towards was for equity infusion. The equity infusion is clear consideration, which is to be paid by the SRA as per Resolution Plan and is clearly distinct from PBG. Hence, the submission of the Appellant that the PBG having been accepted towards equity infusion, the PBG lying with the CoC has lost its character and could not have been invoked, cannot be accepted. PBG given by the Appellant SRA was as per the RFRP had to continue till 100% implementation of the Resolution Plan and the said PBG cannot be treated as equity infusion as per the Resolution Plan. Whether the RP was obliged under Section 29 read with Regulation 36, sub-regulation (2) of the CIRP Regulations 2016 to include the Transaction Audit Report in the Information Memorandum and share the same to Formation, failure of which makes the implementation of the Resolution Plan voidable? - HELD THAT:- The present is not a case where Appellant s case is that the financial statement and audited financial statement of the corporate debtor of the last two financial years have not been provided. It is also not the case that provisional financial statement for the current financial year made upto the date not earlier than 14 days from the date of the application has not been provided - The findings of the adjudicating authority that RP and CoC did not inform the applicant Formation of forensic audit report and the application under Section 60(6), having direct effect on the financial position of the corporate debtor, they come in the purview of relevant information under estimation to Section 29 cannot be supported. The Formation cannot raise any issue regarding non-sharing of transaction audit report or not including the transaction audit report in the information memorandum for wriggling out from its obligation in the resolution plan, which had approved by the adjudicating authority on 30.11.2018. The finding of the adjudicating authority returned in paragraph 61 that non-disclosure of the above information, performance of terms of resolution plan becomes voidable is also an incorrect finding. Non-sharing of transaction audit report in no manner can affect implementation of the resolution plan and it is far fetched to hold that due to not sharing of the said transaction audit report, the performance of the resolution plan became voidable. There is material on record to indicate that earnest money was invoked in October 2018 itself by the CoC, on Formation not extending the EMD as per provisions of the Process Memorandum. The PBG was invoked on 10.12.2019. Whether the RP had not provided the correct financial position of the CD to RA, due to which performance of Resolution Plan became voidable? - HELD THAT:- The judgment of the Hon ble Supreme Court in Ebix Singapore [ 2021 (9) TMI 672 - SUPREME COURT ], clearly binds SRA from its obligation and it cannot be allowed to wriggle out there its obligation as sought to be made in the present case. The submission which has been raised by learned counsel for the Formation distinguishing the judgment of the Hon ble Supreme Court in Ebix Singapore, have no substance. When the plan is approved by the adjudicating authority, obligations on the SRA to implement the plan becomes obligation which are to be statutorily enforced. Thus, on the said ground, the judgment of the Hon ble Supreme Court in Ebix Singapore, cannot be distinguished nor SRA can be allowed to wriggle out from its obligation on the exclusion and pretext as was raised before the adjudicating authority. Adjudicating Authority committed an error in holding that due to not providing correct financial provisions of the corporate debtor to resolution applicant performance of the resolution plan became voidable. The said findings are incorrect findings and has been recorded without correct appreciation of facts and law. Whether the Formation had made out a case for direction to refund the amount of Rs. 93.08 crores and the order of Adjudicating Authority directing such refund is sustainable? - HELD THAT:- The Bank has forfeited the PBG and EMD, which was earlier done in October 2018. Thus, only the aforesaid two amounts were forfeited by the CoC, which was rightly forfeited by the CoC, which could not have been directed to be refunded by the CoC. With regard to Rs.38.2 crores, which by adding interest was kept in fixed deposit of Rs.42.99 crores, orders were required for utilization of the said amount. We, thus, are of the view that order of Adjudicating Authority of 06.07.2023, insofar as it directed refund of the EMD and PBG, cannot be sustained and it deserve to be set aside. With regard to other part of the amount of Rs.38.2 crores, which was subsequently kept in fixed deposit of Rs.42.99 crores, orders were necessary to be passed for utilization of the said amount. The direction of adjudicating Authority to refund 93.82 Crore to the Formation cannot be upheld, and the said direction need to be set aside subject to further orders in this batch of appeals, which need to be considered while considering the appeals filed by Interim Trade Creditors. Whether the Application filed by the RP as well as Application filed by Interim Trade Creditors (who are Appellant before us) were maintainable before the Adjudicating Authority in view of the approval of Resolution Plan of DLH on 19.05.2021 and Adjudicating Authority has rightly taken the view that Application of Interim Trade Creditors has to be decided in appropriate proceedings and not by Adjudicating Authority? - Whether Interim Trade Creditors had made out a case for issuing a direction to make payment of their outstanding amount of Rs. 20.09 crores towards goods and services provided to CD, when it was under control of the Formation? - HELD THAT:- The application by Interim Trade Creditors were filed before the adjudicating authority in the same CIRP proceedings where the Interim Trade Creditors has supplied goods and services to the corporate debtor at the time when it was in the control and management of Formation - It is true that after the approval of the resolution plan by the Formation, Formation took control and management of the corporate on 30.01.2019 and the steps taken by the SRA, under which it could not implement the resolution plan was subject matter of various application filed before the adjudicating authority, which applications were entertained and decided by adjudicating authority by various orders as noted above. The application filed by Interim Trade Creditors were also one said of such application which was filed for payment of their outstanding dues arising out of goods and services supplied to the corporate debtor. There was no occasion for Interim Trade Creditors to file its claim, the adjudicating authority being conscious of the liability which was incurred by the Formation during the period it had control and management has noted liabilities of Rs.22.53 Crore out of which only Rs.1.63 Crore was paid in the resolution plan. It was due to the above reasons that liberty was reserved to the Interim Trade Creditors and direction was issued to keep the amount of Rs.42.99 Crore in the fixed deposit. The application filed by Interim Trade Creditors was occasion for the Adjudicating Authority to consider the application. Adjudicating authority with regard to application filed by RP Charu Desai observes that after approval of the resolution plan, RP has become functus officio, hence the application is infructuous. The application filed by Interim Trade Creditors deserves to be allowed and respondents are directed to pay the balance outstanding amount of Rs.20.9 Crore from the fixed sum of Rs.42.99 Crore which is lying in the fixed deposit with the CoC. The CoC shall take steps to discharge the said amount - after discharging the dues of Interim Trade Creditors of Rs.20.9 Crores along with the interest earned on it, the balance amount of Rs.42.99 Crore which was kept in the fixed deposit towards amount infused by the Formation, thus rest of the amount along with interest earned on it need to be refunded to the Formation, i.e., amount of Rs.22.09 Crore with interest earned on it. Whether Formation was entitled to claim interest @ 12% as prayed in IA No.443 of 2021? - HELD THAT:- As per the provisions of Process Memorandum, no consideration as per the Resolution Plan can be set-off with the equity requirement. There being specific clause in the Process Memorandum, the case of Formation that the payment of earnest money towards PBG could be treated towards equity payment, cannot be accepted. Further, insofar as the emails, which were sent by the RP and the CoC, asking the Formation to pay balance amount of Rs.21 crores, towards the equity, suffice it to say that both RP and CoC have taken a stand that Formation has not paid the balance amount of equity. In this reference the letter written by Bank of Baroda to Formation dated 04.04.2019 is referred to, in which letter the Bank of Baroda clearly informed that Formation has paid only Rs.38.82 towards part payment of FTL s equity component under the Resolution Plan as well as for purposes of buying out the Financial Creditor s share of the equity held in MIL. Further, Bank of Baroda on 22.07.2019 has written to National Stock Exchange informing that SRA has not been able to make payment towards equity, hence, shares be not allotted. The Formation has not paid entire amount, which was required to be paid in the equity. Hence, the claim of interest @ 12% cannot be accepted - The said Section 42 was with respect to provisions in the Companies Act pertaining to share on a private placement basis. The above provision cannot be pressed into service where equity is required to be provided under the Resolution Plan. The consequence of providing or not providing the equity has to be read from Resolution Plan itself. Hence, the provision of Section 42, sub-section (6), cannot be pressed by the Formation. The prayer of the Formation for claiming interest @ 12% could not have been granted. Whether the Adjudicating Authority is right in observing that in view of the order passed in IA 443 of 2021, there is nothing to adjudicate in IA No.1847 of 2021 filed by the Bank of Baroda and if not, what relief to be granted to the Bank of Baroda in IA No.1847 of 2021? - HELD THAT:- The law is well settled that insofar as breach of any undertaking or Clauses, which provide for forfeiture of any amount, there is no question of referring to Section 74 of the Indian Contract Act, 1872 and the said amount can be awarded. However, when damages or loss is difficult to prove, Court is empowered to award liquidated amount - The Hon ble Supreme Court in Kailash Nath Associates vs. Delhi Development Authority and Anr. [ 2015 (1) TMI 1377 - SUPREME COURT ] has clarified the law. The Adjudicating Authority on breach of any terms and conditions by the SRA could very well have directed for payment of amount, which is contemplated in the Process Memorandum, under which the Resolution Plan is submitted - the Adjudicating Authority could not have proceeded to adjudicate about the compensation or damages, which are not liquidated damages in exercise of jurisdiction under Section 60, sub-section (5) (c) of the IBC. Conclusion - i) Invocation of PBG by CoC was valid and sustainable. ii) The SRA failed to implement the approved Resolution Plan. iii) PBG and EMD cannot be adjusted against equity infusion. iv) Non-disclosure of Transaction Audit Report did not vitiate the Resolution Plan. v) Refund of Rs. 93.82 crores to SRA is not sustainable except for balance equity infusion amount in fixed deposit. vi) Interim Trade Creditors are entitled to payment of Rs. 20.9 crores from fixed deposit. vii) SRA not entitled to 12% interest on refund. viii) Bank of Baroda s claim for compensation is not maintainable under IBC. Appeal disposed off.

