TaxTMI Updates e-Newsletter
Apr 17,2020

Right to hearing - principles of natural justice - confiscation under GST - quashing for breach of hearing - remand for fresh adjudication

Right to hearing - principles of natural justice - quashing for breach of hearing - confiscation under GST - Whether the authority afforded the writ applicant a reasonable opportunity of hearing before passing the final order of confiscation in Form GST MOV 11, and consequences of any failure to do so. - HELD THAT: - The Court examined the notice and the impugned order and recorded that the writ applicant had been directed to appear on 05.04.2019 at 11.00 a.m. yet the final order of confiscation was passed on the same date. The absence of a hearing on the date fixed meant the writ applicant was not afforded the reasonable opportunity envisaged by the right to hearing and principles of natural justice. On this short and decisive ground the Court found the impugned confiscation order vitiated by breach of natural justice and therefore liable to be quashed. [Paras 8, 9]

Impugned order in Form GST MOV 11 quashed for breach of the right to hearing; writ application allowed on this ground.

Remand for fresh adjudication - direction to issue notice - Procedure to follow after quashing: whether the matter should be remitted for fresh adjudication and the directions to be given. - HELD THAT: - Having quashed the confiscation order for want of a fair opportunity of hearing, the Court remitted the matter to the adjudicating authority for fresh consideration. The authority was directed to issue notice to the writ applicant and afford an opportunity of hearing; the writ applicant was directed to appear on the date fixed and advance his defence. The Court further directed completion of the exercise within a specified short timeline. [Paras 9, 10]

Matter remitted to respondent no.1 for fresh adjudication; respondent to issue notice and afford hearing, and to complete the exercise within four weeks from receipt of the order.

Final Conclusion: The confiscation order in Form GST MOV 11 was quashed for failure to afford a hearing; the matter is remitted for fresh adjudication with directions to issue notice, afford an opportunity of hearing to the writ applicant and complete the exercise within four weeks.

Genuineness of purchases - admission of additional evidence - reasonable opportunity of being heard - remand for fresh adjudication - disallowance under section 14A r/w rule 8D - availability of interest free funds - deletion of interest component - confirmation of administrative expenses disallowance

Genuineness of purchases - admission of additional evidence - reasonable opportunity of being heard - remand for fresh adjudication - Whether the addition made on account of alleged un substantiated sundry creditor balance in respect of the supplier (Advait Distributors Pvt. Ltd.) could be sustained without examining the additional evidences and without affording further opportunity to the assessee. - HELD THAT: - The Assessing Officer confined his inquiry to transactions with the concerned supplier and treated purchases as non genuine, making an ad hoc large disallowance. Before the Commissioner (Appeals) the assessee furnished additional documents including PAN details, confirmation and ledger copies from both sides which, on their face, established the identity of the supplier and bore on the genuineness of transactions. The Commissioner (Appeals) rejected these documents at the threshold with a general observation that no fruitful purpose would be served, without verifying their authenticity or directing the Assessing Officer to do so. The Tribunal held that the additional evidence was not manifestly irrelevant and that it was incumbent on the appellate authority to examine or cause verification of the material rather than reject it summarily. In view of this failure to consider/admit the evidence and to provide an effective opportunity of hearing, the matter relating to the addition in respect of the supplier is to be restored to the file of the Assessing Officer for fresh adjudication after affording the assessee a reasonable opportunity and after verification of the evidentiary material. [Paras 8]

Issue restored to the Assessing Officer for fresh adjudication after verification of the additional evidence and after giving the assessee a reasonable opportunity of being heard.

Disallowance under section 14A r/w rule 8D - availability of interest free funds - deletion of interest component - confirmation of administrative expenses disallowance - Whether disallowance under section 14A read with rule 8D should be sustained in respect of exempt income earned during the year. - HELD THAT: - The Assessing Officer computed disallowance under rule 8D comprising an interest element and an administrative expenses element. On examining the assessee's balance sheet, the Tribunal found that surplus interest free funds (by way of share capital, reserves and surplus) were substantially in excess of investments that produced exempt income, and therefore the interest disallowance computed under rule 8D(2)(ii) was not justified and is deleted. No persuasive case was made against the administrative expenses disallowance under rule 8D(2)(iii); consequently that component is sustained. The Tribunal applied the principle that where interest free funds are available to meet investments yielding exempt income, the interest component of rule 8D disallowance need not be applied. [Paras 13]

Interest component of the rule 8D disallowance deleted; administrative expenses component sustained, thereby restricting the overall disallowance under section 14A r/w rule 8D.

Final Conclusion: The appeal is partly allowed: the addition relating to the supplier is remitted to the Assessing Officer for fresh adjudication after admission/verification of the additional evidence and after affording a reasonable opportunity of hearing; the disallowance under section 14A r/w rule 8D is reduced by deleting the interest component while confirming the administrative expenses component.

Addition under section 69A - unexplained cash deposits - explanation of source of funds - evidentiary value of affidavits - remand for verification - acceptance of past agricultural savings as source

Explanation of source of funds - acceptance of past agricultural savings as source - addition under section 69A - Whether part of the cash deposits in the assessee's bank account stood satisfactorily explained and liable to be excluded from addition under section 69A for AY 2014-15. - HELD THAT: - The Tribunal examined the documentary material placed before it and observed that (i) Rs. 7,00,000 deposited on 1 February 2014 was explainable as derived from an earlier cash withdrawal of Rs. 8,10,000 from the pension account, and the short interval between withdrawal and deposit did not vitiate the explanation; and (ii) the assessee had earned and held past agricultural net income from earlier years, and while the Assessing Officer accepted agricultural income of Rs. 7,20,000 for the impugned year, the Tribunal found it reasonable to accept that an amount of Rs. 9,00,000 from past agricultural savings remained available and could have been deposited. Applying these findings, the Tribunal held that these portions of the cash deposits were satisfactorily explained and therefore not exigible to be treated as unexplained income under section 69A. [Paras 7]

Rs. 16,00,000 of the cash deposits is accepted as explained and the corresponding part of the addition under section 69A is deleted.

Unexplained cash deposits - evidentiary value of affidavits - remand for verification - Whether the remaining cash deposit claimed to be repayment of loans by third parties was established or required fresh adjudication. - HELD THAT: - The assessee relied on affidavits and confirmation letters to prove repayment of loans amounting to the balance. These documents were not furnished to the Assessing Officer but produced before the first appellate authority. The Commissioner (Appeals) had rejected them as self serving without examination. The Tribunal held that the affidavits possess evidentiary value and could not be summarily discarded; however, as their veracity had not been investigated by the Departmental authorities, the Tribunal directed that the issue be restored to the Assessing Officer for fresh examination and adjudication after verifying the evidence and allowing the assessee adequate opportunity to produce witnesses or further proof. [Paras 7]

Balance cash deposit of Rs. 19,80,000 is remanded to the Assessing Officer for verification of the affidavits and other evidence; the issue to be reconsidered afresh.

Final Conclusion: The appeal is partly allowed: Rs. 16,00,000 of the cash deposits is accepted as explained and the corresponding addition under section 69A is deleted; the remaining deposit is remitted to the Assessing Officer for fresh verification and adjudication after affording the assessee opportunity to adduce evidence.

