TaxTMI Updates e-Newsletter
Dec 30,2019

Release of conveyance on payment of fine - fine in lieu of confiscation under Section 130 of the Central Goods and Services Tax Act, 2017 - modification of earlier court order for release of vehicle - deposit under protest

Release of conveyance on payment of fine - fine in lieu of confiscation under Section 130 of the Central Goods and Services Tax Act, 2017 - modification of earlier court order for release of vehicle - Application for release of Truck No.MH-18-M-8155 on payment of the fine proposed in lieu of confiscation in the notice issued under section 130 of the CGST Act. - HELD THAT: - The petitioner had produced particulars of the person at whose instance the goods were loaded. The respondents issued a notice dated 13.7.2019 in Form GST MOV-10 proposing a fine of Rs. 60,795 in lieu of confiscation under section 130 of the CGST Act. The petitioner sought only the release of the conveyance. The Court exercised its discretion to modify its earlier order dated 27.9.2019 which had directed deposit of a larger sum of Rs. 4,00,000, and directed that the truck be released upon deposit of the sum proposed as fine in the respondents' notice. On that basis the Court made the rule absolute and granted the relief sought, with no order as to costs. [Paras 4, 5]

The truck is to be released upon the petitioner depositing the proposed fine of Rs. 60,795 as levied in the notice under section 130 of the CGST Act; the earlier order of deposit of Rs. 4,00,000 is modified and the rule is made absolute with no costs.

Final Conclusion: Writ petition allowed by modifying the earlier order; conveyance ordered released on deposit of the fine proposed in the Form GST MOV-10 notice under section 130 of the CGST Act, 2017; rule made absolute with no order as to costs.

Right to statutory/default bail under proviso to Section 167(2) Cr.P.C. - compliance with arrest safeguards as expounded in Arnesh Kumar and Rini Johar - bailability and non bailable nature of offences under Section 132 of the CGST Act, 2017 - power of the Commissioner to authorise arrest under Section 69 of the CGST Act and the relevance of Section 70 - requirement of prior sanction for prosecution under Section 132(6) and the sanction procedure under Section 134 of the CGST Act - compounding of offences under Section 138 of the CGST Act

Right to statutory/default bail under proviso to Section 167(2) Cr.P.C. - Statutory/default bail under proviso to Section 167(2) Cr.P.C. did not avail the petitioner because the charge sheet/final report was filed on the 61st day when the petitioner moved for default bail. - HELD THAT: - The Court examined the petitioner's contention that his right to be released on default bail had crystallised on expiry of the statutory investigation period. Reliance upon precedents recognising an indefeasible right prior to filing of the charge sheet was considered. The Court held that the petitioner's application for default bail was filed on the same day the prosecution submitted the final report/charge sheet, and therefore the indefeasible right could not be enforced once the challan/charge sheet had been filed. The Court accepted the principle that the right to statutory/default bail is enforceable only before filing of the challan and does not survive filing of the charge sheet if not availed of prior to that filing.

Default/ statutory bail did not arise in favour of the petitioner because the charge sheet was filed on the same day his default bail application was moved.

Compliance with arrest safeguards as expounded in Arnesh Kumar and Rini Johar - power of the Commissioner to authorise arrest under Section 69 of the CGST Act and the relevance of Section 70 - There was no finding of violation of the arrest safeguards that would entitle the petitioner to bail; the Commissioner had material to form reason to believe and authorised arrest under the CGST Act. - HELD THAT: - The petitioner argued non compliance with the directions in Arnesh Kumar and Rini Johar (relating to arrest procedures and recording of reasons) and that he had cooperated with investigation so arrest was unnecessary. The Court considered the submissions and authorities cited, including the decision in P.V. Ramana Reddy, and examined the prosecution material and charge sheet which recorded statements and documentary evidence indicating the petitioner's involvement. The Court noted that the Commissioner had reason to believe commission of offences under Section 132(1) and had authorised arrest under Section 69. On these facts the Court found that violation of Article 21 or the Arnesh Kumar directions so as to vitiate the arrest did not arise and that compliance with the statutory framework under the CGST Act, as interpreted in relevant precedents, was adequate.

No breach of arrest safeguard principles was found that would justify bail; the Commissioner's authorisation of arrest was supported by material.

Bailability and non bailable nature of offences under Section 132 of the CGST Act, 2017 - The alleged offences under Section 132 of the CGST Act, 2017 were treated as serious, cognizable and non bailable in the facts of this case, disentitling the petitioner to regular bail. - HELD THAT: - The Court addressed the petitioner's claim that the offence under Section 132 is bailable. Having considered the nature, magnitude and documentary evidence of the alleged tax fraud (including admissions and seizure of incriminating material in the final report), and judicial precedents treating large scale issuance of bogus invoices as serious economic offences, the Court concluded that on the prima facie material the case attracted the character of cognizable, non bailable offences. The gravity of the alleged crime and the prima facie evidence were determinative factors in refusing bail.

On the material before the Court, the offence was cognizable and non bailable; the petitioner was not entitled to bail on this ground.

Requirement of prior sanction for prosecution under Section 132(6) and the sanction procedure under Section 134 of the CGST Act - The Court considered the petitioner's contention about absence of recorded sanction to prosecute but, on the material in the charge sheet and the Commissioner's reason to believe, did not find that absence of disclosed sanction entitled the petitioner to bail. - HELD THAT: - Petitioner argued that prosecution was barred without prior sanction under Section 132(6) and Section 134 of the CGST Act and that no sanction document was placed before the Court. The Court examined the legislative scheme and the prosecution record which showed that the Commissioner formulated reason to believe and authorised arrest; the Court treated that material and the charge sheet as evidencing the Commissioner's satisfaction to proceed. Given the prima facie documentary evidence and statements in the final report, the Court did not accept that non production of a separate sanction document before the High Court rendered the prosecution untenable for purposes of bail.

Absence of a separately produced sanction document did not, on the record and prima facie material, warrant enlargement on bail.

Compounding of offences under Section 138 of the CGST Act - The petitioner was at liberty to pursue compounding of the offence under Section 138 of the CGST Act, but that prospect did not alter the refusal of bail. - HELD THAT: - While refusing bail, the Court observed that the petitioner could approach the competent authority for compounding under the statutory provision. This procedural possibility was noted as available relief but was distinguished from the question of bail which was decided on merits and prima facie evidence of serious economic offence.

Petitioner may seek compounding under Section 138, but that does not entitle him to bail; bail application dismissed.

Final Conclusion: The bail application under Section 439 Cr.P.C. is dismissed. The Court found that the petitioner's claimed right to default bail had been overtaken by filing of the charge sheet on the same day, that the arrest was supported by material relied upon by the Commissioner and authorised under the CGST Act, the alleged offences were serious and prima facie non bailable, and any contention about absence of a separate sanction document did not justify enlargement on bail; the petitioner remains at liberty to seek compounding under the CGST Act.

Detention, seizure and release of goods in transit - Confiscation of goods or conveyances - Intent to evade payment of tax / mens rea in confiscation - Redemption fine in lieu of confiscation - Harmonious construction of overlapping non-obstante provisions - Scope of interim relief under Article 226 during confiscation proceedings - Distinction between technical/procedural breaches and substantive evasion

Detention, seizure and release of goods in transit - Confiscation of goods or conveyances - Harmonious construction of overlapping non-obstante provisions - Whether Sections 129 and 130 of the CGST Act are independent provisions and how they are to be read with each other. - HELD THAT: - The Court held that although both Sections 129 and 130 begin with non obstante clauses, they are mutually exclusive and independent provisions which must be read harmoniously in light of their object and scheme. Section 129 deals with detention/seizure and release of goods in transit with summary mechanisms for release on payment or security, whereas Section 130 prescribes specific circumstances in which confiscation and additional consequences may follow. The two sections may operate in the same factual field but are not subordinate to one another; Section 130 is not automatically subject to Section 129. The statutory scheme, including the particular causes of confiscation enumerated in Section 130(1), demonstrates distinct roles for the two provisions. [Paras 58, 81, 82, 182]

Sections 129 and 130 are independent and must be harmoniously construed; Section 129 governs detention/release while Section 130 provides separate confiscation powers.

Confiscation of goods or conveyances - Intent to evade payment of tax / mens rea in confiscation - Whether invocation of Section 130 at the threshold (immediately upon detention) is permissible without antecedent procedure under Section 129, and what standard is required to do so. - HELD THAT: - The Court held that authorities may invoke Section 130 at the earliest stage only if, on the face of the transaction, they are convincingly satisfied that the contravention was committed with a definite intent to evade tax. Mere suspicion or routine absence of documents does not justify immediate initiation of confiscation proceedings. Where Section 130 is to be invoked at the threshold, the officer should record in writing the reasons and the material on which the belief is founded; such satisfaction should be subject to supervisory scrutiny by a superior authority. The notice of confiscation must disclose the grounds and the clause of Section 130(1) relied upon and cannot be a parrot like presumption. [Paras 101, 102, 103, 104, 182]

Section 130 can be invoked at the threshold only in strong cases where the authority forms a reasoned belief of intent to evade tax; mere absence of documents or suspicion is insufficient and recorded reasons are required.

Intent to evade payment of tax / mens rea in confiscation - Penalty and confiscation as penal/adjudicatory measures - Whether the element of mens rea is a pre requisite for invoking Section 130 and for imposing penalty/fine thereunder. - HELD THAT: - The Court explained that the phrase 'with intent to evade payment of tax' in Section 130 imports a requirement that the contravention be more than mere failure to pay tax; it contemplates a deliberate attempt to defeat the tax liability. However, confiscation proceedings are quasi judicial and not criminal; the classical criminal mens rea standard is not rigidly imported. While intention/evidence of evasion is material (and stronger grounds are required to invoke Section 130), the statutory scheme does not demand criminal proof beyond reasonable doubt as a necessary precondition for initiation of adjudicatory confiscation proceedings. [Paras 106, 111, 143, 182]

Section 130 requires a finding of intent to evade tax in appropriate cases, but criminal mens rea standards are not strictly required in quasi judicial confiscation proceedings; nevertheless, stronger evidence is needed than for mere procedural breaches.

Section 129(6) and consequence of non payment - Confiscation of goods or conveyances - Whether confiscation under Section 130 is dependent upon the failure to pay the amount demanded under Section 129(1)/129(6). - HELD THAT: - The Court rejected the submission that Section 130 can be invoked only upon the failure to pay amounts demanded under Section 129(1). It held that Section 129(6) provides one statutory eventuality (further proceedings in accordance with Section 130 where amounts are not paid within the prescribed period), but Section 130 is a separate code and may be invoked where its own conditions are fulfilled. Non payment under Section 129 may lead to auction/forfeiture and is an envisaged route to confiscation, yet invocation of Section 130 is not mechanically or exclusively contingent upon Section 129(6). [Paras 146, 148, 154, 182]

Section 130 is not contingent solely on non payment under Section 129(6); non payment is an established eventuality but does not exhaust the circumstances in which Section 130 may operate.

Redemption fine in lieu of confiscation - Availability of goods for imposition of fine - Whether a redemption fine under the confiscation provision can be imposed where the goods are not physically available (have been released) and the scope of imposing redemption fine when goods are released on bond/security. - HELD THAT: - The Court reviewed authority and held that redemption fine is conceptually offered where confiscation is authorised; while physical availability of goods is relevant to actual confiscation/redemption, release on bond/undertaking does not extinguish the authority's power to levy a redemption fine later. If goods were never made available and no bond/undertaking contemplates their production, physical unavailability may preclude practical confiscation, but contractual security/bond may be enforced to recover equivalent value. Thus one can impose redemption fine even after provisional release where appropriate safeguards (bond/guarantee) exist; absence of goods may limit physical confiscation but does not eliminate revenue remedies. [Paras 166, 170, 174, 182]

Redemption fine may be imposed in appropriate circumstances even if goods were released on bond; where goods are not available and no undertaking/bond exists, physical confiscation/redemption may not be practicable but revenue may enforce available securities.

