TaxTMI Updates e-Newsletter
Mar 17,2020

Eligibility for input tax credit - exclusion of ITC for construction of immovable property - Section 17(5)(d) exclusion for construction of immovable property - input tax credit and letting out of immovable property - capitalisation (repairs, renovation, additions) and ITC exclusion - break in supply chain

Eligibility for input tax credit - Section 17(5)(d) exclusion for construction of immovable property - input tax credit and letting out of immovable property - Whether ITC of GST paid on goods purchased for construction and maintenance of a warehouse to be let out is admissible in full. - HELD THAT: - The Authority examined Sections 16 and 17(5) of the CGST Act and noted that Section 16 grants entitlement to ITC subject to conditions and restrictions, while Section 17(5)(d) expressly disallows input tax credit in respect of goods or services received for construction of an immovable property (other than plant or machinery) on the taxable person's own account, including where such goods or services are used in the course or furtherance of business. The Authority found that the warehouse is an immovable property and that the exclusion in Section 17(5)(d) operates notwithstanding use in the course or furtherance of business; hence the applicant's contention that ITC should be allowed because rentals will attract GST (and therefore there is no break in the supply chain) was rejected. The Authority held that the statutory exclusion is clear and leaves no scope for the interpretation urged by the applicant that would permit ITC for construction of a building meant for letting out. [Paras 7, 8]

No ITC of GST paid on goods purchased for construction and maintenance of the warehouse used for letting out is admissible under Section 17(5)(d).

Exclusion of ITC for construction of immovable property - capitalisation (repairs, renovation, additions) and ITC exclusion - eligibility for input tax credit - Whether ITC of GST paid on work contract services (from registered or unregistered contractors) for construction and maintenance of the building is admissible in full. - HELD THAT: - Applying the same statutory framework, the Authority treated work contract services used in construction and maintenance (to the extent of capitalisation) as falling within the Explanation to Section 17(5) which includes reconstruction, renovation, additions or alterations or repairs to the extent of capitalisation. Consequently, work contract services procured for construction and maintenance of the immovable property are excluded from ITC. The Authority rejected the applicant's submissions that the denial would cause double taxation or that the provision should be confined to immovable property constructed for sale, holding instead that Section 17(5)(d) is applicable to construction for letting out as well. [Paras 7, 8]

No ITC of GST paid on work contract services for construction and maintenance of the building is admissible under Section 17(5)(d).

Section 17(5)(d) exclusion for construction of immovable property - eligibility for input tax credit - capitalisation (repairs, renovation, additions) and ITC exclusion - Whether ITC of GST paid during FY 2017-18 on goods purchased and work contract services received for construction and maintenance of the warehouse is admissible. - HELD THAT: - The Authority expressly applied the statutory exclusion to the transactions taking place during FY 2017-18 and ruled that the temporal aspect does not alter applicability of Section 17(5)(d). The applicant's plea that GST paid in that earlier year should be allowed because of legal uncertainty was not accepted; the Authority concluded that ITC for that period is also inadmissible under the exclusion. [Paras 7, 8]

No ITC of GST paid during FY 2017-18 on goods and work contract services for construction and maintenance of the warehouse is admissible under Section 17(5)(d).

Final Conclusion: The Authority ruled that Section 17(5)(d) of the CGST Act excludes input tax credit on goods and services (including capitalised repairs/works contracts) used for construction or maintenance of immovable property; accordingly, ITC on materials and work contract services for the applicant's warehouse - including GST paid in FY 2017 18 - is not admissible.

Provisional attachment of bank accounts - lapse of attachment after one year unless renewed under Section 83(2) of the CGST Act, 2017 - lifting of attachment on furnishing fixed deposit receipt as security

Provisional attachment of bank accounts - lapse of attachment after one year unless renewed under Section 83(2) of the CGST Act, 2017 - Whether an attachment over the petitioner's bank accounts can continue after the expiry of one year from the date of the provisional attachment order under Section 83 of the CGST Act, 2017. - HELD THAT: - The Court held that Sub-section (2) of Section 83 of the Act, 2017 is explicit that a provisional attachment over bank accounts cannot continue beyond one year from the date of the order unless the order is renewed or a fresh order is passed by the authority. The provisional attachment made on 10th January, 2019 therefore lapsed on completion of one year on 10th January, 2020 in the absence of renewal or a fresh order. [Paras 3, 4, 5]

The attachment lapsed on completion of one year and cannot continue without renewal or a fresh order.

Lifting of attachment on furnishing fixed deposit receipt as security - Whether the provisional attachment should be lifted in the present case and on what terms. - HELD THAT: - In light of the parties' consensus and having regard to Revenue's interest, the Court recorded that the petitioner offered to furnish an original fixed deposit receipt for the sum mentioned to secure the matter, and the Assistant Solicitor General agreed to accept that receipt. On that basis the Court directed the respondent banks to lift the attachment over the petitioner's accounts, subject to the outcome of the pending Criminal Misc. Application No.3070 of 2019. The direction to lift the attachment is thus conditional upon delivery of the original fixed deposit receipt to the respondent. [Paras 8, 9]

Respondent banks directed to lift the attachment upon the petitioner handing over the original fixed deposit receipt, subject to the pending criminal application.

Final Conclusion: The petition is allowed to the extent that the provisional attachment made on 10.01.2019 lapsed after one year; pursuant to the parties' agreement the banks are directed to lift the attachment upon receipt of the original fixed deposit receipt from the petitioner, the relief being subject to the outcome of the pending Criminal Misc. Application.

Provisional attachment - cessation after one year - renewal of provisional attachment - right to operate bank account - provisional attachment to protect revenue under Section 83 of the Gujarat Goods and Services Tax Act, 2017

Provisional attachment - cessation after one year - renewal of provisional attachment - right to operate bank account - provisional attachment to protect revenue under Section 83 of the Gujarat Goods and Services Tax Act, 2017 - Whether the provisional attachment dated 24.09.2018 continues to subsist and whether the bank must be directed to permit the writ-applicant to operate the account. - HELD THAT: - The Court observed that the impugned provisional attachment order is dated 24th September 2018. Section 83(2) provides that every provisional attachment shall cease to have effect after the expiry of one year from the date of the order under sub section (1). The learned Assistant Government Pleader stated on instructions that the provisional attachment order has not been renewed and no fresh order has been passed. In view of the statutory one year limitation and the unrenewed status of the order, the Court concluded that the account is not presently under any attachment and that the bank must permit the writ applicant to operate the account. [Paras 6, 7, 9, 10, 11]

Provisional attachment dated 24.09.2018 has ceased to have effect in the absence of renewal; HDFC Bank Ltd., Gondal shall permit the writ applicant to operate the account.

Final Conclusion: Writ petition disposed; rule made absolute to the extent that the bank shall permit operation of the account as the provisional attachment has lapsed for want of renewal; direct service permitted.

Restoration of registration - implementation of administrative order by GSTN - mandamus directing compliance with departmental order - leave to implead party

Leave to implead party - Leave to implead the GSTN Council as respondent no.4 and amendment of the cause-title. - HELD THAT: - The Court granted leave to implead the GSTN Council as respondent no.4 and directed that the cause-title be amended accordingly. This was ordered at the outset to enable effective adjudication of the narrow controversy concerning the restoration and operational effect of a registration-restoration order. [Paras 1]

Leave to implead the GSTN Council as respondent no.4 was granted and the cause-title shall be amended.

Restoration of registration - implementation of administrative order by GSTN - mandamus directing compliance with departmental order - Direction to the GSTN Council to give effect to the order dated 04.06.2019 restoring the GST registration which was inadvertently cancelled. - HELD THAT: - The writ-applicant mistakenly applied for cancellation of a different registration and sought restoration of its correct registration. The assessing authority (respondent no.2) passed an order on 04.06.2019 restoring the registration, but that order had not been given effect to on the GSTN portal. Given the narrow compass of the controversy and the existence of the departmental restoration order, the Court directed the newly impleaded GSTN Council to examine Annexure-A (the order dated 04.06.2019) and to ensure that the restoration order is implemented without delay. The exercise was to be completed at the earliest and within four weeks from receipt of the writ of this order. [Paras 5, 6]

The GSTN Council was directed to immediately look into the matter and give effect to the order dated 04.06.2019 restoring the registration, the exercise to be completed within four weeks.

Final Conclusion: The High Court allowed impleadment of the GSTN Council and directed it to give effect to the departmental order dated 04.06.2019 restoring the registration, to be completed within four weeks; direct service was permitted.

Zero rated supplies - refund of IGST paid on exports - option to claim refund under Section 16(3) of the IGST Act - shipping bill deemed to be an application for refund under Rule 96 - withholding refund only on grounds specified in Rule 96(4) - circulars and instructions cannot override statutory provisions or Rule 96 - deduction of differential duty drawback before refund - interest on delayed refund

Refund of IGST paid on exports - zero rated supplies - shipping bill deemed to be an application for refund under Rule 96 - withholding refund only on grounds specified in Rule 96(4) - circulars and instructions cannot override statutory provisions or Rule 96 - deduction of differential duty drawback before refund - interest on delayed refund - Entitlement of the writ-applicants to refund of IGST paid on exports for the period July to September, 2017, subject to deduction of differential duty drawback and payment of interest. - HELD THAT: - The Court applied its earlier decision in M/s. Amit Cotton Industries, which held that exports are zero rated supplies and that a registered exporter is entitled to claim refund either under the bond/LOU route or after payment of IGST, as provided in the option under Section 16(3) of the IGST Act. Rule 96 of the CGST Rules treats the shipping bill as a deemed application for refund and restricts withholding of refund to the specific contingencies set out in Rule 96(4). A departmental circular post-dating the export could not be used to deny refund where the statutory rule does not provide for such withholding; circulars or instructions cannot override the statutory scheme or Rule 96. Applying these principles, the Court found no ground to deny the refund of IGST paid on the exported goods; the refund is to be sanctioned after deducting the differential amount of duty drawback for the period July to September, 2017. The Court further directed payment of interest at 7% simple from the date of the shipping bills until actual refund, in line with the reasoning in Amit Cotton Industries and the statutory framework governing refunds. [Paras 9, 10]

Writ allowed; respondents directed to immediately sanction refund of IGST paid in respect of the exported goods for July to September, 2017, after deducting the differential duty drawback, with 7% simple interest from the date of the shipping bills until actual refund.

Final Conclusion: The High Court allowed the writ, directing immediate sanction of IGST refund for the exports in the period July to September, 2017, subject to deduction of the differential duty drawback and with 7% simple interest from the shipping bill date until actual refund.

Respond to show cause notices - make representations to concerned authorities - unlock GST registration to enable payment - challenge to show cause notices - maintainability kept open

Respond to show cause notices - Petitioners directed to respond to the show cause notices within a specified time and may do so manually or through the portal if open. - HELD THAT: - The Court observed that notices had been issued to the petitioners and that the petitioners had not responded. In the interest of enabling further consideration by the authorities and facilitating any payments for post-GST contracts, the petitioners were ordered to file their responses to the show cause notices within two weeks from the date of the order, manually if necessary, or via the portal if it is open. This direction is procedural and aims to ensure that the administrative process proceeds with the petitioners' participation.

Petitioners must respond to the show cause notices within two weeks, manually or via the portal if available.

Make representations to concerned authorities - unlock GST registration to enable payment - Petitioners directed to appear and make specific representations to the concerned authorities; authorities directed to consider such representations and unlock GST registration to enable payments for post-GST contracts. - HELD THAT: - Noting that petitioners' GST registrations have been blocked and they thus claim inability to make payments, the Court required petitioners to appear before the concerned authorities within one week and file specific representations seeking to make payments for post-GST contracts. Upon receipt of such representations, the authorities were directed to consider them and, where appropriate, unlock the GST registration so that payments for the post-GST period can be made. The direction compels administrative action and ensures that the petitioners' ability to perform contractual obligations and make statutory payments is not stymied by an unresolved registration block.

Petitioners to appear within one week and file representations; authorities to consider representations and unlock GST registration to permit payments.

Challenge to show cause notices - maintainability kept open - Maintainability of the petitions challenging the show cause notices was not finally decided and was kept open. - HELD THAT: - Although the Court gave directions to facilitate administrative resolution (responses, representations, and unlocking of registrations), it expressly left open the question of the maintainability of the writ petitions insofar as they challenge the show cause notices. No adjudication on the substantive maintainability issue was undertaken; the matter remains undecided for future consideration.

Maintainability of the challenge to the show cause notices is left open for future determination.

Final Conclusion: Petitioners directed to file representations and respond to show cause notices within stipulated timeframes; authorities directed to consider representations and unlock GST registrations to enable post-GST payments; the question of maintainability of the petitions challenging the show cause notices remains open and undecided.

Commensurate reduction in prices - anti-profiteering - Section 171 of the CGST Act, 2017 - methodology for determination of profiteered amount - deposit in Consumer Welfare Fund - penalty under Section 171(3A) of the CGST Act, 2017 - investigation/remand of other screens

Commensurate reduction in prices - Section 171 of the CGST Act, 2017 - anti-profiteering - Whether the Respondent failed to pass on the benefit of GST rate reductions to recipients by way of commensurate reduction in ticket prices and thereby violated Section 171 of the CGST Act, 2017. - HELD THAT: - The Authority found that the GST rates on admission to cinematograph exhibitions were reduced w.e.f. 01.01.2019 and that the statutory obligation under Section 171(1) required suppliers to pass the benefit by commensurate reduction in prices. Using the Respondent's pre reduction cum tax prices for December 2018, base prices were computed and commensurate post reduction cum tax prices were derived. Comparison with actual post reduction selling prices for the period 01.01.2019 to 31.03.2019 showed that the Respondent had increased base prices across most categories so that selling prices were not reduced commensurately. The Authority held the DGAP's methodology appropriate and consistent with Section 171 and prior Authority practice, and concluded that the Respondent did not pass on the benefit and therefore had profiteered. [Paras 26, 27, 28, 33, 34]

The Respondent violated Section 171 by not passing on the benefit of the GST rate reductions through commensurate reduction in ticket prices; profiteering is established.

