TaxTMI Updates e-Newsletter
Dec 31,2020

Provisional attachment under Section 83 of the GST Act - attachment of cash credit account - defreezing of bank accounts - attachment of fixed deposits - interest of the revenue

Attachment of cash credit account - provisional attachment under Section 83 of the GST Act - defreezing of bank accounts - Provisional attachment of the cash credit account and one current account maintained with the bank shall be lifted and those accounts permitted to be operated. - HELD THAT: - The Court recorded its established view that a cash credit account cannot be subjected to provisional attachment under Section 83 of the GST Act and, having regard to the balance in one current account, exercised its discretion to allow operation of the accounts to prevent undue hardship to the business. Consequently, the Court ordered that the Cash Credit Account No.71701250002155 and Current Account No.71701010016146 (the accounts at Sr. Nos.1 and 2) be defreezed and the provisional attachment in respect of those accounts be lifted, while keeping the broader proceedings pending for further consideration. [Paras 4, 5]

The provisional attachment of the specified cash credit and current accounts is lifted and those two accounts are ordered to be defreezed; the matter remains pending.

Attachment of fixed deposits - provisional attachment under Section 83 of the GST Act - Provisional attachment over the fixed deposits is to remain undisturbed for the present. - HELD THAT: - The Court expressly declined to disturb the provisional attachment of the fixed deposits at this interim stage and therefore left those attachments in place pending further adjudication. [Paras 5]

Provisional attachment on fixed deposits shall continue.

Provisional attachment under Section 83 of the GST Act - interest of the revenue - The broader question concerning provisional attachment of immovable properties and related departmental actions is to be adjudicated along with Special Civil Application No.11209 of 2020, with the respondent required to file an affidavit-in-reply. - HELD THAT: - The Court noted that the provisional attachment of immovable properties and related measures are already the subject matter of Special Civil Application No.11209 of 2020 and that the department has apprehensions about potential loss if that petition succeeds. Rather than decide those matters at this stage, the Court directed that this writ petition be heard along with SCA No.11209/2020, permitted direct service of the order, and directed the respondent to file an affidavit-in-reply for placement on record. The matter was posted for further hearing in the third week of January, 2021. [Paras 3, 5, 6]

The matters relating to attachment of immovable properties and related departmental orders are to be heard along with SCA No.11209 of 2020; respondent to file affidavit-in-reply and the hearing is posted.

Final Conclusion: Interim relief granted by ordering defreezing and operation of the specified cash credit and current accounts; provisional attachment over fixed deposits remains; the broader dispute concerning attachment of immovable properties and related departmental actions is directed to be adjudicated together with Special Civil Application No.11209 of 2020 after filing of the respondent's affidavit.

Regular bail under Section 439 of the Code of Criminal Procedure, 1973 - grant of bail having regard to nature and gravity of offence - wrongful availment of input tax credit and remedial recovery - court may enlarge accused without detailed discussion of evidence on bail - application of principles in Sanjay Chandra on bail - conditions of bail including personal bond, surety, surrender of passport and reporting - release subject to non-requirement in other offences

Regular bail under Section 439 of the Code of Criminal Procedure, 1973 - grant of bail having regard to nature and gravity of offence - court may enlarge accused without detailed discussion of evidence on bail - application of principles in Sanjay Chandra on bail - Applicant entitled to be released on regular bail in the FIR registered for alleged wrongful availment of input tax credit under the Gujarat GST Act, 2017. - HELD THAT: - The High Court, after hearing learned counsel and perusing the material on record, took into account the facts, nature and gravity of the allegations and the role attributed to the accused but declined to enter into detailed evaluation of evidence at the bail stage. Relying on settled principles as adverted to in Sanjay Chandra, the Court exercised its discretion in favour of enlargement on bail despite the prosecution contention about the large amount allegedly involved. The Court observed that allegations of wrongful availment of input tax credit can admit of departmental rectification and recovery, and that criminal liability at bail stage need not be presumed without considering the overall facts. On this basis the petition was allowed and regular bail ordered. [Paras 7, 8, 9]

Application allowed and the applicant ordered to be released on regular bail.

Conditions of bail including personal bond, surety, surrender of passport and reporting - release subject to non-requirement in other offences - trial Court not to be influenced by prima facie observations - Bail to be subject to specified conditions and to be executed before the trial court; trial court to remain uninfluenced by the High Court's prima facie observations. - HELD THAT: - The Court specified the terms on which bail is to be granted: execution of a personal bond with one surety of like amount, conditions prohibiting misuse of liberty or acting prejudicially to prosecution, surrender of passport and restriction on leaving the country without permission, periodic reporting to the police station for six months, and furnishing and not changing residence without permission. The order further directed that release would be allowed only if the applicant is not required in connection with any other offence, and that the Sessions Judge may modify or act on breach of conditions; additionally the Trial Court was directed not to be influenced by the prima facie observations made by the High Court in this order. [Paras 10, 11, 12]

Bail granted subject to the enumerated conditions, compliance and execution of bond before the competent trial court.

Final Conclusion: The High Court allowed the criminal bail application and ordered release of the applicant on regular bail subject to execution of a personal bond with one surety and the specified conditions; release is contingent on the applicant not being required in any other matter and the Trial Court is not to be influenced by the High Court's prima facie observations.

Writ of certiorari - quashing of order - notice of demand in form DRC-07 - principles of natural justice - notice in form GSTR-3A - interest under section 50 - jurisdictional error

Writ of certiorari - quashing of order - Disposition of the petition by adopting the judgment dated 14.01.2020 in C.W.J.C. No. 23797 of 2019 and application of its directions to the instant case. - HELD THAT: - The Court, on the petitioner's prayer and on there being no objection from respondents, disposed of the instant petition by directing that it be disposed exactly in the same terms as the judgment dated 14.01.2020 passed by a co ordinate Bench in C.W.J.C. No. 23797 of 2019 titled M/s Gaya Marketing Vs. The State of Bihar & Ors. The order states that the directions contained in that judgment shall govern the instant case mutatis mutandis. No independent adjudication or fresh reasoning is recorded in this order; the relief in this petition is granted by operative adoption of the earlier coordinate Bench decision.

Petition disposed of in terms of judgment dated 14.01.2020 in C.W.J.C. No. 23797 of 2019 and its directions shall govern the present case mutatis mutandis.

Notice of demand in form DRC-07 - principles of natural justice - notice in form GSTR-3A - interest under section 50 - jurisdictional error - Reliefs claimed in the petition concerning quashing of the notice DRC-07, alleged violation of natural justice for non issuance of GSTR 3A, and non attraction of interest where no tax liability existed are disposed in accordance with the earlier coordinate Bench judgment. - HELD THAT: - The petitioner's specific contentions - seeking quashing of the order dated 26.09.2018 and consequential notice of demand in DRC 07, asserting violation of principles of natural justice for lack of a GSTR 3A notice, and contention that interest under section 50 could not be attracted where no tax liability existed for the period 'the month of September 2017 till the month of June 2018' - were not independently decided in this order. Instead, the Court directed that the petition be disposed in the same terms as the coordinate Bench judgment of 14.01.2020, so that the treatment of these contentions follows the findings and directions recorded in that earlier decision.

Petitioner's contentions regarding the impugned order, notice DRC 07, alleged breach of natural justice, and attraction of interest are disposed by applying the findings and directions of the coordinate Bench judgment dated 14.01.2020 to the present case.

Interlocutory applications - Disposition of interlocutory applications. - HELD THAT: - The order records that interlocutory applications, if any, shall stand disposed of consequent to the disposal of the main petition in terms of the earlier decision.

Interlocutory applications, if any, stand disposed of.

Final Conclusion: The petition is disposed of by adopting the coordinate Bench judgment dated 14.01.2020 in C.W.J.C. No. 23797 of 2019; the directions contained in that judgment shall govern the instant matter mutatis mutandis, and interlocutory applications, if any, are disposed.

Regular bail under Section 439 CrPC - discretionary enlargement on bail - classification of offence not finally adjudicated - non expression of opinion on merits - conditions of bail including personal bond and surety - reporting and travel restrictions as bail conditions - trial court not to be influenced by preliminary observations

Regular bail under Section 439 CrPC - discretionary enlargement on bail - conditions of bail including personal bond and surety - trial court not to be influenced by preliminary observations - Enlargement of the applicant on regular bail in connection with the FIR registered by the Assistant Commissioner of State Tax, Vadodara. - HELD THAT: - The Court exercised its discretionary jurisdiction under Section 439 CrPC to enlarge the applicant on regular bail, expressly without expressing any opinion on the merits of the allegations or on the proper classification of the offence. Having considered the rival submissions and the nature of the allegations, the Court found the case fit for bail and ordered release on execution of a personal bond with one solvent surety of like amount. The bail was made subject to specified conditions including prohibition on misuse of liberty or acting to the prejudice of the prosecution, surrender of passport (if any), restriction on leaving the State without prior permission, periodic attendance at the police station (weekly for three months, then alternate weeks for six months), and furnishing and not changing residence without prior permission. The Court directed that the applicant shall be released only if not required in connection with any other offence and that the Sessions Judge may issue warrant or take appropriate action on breach of conditions. It was further directed that the trial court shall not be influenced by the preliminary observations made by the High Court while granting bail. [Paras 7, 8]

Application allowed; applicant enlarged on regular bail on execution of a personal bond of Rs. 50,000 with one solvent surety of like amount and subject to the specified conditions; rule made absolute to that extent.

Final Conclusion: The High Court allowed the bail application, releasing the applicant on regular bail subject to a personal bond with surety and specified conditions, while reserving all questions on merits for trial and cautioning the trial court not to be influenced by preliminary observations.

Computation of deduction under Section 10A (reduction of export turnover by foreign currency communication and travel expenses) - arm's length price determination for interest on external commercial borrowings - assessment year specific determination of transfer pricing - effect of prior acceptance and consistency across assessment years on re litigation (res judicata type estoppel) - relevance of Reserve Bank of India approval in determining rate of interest

Computation of deduction under Section 10A (reduction of export turnover by foreign currency communication and travel expenses) - Telecommunication and travelling expenses paid in foreign currency deducted from export turnover need not also be reduced from total turnover for computing deduction under Section 10A in the facts of this case. - HELD THAT: - The Tribunal's finding that communication and travelling expenses in foreign currency reduced from export turnover have to be reduced from total turnover was considered in the light of binding precedent of the Supreme Court in COMMISSIONER OF INCOME TAX, CENTRAL III v. HCL TECHNOLOGIES LTD. The assessee relied on that decision and the revenue did not dispute its applicability. Consequently, the Court held that the first substantial question of law is answered against the revenue and in favour of the assessee, following the Supreme Court's pronouncement. [Paras 4, 5]

First substantial question of law answered against the revenue; deduction under Section 10A sustained in favour of the assessee.

