TaxTMI Updates e-Newsletter
Dec 15,2021

Concessional rate for parts of goods of headings 8901, 8902, 8904, 8905, 8906 and 8907 - Parts to be taxed as parts of ship/vessel only when used in goods falling under Chapter 89 - End use conditioned classification - Application of General Rules of Interpretation - specific heading preferred

Concessional rate for parts of goods of headings 8901, 8902, 8904, 8905, 8906 and 8907 - Parts to be taxed as parts of ship/vessel only when used in goods falling under Chapter 89 - End use conditioned classification - Whether parts of diesel marine engine or genset supplied or to be supplied to the Indian Navy are taxable at the concessional rate specified in Sr. No. 252 of Notification No. 01/2017 C.T. (Rate). - HELD THAT: - The Authority examined the documents produced by the applicant (tender documents, purchase orders, chartered engineer's certificate and declaration/certificate from the Indian Navy) and applied the entry at Sr. No. 252 which grants the concessional rate to "Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907". Reliance was placed upon the prior ruling of this Authority in M/s MAN Energy Solutions India Pvt. Ltd., which held that marine engines or their parts qualify as parts of vessels under the said entry only when they are supplied to and used in manufacture of goods classifiable under Chapter 89. The Authority rejected the department's general submission that classification must prima facie follow the specific tariff of the part irrespective of end use, noting that the present question concerns the rate applicable where the goods are supplied as pure goods and that the applicant's case is supported by specific documents showing intended use in ships or vessels. Accordingly, the Authority confined its decision to transactions supported by such documentary evidence and clarified that the concessional rate applies only when the parts are used in diesel marine engines or gensets which are further used in ships and vessels falling under the specified Chapter 89 headings.

Parts of diesel marine engine or genset supplied to the Indian Navy are eligible for the concessional rate in Sr. No. 252 only if they are used in diesel marine engines or gensets which are further used in ships and vessels falling under chapter headings 8902, 8904, 8905, 8906 and 8907, and the transaction is supported by documents demonstrating such use.

Final Conclusion: The question is answered in the affirmative, but strictly subject to the condition that the parts are used in diesel marine engines or gensets which are themselves used in ships or vessels falling under the specified Chapter 89 headings and that the supply is supported by the documentary evidence relied upon in this ruling; the ruling does not apply to transactions lacking such supporting documents.

Cancellation of GST registration for non-filing of returns - Revocation of cancellation of registration - Extension of limitation period - Condonation of delay due to COVID-19 - Application of Notification No. 34/2021-Central Tax and CBIC Circular No. 158/14/2021-GST

Extension of limitation period - Condonation of delay due to COVID-19 - The appeals were filed within time in view of the extension of limitation granted by the Supreme Court and clarified by CBIC. - HELD THAT: - The appellate authority found that the appeals fell within the extended periods of limitation as restored/extended by the Hon'ble Supreme Court's orders relating to the pandemic and as clarified by CBIC. The authority relied on the Supreme Court's continuation of its earlier orders (restoring extension of limitation) and on CBIC Circular No. 157/13/2021-GST, concluding that the appeals are timely. Consequently, the appellate time-limits under Section 107 were held to be satisfied for the appeals before the Commissioner (Appeals). [Paras 4]

Appeals are within time and not barred by limitation.

Cancellation of GST registration for non-filing of returns - Revocation of cancellation of registration - Application of Notification No. 34/2021-Central Tax and CBIC Circular No. 158/14/2021-GST - Registrations cancelled under clause (b) or (c) of sub section (2) of section 29 are to be considered for revocation in light of Notification No. 34/2021 and Circular No. 158/14/2021-GST; appellants' cases are to be processed accordingly. - HELD THAT: - The authority recorded that the registrations were cancelled for non-filing of returns and that the time for filing applications for revocation fell between 1 March 2020 and 31 August 2021. Notification No. 34/2021-Central Tax extended the time for filing such revocation applications to 30 September 2021, and CBIC Circular No. 158/14/2021-GST clarified that the benefit applies irrespective of the status of any pending or rejected applications. In view of these instruments, the appellate authority allowed the appeals and directed the proper officer to consider (or reconsider) the application for revocation, after due verification of tax, late fee, penalty, interest and the status of returns, applying the extended timelines provided by the notification and circular. [Paras 5, 6, 7, 8]

Appeals allowed; matter remitted to the proper officer to process revocation applications under the extended timelines and after verification of compliance.

Final Conclusion: Appeals allowed; appellants' registrations are to be considered for revocation in accordance with Notification No. 34/2021 and CBIC Circular No. 158/14/2021 GST, and the proper officer is directed to process any fresh or pending revocation applications after verification of tax, fees, interest, penalty and returns; appeals disposed.

Royalty - use of, or the right to use, any copyright - copyright licence versus restrictive EULA - commercial exploitation of software - fee for technical services - withholding tax under section 195 of the Income tax Act, 1961 - DTAA interpretation and override of domestic law - beneficial owner / conduit company

Royalty - use of, or the right to use, any copyright - copyright licence versus restrictive EULA - DTAA interpretation and override of domestic law - Whether amounts received by EYGSL (UK) for providing access to computer software to EY member firms amount to 'royalty' taxable in India under the India UK DTAA and the Income tax Act - HELD THAT: - The Court applied the Supreme Court's decision in Engineering Analysis Centre and held that characterization as 'royalty' requires a transfer of copyright or of 'all or any rights' in respect of copyright (i.e., an interest in rights under sections 14/30 of the Copyright Act). A non exclusive, non transferable licence or a restrictive EULA that merely authorises access to and use of software without parting with any proprietary right does not amount to a transfer of copyright. The determinative inquiry is the agreement between the licensor and the licensee (here, EYGSL (UK) and EYGBS (India)); where that agreement confers only the right to use the software and does not create any right to reproduce, sub licence or otherwise exploit the copyright, the receipts cannot be characterized as 'royalty' under Article 13 of the DTAA or Explanation 2 to section 9(1)(vi) of the Act. The Court rejected the Revenue's reliance on AAR precedents to the contrary and held that the Supreme Court's ratio applies generally and covers the present facts. [Paras 13, 14, 16, 17, 18]

Payments received by EYGSL (UK) for providing access to computer software to EYGBS (India) do not amount to 'royalty' taxable in India under the India UK DTAA or the Income tax Act.

Withholding tax under section 195 of the Income tax Act, 1961 - royalty - fee for technical services - Whether such receipts would attract withholding under section 195 of the Income tax Act or be taxable in India as 'fee for technical services' or otherwise - HELD THAT: - Because the Court held the receipts are not 'royalty' (see above), they cannot be taxed in India on that basis and the consequent withholding obligation under section 195 in respect of royalty does not arise. The Court also noted the AAR's answer that the consideration was not 'fee for technical services' and accepted that the characterisation under the agreement was of a right to use/access (not a transfer of copyright). The petitioners' challenge to the AAR ruling was allowed to the extent the AAR had treated the software receipts as royalty. [Paras 7, 14, 18]

No withholding under section 195 is attracted insofar as the receipts are concerned with access/use of software that do not constitute 'royalty'; the receipts are not taxable in India as royalty, and the AAR's contrary conclusion is set aside.

Final Conclusion: The AAR rulings dated 10.08.2016 are set aside; amounts received by EYGSL (UK) for providing access to computer software to EY member firms in India do not constitute 'royalty' under the India UK DTAA or the Income tax Act and therefore are not taxable in India as royalty nor subject to withholding under section 195 on that basis; petitions allowed.

Validity of notice under section 148 - Introduction and applicability of section 148A of the Income Tax Act - Effect of executive notifications on statutory commencement and operation - Extension of limitation by delegated legislation and its impact on newly notified provisions - Interim judicial stay of tax notice

Introduction and applicability of section 148A of the Income Tax Act - Effect of executive notifications on statutory commencement and operation - Validity of notice under section 148 - Whether a notice issued on 30.06.2021 under section 148 is prima facie sustainable despite insertion of section 148A w.e.f. 01.04.2021 and notifications dated 27.02.2021 and 31.03.2021 extending limitation - HELD THAT: - The Court examined the effect of Finance Act, 2021 which inserted section 148A with an effective date of 01.04.2021, requiring preliminary enquiry, prior approval where necessary and a show-cause opportunity before issuing a notice under section 148. The respondents relied on CBDT notifications dated 27.02.2021 and 31.03.2021 extending time-limits, and on pandemic-related extensions, to contend that notices issued up to 30.06.2021 could be issued under the pre-amendment regime. On a prima facie appraisal for interim relief, the Court found that those notifications extended limitation periods but did not have the effect of postponing or nullifying the statutory commencement and operation of section 148A as notified w.e.f. 01.04.2021. The Court regarded the decisions of the Allahabad and Rajasthan High Courts as more persuasive on this aspect than the contrary view taken by the Chhattisgarh High Court. The opinion expressed was provisional for the purpose of interim relief and not a conclusive adjudication on merits. [Paras 11, 12, 13]

Prima facie, section 148A's applicability from 01.04.2021 is not negated by the CBDT notifications extending limitation; the operation of the impugned notice dated 30.06.2021 is stayed by the Court by way of interim relief.

Final Conclusion: By way of interim relief the Court stayed operation of the notice dated 30.06.2021 issued under section 148; the stay is granted on the prima facie view that the CBDT notifications extending limitation do not displace the notified commencement and applicability of section 148A w.e.f. 01.04.2021, an opinion stated only for interim purposes and without prejudice to the final adjudication.