Methodology for determination of profiteered amount - commensurate reduction in prices - The quantum of profiteering, the computation adjustments accepted, and the remedial directions including refund, interest and deposit in Consumer Welfare Funds. - HELD THAT: - The DGAP quantified profiteering by comparing commensurate post reduction prices with actual sales data for the investigation period and computed an initial profiteered amount. The DGAP accepted an error (inclusion of certain 3D shows) and reduced the figure accordingly. The Authority determined the final profiteered amount as Rs. 3,90,272/- (after adjustment), of which Rs. 14/- (including GST) related to the applicant and Rs. 3,90,258/- related to other, unidentifiable recipients. Pursuant to Rule 133(3), the Respondent was directed to immediately reduce sale prices commensurate with the tax reduction, refund Rs. 14/- to the applicant with interest at 18% from the date of collection, and deposit Rs. 1,95,129/- in the Central Consumer Welfare Fund and Rs. 1,95,129/- in the Uttar Pradesh State Consumer Welfare Fund along with 18% interest within three months, failing which recovery to be effected by the Commissioners CGST/SGST. [Paras 15, 16, 42, 44]

Profiteered amount fixed at Rs. 3,90,272/-; refund to the applicant with interest and deposit of the balance in Central and State Consumer Welfare Funds ordered; immediate commensurate price reduction directed.

Penalty under Section 171(3A) of the CGST Act, 2017 - anti-profiteering - Whether the Respondent is liable to be proceeded against for imposition of penalty under Section 171(3A). - HELD THAT: - Having held that the Respondent denied the benefit of tax reductions and thereby profiteered as per the explanation to Section 171, the Authority concluded that the Respondent is apparently liable for penalty under Section 171(3A). The Authority directed issuance of a show cause notice to the Respondent to explain why the prescribed penalty should not be imposed. [Paras 45]

Show cause notice to be issued to explain why penalty under Section 171(3A) should not be imposed.

Investigation/remand of other screens - Section 171 of the CGST Act, 2017 - Whether the scope of inquiry should be extended to other screens operated by the Respondent and further investigation ordered. - HELD THAT: - The Respondent had admitted operating multiple screens and submitted data for other cinemas. Under Rule 133(5)(a) the Authority may, upon reasons recorded, direct the DGAP to investigate supplies other than those in the report where there are grounds to believe contravention has occurred. Given admissions and prima facie evidence of non passage of benefit in respect of other screens, the Authority directed the DGAP to investigate all other screens operated by the Respondent nationwide as a new investigation under Rule 129, to submit a report in accordance with Rule 133(5)(b). [Paras 40, 47]

DGAP directed to investigate all other screens of the Respondent and submit a fresh report; such investigation to be treated as a new investigation under the Rules.

Final Conclusion: The Authority held that the Respondent did not pass on the benefit of GST rate reductions effective 01.01.2019 and thereby profiteered; the profiteered amount was determined (after adjustment) and refund, interest and deposits into Central and State Consumer Welfare Funds were ordered, a show cause notice for penalty was directed, and the DGAP was instructed to investigate the Respondent's other screens nationwide.

Profiteering - commensurate reduction in prices - benefit of Input Tax Credit (ITC) - Section 171 of the CGST Act, 2017 - anti profiteering investigation methodology - no netting off - deposit in Consumer Welfare Fund - penalty under Section 171(3A) - remand for further investigation of franchisor

Profiteering - commensurate reduction in prices - benefit of Input Tax Credit (ITC) - Section 171 of the CGST Act, 2017 - Whether the Respondent failed to pass on the benefit of GST rate reduction and thereby profiteered in contravention of Section 171(1) of the CGST Act, 2017. - HELD THAT: - The Authority examined whether the GST rate on restaurant services was reduced from 18% to 5% w.e.f. 15.11.2017 and whether the commensurate benefit was passed on. Section 171(1) mandates that any reduction in rate of tax or the benefit of ITC must be passed on by way of commensurate reduction in prices for each supply. DGAP compared product wise average pre rate reduction base prices (derived from the Respondent's invoices) with actual post reduction prices and computed the ratio of ITC to taxable turnover for the pre reduction period (July 2017 to Oct 2017) as 8.01%, which represented the extent of ITC benefit that ceased w.e.f. 15.11.2017. The enquiry established that for a large number of SKUs the Respondent increased base prices by more than the 8.01% offset permitted for denial of ITC, thereby charging consumers higher cum tax prices and collecting excess GST. The Authority rejected respondent's contentions that various business costs (royalty, advertising, capital goods, promotion schemes, MRP items, or subsequent business pricing decisions) could be netted off against the obligation to pass on tax/ITC benefits, and held that such costs do not affect the statutory computation under Section 171. The DGAP's inclusion of GST collected on excess base prices in the profiteered amount was held correct because Section 171 requires passing on the benefit inclusive of tax reduction. Having applied the methodology to actual invoice data for the period 15.11.2017 to 31.03.2019, the Authority accepted DGAP's computation and conclusions. [Paras 24, 27, 28, 29, 36]

The Authority found contravention of Section 171(1); the Respondent profiteered and did not pass on the commensurate benefit of tax rate reduction/ITC.

Anti profiteering investigation methodology - no netting off - Validity of the DGAP's methodology and specific contentions raised by the Respondent (including use of average pre reduction prices, treatment of post reduction price decreases, and prohibition on netting off benefits). - HELD THAT: - The Authority held that Section 171 itself prescribes the procedure in principle - the commensurate reduction in prices for each supply - and that the Authority under Rule 126 may determine methodology suited to sectoral facts. Given perishable nature of restaurant supplies and variability in transactions, computing product wise average pre reduction base prices from the Respondent's own invoices and comparing those with actual post reduction transaction prices was an acceptable mathematical method. The Authority rejected the Respondent's arguments seeking netting off of excess benefit passed to some buyers, holding that each recipient is entitled to the commensurate benefit on each supply and excess benefit to some recipients cannot be appropriated to offset denial to others. Contentions about business costs, capital goods ITC projection, promotional zero priced supplies, or MRP based items were found irrelevant to the statutory computation. The Authority also rejected challenges that inclusion of GST on excess base price was erroneous, explaining that excess GST collected formed part of the benefit denied to consumers and correctly formed part of the profiteered amount. [Paras 21, 22, 24, 27, 28]

DGAP's methodology and its application in this case were upheld; netting off and the other contested adjustments claimed by the Respondent were rejected.

Deposit in Consumer Welfare Fund - penalty under Section 171(3A) - remand for further investigation of franchisor - Quantification, relief and consequential directions - determination of profiteered amount, deposit and interest directions, penalty liability and further investigation in respect of franchisor. - HELD THAT: - Applying the accepted methodology to the covered period (15.11.2017 to 31.03.2019), the Authority adopted DGAP's computation resulting in a profiteered amount of Rs. 8,24,260. The Respondent was directed to reduce prices commensurately and to deposit the profiteered sum in two equal parts into the Central Consumer Welfare Fund and the Maharashtra State Consumer Welfare Fund, together with 18% interest from the dates the amounts were realized until deposit, within three months; recovery mechanisms were specified in case of default. Finding an offence under Section 171(3A), the Authority directed issuance of notice to the Respondent to show cause why penalty under Section 171(3A) read with Rule 133(3)(d) should not be imposed. Separately, DGAP's finding that the franchisor M/s Subway Systems India Pvt. Ltd. may have profiteered by charging royalty/advertisement on increased net taxable sales was accepted as warranting further investigation; the DGAP was directed to examine that matter under the relevant Rules and submit a report. [Paras 36, 37, 39]

Profiteered amount fixed at Rs. 8,24,260; deposit with Consumer Welfare Funds with interest ordered; notice for penalty to be issued; DGAP directed to investigate the franchisor for possible profiteering.

Final Conclusion: The Authority found that the Respondent contravened Section 171(1) by not passing on the commensurate benefit of GST rate reduction/ITC for the period 15.11.2017 to 31.03.2019, fixed the profiteered amount at Rs. 8,24,260, directed its deposit into Central and Maharashtra Consumer Welfare Funds with 18% interest, issued a show cause direction for penalty under Section 171(3A), and remanded the franchisor M/s Subway Systems India Pvt. Ltd. for further investigation on possible profiteering.

Exclusion of Chapter VI compliance window by reason of information received under double taxation avoidance agreements (Section 71(d)(iii)) - declaration mechanism and compliance window under Chapter VI (Sections 59 to 63) - chargeability of undisclosed foreign assets in the year when asset comes to the notice of the assessing officer - retrospective operation and saving/clarificatory provisions (Section 72) - interim relief against proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015

Exclusion of Chapter VI compliance window by reason of information received under double taxation avoidance agreements (Section 71(d)(iii)) - declaration mechanism and compliance window under Chapter VI (Sections 59 to 63) - chargeability of undisclosed foreign assets in the year when asset comes to the notice of the assessing officer - Whether petitioners were statutorily entitled to make a declaration under Chapter VI (Sections 59-63) of the Black Money Act, or were excluded by operation of Section 71(d)(iii) on account of information received by the competent authority under agreements under Sections 90/90A - HELD THAT: - Court noted that Chapter VI provided a limited compliance window to declare undisclosed foreign assets and that Section 71(d)(iii) expressly excludes application of Chapter VI where information in respect of the undisclosed asset has been received by the competent authority under agreements entered into under Sections 90 or 90A. The record shows that income tax proceedings were reopened and search and seizure operations were carried out after receipt of information from foreign authorities pursuant to such agreements. In those circumstances Clause (d) of Section 71 applies and petitioners are statutorily barred from making a declaration under Section 59. The departmental circulars consistently reflect this position. Though petitioners challenge this as arbitrary and discriminatory, the Court observed that the statute contains the exclusion and that petitioners' case involves debatable questions which were admitted for final hearing; however, on the material before it the Court found that the statutory bar under Section 71(d)(iii) applies to the petitioners. [Paras 35]

Clause (d) of Section 71, including sub clause (iii), operates to exclude the petitioners from the benefit of Chapter VI; petitioners are statutorily dis entitled to make declarations under Sections 59-63 in view of information received under agreements under Sections 90/90A.

Interim relief against proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - presumption of constitutionality and burden on challenger - no coercive action pending adjudication - Whether interim relief in the form of stay of the impugned notices and a prohibition on action under the Black Money Act should be granted pending final disposal of the writ petition - HELD THAT: - Court recognised that arguable and debatable constitutional and statutory questions were raised and that rule had been issued admitting the petition, signifying a prima facie case. Nevertheless, having considered the statutory scheme, the severity of penal consequences, and the competing contentions of the parties, the Court declined to grant a broad stay of the impugned notices. Instead the Court directed that while respondents may proceed pursuant to the notices, they shall not take coercive measures against the petitioners pending final adjudication. The Court also directed an early listing of the main writ petition for final hearing. The notice of motion for interim stay was discharged accordingly. [Paras 36, 44]

Notice of motion for interim stay discharged; respondents may proceed under the impugned notices but shall not resort to coercive measures against the petitioners pending final hearing, and the writ petition is to be listed early after vacation.

Final Conclusion: The Court held that on the material before it Section 71(d)(iii) excludes the petitioners from the Chapter VI declaration window of the Black Money Act; accordingly, no declaration under Sections 59-63 is available to them. The petition for interim stay of the impugned notices was dismissed (notice of motion discharged), though respondents are restrained from taking coercive measures pending early final hearing of the writ petition.

Review under Order 47 Rule 1 CPC - error apparent on the face of the record - retraction of statement under section 132(4) of the Income Tax Act, 1961 - client code modification as basis for addition - concurrent findings of fact - no question of law where findings are factual

Review under Order 47 Rule 1 CPC - error apparent on the face of the record - Recall of the Court's order dated 02.11.2015 and admission of the appeal on proposed substantial questions of law was not maintainable by way of review. - HELD THAT: - The Court applied the well settled principle that review jurisdiction under Order 47 Rule 1 CPC is confined to correcting a manifest or patent error and is not a re-hearing of an erroneous decision. Reliance on Parsion Devi v. Sumitri Devi and related authorities was noted to underline that an error which requires reasoning is not an 'error apparent on the face of the record'. The Court found no such patent error in its order dated 02.11.2015; instead, the issues raised were governed by concurrent factual findings recorded in the earlier order in Tax Appeal No. 610 of 2015. Consequently, there was no ground to recall the earlier order or admit the appeal for fresh consideration. [Paras 6, 11, 12]

Application to recall the order dismissed; no reviewable error shown.

Client code modification as basis for addition - retraction of statement under section 132(4) of the Income Tax Act, 1961 - concurrent findings of fact - no question of law where findings are factual - Whether the addition made against the assessee on account of client code modification was subsumed in, or distinct from, the addition made pursuant to disclosure under section 132(4). - HELD THAT: - The Court examined the assessment and found that the Assessing Officer attributed an amount to the broker on the basis of the disclosure by Shri Nayan Thakkar, dividing the disclosed sum among several parties and attributing part to the assessee for providing client code modification. However, the Assessing Officer's attribution was based solely on the disclosure and not supported by independent seized material. The Court held that the Revenue's contention that the client code modification addition was subsumed within the s.132(4) disclosure addition was not acceptable. Further, the Court observed that the question whether the disclosure had basis and whether additions were supported by seized material had been addressed by concurrent findings of fact in the earlier order in Tax Appeal No. 610 of 2015; such factual conclusions did not give rise to any substantial question of law warranting recall or admission of the appeal. [Paras 4, 9, 10, 11]

Contention that client code modification addition was subsumed in the s.132(4) disclosure addition rejected; factual findings sustain refusal to reopen the order.

