TMI Tax Updates - e-Newsletter
May 9, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Service Tax Central Excise Indian Laws

Articles

1. Applicabilty of CGST Act 2017

   By: K Balasubramanian

2. ROC Filing for Newly Registered Pvt. Ltd Companies

   By: Ishita Ramani

3. SECTION 65B OF INDIAN EVIDENCE ACT (NOW SECTION 63 OF BHARATHIYA SAKSHYA ADHINIYAM, 2023) NOT APPLICABLE TO PROCEEDINGS BEFORE THE INCOME TAX ACT AUTHORITIES

   By: DR.MARIAPPAN GOVINDARAJAN

4. Free Trade Agreements – Objective Questions (MCQs){Check your Knowledge & Test your Experience}Answers will be published Soon!

   By: YAGAY andSUN

5. Export related Compliances as required to be adhered by an Exporter for smoother completion of Exports.

   By: YAGAY andSUN

6. IMPORT-RELATED COMPLIANCES FOR IMPORTERS.

   By: YAGAY andSUN

7. How to Register a Trademark in India?Intellectual Property Rights

   By: YAGAY andSUN

8. Test your Knowledge on the SIMS Answers will be published Soon!

   By: YAGAY andSUN

9. Test your Knowledge on Export of SCOMET

   By: YAGAY andSUN

10. Test Your Knowledge on Environmental LawsObjective Type Questions – Waste Plastic Management  Rules (India)

   By: YAGAY andSUN

11. Design to LastInternal Training Module and a Supplier On boarding Checklist{Part 3 of 3}

   By: YAGAY andSUN

12. Design to LastPolicy Document along with actionable guidelines.{Part 2 of 3}

   By: YAGAY andSUN

13. Design to Last

   By: YAGAY andSUN

News

1. GST fraud: ED raids in Jharkhand, West Bengal

2. FBI director says bureau needs more funding than what Trump administration budget proposal calls for

3. President grants prosecution sanction against Lalu Prasad in land-for-jobs PMLA case

4. EU publishes US product hit list, prepares for WTO action against Trump's tariffs

5. Delhi South CGST officials bust GST ITC fraud worth ₹7.85 crore; Chartered Accountant arrested

6. DPIIT and Hafele India Sign MoU to Boost Manufacturing Innovation and Localized Supply Chains.

Notifications

Companies Law

1. G.S.R. 291(E) - dated 7-5-2025 - Co. Law

Companies (Indian Accounting Standards) Amendment Rules, 2025

2. G.S.R. 293(E) - dated 6-5-2025 - Co. Law

National Company Law Appellate Tribunal (Recruitment, Salary and other Terms and Conditions of Service of Officers and other Employees) Amendment Rules, 2025.

3. G.S.R. 292(E) - dated 6-5-2025 - Co. Law

National Company Law Tribunal (Recruitment, Salary and other Terms and Conditions of Service of Officers and other Employees) Amendment Rules, 2025.

Income Tax

4. 45/2025 - dated 7-5-2025 - IT

CBDT has notified the ITR-V & ITR-Acknowledgement Form for Assessment Year 2025–26 under the Income-tax (Seventeenth Amendment) Rules, 2025

Law of Competition

5. F.No. CCI/ Reg-COP/01/ 2025-26 - dated 6-5-2025 - Competition Law

Competition Commission of India (Determination of Cost of Production) Regulations, 2025.

Highlights / Catch Notes

GST

• Zero-Rated Supplies Beyond Customs Frontiers Validated Under IGST Act Section 16, Ensuring Tax Neutrality and Refund Processing

  Case-Laws - HC : HC determined that supplies by petitioner outside customs frontiers qualify as zero-rated under Section 16 of IGST Act, rendering the transaction GST-exempt. The court found the tax treatment revenue neutral, particularly for the period before 01.04.2021, and declined revenue's challenge. The third-party refund application must be processed within four weeks, including applicable interest, effectively disposing of the appeal without substantial monetary implications for either party.
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• Tax Notice Invalidated: Improper Service Violates Natural Justice, Requires Fresh Adjudication Under Procedural Guidelines

  Case-Laws - HC : HC held that the SCN was improperly served by uploading it to the Additional notices tab, violating principles of natural justice. Following precedent, the SCN was set aside. The Adjudicating Authority must reissue the SCN and pass a fresh adjudication order, which remains subject to potential Supreme Court review of the underlying notification. The demand order dated 27th December 2023 was consequently nullified due to procedural irregularities in SCN service, effectively rendering the original tax demand invalid.
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• Taxpayers Win: Rule 86A Limits on Input Tax Credit Ledger Automatically Expire After One Year

  Case-Laws - HC : HC ruled that blocking of Input Tax Credit (ITC) ledger beyond one year under Rule 86A of CGST Rules, 2017, must be lifted. The statutory interpretation of Rule 86A(3) mandates automatic removal of credit restrictions after the specified time period. The court's decision explicitly notes that lifting the ITC block is independent of any concurrent administrative or legal proceedings against the taxpayer. The restriction is therefore automatically terminated after the one-year period, providing relief to the petitioner while preserving the authority's right to pursue separate investigative actions.
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• Electronic Filing Deemed Valid: Procedural Flexibility Upheld, Certified Copy Delay Does Not Invalidate Submission Under CGST Rule 108(3)

  Case-Laws - HC : HC allowed the appeal, finding the filing procedurally valid despite delay in certified copy submission. The court determined that online filing with electronic documents constitutes complete submission, and physical certification is not mandatory. Relying on precedent from Chegg India Private Limited, the HC held that technological advancements in filing systems should be interpreted liberally. The subsequent amendment to Rule 108(3) of CGST Rules, 2017 supports retrospective application, thereby validating the appellant's original submission. The court emphasized that technical procedural requirements should not impede substantive hearing of appeals on merits.
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• Tax Challenge Dismissed: Statutory Notice Upheld, Procedural Fairness Confirmed Under Section 107 of CGST Act

  Case-Laws - HC : HC dismissed the petition challenging tax proceedings, finding no violation of natural justice. The petitioner received hearing notice but failed to appear, and the court clarified that statutory provisions do not mandate exactly three hearings. The court directed the petitioner to file an appeal under Section 107 of CGST Act to the Appellate Authority, effectively upholding the department's procedural actions and rejecting claims of improper notice or hearing.
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• GST Levy on Leasehold Rights Transfer: Interim Order Suspends Adjudication, Maintains Status Quo Under Section 54

  Case-Laws - HC : HC determined the GST levy on assignment of leasehold rights for an industrial plot and constructed buildings through third-party transfer. The court stayed the adjudication order issued against the petitioner, following a precedent in a similar case involving another corporate entity. The interim order effectively suspends the impugned order dated 28th February 2025, maintaining the status quo pending further judicial review of the GST assessment and procedural compliance.
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• Tax Notice Nullified: Procedural Flaws Invalidate Show Cause Notice, Demanding Fair Hearing and Proper Service

  Case-Laws - HC : HC set aside the tax notice (N/N. 56/2023) due to procedural irregularities in service of Show Cause Notice (SCN). The court found fundamental violations of natural justice, as the SCN was undated and not properly received by the Petitioner. Following precedential rulings in similar tax dispute cases, the court remanded the matter back to the tax authorities, directing them to provide a fair opportunity for the Petitioner to file a reply and receive a personal hearing. The decision mandates a de novo review of the case, ensuring the Petitioner can present their submissions on merits before any final determination.
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• Compensation Cess Calculation for Motor Vehicles Clarified: Ground Clearance Measurement in Laden Condition Determines 20% Tax Rate

  Case-Laws - HC : HC ruled that Notification No. 3/2023-CC (Rate) dated 26th July, 2023 is prospective, not retrospective. Ground clearance for motor vehicles' Compensation Cess calculation must be measured in laden condition for the period September 2017 to July 2022. Petitioners are liable to pay Compensation Cess at 20% rate during this period, invalidating the 22% levy. The Board's clarification, based on GST Council recommendation, was deemed binding, resulting in the petition being allowed with modified Cess calculation.
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• High Court Strikes Down GST Rule 86A Order, Restores Electronic Credit Ledger Access for Taxpayer Without Proper Procedural Justification

  Case-Laws - HC : The HC allowed the petition, quashing the impugned order blocking the petitioner's Electronic Credit Ledger (ECL) under Rule 86A of CGST Rules. The court found the order legally unsustainable due to absence of pre-decisional hearing and lack of independent, cogent reasons for blocking the ECL. The respondents' reliance on borrowed satisfaction from enforcement authorities was deemed impermissible. The order's failure to provide substantive reasons for blocking the ECL, coupled with procedural irregularities, necessitated its quashing, thereby restoring the petitioner's access to the electronic credit ledger.
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• Amnesty Scheme Under Section 128(A) Provides Relief for Tax Arrears, Ensures Fair Reconsideration of Undisputed Dues

  Case-Laws - HC : HC allowed the petition, setting aside the impugned order and remitting the matter back to the 3rd respondent for reconsideration. The court recognized the applicability of the Amnesty Scheme under Section 128(A) of CGST Act for tax years 2017-18, 2018-19, and 2019-20. The decision emphasized that undisputed tax arrears cannot be demanded arbitrarily when express legal provisions exist under Section 75(12) of GST Acts. The petitioner was granted an opportunity to avail the benefits of the Amnesty Scheme, with directions to reconsider the matter in accordance with established legal principles.
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• High Court Strikes Down Rule 86A Blocking of Electronic Credit Ledger, Mandates Immediate Unblocking and Fair Hearing Process

  Case-Laws - HC : HC allowed the petition challenging Rule 86A blocking of Electronic Credit Ledger (ECL), finding the order invalid due to lack of pre-decisional hearing and absence of independent, cogent reasons. The court held that reliance on borrowed satisfaction from enforcement reports without providing specific grounds constitutes an arbitrary action. Respondents were directed to immediately unblock the petitioner's ECL, enabling the petitioner to file returns, thus upholding principles of natural justice and procedural fairness in tax administration.
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• Corporate Merger Voids Show Cause Notice: Authority Must Reissue Proceedings Against Correct Amalgamated Legal Entity

  Case-Laws - HC : HC held that the respondent authority's issuance of a show cause notice (SCN) to a non-existent company post-amalgamation was procedurally flawed. Despite initial claims of unawareness, the respondent's counsel acknowledged knowledge of the amalgamation. The court set aside the impugned order and granted liberty to the respondents to initiate fresh proceedings against the resultant entity in compliance with legal protocols, effectively nullifying the previous SCN and providing an opportunity for procedural rectification.
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• Tax Credits Restored: Section 16 Amendments Allow Retrospective Claims for Delayed Returns Filed Between June 2018-March 2019

  Case-Laws - HC : HC ruled that pursuant to clause (5) of Section 16 inserted by Finance (No.2) Act, 2024 and the circular dated 15.10.2024, the respondents' orders are set aside. The court directed respondents to permit petitioner's input tax credits for delayed returns filed during June 2018 to March 2019, effectively allowing retrospective tax credit claims despite initial administrative rejection. The judicial intervention ensures compliance with recent statutory amendments and provides relief to the taxpayer by mandating administrative reconsideration of previously denied input tax credit claims.
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• Appellate Rights Upheld: Statutory Deposit Prerequisite for GST Tribunal Appeal Under Section 112(9)

  Case-Laws - HC : HC dismissed the appeal with a procedural directive regarding statutory stay under Section 112(9) of the Act of 2017. The court determined that upon the appointment of the President or State President of the Goods and Service Tax Appellate Tribunal, the petitioner may file an appeal after statutory deposit. The authority is mandated to adjudicate the appeal strictly in accordance with law, with the statutory stay remaining operative until appeal resolution. The court's order effectively preserves the petitioner's appellate rights while maintaining procedural compliance with indirect tax regulations.
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• ITC Refund Allowed: Section 54(3)(ii) Enables Full Credit Recovery for Identical Input and Output Supplies

  Case-Laws - HC : HC held that Section 54(3)(ii) of CGST Act permits refund of Input Tax Credit (ITC) where input and output supplies are identical, rejecting restrictive interpretations in Circular No. 135/05/2020-GST. The court found the respondent's orders erroneously relied on inapplicable circular provisions and improperly rejected refund claims. Consequently, the HC quashed the impugned orders, directing the respondent to refund the accumulated ITC with applicable interest within a specified timeframe, thereby affirming taxpayer's statutory entitlement to ITC refund under the inverted duty structure provisions.
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Income Tax

• Tax Authorities Update Income-tax Rules 1962, Modify ITR-V Form with Retrospective Effect from April 1st, 2025

  Notifications : The CBDT issued a notification amending the Income-tax Rules, 1962, introducing the Income-tax (Seventeenth Amendment) Rules, 2025, effective retrospectively from 1st April, 2025. The amendment specifically modifies Appendix II, substituting FORM ITR-V with a new version. The notification, issued under sections 139 and 295 of the Income-tax Act, 1961, includes an explanatory memorandum certifying that no taxpayer will be adversely impacted by the retrospective implementation. The amendment was officially published by the tax policy and legislation under secretary, with formal legal authorization from the Ministry of Finance.
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• Tax Reporting Overhaul: CBDT Amends ITR-6 Form with Retrospective Effect from April 1, 2025, Enhancing Compliance Mechanisms

  Notifications : CBDT issued Income-tax (Sixteenth Amendment) Rules, 2025, amending Form ITR-6 in Income-tax Rules, 1962. The amendment takes effect from 1st April, 2025, with retrospective application. The notification, issued under sections 139 and 295 of Income-tax Act, 1961, introduces modifications to tax reporting requirements. An explanatory memorandum confirms no adverse impact on taxpayers. The amendment aims to streamline income tax documentation and reporting procedures for specified entities.
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• Assessment Order Invalidated: Procedural Flaws Breach Natural Justice Principles in Tax Evaluation Process

  Case-Laws - HC : HC found the assessment order under Section 143(3) r/w Section 144B invalid due to procedural irregularities. The Assessing Authority failed to consider all uploaded documents and provided insufficient time for evidence submission, thereby violating principles of natural justice. The Court set aside the Assessment Order dated 18.03.2025 and remanded the matter to the National Faceless Assessment Unit for fresh adjudication, ensuring comprehensive review of financial documents for the relevant assessment year.
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• Jurisdictional Defect Nullifies Tax Assessment: Assessment Order Quashed Under Section 143(3) for Lack of Inherent Authority

  Case-Laws - HC : HC quashed the assessment order u/s 143(3) after determining AO's lack of inherent jurisdiction. The Tribunal analyzed the case facts, noting the assessee's nil income return and subsequent notices u/s 143(2) and 142(1). Relying on CBDT Instruction No.1 of 2011 and precedent in Bhagyalaxmi Conclave (P) Ltd., the Tribunal found the AO exceeded jurisdictional limits. The revenue's challenge was unsuccessful, with the HC dismissing a similar appeal involving identical substantial legal questions. Consequently, the Tribunal's order setting aside the AO's assessment was upheld, effectively deciding against the revenue on jurisdictional grounds.
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• Liquidation Transactions Clarify Capital Gains Calculation Under Income Tax Act Sections 46(2), 49(1)(iii)(c), and 55(2)(b)(iii)

  Case-Laws - HC : HC held that in cases of company liquidation, Sections 46(2), 49(1)(iii)(c), and 55(2)(b)(iii) of the Income Tax Act, 1961 are applicable for computing capital gains. The unique circumstance involved two transactions within the same financial year: share transfer resulting in asset distribution and subsequent asset sale. The court found the Tribunal's procedural approach incorrect, particularly in not referring the matter to a larger bench. The computation methodology for cost of acquisition was determined by analyzing both transactions comprehensively. Ultimately, the decision was rendered against the revenue, favoring the assessee's interpretation of the statutory provisions.
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• High Court Upholds Tax Reassessment Under Section 147, Validates AO's Findings on Undisclosed Income and Construction Expenditure Discrepancies

  Case-Laws - HC : HC dismissed the writ appeal challenging reassessment proceedings under Section 147. The AO reopened the assessment based on a District Valuation Officer's report revealing discrepancies in construction expenditure and undisclosed income. The court found the reassessment valid, noting the Assessing Officer recorded legitimate reasons for believing income had escaped assessment. The appellant was afforded opportunity to raise defenses through appellate proceedings. Considering the fresh order passed by the Assessing Authority and alternative remedy under Section 246A, the intra-court appeal was rejected without interference, effectively decided against the assessee.
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• Tax Deduction Claim Rejected: Failure to File Income Return Invalidates Section 80P(2)(a)(i) Benefits for Cooperative Society

  Case-Laws - AT : ITAT order dismissing appeal based on non-compliance with procedural requirements. The assessee failed to file income tax return or revised return, rendering claims for deduction under Section 80P(2)(a)(i) invalid. Tribunal held that tax deductions are not operational without proper income notification to tax authorities. Mere possession of audited accounts does not qualify for deduction. The assessee did not seek exemption from advance tax payment through appropriate channels as mandated by Section 139. Consequently, the appeal was deemed infructuous, with the CIT(A)'s dismissal upheld. The decision emphasizes strict adherence to Income Tax Act provisions and procedural obligations for claiming tax benefits.
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• Tax Exemption Upheld: Educational Institution Wins Appeal on Income Tax Returns and Section 10(23C)(iiiad) Compliance

  Case-Laws - AT : ITAT adjudicated a tax exemption dispute involving an educational institution. The tribunal held that the assessee was not required to file income tax returns since total income did not exceed the non-taxable threshold. The returns filed under Section 148 were deemed valid, and the lower authorities erred in disallowing exemption under Section 10(23C)(iiiad). The tribunal found no legal impediment to the exemption claim, noting the assessee's compliance with procedural requirements and the absence of specific time limitations during the relevant assessment years. Consequently, the assessee's appeal was allowed, reinstating the tax exemption and overturning the previous denials by lower tax authorities.
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• Life Insurance Entity Wins Tax Dispute: Separate Accounts Deemed Single Business, Income Computation Upheld Under Sections 10(34), 10(23AAB)

  Case-Laws - AT : ITAT adjudicated a complex tax dispute involving a life insurance entity's income classification. The tribunal consistently upheld the assessee's position that shareholders' and policyholders' accounts, maintained separately for legal compliance, should be treated as part of a single insurance business. The ruling affirmed the computation of income from shareholders' account under "Profits and Gains of Business or Profession" and granted exemptions under sections 10(34), 10(23AAB), and 10(15). The revenue's appeal was dismissed, with the tribunal finding no procedural or substantive infirmities in the lower appellate authority's findings, thereby maintaining the tax treatment favorable to the assessee.
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• Covid Relief Donations Taxable Under Section 56(2)(x) Due to Lack of Clear Charitable Purpose and Commingled Personal Accounts

  Case-Laws - AT : The ITAT upheld the taxation of Covid relief donations under Section 56(2)(x), finding the assessee's claims unpersuasive. Despite claiming the funds were for charitable purposes, the donations were mixed with personal accounts of the assessee, her father, and sister. The tribunal determined that the funds were not exclusively used for Covid relief, with substantial amounts remaining unutilized and potentially invested. The assessee's attempts to challenge the tax liability were rejected, as she could not substantiate the exclusive charitable use of the donations. The funds were deemed taxable as income from other sources, and the appeals were consequently dismissed.
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• Electronic Evidence and Tax Valuation: ITAT Clarifies Admissibility, Profit Calculations, and Evidence Standards in Complex Assessment

  Case-Laws - AT : ITAT upheld the CIT(A)'s order with key findings: (1) Electronic evidence seized during search was admissible under Section 65B of Indian Evidence Act, (2) Cash receipts from property sales would be taxed only on profit element estimated at 12.5%, (3) For eight plots, matter was remanded to AO for reference to DVO under Section 43CA, (4) Unaccounted scrap sales addition of 20% was confirmed, (5) Bogus steel purchase addition limited to 17% profit element, (6) Salary disallowance to an employee was deleted due to lack of corroborative evidence, and (7) Disallowance under Sections 40A(3) and 37 was rejected as no substantive evidence supported the addition. Overall, most additions were either deleted or substantially reduced.
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• Tax Dispute Resolved: Permanent Establishment Income Taxation Overturned Based on Consistent Precedent and Procedural Interpretation

  Case-Laws - AT : ITAT adjudicated a tax dispute regarding permanent establishment (PE) income taxation. The tribunal referenced its previous ruling in the assessee's own case, finding consistent factual circumstances. Given no material changes from the prior year, the tribunal followed its precedent and ruled in favor of the assessee. The Assessing Officer's addition of business income related to fixed place PE, subject to 40% surcharge and taxes, was deemed unsustainable and consequently deleted. The tribunal allowed the assessee's grounds, effectively reversing the original tax assessment and providing tax relief based on procedural consistency and prior judicial interpretation.
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• Cooperative Society Wins Tax Deduction Claim: ITAT Orders Comprehensive Reassessment of Bank Investment Income Under Section 80P

  Case-Laws - AT : ITAT restored matter to AO for re-computation of deduction u/s 80P regarding interest from bank investments. Following precedent in Cooperative Cane Development Union case, tribunal determined investments compliant with U.P. Cooperative Societies Act sections 58 and 59 and Rule 173 are attributable to cooperative society's business. Provident fund interest earnings, being held in custodial capacity for employees and not constituting direct society income, were deemed non-taxable. The tribunal directed comprehensive reassessment of deduction eligibility, emphasizing statutory compliance and proper characterization of investment income.
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• Tax Dispute Resolved: Offshore Corporate Structure Validated, Revenue Claims Rejected Under Beneficial Ownership Principles

  Case-Laws - AT : ITAT adjudicated a complex taxation matter involving overseas assets and beneficial ownership. The tribunal comprehensively rejected the revenue's claims of tax avoidance by the assessee. Key findings established that the offshore company (CCL) was a legitimate corporate entity, and the shareholders were not beneficial owners. The tribunal deleted all additions made under income tax and Black Money (Undisclosed Foreign Income and Assets) Manifestation Act (BMA), finding no evidence of intentional tax evasion. The revenue's attempts to pierce the corporate veil were deemed unsustainable, with the court emphasizing strict interpretation of deeming provisions and the need for direct evidence of beneficial interest. Ultimately, the appeals filed by the revenue were dismissed, vindicating the assessee's position regarding offshore asset management.
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• Tax Dispute Resolved: Assessee Wins on Unaccounted Receipts with Comprehensive Documentation and Transparent Income Explanation

  Case-Laws - AT : ITAT adjudicated a tax dispute involving unaccounted business receipts. The tribunal upheld the assessee's declaration of on-money receipts, finding the income component was based on seized material and properly explained during assessment proceedings. The ITAT rejected revenue's attempts to make protective additions and disallow expenditures, noting that the expenses were not prohibited by law and the income was fairly computed. The tribunal found no substantive reason to interfere with the lower appellate authority's findings, thereby dismissing revenue's grounds of appeal and maintaining the assessee's tax treatment of the contested receipts and expenditures.
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• Tax Dispute Resolved: Transfer Pricing Adjustment, Deduction Claims Validated with 3% Margin Tolerance Under Specified Sections

  Case-Laws - AT : The ITAT addressed transfer pricing and tax deduction matters. In the TP adjustment, the tribunal remanded the case to the TPO/AO to determine arm's length pricing using TNNM method, with a 3% tolerance range for operating margin. For weighted deduction under section 35(2AB), the tribunal allowed the assessee's claim consistently with a prior year's order. Regarding additional depreciation under section 32(iia), the tribunal directed the AO to comply with DRP's instructions and allow the depreciation claim, criticizing the AO's failure to implement previous directions. The decision emphasizes procedural compliance and consistent interpretation of tax regulations.
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• Tax Authority Overturned: Foreign Currency Derivative Transactions Validated Under Section 263 Assessment Rules

