TaxTMI Updates e-Newsletter
Dec 15,2020

Anti-profiteering - Commensurate reduction in prices - Benefit of input tax credit - Denial of input tax credit ratio - Method of computation of profiteering - Interpretation of Section 171 (Anti-Profiteering Measure) - Deposit in Consumer Welfare Fund - Penalty under Section 171(3A) - non-retrospective application - Constitution of National Anti-Profiteering Authority and requirement of judicial member

Commensurate reduction in prices - Anti-profiteering - Interpretation of Section 171 (Anti-Profiteering Measure) - Whether the respondent passed on the benefit of reduction in the rate of GST (from 18% to 5%) and denial of input tax credit to recipients by way of commensurate reduction in prices for the period 15.11.2017 to 31.01.2018. - HELD THAT: - The Authority found on the material (DGAP report, price-lists and invoices) that although the output GST rate was reduced w.e.f. 15.11.2017 (with denial of ITC), the respondent increased base prices across a large number of SKUs so that customers continued to pay the same (or higher) total price. The DGAP computed the ratio of denial of ITC to net outward taxable turnover for July-October 2017 as 9.11% and compared pre and post rate reduction average base prices (Annexures 32 to 36). The Authority accepted DGAP's approach that Section 171 requires passing on the tax/ITC benefit by commensurate reduction in prices to each recipient and that mere charging the reduced GST rate did not, by itself, discharge that obligation where base prices were increased contemporaneously. On these findings the Authority concluded the respondent did not pass on the benefit under Section 171(1). [Paras 32, 139, 140]

Respondent failed to pass on the benefit of rate reduction and denial of ITC to recipients for 15.11.2017-31.01.2018; Section 171 obliges commensurate reduction in prices and DGAP's product wise comparison was accepted.

Denial of input tax credit ratio - Method of computation of profiteering - Anti-profiteering - Amount of profiteering and consequential directions. - HELD THAT: - On DGAP's computations (item wise comparison of pre and post rate reduction prices, application of the computed ITC denial ratio and quantification in Annexure 37), the Authority accepted the DGAP figure of net higher realisation and determined the profiteered amount as Rs. 7,49,27,786 for supplies in the ten States listed. The Authority directed the respondent to (a) reduce prices commensurately for the impacted products, and (b) deposit 50% of the profiteered amount into the Central Consumer Welfare Fund and the remaining 50% into the State CWFs of the ten States, together with interest at 18% from the dates the amounts were realised until deposit, within three months; the appropriate Commissioners were directed to ensure recovery/reporting. [Paras 139, 140, 141, 142]

Profiteered amount fixed at Rs. 7,49,27,786; respondent directed to effect commensurate price reduction and deposit the quantified amount with interest into central/state Consumer Welfare Funds; compliance to be monitored by Commissioners CGST/SGST.

Penalty under Section 171(3A) - non-retrospective application - Anti-profiteering - Whether penalty under Section 171(3A) could be imposed for the respondent's conduct during 15.11.2017-31.01.2018. - HELD THAT: - Although the Authority found that the respondent had profiteered in contravention of Section 171(1), it noted that penal provision Section 171(3A) (ten percent of the amount profiteered) was inserted only w.e.f. 01.01.2020 by the Finance Act, 2019. The alleged contravention occurred in 2017-2018; therefore the penalty under Section 171(3A) could not be imposed retrospectively. Accordingly, the Authority did not issue a show cause notice for that penalty. [Paras 143]

Penalty under Section 171(3A) not imposed because the provision was not in force during the period of the contravention.

Constitution of National Anti-Profiteering Authority and requirement of judicial member - Excessive delegation - Validity of the Authority's constitution (absence of a judicial member) and challenge of excessive delegation/vires of Rule 122/Rule 126. - HELD THAT: - The Authority observed that it was constituted under Section 171(2) read with Rule 122 and other Rules framed under Section 164 on the recommendation of the GST Council and approved by the competent authorities. The Authority held that its duties are specialised/expert/quasi judicial (determining passage of tax/ITC benefits) and do not displace the jurisdiction of ordinary courts; it therefore concluded that absence of a judicial member in the Authority did not render its constitution invalid. The Authority also recorded that it has notified Methodology & Procedure under Rule 126 (Notification dated 28.03.2018) and that the substantive requirement to pass on tax/ITC benefit is set out in Section 171(1); facts vary case to case and no single mathematical formula can be universally prescribed. Challenges alleging excessive delegation or the need for a prescribed, uniform computation methodology were rejected. [Paras 40, 76, 84]

Challenges to the constitution and to absence of a prescribed uniform methodology dismissed; Authority's constitution and exercise of powers upheld and its Methodology & Procedure (and Section 171) treated as the operative framework.

Scope of investigation - product-level versus complainant/product-limited investigation - Anti-profiteering - Whether DGAP/Authority could investigate all products supplied by the respondent (restaurant services/SKUs) rather than restrict inquiry to the single product named in the complaint. - HELD THAT: - The Authority interpreted Section 171(1)-(2) to require passing on tax/ITC benefits on each supply to each recipient. Given that ITC accounting is maintained across supplies and the complaint alleged a pattern of menu/pricing conduct, the DGAP was entitled to investigate the restaurant service as a whole and the SKUs impacted by the tax change. Rule 133(5) clarifies expanded investigation power; the Authority held that DGAP's wider investigation into products where the rate changed was within mandate and justified by the complainants' allegations and the statutory scheme. [Paras 94, 96]

DGAP was competent to investigate all impacted products under the restaurant service; investigation not confined to the single invoiced product in the complaint.

Time limit for Authority's order - Directory versus mandatory procedural time limits - Whether the Authority's order (dated 16.11.2018) was time barred under Rule 133(1) and thus void. - HELD THAT: - The Authority examined the timeline of DGAP reports and replies and held that the operative date for computing the limitation ran from the last DGAP report/clarification (20.08.2018) and that the order passed on 16.11.2018 was within the three month period. In any event, the Authority accepted judicial authorities treating the Rule 133(1) time limit as directory rather than jurisdictional where no penal consequence is prescribed; therefore the proceedings were not abated for non observance of the three month timeline. [Paras 67, 70]

Proceedings and order not vitiated by time limit objections; Rule 133(1) treated as directory.

Final Conclusion: The Authority concluded that the respondent did not pass on the benefit of GST rate reduction and denial of input tax credit to recipients for 15.11.2017-31.01.2018; the profiteered amount was quantified at Rs. 7,49,27,786, for which the respondent must effect commensurate price reduction and deposit the amount (with 18% interest) into the central/state Consumer Welfare Funds as directed. Challenges to the Authority's constitution, methodology, scope of investigation and limitation were rejected; penalty under Section 171(3A) was not imposed because that provision was not in force during the period of contravention.

Provisional attachment under Section 83 of the Gujarat Goods and Services Tax Act - cash credit account as a bank credit/loan facility - interim relief by lifting provisional attachment - prima facie case

Provisional attachment under Section 83 of the Gujarat Goods and Services Tax Act - cash credit account as a bank credit/loan facility - interim relief by lifting provisional attachment - prima facie case - Provisional attachment of the Cash Credit/Current Account maintained with AMCO Bank was ordered to be lifted and the account permitted to be operated by the writ applicant by way of interim relief. - HELD THAT: - The Court found that the writ applicant had established a strong prima facie case warranting interim relief in respect of the Cash Credit/Current Account No.066028304000013 with AMCO Bank. Having regard to submissions that a cash credit account represents a bank credit/loan facility and the consequences of attaching such an account, the Court directed that the provisional attachment of that specific cash credit account shall no longer operate and ordered the AMCO Bank to permit the writ applicant to operate the account. The direction was confined to interim relief; further proceedings and final adjudication on merits were not undertaken in this order. [Paras 5, 6]

Interim order granted: provisional attachment of the specified cash credit account with AMCO Bank is lifted and the account to be allowed to be operated by the writ applicant.

Provisional attachment under Section 83 of the Gujarat Goods and Services Tax Act - interim relief by lifting provisional attachment - Provisional attachment of two bank accounts maintained with HDFC Bank Ltd. was not decided and was left for consideration on the next date of hearing. - HELD THAT: - The Court reserved its decision regarding the provisional attachment orders affecting one Current Bank Account and one Savings Bank Account at HDFC Bank Ltd., indicating that appropriate orders would be passed on the next date of hearing. Notice was issued to the respondents and no further notice was required given appearance of the State's counsel. The matter concerning these two HDFC accounts therefore remains pending for adjudication. [Paras 6, 7]

Decision on provisional attachment of the two HDFC Bank accounts deferred for consideration on the next date of hearing.

Final Conclusion: Writ petition allowed in part by granting interim relief: the provisional attachment of the specified cash credit account with AMCO Bank is lifted and the account may be operated by the petitioner; the challenge to provisional attachment of two HDFC Bank accounts is deferred for further consideration on the next date of hearing.

Maintainability of writ petition in presence of alternative statutory remedy - availability and efficacy of alternative remedy under Section 107 of the Himachal Pradesh Goods and Service Tax Act, 2017 - deposit condition for statutory appeal - 10% of disputed tax and full admitted liability - bank account freeze and direction to release statutory deposit - limitation on writ jurisdiction where statutory remedy exists

Maintainability of writ petition in presence of alternative statutory remedy - availability and efficacy of alternative remedy under Section 107 of the Himachal Pradesh Goods and Service Tax Act, 2017 - limitation on writ jurisdiction where statutory remedy exists - Whether the writ petition challenging the assessment orders is maintainable in view of the statutory appeal remedy under Section 107 of the Himachal Pradesh GST Act, 2017. - HELD THAT: - The Court found that Section 107 of the Himachal Pradesh Goods and Service Tax Act, 2017 provides an alternative statutory remedy by way of appeal against the assessment orders embodied in Annexures P-6 and P-7. The petitioner's counsel failed to demonstrate that the statutory remedy was not a befitting or efficacious remedy. The limited exception to oust the alternative remedy-palpable breaches by the assessing authority of statutory provisions rendering the remedy inefficacious-was not established on the materials or submissions. In consequence, the exercise of writ jurisdiction is inappropriate and the petition is not maintainable insofar as it seeks to challenge the assessment orders without first availing the statutory appellate remedy. [Paras 2, 3]

Writ petition not maintainable; petitioner must avail the statutory appeal under Section 107.

Deposit condition for statutory appeal - 10% of disputed tax and full admitted liability - bank account freeze and direction to release statutory deposit - Whether the petitioner can be permitted to file the statutory appeal and how the statutory deposit condition is to be complied with given that the petitioner's bank accounts are frozen. - HELD THAT: - The Court noted the obligation under sub section (6) of Section 107 requiring deposit of 10% of the disputed tax and deposit of the entire admitted tax liability as a condition for instituting a valid appeal. The petitioner contended that a bank account freeze would prevent compliance and thereby render the statutory remedy inefficacious. The respondents, through the Sr. Additional Advocate General, stated they had no objection to the bank releasing 10% of the disputed sums into the account of the statutory authority to satisfy the statutory condition. Taking this concession into account, the Court directed that the bank shall forthwith release into the accounts of the statutory authority 10% of the disputed sums and that the petitioner shall deposit the entire admitted tax liability with the statutory authority contemporaneously with filing the appeal. The Court also made clear the petitioner remains free to challenge any order to the bank (oral or written) that resulted in the freeze before the statutory authority if appropriate. [Paras 4, 5, 6]

Bank to release 10% of disputed tax to statutory authority; petitioner to deposit admitted liability; petitioner may file appeal after complying with these directions.

Availability and efficacy of alternative remedy under Section 107 of the Himachal Pradesh Goods and Service Tax Act, 2017 - Timelines for filing and disposal of the statutory appeal following the Court's directions. - HELD THAT: - To ensure prompt adjudication, the Court directed that the petitioner shall file the appeal against the impugned assessment within two weeks from the date of the order. The statutory authority is directed to decide the appeal in accordance with law within four weeks of its filing. The Court thereby furnished a clear timetable to secure expeditious disposal of the statutory remedy which it found to be appropriate and efficacious. [Paras 7]

Appeal to be filed within two weeks; statutory authority to decide the appeal within four weeks thereafter.

Final Conclusion: The writ petition challenging the GST assessment orders is not maintainable because an efficacious alternative statutory remedy exists under Section 107 of the Himachal Pradesh GST Act, 2017. The petitioner is directed to file the statutory appeal within two weeks, after depositing 10% of the disputed tax (to be released by the bank to the statutory authority) and the full admitted tax liability; the statutory authority shall decide the appeal within four weeks of filing.

