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Showing 381 to 400 of 1644 Records
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2025 (4) TMI 1264
Disallowance of expenses u/s 37(1) - vendors were not registered under GST, was justified - discrepancy in invoice furnished by the Appellant - HELD THAT:- In the present case in hand the assessee has submitted the expenses bills before the CIT(A) and AO. The expense bills payments were made through the banking channels after duly deducting the TDS.
AO was not justified to disallow the expenses on the sole ground that the subcontracts were not registered under GST without considering the fact that there is no requirement under the Act that expenses must be incurred only with GST registered parties.
The assessee has proved the expenses were genuine by submitting the bill invoices. The additions have been made merely on the basis that the parties were not registered under GST but at the same time it cannot be said that expenses are bogus. We therefore, set aside the findings of the NFAC/CIT(A) and direct the AO to delete the addition. Appeal of the assessee is allowed.
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2025 (4) TMI 1263
Deduction u/s 80-IC - assessee's claim for 100% deduction based on substantial expansion - HELD THAT:- We noticed that the assessee, engaged in manufacturing in Himachal Pradesh, claimed 100% deduction u/s 80IC for the 10th year on the basis of substantial expansion. AO restricted the claim to 25%, but the Supreme Court in Aarham Softronics [2019 (2) TMI 1285 - SUPREME COURT] has clearly held that units undergoing substantial expansion are eligible for 100% deduction for another five years, within the overall 10-year period.
It was also noticed that the assessee’s claim has already been accepted by the Coordinate Bench in earlier years i.e AY 2014–15 and 2015–16, therefore there is no reason to take a different view on this issue. Accordingly, we hold that the assessee is entitled to 100% deduction u/s 80IC for AY 2016–17, and the appeal of the assessee is allowed.
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2025 (4) TMI 1262
Unexplained investments u/s. 69 - HELD THAT:- To substantiate this claim, the assessee has submitted the bank statements from Cosmos Co-Op Bank evidencing the amounts received from Sanghvi Infotech as repayment of loan and the amounts paid to Sanghvi Infotech as a consideration against 28,00,000 Right Shares. These bare facts could not be disputed on facts or on any other material by the DR. We hold that no addition is called for on account of investments in shares. Appeal of the assessee on this ground is allowed.
Gift received from anonymous - HELD THAT:- We are still searching for appropriate words in the English dictionary to appreciate the dedication, neutrality, objectivity and judicious nature of the AO and CIT(A) while dealing with this issue. Having unable to find appropriate words, we at least found the reasons why the taxpayer detests the tax authorities. We hold that the Revenue Authorities have failed to appreciate the issue in the right perspective and hence we hold that no addition on account of gift of shares received by the assessee from his brother can be treated as unexplained investment u/s 69 of the Act. Appeal of the assessee on this ground is allowed.
Deduction u/s 57 - assessee has earned interest against the amount advanced (loans) to various parties - assessee has also paid interest from whom the amounts (loans) have been received - AO disallowed the deduction of interest claimed by the assessee u/s 57 - CIT(A) upheld the action - HELD THAT:- The details of the name, address and PAN numbers from whom the amounts have been received and interest paid has been duly given before the Revenue Authorities. The ledgers of all the 48 parties have been submitted before the Revenue Authorities. The ledgers reveal opening balances, payment of the principal made during the year, payment of receipt during the year and the interest payments. We also find on record, the flow of money as advances and extending of loans to other parties. Hence, it shall be treated as business activity of the assessee and claim of interest paid has to be allowed from the interest received. In the result, appeal of the assessee on this ground is allowed.
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2025 (4) TMI 1261
Disallowance u/s 28(iv) towards share application money - CIT(A) (NFAC) deleted the additions - as submitted though the share premium was received in the F.Y. 2011-12 & 2012-13, no shares were allotted against them as late as March 2021 - CIT(A) deleted addition - HELD THAT:- Assessee had received share application money from its existing shareholders. In this respect, provisions of section 68 were not urged upon by the AO. Thus, accepting the identity and creditworthiness of the investors and genuineness of the transaction, addition made by the ld. AO is by way of invoking provisions of section 28(iv) to bring this amount to tax under the head ‘profit and gains’ ‘business or profession’ on account of assessee receiving benefit or perquisite.
The most clinching fact for the assessee is that it has ultimately issued the shares and allotted the same to the respective investors which is not in dispute. This fact establishes that impugned transaction is on capital account and thus the receipt in the hands of the assessee is a capital receipt, not liable to be taxed under the provisions of section 28(iv).
No reason to interfere with the findings arrived at by the ld. CIT(A), deleting the addition made u/s 28(iv) by the ld. AO. Accordingly, ground raised by the Revenue in this respect is dismissed.
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2025 (4) TMI 1260
Undisclosed income - Difference between the business income as per the Profit & Loss Account submitted during the survey and the income declared in the return - use of approximate profit and loss account prepared during the survey - actual audited accounts were later on submitted which were different as income declared during the survey was based on incomplete accounts - HELD THAT:- As during the assessment proceedings and also before this Bench, the assessee submitted a reconciliation statement, explaining that the earlier declaration was based solely on information drawn from unaudited books of account.
Upon finalization of the accounts, the assessee observed a reduction in the turnover initially declared at the time of the survey. Specifically, the turnover was revised resulting in a difference of Rs. 38,04,310/-. AR confirmed that the assessee had declared a net profit rate of 7.76% during the relevant assessment year. It was fairly conceded by the Ld. AR that the net profit margin should be applied to the difference in gross receipts, since certain expenses were necessarily incurred to earn those receipts and cannot be disregarded.
