TaxTMI Updates e-Newsletter
Aug 13,2019

Summary order. Petition challenging imposition of penalty under Section 129(3) of the UP GST Act, 2017 is listed for further hearing on 21.08.2019 along with connected matters as Tribunal not yet constituted and appellate remedy not available to the petitioner.

Seizure and release of goods and conveyance under the GST Act - Release on deposit of tax and penalty - Applicability of seizure and release provisions under the GST Act, 2017 (Sections 129 and 130)

Release on deposit of tax and penalty - Seizure and release of goods and conveyance under the GST Act - Immediate release of the seized truck and goods upon deposit of tax and penalty. - HELD THAT: - The Court recorded that the writ applicant had deposited an amount towards tax and penalty and produced the receipt (Annexure D). On that factual foundation the Court directed that the respondents must immediately release the truck and the goods seized under the provisions of the GST Act. The order treats the deposit as the operative basis for immediate release pending final disposal of the petition and does not undertake further adjudication on the merits of any seizure.

Truck and goods seized by the respondents are to be released immediately in view of the deposit of tax and penalty.

Applicability of seizure and release provisions under the GST Act, 2017 (Sections 129 and 130) - Larger legal questions concerning the applicability and interpretation of Sections 129 and 130 of the GST Act were not finally decided and remain under consideration by the Court. - HELD THAT: - The Court noted that it is examining broader issues as to the applicability of the provisions cited, but the present order confines itself to the interim relief of release after deposit. No final determination was made on the contested legal questions arising under Sections 129 and 130, which remain to be addressed in due course.

Questions as to the applicability of Sections 129 and 130 are left open for further consideration; the interim release order does not amount to final adjudication on those provisions.

Final Conclusion: On the basis of the deposit of tax and penalty evidenced by the writ applicant, the High Court directed immediate release of the seized truck and goods; broader issues concerning the applicability of the seizure and release provisions of the GST Act, 2017 (Sections 129 and 130) remain pending consideration.

Seizure of goods in transit - Release of detained vehicle and goods on deposit of tax and penalty - Interim release pending final disposal - Interplay of Sections 129 and 130 of the GST Act, 2017

Release of detained vehicle and goods on deposit of tax and penalty - Interim release pending final disposal - Direction to release the seized truck and goods upon deposit of tax and penalty - HELD THAT: - The writ-application concerned a truck and goods seized while in transit. The record shows deposit by the writ-applicant of tax and penalty, evidenced by a receipt at Annexure D (Page 19). Having taken notice of the deposit, the Court directed respondents to immediately release the truck and the goods seized under the GST Act, 2017, as an interim measure pending final disposal of the petition. The order was made notwithstanding that broader questions concerning statutory applicability remain under examination.

Truck and goods to be released immediately by the respondents in view of the deposit of tax and penalty.

Interplay of Sections 129 and 130 of the GST Act, 2017 - Seizure of goods in transit - Final determination of the applicability and interpretation of Sections 129 and 130 of the GST Act, 2017 not finally adjudicated and reserved for consideration at final disposal - HELD THAT: - The Court noted that it is examining the larger issues regarding the applicability of Sections 129 and 130 of the GST Act, 2017. No final adjudication on the legal questions arising under those provisions was made in the order; the Court granted interim relief (release on deposit) while the substantive legal issues remain to be considered at the final hearing of the petition.

Issues concerning the applicability and interpretation of Sections 129 and 130 are left for final adjudication and not decided in the present order.

Final Conclusion: On the material before the Court (receipt of deposited tax and penalty), the respondents are directed to release the seized truck and goods immediately as an interim measure; the broader questions on the applicability of Sections 129 and 130 of the GST Act, 2017 remain for final determination.

Rectification of TRAN-1 form - technical glitches in electronic portal - opportunity to file revised TRAN-1 - judicial direction to open portal or permit manual filing - processing of claim in accordance with law

Additional documents taken on record - Application for taking additional documents on record was allowed. - HELD THAT: - The Court, upon consideration of the application for placing additional documents on record, permitted the same and recorded that the additional documents are taken on record for the petition. The allowance was recorded as the operative relief in respect of the interlocutory application seeking to place further documents before the Court. [Paras 1]

Application allowed and additional documents taken on record.

Rectification of TRAN-1 form - technical glitches in electronic portal - opportunity to file revised TRAN-1 - judicial direction to open portal or permit manual filing - processing of claim in accordance with law - Petitioners were granted one more opportunity to file a rectified TRAN-1 form and Respondent No.2 was directed to facilitate filing and process the claim. - HELD THAT: - Noting that the petitioners were unable to rectify the TRAN-1 form due to technical glitches, and relying on precedents where similar relief had been granted, the Court directed Respondent No.2 to either reopen the petitioners' portal access to permit filing of the revised TRAN-1 form or to accept a manual filing by the petitioners on or before 31st August 2019. The Court further directed that thereafter the respondent shall process the petitioners' claim in accordance with law. The order provides a specific mechanism (portal reopening or manual filing) and a deadline for cure of the technical impediment, while leaving the substantive adjudication of the claim to be carried out in conformity with applicable law. [Paras 4]

Petitioners permitted to file rectified TRAN-1 by 31st August 2019; Respondent No.2 to open portal or accept manual filing and thereafter process the claim in accordance with law.

Final Conclusion: The interlocutory application for additional documents was allowed and the petitioners were given a further opportunity to rectify and file the TRAN-1 form by 31st August 2019, with a direction to Respondent No.2 to facilitate filing (electronically or manually) and thereafter process the claim in accordance with law; the writ petition is disposed accordingly.

Requirement of details in TRAN-1 for claiming transitional input tax credit - rejection of input tax credit claimed in TRAN-2 solely for want of details in TRAN-1 - reopening of electronic portal and facilitation of manual filing of TRAN-1 - processing of TRAN-2 claim in accordance with law

Reopening of electronic portal and facilitation of manual filing of TRAN-1 - processing of TRAN-2 claim in accordance with law - Direction to permit the Petitioner to re-file TRAN-1 and thereafter file TRAN-2 so that the claim may be processed. - HELD THAT: - The Court accepted the Petitioner's offer to re-file the TRAN-1 with the requisite details and directed the Respondents to enable such re-filing. The remedy ordered provides two alternatives: reopening the Petitioner's portal to enable electronic re-filing on or before 31st August, 2019, or, if electronic re-opening is not possible, permitting manual filing of TRAN-1 by the same date. Following re-filing of TRAN-1, the Petitioner is to be permitted to file TRAN-2 electronically and the Respondents are required to process the claim thereafter in accordance with law. The direction is procedural and seeks to afford the Petitioner an opportunity to furnish required particulars and have its claim adjudicated on the merits thereafter. [Paras 4, 5]

Respondents directed to permit re-filing of TRAN-1 (electronically by reopening the portal or manually) by 31st August, 2019, and thereafter to accept TRAN-2 and process the claim in accordance with law.

Requirement of details in TRAN-1 for claiming transitional input tax credit - rejection of input tax credit claimed in TRAN-2 solely for want of details in TRAN-1 - The substantive question whether rejection of the TRAN-2 claim solely because requisite details were not filed in TRAN-1 was justified was not finally adjudicated; the Court afforded an opportunity for re-filing and processing instead of deciding the legal merit. - HELD THAT: - The Court noted the core controversy as being whether the Respondent was justified in rejecting the credit claimed in TRAN-2 on the sole ground of absence of requisite details in TRAN-1. Rather than pronouncing on the legality of such rejection, the Court allowed the Petitioner to re-file the TRAN-1 and proceed with TRAN-2 so that the claim can be processed. The order thereby leaves the question of justification open for consideration during the processing of the claim by the Respondents in accordance with law. [Paras 3, 5]

The Court did not decide the legality of rejection; the contention is left to be considered when the Respondents process the re-filed TRAN-1 and subsequent TRAN-2.

Final Conclusion: Petition disposed of by directing Respondents to permit re-filing of TRAN-1 (electronically by reopening portal or manually) by 31st August, 2019, allow filing of TRAN-2 thereafter and process the claim in accordance with law; the substantive question of justification for prior rejection was not finally decided.

Bail - custodial interrogation - false implication - conspiracy - creation of fake firms - fraudulent claim of input tax credit - initial stage of investigation - denial of bail having regard to nature of offence and quantum involved

Bail - custodial interrogation - conspiracy - creation of fake firms - fraudulent claim of input tax credit - initial stage of investigation - denial of bail having regard to nature of offence and quantum involved - Bail application filed by the accused Girish Sharma was dismissed. - HELD THAT: - The court found that the investigation disclosed material implicating the accused in the alleged offence. The prosecution relied on a statement recorded during investigation which described the accused's role and alleged that he looked after GST matters, created firms and misused documents to file fraudulent returns to claim input tax credit. The inquiry revealed multiple fake units and an alleged substantial quantum of alleged GST evasion; the allegations and evidence at the initial stage of investigation supported the conclusion that custodial interrogation and continued investigation concerns militated against granting bail. The accused's plea of false implication and submission that he was only an accountant authenticating returns was considered but not accepted as sufficient to outweigh the prosecution case and stage of investigation.

Bail is refused and the bail application is dismissed.

Final Conclusion: Having regard to the nature of allegations, the material collected in the initial stage of investigation including a corroborative statement, and the alleged creation of firms and fraudulent claim of input tax credit, the accused's bail application is refused.

Computation of profits and gains of insurance business under Section 44 read with Rule 2 of the First Schedule - actuarial surplus - treatment of income shown in shareholders' account as part of insurance business income - applicability of Section 14A in the computation of insurance business profits - non-obstante clause in Section 44 establishing statutory scheme's primacy - rule of consistency

Treatment of income shown in shareholders' account as part of insurance business income - computation of profits and gains of insurance business under Section 44 read with Rule 2 of the First Schedule - Income from investments reflected in the Shareholders' Account forms part of the profits and gains of life insurance business for tax computation and is governed by the actuarial valuation mechanism under Section 44 read with Rule 2 of the First Schedule. - HELD THAT: - The Court accepted the ITAT's reasoning that the reporting segregation into policyholders' (revenue/technical) and shareholders' (profit and loss/non-technical) accounts pursuant to IRDA regulations does not alter the statutory method of computing taxable profits of an insurer. There was no amendment to Rule 2 to exclude income shown in the shareholders' account from the actuarial valuation. Consequently, the income shown in the shareholders' account cannot be taxed separately as ordinary income; it falls to be considered within the actuarial surplus computation under the statutory scheme which is prefaced by a non-obstante clause. [Paras 6, 9]

Affirmed that income in the shareholders' account is to be considered within the statutory actuarial computation of insurance business profits.

Applicability of Section 14A in the computation of insurance business profits - computation of profits and gains of insurance business under Section 44 read with Rule 2 of the First Schedule - Section 14A has no separate application for determining the profits and gains of life insurance business where computation is governed exclusively by Section 44 read with Rule 2 of the First Schedule. - HELD THAT: - The Court held that once it is determined that Section 44 read with Rule 2 is the sole statutory scheme to compute profits of life insurance business, resort to other provisions such as Section 14A for disallowance in relation to exempt income is unnecessary. The statutory actuarial valuation mechanism prevails and individual-item invocation of Section 14A does not arise for computing taxable insurance business profits. [Paras 10]

Section 14A is not applicable for the computation of life insurance business profits where Section 44 and Rule 2 govern the computation.

Actuarial surplus - deductions for future appropriations and allocation of bonus to policyholders - rule of consistency - Whether the ITAT was correct in accepting the Assessee's computation of the actuarial surplus which included deductions for future appropriations and allocation of bonus to policyholders is to be considered further. - HELD THAT: - The Court did not decide this issue on merits but framed it as a substantial question of law for consideration. The determinative controversy concerns the permissibility of specific deductions from the actuarial surplus-namely amounts for future appropriations and bonuses to non-linked participating policyholders-and whether the ITAT correctly upheld the Assessee's treatment. The Court directed confined written submissions and compilation of documents on this point, indicating remand for focused adjudication. [Paras 11, 12]

Framed for consideration and remanded for written submissions and further adjudication on the correctness of the Assessee's actuarial surplus computation including specified deductions.

Rule of consistency - actuarial surplus - Whether the ITAT was right in invoking the rule of consistency in accepting the Assessee's case is posed for further consideration. - HELD THAT: - The Court has not ruled on the correctness of applying the rule of consistency by the ITAT. It identified this as a separate substantial question of law to be addressed by the parties through written submissions. The issue requires examination of whether the tribunal properly relied on consistency principles in upholding the Assessee's actuarial treatment. [Paras 12]

Framed for consideration and remanded for written submissions on the propriety of invoking the rule of consistency by the ITAT.

Final Conclusion: The High Court affirmed the ITAT's conclusions that income in the shareholders' account forms part of life insurance business income under the actuarial valuation regime and that Section 14A is not separately applicable; it framed two substantial questions on the correctness of the actuarial surplus computation (including deductions for future appropriations and bonuses) and the ITAT's invocation of the rule of consistency, and remanded those questions for written submissions and further consideration.

Disallowance of business loss for want of substantiation - liability of franchisee for stock shortage under contractual terms - effect of destruction of supporting records by fire on proof - acceptance of undisputed payment as evidence of liability

Disallowance of business loss for want of substantiation - liability of franchisee for stock shortage under contractual terms - effect of destruction of supporting records by fire on proof - acceptance of undisputed payment as evidence of liability - Disallowance of Rs. 2 lakhs claimed as business loss was not justified where contractual liability, accounting entry and undisputed payment were produced and supporting records were destroyed in a fire. - HELD THAT: - The Court found that the assessee had placed before the Assessing Officer the franchise agreement showing contractual obligation to bear stock shortages, the final account statement debiting Rs. 2 lakhs and evidence that the amount was paid to the company. The assessee sought further details from the company but was informed that records had been destroyed in a fire and produced the company's certificate and the FIR reporting loss of records. The inability to furnish additional particulars caused by the fire was not within the assessee's control. In these circumstances the Court held that the assessee had done all that could reasonably be expected to substantiate the claim and that the AO, CIT(A) and the ITAT were in error in upholding the disallowance for want of further details. The Revenue's submission regarding varying claims in earlier years was held not to negate the present evidence. For these reasons the disallowance was set aside and deduction permitted. [Paras 8, 9, 11]

The disallowance of Rs. 2 lakhs is reversed and deduction of Rs. 2 lakhs is to be permitted in computing income for AY 2001-2002.

