TaxTMI Updates e-Newsletter
Jun 22,2020

Support services to mining - Classification of services - HSN 998622 - GST rate on support services to mining - Works contract vs service distinction - Leasing or rental services with or without operator - Scope of advance ruling - Matters beyond jurisdiction of AAR

Support services to mining - Classification of services - HSN 998622 - GST rate on support services to mining - Works contract vs service distinction - Whether the activity carried out by the applicant is classifiable as support services to mining and the applicable GST rate. - HELD THAT: - On the facts recorded in the agreement the applicant was engaged by the mine-owner to extract mineral using applicant's manpower and special-purpose vehicles while the ownership of the land and extracted mineral remained with the mine-owner. The Authority held that the applicant's role was to facilitate and support extraction on behalf of the owner and thus constituted a service, not a supply of goods or a works contract creating or transferring immovable property. The activity falls within the explanatory scope of HSN 998622 (support services to other mining n.e.c.), which explicitly covers overburden removal, development and preparation services of mineral sites and operation of mining units on a contract basis. Accordingly the supply is classifiable under HSN 998622 and taxable at the rate specified in the relevant notification, i.e., 18% (CGST 9% + SGST 9%). [Paras 4]

The work undertaken by the applicant is a 'Support Service to Mining' classifiable under HSN 998622 and attracts GST at 18% (CGST 9% + SGST 9%).

Scope of advance ruling - Matters beyond jurisdiction of AAR - Leasing or rental services with or without operator - Whether the Authority would rule on the distinction between operator and manpower, and whether the special purpose vehicles constitute 'machinery' under GST. - HELD THAT: - The Authority examined the ambit of questions permissible under the advance-ruling provisions and observed that the questions posed by the applicant on the difference between operator and manpower and on classification of the special-purpose vehicles as 'machinery' do not fall within the matters enumerated in Section 97(2) as applicable to advance rulings. Consequently, those questions are outside the jurisdictional mandate of the Authority and no substantive ruling on them is given. [Paras 10]

Questions 2 and 3 are beyond the scope of the Authority's mandate under Section 97(2) and no ruling is given on them.

Final Conclusion: The Authority ruled that the applicant's engagement is a support service to mining classifiable under HSN 998622 and taxable at 18% (CGST 9% + SGST 9%); the remaining questions on operator versus manpower and on whether the special-purpose vehicles are 'machinery' lie outside the Authority's jurisdiction under Section 97(2) and were not decided.

Works contract - composite supply - composite supply of works contract treated as supply of services - eligibility under Entry 3(vi)(a) of Notification No. 11/2017 - Central Tax (Rate) - predominantly for use other than for commerce, industry or any other business or profession - Government Entity

Works contract - composite supply - composite supply of works contract treated as supply of services - The combined supply of supply of materials and erection, testing and commissioning under the tender qualifies as a composite supply and as a works contract under the CGST Act, 2017. - HELD THAT: - The two interdependent work orders issued under a single tender are naturally bundled and supplied in conjunction with one another such that one is the principal supply. The activity involves completion, erection, installation and commissioning of infrastructure that cannot be removed without dismantling, and the execution involves transfer of property in goods. Therefore the contract falls within clause (119) of section 2 (works contract) and, being a bundled supply of goods and services with a principal element of works contract, constitutes a composite supply which, by Schedule II, is to be treated as a supply of services for GST purposes.

The contract is a Composite Supply and qualifies as a Works Contract under Section 2(119) of the CGST Act, 2017; the supply is to be treated as a supply of services.

Eligibility under Entry 3(vi)(a) of Notification No. 11/2017 - Central Tax (Rate) - predominantly for use other than for commerce, industry or any other business or profession - Government Entity - Whether the works contract is eligible for the reduced rate under Entry 3(vi)(a) of Notification No. 11/2017-CT(R); held not eligible. - HELD THAT: - Entry 3(vi)(a) requires (i) the supply to be a composite works contract, (ii) supplied to a Central/State/UT/local authority/Governmental Authority or Government Entity, (iii) to be original works, and (iv) the civil structure/original works must be meant predominantly for use other than for commerce, industry or any other business or profession; where supplied to a Government Entity the work must be entrusted to that entity by government. The Authority found the applicant's contract satisfies the first, second, third and entrustment conditions and that AWNL is a Government Entity. However, AWNL is engaged in supply of electricity to consumers for consideration and such activity falls within the definition of 'business'. The works undertaken assist AWNL in supplying electricity and are therefore predominantly for use in commerce/industry/other business. The Explanation to the entry excluding activities undertaken by governments as public authorities did not apply. Consequently the predominant-use criterion in Entry 3(vi)(a) is not met.

The contract is not covered by Entry 3(vi)(a) of Notification No. 11/2017-CT(R) and thus is not eligible for the concessional 12% rate.

Final Conclusion: The Authority rules that the tendered job (supply of materials and erection, testing and commissioning under the RGGVY turnkey contract) is a composite supply constituting a works contract and is to be treated as a supply of services, but it does not satisfy the 'predominantly for use other than for commerce, industry or any other business' condition of Entry 3(vi)(a) of Notification No.11/2017-CT(R); accordingly the supply is not entitled to the reduced 12% rate and is taxable at 18%.

Classification of goods as preparations for use on the hair - Classification under heading 3305 versus heading 1404 - HSN classification for henna/ mehendi powder - GST rate applicable on preparations for use on the hair - Advance ruling on classification of goods

Classification under heading 3305 versus heading 1404 - Classification of goods as preparations for use on the hair - HSN classification for henna/ mehendi powder - GST rate applicable on preparations for use on the hair - Mehendi/henna powder is classifiable under Chapter 33 (heading 3305) and not under Chapter 14 (heading 1404). - HELD THAT: - The Authority examined the nature and use of henna/mehendi powder, noting it is a natural dye obtained from the Lawsonia inermis plant, produced by drying and grinding leaves. The Customs Tariff amendments effected by the Finance Act, 2006 omitted the specific tariff items under heading 1404 (including the earlier sub-items for henna), so classification under the omitted 14041011 item does not arise. Given henna's dyeing/tanning properties and its common use as a hair dye, the product falls within preparations for use on the hair. Notification No. 41/2017-CT(Rate) includes heading 3305 (preparations for use on the hair) in Schedule-III attracting the higher rate. The Authority therefore treats henna/mehendi powder as covered by chapter heading 3305 and subject to the rate applicable to preparations for use on the hair, rejecting the contention that it remains classifiable under chapter 14 for the purposes of GST.

Mehendi/henna powder is covered under Chapter 33 (heading 3305) and attracts GST at 18% (CGST 9% + SGST 9%).

Final Conclusion: The Advance Ruling holds that mehendi/henna powder is classifiable as a preparation for use on the hair under heading 3305 (Chapter 33) and will attract GST at 18%.

Classification of goods - GST rate on plants and parts of plants used in pharmacy - Interpretation of tariff entries in Schedule I vis a vis residual entries - Principle of specificity

Classification of goods - GST rate on plants and parts of plants used in pharmacy - Interpretation of tariff entries in Schedule I vis a vis residual entries - Principle of specificity - Classification of Psyllium Husk Powder and the applicable GST rate. - HELD THAT: - The Authority examined the product and the applicant's manufacturing process and found that Psyllium Husk Powder is produced from the husk obtained after de husking Psyllium seeds. Chapter 12 of the GST Tariff (heading 1211) expressly lists parts of the Psyllium plant: Psyllium seed under 12119013 and Psyllium husk under 12119032. Notification No. 01/2017 Central Tax (Rate) (Schedule I, S. No. 73) covers "Plants and parts of plants ... whether or not cut, crushed or powdered" and therefore embraces Psyllium husk and its powdered preparations, attracting GST at the reduced rate of 5% (CGST 2.5% + SGST 2.5%). The Authority noted CBIC FAQs confirming that Isabgol (Psyllium) husk falls under heading 1211 and attracts 5% GST. The applicant's contention that Psyllium Husk Powder is unspecified and thereby falls under the residual 18% entry was rejected: a specific tariff entry for Psyllium husk/powder under Schedule I prevails over a general/residual entry, applying the Principle of specificity as laid down in Dunlop India Ltd. and Madras Rubber Factory Ltd. v. UOI & Others . Consequently, the product is classifiable under HSN 12119032 and liable to GST @ 5%.

Psyllium Husk Powder is classifiable under HSN 12119032 and attracts GST at 5% (CGST 2.5% + SGST 2.5%).

Final Conclusion: The advance ruling holds that Psyllium Husk Powder is covered by heading 12119032 and by Schedule I (S. No. 73) of Notification No. 01/2017 Central Tax (Rate), and therefore supply of Psyllium Husk Powder attracts GST at the rate of 5%.

Composite supply - works contract - original works - agricultural produce - units processing agricultural produce as food stuff - mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff - immovable property

Composite supply - works contract - original works - immovable property - Whether the civil and electro mechanical supplies under the work order qualify as a composite supply of works contract by way of construction, erection, commissioning or installation of original works so as to fall under Entry No. (v)(f) of Sr. No. 3 of the table under Notification No. 11/2017 as amended by Notification No. 20/2017. - HELD THAT: - The work order separates civil work (turn key civil construction) from electro mechanical work and within electro mechanical work it separately identifies a supply part and an installation part with item wise price break up to be submitted. The civil works do not involve supply of machinery or equipment and therefore do not meet the description in Entry No. (v)(f). The electro mechanical component centres on an individually identifiable item - the Pouch Filling Machine - which is a movable, marketable machine in existence prior to supply and capable of being sold separately. It is supplied from a manufacturer and is not brought into existence by on site construction. The work order treats supply and installation as distinct; consequently the supply of that individual machine is not a naturally bundled composite supply dominated by a principal supply as envisaged in the definition of composite supply. Further, an essential ingredient of a works contract is coming into existence of an immovable property by virtue of the works; the individual machine does not become immovable merely by subsequent fixing and does not satisfy the tests of permanency and creation of immovable property. For these reasons the supplies (civil work, other electro mechanical supplies and the Pouch Filling Machine) cannot be characterised as supply of a composite supply constituting a works contract by way of original works within Entry No. (v)(f). [Paras 11, 12, 13, 14, 15]

The civil work and the electro mechanical supplies (including the Pouch Filling Machine) do not qualify as a composite supply constituting a works contract supplied by way of original works for the purposes of Entry No. (v)(f).

Agricultural produce - units processing agricultural produce as food stuff - mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff - Whether the Pouch Filling Machine (and related supplies) pertains to machinery or equipment for a unit processing agricultural produce as food stuff so as to attract Entry No. (v)(f). - HELD THAT: - The definition of agricultural produce excludes produce that has undergone further processing other than that ordinarily done by a cultivator/producer which does not alter essential characteristics. The Pouch Filling Machine is used for packing milk after the milk has already undergone multiple processing steps (filtration, chilling, pasteurisation, standardisation, cream processing etc.) at the dairy. At the stage when the machine operates the milk's essential characteristics have been altered by prior processing carried out by the unit (i.e., not merely primary marketable processing by a cultivator/producer). Consequently the machine is not used for processing agricultural produce as defined and does not fall within machinery or equipment for units processing agricultural produce as food stuff under Entry No. (v)(f). [Paras 14, 15]

The Pouch Filling Machine is not machinery for processing agricultural produce as food stuff within the meaning of Entry No. (v)(f) and therefore the entry does not apply to that supply.

Final Conclusion: The Authority rules that Notification No. 20/2017 (amending Notification No. 11/2017) does not cover the supplies made or to be made by the applicant under the cited work order; the civil works, the electro mechanical supplies and the Pouch Filling Machine do not fall within Entry No. (v)(f) and the concessional rate under that entry is therefore not applicable to the applicant's supplies.

Import of goods - integrated tax leviable at time of importation - IGST on high sea sales collected at time of importation - supply - place of supply - inter-state supply - export of goods

Import of goods - integrated tax leviable at time of importation - IGST on high sea sales collected at time of importation - GST payable on goods procured from vendor located outside India when such goods are not brought into India - HELD THAT: - The Authority held that integrated tax on imported goods is leviable and collected at the point when customs duties are levied on importation. The IGST provisions are triggered when goods are brought into India and customs import declarations/bill of entry are filed; where goods procured from outside India are not brought into India and no import declarations are filed, IGST is not leviable. The Authority relied on the combined reading of the IGST Act, the Customs Tariff Act and the Customs Act and on the GST Council/Central Board circular clarifying that IGST on high-sea sales is collected only at the time of importation and that value additions in intermediate transactions are to be reflected at import clearance. Applying these principles to the disclosed facts, the transaction where goods never cross into India does not attract IGST at importation and therefore GST is not payable by the applicant on such procurements. [Paras 11, 13, 15]

GST is not payable on goods procured from a vendor located outside India where the goods are not brought into India and no import declarations are filed.

