TMI Tax Updates - e-Newsletter
April 4, 2025

Case Laws in this Newsletter:

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

TMI Short Notes

1. Prevent tax evasion through the diversion of income to family members "clubbing of income" in Clause 99 of the Income Tax Bill, 2025 vs. Section 64 of the Income Tax Act, 1961

  Bill:

2. Definitions for "transfer" and "revocable transfer" in Clause 98 of the Income Tax Bill, 2025 Vs. Section 63 of the Income Tax Act, 1961

  Bill:

Articles

1. TWO RECENT APEX COURT RULINGS IN GST

   By: Dr. Sanjiv Agarwal

2. Income Tax Changes from April 1, 2025- Everyone Must Know!

   By: Tushar Makkar

3. DATE OF SIGNING THE BALANCE SHEET TO BE TAKEN FOR COMPUTING LIMITATION UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016

   By: DR.MARIAPPAN GOVINDARAJAN

4. Difference Between AOC 4 and MGT 7 in Pvt. Ltd Annual Filing

   By: Ishita Ramani

5. Comparison Between Advance Authorization and EPCG Schemes - An overview.[Chapter 4 and Chapter 5 of the FTP read with HBP].

   By: YAGAY andSUN

6. How to Manage Currency and Foreign Exchange Fluctuation Risk in International Trade: Strategy and Precaution?

   By: YAGAY andSUN

7. The forever traditional weapons - Tariffs, Sanctions and Export Controls.

   By: YAGAY andSUN

8. Legal Consequences and Penalty for using “Make in India Logo” without seeking Permission from DPIIT.

   By: YAGAY andSUN

9. Why Certain Corporates are using "Make in India Logo" on their Products' Packing Materials - Whereas such depiction on Products is not allowed?

   By: YAGAY andSUN

10. What India Can Learn from China in terms of Green Initiatives towards desertification and deforestation?[Environment and Climate Change]

   By: YAGAY andSUN

11. How India Can Become the Third (3rd) Largest Economy of the World: A Critical Analysis

   By: YAGAY andSUN

12. The Business of Perfume in Kanauj: A Critical Insight{Vocal for Local}[One District One Product]

   By: YAGAY andSUN

News

1. About time states spent 25% of budget towards rural infra: SC

2. Delhi govt caps expenditure in April to 5% of budget; AAP says gimmick exposed

3. India, US want to expedite talks for proposed trade agreement

4. Farmers demand return of land acquired for SEZ: Bawankule seeks status report

5. REVISION IN ELIGIBILITY CRITERIA FOR INDUSTRIAL ENTREPRENEURS MEMORANDUM (IEM) ACKNOWLEDGEMENT

6. Union Commerce and Industry Minister Shri Piyush Goyal to inaugurate Startup Mahakumbh

7. Make in India and the Capital Goods Revolution

Notifications

DGFT

1. 03/2025-26 - dated 2-4-2025 - FTP

Inclusion of Land Custom Stations Darranga as Food Import Entry Points in List "A" of Appendix-V to Schedule-I (Import Policy), ITC (HS), 2022 in sync with relevant FSSAI Notification

2. 02/2025-26 - dated 2-4-2025 - FTP

Amendment in import policy and policy condition of Roasted Areca Nuts falling under ITC (HS) Code 20081920 of Chapter-20 of ITC (HS), 2022, Schedule-I (Import Policy)

SEBI

3. SEBI/LAD-NRO/GN/2025/240 - dated 1-4-2025 - SEBI

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

Circulars / Instructions / Orders

DGFT

1. 01/2025-26 - dated 3-4-2025

Amendment in Appendix 4B of Handbook of Procedures, 2023

Customs

2. PUBLIC NOTICE No. 32/2025 - dated 29-3-2025

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

Highlights / Catch Notes

GST

• Non-bailable warrants quashed in GST evasion case as accused previously cooperated with investigation and authorities.

  Case-Laws - HC : The HC quashed non-bailable warrants issued against the petitioner accused of GST evasion through fake firms. The court held that non-bailable warrants should only be issued when an accused fails to appear after service of summons or bailable warrants. In this case, the petitioner had previously cooperated with the investigation, appeared before authorities, and provided statements. The court converted the non-bailable warrants to bailable warrants, noting that the petitioner showed no likelihood of evading legal process. Applying the principle from Tarsem Lal and Sharif Ahmed precedents, the HC emphasized that courts must consider whether an accused is likely to evade justice or tamper with evidence before issuing non-bailable warrants. The presumption of innocence was also affirmed as a fundamental principle of criminal jurisprudence.
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• GST Amnesty Scheme Under Section 128(A) Offers Relief from Interest and Penalties for Section 73 Notices

  Case-Laws - HC : The HC set aside the impugned order and remanded the matter to respondent No.5 for fresh reconsideration in accordance with law. This decision stemmed from the petitioner's intention to avail benefits under the Amnesty Scheme provided in Section 128(A) of the CGST Act, which offers waiver of interest and penalties for notices issued under Section 73. The Court deemed it just and appropriate to allow the petition through remand, issuing specific directions to guide the respondent's reconsideration of the matter in light of the petitioner's eligibility for amnesty benefits concerning interest and penalty waivers.
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• GST Penalties Reversed: Authority Must Compensate Hindu Undivided Family for Wrongful Tax Head Deposit

  Case-Laws - HC : The HC issued a writ of mandamus directing NOIDA to compensate the petitioner, head of a Hindu Undivided Family, Rs. 19,22,778/- within 15 days for penalties imposed under the GST Act. NOIDA had acknowledged that the petitioner's GST payment was deposited under the wrong head due to their error, not the petitioner's fault. Following the Supreme Court's principle in Batliboi that compensation should not result in windfall for one party at another's expense, the court determined the petitioner should not suffer penalties for NOIDA's administrative mistake. NOIDA must notify the District Magistrate after payment and retains the right to recover the amount from its erring officers. Petition disposed of.
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• GST Assessment Order Challenged as Non-Speaking: Petitioner Granted Liberty to Appeal Under Section 75(6)

  Case-Laws - HC : The HC disposed of the petition challenging a GST assessment order characterized as non-speaking and violative of Section 75(6) of the GST Act. Rather than adjudicating on merits, the Court granted the petitioner liberty to approach the appellate Deputy Commissioner (State Tax) within two weeks, directing the appellate authority to entertain the appeal without reference to limitation periods and dispose of it within three months. The Court ordered status quo to be maintained in the interim. The petitioner was permitted to raise all grounds from the writ petition in the appeal, including violations of natural justice principles and the non-speaking nature of the impugned order.
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• Revenue Department Must Grant Personal Hearing Before Recovery of Excess ITC Under Section 75(4) of CGST Act

  Case-Laws - HC : The HC quashed and set aside the impugned order-in-original regarding recovery of alleged excess ITC, finding it was passed in violation of principles of natural justice and Section 75(4) of the CGST Act. The respondent authority failed to grant the petitioners a personal hearing before passing an adverse order. The matter was remanded for fresh de novo proceedings, directing the authority to provide the petitioners an opportunity to reconcile Form GSTR 2A with Form GSTR 3B for the period under consideration. The court ordered completion of this exercise within 12 weeks from receipt of the order.
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• Writ Appeal Partly Allowed: Court Sets Aside Automatic Restoration Clause, Grants Time for Reply with Jurisdictional Defenses

  Case-Laws - HC : The HC partly allowed the writ appeal against an impugned order that exceeded the amount specified in the Show Cause Notice (SCN). While the court acknowledged potential violations of natural justice principles regarding jurisdiction and limitation, it determined these issues required factual examination by the respondent authority. The HC set aside the Single Judge's observation regarding automatic restoration of the order if no reply was filed within three weeks. Instead, the appellant was granted four weeks from judgment receipt to submit their reply, with explicit permission to raise both limitation and jurisdictional defenses before the respondent authority.
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• Limitation Period for Returns After GST Best Judgment Assessment Is Directory, Not Mandatory Under Section 62(2)

  Case-Laws - HC : The HC ruled that the 60-day limitation period under Section 62(2) of the GST Act for filing returns after a best judgment assessment is directory rather than mandatory. If an assessee fails to file returns within this period due to reasons beyond their control, authorities may condone the delay upon application with sufficient justification. The taxpayer would then be permitted to file returns after paying applicable interest, penalties, and charges. The Court held that the right to file returns cannot be categorically denied based solely on non-compliance with the 60-day timeframe. The petitioner was directed to file a delay condonation application within 15 days.
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• GST Taxpayer Granted Two Weeks to File Rectification Application Under Section 161 of TN GST Act

  Case-Laws - HC : The HC disposed of the writ petitions, granting the petitioner liberty to file a rectification application under Section 161 of the Tamil Nadu Goods and Services Tax Act, 2017 before the second respondent within two weeks of receiving the order. The Court determined that statutory remedy was available to the petitioner through the rectification process. If such application is filed within the stipulated timeframe, the second respondent must entertain and dispose of the matter according to law within one month, after providing the petitioner an opportunity for hearing.
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• Assessment Order Without Officer's Signature and DIN Ruled Invalid Under GST Act

  Case-Laws - HC : The HC invalidated a GST assessment order in Form GST DRC-07 due to two fatal defects: absence of the assessing officer's signature and missing Document Identification Number (DIN). Following precedents established in A.V. Bhanoji Row and M/s. SRK Enterprises, the Court affirmed that an officer's signature cannot be dispensed with, and Sections 160 and 169 of CGST Act, 2017 cannot rectify such deficiency. Regarding the DIN requirement, the Court relied on the Supreme Court's ruling in Pradeep Goyal, which held that orders without DIN numbers are non-est and invalid, consistent with CBIC circulars. Consequently, the impugned assessment order was set aside and the petition disposed of.
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Income Tax

• Premium Paid on Redemption of Optionally Fully Convertible Debentures Qualifies as Deductible Revenue Expenditure

  Case-Laws - AT : The ITAT ruled in favor of the assessee, allowing deduction of premium paid on redemption of Optionally Fully Convertible Debentures (OFCDs). The Tribunal rejected the AO's contention that funds from OFCDs were not used for business purposes, finding that the assessee had used these funds to pay security deposit for land possession and development, which constituted legitimate business expenditure. Following precedent in CIT v. Raymond Ltd and Madras Industrial Investment Corpn. Ltd., the ITAT held that premium paid upon redemption of debentures qualifies as revenue expenditure. The Tribunal upheld the CIT(A)'s deletion of disallowances for both assessment years under consideration.
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• Managing Director's Remuneration Within Companies Act Limits Not Excessive Under Section 37(1) and 40A(2)(b)

  Case-Laws - AT : ITAT ruled against revenue, finding that remuneration paid to the managing director was within permissible limits under Companies Act provisions as per Circular No.07/2015. The Tribunal noted no proceedings were initiated by MCA against the assessee for statutory violations, nor were adverse observations made by statutory auditors. The CIT(A)'s order was upheld, confirming that Explanation 1 to Section 37(1) was not attracted and the assessee was entitled to claim deduction for managerial remuneration under Section 37(1). ITAT also rejected the AO's invocation of Section 40A(2)(b), finding no evidence that the remuneration was excessive or unreasonable.
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• Tax Authorities Cannot Disallow Legitimate Journal Entries Without Evidence of Bogus Expenses Under Section 145(3)

  Case-Laws - AT : ITAT overturned the AO's disallowance of Rs.36,25,56,616 across five assessment years for alleged bogus bulk journal entries, finding they were legitimate transfers between ledger accounts. The Tribunal upheld CIT(A)'s findings that individual site operating expenses were properly documented with TDS deductions, year-end provisions were valid, and cash payments for coolie and wages couldn't be entirely disallowed as bogus. ITAT rejected Revenue's alternative arguments under s.40A(3) and s.40(a)(ia), noting these provisions were inapplicable to the expenses in question. However, the Tribunal agreed with CIT(A) on rejecting the assessee's books under s.145(3), but modified the profit estimation from 12.5% to 10% of contractual receipts, considering contemporary economic conditions rather than outdated precedents from the 1980s-90s.
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• Property Acquisition Deemed Complete Upon Full Payment, Not Registration Date Under Sections 69 and 56(2)(vii)

  Case-Laws - AT : The ITAT allowed the taxpayer's appeal, setting aside additions made under sections 69 and 56(2)(vii) regarding property acquisition. The Tribunal determined that the property was purchased in the preceding assessment year with full consideration discharged according to the payment schedule, while only the conveyance deed was registered during the year under review. The AO erroneously concluded the property was purchased in the current financial year. The ITAT noted that the taxpayer had properly disclosed all property payments in their income tax return, with all transactions conducted through banking channels. Despite ex-parte proceedings before lower authorities, the Tribunal decided the case on merits rather than remanding it, directing the AO to delete the additions.
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• Income Tax Reopening Under Section 147 Quashed Due to Vague Reasons and Mechanical Approval Process

  Case-Laws - AT : ITAT quashed the reopening of assessment under section 147 r.w.s. 148 of the Act due to fundamental procedural defects. The AO's reasons for reopening were deemed scanty, vague, and ambiguous, containing conflicting statements about alleged fictitious profit in equity/derivative trading and exempted Long Term Capital Gain. The Tribunal found no independent application of mind by the AO, who merely relied on received information without verifying transaction details, payment modes, or counterparties. Additionally, the PCIT's approval was determined to be mechanical rather than substantive, as it lacked recorded reasoning or satisfaction. The assessment was set aside due to both non-application of mind and invalid approval.
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• Gold Hire Charges Paid to Directors Deemed Valid Business Expense When More Economical Than Bank Loans

  Case-Laws - AT : The ITAT allowed the assessee's appeal, reversing the AO's disallowance of gold hire charges. The Tribunal found that the assessee company had valid Gold Hire Agreements with directors and related parties, with clear covenants for payment of Rs. 5/- per gram per month plus security deposits. The arrangements were properly documented in the balance sheet as loans and hire gold interest paid. The Tribunal accepted that the company had no stock-in-trade of its own and used the hired gold for business purposes. The ITAT determined that paying hire charges of Rs. 41,85,000/- was more economical than taking bank loans at 12% interest (approximately Rs. 1,08,00,000/-) to purchase equivalent stock worth Rs. 9,76,12,546/-.
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• Italian Company's Transfer Pricing Study Prevails: No Additional Income Attribution to Indian PE Required

  Case-Laws - AT : ITAT ruled that the attribution of additional income to the assessee's project office (PE) in India was improper. The Tribunal determined that transactions between the Italian headquarters and Indian PE qualified as international transactions subject to transfer pricing regulations. The AO erroneously attributed 50% of total receipts to the PE without conducting proper Functional, Asset and Risk (FAR) analysis or referring the matter to the Transfer Pricing Officer. The Tribunal noted that major functions and risks were assumed in Italy, and the assessee had already conducted a transfer pricing study demonstrating arm's length allocation. Following Article 7 principles that treat PE as a distinct enterprise, ITAT held that no further attribution beyond the assessee's allocation was required, as transfer pricing principles had been properly applied.
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• Independent Agent Earning 77.60% Revenue from Other Parties Cannot Be Considered Dependent Agent PE Under Tax Law

  Case-Laws - AT : ITAT confirmed that FCIPL does not constitute a dependent agent PE of the foreign assessee in India. The Tribunal found that FCIPL merely acted as an agent for booking cargo per the assessee's fixed tariff without authority to conclude contracts. FCIPL maintained functional independence, with the assessee having no liability for FCIPL's expenses or obligations. Significantly, FCIPL conducted business for multiple enterprises, deriving only 22.32% of its revenue from the assessee while 77.60% came from other independent parties. The Tribunal determined FCIPL operated as an independent agent rather than a representative of the assessee, thereby dismissing Revenue's appeal and upholding the CIT(A)'s order.
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• Penalties under Sections 271(1)(c) and 270A deleted for taxpayer who claimed software distribution receipts weren't taxable in India

  Case-Laws - AT : The ITAT ruled that penalties under sections 271(1)(c) and 270A against the taxpayer were improper and directed their deletion. The tribunal held that merely making an unsustainable claim that receipts from software distribution were not taxable in India cannot constitute furnishing inaccurate particulars to warrant penalty under s.271(1)(c), especially when the taxpayer fully cooperated during assessment proceedings. Regarding s.270A penalty for under-reported income (where DRP reduced attribution from 80% to 30%), the ITAT determined this was not an automatic penalty situation, citing D.C.Polyester and Hindustan Steel Ltd precedents. The tribunal found the exception under s.270A(6)(a) applicable as the taxpayer had disclosed all material facts and provided bona fide explanations.
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• Annual Let-Out Value of Vacant Commercial Mall Units Determined as "Nil" Under Section 23(1)(c)

  Case-Laws - AT : The ITAT ruled in favor of the appellant regarding vacant commercial mall units, determining their annual let-out value as "Nil" under section 23(1)(c). The Tribunal rejected the AO's assumption that the properties were not intended for letting, noting that no reasonable business person would forgo rental revenue if opportunities existed. Evidence that the premises were leased in subsequent years further supported the appellant's position. Since the units remained vacant for the entire assessment year despite the appellant's efforts to let them out, the ITAT concluded that the statutory conditions under section 23(1)(c) were satisfied, warranting nil valuation and deletion of the AO's addition.
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• Biotech Company Wins Tax Relief on ESOP Expenses, Clinical Trial Costs, and CSR Expenditure Under Section 80G

  Case-Laws - AT : The ITAT ruled favorably on multiple issues for the appellant. ESOP expenses were deemed allowable under section 37(1), consistent with treatment in prior years. Expenditure on clinical trials was held eligible for weighted deduction under section 35(2AB), though limited to amounts certified in Form 3CL. The Tribunal directed deletion of additions to book profit under section 115JB related to section 14A disallowances. CSR expenses were held eligible for section 80G deduction subject to verification of prescribed conditions. Several matters were remanded to the AO, including verification of business promotion expenses, section 35DD deduction claims, inventory write-down values, and TDS credit for the merged entity Strides Emerging Market Limited.
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• Debt Forgiveness Under Settlement Agreement Cannot Be Taxed Under Section 28(iv) As It Constitutes Monetary Benefit

  Case-Laws - AT : The ITAT held that debt forgiveness pursuant to a Settlement Agreement cannot be taxed under section 28(iv) as it constitutes a monetary benefit, not a benefit in kind as required by the provision. Following CIT v. Mahindra and Mahindra Ltd, the Tribunal ruled that section 41(1) was also inapplicable as the forgiven debt was not a trading liability for which allowance or deduction had been previously claimed. The ITAT further determined that the benefit could not be characterized as business profits under section 28(i). Additionally, since the assessment for AY 2011-12 was unabated at the time of search under section 132, the assessee's fresh claim for expenditure deduction not based on incriminating material found during search was disallowed.
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• Tax Exemption Granted Under Section 54 Despite Initial Claim Under Section 54F for Property Leased to Bank

  Case-Laws - AT : The Appellate Tribunal allowed the assessee's claim for tax exemption under section 54 of the Income Tax Act, despite initially claiming under section 54F. The dispute concerned a property registered as residential but commercially leased to a bank since 2009. ITAT noted that both sections have similar conditions, with section 54F requiring investment of net consideration rather than just capital gains, imposing a higher burden on the assessee. Since the assessee had fulfilled all statutory requirements and the first appellate authority was obligated to consider alternative grounds, the Tribunal directed the Assessing Officer to allow the section 54 exemption after appropriate calculations.
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• Tribunal Sets Aside Transfer Pricing Adjustments for Royalty Payments, Suggests 5.20% ALP Rate Using External CUP Method

