TaxTMI Updates e-Newsletter
Sep 04,2020

Failure to pass on benefit of input tax credit - profiteering under Section 171(1) - determination of profiteered amount under Section 171(2) and Rule 133(1) - imposition of penalty under Section 171(3A) - prospective operation of penal provision - non-retrospectivity of penal statute

Failure to pass on benefit of input tax credit - profiteering under Section 171(1) - determination of profiteered amount under Section 171(2) and Rule 133(1) - Respondent violated the obligation to pass on benefit of input tax credit to buyers for the period 01.07.2017 to 31.12.2018 and was held to have indulged in profiteering. - HELD THAT: - The DGAP, by report dated 04.06.2019, investigated complaints and found that the respondent did not reduce prices of flats to pass on ITC benefit from 01.07.2017. This Authority, after hearing, accepted the DGAP's findings and, in Order No. 67/2019 dated 09.12.2019, determined the profiteered amount in accordance with the provisions of Section 171(2) read with Rule 133(1) for the period 01.07.2017 to 31.12.2018. On review of the material and submissions, the Authority reaffirms that the respondent failed to pass on the benefit of ITC and thereby contravened Section 171(1) of the CGST Act, 2017. [Paras 2, 6]

Findings of violation of Section 171(1) for the period 01.07.2017 to 31.12.2018 are upheld and the determination of profiteered amount stands.

Imposition of penalty under Section 171(3A) - prospective operation of penal provision - non-retrospectivity of penal statute - Penalty under Section 171(3A) could not be imposed for violations occurring between 01.07.2017 and 31.12.2018 because the penal provision came into force only from 01.01.2020. - HELD THAT: - Section 171(3A) was inserted by the Finance (No. 2) Act, 2019 and brought into force by Notification No. 01/2020-Central Tax dated 01.01.2020. As no penalty provision existed for contraventions during 01.07.2017 to 31.12.2018, the penal provision cannot be applied retrospectively to that period. Consequently, the notice dated 17.01.2020 seeking imposition of penalty under Section 171(3A) was withdrawn and the penalty proceedings were dropped. [Paras 7, 8]

Penalty proceedings under Section 171(3A) are not maintainable for the period 01.07.2017 to 31.12.2018; the notice for penalty is withdrawn and the proceedings are dropped.

Final Conclusion: The Authority upholds that the respondent violated Section 171(1) by not passing on ITC benefits for 01.07.2017 to 31.12.2018 and that the earlier determination of profiteering stands; however, penalty under Section 171(3A) cannot be imposed retrospectively for that period, and the penalty proceedings are accordingly withdrawn and dropped.

Obligation to pass on benefit of input tax credit - profiteering under Section 171(1) of the CGST Act, 2017 - penal liability under Section 171(3A) of the CGST Act, 2017 - non-retrospective operation of penal provisions

Obligation to pass on benefit of input tax credit - profiteering under Section 171(1) of the CGST Act, 2017 - The Respondent denied benefit of input tax credit to buyers in the specified project for the period and thereby violated the obligation to pass on ITC under Section 171(1). - HELD THAT: - The Authority considered the DGAP's investigation and report and, after hearing the parties, found that the Respondent had not reduced prices of the flats commensurate with the benefit of input tax credit introduced with GST from 01.07.2017. The Authority had earlier determined the profiteered amount for the period 01.07.2017 to 30.09.2018 and recorded that the Respondent compelled buyers to pay higher prices and GST by denying the ITC benefit. On the material before it, the Authority concluded that the Respondent violated the statutory obligation to pass on ITC under Section 171(1) of the CGST Act, 2017. [Paras 2, 6]

Profiteering established; Respondent held to have violated Section 171(1) for the period 01.07.2017 to 30.09.2018.

Penal liability under Section 171(3A) of the CGST Act, 2017 - non-retrospective operation of penal provisions - Penalty under Section 171(3A) could not be imposed for the period 01.07.2017 to 30.09.2018 because the penal provision came into force prospectively from 01.01.2020. - HELD THAT: - The Authority examined the Respondent's contention that Section 171(3A), as inserted by the Finance (No. 2) Act, 2019, was brought into force by notification dated 01.01.2020 and therefore could not be applied retrospectively to conduct occurring between 01.07.2017 and 30.09.2018. Noting that no penalty provision existed for violations of Section 171(1) during the relevant period, and that Section 171(3A) was implemented with effect from 01.01.2020, the Authority held that the penal provision could not be invoked retrospectively. Consequently, the notice proposing penalty under Section 171(3A) was withdrawn and the penalty proceedings dropped. [Paras 5, 7, 8]

Penalty proceedings under Section 171(3A) withdrawn; penalty not imposed for violations occurring between 01.07.2017 and 30.09.2018.

Final Conclusion: The Authority affirmed that the Respondent had perpetrated profiteering by failing to pass on the benefit of input tax credit for 01.07.2017 to 30.09.2018, but held that penalty under Section 171(3A) could not be imposed retrospectively and accordingly withdrew and dropped the penalty proceedings.

Addition u/s 41 - cessation or remission of liability - Written back of excess provision made in earlier years - Disallowance of business expenditure Additional expenditure relating to aircrafts taken on finance lease - HELD THAT:- Non availability of the court fee during the lock down period, the same could not be deposited within the time granted by the court on 06.03.2020 but will be deposited now within two weeks. In the circumstances, the order for depositing cost of ₹ 4,000/- in default of payment within four weeks, should be recalled.

Considering the above, the appellant(s) are granted two weeks time to do the needful, in terms of the office report dated 25.8.2020. Having regard to the circumstances for which the amount was not paid, the order for cost of ₹ 4,000/- in default of payment, stands recalled. It is ordered accordingly.

Exemption under Section 54F - requirement of investment in India to claim exemption - prospective operation of statutory amendment - interpretation of taxing enactments favourable to the assessee

Exemption under Section 54F - requirement of investment in India to claim exemption - Assessee entitled to claim exemption under Section 54F for investment in a residential property situated in USA for Assessment Year 2009-10. - HELD THAT: - The Tribunal's finding that the assessee was entitled to exemption under Section 54F in respect of the investment made in a residential house in USA was upheld. The Court noted that the statutory text of Section 54F prior to the 2015 amendment did not expressly confine the new asset to be situated in India; therefore, for Assessment Year 2009-10 the condition of purchase or construction in India was not a statutory requirement. Applying the principle that taxing provisions must be construed strictly and, where two interpretations are possible, the one favourable to the assessee should be adopted, the Court affirmed the Tribunal's allowance of exemption for the foreign investment for the period prior to amendment. [Paras 6, 7]

Appeal dismissed insofar as denial of exemption under Section 54F for investment in the USA for AY 2009-10; assessee entitled to the exemption.

