TaxTMI Updates e-Newsletter
Nov 09,2020

Input tax credit - TRAN-1 - Acceptance of transitional credit claim - Electronic credit ledger - Writ jurisdiction - Vires of Rules 117 and 118 of the Central Goods & Services Tax Rules, 2017

TRAN-1 - Input tax credit - Acceptance of transitional credit claim - Electronic credit ledger - Writ jurisdiction - Respondents directed to accept the TRAN-1 filed by the Petitioner and to credit the input tax credit claimed. - HELD THAT: - The Court, relying on the reasons recorded in its earlier order dated 5th November, 2020 in Writ Petition (St.) No. 3705 of 2020 and noting that the Respondents have admitted the Petitioner's eligibility, invoked its writ jurisdiction to grant relief. The Petitioner was held to be eligible for input tax credit amounting to the sum claimed. The respondents were directed to accept the TRAN-1 submitted by the Petitioner and to credit the claimed input tax credit in the Petitioner's electronic credit ledger/input tax credit account within two weeks from the date of this order. The Court disposed of the petition finally by issuing the specific ministerial direction to give the credit without further adjudication in this proceeding. [Paras 5, 6, 8]

Directed respondents to accept TRAN-1 and to credit the claimed input tax credit in the electronic credit ledger within two weeks; petition allowed.

Vires of Rules 117 and 118 of the Central Goods & Services Tax Rules, 2017 - Challenge to the vires of Rules 117 and 118 CGST Rules, 2017 was not adjudicated. - HELD THAT: - Having granted the substantive relief by directing acceptance of the TRAN-1 and the credit, the Court declined to examine the Petitioner's separate challenge to the vires of Rules 117 and 118 of the Central Goods & Services Tax Rules, 2017. The vires challenge was left undetermined as unnecessary for the grant of the relief sought in this petition. [Paras 7]

Did not consider or decide the vires challenge to Rules 117 and 118.

Final Conclusion: The petition was allowed: respondents were ordered to accept the Petitioner's TRAN-1 and to credit the claimed input tax credit in the electronic credit ledger within two weeks; the vires challenge to Rules 117 and 118 CGST Rules, 2017 was not decided; no order as to costs.

Input tax credit - transitional credit under Section 140 - form TRAN-1 - technical glitches on GST portal - denial of substantive relief on mere procedural technicality - writ jurisdiction under Article 226 - ITGRC verification and rejection

Input tax credit - form TRAN-1 - technical glitches on GST portal - denial of substantive relief on mere procedural technicality - writ jurisdiction under Article 226 - ITGRC verification and rejection - Whether the petitioner, having been found eligible for carry forward of transitional input tax credit, should be denied credit solely because ITGRC recorded that the taxpayer had not attempted to save/submit TRAN-1 on the portal. - HELD THAT: - The Court found as an admitted fact that the petitioner was otherwise eligible for transitional input tax credit and that the respondents themselves had verified the claim and arrived at the eligible amount. The ITGRC rejection rested on a description that the taxpayer "has neither tried for saving/submitting or filing TRAN-1". Given the respondents' admission of entitlement, the Court held that denial of the admitted credit on such a technicality would be unconscionable and a travesty of justice. The Court invoked its writ jurisdiction and the principle that public authorities should not be allowed to defeat substantive rights by relying on needless technicalities, applying the reasoning in the authorities cited to cut down technicalities that frustrate legislative purpose. In consequence the Court directed respondents to accept the TRAN-1 filed by the petitioner and to credit the admitted input tax credit into the petitioner's electronic credit ledger within two weeks from the date of the order. [Paras 21, 22, 27, 28]

Respondents directed to accept the petitioner's TRAN-1 and credit the admitted input tax credit into the petitioner's electronic credit ledger within two weeks.

Transitional credit under Section 140 - form TRAN-1 - challenge to vires of Rules 117 and 118 - Whether the challenge to the vires of Rule 117 and Rule 118 of the CGST Rules, 2017 requires adjudication in this petition. - HELD THAT: - The Court expressly declined to examine the petitioner's challenge to the vires of Rules 117 and 118 because the matter was disposed of on the admitted entitlement and the technical rejection by ITGRC. The constitutional and vires challenge was therefore not adjudicated and remains unaddressed in this order. [Paras 29]

Petitioner's challenge to the vires of Rules 117 and 118 not examined and left open.

Final Conclusion: The petition is allowed: respondents are directed to accept the petitioner's TRAN-1 and credit the admitted transitional input tax credit into the petitioner's electronic credit ledger within two weeks; the vires challenge to Rules 117 and 118 is not decided.

Summary order. Notice issued; respondent permitted to file counter affidavit within four weeks and petitioner to file rejoinder within four weeks thereafter; notice to unserved respondents directed to be served through standing counsel by all modes; matter listed on 14th December, 2020 to await the Supreme Court judgment in Union of India Vs. Brand Equity Treaties Limited & Ors., SLP (C) 7425-7428/2020.

Double counting in profiteering calculation - remand for fresh adjudication - NAPA order set aside - adjudication in accordance with law

Double counting in profiteering calculation - remand for fresh adjudication - NAPA order set aside - Validity of the NAPA order dated 11th May, 2020 holding that the petitioner had profiteered and the appropriate remedy in view of admitted factual mistakes in the profiteering computation. - HELD THAT: - The Director General of Anti-profiteering's computation underlying the NAPA order was challenged as factually incorrect on the ground that invoices were taken twice, resulting in double counting of the profiteered amount. On instructions, counsel for respondents admitted the presence of factual mistakes in the impugned order and consented to setting it aside. The petitioner did not oppose remand. In view of these admissions and the absence of a resolution on merits, the High Court set aside the impugned NAPA order and remanded the matter to NAPA for fresh adjudication, directing that the matter be considered afresh and decided in accordance with law while leaving all rights and contentions of the parties open. The court also listed the matter before NAPA for further consideration on the specified date. [Paras 6, 8]

Impugned order dated 11th May, 2020 set aside and matter remanded to NAPA for fresh adjudication in accordance with law; rights and contentions of parties left open.

Final Conclusion: The High Court allowed the petition by setting aside the NAPA order of 11th May, 2020 in view of admitted factual errors in the profiteering computation and remanded the matter to NAPA for fresh adjudication in accordance with law, leaving parties' rights open.

Summary order. Notice issued; counter-affidavits and rejoinder affidavits directed to be filed within stipulated two-week periods; no coercive action to be taken and bail of the petitioner shall not be cancelled in the specified criminal miscellaneous cases until further orders; matter listed on 18th November, 2020.

Non passing of benefit of input tax credit - profiteering under Section 171(1) of the CGST Act - penalty under Section 171(3A) - prospective operation of penal provision - withdrawal of penalty proceedings for lack of retrospective application

Non passing of benefit of input tax credit - profiteering under Section 171(1) of the CGST Act - Respondent did not pass on the benefit of additional input tax credit and thereby violated the obligation under Section 171(1) of the CGST Act for the period 01.07.2017 to 31.12.2018. - HELD THAT: - The DGAP's investigation report dated 24.04.2019, followed by this Authority's Order No. 75/2019 dated 18.12.2019, recorded that the respondent had failed to pass on the benefit of additional ITC to homebuyers in the project "Nirala Greenshire". After considering the report and the submissions, the Authority finds that the respondent did not pass on the benefit of ITC for the period from 01.07.2017 to 31.12.2018 and therefore committed profiteering in breach of Section 171(1) of the CGST Act. The earlier determination of the profiteered amount was founded on that finding and remains the operative determination of profiteering for the stated period.

Respondent held to have violated Section 171(1) of the CGST Act for the period 01.07.2017 to 31.12.2018; profiteering determination as recorded earlier stands.

Penalty under Section 171(3A) - prospective operation of penal provision - withdrawal of penalty proceedings - Penalty under Section 171(3A) cannot be imposed for the period 01.07.2017 to 31.12.2018 because the provision came into force on 01.01.2020; consequent penalty proceedings are withdrawn. - HELD THAT: - Sub section 171(3A) was inserted by the Finance (No. 2) Act, 2019 and its operation was notified to commence from 01.01.2020 by Notification No. 01/2020 Central Tax dated 01.01.2020. As no penalty provision existed at the time of the respondent's contravention (01.07.2017 to 31.12.2018), the penal provision cannot be applied retrospectively. In view of the prospective commencement of Section 171(3A), the notice dated 04.02.2020 seeking imposition of penalty is withdrawn and the penalty proceedings initiated under that provision are dropped.

Notice for imposition of penalty under Section 171(3A) withdrawn and penalty proceedings dropped as the provision is prospective with effect from 01.01.2020.

Final Conclusion: The Authority affirms that the respondent failed to pass on the benefit of additional ITC and committed profiteering for the period 01.07.2017 to 31.12.2018 (as previously quantified), but declines to impose penalty under Section 171(3A) because that penal provision came into force only on 01.01.2020; accordingly the penalty proceedings are withdrawn.