  Case-Laws - AT : The ITAT set aside the DRP's order regarding transfer pricing adjustments for royalty payments, directing the matter back to the TPO for further examination to establish the arm's length price using internal CUP as the most appropriate method. Alternatively, a mean arm's length royalty rate of 5.20% derived from external CUP agreements was deemed appropriate. The Tribunal relied on EKL Appliances Ltd. and Technimont ICB Pvt. Ltd. precedents, confirming that expenditure cannot be disallowed on grounds of necessity or prudence, and ALP determination requires comparison with uncontrolled transactions. The ITAT also deleted the TP adjustment related to AMP expenditure, recognizing the appellant as a full-fledged telecom service provider rather than a mere distributor, and noting the expenses were inextricably linked to business operations.
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• Compensation for Terminated Merchandising Rights Not Taxable Income Under Section 28(ii)(b) as Recipient Not a Managing Agency

  Case-Laws - AT : The ITAT ruled that compensation received by the appellant from Disney Enterprises Inc. for erosion in investment value due to termination of merchandising and distribution rights did not constitute taxable income under section 28(ii)(b). The Tribunal determined that the appellant was not a managing agency in terms of the statutory provision, which requires stricter interpretation as per Commissioner v. Dilip Kumar. The compensation was held to be a capital receipt not liable to tax. Additionally, the Tribunal accepted the appellant's ground regarding section 73 Explanation, ruling that losses on share sales were not speculative in nature, as previously established in the appellant's 2002-03 case where it was determined the appellant was not engaged in share trading.
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• Depreciation Error Corrected: Tax Audit Report Figure of Rs. 89,96,72,987 Prevails Over ITR Amount

  Case-Laws - AT : The ITAT held that the CIT(A) erred by not recognizing the correct depreciation figure of Rs. 89,96,72,987/- as per the Tax Audit Report, instead of the incorrectly stated Rs. 1,03,13,420/- in the ITR. The Tribunal set aside the CIT(A)'s order on the depreciation issue. Regarding the bonus payment under section 43B, the ITAT found that CIT(A) failed to address this issue properly and remanded it back with directions to pass a speaking order according to law. The CIT(A) should have verified that the bonus was paid before the due date of filing the income tax return. The assessee's appeal was partly allowed.
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• Penalty Under Section 271(1)(c) Quashed Due to Vague Show Cause Notice Failing to Specify Nature of Default

  Case-Laws - AT : The ITAT quashed the penalty imposed under section 271(1)(c) for alleged concealment of income related to unaccounted money introduced as exempt LTCG. The Tribunal held that the AO failed to specify in the show cause notices whether the penalty was being imposed for "concealment of income" or "furnishing inaccurate particulars of income." This procedural defect violated section 274(1) as it left the assessee guessing about the specific default and deprived them of an opportunity to present a proper defense. The Tribunal set aside the CIT(A)'s order and allowed the assessee's appeal, finding the penalty proceedings fundamentally flawed due to lack of specificity.
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Customs

• Detention of Personal Jewelry Ruled Illegal as Customs Failed to Issue Show Cause Notice Under Section 110

  Case-Laws - HC : The HC ruled that detention of personal jewelry (two gold kadas and two gold chains) from a traveler's baggage was impermissible. The court held that waiver of show cause notice (SCN) through a pre-printed standard proforma was invalid, as issuance of SCN is mandatory upon detention of goods. Since the statutory one-year period under Section 110 of the Customs Act had elapsed without a proper SCN, the detention became legally untenable. The court permitted the petitioner to recover the jewelry upon payment of redemption fine and penalty as per the original order, with storage charges waived. The goods were ordered to be released within four weeks of payment.
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• Government's Rejection of Anti-Dumping Duty Recommendations Unchallenged as Domestic Industries Withdraw Support

  Case-Laws - HC : The HC addressed a challenge to a Central Government Office Memorandum that rejected the DGTR's recommendations for imposing Anti-Dumping Duty. During proceedings, counsel for the domestic industries (respondents) informed the court that they had already communicated to the Government their decision not to pursue their rights under the DGTR's recommendations. Since the domestic industry no longer sought imposition of ADD, the challenge to the Office Memoranda became moot, and the CESTAT order was rendered infructuous. The HC disposed of the writ petitions as infructuous, accepting the respondents' position that they no longer contested the government's decision.
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• Styrene Butadiene Rubber Import Appeal Dismissed as Domestic Industry Withdraws Anti-Dumping Duty Request

  Case-Laws - HC : The HC determined that the appeal regarding anti-dumping duty (ADD) on Styrene Butadiene Rubber imports from the European Union, Korea RP, and Thailand had become infructuous. The domestic industry (Respondent No. 2) had formally communicated to the Government that it no longer pressed for imposition of ADD as previously recommended by the Designated Authority. Consequently, the challenged Office Memorandum was no longer contested. The Court noted that assessment orders for provisionally released goods would need to be finalized taking into account that ADD was no longer being sought by the domestic industry. The appeal was accordingly disposed of.
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• Gold Seizure Overturned as Revenue Failed to Prove Foreign Origin While Appellant Provided Legitimate Purchase Invoices

  Case-Laws - AT : The CESTAT held that confiscation of gold and penalties imposed on the appellant were unjustified. The tribunal found that the Revenue's case relied primarily on statements that lacked evidentiary value due to non-compliance with the mandatory procedure under s.138B of the Customs Act. In this town seizure case, the Revenue failed to discharge its initial burden of proving foreign origin or smuggling of the gold. The tribunal emphasized that compliance with s.138B was not contingent upon whether cross-examination was sought, but was a mandatory procedural requirement. Conversely, the appellant produced legitimate purchase invoices which were confirmed by sellers. Without substantive evidence of smuggling, no penalty could be imposed under s.112(b). Appeal allowed.
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• Foreign Liquors and Goods Confiscation Under Customs Act Reversed Following Previous Decision for Co-accused Under Section 123

  Case-Laws - AT : CESTAT set aside the confiscation of foreign liquors and various foreign goods as well as penalties imposed under Sections 112(a) and 112(b) of the Customs Act, 1962 against the appellants. The Tribunal determined that since the Commissioner (Appeals) had previously set aside confiscation and penalties for co-accused R in the same matter, finding that the items were not notified under Section 123 of the Customs Act and thus not liable for confiscation, the same reasoning applied to the present appellants who were penalized for the identical offense. Consequently, both the confiscation order and penalties were set aside, and the appeal was allowed.
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• Anti-Dumping Duty Upheld on Recovered Solvent Cleared Without Proper Payment Under Section 9A(2A) of Customs Tariff Act

  Case-Laws - AT : CESTAT upheld demand for anti-dumping duty on recovered solvent (acetone by-product) cleared in DTA without proper duty payment. The Tribunal rejected appellant's limitation argument, finding extended period invocation justified under Section 28(4) as appellant failed to follow clearance procedures. Appellant's contention regarding absence of Norms Committee report was dismissed as they failed to establish ad hoc norms or file required undertakings under N/N 60/2008-CUS. The Tribunal confirmed applicability of N/N 75/2008-CUS read with Section 9A(2A) of Customs Tariff Act to the recovered solvent cleared as by-product of imported acetone. Appeal dismissed.
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• Printer Exempted from Customs Act Penalties for EPCG License Violations Due to Small-Scale Status and Good Faith

  Case-Laws - AT : The CESTAT set aside penalties imposed under sections 114(iii) and 117 of the Customs Act, 1962 against the appellant, a small-scale industry printer. The appellant had printed exercise notebooks for a third party without being declared as a supporting manufacturer in the EPCG license. The Tribunal determined that as a small vendor, the appellant could not reasonably be expected to know the export scheme details. The appellant's good faith was evidenced by proper payment of excise duty and accurate ER-1 returns. The Department failed to establish specific abetment by the appellant in any contravention committed by the principal exporter. Appeal allowed.
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DGFT

• India Authorizes Export of Nine Essential Commodities to Maldives for FY 2025-26 Under Bilateral Trade Agreement

  Notifications : Pursuant to powers under the Foreign Trade (Development & Regulation) Act, 1992 and FTP 2023, DGFT has authorized export of specified essential commodities to Maldives for FY 2025-26 under bilateral trade agreement. The notification permits export of nine essential items including eggs, potatoes, onions, rice, wheat flour, sugar, dal, stone aggregate, and river sand in specified quantities. These exports are exempt from all existing/future restrictions and prohibitions during FY 2025-26. Exports of prohibited/restricted items must transit through six designated customs stations. Stone aggregate and river sand exports require environmental clearances from state authorities and compliance with CRZ regulations and applicable state legislation or judicial orders.
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FEMA

• Compounding of FEMA Offenses Cannot Be Claimed as Right After Adjudication Completes, Rules Court

  Case-Laws - HC : The HC ruled that compounding of FEMA offenses cannot be claimed as a right after adjudication is complete. The petitioner initially filed a compounding application but failed to proceed after it was returned for lack of clarity. Instead, the petitioner participated in adjudication proceedings without objection, only seeking compounding after receiving an unfavorable ruling and penalty. The court determined this was an attempt to avoid payment and delay proceedings indefinitely. The HC noted that while compounding is permissible during ongoing adjudication, no provision exists for compounding after adjudication concludes, as this would render the Act's penal provisions ineffective and create an indefinite process. The petition was accordingly dismissed.
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Corporate Law

• Unregistered sale agreement deemed invalid as transferee failed to pay stamp duty and register document

  Case-Laws - HC : The HC dismissed an application seeking validation of an unregistered sale agreement under Section 536(2) of the Companies Act, 1956. The Court determined that the agreement was "incomplete and inchoate" as the applicant failed to pay stamp duty or register the document despite being contractually obligated to do so as the transferee. The Court rejected the applicant's reliance on Section 53A of the Transfer of Property Act due to lack of registration as required by Section 17(1A) of the Registration Act. While not ruling against the applicant on grounds of delay, the Court upheld the Official Liquidator's report and directed the applicant to surrender possession of the subject property to the Official Liquidator.
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Benami Property

• Benami Transactions: Bullion Companies' Appeal Dismissed While Abettors' Property Attachments Set Aside Under Section 53

  Case-Laws - AT : The AT dismissed the appeal of beneficial owners (bullion companies) who were found to have created backdated entries to conceal demonetized currency transactions exceeding Rs. 35 crores. Though appellants claimed legitimate gold transactions, FSL digital device reports contradicted this, showing they lacked sufficient gold stock to match RTGS transfers. The procedural objection regarding the 30-day notice period was rejected as appellants received adequate response time. However, the AT allowed appeals by abettors, holding that while they facilitated the benami transactions, their properties could not be attached under the 1988 Act as they were neither beneficial owners nor benamidars. The abettors remain subject to prosecution under Section 53 but their property attachments were set aside.
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F. Acts / Amendment Acts

• Reinsurance services: Retrospective Service Tax Exemption for Agricultural Insurance Schemes from 2011-2017 U/s 135 with Refund

  Act-Rules : Retrospective Exemption and Refund: Section 135 of Finance Act, 2025 provides retrospective exemption from service tax for reinsurance services provided by insurance companies under Weather Based Crop Insurance Scheme and Modified National Agricultural Insurance Scheme for the period April 1, 2011 to June 30, 2017. No service tax shall be levied or collected for these services during this period. Refunds will be granted for previously collected service tax, provided applications are submitted within six months from the date the Finance Bill, 2025 receives Presidential assent. Despite the omission of Chapter V of Finance Act, 1994, its provisions will apply retrospectively for processing these refunds.
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Indian Laws

• Land Acquisition Compensation: Supreme Court Awards 6% Interest Under Section 34 CPC for Delayed Payment

  Case-Laws - SC : In a dispute over enhanced share valuation sold to the State of Rajasthan, the SC modified the High Court's judgment regarding interest rates. The Court determined that although the transaction was commercial, it involved the State with superior bargaining power, and the originally offered price was unconscionable. In the absence of any agreement regarding interest for delayed payment, the Court applied Section 34 of the CPC. The SC awarded simple interest at 6% per annum from July 8, 1975, until the date of decree, and 9% per annum thereafter until realization. The Court directed payment of the enhanced share value with applicable interest, after adjusting amounts already paid, within two months.
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• High Court Wrongly Quashed Disproportionate Assets Case After Discharge Applications Were Already Dismissed Under Section 482 Cr.P.C.

  Case-Laws - SC : The SC overturned the High Court's quashing of criminal proceedings against a public servant for possessing disproportionate assets. The Court ruled that the High Court improperly exercised inherent powers under Section 482 Cr.P.C. after discharge applications had already been dismissed. The Court determined that questions regarding the validity of prosecution sanction should be examined during trial rather than in pre-trial proceedings. The SC emphasized that the High Court erroneously revisited earlier decisions without any material change in circumstances and incorrectly assessed evidentiary matters that should be determined at trial. The typographical error in the sanction order was not sufficient grounds for quashing. The appeal was allowed and the case was restored to the Trial Court.
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PMLA

• Appellant's Challenge to PMLA Investigation Dismissed Despite 9-Year Delay in Predicate Offence Charge Sheet

  Case-Laws - AT : The AT dismissed the appeal challenging an investigation under the Prevention of Money Laundering Act, 2002. Despite the appellant's argument that the predicate offence agency failed to file a charge sheet for over 9 years, the Tribunal found no delay on the respondent's part, as the ECIR was properly recorded following an FIR registered on 14.12.2016 for offences under Sections 409, 420, 120-B IPC read with Sections 7 and 13 of the Prevention of Corruption Act, 1988. The Tribunal declined to comment on the predicate agency's alleged delay as they were not a party to the proceedings, and the appellant failed to cite any legal provision or precedent establishing how such delay would affect PMLA proceedings.
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SEBI

• Investment Advisers and Research Analysts Can Now Collect Fees Up to One Year in Advance from Individual Clients

  Circulars : SEBI has relaxed advance fee restrictions for Investment Advisers (IAs) and Research Analysts (RAs), allowing them to collect fees up to one year in advance, increased from two quarters for IAs and three months for RAs. The circular specifies that fee-related provisions (including limits, payment modes, refunds, and breakage fees) apply only to individual and HUF clients who are not accredited investors. For non-individual clients, accredited investors, and institutional investors seeking proxy adviser recommendations, fee arrangements may be governed by bilaterally negotiated contractual terms. This regulatory amendment addresses industry feedback that previous restrictions disincentivized offering long-term recommendations.
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• Compliance Officers Must Be One Level Below Managing Directors or Whole-time Directors Under Regulation 6(1)

  Circulars : SEBI has clarified that under Regulation 6(1) of the LODR Regulations, the term "one level below the board of directors" refers to the Compliance Officer's position being one level below Managing Directors or Whole-time Directors who serve on the board. This interpretation aligns with Regulation 2(1)(o) of LODR Regulations read with Section 2(51) of the Companies Act, 2013. For entities without a Managing Director or Whole-time Director, the Compliance Officer must be positioned no more than one level below the CEO, Manager, or equivalent leadership role overseeing daily operations. This clarification addresses implementation questions following the December 2024 amendment requiring Compliance Officers to be in whole-time employment and designated as Key Managerial Personnel.
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Service Tax

• Liquidated Damages and Late Payment Charges Not Subject to Service Tax Under Section 66E(e)

  Case-Laws - AT : CESTAT ruled that service tax cannot be levied on liquidated damages and late payment charges under Section 66E(e) of the Finance Act, as these do not constitute a declared service. The Tribunal referenced CBIC Circular No. 214/1/2023-S.T. and determined that recovery of liquidated damages cannot be considered a service since the appellant was not carrying out any activity to receive compensation, nor was there any intention by the other party to breach contracts. Additionally, the extended period of limitation and penalties were found untenable as there was no suppression of facts, especially considering the appellant's status as a public sector undertaking. The Tribunal set aside the original orders, allowing the appeal.
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Case Laws:

• GST

• 2025 (4) TMI 169
  Benefit of Amnesty Scheme - Seeking benefit of waiver of interest and penalty only to notices issued under Section 73 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- In view of the fact that the petitioner intends to avail the benefit of Amnesty Scheme under Section 128(A) of the CGST Act, it is deemed just and appropriate to set aside the impugned order at Annexure-D and remit the matter back to respondent No.5 for reconsideration afresh, in accordance with law by issuing certain directions. Petition allowed by way of remand.

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• 2025 (4) TMI 168
  Liability of petitioner, as the head of a Hindu Undivided Family, for penalties under the GST Act - amount towards the GST payment, has been deposited under wrong head - HELD THAT:- The payment of GST deposited by the petitioner was accepted by NOIDA. Further, they also admitted depositing of the GST amount under the wrong head. The NOIDA had attributed its mistake upon tax consultant by whom the advise was taken. In turn, the NOIDA accepts its mistake for non-deposit of the due tax so paid by the petitioner under the proper heads. The Hon ble Apex Court in the case of Batliboi Environmental Engineers Limited Vs. Hindustan Petroleum Corporation Limited an Another, [ 2023 (9) TMI 1186 - SUPREME COURT ], has held that computation of compensation should not be whimsical and absurd resulting in a windfall and bounty for one party at the expense of the other and the damages should be commensurate with the loss sustained by the party. Since the quantification against the petitioner along with penalty has been made of Rs. 19,22,778/-, which has been confirmed by the appellate authority, a Writ of Mandamus under Article 226 of the Constitution of India is issued to the respondent no.4 i.e. NOIDA to pay/compensate the amount of Rs. 19,22,778/- to the petitioner within 15 days from today. After making the said payment to the petitioner, the NOIDA shall intimate about the same to the District Magistrate, Gautam Buddh Nagar within the said period - The NOIDA is at liberty to recover the said amount from the erring officer of its department. Conclusion - The petitioner should not suffer due to NOIDA s mistake in depositing the GST under the wrong head, the penalties imposed are unjustified. Petition disposed off.

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• 2025 (4) TMI 167
  Challenge to assessment order - impugned order is a non-speaking order, violating Section 75(6) of the GST Act, as it fails to address the petitioner s submissions - violation of principle sof natural justice - HELD THAT:- Considering the submissions made by the learned counsel for the petitioner and the learned Government Advocate for the respondent and also considering the fact that the petitioner is having an appeal remedy before the appellate Deputy Commissioner (State Tax) (GST Appeal), Madurai, under Section 107 of the GST Act, 2017, this writ petition is disposed of, with liberty to the petitioner to approach the appellate authority and raise all the grounds raised in this writ petition in the appeal. In the event, if any appeal is filed within a period of two weeks from the date of receipt of a copy of this order, the appellate authority shall entertain the appeal without reference to the period of limitation and dispose of the same in accordance with law, within a period of three months thereafter. In the interregnum, the respondent shall maintain status quo prevailing as on date. Petition disposed off.

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• 2025 (4) TMI 166
  Violation of principles of natural justice - order passed without granting a personal hearing to the petitioners - Challenge to validity and legality of the SCN - recovery of alleged excess ITC availed - HELD THAT:- It is not in dispute that the impugned order-in-original is passed in violation of provisions of section 75(4) of the CGST Act as the respondent no.1 was required to grant an opportunity of hearing before passing an adverse order. Therefore, as the impugned order-in-original is passed in violation of principles of natural justice, only on that ground same is hereby quashed and set aside and the matter is remanded back to the respondent authority to pass fresh de novo order after giving an opportunity of hearing to the petitioners to reconcile Form GSTR 2A with that of Form GSTR 3B for the period under consideration. Such exercise shall be completed within a period of 12 weeks from the date of receipt of a copy of the order. Conclusion - The impugned order-in-original is passed in violation of provisions of section 75(4) of the CGST Act as the respondent no.1 was required to grant an opportunity of hearing before passing an adverse order. Petition disposed off.

