TaxTMI Updates e-Newsletter
Oct 28,2020

Transitional arrangements for input tax credit - Entitlement to carry forward CENVAT credit - Form GST TRAN-1 - Time limit for submission of TRAN-1 (Rule 117(1)) - Duty to decide pending application and to pass a speaking order after hearing

Form GST TRAN-1 - Duty to decide pending application and to pass a speaking order after hearing - Direction to the appropriate authority to consider and decide the petitioner's application dated 04.12.2019 seeking transition of accumulated Cenvat credit into the GST regime and to give the petitioner an opportunity of hearing before passing a speaking order. - HELD THAT: - The Court, on a conjoint reading of Section 140(1) and Rule 117(1), observed that carrying forward Cenvat credit into the GST regime is effected by filing Form GST TRAN-1. The petitioner filed the TRAN-1 belatedly and an application dated 04.12.2019 is pending adjudication with respondent No.6. Rather than adjudicating the entitlement on merits in these proceedings, the Court directed respondent No.6 to consider the pending application in accordance with law, to afford the petitioner a hearing and to pass a reasoned (speaking) order. The Court therefore disposed of the writ petition by issuing a mandamus-style direction for consideration and adjudication of the petitioner's application within a specified time-frame. [Paras 10, 11, 12]

Respondent No.6 directed to decide the petitioner's application dated 04.12.2019 after granting a hearing and to pass a speaking order within eight weeks.

Transitional arrangements for input tax credit - Entitlement to carry forward CENVAT credit - Time limit for submission of TRAN-1 (Rule 117(1)) - Whether the Court would determine the legal question on the validity or effect of the time limit for filing TRAN-1 (i.e., whether the time limit is directory or mandatory). - HELD THAT: - The petitioners argued, relying on various High Court decisions, that entitlement to transition Cenvat credit is not defeated by a time limit and that the time limit in Rule 117(1) is directory. The Court recorded these submissions and noted the authorities cited, but did not adjudicate the substantive legal controversy in the writ itself. Instead, the Court confined its order to directing the appropriate authority to consider and decide the pending application on merits after hearing the petitioner. Thus the contested question about the character of the time limit was not decided by this order and remains for adjudication by the appropriate authority in the course of deciding the TRAN-1 application. [Paras 6, 10, 11]

The Court declined to decide the issue of whether the time limit in Rule 117(1) is directory or mandatory and left that question to be addressed in the adjudication of the pending application by respondent No.6.

Final Conclusion: Writ petition disposed by directing respondent No.6 to decide the petitioner's application dated 04.12.2019 for transition of accumulated Cenvat credit into the GST regime, after affording a hearing and by passing a speaking order within eight weeks; the Court did not decide the substantive question whether the time limit for filing TRAN-1 is directory or mandatory.

Failure to pass on benefit of additional input tax credit - violation of Section 171(1) (failure to pass on ITC benefit) - imposition of penalty for anti profiteering violations - non retroactivity of penal provisions (Section 171(3A))

Failure to pass on benefit of additional input tax credit - violation of Section 171(1) (failure to pass on ITC benefit) - The Respondent had not passed on the benefit of additional input tax credit to homebuyers in the project "Orchard Avenue-93" for the period 01.07.2017 to 31.12.2018 and thereby violated Section 171(1) of the CGST Act, 2017. - HELD THAT: - Having considered the DGAP's investigative report, the submissions and materials placed before the Authority, and the Respondent's own statement that he was in the process of transferring the benefit but without producing evidence of doing so, the Authority concluded that the Respondent did not pass on the additional ITC benefit to the applicant and other homebuyers for the period from 01.07.2017 to 31.12.2018. The Authority therefore upheld the finding of profiteering and non compliance with the obligation to pass on ITC under Section 171(1) of the CGST Act, 2017.

Violation of Section 171(1) established for the period 01.07.2017 to 31.12.2018; profiteered amount previously determined.

Imposition of penalty for anti profiteering violations - non retroactivity of penal provisions (Section 171(3A)) - Penalty under Section 171(3A) of the CGST Act, 2017 could not be imposed for violations occurring between 01.07.2017 and 31.12.2018 because the provision came into force only w.e.f. 01.01.2020. - HELD THAT: - Section 171(3A) (inserted by the Finance Act, 2019) prescribing specific penalty for contravention of Section 171(1) came into effect on 01.01.2020. Since the Respondent's violation occurred during 01.07.2017 to 31.12.2018, and no penalty provision existed for that period, the Authority held that the penal provision could not be applied retrospectively. Consequently, the notice issued for imposition of penalty under Section 171(3A) was withdrawn and the penalty proceedings were dropped.

Penalty proceedings under Section 171(3A) withdrawn and dropped as retrospective imposition is not permissible.

Final Conclusion: The Authority upheld that the Respondent failed to pass on additional ITC to buyers for 01.07.2017 to 31.12.2018 (violation of Section 171(1)); but, because specific penalty provisions were introduced only w.e.f. 01.01.2020, penalty proceedings under Section 171(3A) were withdrawn and dropped.

Profiteering - failure to pass on benefit of additional Input Tax Credit - verification of compliance by jurisdictional authority - penalty under Section 171(3A) of the CGST Act, 2017 - non retrospectivity of penal provision

Profiteering - failure to pass on benefit of additional Input Tax Credit - verification of compliance by jurisdictional authority - Respondent had not passed on the benefit of additional Input Tax Credit to buyers of the project for the period 01.07.2017 to 31.12.2018 and subsequently complied with the Authority's order; compliance was verified by the jurisdictional GST officer. - HELD THAT: - The Authority accepted the DGAP's investigation and earlier determination that the Respondent had not passed on the benefit of additional ITC to purchasers in the Project 'Synera' for the period from 01.07.2017 to 31.12.2018. The Respondent, in compliance with the Authority's Order No. 60/2019 dated 21.11.2019, transferred the benefit to the buyers. The jurisdictional officer (Deputy Excise and Taxation Commissioner (ST), Gurugram (East)) verified the compliance and reported that the profiteered amounts along with interest had been distributed to residential and commercial buyers, confirming that the direction to pass on benefit was implemented. [Paras 2, 6, 7]

The Respondent had violated Section 171(1) by not passing on additional ITC for 01.07.2017 to 31.12.2018, but has since passed on the benefit and such compliance has been verified by the jurisdictional authority.

Penalty under Section 171(3A) of the CGST Act, 2017 - non retrospectivity of penal provision - Penalty under Section 171(3A) cannot be imposed for the period 01.07.2017 to 31.12.2018 because that penal provision came into force only w.e.f. 01.01.2020. - HELD THAT: - Section 171(3A) (introduced by Section 112 of the Finance Act, 2019) came into force from 01.01.2020. The Respondent's contravention occurred between 01.07.2017 and 31.12.2018, a period during which no specific penalty under Section 171(3A) existed. Applying the principle that penal provisions are not to be given retrospective effect, the Authority held that the penalty prescribed by Section 171(3A) cannot be imposed for past conduct predating its commencement. Consequently, the earlier notice for imposition of penalty issued to the Respondent was withdrawn and the penalty proceedings were dropped. [Paras 3, 5, 8]

Notice for imposition of penalty under Section 171(3A) is withdrawn and the penalty proceedings are dropped since the provision is not retrospective and came into force on 01.01.2020.

Final Conclusion: The Authority confirmed that the Respondent had failed to pass on the benefit of additional ITC for 01.07.2017 to 31.12.2018 but has since complied and the compliance was verified; penal proceedings under Section 171(3A) were withdrawn and dropped as that penal provision is not retrospective.

Pre-deposit of alleged profiteered amount - State Consumer Welfare Fund - Centre Consumer Welfare Fund - operational status of State Consumer Welfare Funds - direction to the Secretary, GST Council to coordinate with State Governments - deposit pending availability of State CWF details

Pre-deposit of alleged profiteered amount - State Consumer Welfare Fund - Centre Consumer Welfare Fund - operational status of State Consumer Welfare Funds - Where State Consumer Welfare Funds are not operational or their account details are not available, in whose favour the petitioner should make the pre-deposit of the alleged profiteered amount and what interim arrangement should be directed. - HELD THAT: - The petitioner sought details of the relevant State Consumer Welfare Funds to make the pre-deposit mandated by this Court's earlier order and repeatedly requested such details from the National Anti-Profiteering Authority and the Directorate General of Anti-Profiteering. The Directorate General provided incomplete account information and did not indicate the specific payee details required to draw the demand draft. The Court observed that it was anomalous that the petitioner wished to comply but the State CWFs were neither fully functional nor had their particulars been made available. In view of the absence of operational State CWFs and complete account particulars, the Court directed the Secretary, GST Council, to coordinate with State Governments and, if necessary, place the matter before the GST Council to ensure that State CWFs become operational and their details are made available expeditiously. As an interim and practical measure, until the State CWFs become operational and requisite details are provided, the petitioner was directed to deposit the entire amount with the Centre Consumer Welfare Fund. [Paras 7, 8]

Petitioner to deposit the entire alleged profiteered amount with the Centre Consumer Welfare Fund until State CWFs become operational and their account details are furnished; Secretary, GST Council directed to co ordinate with States and place the matter before the GST Council if required.

Final Conclusion: Application disposed of by directing interim deposit with the Centre Consumer Welfare Fund and by directing the Secretary, GST Council, to take steps with State Governments to make State Consumer Welfare Funds operational and to furnish necessary details to enable payment into the State funds.

Exemption under section 10B - newly established 100% export-oriented undertaking - reconstruction or split and transfer of plant or machinery - approval by the Board appointed under section 14 of the Industries (Development and Regulation) Act, 1951 - delegation of powers to the Development Commissioner - disallowance under section 14A read with Rule 8D - jurisdiction under section 263 - change of opinion

Exemption under section 10B - newly established 100% export-oriented undertaking - reconstruction or split and transfer of plant or machinery - Whether the unit established by the assessee qualified as a newly established 100% EOU for claiming deduction under section 10B or was merely an expansion of an existing unit. - HELD THAT: - The Tribunal found on the facts that the assessee set up a separate unit adjacent to the old unit with substantial independent capital outlay, increased annual capacity materially, secured Ministry approval for the new unit and obtained extensions applying to that new unit. The Court accepted the Tribunal's factual conclusion that the new unit was distinct and not a reconstruction or transfer of plant/machinery from the old unit; whether new plant/machinery amounts to mere expansion is a question of fact. The Tribunal's reasons that the unit was separate, the revenue's contention to the contrary being unsubstantiated, and the governmental communications treating the unit as a new undertaking were held cogent and unrebutted. [Paras 14, 15, 16, 24, 25]

The Court upheld the Tribunal's factual finding that a new 100% EOU was established and the assessee was entitled to benefit under section 10B.

