TaxTMI Updates e-Newsletter
Feb 03,2023

Registration under section 12AA and approval under section 80G - meaning of 'education' for charitable purposes - genuineness of activities for grant of registration - scope of enquiry on registration limited to objects and genuineness, not application of funds - status under Section 25 company not determinative of registration under section 12AA - provision of services outside India and its effect on charitable character

Meaning of 'education' for charitable purposes - genuineness of activities for grant of registration - Assessee's activities fall within the ambit of 'education' and are prima facie charitable for purposes of registration under section 12AA and approval under section 80G. - HELD THAT: - The Tribunal examined the memorandum of association and the nature of activities (instruction in wilderness skills, mountaineering, wilderness first aid, collaboration with educational entities and non-commercial stipulation) and concluded that the activities are prima facie educational. The Tribunal relied on precedents holding that systematic teaching and training in specialised fields may constitute 'education' and reiterated that at the registration stage the Commissioner is to satisfy himself as to the charitable nature of objects and genuineness of activities. On that basis the Tribunal held that the CIT(Exemption) erred in treating the activities as outside the ambit of education and in rejecting registration and approval under section 80G. [Paras 11, 12, 18]

Allow appeals and direct grant of registration under section 12AA and approval under section 80G subject to statutory conditions.

Scope of enquiry on registration limited to objects and genuineness, not application of funds - status under Section 25 company not determinative of registration under section 12AA - provision of services outside India and its effect on charitable character - CIT(Exemption) exceeded permissible scope by focusing on alleged provision of services to foreign affiliate and on application/use of funds rather than limiting inquiry to objects and genuineness; Section 25 status is not by itself decisive for 12AA but objects and genuineness govern registration. - HELD THAT: - The Tribunal approved authorities which limit the registration-stage inquiry to whether objects are charitable and activities genuine (not camouflage or bogus), and that detailed scrutiny of application of funds or profit-making aspects is a matter for assessment and not registration. The Tribunal rejected the CIT(Exemption)'s reliance on the receipt of consultancy fees from a foreign entity and on the contention that sectional/affiliation evidence or seasonal hiring of trainers disproved educational character. While acknowledging that Section 25 registration does not automatically confer entitlement under section 12AA, the Tribunal observed that the CIT(Exemption) should have considered the assessee's objects and prima facie activities in light of relevant precedents before refusing registration. [Paras 13, 14, 15, 16, 18]

CIT(Exemption)'s refusal on these grounds is unsustainable; matter disposed by directing grant of registration and approval subject to fulfillment of statutory conditions.

Final Conclusion: Appeals allowed; Tribunal found the assessee's activities to be prima facie educational and charitable, held that the Commissioner exceeded the permissible scope of inquiry by unduly focusing on receipts and foreign services, and directed the CIT(Exemption) to grant registration under section 12AA and approval under section 80G afresh subject to statutory conditions.

Applicability of provisions of Section 194-C to CAM charges - TDS liability under Section 194-I as tax on rent - Assessee in default under Section 201(1) where deductee has paid tax - Recomputation of tax liability on remand

Applicability of provisions of Section 194-C to CAM charges - TDS liability under Section 194-I as tax on rent - Whether CAM charges paid by the assessee are liable to TDS under Section 194-I or under Section 194-C and consequent tax treatment - HELD THAT: - The Tribunal examined the factual position that CAM charges were paid under a single lease agreement and that the assessee had deducted tax under Section 194-C. Relying on the coordinate Bench decision in Yum Restaurants India (P) Ltd. which held that Section 194-C applies to CAM charges, and noting that the facts in the present case are not distinguishable and the department did not controvert the admitted deduction under Section 194-C, the Tribunal concluded that CAM charges are taxable under the provisions of Section 194-C rather than Section 194-I. The Tribunal accordingly found the Assessing Officer's treatment of CAM charges as rent for TDS under Section 194-I to be unsustainable on the facts of this case and directed adjustment of tax liability in conformity with the accepted legal position. [Paras 6]

Assessee entitled to have CAM charges treated under Section 194-C; AO directed to recompute tax liability accordingly

Recomputation of tax liability on remand - Assessee in default under Section 201(1) where deductee has paid tax - Direction to the Assessing Officer to recompute tax liability and consequential treatment of assessee-in-default contention - HELD THAT: - The Tribunal, while allowing the appeal, directed the Assessing Officer to recompute the tax liability in accordance with the finding that Section 194-C applies to CAM charges. The Tribunal's direction implicitly addresses the consequence that if tax has been correctly deducted and/or the deductee has discharged tax liability by filing returns, the assessee should not be treated as an assessee in default; the factual verification and consequential adjustments are to be carried out by the Assessing Officer on remand. The Tribunal did not disturb the Commissioner's observation that where the deductee has paid tax on CAM charges, the assessee cannot be treated as assessee in default, and the AO is to verify and give effect to such factual position. [Paras 3, 6]

Matter remitted to AO for recomputation and factual verification; consequences as to assessee-in-default to be determined by AO on verification

Final Conclusion: Appeal allowed; CAM charges shall be treated in accordance with Section 194-C and the Assessing Officer is directed to recompute the tax liability and make consequential adjustments after factual verification, including whether the deductee has paid tax so as to avoid treating the assessee as an assessee in default.

Attribution of income to society's activities - deduction under Section 80P(2)(a)(i) - interest from non-members / non-co-operative entities - investment out of surplus funds versus operational funds - reassessment and escapement of income

Attribution of income to society's activities - deduction under Section 80P(2)(a)(i) - interest from non-members / non-co-operative entities - investment out of surplus funds versus operational funds - Whether interest received from Sardar Sarovar Narmada Nigam Limited is attributable to the assessee's activity of providing credit to members and thus deductible under Section 80P(2)(a)(i), or is income from other sources not eligible for deduction. - HELD THAT: - The Tribunal held that interest earned on investments in SSNL Ltd. and the SK District Bank deposits was from non-co-operative entities and non members and therefore not attributable to the assessee's core activity of providing credit to its members. Reliance on authorities distinguishing investments made with co-operative societies from investments with non cooperative/non member entities indicates that income from the latter cannot be treated as arising from the assessee's member credit activity for the purpose of Section 80P(2)(a)(i). The Assessing Officer's conclusion that the interest was from surplus funds (and thus not deductible) was sustained on this basis. The Tribunal found no reason to interfere with the CIT(A)'s confirmation of disallowance. [Paras 7]

Interest from SSNL Ltd. is income from other sources not attributable to the society's member credit activity and is not deductible under Section 80P(2)(a)(i); the disallowance is upheld.

