TMI Tax Updates - e-Newsletter
April 9, 2025

Case Laws in this Newsletter:

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

TMI Short Notes

1. Understanding Loss Set-Off or carry forward and set-off of losses in Clause 108 of the Income Tax Bill, 2025 Vs. Section 70 of the Income Tax Act, 1961

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2. Tax treatment of amounts borrowed or repaid through instruments like hundis in Clause 106 of the Income Tax Bill, 2025, Vs. Section 69D of the Income Tax Act, 1961

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3. Addressing the issue of undisclosed income through unexplained assets In Clause 104 of the Income Tax Bill, 2025 Vs. Section 69B of the Income Tax Act, 1961

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4. Understanding the Legal Framework for Unexplained Investments in Clause 103 of the Income Tax Bill, 2025 Vs. Section 69B of the Income-tax Act, 1961

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5. Taxation of Unexplained Expenditures in Clause 105 of Income Tax Bill, 2025 Vs. Section 69C of Income Tax Act, 1961

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Articles

1. The End of De Minimis for China - What It Means for Global E-Commerce and Lessons for India

   By: DrJoshua Ebenezer

2. The Tax Cut Dilemma: Catalyst for Growth or Fiscal Pitfall?

   By: Aratrik Banerjee

3. TIME LIMIT FOR FILING RETURN AFTER BEST JUDGMENT ORDER

   By: DR.MARIAPPAN GOVINDARAJAN

4. Common Mistakes to Avoid in LLP Annual Return Filing

   By: Ishita Ramani

5. Current Issues in Indian Consumers' Waste Disposal Behaviour. {Environment Protection and Healing Climate Change}

   By: YAGAY andSUN

6. Extended Producer Responsibility (EPR) vs. Extended Consumer Responsibility (ECR).{Environment Protection and Healing Climate Change}

   By: YAGAY andSUN

7. Micro Plastic - Sources and hidden dangers for Environment, Nature and Living Entities.(Environment Protection and Healing Climate Change)

   By: YAGAY andSUN

8. Visible Pollution from Vehicle Emissions (White and Black Smoke) – The Role of MOEFCC and Traffic Police in Taking Stringent Actions.(Environment Protection and Healing Climate Change)

   By: YAGAY andSUN

9. Extended Producer Responsibility (EPR): A Fight Against Littering and Plastic Pollution by FMCG Consumers.{Environment Protection and Healing Climate Change}

   By: YAGAY andSUN

10. Car Tires are a major Source of Micro Plastics - DW Documentary.How to tackle this issue in an environmental friendly way?{Environment Protection and Healing Climate Change}

   By: YAGAY andSUN

11. Criterion for Installation of Shredding Machines Based on Company’s Turnover: A Strategic Approach.[Environment Protection and Healing Climate Change}{Part 2 of 2}

   By: YAGAY andSUN

12. FMCG Sector and the Need for Plastic Shredder Machines in India: A Supportive Analysis.[Environment Protection and Healing Climate Change]{Part 1 of 2}

   By: YAGAY andSUN

News

1. SC asks FRI to re-examine budget for Taj Trapezium Zone tree census

2. UP govt gears up for major ODOP push in FY?26; finalises category-wise budget allocations

3. Department of Financial Services notifies amalgamation of 26 RRBs in fourth phase of amalgamation

4. Pradhan Mantri Mudra Yojana (PMMY) — completes 10 glorious Years of empowering Small and Micro Entrepreneurs

5. India Must Convert Global Challenges into Opportunities with a Spirit of Nationalism: Shri Piyush Goyal

6. Turkiye sees opportunity as Trump's tariffs upset global economic order

Notifications

GST - States

1. S.R.O. No. 384/2025 - dated 1-4-2025 - Kerala SGST

Seeks to bring in force provisions of various rule of Kerala Goods and Services Tax (Second Amendment) Rules, 2024

2. S.R.O. No. 383/2025 - dated 1-4-2025 - Kerala SGST

Amendment in Notification G.O.(P) No.134/2024/TD. dated 7th October, 2024

3. FA-3-02-2017-1-V (13) - dated 20-3-2025 - Madhya Pradesh SGST

Amendment in Notification No. FA 3-02-2017-1-V (42), dated 27th September, 2023

4. F. No. 3-3-4-0004-2025-Sec-1-V (CT) (12) - dated 18-3-2025 - Madhya Pradesh SGST

Notification under Section 171 of MPGST Act to provide for the sunset date

5. F -No-3-3-4-0006-2025-Sec-1 -V(CT) (10) - dated 18-3-2025 - Madhya Pradesh SGST

Notifies the special procedure for rectification of for Input Tax Credit Orders issued under Section 73, 74, 107, 108 which confirming demand for wrong availment of input tax credit.

6. CT-8-0001-2025-Sec-1-V (CT) (11) - dated 18-3-2025 - Madhya Pradesh SGST

Seeks to bring in force provision of Various Sections of Madhya Pradesh Goods and Service Tax (Third Amendment) Act, 2024

7. F A 3-47/2017/1/V(08) - dated 24-2-2025 - Madhya Pradesh SGST

Amendment in Notification No. F A-3-47/2017/1/V (59) dated 30th June, 2017

8. F A 3-43/2017/1/V(09) - dated 24-2-2025 - Madhya Pradesh SGST

Amendment in Notification No. F A-3-43/2017/1/V(55) dated the 30th June, 2017

9. F A 3-42/2017/1/V(07) - dated 24-2-2025 - Madhya Pradesh SGST

Amendment in Notification No. FA-3-42/2017/1/V(53) dated 30th June, 2017

Income Tax

10. 30/2025 - dated 7-4-2025 - IT

Income-tax (Tenth Amendment) Rules, 2025 - Central Government notifies form ITR-B for taxpayers on whom search, or requisition operation has been initiated.

11. 29/2025 - dated 7-4-2025 - IT

Exemption from specified income U/s 10(46A) of IT Act 1961 – Prayagraj Mela Pradhikaran, Prayagraj

12. 28/2025 - dated 7-4-2025 - IT

Exemption from specified income U/s 10(46A) of IT Act 1961 – Greater Mohali Area Development Authority

Highlights / Catch Notes

GST

• GST Registration Cancelled After Comprehensive Review Finds No Procedural Irregularities or Justifiable Grounds for Continuation

  Case-Laws - HC : HC dismissed the writ petition challenging GST registration cancellation. The court found no merit in the petitioner's contentions regarding retrospective cancellation. The competent authority followed due process under the West Bengal GST Act, 2017, and exercised jurisdiction appropriately. The petitioner failed to produce satisfactory evidence or explanations to justify GST registration continuation. The court determined no procedural irregularities or violations of natural justice occurred, and the verification report was conducted in compliance with legal requirements. Consequently, the petition was rejected, and the GST registration cancellation was upheld.
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• Government Hospital Support Services Deemed Tax-Exempt Under Public Health Constitutional Mandate

  Case-Laws - AAR : AAR determined that services provided to 54 government hospitals under DM&RHS constitute exempt supplies. The ruling hinged on constitutional provisions under Articles 243G and 243W, which define public health and hospital services as state government responsibilities. The services, including housekeeping, security, and maintenance support, directly relate to hospital facility operations. Consequently, these services fall under Entry No.3 of Notification No. 12/2017-CT (Rate), rendering them tax exempt. The exemption applies specifically to activities intrinsically linked to public health infrastructure maintenance, recognizing the essential nature of supporting government healthcare facilities.
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• Integrated Terminal Project Deemed Composite Works Contract, Attracts 18% GST Under Section 2(119) of CGST Act

  Case-Laws - AAR : The AAR determined that the contract for installing terminals linking Western and Southern regions constitutes a composite works contract under Section 2(119) of CGST Act. The services involving transportation, freight, and insurance are inextricably linked to the overall project execution. The entire contract spans five segments but fundamentally aims to commission immovable property. Consequently, the services are classified under 'Construction Services' (SAC 9954) and attract 18% GST, negating any potential exemption claims. The ruling emphasizes the interconnected nature of the contract's components, treating transportation and related services as integral to the comprehensive works contract rather than standalone services.
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• Refund Claim Upheld: Petitioner Wins Challenge Against Incorrect Rejection, Secures Full Refund with Interest under Section 56

  Case-Laws - HC : HC allowed the petitioner's refund claim, quashing the respondent's rejection order. The court directed the respondent to grant a refund of Rs. 96,65,325/- with 6% interest per annum from 12.09.2021 until actual payment, as per Section 56 of CGST Act. The original ground for refund rejection was found factually incorrect, as the Appellate Authority had indeed specified the refund amount. The petition was consequently disposed of in favor of the petitioner.
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• Government Dues Settlement Clears Property Sale Path, Orders Immediate Payment and Certificate Deletion Within Four Weeks

  Case-Laws - HC : HC ruled in favor of petitioner, directing payment of outstanding government dues amounting to Rs. 21,99,700/- within four weeks from order receipt. Upon compliance, the second respondent must delete attachment endorsement from encumbrance certificate, thereby facilitating sale certificate registration for sixth respondent. The court's intervention resolved the recovery notice dispute by providing a clear pathway for resolution through specified monetary settlement, effectively removing administrative impediments to property transaction.
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• Municipal Onion Market Leasing Deemed Public Function Exempt from GST Under Constitutional Municipal Powers

  Case-Laws - AAR : AAR determined that leasing 19 onion mandis to a contractor for daily fee collection constitutes a municipal function under Article 243W of the Constitution. The activity is exempt from GST as it falls within the scope of local authority's public functions. The transaction between the municipality and contractor is considered an inseparable public service activity, not a commercial supply of goods or services. The notification No. 14/2017-CT(Rate) applies, rendering the entire transaction outside the taxable domain. The key consideration was the functional nexus with constitutional municipal responsibilities, rather than the administrative mechanism of service delivery.
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• GST Advance Ruling Rejected: Contractor's Application Deemed Inadmissible Under Section 97(2) CGST Act

  Case-Laws - AAR : AAR determined that the advance ruling application by the contractor regarding GST rate reimbursement was inadmissible. The ruling authority found the tax liability assessment question does not align with Section 97(2) of CGST Act, 2017. Due to the applicant's failure to respond to official notices and the nature of the query falling outside statutory provisions, no substantive ruling was issued. The application was effectively dismissed without addressing the underlying GST rate dispute between 5% and 12% for the works contract.
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• Tapioca Flour Waste Classified as Livestock Feed Residue, Attracts 5% GST Under Chapter 23031000

  Case-Laws - AAR : The AAR determined that tapioca flour derived from dried tapioca root remnants is classified under Chapter heading 23031000, attracting 5% GST. The product, deemed unfit for human consumption and primarily used as livestock feed, was correctly categorized as "Residues of starch manufacture and similar residues". The ruling, based on the applicant's submitted facts, rejected the rectification application under Section 98(2) of CGST/TNGST Acts, 2017, finding no procedural errors in the original advance ruling.
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Income Tax

• Tax Authorities Cannot Repeatedly Reassess Same Income Issue Under Section 153A After Prior Completed Reassessment

  Case-Laws - HC : HC held that the tax department is precluded from repeatedly reassessing the same issue under Section 153A, particularly when prior re-assessment under Section 147 was already completed. The search proceedings did not yield incriminating materials to justify reopening the assessment. The court emphasized the legal principle of finality in judicial proceedings, noting that tax authorities must respect procedural limitations and cannot arbitrarily reopen settled assessments without substantial new evidence. The multiple attempts to reassess the same matter through different legal provisions were deemed improper. Consequently, the court ruled in favor of the assessee, preventing further tax reassessment on the identical issue.
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• Tax Authority's Block Assessment Invalidated: Statement Alone Insufficient, Incriminating Materials Mandatory for Income Addition

  Case-Laws - HC : HC allowed the assessee's appeal, finding the tax authority's assessment invalid. The court ruled that a statement recorded during a search under Section 132(4) cannot be the sole basis for income addition in block assessment. Section 158BC mandates that undisclosed income additions must be supported by incriminating materials discovered during the search. Furthermore, the court held that surcharge under Section 113 applies only to searches conducted after 01.06.2002, following precedent in Vatika Township case, thus deciding in favor of the assessee.
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• Cash Payment Limits for Milk Procurement Narrowly Defined, Disallowing Deductions for Pasteurization Companies Under Rule 6DD

  Case-Laws - HC : HC adjudicated a tax dispute regarding cash payments exceeding Rs.20,000 for milk procurement. The court interpreted Rule 6DD restrictively, holding that the term 'producer' specifically refers to dairy farmers, not companies engaged in milk pasteurization. The court emphasized the legislative intent of Section 40A(3) to discourage cash transactions, noting both transacting entities had banking facilities. The court rejected the appellant's argument that pasteurization constitutes production, thereby disallowing cash payment deductions. The ruling prioritized the statutory objective of promoting banking transactions and narrowly construed exemption provisions. Decided in favor of revenue, the judgment reinforced strict compliance with cash payment restrictions.
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• Unsubstantiated Cash Transaction Claims Invalidated: Section 69C Addition Rejected Due to Procedural Flaws

  Case-Laws - AT : ITAT held that the addition under Section 69C was unsustainable due to procedural impropriety. The AO's reliance solely on unverified statements, without providing cross-examination opportunities, violated principles of natural justice. The tribunal found no corroborative evidence to substantiate the allegations of cash transactions. The seized materials were deemed insufficient as primary direct evidence. The assessment order was consequently set aside, with the tribunal ruling in favor of the assessee and against the revenue's claims.
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• Tax Assessment Nullified: Section 153A Approval Lacks Substantive Reasoning, Procedural Defects Render Order Invalid

  Case-Laws - AT : ITAT adjudicated a tax assessment case involving section 153A and 153D approval process. The tribunal critically examined the approval mechanism, emphasizing that administrative sanction must not be a mere formality but require substantive reasoning and genuine examination of record. The court found the specific approval lacking in judicial application of mind, demonstrating procedural deficiency. Critically, the approval was deemed mechanically granted without proper evaluation of underlying documentary evidence. Consequently, the tribunal declared the approval invalid, rendering the entire assessment order void ab initio. The assessee's appeal was allowed, effectively nullifying the proposed tax assessment based on procedural impropriety in the approval process.
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• Income Tax Assessment: Tribunal Reduces Net Profit Estimation from 2% to 0.75%, Lowering Tax Liability for Assessee

  Case-Laws - AT : ITAT partially allowed the appeal, modifying the Assessing Officer's (AO) income estimation. The tribunal found the AO justified in rejecting books of accounts due to non-production of bills and vouchers. Instead of the AO's 2% net profit rate, the tribunal applied a 0.75% rate on gross turnover, considering the previous year's 1.07% rate. The net addition was reduced from Rs. 1,65,09,996/- to Rs. 43,29,907/-. The AO was directed to recompute the income accordingly, with the assessee's appeal being partly allowed.
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• Tax Dispute Resolved: Ex-Gratia Payment Deemed Capital Receipt, Not Taxable Under Section 17(3)

  Case-Laws - AT : ITAT adjudicated a tax dispute concerning compensation receipt upon employment termination. The tribunal determined that ex-gratia payment constitutes a capital receipt, thus not taxable under section 17(3). Relying on precedential cases involving similar compensation scenarios, the tribunal ruled in favor of the assessee. The ex-gratia amount was characterized as capital in nature, consequently excluding it from taxable income. The appellate tribunal allowed the assessee's appeal, effectively exempting the compensation from tax liability and establishing a consistent interpretative approach for similar compensation-related tax assessments.
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• Tax Treaty Victory: Non-Resident Investors Exempt from Short-Term Capital Gains on Mutual Fund Units Under India-Singapore Agreement

  Case-Laws - AT : ITAT ruled on capital gains taxation for mutual fund units, determining that units of mutual funds constitute a distinct security category under Article 13(5) of the India-Singapore tax treaty. The tribunal concluded that short-term capital gains (STCG) arising from sale of equity and debt-oriented mutual fund units by a non-resident taxpayer are not taxable in India. The decision affirms that gains from mutual fund units fall outside Article 13(4)'s scope and are consequently exempt from Indian taxation pursuant to treaty provisions, providing a favorable interpretation for non-resident investors regarding cross-border investment income treatment.
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• Tribunal Rejects Tax Claim: Insufficient Evidence Leads to Deletion of Rs. 22.25 Crore Addition Under Section 69

  Case-Laws - AT : ITAT held that the Assessing Officer's addition of Rs. 22.25 Crore under Section 69 was unsustainable. The addition was based solely on a retracted statement by the company's director and an unverified loose sheet lacking proper authentication. Without corroborative evidence, the tribunal found no justification for the unexplained investment. The absence of corresponding additions in beneficiaries' assessments further weakened the AO's case. The CIT(A)'s deletion of the addition was upheld, and the Revenue's appeal was consequently dismissed.
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• International Transactions Benchmarked: LIBOR Prevails Over Domestic Rates in Transfer Pricing Assessment of Associated Enterprise Receivables

  Case-Laws - AT : ITAT determined that for benchmarking outstanding receivables from Associated Enterprises (AEs), the applicable interest rate should be LIBOR, not domestic prime lending rates. The tribunal found the average LIBOR rate for 1-4-2005 to 31-3-2006 was 4.42%, and since the assessee charged 6% interest, which exceeded LIBOR, no additional transfer pricing adjustment was warranted. The decision emphasized that international transactions with AEs must be evaluated using international benchmark rates like LIBOR or EURIBOR, rather than domestic lending rates, ensuring arm's length pricing principles are consistently applied in cross-border financial transactions.
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• International Tech Company Loses Transfer Pricing Appeal, Tribunal Validates TPO's Methodology for Royalty and Technical Assistance Payments

  Case-Laws - AT : ITAT adjudicated transfer pricing dispute involving international transactions between an assessee and its Associate Enterprise. The tribunal upheld the transfer pricing officer's (TPO) methodology, rejecting the assessee's contentions regarding benchmarking of royalty and technical assistance payments. The key findings include: (1) royalty transactions were determined to be separate class of transactions, not intrinsically linked to manufacturing activities, (2) comparable agreements were scrutinized, and (3) additional evidence was denied admission. The assessment order regarding payments for raw material purchases through international transactions was affirmed, with the tribunal finding no merit in the assessee's arguments challenging the transfer pricing methodology and rejecting proposed alternative methods of computation.
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• Taxation Tribunal Resolves Multiple Expense Disallowances, Partially Upholds Taxpayer Claims Under Sections 37, 14A, and 36

  Case-Laws - AT : The ITAT addressed multiple taxation issues involving disallowances and appeals. Key outcomes include: (1) 40% of PF damages allowed as compensatory expenditure under Section 37(1), with 60% disallowed as penal; (2) remanding certain salary and wage expense claims to AO for verification; (3) upholding revenue income treatment for marketing/distribution rights transfer; (4) deleting Section 14A disallowance due to lack of evidence; (5) allowing bad debt write-offs under Sections 36(1)(vii) and 28; (6) permitting repair and maintenance expenses as revenue expenditure; and (7) excluding provisions for gratuity, leave encashment, and doubtful debts from MAT computation under Section 115JB. The tribunal generally adopted a consistent approach, partly allowing the assessee's appeals and directing the AO to reconsider several disallowances.
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• Foreign Asset Disclosure Dispute: Technical Non-Reporting Doesn't Warrant Penalty Under Black Money Act Section 43

  Case-Laws - AT : ITAT adjudicated a case involving penalty under Section 43 of the Black Money Act for non-reporting of foreign assets in Schedule FA. Despite technical non-disclosure, the tribunal found no malafide intention as the assessee had previously disclosed the foreign asset, offered perquisite value, and paid TDS. The tribunal emphasized that the Act's purpose is to address undisclosed foreign income, not to punish bonafide technical breaches. Considering the assessee's transparent actions and detailed explanations, the tribunal deleted the imposed penalty, effectively allowing the assessee's appeal and recognizing the difference between intentional concealment and inadvertent procedural omission.
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Customs

• Interactive Flat Panel Displays Clarified: Technical Features Determine Customs Duty Classification Under 85285900

  Circulars : The CBIC issued a clarification on customs duty classification for Interactive Flat Panel Displays (IFPDs) and monitors under tariff item 85285900. The circular provides technical guidelines to distinguish IFPDs from standard monitors, focusing on features like touch capability, screen size, resolution, interactivity, and power characteristics. Both IFPDs and other monitors remain classified under the same tariff item, with IFPDs subject to 20% Basic Customs Duty, while other monitors continue at 10%. Parts of IFPDs, such as Touch Glass Sheets and Touch Sensor PCBs, will be classified under HS 8529 with a 5% duty rate. The IGCR condition for monitors has been removed to prevent duty circumvention and ensure clarity in customs classification.
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• Government Extends Sea Cargo Manifest Regulations Deadline to May 2025, Offering Grace Period for Electronic Declaration Compliance

  Circulars : The GoI's Dept of Revenue extended transitional provisions for Sea Cargo Manifest and Transshipment Regulations (SCMTR), 2018 until 31.05.2025. The extension addresses implementation challenges, specifically incomplete testing of export cargo and transshipment messages by carriers and stakeholders. The measure provides additional time for electronic declaration filing without attracting penal provisions, which could otherwise impose penalties up to INR 50,000 for non-compliance. Stakeholders are encouraged to utilize this interim period to align with regulatory requirements and ensure smooth implementation of SCMTR protocols.
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• Customs Importers Must Upload Complete E-Sanchit Documentation with Precise Product Details for Faster Clearance Process

  Circulars : The public notice issued by the Principal Commissioner of Customs provides comprehensive guidelines for importers and customs brokers regarding document submission in the Faceless Assessment Process. Key directives include uploading complete documentation through e-Sanchit, providing detailed product specifications, ensuring compliance with regulatory requirements, and indicating time-sensitive consignments. The notice emphasizes proactive document submission to expedite customs clearance, with specific instructions on document codes, amendment procedures, and grievance redressal through the Turant Suvidha Kendra. The primary objective is to streamline the assessment process, reduce queries, and facilitate faster clearance of imported goods across INBLR4 port.
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• Jurisdictional Challenge Succeeds: Seven-Year Delay Invalidates Show Cause Notices Under Procedural Irregularities

  Case-Laws - HC : HC quashed show cause notices (SCN) challenging jurisdictional validity due to procedural irregularities. The court determined that despite SCN being issued within statutory timeframe, the seven-year delay in adjudication constituted a breach of natural justice. Relying on precedent from M/s. SJS International, the court examined Rule 16 of Drawback Rules and found no prescribed time limitation. The additional factor of SCN being kept in "call book" without petitioner's knowledge further invalidated the proceedings. Consequently, the court held the SCN as time-barred and without jurisdiction, effectively granting relief to the petitioner and allowing the petition.
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• Procedural Flaws Invalidate Classification Decision, Mandate Transparent Review of Seaweed Fertilizer Product Categorization