Rule 117 of the CGST Rules - intra vires - ultra vires - reading down of a rule - awaiting Supreme Court decision - listing deferred pending higher court judgment

Rule 117 of the CGST Rules - intra vires - ultra vires - reading down of a rule - awaiting Supreme Court decision - Whether these petitions concerning the vires and interpretation of Rule 117 of the CGST Rules should be adjudicated by this Court now or deferred pending the Supreme Court's decision in related SLPs. - HELD THAT: - The Court noted that substantially similar questions regarding the vires and permissible reading down of Rule 117 are pending before the Supreme Court in the SLPs arising from Brand Equity Treaties Limited & Ors. and also that the ratio of this Court's earlier decision in Siddharth Enterprise has been the subject of further challenge. Having heard the parties and on the request of the Union, the Court held that it is appropriate to defer adjudication of the common questions in this group of matters until the Supreme Court decides the mentioned SLPs. The matters are to be listed after the Supreme Court's judgment, upon appropriate application by either party, so that uniformity and avoidance of conflicting decisions are ensured. [Paras 5]

Matters to be listed after the Supreme Court's judgment in the identified SLPs; adjudication deferred until then.

Service of process - Permission for the petitioners in two named matters to serve copies on the Additional Solicitor General. - HELD THAT: - The Court granted leave to the learned counsel for the petitioners in Special Civil Application Nos.13154 of 2020 and 14465 of 2020 to serve copies of their petitions on the learned Additional Solicitor General, recording this procedural direction without deciding any substantive point arising from service.

Petitioners in SCA Nos.13154/2020 and 14465/2020 permitted to serve copies on the Additional Solicitor General.

Final Conclusion: The Gujarat High Court declined to decide the substantive challenge to Rule 117 of the CGST Rules, directing that the grouped petitions be re-listed after the Supreme Court delivers its judgments in the identified SLPs; procedural permission to serve copies on the Additional Solicitor General was granted in two specified matters.

Wrongful TDS deduction - refund application to Income-tax department - assistance by payer to recover TDS from Income-tax department - tribunal's power to release funds - prohibition on keeping disputed amounts in fixed deposit after appeals are over - judicial reliance on precedent

Wrongful TDS deduction - refund application to Income-tax department - TDS appears to have been wrongly deducted and the Income-tax department shall consider the petitioners' refund application on merits. - HELD THAT: - The Court recorded that, on the material before it, TDS was deducted although prima facie it should not have been. The petitioners are permitted to file a refund application which the Income-tax department is directed to consider on merits. The Court observed that the department should take necessary steps in the matter and noted the officer's apology and explanation that the amount was counted in the wrong year. The Court relied on the view that, in the circumstances, the departmental process of refund/adjustment is the appropriate remedy.

Petitioners may file a refund application and the Income-tax department shall consider it on merits; prima facie TDS should not have been deducted.

Assistance by payer to recover TDS from Income-tax department - judicial reliance on precedent - The Insurance company shall assist the appellants in recovering the deducted amount from the Income-tax department. - HELD THAT: - The Court observed that prima facie the Insurance Company had already transmitted the amount through challan to the Income-tax department and, in any event, should assist the appellants in recovery from the department. The Court indicated support for this course by reference to a recently cited Bombay High Court decision relied upon by the appellant, treating cooperative assistance by the payer as appropriate to facilitate resolution.

Insurance company directed to help the appellants in recovering the deducted amount from the Income-tax department.

Tribunal's power to release funds - This Court cannot order release of the disputed amount where the lis between parties before the concerned court/tribunal is subsisting; the Tribunal is the appropriate forum to release the amount. - HELD THAT: - The Court noted that it could not pass an order for release because the lis between the parties is before the relevant forum and that the Tribunal has already passed orders concerning the amount. The proper remedy for release lies with the Tribunal which has control over the subject matter and has, as conveyed, kept the amount in fixed deposit pursuant to its orders.

No order of release by this Court; the Tribunal shall consider and order release if appropriate.

Prohibition on keeping disputed amounts in fixed deposit after appeals are over - judicial reliance on precedent - Amounts should not be kept in fixed deposit once appeals are concluded, having regard to the Apex Court authority cited. - HELD THAT: - Relying on the Apex Court's decision in A.V. Padma & others v. R. Venugopal and others, the Court observed that where appeals are over the practice of keeping the disputed amount in fixed deposit is improper. The Court recorded that the Tribunal had kept the entire amount in fixed deposit but, in light of the cited precedent and the conclusion of appeals, such retention is not appropriate and the Tribunal should act accordingly.

As appeals are over, the amount should not remain in fixed deposit in accordance with the cited Apex Court authority.

Final Conclusion: Civil Misc. Urgency Application allowed: petitioners may apply for refund to the Income-tax department which shall consider it on merits; the Insurance Company shall assist in recovery from the department; this Court will not order release of funds and the Tribunal should address release and not retain the amount in fixed deposit now that appeals are concluded.

Allowability of interest on disputed statutory dues as business expenditure under the mercantile system - treatment of provisions versus ascertainment of liability for deduction - peripheral development expenditure and applicability of government notification/charitable deduction - disallowance for failure to deduct tax at source and remit under section 40(a)(ia) read with section 195 - deductibility of provision for leave encashment and operation of section 43B(f) - claim of additional depreciation and requirement of acquisition and installation dates - application of section 43B to payments deposited under court direction - computation of disallowance under section 14A read with Rule 8D - investment allowance under section 32AC - requirement of acquisition and installation within the specified period - valuation and revaluation loss on non-moving stores and spares and net realizable value

Allowability of interest on disputed statutory dues as business expenditure under the mercantile system - treatment of provisions versus ascertainment of liability for deduction - Deletion of disallowance of interest on disputed Government dues (electricity duty and water charges) and allowance of the claim as business expenditure. - HELD THAT: - The Tribunal followed earlier coordinate-bench decisions in the assessee's own case which treated interest on disputed electricity duty and water charges, charged to profit and loss on accrual (mercantile system), as allowable under the Act. The Tribunal reasoned that where interest is brought to tax (for example, interest earned on deposits made pursuant to court directions), there is no justification for disallowing interest payable to Government for non-payment of such dues; earlier Tribunal orders in the assessee's cases were applied. The balance of the authorities' contentions that the liability was unascertained and no demand had been raised was rejected in view of the precedent and the mercantile accounting treatment accepted by the Tribunal. [Paras 12]

Disallowance deleted and the claim of interest on disputed Government dues allowed.

Peripheral development expenditure and applicability of government notification/charitable deduction - remand for verification and production of evidence - Whether amounts claimed as peripheral development expenses (including payments effected through corporate office) are allowable as business expenditure or qualify alternatively for deduction under charitable provisions. - HELD THAT: - The Tribunal found that the CIT(A) had made detailed findings but the Assessing Officer had not examined or verified the nature and supporting documents of the corporate-office incurrences. Given the factual matrix and the assessee's offer to produce supporting material, the Tribunal remitted the issue to the AO for fresh examination and verification; the assessee was granted liberty to produce evidence and the AO was directed to consider the alternative plea for benefit under section 80G if applicable. [Paras 16]

Issue remitted to the file of the Assessing Officer for re examination; ground allowed for statistical purposes.

Disallowance for failure to deduct tax at source and remit under section 40(a)(ia) read with section 195 - remand for verification of TDS compliance and foreign remittances - Whether expenses paid in foreign currency on which TDS under section 195 was required were correctly disallowed under section 40(a)(ia). - HELD THAT: - The Tribunal observed that the AO's computation was not supported by clear specification of amounts on which TDS was not deducted and that the assessee had furnished TDS particulars. Given factual inadequacy and the need for re verification of foreign remittances and TDS records, the Tribunal remitted the matter to the AO for detailed examination, directing production of relevant documents and providing the assessee a reasonable opportunity of hearing. [Paras 21]

Issue remitted to the AO for verification; ground allowed for statistical purposes.

Deductibility of provision for leave encashment and operation of section 43B(f) - scope and effect of Exide (Supreme Court) and remand for reconsideration - Whether provision for leave encashment debited but unpaid is deductible or must be disallowed under section 43B(f). - HELD THAT: - Relying on coordinate-bench Tribunal orders in the assessee's own case and the Supreme Court's decision upholding constitutionality and operation of section 43B(f) (Exide), the Tribunal concluded that the matter requires factual re-examination by the AO in light of judicial precedents. Accordingly, the Tribunal remitted the issue to the AO to examine and allow the claim as per section 43B(f) applying the guidance of the precedents. [Paras 25, 26]

Issue remitted to the AO for re examination and appropriate decision in accordance with law; ground allowed for statistical purposes.

Claim of additional depreciation and requirement of acquisition and installation dates - remand for verification of date of acquisition/installation - Claim of additional depreciation under section 32(1)(iia) and whether assets/components satisfy acquisition/installation date criteria. - HELD THAT: - The CIT(A) had already directed verification by the AO of whether the main assets and components were acquired and installed after the relevant cut off date; the Tribunal found further direction unnecessary and remitted the issue to the AO to verify particulars (dates of acquisition and installation) and allow additional depreciation where the statutory tests are met. [Paras 29, 30]

Issue remitted to the AO for verification and consequential allowance as per law; ground allowed for statistical purposes.

Application of section 43B to payments deposited under court direction - disallowance under section 43B of electricity duty deposited pursuant to court order - Disallowance under section 43B of amounts deposited in a designated account pursuant to High Court directions (electricity duty and water charges). - HELD THAT: - On this fact sensitive point the Tribunal followed earlier coordinate bench decisions in the assessee's own case which had upheld the disallowance by the AO where the expenditure remained unpaid despite court directions; after considering those precedents the Tribunal concluded there was no reason to interfere with the AO/CIT(A) on this issue. [Paras 33]

Disallowance under section 43B upheld and the assessee's ground in respect of these payments dismissed.

Computation of disallowance under section 14A read with Rule 8D - remand for application of mandatory requirements of section 14A(2) and Rule 8D - Validity and computation of disallowance under section 14A and Rule 8D in respect of expenditure relatable to exempt income. - HELD THAT: - Following recent Tribunal precedent in the assessee's own case, the Tribunal held that the AO had not complied with the mandatory procedures under section 14A(2) and Rule 8D and that the methodology adopted (average of total investments) required re calculation confined to investments yielding exempt income. The matter was remitted to the AO for fresh computation and verification in the light of those observations. [Paras 53, 54]

Issue remitted to the AO for recomputation under section 14A read with Rule 8D; ground allowed for statistical purposes.

Investment allowance under section 32AC - requirement of acquisition and installation within the specified period - remand for verification of CWIP reconciliation and acquisition/installation dates - Allowability of investment allowance under section 32AC claimed by revised return and whether assets were both acquired and installed within 01.04.2013-31.03.2015. - HELD THAT: - The Tribunal examined the statutory scheme and explanatory commentary, noted the twin requirement that assets be both acquired and installed in the specified window, and observed factual deficiencies in the AO's record and the assessee's submissions. Given the incentive nature of section 32AC and the need for factual verification (reconciliation of CWIP and documentary proof of acquisition/installation), the Tribunal remitted the claim to the AO for re examination and verification with directions to give the assessee opportunity to produce details. [Paras 62]

Issue remitted to the AO for re examination and verification; ground allowed for statistical purposes.

Valuation and revaluation loss on non-moving stores and spares and net realizable value - deletion of addition where Tribunal's earlier decisions in assessee's own case apply - Validity of additions made by AO for loss on revaluation of non moving stores and spares where assessee reduced valuation to 5% of cost. - HELD THAT: - The Tribunal followed its earlier coordinate bench decisions in the assessee's own case (cited orders) which had accepted the assessee's valuation approach and deleted additions. On that precedent the Tribunal found no reason to interfere with the CIT(A)'s deletion and dismissed the Revenue's grounds on this issue. [Paras 38, 66, 80]

Additions on account of revaluation of non moving stores and spares deleted; Revenue's grounds dismissed.

Allowability of write off of claims/receivables/shortages - assessment of evidentiary record and necessity of substantiation - Whether write offs for claims, receivables and coal shortages were allowable as business expenditure. - HELD THAT: - The CIT(A) deleted the AO's disallowance after examining the assessee's internal records, quantification and audit certifications; the Tribunal, however, scrutinised the factual matrix and found that on the record presented before it the assessee had not satisfactorily shown claims against transporters or internal controls in the hearing and therefore restored the AO's disallowance. The Tribunal emphasised the need for the assessee to substantiate shortages with supporting steps taken and documents. [Paras 45, 46]

CIT(A)'s deletion set aside as to this item; Revenue's ground allowed and addition restored.

Final Conclusion: The Tribunal disposed the cross appeals by: allowing the assessee's claim for interest on disputed electricity duty and water charges; remitting several factual and documentary issues (peripheral development expenses, foreign TDS/non deduction under section 40(a)(ia), leave encashment under section 43B(f), additional depreciation, investment allowance under section 32AC, and computation under section 14A/Rule 8D) to the Assessing Officer for fresh verification; upholding the disallowance under section 43B in respect of certain electricity duty deposits; deleting additions on revaluation of non moving stores and spares in favour of the assessee; and restoring one write off disallowance for lack of substantiation. The appeals and cross objections were disposed in the result as recorded in the order list.

