TaxTMI Updates e-Newsletter
Aug 03,2021

Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 - Marine diesel engines as parts of ships and vessels - End-use principle for concessional rate - Classification interplay between CTH 8408/8409 and headings 8901-8907 - Concessional GST rate under Sr. No. 252 of Notification No. 1/2017 - Non-application where supplies are diverted or used otherwise

Marine diesel engines as parts of ships and vessels - Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 - Concessional GST rate under Sr. No. 252 of Notification No. 1/2017 - End-use principle for concessional rate - Marine diesel engines, and parts thereof, whether covered by Sr. No. 252 of Notification No. 1/2017-C.T.(Rate) when supplied by the applicant to ship building companies/shipyards or the Indian Navy for use in manufacture of ships/vessels classified under headings 8901, 8902, 8904, 8905, 8906 and 8907. - HELD THAT: - The Authority examined the ordinary meaning of 'part' and applied judicial tests that a component is an integral item whose primary use is in the constitution of the whole. Marine diesel engines (MDEs) are essential for propulsion and auxiliary power of ships and thus qualify as parts of vessels when used in manufacture of goods falling under headings 8901, 8902, 8904, 8905, 8906 and 8907. The entry at Sr. No. 252 provides a concessional GST rate for "parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907" irrespective of the chapter in which such parts are otherwise classifiable; accordingly, goods classifiable under CTH 8408/8409 can fall within Sr. No. 252 if they are used as parts of the specified vessels. The Authority emphasised that the concessional rate is contingent on the goods being supplied to and used by manufacturers of the specified vessels (i.e., shipbuilding companies/shipyards or Indian Navy) for incorporation in goods of headings 8901-8907, and that diversion or supply for other purposes would preclude coverage under Sr. No. 252. The Authority noted that not every item listed by the applicant was demonstrated in detail to be a part of an MDE, and therefore items not conforming to "parts of marine diesel engines" would not be covered by Sr. No. 252. The determinative conclusion applies only where the engines/parts are supplied exclusively and directly for use in manufacture of the specified vessel headings. [Paras 5]

Marine diesel engines and their parts will be covered under Sr. No. 252 of Notification No. 1/2017-C.T.(Rate) only when supplied exclusively and directly to ship building companies/shipyards or the Indian Navy for incorporation in goods falling under headings 8901, 8902, 8904, 8905, 8906 and 8907; items that do not conform to parts of marine diesel engines or are supplied/diverted for other uses are not covered.

Final Conclusion: The Advance Ruling holds that MDEs and parts classifiable under CTH 8408/8409 attract the concessional rate under Sr. No. 252 of Notification No. 1/2017-C.T.(Rate) only when they are supplied exclusively and directly for use in manufacture of ships/vessels falling under headings 8901, 8902, 8904, 8905, 8906 and 8907; otherwise the normal higher rates apply.

Bail under Section 439 Cr.P.C. - interim bail - medical grounds for interim release - personal bond and sureties - conditional interim release - surrender before jail authorities - dismissal of main bail application

Interim bail - medical grounds for interim release - conditional interim release - personal bond and sureties - Interim bail was granted to the accused petitioner on account of the medical condition of the petitioner's father. - HELD THAT: - The Court considered the petitioner's application for interim bail pressed on the ground that the petitioner's 67 year old father required medical treatment, including angiography, and perused a hospital letter which stated that angiography was postponed because the father was suffering from pleural extension with TB chest and had altered sensorium with depression. Balancing the medical circumstances against custody considerations, the Court found it proper to allow interim bail on conditions. The release was made subject to furnishing a personal bond and two sureties to the satisfaction of the trial court and on the stipulation that the petitioner shall appear before the trial court or any transferee court on all subsequent dates. The interim bail was granted for a fixed period and included an express condition that failure to have the angiography performed in the intervening period would disentitle the petitioner to further extension of the interim bail.

Interim bail allowed for two months on medical grounds of the petitioner's father, subject to bond, sureties, appearance conditions and a proviso limiting extension if angiography is not done.

Bail under Section 439 Cr.P.C. - dismissal of main bail application - The main bail application was dismissed. - HELD THAT: - The Court expressly considered the main bail application and, after permitting interim bail for the limited period and on stated conditions, dismissed the main bail petition. No other relief was granted in respect of the main bail application.

Main bail application dismissed.

Final Conclusion: Interim bail granted for two months on medical grounds of the petitioner's father with specified bond and surety conditions and an express limitation on extension; the main bail application is dismissed.

Application of exemption Notification to re-imported repaired goods - follow and give effect to binding appellate orders - consistency in administrative decision making - National Litigation Policy and duty of Government to be an efficient and responsible litigant

Application of exemption Notification to re-imported repaired goods - follow and give effect to binding appellate orders - Whether Respondents are bound to implement the CESTAT orders holding IGST not leviable on repaired goods re imported into India and to grant exemption under Notification No.45/2017 Cus. for subsequent consignments without requiring fresh litigation. - HELD THAT: - The Tribunal (CESTAT) passed two final orders dated 02.11.2020 and 15.01.2021 holding that IGST was not leviable on the re imported repaired goods and that the petitioner was entitled to exemption under the Notification. The High Court found those orders to be binding and observed that once a legal issue is adjudicated in favour of the petitioner, there is no plausible justification for the Department to adopt a contrary interpretation in subsequent assessments. Reliance was placed on the National Litigation Policy and authorities emphasizing that government departments must act as efficient and responsible litigants, avoid needless continuation of litigation, and follow binding judicial/quasi judicial decisions. The Court held that it is unfair and amounts to harassment to force the petitioner to repeatedly litigate identical issues already decided by the CESTAT, and that administrative officers must apply the Tribunal's interpretation consistently to subsequent Bills of Entry. [Paras 14, 26, 27]

CESTAT's orders holding that IGST is not leviable on the re imported repaired goods are binding on the Respondents and the Respondents must apply those orders and grant the exemption under Notification No.45/2017 Cus. in respect of subsequent consignments where facts are similar.

Consistency in administrative decision making - National Litigation Policy and duty of Government to be an efficient and responsible litigant - What relief should be granted to secure compliance by the Respondent Authority with the CESTAT decisions in respect of the petitioner's pending representations. - HELD THAT: - Finding that the petitioner had made specific representations to the Respondent Authority seeking implementation of the CESTAT orders which remained undecided, the Court directed the concerned authority to decide those representations (Annexures A 5 to A 8) in accordance with law and with due deference to the CESTAT decisions. The Court emphasised expeditious disposal and that administrative officers should not relitigate matters already finally decided by the Tribunal, in line with the objective of the National Litigation Policy to prevent unnecessary government litigation and ensure consistent application of binding precedents. [Paras 28]

Respondent Authority directed to decide the petitioner's pending representations in accordance with law and the CESTAT decisions and to dispose of them as expeditiously as possible.

Final Conclusion: Writ petition disposed; Court directs the Respondent Authority to give effect to the CESTAT orders holding IGST not leviable on the re imported repaired goods and to decide the petitioner's specific representations in accordance with those decisions and the law, expeditiously.

Faceless assessment under section 144B - Principles of natural justice (audi alteram partem) - Show cause notice and right to personal hearing - Procedure for draft, revised and final draft assessment orders - Non est provision for assessments not following section 144B procedure

Faceless assessment under section 144B - Principles of natural justice (audi alteram partem) - Show cause notice and right to personal hearing - Whether the draft assessment order dated 22/04/2021 was passed in breach of the procedural requirements of section 144B and the principles of natural justice by failing to afford the petitioner an opportunity of personal hearing after the petitioner responded to the show cause notice. - HELD THAT: - The court examined the scheme of section 144B and the faceless assessment procedure, noting that where a draft, final draft or revised draft assessment order proposes a variation prejudicial to the assessee, the statutory scheme provides for service of a show cause notice and entitles the assessee to request a personal hearing to make oral submissions. The provisions in clauses (xxii)-(xxv) and sub section (7) read as a whole demonstrate that upon receipt of a response to the show cause notice the matter is to be sent to the Assessment Unit, a revised DAO may be framed and, where prejudicial variations are involved, the opportunity for personal hearing (including by video conferencing) is an integral part of the procedure. The court also applied established authorities on natural justice to hold that where the statute envisages an opportunity to be heard and the decision has grave civil consequences, the audi alteram partem principle cannot be disregarded. In the present case the petitioner furnished responses and repeatedly requested personal hearing; there is nothing on record to show that the prescribed procedure under section 144B, including consideration of the request for personal hearing and consequent proceedings, was followed before passing the draft assessment order dated 22/04/2021. Accordingly the court found the impugned DAO to be unsustainable for non compliance with the statutory scheme and principles of natural justice. [Paras 56, 58, 63, 66, 68]

Draft assessment order of 22/04/2021 is unsustainable as it was passed without affording the petitioner the personal hearing mandated by the procedure under section 144B and the requirements of natural justice.

Procedure for draft, revised and final draft assessment orders - Non est provision for assessments not following section 144B procedure - Remedial direction to be followed once non compliance with section 144B was found. - HELD THAT: - Given the finding of procedural non compliance, the court considered the appropriate remedy. Section 144B contains a strict non est provision for assessments not made in accordance with its procedure. The court directed setting aside of the impugned draft assessment order and left it open to the revenue to proceed afresh in accordance with section 144B, which necessarily requires giving the petitioner an opportunity of hearing (including by video conferencing) and following the sequence prescribed for DAO/FDAO/RDAO and any onward steps. The effect is that the authorities must carry forward the assessment process afresh in conformity with the statutory procedure and afford the petitioner the hearing to which it is entitled before any prejudicial variation is finalized. [Paras 65, 69]

Impugned draft assessment order set aside; authorities directed to proceed in accordance with section 144B and to afford the petitioner the opportunity of hearing before passing any prejudicial assessment.

Final Conclusion: Writ petition allowed; draft assessment order dated 22/04/2021 set aside and matter remitted to the income tax authorities to carry forward the assessment process in accordance with section 144B of the Income Tax Act, 1961, giving the petitioner the opportunity of hearing as mandated by the statutory procedure and principles of natural justice.

Income from letting out property with amenities as Profits and Gains of Business - Income from industrial park/SEZ premises let out together with facilities constitutes business income - Eligibility for deduction under Section 80IA - CBDT Circular No.16 of 2017 recognising letting with facilities as business income - Precedent value of Division Bench decisions on characterization of lease rentals

Income from letting out property with amenities as Profits and Gains of Business - CBDT Circular No.16 of 2017 recognising letting with facilities as business income - Precedent value of Division Bench decisions on characterization of lease rentals - Eligibility for deduction under Section 80IA - Lease rent income from letting out modules of a Software Technology Park together with communication and other facilities is business income in the hands of the owner and thus eligible for deduction under Section 80IA. - HELD THAT: - The Tribunal's classification of receipts from letting out premises in a software technology/industrial park together with attendant facilities as income from business accords with the ratio of earlier Division Bench decisions of this Court and the CBDT's Circular No.16 of 2017, which recognises that income from developed space let out along with other facilities in an industrial park/SEZ is to be taxed under the head Profits and Gains of Business. The Revenue conceded that the issue had been decided against it by the Division Bench in T.C.A. No.16 of 2014 (and related authorities) and did not press a contrary legal principle. Applying that binding ratio, the appeal was dismissed and the income characterized as business income, enabling the assessee to claim deduction under Section 80IA in respect of such income.

Question of law answered against the Revenue; lease rent income from letting out modules of the software technology park with facilities is business income and the appeal is dismissed.

Final Conclusion: Following the Division Bench precedent and CBDT Circular No.16 of 2017, the High Court affirmed that lease rentals from letting out developed space in a software technology/industrial park together with facilities constitute business income, and the Revenue's appeal for Assessment Year 2005-06 is dismissed.

Cessation of liability and addition under section 41(1)/28 - depreciation claim on computer peripherals - foreign travel expenses and fringe benefit tax - Accounting Standard-7 and Percentage of Completion Method (POCM) - recognition of expected contract loss based on estimates - related party sale pricing and section 40A(2)(b) - allowability of advances/bad debts as business loss - ground rent and non application of section 43B - commercial expediency and test of reasonableness in related party transactions

Cessation of liability and addition under section 41(1)/28 - Deletion of addition made by AO on account of alleged cessation of trade creditors/liabilities. - HELD THAT: - The Tribunal found that the liabilities/creditors continued to appear in the audited accounts as on the relevant date and had not been written back. Following the Supreme Court's exposition that liabilities continuously shown and admitted in audited accounts do not cease to exist, the CIT(A)'s deletion of the addition was held to be legally correct. The departmental ground was therefore dismissed. [Paras 7, 8]

Addition under section 41(1)/28 deleted; departmental ground dismissed.

