TaxTMI Updates e-Newsletter
Aug 23,2016

Existence of Association of Persons (AOP) - joint venture versus Association of Persons - volition to earn income as ingredient of AOP - taxation in the hands of the person in whose hands income is assessable - credit of tax deducted at source to the person assessable - penalty under section 271(1)(c)

Existence of Association of Persons (AOP) - joint venture versus Association of Persons - volition to earn income as ingredient of AOP - Whether an AOP continued to exist after 02.09.2002 for taxation purposes - HELD THAT: - The Tribunal found, and this Court agreed, that although the contractual joint venture (for accounting and contractual liability) continued on paper, the supplementary agreement dated 02.09.2002 effected a complete withdrawal of LGE&C from performance and from any interest in earning income from the remaining works. The Tribunal explained that AOP under the Income-tax law requires not only joint venture arrangements but also a continuing common purpose and volition of members to earn income together. Once a member ceases to have an interest in earning income from the venture, the AOP for tax purposes ceases even if the joint venture (as a contract or commercial arrangement) survives. Applying these principles to the facts and the terms of the 02.09.2002 agreement, the Tribunal concluded that no AOP subsisted after that date; this conclusion was upheld by the High Court.

No AOP continued to exist after 02.09.2002; the Tribunal's conclusion on cessation of AOP is upheld.

Taxation in the hands of the person in whose hands income is assessable - credit of tax deducted at source to the person assessable - Whether income and associated TDS credit should be assessed and credited to the member (PEL) who became the true recipient of income after the 02.09.2002 transfer - HELD THAT: - The Tribunal held that income arising from work carried out after 02.09.2002 belonged to PEL pursuant to the supplementary agreement and transfer of work, and that even if the joint venture had declared such income, the revenue could tax it in the hands of PEL as the right person in whom the income vested. The Tribunal further held that credit for any tax deducted at source must be given only in the hands of the person in whose hands the income is ultimately assessable; where accrual or title to receipts is shifted to a member by an overriding agreement, the corresponding TDS credit should be considered in that member's hands. This legal approach was accepted by the High Court.

Income from work after 02.09.2002 is assessable to PEL and any TDS credit relating to such receipts should be allowed to PEL.

Penalty under section 271(1)(c) - Whether the Tribunal was justified in deleting the penalty under section 271(1)(c) - HELD THAT: - The challenge to the Tribunal's deletion of penalty was heard as part of the group of appeals. The Tribunal had deleted the penalty following applicable precedent and on the facts of the case; the High Court, upon review of the Tribunal's reasoning and findings, found no reason to interfere with that conclusion. The Court thereby endorsed the Tribunal's exercise of discretion in deleting the penalty.

The deletion of penalty under section 271(1)(c) by the Tribunal is sustained.

Final Conclusion: The High Court affirmed the Tribunal's decision on all contested points: it held that the AOP ceased after 02.09.2002, that income and corresponding TDS credit in respect of work done after that date are taxable and creditable in the hands of PEL, and that the penalty under section 271(1)(c) was rightly deleted; the departmental appeals are dismissed and the issues are decided in favour of the assessee.

Rejection of books and estimation of income by reference to gross profit rate - eligibility for deduction under section 80IA - classification as manufacturing of specified article - counting workers employed through labour contractors for statutory threshold - treatment of items as "plant and machinery" for determining investment ceiling for small scale industrial undertaking - allowability of expenditure paid on behalf of sister concern and scope of section 40A(2)(b)

Rejection of books and estimation of income by reference to gross profit rate - Deletion of addition made by AO by rejecting the assessee's books and estimating sales and gross profit - HELD THAT: - The Tribunal and CIT(A) were held justified in deleting the addition because the assessee maintained all required registers which were verified by the Assessing Officer, and its books were periodically checked by revenue authorities. The same gross profit rate was accepted by the Department in a subsequent year; raw material costs had risen and all goods were sold to a sister concern so that the AO could not establish that finished goods were sold at undervalued prices. Low profits and absence of a regular stock register were held insufficient to justify rejection of the accounts. Having considered the materials placed before them, the appellate authorities' conclusions were not interfered with. [Paras 6]

Addition deleted; appeal answered in favour of the assessee and against the Department.

Eligibility for deduction under section 80IA - classification as manufacturing of specified article - counting workers employed through labour contractors for statutory threshold - allowance of depreciation irrespective of classification for section 80IA purposes - Whether the assessee qualified for deduction under section 80IA: (a) manufacture of articles specified in the Schedule, (b) inclusion of labour-contractor-engaged workers in the statutory headcount, and (c) effect of excluded items on depreciation and eligibility - HELD THAT: - The Tribunal's conclusion that workers engaged through labour contractors must be counted was endorsed, relying on the principle that 'employs' includes use of services for payment and on precedents where control over the work and manner of performance established employment. As the inclusion of such workers met the statutory numerical threshold, the condition of minimum workers was satisfied. The Tribunal's approach that items excluded from 'plant and machinery' for determining small-scale eligibility do not preclude depreciation being allowed under the Income-tax provisions was accepted, making the Revenue's contention on classification and depreciation without force. The appellate findings were based on material placed before the Tribunal and were affirmed. [Paras 7]

Assessee entitled to deduction under section 80IA; appeals answered in favour of the assessee and against the Department.

Treatment of items as "plant and machinery" for determining investment ceiling for small scale industrial undertaking - Validity of disallowance under section 80IA on the ground that the aggregate value of plant and machinery exceeded the statutory ceiling - HELD THAT: - The Tribunal held that certain items (cars, trucks, dead stock, pumps, etc.) cannot be treated as 'plant and machinery' for computing the project cost for small scale industrial undertaking status. However, because there was a factual dispute as to the correct valuation (the assessee claimed a lower figure than the AO), the Tribunal directed a limited remand to the Assessing Officer to compute the value of plant and machinery in accordance with the relevant jurisdictional authority, with opportunity of hearing to the assessee. The High Court agreed with this course and the reasons given by the Tribunal. [Paras 8]

Issue restored to Assessing Officer for limited recomputation of value of plant and machinery; substantive position otherwise favourable to the assessee.

Allowability of expenditure paid on behalf of sister concern and scope of section 40A(2)(b) - Deletion of disallowance under section 40A(2)(b) in respect of amount paid by the assessee to Excise Department on behalf of its sister concern - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the disallowance after noting that the assessee exclusively marketed through sister concerns, collected excise duty from those parties and paid the same to the Central Excise Department; the excess payment was routed through the assessee's trading and profit accounts. On the material, the payment did not fall within the ambit of section 40A(2)(b), and there was no infirmity in deleting the addition. [Paras 9]

Disallowance under section 40A(2)(b) deleted; appeal answered in favour of the assessee and against the Department.

Final Conclusion: All appeals dismissed; the High Court affirmed the appellate tribunals' deletions and conclusions in favour of the assessee, and directed a limited remand only for computation of plant and machinery value in one appeal.

Gift of India Millennium Deposit - "any sum of money" under Section 56(2)(v) read with definition in clause r.w.s. 2(24)(xiii) - Exemption of interest on specified bonds under Section 10(15)(i) - Unexplained credit and charging under Section 68 - Proof of identity and creditworthiness of donor

Gift of India Millennium Deposit - "any sum of money" under Section 56(2)(v) read with definition in clause r.w.s. 2(24)(xiii) - Gift of India Millennium Deposit does not fall within the expression "any sum of money" in Section 56(2)(v) and is not taxable under that provision. - HELD THAT: - The Tribunal accepted the assessee's contention that the IMD certificates are not "any sum of money" for the purposes of Section 56(2)(v). The gift of IMDs was held to have been received on 31.08.2004, which is prior to the amendments effective from 01.09.2004/01.04.2005 relied upon by the Department. The Tribunal followed the reasoning in the cited ITAT decision where, on similar facts, the identity and source were satisfactorily established and the instrument gifted was not treated as a money sum taxable under Section 56(2)(v). Applying that approach, the present gift of IMDs does not attract tax under Section 56(2)(v).

Addition under Section 56(2)(v) deleted; gift of IMDs not taxable under that provision.

Exemption of interest on specified bonds under Section 10(15)(i) - India Millennium Deposits as specified instruments - Interest earned on the India Millennium Deposit bonds is exempt under Section 10(15)(i) as specified by the government notification. - HELD THAT: - The assessee relied on the government notification specifying India Millennium Deposits as instruments covered by Clause (i) of Section 10(15). The Tribunal accepted that notification (S.O. 1114(E), dated 10-8-2005) and held that the interest component on the IMDs falls within the exemption contemplated by Section 10(15)(i). Consequently the interest is not taxable.

Interest on the IMDs held to be exempt under Section 10(15)(i).

Unexplained credit and charging under Section 68 - Proof of identity and creditworthiness of donor - The amount received as gift of IMDs is not liable to be treated as unexplained credit under Section 68 where the identity and creditworthiness of the donor and genuineness of the gift are satisfactorily established. - HELD THAT: - The Tribunal applied the principle that Section 68 applies only if the assessee fails to satisfactorily explain the nature and source of credits. On the facts, the assessee produced the IMD certificates, donor's passport, affidavit, net worth certificate, and other evidence; the donor had directly confirmed the gift and its reason. Following the reasoning of the relied-on ITAT decision, the Tribunal found the donor's identity and creditworthiness established and the gift genuine. Hence the alternative addition as unexplained credit under Section 68 was not sustainable.

Addition under Section 68 rejected; gift accepted as genuine and adequately explained.

Final Conclusion: The appeal is allowed: the gift of India Millennium Deposit is not taxable under Section 56(2)(v), the interest on the IMDs is exempt under Section 10(15)(i), and no addition is sustainable under Section 68 as the donor's identity, source and genuineness of the gift were satisfactorily established.

Arm's length price - international transaction - closely linked transactions - clubbing and aggregation of closely linked transactions - transfer pricing adjustment - bad debts deduction under section 36(1)(vii) - capital versus revenue expenditure - allowability of foreign exchange loss - interest on capital work-in-progress - natural justice

Arm's length price - international transaction - closely linked transactions - clubbing and aggregation of closely linked transactions - transfer pricing adjustment - Whether the credit period allowed to an associated enterprise for realization of sale proceeds is an independent international transaction and whether the TPO's standalone adjustment on account of notional interest is sustainable - HELD THAT: - The Tribunal held that the delay in realisation of dues from the associated enterprise falls within the expanded definition of "international transaction" but is not to be treated as an independent standalone transaction. The credit period allowed for realisation is a follow-on, closely linked element of the sale/services transaction and must be aggregated with the main international transaction for determination of ALP. Accordingly, the approach of treating the extended credit period in isolation and determining notional interest thereon without clubbing it with the sale/services transaction would give a distorted result. The Tribunal directed the AO/TPO to re-do the ALP determination by treating the credit period as closely linked and aggregated with the main international transaction and to reassess interest/ALP accordingly. [Paras 5]

The credit-period issue is closely linked to the sale/services transaction and must be aggregated; the AO/TPO to re-do the ALP determination on that basis.

Transfer pricing adjustment - arm's length price - international transaction - Treatment of the specific adjustment of Rs.4,60,42,886 made by the TPO on account of notional interest arising from extended credit to the AE - HELD THAT: - Because the Tribunal required aggregation of the credit-period element with the main international transaction, the standalone quantification by the TPO could not be sustained in the form made. The TPO's computation based on applying a notional 14% rate to outstanding balances without first aggregating the transactions and reassessing ALP was set aside to the extent implicit in the direction to re-do the ALP exercise in accordance with the Tribunal's approach. [Paras 5]

Adjustment made by the TPO is set aside for reassessment; AO/TPO directed to re-compute ALP after aggregating the credit-period with the principal transaction.

Electricity expenses - capital versus revenue expenditure - natural justice - Allowability of electricity expenses paid for the residence of a director as business expenditure - HELD THAT: - The assessee failed to produce any terms of service or contractual obligation showing that payment of residential electricity was an obligation of the company or part of the director's remuneration. Absent evidence that the payments were incurred wholly and exclusively for business or formed part of agreed remuneration, the Assessing Officer's disallowance was held to be justified. Reliance on Sayaji Iron & Engineering Co. was distinguished because there the expenditure formed part of stipulated remuneration/terms. [Paras 6]

Disallowance of residential electricity expenses sustained.

Allowability of foreign exchange loss - capital versus revenue expenditure - Characterisation and allowability of foreign exchange loss on advances to subsidiaries - HELD THAT: - The Tribunal found that the question of allowability required reconsideration in light of leading authority and the factual matrix. It directed the Assessing Officer to re-examine the claim in the light of the Supreme Court decision in Woodward Governor India Pvt. Ltd. and relevant facts, rather than deciding the matter finally in the appeal. [Paras 7]

Issue remitted to the Assessing Officer for fresh consideration in light of the Supreme Court authority.

