TaxTMI Updates e-Newsletter
Apr 01,2020

Deduction under section 80IB(10) - maximum built-up area limit - approval/commencement certificate not determinative of eligibility - separate project developed by a separate assessee - concurrent findings of fact

Deduction under section 80IB(10) - maximum built-up area limit - approval/commencement certificate not determinative of eligibility - Whether a single commencement certificate/approval that covers both qualifying and non-qualifying residential units defeats the assessee's entitlement to deduction under section 80IB(10). - HELD THAT: - The Court examined section 80IB(10), in particular the requirement as to maximum built-up area of residential units, and concluded that eligibility turns on whether the units for which deduction is claimed meet the statutory size limit. The existence of a common commencement certificate or development approval that, as an aggregate, includes some units exceeding the prescribed built-up area does not, by itself, render the assessee ineligible for deduction in respect of those units which individually satisfy the maximum built-up area limit. The Court held that inclusion of non-qualifying units within the ambit of a development permission is not determinative of entitlement under section 80IB(10) where the assessee's claimed units comply with the statutory criteria. [Paras 7, 8]

The presence of a single commencement certificate covering other non-qualifying units does not preclude deduction under section 80IB(10) for the qualifying units developed by the assessee.

Separate project developed by a separate assessee - Deduction under section 80IB(10) - concurrent findings of fact - Whether deduction under section 80IB(10) can be allowed to the assessee where the allegedly non-qualifying units belong to a distinct project developed and accounted for by another assessee. - HELD THAT: - On the material placed before the authorities, including project brochures, development agreements and assessment records of the other firm, the authorities found that the 55 disputed units formed part of a separate scheme developed by M/s. Pratham Properties and were reflected in that entity's accounts. The Tribunal and CIT(A) concurrently held, and this Court accepted, that those units constituted a separate project of a separate assessee. Given those concurrent findings of fact - which the Court found no legal infirmity in - the assessee was entitled to deduction in respect of the 103 residential units it developed and which met the statutory size criterion under section 80IB(10). [Paras 3, 8]

Where the non-qualifying units are part of a separate project developed and accounted for by another assessee, the claimant assessee remains entitled to deduction under section 80IB(10) for its own qualifying units.

Deduction under section 80IB(10) - concurrent findings of fact - Whether the Tribunal erred in upholding the CIT(A)'s allowance of deduction on the basis of a pro rata allocation when no statutory provision explicitly permits pro rata apportionment. - HELD THAT: - The Revenue challenged the Tribunal's affirmation of the CIT(A)'s order (which dealt with the accounts and segregation of receipts between entities). This Court observed that the impugned orders involved concurrent findings of fact concerning accounting treatment and separate project identity. The Court did not find any legal infirmity in the concurrent factual conclusions reached by the authorities and, therefore, declined to entertain the Revenue's contention as a substantial question of law warranting interference. The judgment does not formulate a new principle permitting or denying pro rata apportionment; rather it rests on acceptance of the factual separation of projects and accounts. [Paras 2, 9]

No legal error found in the Tribunal and CIT(A) upholding the allowance; the contention regarding absence of a statutory provision for pro rata apportionment did not succeed as a substantial question of law given the accepted factual findings.

Final Conclusion: The appeal is dismissed. The concurrent findings of the CIT(A) and the Tribunal that the assessee's qualifying units meet the requirements of section 80IB(10) and that the non-qualifying units belong to a separate project/assessee are unimpeached; accordingly the deduction allowed by the lower authorities is sustained.

Penalty under Section 271D for contravention of Section 269SS - Proof of acceptance of loan or deposit - Reliance on seized diary and inventorised material as evidentiary basis

Penalty under Section 271D for contravention of Section 269SS - Proof of acceptance of loan or deposit - Reliance on seized diary and inventorised material as evidentiary basis - Whether the penalty imposed under Section 271D could be sustained in the absence of material establishing that the assessee accepted cash loans or deposits from Shri Jivraj V. Desai, including reliance on a seized diary. - HELD THAT: - The Tribunal found that the Revenue failed to establish any transaction between the assessee and Shri Jivraj V. Desai and that the seized material, including the diary alleged to record transactions, was misconstrued by the department. On that factual foundation the Tribunal deleted the penalty under Section 271D. The High Court, applying the same factual finding, concluded that in absence of any material showing acceptance of loans or deposits by the assessee from the said person, penalty under Section 271D (which is consequential upon contravention of the prohibition in Section 269SS) could not be sustained. The Court accepted the Tribunal's assessment of the evidentiary record and agreed that deletion of the penalty was justified where the requirement of establishing acceptance of cash loan/deposit was not met. [Paras 5, 6, 7]

Penalty under Section 271D deleted by the Tribunal was rightly sustained; Revenue failed to prove acceptance of cash loans or deposits from Shri Jivraj V. Desai and the appeal is dismissed.

Final Conclusion: The Revenue's appeal is dismissed. The Tribunal correctly deleted the penalty imposed under Section 271D because the department did not establish that the assessee accepted any loan or deposit from the person alleged; no substantial question of law arises from the impugned order.

Transfer Pricing - Comparability Analysis - Transactional Net Margin Method (TNMM) - Profit Level Indicator - Operating Profit/Operating Cost (OP/OC) - Arm's Length Price - Exclusion of Non comparable Entities

Comparability Analysis - Exclusion of Non comparable Entities - Transfer Pricing - Motilal Oswal Investment Advisories Pvt. Ltd. is not a comparable for the assessee and is to be excluded. - HELD THAT: - The Tribunal examined the functional profile of Motilal Oswal and found it to be engaged in merchant banking, investment banking, M&A, private equity and syndication, activities materially different from the assessee's provision of non binding investment advisory services to its associated enterprise. The Tribunal noted consistent decisions of other benches and High Courts, and that revenue authorities had previously excluded this entity in similar contexts. Applying functional dissimilarity as the determinative test for comparability, the Tribunal held that Motilal Oswal cannot be treated as a comparable and must be excluded from the comparable set. [Paras 7, 9]

Motilal Oswal Investment Advisories Pvt. Ltd. excluded as a comparable.

Comparability Analysis - Exclusion of Non comparable Entities - Transactional Net Margin Method (TNMM) - ICRA Online Ltd. is not a comparable for the assessee and is to be excluded. - HELD THAT: - On review of the record the Tribunal found that ICRA Online operated multiple segments-outsourcing services, information services and software products-which are functionally dissimilar to the assessee's non binding investment advisory services. The Tribunal relied on prior Tribunal findings (including in the assessee's own earlier year) and the Transfer Pricing Officer's earlier rejection of ICRA Online as comparable, concluding that none of its segments are comparable to the assessee's activities. Accordingly, functional dissimilarity warranted exclusion of ICRA Online from the comparable universe. [Paras 10, 12]

ICRA Online Ltd. excluded as a comparable.

Arm's Length Price - Transfer Pricing - Comparability Analysis - Direction to the Assessing Officer to determine the arm's length price afresh excluding the two disallowed comparables; other comparability issues left open for future adjudication. - HELD THAT: - Having excluded the two disputed comparables, the Tribunal accepted the assessee's submission that the arithmetic mean of the remaining comparables would bring the assessee's margin within the acceptable range and obviate further adjustment. The Tribunal therefore refrained from adjudicating other comparables in this assessment year and directed the Assessing Officer to recompute the arm's length price of the international transaction with the associated enterprises in accordance with the Tribunal's observations. The Tribunal left issues relating to other comparables open for any future assessment years. [Paras 13]

Assessing Officer directed to determine the arm's length price afresh excluding the two specified comparables; grounds partly allowed.

Final Conclusion: The Tribunal partly allowed the appeal for Assessment Year 2010-11 by excluding Motilal Oswal Investment Advisories Pvt. Ltd. and ICRA Online Ltd. from the comparable set and directing the Assessing Officer to redetermine the arm's length price in light of those exclusions; other comparability questions were left open for future cases.

Penalty under section 271(1)(c) - Assessment on estimation basis - Ad hoc estimation of profit element - Reliance on third party information from Sales Tax Department - Burden to prove positive concealment - Deletion of penalty where additions are estimate based

Penalty under section 271(1)(c) - Assessment on estimation basis - Ad hoc estimation of profit element - Reliance on third party information from Sales Tax Department - Burden to prove positive concealment - Whether penalty under section 271(1)(c) is sustainable where additions arose from ad hoc estimation of alleged non genuine purchases based on third party information. - HELD THAT: - The Tribunal held that where the Assessing Officer made ad hoc estimation of profit element on purchases treated as non genuine (restricting profit at 15%) and there was no conclusive proof of positive concealment or furnishing of inaccurate particulars by the assessee, penalty under section 271(1)(c) could not be sustained. Reliance placed on information from the Sales Tax Department, without independent enquiries or conclusive evidence and where the assessee had discharged primary onus by producing books, bank payments and sale vouchers, did not establish concealment. Coordinate Bench and High Court precedents were applied to recognize the settled principle that estimated additions by themselves do not constitute concealment and that the onus lies on the Department to prove deliberate concealment; consequently penalty imposed solely on the basis of such estimation and third party statements is liable to be deleted. [Paras 5, 9]

Penalty under section 271(1)(c) deleted as additions were based on ad hoc estimation and no positive concealment was established.

Final Conclusion: Revenue's appeal is dismissed; the order of the CIT(A) deleting the penalty is upheld because the additions were estimate based and the Department failed to prove positive concealment.

