TaxTMI Updates e-Newsletter
May 30,2018

Transfer of a going concern - supply of service - scope of supply - transfer of business assets - continuity of business - nil-rated supply under Notification No. 12/2017 - transfer of a going concern

Transfer of a going concern - scope of supply - transfer of business assets - supply of service - Transaction of sale of the Hiriyur unit as a whole amounts to supply of service. - HELD THAT: - The Authority found that the proposed transaction contemplates transfer of an operative manufacturing unit together with its fixed and current assets and liabilities, resulting in continuity of the business in the hands of the purchaser and thus constituting transfer of a going concern. While Schedule II treats transfer of business assets as supply of goods, Schedule II expressly excludes a transfer of business as a going concern from being a supply of goods. The expression 'supply' in Section 7 is wide and includes activities beyond those carried out in the course or furtherance of business, and Notification No. 12/2017 treats transfer of a going concern as a service. Applying these provisions and the Schedule II distinction, the Authority concluded that transfer of a going concern is not supply of goods but constitutes a supply of service. [Paras 7, 10]

The transfer of the unit as a going concern is a supply of service.

Transfer of a going concern - nil-rated supply under Notification No. 12/2017 - transfer of a going concern - continuity of business - Whether the transaction is covered under SI. No. 2 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. - HELD THAT: - The Notification grants nil rate to 'services by way of transfer of a going concern, as a whole or an independent part thereof' and therefore contemplates exemption only where the transaction is genuinely a transfer of a going concern. The Authority noted that the applicant asserted the unit to be an ongoing business with transfer of all assets and liabilities but did not furnish documentary proof to conclusively establish the existence of a going concern. Consequently, the Authority ruled that the transaction would fall under SI. No. 2 of Notification No. 12/2017 if and insofar as the unit is actually a going concern; applicability of the notification is therefore subject to the condition that the unit is a going concern. [Paras 8, 9, 10]

Transaction is covered by SI. No. 2 of Notification No. 12/2017 subject to the unit being a going concern.

Final Conclusion: The Authority ruled that sale of the Hiriyur unit as a whole constitutes a supply of service by way of transfer of a going concern and that such transfer is covered by SI. No. 2 of Notification No. 12/2017 (nil rate) provided the unit is established to be a going concern.

Writ jurisdiction under Articles 226/227 - Mandamus - Cause of action - Standing to seek administrative clarification - Discretion to invoke extraordinary jurisdiction

Writ jurisdiction under Articles 226/227 - Mandamus - Cause of action - Petition seeking a writ of mandamus directing the respondents to clarify implementation of Goods and Services Tax and e-bill on renting shuttering material or to decide the pending representation dated 05.04.2018 was maintainable. - HELD THAT: - The petitioners had filed a representation dated 05.04.2018 to the Finance Minister with copies to concerned respondents but there was no material placed before the Court to demonstrate that a legal cause of action had arisen that would justify the exercise of the Court's extraordinary jurisdiction under Articles 226/227. In the absence of any such showing, the Court declined to direct the respondent Department to furnish the requested clarification or to decide the representation by way of prerogative writ. The Court therefore exercised its discretion to refuse to entertain the mandamus petition.

Petition dismissed for want of cause of action; no writ issued.

Final Conclusion: The writ petition praying for a mandamus to direct clarification on GST and e-bill for renting shuttering material and/or decision of the representation dated 05.04.2018 was dismissed as the petitioners failed to demonstrate a cause of action to invoke the Court's extraordinary jurisdiction.

Appellate Authority under the Haryana Goods and Services Tax Act, 2017 - order under Section 129(1)(a) of the Act - bar of limitation and condonation of delay in filing appeal - mootness by subsequent constitution of authority

Appellate Authority under the Haryana Goods and Services Tax Act, 2017 - mootness by subsequent constitution of authority - Challenge to order dated 25.10.2017 on the ground that no Appellate Authority had been constituted under the Act - HELD THAT: - The Court noted that the State produced notification dated 19.04.2018 appointing the Appellate Authority under the Act, made effective from 01.07.2017. In view of the constitution of the Appellate Authority, the petitioner's grievance regarding non-constitution of that authority was rendered infructuous. The Court therefore treated that aspect of the writ as no longer requiring adjudication.

Grievance about non-constitution of the Appellate Authority rendered infructuous on production of the notification; no further relief on that ground.

Bar of limitation and condonation of delay in filing appeal - order under Section 129(1)(a) of the Act - Whether the appeal filed by the petitioner should be dismissed as time-barred - HELD THAT: - The Court recalled its earlier order dated 07.02.2018 granting liberty to the petitioner to file an appeal to save the bar of limitation. The petitioner filed the appeal on 03.04.2018. Having regard to the fact that the petitioner could not file the appeal earlier due to non-constitution of the Appellate Authority (a defect now cured by the notification), the Court directed that the appeal shall not be dismissed solely on account of delay. The Court thus exercised equitable treatment in the circumstances disclosed.

Appeal shall not be dismissed only on account of delay; petitioner granted protection from dismissal for limitation.

Final Conclusion: Writ petition disposed of: the Appellate Authority has been constituted and the petitioner's appeal, filed pursuant to liberty granted earlier, shall not be dismissed merely on account of delay.

Contradiction in pleadings - proprietorship and representation - production of E-way bill - reply to show cause notice under Section 129(3) of the U.P. Goods & Service Tax Act, 2017 - habitual evasion of tax - imposition of exemplary costs and contempt proceedings

Contradiction in pleadings - proprietorship and representation - Pleadings contain contradictory descriptions of the petitioner as between Sri Fazil and Sri Ashok Kumar Agarwal, creating uncertainty about who is the proprietor and authorised representative of M/s Ashoka Enterprises. - HELD THAT: - The Court noted that the affidavit and vakalatnama are sworn and executed by Sri Fazil describing himself as proprietor, whereas certain applications and representations are signed by Sri Ashok Kumar Agarwal describing himself as proprietor. This inconsistency prevents clear identification of the person authorised to represent the firm and undermines the reliability of pleadings. The Court therefore required the respondents to file a counter affidavit setting out these facts and directed the petitioner to file any rejoinder, so that the true position regarding proprietorship and representation can be established on record.

Respondents to file a counter affidavit within ten days and the petitioner may file a rejoinder within a week; personal appearance of the officials on future date is exempted.

Production of E-way bill - reply to show cause notice under Section 129(3) of the U.P. Goods & Service Tax Act, 2017 - Averments in paragraphs 11 and 12 regarding generation and production of the E-way bill and the circumstances of the reply to the show cause notice are contradicted by the record and require verification. - HELD THAT: - The Court observed that the petitioner's pleadings claim generation and production of an E-way bill and allege that a reply to the show cause notice was obtained under threat and coercion, but the available record, as pointed out by the Additional Advocate General, falsifies those averments. Consequently, the Court has directed exchange of affidavits so that the authenticity and timing of the E-way bill and the circumstances in which the reply was furnished can be examined and adjudicated.

Counter affidavit to address these contradictions to be filed within ten days, with rejoinder by the petitioner within a week.

Habitual evasion of tax - imposition of exemplary costs and contempt proceedings - The respondents placed on record prior penalties against the petitioner for the period 1999 till 26.03.2018 indicating a history of penalties for tax evasion, and the Court warned that, if the alleged anomalies and falsehoods are established, it will consider imposing exemplary costs and initiating contempt proceedings. - HELD THAT: - The Additional Advocate General produced earlier records showing repeated penalties against the petitioner firm, which the Court noted as material reflecting a pattern of tax evasion. The Court therefore reserved the question of imposing heavy exemplary costs and initiating contempt proceedings, subject to the outcome of the affidavit exchange and verification of the alleged misrepresentations.

If the allegations and anomalies pointed out by the Additional Advocate General are found to be established after exchange of affidavits, the Court will consider imposing exemplary costs and initiating contempt proceedings at the next hearing.

Final Conclusion: The Court directed respondents to file a counter affidavit within ten days and permitted a rejoinder within a week, exempted personal appearance of the officials in future, and reserved the question of imposing exemplary costs and initiating contempt proceedings if the alleged contradictions, falsified averments, and prior penal history of the petitioner are established on affidavit; matter listed in the Additional Cause List.

Capital gains on conversion of capital asset into stock-in-trade - fair market value on date of conversion - taxation under section 45(2) - year of sale or transfer of stock-in-trade - advance received vs accrual of business income

Capital gains on conversion of capital asset into stock-in-trade - fair market value on date of conversion - Computation of capital gains on conversion of land into stock-in-trade - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that when a capital asset is converted into or treated as stock-in-trade, section 45(2) applies and the fair market value of the asset on the date of such conversion is to be treated as the full value of consideration for computing capital gains. The Assessing Officer's adoption of stamp-duty/circle rates was set aside in favour of the value determined by an approved valuer as the fair market value on the date of conversion. The Revenue's ground challenging the use of the valuer's fair market value is dismissed. [Paras 17, 21]

Fair market value as determined by the valuer on the date of conversion is to be taken for computation of capital gains under section 45(2); Revenue's challenge dismissed.

Taxation under section 45(2) - year of sale or transfer of stock-in-trade - advance received vs accrual of business income - Year in which profits arising from conversion (and receipts from developer) are taxable - HELD THAT: - Applying section 45(2), the Tribunal held that although conversion triggers valuation for capital gains purposes, taxation of the profit arising on such conversion is postponed until the stock-in-trade is actually sold or otherwise transferred. On the facts, amounts received by the assessee from the developer during A.Y. 2008-09 and A.Y. 2009-10 were advances linked to future sales of flats and did not crystallize the assessee's right to business income. The project was completed and sales were recognised by the developer in A.Y. 2011-12; accordingly the business profits and the capital-gains consequence of the conversion are to be assessed in the year(s) when the receipts crystallise on completion and sale (A.Y. 2011-12 and such subsequent years), not in the year of receipt of advances. [Paras 18, 20, 21]

Advances received in A.Y. 2008-09 and A.Y. 2009-10 are not taxable as business profits in those years; taxation of business receipts and attendant capital gains is postponed to the year(s) when the project is completed and sales are recognised (A.Y. 2011-12 and relevant years).

