TaxTMI Updates e-Newsletter
Mar 06,2020

Transfer of the title in goods - supply - transfer of title as supply of goods under Schedule II - territorial jurisdiction of IGST - admissibility of input tax credit - scope of advance ruling authority under Section 97(2)

Transfer of the title in goods - supply - transfer of title as supply of goods under Schedule II - GST liability on transfer of title in moulds from the applicant to the Indian buyer - HELD THAT: - The Authority examined the statutory definition of "supply" under Section 7 and the classificatory provision in Schedule II which treats "any transfer of the title in goods" as a supply of goods. The factual position recorded is that title in the moulds was transferred for consideration by the applicant to the Indian buyer though physical possession remained with the foreign manufacturer. Applying the statutory test, the Authority concluded that a transfer of title in goods for consideration in the course of business constitutes a supply of goods and is therefore subject to GST. The determinative reasoning rests on the plain statutory provision treating transfer of title as a supply of goods without conditioning liability on physical movement of the goods into India. [Paras 6, 7]

GST is applicable on the transfer of title in moulds from the applicant to the Indian buyer.

Admissibility of input tax credit - scope of advance ruling authority under Section 97(2) - Whether the Authority would rule on the buyer's eligibility to claim input tax credit of GST paid - HELD THAT: - The Authority considered the scope of matters on which an advance ruling may be given as enumerated in Section 97(2). Clause (d) permits a ruling on admissibility of input tax credit of tax paid or deemed to have been paid to the applicant. The question posed by the applicant related to eligibility of the Indian buyer to take credit of tax paid to the applicant, which pertains to the buyer's entitlement and does not fall within any category in Section 97(2) when raised by the applicant on behalf of the buyer. On that basis the Authority recorded that the question on the buyer's input tax credit is not within the ambit of the Authority's jurisdiction and therefore cannot be answered. [Paras 5, 7]

The question on eligibility of the Indian buyer to take input tax credit is not answered as it is not within the ambit of this Authority under Section 97(2).

Final Conclusion: The Authority ruled that the transfer of title in moulds from the applicant to the Indian buyer constitutes a supply of goods and is subject to GST; the question whether the Indian buyer may claim input tax credit was not answered because it does not fall within the matters on which the Authority may give an advance ruling under Section 97(2).

Supply of service - Manufacturing services on physical inputs owned by others - Job work - Classification under SAC 9988 - Rate of tax under Notification No. 11/2017-C.T.(Rate) as amended

Supply of service - Manufacturing services on physical inputs owned by others - Classification under SAC 9988 - Job work - Classification of the electroplating activity carried out by the applicant - HELD THAT: - The Authority examined the facts that the applicant receives customers' components by delivery challan, performs electroplating as per the customers' specifications and returns the same to the customers who retain ownership. Relying on Schedule II para 3 which treats any treatment or process applied to another person's goods as a supply of services, and upon the Explanatory Notes to Heading 9988 which describe outsourced manufacturing services performed on physical inputs owned by others, the Authority held that the electroplating activity is a service characterized as an outsourced portion of a manufacturing process. The activity therefore falls within SAC 9988 and, where performed by a registered person on goods belonging to another registered person, also constitutes job work as defined in Section 2(68) of the CGST Act.

Electroplating undertaken by the applicant is a supply of service classifiable under Heading 9988 (Manufacturing services on physical inputs owned by others).

Rate of tax under Notification No. 11/2017-C.T.(Rate) as amended - Effect of amendments to SI. No. 26 - Distinction as to ownership of goods (registered vs unregistered) - Applicable GST rate for the electroplating (job work) service for the periods before and after 01.10.2019 - HELD THAT: - The Authority reviewed the sequence of amendments to entry SI. No. 26 of Notification No. 11/2017-C.T.(Rate) and subsequent notifications including Notification No. 20/2019 which altered the entries and rates applicable to manufacturing services on physical inputs owned by others. For the period up to 30.09.2019 the entry applicable to SI. No. 26 provided a 9% rate irrespective of whether the goods belonged to a registered or unregistered person. With effect from 01.10.2019, Notification No. 20/2019 inserted item 26(id) which prescribes a differentiated rate: where the goods belong to another registered person, job work services under the relevant entry attract 6% CGST (and corresponding SGST), whereas services in respect of goods owned by unregistered persons continue to attract 9% CGST (and corresponding SGST) under SI. No. 26(iv). The Authority applied these notifications to the facts of the case and determined the applicable rates accordingly.

For the period upto 30.09.2019 the applicable rate is 9% CGST (with corresponding SGST) under the SI. No. 26 entry; from 01.10.2019, where the goods belong to another registered person the applicable rate is 6% CGST (with corresponding SGST) under SI. No. 26(id), and where the goods belong to an unregistered person the rate remains 9% CGST (with corresponding SGST) under SI. No. 26(iv).

Final Conclusion: The Authority ruled that the applicant's electroplating activity is a supply of service classifiable under SAC 9988 (manufacturing services on physical inputs owned by others). The GST rate is 9% CGST (and corresponding SGST) upto 30.09.2019; with effect from 01.10.2019 the rate is 6% CGST (and corresponding SGST) when the goods belong to another registered person, and 9% CGST (and corresponding SGST) when the goods belong to an unregistered person.

Sale of building - activities or transactions which shall be treated neither as a supply of goods nor a supply of services (Schedule III) - construction treated as supply of services (Schedule II) - first occupation - issuance of completion certificate by competent authority - scope of supply

Issuance of completion certificate by competent authority - construction treated as supply of services (Schedule II) - activities or transactions which shall be treated neither as a supply of goods nor a supply of services (Schedule III) - Whether receipt of entire consideration after completion/first occupation renders sale outside the ambit of GST and which date determines taxability - HELD THAT: - Schedule II treats construction of a building intended for sale as a supply of services except where the entire consideration is received after issuance of the completion certificate by the competent authority or after its first occupation, whichever is earlier. Schedule III excludes sale of building (subject to clause (b) of para 5 of Schedule II) from supply. The Authority examined the statutory scheme and the role of the competent authority in issuing completion certificates and relied on the municipal provisions and the Municipal Corporation's communication which showed that the completion certificate in the applicant's case had not been issued due to non-compliance with statutory procedures. The Authority held that the decisive date for determining whether the entire consideration was received after completion is the date of issuance of the completion certificate by the competent jurisdictional authority. If entire consideration is received after that date, the transaction would not be treated as a taxable service; if any part is received before that date, the transaction is a supply of service under clause 5(b) of Schedule II and attracts GST. The Authority also observed that the competence to notify the competent authority and the legal requirement of completion certificate make the certificate-date the operative event for non-taxability where completion-certificate-based condition is invoked. [Paras 8, 10]

The date of issuance of the completion certificate by the competent jurisdictional authority shall be considered the date of completion; entire consideration received after that date is not a taxable service, whereas any part received before that date renders the transaction a taxable supply of service under Schedule II.

First occupation - issuance of completion certificate by competent authority - Whether claimed first occupation (possession given) without mandatory completion certificate suffices to treat subsequent receipts as outside GST - HELD THAT: - The Authority considered the applicant's claim of first occupation and the statutory scheme requiring completion certificate/permission to occupy under the Municipal Acts. The municipal authority's response indicated that the completion certificate had not been issued because of the applicant's non-compliance with statutory requirements. The Authority held that occupancy without observance of mandatory procedures and without issuance of the completion certificate cannot be treated as a valid first occupation for the purpose of Schedule II; such occupancy is devoid of merit for triggering the exception and may indicate an attempt to circumvent tax obligations. Therefore, claimed first occupation in the absence of a valid completion certificate does not operate to make subsequent receipts non-taxable. [Paras 8, 10]

Claimed first occupation without the mandatory completion certificate is not a valid basis to treat subsequent receipts as outside GST; the applicant's claim of first occupation is found to be devoid of merit.

Final Conclusion: The advance ruling holds that the operative event for excluding a construction-from-service treatment is the issuance of the completion certificate by the competent authority (or valid first occupation where it legitimately precedes certificate); in the applicant's case the completion certificate is not issued due to non-compliance, the claimed first occupation is not accepted, and any consideration received before issuance of the completion certificate is taxable as supply of service under Schedule II.

Classification of services as "Licensing services for the right to use minerals including its exploration and evaluation" - Classification under Service Code (Tariff) 9973 37 - Applicability of residual entry of Notification No. 11/2017 (Rate) resulting in levy at the same rate as on supply of like goods (residual Entry 17(viii)) - Advance ruling on classification and determination of liability to pay tax under Section 97(2)(a) and (e) of the CGST/SGST Act, 2017

Classification of services as "Licensing services for the right to use minerals including its exploration and evaluation" - Classification under Service Code (Tariff) 9973 37 - Services rendered by GMVN to the applicant are licensing services for the right to use minerals including its exploration and evaluation and are classifiable under Service Code 9973 37. - HELD THAT: - On examination of the contractual documents and the Annexure to Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017, the Authority found that GMVN was allotted mineral areas and, having received consideration from the applicant for extraction rights and remitting prescribed fees to the State, was effectively granting a right to use minerals. The description in Serial No. 257 of the Annexure corresponds to "Licensing services for the right to use minerals including its exploration and evaluation" and bears Service Code 9973 37. The Authority expressly confined its conclusion to the facts and documents before it. [Paras 13]

The service is classified as "Licensing services for the right to use minerals including its exploration and evaluation" and falls under Service Code 9973 37.

Applicability of residual entry of Notification No. 11/2017 (Rate) resulting in levy at the same rate as on supply of like goods (residual Entry 17(viii)) - Rate of GST applicable to licensing services for right to use minerals - The rate of GST applicable to the said licensing service is the rate specified in the residual Entry 17(viii) of Serial No. 17 of Notification No. 11/2017 (Rate), i.e., taxable at 18% (9% CGST + 9% SGST) as on date. - HELD THAT: - The Authority analysed Serial No. 17 of the Notification and observed that the description of the service in question is not covered by sub-entries (i) to (v) or by subsequent entries (vi)-(viia) introduced by amendment; consequently the service falls under the residual entry (viii) of Serial No. 17. Entry (viii) prescribes levy at the same rate as on supply of like goods involving transfer of title in goods and, following the amendment history and contemporaneous advance rulings, the Authority concluded that the residual entry presently attracts GST at 18% (9% CGST + 9% SGST). The Authority noted earlier rulings that had reached a different result under prior notification text but held those inapplicable in light of amendments. [Paras 12, 13]

The licensing service attracts GST at 18% (9% CGST + 9% SGST) under residual Entry 17(viii) of Notification No. 11/2017 (Rate) as amended.

Final Conclusion: The Authority admits the application and rules that (i) the services provided by GMVN to the applicant are licensing services for the right to use minerals including its exploration and evaluation and are classifiable under Service Code 9973 37, and (ii) such services are taxable at 18% (9% CGST + 9% SGST) under the residual Entry 17(viii) of Notification No. 11/2017-Central Tax (Rate) (as amended).

Proceedings under section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - deposit of bank guarantee as conditional compliance - conclusion of proceedings under section 129(5) of the Uttar Pradesh Goods and Services Tax Act, 2017 - compliance undertaking and conditional disposal - recall of order on failure to comply - precedential reliance on Writ Tax No. 344 of 2018 (M/s Skipper Limited Vs. Union of India and 3 others)

Proceedings under section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - deposit of bank guarantee as conditional compliance - conclusion of proceedings under section 129(5) of the Uttar Pradesh Goods and Services Tax Act, 2017 - precedential reliance on Writ Tax No. 344 of 2018 (M/s Skipper Limited Vs. Union of India and 3 others) - recall of order on failure to comply - Conditional disposal of proceedings under section 129(3) on the petitioner's undertaking to deposit the bank guarantee within three weeks and application of section 129(5) and relevant precedent - HELD THAT: - The Court accepted the petitioner's undertaking to deposit the bank guarantee demanded in the show cause notice dated 8th March, 2018 and directed that, if the bank guarantee is deposited within three weeks, the proceedings initiated under section 129(3) shall stand concluded in terms of section 129(5) of the UP GST Act and the law laid down in Writ Tax No. 344 of 2018 (M/s Skipper Limited). The order implements conditional disposal based on compliance: deposit within the stipulated period results in closure of the proceedings; failure to comply results in automatic recall of the order and permits the authorities to proceed as per law. The Court therefore disposed of the writ petition subject to the stated condition and precedent.

Petitioner to deposit the bank guarantee within three weeks; on deposit proceedings under section 129(3) concluded under section 129(5) and the cited precedent; order to be recalled automatically if the petitioner fails to comply and authorities may proceed in accordance with law.