Distinction between technical/procedural breaches and substantive evasion - Scope of interim relief under Article 226 during confiscation proceedings - Whether minor or bona fide disputes as to classification/valuation or other technical/documentary breaches justify detention/confiscation, and the scope for High Court interim intervention under Article 226. - HELD THAT: - The Court emphasised that not all contraventions detected in transit are substantive evasion; many are technical or bona fide disputes (classification, valuation, missing e way bill while tax paid, etc.). Inspecting officers should distinguish minor/rectifiable/documentary errors from cases indicating real tax evasion. Where a genuine dispute exists, detention should not be prolonged and the proper course is to refer the matter to the assessing authority rather than to effect prolonged seizure. The High Court may exercise its constitutional powers to order release of goods/conveyances in exceptional cases where statutory procedure has been flouted or where continued detention would cause irreparable injustice; such relief is to be sparingly granted. [Paras 98, 159, 177, 181, 182]

Technical or bona fide disputes do not justify automatic confiscation; authorities must apply mind and, where procedure is violated or injustice would result, the High Court may in exceptional cases order interim release pending adjudication.

Final Conclusion: The High Court held that Sections 129 and 130 of the CGST Act are distinct but harmonisable provisions: Section 129 provides for detention, provisional release or release on payment/security, while Section 130 prescribes separate grounds and remedies for confiscation and redemption fines. Confiscation under Section 130 is permissible where its statutory conditions (including, in appropriate cases, intent to evade tax) are satisfied; invocation of Section 130 at the threshold requires strong, recorded reasons and cannot rest on mere suspicion or routine documentary lapses. Section 130 is not mechanically dependent on Section 129(6), redemption fines may be imposed in suitable circumstances (including after release on bond), and courts may in exceptional cases exercise constitutional powers to order release where procedure is breached or continued detention causes injustice.

Certificate under Section 197 - deduction of tax at source under Section 195 - scope of enquiry under Section 197 - permanent establishment (PE) - Explanation 2 to Section 195 - res judicata in income tax assessments

Certificate under Section 197 - deduction of tax at source under Section 195 - Validity of the impugned certificate issued under Section 197 rejecting petitioner's claim for nil deduction and granting deduction @4% of gross receipts - HELD THAT: - The Court examined the record notes and note sheet and found that the Assessing Officer exercised jurisdiction under Section 197 with application of mind and gave cogent reasons. Administrative decisions under Article 226 are subject to judicial review only on narrow grounds such as perversity, patent illegality or procedural irregularity; absent such vitiating defects the court will not substitute its view. The reasons on record, including enquiries raised and reference to earlier assessments, could not be termed arbitrary or patently illegal. Consequently, there was no ground to quash the impugned certificate merely on the basis that the authorities did not accept the petitioner's submissions. The writ petition was therefore dismissed on merits as the decision making process was lawful. [Paras 10, 16, 17, 33, 34]

The impugned certificate dated 26.06.2019 granting deduction @4% was not vitiated by arbitrariness or procedural illegality and will not be quashed.

Scope of enquiry under Section 197 - permanent establishment (PE) - Explanation 2 to Section 195 - Whether the Assessing Officer could conclusively determine existence of a permanent establishment (PE) at the Section 197 stage - HELD THAT: - The Court held that the enquiry permissible under Section 197 is limited and does not permit the Assessing Officer to undertake an exhaustive factual determination on the existence of a PE for assessment purposes. Determination of PE, including analysis of contract terms, duration of installation activities and allocation of revenue between onshore and offshore components, requires full assessment proceedings. Moreover, Explanation 2 to Section 195 (Finance Act, 2012) reinforces the obligation on payers to deduct tax from non residents to safeguard revenue, which justifies a cautious approach at the certificate stage. Thus, the AO was entitled to take into account past assessments and apparent discrepancies in the petitioner's submissions and to refrain from making a definitive assessment of PE while deciding the Section 197 application. [Paras 22, 24, 27, 29, 30]

Assessing Officer was not required or competent to finally determine existence of PE in Section 197 proceedings and could legitimately refuse nil certificate pending detailed assessment.

Res judicata in income tax assessments - certificate under Section 197 - Whether earlier appellate or High Court decisions in respect of other assessment years precluded the revenue from taking a different view for the year of the Section 197 application - HELD THAT: - The Court reiterated the settled proposition that res judicata does not apply in income tax matters across different assessment years because each year involves a separate inquiry; decisions in one year do not estop the department for another year. The fact that earlier years were decided in favour of the petitioner does not preclude the authorities from examining contracts and facts afresh for the period relevant to the Section 197 application. Where contracts or factual matrix differ (for example the R series contract was not before the Court in the petitioner's earlier decision), the revenue may legitimately adopt a different position. [Paras 24, 26, 27]

Prior favourable decisions for other years did not oblige the revenue to grant a nil certificate for the year under consideration.

Certificate under Section 197 - Effect of petitioner's alternative concession to accept deduction @4% - HELD THAT: - The petitioner had, in a communication, offered an alternative and qualified concession that the revenue may issue a certificate @4% plus surcharge and cess for entire contractual revenues to address financial hardship. The Court observed that having made and pressed this categorical request, albeit 'without prejudice', the petitioner could not be permitted to resile from that position once the revenue accepted it. The Court treated the concession as operative for the purpose of the Section 197 application. [Paras 31, 32]

The petitioner's alternative offer to accept deduction @4% was validly accepted by the revenue and precluded the petitioner from attacking the issued certificate on that ground.

Final Conclusion: The writ petition challenging the certificate dated 26.06.2019 under Section 197 was dismissed. The Court found no patent illegality in the decision making process, affirmed the limited scope of enquiry under Section 197 (precluding conclusive determination of PE at that stage), held that prior years' decisions do not bind the revenue for a different assessment year, and treated the petitioner's alternative concession of a 4% deduction as operative.

Disallowance of excess sugarcane price - minimum ex-factory price under Sugarcane (Control) Order, 1966 - precedential effect of Supreme Court decisions in Tasgaon Taluka SSK Ltd. and Shri Satpuda Tapi Parisar SSK Ltd. - remand to Assessing Officer for fresh consideration in light of binding precedent

Disallowance of excess sugarcane price - minimum ex-factory price under Sugarcane (Control) Order, 1966 - Validity of the Tribunal's and Commissioner (Appeals)'s conclusion that disallowance of excess price paid for sugarcane to members and non-members was unjustified - HELD THAT: - The Court recorded that subsequent decisions of this Court and the Supreme Court (including the decisions in Manjara Shetkari Sahakari Sakhar Karkhana Ltd., Deputy C.I.T. v. Shri Satpuda Tapi Parisar SSK Ltd., and C.I.T. v. Tasgaon Taluka SSK Ltd.) govern the legal question framed at admission. In view of those authoritative pronouncements, the impugned orders of the Income Tax Appellate Tribunal and the Commissioner of Income Tax (Appeals) cannot stand. The parties were agreed that, applying the binding Supreme Court rulings, the matters should be sent back for fresh consideration. Accordingly, the Court quashed and set aside the impugned appellate orders and directed that the proceedings be restored to the respective Assessing Officers for reconsideration in the light of the law laid down by the Supreme Court in the cited decisions. [Paras 6, 7, 8]

Appeals allowed; impugned orders of the Tribunal and Commissioner (Appeals) quashed and set aside; proceedings restored to the respective Assessing Officers for reconsideration in light of the Supreme Court decisions.

Final Conclusion: The Revenue appeals are allowed; the appellate orders under challenge are quashed and set aside and the matters are remitted to the respective Assessing Officers to be reconsidered in accordance with the law as declared by the Supreme Court in the cited authorities. No order as to costs.

Reopening of assessment - Reassessment beyond four years - Section 147 proviso - failure to disclose fully and truly all material facts - Change of opinion - Writ under Article 226 despite alternate remedy

Section 147 proviso - failure to disclose fully and truly all material facts - Reassessment beyond four years - Validity of reopening the assessment after four years in the absence of any allegation of failure to disclose fully and truly all material facts. - HELD THAT: - The first proviso to section 147 imposes an additional jurisdictional requirement for reopening assessments beyond four years where an assessment under section 143(3) has been made: there must be a reason to believe that income chargeable to tax has escaped assessment due to the assessee's failure to disclose fully and truly all material facts necessary for assessment. The reasons furnished with the impugned notice contain no assertion that the petitioner failed to disclose such material facts. Moreover, the same materials and allegations were before the Assessing Officer in earlier proceedings arising from the first reopening notice, and the petitioner had supplied and placed all relevant material which was examined and resulted in certain additions. In these circumstances the jurisdictional foundation mandated by the proviso is absent and the reopening notice issued after four years lacks jurisdiction. [Paras 7, 9, 11, 12]

Reopening notice quashed for want of the jurisdictional requirement of failure to disclose fully and truly all material facts.

Change of opinion - Reopening of assessment - Whether the impugned reopening was impermissible as a mere change of opinion when the same material had been previously considered. - HELD THAT: - Reassessment cannot be used as a device for a review or merely to take a fresh view; it must be founded on jurisdictional facts. The foundation of the first reopening notice and the subsequent notice was identical - allegations of bogus purchases and accommodation entries - and the Supreme Court decision relied upon by the Assessing Officer was already before the officer during the earlier proceedings. The petitioner had explained why that decision did not apply, and that explanation had been considered. As the impugned action reflects only a change of opinion on the same material which had already been considered, the reopening is impermissible. [Paras 7, 10, 11, 12]

Impugned reopening set aside as constituting an impermissible change of opinion based on material already considered.

Final Conclusion: Writ petition allowed; the notice dated 28 March 2019 under section 148 and the order dated 4 September 2019 disposing of objections are quashed and set aside.

Applicability of Explanation 5A to section 271(1)(c) - Application of section 271AAA to searches initiated on or after 1.6.2007 - Tribunal's power to admit additional grounds under Section 254 - Notice under section 274 read with section 271(1)(c) must specify whether proceedings are for concealment or for furnishing inaccurate particulars - Defect in initiation notice vitiating penalty under section 271(1)(c)

Tribunal's power to admit additional grounds under Section 254 - Admission of the assessee's additional ground (that Section 271AAA applies) in appeals relating to assessment year 2005-06 was declined. - HELD THAT: - The Tribunal noted the established jurisdictional power to admit additional grounds (as explained from the cited authority) but examined the factual and legal basis for the specific ground sought to be admitted. The search and seized-material record showed that surrender pertaining to later years was allocated across earlier assessment years and that Explanation 5A and Section 271AAA framework applied as per statutory applicability. The Tribunal concluded that no prima facie case was made out to admit the additional ground in respect of AY 2005-06 and therefore exercised its discretion to refuse admission of that ground. [Paras 6, 17]

Additional ground not admitted.

Applicability of Explanation 5A to section 271(1)(c) - Explanation 5A to section 271(1)(c) is applicable to income represented by entries or assets of previous years where the due date for filing return had expired before the date of search; it applied to the assessment years 2005-06, 2006-07 and 2007-08 in the present case. - HELD THAT: - Explanation 5A, introduced w.e.f. 1.6.2007 (with retrospective effect), deems income shown by entries or assets found in a search initiated on or after 1.6.2007 to be concealment or furnishing of inaccurate particulars for the purposes of imposition of penalty where the return due date for the relevant previous year had expired and the income was not declared. The Tribunal examined the assessment orders and found that the additions for the years in question were made on the basis of material seized during the search and that the assessee had not declared such surrendered income in returns filed in response to notices under section 153A(1)(a). Consequently Explanation 5A(b) applied to the stated assessment years. [Paras 12, 15, 16]

Explanation 5A applies to AYs 2005-06, 2006-07 and 2007-08; additions were made on seized material and the due date for filing returns had expired.

Application of section 271AAA to searches initiated on or after 1.6.2007 - Section 271AAA is applicable only to the specified previous year(s) as defined and, in the facts of the present case, is applicable to assessment year 2010-11 only. - HELD THAT: - Section 271AAA, introduced by the Finance Act, 2007, applies to searches initiated on or after 1.6.2007 and prescribes a separate penalty regime for undisclosed income of the specified previous year. The Tribunal observed that because the search was conducted on 30.7.2009, section 271AAA could apply only where the specified previous year meets the statutory definition - in this case, the Tribunal concluded that only AY 2010-11 fell within the provision's ambit given the date-for-filing criteria. [Paras 13, 14]

Section 271AAA applies to AY 2010-11 only.