Final Conclusion: Assessee's appeal partly allowed: fair market value on date of conversion to be adopted for capital gains computation and taxation of business receipts/capital-gains effect postponed to the year(s) when the flats are completed and sold (A.Y. 2011-12 and relevant years). Revenue's appeal dismissed.

Notice under section 148 issued to a non-existent/amalgamating company is void ab initio - assessment under section 147 read with section 143(3) framed against a dissolved/amalgamating company is a nullity - substitution of successor company is required where predecessor ceases to exist on appointed date - Section 292B cannot cure jurisdictional defects arising from assessment/notice against a non-existent entity

Notice under section 148 issued to a non-existent/amalgamating company is void ab initio - assessment under section 147 read with section 143(3) framed against a dissolved/amalgamating company is a nullity - Section 292B cannot cure jurisdictional defects arising from assessment/notice against a non-existent entity - Validity of reassessment proceedings initiated by issuance of notice under section 148 in the name of M/s Sindhu Holdings Ltd. which had ceased to exist on the date of notice due to prior amalgamation - HELD THAT: - The Tribunal held that the assessee (erstwhile M/s Sindhu Holdings Ltd.) had ceased to exist pursuant to a Delhi High Court sanctioned scheme of amalgamation and that intimation of that amalgamation had been furnished to revenue authorities before issuance of the notice. Relying on binding precedent of the jurisdictional High Court and earlier Tribunal decisions, the Tribunal concluded that issuance of notice and framing of reassessment in the name of a non-existent/amalgamating company is a jurisdictional defect going to the root of the proceedings and not a mere procedural irregularity. Consequently, such notice/assessment is void ab initio. The Tribunal rejected the contention that Section 292B could validate the proceedings, observing that Section 292B only cures mere mistakes, defects or omissions but cannot cure inherent jurisdictional defects arising when proceedings are initiated against a dead/non-existent juridical person. As the reassessment was therefore nullity, the addition made in the reassessment order was left unadjudicated as an academic exercise. [Paras 9, 10, 11]

Reassessment proceedings initiated by notice dated 29.03.2016 in the name of M/s Sindhu Holdings Ltd. and the resulting assessment under section 147 r.w.s. 143(3) are void ab initio; the departmental appeal is dismissed and the assessee's cross-objection is allowed.

Addition on merits not adjudicated as reassessment annulled - Adjudication on the merits of the addition made in the annulled reassessment - HELD THAT: - Because the Tribunal annulled the reassessment proceedings as void, the merits of the addition (impugned addition) were not decided and were left as an academic matter. The Tribunal expressly followed the approach of concluding the proceedings by annulling the reassessment and therefore declined to decide the substantive correctness of the addition.

Merits of the addition were not adjudicated and are left undecided as the reassessment proceedings have been quashed.

Final Conclusion: The departmental appeal is dismissed and the assessee's cross-objection is allowed: the notice under section 148 issued in the name of the dissolved/amalgamating company and the consequent reassessment under section 147 r.w.s. 143(3) are annulled as void ab initio; the substantive addition was not decided.

Taxation of excess stock and excess cash as business income - treatment of unrecorded/mixed stock as undisclosed business receipt - application of section 115BBE to deemed income - deemed income under section 69 and head-wise characterisation

Taxation of excess stock and excess cash as business income - deemed income under section 69 and head-wise characterisation - application of section 115BBE to deemed income - Whether amounts surrendered on account of excess stock and excess cash found during survey are to be assessed as business income and not as deemed income under section 69 attracting taxation under section 115BBE - HELD THAT: - The Tribunal examined the factual matrix and relevant judicial precedents, including the jurisdictional High Court decision in Bajrang Traders and coordinate ITAT decisions, which hold that where excess stock or cash found in a survey is closely connected with the regular business and forms part of mixed/undifferentiated stock, such amounts represent undisclosed business receipts and should be assessed under the head "business and profession". Applying those propositions to the present record, the Tribunal found that the surrender relating to excess stock and excess cash arose from the assessee's business transactions and that the lower authorities were therefore not justified in treating those amounts as income under section 69 and taxing them under section 115BBE. The Tribunal thus reversed the application of section 115BBE in respect of the surrendered excess stock and excess cash and held they should be treated as business income. [Paras 13]

Surrendered amounts on account of excess stock and excess cash are to be treated as business income and not subjected to taxation under section 115BBE as deemed income under section 69; appeal allowed to that extent.

Incriminating documents - nature and nexus with business - remand for factual verification - Nature and characterisation of surrender arising from incriminating documents - HELD THAT: - The Tribunal observed that the record did not disclose whether the surrender attributable to incriminating documents related to the assessee's regular business transactions. The authorities below had not made any specific finding on the nature or nexus of those documents and the surrendered amounts. In the interest of justice and factual determination, the Tribunal directed that this specific aspect be restored to the file of the Assessing Officer for fresh examination and determination of whether such surrendered income arises from business transactions, with the assessee to be given an opportunity. [Paras 14]

Issue remanded to the Assessing Officer for fresh adjudication on the nature of surrender arising from incriminating documents.

Final Conclusion: All appeals allowed in part: the additions/taxation under section 115BBE in respect of excess stock and excess cash are set aside as those amounts are to be treated as business income; the question of surrender attributable to incriminating documents is remanded to the Assessing Officer for fresh decision.

Deduction under section 54F - Ownership of more than one residential house and chargeability to tax - Conjunctive construction of disqualifying conditions in section 54F - Allowability of deduction where other properties are not chargeable under Income from House Property

Deduction under section 54F - Ownership of more than one residential house and chargeability to tax - Conjunctive construction of disqualifying conditions in section 54F - Allowability of deduction where other properties are not chargeable under Income from House Property - Assessee entitled to deduction under section 54F despite owning multiple immovable properties where the statutory disqualification is not fully attracted because the other properties were not chargeable to tax under the head Income from House Property. - HELD THAT: - The Tribunal examined section 54F and concluded that the statutory bar to claim the deduction operates only when both conditions are satisfied: (i) the assessee owns more than one residential house other than the new asset on the date of transfer, and (ii) the income from such residential house, other than one residential house owned on the date of transfer, is chargeable under the head Income from House Property. The legislature's use of the conjunctive word "and" requires both conditions to be fulfilled to disentitle the assessee. In the present case the Assessing Officer accepted that only one property was assessed under the head Income from House Property; the other properties were either self-occupied or only allotted without possession and hence not chargeable to tax under Income from House Property. As the second condition of chargeability was not satisfied, the disqualifying provision did not apply and the deduction under section 54F was rightly allowed by the CIT(A). The Tribunal also noted and followed precedent dealing with identical facts where relief was granted under the same reasoning. [Paras 7, 8]

Addition disallowing deduction under section 54F deleted; Revenue's appeal dismissed.

Cross objection rendered infructuous - Assessee's cross objection in support of the CIT(A)'s order is rendered infructuous after upholding the impugned order. - HELD THAT: - The cross objection merely supported the impugned order of the CIT(A). Having upheld the CIT(A)'s decision and dismissed the Revenue's appeal, the Tribunal found that the cross objection required no separate relief and was therefore dismissed as infructuous. [Paras 9, 10]

Assessee's cross objection dismissed as infructuous.

Final Conclusion: The Tribunal upheld the CIT(A)'s deletion of the addition disallowing deduction under section 54F for AY 2012-13 and dismissed the Revenue's appeal; the assessee's cross objection was dismissed as infructuous.

Taxation of cross border service fees and obligation to deduct tax at source - disallowance under section 40(a)(i) for failure to deduct tax at source - definition and scope of 'fees for included services' under Article 12(4) of the Indo US DTAA and the 'making available' test - application of domestic charging provision for income accrued or deemed to accrue in India - treatment of employee's contribution to provident fund under section 36(1)(va) vis a vis proviso to section 43B - deductibility of bad debts written off under section 36(1)(vii) following TRF Ltd. - amortisation of expenditure for demerger under section 35DD

Taxation of cross border service fees and obligation to deduct tax at source - disallowance under section 40(a)(i) for failure to deduct tax at source - definition and scope of 'fees for included services' under Article 12(4) of the Indo US DTAA and the 'making available' test - Whether marketing and market support fees paid to foreign entities were chargeable to tax in India and whether the assessee was obliged to deduct tax at source, thereby justifying disallowance under section 40(a)(i). - HELD THAT: - The Tribunal examined the contractual scope and factual matrix and found that the assessee operated a call centre/BPO in India and that the foreign payees (principally a wholly owned US subsidiary) were engaged solely to provide marketing and market support services outside India. The agreements and invoices showed that intellectual property and IPRs were owned by the Indian assessee, and the US entities were granted limited, non exclusive rights to promote the Indian company's services. The Tribunal applied the DTAA Article 12(4) and the accompanying MOU and concluded that (a) the treaty requires not merely rendering of technical/consultancy services but that such services must also 'make available' technical knowledge, skill or know how to the recipient so that the recipient can use it independently thereafter; (b) mere marketing or commercial consultancy that does not transfer or make available technical know how does not qualify as 'fees for included services'; and (c) on the facts the foreign entities did not render technical services nor make available any technical know how in India. Consequently, no part of the payments was chargeable to tax in India and the assessee had no obligation to withhold tax under section 195; the disallowance under section 40(a)(i) was therefore unsustainable and directed to be deleted. The Tribunal also rejected reliance placed by the CIT(A) on precedents with materially different facts and declined the revenue's contention that treaty benefits were not available, noting the absence of any material to dispute the payees' US residency and that ownership tests under Article 24(1)(a) were satisfied in respect of the principal payee. [Paras 10, 12, 21]

Payments of Rs. 2,96,05,045/ to foreign entities for marketing and sale support services were not chargeable to tax in India; no TDS under section 195 was payable and the disallowance under section 40(a)(i) is deleted.