Final Conclusion: Writ petition disposed of by conditional order: deposit of the stipulated bank guarantee within three weeks will terminate the section 129(3) proceedings under section 129(5) as per the cited precedent; failure to deposit will result in automatic recall of the order and continuation of proceedings by the authorities.

Bail under Section 439 of the Code of Criminal Procedure - economic offences and bail considerations - compounding of offence under Section 138 of the CGST Act - arrest under Section 69 read with Section 132(1) of the CGST Act - safeguards in Sections 41 and 41A of the Code of Criminal Procedure and Section 70(1) of the CGST Act

Bail under Section 439 of the Code of Criminal Procedure - economic offences and bail considerations - compounding of offence under Section 138 of the CGST Act - Whether the petitioner is entitled to be released on bail in the proceedings under the CGST Act - HELD THAT: - The Court considered the renewed bail application in light of the gravity of the alleged economic offence, the earlier refusal dated 24.12.2019, and the filed charge-sheet. Reliance was placed on precedents recognising that offences involving large-scale economic wrongdoing and consequent loss to the public interest must be viewed seriously and that mere incarceration for a period after filing of charge-sheet does not automatically entitle an accused to bail. The Court noted submissions regarding procedural safeguards applicable to arrest under the CGST provisions but applied the established principle that Section 41A protections do not afford an absolute bar to arrest and that considerations under the CGST and CrPC must be borne in mind. Having regard to these factors and its earlier detailed reasoning, the Court declined to enlarge the petitioner on bail. However, the Court recorded and reiterated the option of compounding under Section 138 of the CGST Act and expressly granted the petitioner liberty to approach the competent authority for compounding. The Court further recorded that, if the trial court is satisfied that the petitioner has approached the authority for compounding and has deposited at least twenty percent of the evaded CGST amount, the trial court may consider releasing the petitioner on bail in accordance with law.

Renewed bail petition dismissed, with liberty to seek compounding under Section 138 of the CGST Act and indication that the trial court may grant bail if the petitioner approaches for compounding and deposits at least 20% of the evaded CGST amount.

Final Conclusion: The renewed bail application is dismissed; the petitioner is permitted to seek compounding of the offence under Section 138 of the CGST Act and, upon approaching the compounding authority and depositing at least 20% of the evaded CGST, may be considered for release by the trial court in accordance with law.

Detention and seizure of goods in transit - Release of goods on payment of tax and penalty under Section 129 - Proceedings under Section 130 may be initiated only after non-compliance with Section 129 - Confiscation under Section 130 requires material to show intent to evade payment of tax - Authority must record reasons in writing before invoking Section 130 at the threshold - Notice of confiscation must disclose the materials on which the belief is formed - Right to challenge sufficiency of grounds and reliance on superior court observations

Release of goods on payment of tax and penalty under Section 129 - Detention and seizure of goods in transit - Whether the vehicle and goods are to be released on payment of tax in terms of the interim order while proceedings under Section 130 continue. - HELD THAT: - The Court recorded that, in terms of the interim order passed by a Coordinate Bench, the vehicle and goods were to be released upon payment of the tax determined under the impugned notice. The writ applicant availed the interim order and obtained release of the vehicle and goods on payment of tax. The Court observed that the substantive proceedings under Section 130 remain pending and shall proceed in accordance with law, without being forestalled by the interim release which was granted on the basis of payment as directed earlier. [Paras 3, 4, 5]

The release of the vehicle and goods on payment of tax, as directed in the interim order, is recorded and the proceedings under Section 130 may continue in accordance with law.

Confiscation under Section 130 requires material to show intent to evade payment of tax - Authority must record reasons in writing before invoking Section 130 at the threshold - Notice of confiscation must disclose the materials on which the belief is formed - Principles governing invocation of Section 130 at the stage of detention and seizure and the scope for judicial scrutiny of the grounds recorded for confiscation notices. - HELD THAT: - The Court referred to and permitted reliance upon the observations in Synergy Fertichem Pvt. Ltd. (paras 99-104), which explain that not every contravention in transit justifies immediate invocation of Section 130; the authority must examine the nature of the contravention and whether there is material to show an intention to evade tax. Invocation of Section 130 at the threshold requires a very strong case; mere suspicion is insufficient. Where Section 130 is invoked at the outset, reasons for such belief should be recorded in writing and the notice should disclose the materials on which the belief is founded so that the formation of opinion by the authority reflects application of mind and good faith. The Court noted that sufficiency of reasons cannot be gone into in detail, but materials must exist to show that an honest and reasonable person could form such belief. [Paras 6]

The applicant may challenge the show cause notice on these principles; invocation of Section 130 at the threshold must be supported by recorded reasons and disclosed material demonstrating intent to evade tax.

Final Conclusion: Writ petition disposed; Rule made absolute to the extent recorded: the interim release on payment is acknowledged, the proceedings under Section 130 may continue in accordance with law, and the petitioner is permitted to challenge the confiscation notice relying on the principles set out in Synergy Fertichem Pvt. Ltd.

Release of detained goods and conveyance on payment of tax and penalty - detention and seizure under Section 129 of the Act, 2017 - confiscation under Section 130 of the Act, 2017 - intention to evade payment of tax as prerequisite for confiscation - requirement of recorded reasons for invoking confiscation at the threshold - perishable nature of goods as factor in ordering release

Release of detained goods and conveyance on payment of tax and penalty - perishable nature of goods as factor in ordering release - Direction for release of the detained vehicle and goods was justified and complied with upon payment of the tax amount specified in the impugned notice. - HELD THAT: - A co-ordinate Bench had recorded that the applicant trades in agricultural produce and that the goods (cumin) were perishable; taking into account the nature of contravention and the deposit of the tax and penalty amount determined by the authority, the Court directed the respondent to release the vehicle and the goods at the earliest. The writ applicant availed that interim order and obtained release of the vehicle and goods on payment of the tax amount. The proceedings on the show-cause notice under Section 130 remain pending and shall proceed in accordance with law. [Paras 2, 3, 4]

Vehicle and goods released upon payment of the tax amount as directed; interim release complied with.

Detention and seizure under Section 129 of the Act, 2017 - confiscation under Section 130 of the Act, 2017 - intention to evade payment of tax as prerequisite for confiscation - requirement of recorded reasons for invoking confiscation at the threshold - Validity of the show-cause notice in Form GST-MOV-10 was not finally adjudicated; the applicant may challenge the notice and is permitted to rely on the Court's observations in Synergy Fertichem Pvt. Ltd. regarding the threshold for invoking confiscation. - HELD THAT: - The Court observed the legal principle that not every contravention at the stage of detention and seizure warrants immediate invocation of Section 130; confiscation requires a strong case showing intent to evade tax and, if invoked at the threshold, the authority should record reasons and the material basis for its belief. The present show-cause notice was left open for the applicant to make good his case for its discharge; the confiscation proceedings remain pending and must proceed consistent with the legal standards indicated and in accordance with law. [Paras 6, 7]

Show-cause notice under Form GST-MOV-10 left open for challenge; applicant permitted to rely on the Court's observations in Synergy Fertichem and to make good his case.

Final Conclusion: Writ petition disposed; rule made absolute to the extent of directing release of the vehicle and goods on payment of the tax amount (which was effected); the confiscation proceedings under Section 130 remain pending and the applicant may challenge the show-cause notice and rely on the Court's stated principles regarding invocation of confiscation.

Carry forward and set off of losses - change in shareholding (operation of section 79) - deduction under Chapter VIA - section 80IA - non obstante clause and statutory override - gross total income computation before Chapter VIA deductions - standalone computation of profits of eligible business under section 80IA(5)

Change in shareholding (operation of section 79) - deduction under Chapter VIA - section 80IA - non obstante clause and statutory override - gross total income computation before Chapter VIA deductions - Whether losses lapsed under section 79 can be ignored when computing the quantum of deduction under section 80IA read with section 80IA(5). - HELD THAT: - The Court held that computation of 'gross total income' must first give effect to carry forward and set off provisions under Chapter VI; losses that have lapsed by operation of section 79 cannot be notionally revived for computing the deduction under section 80IA. Section 80IA(5) requires that profits of the eligible business be computed on a standalone basis for determining the quantum of deduction, but it does not permit ignoring losses already rendered non operative by section 79. The scheme of the Act contemplates computing gross total income (after applying Chapter VI) and only then allowing Chapter VIA deductions; permitting section 80IA(5) to override section 79 would subvert that scheme and enable revival of losses which have already lapsed. Consequently the authorities below erred in applying section 80IA(5) so as to negate the effect of section 79. [Paras 9, 10, 11, 12, 22]

Losses lapsed by operation of section 79 cannot be disregarded by invoking section 80IA(5); the claim for deduction under section 80IA must give effect to section 79 and the deductions allowed by the authorities were set aside.

Deduction under Chapter VIA - section 80IA - standalone computation of profits of eligible business under section 80IA(5) - Whether assessment year 2005-2006 was the initial assessment year for exercise of option under section 80IA(2) (and consequence of Circular No.1/2016). - HELD THAT: - The Court recorded that the assessee had opted to treat assessment year 2005-2006 as the first year in the block of ten consecutive years for claiming deduction under section 80IA(1), and that this fact was not disputed by the Assessing Officer. Accordingly Circular No.1/2016, clarifying the concept of 'initial assessment year', is applicable on the facts, but that factual finding does not override the legal conclusion on the applicability of section 79. [Paras 9]

Assessment year 2005-2006 was treated as the initial assessment year for the block of ten years; the circular is applicable, but this does not permit ignoring losses lapsed under section 79.

Final Conclusion: Appeals allowed; impugned Tribunal orders quashed and set aside. The substantial question answered in favour of the assessee: losses which have lapsed by operation of section 79 cannot be notionally carried forward or ignored under section 80IA(5) for computing the deduction under section 80IA.

Charitable purpose as defined in Section 2(15) - proviso to Section 2(15): activities in the nature of trade, commerce or business - Section 13(8) exclusion of exemption where proviso to Section 2(15) applies - application of income under Section 11 - dominant object / profit motive test for characterising business activity - distinction between registration under Section 12A/12AA and assessment under Sections 11, 12 and 13

Proviso to Section 2(15): activities in the nature of trade, commerce or business - Section 13(8) exclusion of exemption where proviso to Section 2(15) applies - dominant object / profit motive test for characterising business activity - Whether the proviso to Section 2(15) and Section 13(8) applied to deny exemption to the assessee for the year under consideration. - HELD THAT: - The Court upheld the concurrent findings of the CIT(A) and the ITAT that the proviso to Section 2(15) did not apply on the facts of this case. The authorities examined the assessee's objects and activities beyond the Garba event, noting sustained charitable work (support to NGOs, medical camps, vocational training, midday meals, etc.) and found that organizing the Garba event, though generating substantial receipts, did not displace the dominant charitable object of the institution. The court applied the settled test that an activity is to be treated as business if undertaken with profit motive or pursued on recognised commercial principles with continuity; absent material showing profit motive or that the activity was pursued as regular business such that it vitiates the dominant object, the proviso is inapplicable. The court also noted that registration under Section 12A granted earlier does not preclude assessment under Sections 11-13, but on the material before it the dominant object remained charitable and the proviso therefore did not defeat exemption under Sections 11 and 12. The concurrent conclusion of the two lower authorities was not interfered with. [Paras 11, 13, 14]

Proviso to Section 2(15) and Section 13(8) do not apply on the facts; the assessee remains entitled to exemption under Sections 11 and 12.

Application of income under Section 11 - proviso to Section 2(15): activities in the nature of trade, commerce or business - Whether certain expenses (assistance to voluntary agencies, management assistance & training, public education programme, research & publications, expenses for community service and doubtful loan provision) could be treated as application of income for charitable purposes. - HELD THAT: - The Tribunal accepted that denial of these deductions by the Assessing Officer was consequential to treating receipts from the Garba event as business income; once the proviso to Section 2(15) was held inapplicable and the assessee retained status as an exempt charitable entity, those expenditures fall within application of income for charitable purposes under Section 11. The court agreed with this approach and with the conclusion that, on the facts, these items are to be treated as applied for charitable objects and therefore allowable. [Paras 5, 11, 13]

The expenses in question are to be treated as application of income for charitable purposes and allowed accordingly.