Prospective operation of statutory amendment - prospective effect of Finance Act, 2014 - Amendment to Section 54F introduced w.e.f. 01.04.2015 is prospective and applies to Assessment Year 2015-16 and thereafter, and does not affect rights for earlier assessment years. - HELD THAT: - Relying on established principles that statutes (other than declaratory or procedural enactments) are prima facie prospective and retrospective operation should not be given so as to impair existing rights, the Court observed the memorandum and CBDT circular stating the amendment takes effect from 1st April 2015 and applies to Assessment Year 2015-16 onwards. Accordingly, the requirement of purchasing one residential house in India was held to be introduced only from AY 2015-16 and could not be read into Section 54F for AY 2009-10. The Court also noted and followed prior High Court decisions reaching the same conclusion. [Paras 6, 7, 8]

The 2014 amendment to Section 54F is prospective, operative from 01.04.2015 and applicable to AY 2015-16 onwards; it does not apply to AY 2009-10.

Final Conclusion: The substantial question is answered in the affirmative for the assessee: for Assessment Year 2009-10 exemption under Section 54F was available in respect of investment in the USA; the 2014 amendment requiring the new house to be in India is prospective and applies only from AY 2015-16. The revenue's appeal is dismissed.

Assumption of jurisdiction in penalty proceedings - Notice under Section 271(1)(c) issued for wrong assessment year - Penalty proceedings distinct from assessment proceedings - Mere disbelief of explanation not sufficient for imposition of penalty - Requirement that notice specify concealment or furnishing of inaccurate particulars

Assumption of jurisdiction in penalty proceedings - Notice under Section 271(1)(c) issued for wrong assessment year - Requirement that notice specify concealment or furnishing of inaccurate particulars - Penalty proceedings distinct from assessment proceedings - Mere disbelief of explanation not sufficient for imposition of penalty - Validity of penalty proceedings and orders when notice under the penalty provision was issued for a different assessment year and did not specify concealment or inaccurate particulars, and whether the Tribunal correctly imposed penalty on the merits. - HELD THAT: - The Court found that the notice under Section 274 read with Section 271(1)(c) had been issued for Assessment Year 2002-03 and not for the Assessment Year 1999-00 which was the subject matter of the penalty orders. The notice further failed to state that the assessee had concealed particulars of income or furnished inaccurate particulars. The authorities therefore lacked proper assumption of jurisdiction to initiate penalty proceedings against the assessee for AY 1999-00. The Court also observed that penalty proceedings are distinct from assessment proceedings and that the Tribunal had failed to appreciate settled legal principle that mere disbelief of an explanation is not sufficient to impose penalty. In light of these deficiencies and having regard to the precedents relied upon by the assessee, the first substantial question was answered in favour of the assessee, rendering the remaining substantial questions academic.

The penalty proceedings and consequential orders were quashed for want of valid notice and proper assumption of jurisdiction; the Tribunal's confirmation of penalty was set aside.

Final Conclusion: The appeal is allowed; the orders imposing and confirming penalty for Assessment Year 1999-00 are quashed on the grounds that the notice was issued for a different assessment year, did not allege concealment or inaccurate particulars, and the Tribunal erred in treating mere disbelief as sufficient for levy of penalty.

Nexus between expenditure and income - Section 57(iii) deduction wholly and exclusively for the purpose of making or earning income - diversion by overriding title - application of Section 115JB and scope of Section 115JB(5) - indexed cost of acquisition in computation of book profits under Section 115JB - book profits / minimum alternative tax on companies

Nexus between expenditure and income - Section 57(iii) deduction wholly and exclusively for the purpose of making or earning income - diversion by overriding title - Deductibility of interest paid to lenders as expenditure under Section 57(iii) by reason of nexus with interest earned on fixed deposits arising from surplus under the court approved restructuring scheme - HELD THAT: - The court found on the facts that the assessee was used as a special purpose vehicle under a scheme of arrangement and that surplus funds deposited in fixed deposits represented proceeds from the restructuring process. The Assessing Officer and the Commissioner of Income Tax (Appeals) had recorded that the surplus was deposited as fixed deposits which earned interest and that the interest earned was used to meet interest obligations to lenders; the Tribunal did not set aside those findings. Section 57(iii) requires that expenditure be laid out wholly and exclusively for the purpose of making or earning the income. Applying settled precedent that expenditure need not bear a direct technical link to income if a dominant purpose or indirect nexus exists, the court held that there was a close nexus between the interest paid to creditors and the interest earned on the fixed deposits and that the interest expenditure was incurred wholly and exclusively for earning that interest income. Consequently the interest paid was allowable under Section 57(iii), and the Tribunal's contrary conclusion was quashed. [Paras 11, 12]

Interest paid to lenders was deductible under Section 57(iii) because a factual nexus existed between interest earned on fixed deposits (representing restructuring surplus) and interest paid to creditors; the Tribunal's disallowance was quashed.

Application of Section 115JB and scope of Section 115JB(5) - indexed cost of acquisition in computation of book profits under Section 115JB - book profits / minimum alternative tax on companies - Applicability of Section 115JB (minimum alternate tax on book profits) and whether indexed cost of acquisition must be allowed in computing book profits for the assessee - HELD THAT: - The court examined Section 115JB(5), which leaves other provisions of the Act applicable unless specifically excluded, and observed that indexed cost of acquisition is a specific statutory allowance under Section 48 for computing capital gains taxable under Section 45 and Section 112. The court held that there is no provision preventing a company subject to Section 115JB from claiming indexed cost of acquisition and that treating sale profit without indexation would tax more than actual income, contrary to the principle that a mere bookkeeping entry cannot be taxed as income. On the facts, the assessee had not declared or paid any dividend and there were findings that the profit arose from specific capital transactions; consequently the provisions of Section 115JB were not attracted in the assessee's case and indexed cost of acquisition must be given effect to. The Tribunal's failure to follow the coordinate bench and consequent application of Section 115JB was therefore set aside. [Paras 13, 15]

Section 115JB was not applicable to the assessee on the facts and the indexed cost of acquisition must be allowed in computing taxable income; the Tribunal's application of Section 115JB and denial of indexation was quashed.

Final Conclusion: The appeals are allowed: the interest paid to lenders is deductible under Section 57(iii) due to nexus with interest earned on fixed deposits representing restructuring surplus, and the Tribunal's application of Section 115JB (and denial of indexed cost of acquisition) was unsustainable on the facts; impugned portions of the Tribunal's orders are quashed.