Treatment of employee's contribution to provident fund under section 36(1)(va) vis a vis proviso to section 43B - Whether employees' provident fund/ESI contributions, withheld by the employer but remitted on or before the due date of filing the return under section 139(1), are deductible despite section 36(1)(va). - HELD THAT: - The Tribunal followed the view of the Calcutta High Court and held that where employees' contributions (though withheld) are remitted by the employer on or before the due date for filing the return under section 139(1), such amounts are allowable. The Tribunal observed that the proviso to section 43B (as interpreted by higher judiciary) applies so as to permit deduction when payment is made by the due date of filing, and that the CIT(A)'s deletion of the addition was in accordance with binding precedent. [Paras 25]

Deduction of employees' contribution to PF/ESI remitted on or before the due date of filing the return is allowable; the CIT(A)'s order deleting the addition is confirmed.

Deductibility of bad debts written off under section 36(1)(vii) following TRF Ltd. - Whether the assessee's claim for bad debts written off is allowable under section 36(1)(vii) where the debts are written off in the books of account. - HELD THAT: - Relying on the Supreme Court decision in TRF Ltd. and subsequent CBDT clarification, the Tribunal held that it is not necessary for the assessee to prove irrecoverability of debts beyond the fact of having written them off in the books; once written off, subject to compliance with section 36(2), the claim is allowable. The CIT(A)'s deletion of the disallowance was unchallenged on substantive grounds. [Paras 27]

Bad debts of Rs. 35,58,342/ written off in the books are allowable under section 36(1)(vii); the revenue's ground is dismissed.

Accounting treatment of profit and loss on sale of fixed assets in computation of income - Whether the AO was justified in making an addition by treating the profit element on sale of fixed assets as not already adjusted by the assessee in the computation of income. - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that the assessee had correctly shown the profit and loss entries separately in the P&L account and had reflected the net effect in the computation of income. The AO's view that the assessee had omitted to add back the profit was found to be a misapprehension of the accounting entries, and the CIT(A)'s deletion of the addition was uncontroverted. [Paras 29]

The AO's addition is erroneous; the disallowance is deleted and the revenue's ground is dismissed.

Amortisation of expenditure for demerger under section 35DD - Whether travelling expenses incurred in relation to a court approved scheme of demerger qualify for deduction under section 35DD (one fifth over five years) despite absence of auditor's certification. - HELD THAT: - Section 35DD permits deduction of expenditure incurred wholly and exclusively for amalgamation or demerger by amortising one fifth over five years; there is no statutory precondition requiring an auditor's certificate to be produced for the claim. The CIT(A) examined the expense details and found them to be wholly and exclusively in relation to the demerger; that finding was unchallenged. Accordingly, the claim for amortisation under section 35DD was held to be legally permissible. [Paras 32]

Deduction under section 35DD is allowable (one fifth per year) for the travelling expenses incurred in relation to the demerger; the CIT(A)'s order is confirmed.

Final Conclusion: For AY 2012 13, the Tribunal allowed the assessee's appeal by deleting the disallowance of marketing and market support fees (Rs. 2,96,05,045/ ) on the ground that such payments were not taxable in India and no TDS under section 195 was required; the revenue's appeals on multiple grounds were dismissed, with the CIT(A)'s deletions/allowances on employee PF/ESI contribution, bad debts, profit/loss on sale of fixed assets and amortisation under section 35DD being confirmed.

Late filing fee under section 234E - intimation issued under section 200A/206CB - prospective operation of statutory amendment - non-retrospective effect of clause (c) w.e.f. 01.06.2015 - conflict of High Court decisions and rule of following decision favourable to assessee

Late filing fee under section 234E - intimation issued under section 200A/206CB - prospective operation of statutory amendment - Levy of fee under section 234E via intimation issued under section 200A/206CB in respect of TDS statements for the period up to 31.03.2015. - HELD THAT: - The Tribunal held that the enabling amendment by which clause (c) was inserted for raising demand under section 200A became effective only from 01.06.2015 and, applying settled principles of statutory interpretation, such substitution must be given prospective effect unless expressly or by necessary implication made retrospective. Following the view in "Shri Fatehraj Singhvi and Others" which held that demands under section 200A for fee under section 234E could not be made for periods prior to 01.06.2015, the Tribunal concluded that fee under section 234E could not be levied by intimation under section 200A/206CB in respect of TDS statements for periods up to 31.03.2015. The Tribunal further relied on the rule that where there is a cleavage of opinion between High Courts, the decision favourable to the assessee should be followed, and therefore accepted the assessee's grievance and set aside the levy.

The levy of fee under section 234E in the intimations issued under section 200A/206CB for TDS statements for the period up to 31.03.2015 is cancelled.

Final Conclusion: Appeals allowed; orders of the CIT(A) reversed and the fee levied under section 234E in respect of TDS statements for the period up to 31.03.2015 is set aside.

Rejection of books of account under section 145(3) - survey under section 133A - re-estimation of profits on rejection of books - reliability of computerized books and corrupt data - physical inventory valuation - addition for unexplained difference in closing stock

Rejection of books of account under section 145(3) - reliability of computerized books and corrupt data - physical inventory valuation - addition for unexplained difference in closing stock - re-estimation of profits on rejection of books - Whether the Commissioner(A) was justified in sustaining only an addition of Rs. 4,06,460/- (and deleting the balance) after the Assessing Officer rejected the books and re-estimated net profit on the basis of computerized extracts impounded during survey. - HELD THAT: - The Tribunal accepted the assessee's explanation that the computerized extracts impounded at the time of survey were afflicted by corruption and contained manifest deficiencies (including anomalous items such as 'Difference in Trial Balance' and an inflated closing stock figure). The survey team, however, carried out a physical inventory and valued closing stock on 30.3.2010 at Rs. 34,71,533/-, a figure which the Tribunal found to be reliable. While the AO's re-estimation relied on the impounded computerized P&L and assumed no post-survey purchases or sales, the Tribunal examined the post-survey entries and the physical stock valuation and concluded that only a limited discrepancy remained between the closing stock ascertained by survey plus post-survey adjustments and the closing stock shown in the return. That unexplained shortfall of Rs. 4,06,460/- in closing stock was held to represent the only sustainable addition. The larger addition computed by the AO was based on reliance upon the corrupted computerized statement and was therefore not sustained. The Tribunal thus upheld the approach of giving primacy to the physical inventory valuation and limited the addition to reconcile the closing stock difference, deleting the balance of the re-estimated profit. [Paras 5, 7]

Addition limited to Rs. 4,06,460/- towards difference in closing stock; the remaining addition made by the AO is deleted.

Final Conclusion: The revenue's appeal is dismissed. The Commissioner(A)'s order sustaining only the addition of Rs. 4,06,460/- (and deleting the balance of the AO's re-estimation) is upheld for Assessment Year 2010-11.

Section 2(47) - transfer for capital gains - Section 53A of Transfer of Property Act - willingness to perform / constructive possession - capital gains - accrual of real income versus hypothetical income - doctrine of relating back / subsequent events

Section 2(47) - transfer for capital gains - Section 53A of Transfer of Property Act - willingness to perform / constructive possession - capital gains - accrual of real income versus hypothetical income - Whether the development agreements entered into on 14-08-2006 gave rise to taxable capital gains in AY. 2007-08 - HELD THAT: - The Tribunal examined whether the conditions for deeming a transfer under Section 2(47) were satisfied having regard to Section 53A TP Act and the factual matrix. The Tribunal found that the agreement with M/s. Siri Lakshmi Balaji Constructions stood cancelled and there was no approval or development activity under that agreement; therefore no transfer or real benefit arose and the AO's computation of capital gains on that agreement could not be sustained. With respect to the agreement with M/s. Siri Balaji Constructions, the Tribunal noted that physical delivery of possession was conditional on plan approvals which were obtained only on 29-03-2008 (i.e., a subsequent year), and even thereafter the developer failed to perform obligations; the matter was compromised and completion was undertaken by a committee of land/flat owners. Relying on the principle that Section 53A requires an unqualified willingness and actual performance (or willingness to perform in sequence) and on authorities holding that only real, not hypothetical, income is taxable, the Tribunal held that subsequent events (cancellation, failure to perform, compromise and takeover of construction) defeated any accrual of capital gains in AY. 2007-08. Consequently the AO's and CIT(A)'s actions in bringing the alleged capital gains to tax for that year were set aside. [Paras 12, 14, 19]

Capital gains do not accrue or arise in AY. 2007-08 on the development agreements in the appellant's facts; the additions brought to tax on that basis are set aside and the appeal is allowed.

Unexplained cash credits - burden of proof and verification - reopening for fresh enquiry / remand for verification - Whether the addition of Rs. 6,50,000 as unexplained cash credit in ITA No. 1233/Hyd/2016 stands sustained - HELD THAT: - The Tribunal considered the explanation in the cash flow statement that the investments were funded by specified relatives and friends and observed that the AO disbelieved these receipts. Noting incomplete opportunity and documentary substantiation before the AO (and that the AO had adopted inconsistent positions as to amounts accepted vis-a -vis amounts brought to tax), the Tribunal directed that the AO should re-examine the contention, verify the capacity of the alleged lenders/ donors and give the assessee an opportunity to produce evidence. The Tribunal did not decide the correctness of the addition on merits but remitted the matter for fresh inquiry consistent with these directions. [Paras 17, 18]

Addition of Rs. 6,50,000 is remitted to the AO for fresh consideration and verification; the matter is allowed for statistical purposes subject to the AO's re-examination.

Final Conclusion: The Tribunal set aside the assessments of capital gains for AY. 2007-08 arising from the development agreements on the facts of these cases (appeal of Shri K. Kondal Rao allowed), and remitted the issue of unexplained cash credit in the co-owner's appeal to the AO for fresh verification (appeal of Shri Rama Rao allowed for statistical purposes).

