TaxTMI Updates e-Newsletter
Jun 03,2021

Classification of goods as prepared additives for cements, mortars or concretes - classification under HSN 3824 40 - applicability of GST rate of 18% - advance ruling under Section 97 of the GST Act - non-applicability of Chapter 30 (pharmaceuticals) and Chapter 31 (fertilisers/organic manure) classifications

Classification of goods as prepared additives for cements, mortars or concretes - classification under HSN 3824 40 - prepared additives for cements, mortars or concretes (Tariff Item 3824 40) - GST rate 18% - Classification of the product (aerobic microorganism/protein derived thereof used to reduce cement requirement) and applicable rate of GST. - HELD THAT: - The Authority examined the nature, characteristics and uses of the product as supplied by the applicant and rejected classification under Chapter 30 (pharmaceutical products) and under Chapter 31 (bio-fertilisers/organic manure) as inapplicable to the instant goods. The product, by its stated properties and use in concrete technology to enhance strength, durability and impart self healing, bears the character of an additive. No specific heading other than those for additives was available; tariff item 3824 40 expressly covers "Prepared additives for cements, mortars or concretes." Applying the characteristics based classification approach, the Authority held that the product falls within Tariff Item 3824 40. The Authority further noted that goods under Heading 3824 are specified in Schedule III of the relevant notification, and accordingly the corresponding GST rate applies. The Authority therefore classified the product under HSN 3824 40 and applied the GST rate applicable to entries in Schedule III for that heading. [Paras 4]

The product is classifiable under HSN 3824 40 as "Prepared additives for cements, mortars or concretes" and attracts GST @ 18% (9% CGST + 9% WBGST).

Final Conclusion: The Advance Ruling determines that the aerobic microorganism/protein product used as a biological agent to reduce cement requirement is classifiable under HSN 3824 40 as a prepared additive for cements, mortars or concretes and is taxable at 18% GST; the Ruling is valid subject to provisions of Section 103 unless set aside under Section 104(1) of the GST Act.

Government Entity - set up by an Act of Parliament - participation by way of equity or control (90% or more) - function entrusted by the Central Government/State Government/Union Territory/local authority - applicability of Notification No.11/2017-Central Tax (Rate) and Notification No.12/2017-Central Tax (Rate) as amended by Notification No.31/2017 and No.32/2017

Government Entity - set up by an Act of Parliament - participation by way of equity or control (90% or more) - function entrusted by the Government - Notification No.11/2017-Central Tax (Rate) and Notification No.12/2017-Central Tax (Rate) as amended - Damodar Valley Corporation falls within the definition of "Government Entity" in the notifications relied upon. - HELD THAT: - The Authority examined whether the applicant satisfies the constituent criteria of the definition of Government Entity as set out in the impugned notifications. The DVC was constituted by the Damodar Valley Corporation Act, 1948, which is an Act of the Central Legislature, meeting the requirement of being set up by an Act of Parliament. The documentary material and the annual financial statement show that the participating governments (Central, West Bengal and Bihar/Jharkhand) hold the capital and control, amounting to full participation by the governments and thereby satisfying the participation by way of equity or control limb. The statutory scheme of the DVC Act (including provisions conferring power on the Central Government to direct the Corporation and control over appointments and removals) demonstrates that the Corporation carries out functions entrusted by the Central Government and acts under its direction, satisfying the function entrusted by the Government requirement. Applying these facts to the definition in Notification No.11/2017 and Notification No.12/2017 as amended by Notification No.31/2017 and No.32/2017, the Authority concluded that the applicant meets all limbs of the definition and therefore is covered by the notifications. [Paras 4]

Damodar Valley Corporation is covered under the definition of "Government Entity" in the cited notifications (as amended).

Final Conclusion: The Authority rules that Damodar Valley Corporation qualifies as a "Government Entity" for the purposes of Notification No.11/2017-Central Tax (Rate) and Notification No.12/2017-Central Tax (Rate), as amended, and the Ruling is valid subject to the provisions of Section 103 and unless declared void under Section 104(1) of the GST Act.

Anticipatory bail - undertaking to join investigation - advance notice before coercive action under Section 69 of the Central Goods and Services Tax Act, 2017 - coercive measures in GST investigation - look out circular (LOC) and facilitation to return

Anticipatory bail - undertaking to join investigation - Anticipatory bail application disposed of subject to the petitioner giving an undertaking to appear before the respondent authority and join the investigation within the time permitted. - HELD THAT: - The Court recorded the petitioner's advance undertaking to return to India and join the investigation and took that undertaking on record. In view of the undertaking and the difficulties occasioned by the pandemic and flight restrictions, the Court permitted a short period (two weeks as prayed) to enable the petitioner to comply. The bail application was disposed of on these terms, thereby conditioning protection upon the petitioner's appearance and joining of the investigation as undertaken.

Bail application disposed of on terms that the petitioner shall appear before the respondent authority and join the investigation in accordance with the undertaking.

Advance notice before coercive action under Section 69 of the Central Goods and Services Tax Act, 2017 - coercive measures in GST investigation - Requirement of prior notice to the petitioner before taking coercive measures under Section 69 of the Central Goods and Services Tax Act, 2017. - HELD THAT: - The Court directed that, subject to the petitioner appearing and joining the investigation, if the respondent authority decides to proceed under Section 69 and take coercive measures, it must serve a seven day advance notice on the petitioner before initiating such measures. This condition was imposed to afford the petitioner a reasonable opportunity to respond after complying with the undertaking to join the investigation.

If the respondent authority decides to take coercive measures under Section 69, it shall provide the petitioner seven days' advance notice, subject to the petitioner first appearing and joining the investigation.

Look out circular (LOC) and facilitation to return - Direction to the respondent authority to take steps regarding the Look Out Circular so as to enable the petitioner to return to India and join the investigation. - HELD THAT: - The Court directed the respondent authority to take appropriate steps in relation to the LOC opened against the petitioner so that the petitioner may come back to India and join the investigation as undertaken. The direction is incidental to the disposal of the anticipatory bail application and intended to facilitate the petitioner's compliance with the undertaking.

Respondent authority to take appropriate steps regarding the LOC to enable the petitioner's return and participation in the investigation.

Final Conclusion: The anticipatory bail petition was disposed of on the petitioner's recorded undertaking to return and join the investigation; subject to that appearance, the respondent may decide on proceedings under Section 69 but must give seven days' advance notice before taking coercive measures, and must take steps to address the LOC to permit the petitioner's return.

Modification of court order - recording of appearance - affidavit as proof of presence

Modification of court order - recording of appearance - affidavit as proof of presence - Order dated 28.04.2021 modified to record the presence of counsel for respondent no.1. - HELD THAT: - The application filed by counsel for respondent no.1 sought modification of the earlier order on the ground that her presence at the hearing on 28.04.2021 was not recorded. The application was supported by an affidavit sworn by the counsel and the assertion of presence was corroborated by the Senior Standing Counsel for the other respondents. There was no representation for the petitioners. The Court found no reason to disbelieve the sworn statement and the corroborating assertion and therefore proceeded to limit the modification to reflecting the counsel's presence. All other parts of the earlier order were left intact. [Paras 5]

Application allowed to the limited extent of modifying the order dated 28.04.2021 to record the presence of Ms. Anju Gupta; remaining portions of the order unchanged.

Final Conclusion: The application is disposed of by modifying the order dated 28.04.2021 to record the appearance of the counsel for respondent no.1; the remainder of the order remains unaltered.

Summary order. Notice issued; matter listed for further consideration on 04.08.2021; notice to certain respondents directed to be issued via all permissible modes.

CENVAT credit transition to GST - TRAN-1 Form filing period directory not mandatory - relief for technical glitches in GST portal - vested right to accumulated CENVAT credit - adjustment of pre-deposit from accumulated CENVAT credit - acceptance of manual TRAN-1 after cut-off for verification

CENVAT credit transition to GST - TRAN-1 Form filing period directory not mandatory - relief for technical glitches in GST portal - acceptance of manual TRAN-1 after cut-off for verification - Direction to permit filing of TRAN-1 Form after the statutory cut-off and processing of the claim for accumulated CENVAT credit. - HELD THAT: - The Court held that in the facts of this case - where accumulated CENVAT credit was allowed by adjudicating orders rendered after the appointed date for GST and where there were systemic technical glitches in the GST portal - the petitioner should not be deprived of the right to have the credit claim examined. Applying earlier decisions of this Court including Brand Equity Treaties Limited , Bhargava Motors , Blue Bird Pure Pvt. Ltd. , and Krish Automotors Private Limited , the Court treated the time prescribed under the relevant Rule for filing TRAN-1 as directory and observed that delay attributable to portal failure or the subsequent grant of credit could not defeat the vested right. In consequence the respondents were directed to either reopen the electronic portal to enable filing or to accept a manually filed TRAN-1 Form and thereafter process the claim in accordance with law. The Court's order is remedial and limited to enabling filing and verification rather than granting substantive credit itself. [Paras 7, 8, 9]

Respondents to enable electronic filing or accept manual TRAN-1 on or before 30th June, 2021 and thereafter process the claim in accordance with law.

Vested right to accumulated CENVAT credit - TRAN-1 Form filing period directory not mandatory - Whether the petitioner lost its vested right to accumulated CENVAT credit for failure to file TRAN-1 within the prescribed period. - HELD THAT: - The Court found that the petitioner did not lose its vested right to the accumulated CENVAT credit. The determinative reasoning was that the credit was allowed by authorities by orders issued after the GST appointed date and, coupled with portal failures and extensions granted by the administration, the petitioner could not have reasonably been expected to complete the TRAN-1 process within the original timeframe. The Court relied on its prior rulings treating the prescription under Rule 117 as directory and refused to permit the mechanical application of the cut-off to extinguish substantive rights where delay was not attributable to the taxpayer. [Paras 7, 8]

The petitioner's vested right to the accumulated CENVAT credit is preserved; delay in filing TRAN-1 will not ipso facto extinguish that right in the circumstances of this case.

Final Conclusion: Petition allowed: respondents directed to permit the petitioner to file TRAN-1 (electronically by reopening the portal or manually) on or before 30th June, 2021 and to process the claim for accumulated CENVAT credit in accordance with law; the Court held that delay caused by portal glitches and the post-appointed-date grant of credit did not extinguish the petitioner's vested right and that the TRAN-1 filing timeline is to be regarded as directory in the circumstances.

Summary order. The Court granted further time to the learned ASG to conclude arguments; directed that suggestions made by counsels (including the appointed amici) be sent to the concerned authorities - those relating to the Central Goods and Services Tax Act, 2017 to the GST Council and CBIC, and those relating to the Income tax Act, 1961 to the CBDT; and listed the captioned matters on 01.06.2021.

Cancellation of registration for continuous non-filing of returns - deregistration after non-filing for six months - no legal provision for filing manual GSTR-3B returns - assessment under Section 62 for non-filing - interim stay of cancellation of registration where outstanding tax liability remains unsatisfied

No legal provision for filing manual GSTR-3B returns - interim stay of cancellation of registration where outstanding tax liability remains unsatisfied - Validity of the interim order permitting the petitioner to file manual GSTR-3B returns and staying the cancellation of registration. - HELD THAT: - The High Court held that GST law contains no mechanism to accept manual GSTR-3B returns and that permitting manual filing would unsettle the statutory scheme; accordingly, the interim direction of the Single Judge allowing manual filing was unsustainable. The Court further observed that an interim order enabling continuation of business as a registered dealer could not be justified where registration had been cancelled for prolonged non-filing and substantial tax liabilities remained outstanding, and that such interim relief should not have been granted in the peculiar facts of the case. For these reasons the interim stay of the cancellation and the permission to file manual returns were set aside, while directing expeditious final disposal on merits. [Paras 12, 15, 16]

Interim direction permitting manual filing of returns and the stay of cancellation was set aside; matter remitted for final hearing without being influenced by the interim order.

Cancellation of registration for continuous non-filing of returns - deregistration after non-filing for six months - assessment under Section 62 for non-filing - Whether the cancellation of the assessee's registration for non-filing of returns for the prescribed continuous period and related assessments could be stayed by interim order. - HELD THAT: - The Court noted that the assessee had not filed GSTR-3B returns since 2018 and that cancellation had been effected after non-filing for the statutory period. The registration was cancelled following notices and assessment proceedings under the statutory scheme for non-filing. Given the admitted prolonged non-filing, the statutory rule that a person who fails to file returns for a continuous period of six months is liable to be deregistered was held to weigh against granting interim protection. Accordingly, in view of the admitted non-compliance and the prima facie large outstanding liability, the interim stay of cancellation was inappropriate and therefore set aside; the Single Judge was directed to decide the writ petition on merits expeditiously. [Paras 13, 14, 16]

Interim stay of cancellation of registration was set aside and the writ petition was remitted for final adjudication on merits.

Final Conclusion: The High Court allowed the writ appeal, set aside the Single Judge's interim order that stayed the cancellation and permitted manual filing of returns, and remitted the matter for expeditious final disposal on merits, observing that manual filing is not provided under the GST scheme and that interim relief was inappropriate given prolonged non-filing and substantial outstanding liabilities.

Submission of Form TRAN-1 after expiry - extension of time to file TRAN-1 - power to grant time for compliance

Submission of Form TRAN-1 after expiry - extension of time to file TRAN-1 - Entitlement to file Form TRAN-1 or revised Form TRAN-1 after the prescribed expiry by seeking judicially granted extension of time. - HELD THAT: - The Division Bench of this Court had earlier adjudicated the same controversy in WA No.18/2020 and connected matters and granted a limited period of thirty days to submit TRAN-1 returns. In view of that binding decision, the present writ appeal was disposed of by applying the same relief. The court granted respondent No.1 an additional thirty days from the date of the order to submit the TRAN-1 returns, thereby allowing filing after the original expiry by reason of the extension ordered by the court. [Paras 2, 3]

The appeal is disposed by granting respondent No.1 thirty days' extension to submit the TRAN-1 returns in light of the Division Bench's earlier order.

Final Conclusion: The writ appeal is disposed of by extending time for filing TRAN-1; respondent No.1 is granted thirty days from the date of the order to submit the TRAN-1 returns in terms of the Division Bench's earlier decision.

Principle of natural justice - refund of unutilised input tax credit on account of inverted duty structure - definition of Net ITC in Rule 89(5) - challenge to vires of Rule 89(5) (ultra vires contention) - power to make rules and retrospective effect under Section 164 - strict interpretation of exemption/refund provisions

Principle of natural justice - Whether the adjudicating authority complied with the principle of natural justice in rejecting the refund application. - HELD THAT: - The adjudicating authority issued a show cause notice in FORM RFD-08, provided an opportunity for personal hearing and directed the appellant to file a reply. The appellant contacted the department seeking deferment and filed a request for adjournment but did not appear on the scheduled date; the authority proceeded to pass the order after the time available to the appellant to file a reply had expired. All submissions made by the appellant have been taken up at length in the appeal and the record shows that sufficient time and opportunity were afforded to file a reply and to appear. On these facts the adjudicating authority is found to have furnished the opportunity contemplated by the rules and the principle of natural justice is held to have been observed. [Paras 7]

Principle of natural justice was complied with and the contention of its breach is rejected.

