TaxTMI Updates e-Newsletter
Jul 03,2021

Export of services - intermediary - place of supply - intra-State supply - zero-rated supply

Intermediary - arranges or facilitates the supply - not on his own account - Whether the applicant's activity of arranging sales of goods amounts to an intermediary as defined in the IGST Act, 2017. - HELD THAT: - The Authority examined the applicant's admitted modus operandi: locating buyers, connecting them with overseas suppliers, having goods dispatched directly by suppliers, and receiving commission at market rates without holding title or supplying goods on his own account. The definition of intermediary focuses on a person who "arranges or facilitates the supply of goods or services" and who does not supply such goods or services on his own account. The applicant's commission is linked to the underlying sale, he does not assume obligations on behalf of supplier or recipient, cannot change the nature or value of the goods, and does not hold title. These factors satisfy the statutory conditions for an intermediary under clause (13) of section 2 of the IGST Act, 2017. [Paras 4]

The applicant is an intermediary as defined in the IGST Act, 2017.

Place of supply - location of supplier - export of services - intra-State supply - zero-rated supply - Whether the services provided by the applicant qualify as export of services or are taxable as intra-State supply. - HELD THAT: - For services where either the supplier or recipient is located outside India, place of supply is determined under section 13 of the IGST Act. As the Authority held that the applicant is an intermediary, place of supply falls under sub section (8) of section 13 and is the location of the supplier. The supplier (applicant) is located in India (West Bengal), hence the place of supply is in India. One of the statutory conditions for export of services is that the place of supply must be outside India; that condition is not satisfied here. Consequently, the supply cannot be treated as an export of services or a zero-rated supply under section 16 of the IGST Act, and the transaction is to be treated as an intra-State supply subject to tax. [Paras 4]

The services are not export of services; place of supply is in India and the supply is an intra State taxable supply, not zero rated.

Final Conclusion: The Authority ruled that the applicant's services of arranging sales of goods are intermediary services and, because the place of supply is the supplier's location in India, such services do not qualify as export of services or a zero rated supply, but are taxable as an intra State supply.

Depreciation as 'building' - depreciation as 'plant and machinery' - eligibility for depreciation where asset is a road developed under agreement with the State/National Government - applicability of precedential Division Bench ratio on identical question of law

Depreciation as 'building' - eligibility for depreciation where asset is a road developed under agreement with the State/National Government - applicability of precedential Division Bench ratio on identical question of law - Roads developed and maintained by the assessee under agreement with the State/National Government are eligible for depreciation as a 'building'. - HELD THAT: - The Division Bench of this Court in T.C.A.Nos.220 to 225 of 2018 (dated 19.01.2021) considered the identical controversy and held that roads developed and maintained by the assessee pursuant to agreements with the State are capable of being treated as 'building' within the Notes to New Appendix I, entitling the assessee to depreciation at the rate of 10%. The Revenue before this Bench acknowledged that the substantial question of law was the same and the earlier Division Bench decision was adverse to Revenue. In view of the binding precedential ratio and the absence of any successful challenge to that ratio in these proceedings, the Court followed the Division Bench decision and answered the substantial question of law against the Revenue and in favour of the assessee. The Court therefore dismissed the Tax Case Appeals in conformity with the earlier decision. [Paras 6, 7]

Substantial question of law answered against the Revenue and in favour of the assessee; appeals dismissed.

Final Conclusion: Following the Division Bench's earlier decision on the identical question of law, the High Court held that roads developed and maintained by the assessee under agreement with the Government qualify for depreciation as 'building' and dismissed the Revenue's appeals.

Validity of notice under Section 148 - limitation for reopening assessment - service at last known address / PAN database - transfer of proceedings to jurisdictional assessing officer - prematurity of writ where statutory procedure not exhausted

Validity of notice under Section 148 - limitation for reopening assessment - Validity of the notice dated 31.03.2017 under Section 148 and whether it was time-barred. - HELD THAT: - The Court held that a notice under Section 148 is valid if it is despatched within the statutory period contemplated by Section 149. The respondents produced postal receipt showing the notice was registered/despatched on 31.03.2017. Delivery to the assessee or actual receipt at the address later than dispatch does not invalidate a notice which was despatched within the limitation period. The Court observed postal delays are possible and that despatch within the time limit satisfies the requirement for issuance of notice for limitation purposes. [Paras 5]

Notice dated 31.03.2017 is not time-barred and is valid for limitation purposes.

Service at last known address / PAN database - service of notice to assessee - Whether issuance of the Section 148 notice to the address recorded in the PAN, rather than the assessee's current foreign address, vitiates the notice. - HELD THAT: - The Court accepted the departmental position that notices may be sent to the last known address as recorded in the PAN database. An assessee who changes address has a duty to inform the Department and update PAN records; mere filing of returns with a new address is not sufficient unless the PAN database is updated or the Assessing Officer is specifically intimated. Relying on the departmental practice and Supreme Court guidance, the Court held that issuance to the PAN-recorded address does not render the notice invalid where the department relied on that address. [Paras 4, 6]

Service at the address recorded in PAN does not invalidate the notice; the petitioner failed to update PAN or specifically intimate the Assessing Officer.

Transfer of proceedings to jurisdictional assessing officer - Validity of transferring the proceedings from the officer who initially issued the notice to the jurisdictional officer (2nd respondent). - HELD THAT: - The Court noted that once it is discerned that another officer is the jurisdictional authority, transfer of files to that jurisdictional office is the correct procedural step. The 1st respondent transferred the file and the 2nd respondent thereafter communicated with the assessee seeking information to proceed with reassessment. Such transfer and subsequent action were held to be proper procedure. [Paras 6]

Transfer of the proceedings to the jurisdictional assessing officer and subsequent communication by the 2nd respondent were proper.

Prematurity of writ where statutory procedure not exhausted - Whether the writ petition is maintainable at this stage or is premature because statutory reassessment procedure had not been completed. - HELD THAT: - The Court observed that the petitioner had been asked to furnish records and explanations by the 2nd respondent but instead approached the Court. The departmental array of steps, including furnishing reasons for reopening and following the procedures and principles laid down by higher courts (including GKN Driveshafts), must be permitted to run. Accordingly, the petition seeking quashment prior to completion of reassessment procedures was held to be premature. [Paras 6, 7]

Writ petition is premature; petitioner should first respond and allow the reassessment procedure to be carried out.

Final Conclusion: The petition is without merit and is dismissed: the Section 148 notice was despatched within the limitation period to the PAN-recorded address, transfer to the jurisdictional officer was proper, and the writ was premature as departmental procedure had not been exhausted.

Reopening under Sections 147 and 148 - reason to believe - Section 50C and undervaluation - failure to disclose true and full particulars - change of opinion - sanction under Section 151

Reopening under Sections 147 and 148 - reason to believe - Section 50C and undervaluation - failure to disclose true and full particulars - Validity of initiation of reassessment proceedings for Assessment Year 2014-15 on the basis of recorded reasons to believe and alleged undervaluation under Section 50C. - HELD THAT: - The Court held that initiation of reassessment was supported by prima facie material giving rise to a 'reason to believe' that income chargeable to tax had escaped assessment. The Assessing Officer's reasons-particularly that the assessee had herself disclosed long-term capital gains in the return while the Stamp Valuation Authority value exceeded the declared consideration-were found to show apparent undervaluation calculable under Section 50C and amounting to escapement of income. The Questionnaire issued before completion of the original assessment did not indicate that the assessing authority had considered the effect of Section 50C, and the fact that the assessee both treated the land as agricultural in submissions yet reported capital gain in the ITR was treated as material. On this foundation the Court concluded that the twin requirement for reopening-that the AO prima facie had material to form reason to believe-was satisfied and the reassessment notice under Section 148 was not a mere change of opinion but based on additional material bearing directly on escapement of income. [Paras 15, 16, 17, 19, 20]

Reassessment proceedings for AY 2014-15 initiated under Sections 147 and 148 were validly commenced on the basis of recorded reasons to believe and alleged undervaluation under Section 50C; the reopening was not a mere change of opinion.

Change of opinion - reopening under Sections 147 and 148 - Whether the reassessment constitutes an impermissible 'change of opinion' reviewing the earlier assessment. - HELD THAT: - The Court examined the contention that reassessment was a review of the earlier order and therefore impermissible. It found that the assessing authority relied upon additional facts and material (not fully considered in the original assessment), including the discrepancy between declared consideration and Stamp Valuation Authority value and the assessee's own treatment in the ITR, which gave rise to reason to believe escapement of income. On that basis the Court concluded that the reopening was not a mere change of opinion but was predicated on tangible material necessitating reassessment under the statute. [Paras 17, 19, 20]

The reassessment was not a mere change of opinion; it was founded on additional material and a recorded reason to believe, hence maintainable.