Final Conclusion: The application for recall of the Court's order is rejected; the proposed substantial questions are covered by earlier factual findings and do not warrant review or admission of the appeal.

Constitutional validity of Section 234E - fee versus penalty distinction - regulatory/compensatory fee and quid pro quo - late-filing regularisation by payment of fee - legislative competence and manifest arbitrariness

Constitutional validity of Section 234E - fee versus penalty distinction - regulatory/compensatory fee and quid pro quo - Section 234E is constitutionally valid and is a fee, not a penalty. - HELD THAT: - The Court held that Section 234E levies a late fee of Rs.200 per day to regularise delayed filing of TDS statements and is compensatory in nature rather than punitive. The provision was construed in the light of established authorities holding that a levy need not have a strict mathematical quid pro quo with services rendered and that a regulatory or compensatory fee may be sustained if there is a reasonable relationship between the levy and services or burden borne by the authority. The Court agreed with earlier High Court decisions that late filing imposes additional processing burden on the Department, delays credit to deductees and causes government liability for refund interest, and that Section 234E compensates for that extra burden by permitting belated filing upon payment of the fee. The existence of separate penalty provisions (notably Section 271H) that operate independently reinforced the characterization of Section 234E as a fee. Applying the principle that courts should uphold a statute where two constructions are possible, the impugned provision was not found to be manifestly arbitrary or beyond legislative competence. [Paras 21, 24, 32, 34]

Section 234E is not ultravires; it is a compensatory/regulatory fee and constitutionally valid.

Late-filing regularisation by payment of fee - fee versus penalty distinction - Demand notices issued under Section 234E (together with Sections 220(2) and 201(1)(A) as raised) are sustainable because the levy under Section 234E is valid. - HELD THAT: - Because the Court upheld the constitutional validity of Section 234E and treated it as an independent late fee distinct from penalty provisions such as Section 271H, the challenge to the specific demand notices raised under Section 234E (and consequentially under the related sections cited in the notices) failed. The Court observed that Parliament has competence to enact the provision and that the statutory scheme contemplates both fee for late filing and separate penalties under appropriate circumstances; nothing showed the levy or its enforcement to be arbitrary or unconstitutional. [Paras 32, 35]

Challenges to the demand notices under Section 234E (and related proceedings) are dismissed as unsustainable.

Final Conclusion: Writ petitions challenging the vires of Section 234E and the demand notices issued thereunder were dismissed; Section 234E is a valid compensatory/regulatory late fee distinct from penalty provisions, and the impugned demand notices therefore fail.

Omission to adjudicate appeal - recall of Tribunal order under Section 254(2) - reassessment proceedings under Section 147 - conversion of shares from stock-in-trade into investments - application of Section 41(1) of the Income Tax Act - mistake apparent from the record

Omission to adjudicate appeal - mistake apparent from the record - Tribunal's omission to deal with the petitioner's appeal for the assessment year 2003-04 and whether that omission constituted a correctible mistake. - HELD THAT: - The High Court examined the Tribunal's consolidated order dated 30.05.2018 and the appeals before it. While the Tribunal had dismissed the appeals relating to assessment year 2006-07, the Court found that the appeal filed by the petitioner for assessment year 2003-04 (I.T.A.No.7501/Mum/2016) was omitted from adjudication. The omission was not confined to one ground only; the order showed no consideration of the grounds raised in I.T.A.No.7501/Mum/2016 and thereby left that appeal undecided. The Court held that the failure to deal with the petitioner's appeal constituted an omission apparent on the face of the record warranting intervention under Article 226 to secure adjudication of the omitted appeal. [Paras 12, 13]

Found omission to adjudicate the petitioner's appeal for 2003-04; intervention warranted and omission set right by recalling the earlier order.

Recall of Tribunal order under Section 254(2) - conversion of shares from stock-in-trade into investments - application of Section 41(1) of the Income Tax Act - Whether the Tribunal's M.A. decision (dated 12.04.2019) should be interfered with so as to recall the order dated 30.05.2018 and require rehearing of both grounds in I.T.A.No.7501/Mum/2016. - HELD THAT: - The petitioner had sought correction under Section 254(2) asserting that the Tribunal's 30.05.2018 order failed to dispose of the appeal for 2003-04. The Tribunal's subsequent M.A. order of 12.04.2019 recalled its earlier order only insofar as ground No.1 of I.T.A.No.7501/Mum/2016 was concerned. On reviewing the record and the grounds urged by the petitioner (which included challenge to reassessment under Section 147 and the addition on account of conversion of shares and its treatment under Section 41(1)), the High Court concluded that both grounds in I.T.A.No.7501/Mum/2016 had been omitted and therefore the recall should extend to both grounds. The Court directed that the order dated 30.05.2018 stand recalled qua both grounds in I.T.A.No.7501/Mum/2016 and that the Tribunal hear that appeal afresh in accordance with law. [Paras 9, 13]

Interfered with the M.A. order to the extent that the Tribunal's order dated 30.05.2018 is recalled qua both grounds in I.T.A.No.7501/Mum/2016 and the Tribunal is directed to hear that appeal in accordance with law.

Final Conclusion: Writ petition allowed; the Tribunal's order dated 30.05.2018 is recalled insofar as I.T.A.No.7501/Mum/2016 (assessment year 2003-04) is concerned, both grounds in that appeal to be heard afresh by the Tribunal in accordance with law; no order as to costs.

Withholding refund under Section 241A - processing of return and refund under Section 143(1) and Section 143(1D) - discretion of the Assessing Officer to process refunds where notice under Section 143(2) has been issued - requirement of recorded reasons and approval by Principal Commissioner for withholding refund - payment of interest on delayed refund under Section 244A - quashing of departmental instructions that fetter AO's discretion

Payment of interest on delayed refund under Section 244A - Direction to the Revenue to process and issue refund for AY 2011-12 forthwith and pay applicable interest. - HELD THAT: - The Court recorded that a refund became due for AY 2011-12 pursuant to an earlier judgment deleting penalty and that the Assessing Officer had not given effect to that order. On the assurance taken from Revenue that the refund order had been processed, the Court directed that the refund for AY 2011-12 be issued within 30 days together with applicable interest, treating the matter as finally due. [Paras 9]

Refund for AY 2011-12 to be issued within 30 days with interest.

Processing of return and refund under Section 143(1) and Section 143(1D) - discretion of the Assessing Officer to process refunds where notice under Section 143(2) has been issued - quashing of departmental instructions that fetter AO's discretion - Revenue cannot refuse to process the return and withhold refund for AY 2016-17 solely because a notice under Section 143(2) has been issued; Assessing Officer must apply mind and decide refund claim expeditiously. - HELD THAT: - The Court reiterated precedent that issuance of a notice under Section 143(2) does not ipso facto bar processing of a return or grant of refund; the AO's discretion under Section 143(1D) must be exercised with reasons. The Revenue's sole reliance on the fact of pending scrutiny and on issuance of notice under Section 143(2) was held unreasonable in the absence of cogent application of mind. Given that the draft assessment indicates a likely demand substantially lower than the refund claimed, the Court directed the AO to process the return and pass consequential orders taking into account the Court's discussed principles, and complete the exercise within six weeks. [Paras 10, 14]

Assessing Officer to process the return for AY 2016-17 and decide the refund claim within six weeks; consequential orders to follow.

Withholding refund under Section 241A - requirement of recorded reasons and approval by Principal Commissioner for withholding refund - discretion of the Assessing Officer to process refunds where notice under Section 143(2) has been issued - Orders withholding refunds for AY 2017-18 and AY 2018-19 under Section 241A were unsustainable and set aside; matter remitted for fresh consideration in accordance with prescribed criteria and within a fixed time. - HELD THAT: - For returns covered by the post amendment regime, Section 241A governs withholding of determined refunds and requires informed, reasoned exercise of discretion; a mere recital of the statutory phraseology without application of mind is inadequate. The Court found the proposals and approvals on record to be laconic and lacking relevant consideration. It set aside the orders and directed the AO, within six weeks, to re-examine whether any part of the refund may be withheld by: (i) making a prima facie estimate of the probability that additions will be made in scrutiny proceedings; (ii) estimating the likely quantum and tax effect of such additions/disallowances; (iii) considering the assessee's financial position and other relevant factors (past demands, litigation, conduct); and (iv) recording reasons which must be approved by the Principal Commissioner. If no such reasoned decision is taken within six weeks, the refunds (specified amounts for AY 2017-18, AY 2016-17 and AY 2018-19) must be transmitted to the assessee with interest; any withholding decision would remain tentative and not preclude final assessment under Section 143(3). [Paras 15, 17, 19]

Orders withholding refunds for AY 2017-18 and AY 2018-19 set aside; AO to reconsider and record reasoned proposal for withholding under Section 241A with Principal Commissioner's approval within six weeks, failing which refunds to be released with interest; any withholding to be tentative.

Final Conclusion: Writ petitions disposed: Revenue directed to pay refund (with interest) for AY 2011-12 within 30 days; AO directed to process return and decide refund for AY 2016-17 within six weeks; orders withholding refunds for AY 2017-18 and AY 2018-19 under Section 241A set aside and remitted for fresh, reasoned consideration with Principal Commissioner's approval within six weeks, failing which specified refunds shall be released with interest.

Disallowance under section 14A - Computation of disallowance under Rule 8D(2)(ii) (interest) and Rule 8D(2)(iii) (expenses) - Tonnage Tax Scheme under Chapter XII-G and effect of exercising option under section 115VP(3)(i) - Computation of book profits for Minimum Alternate Tax under section 115JB - Admissibility of revised return and claim to revise computation (Goetz India principle) - Remand for fresh consideration of classification of receipts as shipping business income

Disallowance under section 14A - Tonnage Tax Scheme under Chapter XII-G and effect of exercising option under section 115VP(3)(i) - Computation of disallowance under Rule 8D(2)(iii) (expenses) - Whether disallowance under section 14A and the expense component computed under Rule 8D(2)(iii) is maintainable in view of the assessee having opted for the Tonnage Tax Scheme. - HELD THAT: - The Tribunal deleted the disallowance under section 14A for the years under appeal. Relying on this Tribunal's earlier decision in the assessee's own case and precedents holding that once an assessee has validly exercised the option under clause (i) of sub-section (3) of section 115VP (Tonnage Tax Scheme), section 14A disallowance would not be attracted, the Tribunal noted that the assessee's shipping income is computed on a deemed basis under Chapter XII-G and followed the coordinate-bench view. While the CIT(A) had confirmed the expense disallowance under Rule 8D(2)(iii), the Tribunal respectfully followed the earlier Tribunal ruling and deleted the disallowance. [Paras 4]

Disallowance under section 14A (including the expense component under Rule 8D(2)(iii)) deleted.

Computation of disallowance under Rule 8D(2)(ii) (interest) - Presumption as to source of investments (HDFC Bank principle applied) - Whether interest disallowance under Rule 8D(2)(ii) was justified. - HELD THAT: - The Tribunal accepted that the presumption in favour of the assessee as to source of investments, noted by the CIT(A) with reference to the ratio in HDFC Bank Ltd., applied on the facts: the assessee's own funds substantially exceeded the investments. On that factual basis the interest disallowance under Rule 8D(2)(ii) was held not to be justified and was deleted by the CIT(A), a view the Tribunal upheld for the years under appeal. [Paras 3, 4]

Interest disallowance under Rule 8D(2)(ii) deleted.

Computation of book profits for Minimum Alternate Tax under section 115JB - Consequential effect of deletion of disallowance under section 14A on book profit computation - Whether the disallowance deleted under section 14A should have been added while computing book profits under section 115JB. - HELD THAT: - The Tribunal held that since the disallowance under section 14A was deleted, any consequential adjustment of that disallowance in computing book profits under section 115JB would not arise. The deletion of the underlying disallowance thus removed the basis for its inclusion in book profits. [Paras 4]

No addition to book profits under section 115JB on account of the deleted section 14A disallowance.

Admissibility of revised return and claim to revise computation (Goetz India principle) - Remand for fresh consideration of classification of various receipts as shipping business income - Whether various receipts (income from house property, interest items, recovered bad debts, miscellaneous receipts, and related items) should be treated as shipping business income and/or excluded in computing book profits, and whether the revised computation may be considered. - HELD THAT: - The Tribunal observed that the lower authorities refused to admit the assessee's revised computation relying on the Supreme Court decision in Goetz India Ltd., which requires a revised return to raise certain claims. However, the Tribunal emphasised that the appellate forum may remit issues for correct ascertainment of income and, in equity, directed remittal of all such claims (grounds 10 to 18 and the additional ground) to the Assessing Officer. The AO was directed to adjudicate afresh whether the specified items constitute business income of the shipping operations and the consequential effect on tax and book profits, taking into account the assessee's submissions. No merits determination on these claims was made by the Tribunal; they were remanded for fresh consideration. [Paras 5, 8]

Matters relating to classification of the listed receipts and the revised computation remitted to the Assessing Officer for fresh adjudication; issues left open for decision on merits.