Interest on capital work-in-progress - capital versus revenue expenditure - Disallowance of proportionate interest as attributable to capital work-in-progress - HELD THAT: - The Tribunal observed that the AO's finding was cursory and material facts (whether the expenditure was for acquisition of new capital asset or extension of existing assets, and availability of non-interest-bearing funds) were not verified. Given these factual uncertainties, the Tribunal directed the AO to re-examine and adjudicate the claim after proper verification of funding and purpose. [Paras 8]

Matter remitted to the Assessing Officer for fresh factual enquiry and adjudication.

Capital versus revenue expenditure - depreciation - Characterisation of software-related expenditures (system development, dictionary/manual, web consultancy) as capital or revenue and consequent relief - HELD THAT: - The Tribunal agreed with the authorities below that expenditure on development of the Tally Ascent system and creation of the multi-language dictionary/reference manual conferred enduring benefits and are capital in nature. The Tribunal, however, held that since these amounts were disallowed as revenue, depreciation on such capitalised amounts is available and directed the AO to allow depreciation at the applicable rate. The web consultancy/development item was allowed by DRP on factual grounds. [Paras 9]

Expenditures on system development and dictionary/manual treated as capital; depreciation to be allowed; web-consultancy item allowed as per DRP.

Foreign travel expenses - capital versus revenue expenditure - Allowability of foreign travel expenses incurred by the directors - HELD THAT: - The assessee's explanation showed that the trips were essentially personal (recreation/refreshment) with only incidental business encounters; no contractual term obliged the company to bear such personal trips. On the record, the AO's conclusion that the expenditure was not wholly and exclusively for business was upheld. [Paras 10]

Disallowance of the foreign travel expenses sustained.

Bad debts deduction under section 36(1)(vii) - capital versus revenue expenditure - Allowability of bad debts written off on retransfer of sundry debtors from the wholly owned subsidiary - HELD THAT: - The Tribunal relied on precedent including the Supreme Court decision in T. Veerabhadra Rao to hold that where debts originally related to the assessee's earlier sales and were taken into account in computing income in the earlier year, subsequent write-off on retransfer to the assessee does not change their character. The slump-sale arrangement and retransfers, together with the notes to accounts, meant the debts reverted to the assessee and satisfied conditions of Section 36(2); consequently the write-off was allowable. The Tribunal rejected the Revenue's contention that the loss was capital in nature or only allowable after expiry of three years under the agreement. [Paras 11]

Bad debts written off on retransfer are allowable as deduction; appeal allowed on this point.

Final Conclusion: The appeal is partly allowed. Transfer-pricing adjustment relating to extended credit was set aside for recomputation after aggregating the credit-period with the principal international transaction; the AO/TPO is directed to re-do the ALP exercise. Disallowances of residential electricity and foreign travel expenses were sustained. Expenditure on specified software development and manuals held capital and depreciation allowed. Allowance of bad debts written off on retransfer to the assessee was upheld. Foreign-exchange loss on advances and disallowance of interest on capital work-in-progress were remitted to the Assessing Officer for fresh consideration and adjudication.

Interest under section 201(1A) - assessee in-default under section 201(1) - compensatory nature of interest - date of actual payment of TDS to the credit of Central Government

Assessee in-default under section 201(1) - Deletion of demand under section 201(1) where TDS was subsequently deducted and paid in the next assessment year - HELD THAT: - The Assessing Officer had treated the assessee as an in-default under section 201(1) for non-deduction/non-payment of TDS on certain expenses for the assessment year 2006-07 and raised a demand. The CIT(A) examined the fact that the TDS amount was subsequently deducted and paid by the assessee in assessment year 2007-08 and held that the assessee could not be held liable under section 201(1). The Tribunal records that the CIT(A) ordered deletion of the demand of the outstanding TDS amount and that matter stands concluded insofar as the section 201(1) demand is concerned. [Paras 4, 7]

Demand under section 201(1) deleted as TDS was duly paid in the subsequent assessment year and the deletion is sustained.

Interest under section 201(1A) - compensatory nature of interest - date of actual payment of TDS to the credit of Central Government - Period for levy of interest under section 201(1A) is limited to the date of actual payment of TDS and not extended until the date of the assessing officer's order - HELD THAT: - The Assessing Officer charged interest under section 201(1A) from April 2005 up to the date of framing of the order (31-03-2011). The Tribunal, after considering that interest under section 201(1A) is compensatory in nature, held that once the outstanding TDS amount has been paid to the credit of the Central Government, Revenue cannot claim interest beyond the date on which such tax was actually paid. The assessee had offered to pay interest only up to the date of actual payment of TDS and the Tribunal directed that interest shall be computed and charged only up to that date and not until the date of the AO's order. [Paras 7]

Interest under section 201(1A) is leviable only up to the date of actual payment of the TDS to the credit of the Central Government and not until the date of the assessment order.

Final Conclusion: The appeal is allowed: the demand under section 201(1) is deleted as the TDS was paid in the subsequent year, and interest under section 201(1A) is to be charged only up to the date of actual payment of TDS to the credit of the Central Government (not until the date of the AO's order).

Penalty under section 271B - section 44AB compliance - reasonable cause for delay in furnishing tax audit report - bonafide belief of charitable status and retrospective registration under section 12A - technical procedural breach versus substantive prejudice to assessment

Section 44AB compliance - Penalty under section 271B - reasonable cause for delay in furnishing tax audit report - bonafide belief of charitable status and retrospective registration under section 12A - technical procedural breach versus substantive prejudice to assessment - Whether penalty under section 271B for failure to furnish the tax audit report in Form 3CD can be sustained where the accounts were audited but the tax audit report was furnished after the due date and the assessee acted under a bonafide belief of exemption as an educational/charitable institution. - HELD THAT: - The proviso to section 44AB requires three cumulative conditions: (i) accounts audited under other law before the specified date, (ii) furnishing the audit report required under such other law by that date, and (iii) furnishing a further report in the form prescribed under section 44AB (Form 3CD). In the present case the books were audited before the specified date and the auditor's report existed, but the tax audit report/Form 10B and Form 3CD were furnished with the return filed after the due date. Therefore, on strict compliance the appellant failed to satisfy the proviso to section 44AB and the AO was correct to initiate penalty proceedings. However, the Tribunal found that the assessee honestly and reasonably believed that its activities (running educational institutions) were charitable and not business, a belief later reinforced by registration under section 12A. That bona fide belief, coupled with the fact that the audit itself had been carried out before the due date and there was no finding that the delay caused prejudice to computation of income or affected any claim, converts the default into a technical procedural breach. In such circumstances the AO ought to have exercised discretion in favour of the assessee and refrained from levying penalty. Applying these considerations the Tribunal concluded that reasonable cause existed for delayed submission and that the penal levy under section 271B was not justified. [Paras 2]

Penalty of Rs. 53,651/- under section 271B is deleted as the assessee had reasonable cause for delay, acted under a bona fide belief of charitable status (later regularised by 12A registration), and the breach was technical with no prejudice to assessment.

Final Conclusion: The appeal is allowed; the penalty under section 271B imposed for delayed furnishing of the tax audit report is set aside on grounds of bona fide belief in charitable status, prior audit of accounts, absence of prejudice to assessment, and existence of reasonable cause for the delay.

Capital expenditure versus revenue expenditure - right to use of land - plantation and horticultural expenses - amortization of lease charges - enduring benefit - accrual of income under mercantile system - take-or-pay agreement shortfall - recognition of income when right to receive is established

Capital expenditure versus revenue expenditure - right to use of land - plantation and horticultural expenses - enduring benefit - Whether amounts claimed as right to use of land and plantation and horticultural expenses were allowable as revenue expenditure or were capital in nature for AY 2002-03. - HELD THAT: - Assessing Officer treated payments for right to use of land and for plantation/horticultural works as capital because they yielded an enduring benefit. The Commissioner (Appeals) upheld that the lease was for 99 years and the assessee could not produce documents to substantiate that the amounts were compulsory forestation or mere site beautification treated as revenue. The Tribunal noted the assessee did not place any material to controvert those findings or to show the claimed amounts had been incurred in the relevant year as amortized revenue expenses. In absence of supporting material and given the character of the payments as conferring long term benefit, the payments were held to be capital in nature.

Claim for right to use of land and plantation/horticultural expenses rejected as capital expenditure; ground dismissed.

Amortization of lease charges - right to use of land - capital expenditure versus revenue expenditure - Whether amortization claimed in respect of lump sum payment for 99 year leasehold (treated by assessee as lease charges/amortization) was allowable as revenue expenditure for AY 2002-03. - HELD THAT: - The lease deed described the payment as cost/price of land; rent was separately stipulated and the lump sum was non refundable. The Commissioner (Appeals) relied on precedents holding lump sum consideration for 99 year leasehold to be capital, not advance rent. The assessee did not produce material before the Tribunal to rebut these findings or to show the payment represented revenue in nature or that only an amortised portion was properly deductible in the year. Consequently the Tribunal found no reason to interfere with the authorities below.

Amortization claim disallowed as capital expenditure; ground dismissed.

Amortization of lease charges - capital expenditure versus revenue expenditure - Whether the same amortization claim in respect of lease charges was allowable for AY 2003-04. - HELD THAT: - Parties agreed that the factual and legal position for AY 2003-04 on the amortization claim was identical to AY 2002-03. For the reasons given while disposing the identical ground for AY 2002-03, and since no additional material was placed before the Tribunal, the same conclusion was applied to AY 2003-04.

Amortization claim for AY 2003-04 disallowed for the same reasons; ground dismissed.

Take-or-pay agreement shortfall - accrual of income under mercantile system - recognition of income when right to receive is established - Whether charges for shortfall under the 'take or pay' agreement constituted income of the assessee in AY 2003-04. - HELD THAT: - The Assessing Officer treated the shortfall charges as income under the mercantile system because the agreement was in force. The Commissioner (Appeals) confirmed the addition observing the agreement remained subsisting in the year. The Tribunal examined whether, notwithstanding mercantile accounting, income had actually accrued - requiring that the right to receive be established and accompanied by a corresponding liability on the payer. Relying on the principle that accrual requires a present right and correlative liability (as reflected in the cited Apex Court authority), and noting Revenue produced no material to show an enforceable liability of the counterparties in that year (and that the assessee later treated the amount as bad debts), the Tribunal held income had not accrued and could not be brought to tax for that year.

Addition of shortfall charges set aside; amount held not to have accrued as income in AY 2003-04 and ground allowed.

Final Conclusion: Tribunal dismissed the assessee's appeals for AY 2002-03 on the questions of characterization of right to use/plantation expenditure and the amortization of lease charges, holding those payments to be capital in nature. For AY 2003-04 the Tribunal dismissed the amortization claim for the same reasons but allowed the appeal against the addition of take or pay shortfall charges, holding that income had not accrued to the assessee in that year.

Deduction under Section 80HHC - Treatment of hiring and operating charges in computing business profits - Taxation of interest receipts as income from other sources - Net interest approach for computing deduction under Explanation (baa) to Section 80HHC - Automatic levy of interest under Section 234B - Retrospective operation of Explanation 2 to Section 234D and interest on excess refund

Deduction under Section 80HHC - Treatment of hiring and operating charges in computing business profits - Interpretation of Section 80HHC with respect to excluding hiring charges and operating charges from profits of the business - HELD THAT: - The Tribunal excluded hiring and operating charges from the profits of the assessee's business for the purpose of determining the deduction under Section 80HHC. The High Court accepted the assessee's contention and placed reliance on the decision in CIT v. Nirma Ltd. , finding no distinguishing feature warranting a different view. On that basis the Court held that hiring and operating charges are to be treated as not forming part of the profits of business for computing deduction under Section 80HHC.

Answered in favour of the assessee and against the Revenue; hiring and operating charges excluded from business profits for Section 80HHC computation.

Taxation of interest receipts as income from other sources - Net interest approach for computing deduction under Explanation (baa) to Section 80HHC - Whether interest receipts are taxable under the head 'Income from other sources' when total interest paid exceeds interest receipts and there is a deficit in the interest account - HELD THAT: - The Court applied the principle affirmed by the Apex Court in ACG Associates Capsules (P.) Ltd. v. CIT, CentralIV, Mumbai , that for purposes of the clause to Section 80HHC (Explanation (baa)), deduction is to be applied on ninety per cent of the net interest (or net rent) that is reflected in the profits under the head 'Profits and Gains of Business or Profession', and not on gross receipts. On the facts presented and in absence of any distinguishing feature, the Court held that taxation and computation must follow the net interest approach.