Final Conclusion: The appeal is allowed; the impugned orders of the AO, CIT(A) and ITAT are set aside and the assessee is entitled to deduction of Rs. 2 lakhs for AY 2001-2002.

Disallowance under Section 40(a)(i) - tax deduction at source obligations under Section 195 - matching cost principle and provision for expenses - remand for verification of TDS payment in subsequent year - retrospective application of the second proviso to Section 40(a)(ia) - verification of recipient's return disclosure for treating expenses as allowable

Disallowance under Section 40(a)(i) - tax deduction at source obligations under Section 195 - matching cost principle and provision for expenses - remand for verification of TDS payment in subsequent year - Whether provision for royalty made in the year under consideration could be disallowed under Section 40(a)(i) for non-deduction of TDS and whether subsequent deduction and payment of TDS in the next year permits allowance of the expenditure. - HELD THAT: - The CIT(A) found that the assessee had made provisions for royalty pursuant to agreements and on the matching-cost accounting principle such that the provisions were not contingent or unascertained liabilities merely because payment occurred in the subsequent year. The CIT(A) observed that provisions were for identified nonresident parties and that Section 195 obligations apply even if the liability is not credited to a party's account. The Tribunal affirmed the CIT(A)'s factual conclusion and upheld the legal position that non-deduction could attract disallowance but recognised that where TDS was in fact deducted and remitted at the time of payment in the subsequent year the Assessing Officer should verify that position. The courts therefore sustained the disallowance in principle but directed verification and, if TDS was deducted and the expenditure was not otherwise claimed or allowed in subsequent proceedings, the AO was to allow the expenditure in the subsequent assessment year. [Paras 2, 5, 10, 13]

Tribunal's confirmation of CIT(A)'s finding is upheld; AO to verify deduction and payment of TDS in subsequent year and allow the expenditure in that subsequent year if not already claimed or allowed.

Retrospective application of the second proviso to Section 40(a)(ia) - verification of recipient's return disclosure for treating expenses as allowable - Whether the second proviso to Section 40(a)(ia) applies retrospectively so as to affect disallowance of interest expenditure for AY 2011-12 and the consequential course of remand to the Assessing Officer. - HELD THAT: - The Tribunal and the CIT(A) applied the ratio of the Delhi High Court holding that the second proviso has retrospective effect. In consequence, matters where disallowance was made on account of failure to deduct TDS under Section 194A were restored to the Assessing Officer for verification. The assessee was directed to produce evidence that the payees had filed returns and offered the receipts to tax; the AO was directed to verify such evidence and decide the allowability of the expenditure in light of the retrospective operation of the proviso. [Paras 8, 11, 12]

Matter remitted to the AO for verification of whether recipients have disclosed the receipts in their returns; decision on allowability to follow on verification in light of the proviso's retrospective application.

Final Conclusion: The appeal is dismissed. The High Court declines to interfere with the Tribunal's order for AY 2011-12; the Tribunal's confirmation of CIT(A)'s findings is upheld subject to directions that the Assessing Officer verify deduction and payment of TDS and the recipients' return disclosures, and allow the expenditure in the subsequent year or as appropriate after such verification.

Classification of lump sum payment as capital or revenue expenditure - advance payment of rent - amortisation of premium as revenue deduction - business deduction under Section 37(1) - precedential weight of earlier tribunal determination - distinguishing factual matrix from Special Bench decision

Classification of lump sum payment as capital or revenue expenditure - advance payment of rent - amortisation of premium as revenue deduction - business deduction under Section 37(1) - Whether the Tribunal erred in refusing to follow its earlier Special Bench view and disallowing amortisation of lump sum premium claimed as advance rent, holding it to be capital expenditure - HELD THAT: - The Court held that the Tribunal's reliance on the Special Bench decision in Mukund Ltd. to treat the lump sum payment as a capital 'premium' and not as advance rent was unsustainable on the materials before it. The leases in the present case reserved nominal or depressed rents (including rents of Rs.100/-, Rs.1/- and Rs.2/- per annum) for long tenures and contained terms (such as entitlement to remove buildings on expiry and grant of possession) which supported the assessee's case that the lump sum payments were made as advance rent to secure possession and enduring business advantage, and were amortised annually. The Tribunal's conclusion that the agreements were "exactly similar" to those considered by the Special Bench was held to be perverse and contrary to the material on record. Applying the principle in Madras Auto Service and related authorities, the Court accepted that where a lump sum payment confers an enduring business advantage without creating a capital asset for the payer, it may be revenue in nature and deductible when amortised; on the facts the payments here fell within that class. Consequently the substantial question framed at admission was answered in favour of the assessee.

Answered in the affirmative; Tribunal's order set aside and appeal allowed in favour of the assessee.

Final Conclusion: The High Court allowed the appeal, holding that the Tribunal's treatment of the lump sum payments as capital premium (following the Special Bench) was perverse on the factual materials and that the amounts could be treated as advance rent and amortised as revenue expenditure, thereby permitting the deduction claimed under Section 37(1).

Implementation of appellate tribunal order - obligation to give effect to directions on remand - computation of peak bank account credit - writ of mandamus to enforce appellate directions - assessment to be redone on remand

Implementation of appellate tribunal order - obligation to give effect to directions on remand - computation of peak bank account credit - Whether the Assessing Officer complied with the ITAT remand directions regarding computation of peak credit in the bank account and whether the assessment order passed on remand requires quashing and redoing. - HELD THAT: - The Tribunal had remanded the assessment to the Assessing Officer to grant one more opportunity to the assessee to explain the source of cash deposit and directed that any addition, if at all, should not exceed the peak credit in the bank account. The Assessing Officer, on remand, concluded the assessment without working out the peak credit in the bank account, thereby failing to give effect to the ITAT's directions. The Court held that the Assessing Officer is legally bound to implement the appellate order in letter and spirit and that failure to do so results in failure of justice. In such circumstances a writ of mandamus is appropriate to compel the Assessing Officer to carry out the directions given by the Tribunal. The Court relied on the principle enunciated in Bhopal Sugar Industries Ltd. to support issuance of mandamus where an inferior authority does not implement appellate directions. Consequently the impugned order was quashed and the matter was restored to the Assessing Officer to redo the assessment in conformity with the ITAT's directions, specifically ensuring that any addition does not exceed the peak bank-account credit; the Assessing Officer was directed to comply expeditiously, preferably within four weeks of receipt of the certified copy of the order. [Paras 6, 7]

Impugned assessment order quashed; proceedings restored to the Assessing Officer to redo assessment in light of ITAT directions and to compute peak credit in the bank account, with compliance directed within four weeks.

Final Conclusion: Writ petition allowed; the Assessment Order dated 26.12.2017 quashed and the assessment is remitted to the Assessing Officer to give effect to the ITAT's remand directions, including computation of peak bank-account credit and limiting any addition to that quantum, to be done expeditiously.

Estimation of income under section 145(3) / section 144 - Best judgment assessment must be based on material and not pure guesswork - Rejection of books of account does not licence arbitrary or conjectural estimation - Requirement of relevant material to support estimation

Estimation of income under section 145(3) / section 144 - Best judgment assessment must be based on material and not pure guesswork - Whether the addition made by estimating commission income at 2% (and earlier at 10%) on the alleged accommodation entries was sustainable in the absence of any material or basis. - HELD THAT: - The Court examined the course adopted by the Assessing Officer, the Commissioner (Appeals) and the Tribunal where the books were rejected and income was estimated. While Section 145(3) permits assessment under Section 144 when accounts are not reliable, that discretion cannot be exercised arbitrarily; an estimate must be founded on material and cannot be a pure guess. The authorities reduced and reworked estimates (AO at 10%, CIT(A) at 2%, Tribunal upholding 2%) without adducing or disclosing any supporting material that would justify the particular percentage adopted. The Court applied settled precedent holding that an estimate must be related to some evidence or material and not be based on mere conjecture or suspicion. The impugned estimation translating commission into a fraction of an assumed tax benefit was held to be unsupported by record material and amounted to guesswork. Given the absence of material to justify the percentages adopted by the authorities, the addition could not be sustained. [Paras 24, 25, 26]

Addition based on estimating commission at 2% (and AO's 10%) was quashed as being unsupported by any material; Tribunal's order is set aside and appeal is allowed.

Final Conclusion: The Tax Appeal is allowed. The appellate order of the Income Tax Appellate Tribunal confirming the addition based on the impugned estimation is quashed and set aside for being founded on conjecture without supporting material.

Disallowance under 40(a)(ia) - Application of second proviso to section 40(a)(ia) - Personal use of company aircraft-apportionment by log book - Capitalization of interest to capital work in progress - Presumption of funding of capital work in progress from own funds - Computation of book profit under section 115JB - non-addition of disallowance not listed in Explanation 1 - Deductibility of prior period expenses in computation of book profit under section 115JB

Disallowance under 40(a)(ia) - Application of second proviso to section 40(a)(ia) - Claim that disallowance under section 40(a)(ia) should be reconsidered in view of the second proviso and that the recipient has declared the income - HELD THAT: - The assessee contended that a lump-sum lease amount paid in an earlier year was amortised and claimed as deduction, and that tax was not deducted at source; reliance was placed on the contention that the recipient had declared the income and on the applicability of the second proviso to section 40(a)(ia) (inserted w.e.f. 1-4-2013). The Tribunal observed that this contention - including applicability of the second proviso and the factual position about declaration by the recipient - was not examined by the assessing officer. In view of the need for factual and statutory scrutiny, the Tribunal set aside the CIT(A)'s confirmation and restored the matter to the AO for examination of the assessee's claim. [Paras 7, 8, 9]

Order set aside and issue restored to the file of the AO for fresh examination of the claim and applicability of the second proviso to section 40(a)(ia).

Personal use of company aircraft-apportionment by log book - Extent of disallowance of aircraft expenses attributable to personal use - HELD THAT: - The AO had disallowed aircraft expenses and depreciation without providing a detailed breakup; the CIT(A) allowed 50% and confirmed the balance. The assessee produced log books recording business and personal usage and requested disallowance be restricted to actual personal usage of directors. The Tribunal held that if reliable log book records are maintained, segregation between business and personal use is possible and disallowance should be restricted to the proportion attributable to personal use as per the log book. As factual verification is required, the Tribunal set aside the CIT(A) order and remitted the issue to the AO with directions to restrict disallowance to personal usage in accordance with log book records. [Paras 10, 11, 13, 14]

Order set aside and issue remanded to the AO to verify log book records and restrict disallowance to proportion attributable to personal use.

Capitalization of interest to capital work in progress - Presumption of funding of capital work in progress from own funds - Whether part of interest expense should be allocated to capital work in progress and disallowed from revenue expenditure - HELD THAT: - The AO disallowed interest attributable to capital work in progress on the basis of a working showing an amount attributable to WIP; the CIT(A) deleted the disallowance observing lack of nexus examination. On appeal the Tribunal noted that the assessee's balance sheet showed own funds in excess of the capital work in progress and that term/working capital loans were stated to be applied to specific purposes. The Tribunal observed that where own funds exceed WIP, a presumption arises that own funds financed WIP and thus disallowance of interest may not be warranted, but these factual aspects were not examined by the AO. For limited factual determination, the Tribunal restored the issue to the AO and directed deletion of the addition if the AO is satisfied that own funds exceeded WIP and borrowings were not diverted to WIP. [Paras 15, 16, 18, 20]

Issue restored to the AO for factual examination; AO directed to delete the disallowance if satisfied that own funds financed the capital work in progress.

Computation of book profit under section 115JB - non-addition of disallowance not listed in Explanation 1 - Whether the interest disallowance (if any) made under normal provisions can be added back while computing book profit under section 115JB - HELD THAT: - The AO had added back the interest disallowance while computing book profit under section 115JB. The CIT(A) deleted that addition relying on the Supreme Court decision in Apollo Tyres Ltd and on the fact that the impugned disallowance is not an item listed in Explanation 1 to section 115JB. The Tribunal agreed with the CIT(A): an adjustment to the net profit adopted in the company's annual general meeting is not permissible in the manner sought, and an interest disallowance not enumerated in Explanation 1 cannot be added back when computing book profit under section 115JB. [Paras 17, 21]

Addition made by the AO while computing book profit under section 115JB on account of the interest disallowance is not sustainable and is deleted.

Deductibility of prior period expenses in computation of book profit under section 115JB - Whether prior period expenses debited to profit and loss account can be deducted from net profit in computing book profit under section 115JB - HELD THAT: - The AO disallowed deduction of prior period expenses shown in the profit and loss account while computing book profit under section 115JB; the CIT(A) allowed the claim relying on Apollo Tyres Ltd. The Tribunal examined the profit and loss account and noted that the prior period expense was shown as an item below the line and had not been claimed as a deduction under the normal provisions. The Tribunal observed that prior period expenses do not appear in the list of deductions in Explanation 1 to section 115JB and therefore cannot be deducted from net profit in computing book profit. The Tribunal found the CIT(A)'s reliance on Apollo Tyres Ltd. to be misplaced on these facts and set aside the CIT(A)'s order. [Paras 23, 24]

Disallowance made by the AO is confirmed; prior period expenses cannot be deducted from net profit for computing book profit under section 115JB.

Final Conclusion: Both appeals are partly allowed for statistical purposes. Several factual issues (application of the second proviso to section 40(a)(ia), quantification of aircraft personal-use disallowance, and allocation of interest to capital work in progress) are remitted to the assessing officer for examination; the AO's addition of interest to book profit under section 115JB is deleted, while the AO's disallowance of prior period expenses from net profit for computation under section 115JB is confirmed.

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars - Validity of show cause notice - Requirement to specify the limb of section 271(1)(c) invoked - Quashing of penalty proceedings for defective notice - Prejudice and principles of natural justice in penalty proceedings - Binding precedent of SSA's Emerald Meadows and its confirmation

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars - Validity of show cause notice - Requirement to specify the limb of section 271(1)(c) invoked - Quashing of penalty proceedings for defective notice - Penalty proceedings under section 271(1)(c) were vitiated and liable to be quashed because the show cause notice failed to specify whether penalty was sought for concealment of particulars of income or for furnishing inaccurate particulars of income. - HELD THAT: - The AO initiated penalty proceedings and, both in the assessment record and in subsequent notices, did not clearly indicate which limb of section 271(1)(c) was being invoked. The notice reproduced the general formulation that the assessee had "concealed the particulars of your income or furnished inaccurate particulars of such income" and the later fresh notice issued after the High Court's decision likewise did not identify the specific limb. The Tribunal relied on the consistent view taken in Jagdamba Prasad Gupta (Delhi Bench) which followed the decision in SSA's Emerald Meadows (Karnataka High Court) - a view confirmed by the Supreme Court on SLP - that a notice which does not specify the limb of section 271(1)(c) under which penalty is proposed is bad in law. Given that the assessee challenged the legality of the notice and the proceedings were fundamentally grounded on a defective notice, the Tribunal held that the entire penalty proceedings were vitiated and must be quashed. The Tribunal therefore set aside the orders below and cancelled the penalty.