Penalty under Section 271(1)(c) - furnishing inaccurate particulars of income - concealment of income - bonafide claim - inadvertent mistake - disallowance for lack of supporting evidence regarding quantum

Penalty under Section 271(1)(c) - furnishing inaccurate particulars of income - concealment of income - bonafide claim - inadvertent mistake - disallowance for lack of supporting evidence regarding quantum - Validity of imposition of penalty under Section 271(1)(c) for alleged furnishing of inaccurate particulars of income and concealment of income. - HELD THAT: - Penalty was imposed based on two additions: disallowance of promotional and advertisement expenses increased in the relevant year and disallowance of excess loss claimed on sale of motor car. The Tribunal found that the disallowance of promotional and advertisement expenditure arose from the Assessing Officer's doubt about the increased quantum and the assessee's inability to support the increase with evidence, and not from any false claim; therefore the disallowance did not amount to furnishing inaccurate particulars or concealment. Regarding the excess loss on sale of motor car, the Tribunal accepted the assessee's explanation that the excess claim arose from a bona fide, inadvertent mistake (debited to profit and loss account) and observed that a working of short term capital loss had been furnished and part of the loss was accepted and carried forward by the Assessing Officer. On these facts the Tribunal concluded there was no contumacious conduct or deliberate misstatement warranting penalty under Section 271(1)(c). Having decided the matter on merits, the Tribunal did not consider the procedural contention that the show-cause notice failed to specify the exact charge. [Paras 5, 6]

Penalty imposed under Section 271(1)(c) deleted.

Final Conclusion: The appeal is allowed: the penalty of Rs. 4,53,389 imposed under Section 271(1)(c) is deleted as the additions did not demonstrate furnishing of inaccurate particulars or concealment of income; other procedural objections were not examined as the Tribunal disposed the matter on merits.

Reopening of assessment - bogus accommodation entries - onus on the assessee to substantiate genuineness of purchases - requirement of corroborative evidence for third party statements - disallowance of purchases by applying industry margin - ex parte hearing

Bogus accommodation entries - onus on the assessee to substantiate genuineness of purchases - disallowance of purchases by applying industry margin - requirement of corroborative evidence for third party statements - Whether the disallowance of purchases as made by the AO could be sustained in full, or the CIT(A)'s restriction of disallowance to 3% of purchases was justified - HELD THAT: - The Tribunal examined the material on record and the conclusions of the CIT(A). The AO had reopened the assessment on information about alleged bogus suppliers and disallowed purchases in full. The CIT(A) scrutinised invoices and noted that invoices were silent on detailed technical attributes of diamonds, but also observed that the AO did not doubt the sales declared by the assessee. The Tribunal accepted the CIT(A)'s approach that in the diamond trade margins and trading profits are narrow (manufacturer margins 1.5%-4.5%; trading profits 1%-3%), and where sales are accepted the possibility that accommodation entries have been used for benefit can justify a limited disallowance rather than treating all purchases as bogus. The Tribunal also recognised that third party statements require corroborative material before resulting in complete denial of purchases. Having regard to industry practice and the findings of the CIT(A), the Tribunal found the restriction of disallowance to 3% to be reasonable and declined to restore the AO's 100% addition. [Paras 8, 9]

The CIT(A)'s restriction of disallowance to 3% of purchases is upheld and the revenue's appeal is dismissed.

Final Conclusion: The appeal filed by the revenue is dismissed; the Tribunal upholds the CIT(A)'s limited disallowance (3%) of purchases for AY 2012-13, concluding that full disallowance was not warranted on the materials before the authorities.

Penalty under section 271AAB - undisclosed income as defined in Explanation (c) to section 271AAB - search and seizure disclosure under section 132(4) - assessment accepting returned income - linkage of disclosed income to seized documents/entries

Penalty under section 271AAB - assessment accepting returned income - Validity of CIT(A)'s deletion of penalty imposed by the Assessing Officer under section 271AAB. - HELD THAT: - The Tribunal examined whether the CIT(A) was justified in deleting the penalty levied by the AO. The CIT(A) had treated the disclosure made in the statement recorded under section 132(4) as a mere statement in the absence of identifiable income, assets or specific entries discovered during the search and, on that basis, deleted the penalty. The Tribunal held that the CIT(A) had not examined whether the disclosures were linked to money, bullion, jewellery, valuable articles, entries in books of account or other documents as envisaged by Explanation (c) to section 271AAB. The Tribunal observed that the Supreme Court decision relied upon by the CIT(A) (Sudarshan Silk Mills) concerned a different penalty provision and was not directly on point. For these reasons the Tribunal reversed the CIT(A)'s conclusion in principle and found that the question of levy of penalty could not be rejected merely because a disclosure was offered in the return and accepted in assessment without examining its linkage to seized material under Explanation (c). [Paras 5]

CIT(A)'s deletion of the section 271AAB penalty is reversed in principle.

Undisclosed income as defined in Explanation (c) to section 271AAB - linkage of disclosed income to seized documents/entries - search and seizure disclosure under section 132(4) - Extent of 'undisclosed income' properly attributable to the assessee under Explanation (c) and consequent scope of penalty. - HELD THAT: - The Tribunal analysed the components of the sum disclosed under the section 132(4) statement and distinguished between amounts already recorded in the books and those not recorded. It found that certain components (initial capital, sundry creditors and miscellaneous income) amounting to Rs.9,14,55,006/- were recorded in the books, whereas other components (commodity profits, P&L profits and estimated profit) totalling Rs.6,90,69,994/- were not recorded and were supported by seized documents marked in the record. On this factual basis the Tribunal concluded that only Rs.6,90,69,994/- constituted "undisclosed income" within the meaning of Explanation (c) to section 271AAB. The Tribunal exercised its jurisdiction as final fact finding authority under the Act and directed that the penal computation be limited to the identified undisclosed amount, disallowing penalty on the amounts already recorded in the books which Revenue failed to link to seized material as undisclosed income. [Paras 6]

Penalty under section 271AAB to be computed only on the undisclosed income of Rs.6,90,69,994/-, with consequential recomputation by the Assessing Officer.

Final Conclusion: Revenue's appeal is partly allowed: the CIT(A)'s deletion of the section 271AAB penalty is reversed in principle, but the Tribunal limits the taxable "undisclosed income" for penalty purposes to the portion of the search disclosure (Rs.6,90,69,994/-) that was not recorded in the books and is supported by seized documents, and directs recomputation of penalty accordingly.

Jurisdiction to make assessment under Section 153A where no incriminating material was seized - disallowance of deduction under Section 80IA(4)(iv) - principles of natural justice - remand for fresh adjudication

Jurisdiction to make assessment under Section 153A where no incriminating material was seized - principles of natural justice - CIT(Appeals) failed to adjudicate the assessee's ground that assessment under Section 153A disallowing deduction was invalid in the absence of any incriminating material seized; whether the matter must be remanded for decision on jurisdiction first. - HELD THAT: - The Tribunal found that the assessee had specifically raised before the CIT(Appeals) a jurisdictional challenge that, in the absence of any incriminating material seized during the search, an assessment made under Section 153A disallowing the claim of deduction under Section 80IA(4)(iv) would be bad in law. On perusal of the CIT(Appeals) order, there is no adjudication or findings on that ground. Applying principles of natural justice, the Tribunal set aside the CIT(Appeals) order insofar as it failed to decide the jurisdictional question and restored the matter to the file of the CIT(Appeals) for adjudication of jurisdiction as the first question. The Tribunal directed that if the assessee does not succeed on jurisdiction, the CIT(Appeals) shall then decide the merits with a speaking order. The same approach was applied to the identical issues in the other assessment years mentioned, and the Tribunal restored those appeals to the CIT(Appeals) with similar directions. [Paras 4, 5, 6]

Order of CIT(Appeals) set aside and appeals restored to CIT(Appeals) to first decide the jurisdictional issue regarding assessments under Section 153A where no incriminating material was seized; if jurisdiction upheld, adjudicate merits with a speaking order.

