ISSUES:

Whether the invoice value declared by the importer can be disregarded and replaced by an enhanced value based on Customs National Import Database (NIDB) data without specific evidence that the declared value does not represent the true transaction value under Section 14 of the Customs Act, 1962.Whether the reassessment of value under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 was conducted in accordance with the prescribed procedure, including providing the importer with relevant data and an opportunity to defend the declared value.Whether the burden of proof lies on the importer to establish the correctness of the declared value or on the revenue to justify enhancement of value.Whether the concept of "deemed price" under Section 14 of the Customs Act, 1962 applies post-amendment w.e.f. 10-10-2007.Whether reliance on DRI Alert Circulars and NIDB data alone is sufficient to reject declared transaction value without corroborative evidence.

RULINGS / HOLDINGS:

The invoice value declared by the importer cannot be disregarded and replaced solely on the basis of NIDB data without specific evidence indicating that the invoice values do not represent the actual transaction value; the NIDB data "would not be determinative of the transaction value" but may be used to "verify whether the values declared by the importer were commensurate with contemporaneous import prices."The reassessment of value must follow the prescribed procedure under the Valuation Rules, including providing the importer with the specific Bills of Entry data and the rule under which reassessment is sought, which was not done; hence, the reassessment was flawed.The burden of proof lies on the revenue to establish the necessity and veracity of the alternate value adopted; there should not be a reverse burden on the importer to prove the negative.The concept of "deemed price" under Section 14 of the Customs Act, 1962 "had been given up subsequent to the amendment made to section 14... w.e.f. 10-10-2007," and thus the value declared is to be the "transaction value" or "price actually paid or payable" without deeming it to be the price at which like goods are ordinarily sold.Reliance solely on DRI Alert Circulars and NIDB data without tangible material or specific evidence is insufficient to reject the declared transaction value; mere suspicion, conjectures or perceptions cannot constitute substantial evidence under Section 14 of the Customs Act, 1962.The impugned order is set aside due to the flawed valuation process and violation of the principles of natural justice and statutory procedure, and the appeal is allowed with consequential relief to the importer.

RATIONALE:

The Court applied the statutory framework under Section 14 of the Customs Act, 1962 and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, emphasizing that "the value of the imported goods... shall be the transaction value," defined as "the price actually paid or payable."The Court relied on precedent that the transaction value must be determined based on concrete evidence, not on "mere suspicion, conjectures or perceptions," and that the burden of proof rests on the revenue to justify any value enhancement.The Court noted the amendment to Section 14 of the Customs Act, 1962 effective from 10-10-2007, which eliminated the concept of "deemed price," thereby requiring strict adherence to the transaction value principle.The Court highlighted procedural defects, including failure to share NIDB data and relevant Bills of Entry with the importer before reassessment and failure to provide an opportunity to rebut, violating principles of natural justice and the prescribed valuation procedure.The Court distinguished the reliance on DRI Alert Circulars and NIDB data as mere guides rather than determinative evidence, underscoring that reassessment must be supported by tangible material and proper procedural compliance.There was no dissenting or concurring opinion recorded.

ISSUES:

Whether the phrase "for use in manufacture" in a customs notification implies intent to use or actual usage of imported goods.Whether duty can be demanded when imported goods intended for manufacture are destroyed by an unavoidable accident such as fire before usage.Whether claiming insurance for goods lost in fire constitutes obtaining double benefit and affects eligibility for concessional duty.Whether failure to produce an end-use certificate due to destruction of goods violates the conditions of the concessional duty notification.Whether the department's demand for differential duty is sustainable in the absence of proof of diversion or misuse of imported goods.

RULINGS / HOLDINGS:

The phrase "for use in manufacture" as appearing in Notification No. 21/2002-Cus. means "intended for use" rather than actual usage, consistent with the Hon'ble Supreme Court's interpretation in State of Haryana Vs Dalmia Dadri Cement Ltd.Imported goods destroyed by fire, an unavoidable accident beyond the control of the importer, do not attract duty demand as the intention to use suffices; actual use is not mandatory under the notification conditions.Claiming insurance for the loss of goods does not amount to obtaining double benefit unless proven otherwise by documentary evidence; assumptions or allegations without proof are insufficient to sustain duty demand.Failure to produce an end-use certificate due to destruction of goods by fire does not violate the undertaking condition, given the statutory provisions for remission of duty on lost or destroyed goods under Rule 21 of the Central Excise Rules and Section 23 of the Customs Act.The department's demand for differential duty is unsustainable in absence of evidence showing diversion of goods or misuse; mere non-use due to destruction does not constitute breach of notification conditions.

RATIONALE:

The Court applied the legal framework established by Notification No. 21/2002-Cus. and Condition No. 20 therein, which requires an undertaking and end-use certificate but does not explicitly mandate actual usage if goods are lost by unavoidable accident.Precedents from the Hon'ble Supreme Court (State of Haryana Vs Dalmia Dadri Cement Ltd., BPL Display Devices Ltd. Vs Commissioner of Central Excise) were relied upon to construe "for use" as "intended for use."Tribunal precedents (Sennar Paper and Boards Ltd., Vamsadhara Paper Mills Ltd.) were cited to support the principle that loss of goods due to fire does not attract duty demand and that remission provisions under Rule 21 and Section 23 apply.The Court emphasized that statutory provisions for remission of duty on lost or destroyed goods cannot be rendered otiose by a narrow interpretation of "use" and that the department must substantiate allegations of double benefit or diversion with documentary proof.No dissenting or differing opinion was recorded; the Court followed established doctrine and coordinate bench decisions without modification.

ISSUES:

Whether the delay of 152 days in refiling the company appeal qualifies for condonation under the applicable legal principles.Whether the explanation offered by the applicant regarding defects in the appeal documents and holidays constitutes "sufficient cause" for condonation of delay.Whether the applicant demonstrated bona fide and earnest efforts to remove the defects within the prescribed time frame under the National Company Law Appellate Tribunal Rules, 2016.Whether the principles of time-bound proceedings under the Insolvency and Bankruptcy Code (IBC) preclude condonation of unjustified delays in filing appeals during Corporate Insolvency Resolution Process (CIRP).

