TaxTMI Updates e-Newsletter
Sep 04,2019

Settlement Commission applications u/s 245(D)(1) - whether or not the disclosure was full and true? - Pr. CIT submitted a report u/s 245D(2B) nowhere directly or indirectly indicated that the income disclosed by the petitioner is not full and true - Settlement Commission permitted the CIT (DR) to raise objections to the admission of the application and more so in permitting him to go beyond the report - decision making process of the Settlement Commission - permitting the Principal Commissioner to supplement the report submitted by the Commissioner by way of oral submissions - permission to raise objection to the admission of the application and be heard before the assessee and too, to supplement an incomplete report on the basis of the material and evidences on record - preliminary report based on prima-facie findings recorded by the Principal Commissioner or Commissioner

HELD THAT:- Special leave petition is dismissed as having become infructuous. HC order confirmed [2019 (3) TMI 702 - GUJARAT HIGH COURT].

Reopening of assessment under Section 147/148 - change of opinion - reasons to believe - live link between material and formation of belief - failure to disclose fully and truly all material facts - investigation report as relevant material - intimation under Section 143(1) versus scrutiny assessment under Section 143(3) -

High Court [2019 (8) TMI 410 - DELHI HIGH COURT] found no prima facie merit in the contention that there was no live nexus between the investigation report and the reasons to believe that income had escaped assessment, and held that reopening was not vitiated by 'change of opinion' in the respective factual settings; interim stays were vacated and the petitioners remain at liberty to raise their statutory and factual objections before the Assessing Officer - HELD THAT:- Application seeking exemption from filing certified copy of the impugned judgment is allowed.

Issue notice. There shall be stay of further A.O. proceedings in the meantime.

Interpretation of Section 3(1) of the Expenditure Tax Act, 1987 - room charges for any unit of residential accommodation - per day per individual - definition of 'room charges' in Section 2(10) - taxing statute strict construction - burden on Revenue to prove charging provision - proviso to Section 4(a) - exemption for hotels under clause (ii) of sub section (5) of Section 80 IA - effect of concession/estoppel in appellate proceedings

Interpretation of Section 3(1) of the Expenditure Tax Act, 1987 - room charges for any unit of residential accommodation - per day per individual - definition of 'room charges' in Section 2(10) - taxing statute strict construction - burden on Revenue to prove charging provision - Whether room charges fixed on a 'double/triple occupancy' basis must be divided 'per individual' so as to exclude the hotel from the operation of Section 3(1) of the Expenditure Tax Act, 1987. - HELD THAT: - The Court held that Section 3(1) must be read as a whole and harmonised with the statutory definition of 'room charges' in Section 2(10) and with the scheme of the Act which taxes chargeable expenditure incurred by an individual. The expression 'per individual' refers to the individual who incurs the chargeable expenditure and does not permit importing concepts of 'per bed', 'per occupant' or splitting a unit's room charges on account of double/triple occupancy. The statutory definition of 'room charges' contemplates a 'unit of residential accommodation' (the room with its furnishings and inclusive services) and contains no provision for dividing that unit's charge by number of occupants. Taxing statutes are to be construed by their language; ambiguities, if genuine, are resolved for the assessee, but the Court rejected the appellants' construction as creating an artificial ambiguity by overemphasising 'per individual' and disregarding the equally important phrase 'room charges for any unit of residential accommodation'. The Revenue had discharged its burden in the circumstances since the room charges per unit exceeded the statutory threshold and the hotels, being responsible for collection, could not rely on an unsubstantiated contention of occupancy based splitting without placing material to show separate incurrence of expenditure by individuals. [Paras 59, 61, 63, 74]

Interpretation proposed by the appellants rejected; Section 3(1) applies where room charges for a unit of accommodation exceed Rs.1200 per day irrespective of 'double/triple occupancy' pricing; conclusion against appellants and in favour of Revenue.

Proviso to Section 4(a) - exemption for hotels under clause (ii) of sub section (5) of Section 80 IA - effect of concession/estoppel in appellate proceedings - Whether the appellants (in Tax Appeals No.53, 54 and 55 of 2007) were entitled to exemption under the proviso to Section 4(a) for assessment years prior to 1995-96. - HELD THAT: - The proviso to Section 4(a) expressly limits the exemption to hotels referred to in clause (ii) of sub section (5) of Section 80 IA for the period 1 April 1991 to 31 March 2001. Approval under clause (ii) relevant to the appellants was obtained on 28.7.1994 and thus, on a plain reading, no exemption can be extended for assessment years prior to 1995 96. The Court declined to rewrite the proviso or substitute references (for example, to clause (iii) of sub section (4)) by implication. Although the ITAT had recorded a concession by the appellants and refused rectification, the Court accepted appellants' contention that the rectification order did not preclude raising the legal challenge; nevertheless, on merits the proviso offers no basis to grant exemption for years before 1995 96 and the view of the tribunals was sustained. [Paras 75, 76, 77, 78]

Claim for exemption under the proviso to Section 4(a) rejected for assessment years prior to 1995 96; conclusion against appellants and in favour of Revenue.

Final Conclusion: All Tax Appeals and the writ petition dismissed; the Court affirms that the Expenditure Tax Act applies where room charges for a unit of residential accommodation exceed the prescribed limit per day regardless of occupancy based pricing, and the proviso to Section 4(a) does not extend exemption to the appellants for years before 1995 96.

Definition of agricultural income - Explanation 1 to section 2(1A) excluding income arising from transfer of specified agricultural land - meaning of revenue derived from land - exclusion of income on transfer of agricultural land from computation of book profit for MAT - application of the second proviso to section 115JB(2) in relation to excluded agricultural income

Explanation 1 to section 2(1A) excluding income arising from transfer of specified agricultural land - meaning of revenue derived from land - exclusion of income on transfer of agricultural land from computation of book profit for MAT - application of the second proviso to section 115JB(2) in relation to excluded agricultural income - Whether the amount received on sale of agricultural land constitutes "agricultural income" or "revenue derived from land" and thereby is excluded from book profit for the purpose of MAT, and whether the Explanation to section 2(1A) was rightly ignored by the ITAT. - HELD THAT: - The court applied Explanation 1 to section 2(1A) which declares that revenue derived from land shall not include, and shall be deemed never to have included, any income arising from the transfer of land referred to in the specified items of clause (14). Textually, the Explanation removes transfers of certain agricultural land from the ambit of "revenue derived from land" and thus from "agricultural income." In the absence of a specific statutory definition of "revenue," the ordinary meaning is adopted: "revenue" or "rent" denotes periodic income derived from an asset while the sale of the asset results in destruction of that revenue-generating capacity. Consequently, proceeds on sale of the specified agricultural land do not amount to revenue or rent derived from land and are not to be treated as agricultural income for exclusion from book profit. Having so construed the Explanation, the court found no tenable question of law in the contention that the ITAT erred in ignoring the Explanation or that the second proviso to section 115JB(2) operated to disallow exclusion; the Explanation itself is decisive. [Paras 8, 9]

The sale consideration of the agricultural land does not constitute agricultural income or "revenue derived from land" and therefore is not covered by the exclusion from book profit; no question of law arises and the appeal is dismissed.

Final Conclusion: The High Court dismissed the appeal, holding that Explanation 1 to section 2(1A) excludes income arising from transfer of specified agricultural land from "revenue derived from land", so sale proceeds are not agricultural income and no question of law arises.

Income from house property vs. business income - revenue sharing arrangement characterised as business receipts - principle that res judicata is not applicable in income tax proceedings and each year is to be considered independently - allowance of depreciation and common expenses on pro rata basis where receipts are held to be business income - carry forward of business loss and unabsorbed depreciation requires an appropriate claim and cannot be adjudicated without such claim

Income from house property vs. business income - revenue sharing arrangement characterised as business receipts - Receipts from the Stargaze cinema (revenue sharing arrangement) are business receipts and not income from house property; the principle of yearly adjudication applies. - HELD THAT: - The Tribunal upheld the CIT(A)'s analysis that the agreement with Stargaze was a revenue sharing business arrangement rather than a simple lease. The contract entitled the appellant to a share of net monthly revenue determined by occupancy and to a percentage of ancillary business revenues (food & beverages, merchandise, advertisements, etc.), provided for detailed monthly accounts and verification rights, and involved provision of specialised space built to statutory specifications for cinema operation. These features distinguish the arrangement from a fixed rent letting and characterise the receipts as derived from an adventure or concern in the nature of trade. The Tribunal also agreed with the CIT(A) that principles of res judicata do not apply to income tax proceedings and each assessment year must be considered on its own facts. [Paras 8, 9]

The CIT(A)'s conclusion that receipts from Stargaze are business receipts is upheld and the ground of appeal in this respect is dismissed.

Allowance of depreciation and common expenses on pro rata basis where receipts are held to be business income - Where receipts are held to be business income, depreciation on building and assets and allocation of common expenses are to be computed and allowed on a pro rata basis after ascertaining linkage with the business. - HELD THAT: - The CIT(A) directed the Assessing Officer to calculate depreciation attributable to the area occupied by Stargaze and to allow depreciation on building and assets at applicable rates on a pro rata basis. The CIT(A) also directed a similar exercise for allocation of common expenses by establishing their linkage with the running of the cinema. The Tribunal found no infirmity in these directions and declined to interfere with the CIT(A)'s orders requiring pro rata computation. [Paras 9]

The CIT(A)'s directions to allow depreciation and to apportion common expenses on a pro rata basis are upheld.

Carry forward of business loss and unabsorbed depreciation requires an appropriate claim - Claim for carry forward of business loss and unabsorbed depreciation could not be adjudicated because no claim had been made by the assessee; entitlement cannot be allowed without a proper claim (and earlier return/revision) under the relevant provisions. - HELD THAT: - The CIT(A) noted that no claim for carry forward of business loss or unabsorbed depreciation had been made by the assessee for the relevant years and therefore no determination could be made. The CIT(A) relied on settled law that a claim for deduction by way of carry forward cannot be entertained unless properly made (for example by filing a revised return where applicable). The Tribunal agreed with this approach and found no reason to interfere. [Paras 9]

The CIT(A)'s finding that carry forward claims are not adjudicable in the absence of a proper claim is upheld.

Final Conclusion: The Tribunal dismissed the assessee's appeal: the receipts from the Stargaze cinema are business receipts (not income from house property), the CIT(A)'s directions to allow depreciation and apportion common expenses on a pro rata basis are upheld, and carry forward of business loss/unabsorbed depreciation could not be allowed in the absence of a proper claim.