Deduction of tax at source on compensation awards - power of a Tribunal to withhold or compute income tax - scope of Section 194A(3)(ix) in respect of compensation payments - treatment of lump sum compensation as income spread over relevant years - non applicability of immediate TDS by insurer or Tribunal on awarded compensation - prima facie error apparent on the face of record

Deduction of tax at source on compensation awards - power of a Tribunal to withhold or compute income tax - scope of Section 194A(3)(ix) in respect of compensation payments - treatment of lump sum compensation as income spread over relevant years - non applicability of immediate TDS by insurer or Tribunal on awarded compensation - Whether the Tribunal (and/or the insurer) could deduct income tax/TDS from the lump sum compensation awarded to the legal heirs of the deceased. - HELD THAT: - The Court held that the Tribunal had no jurisdiction to compute and deduct an income tax liability from the lump sum compensation awarded. Income tax is chargeable in the year in which income accrues and, in the context of a compensation award, the amount is a lump sum which must be spread or considered with reference to the year(s) in which it accrues to the recipients; it cannot be treated as taxable income in one year by a blanket deduction. Section 194A(3)(ix) and the jurisprudence cited (including decisions relied upon by the Court) do not permit automatic TDS on the entire award by the insurer or the Tribunal. The Tribunal's deduction without proper basis and calculation therefore amounted to a mistake apparent on the face of the record; claimants should not be compelled to seek refund by being subjected to such deduction. Consequently, no TDS or tax deduction shall be made from the decretal amount and the insurer must deposit the full decretal amount as directed by the Court. [Paras 11, 12, 13, 14, 16]

Tribunal's deduction of income tax/TDS from the compensation was not tenable; no TDS shall be deducted and the insurer must deposit the decretal amount without withholding tax.

Final Conclusion: Appeal partly allowed: the Tribunal's order to deduct income tax/TDS from the awarded compensation is set aside; the Insurance Company shall deposit the decretal amount forthwith without making any TDS deduction and fresh decree shall be drawn accordingly.

Search and seizure under Section 132(1) of the Income-tax Act - search under Section 132(1A) of the Income-tax Act - reason to believe - reason to suspect - warrant of authorization in Form 45 - judicial review limited to existence not adequacy of reasons to believe - consequential warrant versus independent warrant

Delay and laches - Maintainability of the petitions in view of delay and laches - HELD THAT: - The petitions were filed more than eighteen months after the search action; the petitioners relied on pandemic and assessment notices to explain delay. Although delay and laches were pleaded by the Revenue, the Court elected to decide the petitions on merits and declined to reject them solely on the ground of delay. [Paras 6]

Preliminary objection of delay and laches not accepted; Court proceeded to decide the petitions on merits.

Search and seizure under Section 132(1) of the Income-tax Act - search under Section 132(1A) of the Income-tax Act - warrant of authorization in Form 45 - Whether the search at the petitioners' premises between 06.02.2019 and 09.02.2019 was conducted under Section 132(1A) or under Section 132(1) - HELD THAT: - The material placed in a sealed cover, including the satisfaction note and the Form 45 WoA, shows the genesis of the operation in WoA dated 05.02.2019 issued in the case of the Kochar Group under Section 132(1). That WoA identified multiple premises, including the petitioners' residence, as locations where undisclosed income/assets/documents of the Kochar Group were likely to be found. The Court examined the statutory distinction between sub-sections (1) and (1A) and found that the facts disclose a search under Section 132(1) in the case of the Primary Persons, not a consequential warrant under Section 132(1A). The petitioners' assumption that the initial search was under Section 132(1A) is incorrect and irrelevant to the validity of the exercise in the facts of this case. [Paras 8, 9, 11, 12]

The search conducted at the petitioners' premises from 06.02.2019 to 09.02.2019 was pursuant to WoA under Section 132(1), not Section 132(1A).

Search and seizure under Section 132(1) of the Income-tax Act - consequential warrant versus independent warrant - Validity of the search carried out at the petitioners' premises on 06.02.2019 (search under the WoA issued in the case of the Primary Persons) - HELD THAT: - The satisfaction note and supporting material establish a nexus between the Kochar Group and the petitioners' premises (electronic and physical surveillance, observed movement of cash by couriers), justifying suspicion that incriminating material of the Primary Persons might be kept there. The search at the premises was therefore in relation to the Primary Persons and not a direct search against the petitioners' own undisclosed income. The jurisdictional threshold for searching premises under Section 132(1)(i) - reasonable suspicion that books, documents or valuables of the searched person are kept there - was satisfied. The petitioners lacked locus to challenge a search qua the Primary Persons. [Paras 10, 11, 13]

The search at the petitioners' premises on 06.02.2019 was valid as a search in the case of the Primary Persons under Section 132(1).

Search and seizure under Section 132(1) of the Income-tax Act - reason to believe - Validity of the WoA dated 12.02.2019 and the subsequent search of Locker No. 150F on 03.04.2019 - HELD THAT: - During the initial search of the petitioners' premises a key to Locker No. 150F was recovered and statements recorded under Section 132(4) showed the petitioners either denied knowledge of the locker or failed to give satisfactory particulars of its contents. The satisfaction note recorded reasons to believe that the locker was being used to park unaccounted assets and that incriminating evidence was likely to be found. Those facts fulfilled the conditions of clauses (b) and (c) of Section 132(1), thus justifying issuance of a separate WoA in the name of the petitioners and search of the locker. [Paras 14, 15, 16, 17]

WoA dated 12.02.2019 and the search of Locker No. 150F were validly issued and carried out under Section 132(1).

Judicial review limited to existence not adequacy of reasons to believe - reason to believe - Extent of judicial review over the 'reason to believe' recorded by the competent authority - HELD THAT: - The Court reiterated settled law that it may examine the existence and relevance of material supporting the satisfaction, and whether a reasonable person could form that belief, but it will not test the adequacy or sufficiency of the reasons to believe as if on appeal. The satisfaction note in this case contained material from which a reasonable belief could be formed. [Paras 18, 19]

Court will not substitute its judgment for the revenue's satisfaction; having found material supporting a reason to believe, no interference is warranted.

Shah-E-Naaz Judge distinguished - Whether Shah-E-Naaz Judge decision governs the present case - HELD THAT: - The Court compared facts of Shah-E-Naaz Judge and observed that in that case consequential WoAs in the name of lockers were issued without material showing nexus between petitioners and primary person, and the satisfaction note lacked material. In the present case a separate WoA was issued in the name of the petitioners after discovery of the locker key and unsatisfactory statements, so the factual matrix and the sufficiency of the satisfaction note differ. Therefore Shah-E-Naaz Judge is distinguishable. [Paras 20, 21, 22, 23, 24]

Shah-E-Naaz Judge is not applicable; the present case is distinguishable on facts and does not assist the petitioners.

Final Conclusion: The petitions are dismissed on merits. The Court found the searches were lawfully authorized under Section 132(1), the subsequent WoA for the locker was validly issued, and judicial review does not permit reassessment of the adequacy of the revenue's reasons to believe; registry directed to return documents in the sealed cover to the department.

Deduction under section 10A - adjustment of items excluded from export turnover from total turnover - Provision for expenses - recognition under mercantile system and Accounting Standard 1 - Tax deduction at source - applicability to payments for computer software and to provisions for expenses - Characterisation of software outlays - capital versus revenue expenditure and test of license validity - Remand to assessing officer for factual verification of invoices, licence periods and TDS compliance

Deduction under section 10A - adjustment of items excluded from export turnover from total turnover - Whether communication expenses reduced from export turnover could also be excluded from total turnover for computing deduction under section 10A. - HELD THAT: - The Tribunal upheld the CIT(A)'s allowance of the assessee's method of reducing communication expenses from both export turnover and total turnover in computing deduction under section 10A, following the Karnataka High Court decision in Tata Elxsi Ltd. which was subsequently affirmed by the Supreme Court in HCL Technologies Ltd.; since the CIT(A)'s order conformed with that precedent the Tribunal declined to interfere. [Paras 7]

Deduction under section 10A allowed as computed by the assessee; CIT(A)'s order sustained.

Provision for expenses - recognition under mercantile system and Accounting Standard 1 - Whether the provision for software expenses created by the assessee was a contingent liability and therefore not allowable as deduction. - HELD THAT: - Applying Accounting Standard 1 (prudence) and the Supreme Court's test in Rotork Controls (a provision arises where there is a present obligation from a past event and a reliable estimate can be made), the Tribunal found that the assessee had furnished breakup details, basis of estimation and that the provisions were audited without objection. On these facts the provision could not be treated as a contingent liability and the disallowance by the authorities was set aside. [Paras 16]

Provision for software expenses held to be an ascertained liability and allowable; disallowance set aside.

Tax deduction at source - applicability to payments for computer software and to provisions for expenses - Whether disallowances under section 40(a)(i) / 40(a)(ia) should be sustained for amounts relating to software payments and provisions in the year under appeal. - HELD THAT: - The Tribunal followed coordinate Bench decisions that, for the financial year 2010 11 (ending 31.3.2011), the law then prevailing did not treat off the shelf software payments as royalty and therefore there was no obligation to deduct tax at source; subsequent change in law or later judicial pronouncement (and retrospective amendment) could not be used to fasten TDS liability retrospectively. Applying that principle the Tribunal deleted the disallowances made under section 40(a)(i)/(ia) in respect of the provision and the separate software payment disallowance. [Paras 18, 19]

Disallowances under section 40(a)(i)/(ia) deleted for the year under consideration; AO directed to delete the additions.

Characterisation of software outlays - capital versus revenue expenditure and test of license validity - Remand to assessing officer for factual verification of invoices, licence periods and TDS compliance - Whether the balance software expenditure should be treated as capital expenditure or allowed as revenue expenditure, and whether the CIT(A) could remand the matter to the AO for verification. - HELD THAT: - The Tribunal noted that the Karnataka High Court decisions in Toyota Kirloskar Motors and IBM India lay down the tests to determine whether software outlays are revenue or capital (notably the licence validity test - licences of limited period, particularly less than two years, are revenue). The material on record had not been examined by the authorities along those lines (dates/validity on invoices, verifiability, and TDS compliance). In view of the need to apply the established tests to the invoices and particulars, the Tribunal accepted that the matter required factual and verificatory examination and restored the issue to the file of the AO for fresh adjudication in accordance with the directions articulated by the CIT(A) and the High Court precedents. [Paras 27]

Nature of software expenditure remitted to the AO for fresh examination and adjudication in light of the tests laid down by the Karnataka High Court; matter restored for verification.

Final Conclusion: The Tribunal (ITAT Bangalore) allowed the assessee's appeals in part: it sustained the section 10A computation in the assessee's favour; held that the provision for software expenses was an allowable liability and deleted TDS based disallowances for the year; and remanded the characterisation of the remaining software expenditure (capital v. revenue) to the assessing officer for fresh verification in accordance with Karnataka High Court authorities.

Arm's length principle - comparability analysis - selection and exclusion of comparable companies - rejection for different financial year ending - treatment of intangibles and brand/IPR in comparability - proviso to Section 92C(2) - benefit of range 5% - working capital adjustment

Comparability analysis - selection and exclusion of comparable companies - treatment of intangibles and brand/IPR in comparability - rejection for different financial year ending - Final set of comparables for Assessment Year 2010-11: exclusion of Accentia Technologies Ltd. and Fortune Infotech Ltd.; inclusion of R Systems International Ltd. - HELD THAT: - The Tribunal found that Accentia and Fortune are functionally dissimilar to the assessee's ITeS operations because Accentia's operations include product development, SaaS offerings, acquisitions and identifiable intangibles/brand value that affect pricing and margins, and Fortune has product development elements and proprietary software that distinguish it from a captive routine service provider. The Tribunal held that different financial year ending, by itself, is not a valid ground for rejection where contemporaneous public data can reasonably be used; on the facts R Systems is functionally comparable and should be included. For these reasons the TPO's selection was modified and the TPO was directed to exclude the two specified companies and include R Systems in the final comparable set, leaving computation and verification to the TPO. [Paras 10]

Accentia Technologies Ltd. and Fortune Infotech Ltd. excluded from the final comparable set; R Systems International Ltd. directed to be included and TPO to give effect after verification.

