TaxTMI Updates e-Newsletter
Nov 28,2019

Revision of declaration in FORM G.S.T. T.R.A.N.-1 - Statutory time-limit for revision - Extension of period by the Commissioner - Commissioner's power subject to Council recommendation - Transitional credit of SAD under Section 140(3)

Revision of declaration in FORM G.S.T. T.R.A.N.-1 - Statutory time-limit for revision - Extension of period by the Commissioner - Whether the writ court can direct that the petitioner be allowed to file a revised declaration in FORM G.S.T. T.R.A.N-1 beyond the period permitted by the rules. - HELD THAT: - Rule 120-A permits a registered person who submitted FORM G.S.T. T.R.A.N-1 within the periods specified in Rules 117-120 to revise that declaration once and re-submit the revised FORM G.S.T. T.R.A.N-1 electronically within the period specified in those rules or within such further period as may be extended by the Commissioner. Rule 117 circumscribes the period for submission and enables the Commissioner, on the recommendation of the Council, to extend the initial ninety-day period by a further period not exceeding ninety days (and sub-rule (1A) confines further extension to 31st March, 2019 in specified circumstances). A conjoint reading shows the Commissioner's power to extend under Rule 120-A is co terminus with and limited by the timeframe and conditions set out in Rule 117. Permitting an open ended extension by the Commissioner would subvert the legislative time limits and intended scheme. Given these statutory constraints, the High Court cannot grant the writ of mandamus sought to compel acceptance of a revised TRAN 1 beyond the statutory limits.

Writ in the nature of mandamus cannot be granted to allow filing of a revised FORM G.S.T. T.R.A.N-1 beyond the time and conditions permitted by Rules 117 and 120-A.

Commissioner's power subject to Council recommendation - Transitional credit of SAD under Section 140(3) - Whether the petitioner's claim to carry forward SAD credit in respect of stock as on 30th June, 2017 must be finally adjudicated by this Court or may be considered by the Council/administrative authority. - HELD THAT: - The petitioner had sought administrative relief by a letter to the Goods and Services Tax Council requesting permission to re-submit FORM G.S.T. T.R.A.N-1 within an extended period so as to carry forward the SAD credit under the transitional provisions. The Court found that the statutory scheme contemplates extension by the Commissioner only on the Council's recommendation and that the exercise of such administrative discretion falls within the domain of the Council/Commissioner under the Rules. In view of those administrative provisions and the petitioner's representation to the Council, the Court declined to grant the mandamus and left it open for the Council to consider the petitioner's request in light of the letter dated 28th March, 2019.

Matter is left to the Council/administrative authority to consider the petitioner's request for extension and consequent entitlement to carry forward the SAD credit; the writ is disposed without directing administrative acceptance.

Final Conclusion: The petition for a writ of mandamus directing acceptance of a revised FORM G.S.T. T.R.A.N-1 and grant of the claimed transitional SAD credit is refused; the statutory power to extend is limited by Rules 117 and 120-A (and requires Council recommendation), and the Council is at liberty to consider the petitioner's representation dated 28th March, 2019.

Limitation on revision under section 263(2) - scope of exercise of power under section 263 - allowability of deduction for Accountants' Risk Policy premium - giving effect to appellate/tribunal directions

Limitation on revision under section 263(2) - scope of exercise of power under section 263 - giving effect to appellate/tribunal directions - allowability of deduction for Accountants' Risk Policy premium - Validity of the Commissioner's order under section 263 insofar as it sought to revisit the allowability of the Accountants' Risk Policy premium - HELD THAT: - The Tribunal found that the Assessing Officer's order giving effect to earlier appellate/tribunal directions did not deal with the allowability of the Accountants' Risk Policy premium and that the notice under section 263 sought to revisit an issue which had been allowed in the assessment order dated 31.12.2009. The Tribunal held that the Commissioner, by invoking section 263, was attempting to revise matters which were barred by the time limit prescribed by section 263(2), and that the show-cause notice and consequent order went beyond the scope of the order which the Commissioner purported to revise. The Tribunal therefore quashed the order under section 263 on the ground of limitation. The Tribunal additionally observed, without deciding the detailed merits, that the premium did not fall within the ambit of Explanation 1 to section 37, but expressly rested its decision on the limitation point. The High Court, on review of records and submissions, agreed with the Tribunal's reasoning and declined to interfere, answering the substantial question on whether the action of the Revenue was barred by law in the affirmative and against the Revenue. In view of the Court's conclusion on limitation, the other substantial questions framed (regarding correctness of allowing the deduction and the Tribunal's acceptance thereof) were held not to survive for adjudication.

The order under section 263 insofar as it sought to revisit the allowability of the Accountants' Risk Policy premium was quashed as time barred under section 263(2); question no.3 answered in favour of the assessee and against the revenue, and questions nos.1 and 2 do not survive.

Final Conclusion: The High Court dismissed the revenue's appeal, upheld the Tribunal's order quashing the Commissioner's revision under section 263 on the ground of limitation, and returned the matter in favour of the assessee; the other substantial questions were rendered infructuous.

Disallowance under Section 14A r/w. Rule 8D of the Income tax Rules - disallowance cannot exceed exempt income - application of Section 14A where shares are acquired to obtain controlling interest

Disallowance under Section 14A r/w. Rule 8D of the Income tax Rules - disallowance cannot exceed exempt income - Whether the Tribunal was justified in restricting the disallowance under Section 14A r/w. Rule 8D to the amount computed by the CIT(A) and not accepting the larger disallowance made by the Assessing Officer. - HELD THAT: - The Assessing Officer invoked Section 14A r/w. Rule 8D and made a substantial disallowance of interest; the CIT(A) restricted the disallowance to the portion attributable to a term loan used for business and fixed the disallowance at a lower figure which the assessee accepted. The Tribunal found that only a limited amount of interest was properly attributable to earning exempt dividend income and that the Revenue had not shown any error in the CIT(A)'s restriction. The Court also noted its earlier view in M/s. Nirved Traders Pvt. Ltd. that disallowance under Section 14A cannot exceed the exempt income. In view of these conclusions, the Court held that Question (A) did not raise any substantial question of law and declined to entertain it. [Paras 4]

Question (A) does not give rise to any substantial question of law and is not entertained.

Disallowance under Section 14A r/w. Rule 8D of the Income tax Rules - application of Section 14A where shares are acquired to obtain controlling interest - Maxopp Investment principle - Whether Section 14A applies in the facts where investments were strategic (acquired to obtain controlling interest) and whether the Tribunal erred in restricting the disallowance in that context. - HELD THAT: - The Court admitted the appeal on this substantial question of law (Question (B)). The Bench observed that prima facie the issue appears concluded against the assessee by the Apex Court's decision in Maxopp Investment Ltd. v. CIT, and accordingly directed final hearing to be fixed. The order records admission of Question (B) for final hearing while noting the Tribunal's and parties' positions but does not decide the substantive legal controversy on the applicability of Section 14A to strategic investments. [Paras 5, 6]

Appeal admitted on Question (B) concerning applicability of Section 14A to strategic investments; final hearing fixed.

Final Conclusion: Question (A) is not entertained as it raises no substantial question of law; Question (B) - whether Section 14A applies to strategic investments (including where shares are acquired for control) - is admitted for final hearing, with the matter listed for final hearing and preliminary observation as to the relevance of Maxopp Investment Ltd.

Condonation of delay - Limitation period for filing appeal - Delay attributable to ill health of agent/manager - Duty of litigant to watch its legal affairs

Condonation of delay - Limitation period for filing appeal - Delay attributable to ill health of agent/manager - Duty of litigant to watch its legal affairs - Whether the delay of 1744 days in filing the appeal should be condoned. - HELD THAT: - The Income Tax Appellate Tribunal's order was passed on 28.02.2014 and copy obtained on 10.03.2014; the limitation for filing appeal expired on 08.07.2014. The appeal was filed on 17.04.2019, a delay of more than four and a half years. The assessee relied on its Manager's ill health and subsequent death (22.11.2017) as the reason for non filing. The Court found no material on record to substantiate that the Manager's ailments prevented institution of proceedings, and noted that even after the Manager's death the assessee did not take immediate steps but waited about one and a half years. The Court emphasised the assessee's duty to monitor its own legal affairs and that vague or unsubstantiated explanations for prolonged delay cannot justify condonation. Having regard to the length of delay and absence of satisfactory explanation or supporting evidence, there was no occasion to exercise discretion in favour of condonation.

Application for condonation of delay dismissed and, consequently, the appeal dismissed for being time barred.

Final Conclusion: The petition for condonation of delay of 1744 days was refused for want of satisfactory explanation or supporting evidence; the appeal is dismissed as barred by limitation.

Reopening of assessment - reason to believe - proviso to Section 147 limiting reopening after four years unless due to failure to disclose fully and truly all material facts - failure to disclose fully and truly all material facts - Section 14A - determination of expenditure in relation to exempt income and application of Rule 8D - change of opinion - jurisdictional error

Proviso to Section 147 limiting reopening after four years unless due to failure to disclose fully and truly all material facts - reason to believe - jurisdictional error - Validity of reopening the assessment for AY 2011-12 by issue dated 09.03.2018 and order dated 08.11.2018 made after the four year period - HELD THAT: - The original assessment was completed under Section 143(3) and the notice proposing reopening was issued beyond four years from the end of the relevant assessment year; therefore the first proviso to Section 147 operates and reopening is permissible only if escapement of income is occasioned by failure to disclose fully and truly all material facts. The Court examined whether such failure existed and concluded that the Assessing Officer had no jurisdiction to reopen the assessment where the alleged reason for reassessment flowed from the Assessing Officer's own failure to perform the statutory duty (for example, to apply the prescribed method) and not from any concealment or non disclosure by the assessee. Where the pre condition in the proviso is absent, the Assessing Officer's action in issuing the notice is a jurisdictional error and liable to be quashed. The Court further held that when the issue touches jurisdiction, writ remedy under Article 226 is available despite existence of alternate remedies. [Paras 10, 13, 15]

Impugned reopening proceedings and notice issued beyond four years were without jurisdiction and are quashed.

Section 14A - determination of expenditure in relation to exempt income and application of Rule 8D - change of opinion - failure to disclose fully and truly all material facts - Whether alleged incorrect computation of disallowance under Section 14A and alleged incorrect provisioning could justify reopening the concluded assessment - HELD THAT: - Section 14A(2) places the duty on the Assessing Officer to determine expenditure related to exempt income in accordance with the prescribed method (Rule 8D) if he is not satisfied with the assessee's claim. The assessee had produced accounts and primary materials; therefore there was no failure by the assessee to disclose fully and truly all material facts. The deficiency alleged by Revenue arose from the Assessing Officer not applying Rule 8D or not performing the statutory exercise correctly in the original assessment. Reopening an assessment on that basis after the four year period would amount to permitting a review by the Assessing Officer or a mere change of opinion, which Section 147 does not permit. The Court applied the principle that reassessment cannot be used to remedy the Assessing Officer's own failure to perform the statutory duty or to substitute a fresh opinion on facts already available. [Paras 11, 13, 14]

Alleged incorrect computation under Section 14A/Rule 8D and related provisioning did not establish failure by the assessee to disclose material facts and therefore could not sustain reopening; the reopening is quashed.

Final Conclusion: The writ petition is allowed; the notice dated 09.03.2018 and the order dated 08.11.2018 reopening assessment for AY 2011 12 are quashed as the statutory precondition for reopening after four years (failure to disclose fully and truly all material facts) was not established and the reassessment amounted to impermissible review/change of opinion by the Revenue.

Validity of direction for special audit under section 142(2A) of the Income Tax Act - Scope of "accounts" under section 142(2A) - Special audit where assessee not statutorily required to maintain books - Special audit on account of specialised business activity and multiplicity/volume/doubts about correctness of accounts - Previous approval by Principal Commissioner - requirement of application of mind - Limited scrutiny (CASS) vis-a -vis search triggered scrutiny - Mala fide or time buying invocation of special audit - Terms of reference containing non germane directions - effect on validity

Validity of direction for special audit under section 142(2A) of the Income Tax Act - Special audit on account of specialised business activity and multiplicity/volume/doubts about correctness of accounts - Direction under section 142(2A) to get the petitioner's accounts audited by a special auditor is valid - HELD THAT: - The court held that subsection (2A) (as amended) permits invocation of special audit having regard to any one or more of: nature and complexity of accounts, volume of accounts, doubts about correctness of accounts, multiplicity of transactions, or specialised nature of business activity together with the interest of revenue. The amended provision was intended to widen the scope beyond the pre 2013 restrictive construction. In the present case voluminous seized documentary and digital material (run into lakhs of pages and multiple HDs), interlinked transactions, WhatsApp/SMS evidence and discrepancies between seized material and returns objectively justified the Assessing Officer's opinion that special audit was necessary to arrive at correct taxable income. The court held that where returns do not reflect transactions evidenced by seized material, the assessee cannot avoid explanation on the ground that he is not statutorily required to maintain books; the Assessing Officer may require verification by a special auditor to protect revenue and ascertain true income. [Paras 28, 29, 30, 31, 40]

Direction for special audit under section 142(2A) was validly invoked in the facts; no infirmity in initiating special audit.