Reopening of assessment under section 147/148 - presumptive taxation under section 44AD - treatment of unexplained bank deposits as income - onus under section 68 to prove genuineness and creditworthiness of loans - levy of interest under sections 234A and 234B on declared return income and assessed income - admission of additional grounds of appeal - remand for verification to assessing officer

Presumptive taxation under section 44AD - treatment of unexplained bank deposits as income - Addition of cash bank deposits amounting to Rs. 9,61,984 was confirmed as unexplained income and upheld. - HELD THAT: - The Tribunal examined the assessee's claim that deposits arose from civil petty contract receipts offered at 10% under the presumptive scheme of section 44AD. Records showed asserted contract receipts aggregating Rs. 21,69,320 and a notional 10% profit offered, but the assessee failed to segregate the presumptive income in the computation or produce contemporaneous external vouchers, work orders, receipts from contractees, labour details or corroborative evidence linking the specific bank deposits to contract receipts. The trading accounts and computation did not sufficiently show that the bank deposits represented amounts assessable only under the presumptive scheme. In the absence of cogent material to substantiate the source of deposits, the findings of the lower authorities treating the deposits as unexplained and making addition were held to be justified. [Paras 11]

Ground challenging addition of Rs. 9,61,984 dismissed; addition upheld.

Onus under section 68 to prove genuineness and creditworthiness of loans - Addition of Rs. 11,10,000 treated as unexplained cash credit/loan under section 68 was confirmed. - HELD THAT: - The assessee relied on bank statements and confirmations to establish unsecured loans from third parties. Review of submitted bank pages showed discrepancies in account-holder names and absence of proof of creditworthiness of lenders. Notices issued to the lenders were returned unserved and the assessee did not otherwise discharge the statutory onus to establish genuineness and identity of creditors. In these circumstances, the Tribunal agreed with the AO and CIT(A) that the requirements of section 68 were not satisfied and the addition was properly made. [Paras 12]

Ground challenging addition of Rs. 11,10,000 dismissed; addition upheld.

Levy of interest under sections 234A and 234B on declared return income and assessed income - Interest levied under sections 234A and 234B was deleted as chargeable only on returned income and not on the assessed income determined by the AO. - HELD THAT: - The Tribunal noted the jurisdictional High Court's view that interest under sections 234A and 234B ought to be levied on the total income declared in the return, not on the income subsequently assessed by the AO. Although the Supreme Court had admitted SLPs in related matters, the Tribunal observed that the relevant High Court decision prevailed at the time and accordingly directed deletion of the interest levied under sections 234A and 234B. [Paras 13]

Interest levied under sections 234A and 234B deleted; appeal allowed on this point.

Admission of additional grounds of appeal - remand for verification to assessing officer - An additional ground relating to maturity/face value of fixed deposits was admitted; the matter remitted to the Assessing Officer for verification. - HELD THAT: - Relying on the principle in National Thermal Power Corporation Ltd., the Tribunal admitted the additional ground raised for the first time before it, accepting that the omission was inadvertent. The assessee produced FDs and sought rectification of the CIT(A)'s direction limiting relief to interest already shown in the return. As the material had not been considered below, and the Revenue raised no objection to remand, the Tribunal directed fresh verification by the AO with opportunity of hearing to the assessee; the remand is for factual verification and computation. [Paras 10, 14]

Additional ground admitted; issue remitted to the Assessing Officer for verification and appropriate action.

Reopening of assessment under section 147/148 - Ground claiming illegality of reopening under sections 147/148 was not pursued and dismissed as not pressed. - HELD THAT: - The assessee did not press the ground challenging the validity of reopening before the Tribunal; consequently the Tribunal recorded the ground as dismissed for non-pressing and did not adjudicate the reopening issue on merits. [Paras 6]

Ground on validity of reopening under sections 147/148 dismissed as not pressed.

Final Conclusion: The appeal is partly allowed: additions of Rs. 9,61,984 (unexplained bank deposits) and Rs. 11,10,000 (unsecured loans) are upheld; interest under sections 234A and 234B is deleted; an additional ground relating to fixed deposits is admitted and remitted to the Assessing Officer for verification. Overall result: appeal partly allowed for statistical purposes.

Reconciliation of income as per Form No.26AS with books of account - Remand for verification where lower authority issues non speaking order - Capitalisation of interest and proviso to section 36(1)(iii) - interest on borrowings for assets not put to use - Mercantile system of accounting and prior period expenses - Allowability of revenue expenditure incurred for multi year benefit (prepaid expenses) - Business purpose of foreign travel and partial disallowance - Disallowance under section 40(a)(ia) for failure to deduct/deposit tax at source - Disallowance under section 40A(3) for payments in cash exceeding prescribed limit - Depreciation claim - classification of assets and recomputation of WDV

Reconciliation of income as per Form No.26AS with books of account - Remand for verification where lower authority issues non speaking order - Addition made for difference between amounts shown in Form No.26AS and books of account restored to Assessing Officer for verification - HELD THAT: - The Tribunal found that the assessee had given a specific factual explanation - that TDS was erroneously deducted on VAT/reimbursed amounts billed along with commission for consignment sales - and had filed detailed reconciliation. The CIT(A) rejected the ground in a summary, non speaking manner without dealing with those factual submissions. Because the factual contentions require verification, the matter is restored to the AO for independent verification and adjudication in accordance with law, with opportunity of hearing to the assessee. [Paras 7]

Issue remanded to the AO for verification and fresh adjudication

Capitalisation of interest and proviso to section 36(1)(iii) - interest on borrowings for assets not put to use - Remand for verification where lower authority issues non speaking order - Disallowance of interest claimed under section 36(1)(iii) restored to the AO for fresh consideration - HELD THAT: - The assessee pleaded that no interest bearing funds were employed for acquiring assets/CWIP and that interest claimed did not fall for disallowance under the proviso to section 36(1)(iii). The CIT(A) upheld the disallowance without addressing these specific factual averments. The Tribunal held that such non speaking treatment requires verification by the AO and therefore directed restoration to the AO to examine the factual assertions and decide in accordance with law. [Paras 14, 80]

Matter restored to the AO for verification and fresh adjudication

Mercantile system of accounting and prior period expenses - Remand for verification where lower authority issues non speaking order - Disallowance of prior period rent/CAM charges restored to the AO for verification - HELD THAT: - The assessee challenged the disallowance of expenses relating to an earlier period on the ground that the liability crystallised in the impugned year and produced additional evidence. The Tribunal noted that an identical issue in the sister concern was admitted and remanded; following that precedent, the Tribunal directed the AO to verify the facts afresh in accordance with law as per the directions given in the related proceedings. [Paras 21]

Issue remanded to the AO for verification and fresh adjudication

Business purpose of foreign travel and partial disallowance - Remand for verification where lower authority issues non speaking order - Foreign travel expenditure of directors restricted to 50% disallowance (partial allowance) - HELD THAT: - Considering identical treatment in the sister concern and the Tribunal's reasoning in that case, the Tribunal restricted the disallowance of foreign travel expenses to 50% of the amount claimed. The Tribunal applied that principle consistently across the relevant assessment years where the issue was identical. [Paras 28, 61, 86]

Disallowance restricted to 50%; appeals partly allowed on this ground

Disallowance under section 40(a)(ia) for failure to deduct/deposit tax at source - Admission of additional evidence (challans) and remand for verification - Disallowances under section 40(a)(ia) restored to the AO for verification where assessee produced challans/tds statements; where CIT(A) gave non speaking findings the matter remitted - HELD THAT: - Where the assessee produced challans and TDS statements proving deduction and deposit of tax, the Tribunal admitted the additional evidence and directed the AO to verify these documents and adjudicate afresh. In other instances where CIT(A) upheld disallowance without addressing specific contentions (e.g., nature of payments and single contract issue), the Tribunal found the order non speaking and remanded the matter to the AO for factual scrutiny. [Paras 35, 66]

Issues remanded to the AO for verification of TDS deposit/challans and fresh decision in accordance with law

Disallowance under section 40A(3) for payments in cash exceeding prescribed limit - Disallowance under section 40A(3) for cash payment upheld - HELD THAT: - The assessee claimed cash payments related to purchase of tickets and food from multiple vendors at the venue; however no corroborative evidence was produced. The Tribunal found the AO and CIT(A)'s conclusion - that cash payments exceeded the threshold and attracted section 40A(3) - to be supported by the absence of supporting evidence, and accordingly upheld the disallowance. [Paras 40]

Disallowance under section 40A(3) upheld

Allowability of revenue expenditure incurred for multi year benefit (prepaid expenses) - Prepaid music permission expense allowed in the year of incurrence (not to be apportioned over subsequent years) - HELD THAT: - The Tribunal accepted that the music permission payments were revenue in nature and not capital; there is no provision authorising deferment of revenue expenditure under the Act. Consequently, the portion disallowed by allocating the expense over three years was to be allowed in the year in which it was incurred. [Paras 46]

Prepaid revenue expense allowed in the year of payment; disallowance set aside

Depreciation claim - classification of assets and recomputation of WDV - Depreciation on electrical installations and fittings to be recomputed by AO at prescribed rate after allowing earlier depreciation on enhanced WDV - HELD THAT: - The assessee sought depreciation at a higher rate; the Tribunal directed the AO to recompute the depreciation claim on the impugned assets at the prescribed rate and to allow the claim at the enhanced WDV after applying the lower rate for earlier years, instructing recomputation in accordance with law. [Paras 57, 83]

AO directed to recompute depreciation claim in accordance with law

Remand for verification where lower authority leaves grounds unadjudicated - Grounds left unadjudicated by CIT(A) restored to AO for adjudication on merits - HELD THAT: - The Tribunal observed that certain grounds were not adjudicated by the CIT(A) and, given that several related issues were being remanded to the AO, directed that those unadjudicated grounds also be dealt with by the AO. The AO was given guidance to decide vehicle running/maintenance personal use disallowance on a reasonable basis considering the assessee's past history and other relevant factors, after providing opportunity of hearing. [Paras 89]

Unadjudicated grounds remanded to the AO for fresh decision after verification and hearing

Final Conclusion: All appeals are partly allowed: several issues (differences with Form 26AS, interest capitalization, certain sec.40/40A contentions, unadjudicated grounds) are remanded to the Assessing Officer for verification and fresh adjudication with opportunity of hearing; foreign travel disallowances are restricted to 50%; prepaid revenue expense is allowed in the year of payment; depreciation to be recomputed by the AO in accordance with directions. Order disposed accordingly.

Eligibility for deduction under section 80IB - eligibility for deduction under section 80IC - accounts of the undertaking - Form 10CCB audit report - undertaking not formed by transfer of plant or machinery previously used - meaning of "mineral based industry" and "production" for incentive provisions - statutory construction of exemption/deduction provisions

Eligibility for deduction under section 80IB - accounts of the undertaking - Form 10CCB audit report - Assessee entitled to deduction under section 80IB for assessment years 2003-04 and 2004-05 in respect of new oil wells - HELD THAT: - The Tribunal accepted the CIT(A)'s conclusion that each oil well constituted a distinct "undertaking" for purposes of section 80IB by applying established tests (separate capital employed, separate ascertainable profits, integrated unit producing crude oil). The requirement is not that separate physical books of account be maintained for each undertaking but that the "accounts of the undertaking" enable separate ascertainment of profits; an auditor's report in Form 10CCB evidencing well-wise capital, expenses and profits satisfies this requirement. The Tribunal followed binding High Court authority that separate books are not mandated where profit of the undertaking is separately ascertainable and observed that the Assessing Officer himself verified well-wise production and accounting. The Tribunal also held that submission of the Form 10CCB during assessment proceedings (even if not filed with the return) complied with the statutory requirement where the report was on record before completion of assessment. [Paras 4, 14, 17, 18]

Deduction under section 80IB allowed for AYs 2003-04 and 2004-05; Revenue appeals in those years dismissed.