Transfer pricing - choice and change of method; TNMM versus CUP - determination of arm's length price in international transactions - deemed dividend under section 2(22)(e) - computation of deduction under section 10B - apportionment of profits and eligible turnover - disallowance under section 40(a)(ia) for failure to deduct/deposit TDS - penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars - application of section 14A and Rule 8D in respect of exempt income - TDS obligation on reimbursements and services - application of section 195 - assessment under section 145A - treatment of excise/modvat in valuation of closing stock - allowance of additional depreciation and the effect of revised returns on appellate consideration - prior period income and set-off of prior period expenditure

Transfer pricing - choice and change of method; TNMM versus CUP - determination of arm's length price in international transactions - Whether the assessee's adoption of TNMM was appropriate and the Tribunal should uphold the deletion of upward TP adjustments made by the TPO applying CUP - HELD THAT: - The Tribunal examined the TPO's recommendation to replace the assessee's TNMM with the CUP method and to make upward adjustments. The TPO did not identify specific defects in the TNMM applied by the assessee nor make necessary FAR and other adjustments required for reliable application of CUP to the internal comparables. The assessee had earlier years' appellate decisions (including ITAT orders in its own case and sister concerns) accepting TNMM on identical facts; the CIT(A) relied on those precedent findings. Absent fresh, case-specific reasons why TNMM would be inappropriate, the Tribunal declined to disturb the CIT(A)'s acceptance of TNMM and upheld deletion of the TPO/AO adjustments on the merits. [Paras 5, 11, 31, 32, 33]

Upheld CIT(A)'s deletion of the TPO/AO transfer-pricing adjustments; TNMM accepted as the most appropriate method and no upward adjustment sustained.

Deemed dividend under section 2(22)(e) - Whether loans/amounts received from related concerns (notably SDBPL and BR Labs) are to be treated as deemed dividends under section 2(22)(e) - HELD THAT: - The Tribunal followed concurrent appellate findings in the assessee's own earlier years and the decision in the associate's case: the transactions constituted numerous reciprocal current-account adjustments and frequent movements of funds rather than loans/advances of the kind envisaged by section 2(22)(e). The High Court had earlier sustained the Tribunal's approach on facts, observing the matter was one of appreciation of evidence and that entries represented current accommodation/adjustment accounts. Applying those precedents and the facts, the Tribunal held that section 2(22)(e) did not apply. [Paras 18, 21, 43]

Addition under section 2(22)(e) deleted; transactions treated as current-account adjustments, not deemed dividends.

Disallowance under section 40(a)(ia) for failure to deduct/deposit TDS - Whether expenditure disallowance under section 40(a)(ia) must be sustained where TDS was deducted but deposited after the statutory due date, and whether the CIT(A) correctly deleted such disallowance - HELD THAT: - The assessment concerned TDS deducted but paid after statutory deadlines. The Tribunal observed that Finance Act, 2010 amended provisions effective 1-4-2005 to permit no disallowance where TDS is deposited before the due date of filing the return; the Gujarat High Court's decision in Farson Fibres was relied upon. The CIT(A)'s deletion of the disallowance was consistent with that position and was therefore sustained. [Paras 22, 24]

CIT(A)'s deletion of disallowance under section 40(a)(ia) upheld; no disallowance where TDS deposited before return due date.

Miscellaneous expenses - characterization and ad hoc disallowance - Whether the assessee's claim for certain misc. expenses (library books, R&D, club fees, deferred revenue) should be fully disallowed or subject to an ad hoc restriction - HELD THAT: - The AO made a lump-sum disallowance; the CIT(A) confirmed an ad hoc disallowance of Rs.15 lakh. The Tribunal considered the assessee's explanation that the amounts were written off under mercantile accounting and that, alternatively, depreciation could be allowed on books. Finding the CIT(A)'s adhoc disallowance excessive, the Tribunal reduced the ad hoc disallowance to Rs.10 lakh and allowed the balance, granting the assessee partial relief. [Paras 13, 15, 42]

Part relief granted: ad hoc disallowance reduced and restricted to Rs.10,00,000.

Prior period income and set-off of prior period expenditure - Whether prior period expenditure may be set off against prior period income and only the net differential be taxed - HELD THAT: - The assessee offered prior period income and contended corresponding prior period expenditure crystallised in the same year. The AO taxed the gross prior period income and disallowed the expenditures for lack of documentary clarity; CIT(A) confirmed. The Tribunal held that when an assessee offers prior period income at entity level, related prior period expenditure ought to be set off against it, and only the net amount should be assessed. The Tribunal directed the AO to give effect to set-off, treating the appeal as statistical to permit adjustment. [Paras 58, 60]

Allow set-off of prior period expenditure against prior period income; only net amount to be assessed.

Application of section 14A and Rule 8D in respect of exempt income - Whether disallowance under section 14A (and Rule 8D) in respect of dividend income was correctly computed for AY 2006-07 and whether an adhoc estimate was appropriate - HELD THAT: - Rule 8D was not applicable to the year in issue; judicial precedents on interest-free funds were considered. The CIT(A) accepted that Rule 8D could not be invoked but, because the assessee had not offered any specific expenditure attributable to exempt income, made an adhoc disallowance. The Tribunal reduced the adhoc disallowance to a lower round figure (Rs.3,00,000) as a reasonable estimate to meet ends of justice. [Paras 61, 64]

Adhoc disallowance sustained in part; reduced and confirmed at Rs.3,00,000.

TDS obligation on reimbursements and services - application of section 195 - Whether reimbursements and certain professional/administrative payments to non-residents were liable to TDS under section 195 and whether additions under section 40(a)(i) were justified - HELD THAT: - The Tribunal examined the nature of payments: reimbursements supported by bills and allocation of an expatriate's costs across group entities. Applying Supreme Court authority (GE India Technology) and other precedents, the Tribunal held that pure reimbursements that do not carry an income element are not chargeable and do not attract TDS; similarly, no material was produced to show recipients had taxable presence in India. The AO's allocations and consequential disallowance were not sustained. The CIT(A)'s confirmation of the disallowance was reversed and the entire addition deleted. [Paras 76, 81]

Addition under section 40(a)(i) deleted; reimbursements and payments found not to attract TDS on the record before AO.

Computation of deduction under section 10B - apportionment of profits and eligible turnover - Quantification issues under section 10B - allocation of customs duty, packing/CF/administrative/interest expenses, treatment of unrealised export turnover and inclusion of other income - HELD THAT: - Tribunal confirmed that assessee is entitled to deduction under section 10B but disagreed with AO's arbitrary allocations of customs duty and overheads where the assessee maintained separate, auditable books and AO had not identified specific misallocations. Tribunal directed that unrealised export turnover excluded from export turnover be excluded from total turnover for section10B computation, and allowed inclusion of other business income (eg. export incentives) in eligible profits following Special Bench and High Court precedents. Revenue's allocations were rejected. [Paras 45, 55, 56]

Revenue's adjustments to section 10B deduction rejected in main; AO directed to recompute (exclude unrealised exports from both export and total turnover and include other business income where applicable).

Assessment under section 145A - treatment of excise/modvat in valuation of closing stock - Whether the assessee's negative adjustment under section 145A (MODVAT/excise effect) warranted addition or required fresh verification - HELD THAT: - The assessee produced a negative figure in its computation which it could not satisfactorily explain before the Tribunal on the record. Given the complexity and lack of complete working, the Tribunal found it inappropriate to decide the substantive correctness on the fragmented record and set aside the issue to the AO for detailed verification of the working and supporting documents so that a firm conclusion can be reached. [Paras 90, 92]

Issue remitted to the file of the AO for fresh verification and working; no definitive Tribunal decision on merits.

Allowance of additional depreciation and the effect of revised returns on appellate consideration - Whether additional depreciation claimed (without filing a revised return) should be considered by appellate authorities and remitted for fresh adjudication - HELD THAT: - While the AO relied on Goetze India to refuse to entertain an increased claim not reflected in the return, the Tribunal noted that appellate authorities may consider such claims for determining the correct tax, and that details of assets were on record. Accordingly, the Tribunal allowed the ground for statistical purposes and restored the issue to the AO for fresh adjudication on merits as to admissibility of additional depreciation. [Paras 83, 85]

Matter remitted to the AO for fresh adjudication on the admissibility of additional depreciation; ground allowed for statistical purpose.

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars - Whether penalty under section 271(1)(c) was correctly levied on various additions/disallowances and whether penalty should be sustained, deleted or recomputed - HELD THAT: - The Tribunal analysed each impugned disallowance in light of Explanation 1 to section 271(1)(c) and relevant facts: where additions were deleted or reduced in the quantum appeals (eg. prior period income set-off, section10B adjustments, misc. expenses, ESIC discrepancy, bad-debt type advance) the basis for penalty disappeared or the facts showed a bona fide or debatable claim. Consequently the Tribunal deleted penalty items where inaccurate particulars or concealment were not established on the facts; it allowed the assessee's appeal and set aside the penalty as confirmed by CIT(A), directing recomputation where required. [Paras 96, 103, 115]

Assessee's appeal allowed and penalties deleted where additions were not sustained or where claims were bona fide/debatable; revenue's penalty grounds dismissed.

Final Conclusion: For AYs 2005-06 and 2006-07 the Tribunal dismissed Revenue appeals on the principal issues: upheld acceptance of TNMM and deleted TPO/AO transfer-pricing adjustments; treated inter-company current-account adjustments as not attracting section 2(22)(e); rejected several AO reallocations and disallowances (including those under sections 40(a)(ia)/40(a)(i) and many adjustments to section 10B computation); reduced ad hoc disallowances for miscellaneous and section 14A-related matters; remitted complex technical issues (additional depreciation claim and section 145A negative adjustment) to the AO for fresh verification; and allowed the assessee's appeal against penalty under section 271(1)(c).

