TaxTMI Updates e-Newsletter
Sep 15,2022

Limitation - relaxation of limitation - appeal against cancellation of registration - deemed date for service of orders due to portal defects - remand for fresh adjudication

Limitation - relaxation of limitation - appeal against cancellation of registration - deemed date for service of orders due to portal defects - The appellate authority erred in rejecting the first appeal as time barred and the benefit of governmental relaxation of limitation applies to appeals against orders cancelling registration. - HELD THAT: - The Court accepted the reasoning in re: M/s Singh Group (reproduced in the order) that the Government had granted a generic relaxation of limitation because of defects and difficulties in the common GST portal and later for COVID-related reasons; that relaxation placed certain orders to a deemed date for limitation purposes and suspended limitation for specified periods. Given that the relief was founded on external and generic difficulties in service of orders, it was held to be illogical and absurd to restrict the benefit only to revocation proceedings and not to appeals. Applying that principle to the present facts, where the appellate authority treated the appeal as time barred despite the applicable relaxations, the appellate authority's conclusion was erroneous. Consequently the appellate order rejecting the appeal as barred by limitation was set aside.

Appellate authority's order rejecting the appeal as time barred set aside; the appeal is to be treated as within limitation.

Remand for fresh adjudication - appeal against cancellation of registration - The matter is remitted to the Appellate Authority for fresh consideration treating the appeal as within limitation. - HELD THAT: - Having set aside the appellate order for being time barred, the Court remitted the matter to the Appellate Authority to decide the appeal afresh and strictly in accordance with law, applying the principle that the appeal was filed within the extended/relaxed period of limitation. No further adjudication on merits by this Court was undertaken; the Appellate Authority is directed to pass fresh orders in conformity with the legal position set out.

Matter remitted to the Appellate Authority to pass fresh orders treating the appeal as within limitation.

Final Conclusion: Writ petition allowed; order dated 27.05.2022 of the Appellate Authority set aside and the matter remitted to the Appellate Authority to decide the appeal afresh treating it as within the extended/relaxed period of limitation.

Refund of excess balance in Electronic Cash Ledger - statutory basis for administrative endorsement - application of Section 54(1) vis-a -vis Sections 54(3) and 54(4) - remand for fresh consideration and opportunity of hearing - treatment of refund applications as filed in year 2020 - entitlement to interest on delayed refund

Statutory basis for administrative endorsement - refund of excess balance in Electronic Cash Ledger - The impugned endorsement dated 28.05.2022 rejecting the petitioner's request for refund was without statutory basis and liable to be set aside. - HELD THAT: - The endorsement merely overturned the earlier order without specifying any statutory provision authorising such action and recorded that the refund was reflected in a different portal statement due to technical glitches. The Court found that the impugned endorsement does not refer to any legal provision under which it was issued and that it effectively nullified the earlier sanction-order without lawful basis. Given that the endorsement was made in response to the petitioner's representation seeking implementation of the earlier order, and not in exercise of a clearly identified statutory power, the endorsement was held to be bad in law and was set aside. [Paras 6, 8, 9]

The endorsement dated 28.05.2022 is set aside as having no statutory basis.

Remand for fresh consideration and opportunity of hearing - treatment of refund applications as filed in year 2020 - entitlement to interest on delayed refund - The matter was remanded to the Assistant Commissioner to deal with the petitioner's refund applications afresh, treating them as applications made in January 2020, with directions to give the petitioner an opportunity of hearing and, if eligible, to grant refund with interest. - HELD THAT: - Because the record did not clearly establish whether the petitioner's requests had been accepted or rejected and the earlier Order contained internal inconsistencies (simultaneously recording rejection and sanction), the Court declined to decide the substantive claim on the merits. Instead, the Court directed the Assistant Commissioner to accept and consider the three refund applications filed in January 2020, afford the petitioner a hearing (preferably within six weeks from receipt of the order), and, if found eligible, to disburse the refund amount into the petitioner's account together with interest as prescribed by law. This course was directed so as to preserve the petitioner's claim to interest and to enable fresh adjudication in accordance with law. [Paras 12, 13]

The matters are remanded for fresh consideration; the three refund applications filed in January 2020 are to be treated as applications of 2020 and, if eligible, the refund shall be paid with interest after affording hearing within the prescribed timeframe.

Application of Section 54(1) vis-a -vis Sections 54(3) and 54(4) - The question whether the petitioner's claim falls under Section 54(1) (refund of excess input/credit) or was subject to rejection under Sections 54(3) and 54(4) was not decided on merits and was remanded for fresh consideration. - HELD THAT: - Counsel disputed the applicability of the different limbs of Section 54: the petitioner contended entitlement under Section 54(1) for excess credit (including TDS credit), while the department relied on Form GST RFD-08 which recorded rejection under Sections 54(3) and 54(4) for non-submission of documents. The Court did not resolve this statutory issue; instead it remanded the matter so that the Assistant Commissioner may determine the correct statutory classification and entitlement after giving the petitioner an opportunity to be heard. [Paras 10]

The statutory question as to which provision of Section 54 applies is remanded for fresh consideration by the authority after hearing the petitioner.

Final Conclusion: The impugned endorsement dated 28.05.2022 is set aside; the three refund applications filed in January 2020 are to be treated as applications of 2020 and the Assistant Commissioner is directed to reconsider them afresh, after affording the petitioner an opportunity of hearing (preferably within six weeks), and to grant the refund with interest if the petitioner is found eligible.

Bail - economic offences - evasion of tax - wrongful claim of input tax credit - maximum sentence under Section 132 of the Central and State Goods and Service Tax Act - custodial detention period as ground for bail - absence of criminal antecedents - conditions of bail and liberty safeguards

Bail - wrongful claim of input tax credit - maximum sentence under Section 132 of the Central and State Goods and Service Tax Act - custodial detention period as ground for bail - absence of criminal antecedents - conditions of bail and liberty safeguards - Grant of bail to the applicant accused of evasion of tax by alleged wrongful claim of input tax credit and related offences. - HELD THAT: - The Court found that the core allegation concerns wrongful claiming of input tax credit, an offence attractable to the punishment provided under Section 132 of the Central and State Goods and Service Tax Act, which carries a maximum sentence of one year. The additional criminal provisions were treated as founded on the primary allegation under the GST enactment. The applicant has been in custody since 21.05.2021 and a chargesheet had already been filed, with no requirement for further custodial interrogation. The applicant has no criminal history and has given an undertaking to abide by conditions if released. Having regard to the relatively short maximum sentence under the GST provision, the prolonged pre-trial incarceration exceeding the maximum sentence, the absence of criminal antecedents, and the prospect of protracted trial, the Court exercised its discretion to grant bail while imposing conditions to prevent tampering with evidence or influencing witnesses. No observation was made on the merits of the prosecution case. [Paras 12, 13, 14, 15]

Bail granted to the applicant on furnishing personal bond and two sureties, subject to specified conditions and liberty to the prosecution to move for cancellation on breach.

Final Conclusion: Bail application allowed; applicant released on bail subject to personal bond, sureties and conditions to prevent tampering with evidence or influencing witnesses, without adjudicating the merits of the allegations.

Opportunity of personal hearing - natural justice - remand for fresh adjudication - treatment of intimation under Section 74(5) as show cause notice - adjournment on sufficient cause - requirement to provide relied upon documents before adjudication

Opportunity of personal hearing - natural justice - requirement to provide relied upon documents before adjudication - Adjudication order quashed for failure to grant personal hearing and non-provision of relied upon documents, and matter remitted for fresh adjudication after compliance with natural justice. - HELD THAT: - The Court found that no notice for personal hearing as contemplated by the general provisions relating to determination of tax was given to the petitioner and that relied upon documents were not supplied prior to passing the adjudication order. The petitioner had appeared on summons, produced some documents and sought time to file remaining documents, but no personal hearing was fixed and no statement was recorded. The Court relied upon the settled principle that an opportunity of hearing must be granted where an adverse decision is contemplated and that adjournment may be granted on sufficient cause, and concluded that non-compliance with these requirements and with principles of natural justice vitiated the adjudication. For these reasons the adjudication order was set aside and the matter remitted to the authority to issue fresh notice for personal hearing, provide the relied upon documents, and hear the petitioner before passing a fresh order. [Paras 8, 10, 11]

Adjudication order quashed and matter remitted for fresh adjudication after issuance of personal hearing notice and provision of relied upon documents.

Remand for fresh adjudication - treatment of intimation under Section 74(5) as show cause notice - Procedural irregularity in issuance and treatment of intimation/summary as show cause notice noted; direction issued for fresh proceedings. - HELD THAT: - The Court observed that intimation under the statutory scheme and the summary of statement were issued earlier, and subsequently a summary show cause notice was issued and adjudication followed without fixing a hearing date. The respondents thereby conflated the statutory intimation procedure with the show cause process and proceeded to adjudicate without following the mandated opportunity of hearing. In view of this procedural lacuna, the Court remitted the matter for fresh consideration in accordance with statutory procedure and fair hearing requirements. [Paras 4, 10, 11]

Proceedings set aside to the extent of adjudication; respondents to conduct fresh adjudication in compliance with statutory provisions and fair hearing.

Final Conclusion: Writ petition allowed; the impugned adjudication order is quashed and set aside and the matter is remitted to the concerned authority to issue fresh notice for personal hearing, supply relied upon documents and decide the matter afresh in accordance with law and principles of natural justice for the Financial Years 2017-18 and 2018-19.

Detention, seizure and release of goods and conveyances in transit - Entitlement of owner versus transporter under Section 129 - Release of conveyance distinct from release of goods - Appellate authority's power to grant interim relief incidental to appellate jurisdiction - Pre-deposit under Section 107(6) and its effect on release

Detention, seizure and release of goods and conveyances in transit - Entitlement of owner versus transporter under Section 129 - Release of conveyance distinct from release of goods - Whether a transporter is entitled to seek release of detained goods and/or the conveyance under Section 129 of the Tamil Nadu GST Act, 2017. - HELD THAT: - Section 129(1) contemplates liability of any person transporting or storing goods in transit to detention or seizure and sets out modes of release. Section 129(6) uses the phrase 'person transporting any goods or the owner of such goods' and contains a proviso specifically referring to the 'transporter' whereby the conveyance may be released on payment of penalty or a specified capped amount. Reading the sub sections together, the court concluded that the statutory scheme deliberately differentiates between the owner/agent/representative entitled to seek release of goods and conveyance and the transporter who is given a limited, qualified right to seek release only of the conveyance upon satisfaction of the statutory conditions. The expression 'person transporting the goods' in sub sections (1) and (6) is construed to refer to the owner or his agent who has contracted to supply the goods and not the independent carrier; accordingly the transporter cannot claim an unfettered right to release the goods, and the revenue may proceed in respect of goods where the owner/agent does not come forward after notices are served. [Paras 13, 14, 15, 16, 17]

Transporter may seek release only of the conveyance upon satisfaction of statutory conditions; transporter is not entitled to release of the goods in the absence of owner/agent coming forward.

Appellate authority's power to grant interim relief incidental to appellate jurisdiction - Whether the appellate authority under Section 107 has power to grant interim relief (release of goods/conveyance) pending appeal. - HELD THAT: - Although Section 107 does not expressly confer power to grant interim protection, the court applied the reasoning in the cited Supreme Court decision concerning the ITAT, observing that an appellate body exercising judicial powers must necessarily possess incidental powers to grant stay or interim relief. On that basis the court permitted petitioners to file appeals accompanied by interim applications seeking release; the appellate authority is directed to hear such applications and pass orders on them within one week of receipt. [Paras 18, 19, 20, 21]

Appellate authority has power to grant interim relief incidental to its appellate jurisdiction; parties may file appeals with interim applications and the authority shall decide them within one week.

