TaxTMI Updates e-Newsletter
Mar 03,2021

Violation of principles of natural justice - right to personal hearing - opportunity to reply within 15 days under show cause notice - refund of IGST on zero-rated supply under Section 54 of the Central Goods and Service Tax Act, 2017

Violation of principles of natural justice - opportunity to reply within 15 days under show cause notice - right to personal hearing - Orders rejecting refund applications for October 2018 and April-September 2018 were passed without affording the petitioner the period of 15 days to reply and without considering requests for adjournment or personal hearing. - HELD THAT: - The Court found on the admitted position that the impugned rejection orders in W.P.No.13633/2020 (October 2018) and W.P.No.12555/2020 (April 2018 to September 2018) were passed within the 15 day period which the notices themselves afforded to the petitioner and that requests for adjournment and personal hearing were not considered. Such conduct amounted to a breach of the principles of natural justice. Consequently the Court set aside those rejection orders and directed respondent No.3 to afford a fresh opportunity of hearing following written representations; the petitioner was directed to file a detailed reply within two weeks from release of the order and respondent No.3 was directed to fix a hearing date and dispose of the matter within one month thereafter. [Paras 6, 7, 11]

Impugned rejection orders for October 2018 and April-September 2018 set aside; matter remanded for fresh hearing and disposal after the petitioner files detailed reply.

Right to personal hearing - opportunity to reply within 15 days under show cause notice - violation of principles of natural justice - Orders rejecting refund applications for November and December 2018 were passed without adequately considering the petitioner's request for a specific personal hearing date, notwithstanding that the petitioner had sought extension and a consolidated hearing. - HELD THAT: - Although the revenue contended that an earlier personal hearing date had been fixed and was available to the petitioner, the Court observed that the petitioner had not availed the earlier date and had sought a consolidated hearing; having regard to the acknowledgements of detailed replies, and in the interest of justice, the Court set aside the rejection orders in W.P.No.3384/2021 (November and December 2018) and directed that the petitioner be afforded an opportunity of personal hearing to substantiate the replies already filed. The Court also directed that a common date may be fixed to avoid conflicting orders given the identical factual matrix across the petitions. [Paras 8, 10, 11]

Impugned rejection orders for November and December 2018 set aside; matter remanded for personal hearing and fresh disposal, with a common hearing date to be fixed.

Final Conclusion: W.P.Nos.12555/2020, 13633/2020 and 3384/2021 are disposed of by setting aside the impugned refund rejection orders for the specified months on grounds of denial of the opportunity to reply and/or personal hearing; the matters are remanded for fresh hearing and decision in accordance with the directions issued by the Court.

Attachment of bank accounts - power under Section 83 of the CGST Act, 2017 - statutory life of attachment - extension of attachment period - service by email

Attachment of bank accounts - statutory life of attachment - extension of attachment period - power under Section 83 of the CGST Act, 2017 - Legal effect of orders of attachment dated February, 2020 and need for extension to continue them beyond one year - HELD THAT: - The Court recorded that the impugned orders are orders of attachment of the writ applicant's bank accounts made in February, 2020 under the authority conferred by Section 83 of the CGST Act, 2017, and observed that the statutory life of such an attachment is one year unless the authority deems fit to extend it further. Noting that, as of the hearing, no extension had been recorded, the Court issued notice to the respondents and directed them to state whether they intend to extend the period of attachment so that the matter can be considered on that premise. The Court therefore treated expiry by efflux of time as a live procedural fact requiring the respondents' clarification before further adjudication. [Paras 2, 3, 5]

Notice issued; respondents directed to state whether they intend to extend the attachment which, being dated February, 2020, has a statutory life of one year unless extended.

Service by email - Mode of service of the writ petition on the respondents - HELD THAT: - The Court authorised immediate service of the writ applicants' papers on the respondents by direct email and permitted conventional service as well. This direction was given to ensure the respondents receive notice in time to indicate whether they will seek extension of the attachment. [Paras 6]

Respondents to be served directly through email; regular direct service also permitted.

Final Conclusion: Notice issued returnable on 01.03.2021; respondents must indicate whether they will extend the attachment of bank accounts made in February, 2020, noting that such attachments ordinarily subsist for one year unless extended; service by email authorised.

Maintainability of writ petition in view of statutory appellate remedy - exercise of jurisdiction under Article 226 - availability and adjudication of statutory remedy of appeal before the Additional Commissioner - refusal to adjudicate disputed facts in writ proceedings - directions for expeditious disposal of statutory appeal

Maintainability of writ petition in view of statutory appellate remedy - exercise of jurisdiction under Article 226 - refusal to adjudicate disputed facts in writ proceedings - Whether the writ petition seeking mandamus for refund is maintainable when a statutory appeal to the Additional Commissioner is available and whether the High Court should adjudicate disputed factual controversies in exercise of Article 226 jurisdiction. - HELD THAT: - The court recorded that the respondents had correctly pointed out the existence of a statutory remedy of appeal to the Additional Commissioner and that ordinarily the availability of such remedy renders a writ petition not maintainable. The petitioners' contention that they were deprived of the appellate remedy by the respondents was examined but the court held that the factual disputes raised by the petitioners (including whether documents such as the E Way Bill were in fact produced) are matters which can and should be considered in the statutory appeal. The court declined to enter into those factual controversies in exercise of Article 226, finding no satisfaction that the petitioners were deprived of the remedy of appeal, and therefore did not grant the writ relief sought on merits. [Paras 5, 7, 8]

Writ petition is not entertained on merits because the statutory appellate remedy is available; the High Court will not adjudicate the disputed factual issues in this writ proceeding.

Availability and adjudication of statutory remedy of appeal before the Additional Commissioner - directions for expeditious disposal of statutory appeal - Whether the petitioners should be permitted to pursue the statutory appeal and whether the Additional Commissioner should be directed to consider the petitioners' pleas expeditiously. - HELD THAT: - Although the writ was not entertained on merits, the court granted the petitioners liberty to prefer the appeal before the Additional Commissioner and expressly stated that the pleas raised in the writ (including those relating to production of the E Way Bill and invoice) may be taken in the appeal. The Additional Commissioner was directed to return a finding on the merits of those pleas. The court imposed an administrative timeline for disposal of the appeal to ensure expeditious adjudication. [Paras 9, 10, 11]

Petitioners granted liberty to file the statutory appeal; the Additional Commissioner shall consider the petitioners' pleas on merits and decide the appeal within six weeks from institution; a copy of this order to be filed with the appeal.

Final Conclusion: Writ petition dismissed without adjudication on merits because a statutory appeal to the Additional Commissioner is available; petitioners given liberty to prefer the appeal and the Additional Commissioner directed to decide the appeal on merits, including the pleaded factual contentions, within six weeks.

Transition of input tax credit - inadvertent error in TRAN-1 entries - revision of TRAN-1 under Rule 120A - rectification after statutory revision deadline - entitlement to transitional ITC upon verification

Inadvertent error in TRAN-1 entries - transition of input tax credit - Petitioner's entitlement to transitional input tax credit despite having erroneously entered stock details in column 7(d) instead of 7(a) of FORM GST TRAN-1 - HELD THAT: - The Court found that the petitioner had filed FORM GST TRAN-1 within time and that the only grievance was an inadvertent misplacement of details in column 7(d) rather than 7(a). The factual matrix was distinguished from cases where TRAN-1 was not filed at all. Reliance was placed on the Division Bench decision of the Delhi High Court which recognised bona fide inadvertent errors of this nature and criticised the absence of an effective rectification facility in the electronic system. The Court held that, on these facts, the petitioner should not be denied transitional input tax credit merely for having entered particulars in the wrong column when invoices/documents evidencing payment of tax existed and the mistake was shown to be unintentional. [Paras 2, 6, 7, 8]

Petition allowed on merits insofar as entitlement to transitional input tax credit is concerned; the impugned communication refusing relief is quashed.

Revision of TRAN-1 under Rule 120A - rectification after statutory revision deadline - entitlement to transitional ITC upon verification - Direction to respondents to verify petitioner's averments and, if satisfied, to grant the claimed transitional input tax credit despite the expiry of the TRAN-1 revision window - HELD THAT: - Although Rule 120A permits one-time revision of TRAN-1 within prescribed dates, the Court observed that where an error is shown to be inadvertent and supporting documents exist, administrative refusal solely on account of the expiry of the revision window is not justified. The Court therefore directed the second respondent to forward the petitioner's application to the GSTN/third respondent forthwith and directed the third respondent to verify the correctness of the jurisdictional Assistant Commissioner's findings. Upon satisfaction, the third respondent is to grant the relief sought. The Court mandated completion of this verification and consequential relief within twelve weeks from receipt of the order copy. [Paras 9]

Respondents directed to process the petitioner's application and, after verification, to grant the claimed transitional ITC within twelve weeks; impugned refusal set aside.

Final Conclusion: Writ petition allowed: impugned communication quashed; respondents directed to forward, verify and, if satisfied, grant the petitioner's claimed transitional input tax credit despite the TRAN-1 revision deadline, the exercise to be completed within twelve weeks.

Estimation of value by Valuation Officer under Section 142A - Limitation period for submission of valuation report - Powers of Commissioner (Appeals) to direct further inquiry and call for reports - Authority of appellate forum to require ancillary valuation during pendency of appeal

Powers of Commissioner (Appeals) to direct further inquiry and call for reports - Authority of appellate forum to require ancillary valuation during pendency of appeal - Whether the Commissioner (Appeals) has jurisdiction and power to direct a valuation report or to have further inquiry called for during the pendency of an appeal. - HELD THAT: - The Court examined the procedural provisions governing appeals and the powers of the Commissioner (Appeals). Sections 250(4) and 250(5) empower the Commissioner (Appeals) to make such further inquiry as he thinks fit or to direct the Assessing Officer to make further inquiry and report the result to him, and to permit consideration of grounds not specified in the grounds of appeal in appropriate circumstances. Section 251(2) and its Explanation similarly permit the appellate authority to consider matters arising out of the proceedings. Applying those provisions, the Court held that the Commissioner (Appeals) possesses wide powers to call for valuation reports and to direct inquiries even while an appeal against the assessment is pending. The issuance of directions by the Commissioner (Appeals) to obtain a valuation report was therefore within the appellate authority's jurisdiction and not, in itself, illegal. [Paras 10, 11]

Commissioner (Appeals) has competence to direct a valuation report or further inquiry during pendency of appeal; the notice issued pursuant to such direction is not void as beyond the appellate authority's powers.

Estimation of value by Valuation Officer under Section 142A - Limitation period for submission of valuation report - Validity of a fresh notice for valuation issued after the six month period prescribed for the Valuation Officer to submit his report under Section 142A where the Assessing Officer had earlier sought valuation but proceeded to assess and passed the assessment order. - HELD THAT: - The Court noted that Section 142A(6) prescribes a six month period for the Valuation Officer to submit his valuation report upon reference. In the present case the Assessing Officer had sought a valuation report by letter dated 25 10 2017 but, because assessment for AY 2015 16 was completed by December 2017, the Assessing Officer proceeded to pass an assessment order on 29 12 2017. A subsequent notice dated 19 10 2020 for valuation was challenged as time barred. Rather than adjudicating the limitation point itself, the Court recognized that the question of whether the subsequent notice is barred by the statutory time period and the legal effect of the delayed valuation requires consideration and determination in the first instance by the Commissioner (Appeals). The Court therefore directed the Commissioner (Appeals) to consider the plea of limitation as part of the appeal and decide it expeditiously, preferably within three months from receipt of a certified copy of the order. [Paras 7, 12]

The plea that the valuation notice is time barred under Section 142A is not finally decided by this Court and is remitted to the Commissioner (Appeals) for expeditious adjudication.