Proviso to Section 92C(2) - benefit of range 5% - arm's length principle - Applicability of the proviso to Section 92C(2) for Assessment Year 2010-11 and grant of 5% range benefit where necessary. - HELD THAT: - On the record the Tribunal observed that the TPO had not applied the benefit of the 5% range provided in the proviso to Section 92C(2) when determining ALP. The Tribunal directed that wherever necessity exists the TPO should allow the assessee the said benefit after verification, thereby requiring the TPO to reapply the proviso in appropriate cases. [Paras 11]

TPO directed to grant the benefit of the proviso to Section 92C(2) ( 5% range) to the assessee where appropriate after verification.

Comparability analysis - selection and exclusion of comparable companies - rejection for different financial year ending - working capital adjustment - Final set of comparables and margin computations for Assessment Year 2011-12: exclusion of Accentia Technologies Ltd. and ICRA Online Ltd. (seg.); inclusion of R Systems International Ltd. and Microgenetics Systems Ltd.; rectification of margin for Jindal Intellicom Ltd. - HELD THAT: - For AY 2011-12 the Tribunal concluded that Accentia is functionally dissimilar due to its SaaS/product development, acquisitions and intangible assets which affect pricing; ICRA (outsourced services segment) was held functionally different and not comparable. The Tribunal reiterated that different year end alone cannot justify rejection where contemporaneous data permits computation, directing R Systems to be included. Microgenetics, earlier excluded for lack of public data, was found on the assessee's showing to have available data and to satisfy quantitative and functional filters and was directed to be included. The Tribunal noted prima facie errors in the TPO's margin computation for Jindal Intellicom and directed the TPO to take an appropriate margin for that comparable. All inclusions/exclusions and margin adjustments were left to the TPO for verification and computation. [Paras 17]

Accentia Technologies Ltd. and ICRA Online Ltd. (seg.) excluded; R Systems International Ltd. and Microgenetics Systems Ltd. directed to be included; TPO directed to correct/verify margin for Jindal Intellicom Ltd. and give effect accordingly.

Final Conclusion: Both appeals are partly allowed: for AY 2010-11 and AY 2011-12 the Tribunal directed exclusion of identified non comparable companies, inclusion of specified comparables, correction/verification of selected margins and application of the proviso to Section 92C(2) where appropriate, and remitted the matters to the TPO to give effect to these directions after verification.

Revisionary power under section 263 - lack of enquiry versus inadequate enquiry - genuineness and creditworthiness of creditors - characterisation of security deposit as capital expenditure - application of section 40A(3) and Rule 6DD

Genuineness and creditworthiness of creditors - lack of enquiry versus inadequate enquiry - Whether the Pr. CIT was justified in holding that the AO had not made any enquiry into the unsecured loan of Rs. 10,00,000/- and in directing reassessment on that ground under section 263. - HELD THAT: - The Tribunal examined the ledger entries and the assessment record and found that the assessee's books reflected receipt and repayment of the loan, showing a closing balance of nil as on 31.3.2013; this demonstrates that the transaction between the assessee and the creditor was reflected in the accounts. On this basis the Tribunal concluded that the AO had made enquiry in respect of the loan and it could not be said that there was a total lack of enquiry. The Tribunal nevertheless observed that while the Pr. CIT's general direction on this point was not justified to the extent of treating the matter as completely unexamined, the AO, when framing the fresh assessment as directed, should take into consideration the repayment entries in the ledger and consider the assessee's explanations before making any addition under section 68 if the creditor's creditworthiness is not satisfactorily established. [Paras 10]

The Tribunal held that the AO had made enquiry on the loan; the Pr. CIT's assertion of no enquiry on this point was not wholly correct, and the AO should consider the ledger evidence of repayment while recomputing assessment.

Characterisation of security deposit as capital expenditure - revisionary power under section 263 - Whether the Pr. CIT rightly held that the AO failed to verify the nature of the security deposit of Rs. 80,000/- and was justified in directing reassessment under section 263. - HELD THAT: - The Tribunal found that the Assessing Officer had not made proper enquiries to determine whether the amount treated as a security deposit was refundable (thus of capital nature) or had been forfeited on premature termination as claimed by the assessee. This omission rendered the assessment order erroneous and prejudicial to the revenue. Accordingly, the Pr. CIT's direction to have the AO re-examine the transaction and disallow the amount unless the assessee proved forfeiture was held to be justified. The matter was remanded to the AO for fresh consideration after giving the assessee opportunity to adduce evidence supporting the claim of forfeiture. [Paras 9, 10]

The Tribunal upheld the Pr. CIT's direction to the AO to re-examine the security deposit and decide afresh, permitting disallowance if the assessee fails to prove forfeiture.

Application of section 40A(3) and Rule 6DD - lack of enquiry versus inadequate enquiry - Whether the Pr. CIT was justified in holding that the AO failed to verify cash payments of professional fees aggregating Rs. 2,35,000/- and in directing reassessment under section 263. - HELD THAT: - The Tribunal observed that the Assessing Officer did not make proper enquiries into the cash payments to advocates and whether the payments fell within the exceptions to disallowance under section 40A(3) as explained by Rule 6DD. Given this failure of enquiry, the assessment order was found to be erroneous and prejudicial to revenue. The Pr. CIT therefore validly directed the AO to call for bills and vouchers, examine documentary proof and determine whether exceptional circumstances under Rule 6DD apply; absent such proof the AO was to make the necessary disallowance. The issue was remanded for fresh verification and adjudication in accordance with law. [Paras 9, 10]

The Tribunal upheld the Pr. CIT's direction to the AO to re-examine the cash professional fees payments and decide afresh after verifying bills, vouchers and applicability of Rule 6DD/section 40A(3).

Final Conclusion: The appeal is dismissed; the order passed under section 263 setting aside the assessment and directing the AO to re-frame the assessment is upheld insofar as the AO failed to make proper enquiries into the security deposit and the cash professional fees, and the AO is to consider the assessee's explanations (including the ledger evidence of repayment of the loan) and relevant material while re-computing the assessment.

Treatment of short term capital gains as business income - maintenance of separate investment and stock-in-trade accounts - application of binding precedent in assessee's own case and authority of Gopal Purohit - deductibility of education cess for computing business income - interpretation of initial assessment year under Section 80IA(5) - option to choose initial assessment year for claiming deduction under Section 80IA - non-adjustment of notional brought forward losses and unabsorbed depreciation when computing deduction under Section 80IA

Treatment of short term capital gains as business income - maintenance of separate investment and stock-in-trade accounts - application of binding precedent in assessee's own case and authority of Gopal Purohit - Short term capital gains arising from share transactions were to be treated as capital gains (and not business income) in view of the assessee maintaining separate investment and stock-in-trade accounts and following binding precedent. - HELD THAT: - The Tribunal examined earlier decisions in the assessee's own case for preceding assessment year where it was held that the assessee maintained distinct accounts for investment and for stock-in-trade and that the entries in books should be honoured. The Tribunal also noted reliance on the decision in Gopal Purohit and that the Pune Bench had decided the assessee's 2010-11 matter in favour of the assessee on identical facts. The Revenue conceded factual identity. Applying the assessee's own earlier Tribunal finding and the High Court precedent relied upon, the Tribunal held the gains to be short-term capital gains and allowed the ground of appeal. [Paras 10]

Ground No.1 of the assessee's appeal allowed; gains treated as short term capital gains.

Repair expenditure treated as capital expenditure - Claim for deduction of repair expenditure on existing toilet block was not pressed before the Tribunal. - HELD THAT: - The authorised representative expressly stated that this ground was not pressed at the hearing. The Tribunal therefore did not adjudicate the substantive merits of the claim and dismissed the ground as not pressed. [Paras 11]

Ground No.2 dismissed as not pressed.

Deductibility of education cess for computing business income - Payment of education cess is allowable as deduction in computing income under the head "profits and gains of business or profession". - HELD THAT: - The Tribunal followed the view of the Hon'ble Bombay High Court that the term used in the provision disallowing deduction of 'any rate or tax levied' does not encompass 'cess' and it would be impermissible to read 'cess' into the statutory text. The Tribunal also referred to other Bench decisions which treated education cess as deductible. Applying that authoritative reasoning, the Tribunal allowed the assessee's additional ground seeking deduction of education cess. [Paras 14]

Additional ground allowed; education cess deductible.

Interpretation of initial assessment year under Section 80IA(5) - option to choose initial assessment year for claiming deduction under Section 80IA - non-adjustment of notional brought forward losses and unabsorbed depreciation when computing deduction under Section 80IA - For claiming deduction under Section 80IA, the 'initial assessment year' is the year in which the assessee first opts to claim the deduction; notional brought forward losses and unabsorbed depreciation prior to that initial year need not be adjusted against the deduction. - HELD THAT: - The Tribunal examined the Assessing Officer's computation and the Revenue's reliance on a Special Bench decision. It considered the CBDT circular accepting the Madras High Court's decision in Velayudhaswamy Spinning Mills that the assessee may choose the initial assessment year within the statutory period and that where losses and depreciation were already set off against other income in earlier years they should not be notionally carried forward to dilute the Chapter VIA deduction. The Tribunal found the issue settled by higher authority and by the assessee's own earlier Tribunal decision and held that the deduction under Section 80IA must be computed from the initial year chosen by the assessee without adjusting notional earlier losses. [Paras 24]

Revenue's grounds dismissed; assessee entitled to deduction under Section 80IA as claimed without notional adjustment of earlier losses.

Final Conclusion: The Tribunal partly allowed the assessee's appeal for A.Y.2011-12 by treating the disputed share gains as short-term capital gains and allowing deduction of education cess; the repair-expenditure ground was dismissed as not pressed. The Revenue's appeal challenging the assessee's claim under Section 80IA(5) was dismissed and the assessee's method of choosing the initial assessment year and notional non-adjustment of earlier losses sustained.

Registration under Section 12A/12AA of the Income-tax Act - genuineness of activities of a trust/institution - trust/society incorporated abroad not governed by Indian law - proviso to Section 2(15) - activity in the nature of trade, commerce or business - Rule 17A of the Income-tax Rules, 1962 - documentary requirements for registration

Registration under Section 12A/12AA of the Income-tax Act - trust/society incorporated abroad not governed by Indian law - Rule 17A of the Income-tax Rules, 1962 - documentary requirements for registration - Registration under Section 12A/12AA cannot be granted to a trust which is incorporated and governed by a foreign law and is not shown to be governed by the Indian Income-tax Act and Indian bye laws enabling the revenue to satisfy itself about the trust's identity and genuineness. - HELD THAT: - The Tribunal upheld the view that a trust seeking registration under Section 12AA must be subject to the Indian Income tax law and must furnish constitution/bye laws and documentary proof enabling the Commissioner to verify its identity and the genuineness of its activities. Where the constitution/bye laws show governance under a foreign statute and do not contain Indian registration or certifications, the revenue cannot be satisfied about the trust's genuineness because the trust may take shelter under foreign law. The earlier orders of the revenue and the Tribunal on the identical facts were held to be binding on the appellant and no change in objects, control or governance was demonstrated to rebut those findings. [Paras 10, 11]

Application for registration under Section 12A/12AA was rightly denied because the society is incorporated and governed abroad and has not satisfied the Indian documentary and governance requirements.

Genuineness of activities of a trust/institution - proviso to Section 2(15) - activity in the nature of trade, commerce or business - The assessee's activities were held to be of a commercial character (activity in the nature of trade) and therefore not charitable within the meaning of the proviso to Section 2(15). - HELD THAT: - On the material before it (audited accounts and receipts), the Tribunal accepted that the assessee had income from sale of literature and sale of agricultural produce, which amounted to activities 'in the nature of trade, commerce or business' under the proviso to Section 2(15). The Tribunal explained that where activities are of that nature, even if no direct profit motive is pleaded, they fall outside the scope of charitable purpose for exemption. The assessee failed to prove genuineness of charitable character of its activities or to distinguish its present activities from those considered in earlier adverse orders. [Paras 10]

Assessee's activities treated as activity in the nature of trade, commerce or business, disqualifying it from being regarded as engaged in charitable purposes for exemption.

Final Conclusion: The Tribunal dismissed the appeal, upholding the denial of registration under Section 12A/12AA on grounds that the society is incorporated and governed abroad (preventing satisfaction of the revenue about genuineness) and that its activities fall within the proviso to Section 2(15) as being in the nature of trade, commerce or business.

Condonation of delay and sufficient cause - penalty under Section 272A(2)(k) for failure to file TDS return - responsible officer under Section 204 - ex parte adjudication and requirement of opportunity of hearing / speaking order - remand for fresh consideration and verification of facts with opportunity to produce evidence

Condonation of delay and sufficient cause - Delay of 271 days in filing appeals was condoned and the appeals were admitted for hearing. - HELD THAT: - The assessee explained that the impugned orders were received on 17 January 2018 but the college premises were handed over to the education board for board examinations in February 2018, office records were shifted and the order was misplaced and traced only in December 2018; thereafter the appeal was filed. The Tribunal applied the settled approach that a lenient view is to be taken while considering sufficient cause, provided the explanation is bona fide and not a device to evade limitation. The facts as presented in affidavit regarding receipt of order, conduct of board examinations and summer recess were not disputed on record, and there was no suggestion that the delay was mala fide or intended to obtain some undue advantage. In the interest of substantial justice and on the facts and circumstances explained, the Tribunal was satisfied that sufficient cause existed to condone the delay and accordingly condoned the delay of 271 days. [Paras 2, 3, 5, 6]

Delay condoned; appeals admitted for consideration on merits.

