TaxTMI Updates e-Newsletter
Jan 07,2021

Consideration - job work / custom milling - taxability of custom milling at 5% on processing charges - value in kind as part of consideration - written contractual terms controlling characterisation of transactions - writ jurisdiction despite availability of alternative statutory remedy - arbitration clause and non-arbitrability of revenue disputes

Consideration - value in kind as part of consideration - written contractual terms controlling characterisation of transactions - Whether the by products (broken rice, bran and husk) retained by the miller constitute part of the 'consideration' for levy of GST on custom milling - HELD THAT: - The Court analysed the written CMR agreement, noting distinct clauses dealing separately with milling charges (clause 17) and retention of by products (clause 22). The agreement expressly provides that the mill shall retain by products and shall be responsible for expenses and taxes on their sale, while milling charges are fixed by GOI. The absence of any clear stipulation that by products form part of remuneration, together with the surrounding contractual scheme (including the mill's obligation to deliver specified rice yields and the practical purpose of compensating the miller for shortfall by allowing retention of by products), leads to the conclusion that by products were retained as compensation and not as a component of consideration for milling. The clause making the mill liable to pay tax on sale of by products does not convert those by products into consideration; tax liability on subsequent sale is a separate consequence. Applying the binding precedent in Food Corporation of India v. State of A.P., the Court held that contractual terms are sacrosanct and must determine the characterisation of the transfer. [Paras 13, 17, 19, 20]

By products retained by the petitioner are compensation and not part of the 'consideration' for milling; inclusion of their value in the milling consideration for GST assessment is legally unsustainable.

Job work / custom milling - taxability of custom milling at 5% on processing charges - Whether custom milling of paddy into rice is exempt or taxable under the GST scheme and the correct basis of taxation - HELD THAT: - The Court relied on the Central Government clarification (F.No.354/263/2017 TRU dated 20 11 2017) which explains that milling of paddy is not an intermediate production process and that custom milling is not exempt under the cited notification. The clarification states that milling on job work basis is liable to GST at 5% on the processing charges and not on the entire value of rice. The Court accepted this position and recorded that there is no dispute on this legal proposition. [Paras 14, 15]

Custom milling of paddy is taxable and liable to GST at 5% on the processing/milling charges, not on the entire value of rice.

Writ jurisdiction despite availability of alternative statutory remedy - Whether the writ petition was maintainable notwithstanding the existence of a statutory appeal under the GST statute - HELD THAT: - Although a statutory appeal remedy exists under section 107, the Court exercised its writ jurisdiction because the assessment order had been passed contrary to the settled principle in Food Corporation of India v. State of A.P. and the petitioner had filed the writ within the period available for filing an appeal. The Court distinguished authorities relied on by Revenue (including Glaxo Smith Kline) on their facts and concluded that where an assessment is vitiated by a legal error of the nature demonstrated, entertaining a writ petition is appropriate rather than relegating the petitioner to the appellate forum. [Paras 21]

Writ petition was entertainable in the circumstances; the Court proceeded to decide the legal error without directing relegation to the appellate authority.

Arbitration clause and non-arbitrability of revenue disputes - Whether the existence of an arbitration clause in the milling agreement bars the petitioner from approaching the High Court under Article 226 - HELD THAT: - The Court observed that the dispute before it was between the petitioner and the Revenue regarding tax characterisation of by products, not a contractual implementation dispute between the petitioner and the Corporation that could be referred to the arbitrator. Since the controversy concerns revenue law and characterisation for tax purposes, it is not amenable to resolution by the contractual arbitrator, and the arbitration clause does not oust the Court's jurisdiction in this matter. [Paras 22]

Arbitration clause in the agreement does not bar the writ petition challenging the Revenue's assessment.

Final Conclusion: The writ petition is allowed: the Assessment Order dated 29 10 2018 is set aside insofar as it levies GST by treating the value of by products as part of the consideration for milling; the Court affirmed that custom milling is taxable at 5% on processing charges, and found the writ maintainable despite alternative remedies and not barred by the arbitration clause.

Violation of Section 171(1) - failure to pass on benefit of GST rate reduction - profiteering - penalty not leviable under Section 122(1)(i) for non compliance with anti profiteering provisions - non retrospectivity of Section 171(3A) penalty provision

Violation of Section 171(1) - failure to pass on benefit of GST rate reduction - profiteering - Respondent had not passed on the benefit of reduction in the rate of GST to his recipients and was guilty of profiteering in respect of the specified supplies during the period 27.11.2017 to 31.12.2017. - HELD THAT: - The Authority, upon consideration of the DGAP report and the material placed before it, confirmed that the respondent charged incorrect GST rates and did not pass on the benefit of the reduction in GST rate from 12% to 5% on supplies of the specified products. The earlier determination by this Authority fixed the profiteered amount for the period from 27.11.2017 to 31.12.2017, and the present proceedings record that the respondent had collected additional consideration and additional tax from buyers, thereby contravening the obligation under Section 171(1). [Paras 1, 2, 6]

Respondent held to have violated Section 171(1) and indulged in profiteering for the period 27.11.2017 to 31.12.2017.

Penalty not leviable under Section 122(1)(i) for non compliance with anti profiteering provisions - non retrospectivity of Section 171(3A) penalty provision - Whether penalty could be imposed on the respondent under Section 122(1)(i) for the failure to pass on benefits under Section 171(1), or alternatively under the subsequently inserted Section 171(3A). - HELD THAT: - The Authority examined the statutory scheme and concluded that Section 122(1)(i) does not provide for penalty in respect of failure to pass on benefits under Section 171(1); consequently the penalty under Section 122 could not be invoked for that contravention. The Authority further noted that specific penal provision for breach of Section 171(1) (viz. insertion of Section 171(3A)) was introduced by Section 112 of the Finance Act, 2019 with effect from 01.01.2020. Since no penalty provision existed during the period when the breach occurred (27.11.2017 to 31.12.2017), the later provision cannot be applied retrospectively to impose penalty for that past breach. On this basis the show cause notice seeking to impose penalty under Section 122(1)(i) was withdrawn and the penalty proceedings were dropped. [Paras 7, 8, 9]

Penalty under Section 122(1)(i) cannot be imposed for the failure to pass on benefits under Section 171(1); Section 171(3A) (penalty) introduced w.e.f. 01.01.2020 is not retrospective, and therefore penalty proceedings are withdrawn and dropped.

Final Conclusion: The Authority reaffirmed that the respondent committed profiteering by failing to pass on the GST rate reduction for the period 27.11.2017 to 31.12.2017, but held that no penalty could be imposed under Section 122(1)(i) for that breach and that the penal provision later inserted as Section 171(3A) (effective 01.01.2020) cannot be applied retrospectively; accordingly the penalty proceedings were withdrawn and dropped.

Anti-profiteering under Section 171(1) - Failure to pass on GST rate reduction - Penalty under Section 122(1)(i) of the CGST Act - Non-retroactivity of penal provisions - Insertion of penalty provision Section 171(3A) by Finance Act, 2019

Anti-profiteering under Section 171(1) - Failure to pass on GST rate reduction - Respondent's liability for violation of Section 171(1) for not passing on benefit of GST rate reduction. - HELD THAT: - The Authority examined the DGAP's investigation and earlier determination and concluded that the Respondent did not pass on the benefit of the reduction in GST rate from 28% to 18% in respect of the specified products. On consideration of the material, the Authority found that the Respondent failed to pass the tax-rate reduction benefit to recipients during the relevant period and thereby violated the provisions of Section 171(1) of the CGST Act, 2017. [Paras 6]

Respondent held to have violated Section 171(1) for the period specified by the Authority.

Penalty under Section 122(1)(i) of the CGST Act - Whether penalty under Section 122(1)(i) can be imposed for failure to pass on the benefit under Section 171(1). - HELD THAT: - The Authority considered the statutory text of Section 122(1)(i) and the nature of the contravention. It found that Section 122(1)(i) provides penalty for specified offences (such as issuing incorrect or false invoices) but does not impose penalty for failure to pass on benefits of tax reduction or input tax credit under Section 171(1). Consequently the statutory scheme does not support imposing penalty under Section 122 for a contravention of the anti profiteering obligation in Section 171(1). [Paras 7]

Penalty under Section 122(1)(i) cannot be imposed for violation of Section 171(1).

Insertion of penalty provision Section 171(3A) by Finance Act, 2019 - Non-retroactivity of penal provisions - Whether the penalty provision inserted as Section 171(3A) by the Finance Act, 2019 (w.e.f. 01.01.2020) can be applied retrospectively to the respondent's earlier contravention. - HELD THAT: - The Authority noted that specific penalty provisions for violation of Section 171(1) were introduced by Section 112 of the Finance Act, 2019 (inserting Section 171(3A)), which came into force on 01.01.2020. As no penalty provision for breach of Section 171(1) existed during the period when the Respondent committed the contravention (15.11.2017 to 31.07.2018), the Authority held that the later-enacted penal provision cannot be applied retrospectively. Accordingly, the notice issued under Section 122 alleging liability and the penalty proceedings were withdrawn and dropped. [Paras 8, 9]

Penalty under newly inserted Section 171(3A) (effective 01.01.2020) cannot be imposed retrospectively; penalty proceedings withdrawn.

Final Conclusion: The Authority confirms that the Respondent breached Section 171(1) by not passing on the GST rate reduction for the specified period, but holds that no penalty can be imposed under Section 122(1)(i) for that contravention and that the penalty provision subsequently inserted as Section 171(3A) (effective 01.01.2020) is not retrospectively applicable; accordingly the penalty proceedings are withdrawn and dropped.

Re-opening of assessment - reason to believe - reassessment jurisdiction under Section 147/148 - addition on account of unexplained cash credit under Section 68 - onus of proof on assessee to establish genuineness, identity and creditworthiness of donors - prior assessment findings not determinative after valid re-opening - reliance on investigative agency material (CBI statements) as basis for reassessment

Re-opening of assessment - reason to believe - reassessment jurisdiction under Section 147/148 - reliance on investigative agency material (CBI statements) as basis for reassessment - Validity of the Assessing Officer's assumption of jurisdiction to reopen assessments for the stated years. - HELD THAT: - The Court held that the AO had tangible material-communications from the Joint Director of Income Tax and the CBI investigation disclosing large cash deposits, statements of witnesses denying donations and admissions implicating accommodation entries-which constituted specific information contradicting the earlier assessment and furnished a prima facie basis to form a reason to believe that income had escaped assessment. The presence of witness statements, admission by a person (Sh. Mahesh Garg) regarding accommodation entries, and documentary material received from investigative authorities established a nexus between the information and the assessee's accounts, satisfying the threshold for reopening under the reassessment provisions. The Court rejected the contention that the AO was precluded from reopening because earlier assessment had accepted the donations: once a valid reopening is effected, earlier findings do not preclude fresh inquiry. The Tribunal's and lower authorities' factual conclusions upholding the reopening were not found to be perverse. [Paras 12, 13]

The assumption of jurisdiction by the AO to reopen the assessments for AY 2006-07 and AY 2007-08 was valid and justified by the material available.

Addition on account of unexplained cash credit under Section 68 - onus of proof on assessee to establish genuineness, identity and creditworthiness of donors - prior assessment findings not determinative after valid re-opening - Sustainability of additions made under Section 68 treating donations as bogus where reassessment relied on investigative findings. - HELD THAT: - The Court upheld the factual findings of the Tribunal and CIT(A) that the assessee failed to discharge the onus of proving the genuineness, identity and creditworthiness of donors after contradictory material surfaced during the CBI probe. The assessee had earlier placed donor confirmations and bank records, but the investigative statements revealed that many donors denied making donations and that accommodation entries had been made, undermining the earlier documentary record. The assessee did not produce credible evidence or examine witnesses to counter the investigative material; consequently the tax authorities' conclusion that the amounts credited to general fund were unexplained/ bogus and taxable under Section 68 was supported by the record. The Court found no infirmity in confirmation of the additions and the allocation of the amounts to the correct assessment years. [Paras 15]

The additions under Section 68 treating the donations as unexplained/bogus were sustained for the respective assessment years.

Final Conclusion: The appeals were dismissed: the Court found the reopening of assessments to be valid on the basis of investigative material and witness statements, and affirmed the Tribunal's and CIT(A)'s factual conclusion that the assessee failed to prove the genuineness and creditworthiness of donors, justifying additions under Section 68; no substantial question of law arose for interference.

Compulsory e-filing under Rule 45 of the Income Tax Rules - CBDT Circular extending e-filing deadline and providing remedial window - statutory right of appeal not to be defeated by procedural technicalities - acceptance of defective/manual filing by revenue office and duty to promptly return defects

Compulsory e-filing under Rule 45 of the Income Tax Rules - CBDT Circular extending e-filing deadline and providing remedial window - statutory right of appeal not to be defeated by procedural technicalities - acceptance of defective/manual filing by revenue office and duty to promptly return defects - Validity and treatment of the manual appeal filed in Form No.35 on 25.4.2016 despite the mandate for e-filing, and the correctness of remitting the matter to the CIT(A) for disposal on merits. - HELD THAT: - The Court recognised that Rule 45 mandated e-filing of appeals with effect from 01.3.2016 but noted the CBDT's recognition of technical difficulties and its limited remedial extension permitting e-appeals due by 15.5.2016 to be filed up to 15.6.2016. In the present case the assessee lodged a manual appeal on 25.4.2016 which was accepted and kept pending in the office of the CIT(A). The office did not either refuse the manual filing at that time or return the papers with a memo requesting rectification; instead, the assessee was informed only on 13.12.2018-after about three years-that manual appeals were not acceptable. Given the admitted technical problems with the new e-filing regime, the late notice from the CIT(A) office, and the principle that procedural rules should not defeat a statutory right of appeal for mere technicalities, the Tribunal correctly held that the manual appeal ought to be considered on merits and remitted the matter to the CIT(A) for de novo disposal. The Court found no error in the Tribunal's approach and declined to permit the Revenue to treat the manual appeal as non est in the circumstances.