Eligibility for deduction under section 80IC - meaning of "mineral based industry" and "production" for incentive provisions - accounts of the undertaking - Form 10CCB audit report - Assessee entitled to deduction under section 80IC for assessment years 2005-06 and 2006-07 - HELD THAT: - The Tribunal held that crude oil production from the wells falls within a "mineral based industry" as contemplated by the relevant schedule, construing statutory expressions in their ordinary meaning and relying on authoritative decisions treating drilling/extraction activities as mining/production of mineral oil. It applied precedent that "produce" has a broad meaning capable of including crude oil extraction. The Tribunal further found that the statutory requirement as to "accounts of the undertaking" was met by auditor's well-wise computation in Form 10CCB and related schedules, and rejected Revenue's contention that plant/machinery used earlier vitiated the claim because the new wells were brought into existence by fresh capital and equipment used to bring the well into production rather than constituting a transfer forming the undertaking. [Paras 14, 21, 23, 26]

Deduction under section 80IC allowed for AYs 2005-06 and 2006-07; Revenue appeals in those years dismissed.

Undertaking not formed by transfer of plant or machinery previously used - Use of drilling rigs and exploration equipment did not amount to formation of the oil-well undertakings by transfer of previously used plant or machinery - HELD THAT: - Relying on judicial interpretation of the statutory negative covenant (that an undertaking should not be formed by transfer of plant previously used), the Tribunal found that drilling rigs and exploration equipment were used to create new wells and thereafter moved elsewhere for further exploration; the new wells were established with new plant and separate capital employed. Absent specific material by the Revenue identifying particular plant transferred for use in the undertakings, the statutory bar was not attracted. [Paras 16]

Revenue's contention that the undertakings were formed by transfer of previously used plant/machinery rejected.

Form 10CCB audit report - accounts of the undertaking - Late submission or non-filing with return of Form 10CCB did not defeat the deduction where the report was on record before completion of assessment - HELD THAT: - The Tribunal found on the material that Form 10CCB (revised) and supporting schedules showing well-wise capital employed, expenses and profit computations had been placed on record and that the Assessing Officer himself noted submission of the report. The law requires that the accounts of the undertaking enable ascertainment of profit; a consolidated auditor's report with well-wise details is adequate. Accordingly, the technical objection of non-submission with the return was not sustained. [Paras 17]

Requirement satisfied by auditor's report on record; Revenue's ground on non-filing with return rejected.

Statutory construction of exemption/deduction provisions - meaning of "mineral based industry" and "production" for incentive provisions - Statutory expressions to be construed in ordinary meaning and exemption/deduction provisions interpreted strictly with burden on assessee to show applicability - HELD THAT: - While reiterating the principle that exemption provisions must be strictly construed and the burden lies on the assessee, the Tribunal applied ordinary grammatical meaning to determine that crude oil extraction is within the scope of "mineral based industry" and that "production" includes extraction of crude oil. It relied on apex court authorities on interpretation of such expressions and held that, on facts, the assessee satisfied the tests for production/manufacture under the incentive provisions. [Paras 22, 23, 24, 26]

Assessee met the onus to bring the case within the statutory deduction provisions; Revenue's broader construction arguments rejected.

Eligibility for deduction under section 80IC - application of findings mutatis mutandis to subsequent assessment years - Findings on eligibility for section 80IC/80IB applied mutatis mutandis to assessment years 2007-08 to 2010-11 and those appeals in favour of the assessee are allowed - HELD THAT: - The Tribunal recorded that lower authorities had denied the section 80IC(2)(b) claims for AYs 2007-08 to 2010-11 and that the assessee had alternatively claimed section 80IB(9). Given the earlier detailed findings that the wells constituted eligible undertakings and that statutory requirements were satisfied, the Tribunal applied those conclusions to the later assessment years and reversed the disallowances for those years. [Paras 27]

Deductions under the applicable provisions allowed for AYs 2007-08 to 2010-11; assessee appeals allowed and corresponding revenue appeals dismissed/treated as infructuous as recorded.

Final Conclusion: On the facts and material on record the Tribunal allowed the assessee's claims: section 80IB deduction for AYs 2003-04 and 2004-05 was upheld; section 80IC deduction for AYs 2005-06 and 2006-07 was upheld; the Tribunal found that statutory requirements as to "accounts of the undertaking" and Form 10CCB were satisfied and that the new oil wells were not formed by transfer of previously used plant. The same conclusions were applied to AYs 2007-08 to 2010-11, resulting in allowance of the corresponding deduction claims and dismissal of the Revenue appeals in the lead matters.

Admission of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963 - disallowance under section 36(1)(iii) - interest relating to period prior to asset being put to use - classification for depreciation - electrical installations and fittings as furniture & fittings - accrual basis of taxation under section 5 - income charged in year of accrual - disallowance under section 40(a)(ia) for failure to deduct tax at source - allowability of foreign travel expenses - business purpose v. personal/personal element - restoration to Assessing Officer for verification and fresh adjudication

Admission of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963 - restoration to Assessing Officer for verification and fresh adjudication - disallowance under section 36(1)(iii) - interest relating to period prior to asset being put to use - Admission of additional evidence and restoration to the AO for fresh adjudication of disallowance of interest under section 36(1)(iii) for loans used in relation to new/renovated stores (A.Y. 2010-11 and A.Y. 2011-12). - HELD THAT: - The Tribunal admitted bank sanction letters and utilisation certification produced under Rule 29 as they went to the root of whether the term loan and interest related to renovation of rented shops and/or to periods after the assets were put to use. The assessee furnished reasonable cause for earlier non-production (office shift and misplaced records) and affirmed these facts by affidavit; Revenue did not successfully controvert the explanations. The Tribunal therefore restored the issue to the Assessing Officer to verify the newly produced evidence and to decide the allowability of interest in accordance with law after granting the assessee an opportunity of hearing. [Paras 8, 9, 25]

Additional evidence admitted; issue restored to the AO for fresh consideration and verification (allowed for statistical purposes).

Classification for depreciation - electrical installations and fittings as furniture & fittings - Whether depreciation on electrical installations and fittings should be allowed at 15% as claimed or at 10% as applied by the AO/CIT(A) (A.Y. 2010-11 and applied to A.Y. 2013-14). - HELD THAT: - The Tribunal upheld the factual conclusion of the Assessing Officer and CIT(A) that the items described as electrical installations comprised fittings (PVC wires, GI pipe, bends, bolts etc.) falling within the nature of furniture and fittings. The assessee did not controvert the factual findings or point to any discrepancy; the applicable rate of depreciation for the assets as classified is 10%. On this basis the Tribunal declined to interfere with the restriction of depreciation to 10%. [Paras 15, 52]

Claim for 15% depreciation rejected; depreciation allowable at 10% (ground dismissed).

Accrual basis of taxation under section 5 - income charged in year of accrual - Taxability of interest on fixed deposits reflected in Form 26AS but accounted by the assessee on receipt/maturity basis (A.Y. 2011-12). - HELD THAT: - The Tribunal found no reason to interfere with the CIT(A)'s conclusion that interest on FDRs accrues daily and is taxable in the year of accrual under the accrual principle; the amount in question was reflected in Form 26AS for the impugned year and TDS was deducted. The assessee's explanation that the interest was accounted only on maturity did not persuade the Tribunal, which upheld the addition. [Paras 18, 19, 22]

Addition on account of accrued interest upheld (ground dismissed).

Admission of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963 - restoration to Assessing Officer for verification and fresh adjudication - Admission of additional evidence and restoration to the AO for verification of (i) rent claimed for March 2010 debited in financial year 2010-11 and (ii) alleged excess purchases from supplier reconciled by discount entries (A.Y. 2011-12). - HELD THAT: - The assessee produced the tripartite lease deed, correspondence, supplier ledger and discount ledger as additional evidence and explained non-production earlier due to misplaced records from an office shift. The Tribunal found these documents relevant to show that the rent liability crystallised after execution of the lease deed and that the excess purchase entry was neutralised by corresponding discount entries. As the facts required verification, the Tribunal admitted the documents and remanded the issues to the AO to verify the contentions and adjudicate per law after affording hearing. [Paras 29, 31, 32]

Additional evidence admitted; issues restored to the AO for verification and fresh adjudication (allowed for statistical purposes).

Allowability of foreign travel expenses - business vs personal/personal element - Whether foreign travel expenses of directors (and family) are wholly business expenditure or partly personal (A.Y. 2011-12 and applied to A.Y. 2013-14). - HELD THAT: - The assessee, trading in apparels, asserted business purpose but produced no documentary evidence of business activities abroad. The Tribunal accepted that some portion of the trips could relate to business given the nature of trade but that the entire expenditure could not be sustained as business expense. Applying a reasoned apportionment in absence of supporting evidence, the Tribunal allowed 50% of the claimed foreign travel expenditure and disallowed the remaining 50%. The same approach was applied to the identical ground in A.Y. 2013-14. [Paras 36, 37, 38, 54]

Half of the foreign travel expenditure allowed as business expenditure; balance disallowed (ground partly allowed/partly dismissed).

Disallowance under section 40(a)(ia) for failure to deduct tax at source - restoration to Assessing Officer for verification and fresh adjudication - Disallowance under section 40(a)(ia) for payments on which TDS was not deducted and verification of contentions that (i) a particular advertisement payment was below threshold and (ii) TDS was in fact deducted in respect of professional charges (A.Y. 2011-12). - HELD THAT: - The Tribunal accepted the assessee's averments that one advertisement payment might be below the threshold for TDS and that TDS certificates were produced for one professional payment. Given these contentions, the Tribunal remanded the matter to the AO to verify the facts (whether TDS was deductible in each case and whether TDS was actually deducted) and to adjudicate the disallowance in accordance with law after affording opportunity of hearing. [Paras 42, 43]

Issue remanded to the AO for verification of TDS facts and fresh adjudication (allowed for statistical purposes).