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• 2025 (4) TMI 1401
  Direction for replacement of the Resolution Professional (RP) prior to completion of the land survey and without deciding the pending application for replacement - HELD THAT:- The adjudicating authority itself has directed for land survey in paragraph 40 as noted above. Affidavit was also filed by the suspended director which has been noticed in the order of the adjudicating authority. In view of the facts of the case, adjudicating authority has rightly directed for land survey and in effect no grievance has been raised to the land survey by the RP or the CoC in the present case. Conclusion - The ends of justice be served by directing the adjudicating authority to consider replacement of the RP after the land survey is completed Appeal disposed off.

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• 2025 (4) TMI 1400
  Admission of Section 9 application - threshold limit of operational debt claimed by the Operational Creditor qua the Corporate Debtor in the present facts of the case has been met or otherwise - HELD THAT:- The Appellant is agreed upon that the entire payments made by them to the Operational Creditor has been suppressed by the Operational Creditor. Prima-facie, it is persuaded to infer that the Ledger Account of the Corporate Debtor as maintained by the Operational Creditor is not an updated Ledger Account and did not depict the true and correct status of payments received by them from the Corporate Debtor. If the payment of Rs 11 lakhs claimed to have been made by the Corporate Debtor after 12.05.2023 is taken into account, the outstanding liability falls below Rs 1 Cr. and thus fails to meet the minimum threshold limit prescribed under Section 4 of the IBC. The Adjudicating Authority was therefore misled into admitting the Corporate Debtor into CIRP. It is also mindful of the fact that the impugned order of the Adjudicating Authority was passed exparte and the Appellant did not get an opportunity to defend themselves. In the absence of provision of interest in the contract and no practice of interest payment having been demonstrated by the Operational Creditor, it is inclined to agree with the Appellant that the Operational Creditor has tried to cleverly add interest liability to cross the Section 4 threshold criteria. If the payments made by the Corporate Debtor after 12.05.2023 are factorised, the debt due to the Operational Creditor was clearly below the prescribed minimum threshold limit of Rs 1 Cr. and hence the Section 9 application of the Operational Creditor was not maintainable. Conclusion - Triggering of CIRP in the present facts of the case where, prima-facie, the outstanding liability is below the threshold limit is unwarranted. The Adjudicating Authority has erroneously admitted the application under Section 9 of the IBC. The Appeal is admitted.

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• 2025 (4) TMI 1399
  Admission of claim filed by the Applicant - Claim of Worker (ex-employee) - Layoff having not challenged by the Appellant - collation of claim and calculation of the salary payment till date of layoff - HELD THAT:- In the present case, the Resolution Professional has calculated the salary till the layoff period and accordingly, admitted the claim to the tune of Rs.185,62,360/-, which has been reaffirmed by the Resolution Professional. Non-computation of salary after lay off by the Resolution Professional cannot be faulted with since the Resolution Professional has no adjudicatory jurisdiction and the Adjudicating Authority has rightly observed that whether the Workers are entitled to claim their dues for the layoff period under provisions of Industrial Dispute Act is not in the domain of the Adjudicating Authority. There are no error in the order passed by the Adjudicating Authority warranting any interference - appeal dismissed.