The manual appeal filed in Form No.35 was to be entertained and the Tribunal was right in remitting the matter to the CIT(A) for disposal on merits; the Revenue's challenge fails.

Final Conclusion: The tax case appeal is dismissed; the order of the Income Tax Appellate Tribunal is confirmed and the substantial questions of law are answered against the Revenue.

Mandatory e filing of appeals - condonation of delay - extension of time by administrative circular - reckoning date of filing of appeal - technical difficulties as ground for condonation

Mandatory e filing of appeals - extension of time by administrative circular - reckoning date of filing of appeal - Whether appeals could be rejected for not being e filed within the prescribed period when CBDT Circular No.20/2016 extended time for e filing and treated e appeals filed within the extended window as filed in time. - HELD THAT: - The Court held that Rule 45 made e filing mandatory with effect from 01.03.2016 but the CBDT, recognising practical difficulties, issued Circular No.20/2016 extending the time limit for filing e appeals and directing that e appeals filed within the extended period be treated as filed in time. Having regard to that one time administrative relief and the factual matrix of 2016 when the system and EVC verification were being stabilised, the Court concluded that the substantive right of appeal should not be foreclosed on the technical ground of non e filing within the original period. The Tribunal correctly applied the coordinate bench decision and found that the respondents were entitled to have their appeals adjudicated on merits rather than being dismissed for failure to e file within the original limitation period (the CBDT extension and related operational dates being determinative in 2016). [Paras 5, 6, 12, 13, 16]

The Tribunal did not err in holding that the appeals should not be rejected solely because they were not e filed within the original period, having regard to CBDT Circular No.20/2016 and the one time extension.

Condonation of delay - technical difficulties as ground for condonation - Whether condonation of delay could be granted in the absence of a formal application and whether the proper course was to remit the matter to the Commissioner (Appeals) to consider a condonation petition. - HELD THAT: - The Court recognised the settled procedural principle that a party seeking condonation must place on record reasons for delay and that ordinarily the Tribunal should remit to the Commissioner (Appeals) to decide an application for condonation under the Limitation Act principles. However, in the special factual context of 2016 - when mandatory e filing was newly introduced, operational issues existed and CBDT provided a one time relief - the Court considered it would be unduly harsh and would only prolong litigation to direct remand for condonation applications. Bearing in mind the objective of preventing denial of substantive rights on purely technical grounds and the administrative relief given by CBDT, the Court upheld the Tribunal's exercise of discretion in favour of the assessees despite absence of formal condonation petitions before the Commissioner (Appeals). [Paras 9, 10, 14, 15, 16]

Although condonation ordinarily requires an application and reasons, in the 2016 factual matrix the Tribunal's grant of relief without remanding for formal condonation was justified and not interfered with.

Mandatory e filing of appeals - extension of time by administrative circular - Whether the revenue's appeals against the Tribunal's orders should be entertained. - HELD THAT: - Weighing the CBDT's one time extension, the practical difficulties at the inception of mandatory e filing, and the Tribunal's reliance on a coordinate bench decision, the High Court found no error in the Tribunal's exercise of discretion in favour of the assessees. The Court also noted that, but for the circular relief, several of the revenue appeals would have failed for low tax effect. Given the factual backdrop and the administrative mitigation provided in 2016, the Court declined to interfere with the Tribunal's orders. [Paras 16, 17, 18, 19]

The appeals filed by the revenue were dismissed.

Final Conclusion: In light of the CBDT's one time extension to mitigate initial technical difficulties with mandatory e filing in 2016, and having regard to the factual matrix of that year, the High Court upheld the Tribunal's exercise of discretion in allowing the assessees' appeals and dismissed the revenue's appeals; the Court noted that the substantive right of appeal should not be defeated on technical grounds in the circumstances then prevailing.

Condonation of delay - dismissal for non-prosecution - failure to place material on record - limitation in filing departmental appeal - observations against Assessing Officer's conduct

Condonation of delay - failure to place material on record - limitation in filing departmental appeal - Whether the appeal before this Court could proceed in absence of the application for condonation of delay and related records which were directed to be placed on record - HELD THAT: - The Court recorded that although directions were given to place the application for condonation of delay filed before the ITAT on record, the appellants failed to do so despite repeated adjournments and directions and repeated communications to the Assessing Officer and ITO Headquarters. The failure to place the condonation application and related material on record meant the Court could not adjudicate the question of law sought to be raised against the ITAT's order rejecting condonation of delay. The Court also noted that ITAT had made adverse observations regarding the Assessing Officer's conduct and the reasons for delay, but these did not absolve the appellant from complying with the Court's direction to produce the application and records. In the circumstances, the appeal was disposed of for default and non-prosecution rather than on the merits of the condonation application or the ITAT's reasoning.

Appeal dismissed in default and on account of non-prosecution for failure to place the condonation application and related records on the file; no adjudication on the merits of the ITAT's rejection of condonation of delay.

Dismissal for non-prosecution - observations against Assessing Officer's conduct - Whether adverse observations recorded by the ITAT against the Assessing Officer required any different procedural outcome in this Court in absence of the materials directed to be produced - HELD THAT: - The Court acknowledged the ITAT's observations criticizing the Assessing Officer for not filing a remand report and for oversight leading to limitation, but observed that those findings did not alter the procedural requirement that the appellant place the condonation application and supporting material before this Court. Despite the ITAT's comments, nothing on the ground changed because the application and records were not produced. Accordingly, the Court declined to entertain the appeal further and dismissed it for non-prosecution.

Notwithstanding ITAT's adverse observations against the Assessing Officer, the appeal is dismissed for non-prosecution because the required application and records were not placed on file.

Final Conclusion: The appeal is dismissed in default and for non-prosecution because the appellant failed to place on record the application for condonation of delay and related material as directed; no substantive adjudication was made on the merits of ITAT's rejection of condonation of delay.

Deduction under Section 10A and 10B for eligible undertakings - Tax holiday treatment of provisions written back - Tax holiday treatment of foreign exchange fluctuation gains - Inclusion of foreign currency expenditure and communication/telecommunication charges in export turnover - Stage of deduction under Section 10A vis-a -vis set off of brought forward losses (deduction at undertaking level before Chapter VI set offs)

Tax holiday treatment of provisions written back - Deduction under Section 10A and 10B for eligible undertakings - Provisions written back (including amounts such as link charges and annual day expenses) are eligible for deduction under Section 10A/10B when treated as income of the eligible undertaking. - HELD THAT: - The Court held that questions concerning allowance of deduction under Section 10A in respect of provisions written back are covered by precedents of this Court. Reliance was placed on the decision in M/s. California Software (which itself relied on earlier decisions) holding that income brought to tax by reversal of entries can be regarded as income of the export undertaking and thus be eligible for deduction under Section 10A/10B. Consequently, the Tribunal's view allowing such provisions written back as part of export income was accepted for the purposes of the tax holiday.

The claim for deduction under Section 10A/10B in respect of provisions written back is allowed in favour of the assessee.

Tax holiday treatment of foreign exchange fluctuation gains - Deduction under Section 10A and 10B for eligible undertakings - Foreign exchange fluctuation gains attributable to export business are eligible for deduction under Section 10A. - HELD THAT: - The Court applied the principle in CIT v. M/s. Pentasoft Technologies that where fluctuation in exchange is solely relatable to the export business and arises by virtue of exports, such gains form part of the benefit derived from export and can be entitled to deduction under Section 10A. The Tribunal's finding that foreign exchange gain (even if resulting from restatement of outstanding balances) is eligible was therefore upheld as covered by the cited precedent.

Foreign exchange fluctuation gains attributable to exports are to be treated as eligible for deduction under Section 10A in favour of the assessee.

Inclusion of foreign currency expenditure and communication/telecommunication charges in export turnover - Deduction under Section 10A and 10B for eligible undertakings - Expenditure incurred in foreign currency and communication/telecommunication charges are includible in 'export turnover' for computing deduction under Section 10A/10B and may be excluded from turnover as held in favour of the assessee. - HELD THAT: - The Court treated the questions relating to exclusion/inclusion of foreign currency expenditure and communication charges as covered by its decision in CIT v. M/s. Zylog Systems Ltd., which held that such foreign currency expenditures fall within the definition of 'export turnover' for computation of deduction under Section 10B (and by parity for Section 10A). Accordingly, the Tribunal's approach to exclude specified communication charges from total and/or export turnover was accepted as being consistent with the precedent favouring the assessee.

Foreign currency expenditure and communication/telecommunication charges are to be treated as includible in export turnover calculations and handled as per the cited precedents in favour of the assessee.

Stage of deduction under Section 10A vis-a -vis set off of brought forward losses (deduction at undertaking level before Chapter VI set offs) - Deduction under Section 10A and 10B for eligible undertakings - Deduction under Section 10A is to be computed at the level of the eligible undertaking while computing its profits and gains (Chapter IV) and therefore before application of provisions for set off of brought forward losses under Chapter VI. - HELD THAT: - The Court followed the Supreme Court decision in CIT v. M/s. Yokogawa India Ltd., holding that Section 10A's deduction is to be determined qua the eligible undertaking independently and prior to the exercise under Chapter VI relating to set off and carry forward of losses. The legislative scheme and contemporaneous departmental circular indicate that the export undertaking's gross total income is to be computed and the deduction under Section 10A applied at that stage; application of Chapter VI set offs at that earlier stage would be premature. Thus, the Tribunal's view allowing deduction before set off of brought forward losses was sustained as being covered by the cited authorities.

Deduction under Section 10A must be computed for the eligible undertaking before giving effect to set off of brought forward losses under Chapter VI.

Final Conclusion: All substantial questions of law raised in the Tax Case Appeals were answered against the Revenue and in favour of the assessee, being covered by authoritative decisions of this Court and the Supreme Court; the appeals are disposed of accordingly.

Deduction under Section 10AA - manufacture versus processing - SEZ Act classification of manufacturing/services - treatment of trading activities for Section 10AA - presumption of utilization of interest free own funds - disallowance under Section 36(1)(ii) and inference of fund utilization - admission of substantial question of law for consideration

Deduction under Section 10AA - manufacture versus processing - SEZ Act classification of manufacturing/services - Whether the blending activity carried on by the assessee in the SEZ amounts to manufacturing and thus qualifies for deduction under Section 10AA. - HELD THAT: - The High Court recorded and accepted the concurrent factual findings of the CIT(A) and the Tribunal that the assessee carried out blending in tanks with churners, jet pumps, heating arrangements and specific controls, producing fuel grades with different specifications and viscosity for re export as bunker fuel. Applying the test of manufacture as expounded by the Supreme Court in India Cine Agencies and allied authority-that manufacture involves a transformation where a new or commercially distinct article emerges-the Court found the cumulative processes of inter tank transfers, churning, heating and use of specific equipment amounted to manufacturing within the meaning recognised for SEZ/10AA purposes. The Court therefore held that the first two questions insofar as they challenged this factual and legal conclusion could not be treated as substantial questions of law warranting interference, and declined to admit the appeal on those grounds. The Court left open the separate question relating to trading activities for future consideration in an appropriate case. [Paras 10, 11, 13, 14]

Appeal dismissed on the point that the blending activity is manufacturing for the purposes of deduction under Section 10AA; the challenge to the SEZ/10AA classification is refused admission and the trading activity question is left open.

Treatment of trading activities for Section 10AA - SEZ Act classification of manufacturing/services - Whether the Tribunal erred in treating any trading activity of the assessee as eligible for Section 10AA deduction (question left open). - HELD THAT: - Although both lower authorities had ruled in favour of the assessee on aspects touching trading activities, the High Court expressly declined to adjudicate the question of trading activities in this appeal. The Court recorded that the question remained open for consideration in an appropriate case and therefore did not decide it on the present facts. [Paras 14]

Question on trading activities not decided and left open for future adjudication.

Presumption of utilization of interest free own funds - disallowance under Section 36(1)(ii) and inference of fund utilization - Whether the deletion by the Tribunal of a disallowance under Section 36(1)(ii) on the basis that own funds were utilised (and not loaned funds) was impermissible. - HELD THAT: - Relying on this Court's earlier decision in Commissioner of Income Tax I v. UTI Bank Ltd., the High Court held that where there are sufficient interest free funds to meet tax free investments or expenditures, they are presumed to have been utilised and a disallowance cannot be sustained merely by inference to loaned funds. Applying that principle to the facts recorded by the lower authorities, the Court concluded that the Revenue's question did not raise a substantial question of law warranting admission. [Paras 15, 16]

Appeal dismissed on this point; deletion of the disallowance was not reopened.

Deduction under Section 10AA - income on account of currency fluctuation and interest income - Whether the Tribunal erred in holding that the assessee is eligible for deduction in respect of income on account of currency fluctuation and interest income as part of the Section 10AA claim. - HELD THAT: - The High Court did not decide the merits of this contention. After noting the concurrent findings on manufacturing, the Court found that the Revenue's challenge to inclusion of income from currency fluctuation and interest within the Section 10AA deduction raised substantial questions of law requiring further consideration. Consequently, the Court admitted the appeal on this specific legal question for detailed adjudication. [Paras 17, 18]

Admitted for consideration; issue remitted for fuller adjudication on the merits.

Deduction under Section 10AA - requirement of documentary evidence to substantiate loss - Whether the Tribunal erred in holding that the assessee's claim of a loss (which would increase the Section 10AA deduction) is allowable despite alleged non furnishing of documentary evidence and challenges to eligibility under Section 10AA. - HELD THAT: - The Court recorded that the Revenue's contention that the claimed loss was unsupported by documentary evidence and that such defect affected eligibility for Section 10AA raised a substantial question of law. The appeal was therefore admitted on this point to enable full consideration of whether the claimed loss can legitimately augment the Section 10AA deduction in the absence of the documentary support relied upon by the Revenue. [Paras 17, 18]

Admitted for consideration; issue remitted for detailed examination on the evidence and law.

