TaxTMI Updates e-Newsletter
Jan 09,2020

Bogus forfeiture of shares - amount invested in the forfeited shares - Short Term Capital Loss - Revenue's tax case appeals are dismissed; the Tribunal's order directing acceptance of the short-term capital loss arising from forfeiture of partly paid shares is upheld and the substantial questions of law are answered against the revenue by HC [2019 (3) TMI 136 - MADRAS HIGH COURT]

HELD THAT:- Special Leave Petitions are dismissed on the ground of delay.

Penalty u/s 271(1)(c) - excess claim of exemption u/s 54EC - The Revenue's appeal is dismissed: the Tribunal's deletion of penalty under Section 271(1)(c) is upheld, and the Court declined to entertain the question relating to penalty under Section 54EC given the small amount and the admitted legal doubt by HC [2019 (4) TMI 974 - BOMBAY HIGH COURT]

HELD THAT:- Delay condoned. The special leave petition is dismissed.

Addition u/s 69C - capitation fee for admission in medical college - search conducted on medical college - Chairman and managing trustee of college had accepted receipt of capitation fees and name of assessee son was also appeared - Assessee, stated before AO that the admission process was undertaken by the Assessee’s father-in-law - High Court finds [2019 (7) TMI 709 - DELHI HIGH COURT] no substantial question of law in the ITAT's order and upholds the addition made under Section 69C for AY 2013-14

HELD THAT:- SLP dismissed.

Addition of excise duty - valuation of closing stock made u/s 145A - special audit scope - HELD THAT:- Learned counsel for the petitioner, on instructions, issued by the Department of Revenue, Ministry of Finance vide F. No.390/Misc./116/2017-JC dated 22.08.2019, seeks permission to withdraw this Special Leave Petition along with pending applications therein due to low tax effect. Permission granted, subject to just exceptions.

The special leave petition and pending applications are dismissed as withdrawn, leaving question of law open.

Accrual of income - real income versus hypothetical income - taxability of business benefits only when real accrual and corresponding liability exist - application of real income theory to ascertain accrual - carbon receipts treated as non-taxable unless realized or transferred - Section 28(iv) - value of benefit or perquisite arising from business

Accrual of income - real income versus hypothetical income - carbon receipts treated as non-taxable unless realized or transferred - application of real income theory to ascertain accrual - Deletion of the addition of the amount representing carbon receipts by the CIT(A) and confirmation by the ITAT was justified because the receipts had not accrued or been received in the year and were neither sold nor transferred in that year. - HELD THAT: - The Court applied the settled principles that income must be real and not hypothetical to be taxable, drawing on the tests laid down by the Supreme Court in cases such as Excel Industries Ltd. and authorities cited therein. Accrual requires that the amount becomes due and is accompanied by a corresponding liability on the payer; absent transfer/sale or a legal entitlement enforceable in the year, the claimed benefit represents at best hypothetical income. On the facts, the carbon receipts were neither sold nor transferred in the year under consideration and therefore did not accrue or get received in that year. The Assessing Officer's addition was accordingly unsustainable and the orders of the CIT(A) and the Tribunal deleting the addition were correctly upheld. [Paras 4]

Appeal dismissed; impugned order of the Tribunal confirming deletion of the addition is upheld and no substantial question of law arises.

Final Conclusion: The Revenue's appeal is dismissed: the Tribunal correctly upheld the deletion of the addition relating to carbon receipts for AY 2010-2011 on the ground that no real accrual or receipt occurred in the year and the sums were not sold or transferred in that year.

Re-opening of assessment under Section 147/148 of the Income-tax Act - reason to believe - borrowed wisdom versus independent application of mind by Assessing Officer - change of opinion - failure to make full and true disclosure - accommodation entries / sham transactions - onus under Section 68 (identity, creditworthiness and genuineness)

Re-opening of assessment under Section 147/148 of the Income-tax Act - reason to believe - accommodation entries / sham transactions - Validity of the notice dated 31.03.2019 under Section 148 for Assessment Year 2012-13 - HELD THAT: - The Court held that the Assessing Officer had relevant material on which a reasonable person could form a belief that income chargeable to tax had escaped assessment for AY 2012-13. The material comprised the investigation report showing Moral Alloys Pvt. Ltd.'s exceptionally high turnover with minimal declared income, repetitive same day inflows and outflows, layering through multiple non existent or sham entities and substantial transfers from Moral to the petitioner (formerly SIPL). The Court applied settled principles that at the stage of examining the validity of a reopening notice the question is whether reasonable grounds existed to form the requisite belief and not whether the escapement is finally established. Reliance on investigative material that discloses a prima facie live link between the assessee's receipts and a provider of accommodation entries justified initiation of reassessment proceedings within limitation. The petitioner's disclosure of the transactions in its original return or books did not preclude reopening where the material information about the tainted character of the counterparty was not before the AO at the time of the original assessment.

The notice under Section 148/147 for AY 2012-13 was held valid and the challenge to the reopening was dismissed.

Borrowed wisdom versus independent application of mind by Assessing Officer - reason to believe - Whether the Assessing Officer merely acted on borrowed conclusions from the investigation report without independent application of mind - HELD THAT: - The Court examined the reasons recorded by the Assessing Officer at length and found an elaborate analysis setting out the AO's perusal of the investigation report, enquiries made, bank statement analysis, identification of flows to and from Moral and related entities, and the AO's own conclusions linking the petitioner to the suspect transactions. The Court rejected the contention that the AO acted mechanically on 'borrowed wisdom', observing that the reasons disclose independent consideration of the material, application of legal principles (including change of opinion jurisprudence and the Explanation to Section 147) and the formation of a reasoned belief that income had escaped assessment.

The contention of mere borrowed wisdom was rejected; the AO was held to have applied his mind independently.

Change of opinion - failure to make full and true disclosure - onus under Section 68 (identity, creditworthiness and genuineness) - Whether the reopening was impermissible as a mere change of opinion or blocked by full and true disclosure by the assessee - HELD THAT: - The Court concluded that the case did not involve a simple change of opinion because (i) the information about Moral being a provider of accommodation entries and the surrounding material was fresh and received after completion of the original scrutiny assessment; and (ii) the original assessment order did not show that the AO had formed an opinion on the genuineness of transactions with Moral. The Court relied on authorities explaining that mere production of books or some evidentiary material does not necessarily amount to 'full and true disclosure' of material facts if the material facts are embedded in a manner that they could not have been discovered by the AO with due diligence. Applying the established test under Section 68, the Court noted that where the counterparty's identity, creditworthiness and genuineness are doubtful, reopening is permissible.

Reopening was not invalid as a change of opinion and the petitioner was held not to have made full and true disclosure that would preclude reassessment.

Final Conclusion: Writ petition dismissed. The re-opening notice under Section 148/147 for Assessment Year 2012-13 was held valid; the Assessing Officer applied his mind to the investigative material and had reason to believe escapement of income. Petition dismissed with costs of Rs. 1,00,000 to be paid to the Delhi High Court Advocates Welfare Trust.

Deduction under section 35(1)(ii) - Explanation to section 35(1)(ii) - withdrawal of approval subsequent to payment - retrospective withdrawal of approval and its effect on antecedent donations - statement recorded during survey cannot be sole basis for adverse inference - right to confront/cross examine adverse witness summoned under survey/131 procedure

Deduction under section 35(1)(ii) - Explanation to section 35(1)(ii) - withdrawal of approval subsequent to payment - retrospective withdrawal of approval and its effect on antecedent donations - Deduction under section 35(1)(ii) in respect of donation to Herbicure Healthcare Bio Herbal Research Foundation is allowable for the year in which the donation was made despite subsequent withdrawal of the institution's approval. - HELD THAT: - The Tribunal examined the statutory Explanation to section 35(1)(ii) and the facts that the institution enjoyed approval at the time the donation was made and the payment was evidenced by bank transfers and receipts. Relying on the reasoning in the coordinate ITAT Bench (DCIT v. Desmet Reagent Pvt. Ltd.) and the statutory Explanation, the Tribunal held that retrospective cancellation of approval by the Central Government after the date of payment cannot defeat the assessee's entitlement to deduction. The Tribunal found the facts of the present case pari materia to the cited coordinate decision and, applying that precedent and the Explanation, concluded that the assessee was entitled to the claimed deduction for the relevant year. [Paras 7, 8]

Claim for deduction under section 35(1)(ii) in relation to the donation was allowed.

Statement recorded during survey cannot be sole basis for adverse inference - right to confront/cross examine adverse witness summoned under survey/131 procedure - The assessing officer could not sustain disallowance solely on the basis of a general statement recorded during survey at the institution without giving the assessee an opportunity to cross examine the deponent; the deponent's contemporaneous confirmations that donations were received and not refunded undermined the basis for disallowance. - HELD THAT: - The Tribunal considered the statement recorded during survey which described an alleged modus operandi of accommodation entries, but noted there was no direct evidence linking that practice to the assessee's donation. The Tribunal applied the principle that a survey statement alone cannot be the sole basis for adverse findings (as reflected in earlier authorities referred to in the reasoning) and observed that where the AO considered such a statement adverse, the assessee should have been permitted to cross examine the deponent. Further, the deponent subsequently confirmed receipt of the donations and stated no refund was made, weakening the AO's suspicion. On these grounds the disallowance premised on the survey statement was not sustainable. [Paras 6, 7, 8]

Disallowance founded solely on the survey statement was set aside; the assessee's entitlement was upheld.

Final Conclusion: Following the reasoning of the coordinate ITAT Bench and applying the statutory Explanation to section 35(1)(ii), the Tribunal allowed the assessee's appeal for A.Y. 2014 15 and directed that the deduction claimed in respect of the donation be permitted.