  Case-Laws - HC : HC finds in favor of Petitioner, invalidating Respondent's classification decision due to procedural irregularities. The key violations include non-disclosure of critical documents in Show Cause Notice (SCN) and failure to address prior consistent classification orders. A test report confirming the product as an organic seaweed extract usable as vegetable fertilizer substantiates classification under CTH 3101. The court remanded the matter to Adjudicating Authority for de novo hearing, mandating document disclosure and requiring a reasoned order addressing all substantive arguments. The impugned order was set aside, effectively reinstating the Petitioner's original classification claim.
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IBC

• Insolvency Professionals Regulations Updated: Time Frame Extended from Twelve to Twenty-Four Months Under Section 196 and 207

  Notifications : The IBBI issued an amendment to the Insolvency Professionals Regulations, 2025, modifying regulation 5(a) by replacing "twelve" with "twenty-four". The amendment, enacted under sections 196 and 207 of the Insolvency and Bankruptcy Code, 2016, expands a regulatory parameter for insolvency professionals. The regulation takes effect upon publication in the Official Gazette, signaling a substantive change in professional qualification or duration requirements within the insolvency regulatory framework.
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• Insolvency Resolution Professionals Must Now Use Detailed Compliance Certificate Template Under Amended CIRP Regulations

  Notifications : The IBBI has issued a notification amending the Insolvency Resolution Process for Corporate Persons Regulations, 2016, specifically modifying Schedule-I, Form H (Compliance Certificate). The amendment introduces a comprehensive template for resolution professionals to provide detailed information about the corporate insolvency resolution process (CIRP), including key dates, resolution plan details, stakeholder information, realisable amounts, and compliance with various legal provisions. The new form requires extensive documentation and certification of compliance with IBC regulations, ensuring greater transparency and standardization in the insolvency resolution process. The amendment takes effect from the date of its publication in the Official Gazette.
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• Corporate Debtor's Liquidation Upheld: 100% Voting Resolution Validates Asset Sale Process Under Insolvency Code

  Case-Laws - AT : NCLAT dismissed appeal regarding corporate debtor's liquidation. The CoC, with 100% vote share, decided to liquidate after no compliant resolution plans were received during CIRP. The Tribunal upheld the CoC's commercial wisdom, finding no arbitrary decision in liquidation process. The Tribunal referenced precedents affirming CoC's statutory power to initiate liquidation at any stage before resolution plan confirmation. The decision emphasized that when no viable resolution plan exists and statutory procedures were followed, judicial interference is unwarranted. The liquidator was authorized to sell assets through various methods, including standalone, slump sale, or parcel sales, with potential for exploring going concern proposals subsequently.
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• Corporate Debt Recovery: Financial Creditor Wins Right to Initiate Insolvency Proceedings Under Section 7 of Insolvency Code

  Case-Laws - AT : NCLAT held that the Section 7 application by the ARC against the Corporate Debtor was maintainable. The Tribunal found that a financial debt existed, with an outstanding amount of Rs. 21.40 crore, and a clear default by the Corporate Debtor. The Global Settlement Agreement (GSA) did not alter the fundamental nature of the financial debt, and the creditor retained the right to initiate insolvency proceedings. The Tribunal emphasized that the debt was due and payable, as confirmed by the DRT decree, and the default was above the statutory threshold. Consequently, the NCLAT dismissed the appeal, upholding the Adjudicating Authority's order admitting the Section 7 application.
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• Guarantors' Deposits Deemed Part of Liquidation Estate, Blocking Bank's Unilateral Recovery Under IBC Section 53

  Case-Laws - AT : NCLAT held that the amount deposited by guarantors constitutes part of the liquidation estate, which must be refunded to the corporate debtor's liquidation account. The tribunal emphasized that PNB cannot unilaterally recover amounts from the liquidation estate outside the statutory waterfall mechanism under Section 53 of IBC, 2016. The bank had already relinquished its security interest and filed its claim, which was admitted by the liquidator. The tribunal concluded that trade receivables and payments used to satisfy dues are assets of the corporate debtor and must be distributed through the prescribed legal mechanism, thereby protecting the collective interests of all creditors during the liquidation process.
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• Personal Guarantors Granted Fresh Chance to Challenge Insolvency Application After Tribunal's Comprehensive Review Directive Under Section 95

  Case-Laws - AT : The NCLAT set aside the adjudicating authority's mechanical admission of a Section 95 application, finding a lack of independent assessment. The tribunal emphasized that the adjudicating authority must conduct a comprehensive evaluation beyond the Resolution Professional's report, particularly considering the already realized assets under SARFAESI. The court directed a fresh opportunity for personal guarantors to file objections within 30 days, mandating the adjudicating authority to comprehensively review all materials before passing a renewed order under Section 100. The appellate tribunal remanded the matter for a de novo examination, ensuring a substantive and procedurally sound review of the insolvency proceedings.
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• NCLAT Upholds NCLT's Discretionary Waiver for Sports Company Petition Under Section 244(1)(b) Amid Governance Dispute

  Case-Laws - AT : NCLAT dismissed the appeal, upholding the NCLT's discretionary waiver of eligibility criteria under Section 244(1)(b) of the Companies Act, 2013. The tribunal considered exceptional circumstances involving a sports-promoting Section 8 company, where four members filed a petition alleging oppression and mismanagement, supported by additional concerns from 90 members. The court found no prior adjudication of these allegations and recognized significant internal differences warranting judicial intervention. The waiver was granted based on public interest considerations and the potential merits of the underlying dispute, without prejudging the substantive claims of oppression and mismanagement.
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Indian Laws

• Partner Not Automatically Liable for Company's Bounced Cheque Without Direct Proof of Consent or Involvement

  Case-Laws - HC : HC held that mere mention of a designated partner as key management personnel is insufficient to establish vicarious liability under Sections 138/141 of Negotiable Instruments Act. The complaint failed to demonstrate prima facie liability, particularly when the partner specifically denied involvement and LLP agreement clauses required explicit consent for financial transactions. The partner's email reply denying responsibility, submitted before complaint filing, further undermined allegations. Given inadequate statutory compliance and lack of substantive evidence, the criminal complaint against the petitioner was quashed under Section 482 Cr.P.C. Revision application allowed.
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• Independent Directors Not Automatically Liable: Section 141 Requires Explicit Proof of Direct Involvement in Corporate Misconduct

  Case-Laws - HC : HC adjudicated a case involving vicarious liability under Section 141 of the Negotiable Instruments Act for an Independent Director. The Court held that mere designation as a Director is insufficient to establish criminal liability. The Complaint must explicitly demonstrate the specific role and responsibility of the Director in the company's affairs. In this instance, the Independent Director was neither a cheque signatory nor involved in financial decision-making, and had resigned prior to the incident. The Court emphasized that penal provisions creating vicarious liability must be strictly construed. Consequently, the Court allowed the petition, quashing proceedings against the Independent Director due to lack of specific averments and evidence of direct involvement in the alleged offence.
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• Former Director Not Liable for Company Cheque Bounce: Resignation Breaks Criminal Responsibility Under Section 141 NI Act

  Case-Laws - HC : HC dismisses petition regarding vicarious liability under Section 141 of Negotiable Instruments Act. The court upheld that a former director cannot be held criminally responsible for cheque dishonour after her resignation, absent specific evidence of continued control or involvement in company affairs. The ruling emphasizes that mere prior association or familial connections are insufficient to establish vicarious liability. The court found no material demonstrating the director's consent, connivance, or neglect in cheque issuance, thereby rejecting criminal proceedings against her under Sections 138 and 141 of the NI Act.
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• Cheque Dishonour Case: Insufficient Evidence Leads to Appeal Dismissal Under Section 139 of Negotiable Instruments Act

  Case-Laws - HC : HC dismissed the appeal in a cheque dishonour case, finding insufficient evidence of a legally enforceable debt. The court noted the complainant failed to prove the outstanding amount beyond reasonable doubt. Despite presumptions under Negotiable Instruments Act Section 139, the accused successfully rebutted the claim by demonstrating lack of clear documentation regarding the exact loan liability. The court accepted the trial court's findings that the complainant could not establish a valid, recoverable debt, thereby maintaining the original acquittal and rejecting the appeal.
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PMLA

• Accused Fails to Prove Innocence in Money Laundering Case, Bail Denied Under PMLA Section 45 Statutory Provisions

  Case-Laws - HC : HC denies bail in money laundering case involving fraudulent land transactions. The court found prima facie evidence of criminal activities through cash transactions, land sales, and suspicious financial dealings. The petitioner's involvement in proceeds of crime under PMLA was substantiated by investigation findings, including admissions of financial transactions and connections with co-accused. The court rejected arguments of completed investigation and principles of parity, emphasizing that charge-sheet filing does not automatically entitle bail. Applying statutory tests under Section 45 of PMLA, the court concluded the petitioner failed to demonstrate innocence and posed potential risk of further criminal activities. Consequently, the bail application was dismissed, maintaining judicial custody.
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VAT

• Circular 18.10.2006 Validates Petitioner's Claim, Halts Entry Tax Recovery for Specified Period from April to May 2005

  Case-Laws - HC : HC held that the impugned assessment order revealed a categorical factual finding supporting the petitioner's position that no entry tax was realized from customers during sales. Pursuant to the 18.10.2006 circular, the HC modified the Additional Commissioner's order, restraining recovery of entry tax for the specified period from 01.04.2005 to 29.05.2005. The assessment order was consequently amended to preclude entry tax collection, effectively granting relief to the petitioner and disposing of the petition with a favorable outcome.
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Service Tax

• Microsoft's Software Supply Deal Doesn't Qualify as Franchise Service Under Section 65(47), Reverse Charge Mechanism Not Applicable

  Case-Laws - AT : CESTAT analyzed the agreement between the parties and determined that the transaction did not constitute a franchise service under Section 65(47) of the Finance Act, 1994. The tribunal found the relationship was purely commercial, involving a buyer-seller interaction without representational rights. The agreement was non-exclusive, with Microsoft providing software and hardware on a non-exclusive basis. Critically, the transaction did not meet franchise service criteria, and therefore the respondent was not liable for service tax under the reverse charge mechanism. The Revenue's appeal was consequently dismissed, affirming the original order's validity.
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• Landmark Service Tax Ruling: Partial Exemption for Infrastructure Services to Government Entities Under Original Works Notification

  Case-Laws - AT : CESTAT adjudicated a service tax dispute involving multiple service providers. The tribunal partially allowed the appellant's appeal, exempting services provided to Indian Railways and IIT Kanpur under "original works" notification. For services rendered to Madhyanchal Vidyut Vitran Nigam Ltd, the matter was remanded for recalculation of service tax liability, allowing partial abatement. The revenue's appeal was dismissed, with the tribunal finding no substantive grounds to challenge the original order's interpretation of "original works". The decision affirmed the appellant's right to service tax exemption and directed reassessment of the remaining service tax demand.
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Central Excise

• Govt Raises Excise Duty on Petrol and Diesel to Rs. 13 and Rs. 10 per Litre Under Sections 5A and 147

  Notifications : The GoI's MoF issued Notification No. 02/2025-Central Excise amending the previous excise duty rates for petrol and diesel. The amendment increases the duty to Rs. 13 per litre for Sl. No. 1 and Rs. 10 per litre for Sl. No. 2, effective 8th April 2025. The modification was executed under Section 5A of the Central Excise Act, 1944, and Section 147 of the Finance Act, 2002, with the central government determining the change necessary in public interest. The notification represents a statutory adjustment to existing taxation mechanisms for petroleum products.
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• Manufacturer Wins Excise Duty Challenge: Stock Shortage Deemed Normal, Allegations of Clandestine Removal Dismissed

  Case-Laws - AT : CESTAT held that allegations of clandestine removal were unsubstantiated. The demand of Central Excise duty of Rs. 6,60,030/- and Rs. 2,07,803/- was set aside due to lack of corroborative evidence. Stock shortage was attributed to normal accounting variations in steel manufacturing, not illicit removal. No tangible proof existed to support claims of unaccounted production or sales. Consequently, associated interest, penalties, and personal penalty against the Managing Director were also nullified. The appellate tribunal comprehensively rejected the revenue's claims, finding no merit in the original order and allowing the appeal in its entirety.
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• Taxpayers Win CENVAT Credit Dispute, Revenue Department Fails to Prove Fraud in Credit Utilization Claims

  Case-Laws - AT : CESTAT adjudicated a dispute involving self-credit and CENVAT credit claims. The tribunal comprehensively examined allegations of erroneous refund and excess credit availment. After meticulous review, the tribunal found insufficient investigative evidence to substantiate revenue's claims of fraudulent credit utilization. The department failed to establish a substantive case of wrongful credit, with no comprehensive stock verification, buyer-end investigation, or conclusive documentation of alleged irregularities. The tribunal emphasized that burden of proof lies with the revenue department. Consequently, the appeals were allowed, quashing demands based on assumptions and inconclusive findings. The tribunal's decision underscored procedural rigor and evidentiary standards in tax credit disputes, ultimately ruling in favor of the appellants by rejecting revenue's unsubstantiated allegations.
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Case Laws:

• GST

• 2025 (4) TMI 423
  Cancellation of the petitioner s GST registration - absence of a signboard at the business premises - Violation of principles of natural justice - HELD THAT:- This Court is of the opinion that the present writ petition is devoid of merit and is accordingly dismissed as the petitioner s contention regarding the retrospective cancellation of GST registration on the grounds of an unsubstantiated show-cause notice lacks sufficient legal basis. The competent authority exercised its jurisdiction within the framework of the West Bengal Goods and Services Tax Act, 2017 and followed due process in issuing the cancellation order. Moreover, the respondent authority s rejection of the petitioner s appeal and condonation of delay application does not demonstrate any procedural irregularity or violation of principles of natural justice. The petitioner was afforded multiple opportunities to present its case but failed to produce satisfactory explanations or evidence to justify the continuation of its GST registration. The petitioner s assertion that the verification process was conducted arbitrarily is not borne out by the records. The competent authority has furnished a verification report in compliance with this Court s direction and no procedural lapses have been established that would warrant judicial interference. Conclusion - This Court does not find any grounds for quashing the verification report or directing reinstatement of the petitioner s GST registration. The petitioner has failed to establish any legal or factual infirmity in the actions of the respondent authorities. Petition dismissed.

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• 2025 (4) TMI 422
  Refund claim - only ground on which refund is rejected is that the Appellate Authority has not specifically mentioned the amount of refund to be granted to the Petitioner - HELD THAT:- The ground of rejection is factually incorrect. The order of the Appellate Authority has mentioned the amount of refund. The impugned order dated 01.06.2023 passed by Respondent No. 2 rejecting the refund of the Petitioner is quashed and set aside. Respondent No. 2 is directed to grant the refund of Rs. 96,65,325/- along with interest @ 6% per annum from the date immediately after the expiry of sixty days from the date of receipt of the application, i.e. 12.09.2021 till the date of actual refund in terms of Section 56 of the CGST Act. Petition disposed off.

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• 2025 (4) TMI 421
  Filing of TRAN-1 declaration in the web portal maintained by the appellants department - time limitation - HELD THAT:- The Hon ble Supreme Court in UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER] held that Considering the judgments of the High Courts on the then prevailing peculiar circumstances, any aggrieved registered assessee is directed to file the relevant form or revise the already filed form irrespective of whether the taxpayer has filed writ petition before the High Court or whether the case of the taxpayer has been decided by Information Technology Grievance Redressal Committee (ITGRC). Pursuant to the said order of the Hon ble Supreme Court, the department also issued Circular No.180/12/2022-GST dated 09.09.2022. Web portal was once again opened to enable the assessee to file TRAN-1 declaration form. The writ petitioner herein also availed the said facility and filed TRAN-1 form. All the issues raised in the writ petition have since been resolved. Therefore, nothing survives for further adjudication. This writ appeal is dismissed as infructuous.

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• 2025 (4) TMI 420
  Challenge to recovery notice issued by the first respondent - seeking a direction to the second respondent to delete the attachment endorsement in the encumbrance certificate created at the instance of the first respondent - HELD THAT:- Taking note of the fact that the petitioner institution is ready to pay the remaining amount, this Court finds it appropriate to direct the petitioner to pay the remaining amount against the outstanding government dues of Rs. 21,99,700/-, within a period of four weeks from the date of receipt of a copy of this order, to facilitate the registration of the sale certificate in favour of the sixth respondent. Petition disposed off.

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• 2025 (4) TMI 419
  Exemption from GST - activity of leasing of 19 onion mandis (Shops/Godowns) to the tender contractor for the purpose of collection of fee on daily basis from the merchants/farmers/public for usage of shops for selling of onion on daily basis - activity covered under the function entrusted to Municipality under Article 243W of the Constitution/ Panchayat under Eleventh Schedule of Article 243G as a local authority in which they are engaged as a public authority or not - HELD THAT:- By the notifications and subsequent amendment, if the activities of transactions by the Central Government or State Government or Union Territory or any local authority, if engaged as a public authority does the functions entrusted to municipality or panchayat under article 243W or 243G of the Constitution, all such activity are out of the purview of the taxable net and shall be treated neither as supply of goods nor as supply of services. The Onion mandis for effecting sale of onions is a convenient facility provided to the public/farmers/merchants which will fall under Sl. No. 17 of the functions entrusted to a municipality. The activity of collection of entry fee for using Onion mandis by the vendors/farmers/public would fall within the ambit of functions entrusted under Article 243W of the Constitution. It cannot be said that the contractor is doing any other service or deviating from doing the contracted service not concerned with the functions indicated. The relationship between the Municipality and the contractor is very specific and has a direct correlation with the functions entrusted in the Article. The purpose of providing certain functions entrusted to the municipality will not change the essential characteristics envisaged under the Article irrespective of the person providing the services entrusted. Only for administrative and operational convenience, the functions entrusted to a municipality under the Article are being provided. It is important to determine whether the activities provided by the contractor is the same function entrusted to a municipality in the Constitution and to ensure that the intention of the provisions contained in the Constitution is fulfilled. It is not the proportionality of the activity relating to the function entrusted, but the implications of the legislative assessment of the terms in relation to is more tilted towards nexus, inseparability and identity of the activities involved with the functions and not merely on other parameters. Hence, the transaction between Corporation and Contractor is clearly an activity/transaction undertaken by the local authority, engaged as public authority. Hence, the requirement stated in Section 7 (2) (b) of the Act are clearly met. Hence, the activity undertaken by the corporation is an activity covered under the Notification No. 14/2017-CT (Rate) dated 28-06-2017, as amended as neither a supply of goods nor a supply of services and out of purview of GST and the notification is available for the Contractor also provided the same are rendered as back to back services to the applicant. Conclusion - i) The activity of leasing, to the tender contractor, the right to collect entry fees on a daily basis, from merchants/farmers/public for 19 constructed onion mandis (shops/Godowns) would be covered under the function entrusted to Municipality under Article 243W of the Constitution as a local authority engaged as a public authority. ii) N/N. 14/2017-CT(Rate) dated 28-06-2017 as amended by N/N. 16/2018-CT(Rate) dated 26th July, 2018 issued in terms of Section 7 (2) (b) of CGST/TNGST Act, 2017, is very much available to claim as the activity is neither supply of goods nor supply of services .

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• 2025 (4) TMI 418
  Scope of Advance Ruling application - Rate of GST - Whether the rate of GST reimbursable to M/s. Tata Projects Limited, Mumbai shall be 5% as per the Bill of Entry or 12% considering that the overall contract falls within the definition of the Works Contract? - HELD THAT:- From the statement of facts furnished by the applicant in their application and from the submissions made during the personal hearing, it is understood that the determination of the liability to pay tax vests with the contractor M/s. Tata Projects Limited, Mumbai, in the instant case, and not with the applicant. Therefore, it becomes clear that in this case, the assessment to tax does not relate to the applicant, who happens to be the recipient of service only, and the question raised in the application for advance ruling is about reimbursement of charges to the supplier of service. As the said question does not fit into any of the clauses at (a) to (g) of Section 97 (2) of the CGST Act, 2017, thus no ruling could be pronounced in this regard. The applicant did not file any reply to the notice issued. A reminder dated 14.03.2025 reiterating the contents of the original notice was also issued to the applicant which was sent by RPAD and through email. However, we bring to note that till date, the taxpayer has not filed any reply to the notice and the reminder which were sent to them on 26.02.2025 and 14.03.2025 respectively. Hence, it is construed that, the applicant has no reason to file, and in view of the same, it is opined that no ruling could be pronounced in this case. Conclusion - No ruling is issued in this case, as the question put forth by the applicant does not fall under the scope of Section 97(2) of the CGST/TNGST Acts, 2017.

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• 2025 (4) TMI 417
  Exempt supplies under N/N. 12/2017 (as amended) or not - services to 54 hospitals under the control of DM RHS - HELD THAT:- Public Health is covered as one of the functions of both the Articles 243G (clause 23) and 243W. (clause 6) of the Constitution. While clause 6 of Article 243W refers to Public Health , clause 23 of Article 243G on the other hand cites Health and sanitation, including hospitals, primary health centres and dispensaries as its function. Accordingly, it is clear that Public Health and Hospitals, being State subject, the respective Governments of State have the responsibility to carry out these functions, either through a Panchayat under Article 243G, or through a Municipality under Article 243W, depending upon the location of the health facility. In the case of the state of Tamilnadu, the said responsibility is entrusted to the Directorate of Medical and Rural Health Services, which has been established for this purpose. As much as carrying out the said function of running the hospitals, primary health centres, dispensaries, etc., it also becomes essential to carry out activities for the up-keep and maintenance of the said health facilities. The clause any activity in relation to the functions entrusted to in Entry No.3 of the impugned notification, clearly establishes the fact that activities of any nature, if they are in relation to the functions entrusted to a Panchayat or a Municipality, gets covered under the said entry. As could be seen from the scope of work entrusted to the applicant by the Directorate of Medical and Rural Health Services, Tamil Nadu, i.e., Services in relation to housekeeping, security, providing assistance in Electrical/Plumbing works, etc., are meant for the effective maintenance of the hospital facility - these services are nothing but activities in relation to the function, i.e., operation and maintenance of hospitals, primary health centres, dispensaries, etc., for Public Health, which is entrusted to a Panchayat or a Municipality, and therefore the exemption provided under Entry No.3 of Notification No. 12/2017-CT (Rate) dated 28.06.2017, as amended, is applicable in respect of the scope of work to be carried out by the applicant to the 54 Government hospitals under the charge of the Directorate of Health and Rural Health Services, Tamil Nadu. Conclusion - The proposed supply of services for housekeeping, Security, assistance in electrical, plumbing, etc., to the 54 Government hospitals under the charge of the Directorate of Medical and Rural Health Services, Tamilnadu, is exempt under Entry No.3 of N/N. 12/2017-CT (Rate) dated 28.06.2017, read with Entry No.3 of N/N. II(2)/CTR/532(d-14)/2017 vide G.O.(Ms) No.73 dated 29.06.2017.