Supply - place of supply - inter-state supply - export of goods - GST payable on goods sold to a customer located outside India where goods are shipped directly from a vendor's premises outside India to the customer's premises - HELD THAT: - The Authority found the applicant's transaction to be a 'supply' for consideration. Under the place of supply rules, where movement of goods is involved the place of supply is the location where movement terminates for delivery to the recipient; here that place is outside India. Because the supplier (applicant) is located in India and the place of supply is outside India, the transaction falls within the definition of inter-state supply. The applicant did not establish that the goods were exported from India (the goods never crossed Indian customs frontiers) nor that they were otherwise exempt. Consequently, the supplies as described are taxable under IGST unless they qualify as exports by the statutory definition, which they do not on the facts given. [Paras 14, 15]

Applicable IGST is payable on the outward supply described, because the transaction constitutes an inter-state supply and does not qualify as export of goods under the factual matrix.

Final Conclusion: The Authority ruled that (i) no GST is payable where goods procured from outside India are never brought into India and no import formalities are completed; and (ii) IGST is payable on the applicant's described outward supplies to foreign customers (goods shipped from a foreign vendor to an overseas buyer) because the transactions amount to inter-state supplies and do not qualify as exports on the facts presented.

Classification of goods - Impregnated, coated, covered or laminated textile fabrics - Heading 5903 applicability - Visibility of impregnation/coating to the naked eye - Note 2(a)(1) to Chapter 59

Classification of goods - Heading 5903 applicability - Visibility of impregnation/coating to the naked eye - Note 2(a)(1) to Chapter 59 - Fusible Interlining Fabrics of Cotton (FIFC) is classifiable under HSN Code 5903 rather than under Chapter 52 headings based on cotton content. - HELD THAT: - Note 2 to Chapter 59 covers textile fabrics impregnated, coated, covered or laminated with plastics and states that Heading 5903 applies where such impregnation, coating or covering can be seen with the naked eye. Fabrics in which the impregnation, coating or covering cannot be seen with the naked eye usually fall in Chapters 50 to 55, 58 or 60. The applicant admitted that the powder-dot coating on the cotton interlining is visible to the naked eye, and the concerned officer independently confirmed that the coating is clearly visible and that Note 2(a)(1) is thereby satisfied. On that basis the Authority concluded that the product falls within the scope of Heading 5903 and is not to be classified under Chapter 52 headings despite its cotton content. [Paras 6, 7]

Fusible Interlining Fabrics of Cotton are classifiable under HSN Code 5903 of the GST Tariff.

Final Conclusion: The Authority rules that Fusible Interlining Fabrics of Cotton (FIFC), having a visible plastic coating as admitted by the applicant and confirmed by the concerned officer, are classifiable under HSN Code 5903.

Classification of goods - BOPP laminated PP woven sacks - plastic articles - HS code 3923 - Chapter 39 - Chapter 63 - Circular No. 80/54/2018-GST - specific description preferred over general

Classification of goods - BOPP laminated PP woven sacks - plastic articles - HS code 3923 - Chapter 39 - Chapter 63 - Circular No. 80/54/2018-GST - BOPP (Biaxially Oriented Polypropylene) laminated PP woven sacks are classifiable as plastic articles under Chapter 39 (HS code 3923) and not under Chapter 63. - HELD THAT: - The Authority considered the product description and manufacturing process submitted by the applicant and the clarification in Circular No. 80/54/2018-GST that polypropylene woven and non-woven bags laminated with BOPP are to be treated as plastic bags under HS code 3923. The Authority also relied on earlier rulings and judicial decisions holding that woven sacks made of plastic strips/films (including HDPE/PP tapes) are articles of plastic and fall under Chapter 39 rather than textile headings in Chapter 63. In view of the Circular and the consistent judicial and AAR precedent cited, the determinative classification is that the finished laminated PP woven sacks are plastic articles falling under HS code 3923, and non-laminated woven bags are to be classified according to their constituting materials.

The goods in question are held classifiable under Chapter 39 (HS code 3923) of the GST Tariff and not under Chapter 63.

Final Conclusion: Advance ruling: BOPP laminated polypropylene woven sacks are plastic articles classifiable under Chapter 39 (HS code 3923); therefore Chapter 63 (sacks and bags of textiles) does not apply to the goods in question.

Input Tax Credit entitlement for supplies used in the course or furtherance of business - denial of input tax credit for goods or services used for construction of an immovable property - works contract services disallowance under input tax credit

Input Tax Credit entitlement for supplies used in the course or furtherance of business - denial of input tax credit for goods or services used for construction of an immovable property - works contract services disallowance under input tax credit - Availability of input tax credit on project development services and works for development of Smart Industrial Port City (SIPC). - HELD THAT: - The applicant, a port trust, is developing SIPC by undertaking construction and related development on its land and proposes to auction long term rights for consideration. Section 16(1) confers a general entitlement to take credit of input tax on supplies used in the course or furtherance of business. However, subsection (5) of Section 17 specifies categories where input tax credit is disallowed, including works contract services supplied for construction of an immovable property and goods or services received for construction of an immovable property on a taxable person's own account. The SIPC development comprises construction of immovable property and the project development services and goods listed (programme management consultancy, marketing consultancy, land levelling and related works, roads, water, electricity and drainage infrastructure and other related works) fall within the scope of construction of immovable property or are works contract services used for that construction. Consequently, these inputs are excluded from input tax credit under the statutory disallowances in Section 17(5). [Paras 4, 5, 6, 7, 14]

Input tax credit is not available on the listed project development services and works used for development of SIPC construed as construction of an immovable property.

Final Conclusion: Advance ruling: Input tax credit shall not be available under the CGST Act, 2017 on the specified project development services and works used for the construction and development of the Smart Industrial Port City.

Classification of goods - Prepared foods obtained by the roasting of cereal - Tariff item 1904 10 90 - interpretation of the First Schedule to the Customs Tariff Act, 1975 - application of Chapter and Section Notes - Harmonised System of Nomenclature (HSN) - rate of tax under Schedule III of Notification No.1/2017 (9% CGST and 9% SGST)

Classification of goods - Prepared foods obtained by the roasting of cereal - Tariff item 1904 10 90 - application of Chapter and Section Notes - rate of tax under Schedule III of Notification No.1/2017 (9% CGST and 9% SGST) - Classification of the product marketed as '[J.J.'s] POP CORN' for the purpose of GST and the applicable rate. - HELD THAT: - The Authority examined the product and process: maize grains heated to produce puffed corn, with subsequent addition of salt, turmeric and negligible oil, resulting in a ready-to-eat prepared food. The Notification and its Explanations direct application of the First Schedule to the Customs Tariff Act, 1975 and the rules of interpretation (HSN and Chapter/Section Notes). Applying those rules and the Chapter Notes, the product falls within the description 'Prepared foods obtained by the roasting of cereal' and is classifiable under Chapter sub-heading 1904 10. As it is not specifically covered by the listed tariff items for corn flakes, puffed-rice-like products enumerated elsewhere, the product fits the residual tariff item 1904 10 90. Consequently, the product is not classifiable under Chapter 10 (maize in grain form) because the presence and basic character of the grain is lost by the preparation, nor under Chapter 11 (cereal grains otherwise worked) which excludes products that match heading 1904. On this basis the Authority rejected the applicant's contention that the product should be treated as maize under Sr. No. 50 of Schedule I or as 'cereal grains otherwise worked' under Sr. No. 57 of Schedule I, and held that the appropriate entry is Sr. No. 15 of Schedule III to Notification No.1/2017-Central Tax (Rate). [Paras 11, 12, 13, 14, 15]

The product '[J.J.'s] POP CORN' is classifiable under tariff item 1904 10 90 as 'Prepared foods obtained by the roasting of cereal' and, therefore, falls under Sr. No. 15 of Schedule III of Notification No.1/2017 and attracts 9% CGST and 9% SGST (or 18% IGST).

Final Conclusion: Advance ruling: '[J.J.'s] POP CORN' is classifiable under Chapter Sub Heading 1904 10 90 and liable to tax at the rate specified for Sr. No. 15 of Schedule III to Notification No.1/2017 - 9% CGST and 9% SGST (or 18% IGST).

Entitlement to carry forward CENVAT credit - permissibility of filing TRAN-I after prescribed date - availability of input tax credit in GSTR-3B as alternative - vires of Rule 117(1A) - Article 14 arbitrariness - Article 300A vested property right in input credit

Entitlement to carry forward CENVAT credit - permissibility of filing TRAN-I after prescribed date - availability of input tax credit in GSTR-3B as alternative - Article 14 arbitrariness - Article 300A vested property right in input credit - Petitioner entitled to carry forward CENVAT credit accrued under Central Excise Act, 1944 and to be permitted to upload TRAN-I or, failing that, to avail the ITC in GSTR-3B for July 2020. - HELD THAT: - The Court held that the issue is squarely covered by earlier decisions of this Court (Adfert Technologies Pvt. Ltd.) and the Delhi High Court (Brand Equity Treaties Ltd. and SKH Sheet Metals Components). Having regard to those precedents and to repeated executive extensions to permit filing of TRAN-I in cases of technical difficulties, denial of unutilized credit to dealers unable to furnish evidence of attempt to upload TRAN-I would amount to discrimination and would infringe Article 14 and Article 300A rights in relation to vested input credit. In consequence, the petitioner was directed to be permitted to upload TRAN-I on or before 30.06.2020, and in the event the portal is not opened, to be permitted to avail the input tax credit in the GSTR-3B return for July 2020; the revenue remains entitled to verify the genuineness of the claim. [Paras 6, 7, 8, 9]

Petition allowed; respondent directed to permit upload of TRAN-I by 30.06.2020 or, if portal not opened, petitioner may avail the ITC in GSTR-3B of July 2020 subject to verification.

Vires of Rule 117(1A) - Article 14 arbitrariness - Article 300A vested property right in input credit - Challenge to the vires of Rule 117(1A) was raised but the Court did not declare the provision invalid. - HELD THAT: - Although the petitioner challenged the constitutional validity of Rule 117(1A) and the Court noted the reasoning in Brand Equity that sub rule (1A) is arbitrary and limits the concept of 'technical difficulty' unduly, the bench declined to strike down the provision. Instead, relying on precedents and on principles of fairness and protection of vested credit rights, the Court granted the petitioner the specific relief of permitting TRAN-I filing or alternative availment of ITC, without declaring Rule 117(1A) ultra vires. [Paras 8]

Vires of Rule 117(1A) not declared invalid; relief granted on facts without striking down the rule.

Final Conclusion: Writ petition allowed: petitioner permitted to upload TRAN-I on or before 30.06.2020, and if the portal is not made available, petitioner may avail the disputed CENVAT/ITC in the GSTR-3B return of July 2020, subject to verification; Rule 117(1A) not struck down.

Cancellation of GST registration - recovery of GST dues by instalments - discretion to revive registration - non-deposit of agreed instalments as ground for refusing relief - extension for seeking revocation of cancellation

Cancellation of GST registration - discretion to revive registration - non-deposit of agreed instalments as ground for refusing relief - The appellate court will not interfere with the Single Judge's refusal to revive the appellant's GST registration where the appellant had agreed to pay overdue GST by instalments but made no deposit or concrete offer of payment. - HELD THAT: - The Court recorded that the appellant, a private limited company providing dry-cleaning services, had repeatedly defaulted in payment of CGST and SGST since 2017 and, after agreeing to pay the outstanding amounts in 12 monthly instalments, had not deposited any instalment nor tendered a specific payment proposal when directed by the Court. Given the absence of any payment or concrete offer despite earlier directions that instalments should have commenced and a further direction to ensure specified payment by a fixed date, the Court found no basis to displace the Single Judge's exercise of discretion in refusing revival of registration. The determinative fact was the appellant's failure to comply with the agreed instalment arrangement or to make any deposit when directed, which justified non-interference with the impugned order. [Paras 2]

Writ appeal dismissed for want of compliance with the agreed instalment payments; no interference with cancellation of registration.

Extension for seeking revocation of cancellation - recovery of GST dues by instalments - If a formal notification is issued pursuant to recommendations extending the period for seeking revocation of cancelled registrations, the appellant would be entitled to seek remedy under such notification notwithstanding dismissal of the writ appeal. - HELD THAT: - The Court noted the existence of recommendations by the Goods and Services Tax Council for extension of the period to seek revocation of cancellation but was informed that no formal notification had been issued. The Court observed that, should a notification be published granting such extension or relief and the appellant fall within its scope, the appellant may avail itself of remedies under that notification despite the present dismissal. This observation preserves the appellant's procedural right to seek relief under any subsequently issued statutory instrument without reopening the dismissed writ appeal on the present facts. [Paras 4]

Dismissal of the writ appeal is without prejudice to any remedy the appellant may have under a future notification implementing the GST Council's recommendations.