Scope of "accounts" under section 142(2A) - Special audit where assessee not statutorily required to maintain books - Meaning of 'accounts' in section 142(2A) is wider than statutory 'books of account' and includes seized records of financial transactions - HELD THAT: - The court analysed definitions and authorities and concluded that the legislature deliberately used the word 'accounts' (not 'books of account') so as to have a wider meaning. Dictionaries and precedent support that 'account' can embrace records of pecuniary transactions and computations. Consequently, even if an individual is not statutorily obliged to maintain books, records captured in seized material (electronic data, messages, transaction records) fall within 'accounts' and may justify special audit. The court rejected the argument that absence of statutory obligation to maintain books precludes resort to section 142(2A). [Paras 22, 23, 24, 25, 29]

The term 'accounts' in section 142(2A) has a wider meaning than 'books of account' and can include seized records; absence of statutory duty to maintain books does not bar special audit.

Previous approval by Principal Commissioner - requirement of application of mind - Approval by the Principal Commissioner was not mechanical; the approving authority applied its mind and independently satisfied itself - HELD THAT: - The court examined the file and satisfaction note submitted by the revenue and found that the Principal Commissioner considered the Assessing Officer's detailed proposal and recorded reasons before granting approval. Authorities require that the approving authority must not turn approval into a ritual; here the satisfaction note reflected application of mind. Consequently the contention of mechanical approval was rejected. [Paras 3, 11, 34, 41]

The Principal Commissioner applied mind in granting approval; the approval is valid.

Limited scrutiny (CASS) vis-a -vis search triggered scrutiny - Limited scrutiny selection under CASS did not bar invocation of section 142(2A) in a search triggered scrutiny for AY 2017-18 - HELD THAT: - The court observed that limited scrutiny (CASS) constraints apply only where scrutiny is initiated through CASS. In this case scrutiny for AY 2017-18 was initiated consequent to search/seizure and therefore was not governed by CASS limited scope; the later computer generated limited scrutiny notice did not curtail the search triggered inquiry or the Assessing Officer's power to refer for special audit. Accordingly CBDT instructions on CASS did not invalidate the special audit reference. [Paras 7, 38, 39]

CASS limited scrutiny does not operate to prevent special audit where scrutiny arose from search and seizure.

Mala fide or time buying invocation of special audit - Allegation that special audit was resorted to mala fide or merely to buy time was not established - HELD THAT: - The court noted that the petitioner did not raise the specific contention of time buying before the approving authority and that the material timeline showed prior notices and consideration of seized material. The court found no cogent material to infer mala fides; moreover the petitioner initially acquiesced and only belatedly approached the court after a large part of the audit period had elapsed. On the record the invocation did not appear to be a device to extend limitation. [Paras 3, 35, 36, 37]

No merit in the contention of mala fide or time buying; allegation not substantiated.

Terms of reference containing non germane directions - effect on validity - Presence of some non germane or standard directions in the terms of reference does not vitiate the special audit direction - HELD THAT: - The court acknowledged that certain directions in the standard format were not strictly germane, but held that such immaterial inclusions do not nullify the overall valid process. The Special Auditors are expected to confine inquiry to relevant directions; the terms of reference's peripheral wording therefore does not invalidate the special audit. [Paras 12, 42]

Irrelevant or standardized directions in the terms of reference do not vitiate the special audit order.

Final Conclusion: Writ petition dismissed. The court upheld the Assessing Officer's invocation of section 142(2A) (as amended) and the Principal Commissioner's approval; special audit direction and consequential proceedings are valid and the interim relief earlier granted is vacated.

Validity of Transfer Pricing Officer appointment - Definition of "Transfer Pricing Officer" and application of section 2(28C) - Tested party under Transactional Net Margin Method (TNMM) must be the Indian assessee - Requirement of verifiable and reliable data for benchmarking under transfer pricing provisions - Comparability - effect of geographical market differences under Rule 10B(2) and 10B(3) - Capacity utilization adjustment to comparables under Rule 10B(1)(e) - Operating profit (net profit) as numerator under TNMM includes depreciation - Transfer pricing adjustment confined to international transactions with Associated Enterprises - Remand for fresh consideration where documentary evidence is incomplete

Validity of Transfer Pricing Officer appointment - Definition of "Transfer Pricing Officer" and application of section 2(28C) - Whether the order under section 92CA(3) passed by the Additional Commissioner of Income-tax (Addtl. CIT) as TPO is valid - HELD THAT: - Explanation to section 92CA(7) refers to a "Joint Commissioner" as a Transfer Pricing Officer. Section 2(28C) defines "Joint Commissioner" to include a person appointed as Joint Commissioner of Income-tax or an Additional Commissioner of Income-tax. Sections 2 and 116 must be read harmoniously with the definition in Chapter X. Therefore, the term "Joint Commissioner" in the Explanation to section 92CA(7) applies to the office as defined in section 2(28C), which embraces both JCIT and Addtl. CIT. The impugned order was passed after insertion of section 2(28C), and there is no statutory prohibition on Addtl. CIT acting as TPO in the facts of this case. [Paras 5, 6, 7, 8]

The Additional Commissioner validly acted as Transfer Pricing Officer; the challenge to the TPO's jurisdiction is rejected.

Tested party under Transactional Net Margin Method (TNMM) must be the Indian assessee - Requirement of verifiable and reliable data for benchmarking under transfer pricing provisions - Whether foreign/Associated Enterprises can be taken as the tested party under TNMM instead of the Indian assessee - HELD THAT: - Rule 10B(1)(e) and section 92/92B apply to computing income of an enterprise from an international transaction; the TNMM compares the net profit margin realised by the enterprise from the international transaction with that of comparables. The "enterprise" in rule 10B refers to the assessee in whose hands benchmarking is done (the Indian entity), while "associated enterprise" denotes the foreign AE. Substituting the profit of the foreign AE as 'profit A' would defeat the statutory scheme: it could mask profit shifting by making an inflated foreign AE margin appear acceptable and frustrate the object of ensuring the Indian entity's profit is at arm's length. The Tribunal illustrated with examples how taking the foreign AE as tested party yields skewed results contrary to the statute. [Paras 14, 15, 16, 17, 18]

Foreign/Associated Enterprises cannot be treated as the tested party under TNMM for determining ALP of the Indian assessee's international transactions; the contention is rejected.

Requirement of verifiable and reliable data for benchmarking under transfer pricing provisions - Whether the TPO was justified in rejecting the assessee's separate benchmarking of import of raw materials for lack of verifiable financials and in aggregating import and export transactions - HELD THAT: - The assessee failed to produce complete and verifiable financial statements of the two foreign AEs and the chosen foreign comparables; reliance on certificates was inadequate. Under transfer pricing provisions the onus is on the assessee to substantiate that reported transactions are at arm's length. In absence of reliable data, the TPO's rejection of the assessee's benchmarking and decision to aggregate the import of raw materials and export of finished goods for benchmarking was a permissible approach. [Paras 11, 12, 19]

The TPO was justified in rejecting the assessee's separate benchmarking for import of raw materials and in aggregating the related transactions.

Comparability - effect of geographical market differences under Rule 10B(2) and 10B(3) - Whether the assessee's internal comparables (domestic sales) could be used to benchmark exports to AEs without adjustments - HELD THAT: - Rule 10B(2)(d) requires consideration of market conditions, including geographical location, when judging comparability; Rule 10B(3) permits comparability only if differences are not likely to materially affect profit or if reasonably accurate adjustments can be made. Domestic sales and exports to AEs in the USA/Brazil operate in different geographical markets with different costs and market conditions. The assessee did not provide adjustments or data to eliminate the effects of geographical differences, so internal domestic sales cannot be treated as comparable for benchmarking exports to foreign AEs. [Paras 21, 22]

Internal domestic sales are not comparable with exports to foreign AEs for determining ALP absent appropriate adjustments; the assessee's internal comparables are not acceptable.

Capacity utilization adjustment to comparables under Rule 10B(1)(e) - Operating profit (net profit) as numerator under TNMM includes depreciation - Whether (a) capacity utilization adjustment was to be applied to comparables or to the assessee, and (b) whether operating profit (not gross margin) is the correct numerator under TNMM - HELD THAT: - Rule 10B(1)(e) contemplates computation of net operating profit margin for the enterprise and for comparables and provides for adjustment of the comparables' net profit margin to account for differences. Thus adjustments (such as capacity utilization) are to be reflected in comparables' margins, not by altering the assessee's margin. Further, rule 10B(1)(e) specifies net operating profit margin; judicial pronouncements and common understanding treat 'operating profit' as profit from business operations and include depreciation as an operating cost. Consequently, operating profit (including depreciation) is the correct numerator under TNMM, not gross margin. [Paras 24, 26, 27]

The TPO correctly applied capacity utilization adjustments to comparables and properly used operating (net) profit (including depreciation) as the numerator under TNMM; the assessee's contrary contentions are rejected.

Transfer pricing adjustment confined to international transactions with Associated Enterprises - Whether the transfer pricing adjustment could be computed with reference to the assessee's total costs including transactions with non-associated enterprises - HELD THAT: - Chapter X and rule 10B confine the transfer pricing exercise to computation of income from international transactions with associated enterprises. Under TNMM the benchmark margin of comparables is to be applied to the operating profit margin arising from the assessee's international transactions. Applying the benchmark to the assessee's universal transactions (including non-AE transactions) is not permissible. The TPO had computed adjustment on the basis of total costs covering AE and non-AE transactions. Precedents of high courts confirm that adjustments must be confined to international transactions. [Paras 30, 31]

Transfer pricing adjustment cannot be computed with reference to non-AE transactions; the impugned order is set aside on this ground and the matter is remitted to AO/TPO for fresh computation confined to international transactions after affording the assessee opportunity of hearing.

Remand for fresh consideration where documentary evidence is incomplete - Whether the transfer pricing addition relating to purchase of fixed assets should stand where the assessee has produced only partial invoices/documentation - HELD THAT: - The assessee produced invoices and a Chartered Engineer's certificate for part of the claimed purchases of fixed assets but not for the entire amount. Because the record contains some documentary evidence, the Tribunal considered it appropriate to remit the issue to the AO/TPO to scrutinise the available evidence and determine whether the purchases are substantiated. Where invoices/documentation are not available, any adjustment should be limited to the depreciation claimed in computation of income and future years should not allow further depreciation claims on undocumented assets. [Paras 34, 35]

The matter is remitted to the AO/TPO to examine invoices and documentary evidence afresh; to the extent purchases are substantiated no addition; to the extent not substantiated adjustment limited to depreciation element and future depreciation disallowed on those assets.

Remand for fresh consideration where documentary evidence is incomplete - Whether the disallowance under section 37(1) of provisions (sundry creditors) totalling the disputed amount is justified - HELD THAT: - The assessee asserted that the sums represent provisions for expenses, some of which were written back in computation or reversed in the subsequent year upon receipt of bills. The AO is directed to verify the nature and correctness of these contentions: where provisions were correctly accounted for and appropriately reversed or supported by subsequent bills, no addition should be made; amounts unsupported by evidence are liable to be disallowed. The Tribunal therefore remitted the matter for verification and fresh decision after opportunity of hearing. [Paras 37, 39]

The addition under section 37 is set aside and the issue is remitted to the AO for verification of the nature of the provisions and supporting evidence and for fresh decision after hearing the assessee.

Final Conclusion: The Tribunal upheld the validity of the Addl. CIT acting as TPO and affirmed substantive transfer pricing principles (tested party must be the Indian assessee; requirement of verifiable data; geographic comparability; adjustments to comparables; operating profit includes depreciation). However, certain additions were set aside and remitted: (a) the transfer pricing adjustment computed with reference to non-AE transactions was quashed and the matter remanded for recomputation confined to international transactions; (b) the claim for purchase of fixed assets and the disallowance under section 37 were remitted to the AO/TPO for fresh examination after affording the assessee opportunity of hearing. The appeal is partly allowed.

Comparability adjustment under CUP method for advertisement and publicity expenses - use of Transactional Net Margin Method (TNMM) as alternative benchmarking - arm's length treatment of trademark and technical royalty approved by competent authority - remand for fresh determination of royalty/alp to assessing officer/TPO - allowability of cost sharing / brand development expense under global cost allocation agreement

Comparability adjustment under CUP method for advertisement and publicity expenses - use of Transactional Net Margin Method (TNMM) as alternative benchmarking - Deletion of transfer pricing adjustment made by revenue for partial disallowance of advertisement and publicity adjustments in respect of export sales to associated enterprises - HELD THAT: - The Tribunal found that the assessee's uncontroverted evidence (media service agreements, invoices) showed the advertisement expenditure was incurred for the Indian market and that associated enterprises were incurring marketing expenditure in their respective markets. The assessee had also carried out benchmarking under TNMM (internal and external) demonstrating arm's length margins for export sales. The Dispute Resolution Panel's treatment of the assessee's TNMM analysis as redundant and confining the adjustment to 50% was not correct. In view of the documentary support and the benchmarking, the impugned TP adjustment on this account could not be sustained and was deleted. [Paras 5]

Adjustment deleted; Grounds 1 and 2 allowed.