Final Conclusion: For AYs 2011-12 and 2012-13 the Tribunal deleted the disallowances under section 14A (including the expense component under Rule 8D(2)(iii)) and upheld deletion of interest disallowance under Rule 8D(2)(ii); consequential addition to book profits under section 115JB was held not to arise. The Tribunal dismissed the revenue appeals, allowed the assessee's relevant grounds, and remitted the remaining claims concerning classification of various receipts and the revised computation to the Assessing Officer for fresh consideration.

Transfer pricing comparability - Transactional Net Margin Method (TNMM) - functional comparability (FAR analysis) - selection and rejection of comparable companies - arm's length price determination

Transfer pricing comparability - functional comparability (FAR analysis) - selection and rejection of comparable companies - ICRA Management Consulting Services Ltd. is a valid comparable and is to be retained. - HELD THAT: - The Tribunal examined the functions, assets and risks of ICRA Management Consulting Services Ltd. and, applying FAR analysis, concluded that the services rendered by that company are akin to the non binding investment advisory services provided by the assessee. The decision rests on consistent judicial precedents and earlier appellate treatment in the assessee's own matters where, notwithstanding earlier rejection by the TPO, the company was found functionally similar and accepted as a comparable. Having regard to those findings and authorities, the Tribunal held that ICRA Management Consulting Services Ltd. is a suitable comparable and must be retained. [Paras 8]

Retained as a comparable.

Transfer pricing comparability - functional comparability (FAR analysis) - selection and rejection of comparable companies - Informed Technologies Ltd. is a valid comparable and is to be included. - HELD THAT: - The Tribunal considered the nature of services provided by Informed Technologies Ltd., noting they encompass analysis of financial data and related advisory/data management services for the financial sector, which parallels the advisory services rendered by the assessee. The Tribunal also relied on consistent findings in earlier tribunal and High Court decisions treating this company as functionally similar to investment advisory service providers. On that basis the Tribunal directed the Assessing Officer to include Informed Technologies Ltd. as a comparable. [Paras 11]

Included as a comparable.

Transfer pricing comparability - functional comparability (FAR analysis) - selection and rejection of comparable companies - Integrated Capital Services Ltd. is functionally dissimilar and is to be excluded as a comparable. - HELD THAT: - Although the assessee had originally selected Integrated Capital Services Ltd., the TPO's show cause notice recorded that the company is functionally dissimilar, and the TPO himself excluded it in earlier assessment years for the assessee. The Tribunal observed that several decisions, including a recent Tribunal finding in Warburg Pincus India Pvt. Ltd., hold that the company is not comparable to an investment advisory service provider. Having regard to the TPO's own contemporaneous view and consistent appellate precedents, the Tribunal directed exclusion of Integrated Capital Services Ltd. from the comparable set. [Paras 14]

Excluded as a comparable.

Final Conclusion: Appeal partly allowed: ICRA Management Consulting Services Ltd. and Informed Technologies Ltd. are directed to be included as comparables and Integrated Capital Services Ltd. is directed to be excluded; with these changes the assessee's margin falls within the acceptable range and no further adjustment is required.

Penalty under section 271G for failure to maintain transfer pricing documents - Maintenance of transfer pricing documents and applicability of section 92D and rule 10D - Acceptance of assessee's benchmarking by the Transfer Pricing Officer and its impact on levy of penalty - Power of the Transfer Pricing Officer to determine arm's length price independently by applying prescribed methods

Penalty under section 271G for failure to maintain transfer pricing documents - Maintenance of transfer pricing documents and applicability of section 92D and rule 10D - Acceptance of assessee's benchmarking by the Transfer Pricing Officer and its impact on levy of penalty - Power of the Transfer Pricing Officer to determine arm's length price independently by applying prescribed methods - Sustainability of penalty under section 271G where the assessee maintained primary books and furnished a transfer pricing study report but did not furnish segmental profitability, and the Transfer Pricing Officer ultimately accepted the assessee's benchmarking. - HELD THAT: - The Tribunal found that the assessee had maintained primary books of account and furnished a transfer pricing study report benchmarking the international transactions under TNMM, demonstrating maintenance of documents required by statute. The assessee explained its practical inability to produce segmental profitability for AE and non AE transactions owing to the nature of the diamond business, and those explanations were considered and accepted by the Commissioner (Appeals). Although the Transfer Pricing Officer alleged that non furnishing of segmental details hindered correct determination of arm's length price, he ultimately accepted the assessee's benchmarking without making adjustments. The Tribunal held that where the Transfer Pricing Officer has power under the statute to determine arm's length price independently by applying any prescribed method, any failure by the Officer to reject the assessee's benchmarking and to compute ALP independently cannot be visited as fault upon the assessee. In these circumstances, imposition of penalty under section 271G was unsustainable. The Tribunal relied on and applied the reasoning of earlier decisions dealing with identical facts, which upheld deletion of penalties in similar cases. [Paras 7, 8]

The deletion of the penalty imposed under section 271G was upheld and the Revenue's grounds are dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the Commissioner (Appeals)' order deleting the penalty under section 271G, concluding that the assessee maintained requisite documents and that the Transfer Pricing Officer's acceptance of the benchmarking precluded sustaining the penalty.

Income from House Property - Income from Other Sources - taxability of rent in the hands of legal owner - clubbed income - sham transaction / colorable device - legitimate tax planning / rule of consistency

Income from House Property - taxability of rent in the hands of legal owner - clubbed income - Whether the rental income and apportioned rent received by six co-licensors should be clubbed and taxed entirely in the hands of the assessee-owner. - HELD THAT: - The Tribunal found on the admitted facts that a pre-existing licensed arrangement dated 20/04/2009 granted exclusive license over 60% of the premises to six persons for valuable consideration and that, subsequently, a registered tripartite leave and license agreement dated 28/08/2009 recorded the proportionate shares of the seven licensors vis-a -vis the licensee. The parties performed the agreements and each of the seven licensors, including the assessee, offered their respective shares to tax in their returns. In these circumstances the earlier agreement could not be characterised as a sham or colourable device. The principle that income from a house property is taxable in the hands of its legal owner does not permit re clubbing of legitimately apportioned receipts where the arrangements are bona fide and honoured by parties. The rule of consistency and cited authorities support taking to tax the amount actually received by the assessee rather than treating the entire receipts of the ultimate tenant as the assessee's annual value. Consequently the clubbing of the six persons' share in rent into the assessee's income was held unsustainable. [Paras 6, 7]

Clubbing of rental income of the six co-licensors into the assessee's hands is not sustainable; the assessee's share alone is to be taxed under the head Income from House Property.

Income from House Property - Income from Other Sources - Whether amenities charges received under the Amenities Agreement are income from house property or income from other sources. - HELD THAT: - The Tribunal considered the nature and nexus of the amenities agreement with the leave and license agreement. The amenities were found to be fixed amenities for the building - services such as security, cleaning, landscaping and maintenance - which were co-terminus and dependent on the leave and license agreement. The first appellate authority had accepted that maintenance/amenities charges are to be considered as Income from House Property. Having regard to the substance of the arrangements and their close nexus with the ownership and letting of the property, the Tribunal directed that amenities receipts be taken into account as part of Income from House Property for the assessee, with statutory deductions applicable. [Paras 4, 5]

Amenities charges shall be treated as Income from House Property and not as Income from Other Sources, and statutory deductions under the head shall be allowed.

Legitimate tax planning / rule of consistency - sham transaction / colorable device - Whether the existence of separate returns filed by the six co-licensors or the first appellate authority's view about heads of income empowers re assessment or additions against the assessee. - HELD THAT: - The Tribunal recorded that the six co-licensors had offered their respective shares to tax and that there was no illegality in the agreements or in their performance. The mere fact that the six persons had shown income under a particular head (or that the first appellate authority thought a different head might have been more appropriate for them) did not justify making additions in the assessee's hands where the arrangements were bona fide. The Tribunal reiterated that tax planning legitimately exercised within the law is permissible and that colourable devices alone would warrant disregard; none was found on the facts. [Paras 6, 7]

No additions could be sustained on the basis that the earlier agreement was a sham or that the assessee's receipts should be treated differently; AO directed to compute tax recognising the genuine apportionment and allowing appropriate deductions.

Income from House Property - Whether the Tribunal's decision for AY 2011-12 applies to AYs 2012-13 and 2013-14. - HELD THAT: - Facts and agreements for the subsequent assessment years were pari materia and the impugned order was common for all three years. The Tribunal applied the same reasoning mutatis mutandis to AY 2012-13 and AY 2013-14. [Paras 8]

The decision in the lead year applies to AY 2012-13 and AY 2013-14; those appeals are allowed on the same terms.

Final Conclusion: Appeals allowed. The clubbing of the co-licensors' share of rent and amenities into the assessee's income was held unsustainable; amenities charges are to be treated as Income from House Property; the Assessing Officer is directed to recompute income taking only the assessee's share and allowing statutory deductions; the same result applies to AY 2012-13 and AY 2013-14.

Power to reopen assessment under section 147 - reason to believe - reopening based on change of opinion - requirement of external material for reopening

Power to reopen assessment under section 147 - reason to believe - reopening based on change of opinion - requirement of external material for reopening - Validity of reassessment proceedings initiated under section 147/148 when the Assessing Officer sought to withdraw an earlier allowance on the same material. - HELD THAT: - The Tribunal examined whether the Assessing Officer had formed a valid 'reason to believe' that income had escaped assessment so as to justify issuance of notice under section 148 read with section 147. The AO reopened the scrutiny assessment after noting interest income claimed as deductible under section 80P, relying on later judicial decisions; however the original assessment had examined and allowed the deduction and the material relied upon by the AO was already available on record. The Tribunal applied the settled principle that reopening cannot be justified on a mere change of opinion where no fresh or external material is disclosed which would reasonably lead to a belief of escapement of income. Having found that the formation of belief was based on existing material that had been considered in the original assessment and that no new external information was placed before the AO, the Tribunal concluded that the reassessment was impermissible and constituted a mere change of opinion. In view of this conclusion on the merits, the Tribunal did not consider the other grounds raised by the assessee. [Paras 7, 8]

Reassessment under section 147/148 quashed as being a mere change of opinion in absence of any fresh external material; appeal allowed.

Final Conclusion: The Tribunal set aside the reassessment initiated for A.Y. 2014-2015, holding that the reopening was invalid as it rested on a mere change of opinion and on material already on record; the appeal is allowed.

Deduction under section 80IB(10) - completion certificate as determinative of date of completion - proportionate deduction where part of project has completion certificate - treatment of Development Plan (D.P.) Road in computation of plot area - interpretation of eligible project area inclusive of mandatory amenities

Deduction under section 80IB(10) - completion certificate as determinative of date of completion - proportionate deduction where part of project has completion certificate - Claim for deduction under section 80IB(10) in respect of 12 flats for which Municipal completion certificates were not issued. - HELD THAT: - The Tribunal affirmed that the Explanation to section 80IB(10) makes the date of completion of a housing project the date on which the local authority issues the completion certificate, and therefore post-completion certification by the Municipal Authority is a fundamental statutory requirement for entitlement to the deduction. The Bench accepted the CIT(A)'s approach, following earlier coordinate decisions, that where completion certificates have been obtained for part of the project the deduction is allowable in respect of those completed units but cannot be granted for units lacking certification. The assessee's evidence of physical completion (electricity bills, property tax challans) and submission that delay in issuance was attributable to the municipal authority did not suffice to substitute for the statutory requirement of a completion certificate for those 12 flats; the Tribunal noted the assessee had accepted a similar disallowance in the subsequent assessment year. Accordingly, deduction was upheld for the 48 flats with completion certificates and disallowed for the 12 uncertified flats. [Paras 8]

Deduction under section 80IB(10) is allowable only in respect of the 48 flats for which completion certificates were obtained; deduction for the 12 flats without completion certificates is disallowed.

Treatment of Development Plan (D.P.) Road in computation of plot area - interpretation of eligible project area inclusive of mandatory amenities - Whether area allotted / acquired as D.P. Road must be excluded when determining whether the project site satisfies the minimum one-acre area requirement under section 80IB(10)(b). - HELD THAT: - Following the reasoning in coordinate Tribunal precedents and the CBDT guidance cited therein, the Tribunal held that the area of the site for the purpose of the one-acre threshold must be assessed with reference to the site as approved by the local authority and inclusive of amenities that are mandatory under local regulations. Where part of the land is compulsorily earmarked or acquired for a D.P. Road as a condition of sanction, that land forms part of the project site and cannot be excluded from computation of the plot area for eligibility under section 80IB(10). The Tribunal found no infirmity in the CIT(A)'s conclusion that the D.P. Road area should be included and accordingly sustained the assessee's entitlement on this ground. [Paras 10, 12]

Area acquired as D.P. Road is to be included in the area of the plot for determining the one-acre eligibility under section 80IB(10); the CIT(A)'s allowance on this issue is sustained.

Final Conclusion: Both the assessee's appeal and the Revenue's cross-appeal were dismissed: the Tribunal upheld allowance of deduction under section 80IB(10) only for flats certified as complete (48 flats) and sustained inclusion of D.P. Road area in computing the one-acre plot-size eligibility.