The issue being entirely factual, and the turnover computed by the survey team having been duly accepted, the difference between the gross receipts declared in the return of income and those determined during the survey amounts to Rs. 38,04,310/-. Accordingly, applying the net profit rate of 7.76% to this difference, the resultant income to be added comes to Rs. 2,95,214/-, which is rounded off to Rs. 2,95,300/-.
Consequently, the addition made by the Ld. AO to the extent of Rs. 85,88,540/- is hereby deleted, and the addition is sustained only to the extent of Rs. 2,95,300/-, which is directed to be added to the total income of the assessee. Decided partly in favour of assessee.
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2025 (4) TMI 1259
Unexplained cash credit u/s 68 - bogus short term loss claimed by the assessee by way of transacting in penny stocks - HELD THAT:- We note that transactions were undertaken through the SEBI registered broker on the stock exchange platform on which STT was levied and the consideration was routed through normal banking channel. The entire flow of these transactions is corroborated by relevant documentary evidences placed on record.
While making the addition, there are no discrepancies pointed out by the AO in the documents and the details furnished by the assessee. Ld. AO has not bothered to discuss or point out any defect or deficiency in the documents furnished by the assessee. These evidences furnished have been neither controverted by the Ld. AO during the assessment proceedings nor anything substantive brought on record to justify the addition made by him.
Revenue has not brought on record any material about participation of the assessee with any such dubious transactions relating to accommodation entry, price rigging or exit providers. AO could have taken an adverse view only if he could point out the discrepancies or insufficiency in the evidence and details furnished in his office. Once the assessee has produced documentary evidence to establish the veracity of his claim, the burden would shift on the Revenue to establish its case.
AO had proceeded on the basis of analysis of the financials of the company. According to him, sharp movement in the share prices of the aforesaid scrip is not justified. He has relied upon the search and survey operations conducted by the investigation wing of the Department at various locations in respect of alleged penny stock which sets out the modus operandi adopted in the business of providing entries for bogus capital gains. The conclusion drawn by AO of implicating the assessee is un-supported by any cogent material on record. It is also a fact on record that assessee is a regular investor, transacting and holding shares in several scrips. The finding arrived at by the ld. AO is thus purely an assumption based on conjectures and surmises.
In our thoughtful considerations to the facts and circumstances of the case, it is not in controversy that assessee has discharged his burden by submitting the relevant documents, details of which are already noted above, forming part of the paper book.
Thus, we have no reason to interfere with the first appellate order whereby addition made towards short term capital loss on the share transactions of two scrips which was set off from the short-term capital gains on other scrips. Accordingly, grounds taken by the revenue in this respect are dismissed.
Addition on estimate basis towards commission for arranging alleged artificial capital loss - Since we have upheld the deletion of the said addition towards short-term capital loss on the aforesaid two scrips in terms of above stated observations and findings, this consequential addition also receives the same fate, affirming the finding of ld. CIT(A) to this effect. Accordingly, grounds taken by the revenue in this respect are dismissed.
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2025 (4) TMI 1258
Assessment u/s 153A/153C or 147 - documents found during the search on third party - HELD THAT:- As per the express scheme of the Act, where documents seized in a search pertain to or belong to a person other than the searched party, the appropriate and mandatory course of action is to proceed u/s 153C and not u/s 147.
The documents cited in the assessment order clearly form part of the material seized from the premises of the Ameya Group. No new or independent information was unearthed by the AO in the normal course of assessment proceedings.
AO, despite initiating the reassessment on the basis of alleged cash receipts, ultimately made additions on an entirely different ground, namely cash payments—thus deviating from the recorded reasons. Such divergence between the recorded reasons and the eventual addition undermines the very jurisdiction assumed under Section 147.
Thus, the assumption of jurisdiction u/s 147 by the issuance of notice under Section 148 dated 30.03.2019 is invalid and without legal sanction.
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2025 (4) TMI 1257
Penalty u/s 271(1)(c) - mistake in making of a claim in the return of income -assessee has claimed excess carry forward loss - Assessee in the revised return had claimed remuneration and interest paid to the partners twice which was rectified only in the return filed in response to the notice issued u/s 148 - HELD THAT:- A perusal of the computation statement shows that no such claim of carry forward of loss has been made by the assessee. What the assessee has done is that he has claimed the same without adding interest and remuneration paid to the partners and then claimed the same as has been done in the original computation of income. The assessee has inadvertently omitted to add the same in the revised return of income but claimed the salary and interest paid to the partners.
We, therefore, find some force in the arguments of assessee that it was an inadvertent human error and there is no deliberate attempt on the part of the assessee to evade taxes. It is also an admitted fact that the assessee has not claimed the benefit of carry forward of such loss on account of interest and remuneration paid to the partners. We are of the considered opinion that this is not a fit case for levy of penalty on account of human error. CIT(A) / NFAC and delete the penalty levied by the AO. The grounds raised by the assessee are accordingly allowed.
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2025 (4) TMI 1256
TP adjustment - interest payment on external commercial borrowing (“ECB”) - assessee company entered into three ECB transactions vide three separate loan agreements with its Associated Enterprises(“AEs”) - TPO has determined the ALP of interest on ECB by adopting LIBOR+200 basis points for bench marking the interest paid by the assessee at LIBOR+500 basis and consequently proposed adjustment - HELD THAT:- By following the earlier decisions of this Tribunal in the case of DCIT Vs. Devgen Seeds & Crop Technology (P) Ltd. [2017 (3) TMI 1333 - ITAT HYDERABAD] we hold that the interest payment of ECB @ LIBOR+500 basis is at arms length and consequently no adjustment is warranted. Hence, the TP adjustment made and confirmed by the DRP on this account is deleted.