  Case-Laws - AT : ITAT ruled that the CIT's revisionary order under section 263 was unsustainable. The tribunal found the CIT incorrectly characterized the assessee's foreign currency derivative transactions (FCDT) as mark-to-market losses, disregarding evidence of settled losses and hedging activities. The CIT's attempts to invoke section 73's explanation were deemed inappropriate and without legal merit. The tribunal concluded that the CIT misappreciated facts, violated natural justice principles, and erroneously held the original assessment order as invalid. Consequently, the ITAT allowed the assessee's appeal, setting aside the CIT's revisionary order.
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• Income Tax Valuation Assessment Quashed Due to Procedural Lapses in Approval Process Under Section 153D

  Case-Laws - AT : ITAT held that the approval u/s 153D was mechanically granted without proper application of mind, violating principles of natural justice. The sanctioning authority failed to ensure complete documentation and opportunity of hearing for the assessee regarding a valuer's report. Consequently, the approval was deemed invalid, rendering the consequential assessment void ab initio. The tribunal quashed the assessment proceedings due to non-satisfaction of statutory mandates, ultimately allowing the assessee's appeal and invalidating the entire assessment process.
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DGFT

• Government Updates Export Norms for Di-Ethyl Phthalate, Adjusting Input Standards for Phthalic Anhydride and Ethanol Quantities

  Circulars : The DGFT issued Public Notice No. 06/2025-26 amending the Standard Input Output Norms (SION) A-1294 for Di-Ethyl Phthalate (DEP) export. The amendment modifies two import items: Phthalic Anhydride remains unchanged at 0.700 kg, while Ethanol is replaced with Denatured Ethyl Alcohol at 0.435 kg. The modification takes immediate effect, allowing for adjusted import quantities under the specified export product, with the change implemented through executive powers granted under the Foreign Trade Policy-2023.
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State GST

• GST Registration Process Streamlined: Standardized Verification, 7-Day Approval, Balanced Approach to Preventing Fraud

  Circulars : The GoI's GST Policy Wing issued comprehensive instructions for processing GST registration applications to standardize verification procedures. Key directives include: (1) Officers must strictly adhere to prescribed document lists in FORM GST REG-01, (2) Avoid seeking additional documents beyond the specified list, (3) Complete applications must be approved within 7 working days, (4) Risky applications require physical verification within 30 days, and (5) Officers must obtain senior management approval before requesting documents beyond the standard requirements. The guidelines aim to balance preventing fraudulent registrations while facilitating genuine business registrations through a streamlined, transparent process.
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• Tax Authorities Instructed to Withdraw Appeals When Full Tax Paid Under Section 73, Preserving Taxpayer Relief Benefits

  Circulars : In cases where tax has been fully paid under Section 73 of CGST Act, and departmental appeals are solely related to interest or penalty calculations, the tax authority may withdraw such appeals. The instruction clarifies that taxpayers remain eligible for Section 128A benefits even if the department has initiated appellate proceedings, provided all other statutory conditions are met. The primary objective is to reduce litigation and prevent denial of relief based on technical grounds, ensuring taxpayers can avail waiver provisions for interest and penalty pertaining to Financial Years 2017-18, 2018-19, and 2019-20.
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Indian Laws

• Supreme Court Resolves Cheque Bounce Case by Compounding Offense Under Article 142, Ensuring Full Monetary Restitution

  Case-Laws - SC : SC held that the High Court's judgment lacks scrutiny due to not addressing the Goa Money-Lenders Act's applicability as a valid defense. Exercising constitutional powers under Article 142, the Court compounded the NI Act offense and acquitted the accused-appellant, contingent upon full payment of Rs. 2,30,000 to the complainant. The decision recognizes the accused's prior repayment of cheque amount and compensation, effectively resolving the legal dispute while ensuring monetary restitution to the complainant.
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• Discharge Voucher No Bar: Arbitration Possible After Settlement, Tribunal's Jurisdiction Upheld Under Sections 8 and 11

  Case-Laws - SC : SC held that a dispute can be referred to arbitration even after an insured party signs a discharge voucher. The court emphasized the Kompetenz-Kompetenz doctrine, which allows arbitral tribunals to determine their own jurisdiction. The legislative intent is to minimize judicial intervention at the arbitrator appointment stage. Under Sections 8 and 11 of the Arbitration Act, courts must refer matters to arbitration unless there is a clear prima facie case of non-existence of a valid arbitration agreement. Questions regarding economic duress or partial payment are within the arbitral tribunal's domain. The High Court's order rejecting the arbitration application was set aside, and the appeal was allowed.
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• Mortgagor's Liability Separate from Borrower: SARFAESI Act Interpretation Clarifies Pre-Deposit Calculation and Creditor Response Mechanisms

  Case-Laws - HC : HC held that under SARFAESI Act, the liability of mortgagor is distinct from the borrower in determining pre-deposit amount. The court clarified that when a borrower raises objections to a secured creditor's notice, the creditor's response can be considered in calculating the debt due. The statutory provisions mandate the secured creditor to consider and communicate responses to borrower representations. The court directed DRAT to reassess the pre-deposit amount by considering the petitioner's reply and bank's rejoinder, effectively quashing the previous order and allowing the petition in part.
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SEBI

• Financial Reporting Overhaul for Infrastructure Investment Trusts Enhances Transparency with Comprehensive Disclosure Mandates

  Circulars : SEBI issued a regulatory circular revising disclosure requirements for Infrastructure Investment Trusts (InvITs). The circular modifies financial reporting guidelines in offer documents and placement memoranda, specifically addressing proforma financial statements, audited asset financials, and disclosure frameworks. Key amendments include provisions for assets acquired after financial reporting periods, allowing references to public financial disclosures, and mandating combined/carved-out financial statements when general purpose statements are unavailable. The regulatory changes aim to enhance transparency and standardize financial reporting for InvITs, with immediate implementation except for Chapter 4 provisions, which become effective from April 01, 2025.
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Service Tax

• Gujarat Industries Power Company Wins Tax Dispute Over Liquidated Damages, Clarifies Non-Taxability of Contract Penalty Charges Under Section 66E(e)

  Case-Laws - AT : CESTAT ruled that liquidated damages/penalty charges collected by M/s. Gujarat Industries Power Company Limited from vendors/suppliers for contract breach do not constitute a declared service under Section 66E(e) of the Finance Act, 1994. The tribunal consistently held that service tax demand on liquidated charges is unsustainable, specifically affirming that penalties for non-completion of contractual timelines are not taxable. The appeal was consequently allowed, exempting such penalty amounts from service tax liability.
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• Lease of Land for Storage Space Not Considered Taxable Port Service, Rental Income Exempted from Service Tax Before June 2007

  Case-Laws - AT : CESTAT held that the appellant's lease of land for storage space does not constitute a taxable "Port Service" during the disputed period. The tribunal found no evidence of tax suppression, as the rental income was properly accounted for in the books. The service tax on immovable property rental became applicable only from 01.06.2007, and the CBIC's circular clarified non-levy of tax on such rental income. Consequently, the department's demand was set aside, and the appeal was allowed, effectively exempting the appellant from service tax for the period prior to 01.06.2007.
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Central Excise

• Excise Duty Challenge Succeeds: Input-Output Ratio Assumptions Rejected Under Section 35 Without Substantive Evidence

  Case-Laws - AT : CESTAT allowed the appeal, finding the excise duty demand legally unsustainable. The tribunal determined that the revenue's case was built solely on input-output ratio assumptions without independent verification or corroborative evidence of clandestine manufacture. The department failed to provide substantive proof of unauthorized goods removal or cash transactions. No statements from potential buyers or vehicle owners were recorded, rendering the confiscation of 157.436 M.T. of Sponge Iron invalid. The tribunal set aside the redemption fine and penalties, concluding that the show cause notice lacked specific facts about suppression and was issued beyond reasonable time limitations.
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• Legal Win: Taxpayers Secure CENVAT Credit Refund Under GST Transition Rules, Affirming Rights to Advance License Duty Reimbursement

  Case-Laws - AT : CESTAT allowed the appeal, affirming the appellants' entitlement to refund of excess CENVAT credit paid during the transition from central excise to GST regime. The Tribunal held that duties paid under Advance License scheme are refundable under Section 142(3) of CGST Act, 2017, as the additional customs duties were previously eligible for CENVAT credit. The order rejected the Commissioner's denial, finding the refund claim legally sustainable and consistent with transitional provisions governing tax credit mechanisms during regulatory regime change.
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Case Laws:

• GST

• 2025 (5) TMI 558
  Maintainability of appeal - delay in submission of the certified copy of the impugned order as required under Rule 108 of the CGST Rules, 2017 - HELD THAT:- It is admitted that the appeal against the order dated 16.08.2022 passed by the Proper Officer was preferred on 15.11.2022. It is also not in dispute that along with the appeal, copy of the order appealed against was also filed. The said fact has specifically been mentioned in paragraph no. 22 of the writ petition, which has not been denied by the State in paragraph no. 11 of the counter affidavit. During the pendency of the appeal, subsequent amendment to rule 108 came on 16.12.2022. As per the unamended rule 108 (3) of the Rules, the time of filing certified copy of the order appealed against was within 7 days of submission of appeal; whereas, as per the amended rule 108(3) of the Rules, where the decision and order against is not uploaded on the common portal, then the party shall submit certified copy of the said decision within 7 days - in the event certified copy of the order appealed against is not uploaded along with the appeal through e-mode, then within 7 days of filing of the appeal, a self-certified copy of the order was supposed to be filed within 7 days. The issue in hand has already been decided by the Delhi High Court in Chegg India Private Limited [ 2024 (12) TMI 1354 - DELHI HIGH COURT] wherein, the Court has held merely because the physical submission of the appeal and the order was much later, when the online filing was within the prescribed time, cannot deprive the Petitioner of hearing on merits. In most Courts and Tribunals, online filing and electronic filing is now prescribed mode and the Courts are moving towards technologically advance systems. It would be retrograde to opine that online filing, which was complete in all respects, including electronic copy of the order, is not valid filing. The Delhi High Court, while considering the issue, which is identical to the issue in hand, has held that the condition for physically filing the certified copy is not mandatory, but procedural in nature. If an appeal is preferred along with all documents and the copy of the appeal, the filing of certified copy is not required - Similarly, in the case in hand, it is not in dispute that the appeal, which was preferred on 18.08.2021, was without order appealed against. Once this fact is not in dispute, the issue in hand is covered by the judgement of the Delhi High Court in Chegg India Private Limited. Conclusion - The appeal filed by the petitioner was valid and within limitation despite delay in physical submission of certified copy. The amendment to Rule 108(3) applies retrospectively and supports the petitioner s position. Petition allowed.

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• 2025 (5) TMI 557
  Violation of principles of natural justice - hearing notice was not received by the Petitioner - availment of ITC through fake and fraudulent firms and goods-less invoices - HELD THAT:- The allegation that the personal hearing notice was not received is belied by the Petitioner s own averment in the writ petition - As per the averment, the notice was in fact received, well in time for appearance in the personal hearing on 21st January 2025. Further submission on behalf of Ms. Shivani Sethi, ld. Counsel appearing for the Petitioner is that three personal hearings have not been given to the Petitioner. In fact, a perusal of Section 75 (5) of the Central Goods and Service Tax Act, 2017 (CGST Act) would show that the said provision merely contemplates that the maximum adjournments shall be given for three times but does not in effect mean that three hearings have to be given. The personal hearing notice having been received by the Petitioner and the Petitioner having not availed of the hearing, cannot now be permitted to raise a grievance in respect thereof, against the Department - let the Petitioner file an appeal in respect of impugned order under Section 107 of the CGST Act to the Appellate Authority. Petition disposed off.

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• 2025 (5) TMI 556
  Service of SCN - SCN is undated and was not received by the Petitioner - challenge to N/N. 56/2023 State Tax - violation of principles of natural justice - HELD THAT:- In fact this Court in Neelgiri Machinery through its Proprietor Mr. Anil Kumar V. Commissioner Delhi Goods And Service Tax And Others, under similar circumstances where the SCN was uploaded vide Additional Notices Tab had remanded the matter holding that Be that as it may, intention is to ensure that the Petitioner is given an opportunity to file its reply and is heard on merits and that orders are not passed in default. Since there is no clarity on behalf of the Department, this Court follows the order in Satish Chand Mittal (Trade Name National Rubber Products) vs. Sales Tax Officer SGST, Ward 25-Zone 1 [ 2024 (9) TMI 757 - DELHI HIGH COURT] as also order dated 23rd December, 2024 in Anant Wire Industries vs. Sales Tax Officers Class II/Avato, Ward 83 Anr [ 2024 (12) TMI 1400 - DELHI HIGH COURT] where the Court under similar circumstances has remanded back the matter to ensure the Noticee/Petitioners get a fair opportunity to be heard. Conclusion - It is relevant to note that post 16th January 2024, the Department has effected changes in the portal to ensure that the SCNs become visible to parties. Though the SCN in the present case is of May 2024, considering the Petitioner has not been afforded an opportunity to file a reply or given a personal hearing, following the above decision, the impugned order is set aside. Let the entire matter be considered afresh and an order be passed on merits after duly considering the reply and the submissions made by the Petitioner in the personal hearing.

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• 2025 (5) TMI 555
  Issuance of notice and order u/s 73 of CGST Act, 2017 - Legality, validity and propriety of Notification Nos. 9 and 56 of 2023, dated 31.03.2023 28.12.2023, respectively - HELD THAT:- The issue is already under consideration before the Hon ble Supreme Court of India in M/s HCC-Sew-MEIL-AAG-JV vs. Assistant Commissioner of State Tax Ors. [ 2025 (4) TMI 60 - SC ORDER] , wherein the Hon ble Supreme Court held that Issue notice on the SLP are also on the prayer for interim relief, returnable on 7.3.2025. As the matter is pending before the Hon ble Supreme Court, the interim order passed in this case, would continue to operate and would be governed by the final adjudication of the Hon ble Supreme Court on the issue in the aforesaid Special Leave Petition - petition disposed off.

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• 2025 (5) TMI 554
  Levy of GST - assignment of leasehold rights of a plot of land allotted on lease by the Maharashtra Industrial Development Corporation (MIDC), and the buildings constructed thereon by the lessee to a third party, on the payment of a lump sum consideration - HELD THAT:- In the case of Siemens Limited, this Court has stayed the adjudication of the show cause notice issued to Siemens Limited. In this Writ Petition, what was originally challenged was the Show-cause Notice issued to the Petitioner. However, while the Petition was pending, the said Show-cause Notice was adjudicated and an order has been passed on 28th February 2025, which is also assailed in the Writ Petition by amending the Writ Petition. This amendment was allowed by us today by passing an Order in Interim Application No. 7750 of 2025. Considering these facts, in the present Writ Petition also the impugned Order dated 28th February 2025 shall also remain stayed.

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• 2025 (5) TMI 553
  GST on advertising services provided to foreign clients - Intermediary service - CBIC Circular No. 230/24/2024-GST dated 10th September 2024 and No. 199/11/2023-GST, dated 17th July 2023 read with Circular No. 210/4/2024-GST, dated 26th June 2024 - HELD THAT:- Having regard to CBIC Circular No. 230/24/2024-GST dated 10th September 2024, and the violation of the principles of natural justice in respect of the Employee Stock Option Plan issue, it is found appropriate to set aside the Impugned Order, and remand the case for a de-novo consideration. Accordingly, the impugned order dated 26th August 2024 is quashed and set aside. Matter restored back.

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• 2025 (5) TMI 552
  Levy of Compensation Cess at the rate of 22% - Passenger vehicles- N/N. 3/2023-CC (Rate) dated 26th July, 2023 have retrospective effect or not - measurment of ground clearance in an un-laden condition - HELD THAT:- The only basis for confirming the Compensation Cess at the rate of 22% against the Petitioner is by considering Notification No. 3/2023-CC (Rate) dated 26th July, 2023 to be retrospective in its application. Now the Board itself [albeit based on the GST Council recommendation and clarification] has clarified that the amendment carried out vide Notification No. 3/2023-CC (Rate) dated 26th July, 2023 is prospective in nature. This clarification issued by the Board is binding on the Respondents. The disputed period in the present case is from September 2017 to July 2022. Hence, for the aforesaid period, the ground clearance of motor vehicles for the purpose of determining applicable Cess rate under the Cess Notification had to be considered in a laden condition, as was being done by the Petitioner. Conclusion - Ground clearance under Sr. No. 52B of the Cess Notification means measurement in a laden condition prior to 26th July, 2023. Petitioners liable to pay Compensation Cess at 20% for the period September 2017 to July 2022. Petition allowed.

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• 2025 (5) TMI 551
  Challenge to impugned ex-parte adjudication order - no reply filed by the petitioner - sufficient cause for non-participation by the petitioner - principles of natural justice - HELD THAT:- A perusal of the impugned adjudication order will clearly indicate that the same is a ex-parte order which proceeded on the basis, as the petitioner did not submit a reply to the show cause notice nor contest the proceedings. However, in the light of the specific assertion on the part of the petitioner that it is inability and omission to submit a reply and contest the adjudication proceedings was due to bona fide reasons, unavoidable circumstances and sufficient cause, it is deemed just and appropriate to set aside the impugned assessment adjudication order dated 16.05.2023 and the summary dated 17.05.2023 and remit the matter back to the 1st respondent for reconsideration afresh in accordance with law. The matter is remitted back to the 1st respondent for reconsideration afresh in accordance with law - petition allowed by way of remand.

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• 2025 (5) TMI 550
  Blocking the petitioner s Electronic Credit Ledger (ECL) under Rule 86A of the Central Goods and Services Tax Rules, 2017 (CGST Rules) - absence of a pre-decisional hearing and independent reasons to believe - Violation of principles of natural justice - HELD THAT:- In K-9-Enterprises [ 2024 (10) TMI 491 - KARNATAKA HIGH COURT ], the issues were answered in favour of the petitioner-assessee by holding The aforesaid facts and circumstances are sufficient to come to the unmistakable conclusion that in the absence of valid nor sufficient material which constituted reasons to believe which was available with respondents, the mandatory requirements/pre-requisites /ingredients/parameters contained in Rule 86A had not been fulfilled/satisfied by the respondents-revenue who were clearly not entitled to place reliance upon borrowed satisfaction of another officer and pass the impugned orders illegally and arbitrarily blocking the ECL of the appellant by invoking Rule 86A which is not only contrary to law but also the material on record and consequently, the impugned orders deserve to be quashed. In the instant case since no pre-decisional hearing are provided/granted by the respondents before passing the impugned order, coupled with the fact that the impugned order invoking Section 86A blocking of the Electronic credit ledger of the petition does not contain independent or cogent reasons to believe/accept by placing reliance upon reports of enforcement authority which is impermissible in law, since the same is on borrowed satisfaction as held by Division Bench, the impugned order deserves to be quashed. It is also pertinent to note that the impugned order except stating that he has been found non-existent or not to be conducting any business from any places for which registration has been obtained, no other reasons are forthcoming in the impugned order. On this ground also, the impugned order dated 03.09.2024 deserves to the quashed. Conclusion - In the instant case since no pre-decisional hearing are provided/granted by the respondents before passing the impugned order, coupled with the fact that the impugned order invoking Section 86A blocking of the Electronic credit ledger of the petition does not contain independent or cogent reasons, deserves to be quashed. Impugned order dated 03.09.2024 at Annexure-B is hereby quashed - petition allowed.

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• 2025 (5) TMI 549
  Service of SCN - Challenge to N/N. 9/2023- Central Tax dated 31st March, 2023 and 56/2023- Central Tax dated 28th December, 2023 - challenge to SCN on the ground that they were uploaded on the Additional Notices tab and did not come to the knowledge of the Petitioner - HELD THAT:- This Court in Satish Chand Mittal (Trade Name National Rubber Products) vs. Sales Tax Officer SGST, Ward 25-Zone 1 [ 2024 (9) TMI 757 - DELHI HIGH COURT] and Anant Wire Industries vs. Sales Tax Officers Class II/Avato, Ward 83 Anr [ 2024 (12) TMI 1400 - DELHI HIGH COURT] under similar circumstances has remanded back the matter to ensure the Noticee/Petitioner get a fair opportunity to be heard. This Court is of the opinion that the Petitioner deserves a proper opportunity to file a reply and to be heard on merits. In fact, Accordingly, the impugned orders dated 9th March, 2024 and 2nd December, 2023 are accordingly set aside. Let the consolidated replies to both the Show Cause Notices dated 31st August 2021 and 26th July, 2021 be filed by the Petitioner within a period of 30 days. Petition disposed off.

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• 2025 (5) TMI 548
  Rejection of reply without the authority of law - alleged undisputed arrears of tax or interest cannot be demand under Chapter XV of the GST Acts when express provisions are available in law in Section 75 (12) of GST Acts - HELD THAT:- It is relevant to state that the Amnesty Scheme passed under Section 128 (A) of the CGST Act is for the years 2017-18, 2018-19 and 2019-20. Under these circumstances, in view of the specific submission made on behalf of the petitioner that they would intend to avail the benefit of Amnesty Scheme, it is deemed just and appropriate to set aside the impugned order passed by the 3rd respondent and remit the matter back to the 3rd respondent for reconsideration of the matter afresh, by issuing certain directions, in accordance with law. Petition allowed.

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• 2025 (5) TMI 547
  Blocking of Electronic Credit Ledger (ECL) under Rule 86A of the Central Goods and Services Tax Rules, 2017 (CGST Rules) - absence of a pre-decisional hearing and independent reasons recorded by the authority - principles of natural justice - HELD THAT:- In K-9-Enterprises [ 2024 (10) TMI 491 - KARNATAKA HIGH COURT ] the issues were answered in favour of the petitioner-assessee by holding that The aforesaid facts and circumstances are sufficient to come to the unmistakable conclusion that in the absence of valid nor sufficient material which constituted reasons to believe which was available with respondents, the mandatory requirements/pre-requisites/ingredients/parameters contained in Rule 86A had not been fulfilled/satisfied by the respondents-revenue who were clearly not entitled to place reliance upon borrowed satisfaction of another officer and pass the impugned orders illegally and arbitrarily blocking the ECL of the appellant by invoking Rule 86A which is not only contrary to law but also the material on record and consequently, the impugned orders deserve to be quashed. In the instant case since no pre-decisional hearing are provided/granted by the respondents before passing the impugned order, coupled with the fact that the impugned order invoking Section 86A blocking of the Electronic credit ledger of the petition does not contain independent or cogent reasons to believe/accept by placing reliance upon reports of enforcement authority which is impermissible in law, since the same is on borrowed satisfaction as held by Division Bench, the impugned order deserves to be quashed. It is also pertinent to note that the impugned order except stating that the registered person/ supplier found to be a bill trader and involved in issuance/availment in fake invoices and the business premises is not existing , no other reasons are forthcoming in the impugned order. The concerned respondents are directed to unblock the Electronic credit ledger of the petitioner immediately upon the receipt of copy of this order, so as to enable the petitioner to file returns forthwith - Petition allowed.

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• 2025 (5) TMI 546
  Permissibility for the respondent authority to issue a SCN in the name of a company which stood amalgamated and proceed to complete the adjudication, in the name of the amalgamated/non-existent company - HELD THAT:- The respondent initially submitted that the respondent authority was not aware of the amalgamation. When the cause notice was pointed, to state that the officer was informed and aware of the factum of amalgamation, the learned counsel for respondent would request liberty to proceed afresh against the resultant company. The impugned order is set aside - Respondents are at liberty to proceed in accordance with law. - petition disposed off.

