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2023 (12) TMI 645 - ITAT DELHI Income Tax

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Issues Involved:
1. Deletion of addition under Section 56(2)(viib) on account of excess share premium.
2. Deletion of addition under Section 68 on account of unexplained cash credit in terms of unsecured loans.

Summary:

Issue 1: Deletion of Addition under Section 56(2)(viib) on Account of Excess Share Premium

The Revenue contested the deletion of an addition of Rs. 2,63,00,000/- made by the AO under Section 56(2)(viib) due to excess share premium recorded by the assessee. The AO had recomputed the Fair Market Value (FMV) of the equity shares at a negative figure and invoked Section 56(2)(viib), leading to the addition. The CIT(A) deleted the addition, noting that the premium was minimal and collected from the holding company, KV Aromatics Pvt. Ltd., which held 51% of the assessee-company's shares. The CIT(A) emphasized that the valuation was done as per the Discounted Cash Flow (DCF) method, supported by an independent auditor's report. The Tribunal upheld the CIT(A)'s decision, affirming that the premium charged was supported by the valuation report and was in accordance with the law. The Tribunal referenced various case laws, including the Hon'ble ITAT Delhi's decision in the case of Cinestaan Entertainment Pvt. Ltd., which underscored that the AO cannot change the method of valuation or reject a valid valuation by a competent person.

Issue 2: Deletion of Addition under Section 68 on Account of Unexplained Cash Credit in Terms of Unsecured Loans

The Revenue also challenged the deletion of an addition of Rs. 77,20,700/- made by the AO under Section 68 due to unexplained cash credit in terms of unsecured loans. The Tribunal considered the submissions and documents presented by both sides and upheld the CIT(A)'s decision. The Tribunal found that the CIT(A) had correctly evaluated the evidence and legal provisions, leading to the deletion of the addition.

Conclusion:

The Tribunal dismissed the Revenue's appeal, endorsing the CIT(A)'s reasoning and decision. The Tribunal concluded that the additions made by the AO under Sections 56(2)(viib) and 68 were not sustainable either on facts or in law. The appeal of the Revenue was dismissed, and the order was pronounced in the open Court on 13/12/2023.

Company's share premium to existing 51% shareholder not taxable under Section 56(2)(viib) as deeming provisions don't apply
The ITAT Delhi dismissed the Revenue's appeal challenging deletion of addition under Section 56(2)(viib) for excess share premium. The assessee company issued shares at premium to its existing 51% shareholder. The CIT(A) deleted the addition, which was upheld by ITAT. The Tribunal held that deeming provisions of Section 56(2)(viib) ordinarily don't apply when shares are allotted to existing shareholders. The assessee provided a valuation report showing fair market value of Rs. 14.815 per share, matching the issue price, thus supporting the premium charged. The premium was negligible and charged to an existing shareholder with pre-existing rights.

Deeming provision under Section 56(2)(viib) - fair market value determined by DCF method under Rule 11UA(2) - inter-company allotment between holding and subsidiary - acceptance of valuation report by prescribed valuer and limits on Assessing Officer substituting valuation Deeming provision under Section 56(2)(viib) - fair market value determined by DCF method under Rule 11UA(2) - inter-company allotment between holding and subsidiary - acceptance of valuation report by prescribed valuer and limits on Assessing Officer substituting valuation - Deletion of addition made under Section 56(2)(viib) in respect of share premium on allotment of equity shares to an existing shareholder - HELD THAT: - The Tribunal considered whether the Assessing Officer could invoke the deeming provision and substitute the assessee's valuation where shares were allotted at a premium to an existing shareholder (holding company). The assessee produced a valuation based on the Discounted Cash Flow method prepared by a qualified valuer as permitted by Rule 11UA(2), and also demonstrated that the allottee was an existing shareholder holding controlling interest. The first appellate authority held that where the assessee has adopted one of the prescribed valuation methods and supported it with an expert report, the AO had neither produced cogent material to reject the DCF valuation nor jurisdiction to compel adoption of a different method; projections underlying DCF are estimations and cannot be discredited merely because NAV at the time was negative. The Tribunal noted coordinate-bench precedents recognising that allotments to existing shareholders (holding/subsidiary inter se transactions) ordinarily do not attract the charging object of Section 56(2)(viib) since no outsider derives benefit and there is no change in ultimate interest or control; having regard to the valuation report and the fact of inter-company allotment, the conclusion of the CIT(A) to delete the addition was affirmed. [Paras 6, 7] The addition under the deeming provision was not sustainable; the CIT(A)'s deletion of the addition is upheld. Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the deletion of the addition made under Section 56(2)(viib) in respect of the share premium on allotment to an existing shareholder for AY 2016-17.

2023 (12) TMI 644 - ITAT BANGALORE Income Tax

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ISSUES PRESENTED AND CONSIDERED

1. Whether the period of limitation under section 154(7) of the Income-tax Act runs from the date of the original intimation under section 143(1) or from the date of the last authoritative response/order in relation to objections raised (i.e., whether the rectification application filed on 26.09.2022 is time-barred).

2. Whether the assessee is entitled to set off brought forward unabsorbed depreciation against income from other sources for the assessment year in question, and whether the question of entitlement requires remand for verification by the Assessing Officer.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Limitation under section 154(7): Legal framework

Section 154(7) prescribes that no amendment under section 154 shall be made after the expiry of four years from the end of the financial year in which the order sought to be amended was passed. The triggering event for the running of the four-year period is the "order sought to be amended."

Issue 1 - Precedent Treatment

The controlling judicial treatment, as applied by the Tribunal, holds that the four-year period for filing a rectification runs from the date of the last order/response relating to the matter (i.e., the final authoritative communication disposing of objections), rather than from the date of the original intimation alone. The Tribunal expressly relied on the Supreme Court authority adopting this view.

Issue 1 - Interpretation and reasoning

The Tribunal examined the sequence: intimation under section 143(1) issued by CPC on 11.12.2016 (disallowing set off against income from other sources), an objection raised by the assessee on 21.03.2017, and CPC's disposal of that objection on 04.12.2018. The rectification application under section 154 was filed on 26.09.2022. The Assessing Officer treated the limitation period as commencing from the original intimation date and rejected the rectification as time-barred. The CIT(A) and the Tribunal held that the relevant "order sought to be amended" includes the final authoritative response disposing of the assessee's objection (04.12.2018) and that the limitation period must be computed from that last order. On these facts, the rectification filed on 26.09.2022 fell within four years of the 04.12.2018 response and was therefore within time.

Issue 1 - Ratio vs. Obiter

Ratio: The Tribunal's holding that the four-year limitation under section 154(7) is to be computed from the date of the last authoritative order/response disposing of objections (and not necessarily from the original intimation) is treated as the operative ratio applied to the facts. This ratio is consistent with the cited higher court authority and is applied to allow the rectification as timely.

Obiter: The decision does not expand into broader hypotheticals about differing classes of post-intimation communications; it confines the principle to the factual context of objections raised and a disposing order by CPC.

Issue 1 - Conclusion

The rectification application filed on 26.09.2022 is within the four-year limitation of section 154(7) because the four-year period is to be computed from the date of the final response/disposal of the assessee's objection (04.12.2018). The Assessing Officer's rejection on limitation grounds was therefore in error, and the appellate authority's acceptance of timeliness is upheld.

Issue 2 - Entitlement to set off unabsorbed depreciation against income from other sources: Legal framework

Section 32(2) and related provisions govern treatment of unabsorbed depreciation, including its carry-forward and set-off in subsequent previous years. Entitlement depends on whether unabsorbed depreciation can be applied against specified heads of income in the relevant assessment year.

Issue 2 - Precedent Treatment

The Tribunal and the CIT(A) treated the question of entitlement on merits as favourable to the assessee's claim that unabsorbed depreciation becomes part of depreciation of the succeeding previous year and, consequently, is available for set off. The Tribunal did not conclusively decide the factual/verificatory aspects but accepted that, on merits, set off is available and remitted for verification.

Issue 2 - Interpretation and reasoning

Given that the rectification was held timely, the Tribunal accepted the CIT(A)'s conclusion that the assessee is eligible for set off of unabsorbed depreciation from income of the current year. However, recognizing evidentiary and verification requirements, the CIT(A) remitted the matter to the Assessing Officer to verify the claim of brought forward losses and allow the set off if supported. The Tribunal found no infirmity in this course: timely rectification permits adjudication on the substantive claim, but factual verification by the AO remains necessary.

Issue 2 - Ratio vs. Obiter

Ratio: The operative ratio is procedural - timely rectification enables adjudication of the substantive claim of set off, and where fact-finding is necessary, remand to the Assessing Officer for verification is appropriate. The Tribunal did not lay down a new substantive rule on the scope of set off beyond affirming applicability of section 32(2) principles.

Obiter: Expressions regarding the correctness of the set off on merits are not final adjudications of fact; they function as interim conclusions supporting remand rather than final determinations on entitlement.

Issue 2 - Conclusion

The question of entitlement to set off brought forward unabsorbed depreciation against income from other sources was not finally decided on the record; the rectification being timely permits consideration of the claim, but the matter is remitted to the Assessing Officer for verification and allowance of the set off if proved. The Tribunal upheld the remand and found no infirmity in the appellate authority's approach.

Overall Disposition

The Tribunal dismissed the revenue's appeal, upheld the appellate authority's finding that the rectification under section 154(7) was within time computed from the last disposal of objections, and endorsed remand to the Assessing Officer for verification and allowance of the brought forward unabsorbed depreciation if established.