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• PMLA

• 2025 (4) TMI 1398
  Challenge to direction issued by the Directorate of Enforcement (ED) to the HDFC Bank, by invoking sub-section (4) of Section 8 of the Prevention of Money-Laundering Act, 2002 - provisional attachment of the properties - power of Directorate of Enforcement (ED) to direct a bank to transfer the amounts held in Fixed Deposits (FDs) along with accrued interest - HELD THAT:- Since the fixed FDRs, which is a movable property and the power has been exercised by the Deputy Director, an Officer subordinate to the Director of Enforcement, who is bound by the procedure that is specifically set out in Chapter III of the PMLA in relation to the attachment, adjudication and confiscation, since the FDR s of the petitioners has already faced an attachment, the direction issued to transfer the amount in the name of the Directorate of Enforcement to be unsustainable. The attempt on the part of the respondent to seek recourse to the provisions of the Prevention of Money-Laundering (Issuance of Provisional Attachment Order) Rules, 2013, it is unable to trace any such power, to direct transfer of the property while the proceedings are pending before the Special Court, in the name of the Enforcement Director and we do not think that Rule 5 of the Rules of 2013, in any case, permit such a course of action to be adopted. There are no justification for the aforesaid action and the learned Additional Public Prosecutor in addition has not been able to point out any power permitting the transfer of the amount in the Fixed Deposits along with the interest in the name of the Enforcement Directorate, it is deemed appropriate to quash and set aside the said direction, though it is made clear that in so far as the order of attachment, which is already pending before the appellate Authority, the final decision shall be taken by the Authority, with all the remedies that are available to be invoked by the petitioner. Conclusion - i) The direction issued by the ED to the bank to transfer the FD amounts along with accrued interest to the Enforcement Directorate was quashed and set aside. ii) The attachment order confirmed by the Adjudicating Authority remains in force, and the petitioner s appeal against it is pending, with all remedies available. Petition allowed in part.

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• Service Tax

• 2025 (4) TMI 1397
  Exemption from payment of Service Tax on public services rendered by the petitioners pursuant to the circular issued by KMC and the Mega exemption N/N. 25/2012-ST dated 20th June 2012 - jurisdiction and authority of service Tax authorities to impose Service Tax on the petitioners in respect of contracts with KMC - HELD THAT:- Admittedly, in this case it would transpire that initially the petitioners had individually applied before this Court challenging, inter alia, the circular issued by the KMC claiming that the KMC is exempted from paying service tax in respect of the service rendered by the petitioners, and the authority of the Service Tax Authority to impose Service Tax. Although, by separate orders all dated 25th April 2017, such petitions were dismissed on the ground noted above, on writ appeals being preferred, the Hon ble Division Bench of this Court was of the view that having regard to the claim made by the KMC that services rendered by them and services given to them in rendering public service is exempted from payment of service tax, in the light of the Mega exemption notification no. 25/2012-ST dated 20th June 2012 issued by the Government of India since according to KMC the functioning of duties of KMC is concomitant to public interest, such issue was required to be decided upon notice to the KMC at the first instance. It may be noted here that the respective petitioners have no connection or nexus with each other. The cause of action of the individual petitioners against the KMC are individual and distinct. Though there is a common question of law involved, facts are, however, separate. At no point of time the petitioners questioned the jurisdiction of the respective adjudicating authority to decide the case. In fact, three separate adjudicating orders were passed by the respective adjudicating authorities dated 5th December, 2022, 7th December, 2022 and 8th December, 2022. When the writ petitions were filed in the first round in the year 2022, this question was not raised either before the writ Court or before the appeal Court. The issue as to whether the matter should be remanded back to a common adjudicating authority was also not raised. Although, the ground on which the commissioner had rejected the application cannot be said to be proper, however, having regard to the peculiar facts of the case, it is not inclined to interfere with the same as the prayer for a common adjudicator appears to be an afterthought and is likely to further delay the proceedings. Conclusion - i) The KMC s exemption claim is subject to adjudication and not accepted outright. ii) The original adjudication orders were set aside for violation of natural justice and remanded for fresh adjudication. Petition disposed off.

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• 2025 (4) TMI 1396
  Availment of CENVAT credit on input services under the Reverse Charge Mechanism (RCM) on the basis of invoices/bills rather than the prescribed GAR-7 challans evidencing payment of service tax - Rule 9 of the CENVAT Credit Rules, 2004 - HELD THAT:- The CENVAT Credit of the service tax on the input services is available to appellant on the receipt of invoice by the service recipient. The scheme of taxation of services provide for payment of the tax either by the service provider or the service recipient after the closure of the month in which the invoice is issued. In case of the reverse charge mechanism the scheme of taxation follows the same pattern. It is true in terms of Rule 9 the document prescribed for availing the CENVAT Credit is challan evidencing the payment of Service Tax by the service recipient. However Rule 9 will have to be read along with the Rule 4 (7), and the CENVAT Credit will be allowed only after the tax has been paid in terms of first proviso. The appellant has taken CENVAT Credit and declared in their return filed for the Month of June 2017 only after the receipt of the challan evidencing the payment of Service Tax paid by them on the reverse charge basis. They have taken the credit and utilized the same for payment of the tax due for the month of June 2017. It is not the case of the revenue that the said amount would not be admissible as CENVAT Credit but the what is under dispute is that the said credit could not have been utilized for payment of Service Tax for the month of June 2017. When the admissibility of the CENVAT credit is not in dispute, then the credit taken by the appellant in the month of June 2017 for the payment made by them during the Month of July 2017 cannot be anything but an procedural lapse as has been held by the Ahmedabad Bench in case of Gujarat Pipavav Port Ltd. [ 2008 (2) TMI 376 - CESTAT, AHMEDABAD] . Bench observed that The entire credit cannot be denied to them. Admittedly, the same stands availed premature and in any case was available during the subsequent period. Inasmuch, as, the same is utilized by the appellant, interest in accordance with law is required to be paid. Taking a lenient view, I do not find it a fit case for imposition of penalty. Conclusion - The credit of service tax on input services under RCM is admissible on receipt of invoice and payment of service tax by the recipient, as per Rule 4(7) read with Rule 9 of the CENVAT Credit Rules, 2004. There are no merits in the appeal filed by the revenue - Appeal filed by the revenue is dismissed.