Application of income under Section 11 - charitable purpose as defined in Section 2(15) - Whether the receipt disclosed as anonymous donation in the return was in fact a corpus donation and whether it could be excluded from income as capital receipt eligible under Section 11(1)(d). - HELD THAT: - The CIT(A) found, on evidence in the balance sheet and explanations, that the amount classified in the return as anonymous donation was in fact a corpus (capital) donation received by way of foreign inward remittance and reflected as such in the balance sheet. The Assessing Officer's addition was therefore unsustainable; as a capital receipt/corpus donation it was not to be treated as income of the trust and the assessee was eligible for deduction under Section 11(1)(d). The court accepted the CIT(A)'s factual finding and consequence. [Paras 10]

The sum is a capital/corpus donation and not assessable income; it is eligible for the benefit under Section 11.

Final Conclusion: The High Court declined to interfere with the concurrent findings of the CIT(A) and the ITAT. On the facts, the proviso to Section 2(15) and Section 13(8) do not apply, the assessee is entitled to exemption under Sections 11 and 12 for A.Y. 2014-15, the specified expenses are to be treated as application of income, and the impugned addition of the corpus donation was rightly deleted.

Disallowance under Section 14A while computing book profit under Section 115JB - addition to book profit on account of expenditure relatable to exempt income - treatment of government grant/subsidy vis-a -vis reduction from cost of fixed assets - classification of interest income as business income versus income from other sources - admission of substantial question of law for hearing with connected appeal

Admission of substantial question of law - remand for hearing with connected appeal - Question No.2[a] (whether ITAT was justified in remanding for fresh consideration of disallowance under Section 14A with a cap linked to exempt income) was admitted and is directed to be heard with Tax Appeal No.548 of 2017. - HELD THAT: - The Court recorded that question No.2[a] proposed by the Revenue is admitted because an identical question has been admitted in the assessee's own case for assessment year 2007-08 in Tax Appeal No.548 of 2017. Consequently, the appeal is not decided on merits on this question and the matter is to be heard together with the connected tax appeal listed by the Court. [Paras 3, 16]

Admitted for hearing and ordered to be heard with Tax Appeal No.548 of 2017.

Disallowance under Section 14A while computing book profit under Section 115JB - no addition to book profit on basis of Section 14A calculations - precedent weight of High Court and Special Bench/Tribunal decisions - Whether the addition under Section 14A should be added back while computing book profit under Section 115JB was decided against the Revenue. - HELD THAT: - The Court upheld the conclusion of the CIT(A) and the ITAT that additions computed under Section 14A (and Rule 8D) are not to be added to book profit for purposes of Section 115JB. The judgment relied on binding precedents of the jurisdictional High Court and the Bombay High Court, and the reasoning that the Explanation to Section 115JB does not mandate addition of Section 14A disallowances to book profit. Having considered the conflicting authorities and applied the binding decisions (including Alembic Ltd. and other High Court precedents), the Court found no error in the Tribunal's approach and dismissed the Revenue's contention on this point. [Paras 8]

Appeal dismissed on this question; no addition under Section 14A to be made to book profit under Section 115JB.

Treatment of government grant/subsidy vis-a -vis reduction from cost of fixed assets - absence of acquisition of fixed assets and consequent non-reduction of cost - Whether the estimated capital grant (assumed 15% of earlier grants) could be treated as income by reducing cost of fixed assets was rejected. - HELD THAT: - The Court agreed with the concurrent findings of the CIT(A) and the Tribunal that the assessee had not acquired any fixed assets during the year on which depreciation was claimed; grants received earlier were apportioned among distribution companies and not received as income in the year under consideration. On these factual findings, the assessing officer's estimate treating a portion of grants as income was held to be unfounded. The Tribunal's concurrence with the CIT(A)'s deletion of the addition was upheld as a valid concurrent factual conclusion. [Paras 12]

Appeal dismissed on this question; the addition relating to the capital grant is not sustained.

Classification of interest income as business income versus income from other sources - interest directly related to the business of the assessee - Whether certain interest income should be treated as business income rather than income from other sources was decided in favour of the assessee. - HELD THAT: - The Tribunal, affirmed by the Court, found on the material that interest earned on loans and advances, interest from deposits placed with the Mega Power Project, and interest from the UL pool account were directly related to the assessee's business. The Revenue failed to controvert the submissions and earlier favorable findings for assessment year 2009-10 were noted. On that basis, the classification of the interest as business income was upheld. [Paras 15]

Appeal dismissed on this question; interest income held to be business income.

Final Conclusion: The Tax Appeal is dismissed on the merits as to questions 2(b), 2(c) and 2(d); question 2(a) is admitted and directed to be heard along with Tax Appeal No.548 of 2017.

Disallowance under section 40(a)(ia) - tax deduction at source under section 195(2) - capitalisation of interest under section 36(1)(iii) - method of allocation of borrowing cost - definition of "power" for deduction under section 80IA(4) - treatment of steam as energy / power - disallowance under section 14A and Rule 8D - claim for exemption as precondition for section 14A disallowance

Disallowance under section 40(a)(ia) - tax deduction at source under section 195(2) - Deletion of addition under section 40(a)(ia) on account of non-deduction of tax on commission payable to foreign agents - HELD THAT: - The Assessing Officer disallowed commission paid to foreign agents on the view that income accrued in India and tax was not deducted under section 195(2). The CIT(A) deleted the addition relying on an identical finding for the assessee for A.Y.2010-11, and the Tribunal upheld deletion following that precedent (Tribunal para.11). The Revenue had earlier challenged the similar order in Tax Appeal No.610 of 2019 which was dismissed by this Court. In these circumstances the Court held that the Revenue's substantial question of law in relation to this disallowance cannot be sustained. [Paras 4, 5, 6]

Ground of appeal in respect of disallowance under section 40(a)(ia) dismissed; proposed substantial question of law fails.

Capitalisation of interest under section 36(1)(iii) - method of allocation of borrowing cost - Validity of disallowance made by the Assessing Officer for alleged under-capitalisation of interest and correctness of interest capitalised by the assessee - HELD THAT: - The assessee furnished detailed month-wise working of capital work-in-progress and applied a weighted allocation (in line with ICAI guidance) to capitalise interest of Rs.32,64,147. The Assessing Officer computed a higher capitalisation and disallowed the difference. The CIT(A) accepted the assessee's methodology and the Tribunal concurred, noting the AO had not disproved the detailed working and had no cogent material to assume entire term loan applied to CWIP. Given these concurrent findings of fact by the appellate authorities, the Court held that the Revenue's question did not raise a substantial question of law. [Paras 7, 8, 9, 10, 11]

Question challenging the deletion of the Section 36(1)(iii) disallowance is not a substantial question of law; appeal dismissed on this ground.

Definition of "power" for deduction under section 80IA(4) - treatment of steam as energy / power - Whether steam produced and utilised (including exhaust steam from a back-pressure turbine) qualifies as "power" for the purposes of deduction under section 80IA(4) - HELD THAT: - The assessee operated a captive plant generating high-pressure steam fed to a back-pressure turbine; the exhaust steam (at usable pressure) was utilised in the chemical process. The CIT(A) analysed the plant design and energy flow, observed the turbine was a back-pressure type intentionally leaving useful pressure in the exhaust steam, and directed apportionment of expenses (by enthalpy) and further verification of head-office and interest allocations. The Tribunal agreed with the CIT(A). This Court observed the term "power" is not defined in the Act and should be understood in ordinary parlance as "energy" which may take mechanical, electrical, wind or thermal forms; accordingly, steam produced by the assessee can be termed as power and qualify for benefits under section 80IA(4). [Paras 14, 15, 16, 21, 22]

Steam, as produced and used in the assessee's plant, qualifies as "power" under section 80IA(4); matter as to computation/allocation to be worked out as directed by the lower authorities.

Disallowance under section 14A and Rule 8D - claim for exemption as precondition for section 14A disallowance - Deletion of addition under section 14A (read with Rule 8D) in respect of investment in subsidiary shares despite no exempt income having been earned or claimed - HELD THAT: - The Assessing Officer applied Rule 8D and computed a disallowance despite the assessee not having earned exempt income under section 10. The CIT(A) allowed the appeal following the deduction principle applied by this Court in Corrtech Energy Pvt Ltd., that no disallowance under section 14A is warranted if no exempt income has been claimed. The High Court held that the Revenue's challenge on this point did not raise a substantial question of law. [Paras 23, 24, 25, 26]

Proposed substantial question of law in respect of the Section 14A disallowance is not maintainable; addition deleted by the CIT(A) is upheld.

Final Conclusion: All four questions advanced by the Revenue were held not to raise substantial questions of law: the deletion of the Section 40(a)(ia) addition and the Section 36(1)(iii) capitalisation issue were sustained on the basis of concurrent findings and prior orders; steam produced by the assessee was held to qualify as "power" for Section 80IA(4) purposes and the computation/allocation was to be revisited by the Assessing Officer as directed; the Section 14A disallowance was correctly deleted where no exempt income was claimed. The Revenue's appeal is dismissed.

Deduction under Section 80IA - academic mootness - disallowance of consultancy fees - concurrent findings of fact - appellate review on facts

Deduction under Section 80IA - academic mootness - The question whether the revised claim of deduction under Section 80IA could be sustained was treated as academic and not adjudicated on merits. - HELD THAT: - The Tribunal found, and this Court agreed, that for A.Y.1995-96 the assessee's total income prior to deduction (even after the Assessing Officer's disallowance) was Rs. 314.84 lakhs whereas the deduction allowed by the Assessing Officer was Rs. 322.05 lakhs and the CIT(A) had directed acceptance of a larger revised claim. Similarly for A.Y.1997-98 the assessed income prior to deduction was Rs. 190.68 lakhs while eligibility under Section 80IA as accepted stood at a higher figure. In these circumstances the Tribunal concluded that consideration of the revised claims was consequentially academic. The High Court endorsed that conclusion and declined to entertain Question (A) on the ground that the dispute over the revised quantum of deduction would have no consequence on taxable income as assessed. [Paras 5, 6, 7]

Question (A) treated as academic; Court declined to answer it and appeals insofar as they raised this question were dismissed as academic.

Disallowance of consultancy fees - concurrent findings of fact - appellate review on facts - The disallowance of consultancy fees paid to M/s. B.B. Electricals was negatived and the finding in favour of the assessee upheld. - HELD THAT: - Both the CIT(A) and the Tribunal recorded concurrent findings of fact rejecting the Assessing Officer's disallowance of the consultancy fees. The High Court, on review, accepted those concurrent factual findings and answered Question (B) in favour of the assessee and against the Revenue, thereby upholding the deletion of the disallowance. [Paras 8]

Question (B) answered in favour of the assessee; the disallowance of consultancy fees was deleted.

Final Conclusion: Both tax appeals filed by the Revenue are dismissed: the challenge to the revised claim under Section 80IA was treated as academic and not answered, while the disallowance of consultancy fees was rejected and upheld in favour of the assessee.

Date of commencement - substantial compliance - notification under rule 18C - jurisdictional vires of withdrawal memorandum - principles of natural justice

Date of commencement - substantial compliance - Whether the petitioner complied with the commencement condition in the Industrial Park Scheme, 2002 so as to be entitled to notification under rule 18C, and whether occupation/ completion certificate issued by local authority was the sole determinant of the date of commencement. - HELD THAT: - The Court held that the Scheme 2002 contains no definition of "date of commencement" and therefore the definition in the subsequently framed Scheme 2008 could not be imported to deny benefits conferred under the Scheme 2002. The petitioner had filed the architect's completion certificate and application for occupation certificate within the stipulated period and declared the date of commencement as March 15, 2007 in quarterly returns, which is within one year from the expected commencement date in the approval. The delay by the local authority in issuing the occupation certificate did not obliterate the petitioner's entitlement where substantial compliance was shown and procedural delays were beyond the petitioner's control. Reliance on precedents was noted for the proposition that procedural/administrative delays in grant of statutory certificates may not defeat substantive rights where compliance is otherwise established. [Paras 8, 9, 13]

Petitioner satisfied the commencement condition for the purposes of Scheme 2002 by way of substantial compliance and the occupation certificate's later issuance did not defeat the entitlement to notification under rule 18C.

Notification under rule 18C - jurisdictional vires of withdrawal memorandum - principles of natural justice - Whether the official memorandum of respondent No.1 directing respondent No.2 to withdraw the approval was within respondent No.1's powers and whether it complied with principles of natural justice. - HELD THAT: - The Court found that, under the Scheme 2002, respondent No.1's role was to issue notification under rule 18C in compliance with the approval granted by respondent No.2 and not to adjudicate upon or unilaterally revoke that approval. The official memorandum dated March 1, 2012 instructing withdrawal of approval was held to be arbitrary and beyond the jurisdiction conferred by the Scheme; its language did not clearly limit the instruction to a mere recommendation, and in any event no withdrawal action by respondent No.2 was shown to have followed. The memorandum was also criticised for having been issued without affording the petitioner an opportunity of hearing. [Paras 14, 15]

The official memorandum directing withdrawal of approval was arbitrary and lacked jurisdiction; respondent No.1 was directed to notify the petitioner's industrial park under rule 18C in terms of the Industrial Park Scheme, 2002 within three months.