Final Conclusion: The writ appeal is dismissed for failure to comply with the agreed instalment payments; however, if a formal notification is issued pursuant to the GST Council's recommendations extending relief for revocation of cancelled registrations, the appellant may pursue relief under that notification.

Input tax credit migration - Transitional provision for carry forward of pre-GST credit - Rule 117(1A) CGST Rules - validity - Article 14 - arbitrariness and discriminatory classification - Article 300A - vested property right in accumulated tax credit - Permissible verification of genuineness by tax authorities

Transitional provision for carry forward of pre-GST credit - Input tax credit migration - Permissible verification of genuineness by tax authorities - Whether the petitioner is entitled to carry forward VAT credit/ITC accrued under the pre-GST regime and to be permitted to upload Form TRAN I or avail ITC in monthly return GSTR 3B - HELD THAT: - The Court held that the petitioner, who failed to file Form TRAN I within the prescribed time, is nonetheless entitled to carry forward the unutilised VAT credit/ITC accrued under the Punjab Value Added Tax Act, 2005. The Court relied upon its prior decision in Adfert Technologies and the Delhi High Court decisions (Brand Equity and SKH Sheet Metals) which recognised the transitory nature of the provisions and the purpose of protecting taxpayers' vested credits during migration to the GST regime. In light of repeated extensions granted by the authorities for filing TRAN I where technical difficulties were found, denial of the benefit to taxpayers unable to demonstrate an attempt to upload TRAN I would be contrary to the protective objective of the transition provisions. The Court therefore directed that the petitioner be permitted to upload TRAN I on or before 30.06.2020 and, if the portal is not opened, be allowed to avail the ITC in the GSTR 3B return for July 2020, while preserving the respondents' right to verify the genuineness of the claim. [Paras 6, 7, 8]

Petition allowed; petitioner permitted to upload TRAN I on or before 30.06.2020 or, if portal not opened, to avail the ITC in GSTR 3B for July 2020; respondents entitled to verify genuineness of the claim.

Rule 117(1A) CGST Rules - validity - Article 14 - arbitrariness and discriminatory classification - Article 300A - vested property right in accumulated tax credit - Whether Rule 117(1A) of the CGST Rules should be declared invalid - HELD THAT: - Although the Court observed and recorded earlier reasoning (including the Delhi High Court's view) that the restrictive interpretation of sub rule (1A)-limiting relief to those with 'technical difficulties on the common portal'-is arbitrary and could infringe Article 14 and Article 300A by depriving taxpayers of vested credits, the Bench declined to strike down Rule 117(1A). Instead, the Court provided relief to the petitioner on facts and by following precedent, without formally declaring the provision ultra vires. The Court therefore addressed the petitioner's entitlement without adjudicating the constitutional invalidity of the rule. [Paras 6, 7]

Rule 117(1A) not declared invalid; nevertheless, petitioner granted relief to protect carry forward of pre GST credit, following precedent and in light of principles of non arbitrariness and protection of vested rights.

Final Conclusion: The petition is allowed: the petitioner is directed to be permitted to upload Form TRAN I on or before 30.06.2020, and if the portal is not opened the petitioner may avail the disputed ITC in the GSTR 3B for July 2020; the respondents retain the right to verify the genuineness of the claim. The Court declined to invalidate Rule 117(1A) but granted relief consistent with earlier decisions recognizing the need to protect transitional credits.

Writ of mandamus - possession of leased premises - tenant-landlord rights under lease - sealing of premises under the GST Act - locus standi to challenge proceedings against tenant - remedy by appropriate forum for recovery of possession

Writ of mandamus - possession of leased premises - tenant-landlord rights under lease - sealing of premises under the GST Act - locus standi to challenge proceedings against tenant - Whether the High Court should issue a writ of mandamus directing respondents to unseal the premises and hand over possession to the landlord who had leased the premises to the assessee against whom proceedings under the GST Act were initiated. - HELD THAT: - Petitioner is the landlord who leased the premises to Alfara by a registered lease deed dated 1 July 2017 and the tenant remained in possession. The premises were sealed pursuant to proceedings under the GST Act against Alfara. The court held that relief by way of writ of mandamus to direct unsealing and handing over possession cannot be granted in writ proceedings where the dispute as to possession arises from a subsisting lease and the parties are governed by the terms of that lease. The State's action of sealing the premises under the GST Act and the fact that proceedings are directed against the tenant do not confer on the landlord a right to obtain immediate possession by writ; the landlord must pursue appropriate remedy before the competent forum for recovery of possession and enforcement of lease rights. Consequently, the petition seeking mandamus was misconceived and liable to be dismissed, while expressly leaving open the landlord's right to seek possession in an appropriate proceeding. [Paras 7, 8]

Petition dismissed; landlord not entitled to writ of mandamus for handing over possession in view of subsisting lease and available remedies before appropriate forum; dismissal without prejudice to landlord pursuing recovery of possession in proper proceedings.

Final Conclusion: The writ petition seeking mandamus to unseal the premises and hand over possession to the landlord was dismissed because possession is governed by the lease and the appropriate remedy for recovery of possession lies in the proper forum; dismissal without costs and without prejudice to the petitioner pursuing recovery proceedings.

Revocation of cancellation of registration - extension of statutory time limits due to COVID-19 - consideration of representation before revocation - abeyance of impugned order pending decision

Revocation of cancellation of registration - consideration of representation before revocation - extension of statutory time limits due to COVID-19 - abeyance of impugned order pending decision - Direction to the petitioner to file application for revocation and to respondents to consider and decide the same, with the impugned cancellation order kept in abeyance until such decision is taken. - HELD THAT: - The Court noted the existence of a COVID-19 related notification extending statutory time limits and observed that, in the prevailing circumstances, the respondents ought to have made efforts to consider revocation of the petitioner's cancelled registration. The writ petition was disposed of by directing the petitioner to submit a proper application setting out reasons and to pursue revocation before the respondents. The respondents are directed to decide the application strictly in accordance with law within 30 days. The Court permitted the petitioner to raise all issues before the authority and placed the impugned order in abeyance pending the authority's decision. [Paras 8, 9]

Petitioner to file application; respondents to decide revocation strictly in accordance with law within 30 days; impugned order kept in abeyance until final decision.

Final Conclusion: Writ petition disposed of by directing the petitioner to seek revocation before the respondents and by mandating a decision on such application within 30 days, with the challenged cancellation order remaining in abeyance until that decision is rendered.

Transfer pricing adjustment - Arm's length price - Benefit test - Transactional Net Margin Method (TNMM) - Comparable Uncontrolled Price (CUP) method - Principle of consistency - Advertisement, Marketing and Promotion (AMP) expenses as international transaction - Bright Line Test (BLT) - Agency cost markup - Remand for factual verification - Section 80IB/80IC deductions - apportionment of expenses - Eligibility of sale of scrap under section 80IC - Education cess deductible under section 37 - Dividend Distribution Tax - DTAA relief/remand

Transfer pricing adjustment - Arm's length price - Benefit test - Transactional Net Margin Method (TNMM) - Comparable Uncontrolled Price (CUP) method - Principle of consistency - Deletion of transfer pricing adjustments made in respect of royalty payments - HELD THAT: - The Tribunal examined the TPO's restriction of royalty to 1.5% (derived by applying the CUP and a contemporaneous agreement) and the TPO's nil-ALP finding for two legacy brands, against the assessee's entity-level TNMM benchmarking and materials. Applying the principle of consistency and noting absence of any material change in facts or law, the Tribunal held that Revenue could not depart from the view allowed in earlier years without cogent reasons. The Tribunal accepted the DRP's conclusion that the TPO's disallowance in respect of the two brands was unsustainable, observed that the trademarks were owned by AEs and royalties were for a bundle of services, and found the TPO's benefit-test/CUP application and reliance on an unrelated contemporaneous agreement inappropriate. Consequently the ALP adjustments in respect of royalty for A.Y. 2010-11 and A.Y. 2011-12 were deleted. [Paras 18, 19]

Royalty-related ALP adjustments deleted for A.Y. 2010-11 and A.Y. 2011-12.

Advertisement, Marketing and Promotion (AMP) expenses as international transaction - Bright Line Test (BLT) - Transactional Net Margin Method (TNMM) - Arm's length price - Whether AMP expenditure constitutes an international transaction and the resulting ALP adjustment - HELD THAT: - The Tribunal reviewed the TPO/DRP reliance on the Special Bench's LG Electronics bright-line approach and the TPO's computation (excess AMP over comparable AMP-to-sales ratio, plus a mark-up). Distinguishing facts from LG Electronics, and following the Delhi High Court in Maruti Suzuki, the Tribunal held that unilateral incurrence of AMP for domestic product promotion, absent any contract/obligation or arrangement with the AE, does not by itself create an international transaction under Chapter X. The Tribunal further noted that BLT is not a recognised machinery under Chapter X and that quantitative adjustment of AMP is not permissible in absence of an ascertainable international transaction price. Applying these principles, the Tribunal allowed the assessee's appeal and deleted the AMP-related ALP adjustments for the years in dispute. [Paras 28]

ALP adjustments in respect of AMP expenses deleted for A.Y. 2010-11 and A.Y. 2011-12.

Agency cost markup - Comparable companies - Remand for factual verification - Validity of mark-up applied by TPO on recoveries from AEs for procurement/system costs (choice of comparables and nature of services) - HELD THAT: - TPO treated reimbursements as remuneration-bearing support services and applied a 22.34% mark-up based on selected comparables; DRP upheld TPO but limited markup to agency/service component (excluding cost of materials). The Tribunal found neither TPO nor DRP had adjudicated the precise nature of services rendered and noted the assessee's voluminous documentary evidence claiming cost-to-cost reimbursements. In the interest of justice the Tribunal remitted the issue to the TPO for fresh adjudication on the true nature of the transactions and appropriate quantification, giving effect to the DRP's direction limiting markup to agency cost if service element is established. [Paras 35]

Issue remitted to TPO for adjudication on facts and quantification; ground allowed for statistical purposes.

Remand for factual verification - Transactional Net Margin Method (TNMM) - Direction to give effect to rectified DRP directions on export of raw materials and finished products (external vs internal TNMM) - HELD THAT: - The Tribunal noted that the DRP had rectified its directions to reject the TPO's use of internal TNMM in favour of the assessee's external TNMM approach, but the TPO had not given effect to the rectified directions. The Tribunal directed the TPO to implement the rectified DRP directions and to give effect accordingly. [Paras 37]

TPO directed to give effect to the rectified DRP directions; ground allowed for statistical purposes.

Section 80IB/80IC deductions - apportionment of expenses - Principle of consistency - Apportionment of residual/head-office expenses between eligible (fiscal) units and non-eligible units - HELD THAT: - The Tribunal followed its earlier coordinate-bench decision in the assessee's own case for an earlier year and accepted the assessee's method of apportionment (allocation based on number of executives linked to units and unit sales) as logical. Noting no change in facts or law and absence of contrary material from Revenue, the Tribunal dismissed Revenue's appeals and held the apportionment challenge unsustainable. [Paras 42]

Revenue's appeals dismissed; apportionment upheld in favour of the assessee.

Eligibility of sale of scrap under section 80IC - Inclusion of income from sale of scrap while computing deduction under section 80IC - HELD THAT: - Relying on the Calcutta High Court decision in the assessee's own case and on Madras High Court precedent, the Tribunal held that profit from sale of scrap arises from the industrial undertaking and is eligible for deduction under section 80IC. As there was no change in facts or law, the Tribunal allowed the assessee's ground and dismissed Revenue's challenge. [Paras 46]

Income from sale of scrap held eligible for section 80IC deduction; Revenue's appeals dismissed on this ground.

Excess disallowance - interest allocation - Remand for factual verification - Remand of dispute over quantification of interest income disallowance allocated to eligible units - HELD THAT: - The Tribunal referred to its prior coordinate-bench order remanding similar quantification issues for factual verification. Observing that the question of disallowing interest for 80IB/80IC purposes was accepted as requiring factual verification of quantification, the Tribunal remitted the quantification issue back to the Assessing Officer for factual examination and computation. [Paras 52]

Issue remanded to AO for factual verification and quantification.

Dividend Distribution Tax - DTAA relief/remand - Remand for factual verification - Remand to AO for adjudication on claim for refund of DDT paid in respect of non-resident shareholders under applicable DTAAs - HELD THAT: - The assessee claimed relief under India-UK and India-Spain DTAAs against DDT charged on dividends to non-resident shareholders. The Tribunal found the matter required factual verification (amounts, agreements and documents) and directed remand to the AO to examine relevant DTAAs and evidence and adjudicate the claim in accordance with law. [Paras 54]

Matter remitted to AO for factual verification and adjudication on DTAA relief/refund claim.