TP adjustment on account of royalty payment - assessee owned and developed engineering and technical know-how and information, experience and expertise in respect of manufacture, marketing and sale of different kinds of high speed doors -only reason given by the TPO for determining the ALP at Nil is that the assessee failed to substantiate with any documentary evidence, the benefit derived by it in quantifiable term - HELD THAT:- A consistent view has been taken by the Tribunal on the point that when the payment is made as per the legally binding agreement between the parties, which is duly approved by the RBI for the purpose of remittance of royalty, then the tax authority cannot intervene in the realm of intricacies of commercial expedience involving in the arrangements between the parties. By following the order of M/s Aban Offshore Ltd [2016 (10) TMI 807 - ITAT CHENNAI] we hold that applying the benefit test by the TPO and determining the ALP of royalty at Nil is highly arbitrary and unjustified. Consequently, addition / adjustment made on this account is deleted.
TP adjustment towards interest on receivable - AR contended that when the payables are almost 4 times more than the receivables and the assessee is not paying any interest on the payables to the AE, then adjustment made by the TPO on account of trade receivables without considering the trade payables is not justified - HELD THAT:- The outstanding receivables and payables are not in dispute though the receivables and payables are from different AEs. The assessee has stated that the payables are in respect of the purchases made by the assessee from AEs, which was subsequently sold to another AE and therefore, the transactions are inter connected and when the assessee is not paying any interest on the payables to the AEs, which are more than the receivables from the AEs, then the adjustment made on this account is uncalled for.
Tribunal, in assessee’s own case [2021 (5) TMI 356 - ITAT HYDERABAD] held that it will be appropriate for netting off the notional interest with respect to debit and credit transaction with the assessee’s AEs and only on the net receivables, the notional interest can be benchmarked for transfer pricing purpose. We further note that when the assessee is purchasing raw material from the AEs and selling the goods to the AEs, then the transactions of purchase and sale are directly connected with each other. Therefore, it will be appropriate to consider both the trade receivables as well as payables from the AEs, while bench marking the transactions of notional interest on the receivables. By following the earlier order of this Tribunal, adjustment made by the TPO/AO on this account is deleted as the payable for the year under consideration is substantially higher than the receivables.
TP adjustment on account of trade receivables for the year under consideration - HELD THAT:- As it is clear that the trade payable in the year under consideration is 7 times more than the trade receivables from the AEs. This issue is common as raised the for the A.Y.2017-18 and in view of our finding on this issue for A.Y.2017-18, the addition made by the TPO/AO on this account is deleted.
Scrutiny assessment - adjustment made by the CPC while processing the return u/s 143(1) - suo-moto disallowance made by the assessee - HELD THAT:-The assessment was taken up for scrutiny by issue of notice u/s 143(2) on 23.09.2019, whereas, the CPC has processed the return u/s 143(1) vide order dated 02.12.2019 and therefore, once the assessment proceedings were already pending, the assessee was not supposed to challenge the intimation u/s 143(1) separately. Even otherwise, processing of return merges with the assessment proceedings and therefore, once the assessee has objected to the adjustments made by the CPC, the AO ought to have examined and verified the same from the relevant record. It is the duty of the AO to ensure that there should not be any double addition, even on account of adjustment made by the CPC. Therefore, in the facts and circumstances of the case and in the interest of justice, we set aside these non TP issues, where the CPC has made adjustment, to the record of the AO to verify about suo-moto disallowance made by the assessee and determine the correct amount of disallowance if any.
Disallowance made on account of belated payment towards employees contribution, though this issue is decided by the DRP in favour of the assessee, however, the AO has not given effect to the directions of the DRP. Now this issue is covered by the judgement of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] and therefore, the AO is directed to verify and decide this issue as per law.
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2025 (4) TMI 1255
Denial of foreign tax credit (FTC) u/s 90 - filing Form No. 67 after the due date for filing the return u/s 139(1) - HELD THAT:- We observe that Section 90, in conjunction with the India-Canada DTAA, confers a substantive right to claim FTC for taxes paid abroad, subject to conditions prescribed under the Income Tax Rules. Rule 128(9), as applicable for A.Y. 2022-23, required Form No. 67 to be filed by the due date of the return under Section 139(1).
Neither the Act nor the Rules explicitly mandate disallowance of FTC for delayed filing of Form No. 67. Consistent with decisions in Brinda RamKrishna [2022 (2) TMI 752 - ITAT BANGALORE] Sonakshi Sinha [2022 (10) TMI 107 - ITAT MUMBAI] and Nirmala Murali Relwani [2022 (12) TMI 395 - ITAT MUMBAI] we hold that filing Form No. 67 is a directory requirement, not mandatory, and a procedural lapse does not extinguish the substantive right to FTC, especially when the form was filed on 27.08.2022, well before the processing of the return on 26.10.2022. The amendment to Rule 128(9) effective from 01.04.2022, allowing filing until the end of the assessment year, further indicates a legislative intent to liberalize procedural compliance, though not directly applicable here. CIT(A)’s dismissal of non-jurisdictional precedents is not tenable, as these rulings reflect a consistent judicial interpretation favouring the assessee. Decided in favour of assessee.
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2025 (4) TMI 1254
Disallowance of Speculation loss - Addition u/s 68 by treating that the transaction was bogus - HELD THAT:- We can be said that commodity income made by the assessee cannot be treated as a bogus as there is no rules, regulations which states that the off market transaction needs to be reported to the exchange. As a result of, the order passed by the AO confirmed by the CIT(A) on speculation loss as well as addition u/s 68 of the Act cannot be said to be legal. Accordingly, the same is hereby directed to be deleted.