Failure to decide rectification application - directions to adjudicatory authority to apply binding precedent - stay of recovery pending adjudication - binding effect of High Court precedent

Failure to decide rectification application - binding effect of High Court precedent - Jurisdictional Assessing Officer to decide the petitioner's rectification/application in accordance with this Court's precedent and the petitioner's earlier writ order. - HELD THAT: - The Court recorded that the petitioner had filed a request/application dated 22nd November, 2021 which remained undecided. The Revenue accepted that the Assessing Officer erred in not deciding the application. The Assessing Officer is directed to decide the application in accordance with the judgment in Concentrix Services Netherlands B V vs. Income Tax Officer TDS & Anr. and the petitioner's earlier order in W.P.(C) 3876/2021, ensuring that the binding effect of those High Court decisions is given effect to. The decision is to be taken within four weeks from the date of the undertaking recorded in court. [Paras 4, 5]

Rectification/application remitted to the Assessing Officer for decision in accordance with the cited High Court precedents within four weeks.

Stay of recovery pending adjudication - Whether recovery proceedings in respect of the disputed demand shall be stayed pending decision on the rectification/application. - HELD THAT: - On the assurance given by Revenue's counsel that the Assessing Officer will decide the rectification/application within the stipulated time, the Court accepted the undertaking and directed that until the Assessing Officer passes the order, the impugned demand shall not be given effect to. The stay is interim and conditioned on the Assessing Officer complying with the recorded undertaking. [Paras 6, 7]

Recovery proceedings in respect of the disputed demand shall not be given effect to until the Assessing Officer passes the decision on the rectification/application.

Final Conclusion: Writ petition disposed of on the basis of the undertaking: the Assessing Officer is directed to decide the petitioner's rectification/application in accordance with the cited High Court precedents within four weeks, and recovery of the disputed demand is stayed until such decision is rendered.

Substitution of statutory provisions - reassessment jurisdiction under Section 148 - mandatory pre-issuance compliance under Section 148A - operation and limits of delegated legislation/notifications - temporal applicability of Finance Act, 2021 w.e.f. 01.04.2021 - non obstante clause in enabling legislation

Substitution of statutory provisions - reassessment jurisdiction under Section 148 - mandatory pre-issuance compliance under Section 148A - temporal applicability of Finance Act, 2021 w.e.f. 01.04.2021 - Validity of reassessment notices issued after 01.04.2021 where reassessment jurisdiction was assumed without following the law substituted by the Finance Act, 2021 (including compliance with Section 148A). - HELD THAT: - The Court held that the Finance Act, 2021 substituted the pre-existing provisions relating to reassessment with effect from 01.04.2021 and, in the absence of any express saving clause, the substituted law alone governs reassessment proceedings initiated on or after that date. A reassessment proceeds only upon valid assumption of jurisdiction by issuance of a Section 148 notice; since in the present matters all Section 148 notices were issued after 01.04.2021, jurisdiction could be assumed only in accordance with the amended law. Reassessment notices issued without making the compliances required under the substituted provisions (including Section 148A) are therefore without jurisdiction and liable to be quashed.

Reassessment notices issued after 01.04.2021 without compliance with the law as substituted by the Finance Act, 2021 are without jurisdiction and are quashed.

Operation and limits of delegated legislation/notifications - non obstante clause in enabling legislation - Whether the Enabling Act and Notifications issued thereunder could validate or extend the operation of the pre-existing reassessment provisions in order to save reassessments instituted after 01.04.2021. - HELD THAT: - The Court agreed with the reasoning in Ashok Kumar that the Enabling Act (and the Notifications made under it) was enacted to extend timelines and to protect proceedings already initiated before the cut-off, but does not and cannot resurrect or validate pre-existing reassessment provisions that were substituted by the Finance Act, 2021. The non obstante language in the Enabling Act is confined to protecting proceedings already under way and does not operate to override the substituted law enacted by Parliament. Delegated legislation cannot be read to overreach or defeat the principal legislation; therefore the Notifications cannot render operative the pre-01.04.2021 provisions for proceedings initiated after that date.

The Enabling Act and the Notifications cannot be read so as to save or re-activate the pre-existing reassessment provisions for proceedings initiated from 01.04.2021 onwards; such Notifications have no applicability to reassessments commenced after that date.

Final Conclusion: Writ petitions allowed; the reassessment notices issued under Section 148 after 01.04.2021 are quashed as without jurisdiction. Assessing authorities remain free to initiate reassessment proceedings afresh in accordance with the provisions of the Act as amended by the Finance Act, 2021, after fulfilling all statutory compliances.

Substitution of statutory provisions - delegated legislation cannot override principal legislation - enabling legislation to extend limitation - non obstante clause - jurisdictional validity of reassessment notice - mandatory compliance with substituted reassessment procedure (including new procedural safeguards) - absence of express saving clause

Substitution of statutory provisions - absence of express saving clause - jurisdictional validity of reassessment notice - Validity of reassessment notices issued after 01.04.2021 where reassessment proceedings had not been initiated prior to that date. - HELD THAT: - The Court held that by operation of the Finance Act, 2021 (effective 01.04.2021) the earlier provisions governing reassessment were substituted and therefore the pre-existing provisions ceased to operate except insofar as expressly saved. In absence of any express saving clause preserving the pre-existing reassessment provisions, reassessment proceedings could only be initiated after 01.04.2021 in accordance with the substituted law. Jurisdiction to undertake reassessment arises only upon valid assumption of jurisdiction evidenced by issuance of a Section 148 notice; where no such jurisdiction had been validly assumed before 01.04.2021, the Enabling Act and its Notifications could not be read so as to revive or validate initiation of reassessment under the pre-existing provisions. Consequently, notices issued after 01.04.2021 without complying with the substituted law were held to be without jurisdiction.

Reassessment notices issued after 01.04.2021 quashed as without jurisdiction; assessing authorities may initiate reassessment only under the substituted provisions.

Enabling legislation to extend limitation - non obstante clause - delegated legislation cannot override principal legislation - Whether the Enabling Act and Notifications issued thereunder could extend or preserve the operation of the pre-existing reassessment provisions after substitution by the Finance Act, 2021. - HELD THAT: - The Court concluded that the Enabling Act was an enactment to extend timelines and its non-obstante clause was limited to protecting proceedings already under way (i.e., those where jurisdiction had already been validly assumed). The Enabling Act does not itself save or re-enact substantive provisions replaced by Parliament. Delegated legislation in the form of Notifications cannot be employed to overreach or defeat the substituted principal legislation; absent express legislative authority to preserve the pre-existing reassessment provisions, the Notifications cannot be read as reviving or prolonging their operation beyond the substitution date. Extensions under the Enabling Act therefore apply only to proceedings legitimately initiated before the substitution and, after 01.04.2021, to the amended provisions.

Enabling Act and Notifications cannot operate to validate or extend the operation of pre-existing reassessment provisions after their substitution; their protective effect is confined to proceedings already initiated before 01.04.2021.

Mandatory compliance with substituted reassessment procedure (including new procedural safeguards) - jurisdictional validity of reassessment notice - Whether assessing authorities may re-initiate reassessment proceedings after quashing of earlier notices. - HELD THAT: - The Court left open the power of assessing authorities to initiate reassessment proceedings in accordance with the Act as amended by the Finance Act, 2021, but only after fulfilling all statutory compliances required by the substituted law. The emphasis is that any fresh initiation must conform to the amended procedural scheme (including the provisions introduced w.e.f. 01.04.2021) so that jurisdiction is validly assumed under the new legal framework.

Assessing authorities may initiate reassessment afresh in accordance with the substituted provisions and after complying with all statutory requirements.

Final Conclusion: Writ petitions allowed; reassessment notices issued to the petitioners under Section 148 quashed as issued without jurisdiction in view of substitution of the reassessment provisions w.e.f. 01.04.2021; assessing authorities remain free to initiate reassessment only in accordance with the amended law after making the prescribed compliances.

Bona fide belief - reasonable cause - penalty under Section 271E - requirement of Section 269T - appellate interference with Tribunal findings

Bona fide belief - reasonable cause - requirement of Section 269T - penalty under Section 271E - Whether the Tribunal was right in holding that there was no violation of the requirements of Section 269T and that the assessee's bona fide belief constituted reasonable cause for deleting the penalty under Section 271E. - HELD THAT: - The Court noted that the Tribunal recorded findings in favour of the assessee on the question of bona fide belief and reasonable cause. Rather than re examining the merits of those findings, the Court observed that additional documents now placed on record might warrant fresh consideration of the explanation relied upon by the assessee. The Court therefore refrained from adjudicating the substantive question on merits and directed that the matter be remitted to the Tribunal for fresh consideration and decision after affording both parties an opportunity to be heard. The Court indicated that the Tribunal should examine whether the assessee discharged the burden of proof and whether reasonable cause exists for not complying with the requirement of Section 269Tpenalty under Section 271E. [Paras 10, 11]

The Tribunal's finding on bona fide belief and reasonable cause was not finally adjudicated by this Court; the Tribunal's order is set aside and the issue is remitted to the Tribunal for fresh consideration and decision.

Appellate interference with Tribunal findings - Whether the additional documents (permitted to be brought on record) should be considered and whether the matter should be reopened in the Tribunal for fresh adjudication. - HELD THAT: - The Court accepted the Revenue's prayer for placing certain documents on record and observed that those documents may have bearing on the Tribunal's findings regarding the assessee's explanation. The Court declined to examine the applicability or relevance of those documents itself, noting that the assessee was not previously confronted with them in the adjudication. In the interest of fairness and to permit full consideration, the Court remitted the matter to the Tribunal so that the parties may be afforded opportunity to contest and the Tribunal may decide afresh upon the entire material, including the additional documents. [Paras 4, 10, 11]

Additional documents are permitted to be considered; matter remitted to the Tribunal to examine the documents and decide the issue afresh after giving opportunity to both parties.