Pre-deposit under Section 107(6) and its effect on release - Whether payment of the statutory pre-deposit (25% under Section 107(6)) automatically entitles the appellant to release of seized goods or conveyance. - HELD THAT: - The court held that payment of the prescribed pre-deposit does not automatically mandate release of the seized goods or conveyance. The question of release remains a matter for the appellate authority to decide on the merits of the interim application, having regard to factors such as prima facie case, financial hardship, and balance of convenience; the pre deposit only stays recovery proceedings for the balance, it does not convert into an automatic entitlement to release. [Paras 22, 23]

Payment of the 25% pre-deposit does not entitle automatic release; release is to be determined by the appellate authority on interim application.

Detention, seizure and release of goods and conveyances in transit - Whether a petitioner may furnish a bank guarantee under Section 129(1)(c) to seek release. - HELD THAT: - The court noted that a petitioner willing to furnish a bank guarantee in the form and manner prescribed under Section 129(1)(c) is at liberty to do so; nothing in the order restricts a party from availing the statutory mode of release by furnishing prescribed security. [Paras 24]

Petitioner may furnish a bank guarantee under Section 129(1)(c) to seek release, if so inclined.

Final Conclusion: Writ petitions disposed by directing that petitioners may file statutory appeals with interim applications for release; appellate authority has incidental power to grant interim relief and shall decide such applications within one week; transporter is entitled only to release of the conveyance (not the goods) under Section 129; payment of the pre-deposit does not automatically entitle release; parties remain free to furnish bank guarantees under the statute.

Limitation for refund under Section 54 of the CGST Act - relevant date for zero-rated supplies to SEZ under the IGST Act - effect of executive circulars on time barred quasi judicial proceedings - exclusion of period from 1 March 2020 to 28 February 2022 for computation of limitation - remand for fresh consideration in accordance with law

Limitation for refund under Section 54 of the CGST Act - effect of executive circulars on time barred quasi judicial proceedings - exclusion of period from 1 March 2020 to 28 February 2022 for computation of limitation - relevant date for zero-rated supplies to SEZ under the IGST Act - Validity of the order rejecting the petitioner's refund application as barred by limitation and whether the application was time barred - HELD THAT: - The petitioner filed a refund application on 22.09.2021 for the tax period May, 2018 to May, 2019 which the first respondent rejected as barred by the two year limitation. The court examined the interplay between the Circular dated 20.07.2021 relied upon by the respondent and the subsequent Notification dated 05.07.2022 which postulates exclusion of the period from 1 March 2020 to 28 February 2022 for computing limitation under Sections 54/55. The court noted that the concept of 'relevant date' in the Explanation to Section 54 is expressly prescribed for exports, whereas supplies to SEZs are zero rated under the IGST regime and the relevant date for such supplies was not similarly fixed in the Explanation. In view of the Notification excluding the pandemic period from limitation computation, the court held that it could not be said the refund application was beyond limitation on the basis advanced by the respondent. Accordingly, the impugned rejection could not be sustained. [Paras 6, 7]

Impugned order rejecting the refund application as time barred set aside and the matter remanded to the first respondent for fresh consideration in accordance with law.

Final Conclusion: Writ petition disposed of at admission; order rejecting the refund application set aside and matter remanded to the first respondent for fresh consideration in accordance with law; no order as to costs.

Governmental authority - local authority - works contract - applicability of a notification - control or management of a municipal or local fund - amendment restricting concessional rate to local authority

Governmental authority - local authority - control or management of a municipal or local fund - Whether Uttar Pradesh Jal Nigam (UPJN) is a "governmental authority" or a "local authority" for the purposes of the GST law. - HELD THAT: - The Authority examined the statutory constitution, functions and powers of UPJN under the U.P. Water Supply and Sewerage Act, 1975 and compared them with the attributes of "local authority" as expounded in Union of India v. R.C. Jain and related decisions. UPJN was held not to be a "local authority" because it lacks key characteristics required cumulatively - in particular, it is not an elected body and the statute does not vest in it control and management of a municipal/local fund entrusted by government. Conversely, UPJN satisfies the requirements of a "governmental authority" under Notification No.31/2017 as it is established by a State Legislature and is constituted to carry out functions (water supply and sewerage) entrusted to municipalities under Article 243W of the Constitution. Applying the statutory definitions and judicial tests, the Authority concluded that UPJN is a governmental authority but not a local authority. [Paras 23, 26]

UPJN is not a "local authority" but is a "governmental authority" under the GST law.

Works contract - applicability of a notification - amendment restricting concessional rate to local authority - The applicable GST rate on works contract services supplied by the applicant to UPJN on or after 1st Jan 2022. - HELD THAT: - The Authority analysed Entry 3(iii) and Entry 3(xii) of Notification No.11/2017 (as amended by Notification No.15/2021). The November 18, 2021 amendment limited the concessional rate to supplies of specified works contracts made to Central Government, State Government, Union territory or a local authority, thereby excluding "Governmental Authority" from the lower rate. Since UPJN was found to be a governmental authority (and not a local authority), the concessional entry does not apply. Consequently, works contract services supplied to UPJN fall outside the reduced-rate Entry and are taxable under the residual construction/services entry. [Paras 28, 29]

Works contract services supplied to UPJN on or after 1st Jan 2022 are taxable at the standard rate applicable under the residual construction entry (18% total: CGST 9% and SGST 9%).

Final Conclusion: The Authority ruled that Uttar Pradesh Jal Nigam is a "governmental authority" but not a "local authority"; therefore works contract services supplied to UPJN on or after 1st Jan 2022 are not eligible for the reduced concessional rate and are taxable at 18% (CGST 9% + SGST 9%).

Comparability of companies for transfer pricing - functional analysis (FAR) in transfer pricing - investment advisory versus investment banking distinction - determination of Arm's Length Price - precedential weight of prior transfer pricing decisions

Investment advisory versus investment banking distinction - comparability of companies for transfer pricing - Integrated Capital Services Ltd. and Motilal Oswal Investment Advisors Pvt. Ltd. are not comparable to the assessee for determining arm's length price. - HELD THAT: - The Tribunal excluded Integrated Capital Services Ltd. and Motilal Oswal Investment Advisors Pvt. Ltd. on the basis that both were engaged in investment banking/merchant banking activities, whereas the assessee provided investment advisory services. The High Court noted that this distinction is not res integra and that binding authorities have held that an investment advisor or sub-advisor cannot be compared with a merchant banker or investment banker. Applying that settled legal position, the Court held there was no basis to treat those two entities as comparables for transfer pricing purposes. [Paras 7, 8, 13, 14, 15]

The exclusion of Integrated Capital Services Ltd. and Motilal Oswal Investment Advisors Pvt. Ltd. as comparables is upheld.

Comparability of companies for transfer pricing - determination of Arm's Length Price - precedential weight of prior transfer pricing decisions - ICRA Management Consulting Services Ltd. and IDC India Limited may be treated as comparables to the assessee for computing the arm's length price. - HELD THAT: - The Tribunal accepted ICRA Management Consulting Services Ltd. as comparable on the basis that it provided consultancy services (strategy, risk management, operations, regulatory economics) with revenue from consultation fees, aligning functionally with the assessee's advisory services. IDC India Limited was accepted as a comparable having been so treated in earlier tribunal decisions and being common between the parties in prior proceedings. The High Court found no reason to interfere with the Tribunal's selection of these companies as comparables, noting reliance on earlier relevant decisions and the Tribunal's factual assessment of functional similarity. [Paras 9, 10, 16, 18]

The inclusion of ICRA Management Consulting Services Ltd. and IDC India Limited as comparables for determining the arm's length price is sustained.

Final Conclusion: The appeal is dismissed. The Tribunal's order upholding the transfer pricing adjustments is affirmed and no interference is warranted; no order as to costs.

Fees for Included Services - Fees for Technical Services - Most Favoured Nation clause - Article 12(4)(b) of the India Portugal DTAA - Remand for factual verification

Fees for Included Services - Most Favoured Nation clause - Fees for Technical Services - Taxability of Management Support fees of Rs.17,43,73,176/- received by the non-resident assessee - HELD THAT: - The Tribunal, following its precedents for earlier years and the Tribunal's order for the immediately preceding assessment year, accepted the assessee's contention that the receipt characterised as Management Support fees was not chargeable to tax. The assessee invoked the Most Favoured Nation clause in the Protocol to the India Sweden DTAA and relied on the India Portugal DTAA; the Revenue did not contest the applicability of the MFN principle before the Tribunal. In light of the earlier consistent holdings in favour of the assessee and the Revenue's concession on the point, the Tribunal overturned the Assessing Officer's addition treating the receipt as 'fees for technical services' and directed that the amount not be included in the assessee's total income. [Paras 4]

The addition of Rs.17.43 crore as fees for technical services is reversed and the amount is not taxable.

Article 12(4)(b) of the India Portugal DTAA - Fees for Included Services - Remand for factual verification - Taxability of receipts for Human Resources services and Leadership seminar/conference (totaling Rs.1.38 crore) and whether they fall within Article 12(4)(b) of the India Portugal DTAA - HELD THAT: - While the Tribunal has previously held leadership training receipts not chargeable under Article 12(4)(b) in earlier years, for the year under appeal there was overlap between amounts received as HR services and leadership training. The assessee produced additional documentary evidence (a decoded PowerPoint) not previously considered by the assessing authorities. Given this overlap and the new material, the Tribunal found it necessary to remit the matter to the Assessing Officer for fresh factual examination to determine whether the receipts (other than the component incontestably constituting leadership training) constitute consideration that "make[s] available technical knowledge, experience, skill, know how or processes" within the meaning of Article 12(4)(b). The AO is directed to examine the details of the receipts, consider the additional evidence, and afford the assessee a reasonable opportunity of hearing. [Paras 10]

Matter remitted to the Assessing Officer for fresh consideration of whether the HR services and overlapping receipts fall within Article 12(4)(b); leadership training component is not taxable as per prior Tribunal findings.

Final Conclusion: Appeal partly allowed: addition relating to Management Support fees is deleted; receipts for HR services and overlapping leadership seminar fees are remitted to the Assessing Officer for fresh factual verification under Article 12(4)(b) of the India Portugal DTAA, with the leadership training component treated as not chargeable in view of earlier Tribunal decisions.

Furnishing inaccurate particulars of income - penal liability under section 271(1)(c) - bona fide claim in the return - claim not accepted by Assessing Officer does not, by itself, attract penalty - reliance on precedent that bona fides preclude penalty

Furnishing inaccurate particulars of income - penal liability under section 271(1)(c) - bona fide claim in the return - claim not accepted by Assessing Officer does not, by itself, attract penalty - Whether penalty under section 271(1)(c) was leviable on the assessee for allegedly furnishing inaccurate particulars of income in respect of capital gain on sale of property - HELD THAT: - The Tribunal examined the material placed before the authorities below and found that the assessee had made a bona fide claim of a capital loss in the return and that relevant details concerning the purchase price/value of the property were available in the documents before the authorities. The Assessing Officer recomputed the capital gain in the absence of documentary proof and made additions, and thereafter initiated penalty proceedings. The Tribunal applied the principle that mere non-acceptance of a claim by the Assessing Officer does not automatically constitute furnishing of inaccurate particulars; a claim must be mala fide or dishonest to attract penalty. Having regard to the documents produced (showing prior entries for the purchase price, financing, cheque/payment evidence and conveyance deed indicating value) and the fact that the assessee had closed its business and could not trace some records, the Tribunal held the claim to be bona fide. The Tribunal also relied on the authority that a mere claim not sustainable in law does not by itself amount to inaccurate particulars, and that absent material showing deliberate concealment or mala fides the imposition of penalty is not justified. On this basis the Tribunal found no material or justification for levy or affirmation of penalty and set aside the penalty order. [Paras 5]

Penalty imposed under section 271(1)(c) deleted as the assessee's claim was bona fide and the facts and documents did not justify a finding of furnishing inaccurate particulars of income.

Final Conclusion: The appeal is allowed; the penalty levied under section 271(1)(c) in respect of the addition arising from recomputation of capital gain is deleted as the assessee's claim was bona fide and insufficient material existed to establish furnishing of inaccurate particulars.