Disallowance of deduction under Section 80IA(4)(iv) - remand for fresh adjudication - Whether the disallowance of the deduction under Section 80IA(4)(iv) should be dealt with on merits in the light of the jurisdictional determination and whether earlier assessment-year findings have binding effect on later years. - HELD THAT: - The Tribunal noted that where the jurisdictional question for earlier assessment years is restored for decision, the CIT(Appeals) should, after determining jurisdiction, proceed to decide the disallowance on merits with reasons. For the assessment year 2016-17 the Tribunal observed that any addition on merits may be influenced by the determination in earlier years and therefore restored that appeal as well to the CIT(Appeals) to adjudicate in accordance with the outcome in the earlier years. The Tribunal did not decide the merits itself but directed remand for fresh adjudication and for the CIT(Appeals) to render a speaking order. [Paras 4, 6]

Disallowance claims and related merits are remanded to the CIT(Appeals) for fresh adjudication in the light of the jurisdictional determination; the 2016-17 appeal is restored to be decided consistent with earlier years.

Final Conclusion: The appeals are allowed for statistical purposes; the orders of the CIT(Appeals) are set aside and the matters (Assessment Years 2013-14, 2014-15, 2015-16 and 2016-17) are restored to the CIT(Appeals) to decide first the jurisdictional question relating to assessments under Section 153A where no incriminating material was seized and thereafter, as applicable, to decide the merits with a speaking order.

CBDT instruction on refraining from filing appeals where tax effect is below prescribed threshold - reopening of assessment beyond four years and requirement of negligence in disclosure under section 147 of the Income-tax Act - registration of trade mark as creation of a capital asset and entitlement to depreciation - disallowance under section 14A and application of Rule 8D(2) limbs 2 and 3 - deduction under section 10B and computation under sub-section (4) of section 10B

CBDT instruction on refraining from filing appeals where tax effect is below prescribed threshold - Maintainability of Revenue appeal ITA No.1578/Chny/2018 for AY 2011-12 in view of the CBDT instruction regarding tax-effect threshold. - HELD THAT: - The Revenue conceded that the tax effect in the appeal was below the threshold specified by the CBDT circular. In light of the Board's instruction directing officers not to file appeals where the tax effect is under the prescribed limit, the Tribunal concluded that the Revenue's appeal was not maintainable. The Tribunal applied the administrative instruction as determinative of the maintainability question and dismissed the appeal accordingly. [Paras 2, 3]

Revenue appeal dismissed as not maintainable pursuant to the CBDT instruction.

Reopening of assessment beyond four years and requirement of negligence in disclosure under section 147 of the Income-tax Act - Validity of reassessment proceedings reopened beyond four years for AYs 2009-10 and 2010-11 where no negligence in disclosure was alleged. - HELD THAT: - The Tribunal noted that the assessments were reopened after four years and that the statutory power to reopen under section 147 requires the Assessing Officer to establish that the assessee was negligent in disclosing material facts relevant to assessment. The assessment order contained no allegation or finding of such negligence. In the absence of any case by the Revenue that the assessee had failed to disclose material facts, the Tribunal affirmed the Commissioner (Appeals) in allowing the assessee's appeals and held the reopenings to be bad in law. [Paras 4, 5, 6]

Revenues' appeals dismissed; reopenings set aside for lack of any finding or proof of negligence.

Registration of trade mark as creation of a capital asset and entitlement to depreciation - Whether expenditure incurred for registration of the "micro cotton" trade mark abroad is revenue or capital in nature and the consequent entitlement to depreciation. - HELD THAT: - The Tribunal accepted the Revenue's contention that a trade mark is a capital asset. Expenditure incurred in connection with creating or establishing that capital asset (registration abroad) must therefore be treated as capital expenditure rather than revenue. However, the Tribunal recognised the assessee's right to claim depreciation on the capitalised trade mark and directed the Assessing Officer to allow depreciation at the applicable rate. [Paras 7, 9]

Expenditure held capital in nature; assessee entitled to claim depreciation.

Disallowance under section 14A and application of Rule 8D(2) limbs 2 and 3 - Appropriateness of disallowance under section 14A and the application of Rule 8D(2) limbs 2 and 3 in computing exempt income related disallowance. - HELD THAT: - The Tribunal observed that the impact of borrowed funds versus own funds on the expenditure disallowable under section 14A required factual determination. It also held that for limbs 2 and 3 of Rule 8D(2) only the investments which actually earned exempt or exempt-equivalent income should be considered, a point not examined by the authorities below. Given these open factual and applicational questions, the Tribunal set aside the orders below and remitted the matter to the Assessing Officer for fresh consideration after allowing the assessee to file relevant material and after giving a reasonable opportunity. [Paras 10, 12]

Issue remitted to the Assessing Officer for fresh examination in accordance with law and on evidentiary re-appraisal.

Deduction under section 10B and computation under sub-section (4) of section 10B - Entitlement to deduction under section 10B for profits of the undertaking and computation of the eligible deduction in light of Madras High Court authority. - HELD THAT: - The Tribunal noted competing contentions and that an earlier Bench had decided the assessee's case adversely. However, having regard to the Madras High Court decision in Camiceria Apparels India (P.) Ltd. and the need to apply sub-section (4) to section 10B for computing the eligible deduction, the Tribunal held that the earlier Tribunal decision may not be determinative for the year under consideration. The Tribunal therefore set aside the orders below and remitted the matter to the Assessing Officer to re-examine and compute the deduction under section 10B(4) in accordance with the High Court ruling, after affording the assessee a reasonable opportunity. [Paras 13, 15]

Issue remitted to the Assessing Officer for reconsideration and computation in accordance with section 10B(4) and the cited High Court judgment.

Final Conclusion: Revenue appeals for AYs 2009-10, 2010-11 and 2011-12 are dismissed; assessee's appeal for AY 2011-12 is partly allowed for statistical purposes, with the issues on section 14A disallowance and deduction under section 10B remitted to the Assessing Officer for fresh consideration in accordance with law.

Penalty under section 271B for failure to get accounts audited - reasonable cause for delay in obtaining tax audit report - validity and sufficiency of show-cause notice

Penalty under section 271B for failure to get accounts audited - minimum penalty - Penalty levied under section 271B for failure to get books of account audited before the due date - HELD THAT: - The Tribunal examined whether the assessee had obtained the audit of its books on or before the due date required under the Act and whether the Assessing Officer was justified in imposing the minimum penalty. It is undisputed that the statutory due date for filing the return and obtaining the audit fell prior to 30-09-2012 and that the audit was actually completed on 27-11-2012 with return filed on 30-11-2012. The Assessing Officer issued a show-cause notice, considered the assessee's replies and reached a satisfaction that no reasonable cause had been shown for failure to get accounts audited by the specified date. The Commissioner (Appeals) affirmed that conclusion. Having perused the record and the replies, the Tribunal found the assessee's explanations unsubstantiated and not plausible and therefore upheld the imposition of the minimum penalty under section 271B.

Penalty under section 271B for failure to get accounts audited before the due date upheld and appeal dismissed.

Validity and sufficiency of show-cause notice - Allegation that the show-cause notice was void for failing to specify a charge - HELD THAT: - The assessee contended that the show-cause notice was void ab initio as it did not contain a specific charge and was served after limitation. The Tribunal noted the contents of the notice which required the assessee to show cause within seven days why penalty under section 271B should not be levied and which offered opportunity of hearing in person or through an authorised representative. On this basis the Tribunal held that the notice fairly communicated the charge and afforded opportunity to the assessee to explain and therefore was not void for vagueness or want of specificity.

Show-cause notice held to be valid and sufficiently specific; objection rejected.