Final Conclusion: The High Court held that the Commissioner (Appeals) has power to direct valuation and call for reports during the pendency of an appeal, and remitted the question of whether the later valuation notice was barred by the six month limitation in Section 142A to the Commissioner (Appeals) for prompt decision (preferably within three months).

Reopening of assessment under Section 147/148 - Disallowance under Section 14A read with Rule 8D - Change of opinion doctrine - Requirement of tangible/new material to form reason to believe - Limitation of Section 14A disallowance to exempt income

Reopening of assessment under Section 147/148 - Change of opinion doctrine - Requirement of tangible/new material to form reason to believe - Validity of notice dated 26.07.2018 issued under Section 148 for reopening assessment of A.Y. 2012-13 - HELD THAT: - The Court held that the Assessing Officer had the onus to demonstrate reason to believe that income chargeable to tax had escaped assessment. A close comparison of the materials available at the time of the original assessment under Section 143(3) and at the time of reopening shows that the same material was before the AO earlier and no fresh tangible material had surfaced. The reasons recorded repeatedly relied upon the same balance-sheet, audited accounts and submissions which were considered during original assessment. Absent any new or discoverable material that could not have been extracted with due diligence, the formation of belief amounted to a change of opinion, which does not satisfy the statutory threshold for reopening after four years. The Court applied settled authorities requiring an objective basis and tangible material for jurisdiction under Section 147 and rejected the Revenue's contention that mere nondisclosure was shown when the very materials had been placed on record in the earlier proceedings. [Paras 12, 13, 16]

The notice dated 26.07.2018 under Section 148 was quashed as the prerequisite for reopening-existence of tangible/new material and absence of mere change of opinion-was not satisfied.

Disallowance under Section 14A read with Rule 8D - Limitation of Section 14A disallowance to exempt income - Whether disallowance computed under Section 14A/Rule 8D could exceed the exempt income declared by the assessee - HELD THAT: - The Court noted that even on merits the proposed disallowance significantly exceeded the exempt income declared and relied on the principle, as affirmed by higher authority, that disallowance under Section 14A cannot exceed the amount of exempt income. Applying that principle to the facts, the Court held that the proposed recomputation to a figure exceeding the exempt dividend could not validly form the basis for alleging escapement of income. Thus, the alleged shortfall in disallowance did not, by itself, establish escaped income where the original assessment had restricted disallowance to the exempt income and the same materials were considered earlier. [Paras 14]

On merits, the proposed disallowance exceeding exempt income could not sustain reassessment; Section 14A disallowance is constrained by the exempt income actually earned.

Final Conclusion: The writ petition is allowed; the reassessment notice dated 26.07.2018 issued under Section 148 for A.Y. 2012-13 is quashed and set aside because the Assessing Officer lacked fresh/tangible material and the proposed Section 14A disallowance could not lawfully exceed the exempt income.

Reopening of assessment - reason to believe - borrowed satisfaction - application of mind by Assessing Officer - third party information and statements - proviso to Section 147 - assessments accepted under section 143(1) - sanction under Section 151

Reopening of assessment - reason to believe - borrowed satisfaction - third party information and statements - proviso to Section 147 - assessments accepted under section 143(1) - Validity of the notice under Section 148 read with Section 147 for A.Y. 2012-13 - HELD THAT: - The Court examined the reasons recorded by the Assessing Officer and the material relied upon after receiving information about accommodation entries arising from the scrutiny of a third party. The Assessing Officer verified the assessee's return, bank statements and transactions with three entities and recorded that substantial receipts had been routed through those entities and that statements under oath implicated the entities in providing bogus billing. The Court held that at the stage of issuing a notice under Section 148 what is required is a 'reason to believe' and not a conclusive proof of escapement; the authorities and precedents permit formation of such a belief on relevant material including information from other departments or third party statements, provided the Assessing Officer applies his mind to the material. The record showed independent verification steps (checking returns, bank statements, cross referencing the third party statement) and a factual nexus between the information and the assessee's transactions; accordingly the reopening was not a mere mechanical reliance on borrowed satisfaction but founded on materials that could furnish a reasonable belief that income had escaped assessment. The Court also noted that because the return was processed under Section 143(1) and no scrutiny assessment under Section 2(40) had been made, the proviso to Section 147 did not require the Assessing Officer to show failure to disclose fully and truly of material facts. [Paras 15, 16, 17, 18, 22]

Notice under Section 148 read with Section 147 in respect of A.Y. 2012-13 is valid and not vitiated for want of independent application of mind or being based on borrowed satisfaction.

Sanction under Section 151 - mechanical sanction - Allegation that sanction for issuance of notice under Section 151 was mechanical and therefore invalid - HELD THAT: - The assessee relied on an intimation letter to contend that sanction was mechanically accorded for multiple entities. The Court observed that the intimation produced by the assessee did not constitute the sanction order itself and that no other evidence was placed on record to show that the sanction was accorded mechanically without satisfaction. In absence of material demonstrating a mechanical or blanket sanction, the contention failed. [Paras 19, 20]

Contention of invalid sanction under Section 151 is rejected for lack of supporting evidence; sanction not shown to be mechanical.

Final Conclusion: Writ petition dismissed: the High Court upheld the reopening notice dated 19.03.2019 under Section 148 for A.Y. 2012-13 as validly issued on the basis of relevant material and independent application of mind, and rejected the challenge to the sanction under Section 151.

Capital expenditure vs revenue expenditure (classification of technical know how fees) - allowability of technical know how/royalty as revenue expenditure - capitalisation and depreciation treatment of know how - precedential effect of co ordinate bench tribunal orders

Capital expenditure vs revenue expenditure (classification of technical know how fees) - allowability of technical know how/royalty as revenue expenditure - capitalisation and depreciation treatment of know how - precedential effect of co ordinate bench tribunal orders - Deletion of the addition made by the AO by capitalizing technical know how fees paid to the parent company and treating it as capital expenditure. - HELD THAT: - The Tribunal examined whether the technical know how fees/royalty debited by the assessee should be treated as capital expenditure or as an allowable revenue expense. The assessing officer capitalized the payments, treating the know how as conferring enduring benefits and increased productive capacity, and allowed depreciation but disallowed the balance. The CIT(A) deleted the disallowance following earlier favourable Tribunal decisions in the assessee's own cases for preceding assessment years. The Tribunal in the present appeal found the facts for A.Y. 2014 15 to be identical to those earlier years, and noted reliance on the Tribunal's order for A.Y. 2009 10 and subsequent years which had held the technical know how fees to be revenue in nature. Revenue failed to point out any distinguishing feature in the facts of the year under appeal, or to produce material showing that the earlier Tribunal rulings had been set aside or stayed by a higher forum. In the absence of contrary material or distinguishing facts, the Tribunal followed the co ordinate bench precedent and upheld the CIT(A)'s deletion of the addition. [Paras 9, 10]

The addition for capitalization of technical know how fees is deleted and the CIT(A)'s order is upheld.

Final Conclusion: Revenue's appeal is dismissed; the Tribunal upheld the CIT(A)'s deletion of the disallowance on technical know how fees for A.Y. 2014 15, following co ordinate bench precedents and in the absence of any distinguishing facts or higher court reversal.

Arm's length price - transfer pricing adjustment - comparability under CUP - Transactional Net Margin Method (TNMM) - scope of TPO's jurisdiction under Chapter X - reference to Valuation Officer under section 50C - benchmarked intra-group services - prematurity of penalty proceedings

Arm's length price - transfer pricing adjustment - comparability under CUP - Transactional Net Margin Method (TNMM) - scope of TPO's jurisdiction under Chapter X - Vacating of transfer pricing adjustment in respect of royalty paid to the associated enterprise - HELD THAT: - The Tribunal's earlier decision in the assessee's case for A.Y. 2011-12 was followed. The lower authorities had treated royalty as not payable after the original agreement period by construing Clause 11.1 as requiring a new agreement only upon receipt of 'new technology'; that construction was rejected. The record showed receipt of technical assistance during the year which justified negotiation of a technology agreement and payment of royalty. Government and RBI approvals and conformity with the Government Press Note were held to be relevant for comparability under Rule 10B and could be relied upon for CUP analysis. The TPO's determination of ALP at nil went beyond his jurisdiction where he did not apply any method prescribed in section 92C, and thus was struck down. Alternate comparables relied upon by the TPO (a controlled transaction between AEs and an incomplete royalty agreement from a database) were rejected as not being valid uncontrolled comparables. The assessee's secondary TNMM analysis aggregating manufacturing and royalty was held to be an appropriate method where CUP comparables were not available and the assessee's net margin exceeded comparables, so no addition could be sustained. [Paras 11]

Transfer pricing adjustment of Rs. 5,40,32,169/- in respect of royalty paid to the AE is vacated; grounds relating to royalty allowed.

Benchmarked intra-group services - arm's length price - Transactional Net Margin Method (TNMM) - transfer pricing adjustment - Vacating of transfer pricing adjustment in respect of intra-group services received from AEs - HELD THAT: - The Tribunal's decision for A.Y. 2011-12 was applied. It was an admitted fact that intra-group services were rendered; the TPO/DRP accepted service receipt but rejected benchmarking on grounds that benefits were not quantified and applied CUP without producing comparables. The Tribunal held that where services are shown to have been rendered, the TPO must benchmark using one of the methods under section 92C; rejection of the assessee's TNMM benchmarking was unsustainable when CUP comparables were absent and other methods (RPM, CPM, PSM) were inapplicable. Documentary evidence (including additional evidence) was admitted and found to substantiate receipt of services. Consequently the TPO's ALP determination at nil without applying any prescribed method could not be sustained. [Paras 12]

Transfer pricing adjustment of Rs. 24,42,84,844/- in respect of intra-group services is vacated; related grounds allowed (partly allowed to the extent noted).

Reference to Valuation Officer under section 50C - deemed sale consideration - Direction to refer valuation under section 50C to Valuation Officer for computation of capital gains on sale of building - HELD THAT: - Assessee objected to adoption of stamp duty valuation as deemed consideration under section 50C and sought reference to Valuation Officer. The AO misinterpreted section 50C(2); where the assessee has not previously disputed the stamp duty valuation before other forums but raises before the AO that the stamp duty value exceeds fair market value, the AO is obliged to refer the matter to the Valuation Officer. The Tribunal cannot direct the CIT(A) on that reference, but directed the AO to make the statutory reference to the Valuation Officer for determination under section 50C. [Paras 16]

AO directed to refer valuation of the property to the Valuation Officer under section 50C; grounds 26-29 allowed for statistical purposes.

TDS credit verification - Direction to AO to verify and redress claim of short credit of TDS - HELD THAT: - The assessee raised a claim of short credit of TDS and has filed a rectification application pending before the AO. Adjudication requires verification of records; the Tribunal directed the AO to verify the TDS records and redress the grievance accordingly. [Paras 17]

AO directed to verify records and address the short TDS credit claim; ground 30 allowed for statistical purposes.

Interest under section 234A and section 234B - Direction to AO to consider assessee's claims on interest under sections 234A and 234B while giving effect to the order - HELD THAT: - Assessee contended returns were filed within due date under section 139(1) and had applications under section 154 pending. The Tribunal directed the AO to consider these grievances when giving effect to the Tribunal's order, without adjudicating afresh in the appellate order. [Paras 18]

Grounds 31 and 32 allowed for statistical purposes; AO to consider interest claims while giving effect to the order.

Prematurity of penalty proceedings - Dismissal of challenge to initiation of penalty proceedings under section 271(1)(c) as premature - HELD THAT: - The Tribunal found the challenge to initiation of penalty proceedings to be premature and therefore declined to adjudicate on penalty initiation at this stage. [Paras 19]

Ground 33 dismissed as premature.