Penalty proceedings quashed and penalty cancelled for defective show cause notice that failed to specify which limb of section 271(1)(c) was invoked.

Final Conclusion: Appeal allowed; penalty imposed under section 271(1)(c) set aside and penalty proceedings quashed because the show cause notice did not specify whether penalty was for concealment of income or for furnishing inaccurate particulars, a defect held fatal by binding precedent.

Scope of assessment under section 153A - requirement of incriminating material for additions under section 153A - scope of reassessment under section 147 - abatement/pendency of original proceedings on the date of search - recognition of income on cash or mercantile basis and consequence of alleged double taxation

Scope of assessment under section 153A - requirement of incriminating material for additions under section 153A - abatement/pendency of original proceedings on the date of search - Validity of addition of undisclosed interest in assessment completed under section 153A where no incriminating material was found during search and original proceedings were not pending on the date of search. - HELD THAT: - The Tribunal held that where the original assessment proceedings were not pending (i.e., original time limit for issue of notice under section 143(2) had expired) as on the date of search, the reassessment provisions (section 153A) cannot be used to make additions that are not founded on incriminating material discovered during the search. Although the Assessing Officer discovered the interest income only during reassessment by review of Form 26AS, no incriminating material relating to that income was seized or discerned during the search. In that factual matrix and in view of consistent judicial pronouncements limiting the scope of section 153A to additions based on material found during search, the addition of undisclosed interest in the impugned assessment year was not warranted and was directed to be deleted. [Paras 7, 9]

Addition of undisclosed interest made under section 153A was deleted for want of incriminating material seized during the search.

Scope of reassessment under section 147 - recognition of income on cash or mercantile basis and consequence of alleged double taxation - Whether the Assessing Officer, having become aware during section 153A proceedings that income had escaped assessment, could initiate proceedings under section 147 and whether the assessee's claim of having offered interest on cash basis in a subsequent year affects the Assessing Officer's power to act. - HELD THAT: - The Tribunal observed that the Assessing Officer is not without remedy: information or material unearthed during section 153A proceedings (even if not seized as incriminating material) may form the basis for initiating reassessment under section 147, provided legal requirements for such proceedings are met. The Tribunal also noted that the assessee is entitled to adopt either cash or mercantile basis for reporting interest income; where the assessee claims to have offered the interest on a cash basis in a subsequent year, that contention must be objectively examined. If on such examination the interest is found not to have been offered in the subsequent year as claimed, the Assessing Officer remains free to take action in accordance with law. [Paras 8]

Assessing Officer may initiate proceedings under section 147 based on information seized or otherwise coming to his notice during section 153A proceedings; the assessee's claim of cash-basis reporting requires examination and does not by itself preclude reassessment if the claim is not substantiated.

Final Conclusion: The appeals are allowed: additions of undisclosed interest in the assessments completed under section 153A were deleted for lack of incriminating material seized during the search; however, the Assessing Officer may, if lawfully justified, initiate reassessment proceedings under section 147 based on information that interest income escaped assessment, and the claim of having reported such interest on cash basis in a subsequent year must be examined on merits.

Rectification of mistake apparent on the face of record - actuarial valuation under unamended Insurance Act, 1938 - computation of surplus/deficit under Rule 2 of the First Schedule - legislation by incorporation - assessment of income of shareholder's account as business income - followed coordinate bench and precedent

Rectification of mistake apparent on the face of record - actuarial valuation under unamended Insurance Act, 1938 - computation of surplus/deficit under Rule 2 of the First Schedule - followed coordinate bench and precedent - Grounds no.2 and 3 relating to the manner of actuarial valuation and computation of surplus/deficit were not adjudicated in the earlier order and are disposed of in accordance with earlier decisions. - HELD THAT: - The Tribunal found an inadvertent omission in the appeal order in not disposing grounds no.2 and 3, which falls within the scope of rectification under section 254(2) as a mistake apparent on the face of the record. The parties agreed that the issues raised in these grounds are covered by the Tribunal's earlier decision in the assessee's own case and by the coordinate-bench decision in ICICI Prudential Insurance Co. Ltd. The Tribunal, following the reasoning in that coordinate-bench decision, held that Rule 2 of the First Schedule requires actuarial valuation to be made in accordance with the unamended Insurance Act, 1938 (by legislation by incorporation), and that reliance on IRDA Regulations/format by the assessing officer is not in accordance with Rule 2. Accordingly, the Commissioner (Appeals) decision upholding computation of surplus/deficit in conformity with the unamended Insurance Act, 1938 is upheld and the grounds are dismissed. [Paras 4, 5, 7]

Grounds no.2 and 3 are disposed of in favour of the assessee by upholding the Commissioner (Appeals) and following the coordinate-bench precedent; the appeal order is modified to record this disposal.

Assessment of income of shareholder's account as business income - followed coordinate bench and precedent - Ground no.6 on classification of income arising in the shareholder's account as business income was not adjudicated earlier and is dismissed as covered by earlier decisions. - HELD THAT: - Ground no.6, which concerns whether income arising in the shareholder's account is to be assessed as business income or income from other sources, is an off shoot of ground no.5. The Tribunal noted that, following its earlier decisions in the assessee's own case (assessment years 2002-03 to 2009-10) and the coordinate-bench decision in ICICI Prudential Insurance Co. Ltd., income of the shareholder's account forms part of the insurance business and must be assessed under the head 'income from business' regardless of nomenclature used by the assessee. Given that the issue is academic in view of binding precedent, the ground does not require fresh adjudication and is dismissed. [Paras 6, 8]

Ground no.6 is dismissed as covered by earlier decisions and held to be of no independent adjudicatory consequence.

Final Conclusion: The Tribunal allowed the Revenue's rectification applications, modified the appeal order to record disposal of grounds no.2, 3 and 6 by following the Tribunal's earlier decisions and the coordinate bench precedent, and dismissed those grounds accordingly.

Approval under section 10(23C)(vi) of the Income tax Act - time limit for disposal and deemed grant under the 9th proviso - educational institution existing solely for educational purposes and not for profit - relevance of earlier Tribunal findings and requirement of fresh objective examination - ploughing back of surplus as indicium of non profit character

Time limit for disposal and deemed grant under the 9th proviso - approval under section 10(23C)(vi) of the Income tax Act - Deemed grant of approval under the 9th proviso to section 10(23C)(vi) for the application filed on 27th September 2015 was not available where no specific order of rejection was passed within the statutory period. - HELD THAT: - The 9th proviso prescribes a twelve month period for the authority to grant or reject applications made on or after the specified date. The CBDT circular explains the legislative intent to avoid undue pendency but contains no provision creating a deeming fiction of approval where no order is passed. Judicial decisions on analogous time limit provisions (e.g., under section 12AA) have held the statutory time limit to be directory and not to result in deemed registration. Given the assessee's history of prior rejections and the fact that the impugned year's application was expressly rejected within the stipulated period, the Tribunal held that nondisposal of the 2015-16 application did not lead to deemed grant of approval and dismissed the additional ground. [Paras 6, 7, 8]

Additional ground seeking deemed approval for 2015-16 is dismissed; no deemed grant arises from mere non disposal within the prescribed period.

Approval under section 10(23C)(vi) of the Income tax Act - educational institution existing solely for educational purposes and not for profit - relevance of earlier Tribunal findings and requirement of fresh objective examination - plough back of surplus as indicium of non profit character - Whether the assessee qualifies for approval under section 10(23C)(vi) requires fresh adjudication by the Commissioner (Exemption) after examination of materials and application of relevant judicial precedents; the matter is restored for de novo consideration. - HELD THAT: - The Tribunal observed that the assessee's objects and course offerings (including numerous diplomas, certificates and flagship courses) have remained materially unchanged and that earlier Tribunal decisions had accepted the assessee as an educational/charitable institution. The Commissioner (Exemption) rejected the application largely by reiterating predecessors' orders and on the basis that the assessee does not run formal classes, derives major receipts from examination fees, and generates surplus. The Tribunal held that these conclusions were reached without adequate, objective examination of documentary material or application of relevant Supreme Court and High Court ratios (including that surplus ploughed back for educational purposes does not negate non profit character and that formal classroom teaching is not a prerequisite for being an educational institution). In view of these deficiencies, the Tribunal directed restoration of the issue to the Commissioner (Exemption) for de novo adjudication with opportunity to the assessee to place material and the authority to consider applicable precedents and the true nature of the activities and finances. [Paras 11, 12, 13, 19, 21]

Issue remanded to the Commissioner (Exemption) for fresh, de novo adjudication after considering all materials and applicable judicial precedents; appeal partly allowed for statistical purposes.

Final Conclusion: The Tribunal dismissed the plea of deemed approval for AY 2015-16 and restored the claim for approval under section 10(23C)(vi) for fresh adjudication by the Commissioner (Exemption) with opportunity to be heard; the appeal is partly allowed for statistical purposes (order dated 02.08.2019).

Reopening of assessment - 'reason to believe' and nexus between material and escapement of income - Principles of natural justice in reassessment - obligation to furnish material relied upon - Assessment of share application money and share premium as unexplained credits under section 68 - Onus on the assessee to prove identity, creditworthiness and genuineness of investors under section 68

Reopening of assessment - 'reason to believe' and nexus between material and escapement of income - Principles of natural justice in reassessment - obligation to furnish material relied upon - Validity of reopening of assessment under section 147/148 - HELD THAT: - The Tribunal held that the AO's reasons for reopening were primarily triggered by information received from the CBI and that the AO had in substance relied on that information. The recorded reasons did not disclose any independent tangible material or a direct nexus between available material and the formation of a belief that income had escaped assessment; the AO merely queried the high quantum of share premium and applied tests of human probabilities without independent enquiry. Further, the AO did not confront the assessee with, or furnish, the investigatory material relied upon by him, in breach of principles of natural justice. Applying the settled tests for 'reason to believe' (including the need for a clear link between material and belief), the Tribunal concluded that the reopening was without valid reasons and therefore bad in law. [Paras 36, 37, 38, 40, 41]

Reopening of assessment quashed as bad in law; reassessment notices/orders set aside.

Assessment of share application money and share premium as unexplained credits under section 68 - Onus on the assessee to prove identity, creditworthiness and genuineness of investors under section 68 - Legality and sustainment of additions of share application money/share premium (assessed as unexplained credits under section 68) - HELD THAT: - Although the Tribunal recorded the parties' rival contentions on merits, it noted that the reopening itself was invalid. On the merits the Tribunal observed that the AO treated the receipts as unexplained credits primarily because the quantum of premium appeared high, but the AO did not carry out independent enquiries, nor show that the assessee had failed to furnish or substantiate the relevant particulars. The assessee had produced board resolutions, investor details and a valuation report (which the AO rejected) and there were only procedural deficiencies in application forms. Doubts as to the quantum of premium, without further material showing the receipts were the assessee's own unaccounted money, were held insufficient to sustain additions under section 68. Moreover, the AO's reliance on the CBI material without confronting the assessee constituted an independent ground for deletion. [Paras 62, 63, 67, 68, 69]

Additions made as unexplained credits in respect of share application money/share premium deleted; appeals on merits allowed (in any event rendered academic by quashing of reassessment).

Final Conclusion: The reassessment notices/orders were quashed as invalid for want of valid 'reason to believe' and for breach of natural justice; consequential additions treated as unexplained credits under section 68 were deleted and the appeals were allowed.

Disallowance under section 14A r/w rule 8D - Disallowance limited to exempt income - Adjustment to book profit under section 115JB Explanation 1(f) - Addition under section 41(1) - Allocation of R & D and interest expenditure for benefit under section 80IC - Remand to Assessing Officer for fresh enquiry and verification - Arm's length price of corporate and comfort guarantee fee - Applicability of Indian Medical Council regulations and CBDT Circular No.5/2012

Disallowance under section 14A r/w rule 8D - Disallowance limited to exempt income - Adjustment to book profit under section 115JB Explanation 1(f) - Extent of disallowance under section 14A read with rule 8D and corresponding adjustment to book profit under section 115JB - HELD THAT: - The Tribunal held that any disallowance under section 14A read with rule 8D in computing income under the normal provisions must be restricted to the amount of exempt income actually earned by the assessee in the relevant year. The same limitation applies when making adjustments to book profit under Explanation 1(f) to section 115JB; while section 14A/rule 8D cannot be invoked for that adjustment, expenditure for earning exempt income may be adjusted under Explanation 1(f) but such adjustment must be confined to the exempt income earned during the year. The Tribunal applied the ratio of coordinate decisions and the assessee's own earlier-year Tribunal decision and directed the Assessing Officer to restrict computations accordingly. [Paras 9, 10, 36, 47]

Disallowance under section 14A/rule 8D and any adjustment under section 115JB Explanation 1(f) limited to the exempt income earned in the year; Assessing Officer directed to compute accordingly.

Addition under section 41(1) - Validity of addition under section 41(1) in respect of sundry creditors outstanding for more than three years - HELD THAT: - The Assessing Officer made additions solely on the basis that certain sundry creditors remained outstanding for over three years. The Tribunal found that the AO did not make any enquiry or produce material to demonstrate that the liabilities had ceased to exist as required by section 41(1). Following the Tribunal's earlier decision in the assessee's own case for an earlier year, the appellate order deleting the addition was upheld. [Paras 14, 44]

Deletion of the addition under section 41(1) sustained; Revenue's ground dismissed.

