TaxTMI Updates e-Newsletter
Jul 23,2020

Jurisdiction of Authority for Advance Ruling - maintainability of advance ruling application - situs of supply - distinct person principle under GST - State-specific constitution of AAR - absence of power to transfer proceedings - no provision for refund of application fee

Jurisdiction of Authority for Advance Ruling - maintainability of advance ruling application - situs of supply - distinct person principle under GST - State-specific constitution of AAR - Maharashtra Authority for Advance Ruling has no jurisdiction to decide the applicant's questions because the taxable supply is undertaken from the applicant's Gujarat registered factory, not from Maharashtra. - HELD THAT: - The Authority is constituted under the State GST Act to decide questions in relation to supplies being undertaken or proposed to be undertaken by the applicant in that State. Section 96/Section 95 framework requires the Authority to entertain applications only where the supply in question is being or is proposed to be undertaken from the State for which the Authority is constituted. The facts show the goods will be manufactured, invoiced and accounted for from the Gujarat factory, which is separately registered and is a distinct person for GST purposes. The situs of the impugned supply therefore lies in Gujarat, and all GST formalities, returns and assessment will be in Gujarat. The applicant's Maharashtra head office merely received the purchase order and does not undertake the supply from Maharashtra; hence the Maharashtra AAR lacks jurisdiction and the application is not maintainable. The Authority accordingly declined to decide the merits of the rate issue. [Paras 5]

Application is not maintainable before the Maharashtra AAR for want of jurisdiction and is rejected without going into merits.

Absence of power to transfer proceedings - no provision for refund of application fee - The Maharashtra AAR has no power under the GST Act to transfer the application to another State authority or to appropriate/refund the application fee; the applicant must file before the competent State authority. - HELD THAT: - The GST Act is a special statutory scheme and contains no provision authorising transfer of advance ruling applications between State AARs or for refund/appropriation of the fee in such circumstances. Reliance on general civil procedure transfer provisions is inapposite where the special statute does not provide for them. Judicial authorities cited indicate tribunals lack an inherent power to transfer proceedings in the absence of statutory sanction. Accordingly, the AAR cannot transfer the application to the Gujarat AAR nor order appropriation/refund of the fee; the applicant was advised to approach the competent authority in Gujarat. [Paras 5]

No transfer or refund order can be made by this Authority; applicant may file the application before the jurisdictional AAR.

Final Conclusion: For lack of jurisdiction the Maharashtra Authority for Advance Ruling rejected the application as not maintainable; the merits were not considered and the applicant may approach the Advance Ruling Authority having jurisdiction (Gujarat) as appropriate.

Constitutionality of National Anti-Profiteering Authority - methodology for determination of profiteering - due process and natural justice - deposit of principal profiteered amount - interim relief by instalments - stay of interest and penalty proceedings

Deposit of principal profiteered amount - interim relief by instalments - Petitioner directed to deposit the principal profiteered amount in six equated monthly instalments. - HELD THAT: - The Court, while hearing the challenge to the impugned Order of the National Anti-Profiteering Authority, addressed the petitioner's prayer for interim relief in view of the COVID-19 pandemic. Noting that the GST component alleged to have been profiteered had already been deposited, the Court directed deposit of the principal profiteered amount in six equal monthly instalments. The Court proceeded despite the respondent-Authority's objection, expressly framing the instalment schedule and dates for payment as an interim measure pending further orders in the writ petition.

Petitioner directed to deposit the principal profiteered amount in six equated monthly instalments on the dates specified by the Court.

Stay of interest and penalty proceedings - Interest and penalty proceedings in respect of the impugned order were stayed until further orders. - HELD THAT: - As part of the interim regime attendant to allowing instalments for payment of the principal amount, the Court granted a stay of interest and of penalty proceedings initiated by the respondents. The stay operates as an interim protection for the petitioner pending adjudication of the writ petition.

Interest amount as well as penalty proceedings initiated by the respondents are stayed till further orders.

Due process and natural justice - Procedural directions were given for filing of pleadings and short written submissions and the matter was listed for further hearing. - HELD THAT: - The Court recorded that the petition raises contentions regarding methodology and alleged breaches of natural justice and due process in proceedings before the National Anti-Profiteering Authority. Without adjudicating the merits of those constitutional or statutory challenges, the Court directed respondents to file counter affidavits within two weeks, permitted rejoinders within two weeks thereafter, required short written submissions of limited length in advance of the next hearing, and listed the matter for hearing on the specified date along with connected matters.

Respondents to file counter affidavits within two weeks, rejoinders within two weeks thereafter, parties to file short written submissions, and the matter listed for further hearing on the stated date.

Final Conclusion: Interim relief granted: petitioner permitted to pay the principal profiteered amount in six equated monthly instalments; interest and penalty proceedings stayed pending further orders; procedural timetable fixed for affidavits and written submissions and matter listed for further hearing.

Deduction under section 80IA(1) - eligible business under section 80IA(4) - computation of deduction under section 80IA(5) - initial assessment year (option under section 80IA(2)) - notional carry forward of pre-initial year losses - CBDT Circular No. 1 of 2016 clarification

Computation of deduction under section 80IA(5) - initial assessment year (option under section 80IA(2)) - notional carry forward of pre-initial year losses - deduction under section 80IA(1) - Whether losses of the eligible business incurred prior to the assessee's chosen initial assessment year and already set off against other income can be notionally carried forward and set off for computing deduction under section 80IA(5). - HELD THAT: - The Tribunal accepted the view expressed in the CBDT Circular No. 1 of 2016 and the consistent judicial decisions cited by the CIT(A) that once the assessee exercises the option under subsection (2) by designating an initial assessment year, the statutory fiction in subsection (5) applies prospectively from that chosen initial assessment year. The fiction that the eligible business is the only source of income is for determining quantum of deduction from the initial assessment year (and subsequent years) and does not permit reopening or notionally restoring losses which, in earlier years, had been actually set off against other business income in accordance with the Act. Consequently the Assessing Officer was not entitled to notionally bring forward and set off pre-initial-year losses/unabsorbed depreciation for the purpose of reducing the eligible profits in the chosen initial assessment year. Applying these principles to the facts, the Tribunal held that the CIT(A) correctly directed allowance of the deduction without adjusting earlier years' losses which had already been absorbed. [Paras 9, 10, 11]

Losses of the eligible business incurred prior to the assessee's chosen initial assessment year and already set off cannot be notionally carried forward and adjusted under section 80IA(5); deduction under section 80IA(1) is to be allowed without such adjustment.

Final Conclusion: The Revenue's appeal is dismissed; the assessee is entitled to the deduction under section 80IA without notionally adjusting earlier years' losses that were already set off prior to the chosen initial assessment year.