Arm's length price determination for interest on external commercial borrowings - assessment year specific determination of transfer pricing - effect of prior acceptance and consistency across assessment years on re litigation (res judicata type estoppel) - relevance of Reserve Bank of India approval in determining rate of interest - Transfer pricing adjustment on account of interest on external commercial borrowings for AY 2006 07 was not sustainable where the same rate of interest had been accepted by revenue in earlier assessment years and the loans and rates were evidenced by loan agreements and earlier proceedings; Tribunal's reliance on that consistency and RBI approval was upheld. - HELD THAT: - The Court examined the Transfer Pricing Officer's adjustment (reducing the assessee's claimed rates to 5.67%) vis a vis the material placed before the Tribunal, including loan agreements showing rates of 7.50% and 8.49%, prior show cause and orders for other assessment years, and RBI approval. The Tribunal found that the loans were contracted in 2000 01/2001, that the rate fixed in the loan agreements had been accepted by revenue in assessment years 2002 03 through 2008 09 except for AY 2006 07, and that the Transfer Pricing Officer for AY 2008 09 had accepted the rate after considering the assessee's submissions. Applying the principle that, although strict res judicata does not apply to income tax proceedings, a consistent factual position allowed to stand across years may not be disturbed without proper challenge (as explained in Radhasoami Satsang), the Court held that the revenue could not be permitted to depart from the earlier accepted position for AY 2006 07. The Court also noted that RBI approval and the rate prevailing at the time of availing the loan are relevant considerations in determining the arms length rate of interest. On these bases the Tribunal's setting aside of the transfer pricing adjustment was sustained. [Paras 6, 9, 10]

Second and third substantial questions of law answered against the revenue; transfer pricing adjustment on interest set aside and Tribunal's order upheld.

Final Conclusion: All substantial questions of law (relating to computation under Section 10A and arm's length determination of interest on external commercial borrowings) are answered against the revenue and in favour of the assessee for Assessment Year 2006 07; the revenue's appeal is dismissed.

Disallowance under Section 40(a)(ia) of the Income Tax Act - depreciation as statutory allowance under Section 32 of the Income Tax Act - outright purchase of intellectual property rights versus royalty - tax deduction at source obligations under Chapter XVII-B/Section 195

Disallowance under Section 40(a)(ia) of the Income Tax Act - depreciation as statutory allowance under Section 32 of the Income Tax Act - outright purchase of intellectual property rights versus royalty - tax deduction at source obligations under Chapter XVII-B/Section 195 - Whether disallowance under Section 40(a)(ia) is attracted to a claim for depreciation in respect of purchased intellectual property rights where no tax was deducted at source on the payment to a non-resident. - HELD THAT: - The Court held that Section 40(a)(ia) operates to deny deduction only in respect of amounts which are outgoing expenditure chargeable to tax and on which tax is deductible at source but has not been deducted or paid. Depreciation under Section 32 is a statutory allowance in respect of an asset owned and used for business and is not an outgoing revenue expenditure. Where the payment has been capitalized as an outright purchase of intellectual property rights and no part of it has been claimed as revenue expenditure, there is no requirement of law to deduct tax at source from such an allowance, and consequently Section 40(a)(ia) is not attracted to the claim for depreciation. The findings of the Commissioner of Income Tax (Appeals) and the Tribunal - that the transfer was an absolute sale/capital purchase and that the claim was for depreciation and not revenue expenditure - are unimpeached and not perverse. Accordingly the substantial question of law is answered against the revenue and in favour of the assessee. [Paras 10]

Disallowance under Section 40(a)(ia) does not apply to claim for depreciation on capitalized purchase of intellectual property rights; appeals dismissed.

Final Conclusion: The High Court affirmed the Tribunal and CIT(A) that depreciation is a statutory allowance (not an outgoing expenditure) and that Section 40(a)(ia) does not apply to depreciation claimed on an outright purchase of intellectual property rights; the revenue's appeals are dismissed.

Reassessment proceedings - reopening of assessment - rectification entry - tax neutrality of write-back - change of opinion - disallowance under Section 43B

Rectification entry - tax neutrality of write-back - disallowance under Section 43B - reassessment proceedings - Whether the addition of the amount claimed as deduction in computation for Assessment Year 2006-07 (being a write-back of a wrongly recorded liability of Assessment Year 2005-06) was warranted or whether the rectification entry was tax neutral and the addition deserved deletion. - HELD THAT: - The Tribunal found that the impugned amount had been disallowed by the assessee in computation for Assessment Year 2005-06 under the provisions relating to disallowance (reflected in tax audit annexures), and that in Assessment Year 2006-07 the tax auditor discovered that the earlier year entry was a mistake and accordingly wrote back the amount by means of a rectification entry. The Assessing Officer treated the write-back as a deductible claim in the year under consideration and initiated reassessment proceedings, making the addition. The Tribunal observed that the entry in question was not a fresh deduction but merely a reversal of a wrongly recorded liability of the earlier year and therefore tax neutral; no fresh income had been earned nor any omission in disclosure in the original assessment of the year under consideration shown. The Tribunal further held that the Commissioner (Appeals) misdirected himself by expecting a revised return for the earlier year and by faulting the assessee for not substantiating workings when the material showed the amount related to rectification of the prior year. Concluding that the addition was unwarranted on merits, the Tribunal deleted the addition made by the Assessing Officer. The Tribunal expressly refrained from adjudicating the legal validity of the reassessment proceedings themselves and decided the matter on the merits of the addition.

Impugned addition deleted as the rectification entry in Assessment Year 2006-07 was tax neutral; appeal allowed on merits.

Final Conclusion: Appeal allowed; the addition made by the Assessing Officer was deleted on the ground that the write-back was a tax neutral rectification of a wrongly recorded liability of Assessment Year 2005-06. The Tribunal did not decide the broader legal validity of the reassessment proceedings.

Penalty under section 271C - tax deduction at source under section 194C - privity of contract - payments routed through a Government Department - nature of External Development Charges (EDC) vis-a -vis contractual liability - following coordinate-bench precedents

Penalty under section 271C - tax deduction at source under section 194C - privity of contract - payments routed through a Government Department - Leviability of penalty under section 271C for failure to deduct TDS on External Development Charges (EDC) paid to HUDA. - HELD THAT: - The Tribunal examined whether the EDC payments required deduction of tax at source and hence attracted penalty for failure to deduct. The record shows the demand drafts for EDC were drawn in favour of the Chief Administrator, HUDA but routed through the Director General, Town and Country Planning (DGTCP), a Government Department, and the notes to HUDA's accounts record EDC as amounts received through DGTCP for execution of EDC works. The Tribunal held that the payment was not pursuant to any contract between the assessee and HUDA and that HUDA acted in execution of development works engaged by the Government Department. Since the assessee had no privity of contract with HUDA and the payment was effected through the Government Department (DGTCP), the sums were not payment for a contract for carrying out specific work by HUDA for the assessee which would attract section 194C. Applying this legal analysis, the Tribunal concluded that tax was not required to be deducted at source on the EDC payments and consequently the penalty under section 271C for failure to deduct was not leviable. The Tribunal also noted and followed similar conclusions reached by coordinate benches of the ITAT on identical facts. [Paras 5, 6]

Impugned penalty under section 271C deleted; appeal allowed.

Final Conclusion: The Tribunal set aside the CIT(A)'s order and deleted the penalty imposed under section 271C, holding that EDC payments routed through the Government Department and made without privity of contract with HUDA did not attract deduction of tax at source under section 194C.

Management service fees - royalty - fees for technical services - India-Netherlands DTAA - know-how - distinction between supply of know-how and provision of services - following coordinate bench / judicial precedent

Management service fees - royalty - India-Netherlands DTAA - know-how - distinction between supply of know-how and provision of services - following coordinate bench / judicial precedent - Whether the management service fees received by the assessee fall within the definition of "royalty" under Article 12(4) of the India-Netherlands DTAA (and thereby are taxable in India) or are payments for services not amounting to royalty. - HELD THAT: - The Tribunal examined the nature of services rendered under the service agreement dated 01.04.2004 and applied the established test distinguishing payments for know-how (which give rise to "royalty" under Article 12(4)) from payments for the provision of services. Reliance was placed on the coordinate Bench's earlier orders for the assessee in earlier assessment years which analyzed the same service agreement and held that the services involved business support, advisory and operational assistance rather than imparting of unrevealed know-how enabling independent use by the recipient. The Tribunal noted the OECD commentary and prior decisions emphasizing that for a payment to be "royalty" as information concerning industrial, commercial or scientific experience there must be an element of imparting of know-how such that the recipient can use it independently; mere provision of services, troubleshooting, help-desk, internal audits, tender support, marketing assistance or managerial/administrative support do not amount to transfer or making available of know-how. The Revenue could not distinguish facts or persuade the Tribunal to depart from the coordinate Bench's consistent view for identical payments. Applying that precedent to the facts of the year under appeal, the Tribunal held that the payments do not constitute "royalty" under Article 12(4) and are not taxable on that basis in India. [Paras 7, 8]

Payments received by the assessee under the service agreement dated 01.04.2004 do not fall within the definition of "royalty" under Article 12(4) of the India-Netherlands DTAA; the impugned assessment is set aside and the relevant grounds of appeal are allowed.

Final Conclusion: The Tribunal, following its coordinate Bench decisions on identical facts, held that the management service fees are not "royalty" under the India-Netherlands DTAA and set aside the assessing officer's order; the appeal is partly allowed.

Eligibility of deduction under section 80IA for infrastructure development projects as distinct from works contracts - limits on exercise of revisional powers under section 263 where the Assessing Officer has made plausible and adequate enquiries - application of precedent and earlier assessment-year findings to subsequent assessment years - disallowance under section 14A when no exempt income is earned - followance of binding higher-court authority on applicability of section 14A

Eligibility of deduction under section 80IA for infrastructure development projects as distinct from works contracts - limits on exercise of revisional powers under section 263 where the Assessing Officer has made plausible and adequate enquiries - application of precedent and earlier assessment-year findings to subsequent assessment years - Claim of deduction under section 80IA allowed and revisionary order under section 263 set aside - HELD THAT: - The Tribunal held that the Assessing Officer had examined and verified the assessee's claim for deduction under section 80IA in the earlier and impugned year, had raised specific queries, received detailed replies and contract documents, and reached a plausible conclusion that the contracts were composite turnkey infrastructure-development projects (including post-completion operation and maintenance) and not works contracts excluded by the Explanation. The Tribunal relied on its own earlier decisions in the assessee's cases for earlier assessment years and on authorities establishing that a revisional order under section 263 cannot be sustained where the AO has made adequate enquiries and taken a plausible view on the facts. In those circumstances the Principal CIT's exercise of revisionary power was held to be unjustified and the revisionary order was quashed. The Tribunal also endorsed that findings recorded in the earlier assessment year on identical facts would apply in the subsequent year unless distinguishing facts are shown.

The Tribunal allowed the assessee's appeal, set aside the revisionary order under section 263, and upheld the deduction under section 80IA for the assessment year.

Disallowance under section 14A when no exempt income is earned - followance of binding higher-court authority on applicability of section 14A - Deletion of disallowance under section 14A upheld where no exempt income was earned - HELD THAT: - The Tribunal sustained the CIT(A)'s deletion of the addition determined under section 14A (computed under Rule 8D) on the basis that where no exempt income has been earned, disallowance under section 14A cannot be made. The Tribunal followed the jurisdictional High Court decision relied upon by the CIT(A) and the Supreme Court authority invoked by the CIT(A) (PCIT v. Oil Industry Development Board) and, in the absence of any contrary binding decision placed before it, declined to interfere with the appellate authority's conclusion.

The Tribunal dismissed the Revenue's appeal on the section 14A disallowance and did not interfere with the CIT(A)'s order deleting the addition.

Final Conclusion: The Department's appeal was dismissed: the Tribunal allowed the assessee's claim of deduction under section 80IA by setting aside the revisional order under section 263, and upheld the CIT(A)'s deletion of the section 14A disallowance where no exempt income was earned.