Final Conclusion: The appeal is allowed in part: the transfer pricing additions for royalty and intra-group services made by the AO/TPO for A.Y. 2014-15 are vacated and the AO/TPO are directed to delete those adjustments; the AO is directed to refer the property valuation to the Valuation Officer under section 50C, to verify and redress the short TDS credit claim, and to consider assessee's interest grievances while giving effect to the order; the challenge to initiation of penalty proceedings is dismissed as premature.

Unexplained share capital under section 68 - onus on assessee to prove identity, creditworthiness and genuineness of shareholders - assessments under section 153A/153C - requirement of incriminating material to disturb completed assessments - statements recorded under section 132(4) not, by themselves, constituting incriminating material - deemed dividend under section 2(22)(e) and exception where lending of money is substantial part of business

Unexplained share capital under section 68 - onus on assessee to prove identity, creditworthiness and genuineness of shareholders - assessments under section 153A/153C - requirement of incriminating material to disturb completed assessments - statements recorded under section 132(4) not, by themselves, constituting incriminating material - Deletion of addition of share application money of Rs. 6.70 crores in A.Y. 2009-2010 - HELD THAT: - The Tribunal found that the assessee had filed detailed primary evidence to establish the identity of the investor companies and prima facie their creditworthiness and the genuineness of transactions (confirmations, bank statements, audited financials, ROC master data, board resolutions, share allotment advices and assessment orders of investor companies). The authorities below had relied upon documents seized in search and on a statement recorded under section 132(4), but the Tribunal held that those seized papers were not shown to be incriminating qua the assessee and that the statement of Shri Sampat Sharma could not be treated as standalone incriminating material. Applying the principle that completed assessments cannot be reopened under section 153A/153C in the absence of incriminating material relating to the assessee, and following coordinate-bench precedents on identical facts, the Tribunal held the initial onus under section 68 to be discharged and set aside the addition. [Paras 7, 8]

Orders below set aside and entire addition of Rs. 6.70 crores deleted; appeal allowed.

Unexplained share capital under section 68 - onus on assessee to prove identity, creditworthiness and genuineness of shareholders - assessments under section 153A/153C - requirement of incriminating material to disturb completed assessments - Deletion of addition of share capital/premium of Rs. 9.60 crores in A.Y. 2010-2011 - HELD THAT: - The Tribunal held that the facts and documentary evidence in A.Y. 2010-2011 were identical to those in A.Y. 2009-2010 and that the reasoning and findings recorded for 2009-2010 applied mutatis mutandis. The assessee had produced the same set of documents establishing identity and creditworthiness of investor companies and relied on the same precedents; accordingly, the Tribunal followed its decision for A.Y. 2009-2010 and deleted the addition. [Paras 9]

Orders below set aside and entire addition of Rs. 9.60 crores deleted; ground allowed.

Deemed dividend under section 2(22)(e) and exception where lending of money is substantial part of business - Deletion of addition of Rs. 20 lakhs as deemed dividend under section 2(22)(e) - HELD THAT: - The Tribunal accepted the assessee's case that it is an NBFC registered with the RBI and that lending/financing formed a substantial part of its business. On the material as to composition of assets and interest income and having regard to authorities holding that loans advanced in the ordinary course of a money lending business are covered by the exception to section 2(22)(e), the Tribunal held the transaction to be a business loan and not a deemed dividend. Consequently, the addition was set aside. [Paras 10, 12, 14]

Addition of Rs. 20 lakhs under section 2(22)(e) deleted; ground allowed.

Final Conclusion: Both appeals for A.Y. 2009-2010 and A.Y. 2010-2011 are allowed: additions on account of unexplained share capital/premium are deleted for the respective years, and the alleged deemed dividend assessment is deleted on the ground that lending was in the ordinary course of the assessee's money lending business.

Treatment of share application money as unexplained cash credit under section 68 - burden of proof on the Revenue to establish concealment or unexplained income - requirement to establish identity, genuineness and creditworthiness of share subscribers - limitations on making additions where subscribing entity's returns are not rejected by its Assessing Officer - barter/exchange transaction - allotment of shares in settlement of liabilities not attracting unexplained cash credit - appreciation of documentary evidence and remand enquiries

Treatment of share application money as unexplained cash credit under section 68 - requirement to establish identity, genuineness and creditworthiness of share subscribers - burden of proof on the Revenue to establish concealment or unexplained income - Validity of addition of share capital/premium of Rs. 50.30 crores as unexplained cash credit under section 68 on the ground that subscribers did not substantiate identity, creditworthiness and genuineness. - HELD THAT: - The Tribunal affirmed the factual findings of the CIT(A) that the assessee produced extensive documentary evidence (forms filed with ROC, board resolutions, allotment forms, PANs, ITRs, audited accounts, ledger entries and written submissions) and that the promoters/directors and the corporate subscriber (M/s SKJ Coke Industries Ltd.) were within the same group and had substantiated the transactions. The AO's addition rested principally on alleged non-appearance to summons; on remand the record showed written submissions and appearances and that the scrutinised return of the corporate subscriber had not been rejected by its AO. Applying the principle that the Revenue must bring material from which concealment can be reasonably inferred and that the AO cannot brand a taxpayer or a subscribing creditor unworthy of credence when the creditor is itself an assessee whose return has not been rejected, the Tribunal held that the assessee discharged its onus and that there was no clinching material to treat the amounts as unexplained income. The Tribunal relied on concurrent authorities to the effect that suspicion, conjecture or non-application of mind cannot sustain an addition and that where the subscribing entity's filings are intact the AO should investigate in the hands of the subscriber rather than disbelieve the assessee. Consequently the addition under section 68 was unsustainable on the facts. [Paras 7, 8, 9, 11]

Addition of Rs. 50.30 crores as unexplained cash credit under section 68 deleted; CIT(A)'s order upheld.

Barter/exchange transaction - allotment of shares in settlement of liabilities not attracting unexplained cash credit - appreciation of documentary evidence and remand enquiries - Whether the transaction - allotment of equity shares to M/s SKJ Coke Industries Ltd. in lieu of tangible and intangible assets/settlement of liabilities (transfer of Jupiter Cement Industries) - constituted a barter/exchange so as not to attract section 68. - HELD THAT: - On the documentary record (deed of agreement dated 28.11.2011 and supplemental deed dated 09.12.2011, board resolutions, ROC filings and audited accounts) the Tribunal accepted the factual finding that the allotment of five crore equity shares was in consideration for transfer of assets and satisfaction of liabilities of Jupiter Cement Industries by SKJ Coke Industries Ltd. The Tribunal treated the transaction as an exchange/settlement rather than a receipt of unexplained cash, noting authorities which hold that allotment of shares in settlement of pre-existing liabilities or in exchange for assets does not attract unexplained cash credit when supported by evidence. Given absence of cash flow and documentary corroboration, section 68 was held not to be attracted to these transactions. [Paras 9, 11, 19]

Allotment in settlement/exchange treated as non-cash barter/exchange; section 68 not attracted to the Rs. 50 crores component; deletion sustained.

Final Conclusion: The Appellate Tribunal dismissed the Revenue's appeal. The addition of Rs. 50.30 crores made under section 68 was deleted: the assessee discharged its onus of proving identity, genuineness and creditworthiness of subscribers and the allotment to the corporate subscriber was in settlement/exchange, so unexplained cash credit was not attracted.

Addition under section 68 - initial burden and onus shifting under section 68 - identity, creditworthiness and genuineness of creditors - principles of natural justice (audi alteram partem and right to cross examination) - use of search/seizure material and limited scope of presumption under section 132(4A) - power to summon witnesses and call for information under section 131/section 133(6) - requirement to follow binding coordinate bench/precedent (judicial discipline)

Addition under section 68 - initial burden and onus shifting under section 68 - identity, creditworthiness and genuineness of creditors - principles of natural justice (audi alteram partem and right to cross examination) - use of search/seizure material and limited scope of presumption under section 132(4A) - requirement to follow binding coordinate bench/precedent (judicial discipline) - Validity of addition made under section 68 in respect of unsecured loans received in A.Y.2011-12 - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the addition. The assessee had produced documentary evidence (PAN, ITRs, audited accounts, bank statements, lender confirmations, repayment entries) to establish the identity, creditworthiness and genuineness of the loan creditors, thereby discharging the initial onus under section 68. The Assessing Officer did not bring specific adverse material on record to rebut those particulars, instead relying on search records and third party statements that were not furnished to the assessee and denying opportunity to cross examine. In those circumstances the AO failed to discharge the burden shifted to him. The Tribunal also applied coordinate bench ITAT decisions in the assessee's own case for other assessment years and followed the principle of judicial discipline. The Tribunal further held that presumption or inferences drawn from search reports without making them available to and testing them against the assessee are insufficient; absence of summonsing or further enquiries under section 131/133(6) rendered the AO's conclusion unsustainable.

Tribunal dismissed the revenue appeal and confirmed deletion of the addition made under section 68 for A.Y.2011-12.

Principles of natural justice (audi alteram partem and right to cross examination) - requirement to summon witnesses and call for information under section 131/section 133(6) - presumption under section 132(4A) not applicable against third parties without corroboration - need for cogent evidence beyond suspicion to treat share transactions as sham - documentary proof of share transactions (contract notes, bank statements, demat) where genuine - Sustainability of disallowance of business loss on sale of shares (A.Y.2016-17) alleged to be a pre arranged/penny stock bogus transaction - HELD THAT: - The Tribunal sustained the CIT(A)'s deletion of the disallowance. The assessee produced voluminous documentary evidence (contract notes, broker ledger, bank payments, demat statements, confirmations) showing purchase on the exchange, payment through banking channels and delivery of shares. The AO failed to produce specific adverse material linking the assessee to operators or exit providers, carried out no summons/enquiries under section 131/133(6), and did not make the investigation wing material available to the assessee or permit cross examination. The Tribunal reiterated established law that suspicion, however strong, cannot substitute for proof and that where documentary evidence of genuine transactions is unrebutted, additions based on conjecture are unsustainable. The Tribunal also noted that presumption under section 132(4A) applies primarily to the person in whose possession documents were seized and cannot be indiscriminately applied against third parties without corroborative evidence.

Tribunal dismissed the revenue appeal and confirmed deletion of the disallowance of loss on sale of shares for A.Y.2016-17.

Final Conclusion: Both revenue appeals (relating to A.Y.2011-12 and A.Y.2016-17) are dismissed. The Tribunal confirmed the CIT(A)'s orders deleting the addition under section 68 and the disallowance of loss on sale of shares after finding that the assessee had discharged the initial onus, the Assessing Officer failed to produce or test adverse material and denied opportunities of cross examination, and no cogent evidence was produced to rebut the documentary proofs of genuineness.

Unexplained credit under section 68 - treatment of share application money - book entry versus actual payment - tripartite agreement and its recitals - admission of additional evidence and remand for fresh consideration

Unexplained credit under section 68 - treatment of share application money - book entry versus actual payment - tripartite agreement and its recitals - Whether the addition of Rs. 2,94,57,825/- as unexplained credit under section 68 was justified - HELD THAT: - The Tribunal noted that the AO and CIT(A) treated the sum as paid by the assessee to KHPL as recorded in clause 2 of the tripartite agreement dated 02.02.2010 and therefore held it to be unexplained credit. The assessee disputed the literal reading of the recital, contending that there was no actual payment and that the transaction was effected by inter-company book entries wherein the loan of PRPL was taken over and adjusted as share application money. The assessee produced ledger extracts and sought to admit additional evidence, including an affidavit from a KHPL director affirming that the liability transfer was effected by book entries and not by actual payment. The Tribunal observed that the determinative question is whether the payment recited in the agreement was an actual payment or merely an accounting adjustment; if there was no actual payment, the addition under section 68 could not be sustained. Because the additional evidence bearing on this core factual controversy had not been considered by the AO, the Tribunal held that the matter requires fresh adjudication by the AO after admitting and considering that evidence and affording the assessee an opportunity of hearing. [Paras 11]

Issue remanded to the AO for fresh consideration in the light of the additional evidence (which the Tribunal directed to be admitted); the matter to be reconsidered with opportunity to the assessee, and the appeal treated as allowed for statistical purposes.