Sanction under Section 151 - reopening under Sections 147 and 148 - Validity of the approval/sanction accorded under Section 151 for issuance of notice under Section 148. - HELD THAT: - The Court reviewed the proforma and reasons placed before the sanctioning authority and observed that the Assessing Officer's recorded reasons were forwarded in full and considered by the sanctioning officer. The Court held that Section 148 requires the sanctioning authority to be satisfied with the reasons recorded by the AO and does not mandate separate reasons from the sanctioning authority. As the record showed the sanctioning authority examined the reasons and granted approval, the sanction was not given in a mechanical manner and complied with the requirements of Section 151. [Paras 18, 19, 21]

The sanction under Section 151 for issuance of notice under Section 148 was validly granted and was not mechanical.

Final Conclusion: Writ petition dismissed; the High Court upheld the initiation of reassessment under Sections 147/148 for AY 2014-15 and the sanction under Section 151, finding recorded reasons to believe and material (including alleged undervaluation under Section 50C and the assessee's own disclosures) sufficient to avoid characterization as a mere change of opinion; objections disposed of by the respondents were not found to be illegal.

Reopening of assessment - reason to believe - compliance with proviso to Section 147 regarding six years reopening - change of opinion - non-speaking order - obligatory reasons for administrative decision - opportunity to submit objections - premature issuance of notice under Section 143(2)

Reopening of assessment - compliance with proviso to Section 147 regarding six years reopening - obligatory reasons for administrative decision - change of opinion - opportunity to submit objections - non-speaking order - Validity of the order disposing of objections to reopening for assessment year 2009-10 and whether the order records reasons and application of mind required for reopening beyond four years and within six years. - HELD THAT: - The Court found that although reasons for reopening were furnished, the impugned order disposing of the objections did not consider or answer the specific objections raised by the assessee and merely reproduced statutory provisions. The Assessing Officer is required to follow the procedural requirements and to record adequate reasons demonstrating compliance with the proviso applicable to reopenings beyond four years and within six years; such reasons must show tangible material and an application of mind and must address the assessee's submissions rather than effect a mere change of opinion. The notice issued under Section 143(2) on 04.02.2016 was held to be premature and was not acted upon, but subsequently reasons were furnished and objections filed on 13.06.2016. Because the disposal order lacked findings and reasoned consideration of those objections, it is a non-speaking order and cannot be sustained. The proper course is to quash the impugned order and remit the objections for fresh, reasoned consideration in accordance with the statutory scheme and the principles requiring meaningful reasons and application of mind; the Court directed the respondents to dispose of the objections afresh within twelve weeks. [Paras 9, 10, 11]

Impugned order disposing of objections is quashed for being non-speaking and lacking application of mind; matter remanded to respondents to reconsider and dispose of the objections afresh with reasons within twelve weeks.

Final Conclusion: Writ Petition allowed; order dated 12.09.2016 quashed and the objections to reopening for assessment year 2009-10 are remitted to the respondents for fresh, reasoned disposal in compliance with the proviso to Section 147 and applicable procedural requirements within twelve weeks.

Reopening of assessment under Section 147 - Principles of natural justice in tax proceedings - Retrospective application of amendment for production of Tax Residency Certificate - Writ jurisdiction vis-a -vis alternative statutory remedy of appeal - Appellate adjudication and relaxation of limitation for entertaining appeal

Reopening of assessment under Section 147 - Retrospective application of amendment for production of Tax Residency Certificate - Principles of natural justice in tax proceedings - Validity of reopening the assessment where reason stated included non-production of TRC which was not mandatory at the time and alleged violation of natural justice - HELD THAT: - The Court examined the reasons recorded for reopening and the materials on record and observed that the stated grounds for reopening were not confined solely to non-production of the Tax Residency Certificate. The petitioner's contention that production of the TRC was not required at the time and that a subsequent amendment could not be given retrospective effect so as to justify reopening was noted, but the Court found that the reasons recorded (proceedings dated 10.02.2014) disclosed additional aspects which required adjudication by the Assessing Officer. While recognising that retrospective application of an amendment cannot lightly be used to reopen a completed assessment, the Court did not adjudicate the substantive correctness of applying the amendment retrospectively or finally determine whether there was a breach of natural justice; instead it treated the disputed factual and legal contentions as matters fit for appellate reconsideration and fact finding by the statutory appellate forum. [Paras 4, 7, 10]

Reopening was not set aside at writ stage because the reasons recorded showed matters beyond mere non-production of TRC and factual/legal disputes required adjudication by the appellate authority; the Court did not finally rule on retrospective application or the merits of natural justice breach.

Writ jurisdiction vis-a -vis alternative statutory remedy of appeal - Principles of natural justice in tax proceedings - Whether the High Court should entertain the writ petition or require the petitioner to exhaust the statutory appeal remedy despite allegations of illegality and breach of natural justice - HELD THAT: - The Court reaffirmed the long standing principle that filing an appeal is the primary and normal remedy and entertaining a writ under Article 226 is an exception. The High Court may dispense with the appellate remedy only in exceptional circumstances where imminent, irreparable harm or gross injustice is demonstrated and cannot be compensated by an appeal. Mere allegations of breach of natural justice or disputed factual and legal questions do not ordinarily justify bypassing the statutory appellate forum. The Court emphasised the institutional role of the appellate authority as the appropriate fact finding and adjudicatory body for mixed questions of fact and law and declined to usurp that role. [Paras 11, 12, 13]

Writ petition not entertained on merits; petitioner directed to pursue the statutory appeal as the appropriate remedy.

Appellate adjudication and relaxation of limitation for entertaining appeal - Writ jurisdiction vis-a -vis alternative statutory remedy of appeal - Direction as to the appellate remedy and treatment of any delay in preferring the appeal - HELD THAT: - Recognising the need to preserve the appellate route while ensuring effective redress, the Court directed that the petitioner is at liberty to prefer an appeal to the prescribed appellate forum. The Court further directed that the appellate authority shall entertain the appeal without reference to delay and decide the matter on merits after affording opportunity to the petitioner, disposing of the appeal expeditiously. This direction preserves the statutory hierarchy while mitigating any prejudice arising from delay in approaching the appellate forum. [Paras 14]

Petitioner permitted to approach the Appellate Authority; appellate authority directed to entertain the appeal despite delay and decide on merits expeditiously after giving opportunity.

Final Conclusion: Writ petition dismissed with liberty to prefer the statutory appeal in respect of Assessment Year 2006-07; the appellate authority directed to entertain the appeal notwithstanding any delay and to adjudicate the disputes on merits after affording opportunity to the petitioner.

Reopening of assessment under Section 147 of the Income Tax Act - notice under Section 148 - reason to believe - production of books not amounting to disclosure (Explanation 1 to Section 147) - reopening permissible in case of underassessment (Explanation 2(c)(i)) - change of opinion - distinctness of grounds pending before appellate authority - addition under Section 56(2)(viib)

Reopening of assessment under Section 147 of the Income Tax Act - reason to believe - reopening permissible in case of underassessment (Explanation 2(c)(i)) - Validity of reopening the assessment for assessment year 2013-2014 by issuing notice under Section 148 read with Section 147. - HELD THAT: - The Court examined the recorded reasons dated 05.09.2017 and held that they satisfy the statutory test of 'reason to believe' under Section 147. The recorded reason identifies conversion of preference shares and debentures into equity totalling 1,000,151 shares and notes that the difference between issue price and computed market value in respect of those shares was not brought to tax in the earlier assessment; this constitutes material on which a belief that income chargeable to tax has escaped assessment can be based. Explanation 2(c)(i) was relied upon to show that reopening is permissible where an assessment has resulted in underassessment. Applying these principles to the facts, the Court concluded that the reopening was legally sustainable and that the Assessing Officer was entitled to initiate proceedings by issuing notice under Section 148. [Paras 20, 22, 23, 25, 26]

Reopening of assessment for AY 2013-14 upheld; notice under Section 148 sustained.

Production of books not amounting to disclosure (Explanation 1 to Section 147) - change of opinion - Whether production of account books, auditor's report and documents at the time of original assessment prevents reopening, or whether the reopening represents impermissible change of opinion. - HELD THAT: - The Court construed Explanation 1 to Section 147 as clarifying that mere production of account books or other evidence at the original assessment does not necessarily amount to disclosure that would preclude reopening. The judgment states that production of records alone is insufficient to deny the Assessing Officer power to reopen; discovery of new material or circumstances giving rise to reason to believe can justify reopening. On the claim that the reassessment amounted to a change of opinion, the Court held that the statutory Explanations permit reopening even where records were earlier considered, and therefore the contention of change of opinion is unsustainable on the material before the Court. [Paras 21, 22, 25]

Production of books and documents at the original assessment does not, by itself, bar reopening; change of opinion plea rejected.