Penalty under section 271(1)(c) - Disallowance of purchases as non-genuine / bogus entries - Voluntary surrender of income does not ipso facto attract penalty - Findings in assessment cannot be automatically adopted in penalty proceedings

Penalty under section 271(1)(c) - Disallowance of purchases as non-genuine / bogus entries - Voluntary surrender of income does not ipso facto attract penalty - Findings in assessment cannot be automatically adopted in penalty proceedings - Whether the penalty under section 271(1)(c) is sustainable where purchases were disallowed as non-genuine and the assessee had disclosed the expenditures in the return and books, but could not produce the alleged parties. - HELD THAT: - The Tribunal upheld the order of the Ld. CIT(A) deleting the penalty. It accepted the principle that mere disallowance of claimed purchases as non-genuine does not automatically establish concealment of income or mala fide intention rendering section 271(1)(c) attraction. The Ld. CIT(A) applied settled law that voluntary acceptance or surrender of additions, or failure to contest an assessment, cannot be equated with concealment. The Tribunal agreed that findings in assessment proceedings cannot be mechanically adopted in penalty proceedings; penalty proceedings require fresh consideration of whether there was concealment or furnishing of inaccurate particulars. In the circumstances-where expenditures were disclosed in the return and the Assessing Officer's conclusion rested on information that purchases were in the gray market and on the assessee's inability to produce confirmations-the authorities below were correct in concluding that penalty was not justified solely on the basis of disallowance. [Paras 6, 7, 8]

Penalty imposed under section 271(1)(c) deleted; revenue's grounds challenging deletion rejected.

Final Conclusion: The appeal filed by the revenue is dismissed and the penalty imposed under section 271(1)(c) is confirmed deleted, as mere disallowance of purchases treated as non-genuine does not, without more, sustain a penalty.

Penalty under section 271(1)(c) for concealment of income or furnishing inaccurate particulars - failure to strike off irrelevant limb in penalty notice - non-application of mind - breach of principles of natural justice in penalty initiation - invalid initiation of penalty proceedings - deletion of penalty

Penalty under section 271(1)(c) for concealment of income or furnishing inaccurate particulars - failure to strike off irrelevant limb in penalty notice - non-application of mind - breach of principles of natural justice in penalty initiation - Validity of initiation of penalty proceedings where the penalty notice did not specify or strike off the inapplicable limb of section 271(1)(c), and whether such initiation renders the penalty bad in law. - HELD THAT: - The Tribunal examined the notice issued under section 274 read with section 271(1)(c) and found that the Assessing Officer did not strike off or otherwise specify which limb of section 271(1)(c) - concealment of income or furnishing inaccurate particulars - was being invoked. The assessment order and the penalty order themselves reflect uncertainty as to the precise charge. The Tribunal followed consistent decisions of coordinate benches and the jurisdictional High Court which hold that a penalty notice must indicate with clarity the particular limb relied upon; failure to strike off inapplicable portions or to record a definite satisfaction demonstrates non-application of mind and deprives the assessee of the ability to respond, thereby infringing the principles of natural justice. On that basis, the initiation of proceedings was held to be vitiated and the penalty could not stand. Because the Tribunal disposed of the appeal on this preliminary legal point, other contentions were not adjudicated as they became academic. [Paras 5, 6, 11]

Penalty proceedings held to be invalid for failure to specify/strike off the inapplicable limb; penalty under section 271(1)(c) deleted.

Final Conclusion: Following precedents and finding non-application of mind in the notice for initiation of penalty proceedings, the Tribunal set aside the penalty under section 271(1)(c) and allowed the assessee's appeal.

Penalty for concealment or furnishing inaccurate particulars of income - Ad hoc estimation of income - Reliance on third party information from Sales Tax Department - Onus of proof for positive concealment

Penalty for concealment or furnishing inaccurate particulars of income - Ad hoc estimation of income - Reliance on third party information from Sales Tax Department - Onus of proof for positive concealment - Whether penalty under section 271(1)(c) could be levied where additions were made by the Assessing Officer on the basis of ad hoc estimation of alleged non genuine purchases supported by third party information. - HELD THAT: - The Tribunal held that penalties under section 271(1)(c) are not sustainable where the assessment or addition is made on an ad hoc or estimated basis and there is no conclusive proof of positive concealment or furnishing of inaccurate particulars by the assessee. The Assessing Officer had treated certain purchases as non genuine relying on information from the Sales Tax Department and estimated the profit element at 12.5%, without independent inquiries or conclusive evidence such as production of sellers, proof of movement of goods, or service of summons on third parties. The Tribunal applied settled authorities which establish that mere disallowance or addition on estimate does not, by itself, attract penalty; the Department bears the onus to prove deliberate concealment. In view of the adhoc nature of the estimation and the absence of demonstrable positive concealment, the Commissioner (Appeals) was correct in deleting the penalty levied by the Assessing Officer. [Paras 5, 6, 7, 8, 9]

Penalty under section 271(1)(c) deleted as unsustainable where additions were made on ad hoc estimation based on third party information without conclusive proof of concealment.

Final Conclusion: Revenue appeal dismissed; the deletion of penalty by the Commissioner (Appeals) is upheld because the addition was based on ad hoc estimation and the Department failed to prove positive concealment.

Treatment of pre operative/pre construction expenses as revenue or capital - capitalization as capital work in progress versus charging to Profit & Loss - applicability of Accounting Standard 7 (AS 7) to construction/contract costs - method of accounting regularly employed and AO's power to reject it where income cannot be properly deduced - matching principle - disallowance under section 14A read with Rule 8D - remand for fresh adjudication

Treatment of pre operative/pre construction expenses as revenue or capital - capitalization as capital work in progress versus charging to Profit & Loss - applicability of Accounting Standard 7 (AS 7) to construction/contract costs - method of accounting regularly employed and AO's power to reject it where income cannot be properly deduced - matching principle - Whether the administrative/advertisement and other indirect expenses debited to Profit & Loss Account were rightly disallowed as capital expenditure and required to be treated as part of capital work in progress. - HELD THAT: - The Tribunal found that the assessee consistently followed a recognized accounting method in accordance with AS 7 and had capitalized direct project costs while charging period costs to the Profit & Loss Account. AS 7 distinguishes costs that relate directly to a contract or are attributable and allocable to contract activity from general administration and selling costs which are excluded from contract costs. The assessee's treatment - debiting non project specific administrative and selling related expenses to Profit & Loss - was in conformity with AS 7 and a regularly employed accounting method duly audited. Absent any finding that the accounts were incorrect or incomplete or that income could not properly be deduced therefrom, the Revenue could not disregard the method of accounting. The first appellate authority's conclusion that the business was not set up and that the matching principle precluded deduction was contrary to the Tribunal's earlier finding for AY 2012 13 that the business was set up and that the impugned expenses were not necessarily pre construction. On this basis the disallowance confirmed by the CIT(A) was deleted. [Paras 5, 6, 7, 8, 9]

Disallowance of indirect/administrative expenses confirmed by the AO and CIT(A) was set aside and deleted; ground allowing deletion granted and related grounds rendered infructuous.

Disallowance under section 14A read with Rule 8D - remand for fresh adjudication - Whether the alternative disallowance under section 14A read with Rule 8D, as proposed by the AO, required adjudication or confirmation. - HELD THAT: - The Tribunal noted that the AO computed an alternative disallowance under Rule 8D without considering the basis of the assessee's suo moto disallowance and that no substantive adjudication was undertaken by the CIT(A), who treated the matter as academic. The Tribunal further observed that the issue in respect of AY 2012 13 had earlier been remitted for fresh consideration. To enable the Revenue to take a consistent stand and for proper examination of the facts and basis for any disallowance, the matter of disallowance under section 14A was remitted to the file of the AO for fresh adjudication on similar lines. [Paras 10]

Alternative disallowance under section 14A read with Rule 8D is remitted to the Assessing Officer for fresh adjudication.

Final Conclusion: Both appeals are partly allowed: the additions/disallowance of indirect administrative and promotional expenses are deleted for AY 2013 14 and AY 2014 15; the alternate disallowance under section 14A read with Rule 8D is remitted to the Assessing Officer for fresh adjudication.

Deductibility of business expenditure under commercial expediency - Business loss arising from payments made to protect business goodwill and reputation - Allowability of expenditure paid on behalf of others where amount becomes irrecoverable - Consequential disallowance of interest linked to a primary disallowance - Remand for verification of carried forward losses

Deductibility of business expenditure under commercial expediency - Allowability of expenditure paid on behalf of others where amount becomes irrecoverable - Business loss arising from payments made to protect business goodwill and reputation - Deduction of customs duty of Rs. 93.12 lacs in AY 2006-07 as business loss - HELD THAT: - The assessee paid additional customs duty following DRI action and Settlement Commission directions; of the total payment, Rs. 104.47 lacs was allowed earlier while Rs. 93.12 lacs was disallowed on the ground that payment was not in the name of the assessee. The Tribunal found that the payments were made by the assessee out of its own funds, substantial challans were in the name of the assessee's proprietorship, and the other entities disowned liability and remained unable to reimburse despite legal steps. Non-payment would have caused commercial injury and reputational damage. Applying the test whether the expenditure was incurred wholly and exclusively for the purpose of business and was necessitated by commercial expediency, and relying on the reasoning in CIT v. Shree Krishna Gaynoday Sugar Ltd. and CIT v. Birla Cotton Spinning and Weaving Mills Ltd. , the Tribunal held that the irrecoverable payment constituted an allowable business loss and deleted the disallowance. [Paras 6]

The disallowance of Rs. 93.12 lacs in AY 2006-07 is deleted and the expenditure is allowed as a business loss.