Refund of unutilised input tax credit on account of inverted duty structure - definition of Net ITC in Rule 89(5) - challenge to vires of Rule 89(5) (ultra vires contention) - power to make rules and retrospective effect under Section 164 - strict interpretation of exemption/refund provisions - Whether the refund claim for June, 2019 is admissible, and whether Rule 89(5) (as amended) is contrary to Section 54(3)(ii) of the CGST Act. - HELD THAT: - The claim was made under the proviso to Section 54(3)(ii) for accumulation on account of inverted duty structure. Rule 89(5), as amended by Notification No. 26/2018, defines Net ITC to exclude certain credits (thereby excluding input services from Net ITC) and prescribes the formula for refund. The Central Government possesses rule making power including retrospective effect under Section 164(3), and the amendment to Rule 89(5) was effected under that power. The Tribunal/bench relied on the reasoning in M/s. Tvl. Transtonnelstroy Afcons v. Union of India (Madras High Court) which upheld that Section 54(3)(ii) and the amended Rule 89(5) are intra vires and that exclusion of input services from the Net ITC for the purpose of refund is a valid classification. Refund provisions being analogous to exemptions require strict construction. The appellant also failed to produce segregated documents to substantiate a claim that input goods (as distinct from input services) formed the basis of the accumulated credit despite opportunities to do so. Applying the aforesaid legal principles and facts, the adjudicating authority's conclusion that input services cannot be included in Net ITC for computing the refund and consequent rejection of the claim is sustained. [Paras 8, 10, 11, 13, 14]

Rule 89(5) as amended is intra vires Section 54(3)(ii); input services are not includible in Net ITC for refund computation and the refund claim for June, 2019 is inadmissible and rightly rejected.

Final Conclusion: The appeal is dismissed. The adjudicating authority complied with principles of natural justice, Rule 89(5) (as amended) is held intra vires Section 54(3)(ii), input services are not includible in Net ITC for refund on account of inverted duty structure, and the rejection of the refund claim for June, 2019 is upheld.

Nature of payment - mistaken payment of tax versus deposit - limitation under Section 54 of the CGST Act, 2017 (refund within two years from the relevant date) - relevant date for refund - date of payment of tax - refund under Section 77 of the CGST Act read with Section 19 of the IGST Act - procedure for refund - Rule 89 of the CGST Rules, 2017 - service and opportunity to be heard - communication through common GST portal / principle of natural justice

Nature of payment - mistaken payment of tax versus deposit - IGST as tax - Excess IGST paid by the appellant is a payment of tax and not a deposit or pre-deposit. - HELD THAT: - The appellant had discharged the liabilities for September and October 2017 by debiting the cash/credit ledger and filing GSTR-3B showing IGST liability; the payments were therefore applied against tax heads. The ledger amounts were utilised to meet tax liabilities and the excess amounts were debited against IGST head, which is a tax under the IGST Act. On this factual and legal basis, the excess sums cannot be treated as a mere deposit/pre-deposit but constitute tax paid, and the appellant's contention that the sums are refundable deposits not attracting limitation is not supported by the statutory scheme. [Paras 6]

The disputed excess amounts are tax paid (IGST) and not deposits; they are not exempt from the limitation provisions by being labelled 'deposit'.

Limitation under Section 54 of the CGST Act, 2017 (refund within two years from the relevant date) - relevant date for refund - date of payment of tax - procedure for refund - Rule 89 of the CGST Rules, 2017 - refund under Section 77 of the CGST Act read with Section 19 of the IGST Act - The refund applications filed on 11-2-2020 for the tax periods September 2017 and October 2017 are time-barred under Section 54 of the CGST Act, 2017. - HELD THAT: - Section 54 requires refund claims to be made within two years from the relevant date, which, in cases not otherwise specified, is the date of payment of tax. The appellant filed refund applications on 11-2-2020; the claims for September and October 2017 thus fell beyond the two-year period and were liable to be rejected as time-barred. The appellant's alternate plea that the claims should be governed by Section 19 of the IGST Act read with Section 77 of the CGST Act and are not time barred was rejected: refunds governed by Section 77/Section 19 must still follow the refund procedure in Section 54 and Rule 89, and the limitation prescribed therein applies. The appellant also filed the refund in the category of excess payment rather than the category contemplated for supplies treated as inter-State under Rule 89(2)(j). [Paras 7]

The refund claims are barred by the two year limitation under Section 54 and therefore liable to be rejected as time barred.

Service and opportunity to be heard - communication through common GST portal / principle of natural justice - The adjudicating authority complied with principles of natural justice by issuing the show cause notice and communicating the order through the common GST portal; there was no failure of service or denial of hearing. - HELD THAT: - The record shows issuance of show cause notices in Form GST RFD 08, the appellant's reply in Form GST RFD 09, and that the adjudicating authority made comments on the common portal which were reflected on the taxpayer's portal. The jurisdictional Assistant Commissioner supplied a screenshot and confirmed communication; the appellant was also granted a personal hearing. On these facts, there was no breach of natural justice in respect of communication of the show cause notice or the rejection order. [Paras 8]

No infirmity in service or opportunity to be heard; principles of natural justice were observed.

Final Conclusion: The Commissioner (Appeals) upheld the adjudicating authority's rejection of the two refund claims as time barred under Section 54 of the CGST Act, 2017, finding the excess IGST to be tax (not deposit) and that there was no failure of service or denial of hearing; both appeals were dismissed.

Inverted duty structure - refund of unutilised input tax credit - Net ITC - validity of Rule 89(5) of the CGST Rules - scope of Section 54(3) of the CGST Act - ultra vires challenge to delegated legislation - rule-making power and retrospective effect under Section 164 - strict construction of exemption/refund provisions

Validity of Rule 89(5) of the CGST Rules - scope of Section 54(3) of the CGST Act - ultra vires challenge to delegated legislation - rule-making power and retrospective effect under Section 164 - Amendment to Rule 89(5) by Notification No. 26/2018-C.T., dated 13-6-2018 is intra vires Section 54(3) of the CGST Act and may be given retrospective effect. - HELD THAT: - The adjudicating authority examined the statutory scheme of Section 54(3) and the amendment to Rule 89(5) effected by Notification No. 26/2018-C.T., dated 13-6-2018. Relying on the rule-making power under Section 164(3), which permits retrospective rules not earlier than the commencement of the Act, and on judicial precedent (notably the reasoning in the batch decision of the Madras High Court in Tvl. Transtonnelstroy Afcons), the authority held that the substituted Rule 89(5) falls within the legislative scheme and does not transgress Section 54(3). The courtly reasoning accepted that Section 54(3)(ii) legitimately restricts refund entitlement to unutilised credit that accumulates on account of inputs (goods) and that the rule is a valid classification; consequently the ultra vires challenge to the rule was repelled. [Paras 12, 16]

Amendment to Rule 89(5) is intra vires Section 54(3) and validly applied, including with retrospective effect as permitted by Section 164.

Net ITC - inverted duty structure - refund of unutilised input tax credit - strict construction of exemption/refund provisions - The expression "Net ITC" in amended Rule 89(5) excludes input services and capital goods for the purpose of computing refund under the inverted duty structure formula, and that exclusion is consistent with Section 54(3). - HELD THAT: - The authority construed the amended definition of "Net ITC" in Rule 89(5) as limited to input tax credit on inputs (goods) during the relevant period, excluding input services and capital goods for the formulaic computation of refund under inverted duty structure. The decision noted precedent reasoning that refund provisions are to be construed strictly (analogy to exemption jurisprudence) and endorsed the view that Section 54(3)(ii) permits a source-based restriction limiting refund to credit accumulated by reason of inputs (goods) being taxed at higher rates. Consequently, Rule 89(5)'s definition and application were held to accord with the Act rather than being an impermissible curtailment. [Paras 17, 18]

For the purposes of Rule 89(5) and refund under inverted duty structure, "Net ITC" does not include input services or capital goods; that interpretation is upheld.

Refund of unutilised input tax credit - inverted duty structure - The appellant's refund claims were rightly rejected because the appellant failed to produce documents establishing ITC on inputs (goods) as distinct from input services/capital goods, and therefore the impugned orders are upheld. - HELD THAT: - After addressing the legal validity of the amended rule and its construction, the authority applied the law to the facts: the appellant's refund claims included ITC attributable to input services and capital goods, which are excluded from "Net ITC" under Rule 89(5). Moreover, the appellant did not produce documentary evidence showing ITC on inputs (goods) sufficient to satisfy the formulaic requirement despite opportunities to do so. On both legal and evidentiary grounds the adjudicating authority's rejection of the refund claims was found to be without infirmity and was therefore maintained. [Paras 7, 20]

Refund claims rejected; impugned orders upheld for want of entitlement under amended Rule 89(5) and for failure to substantiate inputs-based ITC.

Final Conclusion: All nine appeals are dismissed and the impugned orders rejecting the appellant's refund claims are upheld: the amended Rule 89(5) is validly made and construed to exclude input services and capital goods from "Net ITC" for inverted duty structure refunds, and on the facts the appellant failed to establish entitlement under that rule.

Seizure and confiscation under Section 67(2) and Section 130 of the CGST Act - validity of search and panchnama proceedings - penalty under Section 122(1)(xvi) and Section 122(1)(xviii) - penalty under Section 122(3) and Section 125 - declaration of additional place of business and Rule 11 of CGST Rules - provisional release and redemption fine in lieu of confiscation

Seizure and confiscation under Section 67(2) and Section 130 of the CGST Act - declaration of additional place of business and Rule 11 of CGST Rules - provisional release and redemption fine in lieu of confiscation - Whether the goods seized at the unregistered godown were liable to confiscation and whether the appellants' plea of bona fide non-registration of the additional place of business succeeds. - HELD THAT: - The appellate authority found that during search the proprietor admitted that wholesale activities were carried out from the godown which was not shown as an additional place of business in the registration certificate and that the godown was added only after the search and seizure. The authority noted that no documentary evidence supporting a prior application to register the godown was produced and that the statements recorded (18-9-2018 and 7-1-2019) corroborated the panchnama. On these facts the officer held that the appellant contravened the statutory obligation to declare places of business and thus the goods found at the godown were liable for confiscation under Section 130 read with Rule 139; a redemption fine in lieu of confiscation and conditions for en-cashment of security on failure to produce provisionally released goods were maintained. The appellate authority rejected the contention that non-declaration was a mere technical lapse, treating the subsequent amendment as indicative of mala fide intent to evade GST obligations. [Paras 12, 13, 14, 17]

Seizure and confiscation under Section 130 read with Section 67(2) and Rule 139 upheld; plea of bona fide technical non-registration rejected; option of redemption fine in lieu of confiscation sustained.

Penalty under Section 122(1)(xvi) and Section 122(1)(xviii) - penalty under Section 125 - Whether penalty under Section 122(1)(xvi) and Section 122(1)(xviii) and under Section 125 of the CGST Act is leviable on M/s. Taj Iron Store. - HELD THAT: - The authority found that the appellants failed to comply with statutory requirements to declare the additional place of business and maintain accounts as mandated by Sections 22, 35 and relevant rules, and that goods were stored at an unregistered premise with concomitant accounting lapses. On this basis, imposition of penalties under Section 122(1)(xvi) and Section 122(1)(xviii) and under Section 125 was sustained. The appellate order records that the appellants' documentary and other submissions did not rebut the finding of contravention, and accordingly the penalties confirmed by the adjudicating authority were not interfered with. [Paras 14, 17]

Penalties under Section 122(1)(xvi), Section 122(1)(xviii) and Section 125 imposed on the firm upheld.

Penalty under Section 122(3) and Section 125 - Whether penalty under Section 122(3)(a) and Section 125 is leviable on the proprietor for aiding, abetting or dealing with goods liable to confiscation. - HELD THAT: - The authority found that the proprietor supervised day-to-day affairs, accepted the panchnama and statements, and knowingly dealt with goods stored at the unregistered godown. On these findings the proprietor was held liable under Section 122(3)(a) and Section 125. The appellate authority observed that the proprietor's retraction was recanted and that the evidence supported his involvement and knowledge of the unrecorded goods, justifying imposition of the penalties confirmed by the adjudicating authority. [Paras 15, 17]

Penalty under Section 122(3)(a) and Section 125 imposed on the proprietor upheld.

Validity of search and panchnama proceedings - Whether the procedural objections to the panchnama and search (including alleged non-compliance with provisions analogous to Section 100 CrPC and non-reliance on seized documents) vitiate the proceedings. - HELD THAT: - The appellate authority examined the recorded statements, the panchnama signed by the proprietor, and the course of proceedings and concluded that the panchnama and statements were lawful. The authority observed that the proprietor had accepted the contents of the panchnama and later reaffirmed his statements, and therefore the procedural pleas regarding offering of personal search by panchas or officers and non-reliance on certain seized documents were not accepted as sufficient to nullify the proceedings. The appellate authority treated these contentions as afterthoughts and found no infirmity in the drawal of panchnama or recording of statements. [Paras 13]

Procedural objections to the panchnama and search were rejected and panchnama proceedings held valid.

Final Conclusion: The appeals are dismissed. The appellate authority upheld the confiscation of goods found at the unregistered godown and the option of redemption fine, rejected the appellants' claim of a mere technical lapse in declaring an additional place of business, sustained penalties on the firm under Sections 122(1)(xvi), 122(1)(xviii) and 125, and sustained penalties on the proprietor under Sections 122(3)(a) and 125; procedural challenges to the panchnama and search were also rejected.

Reopening of assessment under Section 147/148 of the Income Tax Act - reasons recorded - disposal of objections by speaking order - application of mind - change of opinion - remand for fresh speaking order

Disposal of objections by speaking order - application of mind - reasons recorded - remand for fresh speaking order - Validity of the order disposing of the assessee's objections to the reasons recorded for reopening the assessment and requirement for a speaking order reflecting application of mind - HELD THAT: - The Court examined whether the Assessing Officer properly dealt with the objections filed by the assessee to the reasons recorded for reopening the assessment. Applying the principles laid down by the Supreme Court in GKN Driveshafts and the guidance in SABH Infrastructure Ltd, the Court observed that the exercise of considering the assessee's objections is quasi-judicial and must reflect a proper application of mind. The impugned disposal (para-4 of the AO's order) did not deal with the specific objections raised by the assessee and was held to be mechanical and non-speaking. Because the AO failed to address the objections with cogent reasons, the order disposing of the objections violated the requirement that objections to reopening be considered meaningfully. The Court therefore set aside the order disposing of objections and remitted the matter to the AO with directions to consider the objections and pass a fresh, speaking order in accordance with law. The Court expressly declined to express any opinion on the merits of the reassessment and directed that the AO's reconsideration be completed within six weeks; if the fresh order is adverse, the assessee shall have four weeks to seek appropriate remedies. [Paras 14, 15, 16, 17, 18]

Order disposing of the objections dated 30.08.2019 is set aside and the matter is remitted to the Assessing Officer to consider the assessee's objections and pass a fresh speaking order within six weeks; no opinion expressed on merits and prescribed time for aggrieved assessee to challenge any adverse order.

Final Conclusion: Writ petition allowed in part; the order disposing of objections is quashed and the matter is remitted to the Assessing Officer to reconsider and pass a fresh speaking order within six weeks, without the High Court expressing any view on the merits; procedural directions for challenge if order is adverse are given.

