TMI Tax Updates - e-Newsletter
May 10, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Law of Competition PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI Short Notes

1. Continuity and Change in India's Tonnage Tax Regime : Clause 226(1) of the Income Tax Bill, 2025 Vs. Section 115VB of the Income-tax Act, 1961

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2. Navigating Special Tax Regimes for Shipping : Clause 225 of the Income Tax Bill, 2025 Vs. Section 115VA of the Income-tax Act, 1961

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3. Interpreting Special Provisions for Shipping Companies : Clause 235 of the Income Tax Bill, 2025 Vs. Section 115V of the Income-tax Act, 1961

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4. Special Tax Regimes for Investment Funds : Clause 224 of Income Tax Bill, 2025 Vs. Section 115UB of the Income-tax Act, 1961

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5. special taxation regime for business trusts such as (REITs)/(InvITs) Clause 223 of the Income Tax Bill, 2025 Vs. Section 115UA of the Income-tax Act, 1961

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Articles

1. The atrocity of Section 49(5), clause (e) & (f): When GST Credit Utilization Becomes a Trap

   By: ADITYA SINHAL

2. Online 12A Registration Process for New Non-Profits in 2025

   By: Ishita Ramani

3. CHALLENGE OF THE PECUNIARY JURISDICTION OF CONSUMER FORUM

   By: DR.MARIAPPAN GOVINDARAJAN

4. The Tipping Points of Climate Change – and Where We Stand.(Environment Protection & Healing Climate Change)

   By: YAGAY andSUN

5. Climate Change and Global Warming – Ironically Explained 😔. {Environment Protection & Healing Climate Change}

   By: YAGAY andSUN

6. What Is Changing with Climate Change?

   By: YAGAY andSUN

7. FSSAI Guidelines on A1/A2 Cow's Milk and Ghee (Clarified Butter) etc.

   By: YAGAY andSUN

8. Climate Change (According to a Tax Professional){Environment Protection and Healing Climate Change}

   By: YAGAY andSUN

9. Whether concrete footpaths in India are being designed or retrofitted to be “Green”?

   By: YAGAY andSUN

10. Nigeria’s Genius Solution to Recycle Millions of Used Tires: A Sustainable Innovation for a Greener Future.

   By: YAGAY andSUN

11. What 3°C of Global Warming Looks Like: Understanding the Consequences of a 3°C Rise in Temperature.

   By: YAGAY andSUN

12. Climate Change: The Earth Is Still Burning! {Environment Protection & Healing Climate Change}

   By: YAGAY andSUN

News

1. ‘God-Sent Tax’ unites India, funds security measures: Himanta on Cong’s ‘Gabbar Singh Tax’ jab

2. Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman chairs meeting to review banking sector's operational and cybersecurity preparedness, including digital applications such as internet banking and UPI.

3. Delhi: Traffic restored on Rafi Marg after NDMC clears uprooted tree near RBI building

4. India gets upgraded to ‘BBB’ with a ‘Stable’ trend in rating by Morningstar DBRS, a global sovereign credit rating agency.

5. Delhi: Uprooted tree near RBI building hits traffic

6. Updates in Refund Filing Process for various refund categories,

7. Updates in Refund Filing Process for Recipients of Deemed Export.

8. Government notifies the expansion of the Credit Guarantee Scheme for Startups (CGSS) to increase capital mobilization for startups.

9. Pak says economic affairs ministry's X account hacked after post seeking more loans

10. Pak says economic affairs ministry's X account hacked

11. Secretary, DFS chairs a review meeting to monitor the progress of Public Sector Banks in clearing pending cases for NCLT -Banks advised to expedite the resolution process by minimising delays in filing CIRP applications.

12. India and Chile Sign Terms of Reference for Comprehensive Economic Partnership Agreement Negotiations.

Notifications

Customs

1. 11/2025 - dated 8-5-2025 - ADD

Seeks to impose Anti-Dumping Duty on imports of "Textured Tempered Coated and Uncoated Glass " falling under Tariff headings 7003, 7005, 7007, 7016, 7020 and 8541 originating in or exported from China PR or Vietnam for a period of 5 Years.

2. 10/2025 - dated 8-5-2025 - ADD

Seeks to impose anti-dumping duty on import of Sodium citrate originating in or exported from China RP for a period of further 5 years.

3. 09/2025 - dated 8-5-2025 - ADD

Seeks to levy anti-dumping duty on imports of 'Glufosinate and its salt' imported from China PR for a period of 5 years, on the recommendations of DGTR

Circulars / Instructions / Orders

Customs

1. Instruction No. 09/2025 - dated 9-5-2025

Closing of the Integrated Check Post, Attari for all types of incoming and outgoing passengers and movement of goods.

2. PUBLIC NOTICE No. 13/2025 - dated 7-4-2025

Implementation of the Sea Cargo Manifest and Transshipment Regulations (SCMTR) - Registration under SCMTR - Reg.

Highlights / Catch Notes

GST

• Legal Representatives Must Be Notified Before Tax Determination Against Deceased Taxpayer Under Section 93 Liability Rules

  Case-Laws - HC : HC held that a tax determination cannot be made against a deceased person. Section 93 addresses liability of legal representatives only for ongoing or discontinued businesses, but does not authorize determination against a deceased individual. Issuance of show cause notice (SCN) must be made to legal representatives, and determination must occur after seeking their response. The present case's determination, which was made against the deceased without notifying legal representatives, was deemed invalid and the petition was consequently allowed.
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• Excess Stock Discovery Under GST: Tax Assessment via Sections 73/74, Not Punitive Section 130

  Case-Laws - HC : HC held that when excess stock is discovered during a survey under GST Act section 67, proceedings must be initiated under sections 73/74, not section 130. The statutory framework mandates that if a registered dealer fails to account for goods, the Proper Officer shall determine tax liability through sections 73/74. The court emphasized that GST Act is a comprehensive code, and section 130 cannot be invoked when specific provisions exist for addressing undeclared stock. The petitioner's challenge to proceedings was consequently allowed, establishing a clear legal principle that excess stock discovery triggers assessment proceedings rather than punitive actions.
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• Development Rights Transfer Taxable Under GST: No Exemption for Pre-Completion Consideration and Upheld Recovery Mechanism

  Case-Laws - HC : HC dismisses petitioner's challenge to GST notification regarding tax recovery and development agreement. The court held that transfer of development rights is amenable to GST, and the petitioner cannot claim exemption since consideration was received before completion certificate. The court found no violation of natural justice or procedural irregularities. The state's contention that construction services are liable for GST under reverse charge mechanism was upheld. The writ application was dismissed, confirming the tax liability for the financial year 2018-19 and extending the recovery time limit until 31.03.2024.
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• Pre-Deposit Compliance Required: Petitioner Must Deposit Remaining Amount Within 30 Days Under Section 107 of CGST Act

  Case-Laws - HC : HC ruled that the petitioner must deposit the remaining pre-deposit amount within 30 days under Section 107 of CGST Act, 2017. Upon compliance, the appellate authority shall review the interim reply and supporting documents, and adjudicate the appeal on merits regarding availment of ITC. The petitioner had already deposited Rs. 2.5 crores, satisfying a substantial portion of the mandatory pre-deposit requirement. The petition was disposed of with directions for further procedural steps.
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• Tax Credit Dispute Resolved: Procedural Delays Cannot Deny Legitimate Input Tax Credit Under GST Section 16(5)

  Case-Laws - HC : HC allowed the writ petition challenging input tax credit rejection, remanding the matter to the tax authority. The court relied on a prior Division Bench judgment interpreting Section 16(5) of the GST Act, which held that taxpayers can avail tax credits despite procedural delays. The assessment order dated 30.04.2024 was set aside, directing the respondent to conduct a fresh assessment consistent with the legal interpretation of the non-obstante clause in the statutory provision.
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Income Tax

• Tax Dispute: Withholding Liability Remanded for Detailed Review of Service Agreements and Retrospective Tax Implications

  Case-Laws - HC : HC remanded the matter to CIT(A) with specific directions regarding withholding tax liability. The key findings include: (1) if Intelsat Corporation has a final determination of non-taxability, no withholding tax liability shall arise; (2) payments made prior to Finance Act 2012 cannot attract retrospective tax liability; (3) for post-2012 payments, CIT(A) must examine agreements to determine if services constitute 'royalty' under domestic law or tax treaty. The HC emphasized the need for detailed factual analysis of service agreements, interpretation of 'secret process', and application of beneficial provisions under Section 90(2). CIT(A) is directed to dispose of appeals by 31 December 2025, conducting a comprehensive review of tax implications across different assessment years.
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• High Court Validates Taxpayer's Share Capital Legitimacy by Rejecting Revenue's Unsubstantiated Allegations Under Section 68

  Case-Laws - HC : HC upheld the Tribunal's decision, affirming the CIT(A)'s deletion of addition under Section 68. The department failed to establish three critical elements: investor identity, creditworthiness, and transaction genuineness. Evidence demonstrated the assessee's financial robustness, with inventory growth, profit escalation, and increased earnings per share. The tribunal, after meticulously examining 1029 pages of documentation, concluded that the revenue's allegations lacked substantive merit. The court found no substantial legal question warranting further intervention, effectively validating the lower appellate authorities' concurrent findings regarding the share capital's legitimacy.
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• Tax Deduction Notice Quashed as Petitioner Proves Proper Tax Compliance and Appropriate Lower Rate Deduction Under Section 201(1)

  Case-Laws - HC : HC set aside a tax deducted at source (TDS) notice under Section 201(1) where the petitioner demonstrated no failure to deduct or deposit tax. The court found no material evidence suggesting non-compliance with TDS requirements. The petitioner successfully established through a rejoinder affidavit that tax was appropriately deducted at a lower rate for specified payments. Consequently, the court determined that no further proceedings under Section 201 were justified, effectively nullifying the impugned notice and protecting the petitioner from unwarranted tax scrutiny.
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• Tax Demand Nullified: Computational Errors Invalidate Assessment, Mandate Fresh Calculation Under Exemption Provisions

  Case-Laws - HC : HC allowed the petition, setting aside the tax demand notice issued u/s 156 due to computational errors. The court found significant discrepancies in the Assessing Officer's (AO) tax calculation and recognized the appellate order granting exemption u/s 10(26AAB). The HC directed a fresh computation of tax liability, effectively nullifying the original demand notice and the additions made u/s 69 and 69A of the Income Tax Act. The decision fundamentally rectifies the erroneous tax assessment by mandating a comprehensive recalculation that aligns with the previously granted exemption.
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• Statutory Limitation for Final Assessment Order Begins When DRP Directions Become Visible in 360-Degree Portal

  Case-Laws - HC : HC held that statutory limitation for passing a Final Assessment Order under Section 144C cannot be dependent on user functionalities or internal processes. The limitation period commences from the earliest instance when DRP directions are visible to the assessing officer through the 360-degree view portal. The fact that no separate email was sent to the Assessing Officer does not impact the timeline, as the system provides real-time access to uploaded documents. Referencing precedents from Vodafone Idea Limited and Louis Dreyfus Company India Private Limited, the court decisively ruled in favor of the assessee, emphasizing that limitation provisions must have a strict and unambiguous interpretation to prevent potential misuse or multiple interpretations.
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• Tax Deduction for Cooperative Loan Business Upheld: Section 80P Confirms Proper Accounting and Exempts Member Transactions

  Case-Laws - AT : The ITAT allowed the assessee's appeals, finding no merit in the penalty proceedings u/s 271A. The tribunal observed that the AO's grant of deduction u/s 80P implicitly confirmed the maintenance of books of account, rendering the penalty unsustainable. The tribunal further held that the deduction claimed u/s 80P(2)(a)(i) for loan business with members was valid, as the surplus derived from member transactions qualifies for deduction and tax exemption under mutual principles. The demand raised u/s 147 r.w.s 144 was consequently rejected, with the assessee's claims being upheld.
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• Stamp Duty Validated as Part of Acquisition Cost, Enabling Capital Gains Tax Exemption Under Sections 48 and 54

  Case-Laws - AT : ITAT allowed the assessee's appeal, holding that stamp duty constitutes a valid component of cost of acquisition under section 48 and investment for exemption under section 54. The Tribunal pragmatically interpreted evidentiary requirements, recognizing the bona fide nature of the assessee's claims based on documentary evidence. The decision mandates re-computation of long-term capital gains, incorporating stamp duty, interior work, and improvement expenditure, with the Assessing Officer directed to recalculate exemption accordingly.
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• Agricultural Land Sale: TDS Credit Upheld, Section 194IA Inapplicable, Full Tax Credit Granted to Taxpayer

  Case-Laws - AT : ITAT adjudicated a tax dispute regarding TDS credit for agricultural land sale. The tribunal found that section 194IA does not apply to agricultural land transactions, and the Assessing Officer (AO) incorrectly applied Rule 37BA without considering agricultural income declared in the return. The AO failed to properly reconcile gross receipts and Form 26AS, improperly restricting TDS credit. Consequently, the tribunal directed the AO to grant full TDS credit as claimed in the return and Form 26AS, thereby allowing the assessee's appeal and rectifying the tax credit mismatch related to the agricultural land sale.
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• Dividend Income and Capital Loss Exemption Upheld: Transparent Investment Strategy Validates Tax Claim Under Section 10(35)

  Case-Laws - AT : ITAT upheld the assessee's claim for dividend income exemption under Section 10(35) and short-term capital loss set-off. The tribunal found no evidence of manipulative transactions with J.M. Financial Asset Management Ltd. Absent specific SEBI enquiry or proof of tax benefit manipulation, the investment was deemed genuine. The fund's market performance and transparent investment process supported the assessee's position. Section 94(7) was not applicable, and the capital loss was allowable under the Income Tax Act. CIT(A)'s order deleting the disallowance was confirmed, and the revenue's appeal was dismissed.
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• Taxpayer Wins Challenge Against Arbitrary Tax Audit Adjustment, Highlighting Natural Justice Principles in Section 143(1) Proceedings

  Case-Laws - AT : ITAT adjudicated a tax dispute regarding a revised tax audit report addressing a typographical error. The tribunal found that the CPC/AO violated principles of natural justice by not providing proper intimation to the assessee before making adjustments under Section 143(1). The tribunal recognized that inadvertent errors in tax audit reports can be rectified, emphasizing that technical mistakes should not cause undue hardship. Consequently, the tribunal upheld the CIT(A)'s order, directing the AO to delete the impugned adjustment after verifying the typographical error. The revenue's appeal was dismissed, affirming the assessee's right to correct genuine mistakes in tax documentation without malafide intent.
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• Income Tax Dept Loses Case as Reassessment Notice Invalidated Due to Improper Service Under Section 148