Admission of additional grounds - remand for fresh consideration - burden to prove expenditure is wholly and exclusively for business - requirement of speaking order - valuation of scrap sales by item-wise determination - disallowance under section 14A of the Income Tax Act, 1961 - set-off of brought forward loss and depreciation against income - computation of interest under section 234B of the Income Tax Act, 1961

Admission of additional grounds - advancement of natural justice - Admission of the assessee's additional grounds for adjudication. - HELD THAT: - The Tribunal found there was no need for investigation of fresh facts and a sufficient reason for not having raised the ground earlier. Relying on the Supreme Court authority cited by the assessee, the Tribunal exercised its discretion to admit the additional ground and ordered it to be adjudicated. [Paras 5]

Additional ground admitted for adjudication.

Burden to prove expenditure is wholly and exclusively for business - remand for fresh consideration - Allowability of travelling expenditure partly disallowed by AO and confirmed by CIT(A). - HELD THAT: - The assessee claimed travelling expenses largely paid through the Director's credit card. The Tribunal observed that the assessee must substantiate that such expenditure is wholly and exclusively for business and noted the possibility of a personal element. As the AO made an ad hoc disallowance and CIT(A) confirmed it without a speaking order, the Tribunal considered it appropriate to remit the matter to the AO for pinpointing and quantifying any expenditure that is personal or benefits the Directors, after examining detailed vouchers and explanations. [Paras 6]

Issue remitted to the Assessing Officer for fresh consideration and quantification.

Burden to prove expenditure is wholly and exclusively for business - remand for fresh consideration - Disallowance of business development expenditure which was made on an ad hoc basis by AO and confirmed by CIT(A). - HELD THAT: - The AO disallowed a portion of payments (made by Directors through credit card) on an ad hoc basis without specifying which part was personal. The Tribunal held that the AO must identify specific items that are personal and directed that the assessee produce full details so the AO can re-examine the expenditure afresh. [Paras 7]

Issue remitted to the Assessing Officer for fresh examination after production of details by the assessee.

Burden to prove expenditure is wholly and exclusively for business - requirement of speaking order - remand for fresh consideration - Disallowance of club expenses where AO disallowed fifty percent for lack of details. - HELD THAT: - The Tribunal held that the assessee must establish the exclusive business purpose of club expenditure (e.g., hosting foreign buyers) by placing necessary evidence. Given the AO's adhoc approach and absence of supporting particulars, the matter is to be remitted for fresh consideration. [Paras 8]

Issue remitted to the Assessing Officer for fresh consideration on production of supporting evidence.

Valuation of scrap sales by item-wise determination - estimation of income vs. books acceptance - remand for fresh consideration - Addition on account of alleged suppression by valuation of sale of scrap silk yarn. - HELD THAT: - The AO applied a uniform per-kg rate to diverse categories of scrap yarn, leading to a large differential. The Tribunal observed that different scrap items have distinct values and it is improper to apply a single rate across categories. The Tribunal directed the AO to determine value item-wise and, only after comparing item-wise values adopted by the assessee and the AO, to decide whether any addition is sustainable. [Paras 11]

Issue remitted to the Assessing Officer to determine item-wise value of scrap and thereafter decide any addition.

Disallowance under section 14A of the Income Tax Act, 1961 - requirement of speaking order - remand for fresh consideration - Disallowance under section 14A where both assessment and appellate orders were silent on recording satisfaction and reasons. - HELD THAT: - The Tribunal found that the Assessing Officer must record reasons and satisfaction when making a disallowance under section 14A, and that neither the assessment order nor the CIT(A)'s order dealt with this requirement. Consequently, the matter was referred back for a speaking order that records the AO's satisfaction and reasons. [Paras 12]

Issue referred back to the Assessing Officer for passing a speaking order on disallowance under section 14A.

Remand for fresh consideration - set-off of brought forward loss and depreciation against income - Whether an exempt long-term capital gain included in the return should be excluded from computation of income/loss and related directions to CIT(A). - HELD THAT: - The assessee had included a long-term capital gain exempt under section 10(38) in computing loss, thereby reducing the loss. The CIT(A) did not properly adjudicate this contention. The Tribunal held that the exempt gain should not be considered in computing income/loss and remitted the issue to the CIT(A) for proper adjudication instead of dismissing it as infructuous. [Paras 16]

Issue remitted to the Commissioner (Appeals) for proper adjudication on treatment of exempt capital gain in computation.

Set-off of brought forward loss and depreciation against income - requirement of speaking order - remand for fresh consideration - Inclusion by AO of certain interest receipts under 'Income from Other Sources' and whether those should be set off against brought forward losses and depreciation. - HELD THAT: - The AO brought additional interest receipts to tax, but did not correctly consider set-off of brought forward loss and depreciation when computing the assessee's income. The Tribunal noted that the CIT(A)'s order on this point was cryptic and directed remand to the CIT(A) to pass a reasoned speaking order and decide the set-off issue. [Paras 19]

Issue remitted to the Commissioner (Appeals) for passing a speaking order and determining set-off of brought forward loss and depreciation.

Computation of interest under section 234B of the Income Tax Act, 1961 - consequential relief - Levy of interest under section 234B in consequence of the assessments. - HELD THAT: - The Tribunal treated the question of interest under section 234B as consequential to the ultimate determination of taxable income. It directed that interest be computed and determined in accordance with law while giving effect to the orders of the appellate authorities. [Paras 19]

Interest under section 234B to be computed and adjusted as per law while giving effect to the appellate orders.

Final Conclusion: The Tribunal admitted the additional ground and, while not deciding the substantive merits on the papers, partly allowed the appeals for statistical purposes by remanding multiple disputed issues (travel expenditure, business development expenses, club expenses, valuation of scrap sales, disallowance under section 14A, treatment of exempt capital gain, and inclusion/set-off of interest receipts) to the Assessing Officer or Commissioner (Appeals) for fresh consideration with directions to pass speaking and reasoned orders; interest under section 234B to be computed consequentially in accordance with law.

Weighted deduction under section 35(2AB) - allowability of in house R&D expenditure - liberal construction of exemption provisions - precedential effect of an ITAT Mumbai decision

Weighted deduction under section 35(2AB) - allowability of in house R&D expenditure - precedential effect of an ITAT Mumbai decision - liberal construction of exemption provisions - Allowability of the assessee's claim of weighted deduction for in house R&D expenditure for the assessment years in issue, by reference to earlier ITAT Mumbai precedent. - HELD THAT: - The Tribunal examined the assessee's claim for weighted deduction under section 35(2AB) and the materials placed on record (including applications to DSIR, recognition/renewal letters, compliance submissions, bills and vouchers for R&D expenditure and Forms 3CM/3CL). The CIT(A) had allowed the claim following the judgment of ITAT Mumbai in Meco Instruments P. Ltd., which held that procedural technicalities should not defeat the legislative benefit where, in substance, the assessee satisfied the statutory requirements and the exemption provisions are to be liberally construed. The Tribunal found the facts of the present cases to be identical or not distinguishable from Meco Instruments: in house R&D unit recognized, expenditure supported and verified, and comparable compliance. No material change in law or distinguishing fact was shown. Accordingly, the Tribunal concluded that the CIT(A) rightly allowed the weighted deduction; the appellate authority's decision did not warrant interference. The Tribunal noted the conditional observation recorded by the CIT(A) that, if the Meco Instruments decision is modified or reversed by a higher forum, the AO would be free to take remedial action, but that contingency did not affect the present allowance. [Paras 6, 8]

The weighted deduction claimed for the in house R&D expenditure is allowable following the ITAT Mumbai precedent; the revenue appeals are dismissed.

Final Conclusion: The Tribunal upheld the CIT(A)'s allowance of the assessee's weighted deduction for in house R&D expenditure for AYs 2011-12, 2012-13 and 2013-14 by following the ITAT Mumbai decision in Meco Instruments P. Ltd.; the revenue's appeals are dismissed (subject to the caveat that a higher court's reversal of the precedent may permit remedial action by the AO).

Bogus purchases - reliance on third-party investigation evidence - banking payments not conclusive proof of genuineness - opportunity to cross-examine third-party vendors - abnormally low net profit as indicia of account manipulation - corroborative vendor records and parallel accounts - notice under Section 148

Bogus purchases - reliance on third-party investigation evidence - banking payments not conclusive proof of genuineness - corroborative vendor records and parallel accounts - abnormally low net profit as indicia of account manipulation - opportunity to cross-examine third-party vendors - Validity of addition of purchases aggregating to Rs. 98,69,702/- treated as bogus purchases - HELD THAT: - The Tribunal upheld the finding that purchases aggregating to the stated amount were bogus. The conclusion rests on the investigation disclosure arising from search and seizure in the supplier group that the seller concerns issued accommodation/bogus bills and existed only on paper, corroborated by vendor records and parallel accounts recovered. The Tribunal held that payment through banking channels and entry in the assessee's stock register do not, by themselves, conclusively establish genuineness where the Revenue's investigation shows a modus operandi of fabricated bills and return of funds in cash. The assessee's declared net profit (0.33% of turnover) was regarded as abnormally low for the nature of business and indicative of manipulation, especially in the light of the assessee having earlier admitted unaccounted stock; there was no item-wise reconciliation of stock with purchases and sales. The Tribunal also noted that the assessee had not sought cross-examination of the vendors before the authorities and therefore could not fault the authorities for admitting the vendors' recorded confessions; the absence of such a request militated against the assessee's contention that it was denied an opportunity. Having regard to the cumulative material - investigation findings, vendor records, parallel accounts, abnormal profit margin, and lack of reconciliation or challenge to the vendor evidence - the addition was held to be justified and confirmed. [Paras 5, 8, 9]

Addition of Rs. 98,69,702/- as bogus purchases confirmed and sustained on the material before the authorities.

Final Conclusion: The appeal is dismissed and the addition treating the purchases as bogus is confirmed.

Deemed dividend under section 2(22)(e) - requirement that assessee-company must be shareholder in payer company - sharing of common business premises and disallowance of office expenses - reasonableness of disallowance where associate carried no major activity

Deemed dividend under section 2(22)(e) - requirement that assessee-company must be shareholder in payer company - Addition made by the Assessing Officer under section 2(22)(e) treating unsecured loan from an associated company as deemed dividend was deleted. - HELD THAT: - The Assessing Officer treated loan received from Gaurav Securities Pvt. Ltd. as deemed dividend to the extent of accumulated profits because a main shareholder of the assessee also held substantial shares in the payer company. The Tribunal examined coordinate-bench and jurisdictional High Court precedents which construe section 2(22)(e) to apply only where the assessee-company itself is a shareholder in the company from which the loan or advance is taken. Since the assessee was not a shareholder in the payer company, the statutory requirement for invoking section 2(22)(e) was not satisfied. Applying those authoritative decisions to the facts, the Tribunal held that the addition under section 2(22)(e) was not maintainable and deleted the impugned addition. [Paras 7]

Addition under section 2(22)(e) deleted.

Sharing of common business premises and disallowance of office expenses - reasonableness of disallowance where associate carried no major activity - Disallowance out of office expenses on account of sharing premises with an associate was restricted to 25% instead of 50%. - HELD THAT: - The Assessing Officer disallowed 50% of various office-related expenses on the ground that the assessee shared premises with its associate concern. The assessee contended that the associate merely used the premises as a registered office and conducted no significant business activity. The Tribunal examined the associate's accounts showing only indirect income (dividend and interest) and noted that the Assessing Officer failed to controvert the assessee's claim with specific findings of actual activity. On that basis the Tribunal concluded that a full 50% disallowance was excessive and that a 25% disallowance was reasonable in the circumstances, and accordingly reduced the disallowance. [Paras 11]

Disallowance restricted to 25% of the office expenses.