Allocation of R & D and interest expenditure for benefit under section 80IC - Remand to Assessing Officer for fresh enquiry and verification - Apportionment of R & D expenditure to Baddi and Solan Units (claim under section 80IC) - remand for fresh decision - HELD THAT: - The Tribunal noted that the identical issue in the earlier assessment year had been remitted to the Assessing Officer for inquiry into utilization of R & D expenditure with directions to afford the assessee a hearing. As the facts were identical, the Tribunal applied the doctrine of stare decisis and restored the issue to the AO to decide afresh in accordance with the directions given in the earlier year's order, permitting the assessee reasonable opportunity of hearing. [Paras 20, 21]

Issue remitted to the Assessing Officer for fresh decision and verification with directions to grant reasonable opportunity of hearing.

Allocation of R & D and interest expenditure for benefit under section 80IC - Apportionment of interest expenditure to Baddi and Solan Units while computing deduction under section 80IC - HELD THAT: - The assessee demonstrated that certain units (notably Baddi) had no borrowings and that interest allocation was made on the basis of actual utilization of borrowed funds. The AO, without examining facts, reallocated interest on the basis of sales turnover. The Tribunal, following its prior decision in the assessee's own case where factual materials showed no borrowing for Baddi, held that the AO's allocation was arbitrary and upheld the deletion of the addition. [Paras 27, 28]

Deletion of interest allocation to Baddi and Solan Units upheld; Revenue's ground dismissed.

Applicability of Indian Medical Council regulations and CBDT Circular No.5/2012 - Allowability of expenditure on gifts/freebies to doctors and medical professionals - HELD THAT: - The Tribunal observed Medical Council of India regulations and guidelines apply to medical practitioners and govern acceptance of gifts by doctors, not to pharmaceutical companies. Although CBDT Circular No.5/2012 contemplates disallowance of such expenditure by pharmaceutical companies, that circular operates prospectively from A.Y. 2013-14 and therefore does not apply to the impugned year. The Tribunal followed its earlier decision in the assessee's own case and analogous authority allowing the expenditure. [Paras 31, 34]

Disallowance deleted; expenditure on gifts to doctors allowed for the impugned year.

Arm's length price of corporate and comfort guarantee fee - Arm's length price for corporate guarantee fee charged to associated enterprise - HELD THAT: - This recurring transfer pricing issue had earlier been finally adjudicated in favour of the assessee with higher courts upholding a guarantee commission rate around 0.5-0.53%. The Tribunal, applying its prior decisions in the assessee's own case (and subsequent judicial affirmations), accepted the arm's length rate of 0.53% for corporate guarantees and sustained the Commissioner (Appeals) order deleting the Transfer Pricing Officer's higher adjustment. [Paras 38, 39]

Arm's length price of corporate guarantee fee accepted at 0.53%; adjustment deleted.

Arm's length price of corporate and comfort guarantee fee - Arm's length price for comfort guarantee fee - HELD THAT: - The Tribunal treated the comfort guarantee issue as identical to the corporate guarantee issue. For the assessment year where the AO had charged guarantee commission on comfort guarantees, the Tribunal found that the AO's determination should be sustained (the assessee had not charged any commission on comfort guarantees in that year). For the subsequent year, the Tribunal directed computation of the arm's length price of comfort guarantee fee at 0.53% following its consistent earlier findings. [Paras 40, 41, 53, 54]

AO's adjustment on comfort guarantee for AY 2011-12 upheld; for the other year comfort guarantee fee to be computed at 0.53%.

Final Conclusion: The cross appeals were partially allowed in part and dismissed in part: disallowances under section 14A/rule 8D and adjustments under section 115JB are restricted to the exempt income earned in the year; additions under section 41(1) were deleted for lack of evidentiary basis; allocation of certain R & D expenditure remitted to the Assessing Officer for fresh decision; interest apportionment to specified units and expenditure on gifts to doctors were sustained in favour of the assessee; and transfer pricing adjustments for corporate and comfort guarantees were resolved largely in accordance with the Tribunal's earlier rulings (arm's length rate fixed at 0.53% in the specified instances).

Treatment of cash receipts under section 68 - burden of proof on assessee for identity and genuineness of share capital under section 68 - presumption of application of own interest free funds for non business advances under section 36(1)(iii) - penalty under section 271(1)(c) requires concealment or furnishing of inaccurate particulars - allowability of higher rate depreciation for life saving equipment - relevance of incriminating material to assessments under section 153A

Treatment of cash receipts under section 68 - Whether additions based on discrepancies in seized diary Annexure A-2 (difference between cash collections and bank deposits) could be sustained as unaccounted income for assessment years 2008-09, 2009-10, 2010-11 and 2011-12. - HELD THAT: - The Tribunal analysed the seized diary (Annexure A-2), the petty cash record (A-116), bank statements and the day wise/month wise reconciliations filed by the assessee and agreed with the CIT(A) that (i) Annexure A-2 was an incomplete/haphazard diary and did not record all receipts or deposits, (ii) the assessee's books recorded cash receipts equal to or in excess of the diary entries, (iii) substantial cash was shown deposited in the assessee's bank accounts and (iv) returned income exceeded the diary receipts. Those factual findings were uncontroverted by Revenue. On that basis the Tribunal held that mere non correspondence between diary notings and deposits could not justify treating the difference as unaccounted income in the assessee's hands; the assessee had discharged the onus of showing that the diary entries were accounted for in its books. The Tribunal therefore upheld deletion of the additions under section 68 for the impugned years.

Additions based on Annexure A-2 discrepancies are deleted for A.Ys 2008-09, 2009-10, 2010-11 and 2011-12.

Treatment of cash receipts under section 68 - Whether addition of Rs. 2.23 crores (difference between receipts in Annexure A-119 and books for A.Y.2009-10) was sustainable. - HELD THAT: - The CIT(A) caused recomputation of the totals in Annexure A-119; on recalculation the seized document's total was less than the receipts shown in the assessee's books. The Revenue did not controvert the recomputed figures. As the evidence showed no understatement in books vis a vis Annexure A 119, the Tribunal upheld the deletion of the addition.

Addition based on Annexure A-119 recalculation is deleted.

Treatment of cash receipts under section 68 - Whether addition of Rs. 16.92 crores based on notings on Annexure A-120 (page 4) for A.Y.2010-11 was sustainable. - HELD THAT: - The CIT(A) examined the impugned diary page and bank reconciliations; the notings were assessed to be audit/reconciliation reminders made by staff, and the figures corresponded to bank balances per books with only small differences. The assessee produced reconciliation and bank statements which were not shown to be false. The Tribunal agreed that scribblings/reconciliation notes could not be the basis for addition where explained and supported by bank records, and upheld deletion.

Addition based on Annexure A-120 (page 4) is deleted.

Treatment of cash receipts under section 68 - Whether addition of Rs. 32,38,983 made on account of Annexure A-95 (billing software summary / handwritten extract) for A.Y.2011-12 was sustainable. - HELD THAT: - The seized page was a handwritten extract copied from the billing software summary. The CIT(A) found the software printout related to the prior year (ending 31.03.2010) and therefore was not relevant to the year under consideration; moreover, on analysis refunds recorded in the summary reduced net collections so that there was no short collection in cash as compared to books. The Tribunal agreed with these factual findings and held the addition unsustainable.

Addition based on Annexure A-95 is deleted.

Treatment of cash receipts under section 68 - Whether additions based on rough/undated notings in Annexure A-127 (page 19) and Annexure A-21/A-3 registers could be treated as unexplained income for A.Y.2011-12. - HELD THAT: - For Annexure A-127 (page 19) the CIT(A) found the page to be mere scribblings not relatable to other pages and with arithmetic errors; for Annexure A-21 and A-3 the CIT(A) found the registers recorded receipts from ECHS/CGHS received by cheque and/or bifurcation of receipts among group concerns and that the amounts were reflected in books of the assessee or sister concerns. Revenue did not controvert these factual findings. The Tribunal held that such unexplained notings/register bifurcations, when explained and matched with book entries or cheque receipts, cannot be treated as unaccounted income and upheld deletion of the additions.

Additions based on Annexure A-127 (page 19), Annexure A-21 and Annexure A-3 are deleted.

Presumption of application of own interest free funds for non business advances under section 36(1)(iii) - Whether disallowance of interest under section 36(1)(iii) on advances (Cross Objections) was justified where assessee had sufficient own interest free funds. - HELD THAT: - Applying the settled principle that where sufficient own interest free funds are available the presumption is that non business advances are made out of such funds, the Tribunal observed that the assessee's profits/reserves in the relevant years exceeded the advances in issue. Reliance on the principle confirmed by higher courts was applied; Revenue did not controvert the factual availability of own funds. The Tribunal directed deletion of the disallowances of interest under section 36(1)(iii) in the years contested in the assessee's Cross Objections.

Disallowances under section 36(1)(iii) are deleted where own interest free funds sufficed to cover advances (Cross Objections allowed as specified).

Allowability of higher rate depreciation for life saving equipment - Whether excess depreciation claimed at higher rates on surgical/life saving equipment should be disallowed and whether penalty for such claim was justified. - HELD THAT: - The assessee withdrew higher rate claims on opening WDV and filed revised lists for assets acquired thereafter; the CIT(A) reviewed the revised computation and restricted disallowance to amounts as worked out by the assessee. The Tribunal found no anomaly in the revised computations and that the CIT(A) in some instances disallowed less or more than the AO on additions during the year, leaving Revenue with no grievance. On penalty, the Tribunal accepted the CIT(A)'s conclusion that the depreciation claim involved a debatable question of law/fact (whether an item is 'life saving') and that full particulars had been disclosed; mere unsustainable but bona fide claims do not attract section 271(1)(c). Accordingly the disallowances and penalty conclusions were upheld or deleted as per the CIT(A)'s adjustments.

Excess depreciation disallowances restricted as per CIT(A)'s revised computations and related penalties deleted; grounds of Revenue dismissed.

Burden of proof on assessee for identity and genuineness of share capital under section 68 - relevance of incriminating material to assessments under section 153A - Whether share application money of Rs.90 lakhs (A.Y.2005-06) could be added as unexplained under section 68 and whether assessment under section 153A was valid in absence of incriminating material. - HELD THAT: - The assessee produced PANs, cheque details, confirmations (some admitted during appellate proceedings), and bank credits matching cheque numbers; two subscriptions were later returned and no shares allotted. The CIT(A) admitted additional evidence, found identity/genuineness established and observed that it was for Revenue to investigate further if needed. The Tribunal found no reason to disturb these factual findings. Separately, the Tribunal considered the law that where no incriminating material is found during search, reopening/completion under section 153A cannot be used to make additions in respect of already concluded assessment; applying binding High Court decisions, the Tribunal allowed the assessee's (time barred but condoned) Cross Objections and held the assessment additions unsustainable in absence of incriminating material.

Addition of Rs. 90 lakhs under section 68 deleted; Cross Objections on validity of assessments under section 153A allowed where no incriminating material supported the addition.

Penalty under section 271(1)(c) requires concealment or furnishing of inaccurate particulars - Whether penalties under section 271(1)(c) were leviable on additions made (interest disallowances, excess depreciation, consultancy/disallowance from provisional trial balance) for A.Ys 2007-08 to 2011-12. - HELD THAT: - The Tribunal applied well settled principles distinguishing debatable/bona fide claims from concealment or furnishing inaccurate particulars. For interest disallowances under section 36(1)(iii) (where additions were later deleted or were debatable), the CIT(A)'s deletion of penalties was upheld. For excess depreciation, the Tribunal accepted that full disclosure had been made and the issue was debatable; penalties were deleted. For consultancy payments (Rs. 15 lakhs) and the provisional trial balance gap (Rs. 11 lakhs), the Tribunal found that particulars were disclosed, payments were by banking channels (with TDS in case of consultancy) and provisional figures are estimative; mere disallowance did not establish concealment or inaccurate particulars. Accordingly the Tribunal deleted/allowed appeals against penalty as set out in the order.

Penalties under section 271(1)(c) deleted where additions arose from debatable claims, provisional figures or where particulars were disclosed; appeals against confirmed penalties allowed as specified.

Final Conclusion: The Tribunal dismissed the Revenue appeals and allowed, in whole or in part, the assessee's Cross Objections as analysed above: additions founded on seized notings/registers/software summaries were deleted where the assessee established accounting/bank reconciliations or where the seized material was irrelevant; disallowances of interest under section 36(1)(iii) were deleted where own interest free funds were sufficient; excess depreciation adjustments were restricted as per revised claims and related penalties were deleted; the share application money addition (A.Y.2005 06) was deleted on proof of genuineness and identity; assessments under section 153A were held unsustainable in absence of incriminating material; penalties under section 271(1)(c) were deleted where additions arose from bona fide or debatable claims or provisional estimates.

Reopening of assessment and reason to believe - Borrowed satisfaction - Jurisdiction under section 147/148 - Requirements under section 68 - identity, genuineness and creditworthiness - Prima facie material threshold for reopening - Duty of Assessing Officer to make independent enquiries

Reopening of assessment and reason to believe - Borrowed satisfaction - Jurisdiction under section 147/148 - Prima facie material threshold for reopening - Duty of Assessing Officer to make independent enquiries - AO wrongly assumed jurisdiction to reopen assessment under section 147/148. - HELD THAT: - The Tribunal found that the AO merely reproduced the Investigation Wing's report in the reasons recorded and did not apply independent mind to form his own reason to believe that income had escaped assessment. The content of the Investigation Wing's communication raised suspicion and doubts about identity, genuineness and creditworthiness of investors, but the AO made no independent enquiries, copied incorrect figures from the investigation report and failed to demonstrate a link between the tangible material and a bona fide reason to believe. On these facts the satisfaction recorded was a 'borrowed satisfaction' and did not meet the prima facie material threshold required for valid reopening; consequently jurisdiction under section 147/148 was wrongly assumed. [Paras 6]

Reopening under section 147/148 quashed for lack of independent satisfaction; AO's assumption of jurisdiction set aside.

Requirements under section 68 - identity, genuineness and creditworthiness - Duty of Assessing Officer to make independent enquiries - Prima facie material threshold for reopening - Addition under section 68 of the Act (share capital/premium) was not sustainable and was correctly deleted by the CIT(A). - HELD THAT: - On merits the Tribunal examined whether the assessee discharged the onus under section 68. It noted that the AO had relied on the Investigation Wing's findings without conducting independent enquiries during reassessment, and that the assessee had furnished documents and explanations (including before the Investigation Wing) addressing identity, genuineness and premium justification. Because the AO did not articulate reasons for rejecting those explanations or make requisite inquiries himself, and given the factual matrix where the investigating material did not show adverse findings against the assessee, the Tribunal found that the CIT(A) was justified in concluding that the ingredients of section 68 were established and that the addition should be deleted. [Paras 6]

Addition under section 68 deleted; AO's addition restored by revenue reversed and CIT(A)'s deletion upheld.

