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Showing 221 to 240 of 1484 Records
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2025 (3) TMI 1264
Rejection of Application u/s. 80G - since the assessee is not registered u/s 12AB benefit cannot be given to the assessee - HELD THAT:- Since the assessee has already applied for registration under RPT Act and thereby the reasons advance for rejecting the registration of the applicant-assessee trust are curable in nature.
Bench feels that the issue of registration u/s 12AB of the be decided a fresh, based on the registration under RPT Act to be produced by the assessee. Therefore, we restore the matter of the registration u/s 12AB to the file of the CIT(E) be decided afresh.
The Bench also noted that recognition u/s 80G was denied because the applicant-assessee trust was not registered u/s 12AB of the Act. Since we have restored the matter of registration u/s 12AB of the Act to the file of the CIT(E) and therefore, we also deem it a fit case to restore the matter of recognition u/s 80G of the Act to the file of the ld. CIT(E). Appeals of the assessee Allowed for statistical purposes.
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2025 (3) TMI 1263
Deduction u/s.37 - allowability of royalty payment for the use of intellectual property right and use of trademark IP - as argued assessee was not given a reasonable opportunity to present its case - scope of additional evidence - HELD THAT:- The assessee in its submissions made before the First Appellate Authority (submissions dated 23.05.2024) had specifically requested that it may be granted an opportunity to represent its case through video conferencing or physical hearing before the order is passed. In spite of specific request made by the assessee, the assessee was not given an opportunity to represent its case through video conferencing or physical hearing. Many of the documents / evidences filed in support of claim of deduction u/s.37 of the Act has not been properly appreciated / taken note of by the CIT(A).
Given the nature of business involving toxic chemicals and having the confidentiality norms in the agreement, these Standard Operating Procedures are critical and confidential in nature. Therefore, approval from the executive management was required and obtained at the time of appellate proceedings before the Tribunal.
These documents were not expressly requested during the course of assessment proceedings or before first appellate proceedings. The documents that are now submitted before the Tribunal goes to the root of the dispute.
For substantial justice and for a proper adjudication of issues raised in this appeal, we take the same on record. Since the additional evidences / documents are taken on record, we deem it appropriate to restore the matter to the files of AO for him to examine these aspects and come to a conclusion whether the payments claimed as deduction u/s.37 were for the purpose of the business of the assessee and is an allowable deduction - Appeal filed by the assessee is allowed for statistical purposes.
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2025 (3) TMI 1262
Addition under the head capital gain - Gain earned by the appellant on surrender of tendency right - Whether the amount received by the appellant constituted a transfer of a capital asset under section 2(47)? - HELD THAT:- As we are of the view that the assets in the form of tenancy right was acquired by the assessee way back on 29/01/1954 by paying non-refundable deposit and consequently, right of the assessee was created in the said property and, therefore, the assessee remained in possession of the said property till the date of this agreement. Since the assessee continue enjoying the right over the property, hence question of refund of security deposit does not arises.
Therefore, the said deposit can very well be taken as cost of acquisition to the assessee as the same remain unpaid.
A perusal of the provisions of sections 49 and 55 reveals that if the capital asset as mentioned u/s 55(2)(a) which includes ‘tenancy rights’ is acquired by purchase from previous owner, then in that eventuality, the purchase price will be the cost of acquisition. In any other case, if it does not fall under the sub-clauses (i) to (iv) of sub-clause(1) of section 49, then the cost of acquisition will be treated as nil.
In this case, it is an undisputed fact that the assessee had acquired tenancy right by paying a security deposit of Rs. 1080/- in 1954, which is still outstanding in its books, therefore this represents cost attached to the said tenancy right. Though cost is not defined in Section 2 or Section 55 the Income Tax Act, however it is being defined in section 43 for the purpose of Section 28 to 41 of the Act, which says the expression "actual cost" means the actual cost of the assets to the assessee reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by Government or by any public or local authority.
In ascertaining the actual cost, what has to be considered is the actual cost of the assets of the assessee. In this case the deposit paid by the assessee to acquire the tenancy right in 1954 is actual outflow from the pockets of the assessee hence this can very well be taken as cost in its hand. Therefore, in these set of facts, the provisions of section 55(2)(a)(i) is applicable and not 55(2)(a)(ii) as invoked by AO and Ld CIT(A).
There is substance in the contention of the appellant that since the asset was acquired before 1stApril, 2001, hence the assessee has been allowed with an option of either to take the fair market value of the asset as on 1 April, 2001 or the actual cost of the asset as ‘cost of acquisition’ and the said cost will further indexed as per the provisions of section 48 of the Act, to calculate capital gain. As per working submitted by the assessee in AY 2021-22, wherein after considering valuation of the tenancy right as on 1.4.2001 as certified by M/s. Kishore Karamsey & Co., Government Registered Valuer, there is net capital loss. It is important to mentioned here that the said return of income has already been accepted by the revenue.
Since the income has already been offered in later years on sale of the tenancy right and in this year also once valuation as on 01/04/2001 is considered as cost of acquisition then, the transaction resulted in to net loss, hence the addition made by AO deserve to be deleted. Therefore, these grounds raised by the assessee are allowed.
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2025 (3) TMI 1261
Recomputation of income - applying a net profit rate of 8% on the entire gross business receipts - HELD THAT:- We have gone through the finding of the lower authority whereby we note that the assessee has already filed the additional evidence in the appellant proceeding thereby the AO after verifying the cash book so submitted accepted the cash deposit as part of the turnover offered by the assessee while filling the ITR.
From the same set of cash book so filed the assessee contended that the cash contains the re-deposit of cash into the bank account out of cash balance available in that cash book and that re-deposit amount cannot be considered as turnover and thereby cannot be considered to estimate the income of 8 % on that amount.
While doing so we also directed the assessee on 17.12.2024 to file a cash book making the total available with the assessee on each day and the assessee has finally filed it on 19.12.2024 which shows that the assessee was having the sufficient cash on hand to the extent of Rs. 33,68,166/- which was deposited out of the cash balance [ available from withdrawal or cash sales already considered for turnover ] from the copy of the cash book so filed and therefore, the ld. CIT(A) was not justified in directing to considered the income to the extent of 8 %. In the light of the discussion so recorded herein above ground no 1 & 2 raised by the assessee are allowed.