Accrual basis of taxation under section 5 - income charged in year of accrual - restoration to Assessing Officer for verification and fresh adjudication - Addition made for mismatch between Form 26AS and books (reimbursement/credit note contention) - remand to AO for verification (A.Y. 2013-14). - HELD THAT: - The assessee maintained that the amount reflected in Form 26AS represented reimbursement by a supplier and that corresponding credit notes were received and accounted in the subsequent year; the CIT(A)'s brief conclusion that income had accrued in the impugned year did not address the assessee's specific averments. The Tribunal therefore restored the matter to the AO to examine whether the amount was reimbursement and to consider the timing of credit notes and accrual, adjudicating the taxability in accordance with law after hearing the assessee. [Paras 48, 50]

Issue remanded to the AO for verification and fresh adjudication (allowed for statistical purposes).

Final Conclusion: The Tribunal admitted several documents produced under Rule 29 as relevant and, where factual disputes required verification (interest disallowance under section 36(1)(iii); rent and purchase reconciliations; section 40(a)(ia) TDS issues; reimbursement/26AS mismatch), restored those matters to the Assessing Officer for fresh adjudication after verification and opportunity of hearing. On pure legal/factual findings the Tribunal (i) upheld the restriction of depreciation on electrical fittings to 10% (claim for 15% rejected), (ii) upheld taxation of accrued FDR interest in the impugned year, and (iii) allowed 50% of foreign travel expenses as business expenditure while disallowing the remainder. All three appeals were accordingly partly allowed for statistical purposes.

Completed assessment and no incriminating material - application of Kabul Chawla to assessments under section 153A - Requirement of section 153C procedure for use of material seized from third parties - Deemed dividend treatment under section 2(22)(e)

Completed assessment and no incriminating material - application of Kabul Chawla to assessments under section 153A - Deemed dividend treatment under section 2(22)(e) - Deletion of addition held to be deemed dividend under section 2(22)(e) where assessment stood completed prior to search and no incriminating material was relied upon. - HELD THAT: - The Tribunal applied the principle in CIT v. Kabul Chawla that where an assessment for an assessment year was completed prior to the date of search and no incriminating material from the search relates to that completed assessment, the Assessing Officer cannot make additions in that assessment year under section 153A. The record showed no incriminating material was pointed out by the Revenue to sustain the addition of the sum treated as deemed dividend; it was further not disputed that no notice under section 143(2) had been issued within the limitation period and thus the assessment was completed before search. In light of this, and following the cited High Court and Bombay High Court authority on identical facts, the Tribunal set aside the CIT(A)'s confirmation of the addition and directed deletion of the deemed dividend addition. [Paras 3]

Addition under section 2(22)(e) deleted and ground allowed.

Requirement of section 153C procedure for use of material seized from third parties - Deletion of addition made on the basis of documents seized from premises of a third party because the statutory procedure under section 153C was not followed. - HELD THAT: - The Tribunal examined the Panchnama and found the impugned document was seized from the premises of a third party (Sh. Ashok Chowdhary), not the assessee. The law distinguishes material found at the premises of the searched assessee (to be used under section 153A) from material found at third-party premises (which can be used only after compliance with section 153C procedures and handover to the AO having jurisdiction over the other person). The Assessing Officer had framed the assessment under section 153A and relied upon the third-party material without invoking or following section 153C; the CIT(A)'s contrary reasoning was rejected as legally incorrect. Accordingly, the addition made protectively and later treated substantively in the assessee's hands on the basis of that third-party document was held to be void ab initio and deleted. [Paras 5]

Addition made on the basis of documents seized from a third party deleted and ground allowed.

Final Conclusion: The appeal is allowed: the Tribunal deleted the addition treated as deemed dividend (section 2(22)(e)) for AY 2009-10 for want of incriminating material in a completed assessment, and deleted the addition based on documents seized from a third party for failure to follow section 153C; remaining grounds were rendered academic or dismissed as infructuous.

Penalty under section 271(1)(c) - Notice under section 274 must specify limb - Concealment of particulars of income versus furnishing inaccurate particulars of income - Principles of natural justice - right to know the specific grounds of penalty

Notice under section 274 must specify limb - Concealment of particulars of income versus furnishing inaccurate particulars of income - Principles of natural justice - right to know the specific grounds of penalty - Validity of penalty proceedings where the notice under section 274 did not specify whether penalty under section 271(1)(c) was initiated for concealment of particulars of income or for furnishing inaccurate particulars of income. - HELD THAT: - The Tribunal found that the notice issued under section 274 read with section 271(1)(c) was a pre-printed form that did not strike off the alternative limbs and therefore failed to specify which limb of section 271(1)(c) was the basis for initiating penalty proceedings. The requirement that the assessee must be informed specifically whether the charge is for concealment of particulars of income or for furnishing inaccurate particulars of income is a legal mandate rooted in principles of natural justice; the assessee must know the precise grounds to be met. Where the show-cause notice is vague or uncertain as to the specific limb alleged, and the assessing officer has not applied mind to identify the particular charge, the initiation and imposition of penalty under section 271(1)(c) is invalid. The Tribunal relied on settled judicial authorities to the effect that a generic printed notice mentioning both limbs without specificity does not satisfy the statutory requirement and that penalties imposed pursuant to such defective notices cannot be sustained. Applying that principle to the facts, the Tribunal concluded that the proceedings were void ab initio for want of a specific notice and natural justice was thereby violated. [Paras 13, 15, 18]

Penalty levied under section 271(1)(c) quashed as the notice under section 274 failed to specify the limb relied upon, rendering the proceedings invalid.

Final Conclusion: The appeal is allowed and the penalty imposed under section 271(1)(c) is deleted because the show-cause notice under section 274 did not specifically state whether the penalty was for concealment of particulars of income or for furnishing inaccurate particulars of income, thereby violating the assessee's right to know the precise grounds and principles of natural justice.

Rectification of mistake apparent from the record - limitation for rectification under section 254(2) - maintainability of miscellaneous application filed beyond limitation - no power to condone delay in filing rectification application - retrospective application of amendment to limitation

Rectification of mistake apparent from the record - limitation for rectification under section 254(2) - maintainability of miscellaneous application filed beyond limitation - no power to condone delay in filing rectification application - retrospective application of amendment to limitation - Miscellaneous Application filed by the Revenue for rectification/recall of the Tribunal's order was barred by limitation and not maintainable; the Tribunal has no jurisdiction to condone the delay. - HELD THAT: - The Tribunal examined section 254(2) which prescribes the time limit for rectification of a mistake apparent from the record. Following the substitution effected by the Finance Act, 2016 w.e.f. 01.06.2016, the limitation for rectification was reduced to six months from the end of the month in which the order was passed. The Bench applied the settled principle that the amendment cannot be given retrospective effect so as to extinguish existing rights; accordingly, where the impugned order pre-dated the amendment the six month period was to be reckoned from 01.06.2016. In the present case the Revenue's miscellaneous application filed on 22.05.2017 was held to be beyond the applicable limitation (which expired on 30.11.2016) and therefore time barred. The Tribunal further held that there is no provision in the Income tax Act empowering it to condone delay in filing an application under section 254(2); the special statutory limitation cannot be supplemented by the general Limitation Act or by an exercise of discretion. The Bench followed earlier coordinate decisions and relevant High Court and Tribunal precedents holding that rectification applications are governed strictly by section 254(2) and that recall of an order may follow rectification but cannot circumvent statutory limitation. In these circumstances the Miscellaneous Application was not maintainable and was dismissed as barred by limitation.

Miscellaneous Application dismissed being barred by limitation; Tribunal has no power to condone the delay in filing the rectification application under section 254(2).

Final Conclusion: The Revenue's Miscellaneous Application for rectification/recall was dismissed as time barred under section 254(2) and the Tribunal held it had no jurisdiction to condone the delay.

Carry forward of business losses - return filed under section 153A - return filed under section 139(1) - technical/software error in acknowledgement - treatment of non-appearance in departmental acknowledgement as additional income

Carry forward of business losses - return filed under section 153A - technical/software error in acknowledgement - treatment of non-appearance in departmental acknowledgement as additional income - Whether carry forward of current year business losses claimed by the assessee can be denied solely because the loss figure did not appear in the departmental acknowledgement generated for the return filed under section 153A. - HELD THAT: - The Tribunal examined the returns filed under section 139(1) and those filed in response to notice under section 153A and found that the assessee had claimed identical current year business losses in the electronically filed returns and in the computation of income and schedules (including Schedule CFL and CYLA). The non-appearance of the loss figure in the departmental acknowledgement for the return filed under section 153A was held to be the result of a technical/software error in generation of the acknowledgement and not a bona fide omission or a fresh claim of deduction. The AO erred in treating the omission as declaration of additional income because he relied solely on the acknowledgement without examining the complete return, schedules and computation which clearly reflected the losses. There was no incriminating material or any indication that additional income was offered pursuant to the search; the assessee had also answered departmental questionnaires stating no additional income was offered. The Tribunal followed its earlier decisions on identical facts and concluded that genuine claims appearing in the filed return and computations cannot be denied due to inadvertent non-reflection in a system-generated acknowledgement; accordingly the carry forward of losses must be allowed and the authorities below were directed to give effect to the claim.

Allow carry forward of the claimed current year losses for the assessment years as filed in the returns; set aside the disallowance made by the authorities below and direct the AO to give effect to the carry forward.

Final Conclusion: All appeals are allowed; the disallowance of carry forward of losses for AYs 2011-12 to 2013-14 is set aside and the assessee's claim for carry forward of current year business losses is directed to be allowed.

Jurisdiction under section 263 - erroneous and prejudicial to the interest of the revenue - reopening assessment under section 147 - acceptance of share application money through banking channel - additions in hands of company versus investors - principle in Lovely Exports - duty of revisionary authority to conduct independent enquiry before invoking revisionary powers - plausible view of Assessing Officer

Jurisdiction under section 263 - erroneous and prejudicial to the interest of the revenue - plausible view of Assessing Officer - Whether the Commissioner was justified in invoking jurisdiction under section 263 to set aside the assessment order passed under sections 143(3)/147 - HELD THAT: - The Tribunal held that the Assessing Officer had conducted thorough enquiries during the original assessment and the reassessment, had considered bank statements, PAN and other documents, and had acted in accordance with the law and precedent available at the time. The AO followed the Supreme Court's decision in Lovely Exports in accepting the assessee's position that where identity of investors is established additions, if any, lie in the hands of the investors and not the recipient company. A subsequent decision of the Delhi High Court relied upon by the Commissioner was rendered after the AO had passed the reassessment order and therefore could not be held against the AO. The Tribunal applied the principle that section 263 can be exercised only where the order of the AO is both erroneous and prejudicial to revenue, and that the AO's adoption of a plausible view grounded in prevailing precedent does not make the order erroneous. The Tribunal further observed that where the revisionary authority considers further enquiry necessary, it must conduct at least a minimal enquiry itself before recording that the AO's order is erroneous. On the facts, the AO's view was plausible and the twin conditions for invoking section 263 were not satisfied. [Paras 24, 25, 26, 27]

The Commissioner's exercise of powers under section 263 was unjustified; the assessment order under sections 143(3)/147 is not erroneous and prejudicial to revenue and the section 263 order is set aside.