Reopening of assessment under Section 147 - reasons recorded - obligation to furnish reasons and dispose objections by speaking order - requirement of application of mind - mechanical disposal of objections - change of opinion

Reasons recorded - obligation to furnish reasons and dispose objections by speaking order - requirement of application of mind - mechanical disposal of objections - Whether the Assessing Officer properly dealt with and disposed of the objections filed against the reasons recorded for reopening the assessment. - HELD THAT: - The Court found that the Assessing Officer did not properly deal with the objections raised by the assessee against the reasons recorded for issuing notice under Section 148/147. The order disposing the objections (para-3 of that order) did not reflect a proper application of mind nor did it assign cogent reasons dealing with the specific objections raised by the assessee. Relying on the principle that the AO must furnish reasons and, upon objections, dispose them by a speaking order (as laid down in the Supreme Court and accepted authority cited in the judgment), the Court concluded that the AO's disposal was mechanical and devoid of necessary judicial application of mind. The Court emphasised that while disposal of objections is not a statutory requirement, it is guided by the established judicial dictum requiring reasoned consideration; failure to meet this standard vitiates the disposal order. The Court expressly refrained from expressing any opinion on the merits of the reopening itself and limited its examination to the defect in the disposal of objections. [Paras 12, 13, 14]

The order disposing of the objections is set aside and the matter is remitted to the Assessing Officer for fresh consideration.

Reopening of assessment under Section 147 - reasons recorded - change of opinion - Procedure to be followed on remand and scope of the Court's interference with merits of reopening. - HELD THAT: - The Court directed that the Assessing Officer shall take into consideration the objections raised by the assessee and pass a fresh speaking order in accordance with law. The Court limited its intervention to quashing the defective disposal of objections and remitted the matter for fresh adjudication; it did not adjudicate the substantive merits of the reopening or express any view thereon. The Court also provided a timeline for compliance and preserved the assessee's right to challenge any adverse order resulting from the fresh decision, granting a minimum period to seek appropriate remedies. [Paras 15, 16, 17]

Matter remitted to the Assessing Officer to pass a fresh speaking order within six weeks; no opinion expressed on merits and appellate remedy preserved with an interval for the assessee if the fresh order is adverse.

Final Conclusion: Writ petition succeeds in part: the order disposing of objections to the reasons recorded for reopening Assessment Year 2012-13 is set aside and the matter is remitted to the Assessing Officer to decide the objections afresh by a reasoned speaking order within six weeks; the Court expresses no opinion on the merits of the reopening and preserves the assessee's right to challenge any adverse fresh decision.

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - requirement of concealment or furnishing of inaccurate particulars to attract penalty - mere rejection of explanation does not amount to furnishing inaccurate particulars - applicability of precedent on scope of section 271(1)(c)

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - mere rejection of explanation does not amount to furnishing inaccurate particulars - Deletion of penalty under section 271(1)(c) imposed for assessment year 2011-12 - HELD THAT: - The assessment resulted in additions for unexplained cash deposits and bank interest. The assessee had explained that the cash deposits represented withdrawals through ATMs; the Assessing Officer and the CIT(A) rejected that explanation on the ground that documentary proof of ATM withdrawals was not produced. The Tribunal held that there was no finding that the assessee had furnished false or inaccurate particulars in the return or that there was concealment of particulars of income. Relying on the settled principle that the penalty provision requires concealment or furnishing of inaccurate particulars, and that mere non-acceptance of a claim or rejection of an explanation does not by itself attract the penalty, the Tribunal concluded that the conditions for invoking section 271(1)(c) were not satisfied. Therefore the penalty could not be sustained. [Paras 8, 9, 10]

Penalty imposed under section 271(1)(c) deleted and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal for assessment year 2011-12 and directed deletion of the penalty imposed under section 271(1)(c), holding that mere rejection of the assessee's explanation and additions in assessment did not establish concealment or furnishing of inaccurate particulars of income.

Arm's Length Price - Specified Domestic Transaction - Comparable Uncontrolled Price method - Transactional Net Margin Method - Other method under rule 10AB - Comparability (functional and geographic) - Aggregation of closely linked transactions - Shareholder services vs commercial services - Benefit test for services - Section 40A(2) reasonableness not applicable to Chapter X

Specified Domestic Transaction - Shareholder services vs commercial services - Benefit test for services - Whether the assessee availed services from the related enterprise that require payment of consideration - HELD THAT: - The Tribunal found on the basis of documentary material in the paper book that TACO provided specific, detailed and exclusive services to the assessee under the Administrative Service Agreement across marketing, group policies/databases, human resources and training, finance, and legal and taxation advisory. The enquiry properly stops at establishing bona fide availing of services for business purposes; a separate requirement to show ensuing pecuniary benefit is not warranted. The services produced effects on the assessee's operations and were not restricted to shareholder/stewardship activities; therefore they fall outside the ambit of shareholder services and required payment as quid pro quo in an uncontrolled situation. [Paras 4]

Assessee did avail services requiring payment; the TPO's denial based on absence of benefit or characterization as shareholder services is rejected.

Comparable Uncontrolled Price method - Comparability (functional and geographic) - Whether the CUP method as applied by the assessee correctly determined the ALP of the service charges - HELD THAT: - Under rule 10B(2) comparability must be judged having regard to specific characteristics of services and functions performed, and conditions prevailing in the market including geographic location. The assessee selected 13 comparable agreements from foreign databases which related to marketing services only, whereas the assessee received a bundled set of administrative and professional services in India. The CUP method demands a high level of functional and product similarity and comparables operating in the same market; the chosen comparables lacked functional similarity and were located outside India. Accordingly the authorities below were justified in rejecting the CUP benchmarking as applied by the assessee. [Paras 6]

The CUP method, as applied by the assessee with the selected foreign marketing-only comparables, is not acceptable.

Other method under rule 10AB - Arm's Length Price - Section 40A(2) reasonableness not applicable to Chapter X - Whether the TPO correctly applied the 'other method' under rule 10AB to determine Nil ALP and whether transactions between associated enterprises can be used as comparables - HELD THAT: - Rule 10AB contemplates consideration of prices actually charged or which would have been charged in uncontrolled transactions with or between non-associated enterprises. While the TPO's construction that the 'other method' may consider a hypothetical price is permissible, the TPO erred in concluding Nil ALP on the basis that no services requiring payment were availed (a conclusion already reversed). Further, the assessee's submission to accept ALP on the basis of 'reasonableness' derived from prior section 40A(2) decisions is misplaced: Chapter X requires adherence to prescribed transfer pricing methods and comparables must be uncontrolled/non-associated transactions. Transactions between associated enterprises (controlled transactions) cannot be used for benchmarking under rule 10AB. Decisions under section 40A(2) do not relieve the assessee from demonstrating ALP under transfer pricing rules. [Paras 7]

TPO's Nil ALP determination based on absence of services is unsustainable; comparables must be non-associated/uncontrolled and reasonableness under section 40A(2) is not a substitute for ALP under Chapter X.

Transactional Net Margin Method - Aggregation of closely linked transactions - Whether the assessee could aggregate the administrative service charges with other transactions and apply TNMM on an aggregate basis - HELD THAT: - The Rules and authoritative decisions require that aggregation is permissible only where transactions are 'closely linked'-for example, package deals, take-all arrangements, or inextricably linked components. Diverse and independent transactions cannot be aggregated merely because they contribute to the manufacture or sale of final products. The administrative intra-group services in question are of a different nature and are not inextricably linked with the other transactions the assessee sought to aggregate; therefore aggregation for TNMM benchmarking was not permissible and the TPO was justified in rejecting the aggregation approach. [Paras 8]

Aggregation of the administrative service charges with other transactions for TNMM is not permissible because the transactions are not closely linked.

Arm's Length Price - Other method under rule 10AB - Comparable Uncontrolled Price method - Transactional Net Margin Method - Whether the Tribunal should itself determine the ALP or remit the matter for fresh determination - HELD THAT: - The Tribunal is an adjudicatory forum and not an original fact-finding authority empowered to undertake ALP determination afresh in place of the AO/TPO. Given that the CUP as applied by the assessee, the TPO's application of the 'other method', and the aggregation under TNMM were each flawed for reasons identified, the appropriate course is to set aside the impugned order and remit the matter to the AO/TPO for fresh determination of ALP in accordance with law after affording the assessee opportunity of hearing. In the fresh proceedings the AO/TPO may choose any of the prescribed methods as most appropriate provided the flaws in their prior application are remedied; the assessee may lead fresh evidence. [Paras 9]

Matter remitted to AO/TPO for fresh re-determination of ALP after opportunity of hearing; Tribunal declines to determine ALP itself.

Final Conclusion: The Tribunal held that the assessee did avail payable services from TACO and rejected the TPO's characterisation as shareholder services and the benefit test; it upheld the authorities' rejection of the CUP comparables (for lack of functional and geographic comparability), disapproved the use of associated enterprise transactions or section 40A(2) reasonableness as benchmarks under rule 10AB, and refused aggregation for TNMM; the impugned addition was set aside and the matter remitted to the AO/TPO for fresh ALP determination in accordance with law, after affording the assessee an opportunity of hearing. Appeal allowed for statistical purposes.

Revision under section 263 - jurisdictional interference where assessing officer has examined the issue - no interference where assessing officer has taken a bona fide view - treatment of bogus purchases - entire purchase versus profit element

Revision under section 263 - no interference where assessing officer has taken a bona fide view - Validity of the Principal CIT's exercise of revisional jurisdiction under section 263 in setting aside the assessment where the Assessing Officer had examined the allegation of bogus purchases and made an addition. - HELD THAT: - The Tribunal found that the Assessing Officer, in the assessment order dated 07/12/2016, had considered the alleged bogus purchases, verified evidence and made a conscious decision to restrict the addition to 2.28% of the alleged bogus purchases. The Principal CIT invoked section 263 on the ground that a higher addition (12.5%) ought to have been made, relying on certain judicial authorities. The Tribunal held that where the AO has examined the issue on materials and taken a view, mere disagreement by the revisional authority does not render the AO's order erroneous and prejudicial to the interests of revenue so as to warrant exercise of revisional jurisdiction. The Tribunal relied on precedents establishing that interference under section 263 is impermissible when the AO has taken a specific view after inquiry. The decision of the learned Pr. CIT was also compared with a decision where re-examination was held permissible, but the Tribunal distinguished that authority on facts and noted that the AO here had examined sales, stock and purchases and made a considered estimation of addition. Applying these principles, the Tribunal concluded that the revisional order was not justified and set it aside. [Paras 5, 6, 7]

Order under section 263 setting aside the assessment was unwarranted and is set aside; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, held that the Principal CIT erred in invoking section 263 because the Assessing Officer had examined the issue and taken a bona fide view, and set aside the revisional order dated 29/03/2019.

Application of section 56(2)(vii) of the Income-tax Act to receipt on acquisition of immovable property - characterisation of post litigation payments as compensation for settling claims and not fresh purchase consideration - effect of prior payment, possession, confirmations and power of attorney on ownership for taxability - registration and stamp duty as formalisation of earlier title and not determinative of fresh income chargeable under section 56(2)(vii)(b)

Application of section 56(2)(vii) of the Income-tax Act to receipt on acquisition of immovable property - characterisation of post litigation payments as compensation for settling claims and not fresh purchase consideration - effect of prior payment, possession, confirmations and power of attorney on ownership for taxability - registration and stamp duty as formalisation of earlier title and not determinative of fresh income chargeable under section 56(2)(vii)(b) - Deletion of addition under section 56(2)(vii)(b) in respect of alleged receipt on acquisition of immovable property - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the land was purchased by the assessee's father in 1974 and full consideration had been paid to vendors and original owners at that time. The Original Owners and confirming parties had given confirmations before the Deputy District Collector, transferred possession, and executed powers of attorney in favour of the father, establishing that rights in the property had vested in him and passed to the assessee on his death. Payments made later in FY 2014-15 were held to be compensation to settle litigating claims and not fresh purchase consideration. Registration effected by conveyance in FY 2014-15 and stamp duty charged on prevailing ready reckoner value were treated as formalisation of earlier title due to prior litigation and not as indicia of a new acquisition attracting tax under section 56(2)(vii)(b). On this factual and legal matrix the Tribunal found no justification to interfere with the CIT(A)'s conclusion deleting the addition and therefore decided the issue in favour of the assessee.

Addition of Rs. 2,85,42,477/- under section 56(2)(vii)(b) deleted; issue decided for the assessee.

Formal adjudication - Issue No.3 requires no adjudication - HELD THAT: - The Tribunal recorded that Issue No.3 was formal in nature and did not call for any substantive adjudication or determination.

Issue No.3 left unadjudicated as formal.

Final Conclusion: The revenue's appeal is dismissed; the deletion of the addition under section 56(2)(vii)(b) by the CIT(A) is sustained and the assessment order is not restored.

Validity and prosecution of revised return under section 139(5) - Deduction for expenditure incurred by statutory corporations under section 36(1)(xii) - Disallowance of expenditure attributable to exempt income under section 14A and apportionment principle - Applicability and temporal scope of Rule 8D for quantification of disallowance under section 14A - Depreciation treatment of low cost assets and verification of book adjustments - Taxation of income of joint ventures under mercantile system and prevention of double taxation - Allowability of provisions and ascertained vs unascertained liabilities under section 115JB (explanation 1(c)) - Treatment of Productivity Linked Incentive (PLI) - ascertainment and present quantifiability of liability - Capitalisation v. revenue treatment of special (SLP) dunnage - Capital v. revenue nature of quality improvement and unabsorbed construction overheads - Recognition of bonded warehouse income under mercantile accounting and avoidance of double taxation - Admissibility of corporate social responsibility/social obligation expenses prior to Explanation 2 to section 37 - Allowability of interest on delayed indirect tax payments - compensatory v. penal nature - Applicability of book profit MAT provisions to entities not governed by Schedule VI of Companies Act

Validity and prosecution of revised return under section 139(5) - Condensed grounds on validity of revised return and claim for post retirement medical benefit were not pressed and are dismissed as withdrawn. - HELD THAT: - The assessee elected not to press the grounds relating to the validity of the revised return filed on 31/03/2008 and the claim for post retirement medical benefit. The Tribunal accordingly treated those grounds as withdrawn and dismissed them; no adjudication on merits or restoration to the Assessing Officer was undertaken.

Grounds withdrawn and dismissed; no substantive decision on merits.

Deduction for expenditure incurred by statutory corporations under section 36(1)(xii) - Claim for deduction under section 36(1)(xii) dismissed for want of particulars and evidence. - HELD THAT: - Section 36(1)(xii) allows deduction for expenditure (not capital in nature) incurred by entities established under Central/State Acts for objects authorized by the constituting Act. The assessee failed to furnish particulars or evidence identifying specific expenditures qualifying under that provision and had not pressed the claim in earlier years. In the absence of any substantiation, the Tribunal declined to remit the issue to the Assessing Officer and dismissed the ground.

Claim dismissed for lack of details and substantiation; no restoration to AO.