Ex parte adjudication and requirement of opportunity of hearing / speaking order - penalty under Section 272A(2)(k) for failure to file TDS return - responsible officer under Section 204 - remand for fresh consideration and verification of facts with opportunity to produce evidence - Penalty orders passed ex parte and the question whether the Principal (on whom penalty was levied) was the responsible officer was not finally adjudicated and the matter is remanded to the Assessing Officer for fresh consideration after verification and opportunity to the assessee. - HELD THAT: - The Tribunal observed that the Assessing Officer passed the penalty order under Section 272A(2)(k) ex parte and the CIT(A) dismissed the appeals on summary ex parte basis after recording issuance of subsequent notices which the assessee contends were not received. The assessee raised before the Tribunal an additional ground - for the first time at that stage - that the Manager, not the Principal, was the responsible officer for payments and TDS deduction (as per the memorandum of association) and sought to produce additional evidence. Given that this contention was not ventilated before the authorities below and relevant records on the point (including who is the responsible officer under Section 204) require verification, the Tribunal held it would be inappropriate to decide the matter on the existing record. In the interest of justice the Tribunal set aside the impugned orders and remitted the matter to the Assessing Officer to verify the factual position, allow the assessee to produce evidence and to pass a fresh order under Section 272A(2)(k), ensuring appropriate opportunity of hearing. [Paras 12, 13, 14]

Impugned orders set aside and remitted to the Assessing Officer for fresh adjudication with opportunity to the assessee; appeals allowed for statistical purposes.

Final Conclusion: The Tribunal condoned the delay of 271 days and, after noting that penalty proceedings were ex parte and that the issue whether the Principal was the responsible officer was not previously examined, set aside the impugned orders and remanded the matters to the Assessing Officer for verification of facts, receipt of additional evidence and fresh decision with an opportunity of hearing; appeals allowed for statistical purposes.

Disallowance under section 40A(3) - remand for verification - production of cash book - disallowance of wages for unverifiable claims - consideration of work-in-progress in percentage computation - recomputation of disallowance

Disallowance under section 40A(3) - production of cash book - remand for verification - Whether the disallowance made under section 40A(3) should be sustained or the matter should be remitted for verification of the assessee's cash book and supporting evidence - HELD THAT: - The Assessing Officer made a disallowance under section 40A(3) after finding cash payments exceeding the prescribed limit and noting absence of verifiable cash book. The assessee filed a detailed breakup of withdrawals and letters from creditors and during Tribunal hearing undertook to produce the cash book and other evidence. The Assessing Officer in the remand report recorded non-production of the cash book and thus could not verify the assessee's explanation. In the interest of justice and having regard to the assessee's undertaking to produce the cash book, the Tribunal set aside the appellate order on this issue and directed that the Assessing Officer decide the matter afresh after verifying the assessee's explanation from the relevant records including the cash book and other evidence to be produced by the assessee. [Paras 7]

Impugned order on the section 40A(3) disallowance set aside and the matter remitted to the Assessing Officer for fresh verification after production of the cash book and supporting evidence; ground No.1 allowed for statistical purposes.

Disallowance of wages for unverifiable claims - consideration of work-in-progress in percentage computation - recomputation of disallowance - Extent of disallowance to be made on account of wages where claimed wages are not fully supported by documentary evidence and the Assessing Officer's initial percentage computation did not account for increase in work-in-progress - HELD THAT: - The Assessing Officer disallowed 15% of wages after finding claimed wages excessive (computed at 31.36% of receipts) and not fully supported by documents. The Commissioner (Appeals) observed that the Assessing Officer's computation was incorrect because it omitted the substantial increase in work-in-progress; on that basis he reduced the disallowance to 7%. The Tribunal found that wage claim remained not fully verifiable but agreed that the Assessing Officer's working was flawed for omitting work-in-progress. Applying the correct approach and balancing the unverifiable element, the Tribunal considered 7% still somewhat high and, as a matter of fairness, reduced the disallowance to 5%, directing the Assessing Officer to recompute accordingly. [Paras 11]

Disallowance on account of wages modified and restricted to 5%; Assessing Officer directed to re-compute the disallowance accordingly; ground No.2 partly allowed.

Final Conclusion: The appeal is partly allowed: ground No.1 (section 40A(3) disallowance) is set aside and remitted to the Assessing Officer for verification on production of the cash book and other evidence; ground No.2 (wages disallowance) is modified and the disallowance restricted to 5% with directions to recompute.

Addition on account of unexplained excess stock - retraction of statement recorded during survey - verification of books of account - valuation of stock at cost versus selling price - remand for fresh verification

Retraction of statement recorded during survey - verification of books of account - valuation of stock at cost versus selling price - remand for fresh verification - Whether the addition of Rs. 15,48,088/- on account of excess stock found in survey stands finally established or requires fresh verification of books and stock valuation by the Assessing Officer - HELD THAT: - The Tribunal observed that the assessee had, during the survey, initially admitted the excess stock but later produced an affidavit retracting that admission and submitted that books of account for A.Ys. 2011-12 and 2012-13 were prepared showing closing stock as on 31-03-2012. There was no specific finding in the assessment order on verification of those subsequently prepared books. The Departmental Representative accepted that comparison made by the AO with closing stock as on 31-03-2010 was incorrect and that variation up to 03-04-2012 ought to be considered. In these circumstances, and since the assessee undertook to place the books and supporting documents before the AO, the Tribunal held that the issue was not ripe for final adjudication and required fresh verification. The Tribunal therefore set aside the appellate order insofar as it confirmed the addition and remitted the matter to the Assessing Officer to verify the books of account said to be prepared by the assessee, to ascertain closing stock as on 31-03-2012, and to verify the contention that stock at survey was valued at selling price instead of cost price, directing production of supporting documentary evidence by the assessee. [Paras 5, 6]

Impugned confirmation of addition set aside and matter remitted to the Assessing Officer for fresh verification of the books, closing stock as on 31-03-2012 and stock valuation; assessee to produce books and supporting evidence.

Final Conclusion: The Tribunal set aside the CIT(A)'s confirmation of the addition on account of alleged excess stock and remitted the matter to the Assessing Officer for fresh verification of the books of account and the valuation of stock; appeal treated as allowed for statistical purposes.

Transfer pricing - Arm's Length Price - Transactional Net Margin Method (TNMM) - Profit Level Indicator - Comparability - Functional comparability - Filters for selection of comparables - Dispute Resolution Panel directions binding on Assessing Officer under section 144C(13) - Remand for fresh determination

Comparability - Functional comparability - Transfer pricing - Exclusion of Cybermate Infotek Limited from the comparable set - HELD THAT: - The Tribunal examined the nature of services rendered by the assessee and Cybermate's published financials and annual report. The assessee performed exclusive software development and support services for its parent and did not hold own software products or related inventories or capital work-in-progress. Cybermate, by contrast, carried on both product development (around 38 products) with substantive R&D, material inventories, capital work-in-progress and identifiable intangible assets. Because Cybermate's financials combined product and service activities and the record lacked information segregating revenues and operating costs attributable to services analogous to the assessee's operations, the entity-level financial profile was not comparable to the assessee. On this basis the Tribunal excluded Cybermate Infotek Limited from the comparable set. [Paras 6, 7]

Cybermate Infotek Limited is excluded from the list of comparables.

Profit Level Indicator - Dispute Resolution Panel directions binding on Assessing Officer under section 144C(13) - Transactional Net Margin Method (TNMM) - Computation of PLI of Acropetal Technologies Limited and conformity with DRP directions - HELD THAT: - The DRP identified errors in the TPO's computation and directed adoption of segmental operating profit of Acropetal Technologies Limited at the specified figure and re-computation of its PLI accordingly. Section 144C(13) mandates that the Assessing Officer complete the assessment in conformity with DRP directions. The AO/TPO disregarded the DRP's specific operating profit figure and instead used an inflated amount. The Tribunal held that the AO was bound to follow the DRP's figure and therefore vacated the assessment to the extent it substituted the DRP-directed operating profit, ordering adoption of the DRP's figure for computation of PLI. [Paras 8, 9, 10]

The operating profit of Acropetal Technologies Limited must be adopted as directed by the DRP and the AO's substitution is set aside; PLI to be recomputed using the DRP-directed operating profit.

Functional comparability - Filters for selection of comparables - Dispute Resolution Panel directions binding on Assessing Officer under section 144C(13) - Inclusion of Comp-u-Learn Tech India Limited (CTIL) in the comparable set despite AO's application of a new filter - HELD THAT: - The DRP held CTIL functionally comparable on a standalone basis and directed the AO/TPO to include it in the set of comparables 'subject to satisfaction of other filters applied by him.' The Tribunal interpreted that phrase as referring to filters already applied by the TPO in the original selection exercise. Examination of the TPO's show cause notice established that the Employees cost to sales filter was not among the filters previously applied. The AO/TPO therefore erred in introducing that new filter while giving effect to the DRP directions. The Tribunal held that the DRP's direction that CTIL is functionally comparable went beyond any further threshold enquiry and that the AO/TPO could not, without affording the assessee an opportunity (which section 144C(13) precludes at this stage), devise fresh filters to exclude a company found functionally comparable by the DRP. Accordingly CTIL must be included in the comparable list. [Paras 13, 14, 15, 16, 17]

Comp-u-Learn Tech India Limited is to be included in the list of comparables; the AO/TPO erred in applying a new Employees cost to sales filter while giving effect to DRP directions.

Final Conclusion: The Tribunal set aside the assessment to the extent indicated, excluded Cybermate Infotek Limited from the comparable set, directed adoption of the DRP-directed operating profit for Acropetal Technologies Limited for PLI computation, and held that Comp-u-Learn Tech India Limited must be included as a comparable; the matter is remitted to the Assessing Officer for fresh determination of the arm's length price of the international transaction in accordance with these observations, and the appeal is allowed for statistical purposes.

Re-opening proceedings under Section 147/148 of the Income Tax Act - reason to believe - requirement of fresh tangible material to sustain reassessment - re-assessment invalid for lack of fresh tangible material - live link between material and belief of escapement of income

Re-opening proceedings under Section 147/148 of the Income Tax Act - requirement of fresh tangible material to sustain reassessment - re-assessment invalid for lack of fresh tangible material - Validity of reopening assessment where the assessing officer acted on the same material on record without any fresh tangible material forming basis for belief that income had escaped assessment. - HELD THAT: - The Tribunal upheld the CIT(A)'s cancellation of the reassessment since the reasons recorded by the Assessing Officer show that the case was reopened on the identical material already available (Form 16, return and computation with notes) and there was no new tangible material which had come into the Assessing Officer's possession to constitute a "reason to believe" that income had escaped assessment. The Revenue was unable to point to any fresh tangible material relied upon for reopening. Applying the Tribunal's earlier ratio in Sandvik System Development AB v. DCIT, the Tribunal held that in absence of a live link provided by fresh tangible material to justify the belief of escapement, reassessment proceedings are invalid and the consequent order under Section 143(3) r.w.s. 147 cannot stand. [Paras 7, 8]

The reassessment was invalid for lack of fresh tangible material and the CIT(A)'s order cancelling the reassessment is upheld; Revenue's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s cancellation of the reassessment for A.Y. 2007-08 on the ground that no fresh tangible material justified reopening; the assessee's cross-objections were rendered infructuous and dismissed.

Transfer pricing comparability - Arm's length price - Resale price method preferable to TNMM for distribution transactions - Capital financing and deferred receivables as separate international transaction - Imputation of interest on overdue inter company receivables - Benchmarking interest at LIBOR plus 200 basis points for foreign currency receivables - Working capital adjustment subsumes year end outstanding receivables

Transfer pricing comparability - Arm's length price - Exclusion of specified comparable companies from the final comparable set and limited remand for verification of Mindtree Ltd.'s segmental margin. - HELD THAT: - The Tribunal excluded L&T Infotech Ltd., Persistent Systems Ltd., and CG VAK Software and Exports Ltd. from the final list of comparables for benchmarking the assessee's software development services on the ground that each comparable had significant product/intangible profiles, large turnovers and lacked required segmental comparability with the assessee. The Tribunal followed earlier coordinate bench reasoning that absence of segmental revenues/profits for the relevant software services and materially larger scale/intangibles render such entities functionally non comparable. Separately, the Tribunal found an error in computation of Mindtree Ltd.'s segmental margin due to non allocation of unallocable expenses; the matter was remanded to the TPO for verification of the assessee's submitted workings and recomputation of Mindtree's margin and then directed the TPO to recompute the arithmetic mean after (a) excluding the three named comparables, (b) adopting the corrected Mindtree margin, and (c) applying working capital adjustments to the final list. The Tribunal held that, after these changes, further adjudication of other comparables would be academic and left inclusion/exclusion of any other comparables open to the TPO. [Paras 5]

L & T Infotech Ltd., Persistent Systems Ltd., and CG VAK Software and Exports Ltd. are to be excluded from the final comparable set; Mindtree Ltd.'s segmental margin is remanded to the TPO for verification and recomputation, following which the TPO shall recompute the mean of comparables with working capital adjustments.