Validity of penalty proceedings initiated under section 271(1)(c) where notice under section 274 failed to specify whether proceedings were for concealment of particulars or for furnishing inaccurate particulars of income - Requirement of specificity in show-cause notice for penalty proceedings - Consequences of non specification of limb of penalty - notice to be bad in law

Validity of penalty proceedings initiated under section 271(1)(c) where notice under section 274 failed to specify whether proceedings were for concealment of particulars or for furnishing inaccurate particulars of income - Requirement of specificity in show-cause notice for penalty proceedings - Penalty levied under section 271(1)(c) was invalid and to be deleted because the notice under section 274 did not specify which limb of section 271(1)(c) the proceedings were initiated under. - HELD THAT: - The Tribunal examined the show cause notice issued under section 274 and found that it did not indicate whether penalty proceedings under section 271(1)(c) were being initiated for concealment of particulars of income or for furnishing inaccurate particulars of income. The bench observed that penalty proceedings are distinct from assessment and that the Assessing Officer must demonstrate the specific limb of section 271(1)(c) relied upon when initiating penalty. Applying settled precedent, including the decisions of the High Court and the Supreme Court cited in the order - Sahara India Life Insurance Company Ltd , Virgo Marketing Pvt Ltd , and SSA's Emerald Meadows Pvt Ltd - the Tribunal held that a notice which fails to specify the particular limb renders the penalty proceedings bad in law. In light of these determinations, the Tribunal set aside the findings of the CIT(A) upholding the penalty and directed deletion of the penalty imposed by the Assessing Officer. [Paras 9, 11, 12, 13]

Penalty of Rs. 5,36,115/- imposed under section 271(1)(c) is deleted as the notice under section 274 did not specify the limb of section 271(1)(c) relied upon.

Final Conclusion: Appeal allowed; penalty imposed for assessment year 2010-11 set aside and deleted because the show cause notice failed to specify whether proceedings under section 271(1)(c) were for concealment of particulars of income or for furnishing inaccurate particulars of income.

Ex parte order - principles of natural justice - opportunity of being heard - restoration to appellate authority for fresh adjudication - proceed ex parte

Ex parte order - principles of natural justice - opportunity of being heard - Whether the appeals should be restored for fresh adjudication by the Commissioner of Income Tax (Appeals) after affording the assessees a proper opportunity to be heard in view of ex parte orders passed below. - HELD THAT: - The Tribunal noted that the assessees did not appear before the Commissioner of Income Tax (Appeals) and also failed to be represented before this Tribunal. The Department relied on the lower authorities' findings. Despite the assessees' casual approach and non appearance, the Tribunal, exercising discretion in the interest of substantial justice, directed restoration of the appeals to the file of the Commissioner of Income Tax (Appeals) so that the appeals may be adjudicated on merits after giving the assessees a proper opportunity to present their cases. The Tribunal further directed the assessees to comply with notices and to cooperate in the first appellate proceedings, and made clear that failure to do so would entitle the First Appellate Authority to proceed ex parte and adjudicate in accordance with law. [Paras 6]

Appeals restored to the Commissioner of Income Tax (Appeals) for fresh adjudication on merits after affording the assessees proper opportunity to be heard; Commissioner authorised to proceed ex parte if the assessees fail to cooperate.

Final Conclusion: All six appeals restored to the file of the Commissioner of Income Tax (Appeals) for fresh adjudication on merits after affording the assessees an opportunity of being heard; appeals allowed for statistical purposes.

Deduction under Section 80P(2)(a)(i) - scope of inquiry under Section 80P(4) - primary agricultural credit society classification - requirement to verify purpose of individual loan disbursements and membership - each assessment year is a separate unit for entitlement

Deduction under Section 80P(2)(a)(i) - scope of inquiry under Section 80P(4) - requirement to verify purpose of individual loan disbursements and membership - primary agricultural credit society classification - each assessment year is a separate unit for entitlement - Whether the Assessing Officer's proportional denial of deduction under Section 80P(2)(a)(i) was justified or whether the matter requires fresh examination. - HELD THAT: - The Tribunal noted that the Assessing Officer disallowed a portion of the 80P claim on the basis that the assessee was ''essentially doing the business of banking'' and that agricultural loans advanced were only minuscule. The AO, however, did not undertake a detailed examination of individual loan disbursements to determine the purpose for which each loan was advanced nor the extent to which loans were advanced to non members. The Tribunal applied the Full Bench ruling in The Mavilayi Service Co operative Bank Ltd. v. CIT, which holds that after introduction of subsection (4) to Section 80P the AO must enquire into the factual activities of the society and is not bound merely by the registration certificate classifying the society as a PACS; entitlement must be verified year by year. In the circumstances, and because the AO's conclusions rested on summary statements without granular verification of loan purpose and membership status, the Tribunal restored the issue to the file of the Assessing Officer for fresh factual enquiry and decision in accordance with the Full Bench dictum, requiring the AO to list and examine instances of (inter alia) loans to non members and non agricultural advances before denying the 80P(2) claim. [Paras 7]

Issue remanded to the Assessing Officer for fresh examination of the nature and purpose of each loan disbursement and of advances to non members, to determine eligibility for deduction under Section 80P(2)(a)(i) in accordance with the Full Bench decision in Mavilayi.

Final Conclusion: The Tribunal restored the matter to the Assessing Officer for detailed year wise factual enquiry into the nature of loan disbursements and membership, directed decision in accordance with the Full Bench of the Kerala High Court in Mavilayi, allowed the appeals for statistical purposes and dismissed the interim stay applications as infructuous.

Deduction under Section 80P(2)(a)(i) of the Income tax Act - Effect of sub section (4) of Section 80P - assessment year wise factual enquiry - Registrar's classification of a society not conclusive for entitlement to Section 80P deduction - Requirement of enquiry into nature and purpose of loan disbursements to determine eligibility - Remand for fresh examination in accordance with the Full Bench decision in Mavilayi - Stay application dismissed as infructuous

Deduction under Section 80P(2)(a)(i) of the Income tax Act - Effect of sub section (4) of Section 80P - assessment year wise factual enquiry - Requirement of enquiry into nature and purpose of loan disbursements to determine eligibility - Whether the claim of deduction under Section 80P(2)(a)(i) was correctly denied and whether the matter required fresh factual examination by the Assessing Officer. - HELD THAT: - The Tribunal examined the Assessing Officer's conclusion that the assessee was essentially carrying on banking business and that agricultural credit disbursements were only minuscule. The Tribunal held that narration in loan extracts or audit reports is not conclusive to determine whether particular loans were for agricultural purposes; the Assessing Officer was required to examine the details and purpose of individual loan disbursements before denying the Section 80P claim. The Tribunal noted the legal position laid down by the Full Bench of the Kerala High Court in Mavilayi that, after insertion of sub section (4) of Section 80P, the Assessing Officer must conduct an enquiry into the factual activities of the society for each assessment year to determine eligibility and that the Registrar's classification is not conclusive. Applying that principle, the Tribunal found that a detailed factual examination had not been carried out in these assessment years and therefore directed restoration of the issue to the file of the Assessing Officer for fresh consideration. The Assessing Officer was directed to list instances where loans were advanced for non agricultural purposes, examine the purpose of each disbursement, and decide year wise in accordance with law and the Full Bench dictum in Mavilayi. [Paras 7]

The confirmation by the CIT(A) was not sustained; the matter is remanded to the Assessing Officer for fresh, assessment year wise factual enquiry into the nature and purpose of loan disbursements and for decision in accordance with the Full Bench decision in Mavilayi.

Stay application dismissed as infructuous - Whether the stay applications seeking to stay recovery of tax arrears should be granted. - HELD THAT: - As the Tribunal disposed of the appeals by remanding the substantive issue to the Assessing Officer, the Tribunal held that the stay applications had become infructuous and therefore dismissed them. [Paras 8, 9]

Stay applications dismissed as infructuous; appeals disposed of (allowed for statistical purposes) subject to remand direction.

Final Conclusion: The Tribunal remanded the question of eligibility for deduction under Section 80P(2)(a)(i) for assessment years 2013 2014 to 2015 2016 to the Assessing Officer for fresh, year wise factual enquiry into the purpose of loan disbursements in accordance with the Full Bench decision in Mavilayi; the appeals are allowed for statistical purposes and the stay applications are dismissed as infructuous.

Summoning of documents under Order XVI Rule 6 CPC - Relevance of documentary evidence - Benami Transaction (Prohibition) Act, 1988 - effect of Section 4 on third party allegations - Admissibility of departmental records maintained property wise - Scope and applicability of Order VII Rule 14 and Order XI CPC to documents not held by parties - Right to lead rebuttal evidence

Summoning of documents under Order XVI Rule 6 CPC - Relevance of documentary evidence - Validity of the trial court's rejection of the petitioner's application under Order XVI Rule 6 CPC to summon Income Tax Department records as irrelevant - HELD THAT: - Order XVI Rule 6 CPC permits summoning any person to produce a document without requiring that person to give evidence; the only apparent precondition is relevance to adjudication. The plaint expressly alleges that the transaction was Benami and that allegation is one of the bases of the suit and was denied by the defendants. The documents and communication produced by the petitioner (including the requisition from the Deputy Commissioner, Income Tax Department) pertain directly to that allegation. Consequently, the trial court's conclusion that the documents were irrelevant is contrary to the record: where the plaint makes a specific factual allegation and the departmental records relate to that allegation, the court was not justified in rejecting the request to summon them before rebuttal evidence is led.

The rejection of the application under Order XVI Rule 6 CPC on the ground of irrelevance was set aside and the trial court directed to summon the records as prayed.

Benami Transaction (Prohibition) Act, 1988 - effect of Section 4 on third party allegations - Whether Section 4 of the Benami Transaction (Prohibition) Act, 1988 bars a third party from alleging or proving that a transaction is Benami - HELD THAT: - Section 4 of the Act restricts enforcement of any right or defence based on property held Benami; it does not, however, preclude third parties from alleging or proving that a transaction is Benami. The trial court's reliance on Section 4 to refuse production of the Income Tax Department records was misplaced because the provision does not operate as a bar to a third party adducing evidence that a transaction is Benami. Thus the finding based on Section 4 had no sustainable foundation.

The trial court's rejection of the application premised on Section 4 of the Act was held unsustainable.

Scope and applicability of Order VII Rule 14 and Order XI CPC to documents not held by parties - Whether non compliance with Order VII Rule 14 or Order XI CPC invalidates an application under Order XVI Rule 6 CPC when the documents sought are not in possession of either party - HELD THAT: - Order VII Rule 14 and Order XI CPC address production or discovery of documents in the possession of the parties. The records sought from the Income Tax Department are not alleged to be in the petitioner's or defendants' custody. Therefore, the absence of any prior application under Order VII Rule 14 or Order XI CPC is immaterial to an application under Order XVI Rule 6 CPC seeking third party records. The trial court erred in treating failure to invoke those provisions as a ground for rejection.

The objection based on non invocation of Order VII Rule 14 and Order XI CPC was rejected.

Right to lead rebuttal evidence - Admissibility of departmental records maintained property wise - Whether the stage of proceedings (rebuttal evidence) or delay in the suit justified refusal to summon the departmental records - HELD THAT: - The trial court's observation as to the pendency and duration of the suit and its conclusory view that the plaintiff was not entitled to lead rebuttal evidence do not preclude production of relevant documents once the court permits rebuttal. The court further noted that particulars of the documents need not be precluded at this stage because the Income Tax Department maintains records property wise and will be required to identify responsive material once requisitioned. Hence, neither the age of the suit nor the timing at rebuttal stage warranted denial of the summons.

The trial court's refusal to summon the records on grounds of delay or stage of proceedings was set aside and summoning was ordered.

Final Conclusion: Writ petition allowed; order dated 3/2/2020 rejecting the application under Order XVI Rule 6 CPC is quashed and set aside and the trial court directed to summon the records/ documents from the office of the Deputy Commissioner, Income Tax Department, Jaipur, as prayed by the petitioner.

Benami transaction - prohibition of the right to recover property held benami - Order 7 Rule 11 CPC - rejection of plaint on preliminary ground - Order 14 Rule 2 CPC - preliminary issue disposal limited to jurisdiction or bar to suit

Benami transaction - prohibition of the right to recover property held benami - Order 7 Rule 11 CPC - rejection of plaint on preliminary ground - Whether the plaint is barred by Section 4(1) of the Prohibition of Benami Property Transactions Act, 1988 and whether rejection of the plaint under Order 7 Rule 11 CPC was justified at the preliminary stage - HELD THAT: - The Court held that Section 4(1) operates only if the transaction pleaded is in fact a benami transaction as defined in Section 2(9) and that the exception in clause (A)(iii) (acquisition out of known sources, e.g., Stridhan, in the name of spouse/child) may take a transaction out of the ambit of benami. Determination whether the plaintiff purchased the property out of her Stridhan (known source) is a fact-sensitive exercise, requiring cogent and reliable evidence and cannot be decided in limine on an application under Order 7 Rule 11 CPC. Reliance was placed on the principles that (i) the question whether a sale is benami is largely one of fact, (ii) the burden of proof lies on the party asserting benami character and must be strictly discharged, and (iii) indicia such as source of purchase money and conduct of parties are relevant. The trial Court's conclusion that the suit was not barred by Section 4 without adjudication on the factual foundation (whether consideration came from Stridhan/known source) was premature. Consequently that finding was set aside and the question must be examined at trial with evidence. [Paras 11, 12, 13, 15]

Finding that the suit is not barred by Section 4 of the Act is set aside; the question whether the transaction is benami must be determined on evidence at trial and cannot be disposed of at the preliminary stage by rejecting the plaint under Order 7 Rule 11.

Order 14 Rule 2 CPC - preliminary issue disposal limited to jurisdiction or bar to suit - Whether the trial Court could properly decide the benami question as a preliminary issue in the absence of written statements and evidence - HELD THAT: - The Court emphasised that Order 14 Rule 2 permits trying a preliminary issue of law first only where it relates to the Court's jurisdiction or a bar to the suit created by law, and that this procedure is to be applied after issues are framed (normally after the written statement). The trial Court's exercise in reaching a factual conclusion on the benami character at the stage of an Order 7 Rule 11 application, without permitting evidence and trial, was outside the proper application of the preliminary-issue procedure and therefore impermissible. [Paras 16, 17]

The exercise of deciding the factual benami issue as a preliminary matter prior to trial was improper; the provision for trying a preliminary issue applies in the procedural context explained in Order 14 Rule 2 and after issues are framed.