Approval under Section 10(23C)(vi) - mandatory filing deadline / time-bar - no power to condone delay - maintainability of belated application - consideration of pending application as application for the subsequent assessment year

Approval under Section 10(23C)(vi) - mandatory filing deadline / time-bar - no power to condone delay - maintainability of belated application - The correctness of rejection of the assessee's application as time barred and whether the Commissioner had power to condone the delay. - HELD THAT: - The Tribunal upheld the Commissioner's rejection of the application filed in Form No.56D as not maintainable because it was filed beyond the statutory deadline. The Court noted that under the fourteenth proviso to Sec. 10(23C) (as applicable for the relevant period) an application for approval must be filed by the prescribed date, and there is no statutory provision vesting the Commissioner with power to condone delay. Reliance was placed on judicial authorities which hold that where the statute confers no power to condone delay the authority cannot do so; applying that principle, the Tribunal found no jurisdictional or legal basis to condone the assessee's belated filing and therefore sustained the rejection on the ground of time bar. [Paras 9]

Rejection of the application as time barred was upheld; the Commissioner had no power to condone the delay.

Consideration of pending application as application for the subsequent assessment year - approval under Section 10(23C)(vi) - Whether the pending, belatedly decided application for A.Y. 2014-15 ought to be treated as an application for the immediately succeeding year and remanded for consideration. - HELD THAT: - Although the request for condonation was declined, the Tribunal found merit in the assessee's alternative contention that because the application for A.Y. 2014 15 was pending on the statutory cut off date for A.Y. 2015 16 (and was decided only thereafter), the assessee was prevented from filing a timely application for the subsequent year. Following the reasoning in All Angels Educational Society (as considered), the Tribunal remanded the matter to the Commissioner of Income Tax (Exemption), Bhopal with a direction to consider the application as if filed for A.Y. 2015 16 and to decide that application in accordance with law. [Paras 10, 11]

The appeal was remanded and the Commissioner directed to consider the present application as one for A.Y. 2015-16.

Final Conclusion: The appeal is partly allowed: the Commissioner's rejection of the application as time barred is sustained (condonation not permissible), but the matter is remanded with a direction to treat and consider the pending application as one filed for A.Y. 2015-16 and to decide it in accordance with law.

Disallowance under Section 14A read with Rule 8D - Assessing Officer's satisfaction with correctness of assessee's claim - Computation of disallowance by formula in Rule 8D(2)(ii) - Effect of amendment to Rule 8D w.e.f. 01.06.2016 - Burden on assessee to demonstrate absence of expenditure in relation to exempt income

Disallowance under Section 14A read with Rule 8D - Computation of disallowance by formula in Rule 8D(2)(ii) - Assessing Officer's satisfaction with correctness of assessee's claim - Effect of amendment to Rule 8D w.e.f. 01.06.2016 - Burden on assessee to demonstrate absence of expenditure in relation to exempt income - Whether the disallowance computed as 1% of the average value of investments under Section 14A read with Rule 8D(2)(ii) was rightly made and whether the Assessing Officer was required to record further satisfaction before applying Rule 8D. - HELD THAT: - The Tribunal found that the Assessing Officer applied the existing statutory mechanism under Rule 8D(2)(ii) (as amended w.e.f. 01.06.2016) to compute disallowance at 1% of the average value of investments yielding exempt income. The investment figures used for computing the average were not disputed by the assessee. The Tribunal observed that the Assessing Officer had recorded dissatisfaction with the assessee's claim that no expenditure was incurred to earn exempt income, noting that exempt income ordinarily does not arise without expenditure. The assessee failed to identify or correlate any specific expenses in its accounts as relating to the exempt income or to offer any token suo motu disallowance; assertions that exempt income was received by ECS or that funds were interest-free were not shown to negate the statutory computation. The Tribunal also noted that the lower authority's reference to an inapplicable sub rule did not alter that the disallowance was in fact made under the existing Rule 8D(2)(ii). Given the undisputed investment balances, the recorded dissatisfaction, and the absence of evidence to displace the statutory formula, the Tribunal did not interfere with the disallowance.

The disallowance under Section 14A read with Rule 8D(2)(ii), computed as 1% of the average value of investments, is sustained and the assessee's ground of appeal is dismissed.

Final Conclusion: Appeal dismissed; the Tribunal upheld the Assessing Officer's application of Rule 8D(2)(ii) (post amendment) to compute the Section 14A disallowance for AY 2017-18, noting undisputed investment figures and recorded dissatisfaction with the assessee's claim of no related expenditure.

Supervisory jurisdiction under Section 263 - twin conditions for exercise of revisionary power - notional rent on security deposits - determination of Annual Letting Value - audit objection as basis for initiation of revision proceedings

Supervisory jurisdiction under Section 263 - twin conditions for exercise of revisionary power - audit objection as basis for initiation of revision proceedings - Validity of the exercise of revisionary powers under Section 263 to reopen assessment and make addition by treating interest-free deposits as notional interest affecting rental income. - HELD THAT: - Tribunal examined whether the Pr. CIT rightly invoked revisionary jurisdiction under Section 263. The court reiterated that two conditions must coexist for exercise of such jurisdiction: the assessment order must be erroneous and that error must be prejudicial to the revenue. The Pr. CIT's action was initiated pursuant to an audit objection, and the proceedings were found to mirror earlier co-ordinate Bench findings in the assessee's own case for a subsequent year where the Tribunal held that initiation of Section 263 proceedings to give effect to an audit objection was not valid. On merits, the Tribunal relied on precedents of the Hon'ble Bombay High Court holding that notional rent on security deposits cannot be taken into account for determination of Annual Letting Value and observed that the Assessing Officer had adopted a view permissible in law. Revenue failed to place material to show that the AO's view was impermissible or unsustainable in law. Having regard to the identical factual and legal matrix considered by the co-ordinate Bench and the absence of any demonstrable prejudice or impermissible view by the AO, the Tribunal found that the Pr. CIT was not justified in exercising revisionary powers and that the addition based on notional interest on deposits was unwarranted. [Paras 2, 3, 4]

The exercise of revisionary powers under Section 263 was held to be unjustified and the addition made by treating interest-free deposits as notional interest for computation of rental income is deleted.

Final Conclusion: Revenue's appeal is dismissed; the CIT(A)'s order deleting the addition in respect of notional interest on interest-free deposits (for assessment year 2010-11) is upheld.

Revisionary jurisdiction under section 263 of the Income tax Act - Erroneous order prejudicial to the interests of the Revenue - Application of mind by the Assessing Officer - Inadequacy of inquiry versus lack of inquiry - Requirement of verification by the Commissioner before invoking revisionary powers

Revisionary jurisdiction under section 263 of the Income tax Act - Erroneous order prejudicial to the interests of the Revenue - Validity of the Principal Commissioner's exercise of revisional power under section 263 in setting aside the assessment order. - HELD THAT: - The Tribunal found that the PCIT invoked section 263 on the premise that the assessing officer had not made any inquiry and had blindly accepted the assessee's claims. On examining the record, including the questionnaires issued by the AO and the detailed replies and documentary evidence furnished by the assessee, the Tribunal concluded that inquiries were in fact conducted and material was considered by the AO. Reliance was placed on authoritative precedent that section 263 can be invoked only where the AO's order is both erroneous and prejudicial to revenue; mere differences of opinion or a view which the Commissioner dislikes do not suffice. The PCIT did not himself undertake any verification or point to specific inquiries that the AO failed to make; he merely directed further inquiry by the AO. In these circumstances the PCIT's conclusion that the assessment was erroneous and prejudicial was held to be unsustainable and an incorrect assumption of jurisdiction under section 263. [Paras 5]

The order passed by the PCIT under section 263 was set aside as the jurisdiction was wrongly assumed.

Application of mind by the Assessing Officer - Inadequacy of inquiry versus lack of inquiry - Requirement of verification by the Commissioner before invoking revisionary powers - Whether the AO had applied his mind and conducted sufficient inquiry into the assessee's large agricultural receipts so as to make the assessment non erroneous. - HELD THAT: - On perusal of the AO's questionnaire, subsequent queries and the detailed replies and documents placed on record by the assessee, the Tribunal found that the AO had carried out an in depth inquiry into the issue of large agricultural receipts. The Tribunal observed that absence of elaborate discussion in the assessment order does not demonstrate lack of inquiry where the record shows that inquiries were made and material considered. Citing precedents, the Tribunal noted that where the AO has conducted necessary inquiries and applied his mind, the resulting order cannot be treated as erroneous and prejudicial so as to attract revision under section 263 unless the Commissioner conducts his own verification and points out specific failings. The factual conclusion that the AO had applied his mind led to rejection of the PCIT's allegation of no inquiry. [Paras 5]

The AO had conducted sufficient inquiry and applied his mind; the assessment order was not erroneous or prejudicial on this ground.

Final Conclusion: The appeal is allowed; the order under section 263 setting aside the assessment is quashed and the assessment order for assessment year 2014-15 is restored.

Assessment under Section 153A - non-abated assessment - incriminating material - additions under Section 68 - requirement of nexus with seized material

Assessment under Section 153A - non-abated assessment - incriminating material - additions under Section 68 - requirement of nexus with seized material - Whether addition under Section 68 can be made in assessment proceedings initiated under Section 153A where the assessments were non-abated and no incriminating material was found during the search. - HELD THAT: - Both the CIT(A) and the ITAT recorded concurrent findings of fact that no incriminating material or documents were found or seized during the search, and that the present case concerned non-abated assessments. Applying the settled principle, as explained in Kabul Chawla and summarized in Meeta Gutgutia, an assessment under Section 153A must have relevance or nexus with the seized material; although Section 153A does not literally restrict additions to only seized material, completed (non-abated) assessments can be reopened under Section 153A only upon the basis of incriminating material unearthed in the search or other post-search material linked to the seizure. Where no such incriminating material exists and the assessments had attained finality (non-abated), additions under Section 68 are not warranted. The High Court, having applied this legal principle to the concurrent findings of fact, found no substantial question of law to entertain. [Paras 3, 6]

The appeal is dismissed; no addition under Section 68 could be sustained in assessment proceedings under Section 153A where the assessments were non-abated and no incriminating material was found.

Final Conclusion: The High Court dismissed the Revenue's appeal, holding that in the absence of any incriminating material discovered during the search and in cases of non-abated assessment, additions under Section 68 could not be sustained under Section 153A, and no substantial question of law arose for consideration.

Requirement to proceed under Section 148A before issuance of notice under Section 148 after Finance Act, 2021 - Deeming and treatment of pre-amendment Section 148 notices as show-cause notices under Section 148A - Effect of the Supreme Court's directions in Union of India & Others v. Ashish Agarwal - Termination of interim protection upon higher judicial pronouncement - Right to challenge orders passed under Section 148A(d)

Requirement to proceed under Section 148A before issuance of notice under Section 148 after Finance Act, 2021 - Deeming and treatment of pre-amendment Section 148 notices as show-cause notices under Section 148A - Effect of the Supreme Court's directions in Union of India & Others v. Ashish Agarwal - Whether initiation of proceedings under Section 148 without first proceeding under Section 148A was impermissible and the effect of the Supreme Court's decision in Union of India & Others v. Ashish Agarwal on the petitioner's challenge - HELD THAT: - The Court noted that an interim order dated 20.12.2021 had protected the petitioner on the premise that the impugned notice under Section 148 was digitally signed on 02.04.2021. However, the Supreme Court in Union of India & Others v. Ashish Agarwal has held that notices issued under the unamended Section 148 after 01.04.2021 are to be deemed and construed as show-cause notices under Section 148A, dispensed with the prior approval requirement as a one-time measure for such notices, directed that assessing officers supply material relied upon and thereafter pass orders under Section 148A(d), and provided that the order is applicable PAN INDIA. In view of those authoritative directions, the interim protection earlier granted by this Court ceased to operate, and the Department was entitled to proceed to pass orders under Section 148A(d). Having regard to the changed legal position post the Supreme Court's order and the fact that the Department has passed an order under Section 148A(d), the High Court found the writ petition no longer sustainable on its prior grounds and declined further interference while preserving the petitioner's statutory remedies to challenge the Section 148A(d) order.