Appeal Effect Order - implementation of Transfer Pricing Officer's order - rectification under Section 154 - refund with interest under Section 244A - failure to give effect to order / duty to implement appellate or administrative order

Appeal Effect Order - implementation of Transfer Pricing Officer's order - failure to give effect to order / duty to implement appellate or administrative order - Direction to the Assessing Officer to give effect to the Transfer Pricing Officer's order dated 11th September, 2019 by passing the Appeal Effect Order. - HELD THAT: - The Assessing Officer had made an addition in the assessment which was stayed by the ITAT subject to deposit. Pursuant to remand, the Transfer Pricing Officer reduced the addition and, on the petitioner's application under Section 154, reduced the demand to nil by order dated 11th September, 2019. Despite that order, the Appeal Effect Order was not passed for more than a year. The Court observed that once the assessee succeeds in litigation and a departmental order reduces the demand to nil, the Assessing Officer is obliged to give effect to that order without undue delay. In the circumstances, and after declining further adjournment, the Court directed the respondents to pass the Appeal Effect Order in pursuance of the Transfer Pricing Officer's order dated 11th September, 2019 within four weeks in accordance with law. [Paras 6, 7, 9, 11, 12]

Respondents directed to pass the Appeal Effect Order in pursuance of the Transfer Pricing Officer's order dated 11th September, 2019 within four weeks.

Refund with interest under Section 244A - rectification under Section 154 - failure to give effect to order / duty to implement appellate or administrative order - Direction to grant the refund and pass rectification orders on the petitioner's applications dated 25th July, 2019 and 12th September, 2019, together with interest under Section 244A. - HELD THAT: - The Transfer Pricing Officer's order and subsequent Section 154 order reduced the demand to nil, entitling the petitioner to refund of the amount deposited pursuant to the ITAT stay. The Court noted the absence of prompt departmental action to issue the refund and to pass rectification orders, which necessitated the writ petition. Having found no satisfactory explanation for the delay and having declined further adjournment, the Court directed the respondents to grant the refund along with interest under Section 244A and to pass the pending rectification orders within four weeks in accordance with law. [Paras 7, 8, 10, 11, 12]

Respondents directed to grant the refund with interest under Section 244A and to pass the rectification orders on the petitioner's applications within four weeks.

Final Conclusion: Writ petition disposed of with directions that respondents shall, within four weeks, pass the Appeal Effect Order giving effect to the Transfer Pricing Officer's order dated 11th September, 2019, grant the refund with interest under Section 244A and pass the rectification orders on the petitioner's applications, failing which the petitioner may pursue appropriate remedies.

Carry forward and set off of accumulated loss under Section 72A vis-a -vis sanction by the BIFR - effect of a scheme sanctioned by the Board for Industrial and Financial Reconstruction under the SICA on income tax consequences - scope and limits of revision under Section 263 of the Income tax Act - requirement of order being both erroneous and prejudicial to the revenue - precedential effect of Supreme Court interpretation on assessment officer's exercise of jurisdiction

Carry forward and set off of accumulated loss under Section 72A vis-a -vis sanction by the BIFR - effect of a scheme sanctioned by the Board for Industrial and Financial Reconstruction under the SICA on income tax consequences - precedential effect of Supreme Court interpretation on assessment officer's exercise of jurisdiction - Allowance of the assessee's claim for carry forward of losses pursuant to a scheme sanctioned by the BIFR and whether that allowance was legally sustainable. - HELD THAT: - The Court applied the binding principle that sanction of a rehabilitation scheme by the BIFR under the SICA necessarily imports satisfaction of the conditions contemplated by Section 72A of the Income tax Act. The Tribunal's conclusion - that once the BIFR has sanctioned the scheme no separate satisfaction of the conditions under Section 72A need be called for and the assessing officer was correct in allowing the claim - is supported by the Supreme Court's reasoning in Indian Shaving Products Ltd and by the statutory interplay in Section 32(2) of the SICA. The assessment officer's allowance was therefore in accordance with the law and the established precedent that a BIFR sanction implies the requirements of Section 72A have been met. [Paras 18]

The allowance of the claim for carry forward of loss by the assessing officer, in view of the BIFR sanction and Supreme Court precedent, is correct and is affirmed.

Scope and limits of revision under Section 263 of the Income tax Act - requirement of order being both erroneous and prejudicial to the revenue - precedential effect of Supreme Court interpretation on assessment officer's exercise of jurisdiction - Validity of the Commissioner of Income Tax's revision under Section 263 where the assessing officer had allowed the claim following binding judicial authority and a BIFR sanction. - HELD THAT: - Section 263 permits revision only where the assessment order is both erroneous and prejudicial to the revenue. The Court found that, although the assessing officer's action might be prejudicial to the revenue, it could not be said to be 'erroneous' because the officer applied the legal position laid down by the Supreme Court and correctly relied on the effect of the BIFR sanction under Section 32(2) of the SICA. In the absence of concurrence of both conditions required by Section 263, the Commissioner's action to revise the assessment was contrary to statute and liable to be set aside. [Paras 19]

The order of the Commissioner under Section 263 is invalid as the assessment was not 'erroneous' within the meaning of Section 263 despite being prejudicial; revision is therefore set aside.

Final Conclusion: The Revenue's appeal is dismissed. The Tribunal's quashing of the Commissioner's revision under Section 263 is upheld: the assessing officer rightly allowed the claim for carry forward of losses in view of the BIFR sanction and governing Supreme Court precedent, and the conditions for exercise of revision under Section 263 were not concurrently satisfied.

Concealment of income and wilful attempt to evade tax - independence of criminal prosecution and adjudication/reassessment proceedings - sanction to prosecute following consideration of submissions - prosecution may be launched notwithstanding pendency of assessment/reassessment - presumption under Section 278E

Concealment of income and wilful attempt to evade tax - prosecution may be launched notwithstanding pendency of assessment/reassessment - Whether the criminal proceedings in E.O.C.C.No.401 of 2018 for offence under Section 276C(1) could be quashed on the ground that the assessment order on which complaint was said to be based had been set aside - HELD THAT: - The Court found on the record that the complaint was founded on the concealment of share transactions in the return of income for financial year 2007-08 (assessment year 2008-09) and not exclusively on any completed assessment order. The material showed that the petitioner had entered into 165 share transactions which were not disclosed as capital gains in the return and that the Investigation Wing, after analysing returns and available records, concluded there was suppression of income. The Court referred to and applied the settled principle that criminal prosecution for tax offences is separate and distinct from adjudicatory/assessment proceedings and may be initiated even while assessment or reassessment is pending; completion of assessment is not a precondition for launching prosecution. The sanctioning authority considered the petitioner's representative's submissions, recorded reasons (including the volume of transactions, alleged wilful non-disclosure, and the applicability of the statutory presumption), and accorded sanction to prosecute. Subsequent remand by the appellate authority for re-examination and later completion of reassessment did not alter the Court's view that there existed material justifying prosecution and that the pendency or setting aside of an assessment order on technical grounds does not automatically render criminal proceedings an abuse of process. Reliance on precedents recognising the independence of prosecution from adjudication supported dismissal of the quash petition. (Findings and reasoning appear at paras. 7, 9, 11 and 12.) [Paras 7, 9, 11, 12]

The petition to quash the criminal proceedings was rejected and the complaint was held to be maintainable; prosecution may proceed subject to usual rights of the accused.

Sanction to prosecute following consideration of submissions - presumption under Section 278E - Whether the sanction dated 16.10.2018 to prosecute the petitioner was vitiated by alleged suppression of the fact that the assessment order had been set aside - HELD THAT: - The Court examined the sanctioning authority's file note and reasons, noting that the petitioner's authorised representative had been informed and that the sanctioning officer expressly considered and rejected the petitioner's submissions. The sanction order recorded the factual basis (non-disclosure of capital gains, magnitude of transactions, partial TDS) and legal position that prosecution is independent of assessment completion; it also referred to the statutory presumption. On that basis the Court concluded that sanction was not granted mechanically or without application of mind and therefore was valid. (Findings and reasoning appear at paras. 9 and 11.) [Paras 9, 11]

The sanction to prosecute was held to have been accorded after consideration of relevant submissions and was not vitiated by non-disclosure of the appellate order.

Final Conclusion: The Criminal Original Petition seeking quashment of proceedings in E.O.C.C.No.401 of 2018 was dismissed; the Court held that the complaint alleging wilful concealment of share transactions and attempt to evade tax was maintainable, the sanction to prosecute was valid, and the petitioner remains at liberty to raise all grounds in the trial court, which was directed to conclude trial within six months.

Rectification under Section 154 of the Income Tax Act, 1961 - time limit under Section 154(8) - jurisdictional competence of the Centralised Processing Centre vis-a -vis the Assessing Officer - opportunity of hearing - reasoned order

Rectification under Section 154 of the Income Tax Act, 1961 - time limit under Section 154(8) - opportunity of hearing - reasoned order - The petitioner's rectification application filed on 26th December, 2019 was to be decided afresh by the respondent by a reasoned order after affording an opportunity of hearing within a stipulated time. - HELD THAT: - The Court recorded that the petitioner had filed a rectification application seeking deletion of an addition made in the return and refund with interest. Although the respondent contended that rectification arising from action by the Centralised Processing Centre should be addressed to the CPC, the petitioner produced a communication from the CPC indicating that the rectification would be carried out by the jurisdictional Assessing Officer. In view of these facts and the petitioner's entitlement to a decision within the statutory machinery, the Court directed the respondent to decide the rectification application in accordance with law by a reasoned order after giving the petitioner an opportunity of hearing. The Court thereby enforced the statutory expectation of timely and reasoned disposal while leaving open the parties' substantive rights and contentions.