Final Conclusion: Substantial questions are answered in favour of the Revenue and against the assessee; the order of the Tribunal is set aside and the matter is remitted to the Tribunal for fresh adjudication of the assessee's claim of bona fide belief and reasonable cause relating to compliance with the requirement of Section 269T and the levy of penalty under Section 271E, with the Tribunal to decide the appeal afresh after affording opportunity to both parties, preferably within four months.

Remand for fresh consideration - tribunal as final fact finding authority - deduction under Section 80P(2)(a)(vi) - collective disposal of the labour of its members

Remand for fresh consideration - tribunal as final fact finding authority - Whether the Income Tax Appellate Tribunal was justified in remanding the claim for exemption under Section 80P(2)(a)(vi) to the assessing officer for fresh adjudication. - HELD THAT: - The Tribunal had material, including the society's bye laws, on record which were sufficient for it to determine whether the society was engaged in the collective disposal of its members' labour. The High Court held that in the peculiar facts of the case the remand to the assessing officer was unnecessary because the Tribunal, as final fact finding authority, could have appreciated the materials and decided the claim itself. Considering the assessment relates to 2008 09 and the delay that would ensue on remand, the Tribunal's order remanding the matter was set aside and the matter was directed to be considered afresh by the Tribunal itself. [Paras 4]

Tribunal's remand to the assessing officer was unjustified; the Tribunal's order dated 12.04.2013 is set aside and the matter is directed to be reconsidered by the Tribunal.

Deduction under Section 80P(2)(a)(vi) - collective disposal of the labour of its members - Eligibility of the appellant for deduction as income exempt under Section 80P(2)(a)(vi). - HELD THAT: - The question whether the society's income is attributable to the collective disposal of the labour of its members requires examination of the bye laws and other relevant materials. The High Court did not decide the substantive entitlement on merits; instead it remitted the question to the Tribunal for fresh consideration on the record and permitted the assessee to place additional materials in support of the claim, directing expeditious disposal. [Paras 4]

Substantive claim under Section 80P(2)(a)(vi) remitted to the Tribunal for fresh consideration (tribunal to examine the bye laws and materials, with liberty to the assessee to place additional material).

Final Conclusion: Appeal allowed; the Tribunal's order remanding the matter to the assessing officer is set aside and the issue of deduction under Section 80P(2)(a)(vi) is remitted to the Tribunal for fresh consideration preferably within six months, with liberty to the assessee to place additional materials.

Eligibility and deductibility of profits under section 115JB and claim of deduction under section 80HHC - computation of deduction under section 80HHC with reference to adjusted book profit under section 115JB - depreciation rate applicable to commercial vehicles - interpretation of the expression "running on hire" in relation to vehicle usage

Eligibility and deductibility of profits under section 115JB and claim of deduction under section 80HHC - computation of deduction under section 80HHC with reference to adjusted book profit under section 115JB - Assessee's entitlement to claim deduction under section 80HHC for the amount of Rs. 65,20,772/- in the computation under section 115JB for Assessment Year 2003-04. - HELD THAT: - The High Court applied the principle affirmed by the Supreme Court decisions cited by the parties to distinguish between eligibility of profits and deductibility under the special provisions of section 115JB. The Court held that the question is concluded in favour of the assessee by those precedents, which recognise that relief under section 80HHC must be considered in computing tax under section 115JB without conflating eligibility with deductible adjustments; certification requirements under section 80HHC are compliance conditions and do not negate the distinction. Having regard to those authorities, the Court answered the substantial question in favour of the assessee and against the Revenue. [Paras 5]

Question answered in favour of the assessee; deduction under section 80HHC allowed as claimed for Assessment Year 2003-04.

Depreciation rate applicable to commercial vehicles - interpretation of the expression "running on hire" in relation to vehicle usage - Correctness of allowing depreciation at 40% on commercial vehicles used by the assessee. - HELD THAT: - The Tribunal's finding-adopting the interpretation of "running on hire" from the Andhra Pradesh High Court decision that vehicles need not be exclusively used for hire to attract higher depreciation-was examined against the applicable Appendix I schedule for Assessment Year 2003-04. The High Court found that the Tribunal's factual conclusion, that the vehicles were employed in the assessee's business functions equivalent to vehicles taken on hire, accords with the schedule of depreciation and does not raise a substantial question of law under Section 260A. Accordingly, the appellate court declined to disturb the factual finding and upheld the depreciation rate accepted by the lower authorities. [Paras 5, 6]

Tribunal's allowance of 40% depreciation on the commercial vehicles upheld; no substantial question of law made out.

Final Conclusion: Both substantial questions of law raised by the Revenue were answered against the Revenue and in favour of the assessee; the appeal is dismissed.

Deduction under section 80P(2)(a)(i) - Deduction under section 80P(2)(d) - Attribution of interest income to business versus income from other sources - Construction of "members" under the State Co operative Act - Principle of mutuality - Deduction under section 57 for expenditure incurred to earn income from other sources - Remand for fresh examination by Assessing Officer

Deduction under section 80P(2)(a)(i) - Construction of "members" under the State Co operative Act - Principle of mutuality - Remand for fresh examination by Assessing Officer - Whether the claim for deduction under section 80P(2)(a)(i) requires reconsideration in the light of the Apex Court's decision in Mavilayi Service Co-operative Bank Ltd. & Ors. - HELD THAT: - The Tribunal held that the question of entitlement to deduction under section 80P(2)(a)(i) must be examined by the Assessing Officer in the light of the legal principles laid down by the Hon'ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. & Ors., including that the term "members" is not defined in the Income tax Act and must be construed by reference to the relevant State Co operative Act; that transactions with associate/nominal members do not automatically disentitle a society to deduction; and that section 80P should be construed liberally as a benevolent provision. The Assessing Officer's denial based solely on dealings with associate/nominal members was contrary to the Mavilayi ratio and therefore the CIT(A)'s order on this issue was set aside and the matter restored to the A.O. for examination in accordance with the Apex Court's principles. [Paras 7]

CIT(A) order on deduction under section 80P(2)(a)(i) set aside; issue remitted to the Assessing Officer for fresh examination in light of Mavilayi.

Deduction under section 80P(2)(d) - Attribution of interest income to business versus income from other sources - Deduction under section 80P(2)(a)(i) - Remand for fresh examination by Assessing Officer - Whether interest earned on deposits with co operative banks (and other banks) is eligible for deduction under section 80P(2)(d) or section 80P(2)(a)(i), or is taxable as income from other sources, and whether the AO should examine statutory compulsion for such investments. - HELD THAT: - The Tribunal examined earlier judicial pronouncements and noted the consistent thread that interest arising from surplus funds or deposits invested with banks is generally chargeable as income from other sources unless it can be attributed to the business of providing credit to members; section 80P(2)(d) covers interest/dividend derived from investments with other co operative societies (and does not, by its language, extend to co operative banks as such), whereas interest from deposits with banks not being co operative societies will ordinarily not qualify under section 80P(2)(d). However, where investments are made pursuant to statutory obligations under the State Co operative Act or rules (i.e., are integrally linked to the running of the co operative's business), such interest may have business nexus and require examination. The Tribunal therefore remitted the specific grounds (grounds 5-7) raising that statutory compliance point to the Assessing Officer for fresh consideration. [Paras 7, 18]

Interest from investments with co operative societies is allowable under section 80P(2)(d); interest from banks is generally income from other sources unless found to have business nexus by the AO - grounds 5-7 remitted to the Assessing Officer for fresh examination of statutory compulsion and nexus.

Deduction under section 57 for expenditure incurred to earn income from other sources - Attribution of interest income to business versus income from other sources - Remand for fresh examination by Assessing Officer - Whether, if interest income is assessed as income from other sources, the assessee is entitled to deduction of proportionate expenditure under section 57. - HELD THAT: - Relying on the reasoning of the jurisdictional High Court (Totagars Co operative Sales Society Ltd.), the Tribunal recorded that when interest is taxable under the head 'income from other sources', the assessee is entitled to claim proportionate costs, administrative and other expenses incurred in relation to earning that interest under section 57, because only net income is taxable. Although the assessee had not pressed this plea before the lower authorities, the Tribunal considered the principle fundamental and restored the issue to the Assessing Officer to examine whether such expenditure was incurred and to allow it if proved. [Paras 7]

Issue remanded to the Assessing Officer to examine and allow, if substantiated, deductions under section 57 in respect of expenses incurred to earn interest income assessed as income from other sources.

Final Conclusion: The CIT(A)'s order is set aside in part and the appeal is allowed for statistical purposes. The matters relating to entitlement to deduction under section 80P(2)(a)(i) are remitted to the Assessing Officer for reconsideration in the light of the Supreme Court's decision in Mavilayi; grounds concerning interest on deposits with co operative/central banks (grounds 5-7) are remitted for fresh factual and legal examination as to statutory compulsion and business nexus; and the question of allowance of expenditures under section 57 for interest taxed as income from other sources is restored to the Assessing Officer to decide on merits. The appeal is allowed for statistical purposes.