  Case-Laws - AT : ITAT held that the reassessment proceedings were invalid due to improper service of notice u/s 148. The AO failed to demonstrate valid notice service to the assessee, serving instead on a tax consultant without establishing authorized representation. The tribunal found no evidence confirming the notice was served at the correct address. Consequently, the entire reassessment proceedings were quashed as the fundamental procedural requirement of proper notice was not fulfilled, rendering the subsequent assessment proceedings legally unsustainable.
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• Taxpayer Wins: Section 147 Reassessment Invalidated Due to Incorrect Factual Basis in Original Income Determination

  Case-Laws - AT : ITAT quashed reassessment proceedings initiated under Section 147 after finding the Assessing Officer's belief was predicated on incorrect factual understanding. Original assessment was already completed under Section 143(3) on 09/03/2001, determining total income at INR 105,85,36,899. Subsequent reassessment proceedings initiated on 25/03/2004 and assessment order dated 30/03/2006 were deemed unsustainable in law, as the foundational premise for reopening the assessment was factually erroneous. The tribunal held that the reassessment notice dated 28/02/2005 and subsequent proceedings did not meet statutory requirements, thereby rendering them invalid and liable to be quashed.
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• NTPC Tender Qualification Case: Income Assessment Remanded with Directive to Investigate Potential False Return and Section 277 Violations

  Case-Laws - AT : ITAT partially allowed the appeal, remanding the case to the AO for fresh assessment. The tribunal found that the assessee filed a potentially false return to meet NTPC tender qualification criteria. The AO must re-examine the NTPC Vigilance authorities' report and verify the actual turnover and income. The tribunal directed the AO to determine the true income, consider potential violations under section 277, and take appropriate action based on the comprehensive review of the submitted evidence.
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Customs

• Custom Broker Wins Appeal Against Penalty, Court Highlights Importance of Substantive Evidence in Regulatory Proceedings

  Case-Laws - HC : HC dismissed the appeal involving a custom broker's penalty dispute, finding the show cause notice (SCN) deficient in substantiating regulatory violations. Despite potential procedural irregularities, the court declined judicial intervention primarily due to the minimal quantum involved - total disputed drawback amount of Rs. 57,201/- and imposed penalty of Rs. 50,000/-. The ruling emphasized the necessity of comprehensive factual examination as per precedential judgments, but ultimately exercised judicial restraint given the negligible financial scale of the dispute.
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• Petitioner Barred from Challenging Guidelines After Failing to Raise Constitutional Issues in Prior Litigation Under Res Judicata

  Case-Laws - HC : The HC applied the principle of Constructive Res Judicata to dismiss the writ petition challenging Clause 3.3 of the Guidelines for Grant of Reward to Informers and Government Servants, 2015. The court held that since the petitioner failed to raise the constitutional challenge in the earlier round of litigation, they are precluded from doing so now. The doctrine aims to prevent multiplicity of litigation and ensure parties present their entire case in a single proceeding. Consequently, the writ petition was deemed not maintainable and summarily dismissed, upholding the principle of finality in legal proceedings.
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• Legal Representatives Not Liable for Tax Penalties After Assessee's Death; Customs Act Lacks Clear Mechanism for Posthumous Recovery

  Case-Laws - HC : HC determined that penalty imposed on a deceased assessee does not survive after death. The Customs Act lacks specific enabling provisions for assessing and recovering tax/duty from legal representatives of a deceased assessee. Section 142 provides for recovery of government dues, but without explicit statutory mechanism to continue proceedings against legal heirs. The assessments framed in 2002 lacked provisions for enforcement as a first charge. Consequently, the demands raised under the orders dated 24.10.2002 lapse, and the appeals automatically abate due to absence of legal machinery for recovery from deceased assessee's representatives.
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• Importers Win Dispute Over Origin Verification, Tribunal Finds No Conclusive Evidence of Fraudulent Documentation

  Case-Laws - AT : CESTAT adjudicated an import dispute involving goods allegedly originating from Malaysia but suspected of Chinese origin. The tribunal comprehensively examined evidence regarding Certificate of Origin, transaction value, and import documentation. After meticulous analysis, the tribunal found insufficient concrete proof to substantiate revenue's allegations of mis-declaration or fraudulent import practices. The tribunal critically noted lack of corroborative evidence, emphasized procedural fairness, and distinguished prior judicial precedents. Ultimately, the tribunal ruled in favor of the appellants, setting aside the impugned order, rejecting confiscation and penalty claims, and concluding that revenue failed to establish substantive grounds for challenging the import transaction.
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• Optical Fiber Cables Import Case: 13-Year Delay Invalidates Customs Demand Under Procedural Fairness Principles

  Case-Laws - AT : CESTAT adjudicated an import classification dispute involving optical fiber cables, addressing significant procedural delays. The tribunal found the customs adjudication order was passed after an unreasonable 13-year delay from the initial show cause notice, rendering the demand unsustainable. Referencing precedential judicial guidance, specifically the Bombay HC ruling in a similar matter involving prolonged administrative inaction, the tribunal emphasized the legal principle that excessive administrative delay invalidates subsequent enforcement actions. Consequently, the tribunal allowed the importer's appeal, effectively setting aside the customs demand due to the revenue department's unexplained and inordinate procedural postponement, thereby upholding principles of administrative fairness and time-bound regulatory processes.
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• Gold Seizure Overturned: Insufficient Evidence Proves No Reasonable Belief of Smuggling Under Section 123 Customs Act

  Case-Laws - AT : CESTAT adjudicated a customs dispute involving gold seizure, determining that the Revenue failed to establish reasonable belief of smuggling. The tribunal found no substantive evidence supporting the confiscation, specifically noting the confidential information and inconclusive test report did not constitute reasonable grounds for seizure under section 123 of the Customs Act 1962. Consequently, the appellate tribunal set aside the original order of confiscation and penalty, effectively ruling in favor of the appellant by nullifying the administrative action due to lack of demonstrable smuggling evidence.
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• Customs Duty Valuation: Design Charges and Royalties Excluded from Transaction Value Under Section 14

  Case-Laws - AT : CESTAT adjudicated a customs duty valuation dispute concerning design and drawing charges and royalty payments. The tribunal determined that design and drawing charges for customer-specific textile machines and royalty payments unrelated to imported goods should not be included in the transaction value. The key legal finding was that neither Section 14 of the Customs Act nor Valuation Rules mandate inclusion of design costs or royalties that do not directly constitute a condition of sale. The tribunal emphasized that the design charges were for customized products and the royalty payments were not contingent on specific import transactions. Consequently, these charges could not be incorporated into the assessable value for customs duty calculation. The appeal was allowed, excluding design and drawing charges and royalty from the transaction value.
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Corporate Law

• Ind AS 21 Amendments Clarify Currency Exchangeability Rules for Complex Financial Reporting Scenarios in 2025

  Notifications : The MCA issued the Companies (Indian Accounting Standards) Amendment Rules, 2025, modifying Ind AS 21 regarding currency exchangeability. Key amendments include defining currency exchangeability, establishing criteria for assessing when a currency can be exchanged, and providing guidance on estimating spot exchange rates when a currency is not exchangeable. The amendments introduce new disclosure requirements for entities dealing with non-exchangeable currencies, effective from 1 April 2025. Entities must assess currency exchangeability at measurement dates, considering factors like administrative delays, market mechanisms, and specific exchange purposes. The rules provide comprehensive guidance on translating foreign currency transactions and managing financial reporting challenges in complex currency environments.
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• Stenographer Grade-III Recruitment Rules Updated: Expanded Age Range, Enhanced Transcription Time and Relaxation Provisions

  Notifications : NCLAT amended recruitment rules for Stenographer Grade-III, modifying age limit, relaxation provisions, and transcription time. Key changes include: raising age range from 18-25 to 18-27 years, extending government servant age relaxation to 40 years, and increasing computer transcription time from 40 to 50 minutes. Amendment applies to Schedule-I of original 2020 rules, effective from official gazette publication date. Changes aim to provide broader recruitment opportunities and align with current administrative requirements.
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• Tribunal Staff Rules Update: Enhanced Career Pathways and Age Relaxation for Stenographic and Administrative Positions

  Notifications : The NCLT Amendment Rules, 2025 modify recruitment and service conditions for tribunal employees. Key amendments include: (1) renaming Stenographer Grade-II to Grade-I/Personal Assistant, (2) adjusting age limits for stenographic positions from 25 to 27 years, (3) modifying transcription speed and time requirements, and (4) extending age relaxation for government servants up to 40 years. The amendments align with Staff Selection Commission guidelines and provide expanded opportunities for government employees seeking tribunal positions. These changes become effective upon official gazette publication, enhancing recruitment flexibility and standardizing service conditions for NCLT personnel.
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• Corporate Debt Resolution: Strategic Transfer of Winding Up Petition Prioritizes Revival and Rehabilitation of Distressed Companies

  Case-Laws - HC : HC transferred a winding up petition to NCLT under Section 434(1)(c) of the Companies Act. The court emphasized the legislative intent to revive corporate debtors and prevent liquidation. The primary focus was on exploring revival opportunities before concluding corporate death is inevitable. The Supreme Court's precedent in Action Ispat guided the decision, highlighting that IBC is a beneficial legislation aimed at protecting corporate entities from irretrievable financial collapse. The court stressed making comprehensive efforts to resuscitate the corporate debtor in the broader economic and stakeholder interests, prioritizing rehabilitation over liquidation. The transfer was deemed appropriate, with the appeal ultimately being dismissed.
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IBC

• Director's Compensation Claim Rejected: No Additional Remuneration Without Board Resolution and Insufficient Substantive Evidence

  Case-Laws - AT : NCLAT dismissed the appeal involving a dispute over director's emoluments. The Appellant, initially appointed as CFO and subsequently designated as Whole-Time Director, was terminated from employment. The Tribunal held that no separate remuneration was payable for the director role, as there was no board resolution approving additional compensation. The pre-existing contractual dispute was deemed non-maintainable under the Code, with all terminal benefits already paid. The Appellant failed to substantiate claims for continued emoluments after relinquishing the CFO position, resulting in the appeal's dismissal based on lack of documentary evidence and procedural requirements.
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• Corporate Insolvency Resolution: Financial Creditors' Claims Validated, Resolution Plan Upheld Under Strict Regulatory Compliance

  Case-Laws - AT : NCLAT affirmed the resolution plan's approval, rejecting appellant's objections regarding financial creditors' claims and resolution professional's (RP) conduct. The tribunal held that: (1) the two financial creditors had settled inter se claim disputes without manipulation, (2) RP adequately addressed land lease concerns from government, (3) valuation reports were confidentially maintained per regulations, and (4) the resolution plan received 100% vote share in the 9th Committee of Creditors meeting. The court emphasized the limited judicial review scope under IBC, prioritizing CoC's commercial wisdom when statutory compliance is demonstrated. Consequently, the appeal was dismissed, validating the resolution plan's approval.
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• Corporate Asset Sale Not Financial Debt: NCLAT Rejects Insolvency Claim Based on Transaction Nature and Section 5(8) Interpretation

  Case-Laws - AT : NCLAT held that the transaction between parties was a sale and purchase of assets, not a financial debt under Section 5(8) of Insolvency and Bankruptcy Code. The amounts transferred were for asset consideration, not disbursed for time value of money. The mere inclusion of 2% monthly interest does not transform the transaction into a financial debt. Consequently, the Adjudicating Authority's order admitting the Section 7 application was set aside, and the Corporate Insolvency Resolution Process against the Corporate Debtor was closed.
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• Personal Guarantors Face Higher Debt Threshold: NCLAT Rejects Low-Value Claims and Protects Against Frivolous Insolvency Proceedings

  Case-Laws - AT : NCLAT determined the threshold limit for filing an insolvency application against a Personal Guarantor under IBC. The Tribunal held that the Adjudicating Authority for Personal Guarantors is NCLT, rejecting the argument that Debt Recovery Tribunal has jurisdiction. The court specifically rejected the contention that a minimal debt of Rs.1000/- could trigger personal insolvency proceedings. The Tribunal emphasized that permitting insolvency proceedings on such a low threshold would undermine the legislative intent and potentially lead to excessive litigation against Personal Guarantors. Consequently, the threshold remains consistent with the standard Rs.1 crore limit for financial creditors. The appeal was dismissed, affirming the higher monetary threshold for initiating insolvency resolution against Personal Guarantors.
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• Employees' Individual Claims Under Rs. 1 Crore Cannot Trigger Corporate Insolvency Resolution Process Under Section 9

  Case-Laws - AT : NCLAT dismissed the appeal challenging the rejection of a Section 9 insolvency application. The Tribunal held that individual operational creditors' claims must exceed Rs. 1 Crore to initiate Corporate Insolvency Resolution Process (CIRP). In this case, each appellant's individual claim was below the statutory threshold, rendering the application non-maintainable. The Tribunal emphasized that employees are separate operational creditors, and their claims cannot be aggregated to meet the default amount. The minimum default threshold under Section 4 of the Insolvency and Bankruptcy Code is mandatory, and debts below Rs. 1 Crore cannot form the basis for initiating CIRP against a corporate debtor. The Adjudicating Authority's original rejection was upheld.
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Indian Laws

• Supreme Court Limits Bank Guarantee Interference, Mandates Expedited Arbitration and Commercial Court Review Under Section 9

  Case-Laws - SC : SC held that bank guarantees are critical commercial instruments generally enforceable without interference. The Court restrained encashment of the bank guarantee pending arbitration proceedings, directing the Commercial Court to adjudicate the Section 9 petition within eight weeks. The interim order protects both parties' interests by maintaining the bank guarantee's status quo until final determination of the underlying dispute. The Court emphasized that judicial intervention in bank guarantee invocation is permissible only in cases of egregious fraud or irretrievable injustice. The arbitration proceedings shall proceed expeditiously, with parties directed to present comprehensive arguments and supporting documentation.
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• Arbitral Tribunals Can Join Non-Signatories to Proceedings Under Group of Companies Doctrine, Affirming Inherent Jurisdictional Powers

  Case-Laws - SC : The SC affirmed the arbitral tribunal's inherent power to implead or join non-signatories to arbitration proceedings based on the 'group of companies' doctrine. The tribunal is deemed the most appropriate forum to determine whether a non-signatory is bound by an arbitration agreement, given its ability to comprehensively assess evidence and circumstances. The court emphasized that the jurisdiction of an arbitral tribunal stems from the arbitration agreement itself, and there are no statutory prohibitions preventing the tribunal from impleading a non-signatory. The appeal was ultimately dismissed, with the court highlighting the need for legislative clarity in arbitration law to reduce uncertainty in commercial disputes.
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• Supreme Court Defines Narrow Scope for Modifying Arbitral Awards, Emphasizing Strict Interpretation of Statutory Powers

  Case-Laws - SC : SC held that courts have limited power to modify arbitral awards under the Arbitration and Conciliation Act, 1996. Modification is permissible only in specific circumstances: (i) when the award is severable, allowing separation of valid and invalid portions; (ii) correcting clerical, computational, or typographical errors; (iii) modifying post-award interest in certain cases; and (iv) applying Article 142 of the Constitution with extreme caution. The Court clarified that the power to set aside an award does not inherently include the power to modify, and modifications must be carefully circumscribed within statutory limitations.
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• Director Cleared of Cheque Bounce Liability After Resignation Under Section 141 of Negotiable Instruments Act