Final Conclusion: The Tribunal dismissed the Revenue's appeal: jurisdictional reopening under section 147/148 was invalid for lack of independent satisfaction by the AO, and the addition made under section 68 was rightly deleted by the CIT(A); revenue's grounds are rejected.

Summary order. Matter adjourned and listed under the same heading on 13th August, 2019; Court directed the office to report whether verification of the claim lodged by Steel Authority of India Limited has been carried out and recorded that the Official Liquidator admits SAIL filed a proof of debt under section 530 of the Companies Act, 1956.

Admission of Section 9 application under Insolvency and Bankruptcy Code, 2016 - corporate insolvency resolution process (CIRP) - moratorium under Section 14 - appointment and duties of Interim Resolution Professional - operational creditor compliance with Section 9(3) requirements (demand notice, proof of service, no-dispute affidavit) - proof of default and limitation for initiation of CIRP - jurisdiction of Adjudicating Authority

Operational creditor compliance with Section 9(3) requirements (demand notice, proof of service, no-dispute affidavit) - proof of default and limitation for initiation of CIRP - Whether the operational creditor satisfied the statutory preconditions under Section 9(3) and the application was within limitation so as to admit the Section 9 petition. - HELD THAT: - The Tribunal found that the operational creditor served the demand notice under Section 8 (Form No. 3/4) on the corporate debtor and produced tracking proof of service. A bank certificate was placed on record confirming absence of credit for the claimed principal amount for the relevant period, thereby satisfying the requirement under Section 9(3)(c). An affidavit under Section 9(3)(b) asserting no dispute was also filed and the corporate debtor, through its director, admitted liability. The default date and amount were corrected by affidavit during proceedings and the Tribunal recorded that the default occurred on 16.10.2017; on that basis the petition was held to be within the period of limitation. Having found that the statutory preconditions were fulfilled, the Tribunal proceeded to admit the application under Section 9(5). [Paras 7, 8, 9, 11, 12]

Operational creditor complied with Section 9(3) requirements; default established; application admitted as within limitation.

Admission of Section 9 application under Insolvency and Bankruptcy Code, 2016 - corporate insolvency resolution process (CIRP) - Whether the Section 9 application should be admitted and CIRP initiated against the corporate debtor. - HELD THAT: - Applying the satisfaction of the conditions prescribed by Section 9(5)(i) - completeness of Form 5, non-payment of the unpaid operational debt, service of demand notice and absence of a reply, and the affidavit under Section 9(3)(b) - the Tribunal found the statutory threshold met. On these findings the Tribunal admitted the petition and directed initiation of the corporate insolvency resolution process against M/s. Ojasvi Agritech Private Limited. [Paras 12]

Section 9 application admitted and CIRP of the corporate debtor ordered.

Appointment and duties of Interim Resolution Professional - Appointment of the Interim Resolution Professional and the scope of duties during CIRP. - HELD THAT: - The Tribunal accepted the operational creditor's nomination and appointed the named Interim Resolution Professional who filed the requisite consent and registration certificate. The IRP is directed to perform functions under the Code, including protection and preservation of the corporate debtor's assets and to require cooperation from management and personnel of the corporate debtor; the Tribunal recorded that the IRP may apply for appropriate orders if assistance is not furnished. [Paras 13, 17]

Named IRP appointed; directed to discharge statutory duties and protect corporate debtor's assets.

Moratorium under Section 14 - Whether moratorium should follow from the date of the order and its temporal scope. - HELD THAT: - Consequent to admission of the Section 9 application, the Tribunal declared the moratorium envisaged under Section 14(1) to operate from the date of the order until completion of the CIRP, subject to the exceptions contained in Sections 14(2) and 14(3). The Tribunal also recorded that the moratorium will cease if a resolution plan is approved under Section 31 or an order for liquidation is passed under Section 33. [Paras 14, 15, 16]

Moratorium under Section 14 ordered effective from the date of the order until completion of CIRP, subject to statutory exceptions and cessation on approval of a plan or liquidation.

Jurisdiction of Adjudicating Authority - Whether the Tribunal has jurisdiction to entertain the application. - HELD THAT: - The Tribunal noted that the registered office of the corporate debtor is situated within its territorial jurisdiction (Jaipur) and accordingly held that it has competence to entertain and try the Section 9 application. [Paras 10]

Tribunal has jurisdiction to entertain the application.

Final Conclusion: The Section 9 petition by the operational creditor was admitted after the Tribunal found compliance with statutory preconditions, the corporate insolvency resolution process was ordered to commence, the named Interim Resolution Professional was appointed, and the moratorium under Section 14 was declared effective from the date of this order.

Civil contempt - willful disobedience - compromise decree/consent decree as basis for contempt - execution jurisdiction versus contempt jurisdiction - moratorium under Section 14 of the Insolvency and Bankruptcy Code and its impact on satisfaction of decrees - lifting the corporate veil in contempt proceedings

Compromise decree/consent decree as basis for contempt - execution jurisdiction versus contempt jurisdiction - Whether a compromise decree passed on consent without an independent undertaking to the Court can be the subject matter of contempt proceedings and whether the contempt jurisdiction is ousted by availability of execution remedy. - HELD THAT: - The Court examined the distinction between non compliance of a compromise/consent decree and breach of a categorical undertaking to the Court. While Babu Ram Gupta was noted for drawing a distinction, the Court followed the Apex Court's later exposition in Rama Narang to hold that a consent decree is a decree and, when violated wilfully, can attract contempt jurisdiction. Availability of execution does not per se oust the Court's power to proceed under the Contempt of Courts Act; contempt jurisdiction may be exercised where the violation warrants punishment under the Act. On the preliminary objection, however, the Court rejected the respondents' contention that contempt jurisdiction is unavailable merely because execution is an alternative remedy and held that maintainability must be considered by reference to whether the violation is of a nature constituting civil contempt. [Paras 35, 36, 37]

Preliminary objection rejected: contempt proceedings are not precluded merely because the decree is by consent or because execution is an available remedy; maintainability depends on whether there is willful disobedience.

Civil contempt - willful disobedience - moratorium under Section 14 of the Insolvency and Bankruptcy Code and its impact on satisfaction of decrees - lifting the corporate veil in contempt proceedings - Whether the respondents committed civil contempt by willfully disobeying the compromise decree in circumstances where insolvency proceedings (appointment of IRP and moratorium) intervened, and whether directors/officers can be held liable by lifting the corporate veil. - HELD THAT: - Applying settled authorities, the Court emphasised that civil contempt requires a finding of wilful and intentional disobedience. Evidence showed initial part payment followed by financial collapse, recall of major financing, admission of insolvency proceedings, appointment of an IRP and pending liquidation. Those facts were undisputed and established that the company's management had been superseded and a moratorium operated, preventing respondents from giving preferential satisfaction to one operational creditor. The Court held that compelling circumstances arising from the insolvency process and the statutory prohibition on preferential payments precluded a finding of wilful disobedience. The fact of a later demand draft payment by certain individuals from personal funds in a separate criminal/compounding context did not establish that the company or its directors wilfully disobeyed the decree. Consequently, the judgments relied upon for piercing the corporate veil were held inapplicable to the present facts where compliance was prevented by operation of law and insolvency proceedings. [Paras 50, 51, 54, 57, 58]

Respondents not guilty of civil contempt; petition dismissed as there is no proved willful disobedience and insolvency proceedings/moratorium prevent preferential satisfaction of the decree.

Final Conclusion: The contempt petition was held maintainable in principle, but on the merits dismissed: there was no willful disobedience of the compromise decree because insolvency proceedings, appointment of an IRP and the statutory moratorium prevented preferential payment, and therefore respondents cannot be punished for civil contempt; the petition is dismissed and the contempt notice discharged.

Corporate Insolvency Resolution Process - instrumentality of the State / State as 'other authorities' under Article 12 - operational debt and default - maintainability of Section 9 proceedings - public purpose / public interest - doctrine of lifting the corporate veil

Instrumentality of the State / State as 'other authorities' under Article 12 - doctrine of lifting the corporate veil - public purpose / public interest - Whether the Corporate Insolvency Resolution Process can be initiated against the Corporate Debtor, a wholly Government owned company alleged to be an instrumentality/alter ego of the State - HELD THAT: - One Member held that where a company is in substance an instrumentality or alter ego of the State (the entire shareholding being vested in the President of India and the company serving a public purpose), initiating CIRP would effectively initiate insolvency against the State, defeat the public purpose and is impermissible; accordingly, CIRP could not be initiated against such a Government company. The same Member reasoned that the corporate veil must be lifted to identify who stands behind the corporate form and that application of the Code to an instrumentality of the State would create chaos and undermine constitutional and public interest considerations, including the Government's continuing role in reviving sick undertakings. The other Member disagreed, observing that the statutory definition of "corporate person" and "corporate debtor" under the Code is unqualified (except as to financial service providers), that Article 12 or the characterisation of a body as a State instrumentality does not, by itself, exclude application of the Code, and that writ jurisdiction remains available but does not oust the statutory remedy under Section 9. The disagreeing Member relied on statutory scheme, precedents admitting CIRP against public sector undertakings, and the limited scope of the Adjudicating Authority under Section 9 to examine debt, default and existence of dispute, concluding that allowing an exclusion would leave creditors remediless and frustrate the Code's object.

The Tribunal admitted the Section 9 petition and proceeded with CIRP notwithstanding the contention that the Corporate Debtor is an instrumentality of the State; the view that CIRP cannot be initiated against such a Government company was rejected by the Member who admitted the petition.

Operational debt and default - maintainability of Section 9 proceedings - Whether the petition under Section 9 discloses an operational debt, default and absence of a pre existing dispute so as to require admission of the application - HELD THAT: - The Member admitting the petition applied the statutory tests under Section 9 (and the principles in Mobilox Innovations), namely whether an operational debt exists, documentary evidence shows the debt is due and payable, and there is no pre existing dispute or record of such dispute. That Member found the Petitioner had furnished the demand notices, bank certificate and affidavit required by Section 9(3), the Corporate Debtor had not raised a substantive dispute as to liability or default, and therefore the application was complete and satisfied the conditions for admission under Section 9(5). Reliance was placed on the Code's definitions of corporate person, corporate debtor and operational debt and on earlier decisions admitting insolvency petitions against public sector undertakings, and it was held that Section 238 and the Code's scheme do not yield to the claim that other labour or gratuity statutes preclude initiation of CIRP under Section 9.

The petition satisfied the statutory conditions of debt, default and absence of dispute and was admitted under Section 9, commencing the corporate insolvency resolution process.

Final Conclusion: The Tribunal admitted the petition filed under Section 9 against Hindustan Antibiotics Limited, holding that the petition met the statutory requirements for initiation of CIRP; the contention that a wholly government owned company, characterised as an instrumentality of the State, is immune from CIRP was rejected by the Member admitting the petition despite a contrary view recorded by the other Member. The petition is therefore admitted and CIRP is ordered to commence.

Duties of interim resolution professional to take control and custody of assets - Assets excluded from duties of interim resolution professional (third party ownership in possession) - Interaction between the Insolvency and Bankruptcy Code and SARFAESI Act - Code overriding inconsistent provisions of other laws (Section 238) - Possession taken under SARFAESI prior to commencement of moratorium

Duties of interim resolution professional to take control and custody of assets - Assets excluded from duties of interim resolution professional (third party ownership in possession) - Possession taken under SARFAESI prior to commencement of moratorium - Interaction between the Insolvency and Bankruptcy Code and SARFAESI Act - Code overriding inconsistent provisions of other laws (Section 238) - Whether a secured creditor who had taken physical possession of property under Section 13(4) of the SARFAESI Act prior to the commencement of the moratorium can refuse to hand over possession to the Interim Resolution Professional where the corporate debtor remains the owner - HELD THAT: - The Court examined the duties of the Interim Resolution Professional under Section 18 of the I&B Code, which require taking control and custody of assets over which the corporate debtor has ownership rights as recorded in its balance sheet, including assets not in its possession. The statutory explanation excludes from that definition assets owned by a third party in the possession of the corporate debtor, but does not render assets whose title remains with the corporate debtor immune from the IRP's duty. The decision in Transcore pre-dated the I&B Code and cannot override provisions of the Code. Section 238 of the I&B Code makes the Code prevail over any inconsistent provisions of existing laws, including the SARFAESI Act. Accordingly, where title to the property remains with the corporate debtor, Section 18 of the I&B Code prevails over Section 13(4) of the SARFAESI Act, and a secured creditor who has taken possession before moratorium cannot retain possession against the entitlement of the Interim Resolution Professional to take custody. [Paras 12, 13, 14, 15, 16]

Section 18 of the I&B Code overrides Section 13(4) of the SARFAESI Act in the circumstances; the bank (and its assignee) cannot retain possession of property which remains the corporate debtor's and must hand it over to the Interim Resolution Professional.

Final Conclusion: Appeal dismissed. The duties of the Interim Resolution Professional under Section 18 of the I&B Code prevail over the secured creditor's possession taken under Section 13(4) of the SARFAESI Act where title remains with the corporate debtor; possession must be handed over to the Resolution Professional.

Deeming fiction - financial creditor - financial debt - commercial effect of a borrowing - authorised representative on the Committee of Creditors - concurrent remedies (RERA and IBC) - harmonious construction of statutes - presumption of constitutionality of economic legislation

Deeming fiction - financial creditor - financial debt - commercial effect of a borrowing - Whether amounts paid by allottees under real estate projects are subsumed within the definition of "financial debt" and whether the Explanation to Section 5(8)(f) is constitutionally valid or merely clarificatory - HELD THAT: - The Court held that Section 5(8)(f) is a residuary, "catch-all" provision capable of covering transactions that have the commercial effect of a borrowing. Payments by allottees - instalments/advances made for construction of a future asset, used to finance the project and entailing consideration for the time value of money - fall within the ordinary meaning of amounts "raised" under transactions having the commercial effect of a borrowing. The Explanation inserted by the Amendment Act, deeming amounts raised from an allottee under a real estate project to have the commercial effect of a borrowing, was therefore declaratory/clarificatory of a position that already obtained under the main provision and does not create a new legal species; the deeming fiction serves to put beyond doubt the legal position. The Court rejected arguments based on strict noscitur a sociis/eiusdem generis readings and on the contention that an explanation cannot enlarge the main provision, observing that the legislature may amend and clarify definitions and that residuary language was deliberately wide. The Amendment Act does not offend Articles 14, 19(1)(g) or 300 A. [Paras 67, 69, 84, 85, 86]

Allottees/home buyers are financial creditors; the Explanation to Section 5(8)(f) is clarificatory and constitutionally valid.