Condonation of delay - admission of additional ground - revision under section 263 of the Income tax Act - non-application of mind by revisional authority - applicability of revised AS-7 - percentage completion method (PCM) v. completed contract / project completion method - ICAI opinion on non-applicability of revised AS-7 and relevance of AS-2/AS-9 - mandatoriness of Section 43CB w.e.f. 1.4.2017 - power to quash revisional order for calling irrelevant record - consistency of accounting method and revenue neutrality

Condonation of delay - Whether the Tribunal should condone delay of 158 days in filing the appeal. - HELD THAT: - The assessee filed a condonation petition supported by affidavit and medical prescriptions explaining delay due to ill health of the director responsible for finance and taxation. After hearing both parties the Tribunal found that the assessee was prevented by sufficient cause from filing the appeal within time and exercised its discretion to condone the delay. [Paras 3, 5]

Delay of 158 days in filing the appeal is condoned and the appeal is admitted for hearing.

Admission of additional ground - Whether the additional ground challenging the method of accounting for revenue recognition should be admitted. - HELD THAT: - The additional ground elaborated the sole contention in the appeal that the revisional order under section 263 challenged the assessee's accounting method. The Revenue did not press serious objection, and the Tribunal, following relevant precedent, held that the additional ground was an elaboration of the existing ground and could be decided on the material on record. In the interests of justice the additional ground was admitted for adjudication. [Paras 6, 8, 9]

The additional ground is admitted for consideration and adjudication.

Revision under section 263 of the Income tax Act - non-application of mind by revisional authority - applicability of revised AS-7 - percentage completion method (PCM) v. completed contract / project completion method - ICAI opinion on non-applicability of revised AS-7 and relevance of AS-2/AS-9 - mandatoriness of Section 43CB w.e.f. 1.4.2017 - power to quash revisional order for calling irrelevant record - consistency of accounting method and revenue neutrality - Validity of the Pr. CIT's revisional order under section 263 setting aside the AY 2013-14 assessment on the ground that AS-7 (revised) and PCM should have been applied. - HELD THAT: - The Tribunal examined whether the revisional authority complied with the procedural and substantive requirements of section 263. It found that the Pr. CIT had called and relied upon the assessment record of AY 2015-16 (selected for limited scrutiny) instead of the relevant AY 2013-14 record (selected for comprehensive scrutiny), demonstrating that the revisional authority examined irrelevant record and did not call and examine the proper assessment record for the year sought to be revised. That procedural defect alone rendered the revisional action unsustainable. On the substantive point, the Tribunal noted the assessee consistently followed the completed project (completion) method, recognised revenue on transfer of title by registered sale deed, and treated unsold units as stock/work in progress valued at cost. The Tribunal considered ICAI's compendium opinion and guidance which indicate that the revised AS 7 (2002) does not apply to developers undertaking projects on their own account and that AS 2/AS 9 and the Guidance Note govern valuation and revenue recognition for such developers. The Tribunal further noted that the statutory mandate to apply PCM for construction/service contracts was introduced prospectively by section 43CB w.e.f. 1.4.2017 (AY 2017 18) and therefore was not mandatory for AY 2013 14. The Pr. CIT's order did not engage with the assessee's explanations or identify defects in the revenue recognition; nor did it demonstrate that the method adopted distorted income. Applying settled authorities on consistency of accounting method and revenue neutrality, the Tribunal held that neither AS 7 nor PCM was mandatorily applicable to the assessee for AY 2013 14 and that the revisional order was without jurisdiction and merit. [Paras 33, 36, 45, 46, 47]

The revisional order under section 263 is quashed for calling and relying on irrelevant record and for failing to demonstrate applicability of AS 7/PCM to AY 2013 14; the Pr. CIT's order is without jurisdiction and is set aside.

Final Conclusion: The Tribunal condoned the delay, admitted the additional ground, and allowed the appeal: the revisional order passed by the Pr. CIT under section 263 in respect of AY 2013 14 is quashed as procedurally and substantively unsustainable, the assessment stands restored.

Deduction for diminution in value of securities - held to maturity classification - stock-in-trade versus investment - RBI valuation norms versus taxation principles - amortization of premium on securities - deduction under section 36(1)(viia) for provision for bad and doubtful debts - requirement that provision must be charged to Profit and Loss Account

Deduction for diminution in value of securities - held to maturity classification - stock-in-trade versus investment - RBI valuation norms versus taxation principles - amortization of premium on securities - Deletion of addition of Rs. 2.65 crores relating to claimed diminution in market value of Government securities classified as 'Held to Maturity'. - HELD THAT: - The Assessing Officer's primary reasons for disallowance were that the diminution was not recorded in the books and that the securities were investments because they were classified as 'Held to Maturity'. The Tribunal held that whether an amount is deductible depends on tax law and not on the mode of its recording in books; non-reflection in books to comply with RBI norms is immaterial because RBI valuation prescriptions do not override taxation principles. Following the jurisdictional High Court precedent relied upon by the assessee, the Tribunal held that securities held by a bank as 'Held to Maturity' in the present factual matrix are to be treated as stock-in-trade and not as investments. On the computation point, the assessee produced documentary trail showing that the reduced market value was taken into account at the time of sale and profit on sale was offered as business income, demonstrating consistent tax treatment. The amortized premium was excluded from the face-value based calculations for diminution and was not double-counted; moreover, the AO made no separate disallowance for the premium write-off. On these foundations the Tribunal concluded that the diminution claimed was allowable and directed deletion of the addition. [Paras 4, 5, 6, 7]

Addition of Rs. 2.65 crores relating to diminution in value of 'Held to Maturity' securities deleted; deduction allowed.

Deduction under section 36(1)(viia) for provision for bad and doubtful debts - requirement that provision must be charged to Profit and Loss Account - Confirmation of disallowance of the excess claim under section 36(1)(viia) where the provision had not been made in the Profit and Loss Account. - HELD THAT: - Section 36(1)(viia) permits deduction in respect of provision for bad and doubtful debts made by the assessee. The Assessing Officer allowed only the amount actually provided in the Profit and Loss Account and disallowed the excess. The Tribunal noted binding authority of the Hon'ble Punjab & Haryana High Court and earlier decisions of the Pune Benches of the Tribunal which require that the provision be debited to the Profit and Loss Account for the deduction to be allowable. A contrary decision of another Bench was distinguished on its facts and reliance thereon rejected. Respectfully following the precedent cited, the Tribunal upheld the disallowance of the excess amount. [Paras 8, 9, 10]

Disallowance under section 36(1)(viia) in respect of the amount not provided in the Profit and Loss Account upheld.

Final Conclusion: Appeal partly allowed: deletion of the addition relating to diminution in value of 'Held to Maturity' securities and confirmation of disallowance under section 36(1)(viia) in respect of provisions not charged to Profit and Loss Account.