Arm's length treatment of trademark and technical royalty approved by competent authority - remand for fresh determination of royalty/alp to assessing officer/TPO - Remand of determination of ALP for trademark and R&D/technical royalties paid to associated enterprises - HELD THAT: - The Tribunal noted the royalty rates were pursuant to amended manufacturing and distribution license agreements and that approval letters from the Department of Industrial Policy & Promotion / SIA were on record. Having considered the earlier Tribunal proceedings in the assessee's own case and conflicting determinations in earlier years (including a set aside and subsequent ALP computation), the Tribunal deemed it appropriate to restore the matter of trademark and R&D royalty to the file of the Assessing Officer/TPO for fresh consideration in accordance with directions given in the earlier order for AY 2007 08. The issue is therefore not finally adjudicated on merits but remitted. [Paras 6]

Grounds 3 and 4 allowed for statistical purposes by restoring the royalty issues to AO/TPO for fresh determination.

Allowability of cost sharing / brand development expense under global cost allocation agreement - Deletion of disallowance of brand development / cost allocation payments made to associated enterprise - HELD THAT: - The Tribunal observed that payments arose under a global brands cost allocation agreement which granted the assessee defined services and a license to intangibles and provided for compensation on a proportionate cost basis computed with reference to Net Sales Value. The nature of services and contractual terms were on record and uncontroverted. The TPO had disallowed the entire payment without applying any prescribed ALP method, which the Tribunal found to be incorrect. The prior years' treatment, arising from the same agreement, militated against sustaining the adjustment. Accordingly the impugned addition was deleted. [Paras 7]

Adjustment deleted; Ground 5 allowed.

Final Conclusion: The appeal is partly allowed: the TP adjustment relating to advertisement and publicity and the disallowance of brand development cost allocations are deleted; the issue of trademark and technical royalties is remitted to the Assessing Officer/TPO for fresh consideration in line with directions in the earlier order.

Allowability of commission to directors under Section 36(1)(ii) as remuneration - disallowance under Section 14A read with Rule 8D for expenditure in relation to tax exempt income - obligation to deduct tax at source under Section 195 and disallowance under Section 40(a)(ia) for non-deduction of TDS - precedential weight of earlier assessment years and requirement of material change in facts or law - remand for verification and duty to afford opportunity of hearing (principles of natural justice)

Allowability of commission to directors under Section 36(1)(ii) as remuneration - precedential weight of earlier assessment years and requirement of material change in facts or law - Deletion of disallowance of commission paid to two executive directors - HELD THAT: - The Assessing Officer disallowed amounts treated as commission paid to two executive directors on the ground that payments represented distribution of profit and were disallowable under the provision dealing with remuneration in lieu of dividend. The Tribunal noted that the issue is identical to earlier assessment years where the Tribunal had held the payments were properly structured as commission (payable under agreement, board approved, linked to net profits) and accepted by Revenue in prior years. In the year under consideration the directors had reported the commission in their returns and paid tax at the maximum marginal rate, undermining any tax avoidance motive. The CIT(A) recorded these factual findings and followed the Tribunal's earlier conclusions where there was no material change in facts or law. On this basis the Tribunal upheld the CIT(A)'s allowance of the commission as deductible business expenditure. [Paras 7]

Revenue's disallowance of commission to the two directors is dismissed and the CIT(A)'s deletion is upheld.

Disallowance under Section 14A read with Rule 8D for expenditure in relation to tax exempt income - remand for verification and duty to afford opportunity of hearing (principles of natural justice) - Validity and quantum of disallowance under Section 14A/Rule 8D in respect of investments and related expenses - HELD THAT: - The Assessing Officer applied Rule 8D to compute a disallowance in respect of exempt income. The CIT(A) examined the character and purpose of investments (including strategic investments in group companies, investments in taxable bonds/FMPs, and mutual fund investments that may yield both taxable and non taxable income) and observed that the AO had not objectively verified the correctness of the assessee's claim or the break up of investments before invoking Rule 8D. The CIT(A) relied on authority that Rule 8D cannot be mechanically applied without first rejecting the assessee's claim under Section 14A(2). Given the scale and composition of investments and the presence of administrative expenses, the Tribunal directed that the matter be remanded to the Assessing Officer for verification and re adjudication after affording the assessee a hearing. [Paras 8]

Disallowance under Section 14A/Rule 8D is set aside and the matter is remanded to the Assessing Officer for fresh verification and adjudication; ground is partly allowed for statistical purposes.

Obligation to deduct tax at source under Section 195 and disallowance under Section 40(a)(ia) for non-deduction of TDS - scope of 'fee for technical services' and exclusion under Explanation 2 to Section 9(1)(vii) - Disallowance for non-deduction of tax at source on payments to certain foreign entities - HELD THAT: - The Assessing Officer treated payments to various foreign parties as liable to TDS. The CIT(A) examined the nature and place of performance of services, relevant contractual terms, the fact that services were rendered outside India, absence of any permanent establishment of those foreign entities in India, and the applicability of Explanation 2 excluding consideration for construction/assembly/mining projects from FTS. The assessee had filed Forms 15CA/15CB. Relying on judicial precedents and CBDT guidance, the CIT(A) concluded that the payments were not in the nature of FTS chargeable to tax in India and there was no obligation to deduct tax at source. The Tribunal agreed with these findings and noted the absence of any case that the foreign entities had a PE in India or that the services were rendered in India. [Paras 9]

No disallowance under Section 40(a)(ia)/no TDS obligation; CIT(A)'s deletion of the disallowance is upheld.

Final Conclusion: The Revenue appeal is dismissed in respect of the disallowance of directors' commission and the disallowance for non deduction of TDS on payments to specified foreign parties; the Section 14A/Rule 8D disallowance is remanded to the Assessing Officer for verification and fresh adjudication after affording the assessee an opportunity of hearing; appeal is partly allowed for statistical purposes.

Addition under section 68 - onus to prove identity, genuineness and creditworthiness of share applicants - remand to the Assessing Officer for fresh adjudication - treatment of interest income and avoidance of double taxation - penalty under section 271(1)(c)

Addition under section 68 - onus to prove identity, genuineness and creditworthiness of share applicants - remand to the Assessing Officer for fresh adjudication - Whether the addition of Rs. 3,00,00,000 credited as share capital and share premium should stand or be considered afresh by the Assessing Officer. - HELD THAT: - The Tribunal found that the Assessing Officer had added the share application money to income under section 68 on the ground that the assessee had not satisfactorily proved the identity, creditworthiness of the investor companies and the genuineness of transactions. The CIT(A) had upheld that addition after considering remand reports. Subsequent authoritative decisions of the Supreme Court and the Delhi High Court on similar issues were not available to the AO or the CIT(A) when they adjudicated the matter, and no adverse material used by the AO in framing the assessment had been placed before the assessee. In the interest of justice and having regard to the later precedents and the procedural lacunae in confronting adverse material, the Tribunal restored the issue to the Assessing Officer with a direction to afford one final opportunity to the assessee to substantiate the identity, creditworthiness and genuineness of the share applicants, to summon directors or require their production if necessary, and to decide the matter on facts and law keeping in mind the decisions of the Supreme Court and the Delhi High Court cited. [Paras 13, 14]

Issue restored to the file of the Assessing Officer for fresh adjudication after giving the assessee a final opportunity; ground No.1 allowed for statistical purposes.

Treatment of interest income and avoidance of double taxation - remand to the Assessing Officer for fresh adjudication - Whether the addition of Rs. 2,83,160 alleged as unreported interest income should be sustained. - HELD THAT: - The AO made an addition by treating as income the difference between interest shown in Form 26AS and interest declared in the profit and loss account. The assessee asserted the income was offered on receipt basis and the balance was taxed in the subsequent year. The CIT(A) sustained the addition because the assessee failed to produce evidence to show the amount was offered to tax in the subsequent year or to reconcile accounting method. The Tribunal accepted the principle that income should not be taxed twice but noted that the assessee did not produce necessary evidence before AO or CIT(A). In the interests of justice the Tribunal directed restoration to the Assessing Officer to give one more opportunity to the assessee to substantiate its claim and to decide the issue on facts and law. [Paras 20]

Issue restored to the file of the Assessing Officer for fresh adjudication after affording the assessee an opportunity to substantiate the claim; ground No.3 allowed for statistical purposes.

Penalty under section 271(1)(c) - remand to the Assessing Officer for fresh adjudication - Whether the penalty levied under section 271(1)(c) and confirmed by the CIT(A) should be sustained. - HELD THAT: - The Tribunal noted that the substantive assessment issues relevant to quantification had been restored to the Assessing Officer for fresh adjudication. In view of that restoration, the penalty levied by the AO and confirmed by the CIT(A) could not stand and therefore was cancelled. The Tribunal, however, left the Assessing Officer free to initiate fresh penalty proceedings under section 271(1)(c), if warranted, after completion of the assessment. [Paras 22]

Penalty cancelled; Assessing Officer may initiate fresh penalty proceedings after completion of assessment if so required.

Final Conclusion: For AY 2012-13 the Tribunal restored the issue of share application money (addition under section 68) and the disputed interest income to the Assessing Officer for fresh adjudication after affording the assessee final opportunities to substantiate its claims; the penalty under section 271(1)(c) as sustained by the CIT(A) was cancelled but the AO is at liberty to commence fresh penalty proceedings, if appropriate.

Allowability of employees' contribution to Provident Fund and ESI where remitted before the due date for filing return under section 139(1) - interaction between section 43B and section 36(1)(va) / deemed income under section 2(24)(x) - retrospective effect of amendments to section 43B as applied in Alom Extrusions - treatment of employee's contribution deducted from salary but deposited belatedly to statutory funds

Allowability of employees' contribution to Provident Fund and ESI where remitted before the due date for filing return under section 139(1) - interaction between section 43B and section 36(1)(va) / deemed income under section 2(24)(x) - Employees' contributions to PF and ESI deducted from salaries but deposited after the statutory due date and before the due date for filing return under section 139(1) are deductible and not assessable as income of the employer. - HELD THAT: - The Tribunal, following the Division Bench decision of the Hon'ble Madras High Court in CIT v. Industrial Security & Intelligence India Pvt. Ltd. and the coordinate Tribunal decision in ACIT v. Carat Lane Trading Pvt. Ltd., held that the amended provisions and the retrospective effect recognised in Alom Extrusions operate to shelter payments made before the due date for filing the return under section 139(1). Although the employee contributions were deposited after the time prescribed under PF/ESI statutes, they were remitted prior to the statutory due date for filing the income-tax return; accordingly, the disallowance under the provisions relied upon by the Revenue (treated as income under section 2(24)(x) read with section 36(1)(va)) could not be sustained. The Tribunal noted conflicting High Court views but expressly followed the jurisdictional Division Bench authority and the coordinate Bench precedents in reaching the conclusion and directed deletion of the addition.

Addition of Rs.33,32,061 made by treating belatedly deposited employees' PF and ESI contribution as income is deleted; claim allowed.

Final Conclusion: Appeal allowed: employees' shares of PF and ESI deducted from salaries and deposited by the assessee after the statutory due date but before the due date for filing return under section 139(1) are allowable as deduction; the addition made by the Assessing Officer and confirmed by the CIT(A) is deleted.

Business promotion expenses disallowance - deduction under section 80P(2)(a)(i) - interest on investments and attribution to business - netting of interest income and interest expenditure - binding effect of jurisdictional High Court decisions over co-ordinate bench

Business promotion expenses disallowance - commercial expediency - Lump sum disallowance in lieu of detailed deletions/confirmations of estimated business promotion expense disallowance - HELD THAT: - The Tribunal examined the assessee's challenge to the disallowance of business promotion expenses (part of earlier 20% estimate). Finding that neither the assessee had produced complete supporting particulars nor the lower authorities had identified specific defects in the expenses, the Tribunal exercised its discretion in the interest of justice to substitute a global outcome: it allowed the appellant's ground only partly by reducing the assessed disallowance to a lumpsum of Rs. 1,00,000 out of the impugned amount and directed consequential computation. The Tribunal recorded that this relief is given with a rider that the order shall not be treated as precedent for other years. Necessary computation to follow as per law. [Paras 3]

Partly allow the ground by reducing the disallowance to a lumpsum of Rs. 1,00,000 (computation to follow); not to be treated as precedent.