Disallowance of short term capital loss as sham transaction - accommodation entries / bogus LTCG-STCL scheme - suspension of trading by stock exchange as evidentiary indicator - remand for fresh examination and opportunity to assessee

Disallowance of short term capital loss as sham transaction - accommodation entries / bogus LTCG-STCL scheme - suspension of trading by stock exchange as evidentiary indicator - Validity of disallowance of short term capital loss claimed on transactions in shares of M/s Cressanda Solution Limited. - HELD THAT: - The Tribunal upheld the Assessing Officer's finding that the short term capital loss arising from transactions in Cressanda Solution Limited represented accommodation entries forming part of a larger bogus LTCG/STCL scheme identified by the Investigation Directorate. The AO relied upon the investigation reports, statements of entry operators and information from the stock exchange showing suspension/revocation of trading in the company's shares; the Tribunal found no plausible documentary explanation from the assessee to contradict these findings. The Tribunal also relied on precedent and a recent Benches' findings concerning suspended trading in Cressanda Solution Ltd. as a strong indicium that the transactions were sham and used to evade tax. On these grounds the Tribunal affirmed the disallowance of the loss attributable to Cressanda Solution Limited. [Paras 5]

Disallowance of short term capital loss on shares of M/s Cressanda Solution Limited confirmed.

Remand for fresh examination and opportunity to assessee - Treatment of short term capital loss claimed on shares of Pearl Agriculture Limited and Pearl Electronics Limited. - HELD THAT: - The Tribunal observed that the Assessing Officer had not specifically called for detailed reasons and supporting evidence from the assessee for incurring losses on shares of Pearl Agri and Pearl Elec and that the assessee likewise had not adequately explained the cause of those losses during assessment. In the interest of justice the Tribunal considered it appropriate to remit these specific issues to the Assessing Officer for de novo examination. The AO is directed to give full opportunity to the assessee, call for reasons for the losses and supporting documentary evidence, and decide the matter in accordance with law; if the AO is satisfied by the explanation and evidence, he may allow the losses. [Paras 5]

STCL relating to Pearl Agri and Pearl Elec remitted to the Assessing Officer for fresh consideration after giving full opportunity to the assessee.

Final Conclusion: Appeal partly allowed: disallowance of STCL on Cressanda Solution Limited confirmed; losses on Pearl Agriculture Limited and Pearl Electronics Limited remitted to the Assessing Officer for fresh examination with directions to afford full opportunity to the assessee.

Exemption under section 54 of the Income-tax Act, 1961 - utilisation of capital gains for construction of residential house - necessity of completion within three years versus commencement/substantial investment - burden of proof and documentary evidence to substantiate investment - remand for verification of documentary evidence

Exemption under section 54 of the Income-tax Act, 1961 - utilisation of capital gains for construction of residential house - necessity of completion within three years versus commencement/substantial investment - Assessee's entitlement to exemption under section 54 despite residential house being under construction at the end of three years, where investment/substantial steps towards construction have been made. - HELD THAT: - The Tribunal held that section 54 emphasises investment or utilisation of capital gains for purchase or construction of a residential house and does not mandate that the residential house be fully completed within the three year period. The statutory requirement is satisfied by taking steps and making investment towards construction within the specified period; completion is not an absolute precondition. Applying this principle to the facts, the assessee had invested in purchase of land and asserted further construction expenditure exceeding the computed capital gain. On the legal construction adopted by the Tribunal and consistent authority cited, substantial investment and commencement of construction within the stipulated period fulfil the object of section 54 and render the assessee eligible for exemption. [Paras 18, 21, 22, 23]

Assessee is prima facie eligible for exemption under section 54 because the thrust of the section is on utilisation/investment of capital gains and commencement/substantial investment in construction, not mandatory completion within three years.

Burden of proof and documentary evidence to substantiate investment - remand for verification of documentary evidence - Whether the assessee's claim of having invested the asserted amount is to be accepted without documentary proof, and the course of action to be adopted. - HELD THAT: - Although the Tribunal concluded that the legal test for section 54 can be satisfied without physical completion of the house, it noted that the assessee had not produced documentary evidence to substantiate the claimed investment. In view of the absence of supporting documents, the Tribunal did not decide the factual claim on the record but directed a remand to the Assessing Officer for examination and verification of documentary evidence of investment. If the Assessing Officer finds the documentary evidence in order, the benefit under section 54 is to be allowed. [Paras 24]

The issue of factual proof of investment is remanded to the Assessing Officer for verification of documentary evidence; upon satisfactory verification the exemption under section 54 shall be granted.

Final Conclusion: The Tribunal held that section 54 requires utilisation/ investment of capital gains in purchase or construction and does not insist on completion of the residential house within three years; accordingly, the assessee is prima facie entitled to exemption, but the factual claim of investment is remitted to the Assessing Officer for verification and, if substantiated, the exemption is to be allowed. The appeal is disposed of in the assessee's favour for statistical purposes.

Penalty under section 271D for acceptance of loan otherwise than by account-payee cheque - penalty under section 271E for repayment of loan in cash in contravention of section 269T - transactions between near relatives/family members and applicability of sections 269SS/269T - reasonable cause defence and relief under section 273B - deletion of penalty where transactions are reflected in books and there is no escapement of income

Penalty under section 271D for acceptance of loan otherwise than by account-payee cheque - transactions between near relatives/family members and applicability of sections 269SS/269T - reasonable cause defence and relief under section 273B - Whether penalty under section 271D is leviable for acceptance of a loan by bearer cheque where the transaction was between father and son and duly recorded in books of account. - HELD THAT: - The Tribunal found that the loan acceptance on bearer cheque occurred between proprietary concerns of near relatives (father and son) and was reflected in the books of accounts of the parties. There was no suppression or escapement of income and the transactions arose from urgent business exigencies in a cash-intensive trade. Applying consistent precedents dealing with family transactions and reasonable cause, the Tribunal held that such transactions between near relatives do not fall within the mischief of the provisions attracting penalty and that a reasonable cause existed for the deviation from account-payee cheque. Consequently, imposition of penalty under section 271D could not be sustained. [Paras 6, 7]

Penalty under section 271D cancelled.

Penalty under section 271E for repayment of loan in cash in contravention of section 269T - transactions between near relatives/family members and applicability of sections 269SS/269T - deletion of penalty where transactions are reflected in books and there is no escapement of income - Whether penalty under section 271E is leviable for repayment of loan in cash where repayment was deposited into the bank account of the father's proprietary concern and the entries were recorded in accounts. - HELD THAT: - The Tribunal recorded that the alleged cash repayment was made by depositing collections into the bank account of the father's proprietary concern and that both parties maintained regular books reflecting the transactions. Given there was no unaccounted cash or tax effect and the dealings were between near relatives, the Tribunal followed its earlier reasoning and authorities holding that such family transactions, accounted for and not resulting in income escapement, do not warrant imposition of penalty under section 271E. Accordingly the penalty was held unsustainable. [Paras 6, 7]

Penalty under section 271E cancelled.

Final Conclusion: Both appeals allowed; penalties levied under sections 271D and 271E for AY 2014-15 set aside and cancelled as unsustainable in respect of the family transactions which were recorded in the books and did not result in escapement of income.

Relinquishment/extinguishment of contractual rights as transfer attracting capital gains treatment - right to obtain conveyance under an agreement as a capital asset - characterisation of isolated transaction as adventure in the nature of trade versus investment - intention at the time of acquisition as relevant test for classification of receipts as business income or capital gain - application of tests in G. Venkataswami Naidu to determine whether an isolated transaction is an adventure in the nature of trade - computation of capital gain in accordance with the deductions under section 48

Relinquishment/extinguishment of contractual rights as transfer attracting capital gains treatment - right to obtain conveyance under an agreement as a capital asset - intention at the time of acquisition as relevant test for classification of receipts as business income or capital gain - Whether the amount received on relinquishment of rights under the agreement to purchase undivided share of land and construction agreement is taxable as capital gain or as income from business. - HELD THAT: - The Tribunal held that the right acquired under the agreement to purchase/construct falls within the expression 'property of any kind' and is therefore a capital asset; extinguishment or relinquishment of that right amounts to a transfer for the purposes of the Act. The decision applied the tests in G. Venkataswami Naidu, emphasising that classification of an isolated transaction depends on the totality of facts, including whether the assessee was a trader, the nature and quantity of the commodity, and the purchaser's intention at acquisition. The Tribunal found no material to show that the assessee was a trader in real estate or that the transaction formed part of a business adventure: the assessee's plea of investment intent was not disbelieved by revenue, there was no history of similar transactions, and the mere presence of a default clause providing for interest in the cancellation deed could not convert the transaction into an adventure in the nature of trade. Reliance on the Karnataka High Court decision in H. Anil Kumar was held to support the proposition that a right to obtain conveyance is a capital asset and its relinquishment gives rise to capital gain. [Paras 18, 19, 20, 21, 22]

Amount received on relinquishment of the contractual rights is to be treated as income chargeable under the head 'Capital Gain' and not as 'Income from Business'.

Computation of capital gain in accordance with the deductions under section 48 - Whether the quantum and computation of the capital gain were to be adjudicated by the assessing officer in accordance with the statutory scheme. - HELD THAT: - Although the Tribunal held the receipt to be capital gain, it observed that the Assessing Officer and the CIT(A) had not examined the claim under the head 'Capital Gain' in accordance with the deduction and computation provisions. The Tribunal therefore directed that the question of computation be remitted to the AO for fresh consideration after affording the assessee an opportunity of being heard, so that deductions under the relevant provisions are applied prior to determining the income chargeable under capital gains. [Paras 23]

Computation of capital gains remitted to the Assessing Officer for fresh adjudication in accordance with the provisions governing computation and deductions.