Distinctness of grounds pending before appellate authority - addition under Section 56(2)(viib) - Whether the fact that grounds relating to additions under Section 56(2)(viib) are pending before the Commissioner (Appeals) precluded the Assessing Officer from reopening the assessment on other specific grounds. - HELD THAT: - The Court noted that the grounds of appeal before the Commissioner (Appeals) related to the Assessing Officer's treatment of a specific fresh issue of 600,000 shares and the addition made under Section 56(2)(viib), whereas the reasons recorded for reopening related to conversion of preference shares and debentures into equity totaling 1,000,151 shares and the alleged non-inclusion of difference between issue and market value in respect of those conversions. The Court held that grounds pending on appeal, being on different factual matrices, do not by themselves invalidate the separate grounds relied upon to record a reason to believe for reopening. Consequently, pendency of the appeal did not preclude the respondents from initiating reassessment proceedings on the recorded basis. [Paras 11, 15, 23, 24]

Pendency of appeal on certain additions does not bar reopening on distinct, specific grounds; reopening not quashed for that reason.

Final Conclusion: Writ petition dismissed; the reopening notice and consequential proceedings are upheld and the petitioner must participate in reassessment proceedings; no order as to costs and connected miscellaneous petitions dismissed.

Re-opening of assessment under Section 147 of the Income Tax Act - Depreciation classification of Automated Teller Machines as computers - Reliance on prior decision for classification of assets - Burden of proof and production of invoices for claiming depreciation - Admissibility of statutory audit report as secondary evidence

Re-opening of assessment under Section 147 of the Income Tax Act - Validity of the re-opening of the assessment for Assessment Year 2008-09. - HELD THAT: - The Court observed that a notice under Section 148 was issued on 21.03.2013 and reasons for reopening were supplied on 07.05.2013. Having examined the chronology and material, the Court held that the re-opening was in accordance with law and that the Assessing Officer, CIT(A) and the Tribunal were correct in upholding the reassessment proceedings. The Court rejected the contention that reopening amounted to mere change of opinion or was based on 'borrowed satisfaction'. [Paras 6]

Re-opening of assessment was valid; substantial question of law No.1 answered against the assessee and in favour of the revenue.

Depreciation classification of Automated Teller Machines as computers - Reliance on prior decision for classification of assets - Whether ATMs qualify as 'computers' entitled to depreciation at the higher rate (60%). - HELD THAT: - The Court accepted the division bench decision in CIT v. NCR Corporation (2020) which had held that ATMs perform functions of input, process and output and are to be treated as computers for the purpose of depreciation. Applying the reasoning of that precedent, the Court concluded that ATMs are entitled to depreciation at the rate of 60% as computers. The Tribunal's contrary conclusion was set aside insofar as it denied depreciation at that rate. [Paras 7]

ATMs held entitled to depreciation at the rate of 60% as computers; substantial questions of law Nos.2 and 3 answered in favour of the assessee.

Burden of proof and production of invoices for claiming depreciation - Admissibility of statutory audit report as secondary evidence - Whether allowance of depreciation should have been made for all assets claimed when only part of the invoices were produced and whether statutory audit report suffices as evidence. - HELD THAT: - The Court reiterated that the burden to prove ownership and expenditure for depreciable assets lies on the assessee. In the present case the assessee produced invoices for 66% of the claimed assets, and depreciation was allowed to that extent. For the remaining 34% no invoices were produced and it was not contended that the invoices were not in the assessee's possession. The Court distinguished Jay Engineering Works (where books were destroyed by fire and secondary evidence was accepted) and observed that there is no statutory presumption in favour of the statutory audit report. The factual finding by the authorities that absence of invoices disentitled the assessee to depreciation for the unproved portion was held to be in conformity with Section 37 and not perverse. [Paras 8]

Depreciation allowed only to the extent invoices were produced (66%); claim in respect of unproved 34% rejected; substantial question of law No.4 answered against the assessee.

Final Conclusion: The appeal is disposed of. The reassessment under Section 147 was held valid; ATMs are entitled to depreciation at 60% as computers (tribunal's contrary finding quashed on that point); however, depreciation was allowed only to the extent invoices were produced (66%) and disallowance of depreciation for the unproved portion (34%) is upheld.

Allowability of depreciation to a charitable trust as application of income - deduction under section 11 as application of income - double deduction - precedential effect of Supreme Court decision in CIT v. Rajasthan and Gujarati Charitable Foundation

Allowability of depreciation to a charitable trust as application of income - deduction under section 11 as application of income - double deduction - Depreciation on assets held by a trust registered under section 12A is allowable as application of income for charitable purposes and its allowance does not constitute a double deduction where the cost of the asset has been treated as application of income under section 11. - HELD THAT: - The Revenue's substantial questions of law challenged the Tribunal's conclusion that the assessee-trust could claim depreciation as an application of income even though the purchase cost of the assets had been treated as application of income under section 11. The learned Senior Standing Counsel for the Revenue conceded that these questions have been answered against the Revenue by binding precedent of the Supreme Court and by the Division Bench of this Court in related appeals. Applying that precedent and the earlier Division Bench rulings, the Court held that allowing depreciation as application of income is permissible and does not result in an impermissible double deduction where the legal position has already been authoritatively settled by higher judicial decisions relied upon by the parties. The Court therefore followed the said precedent and earlier Division Bench decisions and dismissed the Revenue's appeal. [Paras 4, 6]

Questions of law answered against the Revenue; the Tribunal's view that depreciation is allowable as application of income and does not amount to double deduction is sustained.

Final Conclusion: The Tax Case Appeal is dismissed; the appellate court followed the Supreme Court and Division Bench authorities and upheld the allowance of depreciation as application of income to the charitable trust for Assessment Year 2009-2010.

Reopening of assessment and formation of belief under Sections 147-148 of the Income Tax Act - capital contribution to partnership and chargeability under Section 45(3) of the Income Tax Act - timing of chargeability of capital gain on transfer by partner - prima-facie satisfaction and sufficiency of reasons recorded - roving and fishing inquiry - borrowed satisfaction

Reopening of assessment and formation of belief under Sections 147-148 of the Income Tax Act - prima-facie satisfaction and sufficiency of reasons recorded - roving and fishing inquiry - borrowed satisfaction - Validity of the notices issued under Section 148/147 for AY 2011-12 and AY 2012-13 based on the reasons recorded - HELD THAT: - The Court examined the reasons recorded by the Assessing Officer and concluded that the material placed before the AO was vague and amounted to information inviting further verification of land transactions and receipts by the firm and the assessee rather than concrete material leading to a reasonable belief that income had escaped assessment. The reasons primarily sought further enquiry into genuineness and valuation of transactions and were held to permit only a roving and fishing inquiry; the AO had proceeded on an erroneous premise and there was no sufficient material to form a prima-facie belief of escaped income. The Court further noted that reliance solely on information from another officer without independent application of mind amounted to borrowed satisfaction. For these reasons the reassessment notices were held to be legally invalid. [Paras 10, 14, 15, 16]

Reasons recorded insufficient to form a belief that income had escaped; reopening notices quashed for being vitiated by vagueness, roving inquiry and borrowed satisfaction.

Capital contribution to partnership and chargeability under Section 45(3) of the Income Tax Act - timing of chargeability of capital gain on transfer by partner - Whether the alleged transfer of land and corresponding consideration could be taxed in AY 2011-12 or AY 2012-13 instead of the year of transfer/earlier assessment year - HELD THAT: - The court found that the land had been contributed to the partnership by deed dated 15.08.2008 and that no amount was recorded in the books of the firm as consideration in AY 2009-10; Section 45(3) treats the value recorded in the firm's books as the full value of consideration for the year in which transfer takes place. As no sum was recorded as consideration in the firm's accounts for the earlier year, any chargeability under Section 45(3) would arise in the year of transfer (relevant to AY 2009-10) and not in AY 2011-12 or AY 2012-13. Accordingly, there was no basis to allege escaped capital gains for the years under challenge. [Paras 11, 12, 13]

Transaction being a capital contribution in 2008, any capital gain chargeable under Section 45(3) would relate to the year of transfer (AY 2009-10); therefore no capital gain was shown to have escaped assessment in AY 2011-12 or AY 2012-13.