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• 2025 (4) TMI 416
  Rectification of mistake - Classification of goods - Tapioca flour obtained by crushing the dried roots and remnants of tapioca roots/tubers - Applicability of Notifications issued under the provisions of Act in respect of goods falling under entry No. 78 and tariff item 1106 of Part-A of Exempted goods, and tariff item 1106 in SI. No. 59 of Part-C in schedule 1 of the said Act - requirement of trader/dealer to register - HELD THAT:- As per the facts presented before the Advance Ruling Authorities by the applicant seeking ruling on the clarification sought by them in the original application, it was rightly classified by the members that the product traded by the applicant would fall under the Chapter heading 23031000 attracting 5% of GST. Further, the applicant himself has informed that the said product is not fit for human consumption as such and also not used in the food industry for further processing. The same can be marketable for livestock. Accordingly, the product is rightly classifiable under Chapter 23 as Residues and waste from the food industries; prepared animal fodder and specifically under 23031000 as Residues of starch manufacture and similar residues liable to tax @ 5%. The advance ruling on any of the clarification sought by the applicant under Section 97 (2) is given by the Advance Ruling Authority based on the facts and circumstances submitted by the applicant. From the above facts submitted by the applicant originally, it is crystal clear that the conclusion arrived at by the members is in order and therefore, it is opined that no rectification is warranted in this case as well, as no error or mistake is noticed on the part of the Advance Ruling Authorities. The instant application for rectification of advance ruling is liable for rejection in terms of Section 98 (2) of the CGST/TNGST Acts, 2017.

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• 2025 (4) TMI 415
  Classification of supply - composite supply with principal supply of goods under the Third Contract or not - supply of services made by the Applicant under Fifth Contract - supply of service of transportation, freight and insurance under the Fifth Contract provided for the goods supplied by the Applicant is in the nature of Business Support Services or not - HELD THAT:- As per the Fifth Contract, the applicant had been entrusted with the responsibility of delivery of goods at the site of installation. In connection with the same, the applicant had engaged transporters for undertaking transportation. The said transporters had issued consignment notes, on which the applicant discharged the GST under Reverse Charge. The applicant had also obtained necessary insurance for the said goods. Thereafter, in terms of the said contract, the applicant raised invoices on Power Grid Corporation of India Limited for freight and insurance along with applicable taxes under SAC code 996793 Other goods transport services . However, the GST component of the said invoices was reportedly not reimbursed by Power Grid Corporation of India Limited, as they are of the view that the same is exempt in terms of Sl.No. 18 of Notification No. 12/2017-CT (Rate). The services of transportation with the additional services of taking in-transit insurance are not being provided in isolation by the applicant in the instant case and that they are inextricably linked to the overall execution of the project that comprises of four other Contracts. Apart from the ex-works supply of goods under the First and Third Contract, it involves erection and commissioning including civil work of the various equipment and materials to be supplied for setting up the facility/system under the First, Second, and Third Contracts, and training in India and any other services specified in the contract - in the instant case, the scope of work especially under the Fifth Contract involving the applicant, does not get restricted to procurement of goods, transportation of goods and taking delivery of the same, but it extends to erection, testing and commissioning, i.e., installation of the facility/system including the training to be imparted in relation to the same. Though the contract is divided into five segments so as to assign the roles and responsibilities to the different parties involved in the contract, the overall assignment is to install terminals at the respective places to provide Bipole link between the Western region and the Southern region. It is opined that the commissioning of terminals and other such installations tantamount to commissioning of immovable property, wherein the property in goods stand transferred to the principal on completion of the respective segment of the project. From a conjoined and harmonious reading of the various clauses of Third Contract and Fifth Contract awarded to the applicant, and their inter-dependency under the overall contract comprising of five contracts, we are of the considered opinion that the agreement for setting up the aforesaid project is nothing but a composite works contract as defined under Section 2 (119) of the CGST/TNGST Acts, 2017, and that the same is classifiable under Construction Services , falling under SAC 9954, attracting GST @ 18% as provided under entry Sl.No.3 (xii) of N/N. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended vide N/N. 1/2018-Central Tax (Rate) dated 25.01.2018. Once it is held that the said activity qualifies as Works Contract Service, the question of examining the applicability of exemption as provided under Sl.No.18 of the N/N. 12/2017-Central Tax (Rate) dated 28.06.2017, as claimed by the applicant under para 3 of Annexure-A (Statement of relevant facts) enclosed to the application, does not arise. Conclusion - i) The supply of services made by the Applicant under Fifth Contract is composite supply of service under Works Contract . ii) The supply of service of transportation, freight and insurance under the Fifth Contract provided for the goods supplied by the Applicant is in the nature of Works Contract Service and shall be chargeable to taxes under GST at 18%.

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• Income Tax

• 2025 (4) TMI 414
  Validity of reopening of assessment - reasons to believe - required approval of the Commissioner of Income Tax - As decided by HC [ 2024 (9) TMI 1134 - PATNA HIGH COURT] AO had recorded reasons for believing that there was income escaping assessment which reasons, were also appended to the request for approval made to the Commissioner. The Commissioner had obviously read the reasons and made a written order that he was satisfied on the basis of reasons recorded, that this was a fit case for notice issued under Section 148. There is no requirement for the Commissioner to record his own reasons and it would suffice that he records the satisfaction regarding the reasons recorded by the Assessing Officer. Thus no reason to interfere with the notice issued under Section 148. HELD THAT:- No good ground and reason to interfere with the impugned judgment; hence, the present special leave petition is dismissed.

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• 2025 (4) TMI 413
  Rejection of application for Revision u/s 264 - Exemption u/s 11 denied to assessee - benefits denied merely on the ground that the donor has deducted TDS u/s 194C and 194J while allocating requisite grants to the assessee - scope of principle of consistency in taxation matters - revisional authority dismissed the revision petition of the assessee while reiterating the conclusion arrived at by the AO inter alia holding that the assessee s foundation falls under the sixth limb of Section 2(15) of the Act i.e. Advancement of any other object of general public utility As decided by HC [ 2024 (2) TMI 990 - DELHI HIGH COURT] the deductor in its Income Tax Return, under misconception, deducts TDS under Sections 194C and 194J of the Act, the same would not disentitle the assessee to claim benefit under Sections 11 and 12 of the Act unless the case of assessee is specifically hit by the Proviso of Section 2(15) of the Act, which is not the case here. Proviso to Section 2(15) of the Act would not get attracted merely on the basis of deduction of TDS by the donor under a particular head. HELD THAT:- We are not inclined to interfere with the impugned judgment; hence, the present special leave petition is dismissed. Pending application(s), if any, shall stand disposed of.

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• 2025 (4) TMI 412
  Reopening of assessment u/s 147 - notice under Section 148A(b) - HC [ 2022 (6) TMI 417 - PUNJAB HARYANA HIGH COURT] decided that no reason to warrant interference where the proceedings have not even been concluded by the statutory authority, the writ Court should not interfere at such a pre-mature stage. Moreover it is not a case where from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. The correctness of order under Section 148A(d) is being challenged on the factual premise contending that jurisdiction though vested has been wrongly exercised. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided. HELD THAT:- There are typographical errors in the Record of Proceedings dated 03.01.2023. Necessary corrections have been made. The corrected/revised Record of Proceedings shall be placed on record and shall be uploaded on the website. Learned counsel for the parties shall be informed. Liberty is granted to the parties to move an appropriate application, if required and necessary, since the typographical errors have been corrected without notice to them.

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• 2025 (4) TMI 411
  Revisitation of the issue already considered in re-assessment - Revision u/s 263 after assumption of jurisdiction u/s 153A - Assessing Authority adopts the view that the benefit provided under Section 54F is unavailable as, according to him, the thrust of Section 54F is on dwelling house and hence the investment made must substantially relate to the residential house and not the component of land in the property - distinction between the provisions of Section 54F and Section 54 of the Act, noticing that the phrase lands appurtenant thereto contained in Section 54 are absent in Section 54F HELD THAT:- Section 153A is sought to be invoked in a situation where the reassessment has already been completed on the same issue under Section 147 on 30.05.2012. There cannot thus be, as per the judgement in Abhisar Buildwell (P) Ltd [ 2023 (4) TMI 1056 - SUPREME COURT ] yet another assessment in terms of Section 153A of the Act again on the same issue as identified already in the course of the re-assessment proceedings. As the issue dealt in re-assessment and that dealt with in the order u/s 153A are one and the same, there is an embargo in the Department raking up the same issue yet again in the absence of any incriminating material. Hence, and on a plain reading of the second proviso to Section 153A, the Department is estopped from framing a regular assessment in this case as the re-assessment stands concluded as on 30.05.2012. On the question of assumption of jurisdiction u/s 153A, the search has admittedly not yielded any incriminating materials in regard to the claim u/s 54F. A perusal of assessment order does not indicate any incriminating material based on which the assessment has been made, save the Inspector s report dated 10.08.2011. Incidentally, this is a case where the Department has raked up the same issue in multiple proceedings, an order of re-assessment under Section 147, proceedings under Section 263 and an assessment under Section 153A. The claim has been accepted under Section 147, considered and dropped in revision u/s 263 and disallowed in search assessment u/s 153A in the absence of incriminating search materials. We thus cannot, but recall the observations of the Supreme Court in the case of Parasuram Pottery [ 1976 (11) TMI 1 - SUPREME COURT ] where this to say in regard to allowing stale matters to attain finality. Though in the context of re-assessments, the observations will be equally applicable to the present case as well: It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. Policy of law is that there must be a point of finality in all legal proceedings, that state issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. So far as income-tax assessment orders are concerned, they cannot be reopened on the scope of income escaping assessment under section 147 of the Act of 1961 after the expiry of four years from the end of the assessment year unless there be omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. As already mentioned, this cannot be said in the present case - Decided in favour of the assessee

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• 2025 (4) TMI 410
  Addition of undisclosed income - reliance on statement given by a assessee during search - Whether a statement given by a assessee during search is admissible in the absence of any material or evidence found during the search? - HELD THAT:- Based on the statement, the assessing authority brings to tax a sum of Rs. 9 lakhs. At the outset, it is unclear as to why, when statement refers to a sum of Rs. 25 lakhs as loan, the assessing authority has brought to tax only a sum of Rs. 9 lakhs. In any event, the order of assessment does not reveal the existence of any incriminating material barring the statement recorded, to confirm on the basis on which the addition could have been made. Section 158BC requires that any addition made as undisclosed income must flow from the incriminating materials found in the course of search. While undisputedly, a statement recorded under Section 132(4) would constitute evidence, and a valuable one at that, it cannot be the sole basis upon which an addition may be made in the context of block assessment. For the aforesaid reasons, the appeal succeeds and substantial question of law qua no.1 is answered in favour of the assessee. Surcharge u/s 113 - Whether the provision to Sec. 113 of IT Act providing for surcharge is prospective or retrospective? - HELD THAT:- Issues covered in the case of Vatika Township (P) Ltd [ 2014 (9) TMI 576 - SUPREME COURT (LB)] to the effect that surcharge under Section 113 of the Income-Tax Act, 1961 will stand attracted only in respect of searches that have taken place post 01.06.2002. Decided in favour of the assessee.

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• 2025 (4) TMI 409
  Addition u/s 40A - disallowing cash payments exceeding Rs.20,000/- for procurement of milk/milk products - HELD THAT:- We are of the considered view that the subject transaction would come squarely within the sweep of that provision. Rule 6DD contemplates various situations where remittances may be made by cash. However, it does not exclude a situation where the cash payment is made by a city-based entity to a Company, as in the present case. Reliance on the term producer in Rule 6DD(e)(ii) is, in our view, misconceived. For one, we are not concerned with the act of milk production perse, but milk being the produce of a dairy farm. The term produce may either be a verb or noun. The term produce in Rule 6DD(e)(ii) is with reference to milk as a consequence of dairy farming. Then again, the fact that the milk is pasteurised by the Company and the pasteurised milk is thereafter distributed by the appellant to the dealers is, in our considered view, immaterial, as yet another condition is that the cash payment should have been made to the cultivator, grower or producer of such articles, produce or products. It is in this context that the appellant relies on the decisions of this Court and of the Calcutta High Court to state that conversion of raw milk to pasteurised milk amounts to production and by engaging in this process, it assumes the status of producer . We do not agree as the reference to producer in the conclusion of clause (e) of Rule 6DD is clearly to a dairy farmer and not to a company. The term producer qua dairy farming has to be understood noscitor a sociis with the terms cultivator and grower qua agriculture, forestry, poultry farming, apiculture etc, respectively. It cannot, by any stretch of the imagination stretch to include a company that is engaged in the activity of pasteurisation of milk, particularly bearing in mind the object of section 40A(3), being to discourage cash payments. Both entities, the company and the distributor (appellant) have full access to banking facilities. Supreme Court, in Attar Singh s case [ 1991 (8) TMI 5 - SUPREME COURT ] makes an observation that the Rule provides for an exemption for purchases of agricultural or horticulture commodities in cash where there are no banking facilities available in that place. The operation of Section 40A(3) is thus absolute. Rule 6DD has been brought in to carve out exceptions to the rigour of Section 40A(3) in worthy situations as identified in that Rule itself. Nowhere does Rule 6DD envisage extension of that benefit to cash payments made by a distributor (appellant) to the company. There is no justification for why the payments in the present case were made in cash or what the exigencies were that prevented the entities from transacting through the bank. Decided in favour of the revenue

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• 2025 (4) TMI 408
  Addition u/s. 69C - cash transaction made by the assessee, relating to transfer and posting - additions made by the revenue in both the assessees arise out of seized materials found from search premises and statement recorded - HELD THAT:- As on perusal of the assessment order, it is noted that AO did not bring anything corroborative in order to substantiate the statements recorded of Javed Shaikh, Shailendra Rathi and Ravindra Wadepalle. Impugned addition is based on the statements alone, made in the hands of the two assessees before us. On perusal of the assessment order, it is also noted that assessee sought for cross-examination of the witnesses which was rejected by the AO, without giving any reasons but by stating that statements recorded explains in detail the modus operandi of transaction related to transfer and posting of PWD engineers. AO came to the conclusion without verifying and making any further efforts, and this approach by the AO is in clear violation of principles of natural justice. On this aspect, we refer to the decision of Andaman Timber Industries v [ 2015 (10) TMI 442 - SUPREME COURT] wherein held that, by not providing opportunity of cross-examining, the witness whose statements were relied on by the assessing officer, amounts to violation of principles of natural justice. Once the assessee disputed the correctness of the statement and wanted to cross-examine the witness which was denied, AO cannot pass any order based on such statements, as it is not sustainable in the eyes of law. It is also noted that in the statement recorded of Avish Atal it is recorded that collection of the amount were done by Sonu (Lalit) Mishra and Pavan Mishra along with Avish Atal and others. These persons referred to in the answer given to question 13, were not subjected to examination in order to place any identification regarding the assessees having paid alleged cash. As decided in case of ACIT vs. Ms. Lata Mangeshkar [ 1973 (6) TMI 13 - BOMBAY HIGH COURT] that in the absence of corroborative evidence, seized material cannot be considered to be primary direct evidence. Decided against revenue.

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• 2025 (4) TMI 407
  Addition u/s 68 - Bogus LTCG on the sale of shares - as alleged that assessee had brought its unaccounted money in the books of account through accommodation entry involving sale and purchase of this alleged penny scrip - HELD THAT:- We note that transactions were undertaken through the SEBI registered broker Joindre Capital Services Ltd. on the stock exchange platform on which STT was levied and the consideration was routed through normal banking channel. The entire flow of these transactions is corroborated by relevant documentary evidences placed on record. While making the addition, there are no discrepancies pointed out by the Assessing Officer in the documents and the details furnished by the assessee. Ld. AO has not bothered to discuss or point out any defect or deficiency in the documents furnished by the assessee. These evidences furnished have been neither controverted by the Ld. AO during the assessment proceedings nor anything substantive brought on record to justify the addition made by him. To our mind, Ld. AO could have taken an adverse view only if he could point out the discrepancies or insufficiency in the evidence and details furnished in his office. Once the assessee has produced documentary evidence to establish the veracity of his claim, the burden would shift on the Revenue to establish its case. AO had proceeded on the basis of analysis of the financials of the company. According to him, sharp movement in the share prices of the aforesaid scrip is not justified. He has relied upon the search and survey operations conducted by the investigation wing of the Department at various locations in respect of alleged penny stock which sets out the modus operandi adopted in the business of providing entries for bogus capital gains. The conclusion drawn by the ld. Assessing Officer of implicating the assessee is un-supported by any cogent material on record. We delete the addition made u/s 68 towards proceeds of sale of listed shares of Goenka Business and Finance Ltd. which gave rise to Long Term Capital Gain on the said sale, claimed exempt by the assessee u/s 10(38). Decided in favour of assessee.

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• 2025 (4) TMI 406
  Addition u/s. 69A r.w.s. 115BBE - cash deposits in bank of the assessee during demonetization - HELD THAT:- The assessee has explained source of cash deposits in his bank accounts i.e. the cash was deposited by his employer Jitendra Pal. The assessee further explained that the entire cash deposit in the bank account of the assessee was subsequently transferred to Jitendra Pal through banking channel. To substantiate his contention, the assessee has furnished his saving bank account statements from SBI and ICICI Bank Ltd. The assessee has also placed on record bank statements of Jitendra Pal. The source explained by the assessee for cash deposits is plausible. Hence, we deem it appropriate to restore this issue to the AO for limited purpose of quantification of amount transferred by the assessee from his bank accounts maintained with SBI and ICICI Bank Ltd. to Jitendra Pal. To the extent amount transferred from aforementioned saving bank accounts of the assessee to Jitendra Pal is proved, no addition is warranted. AO has invoked the provisions of section 115BBE. The provisions of section 115BBE were amended w.e.f. 15.12.2016 to increase the rate of tax from 30% to 60%. In Smile Microfinance Ltd. [ 2024 (11) TMI 1444 - MADRAS HIGH COURT] has held that the revised rate of tax @60% would be effective only from 01.04.2017. Accordingly, prior to 01.04.2017 the rate of tax applicable would be 30%. Hence, for AY 2017-18 the rate of tax applicable would be prior to amendment. The revised rate of tax cannot be applied retrospectively. Thus, after verification of amount transferred to Jitendra Pal, in any addition u/s. 69A of the Act survives the same would be subject to tax at the rate as was applicable prior to amendment i.e. 30%.

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• 2025 (4) TMI 405
  Reopening of assessment - Estimation of income on bogus purchases - addition by applying G.P rate of 0.88% on such alleged purchased alleged as bogus - HELD THAT:- From the perusal of the order passed u/s 148A(d), we observed that the AO observed that the information was self-sufficient and it was considered that further enquiries u/s 148A(a) of the Act are not required. However, when we see the information as provided to assessee along with notice u/s 148A(a) as Annexure and reproduced herein above, we find that such information did not speak about the real transactions. Assessee has made bogus purchases in the form of accommodation entries provided by Ahok Kumar Gupta and other entities operated and controlled by him. It is also stated that such information was received through insight portal. Nowhere it is stated as to how department was having such information, who is Ashok Kumar Gupta, what is the nexus between assessee and Ashok Kumar Gupta, which are the entities managed and controlled by him and which of such entities had sold good to assessee alleged as accommodation entry. Details of purchases made, date of transactions, item, value of each individual transaction of purchases etc. were never brought on record as provided in sub-section (a) to section 148A - AO has never provided the statements of such Ashok Kumar Gupta and the other relied upon material based on which of transactions were alleged as accommodation entry of purchases alongwith the notice u/s 148A(b) of the Act. It appears that the AO simply proceeded to reopen the case of the assessee based on the information available on the insight portal which is uploaded under Risk Management Strategy formulated by CBDT and no independent application of mind by AO before using such information against the assessee nor any enquiry was made as provided in section 148A(a) of the Act. This action of AO is highly arbitrary - AO not only proceeded to issue notice u/s 148A(a) without making verification of the vague and insufficient information available with him to satisfy himself that income chargeable to tax has escaped assessment but at the same time also failed to provide the material relied upon to the assessee along with notice u/s 148A(b) of the Act. The Hon ble Supreme Court in the case of Ashish Agarwal (supra) has held that AO should supply the relied upon material to the assessee so as to enable him to respond the show cause notice issued by AO. Not providing the opportunity to cross examine the witness whose statements are relied upon by the Revenue - As from the perusal of the assessment order, it is seen that the Assessing officer has relied upon the statements of Sh. Ashok Gupta and also referred the results of the enquiry conducted u/s 133(6) of the Act from the respective parties, however, despite of request made by the assessee for cross examination of all such parties, no such opportunity was provided to assessee. It is settled proposition of law that if the Revenue is using the statement of third parties, the assessee should have been allowed an opportunity to cross examine those witnesses as has been held by the Hon ble Supreme Court in the case of Andaman Timber Products [ 2015 (10) TMI 442 - SUPREME COURT ] The Co-ordinate Bench of Tribunal in the case of Best City Infrastructure Ltd. [ 2017 (8) TMI 250 - DELHI HIGH COURT ] has held that not providing opportunity of cross examination makes the addition invalid. Decided in favour of assessee.

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• 2025 (4) TMI 404
  Disallowing assessee s claim of deduction u/s. 54 - house has been purchased by the assessee in the name of his spouse - HELD THAT:- As decided in Kamal Wahal [ 2013 (1) TMI 401 - DELHI HIGH COURT] and Ravinder Kumar Arora [ 2011 (9) TMI 343 - DELHI HIGH COURT] has held that wherein new house is purchased in the name of spouse of the assessee, the assessee is eligible for claiming deduction u/s. 54F of the Act. The provisions of section 54F of the Act are pari materia with the provisions of section 54 of the Act. Thus, the law expounded by Hon ble Jurisdictional High Court in respect of section 54F of the Act, would equally hold good for deduction claimed u/s. 54 of the Act. It is a well settled legal preposition that purposive construction is to be preferred as against literal construction, more so when literal construction does not restrict that the house be purchased in name of assessee only. The provisions of section 54 of the Act are beneficial provisions which should be interpreted liberally in favour of the assessee, once the basic conditions for claiming the deduction are satisfied. Assessee has further claimed that the assessee has incurred expenditure on renovation/repairs of the new asset to make it leviable - no documentary evidences to substantiate this claim has been furnished by the assessee. Considering the fact that some expenditure must have been incurred by the assessee towards the renovation/repairs of the house to make it leviable, to meet the ends of justice, expenditure on renovation and repairs is estimated at Rs. 8,00,000/-. Thus, the assessee gets the benefit of deduction to the extent of Rs. 26,72,000/- (Rs.18,72,000/- +Rs.8,00,000/-) u/s. 54 of the Act.