Final Conclusion: The Tribunal held that the sum received on relinquishment of rights under the agreement is a transfer of a capital asset and taxable as capital gains; the matter of computing the capital gain was remanded to the Assessing Officer for fresh consideration in accordance with the statutory provisions. Appeal treated as allowed for statistical purposes.

Comparability of independent enterprises - arm's length price - transfer pricing - selection and exclusion of comparables - functional comparability and merchant banking activities - TNMM benchmarking and operating profit to total cost (OP/OC) margin - remand for recomputation of ALP after excluding comparables

Functional comparability and merchant banking activities - selection and exclusion of comparables - Exclusion of Ladderup Corporate Advisory Private Limited from the final set of comparables for benchmarking the assessee's provision of rating support services. - HELD THAT: - The Tribunal found Ladderup Corporate Advisory Private Limited to be functionally dissimilar to the assessee. The company operates as an investment/merchant banking firm offering investment banking, corporate finance and corporate advisory services as its principal business and is a Category I merchant banker registered with SEBI. Its financial statements and segment disclosures show revenue principally from financial and management consultancy, and AS 17 disclosures classify its business as Financial and Management Consultancy. On these facts the Bench held that Ladderup's core functions and risk/revenue profile are materially different from the assessee, which provides rating support services as a contract service provider, and therefore Ladderup must be excluded from the comparable set. The Tribunal relied on precedents of coordinate Benches and the Hon'ble Delhi High Court upholding exclusion of Ladderup in similar circumstances (see Mckinsey Knowledge Centre India Pvt. Ltd. and other Tribunal decisions referred to in the order). [Paras 15, 16]

Ladderup Corporate Advisory Private Limited is directed to be excluded from the list of comparables on account of functional dissimilarity.

Functional comparability and merchant banking activities - selection and exclusion of comparables - Exclusion of Motilal Oswal Investment Advisors Private Limited from the final set of comparables for benchmarking the assessee's provision of rating support services. - HELD THAT: - The Tribunal concluded that Motilal Oswal Investment Advisors Private Limited is functionally dissimilar to the assessee. The company derives income from multiple business verticals (equity capital markets, mergers & acquisitions, private equity syndication and structured debt), performs merchant banking activities and provides comprehensive investment banking solutions. Despite classification of revenue as advisory fees, its breadth of merchant banking functions materially affects its revenue and margins. The Bench observed lack of segmental disclosures which further indicated broad merchant banking activity distinct from the assessee's specialised rating support services. The Tribunal followed prior decisions of coordinate Benches and the Delhi High Court reasoning where Motilal Oswal was excluded on similar grounds (referenced authorities reproduced in the order). [Paras 17, 18, 19, 20]

Motilal Oswal Investment Advisors Private Limited is directed to be excluded from the list of comparables on account of functional dissimilarity.

Arm's length price - TNMM benchmarking and operating profit to total cost (OP/OC) margin - remand for recomputation of ALP after excluding comparables - Effect of excluding the two comparables on the ALP determination and direction to the Assessing Officer/Transfer Pricing Officer for recomputation. - HELD THAT: - The Tribunal accepted the assessee's submission that exclusion of Ladderup and Motilal Oswal from the comparable set would alter the comparable set average margins such that the assessee's margins would fall within the prescribed 5% interquartile range under TNMM. The Bench therefore directed the AO/TPO to exclude the two comparables and to verify and recompute the arm's length margins accordingly, giving the assessee an opportunity to place relevant data. The Tribunal noted that the DRP had already deleted the addition in respect of other support services (not under challenge by Revenue), and confined its adjudication to the comparables contested by the assessee; other grounds were left undecided as academic. [Paras 15, 20, 21]

AO/TPO directed to exclude the two specified comparables and to recompute the ALP/margins; the appeal is partly allowed.

Final Conclusion: The Tribunal partly allowed the assessee's appeal: Ladderup Corporate Advisory Private Limited and Motilal Oswal Investment Advisors Private Limited are excluded from the comparable set for benchmarking the assessee's rating support services on the ground of functional dissimilarity, and the Assessing Officer/Transfer Pricing Officer is directed to recompute the arm's length margins/prices after excluding these comparables; the addition in respect of other support services had been deleted by the DRP and is not contested by Revenue.

Characterisation of retention money for tax and MAT - Tax treatment under percentage completion method versus realisation - Slump sale and applicability of Section 2(42C) / Section 50B - Transfer by exchange versus sale - substance and form in taxability - Provision for leave encashment and Section 43B(f) - Binding effect of High Court precedents and coordinate bench decisions

Characterisation of retention money for tax and MAT - Tax treatment under percentage completion method versus realisation - Deletion of addition made by AO treating retention money as taxable income and its exclusion in MAT computation - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the addition in respect of retention money on the ground that such amounts do not partake the character of taxable income until mutual contractual obligations are finally satisfied and the amount is realised. The Tribunal noted authoritative decisions of the jurisdictional High Court and a coordinate bench (DCIT vs. M/s. Mcnally Bharat Engineering Ltd., ITA Nos.147&109/Kol/2018) holding that retention money cannot be treated as income merely because bills were raised on completion of a percentage of work; anticipated receipts of uncertain realisation cannot be taxed in advance by applying percentage completion in the assesee's circumstances. For MAT purposes the coordinate-bench decision was held to dispose of the department's contention that the amount should be included in computation of book profits. On these bases the Tribunal rejected Revenue's ground and affirmed the CIT(A)'s order deleting the addition. [Paras 5]

Addition in respect of retention money deleted; amount not taxable until final satisfaction/realisation and excluded for MAT computation.

Slump sale and applicability of Section 2(42C) / Section 50B - Transfer by exchange versus sale - substance and form in taxability - Binding effect of High Court precedents and coordinate bench decisions - Deletion of capital gains addition under Section 50B in respect of transfer of the product division (treatment as slump sale) - HELD THAT: - The Tribunal agreed with the CIT(A) that the transaction could not be treated as a slump sale attractable to Section 2(42C)/Section 50B because the transfer, on the facts and the Scheme, was in exchange for allotment of equity (and not for a monetary consideration) and was to be assessed by reference to the legal character of the documents. Applying the principle that taxability depends on the legal rights and character of the transaction (not merely the commercial substance), and following binding High Court and appellate authority (including the Bombay High Court decision relied upon), the Tribunal held that the transfer amounted to an exchange and not a sale and therefore Section 50B was inapplicable. The Tribunal considered and distinguished the Delhi High Court decision relied upon by Revenue on facts, and held that the applicability of Section 50B must be determined in each case on its facts; on the present facts the CIT(A)'s deletion was correct. [Paras 8]

Capital gains addition under Section 50B deleted; transfer treated as exchange not slump sale, so Section 50B inapplicable.

Provision for leave encashment and Section 43B(f) - Binding effect of High Court precedents and interim orders of higher courts - Disallowance under Section 43B(f) of provision for leave encashment not sustained pending higher courts' final determination - HELD THAT: - The CIT(A) observed that the jurisdictional High Court had struck down the statutory provision relied upon by the Assessing Officer and that the apex court had stayed operation of that High Court decision. In that factual and procedural backdrop the Tribunal noted that there would be no prejudice to the department and directed that the Assessing Officer should follow the final pronouncement of higher courts. Given these circumstances the Tribunal did not sustain the disallowance and dismissed Revenue's grievance in respect of the leave encashment provision. [Paras 9]

Disallowance under Section 43B(f) not upheld; matter to be governed by final decision of higher courts.

Final Conclusion: The Revenue's appeal is dismissed. The Tribunal upheld the CIT(A)'s deletions of the additions relating to retention money and capital gains (Section 50B), and did not sustain the Section 43B(f) disallowance for leave encashment pending higher courts' final decision.

Obligation to deduct tax at source on interest under Section 194A - exemption under Section 194A(3)(iii)(f) for institutions, associations or bodies notified as government owned or established - assessee in default under Section 201(1) and interest liability under Section 201(1A) - condonation of delay in filing appeal

Condonation of delay in filing appeal - Delay in filing the appeal of about 239 days was condoned. - HELD THAT: - The Tribunal considered the affidavit explaining the delay caused by administrative reasons attendant to the merger and change of office premises and absence of negligence or want of diligence on the part of the assessee. The reasons were held to constitute sufficient cause for the belated filing and the delay was accordingly condoned. [Paras 3]

Delay of about 239 days in filing the appeal is condoned and the appeal admitted for adjudication on merits.

Obligation to deduct tax at source on interest under Section 194A - exemption under Section 194A(3)(iii)(f) for institutions, associations or bodies notified as government owned or established - assessee in default under Section 201(1) and interest liability under Section 201(1A) - Interest paid by the assessee to the Karnataka Building & Other Construction Workers Welfare Board did not attract withholding under Section 194A because the Board falls within the exemption in Section 194A(3)(iii)(f); accordingly the orders treating the assessee as in default under Section 201(1) and levying interest under Section 201(1A) were cancelled. - HELD THAT: - The Tribunal accepted the assessee's submission that the recipient Board had been constituted by notification under Section 18 of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 and, by virtue of being a body corporate constituted under that enactment and funded by statutory cess, properly falls within the class of institutions contemplated by clause (f) of sub section (3) of Section 194A. Applying the interpretive aid noscitur a sociis to the notification relied upon, and having regard to the statutory character, constitution and funding of the Board, the Tribunal found the Board to be akin to a corporation/ body falling within the exemption. The Tribunal distinguished the earlier authorities relied upon by the Revenue as factually different and held that the assessee had a bona fide belief that no TDS was required to be deducted. On that basis the Tribunal set aside the orders of the AO and CIT(A) that had treated the assessee as an assessee in default and had levied interest under Section 201(1A). [Paras 7]

Orders under Sections 201(1) and 201(1A) are cancelled and the assessee's appeal is allowed on merits.