Final Conclusion: Writ petitions allowed; the reassessment notices dated 30.03.2018 and 27.03.2018 issued for AY 2011-12 and AY 2012-13 are quashed and set aside as unlawful for lack of sufficient reasons and incorrect application of law; no order as to costs.

Deduction under section 80IA - computation of profit from eligible unit - sale consideration realised from State Electricity Board - captive power unit distinction

Deduction under section 80IA - computation of profit from eligible unit - sale consideration realised from State Electricity Board - captive power unit distinction - Whether the deduction claimed under section 80IA in respect of electricity generated and sold to the Rajasthan State Electricity Board was rightly disallowed by treating sale proceeds at the actual price realised. - HELD THAT: - The assessee owned a windmill in Rajasthan and sold the entire power generated (378,208 units) to the Rajasthan State Electricity Board (RSEB) at a pre fixed rate of Rs. 4.28 per unit, receipts being credited to its profit and loss account accordingly. For computing deduction under section 80IA, the relevant figure is the profit derived from the eligible unit, which must be calculated on the basis of the sale consideration actually received by the assessee from the supply to the RSEB. The rate at which RSEB subsequently sells power to its retail consumers is irrelevant to the assessee's computation of profit from the eligible unit. The assessee's attempt to compute deduction by adopting a higher notional rate (Rs. 8.40 per unit) instead of the actual realised price was therefore contrary to the correct basis of computation. Case law relied upon by the assessee pertained to captive power units and are distinguishable since the assessee did not use the generated electricity for its own consumption but sold it to RSEB. The Assessing Officer and the Commissioner (Appeals) correctly treated the deduction in accordance with the actual sale proceeds realised from RSEB.

Claim for deduction under section 80IA computed on a notional higher rate was rightly disallowed; computation must be based on actual sale consideration realised from RSEB, and the appeal is dismissed.

Final Conclusion: The Tribunal upholds the denial of the section 80IA deduction computed on a notional higher rate and dismisses the assessee's appeal; profit from the eligible unit must be calculated on the basis of the actual sale consideration received from the State Electricity Board.

Condonation of delay - rectification under section 154 and its effect on prosecuting an appeal - reopening of assessment - genuineness of purchases versus accommodation entries (bogus purchases) - remand for fresh adjudication on merits

Condonation of delay - rectification under section 154 and its effect on prosecuting an appeal - reopening of assessment - remand for fresh adjudication on merits - Ld. CIT(A)'s refusal to condone delay in filing the appeal was incorrect; delay is condoned and the matter remitted to Ld. CIT(A) for fresh consideration on merits. - HELD THAT: - The Tribunal found that the assessment order passed by the AO was devoid of any reasoning and that the assessee had pursued an alternative remedy by filing a rectification application under section 154 before the AO. The assessee's belief that the rectification application might succeed was held to be a cogent and reasonable explanation for not immediately filing the appeal before the CIT(A). In these circumstances the CIT(A) erred in treating the delay (approximately 934 days) as wholly unjustified without considering that the assessee had a bona fide expectation of relief from the rectification proceedings. Having accepted the reasonableness of the cause for delay, the Tribunal condoned the delay and remitted the dispute on the merits to the file of the Ld. CIT(A), directing that the issue be considered afresh after giving the assessee an opportunity of being heard. [Paras 7, 8]

Delay in filing the appeal is condoned; appeal is remitted to Ld. CIT(A) for fresh adjudication on merits after hearing the assessee.

Final Conclusion: The appeal is allowed for statistical purposes by condoning the delay in filing the appeal and remitting the matter to the Ld. CIT(A) to decide the merits afresh after giving the assessee an opportunity of being heard.

Deduction under section 54 - interpretation of "a residential house" - acquisition of multiple flats under a development agreement as one residential house - precedential value of High Court decisions and stare decisis - effect of post-facto amendment restricting exemption to one residential house

Deduction under section 54 - interpretation of "a residential house" - acquisition of multiple flats under a development agreement as one residential house - The assessee is entitled to deduction under section 54 for the two flats acquired under the development agreement for Assessment Year 2013-14. - HELD THAT: - The Tribunal held that the assessment year falls prior to the Finance Act, 2014 amendment (effective 01/04/2015) which substituted "a residential house" with "one residential house". Accordingly, the pre-amendment statutory language and the consistent view of various High Courts (as cited in the record) permitting the acquisition of multiple flats arising from a single development agreement to qualify as a residential house for section 54 must be followed. The Commissioner (Appeals) erred in declining the claim by preferring contrary ITAT decisions and by treating dismissal of SLPs as diminishing the precedential value of High Court rulings. The Tribunal emphasised the proper rule of precedent: subordinate authorities are bound to follow High Court decisions of coordinate or higher jurisdiction where applicable. On that basis the Tribunal set aside the CIT(A)'s order and directed that the deduction claimed by the assessee be allowed. The Tribunal thereby resolved the legal question on the merits in favour of the assessee for the tax period in issue. [Paras 10, 11]

Assessee's claim for deduction under section 54 in respect of the two flats acquired under the development agreement for AY 2013-14 is allowed.

Final Conclusion: The Tribunal set aside the CIT(A)'s order, held that for AY 2013-14 (pre-amendment) the assessee is entitled to claim deduction under section 54 in respect of the two flats acquired under the development agreement, and directed allowance of the claimed deduction.

Double assessment / double taxation of the same capital gain - reopening of assessment under section 147 of the Income-tax Act, 1961 - deduction under section 54F of the Income-tax Act - verification/remand for limited purpose - finality under Vivad se Vishwas scheme

Double assessment / double taxation of the same capital gain - verification/remand for limited purpose - finality under Vivad se Vishwas scheme - Whether the capital gain arising on entering into the development agreement, which is assessed in AY 2008-09, was again assessed in AY 2010-11 and, if so, whether proceedings for AY 2010-11 should be dropped. - HELD THAT: - The Tribunal recognized that the same capital gain on entering into the development agreement had been the subject matter of assessment proceedings in AY 2008-09 and that proceedings in respect of AY 2008-09 had been concluded with the assessee availing the Vivad se Vishwas scheme, with Form No.3 issued. Given this factual overlap, the Tribunal did not decide the merit of the claimed deductions or disallowances on the record but remitted the matter to the Assessing Officer for a limited factual verification. The AO is directed to ascertain whether the capital gain in question was indeed assessed in AY 2008-09; if it is found that the same capital gain has been assessed twice (in AY 2008-09 and AY 2010-11), the AO must drop the proceedings for AY 2010-11. If the AO finds otherwise, the assessment proceedings for AY 2010-11 may be revived. The Tribunal treated the assessee's other grounds as allowed for statistical purposes pending this verification. [Paras 7]

Matter remitted to the Assessing Officer for limited verification; if the capital gain is found to have been assessed in AY 2008-09, proceedings for AY 2010-11 to be dropped; otherwise AO may revive the proceedings; grounds treated as allowed for statistical purposes.

Final Conclusion: Appeal allowed for statistical purposes and remitted to the Assessing Officer to verify whether the same capital gain was already assessed in AY 2008-09; consequent action to be taken as directed by the Tribunal.

Date of allotment as date of acquisition for capital gains - holding period for immovable property allotted by builder - benefit of indexation on payments made for under-construction property - mandatory nature of interest under section 234B and section 234D - prematurity of initiation of penalty proceedings under section 271(1)(c)

Date of allotment as date of acquisition for capital gains - holding period for immovable property allotted by builder - benefit of indexation on payments made for under-construction property - Whether the allotment letter and buyer's agreement confer a right constituting acquisition of the capital asset so that the holding period runs from the date of allotment and the assessee is entitled to indexation on payments made. - HELD THAT: - The Tribunal accepted the assessee's submission that the buyers agreement dated 11.04.2011 and allotment letter dated 08.07.2011 conferred on the assessee a right in the specific flat which constitutes a capital asset. The Tribunal relied on the CBDT clarifications in Circular No.471 dated 15.10.1986 and Circular No.672 dated 16.12.1993, and on judicial authorities treating allotment as the relevant date of acquisition. It held that payment of installments and delivery of possession are consequential or formal acts and do not preclude the allotment date from being the date of acquisition; accordingly the asset was correctly treated as long term for the purpose of capital gains and indexation on payments made was allowable. The Tribunal set aside the orders of the Assessing Officer and the CIT(A) and directed the AO to allow the long term capital loss as claimed by the assessee. [Paras 6]

Assessee entitled to treat allotment date as date of acquisition; long term capital loss allowed and indexation to be given on basis of payments made.