Rectification time limit u/s154(7) for 143(1) intimation-clock runs from final CPC response; application held timely.
The dominant issue was limitation under s.154(7) for a rectification application concerning an intimation u/s 143(1). Applying SC law, the ITAT held the four-year period must be computed with reference to the relevant final communication giving rise to the actionable grievance, and not mechanically from the original 143(1) intimation date; the AO erred in ignoring the subsequent final CPC response issued on the assessee's objection. Consequently, the assessee's rectification application was held to be within time. On merits, since the first appellate authority had only remitted the matter to the AO to verify and allow eligible brought-forward losses, the ITAT found no infirmity in that direction and dismissed the revenue's appeal.

Limitation for rectification u/s.154(7) - counting of limitation from last order / final response - set off of brought forward unabsorbed depreciation against income from other sources - remand for verification of claim of brought forward losses - Hindware Industries Ltd. principle on limitation for rectificationLimitation for rectification u/s.154(7) - counting of limitation from last order / final response - Hindware Industries Ltd. principle on limitation for rectification - Rectification application under section 154(7) held to be within time where limitation is counted from the date of the final response to the assessee's objection and not from the original intimation/order. - HELD THAT: - The intimation under section 143(1) was generated on 11.12.2016; the assessee filed an objection with CPC which was disposed on 04.12.2018. The AO rejected the section 154 rectification filed on 26.09.2022 as time barred treating the intimation date as the starting point. Relying on the principle in Hindware Industries Ltd., the Tribunal agreed with the CIT(A) that the period of four years under section 154(7) must be reckoned from the date of the last order/response disposing the objection (the final response dated 04.12.2018) and therefore the rectification application was within time. The Tribunal found no error in the CIT(A)'s approach and upheld his conclusion that rectification was not barred by limitation. [Paras 6, 7]Rectification application under section 154(7) is within time as limitation runs from the date of final response disposing the objection (04.12.2018), and the CIT(A)'s order on this point is upheld.Set off of brought forward unabsorbed depreciation against income from other sources - remand for verification of claim of brought forward losses - Claim for set off of brought forward unabsorbed depreciation allowed on merits and remitted for verification by the Assessing Officer. - HELD THAT: - The CIT(A) allowed the assessee the benefit of set off of unabsorbed depreciation against income from other sources on merits but did not itself quantify or complete verification of the factual claim. The Tribunal found no infirmity in this approach and agreed with the CIT(A)'s direction to remit the matter to the AO to verify the assessee's claim of brought forward losses and to allow the set off if verified. The remand is therefore for verification and implementation of the admitted legal entitlement. [Paras 7]Issue remitted to the Assessing Officer for verification of the brought forward losses and for allowing the set off if the claim is established.Final Conclusion: Revenue's appeal is dismissed; the rectification under section 154(7) is within time when limitation is counted from the final response disposing the objection, and the matter is remitted to the Assessing Officer for verification and allowance of the brought forward unabsorbed depreciation if established.

2023 (12) TMI 643 - ITAT AHMEDABAD Income Tax

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Issues involved:
The issues involved in this case are the confirmation of penalty under Section 271(1)(c) of the Income Tax Act, 1961 by the Ld. CIT(A) for non-disclosure of capital gains, the validity of the notice initiating penalty proceedings, and the explanation of the source of payment for stamp duty charges.

Confirmation of Penalty under Section 271(1)(c):
The appellant filed an appeal against the order of the Ld. CIT(A) confirming the penalty levied by the Assessing Officer under Section 271(1)(c) of the Act. The Assessing Officer added the difference in property value to the total income of the assessee under Section 56(2)(vii)(b) of the Act and also made an addition for unexplained payment of stamp duty charges. The Ld. CIT(A) upheld the additions, stating that the appellant's claim of forgetting to declare short-term capital gains (STCG) was contradictory as proper books of accounts were maintained. The Ld. CIT(A) also rejected the argument that penalty cannot be levied on deemed additions, emphasizing that penalty can be imposed for concealment of income regardless of it being a normal or deemed addition.

Validity of Penalty Notice:
The appellant contended that the notice initiating penalty proceedings was defective as it was issued for furnishing inaccurate particulars of income or concealment of income, which was deemed null and void. However, the Ld. CIT(A) confirmed the penalty, stating that the appellant failed to explain the source of payment for stamp duty charges, leading to the penalty under Section 271(1)(c) of the Act.

Explanation of Source of Payment for Stamp Duty Charges:
During the appeal, the appellant argued that the non-disclosure of the property sale in the original return was inadvertent, as taxes had already been paid on the sale and no additional tax liability arose during the assessment proceedings. The appellant also contended that penalty cannot be imposed on deemed additions under Section 56(2)(vii)(b) of the Act. In response, the Ld. D.R. argued that penalty can be levied even in tax-neutral transactions, citing a Supreme Court case. However, the Tribunal held that no penalty was justifiable as there was no intention to evade taxes, and the additions were made based on deeming provisions without evidence of deliberate concealment of income.

Separate Judgment:
The Order was pronounced by Judicial Member Shri Siddhartha Nautiyal on December 13, 2023, allowing the appeal of the assessee and deleting the penalty under Section 271(1)(c) of the Act based on the facts and legal principles discussed in the judgment.

Penalty under Section 271(1)(c) not applicable when land sale addition made through deeming provisions without concealment intent
ITAT Ahmedabad held that penalty u/s 271(1)(c) was not leviable where assessee failed to disclose land sale in original return. Despite AO adding difference between purchase price and fair market value u/s 56(2)(vii)(b), no penalty was imposed as assessee had already paid taxes including TDS u/s 194IA on sale date, demonstrating no tax evasion intent. Addition was made through deeming provisions without evidence of income concealment or deliberate inaccurate particulars. Following Gujarat HC precedent in Sun on Peak Hotel case, penalty cannot be levied based solely on deeming provisions. Appeal decided in favour of assessee.

Penalty under Section 271(1)(c) - deeming provisions under Section 56(2)(vii)(b) - intention to evade tax / mens rea - voluntary disclosure and filing of revised return - tax deducted at source / advance tax payment as relevant to bona fide beliefPenalty under Section 271(1)(c) - deeming provisions under Section 56(2)(vii)(b) - intention to evade tax / mens rea - voluntary disclosure and filing of revised return - tax deducted at source / advance tax payment as relevant to bona fide belief - Whether penalty under Section 271(1)(c) is leviable where additions are made by invoking deeming provisions of Section 56(2)(vii)(b) and the assessee had filed a revised return after having paid tax/TDS on the transaction. - HELD THAT: - The Tribunal examined the facts that the assessee omitted the sale from the original return but, at the time of sale, had paid advance tax and tax was deducted at source by the purchaser. The Assessing Officer added the difference between actual consideration and stamp-duty (FMV) valuation under the deeming provision of Section 56(2)(vii)(b) and imposed penalty under Section 271(1)(c) on the ground of concealment. The Tribunal found no evidence that the assessee deliberately concealed particulars of income or furnished inaccurate particulars with intent to evade tax; the taxes relating to the sale had already been discharged (including TDS), and the addition arose from application of deeming provisions relating to stamp valuation. Relying on analogous reasoning in the Gujarat High Court decision referred to in the order, the Tribunal held that application of a deeming provision does not automatically establish concealment or intention to evade tax and that voluntary acceptance of deemed income or filing a revised return, in the circumstances where tax was paid, does not justify levy of penalty under Section 271(1)(c). Accordingly, the Tribunal concluded that penalty was not leviable on these facts. [Paras 8]Penalty under Section 271(1)(c) deleted as not leviable in the facts of this case.Final Conclusion: The appeal is allowed: the penalty imposed under Section 271(1)(c) is set aside for Assessment Year 2015-16 on the ground that the addition arose from deeming provisions and there was no proof of deliberate concealment or intention to evade tax, the assessee having paid tax/TDS and filed a revised return.

2023 (12) TMI 642 - ITAT SURAT Income Tax

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Issues:
1. Reopening of assessment under section 147 of the Income Tax Act, 1961.
2. Addition of Rs. 13,79,000/- under section 68 of the Income Tax Act, 1961 on account of unexplained cash credit.
3. Addition of Rs. 11,35,468/- as unexplained investment under section 69 of the Income Tax Act, 1961.

Reopening of Assessment under Section 147:
The appeal pertains to Assessment Year (AY) 2008-09 and challenges the order passed by the National Faceless Appeal Centre, Delhi, which arose from an assessment order passed by the Income Tax Officer, Surat. The assessee did not file the original return of income for AY 2008-09, leading to the case being reopened under section 147 of the Act. The Assessing Officer issued a notice under section 148, but the assessee did not file the return of income.

Addition of Unexplained Cash Credit:
During the assessment year in question, the assessee deposited Rs. 13,79,000/- in a savings bank account. The Assessing Officer, after verifying the bank statement, noted the cash deposits and requested the assessee to explain the transactions. As the assessee did not provide a reply, the Assessing Officer treated the cash credit as income from undisclosed sources under section 68 of the Act. The NFAC/Ld.CIT(A) partly confirmed this addition but allowed set off of the appellant's net loss against the deemed income under section 68.

Addition of Unexplained Investment:
Additionally, the Assessing Officer observed share transactions of Rs. 11,35,468/- as per AIR information. Despite multiple opportunities, the assessee did not produce supporting evidence for these transactions, resulting in an addition under section 69 of the Act. The NFAC/Ld.CIT(A) partly confirmed this action as well.