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• 2025 (5) TMI 545
  Violation of principles of natural justice - ex-parte assessment order passed without providing sufficient and reasonable opportunity to the petitioner - HELD THAT:- A perusal of the material on record would indicate that the petitioner did not submit its reply to the show cause notice, as a result of which, respondent No. 2 proceeded to pass the impugned ex-parte adjudication order at Annexure-D dated 30.05.2023. Subsequently, the petitioner having filed an appeal under Section 107 before respondent No. 1 - Appellate Authority, the same came to be dismissed vide Annexure-A dated 23.11.2023 on the sole ground of limitation without adverting to the merits of the claim of the petitioner. In the case on hand, the material on record discloses that the petitioner did not submit a reply to the aforesaid show cause notice, which culminated in the impugned ex-parte assessment adjudication order. Under these circumstances, by adopting justice oriented approach and in order to provide one more opportunity to the petitioner to submit a reply to the show cause notice and contest the proceedings, it is deemed just and appropriate to set aside Annexures-A, D, K and L and remit the matter back to respondent No. 2 for re-consideration afresh in accordance with law. The matter is remitted back to respondent No. 2 to the stage of the petitioner submitting reply to the show cause notice for re-consideration afresh in accordance with law - petition allowed by way of remand.

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• 2025 (5) TMI 544
  Input tax credits for delayed returns - clause (5) of Section 16 inserted by the Finance (No.2) Act, 2024 with effect from 01.07.2017 and the circular dated 15.10.2024 issued by the GST Policy Wing of the Central Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance, Government of India - HELD THAT:- In view of clause (5) of Section 16 inserted by the Finance (No.2) Act, 2024 with effect from 01.07.2017 and the circular dated 15.10.2024 issued by the GST Policy Wing of the Central Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance, Government of India, the orders (Annexure-2 and Annexure-4 to the writ petition) passed by the respondents are both set-aside and the respondents are directed to allow the petitioner to take input tax credits in respect of the delayed return filed by the petitioner for the period June, 2018 to March, 2019. Petition disposed off.

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• 2025 (5) TMI 543
  Dismissal of appeal on the ground of delay - statutory stay u/s 112(9) of the Act of 2017 during the pendency of the Appeal - HELD THAT:- Considering the order dated 03.12.2019 issued by the Central Board of Indirect Taxes and Customs and further considering the order dated 09.05.2024 passed by the Co-ordinate Bench in M/S DIVYA STEELS [ 2024 (5) TMI 1549 - CHHATTISGARH HIGH COURT] , this Court finds it appropriate to direct that as soon as the President or State President enters the Office of Goods and Service Tax Appellate Tribunal constituted under the Act of 2017, the Petitioner may invoke the aforesaid provision for filing an Appeal after paying the statutory deposit. On such Appeal being filed, the concerned authority shall decide the same strictly in accordance with law. The statutory stay as provided under Section 112 (9) of the Act 2017 would continue to remain in operation till the decision of said Appeal. Petition disposed off.

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• 2025 (5) TMI 542
  Liability to pay interest under Section 50(1) of the WBGST Act, 2017 and CGST Act, 2017 for intervening period between the date of order and date of payment of the tax - HELD THAT:- It is not in dispute that the order impugned in the writ petition is an appealable order but the fact remains that the order was an ex parte order and the petitioner could not raise his points before the adjudicating authority for the reasons beyond his control. The issues raised by the petitioner in this writ petition requires an adjudication on facts as well, the same cannot be decided in this writ petition by way of exchange of affidavits. This Court is, therefore, inclined to afford a last opportunity to the petitioner to present his case, both on facts as well as on law, before the adjudicating authority. Only for such reason this Court is inclined to interfere with the order impugned. The order impugned as set aside. Since the petitioner did not file any reply to the show-cause notice, this Court gives opportunity to the petitioner to file a reply to the show-cause notice on or before April 21, 2025.

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• 2025 (5) TMI 541
  Principles of natural justice - pursuant to the SCN, neither the petitioner appeared nor filed reply - HELD THAT:- The petitioner is at liberty to avail the remedy available to him under the law against the order dated 19- 7-2024. Petition disposed off.

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• 2025 (5) TMI 540
  Rejection of refund claim - Assistant Commissioner is competent officer to issue SCN - HELD THAT:- Attention of this Court invited to a Circular dated 11.06.2019 issued by the Office of the Commissioner, Department of Trade and Taxes, GNCTD regarding powers of refund under Delhi GST Act, 2017 which indicates that in cases of refund of more than Rs.10 lakhs, the proper Officer to consider the case of refund would be the Special Commissioner whereas, in the present case, the Impugned Order dated 29.08.2019 has been passed by the Assistant Commissioner who is not the competent Officer to deal with the issue. The Order dated 29.08.2019 is accordingly set aside. The matter is remanded back to the Respondent/Competent Authority to decide the issue afresh - petition disposed off by way of remand.

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• 2025 (5) TMI 539
  Suppy or not - assignment of long-term leasehold rights in an industrial plot by the Petitioner to its subsidiary - levy of GST on transfer fee received for the leasehold rights of the GIDC plot - HELD THAT:- The said Deed of Assignment is nothing but a complete transfer/sale of the entire leasehold rights in favour of the assignee by the present petitioner/original lesseee for valuable consideration. In such circumstances and factual premise, the decision of this Court in the case of Gujarat Chamber of Commerce (Supra) will squarely apply. In Gujarat Chamber of Commerce [ 2025 (1) TMI 516 - GUJARAT HIGH COURT] , this Court has held that assignment by sale and transfer of leasehold rights of the plot of land allotted by GIDC to the lessee in favour of third party-assignee for a consideration shall be assignment/sale/ transfer of benefits arising out of immovable property by the lessee-assignor in favour of third party-assignee who would become lessee of GIDC in place of original allottee-lessee. In such circumstances, provisions of section 7(1)(a) of the GST Act providing for scope of supply read with clause 5(b) of Schedule II and Clause 5 of Schedule III would not be applicable to such transaction of assignment of leasehold rights of land and building and same would not be subject to levy of GST as provided under section 9 of the GST Act. Conclusion - The assignment of leasehold rights is not subject to GST. Petition allowed.

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• 2025 (5) TMI 538
  Refund of accumulated Input Tax Credit (ITC) under the inverted duty structure provisions of Section 54(3)(ii) of the Central Goods and Services Tax (CGST) Act, 2017, when the input and output supplies are the same goods - Validity and Scope of Circular No. 135/05/2020-GST, restricting the refund - HELD THAT:- Section 54(3)(ii) of the CGST Act does not proscribe/forbid the grant of refund where the input and the output are the same and that clause (ii) of proviso to sub- section (3) of Section 54 of the CGST Act does not contemplate comparing rate of tax on the principal input with the rate of tax chargeable on the principal output supply; further, there is neither any reason nor any scope to further confine the refund of unutilised ITC only to cases where the rate on main input is higher than the rate of tax on the principal output. A perusal of the impugned orders will indicate that respondent has erroneously placed reliance upon Para 3.2 of Circular No. 135/05/2020-GST dated 31.03.2020 though the same has no application in the present case as the said Circular applies only to scenarios/situations where the ITC is accumulated on account of different rates being applicable at different points of time and merely seeks to address an issue where the ITC is accumulated on account of different rates being applicable at different points of time as held in the aforesaid judgments and the impugned orders deserve to be quashed and directions are to be issued to the respondent to refund the amount back to the petitioner. A perusal of the memorandum of petition will indicate that though the petitioner has not challenged the original orders dated 25.01.2022 and 13.04.2022 rejecting the refund claim of the petitioner in the present petition, in view of the findings recorded by me hereinbefore that the said orders are illegal, arbitrary and contrary to law and facts, it is deemed just and appropriate to set aside the said orders as well as the impugned order at Annexure-A dated 28.02.2024 passed by the respondent appellate authority and direct the respondent to grant refund in favour of the petitioner as sought for in their refund applications together with applicable interest within a stipulated timeframe. Petition allowed.

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• 2025 (5) TMI 472
  Cancellation of registration of petitioner on 24.04.2019 w.e.f. 31.03.2019 - HELD THAT:- It does merit acceptance that the petitioner was not obligated to visit the GST portal to receive the show cause notices that may have been issued to the petitioner for 2018-19 through e-mode, preceding the adjudication order dated 24.04.2024 passed in pursuance thereto. It is also not the case of the revenue that any physical/offline notice was issued to or served on the petitioner before the impugned order came to be passed - no useful purpose may be served in keeping the petition pending or calling counter affidavit at this stage or to relegate the present petitioner to the forum of alternative remedy. Petition disposed off.

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• 2025 (5) TMI 471
  Approval of resolution plan under the Insolvency and Bankruptcy Code, 2016 by the National Company Law Tribunal, New Delhi Bench pertaining to the petitioner Company - whether the approval of resolution plan absolves liabilities prior to the plan s sanction unless expressly provided for therein? - the respondents prays for time to file counter affidavit - HELD THAT:- Time prayed for is allowed.

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• 2025 (5) TMI 470
  Appointment of arbitrators - time limitation - notice dated 04.10.2023 for appointment of an arbitrator has been submitted for the first time by the applicant while the instant proceedings have been filed on 30.01.2024, beyond a period of three years for initiation of proceedings for appointment of an arbitrator - HELD THAT:- The applicant prays for some time to refer to the judgment of the Apex Court in the case of Prakash Corporates Vs. Dee Vee Projects Limited [ 2022 (2) TMI 1268 - SUPREME COURT ]. List this case in the week commencing 19.05.2025.

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• 2025 (5) TMI 469
  Dismissal of appeal of petitioner - order passed without granting the personal hearing - violation of principle sof natural justice - HELD THAT:- In terms of the mandate of Section 75(4) of GST Act, it is incumbent to grant an opportunity of hearing even if the same is not asked for, as such, the order under Section 73 of GST Act is in violation of principles of natural justice as well as against the mandate of Section 75(4) of GST Act. The appellate order, although, records the submission made in the memo of appeal, however, does not deal the same on merits and record that the appellant has failed to adduce any evidence. The said manner of adjudication cannot be termed as justified in view of the mandate of Section 107(12) of GST Act. Thus, finding the impugned orders dated 28.12.2023 23.12.2024 to be short of requirements of the mandatory provisions, the same cannot be sustained and are quashed. Matter is remanded to the assessing authority to pass fresh order in accordance with law after affording an opportunity of hearing. Petition allowed.

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• 2025 (5) TMI 468
  Violation of principles of natural justice - impugne dorder passed without hearing the Petitioner and even the SCN has not been served to the Petitioner - HELD THAT:- Since the Petitioner has not been diligent in checking the portal, no reply to the Show Cause Notice has been filed by the Petitioner. Thus the department cannot be blamed. The Petitioner is permitted to file an appeal against the impugned order before the Appellate Authority under Section 107 of the Central Goods and Service Tax Act, 2017 along with the pre-deposit on the tax amount in terms of the said provision - Petition disposed off.

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• 2025 (5) TMI 467
  Levy of CGST/SGST on the minimum guarantee/revenue share on DFS operated by petitioner in the arrival and departure terminals - Zero Rated supply in terms of Section 16 of Integrated Goods and Services Tax Act - petitioners are beyond the customs frontiers of India and outside the territory of India - revenue neutrality - HELD THAT:- Having said that the finding of the Learned Judge, particularly for the period prior to 01.04.2021, that the entire exercise is Revenue neutral is not seriously disputed by the revenue/Union, there are no reason to interfere with the order of the Learned Judge. The Apex Court on more than one occasion held that no appeal need be preferred where the tax effect is revenue neutral. Reliance can be placed in Commissioner of Income Tax, Central, Kanpur v. J.K. Charitable Trust, Kamal Tower, Kanpur [ 2008 (11) TMI 8 - SUPREME COURT ] where it was held that Similarly, where the effect of the decision is revenue neutral there may not be any need for preferring the appeal. All these certainly provide the foundation for making a departure. Conclusion - Supplies outside the customs territory qualifying as zero-rated under Section 16 of the IGST Act are not liable to GST, and that payment followed by refund in such cases is a revenue neutral exercise. Refund application stated to be filed by 3rd respondent shall be processed and finalized within a period of four weeks along with applicable interest in accordance with law - appeal disposed off.

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• 2025 (5) TMI 466
  Extension of Time limit for issue of SCN - Challenge to SCN and N/N. 09/2023-Central Tax dated 31st March 2023 - invalid service of SCN - SCN uploaded on the Additional notices tab and did not come to the knowledge of the Petitioner - violation of principles of natural justice - HELD THAT:- In the opinion of this Court, considering that the show cause notice was uploaded on the Additional notices tab, following the decision in Neelgiri Machinery Through Its Proprietor Mr. Anil Kumar V. Commissioner Delhi Goods And Service Tax And Others [ 2025 (3) TMI 1308 - DELHI HIGH COURT] , SCN is set aside. After hearing the Petitioner, the Adjudicating Authority shall pass the order of adjudication. Needless to add that the adjudication order shall be subject to the outcome of the SLP pending in the Supreme Court, where the impugned notification is challenged. Conclusion - The demand order dated 27th December 2023 is set aside due to invalid service of the Show Cause Notice. Petition disposed off.

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• 2025 (5) TMI 465
  Challenge to SCN and N/N. 09/2023-Central Tax dated 31st March 2023 - invalid service of SCN - SCN uploaded on the Additional notices tab and did not come to the knowledge of the Petitioner - violation of principles of natural justice - HELD THAT:- Considering that the fact that Portal had been rectified after 16th January, 2024 and failure of the Petitioner to provide any justification for not filing the reply or attending the personal hearing, the matter in the opinion of the court, deserves to be dismissed. The present petition is disposed of with the liberty to the Petitioner to file an appeal in terms of Section 107 of the Act. If the Appeal is filed within 45 days along with the pre-deposit it shall not be dismissed due to limitation and shall be adjudicated on merits.

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• 2025 (5) TMI 464
  Blocking of ITC - blocking of credit ledger beyond a period of one year - non-existent firm - Rule 86A of the CGST Rules, 2017 - HELD THAT:- A plain reading of the provision of Rule 86 (A) (3) makes the statutory position abundantly clear. Accordingly, in view of the fact that more than one year has elapsed since the imposition of restriction, the blocking of the Input Tax Credit (ITC) shall stand lifted. This is, however, independent of any other action that the adjudicating authority may have taken, in accordance with law, against the Petitioner. Petition disposed off.

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• 2025 (5) TMI 463
  Challenge to rectification rejection order - petitioner failed to produce E- Way Bills and invoices - HELD THAT:- Recording the submissions made by the learned Government Advocate that the petitioner is having an appeal remedy before the Appellate Deputy Commissioner (ST) GST Appeal, Tiruchirappalli, under Section 107 of the TNGST Act, 2017, this writ petition is disposed of with liberty to the petitioner to approach the appellate authority and raise all the grounds raised in this writ petition in the appeal. Petition disposed off.

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• 2025 (5) TMI 462
  Challenge to order of the Appellate Authority confirming the order of assessment - petitioner submit that they are ready and willing to pay 10% which is the pre-deposit in terms of Section 112 of the GST Act in case an appeal is to be filed - HELD THAT:- There shall be an order of interim stay subject to the condition the petitioner deposits 10% of the balance taxes within a period of 4 weeks from the date of receipt of a copy of this order. Failure to comply with the above condition will result in the stay getting automatically vacated. The petitioner can file an appeal as and when the Tribunal becomes functional. Petition disposed off.

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• 2025 (5) TMI 461
  Invalid service of order - detailed order along with Form GST DRC 07 has not been served - petitioner is ready and willing to pay 25% of the disputed tax and that they may be granted one final opportunity before the adjudicating authority to put forth their objections to the proposal - HELD THAT:- The petitioner shall deposit 25% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent, within a period of four weeks from the date of receipt of a copy of this order. The impugned order dated 13.03.2020 is set aside - Petition disposed off.

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• 2025 (5) TMI 460
  Validity of SCN - petitioner could not point out any statement specifically relied on by the proper officer in the impugned order for imposing liability on the petitioner - principles of natural justice - HELD THAT:- It is found that inasmuch as the proper officer has not relied on any statement recorded by him from the 3rd parties for the purpose of imposing liability on the petitioner, it is not a position to accept the argument of the appellant that there is violation of the principles of natural justice. The question as to whether the proper officer was justified in rejecting the retraction statement filed belatedly, is a matter which should gain attention of the appellate authority and not by the writ court in a writ petition under Article 226 of the Constitution of India - no case is made out for interference in this intra-court appeal. Appeal dismissed.

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• Income Tax

• 2025 (5) TMI 537
  Disallowance u/s 14A - connection between the subject expenditure and the exempt income - Adjustments on account of delay in realization of receivables - TP Adjustment - comparable selection - HC [ 2023 (12) TMI 140 - DELHI HIGH COURT] allowed assessee appeal - HELD THAT:-There is no satisfactory explanation for condoning the delay of 387 days in filing the Special Leave Petition. The Special Leave Petition is accordingly dismissed on the ground of delay. Pending application also stands disposed of.

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• 2025 (5) TMI 536
  Addition of sale proceeds from share transactions u/s 68 - transactions in penny stocks - as decided by HC [ 2024 (3) TMI 1444 - GUJARAT HIGH COURT] admittedly, the assessee has furnished complete evidence including contract note of shares, demat details, details of bonus shares and those evidences have not been doubted by the authorities.The entire transaction was done by the assessee through the platform of BSE by paying necessary security transaction tax and the transaction was undertaken by the share brokers, no such allegation was made against the said broker for indulging in any price manipulation. HELD THAT:- There is a gross delay of 282 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioner. Special Leave Petition is, accordingly, dismissed on the ground of delay. Pending applications, if any, shall also stand disposed of.

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• 2025 (5) TMI 535
  Interest on the claim of the refund - petitioners could not file the return of income claiming refund in time and such return was filed after condoning delay by the respondent under section 119(2)(b) - interest on the compensation amount is paid for acquisition of the agricultural land of the petitioners - TDS deducted under wrong section as correct section for deduction of tax at source is section 194A and not section 194C - As decide by HC [ 2023 (12) TMI 1165 - GUJARAT HIGH COURT] the petitions succeed and are accordingly allowed. The respondent is directed to grant interest on the refund claim from the date of deposit of the TDS till the date of refund as per the provisions of section 244A of the Act, 1961. HELD THAT:- There is a gross delay of 371, 390 and 374 days respectively in filing the Special Leave Petitions which has not been satisfactorily explained by the petitioners. Even otherwise, we see no good reason to interfere with the impugned orders passed by the High Court. Special Leave Petitions are, accordingly, dismissed on the ground of delay as well as merits.

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• 2025 (5) TMI 534
  Assessment order u/s 143 (3) r/w Section 144B - breach of the principles of natural justice in the passing of the impugned assessment order - As decided by HC 2025 (4) TMI 999 - BOMBAY HIGH COURT] personal hearing was offered to the petitioner, but the petitioner s representatives could not avail of the same. This is not a fit case to deviate from the standard rule of exhaustion alternate remedies. All contentions now raised by the petitioner can be better adjudicated before the Appellate Authority, and no extraordinary circumstances have been made out to bypass statutory remedies and entertain this petition. HELD THAT:- As petitioner seeks permission to withdraw the present special leave petition and states that the petitioner, if so advised, would file an appeal and also move an application for grant of stay. In view of the statement made, the special leave petition is dismissed as withdrawn with liberty as prayed.

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• 2025 (5) TMI 533
  Validity of order passed u/s 144C(5) - Reference to dispute resolution panel - [ 2023 (9) TMI 759 - BOMBAY HIGH COURT] - as decided by HC [ 2023 (9) TMI 759 - BOMBAY HIGH COURT] DRP could give directions only in pending assessment proceedings. Once assessment order is passed, rightly or wrongly, the assessment proceedings come to an end. Therefore, the DRP would have no power to pass any directions contemplated under subsection 5 of Section 144C of the Act. Thus quash and set aside the directions issued by DRP and the consequent assessment order. HELD THAT:- After having heard the learned counsel appearing for the petitioners, we find no error in the view taken by the High Court. Special Leave Petition is, accordingly, dismissed.

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• 2025 (5) TMI 532
  Proceedings u/s 153C - issuance of the notice was preceded by the drawl of a Satisfaction Note by the jurisdictional AO - importance of material recovered in the course of a search or a requisition made and a right to reassess u/s 153A and 153C - Distinction between Section 153A and Section 153C - As decided by HC [ 2024 (4) TMI 461 - DELHI HIGH COURT] abatement of the six AYs or the relevant assessment year would follow the formation of that opinion and satisfaction in that respect being reached. Invocation of Section 153C in respect of AYs for which no incriminating material had been gathered or obtained is flawed. Satisfaction Notes also fail to record any reasons as to how the material discovered and pertaining to a particular AY is likely to have a bearing on the determination of the total income for the year which is sought to be abated or reopened in terms of the impugned notices. Respondents have erroneously proceeded on the assumption that the moment any material is recovered in the course of a search or on the basis of a requisition made, they become empowered in law to assess or reassess all the six AYs years immediately preceding the assessment correlatable to the search year or the relevant assessment year as defined in terms of Explanation 1 of Section 153A. The said approach is clearly unsustainable and contrary to the consistent line struck by the precedents noticed above. HELD THAT:- There is a gross delay of 250, 215 and 267 days respectively in filing the Special Leave Petitions which has not been satisfactorily explained by the petitioners. Even otherwise, we see no good reason to interfere with the impugned orders passed by the High Court. Special Leave Petitions are, accordingly, dismissed on the ground of delay as well as merits. Pending applications, if any, also stand disposed of.

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• 2025 (5) TMI 531
  Centralization of assessment in the case of various group entities - HELD THAT:- Issue notice, returnable on 14.05.2025. Dasti service, in addition, is permitted. Income Tax Assessment proceedings sought to be transferred from other places to Kolkata under Section 127(2) of the Income Tax Act, 1961 shall not be transferred till the next date of hearing so far as the present cases are concerned.

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• 2025 (5) TMI 530
  Validity of assessment order passed u/s 143 (3) r/w Section 144B - NFA unit instructed the petitioner to upload certain evidences granting him barely four days, which is considered by the petitioner to be insufficient for compliance - HELD THAT:- As it is not disputed by the counsel for the Income Tax Department that the Assessing Authority though considered the documents uploaded on 01.03.2025 and 09.03.2025, omitted to consider the documents uploaded on 14.03.2025. The assessment order passed under Section 143 (3) read with Section 144B of the Income Tax Act depicts that the same was passed on 18.03.2025. Under such premise, had the Assessing Authority been meticulous, it could have considered documents uploaded on 14.03.2025, while he took up documents for examination which were uploaded on 01.03.2025 and 09.03.2025. Therefore, this Court is of the view that there has been flagrant violation of the principles of natural justice As inadequate time was granted to the petitioner to furnish voluminous documents. This apart, the Assessing Authority appears to have omitted to take into consideration the documents furnished before him on 14.03.2025, even though he framed assessment in Section 143 (3) on 18.03.2025. Therefore, this Court is inclined to set aside the Assessment Order dated 18.03.2025 passed under Section 143 (3) read with Section 144B of the Income Tax Act and remit the matter to the opposite party no. 3- National Faceless Assessment Unit, Income Tax Department for fresh adjudication of the matter with respect to financial year 2022-23 relevant to assessment year 2023-24.

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• 2025 (5) TMI 529
  Validity of order passed by AO challenged on lack of inherent jurisdiction - ITAT quashed assessment order passed u/s 143(3) - HELD THAT:- Tribunal took note of the facts and circumstances of the case and found that the assessee filed its return of income declaring the income to be nil. Subsequently, notice u/s 143(2) was issued on 10.9.2015 and notice u/s 142(1) was issued along with the questionnaire. Assessee contended that the notices were without jurisdiction and relied upon section 120 of the Act. In this regard, the assessee referred to the notification issued by the CBDT in Instruction No.1 of 2011. The learned Tribunal took into consideration the facts of the case and found that the assessment has been framed by the Assessing Officer, who inherently lacks jurisdiction to do so. Tribunal took note of the decision of Bhagyalaxmi Conclave (P) Ltd. [ 2021 (2) TMI 181 - ITAT KOLKATA] . Apart from other decisions and allowed the assessee s appeal, the revenue had challenged the order passed in the case of Bhagyalaxmi Conclave (P) Ltd.[ 2022 (12) TMI 1514 - CALCUTTA HIGH COURT] the appeal filed by the department was dismissed wherein one of the questions framed is identical to the substantial questions of law suggested by the revenue in the instant case. Thus, we find that Tribunal was right in allowing the assessee appeal and setting aside the order passed by the AO on the ground of lack of inherent jurisdiction. Decided against revenue.