Authorised representative on the Committee of Creditors - collegiality of creditors - representation of numerous creditors - Constitutional validity and working of the amendments providing for authorised representatives (Section 21(6A) and Section 25A) to represent classes of financial creditors and the attendant voting mechanism - HELD THAT: - The Court upheld the machinery provisions for appointing authorised representatives for classes of financial creditors exceeding a threshold, and the duties/rights and voting arrangements contained in Section 25A and related Regulations. It accepted the legislative rationale - efficient representation of numerous small creditors (e.g., debenture-holders, fixed deposit-holders, allottees) and protection of the Committee of Creditors' functioning - and noted that implementation issues can be and are being addressed by regulations and subsequent legislative amendments (including the Amendment Bill provisions further clarifying voting by authorised representatives). The Court rejected contentions that heterogeneity of allottees or potential conflicting instructions renders the scheme arbitrary, observing that the statute and regulations provide mechanisms (and further parliamentary amendment) to aggregate voting instructions and that minor implementation difficulties do not render the provisions unconstitutional. [Paras 47, 48, 54, 55, 86]

Sections 21(6A) and 25A and the corresponding regulations are constitutionally valid and fit for purpose; implementation issues do not invalidate the provisions.

Concurrent remedies (RERA and IBC) - harmonious construction of statutes - presumption of constitutionality of economic legislation - Whether RERA, as a special enactment governing real estate, excludes or prevails over the Code (as amended) in disputes between allottees and developers - HELD THAT: - The Court held that RERA and the Code operate in different spheres and provide concurrent remedies. RERA grants project-specific, statutory protections and enforcement mechanisms for allottees; the Code provides an in-rem collective insolvency resolution mechanism focused on rehabilitation of the corporate debtor. Given Section 238 of the Code and the temporal sequence of enactment, the Court held that the Code (as amended) will prevail to the extent of any inconsistency, but that remedies under RERA remain available and are additional, not exclusive. The Court emphasised harmonious construction and noted that resolution plans under the Code must comply with applicable laws including RERA, so that the two regimes can co-exist and complement each other. [Paras 23, 24, 28, 29, 86]

RERA and the Code are concurrent; in case of conflict the Code (as amended) prevails, but RERA remedies remain available and resolution plans must comply with RERA.

Presumption of constitutionality of economic legislation - reading down - Whether the Amendment Act should be read down, given asserted risks of misuse, retrospective effect, summary admission and threat to management rights and fundamental freedoms - HELD THAT: - Applying settled principles of deference in economic legislation and considering the Insolvency Law Committee's factual findings about the real estate sector, the Court refused to read down the Amendment Act. It held that timelines for admission are directory rather than mandatory and that safeguards in the Code (including the ability of the corporate debtor to raise defences, the adjudicating authority's scrutiny, Section 65 for fraudulent invocation, and requirements that resolution plans comply with law) mitigate asserted risks. The Court found the legislative scheme rationally related to its objects and not manifestly arbitrary; the arguments for prospective application or thresholds were unnecessary given the statutory safeguards and the clear, unambiguous language of the amendments. Where implementation difficulties arise, they should be addressed by the legislature/regulator rather than by judicially rewriting unambiguous statutory text. [Paras 31, 50, 52, 56, 86]

No reading down or prospective limitation is warranted; the Amendment Act as enacted is to be applied as valid law.

Final Conclusion: The Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 - including the Explanation to Section 5(8)(f) deeming amounts received from allottees to have the commercial effect of a borrowing, and the provisions for authorised representatives and their voting - is constitutionally valid. Allottees of real estate projects are financial creditors (a position clarified but not created by the explanation), RERA and the Code provide concurrent remedies with the Code prevailing in conflict, and implementation or administrative concerns do not invalidate the amendments. Directions were given for administrative compliance by States/Union Territories and for staffing of tribunals.

Refund under Notification No. 12/2013-ST dated 01.07.2013 - authorized operations in SEZ - common use of input services between SEZ and DTA - distinction between operating out of a DTA unit and making supply to a DTA - finality of earlier administrative/tribunal orders

Refund under Notification No. 12/2013-ST dated 01.07.2013 - common use of input services between SEZ and DTA - distinction between operating out of a DTA unit and making supply to a DTA - Entitlement to refund of Service Tax claimed for July-September 2016 (Rs. 4,54,088/-) where input services were held by revenue to be commonly used for SEZ and DTA operations but the appellant has no DTA unit and only supplies to a DTA entity. - HELD THAT: - The Tribunal examined whether Para 3(III)(a) of the Notification applies where the assessee does not maintain a DTA unit but supplies from its SEZ unit to an entity located in DTA. The authorities rejected the refund on the ground of common use between SEZ and DTA. The Tribunal found that Para 3(III)(a) is directed at cases where the assessee has units in both SEZ and DTA, and does not apply to a situation where an SEZ developer/unit supplies to a separate DTA entity. The Tribunal relied on the distinction between operating out of a DTA unit and merely making a supply to a DTA, held that the earlier allowance of refund in the assessee's own case and a similar sanction by the Commissioner, Mysore supported this view, and concluded that denial of refund on the ground of alleged common use was not sustainable. [Paras 6, 7]

Refund claim of Rs. 4,54,088/- allowed; finding of common use and rejection under Para 3(III)(a) set aside.

Refund on services later specified or listed - finality of earlier tribunal order - Entitlement to refund of Service Tax of Rs. 2,33,325/- paid prior to the services being included in a default list. - HELD THAT: - The Tribunal noted that this issue is covered in favour of the appellant by the Tribunal's own earlier Final Order No. 20490/2019 dated 17.06.2019 on identical facts. The impugned order did not dispute the nature or consumption of the services in the SEZ. Denial of refund on a mere procedural lapse where ab initio exemption applies was held not sustainable in view of the earlier final decision. [Paras 6]

Refund of Rs. 2,33,325/- allowed in view of the earlier final tribunal order in the appellant's own case.

Rent-a-cab and accommodation services - common use of input services between SEZ and DTA - refund under Notification No. 12/2013-ST dated 01.07.2013 - Entitlement to refund of amounts claimed for rent-a-cab and accommodation services (Rs. 8,008/- and Rs. 3,237/-) rejected on ground of common use between SEZ and DTA. - HELD THAT: - The Tribunal treated these claims as analytically linked to the primary finding on common use. Having held that the appellant does not maintain a DTA unit but only supplies to a DTA entity, the Tribunal concluded there was no breach of the Notification conditions with respect to these services. Consequently, rejection of these refund claims on the common-use ground was unsustainable. [Paras 6]

Refunds for the rent-a-cab and accommodation services allowed; rejections on common-use grounds set aside.

Final Conclusion: The impugned order dated 31.07.2018 rejecting the appellant's refund claims for the quarter July-September 2016 is set aside in its entirety; the appellant's appeal is allowed with consequential relief.

Adjustment of excess service tax under Rule 6(4A) of the Service Tax Rules, 1994 - Voluntary Compliance Encouragement Scheme (VCES) - right to refund - computation of tax liability distinct from refund

Adjustment of excess service tax under Rule 6(4A) of the Service Tax Rules, 1994 - computation of tax liability distinct from refund - right to refund - Whether excess service tax paid for the period October 2007 to March 2009 could be adjusted against service tax liability of subsequent months/quarters beyond the immediately succeeding month/quarter under Rule 6(4A). - HELD THAT: - The Tribunal examined Rule 6(4A) which permits an assessee who has paid an excess amount to adjust such excess against service tax liability for the succeeding month or quarter. The adjudicating authority had interpreted the rule to require adjustment only in the immediately following month/quarter and rejected the assessee's request to carry forward and adjust the excess against later periods. The Tribunal rejected that restrictive interpretation. It observed that where excess payment exceeds the liability of the immediately succeeding period, the natural and necessary consequence is that any remaining balance must be carried forward and available for adjustment in subsequent months/quarters. The Tribunal further noted that the assessee's funds remain with Revenue and that the matter concerns computation of tax liability rather than a pure refund claim; an assessee cannot be left remediless when a legal mechanism exists to adjust excess payments. Applying this reasoning to the facts - the assessee having paid tax under VCES for the entire period and later seeking adjustment of the amount paid for October 2007 to March 2009 against liabilities for January 2014 to September 2015 - the Tribunal concluded that the adjudicating authority's restrictive view could not be sustained.

Impugned order rejecting adjustment set aside; assessee entitled to carry forward and adjust the excess tax paid for October 2007 to March 2009 against subsequent service tax liabilities, with consequential benefits as per law.

Final Conclusion: The appeal is allowed: the Revenue's narrow construction of Rule 6(4A) is rejected and the assessee may adjust the excess service tax paid for October 2007 to March 2009 against later tax liabilities, with consequential reliefs as provided by law.

Cenvat credit - Debonding of 100% EOU to DTA - Para 8 of Notification No.22/2003-CE - Rule 3(1) of the Cenvat Credit Rules, 2004 - Proviso inserted by Notification No.35/2008-CE(NT) - Interpretation of proviso as an explanation / drafting error - Objective of Cenvat - removal of cascading

Cenvat credit - Debonding of 100% EOU to DTA - Para 8 of Notification No.22/2003-CE - Rule 3(1) of the Cenvat Credit Rules, 2004 - Objective of Cenvat - removal of cascading - Entitlement to Cenvat credit of duties paid on inputs and capital goods when a 100% EOU surrenders EOU status and becomes a DTA (de-bonding), under Rule 3(1) read with para 8 of Notification No.22/2003-CE. - HELD THAT: - The Court examined Rule 3(1) which enumerates the duties eligible for Cenvat credit and held that the rule is an enabling provision intended to remove cascading by allowing credit for duties paid on inputs, capital goods and input services. The duties paid by the assessee upon de-bonding were duties for which Cenvat credit is ordinarily available under Rule 3(1). On a harmonious reading of Rule 3(1) and para 8 of Notification No.22/2003-CE, the duties paid on de-bonding cannot be excluded from the credit mechanism. Prior tribunal and High Court decisions (including the Bombay Bench decision in Rajdhani Fab. Pvt. Ltd. and related Tribunal orders) support treating amounts paid at de-bonding as excise duty eligible for credit. The court therefore concluded that the assessee was entitled to claim Cenvat credit of the duties (including excise duty, countervailing duty and cess) paid on de-bonding of the unit.

Assessee entitled to Cenvat credit of duties paid on inputs and capital goods at the time of de-bonding; appeal allowed on this ground.

Proviso inserted by Notification No.35/2008-CE(NT) - Interpretation of proviso as an explanation / drafting error - Rule 3(1) of the Cenvat Credit Rules, 2004 - Whether the proviso inserted in Rule 3(1) by Notification No.35/2008-CE(NT) restricts Cenvat credit only to an amount equal to central excise duty paid on capital goods at de-bonding. - HELD THAT: - The Court held that the proviso, as placed below the eleven clauses of Rule 3(1), appears to be a drafting slip and is more in the nature of an explanation clarifying entitlement to credit rather than a provision intended to curtail the broad entitlement under Rule 3(1). The proviso should not be read as a standalone, restrictive enabling provision that limits credit to only the amount equal to central excise on capital goods. Such a restrictive reading would defeat the object and purport of Rule 3(1). The Court relied on principles of proviso interpretation and previous authorities recognizing that a proviso may in substance operate as an explanatory or saving provision and should be harmoniously read with the main enactment.

Proviso of Notification No.35/2008 cannot be read as restricting Cenvat credit only to amount equal to central excise on capital goods; it should be read as clarification/explanation and does not defeat entitlement under Rule 3(1).

Final Conclusion: The appeals are allowed. The Tribunal and lower authorities erred in denying Cenvat credit of duties paid on de-bonding; the impugned orders are set aside. No order as to costs.

Rebate of duty on export under Rule 18 of the Central Excise Rules, 2002 - Scope of notification No.19/2004 dated 6.9.2004 - conditions for rebate - Concept of "excisable goods" and its application to imported goods re-exported as such - Reversal of CENVAT credit as equivalent to payment of duty - Export "directly from a factory" requirement in rebate notifications

Rebate of duty on export under Rule 18 of the Central Excise Rules, 2002 - Scope of notification No.19/2004 dated 6.9.2004 - conditions for rebate - Concept of "excisable goods" and its application to imported goods re-exported as such - Rebate under Rule 18 read with notification No.19/2004 was available for LCD panels and parts re-exported as such even though they were imported and not manufactured in India. - HELD THAT: - Rule 18 authorises rebate on duty paid on "such excisable goods" where the Central Government notifies rebate and prescribes conditions. The term 'any goods' in Rule 18 is wide and does not by itself require that the goods must have been manufactured within the country. The meaning of 'excisable goods' is taken from Section 2(d) and applies to goods specified in the Schedules as being subject to duty; LCD panels and parts fell within that description. Thus, the eligibility to claim rebate depends on satisfaction of conditions in the notification and payment of duty, not on actual manufacture in India. The Court rejected the contention that Rule 18 or the notification imports a separate pre-condition of domestic manufacture as a prerequisite to rebate. [Paras 8, 11, 12, 16]

Rebate claim could not be denied merely because the goods were imported and not manufactured in India; the goods were "excisable" and eligible under Rule 18 and the notification subject to the other conditions being fulfilled.

Reversal of CENVAT credit as equivalent to payment of duty - Rule 3(5) of the CENVAT Credit Rules, 2004 - Reversal of CENVAT credit under Rule 3(5) amounted to payment of duty for purposes of claiming rebate under the notification. - HELD THAT: - It was undisputed that the imported goods had attracted countervailing duty and that CENVAT credit had been availed and subsequently reversed in entirety under the CENVAT Rules. Rule 3(5) requires payment of an amount equal to the credit availed when inputs or capital goods are removed as such. The Court accepted the reasoning in precedents that reversal of CENVAT credit constitutes duty payment and therefore satisfies the notification's requirement that goods be exported after payment of duty. Having regard to the parity with earlier MODVAT provisions and the consistent view in relevant High Court decisions, the reversal was treated as duty paid for the purpose of rebate. [Paras 9, 13, 16, 17]

Payment by way of reversal of CENVAT credit is to be treated as payment of duty and does not preclude entitlement to rebate.