Revision under section 263 - erroneous and prejudicial to the interest of revenue - percentage completion method of accounting - adequacy of enquiries made by the Assessing Officer - consistency of accounting treatment - remand by revisional authority without recording its own finding

Revision under section 263 - erroneous and prejudicial to the interest of revenue - adequacy of enquiries made by the Assessing Officer - percentage completion method of accounting - consistency of accounting treatment - Whether the assessment order framed u/s.143(3) was erroneous and prejudicial to the interest of revenue so as to warrant exercise of revisional jurisdiction under section 263. - HELD THAT: - The Tribunal found on the material on record that the Assessing Officer had issued notices under section 142(1), sought project-wise details, audited financial statements, project-wise percentage of completion, booking details and work in progress, and had recorded revenue recognition following the percentage completion method (PCM). The assessee had consistently followed PCM, produced architect's certificate showing 29% completion and project wise schedules evidencing revenue recognised and WIP. When WIP and recognised revenue are taken together, the assessee's aggregate recognition for the Surekha Vatika project exceeded the figure relied upon by the revisional authority. In these circumstances the Tribunal held that the AO had made sufficient and adequate enquiries during assessment and that the assessment could not be said to be erroneous and prejudicial merely because the Commissioner disagreed with the method adopted by the assessee or estimated a different quantum. Reliance on consistency of accounting treatment and acceptance in other assessment years reinforced that the AO had applied his mind to the matter and that there was no absence of inquiry or manifest omission that would justify exercise of revisional jurisdiction. [Paras 14, 16, 21]

Assessment order is not erroneous or prejudicial to the interest of revenue; revision under section 263 is not sustainable on this ground.

Remand by revisional authority without recording its own finding - revision under section 263 - Whether the Pr. CIT could set aside the assessment and direct a de novo assessment by the AO without the Pr. CIT himself conducting the necessary inquiry and recording a finding that the order was erroneous. - HELD THAT: - The Tribunal applied the settled principle that where a revisional authority alleges an error of fact or law on the merits, it must itself form and record the clear finding of erroneousness after necessary enquiry; it cannot simply remit the matter to the AO for further enquiry or re decision. The impugned revisional order did not record any independent inquiry by the Pr. CIT nor a clear, non debatable finding that the assessment was erroneous; instead the Pr. CIT remitted the issue to the AO. Having found that the AO had already made adequate enquiries and that the assessee's method produced revenue recognition higher than the Commissioner's estimate, the Tribunal held that the revisional authority erred in remanding the matter without exercising its own jurisdiction to record the requisite finding. [Paras 22, 23, 25]

Revisional order directing de novo assessment without recording the revisional authority's own finding is impermissible; the notice and revisional order are unsustainable.

Final Conclusion: The appeal is allowed: the notice and order under section 263 are quashed because the Assessing Officer made adequate enquiries and the revisional authority improperly remitted the matter without recording its own finding that the assessment was erroneous and prejudicial to revenue.

Exemption under Section 10(34) - venture capital fund as pass-through under Section 115U - treatment of distribution between income and capital for investor - deductibility of expenses against pass-through income - interest under Section 234B

Exemption under Section 10(34) - venture capital fund as pass-through under Section 115U - Assessee entitled to exemption under Section 10(34) in respect of its share of dividend distributed by the Venture Capital Fund (SARA Fund). - HELD THAT: - The Tribunal followed the co ordinate bench finding that the statutory conditions for claiming exemption under Section 10(34) must be satisfied at the level of the venture capital undertaking/fund and not again at the stage of the investor. Where the company in which the VCF invested has already paid the additional tax required, the VCF is not required to pay that additional tax a second time on the same dividend; accordingly the investor (assessee) is entitled to the exemption on its share of dividend received from the VCF. The Tribunal therefore allowed the ground disallowing the exemption, applying the pass through character recognised under Section 115U and the earlier coordinate-bench reasoning. [Paras 11]

Ground No.1 decided in favour of the assessee; exemption under Section 10(34) allowed.

Venture capital fund as pass-through under Section 115U - deductibility of expenses against pass-through income - Assessee entitled to tax its share of interest (and other income) from the VCF on a net basis after allowing its attributable share of expenses of the VCF. - HELD THAT: - Relying on the pass through treatment under Section 115U, the Tribunal agreed with the coordinate bench that income received by an investor through a VCF must be treated as income arising from the underlying venture capital undertaking; the VCF is only a conduit. Consequently, expenses incurred by the VCF for earning such income are to be carried through to the investor and allowed against the investor's share of that income. The Tribunal examined the assessee's computation and the details furnished and, finding no material distinction in facts from earlier years where the coordinate bench allowed such expenses, held that the disallowance by the authorities was incorrect. [Paras 13]

Ground No.2 decided in favour of the assessee; expenses allowed and income to be assessed on net basis.

Treatment of distribution between income and capital for investor - venture capital fund as pass-through under Section 115U - Assessee's share of the distributions from the VCF is to be apportioned between income and capital in accordance with the VCF's statutory declaration and accounts, and only the income component is taxable in the hands of the investor. - HELD THAT: - The Tribunal accepted the coordinate bench's detailed examination of Form 64, the audited revenue account and balance sheet of the VCF, and the statutory declaration under Section 115U(2), which demonstrated that a portion of the total distribution represented capital return (non taxable) and the remainder represented income (taxable). Treating the VCF as a pass through vehicle, the assessee was entitled to assess only the income component (after subtracting the capital portion) as its taxable income; the AO's allocation treating the capital component as taxable in the investor's hands was therefore in error. [Paras 14, 15]

Ground No.3 decided in favour of the assessee; only the income component of the distribution is taxable in the assessee's hands.

Interest under Section 234B - Charging of interest under Section 234B was not finally quantified by the Tribunal and is left to the Assessing Officer to consider consequentially in accordance with law. - HELD THAT: - The Tribunal treated the assessment of interest under Section 234B as consequential upon the primary tax determinations which were set aside or altered in favour of the assessee. The order directs the Assessing Officer to examine and compute any interest due under Section 234B in the light of the Tribunal's decision and as per the provisions of law, rather than deciding the interest question on the record before it. [Paras 16]

Interest under Section 234B to be considered afresh by the Assessing Officer consequential to the Tribunal's decision.

Final Conclusion: The appeals for Assessment Years 2008-09 and 2010-11 are allowed: exemption under Section 10(34) upheld, VCF income to be assessed on net basis after allowing attributable expenses and by treating distributions as apportioned between income and capital under Section 115U; assessment authority directed to recompute tax consequences and consider interest under Section 234B in accordance with law.

Unexplained credits under section 68 of the Income-tax Act - genuineness, identity and creditworthiness of share applicants - application of summons under section 131 of the Income-tax Act - wrong specification of statutory provision does not vitiate assessment - opening balance outside scope of section 68 - remand for fresh consideration

Wrong specification of statutory provision does not vitiate assessment - Whether inadvertent reference to section 69C instead of section 68 vitiates the assessment and merits relief to the assessee. - HELD THAT: - The Tribunal found that throughout the assessment proceedings the Assessing Officer examined the share application money in the context of section 68 and the assessee responded on that footing. The AO's mention of section 69C in the framing of the addition was held to be an inadvertent error. The first appellate authority had also noted this inadvertence. The Tribunal held that a wrong mention of the statutory provision of itself would not vitiate the assessment where the substantive inquiry and materials relate to the correct statutory test applied during proceedings, and therefore rejected the assessee's application under Rule 27 for any relief on that ground. [Paras 4, 5]

Application under Rule 27 rejected; inadvertent reference to section 69C does not vitiate the assessment proceedings which proceeded on section 68.