  Case-Laws - HC : HC held that the Petitioner, who resigned as Director on 14.05.2015, cannot be held vicariously liable under Section 141 of the Negotiable Instruments Act for cheques dated 04.10.2016 and 20.12.2016. The court found no specific evidence connecting the Petitioner to the dishonoured cheques or the underlying debt. Following the Supreme Court's precedent in a similar case, the court emphasized that a former director cannot be held responsible for company affairs after resignation. The Petitioner was neither a signatory to the cheques nor part of the promissory note, thus rendering the vicarious liability claim unsustainable. Petition allowed.
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Law of Competition

• Cost Calculation Framework for Competition Proceedings Introduces Detailed Methodology for Assessing Economic Expenses and Marginal Cost Determinations

  Notifications : The CCI (Determination of Cost of Production) Regulations, 2025 establish comprehensive guidelines for determining cost in competition law proceedings. The regulations define multiple cost concepts including average variable cost, total cost, and long run average incremental cost, with average variable cost serving as the primary proxy for marginal cost. The CCI retains discretion to consider alternative cost methodologies in specific cases, subject to written justification. The regulations provide mechanisms for expert engagement, confidentiality requests, and preserve continuity with prior regulatory frameworks by ensuring existing proceedings and actions remain valid under the new regulatory structure.
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• Google Faces Partial Penalty for Anticompetitive Practices in Mobile Ecosystem Under Section 4(2) Provisions

  Case-Laws - AT : NCLAT partially allowed the appeal, upholding violations of Section 4(2)(a)(i) and 4(2)(e) related to Google's dominant position in mobile operating systems and app stores. The tribunal modified the penalty to INR 2,16,69,12,773 (approximately USD 2.98 million), calculated at 7% of relevant turnover from the preceding three financial years. The court rejected claims of violations under Sections 4(2)(a)(ii), 4(2)(b)(ii), and 4(2)(c), and partially set aside the CCI's directions regarding Google's practices in the digital marketplace.
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PMLA

• Accused Under PMLA Granted Comprehensive Documentary Rights Across Legal Stages to Ensure Fair Trial

  Case-Laws - SC : SC held that an accused under PMLA has critical documentary rights across different legal stages. At cognizance, the accused is entitled to copies of complaint documents and list of unrelied documents. During charge framing, while a list of unrelied documents must be provided, actual copies are ordinarily not granted. At defense stage, the accused can seek production of documents through Section 91 CrPC, with courts mandated to liberally construe these rights. During bail proceedings under Section 45(1)(ii), the accused can request unrelied documents, subject to investigation preservation considerations. The core principle is protecting the accused's right to fair trial under Article 21, particularly given PMLA's heightened evidentiary burden on the accused. Appeal was ultimately allowed, establishing comprehensive documentary access principles for PMLA proceedings.
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SEBI

• SEBI Enhances REIT Disclosure Norms with Comprehensive Financial Reporting Guidelines for Improved Investor Transparency

  Circulars : SEBI issued a circular revising disclosure requirements for REITs, focusing on financial information in offer documents and continuous compliance. The amendments modify Chapter 3 and Chapter 4 of the Master Circular, introducing updated guidelines for financial disclosures, including provisions for proforma financial statements, audited asset financials, and references to public financial disclosures. The circular mandates immediate implementation, with specific financial disclosure requirements applicable from April 01, 2025, aimed at enhancing transparency and investor protection in the REIT market. The regulatory changes were developed through recommendations from the Working Group and Hybrid Securities and Advisory Committee.
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Service Tax

• Service Tax Refund Granted: Tribunal Validates Claim Based on Incorrect Tax Deduction and Work Order Evidence

  Case-Laws - AT : CESTAT allowed appellant's refund claim for service tax paid under mistake of law. The tribunal found that service recipient had deducted 50% service tax from appellant's running bill, and the activity was not liable for service tax. Work orders substantiated appellant's claim. The tribunal determined appellant is entitled to full refund with interest at 12% as Section 11B and 11BB provisions were inapplicable. Cross objections by revenue were rejected as contrary to legal principles. The decision affirms refund rights when tax is erroneously paid, emphasizing procedural fairness in tax adjudication.
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Case Laws:

• GST

• 2025 (5) TMI 634
  Initiation of proceedings u/s 130 of the GST Act against a dealer when excess stock is found during a survey or inspection u/s 67 of the GST Act - stock was assessed on the basis of eye measurement - HELD THAT:- It is not in dispute that survey was conducted at the business premises of the petitioner on 15.10.2019. It is also not in dispute that excess stock was found, which triggered the initiation of the present proceedings against the petitioner. On various occasions, this Court has held that if excess stock is found, then proceedings under sections 73/74 of the GST Act should be pressed in service and not proceedings under section 130 of the GST Act, read with rule 120 of the Rules framed under the Act. The law is clear on the subject that the proceedings under section 130 of the GST Act cannot be put to service if excess stock is found at the time of survey. This Court in M/s Vijay Trading Company [ 2024 (8) TMI 1039 - ALLAHABAD HIGH COURT ] has categorically held that the proceedings under section 130 of the GST Act cannot be put to service in case excess stock is found at the time of survey. Further, section 35 of the GST Act prescribes about the maintenance of account and other records. Sub-section (6) thereof contemplates that if the registered dealer fails to account for the goods in accordance with the provision of sub-section (1), the Proper Officer shall determine the amount of tax payable on such goods that are not accounted for by such person and the provision of sections 73/74 of the GST Act, as the case may be, shall mutatis mutandis apply for determination of such tax. The GST Act is a complete Code in itself - Once the Act specifically contemplates that action to be taken, then the provision of section 130 of the GST Act cannot be pressed into service. Conclusion - If excess stock is found at the time of survey, then proceedings under sections 73/74 of the GST Act should be pressed in service and not proceedings under section 130 of the GST Act, read with rule 120 of the Rules framed under the Act. Petition allowed.

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• 2025 (5) TMI 633
  Challenge to order and summary of order - challenge to N/N. 09/2023 dated 31.03.2023 as contained in Annexure-P8 and the N/N. 56 of 2023 dated 28.12.2003 - extension of time limit specified under sub-section (10) of Section 73 of the CGST Act for issuance of order under sub-section (9) of Section 73 of the GST Act for recovery of tax not paid or short paid or input tax credit wrongly availed or utilized upto 31st March, 2024 for the Financial Year 2018-19 - main contention of petitioner is that the impugned order has been passed without consideration of the provisions of the Act, the rules made thereunder and also notification fixing the liability only in respect of the development agreement on or after 01.04.2019 - violation of principles of natural justice - mistake of fact apparent on the record or not. HELD THAT:- The petitioner does not get any right on the said property until the completion of the project. After the project is completed and completion certificate is issued, the petitioner gets a right to sell the area of the property which is called Developers Area . There are no substantial material to establish that with execution of the development agreement, the petitioner got ownership in the land. It is held that the transfer of development rights as it stands is amenable to GST and cannot be brought within the purview of sale of land subject to clause (b) of Paragraph 5 of Schedule II, sale of building (as per Entry 5 of Schedule-III of the GST Act). The petitioner has not controverted the submission of the State that vide notification no.11/2017 dated 28.06.2017, construction of a complex, civil structure etc. intended for sale to a buyer was made exigible to GST except where the entire consideration has been received after issuance of completion certificate or after its first occupancy, whichever is earlier. In this case, it has been specifically pleaded by the State-respondent that the consideration had been received by the petitioner in the form of transfer of development rights, which happened long before the issuance of completion certificate or first occupancy. This Court agrees that in this case, the petitioner cannot claim that it had received the consideration after the issuance of completion certificate or first occupancy. The State-respondents are correct in contending that the construction of a complex, civil structure etc. intended for sale to a buyer was made exigible to GST except where the entire consideration has been received after issuance of completion certificate or after its first occupancy, whichever is earlier. There would be no ambiguity in the above-mentioned notifications. Conclusion - There is no ambiguity with regard to liability of the petitioner on account of GST on RCM basis on the constructions services rendered by him in lieu of the developments rights under the Development Agreement dated 27.11.2014. There are no reason to entertain the present writ application - application dismissed.

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• 2025 (5) TMI 632
  Availment o fake ITC - SCN issued u/s 74 of the CGST Act, 2017 was not considered - HELD THAT:- It is noticed that the Petitioner has already deposited Rs. 2.5 crores with the Department on 16th September, 2020, which forms a substantial part of the 10% pre-deposit which has to be furnished mandatorily in order to file an appeal under Section 107 of the Central Goods and Service Tax Act, 2017. Accordingly, let the Petitioner approach the appellate authority under Section 107 of the CGST Act along with the remaining pre-deposit amount within 30 days. If the Petitioner approaches the appellate authority with the pre-deposit as directed, the appellate authority shall consider the interim reply filed by the Petitioner of 15th April, 2024, as also any other documents which the Petitioner may wish to submit in support of his case. After such consideration, the appellate authority shall adjudicate the appeal on merits. Petition disposed off.

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• 2025 (5) TMI 631
  Rejection of Input Tax Credit - return was filed beyond the time provided - HELD THAT:- A Division Bench of this Court, had considered the same issue, in its judgment M/S. PADMAVATHI ENTERPRISES VERSUS SUPERINTENDENT OF CENTRAL TAX AND OTHERS [ 2025 (5) TMI 372 - ANDHRA PRADESH HIGH COURT] . The Division Bench after considering the effect of sub section (5) of Section 16 of the GST Act, in a similar situation, had held that the petitioner, by virtue of the non-obstante clause, available in the provision, would be entitled to avail the credit which was rejected by the Assessing Officers, in the case before the Division Bench. A perusal of the facts in the present case would show that the facts in this case are similar to the facts in the case before the Division Bench. This Writ petition is allowed setting aside the order of Assessment, dated 30.04.2024, and the matter is remanded back to the 3rd respondent to pass a fresh assessment order keeping in view the insertion of Section 16 (5) of the CGST Act - Petition allowed by way of remand.

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• 2025 (5) TMI 562
  Issuance of SCN in the name of deceased - recovery can be made from the legal representatives even after the determination has been made after the death of the proprietor of the firm or not - HELD THAT:- A perusal of Section 93 would reveal that the same only deals with the liability to pay tax, interest or penalty in a case where the business is continued after the death, by the legal representative or where the business is discontinued, however, the provision does not deal with the fact as to whether the determination at all can take place against a deceased person and the said provision cannot and does not authorise the determination to be made against a dead person and recovery thereof from the legal representative. Once the provision deals with the liability of a legal representative on account of death of the proprietor of the firm, it is sine qua non that the legal representative is issued a show cause notice and after seeking response from the legal representative, the determination should take place. Conclusion - The determination made in the present case wherein the show cause notice was issued and the determination was made against the dead person without issuing notice to the legal representative, cannot be sustained. Petition allowed.

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• 2025 (5) TMI 561
  Maintainability of petition - availability of alternative remedy - Invocation of Section 74 of the Central Goods and Service Tax Act, 2017 - fraudulent availment of input tax credit (ITC) based on transactions with non-existent firms - HELD THAT:- In a case of present nature wherein the allegations pertain to fraudulent availment of ITC i.e. based on supply from non-existent firms and without receiving any actual supply, the plea would always fall within the parameters of Section 74 of the Act, as the same would be input tax credit wrongly availed or utilised by reason of fraud or any wilful misstatement or suppression of facts . The very fact that the input tax credit was availed based on fake supplies, to claim that the said fake supplies were disclosed and, therefore, Section 74 of the Act would not apply, is totally baseless. All the pleas raised and reply to the show cause notice having been dealt with by the adjudicating authority and the challenge laid to the said finding is only factual and does not fall in any of the parameters laid down by the Hon ble Supreme Court wherein petitions under Article 226 of the Constitution of India can be entertained. Reference can be made to Jaipur Vidyut Vitran Nigam Limited and others vs. MB Power (Madhya Pradesh) Limited and others [ 2024 (1) TMI 1459 - SUPREME COURT] . In the case of Ecom Gill Coffee Trading [ 2023 (3) TMI 533 - SUPREME COURT] , it has, inter alia, been laid down by Hon ble Supreme Court that ITC would be available to any dealer only after he discharges burden to establish actual receipt of goods. Mere production of invoices and payment to selling dealer by account payee cheque is not sufficient. Similar is the view expressed by a Single Judge of this Court in the case of Shiv Trading [ 2023 (11) TMI 1157 - ALLAHABAD HIGH COURT] . There are no reason to entertain the present writ petition bypassing the availability of alternative remedy. The alternative prayer made for exempting the mandatory deposit, cannot be countenanced, which prayer is contrary to the statute. Conclusion - Fraudulent availment of ITC through non-existent firms attracts the provisions of Section 74 and mere documentary evidence without actual receipt of goods is insufficient to claim ITC. The statutory procedure for appeals and mandatory deposits must be followed, and writ petitions are not a substitute for appeals in such matters. Petition dismissed.

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• 2025 (5) TMI 560
  Detention of goods - imposition of penalty u/s 129(1)(b) of the CGST Act - no e-way bill was presented at the time of detention - HELD THAT:- Learned ACSC could not show any provision or circular other than relied upon by counsel for the petitioner - matter requires consideration. Learned counsel for the respondents may file counter affidavit within six weeks from today. Rejoinder affidavit, if any, may be filed within one week thereafter - In the meantime, goods in question shall be released forthwith in case the petitioner complies with the provision of Section 129 (1) (a) of the CGST Act. It is further provided that with regard to the balance amount, the petitioner shall furnish security, other than the cash or bank guarantee, to the satisfaction of the authority concerned. List again in July, 2025.

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• Income Tax

• 2025 (5) TMI 630
  Deduction u/s 80IC - Review petition - claiming the exemption at the same rate of 100% beyond the period of five years on the ground that the assessee has now carried out substantial expansion in its manufacturing unit - units established in certain special category States - units situated in the State of Sikkim, Himachal Pradesh and Uttaranchal and North-Eastern States - As decided by SC [ 2018 (8) TMI 1209 - SUPREME COURT] after availing deduction for a period of 5 years @ 100% of such profits and gains from the units , the assessees would be entitled to deduction for remaining 5 Assessment Years @ 25% (or 30% where the assessee is a company), as the case may be, and not @ 100%. The question of law is, thus, answered in favour of the Revenue HELD THAT:- There is an inordinate delay of 412 days in filing the review petition for which no satisfactory explanation has been furnished and having carefully gone through the petition for review and the papers connected therewith, we do not find any ground warranting review of order dated 20-08-2018. The review petition is, therefore, dismissed on the ground of delay as well as on merits.