Consequential disallowance of interest linked to a primary disallowance - Deletion of interest disallowance in AY 2008-09 that was consequential to the AY 2006-07 disallowance - HELD THAT: - The interest disallowance for AY 2008-09 was computed as consequential to the disallowance of the customs duty in AY 2006-07. Having deleted the primary disallowance for AY 2006-07, the Tribunal held that the consequential interest disallowance cannot survive and must be deleted. [Paras 8]

The consequential interest disallowance in AY 2008-09 is deleted.

Remand for verification of carried forward losses - Remand of claim for set-off of carried forward losses for AY 2008-09 - HELD THAT: - In view of the decision deleting the disallowance for AY 2006-07, the Tribunal remitted the assessee's claim for set-off of carried forward loss of Rs. 5.07 lacs pertaining to AY 2005-06 to the file of the Assessing Officer for verification and re adjudication in accordance with law. The remand is for verification and computation consistent with the Tribunal's decision. [Paras 9]

The claim for set-off of carried forward losses is remitted to the Assessing Officer for verification and appropriate action.

Final Conclusion: Appeal for AY 2006-07 allowed by deleting the disallowance of customs duty; appeal for AY 2008-09 partly allowed by deleting the consequential interest disallowance and remitting the claim for carry forward set off to the Assessing Officer for verification.

Assessability of e auction proceeds - entitlement under facilitation agreement (5% share) - diversion of income by overriding title - accrual and application of income - treatment of sale of trading asset as income - bad debt deduction contingent on writing off in accounts - SARFAESI e auction and appropriation against lender's dues

Assessability of e auction proceeds - entitlement under facilitation agreement (5% share) - diversion of income by overriding title - SARFAESI e auction and appropriation against lender's dues - Whether the assessee is taxable on the entire e auction proceeds or only to the extent of its contractual entitlement of 5% under the facilitation agreement, and whether the doctrine of diversion by overriding title applies to negate that entitlement. - HELD THAT: - The Tribunal accepted the CIT(A)'s conclusion that the e auction by HDFC comprised the project as it stood on the date (land, construction and receivables) and that the facilitation agreement and its amendment, though unregistered, were existing documents acted upon by the parties. The facilitation agreement vested in the assessee a contractual right to 5% of the total price of the constructed property sold to final customers. That right accrued to the assessee on appropriation/sale even though the sale proceeds were retained by the lender and adjusted against HPGPL's loan. The doctrine of diversion of income by overriding title was rejected as inapplicable to deprive the assessee of its 5% share because the facilitation agreement was independent of the loan/ mortgage transaction; failure to press or realization of that claim amounted to application of income, not extinguishment of accrual. The Tribunal therefore upheld the CIT(A)'s direction to restrict the addition to 5% of the e auction receipt and rejected Revenue's challenge regarding registration and valuation as unsustainable in the facts of the case. [Paras 21, 22]

Assessee's taxable income in respect of the e auction proceeds is limited to its accrued contractual share of 5% of the sale consideration; diversion by overriding title does not negate that accrual.

Bad debt deduction contingent on writing off in accounts - treatment of sale of trading asset as income - accrual and application of income - Whether, alternatively, the assessee could treat the non receipt of sale proceeds as a business loss or bad debt in the absence of receipt of any amount from the e auction. - HELD THAT: - The Tribunal affirmed the CIT(A)'s finding that the assessee's share (to the extent of 5%) accrued as income on sale of a trading asset. The Assessing Officer had recognised sale proceeds as trading receivables. The assessee's plea of business loss or bad debt was untenable because the statutory allowance for bad debts requires that the debt be written off as irrecoverable in the assessee's accounts in the previous year; no such writing off was shown. Consequently, mere non realisation or non receipt, without writing off in the books, does not qualify for deduction as bad debt or trading loss. [Paras 22, 24, 25]

Assessee's alternative claim of business loss or bad debt is rejected for want of the prerequisite writing off in the accounts; no deduction is allowable on that basis.

Final Conclusion: The Tribunal upheld the CIT(A)'s order: the assessee is taxable on its contractual share of 5% of the e auction proceeds for A.Y. 2014 15 and the alternative claim of business loss/bad debt is disallowed for failure to satisfy the requirement of writing off the debt in the accounts; both cross appeals are dismissed.

Deemed dividend under section 2(22)(e) - beneficial shareholding / substantial interest - inter-corporate deposit treated as loan for deeming provisions - repayment within same year does not negate deemed dividend - distinction between securities (redeemable debentures) and loans for deeming provision - business transaction / back-to-back purchase not taxable as deemed dividend

Deemed dividend under section 2(22)(e) - inter-corporate deposit treated as loan for deeming provisions - repayment within same year does not negate deemed dividend - beneficial shareholding / substantial interest - Inter-corporate deposit of Rs. 9 lakhs from M/s ABM Steels Pvt. Ltd. attracted deeming provisions of section 2(22)(e) and was to be treated as deemed dividend. - HELD THAT: - The Tribunal accepted that the assessee held substantial interest in M/s ABM Steels Pvt. Ltd. and that the lender-company was one in which public were not substantially interested and had substantial accumulated reserves. The Tribunal held that any credit or advantage taken by a person having substantial interest attracts the deeming provision as soon as the benefit is enjoyed, even if repaid within the same year. Reliance was placed on settled principles that repayment by year-end does not avoid the operation of section 2(22)(e), and the inter-corporate deposit, though described as such, was essentially a short-term loan/benefit attracting the deeming provision. [Paras 15]

Addition under section 2(22)(e) sustained in respect of the inter-corporate deposit.

Business transaction / back-to-back purchase not taxable as deemed dividend - deemed dividend under section 2(22)(e) - Payment of Rs. 17.26 lakhs by M/s ABM Steels Pvt. Ltd. on behalf of the assessee for purchase of machinery was a business transaction (back-to-back purchase) and did not attract section 2(22)(e). - HELD THAT: - The Tribunal noted that the sister concern purchased similar machinery from the assessee in the subsequent assessment year, indicating a back-to-back commercial arrangement. On this factual matrix the transaction was treated as a genuine business arrangement rather than a loan or benefit intended to substitute for dividend; accordingly the deeming provision was held not to apply to this payment. [Paras 16]

Addition under section 2(22)(e) not sustained in respect of the machinery payment; treated as a business transaction.

Distinction between securities (redeemable debentures) and loans for deeming provision - deemed dividend under section 2(22)(e) - beneficial shareholding / substantial interest - Subscription to and redemption of redeemable debentures by M/s Jasubhai Business Services Pvt. Ltd., and the outstanding debenture liability, did not attract section 2(22)(e) because debentures are securities and not loans for the purposes of the deeming provision. - HELD THAT: - Although the assessee had substantial interest in the subscribing company and debentures were privately placed, the Tribunal held that securities have an independent capital character and standalone liability distinct from loans or advances. The deeming provision applies where loans or advances are made in lieu of dividends; the issuance and subsequent redemption of redeemable debentures could not be equated to a loan creating a deemed dividend. On this legal distinction the Tribunal agreed with the CIT(A)'s conclusion to reject application of section 2(22)(e) to the debenture transactions. [Paras 17]

Addition under section 2(22)(e) not sustained in respect of the debenture transactions.

Final Conclusion: The revenue appeal was partly allowed: the Tribunal sustained the deemed-dividend addition in respect of the inter-corporate deposit but upheld the CIT(A) in holding that the machinery-payment was a business transaction and that the redeemable-debenture transactions did not fall within section 2(22)(e); the assessee's cross-objection was dismissed as infructuous.

Exemption under section 54F - Investment of capital gains in new asset within three years - Construction commenced before date of transfer - Cost of land as part of cost of new asset - Beneficial construction of fiscal provisions

Exemption under section 54F - Construction commenced before date of transfer - Investment of capital gains in new asset within three years - Assessee entitled to claim exemption under section 54F notwithstanding that construction of the new residential house commenced before the date of transfer of the original asset - HELD THAT: - The Tribunal observed that section 54F is a beneficial provision to promote construction or purchase of a residential house and must be construed liberally. The statutory requirement is that the capital gains realised should be invested in purchasing or constructing a residential house and the timelines in the section relate to one year before, two years after, or construction within three years from the date of transfer. On the facts the assessee commenced construction on 13/01/2014 (within one year prior to sale) and completed construction within three years of the sale; part of the sale proceeds was utilised for construction and the balance offered to tax. Applying the reasoning of the Karnataka High Court in CIT vs Jay Subramanya Bhat and CIT vs Ramachandra Rao and relevant Tribunal decisions, the Tribunal held there was no violation of the conditions of section 54F and directed the Assessing Officer to compute capital gains accordingly. [Paras 16, 17, 18]

Assessee's claim under section 54F allowed insofar as construction commenced before transfer but completed within statutory period; revenue's appeal dismissed on this point.

Cost of land as part of cost of new asset - Exemption under section 54F - Beneficial construction of fiscal provisions - Cost of the land acquired for constructing the new residential house is to be considered while determining the amount invested in the new asset for the purpose of section 54F - HELD THAT: - The Tribunal accepted the assessee's contention that the total expenditure on acquiring the new residential house includes the cost of the plot acquired in 2012-13 together with construction costs, and that such total investment should be taken into account for computing the exemption under section 54F. The Tribunal applied a liberal construction of the words "purchased" and "constructed" in the section and directed the Assessing Officer to re-compute capital gains taking into account the amount expended on the land along with construction costs, in line with the judicial authorities placed before it. [Paras 15, 16, 18]

Assessee's ground to include cost of land in computing investment for section 54F allowed and Assessing Officer directed to recompute.