The petition is closed in view of the Supreme Court's directions treating relevant Section 148 notices as Section 148A show-cause notices and the cessation of interim protection; the petitioner is granted liberty to challenge the order passed under Section 148A(d).

Final Conclusion: Writ petition disposed as infructuous in view of the Supreme Court's decision in Union of India & Others v. Ashish Agarwal which modifies the legal position relating to notices issued after 01.04.2021; petitioner granted liberty to challenge the order passed under Section 148A(d) by appropriate proceedings.

Treatment of demonetised currency deposits as explained by past savings - unexplained cash addition and chargeability under the special tax provision - application of special rate tax under section 115BBE - limited scrutiny selection and validity where bank clarification alters the basis of inquiry

Treatment of demonetised currency deposits as explained by past savings - unexplained cash addition and chargeability under the special tax provision - application of special rate tax under section 115BBE - Deletion of the addition of Rs.1,00,000 made as unexplained cash deposited in the bank on 21.11.2016 during demonetisation. - HELD THAT: - The Assessing Officer made an addition treating the cash deposit as unexplained money and assessed it under the special-tax provision attracting the rate under section 115BBE. On verification, the bank admitted an initial error reducing the purported deposits and established that only Rs.1,00,000 was actually deposited by the assessee on 21.11.2016. The assessee had disclosed the deposit in the return and explained the source as past savings of the HUF and its members arising from earlier withdrawals, which, although occurring long before, were prima facie consistent with the explanation. The scrutiny originally targeted a much larger aggregate deposit which was shown to be incorrect after the bank's clarification; thus the foundational basis for the limited scrutiny did not continue to exist with respect to the smaller sum. The assessee also explained non-response to a faceless electronic notice as attributable to it being the first year of faceless assessments. Considering the declared nature of the deposit, the bank's clarification, the absence of other incriminating deposits during demonetisation, and that the total income including the sum remained below the threshold of taxable income, the tribunal found the addition and assessment under section 115BBE unjustified and deleted the addition.

The addition of Rs.1,00,000 treated as unexplained cash and assessed under section 115BBE is deleted and the appeal is allowed.

Limited scrutiny selection and validity where bank clarification alters the basis of inquiry - Validity of continued scrutiny and consequent addition after bank corrected the record of alleged larger deposits. - HELD THAT: - The limited scrutiny was initiated to examine alleged cash deposits of a larger amount during the demonetisation period. The bank subsequently acknowledged a wrong entry and clarified that only Rs.1,00,000 was deposited. Once the bank's confirmation removed the prima facie basis for examining the higher figure, the foundation of the limited scrutiny concerning the larger alleged deposits ceased to exist. In those circumstances, and having regard to the assessee's disclosure and explanation for the actual deposit, the continuation of the addition on the revised facts was not justified.

The assessment based on the originally alleged larger deposit is effectively vitiated by the bank's clarification; the addition sustained on the reduced deposit is deleted.

Final Conclusion: The Tribunal allowed the appeal, deleted the addition of Rs.1,00,000 treated as unexplained cash deposited during demonetisation and set aside the assessment under section 115BBE for AY 2017-18, having regard to the bank's correction, the disclosure in the return and the declared source as past savings.

Penalty under section 271(1)(c) - Requirement that penalty notice specify the particular limb (concealment or inaccurate particulars) - Validity of notice issued under section 274 r.w.s. 271(1)(c) - Concealment of particulars of income - Furnishing inaccurate particulars of income

Penalty under section 271(1)(c) - Requirement that penalty notice specify the particular limb (concealment or inaccurate particulars) - Validity of notice issued under section 274 r.w.s. 271(1)(c) - Levy of penalty under section 271(1)(c) quashed because the notice did not specify whether proceedings were initiated for concealment of particulars of income or for furnishing inaccurate particulars. - HELD THAT: - The Tribunal examined the contention that the penalty notice dated 26.12.2017 issued under section 274 r.w.s. 271(1)(c) failed to indicate which limb of section 271(1)(c) was invoked. Reliance was placed on the decision of the Delhi High Court in PCIT v. Sahara India Life Insurance Co. Ltd., which, after considering Karnataka High Court authorities, held that where the AO's notice does not specify whether penalty proceedings are for concealment of particulars of income or for furnishing inaccurate particulars, the notice is bad in law and penalty under section 271(1)(c) is not leviable. The Revenue did not place any material to show that the Sahara India Life Insurance Co. Ltd. decision has been stayed, set aside or overruled, nor did it produce contrary binding authority. Applying that ratio, the Tribunal held that the Assessing Officer was not justified in levying the penalty, and that the CIT(A) was incorrect in upholding it; accordingly the levy of penalty was set aside. [Paras 7, 8, 9]

Penalty under section 271(1)(c) set aside for want of specification in the notice; appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal and set aside the penalty imposed under section 271(1)(c) for Assessment Year 2011-12 on the ground that the penalty notice failed to specify which limb of section 271(1)(c) was invoked.

Revised return under section 139(5) - belated return filed under section 139(4) - right of revision available only where original return filed under section 139(1) or in pursuance of notice under section 142(1) - revised return held non-est where original return was belated - taxation of income as reported in the belated return - application of Kumar Jagdish Chandra Sinha precedent

Revised return under section 139(5) - belated return filed under section 139(4) - right of revision available only where original return filed under section 139(1) or in pursuance of notice under section 142(1) - revised return held non-est where original return was belated - application of Kumar Jagdish Chandra Sinha precedent - Validity of the revised return filed under section 139(5) where the original return was a belated return filed under section 139(4). - HELD THAT: - The Tribunal held that the statutory entitlement to file a revised return under section 139(5) is available where the original return has been filed under section 139(1) or in pursuance of a notice under section 142(1). Where the original return was filed under section 139(4) (a belated return), the right to revise by filing under section 139(5) does not arise. Applying the principle in Kumar Jagdish Chandra Sinha, the revised return filed after a belated return is non-est in law; therefore the claim made in such revised return cannot be entertained. [Paras 9]

Revised return filed after a belated return under section 139(4) is invalid and the claim in the revised return is not maintainable.

Taxation of income as reported in the belated return - revised return held non-est where original return was belated - Whether the assessing officer ought to have given effect to the revised computation (capital loss) on facts and documents placed during scrutiny proceedings, instead of assessing income as per the belated return. - HELD THAT: - The Tribunal noted that the evidential material and computations relied upon by the assessee in support of the revised claim were placed before the assessing officer during scrutiny. The AO considered those materials and, having verified the records, proceeded to finalise the assessment on the basis of the belated return. The Tribunal found that the income actually earned and verified from the records was taxed in accordance with the belated return and that no material was shown that would justify a different conclusion. Consequently, there was no infirmity in the orders below in refusing to alter the assessment in favour of the revised computation. [Paras 10]

No interference with the assessment made on the basis of the belated return; the AO rightly assessed the income as verified from records and the claim in the revised return did not warrant alteration.

Final Conclusion: The appeal is dismissed. The revised return filed after a belated return under section 139(4) is invalid; the assessment affirmed on the basis of the belated return stands and no change to the computation of income is warranted.

Arm's Length Price - International transaction - receivables and corporate guarantees - Transaction Net Margin Method (TNMM) - subsumption of working capital cost and notional interest - Transfer pricing adjustment on notional interest for overdue receivables - Corporate guarantee commission - benchmarking and limitation to amount actually utilized - Section 14A and Rule 8D - disallowance only when exempt income is earned

Transaction Net Margin Method (TNMM) - subsumption of working capital cost and notional interest - Transfer pricing adjustment on notional interest for overdue receivables - International transaction - receivables - Whether a separate upward transfer pricing adjustment for notional interest on overdue export receivables from Associated Enterprises is justified where TNMM has been applied. - HELD THAT: - The Tribunal found as an admitted fact that receivables fall within the definition of an international transaction. However, where TNMM is the most appropriate method (not disputed by Revenue) the net margin under that method reflects the overall return and takes into account working capital effects including costs of delayed collection. The assessee's operating margins, both with and without export incentives, were significantly higher than those of the comparables, indicating that any financing cost arising from delayed receipts was reflected in the tested net margin. The working capital adjustment had therefore been factored into ALP/pricing and an additional separate imputation of notional interest on outstanding receivables could not be justified on the facts of this case. Accordingly the Tribunal directed deletion of the upward adjustment made for overdue receivables from AEs. [Paras 7]

Upward adjustment for notional interest on overdue receivables deleted; no separate TP adjustment required where TNMM and working capital considerations already reflected in net margin.

International transaction - corporate guarantee - Corporate guarantee commission - benchmarking and limitation to amount actually utilized - Whether corporate guarantee given to an Associated Enterprise constitutes an international transaction and, if so, the proper basis and rate for charging guarantee commission. - HELD THAT: - The Tribunal accepted that a corporate guarantee issued on behalf of an AE falls within the scope of transactions having a bearing on profits/assets and thus can be an international transaction. The TPO had benchmarked bank guarantee/fee data and arrived at a median of 1.9% on the gross guaranteed amount. While recognizing the risk and service element in providing guarantees, the Tribunal found merit in the assessee's contention that the commission should be restricted to the portion of the guarantee actually utilized by the AE. Applying the principle in the cited authority (Everest Kanto Ltd) and following its ratio, the Tribunal held that the guarantee commission should be treated as an international transaction but computed at 0.50% on the amount of the corporate guarantee actually utilized by the AE rather than on the entire gross guarantee. [Paras 11]

Corporate guarantee commission upheld as international transaction but limited to 0.50% on the amount of the guarantee actually utilized by the AE.

Section 14A and Rule 8D - disallowance only when exempt income is earned - Whether disallowance under section 14A read with Rule 8D is warranted where the assessee has not earned any exempt income in the relevant assessment year. - HELD THAT: - Relying on the Supreme Court's ratio in CIT vs. Chettinad Logistics P. Ltd., the Tribunal noted that section 14A is attracted only when expenditure is claimed in relation to income that does not form part of total income (i.e., exempt income). Rule 8D provides a method to compute such expenditure but cannot be invoked in the absence of exempt income. The assessee had not earned any exempt income in the impugned year; accordingly the AO's disallowance under section 14A was not sustainable. [Paras 15]

Disallowance under section 14A/read with Rule 8D deleted as no exempt income was earned in the relevant year.

Final Conclusion: The appeal is allowed: the notional interest adjustment on overdue receivables is deleted; the corporate guarantee commission is treated as an international transaction but limited to 0.50% on the amount actually utilized by the AE; and the section 14A disallowance is deleted for lack of exempt income.

Disallowance for unverifiable expenses - deeming of unexplained expenditure under Section 69C - discretionary nature of deeming under Section 69C - verifiability of claimed business expenses - admission of additional evidence under Rule 46A - remand for verification by Assessing Officer

Verifiability of claimed business expenses - disallowance for unverifiable expenses - admission of additional evidence under Rule 46A - remand for verification by Assessing Officer - Whether the disallowance of 30% of the direct expenses claimed by the assessee was justified on account of unverifiable elements and failure to substantiate the claim despite opportunities and remand. - HELD THAT: - The Tribunal found that the assessee claimed large direct expenses reported in AIR but failed, despite repeated opportunities and remand proceedings, to furnish details and documentary evidence to substantiate those expenses. Although additional evidence was admitted under Rule 46A and forwarded to the Assessing Officer, the remand report recorded non-compliance by the assessee and absence of verification. The Assessing Officer therefore disallowed 30% of the claimed direct expenses as representing unverifiable elements. The Tribunal held that, irrespective of the Assessing Officer's inadvertent reference to Section 69C, the disallowance was justified on the ground that the claimed expenses remained unsubstantiated and unverifiable after adequate opportunities and remand, and that the learned CIT(A) correctly confirmed the disallowance. [Paras 7]

Disallowance of 30% of the claimed direct expenses on account of unverifiable and unsubstantiated expenditures is upheld.

