TaxTMI Updates e-Newsletter
Nov 04,2020

Value of supply - consideration includes non-monetary consideration - transaction value under Section 15 - valuation where consideration not wholly in money - Rule 27 - taxability of custom milling service - by-products retained as part of consideration - taxability of bran as supply of goods - invoice and delivery challan / bill of supply obligations for job work

Value of supply - consideration includes non-monetary consideration - transaction value under Section 15 - valuation where consideration not wholly in money - Rule 27 - taxability of custom milling service - by-products retained as part of consideration - Levy of tax on estimated value of by-products retained by the rice miller during custom milling, treating those by-products as part of the value of the CMR job-work service. - HELD THAT: - The Appellate Authority held that the CMR activity is a taxable service at 5% and that 'consideration' for supply under the Act includes amounts received in kind. Because the price received in cash (Rs.15 per quintal) is not the sole consideration, Section 15's transaction-value test is inapplicable in isolation and valuation must follow the sequence in Rule 27. Under Rule 27 the value of supply is the sum of the monetary consideration plus the money-equivalent of non-monetary consideration (the residues retained: broken rice, bran, husk), adjusted for any shortfall the miller must make good. The admitted contractual arrangement under which the miller retains the residues as compensation demonstrates that those residues constitute bona fide consideration for the milling service and must be included in the value of supply. Consequently, the assessing officer's inclusion of the market value of retained by-products in the taxable value of the CMR service was upheld. [Paras 20, 21, 22]

Inclusion of the value of by-products retained by the miller as part of the value of the CMR service is upheld and the tax levied on that deemed value is confirmed.

Taxability of bran as supply of goods - invoice and delivery challan / bill of supply obligations for job work - consideration includes non-monetary consideration - Levy of tax on the estimated sale value of rice bran retained by the miller. - HELD THAT: - The Authority examined whether bran retained or subsequently sold by the miller is taxable. It found that bran is not exempt under the CGST/APGST scheme and hence its sale constitutes a taxable supply. The order explains the complementary compliance positions: the civil supplies corporation should issue delivery challan and appropriate documents (bill of supply or tax invoice) for the goods transferred, while the miller must raise tax invoice for the taxable service and, when selling bran in the open market, must issue a tax invoice for bran. Because bran is taxable, the assessing officer's levy on estimated sale value of bran was sustainable. [Paras 21, 23]

Levy of tax on the estimated sale value of rice bran is upheld and the tax so levied is confirmed.

Final Conclusion: The Appellate Authority confirmed the assessing authority's determination of tax for the period July, 2017 to June, 2018 by including the money-equivalent of by-products retained by the miller in the value of the custom milling service and upholding tax on the estimated sale value of bran; the appeal is dismissed.

Extension of time for filing annual return and reconciliation statement - availability of filing utility - direction to respondents to extend time limit for filing

Extension of time for filing annual return and reconciliation statement - direction to respondents to extend time limit for filing - Petition for direction to extend due date for filing Forms GSTR-9/GSTR-9A and GSTR-9C for Financial Year 2018-19 - HELD THAT: - The Court recorded that the petitioner sought a direction to extend the time for filing the annual return and reconciliation statement for FY 2018-19 on account of non-availability of the filing utility and practical difficulties arising from COVID-19. The Court noted the press release of the Central Board of Indirect Taxes and Customs dated 24 October 2020 extending the due date for filing Forms GSTR-9/GSTR-9A and GSTR-9C from 31 October 2020 to 31 December 2020 and that consequential notification would follow. Having noted that the administrative relief sought by the petitioner had been granted by the respondents, the Court found that no further judicial intervention was necessary and closed the petition. [Paras 3, 4, 5, 6]

Petition disposed of as the respondents have extended the due date for filing the specified forms for Financial Year 2018-19 to 31 December 2020; no further order.

Final Conclusion: The petition was closed after the Court recorded that the Central Board of Indirect Taxes and Customs had extended the due dates for filing the annual return and reconciliation statement for Financial Year 2018-19 to 31 December 2020, thereby granting the relief sought.

Refund of accumulated input tax credit - debit of Electronic Credit Ledger under Rule 89(3) of the CGST Rules, 2017 - error in GST common portal affecting FORM GST DRC-03 - remand to adjudicating authority for verification and processing under Section 54 of the CGST Act, 2017

Refund of accumulated input tax credit - debit of Electronic Credit Ledger under Rule 89(3) of the CGST Rules, 2017 - error in GST common portal affecting FORM GST DRC-03 - Validity of rejection of refund claim on the ground that no amount was debited from the Electronic Credit Ledger (NIL ARN) when FORM GST DRC-03 could not be executed due to errors in the GST portal. - HELD THAT: - The adjudicating authority rejected the refund claim because the appellant had generated an ARN for NIL amount and no debit was reflected in the Electronic Credit Ledger, whereas debit through FORM GST DRC-03 was required under Rule 89(3). The appellant explained and documented that the GST common portal prevented debiting the available ITC despite attempts and multiple help-desk complaints, and subsequently debited the ledger by filing FORM GST DRC-03 (ARN AD081119002254F dated 20-11-2019) after the portal was rectified. The appellate authority accepted that the failure to debit initially arose from portal errors and that the appellant has since filed the required FORM GST DRC-03 and supporting documents. Rather than adjudicating the refund on merits, the appellate authority directed that the appellant submit the FORM GST DRC-03 and related documents to the adjudicating authority so that the refund claim may be verified and processed in accordance with Section 54 of the CGST Act, 2017 and the rules thereunder. [Paras 3, 6, 7, 8]

Appeal disposed of by directing the appellant to submit FORM GST DRC-03 and supporting documents to the adjudicating authority for verification and processing of the refund claim; matter remitted to the adjudicating authority for further action.

Final Conclusion: The appellate authority disposed the appeal and remitted the matter to the adjudicating authority with a direction to verify the subsequently filed FORM GST DRC-03 and related documents and to process the refund claim for the period December, 2017 to March, 2018 in accordance with Section 54 of the CGST Act, 2017 and applicable rules.

Reopening of assessment u/s 147 - reasons recorded by DCIT whereas notice issued by ITO - Notice issued by an officer other than the officer who recorded the reasons for reopening - curable defect u/s 292B - As decided by HC [2019 (6) TMI 799 - GUJARAT HIGH COURT] notice under Section 148(1) was invalid for being issued by an officer who had not recorded the reasons and had no jurisdiction; all proceedings under that notice could not be sustained. The irregularity was not cured by Section 292B and participation in proceedings did not preclude judicial review of the jurisdictional defect; the challenge was maintainable

HELD THAT:- Special leave petition is dismissed. However, the question of law is left open.

Disallowance under Section 14A - Onus to prove genuineness of cash purchases - Additions under Section 41(1) - Undervaluation of closing stock by journal entries - Related party transactions and genuineness of services

Disallowance under Section 14A - Extent of disallowance under Section 14A and whether it could exceed the exempt dividend income - HELD THAT: - The Tribunal's and Commissioner (Appeals)'s reduction of the AO's disallowance was sustained. The Court relied on precedent holding that any disallowance under Section 14A cannot exceed the exempt income earned in the assessment year; here dividend income was only Rs. 45,371/-, and therefore disallowance could not exceed that amount. The assessee had voluntarily offered Rs. 65,000/-, and the Commissioner (Appeals) recorded disallowance to that extent; there is no perversity in the concurrent approach. [Paras 9]

Disallowance under Section 14A cannot exceed the exempt dividend income; substantial question answered against the Revenue and for the Assessees.

Onus to prove genuineness of cash purchases - Whether cash purchases amounting to Rs. 60,28,080/- should be added for want of explanation and proof of genuineness - HELD THAT: - The Court found no perversity in the concurrent findings of the lower authorities. The cash purchases constituted about 2% of total purchases and comprised numerous small transactions often below Rs. 20,000/-. The assessee produced 'H' Forms and offered a plausible explanation that purchases were from small traders/mining contractors paid in cash for on the spot transactions. The AO did not reject the books of account. The decision in Shree Choudhary Transport Co. was held distinguishable on facts and inapplicable. [Paras 12, 14, 16]

Findings that cash purchases need not be disallowed were upheld; substantial question answered against the Revenue and for the Assessees.

Additions under Section 41(1) - Validity of deletion of additions under Section 41(1) when confirmations of trade creditors were not produced - HELD THAT: - The Court affirmed the view of the Commissioner (Appeals) and ITAT. It noted that in a closely related earlier assessment year the Tribunal had deleted similar additions relying on Chase Bright Steel Ltd., and that order was not challenged by the Revenue. The concurrent findings that confirmations were produced or that the factual position supported deletion were not perverse. The reasoning of the lower authorities accords with settled law and the material on record. [Paras 21]

Deletion of additions under Section 41(1) sustained; substantial question answered against the Revenue and for the Assessees.

Undervaluation of closing stock by journal entries - Whether undervaluation of closing stock by passing journal entries in the name of a sister concern warranted additions - HELD THAT: - The Court found no perversity in the concurrent factual findings of the Commissioner (Appeals) and the ITAT. The Revenue had accepted the genuineness of the rendering of services and collected tax on that basis; it could not on one hand treat services as genuine for taxation and on the other seek additions for undervaluation of stock. The authorities had applied appropriate scrutiny and no misapplication of law or perverse finding was shown. [Paras 24]

No addition for undervaluation of closing stock; substantial question answered against the Revenue and for the Assessees.

Related party transactions and genuineness of services - Deletion of additions towards staking and handling expenses and blending and screening charges paid to a sister concern where genuineness of services was disputed - HELD THAT: - The Court endorsed the concurrent findings that the sister concern had rendered such services. It observed that the sister concern had rendered similar services to related entities in a preceding assessment year and those expenditures were not disallowed by the Revenue. The Commissioner (Appeals) and ITAT applied requisite care and caution in scrutinising transactions; the AO's contrary factual conclusion was not sustained as perverse. [Paras 28, 29]

Deletions of additions relating to services rendered by the sister concern were upheld; substantial question answered against the Revenue and for the Assessees.

Final Conclusion: All substantial questions of law were answered against the Revenue and in favour of the Assessees; the appeals are dismissed and there is no order as to costs.

Exclusive jurisdiction of the Settlement Commission under Section 245F(2) - Conclusive effect of a Settlement Commission award under Section 245-I - Prohibition on reopening matters covered by a settlement - Impermissibility of a tax authority reappraising or overruling a Settlement Commission award

Exclusive jurisdiction of the Settlement Commission under Section 245F(2) - The DGIT lacked jurisdiction to issue the show cause notice and initiate proceedings for withdrawal of approval while the application under Section 245C had been allowed to be proceeded with by the Settlement Commission. - HELD THAT: - The Trust's application under Section 245C was permitted to be proceeded with under Section 245D(1) by order dated 10.12.2012. By virtue of the exclusive jurisdiction conferred on the Settlement Commission until its order under Section 245D(4), the DGIT, an income-tax authority, could not step into the functions of the Commission and issue a show cause notice on 22.04.2013. The impugned proceedings and the order passed thereon thus proceeded on a foundational act which was beyond the DGIT's jurisdiction and are therefore illegal. Because the show cause notice formed the foundation of the impugned order, illegality at the inception vitiates the entire consequential proceedings. [Paras 11, 12, 15]

Proceedings initiated by the DGIT and the impugned order founded on the show cause notice are quashed for want of jurisdiction.