Judgment:
After considering the arguments and evidence presented, the Tribunal found that the assessee had submitted sufficient evidence to prove the genuineness of the transactions. Citing the duty of the assessing officer to gather all facts and reach a logical conclusion, the Tribunal relied on a Supreme Court judgment to delete the balance addition of Rs. 3,15,047/-. Consequently, the appeal of the assessee was allowed, and the balance addition was removed.

Assessee wins appeal as addition under Section 68 deleted after proving transaction genuineness with sufficient evidence
ITAT Surat allowed the assessee's appeal regarding addition under section 68. The court noted that after setting off the assessee's net loss against the addition, the remaining balance was minimal and covered by the exempted limit of Rs. 2.50 lakh for non-filers. The assessee provided sufficient evidence proving transaction genuineness. Following SC precedent in Sreelekha Bannerjee, the court held that revenue must show inherent weakness or rebut evidence before rejection. The balance addition was deleted, deciding in favor of the assessee.

Unexplained cash credit - burden of proof on assessee to prove genuineness of cash credit - set off of loss against deemed income - reopening of assessment under section 147 - maximum amount which is not chargeable to taxUnexplained cash credit - burden of proof on assessee to prove genuineness of cash credit - set off of loss against deemed income - maximum amount which is not chargeable to tax - Whether the balance addition of Rs. 3,15,047, being part of cash deposits treated as unexplained cash credit, should be sustained after allowing set off of loss and having regard to the assessee's evidence and the basic exemption limit. - HELD THAT: - The Tribunal noted that the NFAC/CIT(A) had already allowed set off of the assessee's net loss of Rs. 10,63,953 against the addition under the head of unexplained cash credit, leaving a balance addition of Rs. 3,15,047. The Tribunal observed that the basic exemption ("maximum amount which is not chargeable to tax") effectively neutralises most of this balance. On the merits, the assessee produced bank statements, ledger accounts, books of account, confirmations from the broker, demat statements and the earlier assessment order, which the Tribunal found to be sufficient evidence to explain the deposits. Reliance was placed on the principle in Sreelekha Bannerjee requiring the department, before rejecting such evidence, to demonstrate inherent weakness in the explanation or to rebut it by adducing information or evidence in its possession. The Assessing Officer had not marshalled facts to rebut the explanations or shown inherent infirmity in the evidence. In view of these considerations, and the near-coverage of the balance by the basic exemption, the Tribunal concluded that the remaining addition could not be sustained and ought to be deleted. [Paras 11]Balance addition of Rs. 3,15,047 treated as unexplained cash credit deleted and the appeal allowed.Final Conclusion: The appeal is allowed: the balance addition sustained by the lower authorities is deleted and the assessment for AY 2008-09 is adjusted accordingly.

2023 (12) TMI 641 - ITAT MUMBAI Income Tax

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Section 14A disallowance cannot exceed exempt income earned by assessee, administrative expenditure restricted accordingly
ITAT Mumbai held that disallowance under Section 14A read with Rule 8D cannot exceed exempt income earned by the assessee. For AY 2016-17, interest disallowance of Rs.21,92,534 was deleted as assessee had sufficient interest-free funds (Rs.81 crores) exceeding mutual fund investments (Rs.15.60 crores). Administrative expenditure disallowance was restricted to exempt income of Rs.53,873. For AY 2017-18, AO was directed to recompute disallowance considering only investments yielding exempt income, ensuring total disallowance doesn't exceed exempt income earned. Finance Act 2022 amendments to Section 14A held prospective from April 1, 2022, following Delhi HC precedent. Appeals allowed with directions for recomputation.

Section 14A - Rule 8D - AO's recorded satisfaction to invoke Rule 8D - disallowance not to exceed exempt income - computation of disallowance considering only investments yielding exempt income - applicability of Finance Act, 2022 amendment (non retrospective effect)Section 14A - Rule 8D - AO's recorded satisfaction to invoke Rule 8D - disallowance not to exceed exempt income - Sustainability and quantum of disallowance under Section 14A/Rule 8D for A.Y. 2016-17 - HELD THAT: - The Tribunal found that the Assessing Officer had recorded satisfaction sufficient to invoke Rule 8D but held that the interest disallowance computed under Rule 8D(2)(ii) for A.Y. 2016-17 was not sustainable because the assessee had substantial interest free funds (share capital and free reserves) far exceeding the investment in mutual funds. The Tribunal further observed that the administrative expenditure disallowed under Rule 8D(2)(iii) greatly exceeded the actual exempt income received for the year. Applying the principle that total disallowance cannot exceed the exempt income, the Tribunal directed the Assessing Officer to restrict the disallowance for A.Y. 2016-17 to the amount of exempt income earned by the assessee. [Paras 11]Interest disallowance under Rule 8D(2)(ii) and administrative disallowance under Rule 8D(2)(iii) for A.Y. 2016-17 are not sustainable as computed; disallowance to be restricted to the exempt income of Rs.53,873/ .Section 14A - Rule 8D - computation of disallowance considering only investments yielding exempt income - disallowance not to exceed exempt income - Computation and verification of disallowance under Section 14A/Rule 8D for A.Y. 2017-18 - HELD THAT: - For A.Y. 2017-18 the Tribunal noted the assessee earned exempt long term capital gain and had made certain suo moto disallowances (Demat charges and STT). The Assessing Officer had computed average investments and applied 1% thereon to arrive at the disallowance. The Tribunal directed that the disallowance under Rule 8D must be computed considering only those investments which yielded exempt income during the year, and it required verification of the computational error pointed out by the assessee. The Tribunal reiterated the controlling principle that aggregate disallowances (including amounts already disallowed by the assessee) cannot exceed the exempt income for the year. [Paras 12]Disallowance for A.Y. 2017-18 to be recomputed by the Assessing Officer considering only investments yielding exempt income and correcting the noted computational error; total disallowance (including amounts already disallowed) must not exceed the exempt income.Applicability of Finance Act, 2022 amendment (non retrospective effect) - Whether the amendment to Section 14A effected by the Finance Act, 2022 has retrospective effect - HELD THAT: - The Tribunal respectfully followed the decision of the Delhi High Court in Era Infrastructure Ltd. and held that the amendment to Section 14A effected by the Finance Act, 2022 (inserting a non obstante clause and an Explanation) takes effect from 1 4 2022 and is not to be given retrospective operation to assessment years under consideration. Accordingly, the 2022 amendment was not applied to A.Y. 2016 17 and A.Y. 2017 18. [Paras 13]Amendment by Finance Act, 2022 to Section 14A is prospective with effect from 1.4.2022 and is not applicable to the assessment years before the Tribunal.Final Conclusion: Both appeals are allowed. For A.Y. 2016-17 the disallowance under Section 14A/Rule 8D is to be restricted to the exempt income for that year; for A.Y. 2017-18 the Assessing Officer is directed to recompute the disallowance considering only investments that yielded exempt income and to verify the computational error, ensuring total disallowance does not exceed exempt income. The Finance Act, 2022 amendment to Section 14A is not retrospective and does not apply to these assessment years.

2023 (12) TMI 640 - ITAT CHENNAI Income Tax

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Issues involved:
The judgment deals with the denial of exemption under section 11 of the Income Tax Act, rectification intimation issued by CPC Bangalore under section 154, and the interpretation of relevant CBDT circulars.

Denial of Exemption under Section 11:
The assessee trust filed its return of income, which was processed denying exemption claimed under section 11 due to the non-filing of Audit Report in Form No.10B along with the return. The assessee challenged the denial, citing a CBDT circular allowing condonation of delay in filing Form 10B. The CIT(A) upheld the denial, stating that rectification under section 154 can only correct errors, not disturb concluded findings. The Tribunal held that the Audit Report was filed before the processing of the return, and the denial of exemption was based on technicalities. Citing various case laws, the Tribunal directed the AO to verify the Form 10B and allow the exemption under section 11.

Rectification Intimation under Section 154:
The assessee filed a rectification under section 154, which was not successful. The CIT(A) upheld the rectification denial, stating that section 154 can only be invoked to correct errors apparent from the record. The Tribunal found that the rectification application was not considered by the CPC and that the denial of exemption was based on technical grounds. Relying on precedents, the Tribunal directed the AO to allow the exemption under section 11 after verifying the Form 10B filed by the assessee.

Interpretation of CBDT Circulars:
The assessee relied on a CBDT circular clarifying the condonation of delay in filing Form 10B for certain assessment years. The Tribunal noted that the Audit Report was filed before the processing of the return, and the denial of exemption was unjustified. Citing relevant case laws and High Court decisions, the Tribunal directed the AO to verify the Form 10B and allow the exemption under section 11.

Separate Judgment:
The appeal was allowed for statistical purposes, and the order was pronounced on 13th December 2023.

Tribunal Orders Tax Exemption for Trust, Citing Unjust Denial Based on Technicalities; AO to Verify Audit Report.
The Tribunal directed the AO to grant the exemption under section 11 of the Income Tax Act to the assessee trust after verifying the Audit Report in Form No. 10B, which was filed before the processing of the return. The denial of exemption was deemed unjustified as it relied on technicalities. The Tribunal also addressed the rectification under section 154, finding that the CPC had not considered the application, and instructed the AO to allow the exemption after verification. The Tribunal's decision was influenced by relevant CBDT circulars and case law precedents. The appeal was allowed for statistical purposes.