Disallowance of expenditure attributable to exempt income under section 14A and apportionment principle - Applicability and temporal scope of Rule 8D for quantification of disallowance under section 14A - Quantification of disallowance under section 14A remitted to the Assessing Officer for fresh determination; Rule 8D not to be applied retrospectively prior to AY 2008 09. - HELD THAT: - Following the Supreme Court and High Court jurisprudence discussed, the Tribunal recognised that where shares are held as stock in trade or business assets, apportionment of expenses attributable to exempt dividend income is required. For assessment years prior to AY 2008 09, Rule 8D (notified with effect from 24.3.2008) cannot be invoked to compute disallowance; instead a reasonable apportionment must be made. Consequently, the Tribunal restored the issue to the AO for recomputation of the disallowance under section 14A in accordance with law and relevant precedents.

Issue remanded to AO for fresh quantification of disallowance under section 14A without applying Rule 8D for years prior to AY 2008 09.

Depreciation treatment of low cost assets and verification of book adjustments - Claim concerning 100% depreciation on assets costing up to Rs.5,000 remitted to the Assessing Officer for verification. - HELD THAT: - Although the assessee maintained that 100% depreciation on low cost assets was charged in books and thereafter added back with appropriate depreciation claimed under the Act, the AO had disallowed an ad hoc 5% in absence of detailed asset lists. The Tribunal considered the matter to be one of documentary verification and restored the issue to the AO to examine primary bills/vouchers and the computation claimed.

Issue remitted to AO for verification and adjudication after examining documentary evidence.

Taxation of income of joint ventures under mercantile system and prevention of double taxation - Income from joint ventures must be taxed once on mercantile (accrual) basis; matter remitted to AO for verification of audited accounts and to prevent double taxation. - HELD THAT: - The Tribunal held that where the assessee follows the mercantile system, income of joint ventures must be taken on accrual after verification of audited accounts; the same income cannot be taxed again on receipt in subsequent years. As verification was required, the issue was restored to the AO to examine the documentary evidence including audited accounts and determine the correct year of taxation.

Remitted to AO to verify audited accounts and ensure income from joint ventures is taxed once on accrual basis.

Treatment of Productivity Linked Incentive (PLI) - ascertainment and present quantifiability of liability - Addition relating to PLI provision remitted to the Assessing Officer for verification of documentary evidence and quantification; prima facie treated as ascertainable liability but verification required. - HELD THAT: - The assessee produced computation and scheme particulars indicating a formulaic computation of PLI and a per employee liability. The Tribunal noted that the material prima facie indicated a present, quantifiable liability rather than a contingent one, but directed remand for the AO to verify documents, payments and calculations (including reliance on precedents) before concluding.

Issue remitted to AO for verification of evidences and fresh adjudication on whether PLI is an ascertained liability.

Capitalisation v. revenue treatment of special (SLP) dunnage - Tribunal upheld CIT(A)'s deletion of addition - special (SLP) dunnage capitalised and ordinary dunnage treated as revenue expenditure based on differing useful lives. - HELD THAT: - On the facts, the Tribunal accepted the distinction that special SLP dunnage has a longer useful life (capital nature) while ordinary dunnage is single use within a year (revenue nature). Earlier departmental acceptance and consistent treatment weighed in favour of the assessee. Following precedent and the factual finding as to life expectancy, the Tribunal found no perversity in CIT(A)'s approach and dismissed the Revenue's ground.

Addition dismissed; special dunnage capitalised and ordinary dunnage allowable as revenue expenditure.

Capital v. revenue nature of quality improvement and unabsorbed construction overheads - Issues as to quality improvement expenses and unabsorbed engineering/construction overheads remitted to the Assessing Officer for detailed examination and verification of supporting particulars. - HELD THAT: - The Tribunal observed that the heads 'quality improvement' and 'construction monitoring/unabsorbed overheads' comprised various itemised entries whose capital or revenue character required item wise scrutiny. As material and explanations were not adequately considered by lower authorities, the Tribunal restored these issues to the AO to examine the detailed schedules and accounting policy and to decide after affording the assessee opportunity to be heard.

Both issues remitted to AO for fresh adjudication after documentary verification.

Recognition of bonded warehouse income under mercantile accounting and avoidance of double taxation - Assessing Officer's addition of bonded warehouse income on accrual basis confirmed subject to direction that amounts already taxed on cash basis in other years must not be taxed again. - HELD THAT: - The assessee credited bonded warehouse charges on realisation (cash) basis while following mercantile accounting. The Tribunal held that under mercantile system income should be taxed on accrual; it therefore confirmed the AO's addition of accrued bonded income but directed the AO to ensure that any of that income already taxed on receipt in other years is not subjected to double taxation.

Accrual basis addition confirmed; AO to ensure no double taxation in later years.

Allowability of provisions and ascertained vs unascertained liabilities under section 115JB (explanation 1(c)) - Additions to book profit under section 115JB for various provisions remitted to the AO for verification of ascertained nature (actuarial valuations and documentary evidence). - HELD THAT: - The Tribunal noted that some provisions (gratuity, leave encashment) were claimed to be based on actuarial valuations and hence ascertained, while others (PLI, bad debts provision) required factual verification. Since determination of whether a provision is ascertained is fact specific, the Tribunal remitted the matter to the AO to verify actuarial reports and supporting documents before applying Explanation 1(c) to section 115JB.

Issue remitted to AO for verification whether the provisions are ascertained and hence not to be added for book profit computation.

Admissibility of corporate social responsibility/social obligation expenses prior to Explanation 2 to section 37 - Corporate social responsibility/social obligation expenses incurred in the relevant years are allowable; Explanation 2 to section 37 (which disallows CSR expenditure) is prospective from 01/04/2015 and not applicable. - HELD THAT: - The Tribunal accepted that the assessee, a Government owned statutory corporation, incurred social obligation expenditures pursuant to Ministry directions and held that Explanation 2 to section 37, effective from 01/04/2015, cannot be applied retrospectively to disallow such expenses for the years before its coming into force. The deletions by CIT(A) were sustained.

CSR/social obligation expenses allowed for the years under appeal; Explanation 2 not applicable retrospectively.

Allowability of interest on delayed indirect tax payments - compensatory v. penal nature - Question whether interest on delayed service tax liability is compensatory was left for factual verification by the AO; matter remitted to ascertain accounting treatment and nature of payment. - HELD THAT: - Relying on Supreme Court authority holding interest on delayed indirect tax (sales tax) to be compensatory, the Tribunal found that interest on delayed service tax is akin to interest on delayed sales tax and prima facie compensatory. Nonetheless, because the nature of the payment and the assessee's method of accounting (inclusive/exclusive) required factual determination, the Tribunal remitted the issue to the AO for verification and redetermination.

Remitted to AO to determine whether the interest is compensatory (allowable) and to verify accounting treatment.

Applicability of book profit MAT provisions to entities not governed by Schedule VI of Companies Act - Assessee's contention that section 115JB does not apply because it is not a Schedule VI company was rejected; additional legal grounds disallowed. - HELD THAT: - Section 115JB prescribes preparation of profit and loss account in accordance with Parts II and III of Schedule VI. The Tribunal observed that exemptions from Schedule VI require Central Government notification under section 211(3) of the Companies Act; the assessee produced no such notification or demonstrable deviation in accounts. The Tribunal therefore refused to admit the additional ground seeking MAT exemption and dismissed it.

Additional grounds challenging applicability of section 115JB dismissed for want of basis and supporting material.

Final Conclusion: The Tribunal partly allowed and partly dismissed the cross appeals and cross objections. Several factual and quantification issues (including disallowance under section 14A, depreciation on low cost assets, PLI provision, quality improvement expenses, unabsorbed construction overheads, joint venture income, and certain book profit additions under section 115JB) were remitted to the Assessing Officer for fresh adjudication after verification of documentary evidence; certain questions were finally decided (e.g., SLP dunnage treated as capital while ordinary dunnage is revenue; CSR/social obligation expenses allowable for the years in issue; bonded warehouse accruals confirmed subject to no double taxation).

Reopening of assessment for escapement of income - reason to believe standard for reopening based on information from investigation - treatment of unexplained cash credit under Section 68 - proof of identity and creditworthiness of lenders - source of funds and "source of the source" evidence - admissibility and evidentiary value of statements recorded under section 131

Treatment of unexplained cash credit under Section 68 - proof of identity and creditworthiness of lenders - source of funds and "source of the source" evidence - admissibility and evidentiary value of statements recorded under section 131 - Deletion of the addition of Rs. 67 crores made under Section 68 in respect of 0% optionally convertible debentures received from Infotel Technologies Pvt. Ltd. - HELD THAT: - The Tribunal examined the material produced by the assessee: debenture certificates, bank statements of both the assessee and the lender, balance sheets, income-tax returns and assessment orders of the lender and upstream parties, and the statement of the lender's representative produced on summons under section 131 confirming the investment. The Revenue did not undertake independent enquiry to test the veracity of these documents; its adverse inference rested largely on the small paid-up capital of the assessee and losses shown in the books of the upstream investor. The Tribunal held that mere losses of the investor or the lender-to-the-lender do not, without corroborative material, render the investments not genuine. Distinguishing precedents where entry operators or unexplained sources were shown, the Tribunal found the facts and evidentiary matrix here materially different and concluded that the assessee had discharged the initial onus to prove identity and source (including source of the source). In absence of any further enquiry or rebuttal by the Revenue, the addition under Section 68 could not be sustained and was deleted. [Paras 15, 16, 17]

Addition of Rs. 67 crores under Section 68 is deleted; grounds 4 and 5 of the appeal are allowed.

Reopening of assessment for escapement of income - reason to believe standard for reopening based on information from investigation - Reopening of assessment under Section 147 was not adjudicated on merits by the Tribunal in view of deletion of the substantive addition and is left unadjudicated as academic. - HELD THAT: - The learned CIT(A) had upheld the reopening relying on information from the investigation wing and applicable judicial principles. However, because the Tribunal has set aside the substantive addition on merits, the challenges to reopening (grounds 2 and 3) were not decided and remain academic. The Tribunal expressly left these grounds unadjudicated. [Paras 21]

Grounds challenging reopening of assessment are left unadjudicated as academic.

Consequential interest consequences of deleted assessment additions - Chargeability of interest under the provisions dealing with interest for defaults (234A/234B/234C) was dismissed as consequential. - HELD THAT: - Since the primary addition was deleted on merits, consequential claims for interest were dismissed; no separate adjudication of interest was undertaken. [Paras 19]

Claims relating to interest under the relevant provisions are dismissed as consequential.

Prematurity of penalty initiation where primary addition deleted - Penalty proceedings initiated under Section 271(1)(c) were held premature and the ground was dismissed. - HELD THAT: - The Tribunal recorded that initiation of penalty proceedings is premature at this stage in view of the outcome on merits and therefore declined to uphold the penalty initiation. [Paras 20]

Penalty-related ground is dismissed as premature.

Distinguishing precedent on entry operators and fabricated investments - The coordinate-bench decision relied upon by the Revenue (Pee Aar Securities Ltd.) was held distinguishable on facts and not applicable. - HELD THAT: - The Tribunal compared factual matrices and found that unlike the cited precedent-where investors were linked to an entry operator and source of funds remained unexplained-the assessee here produced documentary evidence and the investor's representative to corroborate the transactions. Accordingly, the precedent could not support the addition. [Paras 16]

Decision relied upon by the Revenue is distinguished and not followed.

Final Conclusion: Appeal partly allowed: the addition of Rs. 67 crores made under Section 68 is deleted; consequential interest claims and penalty initiation were dismissed; challenges to reopening of assessment were left unadjudicated as academic.

Tax deduction at source and applicability of CBDT notification - Scope of "commission" under Section 194H - Disallowance under Section 40(a)(ia) - Additional depreciation under Section 32(1)(iia) for power generation - Classification of electrical installations as plant and machinery or furniture and fittings - Determination of market value for deduction under Section 80IA - Computation of book profit for MAT under Section 115JB

Tax deduction at source and applicability of CBDT notification - Scope of "commission" under Section 194H - Disallowance under Section 40(a)(ia) - Deletion of disallowance under Section 40(a)(ia) for non-deduction of TDS on bank guarantee charges - HELD THAT: - The Tribunal examined whether bank guarantee charges paid to State Bank of India were subject to TDS as "commission" under Section 194H and whether CBDT Notification No.56/2012 (dated 31.12.2012) excluding such charges from TDS coverage applied to the assessment year. Relying on the reasoning of the Bombay High Court in CIT-TDS v. Larsen & Toubro and treating bank guarantee commission as bank service charges rather than commission in the agency sense, the Tribunal held that Section 194H did not apply. The Tribunal further noted that coordinate benches have treated Notification No.56/2012 as removing hardship with retrospective application for earlier periods. Applying these authorities, the Tribunal concluded the assessee was not obliged to deduct TDS and confirmed the deletion of the disallowance. [Paras 6, 7]

Disallowance of Rs. 827,715 under Section 40(a)(ia) deleted; appeal on this ground dismissed.

Additional depreciation under Section 32(1)(iia) for power generation - Deletion of disallowance of additional depreciation claimed under Section 32(1)(iia) on plant and machinery for power generation - HELD THAT: - The issue was whether generation of electricity qualifies as "manufacture/production of an article or thing" so as to attract additional depreciation under Section 32(1)(iia), and whether the benefit was restricted until amendment effective 01.04.2013. The Tribunal followed coordinate bench decisions in the assessee's own case and other precedents (including NTPC-related authorities) which held that generation of electricity is akin to manufacture and that additional depreciation was allowable even prior to the statutory amendment. On that basis the Tribunal found no infirmity in the CIT(A)'s deletion of the disallowance. [Paras 10, 11]

Disallowance of Rs. 685,662 on account of additional depreciation deleted; appeal on this ground dismissed.

Classification of electrical installations as plant and machinery or furniture and fittings - Whether electrical installations claimed as plant and machinery are properly classifiable as plant & machinery (entitling them to higher depreciation rate) or as "electrical fittings" within furniture and fittings - HELD THAT: - The Tribunal observed that Appendix I and its note distinguish "electrical fittings" (wiring, switches, sockets, fans, etc.) at a lower depreciation rate from plant & machinery. The CIT(A) had allowed higher depreciation by broadly holding the installations formed part of plant & machinery, but the Tribunal found no material on record demonstrating the nature, description or use of the installations to justify classifying them as plant & machinery rather than electrical fittings. Because the classification turns on factual particulars (nature and function of the installed items), the Tribunal set aside the matter to the assessing officer for fresh examination: the assessee is to produce details and be heard, and the AO must decide whether the installations are furniture/fittings or plant/machinery. [Paras 15]

Ground remitted to the file of the assessing officer for factual determination whether the electrical installations are furniture and fittings or plant and machinery; direction to obtain details and decide after hearing assessee.

Determination of market value for deduction under Section 80IA - Deletion of disallowance relating to inclusion of government levies (electricity duty and cess) in notional sale price used to compute deduction under Section 80IA - HELD THAT: - The question was whether the market value for sale of power (for computing profits eligible for Section 80IA relief) may include government levies that the captive-generating unit did not actually pay. The AO excluded such levies from the market price; the CIT(A) allowed the assessee, relying on coordinate-bench and High Court authorities in the assessee's own case which treated the price charged by the State Electricity Board (including such components) as market price for notional/captive sales. The Tribunal noted the Delhi High Court in the assessee's earlier matter affirmed the approach of lower authorities that, despite the notional nature of sales, there was a commercial element and inclusion of local taxes in turnover was upheld. Applying those precedents, the Tribunal confirmed the CIT(A)'s deletion of the disallowance. [Paras 16, 20]

Disallowance of Rs. 68,799,634 for inclusion of duties/cess in notional sale price deleted; appeal on this ground dismissed.