Depreciation claim on computer peripherals - Allowability of depreciation on printers and UPS at higher block rates as claimed by the assessee. - HELD THAT: - Both parties accepted that the issue is settled by higher court decisions (including BSES Yamuna Power Ltd. and Birla Soft Ltd.). Applying those precedents, the Tribunal upheld the CIT(A)'s deletion of the AO's restriction of depreciation and dismissed the departmental ground. [Paras 9]

Depreciation as claimed by assessee upheld; departmental disallowance dismissed.

Foreign travel expenses and fringe benefit tax - Extent of disallowance in respect of foreign travel expenses alleged to be personal (wife of director). - HELD THAT: - The AO disallowed the travel expenses treating part as personal; CIT(A) restricted disallowance to a sum on estimation. The assessee accepted CIT(A)'s order and earlier tribunal precedent in the assessee's own case supported the approach. The Tribunal, noting acceptance by the assessee and relevant authority, confirmed the CIT(A)'s restriction and dismissed the departmental ground. [Paras 10, 11, 12, 13, 14]

Disallowance restricted as per CIT(A); departmental appeal dismissed.

Accounting Standard-7 and Percentage of Completion Method (POCM) - recognition of expected contract loss based on estimates - related party sale pricing and section 40A(2)(b) - commercial expediency and test of reasonableness in related party transactions - Allowability of losses claimed on the Dwarka Project (estimates under AS 7/POCM), and whether AO was justified in disallowing losses by altering sales estimates and challenging large discount to related party. - HELD THAT: - The Tribunal accepted that AS 7 and POCM apply and that paragraph 35-36 of AS 7 requires recognition of expected contract loss when probable, irrespective of stage of completion. The AO had not challenged the project cost estimates but substituted the assessee's conservative sales estimates with higher averaged rates despite contemporaneous evidence of a falling real estate market. The assessee's justification for offering a substantial discount to a sister concern (including carrying cost, interest, commission and advertising savings) was supported by documentary material and the same AO had accepted the purchase price in the related purchaser's assessment. The Tribunal held that averaging upward in a crashing market was not justified, that section 40A(2)(b) is inapplicable to sales pricing, and that commercial expediency and genuineness of the transactions precluded substituting the parties' bona fide pricing. The Tribunal therefore upheld the CIT(A)'s allowance and allocation of project losses across assessment years and dismissed the department's grounds for A.Y. 2008 09 and A.Y. 2009 10. [Paras 43, 44, 46, 47, 48]

Losses on the Dwarka Project allowed as per AS 7/POCM and CIT(A)'s allocation; departmental appeals dismissed.

Sale promotion expenses and personal element - company as artificial legal person - Disallowance of sale promotion expenses on the ground that they were incurred through directors' personal credit cards and therefore had a personal element. - HELD THAT: - The CIT(A) (followed by this Tribunal) held that a company, as an artificial legal entity, cannot incur personal expenses and that the assessment facts were identical to those previously decided in the assessee's case; the Tribunal followed its earlier order and upheld deletion of the disallowance. [Paras 59, 60, 61]

Disallowance deleted; departmental ground dismissed.

Allowability of advances/bad debts as business loss - Disallowance of amounts written off as bad debts/advances given to suppliers. - HELD THAT: - The CIT(A) deleted the AO's disallowance, holding that advances given in the ordinary course of business which become irrecoverable represent business loss under section 28/allowability under section 37. The Tribunal found support in Supreme Court authority (Badridas Daga) and upheld the CIT(A)'s deletion. [Paras 62, 63]

Bad debts/advances written off allowed as business loss; departmental disallowance dismissed.

Ground rent and non application of section 43B - Whether ground rent payable to L&DO is allowable only on actual payment under section 43B or deductible on accrual. - HELD THAT: - Relying on Tribunal precedent (K. Narendra) and analysis of section 43B's clauses, the Tribunal held that ground rent is not listed in the provisions requiring actual payment; accordingly section 43B does not apply and the CIT(A)'s deletion of the AO's disallowance was upheld. The assessee's appeal on this point was allowed. [Paras 65, 66, 67]

Disallowance under section 43B deleted; assessee's appeal allowed.

Final Conclusion: The Tribunal dismissed the departmental appeals and allowed or upheld the relief granted by the CIT(A) on the decided issues for A.Y. 2008 09, 2009 10, 2011 12 and 2012 13: additions under section 41(1)/28 were deleted, depreciation on computer peripherals was allowed as claimed, restriction of foreign travel disallowance confirmed as per CIT(A), project losses on the Dwarka Project were allowed under AS 7/POCM and the CIT(A)'s allocation upheld, sale promotion disallowance was deleted, bad debts/advances written off were held allowable as business loss, and ground rent was held not to fall within section 43B.

Allowability of employee contribution to ESI and EPF as business expenditure - delay in statutory deposit not resulting in deemed income under Section 2(24)(x) - treatment of belated payment - expenditure allowed when actually paid - binding precedent and application of coordinate-bench decisions

Allowability of employee contribution to ESI and EPF as business expenditure - delay in statutory deposit not resulting in deemed income under Section 2(24)(x) - binding precedent and application of coordinate-bench decisions - Whether the addition made by CPC/Assessing Officer disallowing employee contributions to ESI and EPF on account of delayed statutory deposit was sustainable - HELD THAT: - The Tribunal accepted the assessee's submission and followed the line of authority of the Hon'ble Delhi High Court in Pr. CIT vs Pro Interactive Service (India) Pvt. Ltd., which in turn relied on CIT vs AIMIL Ltd., holding that legislative intent is to allow the payment as expenditure when actually paid and that belated deposit should not be treated as deemed income of the employer under Section 2(24)(x). The Tribunal noted that coordinate benches (including DCIT vs Dee Development Engineers Ltd. and Azamgarh Steel & Power Pvt. Ltd. decisions) have applied the same principle and that no higher forum had stayed or overruled those decisions. Applying these binding precedents, the Tribunal held that the CPC/Assessing Officer was not justified in disallowing the claim and directed deletion of the addition. [Paras 8, 9, 10]

The addition disallowing employee contributions to ESI and EPF on account of delayed statutory deposit is deleted and the claim is allowed.

Final Conclusion: Appeal allowed; the Tribunal, following the relevant Delhi High Court and coordinate-bench precedents, directed deletion of the addition made for delayed deposit of employees' ESI and EPF contributions for AY 2018-19 and allowed the assessee's claim.

Deductibility of interest under section 36(1)(iii) - Commercial expediency as test for allowability of business expenditure - Disallowance under section 14A to be restricted to quantum of exempt income - Computation of disallowance under section 14A using Rule 8D

Deductibility of interest under section 36(1)(iii) - Commercial expediency as test for allowability of business expenditure - Whether interest on borrowed funds used for interest-free advances/ investments disallowed by AO under section 36(1)(iii) was rightly deleted by the CIT(A). - HELD THAT: - The Tribunal noted that the facts for assessment year 2013-14 were identical to earlier years where loans and advances (including investments and advances to related parties) had been held to be in the nature of business advances and made for commercial expediency. The Assessing Officer had allocated interest on total borrowings to the portion alleged to be used for advances, but the CIT(A) accepted the assessee's case that the advances and investments formed part of the business operations and were given for commercial expediency. The Tribunal, following its earlier orders for assessment years 2011-12 and 2012-13 and the decision of the Hon'ble Delhi High Court upholding those orders, held that once genuineness and business nexus are established and commercial expediency is found, notional disallowance of interest under section 36(1)(iii) is not warranted. Consequently the Tribunal found no infirmity in the deletion of the addition made by the Assessing Officer. [Paras 4]

Deletion of the addition made by the Assessing Officer under section 36(1)(iii) upheld; revenue's ground dismissed.

Disallowance under section 14A to be restricted to quantum of exempt income - Computation of disallowance under section 14A using Rule 8D - Whether the CIT(A) was right in restricting the disallowance under section 14A to Rs. 21,95,216/- as against the AO's computation invoking Rule 8D. - HELD THAT: - The Assessing Officer invoked Rule 8D to compute a disallowance in respect of expenditure relating to exempt income, arriving at a higher figure than the exempt income itself. The CIT(A) accepted that reasons for making a section 14A disallowance were recorded but restricted the disallowance to the amount of exempt income (share of profit from partnership firm) claimed by the assessee. The Tribunal, following the ratio of the Hon'ble Delhi High Court as relied upon by the assessee, directed that the disallowance under section 14A be restricted to the quantum of exempt income earned during the year and thereby sustained the limitation imposed by the CIT(A). [Paras 5]

Disallowance under section 14A to be limited to the exempt income earned in the year; revenue's ground dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal: it upheld deletion of the interest disallowance under section 36(1)(iii) on the basis that the advances/investments were made for commercial expediency and formed part of business, and directed that the section 14A disallowance be restricted to the quantum of exempt income earned in the assessment year 2013-14.

Requirement of incriminating material for additions under Section 153A - additions in unabated assessments arising from search under Section 153A - entries in books of account and cash credit not constituting incriminating material - reiteration of earlier assessment where no incriminating material is found

Requirement of incriminating material for additions under Section 153A - additions in unabated assessments arising from search under Section 153A - entries in books of account and cash credit not constituting incriminating material - Validity of disallowance of interest in assessments which were final (unabated) at the time of search where additions were made on the basis of books of account and details furnished to the Assessing Officer rather than on incriminating material seized during search. - HELD THAT: - The Tribunal examined whether the addition/disallowance of interest in the relevant assessment years, which had become final because time for issuing notice under section 143(2) had expired before the search, was permissible under section 153A. It was found that the Assessing Officer did not rely upon any incriminating material discovered during the search in respect of those years; the disallowance was based on appreciation of the accounts and details submitted by the assessee. Relying on the principle laid down by the jurisdictional High Court in PCIT v. Saumya Construction Pvt. Ltd. and other precedents, the Tribunal held that under section 153A additions in respect of an assessment year are permissible only if prompted by incriminating material relatable to that year discovered during the search. Where no such incriminating material exists and the assessment was unabated, items of normal assessment such as interest recorded in books or cash credit entries cannot be the basis for fresh additions under section 153A. Applying these principles to the facts, the Tribunal concluded that the disallowance was without requisite authority and deserved deletion. [Paras 5, 7, 8, 9]

Addition of interest in the unabated assessments for the relevant years, made otherwise than on the basis of incriminating material found during the search, is deleted.

Final Conclusion: Both appeals for A.Y. 2010-11 and A.Y. 2011-12 are allowed and the disallowances of interest made in assessments concluded prior to the search, which were not founded on incriminating material seized during the search, are deleted.

Application of income - charitable purpose - education - capitation fee / profiteering - registration under section 12AA - role of fee fixation committee / regulatory authority

Capitation fee / profiteering - business income vs charitable activity - Deletion of addition of excess fees treated by the Assessing Officer as taxable business income on the ground that fees charged were in excess of committee-prescribed amounts. - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the Assessing Officer's allegation of collection of capitation fee was not supported by evidence. The assessee was a society registered under section 12AA for educational charitable activity and there was no independent finding by a regulatory authority that capitation or profiteering had been charged. The Assessing Officer's computation of excess receipts was therefore not a sustainable basis to treat the receipts as business income, particularly where the assessee showed application of income towards its objects and no surplus for the year. Reliance on Supreme Court precedents concerning capitation was inapplicable in absence of proof of capitation or profiteering in the year under consideration. [Paras 6]

Addition of Rs.10,32,13,500 treated as business income was deleted; the appeal on this ground dismissed.

Application of income - registration under section 12AA - role of fee fixation committee / regulatory authority - Whether the Assessing Officer could treat the quantum of fees charged as determinative for taxation of a registered charitable educational institution without a finding of breach of sections 11-13. - HELD THAT: - The Tribunal endorsed the CIT(A)'s conclusion that for an entity registered under section 12AA the Income-tax authorities are primarily concerned with application of income to charitable objects under sections 11-13. Absent a finding of contravention of those provisions or evidence of regulatory violation (for example, a conclusive determination by the fee fixation authority that excess/capitation fees were charged), the AO could not take an adverse view solely on the basis of the quantum or composition of fees collected. The Tribunal noted that regulatory remedies lie with the competent authority and the IT law focuses on application of income. [Paras 6]

AO's approach treating fee quantum as independently determinative of taxability was rejected; CIT(A)'s reasoning upheld.