Final Conclusion: The Tribunal condoned delay in filing the appeal and on the merits allowed the appeal by holding that interest paid to the Karnataka Building & Other Construction Workers Welfare Board was not liable to TDS under Section 194A by reason of the exemption in sub section (3)(iii)(f); accordingly orders treating the assessee as in default under Section 201(1) and levying interest under Section 201(1A) were set aside.

Comparability under FAR analysis - turnover filter in comparables selection - abnormal profit filter - use of contemporaneous data and prohibition on multiple-year averaging - section 133(6) inquiries for verification of comparables - inclusion of telecommunication expenses for deduction under section 10A - remand for further factual verification

Turnover filter in comparables selection - comparability under FAR analysis - Exclusion of certain large software companies from the comparable set on account of high turnover and functional dissimilarity - HELD THAT: - The Tribunal held that comparability must be determined by a FAR analysis and that turnover is a legitimate and important quantitative filter. Applying earlier Tribunal precedents (including the reasoning in Genesis Integrating Systems), companies with substantially higher turnover and materially different risk/asset profiles and functions are not comparable to a captive service provider. On the facts, Flextronics Software Systems (SEG), iGate Global Solutions Ltd, Infosys Technologies Ltd, L&T Infotech Ltd and Satyam Computers Services Ltd were found to be functionally dissimilar and to have turnover beyond the relevant range; their exclusion from the final comparable list was upheld.

Exclusion of the named high-turnover companies from the comparable set upheld; revenue ground dismissed.

Abnormal profit filter - comparability under FAR analysis - Exclusion of Exensys Software Solutions Ltd on account of abnormal profits; treatment of Thirdware Solutions Ltd remanded - HELD THAT: - The Tribunal accepted that an extraordinary event (amalgamation) and evident ownership of significant intangibles rendered Exensys atypical for the year under review and therefore functionally and economically non-comparable; exclusion was sustained. In respect of Thirdware Solutions Ltd, the Tribunal found the available materials insufficient to determine the precise nature of its software activities and directed the TPO to obtain information under section 133(6) to analyse functions, assets and risks; the matter was set aside to the TPO for fresh verification and consideration with opportunity to the assessee.

Exclusion of Exensys upheld; Thirdware remanded to TPO for factual verification and fresh comparability analysis.

Use of contemporaneous data and prohibition on multiple-year averaging - remand for further factual verification - Verification of Quintegra Solutions Ltd margins to be undertaken afresh by the TPO - HELD THAT: - The Tribunal noted disagreement on the correct margin for Quintegra Solutions Ltd and directed the TPO to verify margins by obtaining information under section 133(6). The direction contemplates re-examination of the data rather than adopting the divergent figures without verification; the issue is remitted for factual verification to the TPO.

Matter remitted to TPO to verify and determine correct margins of Quintegra Solutions Ltd.

Comparability under FAR analysis - Exclusion of Tata Elxsi Ltd (segment) as non-comparable - HELD THAT: - On review of functional attributes, asset ownership and risk profile, the Tribunal found Tata Elxsi to be functionally and economically distinct - engaged in R&D and generating substantial intangibles and being a group concern - unlike the assessee which is a captive service provider with limited risks. Consequently Tata Elxsi was held not to be comparable.

Exclusion of Tata Elxsi Ltd from the comparable list upheld.

Comparability under FAR analysis - Exclusion of Bodhtree Consulting Ltd and Geometric Software Solutions Ltd as non comparables - HELD THAT: - The Tribunal observed that both companies carried out product-oriented activities and other functions materially different from the captive service model of the assessee; absence of segmental breakups and divergent product/engineering activities meant they failed the functional tests applied by the TPO and CIT(A). The appellate conclusions excluding these companies were not disturbed.

Exclusion of Bodhtree Consulting Ltd and Geometric Software Solutions Ltd from the comparable list upheld; revenue ground dismissed.

Section 133(6) inquiries for verification of comparables - remand for further factual verification - Re-examination of VIJIL Consulting Ltd for functional similarity directed - HELD THAT: - The Tribunal found procedural deficiency in the manner the TPO treated VIJIL Consulting Ltd - information obtained under section 133(6) was not communicated to the assessee and the TPO had rejected the company without reasoned FAR analysis. The matter was remitted to the TPO to carry out proper FAR analysis after furnishing the information obtained to the assessee and affording opportunity of representation.

Inclusion/exclusion of VIJIL Consulting Ltd remitted to TPO for fresh verification and FAR analysis with due process.

Comparability under FAR analysis - Exclusion of Four Soft Ltd and Sankhya Infotech Ltd directed on assessee's cross-objection - HELD THAT: - The Tribunal examined the materials and noted that both companies were engaged in product development, R&D and owned significant intellectual property with no segmental breakups to establish functional similarity with the captive service provider assessee. The CIT(A) had not undertaken adequate comparability analysis to justify inclusion; on that basis the Tribunal directed exclusion of these two comparables.

Cross-objection allowed: Four Soft Ltd and Sankhya Infotech Ltd are to be excluded from the comparable set.

Inclusion of telecommunication expenses for deduction under section 10A - Telecommunication expenses to be included in computation of deduction under section 10A - HELD THAT: - Relying on the Karnataka High Court decision in CIT vs Tata Elxsi Ltd and on the factual record, the Tribunal held that telecommunication expenses are directly linked to the earning of export income and therefore must be included while computing deduction under section 10A. No distinguishing facts were shown by the Revenue to displace that view for the assessment year in question.

Direction to the Assessing Officer to include telecommunication expenses in computing the deduction under section 10A; revenue grounds on this issue dismissed.

Final Conclusion: The appeal by Revenue is partly allowed for statistical purposes and certain comparables excluded by the CIT(A) are upheld while others are remitted to the TPO for factual verification; the Assessing Officer is directed to include telecommunication expenses for computing deduction under section 10A. The assessee's cross-objection is allowed insofar as exclusion of Four Soft Ltd and Sankhya Infotech Ltd is directed. The matters remitted shall be re-examined by the TPO/Assessing Officer with due opportunity to the assessee.

Applicability of administrative instruction - instruction limiting filing of appeals based on monetary limit - recall of court order - restoration of appeal

Applicability of administrative instruction - instruction limiting filing of appeals based on monetary limit - The instruction dated 22nd August, 2019 restricting filing of appeals where the tax does not exceed Rs. 1 crore is not applicable to customs matters in the present case. - HELD THAT: - The court examined the scope of the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs instruction dated 22nd August, 2019, which was relied upon to not press the appeal. Having considered submissions, the court found that the circular pertains to legacy issues relating to central excise and service tax and does not extend to the customs matter before it. The prior disposal of the appeal as not pressed was therefore based on an inapplicable administrative instruction. [Paras 4]

Instruction dated 22nd August, 2019 is not applicable to the customs matter before the court.

Recall of court order - restoration of appeal - The earlier order dated 10.10.2019 disposing the appeal as not pressed is recalled and the appeal is restored to the file. - HELD THAT: - In view of the finding that the circular relied upon for non-prosecution was not applicable, the court concluded that the disposal of the appeal on that basis required correction. Accepting the applicant's explanation of inadvertence, the court exercised its power to recall the earlier order and to restore Tax Appeal No.1461 of 2009 to the file for further adjudication. [Paras 4]

Order dated 10.10.2019 is recalled and the appeal is restored to the file.

Final Conclusion: The court recalled its earlier order of 10.10.2019 (which had disposed the appeal as not pressed relying on the 22.08.2019 instruction), held that the instruction does not apply to the customs matter in question, and restored Tax Appeal No.1461 of 2009 to the file.

Mis-declaration - personal penalty under Section 112(a) of the Customs Act, 1962 - confiscation under Section 111(d) & (m) of the Customs Act, 1962 - eligibility for exemption under Notification No.4/2006 - classification of ores and concentrates

Classification of ores and concentrates - eligibility for exemption under Notification No.4/2006 - Mis-declaration of imported goods as molybdenum ore and consequent ineligibility for notification benefit and liability to confiscation. - HELD THAT: - The Bench accepted the adjudicating authority's finding that the imported material was mis-declared as molybdenum ore to claim benefit under Notification No.4/2006. The tribunal noted prior disposal of the corporate appellant's appeal and reliance on earlier precedent that the impugned goods fell under the relevant tariff item and were not eligible for the notification. The director's own statements recorded on specified dates acknowledged conflation of ores and concentrates, admitted wrongful claim of exemption arising from lack of awareness of a notification amendment, and included evasive explanations about the CHA's declarations. On these materials the tribunal concluded that the goods were mis-declared and therefore liable for confiscation under the cited provisions.

Mis-declaration upheld; goods not entitled to the notification benefit and liable for confiscation.

Mis-declaration - personal penalty under Section 112(a) of the Customs Act, 1962 - confiscation under Section 111(d) & (m) of the Customs Act, 1962 - Imposition of personal penalty on the director under Section 112(a) of the Customs Act, 1962 for involvement in the mis-declaration. - HELD THAT: - The tribunal recorded the Commissioner's categorical finding that the director was concerned in the import by mis-declaring the goods with intent to wrongly avail exemption. The director's recorded admissions and evasive replies, his position at the helm of company affairs, and his liaison with suppliers, CHA and customs authorities were treated as establishing that he could not dissociate himself from the company's mis-declaration. In view of these findings and the upheld mis-declaration, the tribunal found no reason to interfere with the imposition of penalty under the statutory provision.