Deduction under section 80P(2)(a)(i) - interest on investments and attribution to business - netting of interest income and interest expenditure - binding effect of jurisdictional High Court decisions over co-ordinate bench - Assessee's claim for deduction under section 80P(2)(a)(i) in respect of interest on investments parked in bank term deposits is not allowable per se; disallowance upheld in principle but remanded for computation on netting basis - HELD THAT: - The Tribunal considered competing precedents and the factual nature of the interest income (surplus funds invested in term deposits). Relying upon and following the reasoning of the jurisdictional High Court, the Tribunal held that interest earned from parked surplus funds in banks is not automatically deductible under section 80P(2)(a)(i) unless attributable to the specified business activities; where investments are made from funds required by statute (sections 63/64 of the Multi State Co operative Societies Act), such interest may be treated as attributable to the business and requires appropriate treatment. The Tribunal rejected the assessee's reliance on a co ordinate bench order which ran counter to the jurisdictional High Court, treating that earlier co ordinate bench view as per incuriam. The Tribunal directed that the Assessing Officer shall recompute the disallowance on a netting basis (netting interest income against corresponding interest expenditure), give the assessee adequate opportunity of hearing, and carry out consequential computation as per law. [Paras 6, 9]

Uphold the Revenue in principle that the interest on parked investments is not automatically eligible under section 80P(2)(a)(i); remand to Assessing Officer to recompute the disallowance on a netting basis with opportunity of hearing.

Final Conclusion: Appeal partly allowed. For AY 2014-15, the Tribunal reduced the business promotion disallowance to a lumpsum of Rs. 1,00,000 (computation to follow) and upheld the Revenue's objection to the blanket allowance of section 80P(2)(a)(i) for interest on parked investments; directed recomputation of the latter on a netting basis by the Assessing Officer with adequate opportunity of hearing.

Validity of reassessment proceedings - satisfaction of approving authority for issuance of notice u/s. 148 - mechanical approval / absence of application of mind by sanctioning authority - quashing of reopening under section 147/148

Satisfaction of approving authority for issuance of notice u/s. 148 - mechanical approval / absence of application of mind by sanctioning authority - Validity of reassessment proceedings - quashing of reopening under section 147/148 - Approval for issuance of notice under section 148 given in a mechanical manner without application of mind renders reassessment proceedings unsustainable and liable to be quashed. - HELD THAT: - The format for recording reasons and seeking approval shows that the Joint Commissioner simply endorsed in Column No.12: "Yes, I am satisfied that it is a fit case for issue of Notice u/s. 148", which demonstrates a ritualistic endorsement lacking any recorded satisfaction or application of mind. Following the Tribunal's decision in Krishna Print Pack (SMC, Bench, New Delhi dated 26.9.2019) where identical mechanical approval was held to be insufficient, the reassessment in the present case is vitiated. The appellate authority accordingly quashed the reopening on this ground. As the reassessment is set aside for lack of valid sanction, the merits of the additions were not adjudicated.

Reassessment proceedings initiated by issuance of notice under section 148 are quashed for want of valid, non mechanical approval by the sanctioning authority.

Final Conclusion: The appeal is allowed by quashing the reassessment proceedings because the approval for issuing notice under section 148 was recorded mechanically without application of mind; consequential additions were not adjudicated.

Most appropriate method for transfer pricing (CUP versus TNMM) - Natural justice - disclosure of non public information relied upon by the Transfer Pricing Officer - Comparability and selection of comparables in transfer pricing - Adjustment for under utilisation and high initial fixed costs in benchmarking operating margins - Remand for recomputation and verification by Assessing Officer/Transfer Pricing Officer - Penalty under section 271(1)(c) - premature - Charging of interest under section 234B - consequential and mandatory

Most appropriate method for transfer pricing (CUP versus TNMM) - Natural justice - disclosure of non public information relied upon by the Transfer Pricing Officer - Remand for recomputation and verification by Assessing Officer/Transfer Pricing Officer - Whether CUP could be rejected and TNMM adopted when the TPO relied upon non public information from a third party (Syntel India) without disclosing it to the assessee. - HELD THAT: - The Tribunal held that information obtained from Syntel India and used by the TPO was not in the public domain and was not placed before the assessee, thereby depriving the assessee of an opportunity to meet or controvert that material. Use of such undisclosed material against the assessee violated the principles of natural justice. In view of this procedural infirmity the Tribunal did not decide the comparative merits of CUP vis a vis TNMM on merits but restored the relevant grounds for fresh adjudication by the Assessing Officer/TPO with direction to afford the assessee a fair opportunity of hearing. [Paras 8]

Grounds 3 to 5 remanded to the Assessing Officer/TPO for fresh adjudication after providing the assessee the information and a reasonable opportunity to be heard.

Adjustment for under utilisation and high initial fixed costs in benchmarking operating margins - Remand for recomputation and verification by Assessing Officer/Transfer Pricing Officer - Whether adjustments should be allowed to the assessee's operating margin for substantial salary and travel costs in the first year of operation while determining ALP under the ALM services segment. - HELD THAT: - The Tribunal noted that the year under appeal was the assessee's first year of operation and that significant travel and training costs, and consequent under utilisation of resources, were incurred and not disputed in quantum by the Department. Relying on co ordinate decisions permitting capacity utilisation adjustments in initial years, the Tribunal found the assessee entitled to such adjustment. Rather than determining the quantum itself, the Tribunal restored the matter to the Assessing Officer/TPO for recomputation of operating margin after allowing appropriate adjustments, directing the assessee to produce relevant documents and the AO/TPO to grant a hearing. [Paras 11]

Grounds 8 and 9 remanded to the Assessing Officer/TPO for recomputation of operating margin after allowing adjustments for initial year salary and travel costs, with opportunity of hearing to the assessee.

Comparability and selection of comparables in transfer pricing - Inclusion or exclusion of specific comparable companies in the ALM services benchmarking study. - HELD THAT: - The assessee did not specify during submissions which comparables should be finally included or excluded. The CIT(A)'s inclusion of certain comparables was considered on the record; where the assessee failed to press specific exclusions the Tribunal found no reason to interfere. Consequently, the Tribunal dismissed the assessee's grounds challenging inclusion/exclusion and accepted the comparative list as concluded by the CIT(A)/TPO in respect of the items contested by the Revenue under its cross appeal. [Paras 9, 18, 19]

Grounds 6 and 7 of the assessee's appeal dismissed; Revenue's challenges to inclusion of Lanco Global Systems Limited, Gebbs Infotech Limited and Asian CERC Information Technology Limited rejected and Revenue's appeal dismissed.

Use of single year data in transfer pricing benchmarking - Whether multi year data should have been considered instead of single year data for the year under appeal. - HELD THAT: - The Tribunal reiterated the settled position that benchmarking is to be done with data relevant to the corresponding single year unless a different conclusion is warranted. The assessee's ground seeking consideration of multiple years was found devoid of merit. [Paras 12]

Ground No.10 dismissed.

Penalty under section 271(1)(c) - premature - Maintainability of the challenge to initiation of penalty under section 271(1)(c) at the stage of this appeal. - HELD THAT: - The Tribunal observed that the challenge to initiation of penalty proceedings was premature at the present stage and therefore did not adjudicate on the substantive merit of the penalty invocation. [Paras 13]

Ground No.11 dismissed as premature.

Charging of interest under section 234B - consequential and mandatory - Assessee's challenge to charging of interest under section 234B. - HELD THAT: - The Tribunal noted that interest under section 234B is consequential and mandatory where applicable; the assessee's challenge lacked merit on that basis. [Paras 14]

Ground No.12 dismissed.

Final Conclusion: The assessee's appeal was partly allowed for statistical purpose: (i) grounds relating to rejection of CUP (grounds 3-5) and allowance of initial year adjustments for salary/travel (grounds 8-9) were remanded to the Assessing Officer/TPO for fresh adjudication and recomputation after affording opportunity of hearing; (ii) challenges to inclusion/exclusion of comparables were dismissed; (iii) the assessee's multi year data plea was rejected; (iv) the penalty challenge was held premature; and (v) the interest challenge was dismissed. The Revenue's appeal was dismissed.

Transfer pricing adjustment - disallowance of expenses under section 14A of the Income Tax Act, 1961 - disallowance under Rule 8D - weighted deduction under section 35(2AB) of the Income Tax Act, 1961 - additional depreciation under section 32(1)(iia) of the Income Tax Act, 1961 - carry forward of balance additional depreciation - initiation of penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961

Transfer pricing adjustment - Grounds Nos.1 to 5 relating to transfer pricing adjustments became academic after directions of the DRP and were treated as no longer requiring adjudication. - HELD THAT: - The assessee's counsel stated that after giving effect to the DRP directions no transfer pricing adjustment is required in respect of grounds 1-5. The Tribunal heard the submission and accepted it, recording that those grounds are academic in nature and need not be adjudicated further.

Grounds Nos.1 to 5 are academic and accordingly not proceeded with.

Disallowance of expenses under section 14A of the Income Tax Act, 1961 - disallowance under Rule 8D - The question of disallowance under section 14A/Rule 8D was not finally decided on merits and is remitted to the Assessing Officer for fresh adjudication in line with the Tribunal's order in the assessee's own case for assessment year 2011-12. - HELD THAT: - The Assessing Officer applied Rule 8D and made an addition. The Tribunal noted earlier decisions in the assessee's own cases and concluded that the parity of reasoning requires the matter to be reconsidered. Rather than decide the precise quantum or legal correctness on merits in this appeal, the Tribunal remitted the issue to the file of the AO to adjudicate following the Tribunal's order for AY 2011-12; the ground is therefore allowed for statistical purposes to enable remand.

Issue remitted to the Assessing Officer for fresh adjudication in terms of the Tribunal's earlier order for AY 2011-12; ground No.6 allowed for statistical purposes.

Weighted deduction under section 35(2AB) of the Income Tax Act, 1961 - The claim for weighted deduction under section 35(2AB) is allowed following parity with the Tribunal's decision in the assessee's own case for assessment year 2011-12. - HELD THAT: - The Assessing Officer had disallowed a proportionate weighted deduction. The Tribunal examined the earlier decision in the assessee's own appeals for AY 2010-11 and AY 2011-12, where the Tribunal directed allowance of the weighted deduction. Finding the facts and circumstances identical for AY 2012-13 and applying the same parity of reasoning, the Tribunal directed that the weighted deduction be allowed.

Ground No.7 is allowed and the weighted deduction under section 35(2AB) is to be allowed in accordance with the Tribunal's precedent.

Additional depreciation under section 32(1)(iia) of the Income Tax Act, 1961 - carry forward of balance additional depreciation - The assessee is entitled to claim the balance of additional depreciation in the subsequent assessment year; the claim for additional depreciation is allowed. - HELD THAT: - The Assessing Officer disallowed additional depreciation relying on his view of the statutory provision. The Tribunal, however, followed the binding decision of the jurisdictional Bombay High Court (which in turn relied on Karnataka and Madras High Court reasoning) that the unclaimed portion of additional depreciation (restricted to 50% in the year of acquisition where assets were used for less than 180 days) can be claimed in the succeeding assessment year. The Tribunal noted the legislative amendment (clarificatory proviso) which expressly recognises this right and accepted the High Courts' reasoning that the amendment is clarificatory and applies to pending cases. Respectfully following the jurisdictional High Court, the Tribunal allowed ground No.8.

Ground No.8 allowed; balance additional depreciation is available to the assessee in the subsequent assessment year.

Initiation of penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961 - The initiation of penalty proceedings under section 271(1)(c) is premature and is dismissed at this stage. - HELD THAT: - The Tribunal observed that penalty proceedings could not be appropriately considered at the present stage of the appeal and therefore declined to entertain the issue of initiating penalty under section 271(1)(c), treating it as premature.

Ground No.9 is dismissed as premature; initiation of penalty proceedings is not sustained at this stage.

Final Conclusion: The appeal is partly allowed for statistical purposes: transfer pricing grounds 1-5 are academic; the section 14A/Rule 8D issue is remitted to the Assessing Officer for fresh adjudication in line with the Tribunal's earlier order; weighted deduction under section 35(2AB) and the claim for balance additional depreciation under section 32(1)(iia) are allowed; the question of penalty under section 271(1)(c) is dismissed as premature.

Revision under section 263 of the Income Tax Act, 1961 - lack of enquiry versus inadequate enquiry - addition of profit element in respect of alleged bogus purchases - application of mind by the Assessing Officer - condonation of delay in filing appeal

Condonation of delay in filing appeal - Whether the delay in filing the appeal was liable to be condoned. - HELD THAT: - The Tribunal accepted the explanation that the assessee's authorised representative was unaware that the revisional order was appealable to the Tribunal and that the appeal was filed promptly after senior counsel's advice. The Tribunal found the delay to be unintentional and not attributable to any mala fide conduct, and therefore condoned the delay in the interest of justice. [Paras 2]

Delay of 194 days in filing the appeal is condoned.