Role of fee fixation committee / regulatory authority - capitation fee / profiteering - Whether a fee fixation order existed for the relevant academic year and whether that absence affected the claim of excess fee collection. - HELD THAT: - The Tribunal accepted the assessee's position (supported by affidavit and submissions before the CIT(A)) that no final fee fixation was in force for the academic year relevant to AY 2014-15 for the courses in question, and that the provisional/future fixation relied upon by the AO was not applicable. In respect of paramedical courses, documentary permission showed only a minor additional examination charge. Given the absence of a binding fee-fixation determination and absence of evidence of capitation, the AO's computation of excess fees was held to be speculative. [Paras 4, 6]

Finding that no fee fixation for the relevant year was proved and AO's computation of excess fees was not sustainable; supports deletion of addition.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s deletion of the addition, holding that in absence of evidence of capitation/profiteering or contravention of sections 11-13 and given the assessee's registration under section 12AA and application of income, the Assessing Officer's classification of excess fees as taxable business income could not be sustained.

Deduction under section 10AA - allowability of interest and remuneration to partners in computation of firm's income - interpretation of partnership deed regarding entitlement to interest and remuneration - penalty under section 271(1)(c) and its deletion consequent to deletion of additions

Deduction under section 10AA - allowability of interest and remuneration to partners in computation of firm's income - interpretation of partnership deed regarding entitlement to interest and remuneration - Whether the assessing officer was justified in reducing the claim under section 10AA by computing and excluding notional interest on partners' capital and remuneration where the partnership deed provides that no interest or remuneration is payable. - HELD THAT: - The assessing officer excluded from the eligible deduction under section 10AA amounts computed as interest and remuneration to partners on the view that non-charging of such items had been done to enhance exempt income, relying on Tribunal precedent. The CIT(A) reversed that view after noting that the partnership deed expressly provided that no interest on capital or remuneration was payable to partners. The Tribunal followed the decision of the jurisdictional High Court in Alidhara Taxspin Engineers, which holds that mere incorporation of provisions relating to interest and remuneration does not make them mandatory, and where the partnership deed clearly states that no interest or remuneration is payable, the assessing officer cannot compute and disallow such notional payments to restrict the claim under section 10AA. The Tribunal therefore found no merit in Revenue's contention and held that the AO's adjustment was not sustainable in the facts of this case. [Paras 5, 6, 7]

The disallowance made by the assessing officer by excluding notional interest and remuneration from the deduction under section 10AA is set aside; appeal dismissed.

Penalty under section 271(1)(c) and its deletion consequent to deletion of additions - Whether the penalty under section 271(1)(c) imposed on the assessee survives where the additions/disallowances on the basis of which penalty was levied have been deleted. - HELD THAT: - The CIT(A) had deleted the penalty on the ground that the underlying additions/disallowances had been deleted. The Tribunal has affirmed the deletion of those additions for both assessment years; accordingly, the basis for levy of penalty no longer survives. In view of the affirmed deletions, the Tribunal held that the appeals against the imposition of penalty do not survive and dismissed the Revenue's appeals against deletion of penalty. [Paras 9, 10]

Penalty under section 271(1)(c) deleted; appeals dismissed.

Final Conclusion: The Revenue's appeals for AYs 2009-10 and 2010-11 are dismissed: the assessing officer's adjustment to restrict deduction under section 10AA by imputing interest and remuneration to partners is not sustained where the partnership deed disclaims such entitlement, and consequentially the penalties under section 271(1)(c) are also deleted.

Section 263 revision powers - Erroneous and prejudicial to the revenue - Scope of inquiry under section 263 - AO's application of mind and enquiries - Acceptance of explanation based on agreement of sale - Requirement of opportunity of hearing before revision

Section 263 revision powers - Erroneous and prejudicial to the revenue - AO's application of mind and enquiries - Acceptance of explanation based on agreement of sale - Whether the Principal Commissioner could invoke section 263 and treat the assessment order dated 12.12.2016 as erroneous and prejudicial to the interests of revenue in respect of cash deposits explained as sale proceeds of agricultural land. - HELD THAT: - The Tribunal examined whether both conditions for exercise of power under section 263 - that the AO's order is erroneous and that the error is prejudicial to revenue - were satisfied. The record shows the AO issued specific questionnaires and notices under sections 143(2) and 142(1), asked for bank statements and source of cash deposits, and received from the assessee a detailed written explanation with copy of the agreement of sale. The AO considered the bank statements, agreement and submissions, applied his mind and accepted the explanation, framing assessment at returned income. The Principal CIT's jurisdiction was based on absence of a registered sale deed and a suggestion that the AO did not examine the purchaser on oath; however, where the AO has made enquiries, considered available material on record and accepted the assessee's explanation, the Tribunal held that the AO's order could not be categorised as erroneous and prejudicial merely because the Principal CIT would have preferred further inquiries. In these circumstances and following precedents, the Tribunal found no basis to sustain revision under section 263 and quashed the Pr. CIT's order, restoring the assessment order dated 12.12.2016. [Paras 11, 21, 22, 24]

Ld. Pr. CIT wrongly assumed jurisdiction under section 263; the assessment order dated 12.12.2016 is not erroneous or prejudicial to revenue and is restored.

Final Conclusion: The Tribunal allowed the appeal, quashed the order passed by the Principal CIT under section 263 and restored the assessment order dated 12.12.2016 for A.Y. 2009-10.

Indexation of cost of acquisition - Date of acquisition for computing holding period and indexed cost (date of incurring expenditure/allotment/JDA) - Constructive possession / part performance under Section 53A of the Transfer of Property Act and Section 2(47)(v) of the I.T. Act - Requirement of bills/vouchers for claiming cost of improvement - Direction to Assessing Officer to recompute cost of acquisition

Indexation of cost of acquisition - Date of acquisition for computing holding period and indexed cost (date of incurring expenditure/allotment/JDA) - Constructive possession / part performance under Section 53A of the Transfer of Property Act and Section 2(47)(v) of the I.T. Act - Direction to Assessing Officer to recompute cost of acquisition - Whether cost of acquisition for computing indexed cost and capital gains is to be reckoned from the date payments were made/allotment/JDA (earlier date) or from the date of registration of sale deed. - HELD THAT: - The Tribunal held that for computing indexation the relevant date is the date on which the assessee incurred expenditure to acquire the capital asset (date of allotment/payment/JDA) and not necessarily the date of registration. The Tribunal relied on its earlier decisions and stated authorities holding that constructive possession, allotment or part performance under Section 53A and the expanded definition in Section 2(47) lead to the asset being treated as held by the assessee from the earlier date for the purpose of indexed cost. Applying these principles, the Tribunal directed the Assessing Officer to recompute the cost of acquisition in light of the date(s) on which payments were made/allotment (and thus allow indexation accordingly). [Paras 9, 11]

Allowed in part; directed AO to recompute cost of acquisition and indexation from the relevant earlier date of incurring payments/allotment/JDA.

Requirement of bills/vouchers for claiming cost of improvement - Whether the claim for cost of improvement (interiors) can be allowed in absence of bills and requisite supporting vouchers. - HELD THAT: - The Tribunal found that the assessee failed to produce any bills, vouchers or even minimal corroborative evidence to substantiate the claim for improvement to the interiors. In the absence of requisite details and documentary proof, the Tribunal was not able to appreciate or accept the claim and therefore sustained the disallowance made by the lower authorities. [Paras 12]

Dismissed - the claim for cost of improvement is disallowed for lack of supporting bills/vouchers.

Final Conclusion: Appeal partly allowed: the Tribunal directed recomputation of the indexed cost of acquisition by the Assessing Officer treating the relevant earlier date of incurring payments/allotment/JDA as the date for indexation; the claim for cost of improvement was rejected for want of bills and vouchers; appeal otherwise disposed of for statistical purposes.

Disallowance under section 14A - computation under Rule 8D - Assessing Officer's satisfaction requirement for invoking section 14A - disallowance cannot exceed exempt income - ascertained liability versus provision - mercantile system of accounting - deduction under section 36(1)(va) for employees' contribution - non-obstante provision and actual payment rule under section 43B - conjoint reading of sections 36(1)(va) and 43B

Disallowance under section 14A - computation under Rule 8D - Assessing Officer's satisfaction requirement for invoking section 14A - disallowance cannot exceed exempt income - Whether the disallowance computed by the AO under section 14A read with Rule 8D was sustainable. - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the section 14A disallowance because the AO did not record the requisite satisfaction rejecting the assessee's claim before mechanically applying Rule 8D. The assessee had made a suo motu disallowance and maintained books supporting its claim; the AO's general observations did not constitute the objective, cogent reasons required to reject the claim. Further, the disallowance computed could in any event not exceed the exempt income actually earned, a principle applied by the Tribunal in accordance with the decisions of the jurisdictional High Court and precedent cited in the order. On these bases the Tribunal found the CIT(A)'s deletion to be correct. [Paras 8, 9, 10, 11, 12]

Deletion of the section 14A disallowance upheld and ground dismissed against the Revenue.

Ascertained liability versus provision - mercantile system of accounting - Whether the consumption incentive claimed by the assessee was an allowable expense (an ascertained liability) or a disallowable provision. - HELD THAT: - The Tribunal agreed with the CIT(A) that the consumption incentive represented an ascertained liability under the mercantile system of accounting rather than a mere contingent provision. The CIT(A)'s findings, consistent with earlier appellate decisions in the assessee's own case for earlier assessment years and a coordinate Bench ruling, showed that party-wise details and underlying contracts/schemes were placed on record and inspected by authorities. The Tribunal found no perversity in treating the amounts as allowable expenditure given the consistent accounting treatment and supporting documentation. [Paras 13, 15, 16, 17]

Deletion of the disallowance in respect of consumption incentive upheld and ground dismissed against the Revenue.

Deduction under section 36(1)(va) for employees' contribution - non-obstante provision and actual payment rule under section 43B - conjoint reading of sections 36(1)(va) and 43B - Whether employees' provident fund contributions deposited after the statutory due date but before filing the return were deductible. - HELD THAT: - The Tribunal endorsed the CIT(A)'s deletion of the disallowance on a harmonious reading of section 36(1)(va) with section 43B, following the jurisdictional High Court and Supreme Court precedent. The assessee deposited the employees' contribution after the statutory due date but prior to filing the return; in such circumstances, the proviso to section 43B (as interpreted by the courts relied upon) permits deduction where actual payment is made before the return is filed. Applying that principle, the Tribunal found no infirmity in allowing the deduction. [Paras 18, 19, 21, 22]

Deletion of the disallowance under Explanation 2 to section 36(1)(va) sustained and ground dismissed against the Revenue.

Final Conclusion: The Tribunal dismissed the Revenue's appeal for Assessment Year 2012-13, upholding the CIT(A)'s deletions of the additions made under section 14A (and Rule 8D), the consumption-incentive disallowance, and the disallowance under Explanation 2 to section 36(1)(va) (on a conjoint reading with section 43B).

Disallowance under section 14A read with Rule 8D - deemed dividend under section 2(22)(e) - trading/business transactions versus loans and advances - recasting of client/ledger accounts and peak/negative balance methodology

Disallowance under section 14A read with Rule 8D - Deletion of the disallowance made under section 14A read with Rule 8D where no exempt income was earned in the year. - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the addition under section 14A read with Rule 8D because it was an admitted fact that the assessee did not earn any exempt/dividend income in the impugned year. The Tribunal followed binding and persuasive authorities holding that in the absence of any exempt income received in the relevant year, disallowance under section 14A read with Rule 8D cannot be sustained. Having regard to those decisions and the factual position that no exempt income arose, the Tribunal found no infirmity in the appellate authority's deletion of the addition. [Paras 12]

The deletion of the disallowance under section 14A read with Rule 8D is upheld.

Deemed dividend under section 2(22)(e) - trading/business transactions versus loans and advances - recasting of client/ledger accounts and peak/negative balance methodology - Whether amounts treated as loans/advances and brought to tax as deemed dividend under section 2(22)(e) were in fact business/client trading transactions and therefore not exigible to deemed dividend treatment. - HELD THAT: - The Tribunal affirmed the CIT(A)'s finding that the transactions recorded in the client/ledger accounts related to routine trading in shares, currency, derivatives and commodities with broker companies and constituted running business accounts, not loans or advances. The AO and special auditor had extracted and recast accounts using selected cheque entries and peak/negative balance computations, a methodology the CIT(A) found to be pick-and-choose and not reflective of the accounts in entirety. Applying the principle that commercial/trade transactions recorded in running client accounts cannot be converted into loans by isolating cheque movements, and relying on the ratio of the jurisdictional decisions addressing identical factual matrices, the Tribunal found no contrary material to rebut the factual conclusion that the transactions were trading in nature. Consequently, the additions under section 2(22)(e) were not sustainable. [Paras 16, 17, 18, 19]

The addition made as deemed dividend under section 2(22)(e) is deleted as the transactions are held to be trading/business transactions and not loans/advances.