Final Conclusion: The appeal is partly allowed: the addition under section 2(22)(e) has been deleted and the disallowance of office expenses has been reduced from 50% to 25%.

Deduction under section 24(b) of the Income Tax Act - Allowability of interest on fresh loan raised to repay original loan - Application of the third proviso to section 24(b) - Scope of "property" under Income from House Property - Applicability of CBDT Circular No. 28 dated 20-08-1969

Deduction under section 24(b) of the Income Tax Act - Allowability of interest on fresh loan raised to repay original loan - Application of the third proviso to section 24(b) - Applicability of CBDT Circular No. 28 dated 20-08-1969 - Whether interest paid to a third party on a loan raised to repay the original construction loan is allowable as deduction under section 24(b) where the property is commercial and the third proviso to section 24(b) was relied upon by Revenue to deny the deduction. - HELD THAT: - The Tribunal held that section 24(b) permits deduction of interest on borrowed capital used for acquisition or construction of a property and uses the term "property" without limiting it to residential property; hence the statutory allowance is not confined to residential properties alone. The CBDT Circular No. 28/1969, which provides that interest on a second loan used merely to repay the original construction loan is deductible if so proved to the satisfaction of the Assessing Officer, remains applicable in principle because the scheme of deduction under the re-framed section 24 corresponds to the earlier provision. The third proviso to section 24(b) and the related provisos relate specifically to properties covered by section 23(2) (i.e., houses taken to have nil annual value because occupied by the owner for residence or by reason of employment elsewhere) and therefore carve out a statutory cap or certificate requirement only insofar as residential cases under section 23(2) are concerned. Revenue erred in extending that proviso to deny deduction in respect of interest on the loan from Mrs. Kaveri Bai used to repay the original bank loan for construction of a commercial building. Consequently, none of the reasons advanced by the AO or CIT(A) for disallowing the interest withstand scrutiny and the deduction must be allowed. [Paras 12, 13, 14]

Deduction of the interest paid to Mrs. Kaveri Bai is allowable under section 24(b); the third proviso does not apply to the commercial property in question and the CBDT Circular supports allowability of interest on a replacement loan used to repay the original construction loan.

Final Conclusion: The appeal is allowed; the Tribunal directs that the interest claimed by the assessee in respect of the loan taken from Mrs. Kaveri Bai (used to repay the original construction loan) shall be allowed as a deduction under section 24(b) for Assessment Year 2011-12.

Disallowance under section 40(a)(i)/(ia) - reversal of provision for expenses - voluntary disallowance - taxability of benefit from amount claimed as deduction in an earlier year - double taxation - mercantile system of accounting

Disallowance under section 40(a)(i)/(ia) - reversal of provision for expenses - voluntary disallowance - taxability of benefit from amount claimed as deduction in an earlier year - double taxation - Whether the addition of Rs. 5,53,30,473/- made by the AO by treating reversal of earlier year provisions as taxable income was correctly sustained - HELD THAT: - The Tribunal noted that the sum in dispute formed part of year end provisions of Rs. 9.71 crores created on 31.3.2006 and voluntarily disallowed by the assessee in AY 2006-07, so that the assessee did not claim that amount as a deduction in the earlier year. The amount was reversed and credited to the expenditure/profit & loss account in the year relevant to AY 2007-08; out of the reversal only Rs. 4.17 crores related to expenses actually incurred in that year, while the balance (the impugned sum) merely represented reversal of provisions which had not been claimed as deduction earlier. The Tribunal applied the principle that where an assessee had obtained a benefit from an amount that was claimed as a deduction in an earlier year, such benefit may be taxable; conversely, where the amount was not claimed as a deduction in the earlier year (being voluntarily disallowed), reversal of that provision does not give rise to additional taxable income in the later year. Taxing the impugned amount would result in double taxation of the same economic item. On these findings and reasoning, the Tribunal held that the Commissioner (Appeals) was justified in deleting the addition.

Deletion of the addition of Rs. 5,53,30,473/- was upheld and the addition set aside.

Final Conclusion: The appeal filed by the revenue is dismissed; the appellate authority's deletion of the disallowance in respect of the reversed provision for AY 2007-08 is upheld.

Comparability of companies for transfer pricing - arm's length price (ALP) - transfer pricing comparables inclusion/exclusion - functional comparability - related party transaction (RPT) filter - foreign exchange fluctuation as operating income - application of TNMM and Rule 10B(2)(d)

Comparability of companies for transfer pricing - transfer pricing comparables inclusion/exclusion - Inclusion of Acropetal Technologies Limited as a comparable in the Software Development segment - HELD THAT: - The Tribunal found that Acropetal Technologies Limited satisfied the qualitative and quantitative filters applied by the TPO and that the DRP had excluded the company suo moto despite no objection from the assessee. Suo moto exclusion by the DRP in these circumstances was held improper. The Tribunal directed the TPO to include Acropetal Technologies Limited in the list of comparables for determining ALP. [Paras 3]

Acropetal Technologies Limited to be included as a comparable.

Comparability of companies for transfer pricing - functional comparability - Exclusion of E-Infochips Limited from the list of comparables in the Software Development segment - HELD THAT: - On review of the annual report and reliance on a coordinate-bench finding, the Tribunal noted that E-Infochips derived a material portion of revenue from product/hardware maintenance and that no segmental data was available to isolate software development revenue. Given that software services revenue was less than the required threshold and segmental information was absent, the company could not be treated as a reliable comparable. The DRP's exclusion was therefore upheld. [Paras 3]

Exclusion of E-Infochips Limited from comparables is justified.

Comparability of companies for transfer pricing - functional comparability - Exclusion of Infosys Limited from the list of comparables - HELD THAT: - The Tribunal observed a marked disparity in scale and brand value between Infosys Limited and the assessee (huge turnover and significant brand value), making it functionally and commercially non-comparable. The Tribunal also relied on precedent where Infosys had been excluded as a comparable. Accordingly, the DRP's exclusion was sustained. [Paras 3]

Infosys Limited excluded from the comparables list.

Comparability of companies for transfer pricing - related party transaction (RPT) filter - functional comparability - Exclusion of L&T Infotech Limited from the list of comparables - HELD THAT: - The Tribunal accepted that L&T Infotech was predominantly engaged in onsite software development, had significantly higher turnover and net assets than the assessee, and was involved in product development. Coordinate-bench decisions applying a tighter RPT tolerance (15%) and rejecting L&T Infotech as comparable were relied upon. In view of these functional differences and precedents, the DRP's exclusion was upheld. [Paras 3]

L&T Infotech Limited excluded from the comparables list.

Comparability of companies for transfer pricing - transfer pricing comparables inclusion/exclusion - Inclusion of R S Software Limited as a comparable - HELD THAT: - The Tribunal noted that R S Software Limited had been accepted by both the assessee and the TPO in the TP study and that the DRP's suo moto exclusion, without objection from the assessee, was not proper. Consequently the Tribunal directed that R S Software Limited be included as a comparable. [Paras 3]

R S Software Limited to be included as a comparable.

Comparability of companies for transfer pricing - functional comparability - Exclusion of Acropetal Technologies Limited from comparables in the ITES segment - HELD THAT: - For the ITES segment, the Tribunal examined functional attributes and earlier Tribunal precedents which had held Acropetal not comparable (performed engineering design services requiring high-end skills). Relying on those precedents and the functional dissimilarity, the Tribunal directed the TPO to exclude Acropetal Technologies Limited from the ITES comparables list. [Paras 3]

Acropetal Technologies Limited excluded from ITES comparables.

Comparability of companies for transfer pricing - Exclusion of Jeevan Scientific Technologies Limited and I-Gate Global Solutions Limited from the ITES comparables list - HELD THAT: - No substantial argument was advanced by the Revenue against the DRP's exclusions. The Tribunal found the DRP's decisions to exclude these two companies from the list of comparables to be justified and directed the TPO to exclude them. [Paras 3]

Jeevan Scientific Technologies Limited and I-Gate Global Solutions Limited excluded from comparables.

Foreign exchange fluctuation as operating income - application of TNMM and Rule 10B(2)(d) - Treatment of foreign exchange gain/loss as operating income for transfer pricing purposes under TNMM - HELD THAT: - The Tribunal, following its earlier decision in a coordinate bench and the ITAT Special Bench authority, held that foreign exchange fluctuation gains or losses arising on realization of trade debtors or payments to creditors are operational in nature and should be treated as operating income/expenses. On this analogy, the Tribunal upheld the DRP's finding that such foreign exchange transactions are operating and rejected the Revenue's ground challenging that treatment in the context of Rule 10B(2)(d) and TNMM. [Paras 3]

Foreign exchange gains/losses relating to trading transactions are to be treated as operating income/expenses; DRP's finding upheld.

Final Conclusion: The Revenue's appeal is partly allowed: the Tribunal directed inclusion of Acropetal Technologies Limited (for software development) and R S Software Limited as comparables, and upheld the DRP's exclusions of E-Infochips, Infosys, L&T Infotech, Acropetal (for ITES), Jeevan Scientific Technologies and I-Gate where functionally or commercially non-comparable; the DRP's treatment of foreign exchange fluctuation as operating income was affirmed.

Reopening of assessment under section 147 read with section 148 - failure to disclose fully and truly all material facts - exemption under section 11 - exemption under section 10(23C)(iiiad) - remand for fresh consideration of alternative claim

Reopening of assessment under section 147 read with section 148 - failure to disclose fully and truly all material facts - Validity of reopening assessment after four years on grounds that the assessee did not apply 85% of receipts for charitable purposes and whether there was failure to disclose material facts. - HELD THAT: - The Tribunal found that the reopening of assessment was justified because the assessee had not fully and truly disclosed the material fact that 85% of the receipts for the year were not applied to charitable purposes, which was a pre-condition for exemption under section 11. The assessment order indicates that had this material fact been disclosed, the Assessing Officer would not have accepted the return. The fact that Form No.10B was not filed did not preclude the conclusion of non-disclosure where the essential fact regarding application of receipts was omitted. On these findings the reopening under section 147 r.w.s. 148 was upheld. [Paras 4]

Reopening of assessment upheld and ground dismissed.

Exemption under section 10(23C)(iiiad) - remand for fresh consideration of alternative claim - Whether the Assessing Officer should examine the assessee's alternative claim for exemption under section 10(23C)(iiiad) when deduction under section 11 was denied. - HELD THAT: - The Tribunal held that if the assessee otherwise qualifies for exemption under section 10(23C)(iiiad), that claim must be examined by the Assessing Officer even though the original return claimed exemption under section 11. The matter was not decided on merits by the Tribunal; instead the issue was restored to the file of the Assessing Officer with a direction to consider the alternative claim irrespective of whether it was specifically made in the original return. [Paras 7]

Issue remanded to the Assessing Officer for consideration of the assessee's entitlement under section 10(23C)(iiiad).

Exemption under section 11 - failure to disclose fully and truly all material facts - Claim for exemption under section 11 where assessee admittedly did not apply 85% of income/receipts to charitable purposes. - HELD THAT: - It was admitted that the assessee did not apply 85% of the income/receipts for charitable purposes as required by section 11. On that factual admission and in view of the statutory pre-condition, the Tribunal found no merit in the challenge to the denial of exemption under section 11 and dismissed the ground. The Tribunal's earlier finding on non-disclosure underlies the conclusion on section 11. [Paras 8]

Claim under section 11 rejected and ground dismissed.