Admission of additional evidence and remand for fresh consideration - Admissibility of the additional evidence filed by the assessee and consequential procedure - HELD THAT: - The Tribunal examined the application for additional documents (ledger extracts and financial statements) and the affidavit of KHPL's director. Observing that the additional evidence goes to the root of whether an actual payment took place, the Tribunal found the evidence necessary for deciding the controversy and directed that it be admitted. Because the AO had not examined this evidence, the Tribunal remitted the issue to the AO to decide the question afresh after considering the admitted material and after allowing the assessee to be heard. [Paras 11]

Additional evidence admitted; matter remanded to the AO for fresh adjudication with opportunity to the assessee.

Final Conclusion: The Tribunal admitted the additional evidence, held that the pivotal question-whether the sum was actually paid or only adjusted by book entries-remained to be decided, and remanded the issue to the AO for fresh consideration in the light of the newly admitted evidence; appeal allowed for statistical purposes.

Determination of Arm's Length Price for international intra-group services - Applicability of benefit test/commercial expediency in transfer pricing - Most Appropriate Method and Comparable Uncontrolled Price (CUP) versus Other Method - Opportunity of hearing and remand for fresh consideration - Allowability of advertisement expenditure as revenue expenditure and commercial expediency test - Prohibition of ad-hoc disallowance - Provision for customer claims as a provision/liability deductible under commercial accounting principles - Recognition of provision where present obligation, probable outflow and reliable estimate exist - Deductibility of advances written off where written off in accounts

Determination of Arm's Length Price for international intra-group services - Applicability of benefit test/commercial expediency in transfer pricing - Most Appropriate Method and Comparable Uncontrolled Price (CUP) versus Other Method - Opportunity of hearing and remand for fresh consideration - Benchmarking of intra-group receipt of technical services and project management services (ALP determined as nil by TPO/DRP). - HELD THAT: - The TPO initially proposed CUP as the MAM but abruptly applied the 'other method' and the benefit/commercial-expediency test to benchmark technical and project-management services at nil without examining the taxpayer's evidence or providing adequate opportunity of hearing. The Tribunal held that applying the benefit test to decide whether independent parties would pay for such services exceeds the TPO's mandate of determining ALP; the TPO must determine ALP from the standpoint of a businessman and not substitute its view of commercial expediency. Numerous documents and agreements produced by the taxpayer were not considered by the TPO/DRP and past practice showed acceptance of such services as arm's length in earlier years. In these circumstances the Tribunal remitted the matter to the TPO to examine all evidence, apply appropriate MAM consistently, and decide afresh after affording the taxpayer opportunity of being heard, following the authorities and the principle of consistency. [Paras 17, 18, 21, 24, 25]

Issue remitted to the TPO for fresh adjudication after examining the taxpayer's evidence, applying the appropriate method consistently and affording opportunity of hearing; grounds on these points are allowed for statistical purposes.

Allowability of advertisement expenditure as revenue expenditure and commercial expediency test - Prohibition of ad-hoc disallowance - Sustainability of 30% ad-hoc disallowance of advertisement expenses as capital or for third-party benefit. - HELD THAT: - The Tribunal held that the reasonableness and commercial expediency of advertisement expenditure must be judged from the standpoint of a prudent businessman and not by the revenue. Advertisement outlays are ordinarily revenue in nature and do not necessarily confer enduring or capital benefit. The DRP's confirmation rested on assumptions and ad-hoc reasoning; ad-hoc percentage disallowance is impermissible. Authorities of the Supreme Court and High Court were applied to reject mechanical or guesswork disallowances and to sustain the taxpayer's contention that third-party benefit does not automatically render the expense non-deductible. [Paras 29, 30, 31, 33, 35]

Disallowance of 30% of advertisement expenses deleted; grounds decided in favour of the taxpayer.

Provision for customer claims as a provision/liability deductible under commercial accounting principles - Recognition of provision where present obligation, probable outflow and reliable estimate exist - Disallowance of provision for customer claims (liability for liquidated damages) made by the AO/DRP. - HELD THAT: - Applying the principles that a provision is recognised when (a) a present obligation exists from past events, (b) an outflow is probable, and (c) a reliable estimate can be made, the Tribunal found that the taxpayer produced credit memos, contracts, trend charts and audited extracts demonstrating the nature, basis and historical utilisation of the provision. On the authorities relied upon, such provision qualifies as an ascertained liability measurable by estimation. Accordingly the AO/DRP erred in disallowing the provision; deletion was ordered subject to verification of the data produced by the taxpayer. [Paras 36, 38, 40, 41, 42]

Disallowance deleted and provision accepted as deductible subject to verification of the data furnished by the taxpayer.

Deductibility of advances written off where written off in accounts - Disallowance of advances written off confirmed by AO/DRP for want of details. - HELD THAT: - The taxpayer produced details of advances written off in its books. Reliance was placed on precedent that after 1.4.1989 it is sufficient if a bad debt/advance is written off in the accounts to claim deduction; however, because the AO made the disallowance on alleged insufficiency of particulars, the Tribunal directed that the AO should verify whether advances were given wholly and exclusively for business purposes and decide afresh after affording opportunity to the taxpayer. [Paras 43, 45, 46, 47]

Matter remitted to the Assessing Officer for verification and fresh decision after giving the taxpayer opportunity of hearing; grounds allowed for statistical purposes.

Final Conclusion: Both appeals for AYs 2012-13 and 2013-14 are allowed for statistical purposes: transfer-pricing adjustments relating to technical and project-management services and the advances-written-off issue are remitted for fresh consideration with opportunity of hearing; disallowance of advertisement expenses is deleted; disallowance of provision for customer claims is deleted subject to verification of the data produced by the taxpayer.

Dismissal in limine for non-appearance - duty of the first appellate authority to decide on merits - service of notice via registered post and responsibility of the assessee - restoration of appeal and remand for reasoned adjudication

Dismissal in limine for non-appearance - duty of the first appellate authority to decide on merits - service of notice via registered post and responsibility of the assessee - Whether the Commissioner of Income Tax (Appeals) was justified in dismissing the appeal in limine for non-appearance instead of adjudicating the merits. - HELD THAT: - The Tribunal found that notices were sent by registered post to the address furnished by the assessee and that, if the assessee did not take steps to redirect or secure delivery, non-service was attributable to the assessee's conduct. However, the first appellate authority is not confined to dismissing an appeal for the absence of the assessee; it may and should examine the papers on record and decide the appeal on merits where possible. The CIT(A) in the impugned order did not consider the merits of the assessee's claim but dismissed the appeal solely because the assessee did not appear. Such dismissal was impermissible because the statutory appellate authority ought to have made an effort to appraise the record and record reasons either to confirm or reverse the assessing officer's conclusion. For these reasons the impugned order was set aside and the appeal restored to the file of the CIT(A) with a direction to pass a reasoned order after giving the assessee a reasonable opportunity of being heard. [Paras 5, 6, 7, 8]

Impugned order set aside; appeal restored to the file of the CIT(A) for fresh, reasoned adjudication on merits after affording the assessee a reasonable and sufficient opportunity of being heard.

Final Conclusion: The impugned dismissal in limine by the CIT(A) was set aside and the appeal restored for fresh, reasoned disposal on merits after giving the assessee an opportunity to be heard; appeal allowed for statistical purposes.

Unexplained investment - on-money - requirement of corroborative evidence for additions based on investigation information - binding direction under Section 144A - role of District Valuation Officer in ascertaining market value - jantri value

Unexplained investment - on-money - requirement of corroborative evidence for additions based on investigation information - role of District Valuation Officer in ascertaining market value - Whether the addition of Rs. 10,00,58,873/- treated as unaccounted investment (escape of income) on account of alleged undervaluation/'on-money' in purchase of land is sustainable in absence of corroborative evidence and valuation enquiry. - HELD THAT: - The Tribunal examined the Assessing Officer's addition which rested on information from the Investigation Wing showing an agreement for sale at a much higher amount than the registered sale deed. The Court accepted the principle that additions based solely on departmental information or ancillary documents cannot be sustained without independent corroboration. It noted that the Assessing Officer did not obtain a valuation from the District Valuation Officer (DVO) to ascertain the actual market value, a step which would have been appropriate and which the AO failed to take. In these circumstances the Tribunal agreed with the CIT(A)'s conclusion that, in absence of corroborative material proving receipt of 'on-money' or any independent valuation, the addition on account of alleged unaccounted investment could not be sustained. The Tribunal further relied on the approach in earlier decisions referred to in the order - Sopan Infrastructure and Vinodbhai Shamjibhai Ravani -which support setting aside additions where tangible corroborative material is lacking. Applying this reasoning to the present facts, including the subsequent acceptance of a lower sale price by the department in a later assessment for the same land, the Tribunal declined to interfere with the appellate authority's deletion of the addition.

Addition of Rs. 10,00,58,873/- as unexplained investment not sustainable; CIT(A) order deleting the addition is upheld and Revenue's appeal dismissed.

Final Conclusion: The Revenue's appeal is dismissed; the order of the Commissioner (Appeals) deleting the addition treated as unaccounted investment is affirmed for lack of corroborative evidence and in view of failure to obtain independent valuation.

Unexplained bank deposits - treatment as income from other sources - presumptive taxation under Section 44AD - addition under Section 68 as unexplained credit - substance over form where wrong section was mentioned - acceptance of cash gifts as explained source - mandatory levy of interest under Section 234B

Unexplained bank deposits - addition under Section 68 as unexplained credit - Whether unexplained deposits in the assessee's bank accounts could be added to income as unexplained credits - HELD THAT: - The Tribunal examined the pattern and source of large cash and other deposits totalling the amounts noticed by the AO. The assessee failed to establish a nexus between earlier withdrawals and subsequent deposits, and could not furnish contemporaneous evidence to substantiate the purported redeposits. Having regard to the material, the Tribunal treated the deposits for which no reliable explanation was furnished as unexplained credits and thus liable to be added to the assessee's income. The Tribunal applied the principle that unexplained deposits found in the assessee's bank account, where explanation is rejected, may be treated as income and added accordingly. [Paras 4, 6]

Addition of unexplained deposits is sustained and to be treated as unexplained credits liable to tax.

Treatment as income from other sources - presumptive taxation under Section 44AD - Whether the unexplained deposits should be treated as business income (bringing the assessee out of presumptive regime) or as income from other sources - HELD THAT: - The Tribunal held that mere carrying on of business by the assessee does not automatically convert unexplained bank deposits into suppressed business receipts. The applicability of presumptive taxation under Section 44AD was considered: had the unexplained deposits been accepted as genuine business receipts, the turnover would have exceeded the threshold for Section 44AD. In the absence of acceptable explanation connecting the deposits to the assessee's business, the Tribunal found no basis to treat the deposits as business income and therefore treated them as income from other sources. The Tribunal emphasised that characterization depends on evidence and explanation furnished by the assessee; lacking such proof, unexplained deposits are correctly treated as other income. [Paras 4]

Unexplained deposits are to be treated as income from other sources rather than accepted as business receipts for Section 44AD purposes.