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• 2025 (4) TMI 165
  Challenge to impugned order - scope of SCN - demand in the impugned order in excess of the amount specified in the Show Cause Notice - Violation of principles of natural justice - jurisdiction - HELD THAT:- The question of limitation coupled with an issue relating to jurisdiction is to be decided based on certain factual aspects which can be canvassed before the respondent. Since an opportunity is given by the learned Single Judge, it is open to the appellant to raise all its defence in the reply before the respondent. This Court is of the view that the further observation of the learned Single Judge giving scope for restoration of the order in case no reply is filed within three weeks, may not be appropriate. Therefore, the order of the learned Single Judge is set aside to that extent. It is open to the appellant to submit their reply within a period of four weeks from the date of receipt of a copy of this judgment. It is also open to the appellant to raise the question of limitation as well as jurisdiction as contended before this Court. This Writ Appeal is partly allowed.

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• 2025 (4) TMI 164
  Seeking quashing of non-bailable warrants against the accused petitioner at the first instance - supplying of packing material in the name of fake firms with an intent to dodge the checking conducted by GST Department - when the cognizance is taken by the Competent Court on a complaint filed after completion of investigation in the matter, his presence can be secured by issuing summons or bailable warrants? - HELD THAT:- Issuing non-bailable warrants for securing the presence of an accused can be resorted only when an accused does not turn up even after service or execution of summons or bailable warrants. In the present case after registration of the case by the respondent- department, summons were issued to the petitioner and in response to the summons the petitioner appeared before the department and he was interrogated and his statements were recorded on 08.6.2022. The department did not choose to arrest the accused petitioner at the relevant time. Para 11.2 of the complaint speaks of the fact that the accused petitioner during investigation of the matter appeared before the authorities of the Department and his statements were also recorded. By filing the application under section 72(2) of the BNSS, the petitioner has made a limited prayer that the non- bailable warrants issued against him for securing his personal presence before the court below be converted into bailable warrants and his bail bonds be accepted in view of the fact that he is always ready to appear before the concerned court and he has also cooperated with the investigation in the matter by appearing before the Investigating Officer and got recorded his statements - It is a well settled law that when a cognizance is taken against an accused, at the very first instance for securing his personal appearance before the concerned court, summons or bailable warrants should be issued and the option of issuing non-bailable warrants should only be resorted if such an accused person does not appear before the concerned court even after service of summons or bailable warrants. The facts of the case of Tarsem Lal are quite similar to the facts of the present case. In the case of Tarsem Lal, the Hon ble Apex Court has dealt with the case of accused persons therein who were not arrested after registration of the enforcement case information report till the Special Court took the cognizance against them. The cognizance was taken on the complaint filed under section 44(1)(b) of the PMLA and the Special Court issued warrants for procuring their presence. The present case is on better footings than the case of Tarsem Lal because in that case the accused appellants therein did not appear before the Special Court after summons were served upon them, whereas in the present case the petitioner never avoided his appearance before the Special Court and he has appeared before the Investigating Officer. The present case may be of serious nature but along-with the seriousness of the matter it is also to be seen that whether the accused is likely to evade the process of law or tamper/ destroy the evidence. In the present case, the accused petitioner is ready to join the process of law and before filing of the complainant he has also appeared before the Investigating Officer and got recorded his statements which clearly shows that there is no likelihood to evade the process of law by the accused petitioner. Though in the complaint filed by the respondent- department they have stated that the employees of the accused petitioner have destroyed the evidence, however, no cognizance has been taken by the Special Court against the accused petitioner for such allegations of tampering or destroying the evidence. Thus, this Court can held that the issuance of non-bailable warrants at the very first instance after taking cognizance for securing the personal presence of the accused is not sustainable. After converting the non-bailable warrants into bailable warrants if the accused petitioner appears before the concerned Court, whether he / she should be released on bail or he has to move an application for regular bail? - HELD THAT:- The court below was under an obligation to see whether there is likelihood on the part of the accused petitioner of evading the process of law or he may tamper / destroy the evidence, as has been observed by the Hon ble Apex Court in the case of Sharif Ahmed [ 2024 (5) TMI 1541 - SUPREME COURT] . This Court in view of the assurance given by the petitioner so as to join the trial and there is no evidence or cognizance against the accused petitioner as regards tampering/ destroying the evidence, feels that it is a fit case where the accused petitioner should be allowed the process of law by appearing before the court below without there being non-bailable warrants. The presumption of innocence is available to a person under the fundamental principles of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by the Competent Court. Conclusion - i) Non-bailable warrant should be issued to bring a person to court when summons or bailable warrants would be unlikely to have the desired result. ii) The Court quashed the trial court s order issuing non-bailable warrants, converted them to bailable warrants, and held that the accused need not apply for bail upon appearing before the court. Application disposed off.

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• 2025 (4) TMI 163
  Time limitation for filing returns - failure to furnish the returns within a period of 60 days as prescribed under Section 62(2) of the GST Act - Whether the petitioner will lose his opportunity to file the returns or the petitioner will still be entitled to file the returns by providing sufficient reasons for non-filing of returns, whereby enabling the second respondent to condone the delay and accept the returns of the petitioner? - HELD THAT:- The limitation of 60 days period prescribed under Section 62(2) of the Act appears to be directory in nature and if the assessee was not able to file the returns for the reasons, which are beyond his/her control, certainly the said delay can be condoned and thereafter, the assessee can be permitted to file the returns after payment of interest, penalty and other charges as applicable. At any cost, the right to file the returns cannot be taken away stating that the petitioner has not filed any returns within a period of 60 days from the date of best judgment assessment order. Thus, if any application is filed before the authority concerned with sufficient reasons for non-filing of returns within the prescribed time limit as per section 62(2) of the Act, the same shall be considered on merits. If the authority is satisfied with the said reasons, they can condone the delay and permit the petitioner to file the returns. However, in the present case, no such application was filed by the petitioner. Conclusion - The limitation of 60 days period prescribed under Section 62(2) of the Act appears to be directory in nature and if the assessee was not able to file the returns for the reasons, which are beyond his/her control, certainly the said delay can be condoned. The petitioner is directed to file an application for condoning the delay in filing the returns within a period of 15 days from the date of receipt of copy of this order - petition disposed off.

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• 2025 (4) TMI 162
  Withdrawal of orders, on filing of returns within 30 days from the date of the impugned orders - HELD THAT:- The petitioner is having a remedy to file an application for rectification before the second respondent under Section 161 of the Tamil Nadu Goods and Services Tax Act, 2017, these writ petitions are disposed of, with liberty to the petitioner to file an application for rectification before the second respondent under Section 161 of the Tamil Nadu Goods and Services Tax Act, 2017, within a period of two weeks from the date of receipt of a copy of this order. In the event, if any application is filed within a period of two weeks from the date of receipt of a copy of this order, the second respondent shall entertain the same and dispose of the same in accordance with law, after affording an opportunity of hearing to the petitioner, within a period of one month thereafter. Petition disposed off.

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• 2025 (4) TMI 161
  Challenge to assessment order in Form GST DRC- 07 - the proceeding does not contain the signature of the assessing officer and also DIN number, on the impugned assessment order - HELD THAT:- The effect of the absence of the signature, on an assessment order was earlier considered by this Court, in the case of A.V. Bhanoji Row Vs. The Assistant Commissioner (ST), [ 2023 (2) TMI 1224 - ANDHRA PRADESH HIGH COURT] . A Division Bench of this Court, had held that the signature, on the assessment order, cannot be dispensed with and that the provisions of Sections-160 169 of the Central Goods and Service Tax Act, 2017, would not rectify such a defect. Following this Judgment, another Division Bench of this Court, in the case of M/s. SRK Enterprises Vs. Assistant Commissioner, [ 2023 (12) TMI 156 - ANDHRA PRADESH HIGH COURT] , had set aside the impugned assessment order. The question of the effect of non-inclusion of DIN number on proceedings, under the G.S.T. Act, came to be considered by the Hon ble Supreme Court in the case of Pradeep Goyal Vs. Union of India Ors [ 2022 (8) TMI 216 - SUPREME COURT] . The Hon ble Supreme Court, after noticing the provisions of the Act and the circular issued by the Central Board of Indirect Taxes and Customs (C.B.I.C.), had held that an order, which does not contain a DIN number would be non-est and invalid. Conclusion - In view of the aforesaid judgments and the circular issued by the C.B.I.C., the non-mention of a DIN number and absence of the signature of the assessing officer, in the impugned assessment order would have to be set aside. Petition disposed off.

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• Income Tax

• 2025 (4) TMI 160
  Refunds already been granted but without interest - HELD THAT:- Respondent tenders a calculation sheet in terms of which the additional Income Tax becomes payable to the Petitioners. Mr. Rattesor states that this amount would be paid within some reasonable period that can be determined by this Court. Petitioner, on instructions, states that the calculations handed in by Mr. Rattesor are correct. Accordingly, we direct the Respondents to credit the above amount of Rs. 5,87,739/- into the Petitioner s bank account within two weeks from today.

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• 2025 (4) TMI 159
  Revision u/s 263 - as per CIT deduction u/s 35(2AB) was allowed without verifying whether the assessee submitted Form 3CL from the prescribed authority and at the rate of 200%, whereas the applicable rate as per the amended provision was 150% from 01.04.2018 - HELD THAT:- PCIT has elaborately dealt with the statutory scheme governing deduction under section 35(2AB) of the Act, including the requirements under Rule 6 and Rule 6(7A) of the Income Tax Rules, 1962. It has been specifically noted that Form 3CL, which is required to be furnished electronically by the DSIR, was not available on record either during the assessment proceedings or even during the revision proceedings PCIT has rightly emphasized that there is no ambiguity in the law post amendment, and the provisions of section 35(2AB) of the Act read with Rule 6 of IT Rules, 1962 clearly mandate the filing of Form 3CL and limit the weighted deduction to 150% of eligible expenditure incurred on in-house research and development from A.Y. 2018 19 onwards. AO allowed the deduction at 200% in clear contravention of the law, and without verifying whether the basic condition of prescribed authority s quantification had been fulfilled. Thus, the twin conditions for invoking jurisdiction under section 263 of the Act namely that the assessment order is erroneous and prejudicial to the interests of the revenue stand duly satisfied. PCIT was justified in invoking revisionary powers u/s 263 of the Act and setting aside the assessment order with a direction to the AO to frame a fresh assessment after conducting proper verification and affording reasonable opportunity to the assessee. Decided against assessee.

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• 2025 (4) TMI 158
  Validity of reopening of assessment - original return of income earlier filled which was revised later however, the ld. AO while reopening the assessment and while obtaining the approval of the competent authority has failed to take cognizance of the same - as argued approval by the PCIT was given in a mechanical manner without proper satisfaction HELD THAT:- AO noted in the reasons that the total payments made by the assessee were 34,82,179/-, however, the same was incorrect and as per Form 26AS (TDS) it was Rs. 34,95,369/-. Similarly, the figure noted from the profit and loss account was stated at Rs. 26,66,799/-, which was also factually incorrect. As in the column 13 of reasons recorded, PCIT stated fit case, approved and no satisfaction was recorded by the ld. PCIT before granting the approval. The case of the assessee is squarely covered by the decision of Capital Broadways Pvt. Ltd. [ 2024 (10) TMI 311 - DELHI HIGH COURT] wherein as decided the similar issue by holding that mere mechanical manner of approval is not valid and the reopening made based upon that said approval is bad in law. Besides, this assessment was framed by ignoring the revised return filed by the assessee. Even the revised return was duly processed by the CPC. Therefore, the re-assessment proceedings initiated on the basis of such incorrect and vague facts and invalid approval cannot be sustained. As decided in Mangalore Chemicals Fertilizers Ltd. [ 1991 (1) TMI 70 - KARNATAKA HIGH COURT] and Babubhai Ramanbhai Patel [ 2017 (7) TMI 744 - GUJARAT HIGH COURT] wherein the order of the Hon ble court held that once a revised return is filed, the original return must be taken to have been withdrawn and substituted by a fresh return for the purpose of assessment. Appeal of the assessee is allowed.

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• 2025 (4) TMI 157
  Addition u/s 69 and u/s 56(2)(vii) - Addition u/s 69 on account of unexplained investments in the property and u/s 56(2)(vii) on the ground that the stamp value of the property was more than the agreement value - whether payment for the impugned property was made in the preceding/earlier assessment year? HELD THAT:- The property was purchased in the earlier assessment year for which the consideration was also fully discharged as stated hereinabove in the schedule of payments and it is only conveyance deed which is registered during the year in favour of the assessee and his wife. We note that the issue was accepted by the revenue in the case of assessee s husband. Additions were wrongly made by the AO on the wrong understanding of the facts that the property was purchased during the instant financial year, whereas as a matter of fact the property was purchased in the earlier assessment year and the payments were also made in the earlier assessment year. We note that assessee has duly disclosed all these payments made for the property in the return of income filed and also that all these payments were made from the banks of the assessee. Before parting we would like to state that though the proceedings were ex-parte before the authorities below. However, considering the open and shut case, we are inclined not to restore this file to the file of the ld. AO or ld. CIT (A) and is being decided at this stage. Accordingly, the order of appellate authority is set aside and the AO is directed to delete the addition. Appeal of the assessee is allowed.

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• 2025 (4) TMI 156
  Validity of Reopening of assessment u/s 147 r.w.s. 148 of the Act without any application of mind and without there being a proper approval of the competent authority - HELD THAT:- Perusal of the reasons recorded states that there is no application of mind by the ld. AO to the information received and even the amounts stated in the reasons recorded are different and conflicting. At one place the ld. AO stated that the assessee has entered into fictious profit in equity / derivative trading whereas in the very next line it was stated that the assessee had claimed an amount as exempted Long Term Capital Gain on which STT, was paid. Finally, the ld. AO noted that the income of Rs.95,62,800/- was required to brought to tax as the same has escaped assessment. Moreover, the ld. AO has not given any details of transactions entered into by the assessee such as the date of transactions, with whom the transactions were entered into and therefore, reasons recorded are devoid of any detailed information about the transactions for which the assessee has escaped income. We observe that the reasons recorded by the ld. AO is scanty, vague and ambiguous. The ld. AO has just reopened the case of the assessee based on the information received without any independent application of mind. We note that there is no mention of details of transactions, mode of payment, amount received by the assessee and also the details from whom the money was received by the assessee. In our opinion, the reopening of assessment cannot be allowed on the basis of such vague reasons, where the ld. AO has not done anything as there was gross non-application of mind by the ld. Assessing Officer. Under these circumstances, we are not in a position to sustain the reopening of assessment. Similarly, the approval has been granted in a mechanical manner, wherein it was only mentioned in the approval status as approved. In our opinion, in the case of the assessee, such an approval is mechanical approval and cannot be considered as valid approval. In our opinion, the PCIT has to record the reasons and the satisfaction for having granted such approval. In our opinion, the reopening of assessment on the basis of said approval is bad in law. Thus, we aside the notice issued u/s 147 of the Act and quash the reopening of assessment u/s 147 read with section 144 of the Act on the ground of non application of mind by the AO to the information received and also invalid approval granted by PCIT. Assessee appeal allowed.

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• 2025 (4) TMI 155
  Addition of the loan amount u/s. 69A - unexplained loan - basis of the information received from the office of DCIT, Central Circle-1 (3), Ahmedabad that the assessee has advanced loan to Shri Bhanuprasad D. Trivedi (HUF), and the same has not been reflected by the assessee in his balance sheet - HELD THAT:- Though on one hand the CIT(A), claimed that the copies of the letter of the assessee and confirmation produced before the DCIT, Central Circle-1(3), Ahmedabad, were verified, however, on the other hand vide letter in response to the assessee s application under the RTI Act, 2005, it is the replied by the Revenue that no copy of loan confirmation was filed by Shri Bhanuprasad D. Trivedi (HUF). Also evident from the record that despite multiple requests being made by the assessee for seeking the copy of the confirmation filed by Shri Bhanuprasad D. Trivedi (HUF), the Revenue merely rejected the request of the assessee on technical grounds without proving the existence of any such confirmation being filed by Shri Bhanuprasad D. Trivedi (HUF) during its assessment proceedings. Therefore, not only the statement of the assessee recorded under section 131 of the Act was retracted by the assessee vide its letter dated 22/12/2011, but the loan confirmation, which was claimed to have been given by Shri Bhanuprasad D. Trivedi (HUF) during its assessment proceedings, is also not available with the Revenue. Thus, in the present case, it is evident that no material/document is available with the Revenue which could prove that the assessee s retraction is per se false. Therefore, in the present case, the basis for making the addition u/s 69A of the Act in the hands of the assessee either does not survive or does not exist in the records of the Revenue. Accordingly, we do not find any basis in sustaining the addition made by the AO under section 69A of the Act in the hands of the assessee, and the same is deleted. Also addition on account of interest earned by the assessee from the aforesaid loan transaction has no legs to stand on, and therefore, the same is also deleted. Accordingly, the grounds raised by the assessee in its appeal for the assessment year 2005-06 are allowed.

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• 2025 (4) TMI 154
  Charges paid by the assessee company for gold stock - scope of the Gold Hire Agreements - AO was of the view that considering nature of business of assessee, hiring gold interest paid is not related the business of the assessee and hence, disallowed hire gold interest paid HELD THAT:- We find that in year 2013, the Gold Hire Agreement between appellant and Shri Nathmal wherein we find that 65 kg gold was hired to the assessee. Similarly, in year 2016, by the separate Gold Hire Agreements between appellant and Smt. Indra Bai 2100 grams gold was hired to the assessee and between appellant and Smt. Tara Devi 2650 grams gold was hired to the assessee. In all agreements it is clear covenant that the renter shall have obligation to pay Rs. 5/- per gram per month to the owner. It is also clear stipulation in the Gold Hire Agreements that apart from the hire charges, the renter shall also deposit security charges with the owner. Schedule 3(B) forming part of balance sheet duly records loan from Nathmal (Director) and and Tara Jain and related party Indra Bai. Schedule 20 forming part of balance sheet duly records hire gold interest paid. We also find that the company hired the stock from the directors and used for the purpose of its business. In fact, the company has no stock-in-trade of its own. Pursuant to bench query, ld. AR for the assessee submitted that stock-in-trade is exempt from the Wealth Tax. It is undisputed fact that the company has closing stock of Rs. 9,76,12,546/-. We find force in the argument of the AR for the assessee that the company has to pay interest, if it has purchased stocks worth Rs. 9,76,12,546/- at least at 12% being bank rate which will be Rs. 1,08,00,000/-. Assessee s decision to take on hire charges which requires payment of Rs. 41,85,000/- was better option than taking loan from the bank to purchase the stocks. Hence, in the light of our above view, we delete the addition made by the AO. Appeal of the assessee is allowed.