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2025 (3) TMI 1260
Maintainability of appeal on the ground of low tax effect - Refund of the deposited SAD - rejection on the ground that the same were filed beyond limitation and the original documents had not been furnished - HELD THAT:- A perusal of the table in paragraph 3 of this order, would show that firstly, the appeals would not be liable to be entertained on the ground of Low Tax Effect. In addition, there have been consistent decisions by the Coordinate Benches of this Court in Commissioner of Customs v. Nanak Electronics [2023 (1) TMI 1315 - DELHI HIGH COURT] and Commissioner of Customs v. Bhimeshwari Overseas [2023 (1) TMI 1316 - DELHI HIGH COURT].
In the opinion of this Court, the most important feature would be that there have been consistent decisions of Coordinate Benches and the ld. Single Judges, that in such cases, SAD would be liable to be refunded. The Bombay High Court decision in CMS Info Systems Ltd. [2017 (1) TMI 786 - BOMBAY HIGH COURT] has not been followed by this Court. In view of the fact that the issues raised in these appeals are fully covered by the above decisions as also on the issue of Low Tax Effect, this Court is not inclined to entertain the present appeals.
Appeal dismissed.
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2025 (3) TMI 1259
Confiscation of export goods - prohibited goods or not - Whether export goods become prohibited for export on account of non-declaration of technical characteristics of inputs on shipping Bills as was required in terms of DFIA Scheme? - HELD THAT:- In the present case, the show cause notices have been issued with respect to the exports made by appellants. Apparently and admittedly no exemption from duty has been claimed on such exports. Further these notifications require that the product manufactured out of these imported inputs i.e. the Resultant Product should have same quality, technical specifications and characteristics as that of the imported materials used in the said resultant product.
The Revenue/department has failed to produce any evidence to prove that the exported goods were the resultant goods and were not of same quality, technical characteristics and specifications as those of the inputs used in the said resultant product. It becomes clear that there is no evidence to support the violation of Condition No. (i) of both the notifications.
Hon’ble Supreme Court in the case of Titan Medical System Pvt. Ltd. Vs. Collector [2002 (11) TMI 108 - SUPREME COURT] has held that in the absence of any action taken by the licensing authority, revenue cannot take any action that too on the allegations of misrepresentation/suppression on part of assessee. Thus we are of the opinion that non-compliance of condition of DFIA/Notifications in the shipping bills could affect the duty free import of inputs but shall have no effect on export of products for which there is no evidence that the export goods were “resultant products” as mentioned in 4.55 of HBP.
Revenue has failed to produce any such law, rule, notification policy or any such thing, according to which there is restriction in export of pan masala and gutkha. In such circumstance, any condition on imports and non-compliance thereof cannot affect the exportability; Not specifically in the present case when DFIA was obtained post impugned export and was transferred also to third party and also when no exemption is availed by appellants while exporting pan masala and gutkha. More so for the reason the exported products were got manufactured from synthetic oils procured domestically. The synthetic oils are not mentioned in para 4.55 of HBP. Revenue also has failed to produce any evidence that the exempted pan masala and gutkha were the Resultant Products of the duty free inputs i.e. the natural essential oils imported under DFIA.
Whether non compliance of condition of DFIA i.e. non-declaration of technical characteristics of inputs on the shipping bills as required under para 4.55/4.32 of HBP and under Notification No. 40/2006 dated 01.05.2006 and Notification No. 98/2009 dated 11.09.2009 for the purpose of duty free import of inputs can render the export goods as “Prohibited Goods”? - HELD THAT:- On looking into the definition of “Prohibited goods means goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with.” Apparently there was no condition on the export of pan masala and gutkha. The condition which is alleged to have been violated is the condition of import. Thus, it is clear that based on impugned allegations freely exportable pan masala and gutkha cannot be called as prohibited goods. Above all, appellant has availed no benefit out of alleged non-declaration.
Levy of penalty under Section 113(1) of the Customs Act, 1962 - HELD THAT:- The alleged non-compliance cannot render the export goods prohibited, the order of confiscation passed by adjudicating authority below is not sustainable. Once goods are not found to be liable for confiscation, penalty under Section 113(1) of the Customs Act, 1962 cannot be sustained. The penalty imposed is also required to be set aside.
Conclusion - The goods exported i.e. pan masala and gutkha were freely exportable goods in terms of Foreign Trade Policy. Those have wrongly been called as prohibited for alleged violation of the conditions meant for duty free imports. Also there is no evidence proving connection between imported inputs and the export goods. The order confiscating those export goods and imposing penalty on the appellants is, therefore, not sustainable.
Appeal allowed.
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2025 (3) TMI 1258
Confiscation of gold bangles - diversion of export consignment of gold jewellery, after completion of all export formalities - levy of penalties u/s 114(iii) and 114AA of the Customs Act, 1962 - quantum of redemption fine.
Version of the exporters, Shri Preet Kumar Agarwal and Shri Sanjay Agarwal, is that as Shri Preet Kumar Agarwal was not having the boarding pass and immigration clearance, therefore, he was unable to board the plane, whereas, version of the DRI is that on an intelligence that the export consignment would be diverted, the DRI caught Shri Preet Kumar Agarwal while he was proceeding to Gate No. 11 of the NSCBI Airport while boarding the flight while having no jewellery in his hand.
HELD THAT:- As there were twisted facts from both the sides, to know the truth of the facts, the CCTV footage was very much relevant in order to ascertain as to whether the exporters were correct or the DRI was correct. However, admittedly, the CCTV footage was not placed in the present case and are not part of the relied upon documents. However, other CCTV footages have been relied upon by the DRI to establish their case. This indicates that there were some lapses in the investigation.