Approval by the Board appointed under section 14 of the Industries (Development and Regulation) Act, 1951 - delegation of powers to the Development Commissioner - explanation to section 10B(7) - Whether approval by the Development Commissioner satisfied the requirement of approval by the Board appointed under section 14 of the IDR Act for the purposes of the Explanation to section 10B. - HELD THAT: - Section 10B's Explanation requires approval as a 100% EOU by the Board appointed under section 14 of the IDR Act. The record showed that powers of the Board were delegated to the Development Commissioner (Handbook of Procedures clause 9.37) and the Development Commissioner had issued the approvals and subsequent extensions. Relying on the principle that a delegate acts by exercising the principal's power, the Court held that an act by the delegated authority is the act of the Board/principal for these purposes. Having accepted that the necessary permissions were granted by the competent delegated authority, the Tribunal's conclusion that the approval requirement was satisfied was sustained. [Paras 19, 21, 22, 23, 24]

The Court held that approval by the delegated authority (Development Commissioner) amounted to approval by the Board and the Explanation requirement was satisfied.

Disallowance under section 14A read with Rule 8D - expenditure in relation to exempt income - Whether common/indirect expenditure was required to be disallowed under section 14A read with Rule 8D in respect of dividend income and mutual fund income held by the assessee. - HELD THAT: - The Tribunal examined the factual matrix: the assessee invested surplus funds in mutual funds, received dividends credited directly, and maintained it had not incurred expenditure in earning exempt income. The AO's conjecture that funds were borrowed or that incidental time spent by staff amounted to disallowable expenditure was found to be speculative and unsupported. Applying the statutory and precedential requirement of strict construction of taxing provisions, and noting the absence of material to justify disallowance under Rule 8D, the Tribunal's deletion of the disallowance was affirmed. [Paras 47, 48, 49, 50, 51]

The Court upheld the Tribunal's deletion of disallowance under section 14A read with Rule 8D and held that the assessee was entitled to retain the exemption.

Jurisdiction under section 263 - change of opinion - Whether the Commissioner was justified in invoking jurisdiction under section 263 to set aside assessment orders for AYs 2003-04 to 2005-06. - HELD THAT: - The Commissioner exercised powers under section 263 to call for and examine records and set aside the assessments on the premise that the AO had allowed exemptions without proper examination. The Tribunal held that the twin conditions for exercise of section 263 were not satisfied and that mere change of opinion does not warrant exercise of revisional jurisdiction. The Court observed that this threshold contention became academic because the merits on section 10B were decided in the assessee's favour for the relevant window; hence specific adjudication of section 263 was unnecessary. [Paras 29, 31, 32]

The Court treated the section 263 issue as academic in light of its substantive decision on section 10B and did not sustain the Commissioner's exercise of revisional jurisdiction.

Final Conclusion: The Court answered the framed substantial questions in favour of the assessee: the unit constituted a newly established 100% EOU eligible for section 10B relief; approvals by the delegated Development Commissioner satisfied the Board-approval requirement; disallowances under section 14A read with Rule 8D were not sustainnable on the facts; and the claimed exercise of revisional jurisdiction under section 263 was rendered academic. All appeals filed by the Revenue were dismissed.

Rectification under section 254(2) of the Income Tax Act - mistake apparent on the record - pendency of appeal and applicability of CBDT Circular No. 17 of 2019 read with CBDT Circular No. 3 of 2018 - debatable point of law not constituting mistake apparent on record - exceptions in para 10 of CBDT Circular No. 3 of 2018 - power of the Tribunal to review its own order

Rectification under section 254(2) of the Income Tax Act - pendency of appeal and applicability of CBDT Circular No. 17 of 2019 read with CBDT Circular No. 3 of 2018 - mistake apparent on the record - Whether the Tribunal's order dated 18.10.2019 could be rectified under section 254(2) by applying CBDT Circular No. 17 of 2019 so as to treat the Department's appeal as not maintainable on account of tax-effect being below the revised threshold. - HELD THAT: - The claim for rectification rested on the contention that the appeal was 'pending' at the time CBDT issued Circular No. 17 of 2019 (which raised the monetary threshold) and therefore the Department should have withdrawn the appeal. The Tribunal examined the meaning of 'pending' and observed that the hearing concluded on 23.07.2019 but the order was pronounced on 18.10.2019; nevertheless, the applicant had not pointed to any patent, manifest or self-evident error in the impugned order. The power under section 254(2) is confined to correcting a mistake apparent on the record and does not permit review or re deciding contentious questions of law or fact that require argument or extended reasoning. Circular No. 17 of 2019 is to be read with Circular No. 3 of 2018, which contains exceptions in para 10 that mandate contesting certain adverse judgments irrespective of monetary limits; those aspects were not raised before the Bench. As the alleged omission to apply the revised threshold involved a debatable legal issue and no manifest error on the face of the record was demonstrated, rectification was not permissible. [Paras 4]

Application for rectification to give effect to CBDT Circular No. 17 of 2019 rejected; no mistake apparent on the record.

Power of the Tribunal to review its own order - debatable point of law not constituting mistake apparent on record - Whether the Tribunal may, in exercise of section 254(2), review and re-decide its order in the guise of rectification. - HELD THAT: - Relying on established precedent, the Tribunal reiterated that section 254(2) grants only a limited power to amend an order to correct a mistake apparent on the record and does not confer a general power of review. An error apparent on the face of the record must be patent and not one which requires extended argument or consideration of evidence; decisions on debatable points of law do not qualify. The applicant sought a reconsideration of the Tribunal's reasoning and outcome (effectively a review) by invoking rectification; no patent error was identified. The Tribunal cited authorities underscoring that failure to consider an argument, or disagreement on a debatable point, is not a ground for rectification. [Paras 4, 5]

Tribunal has no power under section 254(2) to review its order; the miscellaneous applications are dismissed as seeking impermissible review.

Final Conclusion: The miscellaneous applications under section 254(2) seeking rectification of the ITAT order dated 18.10.2019 by reference to CBDT Circular No. 17 of 2019 are dismissed: no mistake apparent on the record was shown and the Tribunal cannot exercise a review power under section 254(2).

Admissibility of agricultural income - revision under section 263 - scope of remand versus framing de novo assessment

Revision under section 263 - scope of remand versus framing de novo assessment - Whether the Pr. CIT was justified in invoking section 263 to set aside the assessment order and direct framing of a de novo assessment. - HELD THAT: - The Tribunal examined the Pr. CIT's action under section 263 which challenged the assessment as erroneous and prejudicial for having not examined the admissibility of a large claim of agricultural income. The assessee conceded that the particular issue of admissibility of agricultural income had not been examined by the A.O. but contended that directing a de novo assessment was excessive because other additions made in the assessment had already been considered and deleted by the Tribunal in an earlier connected proceeding. The Tribunal found merit in that contention and held that while the Pr. CIT could direct examination of the omitted issue, the blanket direction to frame a de novo assessment was unnecessary in light of the Tribunal's earlier decision on the other contested additions. The impugned order under section 263 was therefore modified to remove the direction for framing a de novo assessment and confined to directing the A.O. to examine only the issue specified in the show cause notice. [Paras 10, 11]

Pr. CIT's direction to frame a de novo assessment under section 263 is modified; the Pr. CIT is directed to restrict the A.O.'s action to examining the specific issue of admissibility of agricultural income rather than re-opening the entire assessment.

Admissibility of agricultural income - Examination and verification of the claimed agricultural income of Rs. 54.82 crores was to be undertaken by the assessing officer. - HELD THAT: - The Tribunal recorded that the A.O. and the first appellate authority had not examined the material facts concerning the large agricultural income claim. The Pr. CIT had issued a show cause and concluded that admissibility was not prima facie proved and required further scrutiny. The assessee accepted that the admissibility issue remained unexamined and the Tribunal accordingly directed that the A.O. should examine that specific issue as raised in the show cause notice. This constituted a remand for fresh consideration of the admissibility of the claimed agricultural income; the Tribunal did not decide the merits of the admissibility on the record before it. [Paras 10]

The matter of admissibility of the claimed agricultural income is remanded to the A.O. for examination as specified in the show cause notice; the A.O. shall examine that issue afresh.

Final Conclusion: Assessee's appeal is partly allowed: the order under section 263 is modified to delete the direction for a de novo assessment and is confined to directing the assessing officer to examine the admissibility of the claimed agricultural income for AY 2014-15; the question of admissibility is remanded for fresh consideration by the A.O.

Assessment framed on a non-existent entity is void ab initio - notice under section 148 issued in the name of the amalgamating company - doctrine of merger - amalgamating company ceases to exist and cannot be proceeded against - Section 292B - clerical error exception distinguishable on peculiar facts - admission of additional ground notwithstanding delay (NTPC test)

Assessment framed on a non-existent entity is void ab initio - doctrine of merger - amalgamating company ceases to exist and cannot be proceeded against - notice under section 148 issued in the name of the amalgamating company - Section 292B - clerical error exception distinguishable on peculiar facts - Re-assessment proceedings initiated by notice dated 29.03.2005 and the re-assessment order framed in the name of Hind Lever Chemicals Ltd. (the amalgamating/non-existent entity) are valid or void. - HELD THAT: - The Tribunal found on the admitted chronology that HLCL had ceased to exist by virtue of an approved scheme of amalgamation and that the notice under section 148 and the consequent re-assessment had been issued and framed in the name of HLCL (the amalgamating company). Applying the principle that an amalgamating entity ceases to exist on the sanctioned scheme and therefore cannot be proceeded against, the Tribunal followed the reasoning in Maruti Suzuki India Ltd. and the line of authorities holding that completion of assessment in the name of a non-existent entity is a substantive jurisdictional nullity rather than a mere procedural defect curable under Section 292B. The Tribunal distinguished the SkyLight/SkyLight Hospitality line (where a clerical error was found on the peculiar facts) as inapplicable here because the record did not show the kind of affirmative material that established the notice was plainly intended for the successor. On these facts the notice and assessment in the name of HLCL were held to be void ab initio and quashed. [Paras 4]

Notice under section 148 dated 29.03.2005 and the reassessment framed in the name of HLCL (a non-existent/amalgamating company) are void ab initio and are quashed.