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• 2025 (5) TMI 629
  Payment constituted a royalty under the Treaty s domestic law - consideration paid for transponder services - Whether assessable as royalty u/s 9 (1) (vi) of the Act and/or Article 12 of the India-USA DTAA? - Whether the payment made was not for secret process - HELD THAT:- Appellant relying upon the Tribunal s order in the Appellant-Assessee s own case for AY 2015-2016 submitted that since the Tribunal for that year has concluded that Intelsat Corporation was not liable to pay tax, there is no question of the Appellant-Assessee being fastened with withholding tax liability. Mr. Agrawal fairly stated that this was not the reasoning given by the Tribunal in the present appeals. He attempted to tender the orders passed in the case of Intelsat Corporation for the years under consideration after the Respondent-Revenue had started their arguments. This Court refused to take the same on record since it would not be proper for this Court to verify this factual position, whether in the years before this Court, there is a final determination in the case of Intelsat Corporation that they are not liable to pay tax. This would require verification before the lower authorities. However, in the interest of justice if the orders passed in the case of Intelsat Corporation holds that they are not liable for tax in India for the years which are subject matter of the present appeals and the payments made by the Appellant-Assessee has been considered before giving such a finding, then there cannot be any withholding tax liability on the Appellant-Assessee. However, such an order in the case of Intelsat Corporation should have attained finality. Therefore, we remand the matter back to the CIT (A) file for verifying this aspect. Nature of services specified in the agreement and its applicability to the definition of royalty under the Act and Article 12 (3) of the Treaty - The present appeal is under Section 260A of the Act on substantial questions of law. It was incumbent upon the three authorities, i.e. the original authority and the appellate authorities, to have examined and analysed the nature of services as agreed upon by the parties in the agreement. It was also incumbent upon these authorities to thereafter give a finding of fact on this issue and then apply the definition of royalty under the Act or under Article 12 (3) of the Treaty. How these services are covered by the Act or the Article 12 (3) is not discussed. There is an absence of foundational facts in the orders of all the three authorities on this issue. The orders are non-speaking orders. The authorities should have independently analysed and examined how the services rendered under the agreement would fall within the phrase process or secret process as per the Act or Article 12 (3). The authorities have not analysed what is process or secret process and how it applies to the services rendered under the agreement. The questions raised by the Appellant-Assessee and admitted by this Court cannot be answered without there being the findings of the lower authorities on the nature of the services rendered under the agreement by Intelsat Corporation to the Appellant-Assessee and the analysis of the phrase secret process/process used in the Act and the Treaty. The Co-ordinate Bench of this Court in Reliance Industries Limited [ 2024 (8) TMI 432 - BOMBAY HIGH COURT ] has held that retrospective amendment cannot fasten withholding tax liability if payments were made prior to the amendment. Therefore, for those assessment years where the payments have been made prior to the insertion of Explanation 6 to Section 9 (1) (vi) of the Act same would not be exigible to withholding tax liability. This aspect should be examined by the CIT(A) and an appropriate relief be given after verifying the facts for those assessment years prior to the enactment of Finance Act. 2012. The above direction is given as per Section 90 (2) of the Act, which states that between the Act and the DTAA, what is beneficial is to be made applicable to the Assessee. For the payments made post the Finance Act 2012, the CIT(A) is directed to examine the agreements and give a factual finding on the nature of services rendered under the agreements and how the phrase secret process is to be interpreted to ascertain whether the payments constitute royalty under Treaty. This exercise has not been done in the instant case by the authorities. Therefore, we direct them to do the same in the remand proceedings. CIT(A) is requested to dispose of the appeals as expeditiously as possible and in any case on or before 31 December 2025. We remand the appeals back to the file of the CIT(A) with the following directions:- (i) If the Appellant-Assessee is able to show that there is a final determination of no taxability in the hands of Intelsat Corporation on payments made by the Appellant-Assessee, then there would be no withholding tax liability ; (ii) If the payments are made prior to the Finance Act, 2012 then, then following decision of this Court in the case of Reliance Industries Limited [ 2024 (8) TMI 432 - BOMBAY HIGH COURT ] no withholding tax liability can be imposed based on retrospective amendment ; (iii) For payments made after the enactment of Finance Act, 2012, the CIT(A) to examine the nature of agreements for each assessment year and determine whether same constitutes royalty under the domestic law or the Treaty and if same does not constitute royalty then there would be no withholding tax liability after considering provisions of Section 90 (2) of the Act.

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• 2025 (5) TMI 628
  Addition u/s 68 - bogus share capital premium - AO s remand report had categorically stated that the share applicant companies had no credit worthiness to invest in the assesse company - Tribunal upholding the action of the CIT (A) in deleting the addition - whether three factors which are required to be established by the department at the first instance have been established namely identity of the investors, their creditworthiness and the genuineness of the transaction? HELD THAT:- The assessee had inventories of Rs. 8.38 crores as on 31.03.2011 and 9.36 crores as on 31.03.2012. The audited result of the assessee has shown its profits grown by over three times between assessment years 2011-2012 and the assessment year 2012- 2013. Further during the same period, the earning per share of the assessee company had grown from two and half times to 16% per share of Rs. 10 and therefore the CIT (A) on facts held that the assessee company was showing good returns and were showing good profits for its investors and it is a growing company. Therefore, the submission of the revenue that the allegation that unduly high premium was charged was not examined by the CIT (A) is incorrect. In fact, this aspect was also examined by the assessing officer to certain extent as pointed out by the CIT (A). When the matter travelled on appeal to the learned tribunal at the instance of the revenue, the factual aspects were re-examined. Tribunal notes that the paper book containing 1029 pages were filed and all documents were placed before the learned tribunal and after noting the facts the learned tribunal came to the conclusion that the CIT (A) was well justified in deleting the addition made under Section 68 of the Act. No substantial question of law arising for consideration in this appeal.

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• 2025 (5) TMI 627
  Monetary limits for filing Income Tax Appeals by the department before the High Court - HELD THAT:- In view aforesaid submission of learned counsel for the appellant where monetary limit (tax liability) in the present case is less than Rs.2 Crores therefore, in light of aforesaid circular dated 17/09/2024, the instant Tax Case stands disposed of.

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• 2025 (5) TMI 626
  Validity of demand notice issued u/s 156 - addition made by the AO u/s 69 and 69A - HELD THAT:- As huge amount of demand has been made against the Petitioner by reflecting wrong figures. Cursory glance at computation sheet transpires without any ambiguity in mind that the figures have been reflected with erroneous perception. In such view of the matter, the notice of demand under Section 156 of the Income Tax Act (Annexure-4) needs modification by undertaking fresh computation of tax liability. Petitioner furnished copy of appellate order passed under Section 250 by the National Faceless Appeal Centre (NFAC) wherein as allowed in favour of the Petitioner by taking cognizance of the fact that it has been granted exemption under Section 10(26AAB) of the Income Tax Act. In the said appellate order, it has been observed that the source of deposit in the bank is the market fee received from the Odisha State Civil Supplies Corporation Limited. Observing thus, the Appellate Authority found no merit in the addition made by the AO under Sections 69 and 69A of the IT Act and, accordingly, deleted the additions. Regard being had to such Appellate Order for the subsequent period 2018-19 granting exemption u/s 10(26AAB) and being conscious of the fact that there occurred error in computation of tax liability, it is, therefore, felt expedient to show indulgence in the order of the Assessing Authority. This Court has no other option but to set aside the demand raised along with Computation Sheet under Annexures-2 3 and also the notice of demand.

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• 2025 (5) TMI 625
  Notice u/s 201(1) issued when no failure on the part of the petitioner to deduct or deposit TDS - HELD THAT:- It is important to note that the averment that the petitioner had deducted tax at a lower rate in regard to payments made to Sir Ganga Ram Hospital pursuant to a certificate dated 08.05.2015 is not controverted. Thus, admittedly, there is no material on record to suspect that the petitioner had failed to deduct TDS or deposit the same with the Income Tax Authorities. The allegation on the basis of which the impugned notice is stated to have been issued, stands sufficiently addressed by the petitioner in its rejoinder affidavit. We do not consider it necessary to examine the larger question whether any notice for the purpose of verifying the details regarding deduction of payment of TDS can be initiated. It is clear in the present case that no proceedings u/s 201 of the Act are warranted in the case of the petitioner.It is clear in the present case that no proceedings under Section 201 of the Act are warranted in the case of the petitioner.

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• 2025 (5) TMI 624
  Validity of Reopening of assessment u/s 147 - period of limitation - notice issued in accordance with the statutory regime as existed prior to 31.03.2021 - HELD THAT:- The notice issued under Section 148 of the Act stands quashed and set aside. Concededly, the controversy is covered in favour of the Assessee by the decision of this court in Makemytrip India Pvt. Ltd.[ 2025 (4) TMI 46 - DELHI HIGH COURT ] wherein the impugned notice was issued on 27.07.2022, which was admittedly beyond the period of limitation as prescribed under Section 149 (1). Since TOLA was not applicable in respect of the said notices u/s 148 of the Act for AY 2015-16 as conceded by the Revenue in the case of Union of India v. Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB) ], thus the impugned notice is liable to be set aside.

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• 2025 (5) TMI 623
  Rejection of Application u/s 119 (2)(b) - condonation of delay in filing Income Tax returns - impugned order has been passed without affording the petitioner an opportunity of hearing - HELD THAT:- Power u/s 119(2)(b) of the Act, has been consistently held to be quasi judicial in nature. Importantly, grant of personal hearing is found necessary for valid exercise of power u/s 119(2)(b) of the Income Tax Act. In this regard it may be relevant to refer to judgment of this Court in the case of Envission Communication (P) Ltd. [ 2023 (11) TMI 129 - MADRAS HIGH COURT ] held that the power under Section 119(2)(b) of the Act being quasi-judicial in nature and which could result in adverse civil consequence, it must be exercised in compliance with principles of natural justice. However, this Court finds that the impugned order is made in violation thereof, in view of the fact that the impugned order does not assign reason but only contains the conclusion, in other words non-speaking and thus unsustainable . Thus set aside the impugned order. The respondents are directed to pass fresh order after affording the petitioner a reasonable opportunity of hearing.

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• 2025 (5) TMI 622
  Limitation for passing a Final Assessment Order u/s 144C - HELD THAT:- Advisory makes it clear that the FAO would be able to view the DRP order in the 360 degree screen, since the assessment was pending with that officer. This feature has evidently been provided to ensure that an officer can access/receive the directions of the DRP as soon as it is uploaded by the Secretariat of the DRP and the pending proceedings would be completed within the statutory limitation provided. Hence, there is no protection available to the Department by the DRP user having selected the second manual option, as, an assessing officer, in order to ensure that the assessment proceedings are strictly in accordance with statutory limitation, has been given full and complete access to all inputs required for completion of the assessment including the directions of the DRP immediately on their uploading into the ITBA portal by the DRP. Clearly, limitation cannot be dependent on varying user functionalities which are nothing but internal processes. If this argument were to be accepted, the commencement of limitation would vary depending on the option exercised by the user which would defeat the purpose of statutory limitation apart from being an acceptable proposition. The starting point of limitation has thus to be reckoned from the earliest instance when the directions of the DRP would be visible to the officer and cannot be taken to fluctuate from one methodology to another depending on the option exercised by the user. Our understanding of the 360 degree view page is that on entering the details of the assessee including the PAN number and the assessment year, the form would auto populate in regard to all details relating to that assessee including present status of proceedings and all orders, letters and notices. We are supported by the concluding portion of the advisory that states that the DRP order would be visible in the 360 degree screen to the FAO for his ready access. Thus, all that is required to gain complete and up-to- date access to all relevant data in regard to an assessee s assessment would available on the 360 degree screen. Learned Standing Counsel draws attention to letter dated 12.12.2024 from the Secretariat of the DRP, specifically the portion where the DRP states that no separate mail had been sent to AO or FAO . The Assessing Officer thus appears to have been awaiting personal intimation of the order to his e-mail ID. The fact that the FAO has merely chosen to await intimation when the order had admittedly been uploaded on the ITBA by the DRP user, and his consequent belated response, cannot thus lead to a situation of disadvantage to the assessee, particularly when the Advisory provides a methodology by which the FAO can access the document uploaded by the DRP simultaneously, and real-time. Lastly, Section 144C is a Code by itself that provides for very strict timelines for completion of an assessment. Hence the stipulation in regard to limitation cannot be reckoned in a manner so as to give rise to more than one interpretation, where either party can take benefit of a later date. This issue has also attracted the attention in Vodafone Idea Limited [ 2023 (11) TMI 449 - BOMBAY HIGH COURT ] and Louis Dreyfus Company India Private Limited [ 2024 (3) TMI 62 - DELHI HIGH COURT ] In both the cases, the very submissions as made before us, were advanced and have been rejected by those Courts. Decided in favour of the assessee.

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• 2025 (5) TMI 621
  Rejection of application u/s 12A(1)(ac)(vi)(B) and u/s 80G(5)(iv)(B) - as per revenue Assessee having business income and doing business in garb of charity and doing activity beyond the objects and is Siphoning off the funds of the institution - HELD THAT:- As submitted that from the records it can be seen the genuineness of the activities of the trust and also its objects and there is no room for siphoning off the funds and all the funds has been utilized for the object of the trust. Bench adopts the lenient view and feels that the assessee should be given one more opportunity to advance the documents before the ld. CIT(E) as to registration of the trust u/s 12AB and u/s 80G(5)(iv)(B) Matter is restored to the file of CIT(E) for afresh adjudication by providing adequate opportunity of being heard and the assessee is also required to submit the documents as demanded by CIT(E) with regard to registration of the Trust u/s 12AB of the Act. Thus this appeal of the assessee is allowed for statistical purposes.

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• 2025 (5) TMI 620
  Validity of reopening of assessment u/s 147 - reasons to believe - unexplained cash deposit in the bank account - HELD THAT:- The only requirement is that he must have a prima facie belief about concealment of income which was available in this case as the AO was having information about cash deposit in the bank account and coupled with the fact that appellant did not file her ITR for the year under consideration and both these facts were sufficient to raise a doubt about concealment of income and hence the AO was justified in issuing a notice u/s 148 on the facts of the case. In this regard we refer to the case of ACIT v/s Rajesh Jhaveri Stock Brokers P Ltd. [ 2007 (5) TMI 197 - SUPREME COURT] wherein held that at the stage of initiating action u/s 147, the final outcome of the proceeding is not relevant and at the initiation stage, what is required is reason to believe , but not the established fact of escapement of income. Hence we dismiss first ground of appeal. Addition on account of cash deposits in bank accounts which was restricted by CIT (A) at 50% - There is no infirmity pointed out by the D/R also on such cash flow statement. We find that in this cash flow statement the appellant has adopted an opening cash balance of Rs. 3,77,000/- and thereafter by incorporating all transactions of cash deposit and withdrawals in various bank accounts, at no stage any negative balance has been worked out. Neither the CIT(A) nor the ld. D/R raised any doubt about the opening balance of Rs. 3,77,000/- in the cash flow statement and the entries appearing therein. Therefore, there is no doubt about contents of the cash flow statement wherein no negative balance was noticed at any stage, we are inclined to allow the appeal of the assessee and hence we delete the addition as sustained by ld. CIT (A) on account of cash deposit in the bank account of the assessee. This ground of appeal is allowed.