Final Conclusion: The revision petition is allowed to the extent that the trial Court's finding that the suit is not barred by Section 4 of the Benami Act is set aside; the plaint rejection application under Order 7 Rule 11 CPC is refused as premature and the question of benami character is remitted for adjudication at trial in accordance with law. No order as to costs.

Suspension of licence under Regulation 19 of CBLR, 2013 - Procedure for revoking licence or imposing penalty under Regulation 20 of CBLR, 2013 - Requirement of issuance of notice and opportunity of hearing before revocation or imposition of penalty - Necessity of conducting inquiry and appointment of an inquiry officer under the regulations

Suspension of licence under Regulation 19 of CBLR, 2013 - Procedure for revoking licence or imposing penalty under Regulation 20 of CBLR, 2013 - Requirement of issuance of notice and opportunity of hearing before revocation or imposition of penalty - Necessity of conducting inquiry and appointment of an inquiry officer under the regulations - Validity of continued suspension of the Customs Broker's licence in the absence of initiation of proceedings under Regulation 20 or conduct of an inquiry as required by the CBLR, 2013. - HELD THAT: - The Court examined Regulation 19 which permits suspension where immediate action is necessary and requires an opportunity of hearing within specified timeframes, and Regulation 20 which prescribes the procedure for issuing a notice proposing revocation of licence or imposition of penalty, conducting inquiry (including appointment of the appropriate officer), submission of the inquiry report and subsequent consideration leading to final orders. The appellant's licence had been suspended and the confirmation order dated 18-10-2017 was not followed by issuance of a show-cause notice under Regulation 20 nor by an inquiry as contemplated by the regulations; the only subsequent communication was a notice described as for "personal hearing in the matter of confirmation of suspension", which the appellant correctly contended was not the statutory notice proposing revocation or penalty and no inquiry officer had been appointed. The Tribunal found that prolonged suspension without initiating the procedural steps mandated by Regulation 20 and without conducting the prescribed inquiry was legally untenable. While the Tribunal did not adjudicate the merits of any revocation or penalty, it set aside the continued suspension and allowed the Commissioner liberty to proceed afresh in accordance with the regulatory scheme. [Paras 3, 5, 6]

Continuous suspension without initiating proceedings under Regulation 20 or conducting the prescribed inquiry is bad in law; the suspension of the Customs Broker's licence is revoked and the impugned order is set aside, with liberty to the Commissioner to proceed in accordance with the regulations.

Final Conclusion: The appeal is allowed; the order confirming suspension of the Customs Broker licence is set aside and the suspension revoked. The Commissioner is at liberty to initiate and conduct proceedings afresh strictly in accordance with Regulations 19 and 20 of the CBLR, 2013.

Confiscation for concealment - option to pay fine in lieu of confiscation under Section 125 - free baggage allowance exclusion of gold in any form other than ornaments - violation of customs declaration obligations - smuggling by use of baggage - penalty under Section 112(a) and scope of Section 114AA

Confiscation for concealment - free baggage allowance exclusion of gold in any form other than ornaments - Validity of confiscation of gold bars concealed in baggage trolley - HELD THAT: - The Court found that gold in any form other than ornaments is excluded from bona fide baggage under the Baggage Rules, 2016 (Annexure I) and that the applicant admitted ownership and purchase abroad in a voluntary statement. The goods were concealed in the baggage trolley by pasting a metal coated plate with plastic sticker and were not declared; therefore the importation violated the regulatory scheme and rendered the goods liable to confiscation. The adjudicating authority and the Commissioner (Appeals) were correct in upholding confiscation. [Paras 7, 8]

Confiscation of the impugned gold bars is valid and upheld.

Option to pay fine in lieu of confiscation under Section 125 - smuggling by use of baggage - Whether the applicant was entitled to redeem the confiscated gold by payment of fine under Section 125 - HELD THAT: - Although Section 125 provides an option to pay fine in lieu of confiscation for certain goods, the Government instruction (C.B.I. & C. letter dated 10 5 1993) precludes granting the redemption option for gold seized for non declaration except in very trivial cases where no concealment is found. The present case involved deliberate concealment and attempted evasion of customs duty; accordingly the adjudicating authority correctly refused the option to redeem under Section 125 and the Commissioner (Appeals) rightly upheld that refusal. [Paras 9]

No option to redeem the confiscated gold under Section 125 was available to the applicant.

Violation of customs declaration obligations - penalty under Section 112(a) and scope of Section 114AA - Correctness and extent of penalty imposed - HELD THAT: - The applicant crossed the green channel without declaring the gold, thereby violating the statutory declaration obligation (recorded under Section 77 in the order) and manifesting intent to evade duty. The authority imposed penalty under Section 112(a) read with Section 114AA; the Government found Section 114AA inapplicable for imposition of penalty and held that penalty can only be imposed under Section 112(a). On this basis the Government modified the Commissioner (Appeals) order to the extent of confirming penalty under Section 112(a) and disallowing reliance on Section 114AA. [Paras 8, 9]

Penalty is upheld under Section 112(a); imposition under Section 114AA is not sustainable.

Final Conclusion: Revision application rejected; confiscation of the concealed gold upheld, no option to redeem under Section 125, and penalty sustained under Section 112(a) with modification that Section 114AA is not applicable.

Disclosure obligation under Regulation 29(2) and 29(3) of the SAST Regulations - applicability of takeover disclosure obligations to invoked pledge transactions - threshold requirement of 2% for triggering Regulation 29(2) - continuous disclosure obligation under Regulation 13 (including 13(4A) and 13(5)) of the PIT Regulations - revocation/invocation of pledge triggering disclosure under Regulation 31(2) and 31(3) of the SAST Regulations - imposition and quantum of penalty under section 15A(b) of the SEBI Act

Disclosure obligation under Regulation 29(2) and 29(3) of the SAST Regulations - applicability of takeover disclosure obligations to invoked pledge transactions - Whether invocation of pledged shares which effects a change in shareholding attracts the disclosure obligations under Regulation 29(2) read with 29(3) of the SAST Regulations. - HELD THAT: - The Tribunal held that when pledged shares are invoked resulting in a sale and consequent reduction in an entity's shareholding, this constitutes a disposal/ acquisition for purposes of Regulation 29(2) and 29(3). Accordingly, an acquirer/person who, together with persons acting in concert, holds 5% or more and experiences a change amounting to 2% or more must disclose the change within two working days to the stock exchange and the target company. The appellants' contention that Regulation 29 applies only to pledgees and not to pledgors was rejected: invocation leads to change in shareholding and therefore triggers the statutory disclosure duty. The Tribunal examined the chart of transactions in the impugned order and found non-disclosure on multiple occasions, constituting contraventions of Regulation 29(2) read with 29(3). [Paras 5, 6, 7]

Invocation of pledged shares that effects change in shareholding attracts disclosure obligations under Regulation 29(2) and 29(3); non-disclosures amounted to violation and were rightly found by the AO.

Threshold requirement of 2% for triggering Regulation 29(2) - Whether transactions resulting in change of shareholding below 2% fall within the disclosure requirement of Regulation 29(2). - HELD THAT: - Regulation 29(2) is triggered only where the acquisition or disposal represents 2% or more of the shares or voting rights. The Tribunal, on scrutiny of the transaction chart, found two invocations by Appellant No.1 (on August 28, 2012 and November 2, 2012) which resulted in reductions of 1.21% and 1.82% respectively. Those specific transactions therefore did not meet the 2% threshold and could not attract penalties under Regulation 29(2) and 29(3). For all other transactions where the change equalled or exceeded 2%, the AO's findings of violation were sustained. [Paras 8]

Transactions causing changes below 2% do not trigger Regulation 29(2); Appellant No.1 is entitled to relief for the two identified transactions, while other findings under Regulation 29(2)/(3) are affirmed.

Continuous disclosure obligation under Regulation 13 (including 13(4A) and 13(5)) of the PIT Regulations - revocation/invocation of pledge triggering disclosure under Regulation 31(2) and 31(3) of the SAST Regulations - Whether invocation/revocation of pledges and off market transfers that change shareholding attract disclosure obligations under Regulation 13 (including 13(4A) and 13(5)) of the PIT Regulations and under Regulation 31(2) and 31(3) of the SAST Regulations. - HELD THAT: - The Tribunal held that Regulation 13 imposes a continuing duty of disclosure by promoters and persons required to disclose when there is a change in shareholding beyond the prescribed thresholds. Pledges, and their invocation or revocation, effect changes in shareholding and therefore fall within the scope of the disclosure obligations under Regulation 13(4A) and 13(5). Similarly, revocation of pledges may trigger disclosure obligations under Regulation 31(2) and 31(3) of the SAST Regulations. The Tribunal found that Appellant No.1 effected off market transactions and experienced pledge revocations without making the requisite disclosures; such failures justified imposition of penalties as recorded by the AO. [Paras 9, 10, 11]

Invocation/revocation of pledges and off market transfers that change shareholding attract disclosure obligations under the PIT and SAST Regulations; non-disclosures by the appellants in this regard constituted violations and were properly penalised by the AO.

Imposition and quantum of penalty under section 15A(b) of the SEBI Act - Whether the penalties imposed by the AO under section 15A(b) of the SEBI Act were justified and whether any modification of quantum was required. - HELD THAT: - Having affirmed that multiple disclosure obligations were contravened, the Tribunal upheld the imposition of penalties against the appellants. However, applying the exception for the two transactions of Appellant No.1 that fell below the 2% threshold, the Tribunal reduced the penalty imposed on Appellant No.1 for violation of Regulation 29(2) read with 29(3) from Rs. 15 lakhs to Rs. 10 lakhs. All other penalties imposed by the AO were affirmed. [Paras 12]

Penalties for proven disclosure violations were affirmed; penalty on Appellant No.1 for Regulation 29(2)/(3) reduced from Rs. 15 lakhs to Rs. 10 lakhs; appeal partly allowed to that extent.

Final Conclusion: The Tribunal affirmed the AO's finding that invocation/revocation of pledges and off market transfers that change shareholding attract disclosure obligations under the SAST and PIT Regulations and that the appellants' failures to disclose constituted violations. Relief was granted to Appellant No.1 for two specific transactions that fell below the 2% threshold, with a reduction of the penalty imposed on that appellant; all other penalties were upheld and the appeal was otherwise dismissed.

Validity of transfer/pledge of shares - null and void ab initio - prior approval requirement under the Insurance Act and Transfer of Equity Shares Regulations - holding as trustee/custodian - due diligence and Fit and Proper criteria

Validity of transfer/pledge of shares - null and void ab initio - prior approval requirement under the Insurance Act and Transfer of Equity Shares Regulations - The observation in IRDAI's impugned orders that the transfer/pledge of the RGIC shares are null and void ab initio is incorrect and is set aside. - HELD THAT: - The Tribunal examined the impugned orders of IRDAI which had held that the invocation and consequent transfer of pledged RGIC shares violated the statutory requirement of prior approval and were therefore null and void ab initio. Subsequent communications from IRDAI and undertakings from the debenture trustee indicated that the shares were held in a custodial/trust capacity and that any onward transfer would be subject to IRDAI approval and its due diligence exercise. In view of these developments and the trustee's undertaking to seek approval before effecting any transfer, the Tribunal found the categorical declaration that the pledge/transfer was null and void to be incorrect and disproportionate. Accordingly, the Tribunal set aside that aspect of IRDAI's orders while preserving the need for prior approval before any transfer is effected. [Paras 12, 14]

Set aside the finding that the transfer/pledge was null and void ab initio; directions given that any transfer must follow statutory approval process and due diligence.

Holding as trustee/custodian - due diligence and Fit and Proper criteria - invocation of pledge - The position that the debenture trustee is holding the pledged shares in a trustee/custodian capacity and will not exercise control or voting rights while awaiting identification of a suitable buyer; IRDAI's power to carry out due diligence prior to approval is preserved and the question whether 'transfer' includes pledge is left open. - HELD THAT: - The Tribunal recorded the contemporaneous communications and undertakings: IDBI Trusteeship Services Ltd. holds the RGIC shares in its demat account in its capacity as trustee/custodian and has undertaken not to exercise control, management influence or voting rights over RGIC while so holding. The trustee also undertook to make efforts to find a suitable buyer and to approach IRDAI for approval before any sale/transfer is effected so that IRDAI may carry out due diligence regarding the transferee's fitness and financial soundness. Given these representations and IRDAI's subsequent letter clarifying that it would perform due diligence prior to any contemplated transfer, the Tribunal refrained from deciding the broader legal question whether the term "transfer" under the Insurance Act encompasses a pledge, leaving that issue open for determination at the appropriate stage. [Paras 11, 12, 13, 14]

Recorded that the trustee holds the shares as custodian without exercising control; directed that any proposed transfer be preceded by an application to IRDAI for due diligence and approval; left open whether 'transfer' includes pledge.

Final Conclusion: The Tribunal set aside IRDAI's declaration that the invoked pledge/transfer of RGIC shares was null and void ab initio, recorded that the debenture trustee holds the shares as trustee/custodian without exercising control or voting rights, and directed that any sale/transfer to a buyer shall be undertaken only after making an application to IRDAI to enable its due diligence and approval; the question whether a 'transfer' includes a pledge is left open.