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• 2025 (5) TMI 528
  Unexplained share capital and share premium - assessee-company had not discharged the ba sic onus of establishing the identity, genuineness and capacity of the Share Holders who had infused capital into the Company - ITAT deleted addition - HELD THAT:- We note that the Tribunal has referred to the two decisions of this Court in the case of Alishan Steels Pvt. Ltd. [ 2024 (2) TMI 1482 - CALCUTTA HIGH COURT] as well as the decision in the case of M/s. Abhijeet Enterprise Ltd. [ 2023 (11) TMI 1312 - CALCUTTA HIGH COURT] . In the second decision, the Division Bench of this Court took into consideration the decision in the case of V. R. Global Energy (P) Ltd [ 2018 (8) TMI 866 - MADRAS HIGH COURT] wherein it was held that the assessee allotted share to a company in settlement of their existing liability of assessee to the said company since no cash was involved in the transaction of the said allotment of shares, conversion of this liability in such share capital and share premium could not be treated as unexplained cash credits under Section 68 of the Act. The court also took note of the fact that the revenue had filed appeal before the Hon ble Supreme Court against the said decision which was dismissed in the case of ITO Vs. V. R. Global Energy (P) Ltd.[ 2020 (1) TMI 520 - SC ORDER] Apart from that two other decisions, one of the Division Benchin the case of Jatia Investment Co. [ 1992 (8) TMI 16 - CALCUTTA HIGH COURT] and Ritu Anurag Agarwal [ 2009 (7) TMI 1247 - DELHI HIGH COURT] also support the case of the assessee. The Tribunal took note the above decision and the admitted facts in position and dismissed the appeal filed by the revenue thereby affirming the order passed by the CIT(A). No substantial question of law arises

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• 2025 (5) TMI 527
  Computation of cost of acquisition under the provisions of the Income Tax Act, 1961 of an asset distributed on liquidation of the Company, the asset being the immovable property that belonged to the Company - applicability of Sec. 55(2)(b)(iii) - Whether Section 55(2)(b)(iii) overrides the provisions of Section 49(1)(iii)(c) as the Appellants had acquired the shares of the Company prior to liquidation? HELD THAT:- The provisions of Section 46(2) as applicable to shareholders, states that where a shareholder, on the liquidation of a company, has received any money or asset from the company, he shall be chargeable to tax under the head capital gains in respect of the money received or market value of the assets as on the date of distribution, reduced by dividend received by him and the resultant sum shall be the full value of consideration for the purposes of Section 48 of the Act. Under Section 48, the expenditure incurred wholly and exclusively in connection with the transfer of the asset, and the cost of acquisition and improvement of the asset shall be deducted to arrive at the capital gain. Applying the aforesaid provisions to the present case, we find that the unique factor that has transpired in the assessee s case is that both Section 49(1)(iii)(c) and Section 55(2)(b)(iii) would stand attracted as, the transfer of shares, firstly, by way of extinguishment right therein and in consideration of which the appellant received the asset from the company (transaction 1) and secondly, by transfer of the asset received on liquidation and in consideration of which the assessee received actual money (transaction 2). Relevantly both transactions, as aforesaid have taken place in the same financial year as the appellants have proceeded to sell their share of the property to MRL in the same year where the asset had been distributed to them, fusing the applications of both applicable statutory provisions. In order to decide these appeals, it would suffice to advert the order of the Tribunal in the case of T.R. Srinivasan [ 2009 (11) TMI 664 - ITAT CHENNAI ] as this is the speaking order, which has analysed the provisions clearly and in a methodical manner. Tribunal proceeds to conclude adverse to the Appellant stating that it was bound by the conclusions of the earlier Benches of the Tribunal that had been decided adverse to the other two Appellants. In fact, the Tribunal could well have referred the matter for the constitution of a Larger Bench as is normally done in such matters instead of which, the Departmental appeal has come to be allowed. We are of the view that the procedure followed by the Tribunal in this case is incorrect particularly in view of the categorical discussion and conclusion in favour of the Assessee in the paragraphs extracted supra, with which we concur. We are now concerned with the substantial question of law on this issue and for this purpose, find that the manner of computation as adumbrated in Computation 4 above, would be the proper methodology for computation of cost of acquisition. This is a case where one has necessarily to take note of the computations of capital gain both in regard to transactions 1 and 2, and the same have rightly been taken note of, and stand encapsulated, in computation 4 above. Decided against revenue.

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• 2025 (5) TMI 526
  Reopening of assessment u/s 147 - Reasons recorded in view of the report of the District Valuation Officer - writ appeal is presented against an order [ 2025 (2) TMI 1176 - CHHATTISGARH HIGH COURT] HELD THAT:- Admittedly, a Survey was conducted u/s 133 wherein a report has been sought from the DEO with regard to construction of the Nursing Home as well as residential unit made by the assessee. From the report of the DEO, it has been revealed that certain unexplained amount of investment has been made. It was further revealed that the expenditure incurred shown by the assessee was much below the assessed cost of the construction. So considering this clear difference in the cost of construction, a reason to believe has been recorded by the AO in respect of the subject AYs and the case was reopened by exercising the powers vested in him u/s 147 of the Act. Even though the Assessee had raised objections for reopening, however, the same was turned down by a speaking order dated 12.12.2008. Thus, it is explicit that the Assessing Officer has recorded the reasons in view of the report of the District Valuation Officer. Moreover, the Survey conducted reveals that the assessee has not truly disclosed his income chargeable to tax which has escaped assessment for the relevant Financial Years. The learned Single Judge concluded that the AO has recorded his own valid and proper satisfaction for existence of reason to believe that the income of the relevant assessment years has escaped assessment. Thus, the notice cannot be treated to have been passed without jurisdiction. Even otherwise, the writ petitioner would get full opportunity to raise his defence in the appellate proceedings and accordingly, dismissed the writ petition filed by the writ petitioner on merits. Considering the submissions advanced and the fact that the Assessing Authority has already passed its fresh order on 08.04.2025 against which, the appellant herein has alternative remedy to raise all his grievance in the CIT appeal u/s 246A and the finding recorded by the learned Single Judge while dismissing the writ petition filed by the writ petitioner / appellant herein, we notice that the same has been rendered with cogent and justifiable reasons. In an intra-court appeal, no interference is usually warranted unless palpable infirmities are noticed on a plain reading of the impugned order. In the facts and circumstances of the instant case, on a plain reading of order, we do not notice any such palpable infirmity or perversity, as such, we are not inclined to interfere with the impugned order. Decided against assessee.

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• 2025 (5) TMI 525
  Centralisation of assessment in the case of various group entities - incriminating documents are seized from multiple premises of related companies - HELD THAT:- Division Bench of this Court after referring to the decision of Dollar Gulati [ 2024 (5) TMI 456 - DELHI HIGH COURT] which has been upheld by the Supreme Court in the Mark Gulati V. Principal Commissioner of Income-tax [ 2024 (7) TMI 1091 - SC ORDER] as held when the documents are seized from different premises of a group of companies/concerns, it is necessary for all the cases to be centralised or considered together at one place, so that there will be a coordinated investigation. The object of Section 127 is to meet situations as in the present case. The appellants admit that they are a group of companies may be carrying on different business. There is no mala fides alleged in this case as against the first respondent in any of the cases for passing the impugned order for transferring the cases from the office of the second respondent to the office of the Deputy Commissioner of Income Tax, Circle-4(4), Kolkata under Section 127 of the Income Tax Act, 1961. The power under Section 127 is not circumscribed or limited by express language. We find no reasons to doubt the bona fides in this case. Present appeals and the connected Miscellaneous Petitions.

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• 2025 (5) TMI 524
  Adjustment of refunds beyond 20% of the demand raised - HELD THAT:- As on 24.01.2024 and 07.08.2024, the first respondent issued a letter granting stay of demand for Assessment year under dispute. Subsequently, the petitioner submitted a representation/application dated 05.09.2024 and 24.10.2024 seeking the respondents for the refund of the adjust amount along with interest for which the petitioner neither received a reply nor the refund. However, having regard to the fact that the respondents have neither replied to the application filed by the petitioner nor have granted refund as sought for by the petitioner, deem it just and appropriate to direct the respondents to refund entire amount in excess of 20% for the assessment years 2022-23 and 2019-20. The petitions are hereby allowed. The concerned respondents are directed to refund the entire amount in excess of 20% for the assessment years 2022-2023 and 2019-20 together with interest, if applicable, back to the petitioner after due verification within a period of six weeks from the date of receipt of copy of this order.

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• 2025 (5) TMI 523
  Validity of final assessment passed without waiting for the directions of DRP - HELD THAT:- As undisputed that pursuant to the draft assessment order, the petitioner has filed objections before the DRT before cut off date i.e., 09.03.2025. Further in the light of the specific assertion on the part of the petitioner and its inability and omission to intimate and communicate the same to respondent No.1 was due to bona fide reasons, sufficient case and unavoidable circumstances, we deem it just and appropriate to set aside the impugned order by issuing necessary directions.

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• 2025 (5) TMI 522
  Rejection of registration u/sec.80G - assessee trust has failed to prove it s onus of charitable activities carried-out - HELD THAT:- CIT(A) dismissed the application filed by the assessee in a casual manner by repeating or copying the contents from some other order which is evident from the findings in CIT(E) s order where the CIT(E) observed that, the application in Form-10AB is to be decided in time bound manner and non-submission of mandatory information, the present application in Form-10AB for registration u/sec.80G is infructuous and herewith rejected as non-maintainable. CIT(E) never discussed the objects of the appellant trust and activities carried-out by the assessee trust during the relevant assessment year. CIT(E) dismissed the application filed by the assessee without even considering the relevant application filed in Form-10AB and other evidences filed in support of the application. Therefore, we set aside the order of the CIT(E) and restore this issue back to the file of CIT(E) with a direction to redecide the issue afresh, after providing an adequate opportunity of being heard to the assessee. Accordingly, the grounds of appeal of the assessee are allowed for statistical purposes.

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• 2025 (5) TMI 521
  Denial of benefit of Sections 115BAA and invoking the provisions of Section 115JB - HELD THAT:- We find that assessee was not given any show cause notice by the AO/CPC before making rejecting the benefit benefit claimed by the assessee u/s115BAA of the Income-tax Act, 1961 (the Act) and invoking the provisions of Section 115JB of the Act. We note that in this case, the assessee has filed form no.10-IC in the preceding assessment year and has already opted for the lower tax regime. Action of the ld. AO/CPC is beyond the provisions of Section 143(1) of the Act as the issue involved in the present case is debatable issue and therefore, could not have been subject matter of the order passed u/s 143(1) of the Act. Besides it is mandatory to issue show cause notice to the assessee before making any adjustment in rejecting the benefit claimed by the assessee which was never issued. Accordingly, we hold that the order passed u/s 143(1) of the Act is invalid and cannot be sustained. Consequently, we quash the intimation passed u/s 143(1) of the Act. Even on merit, the form no.10-IC which was stated to be filed beyond the due date of filing the return of income u/s 139(1) of the Act, we find that the same is not mandatory and at best can be regarded as a directory and procedural issue and therefore, even on merit the assessee case is very strong case, however, we are not inclined to decide the same at this stage. Appeal of the assessee is allowed.

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• 2025 (5) TMI 520
  Reopening of assessment - non supply the copy of the reasons recorded for re-opening the assessment - HELD THAT:- AO failed to supply the reasons recorded u/s 148(2). CIT (A) passed a very cryptic order as extracted above by justifying the reopening of assessment on basis the information received from the investigation wing. Undisputedly, the reasons were not supplied to the assessee despite being requested by the assessee time and again as noted above. Therefore, we find merit in the contention of the ld. AR that the assessment framed without supplying the reasons to the assessee is bad in law and has to be quashed. The case of the assessee find support from the decision of V. Ramaiah [ 2019 (3) TMI 1171 - SC ORDER] upheld that the order passed by the Tribunal holding that non-communication of reasons recorded for reassessment to assessee did not amount to a mere procedural lapse and thus, upholding the order of Tribunal wherein the reassessment order was quashed on the ground that the reasons recorded by the ld. AO for reopening of assessment were never communicated to the assessee though the same were produced before the Tribunal for perusal during appellate proceedings. Also in Agarwal Metals and Alloys [ 2012 (8) TMI 612 - BOMBAY HIGH COURT] wherein held that the reopening of assessment without communicating the reasons for reopening and without furnishing to the assessee an opportunity of filing its objections is not valid. In the present case also, since the assessee has repeatedly requested the AO to supply the copy of reasons recorded u/s 148(2) of the Act which were never communicated to the assessee during the assessment proceedings. The said fact could not be controverted by the ld. DR - Decided in favour of assessee.

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• 2025 (5) TMI 519
  Addition towards long-term capital gain u/s 50C - adopting the stamp duty value as deemed consideration without reference to the Departmental Valuation Officer, despite the assessee s objection - assessee s 1/5th share was determined after deducting indexed cost - Penalty proceedings u/s 271(1)(c) were initiated. HELD THAT:- Section 50C(2) of the Act provides that where the assessee claims that the value adopted or assessed for stamp duty purposes exceeds the fair market value and has not been received, and the assessee objects to such valuation, the AO may refer the valuation of the capital asset to a Valuation Officer. In the present case, the assessee had placed on record his oral submissions during the assessment proceedings requesting for reference to DVO. This aspect is also part of the assessee s written Statement of Facts and was reiterated before us. CIT(A) has acknowledged that the assessee claimed to have objected to the stamp duty valuation, but concluded against the assessee merely on the ground that no supporting documentary evidence was produced. However, the appellate authority failed to deal with the merits of such objection or direct the AO to make factual verification. It is well-settled law that once the assessee raises objection to the adoption of stamp duty valuation, it is obligatory for the AO to refer the matter to the DVO before proceeding to invoke section 50C(1). In the facts and circumstances of the case, and particularly considering the sale of property to a charitable community trust at lesser than market value, we find it appropriate to restore the matter to the file of the Assessing Officer with a specific direction to refer the valuation to the DVO under section 50C(2) and decide the matter afresh in accordance with law. We deem it fit and proper to set aside the orders of the lower authorities in so far as they relate to the addition under section 50C, and restore the matter to the file of the AO with a direction to: - Refer the property valuation to the DVO under section 50C(2) of the Act; - Recompute the capital gain based on the valuation so obtained. - Grant reasonable opportunity to the assessee for furnishing necessary evidence and explanation. Appeal is allowed for statistical purposes.

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• 2025 (5) TMI 518
  Order passed by Order u/s. 250 dismissing the appeal on the ground of non-payment of amount equal to advance tax - claiming deduction/exemption u/s. 80P(2)(a)(i) - HELD THAT:- It is a matter of record that the assessee has not filed the return of income as well as revised income tax return and when the assessee has not filed the return of income as well as revised income tax return, the question of claiming deduction/exemption u/s. 80P(2)(a)(i) does not arise. The deductions under Income Tax Act will not be operational unless and until the income has been notified to the tax authorities by way of filing the return of income or revised return of income. Merely keeping the audited annual accounts is not a threshold for claiming deduction u/s. 80P of the Act or any claim of deduction/exemption under the provisions/Sections of Income Tax Act, 1961. The assessee at this juncture is showing that the question of advance tax has to be taken into account related to the filing of the appeal as per Section 249(4)(b) of the Act, it is a mandate when the assessee has not filed the return of income. If the assessee wanted any exemption for payment of the prescribed mandate for filing Form 35 in respect of filing appeal before the CIT(A), the assessee should have opted for exemption obligation before the appropriate authority as envisaged in the proviso of Section 139 of the Act. But the assessee has not opted the same as well. CIT(A) has rightly dismissed the appeal being infructuous. The decisions filed by the assessee will not be applicable in the present case as the Tribunal has not taken the cognizance of the proviso to Section 139 of the Act where the assessee has no taxable income/no obligation would be cast upon to compute and pay any advance tax u/s. 208 and 209 of the Act even in the scenario where the assessee had not filed his return of income / revised return of income as he had no taxable income. The decision of Ahmedabad Tribunal has not considered the proviso of Section 139 wherein the assessee has to make a proper application before the authorities for taking the exemptions for filing the appeal before the CIT(A) without paying the amount equal to the advance tax. Here, the word advance tax should not be taken into account in toto but is merely an indicator as if the assessee has to pay particular/certain amount of tax. The assessee is claiming that the assessee has an exempt income u/s. 80P of the Act but the exemptions can only be operational when the assessee files return of income/revised return of income and not otherwise. To get the benefit of any provisions/Sections of the Income Tax Act, the assessee has to fulfill the conditions of the Income Tax Act in totality and not to interpret the provisions/Sections in isolation where it is only a matter of convenience to the assessee to ask for immunity without discharging its obligations of filing the application before the appropriate authorities for calling upon the exemptions of not paying the amount equal to advance tax before filing the appeal before the CIT(A). Hence, the appeal of the assessee is rightly dismissed.

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• 2025 (5) TMI 517
  Levying Penalty u/s 271(1)(c) - Estimation of income on bogus purchases - AO has disallowed the entire purchases from one of the concerns of Rajendra Jain Group, who were found to have provided accommodation entries by way of bogus purchases and sales to various parties - disallowance was restricted to 5% of the impugned purchase by the CIT(A) - HELD THAT:- Addition was sustained on estimation basis. The penalty u/s 271(1)(c) of the Act has been levied on the estimated addition sustained by the CIT(A). As decided in Subhash Trading Co.[ 1995 (11) TMI 37 - GUJARAT HIGH COURT] has held that penalty u/s 271(1)(c) of the Act could not be levied where addition was on estimated basis. ITAT, Mumbai in case of Mun Gems [ 2024 (1) TMI 209 - ITAT MUMBAI] has also held that where AO treated entire purchase as bogus based on findings of Investigation Wing and levied penalty u/s 271(1)(c), since payment of purchase had been made through account payee cheques and there was corresponding sales, ad hoc GP rate applied on alleged bogus purchases to factor in suppression of alleged gross profit could not be basis of levying penalty for furnishing of inaccurate particulars of income or concealing particulars of income. Since the facts are similar, following the above decisions, the order of CIT(A) is set aside and grounds of appellant are allowed.

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• 2025 (5) TMI 516
  Penalty levied u/s 271(1)(c) - assessee claimed bogus purchases in its Return of Income in order to suppress taxable income - assessment order was passed u/s 143(3) r.w.s. 147 of the Act by disallowing 25% of the purchases from the concerns of Shri Rajendra Jain group - disallowance was restricted to 6% of the impugned purchase by the ITAT - HELD THAT:- It is clear that the additions all through have been made on estimation basis. The penalty u/s 271(1)(c) of the Act has been levied on the estimated addition by the AO, which has been deleted by the CIT(A). As relying on SUBHASH TRADING COMPANY [ 1995 (11) TMI 37 - GUJARAT HIGH COURT] and S.P. BHATT. [ 1973 (3) TMI 39 - GUJARAT HIGH COURT] held that where AO treated entire purchase as bogus based on findings of Investigation Wing and levied penalty u/s 271(1)(c), since payment of purchase had been made through account payee cheques and there was corresponding sales, ad hoc GP rate applied on alleged bogus purchases to factor in suppression of alleged gross profit could not be basis of levying penalty for furnishing of inaccurate particulars of income or concealing particulars of income. Appeal of the revenue is dismissed.

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• 2025 (5) TMI 515
  Reducing the Work-in-Progress (WIP) value by disallowing payments made to two entities on the ground that these entities were non-existent and had not filed income tax returns - HELD THAT:- Both the payee entities have acted as POA holders for landlords who have sold their land to the assessee. The transactions are well documented with various sale deeds and the impugned payments are in line with these sale deeds. The sale consideration has duly been split in the respective sale deeds between POA holders and the landlords and the payments have accordingly been made by the assessee through banking channels. There is no evidence that POA holders were paid more than what was specified in the sale deeds nor was there any evidence suggesting that the payments were made for purposes other than the land purchase. AO has made adjustment solely on the ground that the POA holders could not be traced and they had not filed their income tax returns. However, both these reasons do not invalidate the payments made for the land which were properly documented in the sale deeds. This fact would not change the legal validity of the transaction and assessee could not be denied its legitimate claim. Therefore, the impugned reduction of WIP has rightly been reversed by Ld. CIT(A)

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• 2025 (5) TMI 514
  Disallowance u/s. 14A r.w. Rule 8D - HELD THAT:- Respectfully following decision of M/s.Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] we direct the Ld. AO to compute disallowance u/s. 14A r.w.Rule 8D by considering only those investments which have yielded exempt income during the year. The ground raised by the assessee is allowed statistical purposes. Disallowance of depreciation on capital subsidy - HELD THAT:- Respectfully following the decision of Dayal Steel Limited [ 2017 (7) TMI 952 - ITAT PATNA] we allow the second ground raised by the assessee in regard to depreciation on capital subsidy. Disallowance u/s.14A read with Rule 8D - AO has computed disallowance @1% of investment -A submitted that amendment to Rule 8D came into force w.e.f 02.06.2016 and hence said Rule 8D(2) has no application for AY 2015-16 - HELD THAT:- Having heard both the parties and perused the records, we find that the Tribunal in assessee s own case for AY 2015-16 [ 2021 (3) TMI 1429 - ITAT CHENNAI] has remitted the issue of disallowance u/s. 14A r.w. Rule 8D back to the file of AO to consider whether Rule 8D(2) is applicable to the year under consideration or not and to decide the said issue in accordance with law. Thus, we remit the issue of disallowance u/s. 14A read with Rule 8D(2) for the AY 2014-15 also on the similar direction to the AO to consider whether Rule 8D(2) is applicable to the year under consideration or not and to decide the said issue in accordance with law. This ground is allowed for statistical purposes. Depreciation @ 60% on UPS, printers and routers etc. - We find that the Tribunal in the assessee s own case for earlier assessment year 2015-16 [ 2021 (3) TMI 1429 - ITAT CHENNAI] has allowed depreciation @ 60% on UPS, printers and routers etc. Respectfully following the co-ordinate Bench decision of this Tribunal, we allow depreciation @ 60% on UPS, printers and routers etc. as claimed by the assessee. Disallowance u/s. 14A r.w. Rule 8D - We direct the AO to see whether the interest free funds available to the assessee were sufficient to meet its investment in the light of the judgment of Reliance Industries Ltd [ 2019 (1) TMI 757 - SUPREME COURT] Hence, we do so. The first ground raised by the assessee is allowed statistical purposes. Disallowance of weighted deduction u/s. 35(2AB) - AO disallowed the deduction on the ground that certificate of DSIR for the expenditure in Form 3CL is to the extent partly - HED THAT:- As decided in case of M/s. Mahindra Electric Mobility Ltd [ 2019 (1) TMI 20 - ITAT BANGALORE] have clearly held that prior to 01.07.2016 Form 3CL has no legal sanctity and it is only w.e.f. 01.07.2016 with the amendment to Rule 6(7A) of the I.T. Rules, the quantification of weighted deduction under section 35(2AB) of the Act has significance. We are of the considered opinion that if the power of quantification of weighted deduction already exists with DSIR prior to 01.07.2016, then, there was no necessity to make amendment to Rule 6(7A) of the IT Rules. Thus, in view of the above facts and circumstances, we hold that the deduction as claimed by the assessee under section 35(2AB) of the Act is liable to be allowed instead of restricting it to the quantum of claim. Sub-section (3) of section 35 of the Act has no application to be conjointly read for the purpose of allowance of weighted deduction prior to amendment to Rule 6 of Income Tax Rules for the reason that after amendment to Rule 6 of Income Tax Rules, under sub-rule (7A)(b)(ii) of IT Rules, the prescribed authority shall furnish electronically its report in Part B of Form No. 3CL towards quantification of expenditure and eligible for weighted deduction under section 35(2AB) of the Act. Prior to amendment to Rule 6 of the IT Rules, the provision of section 35(3) of the Act does not provide the scope for referring to DSIR for determining the amount of expenditure eligible for deduction. If at all the DSIR has the authority to decide the eligible expenditure prior to 01.07.2016, then, the intention to amend Rule 6 of IT Rules w.e.f. 01.07.2016 does not arise. Thus, the contention of the ld. DR stands rejected. Thus, we direct the AO to allow the deduction as claimed by the assessee u/s 35(2AB). Disallowance of donation towards CSR expenditure u/s. 80G - According to the AO receipt in respect of Adhiparasakthi Charitable Medical Education Cultural Trust has been issued in the name of Secretary to Managing Director of the company and in the name the company, therefore, the AO denied deduction claimed u/s. 80G - assessee submitted that the Charity has clarified the matter and acknowledged that payment was received by the Trust and therefore, deduction u/s. 80G has to be allowed - HELD THAT:- In the light of above clarification given by the Charity, AO is directed to verify the assertions made and if found true, then allow the deduction u/s 80G. The appeal filed by the assessee is partly allowed for statistical purposes.