Notice under section 274 read with section 271(1)(c) must specify whether proceedings are for concealment or for furnishing inaccurate particulars - Defect in initiation notice vitiating penalty under section 271(1)(c) - The notice issued under section 274 read with section 271(1)(c) was defective for not specifying which limb of section 271(1)(c) (concealment or furnishing inaccurate particulars) was invoked, and accordingly the penalty imposed under section 271(1)(c) was obliterated. - HELD THAT: - Relying on the jurisdictional High Court precedent, the Tribunal held that initiation of penalty proceedings under section 271(1)(c) requires the Assessing Officer to specify whether the penalty is for concealment of particulars of income or for furnishing inaccurate particulars. The AO's notice dated 23.12.2011 failed to cross out or indicate the specific limb invoked. Following the cited authority, the Tribunal concluded that the defect in the notice rendered the penalty initiation invalid and set aside the penalty. [Paras 18, 19]

Penalty under section 271(1)(c) obliterated for defective notice.

Final Conclusion: The Tribunal declined to admit the additional ground raised by the assessee, held that Explanation 5A to section 271(1)(c) applied to AYs 2005-06, 2006-07 and 2007-08 while section 271AAA applied only to AY 2010-11, and set aside the penalty under section 271(1)(c) because the initiation notice failed to specify the limb of the section invoked.

Depreciation on goodwill - Employees Stock Option Plan expense as revenue deduction - foreign tax credit entitlement subject to production of certificates - Minimum Alternate Tax credit and adjustment after giving appeal effect - credit for tax deducted at source and role of Form No.26AS - bar under section 205 against direct demand on assessee where TDS has been deducted - interest under section 234A - interest under section 234B - interest under section 234C

Depreciation on goodwill - Allowability of depreciation claimed on goodwill arising on amalgamation. - HELD THAT: - The Tribunal applied its earlier reasoning in the assessee's own and lead appeals (referenced paras 27-34 of the lead order for Assessment Year 2010-11) and, following parity of reasoning, held that depreciation on the goodwill arising from the amalgamation is allowable. The claim for depreciation on the written down value of goodwill for the year under appeal is therefore accepted. [Paras 6]

Depreciation on goodwill is allowed.

Employees Stock Option Plan expense as revenue deduction - Whether reimbursement paid to parent for ESOP/RSU (difference between fair market value and exercise price) is allowable as business expenditure under section 37(1). - HELD THAT: - Following the Tribunal's earlier detailed consideration in ITA No.7637/Del/2018 for AY 2014-15 (paras 102-120 reproduced), the payment reimbursing the discount on issue of shares under ESOP/RSU was held to be an employee compensation expense incurred wholly and exclusively for business purposes and an ascertained liability under mercantile accounting; authorities including Madras and Delhi High Courts and a Special Bench decision were applied by parity. Further, tax deduction at source obligation arises on exercise/allotment under section 17(2)/192 and not upon reimbursement to the group company. Accordingly the reimbursement qualifies as deductible business expenditure and there was no TDS obligation at the time of reimbursement. [Paras 8, 112, 113, 117, 118]

ESOP reimbursement expenses are allowable as business expenditure; TDS was not required at reimbursement stage.

Foreign tax credit entitlement subject to production of certificates - Claim for part of foreign tax credit denied for want of documentary certificate. - HELD THAT: - The assessee claimed a balance foreign tax credit but conceded that it had not produced the certificate for the disputed amount at the time of hearing. The Tribunal found no merit in the claim in absence of the requisite evidence and dismissed the ground seeking the balance credit. [Paras 9, 10, 11]

Balance foreign tax credit disallowed for want of production of certificate.

Minimum Alternate Tax credit and adjustment after giving appeal effect - Grant of MAT credit to the extent arising after giving appeal effects for earlier years. - HELD THAT: - The assessee sought grant of MAT credit remaining after the Assessing Officer had given certain adjustments by an order under section 154. The Tribunal directed that any MAT credit determined to be available after giving appeal effects in earlier years should be allowed by the Assessing Officer, and accordingly directed allowance of the balance if so determined. [Paras 12]

Directed Assessing Officer to allow MAT credit as determined after giving appeal effects in earlier years.

Credit for tax deducted at source and role of Form No.26AS - bar under section 205 against direct demand on assessee - Allowability of claimed TDS credit where claimed TDS exceeds amount reflected by AO; effect of deductor's failure to deposit TDS and evidentiary requirements. - HELD THAT: - The Tribunal held that where the assessee produces necessary primary evidence showing tax was deducted at source from amounts due to it, the Assessing Officer must allow the credit and, if Form No.26AS is subsequently revised to reflect the TDS, give credit accordingly. Drawing on section 199(1) and section 205, and relevant High Court authorities, the Tribunal held that the deductee should not suffer where tax has been deducted by the payer even if the payer has not deposited the same-recovery machinery exists against the deductor. Accordingly, if the assessee furnishes primary evidence of deduction, credit must be allowed; where revised Form No.26AS reflects the deduction later, AO should permit credit upon production of evidence. [Paras 14, 16, 20, 21, 23]

Directed Assessing Officer to allow TDS credit where assessee produces primary evidence of deduction or as per revised Form No.26AS.

Interest under section 234A - Whether interest under section 234A is chargeable when return was filed on the due date. - HELD THAT: - The assessee filed the return on the prescribed due date. The Tribunal found that where the return was filed by the due date, interest under section 234A is not chargeable and allowed the ground accordingly. [Paras 25, 26]

Interest under section 234A is not chargeable; ground allowed.

Interest under section 234B - interest under section 234C - Validity of interest charged under sections 234B and 234C and manner of recomputation. - HELD THAT: - The Tribunal held that the challenge to interest under section 234B was consequential and dismissed that part. As to section 234C, the Tribunal observed that interest under 234C is to be computed on the returned income and directed the Assessing Officer to verify the assessee's position and recompute interest chargeable under section 234C accordingly. [Paras 27, 28, 29]

Interest under 234B dismissed as consequential; interest under 234C partly allowed and directed to be recomputed on returned income.

Procedural dismissal for not pressed grounds - Grounds 1 and 7 not pressed by assessee and dismissed as not pressed. - HELD THAT: - The Tribunal recorded that grounds of appeal numbered 1 and 7 were not pressed by the assessee and therefore dismissed them as not pressed without adjudication on merits. [Paras 5]

Grounds 1 and 7 dismissed as not pressed.

Final Conclusion: The appeal for Assessment Year 2015-16 is partly allowed: depreciation on goodwill and ESOP reimbursement expenses are allowed; balance foreign tax credit is dismissed for want of certificates; MAT credit is to be allowed as determined after giving appeal effect for earlier years; TDS credit must be allowed upon production of primary evidence or as per revised Form No.26AS; interest under section 234A is deleted, interest under section 234B is dismissed as consequential, and interest under section 234C is to be recomputed on the returned income; grounds not pressed were dismissed.

Definition of 'royalty' under India-Italy DTAA Article 13(3) - distinction between purchase of a copyrighted article and transfer of copyright - tax deduction at source under section 195 - disallowance under section 40(a)(i) - binding effect of jurisdictional High Court precedent

Definition of 'royalty' under India-Italy DTAA Article 13(3) - tax deduction at source under section 195 - disallowance under section 40(a)(i) - distinction between purchase of a copyrighted article and transfer of copyright - binding effect of jurisdictional High Court precedent - Whether payments made by the assessee to its overseas group company for software licences/purchase amounted to 'royalty' such that tax was required to be deducted at source and the disallowance under section 40(a)(i) was justified. - HELD THAT: - The Tribunal/AO had treated the payments as royalty and disallowed 30% under section 40(a)(i) for failure to deduct tax under section 195. The CIT(A) had deleted the disallowance by following an earlier coordinate ITAT order in the assessee's own cases which held the payments not to be royalty under Article 13(3) of the India-Italy DTAA. The Tribunal considered the terms of the licence (non exclusive, non transferable, use limited to internal business, right to make copies for backup only) and surveyed competing authorities distinguishing between acquisition of a copyrighted article and transfer of copyright rights. However, a later decision of the jurisdictional High Court in Zylog Systems Limited (23.04.2019) affirmed the Karnataka High Court's approach in Synopsis, holding that grants of non exclusive, non transferable licences for software use do fall within the ambit of 'royalty' (as the phrase 'in respect of' copyright has a wide connotation) and that such payments are taxable and attract TDS obligations. The Tribunal held itself bound by the jurisdictional High Court's decision and, notwithstanding prior favourable ITAT orders, applied the High Court ratio to conclude that the payments constitute royalty, thereby validating the TDS obligation and the consequential disallowance under section 40(a)(i). [Paras 6, 7]

Payments for the software licences/purchase are to be treated as royalty for the relevant year; the Revenue's appeal is allowed and the disallowance under section 40(a)(i) consequent to failure to deduct tax under section 195 is sustained.

Final Conclusion: The Tribunal allowed the Revenue's appeal for AY 2014-15, holding that payments to the foreign group company for software licences/purchase constitute 'royalty' for which tax ought to have been deducted under section 195 and the consequent disallowance under section 40(a)(i) is upheld, being in line with the binding decision of the jurisdictional High Court.

Arm's Length Price - Transfer Pricing - Allocation of Shared Service Charges - Proof of rendition of services - Combined transaction approach under TNMM - Closely linked transactions - Benchmarking of royalty including trademark charges - Remand for fresh determination of ALP

Transfer Pricing - Allocation of Shared Service Charges - Proof of rendition of services - Arm's Length Price - Confirmation of transfer pricing disallowance in respect of payments characterized as allocation of shared service charges where receipt of services was not substantiated - HELD THAT: - The Tribunal examined the assessee's claim that payments for shared service charges were mere cost allocations without mark up and that the services were actually received as per the service agreement. The assessee failed to produce primary evidence (correspondence, emails, faxes, visit reports or working papers showing allocation) to substantiate actual rendition of services or cost sharing without mark up. The assessee's own transfer pricing study indicated that marketing, HR, accounting, finance and routine IT/administrative functions were performed by the assessee itself. Absent proof of receipt of the services, the TPO/AO correctly determined nil ALP for the transaction and made the addition. The Tribunal rejected the assessee's contention of a mere cost sharing arrangement and held that mere execution of an agreement with an associated enterprise is insufficient; the factum of receipt of services must be established before allowing any deduction. [Paras 6, 10, 11, 23, 24]

Disallowance of the payment for shared service charges is upheld where the assessee failed to prove actual receipt of services; addition sustained.

Combined transaction approach under TNMM - Closely linked transactions - Arm's Length Price - Whether the transaction for payment of shared service charges can be aggregated with manufacturing related international transactions under the TNMM as 'closely linked transactions' - HELD THAT: - Rule 10A(d) permits treating a 'transaction' as including a number of closely linked transactions for determination of ALP under the TNMM, but the transactions must be demonstrably 'closely linked'. The Tribunal analysed the nature of the transactions: payment for shared services (receipt of services) on one hand and purchases/sales of raw materials and finished goods on the other (manufacturing activity). These are of different characters and are neither similar nor part of a package deal, nor so inextricably linked that one cannot survive without the other. Reliance on authority recognising aggregation only where transactions form a single composite or package was applied; by contrast the present transactions do not qualify as closely linked. Moreover, the question of aggregation is moot where the receipt of services itself is not proved. Consequently the aggregation argument was rejected. [Paras 17, 18, 20, 22, 24]

Aggregation under TNMM is rejected; payment of shared service charges cannot be clubbed with manufacturing transactions for benchmarking.