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• 2025 (4) TMI 1395
  Levy of service tax - Business Auxiliary service - appellant as an individual distributor of Amway products, is liable to pay service tax on the commission received from Amway or not - cum duty benefit - invocation of extended period of limitation - HELD THAT:- The activity of the appellant is the activity of marketing or sale of the goods belonging to Amway and the commission received by the Distributor from Amway, is linked to the performance of his sales group is liable to be treated as consideration for Business Auxiliary Service of sales promotion provided to Amway. Therefore, service tax would be chargeable on the commission received by a Distributor from Amway on the products purchased by his sales group. In this context, it is noted that the appellant is a similarly placed distributor of Amway India Enterprise Pvt Ltd, as the various distributors involved in the judgment of Charanjeet Singh Khanuja vs Commissioner of Central Excise and Service Tax, Indore [ 2015 (6) TMI 585 - CESTAT NEW DELHI ] where it was held that in the impugned orders Service tax has been demanded on the gross amount of commission and no distinction has been made between the commission earned by a Distributor from Amway based on his own volume of purchase from Amway and the commission earned by him on the basis of the volume of purchases of Amway products made by his sales group i.e. group of second level of Distributors appointed by Amway on being sponsored by the Distributor. For quantifying the Service tax demand on the commission received from Amway on the volume of purchase made by the distributors sponsored /enrolled by a particular distributor i.e. the Distributor s sales group, these matters would have to be remanded to the Original Adjudicating Authority. The Tribunal in its decision in the case of M/s Manish Kumar Khaptawala, Pragna Arunkumar Patakh, Ravi Prakash, Smita Verma, Master Bhavna N Patel, Binal Manoj versus C.C.E. S.T. - Surat-I, C.S.T., Service Tax Ahmedabad [ 2018 (8) TMI 1114 - CESTAT AHMEDABAD] held that the appellant was liable to pay service tax. Duty cum benefit - HELD THAT:- The Hon ble Supreme Court in its judgment in Commissioner of Central Excise Vs. Maruti Udyog Ltd., [ 2002 (2) TMI 101 - SUPREME COURT] granted the cum-duty benefits to the assessee, holding that There is nothing to show that once the demand was raised by the Department, the respondent sought to recover the same from the purchaser of scrap. The facts indicate that after the sale transaction was completed, the purchaser was under no obligation to pay any extra amount to the seller, namely, the respondent. In such a transaction, it is the seller who takes on the obligation of paying all taxes on the goods sold and in such a case the said taxes on the goods sold are to be deducted under Section 4(4)(d)(ii) and this is precisely what has been directed by the Tribunal. There is also nothing to show that the sale price was not cum-duty. Invocation of the extended peri od - HELD THAT:- It is important to note that the respondent is an individual, who cannot be faulted if she thought that she was only a dealer; a difference between the purchase price and the sale price or MRP is available to her and therefore, it cannot be said that there was an intention to evade service tax. The said issue arose only because Amway called such amount as commission whereas the appellant simply sold the goods to the person who asked a product at a particular MRP - the Hon ble Supreme Court in the case of Continental Foundation Joint Venture v. CCE, Chandigarh [ 2007 (8) TMI 11 - SUPREME COURT] held that when there is scope for doubt in the mind of an assessee on a particular issue, the longer limitation period, under proviso to Section 11A(1) cannot be invoked - the extended limitation period of 5 years under proviso to Section 73(1) of the Finance Act, 1994 cannot be sustained. Conclusion - i) The demand of service tax on the commission received by the appellant linked to the performance of her sales group, treating it as consideration for Business Auxiliary Service upheld. ii) The appellant is granted the benefit of cum-tax valuation, and the denial of such benefit by the Commissioner (Appeals) is held to be beyond the scope of appeal and thus not sustainable. iii) Penalties equivalent to the service tax amount under Section 78 set aside due to absence of deliberate default, while penalties under Section 77 also reconsidered. The impugned order is modified to the extent indicated above and the appeal is allowed partially.

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• 2025 (4) TMI 1394
  Levy of service tax - amounts collected by the appellant in the nature of forfeiture of security deposits/earnest money and fines/penalties etc. against delayed completion of works - Section 66E(e) of the Finance Act, 1994 - HELD THAT:- There are other series of decisions as relied on by the appellant and what emerges is that a consistent view has been taken that the amount charged has necessarily to be a consideration for the taxable service provided under the Finance Act and the amount which has no nexus with the taxable service is not a consideration for the service provided and therefore, does not become part of the value which is taxable. Such amounts have been held to be in the nature of penal charges on account of breach or non-performance of contract and are recovered with the intention to make good for the losses and to also act as a deterrent to ensure that buyer or supplier do not violate the terms of the contract. These amounts cannot be termed as consideration in lieu of any service under Section 65B (44) of the Act. Further, it has been laid down that an activity to be covered as a declared service under Section 60E of the Act, there must necessarily be an independent agreement to refrain or tolerate or to do an act between the parties. The Department has issued Circular No.214/1/2023-ST dated 28.02.2023 analysing the provisions of Section 66E(e) read with 66B(44) and clarified that the activities contemplated under Section 66E(e), when one party agrees to refrain from an act, or to tolerate an act or a situation, or to do an act, are the activities where the agreement specifically refers to such an activity and there is a flow of consideration for this activity . In view thereof, the amount in question is not a consideration for providing any services. Conclusion - The amount collected by the appellant is not towards rendering declared service. Appeal allowed.

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• 2025 (4) TMI 1393
  Time limitation for issuance of SCN - SCN issued beyond the statutory limitation period prescribed under Section 73 of the Finance Act, 1994 - suppression of facts or not - HELD THAT:- In the case of Uniworth Textile Ltd Vs CCE, Raipur [ 2013 (1) TMI 616 - SUPREME COURT] as well as Continental Foundation Joint Venture Holding Vs CCE, Chandigarh-I [ 2007 (8) TMI 11 - SUPREME COURT] , the Hon ble Supreme Court held that the expression suppression has been used in the proviso to Section 11A of the Act accompanied by very strong words as fraud or collusion and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. In the case of section 73 of the Finance Act, the words suppression is not preceded by wilful. It is clear that the word suppression of facts has not been qualified with the word wilful . In other words, mere suppression of facts is enough to invoke the extended period under the Service Tax law and impose penalty under section 78 of the Act. Hon ble Andhra Pradesh High Court in the case of Nizam Sugar Factory Ltd Vs CUE [ 1986 (3) TMI 84 - HIGH COURT OF ANDHRA PRADESH AT HYDERABAD] , has held that mensrea is not an essential ingredient for imposing penalty. Conclusion - The extended period of limitation is held to be rightly invoked due to suppression of facts by the appellant in their ST3 returns, despite disclosure of actual income in Income Tax returns. The department has rightly invoked the extended period of limitation. Accordingly, the appeal filed by appellant is liable to be dismissed.

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• 2025 (4) TMI 1392
  Levy of service tax along with penalty under Section 78 and interest received against works contract executed with certain entities registered under Section 12AA of the Income Tax Act, 1961 - entities registered under Section 12AA of the ITA, 1961 are meant predominantly for religious use by general public so as to qualify for exemption under clause 13 of Notification No.25/2012-ST dated 20.06.2012, as amended - use for which the buildings were put to - HELD THAT:- The issue is no more res-integra as this Tribunal in M/S. S. KUMAR BUILDERS VERSUS COMMISSIONER OF CENTRAL GOODS SERVICE TAX CENTRAL EXCISE, JABALPUR (MADHYA PRADESH) [ 2022 (11) TMI 47 - CESTAT NEW DELHI] has considered the identical issue and after considering Section(s) 12AA, 12A and the definition of expression charitable purpose under Section 2(15) of the ITA, 1961 has held educational and medical purpose is a charitable purpose and therefore the benefit of clause 13 of Notification No.25/2012-ST dated 20.06.2012, as amended, cannot be denied, if the buildings owned by entities registered under Section 12AA are used for educational and medical purposes. The ld. Authorized Representative could not produce any decision to the contrary and therefore we find that the Appellant is entitled to relief on this count. In the present case, since the Appellant has discharged VAT on the consideration received against works contract, hence the said value on which VAT has been paid, is deemed to the value of property in goods transferred in the execution of works contract. Consequently, the amount so arrived at is clearly liable to be deducted from the total consideration. Once this is done and the benefit of Notification No.30/2012-ST dated 20.06.2012 is extended, as has been done in the impugned order, the remaining receipts will be much lower than the taxable amount, taxable under the Act. Thus, the submission of the counsel for the Appellant is accepted on this count also. Conclusion - The entire proceedings were initiated against the Appellant on the ITR, Form 26AS and in catena of decisions, the coordinate benches of this Tribunal has held that demand based on income tax records cannot be sustained. The demand of service tax, interest and penalty, to the extent challenged are set-aside and the appeal is allowed with consequential relief to the Appellant.