Admission of additional ground notwithstanding delay (NTPC test) - Admissibility of the additional ground raised on 17.07.2019 that reassessment was initiated and framed in the name of a non-existent entity. - HELD THAT: - The Tribunal held that the additional ground went to the root of the matter, did not require fresh factual investigation and was therefore admissible. Reliance was placed on the Supreme Court's decision in NTPC Ltd. for admitting grounds that raise pure questions of law or go to the root without need for further evidence. Consequently the additional ground raising the jurisdictional nullity was admitted. [Paras 3, 4]

The additional ground filed on 17.07.2019 is admitted.

Assessment framed on a non-existent entity is void ab initio - Validity of the regular assessment framed under section 143(3) for A.Y.2002-03 which was also completed in the name of the amalgamating (non-existent) company. - HELD THAT: - The Tribunal observed that the A.Y.2002-03 assessment was a regular assessment completed in the name of the amalgamating company despite the amalgamation having been brought to the AO's notice during assessment. On application of the same legal principle - that an assessment in the name of a non-existent/amalgamating entity is void - the Tribunal found the A.Y.2002-03 assessment to be on the same footing as the reopened assessments and held it void ab initio. [Paras 4, 6]

The assessment for A.Y.2002-03 framed in the name of the amalgamating (non-existent) company is void ab initio and is quashed.

Other grounds become infructuous upon quashing of reassessment - Whether other additional and original grounds require adjudication after quashing the reassessment. - HELD THAT: - Having quashed the reassessment proceedings as void ab initio, the Tribunal observed that adjudication of the remaining additional and original grounds would be rendered infructuous and therefore refrained from deciding them, leaving those issues open. [Paras 5]

Other additional and original grounds are left open as infructuous.

Final Conclusion: The Tribunal allowed the assessee's appeals and quashed as void ab initio the notice under section 148 dated 29.03.2005 and the reassessment orders framed in the name of the amalgamating (non-existent) company for A.Y.2000-01 and A.Y.2001-02; it also quashed the regular assessment for A.Y.2002-03 framed in the name of the non-existent entity, admitted the additional ground raised on 17.07.2019, and left all other grounds undecided as infructuous.

Reopening of assessment after four years - proviso to section 147 requiring failure to disclose fully and truly all material facts - change of opinion doctrine - reopening impermissible where assessing officer had taken a conscious view on material - existence of international transaction on Advertisement and Marketing Promotion (AMP) expenses - burden on Revenue to prove arrangement/understanding - Bright Line Test (BLT) and segregation of bundled transactions - limits on quantitative bifurcation of AMP - treatment of BCCI sponsorship expenses as international transaction where there is an express agreement and cost sharing with AE - transfer pricing adjustments on reimbursement of expenses - attribution test and benefit test for seconded employees, samples, sporting event costs and freight - determination of ALP and choice of method - remand for fresh examination where facts or comparability differ across years - deductibility under section 37 - "provision for sales returns" and requirement of present obligation under AS 29 - remand to TPO/AO for fresh enquiry where material was not available or TPO took inconsistent stands

Reopening of assessment after four years - proviso to section 147 requiring failure to disclose fully and truly all material facts - change of opinion doctrine - reopening impermissible where assessing officer had taken a conscious view on material - Validity of reassessment proceedings for AY 2007-08 arising from notice issued under section 148 after expiry of four years - HELD THAT: - The Tribunal examined the reasons recorded by the AO which relied on the ITAT's subsequent decision in the assessee's own case for AYs 2005-06 and 2006-07. The proviso to section 147 prohibits reopening after four years unless income has escaped assessment by reason of failure by the assessee to disclose fully and truly all material facts. The AO's reasons did not allege any such failure; instead they amounted to a change of opinion prompted by a later judicial decision. The Tribunal held that where the AO/TPO had earlier taken a conscious view on the issue after receiving explanations and documents from the assessee, the AO cannot reopen the assessment post the four year period merely because a later order of a court/tribunal adopts a contrary view. Reliance was placed on the jurisdictional high court and other authorities recognising that absence of recorded failure to disclose vitiates reassessment commenced after four years. For these reasons the reassessment was held invalid and the assessment order quashed. [Paras 9, 10, 11, 12]

Reopening of assessment for AY 2007-08 is invalid; impugned reassessment order quashed.

Existence of international transaction on Advertisement and Marketing Promotion (AMP) expenses - burden on Revenue to prove arrangement/understanding - Bright Line Test (BLT) and segregation of bundled transactions - limits on quantitative bifurcation of AMP - treatment of AMP (other than BCCI) as part of bundled transactions under TNMM - Whether AMP expenses (other than BCCI expenses) constitute a separate international transaction subject to TP adjustment in AYs 2010-11, 2011-12, 2012-13 and 2014-15 - HELD THAT: - Following the co ordinate bench decision in the assessee's own case for AY 2009-10 and the reasoning of the Delhi High Court, the Tribunal held that mere excess AMP spend vis a vis comparables does not establish an international transaction unless the Revenue proves an arrangement, understanding or agreement obliging the Indian entity to incur such AMP on behalf of the AE. In the absence of such an agreement, incidental benefit to the AE is insufficient. AMP expenses (other than BCCI) should be treated as part of the bundle of transactions and considered within TNMM (i.e., subsumed in operating costs) when determining ALP. The Tribunal therefore decided this category of AMP expenses in favour of the assessee for the years under appeal. [Paras 14, 21, 22]

AMP expenses other than BCCI expenses are not to be treated as independent international transactions; issue decided in favour of the assessee and directed to be treated as part of bundled transactions under TNMM.

Treatment of BCCI sponsorship expenses as international transaction where there is an express agreement and cost sharing with AE - remand to AO/TPO for determination of ALP where contractual terms establish cross border cost sharing - Whether BCCI sponsorship expenses constitute an international transaction and how ALP should be determined (AYs 2010-11 and 2011-12) - HELD THAT: - The Tribunal analysed the BCCI agreement and the agreement between the assessee and its AE which expressly recognised that the BCCI arrangement would provide benefits to the NIKE brand and that the AE agreed to share 50% of the costs. On this factual matrix the Tribunal concluded that the expenditure relating to securing BCCI sponsorship was incurred to promote the AE's brand and was borne pursuant to a conscious agreement between the parties. Consequently, this component qualifies as an international transaction and must be benchmarked under Chapter X. Given factual and valuation issues, the Tribunal remitted this category to the AO/TPO for fresh determination of ALP in accordance with law. [Paras 11, 14]

BCCI expenses constitute an international transaction; matter remanded to AO/TPO for fresh determination of ALP.

Transfer pricing adjustments on reimbursement of expenses - attribution test and benefit test for seconded employees, samples, sporting event costs and freight - onus on assessee to prove that expenses reimbursed to AE were wholly and exclusively for the assessee's business - Validity of TP adjustments on reimbursement of expenses (samples, seconded expatriates' salaries, sporting events, freight and insurance) in relevant years - HELD THAT: - The Tribunal observed that a coordinate bench had earlier examined identical reimbursements for AYs 2005-06 and 2006-07 and upheld TPO adjustments after applying a functional and benefit analysis. The assessee's own transfer pricing documentation acknowledged that the group retained marketing/branding intangibles and that the assessee performed distributor functions. The assessee failed to discharge the onus of demonstrating that the reimbursed expenditures were solely and exclusively for its distribution business or that independent entities would have borne such costs. Thus, following the co ordinate bench precedent and applying the attribution/benefit test, the Tribunal confirmed the TPO's transfer pricing adjustments in respect of these reimbursements. [Paras 15]

TP adjustments on the reimbursements in issue are confirmed against the assessee.

Third party royalty - requirement to establish business nexus, agreements and RBI compliance - Whether third party royalty payments are deductible / at arm's length (AYs 2010-11, 2012-13, 2014-15) - HELD THAT: - The TPO held that the assessee failed to produce underlying agreements, allocation workings, RBI approvals or evidence of business necessity and therefore treated the payments as not related to the assessee's business, fixing ALP at NIL. The Tribunal found that the assessee did not discharge the onus to show these payments were made for commercial necessity and that no additional material was furnished before the Tribunal. In view of the absence of requisite documentation and explanation, the Tribunal found no infirmity in the TPO/AO's conclusion. [Paras 16]

Third party royalty disallowance upheld.

Transfer pricing treatment of service tax on royalty - consistency and remand for fresh examination - Whether service tax component debited in P&L on royalty is an expense of the assessee or liability of the AE (AYs 2010-11 and 2012-13) - HELD THAT: - The TPO disallowed the service tax component in some years relying on the license clause and treated it as liability of the AE, while in AY 2012-13 the TPO accepted the service tax as the assessee's expenditure. Noting this inconsistency and the fact that the issue had been treated differently across years, the Tribunal concluded that the matter required fresh consideration by the TPO/AO and accordingly set aside the AO's order on this point and restored the issue for re examination. [Paras 17]

Issue set aside and remanded to AO/TPO for fresh examination of service tax treatment on royalty.

Classification and ALP of interest on Compulsorily Convertible Debentures (CCD) - hybrid instrument issues and inconsistent treatment - remand for fresh examination where TPO took conflicting stands across years - Appropriate TP treatment (interest rate or equity character) of interest on CCDs (AYs 2012-13 and 2014-15) - HELD THAT: - The TPO applied different approaches in different years - adopting a lower interest rate by reference to bank base rate in one year and treating CCDs as equity in another year - while in a subsequent year accepted the 12% interest as arm's length after additional enquiries. Given these inconsistent positions and that the enquiries giving favourable results were not available for the years under appeal, the Tribunal held that the matter requires fresh fact finding and remitted the issue to the AO/TPO for re examination and appropriate decision. [Paras 18]

Issue remitted to AO/TPO for fresh examination on merits.