Answered in favour of the assessee and against the Revenue; interest to be considered on net basis for relevant computations.

Net interest approach for computing deduction under Explanation (baa) to Section 80HHC - Whether only the net amount of interest is to be considered for computing the deduction under Section 80HHC - HELD THAT: - Relying on the Apex Court's pronouncement in ACG Associates Capsules (P.) Ltd. v. CIT, CentralIV, Mumbai , the Court held that the correct normative approach for computing the deduction under Explanation (baa) to Section 80HHC is to take ninety per cent of the net interest included in profits of business as shown under 'Profits and Gains of Business or Profession', and not ninety per cent of gross interest receipts. No distinguishing facts were shown to justify departure from that principle.

Answered in favour of the assessee and against the Revenue; deduction to be computed on net interest.

Automatic levy of interest under Section 234B - Levy of interest where advance tax shortfall exists - Whether interest under Sections 234A, 234B and 234C can be levied where the Assessing Officer did not specifically initiate levy in the assessment order - HELD THAT: - The Court observed that the question is governed by the settled law that when the statutory conditions for Section 234B are satisfied (assessee liable to pay advance tax fails to pay or pays less than ninety per cent), the liability to pay simple interest arises automatically. The Court relied on the Apex Court decision in CIT v. Bhagat Construction Co. P. Ltd. & Anr. and, finding no distinguishing circumstance, held that levy of interest under Section 234B is automatic once the statutory conditions are met, even if specific initiation in the body of the assessment order was not recorded.

Answered in favour of the Revenue and against the assessee; interest under Section 234B is leviable automatically when its conditions are met.

Retrospective operation of Explanation 2 to Section 234D and interest on excess refund - Interest on excess refund under Section 234D - Whether Section 234D could be applied in respect of refunds granted prior to 01.06.2003 where assessment proceedings were completed after that date - HELD THAT: - The Court followed earlier decisions, including CITII v. Gujarat State Financial Services Ltd. , which in turn considered the reasoning in the Bombay High Court's decision in Commissioner of Income-tax v. Indian Oil Corporation Ltd. , that Explanation 2 to Section 234D is declaratory/clarificatory and applies retrospectively to assessment years where proceedings were completed after 01.06.2003. The Court found no distinguishing feature in the present matter and held that Section 234D applies to excess refunds in assessments completed after the cut-off date, making interest payable as clarified by Explanation 2.

Answered in favour of the Revenue and against the assessee; Explanation 2 to Section 234D applies retrospectively where proceedings complete after 01.06.2003 and interest on excess refund is leviable.

Final Conclusion: The appeal is disposed of: Questions (1), (2) and (3) are answered for the assessee (in favour of the assessee and against the Revenue); Questions (4) and (5) are answered for the Revenue (in favour of the Revenue and against the assessee). No order as to costs.

Reopening of assessment under Section 147 read with Section 148 - reason to believe - change of opinion - TDS obligation under Section 195 - disallowance under Section 40(a)(i)

Reopening of assessment under Section 147 read with Section 148 - reason to believe - change of opinion - TDS obligation under Section 195 - disallowance under Section 40(a)(i) - Validity of the notice reopening the assessment for Assessment Year 2011-12 on the ground of alleged failure to deduct TDS - HELD THAT: - The Assessing Officer issued the notice to reopen within four years, stating that the assessee had paid foreign commission without deducting TDS and that income had escaped assessment. However, during the original scrutiny assessment the assessee had furnished detailed explanations and documentary particulars (including that payments were to foreign agents without permanent establishment in India and that income did not accrue or arise in India), and the assessment order was framed after such scrutiny without making any addition on the ground of non-deduction of TDS. The reasons recorded for reopening refer only to verification of existing records and do not disclose any fresh material or new information discovered after completion of assessment. In those circumstances the reopening amounts to a mere change of opinion by the Assessing Officer rather than action taken upon discovery of new material warranting invocation of Section 147/148. Accordingly the notice lacked the requisite foundation of a genuine 'reason to believe' based on new material and is legally unsustainable. [Paras 7, 8]

Impugned notice dated 10.3.2016 reopening the assessment is quashed and set aside; petition allowed.

Final Conclusion: The High Court held that the reopening was a change of opinion not founded on any fresh material; the notice under Section 148 read with Section 147 for AY 2011-12 was quashed and the petition allowed.

Additions under section 69B as deemed income for undisclosed investments - Onus of proof on revenue to establish expenditure or investment beyond books of account - Third party payments not attributable to the assessee for income tax liability - Remand for fresh consideration of seized material and interest computation under assessment/search provisions

Additions under section 69B as deemed income for undisclosed investments - Onus of proof on revenue to establish expenditure or investment beyond books of account - Third party payments not attributable to the assessee for income tax liability - Validity of addition made u/s.69B towards understatement of cost of imported machinery where supplier invoices exceeded amount capitalised in assessee's books but payments were effected by non resident third parties - HELD THAT: - The Tribunal found, and this Court agrees, that the revenue must prove that the assessee itself expended or invested the excess amount over the value recorded in the books. Although supplier invoices showed a higher aggregate invoice amount than the sum capitalised in the assessee's books, the material on record established that payments were made by NRIs/third parties and not by the assessee. The revenue failed to discharge the burden of proof that the assessee had made the additional payments; payments by a third party not subject to the Indian Income tax Act cannot be treated as payments made by the assessee for the purpose of attracting deemed income under section 69B. On this basis the Tribunal correctly deleted the addition made by the Assessing Officer. [Paras 7, 8, 9]

Addition of Rs. 8,82,18,073/- under section 69B towards understatement of cost of imported machinery deleted; question answered in favour of the assessee and against the revenue.

Remand for fresh consideration of seized material and interest computation under assessment/search provisions - Three issues concerning deemed income from undisclosed cash payments/construction and undisclosed expenditure, and the date from which interest under search/assessment provisions is to be calculated - HELD THAT: - The Tribunal set aside the respective additions confirmed by the CIT(A) and remanded issues relating to deemed income on account of alleged undisclosed cash payments for factory construction and undisclosed expenditure (entries in seized papers), and the question of date from which interest under the search/assessment provisions is to be computed. This Court declines to disturb the remand; the matters were returned to the Assessing Officer for reconsideration with specific directions, and therefore are left open for fresh adjudication. [Paras 2, 3]

Issues (C), (F) and (G) remitted to the Assessing Officer for reconsideration; no findings given and questions kept open.

Final Conclusion: The Tribunal's deletion of the addition under section 69B in respect of the alleged understatement of cost of imported machinery is affirmed; the other three contested issues were remitted to the Assessing Officer for fresh consideration and are left open.

Computation of book profit under section 115J of the Income-tax Act - treatment of depreciation in the profit and loss account as per Income-tax Rules versus as per the Companies Act - levy of interest under sections 234B and 234C where income is computed under section 115J

Computation of book profit under section 115J of the Income-tax Act - treatment of depreciation in the profit and loss account as per Income-tax Rules versus as per the Companies Act - Computation of book profit under section 115J was to be based on the separate profit and loss account furnished by the assessee where depreciation in that account was claimed in accordance with the Income-tax Rules. - HELD THAT: - The Court accepted the assessee's contention that depreciation in the profit and loss account had been claimed on the basis of the Income-tax Rules rather than under the Companies Act. Applying the principle in Malayala Manorama Co. Ltd. v. Commissioner of Income-tax, the Court held that where depreciation in the P&L is computed as per Income-tax Rules, the book profit for the purposes of section 115J is to be computed on the basis of the separate profit and loss account furnished by the assessee. The Court observed, however, that if on facts it were shown that depreciation had been claimed under the Companies Act, the alternative view relied upon by the revenue would apply.

Question answered in favour of the assessee and against the revenue; book profit under section 115J to be computed on the basis of the P&L where depreciation is claimed as per Income-tax Rules.

Levy of interest under sections 234B and 234C where income is computed under section 115J - advance tax liability when income is computed under section 115J - Interest under sections 234B and 234C was not leviable where the assessee's income was computed by invoking section 115J. - HELD THAT: - Relying on the decision in Commissioner of Income-tax v. Kwality Biscuits Ltd., the Court held that when computation of income is performed under section 115J, no interest under sections 234B and 234C would be leviable. The Tribunal's deletion of interest under section 234B was therefore upheld, and the same principle was applied to the related appeal.

Question answered in favour of the assessee and against the revenue; no interest under sections 234B and 234C is leviable where income is computed under section 115J.

Final Conclusion: Both appeals dismissed; the Tribunal's confirmation of the CIT(A)'s orders - computing book profit on the basis of the P&L where depreciation is as per Income-tax Rules, and deleting interest under sections 234B/234C where income is computed under section 115J - is upheld.

Long Term Capital Gain - cost of acquisition - concurrent findings of fact - acceptability of explanation by assessee - purchaser's liability for vendor's non-disclosure

Cost of acquisition - Long Term Capital Gain - concurrent findings of fact - Whether the cost and date of acquisition of 1665 shares as claimed by the assessee could be accepted for computing Long Term Capital Gain. - HELD THAT: - The Assessing Officer disbelieved the assessee's claim of purchase of 1665 shares in the relevant earlier year and treated the entire sale proceeds as short-term capital gain. The CIT(A) found, on consideration of documentary evidence and explanation, that the assessee's earlier computation had inadvertently included an amount relating to preference shares and accepted the cost of acquisition of the 1665 shares at the amount claimed by the assessee. The Tribunal upheld the CIT(A)'s conclusion, noting that payments were made by account-payee cheques and that confirmation letters from the vendors were available but ignored by the Assessing Officer. The High Court found that there were concurrent findings of fact by the CIT(A) and the Tribunal accepting purchase in Assessment Year 2002-03 and the stated cost; nothing shown to make those findings perverse, and the view taken was a possible and reasonable one. [Paras 8]

The claimed cost and date of acquisition were accepted; the question did not give rise to a substantial question of law and the concurrent factual findings were not disturbed.

Purchaser's liability for vendor's non-disclosure - acceptability of explanation by assessee - Whether the purchaser can be held liable for the vendors' failure to disclose receipt of sale consideration in their returns, thereby discrediting the purchaser's claim. - HELD THAT: - Revenue relied on the fact that the vendors did not disclose receipt of sale consideration in their returns to impugn the assessee's claim. The Tribunal and the High Court observed that the vendors' failure to disclose receipts cannot be used to conclude that no consideration was received; that is a matter for the Revenue to pursue against the vendors. The Assessing Officer's ignoring of confirmation letters and the fact of account-payee cheque payments were material in accepting the assessee's explanation. If an explanation is acceptable on the evidence, the appellate authorities are entitled to accept it and the factual consequences follow. [Paras 7]

The purchaser cannot be held responsible for the vendors' non-disclosure; the explanation of the assessee was acceptable and was rightly acted upon by the CIT(A) and the Tribunal.

Final Conclusion: Concurrent factual findings of the CIT(A) and the Tribunal accepting the assessee's claim as to the purchase (in Assessment Year 2002-03) and cost of acquisition for the purpose of computing Long Term Capital Gain in Assessment Year 2005-06 were not shown to be perverse; the appeal is dismissed.

Characterisation of share transactions as business income v. capital gains - Intention test for determining investor v. dealer - Reliance on holding period and frequency of transactions as indicia of business - Badla/borrowed funds and broker status as relevant indicia

Characterisation of share transactions as business income v. capital gains - Intention test for determining investor v. dealer - Reliance on holding period and frequency of transactions as indicia of business - Badla/borrowed funds and broker status as relevant indicia - All the shares sold by the assessee for the year under consideration were held on business account and not on investment account - HELD THAT: - The Tribunal's conclusion that the assessee acted as a dealer in shares was founded on objective indicia demonstrating a trading intention. The transactions showed high frequency of purchases and sales throughout the accounting year, numerous instances of same day or next day disposals, and holding periods largely well under twelve months. The assessee's involvement in badla transactions and status as a stockbroker, use of borrowed funds, and the substantial role of share holdings in his assets were treated as additional indicators of trading activity. The Tribunal rejected the contention that dividend receipts or past treatment as an investor precluded a finding of dealer status for the year, holding that the predominant intention must be gathered from the nature and conduct of the transactions in the year under consideration. The High Court endorsed this determinative reasoning and found no error in treating the gains as business income. [Paras 7]

Appeals dismissed; the Tribunal was right to hold that the shares were stock in trade for 1992 93 and to treat the gains as business income.