Mandatory nature of interest under section 234B and section 234D - Whether the levy of interest under sections 234B and 234D could be set aside. - HELD THAT: - The Tribunal observed that interest under sections 234B and 234D is mandatory and consequential in nature. Having allowed the capital gains issue in favour of the assessee on merits, the Tribunal nevertheless held that the statutory levy of interest cannot be dispensed with as a matter of law and therefore dismissed the assessee's grounds challenging those interest levies. [Paras 7]

Grounds challenging interest under sections 234B and 234D dismissed; interest remains leviable as mandatory and consequential.

Prematurity of initiation of penalty proceedings under section 271(1)(c) - Whether initiation of penalty proceedings under section 271(1)(c) was maintainable at this stage. - HELD THAT: - The Tribunal found initiation of penalty proceedings to be premature at the adjudicatory stage of the present appeal. It declined to adjudicate the penalty issue and dismissed the assessee's ground challenging initiation as not ripe for determination in the present proceedings. [Paras 8]

Ground challenging initiation of penalty proceedings under section 271(1)(c) dismissed as premature.

Final Conclusion: The appeal is partly allowed: the Tribunal set aside the assessments so far as treatment of the property for capital gains is concerned and directed allowance of the long term capital loss with indexation; challenges to interest under sections 234B and 234D were rejected as such interest is mandatory; and the challenge to initiation of penalty proceedings under section 271(1)(c) was dismissed as premature.

Unexplained cash credit under section 68 of the Income-tax Act - Compliance with notices under section 133(6) of the Act - Burden on assessee to substantiate identity and creditworthiness of investors - Powers of Commissioner (Appeals) co-terminus with Assessing Officer - Remand for fresh verification and enquiry

Unexplained cash credit under section 68 of the Income-tax Act - Powers of Commissioner (Appeals) co-terminus with Assessing Officer - Deletion of amount subscribed by M/s M.L. Singhi & Associates Pvt. Ltd. (Rs. 4,04,25,000/-) upheld - HELD THAT: - The CIT(A) obtained and examined the assessment record of M/s M.L. Singhi & Associates Pvt. Ltd. for AY 2012-13 and found that the Assessing Officer himself, in that assessment completed under section 143(3), had examined and accepted the source of funds for the investment in the assessee. Because the appellate authority's powers are co-terminus with those of the AO, the CIT(A) was entitled to act upon the AO's own record and accept the explanation given for the investment. On that basis the Tribunal found no infirmity in the CIT(A)'s deletion of the addition in respect of the said investor. [Paras 8, 18]

Order of the CIT(A) deleting the addition in respect of M/s M.L. Singhi & Associates Pvt. Ltd. is upheld.

Compliance with notices under section 133(6) of the Act - Burden on assessee to substantiate identity and creditworthiness of investors - Remand for fresh verification and enquiry - Issue relating to share subscriptions from the remaining eleven parties restored to the file of the Assessing Officer for enquiries under section 133(6) and fresh decision after opportunity of hearing - HELD THAT: - The Assessing Officer had made additions in respect of the eleven other subscribers because replies to notices issued under section 133(6) were either returned unserved or not received within the time stipulated and, accordingly, the AO stated he could not verify the particulars. The assessee contends that required documents were furnished before completion of assessment (including by speed post) and that the parties are promoters/tax paying entities with assessed funds, but the AO did not complete verification. Considering the totality of facts and in the interest of justice, the Tribunal directed that the questions relating to these eleven parties be restored to the AO to conduct such enquiries as he deems fit pursuant to the notices under section 133(6) and decide the matter on facts and law after affording the assessee a hearing. [Paras 19]

Matter as to the remaining eleven investors is remanded to the Assessing Officer for fresh verification and decision after due opportunity of being heard.

Final Conclusion: The Revenue's appeal is partly allowed for statistical purposes: the deletion in respect of M/s M.L. Singhi & Associates Pvt. Ltd. is upheld, and the additions relating to the remaining eleven subscribers are restored to the Assessing Officer for fresh enquiry and decision under section 133(6) after giving the assessee an opportunity to be heard.

Dispensation of meetings of shareholders and creditors - consent by affidavit - absence of secured creditors - absence of unsecured creditors - compliance with section 230(5) and Rule 8 of the Companies (CAA) Rules, 2016

Dispensation of meetings of shareholders and creditors - consent by affidavit - Meetings of the Equity Shareholders of all the Applicant Companies were dispensed with. - HELD THAT: - The Tribunal considered the affidavits of all equity shareholders of each Applicant Company evidencing their consent to the proposed scheme and to waiver of meetings, together with certificates from the Chartered Accountant confirming the lists of shareholders. In view of the unanimous written consent on record, the Tribunal exercised its power to dispense with convening meetings of the equity shareholders and recorded that such meetings are not required. [Paras 9, 10]

Meetings of the Equity Shareholders of all Applicant Companies are dispensed with in view of the affidavits of consent received from all equity shareholders.

Absence of secured creditors - dispensation of meetings of secured creditors - Meetings of the Secured Creditors of all the Applicant Companies were dispensed with on the ground that there are no secured creditors. - HELD THAT: - The Applicant Companies placed on record certificates from a Chartered Accountant certifying that none of the Applicant Companies has secured creditors. Having found no secured creditors on the record, the Tribunal held that convening meetings of secured creditors was unnecessary and dispensed with such meetings. [Paras 9, 10]

Meetings of Secured Creditors of the Applicant Companies are dispensed with as there are no secured creditors.

Absence of unsecured creditors - dispensation of meetings of unsecured creditors - Meetings of the Unsecured Creditors of Applicant Company No. 4 and Applicant Company No. 6 were dispensed with because those companies have no unsecured creditors. - HELD THAT: - Certificates from the Chartered Accountant were placed on record confirming that Applicant No. 4 and Applicant No. 6 have no unsecured creditors. The Tribunal accepted this material and held that there was no requirement to convene meetings of unsecured creditors for those two companies, accordingly dispensing with them. [Paras 9, 10]

Meetings of Unsecured Creditors of Applicant No. 4 and Applicant No. 6 are dispensed with as those companies have no unsecured creditors.

Dispensation of meetings of unsecured creditors - consent by affidavit - Meetings of the Unsecured Creditors of Applicant Nos. 1, 2, 3, 5, 7, 8, 9, 10 and the Transferee Company were dispensed with. - HELD THAT: - For the Applicant Companies listed, the record contained affidavits from all their unsecured creditors consenting to the proposed scheme and to waiver of meetings, accompanied by Chartered Accountant certificates listing those unsecured creditors. The Tribunal found the written consents adequate to dispense with the convening of meetings of the unsecured creditors of those companies and granted the relief accordingly. [Paras 9, 10]

Meetings of the Unsecured Creditors of Applicant Nos. 1, 2, 3, 5, 7, 8, 9, 10 and the Transferee Company are dispensed with in view of affidavits of consent from all such unsecured creditors.

Compliance with section 230(5) and Rule 8 of the Companies (CAA) Rules, 2016 - service of notice in Form No. CAA.3 and right to represent - The Applicant Companies were directed to serve statutory notices and comply with requirements of section 230(5) and Rule 8 of the Companies (CAA) Rules, 2016. - HELD THAT: - The Tribunal ordered that, in compliance with subsection (5) of section 230 and Rule 8, the Applicant Companies must send Form No. CAA.3 notices with required disclosures to the Regional Director (North Western Region), Registrar of Companies, Gujarat, the Income Tax authorities concerned and the Official Liquidator, allowing 30 days for representations. Notices are to be sent by registered post, speed post, courier or by hand as mandated and an affidavit of service filed within 30 days of service. [Paras 11]

Applicant Companies shall serve notices in Form No. CAA.3 with prescribed disclosures to the statutory authorities, allow 30 days for representations, and file an affidavit confirming service as directed.

Final Conclusion: The Company Application under Sections 230-232 is allowed to the extent that meetings of equity shareholders and, where applicable, meetings of secured and unsecured creditors are dispensed with as recorded; the Applicant Companies must give statutory notices and comply with Rule 8 and section 230(5) before further proceedings; the application is disposed of accordingly.