Violation of audi alteram partem - quashing of administrative order for lack of hearing - reconsideration of stay petition after hearing - interim suspension of recovery pending reconsideration - virtual or physical hearing in view of pandemic restrictions

Violation of audi alteram partem - quashing of administrative order for lack of hearing - Ext.P5 was issued without affording the petitioner an opportunity of being heard and is liable to be set aside. - HELD THAT: - The respondents' counsel conceded that Ext.P5 was issued without offering the petitioner an opportunity of being heard. The Court found that Ext.P5 was issued without proper application of mind, noting the terms of the order and the admitted absence of hearing. The writ petition was allowed on that ground and Ext.P5 was set aside without adjudicating the merits of the underlying contentions, leaving those open for fresh consideration. [Paras 2, 3]

Ext.P5 quashed for failure to afford hearing; matter remitted for fresh consideration.

Reconsideration of stay petition after hearing - The 2nd respondent is directed to reconsider the petition for stay after affording the petitioner an opportunity of being heard. - HELD THAT: - In view of the admitted absence of hearing and the Court's quashing of Ext.P5, the 2nd respondent was directed to take up the petition for stay afresh and pass orders in accordance with law after giving the petitioner an opportunity to be heard. The Court left the merits open for determination by the Authority on reconsideration. [Paras 3]

Issue remitted to the 2nd respondent for fresh decision on the stay application after hearing the petitioner.

Interim suspension of recovery pending reconsideration - All further action to recover amounts as per the demand is deferred until the 2nd respondent considers the stay application. - HELD THAT: - Pending the 2nd respondent's reconsideration of the stay petition after hearing the petitioner, the Court ordered that recovery proceedings stand deferred. This interim relief preserves the status quo until the Authority reconsiders and disposes of the stay application.

Recovery action deferred until disposal of the stay application by the 2nd respondent.

Virtual or physical hearing in view of pandemic restrictions - The petitioner may be heard either physically or through video conferencing on account of COVID-19 restrictions. - HELD THAT: - At the respondents' request and in light of pandemic restrictions, the Court clarified that the hearing to be afforded to the petitioner may be conducted either in person or via video conferencing. This direction permits flexible modes of hearing while ensuring the petitioner's right to be heard.

Hearing may be conducted physically or through video conferencing.

Final Conclusion: The writ petition is allowed: Ext.P5 is set aside for failure to afford hearing; the 2nd respondent is directed to reconsider the stay application after giving the petitioner an opportunity to be heard (physically or by video conference), and recovery proceedings are stayed until such reconsideration.

Penalty under Section 271(1)(c) - Explanation 1 - presumption of concealment or furnishing of inaccurate particulars - Strict liability for concealment under Section 271(1)(c) - Penalty as civil liability - Effect of prior dismissal on subsequent appellate proceedings / recall of judgment

Effect of prior dismissal on subsequent appellate proceedings / recall of judgment - Whether the earlier dismissal of an appeal raising the same substantial question of law precluded the maintainability of the present appeal and warranted recall of the earlier allowance. - HELD THAT: - The Court noted that TCA.No.155 of 2009 raised, as its first substantial question of law, a verbatim repetition of the substantial question entertained in the present appeal. The Division Bench in TCA.No.155 of 2009 had considered the question and dismissed the appeal, recording that no substantial question of law arose for consideration. Given that the same counsel appeared in both matters and the identical nature of the substantial question, the Court held that the earlier adjudication bears on the present proceedings. In consequence, the Court concluded that its earlier judgment in TCA.No.213 of 2009 (which had allowed the appeal) must be recalled because the matter had already been judicially considered and dismissed in TCA.No.155 of 2009, rendering the allowance unnecessary. [Paras 9, 10]

The judgment in TCA.No.213 of 2009 dated 26.6.2019 is recalled and TCA.No.213 of 2009 is dismissed as unnecessary; no costs.

Penalty under Section 271(1)(c) - Explanation 1 - presumption of concealment or furnishing of inaccurate particulars - Strict liability for concealment under Section 271(1)(c) - Penalty as civil liability - Whether penalty under Section 271(1)(c) is attracted on rejection of claim of sundry creditors where the presumption in Explanation 1 was held to be rebutted in proceedings. - HELD THAT: - The Court recorded that the substantial question framed in the present appeal mirrored the first substantial question in TCA.No.155 of 2009, where the Division Bench examined the law relating to Section 271(1)(c). The Division Bench observed the Supreme Court's ruling that invocation of Section 271(1)(c) does not require proof of dishonest intention and that the Explanation to the provision indicates an element of strict liability, treating the penalty as a civil liability enacted to protect revenue. On the facts, the Division Bench concluded that the assessee's inconsistent attitude before the officer justified attraction of the penalty. The present Court, having regard to that earlier conclusion, declined the assessee's attempt to distinguish the matters and did not reopen the substantive question afresh. [Paras 8, 9]

The earlier conclusion that penalty under Section 271(1)(c) is attracted in the circumstances was treated as dispositive for the purposes of adjudicating the present procedural challenge; the present appeal was not permitted to stand independently.

Final Conclusion: The Court recalled its earlier allowance in TCA.No.213 of 2009 dated 26.6.2019 and dismissed TCA.No.213 of 2009 as unnecessary, leaving in place the earlier Division Bench consideration that the penalty under Section 271(1)(c) was attracted; no costs.

Disallowance under Section 14A read with Rule 8D - proportionate disallowance of expenses to exempt income - remand for fresh consideration - open remand - Assessing Officer's power on de novo consideration - restriction on Assessing Officer's inquiry

Disallowance under Section 14A read with Rule 8D - Assessing Officer's power on de novo consideration - restriction on Assessing Officer's inquiry - open remand - Validity of the Tribunal's conditional remand which directed the Assessing Officer to exclude own funds in reserves and surplus and to apply Rule 8D while remitting the claim of disallowance under Section 14A. - HELD THAT: - The Tribunal remitted the issue of disallowance under Section 14A to the Assessing Officer but qualified the remand by directing the AO to treat the assessee's own funds (capital and reserves) as available for investment yielding exempt income, to apply the formula in Rule 8D and to exclude investments in subsidiaries. The High Court found that once the Tribunal chose to remit the matter it should not have curtailed the Assessing Officer's statutory power by imposing such specific restrictions, particularly without independent reasons for extending the directive in Beach Miners Co. Pvt. Ltd. to the facts of this case. The Court observed that the Tribunal's paragraph 11 contained those qualifications and that the Tribunal did not furnish distinct reasons why that approach was appropriate here. Consequently, the High Court set aside the observations in paragraph 11 and directed that the remand be treated as an open remand. The Assessing Officer is to consider all issues, factual and legal, raised by either Revenue or the assessee, afresh and decide after affording an opportunity of hearing to the Insolvency Resolution Professional representing the assessee. The Court left the substantial questions of law framed on admission open for determination by the adjudicating forum on remand. [Paras 11, 13]

Paragraph 11 of the Tribunal's order is set aside; the remand is converted into an open remand and the Assessing Officer is directed to reconsider all issues afresh after affording the IRP an opportunity of hearing.