Reassessment and escapement of income - investment out of surplus funds versus operational funds - Whether the reassessment was bad in law for want of escapement of income relying on earlier Tribunal decision in the assessee's own case. - HELD THAT: - The assessee contended that reassessment was impermissible because the Tribunal in its own earlier matter had taken a contrary view; however, the Tribunal observed that the material showed investments were with non co operative/non member entities and the legal distinction in earlier decisions on investments with co operative bodies was determinative. The reassessment and resulting treatment were examined in light of the nature of the investments and the attribution principle, and the Tribunal found no merit in upsetting the assessment. There was no basis to hold the reassessment bad in law on the ground pleaded. [Paras 7]

The challenge to reassessment for alleged absence of escapement is rejected; reassessment and consequent addition stand.

Final Conclusion: The appeal is dismissed; the CIT(A)'s confirmation of the disallowance of interest from SSNL Ltd. as not deductible under Section 80P(2)(a)(i) is upheld and the reassessment is sustained.

Long Term Capital Gains exemption under Section 10(38) - unexplained income under Section 68 - genuineness of share transactions - bogus/arranged accommodation entries - reliance on investigation reports - off-market purchase versus market purchase - demat evidence and delivery through depository

Long Term Capital Gains exemption under Section 10(38) - unexplained income under Section 68 - genuineness of share transactions - off-market purchase versus market purchase - reliance on investigation reports - demat evidence and delivery through depository - Denial of exemption under Section 10(38) for claimed long term capital gains on sale of Kappac Pharma Ltd. shares and treating the same as unexplained income under Section 68 was upheld. - HELD THAT: - Tribunal examined the factual matrix of the assessee's own case and found the Assessing Officer's conclusion not to be based solely on an external investigation report. The AO noted that the assessee purchased shares off market at a price higher than the market rate on the purchase date, and the transactions involved cash/off market elements inconsistent with regular market acquisition. Although the assessee produced demat statements, share certificates and sale through the stock exchange, the Tribunal accepted the AO's factual findings that the purchase appeared non genuine in the assessee's individual case. The Tribunal therefore concurred with the AO and CIT(A) that the claimed LTCG exemption could be denied and the receipts treated as unexplained income, also having regard to precedent dealing with the same scrip relied upon in the reasoning. [Paras 7, 8]

Appeal dismissed on the issue; denial of LTCG exemption and treatment as unexplained income upheld.

Tuition income - unexplained income under Section 68 - Addition of tuition income treated as unexplained income under Section 68 was upheld. - HELD THAT: - The CIT(A)'s order dismissing the assessee's plea regarding taxation of declared tuition receipts was affirmed by the Tribunal when disposing of the appeal. The record does not disclose separate detailed reasoning in the impugned order beyond the overall dismissal; the Tribunal dismissed the appeal thereby sustaining the assessment finding. [Paras 8]

Appeal dismissed; addition relating to declared tuition income treated as unexplained income under Section 68 sustained.

Final Conclusion: The appeal is dismissed; the Tribunal upholds the assessment additions - the denial of exemption for the claimed long term capital gains on sale of Kappac Pharma Ltd. shares and the treatment of declared tuition receipts as unexplained income under Section 68 for Assessment Year 2014 15.

Limited scrutiny under CASS - scope of inquiry in limited scrutiny cases - CBDT instructions on limited scrutiny and conversion to complete scrutiny - revisional jurisdiction under section 263 - erroneous and prejudicial to the interest of the Revenue - change of opinion

Limited scrutiny under CASS - scope of inquiry in limited scrutiny cases - CBDT instructions on limited scrutiny and conversion to complete scrutiny - revisional jurisdiction under section 263 - erroneous and prejudicial to the interest of the Revenue - Validity of the Pr. CIT's exercise of revisional jurisdiction under section 263 by setting aside an assessment framed after limited scrutiny when the Assessing Officer did not examine issues beyond the reasons for which the case was selected. - HELD THAT: - The Tribunal found that the assessee's case was selected for limited scrutiny under CASS specifically to verify "Large Other Expense claimed in the Profit & Loss Account and mismatch in sales turnover reported in audit report and ITR" (see assessment order). CBDT instructions and subsequent clarificatory communications restrict the scope of enquiry in cases selected for limited scrutiny to the specific aspects indicated, and conversion to a wider or complete scrutiny requires prescribed administrative approval. Reliance on consistent Tribunal decisions (including R&H Property Developers and Balvinderkumar) led the Tribunal to conclude that an Assessing Officer who confines proceedings to the limited reasons for selection cannot be faulted for not adjudicating unrelated aspects. Section 263 can be invoked only where the assessment order is both erroneous and prejudicial to the revenue; where the AO has not traveled beyond the limited scope and has not formed any adverse view on unrelated issues, the twin conditions are not satisfied. The Pr. CIT's setting aside of the assessment on the ground that the AO failed to examine interest reflected in Form 26AS - an issue outside the stated limited scrutiny scope - amounted to an invalid assumption of revisional jurisdiction and amounted to broadening the scope indirectly, which is impermissible. [Paras 11, 12, 13, 15]

Impugned order under section 263 quashed; assessment order framed under section 143(3) restored as the twin conditions for revision (erroneous and prejudicial) were not satisfied in a limited scrutiny case.

Final Conclusion: The Tribunal allowed the appeal, holding that in a case picked up for limited scrutiny the Assessing Officer was bound by the limited scope as per CBDT instructions and the Pr. CIT erred in invoking section 263 to set aside the assessment on issues beyond that scope; the revisionary order was quashed and the assessment restored.