Reopening assessment under section 147 - acceptance of share application money through banking channel - additions in hands of company versus investors - principle in Lovely Exports - Whether, on the material before the Assessing Officer, the acceptance of share application money by the assessee warranted additions in the assessee's hands or only enquiries against investor entities - HELD THAT: - The Tribunal found that the AO had verified the amounts against books of account and bank statements, had obtained details of shareholders including bank statements, PAN and returns, and had forwarded information to the concerned assessing officers of the investor companies for further action. In view of the then-binding Supreme Court precedent (Lovely Exports), even if investor companies were suspected to be bogus, additions could properly be directed to be considered in the hands of the investors and not necessarily in the hands of the recipient company. The AO therefore took a plausible view consistent with precedent and the material on record and declined to make additions in the assessee's hands. [Paras 21, 22, 24]

The Assessing Officer's treatment of the share application money was a plausible view taken after enquiry; additions in the assessee's hands were not warranted on the record before the AO.

Final Conclusion: The Tribunal allowed the appeal, set aside the Commissioner's order under section 263, and held that the Assessing Officer's reassessment order under sections 143(3)/147 for Assessment Year 2006-07 was not erroneous or prejudicial to the interest of the revenue given the enquiries conducted and the law prevailing at the time; the section 263 action was quashed.

Disallowance under section 40A(3) for cash payments exceeding Rs.20,000 - Rule 6DD(b) exception for payments to State-appointed bonded warehouse dealers/agents - Genuineness of transactions and deposit by agents as defence to disallowance - Precedential weight of coordinate-bench Tribunal decisions confirmed by High Court

Disallowance under section 40A(3) for cash payments exceeding Rs.20,000 - Rule 6DD(b) exception for payments to State-appointed bonded warehouse dealers/agents - Genuineness of transactions and deposit by agents as defence to disallowance - Precedential weight of coordinate-bench Tribunal decisions confirmed by High Court - Whether cash payments recorded in excess of Rs.20,000/- are liable to disallowance under section 40A(3) where purchases of country liquor were made from bonders/wholesale licensees appointed under State notification and collections were effected by agents and subsequently deposited by the dealers in their bank accounts. - HELD THAT: - The Tribunal noted that the assessee purchased country liquor from dealers/bonders operating from bonded warehouses appointed under the State notification and that dealers had engaged collection agents who collected cash from retailers and deposited the amounts in the dealers' local bank accounts. The AO disallowed payments on the ground that the dealers' books showed single-day receipts in excess of Rs.20,000/-. The CIT(A) allowed the appeal holding that the payments fell within the exceptions in Rule 6DD(b) and 6DD(k). The Tribunal examined earlier coordinate-bench decisions (including Riktwik Kumar Bera) which held that payments to such dealers/warehouses are, for practical purposes, payments to the State and are covered by Rule 6DD(b), and observed that the decision in Riktwik Kumar Bera was confirmed by the Calcutta High Court. Having regard to those consistent precedents and the undisputed genuineness of the purchases and the manner of collection and deposit by agents, the Tribunal held that the case is squarely covered by the aforesaid decisions and that the provisions of section 40A(3) are not attracted. [Paras 5]

The Tribunal confirmed the CIT(A)'s view that the payments are covered by Rule 6DD(b)/(k) and that no disallowance under section 40A(3) is warranted; revenue's appeal is dismissed.

Final Conclusion: Appeal dismissed. The Tribunal followed coordinate-bench authorities (including a decision affirmed by the Calcutta High Court) holding that cash collections made by agents and deposited by State-appointed bonded warehouse dealers are covered by Rule 6DD(b)/(k), and therefore payments recorded in excess of Rs.20,000/- did not attract disallowance under section 40A(3) for AY 2014-15.

Summary order. Special Leave Petition dismissed; delay condoned; pending application disposed of.

Summary order. Delay condoned; notice issued; permission granted for dasti service; matter to be listed after judgment in C.A. No. 310 of 2011.

Summary order. Delay condoned; application for exemption from filing certified copy allowed; appeals admitted; hearing expedited.

Summary order. Civil appeals dismissed for want of condonation of delay and, alternatively, on merits.

DGFT's obligation to decide licence applications and EODC requests without indefinite deferral - Requirement of a reasoned, written order to refuse or cancel licence under Rule 7 and Rule 10 of the Foreign Trade (Regulation) Rules, 1993 - Invalidity of deficiency notices which merely defer decision on account of a pending criminal or customs investigation - Recovery of duties within five years where duty not paid by reason of collusion, wilful misstatement or suppression

DGFT's obligation to decide licence applications and EODC requests without indefinite deferral - Requirement of a reasoned, written order to refuse or cancel licence under Rule 7 and Rule 10 of the Foreign Trade (Regulation) Rules, 1993 - DGFT is not entitled to withhold consideration or defer decision on the petitioner's applications for issuance of Export Obligation Discharge Certificate and renewal of advance authorisations indefinitely and must pass a reasoned order if refusing or cancelling licences under the Rules. - HELD THAT: - The Rules empower the Director General or licensing authority to refuse or cancel licences for specified reasons, but such refusal or cancellation must be by an order in writing recording the reasons. Rule 7 permits refusal to grant or renew a licence only for the stated grounds; Rule 10 permits cancellation only where specified conditions are established. Neither the Act nor the Rules permits indefinite non-decision merely because a separate investigatory agency has initiated proceedings. While the DRI has represented that investigations will be completed within the statutory period available under the Customs Act, that does not authorise the DGFT to postpone decision-making indefinitely. The DGFT must examine the material before it, apply the statutory tests in the Rules, and if it concludes a licence should be refused or cancelled, record its reasons in writing. In the exercise of supervisory jurisdiction the Court directed the DGFT to take an informed decision on the petitioner's pending applications within six months, expecting that the DRI, if it has concrete material, will supply it to the DGFT to inform that decision. [Paras 11, 12, 13, 15]

DGFT must decide the petitioner's applications within six months and, if refusing or cancelling, must pass a reasoned written order citing the grounds under the Rules.

Invalidity of deficiency notices which merely defer decision on account of a pending criminal or customs investigation - Deficiency letters which require the petitioner to 'cure' a deficiency solely because a DRI investigation is pending are untenable and liable to be set aside. - HELD THAT: - A deficiency notice must identify a curable deficiency traceable to the applicant; it cannot simply direct the applicant to cure a deficiency that arises from the fact that an external agency has an ongoing investigation. The petitioner cannot be expected to remedy or cure the pendency of an investigation by another agency. Where the only ground stated in deficiency communications is that the DRI investigation is ongoing, such communications do not supply a lawful basis to withhold decision on the licence or EODC application. [Paras 16]

The impugned deficiency letters are set aside.

Final Conclusion: The petitions are disposed of by directing the DGFT to take an informed decision on the petitioner's pending applications within six months; deficiency letters premised solely on the pendency of a DRI investigation are set aside.

Effect of adjudication proceedings on criminal prosecution - Independence of adjudication and criminal proceedings - Exoneration on merits bars subsequent criminal prosecution - Double jeopardy / Article 20(2) principle

Effect of adjudication proceedings on criminal prosecution - Exoneration on merits bars subsequent criminal prosecution - Independence of adjudication and criminal proceedings - Whether criminal prosecution under the Customs Act could be continued against the petitioner after he was exonerated on merits in adjudication proceedings and acquitted in related criminal trial. - HELD THAT: - The Court applied the principle explained in Radheshyam Kejriwal (paragraph 43) that, while adjudication and criminal proceedings are independent and can be initiated simultaneously, the effect of an exoneration in adjudication proceedings depends on the nature of that finding. If the exoneration is on merits and establishes that the allegation is not sustainable, criminal prosecution on the same set of facts cannot be allowed to continue. The Tribunal's final order had set aside the adjudicating authority's finding and deleted the penalty, thereby exonerating the petitioner on merits. Applying the ratio, the Court held that continuation of prosecution based on the same facts would be impermissible and amounted to allowing criminal proceedings to proceed despite a conclusive merits-based exoneration in the adjudication forum. [Paras 11, 12, 13]

Proceedings in CC No. 165/2010 were quashed because the petitioner had been exonerated on merits in the adjudication proceedings, which precluded continuation of criminal prosecution on the same facts.

Final Conclusion: The petition is allowed; the order setting aside the magistrate's discharge order is set aside and the criminal proceedings in CC No. 165/2010 are quashed as impermissible in view of the petitioner's merits-based exoneration in the adjudication proceedings.

Duty exemption on re-imported goods - re-importation for repair or reconditioning within three years - EOU entitlement to import for manufacture and export - interpretation of Annexure-I to Notification No.52/2003-Cus

Duty exemption on re-imported goods - re-importation for repair or reconditioning within three years - interpretation of Annexure-I to Notification No.52/2003-Cus - Whether the appellant was entitled to duty exemption on re-importation of exported goods under Sl.No.14 of Annexure-I to Notification No.52/2003-Cus. - HELD THAT: - The Tribunal found the material facts to be undisputed: the appellant is a 100% EOU; it exported the finished product; the product was re-imported for re-processing due to a complaint from the foreign buyer; the goods were re-processed and subsequently re-exported. The adjudicating authority invoked Sl.No.15 of Annexure-I but did not address these material facts. The Tribunal held that the facts brought the case squarely within Sl.No.14 of Annexure-I to Notification No.52/2003-Cus which permits re-importation for repair or reconditioning within three years from the date of exportation. As the appellant re-exported the goods within that period, the claim for exemption was correctly maintainable under Sl.No.14. The Commissioner(Appeals) erred in denying exemption without dealing with the applicability of Sl.No.14 to the undisputed facts.

The appeal is allowed; the impugned order is set aside and the appellant's claim for duty exemption under Sl.No.14 of Annexure-I to Notification No.52/2003-Cus is accepted.

Final Conclusion: The Tribunal allowed the appeal, set aside the Commissioner(Appeals) order and held that the appellant was entitled to duty exemption on re-importation under Sl.No.14 of Annexure-I to Notification No.52/2003-Cus, since the goods were re-imported for re-processing and re-exported within three years.

Classification of paper licences as printed matter under CTH 4907 - documents conveying right to use software - form of import principle (goods to be assessed in the form imported) - applicability of Board Circular No. 15/2011 - precedential weight of Tribunal decision

Classification of paper licences as printed matter under CTH 4907 - documents conveying right to use software - applicability of Board Circular No. 15/2011 - form of import principle (goods to be assessed in the form imported) - precedential weight of Tribunal decision - Imported paper licences conveying the right to use software are classifiable under CTH 4907 and not under CTH 8523. - HELD THAT: - The appellants imported only paper licences - documents of title containing codes to access software on HP ILO Proliant Server - and not the server, media, or software-loaded hardware. The Tribunal relied on the administrative clarification contained in Board Circular No. 15/2011 that documents conveying the right to use software do not merit classification under the tariff heading for software/hardware but merit classification under the heading for printed matter (CTH 4907). The Tribunal also noted that the Chennai Bench decision in Ingram Micro India Ltd. took the same view, and that the appellant's subsequent clearances of similar paper licences under CTH 4907 were not disputed by the Department. Applying the principle that goods must be assessed in the form in which they are imported, and having regard to the Circular and the cited precedent, the impugned classification under heading 8471 (and related duties) was found unsustainable and was set aside.