Export "directly from a factory" requirement in rebate notifications - Meaning of "factory" under Section 2(e) - Export of the goods from the petitioner's factory premises satisfied the notification condition that excisable goods be exported directly from a factory, even though the goods were not manufactured there. - HELD THAT: - Clause 2(a) of the notification requires export after payment of duty directly from a factory or warehouse. The definition of 'factory' in Section 2(e) describes premises where excisable goods are manufactured or a manufacturing process is carried on. The petitioner was carrying out manufacturing activities at its factory premises and the goods were exported from those premises. The Court held there is no statutory requirement that the particular goods exported must have been manufactured at that factory; it is sufficient that export occurred from factory premises as defined. The revenue's contention that the goods must have been manufactured at the factory to qualify was not supported by the statutory language. [Paras 10, 14, 15]

Export from the petitioner's factory premises met the 'directly from a factory' condition in the notification despite the goods being imported and re-exported as such.

Remand for consequential effect - The authorities' orders rejecting rebate were set aside; the matter was remitted to the original authority for consequential action in accordance with law in light of the Court's conclusions. - HELD THAT: - Having held that the petitioner was entitled to rebate, the Court quashed the revisional order and remitted the matter to the original authority to give consequential effect to the conclusions reached in the judgment. The remand is for computation and other consequential formalities consistent with the legal conclusions already pronounced. [Paras 17, 18]

The revisional order dated 2.1.2018 was set aside and the matter remitted to the original authority for consequential action in accordance with law.

Final Conclusion: Petition allowed. The Court held that Rule 18 read with notification No.19/2004 permits rebate on export of imported inputs/capital goods re-exported as such where they are 'excisable goods', payment of duty is effected by reversal of CENVAT credit, and export was from the factory premises; the revisional order rejecting rebate was set aside and the matter remitted to the original authority for consequential action.

Clandestine removal and liability on manufacturer - burden to prove clandestine removal by tangible, cogent and affirmative evidence - admissibility of computer printouts under Section 36B of the Central Excise Act, 1944 - reliance on private records/writing pad and requirement of corroboration - use of investigative reports as exculpatory evidence - requirement of evidence of manufacture including raw material consumption, power usage and labour

Clandestine removal and liability on manufacturer - burden to prove clandestine removal by tangible, cogent and affirmative evidence - requirement of evidence of manufacture including raw material consumption, power usage and labour - use of investigative reports as exculpatory evidence - Whether the department proved clandestine removal/manufacture by the Appellants during the period 1st Setember'2007 to 15th October'2008 - HELD THAT: - The Tribunal found that the department failed to produce tangible, cogent and affirmative evidence establishing that the Appellants manufactured and clandestinely removed the impugned goods. Investigations by DGCEI Chennai, Kochi, Kolkata and Jaipur indicated that the goods were sold by other traders/manufacturers (including job work by third parties) and that consignees had not dealt with the Appellants. The inquiry with the purported trading firms was incomplete and inconclusive; summons could not be served on some firms and no enquiry was conducted with others, so the department could not establish those traders to be bogus. There was no specific evidence of manufacture such as quantification of raw-material purchases, excess electricity consumption, extra labour or payment patterns; excess stocks were explained and accepted. Private entries and isolated documents did not constitute the substantive corroboration required for a charge of clandestine removal. The Tribunal applied settled precedents holding that assumptions, presumptions or uncorroborated private records are insufficient to fasten excise liability on a manufacturer.

Charge of clandestine removal against the Appellants not proved; demands set aside.

Admissibility of computer printouts under Section 36B of the Central Excise Act, 1944 - reliance on private records/writing pad and requirement of corroboration - Whether the computer printouts and data retrieved from the seized laptop were admissible and could be relied upon as evidence - HELD THAT: - The Tribunal held that the computer printouts relied upon by the department did not satisfy the mandatory safeguards under Section 36B of the Central Excise Act (paralleling Section 65B of the Evidence Act). The investigation and seizure procedure did not comply with the statutory conditions and certificates required for admissibility of electronic records; cloning and retrieval procedures and absence of required certification rendered the computer printouts inadmissible. Consequently, the material based on such printouts had to be discarded. The Tribunal also treated unverified private records (such as the seized writing pad) as insufficient in the absence of corroborative evidence and of statements from authors or other confirming material.

Computer printouts and electronic data not admissible; evidence based thereon discarded.

Final Conclusion: Impugned adjudication order set aside; appeals allowed with consequential reliefs as the revenue failed to prove clandestine manufacture/removal and relied on inadmissible electronic and uncorroborated private records.

Refund of interest on reversed CENVAT credit - test of unjust enrichment - proof of passing on or pricing to consumers - effect of accounting entry in Profit & Loss account for establishing passing on - applicability of post-facto statutory amendment to earlier payments (10-5-2008) - entitlement to interest as per explanation to Section 11BB

Refund of interest on reversed CENVAT credit - test of unjust enrichment - effect of accounting entry in Profit & Loss account for establishing passing on - Whether refund of interest paid by the assessee on reversal of CENVAT credit (paid prior to 10-5-2008) is barred by the doctrine of unjust enrichment and whether the assessee has discharged the burden of proving that the interest incidence was passed on to others. - HELD THAT: - The Tribunal accepted that the legal test of unjust enrichment applies to claims for refund of interest paid prior to the statutory amendment, following the ratio in Mafathlal. However, it held that the mere inclusion of the interest payment as an expenditure in the Profit & Loss account is not by itself conclusive proof that the incidence was passed on to consumers by way of increased pricing. The appellate authority's finding rested on the accounting entry and an assumption that cost therefore increased; the Tribunal disagreed, observing that manufacturers may absorb such costs by reducing profit margins or internal overheads and that specific proof of a pricing increase attributable to the interest payment is required. On the material on record the assessee showed that the interest outgo had been reflected in accounts by a reduction in profit and there was no evidence that the cost was passed on to customers. Applying the unjust enrichment test accordingly, the Tribunal concluded that the assessee had not passed on the incidence of the interest and was therefore not barred from recovery of the interest paid.

Refund of the interest of Rs. 11,45,295/- is allowable because the assessee did not pass on the incidence of the interest to others; the Commissioner (Appeals) order rejecting refund on unjust enrichment grounds is set aside.

Entitlement to interest as per explanation to Section 11BB - applicability of post-facto statutory amendment to earlier payments (10-5-2008) - Whether the assessee is entitled to receive interest on the refundable amount and the applicable period for computation of such interest. - HELD THAT: - The Tribunal directed refund of the interest amount found payable and further directed payment of interest on that amount. It specified that interest shall be calculated from three months after the filing of the refund application dated 25-09-2008 in accordance with the provision and the explanation appended to Section 11BB of the Central Excise Act. The Tribunal therefore awarded interest as per the statutory mechanism applicable to the claim and ordered payment within three months of receipt of the order.

Assessee is entitled to interest calculated from three months after filing the refund application dated 25-09-2008, and the department is directed to pay the principal refund and applicable interest within three months of receipt of the Tribunal's order.

Final Conclusion: The appeal is allowed: the order of the Commissioner (Appeals) rejecting refund of interest on unjust enrichment grounds is set aside; the assessee is entitled to refund of the interest paid and to statutory interest from three months after the refund application dated 25-09-2008, with payment directed within three months of receipt of this order.

Cenvat credit on input services - eligibility of services received at depots/branches as input service - inclusive part of the definition of input service (transportation up to place of removal) - cenvat credit for clearing and forwarding and transit insurance used for procurement/export - credit for Intellectual Property/Royalty payments as in relation to manufacture - penalty not leviable where wrongful availment arises from bona fide/uncertain interpretation later settled by higher authority

Cenvat credit on input services - eligibility of services received at depots/branches as input service - Whether cenvat credit on accounting, auditing, renting of immovable property and telecommunication services pertaining to depots is admissible as input service - HELD THAT: - The Tribunal held that denial of credit in respect of services availed at depots (accounting, audit, rent and telecommunication) was not sustainable. Depots and branches perform functions integral to the manufacturer's business - receiving orders and storing goods prior to sale - and therefore facilitate manufacturing activity. The view is supported by earlier Tribunal decisions cited in the order; accordingly such services qualify as input service and credit is allowable. [Paras 5]

Credit on the depot/branch services amounting to Rs. 96,464/- allowed as input service.

Inclusive part of the definition of input service (transportation up to place of removal) - cenvat credit on GTA and transit insurance for movement to depot - Whether GTA services from factory to depot and transit insurance from factory to depot qualify as input service - HELD THAT: - The Tribunal concluded these services are used for removal of goods from factory to depot for sale at the depot; hence the depot is the place of removal. Transportation and insurance up to that place fall within the inclusive part of the definition of input service and therefore qualify for cenvat credit. [Paras 5]

Credit on GTA (factory to depot) and transit insurance (factory to depot) allowed as input service.

Cenvat credit for clearing and forwarding and transit insurance used for procurement/export - cenvat credit on services relating to procurement of inputs and export of finished goods - Whether clearing and forwarding services availed for procurement of inputs and export of finished goods qualify as input service - HELD THAT: - The Tribunal observed that the clearing and forwarding services were availed for procuring inputs and for export of finished goods; such services relate to procurement and transportation up to the place of removal and therefore fall within the inclusive part of the definition of input service. Consequently these services qualify for cenvat credit. [Paras 5]

Credit on Clearing & Forwarding services allowed as input service.

Credit for Intellectual Property/Royalty payments as in relation to manufacture - Whether royalty/IPR payments made to parent companies are eligible for cenvat credit as input service - HELD THAT: - The Tribunal found that the royalty paid to parent companies was directly related to the manufacturing process of final products. Reliance was placed on precedent recognising that payments towards royalty/IPR that are in or in relation to manufacture qualify for credit. Thus the IPR services were held to be input services eligible for credit. [Paras 5]

Credit on Intellectual Property/Royalty services allowed as input service.

Penalty not leviable where wrongful availment arises from bona fide/uncertain interpretation later settled by higher authority - Whether penalty can be imposed for wrongful availment of credit on GTA services up to customer's premises - HELD THAT: - The appellant had conceded disallowance of credit on GTA to customer's premises and reversed the same, and had paid interest in view of the Apex Court decision in Ultratech. The Tribunal held that imputing intention to evade tax was not sustainable because the question involved an interpretative controversy that was later settled by the Apex Court. In those circumstances penalty under the penal provision could not be imposed. [Paras 5]

No penalty is leviable on the appellant in respect of the disputed GTA services up to customer's premises.

Final Conclusion: The appeal is allowed in part: cenvat credit is permitted for services availed at depots (accounting, audit, rent, telecom), GTA and transit insurance for movement to depots, clearing & forwarding services used for procurement/export, and Intellectual Property/Royalty services; the appellants had already conceded and reversed credit for GTA up to customer's premises and paid interest, and no penalty is imposed because the dispute was an interpretation issue later settled by the Apex Court.

Coercive recovery during pendency of appeal and stay application - refund of illegally recovered tax - award of interest as compensation for wrongful retention - duty of tax authorities to refrain from bank attachment where stay application is pending - nonspeaking assessment and violation of principles of natural justice

Coercive recovery during pendency of appeal and stay application - duty of tax authorities to refrain from bank attachment where stay application is pending - refund of illegally recovered tax - Whether the attachment and recovery of the disputed tax by the department under Section 44 while the appeal and stay application were pending was arbitrary and warranted refund of the recovered amount. - HELD THAT: - The Court found the respondents' exercise of coercive powers to compel release and encashment of the entire disputed demand to be highhanded and arbitrary. The officer assisting the AGP conceded that there was error in computation and that a portion of the amount was not leviable, and earlier interim directions and precedents were noted which require restraint by recovery officers while stay applications before the first appellate authority remain pending. In the absence of exceptional circumstances or default by the petitioner, initiating coercive recovery by attaching the bank account when the appeal and stay application were pending was not warranted. Having regard to the departmental concession, earlier orders of this Court and analogous authority emphasising that recovery pending adjudication renders the appeal infructuous, the Court concluded that the recovered amount must be refunded. [Paras 10, 11, 13, 15, 16]

Respondents directed to refund the entire amount recovered of Rs. 1,49,27,723/- to the writ-applicant.

Award of interest as compensation for wrongful retention - Alok Shanker Pandey principle on interest - Whether interest should be awarded on the refunded amount and the legal character of such interest. - HELD THAT: - The Court applied the principle that interest is not a penal imposition but an equitable accretion for wrongful retention of money, as explained in the Supreme Court authority relied upon in the judgment. Having regard to the wrongful and arbitrary recovery of the disputed sum, the Court held that interest ought to be awarded as compensation for the period of wrongful retention rather than as punishment, and fixed the rate at 6% per annum from 15/02/2019. [Paras 18, 19]

Interest at 6% p.a. awarded on the refunded amount from 15/02/2019; refund to be made within one week.

Final Conclusion: Writ petition allowed; respondents directed to refund the amount recovered (Rs. 1,49,27,723/-) to the petitioner with interest at 6% per annum from 15/02/2019, refund to be effected within one week; petition disposed of.

Refund under Section 38 - time-bound refund obligation - carry forward of refund - notice under Section 58/59 - security under Section 38(5) - Interest under Section 42(1) - calculation of interest - remedies against delayed refund and costs for non-compliance

Refund under Section 38 - carry forward of refund - notice under Section 58/59 - security under Section 38(5) - time-bound refund obligation - Whether the respondent lawfully withheld the petitioner's refund claim for the fourth quarter of 2013-2014 or was obliged to grant the refund under Section 38 of the DVAT Act - HELD THAT: - The Court held that Section 38(3)(a)(ii) mandated payment of the refund within two months where the claim is made in a quarterly return, unless the conditions in subsections (4) or (5) operate. In the present case no notice under Sections 58 or 59 had been issued within the two-month period and no demand for security under Section 38(5) was made within the statutory time. Consequently no order carrying forward the refund under Section 38(4) was passed and Section 38(7) was inapplicable. The Court followed its earlier decisions that a notice under Section 59 issued after the two-month period cannot defeat the statutory obligation to refund. The pendency of separate demands for earlier periods before the OHA did not legally bar processing the refund where the statutory two-month window for taking action under Section 38 had expired without the requisite notice or security. [Paras 21, 22, 23, 24, 25]

The respondent was obliged to process and grant the petitioner's refund for the fourth quarter of 2013-2014; the respondent's pleas to the contrary were rejected.