Unexplained cash credit explained by contemporaneous books and receipts (application of the doctrine under section 68) - proof and characterisation of agricultural income as a source of cash deposits - improbability theory regarding physical movement of cash and its irrelevance where source is established - gift from HUF to individual - treatment under definition of relative for section 56(2)(vii) - exemption of amount received out of current year's income of HUF (application of section 10(2))

Unexplained cash credit explained by contemporaneous books and receipts (application of the doctrine under section 68) - proof and characterisation of agricultural income as a source of cash deposits - improbability theory regarding physical movement of cash and its irrelevance where source is established - Deletion of addition of Rs.25,00,000/- treated as unexplained cash credit arising from bank cash deposits. - HELD THAT: - The Tribunal accepted the assessee's evidence showing genuine agricultural receipts, supporting vouchers for agricultural expenditure, 7/12 extract evidencing ownership of agricultural land, and a cash book reconciling cash inflows and outflows. The assessing officer and CIT(A) had relied on an 'improbability' inference because cash generated in Beed was deposited in a Mumbai bank; the Tribunal held that such inference is irrelevant where the source of cash is otherwise established. The CIT(A)'s finding that deposits were followed by withdrawals was based on an incorrect factual premise; once the assessee demonstrated positive cash balances and sufficient cash availability on the dates of deposit, and there was no claim by Revenue that the cash was spent elsewhere, the deposits could not be treated as unexplained credit. Consequently, no addition under the unexplained cash credit principle was warranted in the facts of the case. [Paras 3]

Addition of Rs.25,00,000/- as unexplained cash credit deleted; ground No.1 allowed.

Gift from HUF to individual - treatment under definition of relative for section 56(2)(vii) - exemption of amount received out of current year's income of HUF (application of section 10(2)) - Deletion of addition of Rs.6,00,000/- treated as undisclosed income on account of cash gift received from Gopinath Munde HUF. - HELD THAT: - The assessee produced confirmations from the HUF, the HUF's financial statements reflecting the gift, and the scrutiny assessment order of the HUF confirming the gift out of current year's income. The Tribunal noted precedent of the coordinate bench holding that an HUF is a 'group of relatives' and that gifts from an HUF to an individual member fall within the exemption scheme; in any event, the amount received was established to be out of the HUF's current year's income and therefore exempt in the hands of the individual under the provision exempting amounts received from HUF income. On this basis the addition recorded by the AO and confirmed by the CIT(A) was unsustainable. [Paras 4]

Addition of Rs.6,00,000/- received as gift from HUF deleted; ground No.2 allowed.

Consequential relief - carry forward of depreciation and business loss - Entitlement to carry forward of depreciation and business loss consequential on allowing grounds relating to additions. - HELD THAT: - The Tribunal observed that the claim for carry forward of depreciation and business loss is consequential upon the deletions granted in respect of the disputed additions. Having set aside the additions, the assessee's consequential claims flow from the revised computation of taxable income and should be given effect to by the assessing officer in accordance with law. [Paras 5]

Consequential relief in respect of carry forward of depreciation and business loss to be given effect to.

Final Conclusion: Appeal allowed: additions of Rs.25,00,000/- (unexplained cash deposits) and Rs.6,00,000/- (gift from HUF) deleted; consequential relief including carry forward of depreciation and business loss to be given effect to for A.Y.2012-13.

Capital gains - business income - intention to trade - investment intent - adventure in the nature of trade - realisation of capital investment - appreciation of facts - finding of fact

Capital gains - business income - intention to trade - investment intent - appreciation of facts - Whether surplus on sale of three immovable properties should be taxed as business income or as capital gains. - HELD THAT: - The Tribunal held that on the material on record the properties were held for considerable periods (ranging from over one year to several years), there was no evidence of systematic real estate business activity during the year under consideration, and the assessee had asserted that the properties were held as investments. The Assessing Officer relied on findings from an earlier assessment year and recharacterised the receipts as business income; the Tribunal found this approach incorrect on the facts. Applying settled authorities that require examination of the seller's intention and the factual matrix, and having regard to the period of holding and absence of evidence of trading operations, the Tribunal concluded that the transactions amounted to realisation of capital investment rather than an adventure in the nature of trade. Consequently the authorities below erred in treating the receipts as business income and the addition was directed to be deleted.

The addition treating the surplus as business income is deleted and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal for Assessment Year 2013-14, holding that the gains on sale of the three properties are capital gains (not business income) on the facts of the case, and directed deletion of the impugned addition.

Classification of rental income as Income from Profits and Gains of Business or Profession - income under the head Income from House Property - application of the ratio in Chennai Properties & Investments - disallowance under section 40(a)(ia) of the Income Tax Act, 1961 - claim of expenditure supported by form 26A - verification under section 201 of the Income Tax Act, 1961

Classification of rental income as Income from Profits and Gains of Business or Profession - income under the head Income from House Property - application of the ratio in Chennai Properties & Investments - Whether the rent received by the assessee is taxable as income from profits and gains of business or profession or as income from house property - HELD THAT: - The Tribunal applied the ratio of the Hon'ble Supreme Court in Chennai Properties & Investments and held that on the facts the rental receipts fall to be taxed as business income. The CIT(A) had concluded that letting of the property amounted to business activity and directed computation of income under the provisions applicable to business receipts (sections 28 to 43D). The Tribunal found no infirmity in that conclusion and affirmed that once rental income is held to be business income it must be computed in accordance with the code applicable to business profits. [Paras 7, 10]

Rental income taxed under the head income from profits and gains of business or profession; computation to follow provisions applicable to business income.

Disallowance under section 40(a)(ia) of the Income Tax Act, 1961 - claim of expenditure supported by form 26A - verification under section 201 of the Income Tax Act, 1961 - Whether the interest expenditure claimed by the assessee should be disallowed under section 40(a)(ia) notwithstanding filing of form 26A - HELD THAT: - Although the CIT(A) upheld disallowance of the interest under section 40(a)(ia), the Tribunal modified that direction. The Tribunal noted that the assessee had filed the prescribed form (form 26A) and therefore the claim requires consideration in light of the provisions of section 201 and section 40(a)(ia). The Tribunal directed the Assessing Officer to verify the claim with the recipients of the interest and then decide the allowability of the expenditure under the relevant statutory provisions, effectively remanding that factual/verification exercise to the AO. [Paras 10]

Disallowance under section 40(a)(ia) set aside for the present; matter remitted to the AO for verification from recipients under section 201 and for reconsideration of the claim of expenditure.

Final Conclusion: The Tribunal affirmed classification of the rental receipts as business income and directed computation accordingly, but modified the order on disallowance of interest by remitting the question of allowability to the Assessing Officer for verification with the interest recipients under section 201 before deciding applicability of section 40(a)(ia).