It is the case of the DRI that after taking Shri Preet Kumar Agarwal into custody while he was boarding the flight without jewellery, on his intimation that the said jewellery had been handed over to Shri Sanjay Agarwal who had booked the said jewellery in air cargo for Hyderabad, the flight was stopped by the DRI and Shri Sanjay Agarwal, who had boarded the plane, was apprehended by taking him out of the said flight. Here, the question arises that: if the DRI was having prior information on 03.04.2018 that diversion of export consignment would take place, then, when Shri Preet Kumar Agarwal handed over the consignment to Shri Sanjay Agarwal outside the Airport, why did the DRI not apprehend Shri Sanjay Agarwal who was carrying the export consignment at the time when diversion of the goods was taking place? This raises a question mark on the version that the DRI was having prior knowledge of diversion of export consignment of gold jewellery.
The investigating team has heavily relied on the statements recorded during the course of investigation. However, all those statements were retracted before the Additional Chief Judicial Magistrate. However, the procedure prescribed under Section 138B(b) of the Customs Act, 1962 that a statement relied during the course of proceedings is required to be examined in chief and thereafter be allowed for cross-examination, has not been followed in the present case. Therefore, in such circumstances, the statements recorded by the investigating team, which have been retracted before the Additional Chief Judicial Magistrate, have no relevance to implicate the exporters in this case.
Although COFEPOSA proceedings were initiated, the proceedings against Shri Preet Kumar Agarwal were dropped vide Order of the Central Economic Intelligence Bureau, COFEPOSA Wing dated 16.08.2015, who, as per the allegations, was the main person involved in diversion of the gold jewellery in question. When the COFEPOSA proceedings against the person who was involved in diversion of the gold jewellery in question as per the investigation have been dropped, the case against the co-exporters are also not sustainable.
Any goods cleared for exportation which are not loaded for exportation on account of any wilful act, negligence or default of the exporter, his agent or employee or which having been loaded for exportation, are unloaded without the permission of the proper officer, are liable for confiscation. Admittedly, it is a case of negligence on the part of the exporters, being the circumstances at that time, the exporter was required to take more precaution but failed to do so and the goods cleared for exportation were not loaded for exportation - the goods in question are liable for confiscation under Section 113(k) of the Act.
Imposition of penalties under Section 114(iii) of the Act - HELD THAT:- Since the goods have been held liable for confiscation under Section 113(k) of the Act, penalties under Section 114(iii) are imposable on the appellants/exporters.
Imposition of penalty under Section 114AA of the Customs Act - HELD THAT:- The said provisions are not attracted in this case as penalty under Section 114AA can be imposed on a person who knowingly or intentionally makes, signs or uses, or causes to be made, signed or used any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of the Act. Admittedly, in this case, documents were not found to be false or fabricated. Therefore, the provisions of Section 114AA are not attracted in the present case to impose penalty.
Quantum of redemption fine to be imposed - HELD THAT:- The appellants-exporters have submitted that the value addition is only to the extent of Rs. 43,400.43 if making charges of the said jewellery after importation are taken into consideration. Thus, the redemption fine imposed on the appellant is on the higher side. Accordingly, the redemption fine imposed reduced to Rs.15,00,000/-.
Conclusion - i) The order of confiscation of the consignment of 1194 pcs of gold bangles weighing 54096 gms. upheld, having an ascertained value of Rs.16,10,43,792/- cleared by diversion of the consignment in the domestic area, under Section 113(k) of the Customs Act, 1962. ii) Redemption fine of Rs.15,00,000/- imposed u/s 125 of the Act for redemption of the goods confiscated on account of diversion of the export consignment. iii) Since the goods have been held liable for confiscation under Section 113(k) of the Act, penalties under Section 114(iii) are imposable on the appellants/exporters. iv) The provisions of Section 114AA are not attracted in the present case to impose penalty. v) The gold jewellery, which has been seized from the possession of Shri Sanjay Agarwal, is to be released to Shri Sanjay Agarwal on payment of redemption fine and penalties. vi) No proceedings are sustainable against the other noticees to the SCN issued in this case.
Appeal disposed off.
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2025 (3) TMI 1257
Seeking restoration of the name of the appellant in the Register of the Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- The appellant is right in the sense that in view of the findings recorded by the NCLT on the review petition, the time consumed in prosecuting the review petition ought to have been excluded. However, there is a delay on the part of the appellant at every stage. The application for restoration of the appellant’s name in the Register of the Companies was filed after a lapse of four months from the date on which it was struck out. The review petition was filed five months after the NCLT dismissed the application. After the review petition was dismissed, it took more than one year for the appellant to prefer an appeal before the NCLAT. There is no justification for this delay of five months and one year respectively.
Looking to the nature of the proceedings, the NCLAT was justified in holding that no case was made out to condone the delay, especially when under Section 421 of the Companies Act, the delay could have been condoned provided it was upto forty-five days.
Conclusion - The application for restoration was delayed by four months, the review petition by five months, and the appeal by over a year, with no adequate justification provided. Given these delays, the NCLAT was deemed justified in denying condonation, as Section 421 of the Companies Act limits condonation to delays of up to forty-five days.
Appeal dismissed.
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2025 (3) TMI 1256
Penalty u/s 15A(c) - Failure to sign and date the research reports and to maintain records of research recommendations and rationale for arriving at research recommendations - HELD THAT:- To define as a proper “research report” or a “research recommendation” the document ought to have been duly signed and dated. The allegation by the appellant that at the time of inspection, the inspecting team refused to see the rationale is unsubstantiated and vague. On the other hand, the evidence on record being the core finding on inspection clearly shows that the appellant’s claim is untenable and the appellant’s reliance only on pre-inspection questionnaire is wholly unsustainable. We therefore, don’t find merit in the submission of the appellant.
Not maintaining records of ‘Public Appearances’ - No merit in appellant’s contention that publishing the research report on Whatsapp/Telegraph channels does not amount to “Public appearance”. In our considered view, the definition of the term “Public appearance” under Regulation 2(1)(q) of the RA Regulation includes making recommendations/rendering advice relating to securities, on Whatsapp/Telegram channels, in respect of which the appellant is required to make applicable disclosures. We note that the appellant does not maintain any records, whatsoever, in respect of the publication on Whatsapp/Telegram groups, of the research reports/ recommendations.
Thus, we uphold the order of the AO of imposing of penalty under Section 15A(c).