Reasonable cause for delay in obtaining tax audit report - Whether illness and eventual death of the senior partner constituted reasonable cause for delay in obtaining the audit report - HELD THAT: - The assessee relied on the senior partner's illness (Parkinson's disease) and later produced a death certificate dated much later than the relevant period. The Tribunal observed that no medical certificate or contemporaneous evidence of the partner's incapacity was placed before the Assessing Officer or the Commissioner (Appeals). The solitary production of a death certificate years after the relevant period and absence of supporting medical evidence failed to substantiate that the assessee was prevented by reasonable cause from getting the accounts audited by the due date. The Tribunal further noted that the firm had a history of regular audits and could not claim ignorance of statutory requirements.

Claim of reasonable cause based on partner's illness/death rejected for want of contemporaneous medical evidence; explanation held not plausible.

Final Conclusion: The Tribunal dismissed the appeal, upholding the penalty imposed under section 271B: the show-cause notice was valid, the asserted illness of the senior partner did not constitute a proved reasonable cause for delayed audit, and the minimum penalty was sustained.

Stay of demand - abeyance of recovery - prima facie case - balance of convenience - financial hardship - reopening of assessment - diary entries recovered in search - retracted statement - direction for disposal of appeal within time-bound period

Stay of demand - abeyance of recovery - prima facie case - balance of convenience - financial hardship - reopening of assessment - diary entries recovered in search - retracted statement - direction for disposal of appeal within time-bound period - Whether the demand raised pursuant to the reopened assessment should be kept in abeyance pending disposal of the appeal before the Commissioner of Income Tax (Appeals) and whether the appeal should be directed to be decided within a specified time. - HELD THAT: - The Court considered whether a prima facie case had been made out for grant of stay. The assessment on reopening rested primarily on coded entries in a diary recovered during search and on statements attributed to an alleged beneficiary which, according to the record, had been retracted and were uncorroborated. In those circumstances the additions made by the Assessing Officer were found to be prima facie questionable. The Court observed that respondent authorities, before directing payment (either lump sum or in instalments), ought to have considered the prima facie case, the balance of convenience and any financial hardship of the petitioner; the impugned orders do not reflect such consideration. Having regard to the pendency of the appeal, the nature of the material relied upon in the reopened assessment and the absence of demonstrated application of mind to the relevant factors by the authorities, the Court exercised its equitable jurisdiction to keep the notice of demand in abeyance until disposal of the appeal and to require the appellate authority to decide the appeal within a stipulated period. [Paras 11, 13]

Notice of demand dated 21st December, 2019 for assessment year 2012-13 shall be kept in abeyance till disposal of the appeal by the Commissioner of Income Tax (Appeals); the Commissioner shall decide the appeal within four months from receipt of authenticated copy of this order.

Final Conclusion: Writ petition disposed of by directing that the demand raised pursuant to the reopened assessment for assessment year 2012-13 be kept in abeyance pending disposal of the appeal by the Commissioner of Income Tax (Appeals), which is directed to be decided within four months; observations are for the limited purpose of the stay application and not final on merits.

Recovery from partners under Section 188-A of the Income Tax Act - Joint and several liability of partners for firm's tax arrears - Effect of appellate deletion of demand on recovery proceedings - Liability of a retired partner for demands raised after retirement - Show cause notice and its validity where no subsisting demand exists

Recovery from partners under Section 188-A of the Income Tax Act - Effect of appellate deletion of demand on recovery proceedings - Show cause notice and its validity where no subsisting demand exists - Validity of notice under Section 188A issued to the petitioner for assessment years 2011-12 and 2012-13 when the firm's appeals had resulted in deletion of additions and there was no subsisting demand. - HELD THAT: - The petition challenged the order issuing a show cause notice under Section 188A to the petitioner as a partner for tax arrears said to have been raised against the firm for AYs 2011-12 and 2012-13. The petitioner replied placing on record the orders of the first appellate authority which had allowed the firm's appeals by deleting the additions/disallowances. At the hearing, Revenue's counsel accepted, on instructions, that there was no demand payable by the firm for those assessment years and therefore no basis existed for recovery proceedings against the petitioner under Section 188A. In view of the absence of any subsisting demand and the concession recorded, the Court set aside the impugned order issued under Section 188A insofar as it sought recovery for AYs 2011-12 and 2012-13. [Paras 7, 10, 11]

Impugned order dated 01.12.2019 under Section 188A set aside in respect of assessment years 2011-12 and 2012-13.

Liability of a retired partner for demands raised after retirement - Joint and several liability of partners for firm's tax arrears - Sustainability of raising demand against the petitioner for assessment year 2013-14 despite his retirement from the firm with effect from 31.03.2012. - HELD THAT: - The impugned order had purportedly included demand for AY 2013-14, a year after the petitioner's retirement on 31.03.2012. Revenue's representative conceded that, having retired as a partner with effect from 31.03.2012, the petitioner could not be subjected to a demand for AY 2013-14. The Court accepted the statement on instructions and, in consequence, treated the inclusion of AY 2013-14 in the demand as unsustainable and set aside the order insofar as it sought recovery for years subsequent to the petitioner's retirement. [Paras 8, 10, 11]

Impugned order dated 01.12.2019 set aside insofar as it sought recovery for assessment year 2013-14 and subsequent years after petitioner's retirement.

Final Conclusion: Writ petition allowed; impugned order dated 01.12.2019 under Section 188A set aside insofar as it sought recovery from the petitioner for AYs 2011-12, 2012-13 and for AY 2013-14 and subsequent years following his retirement; no order as to costs.

Joint and several liability of partners under Section 188A - Validity of show cause and recovery order under Section 188A - Effect of retirement of partner on liability for subsequent assessment years - Existence of tax demand as prerequisite for recovery from partners

Existence of tax demand as prerequisite for recovery from partners - Validity of show cause and recovery order under Section 188A - Impugned order under Section 188A directing recovery from the petitioner was not sustainable where there was no subsisting demand in the hands of the firm for the specified assessment years. - HELD THAT: - The petitioner replied to the show cause stating that the firm had preferred appeals and the first appellate authority had allowed the appeals by deleting the additions/disallowances, and copies of the appellate orders were produced. At the hearing the Revenue, through its learned standing counsel and the Income Tax Officer present, accepted that there was no demand payable by the firm for assessment years 2011-12 and 2012-13 and accordingly no basis remained for raising a demand against the petitioner as a partner. On that factual and legal position the requirement for a subsisting demand as a prerequisite to recovery under Section 188A was not met, rendering the impugned recovery order unsustainable. [Paras 6, 10, 11]

Impugned order dated 01.12.2019 under Section 188A set aside insofar as it sought recovery for assessment years 2011-12 and 2012-13.

Effect of retirement of partner on liability for subsequent assessment years - Joint and several liability of partners under Section 188A - Petitioner could not be held liable under Section 188A for assessment year 2013-14 and subsequent years after retirement with effect from 31.03.2012. - HELD THAT: - The impugned order erroneously included demand for assessment year 2013-14 although the petitioner had retired from the partnership with effect from 31.03.2012. The Revenue conceded that raising any demand against the petitioner for assessment year 2013-14 and onwards did not arise in view of her retirement prior to those years. Consequently, there was no basis to fasten liability on the petitioner for periods after cessation of partnership. [Paras 4, 8, 10, 11]

Order set aside insofar as it purported to fasten liability on the petitioner for assessment year 2013-14 and subsequent years.

Final Conclusion: Writ petition allowed: the order dated 01.12.2019 under Section 188A is set aside as there was no subsisting demand in the firm's case for AYs 2011-12 and 2012-13 and the petitioner, having retired on 31.03.2012, cannot be held liable for AY 2013-14 and thereafter; petition allowed without costs.