Benchmarking of royalty including trademark charges - Arm's Length Price - Remand for fresh determination of ALP - Treatment of trademark fee paid under subsequent Trademark License Agreement where earlier Technical Transfer Agreement already provided for royalty which included rights to use the contractual trademarks - HELD THAT: - The Tribunal found that the earlier Technical Transfer Agreement granted the assessee rights to use intellectual property, know how and contractual trademarks and provided for a running royalty (4%) as consideration covering those rights. The assessee admitted using the trademarks throughout the TTA period and failed to substantiate a mistake in the TTA. After acquisition of the joint venture partner's share, the assessee entered into a Trademark License Agreement providing for an additional trademark fee of 0.5%, effectively making the transacted royalty 4.5%. Rather than disallowing the additional 0.5% outright, the correct course is to treat the totality of payments as the transacted value of the royalty transaction and determine the ALP of the combined royalty (4.5%). The Tribunal therefore set aside the disallowance and remitted the matter to the AO/TPO to determine afresh the ALP of the royalty transaction taking into account the combined rate, allowing the assessee an opportunity of hearing. Parallel directions were given for the assessment years 2011 12, 2012 13 and 2013 14. [Paras 29, 30, 31, 34, 37]

Disallowance of trademark fee set aside; matter remitted to AO/TPO to determine ALP of the combined royalty (inclusive of trademark charges) afresh.

Final Conclusion: For AY 2011 12 and AY 2013 14 the disallowances of payments claimed as shared service charges are upheld for lack of proof of rendition of services. The assessee's plea to aggregate those payments with manufacturing transactions under TNMM is rejected. In respect of trademark/royalty payments for AYs 2011 12, 2012 13 and 2013 14 the Tribunal set aside the disallowances and remitted the issues to the AO/TPO for fresh determination of the ALP of the combined royalty transaction (treating the effective rate as the transacted value), with opportunity of hearing.

Treatment of dividend distribution tax as not constituting income - deductibility of provision under section 36(1)(viia) as applicable to cooperative banks - scope of provision for bad and doubtful debts (including provisions against standard assets and rural advances) - deduction test of expenditure being "wholly and exclusively" for business - set aside for fresh adjudication and verification by the Assessing Officer after affording opportunity of hearing

Treatment of dividend distribution tax as not constituting income - Deletion of addition made by AO treating non-payment of dividend distribution tax as income of the assessee (Revenue appeal for AY 2009-10). - HELD THAT: - The Tribunal followed its earlier decision in the assessee's own case (ITA No. 93/Asr/2011 for AY 2007-08) and upheld the approach that the liability to pay dividend distribution tax, even if payable, does not by itself create income to the assessee. Payment of such tax would, if anything, be debited to the profit and loss account and cannot be characterised as income. The Tribunal therefore found no basis for the addition and dismissed the Revenue's appeal on this ground. [Paras 2, 3, 5, 6]

Revenue's ground challenging deletion is dismissed; deletion sustained.

Scope of provision for bad and doubtful debts (including provisions against standard assets and rural advances) - deductibility of provision under section 36(1)(viia) as applicable to cooperative banks - Deletion of addition relating to disallowance of provision made against standard loans and related standard asset provisions (Revenue appeal for AY 2009-10). - HELD THAT: - Relying on earlier tribunal orders in the assessee's own cases, the Tribunal held that provisions made against standard assets and rural advances fall within the ambit of section 36(1)(viia) as applicable to cooperative banks (subject to exclusions). The AO must compute the aggregate deduction under section 36(1)(viia) (considering separately the two limbs described in the provision) and only disallow any excess beyond the statutory limits. Applying that ratio, the Tribunal found in favour of the assessee and dismissed the Revenue's challenge to the deletion. [Paras 7, 9, 10]

Revenue's ground is dismissed; deletion upheld subject to statutory computation under section 36(1)(viia).

Set aside for fresh adjudication and verification by the Assessing Officer after affording opportunity of hearing - Assessee's appeal against disallowance aggregating provision amounts (including provisions for fraud and interest to head office) was remitted to the AO for fresh examination (AY 2009-10). - HELD THAT: - The assessee had furnished a head-wise breakup showing that the aggregate disallowed amount included provisions for fraud and interest remittances which were not separately confronted by the AO. The Tribunal found that the AO did not examine those components after giving the assessee an opportunity and therefore set aside the issue to the AO for reconsideration and adjudication afresh after affording a reasonable opportunity of hearing. [Paras 12, 14]

Matter is set aside to the Assessing Officer for examination and reconsideration with opportunity to the assessee.

Deduction test of expenditure being "wholly and exclusively" for business - Disallowance of fuel and hire charges claimed by the assessee (assesssee's appeal ground for AY 2009-10). - HELD THAT: - Applying the established test that expenditure is deductible only if incurred "wholly and exclusively" for the purpose of the assessee's business, and on facts where the expenditure related to vehicles used by officers of the Registrar of Cooperative Societies (a third party regulatory/administrative body) with no contractual or statutory mandate obliging the assessee to bear that cost, the Tribunal upheld the disallowance. The expenditure was not found to satisfy commercial expediency for the assessee's business. [Paras 15, 16, 17]

Assessee's ground is dismissed; disallowance sustained.

Treatment of dividend distribution tax as not constituting income - Revenue appeal challenging deletion of addition on account of dividend distribution tax for AY 2011-12. - HELD THAT: - The Tribunal applied the same reasoning adopted in the assessee's own earlier decisions (notably ITA No. 93/Asr/2011 for AY 2007-08) and its findings in the AY 2009-10 disposal, concluding that the issue is covered against the Revenue. The addition was therefore not sustained. [Paras 19, 20]

Revenue's ground is dismissed; deletion upheld.

Scope of provision for bad and doubtful debts (including provisions against standard assets and rural advances) - deductibility of provision under section 36(1)(viia) as applicable to cooperative banks - Revenue appeal against deletion of addition relating to provision for bad and doubtful debts (AY 2011-12). - HELD THAT: - Following the Tribunal's earlier reasoning, the Tribunal held that provisions against standard assets and rural advances must be considered under section 36(1)(viia) applicable to cooperative banks and that the AO should compute deductions accordingly. Where the total deduction under that provision does not exceed statutory limits, no disallowance can be made. Applying that principle, the Tribunal dismissed the Revenue's appeal on this ground. [Paras 21, 22, 24]

Revenue's ground is dismissed; deletion sustained subject to statutory computation under section 36(1)(viia).

Set aside for fresh adjudication and verification by the Assessing Officer after affording opportunity of hearing - Assessee's appeal grounds for AY 2013-14 relating to additions alleged to have been already added back in the return (self-assessment tax and another amount) were remitted to the AO for verification. - HELD THAT: - The assessee asserted that the amounts disallowed by the AO had already been added back in the return of income. The Tribunal did not decide the factual question itself but remitted both issues to the AO to verify whether those amounts were indeed added back; if so, no addition would be required, otherwise the AO's additions would stand. The direction mandates verification and fresh adjudication by the AO. [Paras 26, 28, 30, 31, 32]

Both grounds are set aside to the AO for verification and fresh adjudication after affording opportunity to the assessee.

Deduction test of expenditure being "wholly and exclusively" for business - Disallowance of vehicle expenses for AY 2013-14 challenged by the assessee. - HELD THAT: - The Tribunal followed its earlier reasoning in the assessee's own cases (notably para 4-5 of ITA No. 93/Asr/2011 for AY 2007-08) and its disposal in AY 2009-10, concluding that the vehicle expenses did not satisfy the "wholly and exclusively" test and therefore the disallowance was justified. [Paras 33, 34, 35]

Assessee's ground is dismissed; disallowance sustained.

Final Conclusion: The Tribunal, following its earlier decisions in the assessee's own cases, dismissed the Revenue's appeals on the dividend distribution tax issue and on challenges to provisions treated under section 36(1)(viia) (AY 2009-10 and AY 2011-12). Assessee appeals were partly allowed and partly set aside: certain disallowances (including those relating to alleged provisions for fraud and interest remittances, and amounts claimed to have been added back in returns for AY 2009-10 and AY 2013-14) were remitted to the Assessing Officer for fresh examination after affording the assessee an opportunity of hearing; other disallowances (notably fuel/hire and vehicle expenses) were upheld as not "wholly and exclusively" for the assessee's business.

Deduction under section 54F - Capital gains account scheme deposit timing under section 54F(4) - Construction or purchase of residential house within three years under section 54F - Strict interpretation of exemption provisions

Capital gains account scheme deposit timing under section 54F(4) - Deduction under section 54F - Whether failure to deposit unutilised sale consideration into the capital gains account scheme by the due date under section 139(1) disentitles the assessee to deduction under section 54F where investment in purchase/construction is made within three years. - HELD THAT: - The Tribunal examined conflicting authorities and noted decisions of the Madras and Karnataka High Courts holding that where the assessee has invested the sale consideration in purchase or construction within the statutory three year period, non compliance with the procedural deposit requirement should not defeat the substantive relief under section 54F. Applying that view to the facts, the Tribunal concluded that what must be verified is whether the assessee actually invested the proportionate sale proceeds in the new residential asset within three years of transfer. The Tribunal therefore did not uphold the AO's rejection solely on the ground of delayed deposit and directed verification of actual utilisation of funds for the purpose of section 54F. [Paras 7, 10]

Remitted to the AO for verification of the quantum of amount actually spent on purchase/construction within three years; deduction under section 54F to be examined on that basis.

Construction or purchase of residential house within three years under section 54F - Deduction under section 54F - Strict interpretation of exemption provisions - Whether the fact that construction was not complete by the end of the three year period disentitles the assessee to the section 54F deduction where money has been invested in construction within the period. - HELD THAT: - The Tribunal followed the jurisdictional High Court authority which held that section 54F is a beneficial provision intended to encourage investment in residential houses and must be construed to effectuate that purpose; completion or readiness for occupation is not an absolute requirement if the capital gains have been invested in construction within the stipulated period. The Tribunal therefore found the AO's second ground (non completion of construction) to be unsustainable as a categorical bar to the deduction and required factual verification of the amount invested within three years rather than automatic denial for incomplete construction. [Paras 8, 10]

AO's finding of ineligibility on account of non completion is set aside; claim to be re examined after verification of investment within the statutory period.

Final Conclusion: The appellate order rejecting the section 54F claim is set aside; the matter is restored to the AO to verify the quantum of sale proceeds actually invested in purchase or construction of the new residential house within three years of transfer, and the deduction under section 54F is to be determined accordingly; appeal treated as allowed.

Approval under section 10(23C)(vi) - scope of enquiry at the time of granting approval - non importation of earlier violations to fresh applications - monitoring and withdrawal of approval on subsequent breach - CBDT Circular No.14/2015 and American Hotel principle

Approval under section 10(23C)(vi) - scope of enquiry at the time of granting approval - non importation of earlier violations to fresh applications - CBDT Circular No.14/2015 and American Hotel principle - monitoring and withdrawal of approval on subsequent breach - Ld. CIT (Exemptions) erred in rejecting fresh applications for approval under section 10(23C)(vi) solely because approval had been withdrawn for earlier years on account of past violations. - HELD THAT: - The Tribunal held that while the prescribed authority must be satisfied at the time of granting approval that the institution existed solely for educational purposes and not for profit, the scope of enquiry at grant is limited to conditions existing on the date of application. Reliance on the CBDT Circular No.14/2015 and the American Hotel principle supports that compliance with other proviso type conditions, or breaches in earlier years, need not be imported into the assessment of a fresh application for a subsequent year. The authority may impose terms and conditions and is entitled to monitor and, upon breach in any later year, withdraw approval for those years; however, a past withdrawal does not automatically preclude grant of a fresh approval when the institution demonstrates compliance in the relevant year. The Tribunal found no violation pointed out during the period 1/4/2016 to 29/09/2017, and assessment orders for A.Y. 2015-16 recorded no adverse findings; accordingly the Ld. CIT(E)'s rejection based solely on earlier withdrawals was not justified. The Tribunal therefore directed grant of approval from the relevant assessment year onwards, while preserving the Revenue's right to withdraw approval in any year in which fresh violations occur. [Paras 5, 6, 7]

Applications for approval under section 10(23C)(vi) must be considered on the facts of the relevant year; earlier violations alone do not justify rejection of a fresh application, and the Ld. CIT(E)'s orders rejecting the applications are set aside and the authorities are directed to grant approval from the relevant assessment year onwards, subject to future withdrawal if violations recur.