Reassessment under section 147 - change of opinion - tangible material - nexus between material and belief - application of mind - disallowance under section 14A - Rule 8D(2)(ii) - notional interest on sticky loan - depreciation on assets purchased out of NABARD withdrawals - computation of book profit under section 115JB - Explanation 1(f) to section 115JB

Reassessment under section 147 - change of opinion - tangible material - application of mind - nexus between material and belief - Validity of reopening assessment for A.Y. 2009-10 where AO recomputed disallowance under section 14A read with Rule 8D based on material already available at original assessment - HELD THAT: - The Tribunal found that the Assessing Officer had completed assessment under section 143(3) and had already made a disallowance under section 14A read with Rule 8D. In the reassessment order the AO relied on the same material and purported to increase the disallowance, which the Tribunal characterised as a review of the original order rather than reopening based on new 'tangible material'. Applying the settled tests for reopening, the AO must record reasons showing application of mind, a live link between new material and belief that income escaped assessment, and reasons that are not merely a change of opinion. As the AO did not place any fresh tangible material beyond the original assessment record and merely altered his earlier conclusion, the reassessment amounted to an impermissible change of opinion and was held invalid. The Tribunal therefore upheld the CIT(A)'s order annulling the reassessment and dismissed the Revenue's appeal on this ground. [Paras 7, 8, 9, 10, 11]

Reassessment quashed as being based on change of opinion; appeal dismissed.

Disallowance under section 14A - Rule 8D(2)(ii) - application of mind - Validity of disallowance under section 14A read with Rule 8D(2)(ii) for A.Y. 2012-13 - HELD THAT: - The Tribunal applied and followed its Coordinate Bench decisions in the assessee's own earlier years where similar facts prevailed. Those decisions found that where the assessee had sufficient own funds and non-interest bearing funds in excess of investments, no disallowance under Rule 8D(2)(ii) was warranted. As there was no change in facts or law and the Revenue produced no contrary material, the CIT(A)'s deletion of the disallowance was upheld. [Paras 14, 15]

Disallowance under section 14A read with Rule 8D(2)(ii) deleted; appeal dismissed.

Notional interest on sticky loan - mercantile method of accounting - Sustainability of addition of notional interest on 'sticky loan' for A.Y. 2012-13 - HELD THAT: - The Tribunal followed earlier Coordinate Bench decisions in the assessee's own cases which had considered the same contention and deleted similar additions for notional interest on sticky loans. As the facts and law remained unchanged and no fresh material was produced by the Revenue, the CIT(A)'s deletion of the notional interest addition was affirmed. [Paras 16, 17]

Addition for notional interest on sticky loan deleted; appeal dismissed.

Depreciation on assets purchased out of NABARD withdrawals - Allowability of depreciation on plant and machinery acquired out of withdrawals from NABARD for A.Y. 2012-13 - HELD THAT: - The Tribunal, following earlier decisions in the assessee's own case and the Calcutta High Court's affirmation, treated depreciation as a statutory allowance that can be claimed even where acquisition was funded by NABARD withdrawals. Consistent precedent of the Tribunal and the High Court supported deletion of the disallowance, and the Revenue produced no material to distinguish the present facts. [Paras 18, 19]

Depreciation claim upheld; disallowance deleted and appeal dismissed.

Computation of book profit under section 115JB - Explanation 1(f) to section 115JB - disallowance under section 14A - Whether expenses/disallowance under section 14A are to be added back in computing book profit under section 115JB for A.Y. 2012-13 - HELD THAT: - Relying on Tribunal precedent in the assessee's own case and supportive judicial authority, the Tribunal accepted the assessee's submission that section 14A operates in computing total income under Chapter IV and does not have implication for computation of book profit under Chapter XIIB. In view of consistent Coordinate Bench rulings and absence of distinguishing material, the CIT(A)'s deletion of the addition for computing book profit was confirmed. [Paras 20, 21]

Addition in computation of book profit under section 115JB deleted; appeal dismissed.

Final Conclusion: All departmental appeals for A.Y. 2009-10 and A.Y. 2012-13 were dismissed: the reassessment for 2009-10 was quashed as a change of opinion lacking tangible new material; for 2012-13 the CIT(A)'s deletions on issues of section 14A/Rule 8D disallowance, notional interest, depreciation from NABARD-funded acquisitions, and book-profit adjustments under section 115JB were upheld following Coordinate Bench precedent.

Discrepancy in stock statements - bank stock statement versus balance sheet - physical verification of stock - reliance on audited accounts - excessive claim of expenditure - change of business / commencement of manufacturing - share application money - identity and genuineness of subscribers - adjustment of remuneration into share capital - claim of depreciation on newly acquired machinery - proof of purchase and source of funds

Discrepancy in stock statements - bank stock statement versus balance sheet - physical verification of stock - reliance on audited accounts - Addition on account of difference between stock statement furnished to bank and closing stock in audited balance sheet set aside. - HELD THAT: - The Assessing Officer treated the average of monthly stock statements submitted to bank as the correct closing stock and added the difference as undisclosed income, but did so without verifying whether the bank had physically verified the stock and without accepting the assessee's audited financials. The Tribunal found reasonable cause for non-production of computerized books (death of accountant), accepted audited accounts filed with the return, and admitted month-wise breakup produced before the Tribunal. The Tribunal relied on corroborative material (quarterly sales figures and VAT returns) showing substantial sales in March 2010 and noted that bank statements only covered up to 05.03.2010 whereas balance sheet figures related to 31.03.2010. In the absence of evidence of physical verification by the bank and having regard to audited accounts and corroborative VAT/sales records, the Tribunal held that the bank stock statement could not be the sole basis for an adverse inference and accepted the assessee's explanation. [Paras 3]

Addition of Rs. 37,59,520/- on account of stock discrepancy deleted and the explanation of the assessee accepted.

Excessive claim of expenditure - change of business / commencement of manufacturing - burden of proof on assessee - reliance on audited accounts - Addition disallowing alleged excessive expenses deleted where increased expenses were explained by commencement of manufacturing activity. - HELD THAT: - The Assessing Officer compared turnover and expense ratios between two years and disallowed a portion of expenses as excessive, relying on non-production of books. The Tribunal noted that the assessee commenced brick manufacturing w.e.f. 13/01/2010 and incurred new categories of expenditure (coal, fuel, labour, electricity, royalty, purchase of machinery and vehicle) which did not exist in the prior year. These facts were supported by audited financials, invoices/ledgers and VAT records. In absence of adverse material and having regard to the audited accounts and documentary evidence of setting up and operating the manufacturing unit, the Tribunal held that the Assessing Officer should have made specific enquiries rather than disallowing expenditure on comparative ratio basis and allowed the claim. [Paras 4]

Addition of Rs. 65,89,841/- on account of alleged excessive expenditure deleted.

Share application money - identity and genuineness of subscribers - adjustment of remuneration into share capital - closely held company - intra-family funding - Addition of share application money disallowed by revenue deleted where source and identity of subscribers were satisfactorily explained. - HELD THAT: - The assessee, a closely held private company, showed share application money introduced by three family-member directors. The Tribunal examined TDS records, ITRs of the subscribers and ledger entries showing conversion/adjustment of directors' remuneration into share application money. The documentary trail corroborated by TDS and income-tax returns established identity and source. In these circumstances the assessee discharged the onus and the Assessing Officer's addition was unjustified. [Paras 5]

Addition of Rs. 6,00,000/- on account of unexplained share application money deleted.

Claim of depreciation on newly acquired machinery - proof of purchase and source of funds - use of assets in business - corroborative operational evidence - Disallowance of proportionate depreciation on machinery reversed and depreciation allowed. - HELD THAT: - The Assessing Officer disallowed proportionate depreciation because purchase invoices and source were not produced. The Tribunal found purchase invoices and related documents in the record for excavation machinery, truck and other equipment, and noted operational corroboration (increased electricity, fuel, coal consumption, labour expenses and VAT-supported sales) consistent with commencement of manufacturing. On this material the Tribunal held that the additions to fixed assets were proved and depreciation claimed was admissible. [Paras 6]

Addition of Rs. 3,73,282/- by denying proportionate depreciation deleted and depreciation allowed.

Final Conclusion: The appeal is partly allowed: additions made on account of stock discrepancy, alleged excessive expenditure, unexplained share application money and disallowed depreciation are deleted and the respective claims of the assessee are accepted in part for Assessment Year 2010-11.

Allowability of business expenditure under Section 37(1) - Capital expenditure versus revenue expenditure - Business benefit from contribution - entitlement to use accommodation at concessional rates - Precedential weight of coordinate-bench decisions

Allowability of business expenditure under Section 37(1) - Capital expenditure versus revenue expenditure - Business benefit from contribution - entitlement to use accommodation at concessional rates - Contribution of Rs. 1 crore towards construction of Rajasthan Bhawan, Mumbai held to be allowable as expenditure under Section 37(1) for Assessment Year 2013-14. - HELD THAT: - The Tribunal examined whether the lump-sum contribution created a capital asset of the assessee or represented expenditure incurred for business purposes. Relying on coordinate-bench decisions in the assessee's own case and in allied authorities, the Tribunal treated payments that secure a continuing accommodation facility for officers/employees as revenue in nature where such payment confers a business advantage. The assessee produced Government correspondence dated 24.10.2017 granting a rebate (concessional tariff) and entitlement for its employees to use Rajasthan Bhawan, Mumbai; in view of that entitlement and the earlier consistent Tribunal precedents holding similar contributions to be revenue expenditure where they result in facility for the assessee, the Tribunal concluded that the contribution was incurred for business purposes and is allowable under Section 37(1). [Paras 5]

The addition made by the revenue is deleted and the assessee's claim is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the Rs. 1 crore contribution towards Rajasthan Bhawan, Mumbai is revenue expenditure allowable under Section 37(1) for AY 2013-14, given the assessee's entitlement to concessional accommodation and in view of coordinate-bench precedents.