Final Conclusion: The appeal is dismissed; the Tribunal upholds the disallowance out of direct expenses confirmed by the CIT(A) because the claimed expenses remained unsubstantiated and unverifiable despite opportunities and remand, and the incidental reference to Section 69C does not vitiate the disallowance.

Revisionary jurisdiction under section 263 - Requirement of twin conditions: order erroneous and prejudicial to revenue - Explanation 2 to section 263 - order passed without making inquiries or verification which should have been made - Scope of verification of brought forward losses in assessment proceedings - Verification of STT for claim of exemption of long term capital gains

Revisionary jurisdiction under section 263 - Requirement of twin conditions: order erroneous and prejudicial to revenue - Scope of verification of brought forward losses in assessment proceedings - Explanation 2 to section 263 - order passed without making inquiries or verification which should have been made - Validity of PCIT's exercise of revisional power under section 263 in setting aside AO's acceptance of brought forward short term capital losses - HELD THAT: - The Tribunal examined whether the PCIT had material to form a prima facie opinion that the AO's order was erroneous and prejudicial to revenue. Section 263 requires both that an order be erroneous and prejudicial to revenue; Explanation 2 applies where inquiries or verifications which should have been made were omitted. The PCIT's conclusion that the AO failed to verify brought forward losses relied on the possibility that earlier year sale consideration was lower than cost of acquisition, and on the view that verification of losses from AY 2009 10 ought to have been made in the scrutiny for AY 2017 18. The Tribunal found that such a contention would amount to speculation rather than an identifiable legal or factual error: verification of losses of AY 2009 10 was beyond the scope of scrutiny of AY 2017 18 and, in any event, the brought forward losses had already been scrutinized and accepted in an earlier assessment (AY 2015 16). Applying the statutory tests and the precedents cited, the Tribunal held that the foundation for invoking section 263 in respect of brought forward losses was absent and that the PCIT had not demonstrated a gross inadequacy of inquiry by the AO. Consequently, the PCIT's order setting aside the AO's acceptance of brought forward losses was quashed to that limited extent. [Paras 11, 14]

PCIT's invocation of section 263 to set aside AO's acceptance of brought forward short term capital losses is not justified; that part of the PCIT order is quashed.

Revisionary jurisdiction under section 263 - Explanation 2 to section 263 - order passed without making inquiries or verification which should have been made - Verification of STT for claim of exemption of long term capital gains - Validity of PCIT's exercise of revisional power under section 263 in setting aside AO's allowance of exemption for long term capital gains claimed on account of STT payment - HELD THAT: - The PCIT questioned whether the AO had reconciled and verified the assessee's Form 10DB / STT paid details with the exempted long term capital gains claimed. The assessee produced STT particulars and the AO had called for and received documents in the course of assessment; however, the assessment order did not record any specific reconciliation or verification of the Form 10DB figures with the return. The Tribunal observed that, unlike the brought forward losses issue, the PCIT had a specific omission to point to in the assessment record - absence of any notation that the AO had verified and reconciled the exempted LTCG with STT data. On this basis the Tribunal held that the PCIT was justified in directing further verification and therefore modified the PCIT order to the limited extent of setting aside the assessment with regard to the allowance of LTCG exemption to enable the AO to verify the STT data and determine allowability as per law. [Paras 15, 18]

PCIT was justified in setting aside the AO's order to the limited extent of verification of STT data for the claim of exemption of long term capital gains; the matter is remitted for verification and determination.

Final Conclusion: The appeal is partly allowed: the PCIT's invocation of section 263 is quashed insofar as it sought to set aside the AO's acceptance of brought forward short term capital losses, but the PCIT's direction is upheld and the assessment order is set aside to the limited extent that the AO must verify and reconcile the STT/Form 10DB details supporting the claim of exemption of long term capital gains for AY 2017 18.

Implementation of administrative order - redemption fine and penalty for re-export - re-export of seized goods - deposit as condition precedent to re-export - service of official communication

Implementation of administrative order - redemption fine and penalty for re-export - re-export of seized goods - deposit as condition precedent to re-export - Direction to implement the earlier order permitting re-export upon deposit of redemption fine and penalty and fixing the date for compliance. - HELD THAT: - The Court recorded that the respondent had taken a decision that, upon deposit of the redemption fine and penalty totaling Rs.6,60,000/-, proceedings for re-export of the two seized gold articles (one chain with pendant and one bangle/kada, together weighing 600 grams) could commence. The relevant communication dated 04.07.2022, which sets out the requirement to deposit the redemption fine and penalty and to submit proof of payment and a return ticket to Kuwait, was extracted in the order. To resolve the controversy and enable implementation of the order dated 11.12.2020 passed by the Additional Commissioner, the Court directed that the petitioner or an authorised representative shall appear before the concerned officer on 01.09.2022 at 11:00 A.M. for deposit of the specified amount, after which the re-export proceedings shall be taken forward by the authorities. The petitioner agreed to these terms and sought closure of the writ petition. [Paras 3, 5, 6, 7, 8]

Petitioner to appear on 01.09.2022 at 11:00 A.M. and deposit the redemption fine and penalty as per the communication dated 04.07.2022; on deposit, proceedings for re-export shall commence and the writ petition is closed.

Service of official communication - Non-receipt of the communication did not preclude the Court from directing compliance where respondent had formally notified the requirement. - HELD THAT: - Although learned counsel for the petitioner informed the Court that the communication dated 04.07.2022 had not been received by the petitioner, the Court accepted the respondent's position that the communication had been issued and that the formal requirement for deposit remained the operative condition for initiating re-export. To obviate further delay or dispute about service, the Court fixed a specific date and time for the petitioner or an authorised representative to appear and make the deposit, thereby producing an effective mechanism for implementation notwithstanding the asserted non-receipt. [Paras 3, 5]

Despite non-receipt asserted by the petitioner, the Court relied on the respondent's communication and directed compliance on the fixed date to enable commencement of re-export proceedings.

Final Conclusion: The writ petition was closed by the Court after directing the petitioner or an authorised representative to appear on 01.09.2022 at 11:00 A.M. to deposit the redemption fine and penalty specified in the respondent's communication, upon which the authorities shall proceed with re-export of the seized gold articles.

Exemption from the whole of customs duty - interpretation of conjunctive 'and' in an exclusion clause - construction of exclusionary clause in an exemption notification - Multiple Input/Multiple Output (MIMO) technology - Long Term Evolution (LTE) standard - classification under CTI 8517 62 90 - Information Technology Agreement (ITA) and exemption intent

Interpretation of conjunctive 'and' in an exclusion clause - construction of exclusionary clause in an exemption notification - Multiple Input/Multiple Output (MIMO) technology - Long Term Evolution (LTE) standard - exemption from the whole of customs duty - classification under CTI 8517 62 90 - Information Technology Agreement (ITA) and exemption intent - Whether Wireless Access Points (WAP) that are MIMO-enabled but do not support LTE are excluded from the notificational exemption by Serial No.13(iv) and therefore not entitled to exemption from the whole of customs duty. - HELD THAT: - The Tribunal accepted the respondent's contention that the conjunctive 'and' in Serial No.13(iv) must be read in its ordinary conjunctive sense and that the phrase "Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products" denotes products containing both MIMO and LTE. The court observed that MIMO is a technology and not an independent product; had the intention been to exclude products incorporating only MIMO technology, the word 'products' would have been used after 'MIMO' as it is routinely used elsewhere in the same entry. Dictionary meanings of 'and' were cited to support the conjunctive reading. The Tribunal also relied on precedents holding that conjunctive words should not be converted into disjunctive ones when context and wording do not permit such substitution. Further, the Tribunal noted the contextual purpose of the notification as implementing India's commitments under the Information Technology Agreement (ITA): at introduction, goods under the relevant heading were exempted and the 2014 amendment targeted specified telecom products not covered by the ITA; WAPs qualify as network equipment under the ITA and are therefore within the exemption's intended scope. The court reiterated the rule that exclusionary clauses in exemption notifications are to be narrowly construed so as not to frustrate the object of the exemption. Applying these principles to the material facts - that the imported WAPs are MIMO-enabled but do not support LTE and are classifiable under CTI 8517 62 90 - the Tribunal concluded that such WAPs remained covered by Serial No.13 and were entitled to exemption from the whole of customs duty. As a result, the demand, confiscation and penalties raised in the show cause notice were correctly dropped by the adjudicating authority. [Paras 19, 23, 27, 28, 30]

WAPs that are MIMO-enabled but do not support LTE are not excluded by Serial No.13(iv); they are entitled to exemption from the whole of customs duty and the adjudicating authority's order dated 23.12.2019 is upheld.

Final Conclusion: The Department's appeal is dismissed. The order of the adjudicating authority holding that the imported WAPs (MIMO-enabled but not LTE) are classifiable under CTI 8517 62 90 and are entitled to exemption under Serial No.13 of the notification is affirmed; demands, confiscation and penalties proposed in the show cause notice are set aside.

Pre-deposit requirement under section 129E of the Customs Act - statutory bar to entertain appeal unless pre-deposit is made - absence of power in appellate authorities to waive pre-deposit after amendment - condition precedent for exercise of right of appeal - mandatory compliance as prerequisite to maintainability of appeal

Pre-deposit requirement under section 129E of the Customs Act - statutory bar to entertain appeal unless pre-deposit is made - condition precedent for exercise of right of appeal - Whether the appeal is maintainable in the absence of the statutory pre-deposit as required by section 129E of the Customs Act. - HELD THAT: - The Tribunal found that the appellant did not comply with the mandatory pre-deposit requirement prescribed by section 129E and neither explained why the pre-deposit was not required nor sought time to make the pre-deposit. The court reproduced and considered the amended text of section 129E and held that, post-amendment, the Tribunal and the Commissioner (Appeals) lack power to waive or dispense with the statutory pre-deposit. Reliance was placed on Supreme Court authority establishing that conditions imposed by statute for exercise of the right of appeal are condition precedents which must be fulfilled before an appeal can be entertained, and that appellate bodies cannot grant waivers beyond what the statute permits. Applying these principles to the undisputed failure to make the pre-deposit in the present case, the appeal was held not maintainable and could not be entertained by the Tribunal. [Paras 4, 6, 7, 14]

Appeal not maintainable for non-compliance with the pre-deposit requirement of section 129E and therefore cannot be entertained.

Absence of power in appellate authorities to waive pre-deposit after amendment - mandatory compliance as prerequisite to maintainability of appeal - Whether the Tribunal or the Commissioner (Appeals) has jurisdiction to waive or reduce the statutory pre-deposit under section 129E after the 06.08.2014 amendment. - HELD THAT: - The Tribunal concluded that the amendment effected on 06.08.2014 removed any discretionary power previously available to appellate authorities to dispense with or scale down the pre-deposit. The court surveyed binding and persuasive authorities (including the Supreme Court and High Court decisions) which held that where the statute itself prescribes a limited pre-deposit, courts and tribunals cannot further waive that requirement. On that basis, the Tribunal held it had no power to permit prosecution of the appeal without the statutory pre-deposit. [Paras 6, 7, 9, 14]

Tribunal and Commissioner (Appeals) have no power to waive or reduce the statutory pre-deposit prescribed by section 129E after the amendment; non-compliance disentitles the appellant to prosecute the appeal.

Final Conclusion: In view of the appellant's admitted failure to make the mandatory pre-deposit under section 129E and the absence of any statutory or judicially-authorised power to waive that requirement post-amendment, the appeal was dismissed as not maintainable.