Directory nature of filing of Form No.10B - power of Assessing Officer to accept audit report filed after return but before completion of assessment - scope of rectification under Section 154 to correct a mistake apparent from the record - verification of Form No.10B and adjudication of exemption claim under Section 11Directory nature of filing of Form No.10B - scope of rectification under Section 154 to correct a mistake apparent from the record - Whether denial of exemption under Section 11 by way of a rectification intimation could be sustained where the Audit Report in Form No.10B had been filed prior to processing of the return but was not taken into account by CPC. - HELD THAT: - The Tribunal found as an undisputed fact that Form No.10B was filed before CPC processed the return under Section 143(1) and therefore was available on record at the time of processing. Relying on co-ordinate decisions and High Court precedents, the Tribunal accepted that filing of Form No.10B is directory in nature and that Assessing Officers are not powerless to allow an audit report filed after the return but before completion of assessment. The Tribunal observed that Section 154 is confined to correcting a mistake apparent from the record and that the rectification application was not properly considered by CPC since the audit report, though available, was not taken into account. For these reasons the Tribunal held that the rectification intimation denying exemption could not be sustained where the audit report was available prior to processing and not considered. [Paras 5]Rectification intimation denying exemption u/s 11 cannot be sustained where Form No.10B was filed prior to processing and was not considered; the position that Form No.10B is directory and may be accepted before completion of assessment is upheld.Power of Assessing Officer to accept audit report filed after return but before completion of assessment - verification of Form No.10B and adjudication of exemption claim under Section 11 - Whether the matter should be remitted to the Assessing Officer for verification of the Form No.10B and adjudication of the claim of exemption under Section 11. - HELD THAT: - Having held that Form No.10B was filed before processing and that the audit report was not taken into account, the Tribunal directed that the jurisdictional Assessing Officer should verify the Form No.10B filed by the assessee and examine the admissibility of the exemption claim under Section 11 rather than foreclose the assessee on technical grounds. The Tribunal followed the approach of relevant appellate and High Court decisions and therefore remitted the matter to the AO for verification and appropriate allowance of the claim if found admissible. [Paras 5, 6]Matter remitted to the Assessing Officer to verify the Form No.10B and, if admissible, allow the exemption under Section 11; appeal allowed for statistical purposes.Final Conclusion: The appeal is allowed for statistical purposes; the Tribunal held that Form No.10B filed before processing is directory and directed the Assessing Officer to verify the Form No.10B and adjudicate the assessee's claim for exemption under Section 11.

2023 (12) TMI 619 - SC Order Customs

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Withdrawal of Special Leave Petition recorded, with the petition dismissed as withdrawn and pending applications disposed of.
The petitioner sought permission to withdraw the Special Leave Petition, and the Supreme Court recorded that request and dismissed the petition as withdrawn. Pending applications, if any, were disposed of accordingly.

2023 (12) TMI 614 - CESTAT CHENNAI Customs

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Case Remanded on Coal Classification Pending Supreme Court Decision; Appeals Deferred for Future Judgment.
The CESTAT Chennai, comprising Members P. Dinesha and M. Ajit Kumar, remanded the case concerning the classification of coal back to the adjudicating authority. This decision aligns with previous cases where similar issues were deferred pending the Hon'ble SC's ruling. The Tribunal determined that proceeding with the appeals would be unproductive until the SC's decision is rendered. Consequently, all arguments and contentions remain open, and the appeals were disposed of by remand, awaiting the SC's judgment. The order was pronounced on 13.12.2023.

2023 (12) TMI 613 - CESTAT BANGALORE Customs

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Company penalized Rs.14,97,179 under Section 114A for mis-declaring assessable value causing duty short-payment
CESTAT Bangalore upheld penalty under Section 114A of Customs Act, 1962 equivalent to duty short-paid of Rs.14,97,179 against appellant company for mis-declaration of assessable value resulting in short-payment. Personal penalties under Section 112(b) on other appellants were confirmed but reduced - Managing Director's penalty reduced to Rs.2,00,000 and Marketing Director's penalty reduced to Rs.1,00,000 considering gravity of offence and case circumstances. Company's appeal dismissed; other appellants' appeals partially allowed.

Penalty under Section 114A for wilful misstatement and suppression - enhancement of assessable value under proviso to Section 28 - personal penalty under Section 112(b) - confiscation in terms of Section 111(m) - payment of differential duty before show-cause and applicability of penaltyPenalty under Section 114A for wilful misstatement and suppression - enhancement of assessable value under proviso to Section 28 - payment of differential duty before show-cause and applicability of penalty - Penalty equal to the duty short-paid under Section 114A on the appellant-company was rightly imposed. - HELD THAT: - The Commissioner found that the appellant imported fourteen consignments, declared values approximately 40% below the actual price, and later paid the suppressed amount to suppliers through non-banking channels. Statements of the Managing Director and others admitted the undervaluation and the mode of payment. The Commissioner held that the undervaluation amounted to wilful misstatement and suppression attracting revaluation under the proviso to Section 28 and liability under Section 14, rendering the goods liable to confiscation under Section 111(m). Because the short levy arose from wilful misstatement and suppression, penalty equal to the duty and interest under Section 114A was warranted. The Tribunal, on review of the record and the admissions, found no error in the Commissioner's application of law or facts and upheld the penalty under Section 114A on the appellant-company. [Paras 7, 23, 24, 31]Penalty under Section 114A equivalent to the differential duty upheld against the appellant-company.Personal penalty under Section 112(b) - confiscation in terms of Section 111(m) - Personal penalties under Section 112(b) on the directors were justified but were reduced in quantum by the Tribunal. - HELD THAT: - The Commissioner concluded that, given the finding of wilful misstatement and suppression and liability to confiscation, persons actively involved were liable to personal penalty under Section 112(b). The Tribunal agreed with the conclusion that personal penalties could be imposed on the directors who were found to have participated in the undervaluation scheme. Exercising its disciplinary discretion having regard to the gravity of the offence and the facts, the Tribunal reduced the amount of penalty imposed on the Managing Director and the Marketing Director to meet the ends of justice while otherwise upholding the imposition of personal penalties. [Paras 7, 24]Personal penalties under Section 112(b) on the directors sustained but reduced to the quantum specified by the Tribunal.Final Conclusion: The appeal of the appellant-company is dismissed insofar as the penalty under Section 114A is concerned; appeals by the individual appellants are partially allowed only to the extent the Tribunal reduced the personal penalties, and all other findings of the Commissioner are affirmed.

2023 (12) TMI 612 - CESTAT AHMEDABAD Customs

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Appeal Granted: Refund Issued for Excess Customs Duty Paid Due to Glitch, Despite Late Filing Beyond Limitation Period.
The court allowed the appeal in favor of the appellant, granting a refund for the excess customs duty paid due to a technical glitch, despite the application being filed beyond the statutory limitation period. The court acknowledged the appellant's diligent efforts, including obtaining a Chartered Accountant certificate to substantiate the claim of double payment. The decision was influenced by legal precedents supporting refunds for payments made without legal authority, highlighting the appellant's lack of negligence. The decision was pronounced on 13.12.2023.

Refund of customs duty paid by mistake - limitation under Section 27 of the Customs Act, 1962 - limitation under Section 27 read with Section 128 of the Customs Act, 1962 - reasonable time for claiming refund - bonafide mistake and due diligence - technical glitch in customs payment systemRefund of customs duty paid by mistake - limitation under Section 27 of the Customs Act, 1962 - reasonable time for claiming refund - bonafide mistake and due diligence - technical glitch in customs payment system - Whether refund of customs duty paid twice due to a technical glitch could be allowed though the refund application was filed beyond the period prescribed under Section 27 of the Customs Act, 1962. - HELD THAT: - The Tribunal found that the double payment arose from a technical glitch in the Customs payment system on 12.10.2012 and that the appellants repeatedly pursued the bank for confirmation and obtained a Chartered Accountant's certificate before filing the refund application on 02.05.2014. The Tribunal distinguished the decision relied upon by the Revenue where lack of bonafide and absence of due diligence, together with expiry of the statutory period for preferring an appeal, led to refusal of relief. By contrast, the Tribunal followed precedents treating refund of amounts paid without authority of law as subject to the limitation period but governed by the doctrine of a reasonable time where the payment was a bonafide mistake. On the facts, the appellants' actions demonstrated diligence and the mistake was bonafide; consequently the delay in filing the refund claim did not bar relief under the circumstances. The Tribunal therefore granted the refund with consequential relief.Appeal allowed; refund claim permitted as the double payment was a bonafide mistake caused by a technical glitch and the appellants exercised due diligence, making the delayed refund claim allowable.Final Conclusion: The Tribunal allowed the appeal, holding that a bonafide double payment caused by a technical glitch and followed by prompt pursuit of bank confirmation and certification entitled the assessee to refund despite the application being filed after the statutory period, and distinguished authorities denying relief for lack of due diligence.

2023 (12) TMI 609 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB Insolvency and Bankruptcy

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Issues Involved:
The appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 filed against the Impugned Order dated 07.08.2023, dismissal of the Application under Section 9 of the Code, dispute regarding lifting of materials, jurisdiction of Adjudicating Authority, pre-existing dispute, reliance on judgment of the Apex Court.

Brief facts:
The appeal was filed against the Impugned Order passed by the Adjudicating Authority, dismissing the Application under Section 9 of the Insolvency and Bankruptcy Code, 2016. The dispute arose between the Appellant and Respondent regarding the lifting of materials, with the Respondent arguing that the Appellant failed to lift the agreed quantities. The Adjudicating Authority considered the oral business dealings between the parties and concluded that there was a pre-existing dispute.