RULINGS / HOLDINGS:

The court held that the applicant failed to demonstrate "reasonable and genuine ground" to explain the 152 days delay in refiling the appeal, and therefore, the delay cannot be condoned.The explanation based on defects in dim/illegible pages and holiday periods was found to be "bald," "feeble and frivolous," and lacking in substantiation or details regarding efforts made to cure defects.The applicant's filing of an interlocutory application seeking exemption from filing legible copies after the delay undermined the credibility of their explanation for the delay.The court emphasized that "time is of essence in insolvency proceedings" and that condonation of delay on unsound and implausible grounds "cannot be encouraged."The application for condonation of delay was rejected, and consequently, the appeal and all related interlocutory applications were dismissed.

RATIONALE:

The court applied the settled legal principle that "there should be sufficient cause for condoning the delay," referencing the National Company Law Appellate Tribunal Rules, 2016, specifically clause 26(4), which empowers the Registrar to decline registration of appeals where defects are not cured within the fixed time.The court relied on precedents emphasizing the need for clear, substantiated explanations and bona fide efforts to remove defects in time-bound insolvency proceedings under the Insolvency and Bankruptcy Code.The court rejected the applicant's reliance on festive holidays as a justification for the majority of the delay, finding that the registry remained operational and the applicant did not explain the delay during non-holiday periods.The decision reflects a strict adherence to the time-bound nature of CIRP proceedings, underscoring that procedural delays without sufficient cause are detrimental to the insolvency resolution process.

The Supreme Court, through Justices J. B. Pardiwala and R. Mahadevan, granted condonation of delay and allowed exemption applications. Upon hearing Senior Counsel Mukul Rohtagi and reviewing the record, the Court concurred with the High Court's view that the petitioners must file a statutory appeal "in accordance with law." While the High Court allowed 30 days to file the appeal, the Supreme Court extended this period by two months. The Court emphasized that "all contentions available to the parties may be raised before the Appellate Authority." Consequently, the Special Leave Petition and any pending applications were disposed of.

ISSUES:

Whether delay of 394 days in preferring an appeal under Section 107 of the West Bengal Goods and Service Tax Act, 2017 can be condoned.Whether the reasons given for the delay, including informal marital separation and resultant inability to file appeal timely, constitute sufficient cause under Section 107(4).Whether there was violation of the principles of natural justice due to non-fixation of a personal hearing date before the Adjudicating Authority.Whether the detailed show cause notice complied with the requirements of natural justice by providing an opportunity to appear and be heard.

RULINGS / HOLDINGS:

The delay of 394 days in filing the appeal under Section 107 of the said Act is not condoned as the statutory provision under Section 107(4) permits condonation of delay only up to one month, and the delay far exceeds this period without cogent reasons.The reasons assigned for the delay, including informal separation and residence at different places, were found not to be "appropriate reasons" or sufficient cause to justify condonation of delay.The contention of violation of natural justice on the ground that no date of personal hearing was fixed is rejected since the detailed show cause notice dated 14th December, 2023 expressly directed the petitioner to appear on 15th January, 2024, which was not complied with.The order of the Adjudicating Authority dated 16th January, 2024 was validly passed after affording opportunity to appear, and the petitioner's non-appearance does not amount to violation of natural justice.

RATIONALE:

The Court applied the statutory framework under Section 107 of the West Bengal Goods and Service Tax Act, 2017, particularly Section 107(4), which prescribes a maximum condonation period of one month beyond the 90-day appeal period.The Court emphasized that condonation of delay beyond the statutory limit without "cogent reasons" would render the provisions of Section 107(4) "otiose."The Court relied on the detailed show cause notice as evidence that the petitioner was given adequate opportunity to be heard, thereby negating claims of violation of natural justice.No dissent or doctrinal shift was noted; the ruling adhered to established principles of statutory interpretation and procedural fairness.

ISSUES:

Whether the Assessing Officer was justified in passing a rectification order under section 154 of the Income Tax Act to correct an omission of originally declared income in the assessment order.Whether the rectification proceedings under section 154 of the Act are independent of the original assessment proceedings under section 143(3) of the Act.Whether the Commissioner (Appeals) erred in dismissing the appeal against the rectification order under section 154.

RULINGS / HOLDINGS:

The Assessing Officer correctly invoked section 154 of the Act to rectify a "clear mistake apparent from the record" by including the originally declared income that was inadvertently omitted, thereby increasing the assessed income and tax demand.The Court held that proceedings under sections 143(3) and 154 of the Act are "independent of each other," and the rectification order does not require re-adjudication of the original assessment.The Commissioner (Appeals) did not err in dismissing the appeal against the rectification order, as the rectification was validly based on an apparent mistake and the assessee failed to make a valid case for interference.

RATIONALE:

The legal framework applied includes section 154 of the Income Tax Act, which permits rectification of "any mistake apparent from the record" in an assessment order.The Court reaffirmed the principle that rectification proceedings are procedural and distinct from substantive assessment proceedings under section 143(3), thus allowing correction of clerical or arithmetical errors without reopening the merits of the assessment.No dissent or doctrinal shift was noted; the Court relied on established statutory interpretation of section 154 and procedural independence of rectification orders.

ISSUES:

Whether the provisions of section 194IA of the Income-tax Act, 1961 are attracted when the consideration paid to each individual seller is less than Rs. 50 lakhs, despite the total transaction value or the transferee's share exceeding Rs. 50 lakhs.Whether the assessee can be treated as an "assessee in default" under section 201(1) for non-deduction of TDS under section 194IA without verifying if the sellers have declared the receipts and paid taxes thereon, as required by the Explanation to section 191 and the first proviso to section 201(1).Whether the appellate authority under section 250 of the Act is obliged to pass a reasoned and speaking order dealing with each ground of appeal.Whether the amendment to section 194IA(2) by the Finance Act, 2023, which aggregates consideration for threshold purposes, applies retrospectively to assessment years prior to 01.10.2024.

RULINGS / HOLDINGS:

The threshold limit under section 194IA(2) must be tested with reference to each individual transferor-transferee pair, and where the amount paid to any one transferor is below Rs. 50 lakhs, the transferee is not obliged to deduct tax under section 194IA. The court held that "the provisions of section 194IA of the Act were not attracted" in the present case as the payments to individual sellers were below Rs. 50 lakhs.The Assessing Officer failed to satisfy the requirements of the Explanation to section 191 and the first proviso to section 201(1) before treating the assessee as an "assessee in default". Therefore, the demand raised under sections 201(1) and 201(1A) was not sustainable.The appellate authority erred in dismissing the appeal without a reasoned order and without addressing the specific legal contentions raised, thus failing to discharge the statutory obligation under section 250(6) of the Act. The appellate order was held to be "legally unsustainable."The amendment to section 194IA(2) by the Finance Act, 2023, effective from 01.10.2024, which treats the threshold on an aggregate basis, "has no application to Assessment Year 2015-16 under consideration."