Condonation of delay - Remand for fresh consideration - Dismissal as not admitted for being time barred - Service of notice by e mail and requirement of opportunity to explain delay - Levy of late fee under section 234E read with section 200A(1)

Condonation of delay - Affidavitary explanation for delay - Whether the delay of 75 days and 78 days in filing the appeals before the Tribunal should be condoned. - HELD THAT: - The assessee explained that the delay resulted from misplacement of the concerned files/orders by its employee and production of an affidavit by the Assistant Engineer supported this explanation. The Tribunal found the delay to be unintentional and not occasioned for any ulterior purpose. In the interest of justice and having regard to the explanation and supporting affidavit, the Tribunal exercised its discretion to condone the delay in filing the appeals to the Tribunal. [Paras 4]

Delay of 75 days and 78 days in filing the appeals before the Tribunal is condoned.

Dismissal as not admitted for being time barred - Service of notice by e mail and requirement of opportunity to explain delay - Remand for fresh consideration - Levy of late fee under section 234E read with section 200A(1) - Whether the orders of the CIT(A) dismissing the appeals as time barred without giving the assessee an opportunity to explain delay were proper and what relief should follow. - HELD THAT: - The Tribunal noted that the CIT(A) dismissed the appeals as 'not admitted' on the basis that a demand notice was sent by e mail and that the appeals were not filed within the prescribed period. The Tribunal observed that other than the alleged e mail no further record of service was relied upon and, crucially, the assessee was not afforded an opportunity to explain any delay before the CIT(A). Given that the assessee had not been heard on the point and that the CIT(A) proceeded to dismiss in limine, the Tribunal concluded that a defective memo should have been issued or an effective opportunity of hearing given. In the interests of justice the Tribunal set aside the CIT(A)'s orders and remitted the matter to the CIT(A) to afford the assessee a further opportunity to explain delay and, thereafter, to decide condonation of delay and proceed to adjudicate the appeals on merit if necessary. [Paras 7]

CIT(A)'s orders dismissing the appeals as time barred are set aside and the matters are remitted to the CIT(A) for fresh consideration after giving the assessee an opportunity to explain the delay; CIT(A) to first decide condonation and then the merits.

Final Conclusion: The Tribunal condoned the delay in filing the appeals before itself and set aside the CIT(A)'s dismissal of the appeals as time barred; the matters are remitted to the CIT(A) for fresh consideration after affording the assessee an opportunity to explain delay, following which the CIT(A) shall decide condonation and, if required, the appeals on merit.

Mode of taking or accepting certain loans, deposits and specified sum (prohibition on cash transactions) - Mode of repayment of certain loans or deposits - Penalty equal to amount of the loan or deposit for contravention - Exoneration from penalty on demonstration of reasonable cause - Genuineness of transactions and business exigency as defence to penalty

Mode of taking or accepting certain loans, deposits and specified sum (prohibition on cash transactions) - Penalty equal to amount of the loan or deposit for contravention - Exoneration from penalty on demonstration of reasonable cause - Genuineness of transactions and business exigency as defence to penalty - Penalty under section 271D for accepting alleged loans/deposits in cash contrary to section 269SS - HELD THAT: - The Tribunal examined the facts that the assessee-company, a long-established exporter, had become financially sick, was registered with BIFR and, to implement the BIFR scheme and honour urgent liabilities, received cash funds from directors, relatives and market shroffs which were deposited in bank accounts and used to ensure presentation and clearance of cheques. The transactions were not doubted as to genuineness. Relying on precedents where bona fides, business exigency and running current accounts with directors were accepted as reasonable cause, the Tribunal held that the breach was a venial, technical one occurring against a background of genuine business exigency and therefore came within the scope of reasonable cause under section 273B. Applying the determinative reasoning that genuine transactions and business exigency may justify non-application of penalty, the Tribunal deleted the penalty under section 271D. [Paras 21, 22]

Penalty under section 271D deleted as the assessee established reasonable cause and genuineness of cash loans.

Mode of repayment of certain loans or deposits - Penalty equal to amount of the loan or deposit for contravention - Exoneration from penalty on demonstration of reasonable cause - Genuineness of transactions and business exigency as defence to penalty - Penalty under section 271E for repayment of alleged loans/deposits in cash contrary to section 269T - HELD THAT: - On identical facts as to the circumstances leading to repayment in cash, the Tribunal found that repayments were made in the same factual matrix of a sick unit operating under BIFR constraints and that the repayments reflected genuine transactions linked to the effort to revive the company. Consistent with the accepted principle that bona fide transactions and business exigency can constitute reasonable cause under section 273B, and having regard to authorities where similar conduct led to deletion of penalty, the Tribunal concluded that the assessee had discharged the onus to show reasonable cause and therefore could not be visited with penalty under section 271E. [Paras 21, 22]

Penalty under section 271E deleted as the assessee established reasonable cause and genuineness of repayments.

Final Conclusion: Both appeals are allowed: penalties under sections 271D and 271E (relating to alleged contraventions of sections 269SS and 269T) are deleted for Asstt.Year 2009-10 on the ground that the assessee demonstrated reasonable cause in the form of genuine transactions and business exigency arising from its BIFR-related revival efforts.

Deduction under section 80P(2)(a)(i) in respect of interest attributable to a co-operative society's lending business - attributability of income to business - interest from savings bank deposits attributable to business income - distinction between interest on society's own funds and interest on amounts held as liability to members

Deduction under section 80P(2)(a)(i) in respect of interest attributable to a co-operative society's lending business - interest from savings bank deposits attributable to business income - distinction between interest on society's own funds and interest on amounts held as liability to members - attributability of income to business - Interest earned by the assessee from savings bank accounts maintained with scheduled banks is eligible for deduction under section 80P(2)(a)(i) as income attributable to the business of providing credit to members. - HELD THAT: - The Tribunal found that the assessee is a co-operative society engaged solely in providing credit facilities to its members and that sums invested in short-term deposits or kept in savings accounts were its own funds not shown as liabilities to members. Applying the wider meaning of the phrase attributable to, the Tribunal followed the reasoning of the Hon'ble Karnataka High Court in Guttigedarara Credit Co-operative Society Ltd. v. ITO, which held that interest earned on such deposits is income attributable to the business of providing credit and hence falls within the deduction contemplated by section 80P(2)(a)(i). The Tribunal distinguished the Supreme Court decision in Totgars Co-operative Sale Society Ltd. on its facts, since in Totgars the amounts earning interest were liabilities retained for members (sale proceeds) and shown as such in the balance sheet; therefore that decision was confined to its facts and did not govern cases where the interest accrues on the society's own funds employed pending lending. For these reasons the Tribunal held that interest from the savings bank account, maintained for day-to-day operations of lending, is deductible under section 80P(2)(a)(i).

The addition/disallowance of interest income earned from savings bank accounts was set aside and the interest was held eligible for deduction under section 80P(2)(a)(i).

Final Conclusion: Both appeals for assessment years 2013-14 and 2014-15 are allowed: interest earned by the co-operative society from savings bank deposits maintained for its lending operations is deductible under section 80P(2)(a)(i).

Admissibility of statements under Section 138B of Customs Act - Burden of proof under Section 123 of Customs Act - Confiscation for smuggling and town seizure - Imposition of penalty under Section 112 of Customs Act - Redemption of confiscated goods on payment of duty and redemption fine

Admissibility of statements under Section 138B of Customs Act - Admissibility of retracted statements of persons not produced for cross-examination - HELD THAT: - The Tribunal found that the revenue's case relied on retracted statements made to the officers which were not relied upon by calling the makers as witnesses in the adjudication. Section 138B requires that any statement sought to be relied upon in proceedings must be produced by examining the maker as a witness and, if admissible, permitting cross-examination. In the absence of compliance with Section 138B the statements are not admissible as evidence and cannot form the basis of the adjudication against the appellants. [Paras 19]

The retracted statements not placed on oath and not proved by examination of the declarants are inadmissible and cannot support the revenue's case.

Imposition of penalty under Section 112 of Customs Act - Validity of penalties imposed on Shri Mridul Agarwal and Shri Satish Kumar - HELD THAT: - Both appellants denied any connection with the seized gold and no corroborative evidence linked them to smuggling or dealing in the seized gold. Searches at their premises did not recover incriminating material. The order of penalty rested on inadmissible statements and assumptions without independent evidence. Consequently, imposition of penalties under Section 112, in the absence of proof of the acts or knowledge envisaged by the provision, is unsustainable. [Paras 19]

Penalties imposed on Shri Mridul Agarwal and Shri Satish Kumar are set aside.

Imposition of penalty under Section 112 of Customs Act - Validity of penalty imposed on Shri Shakil Ahmad Khan - HELD THAT: - Smuggling was not established on the material produced by the revenue. Given that the primary evidence relied upon was inadmissible, the Tribunal concluded that penalty imposed on Shri S.A. Khan cannot be sustained and is liable to be set aside. [Paras 20]

Penalty imposed on Shri Shakil Ahmad Khan is set aside.

Confiscation for smuggling and town seizure - Burden of proof under Section 123 of Customs Act - Redemption of confiscated goods on payment of duty and redemption fine - Whether confiscation of the seized gold is sustainable and the extent of relief to the carrier (Shri S.A. Khan) - HELD THAT: - The Tribunal held that gold is not a prohibited import and the seizure was a town seizure made on suspicion of smuggling without independent evidence of smuggling. While smuggling was not established, Section 123 casts the primary burden on the person from whose possession the goods were seized to prove that they are not smuggled. Shri S.A. Khan failed to discharge that burden; therefore the confiscation could not be entirely set aside. However, absolute confiscation by the Commissioner was interfered with: the Tribunal converted the confiscation into a redeemable forfeiture, directing redemption on payment of lawful duty and a specified redemption fine. [Paras 19, 20, 21]

Confiscation is upheld as redeemable (not absolute) in respect of Shri S.A. Khan, who may redeem the gold on payment of duty and the prescribed redemption fine; absolute confiscation set aside.

Final Conclusion: The appeals of Shri Mridul Agarwal and Shri Satish Kumar are allowed and the penalties against them are set aside. The penalty against Shri Shakil Ahmad Khan is set aside. Confiscation of the gold is not sustained as absolute; having failed to discharge the statutory presumption under Section 123, Shri Shakil Ahmad Khan may redeem the seized gold on payment of duty and the ordered redemption fine.