Jurisdiction Issue:
The Appellant raised an issue regarding the Adjudicating Authority exceeding its jurisdiction by deciding the Section 9 Application on the basis of preponderance of probabilities. The Adjudicating Authority explained the reasons for dismissing the application, stating that it was not solely based on probabilities but also on circumstantial factors. The main consideration was whether a pre-existing dispute existed, which the Adjudicating Authority found to be the case.

Pre-existing Dispute:
The Adjudicating Authority relied on the judgment of the Apex Court in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited (2018) 1 SCC 353. The Adjudicating Authority concluded that a dispute was raised by the Respondent after receiving the demand notice, which was deemed plausible and not a feeble legal argument. Further investigation was deemed necessary to determine the genuineness of the invoices and Sale Orders, indicating the existence of a pre-existing dispute.

Conclusion:
The Adjudicating Authority's decision to dismiss the Section 9 petition based on the existence of a pre-existing dispute was upheld by the Appellate Tribunal. The appeal was dismissed, and no grounds were found to interfere with the Adjudicating Authority's order.

Appellate Tribunal dismisses insolvency petition due to pre-existing dispute over material lifting, citing Apex Court precedent.
The Appellate Tribunal upheld the Adjudicating Authority's decision to dismiss the Section 9 petition under the Insolvency and Bankruptcy Code, 2016, due to a pre-existing dispute between the parties regarding the lifting of materials. The Tribunal agreed with the Adjudicating Authority's reliance on the Apex Court's judgment in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited, confirming that the dispute was plausible and warranted further investigation. The appeal was dismissed, and no jurisdictional overreach or error was found in the Adjudicating Authority's order.

2023 (12) TMI 608 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI Insolvency and Bankruptcy

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Issues Involved:
1. Whether the Agreement dated 29.03.2019 can be considered a Deed of Guarantee.
2. Whether the Appellant should be admitted as a "Secured Financial Creditor" and included in the Committee of Creditors (CoC).
3. Whether the Committee of Creditors has jurisdiction to adjudicate the claim.

Issue 1: Nature of Agreement dated 29.03.2019
The primary issue was to determine if the Agreement dated 29.03.2019 could be read as a Deed of Guarantee. The Appellant argued that the Agreement constituted a contract of guarantee under Section 126 of the Indian Contract Act, 1872, citing Clause 4 which stated that the Corporate Debtor provided an expressed, unqualified, and unconditional undertaking to pay the secured obligations. However, the Tribunal found that the Agreement was executed as part of additional security under Clause 7.5(b) of the Debenture Trust Deed and was not a Deed of Guarantee. The Tribunal emphasized that the Agreement was meant for additional security and not for guaranteeing the repayment of the secured obligations by the Corporate Debtor. Therefore, the Agreement dated 29.03.2019 could not be read as a guarantee within the meaning of Section 126 of the Contract Act.

Issue 2: Admission as a "Secured Financial Creditor"
The Appellant sought to be declared as a "Secured Financial Creditor" and included in the CoC. The Tribunal noted that the Resolution Professional had rejected the Appellant's claim, which was communicated via email on 22.06.2022 and reaffirmed on 20.01.2023. The Tribunal held that the Resolution Professional did not err in refusing to admit the Appellant's claim, as the Agreement dated 29.03.2019 was not a Deed of Guarantee but an agreement for additional security. Consequently, the Appellant could not be admitted as a "Secured Financial Creditor" and included in the CoC.

Issue 3: Jurisdiction of the Committee of Creditors
The Appellant contended that the CoC had no jurisdiction to adjudicate the claim. The Tribunal noted that the Resolution Professional had already rejected the claim and that the CoC's decision was not the primary issue. The Tribunal emphasized that it is the Adjudicating Authority that has jurisdiction to adjudicate all issues arising out of the resolution process of a Corporate Debtor. Since the Adjudicating Authority had already approved the decision of the Resolution Professional, the Tribunal confined its consideration to whether the Adjudicating Authority had committed any error in rejecting the IA filed by the Appellant. The Tribunal found no error in the Adjudicating Authority's decision.

Conclusion
The Tribunal concluded that the Agreement dated 29.03.2019 was not a Deed of Guarantee but an agreement for additional security. Consequently, the Appellant could not be admitted as a "Secured Financial Creditor" and included in the CoC. The Tribunal upheld the decision of the Adjudicating Authority and dismissed the appeal.

Resolution Professional correctly rejected financial creditor's claim as agreement created additional security, not guarantee under Section 126 Indian Contract Act
NCLAT Principal Bench dismissed an appeal challenging the Resolution Professional's rejection of a financial creditor's claim. The appellant argued that an Agreement dated 29.03.2019 constituted a guarantee under Section 126 of the Indian Contract Act, 1872, making the corporate debtor liable for secured obligations. NCLAT held that the Agreement was executed merely to create additional security as per the Debenture Trust Deed, not as a guarantee. The document's nomenclature was not decisive; its true nature showed it was for additional security purposes only. The Resolution Professional correctly rejected the claim as it exceeded the scope of available security.

Contract of guarantee under Section 126 of the Indian Contract Act - Financial debt by virtue of guarantee under Section 5(8)(i) of the I&B Code - Additional security - Interpretation by substance not nomenclature - Reading document as a whole - Enforcement of security interestAdditional security - Contract of guarantee under Section 126 of the Indian Contract Act - Interpretation by substance not nomenclature - Reading document as a whole - Enforcement of security interest - Financial debt by virtue of guarantee under Section 5(8)(i) of the I&B Code - Nature of the Agreement dated 29.03.2019 - whether it operates as a Deed of Guarantee or only as an agreement for additional security - HELD THAT: - The Agreement dated 29.03.2019 must be read in light of and together with the Debenture Trust Deed (DTD). The DTD expressly contemplates creation of Additional security under Clause 7.5(b) and defines 'Corporate Guarantee', 'Security Documents' and 'Security Provider' in a manner that includes corporate guarantee as a distinct form of security but also permits other documents creating security as required by the Debenture Trustee. The Agreement itself repeatedly describes the instrument as being executed "as part of the Additional Security" (Clauses F, G, I and Clause 2). Clause 2 sets out the specific security mechanism (deposit into an escrow account and future mortgage/charge to be created upon release of prior lender's charge) and Clause 6 provides for enforcement of the RIHPL security by the Debenture Trustee upon occurrence of an Event of Default. Clause 4, relied upon by the appellant, does not, when read holistically with the other clauses, manifest an undertaking by RIHPL to stand as guarantor for the principal obligor's liabilities; there is no provision making RIHPL the principal debtor nor any contemporaneous indication that RIHPL assumed the borrower's obligations as a guarantee. Established principles that a document is to be interpreted by its substance and read as a whole (and not by nomenclature or by isolating clauses) apply. Accordingly, the Agreement operates as an arrangement to provide additional security which is enforceable as security under its terms, and not as a guarantee within the meaning of Section 126 of the Contract Act that would give rise to a financial debt under Section 5(8)(i) of the I&B Code. [Paras 22, 23, 24, 26, 31]Agreement dated 29.03.2019 is a document creating additional security and not a Deed of Guarantee; therefore the Resolution Professional did not err in rejecting the appellant's claim as a secured financial creditor.Final Conclusion: The NCLT's order dismissing IA No.580/2023 is upheld: the Agreement of 29.03.2019 creates additional security and does not amount to a guarantee giving rise to a financial debt; the appeal is dismissed.

2023 (12) TMI 607 - DELHI HIGH COURT VAT / Sales Tax

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Penalty u/s 86 of Delhi VAT Act set aside; remand permitted full challenge, bona fide belief upheld
HC allowed the assessee's appeal and set aside the penalty imposed under s. 86 of the Delhi VAT Act. It held that its earlier order dated 26.09.2016 had not confined the remand to the issue of proportionality of the 200% penalty but permitted a challenge to the very foundation of the penalty. The HC ruled that ss. 86(10), (14) and (15) are not statutory, automatic penalty provisions akin to those considered by SC in Saw Pipes, and the Tribunal erred in treating them as such. On facts, no false, misleading or deceptive statement was found; the assessee's belief on non-taxability was bona fide.