Appeal allowed; impugned order set aside and imported paper licences held classifiable under CTH 4907.

Final Conclusion: The Tribunal allowed the appeal, holding that the imported paper licences are documents conveying the right to use software and are classifiable under CTH 4907 in view of Board Circular No. 15/2011 and consistent Tribunal precedent; the assessment under the contested tariff was set aside.

Limitation - exclusion of time spent prosecuting appeal before wrong forum - provisional release of seized vehicle - confiscation with option of redemption - duty of appellate authority at personal hearing to inform parties

Limitation - exclusion of time spent prosecuting appeal before wrong forum - Whether the delay in filing the appeal against the Order in Original dated 02.05.2018 is excusable by excluding the period consumed in prosecuting an appeal before the Commissioner (Appeals) against the provisional release order. - HELD THAT: - The Tribunal found that the appellant had, with due diligence, been prosecuting an appeal before the Commissioner (Appeals) against the order for provisional release of the vehicle and was given a personal hearing on 29.06.2018. At that hearing the appellant informed the Commissioner (Appeals) that the show cause proceedings had culminated in an Order in Original dated 02.05.2018 which directed confiscation with an option of redemption. The Commissioner (Appeals) did not at that time inform the appellant that the provisional release appeal had become infructuous and took about a month thereafter to dismiss the provisional release appeal, the order being served much later. Applying the principle in M/s. M.P. Steel Corporation (that time spent prosecuting a bona fide appeal before the wrong forum may be excluded under limitation principles), and having regard to the Commissioner (Appeals)'s failure at the personal hearing to advise the appellant that she should prosecute an appeal against the Order in Original, the Tribunal held that the period consumed in prosecuting the provisional release appeal before the wrong forum ought to be excluded for computing limitation. The Tribunal also noted the Order in Original contained a finding of no involvement of the appellant in smuggling, which reinforced the need to decide the matter on merits once time exclusion is applied. [Paras 5, 6]

Period spent in prosecuting the appeal before the wrong authority is excluded for computing limitation; appeal held to be within time when such period is excluded.

Provisional release of seized vehicle - confiscation with option of redemption - duty of appellate authority at personal hearing to inform parties - Whether the appeal against the Order in Original dated 02.05.2018 should be remanded for consideration on merits. - HELD THAT: - Having held that the appeal is within time after excluding the period spent before the wrong forum, and taking into account that the Order in Original did not impose any penalty on the appellant and the adjudicating authority found no involvement of the appellant in smuggling, the Tribunal concluded that the appellant is entitled to have her grievance about release of the vehicle decided on merits. The Tribunal further observed that the Commissioner (Appeals) should have informed the appellant at the personal hearing that the provisional release appeal had become infructuous once confiscation was confirmed, and failure to do so explained the appellant's reliance on the provisional release proceedings. In view of these facts and the applicability of the exclusion principle, the proper course is to set aside the order rejecting the appeal as time barred and remit the matter to the Commissioner (Appeals) for decision on merits. [Paras 6]

Impugned order rejecting the appeal as time barred is set aside; appeal remanded to the Commissioner (Appeals) to be decided on merits.

Final Conclusion: The appeal is allowed by way of remand: the period spent prosecuting the appeal before the wrong authority is excluded for computing limitation, the order rejecting the appeal as time barred is set aside, and the matter is remitted to the Commissioner (Appeals) for fresh consideration on merits.

Summary order. Appeal dismissed as withdrawn on the Revenue's application; Miscellaneous Application and Stay Petition disposed of.

Misdeclaration of goods - confiscation of goods - export of restricted/prohibited goods without licence - fabrication of documents - penalty under Section 114 of the Customs Act, 1962 - penalty under Section 114AA of the Customs Act, 1962 - leniency in penalty

Misdeclaration of goods - confiscation of goods - export of restricted/prohibited goods without licence - Goods found in the container were liable for confiscation. - HELD THAT: - The appellants had declared nut and bolts for export, but examination revealed Muriate of Potash (MOP), which is a restricted/prohibited item requiring a licence. The Court noted clear misdeclaration and that the consignment was being exported in the guise of another commodity; on investigation documents were found to be fake. On these facts the goods were held properly liable for confiscation. [Paras 4]

Confiscation upheld.

Fabrication of documents - penalty under Section 114 of the Customs Act, 1962 - penalty under Section 114AA of the Customs Act, 1962 - Penalty imposed on Shri Rajnish Kansal was justified and no leniency warranted. - HELD THAT: - The Court found Shri Rajnish Kansal to be the main person responsible for fabricating documents and misdeclaring the goods. Given his central role in the fraudulent export of a restricted item and the fake documentation uncovered during investigation, the imposition of penalty on him was sustained and no reduction was granted. [Paras 5]

Penalty on Shri Rajnish Kansal upheld without leniency.

Leniency in penalty - penalty under Section 114 of the Customs Act, 1962 - Penalty on Shri Rinku Kansal was reduced by the Court. - HELD THAT: - Shri Rinku Kansal was found to be an employee of Shri Rajnish Kansal and not a beneficiary of the fraudulent act. On this basis the Court exercised leniency in respect of the penalty under Section 114, reducing the imposed penalty to a lower amount. [Paras 6]

Penalty on Shri Rinku Kansal reduced.

Final Conclusion: The appeals dispose with confiscation of the goods sustained; penalty on the principal offender, Shri Rajnish Kansal, affirmed; and penalty on Shri Rinku Kansal, an employee not shown to benefit, reduced by the Tribunal.

Powers under Section 402 - Interim powers of Tribunal under Section 403 - Interim direction for payment of salary - Finality of unchallenged CLB directions - Regulation of conduct of company's affairs by Tribunal

Interim powers of Tribunal under Section 403 - Interim direction for payment of salary - Regulation of conduct of company's affairs by Tribunal - Validity of the CLB's interim order directing payment of salary to an employee in the course of proceedings under sections 397/398. - HELD THAT: - The Court held that the Company Law Board was empowered to pass interim orders for regulating the conduct of the company's affairs pending final adjudication under sections 397/398. The scope of such interim powers is wide and incidental to the substantive remedial powers enumerated under Section 402; Section 403 permits any interim order which the Tribunal thinks fit upon terms just and equitable. The CLB had earlier passed directions on 28.02.2013 safeguarding day-to-day working, prohibiting suspension or termination of employees and thereby envisaging continued payment of salaries. That order was not challenged and has attained finality. The impugned order directing release of salary for the applicant and restraining withholding of salary was passed in furtherance of the earlier directions and was therefore within the CLB's jurisdiction and a permissible interim arrangement for proper conduct of the company's affairs. [Paras 11, 12]

The CLB's interim direction to release the employee's salary was validly passed under Section 403 read with Section 402 and is upheld.

Finality of unchallenged CLB directions - Interim direction for payment of salary - Effect of the earlier unchallenged order dated 28.02.2013 on subsequent interim directions. - HELD THAT: - The Court observed that the directions issued by the CLB on 28.02.2013 concerning employees' status and the conduct of the company's affairs, including that employees shall not be suspended or terminated, implied that employees were to be paid their salaries. Because that earlier order was not challenged, it attained finality and the later impugned order was merely a continuation or furtherance of those directions. Consequently, there was no merit in disturbing the impugned order which implemented the earlier unchallenged direction. [Paras 6, 11]

The impugned order was a valid continuation of the earlier unchallenged CLB directions and stands affirmed.

Final Conclusion: The appeal is dismissed; the Company Law Board's interim directions directing payment of the employee's salary, passed under its powers to regulate the company's affairs, are upheld as valid and within its jurisdiction.

Traversing beyond the scope of the Show Cause Notice - show cause notice as the foundation of adjudication - appropriation of Cenvat Credit - Cenvat Credit admissibility under Rule 4(7) of the Cenvat Credit Rules, 2004 - entitlement to cum-duty valuation (Cum Duty benefit) - imputing suppression to Public Sector Undertakings - remand for verification and recalculation - penalty unsustainable; interest payable

Traversing beyond the scope of the Show Cause Notice - appropriation of Cenvat Credit - show cause notice as the foundation of adjudication - Cenvat Credit admissibility under Rule 4(7) of the Cenvat Credit Rules, 2004 - remand for verification and recalculation - Whether the adjudicating authority went beyond the scope of the Show Cause Notice by examining and disallowing Cenvat Credit claimed/appropriated by the appellants. - HELD THAT: - The Tribunal noted the settled principle that matters not raised in the Show Cause Notice ordinarily cannot be relied upon for building a new case against the assessee, but also recorded that the appellants in their replies had placed the question of having paid part of the demand through Cenvat Credit before the Commissioner. The Commissioner addressed the correctness of the appellants' claim and applied the tests under Rule 4(7) of the Cenvat Credit Rules, 2004 to examine admissibility, holding that verification of the arithmetical correctness and the documentary foundation for the credit was necessary. The Tribunal found that the question of correctness of the Cenvat Credit claims requires factual/arithmetical verification by the adjudicating authority and cannot be finally determined on the record before the Tribunal without such inquiry. For that reason the Tribunal did not finally decide the credit question on merits but directed that the matter be sent back to the Adjudicating Authority for appropriate verification and decision after affording the appellants an opportunity of being heard.

Issue remanded to the Adjudicating Authority for verification of the propriety and arithmetical correctness of the Cenvat Credit claimed/appropriated by the appellants and for fresh decision after hearing them.

Entitlement to cum-duty valuation (Cum Duty benefit) - imputing suppression to Public Sector Undertakings - penalty unsustainable; interest payable - remand for verification and recalculation - Whether the appellants are entitled to claim Cum Duty benefit while computing service tax liability and whether suppression can be imputed to the appellants (PSU), with consequences for penalty and interest. - HELD THAT: - The Tribunal held that the appellants, being a Public Sector Undertaking, cannot be held to have engaged in suppression or mis-declaration merely on the case built by the Department; mens rea or suppression cannot be presumed against a PSU in the absence of clear material. Applying that principle, the Tribunal concluded that the amounts received from customers should be treated as inclusive of service tax (Cum Duty price) and the appellants are entitled to the Cum Duty benefit; consequently the service tax liability must be re-calculated on that basis. In view of this conclusion, the Tribunal found the penalty imposed to be unsustainable, while directing that interest on the duty found due (as recalculated) shall be payable in accordance with law. The Tribunal therefore directed remand to the Adjudicating Authority for computation of liability on Cum Duty basis and for giving the appellants an opportunity to be heard; the substantive entitlement was recognized but quantification was left to the authority on remand.