The respondent is directed to decide the rectification application by a reasoned order after affording an opportunity of hearing within four weeks.

Final Conclusion: Writ petition disposed of by directing the respondent to decide the petitioner's rectification application dated 26th December, 2019 by a reasoned order after hearing the petitioner, within four weeks; parties' rights and contentions left open.

Interest under Section 244A - Adjustment of self-assessment payment between interest and tax - Explanation to Section 140A(1) - Inordinate delay and compensation for delayed refunds

Adjustment of self-assessment payment between interest and tax - Explanation to Section 140A(1) - Whether, under the explanation to Section 140A(1), an amount paid by an assessee under self-assessment that falls short of the aggregate of tax and interest must be first adjusted towards interest payable and the balance, if any, adjusted towards tax. - HELD THAT: - The Court found that the question as to the order of adjustment of a self-assessment payment between interest and tax was not specifically considered by the Commissioner (Appeals) or the Tribunal. Parties had addressed the subject: the assessee contended that self-assessment payments should be applied first to interest and then to tax, relying on the text of the explanation to Section 140A(1); the revenue relied on authorities holding that only statutory interest under Section 244A is payable and that no interest-on-interest or additional compensation (except for inordinate delay) is warranted. Because the lower authorities did not address the specific issue of adjustment under the explanation to Section 140A(1), the High Court concluded that the matter requires fresh consideration by the Commissioner (Appeals). The Court therefore did not resolve the substantive legal question on the merits and did not pronounce on the substantial questions of law framed in the appeal. [Paras 9, 10]

The matter is remanded to the Commissioner of Income Tax (Appeals) to consider and decide whether the explanation to Section 140A(1) requires that a short self-assessment payment be first adjusted towards interest and the balance towards tax; the remand is confined to this issue and the substantial questions of law are left open.

Final Conclusion: Appeal allowed to the limited extent of setting aside the orders of the Commissioner (Appeals) and the Tribunal on the specified aspect; matter remanded to the Commissioner (Appeals) for fresh consideration of the adjustment of self-assessment payments under the explanation to Section 140A(1). Substantial questions of law left open. No costs.

Interest on income-tax refund - direction to comply with affidavit - disposal of writ petition upon satisfaction of principal relief - reservation of liberty to pursue appropriate proceedings

Direction to comply with affidavit - Direction issued to the Income Tax Department to comply with the averments made in the affidavit dated 12.10.2020 in respect of the assessment year 2017-18. - HELD THAT: - The Court examined the affidavit dated 12.10.2020 filed by the Deputy Commissioner of Income Tax and directed the Department to act in accordance with the statements made therein concerning AY 2017-18. The direction was given as part of disposing the writ petition on the principal relief relating to refund for that assessment year. [Paras 4]

The Income Tax Department is directed to comply with the averments in the affidavit for AY 2017-18.

Interest on income-tax refund - reservation of liberty to pursue appropriate proceedings - Whether the petitioner is entitled to interest on the refund for AY 2018-19 and the period for which such interest is payable. - HELD THAT: - The Court recorded the competing contentions: the petitioner claiming interest from the date of the order dated 13.11.2019 until actual payment, and the Department asserting entitlement to interest only up to the date of the order allowing the refund. The Court kept this question of law open for determination in an appropriate forum and did not adjudicate the precise period for which interest is payable in this writ petition. Consequently, the Court disposed of the petition after noting that the principal relief (payment of refund) had been satisfied, while expressly reserving the petitioner's right to seek determination of the interest claim by taking appropriate legal steps. [Paras 5, 6, 7]

The issue of interest payable on the refund for AY 2018-19 is left open; the petitioner is granted liberty to pursue the question in an appropriate proceeding.

Final Conclusion: The writ petition is disposed of: the Department is directed to comply with its affidavit for AY 2017-18; the principal relief of refund has been satisfied; the question of interest for AY 2018-19 is left open and the petitioner is at liberty to seek its adjudication in accordance with law.

Taxability of unrealised rent - Rule 4 of the Income tax Rules, 1962 - conditions for non-recognition of accrued rent - TDS deduction and its effect on accrual-based taxation of rent - adjustment of security deposit against outstanding rent - disallowance under section 14A read with Rule 8D - attribution of administrative expenses to exempt income - methodology for apportioning common administrative expenses to exempt income

Taxability of unrealised rent - Rule 4 of the Income tax Rules, 1962 - conditions for non-recognition of accrued rent - TDS deduction and its effect on accrual-based taxation of rent - adjustment of security deposit against outstanding rent - Whether the unrealised rent outstanding from licensees for the year under consideration was taxable in the hands of the assessee despite non receipt and whether TDS deduction by the licensee or retention of security deposit rendered such rent taxable. - HELD THAT: - The Tribunal found as a fact that substantial rent remained unrecovered and that the assessee had negotiated a settlement culminating in surrender of claims in exchange for possession, and therefore had no certainty of receipt. The AO had held that three of the four conditions of Rule 4 were fulfilled but rejected the assessee's case for not initiating legal proceedings (Rule 4(d)). The Tribunal applied a commercial and pragmatic appraisal, concluding that institution of legal proceedings would have been futile or commercially unreasonable in the circumstances and that the assessee's settlement/forfeiture equated to satisfying the Rule 4 requirement. Mere deduction and deposit of TDS by the licensee in its returns was held to be insufficient, by itself, to treat accrual as taxable in the hands of the assessee where there was no receipt or reasonable certainty of receipt. The Tribunal directed deletion of the addition of unrealised rent but observed that the TDS amount actually credited by the assessee (Rs. 38.58 lakhs) could be treated as income from house property. [Paras 17, 18, 19, 20]

Addition of unrealised rent of Rs. 3,85,85,341/- deleted; however the AO may treat the actual TDS credit (Rs. 38.58 lakhs) as income from house property; direction to reverse CIT(A)'s direction regarding security deposit adjustment.

Disallowance under section 14A read with Rule 8D - attribution of administrative expenses to exempt income - methodology for apportioning common administrative expenses to exempt income - Whether disallowance under section 14A read with Rule 8D(2)(iii) should be made in respect of administrative/common expenses and, if so, the correct method of apportionment. - HELD THAT: - The AO applied the standard formula under Rule 8D and disallowed an amount; CIT(A) reduced the disallowance by applying the ratio of exempt income to non operating income. The Tribunal accepted that determination under Rule 8D may require a practical approach and that common administrative expenses were incurred for the whole business. It rejected the assessee's contention that no expenditure was incurred for earning the exempt income, but found CIT(A)'s approach imperfect. The Tribunal directed that the appropriate apportionment is by reference to the ratio of exempt income to total income of the assessee (exempt income/total income), and directed AO to disallow that percentage of common administrative expenses. On the facts, the Tribunal calculated the ratio as 3.41% (exempt income to total income) and directed disallowance of 3.41% of other common administrative expenses; the assessee's plea that no expenditure was incurred was accordingly rejected only partly. [Paras 21]

Disallowance under section 14A r.w. Rule 8D to be recomputed by disallowing the proportion of common administrative expenses equal to the ratio of exempt income to total income (directed here as 3.41% of such expenses); assessee's plea of no attributable expenditure partly rejected.

Final Conclusion: The appeal is partly allowed: the addition of unrealised rent for AY 2012-13 is deleted except that the TDS actually credited may be taxed as income from house property; directions given to recompute disallowance under section 14A r.w. Rule 8D by apportioning common administrative expenses in proportion to exempt income to total income.

Explanation under section 68 - Burden of proof for genuineness and creditworthiness of creditors - Requirement of Assessing Officer's satisfaction under section 68 - Admissibility and consideration of additional evidence by appellate authority

Explanation under section 68 - Burden of proof for genuineness and creditworthiness of creditors - Requirement of Assessing Officer's satisfaction under section 68 - Admissibility and consideration of additional evidence by appellate authority - Sustenance of addition under section 68 in respect of unsecured loans received from directors. - HELD THAT: - The Tribunal found that the assessee had produced documentary evidence - confirmations, bank statements and ITRs of the directors - to establish identity, genuineness and capacity of the creditors and the bank transfer of funds. Section 68 requires the assessee to offer an explanation about sums credited and permits addition only where the explanation is not satisfactory in the opinion of the AO; however, the Assessing Officer did not record any satisfaction or give reasons why the explanation was unsatisfactory. The CIT(A) sustained the addition despite the material placed on record and admitted additional evidence which were not considered in reaching the adverse conclusion. The Tribunal held that, in absence of the AO's recorded satisfaction and having regard to the documentary proof of source and capacity produced by the assessee, the addition under section 68 could not be sustained. [Paras 7, 8]

Addition under section 68 in respect of unsecured loans from the directors deleted and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the addition made under section 68 in respect of unsecured loans from the directors for AY 2012-13, observing that the assessee had furnished satisfactory documentary evidence and that the Assessing Officer had failed to record requisite satisfaction for making the addition.