RATIONALE:

The court applied the statutory provisions of sections 194IA, 201(1), 201(1A), and 250 of the Income-tax Act, 1961, and relied on binding precedents from coordinate benches interpreting section 194IA(2) to require threshold testing on a per transferor-transferee basis rather than on aggregate transaction value.The decision followed the ratio in Bhikhabhai H. Patel vs. DCIT and Vinod Soni v. ITO, which emphasized that section 194IA(1) imposes an obligation on "any person being a transferee" and that the exemption threshold in section 194IA(2) must be applied individually to each transferee-transferor pair.The court noted the legislative intent, as explained in the Finance Bill, 2013, to reduce compliance burden on small taxpayers by exempting transactions below Rs. 50 lakhs per transferor-transferee pair from TDS deduction.The court highlighted the procedural requirement under section 250(6) for the appellate authority to issue a reasoned and speaking order addressing each ground of appeal, and found the CIT(A)'s order deficient for non-compliance with this mandate.The court distinguished the amendment by the Finance Act, 2023, clarifying its prospective applicability from 01.10.2024, and thus rejected its retrospective application to the assessment year in question.

ISSUES:

Whether the reassessment orders passed under section 147 read with section 144B of the Income Tax Act, 1961, accepting capital gains computation based on a registered valuer's report, were erroneous and prejudicial to the interests of Revenue to warrant revision under section 263.Whether the Principal Commissioner of Income Tax (PCIT) was justified in invoking revisionary jurisdiction under section 263 on the ground that the Assessing Officer (AO) failed to consider the Departmental Valuation Officer's (DVO) report obtained post-assessment.Whether the AO is under a mandatory obligation to refer valuation matters to the DVO under section 55A of the Income Tax Act, 1961.Whether post-facto material, such as a valuation report obtained after the conclusion of assessment proceedings, can be considered as part of the "record" under Explanation 1 to section 263 for the purpose of invoking revisionary jurisdiction.Whether reliance on a DVO report that is factually incorrect, incomplete, and not confronted to the assessee can render an assessment order erroneous and prejudicial to the interests of Revenue.

RULINGS / HOLDINGS:

The reassessment orders passed under section 147 r.w.s. 144B accepting the capital gains computation based on the registered valuer's report were neither erroneous nor prejudicial to the interests of Revenue, as the AO had duly applied mind and examined the relevant documents and explanations.The PCIT's invocation of revisionary jurisdiction under section 263 was unsustainable because the DVO report relied upon was obtained after the assessment order was finalized and did not form part of the "record" as envisaged in Explanation 1 to section 263; therefore, reliance on such post-facto material is impermissible.The AO is not under a mandatory obligation to refer valuation matters to the DVO under section 55A; the use of the word "may" in the provision confers discretionary power, not a binding duty.Post-assessment material, including the DVO report obtained after the order was authenticated, cannot be retrospectively treated as part of the "record" for the purpose of revising an assessment order under section 263.The DVO report was factually incorrect in stating that the assessee did not submit any documents, rendering the valuation exercise one-sided, incomplete, and lacking evidentiary reliability; hence, reliance on such a report to declare the assessment order erroneous and prejudicial is legally unsustainable.

RATIONALE:

The legal framework under section 263 of the Income Tax Act allows the PCIT to revise an assessment order only if it is both "erroneous" and "prejudicial to the interests of the Revenue," and the revision must be based on the "record" available at the time of passing the order, as defined in Explanation 1 to section 263.Section 55A of the Act provides discretionary power to the AO to refer valuation matters to the DVO ("may" refer), and judicial precedent confirms that non-referral does not render an order erroneous if the AO is satisfied with the valuation report submitted by the assessee.Judicial authorities have consistently held that when the AO adopts one of the plausible views after proper application of mind, the order cannot be treated as erroneous merely because the PCIT holds a different opinion.The faceless assessment system's digital timestamps have legal finality; once an order is authenticated and uploaded, it constitutes a concluded proceeding, and subsequent references or material cannot expand the assessment record retrospectively.The DVO report's failure to consider the valuation report and documents submitted by the assessee during reassessment proceedings undermines its evidentiary value and fairness, rendering it unsuitable as a basis for revision under section 263.The PCIT's reliance on a DVO report obtained post-assessment and not confronted to the assessee constitutes an error of law and fact, vitiating the assumption of jurisdiction under section 263 ab initio.

ISSUES:

Whether the exemption limit under section 10(10AA)(ii) of the Income Tax Act, 1961 for leave encashment salary can be applied retrospectively to non-government employees who retired prior to the notification increasing the limit.Whether the revised exemption limit of Rs. 25,00,000 notified by the Central Board of Direct Taxes (CBDT) with effect from 01.04.2023 applies to private sector retirees for Assessment Year 2020-21.Whether the restriction of leave encashment exemption to Rs. 3,00,000 under section 10(10AA)(ii) is sustainable in law in light of the new notification increasing the limit.

RULINGS / HOLDINGS:

The Court held that the exemption limit under section 10(10AA)(ii) has been increased from Rs. 3,00,000 to Rs. 25,00,000 by CBDT Notification No. 31/2023 dated 24.05.2023, and this revised limit applies to non-government employees including private sector retirees.The notification is deemed to have come into force from 01.04.2023 but the Court found that the revised limit has retrospective effect as per the explanatory memorandum stating "no person is being adversely affected by giving retrospective effect to this notification."The Court overruled the prior restriction of exemption to Rs. 3,00,000 for the leave encashment amount and held that the assessee is entitled to exemption up to Rs. 25,00,000 or actual amount received whichever is less under section 10(10AA)(ii).The Court declined to follow the view that the increased limit benefits only those who retired after 01.04.2023, holding that the revised limit applies regardless of the retirement date.