Final Conclusion: The substantial question is answered for the revenue: on the facts and circumstances of 1992 93 the assessee carried on business in shares and the Tribunal rightly characterised the receipts as business profits; both appeals are dismissed.

Scope of assessment under Section 153A/153C in respect of completed assessments - requirement of incriminating material discovered during search for reopening finalized assessments - disallowance under Section 14A and nexus with seized/incriminating material - jurisdiction to make additions in unabated (finalized) assessments following search

Scope of assessment under Section 153A/153C in respect of completed assessments - requirement of incriminating material discovered during search for reopening finalized assessments - disallowance under Section 14A and nexus with seized/incriminating material - Validity of disallowance made under Section 14A in assessments framed under Section 153C/153A where original assessments had become final and no incriminating material was found in the search - HELD THAT: - The Tribunal examined whether an Assessing Officer, while framing assessments under Section 153C (in the manner of Section 153A), can make additions such as a disallowance under Section 14A in respect of assessment years for which the original assessments had become final, in the absence of any incriminating material found during the course of the search. Relying on the principle that Section 153A/153C proceedings cannot be used to reopen finalized assessments except on the basis of incriminating material unearthed in the search (or material connected thereto), the Tribunal accepted the assessee's contention that the impugned disallowance was made by mere reappraisal of existing material and not on any seized or incriminating material. The Tribunal followed its earlier reasoning in the identical case of the assessee's wife and the established authorities cited therein, holding that completed assessments do not abate and cannot be the subject of fresh additions under Section 153A/153C unless there is a nexus with incriminating material discovered in the search. Applying that principle to the facts, the Tribunal found no material from the search justifying the Section 14A disallowance and thus held the addition was beyond the scope of assessment under Section 153A/153C. [Paras 5, 6]

Disallowance made under Section 14A is deleted as it was not based on any incriminating material found during the search; the appeals are allowed.

Final Conclusion: Following earlier Tribunal reasoning in identical facts, and holding that completed assessments cannot be interfered with under Section 153A/153C in the absence of incriminating material from the search, the disallowances under Section 14A for the stated assessment years are set aside and the appeals are allowed.

Deduction under section 10B of the Income Tax Act - computer software defined to include customised electronic data - export of customised electronic data / legal database as eligible for section 10B - EOU recognition and entitlement to tax incentives - customs-bonding not a pre-condition for grant or continuance of EOU benefits where no imports are involved - formation of new unit not to be treated as splitting-up or reconstruction absent substantial transfer of assets

Deduction under section 10B of the Income Tax Act - computer software defined to include customised electronic data - export of customised electronic data / legal database as eligible for section 10B - Assessee's export of legal services by transmission of customised electronic data / use of legal database qualifies as computer software and is eligible for deduction under section 10B. - HELD THAT: - The Tribunal affirmed the CIT(A)'s conclusion that Explanation 2(i)(b) to section 10B, which defines computer software to include "any customised electronic data", embraces transmission of client-specific legal information compiled as a legal database and exported by electronic means. The assessee's services were recognized under the EXIM/EOU scheme and CBDT Notification S.O. 890(E) (legal databases) was held to render such services eligible as information-technology enabled products/services. Reliance was placed on precedents holding that data collected and stored in electronic form becomes customised electronic data eligible for export-incentive treatment, and on factual findings that the assessee exported client-specific legal data electronically and brought in foreign exchange. For these reasons the claim for deduction under section 10B was allowed in respect of the EOU unit. [Paras 10, 11, 12, 13, 20]

Claim for deduction under section 10B allowed in respect of the assessee's 100% EOU unit for exported customised electronic data / legal database.

EOU recognition and entitlement to tax incentives - customs-bonding not a pre-condition for grant or continuance of EOU benefits where no imports are involved - Customs-bonding requirement cannot be made a condition retrospectively to deny EOU benefits where the unit did not import capital goods and the development commissioner had granted registration. - HELD THAT: - The Tribunal examined the development commissioner's correspondence and the assessee's compliance with EOU registration formalities. Noting authority and precedent (including the Delhi High Court's interpretation), the Tribunal held that customs-bonding is materially relevant only where imports without duty payment are contemplated; it cannot be used after the event as a ground to deny incentives when registration had been granted and the unit did not import capital goods. Consequently, failure to produce customs-bonding certification could not defeat the assessee's entitlement to section 10B benefits. [Paras 9, 19, 20]

Customs-bonding cannot be invoked to deny the assessee's EOU-linked section 10B claim where imports were not involved and registration had been granted.

Formation of new unit not to be treated as splitting-up or reconstruction absent substantial transfer of assets - EOU recognition and entitlement to tax incentives - The EOU unit is not a mere reconstruction or splitting-up of the existing business; separate units with separate books and no substantial transfer of assets qualify for benefits. - HELD THAT: - On facts the Tribunal noted that the assessee maintained separate books for the Ismail Building unit and the Free Press House (EOU) unit, and there was no substantial transfer of assets from the old unit to the new. Applying principles in earlier authorities, the Tribunal held that mere continuity of activity or provision of similar services does not establish formation by reconstruction or splitting-up. The Free Press House unit was a separate operational unit recognised by the development commissioner and thus its export income could be considered for section 10B deduction independently. [Paras 17, 18, 20]

The EOU unit is an independent undertaking not formed by splitting-up or reconstruction; its export income is eligible for section 10B relief.

Final Conclusion: The Tribunal dismissed the revenue appeals and confirmed the CIT(A)'s allowance of deduction under section 10B in respect of the assessee's 100% EOU unit exporting customised electronic data / legal database; customs-bonding could not be used to deny benefits where imports were not involved and the EOU unit was a separate undertaking not formed by reconstruction.

Principles of natural justice - right to production of non-RUDs and assessed copies for effective adjudication - record of personal hearing as appealable order under Section 129A of the Customs Act, 1962 - entertainment of appeal against record of personal hearing - direction for fresh personal hearing after production of documents

Record of personal hearing as appealable order under Section 129A of the Customs Act, 1962 - entertainment of appeal against record of personal hearing - Appeal against the record of personal hearing can be entertained as an order for the purposes of Section 129A of the Customs Act, 1962. - HELD THAT: - On a query whether a record of personal hearing qualifies as an 'order' for preferring an appeal under Section 129A, the Tribunal accepted the submission of the appellant that a Division Bench of another Tribunal in Swiber Offshore Construction Pvt. Ltd. Vs. Commissioner of Customs, Kandla had entertained an appeal filed against a record of personal hearing. In view of that identical situation and the earlier decision, the Bench treated the record of personal hearing dated 29.10.2015 as an order for the limited purpose of entertaining the appeal under Section 129A and proceeded to adjudicate the grievance raised by the appellant.

Record of personal hearing held on 29.10.2015 is to be treated as an appealable order for the purposes of Section 129A and the appeal is entertained.

Principles of natural justice - right to production of non-RUDs and assessed copies for effective adjudication - direction for fresh personal hearing after production of documents - Denial of supply of non-RUDs and assessed copies of bills of entry without reasons violates principles of natural justice and requires production of those documents and a fresh personal hearing. - HELD THAT: - The Tribunal found that the adjudicating authority declined the appellant's request for supply of non-RUDs and assessed copies of bills of entry without assigning reasons. The appellant had contended that those documents were necessary to file an effective and meaningful reply to the show cause notice and for proper adjudication. The Tribunal held that denial of such relevant documents would amount to a gross and flagrant violation of the principles of natural justice. Consequently, the Tribunal directed the Commissioner (adjudicating authority) to furnish the non-RUDs and the assessed copies of the bills of entry to the appellant and thereafter issue a fresh notice for personal hearing so that the appellant may explain its case for adjudication.

The appeals are allowed; the adjudicating authority is directed to supply the requested documents and to re-initiate personal hearing for adjudication.

Final Conclusion: The Tribunal entertained the appeal against the record of personal hearing and allowed the appeals on grounds of violation of natural justice, directing production of non-RUDs and assessed bills of entry and a fresh personal hearing for adjudication.

Claim of duty exemption under Notification No. 21/2002 dated 1.3.2002 - substantial compliance with notification conditions - certificate issued by Export Promotion Council for Handicraft (EPCH) - authenticity of certification by competent authority - distinguishability of precedent decision

Claim of duty exemption under Notification No. 21/2002 dated 1.3.2002 - substantial compliance with notification conditions - Entitlement to duty exemption under Notification No. 21/2002 based on compliance with its conditions - HELD THAT: - The Tribunal found that the appellant had imported polishing materials and filed bills of entry claiming exemption under Notification No. 21/2002. The Export Promotion Council for Handicraft (EPCH) after verification certified that handicraft goods were exported by the appellant in due compliance with the notification. The appellant's Chartered Accountant also certified export of handicraft goods for the period 1.4.2003 to 31.3.2004. On the basis of these certifications and the Tribunal's finding of substantial compliance with the conditions of the notification, the claim for duty exemption was held to be justified. The Tribunal therefore concluded that the denial of exemption in adjudication and in the Commissioner (Appeals) order lacked merit. [Paras 6, 7]

Claim for duty exemption allowed and impugned order set aside.

Certificate issued by Export Promotion Council for Handicraft (EPCH) - authenticity of certification by competent authority - distinguishability of precedent decision - Whether Customs could question the genuineness/authenticity of certificates issued by EPCH and the CA - HELD THAT: - The Tribunal held that EPCH is a sponsored organisation under the Ministry of Textiles and, having certified after verification of the appellant's records that handicraft goods were exported in compliance with the notification, the Customs department could not impugn the genuineness or authenticity of those certificates. The Tribunal further observed that the Supreme Court decision in Louis Shoppe concerned a different notification and was distinguishable on facts and law, so its ratio did not apply to the present notification-driven certification. [Paras 6]

Customs cannot question the certified authenticity of EPCH/CA certificates in these circumstances; reliance on the certificates is upheld.

Final Conclusion: The appeal is allowed; the Commissioner (Appeals) order dated 13.12.2010 is set aside and the appellant's claim for exemption under Notification No. 21/2002 is accepted for the period certified (1.4.2003 to 31.3.2004).

Refund of additional duty of customs - invoice declaration / endorsement for refund - burden of additional duty passed on to the buyer - requirement of enquiry before entertaining refund application

Burden of additional duty passed on to the buyer - refund of additional duty of customs - The record did not establish that the additional duty of customs was charged or its burden passed on to the buyer. - HELD THAT: - The Tribunal examined the invoices produced on the subsequent date and found they evidenced only levy of VAT; no additional duty of customs was shown to have been charged. In the absence of any enquiry or material to demonstrate that the burden of the additional duty was shifted to the buyer, the Tribunal could not uphold Revenue's defence that refund should be denied on that ground. The Tribunal therefore accepted that there was no instance on record proving levy or passing on of additional duty.

No evidence on record that additional duty was charged or its burden passed to the buyer; therefore Revenue's contention on that factual premise is not sustained.

Invoice declaration / endorsement for refund - A prior Larger Bench decision indicates that non-declaration of duty in the invoice may suffice and that stamping/endorsement on duplicate invoices may not be essential where the invoice does not carry the duty element. - HELD THAT: - The Tribunal relied on the Larger Bench view in Chowgule & Company Pvt. Ltd. Vs. Commissioner of Customs , which holds that non-specification of the duty element in the invoice itself may satisfy the condition for non-availability of credit and that an endorsement may not be necessary if the invoice does not show the duty element. That principle was applied to the present factual matrix where original invoices did not recite additional duty.

The Larger Bench principle that endorsement may not be necessary where invoices do not disclose the duty element is applicable to the facts before the Tribunal.

Requirement of enquiry before entertaining refund application - examination of stamping of duplicate bills - The matter is remanded to the original authority to examine the reasons for stamping the duplicate bills and to pass an appropriate order after such examination. - HELD THAT: - Although the Tribunal found no record evidence of levy or passing on of additional duty and noted the Larger Bench principle, it did not itself decide the refund on merits. Instead, the Tribunal remitted the case to the original authority for consideration of the specific factual question as to why duplicate invoices were stamped and for any further enquiry that authority may deem necessary before concluding on the refund claim. The remand is for examination and decision by the original authority, not for computation by the Tribunal.

Appeal is remanded to the original authority to examine reasons for stamping the duplicate bills and to pass an appropriate order.

Final Conclusion: The Tribunal found no documentary evidence that additional duty of customs was shown or its burden passed to buyers, noted the Larger Bench view that endorsement may not be necessary where invoices do not disclose the duty element, and remanded the case to the original authority to inquire into the stamping of duplicate invoices and pass an appropriate order.