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• 2025 (5) TMI 619
  Assessment u/s 144 - addition of receipt towards commission who has deducted TDS - as argued AO was not justified in bringing to tax the entire amount as income of the assessee without allowing any expenditure out of that nor estimating the income - As relying on various decisions, it was argued that in such type of cases, the profit is usually estimated from 4% to 8% - HELD THAT:- As due to non-compliance to the statutory notices issued by the AO he completed the assessment u/s 144 of the Act determining the total income of the assessee which is the gross commission received by the assessee. We find the CIT(A) / NFAC upheld the action of the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of assessee that bringing to tax the entire gross receipts without granting any proportionate expenditure will cause grave injustice to the assessee. A perusal of the order of the CIT(A) / NFAC would show that the CIT(A) / NFAC has basically dismissed the appeal of the assessee on the ground that the assessee did not file any fresh documentary evidence in respect of expenditure incurred nor filed any details for the activities of the assessee in the previous and subsequent years. We deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his case by filing the requisite details and decide the issue as per fact and law. The grounds raised by the assessee are accordingly allowed for statistical purposes. Levy of penalty u/s 270A on account of under-reporting of income - Since the quantum appeal has been restored to the file of the AO for fresh adjudication, therefore, the issue relating to levy of penalty u/s 270A is also restored to his file for fresh adjudication. The grounds raised by the assessee are accordingly allowed for statistical purposes.

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• 2025 (5) TMI 618
  Penalty u/s 271A - holdings the assessee guilty of concealment of income - assessee had not maintained books of account u/s 44AA - HELD THAT:- The return of income in response to notice u/s 148 of the Act was filed by the assessee declaring total income. In the return of income, the assessee has also claimed deduction u/s 80P of the Act which was duly granted by the ld AO in the assessment. While this is so, without mentioning any reason, AO simply initiated penalty proceedings u/s 271A on the ground the assessee had not maintained books of account u/s 44AA of the Act. This notice culminated in the levy of penalty u/s 271A which was also upheld by the ld NFAC. We are unable to comprehend ourselves to accept to the aforesaid levy of penalty u/s 271A of the Act for the simple reason that when books of account are not maintained by the assessee according to the lower authorities, then how the deduction claimed by the assessee u/s 80P of the Act was granted? This itself becomes a clinching evidence that books of account were indeed maintained by the assessee and hence, there is no question of violation of provisions of Section 44AA of the Act. Consequentially there could be no levy of penalty u/s 271A of the Act. Demand raised u/s 147 r.w.s 144 holdings the assessee guilty of concealment of income -denial of deduction claimed by the assessee u/s 80P(2)(a)(i) - The assessee has claimed deduction u/s 80P(2)(a)(i). No deduction or exemption whatsoever was claimed by the assessee in respect of interest earned by it on fixed deposits from banks. The deduction claimed u/s 80P(2)(a)(i) of the Act is with regard to the business of providing loans to its members out of deposit accepted from the members. The surplus derived from this activity would be eligible for deduction u/s 80P of the Act as well as exemption from tax on the principles of mutuality as the transactions are only with the members. Hence, there is absolutely no question of denying the deduction claimed by the assessee u/s 80P(2)(a)(i) in the instant case. Appeals of the assessee are allowed.

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• 2025 (5) TMI 617
  Reopening of assessment u/s 147 beyond period of limitation - information flagged as per Risk Management Strategy formulated by the CBDT through ITBA - HELD THAT:- As held in the case of Suman Jeet Agarwal [ 2022 (9) TMI 1384 - DELHI HIGH COURT ] held that the date on which digitally signed has to be considered. In the given case, the notice was digitally signed only on 02.04.2022. Therefore, the relevant provisions as per amended with effect from 01.04.2022 are applicable. Therefore, the relevant provisions as applicable are, as per section 149(1)(b), no notice u/s 148 shall be issued, if three years have elapsed from the end of relevant AY unless the AO has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of as asset, expenditure or an entries which has escaped assessment amounts to or likely to amount fifty lakh rupee or more. As the escaped assessment amount is only Rs. 17.80 lakhs. Therefore, the notice issued u/s 148 is without jurisdiction. Further it is brought to our notice that as per the declared income in the return of income filed for the year under consideration is Rs. 77.36 lakhs and as per the CBDT instruction no 1/2011 dated 31.03.2011, the jurisdiction lies only with the ACIT whereas the notice and assessment was completed by the ITO. Even on this count, the notice issued is beyond the jurisdiction of the present assessing officer. Therefore, we are inclined to allow the additional ground raised by the assessee.

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• 2025 (5) TMI 616
  Levy of penalty u/s. 271AA - assessee failed to report transaction of issue of shares to its associated enterprises in Form 3CEB - assessee has failed to comply with the mandatory provisions of reporting of international transactions - HELD THAT:- As undisputed fact that the assessee during the period relevant to assessment year under appeal had allotted shares to its parent company i.e. Sarens NV, Belgium. As per the provisions of section 92D of the Act every person who enters into an international transaction is required to maintain and document information in respect of any transactions as specified under Rule 10D of the Income Tax Rules 1962. The assessee has placed on record Form 3CEB. A perusal of the same reveals that the assessee has given a complete list of Associates Enterprises with whom the assessee entered into international transaction during the period relevant to AY 2015-16. The assessee has also given detailed descriptions of transactions entered into with its AE s during the relevant period except for issuance of share capital against outstanding trade payables of the parent company. The assessee is a wholly owned subsidiary of Sarens NV, Belgium the shares have been issued by the assessee to its parent company at par. No addition/adjustment was made by the AO on account of any international transaction and the return of income was accepted by the AO. Hence, in our considered view it is not a fit case for levy of penalty u/s. 271AA therefore, penalty levied u/s. 271AA of the Act is deleted. Appeal of the assessee is allowed.

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• 2025 (5) TMI 615
  Disallowing royalty and interest payments alleging the same to be prior period expenditure - as argued liability in respect of aforesaid expense crystallized during the relevant assessment year under consideration, the same could not be regarded as prior period expense - assessee pleaded that it has been carrying on sale of DVD players every year and which has been consistently allowed as revenue expenditure in the earlier years - HELD THAT:- We find that the contentions of the assessee to be correct as in view of the letter dated 23.04.2015 relevant to AY 2016- 17 wherein, additional royalty and interest had been crystallized in the hands of the assessee and settlement agreed with Philips. The said settlement happened during the year, the expenditure had to be construed as having crystallized during the year. We find that the said expenditure is duly subjected to deduction to tax at source. The evidence for settlement arrived with Philips by the assessee vide letter dated 24.03.2015 is enclosed in pages 78 to 81 of the Factual Paper Book. AR before us sought to meet each and every observation by the ld AO and ld CIT(A) which are enclosed in his written submissions. These additional evidences, in our considered opinion, goes to the root of the matter and are very much crucial for adjudication of the issue in dispute before us. Hence, we deem it fit and appropriate to admit those additional evidences and restore the entire issue in dispute to the file of the ld AO for de novo adjudication in accordance with law in the light of the aforesaid observations, in the light of additional evidence submitted and after due verification of all the agreements on record. Accordingly, Ground Nos. 1 to 1.4 raised by the assessee are allowed for statistical purposes. Non granting full MAT credit u/s 115JAA - This matter requires factual verification with ld AO and hence the ld AO is hereby directed to grant MAT credit in accordance with law after due verification of the computation thereon. Accordingly, Ground No. 2 raised by the assessee is allowed for statistical purposes.

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• 2025 (5) TMI 614
  Estimated additions made arising from undisclosed sales outside books of accounts and estimated additions towards undisclosed capital employed on such undisclosed sales - It is the case of the assessee that the entire basis of additions towards undisclosed sales and consequent additions towards undisclosed investment is certain print out taken by the Central Excise Department from the hard disk and pen drive recovered from the premises of Trikoot in a search carried out by the Central Excise Department. HELD THAT:- Panchnama prepared at the premises of Trikoot does not bear any reference to recovery of hard disk and pen drive. Consequently, adverse opinion towards undisclosed sales made by the assessee to Trikoot flowing from such pen drive etc. is neither admissible as evidence nor it can be examined for this purpose as held in appellate order passed by Excise Tribunal. It is further a case of the assessee that consequent upon search in the case of Trikoot, a search was carried out at the premises of the assessee as well. However, Central Excise Department could not recover any adverse material from the premises of the assessee either. AO in the instant case has also not brought any material on record adverse to the assessee. The sole basis of estimated addition is a show cause notice issued by the Central Excise Department, the aforesaid proceedings against the third party (Trikoot) by Central Excise Department has been quashed and therefore, no firm basis exists any longer against the assessee. Thus we find substantial force in the plea of the assessee for reversal of the additions on this score. AO has entertained adverse inference based on show cause notice issued by the Director of DG of Central Excise Intelligence on Trikoot and reference to some loose papers therein. As pointed out on behalf of the assessee, the appellate authority of Central Excise Department has quashed the proceedings against Trikoot. AO has also not made any independent enquiry in the course of search to assert the additions. No independent material to corroborate the allegation of unrecorded sales is available on record. The ratio of judgement referred in the case of PCIT vs Sapoorji Pallonji Co. Ltd. [ 2020 (3) TMI 552 - BOMBAY HIGH COURT] would thus squarely apply. The Hon ble Bombay High Court in that case observed that the AO had merely relied upon the information received from the Sales Tax Department, Government of Maharasthra without carrying out any independent enquiry. The additions were thus quashed. Adhoc disallowance out of telephone and vehicle expenses etc - It is the case of the assessee that such estimated disallowance by the Revenue is not justified in the case of a company run by the professional management. The assessee being a company, no personal user of telephone and vehicle expenses etc. can be envisaged per se. We find substantial force in such plea of the assessee. The adhoc additions without pin-pointing any specific instance of expenditure incurred which is not wholly and exclusively for the purpose of business, is not permissible. The additions/disallowances cannot be made based on figment of imagination and must necessarily be supported by direct or circumstantial evidences. There being none, the estimated disallowance cannot be sustained in law.

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• 2025 (5) TMI 613
  Credit of TDS - mismatch of corresponding income - assessee has not shown the receipts as exempt income in ITR, though claimed to be exempt income, but corresponding TDS amount was claimed - buyer has deducted TDS @1% u/s. 194IA of the Act on the sale consideration of Rs. 10.50 crores. Since, the land sold by the assessee being agricultural land, no TDS was required to be deducted by the purchaser HELD THAT:- From the perusal of the section 194IA, it is ample clear that this section 194IA applies to immovable property other than agricultural land. Rule 37BA of the Income Tax Rules, 1962 also does not apply to the appellant for the reason that it only applies in the case of income that is assessable to tax. We also find that the AO, CPC does not take into account the agricultural income declared in the return of income when comparing the gross receipts of the ROI with that of the Form 26AS. This is evident from the Rule 37BA working of the AO, CPC . Further, we note that the AO, CPC has not taken into consideration the agricultural income shown in the schedule EI. Therefore, we accept the contention of assessee that even if the assessee had shown the exempt sale consideration of Rs. 10,50,00,000/- as agricultural income in the return of income, the present restriction of TDS would still have been carried out owing to the incorrect application of Rule 37BA. The above factual matrix, we direct the AO to give credit to the entire TDS claimed appearing in the Form 26AS and claimed by the appellant in the return of income. Appeal of the assessee is allowed.

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• 2025 (5) TMI 612
  Assessment u/s 153A - Addition of unsecured loan - addition made on the protective and substantive basis - whether addition can be made in a search assessment in the absence of any incriminating material - 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 the case of Abhisar Buildwell (P.) Ltd [ 2023 (4) TMI 1056 - SUPREME COURT] as held 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 u/s 153-C of the Act, Courts has rightly set aside the Assessment Order(s). Decided in favour of assessee.

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• 2025 (5) TMI 611
  Computation of long-term capital gain on the sale of a residential flat - disallowance of claims made by the assessee u/s 48 as well as u/s 54 - claims were disallowed on the ground of lack of adequate documentary evidence - HELD THAT:- As evidentiary requirements must be interpreted pragmatically, balancing commercial reality with documentary discipline. The modest scale of expenditure, its consistency with the assessee s financial position, and the absence of any contrary evidence from the Revenue reinforce the bona fide nature of the claims. With regard to the stamp duty the same represents the value of the stamp paper used for the original purchase deed of the property. This is a standard and allowable component of the cost of acquisition under section 48 and is clearly evidenced in the purchase deed forming part of the assessment record and paper book. Separately, the assessee has also claimed as stamp duty paid in respect of the new residential property purchased post-sale, forming part of the investment made towards exemption under section 54. The said payment is handwritten on the sale deed itself, which is on record. There is no dispute regarding the identity of the property or the transaction itself. Since the exemption u/s 54 is to be allowed on the actual investment made in a residential house, including registration and stamp duty charges, the stamp duty forms a valid part of such investment and must be included while quantifying the exemption allowable under section 54. We have also considered the reliance placed by the AR on the judgment of Rajesh Babubhai Damania [ 2000 (6) TMI 5 - GUJARAT HIGH COURT] . While that case involved loan confirmations and production of creditors, the principle that once the assessee discharges the initial burden of proof, the claim should not be rejected merely on suspicion (particularly when not doubted by the lower authorities), holds true in the present case as well. Thus, we direct cost of acquisition shall include Stamp duty, Interior work, Improvement expenditure and investment eligible for exemption under section 54 shall include Stamp duty as evidenced in the sale deed of the new property. AO is directed to re-compute the long-term capital gain and eligible exemption under section 54 accordingly. The grounds of appeal are, therefore, allowed.

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• 2025 (5) TMI 610
  Validity of the reassessment - flagged information under Risk Management Strategy constitutes valid information for reopening under the amended law w.e.f. 01.04.2021 - bogus purchases from a supplier flagged as a high-risk entity by GST authorities - CIT(A) concluded that the possibility of inflation in the purchase price or the transaction being in the nature of accommodation entries could not be ruled out - Addition u/s 69C restricted by the CIT(A) to 10% of the transaction value on an estimated basis. HELD THAT:- AO issued notice u/s 148A(b), duly considered the assessee s response, and passed an order under section 148A(d), followed by issue of notice under section 148. CIT(A) has upheld the validity of such reopening by relying on Explanation 1(i) to Section 148 which was inserted by the Finance Act, 2021 and deems information flagged under the prescribed strategy as information suggesting escapement of income. We are in agreement with the view of the CIT(A) in this regard. The procedure followed by the AO complies with the amended framework of law and, therefore, the ground challenging the validity of the reassessment is liable to be rejected. Accordingly, Ground No. 1 of the appeal is dismissed. Estimation of income on bogus purchases - In line with the principle laid down in Jigisha Satishkumar Mehta [ 2022 (9) TMI 1324 - GUJARAT HIGH COURT] and the ultimate ratio of N.K. Industries Ltd.[ 2016 (6) TMI 1139 - GUJARAT HIGH COURT] we consider it just and reasonable to restrict the disallowance to 5% of the purchase value, i.e., 5% of Rs. 18,00,000/-, resulting in an addition of Rs. 90,000/-. This estimation safeguards the interest of revenue while preventing double taxation and undue hardship to the assessee. Appeal of the assessee is partly allowed.