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• 2025 (4) TMI 403
  Assessment u/s 153A - Mandation for seeking the approval u/s 153D - Addition u/s 56(2)(viia) - difference between the {market value purchase value} - HELD THAT:- For making the assessment or reassessment u/s 153A B the approval/sanction u/s 153D of the approving authority is mandatory and therefore the approval should not be rubber stamping and mere ritual formality and should not suffer from lack of application of mind but the same has to be reasoned, based on examination of the relevant material available on record and in the approval, there should be some indication of the material examined and the order of approval is not to be mechanically granted but the same should be done, having regard to the material on record. It is the bounden duty of the AO to submit the draft assessment order, well in advance/time, so that approving authority will not face any immense pressure, due to paucity of time. Though the statute has not provided any format for granting an approval but the approval must reflect the basis of the material and reasons, on which the approval is granted. This Court is of the considered view that in the instant case, the approval under consideration in not based on examining of any relevant documents and provisions of the Act in the context of the proposed addition and has been accorded in haste and time constrained pressure and therefore lacks application of mind and hence in cumulative effects, the same suffers from perversity and impropriety and consequently is un-sustainable. Thus, the approval, is declared as invalid in the eyes of law, which would entail the assessment order as invalid being void ab-initio. Consequently, the assessment order is quashed. Appeal filed by the Assessee stands allowed.

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• 2025 (4) TMI 402
  Rejection of books of accounts - non-production of bills and vouchers and other documents - Estimation of income - HELD THAT:- AO was justified in rejecting the books of account and estimating the net profit, but the estimate has been made at a higher side. Therefore, it was considered appropriate that in place of the net profit rate of 0.31% shown (which was 1.07% in the immediately preceding year) and as against the net profit rate of 2% applied by the AO, it would be justified if net profit rate of 0.75% is applied on the turnover (which is higher this year) as the same was 1.07% in the immediate past year and no supporting bills and vouchers could be filed to justify the fall in the net profit rate, to which the ld. Counsel for the assessee also agreed and the Ld. DR also did not raise any serious objection. Hence, the order of the Ld. AO is modified and he is directed to apply the net profit rate of 0.75% on the gross turnover in place of net profit rate of 2% applied and recompute the additional estimated income after giving allowance for Rs. 29,78,146/- as made by him while estimating the income. The net addition, thus works out to Rs. 43,29,907/- in place of Rs. 1,65,09,996/- made by the Ld. AO. AO is directed to recompute the addition and the income accordingly. Appeal filed by the assessee is partly allowed.

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• 2025 (4) TMI 401
  Condonation of delay filling appeal before ITAT - delay of 1607 days - applicant must satisfy the court that he was prevented by any sufficient cause from prosecuting his case - HELD THAT:- Discretion to condone the delay has to be exercised judiciously based on facts and circumstances of each case. It is the fit case where the delay has to be condoned irrespective of the duration/period of the delay. In this case, the non-filing of an affidavit by the Revenue for opposing the condonation of delay itself is sufficient for condoning the delay of 1607 number of days. We also note that there is no allegation from the Revenue that the appeal was not filed by the assessee within the time deliberately. Therefore, we are inclined to prefer substantial justice rather than technicality in deciding the issue. We also find that if we reject the application of the assessee for condoning the delay then it would amount to legalise injustice on technical ground whereas the Tribunal is capable of removing injustice and to do justice. Thus, we condone the delay of 1607 days in filing the appeal and proceed to hear the appeal on merit for the adjudication. On merits of the case, present appeal is against the penalty levied u/s. 271[1][c] of the Act, which is set-aside to the file of AO to pass fresh order. Rectification order with a delay of 1607 days also to be condoned due to insolvency and medical condition and stated facts appeals were filed late.

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• 2025 (4) TMI 400
  Characterization of receipts - Compensation received by the assessee on account of termination of employment - treated as a capital receipt and not taxable u/s 17(3) - HELD THAT:- We find the Tribunal again in the case of Prasad Vijaykumar Kulkarni [ 2024 (9) TMI 1718 - ITAT PUNE] and in the case of Atul Shashikant Garbhe [ 2024 (9) TMI 1717 - ITAT PUNE] has decided the issue in favour of the assessee by holding that the amount received as Ex-gratia is not taxable being capital in nature. Following the above decisions we hold that the Ex-gratia amount received by the assessee being capital in nature cannot be added in the taxable income - Appeal filed by the assessee is allowed.

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• 2025 (4) TMI 399
  Addition by estimating the income by applying the GP rate 18.82% of the total turnover - HELD THAT:- On perusal of the above Profit and Loss account it is had revealed that the expenses incurred by the assessee are to be allowed and the income cannot be estimated on the basis of GP rate alone. Accordingly, we set aside the order of the CIT (A) and direct the ld. AO to allow the deduction of expenses to the assessee as per the above Profit and Loss account. The appeal of the assessee on this issue is allowed. Addition on account of cash deposited in the bank by treating the same as unexplained cash credit - We note that the assessee has deposited and withdrawn the money from the same bank account and these were repeated transactions done by the assessee and all are reported in the books of accounts maintained by the assessee for the business purposes. Moreover, the addition made by the ld. AO on account of deposits and withdrawals of money and any discrepancy therein cannot be made where the income has been estimated by apply the GP rate. Therefore, we set aside the order of the ld. CIT (A) and direct the AO to delete the addition. The ground raised by the assessee is allowed. Addition as made by the AO on account of loan and advances treating the same as income from undisclosed sources - Since, we have decided ground where the income has been estimated by applying the GP rate no additions was called for. Accordingly, we set aside the order of ld. CIT (A) and direct the AO to delete the addition. Addition on account of interest deposit - As we find that the said interest represented the interest accrued on FDR with UCO bank. Therefore, the same was correctly added by AO in the assessment order and sustained by Commissioner of Income-tax (Appeals)

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• 2025 (4) TMI 398
  TP Adjustment - international transaction, qua corporate guarantee by the assessee to its Associated Enterprises - HELD THAT:- As we find that the issue is similar to the issue as has been decided in A.Y. 2013-14 and A.Y. 2014-15 by the co-ordinate Bench of the Tribunal in assessee s own case and the ld. CIT (A) by following the same held that the corporate guarantee fee of 1% charged by the assessee is to be at arms length. Arm s length price adjustment on account of eligible / non-eligible units between the assessee and its Associated Enterprises - as per TPO inter-unit transactions involving transfer of raw materials between eligible units and non- eligible unit were undertaken on cost-to-cost basis without any mark- up to increase the eligible profit of the eligible unit for claiming of higher exemption of the profit - CIT(A) deleted addition - HELD THAT:- We find that the ld. CIT(A) has passed a very reasonable order by following the decision of M/s Century Plyboards (I) Ltd [ 2020 (12) TMI 55 - ITAT KOLKATA] and Greenply Industries Ltd [ 2022 (7) TMI 1045 - ITAT GUWAHATI] and deleted the transfer pricing adjustment correctly. Appeal of the Revenue is dismissed.

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• 2025 (4) TMI 397
  Reopening of assessment - notice issued after elapsing of three years from the end of the relevant assessment year - valid approval for issuing the notice u/s 148 - HELD THAT:- As notice issued after elapsing of three years from the end of the relevant assessment year and therefore as per sub clause (ii) of section 151 the specified authority for granting the approval for issuing the notice u/s 148 would have been, either Principal Chief Commissioner or Principal Director or where there is no such post then the Chief Commissioner or Director General, for granting the sanction for issuing of notice u/s 148 of the Act, but not the Ld. PCIT-2, Mumbai who has granted the approval in this case and/or authority specified under sub clause (i) of section 151 of the Act. Case of Vodafone India Idea Ltd. [ 2024 (2) TMI 1408 - BOMBAY HIGH COURT] has also clearly held that proviso to section 151 of the Act has been inserted w.e.f. 01.4.2023 and therefore shall not be applicable to the A.Y. 2018-19. In effect, the Hon ble High Court has clarified that provisos to section 151 of the Act would be effective from 01.04.2023 onwards and would not be applicable to the prior period. Thus, the impugned notice u/s 148 as issued by the AO in the instant case by taking approval from the Ld. Pr. CIT-2, Mumbai but not from the Ld. Pr. CCIT and in pursuance to that the assessment order dated 23.01.2023 u/s 147 r.w.s. 144 144B of the Act, is liable to be quashed being void, ab-initio - Decided in favour of assessee.

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• 2025 (4) TMI 396
  Income taxable in India or not - Taxability of capital gains on mutual funds units - taxability in India and benefits of Article 13(5) under the India -Singapore treaty -HELD THAT:- We find that the facts of the case of DCIT v/s K. E. Faizal [ 2019 (7) TMI 598 - ITAT COCHIN] are identical from the above definition of securities , it is clear that shares and units of a mutual fund are two separate types of securities. Applying the above meaning to the provisions of the Tax Treaty, the gains arising from the transfer of units of mutual funds should not get covered within the ambit of Article 13(4) of the Tax Treaty, and should consequently be covered under Article 13(5) of the Tax Treaty. Therefore, the assessee, who is a resident of UAE for the purposes of the Tax Treaty, STCG arising from sale of units of equity oriented mutual funds and debt oriented mutual funds should not be liable to tax in India in accordance with the provisions of Article 13(5) of the Tax Treaty As in the light of the provisions of India-Singapore DTAA and the decisions of the coordinate benches discussed above, we are of the view that the assessee is entitled to deduction in respect of short-term capital gains under the DTAA between India and Singapore is allowable.

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• 2025 (4) TMI 395
  Unexplained investment made u/s 69 - in statement the director of the Assessee admitted the payments made in cash for the property - AO made addition on the basis of loose papers found in the premises of a third party and based on the statement of the third party as latter retracted. HELD THAT:- On bare reading of the seized document it is found that, there is no heading to describe the nature of transaction that depicts in the spiral pad. There were no correct date with year to suggest that these transactions are pertaining to the assessment year. It does not indicate as to who prepared the documents and whether the figures mentioned therein was in Rupees or in any other currency. There is no signature of the person who prepared it or there was no authentication of these documents. In the loose slip has been interpreted by the AO that these are unaccounted cash payments made by the Assessee without their being any corroborative evidence. At this point it is appropriate to consider few judgments on this issue. In the present case, the AO made impugned addition based on sworn statement of its Managing Director recorded u/s 131 during the course of survey without their being other corroborative evidence. In the present case, the assessing officer found nothing incriminating to justify the addition of Rs. 22.25 Crore except the confession made by the then director of the Assessee-Company (which has been retracted letter) apart from a loose sheet. The statement cannot be held as conclusive proof to make an addition. In the present case the addition has been made by the A.O. relying upon the sole statement, which was retracted, having no evidentiary value in the absence of any corroborative material as per the law laid down by the Apex Court and followed by High Courts and Tribunals. In absence of any other piece of evidence to make addition of Rs. 22.25 Crore on pro rata basis u/s 69 in the hands of the Assessee, CIT(A) rightly deleted the addition. Further it is also found that there is no corresponding addition made in the hands of the alleged cash beneficiaries or even corrective action proposed by the AO in the assessment of the beneficiaries of the alleged cash. We find no error or infirmity in the order of the Ld. CIT (A) in deleting the addition made by the AO. Appeal of the Revenue is dismissed.

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• 2025 (4) TMI 394
  Rectification u/s 254 - justifiable reasons leading to the delay of 8 years (approx.) which could be condoned by it - HELD THAT:- Tribunal while dismissing the appeal of the assessee observed that there were no justifiable reasons leading to the delay of 8 years (approx.) which could be condoned by it. Accordingly, the Tribunal was of the view that as the delay involved in the appeal was inordinate and substantial, therefore, the same could not be summarily condoned. Tribunal had dismissed the appeal of the assessee on the ground of delay by relying on various judicial pronouncements. Accordingly, assessee applicant had failed to point out any mistake apparent from the record and in the garb of the aforesaid miscellaneous application, he is seeking a review of the order passed by the Tribunal which is beyond the scope of its powers as envisaged u/s. 254(2) Assessee in the garb of the present application filed u/s. 254(2) of the Act seeks for a review of the order so passed by the Tribunal while disposing off the appeal, which does not fall within the realm of the powers vested with it u/s. 254(2) of the Act. Miscellaneous application filed by the assessee is dismissed.

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• 2025 (4) TMI 393
  Reassessment proceedings - validity of approval granted u/s 151(i) - HELD THAT:- Admittedly the assessment was reopened after elapsing of three years from the end of the relevant assessment year and therefore the approval of either of specified authorities as specified in sub clause (ii) of section 151 was required to be taken, which admittedly has not been taken but the approval dated 28.07.2022 for issuing the notice u/s 148A of the Act infact had taken from the Ld. Pr. Commissioner of Income Tax, Mumbai, which cannot be termed as valid/legal approval. Thus, on the aforesaid analyzations, the notice issued u/s 148 of the Act and in consequence to the said notice, the assessment order u/s 147 of the Act, is quashed being void-ab-initio. Decided in favour of assessee.

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• 2025 (4) TMI 392
  Appeals filed by the assessee/company dissolved - filing an appeal before the ITAT was signed and verified by the company s directors, who had already been suspended - HELD THAT:- Since the company was under a resolution process and controlled by the Sale-cum-Monitoring Committee, the former management was not authorized to sign and verify the appeal filed on 07.03.2018. Therefore, the appeals are not maintainable in their present form. LR was informed, that Form No. 36 had not been signed by a competent person and was thus required to be resubmitted by a duly authorized individual from the Sale-cum-Monitoring Committee. Consequently, the matter was adjourned from 08.01.2025 to 19.02.2025 and subsequently to 17.03.2025. But, despite these adjournments, the learned representative did not submit a revised Form No. 36 signed and verified by an authorized person. Instead, she insisted on accepting the form signed by the IRP. IRP is merely one member of the Sale-cum-Monitoring Committee and does not have sole authority to file the appeal. Therefore, the representative was asked to provide a letter from the Sale-cum-Monitoring Committee authorizing the IRP to pursue the appeal. However, no such authorization was provided, except for a letter dated 13.03.2025 from the IRP, outlining the current status of the Insolvency and Bankruptcy Code (IBC) proceedings. Given the lack of compliance, we find it appropriate to reject these appeals as non-maintainable in their present form. LR cited the decision in the case of Gouri Kumari Devi [ 1959 (5) TMI 44 - PATNA HIGH COURT ] arguing that failure to sign a memorandum of appeal is a mere procedural irregularity that can be rectified through an amendment, effective from the original filing date of the appeal. Respectfully following this precedent, we grant liberty to the assessee to either file fresh appeals, duly authorized by a competent person under the provisions of the Act, or to move an application for reviving the present appeals in their original numbers by filing a modified Form No. 36, properly signed and verified by an authorized individual, if so advised.

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• 2025 (4) TMI 391
  Exemption u/s 11 and 12 - AO proceeded to complete the assessment of the assessee trust as an AOP denying the assessee s claim of donation/contribution received from farmers as corpus/capital receipts for the reason that confirmations from the respective donors/farmers were not submitted by the assessee and also for the reason that the assessee was not registered u/s.12A and hence the said receipts could not be considered for claim of exemption u/s.11 12 - AO denied the assessee s claim of exemption u/s. 11/12 as the assessee was not a registered trust u/s. 12A in AY 2011-12 and brought to tax the entire receipts of donations to tax under the provisions of section 68 of the Act mainly for the reason that the assessee failed to substantiate the said receipts by filing confirmations from the donors due to which the genuineness of the transactions(s) remained unproved. CIT(A) confirmed the action of the AO observing that the donations were anonymous and applied the provisions of section 115BBC. HELD THAT:- We also observe that during the appellate proceeding before the CIT(A), the assessee made its alternate claim for exemption u/s.10(23C)(iiiad) which the CIT(A) rejected mainly for the reason that no such claim was earlier made before the AO and in the return of income filed by the assessee and also on account of lack of any supporting documents furnished by the assessee in support thereof. AR submitted that the assessee has filed additional grounds of appeal along with additional evidences in respect of its alternate claim for exemption u/s.10(23C)(iiiad) of the Act which goes to the root of the matter and hence requested for admission of the same. As further submitted that given an opportunity, the assessee is in a position to substantiate its case before the lower authorities by furnishing the requisite supporting documentary evidences in support of its claim. He therefore made a request to set aside the matter to the file of the AO/ CIT(A) for adjudication afresh on merits in the light of these additional grounds/additional evidences filed by the assessee. We find some force in the above arguments of the Ld. AR. On Perusing the additional grounds/evidences filed by the assessee, we find that the same goes to the root of the matter and in the absence of any contrary material brought on record and any objection raised by the Revenue to the above proposition of the AR, we deem it fit to admit the additional grounds/evidences filed by the assessee. Hence, the additional grounds/ evidences raised by the assessee are hereby admitted. Since the additional evidence field by the assessee needs verification, considering the totality of the facts and in the circumstances of the case enumerated above and in the interest of the justice and fair play and without going into the merits of the case, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to decide the issues afresh on merits in light of the additional grounds and additional evidences filed by the assessee after allowing the reasonable opportunity of being heard to the assessee who shall provide the requisite support in terms of submitting the relevant documents/evidences as may be required/ called upon. Appeal of assessee is treated as allowed for statistical purpose.

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• 2025 (4) TMI 390
  Denying the Foreign Tax Credit claimed u/s 91 - assessee filed Form-67 beyond the due date of filing the return of income u/s 139(1) - HELD THAT:- As relying on series of decisions on this point, it is held Foreign Tax Credit cannot be denied merely because there is a delay in filing Form-67. Accordingly, we direct the AO to allow the Foreign Tax Credit to the assessee. Appeal filed by the assessee is allowed.

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• 2025 (4) TMI 389
  Addition of 50% of interest received u/s. 28 of the Land Acquisition Act, 1894 - Income from Other Sources or as part of compensation exempt from tax - HELD THAT:- The provisions of section 56(2) of the Act were amended by the Finance (No.2) Act 2009 w.e.f 01.04.2010 by way of insertion of clause (viii) to sub-section (2) to section 56 which says Income by way of interest received on compensation or on enhanced compensation referred to in clause (b) of section 145A. Prior to insertion of aforesaid clause, the Hon ble Apex Court in the case of CIT vs Ghanshyam HUF [ 2009 (7) TMI 12 - SUPREME COURT] has held that interest received on compensation/enhanced compensation is part of solatium paid for compulsory acquisition of land, hence, exigible to tax u/s. 45(5) of the Act. The Hon ble Punjab and Haryana High Court in the case of Mahender Pal Narang vs CBDT [ 2020 (3) TMI 1115 - PUNJAB AND HARYANA HIGH COURT] after considering amended provisions of section 56(2) (viii) of the Act distinguished the decision rendered in the case of Ghanshyam HUF (supra) and held that interest received on compensation or enhanced compensation is to be treated as Income from Other Sources and not under the head Capital Gains . Recently, in the case of PCIT vs. Inderjit Singh Sodhi (HUF) [ 2024 (4) TMI 408 - DELHI HIGH COURT] held that interest whether on compensation or enhanced compensation received on acquisition of land u/s. 28 or interest received u/s. 34 of the Land Acquisition Act, 1894 shall be exigible to income tax as Income from Other Sources u/s. 56(2)(viii) of the Act. Appeal of the assessee is dismissed

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• 2025 (4) TMI 388
  TP adjustment - notional interest on outstanding receivables - TPO has made adjustment by imputing the notional interest on the outstanding receivables from AEs by considering the SBI short term deposits as Arms Length Price - whether for benchmarking the outstanding receivables from AEs, the comparable interest rate should be PLR rate/SBI short term rate or LIBOR rate/LIBOR+ mark up? - HELD THAT:- This issue was considered in case of Shiva Industries Holdings Ltd [ 2011 (5) TMI 451 - ITAT, CHENNAI] held LIBOR rate which has to be considered while determining the arm s length interest rate in respect of the transaction between the assessee and the Associated Enterprises. As it is noticed that the average of the LIBOR rate for 1-4-2005 to 31-3-2006 is 4.42 per cent and the assessee has charged interest at 6 per cent which is higher than the LIBOR rate, we are of the view that no addition on this count is liable to be made in the hands of the assessee. Thus, a transaction of loan to the AEs in foreign currency is considered as international transaction between the assessee and its AEs, then the transaction would have to be looked upon by applying the commercial principles in regard to the international transactions. Therefore, the domestic prime lending rate or domestic deposit rate would have no applicability on international transaction, but the international rate being London Interbank Offered Rate (LIBOR) or similar rate i.e. Euro Interbank Offered Rate (EURIBOR) would govern the international transactions of lending by the assessee to the AEs. This issue was again considered in the case of CIT vs. Tata Autocomp Systems Ltd [ 2015 (4) TMI 681 - BOMBAY HIGH COURT] as upheld the decision of the Tribunal directing the Assessing Officer to benchmark the interest at the prevailing EURIBOR rate instead of rupee loan rate to be computed at Arms Length on the loan advanced to the AE.

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• 2025 (4) TMI 387
  TP adjustment - Purchase of material from AE - assessee is stated to have entered into international transactions and specified domestic transaction within the meaning of section 92B and 92BA with its Associate Enterprise defined in section 92A - HELD THAT:-We do not find any merit in the contention raised on behalf of the appellant that DRP ignored to record independent findings on the point of method selected and rejected by TPO. It cannot be said that this aspect remained unadjudicated. In the given facts and circumstances of the appeal at hand, the decisions cited on behalf of the appellant do not come to its aid so as to say that the observations made and the conclusions arrived at by TPO in selecting TNMM method be discarded from consideration, or that CPM method selected by the assessee be applied in determination of ALP. A perusal of the final assessment order would reveal that the AO considered all the grounds raised by the assessee after the passing of the order by DRP, discussed the same and gave effect to the directions issued by DRP on each point. The assessment as regards payments made for purchase of raw material, by way of international transactions, deserves to be upheld. International transactions- pertaining, payment of royalty - Main claim of the assessee was that transactions of payment of royalty should be benchmarked as a part of activity of the assessee, and not as a separate transaction, the reason being that the same is intrinsically linked to the manufacturing activities. TPO rejected CPM applied by the assessee. However, from the material available on record, we do not find any merit in the said claim of the assessee that the transactions pertaining to payment of royalty to AE were intrinsically linked to the manufacturing activities, so as to term the same to be separate transactions. After going through the material on record, we find the royalty transactions are integrated simply because the transactions pertaining to manufacturing business collectively drive its business operations and benefit its business as a whole. Assessee could not establish that same could be evaluated on a combined or aggregate basis. Having regard to the material available on record, it can safely be said that said transaction of payment of royalty is a separate class of transaction. Comparable Agreements - Whether same could actually be termed as such? - The assessee had applied TNMM to benchmark its international transactions of import of raw materials, sub-assemblies and components, payment of technical assistance fees, payment of royalty, payment of software and purchase of fixed assets. All these were categorized under one head Manufacturing of automotive components . Therein, during transfer price proceedings, the assessee was unable to substantiate the need for payment of technical assistance fees to its foreign AE. TPO had also observed that neither any cost benefit analysis nor any benchmarking exercise was undertaken at the time of entering into the agreement. Therein, as regards payment of royalty, TPO had accepted TNMM in respect of payment of royalty as well, but disputed its application for payment of technical assistance and rather CUP method was sought to be applied. Hon ble High Court held that TNMM had to be applied in respect of the technical fee payment too, TPO having accepted TNMM for other international transactions. Additional Evidence - Whether deserves to be produced here? - Nothing has been brought to our notice as to why said additional evidence was not produced before the authorities below. It is not case of the appellant that the authorities below decided the case without giving sufficient opportunity to the assessee to adduce evidence. No reason or substantial cause to allow the appellant to bring on record said three royalty agreements. Accordingly, prayer of the appellant in this regard is rejected. We do not find any merit in the contentions raised on behalf of the appellant as regards assessment relating to payments of royalty.