Penalty for false, misleading or deceptive return - mens rea in penalty provisions - statutory/mandatory penalty versus discretionary penalty - proportionality of penalty - scope of remand - extended limitation for concealment, omission or failure to disclose material particularsScope of remand - proportionality of penalty - Whether the earlier remand directed by the High Court confined the Tribunal's reconsideration solely to the proportionality/quantification of the penalty. - HELD THAT: - The Court held that the Tribunal erred in construing the order of 26 September 2016 as restricting the remit to the question of proportionality alone. The Division Bench's order had not merely observed that a 200% penalty was facially disproportionate, but had accepted that the levy of penalty was unjustified insofar as the question of taxability was contentious; on that overall conspectus the matter was remitted. The Tribunal therefore misconceived the scope of remit by treating the earlier directions as limiting reconsideration to quantum alone, an approach inconsistent with the High Court's directions and reasoning. [Paras 19, 20, 21]The Tribunal's reading of the remand as confined to proportionality was incorrect; the remand did not preclude reconsideration of the foundational basis for levying penalty.Penalty for false, misleading or deceptive return - mens rea in penalty provisions - statutory/mandatory penalty versus discretionary penalty - extended limitation for concealment, omission or failure to disclose material particulars - Whether penalties under Section 86(10), (14) and (15) of the Delhi VAT Act, 2004 were rightly imposed on the assessee. - HELD THAT: - The Court concluded that Sections 86(10), (14) and (15) are predicated on conduct which is "false, misleading or deceptive" and thus incorporate the principle reflected in mens rea/culpable conduct; they are not statutory/automatic penalties of the kind that operate irrespective of intent. The Tribunal's reliance on authorities addressing statutory/mandatory penalties (for example provisions construed in Saw Pipes Ltd.) was inapt because those decisions concerned provisions that created automatic liability. On the facts the appellant had acted on a bona fide and debatable legal position as to taxability of sale of repossessed vehicles (a question that remained subject to Supreme Court proceedings), and the Department did not establish concealment, omission or failure to disclose material particulars such as would engage the proviso to Section 34(1). Consequently the imposition of penalties under the cited sub-sections of Section 86 was unsustainable and was set aside in respect of the tax periods in dispute. [Paras 22, 28, 30, 32]Penalties under Section 86(10), (14) and (15) were not justified on the record and are set aside for FY 2005-06 and FY 2008-09.Final Conclusion: Appeal allowed; Tribunal's order upholding penalties under Section 86(10), (14) and (15) set aside - penalties unsustainable where not founded on "false, misleading or deceptive" disclosures and where the taxability was a bonafide, debatable question; impugned penalty orders for FY 2005-06 and FY 2008-09 are quashed.

2023 (12) TMI 601 - CESTAT CHANDIGARH Central Excise

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Issues Involved:
1. Denial of CENVAT credit on service tax paid for after-sales warranty services.
2. Applicability of the definition of 'input service' under Rule 2(l) of the CENVAT Credit Rules, 2004.
3. Invocation of the extended period of limitation.

Summary:

1. Denial of CENVAT Credit on Service Tax Paid for After-Sales Warranty Services:
The appellant, engaged in manufacturing cranes and earthmoving machinery, availed CENVAT credit on service tax paid for after-sales warranty services provided through authorized dealers. The Department issued a Show Cause Notice proposing to deny this credit, arguing these services were not used in or related to the manufacture of products and thus not covered under the definition of 'input service' as per Rule 2(l) of the CENVAT Credit Rules, 2004. The Additional Commissioner confirmed the demand and imposed a penalty, which was upheld by the Commissioner (Appeals).

2. Applicability of the Definition of 'Input Service' under Rule 2(l) of the CENVAT Credit Rules, 2004:
The Tribunal considered the appellant's argument that warranty services enhance the marketability of final products and are indirectly related to their manufacture. The Tribunal referred to its own previous decisions, including the appellant's case for a different period, and other cases such as JCB India Ltd. v. Commissioner of Central Excise and CCE, Nashik v. Mahindra & Mahindra Ltd., where it was held that repair and maintenance services during the warranty period qualify as 'input services'. The Tribunal emphasized that 'input services' should be construed liberally and include after-sales support services as a business activity.

3. Invocation of the Extended Period of Limitation:
The Tribunal found no grounds for invoking the extended period of limitation, noting that the issue had already been settled in favor of the appellant in previous rulings. The Department failed to prove suppression of material facts by the appellant. The Tribunal also noted that the audit of the appellant's records was conducted well before the issuance of the Show Cause Notice, making the substantial demand beyond the period of limitation.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal with consequential relief, reiterating that the appellant correctly availed CENVAT credit on service tax paid for warranty services, which fall within the ambit of 'input service' as defined in Rule 2(l) of the CENVAT Credit Rules, 2004. The Tribunal also highlighted that pending appeals in higher courts without a stay do not affect the binding nature of its decisions.

Manufacturer entitled to CENVAT credit on service tax paid for warranty-related after-sales services under Rule 2(l) CCR 2004
CESTAT Chandigarh allowed the appeal regarding CENVAT credit for input services related to after-sales services. The department denied credit claiming such services were not used in relation to manufacture and thus not covered under Rule 2(l) of CCR, 2004. The Tribunal, following precedent in JCB India Ltd., held that repair and maintenance services during warranty period fall within the definition of input service. The appellant was entitled to CENVAT credit on service tax paid for dealer-provided services fulfilling warranty obligations. The impugned order was set aside.

Input service - CENVAT credit - repair and maintenance during the warranty period - used directly or indirectly in or in relation to the manufacture of final products - clearance of final products upto the place of removal - precedential effect of Tribunal decisions where appeals are admitted but not stayedInput service - CENVAT credit - repair and maintenance during the warranty period - used directly or indirectly in or in relation to the manufacture of final products - precedential effect of Tribunal decisions where appeals are admitted but not stayed - entitlement to CENVAT credit of service tax paid for repair and maintenance services provided by authorised dealers to customers during the warranty period - HELD THAT: - The Tribunal applied its earlier decisions (including the appellant's own earlier order and the decision in JCB India Ltd.) and other consistent Tribunal precedents to hold that repair and maintenance services rendered by dealers during the warranty period are linked to sale and are used indirectly in or in relation to the manufacture and clearance of final products. The Bench examined the definition of "input service" in rule 2(l) of the CENVAT Credit Rules (both prior to and w.e.f. 01.04.2011) and accepted that such after-sales warranty services fall within the ambit of input services. The Tribunal noted that several of the Revenue's challenges before High Courts amounted to admitted appeals without stays, and that where Tribunal decisions in favour of the assessee have not been stayed, their ratio is binding on lower authorities. Applying these precedents and reasoning, the impugned finding denying credit was held unsustainable. [Paras 6, 7]Impugned order set aside; appeal allowed and CENVAT credit of service tax paid on warranty repair and maintenance services granted with consequential relief, if any.Final Conclusion: The Tribunal allowed the appeal, setting aside the Commissioner(A)'s order and holding that service tax paid to dealers for warranty repair and maintenance services constitutes input service and is eligible for CENVAT credit; earlier Tribunal precedents favouring credit were followed and applied.

2023 (12) TMI 576 - CESTAT CHENNAI Customs

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Tribunal Overrules Customs Order; Allows Conversion of Shipping Bills Without Time Limit u/s 149.
The Tribunal set aside the impugned order denying the conversion of shipping bills from the Advance Authorization scheme to the Duty Drawback scheme. The appellant's request was initially denied by the Commissioner of Customs based on a time limitation outlined in a Board Circular. However, the Tribunal referenced the Gujarat HC's decision, which declared the Circular as ultra vires to Section 149 of the Customs Act, and noted the SC's dismissal of a related special leave petition. Consequently, the appeal was allowed, as Section 149 did not impose a time limitation on such conversion requests.

2023 (12) TMI 575 - CESTAT CHENNAI Customs

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Issues involved:
1. Classification of imported goods as Clear Float Glass and liability for Anti-Dumping Duty.
2. Request for adjudication without Show Cause Notice and personal hearing.

Classification of imported goods as Clear Float Glass and liability for Anti-Dumping Duty:
The appeal was filed by the importer against the Order-in-Appeal passed by the Commissioner of Customs (Appeals), Chennai. The Bill-of-Entry described the goods as "Extra Clear Glass," but upon manual examination, it was found to be "Clear Float Glass Thickness 12mm, country of origin - China." The Order-in-Original concluded that the imported goods were Clear Float Glass attracting Anti-Dumping Duty, confiscation, redemption fine, and penalty under the Customs Act, 1962. The importer's appeal was rejected by the first appellate authority, leading to the current appeal. The main issue was whether the impugned order was sustainable.

Request for adjudication without Show Cause Notice and personal hearing:
The importer avoided further investigation/examination by requesting adjudication without a Show Cause Notice and personal hearing. The appellant did not question the examination report of the officers and chose not to participate in the personal hearing. The appellant's letter requested non-issuance of Show Cause Notice and personal hearing, leading the authorities to rely on the examination report. The appellant failed to provide supporting evidence to establish that the imported goods were Extra Clear Glass and not Clear Float Glass. The order of the first appellate authority was upheld due to the lack of supporting documents and expert opinion. The appellant's attempt to justify the classification based on duty paid was rejected as it did not affect the fundamental dispute regarding classification.

Conclusion:
The Tribunal dismissed the appeal as it found no merit in the appellant's case. The classification of the goods as Clear Float Glass and the liability for Anti-Dumping Duty were upheld based on the examination report and lack of supporting evidence from the importer. The Tribunal did not delve into the arithmetic of duty payment claims and upheld the decision of the lower authorities.

Tribunal Confirms Anti-Dumping Duty on Imported Glass, Rejecting Claim of Incorrect Classification Without Evidence.
The Tribunal dismissed the appeal, upholding the classification of the imported goods as Clear Float Glass, which attracted Anti-Dumping Duty. The appellant's request for adjudication without a Show Cause Notice and personal hearing was granted, but they failed to provide evidence to support their claim that the goods were Extra Clear Glass. The Tribunal agreed with the lower authorities' reliance on the examination report and found no merit in the appellant's arguments, affirming the imposition of duties, fines, and penalties under the Customs Act, 1962.