Exemption under section 54F - Investment of capital gains in new asset within three years - Claim for additional deduction relating to construction cost incurred after filing return but before expiry of three years is remitted to the Assessing Officer for verification and fresh consideration - HELD THAT: - The Tribunal noted that the assessee seeks allowance of additional construction expenditure incurred after filing the return and within three years of the sale. The Revenue rightly submitted that the manner in which the vacant plot was acquired and whether it was funded from capital gains required verification and that the Assessing Officer had not considered these aspects. Consequently, rather than deciding on the merits, the Tribunal set aside this issue to the Assessing Officer for factual verification, directing that the assessee be given an opportunity to be represented and to substantiate the claim. The remand was ordered because the necessary inquiry had not been undertaken below. [Paras 21]

Additional ground allowed for statistical purposes and remitted to the Assessing Officer for verification and fresh adjudication.

Final Conclusion: For Assessment Year 2015-16 the Tribunal allowed the assessee's claims under section 54F to the extent indicated: construction commenced before transfer did not disentitle the assessee from exemption and the cost of the land for the new residential house is to be included in computing the investment; the claim for additional construction expenditure incurred after filing the return is remanded to the Assessing Officer for verification and fresh decision; revenue's appeal dismissed.

Characterisation of transactions as business income or capital transaction - allowability of expenditure as business deduction under section 37(1) - deductibility of interest as business expenditure under section 36(1)(iii) - effect of demerger/scheme of arrangement on character of share acquisition - treatment of rental receipts from ATM sites as income from house property vis-a -vis business receipts - classification of interest on bank fixed deposits as business income or income from other sources - penalty under section 271(1)(c) for concealment or furnishing of inaccurate particulars of income - requirement in notice under section 274 to specify the limb of section 271(1)(c)

Characterisation of transactions as business income or capital transaction - allowability of expenditure as business deduction under section 37(1) - deductibility of interest as business expenditure under section 36(1)(iii) - effect of demerger/scheme of arrangement on character of share acquisition - Whether the assessee was carrying on the business of purchase and sale of shares so as to entitle it to deduct professional fees and interest as business expenditure - HELD THAT: - The Tribunal accepted the concurrent findings of the lower authorities that the sole substantial activity in the year arose from a scheme of arrangement/demerger in which the assessee acquired shares of the demerged entity as part of a business reorganisation rather than as regular trading in securities. The authorities examined the balance-sheet, notes, scheme documents and the nature and purpose of the share acquisition and concluded that the acquisition was strategic pursuant to the demerger (transfer of the passive telecom infrastructure business) and not a frequent or voluminous trading activity intended to earn trading profits. The fact that shares were described as "stock in trade" in the accounts or that the memorandum contained an "other object" permitting dealing in shares did not suffice: the scheme context, transfer of assets and liabilities pursuant to the sanctioned demerger, absence of operating assets/turnover, and lack of compliance for taking up a new business under the Companies Act persuaded the Tribunal that the transactions did not convert the assessee into a securities trading concern. On that basis the Tribunal upheld the disallowance of the professional fees under section 37(1) and disallowance of interest under section 36(1)(iii) as not being for the purposes of a business carried on in the year. [Paras 10, 13]

Assessee was not carrying on business of purchase and sale of shares; disallowance of professional fees and interest expenditure upheld and grounds 1-3 dismissed.

Treatment of rental receipts from ATM sites as income from house property vis-a -vis business receipts - Whether the rental/ATM service receipts were business receipts or income from house property - HELD THAT: - The Tribunal recorded the concurrent finding that the assessee received rental income from Punjab National Bank for provision of ATM sites and, except for the agreement, no material evidence was placed to establish that such receipts arose from a business activity. The lower authorities' characterisation of the receipts as income from house property was therefore sustained. [Paras 11, 13]

Rental/ATM receipts treated as income from house property; ground 4 dismissed.

Classification of interest on bank fixed deposits as business income or income from other sources - Whether interest on fixed deposits could be taxed as business income - HELD THAT: - On the material placed, the assessee had simply invested surplus funds in bank fixed deposits; there was no nexus shown between such deposits and any business activity that would justify treating the interest as business income. The Tribunal found no infirmity in the lower authorities characterising the interest as income from other sources. [Paras 12, 13]

Interest on fixed deposits treated as income from other sources; ground 5 dismissed.

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars of income - requirement in notice under section 274 to specify the limb of section 271(1)(c) - Whether the penalty imposed under section 271(1)(c) was sustainable where the notice under section 274 did not specify which limb (concealment or furnishing inaccurate particulars) was invoked, and whether, on merits, penalty could be sustained - HELD THAT: - The Tribunal followed the relevant decision of the jurisdictional High Court holding that a penalty notice is bad in law if it fails to specify which limb of section 271(1)(c) is invoked. The notice in this case used a standard proforma without striking out the irrelevant limb and therefore suffered the same infirmity. Independently, the Tribunal observed that the assessee had made full disclosure and advanced a debatable claim - the characterisation of the transactions was contested and issues were arguable on the facts and in subsequent assessments similar matters were treated differently - so that levy of penalty could not be sustained on merits. In view of both the notice-defect and the debatable nature and full disclosure of the claim, the Tribunal set aside the penalty. [Paras 24, 25, 26, 27, 28]

Penalty under section 271(1)(c) deleted; appeal in ITA 2191/Del/2017 allowed.

Final Conclusion: For AY 2010-11 the Tribunal upheld the disallowances and characterisations made by the AO and CIT(A) (professional fees, interest disallowance, ATM rent treated as house property income, FD interest as other sources) and dismissed the assessment appeal; however, the penalty under section 271(1)(c) was set aside because the section 274 notice failed to specify the limb of the penalty invoked and, on the merits, the claim was debatable and fully disclosed, hence the penalty appeal was allowed.

Limitation for initiating and passing orders under section 201(1) holding a person to be an assessee in default - four year reasonable period for initiating proceedings where no statutory time limit is prescribed - applicability of the Finance (No.2) Act, 2009 amendment prescribing a two year time limit to proceedings under section 201 - precedential application of jurisdictional High Court decisions on limitation

Limitation for initiating and passing orders under section 201(1) holding a person to be an assessee in default - four year reasonable period for initiating proceedings where no statutory time limit is prescribed - applicability of the Finance (No.2) Act, 2009 amendment prescribing a two year time limit to proceedings under section 201 - Impugned order under section 201(1) and interest under section 201(1A) for assessment-year 2010-11 is barred by limitation. - HELD THAT: - The amendment introduced by the Finance (No.2) Act, 2009 prescribing a two year period for passing orders under section 201 was made applicable with effect from 1 4 2010 to assessment years 2011 12 and subsequent years and therefore does not apply to the assessment year 2010 11. In the absence of an applicable statutory time limit for AY 2010 11, the Tribunal and the cited jurisdictional High Court decisions apply the established doctrine that powers must be exercised within a reasonable period; the accepted reasonable period for initiating proceedings under section 201 prior to the amendment is four years from the end of the relevant financial year. The proceedings in this case were initiated and the order passed after the expiry of that four year period, and therefore the notice and the consequent order dated 30.11.2016 are time barred. The Tribunal therefore upheld the order of the Commissioner (Appeals) quashing the assessment as barred by limitation. [Paras 10]

Order under section 201(1) and (1A) for asst.year 2010-11 is invalid and barred by limitation; CIT(A)'s order quashing the same is upheld.

Condonation of delay in filing appeal - Revenue's short delay in filing the appeal was condoned and the appeal admitted. - HELD THAT: - The Revenue's appeal against the CIT(A) order was filed nine days beyond the limitation period. On the Revenue's petition for condonation of delay and after hearing the parties on this preliminary issue, the Tribunal exercised its discretion to condone the delay and admitted the appeal for adjudication on merits. This admission, however, did not affect the final outcome on limitation. [Paras 2]

Delay of nine days in filing revenue's appeal condoned and the appeal admitted.

Final Conclusion: The Tribunal upheld the CIT(A)'s decision quashing the order passed under sections 201(1) and 201(1A) for asst.year 2010-11 as time barred, dismissed the Revenue's appeal on merits, and dismissed the assessee's cross objection as not surviving in view of the time barred nature of the impugned order.

Deduction under section 80IAB(4)(iii) for income from developing, operating and maintaining SEZ projects - treatment of income from SEZ project as business income versus income from house property - disallowance under section 14A read with Rule 8D - allocation of common interest expenses under Rule 8D(2)(ii) - availability of interest-free own funds as a defence to disallowance under Rule 8D(2)(ii)

Deduction under section 80IAB(4)(iii) for income from developing, operating and maintaining SEZ projects - treatment of income from SEZ project as business income versus income from house property - Whether the assessee was entitled to deduction under section 80IAB(4)(iii) for the assessment year 2012-13 in respect of income from the Millennium Towers SEZ project. - HELD THAT: - The Tribunal noted that the assessee declared the Millennium Towers receipts under the head "Income from House Property" and, as computed by the Assessing Officer after allowing appropriate interest deductions, showed taxable business income; the CIT(A) concluded that if the AO treated the Millennium project as business income then all expenses should be allowed and, on that basis, the project resulted in a loss so there was no occasion to allow deduction under section 80IAB(4)(iii). The Tribunal found the revenue grounds against the CIT(A)'s conclusion to be without basis on the facts before it, observed that the earlier ITAT order for AY 2011-12 on identical facts was applicable, and upheld the CIT(A)'s approach. Consequently the revenue's grounds (2 to 6) challenging the allowance were dismissed. [Paras 5]

Revenue's challenge to the allowance of deduction under section 80IAB(4)(iii) for AY 2012-13 dismissed; the CIT(A)'s conclusion (and the earlier ITAT finding for AY 2011-12) is applied.