Penalty u/s 15EB - Material change in ‘internal policy’ which was not communicated to SEBI - Appellant is clearly required to have appropriate mechanisms to ensure independence of his research activities. Undisputedly, he is carrying on other business activities in his individual capacity. The same was required to be reported to the respondent at the time of registration and if there was any change, the same affects the independence of his ‘research analyst’ function qua his other businesses, which may create conflict situations, as seen in the case of the appellant. Therefore, failure to report change in Internal policy has rightly been held as violation of the relevant regulation by the respondent.
In view of the same, the appellant’s submission is untenable and it is rejected.
Failure to ensure independence of its research activities from its other activities - It is undisputed that the appellant is an individual and a registered Research Analyst. He also carries on independent business activities in his proprietary capacity, inter alia, a Chartered Accountancy Division, a Spiritual/Vipassana Teaching Division and Manish Goel News Broadcast Division (MGNBD), in which he claims to be only an employee. Though no fee is received by him for making research recommendations in the self-manned RA division, admittedly, he earns fee in the other 3 divisions, including the MGNBD, in which he earns fee by broadcasting the research recommendations (which are made available free by RA division).
Thus, services in all these verticals are singularly provided by the appellant only.
By no stretch of imagination, an arm’s length relationship can be construed within the same ‘individual’. Hence, we uphold the finding of the respondent that the appellant failed to make arm’s length between his RA functions and other functions. Secondly, the argument that the SEBI has given the investment advisory certificate and RA certificate both to the appellant is also incorrect on facts, since the investment advisory certificate was issued to an entity titled MSRAPL (a Company) whilst the RA Certificate was granted to the appellant in his proprietary capacity as an ‘individual’. Moreover, it was the duty of the appellant to have made due disclosure in this regard while making the applications for registration as RA and for investment advisory functions of MGRAPL.
Appellant has carried out his independent business of Chartered Accountancy Division through which he used to solicit the business and admittedly no mechanism was put in place to dealing with a conflict situation between the RA division and that division. In view of this, the appellant’s claim is devoid of merit and is rejected.
Trading in stocks recommended by the appellant during the restricted period - An independent research analyst to do only business activity of ‘research analysis or preparation and/ or publication of research report’, whereas, it is evident that the appellant has been carrying on several business activities in his individual capacity, which shall have a bearing on his independent functioning as an independent research analyst.
Undisputedly, the appellant is a Research Analyst, registered with the SEBI. Since the appellant is not employed as a Research Analyst by any research entity, by implication his case falls under the other alternative category of ‘independent research analyst’ under Regulation 16(2). Therefore, appellant’s contention that prescribed period applies to independent research analyst is baseless and rejected.
Failure to make necessary disclosure in the research report/ recommendations - As we find that no explanation was given by the appellant as to how the research report of ‘Investment Trust of India’ prepared by the appellant reached the client and why the same was not duly disclosed by him. The fact remains that the report has reached the client. Under the circumstances, we find his explanation with respect to violation of disclosure requirement under Regulation 19 as unsatisfactory.
Regarding the second allegation, we find that in terms of the RA Regulations 21(1), the appellant was required to make disclosure in respect of his registration status and details of financial interest in the Company. The screenshots of Telegram Channels provided by the respondent show that no such disclosure was made by the appellant regarding his RA number or financial interest in securities in respect of which recommendations were made. The appellant questioned the authenticity of such screenshots. This contention is wholly untenable because screenshots are from appellant’s phone.
Failure to maintain any record of rationales - There is no evidence on record to prove that the appellant was asked through the PIQ to furnish the rationale of the research recommendations. The respondent has not denied that the rationale were provided through the SCN. There is no conclusive evidence to hold that the appellant was asked but did not provide the rationale during the inspection and that the appellant has been providing recommendations without any underlying research, as undisputedly, considering the client base of the appellant, there have not been statistically significant number of complaints against the appellant, which is not possible if his recommendations were random guesses without supported by research. Therefore, in our view, SEBI’s findings on this aspect are unsustainable.
Non-compliance with the KYC procedure - Relying upon the decision in the case of K. Premchand [1953 (10) TMI 5 - SUPREME COURT] we have already held that it is not possible to construe the possibility of having arm’s length relationship within the appellant’s own various income earning activities in individual proprietary capacity qua his Research Analyst activities. Hence, in our considered view, the fiction of arm’s length does not exist between appellant’s fee-yielding business activities qua the Research Analyst division, which too was a proprietary in his individual capacity only.
Non-disclosure of the term ‘Research Analyst’ in recommendations / respect of 9 stocks on Whatsapp/ Telegram chats - Evidently, the respondent has downloaded the Whatsapp chats in respect of appellant from his specific authorised telephone number. The respondent at every stage and even at the appellate stage asked the appellant to furnish details of the telephone number and the appellant has not denied the contents of the Whatsapp chat, which admittedly contains specific recommendations made by him with respect to the recommendations for 9 stocks. Further, the appellant failed to submit any proper documentary evidence to show that he had complied with the aforesaid regulatory requirements. In view of this we find no merit in the plea of the appellant, in respect of this violation.
Keeping in view the fact that the defaults made by the appellant of the RA Regulations are multiple and repetitive and lack any credible explanation, we hold that the quantum of penalty levied by the AO is justified in view of the provisions of Section 15J of the SEBI Act.
Penalty u/s 15HA - We find that the appellant has not denied violation in respect of one scrip i.e. Swasti Vinayak Synthetics Ltd. in respect of which the recommendation through Whatsapp message of assured high returns was made with the offer of one free service. The same undisputedly, falls within the scope of Regulation 4(2)(k) of the PFUTP Regulations, amounting to furnishing of misleading information. Keeping in view the above, we uphold the action of the AO imposing a penalty of Rs. 15 lakhs under Section 15HA.
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2025 (3) TMI 1255
Admission of Section 9 Insolvency and Bankruptcy Code (IBC) petition against the Corporate Debtor - settlement arrived between the parties - HELD THAT:- There has been a settlement between the parties.
In view of the aforesaid, nothing remains further to be done - The impugned order passed by the NCLAT is hereby set aside.