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• 2025 (4) TMI 153
  Accrual of income - attributing provision for fees and technical services income (receipts) to the project office of the assessee, i.e., permanent establishment - whether DRP have erred in not appreciating the concept of profit attribution to PE is in the nature of international transaction requiring arm s length analysis and thereby exceeding their power in attributing additional impugned amount to India project office without appreciating the matter to the ld. TPO? AO rejected the assessee s contention and held that PE did not play limited role in the project and had other major role also, therefore, income attributed to the project office is not acceptable HELD THAT:- TPO has simply brushed aside the TP study report in a very casual manner stating that in TP study report calculation of income attributable to the PE based on transfer pricing study method is done by taking comparables from other sectors instead of highly technical services as in the instant case. Nowhere, ld. AO has either referred the matter to the ld. TPO or has discussed why any of the comparables or the method applied to the assessee is incorrect. Thus, without carrying out FAR analysis no further income can be attributed to the PE. Accordingly, we hold that the allocation / attribution of income to the PE are at arm s length and no further attribution is required to be there. Even otherwise also AO without any TP study analysis or reference to the ld. TPO has attributed 50% of the total receipts when major functions and activities were carried out in Italy and all the risks were assumed in Italy. Accordingly, such an adhoc attribution without FAR analysis or even going through the functions and activities carried out by Italy that most of the deliverables were only from Italy, cannot make further attribution for the production of technical or consultancy services. Accordingly, the attribution made by the ld. AO is rejected. Nowhere it is seen that ld. AO has taken any reasonable basis or conducted any genuine FAR analysis of the functions and activities carried out by the HO and PO which we have highlighted in detail in the foregoing paragraphs. Otherwise also, if there are transaction between two AEs, then the TP provisions are applicable and the term defined u/s. 92F (iii) also include permanent establishment of such enterprise who is or was proposed to engage in certain activities or business. In view of specific inclusion of term PE, in the definition of the term enterprise has been given, then the transaction between the foreign AE and its PE is to be regarded as transactions between two enterprises under the Act. Thus in our view, Fincantieri Spa, Italy and its project office in India would qualify as associated enterprise and accordingly, TP principles are applicable as transaction between PO in India and HO in Italy. In the present case PO in India is akin to a service provider to the AE in Italy and such services provided by PO in India to AE in Italy would qualify as international transaction and therefore, PO in India should be rendered at arm s length price from the head office, Italy for the services received by it Article 7 clearly requires that PE is deemed as distinct and separate enterprise for the purpose of PE attribution and profits attributable to PE need to be determined in line with the ALP principle. This view is now well supported in the case of BEA Shenyang Transformer Group Company Ltd [ 2025 (1) TMI 1274 - ITAT AHMEDABAD ] as concluded that the transaction between a foreign enterprise and its PE in India can indeed be considered as an international transaction and be subject to ALP adjustment. The underlying philosophy of transfer pricing provisions and Article 7(2) of the India-China Double Taxation Avoidance Agreement (DTAA) is the same, wherein both try to analyze how third parties would have dealt with each other under uncontrolled conditions. Therefore, the contention that there is a conflict between Article 9 of the DTAA and domestic transfer pricing provisions was rejected. We hold that attribution of revenue between PO and HO is an international transaction which is subject to TP regulations which here in this case has been duly complied with the assessee and ld. AO has failed to carry out such analysis and adhoc adjustment cannot be sustained or upheld. Accordingly, such ground raised by the assessee is also allowed.

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• 2025 (4) TMI 152
  Revision u/s 263 - Completion of section 153A assessment by the AO inter alia, making a protective addition of amount allegedly paid for purchase of immovable property at New Delhi - CIT proposing to exercise his revisional jurisdiction on the issue of 2(22)(e) deemed dividend, commission payment made to the broker and for having made transactions exceeding Rs. 20,000/-, respectively. HELD THAT:- We find no reason to sustain the impugned revision directions. This is for the precise reason that as on the date of search i.e. 29.05.2018; the assessment year before us i.e. AY 2013- 14 involves an unabated assessment wherein any addition ought to be made based on the specific seized material only as per Abhisar Buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT ] Revenue could hardly pinpoint any specific seized material so far as the PCIT s impugned proposal pertaining to deemed dividend, commission payments and banking transactions is concerned. This being the clinching case, we are of the considered view that the impugned section 153A assessment framed in the assessee s case on 04.05.2021 could neither be termed as erroneous one nor that causing prejudice to the interest of the revenue, in light of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT ] Assessee s appeal is allowed.

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• 2025 (4) TMI 151
  Revision u/s 263 - Revenue submitted that no doubt the case was selected for limited scrutiny, the AO has not asked for right details from the assessee about investment made/held/sold during the year HELD THAT:-Case of the assessee was selected for limited scrutiny and assessee was asked to verify the large increase in investment in unlisted equities and high interest expenses relatable to exempt income u/s 14A. AO has verified the above said aspect from the information submitted by the assessee. The assessee has brought to our notice the various information submitted through ITBA portal, as per which the assessee has addressed the issues raised by the AO in the 143(2) notices. After considering the information made available before him, the AO has accepted the submissions and completed the assessment. It may look cryptic but they had a minimum mandate to scrutinise the issues raised in the CASS selection. PCIT has accepted the information submitted by the assessee on the issues raised by the AO that the assessee has not made any investment on the listed or unlisted shares, which may lead to exempt income. He also accepted that fact that interest expenses are not related to the exempt income. However, he proceeded to question the rationale of making investments in the house properties, utilisation of borrowed funds in the business and he also raised the issue of allowability of interest expenses for investment in the house property. We find it odd to notice such exercises. The assessee has wide range of business and showing healthy turn over. It is normal for the different assessee to make investments other than the business purpose. How can a tax authority interfere in such decisions, as long as it is in the name and control of the assessee, the related expenses have to be allowed as business expenses. It is also unfair to question how the assessee arranges its funds to run the business. PCIT has highlighted the own funds available in the business, he overlooked the other types of funds available in the business like trade payables and other indirect finances. We further observed that he has directed the AO to verify the issues raised by him without giving proper findings and step into the shoes of the businessman, how he must run the business. He has not justified how the interest expenses on the real estate investment cannot be allowed in the income tax provisions. AO has verified the limited scope of selection process and taken one of the possible view based on the material available before him and PCIT may have divergent view and possible other views, the same cannot make the assessment order erroneous and prejudicial to the interest of the Revenue. In this case, the Ld PCIT has invoked Explanation 2 to section 263 in this case wrongly - Decided in favour of assessee.

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• 2025 (4) TMI 150
  Reopening of assessment u/s 147 - Allegation of borrowed satisfaction and without any application of mind by AO - HELD THAT:- AO noted in the reason that on the basis of credible information it is observed that the assessee M/s Keynesian Financial Services Limited has brought back unaccounted funds into its regular books of accounts from shell companies without any financial rationale behind such transactions in the financial year 2012-13 and thereafter concluded that owing the same, he has reasons to believe that income chargeable to tax has escaped assessment for the A.Y. 2013- 14. We observe that the reasons recorded by the ld. AO is scanty, vague and unambiguous. AO has just reopened the case of the assessee based on the information received without any independent application of mind. We note that there is no mention of details of transactions, mode of payment, amount received by the assessee and also the details from whom the money was received by the assessee. Reopening of assessment cannot be allowed on the basis of such vague reasons, where the ld. AO has not done anything as there was gross non-application of mind by the AO. Under these circumstances, we are not in a position to sustain the reopening of assessment. AR in defense of his arguments relied on the decision in the CIT vs. Insecticides (India) Ltd. [ 2013 (5) TMI 691 - DELHI HIGH COURT ] wherein has held that the reopening of assessment cannot be allowed on the basis of sanctity, vague reasons, wherein the AO has not mentioned in the reasons recorded the details of transactions and also the details of persons/entity from whom the money was received by the assessee. Decided in favour of assessee.

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• 2025 (4) TMI 149
  Dependent agent PE of assessee in India - AO preceded that assessee has a PE in India in the form of FCIPL who is an dependent agent for assessee - CIT(A) held that place of effective management of assessee company is neither in Mauritius nor in India but in the third Country and therefore, assessee is not entitled to benefit of Article 8 of India-Mauritius DTAA - HELD THAT:- From the agreement and also from the submissions made before the authorities below it is seen that; firstly, FCIPL is only an agent for booking cargo for the assessee as per the Tariff fixed by it and it has no capacity to conclude contracts of any nature. Further, the booking of freight as an agent does not imply that FCIPL is empowered to conclude any contracts; secondly, the assessee is not liable for any expenses, obligations or liabilities of expenses or otherwise of FCIPL; thirdly, in its normal course of conduct of business, FCIPL does not act as a representative of the assessee but only as an agent for booking cargo, just as it does for other shipping lines for which also it is an Agent; fourthly, the risks associated with their respective business are mutually exclusive. The assessee has limited access to books and records related only to the agency business of FCIPL; and lastly, the instructions are limited to booking of freight and the assessee has no say in the management of FCIPL. FCIPL is functionally independent of the Assessee. Thus, simply booking of freight as an agent does not imply that FCIPL is empowered to conclude any contracts nor assessee was liable for any instances, obligations or liabilities of expenses of FCIPL. It does not act as a representative of the assessee but only an agent for booking cargo and the risk associated was also that of an agent. FCIPL was doing business for other enterprises also and in as much as more than 77.60 % of the Revenue or the income was from other independent parties at only 22.32% Revenue was derived from assessee. In this regard we have already incorporated the table which encapsulates various operating income derived by FCIPL. Thus, FCIPL was an independent agent and not carrying out any work wholly and almost wholly for the assessee company. Accordingly, the order of the ld. CIT (A) is confirmed and the grounds raised by the Revenue are dismissed.

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• 2025 (4) TMI 148
  Addition u/s. 68 - entire sale proceeds of shares of Virtual Global Education Ltd. by alleging the scrip as penny stock - HELD THAT:- Admittedly, it is a fact on record that assessee had earned short term capital gain on the trading of scrips of Virtual Global Education Ltd. which was duly accounted and reported in the return filed by her in the year under consideration which was subjected to tax. The conclusion drawn is like throwing mud in the air so that some part of it get stuck to meet the objective. There is no corroboration of the correct factual matrix about the income reported by the assessee in her return, vis- -vis the information utilised by ld. AO for initiating the impugned re-assessment proceedings. It is evident that AO himself is not sure of the nature of the transaction and income therefrom which has escaped assessment though already reported by the assessee in her return which was subjected to tax and on which applicable taxes were duly deposited. The conclusion drawn by AO as extracted above is nothing but surmises and presumption which do not have any base. Decided against revenue.

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• 2025 (4) TMI 147
  Levy of penalty u/s 271(1)(c) - assessee receives payment from CSOD India towards the distribution of software to its Indian customers but assessee did not offer the said receipts to tax for the reason that according to the assessee, the receipts do not fall within the definition of Royalty or FTS or Business profits as per the DTAA between India and UK - AO held that CSOD India is the DAPE of the assessee and accordingly attributed 80% of the receipts as taxable in India - DRP reduced the attribution to 30% and the assessee did not contend the attribution further in appeal -HELD THAT:- Merely making a claim in the return of income, which is not sustainable under the Act cannot amount to furnishing inaccurate particulars regarding the assessee s income and that mere non-acceptance of claim by the revenue cannot attract any penalty. In assessee s case, the claim of the assessee that the receipts from CSOD India towards sale of software is not taxable in India is not accepted by the revenue, and when we apply the above ratio of Apex Court the same cannot be the sole reason for levy of penalty. Further the assessee during the course of assessment has furnished all the details as has been called for with regard to the impugned receipts which substantiate the contention that there is no wilful intention to provide inaccurate particulars and that during assessment proceedings the assessee has fully cooperated. Thus, AO is not correct in levying the penalty under section 271(1)(c) on the ground of furnishing inaccurate particulars whereas the assessee has merely made a claim which according to the revenue is not allowed. Accordingly we direct the AO to delete the penalty. Penalty proceedings u/s 270A on the ground that assessee has under reported income - AO treated the CSOD India as DAPE of the assessee and accordingly attributed 80% of the total receipts as income in the hands of the assessee taxable in India. The DRP reduced the attribution of income to 30% - HELD THAT:- As decided in D.C.Polyester [ 2023 (10) TMI 971 - ITAT MUMBAI] levy of penalty under section 270A is not automatic and that the AO s powers to levy penalty is discretionary. We have already quoted in the earlier part of this order the observations of Hindustan Steel Ltd [ 1969 (8) TMI 31 - SUPREME COURT] that Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Further the assessee for the year under consideration has disclosed all the material facts and the AO/CIT(A) has not held that the explanation offered is not bonafide. Therefore we are of the view that the exception u/s 270A(6)(a) is applicable to assessee s case and accordingly we direct the AO delete the penalty levied.

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• 2025 (4) TMI 146
  Delay in filing the appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] - Assessee vehemently argued that intimation u/s 143(1) was never communicated or served on the assessee either through email or in physical form and that the assessee came to know about adverse order against them, when notice u/s 245 was served on assessee in July 2023 and that after obtaining copy of the order/ intimation of CPC, the assessee filed appeal with only 75 days of delay - HELD THAT:- We find that such facts were clearly mentioned in column -15 of Form-35 that intimation u/s 143(1) was not served. In our view, the CIT(A) in such circumstances either ought to have obtained report from the jurisdictional AO and a specific submission on such issue from assessee. No such exercise was carried out by CIT(A). Admittedly, the ld CIT(A) sought written submissions of the merit of the alleged additions. We find that in Stride Multitrade Private Limited [ 2021 (9) TMI 1008 - BOMBAY HIGH COURT] held that when Ld. CIT(A) asking the petitioner (assessee) to furnish ground wise written submission on the grounds of appeal, it would mean that condonation of delay application has been allowed by Ld. CIT(A). We find the assessee has filed affidavit of one of its members who is also authorised signatory and stated all such facts on oath. Thus keeping in view of the facts that there is no melafide or intentional delay in filing appeal before ld CIT(A), rather due to the facts explained hereinabove, the order of ld CIT(A) on dismissing the appeal assessee is set aside. Deduction u/s 80P(2)(d) - We find that there are order of CPC, that is at Serial No. 22, the deduction under section 80P(2)(d) is allowed and at serial No.27 it has not been allowed, thus there is conflicting order/ adjustment which is not liable to be sustained. We further find that in Chheda Heights Co-operative Housing Society [ 2024 (12) TMI 1549 - ITAT MUMBAI] it has been held that prior to AY 2021-22, such adjustment could be made within the scope of section 143(1). Similar view was taken in Chanderlok Co-operative Society [ 2024 (6) TMI 1441 - ITAT MUMBAI] . Thus, respectfully following the decisions of coordinate bench the appeal of the assessee is allowed.

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• 2025 (4) TMI 145
  Validity of assessment without issuance of notice u/s 143(2) - HELD THAT:- The material available on the record clearly show that the assessee has not filed any valid ITR of the relevant year either suo moto or in response to the notice u/s 142(1). The assessee has not established and demonstrated that it has filed a valid ITR. Since there is no valid ITR; therefore, the question of issuance of notice u/s 143(2) does not arise. Accordingly, it is held that the assessment without issuance of notice under section 143(2) of the Act has been rightly completed by the AO. Thus, the additional ground challenging validity of assessment without issuance of notice under section 143(2) of the Act is dismissed. Denial of deduction u/s 80P - assessee has not filed the ITR within the due date prescribed u/s 139(1) - HELD THAT:- We are of the considered view that this case is squarely covered by the decision of Shri Kalabhairaveshwara Multi-purpose Co-op. Society Ltd. [ 2024 (10) TMI 1644 - ITAT BANGALORE] as held for claiming deduction under Chapter VIA under the head, Deductions to be made in computing total income , which covers section 80P also, the assessee has to file return of income. The assessee did not file return of income at all and therefore the assessee is not eligible for deduction u/s. 80P. The Hon ble Kerala High Court in the case of Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham [ 2023 (3) TMI 1055 - KERALA HIGH COURT ] has held as under we hold that the assessee is not eligible for deduction u/s. 80P of the Act.

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• 2025 (4) TMI 144
  Taxability of income in India - Addition receipts on account of Delivery Order Charges as an integral part of the consideration for air transportation of cargo to the income returned by the assessee - Both the learned lower authorities have admittedly held that these cargo delivery charges realized/received in India, at the time of handing over of the goods to the consignee concern(s), are taxable in India. HELD THAT:- There is hardly any dispute between the parties that India and the Republic of Turkey have entered into a Double Taxation Avoidance Agreement (DTAA) duly notified on 03.02.1997. Once the assessee has derived its impugned delivery charges income in air cargo business activity, the same is duly covered under the above extracted Article 8 clause 2(b), since representing other activity directly connected with such transportation only . It is accordingly concluded that once the assessee s impugned receipts are directly connected with its air cargo business activities, the same would indeed be not taxable in India, since assessable in the relevant contracting state i.e. the Republic of Turkey. We accordingly accept the assessee s instant sole substantive ground and reverse the learned lower authorities action holding it s delivery charges as taxable in India in very terms.

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• 2025 (4) TMI 143
  Disallowance of premium paid on redemption of debentures - HELD THAT:- From a perusal of the assessment order, we notice that the AO has taken the view that the OFCDs were not converted into equity shares by the promoters of the assessee company only for the reason that they will lose the controlling interest over the assessee company upon such conversion. AO has not properly understood the facts surrounding the issue. The leasehold rights and possession of land were with SGH and the assessee was holding reversionary rights. Under JDA, the assessee took up the responsibility to develop the land. As observed by the AO, the developer is liable to pay money to the owner of the land. Since possession of land was given to the assessee by SGH, the assessee was liable to pay security deposit to SGH. The above table extracted above would show the funds received by the assessee by issuing OFCD to UIVCF were used for paying security deposit to SGH and also for development of land. Hence, it is not correct on the part of the AO to hold that the assessee has not used the funds received by issuing OFCDs for the purpose of business of the assessee. So far as the assessee is concerned, it will have not have any say over the usage of funds so given to SGH, i.e.,it is prerogative of the recipient of funds to decide the manner of its usage. We noticed earlier that the amount so given by the assessee to SGH was for the purposes of business of the assessee only, since it was paid for obtaining possession of land for the purposes of development. Hence, we hold that the assessee has used the funds obtained from UIVCF for the purpose of business only. In our view, manner of usage of funds by SGH is not relevant for deciding the deductibility of premium paid by the assessee on OFCD. The foregoing discussions would show that all the reasons given by the AO to disallow the claim for deduction of premium paid on OFCD would fail. Whether such kind of premium paid on redemption of optionally fully convertible debentures falls under the category of revenue expenditure or not was answered in the case of CIT vs. Raymond Ltd [ 2012 (4) TMI 128 - BOMBAY HIGH COURT ] additional liability equivalent to a discount represents revenue expenditure must, by analogy of reasoning, apply to the premium which is paid by the assessee at the time of redemption of the debentures. In that view of the matter, the question which has been framed by the Revenue would have to be answered in the affirmative, in favour of the assessee. The actual premium paid upon the redemption of the debentures would have to be classified as revenue expenditure, in terms of the decision of the Supreme Court in Madras Industrial Investment Corpn. Ltd.[ 1997 (4) TMI 5 - SUPREME COURT] . We are of the view that the AO was not justified in disallowing the claim of premium paid on OFCDs in both the years under consideration. Accordingly, we are of the view that the CIT(A) was justified in deleting the disallowances made in both the years under consideration. Decided in favour of assessee.

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• 2025 (4) TMI 142
  Validity of approval granted u/s. 153D - assessee contended that the JCIT has granted approval in a mechanical manner in violation of mandatory provisions of Section 153D and the purported approval was in violation of provisions u/s 153D - HELD THAT:- Grant of approval under Section 153D of the Act cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind. In our considered view, a mere endorsement to a list of cases of Assessment Orders in multiple cases by putting signatures with rubber stamping on the letter without application of mind will not satisfy the requirement of the law for approval or sanction u/s 153D of the Act. Therefore, we hold that in the present case, the prior approval of the Addl/Joint CIT required before passing of the Assessment Orders in pursuant to a search operation being a mandatory requirement of section 153D was not granted as per law because such approval is not meant to be given in mechanical manner without application of mind by the JCIT which resulted in vitiating the assessment orders per se. As considering the peculiar facts of the present case, we hold that mandatory approval was being granted mechanically without application of mind by JCIT, Central- Range-5, New Delhi, and therefore, this mechanical exercise of power has vitiated entire assessment proceedings and consequently, the said assessment orders are rendered void ab initio. Accordingly, the impugned order is held to be infirm, illegal and bad in law and same is as such quashed. Appeals of the assessee are allowed.