Final Conclusion: The tax appeal is allowed to the extent of setting aside the Tribunal's qualified directions in paragraph 11; the remand is confirmed as an open remand directing the Assessing Officer to consider all issues afresh and afford the IRP a hearing; the substantial questions of law are left open.

Bogus purchases - genuineness of purchases - onus of proving bogus transactions - reliance on information obtained under section 133(6) inquiries - payments through banking channels as corroboration - peak theory for cash circulation - deletion of additions as unexplained expenditure - acceptance of stock records and audit report as supporting evidence

Bogus purchases - genuineness of purchases - reliance on information obtained under section 133(6) inquiries - payments through banking channels as corroboration - peak theory for cash circulation - acceptance of stock records and audit report as supporting evidence - Whether the addition made by the Assessing Officer on account of alleged bogus purchases (peak disallowance) was sustainable - HELD THAT: - The Tribunal upheld the deletion of the addition made by the AO. The AO reopened assessment on intelligence from the investigation wing and issued notices under section 133(6) to the purported sellers which returned unserved; he applied peak theory to disallow payments as representing cash circulation. The assessee, however, produced purchase invoices, bank payments, stock records, export documents, tax audit report and bank-submitted stock statements, and showed payments were routed through banking channels. The AO did not bring material demonstrating that payments were routed back to the assessee or otherwise establish cash circulation; he relied primarily on information from the Sales Tax/Investigation records and non-production of third parties without conducting further enquiries or adducing corroborative evidence. Relying on the principles reflected in the authorities considered by the CIT(A) and Tribunal, the absence of independent evidence by the AO to prove that purchases were paper transactions meant the onus on the revenue to establish bogusness was not discharged. The Tribunal further observed that acceptance of sales, audited books, stock records and banking evidence materially supported the genuineness of purchases and that the peak balance computation did not demonstrate cash circulation specific to these transactions. For these reasons the CIT(A)'s conclusion deleting the addition was sustained. [Paras 6, 7]

The addition made by the AO on account of alleged bogus purchases (peak disallowance) was deleted and the CIT(A)'s order was upheld.

Final Conclusion: The appeals filed by the Revenue for the assessment years in dispute are dismissed; the Tribunal affirms the deletion of the addition made on account of alleged bogus purchases.

Reassessment proceedings - notice under section 148 - jurisdictional notice - notice issued in the name of a deceased assessee - notice to legal heirs / section 159 - curative provision / section 292B

Notice under section 148 - notice issued in the name of a deceased assessee - jurisdictional notice - notice to legal heirs / section 159 - curative provision / section 292B - Validity of reassessment proceedings where the notice under section 148 was issued in the name of the assessee after his death and no fresh notice was issued to the legal heirs. - HELD THAT: - The Tribunal found on the record that the assessee had died prior to issuance of the notice under section 148 and that no subsequent notice under section 148 was issued to the legal heirs. A valid notice under section 148 is a condition precedent and a jurisdictional requirement for assuming reassessment jurisdiction under section 147. Where a notice under section 148 is issued in the name of a deceased person and the legal heirs do not submit to the jurisdiction or waive the requirement of a fresh notice, such notice is a nullity. Section 159 cannot be invoked because no proceedings were validly initiated against the legal heirs when the assessee was alive, and the limitation for issuing notice had expired, preventing issuance of a fresh notice to the legal heirs. The curative provision in section 292B cannot validate a notice that is, in substance, not in conformity with the jurisdictional requirement of issuing notice to the correct person where the legal heirs have not waived that requirement. The Tribunal applied these principles, following and relying on earlier decisions where identical legal propositions were held, and concluded that initiation and continuation of proceedings on the basis of the notice addressed to the deceased assessee were without jurisdiction and therefore void.

The reassessment proceedings initiated by the notice issued in the name of the deceased assessee are quashed for want of jurisdiction; no notice was issued to the legal heirs and the reassessment is invalid.

Final Conclusion: The appeal is allowed: the reassessment instituted by issuing notice in the name of the deceased assessee is quashed for want of jurisdiction and the assessment framed thereon is set aside.

Allowability of business expenditure under s.37(1) of the Income Tax Act - interest on delayed deposit of statutory dues as deductible expenditure - liquidated damages/charges for delay as revenue deduction and not penalty - distinction between interest on advance tax and interest on delayed statutory remittances

Allowability of business expenditure under s.37(1) of the Income Tax Act - interest on delayed deposit of statutory dues as deductible expenditure - distinction between interest on advance tax and interest on delayed statutory remittances - Interest on delayed payment of entry tax and TDS held to be deductible as business expenditure under s.37(1). - HELD THAT: - The Tribunal examined whether interest paid on delayed deposit of entry tax and TDS is a deductible revenue expenditure. Relying on a Division Bench decision of this Tribunal in M/s Naarayani Sons Pvt. Ltd., and on precedents recognising that interest on delayed statutory remittances (such as sales tax/service tax/TDS) represents expenditure incurred wholly and exclusively for business, the Tribunal held that the principles in Bharat Commerce (which concerned interest on delayed payment of advance tax) are not apposite. The Tribunal treated interest on delayed statutory deposits as distinct from interest in respect of advance tax, and therefore allowable under s.37(1). Applying these precedents to the facts, the impugned disallowance of interest was not justified and was directed to be deleted. [Paras 7, 8]

Deletion of addition relating to interest on entry tax and TDS; such interest allowed as deduction under s.37(1).

Allowability of business expenditure under s.37(1) of the Income Tax Act - liquidated damages/charges for delay as revenue deduction and not penalty - Charges for delay in supply (liquidated damages/contractual cost reductions) held deductible as business expenditure under s.37(1). - HELD THAT: - The Tribunal considered the nature of amounts debited by M.P. Text Book Corporation Ltd. for delayed supply under the tender terms. On facts, the debits arose from contractual clauses and represented liquidated damages/contractual cost reductions inherent to the business risk of late delivery, not penalties for breach of law. Relying on a Coordinate Bench decision in Chaudhary Hammer Works Ltd. which treated such contractual deductions as incidental business expenditure, the Tribunal found that the Assessing Officer erred in applying the principle from Bharat Commerce (advance tax context) to disallow the expenditure. Consequently, the disallowance was unsustainable and was directed to be deleted. [Paras 6, 7, 8]

Deletion of addition relating to charges for delay in supply; such contractual deductions allowed as business expenditure under s.37(1).

Final Conclusion: The assessee's appeal is allowed for A.Y. 2017-18: the additions made by the Assessing Officer for interest on delayed statutory remittances and for charges arising from delayed supply are deleted and both items are held deductible under s.37(1) of the Income Tax Act.