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• 2025 (5) TMI 609
  Denial of exemption of dividend income u/s.10(35) and claim of set off of short term capital loss - assessee s case before us that he is a regular investor in shares and mutual funds and he has made investment in J.M. Financial Asset Management Ltd., and has earned dividend income and the said units were sold for consideration which had resulted into premium capital loss - as argued AO has not invoked the provision of Section 94(7) HELD THAT:- Loss incurred on account of issue of dividend has not been considered as non-genuine and the same shall be disallowed only when the record date falls within the period as stipulated u/s.94(7). This proposition has been upheld in the case of Walfort Share Stock Brokers (P) Ltd. [ 2010 (7) TMI 15 - SUPREME COURT ] Loss incurred cannot be held to be non-genuine merely because the dividend has been issued by J.M. Financial funds. It is not in dispute that the purchase / investment and sale had duly been recorded and reflected in the bank statement and as per the provision of Section 48, capital gain has to be computed by reducing the cost of acquisition and expenditure incurred on transfer from sale consideration. In absence of applicability of Section 94(7), such short term capital loss is otherwise allowable under the Act. CIT(A) that assessee has also invested in many other mutual funds during the year under consideration for instance, assessee has incurred losses in India Bulls Blue Mutual fund and in Franklin India Smaller Company Fund Growth. He has also received dividend from these funds. As a matter of fact, appellant has also invested in JM Arbitrage Advantage Fund floated by JM Financial and earned capital gain which has not been doubted by the AO. This shows that the investment in JM Financial Mutual Fund is not an isolated transaction. Nowhere the ld. AO has brought on record any SEBI enquiry in the case of J.M. Financial Asset Management Ltd., to support his finding given by him. His entire order is based on the premise of SEBI Circular which was general and not particularly applicable for J.M. Financial Asset Management Ltd., Nowhere, there is any material that assessee was involved in manipulation done by J.M. Financial Asset Management Ltd. CIT (A) has also considered various statements of employees of J.M. Financial Asset Management Ltd., which has been relied upon by the ld. AO, however, none of the employees were admitted that any manipulation has been done for the purpose of providing tax benefit to the asset in other investors. There is no whisper that J.M. Financial Management Ltd., have provided excess dividend to the assessee nor provided tax benefit. There is no live link nexus between the statement and the assessee. Thus, ld. CIT (A) has rightly held that there is no substance in relying upon such statement. There is no SEBI enquiry raised on J.M. Financial Management Ltd. It is a matter of fact that the said fund is still active in the market and has given early return of 11.51% against the benchmark return of 11.33% as reflected in the annual report of J.M. Financial Management Ltd., for A.Y.2014-15. Thus, when assessee has made investment in open-ended scheme floated by the Mutual Fund and assessee has made investment as per the price available in the open market and has exited at the time based on market price, then it cannot be said that assessee was involved in alleged pre-planned transaction. Thus, the finding of the CIT (A) in deleting the disallowance / addition made by the ld. AO is upheld. Otherwise also, on the facts as discussed in the impugned orders, we do not find that there any sham transaction involved between assessee and J.M. Financial Asset Management Ltd., to hold that dividend income is fictitious or the short term capital loss is also fictitious. Accordingly, the claim of the assessee is allowed and the appeal of the Revenue is dismissed.

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• 2025 (5) TMI 608
  Disallowance u/s 36(1)(iii) - interest paid on borrowed funds - HELD THAT:- As in the assessee s own cases in[ 2025 (4) TMI 643 - ITAT DELHI] as held no disallowance of interest could be made where non-interest bearing funds were more than the investments made in tax free securities. Thus, set aside the finding of the Ld. CIT(A) on this score and delete the disallowance made under section 36(1)(iii) of the Act and upheld by the Ld. CIT(A). Accordingly, this ground stands decided in favour of the assessee. Disallowance u/s 14A - assessee inadvertently made suo-moto disallowance - HELD THAT:- This issue is squarely covered by the decision of the coordinate bench of Tribunal in the assessee s own cases [ 2025 (4) TMI 643 - ITAT DELHI] Relief sought by the assessee on the reasoning that the assessee inadvertently made suo-moto disallowance u/s 14A - We decline to accept the argument of the Ld. AR in this regard on the simple reasoning that the assessee made suo-moto disallowance of Rs. 4,42,817/- under section 14A of the Act in its Income Tax Return on the basis of judicial pronouncements at that point of time. The relief sought with respect to the disallowance of Rs. 4,42,817/- under section 14A of the Act would result the returned income into loss; i.e. the income below than the income disclosed in the Income Tax Return, eligible to be carried forward. Hence, appreciating the facts in entirety and considering submissions/contentions/arguments of both parties, we are of the considered view that the claim of the assessee is not justified. Hence, this ground stands decided against the assessee. Disallowance of maintenance expenses - CIT(A) Allowed part relief - HELD THAT:- There is no infirmity in the finding of the Ld. CIT(A) as none of these parties brought any material contradictory to the finding of the Ld. CIT(A). We therefore, decline to interfere with the finding of the Ld. CIT(A). Accordingly, the respective ground of both parties stands decided against them.

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• 2025 (5) TMI 607
  Addition u/s 69A - deposits in current account during the demonetization period - as alleged by the AO that assessee has failed to explain the nature and source of the same - HELD THAT:- The contention of the assessee is that the account in which the cash deposits were made during demonetization period appears to be correct. Therefore, the addition made by the AO u/s 69A in the hands of the assessee cannot be sustained. For the limited purpose of the verification of the facts and contentions of the assessee the issue is restored to the file of the AO to verify the contentions of the assessee and if the contentions of the assessee are proved to be correct the addition u/s 69A of the Act in the hands of the assessee cannot be made. Appeal of the Assessee is partly allowed for statistical purpose.

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• 2025 (5) TMI 606
  Penalty u/s 271(1) - non specification of clear charge - as argued said notice does not specify the accurate limb in which the penalty is levied on the assessee - HELD THAT:- Through the penalty proceedings initiated against the assessee, he is put to pecuniary burden, therefore, it is essential from the aspect of natural justice that he should be made aware of the charges, for which, penalty is levied against him so that he can be ready with his defense. The bedrock of any judicial system is based on ultimate epitome of natural justice. This cannot be eroded by any process of law until and unless fraud is detected or malafide conduct is detected on the part of the assessee. In the present case before us, the ambiguity that is existing in the notice issued u/s.274 r.w.s. 271(1) (c) of the Act hampers the rights of the assessee from the perspective of natural justice. There has been no evidence placed on record by the revenue to suggest any malafide conduct on the part of the assessee. We do concur with the same findings arrived at that before issuance of penalty notice, the AO is required to apply his mind to the material on record and specify clearly to the assessee what is being put against him. In other words, which limb of Section 271(1)(c) of the Act is attracted in the given facts and circumstances of the case must be specified in the notice which is sent to the assessee. Since in the present case notice being ambiguous where both the limbs are clubbed together, we therefore hold that such notice itself is void ab initio, therefore, all the subsequent proceedings becomes a nullity in the eyes of law. Accordingly, the order of the Ld. CIT(Appeals)/NFAC itself becomes non-est. Appeal of the assessee is allowed.

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• 2025 (5) TMI 605
  Penalty u/s 271(1)(c) - quantum appeal related to the same income has been restored for de novo adjudication - HELD THAT:- As quantum appeal has been restored to the file of the Ld. CIT(Appeals)/NFAC for denovo adjudication, therefore, the present appeal on penalty should also meet the same fate for the sake of completeness regarding adjudication on issues. See Mohd. Mohatram Farooqui [ 2010 (2) TMI 1122 - SUPREME COURT] wherein it has been held that if addition is restored to the A.O, then penalty should also be restored. Also, in the case of Sanjay Gupta [ 2014 (5) TMI 860 - DELHI HIGH COURT] has also held that where the quantum has been remanded to the A.O, the question of penalty on account of the said amount being treated as undisclosed income, should also be remanded to the AO. In the present case the concerned authority shall be Ld. CIT(Appeals)/NFAC since the quantum has been remanded back to its file for denovo adjudication. Appeal raised by the assessee are allowed for statistical purposes.

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• 2025 (5) TMI 604
  Unexplained money u/s. 69A - cash deposit during demonetization period in SBN in denomination of Rs. 500/- and Rs. 1000/- - HELD THAT:- Revenue authorities have accepted the business of the assessee and there is no dispute with regard to the purchase/sales reported by the assessee. Department has not brought on record any evidence suggesting any alternative source of income of the assessee other than the disclosed sources of income. The only contention of the department regarding addition is that such cash deposits were made in SBNs currency during demonetization period. The department has failed to bring out that such cash deposits are unexplained since the fact remains that the department has not disputed the business source income of the assessee. Therefore, in effect addition cannot be made in this case u/s. 69A - Decided in favour of assessee.

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• 2025 (5) TMI 603
  Initiation of reassessment proceedings - reasons to believe - recording the reasons is based on some uploaded information that assessee has done some high volume / value transactions and fictitious profits in equity / derivative trading and bogus long term capital gain/ short term capital loss in the shares - HELD THAT:- Reasons recorded clearly shows that, firstly, ld. AO is not certain about what is the nature of escapement and whether gain is short term or long term dehors the facts of the assessee s case; and secondly, he states that assessee has been benefitted by inflation of share price through doctored transaction but yet he is not sure if there is a gain or loss shown by the assessee. In his reason to believe, he is not sure what is the nature of accommodation entry which assessee might have taken and what is the basis to entertain his belief that assessee has resorted to some suspicious mode of obtaining the gains and not offering the income to tax by not showing the details of income or claiming non allowable deduction. How he has arrived at conclusion that the income related to some kind of transactions remains undisclosed which is required to be considered in computing total income of the assessee. All this are his bald allegation and complete non-application of mind on the information coming on record and the facts and material of the assessee already on record. Since there was no co-relation between the reasons to believe as recorded by the ld. AO and the live link nexus with the facts of the assessee s case, therefore such reason to believe falls in the realm of conjectures and borrowed. It is a well settled law that reasons which has been recorded and duly approved by the higher authorities, ld. AO cannot change the reasons later on as it is on his reasons recorded approval has been granted to acquire jurisdiction to reopen the case and issue notice u/s 148. Thus, we do not find any infirmity either on facts or in law in the finding given by the ld. CIT (A). Accordingly, we uphold the order of the ld. CIT (A) holding that entire re-assessment order is bad in law as the reasons recorded do not clothe the AO with jurisdiction to reopen the case u/s.148. Accordingly, the grounds raised by the Revenue are dismissed.

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• 2025 (5) TMI 602
  Addition made by the CPC u/s 143(1) - ICDS (Income Computation and Disclosure Standards) adjustments and deviations in stock valuation - allegation of non considering the provisions of Section 40 and Section 43B of the Act through Notification No. 28/2021, dated 01.04.2021 - Whether assessee was entitled to file a revised tax audit report after the end of the relevant assessment year to rectify a typographical error in the original tax audit report, particularly in relation to the inclusion of GST in purchase figures under clause 14(b) of Form 3CD? AR argued that there was a gross violation of principles of natural justice, where the ld. CPC/AO cannot make adjustment/addition without duly giving notice to the assessee - AR contended that the assessee was brought to the notice of discrepancy in the tax audit report only during the Section 143(1) proceeding subsequent to which the assessee had filed its revised tax audit report and there is no express bar in the provision of law for filing the revised tax audit report in case of the other additions made when there has been a genuine error crept in in the tax audit report HELD THAT:- It is observed that the assessee has received intimation u/s. 143(1) pertaining to only the addition made u/s. 41 of the Act, where there was inconsistency in the amount of profit chargeable to tax u/s. 41 specified in the report and in the audit report. In the present case in hand, the CPC/ld. AO has failed to include the adjustment in the proposed adjustment u/s.143(1)(a) of the Act and has merely mentioned the adjustmen on account of inconsistency in the amount of profit chargeable to tax u/s. 41 of the Act as per the return of income and the audit report. There is no iota of doubt that the CPC/AO has not sought for the assessee s response either in writing or via mail pertaining to the said adjustment. It is also evident that the CPC/ld. AO has merely stated that the said adjustment is made due to non-compliance/no response from the assessee, which fact is not correct as per the records placed before us. Proviso to Section 143(1)(a) categorically specifies that before making an adjustment it is mandatory for the CPC/AO to provide an intimation to the assessee either in writing or in electronic mode pertaining to the proposed adjustment. In the present case in hand, this exercise has been carried out before processing the return u/s. 143(1) of the Act, thereby violating the principles of natural justice. On the above observation, we do not find any infirmity in the order of the ld. CIT(A) on this issue. Revision of the tax audit report in case of any arithmetical error or incorrect claim - The decisions relied upon by the ld. AR has dealt with identical issues, where the coordinate benches have decided the issue based on the revised tax audit report in case of inadvertent error and the same has not been restricted to the disallowance u/s 40 or Section 43B of the Act. We are conscious of the fact that a tax audit report could be amended strictly only as per the method recommended in Statement on Auditing Standards - SA-560 on Subsequent Events , there is no bar on the Tribunal to decide on an issue based on the revised tax audit report especially in cases where there has been inadvertent error crept in in the original tax audit report. Even otherwise, there has to be a recourse to the assessee in case of any inadvertent error which are not malafide, where the assessee should not be put to unnecessary hardships due to mere technicalities. We therefore deem it fit to uphold the order of ld. CIT(A) on this issue where it has been held that the same is a typographical error with no malafide intention, thereby directing the ld. AO to delete the impugned adjustment after duly verifying that the said adjustment is merely due to the typographical error in the figures in the original tax audit report. On the above observation, the grounds of appeal filed by the revenue holds no merit and is hereby dismissed. Appeal filed by the revenue is dismissed.