Final Conclusion: Appeals allowed; Ld. CIT (Exemptions) directed to grant approval under section 10(23C)(vi) to the assessees for the relevant assessment year (A.Y. 2016-17) onwards, with liberty to the Revenue to withdraw approval in any year in which the assessees commit fresh violations.

Deduction under section 36(1)(viia) for provision for bad and doubtful debts - Entitlement of co-operative banks to 7.5% deduction of total income independent of rural branches - Separate two-limb deduction: 7.5% of total income and 10% of aggregate average rural advances - Interpretative effect of CBDT Circular No.464/1986 on bifurcated deduction - Binding effect of a non-jurisdictional High Court decision on the Tribunal in absence of contrary High Court ruling

Deduction under section 36(1)(viia) for provision for bad and doubtful debts - Entitlement of co-operative banks to 7.5% deduction of total income independent of rural branches - Interpretative effect of CBDT Circular No.464/1986 on bifurcated deduction - Assessee cooperative bank without rural branches is entitled to claim deduction under section 36(1)(viia) to the extent of 7.5% of total income, subject to making provision in books of account. - HELD THAT: - The Tribunal followed its earlier decision in the assessee's own case for A.Y. 2013-14 and the reasoning in Bhagini Nivedita Sahakari Bank Ltd. and the Kerala High Court in Kodungallur Town Co-Op. Bank Ltd., which construed the amended clause as providing two separate limbs: a general deduction measured by a percentage of total income and a distinct deduction linked to rural-branch advances. The CBDT Circular No.464/1986 and subsequent amendments (Finance Act, 2007) show legislative intent to grant a 7.5% of total income deduction to banks (including co-operative banks) irrespective of rural-branch advances, while the second limb (10% of aggregate average rural advances) applies only where rural branches exist. The Tribunal distinguished the Supreme Court decision in Catholic Syrian Bank Ltd. on the ground that that case concerned earlier statutory contours and did not address the post-2007 inclusion of co-operative banks under clause (viia)(a). In absence of any contrary ruling by a jurisdictional High Court or overturning of the Tribunal's prior order for A.Y. 2013-14, the present Tribunal held the assessee entitled to the 7.5% deduction, subject to the statutory requirement that a provision for bad and doubtful debts be made in the books. [Paras 8, 9]

Assessee entitled to deduction under section 36(1)(viia) equal to 7.5% of total income, conditioned on making the provision in the books.

Separate two-limb deduction: 7.5% of total income and 10% of aggregate average rural advances - Entitlement of cooperative banks to 10% deduction linked to rural branches - The second limb of clause (viia)(a) - deduction linked to 10% of aggregate average advances by rural branches - is not available to the assessee in absence of any rural branches. - HELD THAT: - Applying the statutory text read with the Explanation defining "rural branch" and the decisions relied upon (Kodungallur and Bhagini Nivedita), the Tribunal held that the 10% deduction is intrinsically connected to advances made by rural branches as defined; a cooperative bank without rural branches cannot claim this second limb. The Tribunal therefore allowed only the general 7.5% deduction and denied any claim under the rural-advances limb. [Paras 8]

Assessee not entitled to the 10% deduction based on aggregate average advances since it has no rural branches.

Final Conclusion: Appeal allowed: deduction under section 36(1)(viia) disallowed by lower authorities is restored to the extent of 7.5% of total income (subject to provision being made in books); the 10% rural-advances deduction is not allowable in absence of rural branches.

Evidentiary value of statement recorded under section 133A - retraction of disclosure made during survey - requirement of corroborative incriminating material to sustain additions based on survey - addition based on estimated/assumed stock quantification - assessment addition for lower net profit by comparative rate of profit - effect of increased depreciation on net profit comparison - burden on assessee to prove coercion or mistake in survey statement

Evidentiary value of statement recorded under section 133A - retraction of disclosure made during survey - requirement of corroborative incriminating material to sustain additions based on survey - addition based on estimated/assumed stock quantification - Deletion of addition of Rs. 84,00,000/- made on account of excess stock surrendered during survey - HELD THAT: - The Tribunal examined whether the addition of Rs. 84,00,000/- could be sustained solely on the statement recorded during survey under section 133A and on the stock-sheet prepared by the survey team. It noted that section 133A empowers recording of statements but does not permit sworn examination, and that additions based on survey disclosure require correlation with independent incriminating material. The stock-sheet was found to be an estimate recorded as numbers of trucks without weighment slips, prepared late at night and inconsistent with the available storage area; part of the material belonged to a sister concern. The assessee had kept the physical stock taken on survey separately and, as goods were sold, prepared contemporaneous sale particulars showing 250.703 MT sold and book stock of 85.433 MT, yielding an accepted unrecorded quantity of 165.27 MT and an offered amount of Rs. 33,00,000/-. No other material such as unrecorded sale/purchase vouchers or bank evidence corroborating the larger figure was found. In these circumstances and following precedents that survey statements alone are not conclusive and that estimative stock quantification must be susceptible to reconciliation, the Tribunal held the addition based on the assumptive stock-sheet unsustainable and deleted it. [Paras 16, 23, 24, 25, 26]

Addition of Rs. 84,00,000/- is deleted.

Assessment addition for lower net profit by comparative rate of profit - effect of increased depreciation on net profit comparison - Deletion of ad hoc addition of Rs. 2,33,227/- made for showing lower net profit in the year of survey - HELD THAT: - The Assessing Officer applied an average net profit rate of prior years to the year under consideration and made an ad hoc addition for lower net profit. The Tribunal observed that the assessee had explained during assessment that the reduced net profit was substantially due to an increase in depreciation amounting to Rs. 2,54,512/-, reflecting additions to fixed assets. The AO and CIT(A) did not take this material into account. Considering the depreciation adjustment, the net profit would be consistent with previous years and there was therefore no basis for the AO's estimate. In absence of a justifiable basis for the presumption and having regard to supporting material explaining the lower profit, the Tribunal found the ad hoc addition unsustainable and deleted it. [Paras 28, 31, 32]

Addition of Rs. 2,33,227/- is deleted.

Final Conclusion: Both grounds of appeal are allowed: the addition of Rs. 84,00,000/- on account of alleged excess stock is deleted for lack of corroborative material and because the survey quantification was estimative; the ad hoc addition of Rs. 2,33,227/- for lower net profit is deleted after accounting for increased depreciation, and the appeal is allowed.

Validity of reopening notice under section 148 - Valuation under section 50C and applicability of Wealth Tax valuation provisions - Rent Capitalization Method for tenanted properties - Binding nature of Valuation Officer's report - Appropriate depreciation and useful life for building valuation

Validity of reopening notice under section 148 - The contention that the notice issued under section 148 is void ab initio was rejected. - HELD THAT: - The Tribunal noted that the impugned assessment order was passed pursuant to giving effect to an earlier ITAT order. The assessee did not press any substantive argument on the validity of the reopening notice before the Tribunal. Having considered the material on record, the Tribunal dismissed the ground challenging the validity of the section 148 notice. [Paras 3]

Ground challenging notice under section 148 dismissed.

Valuation under section 50C and applicability of Wealth Tax valuation provisions - Rent Capitalization Method for tenanted properties - Appropriate depreciation and useful life for building valuation - Whether the valuation in the DVO report (Land & Building method using CPWD rates and 70 years life) was appropriate for tenanted properties, or whether valuation must be determined by applying the Rent Capitalization Method, PWD rates, and allowing depreciation at 95% with building life of 60 years; and the consequence for computation of capital gains under section 50C. - HELD THAT: - The Tribunal examined section 50C(2), which provides for reference to the Valuation Officer and expressly incorporates the provisions of section 16A(2)-(5) of the Wealth Tax Act for such references. The Tribunal held that where properties are tenanted and sold 'as is where basis' with tenants protected under rent control, the Land & Building method adopted by the Valuation Officer produced values inconsistent with the nature and income-earning capacity of the assets. Rule 3 of Schedule III of the Wealth Tax Rules prescribes the Rent Capitalization Method for valuation of rented buildings; that method is therefore applicable to valuations made under section 50C(2). The Tribunal further found that the Valuation Officer erred in applying CPWD rates instead of state PWD rates and in adopting a useful life of 70 years and lower depreciation; on the facts the valuation should reflect depreciation at 95% and a building life of 60 years. Reliance on judicial decisions holding that wealth-tax valuation principles and rent-capitalization are applicable in similar contexts was noted. In view of these conclusions, the Tribunal directed the Assessing Officer to determine value by applying the Rent Capitalization Method, PWD rates, and the specified depreciation/life assumptions, and to compute capital gains accordingly. [Paras 9]

Addition set aside to the extent that AO is directed to re-determine value using Rent Capitalization Method, apply PWD rates, allow depreciation @95% with building life 60 years, and recompute capital gains under section 50C accordingly; grounds allowed in favour of the assessee.

Final Conclusion: Appeal partly allowed: challenge to section 148 notice dismissed; valuation-based addition for long-term capital gains set aside and remitted to the Assessing Officer with directions to value the tenanted properties by Rent Capitalization Method using PWD rates, permitting depreciation at 95% and a building life of 60 years, and to recompute capital gains accordingly.

Additions sustained on account of unexplained cash found during survey - additions sustained on account of unexplained advances evidenced by promissory notes - additions sustained on account of unexplained investment in agricultural land in the name of spouse - additions sustained on account of unexplained stock of agricultural produce - deemed income on advances - estimation of low household expenditure - evidential value of statements recorded during survey - duty to verify evidence on remand / effect of non verification by assessing officer

Additions sustained on account of unexplained cash found during survey - evidential value of statements recorded during survey - duty to verify evidence on remand / effect of non verification by assessing officer - Whether the additions made by the authorities in respect of unexplained cash found during survey could be sustained where the assessing officer failed to verify the explanations and documentary material produced by the assessee as directed by the Tribunal. - HELD THAT: - The Tribunal recorded that it had earlier set aside the matter and directed the assessing officer to verify the evidence produced by the assessee. The assessee had given specific explanations for the cash on hand (repayments by debtors, opening cash balance, interest received and sale of stock) and had produced documents. The assessing officer, however, did not undertake the directed verification and again sustained the additions on the basis of the survey declaration. The CIT(A) also did not call for any remand report from the A.O. Given that the A.O. failed to carry out the verification which the Tribunal had earlier mandated, and that the additions rested on the unverified survey declaration and not on a verification of the documentary explanations, the Tribunal held that the additions in respect of cash could not be sustained and directed their deletion. [Paras 9, 14]

Additions in respect of unexplained cash found during survey deleted; assessing officer directed to act on verification as required.

Additions sustained on account of unexplained advances evidenced by promissory notes - deemed income on advances - duty to verify evidence on remand / effect of non verification by assessing officer - Whether additions relating to advances (promissory notes) and resultant deemed income could be upheld where the promissory notes pertained to earlier years and the assessing officer did not verify the documentary explanations. - HELD THAT: - The assessee produced impounded promissory notes which, on their face, related to earlier years and showed dates of receipt on the reverse indicating earlier transactions; the assessee also explained that relevant interest income had been offered. The Tribunal emphasised that it had directed verification of such documents by the A.O. on the earlier remand, but the A.O. again made additions merely on the basis of the survey declaration without undertaking the verification. In these circumstances, and given that the additions were not founded on any verification or satisfactory inquiry by the A.O., the Tribunal could not sustain the additions or the deemed income charged thereon and directed deletion. [Paras 9, 14]

Additions and deemed income in respect of advances/promissory notes deleted for want of verification by the assessing officer.

Additions sustained on account of unexplained investment in agricultural land in the name of spouse - duty to verify evidence on remand / effect of non verification by assessing officer - Whether additions in respect of alleged unexplained investment in agricultural land (held in the name of the assessee's wife and purchased in earlier years) could be sustained where the assessing officer did not verify the facts on remand. - HELD THAT: - The assessee explained that the agricultural lands in question were purchased in earlier years (1993 and 1998) and did not pertain to the assessment year under consideration. The Tribunal noted that the A.O. persisted in making additions on the basis of the survey declaration without appreciating or verifying these factual explanations as previously directed. Since the purported investments related to earlier years and the A.O. did not verify the documentary material and chronology, the Tribunal held that additions under the impugned provisions could not be upheld and should be deleted. [Paras 9, 14]

Addition in respect of alleged unexplained investment in agricultural land deleted for failure of the assessing officer to verify the assessee's explanation.