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• 2025 (5) TMI 513
  D enial of exemption u/s. 10 - Assessee have not filed the return of income within the due date as stipulated u/s. 139(1) - AO noted that since the assessee is registered u/s. 12AA of the Act w.e.f. 19.02.2019 the benefit of 10(23C(iiiad) cannot be given and thereby the he disallowed the claim of income not chargeable to tax u/s. 10 was denied - HELD THAT:- As decided by AM and JM order law as applicable to the assessee says that if the receipt exceeds Rupee one crore and income after giving effect to the provision of section 10(23C(iiiad) the income exceeds the maximum amount which is not chargeable to tax then the present assessee has to file the ITR for the year under consideration. We are of the considered opinion that the ld.CIT(A) has erred in confirming the denial of exemption u/s. 10(23C)(iiiad) of the Act to the assessee for the impugned assessment year and hence we are setting aside the order of the ld. CIT(A) by allowing the ground no 2 raised by the assessee. Further order of JUDICIAL MEMBER - Eligibility for exemption sub- clause (iiiad) of clause (23C) of section 10 - Assessee-appellant has contended that the assessee was not required to file any income tax return, relating to the any of the two assessment years as the assessee had entered into agreement with the Government for upgradation of Government Industrial Trading Institute, Jhalawar under Public Private Partnership Scheme; that certain funds were assigned by the Central Government to the assessee by way of interest free loan to achieve the targets of the abovesaid scheme. The assessee got the free loan amount deposited by way of fixed deposit receipt and utilized the amount of interest that accrued on the said amount to achieve its objects - HELD THAT:- Sub-clause (iiiad) of clause (23C) of section 10 of the Act, as in force, during relevant period, provided that in computing the total income of previous year of any person, any income falling in the said clause shall not be included, where the aggregate annual receipt of any university or other educational institution existing solely for educational purpose and not for purpose of profit, did not exceed the limit of Rs. 1 Cr. Was the assessee required to file Return of Income under any provision other than under section 148? - Sub-section (4C) further provides that all the provisions of this Act shall, so far as may be, apply as if such return were a return required to be furnished under sub-section (1). Significantly, sub-section (1) of Section 139 provides that a return of income during previous year is to be furnished on or before the due date. Herein, nothing has been brought to our notice from the side of the department that the total income of the assessee-appellant (without giving effect to the provisions of section 10) exceeded the maximum amount not chargeable to income tax.In this situation, there is merit in the contention raised on behalf of the assessee-appellant that the assessee was not required to furnish a return of income either u/s 139(1) or section 139(4C) of the Act. Was there any Time limit prescribed under the Act for filing of Return of Income under section 148 during the relevant Assessment Years? - Notices u/s 148 of the Act were issued on 24.03.2021. As per contents of these notices, Returns of Income were required to be filed within 30 days from the date of service thereof. These were filed on 23.04.2021. This shows that the assessee complied with the directions issued by the AO. 3rd proviso came to be inserted in section 148 of the Act to the effect that any returns of income required to be furnished by the assessee under this section, if furnished beyond the period allowed, shall not be deemed to be a return u/s 139 of the Act. It was only w.e.f. 01.04.2023 that said proviso came to be inserted. Hence, said proviso was not there at the relevant time. As per amended provisions of Section 148 of the Act, provisions of this Act shall apply to the return so furnished, as if the same were a return required to be furnished u/s 139 of the Act. The time period of 3 months for furnishing of a return u/s 148 of the Act came to be prescribed only vide amendment by Finance Act, 2023, w.e.f 01.04.2023. Prior to this amendment, the return, when presented was to be treated as a return as required to be furnished u/s 139 of the Act. In the given situation, as per the law in force at the relevant time, the Assessing Officer should have treated said 2 returns of income to have been furnished under section 139 of the Act. In other words, the 2 returns of income were valid and could not be termed to be invalid in the eyes of law. Conclusion - Authorities below were not justified in treating the returns as invalid returns, on the ground that the same were not filed within time prescribed u/s 139(1) of the Act. Consequently, the authorities below also fell in error in disallowing the claims of the assessee seeking exemptions u/s 10 of the Act. Assessee appeal allowed.

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• 2025 (5) TMI 512
  Penalty u/s 271(1)(c) - allegation of Non specification of clear charge - AO disallowed claim of expenditure on Pushkar land and on Suchna Kendra Land towards boundary wall, pillars rcad work etc and made addition for the same - whether penalty proceedings had been initiated i.e., whether for concealment particulars of income or furnishing of inaccurate particulars of income? - HELD THAT:- AO in the assessment order initiated Penalty for fumishing inaccurate particulars. Whereas notice issued u/s 274 r.w.s. 271(1)(c) of the Income Tax Act do not state the clear grounds / directions to initiate penalty proceedings. The reasons for issuance of notice u/s. 148 for which no addition were made and all the purchases and sales of land as alleged to have been recorded, and details were submitted during reassessment proceedings and which were accepted by the ld. AO. Merely because the assessee makes a claim of expenditure which was not accepted by the revenue, that itself would not amount to furnishing inaccurate particulars regarding income of the assessee and no penalty uls 271(1)(c) can be levied. See Reliance Petroproducts (P) Ltd [ 2010 (3) TMI 80 - SUPREME COURT ] Thus no reason to sustain the penalty and therefore, the same is directed to be deleted. Decided in favour of assessee.

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• 2025 (5) TMI 511
  Nature of income in shareholders account and policyholders account maintained by the assessee - Transfer from Shareholder s account to Policy Account And Shown As Part Of surplus in the actuarial valuation - only transfer of capital asset and not taxable u/s 44 of the Act read with Rule 2 of the First Schedule - HELD THAT:- We find that similar findings have been rendered by the Co-ordinate Bench of the Tribunal in assessee s own case in preceding years and it was held that the assessee is engaged only in one line of business, i.e., life insurance business and the two accounts, i.e., shareholders account and policyholders account have been maintained separately for the purpose of meeting with the requirement of law. Therefore, we find that this issue has consistently been adjudicated in favour of the assessee by the Co-ordinate Benches of the Tribunal and the income from the shareholders account was held to be taxable as income from life insurance business. Thus, no infirmity in the findings of CIT(A) in directing the AO to compute the income arising from shareholders account as income from insurance business under the head Profits and Gains of Business or Profession . As a result, the revised grounds of appeal no.1 raised by the Revenue is dismissed. Entitlement to claim exemption u/s 10(34) and section 10(23AAB) of the Act when its income is computed u/s 44 of the Act - HELD THAT:- We find that in Life Insurance Corporation of India [ 1963 (12) TMI 5 - SUPREME COURT] held that the applicability of only certain provisions is excluded by section 44 of the Act, and other provisions which deal with allowable deduction will have to be held applicable, unless they are expressly excluded. No infirmity in the findings of the learned CIT(A) in directing the AO to grant the exemption to the assessee claimed u/s 10(34) and section 10(23AAB) of the Act. Denial of exemption claimed by the assessee u/s 10(15) on the similar basis on which the exemption claimed u/s 10(34) and section 10(23AAB) - As in view of our findings rendered in respect of claim of the assessee for exemption under section 10(34) and section 10(23AAB) in Revenue s appeal for assessment year 2015- 16, we do not find any infirmity in the findings of the learned CIT(A) in also directing the AO to grant exemption to the assessee under section 10(15) of the Act.

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• 2025 (5) TMI 510
  Assessment u/s 175 - Donations received for Covid relief were taxable as the income of the assessee u/s 56(2)(x) - assessee is a journalist and a columnist for the Washington Post newspaper. The AO was in the know of a complaint against the assessee with regard to the donation fund she raised in three separate campaigns in Ketto platform. HELD THAT:- The assessee made a representation before the CBDT in connection with the taxability of funds received as donation for Covid relief but facts on record show that this action of the assessee was taken only after the Revenue sent her a summon u/s 131 of the Act for enquiry in this matter. The representation was made on 01/07/2021 whereas the first summon was issued on 15/06/2021. Moreover, this act of the assessee goes on to show that she was aware that as on date such funds received are taxable in her hands. Throughout the proceedings, the assessee took a stand that she is not a beneficiary of those funds but the same cannot be exhibited because the funds have been mixed up with her personal funds as no separate account was maintained. The stand of the assessee that, in case of Ketto, the beneficiary is clearly identified by Ketto to whom the funds are to be transferred, is also not acceptable as the funds have been transferred in the personal account of the assessee, her father and her sister. When the assessee was cornered by the Tax Department, she offered the entire donations raised from Ketto platform as income from other sources . Considering the facts of the case in totality, keeping in mind the transfer of funds, we have no hesitation to hold that provisions of Section 175 r.w. provisions of sub-sections (2), (3), (4), (5) and (6) of section 174 of the Act, squarely apply in case of the assessee and there is no error or infirmity in invoking the same by the AO and as confirmed by the CIT(A). The additional ground raised by the assessee is accordingly dismissed. Applicability of section 56(2)(x) - Since the assessee is herself a journalist, it is clear that the as per the Foreign Contribution (Regulation) Act, 2010, she could not have received foreign contribution directly in her account. Therefore, she withdrew the amounts from Ketto platform in the accounts of her father and sister from where she had transferred it to her account. The assessee has not spent the money received for the purpose for which such funds were received but diverted the same for other purposes. Considering the facts in totality, we are of the considered view that the donations collected were not just for Covid relief but also for other so-called purposes like funds for slum dwellers and farmers as also for relief work in different states for different purposes. But all the donations collected were parked in the savings bank account of the assessee and family members and no separate accounts were maintained. The funds were also used for personal purposes and also for investment in FDR and substantial amount of donation received remained un-utilized in spite of long time gap. The claim that the end use of these funds was initiated for charitable activities remains unproved. The manner in which the funds were collected, is also not understandable as the donations were collected and parked in the bank accounts of the relatives of the assessee. On the given facts, the donations collected by the assessee are taxable u/s 56(2)(x) of the Act and orders of the authorities below on this count cannot be faulted with. Appeals filed by the assessee are dismissed.

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• 2025 (5) TMI 509
  Unaccounted cash collected from customers on sale of flats - Search u/s 132 was carried out at the business premises of the assessee in which electronic data was found and seized Admissibility of the electronic evidence relied upon by the AO to make the impugned additions - According to the assessee, the excel sheets found in the electronic data, the WhatsApp conversations between the employees were not admissible as it did not comply with Section 65B of the Indian Evidence Act, 1872 - HELD THAT:- We find that, the lower authorities had rightly observed that, the Authorized Officer had followed the due procedures mandated in law and had also obtained the necessary certificates u/s 65B of the Act prior to the seizure of such electronic records. The AO is noted to have extracted the said certificate obtained u/s 65B of Indian Evidence Act, 1872 in the impugned order as well. Before us, assessee was unable to controvert this certificate or point out the fallacy therein. We accordingly agree with the CIT(A) that there was no non-compliance with the provisions of Section 65B of the Indian Evidence Act, 1872 and therefore this preliminary contention of the assessee stands rejected. Contents of the seized material were not reliable and that the Managing Director had retracted his statement and therefore no addition was otherwise permissible on account of undisclosed cash receipts from sale of flats - We note that, submissions put forth by the Assessee had been examined by AO, and he negated the said plea, by observing that, the persons whose statements were being relied upon, had deposed their answers while recording their statements u/s 132(4) of the Act with reference to seized material. Accordingly, it is not the case that their statements were bald or not backed by any material. AO has noted that, above mentioned two employees never retracted their statements and that even the Managing Director had retracted from his statement after a long gap of time. Accordingly, the AO had rightly observed that, the assessee s contention that, these statements were unreliable, was unacceptable. Moreover, before us also, the Ld. AR was unable to point out the mistaken fact admitted by the Managing Director in his statement which led to the retraction nor was the Managing Director able to disprove the facts admitted by him with relevant evidence. Hence, in our considered view, such bald retraction was rightly ignored by the lower authorities. As noted by the lower authorities, the electronic data including whatsapp conversations and excel sheets indeed related to the assessee s business activities and pertained to the actual units sold and therefore the contents thereof could not be discarded. The notings therein suggests that, it contained detailed project and unit-wise data, and the EB heading, in light of the statements of the employee/s, suggests the assessee collected cash payments over and above the declared sale consideration. The assessee was neither able to offer plausible explanation for these EB notings nor was the assessee able to demonstrate the purported extra work carried out in relation to these units. We thus countenance the following findings of the Ld. CIT(A) rejecting the assessee s contention objecting to the reliability of these seized material and the statements given by the employees and Managing Director. Whether the entire value of these cash sales / receipts have to be brought to tax or only the profit element embedded therein has to be taxed? - The entire value of on-monies receipts shouldn t be taxed but only the profit element embedded therein was to be taxed in its hands. On this aspect, it is noted that in the case of ITO Vs. Anand Builders [ 2009 (11) TMI 1039 - ITAT AHMEDABAD] Tribunal in similar circumstances had held that, 8% of the unaccounted on-money could be taxed in place of the entire unaccounted on-money receipts since there is always the unaccounted payments. Thus, we accordingly uphold the Ld CIT(A) s view that only the profit element embedded in the on-monies ought to be assessed to tax. Estimating the profits of the assessee - DR appearing before us was unable to controvert the above estimation exercise conducted by the Ld. CIT(A). We also note that, the Constitutional Courts in their wisdom have generally estimated profit element in the range of 8% to 12.5% on the cash receipts involved in the business of real estate. In light of the foregoing, we thus agree with the Ld. CIT(A) that the assessee s offer of 20% of the on-monies receipts in the return(s) of income filed u/s 148 of the Act was fair and reasonable. Hence, according to us, no further addition on the impugned issue is warranted. Overall, therefore, we uphold the above order of Ld. CIT(A). Hence, the grounds taken by both the assessee and Revenue on this issue stands dismissed. Addition made on account of cash collections from sale of plots in Project - AO is noted to have added the entire notings of cash on-monies by way of undisclosed income of the assessee. On appeal the Ld. CIT(A) restricted the addition to the profit element embedded in the on-monies which was estimated at 12.5% - HELD THAT:- As we hold that the notings contained in the impugned excel sheet under the heading EB indeed denoted cash collections upon sale of plots. Likewise, we also hold that, the AO s action of adding the entire on-monies by way of income of the assessee was not justified and that only the profit element embedded therein ought to have been brought to tax. As noted by us, while adjudicating Issue No. 1 above, the judicial forums across India have generally estimated profit in the range of 8%-12.5% in relation to on-monies involved in real estate. Respectfully following the same, we thus countenance the Ld. CIT(A) s action of estimating the profits embedded in the impugned cash receipts at 12.5%. Hence, we see no reason to interfere with the order of Ld. CIT(A) on this issue. Accordingly, these grounds raised by the Revenue and cross objections of the assessee are dismissed. Addition u/s.43CA - addition made by way of deemed sales consideration in relation to plots sold at the project Residencia - CIT(A) analyzed and compared the actual rates with the guideline rates, after allowing the benefit set out in first and second proviso to Section 43CA of the Act and found that the actual sale value of 15 plots fell within the tolerance limit and thus deleted the notional addition made u/s 43CA of the Act in relation thereto - HELD THAT:- Addition made u/s 43CA of the Act in relation to the 15 out of the 23 plots which were deleted by the Ld. CIT(A). Before us, the Ld. CIT, DR appearing for the Revenue was unable to controvert the factual finding of the Ld. CIT(A) that, the actual sale rates of these 15 plots in question fell within the tolerance range of 10% (20% for the period 12.11.2020 to 30.06.2021) as set out in first second proviso to Section 43CA of the Act. We thus see no reason to interfere with the order of the Ld. CIT(A) deleting additions to this extent. Addition to the remaining eight (8) plots in AYs 2021-22 2022-23 - It is noted that the Hon ble Calcutta High Court in the case of Sunil Kumar Agarwal [ 2014 (6) TMI 13 - CALCUTTA HIGH COURT] has held that, even if the assessee has not requested for reference to DVO, but there exists difference between the actual sales value and the guideline value, then the AO is duty bound to made reference to the DVO. The Hon ble High Court has further held that, an assessee s failure in raising such a reference plea is not fatal in income tax proceedings as the Assessing Officer has to make statutory reference to the DVO u/s 50C of the Act. Thus we deem it appropriate to restore the instant issue back to the AO with a direction to refer the matters to the DVO and accordingly frame the assessment on this limited issue de novo and in accordance with law. Unaccounted cash sales of scrap - addition was based on loose sheets statement(s) - HELD THAT:- As already upheld the evidentiary value of the contents of the excel sheets found in the pen drive found from the possession of Shri Ananda Padmanabhan and his statement recorded u/s 132(4) of the Act. It is also noted that, in the same excel sheet, there were notings of scrap sales whose payments were received in cheque and the same has been found to correlate with the entries in the regular books of accounts. This material fact corroborates the Revenue s case that the notings of scrap sales made in cash found on the same excel sheet cannot be ignored or treated as a dumb noting. Accordingly, the plea of the assessee that the impugned addition was based on loose sheets statement(s) having no evidentiary value is hereby rejected. Income attributable in relation to the unaccounted proceeds received from sale of scrap - CIT(A) correctly estimated the addition on account of unaccounted sale of scrap at 20%. Bogus purchase of steel - HELD THAT:- We agree in principle with the submission of the Ld. AR that an admission/ statement alone is not sufficient to justify an addition but at the same time the onus is on the assessee to rebut the statement with corroborative evidence. On the given facts, it is noted that the assessee has only been able to furnish the relevant tax invoices, ledgers and bank statements in support of purchases. The AO, on the other hand, is noted to have shown that, the supplier had also admitted to have issued bogus invoices and that these invoices were not supported by weighment slips and transportation challans and that the seized electronic data also suggested that these purchases were suspicious. Overall, therefore, we are in agreement with the authorities below that the assessee was unable to fully discharge the genuineness of the purchases which were identified to be bogus. Whether the entire value of payments made to the suppliers was to be disallowed or only the profit element embedded therein was to be taxed in hands of the assessee ? - We uphold the action of Ld CIT(A) that only the profit element embedded in these bogus purchases ought to be assessed to tax. Coming to the issue of estimation of the profits, on the given facts according to us, the Ld. CIT(A) has rightly estimated it at 17% of the value of purchase, which is found to be fair reasonable and therefore, no further addition was warranted in this regard. Addition on account of salary paid to Viswanathan without services - CIT(A) deleted addition - HELD THAT:- AR has however has rightly pointed out that, disallowance could not have been solely based on the statement of Smt.Viswanathan and that some corroborative evidence ought to have been brought on record to justify the impugned disallowance. We note that, the Ld. CIT(A) had taken cognizance of the educational qualification of Smt.Viswanathan and the work profile explained by the assessee. The Ld. CIT(A) having regard to her work profile, also noted that her daily attendance was not necessitated and that she could have indeed worked from home as well. He also took note of the Form 16 issued by the assessee and the PF contributions made from the monthly salary. Having taken note of these contemporaneous material and evidences placed on record by the assessee disproving on fact the statement obtained by the search team from Smt.Viswanathan, we are in agreement with the following reasoning given by the Ld. CIT(A) deleting the disallowance of salary paid to Smt.Viswanathan. The above findings of the Ld. CIT(A) are noted to be supported by the CBDT Instruction F.No. 286/98/2013-IT(Inv.II) wherein the Board has also directed that no addition/ disallowance should not made solely based on admissions obtained in course of search unless there is some corroborative material found to back the same. Disallowance u/s 40A(3) and 37 - HELD THAT:- Except relying on the statement recorded u/s 133A of the Act, the AO did precious little to bring on record any material to justify his conclusion that the addition of Rs.5,00,00,000/- was warranted u/s 37/40A(3) of the Act. The AO was unable to point out even a single instance where any specific item of expense found to be un-vouched for or that any particular expense in excess of Rs.20,000/- had been paid in cash. Accordingly, we countenance the above reproduced findings of the Ld. CIT(A) that the impugned addition made solely by relying on the bald admission made u/s 133A of the Act was not justified. In fact, the case of the assessee before us is on much better footing as there is no admission made u/s 132(4) of the Act, which otherwise carries evidentiary value. Rather, the impugned addition has been made based on admission made u/s 133A of the Act, which as held by us above, does not carry any evidentiary value. AO did not accept the plea of the assessee and made addition by relying upon the statement given during the course of survey. On appeal, the Hon ble High Court upheld the order of the appellate authorities deleting the addition by holding that the addition could not have been made by solely relying on the statement obtained u/s 133A of the Act. We thus uphold the order of Ld. CIT(A) deleting the impugned addition. Accordingly, the grounds raised by the Revenue and the cross objections of the assessee are dismissed.

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• 2025 (5) TMI 508
  Addition as business income on account of fixed place PE to be taxed @40% sur-charge and taxes - HELD THAT:- We find that in own case [ 2023 (8) TMI 1273 - ITAT DELHI ] the Coordinate Bench of the Tribunal has considered that the existence or otherwise of PE of the assessee in India and in case there is PE, the profit attributable to the PE. There being no change in the facts and circumstances compared to the previous year, therefore, respectfully following the order of the Co-ordinate Bench of the Tribunal in assessee s own case, we decided this issue in favour of the assessee. Accordingly, the addition as business income on account of fixed place PE to be taxed @40% surcharge and taxes made by the Assessing Officer in the final assessment order is not sustainable and the same is deleted. Accordingly, grounds are allowed.

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• 2025 (5) TMI 507
  Validity of assessment framed u/s 143(3) - notice u/s 143(2) was issued by ITO, Ward 38(2), New Delhi and the assessment was framed by the ITO, Ward 5(2)(3), Noida u/s 143(3) - contention that without the transfer order u/s 127 transferring the jurisdiction to Noida from New Delhi the assessment framed is invalid - HELD THAT:- On perusal of notice u/s 143(3) of the Act the same was issued by the ITO, Ward 38(2), Delhi the assessment was completed by the Income Tax Officer, Ward 5(2)(3), Gautam Budh Nagar, Noida. There is nothing on record to suggest that the assessment framed by the ITO, Ward 5(2)(3), Gautam Budh Nagar, Noida had obtained jurisdiction by virtue of an order u/s 127 of the Act transferring the jurisdiction from ITO, Ward 38(2), Delhi. As relying on Saroj Sangwan [ 2024 (5) TMI 961 - ITAT DELHI] and VIMAL GUPTA [ 2017 (10) TMI 1670 - DELHI HIGH COURT] the assessment framed by the Assessing Officer u/s 143(3) by the ITO, Ward 5(2)(3), Noida without the transfer order u/s 147 is bad in law and therefore the same is quashed. Since the assessment order is quashed on legal point, the other grounds of the assessee are left open since the adjudication of the same renders only academic at this stage.