Quashing of criminal proceedings for want of prima facie case - Requirement of specific averments against a director before issuance of process - Liability of a director as officer in default and vicarious/managerial responsibility - Continuing offence doctrine - Limitation under Section 468, Code of Criminal Procedure

Quashing of criminal proceedings for want of prima facie case - Requirement of specific averments against a director before issuance of process - Process issued against the petitioner (a director) was liable to be quashed for absence of specific allegations and absence of prima facie ingredients of the offences against him. - HELD THAT: - The Court found that the complaint did not contain any specific averment that the petitioner was in charge of, or responsible for, the conduct of the company's business, nor did it allege any overt act by him. The petitioner was a practising advocate and a professional/formal director; mere formal directorship without allegations showing managerial control or acts attracting criminal liability cannot sustain process. In absence of prima facie ingredients in the complaint and specific allegations against the petitioner, continuation of criminal proceedings against him amounted to issuing process without lawful basis and required quashing. The Court applied this reasoning to the four complaints in which the petitioner was named but not specifically implicated. [Paras 6]

Process issued against the petitioner quashed for lack of specific allegations and absence of prima facie case.

Continuing offence doctrine - Limitation under Section 468, Code of Criminal Procedure - Offences under Sections 211(7), 209(5) and 628 of the Companies Act are not continuing offences for the purpose of running the period of limitation under Section 468 CrPC; therefore cognizance taken after the limitation period was impermissible. - HELD THAT: - Having regard to the nature of the alleged contraventions (non-maintenance/non-disclosure and related alleged falsification of accounts), the Court accepted the view that these provisions do not constitute continuing offences such that limitation would keep running. Applying Section 468 CrPC, the relevant limitation periods govern cognizance; where the alleged acts pertain to earlier years and the complaint was lodged after the limitation period, the Magistrate could not validly take cognizance. The Court relied on its preceding consideration of the doctrine of continuing offence and concluded that limitation barred prosecution in the circumstances of these complaints. [Paras 4, 7, 8, 10, 11]

The offences in question are not continuing offences; the complaints were time barred and cognizance after limitation was impermissible.

Liability of a director as officer in default and vicarious/managerial responsibility - Requirement of proof of mens rea or mala fides for criminal liability under Companies Act provisions - A director who is not shown to have been entrusted with managerial duties, or to have acted with mala fide intent, cannot be held criminally liable merely by virtue of being a formal director; mens rea or specific culpable conduct must be averred. - HELD THAT: - The Court observed that statutory offences under the Companies Act may be technical, but criminal liability requires establishment of requisite ingredients including responsibility for management or culpable conduct. Where a managing director or manager exists and no charge is alleged that a non executive director was entrusted with duties or acted with knowledge/mala fide, prosecution of such a director is impermissible. The absence of any averment of mens rea, overt acts, or allocation of responsibility in the complaint undermined the case against the petitioner. [Paras 5, 6]

Petitioner, being a formal/professional director without specific allegations of managerial control or mala fide conduct, could not be made criminally liable on the basis of the complaint.

Final Conclusion: For the reasons stated, the Special Criminal Applications are allowed and the criminal complaints (Criminal Case Nos.14/2006, 08/2006, 24/2006 and 15/2006) insofar as they proceeded against the petitioner are quashed; rule made absolute.

Bar on winding up proceedings and protection under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 - 2nd proviso to section 15(1) of SICA, 1985 and its effect on maintainability of a BIFR reference where debts have been assigned to a securitisation or reconstruction company - acquisition of financial asset by a securitisation or reconstruction company under the SARFAESI Act - effect of assignment of debt to an Asset Reconstruction Company on invocation of BIFR jurisdiction - exercise of SARFAESI remedies including physical possession under section 14

2nd proviso to section 15(1) of SICA, 1985 and its effect on maintainability of a BIFR reference where debts have been assigned to a securitisation or reconstruction company - effect of assignment of debt to an Asset Reconstruction Company on invocation of BIFR jurisdiction - Reference filed before the BIFR by the company (in liquidation) after assignment of its debt to an Asset Reconstruction Company is not maintainable and is non-est, and therefore does not attract protection under section 22 of SICA, 1985. - HELD THAT: - The Court found as an admitted fact that the debt owed by the Company (in liqn.) to Indian Overseas Bank was assigned to ARCIL (an Asset Reconstruction Company) by a Deed of Assignment executed on 12 November, 2014 and registered on 23 January, 2015, whereas the reference on behalf of the Company to the BIFR was filed only on 21 November, 2015. The 2nd proviso to section 15(1) of SICA, 1985 (inserted by the SARFAESI Act) provides that no reference shall be made to the BIFR after commencement of the SARFAESI Act where financial assets have been acquired by a securitisation or reconstruction company under section 5(1) of that Act. Given the prior assignment to ARCIL, the proviso operates to preclude a valid reference to the BIFR; any reference filed thereafter is contrary to that statutory provision and is therefore non-est. Because protection under section 22 of SICA 1985 depends on the existence of a valid reference before the BIFR, no such protection could be claimed in this case. The Court upheld the view taken in earlier decisions (including Paper Prints and its own prior decision) and applied the statutory provision to the facts at hand, rejecting the contention that the pending BIFR reference barred the Official Liquidator's proceedings. [Paras 4, 5, 6, 10]

The objection that the OLR cannot proceed because the Company is before the BIFR is rejected; the BIFR reference is held non-est in view of the prior assignment to ARCIL and does not shelter the Company under section 22 of SICA, 1985.

Bar on winding up proceedings and protection under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 - Whether protection under section 22 of SICA, 1985 is available to the Company (in liquidation) in the circumstances of this case. - HELD THAT: - The Court held that protection under section 22 contemplates a valid reference before the BIFR. Since the reference was held to be not maintainable being filed after assignment of the debt to an ARC, the statutory protection under section 22 does not arise. The Court therefore proceeded with the Official Liquidator's Report and declined to stay or bar the winding up related actions on the basis of the invalid BIFR reference. [Paras 6, 10, 11]

Section 22 protection is not available to the Company (in liqn.) because the BIFR reference is non-est; Official Liquidator's proceedings are not barred.

Exercise of SARFAESI remedies including physical possession under section 14 - effect of assignment of debt to an Asset Reconstruction Company on invocation of BIFR jurisdiction - Reliefs sought in the Official Liquidator's Report in respect of payment of advertisement charges and directions regarding physical possession and security of the factory premises. - HELD THAT: - The Court recorded that the advertisement charges sought to be recovered from an Ex-Director had already been deposited with the Official Liquidator; accordingly the Official Liquidator was directed to pay the advertising agency out of the deposited sum. As to the prayer seeking direction to IOB to take physical possession and appoint security guards (or alternatively permitting the Official Liquidator to take possession), the Court noted that IOB had already taken symbolic possession and obtained an order under section 14 of the SARFAESI Act dated 29 November, 2011, and that subsequent proceedings (including a securitisation application and assignment to ARCIL) and applications for modification were pending. In view of the prior and continuing steps taken under the SARFAESI Act by IOB/ARCIL to take physical possession, the Court held that the Official Liquidator's prayer for directions in respect of physical possession was rendered infructuous. [Paras 11, 12, 13]

Official Liquidator directed to pay the advertising charges from sums already deposited; prayer for directions regarding physical possession/security of the factory premises is rendered infructuous in view of prior SARFAESI steps by IOB/ARCIL.

Final Conclusion: The Official Liquidator's Report is disposed of: the objection that winding up proceedings are barred by a pending BIFR reference is rejected because the BIFR reference was filed after assignment of the debt to an ARC and is non-est; the Official Liquidator is directed to pay the advertising charges from the amount already deposited; and the request for directions to take physical possession of the factory premises is rendered infructuous in view of prior SARFAESI actions by IOB/ARCIL.

Business Auxiliary Service - Chargeability of service tax on service provider - Reverse charge mechanism under Section 66A - Jurisdictional limit to levy service tax on recipient in absence of reverse charge - Proviso to Section 73(1) - recovery for suppression

Jurisdictional limit to levy service tax on recipient in absence of reverse charge - Reverse charge mechanism under Section 66A - Chargeability of service tax on service provider - Whether the Commissioner had jurisdiction to levy service tax on the petitioner where the show cause notices and order proceeded on the basis that the petitioner had received or incurred expenditure for Business Auxiliary Service, without alleging or adjudicating that the reverse charge mechanism under Section 66A or a notification under Section 68(2) applied or that the petitioner had provided taxable services. - HELD THAT: - The court examined the show cause notices and the adjudication order and found that the department's case throughout rested on the premise that the petitioner had incurred expenditure for sales promotion which the department treated as Business Auxiliary Service. Statutory scheme and rules indicate that service tax is chargeable on the person who provides the taxable service unless a reverse charge is made applicable by Section 66A (deeming the recipient to be the provider) or by notification under Section 68(2). The impugned notices and order contain no case, finding or adjudication that the reverse charge mechanism applied, nor do they establish that the petitioner actually provided taxable services to others. Proceeding to demand tax from the petitioner as recipient in absence of any pleadings or finding invoking reverse charge was therefore beyond the jurisdictional competence of the Commissioner. The court emphasised that if the department intended to make an independent case that the petitioner was the provider or that Section 66A applied, it must initiate proceedings on that basis and afford reasonable notice; absent such a case in the show cause notice and absence of any adjudicative finding, the demand could not be sustained. [Paras 15, 16, 17, 19]

The Commissioner had no jurisdiction to levy the impugned service tax demand on the petitioner in the absence of any allegation or finding that the reverse charge mechanism applied or that the petitioner was a service provider; the demand is legally unsustainable.

Proviso to Section 73(1) - recovery for suppression - Remand for fresh consideration - Whether the matter should be remanded to the Commissioner for fresh consideration or whether the impugned order should be quashed. - HELD THAT: - The court considered the department's request for remand but found no utility in remanding proceedings because the show cause notices themselves did not set up a case permitting levy of service tax on the petitioner as recipient even if the factual allegations were accepted. The court observed that remand could not be used to enlarge the scope of the show cause notices by adding new allegations not presently made. Given that the foundational legal defect was lack of jurisdiction to demand tax from the recipient without invoking reverse charge or adjudicating that the petitioner was a provider, remanding for reconsideration would be futile. [Paras 18]

No remand; the impugned order is quashed and set aside rather than being remitted to the Commissioner for fresh consideration.

Final Conclusion: The writ petition is allowed: the impugned order dated 29.1.2016 is quashed and set aside because the Commissioner lacked jurisdiction to levy service tax on the petitioner in the absence of any allegation or adjudication invoking the reverse charge mechanism or treating the petitioner as the service provider; consequential claims for interest and penalty were not sustained.

Adjustment of excess service tax - refund of the value of taxable service and service tax thereon - Rule 6(3) of the Service Tax Rules, 1994 - demand under Section 73(1) of the Finance Act, 1994 - Article 265 of the Constitution of India

Adjustment of excess service tax - refund of the value of taxable service and service tax thereon - Rule 6(3) of the Service Tax Rules, 1994 - Whether an assessee who has made excess payment of service tax in earlier months may adjust that excess against subsequent service tax liability notwithstanding that no refund of the taxable value and service tax was made to the recipient. - HELD THAT: - The Tribunal analysed Rule 6(3) of the Service Tax Rules, 1994 which links permissibility of adjustment against subsequent liability to refund of the value of taxable service and service tax to the person from whom it was received. Having regard to the undisputed factual position that excess payments had been made in earlier months and were adjusted by the appellant in a subsequent month, the Tribunal adopted a liberal and combined reading of the relevant Service Tax Rules. The Tribunal observed that strict insistence on procedural formalities by Revenue, in the factual matrix where no service was rendered and no dispute existed about the excess payment, would clash with the principle that taxation must conform to law (invoking Article 265). Applying that approach and relying on earlier Tribunal authority, the Tribunal held that the adjustment of the excess payment by the appellant in the later period was permissible despite absence of documentary proof of refund to recipients, and that this case did not fall within categories of excess payment attributable to wrong classification, valuation or exemption claims.

Adjustment of the excess service tax paid in earlier months against subsequent service tax liability was allowed; the appellant's suo motu adjustment was held permissible notwithstanding non-production of evidence of refund to recipients.

Demand under Section 73(1) of the Finance Act, 1994 - interest under Section 75 - Whether the demand and interest confirmed by the adjudicating authority and Commissioner (Appeals) in respect of the asserted short payment for the later month were sustainable. - HELD THAT: - The show cause notice and adjudication sought to demand tax for the month in which the appellant adjusted earlier excess payments. Having accepted the permissibility of the adjustment on the merits, the Tribunal found the foundation for the demand under Section 73(1) and the consequential interest to be displaced. The Tribunal further noted that the adjudicating order's finding about non-production of refund evidence was not an allegation in the show cause notice and had not been addressed, and that the factual position that no service was rendered was not in dispute.