Appeal disposed off.
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2025 (3) TMI 1254
Exclusion of commercial spaces from the assets of the Corporate Debtor - owners of the units allotted, on the basis of allotment of commercial spaces by the CD - dissenting Financial Creditors - it was held by NCLAT that the approval of Resolution plan upheld.
HELD THAT:- There are no good ground and reason to interfere with the impugned judgment which, in our opinion, is in accord with the provisions of the Insolvency and Bankruptcy Code, 2016; hence, the appeals are dismissed.
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2025 (3) TMI 1253
Direction to hand over the possession of the constructed flats/units in Phase-I of the Greenopolis Project to the persons who had paid monies directly to the said concern - HELD THAT:- The homebuyers represented by GWA, who are opposing the present application, had made their investments and payments to TCSPL. Consequently, they cannot insist or compel Orris to allot residential flats/units in their favor. It goes without saying that they must pursue their claims in the CIRP proceedings concerning TCSPL, which remain pending before the NCLT. The order dated 01.07.2021 passed by the Supreme Court and the subsequent order dated 29.03.2022 passed by the NCLT categorically lay down that the TCSPL has no right, title or interest in the ‘Greenopolis Project’ and they have no right to dispose of the property or sale of any units in the same. In essence, the Greenopolis Project is not an asset of TCSPL and, therefore, does not fall within the scope of CIRP Proceedings concerning TCSPL.
Considering the entire gamut of the case and its larger ramifications, where TCPSL and its sister concerns are under investigation by the Serious Fraud Investigation Unit, and Orris and other companies are facing inquiries by the Registrar under Chapter XIV of the Companies Act, 2013, the issue in question are undoubtedly interwoven. Nevertheless, the lengthy and excruciating litigation process involved should not impede the applicant, GWC, from seeking appropriate relief for its members - Unhesitatingly, the sheer audacity of the objector, namely rival GWA, is apparent. Repeated attempts have been made to deflect attention from TCSPL and its sister concerns, which have allegedly defrauded numerous homebuyers. Instead, with ulterior motives, the objector seeks to divert focus to a separate set of homebuyers who are rightfully entitled to possession of constructed residential flats/units from Orris.
The learned NCLT has already passed a detailed order dated 17.12.2024 and has not extended the status quo concerning the allotment of any completed residential flats/units to the home buyers whose cause is being espoused by the present applicant/GWC.
Conclusion - There is no legal impediment in allowing handing over of possession of 512 completed flats in terms of occupancy certificate issued on 01.10.2024 by Orris to its allottees, who are members of the applicant/GWC.
Application allowed.
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2025 (3) TMI 1252
Money Laundering - proceeds of crime - Maintainability of petition - petition has been filed through the power of attorney holder and the affidavit sworn by the power of attorney of the petitioner, which is not maintainable - Money Laundering - Issuance of non-bailable warrant (open-ended) against the petitioner - Section 528 of Bharatiya Nagarik Suraksha Sanhita, 2023 - issuance of summons under Section 50 of the PMLA, 2002.
Maintainability of petition - petition has been filed through the power of attorney holder and the affidavit sworn by the power of attorney of the petitioner, which is not maintainable - HELD THAT:- In the present case, the petitioner is at Dubai who executed a power of attorney in favour of Mr. Khemraj Sinha, resident of Adivasi Colony, Kushalpur, Raipur (C.G.), who sworn an affidavit on behalf of the petitioner in the present petition. The respondent/ED has relied upon the judgment of Amrinder Singh @ Raja (supra) and in Para 7 and 8, it would rely upon the judgment of Amit Ahuja [2010 (5) TMI 962 - PUNJAB AND HARYANA HIGH COURT] and T.C. Mathai [1999 (3) TMI 635 - SUPREME COURT].
There is nothing on record to show that the power of attorney of the petitioner is disabled by filing affidavit in support of the petition or the petition filed through power of attorney is not maintainable. The preliminary objection regarding maintainability of the petition through power of attorney holder is not sustainable and hereby rejected.
Applicability and procedural compliance of summons issued under Section 50 of PMLA, 2002 to a person residing outside India - HELD THAT:- When the ED found sufficient evidence against the petitioner that he actively involved in the illegal operation of Mahadev Operation Book, he issued the summons under Section 50 of the PMLA-2002 to the address of the petitioner available with the ED and asked to appear on 02.09.2023 and 04.09.2023. Since the petitioner did not join the investigation, the ED apply under Section 70 of CRPC for issuance of non-bailable warrant (open-ended) against the petitioner on 04.09.2023. The petitioner had obtained citizenship of a small island nation Vanuatu, which does not have any extradition treaty or arrangement with India, clearly evident that the petitioner did not intend to join the investigation and therefore, the application for issuance of non-bailable warrant was filed before the learned Special Court. The learned Special Court has ample power to issue non-bailable warrant against the accused when he failed to cooperate and deliberately avoided the process of law.
It is apparent from the reading of Section 50 of PMLA-2002 as well as the judgment of Vijay Madanlal Choudhary that the power conferred upon the ED by virtue of Section 50 of PMLA-2002 empowers them to summon any person whose attendance may be crucial either to give some evidence or to produce any record during the course of investigation or proceeding under the PMLA-2002. The persons, so summoned, are also bound to attend in person or through authorized agent and are required to state truth upon any subject concerning which such person is being examined or is expected to make statement and to produce document, as may be required in the case.
In the present case, the investigation conducted by the State Police in FIR No. 206 of 2023 registered at Police Station Cyber Crime, Vishakhapatnam Commissionorate under the scheduled offences, which revealed that the money made via the app was transferred to different accounts till it was siphoned off to a person named Sourabh Chandrakar, a native of Chhattisgarh, who presently lives in Dubai - The FIR was one of scheduled offences included in the ECIR recorded in respect of the petitioner. Statements of the close friends and associates of the petitioner were recorded under Section 50 of PMLA-2002 and they disclosed that the petitioner is one of the main promoters of Mahadev Online Book and this was further corroborated by the digital evidence gathered during investigation.