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• 2025 (4) TMI 141
  Addition towards cash deposits to the Bank account u/s 69A and levied tax u/s 115BB - assessee deposited more than 1 crores rupees in the Bank account and only Rs. 19,70,600/- deposited during demonetization period and there is no bar to except old currency notes and the assessee has produced the sale register and ledger account of the assessee - HELD THAT:- In this case, admittedly, the assessee has explained the source of its cash deposits and the revenue authorities were not disputing the same. Therefore, when the assessee has explained the reasons for accepting these Specified Bank Notes, even after 08.11.2016. AO ought to have accepted the explanation furnished by the assessee, when he is not disputing the nature of business and source for cash deposits as discussed above. The assessee was engaged in the business of selling liquor therefore, sale transactions of liquor should be only by way of cash. Therefore, as per the above detailed discussion, the AO is not right in making the addition towards cash deposit. AO as well as ld. CIT(A) has erred in sustaining the addition towards cash deposits to the Bank account under section 69A of the Act and levied tax u/s 115BB. Appeal filed by the assessee is allowed.

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• 2025 (4) TMI 140
  Addition under the head income from house property in respect of vacant units of a commercial mall during the year pursuant to provisions contained in section 23(1) - annual let out value for these eight units for the year under consideration is to be determined at Nil u/s. 23(1)(c) - HELD THAT:- Assessee would have taken sufficient efforts to let out the property. No reasonable business person would not want to let out its premise at the loss of revenue, if any opportunity exists. Accordingly, AO s assumption that the properties were not intended to be let out was held to be erroneous one. It was also noted that the vacant premises were let out in the subsequent year thus, concluded that the premises were intended to be let out. It was also concluded that since the property were vacant for the whole year, in view of the provisions contained in section 23(1)(c), assessee is entitled to vacancy allowance and thus, the addition made by the ld. AO was deleted. In the present case, the actual rent received or receivable by the assessee is Nil on account of vacancy, there being no tenant for the property. Thus, based on elaborate discussion made in the above paragraphs and in accordance with the conditions prescribed in clause (c) to section 23(1), this Nil when compared with sum referred to in clause (a), leads to the annual value of eight units at Nil for the year. Accordingly, under the deeming provision of section 23(1)(c), in the case of a property which is vacant for whole of the year, its annual value is taken at Nil . Claim of the assessee to determine annual value of eight units which remained vacant for whole of the year is held to be computed by taking recourse to section 23(1)(c) as Nil . Accordingly, addition made by the ld. AO is deleted. Appeal of the assessee is allowed.

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• 2025 (4) TMI 139
  Unexplained cash deposits during the demonetization period - HELD THAT:- As assessee is a senior citizen widow and a homemaker aged about 80 years. The late husband of the assessee was a priest and was engaged in the Bhikshuki activities and also used to perform puja and last rites rituals for the last approximately 30 years. As per the case set up by the assessee, after the death of her husband the assessee was fully dependent upon the lifelong savings which were accumulated over a period out of the said bhikshuki activities. However due to old age, ill health and fear of medical emergency, the cash receipts were kept at home. Since the demonetization scheme was brought into being. Therefore, the appellant had to exchange old currency in new currency and in this way, the entire life savings of approximately 30 years was deposited by the assessee in bank. Income tax assessments are not based on strict rule of evidences and preponderance of probabilities and circumstantial evidences also needs to be taken into account to assess the true income of the person Assessee is residing in a rented room and in such a circumstances it is practically impossible for a widow senior citizen to earn such a huge amount of income in one year, even otherwise the cash deposited in the bank account during the demonetisation period has not been withdrawn from the account which goes to show that it was assessee s own money which she inherited from her husband who had accumulated over the years. Even if we calculate by taking into consideration the amount well below the minimum exemption limit for the past seven years, then also it would justify the claim of the assessee. No contrary, evidence has been brought on record by the revenue to disprove the version put forth by the assessee through her affidavit therefore, considering the totality of the facts and circumstances of the present case, we direct the Ld.AO to deletion of additions. Addition to other credit in the bank account of the assessee and the said amount consist of internal bank transfers from her distant relatives. Thus the same not being income of the assessee. Therefore, the additions on this count are not sustainable. Appeal filed by the assessee stands allowed.

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• 2025 (4) TMI 138
  Addition on account of notional interest purportedly earned on an unsecured, interest free loan claimed by the assessee in the Income Tax Return (ITR) - HELD THAT:- Considering that the assessee received an amount of Rs. 30 crores from RPTPL pursuant to the agreement for the right of pre-emption dated 26/10/2016, and that RPTPL has duly confirmed the transaction, with the requisite confirmation is annexed, we find that the transaction is substantiated. Furthermore, the said amount was duly credited in the assessee s books of account as an interest-free loan, and the assessee is not liable to pay any interest, or any other charges related to this fund. AO calculated the said interest amount under Rule 3(7)(i), which is inapplicable to the assessee, as the assessee is not an employee of the said party. The interest was calculated suo-moto by the AO on interest free fund received on right to pre-emption of property. The said calculation has no basis. So, it is treated as unjustified. Addition made by the CIT(A) is upheld, and the appeal filed by the revenue stands dismissed.

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• 2025 (4) TMI 137
  Disallowance of ESOP expenses u/s 37(1) - ESOP expenses is notional in nature and not backed up by an underlying transaction - HELD THAT:- Department has also allowed the deduction in several earlier years in similar facts and circumstances in assessee s own case. Also, Ld. AO while making the addition has duly noted the above decision as well as the decision in the case of Lemon Tree Hotel [ 2018 (4) TMI 1680 - DELHI HIGH COURT] . However, he has stated in the assessment order that he is making the addition as the department s SLP on this issue has been admitted by the Hon ble Apex Court in the case of Lemon Tree Hotel [PCIT v/s Lemon Tree Hotels Pvt. Ltd. [ 2019 (4) TMI 602 - SC ORDER] ]. Deduction has been allowed in several earlier years, we are of the view that the assessee s claim for ESOP expenses u/s 37(1) is allowable for this year also. Claim of weighted deduction u/s 35(2AB) - Whether expenditure on clinical trials is eligible u/s 35(2AB)? - HELD THAT:- Admissibility of expenditure incurred on clinical trials for weighted deduction u/s 35(2AB) has been decided in favour of the assessee in several decisions of the co-ordinate benches, some of which have been quoted by the assessee during his submissions. We are of the view that the expenditure incurred by the assessee on clinical trials which has also been certified by the prescribed authority in part b, column 6 of the Form 3CL is eligible for weighted deduction u/s 35(2AB). We therefore hold that the assessee is entitled to claim expenses on the clinical trials, incurred outside the approved R D facility u/s 35(2AB) of the Act. Whether the amount eligible for deduction u/s 35(2AB) can only be expenditure quantified DSIR in Form 3CL? - AO was justified in restricting the allowance of expenditure on in-house R D to the amounts mentioned in Form 3CL. The assessee should have taken up the matter with the prescribed authority in case he did not accept the quantification given in the Form 3CL. Therefore, the decision of the Ld. AO in restricting the amount eligible for deduction u/s 35(2AB) to Rs. 3,76,93,000/- as against the claim of the assessee amounting to Rs. 44,91,93,361/- is correct as per the provisions of the section and is therefore upheld. However, the alternative claim of the assessee to allow deduction u/s 37 in respect of the balance amount deserves consideration. Accordingly, we deem it proper to restore the issue to Ld. AO for the limited purpose of verification of these expenses u/s 37 of the Act. Needless to add, the assessee should be allowed adequate opportunity to substantiate its claim for allowance of deduction u/s 37(1) of the Act. Disallowance u/s 14A and adding the same to book profit u/s 115JB - We direct the AO to delete addition made to book profit computed u/s 115JB, towards disallowances computed u/s 14A. Disallowance of business promotion expenses - We deem it proper to remand back the matter to the Ld. AO for verification of these expenses. He is directed to give opportunity to furnish requisite details and supporting evidences and the expenses incurred for business promotion and not for providing gifts, freebies to the doctors etc. should be allowed after due verification. Disallowance of deduction claimed u/s 80G in respect of CSR expenses - We hold that the assessee is eligible for deduction u/s 80G in respect of CSR expenses provided other conditions are satisfied. We, therefore, direct the Ld. AO to allow the deduction u/s 80G subject to verification of other prescribed conditions of this section. The issue is, therefore, restored for the limited purpose of such verification subject to which the assessee is entitled to claim deduction u/s 80G in respect of CSR expenses. Claim of deduction u/s 35DD - As this claim has been made for the first time before us on the basis of a similar allowance for AY 2017-18, we deem it appropriate to restore the issue back to the file of Ld. AO for considering the assessee s claim after verification of the same as per provisions of section 35DD. Claim of 1/5th of write-down value of inventory and other Assets disallowed - Since this issue has been raised for the first time before us, we deem it appropriate to restore it to the file of the Ld. AO for the purpose of verification and allow the same in case admissible. Non-grant of TDS credit to M/s. Strides Emerging Market Limited which was merged with the assessee during the year. Ld. AO is directed to verify and allow the claim of TDS as per the rules.

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• 2025 (4) TMI 136
  Addition made u/s 37(1) - remuneration paid to the managing director exceeded the permissible limit under the Companies Act, 2013 - HELD THAT:- As the remuneration paid by the Assessee to the managing director during the relevant previous year false within the ambit of Circular No.07/2015 and therefore, there is no violation of the applicable provisions of the Companies Act, 1956 and/or the Companies Act, 2013. We note that there is nothing on record to show that any proceedings were initiated against the Assessee-Company by the MCA for violating provisions of the Companies Act, 1956/2013. No adverse observations for the relevant previous year have been made by the statutory auditors of the Assessee-Company. No infirmity in the order passed by CIT(A) holding that provisions of Explanation 1 to Section 37(1) would not be attracted and the Assessee is entitle to claim deduction for managerial remuneration u/s 37(1) - Decided against revenue. Addition invoking the provisions contained in Section 40A(2)(b) - HELD THAT:- There is nothing on record to support the finding returned by the AO that the remuneration paid to the managing director was either excessive or unreasonable in terms of Section 40A(2)(b) -- Decided against revenue.

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• 2025 (4) TMI 135
  Benefit derived from debt forgiveness on account of Settlement Agreement - Whether be brought to tax u/s 28(iv)? - CIT(A) held that the amount received by the assessee as advance was in terms of money and not as any non-monetary benefit. Further, the same is not held as cession of liability by the AO himself. HELD THAT:- In order to invoke provisions of Section 28(iv) of the Act, there should be a business connection between the benefit and the business and further, the benefit which is received should be in kind or some other form other than the shape of money. Since the benefit derived by the assessee in the form of money is monetary benefit, in our considered view, the provisions of Section 28(iv) of the Act, cannot be applied and this principle is supported by the decision of case of CIT Vs. Mahindra and Mahindra Ltd [ 2018 (5) TMI 358 - SUPREME COURT] As held by the Hon ble Supreme Court in the above case, there is no scope for applicability of Section 41(1) of the Act, because in order to apply provisions of Section 41(1) of the Act, the first mentioned person has obtained, whether in cash or in any manner whatsoever any amount in respect of such loss or expenditure or some benefit in respect of such trade and liability by way of remission or cession of liability thereof, the amount obtained by such person or the value of benefit shall be deemed to be profits and gain of business or profession and accordingly, chargeable to tax as the income of that previous year whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not. On a perusal of the said provisions, it is evident that it is a sine qua non there should be any allowance or deduction claimed by the assessee in any assessment for any assessment year in respect of loss or expenditure or trading liability and further subsequently during any previous year, if the creditor remits or waives off any such liability, then the assessee is liable to pay tax u/s 41(1) of the Act. In the present case, the benefit derived by the assessee in pursuant to Settlement Agreement dt.13.01.2010 is a debt forgiveness being loans received from Smith Group of Companies and therefore, the same cannot be treated as trading liability to invoke provisions of Section 41(1). In any case, it is not the case of the Assessing Officer that the provisions of Section 41(1) of the Act, is applicable, because the AO never invoked Section 41(1) of the Act. Benefit derived by the assessee on account of debt forgiveness as business profits u/s 28(i) - We are of the considered view that the benefit derived by the assessee on account of debt forgiveness in pursuant to Settlement Agreement dt.13.01.2010, is not a business profit, as specified in Section 28(iv) of the Act i.e., the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession and therefore, in our considered view, there is no error in the findings recorded by the CIT(A) to delete the addition made by the AO towards benefit derived by the assessee on account of debt forgiveness as business profits under Section 28(i) of the Act. Thus, we are inclined to uphold the findings of LD.CIT(A) and dismiss the appeal filed by the Revenue. Assessment u/s 153A - disallowance of expenditure - It is an admitted fact that a search and seizure operation u/s 132 of the Act was conducted on 09.04.2014 and as on the date of search, the assessment for A.Y. 2011-12 has been completed/ unabated, because the time limit for issuance of notice u/s 143(2) of the Act, has expired on 30.09.2012 i.e., before the date of search on 09-04-2014. Once the assessment is unabated / concluded as on the date of search, the assessee cannot make any fresh claim of deduction towards expenditure, unless the said claim is based on incriminating material found as a result of search and this principle is supported in the case of DCIT Vs. M/s. Sew Infrastructure Limited. [ 2024 (10) TMI 1144 - ITAT HYDERABAD] In the present case, since the assessment is unabated / concluded as on the date of search, the assessee cannot make fresh claim of deduction towards any expenditure, if such claim is not based on any incriminating material found as a result of search. Since the fresh claim made by the assessee is not based on any incriminating material found as a result of search, in our considered view, the fresh claim towards expenditure cannot be allowed as deduction. We direct the AO to exclude the income declared by the assessee and assessed by the AO towards debt forgiveness as income for the assessment year 2011-12. Once the income has been excluded for the assessment year 2011-12, then loss declared by the assessee would increase to that extent. Therefore, even if disallowance of expenditure is taken into account, it is only reducing the loss as reported by the assessee, but it does not lead to an assessment of income of Rs. 27,55,09,803 as computed by the AO. Therefore, on this count also the addition made by the AO towards disallowance of expenditure cannot be sustained. Since the fresh claim made by the assessee towards income and expenditure is not in accordance with the provisions of Section 153A in our considered view, the expenditure claimed by the assessee and disallowed by the AO cannot be sustained. Thus, we direct the AO to delete the addition made towards disallowance of expenditure.

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• 2025 (4) TMI 134
  Rejecting of application for approval u/s 80G(5) - some of the objects being religious - HELD THAT:- As per provisions of section 80G(5) of the Act, the institution or fund had to be established in India for a charitable purpose. The Explanation 3 to section 80G defines charitable purpose, as per which charitable purpose does not include any purpose the whole or substantially the whole of which is of a religious nature. Thus, as per the definition of charitable purpose as enshrined in section 80G, the charitable purpose should not include any purpose of substantial religious nature. The benefit for registration u/s. 80G can be denied only if any purpose of the trust, is wholly or substantially wholly, of religious nature. We have to, therefore, first examine as to whether this condition was fulfilled in this case. The basic activity as per these two objects is to establish halls, wadis and dharamshalas which cannot be held as religious in nature. The halls and wadis will be let out for social and religious functions. Merely because some-one is using the halls/wadis for religious programs after paying due rent, the activity of the assessee trust cannot be held as religious in nature. Similarly establishing and managing dharamsalas at religious places also cannot be held to be religious activity. As per the societal norms dharamshalas are established mostly at religious places so that the common people can avail the facilities by paying nominal rent. In the objects, it is nowhere mentioned that halls, wadis dharamshalas will be hired or let out only to the persons of a particular religious community. As per the constitution of the trust any person aged 18 years or above can acquire membership and thus all the facilities being provided by the trust are available to general public. Therefore, the object no. 5 6 are not found to be of religious nature. CIT(E) was not correct in holding that the object of the trust was religious in nature. When the assessee is given the option as per statute to spend up to 5% of its total income for religious purposes, it is imperative that some of the objects will have tenets of religious nature, otherwise it might not be able to spend that 5% permissible expense for religious purposes. The provision of section 80G(5) can t be applied to deny the benefit to such funds or institutions which are predominantly engaged in charitable activities but are either inspired to do charity by tenets of religion or spend negligible amounts on purposes other than charitable. The registration to the trust could have been denied, had it spent more than 5% of its total income on religious purposes as stipulated u/s. 80G(5B) of the Act. As no such specific finding has been given by the ld. CIT(E); we deem it necessary to set aside the matter to the file of ld. CIT(E) with a direction to carry out the necessary analysis in this respect and thereafter pass the order in accordance with law. Tribunal in the case of Shree Sattavis Kadva Patidar Pargati Mandal [ 2024 (5) TMI 495 - ITAT AHMEDABAD ] has also taken an identical view in the matter. Therefore, the matter is restored to the file of the CIT(E), who should examine the matter and give a categorical finding on the applicability of provision of section 80G(5B) of the Act or otherwise. Appeal of the assessee is allowed for statistical purposes.

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• 2025 (4) TMI 133
  Denial of benefit of section 54F - property sold by the assessee in the year under consideration being a residential property - sale of a property registered as residential but used for commercial purposes - only contention is that said property was being let out to Bank ever since 2009 and from its user, it could not be said that the property was residential in nature - HELD THAT:- As the conditions as prescribed in sections 54 and 54F of the Act are similar, except that in section 54 of the Act condition prescribed is w.r.t. investment of capital gain only and whereas in section 54F of the Act it is investment of net consideration, that way rather by choosing exemption u/s. 54F of the Act, the assessee taken a higher burden of investment. It is observed that the fact that the assessee complied with the provisions of section 54F of the Act is nowhere under challenge, hence there is no need to refer the matter back to the file of the Ld. CIT (A). Moreover, the first appellate authority was under legal obligation to decide the alternate ground taken by the assessee (Who is fulfilling all the conditions otherwise). In view of this, the AO is directed to allow the claim of the assessee u/s. 54 of the Act, after appropriate working is done considering the relevant figures involved. This ground raised by the assessee is allowed.

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• 2025 (4) TMI 132
  TP adjustment relating to payment of royalty - assessee argued that the payment of royalty for the use of Vodafone and Essar trademark and trade name is purely a business decision of the assessee which cannot be questioned by the TPO - HELD THAT:- The contract between VIML and OGF for royalty payment have not been provided to the TPO to examine the details of the royalty payment between the tested party and unrelated third party entity. In the light of the above, it is kindly prayed that the matter of adoption of internal CUP as the most appropriate method under the circumstances should be sent back to the TPO for further examination to establish the Arm s Length Price of the royalty transaction. Alternatively, the mean arm s length royalty rate of 5.20%, derived from external CUP agreements through a fresh search, is also treated as an appropriate ALP. Respectfully reliance is placed on the judgment in EKL Appliances Ltd. [ 2012 (4) TMI 346 - DELHI HIGH COURT ] which establishes that Rule 10B(1)(a) of the Rules does not permit the disallowance of any expenditure on the grounds of necessity or prudence. Additionally, we respectfully rely on the Third Member decision in Technimont ICB Pvt. Ltd. [ 2012 (7) TMI 1172 - ITAT MUMBAI ] wherein it was held that the ALP of an international transaction must be determined exclusively by comparing it with comparable uncontrolled transactions and not with a controlled transaction. The determination of ALP at Nil without applying any of the prescribed methods is unjustified. Accordingly, the adjustments made by the Ld. AO are deleted. The order of the DRP is set aside, and the assessee s ground of appeal is allowed. TP adjustment relating to AMP expenditure - These expenses were inextricably linked to the assessee s business operations and cannot be arbitrarily segregated as brand promotion for the AEs. The TPO s characterization of the assessee as a mere distributor, without any substantive reasoning, contradicts the assessee s established role as a full-fledged telecom service provider. The business model chosen by the assessee is to be respected, as per settled jurisprudence, and cannot be re-characterized arbitrarily by the revenue. The application of the bright line test without ensuring functional comparability of the selected comparable and without considering business-specific factors renders the adjustment methodologically flawed. In subsequent assessment years, no adverse inference has been drawn, and no transfer pricing adjustments have been made concerning AMP expenses. This consistency further weakens the revenue s case for the disputed year. As respectfully submitted that the transfer pricing adjustment made in respect of AMP expenditure is devoid of merit and should be deleted. Therefore, the adjustment is set aside, and the assessee s appeal is allowed.