The demand confirmed by the lower authorities was set aside and the appeal allowed, with consequential relief.

Final Conclusion: Impugned order confirming demand set aside; appeal allowed - the appellant's adjustment of earlier excess service tax against subsequent liability is permitted on the facts, and the demand and interest confirmed by the lower authorities are vacated with consequential relief.

Eligibility for refund of service tax - service tax liability under Goods Transport Agency (GTA) service - classification of composite goods transport and cargo handling

Eligibility for refund of service tax - service tax liability under Goods Transport Agency (GTA) service - The appellants' entitlement to refund of service tax paid for the period 1.1.05 to 8.12.05 in light of the finding that there was no liability under GTA service. - HELD THAT: - The appellants filed a refund claim for amounts paid pursuant to invoices for transport-related activities. The original authority and Commissioner (Appeals) rejected the claim holding the payments to be for taxable composite works under GTA. The Tribunal earlier (Final Order No.53209/2014 dated 13.8.2014) held that the appellants were not liable to service tax under the GTA category for the period 1.1.05 to 30.6.06, observing absence of consignment notes and applying the scope of the GTA definition. Although Revenue challenged that order and the High Court remanded the matter, the Tribunal again examined the factual and legal issues and, by Final Order No.52655/2016 dated 28.7.2016, reaffirmed that there was no service tax liability under GTA for the appellants. Given that the substantive tax liability has been adjudicated in the appellants' favour, the appellant's refund claim for the period 1.1.05 to 8.12.05 succeeds and the appeal against the rejection of the refund is allowed with consequential relief.

Appeal allowed; refund claim sustained because there was no service tax liability under GTA for the period in question, with consequential relief.

Final Conclusion: The Tribunal's subsequent decisions establishing absence of service tax liability under GTA in favour of the appellant dispose of the refund dispute; the appeal is allowed and the appellant is entitled to consequential relief for the period 1.1.05 to 8.12.05.

Condonation of delay - grant of stay of recovery - partial pre-deposit - educational institutions excluded from definition of commercial training or coaching centre - effect of Finance Act, 2011 amendment from 01.05.2011

Condonation of delay - Applications/appeals were filed within the prescribed time and condonation of delay was granted. - HELD THAT: - The appellants demonstrated that the order after rectification was issued on 20/01/2014 and received on 22/01/2014, and that the appeals were filed on 22/04/2014. The Departmental representative conceded that position. On that basis the Tribunal found the appeals to have been filed within the prescribed time limit and allowed the condonation. [Paras 2]

Condonation of delay allowed and appeals held to be filed within time.

Grant of stay of recovery - precedent stay binding in similar case - educational institutions excluded from definition of commercial training or coaching centre - effect of Finance Act, 2011 amendment from 01.05.2011 - Prima facie stay of recovery granted for demands relating to the period 2005-06 to 2009-10 (i.e., up to 27/02/2010) on the grounds that the issue is debatable and covered by an earlier Tribunal stay in the appellants' own case. - HELD THAT: - The appellants relied on an earlier stay order of the Tribunal in their own case and on authorities holding that educational institutions fall outside the definition of 'commercial training or coaching centre'. The Department conceded that the earlier Stay Order No.30080 to 30083/2016 dated 20/06/2016 covers the period 2005 to 2010. The Tribunal found the contentions to be prima facie meritorious and the legal question to be debatable, particularly in view of the amendment effected by the Finance Act, 2011 with effect from 01.05.2011. On these considerations the Tribunal stayed recovery of the demands for the period 2005-06 to 2009-10. [Paras 3, 4, 5, 6]

Recovery of demands for the period 2005-06 to 2009-10 stayed pending disposal of the appeals.

Partial pre-deposit - stay subject to compliance - For demands relating to 2010-11 in respect of ICFAIAN Foundation and ICFAI Hyderabad, the Tribunal directed a pre-deposit of 50% of the specified total amount and stayed recovery of the balance subject to such deposit. - HELD THAT: - The appellants conceded limited prospects on the demands for 2010-11 relating to ICFAIAN Foundation and ICFAI Hyderabad. The Tribunal, in the interests of justice and having regard to the admissions, held that a 50% pre-deposit of the total disputed amount for 2010-11 was appropriate. The deposit was made a condition precedent to staying recovery of the remaining demands in the eleven appeals, with a timetable of four weeks for compliance and a listing for compliance thereafter. [Paras 6]

Appellants directed to deposit 50% of the total disputed amount for 2010-11 within four weeks; on such deposit, recovery of the remaining demands shall be stayed until disposal of the appeals.

Final Conclusion: Condonation of delay allowed; recovery of demands for the period 2005-06 to 2009-10 stayed pending appeal; for the 2010-11 demands relating to ICFAIAN Foundation and ICFAI Hyderabad the appellants ordered to make a 50% pre-deposit within four weeks, failure of which the stay would not operate; matter listed for compliance.

Abatement - assessable value - value of free supplied items - commercial or industrial construction service - construction of residential complex service - precedent of a larger Bench

Value of free supplied items - assessable value - abatement - commercial or industrial construction service - construction of residential complex service - Value of free supplied items by the recipient of services is not to be added to the assessable value for computing the benefit of abatement under Notification No. 15/2004 or 1/2006 in respect of commercial/industrial construction and construction of residential complex services; the impugned order is set aside and the appeal is allowed. - HELD THAT: - Both parties accepted that the controversy was covered by the decision of the larger Bench in Bhayana Builders (P) Ltd. vs. CST, Delhi. The Tribunal applied that precedent, which had been followed in subsequent decisions including CCE, Bhopal v. Sonali India and Paharpur Cooling Towers Ltd. v. CCE and Customs, Raipur, and, on that basis, allowed the appellant's appeal and set aside the impugned order. The decision therefore resolves the present dispute in favour of the appellant by following the larger Bench precedent on whether the value of items freely supplied by the service recipient must be included in the taxable value for the purpose of the specified abatement notifications.

Impugned order set aside; appeal allowed following the larger Bench precedent, with consequential relief to the appellant.

Final Conclusion: The Tribunal, applying the larger Bench precedent, allowed the appeal and set aside the impugned order, holding in favour of the appellant on the treatment of free supplied items for computing abatement under the cited notifications.

Service under Section 37C of the Central Excise Act, 1944 - service of orders by registered post and presumption of delivery under the General Clauses Act - service of orders by speed post and evidentiary presumption under Section 114 of the Evidence Act - burden to rebut presumption of service - time-limits for filing cross-objections before the appellate authority

Service under Section 37C of the Central Excise Act, 1944 - service of orders by speed post and evidentiary presumption under Section 114 of the Evidence Act - burden to rebut presumption of service - Validity of dismissal of the appellant's appeal by reason of delay where the order in original was sent by speed post but alleged not received by the appellant. - HELD THAT: - The Court noted Section 37C prescribes modes of service including registered post and deems service when delivered by post. Section 27 of the General Clauses Act raises a statutory presumption where documents are sent by registered post but contains no corresponding provision for speed post. Consequently no automatic statutory presumption arises from dispatch by speed post under Section 27. However, the Court held that, by operation of Section 114 of the Evidence Act, an evidentiary presumption may be drawn that dispatch by speed post results in delivery in the ordinary course, and the onus lies on the addressee to rebut that presumption. In the present case the department produced material showing dispatch by speed post and attempts to obtain confirmation from the Post Office, while the appellant produced no evidence to rebut non-delivery. On that basis the Court concluded the presumption of delivery could be applied and there was no error in treating the appeal as filed after communication of the adjudication order. Accordingly the appellate action rejecting the appellant's appeal for delay was not sustained in relation to this point. [Paras 11, 12]

Dispatch by speed post, in absence of evidence to the contrary from the addressee, permits an evidentiary presumption of delivery under Section 114 of the Evidence Act and the appellant failed to rebut that presumption.

Time-limits for filing cross-objections before the appellate authority - service under Section 37C of the Central Excise Act, 1944 - Validity of the Appellate Authority's rejection of the appellant's cross-objections as time-barred. - HELD THAT: - The Court observed that while Order 41 Rule 22 CPC prescribes a time for cross-objections in that Code, the Central Excise Act does not prescribe a statutory period for filing cross-objections before the appellate authority. The time-limit referred to by the Appellate Authority was an administrative direction. When the appellant's authorised representative appeared before the Appellate Authority on 26.11.2010 and was granted one week's time to file cross-objections, the cross-objections filed on 03.12.2010 were accepted by the Appellate Authority and ought not to have been treated as time-barred merely because an earlier notice had prescribed a period. The Appellate Authority and the Tribunal erred in treating the cross-objections as barred by limitation. Consequently the Court set aside the impugned rejection of cross-objections and remanded the matter to the Appellate Authority for disposal of the cross-objections according to law. [Paras 13, 14]

Cross-objections filed on 03.12.2010 were not time-barred in the circumstances and the Appellate Authority's and Tribunal's orders rejecting them on limitation grounds are set aside; the matter is remanded for fresh disposal of the cross-objections.

Final Conclusion: The appeal is partly allowed: the High Court upheld the evidentiary presumption of delivery in respect of dispatch by speed post (appellant failed to rebut it) and did not disturb dismissal of the appellant's appeal for delay on that ground; however, the Court set aside the rejection of the appellant's cross-objections as time-barred and remanded the matter to the Appellate Authority for fresh disposal of the cross-objections in accordance with law.

Comparative transaction value from independent buyers governs valuation for related party sales - application of Rule 9 of the Valuation Rules to mixed sales to related and unrelated buyers - establishment of relatedness/inter connected undertakings for adoption of alternate valuation rules

Comparative transaction value from independent buyers governs valuation for related party sales - application of Rule 9 of the Valuation Rules to mixed sales to related and unrelated buyers - establishment of relatedness/inter connected undertakings for adoption of alternate valuation rules - Assessable value of goods cleared to inter connected undertakings where identical goods were also sold to independent wholesale buyers at the same price. - HELD THAT: - The Tribunal held that where an assessee sells goods both to independent wholesale buyers and to inter connected (allegedly related) undertakings at the same price, the transaction value charged to independent buyers is to be applied for valuation of clearances to the inter connected undertakings. The Revenue's contention that valuation should be determined under the exceptional provisions (Rule 9) applicable to sales through related persons was not sustained because the factual matrix involved mixed sales to related and unrelated persons. The Tribunal relied on the Larger Bench decision in Ispat Industries Ltd. and the subsequent decision in Handy Wires Pvt. Ltd. , which are treated as governing precedents that, in identical situations, mandate adoption of the independent buyers' transaction value for related party clearances. In consequence, the Commissioner (Appeals) correctly set aside the original enhancement and penalty where the same price prevailed in sales to independent buyers and to the inter connected undertakings.

The assessee's transaction value as charged to independent wholesale buyers governs the assessable value for supplies to inter connected undertakings; the enhancement under Rule 9 and the penalty were set aside.

Final Conclusion: The appeal by the Revenue is rejected and the order of the Commissioner (Appeals) upholding the assessable value adopted by the assessee is affirmed.

Exemption of moulds manufactured and used within factory under Notification No. 67/95-CE - transfer of plant and machinery as part of shifting/merger not amounting to clearance - invoices or recovery of payment do not by themselves defeat exemption - availability of CENVAT credit and revenue neutrality on transfer between units of same manufacturer

Exemption of moulds manufactured and used within factory under Notification No. 67/95-CE - transfer of plant and machinery as part of shifting/merger not amounting to clearance - availability of CENVAT credit and revenue neutrality on transfer between units of same manufacturer - invoices or recovery of payment do not by themselves defeat exemption - Whether transfer of moulds from the appellant's Delhi factory to its own Noida unit on account of closing and shifting of the factory attracts excise duty or the exemption under Notification No. 67/95-CE continues to apply - HELD THAT: - The Tribunal found that the exemption applies to moulds manufactured and used within the factory and that mere issuance of invoices or recovery of payment does not ipso facto attract duty if the moulds continue to be used within the factory of manufacture. The transfer in question occurred as part of closing the Delhi unit and shifting and merging the manufacturing operations with the appellant's Noida unit; consequently the moulds continued to be used within the relocated factory and were not cleared outside the factory of manufacture. The Tribunal further noted that, even if duty were imposed on such intra manufacturer transfer, the duty would be available as CENVAT credit to the receiving unit since both units belong to the same manufacturer, making the transaction revenue neutral. Applying these principles, the Tribunal held that the conditions of the exemption were not violated by the shifting/merger transfer and that no useful purpose would be served by imposing duty in the circumstances described. [Paras 5]

Impugned demand set aside and appeal allowed on the ground that the moulds retained the benefit of the exemption as they continued to be used within the relocated factory and the transfer did not amount to a chargeable clearance.