Education cess deductible under section 37 - Deductibility of education cess paid on income tax as business expenditure - HELD THAT: - Following CBDT Circular and recent High Court and coordinate-bench precedents, the Tribunal held that education cess is not a tax within the meaning of the disallowance provision invoked and is allowable as an expenditure under section 37. The Tribunal directed the Assessing Officer to allow the claimed education cess in computing total income. [Paras 60]

Claim for deduction of education cess allowed; AO directed to grant deduction.

Final Conclusion: For A.Y. 2010-11 and A.Y. 2011-12 the Tribunal deleted the TPO/ALP adjustments in respect of royalty and AMP expenses, upheld the DRP's deletion of royalty adjustments, remitted the transaction-of-recoveries (agency/support services) and certain quantification issues to the TPO/AO for factual adjudication, directed the AO/TPO to give effect to rectified DRP directions where applicable, allowed the assessee on corporate tax issues of apportionment and scrap income under section 80IB/80IC, allowed deduction of education cess, and remanded the DDT/DTAA relief claim to the AO for verification; appeals are disposed as indicated above.

Penalty under section 271B - show cause notice under section 274 - vagueness of penalty notice - reasonable cause under section 273B - tax audit obligation under section 44AB

Show cause notice under section 274 - vagueness of penalty notice - penalty under section 271B - The validity of the show cause notice dated 15-05-2018 (issued under section 274) and whether it was too vague to sustain a penalty under section 271B. - HELD THAT: - The Tribunal found that the notice merely stated that the assessee had either failed to get accounts audited or failed to furnish the audit report as required under section 44AB, without specifying which fault applied or narrowing the charge to the facts of the case. The AO had thus not struck down inapplicable or irrelevant portions and failed to inform the assessee of the precise charge so as to enable a proper defence. Relying on precedent treating vague penalty notices as invalid, the Tribunal held that the notice was per se vague and therefore bad in law, rendering any consequent penalty unsustainable. [Paras 11]

The show cause notice was held to be vague and legally defective; the penalty could not be sustained on that basis.

Reasonable cause under section 273B - tax audit obligation under section 44AB - penalty under section 271B - Whether the assessee furnished a reasonable cause for delay in filing the Tax Audit Report, rendering penalty under section 271B not leviable. - HELD THAT: - The Tribunal noted that the assessee filed the return and the belated Tax Audit Report on 31-03-2016 and that the return was accepted by the department (intimation under section 143(1)). The assessee explained that the delay arose because the accountant responsible for earlier year accounts left without finalising books, so the earlier year audit completed only on 23-03-2016, which prevented timely completion of the subsequent year's audit. The Tribunal considered this explanation to be reasonable, observed analogous Tribunal precedent where delay in earlier year audit justified delay for the subsequent year, and also took note of typographical and factual errors in the AO's penalty order indicating non-application of mind. Applying section 273B principles, the Tribunal held the explanation as constituting reasonable cause. [Paras 12]

The delay in furnishing the Tax Audit Report was held to be on reasonable grounds; consequently penalty under section 271B was not leviable.

Final Conclusion: The Tribunal allowed the appeal, set aside the penalty under section 271B for AY 2015-16 on the twin grounds that the show cause notice was vague and that the assessee had furnished a reasonable cause for delay; the assessing officer was directed to delete the penalty.

Stay on recovery - status quo pending disposal of appeals - security or undertaking as condition for interim stay - reference to larger bench under section 255(3)

Stay on recovery - status quo pending disposal of appeals - security or undertaking as condition for interim stay - Interim stay on collection and recovery of disputed demands for the assessment years 2011-12 and 2012-13 - HELD THAT: - The Tribunal granted an interim stay of collection and recovery of the disputed demands aggregated for AY 2011-12 and AY 2012-13, while expressly refraining from adjudicating the merits of the appeals. The stay was made conditional so as to protect the legitimate interests of the revenue: the assessee was directed, within one week of receipt of the order, to furnish an undertaking detailing investments of amounts not less than the specified sum which will not be encashed until the stay applications are disposed of; to cooperate in expeditious disposal of stay applications and appeals and, if required, to argue the appeals via virtual hearing; and the interim stay was ordered to operate until disposal of the stay applications, the appeals, or further orders, whichever is earlier. The Tribunal explained that these measures are intended to maintain the status quo and to preserve revenue interests pending fuller consideration of broader questions raised by the stay applications. [Paras 10, 11]

Interim stay granted on the stated conditions; stay to remain operative until disposal of stay applications, appeals, or further orders.

Reference to larger bench under section 255(3) - constitution of larger bench - Referral of questions of wider import to the President of the Tribunal for constitution of a larger bench - HELD THAT: - The Tribunal identified two broad aspects requiring authoritative determination: (a) the legal impact of the amendment to the first proviso to section 254(2A) on the Tribunal's power under section 254(1) to grant stays, including whether the amendment is mandatory or directory and its temporal effect on appeals filed before the amendment; and (b) the scope and nature of reasonable security that may be required when granting stay under the proviso. Concluding that these are pan-India issues of far-reaching consequence warranting fuller consideration, the Tribunal referred the stay applications to the President of the Income Tax Appellate Tribunal for consideration of constitution of a larger bench and for framing the questions to be decided by such bench, and tentatively posted the matters for further hearing by the larger bench as may be constituted. [Paras 7, 8, 9]

Matter referred to the President of the Tribunal for consideration of constitution of a larger bench under section 255(3); matters tentatively posted for hearing by the larger bench.

Final Conclusion: The Tribunal granted an interim stay on collection/recovery of the disputed demands for AY 2011-12 and AY 2012-13 on specified conditions (undertaking regarding investments, cooperation in expeditious hearing, and stay to continue until disposal), and referred the broader legal questions concerning the effect of the amendment to the first proviso to section 254(2A) and the nature of security for stays to the President for constitution of a larger bench under section 255(3).

Disallowance under section 40(a)(ia) for short deduction of tax at source - disallowance under section 14A read with Rule 8D of Income Tax Rules for expenditure relatable to exempt income - applicability of section 115JB (MAT) to banking companies - taxation of income from immovable property under DTAA (Article 6) and relief under section 91

Disallowance under section 40(a)(ia) for short deduction of tax at source - Deletion of addition made under section 40(a)(ia) on account of short deduction of tax at source - HELD THAT: - The Tribunal upheld the deletion of the disallowance where the case involved short deduction (and not non-deduction) of tax at source and the assessee had placed reliance on the coordinate Division Bench's earlier decision in the assessee's own case. The Tribunal followed the coordinate bench's reasoning, including reliance on the jurisdictional High Court decision cited therein, and found no change in facts or law warranting interference. The deletion of the addition under section 40(a)(ia) was therefore sustained.

The addition under section 40(a)(ia) was deleted; Revenue's grounds on this issue are dismissed.

Disallowance under section 14A read with Rule 8D of Income Tax Rules for expenditure relatable to exempt income - Deletion of disallowance computed under section 14A read with Rule 8D - HELD THAT: - Relying on the Division Bench's earlier decision in the assessee's own case and on precedents treating banks differently (including reliance on judicial authorities addressing banks' business of trading/holding securities and netting of interest), the Tribunal found that the facts and legal position were the same and that the Assessing Officer's disallowance under section 14A/Rule 8D was not sustainable. The coordinate-bench reasoning concerning (i) treatment of investments held in the course of banking business, and (ii) computation aspects under Rule 8D, was applied to delete the disallowance.

The disallowance under section 14A read with Rule 8D is deleted; Revenue's grounds on this issue are dismissed.

Applicability of section 115JB (MAT) to banking companies - Whether section 115JB is applicable to the assessee being a banking company - HELD THAT: - Following the Tribunal's earlier well reasoned decision in the assessee's own case and consistent judicial authorities (including the Bombay High Court), the Tribunal held that section 115JB (as in force for the relevant period) did not apply to the assessee-bank. The Tribunal's reasoning, as adopted, rested on the statutory scheme (interaction of section 115JB with section 211 of the Companies Act and the provisos affecting banking companies), legislative history and the consequent unworkability of the machinery provisions if applied to entities governed by special statutes. As there was no change in facts or law to displace the coordinate-bench view, the impugned application of section 115JB was rejected.

Section 115JB was held not applicable to the assessee for the year under consideration; Revenue's grounds on this issue are dismissed.

Taxation of income from immovable property under DTAA (Article 6) and relief under section 91 - Taxability in India of rental income from immovable property situated in Singapore and entitlement to relief for foreign tax paid - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that income from immovable property situated in Singapore is taxable in the State where the immovable property is situated in terms of Article 6 of the India-Singapore DTAA; accordingly, the Assessing Officer's additions in respect of such rental income were not sustained. The Tribunal also noted the assessee's entitlement to relief/credit for foreign taxes paid under section 91 (and applied prior decisions of the authority), and observed that, since MAT was held inapplicable, related debates lost relevance.

The order of the CIT(A) deleting the additions relating to rental income from Singapore was upheld; Revenue's grounds on this issue are dismissed.

Final Conclusion: The Revenue's appeal for A.Y. 2011-12 is dismissed in entirety: additions under section 40(a)(ia) and under section 14A/Rule 8D were deleted; section 115JB was held not applicable to the assessee-bank for the year; and the CIT(A)'s deletion of additions relating to Singapore rental income (and allowance of relief for foreign tax where claimed) was upheld.

Disallowance under Section 14A and Rule 8D - deduction under Section 36(1)(viii) for a housing finance company - 'profits derived' test - treatment of current maturities under Revised Schedule VI for classification as short term - remand for verification of plot loans and repairs/renovation loans for eligibility under Section 36(1)(viii) - employee's contribution - deduction under Section 36(1)(va) read with Section 2(24)(x) - interaction of Section 36(1)(va) with Section 43B and retrospective reading of Finance Act, 2003 (Alom Extrusions principle)

Disallowance under Section 14A and Rule 8D - Deletion of the disallowance under section 14A read with Rule 8D where no exempt income was earned in the year. - HELD THAT: - The Tribunal recorded that it is an admitted and uncontested fact that the assessee did not earn or receive any exempt income in the relevant year and that the CIT(A) had rightly corrected the AO's treatment (interest on deposits misclassified as dividend). In that factual position the Tribunal held that invoking Section 14A/Rule 8D to disallow expenditure was not warranted and upheld the CIT(A)'s deletion of the disallowance, following jurisdictional and other High Court decisions to the like effect. [Paras 5]

The disallowance u/s 14A r.w. Rule 8D of Rs. 4,02,500/- deleted by the CIT(A) is upheld; Revenue's grounds on this issue are dismissed.

Deduction under Section 36(1)(viii) for a housing finance company - 'profits derived' test - treatment of current maturities under Revised Schedule VI for classification as short term - Extent of deduction under Section 36(1)(viii): (a) current maturities of housing loans (as classified in 'Short Term Loans & Advances') to the extent representing housing loan maturities are to be taken into account; (b) current maturities of mortgage/other loans and mortgage/other loans not shown to be for residential purchase/construction are not allowable; (c) assessee bears onus to prove eligibility and profits must be 'derived' from eligible business. - HELD THAT: - The Tribunal observed that Section 36(1)(viii) is a deduction provision to be strictly construed and applies to profits 'derived' from the eligible business of providing long term finance for construction or purchase of houses in India for residential purposes. The Tribunal accepted that Revised Schedule VI required classification of current maturities of long term debt under short term loans and advances, but found that only the portion identified as current maturities of housing loans (not mortgage/other loans) could be included for computing deduction. The Tribunal reversed the CIT(A)'s inclusion of current maturities of mortgage/other loans, held mortgage/prosperity and commercial loans are not eligible unless shown to be for residential purchase/construction, and directed that only the current maturities of housing loans be included. The assessee's onus to prove the long term nature (repayable not less than five years) and direct nexus of profits was emphasised. [Paras 7, 9]

CIT(A)'s inclusion of current maturities of mortgage/other loans is reversed; current maturities of housing loans are to be included for deduction computation; assessee must satisfy statutory 'derived from eligible business' test and onus remains on the assessee.

Remand for verification of plot loans and repairs/renovation loans for eligibility under Section 36(1)(viii) - Plot loans and repairs/renovation loans were remitted to the AO for fresh verification of facts and eligibility for deduction under Section 36(1)(viii). - HELD THAT: - The Tribunal held that plot loans may qualify only if the borrower constructs a residential house within the stipulated period (doctrine of relation back may apply where construction occurs) and that loans for repairs/renovation qualify only where they result in construction of additional floors/areas (not routine repairs). The Tribunal directed the assessee to produce complete documentary evidence and directed the AO to re determine the deduction on plot loans and repairs/renovation loans in accordance with the statutory 'profits derived' test and the cited Supreme Court authorities, remitting the matter for fresh adjudication limited to those verifications. [Paras 7, 9]

Issue remitted to the AO for fresh verification and computation in accordance with the Tribunal's directions; assessee to produce details on plot loans and renovation loans to substantiate entitlement.