Revision under section 263 of the Income Tax Act, 1961 - lack of enquiry versus inadequate enquiry - application of mind by the Assessing Officer - addition of profit element in respect of alleged bogus purchases - Whether the Pr. CIT was justified in setting aside the reassessment order under his revisional jurisdiction on the ground of alleged lack of enquiry by the Assessing Officer, and whether the reassessment additions were unsustainable. - HELD THAT: - On the material of record the AO had issued reasons for reopening, summoned particulars under section 142(1), and received detailed tabular replies identifying suppliers, dates, amounts, mode of payment and mode of delivery (stating 'Free Delivery/ FOR'). The AO, both in original assessment and in reassessment, examined vendors (notices under section 133(6) were issued) and accepted payments through banking channel; the AO made a limited addition by taxing the profit element embedded in the transactions after considering judicial precedents and the facts. The Tribunal reiterated the legal distinction between a complete lack of enquiry and an enquiry which a revisional authority considers to be inadequate: mere opinion that further enquiries could have been made does not render an order erroneous and prejudicial to revenue. If the Pr. CIT believed the enquiry was inadequate by his own standards, he was obliged to conduct or direct proper verification and record prima facie that the AO's view was unsustainable in law and caused prejudice. The Pr. CIT's specific finding that relevant material was not produced and that AO failed to verify transportation was found contrary to the record, because the assessee had stated delivery terms (FOR) and no transportation expenditure was claimed or recorded. Having concluded that the AO had applied his mind and taken a plausible view (limited addition of profit element), the Tribunal held the Pr. CIT's exercise of revisional jurisdiction was without satisfying the twin conditions of section 263 and thus unsustainable. [Paras 10, 11, 12, 14, 15]

Impugned revisional order of the Pr. CIT under section 263 is quashed; the AO's reassessment (limited addition of profit element) is a plausible view and not held to be erroneous or prejudicial to the revenue.

Final Conclusion: The Tribunal condoned the delay and allowed the appeals, quashing the revisional order of the Pr. CIT under section 263; the Assessing Officer's enquiries and the limited addition of the profit element in respect of alleged bogus purchases were held to be a plausible exercise of discretion and not erroneous or prejudicial to revenue.

Summary order. Appeal disposed of in view of low tax effect; question of law kept open.

Decline to interfere - Special leave petition dismissed - Liberty to urge all contentions before appropriate authority - No expression on limitation issue - Decision on limitation to be on merits

Decline to interfere - Special leave petition dismissed - Whether interference in the special leave petition should be granted - HELD THAT: - The Court declined to interfere and dismissed the special leave petition, thereby refusing to set aside the impugned action or order through this petition. The dismissal is operative while leaving open the petitioners' procedural rights in other fora; no substantive adjudication on the merits of the underlying controversy was undertaken by this order.

Special leave petition is dismissed and the petition is declined interference.

Liberty to urge all contentions before appropriate authority - Whether the petitioners are permitted to advance their contentions afresh before the appropriate authority - HELD THAT: - The Court reiterated the High Court's grant of liberty to the petitioners to urge all contentions available in law and on facts before the appropriate authority. This confers on the petitioners the procedural opportunity to seek relief or challenge the matter in the competent forum without the Supreme Court making any determination on those contentions in the present proceedings.

Petitioners are granted liberty to urge all available contentions before the appropriate authority.

No expression on limitation issue - Decision on limitation to be on merits - Treatment of the limitation question raised by the petitioners in proposed proceedings - HELD THAT: - The Court made clear that its dismissal of the writ petition and the special leave petition is not an expression of opinion on the limitation point the petitioners seek to agitate. The question of limitation is left open and must be decided on its own merits by the appropriate forum; the Supreme Court did not adjudicate or resolve that issue in this order.

Limitation issue is not decided and is to be considered and decided on merits by the appropriate authority.

Final Conclusion: The special leave petition is dismissed. The petitioners retain liberty to press all legal and factual contentions before the appropriate authority; the Court expressly refrains from expressing any view on the limitation issue, which remains open for determination on its merits.

Condonation of delay - Jurisdiction of CESTAT - Remand for fresh consideration - Imposition of penalty - Following precedent and uniform treatment of similar appeals - Effect of pending Supreme Court decision on jurisdictional findings

Condonation of delay - Following precedent and uniform treatment of similar appeals - Applications for condonation of delay in filing the appeals were allowed. - HELD THAT: - The Court examined the explanation furnished by the Department and the prejudice, if any, to the respondents, having regard to the fact that numerous similar appeals had been filed and this Court had, in earlier matters, set aside CESTAT orders and directed the Tribunal to independently decide on jurisdiction and merits. The Court found the decision in State of Bihar v. Deo Kumar Singh distinguishable and concluded that condonation should be granted so that the appeals may be disposed on merit without undue further delay. Accordingly, the delay of approximately 486 days was condoned. [Paras 6]

Delay condoned and applications for condonation allowed.

Jurisdiction of CESTAT - Remand for fresh consideration - Imposition of penalty - Effect of pending Supreme Court decision on jurisdictional findings - Impugned CESTAT orders were set aside and the matters were remitted to the CESTAT to decide merits afresh, including jurisdiction and imposition of any penalty, with directions regarding recording of findings where relevant decisions of the Supreme Court are pending. - HELD THAT: - Relying on this Court's earlier decisions (including Principal Commissioner of Customs v. Col. Sanjeev Sethi and Forech India), the Court concluded that, rather than relegating the question back to the Adjudicating Authority, the CESTAT should itself apply its mind independently to the question of jurisdiction and to the merits, including any penalty. The impugned orders that had directed waiting for the Supreme Court decision in Mangli Impex would cause further delay and were set aside. The CESTAT was directed to issue reasonable notice, hear the parties on merits and on jurisdiction (if necessary in light of Mangli Impex), record separate findings, and the Tribunal's findings on lack of jurisdiction based on Mangli Impex would remain subject to the final outcome in the Supreme Court. No opinion was expressed on the merits or on the procedure the Tribunal should adopt. [Paras 7]

Impugned orders set aside; appeals remitted to CESTAT for fresh adjudication on merits, jurisdiction and penalty; Tribunal to record separate findings and proceed to hear the parties.

Final Conclusion: The appeals are allowed: delay in filing is condoned and the impugned CESTAT orders are set aside; the matters are remitted to the CESTAT to independently decide the appeals on merits, including jurisdiction and imposition of penalty, with any jurisdictional findings influenced by Mangli Impex to remain subject to the Supreme Court's final decision.

Maintainability of petition under Sections 241 and 242 - scope of "member" and rights of legal representatives/successors - effect of nomination under Section 72 and entitlement of nominee - transmission of shares on death and entitlement pending registration - waiver under Section 244(4) to permit proceedings by person not yet registered

Maintainability of petition under Sections 241 and 242 - scope of "member" and rights of legal representatives/successors - Whether a person not entered on the register of members but claiming succession to shares of a deceased shareholder may maintain a petition under Sections 241 and 242 of the Companies Act, 2013. - HELD THAT: - The Tribunal and this Appellate Tribunal applied the reasoning of the Supreme Court in M/s. World Wide Agencies Pvt. Ltd. and Another v. Margarat T Desor and Others, holding that legal representatives or heirs in whom the estate vests on death can, in appropriate circumstances, invoke statutory remedies available to the deceased member. Insistence on prior entry on the register would frustrate the object of the remedy; where the estate stands in the shoes of the deceased, the legal representatives/ heirs are entitled to seek relief under Sections 241 and 242 even if their names have not yet been registered. The Court rejected a hyper technical approach that would deny locus to persons who represent the deceased member's estate and noted that succession vests on death and thus the estate can pursue remedies for oppression and mismanagement on behalf of the deceased member.

Application under Sections 241 and 242 was held maintainable at the instance of the heir claiming succession; the petition may be heard on merits.

Effect of nomination under Section 72 and entitlement of nominee - transmission of shares on death and entitlement pending registration - Whether a nomination made under Section 72 and subsequent registration of the nominee excludes legal heirs from claiming rights in the shares of the deceased shareholder. - HELD THAT: - The Court analysed Section 72 and allied rules but, following the Supreme Court's conclusion in M/s. World Wide Agencies, held that nomination does not automatically extinguish the rights of legal heirs or convert the nominee's position into absolute ownership to the exclusion of heirs pending determination of succession. The nominee holds rights conferred by nomination but the legal heirs, in whose favour succession vests on death, can still claim entitlement; registration of the nominee does not preclude the heirs from seeking relief where their title is contested or where the question of distribution of the deceased's estate is sub judice.

Nomination and registration of the nominee did not operate to bar the heir from claiming rights in the shares; the heir's claim could be examined and the petition proceeded to be heard.

Waiver under Section 244(4) to permit proceedings by person not yet registered - Whether waiver under sub section (4) of Section 244 should be granted to permit the petition to proceed despite the petitioner's not being a registered member holding the prescribed percentage. - HELD THAT: - Noting that the petitioner's claim to the shares was the subject of a pending civil suit and that succession vests on death, the Court found this case appropriate for exercise of the statutory discretion to grant waiver under Section 244(4). In light of the circumstances, including the pending suit determining distribution of the estate and the equitable considerations underlying remedies for oppression and mismanagement, the Tribunal's grant of waiver was upheld and the petition directed to be heard on merits.

Waiver under Section 244(4) was held appropriate and the petition was admitted for adjudication on merits.

Final Conclusion: The appeals are dismissed. The Tribunal's order holding the petition maintainable and granting waiver under Section 244(4) is affirmed and the Company Petition is to be heard on merits; no costs.

Liability of surety co-extensive with principal debtor - discharge of surety by variance or creditor's act/compromise - effect of insolvency resolution plan on guarantor's liability under the Insolvency and Bankruptcy Code, 2016 - statutory and involuntary nature of proceedings under Section 7 of the Code of 2016 - application of moratorium provisions to personal guarantors - binding effect of an approved Resolution Plan on stakeholders

Liability of surety co-extensive with principal debtor - discharge of surety by variance or creditor's act/compromise - effect of insolvency resolution plan on guarantor's liability under the Insolvency and Bankruptcy Code, 2016 - statutory and involuntary nature of proceedings under Section 7 of the Code of 2016 - application of moratorium provisions to personal guarantors - Whether the liability of a guarantor of a debt of a corporate debtor stands reduced or extinguished upon approval of an Insolvency Resolution Plan under the Insolvency and Bankruptcy Code, 2016 - HELD THAT: - The court held that the sanction of a Resolution Plan under the Code of 2016 does not, by itself, discharge or extinguish the liability of a personal guarantor. The liability of a surety is co extensive with that of the principal debtor, and a surety may be discharged by a variation or a contract between creditor and principal debtor made without the surety's consent, or by acts of the creditor inconsistent with the surety's rights. However, proceedings under Section 7 of the Code are statutory and involuntary; a financial creditor initiating insolvency proceedings is exercising a statutory right rather than entering into a voluntary composition with the debtor. The two terminal outcomes after admission of a Section 7 application (approval of a Resolution Plan or liquidation) flow from statute and do not amount to a creditor's voluntary variation, release, or compromise in the sense contemplated by the law of guarantee. The Code expressly excludes application of the corporate moratorium to a surety and the Supreme Court has held that personal guarantors do not obtain the protection of Section 14. Binding precedents were applied to conclude that discharge of the corporate debtor in insolvency does not absolve the surety; therefore the approved Resolution Plan and the creditor accepting prescribed payments under it do not automatically extinguish the guarantor's independent liability. [Paras 35, 36, 37, 38, 39]

Answered in the negative; the guarantor's liability does not stand reduced or extinguished merely by approval of a Resolution Plan under the Code of 2016.

Binding effect of an approved Resolution Plan on stakeholders - relief on challenge to listing with credit information bureau - To what relief or reliefs the parties are entitled in the writ petition challenging the bank's listing of the petitioner with CIBIL - HELD THAT: - Given the primary conclusion that the guarantor's liability was not extinguished by the Resolution Plan, the petitioner could not establish illegality in the bank's actions of proceeding against the guarantor or of reporting the guarantor as a defaulter. The court noted that the Resolution Plan did not deal with the petitioner's personal guarantee and that secured financial creditors received a haircut in accordance with the sanctioned plan; this outcome did not amount to a discharge of the surety. On that basis, no relief was merited in the writ petition. [Paras 39, 40]

Writ petition dismissed; no relief granted and interim order vacated.

Final Conclusion: The High Court dismissed the writ petition: a Resolution Plan approved under the Insolvency and Bankruptcy Code, 2016 does not ipso facto extinguish a personal guarantor's independent liability, and consequently no relief was granted to remove the petitioner's name from the defaulter list.

Exclusion of time from CIRP - delay in appointment of Resolution Professional - non-cooperation of the suspended Board of Directors - computation of CIRP period - application under Section 19(2) of the IBC - expression of interest and its challenge

Exclusion of time from CIRP - delay in appointment of Resolution Professional - non-cooperation of the suspended Board of Directors - application under Section 19(2) of the IBC - expression of interest and its challenge - computation of CIRP period - Whether specified periods of delay should be excluded from computation of the CIRP timeline and whether the Resolution Professional was at fault for the delay - HELD THAT: - After hearing the parties and perusing pleadings and authorities, the Tribunal found that the Resolution Professional was not at fault for the delays in the CIRP. The Tribunal accepted that 38 days were lost because the RP was not appointed on time (24.10.2018 to 30.11.2018) and a further 5 days elapsed between appointment order and its receipt (01.12.2018 to 05.12.2018). The Tribunal also treated delay consequent upon the RP's application under Section 19(2) of the IBC and the Corporate Debtor's challenge to the expression of interest (including deliberations and amendment/recirculation of the EoI) as a period to be excluded. The RP's evidentiary material, communications seeking cooperation, repeated non-production of books and data by the suspended board and pendency of interlocutory proceedings were taken as sufficient basis for excluding the contested periods. Applying these findings, the Tribunal computed the total excluded period as 268 days by aggregating the stated intervals and accordingly adjusted the CIRP timeline. [Paras 14]

The Tribunal excluded a total of 268 days from the CIRP period for the reasons stated and disposed of the IA.