Final Conclusion: Following the findings that no exempt income arose in the year (thereby negating disallowance under section 14A read with Rule 8D) and that the impugned inter-company movements were trading/client transactions (not loans attracting section 2(22)(e)), the Revenue's appeal is dismissed.

Penalty for furnishing inaccurate particulars under section 271(1)(c) - show cause notice under section 274 - reasonable and plausible explanation under section 273B - penalty proceedings are separate and independent

Penalty for furnishing inaccurate particulars under section 271(1)(c) - reasonable and plausible explanation under section 273B - penalty proceedings are separate and independent - Deletion of penalty levied under section 271(1)(c) in respect of additions made for irreconcilable sundry creditors. - HELD THAT: - The AO levied penalty under section 271(1)(c) after making additions on account of irreconcilable sundry creditors. In response to the show cause notice the assessee explained that a credit note issued by a creditor was not received by the assessee's accountant and thus was inadvertently omitted while finalising accounts; the assessee undertook to consider the credit in the current year and demonstrated that there was no tax consequence because of losses. The Tribunal finds that the lower authorities did not hold the assessee's reply to be false and, on independent consideration, regard the explanation as reasonable and plausible within the scope of section 273B. The Tribunal reiterates that penalty proceedings are separate and independent and mere non appeal against additions is not a ground for sustaining penalty; however, on the merits the explanation negates any deliberate concealment or furnishing of inaccurate particulars with intent to evade tax. Accordingly the penalty was deleted on merits, rendering the technical contention about the form of the show cause notice academic. [Paras 9, 10, 11]

Penalty under section 271(1)(c) deleted and the assessee's appeal allowed.

Final Conclusion: The Tribunal, accepting the assessee's explanation as reasonable under section 273B and finding no deliberate concealment, set aside the penalty levied under section 271(1)(c) and allowed the appeal for AY 2012-13.

Appropriation of profits - excess price over FRP - requirement of determining existence of profits - burden on the Department to prove appropriation - business expediency - sale at concessional rate to members - remand for fresh adjudication - call for requisite information and records

Appropriation of profits - excess price over FRP - requirement of determining existence of profits - burden on the Department to prove appropriation - business expediency - remand for fresh adjudication - Remand to Assessing Officer for fresh adjudication on whether payments made over and above FRP represent appropriation of profits or deductible business expenditure. - HELD THAT: - The Tribunal held that a finding of appropriation of profits presupposes the existence and determination of profits, which is a question of fact requiring the Assessing Officer to examine books, balance sheet, profit and loss account and any resolutions or governmental approvals. The Assessing Officer had not undertaken the necessary exercise and had not examined whether the alleged excess arose from legitimate business payments such as harvesting and transport expenses or earlier year payments. The onus lies on the Department to prove appropriation by leading relevant evidence; therefore the conclusion of appropriation by lower authorities cannot be sustained without such inquiry. The matter is remitted to the Assessing Officer to determine, on the basis of requisite documents and enquiries, whether the excess payments were bona fide business expediency and hence allowable, or constituted appropriation of profits. [Paras 10]

Ground remitted to the Assessing Officer for fresh adjudication on the aforesaid lines; ground partly allowed for statistical purposes.

Sale at concessional rate to members - call for requisite information and records - remand for fresh adjudication - Remand to Assessing Officer to address the question raised by the Apex Court regarding disallowance for sale of sugar at concessional rates to members after calling for necessary information. - HELD THAT: - The Tribunal found that although the CIT(A) referred to the Apex Court's decision, he did not address the specific question as directed by the Supreme Court with reference to the material on record. In view of that lacuna and the need for the Assessing Officer to examine the relevant facts and documents, the issue is required to be remanded so that the Assessing Officer may consider the matter afresh, calling for such information from the assessee as may be necessary and applying the principles indicated by the Supreme Court. [Paras 11]

Ground remitted to the Assessing Officer for consideration after obtaining requisite information; ground partly allowed for statistical purposes.

Final Conclusion: Both appeals for assessment years 2014-15 and 2013-14 are partly allowed for statistical purposes and remitted to the Assessing Officer for fresh adjudication on (i) whether payments over and above FRP are deductible business expenditure or appropriation of profits, and (ii) the question relating to sale at concessional rates to members, after calling for and examining requisite material.

Mistake apparent from record - rectification under section 254(2) of the Income Tax Act, 1961 - review not permissible under section 254(2) - repetition of miscellaneous application / abuse of process

Mistake apparent from record - rectification under section 254(2) of the Income Tax Act, 1961 - review not permissible under section 254(2) - Rectification application under section 254(2) seeking adjudication of a substantive ground (allowance of depreciation on foreign exchange loss) already raised and dealt with earlier. - HELD THAT: - The Tribunal recorded that the identical grievance had already been the subject-matter of M.A. No. 446/Mum/2019 and was dealt with by the Tribunal. Section 254(2) permits amendment/rectification for mistakes apparent from record but does not confer a power of review to re-adjudicate issues already considered. The applicant's attempt to reframe or press related substantive matters in the garb of rectification amounted to seeking a review; repeated miscellaneous applications cannot alter the statutory prescription. The Tribunal therefore treated the present application as impermissible repetition and not a case of a rectifiable mistake occasioning alteration of its earlier order (paras. 3, 4 and 5). [Paras 3, 4, 5]

Miscellaneous Application dismissed as the issue had been previously disposed and rectification under section 254(2) cannot be used to review the Tribunal's order.

Final Conclusion: The Miscellaneous Application for rectification is dismissed because the same issue was previously adjudicated by the Tribunal and section 254(2) does not permit re-opening the order by way of review; repeated MAs on the same issue are not maintainable.

Release of bank guarantees - maintainability of writ petition without live bank guarantees - representation to authority for revalidation and release of bank guarantees - administrative decision to revalidate bank guarantees

Maintainability of writ petition without live bank guarantees - release of bank guarantees - Petition seeking release of bank guarantees filed without any material or averment demonstrating that the bank guarantees are presently valid and subsisting. - HELD THAT: - The Court declined to issue notice because the petitioner failed to place on record any document or averment showing that the bank guarantees furnished in August 2017 remain valid and alive, or that the respondents had been directed to revalidate them over the intervening period. In the absence of such foundational material, the writ seeking release could not be entertained at this stage.

Writ petition not entertained and notice refused for want of material showing live bank guarantees.

Representation to authority for revalidation and release of bank guarantees - administrative decision to revalidate bank guarantees - Petitioner permitted to withdraw the writ with liberty to make a representation to the concerned authority for release of the bank guarantees and the manner in which such representation is to be decided. - HELD THAT: - The Court allowed withdrawal of the writ petition subject to liberty to the petitioner to make a representation before the concerned authority, to satisfy that the guarantees are alive and, if so, to furnish reasons for their release. The authority was directed to decide such representation in accordance with law, applicable rules, regulations and government policies, and to do so as early as possible and practicable. This preserves the petitioner's right to an administrative remedy and places the resolution within the statutory and regulatory domain of the authority.

Liberty granted to file representation; authority to decide representation in accordance with law, rules, regulations and government policies expeditiously.

Final Conclusion: Writ petition disposed of as withdrawn; petition not entertained for want of proof that the bank guarantees are subsisting, with liberty to the petitioner to seek administrative relief by representation which the concerned authority shall decide in accordance with law and applicable policies as early as practicable.

Power of Registrar to remove name - Compliance with Section 248(5) and (6) - Undertakings and provision for discharge of liabilities - Notice and publication requirements - Opportunity to make representations - Choice of remedy between Section 248 and Section 455

Power of Registrar to remove name - Compliance with Section 248(5) and (6) - Undertakings and provision for discharge of liabilities - Validity of the Registrar's strike-off order under Section 248 in light of mandatory satisfaction about realisation of dues and provision for liabilities under Section 248(6). - HELD THAT: - The Tribunal examined the Registrar's compliance with Section 248(6) which requires that before striking off the name, the Registrar must satisfy himself that sufficient provision has been made for realisation of amounts due and for payment or discharge of liabilities and, if necessary, obtain undertakings. The RoC's report (paras. 16-17) records that from scrutiny of the company's balance sheet the Registrar was satisfied that the company had no borrowings or third-party liabilities. On that basis the Tribunal concluded that the Registrar had fulfilled the statutory requirement under Section 248(6) and that the order under Section 248(5) does not suffer from legal infirmity. [Paras 15, 16, 20]

The strike-off order is valid and does not suffer from infirmity for want of compliance with Section 248(6).

Notice and publication requirements - Opportunity to make representations - Whether the Registrar failed to comply with the procedural requirements of issuing notices and allowing representation before striking off the company's name. - HELD THAT: - The Applicant alleged that Form STK-5 and STK-7 notices were improperly published and that the statutory procedure was not followed. The Tribunal noted that notices in the prescribed forms were issued and published (paras. 5, 17) and that the Applicant did not reply within the 30-day period provided for representations. The Tribunal accepted the RoC's account that the due process under Section 248(1)/(5) and the relevant rules was followed and that the Applicant's non-response amounted to failure to take the opportunity to make representations. [Paras 5, 12, 17]

Procedural requirements as to notice and opportunity to represent were complied with; the Applicant's failure to respond disentitles it to relief.

Choice of remedy between Section 248 and Section 455 - Whether the Registrar's initiation of action under Section 248 instead of Section 455 vitiates the strike-off proceedings. - HELD THAT: - The Tribunal observed that both Sections 248 and 455 empower the Registrar to act where a company has failed to file annual returns and balance sheets for two consecutive financial years. The Tribunal held that the Registrar's selection of Section 248 for initiating action falls within the statutory scheme and this Tribunal is not empowered to direct which specific provision the RoC ought to invoke. Consequently, the mere fact that action was not taken under Section 455 does not invalidate the proceedings initiated under Section 248 (para. 18). [Paras 18]

The Registrar's choice to proceed under Section 248 does not vitiate the strike-off proceedings.

Final Conclusion: The Tribunal finds no legal infirmity in the Registrar's order striking off the company's name; the application for restoration is dismissed (without costs).

Restoration of company name - carrying on business/going concern - Section 252(3) of the Companies Act, 2013 - statutory compliance and conditions for restoration

Section 252(3) of the Companies Act, 2013 - carrying on business/going concern - restoration of company name - Whether the company's name should be restored to the Register of Companies under Section 252(3) on the ground that it was carrying on business/was in operation when struck off or that it is just to restore its name - HELD THAT: - The Tribunal examined the applicant's submissions, the RoC's report and the company's financial statements up to 31.03.2020. The Tribunal noted the latest balance sheet and financial statements showing total assets and revenue from operations and observed the applicant's undertaking to comply with statutory filings. While the RoC pointed to defaults in filing earlier returns and raised queries regarding missing auditor's reports, mismatches in paid-up capital records, non-filing for certain earlier years and director disqualification, the Tribunal found on the material before it that the company was in existence and was a going concern. Applying the satisfaction requirement in Section 252(3), the Tribunal concluded that restoration was warranted, but that restoration should be subject to compliance with statutory formalities and verification by the RoC. The Tribunal accordingly granted restoration while imposing specific conditions including filing of pending statutory documents, clarification on paid-up capital discrepancy, filing of pending income-tax returns, payment of costs, and ROC's satisfaction of its observations prior to restoring the company's name. [Paras 6, 7, 8]

Restoration of the company's name ordered under Section 252(3) subject to specified compliance, verification by the Registrar of Companies and payment of costs and fees as directed.

Final Conclusion: The Tribunal allowed the application and directed restoration of the company's name to the Register of Companies under Section 252(3) of the Companies Act, 2013, subject to fulfillment of the conditions and compliances specified in the order and verification by the Registrar of Companies.