Deduction under Section 35D - capital employed - foreign currency convertible bonds (FCCBs) as part of capital employed - deduction under Section 10A - effect of disallowance on Chapter VI A deduction - binding effect of Tribunal's earlier coordinate bench decisions

Deduction under Section 35D - capital employed - foreign currency convertible bonds (FCCBs) as part of capital employed - binding effect of Tribunal's earlier coordinate bench decisions - Computation of 'capital employed' for allowing deduction under Section 35D - whether FCCBs are to be included. - HELD THAT: - The Tribunal accepted the assessee's contention that FCCBs are in the nature of debentures and therefore are to be included in 'capital employed' for computing the maximum deduction under Section 35D. The Tribunal relied on its coordinate bench decisions in the assessee's own cases for subsequent assessment years (recorded at length in the order) which had held that FCCBs must be taken into account when computing capital employed. The fact that the Revenue has filed further appeal against those Tribunal orders was held not to preclude following the Tribunal's earlier binding view so long as such earlier orders have not been reversed by a higher forum. Accordingly the AO was directed to re compute deduction under Section 35D by treating FCCBs as part of capital employed. [Paras 8, 9]

FCCBs shall be included in capital employed for computing deduction under Section 35D and the AO is directed to re compute the deduction accordingly.

Deduction under Section 10A - effect of disallowance on Chapter VI A deduction - Whether disallowance under Section 35D, resulting in enhanced business profits, entitles the assessee to deduction under Section 10A on such enhanced profits. - HELD THAT: - The Tribunal noted that reduction/disallowance of a business deduction (here under Section 35D) increases taxable business profits and that, on identical facts, the Tribunal has held (and administrative guidance confirms) that Chapter VI A deductions should be allowed on profits as enhanced by such disallowances. The Tribunal referred to its earlier reasoning and to the CBDT Circular recognising that disallowances related to the business activity against which a Chapter VI A deduction is claimed result in enhancement of profits and that the Chapter VI A deduction is admissible on the enhanced profits. Applying that principle, the Tribunal accepted the assessee's ground and held that deduction under Section 10A is to be allowed on the profits after taking into account the disallowance under Section 35D. [Paras 10, 11]

Deduction under Section 10A is admissible on business profits as enhanced by the disallowance under Section 35D; the assessee's ground on this point is allowed.

Final Conclusion: Revenue's appeal dismissed; assessee's appeal partly allowed - AO directed to recompute deduction under Section 35D including FCCBs in capital employed, and deduction under Section 10A to be allowed on profits as enhanced by the disallowance.

Agency Permanent Establishment - representative assessee - taxability of shipping business under Article 7 (Business Profits) of the India-Mauritius DTAA - residence and place of effective management under Article 8 of the India-Mauritius DTAA - assessment of shipping income under section 44B of the Income tax Act, 1961

Agency Permanent Establishment - representative assessee - assessment of shipping income under section 44B of the Income tax Act, 1961 - taxability of shipping business under Article 7 (Business Profits) of the India-Mauritius DTAA - Whether Freight Connection (India) Pvt. Ltd. constituted an agency Permanent Establishment of Arc Line, Mauritius for A.Y. 1998-99 and whether Arc Line's shipping income could be assessed in the hands of the assessee under section 44B as representative assessee. - HELD THAT: - The Tribunal noted that in the separate quantum proceedings for Arc Line, Mauritius (A.Y. 1998-99) it had held Freight Connection to be an agent of independent status, that Arc Line did not have a PE in India and that Arc Line's business income was not taxable in India. Relying on those conclusions, the Tribunal found no basis to treat the assessee as an exclusive/dependent agent or to assess Arc Line's shipping income in the hands of the assessee by invoking section 44B as representative assessee. Consequently the addition made by the AO was held to be unsustainable and was deleted. [Paras 7, 8]

Order of CIT(A) set aside; addition of income assessed under section 44B in the hands of the assessee deleted and the assessee's appeal allowed.

Agency Permanent Establishment - representative assessee - taxability of shipping business under Article 7 (Business Profits) of the India-Mauritius DTAA - residence and place of effective management under Article 8 of the India-Mauritius DTAA - Whether Freight Connection (India) Pvt. Ltd. constituted an exclusive/dependent agent and thereby a PE of Arc Line, Mauritius for A.Y. 2001-02, and whether Arc Line's business income could be taxed in India and assessed in the hands of the assessee. - HELD THAT: - The Tribunal applied its reasoning in the earlier disposed appeal (A.Y. 1998-99) mutatis mutandis, observing that the assessee was not an exclusive/dependent agent of Arc Line. In the absence of a PE in India, Arc Line's business income from shipping could not be brought to tax in India under Article 7 of the DTAA; accordingly the assessment of Arc Line's income in the hands of the assessee as representative assessee under section 44B could not be sustained and was vacated. [Paras 12]

Addition for A.Y. 2001-02 in respect of Arc Line's assessed income deleted; appeal of the assessee allowed.

Agency Permanent Establishment - representative assessee - taxability of shipping business under Article 7 (Business Profits) of the India-Mauritius DTAA - Whether Freight Connection (India) Pvt. Ltd. constituted an exclusive/dependent agent and thereby a PE of Bay Lines, Mauritius for A.Y. 2001-02, and whether Bay Lines' shipping income could be taxed in India and assessed in the hands of the assessee. - HELD THAT: - Having regard to the Tribunal's order in the Bay Lines quantum appeal for A.Y. 2001-02, which held Freight Connection to be an independent agent not devoted exclusively or almost exclusively to Bay Lines and that Bay Lines did not have an agency PE in India, the Tribunal concluded that Bay Lines' shipping income was not taxable in India under Article 7. Therefore the AO's assessment of Bay Lines' income in the hands of the assessee as representative assessee under section 44B was unsustainable and the addition was deleted. [Paras 17, 18]

Order of CIT(A) set aside in part; addition made by the AO in the hands of the assessee vacated and the assessee's appeal allowed.

Interest under section 234B - taxability of shipping business under Article 7 (Business Profits) of the India-Mauritius DTAA - Whether the revenue's challenge to the CIT(A)'s vacatur of interest under section 234B in respect of the Bay Lines assessment remains maintainable. - HELD THAT: - The Tribunal observed that because it concluded Bay Lines' income could not be assessed in India and the underlying assessment in the hands of the assessee was vacated, the revenue's ground attacking vacation of interest under section 234B was rendered infructuous. No separate adjudication on the interest point was required. [Paras 20, 21]

Revenue appeal dismissed as infructuous.

Final Conclusion: The Tribunal held that Freight Connection (India) Pvt. Ltd. was an agent of independent status and did not constitute an agency PE of Arc Line or Bay Lines for the years in issue; accordingly the business incomes of the Mauritius principals could not be taxed in India under Article 7 of the India-Mauritius DTAA and the assessments framed in the hands of the assessee under section 44B/ as representative assessee were vacated; the revenue's appeal on interest was dismissed as infructuous.

Deduction of interest expenditure under Section 57(iii) against income from other sources - Nexus between interest income and interest on borrowings - Recognition of interest expenditure under mercantile system of accounting (Section 145(1)) - Non-applicability of provisions of Section 43B to income from other sources - Effect of bank discontinuance of interest provisioning on assessee's liability to pay interest - Binding effect of a coordinate Bench decision on identical issues and infructuousness of subsequent appeals

Binding effect of a coordinate Bench decision on identical issues and infructuousness of subsequent appeals - Whether the revenue appeals should be dismissed as infructuous in view of a coordinate Bench decision allowing the assessee's appeals on identical issues. - HELD THAT: - The Tribunal noted that a coordinate Bench had, by consolidated order dated 24.10.2017, allowed the assessee's appeals for AYs 2010-11, 2011-12 and 2012-13 by following earlier Tribunal decisions in the assessee's own case for AYs 2008-09 and 2009-10. As the present appeals by the Revenue raised identical issues already decided in favour of the assessee by the coordinate Bench, the revenue's appeals were rendered infructuous. The Departmental Representatives conceded that the coordinate Bench's allowance of the assessee's appeals made the present appeals infructuous. Consequently, the Tribunal dismissed the revenue appeals for the three assessment years. [Paras 7]

Revenue appeals for AYs 2010-11, 2011-12 and 2012-13 dismissed as infructuous in view of the coordinate Bench's decision allowing the assessee's appeals.