Penalty imposed on the director under Section 112(a) sustained; appeal dismissed.

Final Conclusion: The tribunal upheld the finding of mis-declaration (denying entitlement to the notification) and sustained the personal penalty imposed on the director; the appeal was dismissed.

Restoration of company name to the register - standing of shareholder/holding company to seek restoration - disqualification of directors under Section 164(2)(a) (as relied upon) - striking off for non-filing of statutory returns - judicial review of Registrar of Companies' procedural compliance - conditions and costs attendant to restoration

Standing of shareholder/holding company to seek restoration - restoration of company name to the register - Appellant No.2 (holding company) and Appellant No.3 (shareholder) were competent to maintain the appeal for restoration of the company's name. - HELD THAT: - The Tribunal found on the record (share certificate and annual return for the period ending 30.9.2013) that Appellant No.2 is a shareholder/holding company holding 113400 equity shares and that Mr. Dinesh Kanti Lal Rathi signed the memo of appeal as its director. Appellant No.3 was also shown to be a shareholder. On this basis the Court held that the persons/entities relied upon were qualified under the statutory provision permitting a company or any member to apply for restoration; therefore the NCLT's conclusion on maintainability was incorrect. [Paras 8, 9]

The appeal was maintainable as a shareholder/holding company and a shareholder were competent to file for restoration.

Striking off for non-filing of statutory returns - judicial review of Registrar of Companies' procedural compliance - Whether striking off the company's name was justified on merits given non-filing of returns and whether Registrar followed proper procedure. - HELD THAT: - Although the appellants had not filed annual returns and financial statements since financial year 2013-14, the appellants produced audited financial statements and auditor reports for the years ended 31 March 2014 to 31 March 2017 demonstrating that the company was carrying on business. The Tribunal concluded that striking off the name was prejudicial to shareholders in view of the continued business activity and that the impugned action warranted interference. The Court therefore set aside the order striking off the company's name and directed restoration subject to compliance conditions. [Paras 10, 11]

The order striking the company's name was quashed and the company's name directed to be restored, subject to conditions.

Conditions and costs attendant to restoration - powers of ROC to initiate further action for non-filing - Terms upon which restoration should be allowed and reservation of ROC's further powers. - HELD THAT: - The Tribunal imposed specific conditions: payment of costs to the Registrar within a stipulated period; filing of all outstanding annual returns and balance sheets for the period from 2013-14 to date within 30 days of restoration; payment of requisite fees and late fees; and expressly left open ROC's right to take any other punitive or consequential steps under the Companies Act for the defaults in filing. These conditions govern the restoration while preserving ROC's statutory remedies. [Paras 11]

Restoration granted subject to payment of costs, filing of outstanding returns and fees, and without prejudice to ROC's power to take further action.

Final Conclusion: The appeal is allowed: the NCLT order dismissing the appeal as not maintainable is set aside; the company's name is to be restored to the register subject to payment of costs, filing of outstanding statutory returns and fees within the prescribed time, and without prejudice to the Registrar's rights to initiate further action under the Companies Act.

Existence of a pre-existing dispute - notice of dispute - admission criteria under Section 9(5) of the I&B Code - operational creditor's demand notice - plausible contention requiring further investigation - Mobilox standard for rejecting an application under Section 9(5)(2)(d)

Existence of a pre-existing dispute - notice of dispute - admission criteria under Section 9(5) of the I&B Code - Mobilox standard for rejecting an application under Section 9(5)(2)(d) - Whether the Application under Section 9 was correctly rejected by the Adjudicating Authority on the ground that a dispute existed prior to issuance of the demand notice. - HELD THAT: - The Tribunal applied the admission conditions in Section 9(5) and the test laid down in Mobilox Innovations Pvt. Ltd. v. Kirusa Software (paras. 11-12). While noting that the appellant had repeatedly chased payment from 2015, the Tribunal found material facts indicating non-completion of contractual obligations by the operational creditor and resulting contentions between the parties. The record shows exchanges, correspondence and legal notices relating to disputed claims and recoveries, and the Tribunal concluded these amounted to a dispute existing prior to the Section 8 demand notice. Applying the Mobilox principle, the Tribunal held that where a plausible contention requiring further investigation exists and the dispute is not merely feeble or spurious, the Adjudicating Authority must reject the Section 9 application under Section 9(5)(2)(d). On the facts, the Adjudicating Authority's rejection was held to be justified. [Paras 11, 12, 14, 15]

The Adjudicating Authority rightly rejected the Section 9 application as a pre-existing dispute existed prior to issuance of the demand notice; the appeal is dismissed.

Final Conclusion: Appeal dismissed. The National Company Law Tribunal correctly rejected the Section 9 application under Section 9(5)(2)(d) on the ground of a pre-existing dispute; no order as to costs.

Admissibility of an application under Section 9 of the I&B Code - Existence of a pre existing dispute as contemplated by Dispute in Section 5(6) of the I&B Code - Requirement of absence of notice of dispute / record of dispute for admission under Section 9(5) - Mobilox test for a plausible contention not being patently feeble - Distinction between a third party claim and a dispute between the operational creditor and the corporate debtor

Existence of a pre existing dispute as contemplated by Dispute in Section 5(6) of the I&B Code - Requirement of absence of notice of dispute / record of dispute for admission under Section 9(5) - Mobilox test for a plausible contention not being patently feeble - Distinction between a third party claim and a dispute between the operational creditor and the corporate debtor - Whether the Adjudicating Authority was right in rejecting the Section 9 application on the ground that a pre existing dispute existed between the parties, thereby disentitling the Operational Creditor to initiation of insolvency proceedings. - HELD THAT: - The Tribunal applied the standard in Mobilox Innovative Pvt. Ltd. to examine whether a plausible dispute existed at the time of the Section 9 petition. The record before the Adjudicating Authority contained correspondence (emails exchanged between the parties from 10.04.2015 to 04.01.2018) which, as observed in the impugned order, evidenced a pre existing dispute prior to the Demand Notice dated 31.01.2018. Hence the dispute was not a patently feeble or spurious defence and fell within the inclusive meaning of Dispute under Section 5(6). The Tribunal further considered the Appellant's contention that the alleged dispute related to third parties and relied on precedent that third party disputes do not qualify; however, on the facts of this case the correspondence showed an inter se controversy between the Operational Creditor and the Corporate Debtor and therefore the third party line of authority was distinguishable and not applicable. Applying Section 9(5)(ii)(d), the presence of a notice or record of dispute warranted rejection of the Section 9 application. The Tribunal accordingly endorsed the Adjudicating Authority's conclusion and dismissed the appeal. [Paras 8, 10]

The Adjudicating Authority correctly rejected the Section 9 application because a pre existing dispute between the parties existed and the appeal is dismissed.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's order rejecting the Section 9 application is upheld because correspondence preceding the Demand Notice established a plausible pre existing dispute between the Operational Creditor and Corporate Debtor.

Initiation of liquidation under Section 33(1) of the IBC - liquidator's duties under the Liquidation Process Regulations - mode of sale under Schedule I of the Liquidation Process Regulations - reduction of reserve price - public announcement and wide publicity of e auction - time for submission of bids and EMD - allegations of collusion / pre settled buyer - obligation to complete liquidation within two years

Reduction of reserve price - mode of sale under Schedule I of the Liquidation Process Regulations - Validity of the Liquidator's reduction of the reserve price for the second e auction. - HELD THAT: - The Tribunal found that the Liquidator is permitted under Clause (4) of Schedule I of the Liquidation Process Regulations to reduce the reserve price where an auction at the original reserve price has failed. The reduction complained of (from the earlier reserve price to the reserve price in the second sale notice) amounted to a 15% reduction and was well within the power conferred by Schedule I (which permits reduction up to 75% in appropriate circumstances). The Appellant's allegation that the reduction was made solely to favour a pre decided buyer was unsupported by evidence and therefore rejected. [Paras 6]

Reduction of the reserve price was within the Liquidator's regulatory powers and the allegation of improper motive is not substantiated.

Public announcement and wide publicity of e auction - liquidator's duties under the Liquidation Process Regulations - Regulation 12(1) of the Liquidation Process Regulations - Whether the Liquidator failed to give wide publicity or properly disclose the asset in the second e auction notice. - HELD THAT: - The Tribunal recorded that Regulation 12(1) requires public announcement in specified media and locations. The Liquidator issued the sale notice on 10.04.2019 and advertised in the Business Standard circulated in Delhi and Jaipur, and the asset was disclosed in the notice. On the material before the Tribunal, the publicity requirements prescribed by the Regulations were complied with and the complaint of inadequate publicity therefore lacked merit. [Paras 5, 7]

The Liquidator complied with the publicity requirements; the contention of inadequate disclosure is rejected.

Time for submission of bids and EMD - mode of sale under Schedule I of the Liquidation Process Regulations - Whether shortening the time period for submission of bid forms, declaration forms and EMD rendered the second e auction invalid or contrary to the Regulations. - HELD THAT: - The Tribunal observed that Schedule I contemplates the Liquidator preparing terms, marketing strategy and notice of sale, and that the Regulations do not prescribe a fixed minimum time period for the auction process. The Liquidator followed the procedures in Clause 3 of Schedule I and Regulation 2 of Schedule I regarding terms and marketing strategy. No provision was shown that mandates the specific eight day window relied upon by the Appellant. In the absence of a regulatory prohibition, the shorter window did not render the sale invalid. [Paras 8]

The shortening of the bidding period did not contravene the Regulations and the allegation is without merit.