Conclusive effect of a Settlement Commission award under Section 245-I - Prohibition on reopening matters covered by a settlement - The matters dealt with and concluded by the Settlement Commission's award became conclusive and could not be reopened by the DGIT in subsequent proceedings under the Act. - HELD THAT: - The Settlement Commission's order dated 28.03.2014 was passed under Section 245D(4) and, by Section 245-I, is conclusive as to the matters stated therein. The ITSC had dealt with issues including suppression of income, anonymous donations, collection and diversion of unaccounted capitation fees and application of accounted income. Once so concluded, those matters could not be reopened by the DGIT in any proceeding under the Act. The Court further observed that the Department's writ challenging the ITSC award was dismissed and the ITSC findings upheld, reinforcing that reliance on the ITSC's own findings to reopen those matters was impermissible. [Paras 8, 13]

Issues settled by the Settlement Commission's award are conclusive and the DGIT was precluded from reopening them; the impugned order cannot be sustained on this ground.

Impermissibility of a tax authority reappraising or overruling a Settlement Commission award - The DGIT impermissibly reappraised and attempted to overrule the findings of the Settlement Commission, thereby exceeding his statutory powers. - HELD THAT: - The impugned order relied primarily on the materials and findings that were already before the ITSC and, by reappraising those materials and rendering conclusions contrary to the Commission's award, the DGIT effectively sat in appeal over the ITSC. Although the DGIT is an 'Income Tax Authority' for certain purposes, the ITSC is a statutory body constituted under the relevant Chapter; a tax official cannot substitute his opinion for the conclusive findings of the Settlement Commission. This overreach further vitiates the impugned order. [Paras 7, 16]

The DGIT exceeded his powers by reappraising and overruling the ITSC's findings; the impugned order is invalid on this ground as well.

Final Conclusion: The impugned order dated 09.02.2015 withdrawing approval under Section 10(23C)(iv) is quashed and the writ petition is allowed on grounds of want of jurisdiction and impermissible reopening/overruling of the Settlement Commission's conclusive award; connected petition closed, no costs.

Taxability of capital gain upon completed sale despite subsequent cancellation - effect of arbitration award on antecedent executed sale deeds - deemed buy back of immovable property for tax purposes - cost of acquisition and date of acquisition for deemed buy back - overlap/commonality of property in successive transactions and remedy for double taxation

Taxability of capital gain upon completed sale despite subsequent cancellation - Sale effected by execution of registered deeds, receipt of consideration and delivery of vacant possession in F. Y. 2009 10 is taxable in A. Y. 2010 11 notwithstanding later arbitration based cancellation. - HELD THAT: - The Tribunal found on the material that in F. Y. 2009 10 the assessee executed four registered sale deeds conveying 50 acres, received the sale consideration and handed over vacant possession; those ingredients established completion of sale in that year. Although an arbitration award dated 02.09.2015 later cancelled the agreement and the earlier sale deeds as part of a compromise, the facts show the assessee had enjoyed the fruits of the sale and the buyer had possession. On these facts the Tribunal held it was not justified to treat there as having been no sale in A. Y. 2010 11; taxation in that year on the capital gain arising from the completed sale was sustained. [Paras 6, 10, 11]

Capital gain arising from the sale of 50 acres effected in F. Y. 2009 10 is taxable in A. Y. 2010 11.

Effect of arbitration award on antecedent executed sale deeds - deemed buy back of immovable property for tax purposes - cost of acquisition and date of acquisition for deemed buy back - To give full effect to the arbitration award the Tribunal treated part of the earlier sale as deemed bought back on the date of the award and fixed acquisition cost and date for that deemed buy back. - HELD THAT: - The arbitration award cancelled the original agreement and four earlier sale deeds and directed conveyance of different lands totaling approximately 79 acres in F. Y. 2015 16 for Rs. 150 crores. Comparing descriptions, the Tribunal identified 23 acres 30 guntas common to both sets of deeds and 26 acres 10 guntas which were not ultimately transferred in the new deeds. To give effect to the award the Tribunal held that the 26 acres 10 guntas shall be treated as deemed bought back by the assessee on 02.09.2015 (date of the award) for the same consideration of Rs. 2 crores per acre; cost of acquisition for the deemed buy back is to be considered at that rate with acquisition date 02.09.2015 for any future capital gains computation. This approach was adopted so as to preserve the taxability of the completed 2009 10 sale while recognising the effect of the arbitration compromise and subsequent fresh transfers. [Paras 12, 13]

26 Acres 10 Guntas of the earlier sold land is deemed bought back on 02.09.2015 at Rs. 2 crores per acre for computing future capital gains; the arbitration award's effect is otherwise given by excluding the 23 Acres 30 Guntas common land from the deemed buy back.

Overlap/commonality of property in successive transactions and remedy for double taxation - The Tribunal declined to adjudicate potential double taxation in respect of the 23 acres 30 guntas common to the 2009 10 and 2015 16 transfers and left it to the assessee to seek remedy before the department for the other year which is not before the Tribunal. - HELD THAT: - Having identified that 23 acres 30 guntas were common to the sale deeds executed in F. Y. 2009 10 and F. Y. 2015 16, the Tribunal observed that any claim to avoid double taxation in the other assessment year was a matter for the assessee to pursue before the tax authorities because that year was not under adjudication in the present appeal. The Tribunal therefore did not give directions on relief for that year. [Paras 13]

Claim for relief against double taxation in respect of the common land is left to the assessee to advance before the appropriate authority for the other year; no direction given by the Tribunal in this appeal.

Final Conclusion: The appeal is dismissed. The Tribunal upheld taxation of the 2009 10 sale in A. Y. 2010 11, gave effect to the arbitration award by treating a portion of the earlier sale as deemed bought back on 02.09.2015 with specified cost and acquisition date for future capital gains computation, and left any separate claim to avoid double taxation in the other year to be pursued by the assessee before the department.

Power of revision under section 263 - allowability of legal and professional expenses as revenue expenditure - assessing officer taking one of the possible views - retrospective effect of a High Court decision from inception

Power of revision under section 263 - allowability of legal and professional expenses as revenue expenditure - assessing officer taking one of the possible views - retrospective effect of a High Court decision from inception - Whether the Pr. Commissioner of Income Tax was justified in invoking section 263 to revise the assessment on the ground that the Assessing Officer failed to examine the allowability of legal and professional charges of Rs. 10 lakhs. - HELD THAT: - The Tribunal found on the material on record that during assessment proceedings the Assessing Officer had called for details of the legal and professional expenses and the assessee had furnished an explanation which the Assessing Officer considered and, being satisfied, chose not to make any addition. The absence of a separate discussion of the item in the assessment order did not mean there was no enquiry. The Tribunal further held that the jurisdictional High Court decision (Aker Powergas Pvt. Ltd.) - following earlier authority that legal expenses incurred in connection with a capital asset may nevertheless be revenue in nature - applied and, as a settled legal proposition, is deemed to have existed from inception. Where the Assessing Officer has applied his mind and taken one of the possible views supported by law, exercise of revision under section 263 was not justified. Applying the principle in Malabar Industrial, the Tribunal concluded there was no material to show the expenses were not allowable as revenue expenditure and quashed the revision order. [Paras 10, 11]

The order passed by the Pr. CIT under section 263 was quashed and the appeal of the assessee was allowed.

Final Conclusion: The Tribunal held that the Assessing Officer had examined the legal and professional charges, had taken a possible view supported by judicial authority, and therefore the Pr. CIT was not justified in invoking revisional jurisdiction under section 263; the revisional order was quashed and the assessee's appeal allowed.

Reopening of assessment - reason to believe - tangible material forming the basis for reopening - change of opinion - failure to disclose fully and truly all material facts - first proviso to Section 147 - assessment under Section 143(3)

Reopening of assessment - reason to believe - tangible material forming the basis for reopening - change of opinion - failure to disclose fully and truly all material facts - first proviso to Section 147 - assessment under Section 143(3) - Validity of notice under Section 148/assumption of jurisdiction under Section 147 to reopen the assessment for AY 2005-06 - HELD THAT: - The Tribunal examined the recorded reasons and the governing principles of reassessment, emphasising that the validity of reopening must be tested by reference to the reasons recorded and that reopening under Section 147, where the original assessment was completed under Section 143(3), after four years requires either non-filing/non-response or failure to disclose fully and truly all material facts. The Tribunal held that reopening based on mere change of opinion is impermissible and that the Assessing Officer must have tangible material having a live link to formation of belief that income escaped assessment. In the present case the reasons recorded did not demonstrate failure by the assessee to disclose fully and truly all material facts nor did they disclose tangible material establishing escapement of income; rather the record showed only a change of opinion. Applying the settled principles (including the requirement that reasons must manifest the mind of the AO and show nexus with the information on which belief was formed), the Tribunal concluded that the conditions of the first proviso to Section 147 were not satisfied and the reassessment notice was invalid. [Paras 6, 7, 8]

Notice under Section 148 and proceedings under Section 147 for AY 2005-06 quashed; appeal allowed on this ground.

Capital versus revenue expenditure - design and development expenses - depreciation - Nature of 'design and development' expenditure and relief where treated as capital in books - HELD THAT: - The Tribunal noted that the assessee itself capitalised and amortised the design and development expenditure in its books. While the assessee contended the amounts were revenue in nature and deductible under Section 37(1), the Tribunal found that the treatment in the books indicated capital character. Given that position, the Tribunal directed that, insofar as the expenditure is capital in nature, the assessee is entitled to claim depreciation at the applicable rate. The result was a partial allowance: the expenditure is not deductible as revenue but depreciation is to be granted. [Paras 11]

Ground partly allowed; assesssing officer to grant depreciation on capitalised design and development expenditure.

Research and development expenditure - capital portion of R&D expenditure - deduction under Section 35(1)(iv) - depreciation - Allowability of R&D expenditure: revenue treatment for some amounts and capital character for other portions; relief where capital portion claimed - HELD THAT: - The Tribunal observed that the assessee's financial statements treated parts of R&D expenditure as revenue and parts as capital. The revenue portion allowed by the AO was accepted, but the capitalised portion could not be treated as revenue without substantiation. The assessee's claim for deduction under Section 35(1)(iv) was rejected for lack of evidence. However, as an alternative, the Tribunal remanded for grant of depreciation on the capitalised component, directing the Assessing Officer to allow depreciation at the applicable rate. [Paras 15]

Ground partly allowed; capital portion of R&D not allowed as revenue but assessee to be granted depreciation; Section 35(1)(iv) claim rejected for lack of evidence.

Provision for warranty - Provision for warranty not pressed by the assessee - HELD THAT: - The Tribunal recorded that the issue regarding disallowance of provision for warranty was not pressed before it by the assessee. [Paras 17]

Ground dismissed as not pressed.

Sales commission - evidence - Disallowance of provision for sales commission for lack of substantiation - HELD THAT: - The Tribunal noted that the assessee failed to produce evidence to establish the basis for the provision towards sales commission or to show existence of any liability at the relevant time. In absence of such substantiation the claim could not be allowed. [Paras 19]

Ground dismissed for want of evidence.

Interest capitalisation - capital work-in-progress - consequential depreciation - Disallowance of interest as revenue expenditure where funds were applied to capital work-in-progress and entitlement to consequential depreciation - HELD THAT: - The Tribunal agreed with the lower authorities that the interest related to loans utilized for capital work-in-progress and additions to fixed assets, and therefore was correctly treated as capital in nature. The Tribunal however admitted additional grounds raised by the assessee and directed that consequential depreciation on capitalization be allowed in the year the capital work-in-progress is capitalised. The Assessing Officer was directed to grant consequential depreciation. [Paras 21, 22]

Ground partly allowed; interest treated as capital but consequential depreciation to be allowed by the AO.