Addition u/s 56(2) - assessee received gift of the amount from M/s Anand Akash Sureka, being the father and a member of Hindu undivided family - AO disallowed by upholding that the father did not come under the definition of relatives - submission of the assessee is that family was HUF and each of HUF family members have a separate legal status so the father should be considered as a relative - HELD THAT:-We find force in the argument of assessee that the assessee is entitled to claim deduction u/s 56(2) of the Act even the gift received from the father. Accordingly, the order passed by the AO confirmed by the Ld. CIT(A) is set aside and addition made under the same section is hereby directed to be deleted.
Addition of amount from Aakash Sureka Educational Trust u/s 56(2) - HELD THAT:- The present facts of the case are concerned trust had duly filed its return of income and he paid taxes. The amount transferred to the beneficiary had already subjected to the taxation. The trust was formed as per the provision of Indian Trust Act. Once trust has paid taxes was earned in earlier years it means beneficiary has paid the said taxes and therefore, the addition made in the present case is liable to be deleted. Keeping in view, the above discussion the addition made by the AO confirmed by the Ld. CIT(A) is hereby deleted.
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2025 (4) TMI 1253
TP Adjustment - rejection of internal TNMM for the purpose of benchmarking the international transaction of the assessee-company with its AE - HELD THAT:- Assessee-company has not filed any evidence, except a Certificate from the Accountant to prove it’s claim. From the details filed by the assessee-company, we are of the considered view that, the assessee-company has failed to demonstrate that the AEs and Non-AEs are functionally comparable. Further, the nature of the transactions with AEs and Non-AEs along with terms were not produced to substantiate the functional comparability.
Non- Associated Enterprises transactions were predominantly from Indian operations, whereas Associated Enterprises transactions were outside India. No explanation was given for the assessee-company’s geographical differences in it’s transactions and how much material difference was adjusted for the purpose of comparability. The assessee- company failed to prove segmental allocation on actual basis. Therefore, we are of the considered view that, when there is no evidence to prove the argument of the assessee- company in respect of Internal-TNMM, it is difficult for us to accept the contention of the assessee-company that Internal-TNMM is an appropriate parameter for benchmarking the international transaction with it's AEs. Thus, we reject the argument of the assessee-company and reject ground nos.2 and 3 of the assessee’s appeal.
Rejection of TP study conducted by the assessee-company and fresh TP study conducted by the TPO - In the present case, going by the reasons given by the TPO and by the DRP, we find that TP study conducted by the assessee-company is not in accordance with provisions of sec. 92CA(3) of the Act, because, the assessee-company has failed to prove with relevant evidences that it applied appropriate filters while selecting comparable companies and also maintain relevant data to prove the comparability analysis of comparable companies. We further note that, Rule-10B in this regard requires to use of current year data, even if it is subsequently available at the time of determination of ALP during the course of assessment proceedings. From the words of Rule-10B(5), it is very clear that the current year data has to be necessarily considered for the purpose of comparable analysis. Since the assessee-company had not considered current year data for its comparability analysis, in our considered view, the filters adopted by the assessee- company for selection of comparable companies is not in accordance with sec. 92CA(3) of the Income Tax Act, 1961 and Rule 10B(5) of the Income Tax Rules 1962. Therefore, there is no merit in the grounds taken by the assessee-company challenging the reasons given by the TPO/DRP for rejection of TP analysis conducted by the assessee-company.
Exclusion of 13 comparables on the ground of functional dissimilarity, superior profit and turnover and other appropriate filter etc. - Although, the assessee-company contended for application of Rs. 0 to Rs. 200 crore turnover is appropriate turnover filter for exclusion of certain companies, but, in our considered view, going by the settled principle of law by the decisions of various Tribunals, application of 10 times upper and lower limit of turnover at a company is appropriate for exclusion of companies for the purpose of comparability of analysis. If we apply 10 times lower or upper turnover limits for companies, then, in our considered view, going by the revenue earned by the assessee-company of Rs. 34 crores approximately, in our considered view, the above 05 companies viz., Cybage Software Pvt. Ltd., Tata Elxsi Ltd., Persistent Systems Ltd., Larsen & Toubro Infotech Ltd., and Infosys Ltd., are having turnover of above the tolerance range fixed for inclusion of companies. Therefore, we are of the considered view, that Cybage Software Pvt. Ltd., Tata Elxsi Ltd., Persistent Systems Ltd., Larsen & Toubro Infotech Ltd., and Infosys Ltd., are definitely not comparable to assessee-company on turnover filter itself. Thus, we direct the TPO to exclude the above 05 companies for the purpose of benchmarking the ALP of international transaction of the assessee-company with its AE.
Coming back to Thirdware Solution Ltd., Aspire Systems (India) Pvt. Ltd., and Nihlent Ltd., although, the assessee-company seeks to exclude these 03 companies on Rs. 0 to Rs. 200 crore turnover filter, but, in our considered view, since we have applied 10 times upper and lower limit for exclusion of companies and if we apply the said limit, the above 03 companies are coming within the range of turnover fixed for comparable analysis and thus, on this ground, these 03 companies cannot be excluded from the list of comparables. Therefore, we reject the argument of the Counsel for the assessee-company.
When it comes to software development services, it has a bundle of services which includes project engineering, enterprise solution, independent testing services and application of support services and these are services comes under one segment of software development services, although, may be in a different business segments. Therefore, going by the description provided in the annual report of the relevant companies, it cannot be said that these 03 companies are engaged in a different or diversified activities and there is no segmental data available in respect of each segments. Since the functions performed by the assessee-company are similar that of the functions carried-out by the above 03 companies, in our considered view, the above 03 companies are functionally similar to the assessee-company and comparable to the assessee-company. We are, therefore of the considered view that the DRP has rightly included the above 03 in the list of final set of comparables. We, therefore, uphold the findings of DRP and reject the ground taken by the assessee-company.