Classification of imported goods - Reliance on manual/physical examination and description on packaging - Waiver of show cause notice and personal hearing - Admissibility of commercial invoice as self serving evidence and need for independent expert report - Applicability of anti dumping duty - Payment of excess duty does not vitiate classificationReliance on manual/physical examination and description on packaging - Waiver of show cause notice and personal hearing - Classification of imported goods - Whether the adjudicating authorities were justified in treating the imported goods as Clear Float Glass and in relying on the examining officers' report where the importer requested adjudication without issuance of a show cause notice and without personal hearing. - HELD THAT: - The Bill of Entry described the goods as "12MM Extra Clear Glass" but the examining officers' manual inspection and the description on the goods identified them as "Clear Float Glass" of China. The importer expressly requested that no show cause notice be issued and that adjudication proceed without personal hearing, thereby foregoing further investigation and not challenging the examining officers' observations at the earliest opportunity. The importer produced only self serving commercial documentation from the supplier and did not furnish an independent expert report to rebut the departmental physical examination. In these circumstances the original authority was entitled to act on the unrebutted examination report of the Shed Officers and classify the goods accordingly. The absence of objection or supporting independent evidence by the importer justified upholding the classification adopted by the authorities. [Paras 7, 8]The findings of the lower authorities that the imported goods were Clear Float Glass and the reliance on the examining officers' report were upheld.Applicability of anti dumping duty - Classification of imported goods - Payment of excess duty does not vitiate classification - Whether the fact that the importer paid an amount of duty said to exceed the hypothetical liability affects the classification of the goods or the levy of anti dumping duty. - HELD THAT: - There was a fundamental dispute on classification because Clear Float Glass attracts anti dumping duty. The Revenue adopted the classification based on the first check/physical inspection and description on the goods, which remained unchallenged by the importer. The appellant's contention that it paid a higher amount of duty cannot be used to justify or alter the classification; payment in excess does not negate the departmental finding that the imported item was subject to anti dumping duty. Allowing payment of excess duty to determine classification would impermissibly permit taxpayers to override classification by remitting amounts. [Paras 9]The appellant's payment of duty in excess did not affect the classification or the liability to anti dumping duty, and that contention was rejected.Scope of appellate review - Whether the Tribunal could engage in re arithmetic or detailed recomputation of anti dumping duty on the appeal. - HELD THAT: - The appellant placed reliance on hypothetical duty calculations, but the Tribunal noted that the scope of the present appeal was limited and it could not delve into the arithmetics or recomputation of duty liabilities on the facts of this appeal. [Paras 10]The Tribunal declined to enter into arithmetic recomputation of duty in the appeal.Final Conclusion: The appeal is dismissed; the first appellate authority's order upholding classification of the imported goods as Clear Float Glass and the consequent levy of anti dumping duty, confiscation option and penalty is affirmed, the appellant having failed to rebut the departmental physical examination or produce independent expert evidence and having waived issuance of a show cause notice and personal hearing.

2023 (12) TMI 571 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB Insolvency and Bankruptcy

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NCLAT upholds rejection of Section 7 application as profit-sharing loan constitutes joint venture, not financial debt
NCLAT dismissed the appeal challenging rejection of Section 7 application for initiation of CIRP. The appellant claimed financial creditor status based on profit-sharing loan given to respondent. NCLAT held that the transaction was a joint venture agreement for property development with 25:75 resource sharing ratio, not financial debt. The arrangement involved investment for profit-sharing rather than disbursement for time value of money as required under Section 5(8) IBC. Since appellant was collaborator, not financial creditor under Section 5(7) IBC, Section 7 application was not maintainable. Adjudicating Authority's findings upheld.

Financial debt - financial creditor - consideration for the time value of money - commercial effect of borrowing - joint development / profit sharing investment - maintainability of Section 7 IBCFinancial debt - financial creditor - consideration for the time value of money - commercial effect of borrowing - Whether the funds provided by the appellant under the profit sharing loan agreement qualify as a financial debt and confer on the appellant the status of a financial creditor under the IBC. - HELD THAT: - The Tribunal examined the terms of the agreement holistically and found that the transaction was a joint investment for development of the subject property with pooling of resources in the agreed ratio and sharing of profits, losses and costs, rather than a disbursal for exclusive utilisation by the respondent. The agreement manifested reciprocal rights and obligations, obligations to share construction and statutory costs, and allocation of 15% of working profit towards administrative expenses, indicating a collaborative profit sharing arrangement. The Tribunal applied the settled test that a financial debt requires disbursal against the consideration for the time value of money (Section 5(8) read with authority cited), and concluded that the present arrangement lacked the essential element of disbursement for the time value of money and did not have the commercial effect of borrowing. Distinguishing precedents relied upon by the appellant on factual matrix, the Tribunal held that the appellant was a collaborator and co developer and not a financial creditor entitled to invoke Section 7. The Tribunal therefore upheld the Adjudicating Authority's finding that the transaction is not a financial debt and the appellant is not a financial creditor. [Paras 9, 15, 16, 18, 20]The funds do not constitute a financial debt and the appellant is not a financial creditor under Sections 5(7) and 5(8) of the IBC.Maintainability of Section 7 IBC - summary nature of insolvency proceedings - specific performance / contractual remedies - Whether the Section 7 application was maintainable or whether the appellant must pursue contractual remedies in ordinary civil fora. - HELD THAT: - Having concluded that the transaction is not a financial debt, the Tribunal held that a Section 7 application was not maintainable. The Tribunal emphasised the summary character of insolvency proceedings and declined to probe alleged breaches of contract in that forum. It observed that contractual reliefs, including specific performance as provided in the agreement, remain available to the appellant and such remedies should be pursued before appropriate civil fora rather than by invoking the insolvency resolution process. [Paras 19, 20]Section 7 was not maintainable and the appellant may pursue other contractual remedies, including suit for specific performance, before appropriate forums.Final Conclusion: The appeal is dismissed. The Tribunal concurs with the Adjudicating Authority that the profit sharing investment is not a financial debt and the appellant is not a financial creditor under the IBC; therefore the Section 7 application was not maintainable, while leaving open the appellant's civil remedies.

2023 (12) TMI 569 - CESTAT MUMBAI Service Tax

AI TextQuick Glance (AI)Headnote

Issues involved:
The issue in this case is whether the denial of Cenvat Credit on certain services by the Commissioner is justified under Rule 2(l) of the Cenvat Credit Rules, 2004.

Details of the Judgment:

Issue 1: Denial of Cenvat Credit
The appeal challenges the Order-in-Appeal upholding the rejection of refund of Cenvat Credit for General Insurance service, Security Insurance, and Restaurant facility service. The question is whether the denial of Cenvat Credit on these services is justified under Rule 2(l) of the Cenvat Credit Rules, 2004.

The Tribunal considered previous decisions where it was held that denial of Cenvat Credit can only be done by issuing a notice under Rule 14 of the Cenvat Credit Rules, and not solely under Rule 5. Since no notice under Rule 14 was issued in this case, the denial of refund based on the lack of nexus between input and output services cannot be sustained.

The Tribunal referred to a case where it was clarified that the amended Rule 5 does not require establishing a nexus between input and output services for claiming a refund. Denial of refund on this ground is not permissible under Rule 5, as it is governed by the formula prescribed therein.

In the absence of any notice under Rule 14 for recovery of irregularly availed Cenvat Credit, the Tribunal found no justification for the denial of Cenvat Credit solely based on Rule 5. Therefore, the appeal was allowed by setting aside the impugned order.

The Tribunal emphasized that the denial of Cenvat Credit can only be done through the proper procedure outlined in Rule 14, and Rule 5 is specifically for refund purposes without requiring a nexus between input and output services.

The Tribunal concluded that the denial of Cenvat Credit solely under Rule 5, without following the procedure under Rule 14, is not justified. Therefore, the appeal was allowed, setting aside the Commissioner's decision to reject the refund of Cenvat Credit.

This summary provides a detailed breakdown of the judgment, highlighting the key legal principles and decisions considered by the Tribunal in reaching its conclusion.

Refund of Cenvat credit for ineligible input services cannot be rejected without Rule 14 notice under Cenvat Credit Rules 2004
CESTAT Mumbai held that refund of Cenvat credit for ineligible input services including general insurance, security insurance, and restaurant facility services cannot be rejected solely under Rule 5 of Cenvat Credit Rules, 2004. The tribunal ruled that denial of Cenvat credit requires issuance of notice under Rule 14, which provides for recovery of wrongly taken credit. Since no Rule 14 notice was issued to establish irregular availment, the refund rejection was improper. The appeal was allowed and the impugned order was set aside.

Refund of accumulated Cenvat credit under substituted Rule 5 of the Cenvat Credit Rules, 2004 - recovery of irregularly availed Cenvat credit under Rule 14 of the Cenvat Credit Rules, 2004 - nexus between input services and output services - eligibility of input service for Cenvat credit/refundRefund of accumulated Cenvat credit under substituted Rule 5 of the Cenvat Credit Rules, 2004 - recovery of irregularly availed Cenvat credit under Rule 14 of the Cenvat Credit Rules, 2004 - nexus between input services and output services - eligibility of input service for Cenvat credit/refund - Whether the refund of Cenvat credit in respect of certain services can be denied under Rule 5 on the ground that those services are not eligible input services or there is no nexus with the output service, without initiating proceedings under Rule 14 for recovery. - HELD THAT: - The Tribunal held that the substituted Rule 5 provides for refund of accumulated Cenvat credit by application of the prescribed formula and does not provide for adjudication of correctness of availment of credit or require establishment of a one-to-one nexus between input and output services. Denial or variation of Cenvat credit on the ground that certain services are not input services or for lack of nexus is a matter within the scope of Rule 14 which alone contemplates recovery of irregularly availed Cenvat credit. Since no notice under Rule 14 was issued to the appellant in the instant matter, the authorities could not refuse the refund claim by invoking Rule 5. The Tribunal relied on its earlier decisions and the TRU clarification that the amended Rule 5 dispenses with the need to establish nexus and emphasised that availment, utilisation and refund are distinct remedies under the Rules; therefore, in the absence of proceedings under Rule 14, the refund could not be withheld. [Paras 4, 5]The impugned order denying refund on the ground of ineligibility/no nexus is set aside and the appeal is allowed; refund is admissible since Rule 14 proceedings were not initiated.Final Conclusion: The Tribunal allowed the appeal, set aside the Commissioner (Appeals) order insofar as refund was denied for lack of nexus or ineligibility of the services, and held that denial of refund under Rule 5 on such grounds is impermissible absent initiation of recovery proceedings under Rule 14.