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• 2025 (5) TMI 506
  Deduction u/s 80P(2)(d) - Assessee has earned interest income/dividend income and dividend income - HELD THAT:- Totagars Co-operative Sales Society Ltd [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] held that the interest income earned by the Assessee cannot be said to be attributable to the activities of the Society i.e. carrying on the business of providing credit facilities to its members. The activities of the society does not include depositing/investing funds in a Co-operative Bank/commercial bank and other income such as interest earned from the deposits made with the bank are not a part of the business of the providing credit facilities to its members. The intention of the legislature to provide the exemption is to make sure that the funds collected by the Society from its Members properly utilized to the purpose for which the society is formed and not to deposit the amount in a bank and earn interest. Depositing /investing funds in a bank and the interest of earned thereupon cannot be the operational income of the Assessee Society. It is the contention of Assessee s Representative that, it is not the case of surplus or un-required funds involved in the subject case , however, it is the contention of the Ld. Assessee s Representative that the Assessee collects subscriptions from members periodically. It invests funds to earn income and the Assessee having a common kitty which including the entire funds of the appellant and the Assessee provides the credit facilities to its members out of the whole i.e. collection from members and income earned on deposits, therefore, the same deserves to be treated as income from business and entitle for the exemption. We find difficult to appreciate the said contention of the Ld. Assessee s Representative. The main object of the Assessee Company is providing credit facilities to its members out of the deposits made by the other members as investment for earning the interest. However, depositing the funds which was collected from the members of the society and making investment /deposits in a bank cannot be held to be business of the Assessee and the interest earned thereupon cannot be treated as operational income of the society for providing credit facilities to its members . Thus, interest income earned by the Cooperative Society with the investment in the Co-operative Bank is not eligible for deduction u/s 80P(2)(d) of the Act, we find no error or infirmity in the order of the Ld. CIT(A) in dismissing the Appeal. Finding no merits in the Grounds of Appeal of the Assessee, the Grounds of Appeal of the Assessee are dismissed.

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• 2025 (5) TMI 505
  Addition u/s 69A - unexplained cash deposits in the State Bank of India during demonetization period - cash deposit majorly related to the sale of agricultural land which was not considered by the CIT(A) - HELD THAT:- AR relied upon the order passed in the case of Chdralekha Vashishtha [ 2023 (10) TMI 976 - ITAT DELHI] in which held that merely because the assessee was holding big amount of cash in her in the accumulation of cash from declared income, cash rental and salary income cannot be disbelieved unless the AO establishes that the assessee had used amount of the income accrued to her during earlier period, for some other purpose and there was no cash in hand at the time when the cash by deposited to her bank account. Nita Taneja [ 2019 (3) TMI 1855 - ITAT DELHI] held that income tax return, cash book maintained by the assessee have neither been rebutted over there is no any finding that case in hand disclosed in the balance sheet was beyond the scope of their income or are not substantiated from the bank account and simply because after the period of demonetization, certain amount of cash has been deposited in the account, does not mean the case in hand as on 31.03.2015 and 31.03.2016 which is duly shown in the balance sheet and discussed with the department in the respective income tax return file and earlier is unexplained likewise also relied upon the order of the coordinate Bench in Sudhirbhai Praveen Kant Thaker [ 2016 (3) TMI 171 - ITAT AHMEDABAD] We find material substance in the submission advanced on behalf of the assessee and are of the view that the appeal of the assessee deserves to be allowed and addition in question is deleted. Appeal of the assessee is allowed.

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• 2025 (5) TMI 504
  Disallowance of 80P deduction - defaulting in filing the return within the time limit prescribed u/s 139(1) - HELD THAT:- As the appellant society furnished its ITR beyond the prescribed due date (filed belated) but making therein claim for 80P(2) deduction. The claim for deduction was no doubt subjected to disallowance by application of provisions of clause (ii) of section 80AC of the Act, however there was complete absence of authority vested with the Ld. CPC to carry out the disallowance u/s 143(1)(a)(v) . Therefore, the impugned action of denial of 80P deduction to the appellant by the Ld. CPC was barred by jurisdiction, hence unlawful. And in the absence of any explicit power contained in and vested with any authority under the Act to ratify the impugned action of the Ld. CPC, we are duty bond to reverse prejudice caused to the appellant by vacating the impugned disallowance. Without multiplying the judicial precedents on the subject matter, maintaining the parity with the decision of learned co-ordinate benches we concur with the claim of the appellant society that the Ld. CPC clearly traversed and in fact exceeded its jurisdiction in disallowing the appellant s claim for deduction u/s 80P. In the absence of anything contrary brought to our notice by the respondent revenue, placing reliance on the decision of CIT Vs Travancore Titanium Products Ltd. [ 2003 (4) TMI 33 - KERALA HIGH COURT] we allow the appeal of the assessee following the decision of the co-ordinate bench laid in aforestated case of Allamaprabhu VUSS Niyamit Kalloli Allamaprabhu VUSS Niyamit Kalloli [ 2025 (5) TMI 432 - ITAT PANAJI] wherein while allowing the appeal filed by the assessee held that, the Ld. CPC at the relevant time of processing return lacked the jurisdiction to carry out disallowance of 80P deduction. Assessee appeal allowed.

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• 2025 (5) TMI 503
  Deduction u/s 80P - Interest received on Investments held with Banks in form of FDR s - HELD THAT:- As relying on Cooperative Cane Development Union Limited, Maholi [ 2024 (9) TMI 1733 - ITAT LUCKNOW] we restore the matter back to the file of the ld. AO to re-compute admissible deduction under section 80P to the interest earned on investments made in accordance with sections 58 and 59 of the U.P. Cooperative Societies Act, 1965 and 173 of the U.P. Cooperative Society Rules, 1968. Such investments that have been made in accordance with these statutory provisions would be regarded as attributable to the business of the assessee society and eligible for deduction under section 80P. Since the provident fund balances do not belong to the assessee, but the assessee is merely a custodian of the same and the interest earned on the investments made on this account is credited to this account which is to ultimately be repaid to the employees at the conclusion of their contracted terms, the interested on the same cannot be regarded as the income of the assessee and cannot be brought to tax in its hands.

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• 2025 (5) TMI 502
  Taxation of income from the overseas sources in terms of the clauses (a) and (b) u/s 4(1) of the BMA - lifting of corporate veil of an overseas company incorporated in the British Virgin Islands (BVI), in which the assessee and family members were shareholders - appellants/assessee were willing to avoid payment of income-tax under Indian Income Tax Act, provisions on the said properties, thus, route of incorporating an overseas company was implemented. Information collected from the competent authorities of BVI and Singapore Shri Pradeep Wig and his other family members were the beneficial owner of the bank accounts held in the name of CCL. Further, it was also found that CCL was an investment holding company and was holding flats in London. CCL was also 100% owner of another company Eaton Estates Limited (EEL) incorporated in the UK jurisdiction which had also purchased a flat in London - HELD THAT:- Any income included u/s 5(1) of the BMA shall be reduced from the value of undisclosed asset located outside India if the said assets have been acquired from the income which has been assessed or is assessable as the case may be to tax in India under the Income-tax Act 1961. Thus, for the purpose of excluding such asset from the rigors of the BMA is that the assessee proves the source of acquisition the foreign asset from a tax paid money. Ld. Counsel has submitted that the said section does not refer at all to the tax paid money in India and if the said income was assessed overseas, the benefit of exclusion would be very much available. These provisions when considered in the light of fact of properties being subject to ATED make us hold firmly that while examining the factor of beneficial interest or beneficiary for the purpose of the Act or BMA, what should be material is how the country where the impugned property is located abroad, treats the property or interests in such property for the purpose of estate and taxation. Thus where the law of UK levies Annual Tax on Enveloped Dwellings (ATED), as an annual charge on UK dwellings held by a Non-Natural Person (NNP) e.g. a company and admittedly such levy was paid for the impugned properties by CCL then, there was no legal sanctity with the Indian authorities to hold that assessee had any beneficial interest or were beneficiary for the purposes of aforesaid provision under the Act or BMA. There is no presumption against the assessee which assessee is supposed to rebut by virtue of being a share holder in a company to allege that property held by a company is giving some advantage, profit, or privilege exclusively to the assessee but the revenue is supposed to establish the beneficial interest of an assessee or assessee being beneficiary by some sort of direct evidences of the advantage, profit, or privilege derived by the assessee from something, often a contract or agreement. Rather it appears that failing to find any incriminating material from books or accounts the AO went to resorting to piercing the veil of company and draw inference of beneficial interest of assessee or assessee being beneficiary. To become an owner of a property, a person must hold the legal title of the property in his name. He should be able to exercise the rights of the owner, not on behalf of the owner but in his own right. The deeming ownership provision u/s 27 of the Act specifically refer to category of persons to whom deemed rental income can be attributed and by piercing corporate veil deeming ownership could not have been alleged. A deeming income provision needs strict application and by way of adverse presumption or principle of piercing of veil the property of company cannot be held to be lying with the share holders or directors, so as to add income in their hands. If the registered owner does not exploit its property, then it is its choice and not of the beneficial owner. There is substance also in the contention of appellants/assessee that the Revenue did not find any single amount having being invested in those companies by anyone from undisclosed sources much less by the appellants/assessee. Thus, there was no purpose to impugn that the company was incorporated with an intention to avoid assessment of income of the properties overseas in the hands of the appellants/assessee. At the same time there is substance in the contention that the allegation of the Revenue, that the company was incorporated only for the purpose of acquiring the properties in UK falls on the face of it as the company CCL was incorporated on 9th March, 2005 whereas the first property was acquired in London by the said company on 14/02/2008 and both the properties had been sold on 04/08/2014 before even conceptualization of the BMA or the beneficial ownership provisions in the Income-tax Act w.e.f. AY 2016-17. Thus, the Revenue has no case to make any such allegation as at the time of incorporation of the company or acquiring the properties the concept of beneficial holders under the Income-tax Act was absolutely absent rather not concealed of. 3 daughters of the assessee were majors and those shares were registered in their own names only with no beneficial interest of anyone else. No evidence has been brought on record by the AO that the daughters ever tried to exit from their respective interest in their shareholdings in favour of the assessee. It is also seen that Ms. Sonu Wig, one of the daughters of the assessee was an NRI rather became British citizen, holding a British passport since the year 2013 and was residing in the said property overseas off and on. That only shows natural course of events and nothing incriminating. Thus, assessee/appellants were not the beneficial owner of any property or asset of CCL and therefore neither any income arising from the property of the said company as rent nor as capital gains and also the bank interest nor any other income of the company form any source, was assessable in the hands of the assessee or any family member who had never had any beneficial ownership or holding any beneficial interest in the assets of the company. Thus, the action of the both the authorities in considering the assessee Mr. Neeraj Wig and his spouse as the beneficial owners in equal proportions of the assets of the BVI company CCL and then assessing all income from those assets of the said company from any source is illegal ab initio and is quashed in toto. All the amounts, assessed as income under the two respective Acts from any source or under any head, allegedly germinating from any of the properties / bank accounts of and from the company are deleted in the hands of the assessee and his spouse as they are held to be not the beneficial owner of the assets of the company CCL at all. In conclusion, this issue no. 1 is decided in favour of appellants/assessee and all the grounds of appeal of the assessee in this regard are allowed and all the grounds of appeal of the Department in this regard are dismissed. Addition made in the AY 2012-13 in the hands of Ms. Neera Wig by the AO claiming that the assessee failed to prove the refund of the advance received besides not able to identify the prospective buyer of the property - We find that the AO himself admitted in the last of para 9 of the assessment order that the said property was subsequently sold on 19/04/2012 which period falls during the AY 2013-14 for Rs 80,00,000/- period and therefore, if at all the AO wanted to assess the said amount as income u/s 51 of the Act, the same could have been done in the period relevant to the AY 2013-14 and where the assessee had herself declared the same and offered capital gains tax as has also been admitted by the AO in the assessment order for the AY 2013-14. Therefore, in terms of the facts and the law as above, no addition could have been made for any amount in the period relevant to the AY 2012-13 and thus sustaining these grounds addition is deleted. Addition by applying the provisions of the section 50C on the sale of Greenfield plot - Once the assessee made any objection to adoption of the said stamp duty rate as deemed sale consideration u/s 50C of the Act, it was obligatory on AO to refer the same to the DVO under the said section as above and could not adopt the stamp duty value as consideration in contradiction to the legislated code. Hence, in view of this, we deem it fit to restore this issue to file of AO with a direction to refer the matter to DVO and decide in accordance with provisions of section 50C(2) of the Act. This issue is allowed for statistical purposes. Disallowance of the expenses - Revenue has challenged disallowance of 20% on estimated basis of some expenses duly recorded in the books of account of the two firms in CCL and EEL where the assessee Mr. Pradeep Wig was a partner alleging those to be personal expenses - CIT (DR) relied on the assessment order to support the disallowance. However, we find that in the assessment proceedings u/s 153A of the Act, no addition can be made on estimated basis particularly when 80% of the said amount has been accepted as allowable. Moreover, if any disallowance was to be made it could be made in the hands of the firms being LLP. No amount can be assessed in the hands of the assessee as no benefit ever accrued to the assessee from the said amounts. Thus we uphold the deletion made by the CIT(A) by a reasoned order, the findings in which we are inclined to follow. Thus, relevant ground to this issue have no substance. Since we have decided the grounds which were to challenge the quantum of additions on merits as well as in law, all other grounds have become academic and need no separate adjudication. In regard to the BMA appeals as we have already held that there was no reason at all to assess the income of the BVI company in the hands of the individual appellants/assessee in India, the grounds of appeal taken by the assessee and the department on the same need no separate adjudication and the directions given in the income-tax appeals will apply in these appeals also. Thus, the grounds of appeal taken by the appellants/assessee on the accessibility of the said incomes sourced from the BVI company are allowed by deleting all those additions and the appeals of the department on those issues are dismissed. Addition of USD 50,000 in the hands of Mr Pradeep Wig in respect of the amount remitted by his late mother from the declared sources, and inherited by the assessee, the department did not make any new submissions even to contradict the findings of the CIT(A). The assessee relied on the order of the CIT(A) in this regard. Thus, the detailed reasoned order on the issue of the CIT(A), is sustained.. Interest received by the overseas company in its bank accounts on the deposits with the banks, the ld. Counsel submitted that appellants/assessee those amounts were not considered as income under the Income-tax Act but have been assessed in the assessment order under the BMA and that one of the companies and only the companies could be assessed for the said amounts in UK as per prevalent law. Deeming provisions do not apply in respect of such income as interest income. The sources of deposits in those bank accounts were duly disclosed and therefore, para materia the interest income and deposits with the bank also should disclosed there in the hands of the company warranting no addition here in India. The assessee also relies on the submissions made in respect of assessment of rental income on deeming provisions, requesting for deletion of the addition. Since, we have held hereinabove that no amount of any income of the BVI company CCL can be assessed in the hands of the assessee in any manner, the same has to be deleted and accordingly deleted. Assessment of alleged bank balance and interest there on with the Citi Bank, Singapore bank account - On perusal of the information on record and admitted facts that the Citi Bank, Singapore bank account of the assessee jointly with his family (in all 5 members of the family) were joint holders, was not only inoperative but had been closed in October, 2011 which is much before even the conceptualisation of the BMA in the year 2015. Infact, it was closed even before the introduction of the Foreign Asset Schedule in the return of income to be filed w.e.f. AY 2012-13 though it was not mandatory. The balance therein was also very minimal which could not doubt any bonafide of the family and members in holding the said bank account overseas as such. Thus, the said bank account was not existing at any time even at the time of commencement of the BMA and when the mandatory requirement to mention the Foreign Assets in the return of income w.e.f. AY 2015-16 was introduced. Thus, there is no reason to presume that the assessee had not disclosed the same in his return of income so as to attract provisions of the BMA. Thus, the addition made separately in the hands of each of the three appellants/assessee, namely Mr Pradeep Wig, Ms Neera Wig and Ms Sonu Wig is deleted. Appeals of the Revenue are dismissed.

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• 2025 (5) TMI 501
  Assessment u/s 153A - Addition u/s 68 - additions can be made in a search assessment in the absence of any incriminating material found during search? - HELD THAT:- In the case of Smt. Shashi Agarwal [ 2024 (10) TMI 533 - ITAT LUCKNOW ] co-ordinate bench of ITAT Lucknow has decided the matter in favour of the assessee, relying on Abhisar Buildwell (P.) Ltd [ 2023 (4) TMI 1056 - SUPREME COURT] on the issue whether additions can be made in a search assessment in the absence of any incriminating material found during search. Also see M/S U.K. PAINTS (OVERSEAS) LTD. [ 2023 (5) TMI 373 - SC ORDER ] held as no incriminating material was found in case of any of the Assessees either from the Assessee or from the third party and the assessments were under Section 153-C of the Act, the High Court has rightly set aside the Assessment Order(s).

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• 2025 (5) TMI 500
  Estimation of income - bogus purchases - CIT(A) sustained the addition to the extent of 12.50% of purchases - HELD THAT:- CIT(A) has applied the GP ratio of 12.50%, following the decision of the Co-ordinate Bench of the Tribunal in assessee s own case for the A.Y. 2011-12. Nothing has been brought on record as to why the decision of the Co-ordinate Bench of the Tribunal, which has been followed by the Ld.CIT(A) should not be applied in the facts of the present case How the facts of the instant case are distinguishable vis- -vis the facts which were considered by the Co-ordinate Bench of the Tribunal in assessee s own case for the A.Y 2011-12. Therefore, in absence of any material on record, distinguishing the facts of the case vis- -vis for the A.Y. 2011-12, we do not see any infirmity in the order so passed by the Ld.CIT(A), who has followed the decision of the Co-ordinate Bench of the Tribunal in assessee s own case. Appeal of the Revenue is dismissed.

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• 2025 (5) TMI 499
  Unaccounted business receipts ( on-money ) and associated expenditures - net profit @ 20% on unaccounted business receipts as offered by assessee - as submitted Assessee had offered the entire on-money spread during the period of five years - HELD THAT:- In the present set of facts that income element offered by the assessee towards on-money receipts is not out of mere guess work but based on seized material which relates to both, receipts as well as expenses and have been duly explained in the course of search as well as in the post-search assessment proceedings. There is nothing brought on record to establish that expenses incurred by the assessee were prohibited by law or amounted to offence. Explanations furnished for explaining the entries found recorded in the seized material have also not been controverted in the assessment so made. Also, what is found in the course of search cannot be used in piecemeal to advantage of the revenue and adversely for the assessee. The income component of on-money receipts has been fairly arrived at by the assessee and offered to tax in its returns. Accordingly, considering the factual matrix of the case, elaborate submissions made buttressed by relevant judicial precedents, detailed analysis done by the ld. CIT(A), we find no reason to interfere with the findings so arrived at by the ld. CIT(A) in granting relief to the assessee. Addition u/s. 69C towards unexplained expenditure - AO had made addition of unaccounted business receipts u/s 28 and did not allow deduction of expenses against the same - HELD THAT:- AO made the addition as unexplained expenditure even though source for the same was explained to be the same business receipts for which separate addition was made. The said addition relates to payment made to construction contractor which forms part of the seized document. In terms of our observations and findings on ground no. 2 in the above paragraphs, wherein treatment of expenses found recorded in seized material has been extensively dealt with, in our considered view, no separate addition in respect of unexplained expenditure can be made u/s 69C. We do not find any reason to interfere with the finding arrived at by the ld. CIT(A) in this respect. Accordingly, ground no. 3 raised by the revenue dismissed. Disallowance of expenditure from unaccounted business receipts made on protective basis without there being any addition on substantive basis - HELD THAT:- As considering the on-money receipts as offered by the assessee on substantive basis in the return for AY 2018-19, we have already dealt in ground no. 2 with the issue on the income component of the on-money receipts offered by the assessee in its return. Specific to ground no. 1 on addition made on protective basis , according to the assessee, since no addition has been made on substantive basis , the impugned addition made on protective basis is unsustainable in the law. We find ourselves in agreement with this submission, drawing force from the decisions of Ramesh Chand Soni [ 2006 (10) TMI 197 - ITAT JODHPUR ], Kanav Metals [ 2023 (9) TMI 949 - ITAT DELHI ] . Accordingly, addition made by the ld. AO in AY 2018-19 on protective basis without making substantive addition of the same in the assessment made for other assessment years for the assessee or for persons other than assessee is not sustainable in law. However, since we have already affirmed the deletion of addition in ground no. 2, finding in this ground no. 1 has no bearing to alter the outcome in the appeal. Ground no. 1 raised by the revenue is dismissed.

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• 2025 (5) TMI 498
  Addition u/s 69A r.w.s.115BBE - shortage of stock as undisclosed business income - CIT(A) after considering the submissions recorded on survey was satisfied that the source of shortage of stock is unrecorded sales which is part of the business activity and therefore section 69A r.w.s.115BBE cannot be invoked - HELD THAT:- In the assessment and appellate proceedings, assessee is claiming that only the profit element on the unrecorded cash sales should have been taxed. However, in the balance sheet furnished for the year under appeal, the assessee has offered the additional business income in the capital account and in the computation of income it has been offered as Income from other sources . The assessee has shown the application of unrecorded cash sales in the items appearing on the asset side. Admittedly, the claim of the assessee that only the profit element on the unrecorded cash sales should been taxed is an afterthought because during the course of survey proceedings as well as in the return of income filed the assessee has admitted the unrecorded sales as its additional income. Taking note of the fact that during the course of survey the assessee has stated that the cash received from unrecorded sales has been partly utilised for giving advance to the farmers for purchase of raw material and partly for expansion of the existing showroom, we find that details of advance given to the farmers for purchase of raw material and the actual amount spent for expansion of the existing showroom is neither discernible from the audited financial statements for F.Y. 2018-19 nor any such information is provided by the assessee before us or the authorities below. On the strength of various judicial decisions the assessee stated that the assessee should not be subjected to levy of tax which he is not required to pay as per law. Hon ble Apex Court in the case of CIT Vs. Shelly Products [ 2003 (5) TMI 4 - SUPREME COURT ] has referred to Article 265 of the Constitution of India which provides that no tax shall be levied or collected except by authority of law. Considering the fact that the assessee in the statement recorded during the course of survey has stated that the cash received from unrecorded cash sales have been applied for giving advance to the farmers for purchase of raw material and the remaining amount has been utilised for expansion of the existing showroom, which have further not been examined by the ld.AO as well as CIT(A), we deem it proper to restore the impugned issue to the file of CIT(A) before whom the assessee shall demonstrate with credible evidence about the application of cash received from unrecorded cash sales. CIT(A) shall decide the issue in accordance with law after affording reasonable opportunity of hearing to the assessee. Grounds of appeal raised by the assessee are allowed for statistical purposes.

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• 2025 (5) TMI 497
  Rejection of application u/s 12AB and 80G - Non-Registration under Rajasthan Public Trust Act, 1959, Utilising income assets of the trust not as per objects and Non-Genuineness of activities - HELD THAT:- Taking into consideration the serious issues involved, the matter needs to be restored to Learned CIT(E) for decision afresh, so as to provide the applicant trust another opportunity to furnish requisite information/details/documents which its representative did not furnish earlier. As a result, this appeal is disposed of for statistical purposes and the application u/s 12AB of the Act is restored to the files of Learned CIT(E) for decision afresh after affording another opportunity to the applicant of being heard.