Distinction between employers' contribution and employees' contribution for deduction - deposit of employees' contribution on or before the due date as condition for deduction - binding precedents of the Hon'ble Supreme Court (Checkmate Services) - power of CPC under section 143(1)(a) to make adjustments including disallowance indicated in audit report - strict compliance of statutory conditions for grant of deductions in taxing statutes

Distinction between employers' contribution and employees' contribution for deduction - deposit of employees' contribution on or before the due date as condition for deduction - binding precedents of the Hon'ble Supreme Court (Checkmate Services) - strict compliance of statutory conditions for grant of deductions in taxing statutes - Employees' contribution deposited after the due date is not allowable as a deduction and the ratio of the Hon'ble Supreme Court in Checkmate Services applies to intimation/processing under section 143(1) as well as to assessments under section 143(3). - HELD THAT: - The Tribunal held that the statutory scheme treats employees' contribution (subject to Section 36(1)(va) and Section 2(24)(x)) differently from the employer's own contribution and that Parliament conditioned allowability of deduction of employees' contribution on deposit on or before the due date. The decision of the Hon'ble Supreme Court in Checkmate Services was held to be binding and its ratio - that employees' contribution deposited after the due date cannot be allowed as deduction - is applicable irrespective of whether the assessment is framed under section 143(3) or the return is processed under section 143(1). Applying that binding ratio, the Tribunal concluded that delayed deposit of employees' contribution disentitles the assessee to the deduction. The Tribunal rejected the coordinate-bench decisions relied upon by the assessee to the extent they sought to limit Checkmate to 143(3) cases and observed that doing so would create anomalous classes of taxpayers and defeat legislative intent and the Supreme Court's ruling. [Paras 10, 11, 16]

The delayed deposit of employees' contribution is not deductible; the assessee appeals on this point are dismissed.

Power of CPC under section 143(1)(a) to make adjustments including disallowance indicated in audit report - binding precedents of the Hon'ble Supreme Court (Checkmate Services) - strict compliance of statutory conditions for grant of deductions in taxing statutes - Adjustment/disallowance made by CPC Bengaluru under section 143(1)(a) for delayed deposit of employees' contribution is within the powers of CPC and sustainable when the disallowance is compelled by binding judicial precedent. - HELD THAT: - The Tribunal examined the scope of section 143(1)(a) and observed that the provision authorises processing adjustments where incorrect claims or disallowances indicated in the audit report are apparent from the return and related information. In light of the binding Supreme Court decision that employees' contribution must be deposited by the due date for deduction to be allowable, the Tribunal held that it is not beyond the power of the CPC to make the impugned adjustment under section 143(1)(a). The Tribunal reasoned that confining the Supreme Court's ratio to only 143(3) cases would generate unjustified disparities between taxpayers whose returns are processed at CPC and those subjected to scrutiny; therefore CPC's adjustment is valid when it accords with settled law. [Paras 12, 13, 14]

The disallowance made by CPC Bengaluru under section 143(1)(a) is within power and is upheld.

Final Conclusion: Following and applying the binding ratio of the Hon'ble Supreme Court in Checkmate Services, the Tribunal held that employees' contributions deposited after the due date are not deductible and that CPC, while processing returns under section 143(1)(a), has power to give effect to such disallowances; consequently the assessees' appeals are dismissed and the Revenue's appeal is allowed.

Mistake apparent on the face of the record - rectification under section 154 - re-examination of records - assessment under section 143(3) - ex parte adjudication under Rule 24 ITAT Rules

Mistake apparent on the face of the record - rectification under section 154 - re-examination of records - Rectification application under section 154 seeking deletion of interest income of Rs.40,00,000/- was not maintainable as the alleged error was not a mistake apparent on the face of the record. - HELD THAT: - The Tribunal noted that the regular assessment under section 143(3) had accepted the return after verification and that the assessee's subsequent claim that interest income had 'wrongly crept in' could not be resolved without re-examining records and evidence. A mistake under section 154 must be obvious, self-evident and determinable from the record without argument or lengthy examination. Applying the principle in ITO v. Volcart Bros., the Tribunal held that where determination of the alleged error requires factual re-examination or debate, it falls outside the jurisdiction of section 154. Consequently the rectification plea seeking deletion of the interest income was rightly rejected by the authorities below. [Paras 5, 6, 7, 8]

The Tribunal upheld the rejection of the section 154 application and dismissed the appeal.

Final Conclusion: The appeal is dismissed; the rectification application under section 154 seeking deletion of the claimed interest income was not maintainable because the alleged error was not an obvious mistake apparent on the face of the record and required re-examination of facts.

Taxability under section 56(2)(viia) of the Act in respect of shares allotted below fair market value - treatment of conversion of share application money into share capital between holding and subsidiary - anti abuse purpose of section 56(2)(viia) post abolition of the Gift Tax - natural justice - requirement of opportunity to be heard before enhancement of assessment

Natural justice - requirement of opportunity to be heard before enhancement of assessment - Whether the enhancement of disallowance of interest of Rs. 25,93,067/- was made without affording the assessee a reasonable opportunity of being heard. - HELD THAT: - The Tribunal found that the assessment enhancement made by the assessing officer/Ld. CIT(A) was not preceded by providing the assessee a reasonable opportunity to be heard. Applying the principles of natural justice, the Tribunal held that the assessee must be afforded such an opportunity before confirming or finalising the enhanced disallowance. Consequently, the matter was remitted to the Ld. CIT(A) to decide afresh after affording the assessee a reasonable opportunity of hearing. [Paras 6]

Issue remitted to the Ld. CIT(A) for fresh decision after affording the assessee a reasonable opportunity of being heard; Ground No.4 allowed for statistical purposes.

Taxability under section 56(2)(viia) of the Act in respect of shares allotted below fair market value - treatment of conversion of share application money into share capital between holding and subsidiary - anti abuse purpose of section 56(2)(viia) post abolition of the Gift Tax - Whether the differential amount claimed as income under section 56(2)(viia) on allotment of shares in the subsidiary to the holding company is exigible to tax. - HELD THAT: - The Tribunal examined the facts that the assessee (holding company) already held 99.68% of the subsidiary's equity and fully controlled its management, and that the assessee had made payments as share application money in earlier years which were not disputed. The allotment of shares during the impugned year was made at face value by converting previously paid share application money into allotted shares; there was no change in shareholding or ownership of assets. Recognising that section 56(2)(viia) is an anti abuse provision introduced after the abolition of the Gift Tax, the Tribunal held that mere conversion of share application money into shares, without any alteration in shareholding or transfer of beneficial ownership, does not attract section 56(2)(viia). On these peculiar facts, the Tribunal deleted the addition made by the revenue. [Paras 8]

Addition under section 56(2)(viia) deleted; appeal allowed on this issue.