Deduction under section 80P(2)(a)(i) - deduction under section 80P(2)(d) - income from other sources versus profits and gains of business - exclusion of cooperative banks under section 80P(4) - allowance of expenditure under section 57 where interest is taxable as other income - construction of the term "members" for section 80P(2)(a)(i) in light of state Cooperative Acts

Deduction under section 80P(2)(a)(i) - construction of the term "members" for section 80P(2)(a)(i) in light of state Cooperative Acts - exclusion of cooperative banks under section 80P(4) - Whether interest earned on deposits qualifies for deduction under section 80P(2)(a)(i) and related questions of statutory compliance and membership classification - HELD THAT: - The Tribunal found that determination of whether the interest income is attributable to the business of providing credit to members requires factual and legal verification by the Assessing Officer. The CIT(A) had allowed the deduction on the basis that investments were made in compliance with statutory provisions, but the Tribunal observed that the assessee had interest from other Scheduled Banks as well, so the claim that all investments were mandated by the Karnataka Co-operative Societies Act was not established on record. The Tribunal noted the Supreme Court's direction in Mavilayi that the term "members" in section 80P(2)(a)(i) must be construed having regard to the respective State Co-operative Act and that nominal or associate members may qualify unless excluded by the State law. In view of these interlinked legal and factual questions - whether particular deposits were made in compliance with statutory requirements, whether interest is attributable to member lending, and whether recipients qualify as "members" under the State Act - the Tribunal set aside the CIT(A)'s order and remitted the issue to the AO for fresh examination keeping in view the judicial precedents referred to by the Tribunal. [Paras 7, 18]

Remanded to the Assessing Officer for fresh verification and adjudication of the claim under section 80P(2)(a)(i), including assessment of whether investments were made in compliance with statutory provisions and whether recipients qualify as "members" under the relevant State Act.

Deduction under section 80P(2)(d) - income from other sources versus profits and gains of business - Whether interest earned on investments with co-operative societies is eligible for deduction under section 80P(2)(d) and whether interest on bank deposits (including co-operative banks) qualifies - HELD THAT: - The Tribunal held that interest income received from investments with co-operative societies (i.e., other co-operative societies) alone is eligible for deduction under section 80P(2)(d). It relied on the reasoning in Totagars and subsequent High Court and Supreme Court treatments to clarify that interest from investments with banks (including cooperative banks that are regulated as banks) is not to be treated as falling within section 80P(2)(d). The Tribunal therefore restricted the claim under clause (d) to interest derived from investments with co-operative societies only and confirmed that interest otherwise arising from surplus funds invested with banks would be treated as income from other sources unless shown to be attributable to the business of providing credit to members. [Paras 7]

Only interest received from investments with other co-operative societies is deductible under section 80P(2)(d); interest from bank deposits is not deductible under clause (d) unless otherwise shown to be attributable to the business and admissible under section 80P(2)(a)(i) after verification.

Allowance of expenditure under section 57 where interest is taxable as other income - income from other sources versus profits and gains of business - Whether, if interest is assessed as income from other sources, the assessee is entitled to deduction of expenditure under section 57 - HELD THAT: - Although the assessee had not pressed this claim before the tax authorities, the Tribunal applied the principle that only net income is taxable and recalled the jurisdictional High Court's view in Totagars that where interest is taxed as income from other sources under section 56, proportionate costs and administrative expenses attributable to earning such interest are allowable under section 57. The Tribunal therefore restored the claim to the files of the AO and directed him to examine and allow any legitimate expenditure incurred in earning the interest income assessed as other income. [Paras 7]

Issue restored to the Assessing Officer to examine and allow, if established, deductions under section 57 for expenditure incurred in earning interest income treated as income from other sources.

Final Conclusion: The Tribunal allowed the Revenue's appeal for statistical purposes, set aside the CIT(A)'s order, and directed remand to the Assessing Officer to verify the assessee's claims under section 80P(2)(a)(i) and 80P(2)(d), to determine attribution of interest to business or other sources, and to examine any allowable deduction under section 57 where interest is taxable as income from other sources.

Allowance of depreciation when income estimated by applying net profit rate - rectification under section 154 for mistake apparent from record - treatment of interest on FDR while income estimated by net profit rate - finality of net profit rate adopted in assessment

Allowance of depreciation when income estimated by applying net profit rate - rectification under section 154 for mistake apparent from record - Whether depreciation should have been allowed separately where business income was estimated by applying a net profit rate and whether its allowance could be rectified under section 154. - HELD THAT: - The Tribunal found merit in the assessee's reliance on the jurisdictional High Court decision in Shyam Bihari and the CBDT Circular dated August 31, 1965, which support estimating net profit subject to allowance for depreciation and deducting depreciation separately. The original assessment under section 143(3) failed to allow depreciation separately when income was estimated by applying a net profit rate; that omission constituted a mistake apparent from the record. The Assessing Officer's first rectification order under section 154 which allowed depreciation separately was therefore correctly made. The subsequent order under section 154 which reversed that allowance was not sustainable. The CIT(A) erred in upholding the second rectification which disallowed depreciation. [Paras 5]

Depreciation is to be allowed separately where income is estimated by applying a net profit rate; the Assessing Officer's first rectification allowing depreciation was correct and the later disallowance was erroneous.

Treatment of interest on FDR while income estimated by net profit rate - rectification under section 154 for mistake apparent from record - Whether interest earned on FDRs must be added separately to business income estimated by applying a net profit rate. - HELD THAT: - The Tribunal noted that the assessee had disclosed interest from FDRs in the audited profit & loss accounts and in the return. There is nothing on record to establish that the FDR investment was for business purposes or that the interest formed part of the estimated profit covered by the net profit rate. Consequently, bringing the interest to tax by way of rectification under section 154 was held to be appropriate as a mistake apparent from record in not taxing that income earlier. [Paras 6]

Addition of interest on FDRs confirmed; interest is taxable separately where no record establishes that the investment and interest are part of business nexus covered by the net profit estimation.

Finality of net profit rate adopted in assessment - rectification under section 154 for mistake apparent from record - Whether the net profit rate of 6.5% adopted by the Assessing Officer in the earlier rectification had become final and whether the CIT(A) could direct adoption of 6% in disposing of the appeal against a subsequent rectification. - HELD THAT: - The Tribunal observed that the Assessing Officer had applied a net profit rate of 6.5% in the first section 154 order and that the assessee did not appeal against that order. The earlier adoption of 6.5% was therefore final as between the parties for the purposes of subsequent proceedings. The issue of the appropriate net profit rate was not open for reconsideration in the second rectification order under section 154. The CIT(A) was not justified in reducing the rate to 6% while disposing of the appeal against the second rectification. [Paras 7]

The net profit rate of 6.5% adopted in the earlier section 154 order is final and should be retained; the CIT(A)'s direction to adopt 6% is set aside.

Final Conclusion: The appeal is partly allowed: the disallowance of depreciation made by the Assessing Officer in the second rectification is set aside and depreciation is to be allowed separately; the addition of interest on FDRs is sustained; and the net profit rate of 6.5% applied in the earlier rectification is restored as final.

Classification of income - profits and gains from business or profession - income from house property - assessee's freedom to arrange business affairs - genuineness of transaction - consequential deduction of expenses

Classification of income - profits and gains from business or profession - income from house property - assessee's freedom to arrange business affairs - Receipts described as infrastructure support services were held to be taxable as profits and gains from business or profession and not as income from house property. - HELD THAT: - The Tribunal examined the existence of separate agreements under which the assessee charged rental for demised premises and separately charged for infrastructure support services (operation, maintenance and hire of equipment). It accepted that the assessee had consistently bifurcated receipts for earlier and subsequent assessment years and that for some earlier years the authorities had accepted such treatment. Applying the principle that an assessee is free to arrange its business and enter into separate agreements for letting premises and for providing services or hiring equipment, the Tribunal followed the view of a coordinate Bench in Chander Nagar Chemicals and Minerals Pvt. Ltd. which held that Revenue cannot compel amalgamation of separately contracted streams of receipts or prevent the assessee from charging separately for services or hire of equipment. Revenue's contention that the infrastructure receipts were in substance rent because the leased premises would be meaningless without equipment was rejected; at best Revenue could examine genuineness or quantum, but could not displace the contractual bifurcation and treat the receipts as income from house property. For these reasons the CIT(A)'s classification of the infrastructure support receipts as business income was upheld. [Paras 5, 6, 7]

The CIT(A)'s finding that infrastructure support receipts are taxable as profits and gains from business or profession is upheld and Revenue's ground challenging that classification is dismissed.

Consequential deduction of expenses - income from house property - profits and gains from business or profession - Treatment of interest, depreciation and other expenses as deductible business expenses consequential to classification of the infrastructure receipts as business income was accepted in favour of the assessee. - HELD THAT: - The Tribunal held that once the infrastructure support receipts are held to be business income, the claim for consequential deductions - including interest, depreciation and other expenses attributable to that business stream - follows. The question was consequential to the primary classification decision and became academic once the receipts were held to be business income. The Tribunal therefore upheld the CIT(A)'s consequential treatment in favour of the assessee. [Paras 8]

The consequential challenge to the allowance of interest, depreciation and other expenses is dismissed and held in favour of the assessee.

Final Conclusion: The appeal filed by Revenue is dismissed; the order of the CIT(A) for assessment year 2014-15 is upheld.

Sufficient cause - condonation of delay - application under section 154 for rectification - set-off of brought forward short term capital loss - remand for fresh adjudication on merits

Sufficient cause - condonation of delay - application under section 154 for rectification - Delay of nine months in filing appeal before the Commissioner (Appeals) was condoned. - HELD THAT: - The assessee filed an application under section 154 before the assessing officer seeking rectification of the intimation under section 143(1) and, after awaiting disposal, filed the appeal before the Commissioner (Appeals) with a delay of nine months. The Tribunal applied the established principle that 'sufficient cause' is to be construed liberally to advance substantial justice and noted that the assessee had two remedies - rectification under section 154 or appeal to the Commissioner (Appeals). Having first pursued rectification and waited for its disposal, the assessee's subsequent filing of the appeal after a reasonable interval evidenced diligence rather than negligence. On these facts the Tribunal held that the reason furnished constituted a reasonable and fair cause for the delay and therefore merited condonation. [Paras 5]

Delay of nine months in filing the appeal is condoned.