Disallowance under section 14A read with Rule 8D - allocation of common interest expenses under Rule 8D(2)(ii) - availability of interest-free own funds as a defence to disallowance under Rule 8D(2)(ii) - Whether the disallowance computed under section 14A read with Rule 8D, particularly the portion attributable to interest under Rule 8D(2)(ii), was sustainable. - HELD THAT: - The CIT(A) reduced the AO's disallowance to the fixed amount under Rule 8D(2)(iii) and deleted the large interest-related disallowance under Rule 8D(2)(ii), holding that the assessee's interest payments related to borrowings used for business purposes and there was no material linking borrowings to tax-exempt investments. The Tribunal recorded that the revenue did not challenge the CIT(A)'s factual finding that the assessee had sufficient own funds and non-interest-bearing balances (share capital, reserves and interest-free rental deposits) substantially exceeding the tax-exempt investments. Applying settled law that where interest-free own funds exceed tax-exempt investments no part of interest need be disallowed, and noting that the interest-bearing borrowings were for business purposes and not traceable to creating tax-free investments, the Tribunal upheld deletion of the interest-related disallowance and sustained the limited disallowance under Rule 8D(2)(iii). [Paras 10]

Disallowance under Rule 8D(2)(ii) deleted and only the Rule 8D(2)(iii) disallowance sustained; revenue's grounds on section 14A/Rule 8D dismissed.

Final Conclusion: Appeal by the revenue dismissed: the Tribunal upheld the CIT(A)'s treatment on both the claim for deduction under section 80IAB(4)(iii) for AY 2012-13 (applying the earlier ITAT finding) and the deletion of interest-related disallowance under section 14A read with Rule 8D, leaving only the limited Rule 8D(2)(iii) disallowance.

Lawful basis for suspension of Customs House Agent's licence - effect of appellate order setting aside adjudication on consequential disciplinary action - entitlement to restoration of licence and interim operating rights where foundational order is quashed - remedy by writ where suspension lacks subsisting legal foundation - directions for administrative disposal of renewal applications

Lawful basis for suspension of Customs House Agent's licence - effect of appellate order setting aside adjudication on consequential disciplinary action - remedy by writ where suspension lacks subsisting legal foundation - Validity of the order suspending the Customs House agent when the adjudication order that formed its basis had been set aside on appeal. - HELD THAT: - The court held that suspension proceedings or an order of suspension cannot stand where the foundational adjudication order on which they rest has been set aside insofar as the agent is concerned. The writ court therefore correctly allowed the petition: once the adjudicatory finding naming and penalising the agent had been quashed by the Commissioner (Appeals), the legal basis for independent disciplinary action (suspension of licence) was destroyed. In these circumstances the continuation of suspension lacked a subsisting lawful foundation and constituted a ground for judicial intervention by writ.

The impugned writ judgment setting aside the suspension was upheld; the suspension was held to be without lawful basis after the adjudication order was set aside.

Entitlement to restoration of licence and interim operating rights where foundational order is quashed - directions for administrative disposal of renewal applications - Relief to be granted to the agent following the quashing of the adjudication order and the consequent setting aside of suspension. - HELD THAT: - Given that the adjudicatory prejudice has been removed as against the agent (and the tribunal later affirmed the agent's classification), the court directed that nothing remains to sustain continued suspension and the agent is entitled to resume functioning as a Customs House agent. The court imposed a time-bound administrative direction: any pending application for renewal or extension of the agent's licence must be disposed of within one week so that the agent can resume activities without undue delay. The order contemplates compliance with statutory procedures for renewal or extension, but mandates expedition.

The agent was entitled to function subject to obtaining renewal/extension in accordance with law; pending renewal applications shall be disposed of within one week.

Remedy by writ where suspension lacks subsisting legal foundation - Final outcome of the Revenue's appeals and ancillary applications arising from the challenge to suspension. - HELD THAT: - Having found no infirmity in the writ court's conclusion that the suspension lacked foundation, the High Court dismissed the Revenue's appeal and associated general applications. The court also noted that, with the underlying classification dispute ultimately decided in favour of the agent, only consequential claims (such as compensation) remain open to the agent for the period the licence effectively remained suspended while appeals were pending.

The appeal and specified general applications were dismissed; costs were awarded to the agent and the possibility of compensation by separate claim was left open.

Final Conclusion: The High Court condoned delay, heard the appeal and affirmed the writ court's order quashing the suspension of the Customs House agent because the adjudication order on which the suspension rested had been set aside; the agent is entitled to resume functioning subject to lawful renewal/extension (to be disposed within one week), the Revenue's appeal and specified applications are dismissed with costs, and any claim for compensation for the period of suspension remains a separate consequence.

Quashing of First Information Report under the inherent jurisdiction of the High Court - Protection of action taken under the Customs Act - Police jurisdiction and limits in respect of bonded warehouses within customs territory - Preclusion of prosecution of customs officers performing official duties in good faith

Quashing of First Information Report under the inherent jurisdiction of the High Court - Police jurisdiction and limits in respect of bonded warehouses within customs territory - Protection of action taken under the Customs Act - Preclusion of prosecution of customs officers performing official duties in good faith - Whether the FIR C. R. No. II - 3418 of 2012 and consequent proceedings against the customs officials should be quashed on the ground that the police lacked jurisdiction to conduct search/seizure in a bonded warehouse under customs control and the officials are protected for actions taken in good faith under the Customs Act. - HELD THAT: - The Court found that the bonded warehouse was within the territorial jurisdiction of the Customs Department and the Central Government, and that the police had no authority to seal or to carry out search and seizure procedures in that area; at most the police could request action by the Customs Department or the Central Government. The customs officials had themselves conducted search and seizure and the matter had been processed through the competent customs authority, resulting in confiscation and departmental action under the Customs Act. In these circumstances, the filing of the criminal complaint by the police against high ranked customs officers was impermissible. Further, the Court relied on the protective principle contained in the Customs Act which shields actions done in good faith in pursuance of the Act and requires prior notice before proceedings are commenced against officers, thereby precluding the impugned prosecution. The Court concluded there was no material to justify prosecuting the applicants and that the FIR and consequent proceedings must be quashed as regards the applicants.

The FIR C. R. No. II - 3418 of 2012 and all consequential proceedings arising therefrom are quashed and set aside as against the present applicants.

Final Conclusion: The High Court allowed the petition under its inherent jurisdiction, holding that the police lacked authority to prosecute customs officers for actions taken within customs jurisdiction and that such officers are protected under the Customs Act; the impugned FIR and consequent proceedings stand quashed qua the applicants.

Discharge of accused - extra-judicial confession - voluntariness of confessional statement - corroboration requirement for confession - identity of accused - reliance on co-accused's judgment

Discharge of accused - extra-judicial confession - voluntariness of confessional statement - corroboration requirement for confession - identity of accused - reliance on co-accused's judgment - Validity of the trial court's order discharging the accused originally numbered 14 from Criminal Case No.4655 of 1989. - HELD THAT: - The High Court affirmed the trial court's conclusion that the accused no.14 was arraigned solely on the basis of extra-judicial confessions of co-accused and that his identity was not otherwise established. The court examined the earlier judgment (Exh.278) in which the trial court convicted accused nos.1-10 but acquitted accused no.12 on the ground that he was implicated only by confessional statements of co-accused. The present accused no.14 was similarly implicated by statements of other accused and by an extra-judicial confession (Exh.100) which did not satisfy the requirements of voluntariness under the principles governing confessions and did not meet the parameters of Section 26 of the Evidence Act as applied by the courts. Relying on the ratio in Mohammed Fasrin [as cited in the judgment], the court reiterated that a confession recorded while in custody is a weak piece of evidence, must be shown to be voluntary, and ordinarily requires independent corroboration; absent such material the confession cannot sustain arraignment or conviction. Given the parallel factual position to the co-accused who were acquitted, the High Court found the trial court's reliance on its earlier reasoning to discharge accused no.14 was not misplaced and therefore the discharge could not be disturbed. [Paras 6, 7, 8]

The order discharging accused no.14 is upheld and the revision application is dismissed; record to be returned to the trial court.

Final Conclusion: Revision dismissed; the High Court upheld the trial court's discharge of accused no.14 on the ground that he was implicated only by extra-judicial confessions which were weak, not shown to be voluntary or corroborated, and his identity was not otherwise established; records to be sent back to the trial court.

Condonation of delay in filing appeal - admission or rejection under section 9 of the Insolvency and Bankruptcy Code - operational debt and operational creditor - existence of pre existing dispute - documentary evidence to fasten liability - corporate insolvency resolution process is not a substitute for debt recovery - summary adjudication under the IBC

Condonation of delay in filing appeal - Application for condonation of delay of 15 days in filing the Company Appeal (AT) Insolvency No. 780 of 2019. - HELD THAT: - The Tribunal examined the explanation for the delay - delayed upload/communication of the impugned order, time taken to obtain certified copy, intervening summer vacation and bereavement in counsel's family, and internal deliberations - and found these reasons satisfactory. Observing that the appeal was filed within the additional 15 days provided by the proviso to the relevant statutory period, the Tribunal applied a lenient and purposive approach to furtherance of substantial justice and allowed the interlocutory application for condonation of delay without costs. [Paras 4]

Interlocutory application for condonation of 15 days' delay allowed and appeal admitted for hearing.