Allegations of collusion / pre settled buyer - liquidator's duties under the Liquidation Process Regulations - obligation to complete liquidation within two years - Whether there was credible evidence of collusion or a pre settled buyer such that the sale should be set aside or the Adjudicating Authority should intervene. - HELD THAT: - The Tribunal noted letters from the Appellant and an ex director suggesting impropriety, but emphasized that Regulation 33 requires the Liquidator to refrain from sale if there is reason to believe in collusion and to report to the Adjudicating Authority. The Appellant, however, did not participate in the auction and produced no cogent evidence to establish collusion. The Tribunal also observed the statutory aim of avoiding undue delay in liquidation (Regulation 44(1)) and cautioned against prolonging the process on vague allegations. On the material, there was no basis to infer collusion or to disturb the Adjudicating Authority's order. [Paras 9, 10, 11]

Allegations of collusion are unsubstantiated; no interference with the Adjudicating Authority's order is warranted.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the Adjudicating Authority's decision: the Liquidator acted within the powers and procedures of the Liquidation Process Regulations in reducing the reserve price, publicising the sale and fixing the auction timetable, and the allegations of favouring a pre determined buyer through collusion were unproven; accordingly no interference with the impugned order is warranted.

Validity of liquidation auction process - power of liquidator to reduce reserve price after failed auction - discretion of liquidator to fix timelines for sale processes - public advertisement requirement under the Liquidation Regulations - discretion to alter payment timelines to maximize participation - allegation of collusion and abuse of liquidation process

Power of liquidator to reduce reserve price after failed auction - validity of liquidation auction process - Whether the liquidator's reduction of the reserve price for Asset 1 and conduct of a second auction in April 2019 were invalid or amounted to favouring a pre decided buyer. - HELD THAT: - The Tribunal found that the liquidator legitimately reduced the reserve price after the initial auction failed and that the reduction fell within the scope of the liquidator's powers under the Code and the Liquidation Regulations. The change was held to be aimed at ensuring maximum participation rather than to favour any particular buyer; the reduction was quantitatively less than the maximum permissible reduction contemplated by the Schedule. In these circumstances the alteration of the reserve price did not invalidate the auction or amount to procedural impropriety.

Reduction of reserve price and holding of the second auction were valid and did not vitiate the sale process.

Discretion of liquidator to fix timelines for sale processes - validity of liquidation auction process - Whether shortening of timelines for bid submission, KYC, due diligence and site visits in the April 2019 auction rendered the process irregular or non compliant with the Code and Regulations. - HELD THAT: - The Tribunal held that the Code and the Liquidation Regulations do not prescribe fixed timelines for every stage of the auction and that the liquidator has discretion to frame appropriate timelines. Given that the earlier auction had been publicly notified in February and had failed, the liquidator's decision to adopt shorter timelines for a single remaining asset was reasonable. The applicant's contention that identical timeframes must be adopted for a subsequent auction was rejected; the Tribunal also noted that the applicant had the opportunity to seek an extension from the liquidator.

Shortened timelines in the April auction did not render the process invalid.

Public advertisement requirement under the Liquidation Regulations - validity of liquidation auction process - Whether the liquidator failed to publicly advertise the April 2019 auction and thereby prevented participation. - HELD THAT: - The Tribunal accepted the liquidator's averment that the auction was publicly advertised through Business Standard with directions for circulation in the relevant areas. The Tribunal found the advertisement sufficient to meet the publicising requirement under the Regulations and rejected the applicant's claim that lack of publicity prevented genuine participation.

Advertisement of the April auction was adequate; non participation of the applicant did not arise from lack of public notice.

Discretion to alter payment timelines to maximize participation - validity of liquidation auction process - Whether increase in the period allowed for payment of balance consideration violated Schedule I or was otherwise impermissible. - HELD THAT: - The Tribunal treated the 15 day payment provision in Schedule I as procedural and not mandatory in all circumstances. It held that where the liquidator, for justified reasons, extends the payment period to encourage participation and enhance realizations, such a decision falls within the liquidator's discretion in framing terms and timelines of sale.

Extension of the payment period was within the liquidator's discretion and did not vitiate the auction.

Allegation of collusion and abuse of liquidation process - validity of liquidation auction process - Whether the similarity of language between the applicant's pleadings and an e mail from an ex director established collusion sufficient to set aside the auction. - HELD THAT: - The Tribunal noted the similarity of language and observed that it smacked of possible collusion between the applicant and the ex director, but declined to undertake an extended investigation on that basis at the interlocutory stage. The observation was used to record the Tribunal's displeasure and to note that the application did not merit relief on the merits.

Allegation of collusion was noted but not investigated further; it did not lead to setting aside the auction in these proceedings.

Final Conclusion: The Tribunal dismissed the application; the liquidator's actions in reducing the reserve price, framing shorter timelines, advertising the auction as stated and extending payment timelines were held to be within his discretion under the Code and the Liquidation Regulations, and the challenge to the April 2019 auction was rejected.

Extension of bank guarantee validity - prohibition on encashment of bank guarantee - directions to banks - resolution professional's obligation to protect assets/interests

Extension of bank guarantee validity - resolution professional's obligation to protect assets/interests - Disposal of the application by Gail India Ltd. on the undertaking given by the resolution professional to extend the bank guarantee executed by the corporate debtor. - HELD THAT: - The Tribunal recorded the resolution professional's undertaking that he would take appropriate steps to extend the validity of the bank guarantee issued by the corporate debtor until 31.03.2020. On that assurance, the application filed by Gail India Ltd. was disposed of. The Tribunal's disposal was founded on the RP's specific commitment to secure a three-month extension of the guarantee's validity so that the applicant's interest would not be prejudiced.

Application disposed of on the RP's undertaking to extend the bank guarantee's validity to 31.03.2020.

Prohibition on encashment of bank guarantee - directions to banks - Interim directions against five banks to refrain from encashing specified bank guarantees and requirement that the guarantees' validity be extended by three months. - HELD THAT: - The Tribunal directed the five banks named in the application not to encash the listed bank guarantees until the next date of hearing, recording the RP's statement that steps had been taken to extend the validity period and that the beneficiary would not be prejudiced. The Tribunal ordered that the validity of the bank guarantees in question shall be extended by three months and issued notices to non-applicant respondents by dasti process, with a return date fixed for further hearing.

Banks restrained from encashing the specified guarantees until the next hearing and directed to extend their validity by three months; matter listed for further hearing on 08.01.2020.

Final Conclusion: The Tribunal disposed of the Gail India Ltd. application on the RP's undertaking to extend the bank guarantee to 31.03.2020, and granted interim relief in CA-2823(PB)/2019 by restraining the five banks from encashing the listed bank guarantees and directing a three-month extension of their validity pending further hearing.

Financial Creditor - Financial Debt - Allottee/home buyer as Financial Creditor - Explanation to the definition of financial debt deeming amounts raised from allottees as borrowings - Section 7 of the Insolvency and Bankruptcy Code, 2016 - Default - Admission under Section 7(5)(a) - Appointment of Interim Resolution Professional - Moratorium under Section 14 - Territorial jurisdiction of Adjudicating Authority under Section 60(1)

Financial Creditor - Financial Debt - Allottee/home buyer as Financial Creditor - Explanation to the definition of financial debt deeming amounts raised from allottees as borrowings - Applicant (allottee/home buyer) is a financial creditor within the meaning of the Code and the Section 7 application is maintainable. - HELD THAT: - The Tribunal held that the expressions 'financial creditor' and 'financial debt' include amounts raised from an allottee under a real estate project, which have the commercial effect of borrowing. The Amendment to Section 5(8) and the declaration in Pioneer Urban Land & Infrastructure Ltd. v. Union of India [as discussed in the order] confirm that allottees/home buyers fall within the definition of financial creditors and may invoke remedies under the Code. The applicant produced allotment agreement, receipts and cheques evidencing payments to the corporate debtor; those materials, unrebutted by the respondent, establish that the applicant advanced funds to the developer and thereby financed the project. On these findings the applicant qualifies as a financial creditor and is entitled to file under Section 7. [Paras 17, 18, 19, 21, 31]

Applicant is a financial creditor and the Section 7 application is maintainable.

Default - Record of default/evidence - Admission under Section 7(5)(a) - Respondent corporate debtor committed default in repayment of the financial debt and the Section 7 application is to be admitted. - HELD THAT: - The Tribunal examined the documentary evidence placed on record - cheques, receipts, allotment agreement, photographs of stalled construction and the absence of any reply or rebuttal from the respondent. The claimed debt exceeds the statutory threshold. The Form 1 application was complete and the required evidence of default was furnished; in the absence of any contrary material filed by the corporate debtor the Tribunal was satisfied that default had occurred. In view of Section 7 and the settled law that once existence of debt and default is established and the application is complete the Adjudicating Authority is obliged to admit the petition, the requirements of Section 7(5)(a) were held fulfilled. [Paras 21, 29, 30, 31, 32]

Respondent has committed default; the Section 7 application is admitted.