Employee's contribution - deduction under Section 36(1)(va) read with Section 2(24)(x) - interaction of Section 36(1)(va) with Section 43B and retrospective reading of Finance Act, 2003 (Alom Extrusions principle) - Deduction of employee's PF contribution deposited belatedly (i.e., after statutory due date under PF law) but before the due date for filing the return under Section 139(1) is allowable. - HELD THAT: - The Tribunal reviewed the statutory scheme (Section 2(24)(x), Section 36(1)(va), Section 43B) and the divergent High Court decisions, noting the Supreme Court's reasoning in Alom Extrusions that amendments by Finance Act, 2003 are curative and to be applied retrospectively. Following the binding decision of the jurisdictional High Court (Industrial Security) and related authorities, the Tribunal held that where employee contributions are deposited to the credit of employees before the due date for filing the return under Section 139(1), deduction under Section 36(1)(va) is allowable despite belated deposit under the PF statute; accordingly the CIT(A)'s deletion of the disallowance was upheld. [Paras 10]

Assessee's claim for deduction of Rs. 6,31,788/- (employees' PF contribution deposited before return filing date but after statutory PF due date) is allowed; Revenue's appeal on this issue is dismissed.

Final Conclusion: For ay: 2013-14 the Tribunal: upheld deletion of the Section 14A/Rule 8D disallowance (no exempt income); allowed deduction in part under Section 36(1)(viii) by including current maturities of housing loans but reversed inclusion of mortgage/other current maturities and remitted plot loan and repairs/renovation loan claims to the AO for verification; and upheld the CIT(A)'s allowance of delayed employees' PF contribution (deposited before filing of return) under Section 36(1)(va). The Revenue's appeal is partly allowed for statistical purposes and otherwise dismissed as indicated.

Re-opening of assessment beyond four years and proviso to section 147 - reason to believe - failure to disclose fully and truly all material facts - change of opinion - unexplained cash credit treated as income under income-tax heads - classification of credited sums as business receipts for set-off of business loss - prospective amendment excluding set-off effective from 01.04.2017

Re-opening of assessment beyond four years and proviso to section 147 - failure to disclose fully and truly all material facts - change of opinion - reason to believe - Validity of reassessment proceedings initiated under section 147/148 after the four year period where original assessment under section 143(3) was completed and no failure to disclose material facts was alleged. - HELD THAT: - The Tribunal held that the proviso to section 147 bars reassessment after the four year period unless income has escaped assessment by reason of the assessee's failure to file a return or to disclose fully and truly all material facts. On the facts there was no allegation in the reasons recorded that the assessee had failed to disclose material facts at the time of the original assessment; the material relied upon for reopening came from the same record and investigation material and did not show subsequent tangible material establishing failure by the assessee. The reopening was therefore vitiated as amounting to a change of opinion rather than being based on the requisite failure of disclosure, and the reassessment was quashed. The Tribunal applied the principle reflected in the Calcutta High Court decision in Amiya Sales and Industries vs. ACIT and other precedents discussed in the order to conclude that mere belief that income escaped assessment is not sufficient to overcome the proviso where there is no allegation of non disclosure by the assessee. [Paras 11, 13]

Reopening under section 147/148 quashed and assessee's appeal allowed on this ground; merits not adjudicated.

Unexplained cash credit treated as income under income-tax heads - classification of credited sums as business receipts for set-off of business loss - set-off of business (derivative) loss against unexplained cash credit - prospective amendment excluding set-off effective from 01.04.2017 - Whether the addition made under the head of unexplained cash credit can be set off against brought forward derivative/business loss. - HELD THAT: - The Tribunal upheld the view of the Commissioner (Appeals) that the sums credited in the assessee's books could be construed as business receipts, having regard to the nature of the assessee's trading activity and the fact that the entire amount was recorded in the books. On that basis, the tribunal found no infirmity in directing set off of the derivative business loss against the addition under section 68. The Tribunal noted that statutory amendment denying such set off was prospective with effect from 01.04.2017 and therefore not applicable to the assessment year in issue. Reliance was placed on precedents recognizing that sums credited in books may be treated as business income where the facts so indicate. [Paras 16, 17, 18]

Order of the Commissioner (Appeals) upheld; set off of derivative business loss against the addition under section 68 permitted and revenue's appeal dismissed on this point.

Final Conclusion: The reassessment initiated under section 147/148 for A.Y. 2009-10 was quashed for want of jurisdiction as the proviso to section 147 was not satisfied; consequentially the assessee's appeal is allowed. The Revenue's challenge to the Commissioner (Appeals) order directing set off of the derivative business loss against the addition under section 68 is dismissed and the Commissioner (Appeals) order is upheld.

Unexplained investment - valuation by Divisional Valuation Officer - disregard of valuation variation below 10% - curative and retrospective effect of procedural valuation amendment

Unexplained investment - valuation by Divisional Valuation Officer - disregard of valuation variation below 10% - Whether the enhancement of income by treating the excess of DVO valuation over the assessee's books as unexplained investment should be sustained. - HELD THAT: - The Tribunal noted that the Divisional Valuation Officer valued the building at Rs. 1,76,55,900 whereas the assessee's books showed Rs. 1,66,52,805, a difference of Rs. 10,03,095 which is less than 10% of the value shown by the assessee. Relying on co-ordinate Bench decisions which have held that minor variations between stamp/DVO valuation and the value declared by the assessee (below a specified threshold) may be ignored, and treating the third proviso to the valuation provision as declaratory/curative in nature, the Tribunal held that such a variation does not warrant an addition as unexplained investment. Applying that principle to the facts, the Tribunal deleted the addition made by the lower authorities. [Paras 5, 7]

The addition of Rs. 10,03,095 treated as unexplained investment was deleted and the appeal was allowed.

Final Conclusion: The Tribunal deleted the enhancement made on account of the DVO valuation excess (being below the 10% threshold relied upon) and allowed the assessee's appeal for AY 2008-09.

Revisional jurisdiction under section 263 of the Income-tax Act - erroneous order prejudicial to the interest of revenue (Malabar twin test) - speculative transaction versus eligible derivative transaction under section 43(5) proviso (clause (d)) - eligible transaction carried out on a recognised stock exchange supported by time-stamped contract notes - proof of broker's membership and genuineness of transactions as factor in classification

Revisional jurisdiction under section 263 of the Income-tax Act - erroneous order prejudicial to the interest of revenue (Malabar twin test) - Whether the Principal Commissioner of Income Tax validly assumed jurisdiction under section 263 by holding the assessment order to be erroneous and prejudicial to the interest of revenue. - HELD THAT: - The Tribunal applied the twin conditions laid down by the Supreme Court in Malabar Industries-an order of the Assessing Officer must be both erroneous and prejudicial to revenue to attract revision under section 263. The Court examined whether the AO's allowance of currency derivative loss was unsustainable in law or based on incorrect facts, or otherwise amounted to an erroneous order. Having considered the statutory proviso to section 43(5), the notification recognising the exchange, the contract notes, payments by account payee cheque and the legal precedents relied upon by the assessee, the Tribunal concluded that the AO adopted a view which was tenable in law because the transactions fell within the exception in clause (d) of section 43(5). Therefore the AO's order could not be characterised as an erroneous order prejudicial to revenue warranting exercise of revisional jurisdiction by the PCIT. [Paras 6, 7, 8]

Revisional jurisdiction under section 263 was not validly exercisable because the assessment order was not shown to be erroneous and prejudicial to the revenue.

Speculative transaction versus eligible derivative transaction under section 43(5) proviso (clause (d)) - eligible transaction carried out on a recognised stock exchange supported by time-stamped contract notes - proof of broker's membership and genuineness of transactions as factor in classification - Whether the loss claimed by the assessee on currency derivative transactions is a speculative loss or is covered by the proviso to section 43(5) as an eligible derivative transaction. - HELD THAT: - The Tribunal examined the scope of clause (d) of the proviso to section 43(5) and its explanations, the CBDT notification recognising MCX Stock Exchange Ltd., the nature of derivatives (including foreign currency derivatives) as explained in judicial precedents and SEBI materials, and the assessee's contract notes and payment proofs. The Tribunal accepted the assessee's contention that the transactions were exchange-traded currency derivatives effected through a member/broker of the recognised exchange and supported by contract notes, falling within the 'eligible transaction' exception. Although the PCIT inquired into the broker's subsequent business status and locality of address, the Tribunal found the factual matrix - recognition of the exchange, membership at the relevant time, documented contract notes and accounting of payments - sufficient to bring the transactions within clause (d). Consequently the loss was not to be treated as speculative. [Paras 7, 8]

The currency derivative loss is not a speculative loss; it falls within clause (d) of the proviso to section 43(5) and is allowable as incurred in the business.

Final Conclusion: The appeal is allowed: the Tribunal quashed the PCIT's revision proceedings under section 263 because the AO's allowance of the currency derivative loss for A.Y. 2014-15 was not shown to be erroneous or prejudicial to revenue, the loss falling within the proviso to section 43(5) as an eligible derivative transaction.

Treatment of employee contributions deposited after statutory due date but before due date of filing return - allowability of bad debts written off in the books as sufficient for deduction - scope of provisions under section 194C (including sub clauses) and applicability of disallowance under section 40(a)(ia) - reimbursement of expenditure does not constitute taxable income where reflected as reimbursement in books - business expediency of festival/community and subscription expenses as deductible - disallowance under section 14A read with Rule 8D where no exempt income is earned

Treatment of employee contributions deposited after statutory due date but before due date of filing return - interpretation and retrospective effect of provisions affecting deduction of statutory liabilities - Whether employee contributions deposited after the due date under PF/ESI laws but before the due date for filing the return are deductible and cannot be treated as deemed income under the provisions relied upon by the Assessing Officer. - HELD THAT: - The Tribunal upheld the deletion of the addition made by the Assessing Officer. The Tribunal noted and applied the binding precedents of the Supreme Court holding that employee contributions deposited beyond the dates specified under PF/ESI laws but before the due date of filing the return cannot be treated as deemed income under the provisions invoked by the AO. The Tribunal accepted the reasoning of the CIT(A) that the issue is covered by the Supreme Court decision in Commissioner of Income Tax vs. Alom Extrusion Ltd. and subsequent appellate pronouncements relied upon before it, and therefore declined to interfere with the appellate deletion. [Paras 8]

Addition of Rs. 19,85,240/- deleted; order of CIT(A) upheld and ground of appeal dismissed.

Allowability of bad debts written off in the books as sufficient for deduction - application of settled law that post 1989 write off in accounts suffices for deduction - Whether the assessee's write off of bad debts in the audited accounts satisfies the condition for deduction under the relevant provisions so as to preclude disallowance by the AO. - HELD THAT: - The Tribunal agreed with the CIT(A) that the assessee had written off the bad debts in its audited Profit & Loss account and that, in view of settled law, after 1 April 1989 it is not necessary to prove actual irrecoverability beyond the write off in the accounts. On this basis the Tribunal found no infirmity in the appellate order deleting the disallowance and declined to interfere. [Paras 14]

Addition of Rs. 12,72,983/- disallowed by AO deleted; CIT(A)'s order upheld and ground dismissed.

Scope of provisions under section 194C (including sub clauses) and applicability of disallowance under section 40(a)(ia) - independence of section 194C(6) and section 194C(7) for immunity from TDS liability - Whether non deduction of TDS in respect of payments (notably freight/transport) attracts disallowance under section 40(a)(ia) where the assessee had complied with the statutory requirement of furnishing PAN of transporters under the relevant provision. - HELD THAT: - The Tribunal endorsed the CIT(A)'s conclusion that the assessee had obtained PAN details of the transporters and that, as held by the jurisdictional Tribunal in the precedents relied upon by the CIT(A), sections dealing with PAN compliance under the relevant provision afford immunity from TDS obligation so as to preclude disallowance under section 40(a)(ia). The Tribunal found that section sub provisions relied upon are to be read independently and that compliance with the PAN requirement under the said provision prevents the disallowance even if other technical non compliances under a different sub provision exist. On that basis the appellate deletion was upheld. [Paras 19]

Addition of Rs. 6,37,75,651/- disallowed by AO deleted; CIT(A)'s order upheld and ground dismissed.