Final Conclusion: Writ petition allowed: the Court held that the petitioner had substantially complied with the commencement condition under the Industrial Park Scheme, 2002 and that the official memorandum directing withdrawal of approval was arbitrary and without jurisdiction; respondent No.1 is directed to notify the industrial park under rule 18C of the Income-tax Rules, 1962 within three months from receipt of certified copy of the order.

Restriction of deduction under section 10A by invocation of the provision where the course of business is "so arranged" to produce more than ordinary profits to prevent abuse of tax concession - Requirement of cogent evidence to establish an "arrangement" or manipulation of profits between associated enterprises before invoking provision to re compute eligible profits - Transfer pricing comparability analysis - internal comparables versus external comparables and treatment of newly commenced loss making business segments - Rejection of persistently loss making or functionally non comparable enterprises from final comparable set - Limited role of Transfer Pricing Officer's arm's length determination as an indicator, not as a substitute, for invoking adjustment under section 10A(7)

Restriction of deduction under section 10A by invocation of the provision where the course of business is "so arranged" to produce more than ordinary profits to prevent abuse of tax concession - Requirement of cogent evidence to establish an "arrangement" or manipulation of profits between associated enterprises before invoking provision to re compute eligible profits - Limited role of Transfer Pricing Officer's arm's length determination as an indicator, not as a substitute, for invoking adjustment under section 10A(7) - Deduction under section 10A cannot be restricted merely because the assessee earned more than ordinary profits; the revenue must prove that the course of business was "so arranged" to produce more than ordinary profits with intent to abuse the tax concession before invoking section 10A(7). - HELD THAT: - The Tribunal examined the scope and legislative intent of the provision and CBDT Circular, holding that the phrase "so arranged" must be read in context and requires demonstration of an arrangement of the course of business that produces more than ordinary profits with the intent to abuse tax concessions. Mere close connection between parties and existence of higher than ordinary profits are insufficient. The arm's length / Transfer Pricing outcome may serve only as an indicator to investigate, but substantive and corroborative evidence is necessary to establish that the course of business was so arranged to inflate eligible profits. In the present case the Assessing Officer's conclusion rested primarily on higher operating margins vis a vis comparables without any material showing an arrangement to abuse the concession; therefore re working of profits under section 10A(7) was unjustified and the restriction of deduction was set aside. [Paras 8, 31, 32, 33, 34]

Additions/restriction of deduction under section 10A by invoking subsection (7) were set aside for A.Y. 2003-04 as the AO/TPO failed to demonstrate any arrangement to abuse tax concession; assessee succeeds on these grounds.

Transfer pricing comparability analysis - internal comparables versus external comparables and treatment of newly commenced loss making business segments - Rejection of persistently loss making or functionally non comparable enterprises from final comparable set - Inclusion or exclusion of specific comparable companies must be based on functional and economic comparability, not merely on diversification or mixed activities - Whether the Transfer Pricing Officer's combination of system integration sub segments and selection/exclusion of comparables was justified; specific inclusion of Nelco was held improper, while exclusion of Mahindra Ashtec Ltd. and Artson Engineering Ltd. was upheld. - HELD THAT: - The Tribunal considered the assessee's submissions that the IS Infra sub segment was a newly commenced loss making initiative and not functionally comparable with established external comparables; OECD guidelines and domestic law require careful comparability analysis including business strategy and internal comparables where appropriate. On examination of the assessee's and Nelco's business overviews and financials, the Tribunal found Nelco's automation and control division not functionally comparable to the assessee's system integration activities and set aside CIT(A)/TPO's inclusion of Nelco in the final comparable list. Conversely, the Tribunal found no infirmity in the rejection of Mahindra Ashtec Ltd. and Artson Engineering Ltd. where record supported functional dissimilarity and persistent/abnormal losses and turnover decline; their exclusion was therefore sustained. Consequently the transfer pricing adjustment was modified accordingly and the assessee's appeal in this respect was partly allowed. [Paras 25, 26, 27, 28, 29]

Transfer pricing adjustment partly disallowed: Nelco excluded from comparable set (CIT(A)'s inclusion set aside); exclusion of Mahindra Ashtec Ltd. and Artson Engineering Ltd. upheld; appeal partly allowed on TP grounds.

Final Conclusion: For A.Y. 2003-04 the Tribunal set aside the Assessing Officer's restriction of deduction under section 10A(7) for lack of evidence showing that the course of business was "so arranged" to abuse the tax concession; on transfer pricing issues the Tribunal set aside inclusion of Nelco as a comparable but upheld the exclusion of Mahindra Ashtec Ltd. and Artson Engineering Ltd., resulting in the assessee's appeal being partly allowed and the Revenue's appeal dismissed.

Unexplained credit under section 68 - identity, genuineness and credit-worthiness of share applicants - onus of the assessee to explain and duty of the Assessing Officer to investigate - verification under notices issued under section 133(6) and summons under section 131

Unexplained credit under section 68 - identity, genuineness and credit-worthiness of share applicants - onus of the assessee and duty of the Assessing Officer to investigate - Whether the share application money received by the assessee required to be treated as unexplained credit and added to income under section 68. - HELD THAT: - The Tribunal applied the well-settled tripartite test under section 68 requiring proof of identity of the share applicants, genuineness of the transaction and credit-worthiness of the applicants. The assessee produced confirmations, PAN details, responses to the notice under section 133(6) and bank-related documents for the share applicants. The Assessing Officer's remand report merely drew adverse inference from the modest income shown in the applicants' returns and gaps in bank documentation without conducting further enquiries or invoking available powers (for example, under section 131) to verify the material. The Tribunal held that credit-worthiness cannot be judged solely by quantum of income shown in returns and that where the assessee furnishes material and the AO fails to pursue available investigative steps, the AO's mere doubt or inference is not sufficient to sustain an addition. On these facts, and noting that part of the alleged amounts related to opening balance or repayments, the Tribunal found the AO's conclusions unsupported by evidence and deleted the addition to the extent assessed for the year. [Paras 5, 19]

Addition made under section 68 to the extent of Rs. 2,29,28,000/- deleted as the AO failed to conduct necessary inquiries and the assessee had furnished material establishing identity and transaction which the AO did not adequately rebut.

Disallowance under section 14A - Whether the disallowance under section 14A should be sustained. - HELD THAT: - The assessee did not press the ground relating to disallowance under section 14A in view of the smallness of the amount involved. The Tribunal noted the concession and therefore did not entertain the challenge on merits. [Paras 20]

Ground relating to disallowance under section 14A dismissed as not pressed by the assessee.

Final Conclusion: Appeal partly allowed: the addition under section 68 was deleted for the assessment year Asstt.Year 2012- 13 due to failure of the Assessing Officer to conduct necessary investigation and rebut the material produced by the assessee; the challenge to disallowance under section 14A was dismissed as not pressed.

Allowability of business expenses during a temporary lull in business - treatment of rent as income from house property versus income from other sources - deductibility of interest under income from other sources - penalty under section 271(1)(c) for furnishing inaccurate particulars of income - requirement of independent verification before levy of penalty

Allowability of business expenses during a temporary lull in business - continuity of business - Deletion of addition/disallowance of business expenses claimed for periods when business activity was in a lull - HELD THAT: - The Tribunal found that the assessee carried on business in preceding and subsequent years (assessments for AY 2006-07 and AY 2010-11 show trading activity) and that a temporary lull does not amount to closure of business. Expenses incurred to keep the business setup in existence during a lull are in principle deductible, but only those expenses which were necessary to maintain the business. The authorities below had not distinguished necessary from unnecessary expenses but all relevant expense details were on record; on that basis the Tribunal set aside the disallowance and directed deletion of the addition. The finding that a lull is not equivalent to cessation of business and that legitimate expenses to keep the business alive are allowable was applied consistently to the related assessment years. [Paras 8, 9, 10, 25]

Addition/disallowance of business expenses deleted; ground of appeal allowed (parity applied for the related assessment year).

Treatment of rent as income from house property versus income from other sources - substance over form in characterisation of rental income - Characterisation of rent from the leased property as income from other sources rather than income from house property - HELD THAT: - On construction of the original lease and the supplementary deed, the Tribunal concluded that the substance of the transaction was that the lessee required the plot for establishing a petrol pump and did not intend to enjoy the bungalow as a house. The lessee obtained statutory clearances and a commencement letter for construction; the assessee had taken inconsistent stands regarding whether land or bungalow was let. Considering these facts, the Tribunal held the receipts were for use of land and not for a house property; consequently the receipts were taxable as income from other sources and not under the head house property, and the statutory deductions under section 24(a) and 24(b) were therefore not available. [Paras 11, 14]

Rent treated as income from other sources; claims under section 24(a) and 24(b) disallowed and related grounds dismissed.

Deductibility of interest under income from other sources - burden of proof to connect interest to income-producing asset - Claim for deduction of interest against income from other sources disallowed for lack of documentary proof linking interest to the rented land/investment - HELD THAT: - The Tribunal applied section 57 principles and noted that, although interest expenses were incurred, the assessee failed to satisfactorily demonstrate with documentary evidence that the interest related to funds used for the impugned property or investment producing the rental income. The authorities below had therefore correctly disallowed the interest deduction in the assessment proceedings. [Paras 11, 15]

Interest deduction disallowed for want of documentary proof; ground of appeal dismissed in respect of interest.

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - requirement of independent verification before levy of penalty - distinction between a debatable claim and furnishing inaccurate particulars - Levy of penalty under section 271(1)(c) in respect of deleted quantum addition and in respect of disputed classification/deductions - HELD THAT: - With respect to the business-expense addition, once the Tribunal deleted that addition on merits, the penalty based on that addition could not stand and was directed to be deleted. As to the claim under section 24(a), the Tribunal held that declaring rent under an incorrect head (house property instead of other sources) amounted to a debatable, bona fide claim and did not constitute furnishing inaccurate particulars; reliance was placed on authorities holding that a mere unsustainable claim does not attract the penalty. Concerning interest disallowance, the Tribunal emphasized that penalty proceedings are distinct and the AO must undertake independent verification (e.g., summon parties, verify genuineness) before levying penalty; mere addition in quantum proceedings is not sufficient. Applying these principles, the Tribunal held the penalty could not be sustained. [Paras 19, 20, 21, 22]

Penalty imposed under section 271(1)(c) deleted in respect of the business-expense addition and held not sustainable in respect of the disputed rental/interest issues; penalty grounds allowed.

Final Conclusion: The Tribunal partly allowed the appeals: additions disallowing business expenses were deleted (assessee's grounds allowed); the receipts from the lease were held to be income from other sources (deductions under section 24 disallowed) and interest deduction was not proved; penalties under section 271(1)(c) were deleted or held unsustainable for the reasons stated.

Tax deducted at source - fees for technical services - royalty - permanent establishment - membership subscription - utilisation of cross border internet/network services - reimbursement treated as turnover - remand for verification of books and reconciliation

Membership subscription - fees for technical services - royalty - permanent establishment - tax deducted at source - utilisation of cross border internet/network services - Whether payment made to a foreign entity (ICOM) for membership/subscription services was taxable in India as fees for technical services/royalty and liable to TDS. - HELD THAT: - The Tribunal examined the nature of services rendered by ICOM, a US based network offering integrated marketing/communication resources to its members worldwide, available only to members across jurisdictions. The authorities below treated the payment as consideration for services utilised in India and therefore within the ambit of taxable fees for technical services/royalty attracting TDS. The Tribunal found no material on record to show that ICOM's income was chargeable to tax in India or that it had a permanent establishment in India. The Tribunal accepted that the services consisted of network/membership benefits and internet based information made available to members internationally, and that mere utilisation of such information in India does not, without more, render the payment taxable as FTS/royalty. Following the reasoning in the decision relied upon by the assessee, the Tribunal held that where the origin and source of the services lie outside India and the foreign entity has no taxable presence in India, the payment is not chargeable to tax in India and consequently not subject to TDS. [Paras 9]

Addition/disallowance confirmed for failure to deduct TDS in respect of the subscription payment to ICOM is set aside and the ground is allowed.