Reopening of assessment - reasons to believe - requirement of recording reasons - borrowed satisfaction - mechanical approval - reassessment void ab initio

Reopening of assessment - reasons to believe - requirement of recording reasons - borrowed satisfaction - mechanical approval - reassessment void ab initio - Validity of initiation of reassessment proceedings under sections 147/148 read with section 151 in respect of AY 2011-12 - HELD THAT: - The Tribunal found that the reasons recorded for reopening dated 30.03.2018 were based solely on information received from ADIT (Inv.)-Unit-2(1) and did not disclose any transaction-specific or case-specific material such as the identity of the remitter, bank particulars or cheque details. There was no independent application of mind by the Assessing Officer reflected in the recorded reasons; the reasons were vague, lacked direct or circumstantial evidence linking the asserted facts to escapement of income, and appeared to be a borrowed satisfaction. Further, the approval by the Pr. CIT under the statutory sanctioning provision was held to be mechanical as no satisfaction was recorded by the sanctioning authority. The Tribunal reiterated that reasons recorded for reopening must be self-explanatory, based on evidence, and cannot be supplemented by the subsequent assessment order; absent such reasons and a proper sanction, the prerequisite statutory satisfaction for reopening is missing and the reopening is invalid. [Paras 7]

Reopening under sections 147/148 read with section 151 quashed as void ab initio for lack of valid reasons and mechanical sanction.

Final Conclusion: The appeal is allowed; the reassessment for AY 2011-12 is quashed as void ab initio for lack of valid recorded reasons and mechanical approval, and there is no occasion to decide the additions made in the assessment order.

Power to call for information under Section 133(6) for general enquiry - jurisdiction of the Income tax Officer (Intelligence)/ITO(TDS) to issue notice under Section 133(6) with prior approval - penalty under Section 272A(2)(c) for failure to furnish information - time bar for imposition of penalty under Section 275(1)(c) - reasonable cause defence under Section 273B

Power to call for information under Section 133(6) for general enquiry - jurisdiction of the Income tax Officer (Intelligence)/ITO(TDS) to issue notice under Section 133(6) with prior approval - Validity of the notice issued under Section 133(6) by the ITO (TDS)/ITO (Intelligence). - HELD THAT: - The Tribunal held that Section 133(6) empowers income tax authorities to call for information useful for, or relevant to, any enquiry or proceeding, and the 1995 amendment expanded the power to permit general enquiries subject to safeguards. Notices issued by an ITO below the rank of Director/Commissioner are valid when issued after obtaining the requisite prior approval. The Tribunal applied the Supreme Court's decision in Kathiroor Service Co operative Bank Ltd., which characterised Section 133(6) powers as permitting survey/general enquiries to identify persons likely to have taxable income and held that a notice seeking depositor details was permissible. On the facts, the notice seeking details of interest payments was within the enquiry power and was validly issued after obtaining necessary approval.

Notice under Section 133(6) issued by the ITO (TDS)/ITO (Intelligence) (with prior approval) is valid and the assessing authority did not err in issuing it.

Penalty under Section 272A(2)(c) for failure to furnish information - reasonable cause defence under Section 273B - Validity of the penalty under Section 272A(2)(c) for non furnishing of information called under Section 133(6). - HELD THAT: - The Tribunal found that the assessee failed to furnish any reasonable cause under Section 273B for non compliance and was non cooperative in responding to multiple notices. Following coordinate bench decisions which applied the Supreme Court ruling, the Tribunal concluded that contumacious conduct and absence of any plausible explanation justified imposition of penalty. The penalty order therefore could not be quashed for lack of reasonable cause.

Penalty under Section 272A(2)(c) for failure to furnish information is maintainable and is upheld.

Time bar for imposition of penalty under Section 275(1)(c) - Whether the penalty under Section 272A(2)(c) was barred by limitation under Section 275(1)(c). - HELD THAT: - The Tribunal examined the limitation provision and held that the period for reckoning limitation for imposition of penalty runs from the date of initiation of penalty proceedings (issuance of notice under Section 274). On the facts, penalty proceedings were initiated on 12.8.2014 and the penalty order was passed on 19.9.2014, which falls within the time limits prescribed by Section 275(1)(c). The contention that notice under Section 133(6) should be treated as the initiating event for limitation purposes was rejected as legally untenable.

Penalty proceedings and the penalty order are within the time bar prescribed by Section 275(1)(c) and are valid.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and, applying the Supreme Court authority and coordinate bench reasoning, held the Section 133(6) notice valid, upheld the penalty under Section 272A(2)(c) as within limitation and unsupported by reasonable cause, and dismissed the appeal.

Allowability of pre-commencement expenditure under Section 37 - interregnum between setting up and commencement of business - treatment of pre-commencement expenditure under Section 35D - transfer pricing: selection and exclusion of comparable companies - arm's length price under Section 92C - risk adjustment in benchmarking of captive/related-party transactions - application of profit level indicator to cost versus turnover

Allowability of pre-commencement expenditure under Section 37 - interregnum between setting up and commencement of business - treatment of pre-commencement expenditure under Section 35D - Whether expenses incurred by the assessee during 02.05.2009 to 01.08.2009 (interregnum) are allowable as business deductions or are pre commencement expenditure to be treated under Section 35D. - HELD THAT: - The Tribunal found on the facts that the assessee, a service industry undertaking, had purchased computers, recruited staff and incurred recurrent operating expenses (salaries, rent, electricity, internet, etc.), which established that the business had been "set up" though not yet commenced. Applying precedent that expenses incurred in the interregnum between setting up and commencement are deductible, the Tribunal held such outgoes are permissible under Section 37 and cannot be treated as pre commencement capitalized items for disallowance. The Tribunal relied on High Court and Tribunal authorities recognizing that in service businesses the incurring of such recurrent expenses indicates the business was ready to commence; accordingly the disallowance made by the Assessing Officer was vacated and the CIT(A)'s order upheld only to the extent of treating the expenditure as falling under Section 35D was set aside so that the disallowance is removed. [Paras 6]

Disallowance of Rs. 12,26,063/- vacated; expenses incurred in the interregnum held allowable as business deduction (secured under Section 37); order of CIT(A) set aside in respect of this issue.

Transfer pricing: selection and exclusion of comparable companies - arm's length price under Section 92C - Whether the Assessing Officer was justified in excluding M/s Cethar Consultancy Services Pvt. Ltd. from the comparable set when computing ALP under Section 92C. - HELD THAT: - The Assessing Officer observed that the comparable's margins became negative when write offs (bad debts) were treated as operating expenses. The assessee did not rebut that treatment before the lower authorities or the Tribunal. The Tribunal accepted that write offs are a normal operating incident and cannot be treated as non operating for computing operating margins; treating them as operating expenses rendered the comparable a persistent loss making concern across the relevant years. On that basis and in light of precedents relied upon, the Tribunal found no infirmity in the AO's exclusion of the company from the comparable set and upheld the TP adjustment derived therefrom. [Paras 7, 8]

Exclusion of M/s Cethar Consultancy Services Pvt. Ltd. from the comparable set upheld and ground of appeal challenging that exclusion dismissed.

Transfer pricing: selection and exclusion of comparable companies - Whether M/s En Pointe Technologies India Pvt. Ltd. should be excluded from the comparable set merely because it showed a high margin. - HELD THAT: - The Tribunal noted that a standalone high margin is not a ground for exclusion unless the assessee demonstrates that the margin resulted from extraordinary or non recurring events. The assessee did not establish any such exceptional circumstance explaining the higher margin of En Pointe. Consequently, there was no basis to exclude that company from the comparable list. [Paras 9]

Request to exclude M/s En Pointe Technologies India Pvt. Ltd. denied and ground dismissed.

Risk adjustment in benchmarking of captive/related-party transactions - transfer pricing: quantification of adjustments - Whether the Assessing Officer should have considered the assessee's claim for a risk adjustment (2%) in benchmarking the captive international transactions. - HELD THAT: - The AO rejected the risk adjustment as unquantified. The Tribunal accepted the factual premise that a captive unit of a parent operates in a lower risk environment and that this can justify a risk adjustment where substantiated. Because the assessee's entitlement to a risk adjustment required consideration and quantification, the Tribunal restored the matter to the file of the AO with a direction to consider the assessee's claim for risk adjustment while benchmarking the international transactions. [Paras 10]

Ground allowed for statistical purposes; issue remanded to the AO to consider and quantify the risk adjustment.

Application of profit level indicator to cost versus turnover - arm's length price under Section 92C - Whether the AO erred in applying the average PLI (13.15%) to sale turnover instead of to cost in computing the adjustment under Section 92C. - HELD THAT: - The Tribunal observed that the arm's length profit (as determined by the PLI) ought to be applied to the cost base of the tested party's international transactions rather than to the sale turnover used by the AO. On that basis, the Tribunal directed that the AO rework the TP adjustment by applying the PLI to the cost of the international transactions and restored the matter to the AO for computation. [Paras 11]

Ground allowed for statistical purposes; matter remanded to AO to recompute ALP applying PLI to cost.

Procedural consequence of prior findings - Whether ground challenging operating profit calculation required exclusion of the Rs.12,26,063/- once that expenditure was held allowable. - HELD THAT: - Since the Tribunal has held the said expenditure allowable, the related challenge concerning its exclusion from operating cost became academic. [Paras 12]

Ground rendered infructuous and dismissed.

Final Conclusion: The appeal is partly allowed: the Tribunal vacated the disallowance of expenses of Rs.12,26,063/- incurred in the interregnum and held them allowable as business expenditure; it upheld the AO's exclusion of M/s Cethar Consultancy Services Pvt. Ltd. from the comparable set and dismissed related challenges; it declined to exclude En Pointe on the basis of high margin alone; it remanded the question of risk adjustment to the AO for consideration and quantification; and it directed the AO to recompute the TP adjustment by applying the PLI to the cost of transactions. Remaining grounds were either dismissed or rendered infructuous.