Collective investment scheme - Unregistered CIS - prohibition on carrying on without certificate of registration - Illegal mobilization of funds - Prohibition of manipulative, fraudulent and unfair trade practices - Directors' liability for company's contraventions - SEBI powers to direct winding up, refund and market access restraints

Collective investment scheme - Section 11AA(2) - four conditions of CIS - The scheme of allotment of lands/developing colony/plots offered by VBDP satisfied the conditions of a collective investment scheme under Section 11AA of the SEBI Act. - HELD THAT: - SEBI examined scheme documents, registration letters, terms and conditions, balance sheets and land purchase records and found that (i) monies collected were pooled and invested in land projects, (ii) investors were induced to expect profits/returns from the scheme rather than acquisition of identified property, (iii) investments/property were managed by the company and (iv) investors lacked day-to-day control. The temporal correlation between increases in 'other current liabilities' and land acquisitions, the nature of the registration letters and the company's ability to amend terms prima facie establish that the offering meets the four conditions of Section 11AA(2). The adjudicating authority concurs with the Interim Order's analysis and findings that the scheme is a CIS. [Paras 11, 13, 14, 15]

VBDP's scheme is a collective investment scheme as defined in Section 11AA of the SEBI Act.

Unregistered CIS - prohibition on carrying on without certificate of registration - Prohibition on sponsoring or carrying on CIS without registration - VBDP carried on a collective investment scheme without obtaining a certificate of registration, in contravention of Section 12(1B) of the SEBI Act and Regulation 3 of the CIS Regulations. - HELD THAT: - Having concluded that the scheme qualifies as a CIS under Section 11AA, and noting that VBDP did not obtain registration from SEBI to operate such scheme, the authority finds that VBDP contravened the statutory prohibition against sponsoring or carrying on CIS without a certificate of registration. The company did not respond to the Interim Order to contest these findings. [Paras 15, 16]

VBDP violated Section 12(1B) of the SEBI Act and Regulation 3 of the CIS Regulations by operating an unregistered CIS.

Illegal mobilization of funds - Prohibition of manipulative, fraudulent and unfair trade practices - The fund-raising activity of VBDP under the scheme constituted illegal mobilization of funds and amounted to a fraudulent/unfair trade practice under Regulation 4(2)(t) of the PFUTP Regulations (post-insertion with effect from 13 September 2013). - HELD THAT: - Regulation 4(2)(t) of the PFUTP Regulations, inserted with effect from 13 September 2013, proscribes illegal mobilization of funds by carrying on a collective investment scheme. The authority observed that VBDP raised funds under the scheme without registration or filing offer documents as required under the CIS Regulations; therefore, such activity falls within the purview of illegal mobilization of funds and is a fraudulent or unfair trade practice under the PFUTP Regulations. [Paras 3, 17]

The Noticees violated Regulation 4(2)(t) of the PFUTP Regulations by illegally mobilizing funds under the scheme after 13 September 2013.

Directors' liability for company's contraventions - Attribution of corporate conduct to directors - Noticee nos. 2 and 3, being directors of VBDP since August 03, 2010 and continuing in office, are responsible for the company's contraventions and liable for the directions imposed. - HELD THAT: - The record establishes that the two individuals were directors of VBDP during the period of fund mobilisation and continue to be directors. Given the company's operation of an unregistered CIS and illegal mobilisation of funds, the authority holds the directors responsible for violations by the company and subjects them to the consequential prohibitions and obligations. [Paras 16]

Directors Yogendra Bisay and Jitendra Bisay are held responsible for VBDP's violations and are subject to the directions issued.

SEBI powers to direct winding up, refund and market access restraints - Remedial directions - winding up, refund, inventory, reporting and market/professional restraints - Appropriate directions are issued against VBDP and its directors: mandatory winding up of the CIS and refund of investors with prescribed modalities; submission of winding up and repayment report and inventory; prohibition from dealing in securities and holding directorships in listed companies for specified periods; and initiation of recovery proceedings in case of non-compliance. - HELD THAT: - Exercising powers under Sections 11(1), 11B, 11(4) read with Section 19 of the SEBI Act, and relevant CIS and PFUTP regulations, the authority directs (a) wind up of the CIS and refund of contributions with returns within three months through specified banking channels, (b) submission of winding up and repayment report with audit trail and CA certifications, (c) prohibition on diversion or alienation of assets except to make refunds, (d) submission of full inventory of assets, (e) restraint from accessing the securities market until compliance and for a further four years thereafter (including extension to existing holdings), and (f) restraint on the two directors from holding directorships/key managerial positions in listed companies for four years. Non-compliance will invite recovery proceedings under Section 28A of the SEBI Act. [Paras 18, 20, 21]

Directions for winding up, refund, reporting, asset preservation, market access prohibition and professional disqualification are issued against VBDP and its directors; failure to comply will lead to recovery proceedings.

Final Conclusion: SEBI's order finds that Vayaa Builder and Developers Pvt. Ltd. operated an unregistered collective investment scheme satisfying Section 11AA, unlawfully mobilized funds constituting a fraudulent/unfair trade practice under the PFUTP Regulations, and breached the prohibition on carrying on CIS without registration; its two directors are held responsible. Consequently, SEBI directs winding up and refund to investors with specified compliance, imposes restraints on market access and directorships, requires inventory and repayment reporting, and warns of recovery proceedings for non-compliance.

Construction of complex - residential complex - service tax liability - Goods Transport Agency service - reverse charge mechanism - remand for fresh consideration

Construction of complex - residential complex - service tax liability - Levy of service tax on the appellant under the 'construction of complex' service in respect of the works for MP Development Board - HELD THAT: - The Tribunal held that the statutory definition of "residential complex" requires a building or buildings having more than twelve residential units. Independent buildings each containing a single residential unit are not covered by that definition and, accordingly, construction of such independent houses does not fall within the taxable "construction of complex" service. The Tribunal applied and followed earlier decisions (Macro Marvel Projects Ltd. and A.S. Sikarwar, with the Department's appeal having been dismissed by the Supreme Court) and observed that those authorities are directly apposite to the facts here, where the appellant constructed independent one-unit buildings. The Court also noted that the statutory definitions remained unchanged after 1 July 2012, and therefore the service tax liability could not be sustained for the periods in issue. [Paras 15, 21, 22, 23]

Demand of service tax under 'construction of complex' set aside.

Goods Transport Agency service - reverse charge mechanism - remand for fresh consideration - Liability of the appellant as recipient under Goods Transport Agency (GTA) service - HELD THAT: - The Principal Commissioner recorded that the appellant had not submitted documentary evidence to show the payments were for local cartage (no consignment notes) and further held that the threshold limit under the Notification would not be available to a recipient liable under the reverse charge mechanism. The Tribunal observed that although the appellant had not produced the receipts before the Principal Commissioner, the relatively small amounts involved and the existence of receipts tendered before the Tribunal warranted giving the appellant an opportunity to place those documents before the Principal Commissioner. Accordingly, the Tribunal remanded the GTA issue for fresh determination by the Principal Commissioner after affording the appellant six weeks to submit relevant documents to substantiate that the payments were for local cartage and not for GTA services. [Paras 24, 25, 26]

Matter as to GTA service remanded to the Principal Commissioner for fresh consideration after opportunity to produce documents.

Final Conclusion: The appeal is allowed in part: the demand under 'construction of complex' is set aside; the question of liability under GTA (reverse charge) is remanded to the Principal Commissioner for fresh determination after permitting the appellant to produce supporting documents within six weeks.

Construction of complex - residential complex - service tax liability on construction services - definition of residential unit - works contract versus construction of complex

Construction of complex - residential complex - service tax liability on construction services - definition of residential unit - works contract versus construction of complex - Whether the appellant's construction of 489 EWS quarters at Vinayak Nagar for the period 01.04.2012 to 31.03.2013 is taxable as 'construction of complex' attracting service tax. - HELD THAT: - The Court examined the statutory definition of 'residential complex' and 'construction of complex' and held that a 'residential complex' means a building or buildings having more than twelve residential units together with common areas and facilities. Independent buildings each comprising a single residential unit do not satisfy the requirement that a building have more than twelve residential units; consequently, construction of such independent residential units is not covered by the definition of 'construction of complex'. The Tribunal decisions in Macro Marvel Projects Ltd. and A.S. Sikarwar, which rejected service tax on construction of individual residential houses because they did not form a 'residential complex', were held to be directly applicable. The Principal Commissioner's reliance on a contrary view was not accepted because on facts the appellant constructed independent one-unit buildings and not a complex as defined. The Court further noted that the statutory definitions remained the same after 1 July 2012, and thus no service tax liability under 'construction of complex' could be sustained for the period in question. On this basis the demand confirmed for 01.04.2012 to 31.03.2013 was set aside. [Paras 14, 16, 19, 20, 21]

The demand of service tax under 'construction of complex' for 01.04.2012 to 31.03.2013 is not sustainable and is set aside.

Final Conclusion: The appeal is allowed: the order confirming service tax under 'construction of complex' for the period 01.04.2012 to 31.03.2013 is quashed and the demand is set aside.

Rectification of mistake - mistake apparent on the record - scope of rectification limited to patent errors - re-appreciation of evidence not permissible in rectification - recall of order versus review of order - tribunal exceeding powers under rectification

Rectification of mistake - mistake apparent on the record - scope of rectification limited to patent errors - Whether the application to recall the Final Order dated 10-7-2018 on the ground of errors apparent on record is maintainable as a rectification/recall application. - HELD THAT: - The Tribunal examined the applicant's claim that several grounds argued at hearing were not recorded and that those omissions constituted errors apparent on the face of the record. The Bench found no record in the form of written submissions or documents showing that the additional grounds were pressed at the hearing. Reliance on authorities was considered, but the Tribunal applied the settled principle that rectification is confined to obvious, patent mistakes which do not require reappreciation or long-drawn reasoning. The Tribunal referred to the Apex Court's exposition that a rectification cannot be used to review or reappreciate evidence or to overturn debatable conclusions of law or fact. Consequently, the alleged omissions could not be treated as mistakes apparent on the record in the absence of contemporaneous material establishing that those grounds were actually pressed at the hearing. [Paras 9, 10, 11]

Application for recall/rectification dismissed as the matters relied upon do not amount to mistakes apparent on the record and cannot be remedied by rectification.

Re-appreciation of evidence not permissible in rectification - recall of order versus review of order - tribunal exceeding powers under rectification - Whether the authorities cited by the applicant entitle the Tribunal to recall its order and re-hear or review the appeal by rectification. - HELD THAT: - The Tribunal considered the precedents relied upon by the applicant but concluded that those decisions do not permit using rectification proceedings as a vehicle to review an earlier decision or to re-appreciate evidence. Citing the Apex Court's decision in RDC Concrete, the Tribunal emphasised that rectification powers must not be exercised to arrive at a different conclusion after reappreciation of evidence or to correct matters that require debate or reconsideration. The Tribunal therefore held that the cited cases do not support recalling the Final Order for the purposes of re-hearing or review under the guise of rectification. [Paras 11, 12]

The application seeking recall/review based on the cited authorities is without merit; rectification cannot be used to reappreciate evidence or review the earlier decision.

Final Conclusion: Application C/ROM/86725/2018 for recall/rectification of the Final Order dated 10-7-2018 dismissed; no error apparent on the face of the record warranting rectification and rectification cannot be used to review or re-appreciate evidence.

Review petition - error apparent on the face of the record - statutory entitlement to interest - mandamus for payment of interest - rehearing versus review - Limitation Act versus Central Excise Act application

Review petition - error apparent on the face of the record - statutory entitlement to interest - mandamus for payment of interest - rehearing versus review - Whether the review application seeking grant of interest on amounts refunded paid under a mistake of law is maintainable and should be allowed. - HELD THAT: - The court examined the review petition which sought interest at 18% (or such other rate) on sums paid under a mistake of law. The earlier judgment had allowed refund but declined interest on the basis that the Central Excise Act's refund interest provision (section 11BB) did not apply and that, in the absence of a statutory provision, a mandamus could not be issued to require the revenue to pay interest. The petitioner argued that those findings were inconsistent because the court had also held that the payment was not governed by the Central Excise Act and thus interest could not be denied for lack of a statutory provision. The court acknowledged the inconsistency in its reasoning but held that the inconsistency did not constitute an error apparent on the face of the record sufficient to permit review. Crucially, the court noted that no submissions were advanced on the question of interest at the original hearing, the petition and refund application lacked foundational averments as to rate or date for interest, and entertaining the review would require rehearing contested questions (entitlement, rate and date from which interest should run). Allowing such rehearing would convert review into an appeal in disguise and exceed the limited scope of Order XLVII Rule 1 CPC. Reliance on authorities was considered but the court applied the established principle that only patent, self-evident errors that do not require detailed re-examination justify review. Consequently, even though an erroneous view was identified, it did not meet the threshold of an error apparent on the face of the record and could not be corrected in review; the proper remedy would be by appeal. [Paras 15, 17, 18, 19]

Review application dismissed; relief praying for interest not granted and the review petition rejected with rule discharged and no order as to costs.

Final Conclusion: The review petition seeking interest on refunds paid under mistake of law is rejected: the court found that the alleged inconsistency in its earlier reasoning did not amount to an error apparent on the face of the record and that entertaining the claim would necessitate rehearing contested questions beyond the scope of review; petitioner's recourse is by appeal.