Reimbursement of expenses - tax deduction at source - Claim for reimbursement of expenses disallowed for failure to demonstrate tax withholding - HELD THAT: - The Tribunal noted that the assessee did not substantiate that tax had been deducted at source on the reimbursements claimed. In absence of such proof, the claim could not be allowed and the orders of the lower authorities were confirmed. [Paras 24]

Ground dismissed; disallowance confirmed for lack of TDS substantiation.

Final Conclusion: The Tribunal quashed the reassessment for AY 2005-06 as founded on mere change of opinion and lacking tangible material and full-truth nondisclosure required by the first proviso to Section 147; other common grounds across Assessment Years 2005-06 to 2015-16 were partly allowed or dismissed as set out, with directions to grant depreciation where expenditure was capitalised and other reliefs remitted to the Assessing Officer for computation.

Penalty under section 271AAB for search cases - Penalty under section 271(1)(c) of the Income tax Act, 1961 - Specified previous year - Undisclosed income - Non obstante clause and overriding effect of specific provision - Initiation of penalty proceedings - Section 292B - curative operation

Penalty under section 271AAB for search cases - Penalty under section 271(1)(c) of the Income tax Act, 1961 - Specified previous year - Non obstante clause and overriding effect of specific provision - Validity of imposing penalty under section 271(1)(c) where a search was conducted on 03.09.2014 and the matter falls within the purview of section 271AAB. - HELD THAT: - The Tribunal accepted the facts that a search under section 132 was carried out on 03.09.2014 and that the due date for furnishing the return for AY 2014-15 had not expired on the date of search. Section 271AAB, which applies where a search was initiated on or after 1.7.2012, prescribes the levy of penalty on undisclosed income of the specified previous year and contains a non obstante clause excluding applicability of section 271(1)(c) in respect of such undisclosed income. The Assessing Officer had initiated penalty proceedings only under section 271(1)(c). The Tribunal held that where the facts bring the case within the definition of "specified previous year" and "undisclosed income" under section 271AAB, penalty proceedings ought to have been initiated and framed under section 271AAB(1) (in the present case clause (c) thereof), and initiation under section 271(1)(c) was legally impermissible. The Tribunal noted and relied on co ordinate decisions to the same effect and further held that the defect could not be cured by invoking section 292B. Consequently the Commissioner (Appeals) was right in deleting the penalty levied under section 271(1)(c).

Penalty levied under section 271(1)(c) quashed; proceedings and levy should have been under section 271AAB(1)(c).

Final Conclusion: The Revenue's appeal is dismissed and the deletion of the penalty imposed under section 271(1)(c) is upheld as the case falls within section 271AAB for AY 2014-15.

Disallowance under section 14A read with Rule 8D - apportionment of administrative expenses for exempt income - method of computation under Rule 8D(2)(iii) and comparative application of alternative methods - tax deduction at source on bank/credit-card charges versus commission - nature of forfeiture proceeds of optionally convertible warrants as capital receipt - binding effect of coordinate-bench precedent and application mutatis mutandis - pronouncement of orders beyond 90 days-exclusion of lockdown period for computation of time-limit under Rule 34(5)

Disallowance under section 14A read with Rule 8D - binding effect of coordinate-bench precedent and application mutatis mutandis - Validity of disallowance made under section 14A read with Rule 8D for AY 2012-13 - HELD THAT: - The Tribunal found that the identical contention raised by the revenue had already been decided in favour of the assessee by a Coordinate Bench of the Tribunal in the assessee's own earlier years and, applying those decisions mutatis mutandis, held that the revenue's disallowance under section 14A r.w.r. Rule 8D is not sustainable. The Tribunal therefore dismissed the ground raised by the revenue in respect of section 14A for the year under consideration. [Paras 11]

Ground raised by revenue under section 14A r.w.r. Rule 8D dismissed.

Apportionment of administrative expenses for exempt income - method of computation under Rule 8D(2)(iii) and comparative application of alternative methods - Extent and manner of computing disallowance in respect of administrative expenses under section 14A/Rule 8D as raised by the assessee - HELD THAT: - While accepting that many investments were intra-group and that administrative expenses were incurred for administration of the assessee's affairs, the Tribunal did not accept the assessee's submission that no expenditure was incurred. The Tribunal directed the AO to compute administrative expenses and determine total income (taxable and exempt), apportion administrative expenses to exempt income by the ratio of income, and separately compute 0.5% of investments under Rule 8D(2)(iii) considering only those investments which actually yielded exempt income. The AO is to compare both methods and apply the lesser amount for the purpose of section 14A; the matter was remitted to AO for computation accordingly. The allowance is described as for statistical purposes. [Paras 12]

Assessee's challenge allowed in part by remand: AO directed to recompute disallowance using prescribed comparative methods and apply the lesser amount; allowed for statistical purposes.

Tax deduction at source on bank/credit-card charges versus commission - binding effect of coordinate-bench precedent and application mutatis mutandis - Whether commission/charges paid to banks/credit-card companies attract TDS under the provisions relied upon by the revenue (disallowance under section 40(a)(ia)) - HELD THAT: - The Tribunal noted that the identical issue had been decided in favour of the assessee by Coordinate Bench precedents relied upon by the assessee, which held that payments to banks for utilization of credit-card facilities are in the nature of bank charges and not commission liable to TDS under the provisions invoked by the revenue. The departmental representative conceded the applicability of those precedents. Following the coordinate-bench decisions, the Tribunal held that the disallowance made by the AO on account of non-deduction of TDS on credit-card commission could not be sustained and dismissed the revenue's grounds on this issue. [Paras 17]

Disallowance under section 40(a)(ia) in respect of credit-card charges/TDS held unsustainable; revenue's grounds dismissed.

Nature of forfeiture proceeds of optionally convertible warrants as capital receipt - binding effect of coordinate-bench precedent and application mutatis mutandis - Whether amount forfeited on optionally convertible share warrants is taxable as revenue receipt or is a capital receipt for AY 2012-13 - HELD THAT: - Having examined the nature of the transaction and following coordinate-bench decisions in the assessee's earlier years, the Tribunal agreed with the assessee that the forfeited sums arose from part-payments for convertible warrants and were reflected in the books as capital reserve. The Tribunal observed that the AO did not controvert the factual matrix (issue of warrants, part payments, notices and forfeiture) and accepted judicial precedents treating such forfeiture receipts as capital in nature. Consequently, the addition under the relevant provision was not sustainable. [Paras 21]

Addition treating forfeiture proceeds as revenue denied; forfeiture proceeds held to be capital receipt and revenue's grounds dismissed.

Pronouncement of orders beyond 90 days-exclusion of lockdown period for computation of time-limit under Rule 34(5) - Permissibility of pronouncing the Tribunal's order beyond 90 days from conclusion of hearing in the circumstances of lockdown - HELD THAT: - The Tribunal recorded that the order was pronounced after more than 90 days from conclusion of hearing. Relying on a Coordinate Bench decision (JSW Ltd) and the unprecedented disruption caused by the COVID-19 lockdown, the Tribunal accepted the exclusion of the lockdown period for computing the 90-day limit under Rule 34(5) and proceeded to pronounce the order beyond 90 days. The Tribunal placed reliance on the precedent reasoning that extraordinary circumstances justify such exclusion. [Paras 23, 24]

Order pronounced beyond 90 days after excluding lockdown period; pronouncement permitted under Rule 34(5) on the stated grounds.

Final Conclusion: Following and applying coordinate-bench precedents in the assessee's earlier years, the Tribunal dismissed the revenue's appeals on (i) disallowance under section 14A r.w.r. Rule 8D (subject to recomputation of administrative-expense apportionment by the AO as directed), (ii) disallowance under section 40(a)(ia) for non-deduction of TDS on credit-card charges, and (iii) addition treating forfeiture of optionally convertible warrants as revenue; the assessee's appeal is allowed for statistical purposes and the revenue's appeal is dismissed. The Tribunal also pronounced the order beyond 90 days after excluding the lockdown period for computation of the time-limit under Rule 34(5).

Capital expenditure versus revenue expenditure - abandoned project - revenue deduction for failed capital project - allowability of commission as business expenditure - rendering of service and commercial expediency - bad debt written off - allowability under section 36(1)(vii) - book profit computation under section 115JB - addition for provisions for meeting liabilities other than ascertained liabilities - ascertained liability versus contingent/unascertained liability - transfer pricing - arm's length pricing of royalty - R&D cess paid to Government not includible in royalty paid to associated enterprise

Capital expenditure versus revenue expenditure - abandoned project - revenue deduction for failed capital project - Expenditure on unsuccessful/abandoned attempt to install SCALA ERP software is revenue expenditure and deductible; order of CIT(A) deleting AO's disallowance is sustained. - HELD THAT: - The assessee incurred expenses for installation of an ERP package which project failed and was abandoned midway; the amount was written off in the profit and loss account and claimed as deduction under section 37(1). Relying on the reasoning of the CIT(A) and the jurisdictional High Court authorities holding that expenditure on construction/acquisition or projects abandoned midway that do not give rise to any enduring benefit or create a capital asset can be treated as revenue expenditure, the Tribunal finds no infirmity in the deletion of the AO's disallowance. The AO had nonetheless allowed depreciation; the Tribunal accepts the CIT(A)'s conclusion that no capital asset of enduring nature was created and declines to interfere. [Paras 6, 9]

Deletion of AO's disallowance of the software expenses is upheld; Revenue's ground is dismissed.

Allowability of commission as business expenditure - rendering of service and commercial expediency - Disallowance of commission payments to third parties was deleted as unjustified; commission expenses allowed as deduction. - HELD THAT: - The assessee produced communications and documentary material showing the role of agents and the AO issued notices under section 133(6) to verifying parties who confirmed transactions. The CIT(A) relied on the Calcutta High Court decision in the assessee's own case for AY 2003-04 and established principles that business expediency is to be judged from the businessman's viewpoint. The Tribunal notes that similar payments were accepted by the AO in AY 2005-06 after verification, there was no finding of bogusness or collusion, and the AO did not rebut the assessee's evidence. On this basis the CIT(A)'s deletion of the addition is sustained. [Paras 12, 15]

Addition disallowing commission payments is deleted; Revenue's ground is dismissed.

Bad debt written off - allowability under section 36(1)(vii) - book profit computation under section 115JB - addition for provisions for meeting liabilities other than ascertained liabilities - Amount charged as provision for bad debts/bad debts written off is a deductible bad debt and not a provision to be added back under section 115JB; CIT(A)'s deletion of the addition is sustained. - HELD THAT: - The CIT(A) found on facts that the amount represented actual bad debts written off in the profit and loss account and not a fresh provision. Applying the principle that bad debts written off in books after 1 April 1989 are allowable without requirement to prove irrecoverability (as recognised by higher courts), the Tribunal upholds the CIT(A)'s conclusion that the AO's treatment was based on an incorrect premise and that the addition in computing book profit under section 115JB is unsustainable. [Paras 18, 20]

Addition on account of provision for doubtful debts/bad debts is deleted; Revenue's ground is dismissed.

Book profit computation under section 115JB - addition for provisions for meeting liabilities other than ascertained liabilities - ascertained liability versus contingent/unascertained liability - Provisions for gratuity and leave encashment, being ascertained liabilities (valued by actuary), are not required to be added back to book profit under section 115JB; CIT(A)'s deletion of additions is sustained. - HELD THAT: - The CIT(A) relied on Supreme Court precedents holding that liabilities capable of being estimated with reasonable certainty are not contingent and that actuarially valued gratuity and leave encashment constitute real/ascertained liabilities. On that basis such provisions fall outside clause (c) of Explanation 1 to section 115JB which requires addition of provisions for meeting liabilities other than ascertained liabilities. The Tribunal finds no infirmity in that reasoning and upholds the deletion. [Paras 23, 26]

Additions for provision for gratuity and leave encashment are deleted; Revenue's ground is dismissed.