Accumulation or set apart for application to charitable purpose - Section 11(1)(a) - 15% rule - Explanation I to Section 11(1) - option to defer application for non-receipt - Meaning of 'income derived' vis-a -vis 'receipt' - Processing of return under Section 143(1)

Accumulation or set apart for application to charitable purpose - Section 11(1)(a) - 15% rule - Explanation I to Section 11(1) - option to defer application for non-receipt - Meaning of 'income derived' vis-a -vis 'receipt' - Processing of return under Section 143(1) - Validity of adjustment made in processing the return by reducing the amount set apart on account of non-receipt from gross receipts for computing the 15% accumulation permissible under Section 11(1)(a) - HELD THAT: - The Tribunal found no dispute as to the assessee's declared income derived from trust property. The assessee had applied amounts for charitable purposes and had exercised the option under Explanation I to Section 11(1) to set apart sums not received during the year. The Central Processing Centre re-computed the amount allowable as accumulation by reducing the set-apart sum from gross receipts, producing an adjustment. The Tribunal held that for computing the 15% permitted accumulation under Section 11(1)(a) the proper base is the income derived by the trust as declared and adopted for other purposes, not a reduced figure premised on 'receipt' of particular sums. The term 'receipt' in Section 11(1) is relevant to the person in receipt and does not alter the concept of income derived from trust property for the purpose of calculating the 15% relaxation. Once the income of the trust is treated as income received or accrued, a different parameter cannot be applied to the computation of the permissible accumulation. Consequently, the processing adjustment reducing the set-apart amount from gross receipts was contrary to the statutory scheme and was to be deleted.

Adjustment of Rs. 2,15,216 made during processing is not in accordance with Section 11(1) and is deleted; the 15% computation to be made on the income as declared by the assessee.

Final Conclusion: Appeal allowed; the CPC's re-computation and resulting adjustment are set aside and the amount allowable as accumulation under Section 11(1)(a) is to be computed on the income derived and declared by the trust, taking into account the option exercised under Explanation I.

Assessment of annual lettable value of stock-in-trade - income from house property vs business income - notional income / deemed rent - prospective operation of newly inserted provision - choice of precedent where High Courts conflict

Assessment of annual lettable value of stock-in-trade - income from house property vs business income - notional income / deemed rent - choice of precedent where High Courts conflict - ALV of unsold flats held as stock-in-trade cannot be determined and brought to tax under the head 'income from house property' for the years under appeal; such notional income is not assessable as 'house property' where flats are stock-in-trade and not let out. - HELD THAT: - The Tribunal examined conflicting High Court authorities and coordinate bench decisions. It noted that the issue before the Bombay High Court in Gundecha Builders concerned actual rental receipts and the head under which such received rents must be taxed, which is factually distinguishable from the present case where no rent was received and the flats were stock-in-trade. The Tribunal preferred the view of the Gujarat High Court in CIT v. Neha Builders that where property is stock-in-trade it partakes the character of stock and any income therefrom is business income, not income from house property. The Tribunal also relied on consistent coordinate-bench precedents of the ITAT Mumbai which held that estimating notional ALV of unsold flats shown as stock-in-trade is not justified. Applying that precedent and preferring the view favourable to the assessee in the face of non-jurisdictional conflict, the Tribunal held that the ALV of the unsold flats could not be determined and brought to tax under the head 'house property' and set aside the additions made by the AO/CIT(A). [Paras 9, 11]

Addition made by assessing ALV of unsold flats held as stock-in-trade as income from house property deleted; appeals allowed on this ground.

Prospective operation of newly inserted provision - assessment of annual lettable value of stock-in-trade - Section 23(5) (inserted by Finance Act, 2017 w.e.f. 01.04.2018) has prospective operation and is not applicable to the years under appeal; it therefore does not assist the assessee for these years but does not affect the Tribunal's conclusion. - HELD THAT: - The Tribunal noted the legislative insertion of Sec. 23(5) effective from 01.04.2018 which prescribes nil annual value for certain stock-in-trade properties for a limited period post completion certificate. As the provision is prospective (effective from A.Y.2018-19), it has no bearing on A.Y.2014-15 and A.Y.2015-16. The Tribunal observed that even considering the spirit of Sec. 23(5) reinforces the view that notional additions for unsold flats held as stock-in-trade are not merited for the years in question, but the statutory change itself does not retroactively alter the legal position for those assessment years. [Paras 10]

Sec. 23(5) is prospective and inapplicable to the assessment years before the Tribunal; the statutory amendment does not affect the deletion of the additions for those years.

Final Conclusion: The Tribunal allowed the appeals for A.Y. 2014-15 and A.Y. 2015-16, set aside the additions made by treating notional ALV of unsold flats (held as stock-in-trade) as income from house property, and directed deletion of the contested additions; the subsequent statutory provision (Sec. 23(5)) is prospective and does not affect the result for these years.

Exhibition of film on a commercial basis - sale of TV rights and audio rights - Rule 9A(3)(c) of the Income tax Rules - deduction of cost of production of a feature film - mode of exhibition - technological change in modes of exhibition

Exhibition of film on a commercial basis - sale of TV rights and audio rights - Rule 9A(3)(c) of the Income tax Rules - mode of exhibition - Whether receipts from sale of audio rights and TV rights constitute 'amount realised by the film producer by exhibiting the film on a commercial basis' for the purposes of Rule 9A(3)(c). - HELD THAT: - The Tribunal held that the pivotal phrase in Rule 9A(3)(c) is 'exhibition of film on a commercial basis' and that the word 'areas' should not be given a narrow, literal meaning to exclude non theatrical modes. Technological developments (television, digital and other modes) have altered how films are commercially exhibited; the rule does not prescribe a specific mode of exhibition. Audio matter is an integral part of a feature film and sale of audio rights is intricately connected to the film's production. The Tribunal relied on the decision of the Mumbai Bench in Vieshesh Films (P) Ltd (which held that exhibition by television falls within Rule 9A) and on the Supreme Court's recognition in Laxmi Video Theatres that statutory definitions must accommodate subsequent technological developments. On these bases the Tribunal concluded that receipts from sale of TV and audio rights fall within the amount realised by exhibition on a commercial basis and therefore are to be treated as receipts against which production cost deduction under Rule 9A(3)(c) can be claimed. [Paras 12, 13, 14]

Amount realised from sale of audio rights and TV rights held to be receipts from exhibition on a commercial basis and eligible to be reckoned under Rule 9A(3)(c) for set off of production cost; order of Ld. CIT(A) set aside and appeal allowed.

Final Conclusion: Receipts from sale of TV and audio rights of the film were held to be 'amount realised by exhibiting the film on a commercial basis' within Rule 9A(3)(c); the assessing officer's addition is set aside and deduction of production cost against those receipts directed.

Cash credit under section 68 of the Income-tax Act - burden of proof on the assessee - identity, creditworthiness and genuineness of creditor - source and source of source - colourable device - surmise insufficient to reject explanation

Cash credit under section 68 of the Income-tax Act - identity, creditworthiness and genuineness of creditor - source and source of source - surmise insufficient to reject explanation - Whether the addition of Rs. 1.60 crores made as unexplained cash credit under section 68 could be sustained where the assessee explained the amount as withdrawals from a partnership firm and furnished records of the firm and of the partners - HELD THAT: - The Tribunal applied the settled principle that the initial burden to explain cash credits under section 68 lies on the assessee and must cover identity of the creditor, creditworthiness and genuineness of the transaction. The assessee showed that the amount introduced in his capital account was withdrawn from the partnership firm of which he was a partner; the partnership deed, books of account and the firm's fund position recorded the transactions. The assessee also produced the source of the partners' funds (compensation receipts and bank details) and the Assessing Officer did not dispute those documents. The AO's contrary conclusion rested on the mere fact of a time gap between withdrawals by the partners and the firm's formation and on a conjecture that the firm was a colourable device; no material was produced to negativate the documentary evidence or to show that the withdrawals did not in fact represent the partners' funds. Applying authorities cited by the parties, the Tribunal held that an AO cannot reject a plausible documentary explanation merely on surmise about human probability where the source and source of source have been demonstrated; consequently the identity, creditworthiness and genuineness stood proved and the addition could not be sustained. [Paras 8, 9, 10, 11, 13]

The addition of Rs. 1.60 crores as unexplained cash credit under section 68 is deleted and the revenue's appeal is dismissed.

Final Conclusion: The Tribunal upheld the Appellate Commissioner's order deleting the addition under section 68 for Assessment Year 2014-15, finding that the assessee had discharged the burden by proving the source (withdrawals from the partnership firm) and the source of the partners' funds, and that the AO's rejection based on surmise and alleged colourable device was unsupported by material.

Classification of machinery under tariff headings - application of Heading 8453 - exemption under notification dated 23rd March, 2010 - contextual construction of tariff headings - treatment of factual contentions not raised before authorities

Classification of machinery under tariff headings - application of Heading 8453 - The machines in question do not fall under Heading 8453 of the Customs Tariff. - HELD THAT: - The Tribunal and the authorities found as a matter of fact that the machines were declared as "M/C for use in leather footwear industries injection moulding of PVC/TPR/EVA soles with STD ACC Model global 138/150" and therefore were not covered by Heading 8453, which relates to machinery for preparing, tanning or working hides, skins or leather or for making or repairing footwear. The Court declined to disturb those factual findings and accepted the classification conclusion reached by the authorities and the Tribunal. [Paras 2]

Classification under Heading 8453 was not attracted and the factual finding to that effect is affirmed.