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• 2025 (5) TMI 496
  TP Adjustment - specified domestic transactions - Comparable selection - HELD THAT:- Assessee has claimed that its specified domestic transactions having operating margin of 25.21% is at arm s length in comparison to the median margin of the comparable at 20.61%. Accordingly, this issue is remanded to the record of the TPO/AO for determination of the ALP by adopting TNNM as the most appropriate method based on the external comparables as well as international comparables of the assessee. If the operating margin of the assessee is found to be within the tolerance range of 3% of ALP, then no adjustment would be called for. Needless to say, before passing the fresh order, the assessee be given an appropriate opportunity of hearing. Disallowance of weighted deduction u/s 35(2AB) - When the issue as well as the facts are identical for the year under consideration to that of the A.Y 2017- 18, then to maintain the rule of consistency, we following the earlier order of this Tribunal and allow the claim of the assessee u/s 35(2AB) of the I.T. Act, 1961 for the entire expenditure as referred in the report of the DSIR. Additional depreciation in respect of plant machinery u/s 32(iia) - Claim dis-allowed by AO in the draft assessment order by giving the reasons that it was used for less than 180 days - HELD THAT:- DRP after considering all the relevant facts and material has accepted the claim of the assessee and directed the AO to allow additional depreciation u/s 32(iia) of the I.T. Act, 1961. In the final assessment order, the AO has not given the effect to the directions of the DRP which is not only uncalled for but also reflects the indiscipline on the part of the Assessing Officer. Accordingly, we direct the Assessing Officer to give effect to the directions of the DRP and allow the claim of the additional depreciation as directed by the DRP.

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• 2025 (5) TMI 495
  Revision u/s 263 - allowance of loss incurred by the assessee on foreign currency derivative transactions ( FCDT for amounting short) which the ld.Pr.CIT found to be marked to market loss ( M2M for short) and noting the same to be notional loss, contingent in nature and not allowable in terms of the CBDT Instruction No.3/2010 dated 23.03.2010 ( Board Instruction ) - CIT said AO to have allowed this claim erroneously without examining the issue and conducting due enquiries with regard to the same. HELD THAT:- With respect to the portion of the loss claimed by the assessee on account of exchange difference in respect of outstanding balance of creditors, this fact undoubtedly had been brought to the notice of the AO, and CIT also during the revisionary proceedings. The assessee had also demonstrated that the claim of this loss had been made following the AS-11 recommended by the ICAI for this purpose; that it was also pointed out that the Hon ble Apex Court in a series of the decisions beginning with CIT Vs. Woodward Governor P.Ltd.[ 2009 (4) TMI 4 - SUPREME COURT ] and ONGC [ 2010 (3) TMI 81 - SUPREME COURT ] had held such identical claims to be allowable in terms of section 37(1) of the Act. CIT, we agree with the assessee, has found the claim to be wrongly allowed by the AO, completely misappreciating the facts of the present case and noting it to be on account of loss on forward contract of FCDT . Noting this incorrect fact, he has held the transaction to be speculative in terms of section 43(5) of the Act, and noting this incorrect fact alone, he has distinguished the decision, the assessee had cited as applicable in the facts of the case. Therefore, we agree with assessee that the finding of the error by the ld.Pr.CIT on account of incorrect allowance of claim of loss on account of foreign exchange difference in relation to outstanding creditors was an incorrect finding of the error based on incorrect appreciation of the facts, and therefore, the same is held to be not sustainable. Other component of the loss, admittedly, the same was on account of forward contract of FCDT but the assessee had pointed out that the loss was a settled loss and not an M2M loss. CIT, we find, still goes on to record an incorrect finding that the loss was an unsettled M2M loss and hence not allowable in terms of CBDT Instruction No. 3 of 2010 (supra). On the second issue also, we find, that the ld.Pr.CIT has failed to appreciate the correct facts of the case, while finding the assessment order erroneous. The assessee had demonstrated the loss claimed to be not an M2M loss, but a settled loss, and the ld.Pr.CIT, we find, however goes on to record fact to the contrary that it was an M2M loss. Basis this incorrect fact noted by him, the PCIT, we find, went on hold the assessment order erroneous causing prejudice to the Revenue for having allowed such M2M loss in contradiction/in violation of the Instruction issued by the CBDT in this regard. Assessee had explained such loss to have been incurred while hedging its foreign currency transaction from fluctuations, which transactions were entered into in the course of carrying out its business activities for importing raw-material, and had also pointed out that in various judicial decisions such losses were held to be allowable. CIT, we find, has failed to appreciate this contention of the assessee, and has merely noted the fact that the loss booked by the assessee was a notional/contingent loss on account of unsettled transaction, which, as we have noted above, was an incorrect finding of the fact by the ld.Pr.CIT. Therefore, the second issue also of loss on forward contract of foreign currency derivatives booked by the assessee of Rs. 82.91 lakhs being wrongly allowed by the AO, the finding of the error by the ld.Pr.CIT is again based on mis-appreciation of the facts of the case before it, and also by not appreciating the judicial decisions cited by the assessee to it. The finding of the error by the ld.Pr.CIT on the loss on forward contract of FCDT of Rs. 82.91 lakhs is also held to be not sustainable. CIT has alternatively held that even if transactions entered into by the assessee has not treated as speculative, the Explanation to section 73 of the Act was applicable to the facts of the present case, as per which, the assessee would not be entitled to set off any loss on transaction of buy and sale of US dollar through brokers as in the facts of the present case. The AO has not examined the issue from this perspective, and therefore, rendering the assessment erroneous - Admittedly, the applicability of provisions of section 73 of the Act was never confronted to the assessee during the revisionary proceedings. Therefore, holding the assessment order erroneous on account of the applicability of a provision, which was never confronted to the assessee is, we agree with the assessee, in gross violation of principles of natural justice. Besides, we have gone through the order of the CIT and we find that there is no clarity in the order of the ld.Pr.CIT as to how the Explanation to section 73 would disentitle the assessee to set off any loss on transactions on trading in foreign currency. CIT has merely reproduced the Explanation below the section 73, and on perusing the contents of the same, we fail to understand, how it can be derived therefrom that loss on transaction in FCDT is not allowed to be set off in terms of the said section. Even the order of the ld.Pr.CIT gives no clarity on how the Explanation is so interpreted by him. As gone through the provisions of section 73, and we find that it has absolutely no applicability to the facts of the present case. In the facts of the present case, the ld.Pr.CIT has alternatively applied section 73 stating that if the FCDT transactions are not treated as speculative, then section 73 will be applicable. But since section 73 applies only to loss incurred in speculative business, this interpretation of the ld.Pr.CIT, we find, is incorrect. Coming to the Explanation to section 73, which the ld.Pr.CIT has invoked, what it merely states is that if a company indulges in the business of trading in shares primarily, such transactions would be treated as speculative business. Thus, the Explanation to section 73 deems the transactions in trading of shares in specific circumstances to be speculative in nature. The facts of the present case are not that the transactions entered into by the assessee were in relation to trading of shares. There is no question, therefore, for the Explanation to section 73 being attracted. Therefore, we find that the ld.Pr.CIT had grossly erred in holding that the Explanation to section 73 would be attracted in the facts of the present case. We hold that the order passed by the ld.Pr.CIT under section 263 of the Act is not sustainable - Assessee appeal allowed.

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• 2025 (5) TMI 494
  Validity of approval u/s 153D - procedural requirements and application of mind by the sanctioning authority - assessee have submitted that the approval granted by JCIT was on the basis of wrong presumptions, also there was no evidence on record to show that the letter of DVO disposing of the objections of the assessee was placed before the Ld. JCIT, therefore, the approval was granted without perusing the complete assessment record by the Ld. JCIT - HELD THAT:- We find that there were certain proceedings ongoing in the case of assessee, after the draft of assessment was submitted to the JCIT on 28.12.2019. A communication from the valuer M/s FCPL was received on 28.12.2019. Though, there was no documentary evidence to substantiate that such report of valuer was duly furnished before the Ld. JCIT and the draft assessment was approved after considering the same, at this juncture, a question emerges qua the objections of the assessee which were responded by the valuer, why the same are not confronted to the assessee for its comments before culmination of the assessment. If the report was furnished before the Ld. JCIT, who was the authority granting the approval u/s 153D, bearing a presumption that proper opportunity of hearing has been afforded to the assessee, whereas apparently, when there was no response of assessee on the report of valuer on record placed before the sanctioning authority, for the reason that the assessee was not even aware about the receipt of such communication from the valuer, how the sanctioning authority convinced himself that the required / reasonable / proper opportunity of hearing was granted to the assessee. Such observations led to a situation, wherein it can be plainly construed that either the complete set of records are not placed before the sanctioning authority or are not perused by the sanctioning authority or the failure in compliance of the mandatary proceedings could not be envisaged by the authority while granting the sanction u/s 153D. Such facts and circumstances, establishes that there was a violation of principle of natural justice on the part of Ld. AO, as the report of valuer M/s FCPL was not communicated to the assessee for its comments, and furthermore such mistake / lapse could not be perceived / comprehended or slipped the attention of the sanctioning authority, is nothing short of non- application of mind or approval in routine manner. We, thus, held that the approval granted mechanically, without application of mind has no standing in the eyes of law, therefore, the consequential assessment, following such invalid and non-est approval u/s 153D is void ab initio, thus, liable to be quashed due to non-satisfaction of mandate of law u/s 153D. Assessee appeal allowed.

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• 2025 (5) TMI 493
  TP Adjustment - Availing of supervision services and central services - HELD THAT:- DRP noted that identical issues were adjudicated in favour of the Appellant by this Tribunal vide order [ 2021 (11) TMI 967 - ITAT DELHI] for AYs 2014-15 and 2016-17 [ 2022 (11) TMI 1552 - ITAT DELHI] for AY 2018-19. AO has definitely fallen in error in not following the directions of DRP to benefit the assessee of the decisions in favour of assessee in assessee s own cases. Then, in the Assessee s own case for AY 2014-15, AY 2016-17, 2017-18 and 2018-19 the co-ordinate benches have considered the issue of mark and have held that the mark-up charged by the AE for the services provided should be allowed and deleted the entire adjustment made on this account. In AY 2018-19, the co-ordinate bench in which one of us, the Hon ble Accountant Member, was also in quorum has concluded that the issue of mark up being at arm s length is no more res integra. Thus the AO has definitely fallen in error in not following the directions of DRP to benefit the assessee of the decisions in favour of assessee in assessee s own cases.

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• Customs

• 2025 (5) TMI 492
  Refund claim - fulfilment of the condition of filing Appeals against the self-assessed Bills of Entry as a pre-requisite to entertain the refund claim or not - classification of goods Pisum Sativum [Peas] - to be classified under Sl No.20 or under Sl No.20A during the period under dispute? - The Tribunal rejected the Revenue s argument that the importers had not filed appeals against the self-assessed Bills of Entry - Delay of 471 116 days respectively in filing the Civil Appeals - HELD THAT:- There is a gross delay of 471 116 days respectively in filing the Civil Appeals which has not been satisfactorily explained by the appellant. The Civil Appeals are, accordingly, dismissed on the ground of delay.

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• Corporate Laws

• 2025 (5) TMI 491
  Non-existence of the companies at the given address where notices were issued by the bank - HELD THAT:- When the adjudicating authority had called for the report from the RoC to investigate and verify the existence of the companies at the address mentioned authority ought to have awaited the report for proceeding further in the matter and it was not necessary for the adjudicating authority to ask the director to submit a explanation or be physically present before the adjudicating authority on the next date. The directions of the adjudicating authority for directing the director to physically present is not called for at this stage and in the facts of the present case no order was required for imposing cost of Rs. 25000/- each upon the Respondents for submitting the reply within a week. Appeal allowed in part.

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• Service Tax

• 2025 (5) TMI 490
  Non-payment of service tax - non-service of notices - SCN issued based on surmise and solely on the basis of data relating to third party received from Income Tax Department - violation of principles of natural justice - HELD THAT:- This Court finds force in the submission of Ms. Kananbala Roy Choudhury, learned Advocate that the Order-in-Original dated 03.07.2024 could not be challenged before the appropriate forum in terms of remedy available under the Finance Act, 1994. Since the Advocate for the Petitioner as well as the Senior Standing Counsel for the Department conceded that the Order-in-Original is served on the Advocate for the Petitioner on 28.03.2025, in view of existence of alternative remedy under the Finance Act, 1994, the Petitioner is at liberty to assail the said order before the appropriate forum within a period of three weeks from date. In view of the fact that the Petitioner has been granted two weeks from today to approach the appropriate forum to ventilate its grievance invoking alternative remedy, the recovery notice dated 19.03.2025 insofar as it relates to the present Petitioner (Serial No.3 of Annexure-4) is concerned stands vacated. Petition disposed off.

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• 2025 (5) TMI 489
  Classification of service - Work Contract Services - availing abatement of 67% on the total amount received by treating the service as Work Contract Service - HELD THAT:- On going through the work order placed by the appellant on record and as per the work orders placed by the appellant only one work order No. 511-1400/SGTPS/W/IMD-I/W/Ord-54/733 dated 19.10.2013 material cost is involved Rs. 1,98,792/- on which CST @2% has been paid by the appellant and the material cost is shown as Rs. 3,97,584/-. On the other contracts produced by the appellant and placed on record does not show any element of supply. In fact all other contracts are periodical maintenance contract and no material is involved on those contracts which are evident from the bills raised by the appellant. Vide Bill No. IIE/14-15/05 dated 09.06.2014, Bill No. IIE/14-15/09 dated 15.07.2014, Bill No. IIE/14-15/05 dated 09.06.2014, Bill No. IIE/13-14/30 dated 30.01.2014, Bill No. IIE/13-14/18 dated 27.09.2013 and Bill No. IIE/13-14/14 dated 04.09.2013, all these bills shows that the appellant has provided only service no material is involved. Therefore, the contention of the appellant that they have providing works contract service is not acceptable except the agreement dated 19.10.2013. On the said contract, the value of material cost and has already been by worked out i.e. Rs. 3,97,584/-, therefore, on the amount of cost of material i.e. Rs. 3,97,584/-, no service tax is payable by the appellant. Accordingly, demand on the said amount calculating @ 12.36% reduced by Rs. 49,141/-. Rest of the demand confirmed in the impugned order is payable by the appellant along with interest as said amount has not been paid by the appellant till yet. Therefore, the penalty equivalent to said amount is also payable by the appellant. Conclusion - i) The contention of the appellant that they have providing works contract service is not acceptable except the agreement dated 19.10.2013. ii) On the said contract, the value of material cost and has already been by worked out i.e. Rs. 3,97,584/-, therefore, on the amount of cost of material i.e. Rs. 3,97,584/-, no service tax is payable by the appellant. iii) Rest of the demand confirmed in the impugned order is payable by the appellant along with interest as said amount has not been paid by the appellant till yet. Therefore, the penalty equivalent to said amount is also payable by the appellant. Appeal disposed off.

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• 2025 (5) TMI 488
  Classification of service - Business Auxiliary Service (BAS) or Business Support Service (BSS) - invocation of extended period of limitation - HELD THAT:- In the instant case, as has been brought out from the records, various documents etc. were being prepared by the appellants, they were charging commission, they were responsible for arranging finance on old cars and also were arranging various documents including RTO registration etc. Such activities cannot be stated to be a rent of any kind and it has to come within the ambit of Business Auxiliary Service . To fortify the matter against the appellants despite Larger Bench decision in M/S PAGARIYA AUTO CENTER VERSUS CCE, AURANGABAD [ 2014 (2) TMI 98 - CESTAT NEW DELHI (LB)] , the Learned Commissioner (Appeals) has correctly relied upon the statement of Shri Suresh Vishandas Ramani which clearly indicates that Clause 19 (ii) of Section 65 of the Finance Act, 1994 clearly brought this kind of service within the ambit of Business Auxiliary Service . It was also pointed out by Shri. Ramani during the course of the statement that sometimes other sub brokers also bring business to them in which case, they pay them with some commission out of the commission to be earned by them. From the show cause notice, it is also analyzed that renting of space was never an issue made out in the matter as was the case before the Larger Bench. Therefore, for the kind of activities which were being performed by the appellants, there cannot be any doubt about the same not being covered under Business Auxiliary Services. Hence notion that there was confusion in their mind, despite admission by the owner of the business clearly indicates that it is a figment of imagination to take advantage of a case law which is not applicable to them, in any case in its entirety. The order of Commissioner (Appeals) is sustainable both on merits as well as on the point of limitation. Conclusion - i) The appellant s activities involving commission-based purchase and sale of old cars, acting as DSA for banks, arranging finance, and handling RTO and other documentation, clearly fall within the ambit of Business Auxiliary Service, not Business Support Service or mere rent. ii) The extended period of limitation is rightly invoked due to suppression of facts and absence of bona fide belief. Appeal dismissed.

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• 2025 (5) TMI 487
  Exemption from service tax - investment in mutual funds - Trading of Goods - section 66D(e) of Finance Act - reversal of proportionate CENVAT credit attributable to input services used commonly for taxable services and the exempted service of trading of goods - HELD THAT:- The subscription and redemption of liquid mutual fund units cannot be termed as trading of goods and, therefore, do not fall under the exempted services under Section 66D(e) of the Finance Act. The activity to classify as exempted service under Rule 2(e) of the Cenvat Credit Rules, 2004 needs to be qualified as service , as defined under Section 65B (44) of the Act, meaning thereby that service is an activity carried out by a person for another for consideration and includes a declared service but excludes a transfer of title in goods or immovable property by way of sale, gift, etc. The activity of investment in mutual funds does not involve the presence of a service rendered by a service provider towards a recipient of service for some consideration. The activity undertaken would not amount to service in terms of Section 65B(44) of the Act. Conclusion - Mere investment transactions involving transfer of securities do not qualify as service and hence cannot be treated as exempted services such as trading of goods. Appeal allowed.

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• 2025 (5) TMI 486
  Levy of service tax - declared service or not - liquidated damages or penalty charges collected by the parties from contractors/suppliers for breach of contract, such as delay or deficiency in supply of goods/services - HELD THAT:- It is found that issue of service tax on liquidated damages is no more res- integra as Tribunal, in various cases have held that service tax demand on liquidated charges is not sustainable. In a recent decision by this Tribunal in the case of Gujarat State Electricity Corporation Limited vs. Commissioner of Central Excise and Service Tax-Surat-II [ 2024 (11) TMI 473 - CESTAT AHMEDABAD] , it has been clearly held that service tax is not leviable on penalty collected for not completing the contract within the stipulated time period. Conclusion - The liquidated damages/ penalty collected by M/s. Gujarat Industries Power Company Limited from their Vendors/ Suppliers does not come under the purview of declared service as defined under Section 66 E ( e) of the Finance Act, 1994 and service tax is not leviable on this amount. Appeal allowed.

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• 2025 (5) TMI 485
  Liability to pay service tax under the category of Manpower Recruitment or Supply Agency Service (MRSAS) - Fixation of value of taxable services under section 67 of the Finance Act, 1994, reckoning the gross amount without segregating the expenses towards salaries and statutory payments under the ESI/EPF - HELD THAT:- M/s ONGC calculates the wages payable as per agreement, PF, ESI and any other statutory dues and remits the same to the society for disbursal to the members of the society and for payment to Government accounts respectively. In addition, M/s ONGC pays an amount of Rs.2,500/- per month towards society maintenance. Appellants state that the amount is only liable to be calculated for tax. M/s ONGC submitted a list which is annexed to the SCN, which contains amounts paid by M/s ONGC to service provider/appellants. In this list, they have not bifurcated payments with regard to PF/ESI, etc. Appellants have not provided any list containing the payments made to workers with details showing any bifurcations. In view of these facts and circumstances, decision in the case of Young Brothers Transporters Contractors Vs CCE, Meerut-I [ 2017 (9) TMI 229 - CESTAT NEW DELHI] is not applicable to the instant case. Revenue relied on the decision of Coordinate Bench at Ahmedabad in the case of CCE ST, Surat Vs Jalaram Security Services, [ 2019 (10) TMI 1207 - CESTAT AHMEDABAD] wherein, it was held that as per section 67, the gross amount charged towards providing service shall be liable to service tax. As regards the salary of security guards, PF and ESI, the same is not an expenditure incurred by the appellant on behalf of the service recipient. The service recipient is concerned about the overall provision of security service irrespective of bifurcation of payment of service paid by the service recipient to the appellant. Therefore, it cannot be said that salary of guards, PF, ESI, etc., are reimbursable expenditures to be deducted from the gross value of security service. Therefore, it was decided that only the commission portion is liable to tax and not the gross value. Conclusion - The gross amount charged towards providing service shall be liable to service tax. The service recipient was concerned about the overall provision of security service irrespective of bifurcation of payment of service paid by the service recipient to the appellant. Therefore, it cannot be said that salary of guards, PF, ESI, etc., are reimbursable expenditures to be deducted from the gross value of security service. Appeal dismissed.

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• 2025 (5) TMI 484
  Liability to pay service tax on the construction services provided during 2009-10 to December 2013 - services were rendered to government bodies, statutory authorities, as a sub-contractor to main contractors - HELD THAT:- The period of dispute in the case is from 2009-10 to 2013-14(up to December, 2013) which involves both pre and post negative list regime. As far as services provided to Surat Municipal Corporation and Government of Gujarat are concerned, the show cause notice has already considered them as non-taxable services. The proprietor of the appellant in his statement dated 25.06.2014 has accepted to have suppressed the Taxable value non-filing of ST-3 returns. He provided details of exempted income and gross taxable income from the services which Revenue has taken in the show cause notice. The plea taken by the appellant for not taking service tax registration and non-payment of service tax is that the main contractor would be paying the service tax and he being a subcontractor, is not be liable to pay the service tax. The same argument he applied for construction services provided to M/s M D developer, space creators and Shyam Corporation and did not pay the service tax, thinking that the builder must have paid and even if, he pays the tax, the builder will be able to take Cenvat credit of the same and the whole exercise will be revenue neutral. The ingredients for invocation of extended period are available in this case. In the case of M/s. D H Patel vs. CCE ST Surat-I [ 2023 (4) TMI 920 - CESTAT AHMEDABAD] , this Tribunal has clearly brought out that M/s. GSPHCL is 100% owned by Government of Gujrat under Ministry of Home Affairs and therefore, the same was held to be a Government Organization. However, the appellant has not provided any service to M/s. GSPHCL directly and he has acted as subcontractor of M/s. D H Patel. Thus, they have provided service to M/s. D H Patel in this case and not to any government organization. As clarified by CBIC vide F No. 332/16/2010-TRU dated 24.05.2010, in the case of M/s NBCC that sub-contractor will have to pay service tax, plea of the appellant that they are not liable to pay service tax being a sub-contractor, is not acceptable. Regarding appellant is claim that service tax demand has been made from them without classifying the service. We find that the proprietor in his statements dated 25.06.2014 has clearly accepted to have provided Residential Complex Service and therefore, by their own admission, they are liable to pay service tax under the above category. Agreeing with the above proposition, in view of proprietor s acceptance, it is deemed fit to remit the matter to the adjudicating authority to work out demand of service tax under Construction of Residential Complex Service from the date when service has been brought into tax net. Regarding allegation of wrong computation of Service Tax, it is found that the appellant have not clearly spelt out this allegation. Conclusion - i) Services provided directly to Government organizations such as Surat Municipal Corporation for non-commercial purposes are exempt from service tax. ii) The appellant s plea that being a sub-contractor, they are not liable to pay service tax is not acceptable in view of CBIC clarification and Tribunal precedents. iii) The adjudicating authority must re-compute the demand of service tax under Construction of Residential Complex Service from the date service was brought into the tax net and consider submissions on computation, interest, and penalties. The matter is remanded to the lower authority - appeal is partly allowed.