Final Conclusion: The appeal is partly allowed: the addition under section 56(2)(viia) has been deleted, and the disallowance of interest has been remitted to the Ld. CIT(A) for fresh decision after affording the assessee a reasonable opportunity of hearing.

Deductibility of employees' contribution to provident fund under section 36(1)(va) - condition of deposit within statutory due date for treating employees' contribution as deduction - distinction between employer's contribution and employees' contribution - effect of non-obstante clause in section 43B vis-a -vis employees' contribution held in trust

Deductibility of employees' contribution to provident fund under section 36(1)(va) - condition of deposit within statutory due date for treating employees' contribution as deduction - effect of non-obstante clause in section 43B vis-a -vis employees' contribution held in trust - Whether employees' contribution to EPF/ESI paid after the due date prescribed by the respective welfare statutes but before the due date of filing return under section 139(1) is allowable as a deduction under section 36(1)(va) read with section 43B. - HELD THAT: - The Tribunal, following the analysis and conclusions of the Hon'ble Supreme Court in the cited lead matter, held that employees' contributions deducted or received by the employer are monies held in trust for employees and retain a distinct character from the employer's own contribution. The statutory scheme and legislative history show that deposit of such employees' contribution on or before the due date prescribed by the respective welfare enactments is an essential condition for treating those amounts as deductible under section 36(1)(va). The non-obstante clause in section 43B does not negate this condition where the amounts are held in trust; allowing belated deposit (i.e., after the statutory due date but before filing of return) to qualify for deduction would frustrate the object of the welfare enactments and the protective scheme created by section 2(24)(x) and the Explanation to section 36(1)(va). Applying that principle to the facts, since the assessee did not deposit the employees' contribution within the due date fixed by the respective statutes, the amounts could not be allowed as deduction and had to be treated as deemed income and added back. [Paras 8, 9]

Assessee's claim for deduction of employees' contribution paid after the statutory due date but before filing of return is rejected; the amounts are disallowed under section 36(1)(va) read with section 43B and added to income.

Final Conclusion: Both appeals are dismissed; the disallowances of employees' contribution to EPF/ESI were confirmed as the deposits were not made within the due dates prescribed by the respective welfare statutes.

Non-scheduled (passenger) services - air transport service - Condition 104 of the Notification - Rule 3(9) of the Aircraft Rules - undertaking furnished to Customs

Non-scheduled (passenger) services - air transport service - Rule 3(9) of the Aircraft Rules - Condition 104 of the Notification - Whether flights operated by the appellant for transporting its officials without charging remuneration qualify as 'non-scheduled (passenger) services' under Condition 104 of the Notification. - HELD THAT: - Explanation (b) to Condition 104 refers to the term 'non-scheduled (passenger) services' as air transport services other than scheduled services, and Rule 3(9) of the Aircraft Rules defines 'air transport service' as transport by air for any kind of remuneration. The definition therefore requires that the service be provided for some form of remuneration. The appellant's flights were non-revenue flights operated for its own officials and directors without any remuneration from passengers or third parties. Consequently those flights do not fall within the statutory concept of 'air transport service' under Rule 3(9) and hence cannot be treated as 'non-scheduled (passenger) services' for the purpose of Condition 104 of the Notification. While the Court rejected the Tribunal's additional requirement that non-scheduled services must be offered to the public with published tariffs, it concluded on the narrower ground that absence of remuneration prevents classification as an 'air transport service' and thus the appellant did not comply with Condition 104(i). [Paras 34, 35, 37, 38, 46]

The appellant's non-revenue flights do not qualify as 'non-scheduled (passenger) services' under Condition 104 because they do not constitute an 'air transport service' as defined in Rule 3(9) (requirement of remuneration); therefore Condition 104 was not complied with.

Undertaking furnished to Customs - examination by Customs authorities - Condition 104 of the Notification - Whether the Customs authorities were entitled to examine compliance with the undertaking given under Condition 104 even though DGCA had granted an NSOP permit and raised no objection. - HELD THAT: - The Notification conditions and the undertaking thereunder were furnished to the Customs authorities at the time of importation. The Customs authorities have the statutory duty to examine whether the conditions for availing the exemption under the Notification have been satisfied. That inquiry is distinct from any regulatory enforcement by the DGCA under the Aircraft Act or Rules; Customs need not determine whether the NSOP permit terms were violated for purposes of DGCA enforcement, but they are entitled to examine whether the undertaking to use the aircraft only for non-scheduled (passenger) or non-scheduled (charter) services has in fact been complied with. Consequently, absence of any adverse finding by DGCA does not preclude Customs from investigating and deciding compliance with the Notification and undertaking. [Paras 11, 38, 39, 40, 46]

Customs authorities were entitled to examine and determine whether the undertaking under Condition 104 had been complied with; DGCA's non-action does not preclude Customs from denying the exemption if the condition is not met.

Final Conclusion: The appeal is dismissed: the Court held that the appellant's non-revenue use of the imported aircraft for transporting company officials did not amount to 'non-scheduled (passenger) services' because such flights lacked remuneration and thus did not satisfy Condition 104 of the Notification; further, Customs was entitled to examine compliance with the undertaking given under the Notification notwithstanding the DGCA's absence of adverse action.

Self-assessment - re-assessment under Section 17(5) - clearance for home consumption - imported goods cease to be dutiable upon clearance - appeal to Commissioner (Appeals) against an order of assessment including self-assessment - limitation for issuance of demand under Section 28 counted from clearance for home consumption - customs EDI system does not permit re-assessment after clearance

Self-assessment - re-assessment under Section 17(5) - clearance for home consumption - imported goods cease to be dutiable upon clearance - customs EDI system does not permit re-assessment after clearance - Whether the Deputy Commissioner had power to re-assess the goods under Section 17(5) after the goods had been cleared for home consumption. - HELD THAT: - The Tribunal held that the process of assessment ends when an order permitting clearance of the goods for home consumption is issued because the goods cease to be "imported goods" and cease to be dutiable. Once such an order is issued the officer has no authority to re-assess under Section 17(5). The Registrar/systemic practice of EDI also does not permit re-assessment after clearance. While verification and re-assessment may occur prior to such clearance (including correction of importer-initiated errors), after clearance the remedy is by way of appeal or by issuance of a demand under the statutory limitation provisions, not by post-clearance re-assessment under Section 17(5). Applying these principles to the facts, the Deputy Commissioner erred in issuing an assessment order under Section 17(5) after the goods had already been cleared for home consumption, and therefore that assessment order was without authority of law and liable to be set aside. [Paras 11, 12, 13, 14, 15]

Re-assessment under Section 17(5) after issuance of an order clearing goods for home consumption was without authority; the Commissioner (Appeals) was correct in setting aside the post-clearance assessment.