Deduction of interest expenditure under Section 57(iii) against income from other sources - Nexus between interest income and interest on borrowings - Recognition of interest expenditure under mercantile system of accounting (Section 145(1)) - Non-applicability of provisions of Section 43B to income from other sources - Substantive tribunal findings (by the coordinate Bench) on allowability of interest expenditure against interest received from National Stock Exchange and related accounting and statutory principles. - HELD THAT: - The coordinate Bench, whose decision the Tribunal followed, found a direct nexus between interest earned from deposits with the National Stock Exchange (arising from invoked bank guarantees and liened FDRs) and interest incurred on the borrowings that were the source of those deposits. Applying Section 57(iii), the Tribunal held that interest expenditure wholly and exclusively laid out for earning such interest income is deductible against income from other sources. It also observed that the provisions of Section 43B apply only to income computed under the head 'business income' and not to income from other sources. Further, relying on the mercantile system of accounting under Section 145(1), the Tribunal accepted that interest expenditure accruing in the accounts is allowable even if the bank had discontinued provisioning for interest, because the liability to pay interest persisted despite the bank's cessation of provisioning. These substantive findings formed the basis for allowing the interest deduction in the assessee's appeals which, in turn, rendered the revenue's appeals infructuous.

Coordinate Bench allowed deduction of interest expenditure against interest income under Section 57(iii) on the basis of established nexus, held Section 43B inapplicable to income from other sources, and accepted accrual under mercantile accounting even where banks ceased provisioning.

Final Conclusion: The Tribunal dismissed the revenue appeals for AYs 2010-11, 2011-12 and 2012-13 as infructuous, having followed a coordinate Bench decision that allowed the assessee's claim for deduction of interest expenditure against interest income on the grounds of nexus, mercantile accrual, and applicability of Section 57(iii).

Refund of countervailing duty (special additional duty of customs) - eligibility under Notification No. 102/2007-Cus dt. 14.09.2007 - mismatch in description of goods - onus of proof on Revenue to show goods sold are different from goods imported - incidence of duty not passed to buyer

Refund of countervailing duty (special additional duty of customs) - mismatch in description of goods - eligibility under Notification No. 102/2007-Cus dt. 14.09.2007 - onus of proof on Revenue to show goods sold are different from goods imported - incidence of duty not passed to buyer - Whether the appellant is entitled to refund of SAD paid on importation under Notification No. 102/2007-Cus despite a mismatch in the invoice description - HELD THAT: - The Tribunal held that a mere mismatch in the description between the imported goods and the goods sold is not, by itself, a valid ground to reject a refund claim of SAD. The Court observed that the appellant stated on the invoice that the incidence of SAD had not been passed on to the buyer and that VAT was paid, which supports the claim that SAD was borne by the importer to safeguard State revenue. The Tribunal placed the onus on the Revenue to prove that the goods sold were not the same as those imported; such positive proof was not provided. Applying Notification No. 102/2007-Cus dt. 14.09.2007, the Tribunal concluded that when SAD has been paid on importation and the tax incidence has not been passed to the buyer (with VAT paid), the importer is entitled to claim refund, and therefore the rejection based solely on description mismatch was not sustainable. [Paras 6]

The refund claim was allowed and the impugned order rejecting the refund was set aside; consequential relief granted.

Final Conclusion: The Tribunal allowed the appeal, set aside the order rejecting the refund claim of SAD, and granted consequential relief on the basis that a mere mismatch in description does not displace the Revenue's burden to prove that the goods sold were different from the goods imported and that entitlement under Notification No. 102/2007-Cus was otherwise established.

Levy of Anti-Dumping Duty during interregnum between provisional and final notification - application of binding Supreme Court precedent on interregnum levy - remand for fresh speaking order and reconsideration in accordance with principles of natural justice

Levy of Anti-Dumping Duty during interregnum between provisional and final notification - application of binding Supreme Court precedent on interregnum levy - Whether Anti Dumping Duty can be levied for the interregnum period 21.06.2002 to 09.12.2002 on imports made during August to December 2002. - HELD THAT: - The Tribunal considered the identical question earlier decided by a Division Bench of this Tribunal which followed the Supreme Court's decision on the levy of Anti Dumping Duty during the interregnum between provisional and final notifications. The Revenue did not distinguish that precedent nor produce contrary authority. Applying the binding principle established by the higher court and the Tribunal's prior consistent decision, the impugned demand for duty relating to the interregnum period was held unsustainable. Consequently, the orders upholding the demand were set aside.

The impugned order and the demand for Anti Dumping Duty for the interregnum period are set aside; appeal allowed with consequential reliefs if any.

Final Conclusion: The Tribunal allowed the appeal and set aside the confirmed demand for Anti Dumping Duty relating to the interregnum period (21.06.2002 to 09.12.2002) on imports made during August to December 2002, applying the controlling Supreme Court precedent and the Tribunal's earlier consistent decision; consequential benefits granted as per law.

Corporate Insolvency Resolution Process - operational debt and default - pre-existing dispute - limitation and laches - performance bank guarantee and commissioning obligations - summary adjudication under Section 9 of the IBC - remand for fresh consideration

Operational debt and default - pre-existing dispute - limitation and laches - summary adjudication under Section 9 of the IBC - Maintainability of the petition under Section 9 of the IBC in light of alleged default, pre-existing dispute, and unexplained delay. - HELD THAT: - The Tribunal examined the purchase order and agreement terms, payment history and correspondence between the parties and found that the Respondent had raised complaints about defective performance and had communicated with the Petitioner well before the statutory demand. The Respondent paid 90% of the contract value and asserted forfeiture of the remaining 10% for failure to complete performance trials and to furnish the performance bank guarantee. The Petitioner did not produce adequate evidence to establish successful commissioning and continuous performance as required by the contract, nor did it satisfactorily explain the delay from March 2014 until issuance of the statutory demand in February 2019. Given the existence of a pre-existing dispute concerning performance and the claim of forfeiture, and the Petitioner's unexplained laches, the Tribunal held that the claim was not fit for summary adjudication under Section 9. The question whether forfeiture was justified and the merits of the alleged debt could not be resolved in summary proceedings under the Code. [Paras 7, 8, 9]

The petition is not maintainable for initiation of CIRP on the basis of summary proceedings because a pre-existing dispute and unexplained delay (laches/limitation) exist which preclude immediate admission under Section 9.

Remand for fresh consideration - performance bank guarantee and commissioning obligations - Procedure to be followed for resolving the disputed claim between the parties before any insolvency action is taken. - HELD THAT: - Recognising that the dispute over commissioning, performance trials and forfeiture of the balance payment cannot be adjudicated summarily under the Code, the Tribunal directed a limited remedial process to enable an expeditious non judicial resolution. The Petitioner was permitted to submit a detailed representation with supporting documents to the Respondent within four weeks. Thereafter the Respondent was directed to examine the claim in terms of the purchase order and agreement and to pass an appropriate reasoned order communicating its decision within four weeks. The Tribunal clarified that the Petitioner remains at liberty to pursue appropriate legal remedies if the representation is rejected, thereby preserving substantive rights while avoiding immediate initiation of CIRP. [Paras 10]

The claim is remitted to the Respondent for reconsideration on specified timelines; the Petitioner may submit supporting representation and may pursue other legal remedies if dissatisfied with the outcome.