Final Conclusion: The tax appeal is dismissed insofar as the Court refused to admit challenges to the Tribunal's finding that the blending activity constituted manufacturing for Section 10AA purposes and insofar as the deletion of the disallowance under Section 36(1)(ii) is concerned; however, the appeal is admitted and remitted for consideration on two substantial legal questions relating to (i) inclusion of currency fluctuation and interest income within the Section 10AA deduction and (ii) the allowance of the claimed loss which would increase the Section 10AA deduction.

Disallowance under Section 40(a)(ia) of the Income-tax Act, 1961 - treatment of year-end provisions as payments attracting TDS - mistake apparent on record under Section 254(2) of the Act - judicial consistency and binding effect of coordinate-bench decisions

Mistake apparent on record under Section 254(2) of the Act - judicial consistency and binding effect of coordinate-bench decisions - Whether the Tribunal's earlier order dated 10/09/2020 should be recalled/modified for non followance of a coordinate bench decision. - HELD THAT: - The Tribunal examined the record and found that the decision in Mahindra & Mahindra Ltd. dated 19/06/2020 on the same issue was on file but was not followed in the order dated 10/09/2020 (paras 14-15). The non following of the coordinate bench decision was held to constitute a mistake apparent on the face of the record within the meaning of Section 254(2). In order to maintain judicial consistency, the Tribunal modified para 15 of its earlier order to record reliance on the coordinate bench decision and consequentially modified para 16 for the related assessment year. [Paras 3, 4, 5]

Miscellaneous Application allowed; earlier order dated 10/09/2020 modified to follow the coordinate bench decision and para 16 consequentially modified.

Disallowance under Section 40(a)(ia) of the Income-tax Act, 1961 - treatment of year-end provisions as payments attracting TDS - Whether the disallowance under Section 40(a)(ia) in respect of year end provisions for expenses should be upheld or deleted. - HELD THAT: - Respectfully following the coordinate bench decision in Mahindra & Mahindra Ltd., the Tribunal accepted that the year end provisions submitted by the assessee had been placed on record with adequate breakup and were ascertainable rather than being mere adhoc provisions. The Tribunal noted that the coordinate bench had earlier directed deletion of the disallowance in similar circumstances and, applying that view, directed the assessing officer to delete the disallowance under Section 40(a)(ia) in the assessee's case (as recorded in the modified para 15 and consequentially in para 16 for A.Y.2010 11). The Tribunal therefore allowed the grounds taken by the assessee on this aspect. [Paras 3, 4]

Disallowance under Section 40(a)(ia) in respect of the year end provisions deleted; assessing officer directed to give effect.

Final Conclusion: The Miscellaneous Application is allowed: the Tribunal's order dated 10/09/2020 is modified to follow the coordinate bench decision, the disallowance under Section 40(a)(ia) in respect of year end provisions is deleted for the relevant assessment years, and para 16 of the earlier order is consequentially modified; all other contents of the earlier order remain unchanged.

Apportionment of composite expenses between speculative and non-speculative business - Scope of Explanation to section 73 (prospective operation from 01/04/2015) - Depreciation as business expenditure versus allowance for apportionment - Mistake apparent from record under Section 254(2)

Apportionment of composite expenses between speculative and non-speculative business - Tribunal's direction to apportion composite expenses between speculation and non-speculation activities was correct and not displaced by reliance on Rajasthan State Warehousing Corporation. - HELD THAT: - The Tribunal accepted that the assessee carried on both speculative (derivative trading/share speculation) and non-speculative activities and that profitability and taxability of each are governed by distinct provisions. Because the assessee filed a consolidated profit and loss account without segregating results, the Assessing Officer's failure to segregate could not preclude a rational apportionment. The decision in Rajasthan State Warehousing Corporation was held inapplicable on the facts as it did not govern the present factual matrix where separate determination of speculative and non-speculative profits was necessary; accordingly the Tribunal's apportionment was justified and not a mistake apparent on record. [Paras 2]

Ground challenging apportionment dismissed; Tribunal's apportionment upheld.

Scope of Explanation to section 73 (prospective operation from 01/04/2015) - Explanation to section 73 is prospective with effect from 01/04/2015 and therefore does not operate to alter treatment for A.Y.2012-13; separate determination of speculative and non-speculative transactions was required for the period in issue. - HELD THAT: - The Tribunal relied on the Supreme Court's decision holding the Explanation prospective (as in Snowtex Investment Ltd.), and therefore for years prior to 01/04/2015 activities involving purchase and sale of shares could not be treated uniformly under that Explanation. Consequently, for A.Y.2012-13 the nature of transactions (speculative or non-speculative) had to be determined independently and profitability of each class worked out, which the Tribunal did by apportionment. [Paras 3]

Ground based on inapplicability of Explanation to section 73 for the year dismissed; Tribunal's approach to determine and apportion profits for speculative and non-speculative activities sustained.

Depreciation as business expenditure versus allowance for apportionment - Depreciation claimed was properly considered part of aggregate expenditure for apportionment between speculative and non-speculative activities in absence of evidence showing segregation of asset use. - HELD THAT: - Depreciation represents allowance for wear and use of assets employed in the business. The assessee failed to furnish evidence specifying which assets (and what portion of their use) related exclusively to speculative or non-speculative activities. In those circumstances the Tribunal correctly included depreciation debited to the profit and loss account in the pool of expenditure to be apportioned, and the contention that depreciation could not be apportioned as it is merely an allowance was rejected. [Paras 4]

Alternative ground excluding depreciation from apportionment rejected; depreciation included in apportionable expenses.

Mistake apparent from record under Section 254(2) - Miscellaneous application did not disclose a mistake apparent on the face of the record under Section 254(2) and amounted to an inadmissible attempt to review the Tribunal's decision. - HELD THAT: - The matters urged in the Miscellaneous Application involved debatable questions of law and fact, including applicability of precedent and the proper treatment of expenditures, which could not be converted into a ground of mistake apparent from the record. Review in proceedings under Section 254(2) is impermissible where the challenge seeks reconsideration of the Tribunal's conclusions rather than pointing to an obvious clerical or patent error. [Paras 5]

Miscellaneous Application dismissed as not raising a mistake apparent on the record.

Final Conclusion: The Miscellaneous Application was dismissed; the Tribunal's apportionment of expenses (including depreciation) between speculative and non-speculative activities for A.Y.2012-13 was upheld, the Explanation to section 73 was held prospectively operative from 01/04/2015 and the application did not disclose any mistake apparent on the record under Section 254(2).

Ex-parte order - principles of natural justice - remand for fresh consideration - TDS classification for contract/operational services versus professional/testing services - TDS rate on rent dependent on correct classification of payment - first proviso to section 201(1) of the Income tax Act read with Rule 31ACB of the Income Tax Rules

Ex-parte order - principles of natural justice - remand for fresh consideration - Whether the appellate order being ex parte and not decided on merits required restoration to the file of the CIT(A) for fresh opportunity to the assessee. - HELD THAT: - The Tribunal found that the order of the CIT(A) was an ex parte order and had not decided the matter on merits. Considering the totality of facts and in the interest of justice, the Tribunal held that the matter should be restored to the file of the CIT(A) with a direction to grant one final opportunity to the assessee to represent its case and to decide the issue on facts and law. The assessee was directed to appear before the CIT(A) and present its case, failing which the CIT(A) was at liberty to decide the issue on merit in accordance with law. [Paras 7]

Matter restored to the file of the CIT(A) and remanded for fresh adjudication after granting one final opportunity to the assessee to be heard.

TDS classification for contract/operational services versus professional/testing services - TDS rate on rent dependent on correct classification of payment - remand for fresh consideration - Whether the Assessing Officer's finding that TDS was deductible at a higher rate (classification of testing and commissioning services as subject to higher TDS and re classification of rent) was to be adjudicated afresh by the CIT(A). - HELD THAT: - The Tribunal did not decide the merits of the Assessing Officer's classification of payments (testing and commissioning services as attracting higher rate TDS instead of contract rate, and re classification affecting TDS on rent). Since the CIT(A)'s order was ex parte and lacked a merits decision, the Tribunal remitted the substantive questions relating to correct applicability and rate of TDS to the CIT(A) for fresh consideration and decision on facts and law upon affording opportunity to the assessee. [Paras 7]

Substantive disputes over correctness of TDS applicability and rates remitted to the CIT(A) for fresh adjudication after hearing the assessee.

First proviso to section 201(1) of the Income tax Act read with Rule 31ACB of the Income Tax Rules - remand for fresh consideration - Whether the CIT(A) had considered the first proviso to section 201(1) read with Rule 31ACB in disposing of the appeal and whether this issue required fresh consideration. - HELD THAT: - The Tribunal observed that the CIT(A) had not considered the matter on merits, which includes the assessee's contention regarding applicability of the first proviso to section 201(1) read with Rule 31ACB. Given the absence of a merits decision by the CIT(A), the Tribunal remitted this issue to the CIT(A) to consider and decide afresh in accordance with law after granting the assessee an opportunity to be heard. [Paras 7]

Issue relating to applicability of the first proviso to section 201(1) read with Rule 31ACB remitted to the CIT(A) for fresh consideration and decision.

Final Conclusion: Both appeals are partly allowed for statistical purposes and the matters are restored to the file of the CIT(A) for fresh adjudication after affording one final opportunity to the assessee to be heard; if the assessee fails to appear, the CIT(A) may decide the issues on merits in accordance with law.

Set off of unabsorbed business losses pending finalization of assessment - carry forward and set off of business losses - temporary recognition of losses declared in return until assessment is finalised - refund contingent on fresh assessment under proviso to Section 240

Set off of unabsorbed business losses pending finalization of assessment - temporary recognition of losses declared in return until assessment is finalised - Whether the Assessing Officer can decline, for the assessment years 2016-17 and 2017-18, the set off of unabsorbed business losses claimed in the return for assessment year 2014-15 solely because the assessment for 2014-15 has been remanded and is pending finalisation. - HELD THAT: - The Tribunal held that where the assessment for the year in which loss was declared (AY 2014-15) has been set aside and remanded and is yet to be finalised, it is premature for the Assessing Officer to decline, as a matter of law, the claim for carry forward and set off of the loss claimed in the return for subsequent years. The court recognised that any allowance made on the basis of the return would be temporary and subject to revision when the remanded assessment is finalised, but that conditionality does not justify an outright denial of the set off in the intervening assessments. Accordingly, the Assessing Officer was directed to allow, for the time being, the brought forward loss claimed in AY 2014-15 for set off in AY 2016-17 and 2017-18, while retaining the power to amend such allowance in the light of the final outcome of the remanded assessment. [Paras 6, 9]

Claim for set off of the loss returned for AY 2014-15 cannot be declined in AY 2016-17 and AY 2017-18 merely because the assessment for AY 2014-15 is pending; Assessing Officer to allow the set off temporarily subject to adjustment after finalisation of remanded assessment.

Refund contingent on fresh assessment under proviso to Section 240 - carry forward and set off of business losses - Whether allowing the set off in the interim necessarily entitles the assessee to an immediate refund, or whether refund (if any) must await completion of the remanded assessment under the proviso to Section 240. - HELD THAT: - The Tribunal examined the proviso to Section 240 and concluded that the law contemplates deferral of refund where an assessment has been set aside and a fresh assessment directed. The Tribunal observed that the proviso does not require the assessment giving rise to refund to be the same year as the one remanded; hence, a refund that would arise in the present years may be held up until the remanded assessment (AY 2014-15) is finalised. The Tribunal therefore clarified that its direction to allow interim set off should not be construed as a direction to grant refunds immediately; the Assessing Officer must consider the applicability of the proviso to Section 240 and give the assessee a reasonable hearing before deciding on any refund. [Paras 8, 9]

Interim allowance of set off does not automatically entitle the assessee to immediate refund; the Assessing Officer must determine entitlement to refund in light of the proviso to Section 240 after affording the assessee an opportunity of hearing, and refunds may be deferred until the remanded assessment is finalised.

Final Conclusion: All four appeals are allowed: the Assessing Officer is directed to permit, for the time being, the carry forward and set off in AY 2016-17 and AY 2017-18 of the loss returned for AY 2014-15 (subject to adjustment after finalisation of the remanded assessment), and any question of refund is to be decided by the Assessing Officer in accordance with the proviso to Section 240 after giving the assessee a reasonable opportunity of hearing.

Application of section 145A - exclusive method of accounting - inclusive method of accounting - treatment of unutilized CENVAT/CENVAT credit in valuation of closing stock - revenue neutrality of accounting methods - deemed deduction under section 43B where liability has not accrued

Application of section 145A - treatment of unutilized CENVAT/CENVAT credit in valuation of closing stock - exclusive method of accounting - revenue neutrality of accounting methods - Whether unutilized CENVAT credit receivable can be added to closing stock valuation under Section 145A for the assessment year and whether the assessee's exclusive method of accounting disentitles it from such addition - HELD THAT: - The Tribunal examined Section 145A's mandate that constituents of manufacturing/trading accounts subject to duties/levies be valued inclusive of such levies for tax purposes, and the differing accountantial treatment under exclusive and inclusive methods. It accepted the assessee's uncontested, consistent adoption of the exclusive method and found the assessee's illustrative reconciliations and tax-auditor certification acceptable to demonstrate that adopting the inclusive method would not alter taxable profit (revenue neutrality) over time. Relying also on a coordinate-bench decision and relevant High Court precedent cited in the lower-order reasoning, the Tribunal held that unutilized CENVAT credit merely represents an available set-off against future excise liability and cannot be mechanically adopted for inventory valuation under Section 145A where the net effect is revenue neutral. In that factual matrix the addition based on unutilized CENVAT credit was unsustainable and therefore deleted.

Addition of unutilized CENVAT credit to closing stock valuation under Section 145A deleted; assessee's exclusive method accepted and, because inclusive treatment was revenue neutral, the addition was not sustained.