RATIONALE:

The Court applied the statutory framework of section 10(10AA)(ii) of the Income Tax Act, 1961, and the CBDT Notification No. 31/2023 dated 24.05.2023 specifying the increased exemption limit for leave encashment salary.The Court relied on precedents from coordinate Benches of the Tribunal, including decisions in Govind Chhatwani and Devendra Kumar Gupta, which interpreted the notification as having retrospective effect and applying to private sector employees.The Court noted the explanatory memorandum accompanying the notification explicitly certifying that "no person is being adversely affected by giving retrospective effect," supporting the retrospective application of the increased exemption limit.The Court distinguished earlier decisions and orders restricting exemption to Rs. 3,00,000 on the basis that the new notification supersedes prior limits and applies to all employees irrespective of retirement date.No dissenting or concurring opinions were recorded; the Court followed a doctrinal shift recognizing retrospective application of the increased exemption limit under section 10(10AA)(ii).

ISSUES:

Whether the appellate authority erred in issuing notice under section 251(2) of the Income Tax Act.Whether the enhancement of assessed income by including gross receipts and donations as taxable income without allowing deductions under sections 11 and 12 of the Act was justified.Whether income of educational institutions should be exempted under section 10(23C) only or also under sections 11 and 12 of the Act.Whether fees and other charges from students constitute income from property held under trust and are eligible for exemption under section 11.Whether the cost of education can be recovered by educational institutions from students by way of fees and adjusted against expenditure.Whether depreciation claimed under section 32(1)(ii) is allowable when the same amount is applied under section 11, or amounts to double deduction.Whether development receipts collected for specific purposes are revenue receipts taxable under section 11(1)(d) or capital receipts exempt from tax.Whether library fund receipts collected for specific purposes are revenue receipts taxable under section 11(1)(d) or capital receipts exempt from tax.Whether donations received are eligible for exemption under section 11(1)(d) and whether denial violates the provisions of the Act.Whether the Assessing Officer is obliged under CBDT Circular No. 14 of 1995 to assist the taxpayer in claiming and securing relief and not take advantage of the assessee's ignorance.Whether penalty under section 271(1)(c) is justified for alleged concealment or furnishing inaccurate particulars of income where disallowances are upheld.

RULINGS / HOLDINGS:

The issuance of notice under section 251(2) was not upheld; the enhancement of income by treating entire receipts as income from other sources under section 56(1) was unsustainable as it amounted to introducing an altogether new head of income contrary to settled precedents.The enhancement of assessed income by including gross receipts and donations without allowing deductions under sections 11 and 12 was reversed, as such enhancement was not permissible in appellate proceedings.The income of educational institutions is not limited to exemption under section 10(23C) alone; sections 11 and 12 provisions also apply, and denial of such benefit was erroneous.Fees and other charges from students can be income from property held under trust and thus eligible for exemption under section 11; denial thereof was incorrect.The cost of education can be recovered by educational institutions from students by way of fees and adjusted against expenditure; the contrary finding was erroneous.Depreciation claim of Rs. 38,62,562/- is allowable under section 32(1)(ii) and does not amount to double deduction where the corresponding amount is applied under section 11, in line with the Supreme Court's ruling prior to the Finance Act, 2014 amendment.Development receipts collected for specific purposes are not taxable as revenue receipts under section 11(1)(d) absent specific directions from donors; however, in this case, no such directions were established, and disallowance was upheld.Library fund receipts similarly were held to be revenue receipts taxable under section 11(1)(d) due to lack of specific donor directions; disallowance was upheld.Donations amounting to Rs. 2,73,000/- were not eligible for exemption under section 11(1)(d) as held by the authorities; this finding was upheld.The Assessing Officer's duty to assist the taxpayer as per CBDT Circular No. 14 of 1995 was noted but did not affect the substantive findings on exemption claims.Penalty under section 271(1)(c) was not sustained as it is not attracted merely by every quantum disallowance or addition; concealment or furnishing inaccurate particulars was not established.

RATIONALE:

The Court applied the statutory provisions of the Income Tax Act, 1961, particularly sections 10(23C), 11, 12, 32(1)(ii), 56(1), 251(2), 271(1)(c), and relevant CBDT circulars.Precedents relied upon include Supreme Court decisions in CIT vs. Shapoorji Pallonji Mistry, CIT vs. Sardari Lal & Co., CIT vs. Union Tyres, and CIT vs. Rajasthan and Gujarat Charitable Foundation Poona, which clarify the impermissibility of introducing new heads of income in appellate proceedings and the allowability of depreciation claims when corresponding application is made under section 11.The Court distinguished Revenue's cited cases as not addressing the issue of adding an altogether new head of income in appellate proceedings, thereby rejecting the enhancement.The Finance Act, 2014 amendment introducing sub-section (6) to section 11 was acknowledged as prospective; prior to that, depreciation was allowable even when the amount was applied under section 11.The Court emphasized the necessity for specific directions from donors to classify receipts as corpus or specific donations exempt under section 11(1)(d), and in absence of such directions, receipts are treated as revenue and taxable.The penalty provisions under section 271(1)(c) require proof of concealment or furnishing inaccurate particulars, and mere disallowance of claims does not suffice, following the Supreme Court's ruling in CIT vs. Reliance Petro Products.

ISSUES:

Whether disallowance under Section 40A(3) of the Income-tax Act is justified for cash payment exceeding prescribed limits despite business genuineness and timing of payment.Whether addition under Section 2(22)(e) as deemed dividend is sustainable when advance salary is paid to a director.Whether addition under Section 41(1) is warranted for credit balances shown as advances from customers when no deduction was claimed and advances were adjusted against sales.Whether disallowance under Section 36(1)(iii) of interest expense is justified when the assessee has sufficient non-interest-bearing funds and interest-bearing loans are minimal and specifically identified.Whether disallowance of interest paid on belated TDS payment is sustainable when the ground is withdrawn or not pressed before the tribunal.

RULINGS / HOLDINGS:

Disallowance under Section 40A(3) was upheld as the payment was made in cash exceeding prescribed limits; the exception under Rule 6DD(j) was not applicable since the bank was not closed for the entire day but only observing half-day working, and the assessee failed to substantiate the timing of payment.The addition under Section 2(22)(e) was deleted as the provision does not contemplate addition in the hands of the company; advance salary paid to director cannot be treated as deemed dividend in the hands of the company.The addition under Section 41(1) was deleted because the twin conditions of the section were not satisfied: no allowance or deduction was claimed earlier in respect of the advances, and there was no remission or cessation of trading liability since advances were adjusted against sales.The disallowance of interest expense under Section 36(1)(iii) was deleted as the assessee had sufficient non-interest-bearing funds and the interest-bearing loan was minimal and specifically for a car loan; thus, the interest deduction claimed was justified.The additional ground regarding disallowance of interest on belated TDS payment was dismissed as not pressed before the tribunal.