Interest under Section 42(1) - calculation of interest - time-bound refund obligation - remedies against delayed refund and costs for non-compliance - Whether the petitioner was entitled to interest on the delayed refund and the manner and timeline for payment - HELD THAT: - The Court directed payment of interest on the refund in accordance with the scope of Section 42(1) as explained in the Court's earlier decision in IJM Corporation Berhad v. Commissioner of Trade & Taxes. The petitioner's computed interest up to 25 July 2018 was placed before the Court; the respondent did not dispute the method and agreed to act in accordance with the law. The Court ordered that interest be calculated up to the date of payment (or 31 August 2019, whichever is later) and that the refund with interest be credited to the petitioner's account by 31 August 2019. The Court further directed that failure to effect payment by that date would attract a costs liability. [Paras 26, 27, 28, 29]

The respondent was directed to pay interest on the refund in terms of Section 42(1) (calculated up to date of payment or 31 August 2019, whichever is later) and to credit the refund with interest to the petitioner's account by 31 August 2019; failure to comply would attract costs.

Final Conclusion: The writ petition was allowed: the respondent was directed to grant the petitioner's refund for the fourth quarter of 2013-2014 and to pay interest thereon in accordance with Section 42(1) calculated up to payment (or 31 August 2019, whichever is later), with the refund and interest to be credited by 31 August 2019; failure to comply would attract a costs award.

Delay and laches - pre-deposit condition for statutory appeal - composition under Section 4 (7) (d) of the Act - requirement of notification before commencement (Form VAT 250) - one-time amnesty under Government memo and implementing circular - assessment under a provision valid when in force - enlarged period of limitation for suppression

Delay and laches - Writ petition dismissed on ground of delay and laches - HELD THAT: - The order of assessment dated 13.08.2013 and the appellate order dated 26.06.2014 were known to the petitioner who had filed a delayed appeal and whose Authorized Representative was served with the appellate order. The petitioner remained inactive for about four years before approaching the Court and, despite a later explanation of the Authorized Representative's illness, the Court held that service on the Authorized Representative rendered the delay attributable to the petitioner. The writ petition is therefore barred by delay and laches and liable to be dismissed on that ground. [Paras 11, 12, 13]

Writ petition dismissed for delay and laches.

Pre-deposit condition for statutory appeal - Dismissal of statutory appeal for non-compliance with pre-deposit and fee requirements upheld - HELD THAT: - The appellate authority rejected the petitioner's appeal on 26.06.2014 because the prescribed appeal fee and the mandatory pre-deposit under Section 31 were not timely paid; subsequent payments were beyond the statutory period. The Court recorded that the appeal contained defects, notices were issued to remove them, and the Authorized Representative's belated payments could not cure non-compliance. The appellate rejection therefore stood validly made. [Paras 5, 8, 11]

Order rejecting the appeal for failure to comply with pre-deposit and fee conditions is valid.

Composition under Section 4 (7) (d) of the Act - requirement of notification before commencement (Form VAT 250) - Petitioner not entitled to composition under Section 4(7)(d) for the assessed period - HELD THAT: - Section 4(7)(d) permits composition subject to conditions and rules. Rule 17.4(b) mandates that an intending VAT dealer notify the Prescribed Authority in Form VAT 250 before commencement of execution of the work. The petitioner did not file Form VAT 250 prior to commencement; the agreements produced relate to 2010-2011 but no notification under the prescribed procedure was made. Consequently, the petitioner never exercised the option in the manner prescribed and cannot claim the benefit of composition under Section 4(7)(d). [Paras 19, 20, 21]

Claim to composition under Section 4(7)(d) rejected for non-compliance with prescribed procedure (Form VAT 250).

One-time amnesty under Government memo and implementing circular - Relief under the Government memo dated 17.06.2011 and circular limited to transactions up to 17.06.2011 and not available to petitioner who did not comply - HELD THAT: - The Government memo allowed unregistered apartment builders a one-time opportunity to register and pay tax at 1% subject to conditions; the Commissioner issued a circular implementing it and expressly limited the relief to transactions occurring up to 17.06.2011. The petitioner did not register or pay 1% under the composition scheme as required by the memo and circular. Therefore the petitioner cannot now claim the amnesty. [Paras 16, 17, 18]

Petitioner not entitled to the one-time relief under the memo/circular as the twin conditions (registration and payment) were not satisfied.

Assessment under a provision valid when in force - Assessment under Section 4(7)(c) is not invalid insofar as it covers period when that provision was in force - HELD THAT: - Although Section 4(7)(c) was omitted effective 15.09.2011, the impugned assessment spans June 2007 to March 2013. The petitioner did not raise the omission point before the Assessing Officer or in the reply to the show-cause notice, and the Court observed that, in any event, assessments for the period up to 15.09.2011 were validly made under Section 4(7)(c) while the provision was in force. The objection to use of a repealed provision therefore fails to vitiate assessments for the earlier period. [Paras 14, 15]

Argument that assessment was under a non-existent provision rejected; assessments up to 15.09.2011 under Section 4(7)(c) remain valid.

Enlarged period of limitation for suppression - Suppression and enlarged limitation period not adjudicated on merits; petitioner should have raised them in a timely appeal - HELD THAT: - Whether suppression occurred and whether an enlarged period of limitation applies are mixed questions of fact and law. The Court held that these should have been raised in the statutory appeal by complying with time and form requirements. Because the petitioner failed to do so and approached the Court after long delay, the writ petition cannot be permitted to re-litigate those factual/contention-based points. [Paras 22, 23]

Questions of suppression and enlarged limitation period not entertained in writ proceedings because they are mixed questions of fact and law and were not properly raised in the appeal.

Final Conclusion: The writ petition is dismissed for delay and laches; the appellate rejection for failure to satisfy pre-deposit and fee conditions is sustained; the petitioner is not entitled to composition under the prescribed procedure or to the one-time amnesty which was not availed; assessment stands insofar as it relates to periods when contested provisions were in force; questions of suppression and enlarged limitation involve mixed facts and law which were not properly raised and are not decided on merits.

Validity of deduction of tax at source under Central Sales Tax/A.P. VAT statutory scheme - Refund of amounts deposited pursuant to an interim order of the Court - Liability of recipient of court-ordered deposit to refund - Effect of State bifurcation on assessing jurisdiction

Validity of deduction of tax at source under Central Sales Tax/A.P. VAT statutory scheme - Effect of State bifurcation on assessing jurisdiction - The demand for deduction of tax at source made by the Commercial Tax Officer, Narsampet, is without authority of law and stands set aside. - HELD THAT: - The petitioner had challenged the direction to the A.P. Power Generation Corporation Limited to deduct TDS. After bifurcation of the State, the matter fell within the jurisdiction of the Assessing Officer at Gudur and assessments have been completed there. The Court found that the claim for deduction of tax at source is not maintainable and that the impugned demand originally raised by the Narsampet officer has no authority of law. In those circumstances the impugned demand is required to be quashed and left to the appropriate assessing officer at Gudur to take any consequential steps within his jurisdiction. [Paras 7, 12]

Impugned demand for TDS is set aside.

Refund of amounts deposited pursuant to an interim order of the Court - Liability of recipient of court-ordered deposit to refund - The amount of Rs. 2 crores deposited with the Commercial Tax Officer, Narsampet, pursuant to the interim order must be refunded by him to the petitioner within eight weeks; the primary responsibility to refund rests on the officer who received the money. - HELD THAT: - The Court observed that money deposited pursuant to its interim order was paid to the Narsampet officer and, regardless of subsequent administrative or accounting allocations between States after bifurcation, the recipient of funds pursuant to a Court order cannot deny repayment. Although the Commercial Tax Officer at Gudur stated that the deposited amount does not appear in its records and would not itself make repayment, that does not absolve the Narsampet officer of the primary obligation to refund. The Court directed repayment by the recipient of the deposit and ordered cancellation of the petitioner's bank guarantee. [Paras 9, 10, 11, 12, 13]

The 1st respondent shall refund the Rs. 2 crores deposited pursuant to the interim order within eight weeks; the bank guarantee shall be cancelled.

Final Conclusion: Writ petition allowed; impugned TDS demand set aside; the Commercial Tax Officer, Narsampet (1st respondent), directed to refund the Rs. 2 crores deposited pursuant to the interim order within eight weeks and the bank guarantee furnished by the petitioner is cancelled; miscellaneous petitions, if any, dismissed; no order as to costs.

Summary order. Writ petition disposed as the impugned revision notice issued under Sections 73/75 of the Gujarat Value Added Tax Act, 2003 (Form 503) was withdrawn; Rule discharged and any ad interim relief vacated.

Declaration 'F' forms - Invalidation of statutory declaration forms - Cancellation of F-forms by Commissioner (VAT) - Setting aside administrative notification - Judicial precedent

Declaration 'F' forms - Cancellation of F-forms by Commissioner (VAT) - Judicial precedent - Validity of Notification cancelling used Declaration 'F' forms issued by the Commissioner (VAT) - HELD THAT: - The Court held that the challenge to invalidation of Declaration 'F' forms is governed by earlier judicial decisions which favour the petitioner. The order in W.P.(C) No.13365/2018 (Maa Jagdamba Traders v. Commissioner VAT) and the Division Bench decision of the Rajasthan High Court in DB (Civil) W.P. No.11580/2018 (Combined Traders v. State of Rajasthan) were treated as determinative on the issue. Applying those precedents, the Court found that the impugned Notification cancelling the used F-forms could not be sustained. The Court nevertheless clarified that setting aside the Notification would not prevent the respondents from taking any other action permissible under law.

Impugned Notification dated 18th June 2018 cancelling used Declaration 'F' forms is set aside; petition disposed of with liberty to respondents to take other lawful action.

Final Conclusion: The Court set aside the Notification cancelling used Declaration 'F' forms, following binding judicial precedent, and disposed of the petition while permitting the respondents to pursue any other action in accordance with law.

Refund of departmental dues - direction to departmental officer to implement refund - personal attendance of officer in court - writ application concerning refund

Refund of departmental dues - direction to departmental officer to implement refund - The petitioner is entitled to refund of the admitted amount and the department must effect the refund within the time directed by the Court. - HELD THAT: - The Court recorded that there was no dispute regarding the specified amount claimed by the petitioner. On the earlier hearing the concerned departmental officer stated that processes for refund of the amount had been undertaken and undertook to refund the sum by 31st July, 2019. Noting the admitted nature of the claim, the Court directed that the matter be posted on 7th August, 2019 and ordered that the concerned officer shall personally remain present and ensured that, at the latest by 7th August, 2019, the admitted amount shall be refunded. The direction is a limited, enforceable order on implementation of the admitted refund rather than an adjudication of broader contested issues in the writ petition.

The department is directed to refund the admitted amount and the concerned officer must personally appear on the next date to ensure compliance; the matter is listed on 7th August, 2019.

Personal attendance of officer in court - writ application concerning refund - Personal presence of the concerned departmental officer was ordered to secure compliance with the refund direction. - HELD THAT: - Given the prior assurance by the departmental officer and the expectation that the admitted amount be refunded promptly, the Court required the officer's personal attendance on the next listing to facilitate and ensure implementation of the refund direction. This is a procedural direction ancillary to the substantive order for refund.

The concerned officer shall personally remain present on 7th August, 2019 to confirm that the admitted refund has been effected.

Final Conclusion: The Court directed implementation of the admitted refund and ordered personal appearance of the concerned departmental officer on 7th August, 2019 to ensure that the specified amount is refunded by that date; direct service was permitted.

Arbitration agreement in writing - arbitration agreement by exchange of statements of claim and defence - consent recorded in judicial order as conclusive of arbitration agreement - Group of Companies doctrine for joinder of non signatory - implied or tacit consent to arbitration - necessity of joining all necessary parties for complete adjudication

Arbitration agreement in writing - arbitration agreement by exchange of statements of claim and defence - consent recorded in judicial order as conclusive of arbitration agreement - Existence of a valid arbitration agreement between MTNL and Canara Bank (and effect of parties' conduct) to refer disputes to arbitration. - HELD THAT: - The Court held that a valid arbitration agreement existed despite absence of a separately signed tripartite instrument. The parties' consent, as recorded in the Delhi High Court order of 16.09.2011, together with the exchange of statements of claim and defence before the Sole Arbitrator, satisfied the requirement of an arbitration agreement in writing under the Act. The Court applied principles of construction of commercial documents, requiring a commonsense approach to infer intention to arbitrate from correspondence, conduct and judicial recording of consent. Section 7(4)(c) was held applicable where one party asserts the existence of an arbitration agreement in statements of claim and the other does not deny it, and therefore MTNL's preliminary objection that no written arbitration agreement existed was rejected. [Paras 9]

Objection to the existence of a written arbitration agreement rejected; the parties were validly referred to arbitration.

Group of Companies doctrine for joinder of non signatory - implied or tacit consent to arbitration - necessity of joining all necessary parties for complete adjudication - Whether CANFINA, a non signatory wholly owned subsidiary, must be joined in the arbitral proceedings. - HELD THAT: - The Court invoked the Group of Companies doctrine and concluded that CANFINA is a necessary and proper party to the arbitration. The original transaction was between MTNL and CANFINA and the bonds were later transferred to Canara Bank; the disputes are composite and inextricably linked such that final resolution is not feasible without joining CANFINA. The Court noted CANFINA's participation in the Committee on Disputes, in High Court proceedings, appearance before the Sole Arbitrator, and that Canara Bank had itself proposed draft tripartite arbitration agreements. On these facts the Court found implied/tacit consent and a clear intention of the parties to bind both Canara Bank and CANFINA to arbitration, and dismissed Canara Bank's objection to impleadment. [Paras 10, 11]

CANFINA to be joined in the arbitral proceedings; Group of Companies doctrine invoked to effect joinder.

Final Conclusion: Appeals partly allowed: the Court invoked the Group of Companies doctrine to join CANFINA in the arbitration, rejected the objection to existence of an arbitration agreement, and remitted the matter to the Sole Arbitrator to proceed and conclude the arbitral proceedings expeditiously; no opinion expressed on the merits.