Exemption under notification dated 23rd March, 2010 - application of Heading 8453 - The notification dated 23rd March, 2010 granting exemption from anti-dumping duty on certain footwear machinery does not avail the appellant because the machine must fall within Heading 8453 to qualify. - HELD THAT: - Even if the notification refers to exemption for machinery used for making footwear and footwear sole/strap/heel, such exemption applies only where the machine is properly classifiable under the relevant tariff heading. Since the machine in this case was not held to be exclusively within Heading 8453, the appellant cannot claim benefit of the notification. [Paras 3]

The notification does not confer exemption as the machine is not classifiable under Heading 8453.

Contextual construction of tariff headings - application of Heading 8453 - The phrase 'Machinery for making or repairing footwear' must be read in the context of the heading concerning machinery for preparing, tanning or working hides, skins or leather. - HELD THAT: - The Court rejected the appellant's contention that the expression operates independently of the rest of the heading. The expression must be understood in its contextual setting within Heading 8453, which deals with machinery related to hides, skins or leather. Therefore, an independent reading that detaches the phrase from the heading's context is impermissible. [Paras 4]

The phrase is to be construed in the context of the heading and cannot be read independently to attract Heading 8453.

Treatment of factual contentions not raised before authorities - A prior decision favouring an importer based on clamping force being less than 40 tons is not available to the appellant where that factual contention was not raised before the authorities. - HELD THAT: - The Court held that reliance on another case's outcome based on the machine's clamping force could not assist the appellant because the point regarding clamping force was not specifically taken before the authorities in the present proceedings. That is a question of fact which was not canvassed below and therefore cannot be used to overturn the factual findings. [Paras 5]

The contention based on clamping force is inadmissible for not having been raised earlier and does not affect the outcome.

Final Conclusion: The factual classification by the authorities and the Tribunal that the machines do not fall under Heading 8453 is affirmed; the claimed benefit under the notification dated 23rd March, 2010 is unavailable for want of proper classification, and the appeal is dismissed.

Writ under Article 226 - Maintainability of writ where alternate remedy exists - Efficacy of alternative remedy - Appellate remedy under Section 128 of the Customs Act, 1962

Writ under Article 226 - Maintainability of writ where alternate remedy exists - Appellate remedy under Section 128 of the Customs Act, 1962 - Whether the writ petition filed under Article 226 is maintainable in view of the availability of an alternate appellate remedy under Section 128 of the Customs Act, 1962. - HELD THAT: - The Court noted that the adjudicating authority had passed the Order-in-Original dated 7th October, 2020 disposing of the show cause notice dated 29th January, 2020 and that the Petitioner has a statutory remedy of appeal before the Commissioner (Appeals) under Section 128 of the Customs Act, 1962. Having regard to the availability of this efficacious alternate remedy, the Court declined to entertain the petition under Article 226 and observed that the Petitioner should seek redressal before the appropriate appellate forum. No adjudication was made on the merits of the underlying contentions, which were left open for the appellate process. [Paras 17, 18]

Writ petition dismissed as not maintainable in view of the alternate remedy of appeal under Section 128 of the Customs Act, 1962; merits left open; no order as to costs.

Final Conclusion: The High Court dismissed the writ petition under Article 226 on the ground that an efficacious statutory appellate remedy under Section 128 of the Customs Act, 1962 is available to the petitioner; the Court expressed no opinion on the merits and made no order as to costs.

Amendment of Import General Manifest - No-objection certificate requirement - Duty to consider claim under Section 30 of the Customs Act, 1962 - Judicial direction for expeditious decision

Amendment of Import General Manifest - No-objection certificate requirement - Duty to consider claim under Section 30 of the Customs Act, 1962 - Judicial direction for expeditious decision - Claim of the petitioners for amendment of the IGM and deletion of the impugned Bill of Entry remitted to the Competent Officer for decision - HELD THAT: - The Court did not adjudicate the merits of the petitioners' request for amendment of the IGM or the legality of insisting upon a 'no objection certificate'. Having considered the submissions and relied judgments, the Court found that the Competent Officer (respondent No.3) must examine the petitioners' claim on its merits and in light of relevant precedents and statutory scheme, and take a reasoned decision. In view of the pendency and the petitioners' ongoing exposure to demurrage and detention charges, the Court directed an expeditious decision. The direction is procedural - to consider and finalize the claim within the specified short timeline - without expressing a finding on whether the 'no objection certificate' is mandatorily required in this case. [Paras 6, 7]

The petition is disposed by directing respondent No.3 to decide the petitioners' claim for amendment of the IGM within one week and communicate the decision forthwith.

Final Conclusion: Writ petition disposed. Respondent No.3 directed to consider and decide the petitioners' claim for amendment of the IGM (and related relief) within one week from the date of the order and to communicate the decision to the petitioners without delay.

Principles of natural justice - right to be heard - withdrawal of license - speaking order - remand for fresh hearing - status quo pending reconsideration

Principles of natural justice - right to be heard - withdrawal of license - speaking order - The impugned order withdrawing the customs broker license was vitiated for failure to afford hearing and for being non-speaking. - HELD THAT: - The Court found that the order withdrawing the licence would produce adverse civil consequences and therefore required that petitioners be given notice and a reasonable opportunity of hearing before such withdrawal. Merely intimating months earlier that non-compliance with new regulations might result in withdrawal did not satisfy the requirements of principles of natural justice in relation to the impugned action. Further, an order withdrawing a benefit must give reasons and the non-furnishing of reasons renders the order vulnerable; the impugned order did not speak for itself and therefore was deficient. [Paras 12]

Impugned order dated 07.09.2020 set aside on grounds of violation of natural justice and for being non-speaking.

Remand for fresh hearing - speaking order - status quo pending reconsideration - Matter remanded to the Principal Commissioner of Customs (General), Mumbai for fresh consideration after giving petitioners an opportunity of hearing, and interim status quo directed. - HELD THAT: - The Court directed that respondent No.2 shall afford the petitioners an opportunity of hearing and thereafter pass an appropriate order in accordance with law. The fresh order was required to be a speaking order and to be communicated to the petitioners. The direction included a specific time-frame for the reconsideration to ensure expeditious disposal. [Paras 13]

Remitted to Principal Commissioner for fresh hearing and speaking order to be passed within three weeks; status quo to be maintained meanwhile.

Final Conclusion: Writ petition disposed of by setting aside the withdrawal order; matter remanded for fresh consideration after hearing with a direction to pass a speaking order within three weeks and status quo preserved until then.

Appellate jurisdiction of a statutory tribunal - representation as a supplementary remedy under subordinate regulations - subordinate legislation cannot curtail a statutory right of appeal - Regulation 14(2) of the Courier Imports and Exports (Clearance) Regulations, 1998 - section 129A of the Customs Act, 1962

Appellate jurisdiction of a statutory tribunal - Regulation 14(2) of the Courier Imports and Exports (Clearance) Regulations, 1998 - section 129A of the Customs Act, 1962 - subordinate legislation cannot curtail a statutory right of appeal - Whether CESTAT could entertain an appeal under section 129A of the Customs Act without the aggrieved party first availing the representation remedy under Regulation 14(2). - HELD THAT: - The Court held that the remedy of making a representation under Regulation 14(2) is a supplementary remedy provided by subordinate legislation and does not oust or curtail the statutory right of appeal conferred by section 129A of the Customs Act. A High Court's self-restraint in exercising writ jurisdiction where alternative remedies exist is not analogous to the limited, statute-created powers of a tribunal; however, that difference does not permit subordinate regulations to displace an appeal expressly provided by the parent enactment. The Court relied on and followed its decisions in Principal Commissioner of Customs v. Bombino Express Pvt. Ltd. and Commissioner of Customs(II) v. Lynx Express Pvt. Ltd., which held that a representation under Regulation 14(2) does not deprive the Tribunal of jurisdiction to entertain an appeal from an order-in-original. Reading the subordinate regulation consistently with the Customs Act demonstrates that non-availment of the representation remedy cannot operate to non-suit an aggrieved person of the statutory appellate forum; at best the representation is an additional remedy, not a condition precedent to appeal. Applying these principles to the facts, the Tribunal correctly exercised jurisdiction to hear the appeal despite withdrawal of the earlier representation. [Paras 11, 16, 17, 18, 19]

CESTAT had jurisdiction to entertain the appeal under section 129A notwithstanding non exhaustion of the representation remedy under Regulation 14(2); the substantial question is answered in the negative and the appeal is dismissed.

Final Conclusion: The appeal is dismissed. The Court held that the representation remedy under Regulation 14(2) is supplementary and does not oust the statutory right of appeal to the Tribunal under section 129A of the Customs Act; no order as to costs.