Rectification of mistake - jurisdiction of Tribunal under proviso to Section 129A(1) of the Customs Act, 1962 - mixed question of fact and law - prohibition on review by way of rectification - plea not raised at hearing cannot be allowed by rectification

Rectification of mistake - mixed question of fact and law - prohibition on review by way of rectification - plea not raised at hearing cannot be allowed by rectification - Maintainability of Revenue's application for rectification of the Tribunal's order dated 28.7.2017 on the ground that the Tribunal lacked jurisdiction. - HELD THAT: - The application sought recall of the Tribunal's order on the ground that, in view of the proviso to Section 129A(1) of the Customs Act, 1962, the matter fell within the jurisdiction of the Commissioner (Appeals) and not the Tribunal. The Tribunal held that the jurisdictional objection advanced by Revenue depends upon the factual question as to the place and circumstances of seizure and therefore raises a mixed question of fact and law. Entertaining that contention in a rectification proceeding would amount to reviewing the merits of the earlier order, which the Tribunal has no power to do. Further, the plea was not raised or argued before the Tribunal at the hearing of the appeal and, in accordance with the principle that a contention not raised at the hearing cannot be permitted to be advanced by way of rectification, the application was not maintainable. Applying these principles, the Tribunal treated the rectification application as amounting to an impermissible review and dismissed it as devoid of merit. [Paras 6]

Revenue's rectification application is dismissed as impermissible review and not maintainable where the jurisdictional objection raises mixed questions of fact and law and was not raised at the hearing.

Final Conclusion: Application for rectification filed by Revenue to recall the Tribunal's order dated 28.7.2017 is dismissed on the grounds that the contention raises mixed questions of fact and law (requiring review) and the jurisdictional plea was not raised at the hearing, hence cannot be allowed by way of rectification.

Duty payable on debonding of obsolete capital goods imported under the 100% EOU/STPI scheme - voluntary payment of customs duty and finality of debonding - confiscation of goods found within bonded premises - penalty under Section 112(a) of the Customs Act

Duty payable on debonding of obsolete capital goods imported under the 100% EOU/STPI scheme - voluntary payment of customs duty and finality of debonding - Validity of the demand and appropriation of customs duty paid by the appellant on debonding obsolete capital goods - HELD THAT: - The capital goods were imported duty free under the 100% EOU (STPI) scheme and were warehoused within the appellant's bonded premises for use in software development. Departmental verification concluded that many of the capital goods had become obsolete and were no longer usable. The appellant agreed to debond those goods and voluntarily paid the customs duty. The Tribunal found that, in the circumstances, the duty paid upon debonding was in order and upheld the appropriation of the duty already paid by the appellant.

Duty paid on debonding of the obsolete capital goods is upheld.

Confiscation of goods found within bonded premises - Validity of the confiscation of the imported goods which were found in the appellant's bonded premises at the time of departmental verification - HELD THAT: - The goods in question were located within the bonded premises during the course of verification. Given that the goods remained in bonded premises and the appellant had come forward to identify obsolete items and debond them, the Tribunal found no justification for ordering confiscation. The confiscation order was therefore set aside.

Confiscation of the imported goods is set aside.

Penalty under Section 112(a) of the Customs Act - Sustainability of the penalty imposed on the appellant under Section 112(a) of the Customs Act - HELD THAT: - The Tribunal recorded that, having regard to the location of the goods within bonded premises and the appellant's voluntary identification and debonding of obsolete goods with payment of duty, there was no justification for imposing the penalty. Consequently, the penalty imposed under Section 112(a) was quashed.

Penalty imposed under Section 112(a) is set aside.

Final Conclusion: The appeal is partially allowed: the duty paid on debonding is upheld, while the confiscation of goods and the penalty under Section 112(a) are set aside; the impugned order is modified accordingly.

Limitation for refund claims - relevant date for Section 11B read with Rule 5 (quarterly refund claims) - remand to original authority for fresh adjudication - binding effect of Larger Bench decision

Relevant date for Section 11B read with Rule 5 (quarterly refund claims) - limitation for refund claims - binding effect of Larger Bench decision - Whether the Commissioner(Appeals) was correct in treating the last day of the quarter in which FIRCs are received as the relevant date for computing limitation for refund claims filed on a quarterly basis and remanding the matter to the original authority to consider the claim accordingly. - HELD THAT: - The Tribunal noted that the Commissioner(Appeals) interpreted the limitation under Section 11B (as made applicable to service tax) and Notification No.27/2012 so as to treat the cut-off date, for refund claims filed quarterly, as the last date of the quarter to which the refund pertains. The Commissioner(Appeals) relied on High Court authority and applied that interpretation to find the claim not time-barred and remanded the matter to the original authority to adjudicate accordingly. The Revenue challenged the remand, but the Tribunal observed that a Larger Bench decision (Span Infotech (India) Pvt. Ltd. - Interim Order No.4/2018 dt. 09/02/2018) had unanimously held that for refund claims filed on a quarterly basis the relevant date for limitation under Rule 5/Section 11B may be taken as the end of the quarter in which FIRCs are received. In view of that Larger Bench pronouncement, the Tribunal found no infirmity in the Commissioner(Appeals)'s approach or in directing remand to the original authority to consider the end of the quarter as the relevant date.

The Commissioner(Appeals)'s remand directing the original authority to consider the end of the quarter in which FIRCs were received as the relevant date for limitation was upheld.

Remand to original authority for fresh adjudication - Whether the appeal by the Revenue against the order of remand was maintainable and sustainable. - HELD THAT: - Having regard to the Larger Bench decision and the correctness of the appellate authority's approach in directing reconsideration by the original authority on the specified limited question (i.e., the relevant date being the quarter-end when FIRCs are received), the Tribunal found no legal infirmity in the remand order. The appeal sought to set aside a remand that flowed from an accepted legal position in the Larger Bench ruling; consequently the Revenue's challenge lacked merit.

Revenue's appeal against the remand was dismissed.

Final Conclusion: The appeal is dismissed; the Commissioner(Appeals)'s order remanding the refund claim to the original authority to consider the end of the quarter in which FIRCs were received as the relevant date for limitation is upheld in view of the Larger Bench decision.

Refund of unutilized CENVAT credit - relevant date for limitation under Section 11B - time-bar under Section 11B of the Central Excise Act, 1944 - requirement of production of invoices and service tax registration details - Rule 5 of CENVAT Credit Rules, 2004 - remand for fresh consideration in light of Larger Bench decision

Relevant date for limitation under Section 11B - time-bar under Section 11B of the Central Excise Act, 1944 - Rule 5 of CENVAT Credit Rules, 2004 - remand for fresh consideration in light of Larger Bench decision - Whether the refund claim for the period 04/2011 to 06/2011 was to be adjudicated as time barred and what is the relevant date for computation of limitation. - HELD THAT: - The Tribunal did not decide the time bar question on merits. Having noted divergent views and the Larger Bench interim pronouncement in CCE & CST, Bangalore v. Span Infotech (India) Pvt. Ltd. that, in quarterly refund claims, the relevant date may be taken as the end of the quarter in which FIRCs are received, the Tribunal directed remand. The matter is to be reconsidered and decided by the original authority applying the Larger Bench principles rather than by affirming the Commissioner(Appeals)'s reliance on earlier High Court authority dealing primarily with export of goods. [Paras 7]

Remanded to the original authority to decide the limitation/time bar issue in accordance with the Larger Bench decision.

Requirement of production of invoices and service tax registration details - refund of unutilized CENVAT credit - remand for fresh consideration - Whether the refund claim for the period 04/2014 to 06/2014 could be rejected for non production of invoices and absence of service tax registration details on vendor invoices. - HELD THAT: - The Tribunal did not uphold or reject the technical objections on merits. Instead, it directed that the original authority shall consider all invoices and documents which the appellant may produce, afford opportunity in accordance with principles of natural justice, and pass a fresh order. The remand requires the original authority to examine the documentary evidence afresh rather than sustain the Commissioner(Appeals)'s rejection on the stated technical grounds. [Paras 7]

Remanded to the original authority to admit and examine invoices and related documents, afford opportunity to the appellant, and pass a fresh decision.

Final Conclusion: Both appeals disposed of by remand: the matters are directed to be re decided afresh by the original authority (on limitation/relevant date and on admissibility/consideration of invoices and service tax details) in accordance with the Larger Bench pronouncement and after affording the appellant an opportunity to produce documents.

Refund of unutilized CENVAT credit - limitation under Section 11B of the Central Excise Act - relevant date for computation of limitation - end of the quarter in which FIRCs are received - time limit for refund claims under Rule 5 of the CENVAT Credit Rules - application of Larger Bench decision in CCE & CST, Bangalore Vs. Span Infotech (India) Pvt. Ltd. - remand to original authority for disposal in accordance with binding precedent

Refund of unutilized CENVAT credit - limitation under Section 11B of the Central Excise Act - relevant date for computation of limitation - end of the quarter in which FIRCs are received - application of Larger Bench decision in CCE & CST, Bangalore Vs. Span Infotech (India) Pvt. Ltd. - remand to original authority for disposal in accordance with binding precedent - Whether the refund claim dismissed as time-barred should be reconsidered in view of the Larger Bench ruling on the relevant date for computation of the one-year limitation period. - HELD THAT: - The Tribunal noted that a Larger Bench in CCE & CST, Bangalore Vs. Span Infotech (India) Pvt. Ltd. has held that, for refund claims filed on a quarterly basis, the relevant date for computing the one-year period may be taken as the end of the quarter in which the FIRCs are received. Applying that binding clarification, the Tribunal concluded that the impugned orders dismissing the refund as hit by limitation cannot stand without considering the claim in the light of the Larger Bench's ratio. Consequently, the matter is not finally decided on merits by this Bench but is remitted to the original adjudicating authority to dispose of the refund claim after applying the Larger Bench ruling and conducting such verification or proceedings as may be appropriate. [Paras 6]

Appeal disposed by remanding the refund claim to the original authority for fresh disposal in accordance with the Larger Bench decision regarding the relevant date for computation of limitation.