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• 2025 (4) TMI 131
  Disallowing the deduction claimed u/s.80P - assessee which is a Cooperative Society did not file the income-tax returns u/s.139(1) of the Act and only after serving the notice u/s.148 - HELD THAT:- As it was only from 01.04.2018 furnishing of income-tax turn u/s.139(1) of the Act was made mandatory for claiming deduction u/s.80P of the Act. Since the case of the assessee pertain to A.Yrs. 2015-16 and 2016-17 the amendment brought in by the Finance Act, 2018 w.e.f. 01.04.2018 will not be applicable to the assessee and therefore even if the income-tax return was not furnished by the assessee society u/s.139(1), for the purpose of computing the total income, the assessee is eligible for deduction u/s.80P of the Act. See Krushi Vibhag karmachari Vrund Sahakari Pat Sanstha Maryadit [ 2022 (10) TMI 348 - ITAT NAGPUR ] wherein as satisfied that the authorities below were not justified in rejecting the assessee s claim of deduction u/s 80P only on the ground that such a claim was not made in the return but during the course of assessment proceedings. The impugned order is ergo set aside. Quantum of deduction u/s.80P - Authorized Representative was fair enough to accept that the interest received from Scheduled Bank and from HDFC Insurance Scheme is not eligible for deduction u/s.80P of the Act. So far as the interest income received from Cooperative Banks, he referred to the catena of decisions of this Tribunal wherein in the interest received from Cooperative Banks have been held to be eligible for deduction u/s.80P of the Act. Observations and considering the submissions of assessee, we deem it fit to restore the issue of the quantification of deduction u/s.80P of the Act for A.Y. 2015-16 and A.Y. 2016-17 to the file of Jurisdictional AO after taking into consideration that the assessee society is eligible for deduction u/s.80P of the Act for the interest income earned from its members, Cooperative Banks and Cooperative Societies. Appeals of the assessee are partly allowed for statistical purposes.

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• 2025 (4) TMI 130
  Characterization of receipt - applicability of section 28(ii)(b) - compensation received by appellant from M/s Disney Enterprises Inc. (Disney), for erosion in the value of investment of the appellant on account of termination of the right to merchandise the products and distribute the television products of Disney in India, constituted capital receipt not liable to tax in the hands of the appellant. HELD THAT:- We are of the considered view that neither the agreement clause between assessee and Disneys nor the assessment order and the CIT(A), as the case may be, have proved the assessee to be a managing agency qua whole or substantially whole in the foregoing terms. This is indeed coupled with the fact that case law J.R. Kimtee Sons [ 1977 (10) TMI 21 - ANDHRA PRADESH HIGH COURT] and Seshasayee Bros. (P) Ltd [ 1997 (2) TMI 24 - MADRAS HIGH COURT] have settled the issue in assessee s favour and against the department that foregoing statutory provision covers the specified managing agency(ies) under clauses (a) to (c) than having any general applicability in all situations. We accordingly invoke stricter interpretation as per Commissioner Vs. Dilip Kumar [ 2018 (7) TMI 1826 - SUPREME COURT (LB)] and hold that the assessee impugned compensation is not assessable u/s 28(ii)(b) of the Act once it is not the managing agency in the foregoing terms. The assessee s former twin substantive grounds raised in the instant appeal are accepted therefore. This being the outcome qua applicability of section 28(ii) of the Act against the department, we further conclude that the assessee s endeavour to make the impugned sum is rendered academic in nature. Lower authorities have invoked section 73 Explanation to disallow its loss on sale of shares as speculative in nature - We note that this tribunal in assessee s case itself [ 2022 (8) TMI 1568 - ITAT DELHI] in A.Y. 2002-03 has settled the issue in para 23 that it is not involved in trading of shares. Learned counsel has taken us to its balance sheet as well as books of account again reiterating the very factual position. CIT-DR could hardly rebut the fact that the assessee has enclosed his P L account and balance sheet wherein there is no such business income or loss arising from the specified business so as to attract the foregoing Explanation. We thus accept the assessee s instant latter substantive ground as well and direct the learned Assessing Officer to frame his consequential computation as per law.

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• 2025 (4) TMI 129
  Bogus expenses - bulk entries recorded in the books of accounts did not have proper narration and payment details led the AO to believe that they were bogus in nature - AO also noted that the corresponding credit entries were either in Cash account or Bills Expenses payable - Sundries account or certain other ledger accounts which further cast doubt on the genuineness of such expenses - HELD THAT:- The assessee is noted to have explained before the lower authorities that, such journal entries are passed at the end of the year for the purpose of transferring the amounts incurred during the year, which may have been erroneously debited to wrong ledger accounts, to the correct/appropriate ledger account, which is relevant to the concerned expenditure or for the purpose of consolidating the entries under primary ledger accounts. After examining the above entries, we agree with the Ld. CIT(A) that this explanation was tenable in as much as these journal entries passed to simply transfer the amounts debited under a wrong ledger to the correct ledger, and thus cannot be construed to be booking of bogus expense. Accordingly, the disallowance of the above bulk journal entries aggregating to Rs.36,25,56,616/- added across AYs 2016-17, 2017-18, 2018-19, 2019-20 2021-22 is held to be unsustainable on facts. Certain bulk expense entries was debited under site operating expenses account whose corresponding credit entries was not found - The assessee however brought to notice before the Ld. CIT(A) that, these entries represented individual entries of sub-contract expenses in respect of which the corresponding credit was given to the concerned party accounts and the payments thereof were made to the parties through banking channel after due deduction of TDS u/s 194C of the Act. We find that, the Ld. CIT(A) after considering the details furnished by the assessee, noted that the AO had erroneously treated these bulk entries as bogus in nature without naming the details of corresponding credit entry. The Ld. CIT(A) is found to have recorded categorical finding of fact in respect of each of these entries and held that they were not bulk but individual entries which was credited to respective party s account to whom payments were made through banking channel after deducting appropriate tax at source. We therefore uphold the finding of the Ld. CIT(A) that the disallowance of the above expenses u/s 37. Bulk debit entries whose corresponding credit was to Bills and expenses payable - Sundries account, which was shown by way of liability in the balance-sheet to be discharged in the succeeding financial years - Since there was no such debit of year-end bulk provision in the re-casted P L A/c filed u/s 153A of the Act, the disallowance made by the AO was untenable on facts. Bulk debit entries which are noted to comprise of those entries, where corresponding credit was made to Cash Account - CIT(A) did not dispute the AO s finding that, the impugned sum was disallowable as the expenses was incurred in cash and not supported by invoices/vouchers. CIT(A) however took note of the fact that the assessee has already offered and disallowed sum u/s 37 in the return of income for A.Y 2016- 17 filed u/s 153A of the Act and therefore the aforesaid sum stood squarely covered and subsumed by the same. We are thus in agreement with the finding of the Ld. CIT(A) that no further disallowance in this regard was warranted. Bulk entries passed in respect of cash payments debited under the head Coolie Wages - We find ourselves in agreement with his conclusion that, it was not a case that the assessee did not incur any expenses towards Coolie Wages at all so as to disallow the bulk entries of cash payment in its entirety. The above reasoning of the Ld. CIT(A) is found to be supported by his subsequent analysis that, if the AO s reasoning is upheld, then the disallowance would result in abnormally and unrealistically high net profit margins, which again underlines the lack of rationale in the disallowance of bulk entries made by the AO. Assessee had also filed a grievance petition before the Pr. CCIT, Chennai on 07.06.2022 regarding the high-pitched additions made in the impugned assessment orders, to which the Member Secretary, Local Committee on high-pitched scrutiny assessments vide letter dated 27.09.2022 acceded to the assesssee s prayer that the additions made were indeed high-pitched. These surrounding facts and circumstances are found to further support the assessee s plea that, the entire bulk expenses debited under the head Coolie Wages cannot be said to be bogus. Action of the AO by referring to the quantum of cash withdrawals made from the bank accounts by the assessee in AYs 2018-19 2019-20 - As bulk entries passed in the books of accounts was accounting anomaly and cannot be said to constitute debit of bogus expenses in its entirety. To that extent, we are in agreement with the appellate order of Ld. CIT(A). In case these bulk entries are not held to be bogus, then these bulk entries ought to be disallowed either u/s 40A(3) since these expenses were incurred in cash or because the assessee had violated the provisions of Section 40(a)(ia) of the Act by not deducting tax at source on such expenses - As rightly noted by the Ld. CIT(A), the expenditure incurred in cash amounted only to Rs.37,61,67,612/- (in AYs 2016-17 to 2019-20) and Rs.70,21,08,640/- (in AY 2020-21), out of the aggregate disallowance of Rs.118,97,84,974/- 132,76,18,020/- for A.Ys 2016-17 to 2019-20 and AYs 2020-21 2021-22 respectively. Accordingly, the provisions of Section 40A(3) of the Act had no relevance and applicability to the extent of bulk entries of Rs.143,91,26,742/- [81,36,17,362 + 62,55,09,380]. Out of the remaining sum, the Ld. CIT(A) rightly noted that, the expenditure to the extent of Rs.2,35,90,984/- debited under the heads Fuel Expenses-Diesel account and Repairs and maintenance-vehicles / equipment account in A.Y 2016-17 had already been disallowed by the assessee in the return filed u/s 153A of the Act and therefore no further disallowance in this regard was called for. The Ld. CIT, DR also did not dispute this factual aspect. So far as the balance sum is concerned, we find that it comprised only of the cash payments made on account of Coolie Wages . According to us, the Ld. CIT(A) had rightly held that, the provisions of Section 40A(3) had no application in this regard. Applicability of Section 40(a)(ia) - We find that both the AO and the Ld. CIT, DR were unable to adduce any reasons as to why the said provision would apply to such expenditure. Understandably, the wages paid to the labour would not exceed the tax exemption limit and therefore the TDS provisions had no application. Also, the provisions of Chapter XVII-B would not apply to expenses on fuel diesel, staff welfare expenses etc. Thus the contention of the Revenue that the bulk entries ought to be otherwise disallowed u/s 40A(3) and 40(a)(ia) of the Act is rejected. Rejection of the books of accounts of the assessee and the estimation of profits - As the assessee had re-aligned and re-casted the Profit Loss Account for AYs 2016-17 to 2019-20, primarily because there was improper recording of the expenditure incurred towards purchases of gravel and aggregates under the coolies and wages . It is further noted that, the assessee himself also adopted the average proportion of various heads of direct expenses as specified by NHAI for effecting re-alignment of expenses and thereafter reported higher profits in each of these AYs 2016-17 to 2019-20 in the returns filed u/s 153A of the Act. It is thus evident that, the books of accounts of the assessee in relation to his contracts business are not correct and complete and income cannot be correctly deduced from the said accounts. We find merit in the findings rendered by the Ld. CIT(A) while rejecting the books of accounts of the assessee by invoking Section 145(3). Estimating the profits of the assessee - CIT(A) is noted to have estimated the profit at 12.5% of the contractual receipts - We note that the years involved in these cases were 1980s 1990s. We agree with the Ld. AR that the economics of road construction, tax structure, infrastructure and overall economic scenario was vastly different and hence the estimation exercise undertaken in these decisions cannot be considered as a comparable barometer for the years in question before us. Having regard to the foregoing, we thus hold that the profit of the assessee is to be estimated at 10% of the contractual receipts.

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• 2025 (4) TMI 128
  Intimation u/s 143(1) - claim of depreciation was wrongly allowed by the CPC, Bangaluru while processing u/s 143(1) - application for rectification was made u/s 154 but same came to be rejected on the ground that it is not a mistake apparent from the records - addition u/s 43B on account of bonus payable which was also duly paid by the assessee before the due date of filing of income tax return HELD THAT:- We hold that the Ld. CIT(A) ought to taken the correct figure of depreciation which was Rs. 89,96,72,987/- and ought to have granted relief as this is the correct figure as per TAR. The figure of Rs. 1,03,13,420/- is incorrectly stated in ITR through inadvertence. CIT(A) ought to have carefully perused the TAR and ought to have given relief, by not doing so Ld. CIT(A) has erred in law and we set aside the impugned order of Ld. CIT(A) on issue of depreciation only. Payment of bonus is considered CIT(A) ought to have dealt with the issue but has failed to do so. No speaking order is passed on this issue. Therefore we remand this issue of payment of bonus back to the file of Ld. CIT(A) with a direction to deal with this issue according to law and pass a speaking order. Appeal of the assessee is partly allowed.

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• 2025 (4) TMI 127
  Penalty u/s.271(1)(c) - concealment of income or furnishing inaccurate particulars of income - addition towards unaccounted money introduced by the assessee in his books of accounts in the garb of long term capital gain (LTCG) that was claimed as exempt u/s. 10(38) - as argued no specific default for which penalty u/s.271(1)(c) was sought to be imposed mentioned HELD THAT:- As failure on the part of the A.O to clearly put the assessee to notice as regards the default for which penalty u/s 271(1)(c) was sought to be imposed on him by clearly and explicitly pointing out the specific default in the SCN(s), dated 14.12.2017 and 29.05.2018 he was called upon to explain that as to why penalty u/s.271(1)(c) of the Act may not be imposed upon him had, thus, left the assessee guessing of the default for which he was being proceeded against, and divested him of an opportunity to put forth an explanation before the A.O that no such penalty was called for in his case. We, thus, are of a strong conviction that as the A.O had clearly failed to discharge his statutory obligation of fairly putting the assessee to notice as regards the default for which he was being proceeded against, therefore, the penalty u/s 271(1)(c) imposed by him being in clear violation of the mandate of Sec. 274(1) of the Act cannot be sustained. We, thus, for the aforesaid reasons not being able to persuade ourselves to subscribe to the imposition of penalty by the AO, therefore, set-aside the order of the CIT(A) who had upheld the same. The penalty imposed by the A.O u/s 271(1)(c) is quashed in terms of our aforesaid observations - Appeal of the assessee is allowed.

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• 2025 (4) TMI 126
  Violation of principle of Natural justice - CIT appeal has awarded relief to the assesse by admitting and considering evidences which were not confronted to the Ld. AO - Whether the CIT(A) violated Rule 46A by admitting additional evidence without providing the AO an opportunity to examine it, thereby breaching the principles of natural justice? - HELD THAT:- Any information which the Ld. AO had asked during assessment proceedings cannot be considered by the Ld. First Appellate Authority for any relief unless the AO is provided an opportunity of examining the same. The order of Ld. First Appellate Authority thus falls in mischief of being violative of natural justice available to the AO. It is trite law that any order which is based upon violation of principles of natural justice cannot pass the test of any judicial scrutiny and deserves to be set aside. Accordingly, the ground of appeal number 4 raised by the appellant Revenue is allowed and the order of Ld. First Appellate Authority is set aside. It is seen that the Ld. AO has passed a cryptic order without properly marshelling evidences, many of which were not available. Hence the order of the Ld.AO is also set aside. Since, as observed by Hon ble Apex court in the Tin Box company case [ 2001 (2) TMI 13 - SUPREME COURT] an AO always possesses first authority and responsibility to determine taxable income and there are clear indications in this case that the AO was neither provided requisite details during assessment proceedings nor was he afforded opportunity to examine those filed during Ld. First Appellate proceedings, the Ld. AO is directed to pass an assessment order De novo after giving adequate opportunity of being heard. The assesse is directed to file before the Ld. AO all evidences filed before the Ld. First Appellate Authority as well as any other details on which it may like to rely for completion of its assessment proceedings. Any non-compliance on the part of assesse can be adversely viewed.

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• Benami Property

• 2025 (4) TMI 125
  Benami transaction for period of demonetization of the currency note of Rs. 500/- and Rs. 1000/- by the Government of India - circulate demonetize money to convert it to legal tender - allegation against the appellants is for their involvement to get demonetized money deposited in the bank accounts of people having no means for the total value of more than Rs. 35 crores and accordingly the prayer of the counsel for the parties to pass a common order has been accepted. Whether the second show cause notice to transpose the beneficial owner to be abettors and abettors to be the beneficial owner is permissible under the Act of 1988? - Subsequent show cause notice dated 07.09.2018 calling upon the noticee to appear and submit reply/ defence was for 24.09.2018. The notice aforesaid was not for 30 days period as has been provided under second proviso but the material on record shows that appellant sought adjournment while putting appearance on the first date i.e. 24.09.2018 and the matter was adjourned to call upon reply on 09.10.2018 which was for the period of more than 30 days to file reply. The subsequent show cause notice to call upon reply was for the period making it for more than of 30 days and thereby no prejudice was caused to the appellants because period to file reply was extended and thereby mandate of section 26 (1) was followed. It was otherwise a curable defect. The purpose of 30 days notice is to give sufficient time for response which exist in the present matter. Thus, on the facts, we do not find that section 26(1) has been contravened. Whether property involved is benami or it is not a benami property ? - The appellant, beneficial owner, has submitted that there was no benami transaction at their instance. It is submitted that not only books of accounts but stock register was produced to show the stock of gold with the appellant Companies and in fact was delivered to the purchaser who are now taken to be benamidars. It is with further statement that even the entry operators did not disclose the name of the appellant Companies named above for providing cash - We have scanned the matter carefully to analyzed the issue and find that that appellant bullion Companies had created back dated entries in the stock register and other documents which become clear from the FSL digital device report and schedule I to V. In fact, the bullion companies were not having matching stock of gold to pass it on to those firms who had transferred the amount through RTGS. The reference of audio recording to show the transaction has been given which has also been analyzed and mere recording of the transaction would not mean that actual transaction has taken. What is required is the actual happening and not just recording of happening to take place. It is not that the documents produced by the appellant bullion companies were casually ignored rather deep routed investigation was made. The alleged delivery of gold to the benamidars through the abettors was said to have been delivered further to one Mohammad who has refused about delivery of gold. The respondent thus tried to reach to the complete chain to find out actual happening. It is further necessary to clarify that if the gold was purchased, the appellant bullion Company should have produced the payment towards the alleged gold but no such material was produced in a specific. The critical analysis of all the issues has been made in the order passed by the Adjudicating Authority and we don t find any error therein to cause interference in the finding and accordingly the appeal fails and dismissed. Case of the abettors - The argument against the attachment has been raised by the abettor. It is submitted that their property has been attached while they were not the beneficial owner or the benamidars. A reference of section 53 of the Act of 1988 has been given to show that abettors can be subjected to prosecution but there is no provision for attachment of their property. The counsel for the respondents made a contest to it. We find substance in the argument of the counsel for the abettors. As per the framework of the Act of 1988, what can we attached is the benami property. In the instant case, the property in the hands of abettor has not been taken to be benami property. Respondents have failed to prove that the property of the abettors is benami property as defined under the Act of 1988. In fact, the bullion Companies were taken to be the beneficial owner and the allegation against them was to channelize the demonetized money to convert into monetized money. The money was routed through the benamidars and ultimately reached to them as stated by the respondents themselves. There is no allegation that money came to that abettor and it remained with them. The appeals of the abettors are thus allowed. The attachment of their properties is set aside for the reason that attached property could not be proved to be benami property however they are not excluded for their role in benami transaction with consequence of section 53 of the Act of 1988.