Additions sustained on account of unexplained stock of agricultural produce - evidential value of statements recorded during survey - duty to verify evidence on remand / effect of non verification by assessing officer - Whether addition in respect of alleged unexplained stock of agricultural produce could be sustained where the assessee explained that the stock arose from HUF agricultural activities and documentary verification was not carried out by the assessing officer. - HELD THAT: - The assessee stated that the agricultural stock belonged to the HUF which owned agricultural land and reported agricultural and allied income; thus the stock represented agricultural produce and not unaccounted income. The Tribunal observed that these assertions and supporting papers required verification as per its earlier direction, which the A.O. failed to conduct. The addition was therefore premised solely on the unverified survey declaration. In absence of the directed verification and given the documentary explanation offered, the Tribunal concluded that the addition could not be sustained and ordered deletion. [Paras 9, 14]

Addition in respect of alleged unexplained agricultural stock deleted for lack of verification by the assessing officer.

Estimation of low household expenditure - profit on sale of stock - duty to verify evidence on remand / effect of non verification by assessing officer - Whether estimates made by the authorities for low household expenditure and profit on sale of stock could be sustained where the assessing officer did not verify the assessee's explanations and material previously produced on remand. - HELD THAT: - The assessee contested estimated additions for low household expenses and for profit on sale of stock, asserting that the assessing officer had not examined or verified the documentary explanations provided. The Tribunal reiterated that verification had been directed on earlier remand but was not undertaken; consequently, estimates founded on the unverified survey declaration could not be sustained. Applying the same reasoning as to the other additions, the Tribunal directed deletion of these estimates. [Paras 9, 14]

Estimated additions for low household expenditure and profit on sale of stock deleted for want of verification by the assessing officer.

Final Conclusion: The Tribunal allowed both appeals for A.Y. 2005-06, setting aside the additions made by the assessing officer and sustained by the CIT(A), and directed deletion of the impugned additions for failure of the assessing officer to verify the explanations and documentary material as earlier directed; the assessing officer is to proceed accordingly.

Characterisation of unlisted shares as long-term or short-term capital asset - Admissibility of additional evidence under Rule 29 / Rule 46A of ITAT Rules - Accrual of sale consideration and substitution of actual sale consideration with fair market value - Application of Rule 11UA for valuation of unquoted equity shares - Capitalisation of interest as part of cost of acquisition under Section 55(2)(aa) (cost limited to amount actually paid) - Judicial discipline and binding effect of coordinate-bench precedent

Characterisation of unlisted shares as long-term or short-term capital asset - Judicial discipline and binding effect of coordinate-bench precedent - Whether gains on sale of unlisted shares of Scorpio Beverages Pvt. Ltd. are taxable as long-term capital gains or short-term capital gains - HELD THAT: - The Tribunal followed the coordinate-bench decision in the husband's case which examined section 2(42A) as applicable for AY 2014-15 and the legislative history. The bench held that for the year under consideration unlisted shares held for more than 12 months but less than 36 months fell within the proviso's ambit as it stood then, and the Finance (No.2) Act, 2014 changes (restricting the 12 month rule) operate prospectively for AY 2015 16. The Tribunal therefore concluded that the shares sold on 21.03.2014, being held for more than 12 months, qualify as long-term capital assets and the gains are long-term capital gains, and applied the coordinate-bench ratio to the present facts. [Paras 38, 39]

Held that the gains on transfer of the SBPL shares are taxable as long-term capital gains; grounds 4-8 allowed to that extent.

Admissibility of additional evidence under Rule 29 / Rule 46A of ITAT Rules - Judicial discretion to admit annual accounts for valuation - Whether the assessee's additional evidences (annual accounts of intermediary companies; merchant banker and chartered accountant valuation certificates) should be admitted - HELD THAT: - Applying the principles in Pari Mangaldas and the tests under Rule 29/46A, the Tribunal held that the audited annual accounts of intermediary companies (sourced from MCA/public domain) are directly relevant and necessary to apply Rule 11UA and to verify the AO's computation; those balance sheets were admitted. Conversely, the valuation certificates submitted by the assessee (merchant banker and chartered accountant) were not accompanied by requisite underlying working or authenticated intermediary-company data and contained inconsistent valuations; they were therefore rejected as additional evidence. [Paras 35, 36, 37]

Application partly allowed: admitted annual accounts/balance sheets; rejected valuation certificates.

Accrual of sale consideration and substitution of actual sale consideration with fair market value - Application of Rule 11UA for valuation of unquoted equity shares - Whether the full value of consideration for computing capital gains is the actual sale consideration under the SPA or the fair market value computed under Rule 11UA, and what valuation is to be adopted - HELD THAT: - Respectfully following the coordinate bench, the Tribunal held that in the factual matrix - where multiple framework agreements and option arrangements linked the transfer price to the FMV of the underlying VIL group - what 'accrued' to the transferor is the consideration determinable under that contractual mechanism, and thus the relevant figure is the FMV determined in terms of Rule 11UA (i.e., the sale consideration can be substituted by the FMV that 'accrued' under the agreements). However, the Tribunal found errors in the AO's application of Rule 11UA (notably omission of preference share capital from liabilities in certain intermediary companies and incorrect plotting of figures). The Tribunal directed the AO to rework the valuation in accordance with Rule 11UA, correcting the identified defects and verifying all figures from the admitted audited balance sheets; the Tribunal accepted the legal principle that FMV (per Rule 11UA) can represent the consideration accrued but remitted computation for correction and verification. [Paras 40, 41, 42, 43, 44]

Held that the consideration accrued is the FMV linked to VIL and valuation must be computed under Rule 11UA; AO directed to correct computation (remand for verification and recomputation).

Capitalisation of interest as part of cost of acquisition under Section 55(2)(aa) (cost limited to amount actually paid) - Whether interest on funds borrowed to subscribe to right shares can be capitalised as part of cost of acquisition for computing capital gains - HELD THAT: - Following the coordinate bench reasoning, the Tribunal held that section 55(2)(aa)(iii) confines the cost of acquisition of additional financial assets (such as rights/right shares) to the amount actually paid for acquiring such assets. Consequently, interest incurred on loans taken to subscribe to right shares cannot be allowed as part of cost of acquisition for those right shares; prior authorities and legislative notes confirm the provision's restrictive scope. [Paras 45]

Interest capitalisation disallowed; grounds 21-22 dismissed and the AO's and CIT(A)'s disallowance of capitalization is confirmed.

Brought forward long term capital losses - verification and allowance - Whether brought forward long term capital losses claimed by the assessee should be allowed/adjusted - HELD THAT: - The Tribunal noted clerical/miscalculation issues in the quantum claimed and observed that the assessee may be entitled to the correct brought forward loss if substantiated. The assessee was directed to file requisite details before the AO who shall examine and allow set off/ carry forward in accordance with law. [Paras 46]

Grounds 23-26 allowed to the extent that the assessee may establish the correct brought forward losses; AO to examine and grant relief if legally admissible.

Credit for tax deducted at source and advance tax - verification against Form 26AS - Whether credit for TDS and advance tax claimed by the assessee should be allowed - HELD THAT: - The Tribunal confirmed the CIT(A)'s direction: if the amounts appear in Form 26AS or are otherwise properly evidenced, the AO should verify and grant the credit in accordance with law. The assessee must reconcile and produce requisite details. [Paras 48]

Ground 29 allowed with direction to the AO to verify payments/ TDS against Form 26AS and grant credit if supported.

Final Conclusion: The appeal is partly allowed. The Tribunal: (a) holds that the gains on sale of SBPL shares are long term capital gains for AY 2014 15; (b) admits the intermediary companies' audited accounts but rejects the valuation certificates tendered by the assessee; (c) affirms that the consideration accruing may be the FMV determinable under the contractual mechanism and Rule 11UA, but directs the AO to re compute the FMV/value per share after correcting specific computational and presentation errors (including treatment of preference share capital) and verifying figures from the admitted balance sheets; (d) confirms disallowance of interest capitalization under section 55(2)(aa); (e) directs the AO to examine and allow legitimately substantiated brought forward losses and TDS/advance tax credits in accordance with law; appeal disposed partly in favour of the assessee with remand directions for verification and recomputation.

Search and enquiry powers of customs authorities - prohibition of harassment in exercise of investigative powers - principles of natural justice in administrative enquiries - direction to conclude enquiry within fixed time-frame

Search and enquiry powers of customs authorities - principles of natural justice in administrative enquiries - Legitimacy of the respondents conducting searches and enquiries at the petitioner's premises and whether the petitioner could preclude officials from proceeding with such official duties. - HELD THAT: - The Court declined to preclude the respondents from carrying out searches and enquiries in the petitioner's office. It observed that the conduct of search of the head of the petitioner's office and related enquiries are actions incidental to the respondents' official duties and therefore cannot be interdicted merely because the petitioner objects. At the same time, the Court recorded that the respondents must not exceed their powers or violate human rights and that enquiries must be conducted in accordance with law and following the principles of natural justice. The Court accepted the assurance in the respondents' counter that there would be no harassment in the guise of enquiry or investigation and that investigations would follow lawful procedure. [Paras 6, 7]

The petition for preclusion of searches/enquiries is rejected; respondents may proceed with lawful enquiries subject to adherence to natural justice and non-harassment.

Prohibition of harassment in exercise of investigative powers - direction to conclude enquiry within fixed time-frame - Remedial direction to prevent prolonged harassment and to secure timely completion of the respondents' enquiry. - HELD THAT: - Relying on the respondents' undertaking against harassment, the Court directed that the enquiry involving the petitioner and its staff be concluded within a specified short period. The direction places a temporal constraint on the exercise of investigative powers to prevent ongoing interference with the petitioner's day-to-day business and to ensure that the respondents' investigation proceeds without undue harassment. The Court thus balanced the authority to investigate with the need to protect the petitioner from prolonged intrusion. [Paras 6, 8]

Respondents directed to complete the enquiry with the petitioner and their staff within one month from receipt of the order; Writ disposed of on that basis.

Final Conclusion: The Court refused to restrain the respondents from conducting lawful searches and enquiries but recorded that such actions must accord with principles of natural justice and not amount to harassment; accordingly the respondents were directed to conclude the enquiry involving the petitioner and its staff within one month, and the writ petition was disposed of.