RATIONALE:

The court applied the provisions of Section 40A(3) which disallows expenditure for payments made in cash exceeding prescribed limits, subject to exceptions under Rule 6DD; the interpretation of Rule 6DD(j) was held strictly, requiring the bank to be closed for the entire day to avail exception.The court relied on the statutory scheme of Section 2(22)(e), which treats deemed dividends as income in the hands of shareholders, not the company, thereby invalidating addition in the company's hands.The court interpreted Section 41(1) as requiring two cumulative conditions: prior allowance or deduction in respect of loss, expenditure or trading liability, and subsequent remission or cessation of such liability; absence of either condition negates applicability.The court considered financial documents and ledger accounts to assess the nature of funds and loans, applying principles of interest deduction under Section 36(1)(iii), and found no misuse of borrowed funds to grant interest-free advances.The tribunal followed precedent adverse to the assessee on interest on belated TDS payment and accepted the withdrawal of the ground, thus not adjudicating on the merits.

ISSUES:

Whether addition under section 69A of the Income Tax Act for unexplained investment in property is justified against a co-owner when the entire investment has been made and assessed in the hands of the other co-owner.Whether addition under section 56(2)(vii)(b) of the Income Tax Act for difference between consideration paid and stamp duty valuation is warranted when the difference is within permissible limits or has been accounted for in the hands of the other co-owner.Whether penalties under sections 271AAC(1) and 270A of the Income Tax Act should be sustained when the underlying additions have been deleted.Whether an appeal against penalty under section 270A is maintainable after deletion of the penalty by the Commissioner of Income Tax (Appeals).

RULINGS / HOLDINGS:

The addition under section 69A of the Act amounting to Rs. 10,50,000/- was not justified against the assessee as the entire investment was made by the husband and the addition was considered in his hands; therefore, no addition should be made in the assessee's hands.The addition under section 56(2)(vii)(b) of Rs. 5,30,000/- representing the difference between stamp duty value and consideration paid was restricted by the Commissioner of Income Tax (Appeals) to the actual difference determined by the valuation officer, and since this difference was accounted for in the husband's assessment, no addition was warranted in the assessee's hands.The penalty under section 271AAC levied in respect of the addition under section 69A was deleted as the underlying addition was deleted.The appeal against penalty under section 270A was dismissed as withdrawn since the penalty had already been deleted by the Commissioner of Income Tax (Appeals).

RATIONALE:

The Court applied the provisions of the Income-tax Act, 1961, specifically sections 56(2)(vii)(b), 69A, 271AAC(1), and 270A, considering the principle that income or additions should not be doubly taxed or added in the hands of multiple co-owners when the entire investment and corresponding additions have been accounted for in one co-owner's assessment.The valuation officer's report was relied upon to determine the market value of the property, which limited the addition under section 56(2)(vii)(b) to the actual difference between the stamp duty value and the consideration paid, rather than the entire difference initially considered by the Assessing Officer.The deletion of penalty under section 271AAC was consequent to the deletion of the substantive addition under section 69A, reflecting the principle that penalties are contingent on the existence of the underlying addition or concealment.No unique doctrinal shift or dissenting opinion was noted; the decision followed established principles of tax assessment and penalty imposition under the Act.

ISSUES:

Whether the Assessing Officer (AO) was justified in treating the entire amount of accommodation entries as unexplained expenditure under section 69C read with section 115BBE of the Income Tax Act, 1961.Whether the Commissioner of Income Tax (Appeals) (CIT(A)) was correct in directing the AO to treat 10% of the accommodation entry amount as unaccounted income towards commission earned by the assessee.What is the appropriate commission rate to be applied on accommodation entries recognized as income of the assessee.Whether the addition of the entire accommodation entry amount as income or expenditure is valid in the absence of documentary evidence.Whether the provisions of section 69C of the Income Tax Act apply to sales transactions admitted as accommodation entries.

RULINGS / HOLDINGS:

The AO was not justified in treating the entire amount of accommodation entries as unexplained expenditure u/s 69C r.w.s. 115BBE of the Act, as the assessee had provided accommodation entries to the other party and the nature of transactions was not clearly established.The CIT(A) rightly observed that the AO's addition of Rs. 77,03,114/- (full accommodation entry amount plus 1%) was not supported by clarity and evidence, and directed the AO to treat 10% of the accommodation entry amount as unaccounted income towards commission earned by the assessee, thereby restricting the addition to Rs. 7,62,684/-.Following a coordinate bench decision, the Tribunal held that a commission rate of 5% on the accommodation entry amount is appropriate, modifying the CIT(A)'s direction of 10%, as the CIT(A) did not provide a basis for the 10% rate.The provisions of section 69C apply to unexplained expenditure not recorded in books of account; therefore, applying section 69C to sales transactions admitted as accommodation entries is incorrect.In the absence of documentary evidence from the assessee supporting the nature of transactions, the addition cannot be sustained on the entire accommodation entry amount but only on a reasonable commission percentage reflecting profit element.

RATIONALE:

The legal framework applied includes sections 69C and 115BBE of the Income Tax Act, 1961, which deal with unexplained expenditure and its treatment as income.The Tribunal relied on the principle that section 69C applies to unexplained expenditure not recorded in books, and thus cannot be applied to sales transactions admitted as accommodation entries.The coordinate bench decision was followed, which held that commission on accommodation entries should reflect a reasonable profit element, applying a 5% rate rather than the 1% or 10% previously considered.The Tribunal emphasized the need for documentary evidence to establish the nature of transactions and the beneficiary of accommodation entries before making additions to income.There was no dissent or doctrinal shift; the decision aligns with established principles on accommodation entries and unexplained expenditure under the Income Tax Act.