Remand for fresh adjudication on merits - set-off of brought forward short term capital loss - Whether the appeal dismissed by the Commissioner (Appeals) as time-barred should be restored for decision on merits. - HELD THAT: - Because the Tribunal found the delay to be condonable, it set aside the Commissioner (Appeals)'s order dismissing the appeal as barred by limitation and remitted the matter to the Commissioner (Appeals) for fresh disposal on merits. The Tribunal directed that the appeal be decided in accordance with law after affording the assessee a proper and sufficient opportunity of hearing, so that the substantive controversy - namely the disallowance of set-off of the brought forward short term capital loss pertaining to A.Y. 2009-10 - may be adjudicated on its merits. [Paras 5, 6]

Impugned order is set aside and the matter is remitted to the Commissioner (Appeals) for fresh adjudication on merits after giving the assessee opportunity of hearing.

Final Conclusion: The delay in filing the appeal was condoned as a reasonable cause arising from the assessee's pursuit of rectification under section 154; the CIT(A)'s order dismissing the appeal as barred by limitation is set aside and the appeal is remitted to the CIT(A) for fresh disposal on merits with opportunity to the assessee.

Deduction for employees' contribution to PF and ESI - due date for deposit vis-a -vis due date for filing return - clarificatory amendment - retrospective operation of statutory amendment - application of Section 36(1)(va) read with Section 43B

Deduction for employees' contribution to PF and ESI - due date for deposit vis-a -vis due date for filing return - application of Section 36(1)(va) read with Section 43B - Payment of employees' contribution to PF and ESI made after the statutory due date for deposit but before the due date of filing return is allowable as deduction for assessment years 2018-19 and 2019-20. - HELD THAT: - The Tribunal found as an admitted fact that the employees' contributions were remitted by the assessee before the due date for furnishing the return under section 139(1). Having considered binding precedents of the jurisdictional High Court and other High Courts, the Tribunal held that prior to the Finance Act, 2021 amendment an assessee who paid employees' contribution before filing the return was entitled to claim deduction under section 36(1)(va) read with the judicial interpretation of section 43B. The Tribunal recorded that the insertion of Explanation 2 by Finance Act, 2021 clarifies the meaning of "due date" but, on construction of the amendment read alongside the legislative memorandum and the principles laid down by the Supreme Court in Vatika Township Pvt. Ltd., the amendment is prospective and takes effect from 01.04.2021 (assessment year 2021-22). Consequently, the amended provision does not apply to assessment years 2018-19 and 2019-20, and the payments made before the due date of filing the return are allowable for those years. [Paras 6, 7]

Disallowance sustained by the lower authorities on the ground of delayed deposit is rejected and the deduction is allowed for AYs 2018-19 and 2019-20.

Final Conclusion: The Tribunal allowed both appeals, holding that the Finance Act, 2021 amendment (Explanation 2 to Section 36(1)(va) read with Section 43B) is prospective with effect from 01.04.2021 and does not affect assessment years 2018-19 and 2019-20; payments of employees' contribution made before the due date of filing the return are deductible for those years.

Taxability of excess consideration received for issue of shares under section 56(2)(viib) - valuation of unquoted equity shares - choice of valuation method under Rule 11UA of the Income Tax Rules - net asset method versus discounted cash flow method - Assessing Officer's power to verify but not to substitute the valuation method selected by the assessee - remand for verification of projected cash flows while applying the chosen discounted cash flow method

Taxability of excess consideration received for issue of shares under section 56(2)(viib) - choice of valuation method under Rule 11UA of the Income Tax Rules - Assessing Officer's power to verify but not to substitute the valuation method selected by the assessee - Whether the Assessing Officer was justified in rejecting the assessee's valuation under the discounted cash flow method and applying the net asset method to determine taxable excess under section 56(2)(viib). - HELD THAT: - The Tribunal applied the scheme of Rule 11UA and section 56(2)(viib) and held that where the assessee elects a valuation method permitted by the Rules (here, discounted cash flow), the Assessing Officer may scrutinise and verify the methodology and supporting material but does not have a free-standing power to adopt a different valuation method without valid reasons. The Tribunal found that the Assessing Officer had substituted the net asset method for the DCF method chosen by the assessee contrary to the legal position. However, the Tribunal also noted the abnormal increase in issue price compared to the preceding year and that the CIT(A) had followed an earlier order without examining the DCF computation. Consequently, the Tribunal concluded that the AO's substitution of method was impermissible but that the DCF valuation as submitted required verification in light of the financials and supporting evidence. [Paras 8]

The Assessing Officer was not justified in changing the valuation method; he must verify the assessee's chosen discounted cash flow valuation rather than substitute the net asset method.

Valuation of unquoted equity shares - net asset method versus discounted cash flow method - remand for verification of projected cash flows while applying the chosen discounted cash flow method - Whether the matter should be remanded for de novo consideration of the DCF valuation and projected cash flows. - HELD THAT: - Having held that the AO cannot substitute valuation methods, the Tribunal nevertheless observed that the significant increase in share issue price warranted fresh scrutiny of the DCF projections and supporting financials. The Tribunal therefore set aside the matter to the file of the Assessing Officer for de novo reconsideration, directing the AO to apply the discounted cash flow method (as chosen by the assessee) but to examine and verify the projected cash flows and related evidence in accordance with law. [Paras 8]

Matter remanded to the Assessing Officer to re-examine and verify the assessee's discounted cash flow valuation and projected cash flows and to reconsider the taxability under section 56(2)(viib) accordingly.

Final Conclusion: The Tribunal allowed the Revenue's appeal for statistical purposes, held that the AO could not substitute the valuation method chosen by the assessee, and remanded the matter to the Assessing Officer to verify the discounted cash flow valuation and projected cash flows and to reconsider the taxability under section 56(2)(viib) in accordance with law.

Obligations of an Authorised Courier under Regulation 12(1) of the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 - Due diligence in ascertaining correctness and completeness of information submitted for clearance - Duty not to withhold information from Customs and to advise consignors/consignees regarding compliance - Scope of procedural compliance by a G card authorised courier as distinct from substantive obligations of a Customs House Agent - Collateral administrative action under CIER consequent to adjudication under the Customs Act

Due diligence in ascertaining correctness and completeness of information submitted for clearance - Duty not to withhold information from Customs and to advise consignors/consignees regarding compliance - Obligations of an Authorised Courier under Regulation 12(1) of CIER, 2010 - Whether the appellant, an authorised courier, violated Regulation 12(1)(v) and Regulation 12(1)(x) of CIER, 2010 and whether the impugned findings and penalty should be sustained. - HELD THAT: - The Tribunal examined the record and the findings in the related adjudication under the Customs Act, which had dropped proceedings against the appellant. The adjudicating order under challenge contained no evidence that the appellant withheld information from the department. All relevant Courier Bills of Entry were filed in close temporal proximity and were accessible to the Assessing Officer; there was no material to show staggered filing intended to conceal multiple entries. The Commissioner had earlier held in the Order dated 25.11.2020 that the appellant had complied with Regulation 12(1)(x). The specialised role and reduced procedural obligations of a G card authorised courier, as compared with an F card customs broker, were noted, and the impugned findings were characterised as based on an over broad interpretation contrary to established port practice known to the department. On these bases the Tribunal held that the department failed to establish breach of the due diligence obligation or the obligation not to withhold information, and that the penalty and adverse findings in the impugned order were incorrect.

Findings of breach of Regulation 12(1)(v) and 12(1)(x) are set aside; the appellant is held to have exercised requisite due diligence and complied with applicable obligations; appeal allowed.

Final Conclusion: The impugned order confirming breaches of Regulation 12(1)(v) and 12(1)(x) of CIER, 2010 and imposing penalty on the appellant is quashed; the appellant's appeal is allowed as the record does not establish non compliance or withholding of information by the authorised courier.

Appointment of Members and Presidents of NCLT and NCLAT - reappointment of members under Section 413 of the Companies Act, 2013 - search-cum-selection committee and initiation of selection process - expeditious completion of selection/reappointment within a specified timeframe - separate consideration of reappointment without awaiting fresh appointments

Appointment of Members and Presidents of NCLT and NCLAT - search-cum-selection committee and initiation of selection process - expeditious completion of selection/reappointment within a specified timeframe - Direction to expedite appointment of candidates selected pursuant to the 2019 procedure and to initiate the selection process for remaining vacancies including constitution of a Search-cum-Selection Committee. - HELD THAT: - The Court recorded the respondents' undertaking that the process for appointment of candidates selected pursuant to the 2019 selection procedure would be expedited and directed that orders of appointment be issued soon. In respect of existing vacancies, the Court directed that a Search-cum-Selection Committee be constituted and that the Selection Process be initiated at the earliest. The determinative consideration was the depleted strength of Members (39 against a sanctioned strength of 63) and the adverse effect of such depletion on the smooth functioning of the Tribunals; accordingly the executive was directed to act promptly to fill vacancies rather than delay initiation of the selection process.

The Government directed to expedite issuance of appointment letters to those selected in 2019 and to initiate the selection process for remaining vacancies by constituting the Search-cum-Selection Committee without delay.