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• 2025 (5) TMI 601
  Reopening of assessment u/s 147 - Non issuance of notice to assessee/issued to a wrong address/Person - AO brought the assessee s case under the new reassessment regime - AO based on the details furnished by the assessee held that the control and management of the assessee are being carried out from India and accordingly held that the assessee has a fixed place PE in India HELD THAT:- AO in the repost has not mentioned anything as to why the notice is served on the Tax Consultant and whether the Tax Consultants are authorised representatives of the assessee. A mere fact that the notice is served on a Tax Consultant without mentioning how they are linked to the assessee and whether they are authorised to receive the notice on behalf of the assessee cannot absolve the revenue s duty to serve a valid notice on the assessee. It was argued by the ld AR that the survey was conducted in the premised of Aptivaa India which is the PE of the assessee and that the AO at the very least could have served the reassessment notice of the assessee on the PE i.e. Aptivaa India. As notice u/s 148 was served on the address which does not belong to the assessee and that the revenue could not bring any valid evidence that the address on which the notice is served indeed belongs to the assessee. Accordingly the contention of the assessee that valid notice under section 148 under the old regime which is the very basis for the entire reassessment proceedings was not served on the assessee has merits. Entire assessment based on the notice under section 148 which was not served on the assessee is liable to be quashed.

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• 2025 (5) TMI 600
  Addition u/s 69A - unexplained cash deposits in the regular bank account of the appellant during demonization period - HELD THAT:- The department had not disputed the nature of business of the assessee that the assessee is a wholesaler and selling goods to the retailers. The department had also not disputed that some of the retailers are also petty pan-walas/pan shop owners who do not have adequate documents either from the perspective of the income tax or from the perspective of the sales tax. Some of the petty pan-walas also conducts their business in some carts/trolley and they are not available every time at one single place. These realities have also not been disputed by the department. The Department has not questioned the turnover of the assessee and also has accepted the business module conducted by the assessee. Books of accounts of the assessee has also been accepted by the department. When all these parameters have been fulfilled by the assessee, there cannot be any addition u/s. 69A of the Act treating the cash deposits in the bank account as unexplained money of the assessee - Appeal of the assessee is allowed.

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• 2025 (5) TMI 599
  Estimation of income - bogus purchases - addition of profit element at 12.5% on the alleged bogus purchases was justified - HELD THAT:- Tribunal in the cases of Mr. Manish P. Lathia, HUF [ 2024 (12) TMI 1569 - ITAT MUMBAI] and Mr. Vinesh Arvindkumar Shah [ 2024 (12) TMI 1568 - ITAT MUMBAI] has also dealt with identical issue as involved in this case, wherein the Assessee was also involved in the identical business such as ferrous or non- ferrous metals. The Hon ble Coordinate Bench of the Tribunal restricted the addition from 12.5% to 5%. And therefore considering the peculiar fact and circumstances, for the just and proper decision of the case and substantial justice, this court deem it appropriate to restrict the addition @5% instead of 4% as restricted by the Ld. Commissioner. AO is directed to compute the profit element/margin/estimation 5% instead of 4%, as restricted by the Ld. Commissioner.

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• 2025 (5) TMI 598
  Reopening of assessment u/s 147 - notice issued after expiry of 4 years from the end of the relevant assessment year - tangible material to initiate reassessment proceeding or not? - HELD THAT:- AO had proceeded to initiate reassessment proceedings on the incorrect understanding of the fact that no assessment was framed upon the Assessee. We note that in the First Line of Paragraph 1 the Assessing Officer has categorically recorded that the original assessment was completed in the case of Assessee under Section 143(3) of the Act on 09/03/2001 determining total income of Assessee at INR.105,85,36,899/-. CIT(A) has recorded that subsequently, reassessment proceedings were initiated in the case of the Assessee on 25/03/2004 determining the total income at INR.107,74,26,414/-. Thus, from the aforesaid it is clear that the very basis of which the Assessing Officer formed the belief that the income liable to tax is escaped assessment was based upon incorrect understanding of the facts and is, therefore, not sustainable in the eyes of law. The reassessment proceedings initiated do not meet the requirements of Section 147 of the Act read with First Proviso thereto. In view of the above, the notice, dated 28/02/2005, issued under Section 148 of the Act, the reassessment proceedings and the Assessment Order, dated 30/03/2006, passed under Section 143(3) read with Section 147 of the Act are not sustainable in law and are, therefore, quashed. Accordingly, Ground raised by the Assessee is allowed.

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• 2025 (5) TMI 597
  Assumption of jurisdiction u/s 153C - invalid approval u/s 153D - approval sought by the AO u/s 153C whereas approval was granted u/s 153A HELD THAT:- As relying on SHIV KUMAR NAYYAR [ 2024 (6) TMI 29 - DELHI HIGH COURT ] we quash the entire proceedings initiated u/s 153C r.w.s. 153A of the Act in the absence of a valid approval granted by the Ld. Addl.CIT, Central Range, Meerut.

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• 2025 (5) TMI 596
  Validity of reassessment proceedings u/s 147/148 - Assessee failure to deduct tax at source (TDS) on labour payments - HELD THAT:- Assessee is said to have incurred expenditure by way of sub contract (labour charges) amounting to Rs. 61,32,354/- for which the assessee is alleged to have failed to deduct TDS on the same for around 18 parties. AR brought our attention to the details of the contractor s which are enclosed at paper book, page no. 9, in which he had stated that the details of party mentioned at serial no. 8 and 10 were not furnished before the ld. AO but was provided before the ld. CIT(A) and that the details pertaining to the other contractors were provided to the ld. AO. On perusal of the assessment order and CIT(A) s order, it is observed that the assessee has not furnished complete details along with form no. 16A of all these parties neither before the ld. AO nor before the ld. CIT(A). At the request of the ld. AR, we deem it fit to remand this issue back to the file of ld. AO to extend the assessee one more opportunity to furnish the complete details of the transactions along with form no. 16A to substantiate its claim, in the interest of justice dispensation. AO is directed to verify the same and to decide on the merits and in accordance with law. Appeal filed by the assessee is allowed for statistical purpose.

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• 2025 (5) TMI 595
  Ex-parte order passed by CIT(A) - Addition as unexplained money u/s 69A and Disallowance of deduction claimed u/s 80C - as alleged nature and source of cash deposit unexplained - HELD THAT:- We find that the CIT(A) has not passed an order as per the mandate of section 250(6) of the Act and dismissed the appeal of assessee only on the ground of non-compliance. The order passed by the CIT(A) is clearly violative of the express provisions of section 250(6) of the Act, which provides that the appellate orders of the CIT(A) are to state the points arising in the appeal, the decision of the authority thereon and the reasons for such decisions. Appeal of the assessee is allowed for statistical purposes. The underlying rationale of the provision is that such orders are subject to further appeal to the appellate Tribunal. Speaking order would obviously enable a party to know precise points decided in his favour or against him. Assessment order was confirmed by CIT(A) in ex parte order, we are of the considered view that the assessee deserves one more opportunity to contest his case on merit.

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• 2025 (5) TMI 594
  Addition business promotion expenses - as assessee had not furnished all the bills to verify the expenses and the assessee also failed to justify incurring of such huge expenses, the A.O. disallowed 30% of the expenses claimed - HELD THAT:- Facts on record reveal that in course of assessment proceeding, in response to specific query raised by the A.O., the assessee furnished bills/vouchers for transactions exceeding Rs. 10,000/-. Without pointing out any specific defect or deficiency in the supporting evidences, the A.O. disallowed 30% of the expenses claimed purely on adhoc basis. In course of proceedings before the first appellate authority, the assessee furnished complete set of bills and vouchers, representing business promotion expenses. Notably, after verifying the bills and vouchers, the A.O., in the remand report, has very categorically observed that the transaction entered into by the assessee company with the parties were found to be verifiable. The aforesaid observations of the A.O. leaves no room for doubt that there is no dispute about the genuineness of the expenses claimed by the assessee. Merely because complete set of bills and vouchers were not produced before the A.O, in course of the assessment proceeding, an amount of Rs. 1,25,852/- should not have been disallowed. More so, keeping in view the fact that the business promotion expenses incurred by the assessee is very much reasonable, keeping in view the total sales turnover during the year and also the fact that this is the first year of business of the assessee. Therefore, we direct the A.O. to delete the disallowance. Addition of cash discount given to dealers and distributors - HELD THAT:- Observations of the A.O. in the remand report clearly establish that the assessee has furnished full supporting evidence to justify the expenditure claimed on account of discount. In fact, the A.O., after verifying the evidences has commented that on examination, the discount given to the parties were found to be verifiable. No disallowance, much less, disallowance on purely adhoc basis could have been made out of the expenses claimed. In our view, 20% disallowance made out of the expenditure claimed has no rational or sound basis, as it is not backed by any evidence. We direct the assessee to delete the disallowance. Ground is allowed.

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• 2025 (5) TMI 593
  Additions towards sale consideration u/s 68 - unexplained cash credit - investigation report of Income Tax Department, Kolkata, which refers to certain companies and individuals, who were involved in providing entries of bogus long-term capital gains to various persons and in the said report, the name of the scrip, Turbotech Engineering Ltd. was also referred. HELD THAT:- Long-term capital gains declared by the assessee from sale of shares of Turbotech Engineering Ltd is genuine, which is supported by necessary evidences. AO and CIT(A), without appreciating relevant facts, simply made additions towards consideration received towards sale of shares as unexplained cash credit u/s 68 of the Act. Thus, we set aside the order of the Ld.CIT(A) and direct the Assessing Officer to delete the additions made towards long-term capital gains derived from sale of shares u/s 68. Addition u/s 69C - Also to delete the additions made towards alleged commission expenditure because, the said addition is in consequence to addition made by the AO towards unexplained cash credit u/s 68 of the Act. Appeal filed by the assessee is allowed.

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• 2025 (5) TMI 592
  Validity of the assessment done u/s 143(3) - assessment based on revised return - additional receipts shown in the revised return as income from other sources due to lack of verifiable documentary evidence and non-reflection in Form 26AS and bank accounts - HELD THAT:- The order u/s 143(1) is not considered to be an assessment, within the meaning of section 139(5), that would prevent an assessee from filing a revised return, after the return of income originally filed, being processed u/s 143(1). It may not be out of place to mention that the provisions of section 143(1) had been revised w.e.f. 1.04.2008 and now the revised section 143(1) refers to the, processing of the return and does not use the word assessment at all. Thus, it is quite clear that the processing of the return u/s 143(1) is not the assessment as envisaged in section 139(5) and therefore, the plea of the assessee that its return is invalid and non-est and could not be the subject of a valid assessment order, much less a valid appeal order, is found to be without any basis and is accordingly rejected. The additional ground i.e. ground no. 5 is accordingly dismissed. Undisclosed receipts - AO was not able to find out any evidence whatsoever of the assessee indulging in any transactions over and above the transactions that had been declared by it in its return of income. AO has recorded that the assessee has neither shown these so called, receipts in any of its bank accounts, nor has it described the mode of receipts. The assessee has also not submitted any details, that would enable the ld. AO to verify that it had actually indulged in construction of residential houses and supply of materials, that resulted an excess turnover without any corresponding change in its return of income. It is true in the first instance, the assessee did not point out the issue of its filing of a false return before the ld. AO, but subsequently during remand proceedings, it has furnished the details of the proceedings before the Vigilance authorities of NTPC, Vindhyachal and Rihandnagar that prompted it to file its return in the manner that it has. Thus, the assessee has effectively retracted upon the return that it has filed, and in such circumstances, it is for the ld. AO to prove that the retraction was unwarranted. This, the ld. AO has not been able to prove. On the contrary, the assessee has brought sufficient material on record in the form of inquiry letters and reports of the NTPC, to demonstrate that the return that was filed by it may not represent its true state of affairs, but was a return filed to meet certain qualification criteria in the NTPC tender. Now that the assessee has confessed before the ld. CIT(A)and before us that it had, in fact, filed a false return for this specific purpose, it is our view that the ld. AO should consider the said report of the NTPC, Vigilance authorities and the findings of the tender committee of the NTPC, before proceeding to hold that the turnover reflected in the second balance-sheet that was filed before the income tax authorities along with the return dated 1.08.2015, represented the true receipts of the assessee or that the balance figure of Rs. 7,08,32,552/- represented undisclosed income of the assessee. The ld. AO should also consider whether this enhanced turnover is in any way reflected in the hands of the assessee which would justify it being treated as the assessee s undisclosed income. Thus, matter be restored to the file of the ld. AO for a fresh assessment, after considering these aspects, so that the true income of the assessee may be determined and the Department may take appropriate action for the determination of the true income of the assessee and consequent action if it finds that the assessee has acted in violation of section 277 of the Act. Appeal of the assessee is partly allowed the appeal of the Department is held to be allowed for statistical purposes.

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• Customs

• 2025 (5) TMI 591
  Pinciple of Constructive Res Judicata - Determination of rewards for informers - Constitutional validity of Clause 3.3 of the Guidelines for Grant of Reward to Informers and Government Servants, 2015 - HELD THAT:- The principle of Constructive Res Judicata is an extension of the principle of Res Judicata. The origin of this principle in law can be found in the provisions contained in Order II Rule 2 read with Section 11 of the CPC - Order II Rule 2 pertains to relinquishment of part of claim, according to which, in a situation where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim, he cannot afterwards sue in respect of the omitted portion of his claim or the claim which has been relinquished. The principle of res judicata though appears to be technical or artificial prescribed by the Code of Civil Procedure, however, the said principle is founded on considerations of public policy as well, because in case the doctrine of Constructive Res Judicata is not applied to writ proceedings, it may lead to a situation where a party will be entitled to take one proceeding after another and urge new grounds every time which will be inconsistent with the consideration of public policy. The Hon ble Supreme Court in the judgment rendered in the case of Devilal Modi v. Sales Tax Officer, Ratlam and Others, [ 1964 (10) TMI 43 - SUPREME COURT ] has clearly held that principle of Res Judicata would be applicable to the writ proceedings as well, though fundamental rights guaranteed in Part III of the Constitution of India are a significant feature of our Constitution and the High Courts under Article 226 are bound to protect these Fundamental Rights. Constructive Res Judicata is based on the principle inter-alia that the parties to a proceeding should present their entire case in one go to avoid multiplicity of litigations over the same issue, and that if a party could have raised a particular issue in a prior proceeding but failed to do so, even due to negligence or oversight, in our opinion, such a party will be deemed to have lost the right to raise it in a later proceeding. Such a doctrine has been developed to permit finality in legal proceedings and prevent parties from repeatedly litigating. The principle of Constructive Res Judicata does not require a final judgment on the issue which was not raised earlier. It operates on the premise that, the issue should have been included in the earlier proceedings. Challenge to Clause 3.3 of the Guidelines, having been omitted by the petitioner in earlier round of litigation, in our opinion, by applying the principle of Constructive Res Judicata, the instant writ petition, where a prayer to strike down Clause 3.3 of the Guidelines as being unconstitutional has been made, will not be maintainable. If such a challenge is permitted, there will be no end to the litigation between the petitioner and the respondents. The principle of Constructive Res Judicata has evolved as a matter of public policy to prevent multiplicity of litigations on an issue. Conclusion - The writ petition challenging Clause 3.3 of the Guidelines for Grant of Reward to Informers and Government Servants, 2015, is barred by the principle of Constructive Res Judicata and is dismissed as not maintainable. The prayer made in the present writ petition is barred by the principle of Constructive Res Judicata and, therefore, the writ petition is not maintainable - Petition dismissed.