Dispensation of meeting of shareholders and creditors under Section 230(9) - Scheme of Arrangement under Sections 230 and 232 - Compliance with applicable Indian Accounting Standards - Tribunal's limited scrutiny to ensure scheme conforms with law and protects stakeholder interests

Dispensation of meeting of shareholders and creditors under Section 230(9) - Scheme of Arrangement under Sections 230 and 232 - Compliance with applicable Indian Accounting Standards - Tribunal's limited scrutiny to ensure scheme conforms with law and protects stakeholder interests - Whether meetings of the equity shareholders and unsecured creditors of the Applicant Companies could be dispensed with and related directions issued in respect of the proposed Scheme of Arrangement. - HELD THAT: - The Tribunal applied Section 230(9) and examined the material furnished by the applicants including certificates by the companies' chartered accountants and affidavits from shareholders and unsecured creditors showing consent exceeding the statutory threshold and no secured creditors existing. The independent auditors certified that the proposed accounting treatment in the Scheme complies with the applicable Indian Accounting Standards. The Tribunal noted its limited role to broadly examine that the Scheme is prepared in accordance with law and that stakeholders' interests are addressed, and that decisions motivated by commercial expediency are for the companies provided legal requirements are met. On that basis the Tribunal concluded that the applicants had made out a case for dispensation of convening meetings of equity shareholders and unsecured creditors and accordingly granted relief while imposing routine procedural directions (publication of notice) and permitting filing of the sanction petition. [Paras 5, 6, 7]

Convening and holding of meetings of equity shareholders and unsecured creditors of both Applicant Companies are dispensed with; applicants directed to publish specified newspaper notifications; applicants permitted to file the Company Petition for sanction of the Scheme; aggrieved parties may file a miscellaneous application.

Final Conclusion: The Tribunal dispensed with the convening of meetings of equity shareholders and unsecured creditors for the proposed Scheme of Arrangement after satisfied with statutory affidavits, auditor certificates and compliance with accounting standards, directed publication of notices, and permitted the applicants to proceed to seek formal sanction of the Scheme.

Scheme of Amalgamation - sanction under Sections 230 to 232 of the Companies Act, 2013 - Appointed Date - vesting of assets and liabilities - continuation of pending proceedings - no immunity from stamp duty or taxes - filing and registration with Registrar of Companies - official liquidator scrutiny and report - statutory compliance and compounding of defaults

Scheme of Amalgamation - sanction under Sections 230 to 232 of the Companies Act, 2013 - Appointed Date - Sanction of the Scheme of Amalgamation and the Appointed Date from which it shall be effective. - HELD THAT: - Having considered the petition, reports of the Regional Director and ROC, the Official Liquidator's scrutiny and other material on record, the Tribunal found the scheme to be fair and reasonable and not prejudicial to members, creditors or public policy. The Tribunal was satisfied that the procedure specified in subsections (1) and (2) of section 232 had been complied with and accordingly sanctioned the Scheme of Amalgamation. The Appointed Date for the Scheme was declared as 01st April, 2018. [Paras 12]

Scheme of Amalgamation sanctioned; Appointed Date fixed as 01st April, 2018.

Vesting of assets and liabilities - continuation of pending proceedings - Effect of sanction as to transfer and vesting of the transferor companies' assets, liabilities and pending proceedings in the transferee company. - HELD THAT: - The Tribunal ordered that upon sanction the transferor company shall be transferred to and vest in the transferee company for all its estate and interest, subject to existing charges. All liabilities, taxes, levies, charges and duties of the transferor companies shall be transferred to and become liabilities and duties of the transferee company. Proceedings pending by or against the transferor company shall continue by or against the transferee company.

Assets, liabilities and pending proceedings of the transferor companies shall vest in and continue against the transferee company.

No immunity from stamp duty or taxes - tax implications subject to tax authorities - Whether sanction of the Scheme exempts the companies from payment of stamp duty, taxes or other statutory charges and the treatment of tax implications arising from the Scheme. - HELD THAT: - The Tribunal clarified that sanctioning the Scheme does not grant exemption from payment of stamp duty, taxes or other charges; such matters shall be dealt with by the respective authorities under applicable laws. Further, any tax implications arising out of the Scheme are subject to the final decision of the concerned Income Tax Authorities, whose determinations shall be binding on the transferee company.

Sanction does not exempt payment of stamp duty or taxes; tax implications to be finally determined by the concerned tax authorities.

Filing and registration with Registrar of Companies - statutory compliance and compounding of defaults - Obligations of the petitioner post-sanction as to filing, compliance and adjudication/compounding of defaults, if any. - HELD THAT: - The Tribunal directed the petitioner to furnish a certified copy of the Order and the Scheme to the Registrar of Companies for registration within thirty days. The petitioner was required to file all due statutory returns immediately, ensure compliance with provisions of the Companies Act, 2013 and submit periodic affidavits and professional certificates until compliance is ensured. The petitioner companies were directed to present themselves before the Registrar of Companies for adjudication or compounding of defaults/violations/non-compliances, particularly with reference to the MCA's earlier investigation report, if any.

Petitioner to file certified copy of the Order with ROC, complete statutory returns and comply with directions for adjudication/compounding of defaults.

Official liquidator scrutiny and report - Weight to be accorded to the Official Liquidator's examination of the transferor company's affairs. - HELD THAT: - The Official Liquidator engaged auditors to scrutinize the transferor company's books and records and reported that records were maintained and affairs were not conducted in a manner prejudicial to members or public interest. The Tribunal took these remarks into account in concluding that the Scheme could be sanctioned on merits. [Paras 9]

Official Liquidator's report accepted as supporting sanction; no objection requiring denial of the Scheme was found.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation with Appointed Date 01st April, 2018, directed vesting of assets and liabilities and continuation of proceedings in the transferee company, clarified that sanction does not absolve payment of stamp duty or taxes (which are subject to other authorities), and imposed post-sanction filing and compliance obligations including submission to ROC and adjudication/compounding of any defaults.

Section 7(5) discretion to admit or reject application - Section 65 fraudulent or malicious initiation of proceedings - ascertainment of default from records of information utility or other evidence - roving enquiry by the Adjudicating Authority - piercing the corporate veil

Section 7(5) discretion to admit or reject application - Section 65 fraudulent or malicious initiation of proceedings - Whether an application under Section 7 which on its face is complete and discloses default can nevertheless be rejected if it appears to have been filed collusively or with mala fides. - HELD THAT: - The Tribunal held that compliance with the formal requirements of Section 7 and a finding of default do not absolutely fetter the Adjudicating Authority from exercising discretion to reject an application where there is plausible evidence that the petition was filed collusively or with malicious intent. Drawing on Swiss Ribbons and related authorities, the Court recognised that the Code contains penal and protective provisions (notably Section 65 and Section 75) to guard against mala fide invocation of the insolvency process. The phraseology of Section 7(5) and the scheme of the Code permit cautious exercise of discretion to prevent misuse; if facts or records reasonably suggest collusion or fraudulent purpose, the Adjudicating Authority may refuse admission despite formal compliance with Section 7. The Tribunal therefore concluded that the Adjudicating Authority was entitled to consider whether the petition was a mala fide instrument and to act under Section 65 where such an inference was tenable. [Paras 34, 35, 36, 38, 45]

An application under Section 7 which otherwise meets the requirements may be rejected if the Adjudicating Authority, on permissible material, forms a plausible view that the petition was filed collusively or with mala fides and Section 65 is attracted.

Ascertainment of default from records of information utility or other evidence - roving enquiry by the Adjudicating Authority - piercing the corporate veil - Whether the Adjudicating Authority exceeded its jurisdiction by relying on master data and financial statements not on record and by conducting a roving enquiry to infer collusion. - HELD THAT: - The Tribunal noted that the Adjudicating Authority had recorded that the Section 7 application was complete and that default existed, yet proceeded to examine master data and the corporate debtor's financial statements to form the view of collusion. Having considered the corporate debtor's admitted net worth, the existence of substantial corporate guarantees in master records, and the corporate debtor's own disclosures about investments and deterioration in financial position, the Tribunal found there was a plausible basis to infer collusion between the parties to defeat the corporate debtor's liabilities as guarantor. The Tribunal observed that where the master data and other available material reasonably support such an inference, the Adjudicating Authority's enquiry could not be characterised as impermissible 'roving' or as having exceeded jurisdiction. The possibility of lifting the corporate veil was noted as an established exception where the corporate form is used to perpetrate illegality or evade liabilities. [Paras 32, 46, 48, 49]

The Adjudicating Authority did not act without jurisdiction in relying on available master data and financial statements to form a plausible conclusion of collusion; the finding of collusion was tenable on the material before it and the rejection of the Section 7 petition was sustained.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the Adjudicating Authority's power to refuse admission of a formally compliant Section 7 petition where a plausible case of collusive or mala fide initiation is made out on the available material, and found the Adjudicating Authority's conclusion of collusion tenable on the record.