Acceptance of cash gifts as explained source - Whether certain identified deposits could be accepted as explained (gifts, loan, advisory receipts, interest and garment sale) - HELD THAT: - The Tribunal accepted some specific explanations supported by confirmations: (i) cheque receipt treated as loan supported by confirmation; (ii) cash gifts from parents supported by confirmation letters were accepted as explained; (iii) part of advisory receipts not offered to tax was held taxable to the extent not offered; (iv) a small garment sale deposit not offered earlier was directed to be taxed; and (v) bank interest was held taxable as income from other sources subject to allowable deductions. These items were carved out from the unexplained deposits after examining the documentary confirmations and the assessee's returns. [Paras 5]

Specified receipts evidenced by confirmations are accepted as explained and segregated from the unexplained deposits; remaining specified amounts to be taxed as stated.

Substance over form where wrong section was mentioned - Whether mention of an incorrect statutory provision by the Revenue renders the addition invalid - HELD THAT: - The Tribunal observed that referencing an incorrect section heading is not fatal where the substance of the addition is clear. It held that the form of citation does not defeat the action: what matters is the substance of the addition and its justification on facts. Accordingly, the addition was confirmed on substantive grounds despite any erroneous sectional reference. [Paras 7]

Wrong mention of the section is not fatal; addition is confirmed on substance.

Mandatory levy of interest under Section 234B - Whether interest under Section 234B is leviable in consequence of the addition - HELD THAT: - The Tribunal held that levy of interest under Section 234B flows as a consequential and mandatory matter from the assessment of additional income; there was no scope to cancel the interest in the factual matrix of the case. [Paras 8]

Interest under Section 234B is leviable as consequential and mandatory.

Final Conclusion: The appeal is partly allowed: specified deposits supported by confirmations are accepted and segregated, but unexplained deposits remain assessable as income (treated as income from other sources) aggregating the amount affirmed by the Tribunal; the addition is sustained on substance despite any incorrect sectional citation, and interest under Section 234B is held leviable.

Jurisdictional defect - nullity of orders passed without jurisdiction - binding administrative directions - transfer of appellate jurisdiction - pre-dating (backdating) of orders - remand for fresh adjudication by competent authority

Jurisdictional defect - binding administrative directions - Validity of orders passed by CIT(A)-11 after the DGIT's direction dated 18.06.2018 - HELD THAT: - The Tribunal found it to be undisputed that the impugned appellate orders were passed after 18.06.2018, the date on which the Director General of Income Tax (Investigation), Karnataka & Goa, directed CIT(A)-11 not to pass any further appellate orders pending explanation. Instructions issued by CBDT placing supervisory responsibility on Chief Commissioners are binding on income-tax officials. An order passed by the CIT(A) contrary to such binding direction is an act done without jurisdiction. The Tribunal held that the CIT(A)-11, by ignoring the direction and passing multiple appellate orders after 18.06.2018, committed a serious lapse that vitiates those orders and renders them not sustainable in law. [Paras 7, 8, 9]

The orders passed by CIT(A)-11 after 18.06.2018 are without jurisdiction and vitiate the impugned orders.

Transfer of appellate jurisdiction - pre-dating (backdating) of orders - nullity of orders passed without jurisdiction - Effect of transfer notification dated 16.07.2018 and allegation that orders were pre-dated to fall before transfer - HELD THAT: - Revenue alleged that a notification under the relevant administrative power dated 16.07.2018 transferred appeals from CIT(A)-11 to CIT(A)-12 and that several impugned orders, though dated prior to 16.07.2018, were in fact passed after transfer and backdated. The Tribunal observed prima facie material and procedural irregularity - including absence of dispatch entries and the conduct of CIT(A)-11 in passing a large number of orders in a short span - which, together with the prior binding direction, made the revenue's contention probable. Whether or not pre-dating is proved, the fact that orders were passed after the date on which CIT(A)-11 was directed to desist from passing orders and/or after transfer renders them incurably defective. The Tribunal relied on established authority that jurisdictional defects go to the root and render such orders nullities. [Paras 2, 3, 9, 10]

Allegations of pre-dating and the transfer of jurisdiction, together with the earlier directive, lead to the conclusion that the impugned orders suffer from jurisdictional defect and are nullities.

Remand for fresh adjudication by competent authority - Relief to be granted in view of jurisdictional defect - HELD THAT: - Following the finding of jurisdictional defect and in line with precedents treating orders passed without jurisdiction as nullities, the Tribunal directed that the impugned appeals be set aside and remitted to the respective jurisdictional CIT(A) to decide afresh in accordance with law after affording opportunity of hearing to parties. The Tribunal allowed the additional grounds raised by the Revenue and declined to consider the merits of the appeals, treating the appeals and cross-objections as allowed for statistical purposes. [Paras 11]

Impugned orders set aside and remitted to the respective jurisdictional CIT(A) for fresh decision after hearing; appeals treated as allowed for statistical purposes.

Final Conclusion: The Tribunal allowed the Revenue's additional grounds, held that the appellate orders passed by CIT(A)-11 after 18.06.2018 (and/or after transfer) suffered from incurable jurisdictional defect and were nullities, set those orders aside and remanded the matters to the appropriate jurisdictional CIT(A) for fresh adjudication after giving parties an opportunity of hearing; appeals and cross-objections treated as allowed for statistical purposes.

Deduction under section 80P(2)(a)(i) for credit co-operative societies - Construction of the expression 'member' in section 80P(2)(a)(i) by reference to the concerned Co-operative Societies Act - Banking business exclusion and applicability of section 80P(4) - Deduction under section 80P(2)(d) for interest on deposits and allowance of proportionate administrative expenses - Classification of interest from bank deposits as income from other sources with entitlement to expenditure wholly and exclusively laid out - Applicability of TDS provisions on interest payable to non-regular members

Deduction under section 80P(2)(a)(i) for credit co-operative societies - Construction of the expression 'member' in section 80P(2)(a)(i) by reference to the concerned Co-operative Societies Act - Banking business exclusion and applicability of section 80P(4) - Claim for deduction under section 80P(2)(a)(i) in respect of income from loans and whether the assessee is disqualified from the deduction on the ground of carrying on banking business. - HELD THAT: - The Tribunal noted that the law on entitlement to deduction under section 80P(2)(a)(i) for credit co-operative societies has been authoritatively considered by the Supreme Court in Mavilayi Service Co-operative Bank Ltd. The Supreme Court has held that the expression 'members' in section 80P(2)(a)(i) is not defined in the Income-tax Act and must be construed with reference to the definition in the relevant Co-operative Societies Act. Given that principle and its impact on the factual classification of the assessee's members (regular voting members versus associate/non-voting members), the Tribunal held that the question whether the assessee's activities attract the banking business exclusion or whether income is eligible for deduction under section 80P(2)(a)(i) requires fresh examination by the Assessing Officer in light of the Supreme Court's decision and the statutory definition of 'member' in the applicable Co-operative Societies Act. [Paras 8]

Order of the CIT(A) on this issue is set aside and the matter is restored to the file of the Assessing Officer for fresh examination in accordance with the principles laid down by the Supreme Court.

Deduction under section 80P(2)(d) for interest on deposits and allowance of proportionate administrative expenses - Classification of interest from bank deposits as income from other sources with entitlement to expenditure wholly and exclusively laid out - Whether interest income earned on fixed deposits with banks is not eligible for deduction under section 80P(2)(d) and whether proportionate administrative and other expenses are deductible against such interest assessed as income from other sources. - HELD THAT: - The Tribunal referred to the Karnataka High Court decision in Totgars Co-operative Sale Society Ltd., which held that interest earned on deposits assessed as income from other sources entitles the assessee to deduction of proportionate cost and administrative expenses incurred to earn that income. The Tribunal found the reasoning of the Karnataka High Court applicable and concluded that the CIT(A)'s direction to assess interest as income from other sources without allowing proportionate expenses was not correct. Consequently the Assessing Officer was directed to allow deduction of proportionate cost, administrative and other expenses attributable to the interest income. [Paras 9]

The order of the CIT(A) is modified and the AO is directed to allow proportionate cost, administrative and other expenses against the interest income assessed under the head 'Income from other sources'.

Applicability of TDS provisions on interest payable to non-regular members - Construction of the expression 'member' in section 80P(2)(a)(i) by reference to the concerned Co-operative Societies Act - Whether TDS provisions apply to interest paid to non-regular (non-voting/associate) members and the need to examine the definition of 'member' for that purpose. - HELD THAT: - The Tribunal observed that determination of the applicability of TDS on interest paid to non-regular members depends on the connotation of 'member' under the relevant Co-operative Societies Act as interpreted for section 80P(2)(a)(i). Because the Supreme Court's pronouncement requires that 'member' be construed with reference to the concerned Co-operative Societies Act, the factual and legal question whether interest paid to non-regular members attracts TDS must be examined afresh by the Assessing Officer in light of that construction. [Paras 10]

Order of the CIT(A) on applicability of TDS to interest paid to non-regular members is set aside and the matter is restored to the file of the Assessing Officer for fresh consideration.

Final Conclusion: The Tribunal treated the appeal as allowed for statistical purposes: the question of deduction under section 80P(2)(a)(i) and the applicability of TDS to interest paid to non-regular members are remitted to the Assessing Officer for fresh examination in accordance with the Supreme Court's decision on construction of 'member'; the claim for deduction of proportionate expenses against interest from bank deposits is allowed and the Assessing Officer is directed to grant such proportionate deductions.

Provisional assessment - provisional release of imported goods - section 110A of the Customs Act, 1962 - classification of imported goods - principles of natural justice - remand for remedial action

Provisional assessment - provisional release of imported goods - section 110A of the Customs Act, 1962 - Direction to the proper officer to decide on release of the petitioner's imported goods for home consumption either by provisional assessment or under section 110A within a specified time-frame. - HELD THAT: - Petitioner imported gold decorative images declared under a particular Customs Tariff Heading and, after reassessment and re classification by the Deputy Commissioner, obtained an appellate order setting aside the original order and remanding the matter for remedial action on account of failure to accord hearing. The adjudicating authority had not taken a fresh decision after remand and an earlier application for provisional release under section 110A remained unresolved. In the interest of justice and without expressing an opinion on the ultimate classification, the High Court directed that the proper officer shall decide, within two weeks of receipt of the order, whether the goods can be released for home consumption either by provisional assessment or under the provisions of section 110A, thereby ensuring an expeditious administrative determination pending final adjudication. [Paras 7, 8]

Proper officer to decide on release of the imported goods for home consumption by provisional assessment or under section 110A within two weeks from receipt of the order.

Final Conclusion: Writ disposed by directing the proper officer to take a decision, within two weeks, on provisional release or provisional assessment under section 110A for the petitioner's imported goods; matter stood over to 16th March, 2021.

Contempt of court - provisional release of seized goods - Regulation 6(1)(l) of the Handling of Cargo in Customs Area Regulations, 2009 - prohibition of import of old and used multi functional devices (MFDs) - DGFT Notification No. 05/2015-20 read with MeitY Circular No. 01/2019 - CBIC Circular No. 35/2017-Customs (guidelines for provisional release)

Contempt of court - provisional release of seized goods - The Joint Commissioner prima facie acted in contempt of this Court by refusing provisional release contrary to the order dated 11th January 2021 and must explain his conduct. - HELD THAT: - The Court recorded that its order dated 11th January 2021 required the respondent to immediately consider the writ applicant's application under Section 110A and take a decision within eight days keeping in mind Regulation 6(1)(l). The Joint Commissioner, by declining provisional release on his own view and thereby sitting in appeal over the High Court's direction, failed to follow the Court's order. The Court observed that if there were doubts about the correctness of the High Court's order, the proper course was to consult the Additional Solicitor General and, if necessary, seek review or modification from this Court rather than refuse compliance. On this basis the Court found prima facie contempt and required an explanation from the Joint Commissioner. [Paras 5, 6]

Notice issued to the opponents; the Joint Commissioner to explain his conduct; matter listed on 24th February 2021.