Conclusion - Considering all these evidences, learned Special Court, on being application made by the ED, issued non-bailable warrant against the petitioner, and the learned Special Court has rightly exercised its jurisdiction to issue said non-bailable warrant. It is settled law that the provisions of PMLA-2002 are not limited to the accused named in the criminal activity relating to the scheduled offence, but it would apply to any person if he is involved in any process or activities connected with the proceeds of crime and as per the investigation, the petitioner was found involved in possession of proceeds of crime, emanating out of the operation of Mahadev Online Book.
There are no ground to disagree with the order dated 04.09.2023, passed by the learned Special Court (PMLA-2002), by which the non-bailable warrant (open-ended) is issued against the petitioner and to interfere with the same - petition dismissed.
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2025 (3) TMI 1251
Seeking grant of Regular bail - petitioner qualifies as 'sick or infirm' under the proviso to Section 45(1) of the Prevention of Money Laundering Act, 2002 or not - petitioner is 86 years old and is suffering from multiple ailments - Applicability of Section 45 of PMLA - requirement to fulfil triple test - delay in trial - HELD THAT:- A purposive interpretation of the proviso to section 45 (1) of PMLA indicates that it was included as a lenient measure to provide ‘relaxation’ for a sick or infirm individual, as mentioned in the Statement of Objects and Reasons for the PMLA.
What is the level of sickness that qualifies an accused as ‘sick’ under the proviso to section 45 (1) of PMLA? - HELD THAT:- While there is no strict formula to determine the level of illness required for bail under this proviso, the general guideline is that when the sickness is serious enough to pose a threat to life and requires medical assistance and treatment which is specialized and unavailable in jail facilities, the accused should be granted bail under the proviso to section 45 (1) of PMLA. However, this is not an exhaustive criterion and each case should be evaluated based on its unique facts and circumstances.
In the present case, the medical board of AIIMS, Delhi constituted vide Order dated 18.09.2023 submitted its report on 04.12.2023. The medical assessment of the petitioner by the board was conducted on 18.10.2023 and 22.10.2023 - A division bench of this Court in Sandeep Aggarwal v. Priyanka Aggarwal, [2021 (12) TMI 1431 - DELHI HIGH COURT] has observed that the courts cannot sit in appeal of the opinion of the medical board as the judges are not experts in medical fields. Thus, an opinion of doctors who are experts cannot be supplanted by a court overstepping its jurisdiction.
Thus, the petitioner is not ‘sick’ to fall within the ambit of proviso to section 45 (1) of PMLA since the petitioner can be treated in jail for the ailment as categorically opined by the medical board.
Admittedly, the petitioner, aged 86, suffers from cognitive impairment, pseudodementia and recurrent dizziness, along with a history of falls. A medical board from AIIMS has recommended that he requires constant monitoring due to the risk of falls. Given his diagnosed subjective cognitive decline, it is clear that he needs supervision throughout the day, which cannot be adequately provided by jail authorities. Furthermore, considering his age, the likelihood of improvement in his age-related infirmities is minimal and it is expected that his condition will continue to decline - beneficial legislation in favour of a class of persons, which is reflective of constitutional spirit, should not be considered narrowly and must be given a liberal interpretation. Thus, the aforementioned infirmities in a senile stage combined with the need for constant ‘monitoring’ coupled with frequent falls and forgetfulness makes the petitioner ‘infirm’ under the proviso to section 45 (1) of PMLA.
The petitioner falls within the ambit of ‘infirm’ under the proviso to section 45 (1) of PMLA and thus, he is not required to meet the twin test of section 45 (1) of PMLA.
Requirement of fulfilment of triple test of Flight risk, Influencing any witness and Tampering with evidence - HELD THAT:- The petitioner has been released on interim bail since 08.08.2022 on medical grounds and there are no allegations of misuse of liberty by him while on bail - As regards the flight risk, adequate restrictions can be imposed upon the petitioner - the petitioner meets the triple test for grant of bail.
Delay in trial - HELD THAT:- There are 17 accused persons, 66 companies, 121 witnesses and 77,812 pages of documents plus enormous digital data which needs to be analysed in the present case. Thus, there is no likelihood of the trial to be concluded in the near future - In the case of Pankaj Kumar Tiwari v. Directorate of Enforcement, [2024 (10) TMI 1351 - DELHI HIGH COURT], a co-ordinate bench of this Court observed that the right of the accused to speedy trial is an important aspect which the courts must keep in contemplation while deciding a bail application as the same is higher sacrosanct constitutional right, which ought to take precedence.
Conclusion - i) The petitioner falls within the ambit of 'infirm' under the proviso to Section 45(1) of PMLA, exempting him from the stringent bail conditions typically required under this section. ii) The petitioner satisfies the triple test for bail, as there is no substantial evidence of flight risk, witness influence, or evidence tampering. iii) The delay in trial proceedings, coupled with the petitioner's right to a speedy trial, warrants the granting of bail.
The petition is allowed and the petitioner is granted bail, subject to fulfilment of conditions imposed.
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2025 (3) TMI 1250
Invocation of extraordinary jurisdiction of this Court under Section 482 of Cr.P.C./Section 528 of the BNSS, 2023 - If the complaint in regard to a scheduled offence has been quashed, the complaint under Section 3 & 4 of the PMLA, 2002 pertaining to some scheduled offence is maintainable or not? - HELD THAT:- Section 447 of the Companies Act, 2013 stipulates punishment in the case of fraud involving an amount of at least Rs. 10 Lakh. An offence under Section 447 of the Companies Act, is a scheduled offence for the purposes of the PMLA, 2002 and as per Paragraph 29 of the schedule appended to PMLA, 2002, an offence under Section 447, which stipulates punishment for fraud, is a scheduled offence - The expression “scheduled offence” has been defined in Section 2(1)(y). This provision assumes significance as it has direct link with the definition of “proceeds of crime”. In that, the property derived or obtained as a result of criminal activity relating to notified offences, termed as scheduled offence, is regarded as tainted property and dealing with such property in any manner is an offence of money-laundering. The Schedule is in three parts, namely, Part A, B and C. Part A of the Schedule consists of 29 paragraphs. These paragraphs deal with respective enactments and the offences specified thereunder which are regarded as scheduled offences. Similarly, Part B deals with offence under the Customs Act specifically and Part C is in relation to offence of cross-border implications.