Self-assessment - appeal to Commissioner (Appeals) against an order of assessment including self-assessment - limitation for issuance of demand under Section 28 counted from clearance for home consumption - Whether the imported goods merit classification under CTH 20082000 or CTH 08119010. - HELD THAT: - The Tribunal declined to decide the classification on merits because the impugned re-assessment itself was held to be without authority. Having set aside the post-clearance assessment, the Tribunal found it unnecessary to adjudicate the classification issue and left that question open for determination by the appropriate forum or in appropriate proceedings. The Court reiterated that appeals lie against assessment orders (including self-assessment) to the Commissioner (Appeals) and that statutory limitation for issuing demands is governed by the date of clearance for home consumption. [Paras 15, 16]

Classification issue left open; Tribunal did not decide whether canned pineapple slices are classifiable under CTH 20082000 or CTH 08119010.

Final Conclusion: The appeal is rejected; the assessment order passed by the Deputy Commissioner after the goods had been cleared for home consumption was unauthorized and correctly set aside by the Commissioner (Appeals). The question of classification is left open.

Salary in lieu of notice - cost to company as measure of salary - restructuring of compensation and absorption of COLA - damages for delayed severance payment - interest pendente lite and future as discretionary relief - IBC moratorium under section 14

Salary in lieu of notice - cost to company as measure of salary - restructuring of compensation and absorption of COLA - Whether the compensation in lieu of three months' notice is to be calculated with reference to the revised cost to company or only basic salary (plus COLA as per the original appointment letter). - HELD THAT: - The Court held that the definition of 'salary' in clause 8(d) of the appointment letter was effectively modified by the March 2002 restructuring of compensation which adopted a cost to company (CTC) approach and made no provision for COLA. There was no evidence that the revised basic pay expressly absorbed COLA and no cross-examination to establish that paid leave or other benefits were calculated strictly on the narrow basic-salary figure asserted by appellant. Documentary material (payslip and income-tax projection) demonstrated that the respondent's taxed earnings and payslips reflected components beyond the narrow basic figure and supported the Trial Court's use of the annual CTC to compute monthly equivalent. The High Court therefore found no error in the Trial Court applying the annual cost to company to determine compensation in lieu of notice and refused to disturb the decretal calculation except to adjust monies already paid. [Paras 19, 20, 21, 24]

Trial Court correctly applied the annual cost to company to compute the salary in lieu of notice; no interference with that part of the decree except for credits ordered elsewhere.

Leave encashment - credit for amounts already paid - Whether the Trial Court erred in awarding leave encashment without giving credit for an amount already paid to the respondent towards leave encashment. - HELD THAT: - Appellant produced the full and final settlement statement showing a payment towards leave encashment; respondent conceded in court that the amount of Rs.3,20,807 (figure in record) could be reduced from the decretal sum. The High Court accepted that credit should be given for amounts already paid and ordered that the decretal amount deposited in the Trial Court be reduced by the said sum together with proportionate interest, and further directed appropriation of that sum towards outstanding costs as addressed separately. [Paras 14, 15, 24, 25]

Reduce the decretal amount by the amount already paid towards leave encashment (Rs.3,20,807 together with proportionate interest) and appropriate that sum as directed.

Damages for delayed severance payment - Whether the Trial Court's award of damages for delayed payment of severance (Rs.2,50,000) was justified and liable to be interfered with on appeal. - HELD THAT: - The High Court observed that the Trial Court's finding was premised on appellant's unexplained delay of over two months in paying the severance due upon termination. The Trial Court took into account the mental trauma and hardship a summary termination and delayed payment would cause an employee and his family. Given these circumstances and the deterrent rationale, the High Court found the Trial Court's conclusion that damages were warranted to be justified and declined to interfere with the award. [Paras 9, 16, 18, 22]

Award of damages by the Trial Court upheld.

Interest pendente lite and future as discretionary relief - Whether the rate of interest awarded by the Trial Court at 18% per annum for decretal amounts was excessive and required interference. - HELD THAT: - The High Court noted that award of pendente lite and future interest is discretionary and guided by restitution principles. Relying on the discretionary nature of such relief and observing no ground shown in the appeal to disturb the exercise of discretion, the Court declined to interfere with the rate fixed by the Trial Court. [Paras 23]

Interest at 18% p.a. awarded by the Trial Court not disturbed.

IBC moratorium under section 14 - Whether the High Court has jurisdiction to entertain the interim application for release of amounts deposited in the Trial Court despite the appellant undergoing CIRP and the moratorium under section 14 of the IBC. - HELD THAT: - The Court had earlier (recorded in para 11) held that the appeal and attendant interim application are not affected by the moratorium under section 14 of the IBC and therefore this Court possessed jurisdiction to entertain and dispose of the interim application. That jurisdictional objection was disposed of prior to final hearing and the present judgment proceeds on that basis. The interim application was disposed of along with the appeal in light of the substantive directions made. [Paras 11, 26]

Objection based on IBC moratorium rejected; interim application disposed of along with the appeal.

Costs and appropriation of deposited amounts - credit for prior payments - What is to be done with the amounts deposited in the Trial Court and the portion to be paid to the respondent to meet the bill of costs? - HELD THAT: - The Trial Court's bill of costs in the decree showed an amount payable to the respondent which had not been paid or deposited by appellant. The High Court directed that the amount already paid towards leave encashment together with accumulated interest be paid over to the respondent to cover the bill of costs plus interest thereon. The Court ordered the Trial Court to act on an authenticated copy of this judgment for payment and expedited issuance of certified copy was recorded as not to delay payment. [Paras 10, 24, 25, 26]

Direct payment of the amount already paid for leave encashment together with accumulated interest to respondent to cover costs; execution directions given.

Final Conclusion: Appeal partly allowed: Trial Court's computation of salary in lieu of notice based on cost to company, award of damages for delayed severance, and interest at 18% upheld; decretal amount to be reduced by the sum already paid towards leave encashment (with interest) which is to be applied towards the respondent's bill of costs; interim application disposed and directions given for payment from amounts deposited in the Trial Court.