Final Conclusion: Reopening of assessment under section 147 r.w.s. 148 upheld for non-disclosure of material facts; exemption under section 11 denied because 85% of receipts were not applied to charitable purposes; the alternative claim under section 10(23C)(iiiad) is restored to the Assessing Officer for fresh consideration; appeal disposed of as allowed for statistical purposes.

Penalty under Section 271(1)(c) - Unexplained cash credit under Section 68 - Onus of proof under Section 68 - Deletion of addition on merits - Penalty unsustainable where underlying addition deleted - Early fixation / out-of-turn hearing

Early fixation / out-of-turn hearing - Prayer for early fixation of the appeal and to hear the matter out of turn on merits. - HELD THAT: - The Tribunal allowed the assessee's miscellaneous application for early fixation and proceeded to hear the appeal on merits the same day, noting that the issue was simple and covered and that the Revenue raised no objection to hearing the matter out of turn. The Tribunal therefore admitted and decided the appeal on merit after allowing the request for early hearing. [Paras 4]

Application for early fixation allowed and the matter heard on merits out of turn.

Penalty under Section 271(1)(c) - Unexplained cash credit under Section 68 - Onus of proof under Section 68 - Penalty unsustainable where underlying addition deleted - Sustainability of penalty imposed under Section 271(1)(c) in view of deletion of the underlying addition under Section 68. - HELD THAT: - The Tribunal observed that the quantum addition (share capital treated as unexplained cash credit under Section 68) for which the penalty was levied had been deleted by this Tribunal in the quantum appeal after concluding that the assessee had discharged the initial onus by producing identity, confirmations and bank proof and noting that the Revenue did not carry out verification. Given that the addition has been set aside on merits, the Tribunal held that the penalty founded on that addition could not be sustained. Applying the principle that penalty under Section 271(1)(c) cannot survive where the underlying addition is deleted, the Tribunal deleted the penalty levied by the Assessing Officer. [Paras 5, 6]

Penalty under Section 271(1)(c) deleted as unsustainable in view of deletion of the underlying addition under Section 68.

Final Conclusion: The Tribunal allowed the assessee's application for early hearing, heard the appeal on merits and allowed the appeal by deleting the penalty under Section 271(1)(c) because the underlying addition under Section 68 for A.Y. 2012-13 was deleted.

Exhaustion of statutory remedies - Maintainability of writ against revenue orders where statutory appeal is available - Writ jurisdiction under Article 226 - discretionary relief not to circumvent statutory remedy - Availability of appellate remedy with power to condone delay

Exhaustion of statutory remedies - Writ jurisdiction under Article 226 - discretionary relief not to circumvent statutory remedy - Availability of appellate remedy with power to condone delay - Maintainability of the writ petition challenging the order determining liability for the year 2010-2011 when an appeal lay under the statute - HELD THAT: - The Court held that the petitioner, whose liability for the year 2010-2011 was determined by an order of the customs authority, had an alternative statutory remedy in the form of an appeal to the Customs, Excise and Service Tax Appellate Tribunal under the statute. The Tribunal has power to condone delay in filing the appeal if sufficient cause is shown. Applying the principle in Assistant Collector of Central Excise v. Dunlop India Ltd., the Court reiterated that Article 226 is not intended to short-circuit or circumvent available statutory procedures and that revenue matters with available statutory remedies are ordinarily not matters for extraordinary writ relief. The petitioner offered no acceptable explanation for failing to avail the appellate remedy and did not contend that the issues could not have been agitated before the appellate authority. Consequently, the Court declined to enter into merits or disputed questions of fact and dismissed the petition as not maintainable for failure to exhaust the statutory remedy. [Paras 2, 3, 4]

Writ petition dismissed for non-exhaustion of the statutory appeal remedy; connected miscellaneous petition closed; no costs.

Final Conclusion: The petition challenging the customs order for the year 2010-2011 was dismissed on the ground that the petitioner failed to avail the statutory appeal remedy; the High Court declined to examine merits and closed the connected petition with no costs.

Maintainability of writ petition in presence of statutory alternative remedy - Exercise of discretionary writ jurisdiction under Article 226 - Availability of statutory appeal and condonation of delay under Section 129-A of the Customs Act, 1962 - Revenue matters not ordinarily amenable to writ jurisdiction - Doctrine in Assistant Collector of Central Excise v. Dunlop India Ltd. regarding bypassing statutory remedies

Maintainability of writ petition in presence of statutory alternative remedy - Availability of statutory appeal and condonation of delay under Section 129-A of the Customs Act, 1962 - Exercise of discretionary writ jurisdiction under Article 226 - Writ petition challenging adjudication under the Customs Act, 1962 is not maintainable where an adequate statutory appeal remedy was available and not availed of. - HELD THAT: - The Court applied the established principle that Article 226 is not to be used to short-circuit or circumvent statutory remedies and referred to the rule in Assistant Collector of Central Excise v. Dunlop India Ltd. The petitioner was entitled to prefer an appeal against the Order in Original No. 639 of 2012 within three months under the statutory scheme before the Customs, Excise and Service Tax Appellate Tribunal, which has power to condone delay on sufficient cause being shown. The petitioner did not prefer that statutory appeal and has offered no acceptable explanation for bypassing the alternative remedy. The Court therefore declined to investigate disputed factual questions on merits in exercise of its discretionary writ jurisdiction and refused to entertain the petition. [Paras 3, 4]

Writ petition dismissed for non-availment of the statutory remedy; connected miscellaneous petitions closed; no costs.

Final Conclusion: The High Court dismissed the petition challenging the Customs order on the ground that the petitioner failed to avail the statutory appeal remedy under Section 129-A and there was no sufficient reason to exercise writ jurisdiction; consequential petitions were closed and no costs were awarded.

Reactivation of Director Identification Number (DIN) - Reactivation of Digital Signature Certificate (DSC) - Companies Fresh Start Scheme, 2020 - Facilitation of scheme implementation to enable compliance - Challenge to validity of disqualification circular - Constitutional validity of Section 164(2)(a)

Reactivation of Director Identification Number (DIN) - Reactivation of Digital Signature Certificate (DSC) - Companies Fresh Start Scheme, 2020 - Facilitation of scheme implementation to enable compliance - DINs and DSCs of the petitioners were ordered to be reactivated to enable them to avail the Companies Fresh Start Scheme, 2020. - HELD THAT: - The petitioners, directors of a company whose DINs and DSCs had been deactivated following disqualification for non-filing, sought reactivation to utilise the CFSS-2020 which permits defaulting companies to file belated documents by payment of normal fees and grants immunity in specified cases. The Court noted that a substantial portion of the disqualification period had elapsed and that reappointing directors and then attempting compliance under the Scheme would be impractical and frustrate the scheme's purpose of providing a fresh start. While leaving open the broader questions of law, the Court exercised its discretion to direct immediate administrative reactivation so that the petitioners could file under the Scheme before its cut-off date, and directed the Registrar of Companies to reactivate the DINs and DSCs without awaiting a copy of the order. [Paras 8, 9]

DINs and DSCs of the petitioners to be reactivated within 24 hours and writ petitions disposed.

Challenge to validity of disqualification circular - Constitutional validity of Section 164(2)(a) - Division Bench consideration - The substantive legal challenges to the circular dated 15th September 2017 and the constitutional validity of Section 164(2)(a) were not decided and remain under consideration by the Division Bench. - HELD THAT: - The petitions initially raised broader legal questions including the legality of the ROC circular and constitutional validity of the statutory disqualification provision. The Court recorded that the judgment in Mukut Pathak & Ors. and related matters are under consideration before the Division Bench and, by agreement of counsel, the petitioners did not press their challenge to Section 164(2)(a) if reactivation were granted. Accordingly, the Court left these legal questions open and did not adjudicate them; the matters continue to be listed for the Division Bench. [Paras 3, 8]

Questions regarding the validity of the circular and Section 164(2)(a) remain undecided and are pending before the Division Bench.

Final Conclusion: The writ petitions were disposed by directing immediate reactivation of the petitioners' DINs and DSCs (within 24 hours) to enable availment of the Companies Fresh Start Scheme, 2020; substantive challenges to the disqualification circular and to Section 164(2)(a) were left open and remain pending before the Division Bench.

Compounding of offence under section 441 of the Companies Act, 2013 - Non-disclosure in Board's report of reasons for not spending on Corporate Social Responsibility - Obligation of Board to ensure spending at least two per cent of average net profits on CSR - Bona fide contravention and subsequent compliance as a factor in compounding - Imposition of compounding fee as deterrent

Non-disclosure in Board's report of reasons for not spending on Corporate Social Responsibility - Obligation of Board to ensure spending at least two per cent of average net profits on CSR - Whether the company contravened the obligation to disclose reasons for not spending on CSR in the Board's report for FY 2014-2015 and whether the default was bona fide and subsequently remedied. - HELD THAT: - The Tribunal found that the Directors' Report for the year ended 31.03.2015 did not contain the reasons for non-disclosure as required by the combined operation of the reporting obligation and the Board's duty to ensure CSR spending. The company thereafter constituted a CSR committee, established a trust (Anil Salgaocar Foundation) and transferred the amount required to be spent on CSR for the year to the trust. Documentary proof was placed on record showing that the trust made donations to bona fide beneficiaries. The contravention was held to be inadvertent and not wilful; the default was subsequently made good by the company through the trust and related disbursements. Having regard to these facts, the failure to disclose reasons in the Board's report was a contravention but was bona fide and remedied by the corrective steps taken by the company and its directors. [Paras 11, 12, 13]

The contravention of the reporting and CSR-spending requirement for FY 2014-2015 is established but was bona fide and has been made good by the company's subsequent compliance measures.

Compounding of offence under section 441 of the Companies Act, 2013 - Bona fide contravention and subsequent compliance as a factor in compounding - Imposition of compounding fee as deterrent - Whether the offence may be compounded and what compounding fee is appropriate. - HELD THAT: - On consideration of the pleadings, the corrective steps taken by the company (constitution of CSR committee, creation of trust, transfer of the requisite CSR amount and proof of disbursements), and the Registrar's report acknowledging the contravention as unintentional, the Tribunal exercised its power to compound the offence. The Tribunal applied the principle that an inadvertent contravention subsequently rectified and accompanied by cooperation with the Registrar warrants compounding subject to a deterrent fee. Having balanced the absence of wilful default against the need for deterrence, the Tribunal fixed a total compounding levy to be remitted within the time prescribed and directed filing of a compliance report, after which the Registrar will take consequential action. [Paras 14, 15]

The Compounding Application is allowed; the offence is compounded subject to payment of the compounding fee and compliance as directed, and the matter is disposed of accordingly.

Final Conclusion: The Tribunal held that the company failed to disclose reasons for not spending on CSR for FY 2014-2015 but the default was bona fide and subsequently remedied; the offence is compounded on payment of the prescribed compounding fee and subject to filing of the compliance report, after which the Registrar shall take consequential action.