Provisional release of seized goods - prohibition of import of old and used multi functional devices (MFDs) - DGFT Notification No. 05/2015-20 read with MeitY Circular No. 01/2019 - CBIC Circular No. 35/2017-Customs (guidelines for provisional release) - Regulation 6(1)(l) of the Handling of Cargo in Customs Area Regulations, 2009 - The question whether provisional release of the imported old and used MFDs should be permitted was not finally adjudicated and is to be considered further after notice to the opponents. - HELD THAT: - The Joint Commissioner declined provisional release on the ground that the consignment, imported in September 2019, fell after DGFT Notification No.05/2015-20 and MeitY Circular No.01/2019 and therefore constituted prohibited goods; he applied CBIC Circular No.35/2017 which bars provisional release of prohibited goods or goods not fulfilling statutory compliance. The High Court noted the Joint Commissioner's reliance on the DGFT/MeitY notifications and on decisions such as Union of India v. M/s R. R. Marketing and M/s Genuine Copier Systems but did not accept those conclusions as finally determinative in this proceeding. Instead, having found procedural non compliance by the Joint Commissioner, the Court issued notice to the opponents and directed further consideration on the returnable date, thereby reserving substantive adjudication on provisional release. [Paras 2, 3, 6]

Substantive decision on provisional release reserved; opponents to be served and matter listed on 24th February 2021 for further consideration.

Final Conclusion: The High Court found prima facie contempt by the Joint Commissioner for not complying with the Court's earlier direction and issued notice to the opponents; the substantive question of provisional release of the imported MFDs was not finally decided and is reserved for further hearing on the listed date.

Writ petition dismissed as infructuous - Revisionary order superseding impugned order - Liberty to challenge revisionary order and direction to decide on merits

Writ petition dismissed as infructuous - Revisionary order superseding impugned order - Liberty to challenge revisionary order and direction to decide on merits - Petition dismissed as infructuous because a revisionary order dated 19.12.2018 has been passed against the order sought to be implemented in the writ petition, and petitioner given liberty to challenge that revisionary order. - HELD THAT: - The Court recorded that the Revisionary Authority has passed an order dated 19.12.2018 in respect of the order which was sought to be implemented by the respondents. In view of the existence of that subsequent revisionary order, there was nothing subsisting for adjudication in the present writ petition and the petition therefore stood rendered infructuous. The petitioner was granted liberty to challenge the revisionary order bearing reference F.No.380/59/B/16- RA/2242 within 30 days of receipt of the Court's order, and the Authority was directed to dispose of any such proceedings on merits if initiated within the stipulated time. [Paras 2, 3]

Writ petition dismissed as infructuous; petitioner granted 30 days' liberty to challenge the revisionary order and the Authority directed to decide such challenge on merits; no costs.

Final Conclusion: The writ petition is dismissed as infructuous since a revisionary order dated 19.12.2018 supersedes the impugned order; petitioner may challenge that revisionary order within 30 days and the Authority shall dispose the challenge on merits.

Classification of goods - essential character - manufacture versus processing - preparations containing betel nut (supari) - Chapter 8 versus Chapter 21 conflict - interpretation of chapter notes and supplementary notes - role and limits of expert/chemical analysis - binding effect and limited application of Advance Rulings

Classification of goods - essential character - preparations containing betel nut (supari) - Chapter 8 versus Chapter 21 conflict - interpretation of chapter notes and supplementary notes - manufacture versus processing - Imported whole betel nuts are classifiable under CTH 08028010 and not under CTH 21069030. - HELD THAT: - The Tribunal examined whether the imported items, described and presented as whole betel nuts (areca nuts), had by processing lost their essential character so as to become 'betel nut product' or 'supari' falling under heading 21069030. Chapter Note 3 to Chapter 8 permits certain treatments (rehydration, moderate heat treatment, additions for preservation or appearance) provided the nuts retain the character of dried fruit or nuts. The consignments before the Tribunal were whole nuts and, on appearance and on the Chemical Examiner's report, there was no satisfactory evidence that the extensive manufacturing processes described by the supplier had in fact been carried out; at the hearing the appellants' primary claim was limited to boiling and drying. Even assuming boiling/drying, the Tribunal held that such processes did not alter the essential character of the nuts as 'whole' and thus did not take them out of Chapter 8. The Tribunal applied the principle that mere processing does not necessarily amount to manufacture creating a new product; it relied on the Supreme Court authority that processes which do not result in a commercially distinct new commodity will not change classification from Chapter 8 to Chapter 21. Although amendments and supplementary notes define 'supari' as a preparation containing betel nut without lime, katha or tobacco, those notes do not compel reclassification where the product retains the essential character of whole betel nut and no convincing evidence of transformative processing was shown. The Tribunal also observed that Advance Rulings are binding only on parties to whom they are rendered and, in any event, the factual matrix in the present case did not support reliance on the rulings cited by the appellants. The Chemical Examiner and food-safety reports were noted as having limited roles: factual analysis of composition and fitness for consumption but not decisive on tariff classification absent supporting evidence of transformative processing. For these reasons the Tribunal upheld classification under CTH 08028010. [Paras 15, 16, 21, 22, 23]

The imports are whole betel nuts retaining their essential character and are classifiable under CTH 08028010; appeals dismissed.

Final Conclusion: The Tribunal affirmed the classification of the consignments as whole betel nuts under CTH 08028010 (not as 'supari' under CTH 21069030), finding insufficient evidence of transformative processing and dismissing both appeals.

Summary order. Appeal dismissed; order of the National Company Law Appellate Tribunal dated 11 August 2020 in Company Appeal (AT) (Insolvency) No. 1522 of 2019 not interfered with; pending application, if any, disposed of.

Consolidation of Corporate Insolvency Resolution Processes - application of yardsticks for consolidation (Videocon yardsticks) - inter-dependence and inter-lacing of group companies - maximisation of value under the Insolvency and Bankruptcy Code - effect of unregistered/unstamped sub-lease on proprietary and commercial rights - role and composition of Committee of Creditors where only operational creditors exist

Consolidation of Corporate Insolvency Resolution Processes - application of yardsticks for consolidation (Videocon yardsticks) - inter-dependence and inter-lacing of group companies - maximisation of value under the Insolvency and Bankruptcy Code - role and composition of Committee of Creditors where only operational creditors exist - Validity of the Adjudicating Authority's order consolidating the CIRPs of LCL, WAML and DCCL and appointing a common Resolution Professional. - HELD THAT: - The Tribunal reviewed the Impugned Order which applied the yardsticks laid down in State Bank of India v. Videocon and concluded that those criteria substantially applied to the LCL group. The Adjudicating Authority recorded common control, common directors, common assets and liabilities, inter-dependence and inter-lacing of finance, pooling of resources and that DCCL's business (operation of the convention centre) was dependent on LCL. The Adjudicating Authority also noted that DCCL's lease was unregistered/unstamped and, following cancellation, DCCL lacked an independent revenue stream or stand-alone resolution prospect. The Appellant's contention that absence of financial creditors in DCCL or distinct creditors precluded consolidation was rejected: the mere absence of financial creditors or distinct creditor lists does not displace the yardsticks where group inter-linkages and the objective of maximising value for stakeholders require consolidation. Having considered the facts and the detailed findings in the Impugned Order (including the Adjudicating Authority's observations at paras 18.1, 19 and 22 of that order), the Tribunal found no error in concluding that consolidation was necessary to preserve value and enable a viable resolution of the group. [Paras 10, 11, 12, 13]

The consolidation of the CIRPs of LCL, WAML and DCCL and appointment of the Resolution Professional of LCL for the consolidated process is upheld.

Final Conclusion: The Appeal is dismissed. The Tribunal finds no infirmity in the Adjudicating Authority's decision to consolidate the CIRPs of the group companies; no order as to costs.

Insolvency and Bankruptcy Code override of inconsistent enactments - Section 238 of the Insolvency and Bankruptcy Code - priority of distribution under Section 53 of the Insolvency and Bankruptcy Code - prohibition on unilateral recovery or attachment by statutory authorities during liquidation - maintainability of proceedings before revenue authority versus jurisdiction of the Adjudicating Authority in liquidation

Section 238 of the Insolvency and Bankruptcy Code - priority of distribution under Section 53 of the Insolvency and Bankruptcy Code - prohibition on unilateral recovery or attachment by statutory authorities during liquidation - Whether the Adjudicating Authority should have exercised jurisdiction under the IBC to prevent freezing of the corporate debtor's bank account by a State Tax authority and granted relief to the liquidator. - HELD THAT: - The Tribunal accepted the liquidator's submission that the respondent State Tax authority issued directions to freeze the corporate debtor's bank account after the company entered liquidation and after the creditor had filed a claim in the liquidation process. Relying on the principle that the IBC operates as a complete code and, under Section 238, overrides inconsistent provisions of other enactments, the Tribunal concluded that statutory recovery measures which conflict with the IBC regime and the pari passu and distribution scheme in Section 53 cannot be allowed to prevail. The Tribunal noted the Supreme Court's observation in Monnet Ispat that the Code will override inconsistent enactments and applied that principle to hold that an operational creditor (or a statutory authority acting under an earlier enactment) cannot unilaterally seize or attach assets to the detriment of the liquidation process and the statutory order of priorities. The Tribunal further found that the Adjudicating Authority erred in declining to exercise its jurisdiction to protect the liquidation process and ensure compliance with the IBC, and that the appropriate course was to set aside the order refusing relief and to direct defreezing of the account so that the liquidation process and the statutory distribution scheme can proceed unimpaired.

The appeal is allowed; the impugned order is quashed and set aside and the bank is directed to defreeze the corporate debtor's account so that the liquidation and distribution under the IBC may proceed.

Final Conclusion: The Tribunal allowed the appeal, holding that the Insolvency and Bankruptcy Code overrides inconsistent recovery measures under earlier enactments and that the Adjudicating Authority should have exercised jurisdiction to protect the liquidation process; the impugned order was quashed and the corporate debtor's bank account ordered to be defrozen.

Exclusion of lockdown period from computation of Corporate Insolvency Resolution Process timelines - exclusion of period of pendency of applications from CIRP timeline - act of the court shall harm no man (actus curiae neminem gravabit) - application under Section 12(2) of the Insolvency and Bankruptcy Code, 2016 - IBBI amendment excluding lockdown from CIRP timelines - NCLAT suo-motu direction dated 30.03.2020 excluding lockdown period

Exclusion of lockdown period from computation of Corporate Insolvency Resolution Process timelines - IBBI amendment excluding lockdown from CIRP timelines - NCLAT suo-motu direction dated 30.03.2020 excluding lockdown period - The period of nationwide lockdown due to COVID-19 is excluded from computation of the CIRP period of the Corporate Debtor. - HELD THAT: - The Tribunal examined the progress made by the Resolution Professional and the Committee of Creditors and observed that, although steps were taken (invitations for EOI, Information Memorandum, valuation, CoC meetings), the nationwide lockdown and phased unlock impeded effective action on resolution plans. Having regard to the NCLAT suo-motu direction of 30.03.2020 and the amendment to the IBBI regulations which provide for exclusion of lockdown period from CIRP timelines, the Tribunal held that the period during promulgation of the lockdown is to be exempted (excluded) from counting the CIRP period. The IA seeking exclusion of time for the CIRP was therefore allowed on that ground. [Paras 13, 14]

Lockdown period is excluded from computation of the Corporate Insolvency Resolution Process period.

Exclusion of period of pendency of applications from CIRP timeline - act of the court shall harm no man (actus curiae neminem gravabit) - The period consumed in filing the present application until its disposal is excluded from the CIRP timeline. - HELD THAT: - Relying on precedents of the NCLAT and the Supreme Court which endorse excluding time taken in judicial or appellate proceedings from the CIRP computation in appropriate cases, the Tribunal accepted that the period of pendency of this IA from filing to disposal can be exempted. Applying those principles, the Tribunal excluded the period from the date of filing of the IA to its disposal from the CIRP count. [Paras 15, 16]

The pendency period of the application from filing until disposal is excluded from the CIRP period.