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• Customs

• 2025 (4) TMI 124
  Challenge to detention of the gold kada belonging to the Petitioner by the Custom Authorities - HELD THAT:- Once the goods are detained, it is mandatory to issue a show cause notice and afford a hearing to the Petitioner. The time prescribed under Section 110 of The Customs Act, 1962, is a period of six months and subject to complying with the formalities, a further extension for a period of six months can be taken by the Department for issuing the show cause notice. In this case, the period has elapsed, thus no show cause notice can be issued. The detention is therefore impermissible. Considering the weight of the kada and the fact that the same would constitute a personal effect/personal jewellery, the same be released to the Petitioner within four weeks. Storage charges are waived. Petition disposed off.

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• 2025 (4) TMI 123
  Detention of personal jewelry as part of the bona fide baggage of travelers - time limitation for issuance of SCN - No SCN issued as right to SCN waived by signing a pre-printed standard proforma - HELD THAT:- This court is of the opinion that the said goods ought not to have been detained. Once the goods are detained, it is mandatory to issue a show cause notice and afford a hearing to the Petitioner. The time prescribed under Section 110 of The Customs Act, 1962, is a period of six months and subject to complying with the formalities, a further extension for a period of six months can be taken by the Department for issuing the show cause notice. In this case, the one year period itself has elapsed, thus no show cause notice can be issued. The detention is therefore impermissible. In the opinion of this Court, this is a case where the Petitioner has already been given the option of redeeming the goods on payment of fine and penalty. The facts of this case show that the goods are two gold kadas and two gold chains. Considering the fact that the Petitioner had fully participated in the proceedings of show cause notice, the Petitioner may pay the redemption fine and penalty in terms of the order in original and the goods shall be released to him within four weeks. Storage charges are waived in this case. Conclusion - The waiver of the SCN is invalid. The detention of personal jewelry is impermissible under the Baggage Rules, and the failure to issue a timely show cause notice rendered the detention impermissible. Petition disposed off.

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• 2025 (4) TMI 122
  Challenge to Office Memorandum issued by the Central Government, which sets aside the recommendations of the Directorate General of Trade Remedies (DGTR) regarding the imposition of Anti-Dumping Duty (ADD) - HELD THAT:- In terms of the submissions made before the Supreme Court, ld. Counsel for the domestic industries who are the Respondents in these cases, submit that they have already written to the Government that they do not press their rights in terms of the recommendation given by the Designated Authority, DGTR. In effect therefore, the domestic industry no longer presses for imposition of ADD. The respective Office Memoranda, therefore, are no longer challenged by the domestic industry and the CESTAT order is rendered infructuous. Under these facts and circumstances, the stand of the Respondents, i.e., the domestic industry is accepted. The present writ petitions are disposed of as having been rendered infructuous, in view of the stand of the Respondents domestic industry.

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• 2025 (4) TMI 121
  Levy of ADD in respect of imports of Styrene Butadiene Rubber of 1500 and 1700 series from the European Union, Korea RP and Thailand - HELD THAT:- In terms of the submissions made before the Supreme Court, ld. Counsel for the domestic industry being Respondent No. 2 in the present case, submits that it has already written to the Government that it does not press its rights in terms of the recommendation given by the Designated Authority - In effect therefore, the domestic industry no longer presses for imposition of ADD. Accordingly, the impugned OM is no longer challenged by the domestic industry. The entire matter has thus become infructuous. However, since the subject goods were provisionally released by the CESTAT subject to certain conditions, the said assessment orders would have to now be finalised bearing in mind that ADD is no longer insisted upon by the domestic industry. Appeal disposed off.

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• 2025 (4) TMI 120
  Benefit of duty debit on DEPB scrips obtained fraudulently by the exporter - export of restricted item viz. Potassium Chloride or Muriate of Potash by mis-declaring the same as Industrial Salt without possessing a valid licence - contravention of the provisions of Section 11 of the Customs Act, 1962 read with the provisions of Foreign Trade (Development Regulation) Act, 1992 - HELD THAT:- There were large number of importers who had purchased the DEPB scrips in the market sold by the traders and these scrips were originally sold by the Exporter M/s. Bilwa Labs who had fraudulently obtained these scrips. The fraudulent nature of the Scrips is not in dispute, the only dispute is whether the purchasers of these scrips who imported goods debiting these scrips were also not eligible for the benefit. This matter stands settled in larger number of cases and the Supreme Court of India in the case of Munjal Showa Ltd. Versus Commissioner of Cus. C. EX. [ 2022 (9) TMI 1076 - SUPREME COURT] observed that the duty liability due to availing benefits against forged/fake DEPB Scrips upheld. Moreover, as rightly stated by the Revenue, this Tribunal in the case of M/s. ITC Filtrona Ltd. [ 2024 (10) TMI 577 - CESTAT BANGALORE ] held that We do not find any reason to interfere with the impugned order as far as the demand of duty is concerned. However, since the appellants were not aware of the fact that the goods imported by them were based on the fraudulently obtained DEPB scrips, the question of imposing penalty on them does not arise. Accordingly, we set aside the penalty . Conclusion - i) The duty demands and interest for the extended period upheld, emphasizing that fraud vitiates everything, rendering the DEPB scrips void ab initio. ii) Penalties imposed on the appellants are set aside, as they are not aware of the fraud at the time of purchase. Appeal allowed in part.

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• 2025 (4) TMI 119
  Absolute confiscation of Gold with penalty - Town Seizure - admissible evidence to prove the foreign origin and smuggling of subject gold - admissibility and reliability of the statement made by appellant u/s 108 of the Customs Act - HELD THAT:- The case of the Revenue is based on the statement of Shri Suresh Kumar, non-retraction of such statement, invocation of Section 123 of the Act and statements of the authorized representative of M/s Radha Mohan Purshottam Jewels and proprietor of M/s Ambay Jewellers and Bullion Merchants. A perusal of the impugned order shows that the Appellant raised specific objection in respect of non-compliance of Section 138B vis- -vis the statement of Shri Suresh Kumar, which objection has been turned down on the ground that the cross-examination of Shri Suresh Kumar was never sought by the Appellant. This cannot be a ground for not complying with the mandatory procedure specified under Section 138B of the Act. Hon ble Delhi High Court in Basudev Garg vs. Commissioner of Customs [ 2013 (5) TMI 350 - DELHI HIGH COURT ] has also considered the effect of Section 138B of the Act and has held that both Section 9D and Section 138B are identical. The compliance of Section 138B was not dependent upon whether the Appellant sought opportunity of cross examination or not. It was for the adjudicating authority to follow the procedure and only then he could have relied upon the statement - the statement, being an hear say statement cannot be relied upon solely, to conclude that the subject gold was of foreign origin and was illegally imported from Bangladesh. Further, since the present case is that of town seizure and not that of seizure at Airport, Seaport or Land Customs Station, the initial onus was on the Revenue to show that the subject gold was of foreign origin and was smuggled into India. Apart from the statement of Shri Suresh Kumar, which has no evidentiary value as discussed above, there is no evidence on record to suggest that the subject gold was smuggled. On the contrary, the Appellant produced invoices regarding legal procurement of subject gold and upon enquiry been made, the sellers also confirmed the transaction of sale of gold by them to the firm of the Appellant. Imposition of penalty under Section 112(b) on the Appellant - HELD THAT:- Once necessary material to prove smuggling of subject gold is not on record, no penalty can be imposed on the Appellant. Conclusion - i) The statement of Shri Suresh Kumar is inadmissible due to non-compliance with Section 138B, rendering it unreliable as evidence. ii) The Revenue failed to meet the burden of proof under Section 123, as there is no substantive evidence of the gold s foreign origin or smuggling. iii) The confiscation of gold and imposition of penalties are not justified, as the case is based on presumption rather than evidence. Appeal allowed.

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• 2025 (4) TMI 118
  Confiscation of seized goods - smuggled goods or not - foreign liquors and various foreign goods - levy of penalties u/s 112(a) and 112(b) of the Customs Act, 1962 - burden to prove u/s 123 of CA - HELD THAT:- It is seen that for the appeal filed by Shri Rajiv Kumar Hiroo, the order of confiscation of the goods has been set aside. The penalty imposed on the co-accused viz. Shri Rajiv Kumar Hiroo for the same offence has also been set aside - It is observed from the findings of the Ld. Commissioner (Appeals) in the Order-in-Appeal dated 18.02.2025 that the items are not notified items falling under Section 123 of the Customs Act, 1962 and hence the same are not liable for confiscation, which is equally applicable for these three appellants as well. Accordingly, the order setting aside the confiscation of the goods is applicable for these three appellants as well. As the order of confiscation in respect of the same goods seized from Shri Rajiv Kumar Hiroo has already been set aside vide the Order-in-Appeal dated 18.02.2025, it is found that the above findings of the Ld. Commissioner (Appeals) in the said order in respect of setting aside confiscation of the goods involved and setting aside the penalty on Shri Rajiv Kumar Hiroo is applicable for all the three appellants herein as well, as they have been penalized for the same offence. Thus, the penalties imposed on the appellants herein vide the impugned order dated 17.08.2020 for the same offence are also liable to be set aside, in view of the above findings of the Ld. Commissioner (Appeals) in the Order-in-Appeal dated 18.02.2025 passed on the same set of facts. Hence, the penalties imposed on the three appellants herein set aside. Conclusion - Both the confiscation of goods and the penalties imposed on the appellants set aside, aligning with the findings in the related appeal of Shri Rajiv Kumar Hiroo. The impugned order, qua imposition of penalties and confiscation of the goods in respect of the appellants herein, is set aside - Appeal allowed.

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• 2025 (4) TMI 117
  Non-payment of anti-dumping duty, while making DTA clearances - time limitation - contravention of the provisions of N/N. 60/2008-Cus dated 05.05.2008 as well as sub-Section 2A of Section 9A of Customs Tariff Act, 1975 - levy of ADD on the recovered solvent cleared in the Domestic Tariff Area (DTA) as a by-product of the imported Acetone. Demand of ADD is hit by limitation or not - bill of entry for import of goods was filed on 18th September, 2013 and show cause notice was issued after a lapse of 29 months - Section 28 of the Customs Act, 1962 - HELD THAT:- Sub-section (4) of Section 28 provides that where any duty has not been levied or not paid on account of collusion, any willful mis- statement or suppression of facts by the importer or exporter or agent or employee of the importer or exporter, the competent officer may act within five years from the relevant date and serve notice on the person chargeable with duty or interest which has not been paid. Therefore, the provisions of sub-section (4) contemplates extended period of limitation for taking duty proceeding for non-payment or short levy of Customs duty - The appellant had clearly failed to follow laid down procedures before making the impugned clearances in the DTA. Therefore, the invoking of extended period of limitation is just and proper in the present case. Absence of a report from the Norms Committee as required under Notification No. 60/2008-CUS - HELD THAT:- The ad hoc norms would continue till such time the final norms were fixed by the Norms Committee. In the instant case, the appellant has given no indication that it had fixed any ad hoc norms that was submitted to the jurisdictional development Commissioner for confirmation or alteration as required, eventually paving way for the Norms Committee to finalize the norms. Further, the appellant has also not claimed that it had filed any undertaking as required in N/N. 60/2008-CUS dated 05.05.2008 to adjust the ad hoc norms, in accordance with the norms finalized by the Norms Committee. Therefore, it is also clear that the D.T.A. clearances impugned in the instant case, without payment of anti-dumping duty was in contravention of the provisions of the said Notification as well as sub-section 2A of Section 9A of the Customs Tariff Act, 1975. Therefore, there is no merit in the argument of the appellant that the demand should not have been confirmed without the adjudicating authority producing a norms committee report. ADD on recovered solvent - HELD THAT:- In the present case, the appellant failed to pay the anti-dumping duty on ACETONE which was cleared in DTA as recovered solvent which is a by product produced from ACETONE imported without payment of Customs duty including anti- dumping duty. Therefore, the product which was cleared in DTA was in fact ACETONE by product of which was produced from ACETONE imported without payment of Customs Duty and it was cleared in DTA as recovered solvent . Therefore, the provisions of anti-dumping N/N. 75/2008-CUS with effect from 10.06.2008 read with section 9A (2A) of the Customs Tariff Act, 1975 are attracted and applicable in the present case. Conclusion - i) The appellant had clearly failed to follow laid down procedures before making the impugned clearances in the DTA. Therefore, the invoking of extended period of limitation is just and proper in the present case. ii) There is no merit in the argument of the appellant that the demand should not have been confirmed without the adjudicating authority producing a norms committee report. iii) The provisions of anti-dumping N/N. 75/2008-CUS with effect from 10.06.2008 read with section 9A (2A) of the Customs Tariff Act, 1975 are attracted and applicable in the present case, imposition of duty on the recovered solvent upheld. Appeal dismissed.

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• 2025 (4) TMI 116
  Levy of penalty u/s 114 (iii) and 117 of the Customs Act, 1962 - present appellant not declared as supporting manufacturer in the EPCG licence - failure to discharge of export obligation - HELD THAT:- The appellant is only a small time printer working under SSI. He has been given orders by M/s. Print Zone to print Exercise Note Books and was directed to supply the same to M/s. Rup Exports for delivery at their place. As a small time vendor, he is not expected to know as to under which scheme the export was undertaken by M/s. Print Zone/Rup Exports. His genuinity gets clarified by the fact that they have cleared the goods on payment of Excise Duty and they are also showing the details of such clearance in their monthly ER-1 Returns. Conclusion - It is not found that the Department has made out specific case of abetment from their side in the alleged contravention indulged by M/s. Print Zone. Penalty set aside. Appeal allowed.

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• Corporate Laws

• 2025 (4) TMI 115
  Prayer for declaration that the sale agreement is not binding upon the office of the official liquidator - validity of sale agreement - exercise of power under Section 536 (2) of the Companies Act, 1956, to dispose of the present proceedings - obligation to pay stamp duty and registration charges - HELD THAT:- The obligation for payment of stamp duty and registration charges was clearly on the applicant, who was described as transferee in the said sale agreement dated 29th May 2017. It is an admitted position that neither was the entire stamp duty ever paid nor was the document registered and hence, the charges for registration were also never paid/deposited by the applicant. It is also relevant to note that in the earlier application filed on behalf of the applicant i.e. Interim Application (Lodging) No. 4664 of 2022, the applicant prayed for permission of this Court to pay the necessary stamp duty and to register the document as per law, after completing all formalities. This makes it abundantly clear that the applicant was aware about its obligation under the above quoted clause of the sale agreement dated 29th May 2017 that the stamp duty and registration charges were to be paid by the applicant. This Court finds substance in the contention raised on behalf of the official liquidator that the subject document i.e. the sale agreement dated 29th May 2017 is an incomplete and inchoate document, incapable of being validated under Section 536 (2) of the Companies Act. The Supreme Court in the case of J. K. (Bombay) Private Ltd. v/s. New Kaiser-I-Hind Spinning and Weaving Co. Ltd. Ors. [ 1968 (11) TMI 63 - SUPREME COURT] has laid down that once a winding up order is passed and the undertaking as well as the assets of the company in liquidation pass under the control of the liquidator, it is the statutory duty of the liquidator to realize them and to pay from the sale proceeds to creditors and that the creditors also acquire rights to have the assets realized and distributed amongst them pari-passu. The official liquidator also alleged suppression on the part of the applicant, as it was claimed that there was nexus between the management of the applicant and the former management of the company in liquidation. The official liquidator claimed that the company in liquidation had a sister concern called M/s. Desmo Capital and Finance Limited, having the same management and ownership as that of the company in liquidation, prior to its winding up - there is some substance in the contention raised on behalf of the official liquidator that the applicant could not have feigned ignorance about the fact that company petition for winding up of the said company i.e. M/s. Desmo Exports Limited had been filed and it was pending when the subject sale agreement dated 29th May 2017 was executed. In any case, this Court has already rejected the substantial contentions raised in the present matter on behalf of the applicant and accepted those of the official liquidator herein. As regards delay and laches on the part of the applicant, this Court is not inclined to hold against the applicant on that score. It is indeed observed in paragraph 33 of the judgment of this Court in the case of Rathnam P. V. v/s. Premier Automobiles Limited Ors. [ 2012 (4) TMI 234 - BOMBAY HIGH COURT] that dispossession of the property of the company, during the interregnum period between the date of presentation of winding up petition and date of passing of the winding up order can be validated at any time, although the applicant would have to give explanation for any unreasonable delay in filing such application under Section 536 (2) of the Companies Act. In the facts of the present case, delay and laches in itself cannot be held to be a ground to hold against the applicant. Conclusion - The applicant s failure to fulfill its obligations, such as paying stamp duty and obtaining necessary permissions, constituted a default, preventing the application of this provision. Similarly, the applicant s invocation of Section 53A of the Transfer of Property Act, concerning part performance, was rejected due to the lack of registration, as required by Section 17(1A) of the Registration Act. The applicant s interim application for validation of the sale agreement is dismissed and the Official Liquidator s report, directing the applicant to hand over possession of the subject property to the Official Liquidator is allowed.

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• Insolvency & Bankruptcy

• 2025 (4) TMI 114
  Rejection of application for the replacement of the Resolution Professional (RP) under Section 27 of the Insolvency and Bankruptcy Code (IBC) - approval of the Committee of Creditors for replacement of the RP received - HELD THAT:- With regard to the application, u/s 27 of Insolvency Bankruptcy Code, the law is well settled in Sumat Kumar Gupta Vs. Committee of Creditors [ 2022 (9) TMI 174 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI ] , where it was held that invoking of Section 27 and adopting a protracted procedure in that regard, as appears to have been done by the Adjudicating Authority, is unwarranted. This only has resulted in wastage of time and prolonging the CIRP Process. In the face of CoC resolution passed with more than the requisite majority, it cannot lie in the mouth of IRP that any of his legal rights have been infringed. It would have been wise on his part to bow to the commercial wisdom of the Committee of Creditors and quit gracefully. Be that as it may, there was no merit in the case set up by IRP before the Adjudicating Authority and the same was required to be dealt with without insisting upon filing of affidavit by the IRP in regard to the provision of law invoked to pass the resolution. Conclusion - The CoC can replace the RP with a requisite majority without needing to provide reasons. The order passed by Adjudicating Authority cannot be sustained - appeal allowed.