Entertainment expenses - club membership - verification of supporting vouchers - remand for verification - Whether the payment to Gym/Gymkhana on behalf of a director constituted disallowable personal expenditure or an allowable business entertainment/club expense. - HELD THAT: - The authorities treated the payment as to a gym and disallowed it. The assessee claimed it was a payment to Gymkhana club for membership and for business benefit. The authorised representative did not produce a bill or voucher conclusively showing the nature of the payment. Given the small amount involved and absence of documentary proof, the Tribunal directed an administrative verification by the Assessing Officer: if the AO finds the payment was to the Gymkhana club (i.e., a club membership/entertainment expense), the expenditure should be allowed. The Tribunal therefore did not decide the issue finally on merits but directed verification. [Paras 12]

Matter remitted to the Assessing Officer to verify supporting documents; if established as club membership/entertainment, the disallowance shall be deleted; ground allowed for statistical purposes.

Reimbursement treated as turnover - reconciliation of turnover and cost of services - remand for verification of books and reconciliation - Whether the difference between service tax/VAT turnover and book turnover representing non media billing at cost (reimbursements) amounts to unaccounted sales liable to addition. - HELD THAT: - The assessee operated two streams: media billing (earning commission) and non media billing (pass through at cost with no commission). While both types appear in indirect tax returns, the assessee's profit and loss account excluded non media billing from reported sales, treating them as reimbursements. The Assessing Officer made an addition for the differential without being shown reconciliation of the corresponding cost entries. The Tribunal accepted the assessee's explanation in principle but found that the record lacked reconciliation of cost of services to demonstrate that non media amounts were also excluded from expenses. The Tribunal therefore remitted the matter to the AO to verify whether the assessee has excluded corresponding costs in the profit and loss account; if so, the addition may be deleted, subject to giving the assessee an opportunity to produce reconciliations. [Paras 15, 16]

Issue remitted to the Assessing Officer for verification of cost reconciliations; grounds treated as allowed for statistical purposes pending verification.

Final Conclusion: Appeal allowed for statistical purposes: the disallowance relating to the subscription payment to the foreign network (ICOM) is deleted on merits; the small entertainment payment and the discrepancy in turnover are remitted to the Assessing Officer for documentary verification and reconciliation, with directions to allow expenditure or delete the addition if verified.

Liability to pay interest under section 201(1A) of the Income Tax Act, 1961 - assessee-in-default status under section 201(1) of the Income Tax Act, 1961 - operation of the first proviso to section 201(1) in relation to interest liability - effect of deductee's discharge of TDS liability (including interest) on recovery from the deductor - application of Rajesh Projects (India) Pvt. Ltd. on reimbursements by statutory authorities

Liability to pay interest under section 201(1A) of the Income Tax Act, 1961 - effect of deductee's discharge of TDS liability (including interest) on recovery from the deductor - operation of the first proviso to section 201(1) in relation to interest liability - Whether the assessee is liable to pay interest under section 201(1A) where tax was not deducted on lease rent paid to NOIDA and whether recovery can be made from the assessee if the deductee (NOIDA) has paid the TDS liability along with interest. - HELD THAT: - The tribunal examined the interplay between the appellant's non-deduction of TDS on lease rentals paid to NOIDA and the Delhi High Court's decision in Rajesh Projects (India) Pvt. Ltd., which directs that where the deductee (GNOIDA) has satisfied the basic TDS liability along with interest, income-tax authorities shall not pursue recovery from the deductor and the authority shall reimburse amounts already paid by the deductor. The CIT(A) had followed Rajesh Projects to delete the assessee's TDS demand to the extent the deductee had paid tax, but nevertheless directed the AO to recompute interest under the first proviso to section 201(1) from the date tax was deductible until the date on which the deductee filed its return. The tribunal held that it was incumbent on the assessee to produce documentary proof that NOIDA had paid the basic TDS liability together with the interest; in the absence of such proof the AO may raise liability. Consequently, the tribunal did not finally quantify or confirm interest against the assessee but restored the matter to the AO for verification whether NOIDA has discharged the TDS and interest liability. The AO is to give the assessee opportunity to produce relevant evidence and, if verification shows that NOIDA has already paid the basic TDS liability and interest, no recovery shall be made from the assessee. The direction applies to both assessment years and the assessee must cooperate with the AO's verification. [Paras 19, 20]

Issue restored to the file of the Assessing Officer for verification whether NOIDA has paid the basic TDS liability along with interest; if so, no liability shall be raised on the assessee; otherwise the AO may proceed after affording opportunity to the assessee.

Final Conclusion: The appeals are disposed of by restoring the question of interest liability to the Assessing Officer for verification (in both assessment years) whether the deductee (NOIDA) has discharged the TDS liability along with interest; if payment is established, no recovery shall be made from the assessee. Appeals allowed for statistical purposes.

Revisional jurisdiction under section 263 - Erroneous order prejudicial to the interests of the Revenue - Scope of proceedings confined to reasons for reopening or show cause notice - Reopening under section 147 and notice under section 148 arising from survey under section 133A - Prohibition on making additions beyond issues for which reopening was made

Revisional jurisdiction under section 263 - Erroneous order prejudicial to the interests of the Revenue - Whether the Principal Commissioner was justified in invoking revisionary jurisdiction under section 263 to set aside the assessment framed under section 143(3) r.w.s. 147 for AY 2014-15. - HELD THAT: - The Tribunal applied the settled two fold test for exercise of powers under section 263: the assessment order must be (i) erroneous and (ii) prejudicial to the interests of the Revenue. Mere existence of an error alone or mere loss of revenue does not suffice; there must be prima facie material showing that tax lawfully exigible was not imposed or that the officer adopted an incorrect or incomplete interpretation leading to lesser tax. The record shows that the assessment was reopened on the basis of alleged suppression of turnover (discrepancy between two sets of financial statements found during survey). During reassessment the assessee furnished explanations and documentary evidence (TDS certificates, Form 26AS, certified bills, reconciliations) and the AO accepted those explanations and completed assessment without making additions for suppressed turnover. Similarly, additions in respect of alleged bogus labour contract expenses had already been made in the original assessment. The PCIT accepted that the AO had examined the turnover issue, yet proceeded to hold the assessment erroneous and directed a re examination on other fronts. On these facts the Tribunal found that the conditions necessary for valid exercise of section 263 jurisdiction were not satisfied and that the PCIT therefore erred in invoking revisionary powers. [Paras 10, 11, 12, 18]

The PCIT's invocation of section 263 was unjustified and the revision order is set aside; the AO's assessment under section 143(3) r.w.s. 147 is restored.

Scope of proceedings confined to reasons for reopening or show cause notice - Prohibition on making additions beyond issues for which reopening was made - Reopening under section 147 and notice under section 148 arising from survey under section 133A - Whether the PCIT exceeded his jurisdiction by directing the AO to verify various expenses and unsecured loans and to determine net profit when those matters were not the subject of the reassessment or the show cause notice under section 263. - HELD THAT: - The Tribunal observed settled authorities establishing that where reopening is limited to a specific issue and the AO, after enquiry, declines to make any addition on that issue, neither the AO nor the Commissioner in revision can treat the reassessment as an occasion to make fresh additions on unrelated matters without issuance of a fresh notice. The reassessment in this case was initiated on alleged suppression of turnover discovered in survey; the AO examined the turnovers and accepted the assessee's explanation, making no addition. The PCIT's show cause related to suppression of turnover and bogus labour contract charges, but he went beyond that scope by directing enquiries into other expenses, unsecured loans and comparative profitability and by directing computation of net profit on that basis. The Tribunal held that the PCIT thereby enlarged the scope of revisional proceedings beyond matters placed before him in the show cause and beyond issues which were the subject matter of reassessment, thus exceeding the limits of section 263. [Paras 13, 14, 15, 16]

Directions by the PCIT to re examine expenses, unsecured loans and to determine net profit exceeded revisional jurisdiction and are not sustainable.

Final Conclusion: The Tribunal allowed the appeal, held that the Principal Commissioner erred in invoking and in the exercise of powers under section 263 - both because the conditions of an erroneous order prejudicial to revenue were not satisfied and because the PCIT exceeded the permissible scope by directing enquiries and additions beyond the matters subject to reassessment and the show cause; the order under section 263 is set aside and the assessment order under section 143(3) r.w.s. 147 for AY 2014-15 is restored.

Treatment of 'more than ordinary profits' and proof of an arrangement for denial of deduction under section 80-IA(10) (read with section 10AA(9)) - disallowance under section 14A and computation under Rule 8D is contingent on the Assessing Officer recording satisfaction regarding correctness of assessee's claim - allowability of education cess and secondary & higher education cess as deduction - precedential consistency across assessment years and requirement for reasons when departing from earlier decisions

Treatment of 'more than ordinary profits' and proof of an arrangement for denial of deduction under section 80-IA(10) (read with section 10AA(9)) - precedential consistency across assessment years and requirement for reasons when departing from earlier decisions - Deletion of disallowance made under section 10AA(9) read with section 80-IA(10) on account of assessee's reported net margin exceeding that of comparables. - HELD THAT: - The Tribunal sustained the CIT(A)'s deletion of the disallowance. The appellate authority and the Tribunal relied on earlier decisions of the Pune Bench in the assessee's own case holding that mere existence of a close connection and the fact of 'more than ordinary profits' are not, by themselves, sufficient to invoke section 80-IA(10); the Assessing Officer must prove existence of an arrangement which resulted in higher than ordinary profits. As the AO did not establish any such arrangement or furnish reasons justifying departure from earlier consistent findings in the assessee's own assessments, the deletion of the disallowance was held to be fair and not liable to interference. [Paras 6]

Ground No.1 dismissed; deletion of the disallowance under section 10AA(9) r.w.s.80-IA(10) is sustained.

Disallowance under section 14A and computation under Rule 8D is contingent on the Assessing Officer recording satisfaction regarding correctness of assessee's claim - requirement of recording reasons before applying Rule 8D as explained by the Supreme Court - Deletion of additions under section 14A read with Rule 8D(2)(ii) & (iii) relating to exempt dividend and tax-free interest income. - HELD THAT: - The Tribunal agreed with the CIT(A) that the AO failed to record the mandatory satisfaction or reasons that the assessee's claim of incurring no expenditure to earn exempt income was incorrect. Relying on the Supreme Court's exposition that Rule 8D applies only after the AO is satisfied, having regard to the assessee's accounts, that the claim is not correct, the Tribunal found the AO's terse conclusion in the assessment order insufficient. In absence of the required satisfaction and discussion, the additional disallowance under section 14A/Rule 8D could not be sustained and was therefore deleted. [Paras 9, 10, 11]

Ground Nos.2 and 3 dismissed; the additional disallowance under section 14A/Rule 8D is deleted.

Allowability of education cess and secondary & higher education cess as deduction - Admissibility of a new cross-objection ground seeking deduction of education cess and secondary & higher education cess paid on income-tax and surcharge. - HELD THAT: - The Tribunal admitted the cross-objection ground as it was legal in nature and squarely covered by coordinate bench precedent. Relying on the Pune Bench decision in DCIT v. Bajaj Allianz General Insurance Co. Ltd. and the High Court authority cited therein, the Tribunal held that education cess is an allowable expenditure and therefore the ground raised in the cross-objection is allowed in favour of the assessee. [Paras 17, 18, 19]

Cross-objection allowed; deduction of education cess and secondary & higher education cess held allowable.

Final Conclusion: The Revenue's appeal is dismissed in its entirety; the assessee's cross-objection is allowed.

Principle of mutuality - charitable purpose - exemption under section 11 - proviso to section 2(15) - remand for verification and reassessment

Principle of mutuality - Applicability of the principle of mutuality to the assessee's receipts where services were provided to both members and non-members - HELD THAT: - The Tribunal found that the mutuality concept applies only where a mutual concern or association of persons contribute funds for a common purpose and the contributors receive back any surplus in the same capacity in which they made the contribution. Where services are provided to both members and non-members and the activities and receipts cannot be separated between those capacities, the capacity of contributors and participants is not the same and mutuality cannot be invoked. Because the assessee rendered services and made them available to non-members as well as members (not maintaining separate data to distinguish the same), the Tribunal held that the activities could not be assessed under the principle of mutuality. [Paras 11]

Principle of mutuality does not apply to the assessee's activities and receipts where services were rendered to both members and non-members and cannot be characterized as a mutual concern.