Computation of book profit for MAT under Section 115JB - Deletion of addition made by AO to book profit under Section 115JB for depreciation adjustments not debited to profit & loss account - HELD THAT: - The AO increased book profit by an amount representing depreciation/ additional depreciation computed under Income-tax law though that amount was not debited to the profit and loss account prepared under the Companies Act. The CIT(A) followed the Supreme Court authority in Apollo Tyres and coordinate-bench decisions in the assessee's own case, holding that the AO's adjustment lacked discussion in the assessment order and was not sustainable where the accounting treatment did not include such charges. The Tribunal found no reason to depart from those precedents and confirmed the deletion of the addition to book profit. [Paras 21, 24]

Addition to book profit under Section 115JB deleted; appeal on this ground dismissed.

Final Conclusion: The appeal by the assessing officer is partly allowed: grounds seeking to restore disallowances/additions nos. 1, 2, 4 and 5 are dismissed and the CIT(A)'s deletions are upheld; ground no. 3 is remitted to the assessing officer for factual examination and decision on classification of the electrical installations after giving the assessee an opportunity of hearing.

Credit for tax deducted at source - year of assessability - method of accounting - treatment of amounts shown as advances - remand for verification of taxability

Credit for tax deducted at source - year of assessability - method of accounting - treatment of amounts shown as advances - Whether the Assessing Officer was justified in treating amounts shown as advances as taxable income in the year under consideration and in allowing or disallowing corresponding credit for TDS. - HELD THAT: - The Tribunal held that sections dealing with declaration of amounts as income received and the mechanics of TDS credit do not themselves determine the year of assessability, which depends on the method of accounting regularly employed by the assessee. The Assessing Officer had relied on precedent holding that TDS credit can be given only in the year in which the income is offered to tax, but, contrary to that ratio, treated the advances as income in the year under consideration without examining whether the work had in fact been performed or income had accrued in that year. The Tribunal found that the AO's addition of the advance without inquiry or reasoning was not justified and that the assessee's blanket claim of TDS credit in the year was also not correct. In consequence, the Tribunal restored the matter to the Assessing Officer for fresh examination: the assessee was directed to produce documentary evidence (invoices, proof of work performed, etc.) to demonstrate whether the amount treated as advance was taxable in the year under consideration, and the AO was directed to decide the question of taxability and corresponding TDS credit in accordance with law and the method of accounting regularly followed by the assessee. The Tribunal relied on the reasoning in Varsha G. Salunke (as applied by the AO) that credit of TDS must follow the year in which the income is assessable, but concluded that the AO should first determine the year of assessability by examining facts and records. [Paras 5]

Ground No.1 allowed for statistical purposes; issue remanded to the Assessing Officer to determine taxability of the advance and to grant or defer TDS credit in accordance with law and the assessee's method of accounting.

Procedural grounds - Disposition of the remaining grounds of appeal which were general in nature. - HELD THAT: - The Tribunal noted that the remaining grounds were general and did not require separate adjudication in light of the specific remand directed on the principal controversy. Consequently those grounds were treated as not necessitating independent decision. [Paras 5]

Remaining grounds dismissed as infructuous.

Final Conclusion: The appeal is partly allowed: Ground No.1 is allowed for statistical purposes and the matter is remanded to the Assessing Officer to examine documentary evidence and determine whether the amounts treated as advances were taxable in Assessment Year 2013-14 and to grant or defer TDS credit accordingly; the other grounds are dismissed as infructuous.

Reimbursement of expenses - characterisation of payments as reimbursements not royalties or fees for technical services - vicarious liability of tax withholding under section 195

Reimbursement of expenses - characterisation of payments as reimbursements not royalties or fees for technical services - Payments received by the assessee from Braitrim UK Ltd. are reimbursements of specific administration charges/discounts and are not taxable income in India. - HELD THAT: - The Tribunal noted that a coordinate bench in proceedings relating to the recipient (Braitrim UK Ltd.) had found the amounts to be reimbursements under a Cost Reimbursement Agreement, recorded as administration charges, with no mark-up and supported by documentary reconciliation and transfer pricing proceedings where the arm's length price was determined as nil. The coordinate findings (accepted by TPO, DRP and the Tribunal) established that the payments merely represented reimbursement of rebates/discounts passed to retailers and reflected actual expenses incurred on behalf of the payer. Relying on these concurrent factual and legal findings and judicial precedents treating genuine cost-sharing reimbursements as not constituting taxable fees or royalties, the Tribunal held there was no basis to treat the receipts as income chargeable to tax in the hands of the assessee and directed that such reimbursements not be treated as the assessee's income. [Paras 2, 5]

The payments qualify as reimbursements of expenses and are not taxable in the hands of the assessee; relief granted on this ground.

Vicarious liability of tax withholding under section 195 - reimbursement of expenses - Withholding liability under section 195 is vicarious and ceases to exist once the primary taxability of the underlying payment in the hands of the recipient is negated. - HELD THAT: - The Tribunal held that tax withholding obligations under section 195 are vicarious and rest upon the existence of a primary tax liability of the recipient. Since the primary taxability of the payments to the recipient was negated by the coordinate bench's findings that the amounts were mere reimbursements (and thus not income), the foundation for any withholding demand fell away. Accordingly, the Tribunal quashed the demands framed under section 201(1) read with section 195 insofar as they related to those reimbursements. [Paras 5]

The impugned demands under section 201(1) read with section 195 are quashed as the primary taxability has been held to be absent.

Final Conclusion: The appeals are allowed: the payments in question are held to be reimbursements not chargeable to tax in the hands of the assessee and the consequent withholding/demand under section 201 r.w.s. 195 is quashed; all other grounds have become infructuous and are dismissed.

MAT credit under section 115JAA inclusive of surcharge and education cess - interpretation of the term 'tax' to include surcharge and cess - computation of MAT credit as tax paid under section 115JB less tax payable under normal provisions - remand to Assessing Officer for quantification of MAT credit

MAT credit under section 115JAA inclusive of surcharge and education cess - interpretation of the term 'tax' to include surcharge and cess - computation of MAT credit as tax paid under section 115JB less tax payable under normal provisions - Assessee entitled to MAT credit under section 115JAA inclusive of surcharge and education cess - HELD THAT: - The Tribunal examined the claim that MAT credit allowed under section 115JAA was given excluding surcharge and education cess, resulting in short credit. Reliance was placed on the Supreme Court decision in K. Srinivasan holding that the term 'tax' includes surcharge, and on coordinate Tribunal and High Court decisions which held that MAT credit carried forward under section 115JB includes surcharge and cess and should be set off against tax on total income after accounting for surcharge and cess. The Tribunal accepted the reasoning that MAT credit equals tax paid under section 115JB minus the tax payable under normal provisions and that the Explanation in section 115JB which governs computation of tax for MAT purposes should apply when determining the quantum of MAT credit. In view of these authorities and the facts that surcharge and cess formed part of the tax paid under book profits, the CIT(A)'s confirmation of credit excluding surcharge and cess was held incorrect and the assessee's claim was allowed. [Paras 6, 7]

MAT credit under section 115JAA must be allowed inclusive of surcharge and education cess; the CIT(A)'s decision to exclude them is reversed.

Remand to Assessing Officer for quantification of MAT credit - Matter remitted to Assessing Officer for ascertaining correct amount of MAT credit inclusive of surcharge and cess - HELD THAT: - While accepting that MAT credit must include surcharge and cess, the Tribunal followed precedents which directed that the precise quantum of MAT credit inclusive of surcharge and cess be determined by the Assessing Officer. The Tribunal set aside the impugned order and remitted the matter to the file of the Assessing Officer for ascertainment of the correct amount of MAT credit, observing that the assessee should be given a reasonable opportunity of hearing in that process. [Paras 6]

Remit to Assessing Officer to compute and allow MAT credit inclusive of surcharge and education cess and to afford the assessee an opportunity of hearing.

Final Conclusion: The Tribunal allowed the appeal by holding that MAT credit under section 115JAA is to be computed inclusive of surcharge and education cess and remitted the matter to the Assessing Officer to ascertain and allow the correct quantum of MAT credit for A.Y. 2015-16.

Assessment of joint bank account deposits - identification of the correct person for assessment - obligation to verify explanation of source of deposits - reliance on cash flow statement as evidentiary proof

Assessment of joint bank account deposits - identification of the correct person for assessment - obligation to verify explanation of source of deposits - Addition of unexplained cash deposits in a joint bank account could not be sustained in the hands of the assessee where the deposits were shown to have been made by a co joint holder and the assessing officer did not verify or dispute that explanation. - HELD THAT: - The Tribunal found that the joint account was in the names of the assessee, her husband and her mother in law, and that the assessee had specifically informed the Assessing Officer by letter that the deposits were of her mother in law. The AO accepted part of that explanation (sale proceeds) but made the remainder of the deposits taxable in the assessee's hands without giving reasons or undertaking any verification of the assessee's statement that the deposits belonged to the mother in law. The Tribunal held that when deposits are in a joint account the authority must identify and assess the correct person after due verification; in the absence of any effort to verify or any contradicting evidence, there was no justification to assess the deposits to the assessee. The Tribunal therefore set aside the orders below and deleted the addition. [Paras 6]

Addition deleted and not sustainable in the hands of the assessee for the sums deposited in the joint account.

Reliance on cash flow statement as evidentiary proof - On merits, the cash flow statement furnished by the assessee was sufficient to explain the deposits and there was no evidence from the Department to rebut it. - HELD THAT: - The assessee submitted a detailed cash flow statement tracing the source and utilisation of deposits which showed only a marginal deficit. The Department did not produce evidence disputing that statement. Given that all joint account holders were income tax assessees and no material contradiction was shown, the Tribunal accepted the cash flow statement as supporting the explanation for the deposits and on that basis upheld deletion of the addition. [Paras 7]

On merits, addition deleted and appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the orders of the lower authorities and deleted the addition of unexplained cash deposits made by the Assessing Officer in the assessee's hands.

Revisionary jurisdiction under section 263 - erroneous and prejudicial to revenue - Assessment completed under section 144 - Unexplained cash credit and loans squared up - application of unexplained cash credit doctrine - Assumption of fact v. material on record

Revisionary jurisdiction under section 263 - erroneous and prejudicial to revenue - Squared up loans - Assumption of fact v. material on record - Whether the Principal Commissioner of Income Tax was justified in invoking revisionary jurisdiction under section 263 in respect of loans (including Rs.11,30,000) alleged to have been squared up by the assessee. - HELD THAT: - The Tribunal found that the assessment for the relevant year was completed under section 144 after making additions in respect of two loans which were squared up by the assessee. The PCIT invoked section 263 on the premise that an additional loan of Rs.11,30,000 had also been squared up and ought to have been added, holding that the AO failed to examine it. The assessee had, however, in response to the show cause notice and on record before the PCIT, demonstrated that the Rs.11,30,000 was a fresh loan not squared up during the year and that an outstanding balance was shown in the financial statements. The assessee furnished confirmation and bank evidence and the tax-audit particulars to show the loan remained outstanding. The Tribunal recorded that the PCIT proceeded on an incorrect assumption of fact despite the relevant materials being on the assessment record (including details filed on 11.12.2017), and therefore the condition for exercise of revisional jurisdiction - that the assessment order is erroneous and prejudicial to the interests of revenue - was not made out. On that basis the revision order under section 263 was quashed. [Paras 3, 4, 5, 6]

Revision order passed by the PCIT under section 263 was quashed because it proceeded on an incorrect factual assumption about the loan being squared up despite documentary material on record showing otherwise; the assessee's appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, quashed the revision order under section 263 as premised on an incorrect assumption of fact regarding a loan alleged to be squared up, and held that the AO's assessment did not suffer from the asserted error prejudicial to revenue.

Depreciation on intangible assets under section 32(1)(ii) - right to collect toll as an intangible license / business or commercial right - application of ejusdem generis to "any other business or commercial rights of similar nature" - amortisation of BOT project expenditure vis-a -vis depreciation and CBDT Circular No.9/2014 - disallowance of interest under section 36(1)(iii) - capitalization and correlating interest - sufficiency of internal accruals / self-owned funds for avoiding disallowance under section 36(1)(iii)

Depreciation on intangible assets under section 32(1)(ii) - right to collect toll as an intangible license / business or commercial right - application of ejusdem generis to "any other business or commercial rights of similar nature" - Entitlement to claim depreciation under section 32(1)(ii) in respect of the intangible "right to collect toll" arising to a BOT operator who constructed the road on Government-owned land. - HELD THAT: - The Tribunal examined whether the concessionaire's right to operate the project facility and collect tolls, created by investing in construction under a BOT concession agreement, constitutes an intangible asset eligible for depreciation under section 32(1)(ii) read with Explanation 3(b). Applying the definition of "license" from the Easements Act and the statutory definition of intangible assets, the Tribunal held that the concession confers a limited right to use Government land and to operate the facility which, in the absence of the agreement, would be unlawful - i.e., akin to a license. Even if not strictly a "license," the right is a valuable business or commercial right created by the assessee's investment and is of the same nature as the specified intangible assets; the ejusdem generis principle does not exclude such rights. The Tribunal relied on the Special Bench decision in Progressive Construction Ltd. and subsequent coordinate bench precedents and concluded that expenditure incurred to create the right to collect toll gives rise to an intangible asset of enduring benefit and is eligible for depreciation at the prescribed rates under section 32(1)(ii). The CIT(A)'s view substituting amortisation under CBDT Circular No.9/2014 for depreciation was set aside to the extent it denied depreciation on the intangible right to collect toll. [Paras 7, 8, 9, 10]

Assessee entitled to claim depreciation under section 32(1)(ii) on the intangible "right to collect toll"; CIT(A) order denying such depreciation set aside.

Disallowance of interest under section 36(1)(iii) - capitalization and correlating interest - sufficiency of internal accruals / self-owned funds for avoiding disallowance under section 36(1)(iii) - Validity of the assessing officer's disallowance under section 36(1)(iii) of interest attributable to advances/capital outlays and whether no disallowance is warranted if advances were made out of sufficient interest-free internal funds. - HELD THAT: - The Tribunal observed that if an assessee has adequate interest-free funds (self-owned funds and internal accruals) sufficient to meet the advances, interest disallowance under section 36(1)(iii) would not be warranted, following the principle in Reliance Industries Ltd. However, the Tribunal found that the assessee's claim of having sufficient self-owned funds and internal accruals was not clearly established on the record before the authorities. In view of the absence of clear documentary foundation, the Tribunal restored the issue to the assessing officer for fresh adjudication in light of the Supreme Court precedent, directing the AO to examine whether the advances were indeed made out of interest-free/internal funds and to afford the assessee an opportunity to produce supporting evidence. If the AO finds the claim established, no part of the interest would be disallowed; otherwise the disallowance may be sustained after fresh adjudication. [Paras 11, 12]

Issue set aside to the assessing officer for fresh adjudication on whether the advances were made out of sufficient self-owned funds/internal accruals; consequential decision on disallowance under section 36(1)(iii) to follow.