Final Conclusion: The application seeking exclusion of time from the CIRP was allowed: the Tribunal held the Resolution Professional was not at fault, excluded a total of 268 days from the CIRP computation, and disposed of the IA.

Maintainability of writ petition in presence of alternative statutory remedy - discretion under Article 226 of the Constitution - availability and efficacy of statutory appeal under Section 86 of the Finance Act, 1994 - condonation of delay and direction to Tribunal to decide appeal on merits

Maintainability of writ petition in presence of alternative statutory remedy - discretion under Article 226 of the Constitution - availability and efficacy of statutory appeal under Section 86 of the Finance Act, 1994 - condonation of delay and direction to Tribunal to decide appeal on merits - High Court declined to exercise extraordinary writ jurisdiction where an equally efficacious statutory appeal remedy under the Finance Act, 1994 is available, and directed dismissal of the writ with liberty to avail the statutory remedy. - HELD THAT: - The Court acknowledged that although the High Court has discretionary power under Article 226 to entertain writ petitions despite alternative remedies, it is not proper to do so where a statutory scheme provides an equally efficacious remedy for redressal. Having found that the petitioner has a statutory right of appeal under Section 86 of the Finance Act, 1994, the Court exercised its discretion to refrain from entertaining the writ petition and dismissed the application. The Court nonetheless granted limited relief to the petitioner by permitting filing of the statutory appeal within a specified short period and directing that, if so filed along with an application for condonation of delay within two weeks, the Tribunal shall condone the delay and dispose of the appeal on merits in accordance with law. [Paras 3, 5, 6, 7]

Writ petition dismissed; petitioner granted liberty to file statutory appeal under Section 86 within two weeks and Tribunal directed to condone delay and decide the appeal on merits.

Final Conclusion: The High Court declined to exercise extraordinary jurisdiction under Article 226 in respect of matters remediable by appeal under Section 86 of the Finance Act, 1994, dismissed the writ petition, and permitted the petitioner to approach the Tribunal within a limited time with a direction that delay, if any, be condoned and the appeal be decided on merits.

Distinctness of clearing and forwarding agent service and goods transport agency service - separate contracts and separate billing for composite versus separable services - inclusion of transportation/freight charges in assessable value of C & F agent service - consignment note and invoicing requirements under Rule 4A and Rule 4B of Service Tax Rules, 1994 - admissibility of documents produced on direction of the Tribunal

Distinctness of clearing and forwarding agent service and goods transport agency service - separate contracts and separate billing for composite versus separable services - Second (territory freight) agreement dated 01.01.2013 is an independent contract for GTA service and is not part of the First Agreement dated 10.11.2011 for C & F agent service. - HELD THAT: - The Tribunal examined the terms of both agreements and concluded they are complete and independent. The First Agreement relates to C & F activities such as receiving, warehousing, receiving dispatch orders and arranging dispatch as per principal's directions, including contingency arrangements to engage transporters; the Second Agreement specifically and exclusively engages the appellant to transport products under separate terms. The CBEC trade notice and governing circulars were applied to show that where transportation is contracted and billed separately it constitutes a distinct GTA service and does not automatically merge into C & F service. On this basis the Second Agreement cannot be read as part of the First Agreement. [Paras 8, 9]

Second agreement is independent and GTA service commenced only from 01.01.2013; it is not part of the First Agreement.

Inclusion of transportation/freight charges in assessable value of C & F agent service - separate contracts and separate billing for composite versus separable services - Freight/transportation charges covered by the separate second agreement and billed separately are not includible in the assessable value of the C & F agent service under cargo handling/C & F service. - HELD THAT: - Relying on precedent including E V Mathai and statutory clarification in CBEC circulars, the Tribunal held that when transportation and cargo handling/C & F services are provided under separate agreements and the bills indicate the amounts separately and are supported by documentary evidence, the taxable value for C & F is confined to the remuneration for C & F operations. The Tribunal scrutinised the appellant's ledgers, invoices and separate billing and found independent treatment of C & F and transportation amounts. Consequently, the departmental addition of the freight component to compute service tax on C & F was held unsustainable and the impugned demand, interest and penalty were set aside. [Paras 11, 12, 15, 18]

Transportation/freight charged under the separate GTA agreement and billed separately cannot be added to the value of C & F service; impugned demand, interest and penalty are not sustainable.

Consignment note and invoicing requirements under Rule 4A and Rule 4B of Service Tax Rules, 1994 - admissibility of documents produced on direction of the Tribunal - Consignment notes and invoices produced by the appellant, and the CA certificate filed on direction of the Bench, were sufficient to treat transportation billing as separate and the CA certificate was admissible; deficiencies in form did not invalidate the separate treatment. - HELD THAT: - The Tribunal examined the consignment notes and found they contained the material particulars mandated by Rules 4A and 4B except that some amounts were recorded as 'TBB' due to monthly settlement practice; the ledger and CA certificate (produced on the Tribunal's direction) corroborated that the principal discharged service tax on reverse charge basis. The Tribunal rejected the Revenue's objection that the CA certificate was inadmissible because it was not before the adjudicating authority, noting it was produced at the Bench's direction. On these facts the alleged formal shortcomings in the consignment notes did not warrant inclusion of freight into C & F taxable value. [Paras 13, 14, 16]

Consignment notes and the CA certificate (produced on Tribunal's direction) were acceptable; formal deficiencies did not justify treating transportation as part of C & F value.

Final Conclusion: The appeal is allowed. The Tribunal held the second agreement to be an independent GTA contract and found freight/transport charges billed separately are not includible in the assessable value of C & F agent service; accordingly the demand, interest and penalty confirmed in the impugned order are set aside and the appellant is given consequential benefit.

Classification as supply of tangible goods versus transportation service - admissibility of documentary evidence - opportunity of hearing and remand for re-adjudication - reliance on information received from Income Tax Department

Classification as supply of tangible goods versus transportation service - reliance on Form 26-AS and third party information - admissibility of documentary evidence - Whether the demand for duty as 'supply of tangible goods' was sustainable on the basis of material on record and whether the appellants should be afforded an opportunity to place on record admissible evidence before final adjudication. - HELD THAT: - The Tribunal noted that the show cause notice arose from information received from the Income Tax Department and that the Revenue treated various receipts as falling under 'supply of tangible goods'. The Adjudicating Authority had rejected the appellants' contractual contention in part on the ground that the agreement produced was incomplete and unsigned and observed that corroborative evidence to support the appellants' plea was not furnished (recorded at Para 7.5). The Tribunal observed that the allegations and the factual classification involve disputed documentary and contractual facts which require fresh consideration and that the appellants must be given a proper opportunity to present admissible documents and to co-operate with the Original Authority. In view of these findings, the Tribunal found it appropriate to set aside the impugned order and remand the matter for de novo adjudication, directing the Original Authority to allow the appellants to place on record relevant admissible evidence and to re-decide the classification and demand after giving them a fair hearing. [Paras 6, 7]

Impugned order set aside and matter remanded to the Original Authority for re adjudication after giving the appellants an opportunity to present admissible documents and co operate with the adjudication.

Final Conclusion: The appeal is allowed by way of remand: the impugned adjudication is set aside and the matter is remitted to the Original Authority for fresh adjudication on merits, with directions to permit the appellants to produce admissible evidence and to re decide the classification of receipts after affording a fair opportunity of hearing.

Levy of service tax on sale of immovable property - works contract services - construction after execution of sale deed - occupation certificate - short payment of tax - penalty for service tax demand

Levy of service tax on sale of immovable property - occupation certificate - construction after execution of sale deed - Whether the value shown in the sale deed executed after issuance of occupation certificate is exigible to service tax under works contract services. - HELD THAT: - The show cause notice included the sale deed value of Rs. 42,29,075/- in computing alleged short payment of service tax although the occupation certificate for the flats had been obtained in 2009 and the sale deed was executed thereafter. The Tribunal accepted the appellant's submission that where construction is completed and occupation certificate issued prior to execution of the sale deed, the subsequent transaction is a sale of immovable property and the sale-deed value cannot be subjected to service tax as works contract services. Only amounts received for construction activities carried out after execution of the sale deed can be taxable as services. Applying this principle to the facts, the major portion of the sale value could not be treated as service consideration liable to service tax.

Sale-deed value of Rs. 42,29,075/- (executed after occupation certificate) is not exigible to service tax; only post-sale construction receipts are taxable.

Works contract services - short payment of tax - penalty for service tax demand - Extent of service tax liability and fate of penalties after excluding the sale-deed value from the taxable base. - HELD THAT: - On the department's computation, once the sale-deed value was excluded, only an amount of Rs. 11,985/- remained as consideration for construction carried out after the sale deed, which the appellant conceded was liable to service tax. In view of the substantial reduction of the tax demand to this minimal amount and the factual finding that the bulk of the demand was based on sale consideration, the Tribunal found the confirmed demand unsustainable insofar as it related to the sale-deed value and, having regard to the facts, set aside the penalties imposed by the authorities.

Demand restricted to service tax on Rs. 11,985/- (post-sale construction); the earlier demand insofar as it related to the sale value is set aside and penalties imposed are quashed.

Final Conclusion: The appeal is partly allowed: the confirmed service tax demand is set aside insofar as it relates to the sale-deed value executed after issuance of the occupation certificate; liability is confined to service tax on the admitted post-sale construction receipt (Rs. 11,985) and the penalties imposed are set aside.

Summary order. Appeal dismissed under the litigation policy as the amount involved is below the monetary limit notified by the Board.

Cenvat credit on towers and shelters as inputs - Cenvat credit on services used for erection and installation of telecom towers - permanency/immovable property test - functional utility test for inputs - eligibility to claim credit determined at time of receipt - attachment to earth does not necessarily preclude excisable nature

Cenvat credit on towers and shelters as inputs - permanency/immovable property test - functional utility test for inputs - eligibility to claim credit determined at time of receipt - attachment to earth does not necessarily preclude excisable nature - The appellant is entitled to avail Cenvat credit on towers and shelters and support structure used for providing telecommunication services. - HELD THAT: - Relying on this Tribunal's earlier decision in the appellant's own case (Bharati Infratel Limited) and the reasoning of the Delhi High Court as adopted therein, the Tribunal held that towers and shelters received in prefabricated/CKD form which are bolted or fastened for stability do not lose their character as excisable goods merely because they are assembled at site and fastened to foundations. The permanency or attachment to earth for stability does not convert such goods into immovable property for purposes of denying credit. Alternatively, applying the functional utility test, towers and shelters form part of the active infrastructure of the BTS and functionally operate in conjunction with capital goods (BTS, antennae), qualifying them as inputs. Eligibility to claim credit is to be determined at the time of receipt under the Credit Rules; subsequent emergence of a structure at the site does not disentitle the assessee from credit that was available on receipt of the goods. Having applied these principles, the Tribunal set aside the impugned denial and allowed the credit claimed on towers and shelters.

Credit on towers, shelters and related support structures allowed; impugned denial set aside.

Cenvat credit on services used for erection and installation of telecom towers - functional utility test for inputs - The appellant is entitled to Cenvat credit on services used for the erection and installation of telecom towers that are used in providing the taxable output service. - HELD THAT: - Following this Tribunal's earlier decision in Bharat Sanchar Nigam Limited, the Tribunal noted that services used for erection and installation of telecom towers are employed in providing the taxable output service. Even though such services may not strictly fall under the definition of 'input service' in the Rules, where the services are used for erection of towers that facilitate provision of the output service, it is inappropriate to deny Cenvat benefit. Applying that reasoning to the facts before it, the Tribunal allowed credit for the erection/installation services.

Credit on services for erection and installation of towers allowed; impugned denial set aside.

Final Conclusion: Appeals allowed; impugned order denying Cenvat credit on towers, shelters and on services for erection of towers set aside and credit granted with consequential relief, if any.

Exemption to goods transport agency services for export - literal interpretation of notifications - prospective operation of amending notification - limitation and longer period where mala fide alleged - procedure compliance and good faith (consignment note/EXP1) - penalty not leviable in absence of mala fide

Exemption to goods transport agency services for export - literal interpretation of notifications - prospective operation of amending notification - Exemption under Notification No.31/2012-ST did not extend to movements for export from land customs stations prior to the amendment effective 01 April, 2015. - HELD THAT: - The Tribunal examined the text of Notification No.31/2012-ST (original) and the amendment by Notification No.04/2015-ST. The original notification expressly referred only to transport to or from a "port or airport" and contained no ambiguous language suggesting inclusion of land customs stations. The subsequent substitution adding "land customs station" took effect on 01 April, 2015. Where the statutory language is unambiguous, the tribunal must interpret the notification as worded and cannot read into it additional locations. Accordingly, the exemption could not be held to apply retrospectively to exports from land customs stations for the period prior to 01 April, 2015. [Paras 5, 6]

Exemption under the original notification did not cover exports from land customs stations for the period prior to 01 April, 2015.