Appointment of Interim Resolution Professional - Public announcement under Section 13(2) - Moratorium under Section 14 - Interim Resolution Professional appointed; directions issued for deposit, public announcement and moratorium imposed. - HELD THAT: - The proposed Interim Resolution Professional furnished FORM 2, made the requisite disclosures and there was no disciplinary proceeding pending against him; consequently he satisfied the statutory requirements for appointment. The Tribunal appointed him as IRP and directed the financial creditor to deposit funds to meet IRP expenses, to be adjusted as per law. The Tribunal directed immediate public announcement of admission in terms of Section 13(2) and declared the moratorium under Section 14, specifying the prohibitions that flow from it and noting statutory exceptions. [Paras 33, 34, 35, 36, 38]

Mr. Akarsh Kashyap appointed as Interim Resolution Professional; deposit directed; public announcement to be made and moratorium declared.

Territorial jurisdiction of Adjudicating Authority under Section 60(1) - This Tribunal has territorial jurisdiction to entertain the Section 7 application. - HELD THAT: - The registered office of the corporate debtor is situated in Delhi; accordingly the Tribunal territorially competent for that place is the adjudicating authority under Section 60(1) of the Code. No challenge to jurisdiction was raised and the Tribunal proceeded on that basis. [Paras 2]

NCLT New Delhi has territorial jurisdiction to hear the petition.

Final Conclusion: The Section 7 petition filed by the allottee was held maintainable as the applicant qualifies as a financial creditor; the Tribunal found that the corporate debtor committed default, admitted the application, appointed the proposed Interim Resolution Professional, directed a deposit for IRP expenses, ordered immediate public announcement and declared the moratorium, and directed communication of the order to concerned authorities.

Refund of duty arising from finalisation of provisional assessment - unjust enrichment - credit notes as evidence of refund to dealers - requirement to show duty recovered from the ultimate buyer - precedential effect of earlier identical order - remand for fresh decision in light of earlier order

Refund of duty arising from finalisation of provisional assessment - unjust enrichment - credit notes as evidence of refund to dealers - requirement to show duty recovered from the ultimate buyer - precedential effect of earlier identical order - remand for fresh decision in light of earlier order - Whether the impugned rejection of the refund claim on the ground of unjust enrichment should be sustained or the matter should be remanded to the Commissioner (Appeals) to consider earlier identical orders favourable to the assessee. - HELD THAT: - The Tribunal recorded that the refund arose from finalisation of provisional assessment and that the assessee had taken a categorical stand, accepted by lower authorities, that duty collected from dealers/depots was refunded by issuance of credit notes. The assessing authority nonetheless rejected the refund for lack of evidence that duty was recovered from the ultimate buyer. The Tribunal noted that an identical refund claim for an earlier period had been allowed by the Commissioner (Appeals) and that the Tribunal had upheld that allowance on appeal, but that the impugned Commissioner (Appeals) order did not reflect consideration of those earlier decisions. In view of these circumstances the Tribunal did not adjudicate the merits of unjust enrichment but set aside the impugned order and remanded the matter to the Commissioner (Appeals) for a fresh decision after taking into account the earlier Commissioner (Appeals) order as upheld by the Tribunal.

Impugned order set aside and matter remanded to the Commissioner (Appeals) for fresh decision after considering the earlier order of the Commissioner (Appeals) which was upheld by the Tribunal.

Final Conclusion: The appeal is allowed by remand: the Tribunal set aside the impugned order rejecting the refund on unjust enrichment grounds and directed the Commissioner (Appeals) to reconsider the refund claim for April 2016 to December 2016 in the light of earlier identical orders favourable to the assessee.

Clandestine removal - burden of proof for clandestine removal - presumption versus evidence - relevance of statements and documentary records as evidence - penalty under Rules 26 of Central Excise Rules, 2002

Clandestine removal - burden of proof for clandestine removal - relevance of statements and documentary records as evidence - presumption versus evidence - Whether the respondent clandestinely manufactured and cleared aluminium ingots from aluminium scrap received in lieu of goods sold on high sea sales basis, thereby attracting duty demand and penalty. - HELD THAT: - The Tribunal upheld the Commissioner's factual and legal conclusion that the materials produced by the Department at best showed alleged clandestine delivery of aluminium scrap to the respondent, but did not constitute sufficient evidence that the respondent used that scrap to manufacture aluminium ingots and clandestinely removed them without payment of duty. The learned Commissioner observed that there was no allegation or evidence that the respondent availed CENVAT credit on the scrap, nor were there records, statements or confirmations from recipients showing receipt of ingots without documents. The Tribunal agreed that drawing the inference of clandestine manufacture and removal from mere receipt of scrap would be a presumption unsupported by the material on record; the serious charge of clandestine removal required affirmative evidence such as manufacturing records, deliveries of ingots, or corroborative statements, which were absent. In the absence of contrary evidence to rebut the Commissioner's findings, the appellate forum found no reason to interfere with the conclusion that the demand and penalty could not be sustained on the available record. [Paras 21, 22]

Findings of no sufficient evidence of clandestine manufacture and removal are affirmed; the demand and penalty could not be sustained.

Final Conclusion: The Revenue's appeal is dismissed for lack of merit, upholding the Commissioner's order dropping the proceedings for the period January 2005 to July 2006.

Refund of accumulated CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 - Deemed export: clearance to 100% EOU treated as export for refund purpose - Export under bond or letter of undertaking under Rule 19 of the Central Excise Rules, 2002 - Interpretation of taxing statute by plain meaning rule

Refund of accumulated CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 - Deemed export: clearance to 100% EOU treated as export for refund purpose - Export under bond or letter of undertaking under Rule 19 of the Central Excise Rules, 2002 - Refund of accumulated CENVAT credit claimed in respect of inputs cleared to 100% EOUs without payment of duty is admissible under Rule 5 of the CENVAT Credit Rules, 2004. - HELD THAT: - The Tribunal held that Rule 5 must be read in light of Rule 19 of the Central Excise Rules, 2002 and Notification No. 42/2001-CE(NT), which expressly provide for clearance of goods without payment of duty for use in manufacture of goods to be exported. Clearances made in terms of Rule 19(1) and 19(2) are treated as export under the Central Excise scheme and the Board's procedures (Form CT-1, bond/undertaking, bond account, time limits) establish the regulatory framework for such deemed exports. Applying the plain meaning rule of statutory interpretation, the Tribunal rejected the revenue's contention that Rule 5 is confined to physical export outside India and held that supplies to 100% EOUs effected without payment of duty in accordance with Rule 19/Notification 42/2001 are eligible for refund of unutilized CENVAT credit under Rule 5. The Tribunal also noted that the goods in the present case were not cleared as exempted goods and that there is no provision other than Rule 19 permitting clearance without payment of duty; reliance on judgments and settled precedents treating clearances to EOUs as deemed export supported the conclusion. Consequently the impugned orders denying refund were set aside.

Appeal allowed; refund claim in respect of inputs cleared to 100% EOUs without payment of duty is admissible under Rule 5.

Final Conclusion: The Tribunal allowed the appeal and held that the appellants are entitled to refund of accumulated CENVAT credit in respect of goods cleared to 100% EOUs without payment of duty in accordance with Rule 19/Notification No. 42/2001-CE(NT), for the period January 2010 to March 2010.

Condonation of delay - summary dismissal for delay - Special Leave Petition - question of law kept open

Condonation of delay - summary dismissal for delay - Dismissal of the Special Leave Petition on account of unexplained delay in filing - HELD THAT: - The Special Leave Petition was filed with a delay of 239 days. The Court found that the delay had not been satisfactorily explained and accordingly exercised its discretion to refuse condonation. No consideration was given to the merits because the petition was dismissed solely on the ground of inordinate and unexplained delay. The order is a summary disposal limited to the procedural defect of delay.

Special Leave Petition dismissed for non-condonation of delay.

Special Leave Petition - question of law kept open - Status of the substantive question of law raised in the petition - HELD THAT: - Although the petition was dismissed for delay, the Court explicitly refrained from adjudicating the substantive question of law raised. That question was left open for determination on merits in an appropriate proceeding, and the dismissal does not constitute a decision on the legal issue itself.

Question of law not decided and kept open for consideration in appropriate proceedings.

Final Conclusion: The Special Leave Petition is dismissed for failure to satisfactorily explain a delay of 239 days; the substantive question of law raised in the petition remains undecided and is left open.

Penalty for non-filling of declaration form column - intention to evade tax - procedural defect versus substantive non-compliance - administrative duty of inspecting officer to complete and authenticate transport declaration - inspection and verification at check-post

Penalty for non-filling of declaration form column - intention to evade tax - procedural defect versus substantive non-compliance - Validity of the penalty imposed for leaving Column 8 of Form 38 unfilled where the vehicle carried bill, builty and other documents and no finding of discrepancy in goods or quantity was made. - HELD THAT: - The Court found as an admitted fact that Form 38 had been duly obtained and the vehicle was accompanied by the bill, builty and other relevant documents; Column 8 remained blank through inadvertence. There was no finding by any authority that the goods carried were different from or inconsistent with the documents produced, nor any material to demonstrate an attempt to evade tax. The Tribunal's conclusion that a blank column by itself indicated a possibility of evasion was rejected as treating a procedural lapse as substantive non-compliance. Reliance on the earlier decision in I.C.I. India Limited (as cited) supported the view that mere omission of filling some columns of import/transport declaration, when supporting documents are produced and no attempt to evade tax is shown, does not sustain a penalty. Applying that principle, the penalty imposed was unsustainable. [Paras 6, 10, 11]

Penalty quashed as there was only a procedural omission without evidence of intention to evade tax; the omission did not justify the penalty imposed.