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• 2025 (4) TMI 1391
  Eligibility for exemption from payment of service tax under entry 29(g) of N/N. 25/2012 dated 20.06.2012 to the extent they have provided services to banking companies - ppellant have appropriately paid service tax on providing services to Rajcomp Info Services Ltd. or not - invocation of extended period of limitation - penalties - demand of late fee. Whether Appellant were eligible for exemption from payment of service tax under entry 29(g) of Notification No.25/2012 dated 20.06.2012 to the extent they have provided services to banking companies? - HELD THAT:- Appellant s main activity has been opening of Saving Bank Account, cash deposits cash withdrawals as business correspondent to Bank s Rural area branch. They have also submitted that in the nature of their business, details of remuneration payable to them used to be computed by banks as per data available in the banks. In this connection, they drew my attention to a sample copy of details provided by State Bank of Bikaner and Jaipur for the month of April 2016. As per the details, the name of District; name of the concerned branch; name of the concerned location where Appellant s agent is posted and the name of the agent code are given. It is noticed that Branch Code is different and the location of the agent is also different. Appellant have submitted that each location falls in a village and that all the branches are Rural area branch in District Bikaner and Sikar - the Appellant have actually provided services with respect to accounts in Rural area branch of the Bank. Appellant have provided services as business correspondent to a banking company with respect to accounts in its Rural area branch and were eligible for exemption under entry No.29(g) of Notification No.25/2012 dated 20.06.2012 to the extent these services have been provided to State Bank of Bikaner and Jaipur (later merged with SBI), HDFC Bank Ltd. and State Bank of India. The demand of service tax alongwith interest thereon on this account is therefore set aside. Whether Appellant have appropriately paid service tax on providing services to Rajcomp Info Services Ltd. - HELD THAT:- Appellants were liable for payment of service tax amounting to Rs.12,91,420/- on services provided to Rajcomp Info Services Ltd. As per para 8 of the SCN, Appellant have already paid service tax of Rs.10,90,950/- + Rs.2,06,826/- = Rs.12,97,776/-. It is therefore clear that the Appellant have paid more than the amount due to be paid by them on providing services to Rajcomp Info Services Ltd. - there is no short payment of service tax on account of the taxable services provided to Rajcomp Info Services Ltd. Whether extended period of limitation is invokable? - HELD THAT:- In the case of D. N. Pandey Co. [ 2019 (9) TMI 221 - CESTAT ALLAHABAD] the Tribunal observed that the Revenue has not referred to any positive evidence on record to establish mala-fide intent on the part of Appellant. Longer period of limitation is not available merely for not taking registration and non- filing of ST-3 Returns - in the facts of the present case, the demand could not have been confirmed by invoking extended period of limitation, as the Appellant bona-fidely believed that their services to banking companies were exempted from payment of service tax under entry No.29(g) of Notification No.25/2012 dated 20.06.2012. Whether penalties and late fee are demandable from the Appellant? - HELD THAT:- It has already been held that the demand of Rs.34,80,934/- is liable to be set aside on merits as well as on limitation. Therefore, penalty under Section 78 for evasion of service tax cannot be sustained and is liable to be set aside - Penalty of Rs.10,000/- have been imposed under Section 77(1)(d) for non payment of service tax electronically. As I have held that there is no short payment of service tax, therefore, there was no question of paying the same electronically. Therefore, the penalty imposed under Section 77(1)(d) is set aside - Penalty of Rs.10,000/- has been imposed under Section 77(2). As per Section 77(2) penalty is imposable for contravention of the provision of service tax for which no penalty is provided separately. It is on record that Appellant have not filed some of the service tax Returns. Therefore, penalty of Rs.10,000/- under Section 77(2) of the Finance Act, 1994 upheld. Demand of late fee - HELD THAT:- Late fee of Rs.40,000/- has been demanded under Rule 7C of Service Tax Rules, 1994 for not filing the ST-3 Returns during the relevant period. Rule 7 C is applicable to the cases of delayed filing of ST-3 Returns. The said Rule is not applicable where the assessee has not filed the ST-3 Returns. Therefore, demand of late fee is also liable to be set aside. Conclusion - i) The appellant is eligible for exemption under entry 29(g) for services provided to banking companies in rural branches during 01.04.2015 to 30.06.2017. ii) No short payment of service tax is found on services provided to Rajcomp Info Services Ltd. iii) Extended period of limitation is not invokable; demand is barred by limitation. iv) Penalties under Sections 78 and 77(1)(d) and late fee under Rule 7C set aside; penalty under Section 77(2) upheld. Appeal disposed off.

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• 2025 (4) TMI 1390
  Levy of penalty u/s 77(1) of the Finance Act, 1994 for failure to appear before the Central Excise Officer when issued with summon for appearance to produce documents in an inquiry is sustainable or not - HELD THAT:- There is no explanation for the delay caused in submission of the records. However, the penalty in the case of delay in submission of document should be a token penalty to insure compliance with the provisions of law. This fact has been admitted in the impugned order, whereby penalty from Rs.200/day has been reduced to Rs.50/day. Still the penalty is on higher side and reduced the same to Rs.10,000/-. Appeal is partly allowed.