Reimbursement of expenditure does not constitute taxable income where reflected as reimbursement in books - nature of receipts shown in Form 26AS does not automatically convert reimbursements into income - Whether amounts reflected in Form 26AS as payments (with TDS) which are reimbursements of expenses incurred on behalf of principals and are shown as such in books can be treated as unexplained income and added by the AO. - HELD THAT: - The Tribunal agreed with the CIT(A) that the Assessing Officer made the addition without proper application of mind and without considering ledger details and the nature of receipts as reflected in the books. On examination, the receipts from the concerned parties exceeded the amounts in Form 26AS and items were specifically shown in the books as C & F agency income and reimbursements. The Tribunal accepted the appellate reasoning and authorities to the effect that reimbursements, when correctly reflected and identifiable in books, are not to be treated as taxable income merely because TDS has been deducted by the payer. [Paras 25]

Addition of Rs. 56,57,052/- treated as unexplained income deleted; CIT(A)'s order upheld and ground dismissed.

Business expediency of festival/community and subscription expenses as deductible - incidental nature of Puja and subscription expenses to business - Whether Puja, souvenir and subscription/donation expenses incurred in the festival context are incidental to business and therefore allowable, notwithstanding the AO's disallowance. - HELD THAT: - The Tribunal found no infirmity in the CIT(A)'s reliance on the jurisdictional High Court and Tribunal decisions which recognise that festival/community contributions and similar expenses may be necessary to maintain business continuity in particular localities and thus qualify as business expenditures. Applying those precedents to the assessment records and submissions, the Tribunal held the expenses to be incidental to business and upheld the appellate deletion. [Paras 31]

Addition of Rs. 2,57,213/- deleted; CIT(A)'s order upheld and ground dismissed.

Disallowance under section 14A read with Rule 8D where no exempt income is earned - Whether any disallowance under section 14A read with Rule 8D is warranted where the assessee has not earned exempt income. - HELD THAT: - The Tribunal accepted the assessee's contention and the CIT(A)'s reliance on the Delhi High Court view that where no exempt income is earned or received, no disallowance under section 14A read with Rule 8D is justified. On that basis the Tribunal dismissed the revenue's ground and upheld the appellate deletion. [Paras 33]

Addition of Rs. 76,977/- under section 14A/Rule 8D deleted; CIT(A)'s order upheld and ground dismissed.

Final Conclusion: All grounds of the revenue's appeal are dismissed and the order of the Commissioner of Income Tax (Appeals) deleting the additions is upheld; the revenue's appeal is dismissed.

Policy of not filing departmental appeals below prescribed monetary limits - applicability of CBDT circulars to pending appeals - calculation of tax effect separately for each assessment year - dismissal/withdrawal of appeal as non-maintainable where tax effect does not exceed threshold - liberty to verify, recall or restore appeals in exceptional cases

Policy of not filing departmental appeals below prescribed monetary limits - applicability of CBDT circulars to pending appeals - dismissal/withdrawal of appeal as non-maintainable where tax effect does not exceed threshold - calculation of tax effect separately for each assessment year - Effect of CBDT Circular No.17/2019 (read with Circular No.3/2018) on the maintainability of the Revenue's appeal where the tax effect does not exceed Rs.50,00,000 and computation of tax effect for assessment years. - HELD THAT: - The Tribunal applied CBDT Circular No.17/2019, which raises monetary limits for instituting appeals and, read with Circular No.3/2018, applies to pending appeals; accordingly, appeals where the overall tax effect (excluding interest except when interest itself is in dispute) does not exceed Rs.50,00,000 before the Appellate Tribunal ought not to be filed or pressed. The Circular also requires calculation of tax effect separately for every assessment year and precludes filing appeals in respect of assessment years where the tax effect is below the prescribed limit. Having regard to these circulars and the Board's policy of litigation management, and following the approach endorsed by the Supreme Court, the Tribunal found the Revenue's appeal to be non-maintainable and dismissed it as withdrawn on the ground that the tax effect falls within the monetary threshold set out in the circulars. [Paras 4, 6, 7, 10, 11]

The Revenue's appeal is dismissed as withdrawn/non-maintainable under the CBDT policy since the tax effect does not exceed the prescribed monetary limit and tax effect is to be calculated assessment-year-wise.

Liberty to verify, recall or restore appeals in exceptional cases - Extent of liberty granted to the Revenue/Assessing Officer to seek recall or restoration of the dismissed appeal and to examine relevant payments. - HELD THAT: - The Tribunal granted the Department liberty to point out, after necessary verification, instances where the summary dismissal may have been erroneous-for example, due to incorrect computation of tax effect or because the case falls within permitted exceptions-and to seek recall and restoration of the appeal. The Assessing Officer was expressly permitted to examine payments to non-residents and payments characterized as reimbursement of freight charges, and, if appropriate, to initiate remedial steps including seeking recall of the dismissal. [Paras 9]

Liberty granted to the Revenue/Assessing Officer to verify the correctness of the computation and to seek recall and restoration of the appeal if exceptions or errors are demonstrated; Assessing Officer may examine the specified payments.

Final Conclusion: Following CBDT Circular No.17/2019 read with Circular No.3/2018, the Tribunal dismissed the Revenue's appeal as non-maintainable/withdrawn because the tax effect falls within the prescribed threshold for not pressing appeals, while permitting the Department liberty to verify computations and seek recall/restoration in appropriate exceptional cases.

Requirement of a specific charge in the show cause notice under section 274 for levy of penalty under section 271(1)(c) (distinguishing concealment of particulars of income from furnishing inaccurate particulars) - invalidity of penalty proceedings where the show cause notice fails to specify or strike out the irrelevant charge - conflicting judicial views to be resolved in favour of the assessee where two views exist

Requirement of a specific charge in the show cause notice under section 274 for levy of penalty under section 271(1)(c) (distinguishing concealment of particulars of income from furnishing inaccurate particulars) - invalidity of penalty proceedings where the show cause notice fails to specify or strike out the irrelevant charge - Whether the penalty imposed under section 271(1)(c) can be sustained where the show cause notice issued under section 274 did not specify whether proceedings were for concealment of particulars of income or for furnishing inaccurate particulars of income and did not strike out the inappropriate portion. - HELD THAT: - The Tribunal examined the AO's show cause notice and noted that it simultaneously alleged both concealment of particulars of income and furnishing of inaccurate particulars without striking out the inapplicable portion, rendering the notice defective. Applying the precedent of the Hon'ble Karnataka High Court (as followed by a coordinate Bench of the Tribunal) which held that a notice which does not specify the charge under section 271(1)(c) is vague and indicative of non-application of mind, the Tribunal concluded that such defective notice vitiates all subsequent penalty proceedings. The Tribunal observed that conflicting decisions exist (including views of the Bombay and Patna High Courts and some ITAT benches) which treat defects in form or language as not necessarily fatal where the assessee was aware of the charge; however, where two views are available the view favourable to the assessee must be followed. The Tribunal also noted that the Revenue's SLP against the Karnataka High Court decision was dismissed by the Supreme Court, and on that basis, and following the coordinate Bench decision in Jeetmal Choraria Vs. ACIT, the Tribunal held that the penalty could not be sustained in the present facts because the show cause notice failed to specify the charge and was not amended or rectified prior to imposition of penalty. [Paras 2, 3, 5]

The penalty imposed under section 271(1)(c) was cancelled because the show cause notice under section 274 did not specify or strike out whether the proceedings were for concealment of particulars of income or for furnishing inaccurate particulars of income, rendering the proceedings invalid.

Final Conclusion: Following applicable precedents and a coordinate Bench decision, the Tribunal allowed the assessee's appeal for AY 2015-16 and deleted the penalty imposed under section 271(1)(c) on the ground of a defective show cause notice that failed to specify the charge.

Section 115BBE special rate for income under section 69 - Section 69 unexplained investments deemed income - Rectification under section 154 - Acceptance of return and assessment under section 143(3)

Section 115BBE special rate for income under section 69 - Section 69 unexplained investments deemed income - Rectification under section 154 - Acceptance of return and assessment under section 143(3) - Whether the Assessing Officer could rectify the assessment under section 154 to charge tax at the special rate under section 115BBE in respect of an amount surrendered during survey when the returned income was accepted under the head business income in assessment under section 143(3) without invoking section 69. - HELD THAT: - The Tribunal noted that during survey the assessee surrendered an amount as undisclosed investment but subsequently offered that amount as business income in the return, which was accepted by the Assessing Officer and an assessment was completed under section 143(3) without any adjustment to the quantum, nature or classification of that income. The Court examined the statutory scheme: section 115BBE applies only where total income includes income referred to in section 69 (and related provisions), while section 69 can be invoked only after the Assessing Officer records an opinion that the explanation about the investment's nature and source is not satisfactory. The Assessing Officer had not called for explanation, recorded any satisfaction or invoked section 69 in the assessment order; the assessment order is silent on section 69. Consequently the precondition for applying section 115BBE did not exist at the time of assessment. Because section 115BBE is contingent upon the requirements of section 69 being fulfilled, the Assessing Officer could not, by way of rectification under section 154, independently apply section 115BBE where section 69 had not been invoked in the assessment. The Tribunal therefore upheld the appellate finding that the section 154 action was not justified. [Paras 11, 12]

The action of the Assessing Officer under section 154 to apply section 115BBE was not justified where section 69 had not been invoked in the assessment under section 143(3); appeal dismissed in favour of the assessee.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, holding that rectification under section 154 could not be used to apply section 115BBE because the necessary invocation and satisfaction under section 69 were not recorded in the assessment under section 143(3).

Admissibility of additions based on documents seized and survey - relevance and corroboration of impounded documents - jurisdiction under Section 153C - requirement that seized documents be incriminating and relate to the assessment years sought to be reopened - presumption under Section 292C(1)

Admissibility of additions based on documents seized and survey - relevance and corroboration of impounded documents - Deletion of addition of Rs. 13,90,26,749/- made in assessment framed under sections 153C/143(3) for AY 2011-12 - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the impugned addition was founded on a standalone computer printout recovered during a survey at the premises of Mr. Yogesh Gupta and not on incriminating documents seized during the search of the Kalra/Consortium group. The AO did not produce corroborative evidence to show that the cash receipts recorded in that printout represented unexplained income of the assessee-company; the document on its face related to M/s. Meter & Instruments Pvt. Ltd. and was recovered from a third party's premises. The appellate authority also noted prior disclosure of additional income by the assessee in survey proceedings and that the impounded material was not shown to be over and above such earlier surrender. In view of absence of conclusive corroboration, apparent mathematical/identification doubts in the material and the link to prior disclosures, the Tribunal found the addition to be beyond proof and beyond the scope of the 153C-based proceedings and therefore devoid of merit. [Paras 14, 15, 20, 21]

Addition of Rs. 13,90,26,749/- deleted and assessment for AY 2011-12 upheld as returned.

Jurisdiction under Section 153C - requirement that seized documents be incriminating and relate to the assessment years sought to be reopened - presumption under Section 292C(1) - Validity of initiation of proceedings under Section 153C on the basis of the seized material - HELD THAT: - The Tribunal examined the satisfaction note and the nature of the seized material and applied the line of authority of the Delhi High Court that to sustain proceedings under Section 153C the seized documents must be incriminating and must relate to the assessment years sought to be reopened. Although the satisfaction note recited that MOUs and working papers pertaining to the Realtech group were found in the Consortium search, the seized MOUs did not, on their face, reveal undisclosed income for the relevant year and the additions were in fact made on the basis of separate survey material. Relying on precedents that distinguish between mere 'pertain to' and incriminating material and which require cogent material to rebut the presumption that seized documents belong to the person searched, the Tribunal accepted the CIT(A)'s conclusion that the 153C jurisdictional requirement was not met in substance in this case and that the assessment additions could not be sustained on that basis. [Paras 13, 16, 18, 19]

Proceedings under Section 153C were held to be beyond scope because the seized documents were not shown to be incriminating for the relevant AY; the satisfaction was not a sufficient foundation for the additions made.

Final Conclusion: The CIT(A)'s deletion of the addition of Rs. 13,90,26,749/- for AY 2011-12 is upheld; Revenue's appeal is dismissed.

Benami Transaction (Prohibition) Act, 1988 - unity of title and unity of possession - construction of sale deeds and agreements - substantial question of law for admission of second appeal

Construction of sale deeds and agreements - Exhibit-10 and Exhibits-A & A/1 require reconsideration by the appellate forum as part of the admitted substantial question of law. - HELD THAT: - The High Court has admitted the second appeal on the ground that the learned appellate court's interpretation of Exhibit-10 (the agreement) and Exhibits-A & A/1 (registered sale deeds) raises a substantial question of law. The order records competing factual and documentary contentions concerning the meaning and effect of the agreement vis-a -vis the sale deeds and finds that those documents have been misconstrued by the appellate court. In consequence, the Court has called for the Lower Court records and framed the matter as a substantial question necessitating fresh consideration at the appellate stage rather than deciding the matter on the papers in this proceeding.

Admitted for hearing: the correctness of the appellate court's construction of Exhibit-10 and Exhibits-A & A/1 to be considered on return of records.