Transfer pricing - arm's length pricing of royalty - R&D cess paid to Government not includible in royalty paid to associated enterprise - Adjustment by TPO in respect of royalty is deleted: R&D cess paid to Government is not part of royalty payable to the associated enterprise and excluding it yields an effective royalty rate within the arm's length range. - HELD THAT: - The TPO computed an effective royalty rate by including R&D cess (and taxes) along with royalty paid to the AE. The CIT(A) and the Tribunal accept the submission that R&D cess is a statutory liability of the importer payable to Government (per the Research & Development Cess Act, 1986) and does not constitute income of the non resident AE; accordingly such cess should not be included in the numerator when computing the effective royalty rate. Excluding R&D cess produced an effective royalty rate of 4.53%, which falls within the +/-5% range under the proviso to section 92C(2) against comparable uncontrolled transactions and earlier Tribunal rulings in the assessee's own case. On that basis the TP adjustment is unsustainable. [Paras 29, 33]

TP adjustment in respect of royalty (including R&D cess) is deleted; Revenue's grounds are dismissed.

Final Conclusion: All grounds of Revenue appeal against the CIT(A)'s order for AY 2004-05 were considered and rejected by the Tribunal: disallowances concerning ERP software expense, commission payments, bad debts, provisions for gratuity and leave encashment, and the transfer pricing adjustment for royalty (including exclusion of R&D cess) were deleted and the appeal of the Revenue is dismissed.

Additional depreciation - carry forward of balance additional depreciation - effect of proviso inserted in section 32(1) - binding precedent of Division Bench decisions

Additional depreciation - carry forward of balance additional depreciation - Additional depreciation claimed in a subsequent year where it could not be allowed in an earlier year is permissible. - HELD THAT: - The court recorded that the substantial questions of law raised by the revenue have been decided against the revenue in C.I.T. v. Aztec Auto (P.) Ltd., where arrears of depreciation under the relevant provision were held to be eligible when allowed in a later assessment year. Following that decision, the Tribunal's view permitting allowance of additional depreciation in the subsequent year was upheld and applied to the present appeal.

Claim for additional depreciation allowed in the subsequent year; question answered against the revenue.

Binding precedent of Division Bench decisions - additional depreciation - Whether the Tribunal was wrong to disregard the High Court decision in M.M. Forgings Ltd. was rejected; the Tribunal was bound to follow the Division Bench authorities that decided the issue in favour of the assessee. - HELD THAT: - The court noted that the issue has been authoritatively decided by a Division Bench in Brakes India (as considered in Aztec Auto) and that those decisions, having been approved by the Supreme Court by dismissal of special leave, govern the controversy. The Division Bench distinctions of M.M. Forgings were accepted in the cited authorities relied upon, and therefore the Tribunal's reliance on those precedents was proper.

Tribunal correctly followed binding Division Bench authority; it was not in error for not following M.M. Forgings.

Effect of proviso inserted in section 32(1) - carry forward of balance additional depreciation - Insertion of the proviso to section 32(1) with effect from 1-4-2016 does not affect entitlement to additional depreciation for earlier assessment years. - HELD THAT: - The court observed that the proviso inserted w.e.f. 1-4-2016 is not material to the assessment year under appeal and does not alter the settled legal position for earlier years as determined by the Division Bench decisions cited in Aztec Auto. Consequently, the subsequent statutory amendment does not negate the assessee's claim for the earlier period.

The later insertion of the proviso does not preclude allowance of additional depreciation for the relevant earlier year.

Final Conclusion: Appeal dismissed; substantial questions of law answered against the revenue and the Tribunal's order affirmed in favour of the assessee.

Disallowance of interest under section 36(1)(iii) - netting of interest paid and interest received for determining allowable interest expenditure - disallowance under section 14A read with Rule 8D requiring recording of AO's satisfaction - ad hoc disallowance of purchases from related parties without evidentiary basis - proof over suspicion - books of account and corroborative documents required to sustain additions

Disallowance of interest under section 36(1)(iii) - netting of interest paid and interest received for determining allowable interest expenditure - Extent of disallowance of interest expense under section 36(1)(iii) where assessee has both interest paid and interest received. - HELD THAT: - Assessing Officer disallowed 15% of the entire interest paid, treating interest paid as not exclusively for business use. The assessee produced books showing both interest paid and interest received and contemporaneous balance-sheet and P&L entries, and demonstrated that borrowed funds were advanced as loans yielding interest. The Tribunal accepted that borrowed funds were utilised to earn interest and that there was nothing improbable in treating the net interest cost (interest paid minus interest received) as the effective interest expenditure. Consequently the 15% ad hoc disallowance must be applied only on the net interest amount of Rs. 3,83,31,304/- and the balance disallowance deleted. The Tribunal accordingly allowed the assessee's ground in part and directed recomputation by the Assessing Officer. [Paras 5, 6, 7, 8]

Disallowance under section 36(1)(iii) restricted to 15% of the net interest expense (interest paid less interest received); rest deleted.

Disallowance under section 14A read with Rule 8D requiring recording of AO's satisfaction - proof over suspicion - books of account and corroborative documents required to sustain additions - Validity of invoking section 14A read with Rule 8D without recording Assessing Officer's satisfaction and where assessee claims no expenditure relatable to exempt income. - HELD THAT: - Assessment order applied Rule 8D without recording any satisfaction as to why voluntary disclosures were unreasonable. The Commissioner (Appeals) relied on binding High Court precedent that AO must record satisfaction before making such disallowance; no such satisfaction was recorded or discernible from the order. The Tribunal found no legal infirmity in the CIT(A)'s deletion of the addition and upheld the requirement that disallowance under section 14A/Rule 8D cannot be made absent recorded satisfaction or evidentiary basis to reject the assessee's claim. [Paras 9, 10, 11]

Deletion of the disallowance under section 14A read with Rule 8D upheld as the AO did not record requisite satisfaction.

Ad hoc disallowance of purchases from related parties without evidentiary basis - proof over suspicion - books of account and corroborative documents required to sustain additions - Sustainability of ad hoc 10% disallowance on purchases from group concerns based on suspicion and earlier year declarations. - HELD THAT: - AO made a 10% ad hoc disallowance of purchases from sister concerns citing lack of verifiable details and reference to a prior declaration under section 132(4) in the group. CIT(A) admitted additional evidence, examined the record and letters, and found that alleged bogus purchases, if at all, would correspond to bogus sales producing a net zero effect; earlier-year admissions cannot be extrapolated to the relevant year without specific evidence. The Tribunal agreed that suspicion alone, without discrepancies in audited statutory accounts or concrete evidence, cannot sustain an ad hoc disallowance and declined to interfere with the CIT(A)'s deletion. [Paras 12, 13, 14]

Ad hoc 10% disallowance on purchases from group concerns deleted for lack of evidentiary basis; addition cannot be sustained on suspicion.

Final Conclusion: Assessee's appeal allowed in part by restricting the 15% disallowance under section 36(1)(iii) to the net interest expense; Revenue's appeal dismissed as the Tribunal upheld CIT(A)'s deletions of additions under section 14A/Rule 8D and the ad hoc 10% disallowance on purchases for AY 2011-12.

Classification of land as agricultural land versus non-agricultural / residential property - allowability of indexed cost of acquisition and cost of improvement for computation of capital gains - applicability of deemed consideration under Section 50C and obligation to refer to Valuation Officer - admission of additional evidence under Rule 29 of the ITAT Rules

Classification of land as agricultural land versus non-agricultural / residential property - Whether the property sold by the assessee qualifies as agricultural land or is a built-up residential property for the purpose of taxing capital gains. - HELD THAT: - The Tribunal accepted the Assessing Officer's conclusion that the property comprised built-up construction (cement concrete foundation, load bearing walls, masonry, cement flooring and RCC slab roof) as evidenced by the valuation report and the sale deed. The assessee failed to prove when and by whom the construction was raised or the source of funds for construction; statements as to year of construction were inconsistent. The valuation report itself described the subject as immovable property other than agricultural land. On this material the Tribunal held that the property could not be treated as agricultural land and was a built-up residential property; the claim of exemption as agricultural land was therefore rejected and the capital gain computation treating it as non-agricultural was sustained. [Paras 8]

Property is a built-up residential property and not agricultural land; the assessee's claim of agricultural-land exemption is rejected.

Allowability of indexed cost of acquisition and cost of improvement for computation of capital gains - Whether the assessee was entitled to deduction for indexed cost of acquisition and cost of improvement in computing capital gains. - HELD THAT: - Under Section 48 the assessee must prove cost of acquisition and cost of improvement. The assessee did not produce the purchase deed of her father, nor evidence of the cost or timing of construction or source of funds. Given the absence of documentary proof and inconsistent statements, the Tribunal held that the assessee failed to establish entitlement to indexed cost or cost of improvement and therefore the Assessing Officer's computation of capital gain without allowing such indexed amounts was justified. [Paras 8]

No deduction for indexed cost of acquisition or cost of improvement is allowable; Assessing Officer's capital gain computation is sustained.

Applicability of deemed consideration under Section 50C and obligation to refer to Valuation Officer - Whether the value adopted for stamp duty could be treated as deemed consideration under Section 50C and whether the Assessing Officer was obliged to refer the matter to the Valuation Officer. - HELD THAT: - Section 50C deems stamp-duty valuation to be the full value unless the assessee objects before the Assessing Officer that the stamp valuation exceeds fair market value; in that event the AO may refer the matter to a Valuation Officer. In this case the sale deed recorded stamp valuation at a higher figure than the declared consideration, but the assessee's responses before the AO did not constitute a clear objection to the stamp valuation on the basis that it exceeded fair market value; instead the assessee pleaded that the land was agricultural or, in the alternative, claimed a capital loss. The Tribunal found the registered valuer's report unreliable and inconsistent, and noted that the assessee did not raise any objection at the time of registration. Consequently the AO was not obliged to make a reference to the Valuation Officer and was justified in invoking Section 50C to adopt the stamp-duty value as deemed consideration. [Paras 9]

Stamp-duty valuation is to be treated as deemed consideration under Section 50C; no reference to the Valuation Officer was required given the absence of a proper objection by the assessee.

Admission of additional evidence under Rule 29 of the ITAT Rules - Whether the additional documents (mutation, jamabandi, affidavit) tendered by the assessee should be admitted in the appeal. - HELD THAT: - Admission of additional evidence is permissible if it is relevant and goes to the root of the matter. The Tribunal examined the proffered documents and found they did not establish essential facts: they did not show the year or source of construction, did not supply the purchase deed, and therefore would not affect the capital-gains computation or classification of the property. The additional affidavit did not cure the absence of primary documentary proof. Consequently the Tribunal concluded the proferred evidence was not sufficiently relevant or determinative to be admitted. [Paras 7]

Application to admit additional evidence is rejected.

Final Conclusion: The Tribunal dismissed the assessee's appeal for A.Y. 2016-2017: the property is held to be a built-up residential property (not agricultural land), no indexed cost or cost-of-improvement deduction is allowable for lack of proof, the stamp-duty valuation is to be treated as deemed consideration under Section 50C without a reference to the Valuation Officer, and the application to admit additional evidence is refused.