Charitable purpose - exemption under section 11 - proviso to section 2(15) - remand for verification and reassessment - Whether the assessee is entitled to exemption under section 11 and whether the proviso to section 2(15) applies - remand to Assessing Officer for fresh verification and assessment - HELD THAT: - Although the assessee is a section 25 company and had registration under section 12A, the Tribunal observed that the Assessing Officer and CIT(A) had taken divergent views on the effect of fees and activities vis-a -vis the proviso to section 2(15). Rather than finally adjudicating entitlement to exemption under section 11 or the applicability of the proviso to section 2(15) on the record before it, the Tribunal noted factual gaps (including absence of separate accounting for members and non-members and the need to verify books and the nature of receipts and expenses). The Tribunal therefore directed that the matter be remitted to the Assessing Officer to verify the books of account, analyze the activities in the light of the objects in the memorandum of association and relevant law, complete the assessment as per law and give the assessee an opportunity of hearing. The Tribunal declined to decide the exemption/substantive applicability question on the material before it and treated the grounds as allowed for statistical purposes pending reassessment. [Paras 12, 13]

Issue remitted to the Assessing Officer for verification of records and fresh assessment as per law (with opportunity of hearing); substantive questions regarding exemption under section 11 and applicability of the proviso to section 2(15) left for adjudication in the remand proceedings.

Final Conclusion: The Tribunal held that the mutuality principle does not apply where services and receipts are rendered to both members and non-members; it remitted the question of entitlement to exemption under section 11 and the applicability of the proviso to section 2(15) to the Assessing Officer for fresh verification, reassessment and opportunity of hearing, and allowed the appeal for statistical purposes.

Revision jurisdiction under section 263 - capital receipt vs revenue receipt - purpose test - computation of book profit under section 115JB - non-income receipts excluded from book profits/MAT - binding effect of coordinate bench and confirmed precedent

Revision jurisdiction under section 263 - binding effect of coordinate bench and confirmed precedent - Validity of the Principal Commissioner of Income Tax's assumption of revision jurisdiction under section 263 to reopen regular assessments on the ground that excise duty refunds and interest subsidy credited to reserves should have been treated as revenue and included in computation. - HELD THAT: - The Tribunal reviewed the settled test for exercise of revision jurisdiction - that the assessment must be both erroneous and prejudicial to the revenue - and applied relevant precedents and coordinate-bench decisions. The impugned receipts arose under the New Industrial Policy scheme applicable to the assessee's Jammu & Kashmir units and had already been held to be capital receipts by this Tribunal's coordinate benches (and by the Jammu & Kashmir High Court as affirmed), distinguishing the scheme considered in CIT v. Meghalaya Steels Ltd. In view of these binding and directly applicable decisions, the Assessing Officer's conclusion to treat the receipts as non-income in the regular assessment was a tenable view and not an erroneous assessment attracting section 263 revision. The PCIT therefore erred in assuming revision jurisdiction and directing inclusion of those receipts. [Paras 6]

PCIT's assumption of revision jurisdiction under section 263 was held to be erroneous and reversed; regular assessments restored.

Capital receipt vs revenue receipt - purpose test - computation of book profit under section 115JB - non-income receipts excluded from book profits/MAT - Whether excise duty refunds and interest subsidy, held to be capital receipts, must nevertheless be included in book profits for the purpose of section 115JB merely because they were credited to reserves or to the profit and loss account. - HELD THAT: - The Tribunal applied the purpose test for characterisation of receipts and the established proposition that receipts which are not in the nature of income cannot be treated as income for computing book profits under section 115JB. Reliance was placed on coordinate-bench precedents (including Binani Industries and other Tribunal and High Court decisions) which distinguish items that are not income at all from items that are income but exempted under specific provisions. Since the impugned receipts were held to be capital in character by applicable precedents and not income, including them in book profit would both tax non-income and distort the real working results that MAT seeks to capture. Consequently, they must be excluded while computing book profits under section 115JB. [Paras 6]

Excise duty refund and interest subsidy, being capital receipts and not income, are excluded from book profits under section 115JB.

Final Conclusion: The Tribunal allowed the assessee's appeals for assessment years 2013-14 and 2014-15, holding that the PCIT erred in invoking revision under section 263 and that the excise duty refunds and interest subsidy (held to be capital receipts by binding precedents) are not includible in book profits under section 115JB; the regular assessments were restored.

Bailable offence - non-bailable offence - Section 104(6) and Section 104(7) of the Customs Act - non-obstante clause and bailability test - cognizability under the Customs Act - burden of proof under Section 123 of the Customs Act - right to bail under Section 436 Cr.P.C. - evasion of duty threshold for non-bailability

Section 104(6) and Section 104(7) of the Customs Act - non-obstante clause and bailability test - evasion of duty threshold for non-bailability - non-bailable offence - bailable offence - Whether the offence under Section 135 of the Customs Act, as alleged on the facts of this case, is bailable or non-bailable under Section 104(6) and (7) of the Customs Act. - HELD THAT: - The Court examined Section 104(6), which makes certain offences punishable under Section 135 non-bailable if they fall within any of the four specified clauses (including evasion or attempted evasion of duty exceeding fifty lakh rupees, prohibited goods as notified, market price exceeding one crore, or specified frauds). Section 104(7) provides that, save as otherwise provided in subsection (6), all other offences under the Act shall be bailable. The counter-affidavit and record do not show that the seized gold falls into any clause of Section 104(6): there is no allegation or proof that the goods are within a notified category of prohibited goods, no assertion that evasion of duty exceeds fifty lakh rupees, no claim that the market price exceeds one crore, and no pleaded fraud under clause (d). Given the absence of material to bring the case within Section 104(6), the statutory scheme leads to the conclusion that the offence is bailable under Section 104(7). The Court applied this statutory test to the facts as recorded in the recovery memo and the counter-affidavit and found that the prosecution had not discharged the requirement to show applicability of any clause under subsection (6).

The offence as alleged is bailable under Section 104(7) of the Customs Act.

Cognizability under the Customs Act - burden of proof under Section 123 of the Customs Act - right to bail under Section 436 Cr.P.C. - Whether, notwithstanding concerns about ongoing investigation and possibility of tampering, the applicant is entitled to bail in a bailable offence. - HELD THAT: - The Court noted the prosecution's contention that granting bail may impede investigation and facilitate tampering or enable masterminds to escape. However, in a case held to be bailable, the right to bail under Section 436 Cr.P.C. is an absolute right and there is no discretion to refuse bail except in circumstances warranting cancellation post-grant. The prosecution's averments in the counter-affidavit did not demonstrate the specific statutory criteria required to render the offence non-bailable under Section 104(6). The Court observed that the Supreme Court's decisions recognize limited circumstances for cancellation of bail, but those circumstances were not shown to be present. The burden under Section 123 to prove that the goods are smuggled and thus bring the case within non-bailable categories rests on the person in possession, and the prosecution had not established those facts in the present record to deny bail.

In view of the statutory scheme and absence of material to make the offence non-bailable, the applicant is entitled to bail; the bail application is allowed subject to usual conditions.

Final Conclusion: Bail granted. The Court held that the prosecution failed to show that the seizure fell within any clause of Section 104(6) making the offence non-bailable; consequently the offence is bailable under Section 104(7) and the applicant is entitled to be released on bail on furnishing bonds and satisfaction of identity and surety verification by the trial court. Observations are confined to the bail disposal and do not affect the merits of the case.

Liability to pay interest under bond executed for Advance Licence - power of Settlement Commission to grant immunity from penalty and to waive interest - finality and conclusiveness of Settlement Commission orders under section 127J of the Customs Act, 1962 - discretionary partial waiver of interest by the Settlement Commission - effect of subsequent amendment to Customs notifications on past settlements

Liability to pay interest under bond executed for Advance Licence - power of Settlement Commission to waive interest - discretionary partial waiver of interest by the Settlement Commission - effect of subsequent amendment to Customs notifications on past settlements - Whether the Settlement Commission erred in directing payment of interest and in only granting partial waiver where the assessee had executed bonds and availed duty exemption under Advance Licences. - HELD THAT: - The Court held that the question whether the term 'interest' included interest payable under the bond executed for the Advance Licence has already been answered by the Honourable Supreme Court in Rexnord Electronics and Controls Ltd. v. Union of India, which concluded that an importer who evaded duty remains bound to pay duty and interest under the bond and the Settlement Commission lacks jurisdiction to waive the interest payable under such bond. The Settlement Commission's exercise of discretion in granting only a partial waiver of interest, as it stood at the relevant time, was not found to be infirm. A later amendment to Customs notifications (Notification No.46/2013) limiting interest in certain regularisation cases does not impeach the Commission's earlier discretionary order. As the revenue did not challenge the Settlement Commission's order and the order conferred a substantial benefit in favour of the petitioner, the High Court declined to upset the order but directed the petitioner to comply by paying the interest as ordered, failing which immunity would stand withdrawn and enforcement under the Act would follow. [Paras 26, 27, 28, 30, 31]

The Settlement Commission's direction for payment of interest was upheld; the writ petition was disposed but the petitioner was directed to pay the interest within 30 days, failing which the immunity granted would be treated as withdrawn and the authorities may proceed accordingly.

Final Conclusion: Writ petition dismissed in part; the Settlement Commission's order directing payment of interest (with partial waiver) is not disturbed. Petitioner directed to pay the interest within 30 days, failing which the immunity granted by the Settlement Commission will stand withdrawn and respondents may proceed under the Customs Act.

Power to demand interest under a bond executed under the EPCG scheme - enforcement of indemnity-cum-surety bond and invocation of bank guarantee - applicability of Export Promotion Capital Goods (EPCG) scheme conditions and Handbook of Procedure - regularisation under Public Notice No.22(RE-2013)/2009-2014 - capping of interest by Customs Notification No.46/2013-Cus dated 26.09.2013 - notification issued under Section 25(1) of the Customs Act, 1962 - re-quantification of interest and refund of excess payments

Power to demand interest under a bond executed under the EPCG scheme - enforcement of indemnity-cum-surety bond and invocation of bank guarantee - applicability of Export Promotion Capital Goods (EPCG) scheme conditions and Handbook of Procedure - Validity of demand for interest by authorities under the Foreign Trade (Development and Regulation) Act, 1992 for failure to fulfil EPCG export obligations - HELD THAT: - The Court held that importers who availed the EPCG concession did so subject to the Export and Import Policy and the Handbook of Procedure which mandated execution of bonds/undertakings to pay duty and interest in the event of failure to fulfil export obligations. Having accepted the benefits under the scheme and executed the bond, the petitioners could not contend that officers of the Ministry of Commerce lacked authority to demand interest; the customs concession under Notification No.160/92-Cus implemented the Policy and the bond obligations were enforceable, including invocation of the bank guarantee. The Court distinguished the petitioners' reliance on India Carbon Ltd. on its facts and relied on the reasoning in Rexnord (as noted by the Court) that interest payable under the bond is exigible and enforceable. Consequently the respondents were entitled to call for interest in the circumstances of these cases. [Paras 40, 41, 44, 45, 46]

Demand for interest by the FT(D&R) authorities pursuant to bonds executed under the EPCG scheme is valid and enforceable.

Regularisation under Public Notice No.22(RE-2013)/2009-2014 - capping of interest by Customs Notification No.46/2013-Cus dated 26.09.2013 - notification issued under Section 25(1) of the Customs Act, 1962 - Whether relief by way of reduction/capping of interest is available under the subsequent public notice and Customs Notification No.46/2013-Cus - HELD THAT: - The Court found that the Ministry of Commerce, recognising hardship to authorisation holders, issued Public Notice No.22(RE-2013)/2009-2014 providing a procedure to regularise defaults by payment of duty and interest subject to a cap where the interest component shall not exceed the duty payable for the default. The Central Government implemented that policy relaxation by amending Notification No.160/92-Cus through Sl. No.1 to Notification No.46/2013-Cus dated 26.09.2013 so that, for regularisations dealt with under the public notice, interest payable by an importer shall not exceed the amount of duty. The Court held that petitioners are entitled to benefit of that policy change and notification insofar as it limits or reduces the interest liability. [Paras 52, 53, 55, 56]

Petitioners are entitled to reduction/capping of interest in accordance with Public Notice No.22(RE-2013)/2009-2014 and Notification No.46/2013-Cus.

Re-quantification of interest and refund of excess payments - enforcement of indemnity-cum-surety bond and invocation of bank guarantee - Appropriate remedy and disposal where interest already appropriated/collected prior to Notification No.46/2013-Cus - HELD THAT: - The Court observed that in both matters the invoked bank guarantees exceeded the proportionate customs duty payable on the shortfall; amounts appropriated towards interest could not exceed proportionate duty on the shortfall in export obligation. In view of the subsequent policy and notification capping interest, the impugned orders were set aside and the matters remitted to the original licensing authority (Joint Director General of Foreign Trade) to re-determine the interest payable in accordance with Notification No.46/2013-Cus dated 26.09.2013, giving credit for amounts already paid and appropriated towards interest, and refunding any excess payment. [Paras 56, 57, 58]

Impugned orders set aside; matter remitted for re-quantification of interest under Notification No.46/2013-Cus, with credit for payments and refund of any excess.