Reappointment of members under Section 413 of the Companies Act, 2013 - separate consideration of reappointment without awaiting fresh appointments - expeditious completion of selection/reappointment within a specified timeframe - Direction concerning reappointment of Members whose tenure was expiring and the timeframe for completing the reappointment process. - HELD THAT: - Noting that the Government had initiated the reappointment process by requesting the Chief Justice of India to constitute the requisite committee, the Court observed that reappointment under Section 413 may be proceeded with immediately and need not await the process for fresh appointments or issuance of advertisement. Given the potential detriment to the Tribunals' functioning from depletion of membership, the Court directed the Government to complete the reappointment process expeditiously and specified that it be completed within two months. This directive balanced the statutory scheme for tenure and reappointment with the administrative necessity of maintaining tribunal strength.

The Government directed to complete the reappointment process for Members whose terms were expiring within two months; reappointments may be considered separately without awaiting fresh appointments or issuing advertisements.

Final Conclusion: Writ petition disposed of with directions to the Government to (a) issue appointment orders for candidates selected pursuant to the 2019 process and to initiate the selection process for remaining vacancies by constituting a Search-cum-Selection Committee, and (b) complete the reappointment process for Members whose tenures are expiring within two months, reappointments to be considered independently of fresh appointments.

Scheme of Amalgamation - sanction under Sections 230-232 of the Companies Act, 2013 - vesting of assets and liabilities - dissolution without winding-up - protection of Revenue's rights in relation to tax liabilities - employees to be absorbed on existing terms - compliance with statutory requirements and regulators' reports - non-interference with commercial decisions of shareholders

Scheme of Amalgamation - sanction under Sections 230-232 of the Companies Act, 2013 - non-interference with commercial decisions of shareholders - Sanction of the Scheme of Amalgamation of the Transferor Companies with the Transferee Company. - HELD THAT: - The Tribunal considered the filed Scheme, the affidavits of compliance with publicity and service, the certificates of statutory auditors confirming accounting treatment, and the approvals recorded by members and creditors. Reliance was placed on the principle that the Tribunal will not ordinarily interfere with corporate or commercial decisions of shareholders and creditors when sanctioning a scheme under Sections 230-232, absent statutory impediment. The Regional Director's and Official Liquidator's reports having been considered and no substantive objection remaining, the Tribunal found no impediment to sanctioning the Scheme and granted sanction accordingly. The sanction was, however, made subject to compliance with statutory requirements and without creating any immunity from future lawful action for any deficiency or violation.

Scheme sanctioned under Sections 230-232 of the Companies Act, 2013; sanction subject to statutory compliance and without prejudice to future action for violation or deficiency.

Vesting of assets and liabilities - dissolution without winding-up - continuation of pending proceedings - Consequential legal effect of the sanctioned Scheme as to vesting of assets and liabilities, dissolution of Transferor Companies and continuation of proceedings. - HELD THAT: - The Tribunal ordered that, upon the Scheme taking effect, all properties, rights and powers of the Transferor Companies shall stand transferred and vested in the Transferee Company and that all liabilities and duties of the Transferor Companies shall become liabilities and duties of the Transferee Company. It directed that the Transferor Companies shall stand dissolved without following the process of winding-up and that any proceedings pending by or against the Transferor Companies shall be continued by or against the Transferee Company. These orders give legal effect to the amalgamation contemplated by the sanctioned Scheme.

Assets, rights, liabilities and pending proceedings to vest in the Transferee Company; Transferor Companies to be dissolved without winding-up.

Protection of Revenue's rights in relation to tax liabilities - A.Y. 2010-11 - Extent to which the sanctioned Scheme affects the rights of the Revenue and the recovery of tax liabilities (including matters relating to A.Y. 2010-11). - HELD THAT: - On receipt of the Income Tax Department's report, the Tribunal recorded the Revenue's entitlement to examine tax implications of the Scheme at the time of respective assessment or reassessment proceedings. The Tribunal expressly clarified that the order sanctioning the Scheme shall not restrict the Income Tax Department's powers of recovery, including imposition of penalties, as provided by law. The record shows Transferor Company No. 3 had an outstanding demand for A.Y. 2010-11 which was addressed through the Vivad se Vishwas scheme and relevant documents were produced; nevertheless the Tribunal preserved the Revenue's rights generally.

Sanction granted subject to protection of the Revenue's rights to examine tax implications and to recover tax dues (including powers in relation to A.Y. 2010-11) in accordance with law.

Compliance with statutory requirements and regulators' reports - role of Regional Director and Official Liquidator - Sufficiency of compliance with statutory formalities, publication and service, and consideration of reports filed by the Regional Director, Registrar of Companies and Official Liquidator. - HELD THAT: - The Tribunal examined the affidavits of publication and service and noted that notices were served on the Regional Director, Registrar of Companies, Official Liquidator, the Income Tax Department and other regulators. The Regional Director and Official Liquidator had filed reports and participated in proceedings; no objection preventing sanction was recorded. A Registrar of Companies' query about a historical charge on Transferor Company No.1 was addressed by filing an affidavit and charge satisfaction details. The Tribunal found statutory formalities and regulator inputs satisfied for purposes of sanction, while reserving compliance with any remaining statutory requirements.

Publication, service and regulator reports considered satisfactory for sanction; Registrar of Companies' query regarding historical charge clarified.

Employees to be absorbed on existing terms - Treatment of employees of the Transferor Companies on the Scheme taking effect. - HELD THAT: - The Tribunal directed that employees of the Transferor Companies in service immediately prior to the effective date shall become employees of the Transferee Company without break or interruption in service and upon terms and conditions not less favourable than those subsisting immediately before the effective date. This order implements the Scheme's provision for continuity of employment and protection of employee rights on amalgamation.

Employees of Transferor Companies to be absorbed by the Transferee Company on existing or not less favourable terms and without break in service.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013, effecting vesting of assets and liabilities in the Transferee Company and dissolution of the Transferor Companies without winding-up, while preserving statutory compliance obligations and the Revenue's rights (including in relation to A.Y. 2010-11), and directing absorption of employees on existing terms.

Application of Section 18 of the Limitation Act to proceedings under the IBC - acknowledgement in balance sheets as a fresh commencement of limitation - admissibility of documents filed by supplementary or additional affidavit in Section 7 proceedings - power of the Appellate Tribunal to receive documents and regulate procedure in the interest of justice - liquidation under Section 33(2) of the IBC where CIRP period expires and no resolution plan is approved

Admissibility of documents filed by supplementary or additional affidavit in Section 7 proceedings - Form 1 is procedural and not a pleading akin to plaint - Whether, notwithstanding non amendment of the relevant column in Form 1 of the Section 7 application, a financial creditor may place additional materials on record by way of supplementary or additional affidavit and have them looked into by the Adjudicating Authority. - HELD THAT: - Form 1 under the IBC is a statutory, procedural form and does not displace the ability to file supplementary or additional affidavits which constitute 'pleadings' under the NCLT Rules. The Supreme Court in Dena Bank held there is no bar to filing documents before the Adjudicating Authority until final order. Consequently, non amendment of Part V or the relevant column in Form 1 does not preclude the Adjudicating Authority from considering materials subsequently placed on record by way of supplementary or additional affidavits; such materials are admissible and may be relied upon to decide limitation or related issues. The Tribunal answered this question in favour of the Financial Creditor. [Paras 18, 19, 20, 21, 22]

Without amending the relevant column in Form 1, a financial creditor can place and rely on relevant materials filed by supplementary or additional affidavit and the Adjudicating Authority may look into such materials.

Power of the Appellate Tribunal to receive documents and regulate procedure in the interest of justice - admissibility of balance sheets filed first before the Appellate Tribunal - Whether balance sheets not filed before the Adjudicating Authority but produced before the Appellate Tribunal can be looked into on appeal. - HELD THAT: - The Appellate Tribunal has inherent and statutory powers to summon, receive and require production of documents and to regulate its procedure (including Rules and Company Act, s.424). Respondent creditor filed the 2014 15 and 2015 16 balance sheets along with its reply before the NCLAT; the appellant neither disputed their authenticity nor filed a rejoinder contesting them. Earlier orders and the record show these balance sheets were specifically relied upon in prior proceedings. In these circumstances the balance sheets of 31.03.2015 and 31.03.2016 on record before the Tribunal cannot be disregarded and may be examined together with the 31.03.2017 balance sheet that was before the NCLT. The Tribunal therefore permitted consideration of those documents on appeal. [Paras 28, 29, 32, 33, 34]

The balance sheets as on 31.03.2015 and 31.03.2016 produced before this Tribunal can be looked into along with the balance sheet of 31.03.2017 which was on record before the Adjudicating Authority.

Application of Section 18 of the Limitation Act to proceedings under the IBC - acknowledgement in balance sheets as a fresh commencement of limitation - Whether the balance sheets for the years 2014 15, 2015 16 and 2016 17 contain an unequivocal acknowledgement of liability by the corporate debtor sufficient to restart the period of limitation under Section 18, thereby rendering the Section 7 application filed on 26.12.2018 within time. - HELD THAT: - The Supreme Court's law (including Bengal Silk Mills and subsequent decisions) recognises that entries in balance sheets may amount to an acknowledgment under Section 18; compulsion to prepare a balance sheet does not negate a conscious admission of liability. The Court must examine whether the entries are unequivocal or qualified by caveats or notes. Here the balance sheets consistently recorded the rupee term loans, described the security and repayment terms and acknowledged the repayable nature of the loans; they were signed on behalf of the board and bear dates (e.g. 2.9.2015 for the 31.03.2015 sheet). The note referencing possible damage claims against banks did not negate the acknowledgement since Section 18's explanation permits acknowledgements even if accompanied by claims of set off or refusal to pay. Given the default date of 31.07.2013, the acknowledgement in the 31.03.2015 balance sheet falls within three years and was renewed in subsequent annual statements. The Tribunal concluded the balance sheets contain unequivocal acknowledgements within Section 18 and that the Section 7 application dated 26.12.2018 was therefore within limitation. [Paras 47, 48, 51, 52, 54]

The 2014 15, 2015 16 and 2016 17 balance sheets contain acknowledgements of liability within the meaning of Section 18; the Section 7 application filed on 26.12.2018 is within limitation and its admission was proper.