Exclusion of R S Software (India) Ltd - Once the company is engaged in providing software development services which may be in respect of other segments of business, but, when said services comes under one umbrella of software development services, then, the question of segmental information for comparison purpose does not arise. Since the assessee itself has selected the company in it’s TP study and further the assessee failed to make-out a case that it is functionally dissimilar from the assessee-company, in our considered view, based on certain decisions, the said company cannot be excluded. Thus, we reject the arguments of the Counsel for the Assessee and uphold the reasons given by the DRP for inclusion of R S Software (India) Ltd., in the final set of comparables.
Inclusion of 08 companies which were earlier considered in the TP study of the assessee - Once the company is engaged in providing software development services, even if it is providing said services to multiple segments of business, in our considered view, once the services rendered by the companies is comes under one umbrella of software development services, then merely for the reason of said companies providing services to diversified segment businesses, those companies cannot be excluded for the purpose of comparison of analysis.
In the present case, going by the reasons given by the TPO, in our considered view, the TPO has given stereotype reasons for all companies even though the evidences filed by the assessee clearly demonstrates that the said companies are providing software development services and derived 100% revenue from one segment. Further, the assessee had also proved with evidences that all these companies have passed the filters applied by the TPO. Therefore, TPO was erred in excluding the said companies from the list of comparables. The DRP without appreciating the relevant facts, simply upheld the reasons given by the TPO and excluded the above 08 companies from the list of comparables. Thus, we set aside the order of DRP/TPO and direct the AO/TPO to include the above 08 companies in the list of final set of comparables for the purpose of comparison of international transactions of the assessee-company with it’s AEs.
Exclusion of Kals Information Systems Private Limited and Cigniti Technologies Limited from the final list of comparable companies - Although, the DRP has directed the TPO to exclude the above 02 companies, but, the Learned Counsel for the Assessee submitted that the TPO has not given full effect to the directions of the DRP to exclude the above 02 companies. In our considered view, once the DRP has given a direction to the TPO/AO to exclude or include any company, the Assessing Officer/TPO is bound to give full effect to the directions of the DRP without any modifications. Therefore, we direct the Assessing Officer/TPO to verify the fact and give effect to the order of the DRP in toto and exclude the above 02 companies viz., Kals Information Systems Private Limited and Cigniti Technologies Limited from the final list of comparable companies.
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2025 (4) TMI 1252
Denial of registration u/s. 12AB - assessee has not established whether this object is in compliance with any other law for the time being in force as are material for the purposes of achieving its objects - primary contentions of the Ld.AR was that, the assessee was granted provisional registration in Form 10AC, and therefore the assessee may be granted registration u/s. 12AB - HELD THAT:- According to Sub-section 4 and 5 of section 12AB inserted by Finance Act, 2022, with effect from 01/04/2022, Ld.PCIT/CIT may cancel the registration (after providing reasonable opportunity of being heard) if it is found that, the activities are not genuine or are not carried out in accordance with the objects of trust/institution. At this juncture, we note the fact that provisions of sub sections are applicable to the present assessee based on the date of application filed seeking registration under section 12B of the Act.
Registration will also stand cancelled u/s 12AB, if the authorities notice that, the activities of the trust or institution are carried out in a manner that the provisions of section 11 and 12 do not apply due to operation of section 13(1), or, the trust or institution has not complied with the requirement of any other law for the time being in force as is material for the purpose of achieving its objects etc. In case there is a specified violation as mentioned in Explanation to sub section 4, the Registration under section 12AB would be denied or stand cancelled, as the case may be.
One of the intention of Legislature to introduce sub clause (4) and (5) to the section 12AB is to address the issue related to the process of approval or cancellation or withdrawal thereof.
Thus, we do not agree with the argument advanced by the Ld.AR that since provisional registration is granted to the present assessee before u/s.12AB, final registration cannot be denied.
In the present facts, the assessee’s objects include clause 12, which is not in consonance with the main purpose to grant exemption u/s 11(1)(a) of the Act for sale of convenience, the relevant portion are excluded as under.
As noted that, the assessee was offered opportunity of being heard, is apparent from the paper book filed before us. However, nothing on record is filed, to demonstrate that, the assessee took necessary steps to amend the objects which is in contravention to section 11(1)(a) of the Act. Admittedly it is not the case that, the assessee has already applied its funds as per object clause 12 of the memorandum.
By insertion of sub section 4 & 5 inserted by Finance Act, 2022 widened the scope of violations by including violations specified in explanation therein. This was not the legal position u/s. 12A/12AA prior to amendment. The condition to satisfy that the objects of the trust are not in violation to compliance under any other law for time being in force towards achieving the material purposes of the objects is now become necessary to be established by the assessee at the time when its application is scrutinised for converting provisional to final registration. The explanation (f) to sub clause (4) of 12AB mandates compliance with the requirement of any other law as referred to item (B) of sub-clause (i) of clause (b) to subsection (1) of 12AB. With such compliance required at the stage of registration, pertaining clause 12 in the memorandum of the assessee trust will be an hurdle to grant final registration.
We therefore do not find any merit in the arguments advanced by AR and the same stands rejected based on the discussions and analysis of the relevant provisions and decisions on the issue. As a consequence, the application seeking 80G also stands rejected. Accordingly, the Grounds raised by the assessee in both appeal stands dismissed.
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2025 (4) TMI 1251
Classification of 'Receivers' - to be classified under CTH 85177090 or CTH 85181000? - Classification and eligibility of 'Microphones' for exemption under various notifications - Classification of 'Battery Cover, Back Cover, Camera Lens, and Front Cover' and their eligibility for concessional duty - HELD THAT:- It is stated at the bar that identical matters have been dismissed by this Court in the case of Padget Electronics Pvt. Ltd. and M/s Samsung India Electronics Pvt. Ltd. [2024 (7) TMI 1220 - SC ORDER] - Following the orders passed by this Court, these Civil Appeals also dismissed.