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• FEMA

• 2025 (4) TMI 113
  Seeking compounding of the offence adjudicated by the adjudicating authority under FEMA and the subsequent demand notice issued by the Assistant Director (PRC), Government of India - HELD THAT:- Compounding cannot be claimed as a matter of right but it is always subject to the legal provisions. From the chronological sequence of events in this case it appears that the subject transactions took place between 31st February, 2011 and 8th February, 2013. Show cause notice was issued by the adjudicating authority being the Special Director (Enforcement Directorate) on 18th November, 2022. Application for compounding was filed by the petitioner on 20th January, 2023 but the same was returned on 8th January, 2024 on the ground that the application lacked clarity and all facts and figures were not mentioned therein. The petitioner was given liberty to file fresh compounding application. In the instant case the offence of the petitioner was a compoundable one. The petitioner, though applied for compounding at the initial stage, but did not proceed with the same after the application of the petitioner was returned for want of proper details. The petitioner, without raising any objection, participated in the adjudication proceeding. The participation of the petitioner implies that the petitioner did not want to compound the offence and, accordingly, proceeded for adjudication of the same. After the adjudication order was passed and the petitioner has been found guilty of the offences, now prayer has been made to permit the petitioner to proceed with the compounding. It appears that the petitioner simply tried to test the waters and see as to whether the adjudication order comes in his favour or not. After the adjudication order went against him and penalty amount has been quantified, the petitioner seeks to proceed with the compounding. Had the petitioner been aggrieved he would have been required to prefer an appeal, and for doing so, the petitioner had to deposit the entire amount of penalty. The petitioner is trying his level best not to pay the penalty that has been imposed and delay the proceeding for an indefinite period on the plea of compounding. The compounding authority does not have the determination or the jurisdiction to cancel/overrule or set at naught the order passed by the adjudicating authority. It is only one order that survives and that is the order of the adjudicating authority. The petitioner took the risk and did not proceed with his application for compounding prior to conclusion of the adjudication proceeding. The petitioner could have pressed the application for compounding any time prior to conclusion of the adjudication. The FED Master Direction number 4/2015-16 permits compounding even when the adjudication proceeding is ongoing. After the adjudication is complete and offence has been established, the contravener would be bound to comply with the direction passed by the adjudicating authority. The Act is in place since 1999 and the relevant Rules, Regulations, Circulars are also existing for quite some time. The petitioner has not been able to show a single instance when the authority permitted compounding after conclusion of the adjudication process. The interpretation of the petitioner, if accepted, will lead to an uncertain situation and reaching finality to the proceeding will be a never-ending process. As the said situation is not contemplated in the Act, there is no time limit prescribed within which an application of compounding can be filed after the order of adjudication has been passed. It will be an open ended process and any person found guilty in the adjudication proceeding, can seek to file an application for compounding any time he chooses. Penal provision of the Act cannot be taken so lightly leaving it in such an indecisive state. By this way the contravener will remain scot-free and the penal provision of the Act cannot be implemented. The Act will be rendered completely toothless. The same will also give out a very wrong message to the society at large. Tendency to circumvent the law will increase. To avoid such a situation, the legislature has consciously not provided the provision to compound an offence after conclusion of the adjudication process. The Court is of the opinion that the application made by the petitioner seeking compounding of the offence on conclusion of the adjudication proceeding cannot be allowed and the authority rightly rejected the application filed by the petitioner. The Court is not inclined to exercise jurisdiction in the matter.

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• PMLA

• 2025 (4) TMI 112
  Money Laundering - it was held by High Court that In the light of the statutory frame work of the PMLA and the application filed under Section 50 of the Act, this Court is of the considered view that the application was not maintainable before the learned Magistrate, since the Court did not have the power to direct recording of statements for it to become a record under the PMLA, the order which is passed by the Court which did not have a jurisdiction to even consider any application under the PMLA, is rendered unsustainable. HELD THAT:- Without expressing any opinion on the merits of the case, it is not proposed to entertain this petition. However, the question of law, if any, involved is kept open. SLP dismissed.

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• 2025 (4) TMI 111
  Money laundering - Seeking grant of bail - misappropriation of scholarship funds - scam involving the allocation of scholarships to SC, ST and OBC students, under the Post Matric Scheme - non-supply of the copy of the reasons to believe - it was held by High Court that The applicant failed to demonstrate sufficient grounds for bail at this stage. The Court s decision is based on the ongoing investigation, the nature of the allegations, and the unsatisfied twin conditions under Section 45 of the PMLA. HELD THAT:- There are no ground to interfere with the impugned order(s) passed by the High Court. However, insofar as the petitioner(s) who have received interim relief from the High Court, it is inclined to give them four weeks time for surrendering. SLP dismissed.

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• 2025 (4) TMI 110
  Money Laundering - predicate offence - time limitation - despite the expiry of period of more than 9 years, the predicate offence agency has failed to file the charge sheet - HELD THAT:- The facts on record shows that an FIR was registered against the appellant on 14.12.2016 for the offence u/s 409,420,120-B IPC read with Section 7,13 of the Prevention of Corruption Act, 1988. The ECIR was then recorded finding a predicate offence against the appellant. It proceeded with the investigation and prosecution complaint has already been filed. Thus, there is no delay on the part of the respondent to complete the investigation. So far as the alleged delay of predicate agency to complete the investigation is concerned, we cannot comment on it in absence of the predicate agency to be a party. Learned counsel for the appellant otherwise failed to refer to any provision or the judgment to substantiate his argument on delay in completion of the investigation by the police and its effect on the investigation under the Act of 2002. In fact, no provision or the judgment could be shown in reference to the issue raised by the appellant. Thus, no order made on the delay because it cannot be analyzed in absence of the predicate agency as a party. There are no force in the only argument raised by the counsel for the appellant for challenge to the impugned order. Accordingly, the appeals would fail and are dismissed.

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• Service Tax

• 2025 (4) TMI 109
  Refund of the Krishi Kalyan Cess (KKC) under Section 142(9)(b) of the Central Goods and Services Tax (CGST) Act, 2017 - transition to GST regime - HELD THAT:- This issue is no more res integra and the Division Bench of this Tribunal in the case of M/s SBI Cards and Payment Service Ltd. [ 2024 (7) TMI 1404 - CESTAT CHANDIGARH] has already rejected the appeal of the assessee by holding that they are not entitled to refund of Krishi kalyan Cess. Conclusion - The appellant is not entitled to the refund of Krishi Kalyan Cess. Appeal dismissed.

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• 2025 (4) TMI 108
  Exemption from service tax - providing services of construction of complex, building, civil structure or a part thereof and works contract service to Rajasthan Housing Board - governmental authority or not - applicability of Serial No. 12 of the Mega Exemption N/N. 25/2012-ST dated 20.06.2012 - HELD THAT:- Rajasthan Housing Board has not been set up by an Act of a State Legislature. This is clear from the State Act. Section 4 deals with the establishment of the Rajasthan Housing Board. It provides that the State Government may, by the notification in the official gazette, establish, for the purposes of the Act, a board to be called, the Rajasthan Housing Board with effect from such date as may be specified in the notification. The State Government had, therefore, to issue a notification in the official gazette to establish the Rajasthan Housing Board and indeed such a notification was issued by the State Government. The Rajasthan Housing Board has not been constituted or set up by a State Act. The appellant is, therefore, not justified in placing reliance upon (i) of clause (s) to contend that the Rajasthan Housing Board would be a governmental authority because Rajasthan Housing Board has not been set up by a State Legislature. The notification itself distinguishes between a board set up by an Act of a State Legislature or a board established by the State Government. Thus, for the period w.e.f. 30.01.2014 the appellant cannot contend that the Rajasthan Housing Board is a governmental authority . What remains to be examined is whether Rajasthan Housing Board would be a governmental authority under the unamended notification dated 20.06.2012. This unamended clause (s) is more or less the same as (ii) of clause (s) of the amended definition. It again emphasises that the board must be established with 90% of more participation by way of equity or control by the Government - the Rajasthan Housing Board has been established under a State Act and has not been set up by an Act of the State Legislature. Conclusion - The appellant did not lead any evidence to substantiate that the Rajasthan Housing Board was established by the State Government with 90% or more participation by way of equity or control by the Government, to carry out any function entrusted to a municipality under article 243W of the Constitution. There is no error in the order dated 27.01.2016 passed by the Commissioner holding that Rajasthan Housing Board is not a governmental authority and the services provided to it by the appellant are not exempt from service tax. Appeal dismissed.

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• 2025 (4) TMI 107
  Declared services under Section 66E(e) of FA or not - levy of service tax on the amounts collected as liquidated damages and late payment charges (LPC) - invocation of extended period of limitation - penalty - suppression of facts or not - HELD THAT:- It is apposite to reproduce the clarification given by the Central Board of Indirect Taxes and Customs, New Delhi vide its Circular, C.B.I. C. Circular No. 214/1/2023-S.T., dated 28-2-2023 on the subject of Leviability of Service Tax on the declared service Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act under clause (e) of section 66E of the Finance Act, 1994 . There are substance in the contentions of the appellant that being a public sector undertaking, there cannot be an intent to evade payment of duty attributable to it, especially in the absence of any finding stating a positive act of collusion or wilful misstatement, or suppression of facts, with intent to evade payment of duty that has been done by the appellant. Reliance placed in this regard, on the decision in COLLECTOR OF CENTRAL EXCISE VERSUS CHEMPHAR DRUGS LINIMENTS [ 1989 (2) TMI 116 - SUPREME COURT ], is appropriate. Invocation of extended period of limitation - Penalty - suppression of facts or no t - HELD THAT:- While issuing the second and third show cause notices, same/similar facts could not be taken as suppression of facts as these facts were already in the knowledge of the authorities. The decision in Nizam Sugar Factory v CCE, AP, [ 2006 (4) TMI 127 - SUPREME COURT ] applies in this regard. Thus, in these matters, invoking the extended period of limitation and imposing equivalent penalty is, even otherwise, decidedly untenable. Conclusion - The recovery of liquidated damages/penalty from other party cannot be said to be towards any service per se, since neither the appellant is carrying on any activity to receive compensation nor can there be any intention of the other party to breach or violate the contract and suffer a loss. The demands of service tax made along with applicable interest and imposition of penalties in the impugned orders in original cannot sustain and the impugned orders in original are liable to be set aside - Appeal allowed.

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• 2025 (4) TMI 106
  Levy of service tax under the category of Transport of Goods by Road (G.T.A) service - all the consignments of goods consigned by the appellant were only to one individual consignee - applicability for exemption under N/N. 34/2004-ST, dated 03.12.2004 - failure to disclose full/true and correct information of the value of the service - invocation of extended period of limitation - HELD THAT:- It is submitted that in the instant case, that the M.S. Racks were consigned to one consignee M/s Delta Power Solutions Limited, located 2-3 Kms from the appellant s unit - It has also been submitted by the Learned AR that the appellant merely submitted a consolidated cash/credit memo issued by the GTA, but no copy of bill issued by GTA was issued - The decisions of this Tribunal in the case of M/s Lal Traders Agencies 2022 (5) TMI 426 - CESTAT KOLKATA] relying on the decision in the case of Chattisgarh Distilleries [ 2017 (11) TMI 344 - CESTAT NEW DELHI] also noted. In the absence of any evidence to arrive at any decision on the availability of the exemption, it is constrained to remand this case to the original authority to examine the eligibility of the exemption as mentioned to the appellant. The appellant may place all relevant documents to bolster his contentions. The appeal is allowed by way of remand.

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• 2025 (4) TMI 105
  Levy of service tax - Club or Association Services - doctrine of mutuality - entities involved, being incorporated societies, fall under the ambit of service tax post the statutory amendment on 1st July 2012 or not - HELD THAT:- The situation as far as Service Tax is concerned becomes clear as indicated in Clause 44 of Section 65B Explanation 3. It clearly brings out that the statutory provision by inserting an explanation brought out as an exception which indicates that the service will be considered from one person to another as consideration, if it is in relation to unincorporated association or body of persons , as the case may be and the member and club thereof shall be treated as different persons. The issue itself is covered post amendment and has been dealt with by the Hon ble Supreme Corut in the case of State of West Bengal Vs. Calcutta Club Ltd. ors. [ 2019 (10) TMI 160 - SUPREME COURT ] in second round of litigation by the Clubs, post amendment and has been even followed in the matter decided by this bench in the matter of Sumel Business Park 3 Co-Operative Service Society Ltd. Vs. C.S.T- Service Tax- Ahmedabad [ 2023 (10) TMI 740 - CESTAT AHMEDABAD ] . Conclusion - The appellants, being incorporated entities, are not liable for service tax for the period post-1st July 2012, as the statutory provision explicitly exempts them. Appeal allowed.

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• Central Excise

• 2025 (4) TMI 104
  Availability of CENVAT Credit on courier service post amendment of 2011 - input services - period involved of July, 2012 to June 2017 - HELD THAT:- This Court finds that the decision as contained in final order of Dynaflex Pvt. Ltd. Vs. CCE and ST Vadodara- ii, [ 2017 (8) TMI 1217 - CESTAT AHMEDABAD] in which, inter alia, the present appellant was also a party, was concerned with the period post amendment of year 2011 and was considered by the Bench, while dealing with the matter held that includes services used in relation to modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs. accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security business exhibition, legal services, Inward transportation of inputs or capital goods and outward transportation upto the place of removal, but excludes services. A simple reading of the said amended provision, makes it clear that though the expression activities relating to business, such as has been deleted, but the illustrative services viz., Accounting, Auditing, Financing, Recruitment and quality control, Coaching/training, Computer Networking, Credit Rating, Share Registry, Legal Services, Security, Business Exhibition etc., even though directly not related to manufacturing activity, being not used inside the factory premises, but continued to remain in the said definition of input service - It cannot be denied that Courier Service Involves a host of uses relating to the activity of manufacture and sale of goods. For example, the documents relating to technical expert s opinion, sample testing report, sending of samples, machine catalogue etc. are received and dispatched by utilizing the services of Courier and it cannot be said that these are de hors of the activities of manufacturing business. This Tribunal in the cases of Long Meditech Ltd [ 2016 (7) TMI 468 - CESTAT CHANDIGARH] and Sunbeam Generators Pvt Ltd [ 2016 (7) TMI 895 - CESTAT CHENNAI] opined that credit avail on Service Tax paid on Courier Serves is eligible to Cenvat Credit. Conclusion - The Service Tax paid on the Courier Services for various purposes viz., Sending Samples, Documents, finished goods etc., would be eligible to Cenvat Credit before and even after amendment to the definition to the Input Services with effect from 01.4.2011. Appeal allowed.

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• Indian Laws

• 2025 (4) TMI 103
  Appropriate rate of interest to be applied to the enhanced valuation of shares sold by the appellants to the State of Rajasthan - delay in remittance of the fair value of the shares to the appellants - HELD THAT:- Here, it cannot be disputed that there has been a transaction of trade, viz. sale and purchase of goods, which clearly implies a commercial transaction between the parties. The term Public Interest denotes a wider concept with its genus rooted to the welfare of the public at large, with different species attributable to individual and specific impact, depending upon the concept and the subject under consideration. It deals with the impact of a policy decision on the society. Generally, public interest is anathema to commercial transactions. However, by exception, when the terms are oppressive or one-sided, they are to be termed as unconscionable, arbitrary and by application of externalities, public interest will have to lean towards the individual who has been wronged, as such contracts are deemed to take away the fairness, affecting the free consent required to culminate into a valid contract. The constitutional courts, under such circumstances will be armed with Article 14 to strike down such contracts or to pass appropriate decrees or orders. In the present case, the transaction, though commercial, is not between two businessmen or entities; the State and its instrumentality are parties to the contract with better bargaining or imposing authority; and from the records, we find that there was no public interest in offering a lesser sum. Further, with the price fixed found to be unconscionable, this Court affirmed the enhanced price fixed by the High Court. Pertinently, it is to be pointed out at this juncture that there was no agreement between the parties relating to grant of interest for the delayed payment. Even the exchange of communications between the parties remains silent on this aspect. In the absence of any agreement or contract, the provisions of Section 34 of the Code of Civil Procedure dealing with interest would come into play. Section 34 of the Code of Civil Procedure empowers the court to grant interest at three different stages of a money decree viz., (i) the court may award interest on the principal sum claimed at a rate it deems reasonable, for the period before the suit was filed. Such interest is generally governed by agreements between the parties; (ii) The court may award interest on the principal amount from the date of filing the suit until the date of the decree, at a reasonable rate. Here, the court has full discretion to determine the interest rate based on fairness, commercial usage and equity; and (iii)the court may grant interest on the total decretal amount (principal + interest before decree) from the date of the decree until payment, at a rate not exceeding 6% per annum unless otherwise specified in contractual agreements or statutory provisions. However, if the claim arises from a commercial transaction, courts may allow interest at a higher rate based on agreements between the parties. Thus, it is abundantly clear that the Courts have the authority to determine the appropriate interest rate, considering the totality of the facts and circumstances in accordance with law. That apart, the Courts have the discretion to decide whether the interest is payable from the date of institution of the suit, a period prior to that, or from the date of the decree, depending on the specific facts of each case. Considering the prolonged pendency of the dispute regarding the valuation of shares, which has only been determined recently, and the substantial share amount involved, and also keeping in mind that this is a commercial transaction, and the entire burden of interest along with principal value falls upon the Government, it is necessary in the present case to award reasonable interest, in order to strike a balance between the parties. Thus, in these peculiar facts and circumstances, it is deemed fit, just and appropriate to award simple interest at the rate of 6% per annum from 8th July 1975, on the enhanced valuation of shares till the date of decree and interest at the rate of 9% per annum from the date of decree till the date of realisation. The interest shall be paid along with the amount due towards the enhanced value of the shares, after adjusting the amount already paid, to the appellants, within a period of two months from today. Conclusion - The High Court s judgment modified, awarding simple interest at 6% per annum from 8th July 1975 until the date of decree and 9% per annum from the date of decree until realization. The impugned judgments and orders passed by the High Court are modified - appeal disposed off.

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• 2025 (4) TMI 102
  Quashing of criminal proceedings for possessing assets disproportionate to known sources of income - use of inherent powers under Section 482 of the Cr.P.C. - Validity of the sanction granted to prosecute the respondent. Use of inherent powers under Section 482 of the Cr.P.C. - HELD THAT:- In the present case, the inherent power under Section 482 Cr.P.C. for quashing the criminal proceedings was invoked after the dismissal of the discharge application and the consequent revision petition. In State by Karnataka Lokayukta, Police Station, Bengaluru v. M.R. Hiremath, [ 2019 (5) TMI 1986 - SUPREME COURT ] this Court examined a similar situation where the High Court entertained a petition under Section 482 Cr.P.C. filed against the dismissal of a discharge petition. Setting aside the judgement of the High Court, this Court held The High Court has erred in coming to the conclusion that in the absence of a certificate Under Section 65B when the charge sheet was submitted, the prosecution was liable to fail and that the proceeding was required to be quashed at that stage. The High Court has evidently lost sight of the other material on which the prosecution sought to place reliance. It is not disputed that in the instant case, the Special Court, as well as the High Court, while dismissing the petition for discharge, examined the allegations and arrived at clear findings that there was a prima facie case against the respondent. The impugned order revisits the earlier decisions without any statable change in the facts and circumstances of the case, traverses to the extreme end of the spectrum, and concludes that: i) the wife of the accused purchased the properties in the name of the daughter having power of attorney; ii) that there was no satisfactory evidence of Benami; iii) even if allowed to prosecute, the chances of conviction were bleak; or iv) the probability of conviction is low; and v) the statements of witnesses do not warrant prosecution. Validity of the sanction granted to prosecute the respondent - HELD THAT:- There is no doubt that the High Court committed an error in quashing the prosecution on the ground that the sanction to prosecute is illegal and invalid. In conclusion, it is found that the objections raised in the revision petition against the Special Court s order dismissing the discharge application were identical to the grounds raised in the petition under Section 482 Cr.P.C., from which the present appeal arises. Second, apart from being congruent and overlapping, the respondent could not demonstrate any material change in facts and circumstances between the dismissal of the revision petition by the High Court and the filing of the quashing petition under Section 482 Cr.P.C. Third, the validity of the sanction can always be examined during the course of the trial and the problems due to the typographical error as alleged by the State could have been explained by producing the file at the time of trial. Fourth, it is settled that a mere delay in the grant of sanction for prosecuting a public authority is not a ground to quash a criminal case. The reasoning adopted by the High Court for interdicting the criminal proceedings is contrary to the well-established principles laid down by this Court. Conclusion - i) The High Court erred in quashing the proceedings, as it did not adhere to the principles governing the exercise of inherent powers under Section 482. ii) The validity of the sanction should be assessed in the trial court, during the trial, not in pre-trial proceedings. The case restored to Trial Court - Appeal allowed.

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