Deemed deduction under section 43B where liability has not accrued - inclusive method of accounting - application of section 145A - Whether the deduction claimed under Section 43B for excise duty (as used in the Annexure computation) is allowable where no excise liability had accrued as on the end of the previous year - HELD THAT: - The Tribunal noted the principle that Section 43B permits deduction of specified statutory liabilities only on actual payment if such liabilities had not accrued by the end of the previous year; the liability must have accrued as on the balance-sheet date for the deemed deduction rule to operate. On the facts the authorities below observed that finished goods were nil as on 31.03.2010 and therefore no excise liability in respect of finished goods had accrued; accordingly the deduction claimed in the Annexure (invoking Section 43B) was not maintainable as an accrued liability. Nevertheless, having accepted that the exclusive accounting method adopted by the assessee produced revenue-neutral results when correctly reconciled with Section 145A, the Tribunal deleted the addition wholly and did not sustain the enhancement made on the basis of the Section 43B contention.

Deduction under Section 43B cannot be allowed where the excise liability had not accrued as at the end of the previous year; however, the addition/enhancement premised on the alternative treatment was not sustained and the overall addition deleted.

Final Conclusion: The Tribunal allowed the assessee's appeal for Assessment Year 2010-11 and deleted the addition of unutilized CENVAT credit (and the enhancement premised thereon), holding that where the exclusive method of accounting is consistently followed and the switch to inclusive method is revenue neutral, unutilized CENVAT credit cannot be adopted for inventory valuation under Section 145A; deductions claimed under Section 43B were not maintainable where no liability had accrued as at the year end, but the impugned additions were nonetheless deleted.

Deductibility of business expenses - Genuineness of payments to contractor - Burden of proof on assessee to substantiate expenditure - Adverse inference from non-filing/non-appearance of contractor - Payment through banking channel under section 40A(3) - Penalty under section 271(1)(c) consequential on quantum additions

Deductibility of business expenses - Genuineness of payments to contractor - Burden of proof on assessee to substantiate expenditure - Adverse inference from non-filing/non-appearance of contractor - Payment through banking channel under section 40A(3) - Validity of disallowance of job-work/labour expenses of Rs. 46,44,518/- claimed by the assessee - HELD THAT: - The Tribunal examined whether the assessee had discharged the onus to prove that the job-work/labour payments were genuine and incurred for the purpose of business. The assessee produced invoices of the contractor, ledger entries in its books, bank statements showing payments made through banking channels (noted to be in consonance with the requirements of section 40A(3)), evidence of TDS deduction, project-wise job allocations showing the contractor's involvement in RCC work for multiple blocks, and an audited account without adverse remarks. The Assessing Officer relied upon partial/non-appearance of the contractor, bills dated on the last day of the year, unsigned bills, and the contractor's delayed/non-filing of return to draw adverse inference and disallow the expenditure. The Tribunal held that incomplete or partial compliance by the contractor, and the adverse features noted, did not justify a wholesale rejection of the claim where the assessee had placed corroborative documentary evidence and where the nature of construction works (RCC for specified blocks) made the payments prima facie necessary for completion of the project. In these circumstances the Tribunal found the assessee's overall bonafides established and concluded that the Assessing Officer ought not to have drawn an adverse inference to disallow the claimed expenditure; the additions were therefore deleted. [Paras 9, 10, 11, 12]

The disallowance of Rs. 46,44,518/- was set aside and the quantum appeal allowed.

Penalty under section 271(1)(c) consequential on quantum additions - Validity of penalty imposed under section 271(1)(c) consequential to the disallowance - HELD THAT: - The penalty under section 271(1)(c) was predicated on the additions made in the assessment. Having deleted the quantum additions on merits, the Tribunal held that the consequential penalty could not survive. No separate adjudication on culpability was required because the foundational additions were reversed; accordingly, the penalty was deleted as consequential relief. [Paras 13, 14, 15]

The penalty under section 271(1)(c) was deleted and the penalty appeal allowed.

Final Conclusion: Both appeals for AY 2011-12 are allowed: the additions in respect of job-work/labour expenses are deleted and the consequential penalty under section 271(1)(c) is consequently cancelled.

Comparability of comparable companies - transfer pricing adjustment - Transactional Net Margin Method (TNMM) - Operating Profit/Operating Cost as Profit Level Indicator - reliance on co-ordinate bench precedents - remand for fresh examination - exclusion of foreign currency expenses from turnover - application of Supreme Court precedent in CIT v. HCL Technologies

Comparability of comparable companies - reliance on co-ordinate bench precedents - transfer pricing adjustment - Validity of exclusion of seven comparable companies selected by the TPO and excluded by the DRP - HELD THAT: - The Tribunal examined the contested exclusion of seven companies (Acropetal Technologies Ltd, E Zest Solutions Ltd, E Infochips Ltd, ICRA Techno Analytics Ltd, Infosys Ltd, Tata Elxsi Ltd (segment), Larsen & Toubro Infotech) by reference to earlier coordinate bench decisions involving similarly placed software development service taxpayers for AY 2011 12. On functional dissimilarity, presence of product income, absence of segmental break up, disproportionately high related party transactions or onsite revenue filters, the coordinate bench rulings had excluded these companies from comparable sets. Applying those precedents and the comparability factors examined in those orders, the Tribunal upheld exclusion of these companies from the set of comparables for computing ALP under TNMM with OP/OC as the PLI.

Exclusion of the seven contested comparable companies is confirmed; the DRP's direction in that respect is upheld.

Remand for fresh examination - comparability of comparable companies - Need for fresh examination of E Zest Solutions Ltd as a comparable company - HELD THAT: - The Tribunal noted divergent decisions of coordinate benches on E Zest Solutions Ltd; some benches treated it as KPO/ITES and excluded it, while others retained it as a good comparable. Given these inconsistent precedents and that comparability depends on factual parity, the Tribunal concluded that E Zest's comparability requires fresh fact based scrutiny. Accordingly, the matter is restored to the AO/TPO for re examination of comparability with directions to examine the relevant filters and facts.

E Zest Solutions Ltd is remanded to the file of the AO/TPO for fresh examination of comparability.

Comparability of comparable companies - transfer pricing adjustment - Inclusion of three companies agreed by both parties (Evoke Technologies Ltd, R.S. Software (India) Ltd, Mindtree Ltd) in the comparable set - HELD THAT: - Both parties concurred on inclusion of Evoke Technologies Ltd, R.S. Software (India) Ltd and Mindtree Ltd. The Tribunal directed the AO/TPO to include these three companies in the set of comparables and to compute ALP accordingly, after allowing the assessee an opportunity of being heard and applying working capital or other appropriate adjustments as required under TNMM with OP/OC as PLI.

AO/TPO directed to include the three agreed companies in the comparable set and recompute ALP after hearing the assessee.

Comparability of comparable companies - reliance on co-ordinate bench precedents - remand for fresh examination - Assessee's challenge seeking exclusion of Persistent Systems Ltd, Persistent Systems & Solutions Ltd and Sasken Communications Technologies Ltd - HELD THAT: - Following coordinate bench decisions (including the LG Soft India P. Ltd. order which applied the Electronics for Imaging (I) Pvt. Ltd. reasoning), the Tribunal found that Persistent entities and Sasken were functionally dissimilar or lacked reliable segmental break up (presence of product revenues, R&D/multimedia activities and absence of segmental margins). On that basis the Tribunal directed exclusion of these three companies from the comparable set and instructed the TPO to recompute ALP after affording the assessee an opportunity of being heard.

The three companies (Persistent Systems Ltd, Persistent Systems & Solutions Ltd and Sasken Communications Technologies Ltd) are directed to be excluded from the comparable set; AO/TPO to recompute ALP accordingly.

Remand for fresh examination - comparability of comparable companies - Treatment of LGS Global Ltd and Akshay Software Technologies Ltd sought for inclusion by the assessee - HELD THAT: - For Akshay Software Technologies Ltd the Tribunal, following a coordinate bench examination of the same year (AY 2011 12), concluded it was not a good comparable (product/stock items, absence of clear segmental margins). For LGS Global Ltd the coordinate bench had remanded the company for verification of employee cost (composite reporting of purchases and personnel cost) and possible use of statutory information under Section 133(6) to determine functional comparability. The Tribunal therefore held Akshay not comparable and restored LGS Global Ltd to the AO/TPO for factual verification and determination.

Akshay Software Technologies Ltd is not a good comparable; LGS Global Ltd is remanded to the AO/TPO for verification of facts and functional comparability.

Exclusion of foreign currency expenses from turnover - application of Supreme Court precedent in CIT v. HCL Technologies - Whether expenses incurred in foreign currency must be excluded from both export turnover and total turnover for computing export profit - HELD THAT: - The Tribunal relied on the Supreme Court's observations in CIT v. HCL Technologies that expenses excluded from export turnover must be excluded from total turnover in the same proportion; treating foreign currency expenses incurred for providing technical services outside as allowable exclusions from total turnover prevents the calculation formula from being rendered unworkable. Applying that binding principle, the Tribunal upheld the DRP's direction to exclude foreign currency expenses from both export and total turnover.

DRP's direction to exclude expenses incurred in foreign currency from both export turnover and total turnover, following the Supreme Court in CIT v. HCL Technologies, is upheld.

Final Conclusion: Both the revenue's and assessee's appeals are partly allowed: certain comparables are excluded following coordinate bench precedent, three agreed comparables are directed to be included, specific companies (E Zest and LGS Global) are remanded to the AO/TPO for fresh factual examination, Akshay Software is rejected as a comparable, and the DRP's direction to exclude foreign currency expenses from both export and total turnover is upheld in view of the Supreme Court authority.

Full value of the consideration received or accrued as a result of transfer of a capital asset - computation of capital gains under section 48 - power of Assessing Officer to substitute sale consideration/valute shares in case of transfer of shares - absence of statutory provision prior to insertion of section 50CA authorising valuation of shares - adoption of consideration disclosed in share purchase agreement for computation of capital gains - set-off of brought forward capital loss

Power of Assessing Officer to substitute sale consideration/valute shares in case of transfer of shares - full value of the consideration received or accrued as a result of transfer of a capital asset - computation of capital gains under section 48 - absence of statutory provision prior to insertion of section 50CA authorising valuation of shares - adoption of consideration disclosed in share purchase agreement for computation of capital gains - CIT(A) justified in deleting addition made by AO by substituting sale consideration for shares and in holding that consideration disclosed in the share purchase agreement must be adopted for computing long term capital gains for AY 2012-2013. - HELD THAT: - The Tribunal accepted the CIT(A)'s conclusion that the Assessing Officer had no statutory power under the Income-tax Act, as it stood for AY 2012-2013, to refer the transfer of shares for independent valuation or to substitute the contractual sale consideration by a NAV-based value. The decision followed the reasoning that computation of capital gains must proceed from the full value of consideration actually received or accruing on transfer (as governed by section 48) and that the special deeming provision applicable to immovable property (section 50C) has no counterpart for shares prior to the later insertion of section 50CA. In these circumstances, and in the absence of evidence that consideration in excess of the sale agreement had been received, the Tribunal (following the co-ordinate Bench decision and the authorities relied upon by the CIT(A)) held that the sale consideration recorded in the share purchase agreement dated 20.10.2011 is to be adopted for computing long term capital gains, and the AO's recomputation based on NAV was not sustainable. [Paras 9, 10]

Addition substituting sale consideration deleted; contractual sale consideration adopted for computing long term capital gains for AY 2012-2013.

Set-off of brought forward capital loss - consequential relief arising from adoption of contractual sale consideration - Assessee entitled to set off the brought forward capital loss of the assessment year 2012-2013 against capital gains in assessment year 2013-2014. - HELD THAT: - The AO for AY 2013-2014 had denied the claim of set-off on the basis that the AY 2012-2013 assessment order had converted the claimed loss into income by adopting an enhanced sale consideration. Having held that the contractual sale consideration must be adopted for AY 2012-2013 and that the AO's substitution was unsustainable, the Tribunal directed that the brought forward capital loss of AY 2012-2013 stands available for set-off in AY 2013-2014 and ordered consequential relief accordingly. [Paras 11, 12, 13]

Claim for set-off of brought forward capital loss allowed for AY 2013-2014; appeal dismissed.

Final Conclusion: Revenue appeals dismissed: (i) contractual sale consideration in the share purchase agreement is to be adopted for computing long term capital gains for AY 2012-2013; (ii) consequent set-off of the brought forward capital loss is allowed in AY 2013-2014.

Entertaining additional claims before appellate authority - claim for deduction without filing revised return - power of appellate authority coterminous with assessing officer - exemption under section 54B - exemption under section 54F - remand for verification of evidence and fresh adjudication

Exemption under section 54F - remand for verification of evidence and fresh adjudication - Whether the claim for additional deduction under section 54F in respect of long term capital gain is acceptable and what further proceedings are required. - HELD THAT: - The Tribunal found the order of the Commissioner (Appeals) to be cryptic on the section 54F claim and declined to decide the entitlement on the material then before it. The assessee had produced supporting evidence of construction cost and the Assessing Officer had earlier allowed a portion of the deduction while bringing a specified balance to tax. The Tribunal directed that the assessee shall place necessary evidence before the Assessing Officer and that the Assessing Officer shall examine whether the assessee is entitled to the additional deduction under section 54F, thereby remitting the question for fresh consideration on merits and verification of documents. [Paras 5]

Order of the Commissioner (Appeals) set aside on this aspect and the matter remitted to the Assessing Officer to examine the section 54F claim on merits after production and verification of evidence.