ISSUES:

Whether the Resolution Plan approved by the Committee of Creditors (CoC) without prior Competition Commission of India (CCI) approval is sustainable under the Insolvency and Bankruptcy Code, 2016 (IBC).Whether any action taken pursuant to an unsustainable Resolution Plan stands nullified and the rights of stakeholders restored to the status quo ante.Whether the Performance Bank Guarantee (PBG) submitted by the Resolution Applicant (AGI Greenpc) after approval of the Resolution Plan should be returned following the setting aside of the Resolution Plan.Whether the Operational Creditor is entitled to intervene to prevent the return of the PBG and challenge the CoC's decision post the Supreme Court judgment.Whether the Adjudicating Authority's orders on intervention and replacement of the Resolution Professional (RP) were sustainable and based on majority opinion.

RULINGS / HOLDINGS:

The Resolution Plan approved by the CoC on 28.10.2022 without prior approval of the CCI is "unsustainable" and is set aside as per the proviso to Section 31(4) of the IBC."Any action taken pursuant to the Resolution Plan shall stand nullified, and the rights of all stakeholders shall be restored as per status quo ante, prior to the approval of the Resolution Plan by the CoC."The PBG submitted by AGI Greenpc on 31.10.2022 consequent to the approval of the Resolution Plan is "unsustainable" and the decision of the CoC to return the PBG is in accordance with the Supreme Court's directions dated 29.01.2025.The Operational Creditor's intervention to prevent return of the PBG and to set aside CoC decisions post-Supreme Court judgment was not justified; the CoC had duly discussed and recorded reasons for returning the PBG.The Adjudicating Authority's order directing replacement of the RP was not based on a majority opinion and is "unsustainable."

RATIONALE:

The Court applied the statutory framework of the Insolvency and Bankruptcy Code, 2016, particularly Section 31(4) and its proviso mandating prior CCI approval for Resolution Plans involving combinations.The Supreme Court's majority judgment emphasized a "literal interpretation" of the proviso to Section 31(4), holding that Resolution Plans requiring CCI approval must secure it before CoC consideration, thereby invalidating subsequent approvals lacking such approval.The nullification of the Resolution Plan and restoration of rights to status quo ante logically required returning the PBG submitted pursuant to the invalidated plan.The CoC's minutes explicitly recorded discussions on the Supreme Court judgment and the rationale for returning the PBG, negating claims of non-consideration or arbitrariness.The Court rejected attempts by the Operational Creditor to obstruct the CIRP process post-Supreme Court judgment, noting the need to comply with the apex court's directions and the inadmissibility of interventions aimed at derailing resolution.The Adjudicating Authority's split opinion on RP replacement lacked majority support, rendering the direction unsustainable under the principles governing multi-member tribunals.

ISSUES:

Whether "commodity income" shown under 'Other Income' in the balance sheet constitutes commission income liable to Service Tax under the category of 'business auxiliary service'?Whether absence of documentary evidence or ledger records to substantiate the nature of "commodity income" justifies treating such income as taxable service income'Whether commodity trading income without VAT payment and not evidenced through commodity exchanges or regulated platforms can be classified as service income for Service Tax purposes'Whether the Department can impose Service Tax liability on speculative or trading income without concrete evidence of provision of taxable service?

RULINGS / HOLDINGS:

The Department's classification of "commodity income" as "commission income" liable to Service Tax under 'business auxiliary service' is not sustainable in absence of any documentary evidence; the income earned in cash while trading goods cannot prima facie be construed as commission earned while providing a service.The assumption that when all possibilities of income from trading/dealing of goods are ruled out, the only likelihood remaining is income from providing services, is unsupported by evidence and legally untenable.Commodity income arising from speculative trading or hedging activities, which may or may not involve actual delivery of commodities, is to be treated as business income under the Income Tax Act and not as service income liable to Service Tax.The adjudicating authority's finding that the demand for Service Tax was issued without "any semblance of evidence of provision of service, receipt of payment for such provision" and without specifying the person(s) on whose behalf commission was earned, justifies dropping the demand.

RATIONALE:

The legal framework applied includes the definition and scope of 'business auxiliary service' under Service Tax law, the nature of commodity trading regulated by the Forward Market Commission (FMC), and relevant provisions of the West Bengal Value Added Tax Act, 2003.The court emphasized the distinction between commodity trading income as "business and profession income" assessable under Income Tax law and commission income arising from acting as an agent, which attracts Service Tax.The adjudicating authority relied on the principle that a person is liable to Service Tax under 'business auxiliary service' only if acting "on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration."The judgment recognized that commodity trading can be speculative, may not involve actual delivery, and may occur through spot or futures markets, including over-the-counter (OTC) transactions, which do not necessarily require a commodity exchange or Demat account.The court noted the absence of any evidence that the respondent acted as a commission agent or provided any service to others, and that the "commodity income" was accepted by the Income Tax Department as business income from commodity trading.The decision confirms that mere failure to produce documents or VAT payment records does not justify reclassifying business income as service income for Service Tax without evidential basis.

ISSUES:

Whether the freight income shown in the financial records is subject to service tax under the Finance Act, 1994'Whether the appellant's activity of arranging transportation of goods amounts to a taxable service or falls under the negative list exemption for transportation services by road except Goods Transport Agency (GTA) services'Whether the invocation of the extended period of limitation under the Proviso to Section 73(1) of the Finance Act, 1994 is justified on the facts of the case'Whether penalty under Section 78 of the Finance Act, 1994 can be imposed in the absence of justification for extended period invocation?

RULINGS / HOLDINGS:

The demand of service tax on freight income reimbursed by customers is not sustainable as the appellant is not a Goods Transport Agency and the activity of transportation of goods by road by the appellant is covered under the negative list of services specified in Section 66D(p) of the Finance Act, 1994.The appellant's role in arranging transportation and incurring freight and insurance charges, which are reimbursed by customers, does not constitute a taxable service distinct from the exemption provided under Section 66D(p); hence, service tax demand on such amounts is "wrongly demanded."The invocation of the extended period of limitation under the Proviso to Section 73(1) is not justified as there is no evidence of "suppression of facts with an intention to evade payment of tax," and the demand is based solely on financial records which are public documents.Since extended period invocation is unjustified, penalty under Section 78 of the Finance Act, 1994 cannot be imposed and is accordingly set aside.