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• 2025 (4) TMI 386
  Disallowance of Interest on Bonds Issued During Amalgamation - HELD THAT:- As noted that in previous assessment years the assessee s similar claims for interest on bonds issued during amalgamation were disallowed by the AO. These disallowances were subsequently upheld by the CIT(A) and the co-ordinate bench, thereby establishing a consistent judicial stance on this matter. In the assessment years under consideration, the CIT(A) has adhered to the same position, disallowing the claim for interest on bonds as not allowable under the provisions of the Act. We observe that there has been no material change in the facts, or any new legal argument presented that would warrant a departure from this established position. In light of the principle of judicial consistency and considering the treatment of similar claims in prior years, we find no reason to take a different view. We, therefore, uphold the disallowances as made by the AO and confirmed by the CIT(A). Disallowance u/s 43B(b) - Employer s Contribution to PF - assessee failed to make the contributions within the stipulated time frames - HELD THAT:- Following the principle of judicial consistency, in the present case the issue should be set aside to the AO for verification to determine whether the contributions were paid on or before the due date for filing the return of income. If the payments were made within the allowable time frame as per Section 43B(b), then the disallowance should be allowed accordingly. Disallowance u/s 43B on account of employees contribution of PF - The decision in case of CIT -II Vs. Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] is against the assessee on this issue and the AR has conceded the same before us. Hence, the ground of the assessee is dismissed. Disallowance of PF Damages u/s 14B of the PF Act - HELD THAT:- It is an established position, based on the decision in the case of Swadeshi Cotton Mills Co. Ltd. [ 1997 (5) TMI 5 - SUPREME COURT] that where a composite levy includes both compensatory and penal elements, the compensatory portion can be allowed as a deductible business expenditure under Section 37(1). In the assessee s own case for A.Y. 2001-02 [ 2022 (5) TMI 1673 - ITAT AHMEDABAD] the Co- ordinate Bench had upheld the CIT(A) s decision to allow 40% of the damages u/s 14B of the Act as compensatory while treating the balance 60% as penal in nature and disallowing the same. Accordingly, 40% of the damages of are allowed as compensatory and deductible u/s 37(1) of the Act, while the balance 60% is disallowed as penal in nature. AO is directed to verify the computation and ensure that the disallowance is limited to 60% of the damages. The appeal on this ground is partly allowed. Disallowance of Salary and Wages of Packart Press Unit - AO and the CIT(A) disallowed on the grounds that the unit was closed and not operational - HELD THAT:- We noted the Co-ordinate Bench s decision in earlier years which did not conclusively establish the allowability of the expenses but only remanded the matter for further verification. However, it was observed by the co- ordinate bench that the Packart Press Unit was not a distinct line of business but functioned as part of the assessee s overall operations, supporting other units. It was also observed that the allowability of salary and wage expenses depended on whether the liability had accrued during the relevant year based on contractual obligations and whether it was substantiated by evidence. Considering the identical facts and the Co-ordinate Bench s decisions in earlier years, the issue is remanded back to the AO for verification of the facts whether the liability for salaries, wages, and related expenses accrued during the relevant year and whether the liability is supported by contractual obligations and substantiated by adequate evidence. Transfer of Marketing/Distribution Rights - addition made by the AO on account of additional consideration received for the transfer of marketing and distribution rights, which the AO and CIT(A) have treated as revenue income - HELD THAT:- We find that the Co-ordinate Bench in the assessee s own case for A. Y. 2001-02 [ 2022 (5) TMI 1673 - ITAT AHMEDABAD] has adjudicated the identical issue and upheld the treatment of these receipts as taxable revenue income. The findings of the Co-ordinate Bench are squarely applicable to the present case, and the learned AR has also conceded the same. Other and Miscellaneous Expenses - disallowance of expenses include general administrative costs, such as vehicle, telephone, business promotion, conveyance, and other minor expenses - AO disallowed a portion of the expenses claimed under the Profit and Loss account on the grounds that they were either non-business in nature or lacked sufficient evidence to establish that they were incurred wholly and exclusively for business purposes - HELD THAT:- We note that the issue of disallowance of telephone and vehicle expenses, as well as miscellaneous expenses, has been adjudicated in the assessee s favour by the Co-ordinate Bench in [ 2019 (1) TMI 2065 - ITAT AHMEDABAD] wherein as find AO adopted a global approach in the matter and brought about the instances where the assessee was unable to substantiate its claim of the relevant expenditure being incurred only and exclusively for business purposes. No presumption it is trite, can hold, and it is only on a determination of the discrepancies in the assessee s claim can be proceed to estimate the same by applying a percentage that he considers justified, also delineating the reason for the same, so that the appellate authority would while adjudicating on quantum, i.e., where required to do so, be aware of the same, and consider it on merits. Prior Period Expenses - expenses claimed by the assessee that pertain to earlier years but were accounted for in the current year - CIT(A) deleted the disallowance made by the AO, holding that the liability crystallized during the year due to the resolution of disputes with parties and the receipt of bills/ debit notes during the current financial year - HELD THAT:- AO failed to substantiate why the liability for these expenses did not crystallize during the year under appeal. Further, the AO did not identify any year to which the liability pertained, nor did the AO dispute the factual assertion that the liability arose out of the settlement of disputes during the current year. CIT(A) has rightly relied on the principles laid down in the case of Saurashtra Cement Chemical Industries [ 1994 (10) TMI 30 - GUJARAT HIGH COURT] and earlier appellate orders to delete the disallowance. The DR failed to point out any distinguishing facts or legal arguments to differentiate the present case from the co-ordinate bench s decisions in earlier years. The principle of consistency, therefore, squarely applies. We uphold the order of the CIT(A) in deleting the disallowance of prior period expenses. Foreign Travel Expenses - Expenses undertaken by directors and executives, which the assessee claims were for business purposes, such as attending conferences, meeting clients, or exploring new business opportunities - HELD THAT:- We find that the AO s disallowance of 50% of the expenses was ad hoc and arbitrary, made without bringing any material on record to justify the presumption of non-business use. The CIT(A) erred in upholding the disallowance by relying solely on the lack of further evidence from the assessee, despite there being sufficient documentation supporting the business purpose of the travel. Disallowance of Other Penalties (Contractual Obligation) - HELD THAT:- It is observed that the CIT(A) for both years noted that the assessee had suo-moto added back these amounts while filing the return of income. However, there is insufficient evidence on record to establish whether these amounts are compensatory or penal in nature. The determination of the nature of these amounts is critical for deciding their allowability. The matters are remanded back to the AO with the direction to verify the exact nature of the amounts claimed as liquidated damages and sales tax-related damages, based on supporting documentary evidence, allow the amounts if they are found to be compensatory and incurred for business purposes, aligning with Section 37(1) and disallow the amounts if they are found to be penal in nature, arising from statutory infractions or non- compliance with laws. Disallowance u/s 14A - AO asserted that earning exempt income involves incidental expenses like administrative and management costs - HELD THAT:- As it is evident that the investments in SPPL were made in earlier years as a strategic decision, not primarily for earning dividend income. No additional expenditure was incurred during the year under appeal for managing these investments or earning the dividend income. The disallowance sustained by the CIT(A) is based on arbitrary assumptions without any factual support. Accordingly, the disallowance under Section 14A sustained by the CIT(A) is deleted in its entirety. Disallowance of Bad Debts - assessee has also raised an alternate claim for treating the write-off as a business loss u/s 28 - HELD THAT:- Mumbai bench of the tribunal in Jackie Shroff [ 2019 (1) TMI 400 - ITAT MUMBAI] held that irrecoverable advances made for business expediency may be allowable under Section 28 as business loss. The CIT(A) s conclusion that the conditions under Section 36(1)(vii) of the Act were not met is factually and legally incorrect. The details and evidence provided by the assessee were not given due consideration, despite being placed on record. The rejection of the alternate claim under Section 28 on grounds of lack of evidence is also unsustainable, as the nature of the transactions clearly demonstrates their nexus to the business. Assessee s ground of appeal relating to the disallowance as bad debts under Section 36(1)(vii) of the Act to the extent applicable is allowed and in case of remaining amount the alternate claim u/s 28 is allowed. The AO is directed to allow the total deduction. The appeal of the assessee is allowed in toto. Disallowance of bad debt - addition made on insufficient evidence and non-fulfilment of conditions u/s 36(1)(vii) for bad debt deduction - HELD THAT:- We find that the assessee has fulfilled the conditions laid down under Section 36(1)(vii) r.w.s. 36(2) as the amounts written off are reflected as irrecoverable in the books of accounts and pertain to business transactions. The necessity to prove that the debts became bad no longer applies, as clarified in T.R.F. Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] Thus, we conclude that the disallowance is unwarranted. The assessee s claim u/s 36(1)(vii) for the bad debts written off is allowed. Write Off of Bad Debts - HELD THAT:- CIT(A) has observed that the assessee furnished complete details regarding the bad debts, including invoice numbers, party names, and other relevant details, before the AO during the assessment proceedings. CIT(A) further noted that the assessee had complied with the requirement of writing off the bad debts in its books of account. Additionally, there is no evidence to suggest that the debts written off were not considered in the computation of the assessee s total income in earlier years. Revenue s contention that the assessee failed to establish the fulfilment of conditions u/s 36(1)(vii) is devoid of merit, as the CIT(A) has categorically addressed this issue by relying on the submissions and supporting evidence placed on record. CIT(A) s decision is, therefore, in consonance with the principles laid down in T.R.F. Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] and we find no infirmity in the same. Disallowance of Sundry Balances written off - HELD THAT:- Amount relating to sales of goods is allowable as a business loss u/s 28, as it pertains to irrecoverable amounts taxed in earlier years. The balance amount representing irrecoverable deposits and advances made during the course of business, is also allowable as a business loss u/s 28, as it is incidental to the assessee s business operations. In view of the above, we direct the AO to allow the entire claim as a business loss under Section 28 of the Act. The appeal filed by the assessee is allowed. Write-off of Loan Liabilities as Taxable under Section 28(iv) - HELD THAT:- As it is evident that the loan waiver in the present case pertains to a capital liability and is not taxable under either Section 28(iv) or Section 41(1) of the Act. CIT(A) has rightly deleted the addition made by the AO. Disallowance of Repair and Maintenance - Building - Expenses claimed by the assessee pertain to waterproofing, strengthening of beams and columns, and final waterproofing work were incurred to maintain the rented premises in usable condition, with no new asset or structural improvement being created. The CIT(A) s deletion of disallowance is upheld as these expenses qualify as current repairs under Section 30 of the Act, necessary for the upkeep of rented premises. The AO failed to demonstrate how these repairs resulted in an enduring benefit or capital asset. Repair and maintenance claim relate to partition work. These partitions were installed in rented premises to make the space operationally suitable for business needs. The expenditure does not result in the creation of any capital asset owned by the assessee, as the premises were rented. The expenses are routine and necessary for business use, aligning with the decision of HEDE Consultancy (P.) Ltd. [ 2002 (6) TMI 19 - BOMBAY HIGH COURT] where similar repairs to rented premises were allowed as revenue expenditure. Partition work carried out in the manufacturing facilities to improve operational efficiency and protect the quality of production - These expenses do not result in a new asset or structural improvement but are aimed at maintaining existing facilities. The AO failed to demonstrate how these expenses provide an enduring benefit. Relying on the decision of HEDE Consultancy (P.) Ltd. [ 2002 (6) TMI 19 - BOMBAY HIGH COURT] and considering the CIT(A) s observations, the expenses qualify as current repairs and are allowable u/s 30. Disallowance of Repair and Maintenance - Plant Machinery - HELD THAT:- In case of CIT v. TVS Motors Ltd. [ 2019 (7) TMI 750 - MADRAS HIGH COURT] decided that expenditure is considered as current repairs if its object is not to bring a new asset into existence or derive a new advantage. The repair work in this case aligns with this principle, as it was undertaken to maintain operational efficiency rather than create a new asset. AO s contention that these expenses are capital in nature is without merit, as no new asset was created, nor was the nature or capacity of the existing assets altered. The repairs were necessitated by business exigencies and statutory requirements and qualify as revenue expenditure u/s 31 of the Act. The CIT(A) s decision to uphold the AO s disallowance is set aside. Thus, this ground of assessee is allowed. Disallowance of 5% Selling Expenses - CIT(A) deleted the ad hoc disallowances, observing that the AO failed to identify any specific portion of the selling expenses as disallowable - We also find that the decision of the co-ordinate bench in the assessee s own case for A.Y. 2001-02 applies squarely to the present appeals. As held in that case, selling expenses incurred wholly and exclusively for the purposes of business are allowable under Section 37(1). We find no infirmity in the CIT(A) s order. These grounds of revenue are dismissed. MAT adjustment while arriving at book profit under section 115JB - Provisions relating to leave encashment and gratuity - HELD THAT:- The provisions for gratuity and leave encashment are recognized liabilities, determined scientifically for services rendered by employees during the relevant period. In the landmark judgment in case of Bharat Earth Movers [ 2000 (8) TMI 4 - SUPREME COURT] held that a liability arising from an obligation that has already accrued, though the payment may be deferred, is not a contingent liability. Such liabilities, if based on a scientific method like actuarial valuation, qualify as ascertained liabilities and are deductible. Therefore, the CIT(A) has rightfully deleted the addition relating to these provisions. Regarding the provision for doubtful debt s - provisions for doubtful debts, if simultaneously reduced from the asset side of the balance sheet, represent actual write-offs and cannot be treated as unascertained liabilities and therefore do not attract Explanation 1(c) to Section 115JB of the Act . The revenue s arguments fail to establish how these provisions could be classified as unascertained liabilities. Respectfully following the above judgments and in the absence of any material evidence presented by the revenue to contradict these positions, we direct the AO to exclude these provisions from the computation of book profits under Section 115JB of the Act. Thus, the ground of assessee is allowed, and ground of revenue is dismissed.

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• 2025 (4) TMI 385
  Levy of penalty u/s 43 of the Black Money Act - non-reporting of assets/bank account/investment in schedule FA of the income tax return filed for the respective assessment years by the assessee - HELD THAT:- Admittedly, assessee did not disclose his foreign asset in particular Schedule, i.e., Schedule FA though the same was duly disclosed in the preceding year. Further, assessee had offered perquisite value of the foreign asset, i.e., ESOPs in his return of income which was subjected to tax by way of TDS. In the course of impugned proceedings, assessee had offered all the details and explanations corroborated with documentary evidences in respect of foreign asset. The purpose of reporting requirement of foreign assets/income in Schedule FA of the Income tax return is for and monitoring the investments held abroad by the residents of India. Preamble to the Act describes its objective to deal with problem of black money, i.e., undisclosed foreign income and assets. The said Act must not be invoked for punishing a technical /venial /bonafide breach of any statutory obligation and therefore bonafide actions of the tax payers must be excluded from the application of provisions of this stringent legislation. In this regard, we draw our force from the decision of Hindustan Steel Ltd. [ 1969 (8) TMI 31 - SUPREME COURT] Admittedly it is not a case where foreign asset remained undisclosed in entirety and that there is any malafide intention or ulterior motive on the part of the assessee for not disclosing the same. Also, taking into account, detailed discussions on long line of judicial precedents referred by the ld. Counsel, we delete the penalty in the appeal under consideration before us. Appeal of the assesse is allowed.

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• 2025 (4) TMI 384
  Reopening of assessment u/s 147 - unexplained cash credit u/s 68 - HELD THAT:- The creditor J is also an active company on the portal of Ministry of Corporate Affairs and regularly filing income-tax returns. In the income-tax return of AY 2014-15 filed to Income-tax Department, J has claimed credit of TDS as high as Rs. 100.68 lacs. All these details were before lower-authorities but they have not been controverted except giving a general remark that J is a shell company operated by Shri Sharad Darak. Assessee has discharged primary onus cast upon it to satisfy the requirement of section 68. The revenue authorities are unable to negate the documentary evidences relating to J filed by assessee. Thus, the assessee has filed sufficient documents to prove all three ingredients of section 68 i.e. the identity and creditworthiness of J and genuineness of loan transaction. ITAT, Indore has already deleted additions made by AO based on statements of Shri Sharad Dark, in the hands of various other assessees in respect of loans taken from very same creditor J . Two such decisions are M/s Global Realcon Pvt. Ltd. [ 2022 (4) TMI 1652 - ITAT INDORE] and Krishna Devcon Ltd. [ 2023 (8) TMI 1631 - ITAT INDORE] The assessee has already repaid loan on 29.04.2015 immediately after close of financial year 2014-15. Therefore, the assessee deserves benefit of decision in the case of Ayachi Chandrashekhar Narsangji [ 2013 (12) TMI 372 - GUJARAT HIGH COURT ] We do not find any merit in the addition made by AO. Accordingly, we delete the addition made/upheld by lower-authorities and Ground is thus allowed.

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• 2025 (4) TMI 353
  Review application - Petitioner contended that it was not intimated about the initiation of reassessment proceedings or given an opportunity to present its case - Errors apparent on the face of the record, primarily on the grounds that the order incorrectly recorded that the Revenue was represented during the hearing, whereas no such representation was made - HELD THAT:- Belated communication effectively deprived the petitioner of its right to submit a response, thereby constituting a violation to the principle of audi alteram partem. Additionally, the order states that learned advocates appearing for the parties were heard, which is factually incorrect, as the Advocate-on-Record for the petitioner was not afforded an opportunity to advance arguments. These material discrepancies constitute manifest errors on the face of the record, justifying the invocation of this Court s review jurisdiction. Rejection of the writ petition on the premise that an alternative statutory remedy was available - Existence of an appellate or alternate remedy does not operate as an absolute bar to the exercise of writ jurisdiction, particularly where there has been a breach of principles of natural justice. Hon ble Supreme Court, as well as various High Courts, have consistently held that where an order is passed in derogation of fundamental procedural safeguards, the writ court is vested with the authority to intervene under Article 226 of the Constitution of India. It is pertinent to note that the petitioner had sought an adjournment on legitimate grounds, as its counsel was engaged in another matter before a different bench of this Hon ble Court. The refusal to grant such adjournment resulted in manifest prejudice against the petitioner, effectively depriving it of a reasonable opportunity to defend its case. This Court is of the considered view that in cases where substantive rights of a party are impacted due to serious procedural irregularities, the imperative of affording a fair opportunity to be heard must be scrupulously observed. Review petition is maintainable. It is evident that the impugned order suffers from apparent errors, which, if left uncorrected, would result in grave injustice. The refusal to grant the petitioner a fair opportunity to present its case constitutes a procedural irregularity warranting review. The entire concept of writ jurisdiction is founded on equity and fairness, and therefore, it is the duty of the Court to ensure that no miscarriage of justice occurs due to a procedural lapse. Accordingly, this Court finds merit in the review application. Consequently, the order is recalled and the writ petition being is restored for fresh adjudication.

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• Customs

• 2025 (4) TMI 383
  Validity of Order in Original imposing penalties upon the Petitioner under Sections 112 (b) and 114AA of the Customs Act - it was held by High Court that We decline to entertain this Writ Petition but leave it open to the Petitioner to pursue the remedy of appeal by complying with the mandatory conditions prescribed under the law. - HELD THAT:- It is not inclined to interfere with the impugned judgment; hence, the present special leave petition is dismissed.

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• 2025 (4) TMI 382
  Challenge to SCN on the ground that the same are without jurisdiction as no action was taken by the respondents after issuance of the show cause notices and show cause notices therefore are deemed to have lapsed - HELD THAT:- This Court in case of M/s. SJS International [ 2021 (12) TMI 1339 - GUJARAT HIGH COURT] in similar facts after considering similar contentions raised by the petitioners and the respondents in the said case, examined Rule 16 of the Drawback Rules and held that It is quite clear from Rule 16 of the Drawback Rules that what all it provides for is the recovery of excess drawback paid erroneously, but choses not to prescribe the time limit. The question which has come up for consideration as to whether in absence of any period of limitation provided under Rule 16 of the Drawback Rules, any reasonable time period could be read into the said Rule. It also provides for statutory mechanism of recovery under Section 142 of the Act. The decision in case of M/s. SJS International of this Court in similar facts would be squarely applicable to the facts of the present case also. However, in the facts of the present case, there is one additional factor that impugned show cause notices were kept in call book which was never informed to the petitioner and the show cause notices were not adjudicated for seven years and hence even if the show cause notices are issued within three years from date of shipping bill, the same would not be saved in view of inordinate delay for not adjudicating the same. Conclusion - The show cause notices quashed, held without jurisdiction due to delay, breach of natural justice, and time-barred under the reasonable limitation period applied to Rule 16. Petition allowed.

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• 2025 (4) TMI 381
  Classification of Acadian Seaplants Soluble Seaweed Extracts Powder - to be classified under Customs Tariff Heading (CTH) 1212 by the Respondent, or under CTH 3101 as argued by the Petitioner? - non-furnishing of documents relied upon in the SCN - violation of principles of natural justice - HELD THAT:- One of the documents relied upon to justify the issuance of the Show Cause Notice was the Analytic Report 24/2022-23 dated 15th September 2022 issued by the Additional Director General, DGARM, NCTC, Mumbai on the issue of misclassification of Seaweed under CTH 3101 0010 and 3101 0099. Admittedly, this Analytic Report has not been provided to the Petitioner before the passing of the Impugned Order and which forms the basis for issuing the Show Cause Notice. On this ground alone, it is justified in setting aside the Impugned Order. The very same goods of the Petitioner have been classified under CTH 3101, not only by the Deputy Commissioner (vide his order dated 1st July 2020) but also by the Commissioner of Customs (Appeals) vide his order dated 18th September 2015. These orders have been duly accepted by the Department and have not been challenged. Though these orders have been referred to whilst recording the submissions of the Petitioner, there is absolutely no finding and/or reasoning in relation to these orders and why the present Commissioner is taking a different view. The Impugned Order is completely silent on this aspect. This is yet another reason why the Impugned Order requires interference. The Testing Authority has in fact answered two queries, which are quite telling. One query raised by the Department was whether the goods of the Petitioner were an Organic Fertilizer, and which was answered in the affirmative. The other query raised was whether the SEAWEED EXTRACT imported by the Petitioner are Seaweed or Seaweed extract and whether it can be used as Vegetable Fertilizer or otherwise. The answer to this query was that it is a Seaweed Extract, and it can be used as Vegetable Fertilizer. This Test Report also finds no mention in the impugned order which is another reason why we are inclined to interfere with the Impugned Order. Conclusion - A test report confirmed the product as an organic fertilizer and seaweed extract usable as a vegetable fertilizer, supporting classification under CTH 3101. Matter remanded back to the Adjudicating Authority for giving a De Novo hearing to the Petitioner [after supplying the documents referred to in the SCN] and thereafter pass a reasoned order - petition dispsoed off by way of remand.