Entertaining additional claims before appellate authority - claim for deduction without filing revised return - exemption under section 54B - power of appellate authority coterminous with assessing officer - Whether the first appellate authority could entertain and decide the assessee's claim for exemption under section 54B despite there being no revised return filed before the Assessing Officer. - HELD THAT: - After surveying binding and persuasive precedents, the Tribunal held that appellate authorities possess jurisdiction to entertain additional claims or grounds not raised before the Assessing Officer, since their powers are plenary and, in certain respects, co terminus with those of the assessing authority. The Tribunal distinguished the decision in Goetze (India) Ltd. v. CIT as confined to the power of the assessing authority to admit a claim without a revised return and not intended to curtail the jurisdiction of appellate forums. Reliance was placed on earlier authorities establishing that the appellate forum may, in the interest of determining correct tax liability, examine questions of law or additional claims where the relevant facts are on record. Consequently the rejection by the Commissioner (Appeals) solely on the ground of absence of a revised return was held to be incorrect. [Paras 6, 18]

The Commissioner (Appeals) order is set aside on this point and the matter remitted to the Assessing Officer with a direction to consider the assessee's claim under section 54B on merits after the assessee places necessary evidence.

Final Conclusion: The appeal is partly allowed. The Tribunal remitted the section 54F claim to the Assessing Officer for examination upon production of evidence, and set aside the Commissioner (Appeals) order rejecting the section 54B claim for want of a revised return, directing fresh adjudication by the Assessing Officer on merits.

Duty foregone on inputs - proviso to Paragraph 3 of Notification No.52/2003-Cus - nil rate of customs duty and nil additional duty (CVD) on finished goods - treatment of DTA sale by EOU as non-excisable for payment of duty - confiscation and redemption fine under Section 111 and penalty under Section 112(a) of the Customs Act

Proviso to Paragraph 3 of Notification No.52/2003-Cus - nil rate of customs duty and nil additional duty (CVD) on finished goods - duty foregone on inputs - Para 6.8(j) of FTP and CBEC Circular No.54/2004-Cus - Liability to pay customs duty foregone on inputs where finished goods cleared in DTA are exempt or leviable to nil customs and additional duty - HELD THAT: - The Tribunal examined the proviso to Para 3 of Notification No.52/2003-Cus and CBEC Circular No.54/2004-Cus and held that where finished goods cleared in DTA are either non-excisable or, if imported, leviable to nil basic customs duty and nil additional duty (CVD), the exemption on inputs is disallowed and the customs duty foregone on such inputs must be repaid. The bench found that the appellant's finished goods supplied to ISRO and BEL were eligible for 'nil' basic and additional duty (subject to production of requisite certificates) and that Para 6.8(j) of the FTP and the Circular support treating such DTA sales as equivalent to non-excisable goods for the purpose of recovery of duty foregone on inputs. The Tribunal rejected the appellant's contention that conditional nature of the exemption or the absence of an excise demand rendered the proviso inapplicable, observing that the notification language is clear and that the duty on imported inputs was therefore correctly demanded and confirmed; duty with interest had been paid by the appellant. [Paras 15, 16, 17, 18, 19]

Demand of customs duty foregone on inputs used in manufacture of finished goods cleared at nil rate to ISRO and BEL is sustainable and was correctly confirmed; duty (with interest) stands upheld.

Confiscation and redemption fine under Section 111 - penalty under Section 112(a) - physical availability of goods for confiscation - treatment of imported duty-free inputs cleared on authority - Sustainability of confiscation, redemption fine and penalty where imported inputs were cleared by Customs, not physically available at time of adjudication, and duty on inputs has been paid with interest - HELD THAT: - The Tribunal found that the imported inputs had been cleared by Customs for consumption and were used in manufacture and cleared into DTA prior to issuance of the show-cause notice; they were therefore not physically available for confiscation. Relying on its own earlier decision and distinguishing the facts from authorities cited by the appellant, the bench held that the appropriate remedy for the lapse (failure to repay duty foregone at time of DTA clearance) was recovery of duty with interest rather than confiscation, redemption fine or imposition of penalty. In view of the facts - clearance with requisite permissions and post-facto payment of duty with interest - confiscation, redemption fine and penalty were not warranted and were set aside. [Paras 20, 21]

Confiscation, redemption fine and penalty set aside; recovery of duty (already paid with interest) upheld.

Final Conclusion: Appeal partly allowed: the demand for customs duty foregone on inputs (with interest) was upheld as correctly confirmed under the proviso to Para 3 of Notification No.52/2003-Cus; confiscation, redemption fine and penalty were set aside in view of clearance of inputs by Customs, absence of physical availability for confiscation and payment of duty with interest.

Refund of sale proceeds with interest - release of seized goods and vehicles - appeal against order refusing interest - compliance with Tribunal directions

Release of seized goods and vehicles - compliance with Tribunal directions - Direction to Revenue for refund of pre-deposit and release of seized trucks - HELD THAT: - The Tribunal had earlier allowed the appeal and directed refund of sale proceeds with interest. The sale proceeds were refunded but the seized trucks (and pre-deposit) were not released. The Bench noted that, having directed refund and consequential relief in the Final Order, the Revenue must effect release of the pre-deposit and the seized trucks. No substantive dispute as to entitlement to release is recorded; the tribunal therefore issues a compliance direction to the Revenue to effect release within a specified time and to report compliance. [Paras 7]

Revenue directed to refund the pre-deposit and release the seized trucks within one month and to report compliance within a month thereafter.

Refund of sale proceeds with interest - appeal against order refusing interest - Claim for interest on refunded sale proceeds - HELD THAT: - The Tribunal's Miscellaneous Order had directed payment of sale proceeds along with interest 'as per provision of law.' The Deputy Commissioner refunded the sale proceeds but refused payment of interest by an order which is recorded as appealable. The Bench noted this position and did not decide the entitlement to interest on merits; instead the appellant was left at liberty to challenge the Deputy Commissioner's order by filing the appropriate appeal. The Bench therefore declined to adjudicate the interest claim in this proceeding and identified the statutory appeal remedy as the course to be pursued. [Paras 6, 7]

Appellant permitted to challenge the Deputy Commissioner's order refusing interest by filing the appropriate appeal; the Tribunal did not decide entitlement to interest in this order.

Final Conclusion: The Tribunal ordered the Revenue to refund the pre-deposit and release the seized trucks within one month and to report compliance; the claim for interest on refunded sale proceeds was not adjudicated and the appellant is permitted to challenge the Deputy Commissioner's appealable order refusing interest.

Sanction of scheme of amalgamation under the Companies Act, 2013 - Scheme of Amalgamation - Appointed Date - compliance with applicable accounting standards - report of the Regional Director - report of the Official Liquidator - dissolution of the transferor company consequent to amalgamation - filing of order and scheme with Registrar of Companies and stamping formalities - costs payable to regulatory authorities - scheme found fair and reasonable and not contrary to public policy

Sanction of scheme of amalgamation under the Companies Act, 2013 - Scheme of Amalgamation - scheme found fair and reasonable and not contrary to public policy - Sanction of the Scheme of Amalgamation between Andromeda Sales And Distribution Private Limited and Geosansar Advisors Private Limited - HELD THAT: - The Tribunal considered the Petitions seeking sanction of the Scheme of Amalgamation and noted that no objector appeared and no party controverted the averments. The Scheme, proposed to amalgamate the Transferor Company with the Transferee Company, was examined along with material on record including statutory compliances and reports. The Tribunal concluded that the Scheme appears fair and reasonable, is not violative of law, and is not contrary to public policy. Consequently, the Company Scheme Petition No. 921 of 2020 was made absolute in terms of the clauses specified by the Tribunal and the sanction was granted. [Paras 3, 4, 14, 15]

Sanction granted and Company Scheme Petition made absolute.

Report of the Regional Director - compliance with applicable accounting standards - Appointed Date - Observations of the Regional Director and the Petitioners' compliance and undertakings - HELD THAT: - The Regional Director's report raised observations recommending that the Transferee Company pass necessary accounting entries to comply with AS-14 (IND AS-103) and other applicable accounting standards and drew attention to the definition of 'Appointed Date'. The Petitioners explained that they would make the necessary accounting entries and undertook that the Appointed Date is 14th August, 2019 and to comply with the Ministry of Corporate Affairs circular. The Tribunal accepted these clarifications and undertakings. [Paras 9, 10, 11, 12]

Regional Director's observations noted; Petitioners' undertakings accepted.

Report of the Official Liquidator - dissolution of the transferor company consequent to amalgamation - Report of the Official Liquidator regarding the affairs of the Transferor Company - HELD THAT: - The Official Liquidator reported that the affairs of the Transferor Company have been conducted properly and not prejudicially to shareholders, and recommended that the Transferor Company may be ordered to be dissolved. The Tribunal recorded the Official Liquidator's report and proceeded to sanction the Scheme accordingly. [Paras 13]

Official Liquidator's report accepted; dissolution of Transferor Company recorded as consequence of amalgamation.

Filing of order and scheme with Registrar of Companies and stamping formalities - costs payable to regulatory authorities - Post-sanction directions concerning filing, stamping and payment of costs - HELD THAT: - The Tribunal directed the Petitioners to file a copy of the Order and the Scheme with the Registrar of Companies electronically using E-Form INC-28 within the prescribed period, and to lodge authenticated copies with the Superintendent of Stamps for adjudication of stamp duty. The Tribunal also directed payment of specified costs to the Regional Director and the Official Liquidator within the stipulated time and ordered all concerned authorities to act on authenticated copies of the Order and Scheme. [Paras 16, 17, 18, 19]

Petitioners directed to complete filings, stamping formalities and pay costs as ordered.

Appointed Date - Declaration of the Appointed Date for the purposes of the Scheme - HELD THAT: - The Tribunal recorded the Appointed Date for the Scheme as 14th August, 2019 as undertaken by the Petitioners and reflected this in the Order. [Paras 11, 20]

Appointed Date fixed as 14th August, 2019.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation between the two petitioner companies as fair and reasonable, accepted the Petitioners' undertakings in respect of accounting compliance and the Appointed Date, recorded the Official Liquidator's report and consequent dissolution of the Transferor Company, and directed requisite filings, stamping formalities and payment of costs in accordance with the Order.

Approval of proposed dissolution of an offshore group entity under supervisory framework - recognition of asset-level resolution and winding up as part of corporate resolution - judicial recognition of steps for foreign law dissolution taken in furtherance of domestic resolution plan - exemption from stamping and notarisation of affidavits where procedure is administrative

Approval of proposed dissolution of an offshore group entity under supervisory framework - judicial recognition of steps for foreign law dissolution taken in furtherance of domestic resolution plan - The Tribunal took on record and approved the proposal to initiate the dissolution process of IIPL USA LLC in accordance with the laws of the United States of America as part of the IL&FS group resolution. - HELD THAT: - The Tribunal, after considering the history of supervision and resolution directions (including the orders of this Tribunal and the Hon'ble NCLAT), the Resolution Framework adopted by the new Board, the approvals of the relevant boards (IIPL USA, IIPL, ITNL and the New Board), and the supervision/approval of Hon'ble Justice D. K. Jain (Retd.), was satisfied that winding up IIPL USA was the appropriate mode of resolution. The Union of India (Regional Director, MCA (WR)) concurred with Justice D. K. Jain's recommendations and placed no objection to the dissolution being undertaken in accordance with the approved Resolution Framework. Having considered the pleadings and documents, the Tribunal concluded that dissolution under applicable USA law would effectuate resolution of that offshore entity and therefore recorded and approved the proposal. [Paras 26]

Proposal to file application(s) for initiating dissolution of IIPL USA in accordance with USA law is taken on record and approved.

Exemption from stamping and notarisation of affidavits where procedure is administrative - The Tribunal granted the Applicant's request to be exempted from affixing stamp on the affidavit annexed to the application and from notarising the present application. - HELD THAT: - The Applicant sought administrative relief from stamp and notarisation formalities in respect of the affidavit and application filed for recording the dissolution proposal. The Respondent did not oppose the substantive proposal and, on consideration of the nature of the filing and the documents placed before the Tribunal, the Tribunal found it appropriate to relieve the Applicant from these formalities and allowed the exemption. [Paras 26]

Exemption from affixing stamp on the affidavit and notarising the application is granted.

Final Conclusion: CA No. 1155 of 2020 is allowed: the Tribunal recorded and approved the proposal to initiate dissolution of IIPL USA LLC under USA law as part of the approved IL&FS resolution process and granted exemption from stamping and notarisation of the affidavit and application.

Scheme of Arrangement - transfer of business as going concern on slump sale basis - reduction of Securities Premium Account - meetings convening and dispensation under Section 230 of the Companies Act, 2013 - e-voting and postal ballot for virtual meetings - consent affidavits and dispensation of meetings - service of statutory notices to regulatory authorities - transfer of incentives/concessions subject to State Government consent

Meetings convening and dispensation under Section 230 of the Companies Act, 2013 - Scheme of Arrangement - Convening of meeting of Equity Shareholders of Applicant Company 1 and dispensation of shareholders' meeting of Applicant Company 2 - HELD THAT: - The Tribunal directed that a meeting of the Equity Shareholders of Applicant Company 1 (Ordinary Shares and 'A' Ordinary Shares) be convened on February 15, 2021 by video conferencing for consideration and, if thought fit, approval of the proposed Scheme. The Tribunal accepted that Applicant Company 2 has filed consent affidavits from all its equity shareholders and, accordingly, dispensed with convening a meeting of Applicant Company 2's shareholders. The Board approvals dated July 31, 2020 were noted. The undertaking to issue notices and explanatory statements in the prescribed forms was accepted. [Paras 4, 5, 9, 17]

Meeting of Equity Shareholders of Applicant Company 1 to be convened by virtual means; meeting of shareholders of Applicant Company 2 dispensed with on filing of consent affidavits.

E-voting and postal ballot for virtual meetings - meetings convening and dispensation under Section 230 of the Companies Act, 2013 - Voting mechanism and conduct of the Equity Shareholders' meeting of Applicant Company 1 - HELD THAT: - In view of the Covid-19 situation and applicable statutory rules and SEBI regulations, the Tribunal authorised remote e-voting and postal ballot facilities and permitted e-voting during the meeting. Compliance with the Companies (Management and Administration) Rules, Regulation 44 of SEBI (LODR) and Secretarial Standard on General Meetings (SS-2) was mandated. The Chairperson was empowered to decide procedural questions including amendments to the Scheme, and appointment of scrutinizer and manner of determining share values from company records was provided for. [Paras 6, 10, 11, 14, 15]

E-voting and related virtual meeting procedures authorised; Chairperson and scrutinizer appointed and vested with prescribed powers for conduct of the meeting.