Application under Section 7 of the Insolvency and Bankruptcy Code - applicability of Section 18 of the Limitation Act, 1963 - acknowledgement of debt and commencement of fresh period of limitation - Section 238A of the I&B Code and mutatis mutandis application of the Limitation Act - date of default/NPA as commencement of limitation

Applicability of Section 18 of the Limitation Act, 1963 - Section 238A of the I&B Code and mutatis mutandis application of the Limitation Act - Section 18 of the Limitation Act, 1963 applies to proceedings under the I&B Code and is capable of commencing a fresh period of limitation on acknowledgment of debt. - HELD THAT: - The Tribunal reviewed the recent decisions of the Hon'ble Supreme Court and held that provisions of the Limitation Act apply mutatis mutandis to IBC proceedings under Section 238A. The court accepted the ratio in Sesh Nath Singh, Laxmi Pat Surana and subsequent rulings that Section 18 (and other provisions like Section 14) can apply to Section 7 proceedings where the facts warrant, and that an acknowledgement in writing signed by the corporate debtor can start a fresh limitation period. The earlier line of authority which was thought to exclude Section 18 was held to be superseded by the later Supreme Court pronouncements relied upon by the Tribunal. [Paras 6, 7, 8, 11]

Section 18 of the Limitation Act applies to Section 7 proceedings under the IBC and an acknowledgement can give rise to a fresh period of limitation.

Acknowledgement of debt and commencement of fresh period of limitation - date of default/NPA as commencement of limitation - The Corporate Debtor's letter dated 10th July, 2018 constitutes an acknowledgement of liability thereby commencing a fresh period of limitation and rendering the Section 7 application filed in 2019 within time. - HELD THAT: - The Tribunal examined the Form submitted by the Financial Creditor and the annexed documents, including the letter of acknowledgment dated 10.07.2018 issued on the corporate debtor's letterhead and reflected in the balance sheet. The Adjudicating Authority had recorded that the acknowledgment proved the debt was due and payable and that the application was within limitation as the acknowledgment gave a fresh lease of limitation. Applying the accepted principle that an acknowledgement in writing signed before expiry of the limitation period restarts limitation, the Tribunal found that the application was not time-barred. [Paras 4, 20, 21, 22, 23]

The 10.07.2018 acknowledgment restarts limitation and the Section 7 application filed in 2019 is within time.

Application under Section 7 of the Insolvency and Bankruptcy Code - pleadings and amendment at the appellate stage - No remand to the Adjudicating Authority (NCLT) was required; pleadings before the Adjudicating Authority were sufficient and the NCLAT could decide the limitation issue without permitting remand for amendment to NCLT. - HELD THAT: - Having considered Supreme Court directions in related matters that allow amendment of pleadings at appellate stages where necessary, the Tribunal nonetheless found that in the present case the Financial Creditor had specifically pleaded and annexed the acknowledgment and that the issue of limitation was raised and decided by the Adjudicating Authority. The Tribunal therefore rejected the appellant's contention for remand to the NCLT for amendment of pleadings, holding that pleadings and documents before the Adjudicating Authority were adequate for adjudication. [Paras 12, 15, 22]

Remand to the NCLT for amendment of pleadings is not warranted; the NCLAT could and did decide the limitation issue on the pleadings and documents before it.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority's admission of the Section 7 application is upheld as within limitation in view of the 10.07.2018 acknowledgment which commenced a fresh period of limitation under Section 18 of the Limitation Act; no remand is directed and there is no order as to costs.

Admission of insolvency petition under Section 9 and initiation of Corporate Insolvency Resolution Process - appointment of Interim Resolution Professional - declaration of moratorium on admission of CIRP - service and substituted service of notice - undisputed debt and default

Service and substituted service of notice - Service on the Corporate Debtor, including substituted service by paper publication, was valid and effective. - HELD THAT: - The Tribunal recorded that notices were issued and proof of service was filed; subsequently I.A. No. 28 of 2021 for substituted service by publication in specified newspapers was allowed and the service was held to be validly effected. The Registry was directed to post the petition for admission and no further notice was required. The record shows repeated attempts at personal and electronic service followed by publication, and no appearance or objection was filed by the Corporate Debtor after such service. [Paras 6]

Service, including substituted service by paper publication, is valid and the petition was properly placed for admission.

Undisputed debt and default - The debt and default claimed by the Operational Creditor remained undisputed and were substantiated by sufficient evidence on record. - HELD THAT: - The Tribunal found that the Corporate Debtor deliberately did not appear and had no defence on the case made out. The Operational Creditor produced correspondence, ledger entries and evidence of partial payments and acknowledgement of dues by the Corporate Debtor; the claim of outstanding dues was therefore held to be substantiated. In view of non-appearance and absence of any filed reply, the Tribunal treated the debt and default as admitted and not in dispute. [Paras 7]

The claim of debt and default is undisputed and sufficiently supported by the material on record.

Admission of insolvency petition under Section 9 and initiation of Corporate Insolvency Resolution Process - appointment of Interim Resolution Professional - declaration of moratorium on admission of CIRP - The petition under Section 9 was admitted, CIRP initiated, an Interim Resolution Professional appointed and moratorium declared. - HELD THAT: - Exercising powers under the Code and Rules, the Tribunal admitted C.P.(IB) No.177/BB/2020 on the basis that the petition complied with statutory requirements, the debt and default were established and uncontested, and a proposed qualified Resolution Professional had filed the requisite Form-2 and declaration. Accordingly, the Tribunal appointed the suggested IRP to act as Interim Resolution Professional, directed compliance with extant IBC provisions and rules, imposed the statutory moratorium from the date of the order until completion of CIRP, and directed the IRP to file progress reports. The Tribunal also directed the board and staff of the Corporate Debtor to cooperate with the IRP. [Paras 8]

C.P.(IB) No.177/BB/2020 is admitted; CIRP is initiated, Mr. Surender Devasani appointed as Interim Resolution Professional and moratorium declared with consequential directions.

Final Conclusion: The Tribunal found service to be valid, the debt and default to be undisputed and substantiated, and therefore admitted the Section 9 petition, initiated CIRP, appointed the nominated IRP and declared the statutory moratorium with directions for compliance and reporting.

Admission of application under Section 7 of the Insolvency and Bankruptcy Code - Existence of debt and 'default' for the purpose of Section 7 - Adjudicating Authority's satisfaction on records/information utility evidence - Limitation / time bar as a defence to an application under Section 7 - Principles of natural justice and service / opportunity to file reply in Section 7 proceedings - Effect of invocation of Strategic Debt Restructuring and conversion of debt into equity on maintainability of Section 7 - Pendency of SARFAESI or other remedy does not preclude initiating CIRP under Section 7 - Innoventive ratio on prima facie satisfaction of default

Admission of application under Section 7 of the Insolvency and Bankruptcy Code - Existence of debt and 'default' for the purpose of Section 7 - Adjudicating Authority's satisfaction on records/information utility evidence - Innoventive ratio on prima facie satisfaction of default - Whether the Adjudicating Authority rightly admitted the petition under Section 7 by recording existence of debt and default. - HELD THAT: - The Tribunal upheld the Adjudicating Authority's finding that the Financial Creditors had produced documentary evidence (including Statements of Accounts, acknowledgement of debt and CRILIC/CIBIL reports) establishing a debt above the statutory threshold and default. Applying the principle in Innoventive, the adjudicating authority is required to be satisfied on the basis of records/information utility or evidence furnished that a default has occurred; an application must be admitted where the debt is due and payable, even if disputed. The Adjudicating Authority recorded that defaults occurred on 31.03.2018 and 06.04.2019, that the petition was filed within limitation, and that the petition was complete for initiation of CIRP. On that basis, admission under Section 7 was held to be correct. [Paras 30, 36, 41, 46, 47]

The admission of the Section 7 petition was upheld as the Adjudicating Authority was rightly satisfied from the material on record that a debt was due and in default and therefore admission was warranted.

Principles of natural justice and service / opportunity to file reply in Section 7 proceedings - Whether the Adjudicating Authority denied natural justice to the Corporate Debtor by not granting adequate opportunity or by improper service. - HELD THAT: - The Tribunal examined the sequence of orders (including the order dated 05.04.2021) where the Adjudicating Authority repeatedly listed the matter, directed re service, required the Corporate Debtor to collect the petition, allowed ten days to file reply and finally reserved orders. The Adjudicating Authority recorded multiple hearing dates and afforded liberty to file written submissions. The Tribunal found that sufficient opportunities were given and that the Corporate Debtor did not avail the chances provided; thus principles of natural justice were not violated in the admission process. [Paras 43, 46]

There was no denial of natural justice; the Adjudicating Authority afforded opportunity to the Corporate Debtor and the admission was not vitiated on that ground.