Availability of alternative remedy - appealability of order under Section 129-A of the Customs Act, 1962 - self-imposed restraint in exercise of writ jurisdiction - final fact-finding authority of the appellate tribunal (CESTAT) - disputed question of fact regarding service of notice and personal hearing

Availability of alternative remedy - self-imposed restraint in exercise of writ jurisdiction - Whether the writ petition is maintainable when an efficacious alternative remedy of appeal is available under the statute. - HELD THAT: - The Court held that the Order in Original dated 30.06.2020 is appealable under the statutory regime and, in view of binding precedents emphasising exhaustion of statutory remedies and judicial restraint, the High Court will normally not entertain a writ petition which seeks to bypass the special remedy provided by statute. The Court relied on the established principle that where a statute provides a special and efficacious remedy, that remedy must be availed of before invoking writ jurisdiction, and applied the same to decline interference in the present petition. [Paras 3, 6, 7]

Writ petition not entertained on merits because an efficacious alternative remedy by way of appeal is available.

Appealability of order under Section 129-A of the Customs Act, 1962 - final fact-finding authority of the appellate tribunal (CESTAT) - Whether the petitioner has an effective remedy by way of appeal to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) against the Order in Original. - HELD THAT: - The Court recorded that the impugned Order in Original is an appealable order under Section 129 A of the Customs Act, 1962 and therefore the petitioner has an efficacious statutory remedy. The Court observed that the Appellate Tribunal is the appropriate forum to decide disputed factual and legal contentions arising from the Order in Original and permitted the petitioner to prefer an appeal and agitate all points raised in the writ petition before the Tribunal. The Court made clear that it has not considered the merits, which are to be decided by the Tribunal in accordance with law. [Paras 3, 6, 8]

Petitioner is permitted to prefer an appeal under Section 129 A to CESTAT and raise all grounds; the Tribunal will decide the merits.

Disputed question of fact regarding service of notice and personal hearing - final fact-finding authority of the appellate tribunal (CESTAT) - Whether the Court should adjudicate the disputed factual question of service of personal hearing notices or leave that factual determination to the appellate forum. - HELD THAT: - The Court found that there is a highly disputed question of fact as to whether notices of personal hearing were served on the petitioner; the Order in Original records multiple notices scheduled and non appearance. Given this factual dispute and the statutory appellate mechanism, the Court declined to decide the factual controversy and observed that the Tribunal is the final fact finding authority competent to examine service and hearing issues while deciding the appeal. [Paras 6, 8]

Disputed factual issue of service/personal hearing is not adjudicated by this Court and is left to the Tribunal to decide in the appeal.

Final Conclusion: The writ petition is dismissed; the petitioner is directed to challenge the Order in Original dated 30.06.2020 by preferring an appeal under Section 129 A of the Customs Act, 1962 before CESTAT and may raise all grounds there; the Court has not addressed the merits and factual disputes (including service of hearing notices), which are to be decided by the Tribunal.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appropriation and set-off of corporate debtor's funds during CIRP - obligation of financial institutions to act on instructions of the Resolution Professional - condonation of delay in filing appeals on account of COVID-19 lockdown

Condonation of delay in filing appeals on account of COVID-19 lockdown - Application for condonation of delay in filing the appeal - HELD THAT: - The Appellate Tribunal considered the submission that the impugned order was passed during the COVID-19 lockdown and that Supreme Court orders extended time due to the pandemic. The respondent did not object. Having heard the parties, the Tribunal held that the delay, if any, deserved to be condoned and disposed of the interlocutory application accordingly. [Paras 1]

Delay in filing the appeal is condoned; I.A. No. 2038 of 2020 disposed of.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appropriation and set-off of corporate debtor's funds during CIRP - obligation of financial institutions to act on instructions of the Resolution Professional - Whether the bank could appropriate the corporate debtor's fixed deposits during the CIRP despite the moratorium - HELD THAT: - The Tribunal recorded that CIRP was initiated on 27 March 2019 and the moratorium under the Code thereby applied. The Resolution Professional notified the bank and demanded restoration of amounts that the bank had adjusted from the corporate debtor's fixed deposits. Relying on the principle that once moratorium is declared no person, including a financial creditor, may recover or appropriate amounts from the corporate debtor, the Tribunal held that the bank's adjustment of the fixed deposits during the period of moratorium could not be sustained. Lack of actual knowledge of CIRP by the bank was held to be irrelevant once CIRP had been initiated and the moratorium applied. [Paras 8, 11]

Impugned order of the Adjudicating Authority directing restoration of the appropriated amounts is maintained; the appeal is dismissed.

Final Conclusion: The interlocutory application for condonation of delay is allowed. On merits, the appeal is dismissed: adjustments/appropriation made by the bank of the corporate debtor's fixed deposits during the moratorium cannot be sustained and the Adjudicating Authority's order directing restoration is upheld.

Interest on delayed refund of amount deposited under the proviso to section 35F - Interest under Section 11BB on delayed refunds - Claim for refund under Section 11B and the date for computation of interest - Relevant date for refund for limitation under Section 11B(5)(B)(ec) - Appropriation/adjustment against demand prior to finality

Interest on delayed refund of amount deposited under the proviso to section 35F - Interest under Section 11BB on delayed refunds - Whether the refund of the amount recovered by encashment of cheques in September 2007 is governed by Section 35FF or Section 11BB and whether interest is payable. - HELD THAT: - The Tribunal found that the sum of Rs. 15 lakh was not deposited pursuant to Section 35F and therefore the special provision dealing with interest on amounts deposited under the proviso to Section 35F (Section 35FF) is inapplicable. The court accepted that Section 11BB is the statutory provision governing interest on delayed refunds of duty and that interest becomes payable suo motu where a refund ordered under Section 11B is not made within three months from receipt of the refund application. Reliance was placed on the Apex Court's exposition in Ranbaxy Laboratories Ltd., which holds that Section 11BB comes into play after an order for refund under Section 11B and that interest under Section 11BB is calculated from the expiry of three months from the date of receipt of the application for refund. Applying these principles, the denial of interest on the ground of Section 35FF was incorrect. [Paras 8, 9, 12, 13]

Section 35FF does not apply to the Rs. 15 lakh recovered in September 2007; interest is governed by Section 11BB and is payable in accordance with the principles in Ranbaxy Laboratories Ltd.

Claim for refund under Section 11B and the date for computation of interest - Relevant date for refund for limitation under Section 11B(5)(B)(ec) - Whether an express claim for interest had to be made along with the refund application under Section 11B and the relevance of the 'relevant date' provision to the computation of interest. - HELD THAT: - The Tribunal rejected the contention that a separate claim for interest must accompany the refund application under Section 11B. The reference to 'interest' in Section 11B concerns interest paid by an assessee along with duty, not interest on a delayed refund. Section 11BB prescribes payment of interest where a refund ordered under Section 11B is not paid within three months of receipt of the application; such interest is payable suo motu. The provision in Section 11B(5)(B)(ec) that identifies the 'relevant date' for limitation when refund becomes due by virtue of an appellate order relates to limitation and does not alter the date from which interest under Section 11BB is to be reckoned. [Paras 9, 10, 11, 12]

No separate claim for interest under Section 11B was necessary; interest on delayed refund is governed by Section 11BB and the 'relevant date' provision in Section 11B(5)(B)(ec) concerns limitation and does not change the commencement date for interest under Section 11BB.

Final Conclusion: The impugned order denying interest is set aside. The Rs. 15 lakh refund is not covered by Section 35FF; interest is payable under Section 11BB in accordance with Ranbaxy Laboratories Ltd., computed from the date prescribed by that provision (three months from receipt of the refund application) as held by the Tribunal.

Pre-deposit requirement under Section 62(5) of the PVAT Act - financial hardship as a ground for relaxation of pre-deposit - exercise of writ jurisdiction under Article 226 for relaxation of statutory pre-conditions - appellate authority's power to waive pre-deposit - entertainment and adjudication of appeal on merits subject to compliance with modified pre-deposit

Pre-deposit requirement under Section 62(5) of the PVAT Act - appellate authority's power to waive pre-deposit - financial hardship as a ground for relaxation of pre-deposit - Whether the statutory pre-deposit of twenty-five percent is an absolute bar to entertain an appeal and whether relaxation of that pre-deposit can be granted. - HELD THAT: - The Court held that Section 62(5) of the PVAT Act requires a prior minimum payment of twenty-five percent as a condition for entertaining an appeal, and earlier precedent establishes that the appellate authority ordinarily has no power to waive this requirement. However, the Court recognised that relief from the pre-deposit condition may be available in exceptional cases where financial hardship is satisfactorily shown. While the ratio in Tecnimont establishes the mandatory character of the statutory pre-deposit, it does not preclude a High Court, in appropriate writ proceedings under Article 226, from exercising its discretionary jurisdiction to relax the condition by taking into account peculiar facts and demonstrable hardship. Applying these principles to the present case, the Court noted that the petitioner had pleaded financial loss and, although had not earlier deposited the reduced sum directed by the Appellate Authority, expressed readiness to deposit ten percent of the demand. In view of the petitioner's stated hardship and in the interest of justice, the Court exercised its writ jurisdiction to permit a reduced pre-deposit and to ensure the appeal is heard on merits upon compliance with that reduced deposit.

Pre-deposit of twenty-five percent remains the statutory norm, but High Court in writ jurisdiction may relax the requirement on proof of financial hardship; petitioner permitted to deposit ten percent to enable the appeal to be heard.