Sourcing commission - requirement of evidences proving agent performed contracted activities and remand for fresh enquiry - Validity of TP adjustment disallowing sourcing commission paid to related agent (AY 2014-15) - HELD THAT: - The TPO concluded that the commissioned agent did not perform the contracted services and treated the payments as not related to the assessee's business, disallowing the commission. The assessee produced agreements, confirmations and email communications which, according to the assessee, were not adequately considered by the TPO. The Tribunal found that given these factual contentions and documentary material, the matter required a fresh, detailed enquiry by the TPO/AO and therefore remitted the issue for reconsideration after affording the assessee opportunity to be heard. [Paras 19]

Issue remanded to AO/TPO for fresh examination of evidence and determination of ALP.

Disallowance of purchase of samples and incidental expenses - deductibility under section 37 and attribution to manufacturer versus distributor - Whether expenditure on purchase of trade samples and incidental costs is deductible as business expenditure (AYs 2012-13 and 2014-15) - HELD THAT: - The AO disallowed the expenditure on the basis that samples were supplied by the parent and such costs are normally borne by the manufacturer; the assessee failed to demonstrate that these expenses were wholly and exclusively for its own business. The Tribunal followed the co ordinate bench decisions for earlier years which had attributed such expenses to the parent company on the basis of the group's functional profile and the assessee's distributor role. Applying that guidance and noting the assessee's inability to discharge the onus, the Tribunal confirmed the AO's disallowance. [Paras 20]

Disallowance of purchase of samples and incidental expenses confirmed.

Provision for sales returns - definition of provision under AS 29 and requirement of present obligation arising from past event - deductibility under section 37 - difference between provision and contingent liability - Allowability of 'Provision for sales return' as deduction under section 37 (AYs 2012-13 and 2014-15) - HELD THAT: - The Tribunal analysed AS 29 which requires a present obligation as a result of a past event, probability of outflow and reliable estimate. The assessee's 'provision for sales return' sought to de recognise revenue on the basis of anticipated future returns; the Tribunal held that the relevant past event is the sale and not a sale return, and that anticipated sales returns constitute a possible future obligation rather than a present obligation arising from a past event. Consequently the provision falls into the realm of contingent/expected liabilities, not a recognised provision under AS 29, and is not allowable under section 37. The Tribunal therefore confirmed the AO's disallowance. [Paras 21]

Provision for sales returns disallowance confirmed; not deductible under section 37.

Disallowance under section 40(a) - verification and remand where record is incomplete - Allowability of provisions in earlier years (previously disallowed for TDS non deduction) where tax has since been deducted and paid (AY 2012-13) - HELD THAT: - The AO rejected the assessee's claim for lack of verifiable records. The assessee sought restoration for want of time to produce documents. Having regard to the facts and observations in the assessment order, the Tribunal found that the issue requires fresh consideration and factual verification by the AO and therefore set aside the order and remitted the matter to the AO for fresh examination in accordance with law. [Paras 22]

Issue remanded to AO for fresh examination and verification of records regarding section 40(a) disallowance.

Final Conclusion: The Tribunal allowed the assessee's appeal on the reopening ground for AY 2007-08 (reassessment quashed). Other appeals for AYs 2010-11, 2011-12, 2012-13 and 2014-15 were partly allowed: AMP expenses (other than BCCI) were accepted in favour of the assessee; BCCI expenses, service tax on royalty, CCD interest, sourcing commission and the service tax/royalty question were remanded to AO/TPO for fresh examination where indicated; TP adjustments on reimbursements, third party royalty and disallowance of samples and provision for sales returns were confirmed against the assessee; and the section 40(a) matter was remanded for verification.

Bogus sundry creditors - unexplained capital introduction - undisclosed/ suppressed sales - stock shortage and excess adjustments - inventory by survey - eye estimation versus weighment - assessment after search and seizure - onus on assessee to explain; duty on Revenue to verify - remand for verification and fresh adjudication - presumption from impounded documents and ledger copies

Bogus sundry creditors - onus on assessee to explain; duty on Revenue to verify - Deletion of addition of Rs. 7,72,400 made as bogus sundry creditors - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that the amounts shown as sundry creditors related to authorised representatives engaged in the assessee's custom milling operations and that ledger copies, Aadhaar details and confirmations were placed before the CIT(A). The Tribunal noted that the assessee explained the nature of the relationship (authorised representatives receiving paddy and incurring expenses) and produced ledger confirmations and authorisation letters; it also observed that the AO/CIT(A) had opportunities to verify but the AO did not carry out further enquiry. Having regard to the material produced and the fact that no evidence of bogus purchases was found during search, the Tribunal held that the assessee had discharged its initial burden and that the onus shifted to Revenue for verification, which was not adequately performed. The addition was therefore deleted.

Addition of Rs. 7,72,400 treated as bogus sundry creditors deleted; ground ruled in favour of the assessee.

Stock shortage and excess adjustments - inventory by survey - eye estimation versus weighment - assessment after search and seizure - Addition on account of shortage of paddy and bran and excess of rice and broken rice - HELD THAT: - The Tribunal examined the competing contentions: Revenue relied on the survey inventory and physical counting taken in presence of the manager, while the assessee contended the inventory was based on eye estimation, ought to have been weighed, and that the stocks belonged to principals (OSCSC/MARKFED) because the assessee was only a custom miller. The Tribunal accepted that the survey inventory involved sampling/eye estimation and that the principals had frequent inspections shortly before the survey; it found the assessee's position that the stocks were of the principals and registers had been inspected to be relevant. However, the Tribunal also found merit in Revenue's point that discrepancies were not satisfactorily explained during assessment and remand. Balancing these aspects, the Tribunal allowed partial relief: it reduced the additions by 20% to account for possible estimation differences but sustained 80% of the additions.

Additions on stock shortage/excess partly allowed: assessee granted 20% relief; 80% of the additions sustained.

Undisclosed/ suppressed sales - presumption from impounded documents and ledger copies - remand for verification and fresh adjudication - Addition on account of alleged undisclosed sale of rice bran (impounded document MFP 30) - HELD THAT: - The Tribunal reviewed the AO's reliance on impounded loose sheets (MFP 30) and the manager's recorded statements accepting that cash sales of bran were not recorded. The assessee disputed the entries, produced cheques, bank certificates and other material to show certain cheque payments related to BRMC and denied transactions with the third parties whose ledgers were impounded. The CIT(A) deleted the addition on the basis that cheques in the impounded material matched BRMC payments and therefore the impounded ledgers were unreliable. The Tribunal found that the matter involved factual reconciliation and discrepancies in the seized material and the assessee's submissions that required detailed verification and computation of current year transactions. Rather than finally adjudicating, the Tribunal directed that the issue be restored to the AO for calculation of the current year's unaccounted bran sales and fresh adjudication with opportunity for verification.

Issue restored to the AO for fresh computation/verification of current year unaccounted sales of bran; matter remanded for adjudication.

Unexplained capital introduction - income from bus plying - remand for verification and fresh adjudication - Additions relating to unexplained capital introduction and estimated income from bus plying - HELD THAT: - The Tribunal noted conflicting material: the assessee maintained that the amount treated as unexplained capital was cash transferred from the proprietor's individual account to the proprietary concern and produced books/ledgers; Revenue relied on the AO's view that sources were unexplained and that bus income was not shown. Because the AO had not examined and verified the books/returns fully and factual verification (including whether bus income was offered and tax paid) remained outstanding, the Tribunal declined to decide the merits and remanded these matters to the AO for verification of returns, supporting records and tax treatment and for fresh adjudication.

Grounds concerning unexplained capital introduction and bus plying income remanded to the Assessing Officer for verification and fresh adjudication.

Final Conclusion: For A.Y.2014 2015 the Tribunal: upheld deletion of the addition treating sundry creditors as bogus; allowed partial relief on stock discrepancy additions (20% relief to the assessee, 80% sustained); remanded the disputed issues of undisclosed sale of rice bran for fresh computation and verification by the AO; and remanded issues of unexplained capital introduction and bus plying income to the AO for verification and fresh adjudication. The Revenue's appeal is therefore partly allowed (statutory remands and partial sustention) and the assessee's cross objection is dismissed as infructuous.

Exemption under section 54F - capital gains account scheme deposit requirement under section 54F(4) - investment in construction within three years - verification of investment by the Assessing Officer

Exemption under section 54F - capital gains account scheme deposit requirement under section 54F(4) - investment in construction within three years - Failure to deposit the net consideration in the specified bank account under subsection (4) of section 54F does not preclude exemption under section 54F where the entire capital gains have been invested in construction of a residential house within the prescribed period of three years. - HELD THAT: - The Tribunal accepted the legal proposition as laid down by the Hon'ble Karnataka High Court in CIT v. K. Ramachandra Rao that subsection (4) of section 54F is directed at cases where the assessee intends to retain cash and claim exemption by placing unutilised capital gains in the notified account. If, however, the assessee actually invests the sale proceeds in construction or purchase of a residential house within the period prescribed by section 54F(1), subsection (4) does not attract and exemption cannot be denied merely for non-deposit of the net consideration in the specified bank account. The Revenue did not dispute the legal position propounded by the Karnataka High Court, and the Tribunal applied that ratio to hold that non-deposit alone is not fatal where timely investment in construction is shown. [Paras 6, 7]

The Tribunal held that exemption under section 54F cannot be denied solely on the ground of non-deposit under section 54F(4) where the capital gains have been invested in construction within three years.

Verification of investment by the Assessing Officer - investment in construction within three years - The factual claim of investment in construction within the three-year period required verification and was remanded for limited enquiry. - HELD THAT: - Although the Tribunal accepted the legal principle that timely investment attracts exemption, the Revenue pointed out-and the Assessing Officer's record did not establish-that the actual investment made by the assessee within the stipulated three-year period had not been verified. The Tribunal found merit in the submission that the Assessing Officer should be given an opportunity to verify the assessee's claim regarding the amount and timing of the investment. The matter was therefore restored to the file of the Assessing Officer for verification of the actual investment made in construction within three years from the date of transfer, and on such verification, to allow the exemption if the claim is substantiated. [Paras 7]

The Tribunal remanded the matter to the Assessing Officer for limited verification of the assessee's investment in construction within three years and directed allowance of the exemption if verification is satisfactory.