Final Conclusion: The Tribunal allowed the appeal in part: it held that the BOT operator's "right to collect toll" is an intangible asset eligible for depreciation under section 32(1)(ii) and set aside the CIT(A)'s contrary finding, and it remitted the question of disallowance under section 36(1)(iii) to the assessing officer for fresh consideration whether the advances were made from sufficient interest-free internal funds, in accordance with relevant Supreme Court authority.

Penalty under section 114(1) of the Customs Act, 1962 - customs house agent's liability for mis-declaration - verification of documents by CHA - requirement of evidence to impose penalty - benefit of doubt

Penalty under section 114(1) of the Customs Act, 1962 - customs house agent's liability for mis-declaration - verification of documents by CHA - requirement of evidence to impose penalty - benefit of doubt - Whether penalty can be imposed on the Customs House Agent when the CHA verified shipping documents, the goods were examined and found as declared, and there is no evidence linking the CHA to substitution or export of prohibited goods. - HELD THAT: - The Tribunal found that the appellant (CHA) filed the shipping bill after verifying documents submitted by the exporter's representative and that the consignment was examined (5%) and found to be as declared. There is no material on record showing any role of the appellant after filing the shipping bill or any investigation linking the appellant to substitution or change of goods during transportation; in particular, no action or evidence was produced regarding the transporter. In the absence of evidence establishing the appellant's complicity, the adjudicatory finding that the CHA violated law was not supported. Applying the principle that an appellant is entitled to the benefit of doubt where prosecution/adjudication fails to place requisite evidence on record, the Tribunal concluded that penalty cannot be imposed on the appellant without evidence proving involvement. [Paras 6, 7]

Impugned order imposing penalty set aside; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the penalty imposed under section 114(1) of the Customs Act, 1962, and granted consequential relief, holding that in absence of evidence linking the CHA to export of prohibited goods the appellant is entitled to benefit of doubt.

Permission to take on record proposed sale of listed shares - permission to consummate sale of assets of Red Entities - approval by supervisory authority (Justice D. K. Jain (Retd.)) - asset level resolution to preserve going concern - market sale of publicly listed securities without detailed public solicitation

Permission to take on record proposed sale of listed shares - approval by supervisory authority (Justice D. K. Jain (Retd.)) - permission to consummate sale of assets of Red Entities - Application to take on record the proposed sale of listed shares held by IL&FS Financial Services Limited and IL&FS Maritime Infrastructure Company Limited and to permit consummation of those sales in accordance with the approval of Justice (Retd.) D. K. Jain. - HELD THAT: - The Tribunal considered the Resolution Framework prepared by the New Board, the supervisory approval dated 12/12/2019 of Hon'ble Justice Mr. D. K. Jain (Retd.), the categorisation of IFIN and IMICL as Red Entities, and the purpose of selling the listed shares as non core assets to generate liquidity and preserve the going concern status of the selling entities. The Tribunal noted that the Hon'ble NCLAT had sanctioned a resolution process and supervision mechanism and that the proposed sales fall within the asset level resolution steps to be presented to this Tribunal for formal approval. The Applicant's submission that the listed shares are marketable securities susceptible to daily price fluctuations and that a detailed public solicitation was not required given the nature of the assets and absence of non public information was accepted. The Respondent raised no objection. In these circumstances the Tribunal held it appropriate to take the proposed sale on record in accordance with the supervisory approval and to permit the selling entities to consummate the sales to create liquidity for meeting going concern and resolution costs, subject to the terms approved by the supervisory authority. [Paras 19]

The Application is allowed; the proposed sale of the listed shares as set forth in the application is taken on record in accordance with the approval of Justice (Retd.) D. K. Jain dated 12/12/2019 and the selling entities are permitted to consummate the sale.

Final Conclusion: The Tribunal allowed the application without contest, recorded the proposed sale of the listed shares held by IFIN and IMICL in accordance with the supervisory approval, and permitted the selling entities to effect the sales to generate liquidity and preserve their going concern status; no order as to costs.

Sanction of scheme of amalgamation under Sections 230-232 of the Companies Act, 2013 - Appointed Date - Compliance with observations of the Regional Director - Applicability of Real Estate (Regulation and Development) Act, 2016 - Dissolution of transferor companies on sanction - Filing of certified copy of order and scheme with Registrar of Companies and Superintendent of Stamps - Costs payable to statutory authorities

Sanction of scheme of amalgamation under Sections 230-232 of the Companies Act, 2013 - Sanction of the Scheme of amalgamation and making the Company Scheme Petition absolute. - HELD THAT: - The Tribunal examined the petition for sanction of the Scheme, noted that no objector appeared and that statutory requirements and compliances (including board resolutions and affidavits of compliance) were placed on record. The Official Liquidator reported that the affairs of the transferor companies had been conducted properly and that they may be dissolved. Having considered the material on record, the Tribunal found the Scheme to be fair and reasonable, not violative of law or public policy, and directed that the Company Scheme Petition be made absolute in terms of its prayers. [Paras 2, 4, 16, 17]

Scheme sanctioned and Company Scheme Petition made absolute.

Compliance with observations of the Regional Director - Appointed Date - Acceptance of explanations and undertakings given by the petitioner companies in reply to the Regional Director's report including the Appointed Date and accounting compliance. - HELD THAT: - The Regional Director had raised observations requiring certain accounting entries in accordance with applicable accounting standards, confirmation of the Appointed Date and Effective Date definitions, compliance regarding set-off of fees under the Act, duly passed approvals by requisite majorities, service of notices to affected authorities, confirmation that the copies of the scheme are identical, and clarification on RERA applicability. The petitioners provided specific clarifications and undertakings: to make necessary accounting entries in compliance with applicable accounting standards; that the Appointed Date is 16th December 2019; to comply with set-off of fees as per the Act; that requisite approvals were obtained; that notices to authorities would be without prejudice to those authorities' powers; that the scheme copies are identical; and that they are not registered under RERA and do not undertake construction business for RERA purposes. The Tribunal accepted these explanations and undertakings. [Paras 11, 12, 13, 14, 15]

Regional Director's observations addressed; clarifications and undertakings accepted and recorded; Appointed Date fixed as 16th December, 2019.

Applicability of Real Estate (Regulation and Development) Act, 2016 - Non-applicability of RERA to the petitioner companies as stated by the petitioners and accepted by the Tribunal. - HELD THAT: - The Regional Director queried applicability of RERA. The petitioners stated they are not registered under RERA and are not carrying out any business of construction so that RERA and related rules would not apply. The Tribunal accepted this clarification in the course of recording that the RD's observations were explained and undertakings given were accepted. [Paras 7, 14, 15]

Petitioners' position on non-applicability of RERA accepted.

Filing of certified copy of order and scheme with Registrar of Companies and Superintendent of Stamps - Directions regarding post-sanction compliances with Registrar of Companies and Superintendent of Stamps. - HELD THAT: - The Tribunal directed the petitioners to file a certified copy of the order along with the Scheme electronically with the Registrar of Companies using E-Form INC-28 and additionally in physical form within 30 days of receipt of the certified copy. The petitioners were also directed to lodge a certified copy of the order and scheme with the Superintendent of Stamps within 60 days for adjudication of stamp duty, if any. [Paras 18, 19]

Mandated filing with Registrar of Companies within 30 days and with Superintendent of Stamps within 60 days.

Costs payable to statutory authorities - Imposition of costs in favour of the Regional Director and Official Liquidator and timeline for payment. - HELD THAT: - The Tribunal ordered the petitioner companies to pay costs to the Regional Director, Western Region, Mumbai and directed the transferor companies in the related petition to pay costs to the Official Liquidator, High Court, Bombay. The costs are to be paid within four weeks from receipt of the order. [Paras 20]

Costs ordered to be paid to the Regional Director and Official Liquidator within four weeks.

Final Conclusion: The Tribunal sanctioned the Scheme of amalgamation, fixed the Appointed Date as 16th December, 2019, accepted the petitioners' clarifications to the Regional Director's observations (including on accounting compliance and RERA non-applicability), directed statutory filings with the Registrar of Companies and the Superintendent of Stamps, and awarded costs to the Regional Director and Official Liquidator.

Restoration of name in the register - 'just' ground for restoration - compliance of statutory filings and payment of fees - deposit to defray ROC's costs and late charges - restoration not affecting disqualification under Section 164 - continuing power of Registrar to proceed for statutory defaults

Restoration of name in the register - 'just' ground for restoration - Application under Section 252(3) for restoration of the Company's name in the register was allowed on 'just' grounds. - HELD THAT: - The Tribunal examined material placed by the applicants and relevant authorities and applied the equitable concept of 'just' as requiring consideration of all facts, including present activity and future prospects. While the Company had defaulted in filing financial statements for earlier years and had not shown continuous active business in the two years immediately preceding strike-off, the records demonstrated ongoing disputes with AAI, availability of financial statements for subsequent years and prospects of resuming operations. The Tribunal accepted that restoration was just and equitable in the circumstances and ordered restoration of the Company's name subject to conditions. [Paras 8, 9, 10, 11]

Name of the Company restored in the register maintained by the Registrar of Companies on the basis of 'just' grounds.

Compliance of statutory filings and payment of fees - deposit to defray ROC's costs and late charges - Restoration was made conditional on filing of annual returns and balance sheets for the period of default, payment of requisite fees/additional fees/late charges, and deposit to defray ROC's costs. - HELD THAT: - The Tribunal directed that within prescribed periods after restoration the Company must file all outstanding annual returns and financial statements with requisite charges and additional fees/late charges. The Company was ordered to deposit a specified sum with the ROC from its funds to meet fees, charges and costs incurred in striking off; any shortfall was to be paid by the Company and any surplus returned by the ROC. These conditions were imposed to ensure statutory compliance and to protect public/administrative interest while permitting restoration. [Paras 11, 12]

Restoration subject to filing outstanding compliances with payment of statutory fees and a deposit to defray ROC's costs, with timelines prescribed.

Restoration not affecting disqualification under Section 164 - continuing power of Registrar to proceed for statutory defaults - Order of restoration does not automatically remove any disqualification of directors under Section 164, and does not bar the Registrar from proceeding against the Company or its directors for alleged defaults. - HELD THAT: - The Tribunal clarified that revival of the Company's name is without prejudice to the legal consequences already recorded against any director under disqualification provisions; such restoration does not revive any director's directorship rights except in accordance with law. Further, the Tribunal expressly preserved the ROC's power to initiate or continue proceedings in respect of alleged late filings or other compliance defaults despite allowing restoration. [Paras 12]

Restoration limited so as not to automatically validate disqualified directors and without restricting the ROC's statutory powers to proceed against the Company or its directors.

Ancillary restrictions pending compliance - Until all compliances are completed, the Company was restrained from alienating or disposing of its valuable assets and ordered to file an affidavit and an undertaking regarding non-use of accounts for tainted money during demonetisation. - HELD THAT: - As part of protective measures accompanying restoration, the Tribunal prohibited disposition of valuable assets pending fulfillment of compliance obligations, required an affidavit of compliance within two months, and an undertaking by shareholders/directors concerning non-use of accounts for tainted money during demonetisation. These conditions were framed to preserve assets for satisfying statutory liabilities and to address specific concerns raised in the record. [Paras 12]

Prohibition on alienation of assets until compliance, with additional affidavit and undertaking obligations imposed on the Company and its stakeholders.

Final Conclusion: The Tribunal allowed the application to restore the Company's name on equitable 'just' grounds while imposing specific compliance, deposit, asset-restraint and disclosure conditions; restoration does not revive disqualified directors automatically nor preclude the Registrar from pursuing statutory actions for defaults.

Maintenance Security Deposit - Process Memorandum - Letter of intent - e-Auction - Acceptance of bid and binding terms - Doctrine of estoppel - Liquidator's liability for statutory dues - Interest on delayed payment under Liquidation Regulations - Forfeiture of Earnest Money Deposit - As is where is basis

Maintenance Security Deposit - Process Memorandum - Letter of intent - e-Auction - Acceptance of bid and binding terms - Doctrine of estoppel - Interest on delayed payment under Liquidation Regulations - Liability of the successful bidder to pay the Maintenance Security Deposit over and above the accepted bid price and related payment terms. - HELD THAT: - The Tribunal held that the Process Memorandum dated 24.03.2020 and the draft Letter of Intent dated 21.04.2020 clearly stipulated that an amount of Rs. 6 Lakhs towards an interest-bearing Maintenance Security Deposit (MSD) with DLF was payable by the successful bidder and would form the bidder's asset. The Appellant's reliance on an earlier email (10.04.2020) did not negate that the Liquidator had expressly stated the MSD was non-negotiable and that the Appellant was free to bid having knowledge of that condition. By participating in the 5th e-Auction, paying EMD and accepting the LOI, the Appellant exercised the choice to be bound by the terms then prevailing; it could not later contend that the MSD was included in the consolidated bid. The Tribunal noted that questions whether earlier auctions contained similar terms were irrelevant because the Appellant participated only in the 5th Auction. Taking into account the pandemic-related extension granted by the Liquidator, the Tribunal exercised discretion to direct the Liquidator to accept the balance sale consideration plus the MSD without charging interest provided the amount is deposited in the Corporate Debtor's account within 10 days from receipt of the order. The Tribunal found no illegality in the Adjudicating Authority's direction requiring payment of the MSD and dismissed the challenge. [Paras 10]

The Appellant is bound to pay the Maintenance Security Deposit over and above the accepted bid; the Liquidator shall accept the balance sale consideration plus the MSD without charging interest if paid into the Corporate Debtor's account within 10 days of receipt of this order; the appeal is dismissed.

Final Conclusion: The appeal is dismissed. The Tribunal affirmed that the successful bidder must pay the specified Maintenance Security Deposit in addition to the accepted bid and directed the Liquidator to accept the balance sale consideration plus the MSD without charging interest if deposited within 10 days, with the other directions of the Adjudicating Authority confined.

Operational creditor's entitlement - existence of debt and default - notice of dispute under Section 8 - admission of application under Section 9 - initiation of corporate insolvency resolution process (CIRP) - appointment and duties of interim resolution professional (IRP) - moratorium under Section 14

Operational creditor's entitlement - The petitioner is entitled to file the Section 9 petition as the invoices and correspondence establish that the petitioner is the proprietor trading as Ashish Electronics. - HELD THAT: - The Corporate Debtor had contended that purchase orders were placed in the name of M/s. Ashish Electronics. The Tribunal examined the invoices, the rejoinder and the Corporate Debtor's own reply dated 09.06.2018 in which it referred to the petitioner as proprietor of Ashish Electronics. On that basis the Tribunal held that the petitioner is the proprietor of Ashish Electronics and is entitled to file the present petition in its capacity as operational creditor. [Paras 4]

Petitioner entitled to maintain the Section 9 petition as operational creditor being the proprietor trading as Ashish Electronics.