Liquidation under Section 33(2) of the IBC where CIRP period expires and no resolution plan is approved - Whether the Adjudicating Authority erred in directing liquidation under Section 33(2) of the IBC on expiry of the CIRP period without an approved resolution plan. - HELD THAT: - Having upheld the admission of the Section 7 petition and in view of the absence of an approved resolution plan within the CIRP period, the Adjudicating Authority acted within the statutory scheme in allowing the Resolution Professional's application for liquidation. The Tribunal found no error in the order dated 08.10.2021 directing liquidation and appointing a liquidator. [Paras 56]

The order directing liquidation dated 08.10.2021 was not in error and the appeal against it is dismissed.

Final Conclusion: The Tribunal dismissed both appeals: it upheld that supplementary or additional affidavits and documents filed despite non amendment of Form 1 may be considered; allowed consideration of the 2014 15 and 2015 16 balance sheets produced before the NCLAT together with the 2016 17 balance sheet; held those balance sheets amounted to unequivocal acknowledgements under Section 18 thereby rendering the Section 7 application of 26.12.2018 within limitation; and found no fault in the liquidation order, so both appeals were dismissed.

Operational debt and default under IBC - Service of demand notice under section 8 - Application under section 9 admission - Limitation and date of default - Notice of dispute - Jurisdiction of Adjudicating Authority - Appointment of Interim Resolution Professional - Moratorium under section 14 - Deposit to meet IRP expenses

Service of demand notice under section 8 - Application under section 9 admission - The demand notice and the Section 9 application were validly served and received by the Corporate Debtor. - HELD THAT: - The Tribunal recorded that the demand notice dated 04.01.2019 in Form 3 was sent by speed post to the registered address as per master data and the tracking report shows delivery. The Section 9 application was served by email to the registered email on the MCA website and also by speed post to the registered address, with delivery confirmed. The Corporate Debtor did not file any reply or appear and was proceeded ex parte. These facts satisfy the requirement of service under the Rules and support continuation of the proceeding. [Paras 5, 6, 7]

Service was validly effected and the application could be adjudicated despite the Corporate Debtor's non-appearance.

Operational debt and default under IBC - Limitation and date of default - The Applicant established an operational debt and a valid date of default within limitation. - HELD THAT: - The Applicant's Form V, Part IV quantified the outstanding operational debt for the period 01.04.2015 to 31.12.2018 and identified the last payment on 21.07.2018 as the date of default. The application was filed on 28.01.2019. On this basis the Tribunal found that the debt was not time-barred and that default in payment of the operational debt stood established for the period asserted by the Applicant. [Paras 8]

The operational debt and date of default were established and the claim was within limitation.

Notice of dispute - Operational debt and default under IBC - No bona fide dispute was raised by the Corporate Debtor in response to the demand notice. - HELD THAT: - The Applicant filed an affidavit under Section 9(3)(b) affirming that no notice of dispute had been received from the Corporate Debtor in relation to the unpaid operational debt. The Corporate Debtor did not contest the claim or produce evidence to show a disputed debt. In the absence of any dispute or challenge, the Tribunal treated the debt as uncontroverted and actionable under Section 9. [Paras 9, 11]

There was no notice of dispute and the operational debt remained uncontroverted.

Jurisdiction of Adjudicating Authority - The Tribunal has jurisdiction to entertain the Section 9 application. - HELD THAT: - The registered office of the Corporate Debtor is situated in Delhi, and on that basis the Tribunal held it had jurisdiction to entertain and try the application under the Code. This factual connection to the forum supported maintainability of the petition before the Bench. [Paras 10]

The Adjudicating Authority had jurisdiction to hear the application.

Application under section 9 admission - Appointment of Interim Resolution Professional - Moratorium under section 14 - Deposit to meet IRP expenses - The Section 9 application was admitted and consequential directions were issued including appointment of an IRP, imposition of moratorium, and requirement for deposit to meet IRP expenses. - HELD THAT: - Having found the application complete, the Tribunal admitted the petition under Section 9(5). The Bench appointed Mr. Parveen Kumar Jain as Interim Resolution Professional subject to the conditions of his eligibility and filing of requisite consent and disclosures. The Tribunal directed the Operational Creditor to deposit a specified sum with the IRP to meet initial expenses, permitted adjustment by the Committee of Creditors as accounted by the IRP, and ordered the moratorium under Section 14(1) to follow with the consequential application of Sections 14(2) to 14(4). The Registry was directed to communicate the order to the parties, forward a copy to the IBBI, and send the order to the ROC for updating master data. [Paras 11, 12, 13, 14, 15]

The petition was admitted; an IRP was appointed; moratorium was imposed; and procedural directions including deposit and communications were issued.

Final Conclusion: The Tribunal admitted the insolvency application under Section 9 after finding valid service, an uncontroverted operational debt within limitation and absence of any dispute; it appointed an Interim Resolution Professional, directed an initial deposit to meet IRP expenses, imposed the moratorium under Section 14, and issued consequential administrative directions.

Prospective operation of statutory amendments - supply of tangible goods on hire - Support Services of Business or Commerce - classification of supply as service vis-a -vis supply of goods - service tax leviability

Prospective operation of statutory amendments - supply of tangible goods on hire - Whether the insertion of a specific entry for supply of tangible goods on hire effective from 16th May, 2008 could be applied retrospectively to levy service tax on the respondent's activities prior to that date - HELD THAT: - The Court affirmed the established principle that an amendment constituting the insertion of a new definition or clause is prospective in operation unless the statute clearly indicates otherwise. Relying on the reasoning in Balaji Enterprises (as referred to in the judgment), the Court held that the newly inserted sub-clause bringing 'supply of tangible goods service' into the taxable ambit with effect from 16th May, 2008 could not be read back to cover periods prior to its effective date. Consequently, the activity of letting out cranes and material handling equipment on hire could not be brought within that newly inserted definition for dates before 16th May, 2008.

The 2008 insertion is prospective; supply of tangible goods on hire could not be taxed under that inserted provision for periods before 16th May, 2008.

Support Services of Business or Commerce - classification of supply as service vis-a -vis supply of goods - service tax leviability - Whether the respondent's activity of placing cranes and operators at the disposal of clients amounted to a taxable 'Support Services of Business or Commerce' under the law in force during the period under consideration - HELD THAT: - The Tribunal, as the final fact-finding authority under the statutory appellate hierarchy, examined the contract and factual matrix and concluded that the arrangement amounted to hire of tangible equipment (with operators) placed at the client's disposal rather than the rendering of business support services outsourced on behalf of the client. The Court noted and relied on the Tribunal's factual findings and the Calcutta Tribunal decision to the same effect, emphasising that the definition of business auxiliary/support services applies where services are rendered on behalf of another and not where tangible goods are merely let out for use. No error was found in the Tribunal's application of law to the facts.

The activity did not fall within 'Support Services of Business or Commerce' as charged; the Tribunal correctly held the activity outside the service-tax category under the law applicable to the period.

Final Conclusion: The appeal is dismissed. The tribunal's order setting aside the service tax demand is upheld and the substantial questions of law are answered against the Revenue.

Maintainability of appeal where no challenge was taken before the Commissioner (Appeals) - validity of amendment restricting refund to 75% of duty - binding effect of Supreme Court precedent on pending refund applications

Maintainability of appeal where no challenge was taken before the Commissioner (Appeals) - The appeal before the Tribunal is not maintainable as the appellant did not file an appeal before the Commissioner (Appeals) against the rejection of the refund of differential basic excise duty. - HELD THAT: - On reading the Commissioner (Appeals) order, the Tribunal found that the appellant's appeal to the Commissioner was confined to Education Cess and Secondary Higher Education Cess and did not challenge the rejection of refund of differential basic excise duty. Consequently, the Commissioner (Appeals) did not decide the differential basic excise duty point, leaving no adjudicatory order on that issue to be appealed to the Tribunal. For this reason the Tribunal held the present appeal to be not maintainable. [Paras 5]

Appeal not maintainable on the ground that there was no prior appeal to the Commissioner (Appeals) against rejection of the refund of differential basic excise duty.

Validity of amendment restricting refund to 75% of duty - binding effect of Supreme Court precedent on pending refund applications - On merits, the appellant is entitled to refund of basic excise duty only to the extent prescribed by the amended notification and not to the full amount paid from PLA. - HELD THAT: - The Tribunal applied the Supreme Court's decision in Union of India v. VVF Ltd., which upheld the validity of the subsequent notifications that restricted refunds to specified percentages and clarified that pending refund applications are to be decided in accordance with those notifications. Relying on the Apex Court's reasoning and its clarification that pending refund claims must be adjudicated as per the subsequent notifications, the Tribunal held that the amendment limiting refund to 75% is valid and the appellant cannot claim refund of the entire duty paid from PLA. [Paras 5, 6]

On the merits, refund of differential basic excise duty is allowable only to the extent prescribed by the amended notification (75%); full refund from PLA not permissible.