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2025 (4) TMI 1250
Maintainability of petition - availability of alternative remedy - Validity of Provisional Attachment under section 110(5) r/w section 28BA of the customs act at a stage which is anterior to finalization of an assessment or raising of the Demand - basic order on the basis of which impugned intimation dated 03.12.2024 has been issued, not challenged - Jurisdiction to issue impugned intimation/attachment order - alternative remedy under Section 110A of Customs Act, 1962 - Colourable exercise of power by Respondents in provisionally attaching the bank accounts of the petitioners - time barred attachment order.
Basic order on the basis of which impugned intimation dated 03.12.2024 has been issued, not challenged - HELD THAT:- A bare perusal of so called basic order dated 02.12.2024 would reveal that it is merely a note-sheet wherein approval has been obtained for issuing the intimation under Section 110(5) of Customs Act, 1962 and the same was not even communicated to the Petitioners for them to be able to challenge the same. Even otherwise, in the considered opinion of this court, there is no need for separate challenge to the note-sheet dated 02.12.2024 as the same stood merged with impugned intimation dated 03.12.2024.
Maintainability of the petition in view of availability of alternative efficacious remedy - HELD THAT:- It has been settled by catena of decisions that the availability of alternative remedy is not an absolute bar for granting relief in the exercise of power under Article 226 of the Constitution of India as the same is a rule of convenience and self imposed restriction and there are certain exceptions to the said rule.
In the case at hand, learned counsel for the petitioners has tried to persuade this court that the present petition is maintainable as the availability of alternative remedy provided under Section 110A of Customs Act is only available during the pendency of adjudication and not during the pendency of investigation - If this court comes to conclusion that the impugned intimation dated 03.12.2024 is without jurisdiction as the same has been issued during investigation and not during any proceedings which is impermissible in accordance with provisions of law, then certainly this petition would be maintainable and liable to be entertained by this court.
Whether the impugned intimation/attachment order dated 03.12.2024 issued under Section 110(5) of Customs Act, 1962 has been issued without jurisdiction or not? - HELD THAT:- A bare reading of Section 28, or Section 28AAA or Section 28B would reveal that the proceedings under the said Sections would commence only after issuance of Show Cause Notice as provided under the said Sections. Furthermore, as per Circular No. 10/2008-Customs and F.No.401/7/2004-Cus.III(Pt.) dated 30.06.2008 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise & Customs also, it has been specifically instructed that the proceedings for provisional attachment can be initiated only after issuance of SCN under Section 28, 28AAA or 28B of Customs Act, 1962.
In the case at hand, it is an admitted fact that investigation is still pending and no show cause notice has been issued to the petitioners under the aforesaid provisions. Hence, in the considered opinion of this court, when there is no “proceeding” pending against the petitioners within the meaning attached to the said word under the provisions of Customs Act, 1962, Respondents had no jurisdiction/authority in law to pass an order of provisional attachment under Section 110(5) of Customs Act, 1962 pending investigation.
Whether the petitioners have alternative remedy under Section 110A of Customs Act, 1962 or not? - HELD THAT:- The remedy under Section 110A is not available to the petitioners during the stage of investigation but is only available after the proceedings are initiated before the adjudicating authority. Therefore, in view of the above, this court is of the considered opinion that the present petition challenging impugned intimation is maintainable as no alternative remedy is available to the petitioners under Section 110A of Customs Act, 1962 against impugned intimation dated 03.12.2024.
Colourable exercise of power by Respondents in provisionally attaching the bank accounts of the petitioners - HELD THAT:- The said question does not require consideration for the adjudication of the present petition and the same is left open in peculiar facts and circumstances of the present case.
Whether the impugned attachment order is time barred? - HELD THAT:- The petitioner has neither pleaded specifically nor established as to what is the “relevant date” from which the limitation would start to run in terms of Section 28. Even otherwise the said question also does not warrant consideration for the adjudication of the present petition as the said limitation has been provided for initiation of proceedings under Section 28 by issuance of Show Cause Notice and in the case at hand, no proceedings have been initiated as no show cause notice has been issued to petitioners and since this court has already held that the provisional attachment during investigation is itself without jurisdiction, the said question is also left open in peculiar facts and circumstances of the present case.
Ex Consequenti, impugned intimation dated 03.12.2024 issued under Section 110(5) of Customs Act, 1962 is hereby quashed for it being issued without jurisdiction and Respondents are directed to defreeze the bank accounts of the petitioners which have been provisionally attached vide impugned intimation dated 03.12.2024 with immediate effect - This court is constrained to observe that though the impugned intimation dated 03.12.2024 had been stayed by this court vide interim order dated 16.01.2025 but the Respondents have not defreezed the bank accounts of the petitioners which is a clear cut case of contempt of this court’s interim order. However, since the petition is being allowed and disposed off finally, it is expected from Respondents to comply with this order immediately and any non-compliance thereof, would be viewed seriously by this court.
Conclusion - i) The impugned provisional attachment order dated 03.12.2024 was issued without jurisdiction as no adjudication proceedings were pending. ii) The petitioners had no alternative remedy under Section 110A at the investigation stage; hence, the writ petition was maintainable. iii) The attachment order dated 03.12.2024 is quashed, and Respondents are directed to defreeze the petitioners' bank accounts immediately. iv) The Court refrained from deciding the question of colourable exercise of power and limitation under Section 28, leaving those issues open.
This petition deserves to be allowed and is hereby allowed.