Final Conclusion: Impugned orders demanding interest are held enforceable insofar as they arise from bonds executed under the EPCG scheme, but petitioners are entitled to benefit of the capping/regularisation policy in Public Notice No.22(RE-2013)/2009-2014 and Notification No.46/2013-Cus; the writ petitions are allowed to the extent impugned orders are set aside and the matters are remitted to the licensing authority to re-determine interest payable, give credit for amounts already appropriated and refund any excess.

Proceeds of crime - scheduled offence threshold under Section 2(y)(ii) of PMLA - interpretation of Explanation to Section 2(1)(u) of PMLA (Act No. 23 of 2019) - validity of complaint where initial ECIR valuation differs from pleaded proceeds - remand for fresh consideration by trial court

Proceeds of crime - interpretation of Explanation to Section 2(1)(u) of PMLA (Act No. 23 of 2019) - scheduled offence threshold under Section 2(y)(ii) of PMLA - validity of complaint where initial ECIR valuation differs from pleaded proceeds - Impugned order rejecting the discharge application was set aside and the matter remanded for fresh consideration in view of a discrepancy between the ECIR averment of value exceeding the Rs.30 lac threshold and the complaint pleading proceeds of only the cost of the uninstalled device, in the light of the Explanation added to the definition of "proceeds of crime". - HELD THAT: - The Court found it undisputed that the ECIR originally recorded combined sales in two financial years amounting to Rs. 52,42,525/-, thereby indicating an investigation under the Part-B scheduled offence threshold in Section 2(y)(ii) of the PMLA. During investigation the Enforcement Directorate obtained from the pollution control authority a valuation of the uninstalled pollution control device as Rs.2 lac, and the complaint ultimately pleaded that amount as the "proceeds of crime." The court observed that the trial court failed to notice and consider this material discrepancy between the ECIR allegation (value exceeding Rs.30 lac) and the subsequent complaint (proceeds pleaded as the cost of the device). The Court further noted the legislative insertion of the Explanation to Section 2(1)(u) by Act No. 23 of 2019 which expands the scope of "proceeds of crime," but held that, given the factual and pleading inconsistency, the trial court must reassess the matter afresh taking into account the observations made in the present order, including the relevance of the Explanation and the threshold in Section 2(y)(ii). In view of these considerations the High Court concluded that the impugned rejection of the discharge application could not be permitted to stand without fresh adjudication by the court below.

Impugned order dated 29.04.2019 set aside; matter remanded to the trial court for fresh disposal taking into account the noted discrepancy between ECIR and complaint and the effect of the Explanation to Section 2(1)(u) of the PMLA.

Final Conclusion: Revision allowed; the order rejecting discharge is set aside and the case is remitted to the Special Judge (PMLA) to decide afresh in accordance with the observations made by the High Court.

Deduction for material component in works contract - works contract-taxable value includes material unless deducted - entitlement to cum-tax benefit - re-quantification of tax demand on remand - penalty under Section 76 and Section 78-no penalty in absence of deliberate default - re-quantification of penalty under Section 77

Deduction for material component in works contract - works contract-taxable value includes material unless deducted - re-quantification of tax demand on remand - Re-determination of service tax liability after allowing deduction for material component of the works contract - HELD THAT: - The Tribunal found from the work order and the facts on record that the appellant performed a works contract involving supply of materials and execution of work, so the gross amounts received included value of materials. The Commissioner (Appeals) had observed a mistake in calculation by treating gross turnover without allowing deduction for the material component. The matter is therefore remitted to the original adjudicating authority for re-quantification of the tax demand after allowing deduction for the material component, which is to be verified from the sales tax assessment order and other records. The remand is for re-determination of liability (including cum-tax benefit and turnover adjustments) and not for reopening the fundamental finding that materials formed part of the gross receipts. [Paras 5]

Impugned order set aside and matter remitted for re-determination of tax liability after allowing deduction for the material component, verifiable from sales tax records.

Entitlement to cum-tax benefit - Claim to cum-tax benefit and adjustment of turnover - HELD THAT: - The Commissioner (Appeals) held that the appellant is entitled to cum-tax benefit. The Tribunal endorsed that position, recording that the appellant shall be entitled to the cum-tax benefit as already held by the Commissioner (Appeals) and to appropriate turnover adjustments in the re-quantification exercise on remand. [Paras 5]

Appellant entitled to cum-tax benefit and corresponding turnover adjustments to be given effect on remand.

Penalty under Section 76 and Section 78-no penalty in absence of deliberate default - re-quantification of penalty under Section 77 - Liability for penalties under the relevant provisions - HELD THAT: - The Tribunal accepted the Commissioner (Appeals) finding that there was no malafide or deliberate default made out in the show cause notice; consequently no penalty is exigible under the provisions corresponding to Sections 76 and 78. As to the penalty covered by Section 77, the Tribunal directed that it stand reduced in accordance with the re-quantified demand determined on remand, since the quantum of demand will change after deduction of the material component and other adjustments. [Paras 5]

Penalties under Sections 76 and 78 are not exigible for lack of malafide; penalty under Section 77 to be re-quantified and reduced in accordance with the re-determined demand.

Final Conclusion: The appeal is allowed by way of remand: the impugned order is set aside and the matter is remitted to the original adjudicating authority for re-quantification of service tax liability after allowing deduction for the material component (verifiable from sales tax records) and giving cum-tax benefit; penalties under the provisions corresponding to Sections 76 and 78 are held not exigible for lack of deliberate default and the penalty under Section 77 is to be reduced in accordance with the re-quantified demand.

Scope of show cause notice - classification of service - confirmation of demand beyond show cause notice - Commercial or Industrial Construction Service - adoption of different service heading during adjudication - precedent requiring clear allegations in show cause notice

Scope of show cause notice - classification of service - confirmation of demand beyond show cause notice - Whether a demand confirmed under service headings different from those specified in the show cause notice is sustainable. - HELD THAT: - The Tribunal found that the show cause notice proposed demand under Commercial or Industrial Construction Service for the period 01.04.2009 to 30.06.2012 (and other characterization for 01.07.2012 to 31.03.2013), whereas the adjudicating authority confirmed the demand under different service headings such as Erection, Commissioning and Installation Service, Maintenance and Repair Service and Manpower Supply Agency Service. Relying on this Tribunal's decision in M/s Marubeni India Pvt. Ltd. and the authorities cited therein, the court applied the principle that the Revenue must make clear allegations in the show cause notice and that re classifying the service under a heading different from that pleaded in the notice and then confirming demand amounts to passing an order beyond the scope of the show cause notice. Because the confirmation was under different service categories than those alleged in the show cause notice, the adjudication exceeded the scope of the notice and could not be sustained.

Impugned order set aside and appeal allowed on the ground that demand was confirmed under service headings different from those specified in the show cause notice.

Final Conclusion: The Tribunal allowed the appeal and quashed the adjudicating order on the sole ground that the demand was confirmed under service classifications different from those alleged in the show cause notice; other grounds were not decided.

Clandestine removal - shortages detected by visiting officers - requirement of corroborative evidence to sustain demand - confirmation of duty demand overturned for lack of evidence

Clandestine removal - shortages detected by visiting officers - requirement of corroborative evidence to sustain demand - Whether a demand of duty based solely on shortages detected at an inspection can be sustained as clandestine removal in absence of any corroborative evidence - HELD THAT: - The Tribunal held that the Revenue's case rested entirely on shortages observed during a factory visit and that there was no corroborative evidence of clandestine manufacture or removal. Relying on settled legal position and precedents, the Tribunal affirmed that allegations of clandestine removal cannot be upheld merely on the basis of shortages detected by visiting officers when there is no other supporting material. Applying that principle to the facts, the demand confirmed on the basis of such shortages was found not sustainable.

The impugned order confirming the duty demand was set aside and the appeal allowed; consequential relief was granted to the appellant.

Final Conclusion: The appeal was allowed and the order confirming demand based solely on shortages detected at the inspection was set aside for lack of corroborative evidence of clandestine removal.

Includability of retained VAT in assessable value - transaction value and the principle of amounts "actually paid" - binding precedent of the Supreme Court in Super Synotex - res judicata - extended period of limitation for fraud, suppression or willful mis-statement - remand for limited recomputation

Includability of retained VAT in assessable value - binding precedent of the Supreme Court in Super Synotex - transaction value and the principle of amounts "actually paid" - Amounts collected from customers as representing VAT but retained under a State remission/incentive scheme form part of the assessable value for Central Excise duty. - HELD THAT: - The Tribunal held that the Supreme Court's decision in Super Synotex, read with the post-1-7-2000 definition of "transaction value", governs the question. Under the amended provision the words "actually paid" are decisive: amounts not actually paid to the State do not qualify for exclusion from transaction value. Where an assessee collects VAT but retains it under an incentive scheme, the retained portion constitutes additional consideration paid to the manufacturer and must be included in the transaction value for excise duty. A contrary view in a Tribunal order (Welspun) based on technical grounds does not override the Supreme Court precedent, and the bench is bound to follow the Apex Court's ratio. [Paras 7, 8]

Demand on amounts collected as VAT and retained is upheld; such amounts are to be treated as cum-duty price and included in assessable value for excise duty.

Res judicata - Earlier decisions in favour of the assessee for prior periods do not operate as res judicata to preclude the Department from raising demands for subsequent consignments/periods. - HELD THAT: - The Tribunal explained that each consignment/assessment in Central Excise is separate; a mistake or an unchallenged decision in one assessment does not bind the Department for later periods. Relying on this principle, the plea of res judicata was rejected because a prior favourable order for an earlier period does not preclude fresh adjudication for later periods where law and factual matrix differ. [Paras 9]

Argument of res judicata rejected; Department may raise demand for subsequent periods notwithstanding an earlier unchallenged order.

Extended period of limitation for fraud, suppression or willful mis-statement - Invoking the extended period of limitation on grounds of fraud, collusion, willful mis-statement or suppression was not justified and is set aside. - HELD THAT: - The Tribunal found no basis on record to allege fraud, collusion, willful mis-statement or suppression by the assessee; the Revenue was aware of the assessee's modus operandi. In absence of such material, invocation of extended limitation is unwarranted and the demand under extended period was quashed. [Paras 10, 11]

Demand under extended period of limitation set aside; normal period demand upheld.

Penalty - Penalties imposed upon the assessee were set aside. - HELD THAT: - Having found no basis for invoking extended limitation and having remitted the duty computation to conform with the binding legal position, the Tribunal held that the penalties imposed cannot be sustained and accordingly set them aside. [Paras 10, 11]

Penalties imposed on the assessee are set aside.

Remand for limited recomputation - Matter remanded to the Adjudicating Authority for limited purpose of re-computation of duty treating retained VAT amounts as part of cum-duty price. - HELD THAT: - While upholding the principle that retained VAT must be included in assessable value, the Tribunal directed remand for re-computation so that duty can be calculated correctly on the cum-duty price in accordance with the decision. The remand is limited to quantification and computation consistent with the legal conclusions reached. [Paras 11]

Appeal remitted to the Adjudicating Authority for limited re-computation of duty.

Final Conclusion: Appeal disposed: law upheld that VAT amounts retained under the remission scheme are includable in assessable value and duty is payable thereon; extended period demand and penalties set aside; matter remitted for limited recomputation and normal period demand sustained.

Cenvat credit entitlement - substantive benefit not to be denied for procedural lapses - credit admissible on invoices in name of head office - maintenance and recording in RG-23A registers

Cenvat credit entitlement - substantive benefit not to be denied for procedural lapses - credit admissible on invoices in name of head office - maintenance and recording in RG-23A registers - Whether Cenvat credit can be denied solely because invoices showed the head office address instead of the factory address - HELD THAT: - The Tribunal found that the denial of Cenvat credit was based solely on the absence of the factory address on invoices while the invoices were in the name of the appellant's head office and the credit had been recorded in the appellant's RG-23A Part I and Part II registers. Relying on the principle that substantive benefits cannot be forfeited on account of procedural lapses and on the Tribunal's decision in Commr. of C. Ex. & Service Tax, Raipur v. Dayalal Meghji And Company 2015 (12) TMI-488- CESTAT New Delhi, the order holds that an assessee is entitled to take credit on the basis of invoices issued in the name of its own head office where that is the assessee's address shown and records substantiate the claim. Applying these principles to the facts for the period April, 2010 to March, 2015, the credit could not be denied for the stated procedural defect. [Paras 2, 3]

The impugned denial of Cenvat credit was set aside and the appeal allowed with consequential relief.