Final Conclusion: The Company Petition under Section 9 is disposed of without initiating CIRP: the Tribunal declined summary admission due to a pre-existing dispute and unexplained delay, and directed the Petitioner to submit its claim to the Respondent for reconsideration within four weeks, with the Respondent to decide and communicate its decision within a further four weeks; the Petitioner remains free to pursue appropriate legal action thereafter.

Approval of resolution plan under Section 31(1) of the Insolvency and Bankruptcy Code - Compliance with Section 30(2) requirements including payment to operational creditors and dissenting financial creditors - Commercial wisdom of the committee of creditors not open to judicial review - Provisions for effective implementation and monitoring of a resolution plan - Requirement of performance security under Regulation 36B and evidence under Regulation 39(4) of the CIRP Regulations - Eligibility of resolution applicant under Section 29A and related affidavit requirements

Approval of resolution plan under Section 31(1) of the Insolvency and Bankruptcy Code - Compliance with Section 30(2) requirements including payment to operational creditors and dissenting financial creditors - Whether the resolution plan submitted by Vaibhav Buildtech Private Limited, as approved by the CoC, should be sanctioned under Section 31(1) of the Code. - HELD THAT: - The Tribunal examined whether the Plan met the statutory preconditions for approval under Section 31(1): (a) approval by the CoC under Section 30(4) (the Plan was approved by 93% voting share); (b) compliance with the requirements of Section 30(2) (as recorded in Form H and examined in the order); and (c) provision for effective implementation. The RP certified compliance in Form H and the record shows that the Plan provides for payment of CIRP costs in priority, upfront payments to secured creditors, amounts to operational creditors and dissenting unsecured financial creditors, management and implementation arrangements, and did not contravene law. The Tribunal applied the principle that commercial decisions of the CoC are not ordinarily interfered with, having regard to K. Sashidhar, and found no ground to upset the commercial determination of the CoC. On that basis and on the documentary compliance shown, the Tribunal approved the resolution plan and directed it to be binding on the corporate debtor and stakeholders. [Paras 31, 32, 36]

Resolution plan submitted by Vaibhav Buildtech Private Limited is approved under Section 31(1) of the Code and shall be binding on the corporate debtor and its stakeholders.

Compliance with Section 30(2) requirements including payment to operational creditors and dissenting financial creditors - Whether the resolution plan complies with Section 30(2)(b) as amended, in relation to payments to operational creditors and dissenting unsecured financial creditors. - HELD THAT: - The Tribunal considered the amended Section 30(2)(b) (w.e.f. 6-8-2019) which requires that operational creditors and financial creditors who do not vote in favour be paid not less than specified liquidation benchmarks. The Plan provides specified upfront payments to operational creditors (Rs. 0.35 crore) and to dissenting unsecured financial creditors (Rs. 0.25 crore). The Tribunal noted that the liquidation value payable to those classes under Section 53(1) would be Nil, and therefore the amounts proposed are not less than the liquidation benchmarks. Accordingly, the Tribunal found Section 30(2)(b) complied with in the facts of this case. [Paras 24, 25]

The resolution plan satisfies Section 30(2)(b) (as substituted) in that the proposed payments to operational creditors and dissenting unsecured financial creditors meet the statutory benchmarks.

Requirement of performance security under Regulation 36B and evidence under Regulation 39(4) of the CIRP Regulations - Evidence of performance security under Regulation 39(4) - Whether the requirement of performance security and the evidence of its deposit, as mandated by Regulation 36B and Regulation 39(4) of the CIRP Regulations, have been complied with. - HELD THAT: - The Tribunal observed that compliance with Regulation 39(4) (evidence of receipt of performance security required under Regulation 36B(4A)) had not been shown at the time of the earlier reserved order and therefore listed the matter for further hearing. The RP subsequently filed affidavits and bank statements showing that the resolution applicant deposited funds equivalent to the 5% performance guarantee (Rs. 30 lakh) in the corporate debtor's account on 31-8-2019, and filed a computation of cash contribution confirming the required amount. The Tribunal found that the requirements of Regulation 36B(4A) and Regulation 39(4) were complied with on the record produced. [Paras 33, 34, 35]

The performance security requirement under Regulation 36B and the evidentiary requirement of Regulation 39(4) have been complied with on the material produced by the RP.

Provisions for effective implementation and monitoring of a resolution plan - Whether the resolution plan contains adequate provisions for its effective implementation and supervision as required by the proviso to Section 31(1). - HELD THAT: - The Tribunal examined the implementation architecture in the Plan: constitution of an Implementation and Monitoring Committee on the NCLT approval date (composition and terms recorded in the Plan and affidavit), an implementation schedule (three months from approval) and specified upfront and deferred funding commitments, together with proposed infusion for capex and working capital. The Plan provided for management transition, reconstitution of the board after the Effective Date, and supervisory mechanisms including an advisory board. The Tribunal was satisfied that the Plan contains workable provisions for effective implementation and supervision. [Paras 18, 31]

The resolution plan contains adequate and effective implementation and monitoring provisions meeting the proviso to Section 31(1).

Eligibility of resolution applicant under Section 29A and related affidavit requirements - Whether the resolution applicant satisfied eligibility under Section 29A and furnished the requisite affidavits and certifications. - HELD THAT: - The RP filed a revised affidavit of the resolution applicant regarding eligibility under Section 29A and submitted a revised Form H certifying compliance. The Tribunal noted the RP's certification in Form H that the resolution applicant submitted the affidavit required under Section 30(1) confirming eligibility under Section 29A and that the contents were in order. No material was shown to displace that certification. The Tribunal therefore accepted the record of eligibility as compliant. [Paras 12, 32]

The resolution applicant is recorded as eligible under Section 29A on the basis of the affidavits and certifications filed and accepted by the RP.

Final Conclusion: The Tribunal, having found that the resolution plan approved by the CoC met the statutory requirements of Section 30 and Section 31(1), including the amended provisos relating to payments to operational and dissenting creditors, that performance security and related evidentiary requirements under the CIRP Regulations were complied with, and that the Plan contains adequate implementation and monitoring provisions, sanctioned the resolution plan submitted by Vaibhav Buildtech Private Limited; the moratorium is vacated and the RP directed to forward the CIRP records to the Board.

Service Tax Voluntary Compliance Encouragement Scheme, 2013 - eligibility under Section 106(1) of the Finance Act, 2013 - second proviso to Section 106(1) - effect of prior notice or order on subsequent declarations - effect of prior show cause notices/orders on subsequent declarations - payments made prior to enactment and applicability under VCES - Place of Provision of Services Rules, 2012

Eligibility under Section 106(1) of the Finance Act, 2013 - second proviso to Section 106(1) - effect of prior notice or order on subsequent declarations - effect of prior show cause notices/orders on subsequent declarations - Petitioner was not eligible to make a declaration under the VCES in respect of the same issue for subsequent periods where show cause notices and orders of determination had already been issued. - HELD THAT: - The Scheme by its terms permits declaration only where no notice or order of determination under Chapter V had been issued before 1 March 2013. The second proviso to Section 106(1) bars a declaration of tax dues on the same issue for any subsequent period where a notice or order has been issued in respect of that issue. The petitioner had been subjected to multiple show cause notices and adjudication confirming demand on the commission retained in re-insurance business; that issue persisted into later periods and was the same issue sought to be declared under VCES. A mere change in rules (including the Place of Provision of Services Rules, 2012) or timing of levy did not alter the identity of the issue. Consequently, the petitioner fell outside the class of persons contemplated by the Scheme and could not avail its benefits. [Paras 26, 28]

Declaration rejected as petitioner not eligible under Section 106(1) because prior notices/orders on the same issue precluded VCES relief.