Anticipatory bail - custodial interrogation - forgery of documents - tampering with evidence - triable by Magistrate - balance between fair investigation and prevention of harassment - relevance of non-production of original documents

Anticipatory bail - balance between fair investigation and prevention of harassment - triable by Magistrate - Applicants entitled to anticipatory bail subject to conditions. - HELD THAT: - Having considered the nature and gravity of the accusations, the role of the accused, their antecedents, the likelihood of fleeing from justice, and the possibility of tampering with evidence, the court found that the offences alleged (under Sections 420/468/471/120-B IPC) are triable by a Magistrate and carry maximum punishments that do not, in the court's view, preclude grant of anticipatory bail. The dispute is predominantly corporate and documentary in character, there is no significant public interest warranting refusal, and certified/photocopy evidence of the Power of Attorney remains available for investigation. Applying the principles in Siddharam Satlingappa Mhetre and balancing the need for full investigation against prevention of harassment, the court concluded that anticipatory bail should be granted with specific conditions to safeguard the investigation and prevent abuse of the liberty granted. [Paras 7, 8, 9, 13, 15]

Anticipatory bail granted to both applicants on furnishing bonds and subject to enumerated conditions.

Relevance of non-production of original documents - custodial interrogation - Non-availability of the Original Power of Attorney alone does not justify custodial interrogation or denial of anticipatory bail. - HELD THAT: - The court observed that the applicants had appeared multiple times before the Investigating Officer and that photocopies and certified copies of the Power of Attorney are part of the record and usable as secondary evidence under the Evidence Act. Given these circumstances and the availability of other investigative measures (recording statements of signatories, handwriting examination, recovery efforts), mere non-production of the original document was not sufficient to deny anticipatory bail or to mandate custodial interrogation. [Paras 12, 13]

Non-production of the Original Power of Attorney by itself is not a ground for custodial interrogation or for refusing anticipatory bail.

Forgery of documents - tampering with evidence - There was no reasonable apprehension of the applicants tampering with evidence or fleeing from justice. - HELD THAT: - The court noted that the applicants are permanent residents with movable and immovable properties in Gujarat, have no adverse criminal antecedents, have cooperated by appearing before the Investigating Officer on multiple dates, and have undertaken to produce the Original Power of Attorney if located. The allegations concern forgery of signatures in a corporate Power of Attorney, which is documentary and investigable through non-custodial means (e.g., examination of signatories, certified copies, handwriting analysis). On this factual matrix the court found no substantial risk of tampering with witnesses or evidence or of the accused absconding. [Paras 5, 13, 14]

No reasonable apprehension of tampering or flight; conditions imposed to guard against such risks.

Final Conclusion: Anticipatory bail applications allowed; applicants to be released on furnishing specified bonds and complying with conditions including cooperation with investigation, non-contact with witnesses, surrender of passports, and production of the Original Power of Attorney if located; State/complainant free to move the court on any breach of conditions.

Appropriate Government under the Industrial Disputes Act - instrumentality of the Central Government - control and management test for determining appropriate Government - jurisdiction of Central Government Industrial Tribunal - claims by workmen under the Insolvency and Bankruptcy Code - submission to Interim Resolution Professional - shareholder not liable to be impleaded as employer

Appropriate Government under the Industrial Disputes Act - instrumentality of the Central Government - control and management test for determining appropriate Government - jurisdiction of Central Government Industrial Tribunal - Whether the dispute concerning Rubberwood India Pvt. Ltd. falls to be referred by the Central Government to the Central Government Industrial Tribunal on the ground that the company is an instrumentality controlled by the Central Government. - HELD THAT: - The Court examined the statutory definitions in Section 2(a) and 2(g) of the Industrial Disputes Act and the Rubber Board's constitutional provisions under the Rubber Act, 1947 (Section 4). The Memorandum and Articles of Association of Rubberwood India Pvt. Ltd. restrict membership and vest the Rubber Board with the power to nominate five directors and to appoint a director as Chairman. Taken with the fact that the company was established under the Rubber Act and the Board's pervasive role in constitution and management, the Court found on the facts that Rubberwood India is an instrumentality of the Central Government. Applying the fact-sensitive control/authority test recognized in the cited authorities, the Court held that the Central Government was the appropriate Government to refer the dispute to the Central Government Industrial Tribunal and that the reference dated 09.01.2020 was justified. [Paras 9, 10, 18, 19, 21]

The dispute was rightly referred by the Central Government to the Central Government Industrial Tribunal because Rubberwood India Pvt. Ltd. is an instrumentality controlled by the Central Government.

Claims by workmen under the Insolvency and Bankruptcy Code - submission to Interim Resolution Professional - Regulation 9 - submission and proof of claims - duties of Interim Resolution Professional - Whether, after initiation of CIRP and appointment of an Interim Resolution Professional, the workmen should submit their claims before the Interim Resolution Professional and whether the IRP is required to adjudicate those claims in terms of the Code and Regulations. - HELD THAT: - The Court referred to Sections 10, 13 and 18 of the Insolvency and Bankruptcy Code, 2016 and Regulation 9 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Regulation 9 requires workmen claiming dues to submit claims with proof to the Interim Resolution Professional, who must receive, collate and adjudicate claims and afford opportunity to inspect records and prove entitlement; remedies against the IRP's decisions lie under the Code before the NCLT/NCLAT. The Court noted potential practical difficulties but found that the statutory scheme contemplates submission and adjudication of such claims before the IRP. Consequently, the workmen were directed to file claims before the IRP and the IRP was directed to adjudicate claims in accordance with the Regulations within the timelines prescribed under the Code. [Paras 22, 23, 24]

Workmen must submit their claims to the Interim Resolution Professional under Regulation 9 and the IRP shall adjudicate those claims in accordance with the Code and Regulations.

Shareholder not liable to be impleaded as employer - scope of impleadment in industrial dispute - Whether the Rubber Board, as a shareholder of Rubberwood India Pvt. Ltd., can be impleaded as a party in the industrial dispute between the company and its workmen. - HELD THAT: - The Court observed that the Rubber Board was only a shareholder and that a shareholder, even a majority shareholder or the Government, does not ipso facto become the employer for purposes of adjudicating a dispute between the company and its employees. While the Rubber Board was served with a copy of the reference, the Court clarified that such endorsement does not amount to impleading the shareholder as the employer. Applying settled principles, the Court held that the notice dated 09.01.2020 must be construed as a claim against the company and not against the shareholder. [Paras 25]

The Rubber Board, as a shareholder, cannot be made a party to the industrial dispute; the reference is a claim against the company and not against the shareholder.

Final Conclusion: The Central Government was correctly the appropriate Government in referring the dispute involving Rubberwood India Pvt. Ltd. to the Central Government Industrial Tribunal because the company is an instrumentality of the Central Government; workmen are directed to submit their claims to the Interim Resolution Professional who shall adjudicate them as per the Code and Regulations; and the Rubber Board, being a shareholder, cannot be impleaded as the employer in the industrial dispute.

Condonation of delay in liquidation proceedings - calculation of limitation from liquidation commencement date - application of Section 5 principle that limitation is a hard taskmaster - non-compliance with prescribed claim form under IBBI (Liquidation Process) Regulations, 2016 - bona fides in delay applications

Condonation of delay in liquidation proceedings - calculation of limitation from liquidation commencement date - application of Section 5 principle that limitation is a hard taskmaster - bona fides in delay applications - The challenge to the Adjudicating Authority's refusal to condone the delay in filing the claim before the Liquidator was dismissed. - HELD THAT: - The Tribunal examined the impugned order and accepted the Adjudicating Authority's computation of delay from the Liquidation Commencement Date (03.09.2019) to the date of submission of the claim form (06.07.2021), arriving at 672 days of delay. The Tribunal applied the established principle that limitation is a strict rule under Section 5 and noted the delay was exorbitant and not shown to be bona fide. Reliance on pandemic-related difficulties and the appellant's contention regarding procedural insistence by the Liquidator did not persuade the Tribunal to take a different view from the Adjudicating Authority. Consequently, the Tribunal found no grounds to condone the delay or to interfere with the Adjudicating Authority's exercise of discretion.

Appeal on the question of condoning delay dismissed; the Adjudicating Authority's refusal to condone the 672 days' delay upheld.

Non-compliance with prescribed claim form under IBBI (Liquidation Process) Regulations, 2016 - Whether the claim filed before the Liquidator was invalid for not being in the prescribed form under the IBBI (Liquidation Process) Regulations, 2016. - HELD THAT: - The Tribunal noted the Adjudicating Authority's finding that the claim form submitted by the appellant did not conform to the form prescribed under the IBBI (Liquidation Process) Regulations, 2016, and was therefore non-est. The Tribunal did not find error in that conclusion and declined to disturb the finding that non-compliance with the prescribed form rendered the claim infirm.

Finding that the claim was not in the prescribed form was affirmed and the claim held non-est.

Final Conclusion: The appeal is dismissed as devoid of merits; the Adjudicating Authority's order dismissing the application to condone delay and holding the claim non-est is upheld. Appeal dismissed without costs.

Direction to Resolution Professional to place settlement proposal before Committee of Creditors - inherent powers under Tribunal rules - withdrawal under Section 12A and Regulation 30 A procedure - requirement of Form FA for withdrawal - binding enforceable settlement obligations - commercial wisdom of Committee of Creditors

Direction to Resolution Professional to place settlement proposal before Committee of Creditors - inherent powers under Tribunal rules - withdrawal under Section 12A and Regulation 30 A procedure - requirement of Form FA for withdrawal - Whether the Tribunal can direct the Resolution Professional to communicate the applicant's settlement proposal to the Committee of Creditors and place it for e voting pursuant to an application filed under Rule 31 of the NCLAT Rules. - HELD THAT: - The Tribunal held that there is no provision under the Insolvency and Bankruptcy Code, 2016 or the Regulations that authorises the Appellate Tribunal to issue the relief sought - namely directing the Resolution Professional to communicate and place the appellant's settlement proposal for e voting. The statutory regime provides a specific procedure for withdrawal/settlement under Section 12A read with Regulation 30 A, which contemplates that an application for withdrawal after constitution of the CoC must be made through the (I)RP in Form FA and considered by the CoC with prescribed voting thresholds. An exercise of inherent powers under Tribunal rules cannot be used to bypass or conflict with these express statutory procedures. The application under Rule 31 did not invoke or demonstrate compliance with the statutory route, including absence of Form FA and absence of requisite assent/consent of the home buyers who hold substantial voting share. The Tribunal also noted deficiencies in the draft settlement (non binding aspects, absence of the investor as a signatory and no timeline for mobilisation of funds), which undermined the proposal's character as an enforceable settlement to be placed before the CoC. In view of the statutory code being a self contained scheme and the primacy of CoC's commercial wisdom within that scheme, the sought direction was impermissible and the application was held to be not bona fide but liable to delay the main proceedings. [Paras 41, 51, 59]

The application under Rule 31 seeking a direction to the Resolution Professional to communicate and place the settlement proposal for e voting is dismissed as impermissible and not bonafide; the Tribunal will not exercise inherent powers to override the statutory withdrawal/settlement procedure.

Final Conclusion: I.A. No. 558 of 2022 filed under Rule 31 is dismissed: the Tribunal cannot direct the Resolution Professional to place the appellant's draft settlement before the Committee of Creditors in the absence of compliance with the statutory withdrawal/settlement mechanism (including Form FA and requisite consents), and the proposal on record lacks the requisite enforceability and bona fides.

Limitation - pre-existing dispute - plausible contention standard at admission (Mobilox test) - admission under section 9 of the Insolvency and Bankruptcy Code and initiation of CIRP - moratorium under section 14 of the IBC - appointment of Interim Resolution Professional

Limitation - The Company Petition under section 9 is not barred by limitation. - HELD THAT: - The Tribunal noted that although invoices dated 04.08.2018 and 04.04.2019 and subsequently re-issued invoices dated 10.01.2020 were placed on record, the petition filed on 03.08.2021 falls within the period of limitation even if the earlier invoice dates are taken into account. The Tribunal accordingly concluded that the application is within time and available for adjudication on merits. [Paras 11, 12]

Application is within limitation and not time-barred.