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• CST, VAT & Sales Tax

• 2025 (4) TMI 1389
  Entitlement for concessional central sales tax - respondent despite falling in the negative list would still be entitled to the tax rebate as set out in the notification dated 01.04.2013, that too, for the period 2015-16, especially, when it was not disputed before the authorities below that the industrial unit of the respondent falls in the negative list - failure to take into consideration the judgment of the Hon ble Supreme Court in Lloyd Electric and Engineering Limited vs. State of Himachal Pradesh Ors, [ 2015 (9) TMI 370 - SUPREME COURT ], wherein the Hon ble Supreme Court has held that the State Government cannot speak in two voices - principles of natural justice - HELD THAT:- In Ambica Quarry Works v. State of Gujarat and others [ 1986 (12) TMI 365 - SUPREME COURT ], the Hon ble Supreme Court held that the ratio of any decision must be understood in the background of the facts of that case. Relying on Quinn v. Leathem, it has been held that the case is only an authority for what it actually decides, and not what logically flows from it. In Union of India v. Amrit Lal Manchanda and another [ 2004 (2) TMI 361 - SUPREME COURT ], it has been stated by the Hon ble Supreme Court that observations of courts are neither to be read as Euclid s theorems nor as provisions of the statute and that too taken out of their context. The observations must be read in the context in which they appear to have been stated. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. It was not disputed before the Hon ble Supreme Court that the appellant therein was found eligible for said concession since it satisfied the parameters prescribed in the notification till 31.03.2009. These incentives were thereafter extended not only for five years up to 19.05.2009 but were thereafter extended vide notification dated 29.05.2009 upto 31.03.2013 or till the time CST is phased out or whichever is earlier. This notification clearly excluded the industrial units specified in the negative list from the concessional rate of 1.5% of the taxable turnover of such goods w.e.f. 01.04.2013 for a period of five years or till the implementation of the Goods and Services Tax Act, whichever is earlier - the notification clearly excluded the industrial units specified in the negative list from the concessional rate of 1.5% of the taxable turnover of such goods w.e.f. 01.04.2013 for a period of five years or till the implementation of the Goods and Services Tax Act, whichever is earlier. Conclusion - i) The respondent s industrial unit, being part of the negative list, is not entitled to the concessional CST rate of 1.5% under the notification dated 01.04.2013. ii) The assessment imposing CST at the rate of 2% and associated interest and penalty is valid and rightly upheld by the assessing and appellate authorities. Appeal allowed.

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• 2025 (4) TMI 1388
  Dismissal of Second Appeal for non-payment of pre-deposit, especially when the Appellant has already made pre-deposit in the First Appeal - Tribunal exceeded the pre-deposit amount to an extent of the entire tax demand - increasing the pre-deposit amount in Second Appeal in comparison with the pre-deposit amount of first appeal, when the tax demand has been reduced in comparison of the first appeal. HELD THAT:- The appellant submitted that total demand disputed by the appellant in the Second Appeal before the Tribunal is around Rs. 4,50,000/- whereas the appellant has already deposited Rs. 1,80,000/- (Rs. 1,30,000/- before the First Appellate Authority and Rs. 50,000/- before the Tribunal) and therefore, the appellant has also prayed for waiver of remaining amount of pre-deposit before the Tribunal but the Tribunal did not consider the request of the appellant and dismissed the appeal of the appellant and as such, the appellant is prevented from availing the opportunity to make submissions on merits of the case. In view of above submission by the appellant, the interest of justice would be served, if the order passed by the Tribunal for pre-deposit of Rs. 3,00,000/- is modified. The order of the Tribunal is modified by giving credit of Rs. 1,30,000/- deposited by the appellant before the First Appellate Authority, reducing the pre-deposit amount to Rs. 1,70,000/-. As the appellant has deposited Rs. 50,000/- before the Tribunal, the Appellant is directed to deposit Rs. 1,20,000/- towards pre-deposit within a period of four weeks from today. On deposit of Rs. 1,20,000/- within four weeks, the Second Appeal No. 610/2021 shall stand restored to file of the Tribunal. Appeal is disposed off.

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• Indian Laws

• 2025 (4) TMI 1387
  Setting aside of arbitral award - binding nature of Development Agreement dated 10.03.1998 entered into between the Respondent and the Claimants - coercion and economic duress on the claimants - breaches of the fundamental terms of the Development Agreement - downsizing/ exit of the business of real estate development and not to pay EDC or commence development work - non provisions of security of the development site and unprovoked unilateral abandonment of the site by L T - termination of development agreement for the reasons stated in the letter of termination - obligation to commence construction in phase I - termination of the contract by the Claimants amounts to wrongful repudiation - Respondent is entitled to be relieved of its obligations under the Tripartite Agreement or not - liability to compensate the Claimants under the agreement of indemnity - authority to institute the instant claim petition and to carry out acts necessary to prosecute the instant claim petition on behalf of Claimants other than Puri Construction Limited. Power of the Court under Section 34 of partly setting aside the award - HELD THAT:- This issue was dealt with by this Court in the case of Project Director, National Highways No. 45 E and 220, National Highways Authority of India v. M. Hakeem and Another [ 2021 (7) TMI 1343 - SUPREME COURT ]. This Court, in the said decision, considered its earlier decision in the case of McDermott International Inc. v Burn Standard Co. Ltd. Ors. [ 2006 (5) TMI 442 - SUPREME COURT ] - Ultimately, in paragraph 42, this Court held Even otherwise, to state that the judicial trend appears to favour an interpretation that would read into Section 34 a power to modify, revise or vary the award would be to ignore the previous law contained in the 1940 Act; as also to ignore the fact that the 1996 Act was enacted based on the Uncitral Model Law on International Commercial Arbitration, 1985 which, as has been pointed out in Redfern and Hunter on International Arbitration, makes it clear that, given the limited judicial interference on extremely limited grounds not dealing with the merits of an award, the limited remedy under Section 34 is coterminous with the limited right , namely, either to set aside an award or remand the matter under the circumstances mentioned in Section 34 of the Arbitration Act, 1996. The Development Agreement is a contract between PCL and L T. Clause 4 of the Development Agreement refers to the obligations of PCL under the agreement entered into by it on 30th July, 1997 with ITCREF. It refers to the fact that PCL had agreed to hand over 1,95,000 sq. ft. of built-up area in the Schedule A property, after its development, comprising high-rise and low-rise buildings, inclusive of a car park, to ITCREF - The Agreement provides that L T shall complete the construction of the building on the Schedule B property within 60 months or such mutually extended period from the date of obtaining sanction for the building plan, or tax clearance under Section 37-I of the Income Tax Act, and making the said property available for development, whichever is later. It has also stipulated that construction shall be carried out in phases. After completion of phase of 3,00,000 sq. ft. on Schedule B property, L T, in consultation with PCL, by mutual consent, shall have the option and liberty to renew and revise the specifications/amenities and built-up area of the balance development and extend the period of completion by a further period of 12 months, depending upon the prevalent market conditions. In the recital of the Supplementary Agreement, it is mentioned that L T has made only partial compliance with the requirement under the Development Agreement to pay EDC to DTCP. Moreover, L T has failed to furnish a bank guarantee for the balance payment of EDC. In fact, it records that L T had taken a stand that in view of the adverse market conditions, the project had become unviable and sought further time from PCL to allow the prevailing real estate market conditions to improve - Clause (I) of the Supplementary Agreement makes it very clear that the Supplementary Agreement shall come into effect only upon the occurrence of the four events specified therein. That is how the Supplementary Agreement remained a non-starter. It is apparent from the recitals in the Supplementary Agreement as well as Tripartite Agreement that as L T did not discharge its obligation under the Development Agreement to pay EDC, the Bank was required to be brought into the picture so that it could advance a sum of Rs. 6 crores by way of loan for making payment of the said amount to DTCP. The Division Bench referred to Section 16(3) of the Contract Act which provides that where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that there was no undue influence is on the person in a position to dominate the will of the other - After examining the evidence, the Division Bench held that there was no patent illegality in the findings recorded by the Arbitral Tribunal that the Supplementary Agreement and the Tripartite Agreement were tainted by coercion. On consideration of the facts discussed before, such a view by the Arbitral Tribunal cannot be said to be contrary to justice and morality. Whether the Claimants committed breaches of the fundamental terms of the Development Agreement dated 10.03.1998 to enable the Respondent to resile from the agreement of development? - HELD THAT:- The Tribunal found that L T committed a breach of Clause 19 of the Development Agreement by not making payment of a single instalment of EDC. Moreover, interest free deposit of Rs. 5 crores in terms of Clause 12 of the Development Agreement was not paid by L T to PCL. The Tribunal found that there was no Development work carried out and not a single floor of any residential building was constructed for which development plans were sanctioned. Therefore, the finding recorded by the Tribunal that L T committed fundamental breaches of the agreement cannot be interfered within the limited jurisdiction under Section 34 of the Arbitration Act. Whether the respondent s Board of directors in pursuance of reports of Boston Consulting Group (for short BCG ). Richard Ellis and Jones Lang La Salle decide to downsize/ exit the business of real estate development and not to pay EDC or commence development work? - Whether there had been non provisions of security of the development site and unprovoked unilateral abandonment of the site by L T. If so whether such actions had resulted in encroachments causing monetary loss to the Claimants and in the event of such monetary loss caused to the Claimants what is the extent of such loss? - HELD THAT:- The powers of the Appellate Court under Section 37 of the Arbitration Act are not broader than those of the Court under Section 34 of the Arbitration Act. Therefore, what cannot be done in the exercise of the powers under Section 34 cannot be done in an Appeal under Section 37. An Arbitral Award cannot be modified. Thus, even after recording the conclusions in paragraph no. 119, the Division Bench has not modified the Award by partly setting aside the Judgment under Section 34 - the remedy of PCL has been kept open to pursue appropriate course of action under law as there cannot be a remand to the Arbitral Tribunal for quantification of monetary claim. As the finding of the Arbitral Tribunal regarding breaches committed by L T was affirmed, the Division Bench has rightly segregated that part of the Award by which, cost of arbitration was ordered to be paid to PCL by L T. This part has been severed from rest of the Award. Therefore, this part of the Award must be complied with by L T, if not already done. As documents of title were deposited with the Registrar, the direction to hand over the same to PCL cannot be faulted with. Conclusion - i) The conditions precedent in Clauses (I), (II), and (III) of the Supplementary Agreement were not fulfilled. Therefore, the Supplementary Agreement was a non-starter, hence, only the Development Agreement was binding on the parties which was not novated by the Supplementary Agreement. ii) The Supplementary Agreement and the Tripartite Agreement were tainted by coercion. iii) L T committed fundamental breach of the Development Agreement by unilaterally abandoning the project, failing to pay EDC, and not fulfilling its obligations towards statutory authorities, ITCREF, and the Bank. iv) The termination of the Development Agreement by PCL was justified and did not amount to wrongful repudiation entitling L T to rescind or claim damages. v) The courts under Sections 34 and 37 of the Arbitration Act do not have the power to modify or partially set aside arbitral awards; they may only uphold or set aside in entirety or remand under limited circumstances. vi) The authority of the claimant s representative to institute arbitration was valid and unchallenged. Appeal dismissed.