Restoration of company name - power under section 252 of the Companies Act, 2013 - striking off under section 248 - requirement to make provision for payment or discharge of liabilities before striking off - filing of statutory documents and payment of fees/additional fees - imposition of costs for restoration - registrar's non-objection subject to conditions

Restoration of company name - power under section 252 of the Companies Act, 2013 - striking off under section 248 - filing of statutory documents and payment of fees/additional fees - imposition of costs for restoration - Restoration of the company's name on the Register of Companies and the conditions for such restoration. - HELD THAT: - The Tribunal recorded that the Registrar of Companies had lawfully struck off the company's name for failure to file financial statements and annual returns, having followed the procedure under Section 248. The Registrar filed a counter affidavit stating no ongoing inquiry or objections and left the matter to the Tribunal subject to terms. Exercising the discretionary power under Section 252, the Tribunal accepted the petitioner's plea that non-filing was not deliberate, the company is a going concern, restoration would not prejudice third parties and that the petitioner undertook to comply with outstanding filings. In the interest of justice and ease of doing business the Tribunal ordered restoration of the company's name as if it had not been struck off, subject to conditions intended to secure compliance and protect public interest. Those conditions require restoration of consequential entries (including DINs), filing of all outstanding statutory documents with prescribed/additional fees within 30 days, personal supervision by the petitioner's representative, payment of costs to the Central Government within three weeks (otherwise the order lapses), delivery of a certified copy of the order to the Registrar, publication of the order in the Official Gazette by the Registrar, and a clarification that the order is confined to the violations that led to striking off and does not preclude further action by the Registrar for any other violations or offences.

The Tribunal allowed the petition and directed restoration of the company's name on the Register subject to specified conditions including filing of outstanding documents, payment of fees and costs, and compliance steps.

Final Conclusion: The petition under Section 252 was allowed: the Tribunal restored the company's name on the Register as if it had not been struck off, imposing conditions for filing outstanding statutory documents, payment of prescribed/additional fees and costs, personal compliance supervision, publication in the Official Gazette, and reserving the Registrar's right to take action for any other violations.

Restoration of company struck off - compliance with filing of statutory documents - payment of fees, additional fee and cost for revival - publication of restoration order in Official Gazette - Registrar's residual power to take further action

Restoration of company struck off - compliance with filing of statutory documents - payment of fees, additional fee and cost for revival - Restoration of the company's name in the Register of Companies and the conditions for restoration. - HELD THAT: - The Tribunal considered the ROC's action of striking off the company's name for non filing of Annual Returns and Financial Statements for 2010 11 to 2015 16 and the material on record including the Financial Statements and the ROC report. Although the Financial Statements did not conclusively establish active trading, they indicated some activity, and the applicant's representative asserted an intention to expand operations. The ROC reported that restoration may be allowed on merits subject to filing of pending statutory documents with additional fee. Balancing these factors, the Tribunal concluded it was just and proper to restore the company's name from the date of striking off, but subject to specific compliance conditions: filing all pending statutory documents (Annual Accounts and Annual Returns) for the years in default with prescribed fees/additional fee/fine, payment of a specified cost for each year of default, delivery of a certified copy of the order to the ROC, and subsequent publication of the order by the ROC in the Official Gazette. The Tribunal also made clear that the restoration is confined to the violations leading to striking off and does not preclude ROC from taking further actions for any other violations or offences in accordance with law. [Paras 5]

The company's name is restored in the Register of Companies from the date of striking off, subject to filing all pending statutory documents with prescribed fees/additional fee/fine within 45 days, payment of the directed cost for each year of default within 30 days, delivery of a certified copy to the ROC, and publication of the order in the Official Gazette; ROC may take further lawful action for other violations.

Final Conclusion: The Company Appeal is allowed: the Tribunal restores the company's name on the Register of Companies subject to the specified filings, payment of fees and costs, delivery of a certified copy to the ROC and publication in the Official Gazette; the restoration does not bar the ROC from pursuing other lawful actions for separate violations.

Valuation of assets - appointment of independent valuer - commercial wisdom of Committee of Creditors - expedition of Corporate Insolvency Resolution Process - judicial review of valuation disputes in CIRP - role of the Adjudicating Authority in valuation disputes

Valuation of assets - appointment of independent valuer - commercial wisdom of Committee of Creditors - expedition of Corporate Insolvency Resolution Process - Whether the Tribunal should interfere with the Adjudicating Authority's order directing the Resolution Professional to continue with the existing valuer (GAA Advisory) instead of appointing a fresh independent valuer. - HELD THAT: - The Tribunal examined the history of competing orders including a split bench, a third member direction for a limited fresh valuation of intangible assets and subsequent proceedings in which GAA Advisory submitted a report that was placed before the Committee of Creditors. The Adjudicating Authority found that the Corporation Bank, holding approximately 7% voting share in the CoC, repeatedly objected to valuation which contributed to delays in the CIRP that had already exceeded 550 days. The Adjudicating Authority accepted the view that, in the circumstances, continuing with the valuer already familiar with the corporate debtor would better serve the objective of expediting the resolution process and reflected the commercial decision of the majority of the CoC. The Tribunal held that, given these developments and the commercial wisdom exercised by the CoC, interference on technical grounds was not warranted as it would further prolong the CIRP. The Tribunal therefore declined to disturb the impugned order directing the RP to continue with GAA Advisory and did not re-open merits of the valuation dispute.

The appeal is dismissed and the impugned order directing the Resolution Professional to continue with the existing valuer is upheld; no interference was warranted to avoid further delay in the CIRP.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's order permitting the Resolution Professional to continue with the incumbent valuer is sustained to prevent further delay in the CIRP.

Appointment and replacement of Resolution Professional under Section 22 of the I&B Code - commercial wisdom of the Committee of Creditors - judicial review of Committee of Creditors' decision - inapplicability of Section 27 procedure to CoC resolution under Section 22

Appointment and replacement of Resolution Professional under Section 22 of the I&B Code - commercial wisdom of the Committee of Creditors - judicial review of Committee of Creditors' decision - Validity of the Committee of Creditors' resolution replacing the Interim Resolution Professional by a Resolution Professional and the scope for the Adjudicating Authority to entertain objections by the IRP. - HELD THAT: - The Tribunal noted that Section 16(5), as amended, contemplates that the term of the Interim Resolution Professional continues until appointment of a Resolution Professional under Section 22. Section 22 empowers the Committee of Creditors, by the requisite majority, to appoint the IRP as RP or to replace the IRP with another RP. The decision to appoint or replace the IRP is a commercial decision falling within the commercial wisdom of the Committee of Creditors and is not ordinarily amenable to judicial review. In the present case the first CoC meeting did not confirm the IRP as RP and the IRP's offer to be appointed did not secure support; the second CoC meeting passed a resolution replacing the IRP with Mr. Gangaram Agarwal with the requisite majority (approximately 78%). Given that the resolution was passed within the ambit of Section 22, the Adjudicating Authority's recourse to the procedure under Section 27 and its direction to afford the IRP time to file an affidavit/objection was unwarranted, amounted to unnecessary prolongation of the CIRP, and was not justified when no arguable infringement of the IRP's legal rights was shown. The Tribunal therefore held that the impugned order should be set aside and directed the Adjudicating Authority to carry forward the resolution process with the CoC-appointed Resolution Professional discharging functions in terms of the CoC resolution. [Paras 4, 5]

The Adjudicating Authority's order adjourning the matter to permit the IRP to file an affidavit and invoking Section 27 procedure was set aside; the CoC resolution replacing the IRP with Mr. Gangaram Agarwal (passed by the requisite majority under Section 22) must be given effect and the Resolution Professional shall discharge functions in terms of that resolution.

Final Conclusion: Appeal allowed. The impugned order is set aside and the Adjudicating Authority is directed to proceed with the CIRP with the Resolution Professional appointed by the Committee of Creditors discharging functions in terms of the CoC resolution.

Classification as Financial Creditor - Claim submitted in Form C - Claims other than Financial or Operational Creditors (Form F) - Bonafides of claim and evidentiary requirement - Limitation under the Limitation Act, Section 18 - Board resolution requirement under Section 179 and Section 186 of the Companies Act, 2013

Classification as Financial Creditor - Claim submitted in Form C - Bonafides of claim and evidentiary requirement - Whether the applicant could be classified as a Financial Creditor and have its claim admitted as such - HELD THAT: - The Tribunal examined the documents filed with the Form-C claim and found material defects and contradictions which undermined the applicant's claim to be a Financial Creditor. The ledger and cheque details relied upon by the applicant showed inconsistent clearance dates (notably a cheque appearing to clear in 2017 despite being issued in 2007), and no agreement or promissory note was produced to establish the terms or date of disbursement. The applicant also failed to produce board resolutions authorising the disbursement or receipt of the alleged loan, a shortcoming specifically noted in relation to compliance with the board-authorisation requirements under Sections 179 and 186 of the Companies Act, 2013. On this record the Tribunal concluded that the applicant had not discharged the evidentiary burden to establish its status as a Financial Creditor and that the IRP was correct in treating the claim as not admitted as a financial debt. [Paras 6, 7, 8, 9, 10]

The claim for classification as a Financial Creditor is rejected.

Limitation under the Limitation Act, Section 18 - Bonafides of claim and evidentiary requirement - Whether the broader claim (beyond Rs. 5 crores) is time-barred and legally maintainable - HELD THAT: - The Tribunal observed that, even assuming payment was made as alleged, the documents on record do not establish disbursement dates or continuous acknowledgement sufficient to overcome limitation. In the absence of contemporaneous agreement, promissory note, or other reliable documentary proof of disbursement, the claim beyond the amount specifically reflected in the corporate debtor's books is vulnerable to limitation. The Tribunal relied upon Section 18 of the Limitation Act in concluding that the unproven portion of the claim was time-barred and that the entire claim was not free from reasonable doubt. [Paras 11]

The claim, insofar as it exceeds the amount clearly acknowledged in the debtor's books, is not maintainable and is time-barred.

Claims other than Financial or Operational Creditors (Form F) - Bonafides of claim and evidentiary requirement - Whether any part of the applicant's claim should nevertheless be considered by the IRP and in what capacity - HELD THAT: - The Tribunal noted that the corporate debtor's books acknowledge a sum of Rs. 5 crores. Given the documentary record and the IRP's action in admitting only that amount, the Tribunal held that the IRP was justified in directing the applicant to file under the form appropriate for claims other than financial or operational creditors. The Tribunal left the admitted portion to be processed by the IRP as a claim in the appropriate category (Form-F), thereby permitting consideration of the acknowledged amount while rejecting the broader assertion of financial creditor status. [Paras 4, 10, 12]

The IRP may take into account the Rs. 5 crores acknowledged by the corporate debtor as a claim under the category other than Financial or Operational Creditor (to be filed in Form-F); the remainder of the claim is rejected.

Final Conclusion: The application under Section 60 is rejected: the applicant is not entitled to be classified as a Financial Creditor on the record filed; the excess claim is not maintainable and is time-barred, but the Rs. 5 crores acknowledged in the corporate debtor's books may be admitted by the IRP as a claim under the appropriate category (Form-F).

Extension of corporate insolvency resolution process under Section 12(2) of the Insolvency and Bankruptcy Code, 2016 - exclusion of lockdown period from CIRP timelines under Regulation 40 / Regulation 40C of the CIRP Regulations - committee of creditors' approval for extension of CIRP period

Extension of corporate insolvency resolution process under Section 12(2) of the Insolvency and Bankruptcy Code, 2016 - committee of creditors' approval for extension of CIRP period - Application under Section 12 of the IBC read with Regulation 40 of the CIRP Regulations for extension of the CIRP period by 90 days was considered and decided. - HELD THAT: - The Resolution Professional, supported by a Committee of Creditors' resolution passed with 100% voting power in the 5th CoC meeting authorizing an application for a 90 day extension beyond the 180 day CIRP period, sought approval of the Adjudicating Authority. The Tribunal noted that the CoC had authorized the RP in accordance with the requirements of Section 12(3) of the IBC and Regulation 40, and that further time was necessary to complete the resolution process given re advertisement of EOI and the time required for evaluation of resolution plans. On that basis the Adjudicating Authority exercised its power under Section 12(2) to permit an extension of the CIRP period by 90 days. [Paras 18, 19]

Extension of the CIRP period by 90 days is granted.