Appellants entitled to Cum Duty valuation; suppression cannot be imputed to the PSU; penalty set aside as unsustainable; remand to the Adjudicating Authority for recalculation of tax liability on Cum Duty basis, assessment of interest, and fresh adjudication after hearing the appellants.

Final Conclusion: Appeal allowed in part: the matter is remitted to the Adjudicating Authority for (a) verification and fresh adjudication on the correctness and appropriation of Cenvat Credit claimed by the appellants, and (b) recalculation of service tax liability treating receipts as inclusive of service tax (Cum Duty), with penalty set aside and interest to be determined; appellants to be given opportunity of hearing.

Service tax liability on receipt basis versus accrual basis - Point of Taxation Rules, 2011 and its retrospective effect - Discharge of service tax prior to 1 July, 2011 on receipt basis - Evidence of payment by production of challans and sufficiency of proof - Adjudicatory obligation to consider prima facie evidence of tax payment

Service tax liability on receipt basis versus accrual basis - Discharge of service tax prior to 1 July, 2011 on receipt basis - Evidence of payment by production of challans and sufficiency of proof - Whether the demand for short-paid service tax for 2007-08 could be sustained when the assessee produced challans and a CA certificate showing the taxable receipts were received in April 2008 and service tax discharged then, in the context of pre-1 July 2011 practice of payment on receipt basis. - HELD THAT: - The Tribunal found that prior to 1 July 2011 an assessee could discharge service tax liability on the basis of receipts notwithstanding that internal ledgers were maintained on an accrual basis. The appellant produced a financial summary and a Chartered Accountant's certificate stating that the taxable amount of Rs. 14,27,411 was received in April 2008 and service tax on that amount was paid by two challans dated 29.04.2008. The adjudicating authority rejected the plea solely because the amounts shown in the two challans did not numerically correspond to the demanded tax figure. The Tribunal held that the amounts in the challans could properly include tax for other receipts received in April 2008 and that a rejection of the payment contention on the narrow ground of non-correspondence of figures was erroneous. The Commissioner (Appeals) failed to address this specific contention. Applying these facts to the legal position, the Tribunal concluded there was no short payment of service tax for the period in issue and that the demand could not be sustained. [Paras 16, 17, 18, 19, 20]

Demand set aside as there was no short payment of service tax for 2007-08; appellant's payment on receipt basis in April 2008 accepted and impugned order quashed.

Final Conclusion: The appeal is allowed: the Commissioner (Appeals) order is set aside and the short-payment demand for 2007-08 is rejected on the finding that service tax was discharged by the appellant in April 2008 in accordance with pre-1 July 2011 practice.

Penalty under Section 78 of the Finance Act, 1994 - second proviso to Section 78(1) - longer period of limitation under proviso to Section 73(1) - reversal of proportionate CENVAT credit and payment of interest and 15% penalty within 30 days - application of Rule 6/Rule 14 of the CENVAT Credit Rules, 2004

Penalty under Section 78 of the Finance Act, 1994 - second proviso to Section 78(1) - reversal of proportionate CENVAT credit and payment of interest and 15% penalty within 30 days - application of Rule 14 of the CENVAT Credit Rules, 2004 - Whether imposition of penalty equal to the proportionate credit under Section 78 is sustainable where the assessee reversed the proportionate credit, paid interest and paid 15% penalty within 30 days and notified the department. - HELD THAT: - The Tribunal found that the appellant had, after receipt of the show-cause notice, reversed the proportionate CENVAT credit attributable to exempted trading, paid the corresponding interest and deposited 15% penalty within 30 days, and informed the Department. The Commissioner (Appeals) had concurrently held that the reversal, interest and penalty payment were in accordance with Rule 14 of CCR, Section 78 and Rule 15(3) of CCR and required no interference, but nevertheless imposed a penalty equal to the proportionate credit. The Tribunal held this to be contradictory and unsustainable because there was no willful suppression with intent to evade duty; having availed the benefit of the second proviso to Section 78(1) by timely reversal and payment, the assessee was entitled to the reduced penalty already paid. The imposition of an equal penalty was therefore set aside. [Paras 6]

Penalty under Section 78 equal to the proportionate credit set aside; assessee entitled to benefit of the second proviso to Section 78(1) having reversed credit, paid interest and 15% penalty within 30 days.

Longer period of limitation under proviso to Section 73(1) - suppression with intent to evade duty - prior audit and departmental knowledge - Whether the longer period of limitation under the proviso to Section 73(1) could be invoked on the ground of suppression where earlier audit (August 2009 to July 2014) did not object and the department was aware of the trading activity. - HELD THAT: - The Tribunal observed that the Department had earlier conducted an audit for August 2009 to July 2014 and did not raise an objection to the assessee's availment of input credit despite being aware of the trading activity. The objection surfaced only in a subsequent audit, leading to the present show-cause notice. In the absence of any finding of willful suppression or intention to evade duty, invocation of the extended limitation under the proviso to Section 73(1) was not warranted. Reliance on the fact that the issue had been previously examined without objection supported the conclusion that suppression with intent was not established. [Paras 6]

Invocation of the longer period of limitation under the proviso to Section 73(1) was not sustainable on the facts; no willful suppression established.

Final Conclusion: The appeal is allowed: the order of the Commissioner (Appeals) insofar as it imposed a penalty under Section 78 equal to the proportionate credit is set aside; the assessee is held entitled to the benefit of the second proviso to Section 78(1) having reversed the credit, paid interest and deposited 15% penalty within 30 days, and the invocation of the extended limitation under proviso to Section 73(1) is held unsustainable.

Condonation of delay - sufficient cause - service by speed post - duty to verify receipt / track filing - consultant negligence and appellant responsibility - jurisdiction to file appeal before the Appellate Tribunal

Condonation of delay - sufficient cause - service by speed post - duty to verify receipt / track filing - consultant negligence and appellant responsibility - Application for condoning the delay of 1146 days in filing the appeal was rejected for want of sufficient cause. - HELD THAT: - The Tribunal found that the appellant sought condonation relying on a speed-post dispatch allegedly sent on 16 April 2015, but the postal receipt showed delivery addressed to an Assistant Commissioner at an incorrect address rather than to the Tribunal. The forwarding communication to the appellant had clearly stated that the appeal was to be filed before the Appellate Tribunal and provided the Tribunal's address. The appellant and its consultant therefore were unjustified in sending the appeal to an incorrect addressee and address. Further, neither the consultant nor the appellant made adequate efforts to verify receipt - by inquiry with the Tribunal, by checking the Tribunal's website earlier, or by obtaining postal tracking information - which demonstrated a casual approach. The application also failed to specify when the departmental recovery letter was received or to explain delays in ascertaining the appeal's non-availability on the Tribunal's records. On these facts the Tribunal held that the appellant had not shown that it was prevented by sufficient cause from filing within time, and so condonation could not be granted. [Paras 8, 9, 10, 11, 12]

Delay condonation application rejected; appeal dismissed.

Final Conclusion: The application for condonation of 1146 days' delay was refused for want of sufficient cause and the appeal was dismissed.

Summary order. Special leave petitions dismissed; pending applications, if any, disposed of.

Summary order. Notice issued limited to the question whether Circular No. 162/73/95-CX dated 14th December, 1995 is in conformity with and authorised by Section 37B of the Central Excise Act, 1944 read with the Central Excise Rules; matter tagged with S.L.P. (C) No. 18214 of 2017.

Summary order. Notice issued returnable within four weeks; Dasti permitted.

Penalty under Rule 209A of the Central Excise Rules, 1944 - Clandestine removal of excisable goods - Undervaluation and suppression of turnover - Documentary and seized electronic evidence - Reliability of retracted statement - Vicarious liability of managing director

Penalty under Rule 209A of the Central Excise Rules, 1944 - Clandestine removal of excisable goods - Documentary and seized electronic evidence - Validity of imposition of penalty of Rs. 20 lakhs on the appellant in respect of clandestine removals and undervaluation. - HELD THAT: - The adjudicating authorities and the Tribunal found, on examination of accounts, seized documents and computer data recovered on search, that the company had resorted to unaccounted raw materials, clandestine removals and suppression/undervaluation of sales. Those fact-findings support imposition of penalty under Rule 209A since the appellant, as Managing Director during the relevant period, was shown by the evidence to have been concerned with or had reason to believe in the clandestine dealings. The Court declined to interfere with concurrent findings of fact recorded by the authorities and the Tribunal where no illegality or infirmity was demonstrated. [Paras 6, 7, 8]

Penalty imposed under Rule 209A was validly sustained on the evidence and the appeal in respect of the penalty fails.

Reliability of retracted statement - Documentary and seized electronic evidence - Effect of the appellant's retraction of earlier statement on oath. - HELD THAT: - The Court held that mere retraction of a previous statement on oath, made later as a self-serving afterthought, does not automatically exonerate the appellant where independent documentary and other testimonial evidence corroborates clandestine activities. The authorities were entitled to place reliance on earlier statements together with seized documents and computer records. [Paras 7]

Retraction of statement did not absolve the appellant in presence of corroborative evidence.

Vicarious liability of managing director - Re-appreciation of evidence - Whether this Court should re-appreciate the evidence on facts. - HELD THAT: - The Court observed there was no reason to re-appreciate or revisit the factual findings of the adjudicating authority and the Tribunal, which had considered accounts, witness statements and seized material. Absent any pointed illegality, the concurrent factual conclusions warrant no interference. [Paras 8]

No re-appreciation of evidence; concurrent findings on fact are upheld and appeal dismissed.

Final Conclusion: Concurrent findings of clandestine removals, undervaluation and the appellant's concern with such dealings, supported by seized documentary and electronic evidence and witness statements, sustain the penalty under Rule 209A; retraction of statement does not negate corroborative evidence and there is no ground for interference with the factual conclusions, hence the appeal is dismissed.

Eligibility for cenvat credit on Erection, Commissioning and Installation services - Distinction between Erection, Commissioning and Installation Service and Construction/Works Contract Service - Time-bar/extended period of limitation for recovery of cenvat credit - Requirement of suppression with intent to evade duty for invocation of extended period - Precedential reliance on earlier CESTAT decisions

Eligibility for cenvat credit on Erection, Commissioning and Installation services - Distinction between Erection, Commissioning and Installation Service and Construction/Works Contract Service - Precedential reliance on earlier CESTAT decisions - Appellant entitled to cenvat credit on Erection, Commissioning and Installation services and such services do not fall within excluded Construction/Works Contract Service in the facts of the case. - HELD THAT: - The Tribunal found on the record that invoices described the services as pure labour without supply of goods, the vendor's service tax challan identified the tax under Erection, Commissioning and Installation Service, and the vendor's service tax returns likewise reflected the same classification. The Department did not establish that the input services availed by the appellant were Construction/Works Contract Services. The Tribunal applied its earlier decisions which held that services like Erection, Commissioning and Installation are not excluded by the amended definition of 'input service' and followed the reasoning in those precedents. On these findings the issue of entitlement to cenvat credit on the said services was decided in favour of the appellant. [Paras 6]

Entitlement to cenvat credit on Erection, Commissioning and Installation services upheld and the classification as Construction/Works Contract Service rejected.