Clandestine removal - onus of proof on Revenue - requirement of corroborative evidence for clandestine clearance - reconciliation of excise records with balance sheet not by itself sufficient

Clandestine removal - requirement of corroborative evidence for clandestine clearance - onus of proof on Revenue - reconciliation of excise records with balance sheet not by itself sufficient - Whether the allegation of clandestine removal and demand could be sustained solely on the basis of mismatch between excise records and the assessee's balance sheet. - HELD THAT: - The Tribunal found that the Revenue's case rested exclusively on a quantitative mismatch between the assessee's excise records and its balance sheet for the financial year 2008-2009, without any independent evidence of receipt of excess raw material, consumption leading to excess production, transportation or identification of recipients. Citing prior Tribunal precedents, the Bench held that charges of clandestine removal cannot be established merely by differences in statutory and accounting records unless supported by corroborative positive evidence demonstrating receipt, manufacture and removal. The onus to prove clandestine clearance rests heavily on the Revenue and cannot be discharged by assumptions or presumptions arising solely from reconciliation discrepancies. [Paras 7, 8]

The charge of clandestine removal could not be sustained on the available material; the impugned order was set aside and the appeal was allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, setting aside the demand confirmed on the basis of alleged clandestine removal as unsupported by corroborative evidence; consequential relief was granted to the appellant.

Total turnover - taxable turnover - exempted turnover - Section 3-D (flat 2% compounding tax) - Rule 6 of the TNGST Rules - retrospective operation of statute / clarificatory amendment

Total turnover - taxable turnover - exempted turnover - Rule 6 of the TNGST Rules - Section 3-D (flat 2% compounding tax) - Whether exempted turnover and second/subsequent sales which are not taxable can be excluded from the "total turnover" for the purpose of levy under Section 3-D for the assessment years in question. - HELD THAT: - The Court held that the terms "total turnover", "taxable turnover" and "exempted turnover" are distinct under the Act and the Rules. "Total turnover" comprises the aggregate turnover of all goods of a dealer in the State irrespective of liability to tax; an exempted turnover remains part of the total turnover though it may be excluded when computing taxable turnover under Rule 6. Section 3-D, as it stood prior to 1.4.1999, expressly referred to "total turnover" as the basis for applying the compounding/flat rate; consequently the authorities were justified in treating the entire disclosed turnover (including exempted sales and second/subsequent sales) as the total turnover for applying Section 3-D and in levying tax at the rate provided therein where the total exceeded the prescribed limit.

Exempted turnover could not be excluded from "total turnover" for applying Section 3-D for the assessment years 1997-98 and 1998-99; the Tribunal and lower authorities were correct in treating the entire turnover as liable for determination under Section 3-D.

Retrospective operation of statute / clarificatory amendment - Section 3-D (flat 2% compounding tax) - Whether the substitution of Section 3-D with effect from 1.4.1999 operates as a clarification of the earlier provision and therefore applies retrospectively to assessments for periods prior to that date. - HELD THAT: - The Court rejected the submission that the post-1.4.1999 amendment should be read as clarificatory and applied retrospectively to assessment years prior to its commencement. It observed that a substantive provision of the statute cannot be construed to have retrospective effect unless the Legislature expressly makes it so. Therefore the amended wording effective from 1.4.1999 could not be read into or applied to the assessment years 1997-98 and 1998-99.

The substitution of Section 3-D effective 1.4.1999 is not clarificatory such as to operate retrospectively; it does not apply to the assessment years in dispute.

Final Conclusion: Writ petitions dismissed. The Tribunal and the authorities below were correct in treating the aggregate turnover (including exempted and second/subsequent sales) as "total turnover" for applying Section 3-D for AYs 1997-98 and 1998-99, and the post-1.4.1999 amendment to Section 3-D was not retrospective.

Prospective application of a statutory rule - valuation of shares for wealth-tax purposes - inclusion in net wealth of amounts due from foreign parties - application of settled precedent to earlier assessment years

Prospective application of a statutory rule - valuation of shares for wealth-tax purposes - Whether the Appellate Tribunal should have applied Rule 1D prospectively and followed the Pune Bench practice in disposing the appeals relating to share valuation for the stated assessment years. - HELD THAT: - The Court accepted the applicants' submission that the Tribunal, having expressed agreement with the view taken by the Tribunal, Pune Bench - namely, that Rule 1D of the Wealth Tax Rules, 1957 is prospective in operation - was bound to follow the same course of action in disposing of these appeals. The Pune Bench had held that Rule 1D could not be applied to assessment years 1964-65, 1965-66 and 1966-67 but could be applied to 1967-68 and 1968-69, and that view was not challenged by the Revenue. Although the Appellate Tribunal recorded its concurrence with the Pune Bench, it nonetheless dismissed all the appeals; the High Court found this course inconsistent with the concurrence and directed that the same disposal pattern adopted by the Pune Bench should have been followed here. [Paras 5, 6, 7, 8, 9]

Appeals relating to assessment years 1964-65, 1965-66 and 1966-67 were to be partly allowed (Rule 1D not to be applied), while appeals for assessment years 1967-68 and 1968-69 could be dismissed (Rule 1D applicable) - the Appellate Tribunal's dismissal of all appeals was set aside to that extent.

Inclusion in net wealth of amounts due from foreign parties - application of settled precedent to earlier assessment years - Whether the Appellate Tribunal was justified in confirming inclusion in the net wealth of amounts due from parties in Portugal (the 'Lisbon fund') for the assessment years in question. - HELD THAT: - The Court examined the material placed before it, including a communication of 29.03.1994 from the Commissioner pointing to factual and legal impediments to recovery of the Lisbon fund (including limitation, ban on remittances, disrupted economic relations and practical impossibility of enforcing claims abroad) and observed that the same reasoning had led the Appellate Tribunal, Pune Bench to dispose of later assessment-year matters in favour of the assessees. Relying also on the principle that a view accepted in an unchallenged decision for the same assessee and subject-matter must apply to related years, the Court held that the Tribunal was not justified in law in confirming the inclusion of the Lisbon fund in the assessees' net wealth for the assessment years before it. [Paras 15, 16, 17, 18, 19]

The inclusion of the amount due from the Lisbon parties in the net wealth of the assessees for assessment years 1964-65 to 1968-69 was not justified in law; the Tribunal's confirmation of that inclusion was set aside.

Questions 3 and 4 (whether gold ornaments not studded with precious stones are 'jewellery' for inclusion and rejection of certain deductions) were not pressed by the applicants and are disposed of without opinion. - HELD THAT: - The applicants, on instructions, did not press for any opinion on question nos. 3 and 4; accordingly the Court declined to express any view and disposed of the reference insofar as those questions are concerned without adjudication on merits. [Paras 3]

Questions 3 and 4 are disposed of without expression of opinion.

Final Conclusion: The Reference is disposed: (i) on valuation of shares, the Tribunal must follow the Pune Bench approach - Rule 1D not to be applied for 1964-65, 1965-66 and 1966-67 but applicable for 1967-68 and 1968-69; (ii) the Lisbon fund could not be included in the assessees' net wealth for assessment years 1964-65 to 1968-69; questions 3 and 4 are left without opinion. The Registry is directed to communicate this opinion to the Tribunal for consequential disposal.

Applicability of administrative circulars to pending proceedings - Prospective versus retrospective operation of circulars - Monetary limits as a threshold for maintainability of appeals - Doctrine of administrative instruction and conformity with precedents

Applicability of administrative circulars to pending proceedings - Prospective versus retrospective operation of circulars - Doctrine of administrative instruction and conformity with precedents - Circular No.17/2019 issued by the Central Board of Direct Taxes applies to pending appeals and proceedings and is not restricted to purely prospective operation. - HELD THAT: - The Court rejected Revenue's contention that Circular No.17/2019 is prospective only. It applied the binding view of the Coordinate Bench in COMMISSIONER OF INCOME TAX & ANOTHER V. RANKA & RANKA and the affirmance by the Supreme Court in DIRECTOR OF INCOME TAX V. S.R.M.B DAIRY FARMING (P) LTD., and noted the CBDT instruction F.No.279/MISC/M-93/2018-ITJ dated 20.08.2019 communicating that Circular No.17/2019 is to be applied to pending SLPs/appeals/cross objections/references. In light of these authorities and the administrative instruction, the Court held that the Circular is applicable to pending matters and dismissed the Revenue's submission to the contrary. [Paras 3]

Circular No.17/2019 applies to pending proceedings; the contention that it is only prospective is rejected.

Monetary limits as a threshold for maintainability of appeals - Applicability of administrative circulars to pending proceedings - Appeal is not maintainable and is to be dismissed on the basis of monetary limits fixed in Circular No.17/2019 as applied to the pending proceedings. - HELD THAT: - The Court observed that, under similar circumstances, a Coordinate Bench in WTA No.26/2017 had dismissed the appeal on the monetary limits prescribed by Circular No.17/2019. Having held that the Circular applies to pending matters, the Court concluded that the present appeal-being an off-shoot of the common ITAT order-must be dismissed as not maintainable on the same basis. The Court also recorded the CBDT instruction reinforcing the application of the Circular to pending matters and accordingly dismissed the appeal. [Paras 2, 4]

The appeal is dismissed as not maintainable in view of the monetary limits prescribed by Circular No.17/2019 applied to pending proceedings.

Final Conclusion: The appeal is dismissed as not maintainable: the Court holds that CBDT Circular No.17/2019 (as reinforced by the CBDT instruction) applies to pending proceedings and, applying the monetary limits fixed thereby and the Coordinate Bench decision, the appeal fails.

Taxability of immovable property under wealth tax - exemption of unfinished or uninhabitable building from wealth tax - treatment of urban land vis-a -vis building for wealth tax purposes - stock-in-trade exclusion from assets exigible to wealth tax - valuation of property by Stamp Valuation Authority for assessment - assessment of movable assets (motor car) under wealth tax

Taxability of immovable property under wealth tax - exemption of unfinished or uninhabitable building from wealth tax - valuation of property by Stamp Valuation Authority for assessment - 1/2 share of flat at Khairatabad not to be treated as residential asset exigible to wealth tax; only undivided share in land attributable to the flat to be valued and included. - HELD THAT: - The Tribunal disagreed with the ad-hoc market valuation adopted by the WTO and accepted that the flat, being under repair/uninhabitable during the relevant valuation date, could not be treated as a residential building exigible to wealth tax under the definition of asset. The undivided share in the land component alone is exigible; the WTO was directed to obtain the land value from the Stamp Valuation Authority and, after considering relevant factors, estimate the undivided share for computing taxable wealth.

Flat not exigible as residential asset; undivided share in land to be valued via Stamp Valuation Authority and included in taxable wealth.

Exemption of unfinished or uninhabitable building from wealth tax - treatment of urban land vis-a -vis building for wealth tax purposes - valuation of property by Stamp Valuation Authority for assessment - 1/4 share of land at Jubilee Hills: unfinished building not exigible as building; urban land component exigible and to be valued by Stamp Valuation Authority. - HELD THAT: - The Tribunal rejected the WTO's ad-hoc market valuation of the immovable asset as a completed building, holding that an unfinished building cannot be treated as a building exigible to wealth tax. However, the urban land is exigible under the Act and the WTO was directed to obtain the market value of the land from the Stamp Valuation Authority for the relevant assessment year and adopt that value after considering relevant factors.

Unfinished building excluded; urban land exigible and to be valued through the Stamp Valuation Authority for inclusion in taxable wealth.

Stock-in-trade exclusion from assets - treatment of urban land vis-a -vis building for wealth tax purposes - Land at Kapra to be excluded from assets exigible to wealth tax as it was held as stock-in-trade for construction and sale of flats. - HELD THAT: - The Tribunal accepted the assessee's case that the land was purchased jointly for the business purpose of constructing flats for sale and that steps (such as seeking construction permission) evidenced trading intention. Consequently, the land should be treated as stock-in-trade and excluded from the definition of asset for computing taxable wealth, notwithstanding the timing of the permission application relied upon by the WTO.

Kapra land excluded from taxable wealth as stock-in-trade.

Taxability of immovable property under wealth tax - Land at Katedan remitted for fresh consideration regarding claim that it is commercial and let out (rental offered to tax). - HELD THAT: - The Tribunal noted the assessee's assertion that the Katedan property is commercial and let out with rental income declared, and the Revenue's contention about absence of supporting evidence. Rather than decide on the record, the Tribunal remitted the issue to the WTO to afford the assessee another opportunity to produce cogent evidence and for de novo consideration.

Issue remitted to the WTO for de novo consideration on evidence of commercial letting and exclusion from wealth.

Taxability of immovable property under wealth tax - Land at L.B. Nagar remitted for fresh consideration on the assessee's claim that a commercial building there was rented out and rental income was offered to tax. - HELD THAT: - Similar to the Katedan land, the Tribunal found competing contentions and absence of decisive evidence on record; it directed the WTO to give the assessee one more opportunity to produce cogent evidence and to reconsider the issue afresh.

Issue remitted to the WTO for de novo consideration on evidence relating to commercial rent and exclusion from wealth.

Assessment of movable assets (motor car) under wealth tax - Motor car assessed to wealth tax by adopting written down value was correctly included in taxable wealth; assessee's claim of business use not established. - HELD THAT: - The Tribunal upheld the WTO's assessment of the motor car to wealth tax under the relevant provision, finding that the assessee was not in the business of running or hiring cars nor holding the vehicle as stock-in-trade. The claim that the car was used for business was not substantiated; therefore the inclusion and the valuation by WDV stood confirmed.

Motor car correctly assessed to wealth tax; claim of business use rejected.

Final Conclusion: The appeal is partly allowed: the Tribunal set aside the CWT(A) order, upheld or modified assessments on several assets as above, excluded Kapra land as stock-in-trade, directed valuation of specified land shares by the Stamp Valuation Authority, remitted two immovable property issues to the WTO for fresh consideration, and upheld the motor car assessment; appeal disposed of partly in favour of the assessee for statistical purposes.