Exclusion of lockdown period from CIRP timelines under Regulation 40 / Regulation 40C of the CIRP Regulations - Whether the period of national and local lockdowns should be excluded from computation of the CIRP timeline was decided. - HELD THAT: - The Tribunal considered the impact of COVID 19 lockdowns and the amendment to the CIRP Regulations (Regulation 40C) together with the NCLAT suo moto direction excluding lockdown periods from computation of resolution timelines. The RP sought exclusion of lockdown days claimed between March 25, 2020 and August 5, 2020 (including a local lockdown in Tirupati). The Adjudicating Authority accepted exclusion of the period from March 25, 2020 to June 30, 2020 (98 days) for the purpose of calculating available CIRP days and treated those days as not counted towards the 180 day period. [Paras 11, 19]

The period from March 25, 2020 to June 30, 2020 (98 days) is excluded while calculating the available days for the CIRP.

Final Conclusion: The Adjudicating Authority allowed the RP's application: the CIRP period is extended by 90 days, and the lockdown period from March 25, 2020 to June 30, 2020 (98 days) is excluded from computation of the CIRP timeline.

Anticipatory bail under Section 438 Cr.P.C. - concurrent jurisdiction of High Court and Court of Sessions in anticipatory bail - reasonable apprehension of arrest based on published reports - power of specified officers to arrest under Section 19 of the PML Act - Section 45 of the PML Act - twin-conditions for grant of bail - effect of 2018 amendment to Section 45 of the PML Act - economic offences as a class apart in bail jurisprudence

Concurrent jurisdiction of High Court and Court of Sessions in anticipatory bail - anticipatory bail under Section 438 Cr.P.C. - Maintainability of petition for anticipatory bail filed directly in the High Court without first approaching the Court of Sessions - HELD THAT: - Section 438 Cr.P.C. confers concurrent jurisdiction on the High Court and the Court of Sessions; ordinarily a party should first approach the Sessions Court but concurrent jurisdiction means the High Court may be approached directly in special or compelling circumstances. The petitioner established such exceptional grounds by showing (a) an earlier related anticipatory bail order by the High Court in A.B.No.21 of 2017 arising from the same CBI FIR and (b) wide media publication of an ED probe which, taken with the admitted ECIR/initiated investigation, justified directly invoking the High Court's jurisdiction. Applying the principles in Vinod Kumar and related authority, the High Court exercised its discretion to entertain the petition as maintainable on the facts. [Paras 24, 69]

The anticipatory bail petition before the High Court is maintainable and the High Court could be approached directly in the present exceptional circumstances.

Section 45 of the PML Act - twin-conditions for grant of bail - effect of 2018 amendment to Section 45 of the PML Act - Nikesh Tarachand Shah principle on constitutional validity of Clause (ii) - Whether the 2018 amendment to Section 45 of the PML Act revived the twin-conditions declared ultra vires by the Supreme Court in Nikesh Tarachand Shah - HELD THAT: - The Court examined the statutory amendment substituting 'under this Act' and considered the Supreme Court's reasoning in Nikesh Tarachand Shah that Clause (ii) of Section 45(1) made a drastic inroad into personal liberty and had been declared ultra vires insofar as it depended on Part A scheduled offences. The High Court concluded that the 2018 amendment does not have the effect of reviving the twin-conditions struck down by the Supreme Court; the constitutional concerns identified in Nikesh Tarachand Shah persist and the amendment does not resuscitate the invalidated aspects of Clause (ii). The Court rejected the submission that subsequent decisions or amendments obviated the earlier constitutional analysis. [Paras 60]

The 2018 amendment to Section 45 does not revive the twin-conditions invalidated in Nikesh Tarachand Shah; those constitutional concerns remain.

Reasonable apprehension of arrest based on published reports - anticipatory bail under Section 438 Cr.P.C. - Whether a widely published news report and admitted initiation of ED investigation gave the petitioner a bona fide and reasonable apprehension of arrest warranting anticipatory bail - HELD THAT: - The Court assessed the Siddharam Mhetre parameters for anticipatory bail and noted that a petition must show concrete facts relatable to a specific offence and a reasonable apprehension of arrest. The respondent admitted recording ECIR No.01/GWZO/2019 and initiation of investigation arising from the CBI FIR; the news item had wide coverage and related to the same investigative material. On these facts the Court found the petitioner's apprehension to be bona fide and well founded rather than speculative. The Court observed that investigative and evidentiary questions must be explored during trial and that anticipatory bail is available where personal liberty requires protection from frivolous or vengeful arrests. [Paras 80, 82]

The petitioner had a bona fide and reasonable apprehension of arrest based on the published report and the admitted ED investigation, supporting relief under Section 438 Cr.P.C.

Power of specified officers to arrest under Section 19 of the PML Act - economic offences as a class apart in bail jurisprudence - anticipatory bail under Section 438 Cr.P.C. - Whether anticipatory bail can be granted in respect of an investigation under the PML Act and whether PMLA-specific arrest powers preclude High Court relief - HELD THAT: - The Court acknowledged that the PML Act vests arrest powers in specified officers under Section 19 and that economic offences require careful scrutiny; safeguards in the Act and rules were noted. Nonetheless, the Court held that anticipatory bail addresses personal liberty under Article 21 and, despite the special statutory arrest regime, a person legitimately fearing arrest under PMLA may seek anticipatory bail. The Court reiterated that such relief is extraordinary and must be exercised with caution, applying established anticipatory bail principles (including those in Siddharam Mhetre) and imposing conditions to protect investigation integrity. [Paras 72, 84]

Anticipatory bail is available in respect of an ED investigation under the PML Act; the High Court may grant such relief subject to caution and appropriate conditions.

Anticipatory bail under Section 438 Cr.P.C. - conditions for grant of anticipatory bail - Whether, on the facts of this case, anticipatory bail should be granted and on what conditions - HELD THAT: - Applying the relevant principles and weighing the petitioner's conduct (including earlier grant of anticipatory bail in related CBI proceedings), absence of any suggestion of likelihood to abscond, and the bona fide apprehension of arrest, the Court found that interests of justice warranted anticipatory bail at this stage. To balance investigative needs and personal liberty, the Court imposed conditions including execution of personal bond with sureties, surrender to ED within fifteen days, cooperation with investigation, non-tampering with evidence, restriction on leaving the country without ED permission, and liberty for ED to seek cancellation on breach. [Paras 82, 84]

Anticipatory bail was granted to the petitioner in the ED investigation subject to specified conditions; breach renders the bail liable to cancellation.

Final Conclusion: The High Court entertained the anticipatory bail petition as maintainable in view of exceptional circumstances, held that the 2018 amendment to Section 45 PMLA does not revive the twin-conditions invalidated in Nikesh Tarachand Shah, found the petitioner's apprehension of arrest on the facts to be bona fide, and therefore granted anticipatory bail in the ED investigation subject to stated conditions.

Grant of bail under Section 439 CrPC read with Section 45 of the PMLA - Non-obstante clause and overriding effect of PMLA over CrPC - Reasonable grounds for believing that the accused is not guilty and not likely to commit an offence while on bail - Economic offences constitute a class apart - gravity, magnitude and public interest in bail considerations - Presumption under Section 24 PMLA and burden of proof on accused

Grant of bail under Section 439 CrPC read with Section 45 of the PMLA - Economic offences constitute a class apart - gravity, magnitude and public interest in bail considerations - Bail application of the accused-applicant was refused. - HELD THAT: - The Court applied the established principle that economic offences with deep-rooted conspiracies and large-scale diversion of public funds must be treated differently when considering bail. The factual matrix, as recorded by the Supreme Court and adopted in the Enforcement Directorate's complaint, discloses alleged large scale siphoning and diversion of homebuyers' funds, creation of sham companies, involvement of relatives and employees as directors, non-compliance with Supreme Court directions and ongoing investigation into proceeds of crime and assets created. The Court held that in view of the Supreme Court's detailed findings, the continuing investigation and the magnitude and gravity of the alleged offences, it would not be appropriate to enlarge the accused on bail. The Court took into account authorities emphasising stringent parameters for bail in socio-economic and serious economic offences and the necessity of considering nature of accusations, evidence and public interest when granting bail. [Paras 23, 26, 27, 30, 35]

Bail refused and the bail application rejected.

Non-obstante clause and overriding effect of PMLA over CrPC - Reasonable grounds for believing that the accused is not guilty and not likely to commit an offence while on bail - Presumption under Section 24 PMLA and burden of proof on accused - Section 45 of the PMLA is operative and its conditions for grant of bail are mandatory and applicable to the bail petition filed under Section 439 CrPC. - HELD THAT: - The Court held that PMLA is a special statute with an overriding non-obstante clause; accordingly, the conditions in Section 45 (as amended post the Nikesh Tarachand Shah decision) must be complied with when considering bail applications even under Section 439 CrPC. The statutory scheme and judicial precedents require that the Public Prosecutor be afforded opportunity to oppose bail and, where opposition is made, the court must be satisfied on reasonable grounds that the accused is not guilty and not likely to commit an offence while on bail. The Court reiterated that Section 24 of PMLA creates a presumption regarding proceeds of crime, placing the burden on the accused to show otherwise, and that these statutory principles inform the stricter threshold for bail in money-laundering matters. [Paras 31, 32, 33, 34]

Section 45 PMLA applies; its conditions are mandatory and weigh against grant of bail in this case.

Final Conclusion: In view of the Supreme Court's findings, the forensic-auditors' report, the scale and character of the alleged diversion of homebuyers' funds, the overriding statutory bail conditions under PMLA and the ongoing investigation into proceeds of crime and assets, the application for bail is refused.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - extension of time for compliance - administrative discretion of the Chairman, CBIC - representation to statutory authority for remedial relief - judicial non-intervention in administrative decision absent demonstrable illegality

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - extension of time for compliance - representation to statutory authority for remedial relief - Whether the writ applicant was entitled to quash the impugned letters, to restrain coercive recovery and to obtain extension of time for payment under SVLDRS-3. - HELD THAT: - The petition sought quashing of two letters and directions restraining coercive recovery and granting extension of time to make payment under the SVLDRS-3. The Court noted the Government of India/CBIC instructions of 14 July 2020 directing Zonal Chief Commissioners to survey and contact declarants unable to pay by 30.06.2020 and to estimate amounts likely recoverable by 30.09.2020 (recorded in the paper book). Rather than exercise writ jurisdiction to quash the impugned administrative communications, the Court directed the writ applicant to make a representation to the Chairman, CBIC for appropriate administrative relief, observing that the Registry should not be used for depositing funds and that the matter is one for the concerned authority to consider. The Court thus disposed the petition while leaving the writ applicant free to return in case of future difficulty. [Paras 5, 6, 7]

The writ petition is disposed of by directing the applicant to approach the Chairman, CBIC for appropriate relief; the Court declined to involve its Registry for deposit and permitted the applicant to return in case of difficulty.