Condonation of delay under Section 249(3) - appeal period under Section 249(2) - late fee leviable under Section 234E - processing of TDS statements under Section 200A - preference to substantial justice over technical bar

Condonation of delay under Section 249(3) - appeal period under Section 249(2) - preference to substantial justice over technical bar - Condonation of delay in filing the appeal and restoration of the appeal to the file of the first appellate authority. - HELD THAT: - The assessee pleaded that the default summaries processed under Section 200A were served only on 27/06/2018 and that adverse business, financial and medical circumstances explained nonreceipt and consequent delay. The Tribunal found no deliberate negligence or mala fides and applied the principles in Collector, Land Acquisition v. Katiji, emphasising that substantial justice should prevail over technical disqualification and that every day's delay need not be the subject of pedantic scrutiny. In light of the factual matrix and the absence of culpable conduct, the Tribunal exercised discretion to condone the delay and restore the appeals to the first appellate authority for disposal on merits. [Paras 4, 5]

Delay condoned and appeals restored to the file of the learned CIT(A) for adjudication on merits.

Late fee leviable under Section 234E - processing of TDS statements under Section 200A - Whether the levy of late fee under Section 234E should be adjudicated on merits by the first appellate authority. - HELD THAT: - The substantive challenge to the levy of late fee under Section 234E arose from processing of TDS returns by TDS-CPC under Section 200A. The Tribunal did not decide the merits of the levy; having restored the appeals for want of condonation of delay, it directed that the learned CIT(A) examine the correctness of the charges and the assessee's contentions on merits. The Tribunal thus left the substantive issue for fresh consideration by the first appellate authority in accordance with law. [Paras 4, 7]

Substantive challenge to levy under Section 234E remitted to the learned CIT(A) for de novo consideration on merits.

Final Conclusion: The appeals for AY 2013-14 to AY 2016-17 are partly allowed: delay in filing the appeals is condoned and the appeals are restored to the learned CIT(A) for adjudication on merits, including the assessee's challenge to the levy of late fee under Section 234E.

Notional income - notional interest - taxability of notional income - income from other sources - deeming provisions

Notional interest - notional income - income from other sources - deeming provisions - Whether notional interest on a security deposit can be brought to tax in the absence of actual accrual or an applicable deeming provision. - HELD THAT: - The Assessing Officer treated the security deposit retained by the assessee as yielding a notional interest and brought an amount to tax under the head "income from other sources" on the premise that the assessee benefitted from holding the deposit. The Tribunal holds that taxation requires proof that income has actually been earned; hypothetical or notional incomes which are not covered by express deeming provisions in the statute cannot be taxed. The AO did not produce evidence showing that the assessee actually earned interest or that any statutory deeming provision applied to treat notional interest as income. Consequently, the addition based solely on an assumed or hypothetical interest cannot be sustained and is legally invalid. [Paras 10, 11]

Addition of notional interest on the security deposit deleted; appeal allowed.

Final Conclusion: The Tribunal set aside the addition of notional interest on the security deposit-holding that, absent actual accrual or a statutory deeming fiction, notional interest cannot be taxed-and allowed the assessee's appeal.

Disallowance under section 36(1)(iii) of the Act - diversion of interest-bearing funds into interest-free advances - computation of average cost of borrowed funds for interest disallowance - interest-free advances and nexus with interest-bearing borrowings - time limit for pronouncement of orders under the Appellate Tribunal Rules and exclusion of lockdown period

Disallowance under section 36(1)(iii) of the Act - computation of average cost of borrowed funds for interest disallowance - diversion of interest-bearing funds into interest-free advances - Rate of interest to be applied for computing disallowance under section 36(1)(iii) on funds diverted to interest-free loans and advances. - HELD THAT: - The Tribunal recorded that the assessee conceded diversion of interest-bearing funds into interest-free loans and advances, limiting dispute to the appropriate rate of interest to be applied. The Assessing Officer computed an average cost of borrowed funds at 11.45% based on the pattern of borrowings (predominantly at 10.50% and several loans at 12% and some at 15% and 10.5%). The assessee's counter claim of 8.73% was unsupported by the documented rates at which the assessee actually borrowed. Given the recorded borrowing rates and the AO's methodology, the Tribunal found the AO's average rate of 11.45% to be reasonable and logical on the facts and circumstances and accordingly affirmed the disallowance computed by applying that rate. [Paras 9, 10, 11]

Assessee's challenge to the rate rejected; average borrowing cost of 11.45% upheld and the resulting disallowance sustained.

Time limit for pronouncement of orders under the Appellate Tribunal Rules and exclusion of lockdown period - practical extension of the 90-day pronouncement period in view of COVID-19 disruption - Whether the Tribunal could pronounce the order beyond the 90-day period stipulated by the Rules in view of the COVID-19 lockdown. - HELD THAT: - The Bench observed rule 34(5)(c) requires endeavour to pronounce orders within 60 days, extendable in exceptional circumstances ordinarily up to 90 days. Given the unprecedented disruption caused by the COVID-19 lockdown, the Tribunal relied on reasoning in a recent coordinate order to exclude the lockdown period when computing the 90-day limit. Recognising the lockdown as an extraordinary disruption and having regard to the pragmatic approach adopted by higher fora and governmental notifications treating the situation as a disaster, the Tribunal held that the lockdown period should be excluded for the purpose of the time limit and therefore proceeded to pronounce the order beyond the strict 90-day window. [Paras 12]

Delay in pronouncement justified by exclusion of the lockdown period; order pronounced beyond the 90-day period.

Final Conclusion: The appeal is dismissed: the disallowance under section 36(1)(iii) computed by applying an average borrowing cost of 11.45% is upheld for A.Y. 2009-10; the Tribunal also permitted pronouncement of the order beyond the ordinary 90-day limit by excluding the COVID-19 lockdown period.

Jurisdiction to reopen assessment - validity of notice under section 148 - assessment framed without fresh notice - transfer of proceedings under section 127 - void ab initio

Jurisdiction to reopen assessment - validity of notice under section 148 - Validity of the notice issued by ITO, Dasuya under section 148 given the assessee's NRI status and earlier communications - HELD THAT: - The Tribunal found on the material placed on record that the assessee had repeatedly informed the tax authorities (ITO Hoshiarpur and ITO Dasuya) that he was a non-resident (NRI) and furnished passport, PR card and PAN copies. Despite those communications, ITO Dasuya proceeded to issue a notice under section 148 and initiate reassessment proceedings. The ITO Dasuya had, however, later transferred the file to ADIT (International Taxation) acknowledging that the case vested with the International Taxation jurisdiction. On these facts the Tribunal held that ITO Dasuya did not have jurisdiction to initiate reopening and that his notice under section 148 was therefore without legal validity. [Paras 6]

Notice issued by ITO Dasuya under section 148 was invalid for want of jurisdiction and is void ab initio.