Restoration of company struck off from register - exercise of power under Section 252 of the Companies Act, 2013 - filing of pending statutory returns and financial statements as condition of restoration - directions to Registrar of Companies for consequential actions on restoration - payment of costs for revival pursuant to NCLT order

Restoration of company struck off from register - exercise of power under Section 252 of the Companies Act, 2013 - filing of pending statutory returns and financial statements as condition of restoration - directions to Registrar of Companies for consequential actions on restoration - payment of costs for revival pursuant to NCLT order - Whether the Tribunal should restore the name of the company struck off the Register and on what conditions - HELD THAT: - The Tribunal, after considering the applicant's explanations, the RoC report and the documents placed on record, accepted the applicant's explanation that the failure to file statutory returns was inadvertent and noted that the pending documents were ready for filing. The Tribunal was satisfied by the applicant's assurance and supporting material (including bank statements and demonetization affidavit) and concluded that restoration was appropriate in the interest of the company, its shareholders and creditors. Exercising powers under Section 252 of the Companies Act, 2013 and the relevant NCLT Rules, the Tribunal ordered restoration of the company's name subject to specified conditions. Those conditions require the company to file all statutory documents along with INC-28 and pay prescribed fees/additional fee/fine within 30 days of restoration, to comply with ROC observations/clarifications, to deliver a certified copy of the order to the RoC for publication in the Official Gazette, and to pay the cost directed by the Tribunal. The Tribunal also clarified that the order is confined to violations that led to striking off and does not preclude the RoC from taking lawful action for any other violations or offences. [Paras 7, 8, 9]

Application allowed; Registrar of Companies directed to restore the company as if not struck off, subject to the company filing pending statutory documents with prescribed fees and forms within 30 days, complying with ROC observations, delivering a certified copy of the order for Gazette publication, and paying the directed cost; liberty preserved to RoC to take further action for other violations.

Final Conclusion: The Tribunal allowed the restoration application under Section 252 of the Companies Act, 2013, directed the RoC to restore the company to active status and take consequential steps, and imposed conditional obligations on the company including filing pending returns, compliance with ROC observations, publication of the order, and payment of the Tribunal directed cost.

Dispensation of meetings under Section 230 of the Companies Act, 2013 - convening meetings of unsecured creditors - appointment of Chairperson and Scrutinizer for creditor meetings - compliance with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - service of notices to statutory authorities under Section 230(5) of the Companies Act, 2013

Dispensation of meetings under Section 230 of the Companies Act, 2013 - consent affidavits of shareholders and creditors - Dispensation of meetings of equity shareholders and secured creditors of the Applicant companies - HELD THAT: - The Tribunal considered the affidavits of consent filed by the shareholders, secured and unsecured creditors and the certificates furnished by the chartered accountants certifying the lists of such stakeholders. Noting that Section 230(1) and the requirement of 90% consent (as recorded by the Tribunal) permit dispensing with convening meetings where requisite consent is obtained, the Tribunal found the materials sufficient to dispense with meetings of equity shareholders and secured creditors of the Applicant companies and granted relief accordingly. [Paras 11, 12]

Meetings of equity shareholders and secured creditors of the Applicant companies are dispensed with.

Convening meetings of unsecured creditors - quorum for unsecured creditors' meetings - use of video conferencing / other audio-visual means for meetings - Convening of meetings of unsecured creditors of the First Applicant and Fourth Applicant - HELD THAT: - Having dispensed with other classes of meetings, the Tribunal directed that meetings of unsecured creditors of the First Applicant Company and the Fourth Applicant Company be convened for consideration of the Composite Scheme. The Tribunal specified that the meetings shall be held by Video Conferencing/Other Audio-Visual Means (VC/OAVM) on the dates and times recorded, fixed the respective quorums (three unsecured creditors for the First Applicant and twenty-five for the Fourth Applicant), and authorised voting by persons present, by proxy or by e voting in accordance with applicable rules when meetings are held by VC/OAVM. [Paras 12]

Meetings of unsecured creditors of the First and Fourth Applicant Companies are to be convened as directed, by VC/OAVM on the dates and with the quorums specified.

Appointment of Chairperson and Scrutinizer for creditor meetings - compliance with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - service of notices to statutory authorities under Section 230(5) of the Companies Act, 2013 - Appointment of meeting officials, fee fixation and procedural directions for notices, publication and statutory service - HELD THAT: - The Tribunal appointed the named Chairperson and Scrutinizer for the unsecured creditors' meetings and fixed their fees. It directed publication of notices in the specified newspapers, service of notices to unsecured creditors by registered post/courier/ordinary post/registered e mail at least 30 days before the meetings in Form CAA2, dispatch of explanatory statements and proxy forms in accordance with the rules, and required the Chairmen to file an affidavit seven days before the meetings confirming compliance and to file reports of the meeting results within ten days. The Tribunal further directed service of notices on the Regional Director, Registrar of Companies, Income Tax Authority and Official Liquidator under Section 230(5), recording that absence of response within 30 days would be treated as no objection as per the Rules. [Paras 12]

Named Chairperson and Scrutinizer appointed with fees fixed; notices, publications, statutory service and timelines directed to be complied with in accordance with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and Section 230(5) procedures.

Final Conclusion: The Tribunal dispensed with meetings of equity shareholders and secured creditors of the Applicant companies, directed convening of unsecured creditors' meetings for the First and Fourth Applicants by VC/OAVM on the dates fixed with prescribed quorums, appointed the Chairperson and Scrutinizer with fees, and issued detailed procedural directions for notices, publication, statutory service and filing of compliance affidavits and meeting reports.

Rejection of claims filed after extended period under Regulation 12(2) and finality of claims before approval of a resolution plan - finality of claims and the "hydra head" principle protecting successful resolution applicants - public announcement under Regulation 6 and adequacy of paper publication as mode of inviting claims - duty of the resolution professional to procure records from the ex management and verify claims under Regulation 13 - directory versus mandatory character of time stipulations in the IBC regime

Public announcement under Regulation 6 and adequacy of paper publication as mode of inviting claims - Ld. Adjudicating Authority erred in holding that paper publication was not a proper service for inviting claims. - HELD THAT: - Regulation 6 prescribes the manner of public announcement and there was no allegation that the erstwhile IRP failed to make the public announcement as required. The Respondent admitted filing its claim through the public notice and did not assert that it only became aware of the CIRP in August 2020; indeed, documents on record (special power of attorney dated 26.07.2019) contradict the claim of ignorance. Therefore the conclusion that paper publication was improper service and justified late admission of the claim was erroneous. [Paras 15, 16, 17, 18, 19]

The finding that paper publication was not proper service is unsustainable.

Duty of the resolution professional to procure records from the ex management and verify claims under Regulation 13 - The Adjudicating Authority's conclusion that the RP failed to obtain records from the ex management and thereby shirked duties is not supported by the record. - HELD THAT: - The material shows that the IRP/RP made efforts to procure records; an application under Section 19 had been filed seeking directions to the ex management to produce records. The Respondent did not deny these efforts in its reply. On this basis the Tribunal cannot hold that the RP failed in his bounden duties under the Code and Regulations. [Paras 20, 21]

There is no evidence of deliberate failure by the RP to procure records from the ex management.

Duty of the resolution professional to ascertain creditors - A general remark that the RP ought to have ascertained more creditors does not establish a failure of duty. - HELD THAT: - The Adjudicating Authority did not identify specific omissions or the particular efforts the RP should have undertaken to ascertain creditors. As a general observation, that does not suffice to displace the RP's actions as compliant with the IBC and Regulations. [Paras 22, 23]

The general finding that the RP failed to ascertain creditors is not sustainable.

Allegation of hurriedly wrapping up the CIRP by approving a resolution plan - There is no basis to conclude that the RP/IRP hurriedly wrapped up the CIRP with a resolution plan. - HELD THAT: - A review of the chronology of events - initiation of CIRP, public announcement, constitution of CoC, invitation for EOIs, appointment of RP, collation of claims as on 08.07.2020, voting on plans on 11.07.2020 and CoC approval on 17.07.2020 - demonstrates that the process proceeded in accordance with the Code and Regulations. Nothing on record supports the inference of haste sufficient to vitiate the process. [Paras 24, 25, 26]

The conclusion that the RP hurriedly wrapped up the company is not supported by the record.

Rejection of claims filed after extended period under Regulation 12(2) and finality of claims before approval of a resolution plan - finality of claims and the "hydra head" principle protecting successful resolution applicants - directory versus mandatory character of time stipulations in the IBC regime - A claim filed after the extended period under Regulation 12(2) and after the CoC has approved a resolution plan is liable to be rejected; the Adjudicating Authority erred in directing the RP to consider the belated claim on merits. - HELD THAT: - Regulation 12(2) provides the extended 90 day window from the insolvency commencement date for submission of claims; Regulation 13 requires collation and verification as on that date. While some authorities have held time stipulations may be directory in particular contexts, there is no blanket discretion granted to the RP to admit claims filed after the extended period where the CoC has already approved a resolution plan. Admission of such belated claims at the stage when the plan has been approved would jeopardize the time bound CIRP, unsettle the basis on which prospective resolution applicants prepared plans, and risk reopening the process - the very risk identified by the Supreme Court as the "hydra head" problem. Applying these principles to the facts, the Respondent's claim, submitted 287 days late and after CoC approval, was properly rejected and the Adjudicating Authority's direction to reconsider it was unsustainable. [Paras 31, 32, 33, 34, 35]

The RP was correct to reject the belated claim; the impugned order directing reconsideration is set aside and the appeal allowed.

Final Conclusion: The Adjudicating Authority's order directing the resolution professional to consider the Respondent's belated claim is set aside. The Tribunal finds no failure by the RP to notify creditors or to procure records; however, a claim filed after the extended period under Regulation 12(2), and after CoC approval of a resolution plan, cannot be admitted as that would undermine the finality of claims and jeopardise the time bound CIRP. The appeal is allowed, no order as to costs.

Admission of company petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - initiation of Corporate Insolvency Resolution Process (CIRP) - proof of discharge / set-off by corporate debtor - appointment of Interim Resolution Professional - moratorium and its consequences during CIRP - public announcement and management vesting in IRP

Admission of company petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - initiation of Corporate Insolvency Resolution Process (CIRP) - Company petition under Section 9 was admitted and CIRP ordered against the corporate debtor. - HELD THAT: - The Tribunal found that the petition filed by the operational creditor was maintainable and that the asserted defences and contentions of the corporate debtor did not preclude admission. The record showed earlier settlements followed by withdrawals of previous petitions and subsequent alleged defaults. Having regard to the material on record and the conduct of the parties, the Tribunal concluded there were no warranting grounds to dismiss the petition and therefore ordered initiation of CIRP against the corporate debtor. [Paras 10, 11]

The company petition is allowed and CIRP is initiated against the corporate debtor.

Proof of discharge / set-off by corporate debtor - vicarious liability for acts of employees - The corporate debtor's plea of prior payment / discharge was rejected for want of admissible proof and on account of prior conduct. - HELD THAT: - The corporate debtor claimed payments aggregating to a material amount but failed to place contemporaneous proof before the Tribunal until late, alleging misplacement by a former employee and lodging a police complaint. The Tribunal noted absence of an FIR on record demonstrating police action and observed that the operational creditor cannot be held responsible for the corporate debtor's employee's acts. Even accepting the disputed payments arguendo, the Tribunal found that a residual unpaid amount remained in excess of the statutory threshold for admission. In view of the absence of acceptable documentary evidence and the parties' settlement history, the plea of complete discharge was not accepted. [Paras 3, 4, 7, 10]

The contention of full payment / discharge by the corporate debtor is not accepted and does not preclude admission of the petition.

Appointment of Interim Resolution Professional - initial CIRP cost deposit - moratorium and stay of proceedings - public announcement and management vesting in IRP - Interim directions incidental to CIRP were issued, including appointment of an IRP, deposit of initial CIRP costs, moratorium and related administrative actions. - HELD THAT: - Since no candidate for IRP was proposed by the applicant, the Tribunal appointed an Insolvency Professional from the IBBI list to act as IRP. The operational creditor was directed to deposit initial CIRP costs by way of demand draft payable to the IRP. The usual moratorium provisions were directed to operate from the date of the order, with specified consequences for ongoing suits, actions to recover security, and supply of essential services. The Tribunal also directed immediate public announcement of the CIRP and vesting of management in the IRP, and ordered communication of the order to the Registrar of Companies for updating records. [Paras 11]

An IRP is appointed; initial CIRP cost to be deposited; moratorium, public announcement and vesting of management in the IRP are ordered.