Resale price method preferable to TNMM for distribution transactions - Arm's length price - Characterisation of the distribution activity and choice of most appropriate method for benchmarking the distribution of software licenses. - HELD THAT: - The Tribunal held that the assessee's distribution activity is functionally that of a distributor (not a service provider) and thus the Resale Price Method (RPM), a traditional transaction method, is the most appropriate for benchmarking the purchase and resale of software licenses supplied by the AE. The Tribunal further held that the value of the international transaction (purchase of software from the AE) is nil where no payment is made for the license; consequently any TP adjustment cannot be applied at the entity level but must be restricted to the value of the international transaction. Applying these principles and following its own prior decision for an earlier year, the Tribunal directed deletion of the TP adjustment made by the TPO in respect of the distribution segment. [Paras 6]

The distribution activity is to be treated as distribution (RPM applicable); the TP adjustment in respect of the distribution segment is deleted.

Capital financing and deferred receivables as separate international transaction - Imputation of interest on overdue inter company receivables - Benchmarking interest at LIBOR plus 200 basis points for foreign currency receivables - Working capital adjustment subsumes year end outstanding receivables - Whether outstanding receivables from AEs constitute a separate international transaction and the appropriate rate and scope for imputing interest thereon. - HELD THAT: - The Tribunal held that deferred receivables fall within 'capital financing' as introduced by Clause (c) of the Explanation to Section 92B and thus constitute a separate international transaction warranting benchmarking and imputation of interest. The Tribunal rejected the assessee's contentions that (a) working capital adjustment wholly subsumes the receivables issue for all purposes, and (b) absence of contractual interest or a policy of non charging interest absolves it from adjustment. Applying the statutory scheme and precedents, the Tribunal clarified scope: where working capital adjustment is granted, outstanding receivables at the end of the year need not attract a separate adjustment (following Kusum Healthcare to that extent), but invoices raised in earlier years and realized during the relevant year beyond agreed credit period, and invoices raised during the year realized during the year beyond agreed credit period, are to attract imputed interest. For foreign currency receivables, the Tribunal directed benchmarking interest at LIBOR plus 200 basis points, applied from (a) 1 April of the earlier year until realization for earlier year invoices realized in the year and beyond the agreed period, and (b) from the expiry of the agreed credit period until realization for invoices raised in the year. The Tribunal therefore overturned the DRP/TPO's application of domestic short term deposit rates and directed recalculation on the stated LIBOR plus basis limited to the specified invoices and periods. [Paras 7]

Outstanding receivables from AEs constitute a separate international transaction; impute interest on specified delayed realizations applying LIBOR + 200 basis points for the relevant delayed periods, with year end receivables covered by working capital adjustment excluded from separate adjustment.

Final Conclusion: The appeal is partly allowed: the TP adjustment in the distribution segment is deleted; three specified IT comparables are excluded and Mindtree Ltd.'s margin is remanded for verification and recomputation of the comparable mean with working capital adjustments; outstanding inter company receivables are treated as a separate international transaction with interest to be imputed at LIBOR + 200 bps for specified delayed realizations; other grounds are disposed accordingly and penalty initiation is left open.

Summary order. Tax appeal admitted and substantial questions of law framed (relating to imposition and confirmation of penalties, invocation of Rule 26 of the Central Excise Rules, 2002 and Section 112(a) of the Customs Act, 1962, denial of cross-examination and alleged violation of principles of natural justice); notice issued to the respondent.

Writ jurisdiction under Article 226 - Alternative statutory remedy - Appeal to CESTAT under Section 129-A - Pre-deposit requirement under Section 129E - Treatment of recovery under bond as pre-deposit

Writ jurisdiction under Article 226 - Alternative statutory remedy - Appeal to CESTAT under Section 129-A - Whether the writ petition could be entertained despite availability of statutory appeal to the CESTAT and absence of adequate explanation for not availing that remedy. - HELD THAT: - The Court applied the well settled principle that Article 226 is not to be used to short circuit available statutory remedies and relied on the reasoning in Assistant Collector of Central Excise v. Dunlop India Ltd. The impugned order expressly informed the petitioner of the right to prefer an appeal under Section 129 A to the CESTAT within three months and of the CESTAT's power to condone delay. The petitioner did not institute the statutory appeal and offered no acceptable explanation for bypassing that remedy. In these circumstances the Court declined to exercise writ jurisdiction to supplant the alternative remedy and permitted withdrawal of the writ petition with liberty to pursue the appellate forum. [Paras 2, 3, 5]

Writ petition dismissed as withdrawn; petitioner directed to avail the statutory appeal remedy before the CESTAT.

Pre-deposit requirement under Section 129E - Treatment of recovery under bond as pre-deposit - Whether the amount recovered under the bond may be treated as satisfying the pre deposit requirement before the CESTAT and how that question is to be dealt with. - HELD THAT: - The Court did not express any view on the merits of the submission that enforcement of the bond (said to have resulted in recovery) should be treated as fulfilling the pre deposit obligation under Section 129E. Instead, the Court left the matter to the statutory appellate authority, observing that the petitioner is free to make an application to the CESTAT to treat the recovery under the bond as the pre deposit. The CESTAT is directed to consider such application on merits and in accordance with law after hearing the parties. [Paras 4, 5]

Liberty granted to apply to the CESTAT to treat the recovery under the bond as pre deposit; CESTAT to decide the application on merits and in accordance with law.

Final Conclusion: The writ petition is dismissed as withdrawn; petitioner permitted to pursue the statutory appeal before the CESTAT and to apply to the CESTAT to treat recovery under the bond as fulfilling the pre deposit requirement, which the CESTAT shall decide on merits.

Mandamus - consideration of representation on merits and in accordance with law - segregation of imported goods - seizure of imported consignment - import prohibition on waste - environmental pollution concern

Mandamus - positive direction - Whether the High Court could grant a positive mandamus directing clearance and disposal of the PET bottles retained with the respondents. - HELD THAT: - The Court declined to grant the specific positive relief sought by the petitioner to direct the respondents to permit clearance and disposal of the PET bottles. The petition sought a coercive direction to the respondent authority to allow segregation and disposal, which is a matter within the respondents' statutory and administrative domain. The Court observed that the appropriate course is for the respondents to consider the petitioner's representations on their merits and in accordance with law rather than the Court issuing a direct order for clearance or disposal. [Paras 6]

The Court will not issue a positive mandamus directing clearance or disposal; the petition for such a direction is refused.

Consideration of representation on merits and in accordance with law - segregation of imported goods - seizure of imported consignment - environmental pollution concern - import prohibition on waste - Direction to the respondents to consider the petitioner's representations seeking permission to segregate PET bottles from light melting scrap and to permit disposal in India instead of re-exportation. - HELD THAT: - The Court directed the second respondent to consider the representations dated 25.08.2014 and 15.09.2014 requesting segregation of PET bottles from the imported light melting scrap and permission to dispose of the PET bottles in India. The Court refrained from deciding the merits itself and instead remitted the matter for administrative determination, noting the respondents' environmental concerns and statutory position that imports of certain waste materials are prohibited. The respondents are to decide the representations on merits and in accordance with law, taking into account issues such as seizure, pollution risk, and applicable import restrictions. The Court prescribed an eight week period from receipt of a copy of the order for the respondents to pass final orders. [Paras 7]

The respondents are directed to consider and decide the petitioner's representations on merits and in accordance with law within eight weeks; matter remitted for administrative decision.

Final Conclusion: The petition for a positive mandamus directing clearance and disposal is refused; however, the Court directs the second respondent to consider the petitioner's representations for segregation and disposal of the PET bottles on merits and in accordance with law and to pass final orders within eight weeks, whereupon the writ petition is disposed of without costs.

Writ jurisdiction under Article 226 - Doctrine of exhaustion of alternative remedies - Alternative statutory remedy of appeal to CESTAT - Condonation of delay by CESTAT - Confiscation under the Customs Act, 1962

Writ jurisdiction under Article 226 - Doctrine of exhaustion of alternative remedies - Alternative statutory remedy of appeal to CESTAT - Condonation of delay by CESTAT - Whether the writ petition is maintainable notwithstanding the availability of the statutory appeal to the CESTAT against the confiscation order. - HELD THAT: - The petitioner's challenge to the confiscation order was by way of writ petition filed in this Court instead of availing the specific appeal remedy provided in the order-in-original under the statutory scheme. The order itself informed the petitioner of the right to appeal to the Customs, Excise and Service Tax Appellate Tribunal and that the Tribunal is empowered to condone delay if sufficient cause is shown. Applying the settled principle that Article 226 is not intended to short-circuit or circumvent statutory remedies, as explained by the Supreme Court in Assistant Collector of Central Excise v. Dunlop India Ltd., the Court held that statutory remedies should be exhausted before seeking extraordinary relief under Article 226. The petitioner offered no acceptable explanation for not resorting to the alternative remedy; accordingly the Court declined to entertain the writ petition and did not express any opinion on the merits of the confiscation order. [Paras 3, 4]

Writ petition dismissed for non-exhaustion of the statutory appeal remedy to the CESTAT; the Court refrained from adjudicating the merits; no costs.

Final Conclusion: The writ petition was dismissed because the petitioner failed to avail the statutory appeal to the CESTAT (which could have condoned delay), and the High Court declined to bypass the alternative remedy under Article 226, without expressing any view on the merits.

Appointment of whole-time Company Secretary - compliance with Section 203 relating to Key Managerial Personnel - power to initiate penalty proceedings for non-compliance with Section 203 - filing of e-form ACTIVE (INC-22A) - provisional relief by interim order without adjudication on merits

Filing of e-form ACTIVE (INC-22A) - appointment of whole-time Company Secretary - provisional relief by interim order without adjudication on merits - Petitioners permitted, on a provisional basis, to file e-form ACTIVE (INC-22A) without insisting on appointment of a whole-time Company Secretary. - HELD THAT: - The Court recorded that interim orders had been earlier passed permitting the petitioners to file e-form ACTIVE, INC-22A (and specified related forms) without insisting on appointment of a whole-time Company Secretary, pending final disposal of the writ petitions. On hearing, the Court maintained that position and reiterated that such permission is provisional. The Court expressly clarified that the interim accommodation extended to the petitioners shall not be treated as a pronouncement on the merits and does not decide the legality of Section 203 of the Companies Act, 2013 or Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. [Paras 5, 9]

Interim permission to file e-form ACTIVE, INC-22A without appointment of a whole-time Company Secretary is continued on a provisional basis and is not a determination on the merits.

Compliance with Section 203 relating to Key Managerial Personnel - power to initiate penalty proceedings for non-compliance with Section 203 - Respondents are empowered to take action, in accordance with law, against the petitioner-companies for non-compliance with Section 203. - HELD THAT: - The Court observed that the petitioner-companies have not complied with the statutory requirement under Section 203 regarding appointment of Key Managerial Personnel. Having so found, the Court held that the respondents retain the power to proceed against the companies for such violations and granted liberty to the respondents to initiate proceedings and impose penalties as provided under the statute, if so advised. The Court thereby declined to stay or foreclose enforcement action while limiting its present order to provisional filing relief. [Paras 9, 10]

Liberty granted to respondents to proceed against the petitioner-companies for contraventions of Section 203 in accordance with law.

Final Conclusion: Writ petitions disposed of: petitioners allowed, on a provisional basis, to file e-form ACTIVE, INC-22A without insisting on appointment of a whole-time Company Secretary; interim orders are not a pronouncement on merits; respondents granted liberty to initiate enforcement or penalty proceedings under Section 203 if so advised.