Final Conclusion: The appeal is allowed in part: the legal contention that non-deposit under section 54F(4) does not bar exemption where the capital gains have been invested in construction within three years is accepted; the case is remanded to the Assessing Officer for verification of the actual investment and for allowance of exemption under section 54F if the investment is duly established.

Genuineness of business expenditure - requirement of third party corroboration for related payments - burden on assessee to produce credible documentary evidence - improper accounting by adjusting sale consideration instead of P&L charging - timing of payments vis a vis sale as indicia of genuineness - work in progress adjustment and its effect on disallowance - remand for factual verification with observance of principles of natural justice

Genuineness of business expenditure - requirement of third party corroboration for related payments - burden on assessee to produce credible documentary evidence - Disallowance of commission payment to Mrs. Farzana Khan of Rs. 6,30,000 upheld - HELD THAT: - The Tribunal affirmed the appellate authority's conclusion that the assessee failed to establish genuineness of the commission payment. The Assessing Officer had sought credible evidence (nature of services, third party confirmation) which was not produced. Mere payment through banking channels and TDS deduction and the payee's filing of a return were held insufficient in absence of specific material showing why the commission was payable. The assessee also did not press the ground before the CIT(A) and did not produce the payee or supporting documents at appellate or Tribunal stage. Reliance was placed on higher authority decisions to the effect that banking evidence alone does not establish genuineness. Considering the factual record and absence of proof, the disallowance was sustained. [Paras 3, 4, 5, 6]

Disallowance of Rs. 6,30,000 on account of commission to Mrs. Farzana Khan is upheld

Improper accounting by adjusting sale consideration instead of P&L charging - timing of payments vis a vis sale as indicia of genuineness - work in progress adjustment and its effect on disallowance - remand for factual verification with observance of principles of natural justice - Disallowances relating to leveling, payments to tenants and other expenditures totalling Rs. 42,42,182 partly sustained, partly deleted, and partly remanded for verification - HELD THAT: - The Tribunal agreed with the CIT(A)'s factual findings that (a) the Rs. 1,00,000 paid to Mr. Netaji Surya for leveling could not be substantiated and was properly disallowed where the assessee failed to produce the contractor or documents and had adjusted the amount against sale consideration rather than passing through P&L; (b) payments to tenants (Rs. 14,00,000) for vacating encroachments were not supported by documentary proof or evidence of those tenants' returns and were therefore sustained as unexplained; (c) of the remaining aggregate disallowance, the difference between WIP and project cost (Rs. 15,40,533) was already offered to tax and hence deleted; and (d) an unsubstantiated balance (Rs. 13,01,649) could not be established on record but, given the CIT(A)'s observation that it might qualify as WIP, the Tribunal restored this specific issue to the assessing officer for factual verification. The Assessing Officer was directed to decide the WIP character of that amount after affording opportunity in accordance with natural justice. [Paras 7, 8, 10]

Disallowances partly sustained (including Rs. 1,00,000 and Rs. 14,00,000), Rs. 15,40,533 deleted as already taxed, and Rs. 13,01,649 remanded to the Assessing Officer for determination as WIP with observance of natural justice

Final Conclusion: The assessee's appeal is partly allowed for statistical purposes: the Tribunal upheld the unexplained disallowances for the commission and specified payments and deleted the portion already offered to tax, while remanding the remaining unsubstantiated balance for factual verification by the Assessing Officer in accordance with principles of natural justice.

Penalty under section 271(1)(c) - furnishing inaccurate particulars of income - concealment of particulars of income - bona fide claim based on existing judicial precedent - deductibility of provision for non performing assets vis a vis RBI prudential norms - treatment of deferred revenue expenditure relating to raising of loan

Treatment of deferred revenue expenditure relating to raising of loan - penalty under section 271(1)(c) - Whether penalty under section 271(1)(c) is leviable in respect of the disallowance of expenditure claimed as deferred revenue expenditure for raising of loan. - HELD THAT: - The Tribunal in the related quantum proceedings deleted the addition made by the Assessing Officer in respect of the expenditure on raising loan funds after following a co ordinate bench decision which decided the identical issue in favour of the assessee. Since the disallowance was deleted in the quantum proceedings, the consequential penalty imposed under section 271(1)(c) in respect of that disallowance was directed to be deleted. The Tribunal applied the normal principle that penalty cannot survive where the underlying addition is held unsustainable and there was no finding of concealment or furnishing of inaccurate particulars on this issue.

Penalty under section 271(1)(c) deleted insofar as it related to the disallowance of expenditure treated as deferred revenue expenditure for raising of loan.

Deductibility of provision for non performing assets vis a vis RBI prudential norms - bona fide claim based on existing judicial precedent - penalty under section 271(1)(c) - furnishing inaccurate particulars of income - Whether penalty under section 271(1)(c) is leviable in respect of the disallowance of provision for non performing assets claimed as deductible based on RBI prudential norms and prior Tribunal precedent. - HELD THAT: - The assessee filed the return relying on an ITAT Special Bench decision that allowed provision for NPA as deductible and expressly disclosed the basis for the claim in the return. At the time of filing the return the issue was debatable and supported by favourable precedent; the adverse decision of the Madras High Court and ultimately the Supreme Court (Southern Technologies) came later. The Tribunal applied the settled legal principle that section 271(1)(c) requires concealment or furnishing of inaccurate particulars, and that making a debatable or incorrect claim in the return, when based on an existing judicial precedent and fully disclosed, does not ipso facto attract penalty. Having found that the claim was bona fide and disclosed, and that the issue was arguable at the relevant time, the Tribunal held that penalty could not be sustained.

Penalty under section 271(1)(c) deleted insofar as it related to the disallowance of provision for non performing assets claimed on the basis of RBI norms and existing judicial precedent.

Final Conclusion: The appeal is allowed: the Tribunal deleted the penalty under section 271(1)(c) both in respect of the disallowance relating to deferred revenue expenditure on raising of loan (since that addition was deleted in quantum) and in respect of the disallowance of provision for non performing assets (the claim being bona fide and based on existing precedent and disclosure).

Condonation of delay - dismissal in limine for belated appeal - service of notice - sufficient cause based on medical incapacity - restoration/remand for adjudication on merits

Condonation of delay - dismissal in limine for belated appeal - sufficient cause based on medical incapacity - Whether the delay in filing appeals before the CIT(A) should be condoned and the appeals restored for adjudication on merits. - HELD THAT: - The Tribunal examined the explanation and documentary evidence supplied by the assessee that he suffered from multiple ailments, including a paralysis attack from July 2015, which caused prolonged hospitalization and incapacitation and prevented personal receipt of departmental orders and timely filing. The CIT(A) had rejected the condonation petitions primarily on the ground that the assessee misstated the date of service of demand notice and therefore had been misled; the Tribunal treated that discrepancy as insufficient to deny relief in the circumstances. The Tribunal relied on a coordinate-bench decision in the assessee's own earlier appeals where similar medical evidence was accepted, delay was condoned and the matters were restored to the CIT(A) for fresh decision after giving opportunity of hearing. In view of the medical incapacity and the fact that the CIT(A) had not decided the appeals on merits, the Tribunal exercised its discretion to take a lenient view and condoned the delays of 308 days and 127 days in the respective appeals, setting aside the CIT(A)'s dismissal in limine and restoring the matters for fresh adjudication.

Delay in filing the appeals is condoned and the appeals are restored to the file of the CIT(A) for adjudication on merits after giving the assessee an opportunity of hearing.

Service of notice - restoration/remand for adjudication on merits - Whether the matters should be remitted to the CIT(A) for fresh adjudication on merits after condonation of delay. - HELD THAT: - The Tribunal observed that the CIT(A) had not decided the appeals on merits because they were dismissed at the admission stage for delay. Given the condonation of delay and the coordinate-bench precedent in identical proceedings, the Tribunal set aside the CIT(A)'s orders dismissing the appeals and remitted the matters to the CIT(A) for fresh adjudication on merits in accordance with law, directing that the assessee be given appropriate opportunity to be heard.

Matters are remitted to the CIT(A) to decide the appeals on merits after giving the assessee appropriate opportunity of hearing.

Final Conclusion: The Tribunal condoned the delays in filing the appeals, set aside the CIT(A)'s dismissal in limine, and restored the appeals to the CIT(A) for fresh adjudication on merits (AY 2008-09) after affording the assessee an opportunity of hearing; appeals are allowed for statistical purposes.

Admission of additional evidence under Rule 46A(4) of the Income tax Rules, 1962 - deduction under section 54 for reinvestment in house construction - computation of long term capital gain - classification of amounts as capital gains or income from other sources - remand for fresh consideration on receipt of admissible evidence

Computation of long term capital gain - admission of additional evidence under Rule 46A(4) of the Income tax Rules, 1962 - Correctness of the cost of construction allowed in computing long term capital gain and admissibility of additional evidence to establish actual cost of construction. - HELD THAT: - The CIT(A) erred in rejecting the assessee's additional evidence without showing any valid reason for non filing before the AO, since the additional documents were necessary to determine the correct cost of construction which directly affects computation of long term capital gain. When the AO had allowed only 50% of the claimed cost, the actual cost ought to be examined on the basis of the materials tendered; consequently the appellate authority should have admitted the evidence under Rule 46A(4) for proper adjudication. The Tribunal therefore set aside the CIT(A)'s decision on these aspects and remanded the matter to the AO to admit and examine the additional evidence and any further material the assessee may produce, and to recompute the capital gain in accordance with law. [Paras 8, 9]

Admit additional evidence and remand to the AO for fresh consideration of cost of construction and recomputation of long term capital gain.