Final Conclusion: The Tribunal admitted the Section 9 petition and ordered initiation of CIRP against the corporate debtor; the corporate debtor's defence of prior payment was rejected for want of admissible proof and on account of parties' conduct; consequential directions were issued including appointment of an IRP, deposit of initial CIRP costs, imposition of moratorium, public announcement and vesting of management in the IRP.

Financial Creditor - Allottee in a real estate project - Financial Debt - Threshold for joint filing by real estate allottees under section 7 - Interpretation of allotment/purchase agreement - Force majeure

Allottee in a real estate project - Interpretation of allotment/purchase agreement - Financial Creditor - Whether the petitioner is an allottee/homebuyer or an investor/financial creditor for the purposes of initiating CIRP under the Code. - HELD THAT: - The Bench examined the agreement between the parties and the payment schedule which tied instalments to construction milestones. The agreement operated as an allotment letter for Flat No. 1907 with a conventional schedule of payments dependent on levels of construction. Clause 10 providing for refund on failure to obtain approvals within the lock-in/grace period did not convert the transaction into a commercial borrowing with a fixed return, and its force majeure carve-out further limited the unconditional nature of any repayment obligation. On these facts the Bench concluded that the petitioner is an allottee/homebuyer and not an investor in the commercial-borrowing sense. [Paras 2, 3, 4]

The petitioner is an allottee/homebuyer and not an investor/financial creditor in the commercial-borrowing sense.

Financial Debt - Threshold for joint filing by real estate allottees under section 7 - Whether a single allottee can file an application under Section 7 to initiate CIRP against the corporate debtor after the 2020 amendment to the Code. - HELD THAT: - The Bench recalled that Section 5(8) treats amounts raised from an allottee in a real estate project as having the commercial effect of a borrowing, thereby bringing allottees within the definition of financial creditors. However, the Insolvency and Bankruptcy (Amendment) Act, 2020 introduced provisos to Section 7 requiring that applications by real estate allottees be filed jointly by at least one hundred allottees of the same project or not less than ten per cent. of such allottees, whichever is less. The amendment thus imposes a statutory threshold for real estate allottees to qualify for initiating CIRP under Section 7. The present petition was filed by a single allottee and does not satisfy the amended threshold. [Paras 5, 7, 8]

A single allottee does not meet the statutory threshold under amended Section 7; the petition filed singly is not maintainable and is dismissed.

Final Conclusion: The petition filed under Section 7 by a single allottee/homebuyer is dismissed because the agreement characterises the petitioner as an allottee and the Insolvency and Bankruptcy Code (Amendment) Act, 2020 requires joint filing by the specified threshold of allottees for initiation of CIRP.

Applicability of Insolvency and Bankruptcy Code to Government Companies - instrumentality of State and sovereign functions exception - debt and default for initiation of Corporate Insolvency Resolution Process - operational creditor's part payment and admission as evidence of liability - claim for interest under the Micro, Small and Medium Enterprises Act - admission of petition under Section 9 of the Insolvency and Bankruptcy Code

Debt and default for initiation of Corporate Insolvency Resolution Process - operational creditor's part payment and admission as evidence of liability - The petitioner's debt and default have been established and are sufficient to initiate CIRP. - HELD THAT: - The Tribunal found that the corporate debtor had admitted liability in its reply to the demand notice and had made part payments and further remittances, which confirmed the existence of the debt and default. The respondent's post hoc contentions about non-payability (inspection reports, receipt of subsidy, alleged short supply, penalties and rate differences) were treated as after thoughts since they were not raised in response to the demand notice and the respondent had earlier acknowledged substantial liability and made payments. On this basis the Tribunal concluded that the requisites for a petition under Section 9 were satisfied. [Paras 9]

Debt and default established; petition under Section 9 is maintainable and admits CIRP.

Applicability of Insolvency and Bankruptcy Code to Government Companies - instrumentality of State and sovereign functions exception - admission of petition under Section 9 of the Insolvency and Bankruptcy Code - A government owned company can be subjected to CIRP under the IBC unless it is performing sovereign functions or is an instrumentality of the State. - HELD THAT: - On a parallel reading of the definitions of 'Government Company' under the Companies Act and 'Corporate Person' under the IBC, the Tribunal held there is no blanket exemption for government companies under the Code. The concept of government companies falls within the definition of Corporate Person; therefore, IBC applies to them. The Tribunal noted earlier authorities and the principle that a government company which is an instrumentality of the State or performs sovereign functions may be excluded, but in the absence of such status the company is liable to be proceeded against under the IBC. Applying this, the corporate debtor, though government promoted, was not shown to be performing sovereign functions and was therefore amenable to CIRP. [Paras 10, 11, 12]

CIRP can be initiated against the respondent government company; no categorical exemption under IBC.

Claim for interest under the Micro, Small and Medium Enterprises Act - admission of petition under Section 9 of the Insolvency and Bankruptcy Code - The Tribunal declined to adjudicate the quantum or entitlement of interest under the MSME Act for purposes of admission, as the principal amount itself satisfied the threshold for initiating CIRP. - HELD THAT: - The parties disputed the entitlement and rate of interest claimed under the MSME Act. The Tribunal observed that since the principal amount due and payable exceeded the minimum required amount for admission under Section 9, it was unnecessary to resolve the contention relating to the interest component at the admission stage. Accordingly, the interest claim was left open without affecting the decision to admit the petition. [Paras 13]

Interest issue not decided at admission stage; admission proceeded on principal debt.

Final Conclusion: The Tribunal admitted the Company Petition under Section 9 and ordered initiation of CIRP against The Maharashtra Agro Industries Development Corporation Limited, appointing an interim resolution professional and imposing the statutory moratorium; the findings include that debt and default were established by admissions and part payments, government ownership does not bar IBC proceedings absent sovereign function status, and the interest claim under the MSME Act was not decided at the admission stage.

Existence of debt and default - Admission of petition under section 7 of the Insolvency and Bankruptcy Code, 2016 - Moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 - Appointment of Interim Resolution Professional and compliance with IBBI requirements - Vesting of management in the Interim Resolution Professional - Public announcement of the Corporate Insolvency Resolution Process

Existence of debt and default - Admission of petition under section 7 of the Insolvency and Bankruptcy Code, 2016 - The petition under section 7 was admitted on the basis that debt and default stood established. - HELD THAT: - The Corporate Debtor admitted liability and its inability to repay, and the Financial Creditor produced the loan agreement, statement of account and related documents. The application satisfied the statutory threshold and formalities required for initiation of proceedings under section 7. The Bench found no dispute that the Corporate Debtor had availed the loan and that default had occurred, and the petition was complete in all respects. [Paras 9, 10, 12]

The section 7 petition is admitted and the Corporate Insolvency Resolution Process is ordered to be initiated against the Corporate Debtor.

Appointment of Interim Resolution Professional and compliance with IBBI requirements - An Interim Resolution Professional was appointed from the name proposed by the Financial Creditor after verifying required communication and registration. - HELD THAT: - The Financial Creditor proposed a candidate and the proposed IRP filed the requisite written communication in Form 2 together with his certificate of registration as required by the rules. The Tribunal recorded the proposal and compliance with the regulatory requirements and appointed the proposed individual to perform duties under the Code and applicable regulations. [Paras 11, 13]

Mr. Sanjay Kumar Lalit is appointed as Interim Resolution Professional to carry out functions under the IBC, subject to applicable IBBI regulations and directions.

Moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 - Vesting of management in the Interim Resolution Professional - Public announcement of the Corporate Insolvency Resolution Process - A moratorium was declared, the management of the Corporate Debtor was vested in the IRP, and public announcement of the CIRP was directed. - HELD THAT: - Upon admission of the petition, the Tribunal imposed the statutory moratorium restraining institution or continuation of suits, transfer or disposal of assets, enforcement of security interests and recovery of leased property. The order clarified exceptions for continued supply of essential goods or services and any transactions exempted by the Central Government. The management and control of the Corporate Debtor were directed to vest in the IRP, with officers and managers required to cooperate, and a public announcement of the CIRP was to be made in accordance with the Regulations. [Paras 13]

Moratorium is effective from the date of the order until completion of CIRP or further order; management vests in the IRP and a public announcement of the CIRP is to be made immediately.

Final Conclusion: The Tribunal admitted the section 7 petition on the finding of debt and default, appointed the nominated Interim Resolution Professional who complied with registration requirements, declared the statutory moratorium, vested management in the IRP and directed immediate public announcement and further consequential steps to commence the CIRP.

Corporate Insolvency Resolution Process - exclusion of period from CIRP - power to extend CIRP period - role of Committee of Creditors - withdrawal under Section 12A - obligation to file application under Section 33 - objective of Code to preserve going concern

Exclusion of period from CIRP - power to extend CIRP period - role of Committee of Creditors - objective of Code to preserve going concern - Application to exclude 60 days from the 90-day period previously directed by the Adjudicating Authority and to extend the CIRP timeline until 24.08.2021 was allowed. - HELD THAT: - The Tribunal accepted the Resolution Professional's account that multiple prospective resolution applicants had expressed interest, that publication of Form G and further steps had been affected by interim orders and Covid-19 constraints, and that the Committee of Creditors had resolved to seek exclusion of 60 days and to extend the last date for submission of resolution plans. Observing that the primary objective of the Code is to resolve insolvency so as to preserve the corporate debtor as a going concern, and noting a realistic possibility of either submission and approval of a resolution plan or withdrawal of the admission application under Section 12A, the Tribunal exercised its authority under the insolvency framework to allow the limited extension. The extension was granted conditionally to enable completion of the CIRP process within the further period permitted. [Paras 3]

The application to exclude 60 days and permit completion of CIRP on or before 24.08.2021 was allowed.

Obligation to file application under Section 33 - withdrawal under Section 12A - role of Committee of Creditors - Direction that if the Resolution Professional fails to complete the CIRP by 24.08.2021, he must file an application under Section 33 of the Code. - HELD THAT: - The Tribunal made its grant of time subject to a clear consequence: if the CIRP is not completed within the extended period, the Resolution Professional is required to seek initiation of liquidation proceedings under Section 33. This ensures that the limited extension operates within the statutory scheme and avoids indefinite prolongation of the CIRP where no resolution is achieved. The direction follows from the Tribunal's concern to balance facilitation of resolution (including where COC may withdraw under Section 12A) with the need for finality under the Code. [Paras 3]

RP permitted to complete CIRP by 24.08.2021; failing which he must file an application under Section 33.

Final Conclusion: The Interlocutory Application was allowed: 60 days were excluded from the 90-day timeline directed earlier and the Resolution Professional was permitted to complete the CIRP on or before 24.08.2021, with a mandate to file for liquidation under Section 33 if the CIRP is not completed by that date.

Initiation of Corporate Insolvency Resolution Process (CIRP) - default and debt acknowledgment - demand notice under Section 8 - bank statements as evidence of payment - appointment of Interim Resolution Professional - moratorium

Default and debt acknowledgment - demand notice under Section 8 - bank statements as evidence of payment - Whether the petitioner proved existence of debt and default so as to admit the company petition under the Code - HELD THAT: - The Tribunal examined the invoices, payment particulars and correspondence relied upon by the petitioner. The corporate debtor had, by emails, acknowledged liability and offered repayment by instalments which the petitioner rejected; the Tribunal held that such admissions, together with bank transaction details evidencing payments and the demand notice issued in Form 3 under Section 8, established debt and default. The pleas of the corporate debtor contesting certification of account statements were rejected as not sustainable, and the petition was held to be complete in all respects and maintainable for admission. The determinative findings appear in the reasons recorded by the Tribunal concerning proof of debt and default and the sufficiency of the supporting material. [Paras 10, 11]

Debt and default established; company petition admitted and CIRP ordered

Initiation of Corporate Insolvency Resolution Process (CIRP) - appointment of Interim Resolution Professional - moratorium - Reliefs and consequential directions upon admission of the petition - HELD THAT: - On admission, the Tribunal directed initiation of CIRP against the corporate debtor, appointed the proposed Interim Resolution Professional whose consent was placed on record, and directed the operational creditor to deposit initial CIRP costs. The order imposed moratorium measures restraining suits, recovery actions and disposition of assets, preserved supply of essential goods or services during the moratorium and required public announcement and registry notification as mandated under the Code. These consequential directions were made to give full effect to the admission and to enable the IRP to assume management and carry out statutory functions. [Paras 11]

CIRP ordered; IRP appointed; moratorium and ancillary directions issued

Final Conclusion: The Tribunal admitted the company petition, held that the existence of debt and default was established on the material before it, ordered initiation of CIRP against Mercator Oil & Gas Ltd., appointed the Interim Resolution Professional and issued the moratorium and attendant directions.