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• 2025 (4) TMI 1386
  Maintainability of suit - issue as regards the maintainability of the suit, raised on the ground that a partner of an unregistered partnership firm could not have filed the Suit for recovery of money, being hit by Section 69 of the Indian Partnership Act, 1932 - HELD THAT:- It is evident from a reading of sub-sections (1) and (2) of Section 69 that it assumes a mandatory character. Section 69(1) prohibits a suit amongst the partners of an unregistered partnership firm, for the enforcement of a right either arising from a contract or conferred by the Act, unless the suit amongst the partners is in the nature of dissolution of the partnership firm and/or rendition of accounts. Section 69(2) prohibits the institution of a suit by an unregistered firm against third persons for the enforcement of a right arising from a contract. As a consequence, a suit filed by an unregistered partnership firm and all proceedings arising thereunder, which fall within the ambit of Section 69 would be without jurisdiction. This Court in Seth Loonkaran Sethiya and Others v. Mr. Ivan E. John and Others [ 1976 (10) TMI 160 - SUPREME COURT ] had categorically held that Section 69 is mandatory in character and a suit instituted by a plaintiff in respect of a right which was vested in him by virtue of a contract and entered into in his capacity as a partner of a partnership firm, would be void, if such a firm was unregistered. In the case on hand, the petitioners (original plaintiffs) had filed the suit for recovery of money in their capacity as partners of an unregistered partnership firm, against the respondent (original defendant) in her capacity as a partner of the same unregistered partnership firm. The Trial Court itself had arrived at a finding that the agreement executed between the parties was in fact a partnership deed and not a bond as claimed by the petitioners. It is a clear as a noon day that the present suit had not been instituted by or on behalf of the firm against any third persons so as to fall under the ambit of Section 69(2). The petitioners have also not filed the instant suit for enforcing any statutory right conferred under any other law or a common law right so as to exempt the application of Section 69. Hence, the rigours of Section 69(1) would apply on such a suit and the partnership firm being unregistered would prevent the petitioners from filing a bare suit for recovery of money from the respondent. The defence that the partnership business had not yet commenced and thus, such a suit for dissolution could not have been preferred, would not be of any avail to the petitioners, particularly for overcoming the jurisdictional bar under Section 69(1). The High Court is right in taking the view that a suit of such nature could not be said to be maintainable in the absence of the registration of the partnership firm. Conclusion - The suit filed by the petitioners, partners of an unregistered partnership firm, against another partner for recovery of money arising from the partnership agreement is not maintainable under Section 69(1) of the Indian Partnership Act, 1932. There are no error not to speak of any error of law could be said to have been committed by the High Court in passing the impugned order - SLP dismissed.