Assessment framed without fresh notice - assessment framed without fresh notice - Sustainability of the reassessment order framed by DCIT (International Taxation) who did not himself issue a notice under section 148 - HELD THAT: - The Tribunal recorded that DCIT (International Taxation) proceeded with assessment without recording his own reasons to believe and without issuing a fresh notice under section 148. Because the initial notice issued by ITO Dasuya was invalid for want of jurisdiction, the DCIT could not validly continue the proceedings on the basis of borrowed satisfaction. Reopening by an officer competent to assess requires that officer himself to form and record the requisite belief and issue notice; absence of such steps rendered the reopening and consequent assessment unsustainable. [Paras 7]

Reassessment framed by DCIT (International Taxation) without issuance by him of a notice under section 148 is invalid and the assessment is not sustainable.

Transfer of proceedings under section 127 - void ab initio - Whether transfer of the proceedings from ITO Dasuya to DCIT (International Taxation) under section 127 validated the reopening initiated by an officer without jurisdiction - HELD THAT: - The Tribunal considered the Revenue's reliance on section 127(4) to contend that transfer validated continuation of proceedings. It held that where the original proceedings are void for lack of jurisdiction, their mere transfer does not validate them. Further, transfer under section 127 must be in accordance with that provision and cannot be effected suo motu by an officer who lacked jurisdiction; only the competent authority prescribed by section 127 can order a valid transfer. Consequently, reliance on transfer did not cure the jurisdictional defect. [Paras 12]

Transfer of proceedings did not validate the void reopening and could not cure the jurisdictional defect.

Final Conclusion: The reassessment proceedings and the consequential assessment framed for AY 2009-10 were quashed for lack of jurisdiction and failure to issue a valid notice under section 148 by the competent officer; appeal allowed.

Provisional release of seized goods and vehicle - owners to furnish security, cash and bank guarantee for provisional release - seizure under Section 110 of the Customs Act, 1962 based on reasonable belief - investigation cannot be interfered with or nipped in the bud - maintainability of writ petition under Article 226 of the Constitution of India - locus/authorization of the transporter to seek release - remand to adjudicating/customs authorities for consideration of issues raised

Provisional release of seized goods and vehicle - owners to furnish security, cash and bank guarantee for provisional release - Provisionally releasing the seized betel nuts and the truck on application by the owners subject to conditions and timeline. - HELD THAT: - The Court observed there was no dispute between the parties about release subject to compliance with departmental procedure. Liberty was granted to the owners to file appropriate application for provisional release before the respondent Customs authorities. The Customs authorities were directed to release the goods and vehicle in accordance with their scheme/circular upon the owners furnishing adequate security, cash and bank guarantee. The Court directed that provisional release shall be effected within 24 hours of furnishing the requisite security/cash and bank guarantee.

Owners may apply for provisional release and, upon furnishing security/cash and bank guarantee, the Customs authorities shall provisionally release the goods and truck within 24 hours.

Seizure under Section 110 of the Customs Act, 1962 based on reasonable belief - investigation cannot be interfered with or nipped in the bud - maintainability of writ petition under Article 226 of the Constitution of India - remand to adjudicating/customs authorities for consideration of issues raised - locus/authorization of the transporter to seek release - Whether the Court will adjudicate the merits of the challenge to initiation of seizure/confiscation proceedings or leave such issues to the Customs authorities. - HELD THAT: - The Court declined to go into the merits of the challenge to the initiation of seizure/confiscation proceedings, noting that the investigation was in a nascent stage and interference could hamper proper investigation and adjudication. The respondents had raised maintainability and bona fides issues, including lack of owner authorization and non-cooperation during investigation. In view of these factors and the departmental materials indicating a prima facie suspicious transaction, the Court refrained from adjudicating the merits and instead granted liberty to the petitioners to raise their contentions before the respondent Customs authorities. The Customs authorities were directed to consider and decide the issues in accordance with law and expeditiously, and the Court expected the investigation and any resulting adjudication to be completed within six months.

Merits of seizure/confiscation not adjudicated by the Court; petitioners directed to raise issues before Customs and the authorities directed to consider them and complete investigation/adjudication within six months.

Final Conclusion: Writ petition disposed by permitting owners to apply for provisional release of the seized goods and vehicle on furnishing prescribed security/cash and bank guarantee, directing Customs to release within 24 hours of compliance; the Court declined to decide the merits of the seizure/confiscation and directed the petitioners to agitate those issues before the Customs authorities, which are to consider and conclude investigation and adjudication within six months.

Provisional release of imported goods - restricted import notification - minimum import price - protection of domestic industry - transferred writ petitions and jurisdictional interdiction by the Supreme Court - maintainability of relief before High Court where Supreme Court has interdicted High Courts

Provisional release of imported goods - restricted import notification - minimum import price - protection of domestic industry - Provisional clearance of the imported Canadian Green Peas pending adjudication of the legality of the restriction notification was refused. - HELD THAT: - The petitioner imported a commodity subject to a Central Government restriction issued by DGFT which prescribes permitted ports and a minimum import price aimed at safeguarding domestic trade. It was not disputed that the petitioner's import price was substantially below the stipulated minimum CIF price. Allowing provisional clearance would permit the goods to enter the domestic market and thereby frustrate the objective of the notification. In these circumstances, exceptional relief in the form of provisional release could not be granted.

Prayer for provisional release refused and relief denied.

Transferred writ petitions and jurisdictional interdiction by the Supreme Court - maintainability of relief before High Court where Supreme Court has interdicted High Courts - The High Court declined to entertain the writ petition for interim relief because the challenge to the notification had been transferred to the Supreme Court, which interdicted High Courts from deciding the issue and directed importers seeking interim relief to approach the Supreme Court. - HELD THAT: - The writ petitions challenging the notification were transferred to the Supreme Court, which expressly interdicted further proceedings in the High Courts on the matter and indicated that interim relief requests should be made to the Supreme Court. Given that the controversy is pending before the Supreme Court and the petitioner imported in contravention of the notification, the petitioner could not claim exceptional treatment by seeking interim relief in this Court. A previously cited Supreme Court decision relied upon by the petitioner was held inapposite to the peculiar facts at hand and did not impel a different result.

Writ petition not maintainable for the interim relief sought in view of the Supreme Court's interdiction; petition dismissed.

Final Conclusion: The writ petition seeking provisional clearance of imported Canadian Green Peas is dismissed: provisional release refused because the import contravened a DGFT restriction (including the minimum import price) and the matter is pending before the Supreme Court which has interdicted High Courts from deciding the issue and directed interim applications to that Court.