Deduction under section 54 for reinvestment in house construction - admission of additional evidence under Rule 46A(4) of the Income tax Rules, 1962 - Whether the assessee is entitled to deduction under section 54 on the basis that sale proceeds were applied to construction within the statutory period, and whether the evidence to that effect should have been admitted. - HELD THAT: - The Tribunal held that the question of entitlement to section 54 relief depends on examination of evidence as to the construction of the residential house within the period specified by law. The CIT(A) should have admitted the additional evidence which purported to show utilization of proceeds in construction, and the matter must therefore be remanded for the AO to decide the claim in light of the additional documents and any other evidence required to substantiate the claim. [Paras 8, 9]

Remand to the AO to admit and examine the evidence and decide the claim for deduction under section 54 in accordance with law.

Classification of amounts as capital gains or income from other sources - admission of additional evidence under Rule 46A(4) of the Income tax Rules, 1962 - Whether the difference between the sale consideration shown by the assessee and the amount recorded in the sale deed (the disputed Rs. 46 lakhs) should be treated as part of long term capital gain or as income from other sources. - HELD THAT: - The Tribunal observed that the assessee had placed before the AO an agreement for sale showing a higher agreed price than the sale deed, and therefore the classification of the disputed amount requires examination of the evidence. Since the CIT(A) treated the excess as income from other sources without admitting the additional evidence, the matter was set aside and remitted to the AO to admit the evidence and determine, after hearing the assessee, whether the amount forms part of capital gains or is taxable as income from other sources in accordance with law. [Paras 10]

Remand to the AO to admit and examine the additional evidence and decide the classification of the disputed amount in accordance with law.

Final Conclusion: The orders of the CIT(A) are set aside on the above issues; the matters are remitted to the Assessing Officer to admit and examine the additional evidence and to decide the computation of long term capital gain, the claim for deduction under section 54, and the classification of the disputed amount in accordance with law after affording the assessee an opportunity of being heard; appeal allowed for statistical purposes.

Arm's length price - transfer pricing - other method - obligation of Transfer Pricing Officer to apply prescribed methods - benchmarked comparison of markup - evidentiary value of customs acceptance - deletion of ad hoc ALP adjustment

Arm's length price - transfer pricing - other method - obligation of Transfer Pricing Officer to apply prescribed methods - benchmarked comparison of markup - deletion of ad hoc ALP adjustment - Whether the ALP adjustment made by the TPO treating the purchase of fixed assets from the associated enterprise as nil was sustainable where the assessee had declared the transaction as an international transaction, claimed the other method with a 5% markup and furnished invoices and supporting supplier documentation accepted by Customs. - HELD THAT: - The Tribunal examined the material on record and the submissions of the parties and noted that the assessee had imported two rigs from its associated enterprise and had produced the supplier invoices, the AE's invoices and supporting working showing total cost and a 5% markup. The TPO had rejected the assessee's documentation by observing discrepancies in quantities and treated the ALP as nil without applying any of the methods prescribed under Chapter X/Rule 10AB et seq. The Tribunal held that where the assessee has produced supporting documentation (including documents which had sufficed for Customs clearance) and has declared the transaction as international, the TPO cannot make an ad hoc determination of ALP as nil without applying one of the prescribed transfer pricing methods or otherwise following the parameters set out in the statute. The proper exercise was to benchmark the reasonableness of the 5% markup charged by the AE; missing documentary proof related only to the rationale for the markup and did not justify treating the entire transaction as at nil ALP. Relying on the principle (as applied in the cited Bombay High Court authority) that an ad hoc determination by the TPO dehors the statutory framework is not sustainable, the Tribunal found no reason to disturb the transaction and deleted the addition made by the TPO. [Paras 11, 12, 13]

Addition made by the TPO treating the international transaction as nil ALP was deleted and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal for AY 2013-14, deleting the ALP adjustment made by the TPO and holding that the TPO could not treat the transaction as nil without applying the prescribed transfer pricing methods; the assessee's purchase from the associated enterprise with a 5% markup was upheld on the material produced.

Client code modification by broker - reopening of assessment on account of escapement of income - reliance on information from investigation wing as a lead requiring further inquiry - suspicions and presumptions cannot substitute for evidence - banking channel evidence as indicia of genuineness of transactions - onus on Revenue to demonstrate mala fide collusion between assessee and broker

Client code modification by broker - suspicions and presumptions cannot substitute for evidence - banking channel evidence as indicia of genuineness of transactions - onus on Revenue to demonstrate mala fide collusion between assessee and broker - Deletion of addition made on account of alleged fictitious loss arising from client code modification. - HELD THAT: - The Tribunal upheld the finding of the CIT(A) that the assessing officer had made the addition solely on the basis of enquiries conducted by the Investigation Wing and on suspicion without specific cogent evidence against the assessee. The Tribunal noted that client code modification is an act carried out by the broker, permissible under exchange procedures, and may be effected suo motu by the broker or on written request of the client; when modifications were effected on the same day and settlement occurred through banking channels, there was no material to infer mala fide intent or diversion of cash back to the assessee. Absent direct evidence of the assessee's collusion with the broker or cash returns to the assessee, the Revenue failed to discharge the onus of proving that the losses were bogus. Reliance on investigation-wing information was treated as a lead that required further in-depth inquiry by the AO and could not, by itself, substitute for evidence establishing escapement of income. Applying these principles, the Tribunal agreed with the CIT(A)'s conclusion that the addition was based on surmise and conjecture and therefore liable to be deleted. [Paras 10, 11]

Addition of alleged fictitious loss was deleted for want of cogent evidence and on the view that suspicion and investigation-leads alone do not sustain an addition.

Reopening of assessment on account of escapement of income - reliance on information from investigation wing as a lead requiring further inquiry - suspicions and presumptions cannot substitute for evidence - Validity of reopening the assessment and consequent proceedings under the reassessment notice. - HELD THAT: - The Tribunal observed that the assessment had been reopened by the AO after receiving information from the Investigation Wing regarding misuse of client code modification by certain brokers and their clients. However, in the assessee's case there was no direct finding or material linking the assessee to the investigative findings. The Tribunal accepted the CIT(A)'s view that the information from the Investigation Wing constituted only a lead which required further inquiry and could not by itself justify reopening in the absence of specific material implicating the assessee. Given the lack of cogent material brought on record by the AO to establish escapement of income by the assessee, the reassessment could not be sustained insofar as it led to the impugned addition. [Paras 10, 11]

Reopening and reassessment insofar as it produced the impugned addition was not sustained due to absence of specific material linking the assessee to the investigation findings; the revenue's challenge on reopening was dismissed.

Final Conclusion: Revenue's appeal was dismissed; the Tribunal approved the CIT(A)'s deletion of the addition based on client code modification and found that reliance on investigation-wing information and mere suspicion, without cogent evidence of collusion or cash returns, did not justify sustaining the reassessment.

Mandamus - judicial review of ongoing administrative/assessment proceedings - re-export of imported goods - continuation of adjudicatory process bars prerogative relief

Mandamus - judicial review of ongoing administrative/assessment proceedings - re-export of imported goods - Petition for a mandamus directing consideration of representations and ordering re-export of goods covered by bill of entry 8575624 dated 23.10.2018 was not maintainable while assessment proceedings are pending. - HELD THAT: - The petition sought a writ of mandamus compelling the respondents to consider representations (the latest dated 02.07.2020) and to order re-export of the imported goods. The official respondents informed the Court that show cause notice dated 25.10.2019 has been issued and assessment proceedings in respect of the goods are ongoing and have not been finalised. In these circumstances the Court held that it would not be appropriate to grant the prerogative relief sought, as the continuation of the statutory adjudicatory process precludes interference by way of mandamus until assessment proceedings are concluded. The writ petition was therefore dismissed. [Paras 2, 3]

Writ petition dismissed for want of appropriateness in view of pending assessment proceedings; request for mandamus to order re-export refused.

Withdrawal of petitions - W.P. Nos.26344 and 26350 of 2019 were dismissed as withdrawn pursuant to the petitioner's memo. - HELD THAT: - Counsel for the petitioner filed a memo by e-mail dated 16.10.2020 indicating withdrawal of W.P. Nos.26344 and 26350 of 2019. The Court recorded the withdrawal and dismissed those petitions as withdrawn; connected miscellaneous petitions were closed. No costs were ordered. [Paras 4]

W.P. Nos.26344 and 26350 of 2019 dismissed as withdrawn; connected miscellaneous petitions closed; no costs.

Final Conclusion: The writ petition seeking mandamus for consideration of representations and re-export of goods is dismissed because assessment proceedings initiated by a show cause notice are pending; two other writ petitions were recorded as withdrawn and dismissed accordingly.

Restoration of company struck off - carrying on business or in operation - discretion under Section 252(3) - striking off under Section 248(5) read with Rule 9 - filing of outstanding statutory documents and payment of fees

Carrying on business or in operation - discretion under Section 252(3) - Appellant demonstrated that the company was carrying on business / in operation when its name was struck off and therefore entitlement to restoration under the Tribunal's discretion was established. - HELD THAT: - The Tribunal accepted the appellant's documentary evidence - audited financial statements showing revenue, purchases, depreciation and administrative expenses for the relevant years, bank statements evidencing transactions and income-tax returns for 2016-17, 2017-18 and 2018-19 - as sufficient proof that the company was in operation when its name was struck off. Applying the statutory test in Section 252(3), which permits restoration where the company was carrying on business or in operation or where it is otherwise just, the Tribunal concluded that the appellant satisfied the condition and that restoration was just and appropriate in the interest of stakeholders. [Paras 5, 13, 14]

Name of the company to be restored on the register as the company proved it was in operation and restoration is just under Section 252(3).

Restoration of company struck off - striking off under Section 248(5) read with Rule 9 - filing of outstanding statutory documents and payment of fees - Restoration ordered subject to compliance conditions and payment of specified costs and fees. - HELD THAT: - While setting aside the public notice under which the company's name was struck off, the Tribunal conditioned restoration upon the company filing all outstanding statutory documents and returns with the appropriate filing fees and additional fees as required by law, and completing all formalities including payment of late fees or other charges leviable by the Registrar. The Tribunal further directed payment of a cost to the Prime Minister's Relief Fund as a precondition to restoration. The Registrar of Companies had no objection to restoration on such proof and compliance. [Paras 15]

Restoration subject to filing outstanding documents with proper fees and additional fees/charges, and payment of directed cost to Prime Minister's Relief Fund; thereafter the company's name shall be restored.