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• Insolvency & Bankruptcy

• 2025 (4) TMI 380
  Liquidation of Corporate Debtor - applicability and interpretation of Regulation 32 and 32A of the Insolvency and Bankruptcy Board of India (IBBI) (Liquidation Process) Regulations, 2016 - HELD THAT:- The present is a case where the CIRP against the CD commenced on an Application filed under Section 10 by the CD itself. The RP continued the CIRP by inviting Resolution Plans. In response to the invitation of EoI, only three entities have submitted the EoIs, out of which one was M/s. Busy Bee in Consortium. Only two Resolution Plans were received by the RP and both Resolution Plans, which were received, were not found compliant. It is clear that there was no compliant Resolution Plan received in the CIRP. The CIRP has run its full course, giving enough opportunity to the RP to revive the CD and it was only on 23.07.2024, after more than 14 months of initiation of CIRP, a Resolution was passed by the CoC to liquidate the CD. The present is a case where no Resolution Plan was considered or approved and a decision was taken by the CoC with 100% vote share to liquidate the CD. The Adjudicating Authority in the impugned order has referred to the judgment of this Tribunal in Sreedhar Tripathy vs. Gujarat State Financial Corporation and Ors. [ 2022 (10) TMI 1143 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ], where this Tribunal considering scope, ambit and power of CoC has held that We are not convinced with the submission of learned counsel for the Appellant that the CoC s decision is an arbitrary decision. CoC is empowered to take decision under the statutory scheme and when in the present case the decision of the CoC for liquidation has been approved by the Adjudicating Authority, we see not good ground to interfere at the instance of the Appellant. With respect to going concern sale, the CoC was of the view that the Liquidator may sell assets on a standalone basis; assets in a slump sale; a set of assets collectively; and the assets in parcels and not wait for selling the CD or its business as a whole. The CoC has further observed However, in the event a suo-moto proposal is received from any person by the Liquidator for taking the company or its business as a whole the same can be explored in discussions with the Stakeholders Consultation Committee - the CoC has adverted to the provisions of 39C and has taken a decision as noted above. Regarding the submission of the Appellant that CoC ought to have taken a decision for sale as a going concern, the CoC was well aware of all details of the assets and facts and the decision taken by the CoC is based on the commercial wisdom of the CoC, which needs no interference in exercise of appellate jurisdiction. The Hon ble Supreme Court in Arun Kumar Jagatramka vs. Jindal Steel and Power Ltd. and Ors. [ 2021 (3) TMI 611 - SUPREME COURT ] has noticed the amendment made in Section 230 of the Companies Act, which provides for compromise and arrangement, which can be proposed by the Liquidator appointed under the IBC. Regulation 2B in the Liquidation Process Regulation added subsequently provided for submission of scheme of compromise and arrangement to the Liquidator. The Hon ble Supreme Court in the above case has also noticed the third eventuality, when a revival is contemplated through the modalities provided in Section 230 of the Companies Act. There can be no quarrel to the proposition laid down by the Hon ble Supreme Court in the above case, which provides that revival of the CD can also be done by mode of compromise and arrangement. Conclusion - The CoC in the Legislative Scheme has been empowered to take decision to liquidate the Corporate Debtor, any time after its constitution and before confirmation of the resolution plan. There are no error in the order of the Adjudicating Authority - appeal dismissed.

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• 2025 (4) TMI 379
  Admission of Section 7 petition - debt and default above the threshold level - Section 7 application was maintainable for the original amount of debt prior to the GSA or not. Whether there was a debt and default by the Corporate Debtor qua ARC which had arisen on account of the breach of the GSA? - HELD THAT:- The ARC has in clear and unambiguous terms stated that NDCs have been issued for those companies whose settlement amount has been paid while the amounts payable by Uniworth Textiles Ltd of Rs. 21.40 crore as per terms of GSA had still not been paid. The letter also clearly stated that if payments were not made by 23.11.2018, ARC would proceed with legal action for recovery of the outstanding dues against the Corporate Debtor. The Corporate Debtor had only adverted attention to the fact that the ARC had already given NDC in respect of Indoworth India Ltd. and Uniworth International Ltd. besides requesting for issue of NDC for Uniworth Ltd. for which substantial payment had been made. However, there is no objection made whatsoever to the outstanding settlement amount claimed by the ARC as payable in respect of the Corporate Debtor-Uniworth Textiles and the resultant default. In such a situation where the Corporate Debtor did not make the payments as contemplated in the GSA allowing them to take a stance that the ARC cannot claim revocation of GSA is an illogical and absurd argument - The tone and tenor of the response does not indicate even a muted objection to the revocation of the GSA thus betraying undertone of implicit acceptance. In these circumstances, it is inclined to agree with the Adjudicating Authority the Corporate Debtor had acknowledged that the settlement was revoked by the ARC. Perusal of the Section 7 application makes it clear that it is not based on the default of the GSA but founded on the original financial debt which was extended by the ICICI and IFCI to the Corporate Debtor which had been subsequently assigned to the ARC. The Respondent cannot be held to be precluded in any manner from being entitled to initiate a Section 7 application against the Corporate Debtor in the facts of the present case. The nature of debt which has been claimed under Section 7 application is a financial debt. Simply because an GSA was entered into between the parties which GSA suffered breach, the nature of debt shall not get changed - The right of the financial creditor would not be wiped out nor the nature and character of the financial debt would change by the mere fact of entering into the GSA and any contrary interpretation would provide undue advantage to the Corporate Debtor and frustrate the objective of IBC. Whether there was debt which was due and payable and default in the payment thereof? - HELD THAT:- It is an admitted fact that the GSA entered into both parties provided for a settlement amount of Rs 75 Cr. of which the amount paid by the Corporate Debtor was only Rs 51.10 Cr. Only part payment had been made towards satisfaction of the full and final claim of the financial creditor in terms of the settlement agreement. The ARC in their letter of 22.11.2018 as at para 13 supra had clearly pointed out that the amounts payable by the Corporate Debtor was Rs. 21.40 cr. There has been no specific denial that this amount was not due nor has any proof been submitted of payments to the tune of Rs. 21.40 cr. having been made - the DRT decree clearly establishes debt and default. Even though the order of DRT has been appealed against, the order of the DRT has not been stayed by the DRAT. This does not in any way obliterate the fact that debt qua the ARC subsists. More significantly, when the DRT decree passed on 04.12.2018 has been noticed also by the highest court of the land in Civil Appeal No.6175/2023, it does not lie in the mouth of the Appellant to state that this decree has not been referred to by the Adjudicating Authority in coming to the decision of debt and default. Under the ambit of Section 7 of the IBC, the Adjudicating Authority is to only determine whether a default has occurred and whether the debt, which even if disputed, remains due and unpaid. The moment the Adjudicating Authority is satisfied that a default has occurred, the Section 7 application is to be admitted unless it is incomplete. In the present matter, the Adjudicating Authority has rightly concluded that it was satisfied that a debt had arisen qua ARC; that a default on the part of the Financial Creditor-Appellant has occurred and the default is above the threshold limit of Rs. 1 crore. Since debt and default is clearly established, there is no infirmity in the impugned order admitting the Section 7 application. Conclusion - The debt and default are established, and the application is maintainable. There are no good reasons to interfere with the impugned order - appeal dismissed.

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• 2025 (4) TMI 378
  Liquidation Estate of the Corporate Debtor or not - Amount deposited with Punjab National Bank (PNB) by the guarantors - waterfall mechanism - HELD THAT:- From the perusal of the balance sheet of the Corporate Debtor and other materials on record, we find that certain payments have been received by the company in liquidation and the same has been paid by Respondent No. 2 and 3 to Respondent No. 1. It is also found that the Respondent No. 1 filed its claim for an amount of Rs. 18,17,55,581/- which has been admitted by the Liquidator. Also in terms of Section 52(1) of Code vide letter dated 17.12.2018 Respondent No.1 PNB has already relinquished its security interest to the liquidation estate. The amount has been realized from the assets under Liquidation estate of the CD in Liquidation and distributed in preference to one of the creditors Respondent No.1 PNB without intimation to the Liquidator, which should have been distributed by the Liquidator as per Section 53 of the IBC,2016 i.e waterfall mechanism. Further Respondent No.1 PNB has not placed any evidence or document to demonstrate that the amount which has been reduced in the Balance sheet of the Corporate Debtor is not an asset of the Corporate Debtor and without considering that no document was filed by the Respondent No. 1. Section 36 (1) of the Code provides that for the purposes of liquidation, the liquidator shall form an estate of the assets mentioned in sub-section (3) which will be called the liquidation estate in relation to the Corporate Debtor. Further, Section 36 (2) provides that the Liquidator shall hold the liquidation estate as a fiduciary for the benefit of all the creditors. Any amount reflected in the balance sheet of the Corporate Debtor is admittedly an asset of the Corporate Debtor and, therefore, the Adjudicating Authority ought to have considered the balance sheet of the Corporate Debtor which reflects a reduction of short-term borrowing during the Liquidation process - Respondent No. 1 has no right to recover any amount being an asset of the Company in liquidation during the liquidation process as Respondent No.1 PNB will receive the proceeds from Liquidation Estate in the manner provided under Section 53 of the Code. Respondent No.1 PNB had already filed its claim for an amount of Rs. 18,17,55,581/-, which has been admitted by the Liquidator and in terms of Section 52 (1) (a) of the Code has vide its letter dated 17.12.2018 already relinquished its security interest to the Liquidation Estate and have agreed to receive the proceeds from the sale of assets by the Liquidator in the manner specified and, therefore, the Respondent No.1 PNB cannot recover any amount being part of the Liquidation Estate. Respondent No. 1-PNB has not been able to justify that the dues to the tune of INR 4,50,44,500/-, so satisfied are not made out of assets of the Corporate Debtor. It can be, safely concluded that it is none other than Trade Receivables and Trade Payments of the Corporate Debtor which has been used to pay Rs.4,50,44,500/-. Conclusion - The amount deposited by the guarantors is part of the Liquidation Estate and should be refunded to the Liquidation account of the Corporate Debtor. Apeal allowed.

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• 2025 (4) TMI 377
  Admission of Section 95 application filed by the Indian Bank - existence of relevant record or evidence of default or not - time limitation - HELD THAT:- The law is well settled by the Hon ble Supreme Court in Dilip B. Jiwrajka Vs. Union of India Ors. [ 2024 (1) TMI 33 - SUPREME COURT] that adjudicatory functions of the adjudicating Authority commences under Section 100 after the submission of the Report. It was further held that adjudicating authority has to conduct an independent assessment not solely relying on the RP s Report to decide the fate of application. In the present case, adjudicating authority has not carried any assessment which is clear from the order of the adjudicating authority. The adjudicating authority has adverted to the issue of limitation in paragraph 14 and has observed in paragraph 15, that when default is committed by principal borrower surety are jointly and severally liable to creditor. In the present case, it was admitted fact that under SARFAESI bank has already realised Rs.5,92,92,750/- from the sale of the assets and by email on behalf of the personal guarantor, it was communicated that one property which is in possession of the bank is sufficient to liquidate the entire debt. The above relevant issue which was raised on behalf of the personal guarantors was neither adverted by the RP in its report nor adverted by the adjudicating authority in the impugned order. There is a difference between the scheme and under Section 7 of the IBC and Section 100. In view of the law laid down by the Hon ble Supreme Court in Dilip B. Jiwrajka, adjudicating authority has to apply its mind and not to mechanically follow the Report of the IRP. Observation of the Hon ble Supreme Court are in essence, the adjudicating authority conducts an independent assessment, not solely relying on the RP s report to decide the fate of application under Section 94 95 of the IBC . Present is a case where adjudicating authority has not adverted to any adjudicatory issue, has not adjudicated on any of the issues which was raised before the RP and as reflected in the Report of the RP itself. It was submitted on behalf of the personal guarantor that amount of Rs.6 Crore has already been realised, and the assets of the corporate debtor are already with the bank amounting to Rs.1.66 Crore which are sufficient to meet out the bank dues. These factors are required to be adverted to by the adjudicating authority before admitting the application. A fresh opportunity be given to the personal guarantors to file an objection to the Report within 30 days from today and the adjudicating authority after considering all relevant material, including the Report and the objection, pass a fresh order under Section 100. Conclusion - The adjudicating authority s order admitting the Section 95 application is unsustainable due to its failure to independently assess the evidence and facts, particularly regarding the realization of assets under SARFAESI and the previous Section 7 application. The personal guarantors be given an opportunity to file objections to the RP s report, and the adjudicating authority must consider all relevant materials before passing a fresh order under Section 100. Applications under Section 95(1) are revived before the adjudicating authority for afresh consideration in accordance with law - appeal allowed.

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• 2025 (4) TMI 376
  Oppression and mismanagement - Waiver of eligibility criteria under Section 244(1)(b) of the Companies Act, 2013 - HELD THAT:- The Ld. NCLT has recognised that there are differences between the members of the Respondent Club, which was established with the principal objective to promote and encourage various sports and also carries good reputation, and therefore it is in the public interest that these differences are addressed in right earnest. Further it is nobody s case that these allegations were made earlier in any proceedings and stand decided/concluded. Thus, the requirements prescribed in sub clauses (i), (ii) and (iii) of para 151 of the judgment of Cyrus Investments Pvt. Ltd. Anr. [ 2017 (9) TMI 1500 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] are fulfilled. The only issue left is whether the Ld. NCLT was satisfied about the exceptional circumstances made out to grant waiver or not. The Ld. NCLT has noted the allegations of oppression and mismanagement, and differences between the members, and has noted the public interest involved in the Section 8 company promoting sports - The issue of waiver has been considered and allowed in various judgements. In Brookefiled Technologies Pvt. Ltd., Represented by Director, Mr. Pawan Kumar Jain and Another v. Shylaja Iyer and Others [ 2020 (12) TMI 1176 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] this Tribunal had granted waiver holding that The First Respondent/Petitioner has 9% of the total share capital even after a shareholding was reduced from 45%, by means of Rights Issue which is a subject matter of the main company petition. The Tribunal, has exercised its discretion and opined that a meritorious litigation cannot be thrown at threshold without examining the merits of the case and further observed that the First Respondent/Petitioner had made out a prima facie case to entertain the main company petition for its final adjudication. It is noted that besides the company petition by 4 members, 90 members of the Respondent/Club have raised various issues of mismanagement in their letter to Club Management dated 22.08.2023. The Ld. NCLT has noted the allegations of oppression and mismanagement in the petition before exercising its discretion to allow waiver. A decision on merits of the allegation was not warranted at this stage, as Ld. NCLT will have to consider it while deciding the main petition under Section 241 read with Section 242 of the Companies Act, 2013. Conclusion - In the conspectus of this case, where petition under Section 241 read with Section 242 of Companies Act, 2013 is filed by four members of the Section 8 company alleging acts of oppression and mismanagement, and the issue of mismanagement is also raised by 90 other members in their signed letter to Club Management, and considering the nature of activities of the company involving public interest, and that similar allegations were not considered or decided earlier, there are no reason to interfere in the discretion exercised by Ld. NCLT in allowing waiver under Section 244 of the Companies Act, 2013. Appeal dismissed.

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• PMLA

• 2025 (4) TMI 375
  Seeking grant of regular bail - Money Laundering - involvement in fraudulent sale/purchase of land - predicate offence or not - whether the parameter as fixed under Section 451(i)(ii) of the PML Act 2002 is being fulfilled in order to reach to the conclusion that it is a fit case where regular bail is to be granted or not? - HELD THAT:- It is evident from the prosecution complaint that on 16.04.2024, searches were conducted at the residential premises of the present applicant and from scrutiny of the said documents and diaries revealed cash transactions with respect to several landed properties which are nonsaleable properties. During investigation the accused person Antu Tirkey had admitted his dealings with respect to non-saleable landed properties at Ranchi by which he has acquired huge amount of money. The same is also evident from the cash entries in the diary. Further, the present applicant in his statement dated 22.04.2024 has also admitted the aforesaid dealing and has further stated to have received Rs. 70 to 80 lakhs till date. It has further come in the investigation that in addition to this the present applicant acquired around 42 decimals of land from Mitku Pahan (bhuinhari property) falling under Khata no. 234 Plot no. 1055 for an amount of Rs. 30 lakhs. Out of this he sold around 6 decimals of land of Saddam Hussain for and amount of Rs. 18.5 lakhs and rest of the land is sold to Krishna Munda for an amount of Rs. 55 lakhs - Further as per the prosecution complaint where CDR analysis of mobile phones of the accused has been mentioned, the petitioner was in touch with co-accused Afsar Ali and as per para 9.45 of the supplementary prosecution complaint, the bank account scrutiny reveals that petitioner had transaction with co-accused Md. Saddam Hussain - the involvement of present petitioner in alleged crime, cannot be lightly brushed out. To constitute any property as proceeds of crime, it must be derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence. The explanation clarifies that the proceeds of crime include property, not only derived or obtained from scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. Clause (u) also clarifies that even the value of any such property will also be the proceeds of crime - Further it is settled proposition of law that if a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of crime, in that case, he can be held guilty of committing an offence under Section 3 of the PMLA. Therefore, it is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged must have been shown as the accused in the scheduled offence. Thus, on the basis of the discussion made, the contention of the learned counsel for the petitioner that even if the entire ECIR will be taken into consideration, no offence will be said to be committed so as to attract the ingredients of Sections 3 4 of the P.M.L. Act, 2002, is totally misplaced in the light of accusation as mentioned in prosecution complaint - Further, contention has been raised that a prosecution complaint against the petitioner has already been filed and, thus, investigation is complete and therefore, no purpose would be served in keeping the petitioner in judicial custody - Further, it is settled proposition of law that the filing of charge-sheet is not a circumstance that tilts the scales in favour of the accused for grant of bail and needless to say, filing of the charge-sheet does not in any manner lessen the allegations made by the prosecution. This Court thinks it fit to revisit the scope of section 45 of the PML Act 2002. As discussed in preceding paragraphs that Section 45 of the PMLA Act, 2002 provides twin test. First reason to believe is to be there for the purpose of reaching to the conclusion that there is no prima facie case and second condition is that the accused is not likely to commit any offence while on bail. Principles of parity - HELD THAT:- The Hon ble Apex Court in Tarun Kumar Vs. Assistant Director Directorate of Enforcement [ 2023 (11) TMI 904 - SUPREME COURT ] wherein at paragraph-18, it has been held that parity is not the law and while applying the principle of parity, the Court is required to focus upon the role attached to the accused whose application is under consideration - It has further been held in the paragraph 19 of the said judgment that the principle of parity is to be applied in the matter of bail but equally it has been laid down therein that there cannot be any negative equality, meaning thereby, that if a co-accused person has been granted bail without consideration of the factual aspect or on the ground said to be not proper, then, merely because the co-accused person has been directed to be released on bail, the same will not attract the principle of parity on the principle that Article 14 envisages positive equality and not negative equality. Thus, applying the principle of parity, this Court is of the view as per the judgment rendered by the Hon ble Apex Court rendered in Tarun Kumar that the benefit of parity is to be given if the facts/involvement of the petitioner, is identical to the persons with whom parity is being claimed - This Court, on the basis of the discussion of the involvement of the petitioner, vis- -vis, the other co-accused person, is of the view that the case of the petitioner is quite distinguishable to that of the case of the co- accused/petitioner of B.A no.4892 of 2024, therefore, is of the view that it is not a fit case for applying the issue of parity herein. Conclusion - Having regard to the entirety of the facts and circumstances of the case, this Court is of the view that the petitioner has miserably failed to satisfy this Court that there are reasonable grounds for believing that he is not guilty of the alleged offences. On the contrary, there is sufficient material collected by the respondent-ED to show that he is prima facie guilty of the alleged offences. Since, the petitioner has failed to make out a case to exercise the power to grant bail and the parameters, necessary to be considered for adjudication of bail, this Court does not find any exceptional ground to exercise its discretionary jurisdiction to grant bail. This Court is of the view that it is not a case where the prayer for bail is to be granted, as such, the instant application stands dismissed.

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• Service Tax

• 2025 (4) TMI 374
  Nature of activity - service or manufacture? - embroidery of textile which is a separate decorative process rather than an intermediate textile processing step - exemption under Entry No.30(ii)(a) of the Mega Exemption N/N. 25/2012-ST - HELD THAT:- The activity of embroidery carried on by the appellant has been held to be manufacture even by CBIC vide Letter dated 15th July, 2011; the said letter clarified that embroidery work done on job work basis amounts to manufacture and does not fall within the purview of Business Auxiliary Service. Thus, by relying upon the said letter issued by the Revenue, the Commissioner of CGST, Rohtak on identical facts in the matter of Shee Bankey Bihari Embroidery vide its OIO dated 29th July, 2012 has held that the activity of embroidery amounts to manufacture and is not subject to service tax. In the present case, the SCN was issued entirely based on the amount available in Form 26AS for the financial year 2015-16 and 2017-18 to levy service tax. It has been consistently held by the Tribunal and other Courts that service tax cannot be demanded merely on the basis of Form 26AS without examining and analyzing the activity carried on by the appellant. Further, it has also been held by the Tribunal that the extended period cannot be invoked merely on the basis of difference in Form 26AS and ST-3 Returns. Conclusion - The embroidery is a manufacturing activity exempt from service tax, and the demand based on Form 26AS and extended period invocation are unjustified. The impugned order set aside - Appeal allowed.