Convening meeting of Secured Creditors - PV Business Liabilities and Government of Gujarat Loan - Convening of meeting of Secured Creditors of Applicant Company 1 and treatment of secured liabilities in the Scheme - HELD THAT: - The Tribunal directed a meeting of Secured Creditors of Applicant Company 1 as on September 30, 2020 to be held by video conferencing on February 15, 2021, with voting by e-voting at the time of meeting. The counsel's submission that only the Government of Gujarat loan (relating to the PV Business) is proposed to be transferred under the Scheme, subject to requisite approvals, was recorded; other secured creditors have no security over assets forming part of the Passenger Vehicles Undertaking. The Applicant Company 1 undertook to obtain specific no-objection where existing agreements require such consent. [Paras 18, 19, 20, 23, 26]

Meeting of Secured Creditors to be convened virtually; transfer of Government of Gujarat loan as part of Scheme is subject to necessary approvals and consents where required.

Consent affidavits and dispensation of meetings - unsecured creditors' representations and individual notice - Dispensation of meeting of Unsecured Creditors of Applicant Company 1 and requirements for consents/notice - HELD THAT: - The Tribunal accepted that the Scheme is an arrangement between the companies and their shareholders under Section 230(1)(b) and that no sacrifice is called from creditors. It dispensed with convening the meeting of Unsecured Creditors subject to the condition that consent affidavits from at least 90% by value of the company's unsecured creditors be obtained and filed. Additionally, the Tribunal directed individual notices to unsecured creditors with claims of specified minimum value (as recorded) by registered post/speed post and e-mail, allowing them 30 days to submit representations to the Tribunal and serve copies on the Applicant Company 1. [Paras 31]

Meeting of Unsecured Creditors dispensed with on condition of filing requisite consent affidavits; individual notice to large unsecured creditors directed and right to submit representations preserved.

Service of statutory notices to regulatory authorities - Scheme of Arrangement - Service of notices of meetings on statutory/regulatory authorities and publication requirements - HELD THAT: - The Applicant Companies were directed to serve notices of the meetings, along with copies of the Scheme, on specified authorities (Regional Director, Registrar of Companies, Income Tax Authority, SEBI, stock exchanges and GST authorities) and to invite representations within 30 days. The Tribunal recorded that service on the Competition Commission of India was not required. Publication of the meeting notice in two specified newspapers once each in Mumbai and provision for obtaining copies of the Scheme on request were ordered. Proof of compliance to be filed electronically. [Paras 8, 32, 33, 35, 36]

Statutory notices to authorities and publication directions ordered; Competition Commission notice dispensed with; proof of compliance to be filed.

Transfer of incentives/concessions subject to State Government consent - Requirement to obtain State Government consents for transfer of incentives and concessions - HELD THAT: - The Tribunal directed that the Applicant Companies shall obtain consent from the State Governments of Maharashtra and Gujarat for transfer of incentives and concessions availed by Applicant Company 1 so that such incentives/concessions will be available to Applicant Company 2 after implementation of the Scheme. [Paras 34]

Applicant Companies to obtain requisite consents from State Governments for transfer of incentives and concessions.

Appointment of Chairperson and Scrutinizer - e-voting and postal ballot for virtual meetings - Appointment of Chairperson and Scrutinizer and quorum/attendance rules for virtual meetings - HELD THAT: - The Tribunal appointed Mr. N. Chandrasekaran (failing him Ms. Vedika Bhandarkar) as Chairperson for the shareholders' and secured creditors' meetings, and nominated Mr. P N Parikh (with named alternates) as Scrutinizer. It fixed quorum rules applicable to virtual attendance, disallowed appointment of proxies for virtual meetings while permitting corporate authorised representatives upon filing required authorisations, and directed the Chairperson to report meeting results to the Tribunal within 30 days verified by affidavit. [Paras 12, 13, 25, 28, 29]

Chairperson and Scrutinizer appointed; virtual meeting quorum, proxy and reporting arrangements prescribed.

Final Conclusion: The Tribunal admitted the Company Scheme Application for convening prescribed virtual meetings, directed service and publication of notices, authorised e-voting and related virtual meeting procedures, dispensed with certain meetings where unconditional consents were filed subject to specified conditions (including filing of 90% unsecured creditors' consents and State Government approvals for transfer of incentives), appointed Chairperson and Scrutinizer, and directed filing of compliance proof and reporting of results within stipulated timelines.

Sanction of scheme of amalgamation under Sections 230-232 of the Companies Act, 2013 - appointed date for amalgamation - transfer and vesting of assets and liabilities on amalgamation - continuity of employees and attendant liabilities - tax consequences subject to final decision of concerned tax authorities - no exemption from stamp duty, taxes or other statutory charges by sanction - obligation to deliver certified copy of Tribunal order to Registrar of Companies

Sanction of scheme of amalgamation under Sections 230-232 of the Companies Act, 2013 - appointed date for amalgamation - Scheme of Amalgamation between Rangsons Schuster Technologies Pvt. Ltd. (Transferor) and Rangsons Aerospace Pvt. Ltd. (Transferee) sanctioned and appointed date fixed - HELD THAT: - The Tribunal considered the petition, statutory reports including those of the Regional Director and ROC, the Official Liquidator's scrutiny report and the replies filed by the petitioners. The Tribunal found that the procedure prescribed in sub sections (1) and (2) of section 232 had been complied with and that the Scheme was fair, reasonable and not prejudicial to members, creditors or public policy. On that basis the Scheme as filed was sanctioned and the Appointed Date for the amalgamation was declared to be 01st April, 2019. The sanction was granted subject to other directions stated in the order. [Paras 13]

Scheme sanctioned and Appointed Date fixed as 01st April, 2019

Transfer and vesting of assets and liabilities on amalgamation - continuity of employees and attendant liabilities - tax consequences subject to final decision of concerned tax authorities - no exemption from stamp duty, taxes or other statutory charges by sanction - obligation to deliver certified copy of Tribunal order to Registrar of Companies - Legal consequences of the sanctioned Scheme: transfer/vesting of assets, liabilities and proceedings; employee continuity; tax and regulatory obligations; procedural consequential directions - HELD THAT: - The Tribunal ordered that, with effect from the Appointed Date, the Transferor Company shall be transferred to and vest in the Transferee Company and all assets, liabilities, duties and ongoing proceedings of the Transferor shall stand transferred and continue against or by the Transferee, subject to existing charges. Services of transferred employees shall be treated as continuous and past service shall be accounted for for employee benefits. The Tribunal clarified that sanction does not constitute an exemption from payment of stamp duty, taxes or other charges and that tax implications, including under the Income Tax Act, 1961, are subject to the final decision of the concerned tax authorities and shall be binding on the Transferee. The Transferee is also bound by any post amalgamation demands (including those from KSCST) and any liabilities under statutory provisions (for example section 135) shall transfer. The Tribunal directed the petitioner companies to file a certified copy of the order with the Registrar of Companies and to ensure filing of statutory returns and periodic compliance affidavits until compliance is complete. [Paras 13]

Assets, liabilities, proceedings and employee continuity to vest in Transferee; tax and duty consequences not affected by sanction and remain subject to competent authorities; statutory filing and compliance directions issued

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation as filed between the two petitioner companies with effect from 01st April, 2019, found the statutory procedure under section 232 complied with, and recorded consequential orders concerning transfer/vesting of assets and liabilities, employee continuity, tax and regulatory liabilities, and mandated filing and compliance steps including delivery of a certified copy of the order to the Registrar of Companies.

Admission of petition under Section 9 of the Insolvency and Bankruptcy Code - demand notice under Section 8 of the Insolvency and Bankruptcy Code - default and existence of debt - absence of notice of dispute and affidavit under Section 9(3)(b) - ex-parte hearing for non-appearance of Corporate Debtor - moratorium under Section 14 of the Insolvency and Bankruptcy Code - public announcement of corporate insolvency resolution process under Section 13 - appointment of Interim Resolution Professional

Admission of petition under Section 9 of the Insolvency and Bankruptcy Code - demand notice under Section 8 of the Insolvency and Bankruptcy Code - default and existence of debt - absence of notice of dispute and affidavit under Section 9(3)(b) - The Section 9 petition filed by the petitioner was maintainable and admitted. - HELD THAT: - The petitioner issued a demand notice under Section 8 and filed the affidavit required by Section 9(3)(b) stating there was no notice of dispute. The ledger and invoices produced showed outstanding dues for services availed by the corporate debtor. The corporate debtor failed to respond to the demand notice and did not appear at the hearing despite service, and prior assurances by the corporate debtor's representative were treated as admission of liability. On these facts the Bench was satisfied that there was default and that the petition complied with the statutory requirements for admission under Section 9. [Paras 8, 9]

Petition under Section 9 admitted.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - ex-parte hearing for non-appearance of Corporate Debtor - A moratorium was declared and its scope and duration specified. - HELD THAT: - Having admitted the petition, the Bench imposed the moratorium prohibiting institution or continuation of suits or proceedings against the corporate debtor, transfer or alienation of its assets, actions to enforce security interests, and recovery of property occupied by the corporate debtor. The order also protected supply of essential goods or services and noted statutory exceptions. The moratorium was directed to operate from the specified commencement date until completion of the CIRP or approval of a resolution plan or liquidation as applicable. [Paras 10]

Moratorium declared with specified prohibitions and duration.

Public announcement of corporate insolvency resolution process under Section 13 - appointment of Interim Resolution Professional - Directions were issued for public announcement of CIRP and for appointment of an Interim Resolution Professional. - HELD THAT: - The Bench directed immediate public announcement of the CIRP as prescribed and appointed an Interim Resolution Professional to carry out functions under the Code. Registry was directed to communicate the order to the parties and the Interim Resolution Professional without delay. [Paras 10, 11]

Public announcement ordered and an Interim Resolution Professional appointed.

Final Conclusion: The Section 9 petition was admitted and the Corporate Insolvency Resolution Process ordered to commence; a moratorium was declared effective from 04.01.2021 until completion of CIRP or its lawful termination, the public announcement of CIRP was directed, and an Interim Resolution Professional was appointed.

Liquidation upon expiry of the corporate insolvency resolution process period under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - Appointment of Company Liquidator and duties of the Liquidator - Ceasure of CIRP moratorium and commencement of fresh moratorium under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 - Investigation of financial affairs and avoidance/ preferential transactions including proceedings under Section 66 and Section 35(1) of the Insolvency and Bankruptcy Code, 2016 - Role of the Committee of Creditors' resolution to liquidate and availability of revival scheme during liquidation as per Regulation 2B and Section 230 of the Companies Act, 2013

Liquidation upon expiry of the corporate insolvency resolution process period under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - Appointment of Company Liquidator and duties of the Liquidator - Ceasure of CIRP moratorium and commencement of fresh moratorium under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 - Investigation of financial affairs and avoidance/ preferential transactions including proceedings under Section 66 and Section 35(1) of the Insolvency and Bankruptcy Code, 2016 - Order for liquidation of the corporate debtor and appointment of the liquidator with specified ancillary directions - HELD THAT: - The Tribunal found that the period permitted for completion of the corporate insolvency resolution process had expired and that an application to extend CIRP beyond 330 days was declined. The Committee of Creditors had unanimously resolved to liquidate the corporate debtor. In view of Section 33(1)(a) of the IBC, 2016, where no resolution plan is received within the maximum CIRP period, the Adjudicating Authority is required to order liquidation. The Tribunal therefore ordered liquidation of the corporate debtor and appointed the named insolvency professional as Liquidator. The Liquidator was directed to act in accordance with the IBC and the applicable regulations, to issue the public announcement of liquidation, and to treat the order as a notice of discharge to officers/employees as envisaged by Section 33(7). The Liquidator was also directed to investigate the financial affairs of the corporate debtor - including preferential, undervalued and fraudulent transactions - and to file appropriate applications (including those arising under Section 66 and Section 35(1)) before the Adjudicating Authority. The Registry was directed to notify the Registrar of Companies and the IBBI, and the Liquidator was directed to intimate fiscal and regulatory authorities (including under section 178 of the Income Tax Act). The order of moratorium under Section 14 was held to cease and a fresh moratorium under Section 33(5) was to commence. A preliminary report by the Liquidator was ordered to be submitted within 75 days from the liquidation commencement date. The Tribunal noted that, subject to statutory eligibility and Regulation 2B, promoters may seek revival schemes under Section 230 of the Companies Act during liquidation, but this did not preclude the liquidation order where CIRP time had expired and the CoC had resolved for liquidation. [Paras 11, 12, 13, 14, 15]

Application for liquidation is allowed; the corporate debtor is ordered to be liquidated and PATHUKASAHASRAM RAGHUNATHAN RAMAN is appointed as Liquidator with the directions set out in the order.

Final Conclusion: The Tribunal ordered liquidation of M/s RA-NI Precast Private Limited on account of expiry of the CIRP period and refusal to extend the CIRP, appointed the specified Liquidator, and issued directions governing the liquidation process including investigation duties, public announcement, statutory intimations, cessation of the earlier moratorium and commencement of a fresh moratorium, and filing of a preliminary report within 75 days.