Levy of fee under section 234E for late filing of TDS statements - Processing of TDS statements under section 200A - Amendment by Finance Act 2015 introducing clause (1)(c) to section 200A w.e.f. 01.06.2015 - Clarificatory amendment doctrine - Pre-01.06.2015 applicability of section 234E

Levy of fee under section 234E for late filing of TDS statements - Processing of TDS statements under section 200A - Pre-01.06.2015 applicability of section 234E - Whether fee under section 234E can be levied while processing TDS statements under section 200A for periods prior to 01.06.2015. - HELD THAT: - The Tribunal found that although section 234E was introduced w.e.f. 10.07.2012, no corresponding enabling provision in section 200A authorised levy of the fee while processing TDS statements until clause (1)(c) was inserted by the Finance Act, 2015 effective 01.06.2015. In absence of that specific empowerment under section 200A prior to 01.06.2015, the levying authority had no statutory power to impose the fee under section 234E during processing of TDS statements for periods before 01.06.2015. The Tribunal noted consistent decisions of different benches of the Tribunal and the Karnataka High Court adopting the same view, and applied the established principle that where courts differ, the view favourable to the assessee should be followed. Consequently, the Tribunal held that fee under section 234E cannot be charged in respect of TDS statements pertaining to periods prior to 01.06.2015 and set aside the contrary levy. [Paras 6]

Levy under section 234E cannot be made while processing TDS statements under section 200A for any period prior to 01.06.2015; appeals allowed on this ground.

Processing of TDS statements under section 200A - Verification of facts before giving effect to appellate direction - Whether the Assessing Officer should be directed to verify facts and refrain from charging fee under section 234E for periods prior to 01.06.2015. - HELD THAT: - Having concluded that no statutory power existed to levy section 234E fees prior to 01.06.2015, the Tribunal directed the Assessing Officer to verify the relevant facts of the assessee's TDS filings and to ensure that no fee under section 234E is charged for any period earlier than 01.06.2015. This direction is a limited verification remand to give effect to the legal conclusion reached, not a re-adjudication of the legal issue on merits. [Paras 6, 7]

Assessing Officer to verify relevant facts and shall not charge fee under section 234E for periods prior to 01.06.2015.

Final Conclusion: The appeals are allowed: the Tribunal held that section 234E could not be levied while processing TDS statements under section 200A for any period prior to 01.06.2015, and directed the Assessing Officer to verify facts and not to impose such fee for Financial Years 2012-13, 2013-14 and 2014-15.

Assessment framed in the name of a non existent entity is void ab initio - jurisdictional defect not curable under section 292B - goodwill arising on amalgamation as an intangible asset eligible for depreciation - tax neutrality of amalgamation and the proviso limiting post amalgamation depreciation - valuation by an independent valuer and obligation on AO to seek technical assistance if dissatisfied - colourable device/related party amalgamation - onus on revenue to establish concealment or abnormality

Assessment framed in the name of a non existent entity is void ab initio - jurisdictional defect not curable under section 292B - Validity of assessment framed in the name of Urmin Marketing Pvt. Ltd. after it had ceased to exist on amalgamation - HELD THAT: - The Tribunal found that the assessment under section 143(3) read with section 144C was completed in the name of M/s Urmin Marketing Pvt. Ltd. after that company had been amalgamated and had ceased to exist. The Department was aware of the amalgamation (as recorded by the AO and by communications to the Department and to the High Court) and had the opportunity to raise objections during the High Court sanction process but did not do so. Following the judgments of the Supreme Court and High Courts (notably the principle in PCIT v. Maruti Suzuki India Ltd. and the line of authority in Spice Entertainment and related decisions), the Tribunal held that framing assessment against an entity which has ceased to exist is a jurisdictional defect going to the root of the matter and not a mere procedural irregularity curable under section 292B. On these grounds the assessment in the name of the non existent entity was declared void ab initio and quashed. [Paras 18]

Assessment of 27.12.2018 in the name of Urmin Marketing Pvt. Ltd. is void ab initio and is quashed

Goodwill arising on amalgamation as an intangible asset eligible for depreciation - tax neutrality of amalgamation and the proviso limiting post amalgamation depreciation - valuation by an independent valuer and obligation on AO to seek technical assistance if dissatisfied - colourable device/related party amalgamation - onus on revenue to establish concealment or abnormality - Allowability of depreciation claimed on goodwill recorded in books of the amalgamated company arising from the approved scheme of amalgamation - HELD THAT: - The Tribunal analysed (i) accounting treatment under AS 14/Ind AS 103 and the nature of goodwill arising on amalgamation; (ii) statutory scheme under sections 32 and 43 which aims at tax neutrality of amalgamation and limits post amalgamation depreciation to that available to the amalgamating company; and (iii) the precedents recognising goodwill as an intangible asset eligible for depreciation (notably Smifs Securities). The Tribunal concluded that the excess of purchase consideration over net assets (as determined by a SEBI registered valuer and recorded in the sanctioned scheme) constituted goodwill acquired by the amalgamated company and, therefore, was in principle an intangible asset eligible for depreciation under section 32. The Tribunal rejected the lower authorities' conclusion of nil value on facts: the scheme and valuation were disclosed and approved by the Gujarat High Court after invitation to the Income Tax Department; the AO, if dissatisfied with the technical valuation, ought to have sought assistance from experts under section 133(6) rather than substitute his own valuation; and mere common control/issue of shares as consideration does not ipso facto render the transaction a colourable device absent evidence of concealment or abnormality. While recognising the proviso to section 32 and related provisions that preserve tax neutrality for assets actually recorded in the amalgamating company's books, the Tribunal found on the facts and on authority that goodwill recorded pursuant to the approved valuation was acquired and depreciation should be allowed. The Tribunal therefore set aside the disallowance and directed the AO to allow the depreciation claim. [Paras 34]

Disallowance of depreciation on goodwill is set aside; the AO is directed to allow the claim of depreciation on the goodwill recorded in the sanctioned scheme

Final Conclusion: The Tribunal quashed the assessment dated 27.12.2018 as void ab initio because it was framed in the name of a non existent entity; on the merits, the Tribunal allowed the assessee's claim for depreciation on goodwill arising from the sanctioned amalgamation and directed the Assessing Officer to permit the depreciation.

Section 68 - burden to prove identity, genuineness and creditworthiness - Unexplained cash credit - Investigation report versus independent enquiry by the Assessing Officer - Shifting of onus to Revenue after assessee's prima facie discharge - Proviso to section 68 - prospective application (not applicable to AY 2011-12)

Section 68 - burden to prove identity, genuineness and creditworthiness - Investigation report versus independent enquiry by the Assessing Officer - Shifting of onus to Revenue after assessee's prima facie discharge - Deletion of addition of Rs. 9,85,00,000 made by the Assessing Officer under section 68 for AY 2011-12 by treating the receipt from Minaxi Suppliers Pvt. Ltd. as unexplained cash credit. - HELD THAT: - The Tribunal held that under pre amendment Section 68 the assessee bore the initial onus to prove identity of the creditor, genuineness of the transaction and the creditor's creditworthiness. The assessee furnished corporate documents, PAN, bank statements, confirmations, audited financial statements and assessment orders of the creditor, together with an affidavit from the creditor asserting the payment under a joint venture arrangement. The CIT(A) found, and the Tribunal agreed, that these documents discharged the assessee's primary onus. Once that prima facie case was established, the onus shifted to the Revenue to bring cogent material dislodging the evidence. The AO relied principally on an investigation wing report alleging layering through shell entities but did not undertake independent enquiries (for example, by placing corroborative evidence on record, issuing effective statutory summons or conducting field verification) to test the veracity of the assessee's documents. The Tribunal applied consistent precedents to conclude that additions cannot be sustained on suspicion, surmise or conjecture where the assessee has produced the requisite evidence and the AO has not carried out or produced independent verificatory material. The proviso to Section 68 (requiring proof of source of source) was held to be prospective and inapplicable to the year under appeal, so the assessee was not required to prove source of source for AY 2011 12. [Paras 8, 9, 10]

The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s deletion of the addition of Rs. 9,85,00,000 under section 68.

Final Conclusion: Appeal dismissed; the Tribunal upheld the CIT(A)'s deletion of the addition under section 68 for AY 2011-12, holding that the assessee discharged the initial onus and the AO failed to produce independent cogent material to rebut the evidence.

Police officer within the meaning of Section 25 of the Evidence Act - relevancy and evidentiary value of statements recorded under Section 67 of the NDPS Act - interaction between Section 53 of the NDPS Act and the power to file a police report under Section 173 CrPC - overruling of Raj Kumar Karwal and Kanhaiyalal to the extent inconsistent - Article 20(3) right against self incrimination and Article 21 right to privacy in investigative contexts

Police officer within the meaning of Section 25 of the Evidence Act - interaction between Section 53 of the NDPS Act and the power to file a police report under Section 173 CrPC - Officers invested with powers under Section 53 of the NDPS Act are police officers for the purpose of Section 25 of the Evidence Act. - HELD THAT: - The Court held that the designated officers under Section 53, being invested with the powers of an officer in charge of a police station for investigation of offences under the NDPS Act, fall within the ambit of "police officer" in Section 25 of the Evidence Act. The majority examined the scheme of the NDPS Act (including Section 53, Section 36A and related provisions), compared the investigatory attributes with the CrPC and prior decisions, and concluded that where officers possess investigative powers tantamount to those culminating in the functions of an officer in charge (including the practical effect of Section 36A(1)(d)), they are amenable to Section 25's bar on proving confessions made to police. The Court rejected the narrow view that confined "police officer" to members of the State police force and held that Raj Kumar Karwal and Kanhaiyalal had not correctly stated the law on this point and therefore were overruled to the extent inconsistent with the present conclusion. [Paras 155]

Designated officers under Section 53 of the NDPS Act are police officers for the purpose of Section 25 and confessions made to them are barred from being proved under that provision.

Relevancy and evidentiary value of statements recorded under Section 67 of the NDPS Act - Article 20(3) right against self incrimination and Article 21 right to privacy in investigative contexts - A statement recorded under Section 67 of the NDPS Act cannot be used as a confessional statement to convict an accused. - HELD THAT: - The Court held that the power under Section 67 - which permits an authorised officer (under Section 42) to call for information, require production of documents and examine persons during an inquiry - does not convert a Section 67 statement into a confessional statement admissible as substantive evidence for conviction. In light of constitutional protections (Article 20(3) and the right to privacy under Article 21) and statutory scheme (including Section 53A and the safeguards the NDPS Act contemplates), statements under Section 67 cannot form the basis for conviction as confessions; their admissibility/value must be governed by the statute and constitutional standards, and extra judicial/confessional statements remain subject to requirements against compulsion and other legal safeguards. The majority therefore disapproved earlier decisions to the contrary and reaffirmed that Section 67 statements do not equate to confessional statements usable as substantive proof of guilt. [Paras 155]

Statements recorded under Section 67 are not confessional statements admissible to convict; their use is subject to the NDPS Act and constitutional protections.

Final Conclusion: The Reference is answered by the majority: officers invested with powers under Section 53 of the NDPS Act qualify as "police officers" for the purpose of Section 25 of the Evidence Act (thereby excluding confessions made to them from being proved), and statements recorded under Section 67 of the NDPS Act cannot be treated as confessional statements to ground a conviction; earlier decisions inconsistent with these conclusions are overruled to that extent.