Pre-existing dispute - plausible contention standard at admission (Mobilox test) - There is no established pre-existing dispute which is a bar to admission of the section 9 petition. - HELD THAT: - Applying the admissibility threshold articulated in Mobilox Innovations (the 'plausible contention' test), the Tribunal examined the materials relied upon by the Corporate Debtor and found the alleged email communications to be inauthentic (not printed from webpage and appearing typed). The Tribunal observed that the Corporate Debtor had failed to clear dues which resulted in delay in completion of work and that the alleged contentions raised by the Corporate Debtor amounted to assertions unsupported by tangible evidence. On this basis the Tribunal held that the contesting plea did not constitute a plausible pre-existing dispute warranting rejection at the admission stage. [Paras 13, 14, 15]

Pre-existing dispute not established; the defence is a patently feeble assertion unsupported by tangible materials and does not preclude admission.

Final Conclusion: The petition under section 9 is admitted; moratorium under section 14 of the IBC is imposed, public announcement and other statutory steps directed, and an Interim Resolution Professional is appointed to conduct the CIRP.

Advance payment for supply of goods or services constitutes operational debt - operational debt - financial debt - Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016 - effect of earlier proceedings / withdrawal and liberty to approach Adjudicating Authority

Advance payment for supply of goods or services constitutes operational debt - operational debt - financial debt - Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Whether the petition under Section 7 of the Code was maintainable where the claim arose from an advance payment made to the corporate debtor for taking premises on lease. - HELD THAT: - The Tribunal applied the ratio of the Supreme Court in Consolidated Construction Consortium Ltd. v. Hitro Energy Solutions Pvt. Ltd., holding that an advance payment made for goods or services falls within the definition of 'operational debt'. The admitted facts establish that the applicant paid an advance to the corporate debtor for lease of premises and no lease deed was executed; the amount was not interest-bearing and therefore did not satisfy the characteristics of a 'financial debt'. In view of this legal classification, a petition under Section 7 (meant for initiation of CIRP by a financial creditor) was not the appropriate remedy. The Tribunal accordingly concluded that the present petition under Section 7 was not maintainable and must be rejected. [Paras 14, 15, 16]

The Section 7 petition is not maintainable because the advance payment is an operational debt, not a financial debt; the petition under Section 7 is rejected.

Effect of earlier proceedings / withdrawal and liberty to approach Adjudicating Authority - Whether the earlier Section 9 application and subsequent appeal/withdrawal proceedings precluded the applicant from approaching the Adjudicating Authority afresh. - HELD THAT: - The Tribunal examined the record of the earlier Section 9 petition, its dismissal and the withdrawal of the appeal before the NCLAT. The Tribunal noted the NCLAT order which dismissed the appeal as withdrawn and the subsequent interlocutory clarification in which the NCLAT observed, on equitable grounds, that the dismissal would not preclude the appellant from approaching the competent Adjudicating Authority by filing necessary application in accordance with law. The Tribunal recorded that the NCLAT's orders did not bar the applicant from pursuing appropriate proceedings before the Adjudicating Authority and that factual and legal pleas could be raised afresh subject to law and principles of natural justice. However, that liberty did not alter the legal classification of the claim under the Code. [Paras 10, 11, 12]

The earlier dismissal/withdrawal did not bar the applicant from approaching the Adjudicating Authority, but that procedural liberty did not render a Section 7 petition maintainable when the claim is an operational debt.

Final Conclusion: The petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 is rejected because the advance payment to the corporate debtor is an operational debt (not a financial debt); the earlier appellate proceedings did not preclude the applicant from approaching the Adjudicating Authority but do not change this legal conclusion. No order as to costs.

Corporate Insolvency Resolution Process - Section 10 of the Insolvency and Bankruptcy Code, 2016 - existence of debt and default - ineligibility under Section 11 - completeness of application and Form 6 requirements - appointment of Interim Resolution Professional - moratorium under Section 14 - public announcement under Section 13(2)

Section 10 of the Insolvency and Bankruptcy Code, 2016 - existence of debt and default - completeness of application and Form 6 requirements - ineligibility under Section 11 - Admission of the Section 10 petition and initiation of CIRP against the corporate applicant - HELD THAT: - The Tribunal applied the settled principle that under Section 10 the adjudicating authority is bound to admit an application if the applicant establishes existence of debt and default and the application is complete, subject only to the ineligibilities in Section 11. Having considered the averments, audited financial statements, ledgers and the certificate of default placed on record, and having found no pending winding up proceeding or disqualification under Section 11, the Tribunal concluded that debt and default stood established and the petition was complete. Reliance was placed on the legal proposition (as summarised from NCLAT) that once satisfied a default has occurred, the application must be admitted unless incomplete. No statutory bar under Section 11 was found to preclude admission. The petition was therefore admitted and CIRP initiated. [Paras 6, 7, 22, 23]

Petition under Section 10 admitted and Corporate Insolvency Resolution Process initiated against M/s. IT Power Consulting Private Limited.

Appointment of Interim Resolution Professional - Appointment of the Interim Resolution Professional - HELD THAT: - The Corporate Applicant had proposed a named professional in Part II of Form 6, but the Tribunal noted that the proposed nominee's registration had been suspended by the IBBI Disciplinary Committee. On that basis the Tribunal declined to appoint the proposed person and appointed an alternative interim resolution professional on the terms recorded, subject to there being no disciplinary proceedings pending against him and subject to filing of requisite consent and disclosures in the prescribed Form. [Paras 8, 9]

Mr. Vijay Kumar Sharma appointed as Interim Resolution Professional, subject to required disclosures and absence of pending disciplinary proceedings.

Moratorium under Section 14 - public announcement under Section 13(2) - Imposition of moratorium and consequential directions including public announcement and deposit for resolution costs - HELD THAT: - On admission under Section 10 the Tribunal declared the moratorium in terms of Section 14 and set out its statutory consequences, including prohibition on institution or continuation of suits, transfer or disposal of assets, enforcement of security and recovery of property by lessors. The Tribunal directed the Interim Resolution Professional to make the public announcement within the prescribed period, and directed the Corporate Applicant to deposit an advance with the Interim Resolution Professional to meet resolution-process expenses, subject to adjustment as per applicable rules. The Tribunal also recorded the duties of the Interim Resolution Professional and the obligation of management and personnel to cooperate. [Paras 10, 11, 12, 19, 20]

Moratorium declared; public announcement to be made by the IRP; Corporate Applicant directed to deposit funds for resolution costs and IRP duties enunciated.

Final Conclusion: The Tribunal admitted the Section 10 petition and initiated CIRP against the corporate applicant, appointed an Interim Resolution Professional (alternate to the suspended nominee), declared the moratorium, directed the IRP to make the public announcement and required the corporate applicant to deposit funds for resolution-process expenses.

Interlocutory nature of bail applications and fresh applications on changed circumstances - issue-estoppel in successive bail proceedings - requirement and effect of recording satisfaction under Section 19 of the PMLA - applicability of Section 45 of the PMLA and its twin conditions for grant of bail - effect of abscondence, furnishing fake addresses and non-cooperation on bail - power of court under Section 88 Cr.P.C. to take bond for appearance when accused produced without arrest - Explanation (ii) to Section 44(d) of the PMLA permitting filing of complaint while investigations continue

Interlocutory nature of bail applications and fresh applications on changed circumstances - issue-estoppel in successive bail proceedings - Fresh bail applications are permissible and issue-estoppel does not bar a reconsideration of bail, subject to the limitation that unchanged circumstances cannot be used to seek review of an earlier order. - HELD THAT: - The Court held that an order on bail is interlocutory and therefore not final; successive bail applications may be entertained where there are changed circumstances or subsequent events calling for fresh consideration. However, repetition of the same grounds without any fresh circumstance would amount to an impermissible review of the earlier decision. The Court followed the principles in Usmanbhai Dawoodbhai Memon and related authorities and observed that while fresh applications are maintainable, they must present new circumstances to require a fresh exercise of judicial mind. [Paras 14, 15, 16]

Issue-estoppel is not available to the respondent to oppose the bail application, but the fresh application must present changed circumstances to be entertained on merits.

Requirement and effect of recording satisfaction under Section 19 of the PMLA - power of court under Section 88 Cr.P.C. to take bond for appearance when accused produced without arrest - Non-adherence to the procedural step under Section 19 of the PMLA, as argued, does not entitle the applicant to bail where the record shows compliance or where arrest resulted from execution of NBWs after abscondence. - HELD THAT: - The Court observed that the Directorate had recorded satisfaction on its file and that a Coordinate Bench had previously considered and rejected the contention regarding non-compliance with Section 19. Further, when an accused is produced before the court without formal arrest during investigation the court retains powers under Section 88 Cr.P.C. to take a bond; conversely, where NBWs are issued because the accused furnished fake addresses and was untraceable, his subsequent arrest and remand to custody cannot be impugned in a bail application. Therefore, the contention that absence of an arrest under Section 19 prevents application of the PMLA rigours was rejected. [Paras 16, 17, 18]

The plea that Section 19 non-compliance vitiates custody or prevents application of Section 45 is not available to the applicant; arrest on execution of NBWs and the record of satisfaction by the Enforcement Directorate negate that contention.

Applicability of Section 45 of the PMLA and its twin conditions for grant of bail - effect of abscondence, furnishing fake addresses and non-cooperation on bail - Explanation (ii) to Section 44(d) of the PMLA permitting filing of complaint while investigations continue - The applicant has not satisfied the twin conditions under Section 45 of the PMLA; his abscondence, provision of fake addresses, non-cooperation with investigation and the gravity and scale of alleged offences preclude grant of bail. - HELD THAT: - The Court applied the twofold test under Section 45 - (i) reasonable grounds for believing the accused is not guilty, and (ii) that the accused is not likely to commit an offence while on bail. It found the allegations grave (massive alleged money laundering, multilayering, international aspects), noted that Rs.35 crores were traceable to the applicant and that he had earlier furnished fake addresses and remained out of reach for about two years necessitating NBWs. The Court held that an exculpatory statement is insufficient to establish reasonable grounds to believe non-guilt and that the applicant's past conduct indicates potential interference with investigations and risk of flight. The Court also noted Explanation (ii) to Section 44(d) allows the Enforcement Directorate to file complaints while investigations continue, so pendency of investigation did not entitle the accused to bail. [Paras 20, 21]

Twin conditions under Section 45 are not fulfilled; bail is refused having regard to gravity of allegations, non-cooperation, abscondence and risk of interfering with investigation or fleeing.

Final Conclusion: Bail application under Section 439 Cr.P.C. read with Section 45 PMLA is rejected: successive bail applications are maintainable but must show changed circumstances; the challenge based on non-compliance with Section 19 PMLA is untenable on the record; and the twin conditions of Section 45 are not satisfied given the gravity of allegations, the applicant's past non-cooperation and abscondence.

Club Membership or Association Service - Taxability of infrastructural support services - Reconsideration in light of Supreme Court precedent - Remand for fresh adjudication

Club Membership or Association Service - Taxability of infrastructural support services - Reconsideration in light of Supreme Court precedent - Remand for fresh adjudication - Matter remitted to the adjudicating authority for fresh consideration in light of the Hon'ble Supreme Court's decision in CALCUTTA CLUB LTD. - HELD THAT: - The Tribunal noted that the question of taxability of club membership and related services has been authoritatively addressed by the larger Bench of the Hon'ble Supreme Court in CALCUTTA CLUB LTD. While the Supreme Court's decision settles the legal question, the Tribunal held that the legal principle must be applied to the specific facts of each case. Consequently, the impugned order is set aside and the matter is remanded to the adjudicating authority to re-examine and decide the taxability of the services rendered to the caterers (including claimed infrastructural support) by applying the Supreme Court's ruling to the appellant's factual matrix. All issues are left open for fresh adjudication, and the adjudicating authority is directed to pass a de novo order within two months from the date of this order. [Paras 4, 5]

Set aside the impugned order and remit the matter to the adjudicating authority for fresh decision in accordance with the Supreme Court's judgment; all issues kept open.