Collusive petition - locus of shareholders to intervene in Section 9 proceedings - pre-existing dispute under Section 9 of the Insolvency and Bankruptcy Code, 2016 - natural justice and right to be heard - summary jurisdiction of the Adjudicating Authority under Section 9

Collusive petition - summary jurisdiction of the Adjudicating Authority under Section 9 - Section 9 petition was collusive and properly dismissed by the Adjudicating Authority. - HELD THAT: - The Tribunal accepted the Adjudicating Authority's finding that the demand notice was addressed by the appellant to addresses and persons under his control after he and the other director had resigned, and that the appellant nonetheless caused the Section 8 notice to be directed in a manner which prevented the corporate debtor from receiving or responding to it. The fact that the co-resigned director (KKV) appeared and purported to represent the corporate debtor before the Adjudicating Authority despite having resigned reinforced the conclusion of connivance. On these facts, the Adjudicating Authority was justified in treating the Section 9 petition as collusive and dismissing it; interference was not warranted given the summary nature of Section 9 proceedings and the evident manipulation of process. [Paras 12]

The Section 9 application was collusive and its dismissal by the Adjudicating Authority was justified.

Locus of shareholders to intervene in Section 9 proceedings - natural justice and right to be heard - Majority shareholders (Respondents No.2 and No.3) were entitled to be heard and to defend the interests of the corporate debtor in the circumstances of the case. - HELD THAT: - Although shareholders and the corporate debtor are separate legal persons, the Tribunal held that where the Section 8 notice could not be responded to by the corporate debtor due to conduct attributable to the appellant and a void in board composition caused by resignations, the majority shareholders holding 98.98% shares deserved an opportunity to protect the corporate debtor's interests. The peculiar facts - resignation of directors leaving no one on the board to defend the corporate debtor and unauthorized representation by a resigned director - made participation by shareholders necessary in the interest of justice and to prevent miscarriage of justice. [Paras 13]

Respondents No.2 and No.3, as majority shareholders, were entitled to intervene and be heard to safeguard the corporate debtor's interests.

Pre-existing dispute under Section 9 of the Insolvency and Bankruptcy Code, 2016 - There existed a bona fide pre-existing dispute concerning the operational debt claimed by the appellant. - HELD THAT: - The Tribunal found that respondents placed material on record alleging that (i) a prior Consultancy Agreement contained restrictive and indemnity clauses, (ii) the appellant engaged in competing activities and communications indicative of breach of fiduciary obligations, and (iii) the appellant made unexplained withdrawals and failed to produce supporting vouchers. The Tribunal held that it was not required in a Section 9 summary inquiry to undertake detailed factual or comparative industry analysis; it was sufficient that a genuine dispute was shown on the record and was not a spurious or fabricated defence. On this basis the Tribunal affirmed that a pre-existing dispute existed. [Paras 20]

A bona fide pre-existing dispute was established, negativing admissibility of the Section 9 claim.

Final Conclusion: The Tribunal dismissed the appeal, holding that the Section 9 petition was collusive, that majority shareholders could intervene to defend the corporate debtor given the circumstances, and that a bona fide pre-existing dispute existed; the Adjudicating Authority's dismissal of the Section 9 application was upheld.

Right to bail under Section 439 Cr.P.C. - Bail restrictions under Section 45(1) of the Prevention of Money Laundering Act, 2002 - Reasonable grounds for believing / probability test under Section 45 - Effect of acquittal in scheduled/predicate offence on prosecution under the PMLA - Proceeds of crime must be linked to criminal activity constituting a scheduled offence

Right to bail under Section 439 Cr.P.C. - Bail restrictions under Section 45(1) of the Prevention of Money Laundering Act, 2002 - Reasonable grounds for believing / probability test under Section 45 - Grant of bail to the petitioner under the PMLA despite the statutory twin conditions in Section 45(1). - HELD THAT: - The Court applied the established jurisprudence that bail is the rule and refusal the exception, and that Section 45(1) of the PMLA imposes a judicial, not arbitrary, constraint requiring that (i) the public prosecutor be heard and (ii) where opposed, the Court be satisfied on reasonable grounds (a probability-based view) that the accused is not guilty and unlikely to offend while on bail. The Court held that it need not delve into trial merits but may form a view on probability from available material. Having considered the facts, the pendency of pre-trial detention since 07.09.2022, and the material placed before it, the Court found that the twin conditions of Section 45(1) were satisfied on a prima facie/probability basis and that continuing detention pending trial would be unwarranted. Consequently bail was granted subject to specified conditions and securities. The Court emphasised that its order is confined to the bail application and is not a final expression on merits of the PMLA prosecution. [Paras 4, 9, 10, 11]

Bail granted subject to conditions and security after recording that the twin conditions of Section 45(1) PMLA are satisfied on a prima facie/probability view.

Effect of acquittal in scheduled/predicate offence on prosecution under the PMLA - Proceeds of crime must be linked to criminal activity constituting a scheduled offence - Impact of the petitioner's acquittal in the predicate scheduled offence and an appellate direction for restoration of property on the maintainability/assessment under the PMLA. - HELD THAT: - The Court examined the legal principle that proceeds of crime under the PMLA must be linked to criminal activity constituting a scheduled offence and that if a person is finally discharged or acquitted of the scheduled offence and a court of competent jurisdiction has adjudicated that the property belongs to him, such property cannot, by that adjudication, be treated as proceeds of crime. Considering that the petitioner was acquitted in the underlying Sessions trial and that an appellate order directed restoration/return of the seized property to him, the Court held these circumstances provide sufficient material to conclude, on a prima facie basis, that the petitioner has met the requirement under Section 45(1) (reasonable grounds for believing non-guilt) and that continuing pre-trial custody solely on expectation of further complaints or investigations would be illogical. The Court nonetheless noted that the PMLA proceeding remains independent and subject to adjudication on merits. [Paras 7, 9, 10]

Acquittal in the predicate scheduled offence and appellate direction for return of property were held sufficient, on a prima facie/probability basis, to undermine the presumption that the seized property is proceeds of crime and to support grant of bail; however, merits of PMLA prosecution remain open to trial.