Existence of debt and default - notice of dispute under Section 8 - The Tribunal found that the operational creditor established existence of debt and default and that no notice of dispute was received in response to the demand notice. - HELD THAT: - The Tribunal noted supply of materials, presentation of invoices and the absence of any dispute by the Corporate Debtor regarding quality or quantity. The Corporate Debtor's reply to the Section 138 notice acknowledged liability for outstanding dues and the applicant filed an affidavit stating no notice of dispute had been received in reply to the Section 8 demand notice. On these materials the Tribunal concluded that the operational creditor had proved unpaid operational debt and default, and that the petition was within limitation. [Paras 2, 3, 7]

Existence of unpaid operational debt and default established; no notice of dispute received; petition within limitation.

Admission of application under Section 9 - initiation of corporate insolvency resolution process (CIRP) - The application under Section 9 was admitted and CIRP was ordered to commence with immediate effect. - HELD THAT: - Applying the statutory criteria for admission under Section 9(5), and having found that the application was complete, there was no payment of the unpaid operational debt, the notice/invoice had been delivered and no notice of dispute had been received, the Tribunal held that the conditions for admission were satisfied. Consequently the Tribunal admitted the application and directed initiation of the corporate insolvency resolution process. [Paras 6, 8]

Section 9 application admitted; CIRP initiated immediately.

Appointment and duties of interim resolution professional (IRP) - moratorium under Section 14 - An IRP was appointed, the scope of his duties was delineated and a moratorium under Section 14 was declared with the usual prohibitions and directions for public announcement. - HELD THAT: - The Tribunal appointed an IRP proposed by itself in absence of a proposal by the operational creditor and directed him to perform functions under Sections 15, 17, 18 and 21 of the Code and to file reports. It directed immediate public announcement as required by Section 13(2) and declared the moratorium under Section 14, specifying the prohibitions on suits, transfer or disposal of assets, enforcement of security and recovery by owners or lessors; it also recorded statutory exceptions relating to essential supplies and specified exclusions under amendment provisions. The Tribunal emphasized the IRP's obligations to protect and preserve the corporate debtor's property and to receive cooperation from management and personnel. [Paras 9, 10, 11, 12, 13]

IRP appointed; public announcement and moratorium directed; IRP to perform statutory duties and protect corporate debtor's assets.

CIRP cost and interim expenses - The operational creditor was directed to deposit an interim fee to meet immediate expenses of the IRP, refundable and recoverable as CIRP cost. - HELD THAT: - The Tribunal directed the operational creditor to deposit a specified fee within two weeks to meet the IRP's immediate expenses, stating that the amount would be accountable and reimbursable by the Committee of Creditors and recovered as CIRP cost, thereby providing for interim funding of the insolvency process in accordance with procedural needs. [Paras 14]

Operational creditor to deposit interim fee; amount to be accounted for and recoverable as CIRP cost.

Final Conclusion: The Section 9 petition filed by the operational creditor was admitted; CIRP is initiated against the corporate debtor, an IRP is appointed and a moratorium is declared; ancillary directions include public announcement, IRP's statutory duties and deposit of an interim fee to meet IRP's expenses.

Corporate Insolvency Resolution Process initiation - Operational Creditor's claim and default - Validity of Board Resolution authorizing filing - Existence of genuine dispute and debit notes - Account reconciliation by Independent Chartered Accountant - Moratorium under Section 14 - Appointment of Interim Resolution Professional - Interim reliefs and directions to IRP

Operational Creditor's claim and default - Corporate Insolvency Resolution Process initiation - Admission of the Section 9 petition and initiation of CIRP against the corporate debtor on account of default - HELD THAT: - The petition under Section 9 was supported by invoices, acknowledgements of receipt of goods, a demand notice dated 12.02.2020, compliance affidavit under Section 9(3)(b) and (c), ledger and bank statements, and the reconciliation report prepared by the Independent Chartered Accountant. The Chartered Accountant, after examining records produced by both parties, concluded that an outstanding amount remained due. The materials collectively established default by the corporate debtor and justified admission of the petition and commencement of CIRP, to be ordinarily completed within 180 days from this order. [Paras 4, 5, 6, 12, 13]

The Section 9 application is admitted and CIRP is initiated against the corporate debtor.

Validity of Board Resolution authorizing filing - Objection to the Operational Creditor's locus on the ground of an allegedly defective board resolution was rejected - HELD THAT: - The board resolution dated 06.02.2020 authorises the Managing Director and/or the Joint Managing Director to appear, sign, verify and file proceedings before courts, tribunals and quasi judicial authorities. The resolution's language was clear and encompassed authority to initiate actions and file applications; the Managing Director authorised by the resolution is also a director of the Operational Creditor. Accordingly, the contention that the application was filed by an unauthorised person on account of a faulty resolution was found to be without merit and rejected. [Paras 7, 8]

The board resolution sufficed to confer authority to file the present application; the objection is rejected.

Existence of genuine dispute and debit notes - The plea of a pre existing genuine dispute based on debit notes and alleged prior payments was rejected - HELD THAT: - The corporate debtor's claim of 63 debit notes purportedly reducing the claim and of payments made through a third party were not supported by contemporaneous documentary evidence preceding the demand notice. The debit notes were asserted only after issuance of the demand notice, and no record established their being sent to or accepted by the Operational Creditor prior to the demand notice. Similarly, the alleged payments by a third party lacked documentary proof of nexus with the corporate debtor. The Chartered Accountant's reconciliation corroborated absence of evidence that debit notes were raised and accepted prior to the demand notice and found no nexus for the third party payments. Accordingly, the plea of a genuine dispute failed. [Paras 9, 10, 11, 12]

The contention of a genuine dispute founded on debit notes and alleged third party payments is rejected.

Account reconciliation by Independent Chartered Accountant - The reconciliation report prepared by the appointed Independent Chartered Accountant was relied upon to determine the outstanding amount for purposes of admission - HELD THAT: - Pursuant to the corporate debtor's request, an Independent Chartered Accountant was appointed to reconcile accounts. The report, prepared from records furnished by both parties, quantified the outstanding amount and noted absence of documentary proof that debit notes were raised and accepted prior to the demand notice and that third party payments related to the corporate debtor. The Operational Creditor did not object to the reduced figure in the reconciliation, and the Tribunal treated the report as material establishing default. [Paras 12, 13]

The reconciliation report was accepted as material and factually supported admission of the petition.

Moratorium under Section 14 - A moratorium under Section 14 is declared from the date of the order till completion of CIRP - HELD THAT: - Upon admission of the petition and commencement of CIRP, the statutory moratorium was declared to take effect from the date of this order until the completion of the corporate insolvency resolution process, prohibiting institution or continuation of suits or proceedings, transfer or dealing with assets, enforcement of security interests and recovery of property occupied by the corporate debtor, subject to statutory exceptions for supply of essential goods or services. [Paras 13, 14, 15]

Moratorium is declared as prescribed, with protections for supply of essential goods or services.

Appointment of Interim Resolution Professional - Interim reliefs and directions to IRP - An Interim Resolution Professional (IRP) was appointed and directed to take charge with attendant procedural directions, and the Operational Creditor was directed to deposit funds to meet IRP expenses - HELD THAT: - As no resolution professional was proposed by the Operational Creditor, the Tribunal appointed a named IRP registered with the IBBI. The IRP was directed to take immediate charge of management and bank accounts, make the public announcement, call for claims, and comply with relevant provisions of the Code. The Directors and promoters of the corporate debtor were directed to cooperate, and the Operational Creditor was directed to pay an amount to the IRP to meet expenses in accordance with the relevant regulations. Registry was directed to communicate the order to the IRP, parties and the concerned RoC. [Paras 16, 17, 18, 19, 20]

Mr. Vikas Garg is appointed as IRP with directions to take charge and the Operational Creditor is directed to deposit funds for IRP expenses; ancillary procedural directions are issued.

Final Conclusion: The Tribunal admitted the Section 9 petition against the corporate debtor, initiated the CIRP, declared the statutory moratorium, rejected objections as to the Operational Creditor's locus and the alleged pre existing disputes, accepted the reconciliation report as material, appointed an Interim Resolution Professional with directions and ordered payment by the Operational Creditor to meet IRP expenses.

Corporate Insolvency Resolution Process - operational creditor - pre-existing dispute - definition of "dispute" under the Code - reject Section 9 application where notice of dispute received or record of dispute in information utility

Pre-existing dispute - definition of "dispute" under the Code - operational creditor - Whether the Section 9 application for initiation of Corporate Insolvency Resolution Process is liable to be rejected on the ground of a pre-existing dispute regarding quality of goods and non-admission of debt. - HELD THAT: - The Tribunal applied the test in Mobilox Innovative Pvt. Ltd. to determine whether a plausible dispute exists which is not a patently feeble legal argument or assertion unsupported by evidence. The corporate debtor had placed on record contemporaneous communications, including a letter dated 22.11.2019 and debit notes from its overseas client, asserting that goods supplied by the operational creditor were defective and that payment would not be made. The materials on record show that the dispute was raised prior to issuance of the demand notice and there was no admission of debt by the corporate debtor. Given these facts, the alleged dispute was neither spurious nor illusory and called for further investigation. Under the statutory scheme, where a notice of dispute has been received or there is a record of dispute, the adjudicating authority is required to reject the Section 9 application. Applying that principle, the Tribunal concluded that the claim falls within the ambit of a disputed claim and the petition could not be admitted. [Paras 7, 8, 9, 10, 11]

The Section 9 petition is rejected on the ground of existence of a pre-existing and plausible dispute regarding the quality of goods and non-admission of operational debt.

Final Conclusion: The petition filed under Section 9 is dismissed as the adjudicating authority found a pre-existing dispute supported by documents on record and therefore rejected the application without expressing any opinion on the merits of the underlying commercial controversy.

Pre-existing dispute - rejection of Section 9 petition on record of pre-existing dispute - plausible contention requiring further investigation (Mobilox test) - notice under Section 8 of IBC, 2016 - adjudicatory standard for 'dispute' at admission stage

Pre-existing dispute - plausible contention requiring further investigation (Mobilox test) - rejection of Section 9 petition on record of pre-existing dispute - notice under Section 8 of IBC, 2016 - Maintainability of the petition under Section 9 of the IBC in view of a record of dispute raised prior to issuance of the demand notice - HELD THAT: - The Tribunal examined the material on record and found that the corporate debtor had raised objections to the rates and the bill prior to the demand notice, specifically by email dated 14.12.2019 which questioned approved rates, discounts and sought measurements. Applying the standard laid down in Mobilox Innovative Pvt. Ltd. - that the adjudicating authority must determine whether a plausible contention exists which requires further investigation and is not a patently feeble or spurious defence - the Tribunal held that a genuine dispute existed on the face of the record. Because the dispute was raised before the demand notice under Section 8 was issued, there is a record of dispute within the meaning of the Code. In consequence, Section 9(5)(ii)(d) requires rejection of the application seeking initiation of CIRP where notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. The Tribunal emphasised that the existence of the dispute necessitated further investigation and that no admission of the debt had been made by the corporate debtor. [Paras 11, 13, 14, 15, 16]

Petition under Section 9 rejected on the ground that a pre-existing dispute was recorded prior to the demand notice, engaging Section 9(5)(ii)(d).

Final Conclusion: The petition under Section 9 of the IBC is dismissed because the record shows a pre-existing, plausible dispute raised by the corporate debtor prior to issuance of the demand notice, attracting rejection under the statutory provision; observations are without prejudice to the parties' rights before other fora.

Substitution of Interim Resolution Professional - service of demand notice - undisputed operational debt and default - admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - declaration of moratorium under Section 14 - appointment and duties of Interim Resolution Professional

Substitution of Interim Resolution Professional - Application for substitution of the proposed Interim Resolution Professional was allowed and the earlier proposed IRP was substituted. - HELD THAT: - The applicant sought substitution of the originally proposed Interim Resolution Professional on grounds of reluctance due to COVID-19 and health concerns and filed the consent of the proposed substitute in the prescribed Form. The Tribunal, after noting that no disciplinary proceedings were pending against the proposed substitute, permitted substitution and disposed of the application. [Paras 2]

IA allowed and Mr. Vekas Kumar Garg substituted in place of Mr. Sameer Rastogi as the proposed Interim Resolution Professional.

Service of demand notice - The demand notice in Form No. 3/4 dated 08.03.2019 was held to have been properly served on the corporate debtor. - HELD THAT: - The Tribunal examined the record and found acknowledgement of hand delivery as well as postal receipts and tracking reports attached to the petition, concluding that the statutory demand notice had been duly delivered to the corporate debtor. [Paras 14, 16]

Demand notice was properly delivered to the corporate debtor.

Undisputed operational debt and default - The debt claimed by the operational creditor was not disputed by the corporate debtor and default was established. - HELD THAT: - The corporate debtor, in its reply, admitted liability though pleaded inability to pay due to poor financial condition. The petitioner produced invoices, ledger entries, correspondence including a letter of confirmation of debt, and an affidavit stating no reply disputing the demand notice had been received. On this basis the Tribunal found no pre-existing dispute and held that the operational debt and the default were proved. [Paras 15, 16, 17]

Liability is undisputed; the operational debt and default are established.

Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - The petition under Section 9 was admitted and the Corporate Insolvency Resolution Process was initiated against the corporate debtor. - HELD THAT: - Having found the demand notice duly served and the debt and default established, the Tribunal held that the conditions for admission under Section 9(5)(i) were satisfied and therefore admitted the petition for initiation of CIRP in respect of the corporate debtor. [Paras 18]

Petition under Section 9 admitted; CIRP initiated against the corporate debtor.

Declaration of moratorium under Section 14 - A moratorium under Section 14 was declared with immediate effect until completion of CIRP or other concluding orders. - HELD THAT: - The Tribunal declared the moratorium envisaged by Section 14(1), listing the prohibitions on instituting or continuing suits, transferring or disposing of assets, enforcing security interests, and recovering property from the corporate debtor, and clarified exceptions regarding essential supplies and specified transactions. [Paras 19, 21]

Moratorium declared from the date of the order until completion of the CIRP or other concluding orders.

Appointment and duties of Interim Resolution Professional - Mr. Vekas Kumar Garg was appointed as Interim Resolution Professional and directed to perform specified duties in accordance with the Code. - HELD THAT: - After verification of credentials and absence of adverse record, the Tribunal appointed the named professional as Interim Resolution Professional. The Tribunal directed him to act in accordance with the Code and regulations, assumed management powers under Section 17, prepare inventory of assets, cause public announcement, procure and collate claims, constitute the Committee of Creditors within the prescribed time, and file periodic progress reports. [Paras 22]

Mr. Vekas Kumar Garg appointed as Interim Resolution Professional with specified directions concerning management powers, public announcement, claim collation, constitution of the Committee of Creditors and reporting obligations.

Final Conclusion: The Tribunal allowed substitution of the proposed Interim Resolution Professional, held the demand notice to be duly served and the operational debt to be undisputed, admitted the petition under Section 9 and initiated CIRP, declared the moratorium under Section 14, and appointed Mr. Vekas Kumar Garg as Interim Resolution Professional with directions to perform statutory duties.