Limitation and longer period where mala fide alleged - procedure compliance and good faith (consignment note/EXP1) - Demand raised invoking the longer period is time-barred to the extent that the Revenue cannot show mala fide on the part of the assessee who had complied with prescribed procedural formalities. - HELD THAT: - Although the exemption did not apply for exports from land customs stations before the amendment, the assessee had followed the procedure prescribed in the original notification (production of consignment notes, filing of EXP1 returns), and the Revenue was aware that exports occurred from a land customs station. In these circumstances the Tribunal found no mala fide on the part of the assessee. Absent mala fide, invocation of the extended limitation period is not justified and the demand confirmed to the extent raised by relying on the longer period must be held barred by limitation. A portion of the demand, however, falls within the ordinary limitation period and therefore remains exigible. [Paras 7]

Demand based on the longer limitation period is barred insofar as it relied on alleged concealment or mala fide; part of the demand within the ordinary limitation remains to be quantified.

Re-quantification within limitation - The matter of quantification of the portion of demand that falls within the limitation period is remanded to the Original Adjudicating Authority for re-quantification. - HELD THAT: - The Tribunal held that while demands raised by invoking the extended period are barred where no mala fide is shown, some portion of the demand lies within the ordinary limitation period. The Tribunal did not adjudicate the quantum of that recoverable portion on merits but directed that the Original Adjudicating Authority re-quantify the amount that remains exigible within the limitation period. [Paras 7]

Remitted to the Original Adjudicating Authority for re-quantification of the demand within the limitation period.

Penalty not leviable in absence of mala fide - Penalty imposed on the assessee is set aside as there was no mala fide on the part of the assessee. - HELD THAT: - Given the Tribunal's finding of absence of mala fide-based on the assessee's compliance with prescribed procedures and the Revenue's awareness of exports from land customs station-the imposition of penalty was not justified. The Tribunal therefore held that penalty should be annulled in entirety. [Paras 8]

Penalty set aside.

Final Conclusion: Appeals allowed in part: exemption under the original notification did not cover exports from land customs stations before 01 April, 2015; demands based on the extended limitation period are barred for want of mala fide but the portion within ordinary limitation must be re-quantified by the Original Adjudicating Authority; penalties are vacated for absence of mala fide. Appeals disposed accordingly.

Summary order. Delay condoned; appeal admitted; notice issued on application for stay.

Excisability of waste and scrap arising during manufacture - waste and scrap not being a manufactured product - goods liable to excise only if capable of being sold for consideration - Cenvat credit and chargeability on inputs/input services

Excisability of waste and scrap arising during manufacture - waste and scrap not being a manufactured product - goods liable to excise only if capable of being sold for consideration - Waste and scrap arising during the course of manufacture of enameled wires and cables are not excisable goods and not dutiable. - HELD THAT: - The Tribunal examined whether the end cuttings, waste and scrap generated during manufacture of insulated/enameled wires and cables attract central excise. The appellant's own adjudicatory order dated 26.10.2010 had earlier dropped the demand on the same subject-matter, treating such waste and scrap as not constituting a manufactured product. The Tribunal placed reliance on the view in Hon'ble Bombay High Court in Hindalco Industries Ltd and the Apex Court in DSCL Sugar Ltd, which hold that waste and scrap arising in the course of manufacture of the final product are not dutiable. Although the CBEC circular indicates that waste, residue or refuse capable of being sold may be excisable, the Tribunal found on the facts and by application of the cited precedents that the waste and scrap in the appellant's manufacturing process do not qualify as excisable goods and therefore are not liable to central excise duty. [Paras 6, 7, 8]

Impugned demand confirmed by the adjudicating authority is set aside; appellant not liable to pay duty on the waste and scrap arising during manufacture of enameled wires and cables.

Final Conclusion: The appeal is allowed; the impugned order confirming demand on waste and scrap arising during manufacture is set aside and the appellant is not liable to pay central excise duty on such waste and scrap, with consequential relief if any.

Sales against Form-C - duplicate C-forms - reconsideration on merits - opportunity of hearing - remand to Assessing Officer - penalty corresponding to disallowance

Sales against Form-C - duplicate C-forms - reconsideration on merits - opportunity of hearing - penand corresponding to disallowance - Assessment in respect of sales against Form-C and the corresponding penalty was set aside and remitted to the Assessing Officer for fresh consideration. - HELD THAT: - The Assessing Officer had rendered the assessment adverse to the petitioner on the ground that proof of acknowledgement for filing original C-forms before the then Assessing Officer was not produced, notwithstanding that the petitioner had filed duplicate C-forms before the present Assessing Officer. The court observed that the Assessing Officer did not dispute receipt of the duplicate C-forms. In light of the respondents' undertaking and the principle that duplicate forms may be examined for genuineness, the court directed that the duplicate C-forms filed by the petitioner be considered and verified; if found in order, the Assessing Officer is to pass fresh orders on merits after affording the petitioner a due opportunity of hearing. The court therefore set aside the impugned order only insofar as it pertains to sales against Form-C and the related penalty, and remitted that limited issue for fresh adjudication. [Paras 6, 7]

Impugned assessment order quashed only in respect of sales against Form-C and the corresponding penalty; matter remitted to the Assessing Officer to verify the duplicate C-forms, rehear the petitioner and pass fresh orders on merits within four weeks.

Final Conclusion: Writ petition allowed in part; assessment order is set aside solely for the issue of sales against Form-C and corresponding penalty and remitted to the Assessing Officer for fresh consideration after verification of duplicate C-forms and affording hearing, to be completed within four weeks; other issues remain subject to separate proceedings.

Assessment under section 39(2) of the BVAT Act - Assessment under section 8 of the BTEG Act - Adjustment of refund against subsequent entry-tax liability - Validity of ex parte assessment and special mode of recovery - Primacy of official records (Register VIII / challan) over inconsistent return entries

Assessment under section 39(2) of the BVAT Act - Validity of ex parte assessment and special mode of recovery - Sustainability of the assessment order dated 12.01.2019 (entry tax for 2015-16) and consequent demand notices, which were passed under section 39(2) of the BVAT Act read with section 8 of the BTEG Act. - HELD THAT: - The Court examined whether the order under section 39(2) for 2015-16, which recorded a tax shortfall and triggered recovery, was sustainable in view of the respondent authorities' inconsistent treatment of refunds and payments across financial years. The assessment impugned was not a reassessment but an order based on comparison between amounts admitted in the return and amounts accepted as paid by the authorities. Material official records (challan/ Register VIII) showed that a refund amount had been credited to the petitioner and that the authorities later found 2014-15 refundable as well. The Court found it impermissible for the revenue to accept the petitioner's return in part, to treat the refund as credited for an earlier year, and yet proceed to recover from the petitioner for 2015-16 without first reconciling and, if necessary, completing the 2014-15 assessment which declared a refundable balance to be adjusted for 2015-16. Because the authorities proceeded in an order-of-years which produced mutually inconsistent positions (a contemporaneous return suggesting excess payment, official records showing credited refund, and an assessment finding a shortfall), the impugned assessment and consequent recovery could not be sustained.

Assessment dated 12.01.2019 and demand notices dated 12.01.2019 and 28.01.2019 set aside as unsustainable.

Adjustment of refund against subsequent entry-tax liability - Primacy of official records (Register VIII / challan) over inconsistent return entries - Effect of the refund order of 31.03.2015 (period 2010-11) and the later assessment for 2014-15 (22.06.2019) on the tax liability for 2015-16. - HELD THAT: - The Court accepted that the refund for 2010-11 was ordered and credited to the petitioner's account and that the 2014-15 assessment subsequently found an additional refundable amount to be adjusted for 2015-16. Given these facts, had the 2014-15 assessment been completed before the 2015-16 order, the petitioner would not have had the tax liability computed in the impugned order. The Court emphasised that the amount appearing in the petitioner's return as paid cannot be treated as decisive when official records maintained by the revenue (challan and Register VIII) demonstrate crediting and adjustments; the revenue could not both acknowledge credit/refund and, without reconciling records and passing the 2014-15 assessment, validly hold the petitioner liable for the 2015-16 shortfall.

The assessment for 2015-16 cannot stand without prior reconciliation and completion of the 2014-15 assessment and recognition of credited refunds.

Validity of ex parte assessment and special mode of recovery - Assessment under section 39(2) of the BVAT Act - Whether recovery effected from the petitioner's bankers under special mode was lawful in the circumstances. - HELD THAT: - The Court noted that recovery was initiated after the impugned assessment and that bankers paid the amount demanded. However, because the underlying assessment was held unsustainable for the reasons identified - inconsistent treatment of refunds/payments and failure to complete earlier-year assessment which would have obviated the demand - the consequential recovery could not be sustained. The revocation of attachment following payment was a factual consequence; the legality of the underlying demand, which justified the special mode recovery, was the core issue and was found wanting.

Recovery under the impugned demand was quashed as it flowed from an unsustainable assessment.

Final Conclusion: The writ petition is allowed. The assessment dated 12.01.2019 and the demand notices dated 12.01.2019 and 28.01.2019 are set aside. Respondents are granted liberty to reconcile accounts and pass fresh orders in accordance with law after completing the 2014-15 assessment and duly accounting for the refunds/credits reflected in official records.

Requirement of a show-cause notice containing a gist of the accusations under Rule 58 of the JVAT Rules, 2006 - Requirement of issuance of a show-cause notice in prescribed format (Metal Forgings principle) - Penalty for failure to produce evidence regarding proper accounting and release on payment under Section 70(5)(b) of the JVAT Act, 2005 - Distinction between daily entries for retailers and month-wise records for manufacturers under Rule 38 - Effect of acceptance of statutory returns and assessment findings on penalty proceedings

Requirement of a show-cause notice containing a gist of the accusations under Rule 58 of the JVAT Rules, 2006 - Requirement of issuance of a show-cause notice in prescribed format (Metal Forgings principle) - Validity of the show-cause notice issued in respect of penalty under Section 70(5)(b) for failure to make entries in books of account. - HELD THAT: - The Court held that Rule 58(1) of the JVAT Rules mandates service of a notice containing a gist of the accusations to enable the person proceeded against to file an effective reply. Relying on the principle in Metal Forgings, the Court found that the show-cause notice in the present case did not disclose any reasons or the requisite satisfaction for invoking penalty under Section 70(5)(b), nor did it provide the necessary gist of accusations to the petitioner. The State's reliance on the inspection report as a substitute for a proper notice was rejected because the law requires issuance of notice in the prescribed manner and not by way of ancillary correspondence or part of an inspection report. For these reasons the initiation of proceedings under Section 70(5)(b) was held to be vitiated and void ab initio. [Paras 5, 6, 28]

Proceedings under Section 70(5)(b) were set aside because the show-cause notice did not comply with Rule 58 and was therefore invalid.

Distinction between daily entries for retailers and month-wise records for manufacturers under Rule 38 - Effect of acceptance of statutory returns and assessment findings on penalty proceedings - Whether the Tribunal erred in upholding the penalty by misapplying record-keeping rules and by ignoring the returns, documents and the regular assessment order accepting accounts. - HELD THAT: - The Court found that the Tribunal misread Rule 38 by using the term 'dealer' in place of 'retailer' and thus applied a rule intended for retailers (daily entries) to a manufacturer. Rule 38(6) prescribes month-wise records for manufacturers and Rule 38(2)(r) prescribes stock records without a daily-entry requirement. The Tribunal also erred in concluding that no purchase documents or inter state purchase details were filed, despite the petitioner having filed returns for April 2010 (on 25.05.2010) and annexed purchase invoices and other documents before the authorities and the Tribunal. The assessment order for 2010-11, placed on record, accepted the petitioner's accounts and found no discrepancies; this acceptance was a material factor undermining the justification for the penalty. The Court held that these factual and legal errors vitiated the Tribunal's affirmation of the penalty. [Paras 25, 29, 30, 31, 32]

Tribunal's findings were erroneous: Rule 38 was misapplied and the Tribunal wrongly ignored returns, documents and the assessment finding; these errors support setting aside the penalty.

Penalty for failure to produce evidence regarding proper accounting and release on payment under Section 70(5)(b) of the JVAT Act, 2005 - Effect of acceptance of statutory returns and assessment findings on penalty proceedings - Relief consequential on invalidation of the penalty order including demand notices and refund direction. - HELD THAT: - Having held the show-cause notice and consequent penalty to be void and having found error in the Tribunal's reasoning, the Court quashed the penalty order, the appellate order insofar as it confirmed the penalty under Section 70(5)(b), and the Tribunal's affirmation on that score. The demand raised pursuant to the impugned penalty was set aside. The Court directed refund of any amounts paid pursuant to the impugned orders within two months with statutory interest, if any. [Paras 14, 28, 33]

Impugned penalty order, appellate order and Tribunal's affirmation insofar as they relate to Section 70(5)(b) are set aside; demands are quashed and paid amounts to be refunded with statutory interest.