Review under Order 47 CPC - Error apparent on the face of the record - Scope of review jurisdiction - Re-agitation of decided issues - Two views not ground for review - Non-joinder of necessary parties - Interpretation of Section 529 and Section 529A of the Companies Act, 1956

Review under Order 47 CPC - Scope of review jurisdiction - Error apparent on the face of the record - Whether the review petition discloses a ground for review under Order 47 CPC by way of new evidence, discovery of a mistake, or an error apparent on the face of the record. - HELD THAT: - The Court held that the grounds advanced in the review petition do not disclose any new or important evidence, or facts that were not within the petitioners' knowledge or could not have been produced earlier. The petitioners' contentions amounted to re-argument of points already considered by the Court and do not demonstrate an error that is self-evident. An alleged incorrect interpretation, if it exists, is not manifest on the face of the record but would require a process of reasoning to detect; such an error is not amenable to review under Order 47. The Court emphasised that a decision reached after consideration of relevant law and Apex Court pronouncements cannot be reopened merely because an alternative view is possible. [Paras 3, 4, 7]

The review petition does not disclose any ground entitling the petitioners to relief under Order 47 CPC and is accordingly not maintainable on the pleaded grounds.

Re-agitation of decided issues - Two views not ground for review - Whether the petitioners can re-agitate points already decided or rely on the possibility of an alternative view as a basis for review. - HELD THAT: - The Court reiterated that points which have been considered and adjudicated upon cannot be reopened in a review petition merely because the petitioners prefer a different conclusion. Even where two views are possible on a legal question, the existence of an alternative view does not constitute a ground for review if the Court has already considered the relevant authorities and material. A decision rendered after such consideration cannot be characterised as containing an apparent error merely because a different view might be tenable. [Paras 4, 5, 6]

Re-argument of matters already decided and the mere possibility of another view do not furnish grounds for review; such contentions are rejected.

Interpretation of Section 529 and Section 529A of the Companies Act, 1956 - Error apparent on the face of the record - Whether the Court misinterpreted the provisions of Section 529 read with Section 529A, such that a review is warranted. - HELD THAT: - The petitioners alleged that the Court failed to construe the legislative intent of Section 529 and Section 529A correctly, particularly in relation to the preferential rights of secured creditors. The Court declined to accept that its earlier interpretation was erroneous. It found that the impugned judgment contained detailed discussion of the statutory provisions and Supreme Court precedents, and any perceived error would not be an error apparent on the face of the record but would require reasoning to establish. Hence, the contention does not meet the stringent standard for review. [Paras 1, 7]

The challenge to the Court's interpretation of Section 529 and Section 529A is not a ground for review; no apparent error is shown.

Non-joinder of necessary parties - Whether the review petition is liable to be dismissed for non-joinder of necessary parties (workmen) affected by the order. - HELD THAT: - The Court observed that the petition raises doubt about the calculations and findings regarding the share of workmen under Section 529A, yet the workmen were neither impleaded as parties nor served with a copy of the review petition. For want of joining a necessary party whose rights are directly affected by the adjudication sought in review, the petition is procedurally defective. Non-joinder of such interested parties is an independent ground for dismissal. [Paras 9]

The review petition is liable to be dismissed for non-joinder of necessary parties (the workmen).

Final Conclusion: The review petition is dismissed as devoid of merit: the grounds do not satisfy the narrow scope of review under Order 47 CPC, re argument and the possibility of an alternative view are insufficient, no error apparent on the face of the record is shown in the Court's interpretation of Section 529/529A, and the petition is also defective for non joinder of necessary parties; all pending applications are dismissed.

Mere change of name of a company - stamp duty and registration fee liability on change of name - distinction between change of name simplicitor and transfer of assets - conversion of a public company into a private company (addition of "private") - entry of changed name in revenue records - judicial restraint in issuing mandamus to statutory authority under Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act, 1972

Mere change of name of a company - stamp duty and registration fee liability on change of name - distinction between change of name simplicitor and transfer of assets - entry of changed name in revenue records - Whether the mere change of the petitioner-company's name by addition of the word "private" (with Registrar's approval) attracts stamp duty and registration fee on the value of the immovable property and assets - HELD THAT: - The Court held that where a company simply changes its name with the approval of the Registrar and there is no transfer or conveyance of the company's assets or liabilities to a different legal entity, no instrument chargeable under the Indian Stamp Act is created and no document requiring compulsory registration under the Registration Act comes into existence. The reasoning draws upon the circular dated 16.2.2012 (Annexure P-2) which distinguishes change of name simplicitor from transactions involving transfer of assets (such as merger, demerger, amalgamation), and on the Registrar's certificate confirming the name-change. The State's contention that conversion from a public to a private company alone effects a transfer of assets was not accepted: the Court found no transfer occurring merely by addition of the word "private", and observed that Section 3 of the Stamp Act and the Registration Act do not charge duty or registration fee in such circumstances. Consequently the impugned order insofar as it required payment of stamp duty and registration fee for recording the changed name was held to be without legal or factual foundation and was quashed. [Paras 8, 15, 16, 18, 21]

Impugned order directing payment of stamp duty and registration fee for recording the company's changed name quashed; respondents directed to enter the changed name in the revenue record without payment of stamp duty or registration charges within six weeks.

Judicial restraint in issuing mandamus to statutory authority - Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act, 1972 - Whether this Court can issue a writ of mandamus directing the respondents to grant approval under Section 118 for transfer of the demised land to the proposed purchaser - HELD THAT: - The Court declined to grant the third relief seeking directions to the authorities to permit the transfer under Section 118. It held that granting such a writ would amount to impermissible interference with the exercise of statutory jurisdiction vested in the appropriate authority under the Tenancy and Land Reforms Act. The proper course is for the petitioner to approach the competent authority for its independent consideration; the Court will not substitute its discretion for that of the statutory authority by issuing a mandamus to grant approval. [Paras 19]

Petitioner's prayer for mandamus to compel grant of permission under Section 118 rejected; matter left to the statutory authority to decide in accordance with law.

Final Conclusion: Writ petition allowed partly: direction issued to respondents to record the petitioner's changed name in the revenue records without payment of stamp duty or registration fee; the challenge to the impugned order insofar as it sought to levy such charges is upheld; the claim for a writ directing grant of permission under Section 118 is refused and left to the competent authority.

Admissibility of fresh grounds on appeal not raised before the tribunal - doctrine of issue exhaustion before the tribunal - maintainability of an appeal where the tribunal has not adjudicated new contentions - remand for fresh consideration to the tribunal - leave to file review or miscellaneous petition before the tribunal

Admissibility of fresh grounds on appeal not raised before the tribunal - doctrine of issue exhaustion before the tribunal - maintainability of an appeal where the tribunal has not adjudicated new contentions - Whether the High Court may entertain substantive contentions raised by the Revenue on appeal that were not urged before, or dealt with by, the Tribunal. - HELD THAT: - The Court examined the practice of permitting fresh substantive contentions to be advanced for the first time in the High Court when those contentions were not raised before the Tribunal and were not referred to in the Tribunal's order. The judges observed that the Revenue's contentions on the merits did not appear to have been raised before the Tribunal and that the impugned order contains no mention of those contentions. In view of this omission, the Court declined to entertain the Revenue's fresh submissions on merit, holding that such submissions must first be raised and addressed by the Tribunal in a reasoned manner before the High Court can consider them. The Court therefore treated the matter as not presenting a question of law arising from the Tribunal's order until the Tribunal has had an opportunity to consider the new contentions. [Paras 1, 4]

Substantive contentions not raised before and not considered by the Tribunal cannot be entertained by the High Court; no question of law arises from the impugned order on those unvented grounds.