Exercise of writ jurisdiction under Article 226 for relaxation of statutory pre-conditions - entertainment and adjudication of appeal on merits subject to compliance with modified pre-deposit - Whether the petitioner should be permitted to file the appeal and have it adjudicated on merits upon depositing a reduced pre-deposit. - HELD THAT: - Balancing the binding precedent on the mandatory nature of the pre-deposit and the petitioner's pleaded financial hardship, the Court exercised its powers under Article 226 to provide equitable relief. The Court directed the petitioner to file the appeal within two weeks from receipt of the certified copy of this order and to deposit ten percent of the total demand. The Deputy Excise and Taxation Commissioner (Admin) was directed to entertain the appeal and decide it on merits in accordance with law within four weeks of the deposit. The order is founded on the Court's discretionary writ power and the particular facts of the case rather than on a general alteration of the statutory scheme.

Petitioner allowed to file appeal within two weeks and to enable its adjudication the Appellate Authority shall entertain the appeal and decide it on merits within four weeks upon deposit of ten percent of the demand.

Final Conclusion: Writ petition disposed of by permitting the petitioner, in view of pleaded financial hardship and on exercise of Article 226 jurisdiction, to file the appeal within two weeks and to have it heard on merits by the Appellate Authority on deposit of ten percent of the demand, which the Appellate Authority shall decide in accordance with law within four weeks thereafter.

Rectification of return - issuance of Form F - entitlement to statutory form - power of assessing authority to refuse statutory form - suspension of direction pending decision of higher court

Rectification of return - issuance of Form F - entitlement to statutory form - power of assessing authority to refuse statutory form - suspension of direction pending decision of higher court - Petition challenging rejection of application for rectification of Form F for Assessment Year 2017-18 and seeking issuance of segregated Forms F for supplies from different States. - HELD THAT: - The Court noted that the petitioner sought correction in Form F for the Financial Year/Assessment Year 2017-18 to segregate supplies wrongly aggregated from two States and had applied to the Assistant Commissioner for rectification. While acknowledging competing decisions of this Court and interim orders passed by the Supreme Court in related matters, the Court found that keeping the petition pending would serve no useful purpose. Exercising its discretion, the Court directed the respondent to allow the amendment sought by the petitioner in its return for Assessment Year 2017-18. The Court qualified that the direction shall remain suspended until the Civil Appeals pending before the Supreme Court (which challenge related decisions and under whose interim orders similar reliefs have been held in abeyance) are finally decided, and that the direction must abide by the Supreme Court's decision. The order of allowance is therefore made subject to the outcome of the higher court proceedings and the existing stay/interim orders affecting similar judgments were noted as the reason for suspending immediate operability of the relief. [Paras 11]

Direction to allow the rectification/amendment in the return for Assessment Year 2017-18 granted, with the operation of that direction suspended pending final decision of the Civil Appeals before the Supreme Court; writ petition disposed.

Final Conclusion: The Court directed that the petitioner's requested amendment in the return for Assessment Year 2017-18 be allowed, but suspended the operation of that direction until the Civil Appeals pending in the Supreme Court are decided; the writ petition is disposed accordingly.

Remedies under the Consumer Protection Act are additional and not in derogation of other laws - concurrent remedies under RERA and Consumer Protection Act - Section 18 remedy of refund with interest is without prejudice to other remedies - Section 79 bar on civil courts does not oust jurisdiction of consumer fora which are not civil courts - effect of registration under RERA does not defer rights under pre-existing agreement for possession - interpretation of force majeure in builder buyer agreements

Interpretation of force majeure in builder buyer agreements - The National Commission's finding that the delay in construction was not attributable to force majeure and that the developer was deficient in rendering service is upheld. - HELD THAT: - The Court accepted the Commission's factual conclusion that the developer did not establish that claimed events (including demonetisation, shortage of contractual labour, delay in approvals) constituted force majeure. The appellate record and admissions by the developer acknowledged delay; the Commission's rejection of the force majeure defence was supported by absence of evidence and does not warrant interference. [Paras 18]

Finding that there was delay not excused by force majeure and that the developer was deficient in rendering service is affirmed.

Remedies under the Consumer Protection Act are additional and not in derogation of other laws - concurrent remedies under RERA and Consumer Protection Act - Whether consumers/allottees could pursue remedies under the Consumer Protection Act despite availability of remedies under the RERA Act: consumers may pursue remedies under both statutes; the CP Act remedy is additional and not barred by RERA. - HELD THAT: - Relying on established precedents and the statutory scheme, the Court held that remedies under the CP Act are in addition to remedies under special statutes. Section 18 of RERA expressly saves other remedies by stating return of amounts and compensation is "without prejudice to any other remedy available". The Court observed that the availability of RERA remedies does not oust the right to proceed under the CP Act and treated the remedies as concurrent. [Paras 20, 21, 23, 31]

Remedies under the CP Act remain available to eligible complainants notwithstanding the RERA Act; the Commission was competent to entertain the complaints.

Section 79 bar on civil courts does not oust jurisdiction of consumer fora which are not civil courts - Section 18 remedy of refund with interest is without prejudice to other remedies - Whether Section 79 of RERA ousts the jurisdiction of consumer fora in respect of matters covered by RERA: Section 79 bars civil courts but does not preclude consumer fora (which are not civil courts) from entertaining complaints; RERA contains saving provisions (Section 88) and overriding provision (Section 89) but Section 18 and related provisions leave complainants a choice of remedies. - HELD THAT: - The Court analysed Section 79 in light of the characterisation of consumer fora as not being 'civil courts' and noted provisos and saving clauses in RERA. Proviso to Section 71(1) permits withdrawal of pending CP Act proceedings to proceed under RERA but does not compel transfer. Section 88 preserves application of other laws and Section 18 expressly contemplates alternative remedies. Thus, Section 79 does not operate to bar the Commission from exercising jurisdiction over complaints by consumers. [Paras 26, 27, 28, 30]

Section 79 of RERA does not bar consumer fora from entertaining complaints; an allottee may choose to proceed under CP Act or under RERA.

Effect of registration under RERA does not defer rights under pre-existing agreement for possession - Whether registration of the project under RERA (valid up to a later date) absolves the promoter of delay or defers the allottee's entitlement under earlier builder buyer agreements: registration does not postpone or alter rights that accrued under the agreement; entitlement is to be reckoned by the agreement terms. - HELD THAT: - The Court observed that the apartments were booked and agreements executed well before registration. For purposes of Section 18 and the allottee's rights, the relevant period is that specified in the agreement, not the registration validity. The RERA registration's later validity does not sanctify delay or defer an allottee's right to seek refund or other relief under the agreement and applicable law. [Paras 33]

Registration under RERA does not defer or negate allottee's entitlement arising from earlier agreements; the Commission correctly considered rights under the builder buyer agreements.

Remedies under the Consumer Protection Act are additional and not in derogation of other laws - Reliefs awarded by the Commission - refund with simple interest @9% p.a. and costs - were appropriate and are affirmed; appeals dismissed and costs quantified. - HELD THAT: - Having upheld the Commission's findings on consumer status and lack of force majeure, and having held that consumer fora were competent notwithstanding RERA registration, the Court found no reason to interfere with the relief granted (refund with interest and costs). The Court quantified additional costs in respect of each Consumer Case and directed that complainants may execute the Commission's orders as per law. [Paras 18, 35, 36]

Appeals dismissed; Commission's orders affirmed; costs of Rs. 50,000 fixed in respect of each Consumer Case and enforcement permitted in accordance with law.

Final Conclusion: The Supreme Court dismissed the appeals, affirmed the National Commission's findings that the complainants were consumers and that the developer was deficient (delay not excused by force majeure), held that remedies under the Consumer Protection Act remain available despite RERA registration (the remedies are concurrent and Section 18 of RERA is without prejudice to other remedies), ruled that registration under RERA does not defer rights under pre-existing agreements, and affirmed refund with interest and costs as directed by the Commission.

Modification of bail/conditional release conditions - surrender of passport - personal attendance requirement before investigating agency - release of passport for limited period subject to conditions - compliance with conditions and prior good conduct - penalty under Customs Act, 1962

Modification of bail/conditional release conditions - surrender of passport - personal attendance requirement before investigating agency - release of passport for limited period subject to conditions - Modification of conditions Nos.3 and 4 of the order dated 21.06.2014 relating to surrender of passport and monthly attendance before the DRI office. - HELD THAT: - The Court recorded that the applicant had complied with the original conditions, had previously surrendered his passport and regularly marked presence, and that earlier applications for modification had been granted from time to time. The applicant's business necessitates foreign travel and there was no breach of prior liberties. Although a penalty under the Customs Act, 1962 remains payable, the Court found this did not justify refusal to relax the conditions. Balancing these facts and the applicant's conduct, the Court exercised its discretion to relax the conditions while imposing safeguards: attendance reduced to once in six months at the DRI Office, Jamnagar; the passport is released for two years; and the applicant must furnish full travel itinerary and address of stay to the DRI office before travel. These measures preserve the investigatory interest while accommodating the applicant's commercial exigencies. [Paras 8, 9, 10]

Conditions Nos.3 and 4 are modified: applicant to mark presence once every six months before DRI Office, Jamnagar; passport released for two years; applicant to provide itinerary and address before travel; rule made absolute to this extent.

Final Conclusion: The petition succeeds to the limited extent of modifying the passport-surrender and attendance conditions: attendance reduced to once every six months, passport released for two years, subject to prior submission of travel itinerary and address to the DRI office; the rule is made absolute accordingly.