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• 2025 (5) TMI 483
  Levy of service tax on the lease rent charged by the appellant on the port users like, stevedores etc. for providing of storage space in the land parcel belonging to the Kolkata Port Trust for storage of import/export goods in terms of Port Service as defined under Section 65 (82) of the Finance Act, 1994 - time limitation - HELD THAT:- During the impugned period, any activity not falling under the scope of the defined taxable service, was not liable to tax. Thus even though, the appellant collected rent for vacant land acquired for storage of goods for its customers, it will not come within the ambit of Port Service . It cannot be denied that such license fee received was for the purpose of renting of immovable property, which became taxable only w.e.f. 01.06.2007, as evident from the licence agreement. It is also noticed that this Tribunal on a similar question arising in the case of Cochin Port Trust Vs. Commissioner of Central Excise, Cochin [ 2010 (5) TMI 479 - CESTAT, BANGALORE] with regard to a similar question, had held that these are recovered for leasing out immovable property to IGTPL for permitting it the use of the site belonging to CPT. Renting of immovable property services under which the impugned activity will be appropriately classified was introduced only on 1-6-2007 post the period of dispute. Therefore the impugned demand under port services is liable to be set aside. Time Limitation - HELD THAT:- It is found from the record that there is nothing to substantiate the Department s charge of suppression or wilful mis-statement. The appellant has been regularly filing returns in respect of the service rendered and the rental income so received has been duly accounted in their Books of Account. This cannot be a case of deliberate evasion of tax on the part of the assessee - Moreover, under the circumstances, when the CBIC has itself issued a Circular wherein it specifically clarified in respect of non-levy of tax on such rental income, no case for invoking extended period is also made out. The order of the lower authority is, therefore, not in accordance with legal provision and therefore, the same is required to be set aside. Conclusion - i) The appellant is not providing storage services to the stevedores and is merely renting the immovable property, for which, the service tax on such license fee is being paid w.e.f. 01.06.2007 as Renting of Immovable Property i.e. when the said service came under the purview of tax net under Service Tax statute. ii) When the CBIC has itself issued a Circular wherein it specifically clarified in respect of non-levy of tax on such rental income, no case for invoking extended period is also made out. Appeal allowed.

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• 2025 (5) TMI 482
  Refund of service tax, which was deposited by mistake - Refund rejected on the ground of time limitation - Applicability of Section 11B of CEA - rate of interest applicable 6% or 12% - HELD THAT:- It is admitted fact that appellant had paid service tax by mistake which is not payable at all and same shall be treated as Revenue deposit not service tax paid by the appellant. Therefore, the provision of Section 11B of the Act is not applicable. The same view has been affirmed by the Hon ble Apex court in the case of KVR Constructions Ltd. [ 2012 (7) TMI 22 - KARNATAKA HIGH COURT] . As provision of Section 11B are not applicable to the facts of the present case, in that circumstances, determining the rate of interest under Section 11BB of the Act is not applicable. Therefore, the Notification No. 67/2003 CE (NT) dated 12.09.2003 also not applicable to the facts of the case. Relying on the decision of further in the case of Indus Towers Limited [ 2025 (1) TMI 1261 - CESTAT CHANDIGARH] , wherein the interest @ 12% has been granted to the appellant. Therefore, following the judicial pronouncement, it is held that the appellant are entitled interest @ 12% on delayed refunds. Accordingly, the Revenue is directed to pay interest @ 12% per annum to the appellant. Conclusion - i) Where service tax is paid by mistake of law on exempted services, such payment is a revenue deposit and not duty or tax payable in law, thus Section 11B and consequently Section 11BB are not applicable. ii) In cases of delayed refund of revenue deposits or mistaken payments, interest at 12% per annum is appropriate. Appeal allowed.

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• 2025 (5) TMI 481
  CENVAT Credit - duty paying documents - credit be denied only on the account that the bills are not in the names of the appellant and is not a proper document for claiming the CENVAT credit as per Rule 9 of the CENVAT Credit Rules - HELD THAT:- In this case, the only ground on which the CENVAT credit has been denied to the appellant is that his name does not figure in the document issued by M/s Evergreen Shipping Agency (India) Pvt. Ltd., Mumbai which had issued the document in favour of M/s Adhunik Niryat Ispat Limited, the original importer. It is further found that once he has purchased the goods on high sea sale basis, he stepped into the shoe of the original importer and later filed Bill of Entry before the Customs for clearance of the goods imported which was permitted by the customs. The identical issue has been considered in the case of Karaikal Chlorates [ 2022 (9) TMI 429 - CESTAT CHENNAI] wherein the Tribunal after considering the identical facts has held that After purchase of the goods by the appellant, these services providers had provided services to the appellant for clearances of the goods. However, the invoices were issued in the name of original importer M/s. Mitsubishi Corporation India Pvt. Ltd. It is clear from the records that the appellant had paid service tax for the services availed. I find that denial of credit alleging that invoices mention the name of the original importer is too technical and cannot be accepted. Similarly, in the case of Mammon Concast Pvt. Ltd. [ 2021 (6) TMI 619 - CESTAT NEW DELHI] , the Tribunal has allowed the CENVAT credit to the person who has purchased the goods on high sea sales agreement basis. Conclusion - The impugned order denying CENVAT credit on the sole ground of invoice name mismatch is unsustainable in law. Appeal allowed.

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• 2025 (5) TMI 480
  Invocation of extended period of limitation - imposition of penalty equivalent to tax involved during the period April, 2015 to September, 2015 under section 78 and also penalty under section 78A - HELD THAT:- Essentially, for invoking extended period, as also for imposing penalty under section 78, it is incumbent upon the department to establish non-payment or short payment of service tax by reasons of fraud or collusion or willful misstatement or suppression of facts or contravention of any of the provisions of this law with intent to evade payment of service tax, where SCN is issued in terms of the proviso to sub-section (1) of section 73. Therefore, in order to invoke section 78, the SCN issued under proviso to section 73(1) has to be sustained first. In this case, while the SCN has been proposed invoking proviso to section 73(1), we do not find any ingredient to sustain the invocation of extended period for recovery of demand notwithstanding the fact that the appellants are themselves not contesting the recovery of service tax not paid/short paid even for the period beyond the normal period of demand. It is apparently because they paid entire amount of service tax and interest much before the issue of SCN itself. Merely because they are not contesting the confirmation of demand and recovery thereof, it would not tantamount to their admitting the fact that there was a deliberate act of evasion or there was any intent on their part to evade service tax payment. On the contrary, there is force that this was an omission which can be cured within the provisions of the Finance Act and Rules made thereunder subject to payment of interest, late fee, etc. Revenue has also argued that since they have paid 25% of penalty, they have already admitted the validity of imposition of penalty under section 78. Unlike section 73(3), payment @ 25% under section 76, does not bar a person from agitating the same before the Appellate Authority. Therefore, once there is no element of willful misstatement, fraud, collusion, etc., obviously in the given factual matrix, section 73(3) would have been available and that there was no need for issuing any SCN. The denial of benefit under section 73(3) by the Adjudicating Authority is therefore not correct or tenable and it is found that they would be entitled for section 73(3) of the Act. Having regard to factual matrix of the case, evidence on record, as also various case laws cited by both sides, we find that the department has not been able to establish the element of fraud or collusion or willful misstatement or suppression of facts or contravention of any provision of this Chapter or Rules made thereunder with intent to evade payment of service tax - the impugned order is liable to be set aside to the extent of imposition of penalty of Rs.7,16,02,680/- under section 78 on the appellant. Penalty u/s 78A on Director of appellant company - HELD THAT:- Penalty under section 78A can be imposed on any director, manager, secretary, officer, etc., of the company who at the time of such contravention was in-charge of and was responsible to the company for the conduct of business of such company and was knowingly concerned with such contravention - There is nothing on record to substantiate the claim that he was in-charge in relation to those functions and it was under his active and direct instruction that Mr. K.V. Vasantha Rao has committed such non-compliance or alleged evasion. In fact, the department has not proposed any penal action in the SCN against Mr. K.V. Vasantha Rao even though he is the manager in the said company, who is also covered within the provisions of section 78A. The Adjudicating Authority s reliance on the fact that Mr. K. Bhaskar Rao did not give any explanation or rebuttal to the charges leveled in itself cannot become a ground for sustaining the charges in SCN for imposition of penalty under section 78A - the imposition of penalty under section 78A on Mr. K. Bhaskar Rao is not tenable and is liable to be set aside. Conclusion - i) The invocation of extended period under proviso to section 73(1) was not justified, and the appellant was entitled to the benefit of section 73(3). ii) The penalty under section 78 on the appellant and under section 78A on the director was set aside due to lack of evidence of culpable intent or knowledge. Appeal allowed in part.

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• Central Excise

• 2025 (5) TMI 479
  Demand of duty raised on the basis of input output ratio and without having any evidence towards clandestine manufacture and removal of goods without payment of duty - confiscation of quantity of 157.436 M.T. of Sponge Iron found in excess, under Rule 25 of the Central Excise Rules - HELD THAT:- There are force in the appellant s argument that the entire proceedings have been built on the assumptions of the input/output ratio of Sponge Iron vis- -vis end product. The Revenue has considered the input / output ratio of 1 : 1.67 as sacrosanct based on the expert opinion of Institute of Mineral Technology, Govt of India and another opinion of Popuri Engineering Consultancy Services, Hyderabad. Revenue has not brought in any corroborative evidence to the effect that the manufactured goods have been cleared clandestinely and cash transactions have taken place. No statements have been recorded from any of the purported buyers, vehicle owners. No private records with reference to the cash transactions have been seized. All these make to conclude that the Department has proceeded purely based on the assumptions and presumptions basis without verifying their allegations. The facts of the present case are similar with the Revenue mainly relying on the input / output ratio relied on source which are not tested independently by them and hence these case laws are squarely applicable in the present case. It is also found that the alleged shortage is also not properly corroborated by the Revenue. Hence, the Redemption Fine and penalty imposed are not legally sustainable. Accordingly, the impugned order set aside and the appeal allowed on merits. Time limitation - HELD THAT:- In cases of allegation of clandestine removals, it requires detailed investigation, verification of various documents so as to finalize the Show Cause Notice. Since no specific facts have been brought in the SCN about the suppression on the part of the appellant, the delay in issuing of the SCN after having all the facts on record does not come to the rescue of the Department. Hence, the impugned order is set aside even on account of limitation. Conclusion - i) The demands for excise duty based solely on input-output ratio estimates without independent verification and corroborative evidence of clandestine manufacture and removal cannot be sustained. ii) The alleged shortage is also not properly corroborated by the Revenue. Hence, the Redemption Fine and penalty imposed are not legally sustainable. iii) Since no specific facts have been brought in the SCN about the suppression on the part of the appellant, the delay in issuing of the SCN after having all the facts on record does not come to the rescue of the Department. Hence, the impugned order is set aside even on account of limitation. Appeal allowed.

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• 2025 (5) TMI 478
  Maintainability of Department s appeal against the order of the Commissioner (Appeals), given that the same order has already been set aside by the Tribunal in a prior appeal preferred by the assessee - HELD THAT:- As could be noticed from the development of the proceedings initiated after issue of Show-cause, vide Order-In-Original dated 30.08.2013 in ORCHID CHEMICALS PHARMACEUTICALS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, AURANGABAD [ 2017 (4) TMI 799 - CESTAT MUMBAI] , the entire demand of excise duty in the show cause was confirmed alongwith interest and proportionate penalty against which Appellant preferred appeal No. E/85851/2014-Mumbai that was admittedly disposed of by the Tribunal by setting aside the order passed by the Commissioner (Appeals) on 30.08.2013. The appeal filed by the Department is dismissed since the relief sought in the said appeal seeking non application of cum-duty benefit could not be extended when duty demand as such was held to be unsustainable. Appeal dismissed.

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• 2025 (5) TMI 477
  Refund of Additional duties of Customs/Countervailing Duty (CVD), Special Additional Duty of Customs (SAD), Education Cess, and Secondary Higher Education Cess paid consequent to cancellation of export orders under the Advance License scheme - transition from Central Excise regime to Goods and Services Tax (GST) regime - Section 142 of the Central Goods and Services Tax, 2017 read with Section 11B of the Central Excise Act, 1944 - HELD THAT:- The appellants had duly followed the procedure and conditions prescribed in complying with the obligations under the Foreign Trade Policy and the Customs Act, 1962, inasmuch as upon identifying that they are unable to fulfill the export obligations cast upon them in importation of capital goods/machinery under Advance License scheme, which had arisen consequent to cancellation of export orders, they had paid the applicable duties of customs vide challans dated 29.05.2018, 14.06.2018 and 04.09.2018, as authorised and certified by the Customs authorities at Nagpur. The nature of duties paid by the appellants remains as the duties of customs which otherwise would have been paid at the time of import of machines under such Advance License, even though these are being paid now as duty foregone. It is not in dispute that the additional duties of customs equivalent to the duty of excise, Education Cess Secondary Higher Education Cess leviable on the imported goods was available as CENVAT credit under the provisions of the CENVAT Credit Rules, 2004. Post introduction of GST regime, CVD on imported article is presently charged as Integrated Goods and Service Tax (IGST) which is levied under Section 5 of the IGST Act, 2017 and collected in terms of Section 3(7) of the Customs Tariff Act, 1975 and the same is allowed as input duty credit Section 16(1) of CGST Act, 2017. The provisions of Section 11 of the Central Excise Act, 1944, empowers Central Excise officers to take action for recovery of arrears and pursuing the recovery with the assessee. If dues remain unrecovered even after taking action under section 11 ibid, then action is to be taken under provisions of section 142 of the Customs Act, 1962 which have been made applicable in Central Excise cases, vide Notification No. 68/63-Central Excise dated 04.05.1963, as amended, issued under section 12 of the Central Excise Act, 1944. The process of recovery of arrears starts with confirmation of demand against the defaulter assessee and includes a number of appellate forums wherein assessee as well as Department can go for appeal. In the present case, the duty/cess have been paid by the appellants voluntarily along with applicable interest, and hence the finding given by the learned Commissioner is contrary to the legal position and the procedures prescribed by the Government. In view of the above discussions, the impugned order is not legally sustainable and the appellants are eligible for refund of excess CENVAT credit paid by them, as this is specifically allowed to be refunded in terms of Section 142(3) of the CGST Act, 2017. The Co-ordinate Bench of the Tribunal has held in the case of New Age Laminators Pvt. Ltd. [ 2022 (3) TMI 748 - CESTAT NEW DELHI] that refund of CVD and SAD paid for redemption of Advance Authorisation scheme is admissible as refund under Section 142(3) and (6) of the CGST Act, 2017. Further, the issue of reversal of excess CENVAT credit under the transitional arrangement as provided under Section 142 of CGST Act, 2017 has already been addressed by the Co-ordinate Bench of the Tribunal in various cases, and it was held that cash refund of such excess CENVAT credit is permissible. When the Central Excise Act, 1944 amongst other laws relating to old tax regime was repealed by Section 174 of the CGST Act, 2017 and that the CCR is also being superseded vide Notification No.20/2017-C.E. (N.T.) dated 30.06.2017, by the Central Government for smooth implementation of transfer to GST regime in indirect taxation, it is found that the provisions of Section 142 of the CGST Act, 2017 are sufficient to provide for the tax administration for sanction of cash refund in circumstances stated therein, and I find that there is no need and it is not legally feasible to make any specific provision in CENVAT statute itself, for enabling cash refund of excess/eligible CENVAT credit relating to earlier regime while moving to the new GST regime. There are no merits in the impugned order passed by the learned Commissioner (Appeals) to the extent it has rejected the refund of CENVAT credit, which is contrary to the legal provisions of Section 142(3) and Sections 142(6), 1428(a) of the CGST Act, 2017 and thus, it does not stand the scrutiny of law. Therefore, by setting aside the impugned order dated 06.11.2020, the appeal is allowed in favour of the appellants. Conclusion - The appellants claim for refund cannot be denied on the ground that the duties paid are customs duties and not excise duty, since the additional duties are leviable under Section 3 of the Customs Tariff Act and are recognized as CENVAT credit under the erstwhile law. Appeal allowed.

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• 2025 (5) TMI 476
  Levy of service tax on construction of residential complex services for the period from April, 2014 to June, 2017 - time limitation - penalties - HELD THAT:- Reliance placed upon the judgement of Hon ble Delhi High Court in the case of Suresh Kumar Bansal [ 2016 (6) TMI 192 - DELHI HIGH COURT] . The Hon ble High Court held that there was no statutory mechanism to ascertain the value of service component and that service tax could not be levied on value of undivided share of land. Neither Service Tax (Valuation) Rules, 2006 nor Finance Act, 1994 have any provisions for determining value of service covered under Section 65(105)(zzzh). The aforesaid decision of Hon ble Delhi High Court, even though had been passed in the context of service tax provisions as applicable prior to 01.07.2012, is equally applicable to the period after 01.07.2012 - Appellants were not liable for payment of service tax on construction of residential complex service during April, 2014 to June, 2017 and the appeal is liable to be allowed on merits. Time limitation - HELD THAT:- For demanding service tax for the period April, 2014 to June, 2017, SCN had been issued on 07.11.2019, by invoking extended period of limitation. The Commissioner (Appeals) has upheld the invocation of extended period by holding that the decision in the case of Suresh Kumar Bansal [ 2016 (6) TMI 192 - DELHI HIGH COURT] was for the period prior to 01.07.2012 and that the Appellants have been holding service tax registration for a long period and accordingly, they were under legal obligation to file ST-3 return and pay the service tax. Penalties - HELD THAT:- As the demands itself are being set aside, penalties under Section 78(1) as well as Section 77(2) are also liable to be set aside. Conclusion - i) The appellant s contract for construction and sale of residential complexes is a composite contract involving sale of immovable property and goods, and no statutory mechanism existed to determine the service component. Therefore, the demand of service tax on the entire amount is unsustainable. ii) Invocation of extended period of limitation is upheld. iii) As the demands itself are being set aside, penalties under Section 78(1) as well as Section 77(2) are also liable to be set aside. Appeal allowed.

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• Indian Laws

• 2025 (5) TMI 475
  Dishonour of cheque - accused-appellant has returned the amount of the cheque to the complainant-respondent with interest payable thereupon - money lending activities without a license under the Goa Money-Lenders Act, 2001 (Goa Act) preclude prosecution under the NI Act or not - HELD THAT:- Upon having considered the entirety of the facts and circumstances as emerging from the record, it is found that the High Court, while reversing the acquittal of the accused-appellant, as recorded by the First Appellate Court, did not advert to the important issue regarding applicability of the Goa Act which provided a valid defense available to the accused-appellant. Thus, apparently, the judgment rendered by the High Court does not stand to scrutiny. Furthermore, it is an admitted position that the cheque amount to the tune of Rs. 2,00,000/- and the compensation amount to the tune of Rs. 30,000/-, as imposed by the trial Court, has already been paid by the accused-appellant. Considering the aspect that the accused-appellant has already paid the cheque amount and the fine of Rs. 30,000/- imposed by the trial Court, powers under Article 142 of the Constitution of India are exercised to compound the offence and acquit the accused-appellant of the accusation under Section 138 of the NI Act subject to the condition that the entire amount of Rs.2,30,000/- deposited by the accused-appellant shall be paid to the complainant-respondent, if the same has not been paid till date. Conclusion - i) The judgment rendered by the High Court does not stand to scrutiny for failure to advert to the applicability of the Goa Act, which was a valid defense available to the accused-appellant. ii) Recognizing that the accused-appellant had repaid the entire cheque amount and compensation, the Court exercised its constitutional power under Article 142 to compound the offence and acquit the accused-appellant, subject to payment of the amount to the complainant. Appeal allowed.

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• 2025 (5) TMI 474
  Reference of dispute for arbitration - whether a dispute raised by an insured after giving a full and final discharge voucher to the insurer can be referred to arbitration? - HELD THAT:- In Duro Felguera, S.A. Vs. Gangavaram Port Ltd. [ 2017 (10) TMI 1304 - SUPREME COURT] , a two-Judge Bench of this Court examined Section 11(6) of the 1996 Act as well as Section 11(6A) inserted in the 1996 Act by way of the Arbitration and Conciliation (Amendment) Act 2015 and concluded that courts should look into only one aspect: existence of an arbitration agreement. Already the width of jurisdiction under Section 11(6) of the 1996 Act was considerably wide following judicial dicta but post the aforesaid amendment, all that the courts need to see is whether an arbitration agreement exists nothing more, nothing less. The legislative policy and purpose is essentially to minimize the court s intervention at the stage of appointing the arbitrator. A three-Judge Bench of this Court in Vidya Drolia Vs. Durga Trading Corporation [ 2020 (12) TMI 1227 - SUPREME COURT] held that subject matter qua arbitrability cannot be decided at the stage of Sections 8 or 11 of the 1996 Act unless it is a clear case of dead wood. The court under Sections 8 and 11 has to refer a matter to arbitration or to appoint an arbitrator, as the case may be, unless a party has established a prima facie case of nonexistence of a valid arbitration agreement. The court should refer a matter if the validity of the arbitration agreement cannot be determined on a prima facie basis. The rule should be: when in doubt, do refer. In Oriental Insurance Company Ltd. Vs. Dicitex Furnishing Ltd. [ 2019 (11) TMI 662 - SUPREME COURT] , a two-Judge Bench of this Court considered the objection of the insurer about maintainability of the application under Section 11(6) of the 1996 Act in which the High Court had appointed an arbitrator. The objection was that the claimant had signed the discharge voucher and had accepted the amount offered, thus signifying accord and satisfaction which in turn meant that there was no arbitrable dispute. The doctrine of Kompetenz-Kompetenz is now firmly embedded in the arbitration jurisprudence in India. This doctrine is based on the principle that an arbitral tribunal is competent to rule on its own jurisdiction including on the issue of existence or validity of an arbitration agreement. The object is to minimize judicial intervention which is an acknowledgment of the concept of party autonomy. Conclusion - There are no hesitation in holding that the High Court was wrong in rejecting the Section 11(6) applications of the appellant. The question as to whether the appellant was compelled to sign the standardized voucher/advance receipt forwarded to it by the respondent out of economic duress and whether notwithstanding receipt of Rs.1,88,14,146.00 as against the claim of Rs. 5,71,69,554.00 the claim to arbitration is sustainable or not are clearly within the domain of the arbitral tribunal. The impugned order of the High Court dated 02.12.2011 is set aside - Appeal allowed.

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• 2025 (5) TMI 473
  Liability of mortgagor, distinct from the borrower to pay the amount claimed as debt due under the SARFAESI Act for the purpose of pre-deposit under Section 18(1) - HELD THAT:- There is no dispute about the proposition of law as laid down in the judgments of Narayan Chandra Ghosh [ 2011 (3) TMI 1478 - SUPREME COURT] that condition of pre-deposit for entertaining appeal under section 18 of the SARFAESI Act is not an onerous condition and any person aggrieved contemplated under said section will include mortgagor or even third party purchaser. Plain reading of Section 13(3A) of the SARFAESI Act (introduced w.e.f. 11.11.2004) makes it clear that on receipt of notice under Section 13(2) of the SARFAESI Act, the borrower can make a representation or raise an objection and if so done, the secured creditor is under statutory obligation, first to consider such representation or objection and secondly to communicate its response to the same. The word used at both places by the legislature is shall . Therefore, if after such exercise, the secured creditor indicates a distinct quantum of liability due from the borrower or even its absence, we do not find any reason to exclude consideration of such response for the purposes of determining the amount of pre- deposit under 2nd and 3rd proviso to section 18(1) of the SARFAESI Act. The proviso to Section 13(3A) specifically provides that the reasons communicated for non-acceptance or likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the Borrower to prefer an application to the DRT under Section 17. Again, words used are shall not . Borrower includes mortgagor. This creates a clear bar for the Borrower (including mortgagor) to approach the DRT at that stage . Conclusion - While arriving at the amount of pre- deposit under 2nd and 3rd proviso to section 18(1) of the SARFAESI Act, there is no reason to restrict the determination of debt due as claimed, only on the basis of notice under Section 13(2) of the SARFAESI Act and there is no reason to exclude the consideration of the Bank s response, if given, pursuant to the objection / representation given by the borrower / mortgagor to the notice issued under Section 13(2) of the SARFAESI Act. The DRAT, Mumbai is directed to consider the effect of the Petitioner s reply dated 14.02.2020 and Bank s rejoinder dated 28.02.2020 alongwith documents referred therein alongwith judgments referred above while deciding I.A. No.118 of 2022 and decide the pre-deposit as may be deemed fit by the Appellate Tribunal - impugned order is quashed and set aside - petition allowed in part.

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