Payments made prior to enactment and applicability under VCES - Service Tax Voluntary Compliance Encouragement Scheme, 2013 - Payments made by the petitioner prior to enactment of the Finance Act, 2013 could not secure entitlement to VCES benefits where the petitioner was otherwise ineligible under the Scheme. - HELD THAT: - Although the petitioner paid amounts before the Scheme was enacted, the Court held that eligibility is governed by the Scheme's terms and the statutory provisos. The CBEC clarification that immunity for interest and penalty applies only to tax dues declared under VCES was noted. However, the determinative reason for denial of relief was the petitioner's ineligibility under the second proviso to Section 106(1); therefore payments made prior to enactment did not confer entitlement to VCES in the circumstances of this case. [Paras 6, 16, 27]

Pre-enactment payments did not entitle the petitioner to VCES benefits where the petitioner was excluded from the Scheme by operation of Section 106(1).

Final Conclusion: Writ petition dismissed; petitioner not entitled to VCES relief because prior show cause notices/orders on the same issue precluded declaration and pre-enactment payments did not confer eligibility.

Refund claim barred by limitation - Time-bar under Section 11B Explanation B(f) - Refund applications before Revenue governed by statutory limitation - Mistake of law not a ground to entertain time barred refund

Refund claim barred by limitation - Time-bar under Section 11B Explanation B(f) - Refund applications before Revenue governed by statutory limitation - Mistake of law not a ground to entertain time barred refund - The refund claim filed by the appellant was time barred and therefore not admissible before the revenue authorities. - HELD THAT: - The Tribunal examined the refund claim which was filed beyond the prescribed period and upheld the view that refund applications made to departmental authorities are governed exclusively by the statutory time limit. Reliance was placed on the ratio in Porcelain Electric Magg. Co. v. Collector of Central Excise that the general law of limitation does not apply to refund claims before revenue authorities and that such claims must comply with the time limits contained in the statute. The Tribunal further noted the decision of the Madras High Court in Assistant Commissioner of Service Tax, Chennai v. Nataraj & Venkat Associates, holding that refund claims filed beyond the prescribed limitation are barred even if tax was paid under a mistake of law. Applying these principles, the adjudicating and appellate authorities correctly rejected the refund on the ground of limitation; no grounds were made out to depart from the settled principle that mistake of law does not avail to entertain an otherwise time barred refund application. [Paras 4, 5, 7, 8, 9]

Appeal dismissed; refund claim rejected as time barred.

Final Conclusion: The Tribunal dismisses the appeal and upholds the rejection of the refund claim on the ground of limitation; statutory time limits govern refund applications before revenue authorities and mistake of law does not entitle the appellant to relief.

Cenvat credit - Outdoor Catering Service - input service - reversal of credit - remand for verification of figures - quantification of demand - penalty

Remand for verification of figures - Cenvat credit - Outdoor Catering Service - input service - reversal of credit - Whether, on remand, the figures of Cenvat credit reversal were required to be verified and whether the appellant had correctly reversed the Cenvat credit claimed in respect of outdoor catering and related tea/snacks for the period 2008-09 to 2010-11. - HELD THAT: - The Tribunal's remand order expressly required the adjudicating authority to verify the figures of credit already paid by the appellants. The adjudicating authority, however, did not carry out the required verification of amounts claimed to have been borne by the appellant for tea and snacks provided free to employees. The Tribunal examined the figures, reproduced a chart of recoveries, applicable tax rates and credit reversal, and found no contrary evidence from the Revenue to rebut the appellant's claim that they had already reversed the amount shown. On that basis the Tribunal concluded that the appellant had rightly reversed Rs. 24,67,690 and that the remaining demand of Rs. 10,38,860 arising from a total claimed reversal of Rs. 35,06,550 was not supported by verification or evidence. [Paras 6, 7]

The adjudicating authority's failure to verify figures was remedied by the Tribunal's review; the appellant's reversal of Rs. 24,67,690 is held to be correct and the additional demand of Rs. 10,38,860 is set aside.

Penalty - quantification of demand - Whether any penalty was imposable on the appellant consequent to the confirmed demand. - HELD THAT: - Having set aside the portion of the demand attributable to the unverified credit reversal, the Tribunal held that no penalty could be sustained in respect of the disallowed amount which was not established after verification. The consequential imposition of penalty in the impugned order therefore lacked basis once the demand was reduced by the Tribunal's finding. [Paras 7]

No penalty is imposable on the appellant.

Final Conclusion: The appeal is allowed in part: the Tribunal finds that the appellant properly reversed Rs. 24,67,690 of Cenvat credit for 2008-09 to 2010-11, sets aside the remaining demand of Rs. 10,38,860, holds that no penalty is imposable, and disposes of the appeal accordingly.

Excisable goods - exempted goods - Rule 6 of the Cenvat Credit Rules, 2004 - maintenance of separate accounts and payment on exempted goods - Explanation-1 to Rule 6 (w.e.f. 01.03.2015) - availing of Cenvat credit on input services - definition of "exempted goods" under Section 2(d) of the Central Excise Act

Excisable goods - exempted goods - definition of "exempted goods" under Section 2(d) of the Central Excise Act - availing of Cenvat credit on input services - Whether electricity generated from the windmill site is an "excisable" or "exempted" good for the purposes of Rule 6 and thus whether Cenvat credit on common input services could be disallowed under Rule 6(3). - HELD THAT: - The Tribunal held that the embargo in Rule 6 applies only where an assessee manufactures both dutiable and exempted excisable goods. "Exempted goods" refers to excisable goods which are exempt from duty or are chargeable to a "Nil" rate under the Tariff. Although electrical energy appears under Chapter 27 headings, no rate of duty is specified in the Tariff and no Central Government notification under Section 5A has exempted electrical energy; accordingly electrical energy cannot be categorised as "exempted goods" under Section 2(d). The Tribunal relied on precedent treating electricity as non-excisable and observed that the Supreme Court has dismissed the appeal in the reported dispute arising from that reasoning, making the question of whether electricity is "Nil" rated or exempt no longer res integra. Given electricity is not an exempted excisable good, the conditions in Rule 6(3) for separate accounts or payment on removal of exempted goods do not apply to the appellant's electricity generation, and the departmental disallowance of Cenvat credit on common input services was unsustainable on that ground.

Electricity from the windmill site is not an "excisable" or "exempted" good for the purposes of Rule 6; accordingly the disallowance of Cenvat credit under Rule 6(3) cannot be sustained.

Explanation-1 to Rule 6 (w.e.f. 01.03.2015) - non-excisable goods cleared from the factory - maintenance of separate accounts and payment on exempted goods - Whether the amendment inserting Explanation-1 to Rule 6 w.e.f. 01.03.2015 brings the appellant's activities within the ambit of Rule 6 requiring compliance for non-excisable goods cleared for a consideration. - HELD THAT: - Explanation-1 extended the definition to include non-excisable goods cleared for a consideration from the factory. The Tribunal found that, on the facts, the appellant's registered factory was engaged in manufacture of excisable goods and had not cleared non-excisable goods from that registered factory. Therefore the amended Explanation-1 did not materially affect the appellant's position; there was no application of the Explanation to bring the appellant's windmill electricity within Rule 6 compliance obligations.

Explanation-1 to Rule 6 (w.e.f. 01.03.2015) does not apply to the appellant because no non-excisable goods were cleared from the registered factory; the amendment does not alter the conclusion that Rule 6 obligations do not arise.

Final Conclusion: The impugned order upholding the disallowance of Cenvat credit is set aside and the appeal is allowed in favour of the appellant.