Final Conclusion: Appeal allowed; the public notice striking off the company's name set aside and the company's name ordered restored on the Register subject to compliance with filing of outstanding statutory documents, payment of all applicable fees and charges and the directed cost to the Prime Minister's Relief Fund.

Reduction of share capital - Sanction under section 66 of the Companies Act, 2013 - Payment of consideration to shareholders upon capital reduction - Foreign remittance compliance under FEMA/RBI - Approval of minute under section 66(5) - Filing of certified copy with Registrar and public notice

Reduction of share capital - Sanction under section 66 of the Companies Act, 2013 - Sanction for the proposed reduction of the paid-up share capital of the applicant company as set out in the scheme. - HELD THAT: - The Tribunal considered the company's Board resolution, members' special resolution passed at the extraordinary general meeting held on 26.11.2019, the company's articles permitting reduction by special resolution, the valuation basis for consideration to be paid, and the absence of objections from statutory authorities. On that basis the Tribunal allowed the reduction of paid up share capital from the existing amount to the reduced amount by cancellation of the specified number of equity shares and directed payment of consideration to shareholders as proposed. The Tribunal expressly approved the mechanics of cancellation and refund as set out in the petition. [Paras 3, 4, 6, 12]

Reduction of the paid-up share capital as proposed is allowed and cancellation of the specified equity shares is sanctioned.

Payment of consideration to shareholders upon capital reduction - Approval of minute under section 66(5) - Approval of the form of minute and directions relating to payment of consideration to shareholders and the source thereof. - HELD THAT: - The Tribunal approved the form of minute under section 66(5) as filed with the petition. It authorised refund/payment to shareholders of the consideration for extinguished shares by appropriate disposal/adjustment of current/non current assets as proposed by the company. The Tribunal recorded that the company's undertaking regarding the source of payment and compliance with applicable laws will remain binding. [Paras 3, 9, 12]

Form of minute under section 66(5) is approved; payment to shareholders by disposal/adjustment of assets as proposed is permitted, subject to the company's undertaking.

Foreign remittance compliance under FEMA/RBI - Requirement to comply with RBI/FEMA norms for remittance to foreign shareholder and binding nature of the company's undertaking. - HELD THAT: - The Tribunal considered the Regional Director's observation that the reduction would result in remittance to a Singapore based shareholder and recommended RBI approval if required. The applicant filed an affidavit undertaking that applicable FEMA/RBI compliances will be complied with and that petition copies were served on the RBI. The Tribunal accepted the undertaking and made the approval subject to fulfilment of any law otherwise applicable, and recorded that the undertaking remains binding on the company. [Paras 8, 9, 12]

Approval is subject to applicable FEMA/RBI compliance; the company's affidavit undertaking is binding and must be complied with.

Statutory and regulatory objections - Responses to statutory observations and absence of outstanding objections from Income Tax Department and Registrar/Regional Director sufficient to permit sanction. - HELD THAT: - The Tribunal noted the Regional Director's report and the Income Tax Department's observations and the company's replies. The Tribunal recorded that the company had filed required returns up to 30.03.2019 and that no prosecutions, inspections or investigations were pending. The Income Tax Department's objections were addressed to the Tribunal's satisfaction. In light of the statutory filings, consents from creditors and lack of outstanding objections, the Tribunal proceeded to sanction the scheme. [Paras 5, 8, 10, 11, 12]

Statutory and revenue observations have been considered and addressed; no bar was found to sanctioning the reduction.

Filing of certified copy with Registrar and public notice - Directions for filing the certified copy of the Tribunal's order and requirement for publication in the prescribed newspaper. - HELD THAT: - The Tribunal directed that a certified copy of the order, including the approved minute, be delivered to the Registrar of Companies within thirty days of receipt. It also ordered publication of the paper notice confirming the reduction in the English and Hindi editions of the specified newspaper in the prescribed format within thirty days of the order. These directions implement the statutory compliance steps consequent to sanctioning a reduction of capital. [Paras 7, 12]

Certified copy to be filed with the Registrar and public notice to be published in the prescribed newspapers within the specified time.

Final Conclusion: The Tribunal sanctioned the company's scheme for reduction of paid-up share capital, authorised cancellation of the specified equity shares and payment of consideration as proposed, approved the minute under section 66(5), directed statutory filings and publication, and made the sanction subject to the company's binding undertaking to comply with applicable FEMA/RBI and other laws.

Limitation - acknowledgement in writing under Section 18 of the Limitation Act, 1963 - admissibility and evidentiary weight of disputed acknowledgements - misuse of the Insolvency and Bankruptcy Code - penalty under Section 65 of the Insolvency and Bankruptcy Code, 2016

Limitation - acknowledgement in writing under Section 18 of the Limitation Act, 1963 - admissibility and evidentiary weight of disputed acknowledgements - Whether the operational debt claimed by the Operational Creditor was barred by limitation and whether the alleged acknowledgement of debt dated 28.07.2016 revived the limitation period. - HELD THAT: - The Tribunal accepted the Adjudicating Authority's conclusion that the claim was time barred. The only evidence relied upon by the Operational Creditor to save limitation was a ledger entry said to be an acknowledgement dated 28.07.2016. The admitted material shows supply of coal during 22.09.2015 to 28.12.2015 and that payment was contractually due within fifteen days of invoicing; the Section 9 petition was filed on 05.03.2019. The writing alleged to be an acknowledgement is a disputed endorsement consisting of a signature and a rubber stamp with an 'ok 28.07.2016' endorsement; the Corporate Debtor expressly denied that the signature belonged to any authorised signatory and pointed to a police complaint alleging forgery. The Court observed that an acknowledgement under Section 18 must be a conscious acknowledgement of liability by the party or an authorised agent, and where the execution and authorship of the writing are seriously disputed and unexplained, the ledger entry does not inspire confidence or suffice to revive limitation. In those circumstances the Adjudicating Authority did not err in holding the debt time barred. [Paras 14, 15]

The debt was held to be barred by limitation; the alleged acknowledgement dated 28.07.2016 was insufficient to revive the claim.

Misuse of the Insolvency and Bankruptcy Code - penalty under Section 65 of the Insolvency and Bankruptcy Code, 2016 - Whether the Adjudicating Authority was justified in imposing a monetary penalty on the Operational Creditor for allegedly initiating proceedings with malicious or fraudulent intent. - HELD THAT: - While the Adjudicating Authority concluded that the Application was filed with malicious intent and imposed a penalty of Rs. 1 lakh under Section 65 of the IBC, the Tribunal found no sufficient ground to characterize initiation of the proceedings as fraudulent or malicious. The Tribunal accepted that the Corporate Debtor did not dispute supply of coal and there was no substantive material before it to justify penalizing the Operational Creditor for malicious prosecution. Accordingly, the Tribunal set aside the penalty imposed in Paragraphs 13 and 14 of the Impugned Order, while leaving intact the Adjudicating Authority's finding on limitation. [Paras 16, 17]

The penalty imposed on the Operational Creditor was set aside for lack of adequate justification; the finding of malicious or fraudulent initiation was reversed.

Final Conclusion: Appeal partly allowed: the Adjudicating Authority's finding that the claim was time barred is upheld and the Section 9 application remains dismissed, but the monetary penalty imposed on the Operational Creditor is set aside; the remainder of the impugned order is maintained.

Liquidation under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' commercial wisdom and decision not to extend the CIRP period - Appointment of Liquidator under Section 34(1) of the Insolvency and Bankruptcy Code, 2016 - Liquidator's duties including public announcement, conduct of liquidation under Chapter III of Part II, and investigation of antecedent transactions - Termination of existing moratorium and commencement of moratorium under Section 33(5)

Liquidation under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' commercial wisdom and decision not to extend the CIRP period - Application under Section 33(1)(a) for liquidation of the corporate debtor was allowed based on COC's decision not to approve extension of the CIRP period. - HELD THAT: - The Tribunal recorded that the COC, in its commercial wisdom, chose not to approve an extension of the CIRP period and, in consequence, resolved that liquidation under Section 33(1)(a) of the Code was the only available course. The Tribunal declined to interfere with the commercial decision of the COC and accordingly allowed the RP's application for liquidation, observing that the COC had considered alternatives (including sale as a going concern) but had not approved extension of time for submission of resolution plans. The Court therefore concluded that liquidation should proceed in the manner prescribed by the Code. [Paras 11, 12, 13, 14, 15]

Liquidation of UTM Engineering Private Limited was ordered under Section 33(1)(a) as the COC did not approve an extension of the CIRP period.

Appointment of Liquidator under Section 34(1) of the Insolvency and Bankruptcy Code, 2016 - Consent to act as Liquidator - The Tribunal appointed the person proposed by the COC as liquidator after receipt of his consent and registration certificate. - HELD THAT: - The Tribunal noted that the RP had not consented to act as liquidator and that the COC proposed Mr. Kanti Mohan Rastogi as liquidator. The proposed appointee had filed consent in Form AA along with his certificate of registration. Satisfied with the formal requirements, the Tribunal appointed Mr. Kanti Mohan Rastogi as liquidator in terms of Section 34(1). [Paras 15, 16]

Mr. Kanti Mohan Rastogi was appointed as Liquidator under Section 34(1).

Liquidator's duties including public announcement, conduct of liquidation under Chapter III of Part II, and investigation of antecedent transactions - Preliminary report under Regulation 13 of the Liquidation Process Regulations - The Tribunal directed the liquidator to take specified steps in the liquidation process, including public announcement, conducting liquidation per Chapter III of Part II of the Code and related regulations, investigation into the corporate debtor's financial affairs, and submission of a preliminary report within the prescribed time. - HELD THAT: - On appointment, the liquidator was directed to issue the statutory public announcement, carry out the liquidation process in accordance with the Code and applicable regulations, continue investigations into undervalued or preferential transactions, and submit a preliminary report to the adjudicating authority within seventy five days from the liquidation commencement date as mandated by the Liquidation Process Regulations. These directions implement the procedural obligations that follow an order of liquidation to ensure statutory compliance and protection of stakeholders' interests. [Paras 16]

The liquidator was directed to issue the public announcement, proceed with liquidation as per Chapter III of Part II and relevant regulations, investigate antecedent transactions, and submit a preliminary report within seventy five days.