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2025 (4) TMI 1249
Imposition of cost of INR 50,000/- on the DRI officials - Seeking leave to produce additional documents - Jurisdiction of DRI officers had jurisdiction to issue show cause notices under the Customs Act, 1962 - HELD THAT:- For the period subsequent to the amendment, this Court in Mangali Impex Limited v. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT] held that even the newly inserted Section 28(11) of the Customs Act does not empower either the officers of DRI to issue the SCN for the period prior to 8th April, 2011. Since the same issue was pending before the High Court of Bombay and High Court for the State of Telangana, the matter reached the Supreme Court and the decision in Mangali Impex Limited was stayed.
Having regard to the factual and procedural history outlined above, this Court is satisfied that the delay in the initiation of prosecution arose not from any wilful default or administrative indifference, but from complex legal and jurisdictional questions that were the subject of extended litigation and legislative intervention. The scope of authority exercised by DRI officers remained unsettled until clarified through multiple judgments and statutory amendments. In this background, the procedural delays, including the timing of the sanction and the belated filing of complaint, are not without explanation. However, the Department cannot be absolved of responsibility altogether - The failure to place relevant documents on record in a timely manner, has undoubtedly impeded the progress of proceedings. In this context, the imposition of costs by the Trial Court does not warrant interference. It operates as a measured judicial response to procedural lapses which, while understandable, cannot be left entirely unaddressed.
While the Trial Court was correct in viewing the Department as collectively responsible for the procedural lapse, the mode of enforcing that responsibility is not be warranted.
Conclusion - The imposition of costs by the Trial Court does not warrant interference. It operates as a measured judicial response to procedural lapses which, while understandable, cannot be left entirely unaddressed.
The cost imposed as a measure of institutional accountability by the Trial Court, is upheld. However, the directions contained in paragraphs No. 18 to 20 of the impugned order, insofar as they mandate recovery of the said cost from specific officers or from the Principal Additional Director General, DRI, are hereby set aside - Petition allowed in part.
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2025 (4) TMI 1248
Challenge to adjudication of the show cause notice as being time barred - Inordinate delay in adjudication of SCN - SCN was issued on 31.07.2013, but it was adjudicated only on 19.01.2023 after a period of about ten years - whether the department can take advantage of expression “where it is possible to do so” for not adjudicating the show cause notice within one year? - HELD THAT:- The Delhi High Court then relied upon an earlier decision of the Delhi High Court in Sundar System Pvt. Ltd. vs. Union of India [2020 (1) TMI 199 - DELHI HIGH COURT] and observed that the legislature in its wisdom has provided a specific period for the authority to discharge its functions and indifference of the concerned officer to complete the adjudication within the time period cannot be condoned to the detriment of the assessee, for such indifference is not only detrimental to the interest of the taxpayer but also to the interest of the exchequer.
It would be seen from the aforesaid judgment of the Delhi High Court in Swatch Group that the High Court made it amply clear that the incorporation of words like “where it is possible to do so” merely give a certain degree of flexibility to the department where there are circumstances or insurmountable exigencies which make it impracticable or not possible for the authorities to adjudicate, and in such cases the authorities can deviate from the time limit provided in the Statute. The High Court further held that when the legislature has specifically provided flexibility only to the extent that it was not practicable/possible to adjudicate within the stipulated time, the period can be extended only on satisfaction of such circumstances. The Delhi High Court specifically observed that the phrase “where it is possible to do so” would only mean wherever it is not practicable or possible to do a certain act, the period can be extended but the same cannot provide endless time limit to the department without any plausible justification. In the present case, none of the aforesaid situations existed for extension of the time limit.
It would also be useful to refer to decisions that hold that even if a time limit is not prescribed for deciding a matter, it would still have to be decided within a reasonable period of time.
The factual position leaves no manner of doubt that the adjudicating authority, despite the specific mandate contained in sub-section (9) of section 28 of the Customs Act to adjudicate the show cause notice within one year, completely failed to discharge the statutory obligation cast upon it. The phrase “where it is possible to do so”, does give a certain degree of flexibility to the adjudicating authority when circumstances are such that make it not possible for the adjudicating authority to decide or there are insurmountable exigencies, but such exceptional circumstances or exigencies do not exist in the present case.
In the present case, it is seen that there was no justifiable reason for the department to place the show cause notice in the call book and thereby delay the adjudication contrary to the specific mandate of sub-section (9) of section 28 of the Customs Act.
Conclusion - i) The phrase 'where it is possible to do so' would only mean that wherever it is not practicable or possible to do a certain act, the period can be extended. The same, however, cannot be an endless period without any plausible justification. ii) The adjudicating authority failed to discharge the statutory obligation cast upon it under section 28 (9) of the Customs Act to adjudicate the show cause notice within one year and no exceptional circumstances existed to justify the delay.
The order dated 19.01.2023 passed by the Principal Commissioner adjudicating the show cause notice dated 31.07.2013 is, accordingly, set aside and the appeal is allowed.
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2025 (4) TMI 1247
Entitlement for BCD exemption under the notification dated 01.03.2005, as amended by the notification dated 17.03.2012, whereby an 'Explanation' was added - import of digital still image video cameras - interpretation of the scope of Explanation - HELD THAT:- The issue as to whether digital still image video cameras would be entitled to basic customs duty exemption under Notification dated 01.03.2005, as amended by Notification No. 15/2012 dated 17.03.2012, is the issue that was involved in Customs Appeal No. 52218 of 2019 [2024 (6) TMI 1422 - CESTAT NEW DELHI [LB]] and is also the issue involved in the present four Customs Appeals.