2023 (12) TMI 568 - CESTAT CHENNAI Service Tax

AI TextQuick Glance (AI)Headnote

Issues Involved:
1. Whether the amount accounted as net-operating income in the financial accounts of the appellant is a consideration received by the appellant for providing services under the category of Business Support Service (BSS).
2. Whether the extended period is invocable or not.

Summary:

The appellants, engaged in handling export and import cargo, were audited, revealing that they did not discharge service tax on the mark-up received on freight charges. The department issued a show cause notice demanding service tax, interest, and penalties, which the appellants contested.

Issue 1: Net-Operating Income as Consideration for Services under BSS

The appellants argued that the excess amount received from freight charges, accounted as net operating income, is not subject to service tax as it represents profit from trading in cargo space, not for services rendered. They cited several judicial precedents, including EMU Lines Pvt. Ltd. and Greenwich Meridian Logistics, which held that such profits are not taxable under BSS. The Tribunal agreed, noting that the differential freight earned by the appellant is not consideration for services rendered and thus not liable to service tax under BSS. The Tribunal referenced multiple decisions supporting this view, including CST New Delhi Vs Karam Freight Movers and CST New Delhi Vs Continental Carriers, which affirmed that profit from the sale and purchase of cargo space is not a taxable service.

Issue 2: Invocation of Extended Period

The appellants contended that the issue was interpretational and they had a bona fide belief that these amounts need not be included in taxable value. The Tribunal found no evidence of suppression with intent to evade tax, as the demand was based on accounts maintained by the appellant and the issue was contentious with several decisions in favor of the assessee. Thus, the invocation of the extended period was not justified.

Conclusion

The Tribunal set aside the impugned orders, allowing the appeals with consequential relief, if any, and ruled in favor of the appellants on both issues, stating that the demand of service tax cannot sustain and the extended period cannot be invoked.

(Pronounced in court on 13.12.2023)

Freight forwarder's differential freight earnings not liable for service tax under Business Support Service
CESTAT Chennai set aside service tax demand on freight forwarder's differential freight earnings under Business Support Service. The Tribunal held that excess freight charges over actual costs constitute profit from cargo space trading, not consideration for services rendered to clients. Following precedents from Greenwich Meridian Logistics and Karam Freight Movers cases, the differential amount cannot be subjected to service tax levy. Additionally, the extended limitation period was deemed invalid as the department failed to establish suppression with intent to evade tax, and the issue remained contentious with favorable precedents for the assessee.

Business Support Services - consideration for services - purchase and sale of cargo space as principal-to-principal transaction - notional surplus/markup on freight not taxable as service - Sea Transportation Services outside levy of service tax - liability on aircraft operator for Air Transportation Service - extended period of limitationBusiness Support Services - consideration for services - purchase and sale of cargo space as principal-to-principal transaction - notional surplus/markup on freight not taxable as service - Sea Transportation Services outside levy of service tax - liability on aircraft operator for Air Transportation Service - Net operating income (difference between freight charged to shippers and freight paid to carriers) is not consideration taxable under Business Support Services. - HELD THAT: - The appellant's core activity is booking cargo space with carriers and reselling that space; the differential between the buy-rate and sell-rate is a profit element arising from sale and purchase of cargo space and not consideration paid for any service rendered to the shipper. Sea freight falls outside the levy of service tax and air freight liability (where relevant) rests on the aircraft operator, so the mark-up or notional surplus retained by the appellant does not constitute taxable consideration under the definition of Business Support Services. The Tribunal followed earlier authorities holding that such principal-to-principal transactions and resultant surplus do not amount to promotion or marketing of another's services and hence are not taxable as Business Support Services, and applying those precedents the demand cannot be sustained and is set aside. [Paras 22, 23, 24, 25, 26]Demand of service tax on the net operating income/markup on freight is set aside; such amounts are not taxable as consideration under Business Support Services.Extended period of limitation - Extended period of limitation invoked by the department is not sustainable. - HELD THAT: - The quantification was made from the appellant's own audited accounts and there is no finding of a positive act of suppression with intent to evade tax. The issue involved interpretational controversy with several decisions favouring the assessee, and on those facts the invocation of extended period could not be justified. Consequently the extended period allegation and related demands are rejected. [Paras 27]Extended period cannot be invoked; limitation contention answered in favour of appellant.Final Conclusion: Following analysis of the facts and precedents, the Tribunal allowed the appeals, set aside the demands of service tax (including interest and penalties) on the net operating income/markup on freight charged by the appellant, and held that the extended period of limitation was not invocable; impugned orders are set aside with consequential relief, if any.

2023 (12) TMI 567 - CESTAT CHENNAI Service Tax

AI TextQuick Glance (AI)Headnote

Issues Involved:

1. Nature of the Contract between the appellant and M/s. India Cements Ltd (M/s. ICL)
2. Applicability of Service Tax on amounts received by the appellant under the IPL Playing Contract

Summary:

1. Nature of the Contract between the appellant and M/s. India Cements Ltd (M/s. ICL):

The appellant, a cricketer for the Chennai Super Kings, entered into an agreement with M/s. ICL and BCCI. The agreement included terms that indicated an employer-employee relationship, such as the appellant being under the control and supervision of M/s. ICL, being restricted from playing for other teams, and being required to undergo medical examinations and attend training. The remuneration was fixed and did not vary based on the number of promotional activities or advertisements. The Tribunal held that the contract was in the nature of an employment contract, with the appellant being hired primarily to play cricket, and the promotional activities being ancillary.

2. Applicability of Service Tax on amounts received by the appellant under the IPL Playing Contract:

The department argued that the amounts received by the appellant were for brand promotion services and thus subject to service tax under Section 65B (44) of the Finance Act, 1994. However, the Tribunal noted that the appellant's main obligation was to play cricket, and the promotional activities were secondary. The fixed remuneration and the control exercised by M/s. ICL over the appellant indicated an employer-employee relationship. Previous decisions in similar cases, such as those involving Yusufkhan Pathan and Irfankhan Pathan, supported this view. Consequently, the Tribunal concluded that the payments were not for brand promotion services but were part of the employment contract, and thus, the demand for service tax could not be sustained.

Conclusion:

The Tribunal set aside the impugned order demanding service tax, ruling that the contract was an employment contract and the amounts received were not for brand promotion services. The appeal was allowed with consequential relief, if any.

Professional cricketer's IPL contract amounts not subject to service tax as employment-based, not service provision
CESTAT Chennai held that amounts received by a professional cricketer from India Cements Ltd. under IPL playing contract were not subject to service tax as brand promotional activities. The tribunal determined the contract was employment-based, not service provision, as the player was under control and supervision of the franchisee, restricted from playing for other teams, received fixed remuneration, and was primarily hired to play cricket rather than conduct promotional activities. The promotional activities were incidental to the dominant cricket-playing obligation. Following precedents in similar cases, the tribunal set aside the service tax demand and allowed the appeal.

Employer-employee relationship - brand promotion as taxable service - definition of service under Section 65B(44) - composite contract versus contract of service - ancillary promotional activities - control and supervision as indicia of employmentEmployer-employee relationship - brand promotion as taxable service - ancillary promotional activities - control and supervision as indicia of employment - Whether the amounts paid by M/s. India Cements Ltd. to the appellant for the period July 2012 to March 2014 are consideration for a taxable service of brand promotion or remuneration under a contract of service not liable to service tax - HELD THAT: - The Tribunal examined the IPL Playing Contract and found the dominant character of the agreement to be engagement of the player as a professional cricketer under terms that impose control and supervision, fixed remuneration and obligations to report, train, play and undergo medical examinations. Clauses restricting the player from taking other employment or playing for other teams, the obligation to wear team clothing and to attend promotional events, and the fixed nature of the player fee indicate an employer-employee relationship rather than an independent contractual provision of brand-promotion services. The promotional appearances and related rights granted to the franchisee are ancillary to the primary obligation to play cricket and do not convert the composite agreement into a contract for rendering taxable brand-promotion services. The Tribunal followed earlier decisions of the Bench addressing identical contracts and applied the same determinative reasoning to hold that the amounts received are remuneration under a contract of service and not consideration for a service within the meaning of the taxing provision relied upon by the Department. Consequently, the demand of service tax, interest and penalties was set aside. [Paras 11, 12, 13]Demand of service tax on amounts received by the appellant for July 2012 to March 2014 quashed; impugned order set aside and appeal allowed with consequential relief, if any.Final Conclusion: On the facts and terms of the IPL Playing Contract and following earlier Tribunal decisions, the relationship between the appellant and the franchisee is contractual employment; the amounts paid are remuneration and not consideration for taxable brand-promotion services for the period July 2012 to March 2014, and the demand of service tax and penalties is set aside.

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