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• 2025 (4) TMI 373
  Levy of service tax - franchise services or not - agreement between the respondent and Microsoft constitutes a franchise under Section 65(47) of the Finance Act, 1994 - reverse charge mechanism - HELD THAT:- After perusal of various clauses of the agreement which clearly state that the agreement is non-exclusive between the parties and Microsoft makes software and hardware available to the respondent on a non-exclusive basis. Further it is found that the there is not a single word of franchises/franchisor/franchisee used in the agreement between the respondent and Microsoft and Microsoft has not given any representational rights to the respondent s company and the respondent have only right to sell the goods which does not fall within the ambit of a franchise. In this regard, it is pertinent to refer the decision of the Tribunal in the case of Tata Consultancy Services Ltd [ 2019 (6) TMI 109 - CESTAT MUMBAI] wherein it has been held that In this case the so called Sub Certifying authorities and Sub CA Administrators (Sub CAA), Registering Authorities and RA-Administration appointed by appellants have any authority to issue DSC certificates, representing them to be issued by appellant. Such transfer of right granted to appellant, by the certifying authority in terms of IT Act, 2000, is also not permissible. It is only the Appellants who could have issued the Digital Signature Certificate and this could not have been done by any other person or agency appointed by appellant. Hence mere act of collecting the applications and verification of the same for onward submission to the appellant cannot be termed as grant of representational rights . Further, in terms of the agreement, the purchase price of Microsoft OEM pack was bifurcated into two components i.e. hardware price and software price. The cost of hardware purchase was paid as per the prevailing royalty and price list and was to be paid to the authorized replicators - The agreement between the respondent and Microsoft was on principal to principal basis and the said agreement was executed purely on commercial and as trading transaction and it does not grant any representational right to the respondent so as to fall under the ambit of franchise service. In fact, the relationship between the respondent and Microsoft was that of a buyer and a seller and not of a franchisee and a franchisor. The learned Commissioner has analyzed the terms conditions of the agreement and has rightly come to the conclusion that the agreement between the respondent and Microsoft does not create franchise service. Conclusion - The respondent is not liable for service tax on the payments made to Microsoft under the reverse charge mechanism. There are no infirmity in the impugned order - appeal of Revenue dismissed.

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• 2025 (4) TMI 372
  Rejection of prayer of appellant for interest on delayed sanction of refund - grant of interest from expiry of three months from the date of application till payment of refund in terms of Section 11BB of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - HELD THAT:- The Hon ble Bombay High Court in the appellant s own case [ 2019 (3) TMI 349 - BOMBAY HIGH COURT] has allowed the interest on delayed sanction of refund. Hon ble Punjab Haryana High Court in the case of Om Refoils Ltd [ 2018 (2) TMI 36 - PUNJAB AND HARYANA HIGH COURT] has held that interest is payable immediately after expiry of three months from the date of application. Hon ble Apex Court in the case of Ranbaxy Laboratories Ltd [ 2011 (10) TMI 16 - SUPREME COURT] has held that interest is payable on the amount refunded to the assessee from the expiry of three months from the date of application till the date of payment of the amount of refund sought under Section 11B of the Central Excise Act. Conclusion - The appellant is entitled to get the interest from the expiry of three months from filing the first application seeking refund at the rate as prescribed under the law. Appeal allowed.

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• 2025 (4) TMI 371
  Recovery of service tax with interest and penalty - services provided by the appellant to Indian Railways and IIT Kanpur qualify as original works under the relevant service tax exemption notifications - partail reverse charge mechanism - HELD THAT:- After having examined adjudicating authority has concluded that these pertain to the Original Works. Revenue in their appeal has made a sweeping statement without pointing out to a single order which were in relation to some other activities, which is not in nature of original works in absence of anything specific, there are no merits in the appeal filed by the revenue on this account. Further it is found that impugned order not only drops the demand for this reason only, but in the impugned order has gone ahead to interpret the phrase original work used in the N/N. 25/2012-ST dated 20.06.2012. On the basis of his interpretation of the said phrase, he has concluded that all these work orders would qualify for exemption under that notification. In their appeal revenue has not specified any reason to question the interpretation placed. In absence of any challenge to the interpretation placed in the impugned order to phrase original works the ground taken in the appeal is not sufficient to dislodge the findings recorded. In respect of the services provided to Madhyanchal Vidyut Vitran Nigam Ltd the demand has been confirmed after allowing the benefit of abatement. Appellant do not dispute the leviability of service tax, submit that amount of service tax due has been paid by them by taking abatement as applicable. Also they claim that they are liable to pay only 50% of the service tax due in terms of Notification No 30/2012-ST dated 20.06.2012. The demand in respect of this needs to be worked out and adjusted against the amount already paid. For this limited purpose the matter needs to be remanded back to the Original Authority. The quantum of penalty if any imposable would be determined in case any amount of tax is due. Conclusion - The appellant s appeal is allowed regarding services to Railways and IIT Kanpur, while the matter concerning Madhyanchal Vidyut Vitran Nigam Ltd. is remanded for recalculation. The revenue s appeal is dismissed. Appeal disposed off.

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• 2025 (4) TMI 370
  Liability of appellant the Central Industrial Security Force (CISF) to pay service tax for providing Security Agency Services (SAS) to Bharat Dynamics Ltd. from 18.04.2006 to 31.12.2011 - levy of interest and penalty - HELD THAT:- There is no dispute on the merit of leviability of service tax under the head Security Agency Services, therefore, the leviability of service tax for the period beyond 01.04.2009, as held by the Adjudicating Authority, is correct and there are no infirmity in the said order. Levy of interest thereon in respect of service tax short paid/not paid/late paid - HELD THAT:- The Statutory Provision under Section 75 of the Finance Act is quite clear that for any delayed payment, amount is liable to be levied to service tax or service tax short paid/not paid, interest is payable. Since this is a Statutory Provision under the Act, and the Tribunal being a creation of Statute, it cannot go beyond the provision of the Statute itself. Therefore, the imposition of interest under Section 75 to the extent of demand upheld by Commissioner is correct and we upheld the same. However, this amount needs to be calculated and to be paid by the appellant. Imposition of penalty under Section 78 - HELD THAT:- Admittedly, CISF is Central Armed Police Force under the Ministry of Home Affairs. The charges for invoking the extended period and levy of penalty is contained in Para 8 of the show cause notice from which, there are no substantive and positive evidence which would have required imposition of penalty under Section 78. A mere delay due to interpretational issue cannot be termed as a deliberate attempt with an intent to evade payment of service tax. The Department had to come out with ad-hoc exemption to waive the demand for the period prior to April 2009. In this case, it is also apparent that the CISF on their own has also paid certain amount - there are much force in the argument of the Learned Advocate that the elements required for imposition of penalty under Section 78 is not available in the factual matrix of the case and therefore the imposition of penalty under Section 78 by the Adjudicating Authority is not sustainable and therefore it is set aside to that extent. In so far as, penalty under Section 77 is concerned, in the facts of the case, this penalty is also not sustainable as it is already held there could have been a genuine interpretational issue in regard to payment of service tax especially in view of exemption notification issued by the Government as well as further clarification issued and their being a Government Agency, it is found that penalty imposed under Section 77 by the Adjudicating Authority is not sustainable and therefore we set aside the same. The impugned order is upheld in so far as it relates to the demand of the duty and imposition of interest. However, it is set aside to the extent of imposition of penalty under Section 78 and under Section 77. Conclusion - i) The appellant is liable for service tax for the period beyond 01.04.2009. ii) The imposition of interest under Section 75 is upheld, with the amount to be calculated and paid by the appellant. iii) Penalties under Sections 77 and 78 are not sustainable and are set aside. Appeal allowed in part.

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• Central Excise

• 2025 (4) TMI 369
  CENVAT Credit for the capital goods used in establishing a captive power plant of the respondent - delay in adjudication of SCN - HELD THAT:- It is a settled legal proposition that, the Revenue cannot improve their case beyond what has been shown in their show cause notices. Umpteen number of decisions have been rendered that, the Revenue must confine with the content of the show cause notice, as the show cause notice is the basis, based on which only adjudication process has to go on and to be decided. The Adjudicating Authority in the case of M/s.EID Parry (India) Ltd., has stated that the User Test theory propounded by the Hon ble Supreme Court in the case of Rajasthan Spinning and Weaving Mills Ltd., [ 2010 (7) TMI 12 - SUPREME COURT ] to satisfy that the materials, components have been used in the captive power plant was applied and therefore the Adjudicating Authority before whom infact, the Jurisdiction Range Officer had filed Verification Report dated 31.03.2023 after conducting the verification and inspection by the Chartered Engineer and thereafter, has allowed the case of the M/s.EID Parry (India) Ltd. Even in Jawahar Mills Ltd. [ 2001 (7) TMI 118 - SUPREME COURT] , case, this kind of User Test Principle by requiring a User Test Certificate as a mandatory one before the Adjudication has not been propounded. What is the case of the Revenue right from the beginning is the matter. As the case of the Revenue should emanate from the show cause notice, where what was the stand that has been taken by the Revenue, that shall be taken into account. The case of the Revenue all through has been whether the goods utilised or used by the assessee are the capital goods or not and if they are capital goods, whether the assessee would be entitled to avail the CENVAT Credit or not are the only question to be answered by the Adjudicating Authority in every such case - Therefore based on the facts that has been emanated from the show cause notice, which are the basic content of the Revenue, applying the principle of Jawahar Mills Ltd., case that would not advance the case of the Revenue, instead that would advance the case of the assessee. The show cause notice dated 16.06.2009 having been perused, the relevant portions have already been extracted herein above, where it is the definite case of the Revenue that, the assessee had set up a co-generation plant in their factory premises. During the course of audit of the records and accounts maintained by the assessee, it was noticed that they have availed CENVAT Credit on capital goods used in co-generation plant as detailed below. By stating this, eight items have been mentioned as capital goods, which had been used in co-generation plant. The only reason for issuing these show cause notices by the Revenue is that, in the co-generation plant capital goods were used, for which CENVAT Credit was availed, however the co-generation plant generates electricity, which is an exempted product - merely because in respect of some other assessees, such a User Test Certificate was sought for or produced voluntarily or the User Test Theory has been adopted by the Adjudicating Authority, in each and every case, such an User Test Theory need not be adopted, as that kind of proposition has not been propounded in those two cases, i.e., in Jawahar Mills Ltd., case and Rajasthan Spinning and Weaving Mills Ltd., case. There are no hesitation to hold that, apart from the reason that has been given by the learned Judge, for the reasons and discussions herein above made, the show cause notices which were under challenge before the writ court cannot be adjudicated merely on the ground that the User Test Certificate has not been produced by the assessee. Conclusion - i) The Revenue s case must be clearly articulated in the show cause notices and cannot be expanded during adjudication. ii) The show cause notices could not be sustained for adjudication on the basis of the reasons originally cited by the Revenue. All these writ appeals are failed, therefore they are liable to be dismissed. As a result of which, all these writ appeals are dismissed.

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• 2025 (4) TMI 368
  Classification of goods supplied to the Indian Railways - major items manufactured are brake systems, HVAC, couplers, doors, pantographs etc. - to be classified under Chapter 86 or under chapters 84, 85 etc.? - Extended period of limitation - interest - penalty - the classification of pantographs and its parts under CTH 86079990 was upheld - HELD THAT:- There is no reason to interfere with the impugned judgment and order. The appeal is accordingly dismissed.

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• 2025 (4) TMI 367
  Time limitation for filing SCN - four years taken to complete the investigation - Clandestime removal of raw materials - existence of evidence to uphold the demand, present or not - demand based on assumptions and presumptions - Section 11A(11) of the Central Excise Act, 1944 - HELD THAT:- It is found that in the impugned case, central excise officers visited the premises of the appellants on 19.11.2011 and they have taken around 04 years to complete the investigation and issued a show cause notice on 17.06.2016 on the alleged excess/ shortage found during the physical stock taking. They have further taken some time to issue a corrigendum dated 02.03.2017 alleging that the appellants have clandestinely removed the raw materials on which CENVAT credit was taken. The show cause notice, demanding the CENVAT credit has been issued, on the basis of a calculation shown in the show cause notice. Apparently, the due allowance was not given, to the manufacturing losses and input contained in work in progress, as contended by the appellants. This is not the correct manner to arrive at the quantity of raw material alleged to have been clandestinely removed. Moreover, it is found that having alleged clandestine removal of raw material, Revenue has not questioned any of the transporters or buyer to establish that there was a clandestine removal of raw material. The clandestine removal cannot be established with a mathematical precision. At the same time, the clandestine removal cannot be alleged only on the basis of a mathematical formula or arithmetic calculation. Any such allegation needs to be termed as assumption/ presumption or conjecture/ surmise. It cannot be evidence in itself to uphold the alleged demand. The coordinate Bench of the Tribunal, in the matter of Nova Petrochemicals v. CCE, Ahmedabad-II [ 2013 (11) TMI 626 - CESTAT AHMEDABAD] has held that There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions. Conclusion - There is considerable force in the submission of the appellants on legal issues that the show cause Notice is barred by limitation and the adjudication order was issued beyond the time period specified under Section 11A(11) of the Central Excise, Act, 1944. However, the appellants have a strong case on merits and as such other issues are required to be considered. Appeal allowed.

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• 2025 (4) TMI 366
  CENVAT credit on the Clean Energy Cess (CEC) paid on coal, both imported and indigenously procured, during the period from September 2014 to June 2017, availed beyond time limit of more than one year - HELD THAT:- The learned Commissioner referring to various provisions of CEC and the Notifications issued relating to CEC with effect from 01.07.2010 reasoned that since CEC is not among the specified duties and excise available to credit mentioned under Rule 3(1) of CCR, 2004 notified under Section 37 of the Central Excise Act, 1994, therefore, cenvat credit on CEC is inadmissible. The appellant, on the other hand, heavily relied on the judgment in the case of Shree Renuka Sugars case [ 2014 (1) TMI 1469 - KARNATAKA HIGH COURT] in which the Hon ble High Court of Karnataka allowed cenvat credit on sugar cess.The said judgment of the Hon ble High Court has been distinguished by the Tribunal in Deccan Cements Ltd. [ 2019 (7) TMI 764 - CESTAT HYDERABAD] and held that the sugar cess and CEC stands on a different footing, therefore, the judgment of the Hon ble High Court of Karnataka cannot be made applicable to CEC. The learned Commissioner has already dropped levy of interest and as far as penalty is concerned following judgment in Deccan Cements Ltd, no penalty is imposable since the issue involved is interpretation of law. Consequently, the impugned order is modified to the extent of confirming the demand of cenvat credit on CEC and penalty imposed is set aside. Conclusion - The denial of cenvat credit on Clean Energy Cess, emphasizing the strict interpretation of Rule 3 of CCR, 2004 upheld. Appeal disposed off.

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• 2025 (4) TMI 365
  Clandestine removal - shortage of finished goods - existence of corroborative evidence or not - absence of adverse materials in support of the charge of clandestine removal - interest ad penalties - Imposition of Personal penalty on Managing Director of the appellant company, under Rule 25 of Central Excise Rules, 2002. Demand of Central excise duty of Rs. 6,60,030/- confirmed based on the purported computer printout Sales Ledger A/c - HELD THAT:- It is found that during the course of the same investigation, proceedings were also initiated against the sister concern Vinayak Agro Industries, based on the same documentary evidences. The proceedings initiated against the sister concern relating to the issue of clandestine removal has been already settled by this Tribunal in favour of the sister-concern - As the demand of central excise duty on the allegation of clandestine removal has been set aside against the sister concern, the demands of central excise duty confirmed on the allegation of clandestine removal of the goods against the appellant company on the basis of the same evidences also does not survive. Accordingly, the demand confirmed in the impugned order on this count set aside. Demand of Rs. 2,07,803/- confirmed on account of the shortage of 46.359 MT of finished products (MS Flats/Squares/Rods) allegedly detected during physical verification - HELD THAT:- The shortage of stock is on account of the differential methodologies of accounting adopted while recording the same in its books of accounts. The stock in books was maintained on the basis of average weight per piece of the finished goods, while the physical stock was taken on actual weight basis. This discrepancy is entirely normal and expected in the steel industry, where each piece of MS Ingot naturally varies in weight due to manufacturing tolerances. In his statements dated 03.08.2012 and 03.07.2013, the Appellant No. 2 explained that the Appellant no. 1 maintains the Daily Stock Register on the basis of weight per piece of the finished goods, which generally varies from piece to piece. This might have caused the apparent difference between the actual physical stock and the stock recorded in the Daily Stock Register. Thus, the same cannot be held to be due to clandestine removal of goods. Reliance in this regard is placed on the ruling in the case of Commissioner v. Prem Industries [ 2007 (3) TMI 649 - CESTAT, AHMEDABAD] . It is also found that Appellant No. 2 never admitted to having removed any finished products clandestinely. Thus, the alleged shortage represents a mere accounting discrepancy, not evidence of clandestine removal. The charge of clandestine manufacture and clearance is a serious charge, which is required to be established with positive/affirmative/tangible evidence and the burden of establishing the said charge lies heavily upon the revenue. Further, no demand of clandestine manufacture and clearance can be confirmed purely on conjectures, surmises, assumptions and presumptions. In the present case, the Appellate Authority has upheld allegations of clandestine removal without any corroborative evidence. There has been no seizure of unaccounted goods or interception of consignments cleared without payment of duty. The department has failed to present any affirmative evidence, such as records indicating unaccounted procurement of raw materials, excess production, or unrecorded sales, to substantiate its claims. Furthermore, the investigating agencies have made no effort to establish the existence of unaccounted manufacturing activities - the finding relating to clandestine removal by the Appellant no. 1 is grossly untenable and liable to be set aside. Accordingly, the demand of Central Excise duty of Rs. 2,07,803/- confirmed in the impugned order on account of the shortage of 46.359 MT of finished products set aside. Interest and penalties - HELD THAT:- Since, the demand of central excise duty against the appellant is not sustained, the question of demanding interest and imposing penalties against appellant no.1 does not arise. Imposition of Personal penalty on Managing Director of the appellant company, under Rule 25 of Central Excise Rules, 2002 - HELD THAT:- The allegation of clandestine clearance against the appellant company is not sustained. Accordingly, I hold that the role of the appellant in the alleged offence of clandestine removal is not established. Thus, there is no material evidence available on record to implicate the appellant no. 2 in the alleged offence. Thus, the penalty imposed on the appellant no.2 set aside. Conclusion - i) The demands based on pen drive data are not sustainable as the printouts were not obtained in compliance with mandatory conditions. ii) The shortage of stock was due to accounting discrepancies, not clandestine removal. iii) Since the demand of central excise duty was not sustained, the question of demanding interest and imposing penalties do not arise. iv) The personal penalty on the Managing Director also set aside as the allegation of clandestine clearance was not established. The impugned order set aside - appeal allowed.

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• 2025 (4) TMI 364
  Area Based Exemption - Eligibility for exemption under N/N. 50/2003-CE dated 10.06.2003 - goods manufactured and cleared from the factory of the appellant situated at 7 KM Stone, Muradabad Road, Kashipur - HELD THAT:- The order passed by the Tribunal shows that it was the adjudicating authority that had to visit the factory and decide the issue denovo. On record is an application dated 12.09.2018 submitted by the appellant which clearly mentions that the impugned order dated 20.03.2018 was passed by the Commissioner in contravention of the direction issued by the Tribunal and that too without affording any opportunity to the appellant. It also mentions that the adjudicating authority has relied upon a document which was neither a part of the show cause notice nor part of the earlier proceedings and no response was invited from the appellant. No reliance can, therefore, be placed on these two documents, which in fact are the sole document on the basis of which the Commissioner has recorded a finding that manufacturing activity is being carried out in Khasra No. 281. The Tribunal, in the order dated 31.01.2017, had clearly held that if no manufacturing activity was carried out in Khasra No. 281, the department would have no case. From a perusal of the layout plan and the report dated 20.01.2010 submitted by the lekhpal, it is clear that no manufacturing activity was carried out in Khasra No. 281. The layout plan, in fact, clearly shows that the manufacturing activity was carried out only in Khasra No. 284. Khasra No. 281 admeasures 290 Meters in length and 2.53 Meters in width. It has a boundary wall and according to the appellant only a sewer line for extermination of sewage from the factory passes through Khasra No. 281. It also has a small pit for treatment of the sewage before it is discharged in a government drain located in the said Khasra. No manufacturing activity, therefore, can be said to have been carried out in Khasra No. 281. The area of Khasra No. 281 is about 7% of the total area of the area covered by the Khasra No s. 281, 282, 283 and 284. The Exemption Notification is a beneficial notification for promoting manufacturing activity in the backward area of the State of Uttrakhand. Merely because Khasra No. 281 measuring 0.146 Hectares is not mentioned in Annexure-II of the Exemption Notification, which in fact includes Khasra No s. 282, 283 and 284, should not result in denying the benefit of the Exemption Notification to the appellant, when no manufacturing activity is taking place in Khasra No. 281. It transpires from the decisions of the Tribunal in Forbes Company [ 2017 (10) TMI 73 - CESTAT ALLAHABAD] and Saral Wire Craft [ 2017 (7) TMI 1479 - CESTAT NEW DELHI] that where production is carried in a majority portion covered by the Exemption Notification, the assessee would be entitled to the benefit of the Exemption Notification. The decisions also hold that it is not necessary that every inch of the land should be utilized for installation of the machines for there can be some open area. In such cases, the benefit of area based exemption should not be denied when the plots are adjacent. Conclusion - No reliance can, therefore, be placed on these two documents, which in fact are the sole document on the basis of which the Commissioner has recorded a finding that manufacturing activity is being carried out in Khasra No. 281. The appellant is entitled to the exemption. Appeal allowed.

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• 2025 (4) TMI 363
  Classification of coconut oil manufactured by the appellant - to be classified under Chapter 33 as hair oil suitable for use as cosmetics or under Chapter 15 as edible oil? - exemption under Serial No. 9 of N/N. 3/2006-CE dated 01.03.2006 - HELD THAT:- Some of the admitted facts, as apparent from record and also not disputed by the Revenue are that the manufacturing process involved for making coconut oil from copra is a manufacturing process. That, there is no chemical treatment involved or addition of any additives etc., in the impugned oil. It is also on record as apparent from the Test Report that no additives were added which could have made such oil suitable for use as cosmetics. It is also noted that in their reply to the Adjudicating Authority at Para 20 of the Order-in-Original, the appellant made a submission that the Chapter Note 3 to Chapter 33 is not applicable since they are not putting any special labels or remarks stating it as a hair oil and in fact they are mentioning that it is an edible oil and are also mentioning the nutritional value on the bottle. Neither the product was subjected to any chemical treatment nor was sold as hair oil and is simply a refined coconut oil not chemically modified. It is also clear that it was never shown as intended for any cosmetic purpose, which is an essential ingredient for invoking under Chapter 3 of Chapter 33 read with the provisions in the General Notes of HSN in the Chapter Heading 3303 to 3307, which clearly makes that for it s coverage under such chapter headings, the packaging has to be of a kind sold to consumer and put up with labels, literature or other indications to the extent that they are for use as perfumery, cosmetic or toilet preparations, or as room deodorisers: or put up in a form clearly specialised to such use (e.g. nail varnish put up in small bottled furnished with the brush required for applying the varnish). Since, the order of the Commissioner is not sustainable on merit itself, there is no question of imposition of penalty under Rule 25 and accordingly, the appeal of the Revenue is also bound to fail and is accordingly, dismissed. Conclusion - The product is correctly classified under Heading 1513.11, leading to the allowance of the appellant s appeal. Appeal allowed.