The Apex Court in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] in Para-107 observed that a property derived directly or indirectly as a result of criminal activity relating to a scheduled offence would be liable for prosecution under the provisions of the PMLA, 2002. The Apex Court further held that the explanation, which is added to Section 2(1)(u) and which provides for definition of proceeds of crime, does not travel beyond the intent of tracking and reaching up to the property derived or obtained directly or indirectly as a result of criminal activity relating to a schedule offence.
The conclusion which has been arrived at by the Apex Court makes it abundantly clear that the property which is derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence, can be regarded as proceeds of crime and other property, which has no nexus with any scheduled offence, cannot be brought within the ambit of the proceeds of crime.
It is clear that the co-ordinate Bench of this Court concluded that the prosecution launched under Section 447 of the Companies Act as was an attempt to apply statutory provision with retrospective effect, which was not permissible and therefore, concluded that the prosecution was illegal. Even the co-ordinate Bench proceeded ahead to label the prosecution to be malicious. The Court also concluded that upon due consideration of the allegations as set out in the FIR, if the offence registered is not formulated and the prosecution is considered to be malicious, the proceedings can be quashed.
Conclusion - The proceedings under the PMLA, 2002, could not be maintained against the applicant due to the quashment of the predicate offence under Section 447 of the Companies Act, 2013.
Petition allowed.
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2025 (3) TMI 1249
Inordinate delay and failure on the part of the tax authorities to conclude the adjudication proceedings within a reasonable period of time - Violation of principles of natural justice - HELD THAT:- Section 73 of the Act empowers the taxing authorities to issue SCN(s) to the assessee, chargeable with service tax, which has not been levied or paid or short-levied or short-paid or erroneously refunded. After issuance of the SCN, Section 73(4B) of the Act casts a duty upon the authorities to determine the due amount of service tax within six months/ one year, where it is possible to do so, from the date of notice.
This court, in Vos Technologies India [2024 (12) TMI 624 - DELHI HIGH COURT], had the opportunity to consider the effect of inordinate delay and failure on the part of the tax authorities to conclude the adjudication proceedings within a reasonable period of time, the Finance Act, 1994 and the Central Goods And Services Act, 2017) and held that such delay/ failure to act within a reasonable period of time, constituted sufficient ground to quash such proceedings. This Court also held that the authorities are bound and obliged in law to make endeavors to conclude adjudication with due expedition.
There is no apparent reason given for the inordinate delay in adjudication.
In Vos Technologies India this Court categorically held that matters having financial liabilities or penal consequences cannot be kept unresolved for years; and the phrase “where it is possible to do so” cannot be a license to keep matters pending for years. The flexibility provided by the legislation is not meant to be misused or construed as sanctioning indolence. The statutory leverage cannot be brought into play routinely and in an unfettered manner for years, without any due justification or explanation.
Conclusion - The authorities are bound and obliged in law to make endeavors to conclude adjudication with due expedition. There is no apparent reason given for the inordinate delay in adjudication.
The impugned SCNs dated 18.10.2013, 21.05.2014, 07.09.2015, 13.10.2016 and 01.03.2018 and the impugned order dated 23.08.2024 issued by the Respondent are hereby quashed - Petition disposed off.
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2025 (3) TMI 1248
Levy of service tax - licence fee collected from the appellants’ customers, on which the appellant has paid value added tax treating it as sale, can once again be included in the taxable value of service rendered under the category of Information Technology Software Services or not - HELD THAT:- It can be seen from a perusal of the agreement as a whole that the solution which the appellant provides is a software solution. The solution is to meet the specified business requirements of the client. The solution is to be made available in the customer/client’s system as per the deliverables indicated in the delivery schedule. Such customisation required to integrate with the existing legacy/ERP system, includes all activities such as installation, training and enhancements to the standard product by change of source code. Thus, it is evident from the agreement that the solution that the appellant provides is in the form of the appellant’s product, i.e., the software which it customises as per the client’s requirements, including making changes in the source code as required. It is also clear from the agreement that while the intellectual property rights of all the products of the appellant that is implemented/used for developing and providing the solution to the client belongs to the appellant, nevertheless, the client is put in full control and possession of the appellant’s product, i.e. the customised software, so delivered with its exclusive right to use.
The transaction between the appellant and its customer in terms of this agreement has resulted in sale of the appellants’ software along with the right to use such software and the licence fee for the same has therefore been rightly made exigible to sales tax by the appellant and cannot therefore be yet again subjected to levy of service tax. Payment of service tax as well as VAT are mutually exclusive.
Reliance placed in the decision of this Tribunal in Quick Heal Technologies v. CST, Delhi [2020 (1) TMI 430 - CESTAT NEW DELHI]. In the said case the facts were that the appellant therein had supplied “Quick Heal” brand Anti- virus Software key/codes to the end users through dealers/distributors without discharging the service tax liability on such transactions. It was further stated that the end user was provided with a temporary/non- exclusive right to use the Anti-virus Software as per the conditions contained in the End User License Agreement (EULA) and would, therefore, not be treated as deemed sale under Article 366(29A) of the Constitution. Thus, on the view that the supply of packed Anti-virus Software to the end user by charging license fee would amount to a provision of service and not sale, the Department had demanded service tax on the appellant.
The impugned order in appeal upholding the demand along with applicable interest as well as imposing penalties, cannot sustain and is liable to be set aside. The appellant having displayed its bonafides by not only indicating the levy of sales tax on the invoice but also remitting the same and reflecting it in its sales tax returns, no malafide can be attributed to them. The imposition of penalties is unsustainable on this count too.
Conclusion - The appellant's transaction with its customers constituted a sale of goods, and the license fee was rightly subjected to VAT.
Appeal allowed.
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2025 (3) TMI 1247
Classification of service - Construction of Complex Service or not - construction of two residential projects - extended period of limitation - penalty - HELD THAT:- It is undisputed that the appellant is engaged in a composite contract involving provision of service as well as transfer of property in goods. The appellants‟ contention that they have discharged applicable VAT on the transactions also remains uncontroverted.