Scheme of amalgamation - dispensing with meetings of shareholders on production of consent affidavits - no meeting of transferee's shareholders where no shares are to be issued - dispensing with meetings of secured creditors where net assets suffice and consents to be obtained - dispensing with meetings of unsecured creditors subject to limited notice to large creditors - service of notices under section 230(5) of the Companies Act, 2013 read with rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Reserve Bank of India no-objection certificate for amalgamation of a NBFC - appointment of Chartered Accountant to assist Official Liquidator and report - notice to stock exchanges and SEBI

Dispensing with meetings of shareholders on production of consent affidavits - consent affidavits - Meeting of the Equity Shareholders of the First Applicant Company dispensed with on production of consent affidavits. - HELD THAT: - The Tribunal recorded that the First Applicant Company has obtained consent affidavits from all its equity shareholders annexed as Exhibit "L-1-L7" to the Company Application and, on that basis, dispensed with the requirement to hold meetings of the equity shareholders of the First Applicant Company. [Paras 4]

Meeting of the First Applicant Company's equity shareholders is dispensed with on production of the consent affidavits.

No meeting of transferee's shareholders where no shares are to be issued - Meeting of the Second Applicant Company's equity shareholders for approval of the Scheme is not required where no shares are to be issued and rights are not adversely affected. - HELD THAT: - The Tribunal accepted the applicants' submission that the First Applicant Company is a wholly owned subsidiary, no shares are to be issued under the Scheme and the rights of the Second Applicant Company's shareholders are not adversely affected; accordingly, a meeting of the Second Applicant Company's shareholders is not required. The Tribunal relied on analogous precedents tendered by counsel. [Paras 5]

No meeting of the Second Applicant Company's equity shareholders need be convened.

Preference shareholders - No meeting of preference shareholders is required as none exist for the Applicant Companies. - HELD THAT: - Counsel for the Applicant Companies represented that there are no preference shareholders in either company; the Tribunal recorded that circumstance and accordingly dispensed with any requirement to convene meetings of preference shareholders. [Paras 6]

No meeting of preference shareholders is required.

Secured creditors - no meeting where none exist - No meeting of the Secured Creditors of the First Applicant Company is required as there are no secured creditors of the First Applicant Company. - HELD THAT: - The Tribunal recorded the First Applicant Company's counsel's statement that there are no secured creditors of the First Applicant Company as on the date of hearing, and accordingly dispensed with convening meetings of its secured creditors. [Paras 7]

Meeting of the First Applicant Company's secured creditors is dispensed with.

Dispensing with meetings of secured creditors where net assets suffice and consents to be obtained - consent affidavits - Meeting of the Secured Creditors of the Second Applicant Company is not required, subject to sending notices and obtaining consent affidavits and inviting representations within 30 days. - HELD THAT: - The Tribunal noted the Second Applicant Company's list of secured creditors (Exhibit "N") and the submission that post-Scheme assets will suffice to discharge liabilities. On that basis and by analogy with earlier authority, the Tribunal dispensed with convening a meeting of the Second Applicant Company's secured creditors but directed that notices be sent to obtain consent affidavits and invite representations to be filed before the Tribunal within 30 days of receipt of such notice. [Paras 8]

No meeting of the Second Applicant Company's secured creditors need be convened; notices to obtain consents and representations within 30 days to be issued.

Dispensing with meetings of unsecured creditors where consent obtained - Meeting of the Unsecured Creditors of the First Applicant Company is dispensed with as the sole unsecured creditor has filed a consent affidavit. - HELD THAT: - The Tribunal recorded that, as on 30 September 2020, the First Applicant Company had only one unsecured creditor (Exhibit "P") who has given consent by affidavit; accordingly, the requirement to convene a meeting of its unsecured creditors was dispensed with. [Paras 9]

Meeting of the First Applicant Company's unsecured creditors is dispensed with.

Dispensing with meetings of unsecured creditors subject to limited notice to large creditors - Meeting of the Unsecured Creditors of the Second Applicant Company is not required, but the Second Applicant Company must send notices to unsecured creditors having value of INR 50,00,000 and above inviting representations within 30 days. - HELD THAT: - The Tribunal accepted the Second Applicant Company's submission that post-Scheme assets will suffice for liabilities and, by analogy with prior authority, dispensed with convening meetings of its unsecured creditors. The Tribunal nonetheless directed limited service of notices to unsecured creditors of value INR 50,00,000 and above, inviting representations within 30 days, failing which absence of objection will be presumed. [Paras 10]

No general meeting of unsecured creditors of the Second Applicant Company is required; limited notices to large unsecured creditors and 30 day representation period directed.

Reserve Bank of India no-objection certificate for amalgamation of a NBFC - The Reserve Bank of India has granted a no-objection certificate for the proposed amalgamation of the First Applicant Company (an NBFC) with the Second Applicant Company. - HELD THAT: - The Tribunal recorded that the First Applicant Company, registered with the RBI under Section 45-IA as a non banking financial institution, applied to the RBI for prior permission and the RBI granted its no objection certificate dated 25 September 2020 (Exhibit "R"). The Tribunal noted this compliance. [Paras 11]

RBI's no-objection certificate for the amalgamation is recorded.

Service of notices under section 230(5) of the Companies Act, 2013 read with rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - notice to stock exchanges and SEBI - The Applicant Companies must serve notices on specified authorities (Regional Director, ROC, Income Tax authorities, Official Liquidator, stock exchanges and SEBI and other sectoral authorities) and if no response is received within 30 days, no objection will be presumed. - HELD THAT: - The Tribunal directed service of notices as required by section 230(5) read with rule 8: Central Government through the Regional Director, ROC Mumbai, Income Tax authorities for each company, Official Liquidator (First Applicant Company), BSE, NSE and SEBI (Second Applicant Company) and any other applicable sectoral authorities. The Tribunal provided that absence of response within 30 days from receipt of notice will be treated as no objection. [Paras 12, 13, 14, 15]

Service of notices on the specified regulatory and statutory authorities directed; 30 day period for responses after which no objection will be presumed.

Appointment of Chartered Accountant to assist Official Liquidator and report - A Chartered Accountant is appointed to assist the Official Liquidator in scrutinising the First Applicant Company's books for the last five years and to report within 30 days; fee fixed to be paid by the First Applicant Company. - HELD THAT: - Pursuant to service of notice on the Official Liquidator, CA Anjan Bhattacharya was appointed to assist the Official Liquidator to scrutinise the First Applicant Company's books of account for the last five years. The Tribunal fixed the fee and directed that the Official Liquidator submit his report to the Tribunal within 30 days of receipt of the notice, failing which no objection will be presumed. A copy of the report must be served on the Transferor Company. [Paras 13]

CA appointed to assist Official Liquidator; report due in 30 days and fee fixed to be paid by the First Applicant Company.

Publication and proof of service - Applicant Companies must file an affidavit proving publication and service compliance at least three days before the date fixed for hearing of the Company Petition. - HELD THAT: - The Tribunal directed the Applicant Companies to file an affidavit proving publication in newspapers, sending notices and other compliances required by the order at least three days before the date fixed for the Company Petition hearing. [Paras 16]

Affidavit proving publication and service to be filed at least three days before the hearing date.

Final Conclusion: The Tribunal recorded compliance and directed procedural steps for the proposed amalgamation: meetings of certain classes of shareholders and creditors dispensed with where consents exist or meetings are unnecessary; limited notice and representation procedures ordered for specified creditor classes; RBI no objection noted; statutory and sectoral authorities, stock exchanges and the Official Liquidator to be served with notices with a 30 day response period; a CA appointed to assist the Official Liquidator with a report due in 30 days; and affidavit proof of publication and service to be filed three days before the Company Petition hearing.

Reactivation of DIN for filing defaulted statutory returns - disqualification of directors under Section 164(2) and vacation under Section 167(1)(a) - enforcement of Tribunal orders under Section 424(3)

Reactivation of DIN for filing defaulted statutory returns - disqualification of directors under Section 164(2) and vacation under Section 167(1)(a) - enforcement of Tribunal orders under Section 424(3) - Tribunal's direction to the Registrar of Companies to reactivate DIN No. 01101219 of the director for the limited purpose of enabling the company to file defaulted annual returns and financial statements, despite the statutory disqualification. - HELD THAT: - The Tribunal considered the earlier restoration order dated 25.06.2020, the respondent's reliance on Sections 164(2) and 167(1)(a) and its contention that disqualified directors could not have DINs reactivated, and authorities relied upon by the applicant. Having examined Section 424(3) permitting enforcement of Tribunal orders and the submissions (including the decision relied upon by the applicant), the Tribunal concluded that, in the circumstances, it was just and proper to direct reactivation of the specific DIN of Mr. P. I. Stanley for the limited purpose of filing the company's statutory documents. The reactivation is subject to compliance conditions: collection of fine/penalty as may be applicable, filing of all statutory documents along with prescribed fees/additional fee/fine within 30 days of reactivation, and updating of ROC records thereafter. The order is confined to violations that led to the DIN deactivation and does not preclude the ROC from taking any other action in accordance with law for other violations or offences. [Paras 19, 20, 21]

RoC directed to reactivate DIN No. 01101219 forthwith (subject to payment of fine/penalty, if any) to enable filing of defaulted returns; company to file statutory documents within 30 days and RoC to update records; order limited to violations leading to deactivation.

Final Conclusion: MA disposed of: Tribunal directed reactivation of the director's DIN for the limited purpose of enabling the company to file defaulted annual returns and financial statements, subject to payment of any fine/penalty and compliance within the stipulated time; ROC's liberty to take other actions for unrelated violations is preserved.

Corporate Insolvency Resolution Process under Section 10 of IBC, 2016 - Obligation to disclose change of corporate name and registered office in Form VI - Requirement of completeness of application under Section 10(4)(b) - Status quo obligations on a corporate applicant after filing under Section 10 - Public announcement and creditors' ability to identify the corporate debtor - Misuse of Section 10 by a corporate applicant

Obligation to disclose change of corporate name and registered office in Form VI - Public announcement and creditors' ability to identify the corporate debtor - Failure to disclose the change of the corporate applicant's name and registered office in the filed Form VI amounted to concealment of material facts and had direct consequences for public announcement and creditors' ability to identify the corporate debtor. - HELD THAT: - The Tribunal found that the applicant changed its name and thereafter obtained a fresh certificate of incorporation, and also later changed its registered office, but did not disclose these changes in the Form VI filed with the Section 10 application (paras 4-7, 11, 17). The Tribunal explained that an admission under Section 10 triggers a public announcement by the interim resolution professional; if the corporate debtor's name/address are altered and not disclosed, creditors and other stakeholders may be unable to identify the debtor and file claims, thereby defeating the purpose of the public announcement and affecting rights of third parties (paras 7, 9). The Tribunal held that the applicant was under a duty to disclose the change of name and registered office when filing the Section 10 application and that non disclosure amounted to concealment of material facts relevant to the in rem effect of a CIRP order (paras 6-9). [Paras 6, 7, 9, 11, 17]

Non disclosure of change of name and registered office in Form VI amounted to concealment of material facts and adversely affected the public announcement process and creditors' ability to identify the corporate debtor.

Status quo obligations on a corporate applicant after filing under Section 10 - Misuse of Section 10 by a corporate applicant - Acts undertaken by the applicant after filing the Section 10 application - including changing name/address and settling only one creditor's dues - were inconsistent with the expectation that the corporate applicant maintain status quo and gave rise to suspicion of misuse of Section 10. - HELD THAT: - The Tribunal reasoned that a corporate applicant who files under Section 10 places itself in a position where, effectively, major decisions ought to be kept in abeyance and the applicant should maintain status quo regarding constitution, creditors and assets (para 8). The applicant's subsequent conduct - obtaining a new certificate of incorporation, changing registered office, and settling the dues of only the 2nd respondent while not disclosing the manner of payment - indicated alteration of financial status and possible attempt to gain advantage from CIRP provisions or frustrate creditors (paras 3, 5, 18). The Tribunal observed that such conduct could amount to filing the application with malicious intention to defraud creditors and that pending Section 10 proceedings applicants must come with clean hands (paras 6-9, 18). [Paras 5, 6, 8, 9, 18]

The applicant's post filing actions - name/address change and selective settlement - were improper, inconsistent with the duty to maintain status quo, and indicative of misuse of Section 10.

Requirement of completeness of application under Section 10(4)(b) - Corporate Insolvency Resolution Process under Section 10 of IBC, 2016 - The Section 10 application was incomplete for want of an amended Form VI reflecting the change of name/registered office; consequently the application was liable to be rejected under Section 10(4)(b) and was dismissed. - HELD THAT: - Section 10(4)(b) permits rejection of an application if it is incomplete (para 20). The Tribunal found that the applicant failed to file the amended Form VI despite repeated opportunities and directions to do so (paras 10-12, 17). The record showed that the registry did not have the amended petition and the master data did not match the submitted Form VI (para 17). Given that the application on record was incomplete and admission could not be ordered in the name that no longer existed on record, the Tribunal concluded that the application could not be admitted and therefore dismissed the IBA/120/2020 under Section 10(4)(b) (paras 21-22). [Paras 12, 17, 20, 21, 22]

The Section 10 application was incomplete for failure to file the amended Form VI; the application was rejected/dismissed under Section 10(4)(b) and connected IAs were closed.