Corporate Insolvency Resolution Process - Operational Creditor - Default - Notice and service - Admission-stage disposal - Liberty to file fresh petition

Admission-stage disposal - Settlement between parties - Liberty to file fresh petition - Disposition of the company petition at the admission stage by directing the parties to amicably settle and granting liberty to the petitioner to file a fresh petition if settlement fails. - HELD THAT: - The Tribunal recorded that the notice issued by the Adjudicating Authority had been served and that the respondent had indicated willingness to settle the dispute with the operational creditor. As the petition was at the admission stage and both parties were amenable to settle the matter, the Tribunal exercised its discretion to dispose of the company petition by directing the parties to effect an amicable settlement. The Tribunal expressly preserved the petitioner's right by granting liberty to file an appropriate fresh petition before the Adjudicating Authority in accordance with law if the respondent failed to settle the dispute as agreed. The Registry was directed to forward a copy of the order to both parties and no costs were imposed. [Paras 5, 6]

C.P.(IB) No. 189/BB/2020 disposed of by directing the parties to settle the matter amicably; petitioner granted liberty to file a fresh petition in case of failure to settle.

Final Conclusion: The Tribunal disposed of the petition at the admission stage directing an amicable settlement between the parties and granted the operational creditor liberty to file a fresh petition before the Adjudicating Authority if the settlement is not effected; registry to forward copy of the order to the parties; no costs.

Exclusion of lockdown period from CIRP time lines - computation of 180 day period for corporate insolvency resolution process - extension of limitation and applicability of Article 142 - regulatory exclusion under Regulation 40C of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - regulatory exclusion under Regulation 47A of IBBI (Liquidation Process) Regulations, 2016 - exercise of powers under Rule 11 of NCLT/NCLAT rules

Exclusion of lockdown period from CIRP time lines - computation of 180 day period for corporate insolvency resolution process - regulatory exclusion under Regulation 40C of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - regulatory exclusion under Regulation 47A of IBBI (Liquidation Process) Regulations, 2016 - Period of lockdown from 25.03.2020 to 31.07.2020 is to be excluded from computation of the 180 day CIRP period. - HELD THAT: - The Tribunal allowed the IA filed by the Resolution Professional seeking exclusion of days lost due to the COVID 19 lockdown from the 180 day CIRP period. In reaching this conclusion the Tribunal relied on the Supreme Court's order extending limitation w.e.f. 15.03.2020, the NCLAT suo motu order excluding the lockdown period for purposes of counting the resolution process period, and the Insolvency and Bankruptcy Board of India's insertion of Regulation 40C (for resolution processes) and Regulation 47A (for liquidation processes) which provide that the lockdown period shall not be counted for timelines that could not be completed due to the lockdown. Applying those authorities and regulations, the Tribunal excluded the period 25.03.2020 to 31.07.2020 from the 180 day computation which otherwise would have expired on 25.08.2020. [Paras 8]

IA No. 348/2020 allowed; period of lockdown w.e.f. 25.03.2020 to 31.07.2020 excluded from calculation of the 180 day CIRP period.

Exercise of powers under Rule 11 of NCLT/NCLAT rules - Urgent listing application IA No. 347/2020 was allowed to enable hearing of IA No. 348/2020. - HELD THAT: - The Tribunal considered the preliminary application for urgent hearing and, in the circumstances, allowed IA No. 347/2020 so that IA No. 348/2020 could be taken up for hearing. No further legal controversy arises from this procedural order. [Paras 1, 2]

IA No. 347/2020 allowed and disposed of; IA No. 348/2020 taken up for hearing.

Final Conclusion: The Tribunal allowed the Resolution Professional's application: the nationwide lockdown period 25.03.2020 to 31.07.2020 is excluded from the 180 day CIRP computation (IA No. 348/2020 disposed of), and the interim urgent application (IA No. 347/2020) for listing was allowed and disposed of.

Exclusion of time period - implementation of resolution plan - inherent powers under Rule 11 of NCLT Rules, 2016 - effect of Supreme Court suo moto order W.P.(C) No.3/2020 on limitation - precedents on exclusion of time in CIRP and implementation of resolution plan

Exclusion of time period - implementation of resolution plan - inherent powers under Rule 11 of NCLT Rules, 2016 - effect of Supreme Court suo moto order W.P.(C) No.3/2020 on limitation - precedents on exclusion of time in CIRP and implementation of resolution plan - Exclusion of the period from 15.03.2020 to 30.06.2020 for the purpose of implementing the approved Resolution Plan. - HELD THAT: - The Tribunal recorded that the Resolution Applicant was required to implement the Resolution Plan within 120 days of its approval but that implementation was impeded by travel and other restrictions arising from the COVID-19 pandemic. Relying on the Hon'ble Supreme Court's suo moto order made effective from 15.03.2020 and relevant precedents addressing exclusion of time in the corporate insolvency process, and invoking its inherent powers under Rule 11 of the NCLT Rules, 2016, the Tribunal concluded that the period from 15.03.2020 to 30.06.2020 should be excluded for the purpose of computing the time for implementation. The Tribunal noted the implementation schedule placed on record and accepted the Resolution Applicant's representation that exclusion of that period would enable completion of mandated activities and takeover of assets.

The period 15.03.2020 to 30.06.2020 is excluded for implementing the Resolution Plan; IA/572/IB/2020 is allowed.

Urgent hearing application - disposal of interlocutory application - Disposition of IA/573/IB/2020 filed for urgent hearing of IA/572/IB/2020. - HELD THAT: - IA/573/IB/2020 sought urgent hearing of the application challenging or seeking relief in relation to implementation of the Resolution Plan. Having allowed IA/572/IB/2020 by excluding the specified period, the Tribunal disposed of the urgent hearing application accordingly.

IA/573/IB/2020 is disposed of as consequential to the allowance of IA/572/IB/2020.

Final Conclusion: The Tribunal allowed the application to exclude the period 15.03.2020 to 30.06.2020 for implementing the approved Resolution Plan and disposed of the ancillary urgent hearing application accordingly.

Preferential transactions - Relevant time for preference - Transactions defrauding creditors - Fraudulent trading and wrongful trading - Transaction audit report as basis for recovery - Ordinary course of business defence

Preferential transactions - Relevant time for preference - Ordinary course of business defence - Whether the repayment of an unsecured loan of Rs. 10 lakhs constituted a preferential transaction under Section 43 of the I&B Code - HELD THAT: - The Tribunal examined the ledger entries and the explanation furnished by the respondents that the amount was borrowed from Smt. Yerra Padmaja to meet an immediate and urgent business requirement (payment of arbitrators' fees) and was repaid shortly thereafter. The Tribunal accepted the respondents' account, noting that the transaction arose in the normal course of the corporate debtor's business and was supported by ledger extracts and contextual facts (payment and prompt repayment in connection with arbitration proceedings). On this basis the Tribunal found that the transaction did not fall within the statutory concept of preference.

The transaction is not a preferential transaction and does not fall within Section 43.

Transactions defrauding creditors - Transaction audit report as basis for recovery - Whether the write-offs of security deposits, VAT recoverable, electricity/road/rent deposits and similar entries totaling the amounts noted in the audit report were transactions defrauding creditors under Section 49 of the I&B Code - HELD THAT: - The Tribunal considered the detailed project wise explanations and documentation placed before it by the respondents explaining the commercial and accounting reasons for writing off various deposits and receivables (age of deposits, project completion/termination, incapacity to pursue refunds or obtain TDS certificates, and settlements/mediations or arbitration outcomes). The Tribunal found the explanations convincing, observed that many entries related to long standing project accounts and routine accounting adjustments, and concluded there was no sufficient evidence of a premeditated scheme to keep assets beyond the reach of creditors. Consequently, the Tribunal was not persuaded that the write offs amounted to transactions intended to defraud creditors.

The write offs are not transactions defrauding creditors under Section 49.

Fraudulent trading and wrongful trading - Transaction audit report as basis for recovery - Whether the adjustments charging a party's receivable to profit & loss (Rs. 35 lakhs) and the write off of cash balances (about Rs. 10 lakhs) constituted fraudulent or wrongful trading under Section 66 of the I&B Code - HELD THAT: - The Tribunal reviewed the respondents' explanations and supporting documents relating to the Letter of Credit transaction with Messrs Agastya Tradelinks and the accounting treatment. It accepted that the amount in question was erroneously charged to interest instead of discount and that attempts were made to recover the amount from the beneficiary; the Tribunal treated this as an accounting error rather than deliberate fraudulent trading. Similarly, for the written off cash balances, the Tribunal accepted the respondents' factual explanations about site closures, employee conduct, and steps taken (including FIRs where applicable) and found these did not establish intent to carry on business with intent to defraud creditors. On the material before it the Tribunal found no sufficient evidence of fraudulent or wrongful trading.

The impugned adjustments and cash write offs do not amount to fraudulent or wrongful trading under Section 66.

Transaction audit report as basis for recovery - Ordinary course of business defence - Whether the Transaction Auditor's report, and the Committee of Creditors' noting of that report, sufficed to establish recoverable liabilities against the respondents absent further specific evidence of misfeasance - HELD THAT: - While the Transaction Auditor prepared a report and the Committee of Creditors took note of it, the Tribunal proceeded to examine the material and explanations placed on record by the respondents. The Tribunal applied evidentiary scrutiny to the specific transactions identified in the report and found that the respondents' contemporaneous records and project wise explanations rebutted the liquidator's characterisation of the transactions as preferential, undervalued or fraudulent. The Tribunal therefore did not treat the audit report alone as determinative in the face of satisfactory explanation and documentary material.

The Transaction Auditor's report and COC note did not, by themselves, establish recoverable liabilities against the respondents; the application failed on the merits in respect of the impugned transactions.

Final Conclusion: The Tribunal, after considering the transaction audit report, the applicants' contentions and the respondents' detailed explanations and supporting material, found no sufficient evidence that the specified transactions constituted preferential transactions, transactions defrauding creditors, or fraudulent/wrongful trading; the application is dismissed.

Clearing and forwarding agent service - consignment agency service - assessable value including freight - service tax levy where excise duty paid on same element - precedent and finality of tribunal order

Clearing and forwarding agent service - consignment agency service - assessable value including freight - service tax levy where excise duty paid on same element - precedent and finality of tribunal order - Leviability of service tax on consignment agency/clearing and forwarding agent service in respect of charges included in the invoice value on which central excise duty was paid and where the consignment agency agreement was not acted upon. - HELD THAT: - The Tribunal examined the agreements and records and found that the appellant's activities were limited to conversion of raw materials into finished goods and dispatching those finished goods to stockyards/consignment agents appointed jointly with Tata Steel Limited. The consignment agency agreement, though executed, was not acted upon and the appellant did not receive any amount as consignment agent nor render consignment agency services; no contrary evidence appears in the show cause notices or impugned orders. The invoices show that the handling/freight charges were included in the assessable value for central excise and duty was paid on that value. Following its earlier order in S.T. Appeal Nos. 70999/13 & 71273/13 & C.O. 75253/15 (Order No. FO/76346-76347/2018 dated 13.03.2018) dealing with identical facts and parties, and applying the reasoning endorsed therein (including the reliance on the Punjab & Haryana High Court decision in Commissioner of Central Excise Vs. Kulcip Medicines (P) Ltd.), the Tribunal held that where the element claimed as consignment/handling charges has been included in the assessable value and excise duty has been paid, demand of service tax on that same element is not sustainable. The earlier Tribunal order having become final between the parties was held applicable and binding for the instant appeals. [Paras 11, 12, 13, 14, 15]

The impugned orders confirming service tax demands, interest and penalties are set aside and the appeals are allowed with consequential relief.

Final Conclusion: Following the Tribunal's earlier final order on identical facts and the finding that the consignment agency agreement was inoperative and the handling/freight charges were included in assessable value on which excise duty was paid, the service tax demands and penalties in the impugned orders are unsustainable; the appeals are allowed and the impugned orders are set aside.

Refund of unutilised Cenvat Credit - Right to refund where output service tax not payable - Principles of natural justice - opportunity to be heard - Classification by service provider not determinative of credit eligibility - Remand for fresh consideration and expeditious decision

Principles of natural justice - opportunity to be heard - Ex parte order and duty to provide reasonable opportunity - Whether denial of refund without affording opportunity to the appellant warranted remand for fresh consideration - HELD THAT: - The Tribunal found that the original authority passed an ex parte order rejecting the refund claim after issuance of a show cause notice to which no reply was filed. The appellant had subsequently furnished documents before the Commissioner (Appeals) which were not considered in the impugned order. In these circumstances, and having regard to the settled requirement that a party be given an opportunity to produce requisitioned documents before final adjudication, the Tribunal held that it was appropriate to remit the matter to the original authority for providing a reasonable opportunity to the appellant to submit the desired documents and for fresh decision. [Paras 7, 8]

Matter remanded to the original authority with direction to afford reasonable opportunity and decide the claim afresh.

Classification by service provider not determinative of credit eligibility - Scope of availment of credit - repair and maintenance services - Whether refund can be denied on the ground that the service provider classified the service under a different category - HELD THAT: - The Tribunal disagreed with the lower authorities' reason for denial based on the classification adopted by the service provider. It observed that repair and maintenance services are not excluded from credit and that denial of refund solely because the vendor charged service tax under the head 'Renting of Immovable Property' was not justified. The Tribunal emphasised that when the service itself is eligible for credit, mere classification by the vendor cannot defeat the assessee's entitlement, and the lower authorities had not articulated why the credit should be disallowed. [Paras 7]

Denial of refund on the basis of the vendor's classification is not justified; the claim requires fresh consideration on merits.

Refund of unutilised Cenvat Credit - Right to refund where output service tax not payable - Whether the appellant was entitled to claim refund of unutilised Cenvat Credit where output service tax on exported services was not payable - HELD THAT: - The Tribunal noted there was no dispute that the appellant's services constituted export of service and that no output service tax was payable, resulting in unutilised credit. It recorded that the service tax, which formed the subject of the refund claim, had not been deposited with the Revenue and that the appellant produced confirmations from service providers supported by a CA certificate. In light of these facts and settled position that entitlement to credit should not be denied while an assessee pursues refund claimed in returns, the Tribunal held that it would be unjust to refuse the refund without allowing the appellant to substantiate its claim and for the authority to apply the law to the submitted documents. [Paras 7]

Appellant's entitlement to refund requires verification but cannot be summarily denied; claim to be reconsidered on submission of documents.