Administrative duty of inspecting officer to complete and authenticate transport declaration - inspection and verification at check-post - Effect of the departmental notification dated 03.02.2009 obliging the officer at the check-post to fill up blank columns in Form 38 in accordance with accompanying documents and to release the goods. - HELD THAT: - The Court noted the notification which directed officers that where a vehicle importing goods is accompanied by Form 38 and the goods tally with supporting documents, any unfilled column should be completed by the inspecting officer in accordance with those documents and authenticated. In the present case the inspecting officer discovered the omission but did not exercise the duty to complete the blank in light of the documents carried. That administrative instruction, together with the fact that the goods and documents matched, undermined the assessing authority's justification for imposing the penalty. [Paras 7, 9, 11]

Failure of the inspecting officer to fill the blank column as per the departmental instruction rendered the imposition of penalty unwarranted; the vehicle should have been released after completion of the form.

Final Conclusion: Revision allowed; the order of the Commercial Tax Tribunal dated 27.04.2012 is quashed and the penalty imposed for the blank Column 8 of Form 38 set aside, the Court accepting that the omission was procedural, supporting documents accompanied the consignment and the departmental instruction required completion of the form by the inspecting officer.

Encashment of bank guarantees - refund of excess encashed amounts - deferred spectrum charges - re-furnishing of bank guarantees - execution proceedings - separate cause of action for subsequent defaults - right to set-off against subsequent liabilities

Encashment of bank guarantees - refund of excess encashed amounts - deferred spectrum charges - re-furnishing of bank guarantees - Whether the Tribunal correctly directed refund of the unadjusted excess amount realised on encashment of bank guarantees. - HELD THAT: - The Court found on the material before it that the admitted deferred spectrum liability of the respondent licencees in May 2018 was Rs. 774.25 crores while the Union had realised Rs. 908.91 crores by encashment of bank guarantees. The respondents thereafter furnished fresh bank guarantees equal to the admitted liability (Rs. 774.25 crores). In these circumstances the Court held there was no rationale for the Union to retain the excess sums. The Tribunal did not grant the entire claim but directed return of the unadjusted balance (Rs. 104.34 crores) while leaving open rights in respect of other charges; the Supreme Court found this exercise of discretion reasonable and not liable to interference. [Paras 7, 10, 11]

The Tribunal's direction to refund the unadjusted excess amount realised on encashment of bank guarantees is upheld.

Execution proceedings - separate cause of action for subsequent defaults - right to set-off against subsequent liabilities - Whether the Tribunal erred in deciding the refund claim in execution proceedings and whether the Union could retain the excess on account of alleged subsequent defaults. - HELD THAT: - The Court rejected the Union's contention that the matter could not have been entertained in execution proceedings. It also held that allegations of subsequent defaults or later short payments did not furnish a valid ground to retain the excess sums where the respondents had furnished fresh guarantees for the admitted liability. The Court observed that subsequent defaults constitute a separate cause of action and that the Union had remedies to recover later dues, but those did not justify withholding the excess amounts realised earlier. Accordingly, the Union's objections on maintainability and set-off were held insubstantial. [Paras 11]

The Tribunal did not err in adjudicating the refund in execution proceedings and the Union cannot withhold the excess sums on the basis of alleged subsequent defaults.

Final Conclusion: The appeal is without merit and is dismissed; the TDSAT order directing return of the unadjusted excess amount is upheld.

Jurisdictional bar under SARFAESI Act - exclusive remedy before Debt Recovery Tribunal under Section 17 - civil court barred by Section 34 of the SARFAESI Act - exception for fraud in Mardia Chemicals Ltd. - disputed questions of fact not disentitling Section 34 bar

Civil court barred by Section 34 of the SARFAESI Act - exclusive remedy before Debt Recovery Tribunal under Section 17 - Whether the civil court has jurisdiction to entertain the suit in view of Section 34 of the SARFAESI Act and existence of remedy under Section 17 before the DRT. - HELD THAT: - The statutory scheme grants persons aggrieved by measures taken under Section 13(4) a remedy before the Debts Recovery Tribunal under Section 17, and Section 34 expressly bars civil courts from entertaining matters which the DRT or Appellate Tribunal is empowered to determine. The plaint discloses that measures under the Act were taken (demand notice and symbolic possession) and that the plaintiffs have already approached the DRT by filing a petition under Section 17. The court held that these facts bring the controversy squarely within the purview of the SARFAESI Act and the exclusive jurisdiction of the DRT, thereby ousting the civil court's jurisdiction. The presence of available statutory remedies and the pendency of a Section 17 petition indicate that the civil suit is barred under Section 34 and is liable to be rejected under Order 7 Rule 11 CPC. [Paras 15, 25]

Suit is barred by Section 34 of the SARFAESI Act and must be dismissed; plaintiffs may pursue remedies before the DRT under Section 17.

Exception for fraud in Mardia Chemicals Ltd. - disputed questions of fact not disentitling Section 34 bar - Whether the plaint falls within the Mardia exception permitting civil court jurisdiction on grounds of alleged fraud by the secured creditor. - HELD THAT: - The Supreme Court in Mardia carved out a limited exception permitting civil court jurisdiction where the secured creditor's action is fraudulent or so manifestly untenable as to require no probe. The plaintiffs alleged a wide-ranging fraud involving third parties and agents, and denial of execution of a communication said to authorize disbursal to third-party accounts. The court found the plaint admits application for the loan, delivery of title papers as security and payment of instalments, and that the core dispute concerns the authenticity of a document and other disputed factual questions. These are seriously triable factual issues that cannot be characterised as an egregious fraud by the secured creditor on the face of the plaint. Merely alleging fraud or creating an appearance of fraud for the purpose of invoking the exception is insufficient. Consequently, the Mardia exception does not apply on the pleadings before this court. [Paras 16, 22, 23, 24]

Mardia exception not attracted; allegations raise disputed questions of fact and do not establish a manifest fraud by the secured creditor to oust statutory exclusivity.

Final Conclusion: The application under Order 7 Rule 11 CPC is allowed; the suit is dismissed as barred by Section 34 of the SARFAESI Act, with liberty to the plaintiffs to pursue all contentions before the Debt Recovery Tribunal or other fora as permissible under law.

Dishonour of cheque under Section 138 as including non matching signature - Presumption under Section 139 of issuance of cheque for discharge of debt or liability - Rebuttable presumption and burden of proof on the accused - Signature mismatch / signature incomplete as species of insufficiency - Maintainability of complaint despite bank return memo stating "signature do not match specimen" - Liability of authorised signatory

Maintainability of complaint despite bank return on ground of signature mismatch - Complaint under Section 138 of the Negotiable Instruments Act is maintainable where the cheque is dishonoured on grounds such as 'signature do not match specimen' or 'signature incomplete'. - HELD THAT: - Relying upon and following the reasoning in authoritative decisions of the Supreme Court (including Laxmi Dyechem and the line of cases discussed therein), the Court held that the contingencies mentioned in Section 138 are to be understood broadly. The expression indicating insufficiency is a genus which includes species such as account closed, stop payment and mismatched signatures. Where dishonour occurs because signatures do not match the specimen or the image is not found, such dishonour falls within the ambit of Section 138 subject to the other statutory conditions being met; consequently the complaint cannot be quashed merely because the bank returned the cheque with a memo stating signature mismatch. [Paras 7]

The complaints are maintainable and cannot be quashed solely on the ground that the bank returned the cheque stating that signatures do not match or are incomplete.

Presumption under Section 139 of issuance for discharge of debt - Rebuttable presumption and burden on accused - Section 139 presumption applies where a cheque is dishonoured for signature mismatch; the presumption is rebuttable but the burden of proof lies on the accused to displace it. - HELD THAT: - The Court observed that by virtue of Section 139 a cheque returned unpaid gives rise to a statutory presumption that it was issued for the discharge of a lawful debt or liability. That presumption applies even when dishonour occurs for reasons such as signature mismatch. Being rebuttable, it places the onus on the accused to prove the absence of a lawful liability or other valid cause for dishonour. The High Court cannot quash a complaint merely on the basis of the return memo without permitting the trial court to examine the evidence and the statutory presumption. [Paras 7]

Section 139 presumption applies and the accused must bear the burden of rebutting the presumption; the complaint should not be quashed on that ground.

Quashing of complaint and remand for trial - The High Court's orders dismissing the complaints on the basis of signature mismatch were set aside and the matters were remitted for trial. - HELD THAT: - Applying the above legal principles, the Court found that the lower courts erred in treating a bank memo of signature mismatch as a ground for summary dismissal. The impugned orders of the Trial Court and the Additional Sessions Judge (as confirmed by the High Court) were quashed and the trial Court was directed to proceed expeditiously with the complaints so that evidence can be led and the statutory presumption examined and, if necessary, rebutted in the trial. [Paras 8, 9]

Impugned orders are quashed and the trial Court directed to proceed with the trial of the complaints.

Liability of authorised signatory - An authorised signatory who signs a cheque may be prosecuted along with the company; the signatory's defence does not by itself justify quashing the proceedings against him. - HELD THAT: - The Court noted precedents holding that managing directors or authorised signatories are covered by the provisions relating to offences under the Act and may be prosecuted. Differing defences taken by signatories and by the company do not, without more, justify striking down criminal proceedings; questions of fraud, authority and mens rea are matters for trial and cannot be resolved by summary quashing under Section 482 Cr.P.C. [Paras 7]

Proceedings against authorised signatories are competent and their liability is a matter to be examined at trial.

Final Conclusion: Petitions allowed; the orders of the courts below dismissing the complaints on the ground of signature mismatch are quashed and set aside, and the trial Court is directed to proceed expeditiously with trial in accordance with law, leaving the merits to be decided on evidence.

Summary order. Writ petition withdrawn and consigned to records on the petitioner's prayer for withdrawal, with liberty to any person aggrieved or otherwise entitled to file an appropriate petition challenging the proviso; no costs.