Operational debt and operational creditor - existence of pre existing dispute - documentary evidence to fasten liability - admission or rejection under section 9 of the Insolvency and Bankruptcy Code - corporate insolvency resolution process is not a substitute for debt recovery - summary adjudication under the IBC - Maintainability of the Section 9 application: whether the appellant qualified as an operational creditor and whether an operational debt, payable by the respondent, was established so as to admit CIRP proceedings. - HELD THAT: - The Tribunal reviewed the pleadings, invoices and correspondence and the Adjudicating Authority's finding that no documentary evidence established that the alleged purchase order created liability on the respondent. The respondent had denied being a beneficiary or recipient of services, asserted it acted as a collecting agent for the SRS group, and had expressly disputed the claim in its reply and correspondence (including March 23, 2018 and the reply dated May 17, 2018). The Tribunal held that the claim did not fall within the definition of 'operational debt' against the respondent because the goods/services were not shown to have been purchased or availed by the respondent, the purchase order was not addressed to it, and no material was produced to fasten liability on the respondent. Given the existence of bona fide, pre existing disputes requiring deeper examination, the Tribunal emphasised that proceedings under the Code are not recovery proceedings and summary adjudication cannot be used to resolve such disputes. Applying the statutory tests for admission under section 9 and relevant precedent, the Tribunal upheld the rejection of the application as not maintainable. [Paras 6, 32, 33, 35]

Section 9 application held not maintainable; appeal dismissed.

Final Conclusion: The Tribunal allowed condonation of a 15 day delay in filing the appeal but affirmed the Adjudicating Authority's conclusion that the Section 9 application was not maintainable because the appellant failed to establish an operational debt owed by the respondent and the respondent had raised bona fide pre existing disputes; the appeal is dismissed, subject to the appellant's right to pursue alternate remedies in law.

Withdrawal of application under section 7 of the Insolvency and Bankruptcy Code - exercise of powers under rule 11 of the National Company Law Appellate Tribunal Rules, 2016 - settlement between creditor and corporate debtor as foundation for termination of CIRP - refusal to adjudicate limitation where dispute settled between parties - assessment and payment of interim resolution professional's fees and costs

Withdrawal of application under section 7 of the Insolvency and Bankruptcy Code - settlement between creditor and corporate debtor as foundation for termination of CIRP - exercise of powers under rule 11 of the National Company Law Appellate Tribunal Rules, 2016 - Application under section 7 admitted by the Adjudicating Authority was set aside and the petitioner-creditor permitted to withdraw the section 7 application following settlement and payment to the creditor. - HELD THAT: - The Appellate Tribunal recorded that the parties had negotiated an amicable settlement and that the corporate debtor had deposited the amount claimed by the creditor with the creditor. In view of the settlement and the creditor's expressed intention to withdraw the section 7 petition, the Tribunal exercised its rule 11 powers to set aside the impugned admission order and allowed withdrawal of the section 7 application so that the corporate debtor need not undergo the corporate insolvency resolution process. The payment by the corporate debtor was directed to be treated as full and final settlement, and the Adjudicating Authority was directed to close the petition and terminate the process. [Paras 8]

Impugned order dated June 21, 2019 set aside; the section 7 application stands withdrawn and the Adjudicating Authority to close the process.

Refusal to adjudicate limitation where dispute settled between parties - The Tribunal declined to adjudicate the appellant's contention that the claim was barred by limitation because the parties had reached a settlement and the claim amount had been paid. - HELD THAT: - Although the appellant sought to argue that the creditor's claim was time barred, the Tribunal refrained from deciding the limitation question in the face of the parties' settlement and the payment having been made. The Tribunal noted the settled position between the parties and accordingly did not examine the merits of the limitation defence. [Paras 6, 7]

Limitation issue not decided by the Tribunal in view of the settlement and payment.

Assessment and payment of interim resolution professional's fees and costs - The Tribunal assessed the fees and costs payable to the interim resolution professional and directed the financial creditor to pay the outstanding amount after adjustment of sums already paid. - HELD THAT: - Having recorded that the interim resolution professional had rendered services and incurred expenditure, the Tribunal fixed the total remuneration and costs payable to the interim resolution professional. The Tribunal required the financial creditor to pay the balance after adjusting amounts it had already remitted to the interim resolution professional, and directed that the interim resolution professional hand over the corporate debtor's assets and records to its board of directors/promoters immediately. [Paras 9]

Interim resolution professional's fees and costs assessed; financial creditor directed to pay the outstanding balance within the stipulated period and IRP to hand over assets and records.

Final Conclusion: The appeal is allowed: the impugned admission order is set aside and the section 7 petition is permitted to be withdrawn on the parties' settlement and payment (treated as full and final); the Tribunal did not decide the limitation plea; and the financial creditor was directed to pay the assessed balance of the interim resolution professional's fees, after adjustment of amounts already paid, with the Adjudicating Authority closing the corporate insolvency process.

Existence of operational debt and default - dispute regarding debt and maintainability of section 9 application - admission of section 9 application and initiation of corporate insolvency resolution process - appointment of interim resolution professional - moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016

Existence of operational debt and default - dispute regarding debt and maintainability of section 9 application - The operational creditor proved existence of an operational debt and default and the defence of dispute raised by the corporate debtor did not preclude admission of the section 9 application. - HELD THAT: - The Tribunal examined the contract/purchase order, invoices, ledger entries showing part payments and the sequence of events. The one page purchase order recording terms, the invoices annexed, receipt of part payments and the allegation of dishonour of a cheque together established that operational debt had arisen and was payable after completion of work. Though the corporate debtor pleaded delay and commercial losses, the Tribunal found that delay in commencement was attributable to the corporate debtor's delayed advance payment and that correspondence did not demonstrate a bona fide pre-existing dispute which would bar admission. On this basis the Tribunal held that the existence of the operational debt and default were proved and that the pleaded dispute did not render the application incompetent for admission. [Paras 17, 18]

Existence of operational debt and default established; defence of dispute rejected for purposes of maintainability.

Admission of section 9 application and initiation of corporate insolvency resolution process - appointment of interim resolution professional - The section 9 application was admitted and the corporate insolvency resolution process (CIRP) was initiated; the proposed insolvency professional was appointed as interim resolution professional. - HELD THAT: - Having concluded that operational debt and default were established and that no bar to admission subsisted, the Tribunal admitted the application under section 9(5) of the Code and appointed the operational creditor's proposed nominee as interim resolution professional. The proposed IRP had filed the requisite written communication in the prescribed format and his registration particulars were recorded; accordingly the Tribunal formally appointed him to take forward the CIRP. [Paras 19]

Section 9 application admitted; CIRP initiated and Mr. P. Sriram appointed as interim resolution professional.

Moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 - A moratorium under section 14 was declared with the scope and duration as specified in the Code. - HELD THAT: - Consequent to admission of the section 9 application, the Tribunal declared the moratorium under section 14(1), prohibiting institution or continuation of suits or proceedings, transfer or disposal of assets, enforcement of security and recovery of property in the possession of the corporate debtor. The Tribunal recorded that supplies of essential goods or services would not be terminated during the moratorium as per section 14(2) and noted the statutory provision governing the duration of moratorium until completion of the CIRP subject to earlier approval of a resolution plan or liquidation under section 33. [Paras 19, 20, 21]

Moratorium declared with the statutory scope and duration under section 14; registry and IBBI to be furnished copies of the order and IRP notified.

Final Conclusion: The Tribunal admitted the section 9 petition, held that operational debt and default were established and no viable pre-existing dispute barred admission, appointed the proposed interim resolution professional and declared the moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016.

Service of notice under section 8 of the IBC - pre-existing dispute / defence to operational debt - lifting of the corporate veil - admission of application under section 9 of the IBC

Service of notice under section 8 of the IBC - presumption of service - The section 8 demand notice was duly served on the corporate debtor. - HELD THAT: - The Tribunal examined the postal and courier tracking records placed on file and the fact that the notice was addressed to the registered office address of the corporate debtor. The Adjudicating Authority had found, and the Tribunal concurred, that delivery by Blue Dart and the Postal Department to the registered office satisfied the statutory requirement. A mere denial by the corporate debtor that it did not actually receive the notice was held insufficient to rebut the presumption of service arising from proper addressing and delivery. [Paras 13]

Notice under section 8 was held to have been duly served.

Pre-existing dispute / defence to operational debt - independent transaction of sale - record of pendency of suit or arbitration - There was no established pre-existing dispute or other record sufficient to defeat the operational creditor's claim and prevent initiation of section 9 proceedings. - HELD THAT: - The Tribunal reviewed the documents relied on by the appellant (including the asset purchase agreement, deed of assignment and the tripartite document) and found no record showing a bona fide dispute between the operational creditor and the corporate debtor that pre-dated the demand notice within the meaning of section 8(2). The Tribunal observed that transactions between sister concerns and separate entities (Univercell and MPS) or unresolved asset-sale disputes between those entities did not negate the independent sale transactions giving rise to the operational debt. The incomplete tripartite document, to which the operational creditor was not a party, did not establish that the corporate debtor had a subsisting legal defence or had paid the debt; if anything, the record showed acceptance of liability by the corporate debtor. [Paras 15]

No pre-existing dispute was shown; the claimed cross-dealings did not oust the operational creditor's claim.

Lifting of the corporate veil - admission of application under section 9 of the IBC - The admission of the section 9 application by the Adjudicating Authority was valid and is upheld. - HELD THAT: - Having held that the demand notice was duly served and that no pre-existing dispute had been established, the Tribunal agreed with the Adjudicating Authority's conclusion that the statutory requirements for admitting the section 9 application were satisfied. The appellant's plea to lift the corporate veil to treat inter-company or sister-concern transactions as negating the independent operational debt was considered and rejected on the facts: there was no material to justify disregarding corporate separateness or to show that such transactions extinguished the claimed liability. [Paras 15, 16]

Section 9 application was properly admitted; the appeal is dismissed.