Approval of resolution plan under Section 30(6) of the I&B Code - Compliance with Section 30(2) and Regulation 38 - feasibility, viability and source of funds - Classification and differential treatment of creditors (financial vs operational; secured vs unsecured; home buyers) - Commercial wisdom of the Committee of Creditors - Liquidation value and waterfall priority under Section 53 - Validity of exclusion from final list of prospective resolution applicants under Section 25(2)(h) and Regulation 36A - Adjudicatory limits of the Tribunal in granting statutory waivers/reliefs (public law / taxation) - Appointment of Monitoring Committee for implementation - Adjudication of antecedent transactions under Sections 43, 45, 50 and 66 - separate pending applications

Approval of resolution plan under Section 30(6) of the I&B Code - Compliance with Section 30(2) and Regulation 38 - feasibility, viability and source of funds - Commercial wisdom of the Committee of Creditors - Whether the Resolution Plan submitted by RCC e-Construction Pvt. Ltd. complies with the requirements of Section 30(2) and related Regulations and is fit for approval by the Adjudicating Authority - HELD THAT: - The Tribunal examined the Resolution Plan against the mandatory requirements in Section 30(2) and the Regulations, including submission of affidavit under Section 29A, treatment of CIRP costs, demonstration of source of funds, implementation and management arrangements and treatment of stakeholders under Regulation 38. The plan, having been certified in Form H and having been approved by the requisite majority of the Committee of Creditors (81.39% voting share), met the statutory requirements and the commercial decision of the COC was accorded deference. The Tribunal noted that the plan need not necessarily equal or exceed the liquidation value so long as statutory requirements are met and the commercial wisdom of the requisite majority is respected. Consequently the plan was held to be approvable and binding on the stakeholders, subject to directions to seek statutory reliefs from the appropriate authorities where required. [Paras 21, 27]

Resolution Plan approved and declared binding; moratorium ceases to have effect; liberty granted for ancillary applications for implementation

Liquidation value and waterfall priority under Section 53 - Classification and differential treatment of creditors (financial vs operational) - Equality principle vis-a -vis differentiated treatment of creditors - Whether the allocation of 1.5% to Operational Creditors (when liquidation value due to OCs was found to be NIL) renders the Resolution Plan discriminatory or unsustainable - HELD THAT: - The Tribunal accepted the Form H valuation showing liquidation value and noted that admitted financial creditor claims exceeded amounts recoverable in liquidation such that liquidation-value recovery for operational creditors would be NIL. Reliance was placed on Supreme Court authority that the Code permits differential treatment of creditor classes and that equitable treatment does not mean identical percentage recovery for unequals. The Tribunal held that so long as statutory provisions and Regulations are complied with and the COC's commercial decision is within its remit, the proposed haircut to operational creditors is not unconstitutional or discriminatory. [Paras 22]

Objections by operational creditors to the 1.5% payout dismissed

Validity of exclusion from final list of prospective resolution applicants under Section 25(2)(h) and Regulation 36A - Limitation on challenges to inclusion/exclusion of prospective applicants - Commercial wisdom of the Committee of Creditors - Whether the exclusion of M/s Sai Trading & Interiors from the final list of prospective resolution applicants was impermissible and susceptible to challenge before the Tribunal - HELD THAT: - The Tribunal examined the minutes of the 8th COC meeting and Regulation 36A (10)-(12) and held that objections to inclusion/exclusion are to be made within the timeframe prescribed and that the COC (with RP's process) may include or exclude prospective applicants having regard to eligibility and concerns raised. Applying the Supreme Court's ArcelorMittal rationale that an intended prospective resolution applicant has no vested right that its plan be considered, the Tribunal held that the challenge to exclusion by an intended prospective applicant cannot be entertained before this Authority. [Paras 22]

MA/626/2019 and MA/629/2019 dismissed; exclusion of Sai Trading & Interiors upheld

Classification and differential treatment of creditors (secured vs unsecured; security interest) - Rationality of classification by reference to security interest and project-specific recourse - Whether the dissenting financial creditor Sanchit Sales was wrongly sub classified and entitled to different treatment than provided in the Resolution Plan - HELD THAT: - The Tribunal accepted the Resolution Applicant's and RP's rationale that financial creditors were differentiated based on the nature and existence of a demonstrable security interest or project-specific recourse. Having regard to the materials showing absence of security interest or the asset no longer being in the CD's portfolio, the Tribunal found the sub classification rational and not arbitrary, and concluded that the dissenting financial creditor's objection was unsustainable. [Paras 23]

MA/641/2019 dismissed

Admissibility and verification of claims under Regulation 8A - Finality of claim admission by Resolution Professional - Whether the Resolution Professional erred in rejecting or partially admitting certain claims (MA/659/2019, MA/819/2019, MA/627/2019, MA/436/2019) - HELD THAT: - The Tribunal reviewed each challenge to the RP's claim decisions. For late or inadequately supported claims, the Tribunal found the claimants had failed to lodge proper claims within prescribed processes and timelines, or produced inconsistent documentation. The Tribunal noted the Resolution Plan's provision for a 60-day window for similar home buyers to be considered post-approval, but held that where the RP's exercise of verification and partial admission was supported by the record and regulations, no interference was warranted. [Paras 24]

MA/659/2019, MA/819/2019, MA/627/2019 and MA/436/2019 dismissed

Classification of duplicate home buyer claims - Protection of home buyers and project specific treatment in real estate CIRP - Whether the Resolution Professional was justified in categorising certain home buyers as 'duplicate claim' and providing a lower payout percentage under the Resolution Plan - HELD THAT: - The Tribunal accepted the RP's methodology for tagging duplicate claims where multiple claimants claimed the same unit, while admitting proofs and tagging entitlement to the claimant whose sale deed or verifiable payment evidence predominated. The Tribunal recognised the distinct category of duplicate-claim home buyers and the plan's lower payout for that category. Having regard to the Resolution Applicant's subsequent undertaking to increase payout from 20% to 30% for these claimants, the Tribunal recorded that improved offer. [Paras 25]

Objections by the home buyers dismissed; successful RA to pay 30% of admitted claims to duplicate claim home buyers

Adjudicatory limits of the Tribunal in granting statutory waivers/reliefs (public law / taxation) - Appropriate forum for tax reliefs and carry forward of losses - Whether the Tribunal can grant reliefs/waivers claimed in the Resolution Plan from tax and other statutory authorities and permit carry forward of tax losses - HELD THAT: - The Tribunal referred to recent Supreme Court and NCLAT decisions delineating that reliefs outside the IBC's purview (public law matters, taxation reliefs) cannot be granted by this Tribunal and must be sought before the competent tax or statutory authority. The Resolution Applicant's undertaking to file returns and pursue statutory reliefs before appropriate authorities was noted; the Tribunal directed that applications for such reliefs be made to the proper forum. [Paras 26]

Income tax objections noted; Tribunal declined to grant tax waivers - RA to approach appropriate authority for statutory reliefs

Appointment of Monitoring Committee for implementation - Implementation and supervision of the Resolution Plan - Whether a Monitoring Committee should be appointed and what directions should govern implementation and handover of records - HELD THAT: - On the RP's prayer for a Monitoring Committee, the Tribunal appointed a committee comprising the RP, two representatives of the successful RA and specified home buyer representatives, with project confined participation rights. The Tribunal directed handing over of records, premises and project documents by the RP to the RA and recorded that provisions of the Companies Act shall apply to the new promoters stepping into the company's shoes. [Paras 27]

Monitoring Committee constituted; RP directed to hand over records and premises to the RA for implementation

Adjudication of antecedent transactions under Sections 43, 45, 50 and 66 - separate pending applications - Whether the antecedent transaction applications referred to in Form H under Sections 43, 45, 50 and 66 are to be finally adjudicated in the present order - HELD THAT: - The Tribunal recorded that the Resolution Professional had filed applications disclosing transactions falling under Sections 43, 45, 50 and 66 and specified that those applications are pending adjudication. The Tribunal has not decided merits of those applications in the present order and scheduled them for hearing on a later date. [Paras 8, 28]

Applications under Sections 43, 45, 50 and 66 are not decided here and are listed for further adjudication on 12.02.2020

Final Conclusion: The Tribunal approved the Resolution Plan submitted by RCC e-Construction Pvt. Ltd., held that the plan complies with statutory requirements and the COC's commercial decision is respected, dismissed multiple objections by operational creditors, dissenting financial creditor and other claimants as unsustainable, upheld the RP's classification of duplicate home buyer claims while securing an enhanced 30% payout for that category, declined to grant statutory tax waivers (directing the Resolution Applicant to approach appropriate authorities), constituted a Monitoring Committee and directed handover of records to the Resolution Applicant; separate applications under Sections 43, 45, 50 and 66 remain pending and are listed for further consideration.

Service tax classification - Rent-a-cab operator service - Service tax classification - Support services of business or commerce (Business Support Service) - Limitation - extended period and suppression of facts - Inclusionary construction of inclusive clause in defining ancillary services - Penalty - simultaneous imposition under separate penal provisions

Service tax classification - Rent-a-cab operator service - Limitation - extended period and suppression of facts - Demand of service tax under the head Rent-a-cab operator service and its limit in time. - HELD THAT: - The Tribunal accepted the view that the Rent-a-cab operator classification is sustainable on merits in light of the Gujarat High Court decision in Vijay Travels, but limited the demand to the normal period. Applying the same precedent, the Tribunal held that the demand for the extended period is not maintainable; the extended period invocation was set aside while the substantive demand for the ordinary limitation period stands affirmed. [Paras 6, 10]

Demand under Rent-a-cab operator service sustained only for the normal period; demand for the extended period is set aside.

Service tax classification - Support services of business or commerce (Business Support Service) - Inclusionary construction of inclusive clause in defining ancillary services - Limitation - extended period and suppression of facts - Taxability of the appellant's services (drivers, cleaners and maintenance of company-owned buses) as Business Support Service and the applicability of extended limitation on account of suppression. - HELD THAT: - The Tribunal construed the definition of 'support services of business or commerce' purposively, observing that the inclusive list in the clause is illustrative and not exhaustive; services provided in relation to business or commerce fall within the definition even if not identical to the examples. The appellant's provision of drivers, cleaners and maintenance for buses used by the corporate recipient was held to be 'in relation to business or commerce' and therefore taxable as Business Support Service. Because there was no ambiguity as to taxability under this head, non-payment without informing the department amounted to suppression of facts, justifying invocation of the extended period by the adjudicating and first appellate authorities. [Paras 7, 8, 9]

Services held to be within Business Support Service and demand (including for the extended period) sustained on account of suppression.

Penalty - simultaneous imposition under separate penal provisions - Validity of imposition of simultaneous penalties under the two penal provisions. - HELD THAT: - Relying on the Gujarat High Court authority cited, the Tribunal held that simultaneous penalties under both penal provisions cannot be sustained. Consequently, the penalty imposed under one of the provisions was set aside while other penalties and interest, to the extent demand was sustained, remain imposable. [Paras 10]

Penalty under the first penal provision set aside; other penalties and interest in respect of sustained demand remain enforceable.

Final Conclusion: The appeal is partly allowed: the Rent-a-cab operator service demand is upheld for the normal limitation period but the extended-period demand is quashed; the Business Support Service demand (including extended-period demand for suppression) is sustained; the penalty imposed simultaneously under both penal provisions is partially set aside (one penalty struck down) while other penalties and interest as sustained remain payable.

CENVAT credit - provider of taxable service - input service - broadcasting service - legal fiction of agency - eligibility under rule 3 of CENVAT Credit Rules, 2004 - place of consumption / utilisation - exclusions to input service

CENVAT credit - provider of taxable service - legal fiction of agency - eligibility under rule 3 of CENVAT Credit Rules, 2004 - Entitlement of the appellant to avail CENVAT credit of tax paid on input services despite acting as the designated/contracted agent of an overseas broadcaster and Revenue's contention that agency status precludes such entitlement. - HELD THAT: - The Tribunal held that where the statute (including the deeming provisions in section 65(105)(zk) as relevant for the period prior to 1 July 2012 and the CENVAT Credit Rules thereafter) fastens tax liability on the appellant and the appellant has discharged that liability, the appellant falls within the statutory notion of 'provider of taxable service' for purposes of CENVAT credit. The Court rejected Revenue's dichotomy that liability to discharge tax (as agent by legal fiction) is distinct from being the provider eligible to take credit. Rule 3's eligibility contemplates leviability of tax and being a provider of taxable service; once the appellant accepted and discharged the tax and the State acknowledged it, the appellant could not be denied the privilege of taking credit except where an express exclusion in the CENVAT Credit Rules applies. The statutory scheme contemplates relieving the taxpayer of cascading tax and does not permit resurrecting the overseas entity's existence for the limited purpose of denying credit. Accordingly, the denial of credit on the ground that the appellant was merely an agent/ surrogate and not a consumer/provider of the input services was unsustainable. [Paras 16, 18, 19, 20, 21]

The appellant is entitled to avail CENVAT credit of tax paid on input services notwithstanding Revenue's contention of mere agency; the discharge of tax by the appellant brings it within the entitlement under the CENVAT scheme.

Input service - exclusions to input service - Legitimacy of denial of CENVAT credit claimed on certain services allegedly falling within the excluded category (rent-a-cab, outdoor catering, club/association membership) after amendment. - HELD THAT: - The Tribunal examined the specific claims and accepted the appellants' contention that the disputed credits were not for personal use and thus did not fall within the intended exclusions. Relying on precedents and the statutory purpose of the April 2011 exclusions (to disallow inputs patently not used in rendering output service), the Court found no allegation or evidence of personal benefit. Consequently, the demand relating to the ineligible input services (totaling the smaller challenged amounts) was held to fail. [Paras 12]

The denial and recovery of tax purportedly relating to the identified excluded input services is not sustainable; the claimed credit in respect of those services is upheld.