Time-bar/extended period of limitation for recovery of cenvat credit - Requirement of suppression with intent to evade duty for invocation of extended period - The demand was barred by limitation because there was no suppression with intent to evade duty and the availment of credit had been disclosed to the Department. - HELD THAT: - The Tribunal recorded that the appellant availed the credits in April and May 2012 and submitted a letter with the Cenvat Register on 18.06.2012; the audit report that noticed the credit was dated 19.12.2012 while the show-cause notice was issued on 07.11.2014. The appellant produced acknowledgments, invoices, challans and returns showing disclosure. Applying the principle that extended limitation requires suppression with intent, and relying on precedent where reflection of credit in returns and submission of registers rebut mala fide suppression, the Tribunal concluded the Department failed to establish concealment or intent to evade duty and therefore the extended period could not be invoked. [Paras 6, 7]

Demand set aside as barred by limitation; extended period invocation rejected for lack of suppression with intent.

Final Conclusion: Appeal allowed: impugned order set aside. The appellant's entitlement to cenvat credit on Erection, Commissioning and Installation services is upheld on merits and the demand is held time barred for lack of suppression with intent, with consequential relief.

Transaction value - assessable value - deduction under Section 4(3)(d) - actual payment of VAT for excise deduction - VAT subsidy/remission (VAT-37B challan) as payment of tax - distinction between remission/subsidy schemes and tax payment

Transaction value - assessable value - deduction under Section 4(3)(d) - VAT subsidy/remission (VAT-37B challan) as payment of tax - Whether amounts remitted back to the appellant in the form of VAT-37B challans under the Rajasthan investment promotion/subsidy scheme must be included in the transaction value/assessable value for computation of central excise duty - HELD THAT: - The Tribunal held that the question was no longer res integra because an identical controversy in the appellant's own case had been finally decided in favour of the appellant by final order No. 51252 of 2018 dated 05 April 2018. That earlier decision analysed the effect of subsidy or remission received under state investment promotion schemes and concluded that where the scheme treats the subsidy challans as legally valid means to discharge VAT liability in subsequent periods, such utilization constitutes "actual payment" of VAT for purposes of Section 4(3)(d). The Tribunal distinguished the Supreme Court's ruling in Super Synotex India Ltd. by reference to the Welspun Corporation Ltd. line of reasoning and the specific statutory/scheme context under which the remission/subsidy operates. Applying that concluded reasoning to the facts of the present appeal, where VAT credited to Government is partly disbursed back in the form of VAT-37B challans usable for payment of VAT and recognised by the Rajasthan scheme as legal payment, the amounts covered by those challans need not be included in the assessable value for central excise duty. [Paras 5, 6]

The impugned order-in-appeal is set aside and the appeal is allowed, holding that VAT amounts discharged using VAT-37B challans under the Rajasthan subsidy scheme are not includible in the assessable value for central excise duty.

Final Conclusion: The Tribunal allowed the appeal, setting aside the Commissioner (Appeals) order and affirming that VAT remitted back to the assessee in the form of VAT-37B challans under the Rajasthan investment/subsidy scheme do not form part of the transaction value for central excise duty computation.

Summary order. Appeal dismissed on monetary grounds under the litigation policy as the interest amount in dispute is below the prescribed monetary threshold.

Maintainability of writ petition during corporate insolvency resolution process - management of affairs by interim resolution professional under Section 17 IBC - moratorium on suits and proceedings under IBC

Maintainability of writ petition during corporate insolvency resolution process - management of affairs by interim resolution professional under Section 17 IBC - moratorium on suits and proceedings under IBC - Writ petitions filed by the company through its Senior Vice President (Taxation) were not maintainable after appointment of an interim insolvency resolution professional and the declaration of moratorium under the IBC. - HELD THAT: - The National Company Law Tribunal admitted a Section 9 IBC petition and appointed an interim insolvency resolution professional (IRP), directed the IRP to take charge and declared the moratorium (NCLT order paras. 5-7). Under Section 17(1)(b) IBC the powers of the board of directors of the corporate debtor stand suspended and are to be exercised by the IRP; Section 17(2) authorises the IRP to act and execute in the name and on behalf of the corporate debtor and to access records and comply with statutory requirements on its behalf. In that factual and legal matrix, the company could not maintain the writ petitions through its Senior Vice President since the management and conduct of proceedings on behalf of the corporate debtor vested in the IRP. The Court accepted the Revenue's preliminary contention and dismissed the petitions as not maintainable, while leaving open the right of the IRP to initiate or continue any legal proceedings if the IRP so chooses (paras. 5, 7, 11-14). [Paras 7, 11, 12, 13, 14]

All four writ petitions dismissed as not maintainable; liberty granted to the interim resolution professional to institute or pursue proceedings on behalf of the corporate debtor.

Final Conclusion: Writ petitions challenging revised VAT assessments and related stay orders were dismissed as not maintainable because the IRP, appointed under the IBC and authorised by Section 17 to manage the corporate debtor's affairs during the moratorium, alone is competent to institute or continue legal proceedings on behalf of the company; the IRP may, if it so chooses, pursue any remedies.

Reasonable opportunity to show cause - service of revisional notice - revisional proceedings under Section 27 of the Tamil Nadu Value Added Tax Act, 2006 - setting aside assessment orders for want of opportunity - remand for fresh assessment - time-bound directions for reassessment - communication under due acknowledgement

Reasonable opportunity to show cause - service of revisional notice - revisional proceedings under Section 27 of the Tamil Nadu Value Added Tax Act, 2006 - setting aside assessment orders for want of opportunity - Impugned revised assessment orders set aside because the writ petitioner was not served with the revisional notices and therefore was not afforded a reasonable opportunity to show cause before those orders were passed. - HELD THAT: - The Court found that the two revisional notices dated 26.07.2017 and 22.11.2017 were not served on the writ petitioner but were served on a third party connected to a relative of the petitioner's director. Reliance was placed on the proviso to sub-sections (1) and (2) of Section 27 of the TNVAT Act which makes it statutorily imperative that a reasonable opportunity to show cause be given before passing revisional orders. In these circumstances the Court set aside the impugned orders solely on the ground that the writ petitioner had not been given the mandated opportunity to respond; no adjudication was made on the merits of the assessments. [Paras 5, 6, 13, 14]

All six impugned orders dated 15.05.2019 are set aside solely for want of a reasonable opportunity to show cause; no view expressed on merits.

Remand for fresh assessment - time-bound directions for reassessment - communication under due acknowledgement - The matter remitted to the respondent for fresh revisional proceedings after service of revisional notices and receipt of the writ petitioner's objections, with specified time frames and procedural directions. - HELD THAT: - The Court directed that the two revisional notices be served on the writ petitioner within a fortnight of receipt of the order, that reasonable time be allowed for the petitioner to file objections and responses, and that the respondent shall redo the revised assessments and pass fresh orders expeditiously and in any event within an overall period of 12 weeks from receipt of this order. The Court further directed that the revised assessment orders be communicated to the writ petitioner under due acknowledgement in accordance with the operating rules under the TNVAT Act. These directions effect a remand for fresh consideration rather than a decision on substance. [Paras 14]

Respondent to serve the revisional notices within a fortnight, entertain objections, redo the revised assessments and pass fresh orders within 12 weeks, and communicate the same under due acknowledgement.

Final Conclusion: All six writ petitions are disposed by setting aside the impugned revisional orders dated 15.05.2019 solely for failure to afford the writ petitioner a reasonable opportunity to show cause; the matters are remitted to the respondent for service of the revisional notices, receipt of objections and redoing the revised assessments in a time-bound manner (fortnight for service of notices and 12 weeks for fresh orders). No adjudication has been made on the merits; there shall be no order as to costs.

Natural justice - Availability of alternate statutory remedy - Exercise of writ jurisdiction in fiscal matters - Right to statutory appeal subject to limitation and pre-deposit conditions - Jurisdiction to pass revised assessment under the Tamil Nadu VAT Act

Natural justice - Whether principles of natural justice were violated in the proceedings leading to the revised assessment order. - HELD THAT: - The Court examined the sequence of revisional notices, written replies by the dealer, and two personal hearings (24.08.2016 and 26.09.2016), together with an intervening notice dated 20.09.2016 and the dealer's responses. The impugned order expressly records that certain objections were accepted while others were rejected for lack of supporting documents. Having considered the procedural steps taken by the respondent and the opportunities afforded to the dealer to file replies and to be heard, the Court found that there was no breach of the principles of natural justice. [Paras 8, 9]

No violation of natural justice was found.

Jurisdiction to pass revised assessment under the Tamil Nadu VAT Act - Whether the assessing authority had jurisdiction or power to pass the revised assessment order under Section 22(4) of the TNVAT Act. - HELD THAT: - The petition did not dispute the respondent's jurisdiction or power to pass a revised assessment under the statutory provision. The Court recorded that it was not the case of the petitioner that the respondent lacked jurisdiction or statutory power to pass the revised assessment order, and proceeded on that basis. [Paras 9]

The respondent's jurisdiction and power to pass the revised assessment under Section 22(4) TNVAT Act were not impugned and were treated as valid for present purposes.

Availability of alternate statutory remedy - Exercise of writ jurisdiction in fiscal matters - Right to statutory appeal subject to limitation and pre-deposit conditions - Whether the writ petition should be entertained despite the availability of an alternate statutory appeal under Section 51 of the TNVAT Act. - HELD THAT: - The Court applied the settled principle that writ jurisdiction is exercised with restraint in fiscal matters and that the availability of an effective statutory remedy ordinarily precludes interference under Article 226. Relying on the principle that alternate remedies in revenue matters must be applied with rigour, the Court noted that an appeal lies to the Appellate Deputy Commissioner under Section 51 and that the petitioner may pursue that remedy subject to limitation and the pre-deposit conditions prescribed by the statute. The Court also noted the procedural history of the petition (dismissal for default and subsequent restoration) in determining that the petitioner remains entitled to invoke the statutory appeal within the prescribed time and conditions. [Paras 11, 12, 16, 17]

Writ petition dismissed on the ground of availability of alternate statutory remedy; petitioner permitted to pursue the statutory appeal subject to limitation and pre-deposit conditions.

Final Conclusion: Writ petition dismissed; Court found no breach of natural justice and no challenge to the assessing authority's jurisdiction, and declined to exercise writ jurisdiction in view of the available statutory appeal under Section 51 of the TNVAT Act, while preserving the petitioner's right to pursue that appeal subject to limitation and pre-deposit requirements.