Unexplained credits under section 68 of the Income-tax Act - genuineness, identity and creditworthiness of share applicants - application of summons under section 131 of the Income-tax Act - remand for fresh consideration - Whether the deletion by the CIT(A) of the addition of share application money of Rs. 2,01,50,000/- was sustainable, or the matter required remand for fresh examination. - HELD THAT: - The AO had made the addition after noting limited bank statements, low returned incomes of the share applicants and non-attendance in response to summons under section 131. The assessee later produced complete bank statements, confirmations, ITRs and source-of-funds documentation before the CIT(A), who admitted the additional evidence and called for a remand report. The Tribunal observed that the lower authorities did not appear to have thoroughly examined the newly furnished documentary evidence and that, where the declared income of share applicants is not prima facie sufficient to justify large credits, the burden on the assessee to prove creditworthiness is heavier. In the interest of justice and to enable a detailed examination of the complete bank statements and source documents, the Tribunal restored the assessment to the file of the Assessing Officer with directions to examine the evidence afresh and to afford the assessee reasonable opportunity of being heard. [Paras 12, 13, 15, 16, 17]

Assessment restored to the file of the Assessing Officer for fresh and thorough examination of documentary evidence regarding availability of funds and creditworthiness of share applicants; matter remanded.

Opening balance outside scope of section 68 - unexplained credits under section 68 of the Income-tax Act - Whether the addition in respect of share application money of Rs. 6,50,000 brought forward from preceding years (Pawan Goyal & Sons, HUF) was exigible to tax under section 68. - HELD THAT: - The Tribunal agreed with the CIT(A)'s finding that the amount in question represented an opening balance brought forward from preceding assessment years. Such an opening balance is not within the ambit of section 68, which deals with unexplained credits in the year under consideration. The Tribunal found no error in the appellate authority's conclusion and upheld deletion of that portion of the addition. [Paras 11, 18]

Addition of Rs. 6,50,000 as opening balance from Pawan Goyal & Sons, HUF deleted; finding of CIT(A) upheld.

Final Conclusion: The Revenue appeal is allowed in part: the Tribunal rejected the contention that a mistaken reference to section 69C vitiates the assessment, deleted the addition relating to the opening balance from Pawan Goyal & Sons, HUF, and restored the remaining assessment issues on share application money to the Assessing Officer for fresh examination and decision after affording the assessee a reasonable opportunity of being heard.

Deduction under section 43B for tax, duty and cess and timing of payment - admissibility of foreign exchange fluctuation loss and burden of proof - allowability of bad debts under section 36(1)(vii) and conditions of section 36(2) - treatment of advances and sundry balances as business loss under section 37 - unexplained cash credit and proof of creditworthiness for loans under section 68 - transfer under section 2(47) - effect of unregistered agreement and requirement of possession/section 53A - entitlement to raise additional grounds or claims before appellate authorities (Tribunal/CIT(A)) - admission of additional evidence under Rule 29 of the Appellate Tribunal Rules - rectification under section 154 - limited to mistakes apparent from record - remand to Assessing Officer for fresh adjudication where additional evidence admitted

Deduction under section 43B for tax, duty and cess and timing of payment - Whether disallowance under section 43B of the outstanding VAT/tax closing balance for the year under consideration was sustainable. - HELD THAT: - The Tribunal examined the computation and schedule filed by the assessee and the balance-sheet note showing VAT & tax payable. It found that the assessee had voluntarily disallowed current year VAT and excise obligations which remained unpaid by the due date and those amounts were included in the assessee's suo motu disallowance under section 43B. The balance amount disallowed by the AO related to closing balances carried forward from earlier years. Section 43B permits denial of deduction only insofar as the liability pertains to the previous year where payment was not made by the due date; liabilities of earlier years carried as closing balance cannot be disallowed afresh under section 43B in the year under consideration. [Paras 11]

Disallowance of Rs. 36,66,290/- under section 43B is vacated and the ground is allowed.

Admissibility of foreign exchange fluctuation loss and burden of proof - Whether the foreign exchange fluctuation loss debited in profit & loss account was allowable as deduction. - HELD THAT: - The Tribunal noted the assessee had produced only ledger extracts before the AO and, despite directions, failed to furnish supporting documents such as bank statements, underlying transaction details and exchange rates. Recognition of exchange differences is governed by accounting standard (AS 11) but the onus to substantiate the loss lies on the assessee. Although the ledger entries filed before the Tribunal lent some prima facie support to the claim, the lower authorities correctly declined the unsubstantiated claim. In fairness, because the ledger evidence raises a triable factual issue, the Tribunal directed a restoration to the AO to permit the assessee to substantiate the claim with fresh documentary evidence and re adjudicate after providing opportunity of hearing. [Paras 14]

Matter remitted to the Assessing Officer for fresh adjudication; ground allowed for statistical purposes.

Allowability of bad debts under section 36(1)(vii) and conditions of section 36(2) - remand to Assessing Officer for fresh adjudication where additional evidence admitted - Whether the amounts written off as bad debts and advances (aggregate) were deductible under section 36(1)(vii) and met conditions of section 36(2). - HELD THAT: - The assessee filed detailed party wise particulars and contended that bad debts arose from sales in earlier years and thus satisfied the condition in section 36(2). The Tribunal found prima facie that for amounts relatable to three divisions the genesis was in earlier years and the section 36(2) condition may be satisfied, but these details were additional evidence not before the lower authorities. In view of admission of such evidence, the Tribunal declined to decide on merits and remitted the matter to the AO for fresh adjudication and verification, directing the AO to afford the assessee reasonable opportunity to substantiate its claim with documentary evidence. [Paras 17]

Issue restored to the AO for fresh adjudication in respect of specified divisions; ground partly allowed for statistical purposes.

Treatment of advances and sundry balances as business loss under section 37 - Whether advances to suppliers and sundry balances written off could be allowed as business loss under section 37 despite not qualifying as bad debts under section 36(2). - HELD THAT: - The Tribunal agreed with precedent that failure to satisfy conditions for bad debt under section 36(2) does not preclude allowance as an ordinary business loss under section 37 if the loss is incidental to the business. The assessee, however, had not earlier substantiated this claim before the AO and the details were placed before the Tribunal as additional evidence. The Tribunal directed the AO to adjudicate the claim afresh under section 37, giving the assessee opportunity to substantiate the business loss character of the write offs. [Paras 19]

Directed remand to the AO to examine allowability under section 37; ground partly allowed for statistical purposes.

Unexplained cash credit and proof of creditworthiness for loans under section 68 - admission of additional evidence under Rule 29 of the Appellate Tribunal Rules - Whether unsecured loans from two directors could be treated as unexplained cash credits under section 68. - HELD THAT: - The AO treated director loans as unexplained as confirmations, PANs and creditworthiness proof were lacking. The assessee subsequently filed affidavits and copies of the directors' income tax returns (additional evidence) showing declared incomes and admissions of advances. As these documents were not available to the lower authorities and were admitted by the Tribunal, the Tribunal found it appropriate to remit the matter to the AO to reconsider the creditworthiness and sources in light of the additional evidence, permitting the AO to verify and afford hearing. [Paras 21]

Matter remitted to the AO for re adjudication after considering additional evidence; ground allowed for statistical purposes.