Final Conclusion: The appeal is allowed to the extent that the matter is remitted to the original authority for fresh disposal of the refund claim in accordance with the Larger Bench ruling that, for quarterly refund claims, the relevant date for computing the one-year limitation may be taken as the end of the quarter in which the FIRCs are received.

Limitation - extended period under the proviso to Section 73(1) for fraud, wilful misstatement or suppression - suppression of facts - ST3 return disclosure - CENVAT credit - admissibility and temporal bar

Limitation - extended period under the proviso to Section 73(1) for fraud, wilful misstatement or suppression - suppression of facts - ST3 return disclosure - Whether the demand for alleged ineligible CENVAT credit for the half year April 2008 to September 2008 was barred by limitation and whether the extended five year period could be invoked. - HELD THAT: - The Tribunal found it was an admitted fact that the assessee filed the ST3 return for April 2008 to September 2008 on 10/09/2009 and that the return contained full details of CENVAT credit availed on tippers; the assessee also submitted supporting invoices on 03/05/2010, facts recorded in the show cause notice. Under Section 73(1) the normal one year period for issuing a show cause notice runs from the date the return is filed or ought to have been filed; therefore the notice should have been issued on or before 10/09/2010. The Department issued the notice on 30/08/2011, beyond the one year period and relied on the proviso to invoke the extended five year period. However, the Revenue produced no material to show conscious or deliberate suppression with the intention to evade tax. The Tribunal applied binding precedents holding that the extended period is invokable only when something positive-conscious withholding or suppression of material facts-is proved and that mere inaction or failure to detect an irregularity does not justify extension. In the absence of any finding or evidence of deliberate suppression or misstatement, and given the detailed disclosure in the ST3 return, the extended period could not be invoked and the demand was time barred. [Paras 6]

The Commissioner(Appeals) correctly held the demand time barred and the extended five year period was not invokable for the said half year; the Revenue's appeal is dismissed.

Final Conclusion: The appeal is dismissed; the impugned order setting aside the original demand on limitation grounds is upheld.

Benefit of Section 11A(2) - payment of duty with interest precludes issuance of show cause notice absent fraud, suppression or willful misstatement - requirement of fraud, suppression or willful misstatement for invocation of extended limitation - penalty under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act

Benefit of Section 11A(2) - payment of duty with interest precludes issuance of show cause notice absent fraud, suppression or willful misstatement - requirement of fraud, suppression or willful misstatement for invocation of extended limitation - Entitlement to protection under Section 11A(2) where duty and interest were paid before issuance of show cause notice and whether the Department established fraud, suppression or willful misstatement to justify issuing the notice and invoking extended limitation. - HELD THAT: - The Tribunal found on the record that the appellant paid the disputed duty and interest immediately upon audit objection and before the show cause notice was issued. Under Section 11A(2) a department ordinarily should not issue a show cause notice where duty along with interest has been paid unless there is fraud, suppression or willful misstatement. The Revenue failed to establish any wilful misdeclaration or suppression with intent to evade duty. Reliance on binding precedent (including the reasoning in Uniworth Textiles and various decisions cited by the Tribunal) supports the proposition that mere non payment does not automatically import suppression or collusion and that something more must be shown to attract the proviso permitting extended limitation. Applying this principle to the facts, the Tribunal concluded that issuance of the show cause notice and the consequential confirmation were not sustainable. [Paras 6, 7]

Appellant entitled to the benefit of Section 11A(2); show cause notice could not be sustained in the absence of established fraud, suppression or willful misstatement, and the impugned order was set aside.

Final Conclusion: The appeal is allowed; the Commissioner (Appeals) order confirming the demand and penalty is set aside as the appellant paid the duty with interest before the show cause notice and the Department failed to prove fraud, suppression or willful misstatement necessary to invoke extended limitation.

Cenvat Credit recovery from registered dealers - Applicability of Rule 12 of Cenvat Credit Rules 2002 to traders - Effect of passing on Cenvat credit by invoice/debit entry in RG 23D - Inapplicability of manufacturer centric demand provisions to dealers

Applicability of Rule 12 of Cenvat Credit Rules 2002 to traders - Inapplicability of manufacturer centric demand provisions to dealers - Whether Rule 12 of the Cenvat Credit Rules, 2002 can be invoked to recover Cenvat credit from registered dealers who are not manufacturers - HELD THAT: - The Tribunal found that Rule 12 of the Cenvat Credit Rules, 2002 (now Rule 14 of 2004) is directed to cases of Cenvat credit wrongly availed or utilised by a manufacturer and does not contemplate recovery from traders who are registered dealers. The appellants were traders, not manufacturers, had obtained dealer registration and issued invoices as registered dealers. Applying Rule 12 against such dealers was therefore impermissible. The Tribunal accepted the appellants' contention that the provision sought to be pressed into service is not intended for dealers and, on that determinative legal ground, the demands founded on Rule 12 could not be sustained.

Rule 12 (Cenvat Credit Rules, 2002) cannot be invoked to recover Cenvat credit from the appellants who were registered dealers and not manufacturers; demands based on that provision are unsustainable.

Effect of passing on Cenvat credit by invoice/debit entry in RG 23D - Cenvat Credit recovery from registered dealers - Whether, alternatively, the Department could demand repayment of Cenvat credit that the appellants had passed on to purchasers and recorded by debit entry in their books/invoices - HELD THAT: - The Tribunal proceeded on an alternative basis that even if repayment were required, the appellants had, while invoicing the goods, debited the Cenvat credit amount as registered dealers (recorded in RG 23D or on invoices). The Tribunal applied the settled legal principle that where the credit amount has been passed on to purchasers and debited in the dealer's accounts, the same amount cannot be doubly demanded from the dealer, as effectively the amount stands discharged. Relying on precedent accepted by the bench, the Tribunal held that no further demand could be sustained on that basis and accordingly set aside the impugned orders.

Alternatively, insofar as the appellants had passed on the Cenvat credit by debiting the amount in invoices/accounts, the Department could not demand the same amount again; thus the demands could not be sustained.

Final Conclusion: The impugned orders confirming demands, interest and penalties were set aside; the appeals were allowed on the ground that Rule 12 could not be invoked against registered dealers who were not manufacturers and, alternatively, because the credit had been passed on and debited in the appellants' accounts, precluding further demand.

Rectification of assessment - credit for payments - direction to decide representations within fixed time - deferred recovery pending decision

Rectification of assessment - direction to decide representations within fixed time - First respondent directed to decide the petitioner's applications for rectification (Exts.P5 to P8) of modified assessment orders (Exts.P1 to P4) within a specified time. - HELD THAT: - The petitioner, a registered dealer under the Kerala Value Added Tax Act, filed applications for rectification contending that certain payments were not given credit in the modified assessment orders. The High Court, having considered the limited prayer for a direction to decide those applications, disposed of the writ petition by requiring the first respondent to take a decision on Exts.P5 to P8 within two months from receipt of the judgment. The Court's order confines itself to issuing a time-bound directive for administrative decision-making without expressing any substantive view on the merits of the rectification claims.

First respondent to decide Exts.P5 to P8 applications within two months from receipt of the judgment.

Deferred recovery pending decision - credit for payments - Further proceedings for realization of amounts covered by the modified assessment orders are to be deferred until the rectification applications are decided. - HELD THAT: - In order to preserve the parties' positions pending administrative determination of the rectification applications, the Court directed that until orders are passed on Exts.P5 to P8, any further action to realize the amounts specified in Exts.P1 to P4 shall be deferred. This interim protection is procedural and contingent on the first respondent complying with the time-bound decision directive; it does not adjudicate on the correctness of the disputed credits or the underlying assessments.

Further proceedings for realization of amounts under Exts.P1 to P4 shall be deferred until the first respondent decides Exts.P5 to P8.

Final Conclusion: Writ petition disposed by directing the first respondent to decide the petitioner's rectification applications within two months; realization of amounts under the challenged modified assessment orders is stayed until such decision is rendered.

Period of limitation for reassessment on remand - Assessment in consequence of appellate order within two years - Deemed assessment under annual return - Entitlement to refund where assessment is time-barred

Period of limitation for reassessment on remand - Assessment in consequence of appellate order within two years - Whether the assessment framed on remand after the appellate order was barred by limitation under Section 18(1) of the HVAT Act. - HELD THAT: - The appellate authority remanded the matter for de novo assessment by order dated 19.11.2013; a copy of that order was sent to the assessing authority by registered post on 10.12.2013. Section 18(1) of the HVAT Act permits assessment in consequence of an order made by any court or authority only within two years of receipt of a copy of such order by the assessing authority. The assessment order subsequently passed on 29.12.2016 was not within the two-year period calculated from receipt of the remand order and therefore was beyond the statutory limitation. Consequently the reassessment on remand was invalid as barred by the period of limitation prescribed by Section 18(1). [Paras 5, 7]

The assessment passed on remand on 29.12.2016 is barred by limitation and therefore unsustainable.

Deemed assessment under annual return - Entitlement to refund where assessment is time-barred - Whether the petitioner is entitled to refund on the basis of the annual return as a deemed assessment where reassessment on remand is time-barred. - HELD THAT: - The petitioner had filed the annual return for the assessment year 2009-10 on 25.11.2010 and claimed refund of the excess tax deposited/deducted. Since the reassessment attempted after remand was barred by limitation, the assessing authority could not validly disturb the return. In that situation the assessment is to be treated as a deemed assessment under Section 15(1) in accordance with the return filed, entitling the petitioner to the refund claimed. The Court accordingly held that the petitioner is entitled to the refund of the claimed amount in accordance with law. [Paras 7, 8]

The petitioner is entitled to refund on the basis of the annual return (deemed assessment) and the respondents must release the refund.

Final Conclusion: Writ petition allowed; respondents directed to refund the amount claimed for assessment year 2009-10 within one month from receipt of this order in accordance with law.