Final Conclusion: The Tribunal dismissed the Section 10 application (IBA/120/2020) as incomplete for non disclosure and non filing of the amended Form VI reflecting change of name and registered office, found the applicant's post filing conduct inconsistent with the duty to maintain status quo and indicative of misuse of Section 10, and closed all connected applications; registry was directed to communicate a copy of the order to IBBI.

Payment of interest for wrongful confiscation - interpretation of Section 42(3) of FERA - statutory interest on refunded proceeds - laches and undue delay in exercise of discretionary public law remedy under Article 226 - finality of judicial order and scope for modification

Interpretation of Section 42(3) of FERA - payment of interest for wrongful confiscation - finality of judicial order and scope for modification - laches and undue delay in exercise of discretionary public law remedy under Article 226 - Whether the Petitioner was entitled to interest on the rupee equivalent refunded for UK Pounds 1800 and, if so, whether such interest was payable under Section 42(3) of FERA or otherwise, having regard to the finality of the earlier order and the delay in seeking relief. - HELD THAT: - The Court held that the expression "such proceeds" in Section 42(3) of FERA relates to proceeds realised pursuant to a direction under Section 42(1) and deposited in the separate account required by Section 42(2); therefore Section 42(3) did not apply to the refund made in this case. The Court accepted that a claim for interest independent of Section 42(3) is a distinct question, but declined the Petitioner's claim on discretionary grounds. Although the order dated 26.11.1999 setting aside confiscation of UK Pounds 1800 attained finality, the petitioner neither sought modification of that order to claim interest nor pursued an appeal in respect of interest when the order was pronounced. The petitioner accepted the refund in March 2000 while reserving a right to claim interest, but thereafter filed the present writ petition only in August 2009-over nine years later-without offering any adequate explanation or producing written reminders. Applying the settled doctrine of laches and undue delay in the exercise of the High Court's discretionary power under Article 226, the Court concluded that, in the overall facts and the petitioner's unexplained delay and failure to seek appropriate modification or challenge earlier, it would not be appropriate to exercise discretion to grant interest. For these reasons the claim for interest was rejected despite the statutory inapplicability of Section 42(3). [Paras 11, 12, 13]

Claim for interest on the refunded rupee equivalent of UK Pounds 1800 dismissed; refund without interest upheld and writ petition dismissed on grounds of laches and failure to seek modification of the earlier order.

Final Conclusion: The petition for payment of interest on the rupee equivalent refunded for UK Pounds 1800 is dismissed. Section 42(3) of FERA was held inapplicable to the refund, and the Court declined to grant interest on discretionary grounds because the petitioner inexcusably delayed over nine years and did not seek modification of the earlier final order.

Show Cause Notice - Rule 4 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 - adjudicatory first-stage scrutiny - judicial restraint in interference with pre-inquiry notices - opportunity to be heard before the Adjudicating Authority

Show Cause Notice - Rule 4 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 - adjudicatory first-stage scrutiny - judicial restraint in interference with pre-inquiry notices - Whether the High Court should entertain a writ petition to quash a first-stage show cause notice issued under Rule 4 of the Rules. - HELD THAT: - Rule 4 contemplates a two-stage process: issuance of an initial notice requiring the person to show cause (first stage) and, after considering any cause shown, the Adjudicating Authority may direct an inquiry and fix a date for appearance (second stage). The impugned notice is at the initial stage under Rule 4(1)-(5) where the Authority is to form an opinion on whether an inquiry should be held. Given the procedural character of a first-stage show cause notice and the scheme of Rule 4, the Court declined to exercise writ jurisdiction to quash the notice at this pre-inquiry stage. The petitioner is entitled to raise all factual and legal contentions before the Adjudicating Authority, and, if aggrieved by the Authority's subsequent decision, may challenge that decision in accordance with law. [Paras 7, 8]

Writ petition dismissed; Court will not quash or entertain challenge to a first-stage show cause notice issued under Rule 4 and the petitioner may raise its contentions before the Adjudicating Authority and, if necessary, challenge the Authority's decision later.

Final Conclusion: The petition seeking quashing of the initial show cause notice issued under Rule 4 is dismissed: the Court declines to interfere at the pre-inquiry stage, leaving the petitioner free to put forth its contentions before the Adjudicating Authority and to pursue statutory remedies against any adverse decision.

Maintainability of writ under Article 226 against time barred statutory appeal - finality of statutory orders where statutory appeal is not filed within maximum limitation - condonation of delay by appellate authority - limitation for filing appeal under Section 85 of the Finance Act, 1994

Maintainability of writ under Article 226 against time barred statutory appeal - finality of statutory orders where statutory appeal is not filed within maximum limitation - condonation of delay by appellate authority - limitation for filing appeal under Section 85 of the Finance Act, 1994 - Whether the High Court may entertain a writ under Article 226 challenging a statutory order where the statutory appeal before the designated Appellate Authority was not filed within the maximum period of limitation and was refused admission as time barred. - HELD THAT: - The Court recorded that the petitioner received the impugned order on 31.12.2016 and that, under Section 85 of the Finance Act, 1994, an appeal ought to have been preferred within two months with a discretionary one month condonation available to the Appellate Authority, making the maximum limitation three months. The appeal was filed only on 19.04.2017 and the Appellate Authority refused to entertain it as time barred. Reliance was placed on the Supreme Court's decision in Assistant Commissioner (CT) LTU, Kakinada v. Glaxo Smith Kline Consumer Health Care Limited, which establishes that a High Court should not, in exercise of Article 226, entertain a writ petition assailing a statutory order where the statutory appeal was not preferred within the maximum limitation before the prescribed Appellate Authority. Applying that principle, the High Court held that it could not entertain the present writ petition nor express any view on the merits of the underlying controversy, the question of limitation and refusal to admit the appeal being determinative. [Paras 3, 4, 5]

Writ petition dismissed for being an attempt to challenge a statutory order without availing the statutory appeal within the maximum period; Court abstained from adjudicating merits.

Final Conclusion: The writ petition is dismissed; the connected miscellaneous petition is closed; no costs.

Availability of alternative statutory remedy - exercise of discretionary writ jurisdiction under Article 226 - circumstances permitting bypass of statutory remedies - condonation of delay by appellate tribunal - bar on entertaining writs in revenue matters where statutory appeal is available

Availability of alternative statutory remedy - exercise of discretionary writ jurisdiction under Article 226 - bar on entertaining writs in revenue matters where statutory appeal is available - condonation of delay by appellate tribunal - Writ petition dismissed for non resort to the alternative statutory appeal remedy despite its availability and the appellate tribunal's power to condone delay. - HELD THAT: - The Court found that the original order expressly afforded the petitioner an appeal remedy before the Appellate Tribunal under the statute and specifically noted the Tribunal's power to condone delay. The petitioner did not invoke that remedy and, instead, filed the present writ petition after the period for appeal. Relying on the principle stated in Assistant Collector of Central Excise -vs- Dunlop India Limited , the Court held that Article 226 is not intended to short circuit statutory procedures and that extraordinary circumstances are required to bypass available statutory remedies. In revenue matters where an alternative statutory remedy exists, the Court will not ordinarily entertain a writ petition unless there are good and sufficient reasons to bypass the prescribed remedy. The petitioner failed to provide an acceptable explanation for not availing the statutory appeal, and the Court therefore declined to consider the merits of the challenge to the original order. [Paras 2, 3]

Writ petition dismissed for failure to avail the statutory appellate remedy; merits not adjudicated.

Final Conclusion: The writ petition was dismissed because the petitioner did not avail the alternative statutory appeal, which remained the appropriate forum and whose delay condonation power was available; the Court declined to examine the merits.

Exercise of writ jurisdiction under Article 226 - time-barred statutory appeal - doctrine against circumventing statutory limitation - initiation of reassessment proceedings within statutory period - scope of 'proceed to assess' and 'determine' in assessment limitation - interruption of proceedings by interim stay - reassessment consequent to amendment in law - binding precedential effect of Division Bench decisions on turnover assessment

Exercise of writ jurisdiction under Article 226 - time-barred statutory appeal - doctrine against circumventing statutory limitation - Whether the High Court should entertain writ petitions under Article 226 challenging orders which were not appealed to the statutory Appellate Authority within the maximum period of limitation. - HELD THAT: - The Court applied the binding principle in Assistant Commissioner (CT) LTU, Kakinada -vs- Glaxo Smith Kline Consumer Health Care Limited to hold that where the statutory maximum period for preferring an appeal before the Appellate Authority has lapsed, the High Court should not be permitted to circumvent the statutory bar by entertaining a writ petition under Article 226. The court rejected the petitioner's attempt to distinguish that precedent on the ground that no time-barred appeal had been filed, observing that a person who did not file an appeal is not less blameworthy than one who filed a time barred appeal; the legislative intent embodied in the limitation cannot be evaded by resort to writ jurisdiction. Consequently, the court declined to enter into the merits of the assessment orders in these proceedings as the statutory appellate remedy was not pursued within the maximum period. [Paras 3]

Writ petitions challenging orders not appealed within the statutory maximum period are not maintainable and the court will not ordinarily examine merits.

Initiation of reassessment proceedings within statutory period - scope of 'proceed to assess' and 'determine' in assessment limitation - interruption of proceedings by interim stay - Whether the reassessment proceedings and final orders impugned were time barred under the limitation provisions analogous to Section 16 of the TNGST Act. - HELD THAT: - On the material before it, the Court found that the notices for reassessment were issued on dates within the statutory period for each assessment year (noted in the impugned orders), and therefore the proceedings had been validly initiated within the limitation period. The court recalled the consistent line of authority (including Sales Tax Officer -vs- Sudarsanam Iyengar & Sons and subsequent Full Bench and Supreme Court decisions) that the critical question is whether the reassessment process was initiated within the prescribed period; if initiation occurs within the period, subsequent completion may lawfully follow. The Court further noted that earlier interim orders and stays (referred to in the impugned orders) impeded finalisation of proceedings, and that such impediments absolved the authority from fault for delay in completing reassessment. [Paras 4, 5]

The reassessment proceedings were validly initiated within the statutory period and could be lawfully completed thereafter; the impugned orders are not vitiated by limitation.

Reassessment consequent to amendment in law - binding precedential effect of Division Bench decisions on turnover assessment - Whether the Petitioner could contend against reassessment of turnover arising from the amendment (introduction of Section 3-B and amended definition of 'sale') which treats transfer of goods in works contracts as sale. - HELD THAT: - The Court observed that Division Bench decisions have settled the legal position that, after the statutory amendment, transfer of goods involved in works contracts amounts to 'sale' and the entire turnover is assessable. Given those authoritative rulings (referred to in the impugned order), the petitioner could not successfully challenge reassessment founded on that settled question of law. That settled legal position removes any legitimate grievance to the reassessment on that ground. [Paras 6]

Petitioner has no valid grievance against reassessment premised on the amended statutory position; the reassessment stands in light of binding precedents.

Final Conclusion: The writ petitions lack merit and are dismissed; connected miscellaneous petition closed with no costs.

Anticipatory bail - custodial interrogation - criminal breach of trust and cheating under sections 406 and 420 IPC - embezzlement of deposits - forged/false passbooks - recovery of proceeds and incriminating records - investigative necessity outweighing pre-arrest relief

Anticipatory bail - custodial interrogation - embezzlement of deposits - forged/false passbooks - recovery of proceeds and incriminating records - Anticipatory bail petition dismissed and custodial interrogation of the petitioner held necessary to effect recoveries and further the investigation. - HELD THAT: - The court recorded the FIR allegations that the petitioner, as secretary of the society, induced the complainant to deposit funds promising returns, issued passbooks and thereafter retained them while allegedly not crediting deposits to the society. Investigation revealed non-deposit of the complainant's funds, signatures of the petitioner on the passbooks at various places and material suggesting embezzlement; recovery and other incriminating records remain to be effected. The petitioner sought to characterise certain transactions as separate personal dealings and relied on receipts and pending civil and NI litigation, but the court found that those contentions muddle distinct transactions and do not negate the necessity of custodial interrogation. Given the nature of the allegations, the presence of alleged forged/false passbooks and the investigative requirement to secure recovery and records, the court held that the need for custodial interrogation outweighs grant of pre-arrest relief. [Paras 5, 6, 7, 8]

Anticipatory bail is refused; custodial interrogation is necessary and the petition is dismissed.

Final Conclusion: The anticipatory bail application is rejected on the ground that custodial interrogation is required to effect recoveries and obtain incriminating records in the investigation into alleged embezzlement and issuance of false/forged passbooks; the petition is dismissed.