Transfer under section 2(47) - effect of unregistered agreement and requirement of possession/section 53A - entitlement to raise additional grounds or claims before appellate authorities - Whether capital gain could be assessed on the basis of an unregistered MOU when (a) the agreement was unregistered and (b) possession was not parted with, and whether the assessee could rely on deed of cancellation filed later. - HELD THAT: - Relying on Supreme Court and Bombay High Court authority, the Tribunal held that after the 2001 amendments an unregistered agreement cannot have effect under section 53A; section 2(47)(v) requires a contract enforceable under section 53A. Further, section 2(47)(vi) requires transfer enabling enjoyment by the purchaser; here possession was never delivered and later a deed of cancellation was produced. The Tribunal accepted that the ground concerning cancellation arose on change of circumstances and is entertainable before the appellate authorities. On facts, no material was produced to rebut the deed of cancellation and subsequent sales of part of the land in later years supported the assessee's position that the MOU did not crystallize into a transfer. The AO/CIT(A) were therefore reversed on this point. [Paras 26]

Addition of long term capital gain based on the MOU is vacated; ground allowed.

Short term capital loss on sale of depreciable assets - allocation of sale consideration and substantiation - Whether the Short Term Capital Loss of Rs. 69,72,79,948/- claimed on sale of depreciable assets was admissible. - HELD THAT: - The AO disallowed the claimed STCL because the assessee failed to justify allocation of the lump sum sale consideration (Rs.40 crores) among individual assets, produced no valuation or purchaser's accounting, and claimed an unrealised loss on intangible assets not supported by annual reports. The Tribunal observed that the assessee's return contained an allocation but the basis was not apparent; given the absence of requisite details, the claim required fresh opportunity to substantiate. Accordingly the Tribunal remitted the matter to the AO with directions to call for supporting details and re adjudicate. [Paras 28]

Matter remitted to the AO for re adjudication and verification of allocation and substantiation; additional ground allowed for statistical purposes.

Rectification under section 154 - limited to mistakes apparent from record - Whether the Assessing Officer erred in refusing rectification under section 154 for matters not being mistakes apparent from record. - HELD THAT: - The Tribunal concurred with the CIT(A) that the issues raised in the rectification application were not 'mistakes apparent from record' but involved debatable questions requiring substantive adjudication; such matters are beyond the scope of section 154. The Tribunal also noted that the substantive issues had been decided in the appeal against the assessment, rendering the rectification appeal alternatively infructuous. [Paras 31]

Appeal against the order under section 154 is dismissed; AO and CIT(A) rightly refused rectification.

Admission of additional grounds or claims before appellate authorities - admission of additional evidence under Rule 29 of the Appellate Tribunal Rules - Whether the Tribunal should admit the additional grounds of appeal and additional documents filed by the assessee. - HELD THAT: - The Tribunal examined the nature of the additional grounds and documents, noting that one additional ground was an elaboration of an existing ground and another arose from facts on record. Citing authorities, the Tribunal held appellate authorities have jurisdiction to entertain additional grounds/claims where they are bona fide and do not require fresh investigation. Considering the circumstances (closure of operations and affidavit support) and that the documents either formed part of revenue records or were extracts of books of account, the Tribunal admitted the additional grounds and admitted the additional evidence under Rule 29, holding that the documents would materially affect adjudication and did not require further verification. [Paras 3, 5]

Additional grounds and additional evidence are admitted.

Remand to Assessing Officer for fresh adjudication where additional evidence admitted - Whether matters where additional evidence was admitted should be remitted to the AO for verification. - HELD THAT: - Where the Tribunal admitted additional evidence that was not before the lower authorities and such evidence affected verification of claims (foreign exchange loss, bad debts, advances, loans under section 68, STCL), the Tribunal directed remand to the AO to permit fresh adjudication and verification, instructing the AO to afford the assessee reasonable opportunity to substantiate claims with documentary proof. [Paras 14, 17, 19, 21, 28]

Relevant issues remitted to the AO for fresh adjudication in light of admitted additional evidence.

Final Conclusion: For A.Y. 2013-14 the Tribunal: (a) set aside the section 43B disallowance; (b) vacated the capital gain addition based on the unregistered MOU and accepted that no transfer crystallised; (c) dismissed the rectification appeal under section 154; and (d) admitted additional grounds and evidence and remitted several contested items (foreign exchange loss, parts of bad debts/advances/sundry write offs, director loans under section 68, and claimed short term capital loss) to the Assessing Officer for fresh adjudication and verification after affording the assessee opportunity to substantiate its claims.

Franchise fee: capital v. revenue - Revenue expenditure vs. capital expenditure (intangible asset / licence / franchise) - Ad hoc disallowance of business expenses - Restoration / remand for de-novo adjudication - Interest under section 234D is mandatory and consequential - Initiation of penalty proceedings under section 271(1)(c) premature

Franchise fee: capital v. revenue - Revenue expenditure vs. capital expenditure (intangible asset / licence / franchise) - Payment of annual Franchisee Fee claimed as revenue expenditure was held to be revenue in nature and allowable for the assessment year under appeal. - HELD THAT: - The Tribunal examined the franchise agreement dated 04/04/2008 and followed coordinate-bench precedents in the assessee's own cases for earlier years which held that the annual franchise payment enabled participation in the relevant IPL season only and did not vest any enduring or assignable right in the assessee. The Bench distinguished authorities relied upon by the AO as factually inapposite where enduring commercial rights were involved, and, on that basis, concluded that no asset or enduring benefit was created by the payment. Respectfully following the coordinate-bench decisions, the Tribunal set aside the CIT(A)'s finding and directed deletion of the addition, allowing Grounds Nos. 2 and 3. [Paras 9]

Franchise fee of Rs. 30,03,60,000/- is revenue expenditure; Grounds Nos. 2 and 3 allowed.

Alternate plea for depreciation if held capital - Alternate claim for allowance of depreciation on the entire franchise fee became infructuous on the primary finding that the fee is revenue expenditure. - HELD THAT: - Because the Tribunal has held the franchise fee to be revenue in nature, the alternate contention seeking depreciation (if the payment were held capital) required no adjudication and was treated as moot. [Paras 10]

Alternate plea for depreciation dismissed as infructuous.

Ad hoc disallowance of business expenses - Restoration / remand for de-novo adjudication - Ad hoc disallowance of a portion of airfare and travelling expenses was not sustained and the matter was restored to the Assessing Officer for de-novo verification and adjudication. - HELD THAT: - The AO had mechanically disallowed 25% of airfare and travelling expenditure on the premise that amounts related to VIPs/celebrities were not business-related. The Tribunal observed that such expenses can be integral to the assessee's business (attracting audience and sponsorship) and that if the AO believed non-business expenditure existed he was obliged to demonstrate it with reference to particulars. In view of earlier coordinate-bench directions and absence of specific discrepancies pointed out for the year under appeal, the Tribunal restored the claim to the AO for verification on documentary evidence, permitting the AO to disallow up to the original extent if not satisfied, and allowed Grounds Nos. 5 and 6 for statistical purposes. [Paras 11]

Issue restored to AO for de-novo adjudication; Grounds Nos. 5 and 6 allowed for statistical purpose.