Final Conclusion: The Tribunal allowed the appeal, setting aside the orders below and holding that moulds moved as part of closing and shifting the factory to the appellant's Noida unit remained covered by the exemption and that charging duty on such intra manufacturer transfer would be unwarranted and revenue neutral due to availability of CENVAT credit.

Cenvat Credit - denial of credit based on investigations at third party/manufacturer's end - circumstantial evidence insufficiency - receipt of inputs reflected in RG 23 Part A and utilisation in manufacture

Cenvat Credit - denial of credit based on investigations at third party/manufacturer's end - circumstantial evidence insufficiency - receipt of inputs reflected in RG 23 Part A and utilisation in manufacture - Whether the appellant's Cenvat credit could be denied solely on the basis of investigations conducted at the manufacturer's factory when the appellant had invoices, had recorded receipt in RG 23 Part A and had utilised the inputs in manufacture. - HELD THAT: - The Tribunal found that the denial of Cenvat credit was founded entirely upon investigations carried out at the manufacturer's premises which suggested that the manufacturer cleared prime quality bars as scrap and raised invoices showing defective rounds. However, there is no material on record establishing that the appellant did not actually receive the goods shown on the invoices. The appellant had recorded the receipts in its RG 23 Part A register and had utilised the inputs in the manufacture of its final product. The Commissioner (Appeals) relied on circumstantial evidence at the manufacturer's end - namely higher clearances of defective rounds than prime quality rounds - but there was no evidence linking such alleged excess clearances to non receipt by the appellant. In the absence of direct evidence to displace the appellant's records and utilisation, the Tribunal held that an investigation at a third party's premises cannot, by itself, constitute a sufficient basis to deny Cenvat credit.

The denial of Cenvat credit on the sole basis of investigations at the manufacturer's end is unsustainable; the impugned order is set aside and the appeal is allowed with consequential relief.

Final Conclusion: The appeal is allowed: Cenvat credit denied solely on the basis of third party investigations and circumstantial findings at the manufacturer's factory cannot be sustained where the recipient's records (RG 23 Part A) and utilisation of inputs remain uncontradicted; the impugned order is set aside with consequential relief to the appellant.

Excisability of Dolochar - classification of product as fuel under Chapter 26 of the Central Excise Tariff - classification as raw / intermediate for Sponge Iron under Chapter 72 - doctrine of judicial precedent - res integra

Excisability of Dolochar - classification of product as fuel under Chapter 26 of the Central Excise Tariff - classification as raw / intermediate for Sponge Iron under Chapter 72 - doctrine of judicial precedent - Dolochar arising in the manufacture of sponge iron is not exigible to excise duty and the departmental demand confirmed by lower authorities is set aside. - HELD THAT: - The Tribunal examined the appellant's contention that the question of excisability of Dolochar had been finally decided in favour of the manufacturer by the Hon'ble Supreme Court in Union of India v. Ahmedabad Electricity Company Ltd. and by this Tribunal in M/s H.E.G. Ltd. v. CCE, Raipur. Those precedents treat Dolochar as not exigible (or as falling outside the scope of chargeability relied upon by Revenue) and therefore the question is no longer res integra. The Tribunal found that the Commissioner (Appeals) failed to follow the binding judicial precedent of the Apex Court and the Tribunal decision applying to the same Commissionerate, and on that basis allowed the appeal and set aside the confirmed demand. The Tribunal applied the doctrine of judicial precedent to require conformity with the earlier decisions which squarely covered the issue. [Paras 4, 5]

Appeal allowed; demand of excise duty on Dolochar for the period in dispute set aside.

Final Conclusion: The Tribunal allowed the appeal, holding that the excisability of Dolochar had been conclusively decided in favour of the appellant by earlier superior and coordinate decisions and directing that the demand confirmed by the lower authorities for August 2006 to June 2007 be set aside.

Cenvat credit on capital goods - exempted goods - capital goods received during exemption period - eligibility to credit determined with reference to date of receipt of inputs/capital goods - interpretation of sub rule 4 of Rule 6 of the CENVAT Credit Rules regarding capital goods used exclusively in manufacture of exempted goods

Cenvat credit on capital goods - exempted goods - eligibility to credit determined with reference to date of receipt of inputs/capital goods - sub rule 4 of Rule 6 of the CENVAT Credit Rules - Whether CENVAT credit on capital goods received during the period when the final product was exempt (nil duty) is allowable where the final product became dutiable later in the same financial year. - HELD THAT: - The Tribunal applied sub rule 4 of Rule 6 of the CENVAT Credit Rules which excludes allowance of credit on capital goods used exclusively in the manufacture of exempted goods. On the date of receipt of the capital goods the appellant's final product was chargeable to nil rate of duty; consequently those capital goods fall within the exclusion in sub rule 4 and are not eligible for CENVAT credit. The appellant's contention that credit should be allowed because their final product became dutiable later in the same financial year was rejected. The Tribunal relied on the Larger Bench precedent in Spenta International Ltd v. Commissioner of Central Excise, Thane, holding that credit eligibility is to be determined with reference to the duty liability of the final product on the date of receipt of the capital goods, and applied that principle to disallow the credit in the appellant's case. [Paras 4, 5, 6]

CENVAT credit on capital goods received when the final product was exempt is not allowable; the appeal of the assessee is dismissed and the revenue's appeal succeeds.

Final Conclusion: The Tribunal upheld the denial of CENVAT credit on capital goods received during the period when the final product was exempt (nil duty), rejecting the contention that subsequent dutiability in the same financial year entitled the appellant to credit; the revenue's appeal succeeds.

Concealment of particulars of duty liability - bar on subsequent application for settlement - limitation of Settlement Commission jurisdiction - abate settlement proceedings under section 32F(1) - clarificatory explanation to section 32-O(1)(i)

Concealment of particulars of duty liability - clarificatory explanation to section 32-O(1)(i) - limitation of Settlement Commission jurisdiction - Earlier penalty was imposed on the appellants for concealment of particulars of their duty liability. - HELD THAT: - The Court examined the record of the earlier proceedings, including the admissions recorded in the show cause notice replies (notably answers by the director admitting clearances without duty and accepting liability) and the order dated 4th January, 2011. The earlier order, passed under the Settlement Commission's powers, imposed penalty on the applicants and recorded that the applicants had admitted clandestine removals and had been penalised for concealment of particulars of duty liability. The Court held that the Explanation to section 32-O(1)(i) - clarifying that concealment relates to concealment from the Central Excise Officer - is clarificatory and consistent with section 32E(1)'s requirement of full and true disclosure, and therefore supports the conclusion that the earlier penalty was imposed on the ground of concealment. On this basis the Commission's finding that the applicants were disqualified from seeking a subsequent settlement was justified. [Paras 11]

Finds that the 4th January, 2011 order imposed penalty for concealment of particulars of duty liability and that the bar in section 32-O(1)(i) applies.

Bar on subsequent application for settlement - limitation of Settlement Commission jurisdiction - The Settlement Commission rightly dismissed the subsequent settlement applications as barred by section 32-O(1)(i). - HELD THAT: - Given the Court's finding that the earlier order imposed penalty for concealment, the statutory bar in section 32-O(1)(i) precluded the appellants from making a further application for settlement in respect of other matters. The Court rejected the argument that the temporary insertion and later omission of sub-section (2) to section 32-O (effective 1 June 2007 to 8 May 2010) aided the appellants, noting no identical application was pending at the relevant times. Consequently, the Commission had no jurisdiction to entertain the later applications and was entitled to reject them without going into merits. [Paras 9, 11, 12]

Upholds the Commission's dismissal of the applications for want of jurisdiction under section 32-O(1)(i).

Abate settlement proceedings under section 32F(1) - entitlement to adjudication after abatement - On rejection of the settlement application the settlement proceedings abated under section 32F(1), and the appellants are entitled to have the show cause notice adjudicated by the appropriate authority. - HELD THAT: - The Court held that the Commission's order dated 27th August, 2014 rejected the applications for lack of jurisdiction and thereby, under section 32F(1), the settlement proceedings stood abated. Recognising that appellants must not be left remediless, the Court gave liberty to the appellants to pursue adjudication of the show cause notice dated 6th February, 2014 before the competent adjudicating authority, directing that if a reply is filed the authority shall proceed expeditiously and in accordance with law after observing principles of natural justice. The Court expressly did not adjudicate the merits of the show cause notice. [Paras 12, 13]

Settlement proceedings abated; appellants permitted to seek adjudication of the show cause notice before the appropriate authority.

Final Conclusion: The Single Judge's judgment upholding the Settlement Commission's order is affirmed. The Court finds that penalty was earlier imposed for concealment of particulars of duty liability, that the statutory bar under section 32-O(1)(i) precluded the subsequent settlement applications, and that the settlement proceedings abated under section 32F(1); appellants are granted liberty to pursue adjudication of the show cause notice before the appropriate authority.

Reversal of cenvat credit - Rule 3(5) of the Cenvat Credit Rules, 2004 - clearance as such - manufacture - penalty for wrongful availment

Reversal of cenvat credit - Rule 3(5) of the Cenvat Credit Rules, 2004 - clearance as such - manufacture - Applicability of Rule 3(5) of the Cenvat Credit Rules, 2004 for reversal of Cenvat credit in respect of Zinc Ash which emerged during processing of imported Zinc Skimmings and was cleared by the respondent. - HELD THAT: - The Tribunal accepted the admitted facts that Zinc Ash emerged during processing of imported Zinc Skimmings and that the allegation was based on clearance of Zinc Ash. It was found that the respondent never imported Zinc Ash and did not clear Zinc Skimmings "as such." The Commissioner (Appeals) recorded that the respondent had taken Cenvat credit only on the metallic part recovered after processing and had not claimed credit attributable to Zinc Ash. In those circumstances the activity did not attract the operation of Rule 3(5) because the prerequisites for invoking reversal (clearance of input as such or disallowance attributable to clearance) were absent. The Tribunal therefore agreed with the Commissioner (Appeals) that Rule 3(5) was not attracted on the facts and no duty reversal, interest or penalty under that provision could be sustained.

Rule 3(5) of the Cenvat Credit Rules, 2004 is not applicable on the facts; the order of the Commissioner (Appeals) setting aside the demand is upheld.

Final Conclusion: The appeal filed by the revenue is dismissed; the impugned order of the Commissioner (Appeals) holding that Rule 3(5) is not attracted and dropping the demand is upheld.

Entitlement to exemption under small scale exemption notification despite use of foreign brand assigned to the assessee - assignment of trade mark converts assignee's use into own trade mark

Entitlement to exemption under small scale exemption notification despite use of foreign brand assigned to the assessee - assignment of trade mark converts assignee's use into own trade mark - Whether the respondent, having been assigned the foreign brand name for use in India, is eligible for benefit under the small scale exemption notification despite using a brand originally owned by a foreign entity. - HELD THAT: - The Tribunal found on the admitted facts that the foreign brand owner had assigned the trade mark/brand name to the respondent for use in India. Reliance was placed on the reasoning of the Hon'ble Supreme Court in Commissioner of Central Excise, Bangalore v. Otto Bilz (India) Pvt. Ltd., where it was held that assignment of a trade mark by a foreign company to the Indian assignee confers on the assignee the right to use the trade mark in its own right and therefore it cannot be said to be using the trade mark of another person. Applying that principle, the Tribunal concluded that the respondent was using the brand as its own and was therefore entitled to the benefit of the small scale exemption notification; the Revenue's contrary view was rejected. [Paras 4, 5]

Benefit of the small scale exemption notification extended to the respondent because the assigned foreign brand was used by the respondent in its own right; Revenue's appeal rejected.

Final Conclusion: The appeal is dismissed; where a foreign owner has validly assigned a trade mark/brand to an Indian manufacturer for use in India, the assignee's use is treated as its own and the assignee is entitled to the small scale exemption notification.