Remand for fresh consideration to the tribunal - leave to file review or miscellaneous petition before the tribunal - What procedural avenue is available to the Revenue to have its unraised contentions considered by the Tribunal. - HELD THAT: - The Court granted the Revenue liberty to approach the Tribunal by filing a Review Petition or Miscellaneous Petition to place all its contentions before the Tribunal. The judges made clear that, unless the Tribunal deals with those contentions and gives reasons for its decision, the High Court cannot treat any question of law as arising from the existing impugned order. The order thus leaves the matter to the Tribunal for fresh consideration rather than deciding the merits itself. [Paras 6]

Appellant allowed liberty to file a Review Petition or Miscellaneous Petition before the Tribunal for consideration of the contentions; matter to be decided by the Tribunal before any question of law is entertained by this Court.

Final Conclusion: The appeal is dismissed without consideration of the merits of the fresh contentions; the Revenue is granted liberty to seek fresh adjudication before the Tribunal by filing an appropriate petition, and no question of law is held to arise from the impugned Tribunal order at this stage; no costs.

Related persons - mutuality of interest - transaction value - exemption under Notification No. 6/2006-CE for wind operated electricity generator and its parts - interpretation of exemption entries confined to text of the notification

Related persons - mutuality of interest - transaction value - M/s SKF India Ltd. and M/s SKF Technologies India Pvt. Ltd. are not related persons under clause (iv) of section 4(3)(b) of the Central Excise Act, 1944 and the transaction value between them is therefore to be accepted. - HELD THAT: - Revenue relied on common holding by AB SKF, Sweden, related party disclosures in SKFTIL's balance sheet, inter company loans, shared personnel and cost sharing arrangements to establish that SKFTIL and SKFIL were 'so associated that they have interest, directly or indirectly, in the business of each other'. The Tribunal examined the material and found that the loan carried commercial interest at market linked rates and the cost sharing arrangements involved recharges of costs rather than provision of subsidised or free services that would evidence an interest in each other's business. The mere fact that SKFTIL's entire production was sold through SKFIL, or that related party entries appear in financial statements, does not by itself satisfy the statutory test. Revenue did not produce positive evidence of mutuality of interest or of a flow back of benefit establishing an interest in each other's business. In the absence of such evidence, the statutory criteria for treating the parties as related were not met and the transaction value declared by SKFTIL must be accepted. [Paras 10]

Revenue's finding of relatedness is reversed; transaction value between the companies is accepted.

Exemption under Notification No. 6/2006-CE for wind operated electricity generator and its parts - interpretation of exemption entries confined to text of the notification - benefit of exemption where part is used in wind operated electricity generator - Bearings manufactured by SKFTIL and used in various parts of wind operated electricity generators are eligible for exemption under Notification No. 6/2006-CE. - HELD THAT: - Revenue urged a narrow construction, contending that only parts of the generator (and not other windmill components) are covered. The Tribunal considered the notification text, the Board's circular (identifying tower, nacelle, rotor, main shaft and special bearings as exempt), and judicial authority including the Larger Bench on components being parts of the system. The Tribunal concluded that 'wind operated electricity generator' in the notification encompasses the entire assembly (tower, nacelle, blades, generator and associated parts) and that bearings used in the nacelle, rotor, gearbox, main shaft and related locations fall within the exemption. Accordingly, Revenue's restricted interpretation was rejected and the exemption was held to apply to the bearings in question. [Paras 11]

Demand on account of denial of exemption under Notification No. 6/2006-CE is set aside and the exemption is allowed for the bearings supplied for use in wind operated electricity generators.

Final Conclusion: The appeals are allowed: the Tribunal held that (i) SKF India Ltd. and SKF Technologies India Pvt. Ltd. are not related persons for the purposes of section 4(3)(b) and the transaction value declared by SKFTIL is to be accepted, and (ii) the bearings used in wind operated electricity generators are eligible for exemption under Notification No. 6/2006-CE, with the demands set aside accordingly.

Anticipatory bail under Section 438 CrPC - Custodial interrogation for investigation - Dishonour of cheques under Negotiable Instruments law - Non-Disclosure Agreement does not constitute a binding contract - Requirement of account verification and audit in fraud allegations

Anticipatory bail under Section 438 CrPC - Custodial interrogation for investigation - Dishonour of cheques under Negotiable Instruments law - Requirement of account verification and audit in fraud allegations - Whether the applicant is entitled to anticipatory bail in respect of the offences alleged in Crime No.239/2020. - HELD THAT: - The application for anticipatory bail was considered in the backdrop of allegations that the applicant and another person induced the complainant to invest a large sum by representing tie-ups with established companies, paid the complainant with two cheques which were dishonoured, and that records do not transparently show utilisation of the invested money. The Court examined the material placed on record including a one page profit and loss statement and submissions about audit reports, and observed absence of satisfactory explanation regarding how the complainant's funds were utilised. The dishonour of the cheques and gaps in documentary/accounting evidence weighed in favour of further investigation. In view of these factors the Court found custodial interrogation necessary for appropriate investigation and held there were no valid grounds to grant anticipatory bail to the applicant.

Application under Section 438 CrPC is rejected and custodial interrogation of the applicant is considered necessary for further investigation.

Non-Disclosure Agreement does not constitute a binding contract - Whether the documents shown to the complainant amount to a binding contract establishing the alleged tie-up with third parties. - HELD THAT: - The Court perused the documents placed on record and accepted the submission of the State and the complainant that the documents are 'Non Disclosure Agreements'. The Court observed that such non disclosure arrangements reflect communication of terms and confidentiality aspects but do not by themselves amount to a substantive contractual agreement conferring the rights and guarantees that induced the complainant to invest. Consequently, the documents do not carry the sanctity of a binding contract for the purposes asserted by the applicant.

The documents relied upon are Non Disclosure Agreements and do not constitute a valid contract between the parties for the purpose claimed.

Final Conclusion: Anticipatory bail is refused; the court finds custodial interrogation necessary to enable proper investigation of the complaints including the dishonour of cheques and unclear accounting; the documents produced are non disclosure agreements which do not amount to the contract relied upon by the applicant.