Benami Transaction (Prohibition) Act, 1988 - Whether the suit property is hit by the provisions of the Benami Transaction (Prohibition) Act, 1988 is a substantial question of law admitted for consideration. - HELD THAT: - The trial court had negatived the application of the Benami law while the appellate court recorded a contrary view. The High Court found that the question whether the transaction is benami implicates a substantial legal point warranting admission of the second appeal and further scrutiny of the documentary and evidentiary record. Accordingly, the issue is placed before the High Court for determination after calling for records and issuing notice to the parties.

Admitted for determination whether the transaction is benami under the Benami Transaction (Prohibition) Act, 1988.

Unity of title and unity of possession - construction of sale deeds and agreements - Whether, absent material showing jointness, the appellate court could declare that defendant nos.2 & 3 are not real owners despite registered sale deed (Exhibit-A) is a substantial question admitted for consideration. - HELD THAT: - The High Court noted conflicting findings on unity of title and possession: the trial court found against jointness, whereas the appellate court held that the sons named in Exhibit-A were not the real owners. The High Court determined that this conflict over ownership, and the appellate court's apparent reliance on inferred jointness rather than clear documentary proof, raises a substantial question of law suitable for admission of the second appeal. The matter has accordingly been admitted and the Lower Court records summoned for fuller adjudication.

Admitted for hearing: whether the appellate court could displace registered title in favour of an inference of non-ownership without material proving jointness.

Final Conclusion: Second appeal admitted on three substantial questions of law concerning the construction of the agreement and sale deeds, the applicability of the Benami Transaction (Prohibition) Act, 1988, and the appellate court's conclusion as to the true ownership of the suit land; Lower Court records are called and notice issued to respondents, with registrar directed to report on an administrative signature matter on the impugned decree.

Power to summon under Section 108 of the Customs Act, 1962 - Quasi judicial character of proceedings under Section 108 - Limitation on delegation and exercise of powers under Section 5(2) of the Customs Act - Effect of magisterial permission for police investigation under Section 155 Cr.P.C. on parallel administrative inquiry - Concurrent adjudication/prosecution and scope of 'in connection with' - Protection against self incrimination under Article 20(3) of the Constitution

Power to summon under Section 108 of the Customs Act, 1962 - Quasi judicial character of proceedings under Section 108 - Limitation on delegation and exercise of powers under Section 5(2) of the Customs Act - Validity of the summons dated 26th March 2019 issued under Section 108 of the Customs Act, 1962 to the petitioners. - HELD THAT: - The Court held that proceedings under Section 108 are quasi judicial and the qualitative preconditions prescribed therein must be satisfied by the officer issuing the summons. Where statute requires the power to be exercised in a specified manner, that manner must be followed. Here the issuing officer had not himself formed the requisite opinion nor was he conducting the inquiry; the summons were issued at the direction of a superior and attendance was directed before a different officer. Section 5(2) does not permit a mechanical or partial exercise/delegation that defeats the statutory ingredients of Section 108. Because the statutory drill was not followed, the summonses were issued contrary to Section 108 and were therefore quashed and set aside. [Paras 10, 14]

Summons dated 26th March 2019 issued under Section 108 quashed and set aside for failure to comply with the statutory requirements of Section 108.

Effect of magisterial permission for police investigation under Section 155 Cr.P.C. on parallel administrative inquiry - Concurrent adjudication/prosecution and scope of 'in connection with' - Protection against self incrimination under Article 20(3) of the Constitution - Whether the Customs authorities could continue a parallel inquiry after filing written information with the police and after the magistrate granted permission for police investigation. - HELD THAT: - The Court found that the Customs filed written information on 22nd March 2019 which was entered in the GD and the police obtained magistratial permission under Section 155 Cr.P.C. and proceeded with investigation (witness statements recorded and CCTV obtained). In respect of the complaint so filed and acted upon by the police, the Customs had thereby lost the jurisdiction to conduct a parallel inquiry into that complaint and were restrained from making simultaneous investigation into the same matter. Separately, the Court recognised that the Customs remain entitled to inquire into contested events to the extent those events fall within the statutory ambit of the "Customs Airport" and relate to suspected violations of the Customs Act occurring inside that territorial ambit. Thus the Customs cannot pursue a parallel investigation into the police referred complaint, but may continue inquiries limited to matters within the Customs' statutory jurisdiction inside the Customs Airport. [Paras 12, 13]

Customs restrained from conducting parallel inquiry into the complaint once police investigation with magisterial permission commenced; however Customs may inquire into violations occurring within the defined 'Customs Airport' territory.

Final Conclusion: Writ petitions disposed: summons under Section 108 quashed; Customs restrained from making parallel inquiry into the police referred complaint after magisterial permission for police investigation, while remaining free to inquire into matters within the statutory ambit of the Customs Airport.

Forgery of WPC licences - liability of importer for using forged approvals - confiscation for import in contravention of law - requirement of Equipment Type Approval (ETA) from WPC - penalty under the Customs Act for procurement/supply of forged approvals - verification of licence genuineness by matching with WPC dispatch register - preponderance of probabilities as evidentiary standard - cross-examination of witnesses under Section 138B of the Customs Act

Forgery of WPC licences - verification of licence genuineness by matching with WPC dispatch register - requirement of Equipment Type Approval (ETA) from WPC - Whether the WPC licences produced/used for import were forged and whether the appellant was responsible for forging and supplying forged WPC approvals. - HELD THAT: - The Tribunal examined the investigation record, statements recorded under Section 108, the report of the Asstt. Wireless Advisor (WPC) that certain licence copies had no entry in the Dispatch Register and thus 'did not appear to be genuine', and recoveries of materials from the appellant's premises. The material established that, although a large number of WPC approvals handled by the appellant were genuine, investigations disclosed specific instances where WPC approvals were not issued by the authorised department and were prepared by employees of the appellant. While noting that DOT verification did not categorically pronounce every licence forged, the Tribunal accepted that in a limited number of cases the licences were forged and had been used to obtain clearance. The Tribunal also observed that the investigations did not enquire or decide whether the imported equipment in those consignments violated technical norms, but that fact did not absolve the appellant from omissions and commissions in forging approvals. On these findings the Tribunal held that forgery was established in certain cases and that the appellant bore culpability for those instances. [Paras 34, 36]

Forgery of certain WPC licences was held established against the appellant in limited cases; the appellant was culpable for those forged approvals.

Penalty under the Customs Act for procurement/supply of forged approvals - preponderance of probabilities as evidentiary standard - cross-examination of witnesses under Section 138B of the Customs Act - Whether the penalties and confiscation imposed under the Customs Act should be sustained as imposed by the Commissioner, and whether procedural/evidentiary lapses (non-availability of cross-examination, absence of forensic examination) vitiated the orders. - HELD THAT: - The Tribunal considered submissions that statements relied on were not tested by cross-examination under Section 138B and that DOT's report was only that licences 'did not appear to be genuine' based on dispatch-register matching, with no forensic examination or direct inquiry from issuing officers. Taking into account that the investigation showed forgery only in a few instances and that many approvals handled by the appellant were genuine, the Tribunal adopted a lenient approach on penalty. It accepted the factual finding of culpability in limited cases but found that the overall mischief was not of a grave magnitude warranting the originally imposed quantum of penalties. Accordingly, while confirming that confiscation and liability for contravention exist against importers in general, the Tribunal reduced the monetary penalties imposed on the appellant and set aside the penalty under the provision for enhanced penalty in light of mitigating facts and proportionality. [Paras 34, 36]

Penalties under the enhanced provision were set aside and monetary penalties under the primary penalty provision were substantially reduced; appeals allowed in part.

Final Conclusion: The Tribunal found that while certain WPC licences handled by the appellant were forged and the appellant was culpable in limited instances, the overall wrongdoing did not merit the original quantum of enhanced penalties. Accordingly, the enhanced penalty was set aside and the penalties under the primary provision were substantially reduced; the appeals were allowed in part and the miscellaneous application for additional grounds was allowed.

Power under Section 452(2) of the Companies Act to direct delivery of possession - wrongful withholding of company property - lease and leave-and-license allotment as part of service entitlement - interim eviction during pendency of criminal proceedings - application of appellate and Supreme Court precedents on vacation of company accommodation

Power under Section 452(2) of the Companies Act to direct delivery of possession - wrongful withholding of company property - application of appellate and Supreme Court precedents on vacation of company accommodation - The order of the ACJM dismissing the petitioner's application under Sub Section (2) of Section 452 of the Companies Act was untenable and required setting aside. - HELD THAT: - The High Court found that the admitted facts established that the quarter occupied by the opposite party was allotted pursuant to his employment and formed part of his service entitlement, and that the opposite party retired on 31 3 2015. No scheme or entitlement existed at the date of superannuation which would lawfully entitle him to retain the quarter. Relying on settled precedents cited by the petitioner, the Court held that a Magistrate has power under Sub Section (2) of Section 452 to direct vacation of company accommodation even while criminal proceedings under Sub Section (1) are pending, where the facts show wrongful withholding of company property. The ACJM's conclusion that the question could not be resolved at the threshold was inconsistent with these principles and with the admitted documentary and factual position, and therefore the ACJM's order dated 17 4 2019 was set aside.

The ACJM's order refusing relief under Section 452(2) was set aside and the revisional petition allowed.

Interim eviction during pendency of criminal proceedings - lease and leave-and-license allotment as part of service entitlement - Relief and timeline for vacation of the quarter were determined: the opposite party was permitted temporary possession until 30 June 2021 and required to vacate thereafter. - HELD THAT: - While directing that the opposite party should vacate the company quarter, the Court took into account contemporary socio economic conditions (pandemic) and granted a limited, time bound extension. The Court ordered that if the opposite party failed to vacate by 30 June 2021, the ACJM, Durgapur would be entitled to invoke appropriate legal measures, including directing police authorities to give effect to the order.

The opposite party may retain the quarter until 30 June 2021; failure to vacate will permit enforcement measures from 1 July 2021.

Final Conclusion: The revisional petition is allowed: the ACJM's order dated 17 4 2019 is set aside; the opposite party must vacate the company quarter within the limited period granted (until 30 June 2021), failing which enforcement steps may be taken.

Admission of Section 9 IBC application - default on operational debt - pre-existing dispute - limitation and running account - applicability of the Limitation Act, 1963 to IBC proceedings - appointment of Interim Resolution Professional - moratorium under Section 14 IBC

Limitation and running account - applicability of the Limitation Act, 1963 to IBC proceedings - The Section 9 application is within the period of limitation and provisions of the Limitation Act, 1963 apply to applications under the IBC. - HELD THAT: - The Tribunal found that the invoices forming the basis of the claim span from 19.07.2016 to 13.12.2016 and, treating the account as a running account (no evidence to treat it otherwise), the date of the last invoice is apt for reckoning limitation. The petition filed on 24.09.2019 therefore falls within the three-year limitation period. The contention that Section 19 of the Limitation Act is not applicable was rejected: Section 238A of the IBC makes the Limitation Act applicable to proceedings before the Adjudicating Authority and Section 29(2) of the Limitation Act preserves the application of Sections 4 to 24 unless expressly excluded by the special law. Consequently, limitation could not bar the petition irrespective of the disputed allegation of a payment of Rs. 1,00,000/- by the Corporate Debtor. [Paras 11, 12]

Limitation does not bar the Section 9 application; the Limitation Act, 1963 applies to IBC proceedings and the petition is within time.

Default on operational debt - pre-existing dispute - There was a valid operational debt and no justiciable pre-existing dispute or adequate documentary proof to defeat admission. - HELD THAT: - On the material placed by the Operational Creditor - invoices, ledger extract and bank statement - and the affidavit under Section 9(3)(b) stating no notice of dispute was issued after the Demand Notice, the Tribunal concluded that the Corporate Debtor failed to discharge the debt. The Corporate Debtor's assertions of defective dyeing, non-payment by its client, and challenge to invoice amounts were found to be unsupported by documents and characterised as afterthoughts. The Corporate Debtor had not replied to the Demand Notice and no cogent evidence was produced to establish a pre-existing dispute prohibiting admission. [Paras 10, 13]

The Operational Creditor has established default; the plea of a pre-existing dispute is rejected for want of supporting evidence.

Admission of Section 9 IBC application - appointment of Interim Resolution Professional - The Tribunal admitted the Section 9 petition and appointed the proposed Interim Resolution Professional who had filed consent. - HELD THAT: - Having found the claim within limitation and default established, and with the Corporate Debtor amenable to the Tribunal's territorial jurisdiction, the Tribunal admitted the application and initiated the Corporate Insolvency Resolution Process. The proposed IRP, whose consent in Form-2 was on record, was appointed as Interim Resolution Professional in accordance with the Code and IBBI rules. [Paras 14, 15]

The Section 9 petition is admitted and Mr. Kannan Sambasivam is appointed as Interim Resolution Professional.