Final Conclusion: The appeal was allowed: Cenvat credit wrongly denied only on account of invoices showing the head office address (rather than the factory address) was restored for the period April, 2010 to March, 2015, with consequential relief.

Cenvat credit - limitation period for availing credit - applicability of Notification No. 21/2014-CE from 1.9.2014 - retrospective application of a notification

Cenvat credit - limitation period for availing credit - applicability of Notification No. 21/2014-CE from 1.9.2014 - Whether the six month time limit introduced by Notification No. 21/2014 CE (effective 1.9.2014) applies to Cenvatable invoices issued prior to 1.9.2014. - HELD THAT: - The Tribunal examined earlier decisions of the Tribunal which held that the six month limitation, made effective from 1.9.2014 by Notification No. 21/2014 CE, does not apply to invoices issued before that effective date. Applying those precedents, the Tribunal found that the invoices in question were raised prior to the notification's effective date and therefore the post notification six month bar could not be invoked to deny the Cenvat credit claimed in November 2014. In consequence, the impugned order denying credit on the ground of delay beyond six months was set aside and the appeal allowed with consequential relief. [Paras 3]

Appeal allowed; denial of Cenvat credit on the ground of the six month limitation under Notification No. 21/2014 CE set aside for invoices issued prior to 1.9.2014.

Final Conclusion: The Tribunal allowed the appeal, holding that the six month limitation introduced by Notification No. 21/2014 CE (effective 1.9.2014) does not apply to Cenvatable invoices issued before 1.9.2014, and set aside the denial of credit claimed in November 2014.

Cenvat credit reversal - manufacture - clearance on payment of duty - utilisation of Cenvat credit

Cenvat credit reversal - clearance on payment of duty - Payment of duty on goods cleared after cutting and slitting of CR coils constitutes reversal of Cenvat credit and precludes demand for denial of credit on that ground. - HELD THAT: - The factual position, which was admitted, is that after cutting and slitting CR coils into sheets the appellants cleared the goods on payment of duty having earlier utilized Cenvat credit. Applying the principle that where goods are cleared on payment of duty after utilization of Cenvat credit such payment operates as a reversal of the credit, the demand raised by the revenue seeking denial of Cenvat credit on the ground that cutting and slitting did not amount to manufacture is answered by the reversal effected through payment of duty on clearance. The Tribunal, relying on the established precedent to this effect, held that the payment by the appellants amounts to reversal of the Cenvat credit and therefore the impugned orders sustaining the demand lack merit. [Paras 5]

Impugned orders set aside; appeals allowed with consequential relief.

Final Conclusion: The appeals were allowed because the admitted clearance of goods on payment of duty after utilization of Cenvat credit amounted to reversal of the credit, thereby negating the revenue's demand; the impugned orders were set aside and consequential relief granted.

Reliance on SIB survey report - taxation on undocumented transactions - requirement of actionable, verifiable and reliable evidence for additions to turnover - presumption versus verifiable proof

Reliance on SIB survey report - taxation on undocumented transactions - requirement of actionable, verifiable and reliable evidence for additions to turnover - Whether the transaction alleged to have taken place (purchase of 4700 Kg betel nut) could be brought to tax against the revisionist solely on the basis of an invoice discovered during SIB survey when the alleged seller denied the sale and the Department could not verify the transaction. - HELD THAT: - The Court found that the impugned addition to turnover rested solely on a bill/invoice discovered by the SIB during survey and that the revisionist consistently denied the transaction. The alleged seller, M/s Trade Impex, also denied the sale in its return and the Assistant Commissioner reported that no such sale could be traced for the relevant month. The Court held that a stray document discovered in survey, unsupported by corroborative, verifiable evidence and inconsistent with the seller's records and departmental verification, is insufficient to establish that the transaction actually occurred. Taxability cannot be deduced from such isolated material; there must be actionable, verifiable and reliable evidence before including a transaction in the assessee's turnover. [Paras 14, 15, 16]

The transaction could not be included in the revisionist's turnover on the basis of the solitary invoice discovered by SIB and the addition was set aside.

Presumption versus verifiable proof - requirement of actionable, verifiable and reliable evidence for additions to turnover - Whether the orders of the assessing authority, first appellate authority and Tribunal premised on presumption or unverified material were sustainable. - HELD THAT: - The Court observed that the lower authorities acted on the basis of the discovered document without satisfactory verification and that the departmental enquiries confirmed the absence of the alleged sale from the seller's records. In these circumstances the Court concluded that the satisfaction recorded by the Tribunal and the findings of the lower authorities were infirm, being founded on presumption rather than verifiable proof. Accordingly, the Court interfered with and set aside those orders. [Paras 16, 17, 18]

Orders founded on presumption and unverified material were unsustainable and were set aside.

Final Conclusion: The impugned Tribunal order, the first appellate orders and the assessment order are set aside; the revision is allowed and the substantial questions of law are answered in favour of the revisionist.

Opportunity of hearing - remand for fresh consideration - exemption on sales to Special Economic Zone - redetermination of assessment - direction to pass assessment orders within specified time

Opportunity of hearing - redetermination of assessment - Impugned assessment order set aside for want of opportunity of hearing and petitioner entitled to personal hearing. - HELD THAT: - The Court found that following earlier orders setting aside assessments, the Assessing Officer issued notice and adjudicated only the SEZ exemption for 2007-08 while merely reiterating original conclusions on the remaining eight issues and penalty without affording fresh hearing. In the absence of an opportunity to address those issues after the remand, the impugned order was vitiated for want of opportunity. The writ petition was therefore allowed to the extent of setting aside the impugned assessment order and directing a personal hearing.

Impugned order set aside for want of opportunity; petitioner granted personal hearing.

Remand for fresh consideration - direction to pass assessment orders within specified time - Assessments for the listed periods remanded for fresh consideration with directions to afford opportunity and pass fresh orders within a specified timetable. - HELD THAT: - The Court directed the petitioner to appear for personal hearing on a fixed date and ordered the Assessing Officer to take up the assessments for 2007-08, 2008-09, 2010-11, 2011-12 and 2012-13, afford sufficient opportunity to file responses on all issues (including penalty), and thereafter pass assessment orders within four weeks from conclusion of the personal hearing. This remand contemplates reconsideration and redetermination of the issues on merits after hearing.

Assessments remanded for fresh consideration; personal hearing fixed and Assessing Officer directed to pass orders within four weeks of hearing.

Exemption on sales to Special Economic Zone - Claimed exemption on sales to SEZ for 2007-08 accepted by the Assessing Officer. - HELD THAT: - On receipt of notice pursuant to the remand, the respondent examined the petitioner's reply concerning the SEZ exemption for 2007-08 and accepted the claim in favour of the petitioner. The Court recorded this acceptance while setting aside the remainder of the assessment for want of opportunity on the other issues.

SEZ exemption for 2007-08 accepted in favour of the petitioner.

Final Conclusion: Writ petition allowed: the impugned assessment order set aside for want of opportunity; personal hearing directed on a specified date; assessments for 2007-08, 2008-09, 2010-11, 2011-12 and 2012-13 remanded for fresh consideration with directions to afford opportunity and pass fresh assessment orders within four weeks of the hearing; SEZ exemption for 2007-08 accepted.

Quashing of criminal proceedings where a statutory remedial code applies - exclusive remedial scheme under the SARFAESI Act and availability of alternative remedies - exercise of inherent jurisdiction to prevent abuse of process (Bhajan Lal parameters) - immunity from prosecution for actions taken in good faith under the SARFAESI Act

Quashing of criminal proceedings where a statutory remedial code applies - exclusive remedial scheme under the SARFAESI Act and availability of alternative remedies - exercise of inherent jurisdiction to prevent abuse of process (Bhajan Lal parameters) - The complaint, the magistrate's order directing investigation and the FIR insofar as the appellants are concerned were quashed on the ground that the statutory remedy under the SARFAESI Act was available and the criminal process amounted to an abuse and impermissible review of those remedies. - HELD THAT: - The Court noted that the dispute concerned enforcement of security and sale of a secured asset under a statutory code (SARFAESI Act) which provides a complete remedial scheme, including recourse to DRT/DRAT under Section 17; where discrepancies in valuation or auction procedure are alleged the statutory forum is the appropriate forum to adjudicate and, therefore, resort to criminal prosecution to re examine such measures is improper. The High Court's earlier consideration of the same grievance in the writ proceedings and the availability of remedies under the SARFAESI Act were material to conclude that permitting police investigation would allow a collateral, impermissible review of actions already subject to statutory adjudication. Applying the principles in State of Haryana v. Bhajan Lal, the Court held that extraordinary power to quash was justified to prevent harassment of the appellants and to protect the banking recovery process from being held to ransom by intimidatory or afterthought complaints; accordingly the complaint, the referral for investigation and the FIR against the appellants were quashed. The Court observed that questions such as good faith under Section 32 are factual matters which may be examined in the statutory proceedings, and exposing the appellants to criminal proceedings on the present facts was unjustified. [Paras 16, 17, 18, 19]

Complaint P.C. No.389/2016, the order dated 20.05.2016 and FIR No.0152/2016 insofar as the appellants are concerned are quashed; the complainant remains free to pursue statutory remedies under the SARFAESI Act.

Final Conclusion: The appeal is allowed: criminal proceedings against the appellants were quashed because the controversy related to enforcement of security under the SARFAESI Act and adequate statutory remedies existed; the complainant remains free to challenge the DRT/DRAT orders in accordance with law.

Offence under Section 138 of the Negotiable Instruments Act, 1881 - Presumption under Section 139 of the Negotiable Instruments Act, 1881 - Presumptions as to negotiable instruments - Burden of rebuttal of statutory presumption - Dishonour of cheque for insufficiency of funds - Notice requirement under Section 138 - Sentence, fine and recovery under criminal proceedings

Offence under Section 138 of the Negotiable Instruments Act, 1881 - Dishonour of cheque for insufficiency of funds - Notice requirement under Section 138 - Respondent committed offence under Section 138 of the Negotiable Instruments Act, 1881 by issuance of cheque for discharge of debt which was dishonoured and for which statutory notice was served but no payment made. - HELD THAT: - The court accepted the appellant's evidence that a loan of Rs. 7,00,000 was advanced and a cheque dated 8-7-2011 was given in discharge of that liability, which was presented and returned dishonoured for insufficiency of funds. The notice as per Ex.P/3 was served on the respondent and no payment or reply was made. The Sessions Court's acquittal was found to be against the weight of evidence. On the totality of evidence the act of the respondent falls within the mischief of Section 138 of the Act, 1881 and conviction was warranted. [Paras 6, 7, 11, 12]

Convicted under Section 138 of the Negotiable Instruments Act, 1881.

Presumption under Section 139 of the Negotiable Instruments Act, 1881 - Presumptions as to negotiable instruments - Burden of rebuttal of statutory presumption - Statutory presumption under Section 139 in favour of the payee/holder was not rebutted by the respondent and therefore stood established. - HELD THAT: - Section 139 creates a legal presumption that a cheque drawn in favour of the holder was issued for discharge of any debt or liability. The respondent did not himself depose to rebut this presumption; his defence witnesses gave inconsistent versions and no documentary evidence was produced. Non-production of income-tax returns or account registers by the complainant was not fatal, as corroboration is prudential not a legal requirement where the statutory presumption under Section 139 remains unrebutted. Consequently the presumption survived and supported conviction. [Paras 8, 9, 10]

Presumption under Section 139 stood unrebutted and supported the appellant's case.

Sentence, fine and recovery under criminal proceedings - Civil liability quantified and criminal sentence imposed with directions for recovery and interest. - HELD THAT: - The court ordered that the appellant is entitled to interest at 6% per annum on the amount advanced. The respondent was sentenced to pay a fine (directed amount) for the offence under Section 138 and the trial court was directed to take measures for liquidation of the amount as per Cr.P.C. The court clarified that imprisonment for non payment would be a mode of recovery and would not discharge the underlying monetary liability; further interest at 6% per annum on the principal was directed to run if payment was not made within fifteen days. [Paras 12]

Respondent directed to pay fine and monetary liability with interest; trial court to attempt recovery as per Cr.P.C.; detention not to extinguish liability.

Final Conclusion: The appeal is allowed; the Sessions Court's acquittal is set aside, the respondent is convicted for offence under Section 138 of the Negotiable Instruments Act, 1881, ordered to pay the monetary liability with interest and fined with directions for recovery; statutory presumption under Section 139 was held unrebutted.