Applicability of Rule 6(3) of the Cenvat Credit Rules, 2004 - Job work under Notification No. 214/86-CE - Classification of job-work goods as dutiable versus exempt - Liability to pay duty by the principal manufacturer - Requirement of separate accounts for dutiable and exempted goods

Applicability of Rule 6(3) of the Cenvat Credit Rules, 2004 - Job work under Notification No. 214/86-CE - Classification of job-work goods as dutiable versus exempt - Whether Rule 6(3) of the Cenvat Credit Rules, 2004 was attracted so as to render the respondent liable to pay 10% of the value of job-work goods on the ground that the respondent manufactured both dutiable and exempted final products and did not maintain separate accounts. - HELD THAT: - The Tribunal found as a fact that the job-work goods manufactured by the respondent were dutiable goods and that the respondent was engaged only in the manufacture of dutiable goods. Notification No. 214/86-CE exempts the job worker from payment of duty but does not convert the goods into exempted goods; duty is to be discharged by the principal manufacturer. On that basis the Tribunal upheld the Commissioner (A)'s conclusion that the circumstances for invoking Rule 6(3) - which addresses cenvat credit apportionment where manufacture of both dutiable and exempt goods occurs without segregation of accounts - were not present. The Tribunal further noted and applied the ratio of the Larger Bench decision in Sterlite Industries (Tri. -LB) and the decision in Bharat Fritz Werner Ltd., as relied upon by the Commissioner (A), to support the view that proceedings to fasten liability under Rule 6(3) were not warranted where the goods in question are dutiable and job work relief under Notification 214/86-CE merely postpones duty liability to the principal manufacturer.

Rule 6(3) of the Cenvat Credit Rules, 2004 is not attracted; the demand and penalty were unwarranted and the Commissioner (A)'s order setting aside the adjudication order is upheld.

Final Conclusion: The appeal is dismissed; the adjudication demand under Rule 6(3) and the penalty are held unwarranted because the job-work goods were dutiable and Notification No. 214/86-CE does not render those goods exempt, duty being payable by the principal manufacturer.

Provisional assessment - finalization of provisional assessment - adjustment of excess duty against short payment - unjust enrichment - applicability to the entirety of the goods

Provisional assessment - finalization of provisional assessment - adjustment of excess duty against short payment - unjust enrichment - applicability to the entirety of the goods - Whether on finalization of provisional assessment the excess duty paid on certain clearances can be adjusted against duty found short paid on other clearances without awaiting separate examination of unjust enrichment. - HELD THAT: - The Tribunal held that the question is no longer res integra and that on finalization of a provisional assessment the assessment relates to the entirety of the goods. To arrive at the final duty liability the excess duty paid on some clearances must be adjusted against the short payment on others. The reasoning follows earlier decisions which have applied this principle, rejecting the view that adjustment must await a separate probe into unjust enrichment before allowing credit of excess duty against short payment. In consequence, the Original Authority's refusal to adjust the excess duty pending examination of unjust enrichment was disapproved and the Commissioner (Appeals) order upholding that refusal was set aside. The Tribunal therefore allowed the appeal and granted consequential relief in accordance with the settled line of decisions relied upon. [Paras 4, 5]

Adjustment of excess duty against duty short paid was held permissible at the time of finalization of provisional assessment; appeal allowed with consequential relief.

Final Conclusion: The appeal was allowed: on finalization of the provisional assessment the excess duty paid on certain clearances must be adjusted against duty found short paid on others without withholding adjustment pending separate unjust enrichment examination; consequential relief was granted.

Revenue neutrality - rebate of duty paid on export - inclusion of commission in assessable value - claim under Rule 18 of Central Excise Rules

Inclusion of commission in assessable value - rebate of duty paid on export - revenue neutrality - Whether confirmation of duty, interest and penalty for non-inclusion of commission in the assessable value of exported goods can be sustained where an equal rebate of the enhanced duty is available to the exporter resulting in revenue neutrality. - HELD THAT: - The Tribunal examined the contention that commission ought to have been included in the assessable value, which would have resulted in a higher duty liability, but observed that the appellants had exported the goods and claimed rebate of duty paid under the provisions applicable to export rebate claims. Relying on the decision in Sterlite Industries (India) Ltd. v. Commissioner, which was affirmed by the Bombay High Court, the Tribunal noted that where an enhanced duty is payable but an equal rebate is available to the exporter, the net effect is revenue neutrality. In such circumstances the confirmation of duty (and consequent interest and penalty) was held not to be tenable. Applying that precedent, the Tribunal found no reason to uphold the Commissioner's order and set it aside on the ground of revenue neutrality.

The impugned order confirming duty, interest and penalty was set aside and the appeal allowed on the ground that the enhanced duty, if payable, was rendered revenue neutral by the availability of an equal rebate on export.

Final Conclusion: Appeal allowed; Commissioner's order confirming duty, interest and penalty set aside because the higher duty, if exigible due to non-inclusion of commission, was offset by an equal rebate on export resulting in revenue neutrality.

CENVAT credit on capital goods - restriction on immediate full credit on capital goods under CENVAT Credit Rules - irregular availment of credit - recovery of wrongly availed credit - procedural lapse vs. revenue loss - reversal and subsequent availing of credit - interest and penalty as compensation for procedural lapse

CENVAT credit on capital goods - irregular availment of credit - recovery of wrongly availed credit - procedural lapse vs. revenue loss - reversal and subsequent availing of credit - Demand for recovery of irregularly availed CENVAT credit for the periods 2005-06, 2006-07 & 2007-08 is not sustainable and is set aside. - HELD THAT: - The appellant was eligible to avail only 50% credit in the same year and the balance in the subsequent year; however, such availment in the same year constituted at most a procedural lapse rather than causing revenue loss because the balance credit could legitimately be taken in the following year. There is no finding of contumacious or dishonest conduct by the appellant, and the appellant has paid the interest and penalty. Reliance on the principle in Indian Oil Corporation Ltd. - where confirmation of irregularly availed credit was held unsustainable when the irregular credit was reversed and subsequently availed in the correct year - supports that recovery of the credit itself is not warranted here. Taking into account the facts and payments already made, the Tribunal finds the demand for recovery of the credit unsustainable and restores the adjudicating authority's order to that extent. [Paras 5]

Recovery/demand of the irregularly availed CENVAT credit is set aside.

Interest and penalty as compensation for procedural lapse - procedural lapse vs. revenue loss - Confirmation of interest and the penalty under Rule 15(2) of CENVAT Credit Rules, 2004 is not disturbed. - HELD THAT: - The appellant has remitted the interest and the penalty and does not contest these impositions. The Tribunal regards payment of interest and the penalty as adequate compensation for the procedural lapse. Accordingly, while the demand for recovery of credit is set aside, the confirmation of interest and the penalty imposed by the original authority is left intact. [Paras 5]

Confirmation of interest and the penalty upheld; penalty not disturbed.

Final Conclusion: The appeal is allowed insofar as the demand for recovery of the irregularly availed CENVAT credit for 2005-06, 2006-07 & 2007-08 is set aside; however, the confirmation of interest and the penalty imposed is not disturbed.

Input tax credit - retrospective cancellation of registration - reliance on registration certificate - taxation with retrospective effect - revision of assessment

Input tax credit - retrospective cancellation of registration - reliance on registration certificate - taxation with retrospective effect - Denial or reversal of input tax credit solely because the selling dealer's registration certificate was later cancelled with retrospective effect. - HELD THAT: - The Court applied the principle that a purchasing dealer who acted upon a seller's registration certificate while it was in force is entitled to rely upon that certificate; a subsequent retrospective cancellation of the seller's registration cannot, by itself, render previously lawful tax-free resales taxable or justify denial of input tax credit. The department's contention that persons dealing with registered dealers must thereafter ascertain facts justifying cancellation was rejected as contrary to the statute and to the law declared by the Supreme Court in the cited authority. Consequently, revised assessments which seek to disallow input tax credit only on the ground of retrospective cancellation of the sellers' registrations were set aside. [Paras 3, 4]

The impugned revised assessment orders insofar as they deny input tax credit on the ground of retrospective cancellation of the selling dealers' registration certificates are quashed and the writ petitions are allowed.

Final Conclusion: Writ petitions allowed; impugned revised assessments set aside to the extent they reverse input tax credit solely due to retrospective cancellation of suppliers' registrations; no costs; connected petitions closed.

Purchaser for value without notice - encumbrance/attachment of property for sales tax arrears - effect of certificate of sale issued by the Debts Recovery Tribunal - priority of sale under secured-creditor proceedings over subsequent tax encumbrance - protection under Section 24(2) of the TNGST Act

Purchaser for value without notice - effect of certificate of sale issued by the Debts Recovery Tribunal - priority of sale under secured-creditor proceedings over subsequent tax encumbrance - Validity of the attachment dated 28.8.2006 made by the Commercial Tax Officer over property purchased by the petitioner from a purchaser who acquired the property pursuant to a certificate of sale issued by the Debts Recovery Tribunal. - HELD THAT: - The Court found that the company's property had been sold under recovery proceedings before the Debts Recovery Tribunal and a certificate of sale was issued and registered in favour of the intermediate purchaser prior to the petitioner's purchase. The petitioner acquired the property for valuable consideration from that purchaser before any action was initiated by the Commercial Tax Officer. As the certificate of sale had not been cancelled or modified, the department could not create a lien or enforce the defaulting company's sales tax liability against the petitioner's title. Reliance was placed on earlier Division Bench decisions holding that purchasers who acquire rights under a sale in execution (including sales under the SARFAESI/DRT regime) without notice of a prior tax charge are purchasers for value without notice and their titles are not subject to belated encumbrances created thereafter. [Paras 2, 3, 4, 5]

The attachment dated 28.8.2006 is quashed insofar as it affects the petitioner; the petitioner is protected as a purchaser for value without notice.

Encumbrance/attachment of property for sales tax arrears - protection under Section 24(2) of the TNGST Act - Relief and consequential directions to be given following quashing of the attachment. - HELD THAT: - The Court directed that the entry of encumbrance made by the Sub-Registrar pursuant to the attachment shall be deleted and appropriate entries made to record that the attachment has been lifted. The Court required compliance within a specified short period upon the petitioner approaching the Sub-Registrar with a representation and a copy of the order. The order was issued after noting precedents where late creation of an encumbrance after a purchaser had acquired rights under execution/sale proceedings was held insufficient to affect the purchaser's rights under the relevant statutory protection. [Paras 6]

The Sub-Registrar is directed to delete the encumbrance entry and record that the attachment is lifted, to be done within four weeks upon the petitioner's representation accompanied by this order.

Final Conclusion: Writ petition allowed; impugned attachment quashed as against the petitioner who is a bona fide purchaser for value without notice of any sales-tax charge, and the encumbrance entry is to be deleted by the Sub-Registrar within four weeks on representation accompanied by a copy of this order.

Works contract versus sale - revision of assessment under Section 60 - change of opinion as impermissible ground for revision - binding effect of appellate authority's decision - precedential effect of identical transaction decisions

Revision of assessment under Section 60 - change of opinion as impermissible ground for revision - binding effect of appellate authority's decision - Validity of the revision notice issued for assessment year 1999-2000 where identical earlier years were decided in favour of the assessee by the Appellate Assistant Commissioner - HELD THAT: - The Assessing Officer issued the revision notice despite the Appellate Assistant Commissioner having earlier set aside assessments for identical transactions in assessment years 1997-98 and 1998-99. The Court held that where the nature of the transaction in the impugned assessment year is identical to earlier years and the assessee has succeeded before the Appellate Authority, the revenue is bound by that decision. A mere change of opinion by the Assessing Officer does not satisfy the parameters for invoking revision under Section 60, and therefore the impugned revision notice is untenable and liable to be quashed. [Paras 6]

Impugned revision notice quashed as the revenue was bound by the Appellate Assistant Commissioner's earlier decision and could not proceed on a mere change of opinion.

Works contract versus sale - precedential effect of identical transaction decisions - Whether the transactions of printing bill books, forms and registers on customers' specifications using customers' paper attract sales tax or constitute works contract - HELD THAT: - The Court examined earlier Division Bench rulings in Orient Litho Press and Premier Litho Works, and the Supreme Court decision in State of Tamil Nadu v. Anandam Viswanathan, which held that printing of material according to customers' specifications using the customers' paper does not attract sales tax. Applying those precedents to the identical transactions of the petitioner, the Court concluded that the supplies in question are not sales liable to tax but are to be treated as works contract/printing services not attracting sales tax, thereby providing an additional basis to set aside the impugned notice. [Paras 7, 8, 9]

Transactions held to be of the same character as in the cited precedents and not liable to sales tax; reliance on those precedents supports quashing the revision notice.

Final Conclusion: Writ petition allowed; impugned revision notice for assessment year 1999-2000 quashed following the binding appellate decision on identical transactions and applicable precedents; connected miscellaneous petition closed. No costs.