Moratorium under Section 14 IBC - A moratorium under Section 14 of the IBC operates from the date of the admission order until completion of the CIRP, subject to statutory exceptions. - HELD THAT: - On admission of the application, the statutory moratorium as prescribed by Section 14(1) was declared operative against initiation or continuation of suits, transfer or disposal of assets, enforcement of security interests and recovery of property occupied by the Corporate Debtor. The Tribunal recorded the statutory exceptions in Sections 14(2), 14(2A) and 14(3), and noted that the moratorium continues until completion of the CIRP unless a resolution plan is approved or liquidation is ordered earlier. [Paras 16, 17, 18, 19]

Moratorium under Section 14 is declared effective from the date of the order until completion of the CIRP, subject to the statutory exceptions.

Final Conclusion: The Tribunal admitted the Section 9 application, initiated the CIRP against the Corporate Debtor, appointed the named Interim Resolution Professional who had filed consent, and declared the statutory moratorium; the petition was held to be within limitation and the asserted pre-existing dispute was rejected for lack of supporting evidence.

Consolidation of corporate insolvency resolution processes - single consolidated resolution plan for group companies - inter dependence and singleness of economic unit - treatment of subsidiaries not under CIRP within consolidated process - appointment of parent company resolution professional for consolidated CIRP - value maximisation objective of the Insolvency and Bankruptcy Code

Consolidation of corporate insolvency resolution processes - single consolidated resolution plan for group companies - value maximisation objective of the Insolvency and Bankruptcy Code - Consolidation of the CIRPs of Lavasa Corporation Limited, Warasgaon Asset Maintenance Limited and Dasve Convention Centre Limited and approval of a single consolidated resolution process - HELD THAT: - The Tribunal held that the CIRPs of the parent (LCL) and its two wholly owned subsidiaries (WAML and DCCL), each already undergoing CIRP, ought to be consolidated into a single consolidated CIRP and a single consolidated resolution plan. The Bench applied the yardsticks used in prior consolidation precedents (the 13 criteria referenced in Videocon) and found that the group exhibits common control and directors; common and pooled assets and office infrastructure; common liabilities and inter looping of debts; inter dependence of business functions; singleness of economic unit and intertwined accounts; and that several creditors' claims of the subsidiaries are already admitted as debts of the parent. Given that stand alone resolution of the subsidiaries would defeat the Code's objective of maximising value (their businesses and revenue streams depend on LCL and many debts are already guaranteed/admitted against LCL), separate resolutions would likely produce inferior outcomes. On these determinative findings the Tribunal ordered consolidation of the CIRPs of LCL, WAML and DCCL into a consolidated corporate insolvency process to facilitate a coordinated, value maximising resolution. [Paras 18, 22, 23]

The CIRPs of Lavasa Corporation Limited, Warasgaon Asset Maintenance Limited and Dasve Convention Centre Limited are consolidated into a single consolidated CIRP.

Treatment of subsidiaries not under CIRP within consolidated process - treatment of financial creditors' preferences - inter dependence and singleness of economic unit - Procedural approach for inclusion of Warasgaon Power Supply Limited and Dasve Retail Limited (not under CIRP) in the consolidated resolution framework - HELD THAT: - The Tribunal recognised that WPSL and DRL are wholly owned subsidiaries whose debts are effectively linked to LCL (their debts are guaranteed by LCL and creditors of those subsidiaries are also creditors of LCL). Although neither WPSL nor DRL is under CIRP, the sole financial creditors of those entities have indicated willingness to have their debts resolved as part of LCL's consolidated resolution. The Bench directed that the consolidated CoC (of LCL, WAML and DCCL) may take an informed decision about resolving the debt of WPSL and DRL as part of the consolidated resolution plan, thereby permitting their issues to be considered within the consolidated process while noting that formal CIRP has not been initiated against them. [Paras 14, 20, 21, 23]

WPSL and DRL, though not under CIRP, may have their debts considered for resolution by the consolidated CoC of LCL, WAML and DCCL; the consolidated CoC is authorised to take a decision on inclusion.

Appointment of parent company resolution professional for consolidated CIRP - coordinated administration of group insolvency - Appointment of the Resolution Professional of Lavasa Corporation Limited as the Resolution Professional for the consolidated CIRP - HELD THAT: - Having ordered consolidation, the Tribunal appointed the Resolution Professional of the parent company (LCL) to act as the Resolution Professional for the consolidated CIRP. This aligns the administrative authority for the consolidated process in a single Resolution Professional to enable coordinated conduct of the consolidated CIRP and engagement with the consolidated CoC, consistent with the objective of efficient and value maximising resolution of the inter linked group entities. [Paras 23]

The Resolution Professional of Lavasa Corporation Limited is appointed as the Resolution Professional for the consolidated CIRP.

Timeframe for consolidated CIRP - extension subject to progress and Adjudicating Authority - Initial time period granted for completion of the consolidated CIRP and procedure for extension - HELD THAT: - The Tribunal granted an initial period of 60 days from the date of the order for completion of the consolidated CIRP of the Lavasa group. It specified that any further extension would depend on the progress of the consolidated CIRP and that the CoC or Resolution Professional may approach the Adjudicating Authority for such extension, thereby setting an initial timeframe while preserving the statutory extension mechanism. [Paras 23]

An initial period of 60 days is granted for completion of the consolidated CIRP; extensions to be sought from the Adjudicating Authority based on progress.

Final Conclusion: Application MA 3664/2019 is allowed. The Tribunal ordered consolidation of the CIRPs of Lavasa Corporation Limited, Warasgaon Asset Maintenance Limited and Dasve Convention Centre Limited into a single consolidated CIRP; authorised the consolidated CoC to consider inclusion of the debts of Warasgaon Power Supply Limited and Dasve Retail Limited (not under CIRP) in the consolidated resolution; appointed the Resolution Professional of Lavasa Corporation Limited as the Resolution Professional for the consolidated CIRP; and granted an initial 60 day period to complete the consolidated CIRP.

Independence of insolvency professional - Insolvency resolution process costs - Inclusion of non-CIRP expenses in IRPC - Code of Conduct for insolvency professionals - Committee of Creditors' role vis-a -vis duties of resolution professional - Approval of fees and expenses by Committee of Creditors - Recovery of expenditure not forming part of IRPC

Independence of insolvency professional - Insolvency resolution process costs - Inclusion of non-CIRP expenses in IRPC - Code of Conduct for insolvency professionals - Whether the resolution professional compromised independence by directing valuation of personal guarantor's properties and including the cost thereof in the insolvency resolution process costs. - HELD THAT: - The resolution professional directed two valuers to value assets of the corporate debtor together with assets of the personal guarantor on instructions of the sole CoC member. Payments for those valuations were routed through the RP's personal account: Bank of India reimbursed the RP and the RP issued cheques to the valuers. The DC found that valuing properties of the personal guarantor (which were not under the RP's control) and including the related cost in IRPC constituted a procedural lapse. Routing payments via the RP's personal account and acting on CoC directions showed that the RP did not maintain independence as required by the Code of Conduct and the statutory scheme, and thereby contravened the duties of an IP and relevant provisions of the Code and Regulations. The DC observed that such costs ordinarily should not form part of IRPC and, where incurred, should be recovered and deposited into the corporate debtor's account; however, given the factual peculiarity that the sole CoC member bore the expenses, recovery was considered superfluous in this case. The DC also noted lack of clarity in earlier period regarding coverage of surety's assets under moratorium prior to the 2018 amendment, which is a contextual factor but does not negate the lapse. [Paras 3, 4]

Found that the RP acted without requisite independence by directing valuation of guarantor's properties and including those costs in IRPC; procedural lapse established but remedied by a warning in light of factual circumstances.

Approval of fees and expenses by Committee of Creditors - Resolution professional costs - Whether the resolution professional erred in not having the fees of the statutory auditor fixed by the Committee of Creditors. - HELD THAT: - Regulation 34 requires the committee to fix expenses to be incurred on or by the resolution professional. The minutes do not show fixation of the auditor's fees in a CoC meeting, although the sole CoC member (Bank of India) approved the appointment and fees by email. No payment has been made to the auditor and therefore no financial burden fell on the corporate debtor. The DC found procedural non-compliance in not recording fixation of fees in CoC minutes but, given the sole-member CoC's email approval and absence of mens rea or financial prejudice to the corporate debtor, took a lenient view. [Paras 3]

RP failed to get the auditor's fees fixed in CoC meeting minutes, but due to sole-member CoC approval by email and no payment made, the lapse warranted leniency rather than punitive action.

Code of Conduct for insolvency professionals - Committee of Creditors' role vis-a -vis duties of resolution professional - Appropriate disposal of the show cause notice in light of the findings and the nascent state of the insolvency regime. - HELD THAT: - The DC recognized the centrality of the IP's role and emphasized the need for independence, diligence and transparency. Considering the emerging nature of the insolvency profession, absence of mala fides, the sole-member CoC context, and that the disputed valuation costs were borne by the sole creditor, the DC exercised regulatory discretion under the Inspection and Investigation Regulations and IP Regulations to avoid harsher sanctions. The DC directed issuance of a warning, required strict adherence to law in future, and forwarded the order to the IP's professional institute and the NCLT registry for information. [Paras 5]

Show cause notice disposed with a warning to the RP to act diligently and independently; order to be forwarded to the IP's institute and the NCLT registry.

Final Conclusion: The Disciplinary Committee found procedural lapses in the RP's conduct-principally compromise of independence by directing valuation of guarantor's properties and inclusion of those costs in IRPC, and failure to record fixation of auditor's fees-but, in view of the sole-member CoC, absence of mala fide intent, and the nascent insolvency framework, disposed of the show cause notice with a formal warning and directed circulation of the order to the professional institute and the NCLT registry.

Summary order. Special Leave Petition dismissed; pending applications, if any, disposed of.

Scope of interim relief under Section 9 vis-a -vis non signatories - Interplay between Section 9 interim measures and prior court orders affecting the same funds - Distinction between powers under Section 9 and Section 17 of the Arbitration and Conciliation Act, 1996

Scope of interim relief under Section 9 vis-a -vis non signatories - Distinction between powers under Section 9 and Section 17 of the Arbitration and Conciliation Act, 1996 - Whether a Court exercising power under Section 9 can grant interim measures affecting a non party / non signatory to the arbitration agreement. - HELD THAT: - The Court held that Section 9 is not confined to issuing interim measures only against parties to an arbitration agreement. While an Arbitral Tribunal under Section 17 is generally limited to directing measures against parties to the arbitration, a court under Section 9 may, in exceptional circumstances, pass orders which affect third parties where denial of relief would frustrate the petitioner's rights in arbitration, render arbitration infructuous, or leave the petitioner remediless. The power to issue such orders must be exercised sparingly and only to protect the subject matter of the arbitration or to preserve the efficacy of arbitral proceedings. The Court relied on and applied earlier decisions which recognise that Section 9 can reach third parties in appropriate facts, subject to the limitation that such relief must be ancillary to and in aid of the arbitral proceedings. [Paras 25, 26, 27, 28, 29]

A court may, in exceptional circumstances and to protect the subject matter of arbitration or the efficacy of arbitral proceedings, grant interim relief under Section 9 affecting non parties, but such power must be exercised sparingly.

Interplay between Section 9 interim measures and prior court orders affecting the same funds - Whether the petition seeking directions to Respondent No.2 (IFCI) to deposit or not disburse the sums lying as FDRs could be granted in view of earlier orders and the rights acquired by SEBI. - HELD THAT: - On the facts, Respondent No.2 had admitted that the contested sum (earlier restrained by this Court) was lying in fixed deposits and that it had no proprietary claim to the amount after appropriations. However, this Court had by order dated 27.08.2018 recalled the earlier restraint and left parties free to pursue independent remedies while temporarily directing that IFCI/SEBI not disburse the amount for six weeks; SEBI thereby acquired a right to claim the sum. Granting the specific relief sought-directing deposit of the sum in this Court and restraining Respondent No.2 from disbursing it-would conflict with and effectively negate the recalled/superseded order and SEBI's claim, and would be beyond the jurisdiction of this Court in the existing factual matrix. Consequently, the petitioner's claim to secure the funds in aid of arbitration was rejected as inconsistent with the prior orders and the present status of competing proceedings. [Paras 31, 33, 34, 35]

Relief directing Respondent No.2 to deposit the funds with this Court or to be restrained from disbursing them to Respondent No.1 is refused because such directions would conflict with the intervening orders and rights of SEBI and the existing proceedings; the petition is dismissed on this ground.

Final Conclusion: The petition under Section 9 is dismissed. Although Section 9 can, in appropriate cases, support interim measures affecting non parties, the specific reliefs sought to secure or restrain disbursal of the funds lying as FDRs could not be granted in view of intervening orders and the rights asserted by SEBI; the petition and pending application are accordingly dismissed.