Final Conclusion: The appeal is allowed by way of remand: the impugned order is set aside and the matter is remitted to the adjudicating authority to reconsider taxability in accordance with the Supreme Court's decision in CALCUTTA CLUB LTD, with a direction to pronounce a de novo order within two months; all issues remain open.

Misuse of exemption notification - certificate for use on handlooms not based on verification - commission agent/agency vs real purchaser - penalty under Rule 209A read with Rule 26 - appellate interference vitiated by perversity

Misuse of exemption notification - certificate for use on handlooms not based on verification - commission agent/agency vs real purchaser - The respondent had participated in a modus by which exemption notifications were abused and certificates stating yarn would be used only on handlooms were not founded on independent verification. - HELD THAT: - The adjudicating authority's findings, based on scrutiny of documents, depositions and seizure material, recorded that cross reel hank yarn dutiable but for exemption was routed such that the spinning mill issued invoices in the names of traders while consigning yarn purportedly to the apex bodies. The authority found that the apex bodies (including the respondent) received only a small commission and did not negotiate purchase prices, indicating they acted as commission/selling agents rather than the real purchasers. Further, certificates purportedly declaring that the yarn would be used only on handlooms were issued by the respondent on the basis of certificates from the spinning mill and without independent verification or control over ultimate sales. Those factual findings led to the conclusion that the transaction structure defeated the object of the notification and the conditions for exemption were not satisfied in substance.

The Court accepted the adjudicating authority's factual conclusion that the respondent's conduct amounted to misuse of the exemption scheme and that the certificates were not based on factual verification.

Penalty under Rule 209A read with Rule 26 - appellate interference vitiated by perversity - Whether the Tribunal was correct in setting aside the penalty imposed on the respondent; the High Court held that the Tribunal's interference was perverse and restored the adjudicating authority's order imposing penalty. - HELD THAT: - The Tribunal reversed the adjudicating authority without addressing or rebutting the material findings about the modus operandi, the commission-agent character of the apex bodies, and absence of independent verification of certificates. The High Court found that the Tribunal had quoted a truncated portion of the notification and failed to examine critical evidence and the reasoning of the adjudicating authority. Given the uncontroverted factual findings demonstrating that the conditions for exemption were not met and that the respondent's conduct defeated the notification's purpose, the Tribunal's order was held to be legally unsustainable.

The appeal is allowed; the Tribunal's order setting aside the penalty is quashed and the adjudicating authority's imposition of penalty is upheld.

Final Conclusion: The High Court answered the substantial question of law in favour of the revenue, holding that the respondent participated in a scheme defeating the notification's purpose, the certificates were not based on independent verification, and the Tribunal's interference with the penalty order was perverse; the adjudicating authority's order imposing penalty is restored.

Manufacture - adoption of any other treatment to render the product marketable to the consumer - peripheral activities - area based exemption under notification dated 10.06.2003 - classification under Chapter 32 and Chapter 33 - packing and form determining classification - extended period of limitation under section 11A(4) of the Central Excise Act, 1944

Manufacture - adoption of any other treatment to render the product marketable to the consumer - classification under Chapter 32 and Chapter 33 - packing and form determining classification - area based exemption under notification dated 10.06.2003 - Whether the processes undertaken by the appellant on the raw materials amounted to 'manufacture' so as to qualify the clearances for the area based exemption dated 10.06.2003. - HELD THAT: - The Tribunal examined whether, beyond the peripheral activities listed in paragraph 4 of the notification, the appellant adopted any other treatment that rendered the colour solution marketable as nail enamel. Having regard to the definition of 'manufacture' in section 2(f)(iii) and the HSN/Chapter 33 notes, the Tribunal held that colour solution supplied in bulk drums could not be regarded as nail enamel until it was put up in the specialised retail packing and form (small bottles with brush) and subjected to treatment (homogenisation, mixing with thixo lacquer to adjust viscosity, maturation, filling and packing) that produced a commercially identifiable product known to consumers as nail enamel. The General Explanatory Notes to Chapter 33 and Chapter Note 5 (as applied) show that such packing and form are critical to classification and marketability. Reliance on the Tribunal's earlier decision in Lakme Lever supported the proposition that adoption of any other treatment rendering a product marketable to the consumer amounts to manufacture. The Additional Director General's contrary conclusion, treating the processes as only viscosity adjustment or peripheral activity, was rejected because the processes conferred the attributes of marketability and produced a new commercially identifiable product. [Paras 17, 18, 25, 29]

The processes undertaken by the appellant amount to 'manufacture' and the appellant is entitled to the area based exemption under the notification dated 10.06.2003.

Peripheral activities - extended period of limitation under section 11A(4) of the Central Excise Act, 1944 - Whether the invocation of the extended period of limitation and confirmation of duty, interest and penalty could be sustained once the appellant was held entitled to the exemption. - HELD THAT: - The Tribunal recorded that the Additional Director General had invoked the extended period under section 11A(4) and confirmed duty, interest and penalty. Having found that the appellant's clearances were covered by the exemption notification (i.e., no dutiable manufacture and clearance in the circumstances held), the consequential invocation of extended limitation and imposition of duty, interest and penalty could not be sustained. The Tribunal therefore set aside the impugned order confirming demand, penalty and interest. [Paras 13, 29]

Invocation of the extended period and confirmation of duty, interest and penalty cannot be sustained in view of the finding that the appellant is entitled to the exemption; the impugned order is set aside.

Final Conclusion: The appeal is allowed: the Tribunal held that the appellant's processes rendered the bulk colour solution marketable as nail enamel and thus amounted to 'manufacture' for purposes of the exemption notification dated 10.06.2003, and accordingly set aside the order confirming duty, interest and penalty.

Input Tax Credit - Purchase Tax under Schedule VIII - Levy of tax on purchase - Allowability of input tax paid on purchases from unregistered dealers - Remand for recomputation of assessment

Input Tax Credit - Purchase Tax under Schedule VIII - Allowability of input tax paid on purchases from unregistered dealers - Denial of input tax credit in respect of purchase tax paid on raw rubber procured from unregistered dealers within the State. - HELD THAT: - The Court held that goods covered by Schedule VIII attract purchase-tax liability on the purchaser and that Section 10 of the TVAT Act contemplates input tax credit in respect of taxable purchases mentioned in Schedule VIII. The statutory scheme distinguishes purchases from registered and unregistered sellers as to documentary proof required from registered sellers, but does not restrict the availability of input tax credit only to purchases from registered dealers where the purchaser has deposited the purchase-tax as mandated by the Act. Consequently, where the purchaser has deposited the purchase-tax in respect of Schedule VIII goods, the amount so deposited qualifies for being set off as input tax credit, subject to compliance with legal requirements for deposit of purchase-tax.

Denial of input tax credit in the assessment was held unlawful to the extent that the petitioner had deposited purchase-tax on Schedule VIII goods purchased from unregistered dealers; such deposited tax is, in principle, available as input tax credit.

Remand for recomputation of assessment - Disposition of the assessment proceedings in light of the principle declared by the Court. - HELD THAT: - The Court did not adjudicate quantification of credit or ancillary issues but directed that the assessment be remanded to the Assessing Officer for fresh computation and conclusion of proceedings within six months. The Assessing Officer was directed to give effect to the legal view expressed and to comply with directions in the earlier Division Bench decision in WP(C) 234/2015 (subject to any outcome in the Supreme Court challenge to that decision). The petitioner was permitted to raise other issues, if necessary, before the Assessing Officer. The Court also recorded interim arrangements regarding amounts deposited and their custody by the department.

Matter remanded to the Assessing Officer for fresh computation of input tax credit and conclusion of assessment within six months; directions given for compliance with the earlier Division Bench order and for handling of interim deposits.

Final Conclusion: The writ petition succeeded in principle on the question of law: purchase-tax deposited by a purchaser in respect of goods specified in Schedule VIII (raw rubber) - including purchases from unregistered dealers where purchase-tax has been deposited in accordance with law - is, subject to statutory compliance, eligible to be set off as input tax credit; the matter is remanded to the Assessing Officer for fresh computation and completion of assessment within six months, with interim deposit directions recorded.

Rejection of books of account - best judgment assessment - adverse inference from missing invoices / bills - restoration of first appellate authority's finding - determination of turnover without evidentiary basis - sale from recorded stock versus out-of-books sale

Rejection of books of account - best judgment assessment - restoration of first appellate authority's finding - The validity of the Tribunal's reversal of the First Appellate Authority's acceptance of the assessee's books and its restoration of the assessing authority's best judgment assessment. - HELD THAT: - The Tribunal reversed the First Appellate Authority which had, after detailed consideration, held that none of the grounds taken by the assessing authority warranted rejection of the books or a best judgment assessment. The High Court found that the books were subsequently produced and no discrepancies were pointed out; the First Appellate Authority accepted the explanations. There was no material or cogent reason recorded by the Tribunal to justify rejection of the appellate finding and reinstatement of the best judgment assessment. In these circumstances the Tribunal's order restoring the assessment was unsustainable and was set aside, with the First Appellate Authority's order restored.

The Tribunal's reversal was quashed and the First Appellate Authority's order accepting the books and rejecting best judgment assessment was restored.

Adverse inference from missing invoices / bills - sale from recorded stock versus out-of-books sale - Whether an adverse inference and resulting tax liability could be imposed solely on account of two bills (Nos. 759 and 760) intercepted in transit when the assessee explained the absence of one bill and showed the stock issuance in the books. - HELD THAT: - The assessing authority drew adverse inference because for 46 quintals of Chokar no bill was produced at interception. The assessee explained that one bill (No. 759) existed but the driver mistakenly did not carry it, and that bill No. 760's carbon copy slipped so the carbon was blank; importantly, the goods were shown as issued from the assessee's maintained stock. The First Appellate Authority accepted these explanations and no material suggested purchases outside the books. The High Court held that, in absence of material showing transactions outside the recorded accounts, no adverse inference could be drawn and no tax liability could be fastened merely on that discrepancy.

Adverse inference based solely on the missing/intercepted bills was rejected and could not sustain the tax liability.

Determination of turnover without evidentiary basis - best judgment assessment - Whether the Tribunal was justified in determining turnover (first purchase of wheat) and imposing tax arbitrarily in the absence of evidence of purchases outside the account books. - HELD THAT: - The impugned order fixed turnover and imposed tax despite no evidence on record of purchases outside the books; the only basis was the intercepted bills discrepancy which the First Appellate Authority had examined and accepted the assessee's explanation. The High Court observed that once there was no material to suggest undisclosed purchases and the stock movement was reflected in the books, the Tribunal had no warrant to determinatively fix turnover and tax without cogent material.

The Tribunal's arbitrary determination of turnover and tax in absence of evidentiary basis was set aside.

Sale from recorded stock versus out-of-books sale - adverse inference from missing invoices / bills - The correctness of disbelieving the assessee's contention that sale of Chokar on 26.10.2006 was from recorded stock as found by the First Appellate Authority. - HELD THAT: - The First Appellate Authority found that 48 quintals of Chokar were sold out of an existing stock of 76 quintals as recorded in the assessee's accounts. The Tribunal disbelieved that finding and treated the sale as out-of-books. The High Court noted that the stock in transit was issued from the books and the First Appellate Authority accepted the explanation regarding the missing bill copies; absent material to the contrary, the Tribunal's disbelief was unsupported. Consequently, the appellate finding that the sale was from recorded stock was restored.

The Tribunal's disbelief was rejected and the First Appellate Authority's finding that the sale was from recorded stock was restored.

Final Conclusion: The revision is allowed: the Tribunal's order restoring the assessment and reversing the First Appellate Authority is set aside; the First Appellate Authority's order, which accepted the assessee's books and explanations and rejected best judgment assessment and adverse inferences, is restored for assessment year 2006-07.