Ad hoc disallowance of boarding, lodging and food expenses - Restoration / remand for de-novo adjudication - Ad hoc disallowance of a portion of boarding, lodging and food expenditures was set aside and the matter remanded to the Assessing Officer for fresh verification. - HELD THAT: - The Tribunal noted that such expenditures, including hosting and accommodation for invited guests, support staff and teams, can be wholly and exclusively for business purposes. However, where documentary bills lacked nexus or showed discrepancies, the Tribunal directed verification by the AO on the limited issues identified and afforded the assessee opportunity to produce evidence. Following coordinate-bench precedent and on identical facts, the Tribunal restored the matter to the AO with directions for re-adjudication. [Paras 12]

Issue restored to AO for re-adjudication with directions; Grounds Nos. 7 and 8 allowed for statistical purpose.

Double taxation / rectification under section 154 - Complaint of double taxation of sponsorship rights income was rendered infructuous because the AO granted rectification under section 154 prior to this appeal. - HELD THAT: - The assessee had filed a rectification petition and relief was granted by the AO by order dated 25/05/2016. Accordingly, no adjudication on the substantive grievance was required in the present appeal. [Paras 13]

Ground No. 9 dismissed as infructuous.

Interest under section 234D is mandatory and consequential - Challenge to levy of interest under section 234D was dismissed. - HELD THAT: - The Tribunal observed that charging of interest under section 234D is mandatory and consequential; therefore the ground challenging levy of such interest lacked merit and was dismissed. [Paras 15]

Ground No. 11 dismissed.

Initiation of penalty proceedings under section 271(1)(c) premature - Challenge to initiation of penalty under section 271(1)(c) was dismissed as premature. - HELD THAT: - The Tribunal held that assailing proposed/initiated penalty proceedings at this stage was premature and therefore declined to adjudicate the matter on merits. [Paras 16]

Ground No. 12 dismissed as premature.

Final Conclusion: The appeal is partly allowed: the franchise fee for AY 2011-12 is held to be revenue expenditure and the related addition deleted; alternate depreciation plea rendered infructuous; claims relating to airfare/travel and boarding/food disallowances are remitted to the Assessing Officer for de-novo verification in accordance with the Tribunal's directions; the double-taxation grievance has been rectified and is infructuous; interest under section 234D and the challenge to initiation of penalty proceedings under section 271(1)(c) are dismissed.

Import prohibition under Hazardous and Other Wastes (Management, Handling and Transboundry Movement) Rules, 2016 - classification as used critical care medical equipment for reuse (Basel No. B1110) - definition of reuse including original use - confiscation and option to redeem under Section 125 of the Customs Act, 1962 - re-export as available relief where import is prohibited

Classification as used critical care medical equipment for reuse (Basel No. B1110) - definition of reuse including original use - import prohibition under Hazardous and Other Wastes (Management, Handling and Transboundry Movement) Rules, 2016 - Imported used ventilators fall within Basel No. B1110 in Schedule VI and are thus prohibited for import under the 2016 Rules. - HELD THAT: - On inspection of Schedule VI, Basel No. B1110 expressly includes used critical care medical equipment for reuse. The impugned goods are ventilators, which are critical care medical equipment, and were declared by the importer as used. The Rules define reuse to include original use, bringing the imported ventilators within the embargo created by sub rule (6) of Rule 12. A decision in a different factual context concerning second hand digital multifunction machines was inapposite, because whether a machine is complete was not determinative here. The Tribunal therefore held that the imported ventilators are covered by Schedule VI and their import is not permitted under the 2016 Rules.

Imports are prohibited; the ventilators are covered by Basel No. B1110 in Schedule VI and by sub rule (6) of Rule 12.

Confiscation and option to redeem under Section 125 of the Customs Act, 1962 - re-export as available relief where import is prohibited - Whether confiscation, redemption fine and penalty should be sustained, and appropriate relief. - HELD THAT: - Although the goods were correctly held to be prohibited imports, the Tribunal noted that the original authority had allowed re export and had also imposed confiscation, redemption fine and penalty. Under Section 125, an option to redeem marginally exists, but such option cannot be compelled. To facilitate re export of the prohibited goods, the Tribunal exercised its discretion to set aside the confiscation, and consequently set aside the redemption fine and the penalty imposed. The Tribunal directed re export of the goods in place of leaving them confiscated or compelling redemption.

Confiscation, redemption fine and penalty set aside; appellant directed to re export the goods.

Final Conclusion: The Tribunal held that the imported used ventilators are prohibited under Schedule VI (Basel No. B1110) read with Rule 12(6) and Rule 3(26) of the 2016 Rules, but in exercise of discretion set aside the confiscation, redemption fine and penalty and directed re export of the goods.

Competency of a legal heir under a will to prosecute an appeal - power of Registrar to remove name under Section 248 of the Companies Act, 2013 - power of the Tribunal to wind up a company whose name has been struck off - effect of striking off on pending winding up proceedings

Competency of a legal heir under a will to prosecute an appeal - Competency of Mr. Vijay Kumar Aggarwal to file the appeal as legal heir of Late Ms. Mona Agarwal. - HELD THAT: - The Tribunal examined the Will dated 7.9.2015 in which Late Ms. Mona Agarwal bequeathed all her movable and immovable property to her husband, Mr. Vijay Kumar Agarwal, as the sole beneficiary, with alternate beneficiaries only in the event of the husband's pre-decease. On this basis the Tribunal held that Mr. Vijay Kumar Agarwal is the competent person to institute the appeal on behalf of the deceased shareholder and the respondent's contention misconstruing the Will was rejected. [Paras 10]

Mr. Vijay Kumar Aggarwal is competent to file the appeal as legal heir and appellant.

Power of the Registrar to remove name under Section 248 of the Companies Act, 2013 - power of the Tribunal to wind up a company whose name has been struck off - effect of striking off on pending winding up proceedings - Whether NCLT can proceed with a winding up petition where the company's name has been struck off by the Registrar under Section 248 of the Companies Act, 2013. - HELD THAT: - The Tribunal considered sub-section (8) of Section 248 which states that nothing in that section shall affect the power of the Tribunal to wind up a company the name of which has been struck off. Applying this provision, and following the Tribunal's earlier view in Hemang Phophallia (supra), the Tribunal concluded that striking off the company's name under Section 248 does not oust the NCLT's jurisdiction to adjudicate a pending winding up petition. Consequently, the NCLT's rejection of the petition on the sole ground that the company's name had been struck off was held to be unsustainable. [Paras 14, 16]

Striking off under Section 248 does not affect the Tribunal's power to wind up; the impugned order is set aside and the petition is remitted to NCLT, New Delhi for fresh adjudication on merits.

Final Conclusion: The appeal succeeds in part: the appellant is competent to prosecute the appeal as legal heir, and the NCLT's order dismissing the winding up petition solely because the company's name was struck off is set aside; the matter is remitted to NCLT, New Delhi to decide the winding up petition on merits.