Exhaustion of statutory appellate remedy - writ jurisdiction under Article 226 as exceptional remedy - appeal as the rule and writ as exception - entertainment of writ petition only in presence of imminent threat or gross injustice - mere violation of principles of natural justice insufficient to bypass appellate remedy - claims of lack of jurisdiction or malafide as permissible exceptions - role of appellate authority as final fact-finding forum - direction to appellate authority to condone delay and decide expeditiously

Exhaustion of statutory appellate remedy - writ jurisdiction under Article 226 as exceptional remedy - appeal as the rule and writ as exception - role of appellate authority as final fact-finding forum - Whether the High Court should entertain writ petitions without the applicants first exhausting the statutory appellate remedy - HELD THAT: - The Court held that, as a general rule, aggrieved persons must first avail the appellate remedy provided by the statute and that routine dispensation of the statutory appeal by instituting writ proceedings is not permissible. The appellate authorities are the designated fact-finding forums whose findings and scrutiny of original records are important both for complete adjudication and for the High Court's exercise of judicial review under Article 226. The High Court's power under Article 226 is supervisory and directed at the process by which decisions are taken rather than re-deciding contested facts; consequently, writ jurisdiction is an exception and should be invoked only in exceptional circumstances. [Paras 3, 4, 5]

Writ petitions filed without first exhausting the statutory appeal are ordinarily to be dismissed; parties are expected to prefer the prescribed appeal except in exceptional cases.

Entertainment of writ petition only in presence of imminent threat or gross injustice - mere violation of principles of natural justice insufficient to bypass appellate remedy - claims of lack of jurisdiction or malafide as permissible exceptions - What exceptions justify entertaining a writ petition without exhausting the appellate remedy - HELD THAT: - The Court specified that dispensing with the appellate remedy may be justified only where there is an imminent threat or gross injustice warranting urgent relief, or where the authority that issued the order is incompetent or actions are attended by malafide. Mere allegation of breach of natural justice or routine grievances are inadequate. Even where malafide is alleged, the authority must be impleaded in personal capacity so that the High Court can examine that specific contention. These constraints preserve the legislative intent and institutional hierarchy. [Paras 4, 5, 6]

Only imminent threat, gross injustice, lack of jurisdiction, or bona fide allegations of malafide (with appropriate impleadment) justify bypassing the appellate remedy; mere procedural or natural justice complaints do not.

Direction to appellate authority to condone delay and decide expeditiously - Relief to be afforded where petitioners have not availed statutory appeal and seek judicial intervention - HELD THAT: - The Court declined to entertain the writ petitions and instead granted the petitioners liberty to prefer the prescribed appeals within a limited period. The Court directed that any delay should be condoned by the appellate authority, that the appeals be entertained and disposed of on merits in accordance with law, and that parties be afforded opportunity to be heard expeditiously. The Court noted that parties remain free to rely on precedent decisions of this Court when presenting grounds before the appellate forum. [Paras 7, 8]

Petitioners permitted to file the prescribed appeals within four weeks; appellate authority to condone delay if any and decide the appeals on merits expeditiously.

Final Conclusion: Writ petitions filed without first availing the statutory appellate remedy were dismissed with liberty to prefer appeals within four weeks; appellate authority directed to condone delay, entertain and decide the appeals on merits expeditiously. No costs.

Re-examination of quantum of CENVAT credit under Rule 3(5) of the CENVAT Credit Rules, 2004 - Duty to reverse CENVAT credit on sale of inputs without use in manufacture - Effect of voluntary withdrawal of appellate remedy and res judicata - Setting aside appellate orders and remand for fresh adjudication in the interest of justice

Re-examination of quantum of CENVAT credit under Rule 3(5) of the CENVAT Credit Rules, 2004 - Duty to reverse CENVAT credit on sale of inputs without use in manufacture - Quantum of CENVAT credit demanded for sale of inputs without use was not finally adjudicated and is remitted for fresh consideration. - HELD THAT: - The Tribunal and lower authorities had proceeded on the basis that the appellant had sold inputs without using them in manufacture and that reversal under Rule 3(5) was required; disputes arose about the quantum and whether amounts of duty paid by the appellant could be taken into account. The High Court, having regard to the sequence of orders, the subsequent setting aside of the adjudicating authority's order by the departmental appeal and the appellant's consequent loss of remedy, exercised its discretion in the peculiar facts to set aside earlier appellate directions and remand the entire matter to the Original Adjudicating Authority for a fresh, on-merits adjudication. The remand leaves all contentions open to be urged and decided afresh, including the correctness of any demand under Rule 3(5) and the computation of the credit sought to be reversed for the period in issue. [Paras 4, 5]

Matter remitted to the Adjudicating Authority/Original Authority for re-consideration on merits and fresh adjudication of the quantum of CENVAT credit demand.

Effect of voluntary withdrawal of appellate remedy and res judicata - Setting aside appellate orders and remand for fresh adjudication in the interest of justice - Tribunal's rejection of the appellant's restoration application and dismissal of the subsequent appeal on the ground of res judicata was set aside. - HELD THAT: - The appellant had withdrawn an earlier Tribunal appeal after obtaining relief from the adjudicating authority; the department thereafter successfully challenged that adjudicatory relief and the appellant's subsequent attempt to restore or pursue the appellate remedy was rejected by the Tribunal on res judicata grounds. The High Court found, in the special facts of the case, that fairness required setting aside the impugned appellate orders and the Commissioner(Appeals) order dated 17.11.2014 so that the controversy may be examined afresh. The court therefore interfered with the Tribunal's rejection of restoration and the reliance on res judicata in these circumstances. [Paras 3, 5]

Final order No.20445/2019 and Miscellaneous Order No.20444/2018 are set aside; the Commissioner(Appeals) order dated 17.11.2014 is set aside to permit fresh adjudication.

Final Conclusion: The appeal is allowed; the Tribunal's orders and the Commissioner(Appeals) order dated 17.11.2014 are set aside and the matter is remitted to the Original Adjudicating Authority for fresh consideration on merits of the disputed CENVAT credit for the period prior to April-2007 to July-2008, with all contentions left open.

Monetary limit for departmental appeals - maintainability of appeal under Section 35G of the Central Excise Act - CBDT circulars as administrative instructions governing filing of appeals - exception for matters involving constitutional validity or ultra vires notifications

Monetary limit for departmental appeals - maintainability of appeal under Section 35G of the Central Excise Act - CBDT circulars as administrative instructions governing filing of appeals - exception for matters involving constitutional validity or ultra vires notifications - Whether the departmental appeal was maintainable in view of the monetary threshold fixed by the CBDT circular - HELD THAT: - The Court noted that the tax effect of the impugned demand was Rs. 3,45,203/-. It applied the CBDT circular which fixes a monetary threshold for instituting departmental appeals and observed that the circular dated 22.08.2019 raised the limit applicable to filing appeals. The Court further observed that none of the specific exceptions in the earlier circular-challenges to constitutional validity or where a Notification/Instruction/Order or Circular has been held illegal or ultra vires-were attracted in the present matter. In consequence, an appeal by the revenue where the tax effect is below the prescribed monetary threshold was held not maintainable and the appeal could be dismissed on that short ground without adjudicating the merits of the underlying demand.

Appeal dismissed as not maintainable being below the monetary limit prescribed by the CBDT circular; no exception applicable.

Final Conclusion: The departmental appeal under Section 35G was dismissed on the sole ground that the tax effect was below the monetary limit fixed by the CBDT circular and none of the specified exceptions applied.

Refund of excise duty - end-use exemption for supplies to Indian Navy - unit-to-unit correlation - provisional assessment under Board instructions - unjust enrichment - withdrawal of warehousing facility - application of CBEC circulars to identification of duty-paid stocks

Refund of excise duty - end-use exemption for supplies to Indian Navy - unit-to-unit correlation - withdrawal of warehousing facility - application of CBEC circulars to identification of duty-paid stocks - Whether the refund claim for duty paid LSHFHSD supplied to the Indian Navy can be denied for want of tank-wise or unit-to-unit correlation when the receipt of duty-paid goods and supply to the Indian Navy are not in dispute and Board circulars require duty to be paid on warehouse stocks after withdrawal of warehousing facility. - HELD THAT: - Both lower authorities accepted that (i) the goods in question were received on payment of duty from the refinery and (ii) the supplies to the Indian Navy were made claiming the exemption under Notification No. 64/95-CE; they also found that the claim was not hit by unjust enrichment. Their only ground for restricting the refund was that the duty-paid goods were recorded as stored in Tank No.5 while clearances to the Navy were effected from Tank Nos.3 and 5, and therefore a tank-wise correlation was necessary. The Tribunal examined CBEC Circulars issued on withdrawal of the warehousing facility and the guidance in the subsequent circular allowing provisional assessment when identification at removal is not possible. Those communications make clear that after withdrawal of warehousing (w.e.f. 6.9.2004) stocks in warehouses are to be treated as duty-paid and that where the refinery cannot identify consignments at removal, provisional assessment and deeming principles may be applied. Applying those instructions, the Tribunal held that when receipt on payment of duty and exempted supply to the Navy are not disputed, the insistence on drop-by-drop or tank-by-tank correlation is misplaced. The Tribunal also relied on earlier orders favourable to the appellant (including a CESTAT Ahmedabad decision) and observed that the Assistant Commissioner's emphasis on mix-bonding permission and tank-wise clearance was inconsonant with the Board's clarifications that warehouse stocks post-withdrawal are duty-paid and that identification procedures or provisional assessment are the prescribed remedies where logistical identification is difficult. On these grounds the Tribunal concluded that the restriction of refund to the quantity shown cleared from Tank No.5 alone was unsustainable.

The restriction of the refund claim on the sole ground of lack of tank-wise/unit correlation was set aside and the appeal was allowed.

Unjust enrichment - refund of excise duty - Whether the refund claim is barred by unjust enrichment where invoices to the Indian Navy were raised at nil duty and the incidence of duty was not passed on to the Navy. - HELD THAT: - Both the Assistant Commissioner and the Commissioner (Appeals) recorded that invoices to the Indian Navy were raised at nil duty and that the incidence of duty was not passed on to the Navy. The authorities found that the evidence (including certificates from the Naval Officer and TR-6 challans) showed duty had been paid by the supplier and that the Navy did not bear the duty incidence, satisfying the requirements to negate unjust enrichment under the statute. The Tribunal recorded these concurrent findings and did not disturb them.

The claim was not barred by unjust enrichment.

Final Conclusion: The impugned order limiting the refund to the quantity purportedly cleared from a specific tank was set aside. The Tribunal allowed the appeal, holding that where duty-paid receipt and exempt supply to the Indian Navy are not disputed and Board circulars treat warehouse stocks as duty-paid (and provide provisional assessment remedies), insisting on tank-wise/unit-to-unit correlation is not a valid ground to refuse the refund; the claim was also held not barred by unjust enrichment.

Mandatory pre-deposit for filing appeal under OVAT Act - revival of appeal on compliance with pre-deposit direction - stay of coercive action subject to compliance with court directions - remand of appeal for fresh adjudication on merits - refund of pre-deposit with interest if appeal succeeds

Mandatory pre-deposit for filing appeal under OVAT Act - revival of appeal on compliance with pre-deposit direction - Validity of dismissal of appeal for non-payment of pre-deposit and power to set aside such dismissal on conditions. - HELD THAT: - The Additional Commissioner of Sales Tax (Appeals) had dismissed the petitioner's appeal for failure to make the statutory pre-deposit. The High Court accepted the petitioner's offer to make the prescribed pre-deposit within a stipulated time and exercised its supervisory jurisdiction to set aside the impugned order of dismissal subject to deposit of the specified sum with the Department by a specified date. On such compliance the Court directed that the appeal shall stand revived before the ACST (Appeals) and be listed for directions. The Court's order restored the petitioner's right to have the appeal adjudicated on merits upon fulfillment of the conditional pre-deposit requirement.

Impugned order dismissing the appeal for non-payment of pre-deposit set aside on condition that the petitioner deposits the specified pre-deposit within the time directed, and the appeal stands revived.

Remand of appeal for fresh adjudication on merits - refund of pre-deposit with interest if appeal succeeds - Direction for further adjudication of the revived appeal and consequences of success in the appeal. - HELD THAT: - The High Court directed that once revived the appeal shall be heard afresh on merits by the ACST (Appeal) within a specified period. The Court provided that if the petitioner succeeds in the appeal the pre-deposit shall be refunded to the petitioner along with interest, if any, in accordance with the Rules and subject to directions to be recorded by the ACST (Appeal) while disposing of the appeal. The order therefore remitted the matter to the appellate authority for fresh consideration on merits and addressed the mechanism for restitution of the deposit in case of a favourable outcome for the petitioner.