Operational debt and default - pre-existing dispute - admissibility of an application under Section 9 of the Insolvency and Bankruptcy Code - moratorium on proceedings and preservation of assets - appointment of Interim Resolution Professional and public announcement of CIRP

Operational debt and default - admissibility of an application under Section 9 of the Insolvency and Bankruptcy Code - The application under Section 9 was admitted on the ground that an operational debt was due and payable and the corporate debtor committed default. - HELD THAT: - The Tribunal examined the documents filed by the operational creditor - purchase order, invoices, proof of delivery and demand notice - and found that goods were delivered and invoices raised on 06.05.2019, and that payment remained unpaid despite demand. The Authority observed that its role is limited to determining existence of debt and default, and on the material placed the applicant established both. Applying the tests in Mobilox Innovative (as noted), the Tribunal concluded that the requirements under the I&B Code were fulfilled and admission was warranted. [Paras 16, 17, 18, 21, 26]

Application under Section 9 is admitted as operational debt is established and default is proved.

Pre-existing dispute - operational debt and default - The respondent's plea of a pre-existing dispute regarding quality/specifications was rejected and held to be an afterthought not barring admission. - HELD THAT: - The respondent contended that specifications (density) differed and raised quality objections. The Tribunal noted the respondent carried out its own analysis on 09.05.2019, sent samples to an external laboratory, but only first complained of rejection by email dated 20.08.2019, months after delivery and after the demand notice. The respondent repeatedly asked the applicant to take back the goods and declined the applicant's request to draw samples, while nonetheless annexing certificates of analysis in its reply. The Tribunal regarded these conduct and delays as a moonshine defence, observed that terms of the purchase order required certificate of analysis and immediate payment, and held there was no pre-existing dispute made out prior to receipt of the demand notice. [Paras 11, 12, 13, 15, 19]

The plea of pre-existing dispute is negatived; it does not defeat the Section 9 application.

Moratorium on proceedings and preservation of assets - Moratorium under Section 14 was declared from date of receipt of authenticated copy of the order, prohibiting specified actions against the corporate debtor. - HELD THAT: - Relying on Sections 13 and 14, the Tribunal directed imposition of moratorium provisions enumerated in Section 14(1), including stay on institution or continuation of suits, transfer or disposal of assets, enforcement of security interests, and recovery of leased property. The Tribunal also directed that supply of goods and essential services shall not be terminated during the moratorium subject to notified exceptions and fixed the moratorium's temporal scope as in Section 14. [Paras 20, 22, 23, 24]

Moratorium is declared in terms of Section 14 from the date of receipt of authenticated copy until completion of CIRP or further order.

Appointment of Interim Resolution Professional and public announcement of CIRP - An Interim Resolution Professional was appointed and directed to make the public announcement and call for submission of claims. - HELD THAT: - Noting that the applicant had not proposed an IRP, the Tribunal appointed the named professional under Section 13(1)(c) and directed him to make the public announcement and call for claims as required by Section 13(1)(b) and Section 15(2). The Tribunal reiterated that public announcement is to follow appointment and that the IRP shall carry out statutory functions required during the CIRP. [Paras 20, 25]

Mr. Vijay Prakash Usharia is appointed as Interim Resolution Professional and directed to make the statutory public announcement and call for claims.

Registry notification to Registrar of Companies - The Registry was directed to inform the Registrar of Companies that the corporate debtor is under CIRP to forestall striking off proceedings. - HELD THAT: - The Tribunal observed that initiating striking-off proceedings under the Companies Act during CIRP would be detrimental to liquidation and asset realisation. Consequently, registry was directed to notify the ROC that the company is undergoing corporate insolvency resolution so that no striking-off proceedings arising from alleged non-compliances be initiated. [Paras 28]

Registry to inform the Registrar of Companies that the respondent company is under CIRP and to refrain from initiating striking-off proceedings.

Final Conclusion: The Section 9 petition filed by the operational creditor is admitted: the Tribunal found that an operational debt was due and payable and no pre-existing dispute barred admission; moratorium is declared; an Interim Resolution Professional is appointed and directed to make the public announcement and call for claims; and the Registry is directed to notify the Registrar of Companies to avoid striking-off proceedings.

Proceed with liquidation - exclusion of time from liquidation period - liquidation commencement date and liquidation period under Regulation 44 - compromise or arrangement under Section 230 of the Companies Act, 2013 - effect of appellate interim orders on liquidation steps - extension of limitation and exclusion of lockdown period under Regulation 47A

Proceed with liquidation - effect of appellate interim orders on liquidation steps - compromise or arrangement under Section 230 of the Companies Act, 2013 - Liquidator permitted to proceed with the liquidation of the corporate debtor in accordance with the liquidation order. - HELD THAT: - The Tribunal recorded that the CIRP concluded without an approved resolution plan and that the Adjudicating Authority's liquidation order dated 06.12.2018 (and consequential order dated 03.01.2019) remained in force. While an appeal and interim directions were entertained by the NCLAT, those directions required the liquidator to explore revival routes under Section 230 of the Companies Act and to keep the corporate debtor as a going concern if reasonably possible. The liquidator undertook the steps directed by the NCLAT (inviting schemes, convening meetings of financial creditors, advertising and considering proposals) but the scheme did not secure the requisite approval of secured creditors. The NCLAT, by its subsequent order, was not inclined to interfere with the liquidation order. Having completed the scheme process as required by the appellate directions and with no successful revival, the Tribunal held that the liquidator must now proceed with liquidation in accordance with the earlier orders and applicable liquidation regulations. [Paras 20]

The liquidator is directed to proceed with liquidation of the corporate debtor as per the Adjudicating Authority's orders.

Exclusion of time from liquidation period - liquidation commencement date and liquidation period under Regulation 44 - extension of limitation and exclusion of lockdown period under Regulation 47A - Prayer to exclude 367 days from computation of the liquidation period was rejected. - HELD THAT: - Regulation 44 prescribes the liquidation period counted from the liquidation commencement date; the liquidator sought exclusion of 367 days spent pursuing a scheme under Section 230 and due to appellate proceedings before the NCLAT. The Tribunal noted that Regulation 2B (providing for exclusion in certain circumstances) was introduced by amendment and is inapplicable to liquidation processes that commenced before its effective date. The Tribunal further observed that COVID-19 related reliefs (including the Supreme Court's extension of limitation and insertion of Regulation 47A excluding lockdown period) operate to provide temporal accommodation to the liquidator. In the Tribunal's view the time lost in the scheme and appellate process would not prejudice the overall ability to complete liquidation within the permissible timeframe when the lockdown exclusion and other reliefs are accounted for. For these reasons, the request to specifically exclude the 367 days was declined. [Paras 23, 24, 26, 27, 28]

The application for exclusion of 367 days from the liquidation period is rejected.

Final Conclusion: The Tribunal ordered the liquidator to proceed with the liquidation of Coastal Projects Limited in terms of the Adjudicating Authority's liquidation orders and declined the liquidator's prayer to exclude 367 days from the liquidation period; the application is disposed of.

Applicability of Section 10A to pending CIRP - mandatory versus directory nature of statutory timelines under the IBC (Section 12) - exclusion of time on account of COVID-19 and Regulation 40C - scope and effect of Regulation 40A read with Regulation 40C - continuance of CIRP despite overshooting prescribed timelines - powers and conduct of the Resolution Professional during CIRP

Applicability of Section 10A to pending CIRP - Section 10A does not suspend or terminate CIRP proceedings already initiated prior to 25.03.2020 and therefore cannot be invoked by the Applicant to halt the ongoing CIRP of the corporate debtor. - HELD THAT: - The Tribunal found that Section 10A was enacted to bar initiation of fresh CIRP petitions in respect of defaults occurring after 25.03.2020 and, by its Explanation, does not apply to defaults existing before that date. The court therefore rejected the Applicant's submission that Section 10A could be relied upon to suspend or invalidate a CIRP already admitted on 19.02.2020. The Tribunal relied on the submissions of the RP and the Bank to hold that Section 10A offers no assistance to the Applicant seeking suspension of the proceedings. [Paras 19]

Prayer based on Section 10A rejected; Section 10A inapplicable to CIRP admitted prior to 25.03.2020.

Mandatory versus directory nature of statutory timelines under the IBC (Section 12) - exclusion of time on account of COVID-19 and Regulation 40C - scope and effect of Regulation 40A read with Regulation 40C - Timelines under Section 12 are directory in light of Supreme Court precedent; Regulations framed thereunder (including Regulation 40A) operate as guidelines and Regulation 40C permits exclusion of lockdown period for CIRP timelines. - HELD THAT: - The Tribunal applied the Supreme Court's dictum that the 330-day outer limit under Section 12 is to be treated as ordinarily the outer limit but is not a rigid mandatory bar, and that extension may be permitted in exceptional cases. Consequentially, timelines prescribed by IBBI regulations (including Regulation 40A) are to be read as guiding norms rather than absolute mandates. In the context of the pandemic, Regulation 40C was held to be enacted to exclude periods affected by COVID-19 lockdowns from the CIRP timeline. The Tribunal thus accepted that the pandemic and associated lockdowns are relevant exceptional circumstances that may justify exclusion and extensions, and that the RP's actions must be assessed in that factual matrix. [Paras 16, 17, 20]

Timelines are directory; Regulation 40C allows exclusion of COVID-19 affected periods and Regulation 40A must be read with Regulation 40C as enabling measures rather than absolute prohibitions.

Continuance of CIRP despite overshooting prescribed timelines - powers and conduct of the Resolution Professional during CIRP - The Tribunal found no merit in the contention that overshooting of timelines rendered the CIRP a nullity or entitled the Applicant to suspend the process or forbear the RP; the RP's conduct was held to be diligent in the circumstances and the Invitation for Expression of Interest was not stayed. - HELD THAT: - After examining the chronology of events filed by the RP, the Tribunal observed that publications, constitution of CoC, valuer appointment, information memorandum and Form-G were effected notwithstanding lockdown constraints. The Tribunal noted authorities holding that CoC does not dissolve by reason of lockdown and that exclusion of time for pandemic-related disruption is recognised. On this basis the Tribunal rejected the Applicant's allegation that the RP acted without authority or that the CIRP must be suspended as a nullity. The Application seeking stay of the invitation for EOI and forbearance of the RP was dismissed. [Paras 21, 22, 23, 24]

Allegation of nullity/suspension of CIRP and forbearance of RP rejected; Application dismissed.

Final Conclusion: The Application filed by the director/promoter was dismissed. Section 10A does not apply to a CIRP admitted before 25.03.2020; timelines under Section 12 and attendant regulations are to be understood as ordinarily limiting but amenable to extension in exceptional circumstances, and Regulation 40C permits exclusion of periods affected by COVID-19; on the facts the RP's conduct was not disapproved and the reliefs sought were refused.

Cenvat credit on capital goods - Rule 3 of the Cenvat Credit Rules, 2004 - exclusionary scope of Notification No.13/2016-CE dated 1.3.2016 - area-based exemption and opting out

Cenvat credit on capital goods - Rule 3 of Cenvat Credit Rules, 2004 - exclusionary scope of Notification No.13/2016-CE dated 1.3.2016 - area-based exemption and opting out - Entitlement to Cenvat credit on capital goods installed during Nov.15 to March, 2016 and used in manufacture of dutiable goods vis-a -vis Notification No.13/2016-CE dated 1.3.2016 - HELD THAT: - The Tribunal found as an admitted fact that the capital goods were installed during the period November, 2015 to March, 2016 and that the appellant had opted out of the area-based exemption with effect from 8.11.2015 and commenced manufacture of dutiable goods cleared on payment of duty. Applying Rule 3 of the Cenvat Credit Rules, 2004, credit is available where capital goods are used in the manufacture of dutiable goods. Notification No.13/2016-CE, which bars availing credit on capital goods used in manufacture of exempted goods, does not apply to facts where the goods were used for manufacture of dutiable goods after the appellant opted out of exemption. The Tribunal therefore held that the notification's bar was not applicable to the appellant's case and that the appellant was entitled to claim Cenvat credit under Rule 3.

Credit under Rule 3 of the Cenvat Credit Rules, 2004 is available as the capital goods were used in manufacture of dutiable goods; Notification No.13/2016-CE is not applicable to these facts.

Final Conclusion: The impugned order denying credit is set aside; the appeal is allowed and the appellant is entitled to Cenvat credit with consequential relief, if any.

Proportionate reversal of CENVAT credit - value of trading service under Explanation I(c) to Rule 6 - interpretation of 'total CENVAT credit' for computation under Rule 6(3A) - options under Rule 6(3) for payment or reversal - common input services - ISD credit distribution

Value of trading service under Explanation I(c) to Rule 6 - proportionate reversal of CENVAT credit - Whether the value of the exempted service in trading should be the total turnover of goods traded or limited to the service element as defined in Explanation I(c) to Rule 6 when computing the amount to be reversed under Rule 6(3A). - HELD THAT: - The Tribunal held that trading is a composite transaction where the turnover includes both the goods value and a distinct service element. Explanation I(c) to Rule 6 expressly prescribes that for trading the value of the service shall be the difference between sale price and cost of goods sold or ten per cent of the cost of goods sold, whichever is higher. The adjudicating authority erred in treating the total trading turnover as the value of the exempted service when computing reversal under Rule 6(3A). That approach ignored the special nature of trading captured by Explanation I(c) and resulted in overstating the value of exempted services and hence the reversal amount. [Paras 24, 34]

The value of the exempted trading service for computation under Rule 6(3A) must be determined in accordance with Explanation I(c) to Rule 6 (difference between sale and cost or 10% of cost, whichever is higher), not by taking total trading turnover.

Interpretation of 'total CENVAT credit' for computation under Rule 6(3A) - common input services - proportionate reversal of CENVAT credit - options under Rule 6(3) for payment or reversal - Whether the formula in Rule 6(3A) requires use of the entire CENVAT credit taken during the month/year (including credit on inputs/input services exclusively used for dutiable manufacture) or only the credit on common input services when computing the amount to be reversed. - HELD THAT: - Rule 6(1) prohibits credit on inputs/input services used in or in relation to exempted goods/services; Rule 6(2) permits maintenance of separate accounts so that credit on inputs/input services exclusively used for dutiable activity remains fully available. The structure and sequential steps in Rule 6(3A)(b)/(c) compute common credit C = T - (A + B), where A and B are ineligible and eligible exclusive credits respectively, so that C represents only common credit. Reading the rule as a whole, 'total CENVAT credit' in the formula must be understood in that contextual sense (i.e., the total credit subject to attribution - the common credit) and not as an aggregation that includes credits exclusively attributable to dutiable manufacture. Applying the latter interpretation would nullify the protections in Rule 6(2) and deny credit expressly allowable under Rule 3, which is inconsistent with the scheme of the Rules. Accordingly, where the assessee has maintained separate records under Rule 6(2) and taken no credit on inputs/input services exclusively for exempted services, Rule 6(3A) applies only to apportion and reverse credit on common input services. [Paras 26, 27, 31, 33, 34]

For computation under Rule 6(3A) the relevant 'total' credit is the credit subject to attribution (i.e., common input services credit); credits exclusively used for dutiable manufacture are not to be included in the reversal computation.

Final Conclusion: The Tribunal allowed the appeals, set aside the impugned orders for both periods on grounds that (a) the value of the exempted trading service must be computed as per Explanation I(c) to Rule 6 and (b) the reversal under Rule 6(3A) must be applied only to credit on common input services; consequential relief granted and the Cross-Objection rejected.