Final Conclusion: The Tribunal dismissed the appeal: the section 8 notice was found to have been duly served, no pre-existing dispute was proved to bar recovery, arguments for lifting the corporate veil were rejected, and the admission of the section 9 application was upheld.

Share application money treated as a deposit - financial debt - default for the purposes of initiation of corporate insolvency resolution process - refund of share application money and compliance with RBI/FEMA procedural formalities - liberty to revive a section 7 application

Share application money treated as a deposit - financial debt - Whether the amounts remitted as share application money have changed colour into a deposit and thereby constitute a financial debt. - HELD THAT: - The Adjudicating Authority concluded, after applying the Companies Act provisions and the Companies (Acceptance of Deposits) Rules, 2014, that where shares are not allotted within the prescribed period the share application money becomes a deposit and attracts compensation for time value, thereby amounting to a financial debt. The Appellate Tribunal recorded that the reasons and finding in paragraph 10 of the impugned order, to the effect that the share application money transmitted in 2008 has become a deposit and can be treated as a financial debt, were not challenged before it and found no reason to disturb that finding. [Paras 10]

The finding that the share application money has become a deposit and constitutes a financial debt is affirmed and left undisturbed.

Default for the purposes of initiation of corporate insolvency resolution process - refund of share application money and compliance with RBI/FEMA procedural formalities - Whether the Adjudicating Authority could direct the corporate debtor to fulfil conditional procedural formalities and grant liberty to revive the Section 7 application despite having found that default had not been established. - HELD THAT: - The Adjudicating Authority found that delivery of the July 3, 2015 letter demanding refund had not been proved and therefore held that default was not established. Notwithstanding that finding, it went on to direct the corporate debtor to fulfil RBI-prescribed formalities and gave the financial creditor liberty to revive the application if refund was not made. The Appellate Tribunal held that once the Adjudicating Authority concluded that default had not been proved, it should have rejected the application; it could not proceed to make directions based on a conditional offer. Consequently, the portion of paragraph 11 of the impugned order directing the appellant to fulfil formalities within three months and granting liberty to revive the application was set aside. [Paras 9, 11]

The directions in paragraph 11 requiring the corporate debtor to complete RBI/FEMA formalities and granting liberty to revive the Section 7 application are quashed.

Liberty to revive a section 7 application - Whether the respondent-financial creditor may pursue fresh proceedings and whether limitation is to be considered at this stage. - HELD THAT: - The Appellate Tribunal disposed of the appeal while permitting the financial creditor to take necessary steps (those found wanting by the Adjudicating Authority) and to file a fresh Section 7 application if so advised. The Tribunal explicitly kept the question of limitation open for consideration when any fresh application is moved, rather than deciding limitation in the present disposal. [Paras 10]

The respondent is granted liberty to take necessary steps and file a fresh Section 7 application; the question of limitation is left open for future adjudication.

Final Conclusion: The Appellate Tribunal affirmed the Adjudicating Authority's finding that the share application money has become a deposit and constitutes a financial debt, set aside the directions in paragraph 11 that required the corporate debtor to complete conditional RBI/FEMA formalities and granted liberty to the financial creditor to file a fresh Section 7 application, keeping the question of limitation open.

Admission of section 9 application under the Insolvency and Bankruptcy Code, 2016 - bona fide dispute - summary nature of proceedings before the Adjudicating Authority - proof of payment and documentary authenticity - triggering of corporate insolvency resolution process on admitted default

Bona fide dispute - proof of payment and documentary authenticity - summary nature of proceedings before the Adjudicating Authority - The appellant's plea of payment of Rs. 25 lakhs to an alleged authorised representative of the operational creditor does not constitute a bona fide dispute preventing admission of the section 9 application. - HELD THAT: - The Tribunal examined the asserted receipt dated October 27, 2018 and found that the document did not identify the signatory and did not clearly state the amount or its currency; the operational creditor vehemently disputed the receipt. Given the summary jurisdiction of the Adjudicating Authority under IBC, contested questions of veracity and authenticity of documents - which require oral evidence, cross-examination and possibly forensic examination - cannot be resolved at the admission stage. The Tribunal also observed that cash payment of the magnitude claimed, allegedly to a third party, is impermissible and not recognised under the framework relied upon by the appellant. In these circumstances the Tribunal held that there was no pre-existing bona fide dispute as would bar admission of the section 9 petition. [Paras 6, 8, 9]

The contention of payment of Rs. 25 lakhs is not accepted and does not establish a bona fide dispute to deny admission of the section 9 application.

Triggering of corporate insolvency resolution process on admitted default - admission of section 9 application under the Insolvency and Bankruptcy Code, 2016 - Even if the asserted payment of Rs. 25 lakhs were accepted, the admitted balance of Rs. 1 lakh would constitute default sufficient to trigger CIRP under the IBC. - HELD THAT: - The Tribunal noted that the appellant itself admitted withholding of the remaining amount of Rs. 1 lakh. Section 4 of the IBC permits initiation of CIRP where a default exists; therefore, an admitted unpaid balance, however small, is sufficient to attract insolvency proceedings. On that basis the Adjudicating Authority was correct in admitting the application. [Paras 10]

An admitted unpaid balance of Rs. 1 lakh amounts to default and justifies admission of the section 9 petition and initiation of CIRP.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's order admitting the section 9 application is upheld for the reasons that the alleged cash payment was not proved and, in any event, an admitted unpaid balance remained which justified triggering CIRP.

Admissibility of application under section 9 of the Insolvency and Bankruptcy Code, 2016 - formation of contract by unsigned offer letter - enforceability of unsigned memorandum of understanding - proof of default in payment of salary/remuneration - effect of board and remuneration committee resolution fixing remuneration

Admissibility of application under section 9 of the Insolvency and Bankruptcy Code, 2016 - proof of default in payment of salary/remuneration - The company petition under section 9 of the IBC filed by the operational creditor is not maintainable as there is no established contractual liability in the claimed amount and no proved continuing default. - HELD THAT: - The Adjudicating Authority examined the materials relied upon by the petitioner and the corporate debtor's counter. Although the petitioner asserted entitlement under an offer letter and claimed amounts ostensibly in default, the record establishes that the remuneration ultimately accepted and acted upon was the one recommended by the remuneration committee and confirmed by the board on May 29, 2015. The petitioner attended that meeting and continued to receive and accept the remuneration fixed by the company; no contemporaneous objection to the reduced remuneration was placed on record. The Tribunal found no documentary basis to treat the larger sum claimed as an admitted contractual liability of the corporate debtor or to establish a continuing default by the company in respect of such sum. In those circumstances the statutory petition under section 9, which requires proof of a debt and default, could not be admitted. [Paras 7, 9]

Petition under section 9 is not admissible for lack of proved contractual liability and default; petition rejected.

Formation of contract by unsigned offer letter - The unsigned offer letter did not result in a binding contract between the petitioner and the corporate debtor. - HELD THAT: - The offer letter expressly required the petitioner to sign, date and return a copy to formalise acceptance. No signed copy evidencing the petitioner's acceptance was produced. The Tribunal accordingly concluded that, in the absence of the petitioner's acceptance, the offer letter could not be treated as creating a binding contractual obligation on the part of the corporate debtor for the terms claimed therein. [Paras 8]

Unsigned offer letter does not constitute a binding contract; no liability arises on that basis.

Enforceability of unsigned memorandum of understanding - The unsigned memorandum of understanding could not be enforced against the corporate debtor and did not create privity or liability. - HELD THAT: - The memorandum of understanding placed on record was unsigned. The Tribunal held that, as clause 2 made the MoU operative from the date of signing and no signature was produced, it did not form any privity of contract between the parties and could not be relied upon to establish the claimed entitlement or to prove default by the corporate debtor. [Paras 8]

Unsigned memorandum of understanding is unenforceable and does not give rise to a claim.

Final Conclusion: The petition under section 9 of the IBC is rejected because the asserted contractual terms were not accepted or evidenced, the remuneration fixed by the company's remuneration committee and board was the operative arrangement acted upon, the unsigned MoU is unenforceable, and the petitioner has failed to prove a debt and default sufficient to admit the insolvency petition.

Corporate insolvency resolution process - financial debt and default - limitation and acknowledgment of debt - power of attorney/authorization to initiate proceedings - effect of pending recovery/SARFAESI/DRT proceedings on maintainability - appointment of interim resolution professional - moratorium under section 14

Power of attorney/authorization to initiate proceedings - Validity of the authorization for filing the section 7 application by the person signing on behalf of the financial creditor - HELD THAT: - The Tribunal examined the authorization for the officer named in Part I of the application and found that an authorization letter dated October 6, 2018 in favour of the signatory (Mr. S. T. Nadarajan, Assistant General Manager) was placed on record and reiterated in the additional typed set. The Tribunal distinguished the objection based on an earlier power of attorney and, applying the NCLAT guidance, held that the factual and legal objection to the authorization lacked merit and was overruled. [Paras 12]

Authorization found adequate and objection on that ground overruled.

Limitation and acknowledgment of debt - Whether the section 7 claim was barred by limitation - HELD THAT: - The Tribunal considered competing precedents on whether amounts in financial statements constitute acknowledgment of debt. Relying on Bhajan Singh Samra v. Wimpy International Ltd. and noting section 238A of the Code, the Tribunal accepted that the corporate debtor's financial statements for the year ended March 31, 2018 constituted an acknowledgment of debt in excess of the statutory threshold and thus extended the limitation period. On this basis the claim was held not to be time-barred. [Paras 13, 17, 18]

Claim is not barred by limitation.