It is found that the issue whether, service tax could be levied on Composite Works Contract prior to the introduction of the Finance Act, 2007, by which the Finance Act, 1994 came to be amended to introduce Section 65(105)(zzzza) pertaining to Works Contract, was a subject matter of dispute and litigation and was finally settled by the Hon‟ble Supreme Court in the case of Commissioner of Central Excise & Customs, Kerala vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT].
The services provided by the appellant in respect of the projects executed by them for the relevant period, being in the nature of composite works contract cannot be brought within the fold of “construction of complex” service and thus the impugned OIA upholding the impugned OIO confirming the demand along with applicable interest and imposing penalty, cannot sustain and is liable to be set aside on merits.
Extended period of limitation - penalty - HELD THAT:- It is undisputed that the appellant has not collected service tax from the clients/customers during the relevant period and further the issue whether, service tax could be levied on Composite Works Contract prior to the introduction of the Finance Act, 2007, by which the Finance Act, 1994 came to be amended to introduce Section 65(105)(zzzza) pertaining to Works Contract, being a subject matter of litigation during the relevant period, evidences that the issue involved interpretational disputes. As such, no malafide can be attributed to the appellants warranting invoking of the extended period of limitation and the appellants contentions against invoking of extended period of limitation is also tenable.
Conclusion - i) The composite works contracts cannot be subjected to service tax under the "Construction of Complex Service" category prior to the Finance Act, 2007 amendment. ii) No malafide can be attributed to the appellants warranting invoking of the extended period of limitation and the appellants contentions against invoking of extended period of limitation is also tenable.
Appeal allowed.
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2025 (3) TMI 1246
Relevant date for filing rebate claim - rebate claim made by the appellant is barred by limitation - no correlation regarding inward remittances - HELD THAT:- The issue is no more res integra and considering the decision of the Tribunal in the matter of Volkswagen India Pvt. Ltd. [2015 (11) TMI 349 - CESTAT MUMBAI], it was held that the relevant date for claiming the rebate claim is from the date of payment of service tax only - As regarding the eligibility of the appellant, the claim was made only on 02.02.2009 against the payment of service tax made on 05.01.2008 for the period from April 2007 to June 2007. Fact being so, the said claim is beyond one year over from the date of payment of service tax and it is barred by limitation.
As regarding the claim for the period from July 2007 to September 2007, the due date for filing the rebate claim was on 05.02.2009 and considering the submissions of refund claim on 02.02.2009, it is within the time limit and appellant is eligible for the rebate.
Conclusion - The relevant date for filing a rebate claim under the Export of Service Rules is the date of payment of service tax, not the date of receipt of inward remittances.
Appeal allowed in part.
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2025 (3) TMI 1245
Liability of service tax - club membership fee/entrance fee and other services such as health club and fitness facilities, business auxiliary service etc.
Levy of service tax on club membership fee - HELD THAT:- The issue regarding club membership fee is no longer res integra in as much as the issue stands settled in favour of the appellant in their own case by this Tribunal vide Final Order No. 21721/2018 dated 12.11.2018 [2018 (11) TMI 979 - CESTAT BANGALORE]. The issue is also stand settled by the Hon’ble Supreme Court in the case of STATE OF WEST BENGAL Vs. CALCUTTA CLUB LIMITED [2019 (10) TMI 160 - SUPREME COURT], wherein the apex court has observed that 'from 2005 onwards, the Finance Act of 1994 does not purport to levy Service Tax on members’ clubs in the incorporated form.' - The demand against the appellant on ‘Club or Association service’ cannot be sustained for the relevant period.
Levy of service tax on Entertainment fee/Cultural program fee - HELD THAT:- The admission fee/entrance fee are also the amounts collected from individuals who are likely to become members, for which service tax has been demanded under the category of ‘Club or Association service’. The service tax on residential facilities (chamber service) provided by the appellant, the Commissioner in the impugned order states that it is meant for the members of the club and same is charged under ‘Club or Association Service’. The Health and Fitness services which is also meant for the members of the club, the demand is on these services in the ’Club or Association Services’. All the above services are meant only for the members and in view of the apex court decision in the case of STATE OF WEST BENGAL Vs. CALCUTTA CLUB LIMITED [2019 (10) TMI 160 - SUPREME COURT], the demands cannot be sustained.
Levy of service tax on Business Support Services with regard to Outlet handling charges - HELD THAT:- It has been observed by the Commissioner that ‘the assessee is providing necessary infrastructure support to the business or commerce being done by various entities to promote / sell their products in their premises of their club and hence this activity is clearly classifiable under the category of ‘Business Support Service’. It is further observed that the appellant has received huge amounts from various entities like M/s. Balajee Hotels and Real Estates, M/s. Bangalore Cold Storage, M/s. Life Style Services Pvt. Ltd. for providing infrastructural facilities to these organisations, which is rightly classifiable under ‘Business Support Services’. Since these services are in the nature of Business Support Services and they are not meant for the club members but various outside organizations, it is found that the Commissioner has rightly confirmed these demands.
Commission received from UTI Bank towards the credit cards swiping charges - HELD THAT:- The commission earned by providing services to the clients of an entity is clearly taxable under the ‘Business Auxiliary Services” and hence, the assessee is liable to pay the service tax on the said commission received for providing the service. With regards to the contention of the assessee that every business entity allowing the swiping of the cards should come under the purview of the tax, the same is agreed with. Several entities receiving the said commission are paying service tax after crossing the exemption limit of commission amount of Rs.10 lakhs received during a financial year.” In view of this, there are no reason to disagree with the impugned order, hence, the same is being upheld.
Conclusion - i) The doctrine of mutuality applies to club membership fees, exempting them from service tax. ii) Charges deemed as penalties or subject to state entertainment tax do not attract service tax. iii) Outlet handling charges are taxable under Business Support Services, and commissions from banks are taxable under Business Auxiliary Services. iv) The extended period of limitation is not applicable, and penalties are not warranted.
Appeal disposed off.
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