Availability of alternative statutory remedy - exercise of writ jurisdiction under Article 226 - doctrine of exhaustion of statutory remedies - discretionary relief against revenue orders - condonation of delay by appellate authority

Availability of alternative statutory remedy - doctrine of exhaustion of statutory remedies - condonation of delay by appellate authority - Whether the writ petition could be entertained despite the availability of a statutory appeal before the Commissioner of Customs (Appeals) with condonation power. - HELD THAT: - The Court recorded that the Respondent had passed an Order in Original demanding differential duty and that the Petitioner had a statutory right to appeal to the Commissioner of Customs (Appeals) within 60 days, with the Appellate Authority empowered to condone delay for a further period of 30 days if sufficient cause was shown. The Petitioner did not prefer the statutory appeal but instituted the present writ petition, and the Court found no acceptable explanation for bypassing the alternative remedy. Relying on the principle explained in Assistant Collector of Central Excise v. Dunlop India Ltd., the Court held that Article 226 is not intended to short-circuit statutory procedures and that matters involving the revenue where statutory remedies are available are ordinarily not suitable for exercise of writ jurisdiction. The Court therefore declined to entertain the writ petition and expressly refrained from expressing any view on the merits of the underlying controversy. [Paras 2, 3, 4]

Writ petition dismissed for failure to avail the alternative statutory remedy; no adjudication on merits.

Final Conclusion: The writ petition was dismissed because the petitioner failed to pursue the statutory appeal to the Commissioner of Customs (Appeals) and offered no acceptable reason to bypass the alternative remedy; the Court did not consider the merits of the demand order.

Oppression and mismanagement under sections 241 and 242 - interim injunction restraining communication with third parties - interim injunction restraining interference with ongoing banking credit facilities - continuance of existing credit facility not constituting fresh financial indebtedness - prima facie case, balance of convenience and irreparable injury in interlocutory relief - contractual deadlock resolution not ousting statutory remedy - competence of Tribunal to grant interim reliefs despite parallel High Court proceedings

Interim injunction restraining communication with third parties - interim injunction restraining interference with ongoing banking credit facilities - Ad interim injunctions sought by the Petitioners to restrain Respondent nos. 2 to 6 from corresponding with third parties on matters in the petition and from interfering with the ongoing credit facilities were to be considered and partly granted. - HELD THAT: - The Tribunal found that the continuance of the credit facilities (originally sanctioned and continued since 2007 and recently renewed) was essential for the survival and operations of the Company and that the investors' communications to banks threatening non-cooperation had a real risk of causing immediate prejudice. On the interlocutory record the Petitioners demonstrated a prima facie case that the investor directors had, by their correspondence with banks, acted in a manner prejudicial to the Company's interests and had threatened continuity of facilities on which ongoing projects depended. The Tribunal concluded that allegations of financial irregularity, if established, could generally be compensated in money and therefore did not make interim continuation of credit facilities impermissible; balance of convenience favoured preservation of the facilities to avoid business paralysis; and the reliefs sought in the praecipe were essentially prohibitory rather than mandatory. For these reasons limited interim injunctive relief was appropriate to prevent third-party notices and interference that could irreparably harm the Company's operations. [Paras 23, 24, 25]

Respondent nos. 2 to 6 are injuncted from corresponding with third parties relating to matters covered in the petition and from preventing or interfering with the ongoing credit facility from Bank of Baroda (and its renewal) and credit facility from Axis Bank; other interim prayers remain pending.

Continuance of existing credit facility not constituting fresh financial indebtedness - affirmative vote rights under Articles of Association - Whether renewal/continuance of the existing banking credit facilities amounted to incurring fresh financial indebtedness requiring an affirmative vote of investor directors. - HELD THAT: - The Tribunal held, at the interlocutory stage, that continuance of an existing credit facility which had been in place since 2007 and regularly renewed (including resolutions approving borrowing limits in 2018 and 2019) did not prima facie fall within the Article 165(n) restriction on incurring new financial indebtedness. Consequently, the Petitioners' reliance on prior approvals and the historical continuity of the facilities supported their contention that the renewals were not 'new indebtedness' necessitating a fresh affirmative vote. The Tribunal treated this as a factor favouring grant of interim measures to preserve the Company's operational liquidity pending full adjudication. [Paras 24, 25]

On the limited record, continuance/renewal of the existing credit facilities was not treated as fresh financial indebtedness and did not, at this stage, preclude interim protection for the Company.

Competence of Tribunal to grant interim reliefs despite parallel High Court proceedings - contractual deadlock resolution not ousting statutory remedy - Whether pendency of a Commercial Suit in the High Court and contractual deadlock/arbitration clauses in the AoA/SHA barred the Tribunal from entertaining the Company Petition or granting interim reliefs. - HELD THAT: - The Tribunal concluded that allegations of oppression and mismanagement under sections 241 and 242 are within the exclusive competence of the Company Law Tribunal and that resort to contractual dispute resolution mechanisms or the existence of related proceedings in the High Court did not automatically oust the Tribunal's jurisdiction at the interlocutory stage. The Tribunal observed that the deadlock resolution mechanism in the AoA would not prevent the Petitioners from seeking statutory relief before the Tribunal and that whether the matters ultimately required arbitration could not be determined at this preliminary stage. Given the urgency created by banks' demands and the risk of immediate harm, the Tribunal found it appropriate to exercise its statutory jurisdiction and grant conditional interim reliefs. [Paras 24, 25]

The Tribunal retained competence to consider the petition and to grant interim reliefs notwithstanding the parallel High Court suit and contractual deadlock procedure; questions of arbitrability and forum-competence were left for the main petition.

Interlocutory restraint on increasing exposure without Tribunal concurrence - requirement of appropriate board/shareholder resolution for fresh borrowings - Whether, pending final disposal, the Company should be restrained from increasing its exposure to banks/financial institutions without Board/Shareholder approval and concurrence of the Tribunal. - HELD THAT: - To balance interim protection for the investors and the need to preserve the Company's operations, the Tribunal ordered that Respondent No.1 (the Company) shall not, except for the existing credit facility with banks and financial institutions, increase its exposure with any bank, financial institution or other lender without an appropriate Board resolution, shareholders' resolution and the concurrence of this Tribunal. This condition preserves the Company's ability to operate under existing facilities while preventing unilateral fresh borrowings that could prejudice the parties until the main petition is decided. [Paras 25]

Company is restrained from increasing its exposure to lenders except under appropriate Board/shareholder resolution and with concurrence of the Tribunal; existing facilities are preserved subject to this limitation.

Final Conclusion: The Tribunal granted ad interim reliefs in part: respondent investors are restrained from corresponding with third parties on issues raised in the petition and from interfering with the Company's ongoing Bank of Baroda and Axis Bank credit facilities; the Company may not incur additional borrowing exposure (beyond existing facilities) without proper Board/shareholders' approval and the Tribunal's concurrence; all other substantive prayers and interim claims remain pending for determination in the main petition.

Scheme of Amalgamation - sanction under sections 230 to 232 of the Companies Act, 2013 - appointed date - protection of creditors' interest - compliance with accounting standards (Ind AS 103 and Ind AS-8) - dissolution of transferor companies without winding up - filing of order with Registrar and other regulatory authorities - notice to sectoral regulators

Scheme of Amalgamation - sanction under sections 230 to 232 of the Companies Act, 2013 - Sanction of the Scheme of Amalgamation between Transferor Companies No.1-7 and Transferee Company No.8 - HELD THAT: - The Tribunal examined the petition, the Report of the Regional Director and the Official Liquidator's report, noted that no objector opposed the Petitions and that statutory compliances and required affidavits were placed on record. The Tribunal found the Scheme annexed to the petition to be fair and reasonable, not violative of law and not contrary to public policy. Having regard to the material on record and accepted undertakings, the Tribunal held that all requisite statutory compliances had been fulfilled and made the Company Petition absolute in terms of its prayer. The Scheme was therefore sanctioned. [Paras 9, 13, 14, 15, 16]

Scheme sanctioned and Company Petition No.77/MB.V/2020 made absolute.

Appointed date - Scheme of Amalgamation - Fixing of the Appointed Date for the Scheme - HELD THAT: - The Scheme defined the Appointed Date as 1st April, 2019. The Tribunal accepted the definition and fixed the Appointed Date accordingly when sanctioning the Scheme. [Paras 6, 11, 16]

Appointed Date fixed as 1st April 2019.

Protection of creditors' interest - dissolution of transferor companies without winding up - Effect on creditors and dissolution of transferor companies - HELD THAT: - The Regional Director's observations regarding protection of creditors were considered. Petitioners undertook that all liabilities of the Transferor Companies will stand transferred to the Transferee Company from the Appointed Date and that creditors' interests would be protected. The Official Liquidator reported that affairs of the Transferor Companies had been conducted properly. On these bases the Tribunal directed dissolution of the Transferor Companies without winding up. [Paras 10, 11, 13, 16]

Liabilities to stand transferred; Transferor Companies to be dissolved without winding up and creditors' interests to be protected.

Compliance with accounting standards (Ind AS 103 and Ind AS-8) - undertakings accepted - Acceptance of Petitioners' undertakings on accounting and statutory compliance - HELD THAT: - Regional Director's observations called for certain accounting entries and compliance with applicable accounting standards. Petitioners gave specific undertakings to pass necessary accounting entries and comply with Ind AS 103 and Ind AS-8 and other statutory requirements. The Tribunal accepted these clarifications and undertakings as fulfilling the observations. [Paras 9, 10, 11, 12]

Petitioners' undertakings on accounting and statutory compliance accepted by the Tribunal.

Filing of order with Registrar and other regulatory authorities - notice to sectoral regulators - Directions as to subsequent filings and notices to regulators - HELD THAT: - The Tribunal directed the Petitioner Companies to file the certified order and Scheme with the Registrar of Companies electronically in e-Form INC-28 and physically, to lodge the order with the Superintendent of Stamps for adjudication, and to file a copy of the order with the Reserve Bank of India within 30 days where applicable. It further directed that all concerned regulatory authorities be served with certified copies and remain at liberty to act or approach the Tribunal for clarifications. [Paras 10, 17, 18, 19, 21]

Petitioners directed to make specified filings with RoC, RBI and stamp authorities and provide certified copies to regulatory authorities; regulators at liberty to act or seek clarification.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation between Transferor Companies No.1-7 and Transferee Company No.8, fixed the Appointed Date as 1st April 2019, accepted the petitioners' undertakings on statutory and accounting compliance and protection of creditors, ordered dissolution of the transferor companies without winding up, and directed specified filings and service of certified copies on concerned authorities.

Scheme of Arrangement - Demerger - Appointed Date - Accounting treatment for tax and regulatory purposes - NCLT sanction under Sections 230-232 - Compliance with Stock Exchange observation letters - Approval by requisite majority of shareholders and creditors - Ind AS 103 accounting for business combinations

Scheme of Arrangement - NCLT sanction under Sections 230-232 - Sanction of the Scheme of Arrangement between Hind Lamps Limited (Demerged Company) and Bajaj Electricals Limited (Resulting Company). - HELD THAT: - The Tribunal considered the petition under Sections 230-232 read with other applicable provisions and the material on record, including the absence of any objector and the approvals/board resolutions annexed to the petition. The Tribunal found the Scheme to be fair and reasonable, not violative of law or public policy and not prejudicial to shareholders or public interest. All statutory compliances were either fulfilled or undertaken to be fulfilled. On these bases the Company Scheme Petition was made absolute and the Scheme approved and sanctioned. [Paras 24, 25, 28]

Company Scheme Petition No.1263/2019 is allowed and the Scheme of Arrangement is sanctioned.