Financial debt and default - corporate insolvency resolution process - Existence of a financial debt and default sufficient to admit the section 7 application - HELD THAT: - On the material placed (facilities sanctioned, securities executed, statements of account, bankers' certificate, issuance of letters of credit and subsequent classification as NPA, SARFAESI steps and proceedings before DRT), the Tribunal concluded there was a financial debt owed by the corporate debtor in excess of the statutory threshold and repayment had defaulted. Applying the scheme of the Code and precedents concerning section 7, the Tribunal held that where existence of financial debt and default is shown, the adjudicating authority is bound to admit the application and trigger CIRP. [Paras 6, 7, 9, 16, 22]

Section 7 application is required to be admitted for initiation of CIRP.

Effect of pending recovery/SARFAESI/DRT proceedings on maintainability - Whether pendency of proceedings before DRT, SARFAESI actions or a counterclaim by the corporate debtor barred or rendered the section 7 petition an abuse of process - HELD THAT: - The Tribunal noted the existence of parallel recovery measures (DRT proceedings, SARFAESI notices, possession) and a counter claim, but observed that the corporate debtor did not deny existence of debt or default. Relying on the statutory scheme and authoritative Supreme Court precedents, the Tribunal held that multiplicity of proceedings, pendency before other fora or a counterclaim/defence of set-off do not preclude admission under section 7 where financial debt and default are established; such contentions cannot be treated as a dispute preventing admission. [Paras 19, 20, 21]

Multiplicity of proceedings and counterclaim do not preclude admission; plea of mala fide/abuse rejected.

Appointment of interim resolution professional - Appointment of the proposed interim resolution professional (IRP) - HELD THAT: - The financial creditor proposed Mr. Chandramouli Ramasubramaniam with the required IBBI registration and submitted the prescribed Form 2 communication. The Tribunal accepted the proposal and appointed him as IRP to perform duties under the Code and file his report within the stipulated period. [Paras 23]

Proposed IRP appointed to conduct CIRP and to act under the Code.

Moratorium under section 14 - Imposition and scope of moratorium consequent to admission of the section 7 petition - HELD THAT: - Upon admission under section 7, the Tribunal directed that moratorium as set out in section 14(1) follows immediately. It recorded the statutory prohibitions on institution or continuation of suits, transfer or disposal of assets, enforcement of security interests (including SARFAESI actions), and recovery by owners/lessors, and noted continuance of specified exceptions under subsections (2)-(4). The Tribunal directed communication of the order to parties and IBBI. [Paras 24, 25, 26, 27]

Moratorium imposed with the statutory scope and duration; registry to inform parties and IBBI.

Final Conclusion: The section 7 petition filed by the financial creditor is admitted; the Tribunal found valid authorization, held the claim not barred by limitation, confirmed existence of financial debt and default, rejected objections based on multiplicity of proceedings and counterclaim, appointed the nominated IRP, and imposed the statutory moratorium with directions for communication and compliance.

Preferential transactions - Related party - Ordinary course of business exception - Relevant time - two years preceding the insolvency commencement date - Preference as transfer putting creditor in a better position than distribution under section 53

Preferential transactions - Related party - Relevant time - two years preceding the insolvency commencement date - Transfers made to Excello Fin Lea Ltd. and Tirumala Balaji Alloys P. Ltd. within two years prior to the insolvency commencement date were preferential transactions. - HELD THAT: - The Tribunal applied the statutory test that a transfer by the corporate debtor conferring a preference occurs where property or an interest is transferred for the benefit of a creditor and has the effect of putting that creditor in a more beneficial position than it would have been on distribution under section 53. The Adjudicating Authority found, and the Tribunal accepted, that the promoters held 99.4% of Excello and 50% of Tirumala (the remaining shareholding being with close relatives), bringing both entities within the definition of related parties. Transactions made to related parties during the two years preceding the insolvency commencement date therefore fall within the definition of preferential transactions under the Code. The Tribunal upheld the Adjudicating Authority's finding that the repayments and interest disbursed to these connected entities within that two year relevant period constituted preferential transfers and were catchable under the avoidance provisions. [Paras 16, 20, 21]

The payments to the two companies made within two years before the insolvency commencement date were held to be preferential transactions and liable to be set aside.

Ordinary course of business exception - Preferential transactions - The ordinary course of business exception did not apply to the impugned transfers. - HELD THAT: - Section 43(3)(a) excludes transfers made in the ordinary course of business or financial affairs from being treated as preferences. The appellants did not establish that similar payments were made to all creditors in the ordinary course. The Adjudicating Authority noted that the impugned disbursements were particular to the appellants and were repaid shortly after receipt in several instances, and thus were not shown to be ordinary course transactions that would attract the exception. On that basis, the Tribunal found no reason to displace the Adjudicating Authority's conclusion that the ordinary course exception was not attracted. [Paras 17, 19, 20]

The ordinary course of business exception under section 43(3)(a) was not attracted and could not save the impugned transfers from being treated as preferential.

Final Conclusion: The Tribunal dismissed the appeals and declined to interfere with the Adjudicating Authority's order setting aside the transfers to the two related companies as preferential transactions; the ordinary course exception was not found to apply.

Extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 - amount retained by the statutory services charge/SSC not to be added to assessable value - departmental circular dated 16.02.2018 (para-12.2) excluding extended period for raising demand - availability of alternative remedy/appeal under the Act - interim suspension of assessment order pending challenge

Extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 - departmental circular dated 16.02.2018 (para-12.2) excluding extended period for raising demand - amount retained by the statutory services charge/SSC not to be added to assessable value - interim suspension of assessment order pending challenge - Impugned assessment order upholding demand and invoking extended limitation was stayed temporarily in view of the Department of Revenue's circular and related precedent. - HELD THAT: - The Court noted para-12.2 of the Department of Revenue's circular dated 16.02.2018, which, relying on apex court decisions, states that amounts retained as SSC are not to be added to assessable value and that the extended period would not be available to the department to raise the demand. Having perused the circular and earlier similar directions of this Court, the High Court concluded that the question whether the extended period could be invoked in the present case required examination in light of that circular and authorities. In view of that position and without prejudging merits, the Court held that the impugned order dated 26.03.2018 should not be given effect to until the next returnable date and granted an interim stay of the operation of the assessment order, while permitting respondents to seek modification or vacation of the interim order. [Paras 4, 5, 8]

Impugned order dated 26.03.2018 shall not be given effect to until the next returnable date; interim stay granted subject to respondents' right to move for modification or vacation.

Availability of alternative remedy/appeal under the Act - interim suspension of assessment order pending challenge - Availability of the departmental appeal did not bar the petitioner from approaching the High Court for interim relief in the circumstances of this case. - HELD THAT: - Respondents relied on the availability of an appeal to the Commissioner (Appeals) and on the principle that alternative remedies should ordinarily be availed. The Court, however, applied the principle that where the impugned action suffers from palpable defects not requiring detailed examination, availability of an alternative remedy may not operate as a bar to judicial review. Given the clear position in the departmental circular and the nature of the challenge, the Court considered that the petitioner was entitled to approach the High Court and granted interim relief accordingly. [Paras 6, 7, 8]

Petitioner was not precluded from seeking interim relief before this Court despite the existence of an alternative statutory appeal; interim relief accordingly maintained.

Final Conclusion: The High Court granted an interim stay of the impugned assessment order dated 26.03.2018 in light of the Department of Revenue's circular (16.02.2018) and relevant precedents, and held that the existence of an alternative statutory appeal did not bar the petitioner from seeking interim judicial relief; the stay is subject to modification or vacation on application by the respondents and the matter is listed after three weeks.

Cenvat credit of service tax on outward transportation - place of removal - point of sale - FOR (destination) sale - ownership and risk in transit - input service eligibility for GTA services - beneficial circulars cannot be withdrawn retrospectively

Cenvat credit of service tax on outward transportation - FOR (destination) sale - ownership and risk in transit - point of sale - input service eligibility for GTA services - beneficial circulars cannot be withdrawn retrospectively - Admissibility of Cenvat credit of service tax paid on outward transportation for the period 2009-10 to 2013-14 where goods were cleared on FOR/destination basis and freight and transit risk remained with the seller until delivery at buyer's premises. - HELD THAT: - The Tribunal found, on the material placed before it, that the assessee effected sales on FOR basis; prices in excise invoices were inclusive of freight and insurance; consignment notes were raised on the assessee; and ownership/risk in transit remained with the assessee until delivery at the customer's doorstep. Applying the principles on determination of 'place of removal' and 'point of sale' as explained in the Board Circular relied upon and relevant Supreme Court precedents, the Tribunal held that where property and risk remain with the seller until delivery at the buyer's premises (destination sale), the freight element borne by the seller qualifies as an input/service and Cenvat credit of service tax paid on outward GTA is admissible. The Tribunal further held that beneficial circulars operating during the relevant period could not be withdrawn retrospectively and, in light of the prolonged litigation on the issue, denial for extended periods could not be sustained on limitation grounds. The High Court, on scrutiny, found that the Tribunal's determination was based on these factual and legal conclusions and that no substantial question of law arose from the impugned order. [Paras 7]

Tribunal's allowance of Cenvat credit of service tax on outward transportation for the material period is upheld; no substantial question of law made out by Revenue.

Final Conclusion: Revenue's appeals are dismissed; the Tribunal's order allowing Cenvat credit for the period 2009-10 to 2013-14 is maintained and no substantial question of law arises. No order as to costs.