Final Conclusion: Writ petition allowed: the penalty proceedings and consequential demand under Section 70(5)(b) were quashed for failure to issue a show-cause notice in the prescribed form and for material errors in the Tribunal's application of Rule 38 and disregard of returns and the assessment finding; demands are set aside and any amounts paid are to be refunded with statutory interest within two months.

Monetary limits for filing appeals - tax effect - withdrawal of appeals - extension of monetary limits to wealth-tax matters - definition of "urban-land" under Section 2(ea) - distinction between prohibition and regulatory permission for construction - valuation by District Valuation Officer / Registered Valuer - allowability of debts against land for net-wealth computation - validity of reopening and notice issued for escapement of wealth under Section 17

Monetary limits for filing appeals - tax effect - withdrawal of appeals - extension of monetary limits to wealth-tax matters - Applicability of enhanced monetary limits to Revenue appeals before the Tribunal and maintainability where tax effect per assessment year is below the prescribed limit. - HELD THAT: - The Tribunal applied CBDT Circulars (11.07.2018 as extended to wealth-tax matters and 08.08.2019 amending monetary limits) and held that the enhanced limits apply to wealth-tax appeals pending before the authorities. The Board's prescription treats tax effect on an assessment-year basis and requires separate calculation for each year; where tax effect in an individual assessment year is less than Rs. 50 lakhs, the Department's appeal in respect of that assessment year is not maintainable. Consequentially, Revenue appeals in the specified assessment years with tax effect below the revised threshold are dismissed and corresponding cross-objections by the assessee become academic. [Paras 9, 11, 12, 14, 15]

Revenue appeals in respect of assessment years where the tax effect per year is less than Rs. 50 lakhs are not maintainable and are dismissed; related cross-objections are dismissed as academic.

Definition of "urban-land" under Section 2(ea) - distinction between prohibition and regulatory permission for construction - Whether land on which construction requires prior statutory permission but is not expressly prohibited is to be treated as "urban-land" includable in net wealth. - HELD THAT: - Following the ratio of the Hon'ble Bombay High Court in Sarovar Hotels Pvt. Ltd., the Tribunal held that the exclusion in Explanation 1(b) to Section 2(ea) (which excludes land where construction is not permissible under law) does not cover land where construction is permissible but subject to statutory sanction or prior permission from the competent authority. The requirement of regulatory permission does not amount to a prohibition; therefore, lands where construction could be permitted (though permission was not obtained as on the valuation date) are to be classified as "urban-land" and included in the assessee's net wealth. [Paras 16, 18, 19, 20]

Lands, though requiring prior sanction for construction and lacking permission on the valuation date, qualify as "urban-land" under Section 2(ea) and their value is includable in net wealth.

Valuation by District Valuation Officer / Registered Valuer - allowability of debts against land for net-wealth computation - Procedure for determination of value of lands and allowability of debts where lands are held to be urban-land and includable in net wealth. - HELD THAT: - The Tribunal directed that the Assessing Officer determine the value of the lands as on the relevant valuation dates either by obtaining valuation report(s) from the District Valuation Officer or by adopting the registered valuer's report filed by the assessee. The Assessing Officer is further directed to allow deduction of debts attributable to the lands provided the assessee furnishes requisite proof and such debts are outstanding as on the relevant dates. This constitutes a remit to the Assessing Officer for valuation and verification-quantification and computation rather than adjudication of the underlying legal test. [Paras 21, 25, 26]

Valuation is to be determined by DVO or Registered Valuer and permitted debts as on the relevant dates shall be allowed after verification; Assessing Officer to compute net wealth accordingly.

Validity of reopening and notice issued for escapement of wealth under Section 17 - Validity of notice issued under Section 17 and consequent assessment proceedings initiated after search where companies had not filed wealth-tax returns. - HELD THAT: - On the facts, search and seizure revealed multiple companies holding lands/stock which had not filed wealth-tax returns. The Assessing Officer recorded reasons for escapement of wealth and issued notice under Section 17; the Tribunal found the reasons for reopening to be correctly recorded and upheld the validity of the notice and initiation of proceedings. The Tribunal also observed that the lands so held were taxable as net wealth (having rejected the assessee's contention of exemption), and therefore dismissal of the challenge to the notice was warranted. [Paras 28, 29]

The notice under Section 17 and the consequent assessment proceedings were valid and are upheld.

Final Conclusion: The Tribunal applied CBDT circulars to hold Revenue appeals non-maintainable where tax effect per assessment year is below Rs. 50 lakhs and dismissed those appeals; it held lands requiring prior permission for construction to be "urban-land" includable in net wealth, remitted valuation and verification of debts to the Assessing Officer (via DVO or registered valuer reports), and upheld the validity of notices issued under Section 17 for escapement of wealth.

International Commercial Arbitration - independence and impartiality of arbitrator - power of court to appoint arbitrator under Section 11(6) - agreed appointment procedure and consequences of failure to act - effect of an invalid appointment and annulment

International Commercial Arbitration - lead member of a consortium - Whether the arbitration fell within the definition of an "International Commercial Arbitration" under Section 2(1)(f) of the Act. - HELD THAT: - The Court examined the consortium documents, including the declaration designating Applicant No.1 as the lead member with its registered office in New York. Applying the reasoning in Larsen and Toubro Limited SCOMI Engineering BHD, the Court treated the categories in Section 2(1)(f) distinctly and concluded that where the lead member is incorporated outside India, the requirements of Section 2(1)(f) are satisfied. On that basis the arbitration was held to be an "International Commercial Arbitration", thereby bringing the appointment application within the jurisdiction of this Court under Section 11(6). [Paras 10]

The arbitration is an International Commercial Arbitration.

Power of court to appoint arbitrator under Section 11(6) - agreed appointment procedure and consequences of failure to act - independence and impartiality of arbitrator - effect of an invalid appointment and annulment - Whether this Court should exercise its power under Section 11(6) to annul the respondent's appointment and appoint an independent arbitrator. - HELD THAT: - The Court found that although the respondent's appointment of an arbitrator was made shortly after the contractual 30-day period expired, mere technical delay did not, by itself, require court intervention. However, having regard to the imperative of ensuring impartial and independent arbitral constitution and the principles in TRF Limited and Voestalpine (Walter Bau and related authorities), the Court held that where the party authorised to appoint a sole arbitrator has a potential interest affecting impartiality or where circumstances give rise to justifiable doubts, the Court may ignore the designated procedure and appoint an independent arbitrator for reasons to be recorded. Applying these principles to the facts, the Court concluded that the circumstances warranted annulment of the respondent's appointment dated 30.07.2019 and exercise of the power under Section 11(6) to make a fresh appointment. The Court therefore annulled the respondent's appointment and, exercising its Section 11(6) power, appointed Dr. Justice A.K. Sikri as sole arbitrator subject to statutory disclosures and timelines. [Paras 25, 27]

The appointment dated 30.07.2019 is annulled and the Court, under Section 11(6), appoints Dr. Justice A.K. Sikri as sole arbitrator.

Final Conclusion: The Court held that the disputes constitute an International Commercial Arbitration and, exercising its power under Section 11(6) of the Arbitration and Conciliation Act, 1996, annulled the respondent's appointment dated 30.07.2019 and appointed Dr. Justice A.K. Sikri as sole arbitrator to decide all disputes arising out of the agreement dated 22.05.2017; the appointment is subject to the amended Section 12 declaration and timelines under Section 29A, and costs/fees to be shared equally.

Criminal liability of company director under Section 138 of the Negotiable Instruments Act - effectiveness of resignation of director and proof by Registrar records - adequacy of complaint averments to show director "in charge" and responsible for conduct of company - piercing corporate veil and lifting corporate veil to determine individual liability - summary quashing of criminal complaint where material facts are disputed

Effectiveness of resignation of director and proof by Registrar records - Form No.DIR-11 / Form No.DIR-12 / Form No.32 as evidence of resignation - Whether the petitioner's alleged resignation prior to issuance of the cheques was established such that he could be discharged from prosecution. - HELD THAT: - The Court found that the petitioner did not place on record the Form No.32 or any certificate from the Registrar of Companies proving the date on which his resignation was accepted. Form No.DIR-12 relied upon by the petitioner showed a digital signing date by another director which raised a dispute about the acceptance date of the resignation. In the absence of uncontested Registrar records, the trial Court was justified in treating the resignation date as a disputed fact and not accepting the contention that the petitioner had effectively resigned prior to issuance of the cheques. The possibility that the resignation information could be ante-dated was a matter for evidence and trial rather than summary adjudication.

Resignation prior to issuance of cheques was not established; the question remains a disputed factual issue for trial.

Adequacy of complaint averments to show director "in charge" and responsible for conduct of company - criminal liability of company director under Section 138 of the Negotiable Instruments Act - Whether the averments in the complaints were sufficient to summon the petitioner for offences under Section 138 N.I. Act. - HELD THAT: - The complaints contained specific averments that the petitioner was an active director, participated in purchase and export operations, attended offices and plants, and was responsible for day-to-day conduct of the company; accompanying statements of account for the financial years 2014-2015 to 2016-2017 were produced. The Court observed that the law requires specific pleading to show a director was in charge and responsible, but concluded that here the complaint's pleadings were not merely bald statements and, coupled with the account particulars, raised triable issues. Given these specific averments and the existence of disputed facts (including travel, signing and share-holding contentions), the trial Court's summoning and refusal to drop proceedings could not be impugned at the quashing stage.

The complaint averments were sufficient to raise a prima facie case and justify continuation of prosecution; summary discharge was inappropriate.

Summary quashing of criminal complaint where material facts are disputed - piercing corporate veil and lifting corporate veil to determine individual liability - Whether the High Court should quash the complaints and related proceedings at the pre-trial stage. - HELD THAT: - The Court emphasized that several material facts were disputed (effectiveness and date of resignation, whether the petitioner was an active director, who signed the cheques, and the company's account liabilities) and that the petitioner had not led affidavits or documentary proof (e.g., passport copies, Registrar acceptance) to rebut the complaint's allegations. While recognizing precedents that a non-executive or resigned director may not be prosecuted if resignation predates the cheque, the Court found those authorities inapplicable on the present facts where resignation timing and the petitioner's role remained contested. Accordingly, the Court held that quashing at this stage would be premature and that these matters require evidence at trial or in discharge proceedings.

Petitions for quashing were dismissed; the complaints and all proceedings are to continue for adjudication of disputed factual issues.

Final Conclusion: The petitions to quash the complaints, the summoning orders and the orders refusing discharge were dismissed. The High Court declined to quash criminal proceedings under Section 138 N.I. Act because material facts - including the date/effectiveness of resignation and the petitioner's role in the company - are disputed and require evidence at trial.

Correction of clerical or arithmetical errors under Section 13A - Finality of award under Section 12 - Absence of statutory power of review - Illegality of review beyond statutory provision

Correction of clerical or arithmetical errors under Section 13A - Absence of statutory power of review - Illegality of review beyond statutory provision - Review Award dated 14.07.2004 could not be validly passed under the Land Acquisition Act, 1894, and Section 13A does not confer a power to review the Award of the Collector. - HELD THAT: - Section 13A, inserted with effect from 24.09.1984, permits the Collector to correct clerical or arithmetical mistakes in an award and only within six months from the date of the award (or before reference under Section 18). A plain reading shows it is not a provision for review. In the present case the order dated 14.07.2004 effected a reduction in compensation on the ground of illegality of structures - a substantive reconsideration of entitlement which is not a clerical or arithmetical correction and was also passed beyond the six months period. There is no other provision in the Act permitting review of a final award. Established precedent holds that review is not an inherent power and must be conferred by statute; absent such conferral any purported review is ultra vires. Consequently the Collector's order purporting to review the Award is legally impermissible. [Paras 8, 9, 10, 12]

The Review Award no.16/03-04 dated 14.07.2004 is without jurisdiction and cannot be sustained.

Finality of award under Section 12 - Correction of clerical or arithmetical errors under Section 13A - The Award dated 01.10.2003 had attained finality and the appellants are entitled to the compensation awarded therein and to the Supplementary Award dated 27.10.2004. - HELD THAT: - Section 12 provides that the Collector's award becomes final when filed in the Collector's office and notice is given to interested persons. The facts show the Award dated 01.10.2003 was duly notified and part compensation paid, thus attaining finality. The purported deduction by the later Review Award cannot stand. The High Court's dismissal of the writ petitions upholding the Review Award was therefore incorrect. Given the invalidity of the Review Award, the appellants are entitled to the compensation as awarded in the Award dated 01.10.2003 and to the Supplementary Award of 27.10.2004. [Paras 11, 13]

The appellants are entitled to the compensation awarded on 01.10.2003 and to the Supplementary Award dated 27.10.2004; the High Court order upholding the Review Award is quashed.

Final Conclusion: The appeals are allowed. The Collector's Review Award dated 14.07.2004 (Review Award No.16/03-04) and the Delhi High Court judgment dismissing the challenges thereto are quashed; the appellants shall be entitled to the compensation as awarded in the Collector's Award dated 01.10.2003 and the Supplementary Award dated 27.10.2004.