Final Conclusion: The IA is allowed: the period of lockdown is excluded from the CIRP computation and the period of pendency of the IA from filing to disposal is also excluded; the application stands disposed of accordingly.

Independent proceeding under Section 7 of the Insolvency and Bankruptcy Code - non-obstante clause in Section 238 of the IBC - transfer of winding up proceedings to the NCLT under the fifth proviso to section 434(1)(c) - irretrievable steps test for refusal to transfer (as explained in Action Ispat) - secured creditor's right to realise security dehors winding up

Independent proceeding under Section 7 of the Insolvency and Bankruptcy Code - non-obstante clause in Section 238 of the IBC - Maintainability of a Section 7 petition under the IBC notwithstanding an admitted winding up petition pending before a Company Court - HELD THAT: - The Court held that a petition under Section 7 is an independent proceeding which may be initiated and decided irrespective of a pending winding up petition, subject to the statutory parameters of the IBC. The IBC is a special statute directed to revival of corporate debtors and contains a non-obstante clause in Section 238 which gives it overriding effect in case of inconsistency with the Companies Act. Precedents such as Swiss Ribbons, Jaipur Metals, Forech, Duncans and related authorities establish that proceedings under the Code run their own course and that, save where winding up has progressed to an irreversible stage amounting to corporate death, transfer to or exercise of jurisdiction under the IBC is permissible. The Court applied this principle on the facts and concluded that the Section 7 petition could not be held non-maintainable merely because a winding up petition had earlier been admitted. [Paras 23, 24]

Section 7 petition is maintainable and independent of the admitted winding up petition; the IBC prevails in case of inconsistency.

Irretrievable steps test for refusal to transfer (as explained in Action Ispat) - transfer of winding up proceedings to the NCLT under the fifth proviso to section 434(1)(c) - Whether the pendency or progress of winding up had reached an irreversible stage so as to preclude transfer or insistence on continuation of winding up rather than allowing IBC proceedings - HELD THAT: - Relying on Action Ispat and related authorities, the Court explained that a Company Court may refuse transfer only if the winding up has reached a stage where irreversible steps have been taken such that it is impossible to set the clock back. The determination is fact-sensitive. On the material before the Court it was found that nothing had become irretrievable in the sense indicated in Action Ispat: assets remained in custodia legis, other assets continued with the provisional liquidator, and the factual matrix did not establish inevitable corporate death. Consequently, the mere admission of a winding up petition did not deprive the NCLT of jurisdiction to proceed under the IBC. [Paras 22, 24]

Winding up had not reached an irreversible stage; transfer/refusal to entertain IBC proceedings on that ground was not justified.

Secured creditor's right to realise security dehors winding up - Effect of a secured creditor's exercise of sale of mortgaged property outside winding up on the maintainability of Section 7 proceedings - HELD THAT: - The Court reiterated the settled principle that a secured creditor stands outside winding up and may realise its security dehors the winding up; such sale can be challenged in appropriate fora and, if set aside, the asset will return to the liquidator. The fact that a secured creditor has conducted a sale outside the winding up does not, by itself, render a Section 7 petition non-maintainable or preclude the NCLT from proceeding. On the facts, the challenged sale to Honest Shelters was the subject of proceedings before the Bombay High Court and, irrespective of the outcome, other assets of the corporate debtor remained with the provisional liquidator. [Paras 25, 26]

A secured creditor's sale dehors winding up does not bar Section 7 proceedings; the sale's validity is a matter for appropriate adjudication but does not defeat maintainability under the IBC.

Suppression or alleged subterfuge in Section 7 petition - Whether alleged suppression of the pending winding up petition by the financial creditor vitiated the Section 7 proceeding - HELD THAT: - The Court held that allegations of suppression or subterfuge in the Section 7 application did not affect the fundamental character of Section 7 as an independent proceeding under the IBC. The maintainability of the petition must be determined on the statutory criteria and merits under the Code; procedural or disclosure complaints do not automatically render a Section 7 petition non-maintainable. The discretionary remedy of transfer under the Companies Act cannot override the NCLT's jurisdiction once the IBC's parameters are fulfilled. [Paras 27]

Allegations of suppression or subterfuge do not by themselves render a Section 7 petition non-maintainable; the Section 7 petition must be decided on its merits under the IBC.

Final Conclusion: The appeals are dismissed. The Court affirmed that Section 7 proceedings under the IBC are independent and maintainable notwithstanding an admitted winding up petition unless irreversible steps amounting to corporate death have occurred; a secured creditor's sale dehors winding up does not preclude IBC proceedings; and allegations of suppression do not negate the independent jurisdiction of the NCLT. The interim order of 18.12.2020 is vacated.

Correction of clerical or arithmetical errors - Errors arising from accidental slip or omission - Power of an Appellate Board to correct its own order - Benefit of doubt - Foreign Exchange Regulation Act, 1973

Correction of clerical or arithmetical errors - Errors arising from accidental slip or omission - Power of an Appellate Board to correct its own order - Benefit of doubt - Whether the Appellate Board validly corrected its earlier order on the ground of an accidental slip and set aside the penalty by giving the benefit of doubt. - HELD THAT: - The Appellate Board found that an accidental slip or oversight in its earlier order resulted in a conflict between the recorded receipt of Rs. 75,000/- and its conclusion in Appeal No.110 of 1984. Applying the corrective power contemplated by Section 65 to remedy clerical or arithmetical mistakes or errors arising from accidental slip or omission, the Appellate Board held that the charge was not established and granted the benefit of doubt to the respondent. The High Court examined the Review order and the limited material placed before it, noted that the Review was taken after hearing the authorities, and found no ground to interfere with the Board's conclusion that a slip had occurred and was corrected. The Court observed absence of contrary material or appearance for the respondent and, on that basis, confirmed the Appellate Board's exercise of corrective power and its decision to set aside the earlier fine.

The Appellate Board rightly exercised its power to correct an accidental slip and to set aside the penalty by giving the benefit of doubt; the High Court confirms the Review order and dismisses the appeal.

Final Conclusion: The Civil Miscellaneous Appeal is dismissed; the High Court upholds the Appellate Board's Review order correcting an accidental slip and setting aside the fine, and no costs are awarded.

Maintainability of writ petition - availability of statutory remedy of appeal - pre-deposit requirement under Section 35F - waiver of pre-deposit - application of rule not in force

Maintainability of writ petition - availability of statutory remedy of appeal - pre-deposit requirement under Section 35F - waiver of pre-deposit - Challenge to the impugned order by way of writ petition when an appeal to CESTAT is available; whether the writ is maintainable to bypass the statutory pre-deposit requirement. - HELD THAT: - The Court held that the existence of an alternative statutory remedy of appeal to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) renders the writ petition inappropriate for seeking relief that is available on appeal. The mandatory pre-deposit obligation under the statutory scheme cannot be circumvented by invoking writ jurisdiction merely on the ground of the size of the demand. If, after filing an appeal, the petitioner is unable to comply with the pre-deposit requirement or has grounds for its waiver, the correct course is to make appropriate averments and seek relief at the appellate stage, or, if necessary, to apply under Article 226 at that stage for waiver of pre-deposit; writ petitions cannot be entertained as a substitute for the statutory remedy. The Court observed that no determination was made on the merits of the impugned order and emphasised that procedural objections about lack of reasons or improper application of a rule not in force must be raised in the appeal. The Court also noted that the limitation period for preferring the statutory appeal had not expired and accordingly granted liberty to pursue the appellate remedy and any application for waiver arising therein. [Paras 6, 7, 8, 9, 10]

Writ petition dismissed; petitioner permitted to prefer the statutory appeal to CESTAT and, if unable to comply with the pre-deposit requirement or entitled to waiver, to seek relief at the appellate stage (including by making an appropriate application under Article 226 at that stage).

Final Conclusion: The writ petition challenging the impugned order is dismissed for lack of maintainability in view of the available statutory appeal; liberty granted to the petitioner to prefer the appeal and to seek any relief regarding pre-deposit at the appellate stage.

CENVAT credit admissibility - finality of assessment of the service provider - approbate and reprobate - business support services - reopening assessment of the service provider

CENVAT credit admissibility - finality of assessment of the service provider - Denial of CENVAT credit to the service recipient when the service provider has collected and remitted Service Tax and its assessment has not been reopened. - HELD THAT: - The Tribunal held that where the service provider has collected Service Tax on the invoices and the Department has accepted and realised that tax at the provider's end, the revenue cannot, in proceedings against the service recipient, deny the recipient's credit by recharacterising the transaction as not involving any service without first reopening or revising the assessment of the service provider. The reasoning follows the jurisdictional High Court decision in M/s. Modular Auto Ltd., which emphasised that the correctness of tax paid by the service provider cannot be called in question in proceedings against the recipient and that the adjudicating authority must confine itself to the character of payment made by the recipient unless the provider's assessment is reopened within limitation. Applying that principle to the facts, the Tribunal concluded that denial of credit at the recipient's end was unsustainable in the absence of any revision of the dealer's assessment. [Paras 7, 8, 10]

Credit availed by the appellant cannot be denied on the ground that no service was provided by the dealers where those dealers had collected and remitted Service Tax and their assessments were not reopened; the impugned order is set aside.

Approbate and reprobate - reopening assessment of the service provider - business support services - Whether the Department can question the description of services in invoices and treat the payouts as disguised commissions in adjudication against the recipient without affecting the provider's accepted returns. - HELD THAT: - The Tribunal noted that although the Show Cause Notice alleged incorrect description of services and ultimately the Original Authority found that no services were actually provided (i.e., payouts were camouflaged), the Department had not disturbed the assessment of the dealers who had described and paid tax on those services. The Tribunal rejected the Department's contention that it could 'approbate and reprobate' by accepting tax from the dealer and yet denying credit to the recipient on the same invoices. The correct approach, as explained with reference to Modular Auto Ltd., is that the characterisation exercised at the provider's assessment, once final (or not reopened), cannot be revisited in proceedings against the service recipient. [Paras 7, 8]

The Revenue cannot question the description of services and deny recipient's credit without reopening the dealers' assessments; the impugned findings to the contrary are set aside.

Final Conclusion: The Tribunal allowed the appeal, setting aside the impugned order and holding that CENVAT credit availed by the insurance company on invoices where dealers had collected and remitted Service Tax cannot be denied in adjudication against the recipient unless the dealers' assessments are reopened; consequential reliefs, if any, to follow as per law.

Condonation of delay under Section 5 of the Limitation Act - sufficient cause - service of order and deemed receipt - governmental functioning and bureaucratic delay - reasoned explanation for delay and bona fides

Condonation of delay under Section 5 of the Limitation Act - sufficient cause - service of order and deemed receipt - governmental functioning and bureaucratic delay - reasoned explanation for delay and bona fides - Application for condonation of delay of 367 days in filing the appeal by Thane Municipal Corporation was allowed. - HELD THAT: - The Tribunal examined the appellant's day-to-day affidavit which showed that the impugned adjudication order dated in August 2018 was first received by the appellant as an email attachment on 14.01.2019 (email is not the prescribed mode of service). The appellant's officers were subsequently engaged on election duty after the Lok Sabha elections were announced, and active steps to engage counsel and obtain certified copy proceeded thereafter. The certified copy was issued on 25.11.2019 and the appeal was filed on 17.01.2020. The Tribunal applied the settled principles that the expression 'sufficient cause' under Section 5 must be given a liberal, justice-oriented construction, while recognizing recent authorities cautioning that modern governmental machinery requires reasonable and acceptable explanations for delay. On the facts, and noting that the department itself provided a certified copy only on 25.11.2019 (indicating service in appealable form at that time) and that there was no evidence of gross negligence, mala fides or deliberate inaction on the part of the appellant, the Tribunal held that the delay was satisfactorily explained and that substantial justice warranted condonation. The Tribunal thus exercised its discretion to condone the delay and to enable the appeal to be heard on merits. [Paras 7, 11]

Delay in filing the appeal is condoned and the appeal is admitted for adjudication on merits.