Final Conclusion: The appeal is allowed by way of remand: the original authority is directed to afford the appellant a reasonable opportunity to submit requisitioned documents and decide the refund claim relating to Quarter ended March 2015 expeditiously, within three months of receipt of this order.

Input service - Cenvat credit admissibility - Rule 2(l) of the Cenvat Credit Rules, 2004 - inclusive and substantive parts of definition - transfer of Cenvat credit under Rule 10 - penalty under Section 11AC

Input service - Cenvat credit admissibility - Rule 2(l) of the Cenvat Credit Rules, 2004 - inclusive and substantive parts of definition - Eligibility of Cenvat credit for advisory services availed from M/s Singhi Advisors as input services under Rule 2(l) of the Cenvat Credit Rules, 2004. - HELD THAT: - The Tribunal examined the two-fold structure of Rule 2(l) - the substantive provision that an input service is any service used by a manufacturer, whether directly or indirectly, in or in relation to manufacture and clearance of final products, and the inclusive portion that lists illustrative services. The Bench held that nomenclature or classification of the service is secondary; what matters is whether the service was used in relation to continuation of the manufacturing activity. Noting the appellant's objective to transfer the aluminium-extrusion unit so that manufacturing and removal of final products would continue, the Tribunal found the advisory services were employed in relation to the manufacture of final products and thus fall within the substantive definition. The inclusive list only illustrates and expands the scope and does not restrict admissibility to services expressly mentioned therein. Consequently, the advisory services could not be excluded merely because characterised as related to 'business' or sale of unit, and are eligible for Cenvat credit. As the credit was held admissible, ancillary contentions concerning non-transfer under Rule 10 and the imposition of interest and penalty did not require separate adjudication by the Bench. [Paras 10, 11]

The services availed from M/s Singhi Advisors are input services within Rule 2(l) and the Cenvat credit claimed is admissible; consequential issues need not be considered.

Final Conclusion: Appeal allowed; the disputed advisory services qualify as input services under Rule 2(l) CCR, 2004 and the Cenvat credit claimed by the appellant is held admissible with consequential relief as per law.

Assessment/reassessment for turnover escaped from assessment - extended period of limitation under Section 29(7) of the U.P. VAT Act, 2008 - authority of the Commissioner to authorise reassessment within eight years - reassessment permissible where no prior assessment order exists - distinguishing precedent on reassessment initiated during remand

Assessment/reassessment for turnover escaped from assessment - extended period of limitation under Section 29(7) of the U.P. VAT Act, 2008 - authority of the Commissioner to authorise reassessment within eight years - Validity of the authorisation dated 20.08.2020 under Section 29(7) permitting assessment/reassessment for Assessment Year 2012-13 where turnover escaped assessment - HELD THAT: - The Court held that Section 29(1) permits an assessing authority, upon reason to believe that turnover has escaped assessment, to assess or reassess after issuing notice and making such inquiry as may be necessary. The normal limitation is three years under Section 29(3), but Sub section (7) empowers the Commissioner to authorise assessment or reassessment within eight years where he is satisfied it is just and expedient. On the facts, assessment under the U.P. Tax on Entry of Goods into Local Areas Act, 2007 for Assessment Year 2012 13 had escaped notice and the Additional Commissioner granted authorisation under Section 29(7). The Court found that where the whole of the turnover has escaped assessment by reason of no assessment order having been passed, Section 29(1) can be invoked and the Commissioner may grant the extended authorisation under Sub section (7); it is not incumbent on the assessing authority to have first passed an assessment before invoking Section 29(1) and seeking authorisation. Applying these provisions to the material before it, the Court concluded that the impugned authorisation was legally sustainable. [Paras 7, 8, 9, 15, 16]

The authorisation dated 20.08.2020 under Section 29(7) to permit assessment/reassessment for Assessment Year 2012-13 is valid; the writ petition is dismissed on this ground.

Reassessment permissible where no prior assessment order exists - distinguishing precedent on reassessment initiated during remand - Whether the decision in Catalysts (Writ Tax No.706 of 2010) precludes reassessment where no assessment order exists - HELD THAT: - The Court examined Catalysts and the facts underlying that decision, noting it arose from reassessment proceedings initiated while original assessment proceedings were pending pursuant to an appellate remand. Catalysts relied on the principle that where proceedings are remanded by an appellate authority the matter is 'at large', and reassessment cannot be initiated in such circumstances because there is no subsisting assessment order to reassess. The Court distinguished those facts from the present case, observing that the present case involves turnover that escaped assessment altogether and not reassessment during the pendency of remand proceedings. The Court further noted that the view in Catalysts, if read as a blanket bar, would conflict with earlier Full Bench authority which recognised independent powers to assess under parallel provisions and did not require a prior assessment to invoke reassessment provisions. Consequently, Catalysts was held distinguishable and not applicable to the facts before the Court. [Paras 10, 11, 12, 13]

Catalysts is distinguishable on its facts and does not bar reassessment in a case where whole turnover escaped assessment; the petitioner's reliance on that decision fails.

Final Conclusion: The writ petition is dismissed; the impugned authorisation dated 20.08.2020 under Section 29(7) (enabling assessment/reassessment for Assessment Year 2012-13 where turnover escaped assessment) is upheld, and there shall be no order as to costs.

Rectification under Section 84 of the TNVAT Act, 2006 - filing of C Form declarations - extension of time to file declarations after completion of assessment - taxation of sale of capital goods at concessional rate - application of Central Sales Tax rate for capital goods

Rectification under Section 84 of the TNVAT Act, 2006 - filing of C Form declarations - extension of time to file declarations after completion of assessment - Application for additional time to file C Form declarations was not entertainable and the refusal to grant extension was upheld. - HELD THAT: - The assessing authority had rejected the Section 84 application seeking time to file C Form declarations on the ground that the assessments were completed and more than one year had elapsed without appeal or discharge of the demand. The Court found no infirmity in the officer's conclusion that sufficient time had already been afforded and that the requisite forms were unavailable; accordingly the rejection of the request for additional time was affirmed. [Paras 6]

Request for additional time to file C Form declarations refused and that conclusion is confirmed.

Taxation of sale of capital goods at concessional rate - application of Central Sales Tax rate for capital goods - Alternate contention that the sales were of capital goods chargeable at the concessional rate was not considered by the assessing authority and was remitted for fresh consideration. - HELD THAT: - Although the impugned orders noted the alternate submission that the goods were capital goods taxable at the concessional rate (relying on the CST rate for capital goods), the assessing officer omitted to adjudicate that prayer. The Court directed the petitioner to appear before the assessing officer for personal hearing on the alternate claim and ordered the assessing officer to pass orders on that alternate prayer after hearing within a specified short timeframe. [Paras 6, 7]

Alternate prayer that sales be taxed as capital goods at concessional rate remanded to the assessing officer for personal hearing and decision within the timeframe directed by the Court.

Final Conclusion: The refusal to grant further time to file C Form declarations is affirmed; however the alternate claim that the transactions qualify as sales of capital goods at the concessional CST rate was not decided and is remitted to the assessing officer for personal hearing and determination within the period specified by the Court.

Anticipatory bail under Section 438 of the Code of Criminal Procedure - interim bail subject to conditions and obligation to join investigation - failure to comply with court undertaking / non-joining of investigation - criminal cheating and conspiracy - dishonour of cheques and parallel complaint under the Negotiable Instruments Act not ipso facto a bar to criminal prosecution for cheating - forcible dispossession of possession as circumstance bearing on culpability

Interim bail subject to conditions and obligation to join investigation - failure to comply with court undertaking / non-joining of investigation - Extension of interim bail granted earlier to Som Parkash - HELD THAT: - The earlier interim bail granted to Som Parkash on 22.12.2020 was conditional upon his appearance before the investigating officer and other undertakings. The Court recorded that Som Parkash did not join the investigation and failed to comply with the undertaking given before the Court. In view of that non-compliance and having heard the parties, the Court found no ground to continue or extend the interim concession previously granted to him.

The interim bail previously granted to Som Parkash is not extended and the petition for anticipatory bail is dismissed.

Anticipatory bail under Section 438 of the Code of Criminal Procedure - criminal cheating and conspiracy - dishonour of cheques and parallel complaint under the Negotiable Instruments Act not ipso facto a bar to criminal prosecution for cheating - forcible dispossession of possession as circumstance bearing on culpability - Grant of anticipatory bail to Dharmender Kumar - HELD THAT: - The allegations in the FIR directly implicate Dharmender: he is said to have received the sale consideration, given possession, later taken forcible possession back and issued cheques which were dishonoured. The Court noted the prosecution case of calculated deception and conspiracy and observed that the pendency of a complaint under the Negotiable Instruments Act based on dishonoured cheques did not suffice to show that the FIR for cheating was not maintainable. Having considered the nature of the allegations, including forcible dispossession and the cheques allegedly given knowing they would be dishonoured, the Court found no ground to accede to the prayer for anticipatory bail to Dharmender.

Prayer for anticipatory bail to Dharmender Kumar is rejected and the petition is dismissed.

Final Conclusion: Both petitions for anticipatory bail are dismissed: the interim bail granted earlier to Som Parkash is not extended due to his failure to join investigation, and anticipatory bail to his son Dharmender Kumar is refused on the basis of the allegations of cheating, conspiracy, dishonoured cheques and forcible dispossession.

Forfeiture of property under Chapter V-A of the NDPS Act - bonafide purchaser for adequate consideration - jurisdictional validity of forfeiture and surrender orders - exclusion of property from notice/freeze upon prior acceptance by Competent Authority - right to notice and opportunity to be heard in forfeiture proceedings - appeal under Section 68-O of the NDPS Act

Bonafide purchaser for adequate consideration - exclusion of property from notice/freeze upon prior acceptance by Competent Authority - forfeiture of property under Chapter V-A of the NDPS Act - jurisdictional validity of forfeiture and surrender orders - The impugned orders insofar as they declare the said property forfeited to the Central Government and direct its surrender are without jurisdiction. - HELD THAT: - The Court found as an uncontroverted fact that the petitioner purchased and has held the property since 1996 as a bonafide purchaser for valuable consideration and that no notice of proceedings under the NDPS Act had been issued to him (para 16-17). Earlier records demonstrate that the property was transferred to antecedent purchasers prior to issuance of the notice under Section 68-H(1), the Director, NCB had intimated that the property was wrongly frozen and the Competent Authority accepted exclusion of the property from the schedule of affected properties by letter dated 17.01.1994 (para 9-11, 18-20). In these circumstances the Competent Authority was obliged to consider that prior acceptance before passing any fresh forfeiture order; the subsequent orders of forfeiture and surrender passed some twenty seven years later were made without regard to those material facts and thereby lacked jurisdiction (para 18-22). Applying the statutory test that Chapter V A does not apply to a present holder who is a transferee in good faith for adequate consideration, the Court held the order of forfeiture as to this property to be without jurisdiction (para 21-22). [Paras 18, 19, 20, 21, 22]

Impugned orders are set aside insofar as they declare the said property forfeited and require its surrender; the forfeiture and surrender directions in respect of that property are without jurisdiction.

Appeal under Section 68-O of the NDPS Act - relegation to statutory remedy - Whether the petitioner should be relegated to pursuing an appeal under Section 68-O instead of obtaining relief in writ jurisdiction. - HELD THAT: - Although Section 68 O permits an appeal against orders of the Competent Authority, the Court noted there was no dispute as to the essential facts and that the Competent Authority had previously accepted exclusion of the property from the proceedings (para 23-24). Given the absence of controversy on material facts and the clear jurisdictional defect in the orders impugned, the Court considered it unnecessary and inapt to require the petitioner to first exhaust the statutory appellate remedy and therefore granted relief in the writ petition (para 24-25). [Paras 23, 24, 25]

The petitioner need not be relegated to an appeal under Section 68 O; the Court, on the facts, declined to insist on exhaustion of the statutory remedy and granted relief by setting aside the impugned orders as they related to the property.

Final Conclusion: Writ petition allowed: the orders impugned are set aside insofar as they declare the specified property forfeited to the Central Government and direct its surrender; the petitioner granted the relief sought without being required to pursue the statutory appeal.

Compounding of offence under the Negotiable Instruments Act - power to compound after conviction - compromise deed and payment of cheque amount - release of amount deposited in court

Compounding of offence under the Negotiable Instruments Act - power to compound after conviction - compromise deed and payment of cheque amount - Compounding of the offence under the Negotiable Instruments Act after conviction in view of an inter se compromise and payment of the cheque amount - HELD THAT: - The Court recorded that the parties filed a compromise deed dated 3.12.2020 and that the complainant acknowledged receipt of the agreed amount, with a portion already deposited in the trial court and the remainder paid to the complainant. Relying on the principle laid down by the Hon'ble Apex Court in Damodar S. Prabhu v. Sayed Babalal H., the Court held that the offence punishable under Section 138 of the Act could be compounded even after conviction when the parties have amicably settled the dispute and the cheque amount has been paid. In view of the compromise and payment, the Court exercised its power under the Act to accept the compromise, quash and set aside the judgments of the courts below and acquit the accused of the offence under Section 138. [Paras 5, 8, 9]

The offence was compounded on account of the inter se compromise and payment; judgments of the courts below were quashed and set aside and the accused was acquitted.

Release of amount deposited in court - Direction for release of the amount deposited in court to the complainant following compounding - HELD THAT: - Having accepted the compromise and directed quashing of the convictions, the Court ordered that the amount deposited by the accused in the trial court be released to the complainant forthwith upon her application. The Court recorded that the complainant had no objection to quashing the conviction if the deposited amount was released to her, and accordingly directed the learned trial court to effect release. [Paras 10]

The trial court was directed to release the deposited amount in favour of the complainant on her making an application.

Final Conclusion: The compromise between the parties was accepted; the offence under Section 138 was compounded, the convictions and sentences recorded by the courts below were quashed and set aside, the accused was acquitted, bail bonds discharged, and the trial court directed to release the deposited amount to the complainant on application.