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• 2025 (4) TMI 1385
  Maintainability of petition - survival of terms of the allotment letter after the execution of the lease deed - cancellation of the allotment letter has the consequent effect of cancelling the lease deed, in absence of specific reference to the lease deed - petitioner s prior writ petition challenging proportionate cancellation disentitles it from challenging the present cancellation on proportionality grounds - cancellation of the entire allotment for non- payment of some dues is excessive administrative action and hit by the doctrine of proportionality - cancellation of the entire allotment was only on account of non-payment of dues or also on the account of purported defaults in development/construction - cancellation of allotment was on account of purported defaults in development/ constructions -subsistence of homebuyers and banks sub-leases without validity of lease. Whether the writ petition is maintainable? - HELD THAT:- The impugned order of cancellation is being challenged as an illegal, arbitrary and disproportionate executive fiat. The petitioner is not seeking to establish any new right but attempting to safeguard its rights under the allotment made in its favour. The impugned order itself recites that it was passed not only to protect the interest of YEA but also the sub-lessees and homebuyers. It thus seeks to subserve larger public interest. As such, it cannot be said that the writ petition is liable to be thrown out on the ground of maintainability. However, the exercise of power of judicial review shall have to be within the well established parameters - the issue is answered against YEA and in favour of the petitioner holding the writ petition as maintainable. Whether the terms of the allotment letter, except those, specifically referred to and incorporated by reference in the lease dead, survive after the execution of the lease deed? - Whether the impugned cancellation of the allotment letter by letter dated 12.02.2020 has the consequent effect of cancelling the lease deed, in absence of specific reference to the lease deed? - HELD THAT:- The provisions relating to sub-lease as contained in the letter of allotment also find mention in the reservation letter (vide Clauses 9.12, 9.13, 9.14). The allottee was also given right to mortgage the property for arranging funds for implementation of the project subject to certain conditions. The allottee was required to complete minimum 40% of the permissible covered area earmarked for core activity within five years from the date of execution of lease deed. In special circumstances, the said period could be extended. The provisions of U.P. Industrial Area Development Act, 1976 and regulations framed thereunder were made applicable. The power under Section 14 of the Act, 1976 is not confined to transfer by lease only. It also applies to transfer by other modes contemplated under Section 7 of the Act, 1976, i.e., sale, auction, allotment or otherwise. Therefore, the legislation has not provided any specific procedure for exercise of the power of resumption of the site or building (except implicit requirement of compliance of the principles of natural justice) unlike Section 111(g) of the Transfer of Property Act, 1882. All that is required is that the order should reveal that the building site is being resumed for breach of any express condition of the lease/transfer. The instant case is not a case of absolute transfer by sale and, therefore, Sections 10 and 11 of the Transfer of Property Act on which A.P. Industrial Infrastructure Corporation Limited was grounded are not applicable. Moreover, it was a case based on sole interpretation of the terms of contract. In the instant case, as already discussed, the respondent-Corporation, even independent of Clause 4.2 of the Allotment letter, continued to have power to cancel the lease in view of Clause 38 of the lease deed which saved all rights conferred on YEA under any law for the time being in force including Section 14 of the Act, 1976. The statutory power under Section 14 to resume the site was not whittled down in any manner. The allotment letters existed for limited purposes alongwith the lease deeds and, irrespective of Clause 4.2 of the Allotment letters, the YEA had the power to resume the site by virtue of Section 14 of UPIAD Act, independent of, and read with Clause 38 of the lease deeds. The impugned order, thus, has the effect of cancelling the lease deeds. Whether the petitioner s earlier Writ C- No. 47262/2017 challenging the decision taken by the respondent in its meeting dated 04.09.2017 for cancelling proportionate land would disentitle the petitioner from challenging present cancellation on the ground of proportionality? - HELD THAT:- The challenge in the earlier Writ Petition No. 47262 of 2017 was essentially based on the ground that there was no occasion even to proportionately cancel the land in view of the fact that the default in payment was due to various actions of the respondents themselves such as not approving building plans, etc. - the issue is answered in favour of the petitioner and is decided accordingly Whether the cancellation of the entire allotment for non- payment of some dues is excessive administrative action and hit by the doctrine of proportionality? - Whether the cancellation of the entire allotment was only on account of non-payment of dues or also on the account of purported defaults in development/construction? - Whether, if the cancellation of allotment was on account of purported defaults in development/ constructions, the cancellation is illegal? - HELD THAT:- The basic ground for cancellation was default on part of the petitioner- Company in failing to pay the dues of the Development Authority. Even, last show-cause notice dated 09.12.2019 was for alleged non- payment of the dues of the Authority and not on account of non- development and, therefore, we agree with the submission of learned Senior Counsel for the petitioner that non-development could not be a ground for cancellation. While holding that the recital regarding non-development was not ground for cancellation it was a relevant consideration while cancelling the allotment in entirety, even, on ground of non-payment of dues. Likewise, the obligation of the petitioner-Company to the homebuyers, another important stakeholder of the SDZ policy, was also duly kept in mind. It shows that the Authority consciously took into consideration different factors, which were necessary for attaining the goal of planned development of the area and objectives of the SDZ policy. This, in fact, is a strong countervailing factor in favour of the Authority to repel the contention that its action was arbitrary and taken in undue haste. The sole and primary objective of the allotment under the SDZ policy was to ensure planned development along the Yamuna Expressway. The respondent being the nodal agency to oversee proper implementation of SDZ project and as a Development Authority for the area while deciding what action was to be taken in the facts of the instant case should be given sufficient leeway to decide what specific measure would be in larger public interest. For the said purpose, it was competent to, and had rightly, considered different aspects regarding non-development, interest of homebuyers and sub-lessees. The cancellation of entire allotment is not hit by doctrine of proportionality nor was illegal for any other reason - while passing the cancellation order, the Authority had considered several factors including default in development/construction but the cancellation was primarily on ground of non-payment of the dues of the Authority. Whether homebuyers and banks sub-leases can subsist without validity of lease? - HELD THAT:- Undoubtedly, the homebuyers are one of the major stakeholders in the present dispute. In fact, the main ground which impelled YEA to resort to the extreme step of resumption of the leased land is inordinate delay on part of JAL in abiding by the timelines prescribed for completing the constructions, resulting in immense difficulties to the homebuyers. Further, as noted, YEA has also filed affidavit reiterating its commitment to safeguard the interest of the homebuyers and the steps it would take in this respect. It is therefore necessary to issue directions to ensure that YEA fulfills its commitment and interest of the allottees/homebuyers is protected. Undoubtedly, the Financial Institutions cannot be expected to engage in development of land and construction activity. The sub-lease was obtained by the Financial Institutions to protect the money advanced to JAL. The same was admittedly with the consent of YEA and in terms of the provisions of the allotment orders/lease deeds, YEA is committed to protect interest of the sub-lessees, which would apply to all sub-leases including the lease in favour of financial institutions. It is opined that the Financial Institutions should be permitted to assign their interest in favour of third party. Conclusion - i) The writ petition challenging cancellation is maintainable. ii) The allotment letters and lease deeds coexist; cancellation of allotment cancels leases. iii) The cancellation order dated 12.02.2020 effectively cancelled the lease deeds. iv) The earlier writ petition challenging proportionate cancellation does not bar present challenge. v) Cancellation of entire allotment is lawful, not violative of proportionality, given persistent defaults and public interest. vi) Cancellation was primarily for non-payment, but non-development was a relevant factor. vii) Money deposited by petitioner is not forfeited automatically and must be refunded to be dealt with under insolvency. viii) Homebuyers and sub-lessees interests must be protected; directions issued for their protection and project completion. ix) Sub-leases in favour of financial institutions stand protected with option to obtain leases directly from Authority. x) Insolvency proceedings continue; claims and funds to be managed under IBC framework. The impugned cancellation order dated 12.02.2020 is upheld.

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