Final Conclusion: The application for condonation of delay is allowed; the appeal filed by Thane Municipal Corporation is admitted and ordered to be proceeded with on merits.

Interim relief - provisional restraint on demand of Administrative Charges - maintenance of separate accounts - GST applicability - protection on parity with earlier order - double taxation

Interim relief - provisional restraint on demand of Administrative Charges - GST applicability - Grant of interim relief restraining respondents from demanding Administrative Charges from the petitioner on condition of payment of GST. - HELD THAT: - The Court applied the same interim protection earlier granted in Writ Petition No.7950 (MB) of 2018 and directed that, as an interim measure, respondents shall not demand any Administrative Charges provided the petitioner continues to deposit GST as demanded by the Central and State authorities. The Court recorded that the contention concerns possible double taxation and that the petitioner accepts liability to pay GST while seeking restraint of Administrative Charges. The State did not dispute parity with the earlier order. The order is provisional, tied to the petitioner's continued payment of GST during pendency of the petition, and is in the nature of an interim measure pending further proceedings.

Respondents restrained from demanding Administrative Charges so long as petitioner deposits GST as demanded by Central and State Governments.

Maintenance of separate accounts - protection on parity with earlier order - Requirement that both the petitioner and the State maintain separate accounts for sale/supply/purchase of molasses during pendency of the petition. - HELD THAT: - Following the approach in Writ Petition No.7950 (MB) of 2018, the Court directed that separate accounts for sale, supply and purchase of molasses shall be maintained by the petitioner and by the State. This measure is intended to preserve rights of both parties pending final adjudication so that, dependent on the ultimate outcome, tax liability or refunds can be determined without prejudice. The direction mirrors earlier interim orders given in analogous cases and is part of the conditional interim relief granted to secure parity.

Both parties directed to maintain separate accounts for sale/supply/purchase of molasses; such accounts to govern rights on final determination.

Protection on parity with earlier order - Continuation of interlocutory procedure: time granted to respondents to file counter-affidavit and to petitioner to file rejoinder; matter to be listed and connected with Writ Petition No.7950 (MB) of 2018. - HELD THAT: - The Court granted the State one month to file a counter-affidavit and the petitioner two weeks to file a rejoinder, and ordered that the present petition be listed and connected with Writ Petition No.7950 (MB) of 2018. The connection with the earlier writ is for purposes of parity and consolidated consideration of the common controversy regarding Administrative Charges and GST. These are interlocutory directions to facilitate adjudication on the merits.

Counter-affidavit and rejoinder timetable fixed; petition to be listed and connected with Writ Petition No.7950 (MB) of 2018 for further hearing.

Final Conclusion: Interim relief granted restraining demand of Administrative Charges on the petitioner, conditional on continued deposit of GST and maintenance of separate accounts by both parties; procedural timetable fixed and matter to be connected with Writ Petition No.7950 (MB) of 2018 for further adjudication.

Definition of proprietor - entitlement to exemption for lessee - power of general exemption - parent Act prevails over executive instructions - preference of Hindi version in case of doubt - strict interpretation of exemption notifications

Definition of proprietor - entitlement to exemption for lessee - power of general exemption - Lessee (operator) of a multiplex is entitled to benefit of entertainment tax exemption where covered by the definition of 'proprietor' in the parent Act. - HELD THAT: - The notification of exemption was issued under the enabling power of Section 7 of the Act of 1936; the executive policy did not define 'proprietor/swami'. The Court looked to Section 2(f) of the Act of 1936, which inclusively defines 'proprietor' as including any person responsible for or for the time being in charge of the management of the entertainment. Precedents and statutory construction support a wide meaning of ownership for the purpose of exemption. The Divisional Level Committee granted exemption in favour of Satyam Cineplexes Ltd. and the exemption order names the lessee/operator. The impugned order declining exemption solely on the ground that no certificate was in the name of Satyam Cineplexes Ltd. was factually incorrect and did not advance any contemporaneous view that lessees are excluded from benefit. Consequently, the lessee, who alone pays the entertainment tax and is within the Act's inclusive definition of 'proprietor', is entitled to the exemption. [Paras 18, 21, 24, 25, 26]

Impugned order set aside; petitioner/lessee entitled to entertainment tax exemption as per law.

Alternative remedy - relegation to alternative remedy - Petition was maintainable despite availability of an alternative statutory remedy; petitioner should not be relegated to that remedy after long delay. - HELD THAT: - Although an efficacious alternative remedy existed, the Court exercised discretion not to relegated the petitioner to that remedy because the petition had been entertained long ago and the question raised is purely legal requiring no factual inquiry. Reliance was placed on earlier decisions recognizing that where delay would render a remedy unusable or where the petition has been pending for years, the court may hear the matter on merits instead of insisting on exhaustion of alternate remedies. [Paras 15]

Petition entertained on merits and petitioner not relegated to alternative remedy.

Final Conclusion: Writ petition allowed; the impugned order dated 05.05.2014 is set aside and the petitioner/lessee (M/s Satyam Cineplexes Ltd.) is held entitled to the entertainment tax exemption granted under the policy/notification as per the definition of 'proprietor' in the Act of 1936.

Interpretation of taxing statute - "parts thereof" - accessories vs. parts - Entry 12 of Schedule-II Part A - clarificatory order under section 105 - delegated authority cannot introduce new terminology - remand for fresh decision

"parts thereof" - Entry 12 of Schedule-II Part A - definition by common parlance - Whether the items 'cycle lock' and 'cycle seat cover' fall within Entry 12 of Schedule-II Part A of the AVAT Act, 2003 - HELD THAT: - The Court held that the determination whether the items in question are 'parts thereof' under Entry 12 cannot be concluded on the record before it because the Commissioner of Taxes' clarificatory order contained no proper findings of fact necessary to reach that classification. The Court explained that, in the absence of statutory definitions, the meaning of terms in a taxing entry must be derived from common parlance and trade usage, and that it is material to ascertain whether the items are ordinarily supplied as part of bicycles/tricycles or are fittings added depending on user requirements (notably in the context of cycle rickshaws where fittings may be added to a frame). Because such factual findings were not made, the question whether the items are covered by Entry 12 was not finally decided on merits and requires fresh factual consideration and classification by the tax authority. [Paras 14, 17, 18, 22, 25]

Not finally adjudicated on merits; remanded to the tax authority for fresh consideration and decision on available material.

Clarificatory order under section 105 - accessories vs. parts - delegated authority cannot introduce new terminology - Whether the Commissioner of Taxes' clarificatory order dated 10-07-2013 correctly interpreted Entry 12 by treating cycle locks and seat covers as 'accessories' and thereby excluding them from 'parts thereof' - HELD THAT: - The Court found that the Commissioner had reached the conclusion that the items are 'accessories' and not 'parts' without making the factual findings necessary to support that classification in the context of Entry 12. The Commissioner introduced and relied upon the term 'accessories', which is not used in Entry 12, without statutory definition or proper factual basis, and thereby exceeded the scope of the delegated power to classify under the AVAT Act. The absence of required factual findings and the importation of an undefined term rendered the clarificatory order legally unsustainable. [Paras 12, 22, 25]

Clarificatory order dated 10-07-2013 quashed and set aside.

Assessment orders - revisional order - remand for fresh decision - Validity of the assessment orders dated 20-07-2013 and the revisional order dated 02-03-2015 which relied on the quashed clarificatory order - HELD THAT: - The Court held that the Deputy Commissioner of Taxes and the revisional authority had relied upon the Commissioner of Taxes' clarificatory order in arriving at the assessments and confirmation in revision, and had not exercised an independent quasi judicial application of mind supported by necessary findings. Because the foundational clarificatory order was set aside for want of proper factual and legal basis, the impugned assessment and revisional orders that followed from it are likewise unsustainable. The Court therefore set aside those orders and remanded the matter to the Deputy Commissioner for fresh adjudication on the materials available and in accordance with law. [Paras 5, 22, 25]

Assessment orders dated 20-07-2013 and revisional order dated 02-03-2015 set aside; matter remanded to the Deputy Commissioner of Taxes to decide afresh.

Final Conclusion: Writ petitions allowed to the extent indicated: the Commissioner of Taxes' clarificatory order dated 10-07-2013 is quashed; the assessment and revisional orders founded upon that clarification are set aside; the matter is remanded to the Deputy Commissioner of Taxes for fresh decision on the classification of the items in accordance with law and on the available record; parties to bear their own costs.

Abuse of process of law - Quashing of FIR - Article 226 of the Constitution - Section 482 Cr.P.C. - Section 210 Cr.P.C. - procedure where complaint and police investigation relate to same offence - Cognizable offence

Abuse of process of law - Quashing of FIR - Article 226 of the Constitution - Section 482 Cr.P.C. - Section 210 Cr.P.C. - procedure where complaint and police investigation relate to same offence - Whether the impugned FIR was an abuse of process of law warranting quashing in exercise of powers under Article 226/Section 482 Cr.P.C. - HELD THAT: - The Court held that although the Code permits concurrent complaint proceedings and police investigation and registration of an FIR on the same set of facts (Section 210 Cr.P.C.), an FIR that is filed merely to harass accused or to bring pressure upon them is amenable to quashing. Applying this principle to the material facts, the Court found indicia of abuse: the complainant had earlier been the subject of a Section 138 NI Act complaint and of proceedings under Section 156(3) Cr.P.C. which remained pending; the Magistrate had earlier treated the 156(3) application as a complaint and was directed on revision to pass a speaking order; after prolonged pendency the complainant lodged an FIR two years later repeating the same allegations without referring to the pending proceedings; and it appeared that the complainant was not actively prosecuting the 156(3) proceedings. On these facts the Court concluded that the subsequent FIR was filed to harass the appellants and amounted to an abuse of process, making it fit for quashing under Article 226/Section 482 Cr.P.C. The Court expressly abstained from deciding the merits of the allegations in the pending 156(3) complaint. [Paras 5, 7, 8, 9]

Impugned FIR quashed and set aside as an abuse of process of law; High Court ought to have exercised powers under Article 226/Section 482 Cr.P.C. to quash the FIR.

Proceedings under Section 156(3) Cr.P.C. - Section 210 Cr.P.C. - procedure where complaint and police investigation relate to same offence - Disposition of the pending complaint under Section 156(3) Cr.P.C. following quashing of the FIR. - HELD THAT: - The Court made clear that its quashing of the FIR did not constitute any expression on the merits of the allegations in the Section 156(3) application, which remain pending before the Magistrate. In consequence of quashing the FIR as an abuse, the Magistrate was directed to proceed with the 156(3) proceedings in accordance with law and decide the matter on its merits; the judgment reiterates that Section 210 Cr.P.C. governs the interplay where complaint proceedings and police investigation relate to the same offence, and the Magistrate must act as per statutory prescriptions. [Paras 9]

The Magistrate shall proceed further with the pending Section 156(3) Cr.P.C. application and decide it on its own merits in accordance with law.

Final Conclusion: The appeal is allowed: the FIR registered as Case Crime No. 790 of 2017 (Sections 420/406 IPC) is quashed as an abuse of process; no expression is made on the merits of the pending complaint under Section 156(3) Cr.P.C., which the Magistrate is directed to decide afresh in accordance with law.