Appointed Date - Accounting treatment for tax and regulatory purposes - Ind AS 103 accounting for business combinations - Treatment of the Scheme in accounting and tax records and the temporal effect of the Scheme from the Appointed Date. - HELD THAT: - The Scheme's Clause 12 prescribes dual accounting treatments: (a) in the Resulting Company's statutory books the demerger shall be accounted from the effective date in accordance with Ind AS 103 (fair value accounting for acquisition and recognition of goodwill or capital reserve as applicable); and (b) for tax and other regulatory purposes the Scheme shall be effective from the Appointed Date (31st day of March 2014) with assets and liabilities recorded at book values for tax/regulatory filings. The Tribunal accepted the petitioner's undertaking to comply with applicable accounting standards and directed that the accounting treatment in the Scheme be incorporated in the books and in financials drawn up for tax and regulatory purposes, to be approved by the Boards and furnished to the authorities upon audit. [Paras 12, 13, 14, 23]

The Scheme shall be given effect for accounting in the Resulting Company's books as per Ind AS 103 from the effective date, and for tax and regulatory purposes the Scheme is effective from the Appointed Date (31st day of March 2014); corresponding financials and tax filings to be prepared and furnished.

Compliance with Stock Exchange observation letters - Approval by requisite majority of shareholders and creditors - Satisfaction of regulatory and procedural prerequisites including stock exchange observations and approvals by requisite majorities. - HELD THAT: - The record included observation letters from BSE and NSE dated 21 March 2018 conveying 'No-objection' after requisite amendments; the petitioner confirmed compliance with those directions. The petitioner also produced chairman's reports and undertook that the Scheme had been approved by the requisite majority of equity shareholders, secured creditors and unsecured creditors in meetings convened per Sections 230(1) and 230(6). The Tribunal accepted the explanations and undertakings furnished in response to the Regional Director's report and the related filings. [Paras 5, 18, 19, 22]

Petitioner's compliance with stock exchange observations and approval by requisite majorities is accepted; related undertakings are recorded.

Regional Director observations - Accounting treatment for tax and regulatory purposes - Clarifications and undertakings in response to the Regional Director (Western Region) report were accepted by the Tribunal. - HELD THAT: - The Tribunal examined the Regional Director's observations concerning accounting standards, appointed date, discrepancies in paid-up capital, jurisdiction of the Demerged Company, FEMA and other compliance matters. The petitioner furnished explanations, undertakings to pass necessary accounting entries, to comply with FEMA/guidelines where applicable, and to address any complaints received from ROC. The Tribunal accepted these clarifications and undertakings and directed incorporation of the accounting treatment and compliances as part of the sanction. [Paras 12, 13, 14, 22, 23]

Clarifications and undertakings submitted in response to the Regional Director's report are accepted and incorporated as directions in the sanction.

Final Conclusion: The Scheme of Arrangement between Hind Lamps Limited and Bajaj Electricals Limited is sanctioned by the Tribunal and shall operate from the Appointed Date (31st day of March 2014) for tax and regulatory purposes; accounting treatment in the Resulting Company's books shall follow Ind AS 103 from the effective date, requisite compliances and filings (including e-form INC-28) are directed to be completed and the sanction is binding on the companies, their shareholders and creditors.

Sanction of Scheme of Amalgamation - Appointed Date / Effective Date of Scheme - Compliance with accounting treatment under applicable Accounting Standards - Non-waiver of statutory liabilities and rights of regulatory authorities to initiate action - Dispensation of meetings of shareholders and creditors - Related party transactions and applicability of arm's length / Section 188 exclusions - Clubbing of authorised share capital and payment of differential statutory fees / stamp duty

Sanction of Scheme of Amalgamation - Appointed Date / Effective Date of Scheme - The Scheme of Amalgamation between Arkinnet Software Private Limited (Transferor) and VMware Software India Private Limited (Transferee) is provisionally sanctioned and given effect from 27th June, 2016 as the Appointed Date. - HELD THAT: - The Tribunal examined the Scheme under Sections 230-232 of the Companies Act, 2013 and the Rules thereunder and found the Scheme to be prima facie comprehensive, fair and reasonable and not detrimental to members or creditors. The Transferee's statutory auditor furnished a certificate that the accounting treatment proposed in the Scheme conforms with the applicable Accounting Standards. Meetings of equity shareholders and unsecured creditors of the Transferee Company were dispensed with by earlier order and no objections were received following publication of notices. The Tribunal noted that the Transferor's Bench (Mumbai) has already sanctioned the Scheme in proceedings filed by the Transferor. On this basis the Tribunal sanctioned the Scheme, subject to compliance with undertakings and observations of statutory authorities. [Paras 11, 13, 15]

Scheme provisionally sanctioned with effect from 27th June, 2016.

Non-waiver of statutory liabilities and rights of regulatory authorities to initiate action - Sanction of the Scheme does not operate as a waiver of any violation or statutory liability and statutory authorities remain entitled to initiate appropriate action. - HELD THAT: - The Tribunal reiterated the settled principle that a scheme of arrangement or amalgamation cannot be used to extinguish statutory liabilities or to prevent authorities from proceeding under law. Accordingly, any alleged violations by the companies are not to be examined in the sanction proceedings and statutory authorities retain their rights to initiate investigations or prosecutorial action and to seek appropriate directions from this Tribunal by filing applications in the instant matter. [Paras 12, 15]

Sanction subject to preservation of rights of statutory authorities; scheme does not waive any violations or liabilities.

Compliance with accounting treatment under applicable Accounting Standards - Related party transactions and applicability of arm's length / Section 188 exclusions - Clubbing of authorised share capital and payment of differential statutory fees / stamp duty - The Petitioner must comply with observations of the Registrar of Companies and Regional Director, including clarifying the Effective Date, ensuring applicability or exclusion of Section 188 for related party transactions, and paying any statutory fees or stamp duty on clubbing of authorised share capital as required under law. - HELD THAT: - ROC and Regional Director recorded specific observations: the Scheme stated an Appointed Date but not an express Effective Date; related party transactions require scrutiny under the statutory regime though the Petitioner contended the fourth proviso to Section 188 exempts the transactions as being in ordinary course and at arm's length; and clubbing of authorised share capital requires payment of differential fees under the statutory provisions. The Petitioner filed affidavits addressing these points, undertook to pay applicable fees and stamp duty in accordance with the law, and supplied auditor certification for accounting treatment. The Tribunal sanctioned the Scheme subject to compliance with these statutory requirements and other undertakings. [Paras 5, 6, 15]

Petitioner to comply with ROC/Regional Director observations, statutory fee/stamp duty obligations and other compliance requirements before completing formalities.

Dispensation of meetings of shareholders and creditors - Meetings of the equity shareholders and unsecured creditors of the Transferee Company were dispensed with for the purpose of considering the Scheme. - HELD THAT: - The Tribunal referenced its earlier order dispensing with convening meetings of equity shareholders and unsecured creditors of the Transferee Company; the Scheme nevertheless received requisite consents and notices were published as directed, with no objections reported, supporting the procedural sufficiency for sanction under the Act. [Paras 3, 11]

Meetings dispensed with as per earlier order; procedural requirements for sanction satisfied.

Final Conclusion: The Tribunal provisionally sanctioned the Scheme of Amalgamation between the Transferor and Transferee Companies with effect from 27th June, 2016, subject to compliance with statutory observations and undertakings; the sanction does not extinguish statutory liabilities and regulatory authorities remain at liberty to pursue any enforcement or other actions in accordance with law.

Oppression and mismanagement under Section 241-242 - powers of Tribunal under Section 242 to regulate conduct of company's affairs - recovery of undue gains and compensation from directors - admissibility and probative value of an independent Chartered Accountant's report - principle of natural justice and opportunity to rebut - corporate governance measures including convening of AGM/EGM and appointment of forensic auditor

Recovery of undue gains and compensation from directors - admissibility and probative value of an independent Chartered Accountant's report - principle of natural justice and opportunity to rebut - Whether the petitioner proved entitlement to directions for recovery of alleged undue gains, compensation and related reliefs based on the materials on record. - HELD THAT: - The Tribunal held that the petitioner did not establish cogent and admissible evidence on record to justify monetary reliefs or directions for recovery of alleged losses. The independent Chartered Accountant's report produced in a prior proceeding disposed of for procedural default cannot be treated as conclusive proof; such a report is an opinion that requires formal acceptance, oath verification and opportunity for the respondents to file rebuttal or a second opinion before any binding direction is issued. Allegations of criminality and civil liability fall within the domain of appropriate criminal or civil fora and, in absence of proved liability or final adjudication, the Tribunal declined to grant the pleaded monetary reliefs which were vague and unsubstantiated on the record before it. [Paras 16, 17, 20]

Monetary reliefs and directions for recovery of alleged undue gains, compensation and other consequential monetary orders were declined for want of cogent admissible evidence and because the CA report could not be acted upon without procedural safeguards and opportunity to rebut.

Oppression and mismanagement under Section 241-242 - powers of Tribunal under Section 242 to regulate conduct of company's affairs - corporate governance measures including convening of AGM/EGM and appointment of forensic auditor - Whether the Tribunal should exercise its powers under Section 242 to issue non monetary directions to regulate the company's affairs in the interest of the company and its shareholders. - HELD THAT: - The Tribunal concluded that, notwithstanding refusal of monetary reliefs, it could exercise statutory powers under Section 242 to bring an end to matters complained of and to secure the smooth functioning of the company. Acting under that power the Tribunal issued specific non monetary directions: directing the company to convene AGM/EGM to consider the independent CA report and related steps; granting liberty to amend or correct statutory returns; permitting the Board/AGM/EGM to appoint a forensic auditor to examine accounts for the preceding five years; and authorising appointment of a facilitator and an observer to assist and report to the Tribunal. The directions were framed as regulatory and procedural measures to enable shareholders and the company to consider evidence and take lawful steps, while preserving the parties' rights to pursue civil or criminal remedies elsewhere. [Paras 21, 22, 23]

The Tribunal exercised its Section 242 powers to issue directions regulating conduct of the company's affairs: convene meetings to consider the CA report, liberty to amend statutory returns, power to appoint a forensic auditor, and appointment of a facilitator and observer, with the company bearing their professional fees.

Procedural communication and implementation of Tribunal orders - imposition of administrative obligations on company - What incidental administrative steps are required for implementation of the Tribunal's directions. - HELD THAT: - The Tribunal directed that its order be communicated to the Registrar of Companies, the appointed facilitator and the advocate observer, and required compliance within the specified timeline (noting practical limits such as lockdown). The company was ordered to bear professional fees of the appointed facilitator/observer and to effect necessary steps to convene meetings, amend returns and engage forensic audit as authorised by the Tribunal's directions. [Paras 22, 24]

The Tribunal directed communication of the order to ROC and the appointed facilitator/observer and imposed administrative obligations on the company to comply with the directions and bear the professional expenses.

Final Conclusion: Petitioner's claims for recovery of alleged undue gains and other monetary reliefs were rejected for lack of cogent admissible proof and because the prior CA report could not be treated as conclusive without giving respondents an opportunity to rebut; however, relying on its statutory power under Section 242 the Tribunal issued regulatory directions to the company to convene meetings to consider the report, to correct statutory returns, to permit appointment of a forensic auditor, and appointed a facilitator and an observer to assist implementation, with the company directed to bear their fees and to communicate the order to the RoC.

Sanction of scheme of merger by absorption under Sections 230-232 of the Companies Act, 2013 - Scheme of Amalgamation - appointed date - dissolution of transferor companies without winding up - official liquidator's report on affairs - regional director's observations and verification of commercial rationale - compliance with procedural filing and stamp duty adjudication directions - scheme being fair and reasonable and not contrary to public policy

Sanction of scheme of merger by absorption under Sections 230-232 of the Companies Act, 2013 - Scheme of Amalgamation - scheme being fair and reasonable and not contrary to public policy - regional director's observations and verification of commercial rationale - Sanction of the Scheme of Amalgamation of the six Transferor Companies with the Transferee Company. - HELD THAT: - The Tribunal considered the petitions under the statutory scheme for compromise/arrangement and the material on record including Board resolutions approving the Scheme, the Report of the Regional Director which queried the commercial rationale (noting absence of revenue for some transferors and negative net worth of certain transferors), and the clarifications filed by the Petitioner Companies. The Tribunal accepted the explanations that the merger would consolidate businesses under common management, produce operational synergies, and strengthen the financial base of the Transferee Company. The Official Liquidator's report that the affairs of the Transferor Companies were conducted properly and not prejudicial to shareholders was also noted. On the basis of these materials the Tribunal concluded that the Scheme is fair and reasonable, not violative of law and not contrary to public policy, and that statutory compliances have been fulfilled.