RATIONALE:

The Court applied the statutory framework of the Finance Act, 1994, particularly Section 66D(p) which provides a negative list exemption for "services by way of transportation of goods by road except the services of a Goods Transport Agency or a courier agency." The appellant, not being a GTA, falls within this exemption.The Court relied on the principle that post the Finance Act (Amendment Act of 2012), all services are taxable except those specifically exempted under the negative list, and the appellant's activity of facilitating transportation is exempt under this provision.The Court examined contractual documents and internal orders showing bifurcation between supply and service contracts and found that transportation charges were reimbursed expenses, not a separate taxable service rendered by the appellant.Precedential decisions of the Tribunal in related cases involving sister units of the appellant were followed, where similar service tax demands on freight facilitation were quashed based on the same legal reasoning.The Court emphasized settled law that invocation of extended limitation requires proof of suppression or evasion of tax, which was absent here, especially given the appellant's status as a public sector undertaking whose financial statements are publicly disclosed and audited by the Comptroller and Auditor General (CAG).In interpreting the phrase "services by way of transportation of goods by road except the services of a GTA," the Court held that the exclusion applies narrowly to GTA services and does not extend to indirect or facilitation services, supported by authoritative case law on statutory interpretation emphasizing the non-restrictive nature of terms like "such as," "includes," and "in relation to."The Court also noted the absence of consignment notes issued by the appellant, a mandatory requirement for GTA services under Rule 4B of the Service Tax Rules, 1994, reinforcing that the appellant cannot be classified as a GTA.The Court held that penalty and interest demands are consequential on the tax demand and thus fail once the tax demand is set aside on merits and limitation grounds.

ISSUES:

Whether goods manufactured bearing the brand name or trade name of another person are eligible for exemption under Notification No. 8/2003-CE.Whether the absence of brand name registration with the patents department affects the applicability of exemption under Notification No. 8/2003-CE.Whether permission or licence from the brand name owner is necessary for determining exemption eligibility under Notification No. 8/2003-CE.Whether the extended period of limitation under section 11A(4) of the Central Excise Act, 1944 can be invoked in the facts of the case.Whether penalty under section 11AC of the Act and Rules 26 and 27 of the Central Excise Rules, 2002 are justified and correctly imposed.Whether goods exempt under Notification No. 12/2012-CE (e.g., chloroquine preparations) are liable to excise duty demand.Whether penalty under Rule 26 is sustainable in absence of confiscation or issuance of invoices without delivery of goods.

RULINGS / HOLDINGS:

Goods bearing the brand name or trade name of another person, "whether registered or not," are not eligible for exemption under Notification No. 8/2003-CE as per paragraph 4 of the notification.The lack of registration of brand names with the patents department does not affect the applicability of Notification No. 8/2003-CE; the exemption excludes goods bearing unregistered brand names of others as well.Permission or licence from the brand name owner is not a prerequisite for determining exemption eligibility; manufacturing goods with another's brand name without licence does not confer exemption under Notification No. 8/2003-CE.The extended period of limitation under section 11A(4) was correctly invoked due to suppression of facts and manufacture of goods with brand names of others without paying duty.Penalty under section 11AC of the Act is mandatory where non-payment or short payment of duty is due to "fraud or collusion or wilful misstatement or suppression of facts or contravention" with intent to evade duty, and is upheld in this case.Penalty under Rule 27 of the Central Excise Rules, 2002 is not applicable where penalty under section 11AC is imposed; thus, penalty under Rule 27 on the assessee is set aside.Penalty under Rule 26 is unsustainable absent confiscation of goods or issuance of invoices without delivery; penalty under Rule 26 imposed on the director is set aside.Excise duty demand does not apply to preparations of chloroquine as they are exempted under Notification No. 12/2012-CE; demand was correctly computed excluding such goods.Demand and penalties related to goods cleared under the brand name 'Ranemax', which belongs to the manufacturer, are set aside.

RATIONALE:

The Court applied the provisions of Notification No. 8/2003-CE, 1.3.2003, particularly paragraph 4, which excludes exemption for goods bearing brand names of others, regardless of registration status, relying on the plain language of the notification.Section 11A(4) of the Central Excise Act, 1944, allowing extended period of limitation, was invoked due to suppression of facts and non-payment of duty on goods bearing others' brand names, consistent with statutory intent to prevent evasion.Section 11AC of the Act imposes mandatory penalties where duty evasion involves "fraud or collusion or wilful mis-statement or suppression of facts," which was found applicable on the facts established by the investigation and invoices examined.Rule 26 and Rule 27 penalties under the Central Excise Rules, 2002 were interpreted strictly; Rule 27 penalty is inapplicable when section 11AC penalty is imposed, and Rule 26 requires confiscation or issuance of false invoices, neither of which was established.The Court emphasized that exemption notifications are to be strictly construed and that the burden of proving eligibility for exemption lies on the manufacturer, who failed to demonstrate that goods bearing brand names of others qualified for exemption.The Court recognized that the absence of license from brand owners does not affect the applicability of exemption provisions, distinguishing between legal disputes over brand use and statutory exemption eligibility.The Court remanded the matter for recomputation of duty, interest, and penalty after excluding goods under the manufacturer's own brand name and those exempt under Notification No. 12/2012-CE, reflecting a partial doctrinal adjustment in relief granted.

ISSUES:

Whether the doctrine of unjust enrichment is applicable to refund claims of excess customs duty paid on provisional assessment in the context of vessel conversion from 'foreign run' to 'coastal run'.Whether the appellant discharged the onus under Section 18(5) of the Customs Act, 1962 to prove that the burden of excess duty was not passed on to any other person.Whether the refund of excess duty paid on provisional basis can be treated as a notional deposit and thus exempt from the application of unjust enrichment principles.Whether recovery of refund amount along with interest is justified when documentary evidence is produced to show that the duty burden was borne by the appellant and not passed on.

RULINGS / HOLDINGS:

The doctrine of unjust enrichment is not applicable in the refund of excess customs duty paid on provisional assessment in respect of vessel conversion from 'foreign run' to 'coastal run', as the initial deposit is "in the nature of deposit" and a "notional amount".The appellant successfully discharged the onus under Section 18(5) of the Customs Act, 1962 by producing a Chartered Accountant's certificate and accounting evidence demonstrating that the excess duty was borne by the appellant and not passed on to buyers or any other person.The refund claim of Rs. 11,05,908/- recorded in the appellant's books of account and transferred to the party who paid the customs duty at provisional assessment confirms that the burden was not shifted, negating the applicability of unjust enrichment.The impugned order directing recovery of the refund amount along with interest is not sustainable and is set aside, allowing the appeal.