Termination of existing moratorium and commencement of moratorium under Section 33(5) - On admission of the liquidation application, the prior moratorium under Section 14 ceased and a fresh moratorium under Section 33(5) commenced. - HELD THAT: - The Tribunal recorded that with the order admitting the application for liquidation, the earlier moratorium (imposed during CIRP under Section 14) would cease to have effect and that a fresh moratorium, as provided under Section 33(5) consequent to liquidation, would commence. This operational consequence of the liquidation order was directed to take effect accordingly. [Paras 17]

The moratorium under Section 14 ceases; a moratorium under Section 33(5) commences upon liquidation.

Final Conclusion: The Tribunal allowed the RP's application for liquidation of UTM Engineering Private Limited under Section 33(1)(a), appointed the proposed liquidator who had filed consent and registration, directed the liquidator to follow statutory liquidation procedures (including public announcement, investigation and filing of a preliminary report within seventy five days), and declared that the earlier CIRP moratorium ceases while the moratorium under Section 33(5) commences.

Alternative remedy of statutory appeal - limitation for filing appeal - abstention by tribunal while High Court is seized - interim restraint on coercive recovery

Alternative remedy of statutory appeal - limitation for filing appeal - abstention by tribunal while High Court is seized - Direction permitting filing of appeal before the CESTAT to save limitation, with the CESTAT refraining from hearing the appeal on merits while the High Court is seized of the matter. - HELD THAT: - The Court noted that the applicants possess the alternative statutory remedy of appeal to the CESTAT but had not filed the appeal because proceedings were pending before this Court and the period of limitation was about to expire (paras 4-5). In view of the imminent expiry of limitation and the absence of the Assistant Solicitor General from Court, the applicants were permitted to file the appeal before the CESTAT solely for the purpose of protecting their right against limitation. The Court directed that the CESTAT shall not proceed to hear the appeal on merits while the High Court remains seized of the matter, thereby preserving the High Court's primacy to decide the petitions on their merits (paras 4-7). [Paras 4, 5, 7]

Applicants may file the statutory appeal to the CESTAT to save limitation; the CESTAT shall not hear the appeal on merits while this Court is seized.

Interim restraint on coercive recovery - Interim direction restraining coercive steps for recovery of the demand until the next date of hearing. - HELD THAT: - Having regard to the issues raised and the pendency of the petition before this Court, and because it was not possible to hear the matter before the forthcoming holiday break, the Court granted a limited interim protection. Until the next date of hearing the respondents were directed not to take any coercive steps for recovery of the demand confirmed by the impugned order (paras 7-8). The matter was listed for further hearing on the specified date (para 8). [Paras 7, 8]

Until the next date of hearing, no coercive steps shall be taken for recovery; matter listed on 08.12.2020.

Final Conclusion: The petition was not decided on merits; the Court allowed filing of the statutory appeal to save limitation with a direction that the CESTAT shall not adjudicate the merits while the High Court is seized, and granted interim protection from coercive recovery until the next hearing, with the matter listed on 08.12.2020.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - declaration in Form SVLDRS-1 - rejection of SVLDRS declaration for non disclosure of penalty - remand for reconsideration - opportunity of hearing - appropriation of payments towards tax, interest and penalty

Declaration in Form SVLDRS-1 - rejection of SVLDRS declaration for non disclosure of penalty - remand for reconsideration - opportunity of hearing - Impugned rejection of the petitioner's SVLDRS Form (ARN LD1812190003052 dated 18.12.2019) was set aside and the matter remanded to the designated authorities for fresh consideration in terms of the Scheme and rules. - HELD THAT: - The petitioner filed an electronic declaration in Form SVLDRS-1 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 showing the determined duty and deposit such that the net amount payable under the Scheme became nil, the Scheme providing waiver of interest and penalty. The Designated Committee rejected the declaration on the ground that the amount of penalty had not been shown in Form SVLDRS-1, treating the declaration as incorrect. The High Court, following the disposal of a coordinate petition and on consent of the parties, set aside the rejection order and remanded the matter to the authorities to reconsider the declaration submitted by the petitioner and to pass appropriate orders in accordance with the Scheme and the Rules. The Court directed that if the authorities consider a fresh declaration necessary they shall permit the petitioner to file it, and that the authorities shall decide the matter within two months of receipt of the certified copy of the order. The direction preserves the petitioner's right to an opportunity of hearing and requires decision-making in accordance with the Scheme and applicable rules. [Paras 9, 10]

Rejection quashed; declaration to be reconsidered afresh by the authorities in terms of the Scheme and rules, with liberty to file fresh declaration and decision to be rendered within two months.

Final Conclusion: The writ petition was disposed by setting aside the Designated Committee's rejection of the SVLDRS declaration and remanding the matter for reconsideration in accordance with the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and its rules; the authorities were directed to decide the application within two months and to permit filing of a fresh declaration if required.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDRS-1 declaration - correction of declaration - remand for fresh consideration - reasoned speaking order

SVLDRS-1 declaration - correction of declaration - reasoned speaking order - Petitioner permitted to correct the SVLDRS-1 declaration and respondents directed to reconsider the rejected declaration and pass a reasoned order. - HELD THAT: - The impugned rejection of the petitioner's SVLDRS-1 Form dated 28.12.2019 was founded on a discrepancy between the pre-deposit recorded in the departmental report and the figure furnished in the SVLDRS-1 declaration. The Court accepted the petitioner's explanation that the mismatch arose from an inadvertent mistake in entry and that the error did not cause any loss to the revenue. The respondents (authorities) agreed to permit the petitioner to submit an application for correction of the information in the SVLDRS-1 Form. The Court required that upon receipt of such application the authorities must consider the corrected declaration and pass a reasoned, speaking order. Timelines were fixed for submission of the application and for disposal by the authorities to ensure expeditious fresh consideration. [Paras 12, 14]

Petitioner to apply for correction within 15 days of certified copy; respondents to pass a reasoned speaking order on the corrected declaration within 2 months of receipt.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - remand for fresh consideration - Court clarified that its earlier observation regarding benefit under Section 124(1)(e) does not confine the petitioner to claim only that relief and petitioner remains free to claim any other entitlement under the Scheme. - HELD THAT: - While disposing of the petition by directing fresh consideration of the corrected declaration, the Court expressly stated that any prior observation in the order concerning entitlement under a specific provision of the Scheme (Section 124(1)(e)) shall not operate as a limitation on the petitioner's rights. The petitioner may assert any other benefit to which it may be entitled under the Scheme when the corrected declaration is considered by the authorities. [Paras 13]

Earlier observation as to benefit under Section 124(1)(e) shall not restrict the petitioner from claiming any other benefit under the Scheme.

Final Conclusion: Writ petition disposed of; the order of rejection dated 28.12.2019 is set aside. Petitioner permitted to seek correction of the SVLDRS-1 declaration within 15 days of certified copy of this order and respondents directed to decide the corrected declaration by a reasoned order within 2 months of receipt; petitioner not restricted to the benefit under Section 124(1)(e) alone.

CENVAT credit of additional duty of customs - rule 3(1)(vii) of the CENVAT Credit Rules, 2004 - scope of proviso to rule 3(1)(i) in relation to clause (vii) - distinction between Customs Notification and Excise Notification for imported coal - availability of credit where concessional CVD paid under Customs Notification No. 12/2012-Cus.

CENVAT credit of additional duty of customs - rule 3(1)(vii) of the CENVAT Credit Rules, 2004 - Customs Notification No. 12/2012-Cus. - Admissibility of CENVAT credit of additional duty of customs (2% CVD) paid on imported coal under the Customs Notification dated March 17, 2012. - HELD THAT: - The Tribunal held that CENVAT credit under rule 3(1)(vii) is available where additional duty under section 3(1) of the Customs Tariff Act has been paid after availing the concessional rate under the Customs Notification dated March 17, 2012. The authorities below committed an error by applying the Excise Notification and provisos applicable to domestically manufactured coal to imported coal. The Tribunal relied on earlier decisions of the Tribunal (Hindalco, Jaypee Sidhi Cement Plant, Asahi Songwon Colors) and the Regional Advisory Committee minutes which concluded that CVD at the concessional rate under the Customs Notification is not excluded from Rule 3 and therefore is eligible for CENVAT credit. The Commissioner's reading that clause (vii) is subject to the restrictions in clause (i) was held to be a misreading and legally incorrect. [Paras 15, 16, 17, 18, 22]

CENVAT credit of the additional duty of customs paid at concessional rate under the Customs Notification dated March 17, 2012 is admissible under rule 3(1)(vii).

Scope of proviso to rule 3(1)(i) in relation to clause (vii) - distinction between Customs Notification and Excise Notification for imported coal - Whether the proviso barring credit in rule 3(1)(i) (applicable to certain Excise Notifications) applies to the additional duty taken under rule 3(1)(vii). - HELD THAT: - The Tribunal found that the Commissioner erred by importing the conditions of proviso (a) and (b) of rule 3(1)(i) into clause (vii). Clause (vii) permits credit of additional duty leviable under section 3 of the Customs Tariff Act "equivalent to the duty of excise specified" in clauses (i)-(via), but does not incorporate the proviso restrictions which apply to excise notifications for domestically manufactured goods. The Excise Notification conditions (serial numbers in Excise Notification No. 12/2012-CE) are directed to indigenous manufacture and are not applicable to the concessional Customs Notification for imported coal; therefore the proviso cannot be read so as to bar credit of CVD paid under the Customs Notification. [Paras 11, 13, 14, 21, 22]

The proviso to rule 3(1)(i) does not operate to deny CENVAT credit of additional customs duty paid under the Customs Notification on imported coal; the proviso is not applicable to clause (vii).

Final Conclusion: Excise Appeal No. 52928 of 2019 filed by Hindustan Zinc is allowed and the order of the Commissioner dated September 24, 2019 is set aside; Excise Appeal No. 52774 of 2019 filed by the Commissioner is dismissed, thereby upholding the Commissioner (Appeals) order allowing CENVAT credit in respect of concessional additional customs duty paid on imported coal.