Place of consumption / utilisation - provider of taxable service - Validity of Revenue's contention that CENVAT credit can be availed only where input service is received at the premises from which the output service is rendered. - HELD THAT: - The Tribunal rejected Revenue's reliance on the place-of-consumption argument. The cited authority on which Revenue relied involved different facts (absence of evidence linking premises to the output activity). Given the Tribunal's finding that the appellant is the provider of the output service and the consumer of the input services, the requirement urged by Revenue did not preclude entitlement to credit. The determinative criterion remains the taxpayer who bears the incidence of tax and the linkage of the input to the output service, not a restrictive premise-based consumption rule in the present facts. [Paras 22]

The place-of-consumption contention does not defeat the appellant's claim to CENVAT credit in the facts of this case.

CENVAT credit - penalty - Appropriateness of recovery and imposition of penalties on the appellant company and the individual directors. - HELD THAT: - Having held that the appellant was entitled to the CENVAT credit claimed and that the denials were unsustainable, the Tribunal concluded that the consequential demand and the penalties imposed under the Finance Act lacked foundation. The Tribunal therefore set aside the recovery ordered in the impugned order as well as the penalties levied on the appellant and the individual appellants. [Paras 26]

The recovery and penalties imposed on the appellant and the individual appellants are set aside.

Final Conclusion: All three appeals are allowed: the appellant is entitled to the contested CENVAT credit (including the credits challenged on account of agency/deeming fiction and place-of-consumption arguments), the small challenged exclusions were not disallowable on the facts, and the consequential recovery and penalties are set aside.

Works contract services - service tax liability on construction services post execution of sale deed - computation of demand - remand for recalculation

Service tax liability on construction services post execution of sale deed - computation of demand - remand for recalculation - Whether the demand should be recomputed by excluding the sale deed value from the gross receipts and remanding the matter to the original authority for recalculation. - HELD THAT: - The Tribunal noted that the show cause notice contended liability for works contract services arising under the construction agreement entered into after sale, and that amounts received under the sale deed were not to be subjected to service tax. On a prima facie examination of the annexure to the SCN, the table placed by the appellant and the RTI response, it appeared that the sale deed value may have been included in the computation of the demand despite the show cause notice seeking tax only on amounts received after sale. As the dispute is confined to quantification and computation of the demand and does not involve any substantial question of law, the appropriate course is to remit the matter to the original adjudicating authority for recomputation of the demand after excluding the sale deed value. [Paras 7, 8]

Matter remitted to the original authority to recalculate the service tax demand after excluding the sale deed value; appeal allowed by way of remand.

Final Conclusion: The Tribunal allowed the appeal by way of remand and directed the original authority to recompute the demand excluding the sale deed value, since the dispute related solely to computation and appeared to show inclusion of sale consideration contrary to the SCN.

Exemption for works contract services provided ultimately to Government for irrigation works - availability of mega-exemption to sub-contractors - CBEC education guide para 7.11.11 on subcontractors and exempt works contract services - claim of exemption by writing exemption clause on invoice - stay of operation of order where order is non-executable

Exemption for works contract services provided ultimately to Government for irrigation works - availability of mega-exemption to sub-contractors - CBEC education guide para 7.11.11 on subcontractors and exempt works contract services - claim of exemption by writing exemption clause on invoice - The sub-contractor rendering part of a works contract for an irrigation project is entitled to exemption under Notification No.25/2012-ST when the services were ultimately rendered for the State Government. - HELD THAT: - The Commissioner (Appeals) recorded that the appellant had issued invoices stating that service tax was exempt under Notification No.25/2012-ST which exempts services provided to Government by way of construction, commissioning or related works for canal or other irrigation works. The Commissioner (Appeals) found no condition in the notification denying exemption to sub contracted services and relied on the CBEC education guide (para 7.11.11) which clarifies that a sub contractor providing works contract services to a main contractor engaged in exempt works contract services is covered by the mega exemption. Applying that reasoning to the present facts, where the appellant's services formed part of the contract awarded by the State Government for an irrigation project and were ultimately for the Government, the exemption could not be denied merely because the services were rendered through a sub contractor. The Tribunal found no infirmity in that conclusion and upheld the grant of exemption, rejecting the Revenue's contention that the services were rendered only to the main contractor and not to the State Government. [Paras 3, 4]

Grant of exemption to the sub contractor under Notification No.25/2012 ST upheld; demand of service tax set aside.

Stay of operation of order where order is non-executable - Whether the Commissioner (Appeals) order should be stayed pending appeal. - HELD THAT: - The Tribunal observed that the impugned order of the Commissioner (Appeals) was non executable and accordingly found no reason to stay its operation. On that basis the stay petition filed by the Revenue was rejected. The Tribunal therefore proceeded to decide the appeal on merits and disposed of both the stay petition and the appeal. [Paras 1, 5]

Stay petition rejected; no stay granted because the impugned order was non executable.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and rejected the stay petition: the Commissioner (Appeals) order allowing the sub contractor exemption under Notification No.25/2012 ST was upheld and the demand of service tax set aside.

Availability of alternative remedy - maintainability of writ petition - dismissal for existence of equally efficacious remedy - appeal to Customs, Excise & Service Tax Appellate Tribunal under Sec. 35B of the Central Excise Act, 1944 and Sec. 129A of the Customs Act, 1962 - order passed by competent authority after hearing

Availability of alternative remedy - maintainability of writ petition - dismissal for existence of equally efficacious remedy - appeal to Customs, Excise & Service Tax Appellate Tribunal under Sec. 35B of the Central Excise Act, 1944 and Sec. 129A of the Customs Act, 1962 - The writ petition challenging the order of the Commissioner is not maintainable in view of the existence of an alternative, equally efficacious remedy by way of appeal to the Customs, Excise & Service Tax Appellate Tribunal. - HELD THAT: - The Court observed that the impugned order is an appealable order and that statutory remedies exist before the Customs, Excise & Service Tax Appellate Tribunal as provided under the statutory scheme identified in the impugned order. The Court noted that a series of writ petitions raising the same grievance have been dismissed for the same reason and specifically relied on the earlier decision in Kirit Shrimankar Vs. The Commissioner of CGST & Central Excise, wherein paragraph 20 records that because the order was passed by a competent statutory authority after hearing and an alternative remedy of appeal is available, the writ petition was dismissed on that ground. Applying the same principle, the Court concluded that there is no ground for interference by writ jurisdiction when an equally efficacious statutory appeal lies.

Writ petition dismissed for non-maintainability with liberty to aggrieved party to pursue the statutory appeal.

Final Conclusion: The writ petition is dismissed on the ground that the petitioner has an equally efficacious alternative remedy by way of appeal to the Customs, Excise & Service Tax Appellate Tribunal; the petitioner is granted liberty to avail the statutory remedy.

Valuation of excisable goods - manufacture including repacking and relabelling - application of the Legal Metrology Act to valuation - choice between CAS 4 costing method and valuation under Section 4A - maintainability of appeal under Section 35G - appeal to the Supreme Court under Section 35L

Valuation of excisable goods - manufacture including repacking and relabelling - application of the Legal Metrology Act to valuation - maintainability of appeal under Section 35G - appeal to the Supreme Court under Section 35L - The appeal to the High Court is not maintainable because the dispute principally involves valuation of goods and therefore lies to the Supreme Court under the statutory scheme. - HELD THAT: - The goods manufactured by the assessee fall within the notified list under the Legal Metrology Act and the assessee undertakes repacking and relabelling; such activity amounts to "manufacture" within the meaning of the Act. The controversy before the Court is the correct valuation method to be adopted (whether valuation as per the assessee's CAS 4 costing method or valuation under Section 4A based on MRP as governed by the Legal Metrology Act). Since the appeal raises a substantial question of law relating to value of goods for purposes of assessment, the statutory scheme in Sections 35G and 35L confines appellate jurisdiction: an appeal from an order of the Appellate Tribunal on questions relating to value lies to the Supreme Court and not to the High Court. The Court therefore confines itself to the jurisdictional question and does not decide the merits of the valuation dispute, leaving those contentions to be raised before the appropriate forum. [Paras 9, 10, 11]

Civil Miscellaneous Appeal dismissed as not maintainable before this Court; liberty granted to prefer an appeal to the Supreme Court.

Final Conclusion: The High Court dismissed the appeal for want of jurisdiction under Sections 35G and 35L of the Central Excise Act, holding that the valuation question falls within the class of matters to be agitated before the Supreme Court; the merits of the valuation dispute were not decided.

Interest liability on unutilized Cenvat credit - applicability of judicial precedents in tax demand - requirement of a detailed and speaking order - remand for fresh consideration on merits and in accordance with law

Requirement of a detailed and speaking order - applicability of judicial precedents in tax demand - remand for fresh consideration on merits and in accordance with law - Order of the Tribunal set aside and matter remanded for fresh, detailed speaking order on merits and in accordance with law after hearing both parties. - HELD THAT: - The Tribunal allowed the appeal on the basis of several precedents, holding that no interest was payable where Cenvat credit reversed remained unutilized, but did so without a detailed discussion of the judgments relied upon or the subsequent amendment of law, nor did it address certain substantive contentions raised by the assessee. The High Court found these defects material to adjudication and, for that reason, directed that the Tribunal's order be set aside. The matter is remitted to the Tribunal with an express mandate to consider the merits, examine the authorities and any later legislative amendment, hear both sides and pass a reasoned, speaking order disposing of the issues in accordance with law. [Paras 3, 4]

Tribunal order set aside; matter remitted to the Tribunal to decide afresh by a detailed and speaking order on merits and in accordance with law after hearing both parties; Civil Miscellaneous Appeal disposed of with no costs.

Final Conclusion: The High Court set aside the Tribunal's non-speaking order and remitted the matter for fresh adjudication, directing the Tribunal to pass a reasoned speaking order on the merits after hearing both parties; appeal disposed of without costs.

Summary order. Appeal dismissed as withdrawn on account of filing a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, with liberty to the appellant to apply for restoration if a discharge certificate is not issued in respect of the dispute.

Suppressed turnover - proforma invoice - no taxable sale without a final invoice - burden of proof on the Revenue to establish taxable sale - penalty for willful suppression under the Central Sales Tax regime - refund with interest

Proforma invoice - suppressed turnover - no taxable sale without a final invoice - burden of proof on the Revenue to establish taxable sale - Whether the amount shown as a proforma invoice in Slip No.4 could be treated as suppressed taxable turnover of the assessee for Academic Year 1995-96. - HELD THAT: - The Court found that the Slip No.4 did not refer to any final invoice and that the assessee produced explanation and contemporaneous ledger entries showing that the third machine was invoiced and accounted for in the next year under Invoice No.3 dated 29.06.1996. The proforma invoice was not serially numbered nor dated in a manner that established a completed taxable sale in 1995-96. The Court reiterated that a proforma invoice by itself does not constitute a taxable sale and that the burden lay upon the Revenue to prove that an actual taxable sale occurred in the year sought to be taxed. In absence of controverting evidence and given the statement of account produced before the Income Tax authority and the books maintained in the ordinary course, the authorities below erred in treating the proforma invoice entry as a suppressed sale for 1995-96. [Paras 10, 11, 12]

The alleged proforma invoice could not be treated as suppressed taxable turnover for Academic Year 1995-96 and the tax on that basis was wrongly imposed.

Penalty for willful suppression under the Central Sales Tax regime - refund with interest - Validity of the tax and penalty imposed on the assessee and relief consequential thereto. - HELD THAT: - Having held that the purported suppressed turnover was not established, the Court concluded that the concurrent imposition of tax and the penalty for willful suppression could not stand. The orders of the Assessing Authority, the first appellate authority and the Tribunal were quashed. The Court directed that any tax and penalty recovered on this account be refunded to the assessee with interest at 9% per annum from the date of payment until the date of refund. [Paras 12, 13]

The tax and penalty imposed are quashed; recovered amounts, if any, to be refunded with interest at 9% p.a.

Final Conclusion: Writ petition allowed; concurrent orders upholding tax and penalty on the basis of the alleged proforma invoice are quashed. Tax and penalty, if recovered, shall be refunded to the assessee with interest at 9% per annum from date of payment until refund.