RATIONALE:

The Court applied the legal framework under Section 18(5) of the Customs Act, 1962, which requires that refund of customs duty shall not be allowed if the claimant has passed on the incidence of such duty to any other person, thereby invoking the doctrine of unjust enrichment.Precedents were relied upon, including rulings that held the doctrine of unjust enrichment does not apply to refunds of excess duty paid on provisional assessments where the duty was estimated and not fully consumed, specifically in cases involving unutilized stores and provisional deposits for ship bunkers and stores.The Court recognized that the initial duty payment was provisional and estimated, thus constituting a deposit rather than a final liability, which distinguishes it from cases where unjust enrichment principles typically apply.The appellant's production of documentary and accounting evidence, including a Chartered Accountant's certificate, was deemed sufficient to meet the statutory burden, demonstrating no passing on of duty incidence.No dissent or doctrinal shift was noted; the decision aligns with established jurisprudence confirming that unjust enrichment is not attracted in provisional assessment refund scenarios where the duty burden is borne by the claimant.

ISSUES:

Whether the penalty imposed under Section 114(iii) of the Customs Act, 1962 on the Customs House Agent (CHA) for failure to obtain written authorization from the exporter and for not verifying the correctness of the Shipping Bill declarations is justified.Whether the CHA's role and responsibility extend beyond the clearance of goods and issuance of Let Export Orders under the Customs Act and Customs House Agents Licensing Regulations (CHALR).Whether the absence of a prescribed proforma for exporter authorization affects the validity of penalty under Section 114 of the Customs Act.Whether the penalty under Section 114 of the Customs Act is appropriate for alleged failure to discharge functions as a CHA, or whether such failure is governed exclusively by the CHALR.

RULINGS / HOLDINGS:

The penalty under Section 114(iii) of the Customs Act, 1962 imposed on the CHA was not justified as the CHA had obtained the exporter's signature on the Shipping Bills, which is to be treated as "sufficient compliance of obtaining authorization."The CHA's role ceases after the goods have been cleared out of customs charge and handed over to the shipping agency, as held in the Tribunal decision that "the duty of the CHA ceases after the goods have been cleared out of customs charge and handed over to the shipping agency."Since there was no proforma prescribed at the relevant time for obtaining written authorization from the exporter, penalty under Section 114 of the Customs Act for failure to file authorization is not imposable, relying on the Tribunal Mumbai's holding that "penalty under Section 114 of Customs Act, 1962, not imposable on ground that CHA failed to file Authorization."Failure to discharge functions as a CHA is governed by the Customs House Agents Licensing Regulations and not by penalty under Section 114 of the Customs Act, 1962, as affirmed by the Madras High Court that "penalties are provided in the Customs House Agents Licensing Regulations. Therefore, imposition of penalty under Section 114(i) of the Customs Act is unwarranted."In light of similar facts where penalties were set aside against another CHA, the penalty imposed on the appellant CHA is liable to be set aside following principles of natural justice and consistent judicial precedent.

RATIONALE:

The Court applied statutory provisions under Section 114(iii), Section 113(i), and Section 75(1) of the Customs Act, 1962, along with Rules 16 and 16A of the Customs and Central Excise Duty Drawback Rules, 1995.Judicial precedents from various Customs Appellate Tribunals and High Courts were extensively relied upon, including decisions that clarify the scope of CHA's duties and the nature of authorization required from exporters.The Court emphasized that the Customs House Agents Licensing Regulations provide a separate mechanism for penalizing failure to discharge CHA functions, thereby limiting the applicability of Section 114 penalties to active misconduct or fraud.The Court recognized that the CHA had performed due diligence by verifying IEC and bank details and that the exported goods were examined and cleared by Customs officers, negating allegations of complicity in misdeclaration.The absence of a prescribed form for authorization and the acceptance of exporter's signature on Shipping Bills as sufficient compliance represents a doctrinal interpretation limiting the scope of CHA liability under Section 114.The Court noted the principle of natural justice and consistency with prior rulings where penalties on similarly situated CHAs were set aside, reinforcing the decision to quash the penalty in the present case.

ISSUES:

Whether the Department's rejection and re-determination of the declared transaction value for export duty purposes is legal and proper.Whether Basic Customs Duty (BCD) @ 15% is correctly imposed on "Iron Ore Lumps (more than 10mm)" when exported as part of a mixture with iron ore fines without segregation.

RULINGS / HOLDINGS:

On valuation, the Court held that the transaction value declared by the exporter cannot be rejected without substantial basis and that "transaction value is the primary basis for valuation of export goods" as per Section 14 of the Customs Act and Rule 3(1) of the Valuation Rules; mere existence of contemporaneous exports at higher prices does not justify re-determination without compliance with Rule 4 of Export Valuation Rules.On classification and duty rate, the Court ruled that "there cannot be any artificial segregation of iron ore lump and iron ore fine in a composite mixture for the purpose of levying export duty" and that the entire consignment containing iron ore lumps within tolerance limits must be treated as iron ore fines, attracting the lower duty rate applicable to fines rather than the higher 15% BCD on lumps.

RATIONALE:

The Court applied the statutory framework under Section 14 of the Customs Act and the Export Valuation Rules, particularly Rule 3(1) and Rule 4, emphasizing that transaction value is the primary basis for export valuation and that re-determination requires strict compliance with valuation rules including adjustments for differences in quality, quantity, and commercial terms.The Court relied on precedent including judgments holding that transaction value cannot be discarded without proof of higher prices for identical or similar goods at about the same time and destination, and that valuation must reflect actual consideration realized as evidenced by Bank Realization Certificates.The Court followed prior Tribunal authority rejecting artificial segregation of iron ore lumps and fines for duty purposes, recognizing that a mixture with lumps within contractual tolerance must be classified uniformly as iron ore fines.The Court noted absence of evidence that the exporter received any amount over and above the declared and realized value, and found the Department's reliance on contemporaneous export values flawed due to lack of examination of contract terms, export quantities, destination, and quality parameters.The Court distinguished certain High Court decisions cited by the Department on the basis that they involved different factual scenarios (e.g., ROM ore with declared lump and fines proportions) and did not address classification of mixtures under interpretative rules.The Court rejected the Department's reliance on Section 19 of the Customs Act for classification, clarifying that Section 19 applies to goods consisting of a set of articles, not to mixtures of substances like iron ore lumps and fines.