Limitation / time bar as a defence to an application under Section 7 - Whether the claim of limitation (time bar) succeeds so as to render the Section 7 application not maintainable. - HELD THAT: - The Adjudicating Authority recorded relevant acknowledgements and the dates on which accounts were treated as NPA by the respective Banks. It found last payment into the account on 04.03.2019 and noted that the amended petition was filed on 30.12.2020, concluding the petition had been filed within limitation. The Tribunal accepted those findings and rejected the appellant's contention that limitation should be reckoned from earlier alleged irregular dates or from 30.06.2016. Having regard to the documentary acknowledgements and transactions within three years of filing, the limitation defence was held to be without substance. [Paras 22, 46]

The limitation defence failed; the petition was held to have been filed within the period permissible and the application was not time barred.

Effect of invocation of Strategic Debt Restructuring and conversion of debt into equity on maintainability of Section 7 - Whether invocation of SDR and alleged acquisition of 51% shareholding by consortium lenders precludes initiation of CIRP under Section 7. - HELD THAT: - The appellant relied on documents referring to invocation of SDR and proposed conversion of debt into equity and asserted that lenders thereby took over management and so Section 7 was not maintainable. The Tribunal found no material on record to demonstrate that the Financial Creditors had in fact taken over the running or management of the Corporate Debtor. In absence of evidence of such an actual takeover, the speculative or proposed conversion under SDR did not oust the Financial Creditors' right to file under Section 7. [Paras 21, 22]

The contention based on SDR/conversion to equity was rejected; SDR without evidence of actual takeover did not bar initiation under Section 7.

Pendency of SARFAESI or other remedy does not preclude initiating CIRP under Section 7 - Whether pendency of SARFAESI or other recovery proceedings prevents a Financial Creditor from initiating CIRP by filing under Section 7. - HELD THAT: - The Adjudicating Authority noted, and the Tribunal reiterated, the settled position that the pendency of SARFAESI or other disputes does not prevent a Financial Creditor from triggering CIRP because the remedy under the IBC is in rem. Thus existence of other recovery processes does not by itself bar admission of a Section 7 petition where default is otherwise established. [Paras 15, 46]

Pendency of SARFAESI or other proceedings does not preclude filing or admission of a Section 7 petition where the adjudicating authority is otherwise satisfied about default.

Final Conclusion: The Tribunal declined to admit the appeals and upheld the Adjudicating Authority's admission of the Section 7 petition: the Financial Creditors had shown debt and default on the materials before the Adjudicating Authority, the limitation and natural justice objections were rejected, SDR/conversion to equity did not bar Section 7 in absence of proof of takeover, and pendency of SARFAESI proceedings did not preclude initiation of CIRP.

Show cause notice validity where tax was paid before issuance - penalty for collection but non-deposit of service tax - extended period of limitation under proviso to section 73(1) - reasonable cause under Section 80 - quashing for non-speaking orders and remand for fresh adjudication

Quashing for non-speaking orders and remand for fresh adjudication - Impugned orders of the Assistant Commissioner, Commissioner (Appeals) and the Tribunal were quashed and the matter remitted for fresh adjudication. - HELD THAT: - The High Court found that the Commissioner (Appeals) and the Tribunal decided the appeals in a cryptic manner without adequately considering the submissions of the appellant. The Assistant Commissioner likewise failed to assign reasons. In view of the absence of reasoned findings on the contesting contentions, the Court held those orders unsustainable and remitted the matter to the Assistant Commissioner for fresh hearing and adjudication on the penalty issues. Because the remand was directed for de novo consideration, the Court declined to answer the substantial questions of law framed at admission.

Impugned orders quashed; matter remitted to the Assistant Commissioner for fresh adjudication after affording opportunity of hearing.

Show cause notice validity where tax was paid before issuance - penalty for collection but non-deposit of service tax - extended period of limitation under proviso to section 73(1) - reasonable cause under Section 80 - Questions concerning the validity of the show cause notice, the applicability of the extended limitation period, and the imposition of penalties were remitted for fresh consideration. - HELD THAT: - The Court did not decide on the merits whether payment of service tax with interest prior to issuance of the show cause notice precludes initiation of penalty proceedings, nor did it decide whether penalties under the cited provisions were warranted or whether reasonable cause under Section 80 was made out. Those contested legal and factual issues - including the claim that tax was paid before the show cause notice, the applicability of the proviso to section 73(1) for extended limitation, and the question of penalty under the relevant provisions - were directed to be re-examined by the Assistant Commissioner in a reasoned order after giving the appellant an opportunity of hearing.

These issues remitted to the Assistant Commissioner for fresh, reasoned adjudication; the Court did not pronounce on their merits.

Final Conclusion: The appeals were allowed to the extent that the impugned orders were quashed for want of reasoned decisions and the matter remitted to the Assistant Commissioner for fresh adjudication after hearing; the substantive legal questions were left open for determination on remand.

Claim for refund of duty - relevant date under section 11B - limitation of one year for refund - payment under protest - finality of judgment determining entitlement to refund - continuation of litigation by appeal affects relevant date

Relevant date under section 11B - limitation of one year for refund - finality of judgment determining entitlement to refund - continuation of litigation by appeal affects relevant date - The relevant date from which the one year limitation for filing a refund claim under section 11B is to be computed for amounts deposited during investigation and subsequently found refundable. - HELD THAT: - The Tribunal held that the "relevant date" under section 11B is the date of the judicial decision which finally determines the assessee's entitlement to the refund. Although the CESTAT's order of 31.03.2012 set aside the appropriation and made the amount refundable, the Department filed an appeal to the High Court. The entitlement thus remained unfinalised until the High Court dismissed the Department's appeal on 21.04.2017. Where litigation is continued by an appeal, the final adjudication of entitlement occurs upon disposal of that appeal. The proviso to section 11B and the settled position that duty paid under court order pending appeal amounts to payment under protest (as recognised in Mafatlal Industries Ltd.) were considered; accordingly, the fact that the amount was paid during investigation and challenged does not bar the claim once the entitlement is finally determined. Applying this principle, the Tribunal found that the relevant date is 21.04.2017 and that the refund application filed on 19.02.2018 fell within one year of that date.

The Commissioner (Appeals) order rejecting the refund as time-barred is set aside and the appeal is allowed on the ground that the relevant date for limitation is 21.04.2017 and the refund claim was filed within one year.

Final Conclusion: Appeal allowed; the refund claim was held to be within time because the entitlement to refund was finally determined on 21.04.2017, and the order rejecting the refund as time-barred is set aside.

Classification of agricultural land in government records and its effect on exclusion from urban land for wealth tax - Requirement of land being 'put to use' for agricultural purposes to qualify as agricultural land for wealth tax - Exemption for a let-out residential property under section 2(ea)(i)(4) of the Wealth Tax Act

Classification of agricultural land in government records and its effect on exclusion from urban land for wealth tax - Requirement of land being 'put to use' for agricultural purposes to qualify as agricultural land for wealth tax - Whether the lands at Dundigal, Bowrampet and Ravada are agricultural lands and therefore not includible as urban land for wealth tax purposes. - HELD THAT: - The Tribunal held that where lands are declared in government records as agricultural lands, the finding of the Commissioner (Appeals) that the assessee failed to show that the lands were put to use for agricultural purposes was incorrect. The assessee produced official revenue records and certificates and received agricultural subsidy directly credited to his bank account, which the Tribunal found to be material evidence clarifying the nature of the lands as agricultural. On this basis the Tribunal set aside the CIT(A)'s confirmation and directed the Assessing Officer to treat the lands as agricultural lands not chargeable as urban land under the Wealth Tax Act. [Paras 8]

The lands at Dundigal, Bowrampet and Ravada are to be treated as agricultural lands and are not includible as urban land for wealth tax; grounds 1 to 4 allowed.

Exemption for a let-out residential property under section 2(ea)(i)(4) of the Wealth Tax Act - Whether the flat at Banjara Hills qualifies for exemption under section 2(ea)(i)(4) despite being let out for a short period in the relevant previous year. - HELD THAT: - The Tribunal accepted the assessee's submission that the flat was purchased in September 2006 and therefore the holding-period requirement (more than 300 days) for claiming exemption did not arise for the year under consideration. On this basis the Tribunal directed the Assessing Officer to treat the flat as an exempted asset under the cited provision. [Paras 9]

The flat at Banjara Hills is to be treated as an exempted asset under the Wealth Tax Act; ground 5 allowed.

Final Conclusion: Both appeals are allowed: the impugned agricultural lands are to be treated as agricultural (not urban) for wealth tax purposes and the residential flat at Banjara Hills is to be treated as an exempt asset; consequent directions issued to the Assessing Officer.