Appeal remanded to ACST (Appeal) for fresh adjudication within the timeframe directed; successful petitioner to receive refund of the pre-deposit with interest in terms to be recorded by the ACST (Appeal).

Stay of coercive action subject to compliance with court directions - Whether coercive action could be restrained pending disposal of the revived appeal upon compliance with the conditional deposit. - HELD THAT: - The High Court ordered that so long as the petitioner complied with the condition of depositing the specified sum within the time directed and until the appeal is disposed of by the ACST (Appeal), no coercive action shall be taken against the petitioner. This restraint was conditional and limited to the period until disposal of the appeal, thereby protecting the petitioner from enforcement measures while preserving the Department's rights in the event of non-compliance or an adverse appellate outcome.

Coercive action against the petitioner restrained until disposal of the appeal subject to timely compliance with the deposit condition.

Final Conclusion: The High Court set aside the dismissal of the petitioner's appeal for non-payment of the mandatory pre-deposit on the petitioner's undertaking to deposit the prescribed sum within the time directed, revived the appeal for fresh adjudication by the ACST (Appeal) within a fixed period, ordered refund of the deposit with interest if the petitioner succeeds, and restrained coercive action meanwhile subject to compliance with the conditions.

Interim stay of tax demand - prima facie case - right to appeal as a statutory right - tax liability on closing stock after implementation of Goods and Services Tax - status of a government undertaking vis-a -vis tax liability - direction for expeditious disposal of appeal

Interim stay of tax demand - prima facie case - right to appeal as a statutory right - Entitlement to stay of the entire disputed tax demand pending disposal of the first appeal. - HELD THAT: - The Court found that a strong prima facie case was made out in favour of the revisionist, as evidenced by prior interim relief granted by the first appellate authority and the Appellate Tribunal (stay to the extent of 90%). The Court observed that the right to appeal is a statutory right which should not be rendered illusory by onerous deposit conditions. In the facts of the case the appellate authority ought to determine the appeal on its merits without insisting on discharge of the entire disputed tax. Having regard to these considerations, the revision was allowed to the extent of staying the demand in its entirety until the decision of the first appeal.

Demand of the disputed tax in its entirety shall remain stayed till the decision of the first appeal pending before the first appellate authority.

Direction for expeditious disposal of appeal - tax liability on closing stock after implementation of Goods and Services Tax - status of a government undertaking vis-a -vis tax liability - Obligation of the first appellate authority to decide the pending first appeal and the scope of remand for disposal. - HELD THAT: - The High Court directed that the first appellate authority must decide the pending appeal expeditiously and preferably within two months from the date of production of a certified copy of the High Court's order. The Court remitted the matter to the first appellate authority for disposal on merits; the stay granted by this Court remains operative until that decision. The Court noted submissions concerning the applicability of GST from 1.7.2017 and reversing tax liability on closing stock, and the revisionist's status as a government undertaking, but left the substantive adjudication of those contentions to the appellate authority in the appeal.

First appellate authority directed to decide the pending appeal expeditiously (preferably within two months from production of a certified copy); substantive issues to be considered by that authority; stay to continue until its decision.

Final Conclusion: Revision allowed in part: the High Court stayed recovery of the disputed tax for 2017-18 in full until the first appellate authority disposes of the pending appeal and directed expeditious disposal of that appeal (preferably within two months of production of a certified copy of this order).

Retrospective cancellation of registration - input tax credit reversal - application of precedent - remand for fresh adjudication - opportunity of appeal and hearing - activation of registration certificate

Opportunity of appeal and hearing - application of precedent - Direction permitting the petitioner to file an appeal and obliging the appellate authority to consider and adjudicate the matter on merits by applying the Division Bench principles and affording opportunity to the petitioner. - HELD THAT: - The Court observed that the Division Bench decision relied upon by the petitioner lays down principles to be followed, but that factual adjudication as to applicability of those principles must be undertaken by the appellate authority. In the interest of justice, the petitioner was granted leave to file the prescribed appeal within six weeks and to place on record the relevant documents and the Division Bench judgment; the appellate authority was directed to consider and adjudicate the appeal on merits, in accordance with law and after affording the petitioner an opportunity of hearing, preferably within three months. The Court emphasised that application of the precedent requires verification of original records and factual scrutiny by the appellate forum. [Paras 6]

Petitioner permitted to file appeal within six weeks; appellate authority directed to adjudicate issues on merits, following the Division Bench principles and affording opportunity to the petitioner, preferably within three months.

Retrospective cancellation of registration - input tax credit reversal - remand for fresh adjudication - activation of registration certificate - Validity and applicability of retrospective cancellation of the sellers' registration Certificates and the consequent reversal of input tax credit were not finally decided but remanded to the appellate authority for fresh consideration of facts and application of the Division Bench ruling. - HELD THAT: - While noting the Division Bench's treatment of retrospective cancellation (including reliance on earlier decisions), the Court refrained from adjudicating the factual applicability of those precedents to the petitioner's case. The Court held that complete adjudication of facts, scrutiny of records and documents, and application of the principles laid down by the Division Bench are necessary to render justice; accordingly, the question whether the retrospective cancellation (and any activation of registration certificate) was bad in law was left for the appellate authority to determine after fresh consideration. [Paras 3, 4, 5, 6]

Issue of retrospective cancellation and reversal of input tax credit remitted to the appellate authority for fresh adjudication of facts and application of precedent.

Final Conclusion: Writ petitions disposed by permitting the petitioner to file an appeal; the appellate authority is directed to consider and decide the appeal on merits after affording opportunity to the petitioner and applying the relevant Division Bench principles; matters concerning retrospective cancellation and input tax credit are remitted for fresh adjudication.

Presumption under Section 139 of the Negotiable Instruments Act - Rebuttal of statutory presumption and burden shift - Proof of legally recoverable debt in prosecution under Section 138 N.I. Act - Competency and authorization of witness to testify for a cooperative society - Effect of bank merger on authenticity/timing of cheque issuance

Presumption under Section 139 of the Negotiable Instruments Act - Rebuttal of statutory presumption and burden shift - Whether the statutory presumption under Section 139 N.I. Act stood rebutted and, if so, whether the complainant discharged the evidentiary burden thereafter - HELD THAT: - The Court applied settled law that the presumption under Section 139 is a rebuttable legal presumption. Once the accused raised a specific defence that the cheque had been given earlier (as security in 1993) and that the alleged loan of 2001 was not taken, the presumption was effectively rebutted and the evidentiary onus shifted back to the complainant. The complainant could not rest on issuance of the cheque alone after the presumption was rebutted but was required to lead further evidence to establish that the cheque represented a legally recoverable debt arising from a loan availed on 18.09.2001 and that the cheque issued on 20.07.2010 reflected that liability. Having regard to the defence raised and the need for additional proof once the presumption was displaced, the Trial Court correctly examined whether the complainant produced sufficient evidence beyond the cheque to meet the shifted burden. [Paras 8, 10]

The presumption under Section 139 was held to be rebutted by the accused and the complainant failed to discharge the subsequent burden of proof.

Proof of legally recoverable debt in prosecution under Section 138 N.I. Act - Effect of bank merger on authenticity/timing of cheque issuance - Whether the complainant proved that the cheque was issued towards a legally recoverable debt and that it was issued on the date alleged - HELD THAT: - The Court considered the material on record and noted that, apart from the cheque, bank endorsement, office copy of legal notice and acknowledgment, the complainant produced no documents evidencing the loan said to have been advanced on 18.09.2001. PW.1 admitted the absence of any executed loan documents or arbitration/recovery proceedings. Further, the Court observed that the bank which issued the cheque (Ganesh Bank of Kurundwad) had merged with Federal Bank in 2005-06, rendering the possibility of that bank issuing the quoted cheque in 2010 improbable. This factual circumstance supported the accused's defence that the cheque related to an earlier transaction (1993) and was misused after repayment. On the totality of evidence, the Trial Court's conclusion that the complainant failed to prove that the cheque represented a legally recoverable debt payable in 2010 was upheld. [Paras 9, 11, 13]

The complainant did not prove that the cheque was issued for a legally recoverable debt on the date alleged; the contention that the cheque issuance in 2010 was improbable was accepted.

Competency and authorization of witness to testify for a cooperative society - Whether the witness examined on behalf of the complainant was duly authorized to give evidence for the society - HELD THAT: - The authorization placed on record (Ex. P-6) named a different individual as authorized to appear and give evidence. The witness who testified before the Trial Court was not the person identified in Ex. P-6. The Trial Court rightly found that PW.1 was not authorized to give evidence on behalf of the complainant society and therefore his testimony could not be relied upon to establish the complainant's case. This defect contributed materially to the failure of proof. [Paras 12, 13]

PW.1 was not shown to be authorized to testify for the society; his evidence was therefore inadmissible for proving the complainant's claim.

Final Conclusion: The Criminal Appeal challenging dismissal of the complaint under Section 138 N.I. Act was dismissed. The High Court upheld the Trial Court's findings that the statutory presumption under Section 139 had been rebutted, that the complainant failed to prove the loan and the cheque's linkage to a legally recoverable debt on the alleged date, and that the witness was not duly authorized to testify on behalf of the society.

Section 138 of the Negotiable Instruments Act, 1881 - Presumption of consideration under Section 139 of the N.I. Act - Rebuttal of presumption - Admissibility and proof of loan transaction by oral and documentary evidence - Alleged partnership and defence of cheque as security / arbitration clause - Scope of interference in revision petitions - perversity, illegality or capriciousness

Section 138 of the Negotiable Instruments Act, 1881 - Presumption of consideration under Section 139 of the N.I. Act - Admissibility and proof of loan transaction by oral and documentary evidence - Conviction under Section 138 upheld on proof of a legally enforceable debt and cheque dishonour; presumption under Section 139 stood unrebutted. - HELD THAT: - The courts below correctly drew the statutory presumption of consideration in favour of the complainant on presentation and dishonour of the cheque (Ex.P-1 and Ex.P-2) and service of the legal notice (Ex.P-6) as supported by postal delivery evidence (Ex.P-8). The complainant corroborated the loan transaction by oral testimony (PW-1) and contemporaneous documents - Promissory Note, Consideration Receipt and Agreement (Exs.P-3, P-4, P-5) - and the account statement (Ex.P-9) confirming remittances. Defence witnesses did not successfully rebut these materials; DW-1 admitted preparing Exhibits P-3 and P-4 at the accused's request and DW-2's testimony further corroborated the loan transaction. Suggestions in cross-examination made by the accused (admissions that monetary transactions occurred and that amounts were repaid or interest was paid) reinforced the existence of monetary dealings rather than negating liability. On the evidence as a whole the trial courts were entitled to find a legally enforceable debt and to convict under Section 138. [Paras 15, 16, 18, 19, 20]

Conviction under Section 138 affirmed; presumption under Section 139 remained unrebutted and supported by cogent oral and documentary evidence.

Alleged partnership and defence of cheque as security / arbitration clause - Rebuttal of presumption - Scope of interference in revision petitions - perversity, illegality or capriciousness - Defence based on an alleged Partnership Deed (cheque as security / arbitration clause) not established and insufficient to displace complainant's case; revision petition did not disclose perversity or illegality warranting interference. - HELD THAT: - The accused contended that the amount was an investment in a partnership and that the cheque was held as security, with disputes governed by an arbitration clause. However, no Partnership Deed was produced or proved in the present trial, the alleged deed from another pending matter was not placed before or confronted to the complainant, and defence witnesses/documents (Exs.D-1, D-2) failed to establish the pleaded arrangement. The trial courts correctly refused to admit or act upon a document not proved in this case and assessed the defence on the evidence actually produced. Given the cogent evidence for the complainant and the absence of satisfactory rebuttal, the findings do not suffer from perversity, illegality or capriciousness and are not amenable to interference in revision. [Paras 11, 13, 21]

Alleged partnership/arbital defence rejected for want of proof; revision dismissed as courts below did not act perversely or illegally.

Final Conclusion: Both the conviction and sentence under Section 138 of the N.I. Act were affirmed: the presumption of consideration under Section 139 stood unrebutted on the evidence, the accused's partnership/security defence was not proved, and the criminal revision petition is dismissed as devoid of merits.