Final Conclusion: The High Court allowed the petitioner's bail application under the PMLA, holding that the twin conditions in Section 45(1) were satisfied on a prima facie/probability basis-in particular in view of the petitioner's acquittal in the predicate scheduled offence and the appellate direction for restoration of property-while clarifying that the order does not decide the merits of the pending PMLA prosecution and that trial shall proceed independently; bail was granted subject to specified securities and conditions.

Mens rea for offence of money laundering - prima facie case for Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 - non bailable and cognizable regime under Section 45(1) of the Prevention of Money Laundering Act, 2002 - risk of tampering with evidence and thwarting ongoing investigation

Non bailable and cognizable regime under Section 45(1) of the Prevention of Money Laundering Act, 2002 - prima facie case for Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 - Whether the petitioner is entitled to bail under Section 45(1) of the Prevention of Money Laundering Act, 2002 - HELD THAT: - The court examined the twin condition in Section 45(1) that, when the Public Prosecutor opposes bail, the court must be satisfied there are reasonable grounds for believing the accused is not guilty and is not likely to commit an offence while on bail. Having reviewed the materials including investigation findings of siphoning, diversion and creation of assets through shell/puppet entities and the petitioner's continued association with multiple companies linked to the Surana Group, the court found a prima facie case under Sections 3 and 4 of the PMLA. Where a prima facie case exists, the court cannot be satisfied of the second limb of Section 45(1)(ii). On that basis and on the totality of circumstances the court held the petitioner has not met the statutory requirement for grant of bail under Section 45(1). [Paras 15, 21]

Bail under Section 45(1) PMLA refused; criminal petition dismissed.

Mens rea for offence of money laundering - risk of tampering with evidence and thwarting ongoing investigation - Whether the petitioner's claimed lack of mens rea and illiteracy disentitles prosecution for money laundering and warrants bail - HELD THAT: - The petitioner asserted lack of mens rea, poor acumen and that he was a mere name lender. The court considered investigative material showing the petitioner's appointment as Director/Partner/Proprietor in ten entities associated with the Surana Group, transaction ledgers evidencing triangular round tripping, witness statements describing the petitioner as a benami/dummy and admissions (and subsequent retractions) in statements under Section 50 PMLA. The court drew the inference that the petitioner's long standing deployment in companies linked to the main accused demonstrates prima facie knowledge and connection to the laundering scheme. Further, because investigation remained ongoing and the petitioner had not cooperated fully, the court found a real possibility that release on bail would enable tampering with evidence and interference with the investigation. Accordingly the claim of absence of mens rea did not, at the bail stage, justify release. [Paras 10, 16, 18, 20]

Petitioner's plea of lack of mens rea rejected on prima facie material; risk of tampering found, weighing against bail.

Final Conclusion: On the materials before it the High Court found a prima facie case under Sections 3 and 4 PMLA, concluded the petitioner had not satisfied the conditions of Section 45(1)(ii) and that release on bail presented a real risk of tampering with evidence; bail was therefore refused and the petition dismissed.

Eligibility as 'eligible unit' under the Scheme - availing ab-initio area-based excise exemption - continuity of entitlement despite payment under protest - entitlement not defeated by Revenue's contestation prior to final adjudication - Scheme of Budgetary Support under GST Regime

Eligibility as 'eligible unit' under the Scheme - availing ab-initio area-based excise exemption - continuity of entitlement despite payment under protest - Whether the petitioner qualified as an 'eligible unit' under the Scheme and was availing the benefit of the Notification immediately prior to 01.07.2017. - HELD THAT: - Paragraph 4.1 of the Scheme requires two conditions: (i) the unit was eligible before 1st July 2017 to avail ab-initio exemption (or exemption by refund) under the notifications listed in paragraph 2 of the Scheme; and (ii) the unit was availing such exemption immediately before 01.07.2017. The Court found, on the material record, that the petitioner was indisputably eligible for benefit under Notification No.50/2003-CE and that the controversy as to entitlement was finally resolved in the petitioner's favour by the order of the Commissioner (Appeals) dated 23.12.2011 and the order of the CESTAT dated 07.11.2017. The fact that the petitioner paid duty under protest while Revenue contested the claim does not negate that the petitioner was availing its entitlement; pursuing and ultimately securing the exemption and sanction of refund demonstrates that the benefit was in substance enjoyed and that the pending litigation does not disentitle the petitioner. The second limb of paragraph 4.1 is intended to exclude units which had elected not to avail area-based exemption or whose entitlement had expired, and not to exclude units which had asserted claims later upheld. On these conclusions the Court directed respondents to release budgetary support assessed under the Scheme and to grant registration enabling online claims. [Paras 14, 15, 16, 17, 19]

Petitioner is an 'eligible unit' under the Scheme and was availing the Notification immediately prior to 01.07.2017; respondents directed to release budgetary support and grant registration for online claims.

Final Conclusion: The petition is allowed: the petitioner is entitled to budgetary support under the Scheme as an eligible unit and respondents are directed to release the assessed amount and to grant registration for online claims within six weeks; parties to bear their own costs.

Penalty under rule 26 of Central Excise Rules, 2002 - Confiscation under rule 25 of Central Excise Rules, 2002 - Liability of artificial persons for penal provisions - Knowledge requirement for imposition of penalty on corporate entities - Veil of corporation and attribution of mens rea

Penalty under rule 26 of Central Excise Rules, 2002 - Liability of artificial persons for penal provisions - Knowledge requirement for imposition of penalty on corporate entities - Whether penalty under rule 26 of the Central Excise Rules, 2002 can be imposed on a corporate (artificial) person in the absence of attributable knowledge of liability for confiscation - HELD THAT: - The Tribunal applied the Larger Bench precedent dealing with the identical provision under the earlier Rules (Rule 209A) and held that the penal provision presupposes knowledge that goods are liable for confiscation. A corporate entity does not itself possess a mind capable of knowledge; actions and knowledge are those of individual natural persons (directors, employees). Penal liability under the rule cannot be imposed on an artificial person merely by treating the corporate entity as having the requisite knowledge; liability attaches to the individuals whose knowledge can be established. Relying on that reasoning, the penalty imposed under rule 26 was found inapplicable to the appellant and therefore set aside. [Paras 3]

Penalty imposed under rule 26 of the Central Excise Rules, 2002 set aside and appeal allowed

Final Conclusion: The Tribunal set aside the penalty imposed under rule 26 of the Central Excise Rules, 2002 on the appellant, holding that the penal provision cannot be invoked against a corporate entity in the absence of attributable knowledge; appeal allowed.