Final Conclusion: The Tribunal found the appeal non maintainable for lack of a prior challenge before the Commissioner (Appeals) and, on the merits applying the Supreme Court precedent, held that refund of basic excise duty is restricted to the percentage prescribed by the amended notification; accordingly the appeals are dismissed.

Right to cross-examination in quasi judicial tax proceedings - natural justice / minimum fair procedure - prejudice as test for procedural infirmity - use of material recovered clandestinely in proceedings - penalty under Section 45A(1) of the KGST Act - remand for fresh consideration

Right to cross-examination in quasi judicial tax proceedings - natural justice / minimum fair procedure - prejudice as test for procedural infirmity - use of material recovered clandestinely in proceedings - Whether imposition of penalty by relying on books and statements recovered from the residence of an employee without affording opportunity for cross-examination rendered the penalty order illegal and prejudicial. - HELD THAT: - The court examined the materials relied on by the Intelligence Officer, noting that the show cause and penalty orders proceeded substantially on books and a statement recovered from the house of the dealer's employee, K. Ravindran. While recognising that there is no absolute or invariable right to cross examination in quasi judicial tax proceedings, the court held that the entitlement to such an opportunity depends on the nature of the proceeding, the materials relied upon, the conduct of the parties and the circumstances of the case. Where material gathered behind the dealer's back is relied upon to impose a serious detriment such as a penalty, minimum fair procedure requires that acceptance of that material should not be ipse dixit if its use causes real prejudice. On the facts, the Intelligence Officer relied on the seized books and statement without affording adequate procedure to meet that material; the denial of a meaningful opportunity to test the relied material resulted in prejudice to the dealer and vitiated the penalty order. The court therefore found the penalty order illegal on grounds of procedural unfairness and prejudice. [Paras 12, 13]

Penalty order set aside as illegal because acceptance of books/statements recovered from the employee without adequate opportunity to test them caused prejudice; the matter requires reconsideration.

Remand for fresh consideration - penalty under Section 45A(1) of the KGST Act - use of material recovered clandestinely in proceedings - Whether the appellate authority erred in wholly allowing the dealer's appeal instead of remitting the matter for fresh consideration, and what remedial course should be ordered. - HELD THAT: - The court found that the Tribunal's decision to allow the appeal in its entirety on the ground of denial of cross examination was unsustainable. Although the appellate authority might have concluded that prejudice resulted, the proper course, rather than outright exoneration, was to remit the matter to the primary authority for fresh consideration after affording the dealer appropriate procedural opportunities. The High Court therefore set aside the orders of the Intelligence Officer, the Deputy Commissioner (Appeals) and the Tribunal/Commissioner of State GST, and remitted the matters to the Intelligence Officer for reconsideration and disposal in accordance with law. The Revenue was granted liberty to serve additional reassessment notice referring to the recovered material, the dealer to file an additional reply, and to be afforded opportunity to cross examine or rebut any additional material produced. [Paras 14]

Orders of the lower authorities set aside; matters remitted to the Intelligence Officer for fresh consideration and disposal in accordance with law with directions to afford procedural opportunities and reopen reassessment if so advised.

Final Conclusion: The penalty orders and the appellate and tribunal orders are set aside. The matters (covering the assessment years listed) are remitted to the Intelligence Officer for fresh consideration and disposal in accordance with law; the Revenue may serve additional reassessment notices if advised, and the dealer shall be afforded opportunity to file replies and to cross examine or rebut any material relied upon. No order as to costs.

Proviso to Section 8(a) of the Kerala Value Added Tax Act, 2003 - payment of tax at compounded rates - proviso as exception or independent enactment - interpretation of provisos - Article 14 equality before law - legislative competence to frame compounding scheme

Proviso to Section 8(a) of the Kerala Value Added Tax Act, 2003 - Article 14 equality before law - payment of tax at compounded rates - Validity of the proviso to clause (ii) of Section 8(a) of the KVAT Act, 2003 as discriminatory and unconstitutional under Article 14 - HELD THAT: - The Court examined the challenge that the proviso causes discrimination by charging contractors executing works for the State, KWA or local authorities a compounded rate of 4% while other contractors (after the 2009 substitution) pay at the rates set out in sub-clause (ii). The Court accepted the respondents' explanation of the legislative scheme: Section 8 offers an option to pay tax at compounded rates under different subclauses and the proviso, introduced by the 2008 amendment and not repealed by the 2009 substitution of sub-clause (ii), continues to apply to government/KWA/local authority contracts. Applying established principles of proviso interpretation, the Court held that the proviso may operate either as an exception to the main enactment or, in substance, as an independent provision; in either reading it has independent scope and application. The Court emphasised that statutory language is determinative of legislative intent and that courts must interpret, not legislate; if a provision causes perceived misuse or unfairness, the remedy lies with the Legislature. Having considered the text, context and the legislative history of the 2008 and 2009 amendments, the Court found no arbitrariness or constitutionally impermissible classification warranting invalidation under Article 14.

Challenge under Article 14 to the proviso to clause (ii) of Section 8(a) was rejected and the proviso held not unconstitutional.

Interpretation of provisos - proviso as exception or independent enactment - principles of proviso interpretation - Proper interpretative approach to the proviso appended to Section 8(a)(ii) after the 2008 and 2009 amendments - HELD THAT: - The Court applied the established rules of construing provisos, including that a proviso ordinarily qualifies or excepts from the main enactment but may, depending on drafting and context, function as an independent enactment or clarify an unclear substantive provision. The sequence of legislative amendments - substitution of clause (a) in 2008 (introducing the proviso) and substitution of sub-clause (ii) in 2009 - indicates the Legislature deliberately retained the proviso. The Court held that the proviso can legitimately be read either as carving out an exception to sub-clause (ii) or as an independent provision governing tax compounding for government/KWA/local authority contracts; either construction is permissible and the proviso is not rendered otiose. The Court refused to read down or delete the proviso on the ground urged by the appellants, emphasising adherence to grammatical and ordinary meaning unless absurdity arises.

Proviso construed as legitimately forming part of the legislative scheme (either as exception or independent provision); no basis to read it down or strike it off.

Final Conclusion: Writ appeals challenging the proviso to clause (ii) of Section 8(a) of the KVAT Act, 2003 were dismissed; the proviso was held intra vires and properly construed as forming part of the compounding scheme enacted by the Legislature.

Statements under Order X Rule 1 and Rule 2 CPC - Admissibility and evidentiary value of statements recorded under Order X - Judgment on admissions under Order XII Rule 6 CPC - Effect of TDS certificates and statements of Chartered Accountant as admissions - Final adjudication having regard to pleadings and evidence

Statements under Order X Rule 1 and Rule 2 CPC - Admissibility and evidentiary value of statements recorded under Order X - The legal effect and proper use of statements recorded under Order X Rule 1 and Rule 2 CPC in the suit. - HELD THAT: - The Court held that statements recorded under Order X must be read in the context of Order X Rule 1 and Rule 2 CPC. Such statements are recorded after oral examination to elucidate matters in controversy and must be considered along with the pleadings. The Court observed that while such statements assist in clarifying disputed facts, their role is to elucidate the controversy and they are to be read with the pleadings and the entirety of the evidence before reaching final adjudication. The Court endorsed the necessity of construing these statements in light of the procedural scheme for recording oral statements and cautioned against treating them in isolation from the record and other evidence. [Paras 11, 15]

Statements under Order X Rr.1-2 CPC are to be read as elucidatory of matters in controversy and considered with pleadings and evidence at final adjudication.

Effect of TDS certificates and statements of Chartered Accountant as admissions - Judgment on admissions under Order XII Rule 6 CPC - Whether the TDS certificates and the Chartered Accountant's statement recorded in court amount to admissions permitting a decree on admissions under Order XII Rule 6 CPC. - HELD THAT: - The Court noted that the Chartered Accountant stated that TDS was deducted and deposited as tax on payment of interest and produced TDS returns and certificates. However, the Court did not finally treat those materials as conclusively amounting to admissions for the purposes of entering a judgment on admissions. Instead, the Court directed that the Trial Court must examine the effect of the TDS certificates and the statement of the Chartered Accountant in the context of the full evidence and pleadings at the stage of final adjudication. The High Court relied on the principle that statements under Order X elucidate matters and that documentary material produced in that context must be weighed with other evidence; it therefore declined to uphold dismissal of the plaintiffs' application under Order XII Rule 6 CPC without such holistic consideration. [Paras 12, 14]

TDS certificates and the Chartered Accountant's statement are relevant and require examination in context; they do not automatically mandate a judgment on admissions without consideration of all pleadings and evidence.

Final adjudication having regard to pleadings and evidence - Whether the amounts advanced by the plaintiffs were loans or investments and the appropriate course at final adjudication. - HELD THAT: - The Court recorded that evidence has been led and pleadings are complete, and directed the Trial Court, at final adjudication, to determine whether the amounts advanced were loans or investments. The High Court indicated that if the defendant's contention that the advances were investments is not established on the evidence, the Trial Court should proceed in accordance with law based on the plaintiffs' evidence and the statements recorded under Order X read with the pleadings. Thus, the factual issue as to the nature of the transactions was left for determination on merits by the Trial Court after assessing the entire record. [Paras 13, 14, 15]

Issue whether advances were loans or investments is remitted to the Trial Court for final determination on the record of pleadings and evidence.

Final Conclusion: The High Court held that statements recorded under Order X Rr.1-2 CPC must be read as elucidatory and considered with pleadings and evidence; TDS certificates and the Chartered Accountant's statement are relevant but do not automatically entitle the plaintiffs to a decree on admissions under Order XII R.6 CPC, and the factual question whether the advances were loans or investments is remitted to the Trial Court for final adjudication.