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• 2025 (4) TMI 362
  Recovery of self-credit availed by the appellants in terms of the Notification No.56/2002-CE dated 14.11.2002, in terms of Section 11A of the Central Excise Act, 1944 - erroneous refund in the absence of any order in review of the original orders passed ratifying the self-credit taken by the appellants - overstating of production in order to avail excess credit in cash - availment of CENVAT credit only on the strength of invoices wherein no goods have been physically received by the appellants - imposition of penalty on Senior Manager of the appellant No.1 - levy of penalty on juridical persons under Rule 26 of Central Excise Rules, 2002. Whether the self-credit availed by the appellants in terms of the N/N. 56/2002-CE dated 14.11.2002 can be recovered in terms of Section 11A of the Central Excise Act, 1944? - HELD THAT:- In the facts and circumstances of the case, where refund has been availed as self-credit and when proper officer has ratified such refunds after due examination, this Bench and the Jurisdictional Hon ble High Court J K held, relying on the decision of Hon ble High Court of Guwahati in the case of Jellapore Tea Estate [ 2011 (3) TMI 11 - GAUHATI HIGH COURT] , held that when refunds are issued in such circumstances, provisions of Section 11A, cannot be invoked without reviewing the original order as dealt in the forthcoming Paras. Moreover, the appellant argues that what is involved in the impugned case is not duty but an amount and therefore, provisions of section 11 A can not be invoked. Learned Counsel for the appellants relies on the ratio of some cases. This Bench in the case of Vee Ei Cee Industries [ 2018 (9) TMI 21 - CESTAT CHANDIGARH] held that the amount already refunded to the appellant is not recoverable under Section 11A. Can such credit be termed as erroneous refund in the absence of any order in review of the original orders passed ratifying the self-credit taken by the appellants? - HELD THAT:- In the instant case, the appellant availed self-credit by way of refund, in terms of the N/N. 56/2002; the jurisdictional Deputy/ Assistant Commissioner after examining the records to his satisfaction has permitted/ratified the refunds; the appellants were not informed, of any deficiency, as contemplated under Para 2C(e) of the Notification. Thus, the order passed by the Deputy/ Assistant Commissioner assumes the character of an assessment order. The said order has not been reviewed and no appeal has been filed. Consequently, no competent authority has held that the refund impugned were erroneous so as to initiate recovery proceedings as per the provisions of Para 2C(g) of the Notification and/or section 11A of the Central Excise Act,1944. In view of the above discussion, ratio of the cases discussed and the other cases relied upon by the appellant, it is opined that the issue is resolved in favour of the appellants. Whether in the facts and circumstances of the case, Revenue has established a case of overstating of production in order to avail excess credit in cash? - Whether in the facts and circumstances of the case, the allegation of availment of CENVAT credit only on the strength of invoices wherein no goods have been physically received by the appellants is sustained? - HELD THAT:- It is found that a minimum level of investigation is not carried out by the department. Surprisingly, investigating a case of alleged excess show of production and clearance wrongful availment of Cenvat Credit, no stock taking, actual or estimated, of raw materials and the final products was undertaken. Shortage/excess of raw material could have established the revenue s case at least to some extent. In respect of the alleged excess production, no investigation at the buyers end, to establish that they are non-existent or did not receive any material, was conducted. It was not enquired as to how the financial transactions took place and if records were manipulated - there is force in the appellant s argument that if the appellant has taken excess self-credit, it is only after excess payment; the situation is revenue neutral at least in the facts of the impugned case. As regards the allegation of wrongful credit availment is concerned, we find that the statements of dealers, who have been alleged to have issued invoices without actually supplying goods, were not recorded. Transporters were not questioned; financial transactions have not been gone in to. The only evidence that revenue relied is the inconclusive findings on the basis of check-post records at interstate borders. The culpability of the dealers is also sought to be established on the basis of the reports that goods in respect of 32 Bills of Entry/ Invoice were not received by M/s CCPPL, Ludhiana as the details supplied by them were not reflected at the appropriate ICC as per data supplied by the Punjab Sales Tax Department. The dealers were not even questioned on the same. It has been held in a catena of judgments that the onus to prove with the evidence is on the department who are making allegations rather than the on the appellant who is defending. As long as the department does not establish with a reasonable degree of evidence that the raw material/input was not duty paid, the same was not received under the cover of documents prescribed thereof, the same was not received in the factory of the manufacturer and that the same is not used in the manufacture of final products cleared on payment of duty or exported without payment of duty or under bond, credit availed cannot be denied. The department cannot allege wrongful availment of Cenvat credit on the basis of half-baked investigation and half-hearted approach and ask the appellant to defend himself by establishing that credit was correctly availed. Conclusion - Revenue has not established wrongful availment of self-credit or wrongful availment of Cenvat credit by the appellants. The entire allegation and consequential quantification being based on assumptions, presumptions and conjectures, cannot be sustained as held in a number of judgments. Thus, the appeals succeed on the merits of the case and the legal provisions. Therefore, it is found that the other submissions, on limitation, imposition of penalty on different appellants etc., need no discussion as the demand itself is not sustainable. Appeal allowed.

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• 2025 (4) TMI 361
  Reversal of CENVAT Credit - capital goods removed as such in terms of Rule 3(5A) of CENVAT Credit Rules, 2004 - invocation of extended period of limitation - HELD THAT:- On an identical issue decided by the Principal Bench of CESTAT in the case of Bharti Infratel Ltd. [ 2022 (9) TMI 1339 - CESTAT NEW DELHI] and held that the capital goods cleared by the appellant would qualify as scrap and that no amount is required to be paid on the clearance of the same by the appellant under Rule 3(5A) of CENVAT Credit Rules, 2004. As the issue stands decided on merits on unequivocable terms in favour of the appellants, it is not necessary to examine the contention advanced by learned counsel for the appellant that the extended period of limitation could not have been invoked in the facts and circumstances of the present case. Conclusion - The appellants are not liable for reversing CENVAT credit on the capital goods removed as scrap. The impugned order is not sustainable and is liable to be set aside - Appeal allowed.

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• 2025 (4) TMI 360
  Process amounting to manufacture - activity in compressing the hydrogen gas, received through a pipeline from M/s Punjab Alkalies and Chemicals Pvt. Ltd., into cylinders - HELD THAT:- The Delhi Bench of the Tribunal in the case of Goyal M G Gases [ 2016 (9) TMI 573 - CESTAT CHANDIGARH] has gone into the issue at length and held In fact, they are the processors of the goods. In the case in hand, as the buyer are not consumer as per Chapter Note 9 of Chapter 28 of CETA, 1985. Further, we also hold that the gas is already marketable in its original form and the activity undertaken by the appellant does not render the gas marketable which is already marketable. Therefore, we hold that the activity undertaken by the appellant does not amount to manufacture. Consequently, the appellants are not liable to pay duty. Conclusion - The activity undertaken by the appellant does not amount to manufacture on the ground that mere compression of gas into cylinders does not meet the statutory definition of manufacture if it does not create a new product or significantly alter marketability. There are no merits in the impugned order and consequentially, the appeal is allowed.

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• CST, VAT & Sales Tax

• 2025 (4) TMI 426
  Challenge to impugned order - petitioner had failed to respond to SCN - violation of principles of natural justice - HELD THAT:- It is noticed that there is a long gap between the notices that were issued to the petitioner. The second notice dated 14.01.2020 was issued few days before the Country went into lockdown due to outbreak of Covid-19 pandemic. The third notice dated 09.02.2021 was issued when the Country was still under intermittent lockdown. Since the petitioner had failed to respond to the same, the respondent has passed the Impugned Order. It appears that the petitioner has not furnished any details to substantiate that the Input Tax Credit availed under Section 19 of the Tamil Nadu Value Added Tax (TNVAT) Act, 2006 - the Impugned Order is set aside and the matter is remitted back to the respondent to pass a fresh order. Petition disposed off by way of remand.

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• 2025 (4) TMI 425
  Recovery of dues - bank s lien on fixed deposits takes precedence over the statutory charge - stand of the bank is that it is the bank that holds priority of charge in respect of the fixed deposit - HELD THAT:- In State Bank of Bikaner and Jaipur [ 1994 (12) TMI 72 - SUPREME COURT] , the appellant had accepted cash credit facilities and secured the facilities by a mortgage of the factory premises of the borrower. On defaults in repayment by the borrower, a suit was filed seeking recovery of the outstandings and realization of mortgage security under Order 34 Rule 4 of the Code of Civil Procedure. Pending Suit, a rival claim was raised by the Commercial Tax Officer, Bharatpur relying on a prior claim in respect of the sales tax dues from the borrower. The sales tax officer argued that by virtue of the prior charge that the Commercial Taxes Department held, it was entitled to realize the sales tax arrears by sale of the mortgaged property - The claim of the Commercial Taxes Officer rested on the provisions of Section 11AAAA of the Rajasthan Sales Tax Act, 1954, in terms of which, notwithstanding anything to the contrary contained in any law for the time being in force, in respect of the outstandings of tax, penalty, interest or any other sum, such outstandings, constituted a first charge on the property of the defaulting assessee. While considering the priority of charge, ie., whether the statutory first charge would hold priority over an existing prior mortgage, the Court held that where a mortgage had been created in respect of a property and interest in that property had been carved out in favour of the mortgagee, the redemption of the property by the mortgagor would only stand settled on payment of the mortgage dues. This principle operates notwithstanding that the title to the property remained with the mortgagor. In Dattatreya Shanker Mote V. Anand Chintaman Datar [ 1974 (10) TMI 99 - SUPREME COURT] , the Supreme Court observed while comparing a charge and a mortgage, that a charge is wider as it also includes a mortgage. Put differently, every mortgage is a charge but every charge is not a mortgage. The Supreme Court thus concluded that where a first charge is created by operation of law over a property, such charge would have precedence over an existing mortgage. In the present case, the dates of creation of charge are 30.04.2003 in respect of the periods 1997-98 to 2001-02 and 10.05.2004 in respect of the period 1996-97. Clearly, the department has missed the bus and cannot now seek to impinge on the priority marked by the bank. In such view of the matter, the impugned B-6 notice has no legs to stand. Coming to the submission in regard to pre-closure, there are no legal relevance of the same in deciding this matter. It is true that the bank had proceeded to pre-close the fixed deposits towards the outstandings of packing credit even prior to the dates of maturity of the fixed deposits. However, this could be viewed as the act of a prudent bank wishing to secure its interest in alignment with the lien created by it and nothing more. Hence, this argument does not advance the case of the Commercial Taxes Department. The impugned notice is quashed and this writ petition is allowed.

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• 2025 (4) TMI 424
  Wrong availment of Input Tax Credit pursuant to the mismatch noticed between the Input Tax Credit availed by the petitioner and the documents that were filed during the assessment - HELD THAT:- A reading of Section 27(4) of TNVAT Act indicates that both before amendment and after amendment there is no scope for any discretion. The petitioner has availed Input Tax Credit which was sought to be denied based on the information gathered by the Commercial Tax Department from the checkpost and web portal - Although Sub-Section 4 to Section 27 of TNVAT Act leaves no scope for discretion in the matter of levy of penalty, this Court is of the view that the present case cannot be strictly fit into the penalty as the tax itself has been confirmed pursuant to information gathered from checkpost which is not conclusive of mistakes. Since this case cannot be strictly covered within the purview of Section 27(4) of TNVAT Act although there has been determination under Section 27(2) of TNVAT Act, imposition of penalty cannot be justified. Under these circumstances, the Impugned Assessment Orders dated 07.02.2017 are partly set aside insofar as the imposition of penalty on the petitioner is concerned. Petition allowed.

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• 2025 (4) TMI 359
  Restraint on respondents from realizing entry tax from the petitioner - HELD THAT:- Bare perusal of the impugned assessment order, a categorical finding of fact in favour of the petitioner that on perusal of the records and the bill, shows that the petitioner has not realized any entry tax from its customers, while making the sale. Once a finding of fact in favour of the petitioner has been recorded, no entry tax can be realized from the petitioner in view of the circular dated 18.10.2006, which still holds water. The impugned order dated 29.05.2024 passed by the Additional Commissioner, Grade - 2, (Appeals-1), State Tax, Bareilly is modified to the extent that no recovery of entry tax for the period from 01.04.2005 to 29.05.2005 shall be made from the petitioner. Petition disposed off.

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• Indian Laws

• 2025 (4) TMI 358
  Liability of appellant, United India Insurance Co. Ltd., to compensate the respondent, M/s. Park Leather Industries Ltd., under the insurance policy for the damage and loss suffered due to the collapse of the factory shed - correct determination of quantum of compensation payable to the respondent - HELD THAT:- Having noted that the surveyor appointed by the appellant had assessed the damage at a much lesser figure, i.e., Rs.8,89,176/-, the NCDRC could not have assumed that the appellant had mutely accepted the enhanced estimation of Rs.46,97,085/-, as per the unilateral assessment made by the surveyor appointed by the respondent. It is not in dispute that this assessment was undertaken by the respondent s surveyor without putting the appellant on notice and without its participation. In any event, it is patently clear that the NCDRC did not independently apply its mind to the quantification of the claim and blindly acted upon the alleged failure of the appellant to deny the assessment in the surveyor s report produced by the respondent. This impression, was unfounded and erroneous. It would, therefore, be just and proper that the NCDRC undertakes that exercise now, by allowing the parties to adduce evidence in that regard, and then decide the amount that would be payable to the respondent under the insurance policy. Conclusion - The determination of liability under the insurance policy upheld, but the issue of quantum of compensation remitted to the NCDRC for fresh assessment. Appeal allowed by way of remand.

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• 2025 (4) TMI 357
  Dishonour of Cheque - legally enforceable debt or not - vicarious liability of designated partner of the LLP u/s 138/141 of the Negotiable Instruments Act, 1881 - HELD THAT:- It cannot be said that mere mentioning in the complaint that the petitioner is the key person responsible for the management of the accused no.1 and thereby is jointly and severally liable for the offence under section 138/141 of the N.I. Act in the complaint, is sufficient compliance of section 141 of N.I Act. When clause 41C and 73 of the LLP agreement stipulates that a partner of the LLP agreement can borrow a loan in the name of the LLP only upon written consent of the LLP/other partners, it was required to be averred as to whether the consent of the petitioner herein was taken or not in the context of his specific denial in the reply. Clause 41(g)(k) of the agreement specially mandates that the entire loan borrowed in the name of LLP must be approved by Mr. Kakrania and Mr. Baid, then how the petitioner can be fastened with the allegations levelled in the complaint - Section 41(c) and 73 makes it clear that partner will not be responsible for wrongful act and in reply to demand notice, it has been specially stated that the alleged act is the wrongful act of accused no. 2, then why the present petitioner has been made responsible in the complaint, specially when it has been specifically alleged in the reply that accused no. 2 was made accused of financial irregularities, which culminated several criminal proceedings and said accused no.2 is solely responsible for taking all fiscal and financial decisions of the LLP and that accused no.2 had misutilized his positon and entered into financial transaction for his personal gain and enrichment and not for the benefit of the firm and that such transaction was beyond the knowledge of the other partners. From the facts and circumstances of the case it is clear that the reply was given by the petitioner herein through Email on 10th June, 2021 and from the order sheet it is clear that complaint was lodged much thereafter on 1st July 2021. From the complaint in question, it is found that except a bald statement that the petitioner and other accused persons are the key persons and petitioner along with other accused persons are jointly and severally liable for the offences under section 138/141 of N.I Act, no attempt has been made in the complaint to indicate even prima facie that petitioner is vicariously liable to the alleged transaction, discarding the reply as underlined above. The statutory requirement contained in section 141 of N.I Act had not been complied with in respect of present petitioner, specially in the context of reply given by the petitioner herein denying his liability. It may be true that it is not necessary for the complaint to specifically reproduce the wordings of the section but what is required is a clear statement of fact in the context of petitioner s denial of his liability, so as to enable the court to arrive at a prima facie opinion that the petitioner/accused no.3 is vicariously liable. Conclusion - The averment in the complaint filed by the opposite party herein are not sufficient to satisfy the mandatory requirements under section 141 of N.I Act. Since the averments in the complaint are not sufficient to attract the rigour of section 141 to create vicarious liability upon the petitioner herein, he is entitled to succeed in this Application. The petitioner has therefore made out a case for quashing the criminal complaint in relation to him in exercise of the jurisdiction under section 482 of the Cr.P.C. Revision allowed.

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• 2025 (4) TMI 356
  Dishonour of Cheque - vicarious liability of Independent Director u/s 141 of the Negotiable Instruments Act, 1881 - main ground on which quashing of the summoning Order and further proceedings emanating therefrom in relation to the Petitioner is sought, is that he was an Independent Director and had no role in the day to day affairs of the Company - HELD THAT:- It is a penal provision creating vicarious liability which must be strictly construed. Mere bald cursory statement in a Complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the Company without anything more as to the role of the Director, is not sufficient. The Complaint should spell out as to how and in what manner Respondent was in charge of or was responsible to the accused Company for the conduct of its business. Apex Court explained in the case of N.K. Wahi v. Shekhar Singh, [ 2007 (3) TMI 671 - SUPREME COURT ] that to launch a prosecution against the alleged Directors, there must be a specific allegation in the Complaint as to the part played by them in the transaction. There should be clear and unambiguous allegation as to how the Directors are in-charge and responsible for the conduct of the business of the Company. While the exact words of the Section may not be reproduced, but the role of the Director must be discernible from the averments made in the Complaint. In the absence of any averment or specific evidence, the Complaint would not be entertain-able. In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Another, [ 2005 (9) TMI 304 - SUPREME COURT ], the Apex Court held that mere designation as a Director is not sufficient; specific role and responsibility must be established in the Complaint. It is well established that in order to fasten the vicarious liability in terms of Section 141, the role of the Directors concerned should be specifically described in clear and unambiguous as to how the Directors concerned were alleged to be in charge and responsible for the conduct and affairs of the Company - the averments made against the Petitioner in the Complaint may be considered. It is evident that the Appellant was neither a signatory to the dishonoured cheques nor was he actively involved in the financial decision-making of the Company. Moreover, he resigned from the post of independent Non-Executive Director on 03.05.2017, duly notified through Form DIR-11 and DIR-12 to the Registrar of Companies. A contention is raised that the DIR Form 12, did not reflect the name of the Petitioner as an Independent Director, but as explained, DIR form merely gives the names of Directors and does not specify if they are independent Directors, which is generally reflected in Memorandum/ Articles of Association. Conclusion - The Petitioner could not be held vicariously liable under Section 141 of the NI Act due to the lack of specific averments and evidence of his involvement in the alleged offence. Petition allowed.

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• 2025 (4) TMI 355
  Dishonour of Cheque - vicarious liability of former director, u/s 141 of the Negotiable Instruments Act, 1881, for cheques issued by the company after her resignation - HELD THAT:- The Revisional Court has examined this issue threadbare and applied the correct test for vicarious liability under Section 141 of the NI Act. The Revisional Court, relying on the Supreme Court s judgment in S.P. Mani Mohan Dairy v. Dr. Snehalatha Elangovan [ 2022 (9) TMI 846 - SUPREME COURT ], rightly observed that where there exists unimpeachable material, such as a duly recorded resignation and absence of any role in the cheque issuance, the complaint against such a person cannot be sustained. Mere prior association with the company or the fact that she is related to other co-accused cannot, by themselves, form the basis for continuing criminal proceedings under Sections 138 read with 141 of the NI Act. It is a settled position in criminal jurisprudence that vicarious liability, where one person is held liable for the acts of another, is not ordinarily recognised unless explicitly provided for by statute. Section 141 of the NI Act carves out a statutory exception to this general rule. It incorporates a deeming fiction, enabling the prosecution of not only the company that issued the dishonoured cheque but also those individuals who, at the material time, were in charge of and responsible for its business - However, in order to attract Section 141 (1), it must be shown that the person, at the time the offence was committed, was in charge of and responsible to the company for the conduct of the business of the company. The Supreme Court has repeatedly emphasised that this deeming provision must be applied with precision. There is no material on record to suggest that the Respondent exercised control over the affairs of the company at the relevant time, particularly after her resignation as director. The mere fact that her email address continued to reflect on the website of the RoC Ministry of Corporate Affairs does not, by itself, establish that she retained any decision-making authority or functional role within the company. In the absence of a formal designation or specific averments demonstrating her responsibility in the conduct of the company s business on the date the offence is alleged to have been committed, the deeming fiction under Section 141 (1) of the NI Act cannot be invoked against her. In the present case, a careful perusal of the complaints reveals that the allegations against the Respondent are vague, generalised and bereft of any particulars that would indicate her role in the commission of the alleged offence. There is no material to suggest how, and in what manner, she consented to or connived in the issuance of the dishonoured cheques or that her neglect was the proximate cause of the same. In the absence of such foundational pleadings, the threshold for invoking vicarious liability under Section 141 (2) is also not met. Conclusion - The Revisional Court has correctly appreciated the factual matrix and applied the settled legal principles to conclude that the summoning orders against the Respondent could not be sustained. This Court finds no cogent reason to interfere with the impugned order in exercise of its revisional jurisdiction under Section 528 of the BNSS. Petition dismissed.

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• 2025 (4) TMI 354
  Dishonour of cheque - Funds Insufficient - legally enforceable debt or liability at the time of presentation of cheque or not - HELD THAT:- The facts that emerge on record is that the loan was taken on 15.10.1998, as per the document produced at exhibit 15 and an amount of 70,426/- was repaid by Rs. 2,18,200/- dated 08.05.2001 from his account with the accused. There is no evidence on record as to whether any interest had to be taken on the amount, and if any interest had to be taken at what rate it had to be taken. The amount of Rs. 2,18,200/- dated 08.05.2001 from his account with2,18,200/- which is the amount of cheque is not reflected in the statement produced at exhibit 24 and if the amount that is repaid is considered an amount of Rs. 2,18,200/- dated 08.05.2001 from his account with1,04,574/- is outstanding. The accused has stepped into the witness box and it is the defence of the accused that the entire amount has been repaid within a period of two years, but no evidence has come on record that the amount of cheque of Rs. 2,18,200/- dated 08.05.2001 from his account with 2,18,200/- was the legally enforceable due from the accused. As per the observations of the Apex Court in the case of Rangappa [ 2010 (5) TMI 391 - SUPREME COURT ] and Basalingappa [ 2019 (4) TMI 660 - SUPREME COURT ] in the cross-examination of the complainant the presumption has been rebutted and the accused has raised a probable defence and from the documents by produced by the complainant there is no evidence that the amount of cheque was the legally enforceable due. The learned Trial Court has appreciated all the evidence produced by both the parties and has concluded that the complainant has not proved the legally enforceable debt as the amount mentioned in the cheque in question. The learned Trial Court has concluded that from evidence on record the complainant has failed to prove his case and the amount mentioned in the cheque is more than the loan amount and the accused has successfully rebutted the presumption under Section 139 of the NI Act. The accused had created a reasonable doubt and the complainant has failed to produce reliable and cogent evidence on record about the legally recoverable debt from the accused and has not proved his case beyond reasonable doubt. Conclusion - No interference is warranted as the complainant failed to establish the accused s guilt beyond a reasonable doubt. Appeal dismissed.

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