Initiation of corporate insolvency resolution process - Default under the Insolvency and Bankruptcy Code - Admission under section 7 - Limitation and revival by acknowledgment - Moratorium under section 14 - Appointment of Interim Resolution Professional - Record of default / evidence of default

Default under the Insolvency and Bankruptcy Code - Record of default / evidence of default - Limitation and revival by acknowledgment - Existence of a financial debt and occurrence of default by the corporate debtor and the effect of acknowledgement on limitation. - HELD THAT: - The Tribunal found on the record that the petitioner-financial creditor had sanctioned and disbursed multiple credit facilities to the corporate debtor and produced account statements, demand promissory notes, hypothecation and mortgage documents and other records to establish the financial debt. The corporate debtor did not deny liability and had earlier submitted an one-time settlement proposal and made payments up to May 31, 2017; the petitioner's affidavit further recorded that the corporate debtor's OTS/acknowledgement revived the fresh period of limitation for recovery. The Tribunal relied on the Supreme Court's exposition in Innoventive Industries Ltd. that once a debt and default are established on the material before the Adjudicating Authority, the process under section 7 is triggered. Applying that principle to the materials and admissions on record, the Tribunal held that a default had occurred and the application was within limitation. [Paras 15, 16, 17]

Default by the corporate debtor is established and the petition is within limitation.

Admission under section 7 - Initiation of corporate insolvency resolution process - Appointment of Interim Resolution Professional - Moratorium under section 14 - Admission of the Section 7 application, appointment of the interim resolution professional and declaration of moratorium. - HELD THAT: - Satisfied that the Section 7 application was complete and a default had occurred, the Tribunal admitted the petition under section 7 and declared the commencement of the corporate insolvency resolution process from the date of the order. The Tribunal appointed the proposed interim resolution professional whose consent and absence of disciplinary proceedings were on record, and directed him to make the public announcement and call for claims. The Tribunal further declared the moratorium under section 14 and specified its effect and ancillary directions concerning preservation of assets, prohibition of suits and continuance of essential supplies, and duties of the interim resolution professional under the Code. [Paras 18, 19, 20]

The Section 7 petition is admitted; the proposed IRP is appointed and moratorium under section 14 is declared, and CIRP commences from the date of the order.

Final Conclusion: The Adjudicating Authority admitted the Section 7 petition filed by the Union Bank of India against Greendiamz Biotech Ltd. on the finding of debt and default, appointed the proposed interim resolution professional, declared the moratorium under section 14 and directed initiation of the corporate insolvency resolution process with effect from the date of the order.

Inter-unit transfer for captive consumption - Rule 8 of the Valuation Rules - cost of production for captive consumption (actual cost 100%) - notional loading (15%/10%) exclusion from cost of raw material - application of CAS-4 for computation of cost of production - Larger Bench precedent in I.T.C. Ltd.

Inter-unit transfer for captive consumption - Rule 8 of the Valuation Rules - cost of production for captive consumption (actual cost 100%) - notional loading (15%/10%) exclusion from cost of raw material - Larger Bench precedent in I.T.C. Ltd. - Whether, in inter unit transfer of partly processed goods for captive consumption between two units of the same company, the cost of such raw material in the receiving unit for purpose of Rule 8 valuation is 115%/110% of cost of production (including notional loading) or the actual cost of production (100% excluding notional loading). - HELD THAT: - The Tribunal held that where goods are stock transferred between units of the same company for captive consumption the value to be taken by the receiving unit for computing cost of production is the actual cost of production determined under the appropriate cost accounting standard (CAS 4) and does not include the notional loading (15%/10%) mandated by Rule 8 for remittance of duty by the transferring unit. The Larger Bench decision in I.T.C. Ltd. considered the same question and answered that the notional loading under Rule 8 is for the purposes of excise remittance by the transferring unit and is not part of the cost of raw material in the hands of the consuming unit; Eicher Motors (Larger Bench) was inapplicable because it did not involve inter unit captive transfer. Applying the reasoning of I.T.C. Ltd., the Tribunal found the Belur unit was entitled to adopt the actual cost (100%) of the raw material produced by the Taloja unit and exclude the notional loading while determining assessable value under Rule 8. [Paras 26, 27]

The Appellant was justified in treating the cost of raw material at the Belur unit as the actual cost of production (100%), excluding the notional loading under Rule 8; the Commissioner (Appeals) order confirming the demand is set aside and the appeal is allowed.

Final Conclusion: The demand confirmed by the Commissioner (Appeals) was quashed: for inter unit transfers for captive consumption between two units of the same company the receiving unit must take the actual cost of production (100%), excluding the notional loading under Rule 8, when determining assessable value; impugned order dated September 30, 2009 is set aside and the appeal is allowed.

Capital Investment Subsidy - Rajasthan Investment Promotion Scheme-2003 - Revision under Clause 13 - Entitlement Certificate - State Level Screening Committee (SLSC) decision - BIDI decision and its interpretation - Strict interpretation of incentive/exemption provisions - Doctrine of Contemporanea Expositio - Promissory estoppel - Recovery of excess subsidy and interest

Capital Investment Subsidy - Rajasthan Investment Promotion Scheme-2003 - Entitlement Certificate - Extent of Capital Investment Subsidy payable to the Kotputli Unit of the Appellant under RIPS-2003 - HELD THAT: - The Court examined the text and amendments of Clause 7 of RIPS-2003, the BIDI minute of 01.04.2006, the deletion of Sub-clauses (vi) and (vii) on 28.04.2006, the SLSC decisions of 17.03.2011 and 24.11.2011 and the subsequent revision. It held that BIDI's direction that the 'recently announced cement package and RIPS-2003 will be applicable on the company' referred to the then-existing Sub-clauses (vi) and (vii) (inserted 02.12.2005) and did not constitute a decision under the proviso to Clauses 7(i)(a)/(b) to raise the limit to 75%. After deletion of Sub-clauses (vi) and (vii) on 28.04.2006 there was no extant policy authorising 75% subsidy when SLSC granted subsidy in 2011. SLSC's construction importing the proviso to Clauses 7(i)(a)/(b) into BIDI's 01.04.2006 decision was perverse and unauthorised. The Appellant was therefore entitled only to subsidy up to 50% of tax payable and deposited, not 75%. [Paras 19, 20, 30, 31]

The Appellant was entitled to Capital Investment Subsidy only to the extent of 50% of the payable and deposited tax; the 75% entitlement as granted by SLSC was erroneous and set aside.

BIDI decision and its interpretation - State Level Screening Committee (SLSC) decision - Strict interpretation of incentive/exemption provisions - Whether SLSC's grant of 75% subsidy was a possible view deserving protection from revision - HELD THAT: - The Court held that the SLSC's decision was not merely an alternative but a legally unsustainable construction. The scheme and its amendments were to be strictly construed (following the principle that incentive/exemption provisions are strictly interpreted). The record showed no decision by BIDI to invoke the proviso to Clauses 7(i)(a)/(b) to raise the limit to 75% for this unit; SLSC misread the BIDI minute. Given the absence of any material supporting SLSC's construction and the deletion of Sub-clauses (vi)/(vii), SLSC's view could not be treated as a defensible or possible view for purposes of resisting revision under Clause 13. [Paras 19, 20, 24]

SLSC's grant of 75% subsidy was not a possible view of the matter and therefore was open to revision and cancellation.