The Scheme of Amalgamation is sanctioned.

Appointed date - dissolution of transferor companies without winding up - Fixing of the Appointed Date and consequent dissolution of the Transferor Companies. - HELD THAT: - The Tribunal fixed the Appointed Date as 31st December 2017 for the Scheme and, upon sanction of the Scheme, directed that the Transferor Companies shall stand dissolved without the process of winding up. This follows the sanction and is the operative consequence of the amalgamation as approved by the Tribunal.

Appointed Date fixed as 31st December 2017; Transferor Companies to be dissolved without winding up.

Compliance with procedural filing and stamp duty adjudication directions - Directives regarding statutory and procedural compliances consequent to sanction of the Scheme. - HELD THAT: - The Tribunal recorded that all requisite statutory compliances have been fulfilled and issued directions to the Petitioners to file certified copies of the Order and the Scheme with the Registrar of Companies (including electronic filing in Form INC 28), and to lodge certified copies with the Superintendent of Stamps for adjudication of stamp duty, within the specified time frames. The Tribunal also directed that regulatory authorities act on the certified copy of the order and that any interested person may apply for further directions if necessary.

Petitioners directed to file certified copies of the Order and Scheme with the Registrar of Companies and Superintendent of Stamps within the stipulated periods; regulatory authorities to act on certified copy.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation of the six Transferor Companies with the Transferee Company as fair and reasonable, fixed the Appointed Date as 31st December 2017, directed dissolution of the Transferor Companies without winding up, and issued consequential procedural directions for filing and stamp duty adjudication.

Writ jurisdiction under Article 226 - State under Article 12 - Public function doctrine - Territorial jurisdiction of High Court - Ouster clauses in private contracts and writ remedy - Availability of alternative remedies (in house appeal and SEBI complaint) - Non justiciability of expert financial assessment in writ proceedings

State under Article 12 - Public function doctrine - Whether the Credit Rating Agency (third respondent) is a 'State' under Article 12 and/or discharges public functions amenable to writ jurisdiction. - HELD THAT: - Applying the test of whether a body is financially, functionally and administratively dominated by the Government and considering the nature of credit rating as an evaluative corporate function, the Court held that mere regulatory or supervisory control by SEBI is not sufficient to characterise the credit rating agency as 'State'. Credit rating, being an assessment of creditworthiness performed by financial analysts, is a corporate function which, despite its public consequences, does not amount to a public or sovereign function such as to attract Article 12. Consequently the third respondent is not amenable to writ jurisdiction on the ground of being a 'State'. [Paras 12, 13]

The third respondent is not 'State' within Article 12 and is not discharging a public function; writ petition is not maintainable on that ground.

Territorial jurisdiction of High Court - Ouster clauses in private contracts and writ remedy - Whether this High Court lacks territorial jurisdiction or is ousted from adjudicating the dispute by contractual ouster clauses in the rating agreement. - HELD THAT: - Relying on Article 226(2), the Court found that where a substantial part of the cause of action arises within the territorial limits of the High Court, jurisdiction cannot be negatived merely because the respondent is seated elsewhere. Likewise, an ouster clause in the rating agreement cannot preclude the Court's jurisdiction under Article 226; contractual provisions cannot bar writ jurisdiction where constitutionally available. However, these jurisdictional entitlements do not determine maintainability where other factors render writ relief inappropriate. [Paras 8]

The writ petition is not defeated for lack of territorial jurisdiction, and contractual ouster clauses do not by themselves preclude the Court's jurisdiction.

Availability of alternative remedies (in house appeal and SEBI complaint) - Non justiciability of expert financial assessment in writ proceedings - Writ jurisdiction under Article 226 - Whether the writ petition is maintainable despite the availability of alternative remedies and the expert nature of rating exercise. - HELD THAT: - The Court recognised that rating is an expert exercise carried out by financial analysts and that matters of this nature are better addressed by the specialised mechanisms provided. The petitioner has effective alternative remedies including in house appeal mechanisms and the statutory complaint route to SEBI under the regulatory scheme. Given the private character of the agency, the expert nature of the subject matter and the existence of efficacious alternate remedies, the Court declined to assume jurisdiction and expressly refrained from adjudicating the merits. [Paras 16, 17, 18]

In view of the expert character of the rating exercise and availability of effective alternative remedies, the writ petition is not maintainable and is dismissed without deciding merits.

Final Conclusion: Writ petition dismissed as not maintainable: the Credit Rating Agency is not 'State' under Article 12 and does not discharge a public function; territorial jurisdiction of this High Court exists but contractual ouster cannot bar constitutional jurisdiction; however, because the subject matter is an expert financial assessment and effective alternative remedies (in house appeal and SEBI complaint) are available, the Court declines to entertain the petition and does not decide the merits.

Liability of guarantor is co-extensive with the principal debtor - moratorium under section 14 of the Insolvency and Bankruptcy Code - binding effect of an approved resolution plan on guarantors under section 31 of the Insolvency and Bankruptcy Code - proceedings under the SARFAESI Act against guarantors

Liability of guarantor is co-extensive with the principal debtor - moratorium under section 14 of the Insolvency and Bankruptcy Code - proceedings under the SARFAESI Act against guarantors - binding effect of an approved resolution plan on guarantors under section 31 of the Insolvency and Bankruptcy Code - Whether a bank can institute or continue proceedings under the SARFAESI Act against a personal guarantor while insolvency proceedings under the IB Code are pending against the principal borrower. - HELD THAT: - The Court held that the liability of a guarantor is co-extensive with that of the principal debtor and not alternative; consequently, initiation or continuation of insolvency proceedings against the corporate debtor does not by itself bar proceedings against the guarantor. A plain reading of the moratorium provision under Section 14 shows that it refers to the corporate debtor alone and contains no prohibition applicable to personal guarantors. Although Section 31 makes an approved resolution plan binding on guarantors, that provision does not preclude a creditor from pursuing remedies against a guarantor during the insolvency resolution process; rather, Section 31 ensures that guarantors remain liable insofar as the approved plan prescribes. The Court relied on the Supreme Court precedent which reached the same conclusion, and therefore rejected the petitioner's contention that SARFAESI proceedings against the guarantor must await the outcome of the corporate insolvency resolution process. [Paras 12, 13, 14]

Proceedings under the SARFAESI Act against the guarantor may be instituted or continued notwithstanding pending insolvency proceedings against the principal borrower under the IB Code; the writ petition is dismissed.

Final Conclusion: The petition challenging the Bank's initiation and continuation of SARFAESI proceedings against the petitioner (a guarantor) during the pendency of insolvency proceedings against the principal borrower is dismissed; the Court held that moratorium under the IB Code does not apply to personal guarantors and the creditor may proceed against them.

Taxability of revenue share from joint commercial activity - renting of immovable property - municipal tax deduction - taxability of entertainment receipts (fun factory) vis-a -vis State entertainment tax - parking fee - admitted payment exceeding assessed tax - reversal of Cenvat credit on common input services - Rule 6(3) of Cenvat Credit Rules - remand for fresh adjudication after affording opportunity under principles of natural justice - penalty under Section 76 and Rule 15(1) of Cenvat Credit Rules

Taxability of revenue share from joint commercial activity - principal-to-principal relationship - Demand of service tax on share of revenue from joint commercial activity (Food Court). - HELD THAT: - The Tribunal applied its precedent in the appellant's own earlier final order dated 18.03.2019 and concluded that the receipts were received on a principal-to-principal basis as share of revenue arising from sale of goods which had been subjected to State sales tax/VAT. There was no service provider-service recipient relationship and no provision of service attracting service tax. Reliance was placed on the earlier Tribunal reasoning that such revenue sharing is not exigible to service tax where the arrangement does not create a distinct taxable "new entity" but operates on principal-to-principal terms. [Paras 6, 13]

Demand of Rs. 37,31,953/- on revenue share is set aside.

Renting of immovable property - municipal tax deduction - Demand of service tax on amount shown as rent from immovable property to the extent representing municipal taxes. - HELD THAT: - The Tribunal accepted the appellant's contention that the amount reflected pertains to municipal taxes which are deductible from gross rent under the exemption notification referenced in the order. Consequently, the portion representing municipal taxes is not exigible to service tax and the related demand was not sustained. [Paras 5, 13]

Demand of Rs. 6,15,873/- in respect of rent (municipal tax component) is set aside.

Taxability of entertainment receipts (fun factory) vis-a -vis State entertainment tax - Demand of service tax on receipts from Fun Factory (entertainment activities run by the appellant). - HELD THAT: - The Tribunal relied on its prior decision dated 01.01.2019 in the appellant's case and held that these receipts are in the nature of consideration for entertainment which is taxable under the State Entertainment Tax Act and therefore not exigible to service tax. The adjudication in the impugned order was set aside having regard to that precedent. [Paras 4, 13]

Demand in respect of Fun Factory receipts is set aside as not exigible to service tax.

Parking fee - admitted payment exceeding assessed tax - Demand of service tax on parking fee receipts and reconciliation with admitted payment. - HELD THAT: - Records showed that the appellant had remitted an admitted tax amount exceeding the service tax assessed in the impugned order. The Tribunal noted that the admitted payment of tax was more than the assessed liability and therefore no further tax was due. [Paras 4, 13]

Service tax demand on parking fee is not disputed and is fully covered by the admitted payment; no further tax is payable.

Reversal of Cenvat credit on common input services - Rule 6(3) of Cenvat Credit Rules - remand for fresh adjudication after affording opportunity under principles of natural justice - Demand under Rule 6(3) for reversal of Cenvat credit alleged to relate to common input services used for both taxable and exempt services. - HELD THAT: - The Tribunal recorded that the appellant had specifically averred maintenance of separate accounts and non availment of Cenvat credit for input services attributable to exempt output services and had sought verification of records. The adjudicating authority, by confirming the demand without providing the opportunity to verify evidence, adopted a pedantic approach. The Tribunal therefore declined to decide the merits and remitted the issue to the adjudicating authority for fresh consideration after following principles of natural justice, directing the appellant to cooperate and lead evidence on non availment and non utilisation. [Paras 7, 8, 13, 15]

Demand of Rs. 87,67,255/- under Rule 6(3) is set aside and remitted to the Adjudicating Authority for re-adjudication after affording opportunity and verification.

Penalty under Section 76 and Rule 15(1) of Cenvat Credit Rules - Validity of penalty imposed in relation to the matters adjudicated. - HELD THAT: - Given the Tribunal's findings that the principal issues were interpretational and there was no finding of suppression, fraud or deliberate concealment, the Tribunal held that the penalties imposed were not warranted. On that basis the penalties were found to be unjustified. [Paras 14]

Penalty imposed under Section 76 and Rule 15(1) is set aside.

Final Conclusion: The appeal is allowed: demands in respect of revenue share, municipal tax component of rent, and Fun Factory receipts are set aside; parking fee liability is held fully covered by admitted payment; demand under Rule 6(3) for reversal of Cenvat credit is remitted for fresh adjudication after affording opportunity and verification; penalties under Section 76 and Rule 15(1) are set aside.