Final Conclusion: The writ petition was disposed of with directions to the applicant to file an appropriate representation before the Chairman, CBIC for consideration of extension or recovery matters under the SVLDRS-3; the High Court declined to order quashing of the impugned letters or to permit deposit with the Court Registry and granted liberty to return if difficulties persist.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - quantification of liability prior to cut-off date - eligibility to participate in amnesty/settlement scheme - natural justice - requirement of speaking reasons for rejection - remand for fresh consideration in accordance with scheme

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - quantification of liability prior to cut-off date - eligibility to participate in amnesty/settlement scheme - Whether the petitioner was eligible to apply under the Scheme on the ground that the service tax liability had been quantified prior to 30.06.2019. - HELD THAT: - The impugned rejection letter itself refers to departmental communications dated 20-06-2019 directing payment of the specified service tax amounts, which establishes that the liability was quantified before the Scheme's cut-off date. Having found quantification prior to 30.06.2019 and that such quantification was served on the petitioner, the court held that the petitioner fell within the class of persons entitled to participate in the Scheme. The court therefore concluded that the rejection on the ground of ineligibility was unsustainable and set aside the rejection to enable consideration under the Scheme. [Paras 7, 9, 10]

The petitioner was entitled to approach under the Scheme because the liability had been quantified before 30.06.2019; the rejection on ineligibility grounds was set aside.

Natural justice - requirement of speaking reasons for rejection - remand for fresh consideration in accordance with scheme - Whether the order of rejection, which did not set out reasons and relied on alleged deficiencies, warranted setting aside and fresh consideration. - HELD THAT: - The impugned order did not furnish detailed reasons for rejection and the counter-affidavit relied on allegations (a purported bogus notice and lack of quantified disclosure) not reflected in the rejection letter. In these circumstances the court found that the rejection could not stand without proper consideration and reasons. Rather than finally adjudicating entitlement on disputed factual contentions, the court directed that the rejection be set aside and the respondents consider and pass orders on the petitioner's application in accordance with the Scheme within six weeks from receipt of the order, thereby remitting the matter for fresh consideration consistent with the Scheme's terms and principles of fair procedure. [Paras 3, 4, 10]

Rejection set aside; respondents to consider the application afresh in accordance with the Scheme and pass orders within six weeks.

Final Conclusion: The writ petitions are allowed in part: the rejection of the applications under the Sabka Vishwas Scheme is set aside and the respondents are directed to consider and decide the petitioners' applications in accordance with the Scheme within six weeks; petitions disposed of with no order as to costs.

Service tax on the foreman of chit fund business - non-exigibility of service tax for the period 15-06-2007 to 14-06-2015 - binding effect of Supreme Court precedent - transaction in money or actionable claim as basis for taxability w.e.f. 15-06-2015

Service tax on the foreman of chit fund business - non-exigibility of service tax for the period 15-06-2007 to 14-06-2015 - binding effect of Supreme Court precedent - Validity of the Order-in-Original levying service tax on the petitioner as foreman of chit fund business for October 2014 to May 2015 in light of the Supreme Court's decision in Union of India v. Margadarshi Chit Funds (P) Ltd. - HELD THAT: - The High Court applied the binding pronouncement of the Supreme Court which held that service tax could not be levied on the foreman of a chit fund for the period up to 14-6-2015, the taxability only being restored w.e.f. 15-6-2015 by amendment bringing the activity within the expression "transaction in money or actionable claim". Since the impugned demand relates to October 2014 to May 2015, a period expressly falling within the non-exigible span identified by the Supreme Court, the impugned order could not be sustained. The court therefore set aside the Order-in-Original and held that the respondent was not entitled to recover the service tax demanded for the specified period. [Paras 3]

Impugned order levying service tax for October 2014 to May 2015 set aside; recovery not permitted.

Final Conclusion: Writ petition allowed; Order-in-Original setting aside service tax demand for October 2014 to May 2015 upheld in view of the Supreme Court's decision; connected miscellaneous petition closed; no costs.

Maintenance of separate accounts under Rule 6(2) of the Cenvat Credit Rules - back calculation method for apportionment of common inputs and input services - reversal of cenvat credit amounts to non availment of credit - option to pay amount in lieu under Rule 6(3) of the Cenvat Credit Rules and Explanation I thereto - extended period of limitation and knowledge of Department - penalty under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Act

Maintenance of separate accounts under Rule 6(2) of the Cenvat Credit Rules - back calculation method for apportionment of common inputs and input services - reversal of cenvat credit amounts to non availment of credit - Whether post manufacture apportionment by back calculation and reversal of proportionate cenvat credit satisfied the requirement of Rule 6(2) and obviated liability under Rule 6(3)(i). - HELD THAT: - Rule 6(2), as in force from 01.03.2011, contemplates maintenance of separate account of inputs and input services as "used" and therefore permits accountal after use; where physical segregation prior to or at manufacture is impossible, the only practicable method is back calculation. The record in this case establishes impossibility of segregating inputs at production and that the appellant effected proportionate reversals (in some cases with interest) which were reflected in returns and audited. Citing consistent Tribunal, High Court and Supreme Court decisions, the Bench held that reversal of credit after manufacture operates as non availment of credit and, accordingly, where proportionate reversal is effected, payment under Rule 6(3)(i) is not exigible. The appellants' method thus complied with Rule 6(2) and prevented invocation of Rule 6(3)(i). [Paras 8]

Back calculation apportionment and proportionate reversal of cenvat credit complied with Rule 6(2); therefore no liability arose under Rule 6(3)(i) once reversals were made.

Option to pay amount in lieu under Rule 6(3) of the Cenvat Credit Rules and Explanation I thereto - procedural intimation under Rule 6(3A) - Whether the appellant impermissibly altered the option under Rule 6(3) mid financial year in contravention of Explanation I. - HELD THAT: - The Tribunal followed its earlier decisions holding that Rule 6(3) does not require the option to be exercised only at the start of a financial year; Explanation I only mandates consistency after option is exercised for the remainder of that year. The requirement in Rule 6(3A) to intimate in writing is procedural and failure to furnish a separate written intimation does not deny the substantive right to apply proportionate reversal. The material on record showed that the appellant began reversing from July 2012 and continued for the relevant period without evidence of any prior exercise of the alternate option; there was therefore no breach of Explanation I. [Paras 9]

No violation of Explanation I; exercising the option mid year and applying proportionate reversal was permissible and the procedural intimation requirement does not defeat the substantive right.

Extended period of limitation and knowledge of Department - normal period of limitation under Section 11A(1) of the Act - Whether the confirmed demand was barred by limitation or whether extended period could be invoked. - HELD THAT: - The record shows the Department was informed in 2012 of the appellant's non maintenance and then of the method of proportionate reversal (ER 1 of July 2012 onwards) and confirmed the same in audits; the Department therefore had knowledge of the manner of compliance. In such circumstances, there was no suppression or wilful misstatement warranting invocation of the extended period. The show cause notice issued in August 2017 was beyond the normal two year period; applying the Supreme Court's principles, the demand is barred by limitation. [Paras 10]

Demand confirmed in the impugned order is barred by limitation and only the normal limitation would have applied; extended period not attracted.

Penalty under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Act - reversal of cenvat credit amounts to non availment of credit - Whether penalty equivalent to the confirmed demand under Rule 15(2) read with Section 11AC is sustainable. - HELD THAT: - Since the demand itself was held unsustainable - the appellant had reversed proportionate credit and the demand was also barred by limitation because the Department had knowledge - the conditions precedent for invoking extended penalty provisions were absent. The Tribunal therefore found the levy of penalty and interest under the cited provisions unsustainable. [Paras 11]

Interest and penalty imposed under the cited provisions are unsustainable and set aside.

Final Conclusion: The impugned adjudication order dated 19.06.2018 is set aside: the appellant's post manufacture apportionment by back calculation and proportionate reversal of cenvat credit satisfied Rule 6(2) and obviated liability under Rule 6(3)(i); the demand is barred by limitation; interest and penalty imposed are unsustainable; appeal allowed with consequential relief.

Revision of completed assessment - mechanical reliance on web report - requirement of independent assessment and verification of books of accounts - inter-departmental enquiry before revision - principles of natural justice in assessment proceedings - remand for fresh consideration with personal hearing

Mechanical reliance on web report - requirement of independent assessment and verification of books of accounts - principles of natural justice in assessment proceedings - Validity of revision assessment orders passed under Section 27 of the TNVAT Act which were founded on Enforcement Wing reports/web report without independent verification of the assessee's books and records. - HELD THAT: - The Court examined the impugned revision orders and found that the respondent had accepted the Enforcement Wing's web report mechanically without conducting an independent assessment or verifying the petitioner's books of accounts. The procedure mandated by this Court in the cited decision was not followed: there was no inter-departmental enquiry nor independent evaluation of records prior to proposing revision of completed assessment. Although personal hearing was afforded, the absence of verification and independent assessment rendered the proceedings arbitrary and in breach of the principles of natural justice. Consequently the impugned orders suffer from legal infirmity and cannot stand. [Paras 8, 10]

Impugned assessment orders dated 28.11.2018 are quashed for being mechanically based on the web report without independent verification and in violation of principles of natural justice.

Remand for fresh consideration with personal hearing - inter-departmental enquiry before revision - Appropriate remedy and directions following quashing of the impugned orders. - HELD THAT: - Having quashed the revision orders, the Court remanded the matter to the respondent for fresh consideration. The respondent is directed to undertake assessment afresh on merits and in accordance with law, adhering to the procedure laid down by this Court (including inter-departmental enquiry where necessary), affording the petitioner adequate opportunity to raise objections, furnishing records called for, and granting the right of personal hearing. The Court fixed a time-bound direction for final disposal to ensure the matter is reconsidered without delay. [Paras 11]

Matter remanded to respondent to pass fresh final orders on merits in accordance with law and the Court's directions, after affording opportunity and personal hearing, within twelve months from receipt of copy of this order.

Final Conclusion: Impugned revision assessment orders dated 28.11.2018 for the assessment years 2006-07 to 2014-15 are quashed; the matter is remitted for fresh consideration and final decision on merits in accordance with law and the Court's directions, after affording the petitioner full opportunity including personal hearing, within twelve months.

Quashing of criminal proceedings - Inherent powers of High Court under Section 482 Cr.P.C. - Offence under Section 138 of the Negotiable Instruments Act - Threshold for quashing - complaint must not disclose an offence or be frivolous, vexatious or oppressive - Triability of disputed factual issues - Presumption as to signature and discharge of debt under Section 138 of the Negotiable Instruments Act

Triability of disputed factual issues - Quashing of criminal proceedings - Inherent powers of High Court under Section 482 Cr.P.C. - Whether the proceedings in C.C.No.141 of 2016 ought to be quashed on the ground that the cheques were issued only as collateral security and not towards a legally enforceable debt. - HELD THAT: - The petitioners contended that the cheques were issued as collateral security and not for a legally enforceable debt; the complainant alleged the cheques were issued in discharge of a legally enforceable debt. The Court applied the settled principle that quashing is appropriate only where the complaint does not disclose an offence or is frivolous, vexatious or oppressive, and that courts should not undertake a meticulous merit-based inquiry at the threshold. Where the ingredients of the offence are prima facie disclosed, disputed factual questions-such as whether the cheques were given as collateral security or in discharge of debt-are matters for trial. The petitioners do not dispute signatures on the cheques, and the trial court is to examine oral and documentary evidence to decide the contested factual issue. On the material before the High Court, the contention raised by the petitioners is a triable issue and does not justify quashing the criminal proceedings under the inherent jurisdiction. [Paras 6, 8, 11, 12]

The petition to quash C.C.No.141 of 2016 is refused; the dispute as to whether the cheques were collateral security or given in discharge of a legally enforceable debt is triable and must be determined by the trial court.

Final Conclusion: Criminal Petition dismissed; interim stay vacated and pending miscellaneous petitions closed - the contested factual question as to the nature of the cheques is for trial and does not warrant quashing under the High Court's inherent powers.