Revision under Clause 13 - Recovery of excess subsidy and interest - Validity of the State Government's exercise of revision under Clause 13 of RIPS-2003 and consequent recovery of excess subsidy - HELD THAT: - Clause 13 authorised revision by the Finance Department where an order by a Screening Committee was 'erroneous and prejudicial to the interest of the State revenue' within five years of full availing of benefits. The Finance Department's enquiry and ACS order found SLSC's decisions erroneous and prejudicial because they caused excess payment from public exchequer. The revision proceedings were initiated within the five-year window (benefit fully availed up to Feb 2017; show cause July 2017; revision March 2018). Applying principles in Malabar and allied authorities, the Court found the revision exercise lawful and the cancellation of the Entitlement Certificates and direction to recover excess subsidy valid. [Paras 11, 27, 30, 31]

Exercise of revision under Clause 13 and directions to cancel the entitlement certificates and recover the excess subsidy were lawful.

Doctrine of Contemporanea Expositio - Promissory estoppel - Applicability of the doctrines of contemporanea expositio and promissory estoppel in favour of the Appellant - HELD THAT: - The Court rejected reliance on contemporanea expositio because the administrative/contemporaneous construction relied upon (SLSC's interpretation) was clearly wrong and not binding; the doctrine does not immunise an erroneous administrative view. Promissory estoppel was also rejected: there was no representation by BIDI or SLSC granting 75% under the proviso, and estoppel cannot be invoked to enforce a promise contrary to law or beyond authority. Further, the Scheme itself preserved revisional power under Clause 13, which would defeat any estoppel against revision of an erroneous grant. [Paras 25, 26]

Neither contemporanea expositio nor promissory estoppel inures to the Appellant's benefit; they do not prevent revision of the erroneous grant.

Recovery of excess subsidy and interest - Rate of interest payable on recovery of the excess subsidy - HELD THAT: - Clause 10 of RIPS-2003 provided for recovery with interest @18% where there was breach of conditions; Form 2 (submitted by the Appellant) contained an undertaking to repay excess benefits with interest at 12% per annum. The Court found no allegation that the Appellant breached scheme conditions or committed misrepresentation; the overpayment resulted from SLSC's erroneous grant. Given the parties' contractual undertaking and absence of grounds for invoking the 18% Clause-10 rate, the Court held recovery of excess subsidy permissible but limited interest to 12% per annum from the date of availing excess subsidy until payment/recovery. [Paras 33]

Excess subsidy must be refunded; interest recoverable at 12% per annum (as per the Form-2 undertaking) from the date of availing excess subsidy until recovery/payment.

Final Conclusion: The High Court's order upholding the Finance Department's revision is affirmed. The Appellant was entitled only to 50% subsidy (not 75%); the SLSC entitlement certificates granting 75% were cancelled and excess subsidy is to be refunded. Recovery is lawful but interest is limited to 12% per annum (per the Appellant's undertaking) from the date of availing the excess subsidy until payment/recovery. Parties to bear their own costs.

Judicial review of Reserve Bank of India's grievance redressal mechanism - moratorium commencement governed by contractual terms between bank and borrower - classification of account as Non-Performing Asset and recovery under SARFAESI/DRT - limits of writ jurisdiction under Article 226 in contractual and credit disputes - RBI's supervisory/regulatory role and non-intervention in banks' commercial decisions

Judicial review of Reserve Bank of India's grievance redressal mechanism - RBI's supervisory/regulatory role and non-intervention in banks' commercial decisions - Whether the Reserve Bank of India was obliged to further examine and adjudicate the petitioners' complaints about classification of accounts as NPA and related grievances. - HELD THAT: - The Court accepted the Reserve Bank of India's position that its Complaint Management System and CEPC grievance mechanism are grievance-redressal processes and do not displace statutory or contractual remedies available to parties. The RBI informed the Court that it had taken up the matter with the bank and that the bank had returned the title deeds; RBI stated it does not intervene in the internal commercial or recovery decisions of banks and noted the absence of specific RBI guidelines mandating a particular moratorium calculation. In light of RBI's supervisory role, the Court held that RBI is not in a position to adjudicate disputes that turn on contractual terms between bank and borrower or to interfere with recovery proceedings instituted under statutory remedies. [Paras 11, 20]

RBI was not required to adjudicate the petitioners' complaints or to pass specific orders beyond the grievance response already furnished; no mandamus could be issued directing RBI to do so.

Moratorium commencement governed by contractual terms between bank and borrower - limits of writ jurisdiction under Article 226 in contractual and credit disputes - Whether the moratorium period for repayment had to be computed from the date of sanction of loan or from the date of disbursement of the last instalment as a matter on which the Court should adjudicate in these writ petitions. - HELD THAT: - The Court noted the first respondent's (RBI) statement that it has not issued specific guidelines prescribing the computation date for moratorium in the petitions' factual matrix and that banks are expected to have Board-approved policies governing such commercial decisions. Since the determination of the commencement of moratorium arises from the terms of the loan contract and the bank's internal policy, it involves disputed contractual facts which require evidence and contractual interpretation. The Court held it would be inappropriate to examine or decide these contractual issues in a writ petition filed under Article 226 where factual disputes and contract interpretation are central. [Paras 11, 18]

Computation of the moratorium is to be determined by reference to the contract/policies of the bank; the High Court will not decide that question in the present writ proceedings.

Classification of account as Non-Performing Asset and recovery under SARFAESI/DRT - limits of writ jurisdiction under Article 226 in contractual and credit disputes - Whether the petitioners' grievance regarding classification of accounts as NPA and consequent recovery actions could be adjudicated by this Court in these writ petitions instead of statutory fora. - HELD THAT: - The Court observed that the accounts had been classified as NPA and that recovery proceedings under the SARFAESI Act and before the Debt Recovery Tribunal were pending or had been initiated. Citing the principle that statutory remedies under the DRT/SARFAESI regime are the appropriate forum for adjudication of such disputes, the Court held that it should exercise restraint in substituting the statutory remedy by entertaining writ petitions which require detailed fact-finding and issues of contractual construction. The petitioners were directed to raise their contentions before the competent statutory fora empowered to decide such matters. [Paras 19, 21]

Disputes concerning NPA classification and recovery proceedings are to be pursued before the Debt Recovery Tribunal/SARFAESI mechanism; the writ petitions are not the appropriate vehicle and are dismissed.

Final Conclusion: The writ petitions challenging the RBI grievance response and the classification of loans as NPA are dismissed; the Court declined to direct RBI to further adjudicate contractual/credit disputes, observing that moratorium computation and recovery actions turn on contractual terms and statutory remedies (SARFAESI/DRT) which the petitioners must pursue in the appropriate fora.