Such being the position, the order dated 09.09.2024 passed in Customs Appeal No. 52218 of 2019, following the answer to the reference by the Larger Bench of the Tribunal on 14.06.2024, would govern the issue involved in all the four Customs Appeals. The digital still image video cameras involved in the present Customs Appeals would, therefore, be entitled to exemption from basic customs duty in terms of the Notification dated 01.03.2005, as amended on 17.03.2012.
Conclusion - The 'digital still image video cameras' imported by the appellants are entitled to BCD exemption under Notification No. 25/2005-Cus dated 01.03.2005, as amended by Notification No. 15/2012 dated 17.03.2012.
The order dated 28.10.2016 impugned in all the present four Customs Appeals deserves to be set aside and is set aside - Appeal allowed.
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2025 (4) TMI 1246
Maintainability of objection to execution of the arbitral award referrable to Section 47 of the Civil Procedure Code, 1908 (CPC) - arbitral award was a nullity and hence non-executable? - Facilitation Council lost its jurisdiction to proceed and pronounce the arbitral award in view of the insolvency resolution plan of the petitioner which was duly approved under Section 31 of the IBC.
HELD THAT:- As an independent arbitration agreement existed between the parties, Facilitation Council should not proceed under Section 18(3) of the MSME Act. Already arbitration process was going on as per the arbitration agreement. Facilitation Council in its proceedings dated 31.07.2017 noted that it appeared from newspaper reports and order copy of the NCLT that moratorium was declared under Section 14 of IBC in the matter of State Bank of India Vs. Electrosteel Steels Ltd. It was decided that the matter should be kept in abeyance till the moratorium period was over.
The resolution plan was submitted by Vedanta Ltd. as resolution applicant and is dated 29.03.2018. Clause 3 contained the mandatory contents of the resolution plan. Clause 3.2(v) declared that while the liquidation value of the corporate debtor was Rs. 2,899.98 crores, the admitted debts of the financial creditors aggregated to approximately Rs.13,395.25 crores. The liquidation value was not sufficient to cover the debts of the financial creditors in full. Therefore, the liquidation value of the operational creditors or the other creditors or stakeholders of the corporate debtor including dues of the employees (other than workmen), government dues, taxes etc. and other creditors and stakeholders was nil. As such, they would not be entitled to any payment. The dissenting financial creditors would be entitled to receive 21.65 percent of the value of their admitted debt which would be paid in priority to any payment to the assenting financial creditors.
On 16.05.2018, Facilitation Council noted that the moratorium period of the corporate insolvency resolution process had expired. The buyer did not appear in the conciliation process as well as in the arbitration proceeding. Thereafter, the Facilitation Council passed the award dated 06.07.2018 holding that claim of the respondent was genuine. The buyer unit was liable to pay the outstanding amount of Rs. 1,59,09,214.33 with interest at the rate of 3 times of the prevailing bank rate.
Since the appellant did not file any application under Section 34 of the 1996 Act, the Executing Court dismissed the application of the appellant dated 14.05.2019 observing that the appellant was trying to deprive the decree holder of the fruits of the award by unnecessarily delaying the execution - High Court concluded that the plea of nullity qua an arbitral award can be raised in a proceeding under Section 47 CPC but such a challenge would lie within a very narrow compass.
High Court rejected the contention of the appellant that since the award suffered from patent or inherent lack of jurisdiction, objection to the award can be taken at the stage of execution without challenging the award under Section 34 of the 1996 Act. While rejecting the said contention, High Court held that the arbitral proceedings culminating in the award cannot be said to be suffering from inherent lack of jurisdiction.
After observing that the respondent was not included in the top 30 operational creditors whose claims were settled at nil, High Court held that the Facilitation Council had the jurisdiction to proceed and pronounce the award even after approval of the resolution plan. The arbitral proceedings were initiated prior to the resolution insolvency date, suspended during the moratorium period and resumed upon expiry of the moratorium period. High Court further observed that the approved resolution plan did not determine the claim of the respondent as nil and that the proceedings before the Facilitation Council was taken note of in the resolution plan - High Court is correct in answering the first issue that a plea of nullity qua an arbitral award can be raised in a proceeding under Section 47 CPC but such a challenge would lie within a very narrow compass.
Objection to execution of an award under Section 47 CPC is not dependent or contingent upon filing a petition under Section 34 of the 1996 Act. High Court was not justified in taking the view that since the appellant did not file a petition under Section 34 of the 1996 Act, therefore, it was precluded from filing an application before the Executing Court to declare the award as void and hence nonexecutable.
The view taken by the High Court that notwithstanding approval of the resolution plan by the NCLT, the Facilitation Council did not lose jurisdiction to proceed and pronounce the arbitral award, is erroneous and contrary to the law laid down by this Court.
Conclusion - There are no hesitation to hold that upon approval of the resolution plan by the NCLT, the claim of the respondent being outside the purview of the resolution plan stood extinguished. Therefore, the award dated 06.07.2018 is incapable of being executed.
Appeal allowed.
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2025 (4) TMI 1245
Maintainability of second complaint - sanction required in view of amended Section 19 and newly inserted Section 17-A of the PC Act - applicability of Aiyappa’s [2013 (10) TMI 1428 - SUPREME COURT] judgment - HELD THAT:- As for maintaining judicial discipline a coordinate bench of this Court has refrained from proceeding further in deciding the underlying issue Whether the bar of Section 19 of the PC Act would be applicable on exercise of power under Section 156 (3) of CrPC., which is under reference to a larger bench, it is deemed appropriate to tag these petitions with the referred matter Manju Surana vs. Sunil Arora & Ors. [2018 (3) TMI 1434 - SUPREME COURT].
The registry is directed to place these matters before the Hon’ble Chief Justice of India for appropriate orders.
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