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• 2025 (5) TMI 590
  Penalty imposed on a deceased assessee survives after his death - fiscal enactment where the Statute must contain a specific and enabling provision to assess and recover tax/duty - recovery of penalty from the legal representatives of the deceased assessee - HELD THAT:- Section 142 provides for the recovery of sums due to the Government by a person. The term person is not defined under the Act. However, and on an application of first principles, since an assessment of duty and levy of penalty can be with respect to a person alone, the recovery contemplated under Section 142 is also expected to be from the same person and no other unless the concerned enactment provides for the continuance of the proceedings for assessment/recovery in the hands of any other person. Even for recovery to be continued/taken, the concerned Department must specifically be enabled by way of a mechanism. The Supreme Court in the Judgement in Shabina Abraham and others V Collector and Central Excise and Others [ 2015 (7) TMI 1036 - SUPREME COURT ] was concerned with the recovery of arrears of Central Excise in the hands of the appellant, who was the legal representative of an assessee who had died - The argument of the revenue in that case, similar to that advanced before us, was that the Central Excise and Salt Act provided for recovery of amounts due to the Department from an assessee by various methods including attachment and sale of excisable goods belonging to the assessee. The Department relied on the provisions of Section 11 contending that that provision would enable the revenue to continue with assessment proceedings and, should such proceedings be concluded adverse to the assessee represented by the legal representative, then the demand as raised, could be recovered from the legal representatives of the deceased assessee. In the present case, the proceedings have been concluded in the hands of the assessee. To that extent the facts are a little different. However, the difference is no so much, so as to make a difference to the legal position as there is no provision in the Customs Act for continuing proceedings even for recovery, in the hands of the legal heirs. To that extent, the ratio of the judgment supra, that the concerned enactment must contain suitable machinery to enable certain actions to be taken, would be equally applicable in this case as well. The scheme of the Act thus contemplates recovery only as set out under Section 142 or Section 142A, read with the Rules. Pre-2011, the Department could embark on recovery in the manner as set out under the Rules, in the case of those Assessee s where Certificates had been drawn up and the procedure as contemplated under the Rules. Post 2011, the demands raised after the date of insertion of Section 142A will be a charge on the property of an assessee. However, Sections 142, 142A and the Rules are silent as to the impact of the recovery provisions in the case of demise of an assessee, and Legislature has consciously not provided for such a situation - The assessments in the present case have been framed as early as on 24.10.2002 when there was no enabling provision under the Customs Act stipulating that the demands under those orders could be enforced as a first charge. In such circumstances, and on the facts of the present case, Section 142A of the Act also cannot come to the aid of the Department. Conclusion - The appeals abate. In the absence of a mechanism under the Act prior to 2011 for enforcement of the demand of duty, penalty, interest or any other sum payable by an assessee or a person under Customs Act, 1962, the demands raised under orders dated 24.10.2002 lapse. The appeals abate.

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• 2025 (5) TMI 589
  Origin of imported goods - goods loaded in containers at China have come to India merely with change of Bills of Lading (BL) at Malaysia - honoring of COO certificate issued under Free Trade Agreement by another sovereign country - mis-declaration of transaction value along with mis-declaration of actual weight of the goods imported - actual importer of the goods - confiscation - extended period of limitation. Whether the impugned goods loaded in containers at China have come to India merely with change of BL at Malaysia and therefore, these goods are not of Malaysian Origin? - HELD THAT:- The appellants have stated that the statements do not show any concrete proof and are general in nature. They do not disclose any specific evidence correlating the documents to the goods imported by them. They have been taken from different people with different education qualifications all in English and by different officers, but the words and phrases used in the statements are identical including in the handwritten portion, hence they appear to be prepared to suit the departments needs and are hence not dependable - A statement cannot be taken as gospel truth without any factual corroboration. There is a difference between admissibility and acceptability of evidence. Admissibility refers to whether a piece of evidence can be legally introduced in a legal proceeding. Acceptability, on the other hand, pertains to whether the authority will consider the evidence credible and relevant in deciding the case. If the statement is properly corroborated and discussed in the OIO, then while the burden of proof would still be that of the department, the onus of proof to show otherwise or even to justify the retraction, would then shift to the appellant. The appellant has stated that as per the COO certificate the goods were consigned from M/s Topaz Plastic Industries and M/s Malaya Winds Plastics both of whom are manufacturers of PVC flex banners in Malayasia. Proof of the same was also submitted in the reply to SCN. Payments were also made through banking channels to the said Co s as evidenced from the bank statements and mentioned in their reply to SCN. It is found that the regarding the alleged payments for shipments, no verification of available bank statements have been discussed neither have records and details of direct payment to Chinese manufacturers been mentioned. The findings in the impugned order hence contains conclusions made without relevant factual evidence being discussed and hence do not succeed in establishing the Chinese origin of the goods. Whether the COO certificate issued under Free Trade Agreement by another sovereign country needs to be honored and if there are doubts, then, procedure set out in the relevant Rules need to be followed? - HELD THAT:- The judicial pronouncements and the irrefutable evidence brought out during the course of investigation, buttress the case of the department. What were this irrefutable evidence has not been discussed. There is nothing more by way of explanation and analysis regarding the COO certificate being improper other than a statement. If it is the alleged movement of goods from China to India that is being additionally referred to, then it should have been clearly stated. The appellant has stated that the COO certificate have not been verified by the department with Malayasia as per the procedure provided in the Rules of 2009, and none of the certificates were found to be false. Further the goods were cleared by Malaysian Customs after verifying all the documents. The Hon ble Supreme Court in Smt. J. Yashoda Vs. Smt. K. Shobha Rani [ 2007 (4) TMI 11 - SUPREME COURT] , stated the Rule of Best Evidence as the rule which is the most universal, namely that the best evidence, the nature of the case will admit shall be produced. So long as the higher or superior evidence is within your possession or may be reached by you, you shall give no inferior proof in relation to it. Although a strict compliance of the Evidence Act will not apply to a quasi-judicial proceedings, on the scale for evaluation of evidence, a certificate issued by an authorised entity carries more value than an allegation in a third-party statement or of documents that are not correlated to the BE s. Revenue has relied on the judgment of the Hon ble High Court of Gujrat in Trafigura India Private Ltd Vs UOI [ 2023 (12) TMI 196 - GUJARAT HIGH COURT] to support their stand. It has been stated that the substantive provisions of the Customs Act like Section 148 and Section 28 will have dominion over the procedural aspects of the Rules of Origin notified by Rules and Notifications - The Hon ble High Court held that misrepresentation became suppression which provided solid basis for the Customs authorities to proceed under section 28(4) of the Customs Act. However as discussed above in this case, there is no proof of any wrong doing or manipulation of data or any action by the Malaysians Authorities in issuing a fake certificate. Hence the judgment is distinguished. Thus, revenue has not proved that the impugned goods are not of Malaysian Origin or that the COO is false. Whether the transaction value has been mis-declared along with mis-declaration of actual weight of the goods imported? - HELD THAT:- The omission by the officers to find out the central core weight has resulted in the alleged variation in the net quantity of the materials imported. Apart from the above, the appellants have submitted information regarding the Malaysian Suppliers and the manufacturing facility, they have for manufacturing PVC Flex Banner Sheets. In the light of the above, there is no evidence, whatsoever, to establish that these goods are not of Malaysian Origin or the value and quantity were mis-declared and the impugned order is hence not sustainable - it is found that the weighment process does not inspire confidence in its accuracy and extrapolating it to a larger number of cleared containers is likely to magnify the error. Hence the benefit of doubt must be given to the appellant and the weighment results rejected. There was no detailed discussion in the impugned order showing the description, quantity and quality of the goods as imported by the Bhandari Brothers and those of the appellants. Bland statements and generalities alone would not provide the specific detail required to compare the goods. The statements are dependable when correlated with other evidence sufficient to discard the values declared. Neither was a comparison with contemporaneous import prices and current international prices done utilizing the NIDB data to form an opinion on the necessity for re-assessment. Thus, revenue has not succeeded in proving that the value of the imported goods needs to be re-assessed and that the re-assessment based on the seized documents was done correctly under Rule 5 of CVR 2007. Who is the actual importer of the goods and whether goods are liable to confiscation and the appellants are liable to penalty and whether the extended period is invokable? - HELD THAT:- The appellant Rajesh Surana of Tech Zone Global has averred that as per the documents on record, it is seen that the respective importers themselves have placed orders with the manufacturers and the BL, invoice and BE were in the importers name. They satisfy the definition of importer as per section 2(26) of the Customs Act, 1962. No documents were provided to the contrary. Liability to duty cannot be based on statements alone and that too which were not factually corroborated. Further the order itself demands duty from the said importers jointly and/ or severally and not from him alone - the said averments have not been discredited by any evidence other than the statements of those allegedly involved in letting out their IEC to Tech Zone, while the entire documentation was in the name of the IEC holders. Evidences, of ownership of the goods post-importation and its disposal have not been examined. The whole discussion hence suffers from the same weakness as discussed above. Hence the impugned goods were not liable to confiscation neither were the appellants liable to penalty. The question of invoking the extended period to demand duty hence does not survive. Conclusion - The impugned order has failed to cogently discuss the evidence and its relevance to the facts of the case relating to all the appellants. Duty cannot be collected on assumptions and presumptions or on the basis of statements that have not been properly linked to evidence to establish its veracity and accuracy. Hence the charge against all the appellants fails. No tax can be imposed by inference. Revenue has failed to prove that the impugned goods were imported from China to India and documents manipulated to show that they had been shipped from Malayasia; that the COO certificate was obtained fraudulently; that the good were mis-declared for weight or value. Hence no action survives against the appellants. The impugned order set aside - appeal allowed.

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• 2025 (5) TMI 588
  Time Limitation - adjudication order passed after an inordinate delay of nearly 13 years from the issuance of the show cause notice (SCN) - Classification of Loose Tube Optical Fibre Cables imported by the importer - to be classified under CTH 9001 or not - denial of benefit of Customs Notification No.24/2005 dated 01.03.2005 - HELD THAT:- The Hon ble Bombay High Court in Lanvin Synthetics Pvt. Ltd. [ 2015 (8) TMI 387 - BOMBAY HIGH COURT] held that In the present case the show cause notice was kept dormant and the notice for personal appearance was issued 18 years ago. The dicta as laid down is clearly applicable to the facts of the present case. There is no dispute and cannot be any dispute regarding the above position of law laid down in these decisions. The petition was admitted and Rule was issued, and thus, the position has continued for 25 years. The impugned order has not been passed in time, but with inordinate delay which is not at all explained by Revenue. Consequently, the demand therefore cannot sustain. The impugned order therefore, requires to be set aside - Appeal allowed.

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• 2025 (5) TMI 587
  Confiscation of gold - imposition of penalty - existence of reasonable belief or not - shifting of burden of proof - section 123 of the Customs Act 1962 - HELD THAT:- In cases not covered by section 123, the burden of proving that any goods are smuggled rests on the Revenue because it is Revenue that asserts that they are smuggled. In this case, it is found that the belief under which the officers have seized the gold is the information which they had received and the test report. There is nothing on record to show that there is anything else based on which they formed the opinion that the gold and other goods were of smuggled origin. The information which was received by the officers was confidential information and it is not part of the evidence. It helped the officers start the investigation and examine the goods. That, by itself, cannot give an officer reasonable belief that any goods were of smuggled origin. The second document which they had was the test report, which categorically states that it cannot be determined if the gold is of foreign origin or of Indian origin. Conclusion - The entire case was built on the basis of seizure without reasonable belief that the goods in question were smuggled goods. Once such belief does not exist, section 123 would not apply and it is for the department to establish that they were smuggled goods. There is no evidence, whatsoever, in the entire case that the seized goods were smuggled goods. The impugned order upholding the OIO, insofar as it pertains to the confiscation of the gold of the appellant and imposition of penalty on the appellant is set aside - Appeal allowed.

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• 2025 (5) TMI 586
  Valuation - Calculation of Customs duty - Inclusion of Design and Drawing charges / Royalty paid to the supplier are connected to the imported components in the transaction value of imports - Rule 10 [1] [b] [iv] of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - HELD THAT:- It would appear that the original authority has presumed that addition is mandated by Rule 10(1)(b)(iv) of CVR, 2007 while the lower authority felt that the charges are includible in assessable value of the imported goods in terms of Rule 10(1) (e) of CVR,2007. Neither in Section 14 of the said Act nor in the Valuation Rules is there any provision which provides that the cost of designs and drawings/Royalty required for procurement or manufacture of goods in India by the importer or which relates to post-importation activities for assembly, construction, erection, operation and maintenance of the plant are to be included in the price of equipments for determining their transaction value and consequently their assessable value for the purpose of levy of customs duty under the said Act. As per sub-rule (1), value of certain costs of goods and services are includible only if the same, as provided in the further sub-rule (b) when such goods and services are supplied by the buyer i.e., the importer, either free or at reduced costs and such goods and services are used for the production of import goods and in which case, as provided in clause (iv), if such goods and services are in the form of Designs and Development that are necessary for the production of imported goods. However, in the present case, no goods and services were supplied by the appellants that are used in the form of Design and Development in the production of import goods. On the other hand, the Design and Drawings supplied by the foreign supplier are meant for the production of customized wet processing textile machines and not related to imported goods. The condition of sale too is absent. As the design and Development charges were not paid for production of standardized products but rather for customer specific products it could not have been paid as a condition of sale in any manner. It is pertinent to note that in terms of the cited clauses 8 and 12 of the agreement, the Appellant has a discretion not to buy certain raw materials from their parent company and will have to pay royalty on manufactured goods whether or not there are imports from the overseas supplier in a given period. This shows that the royalty payment is not related to and is not the condition of sale for the imported goods and therefore, Rule 10(1)(c) conditions are not satisfied. Hence, royalty is not includible in the value of the imported goods. In the case of Brembo Brake India Pvt. Ltd. vs. CC, [ 2014 (11) TMI 22 - CESTAT MUMBAI ], it was held that royalty and other charges not includible in assessable value if Payment of royalty and other charges not for imported goods and not a condition of sale of goods. Conclusion - Design and Drawing Charges / Royalty, is not includible in the transaction values of imported goods in terms of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Appeal allowed.

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• 2025 (5) TMI 585
  Smuggling of R-22 gas - jurisdiction of Appellate Tribunal to issue a show cause notice - alleged offence was committed outside India, prior to the amendment of the Customs Act effective 29.03.2018 - penalty imposed on the basis of statements of co-noticees - appellant was not provided an opportunity of cross examination of the co-noticees - violation of principles of natural justice - HELD THAT:- The learned Commissioner has confirmed the role of the appellant in the impugned case of smuggling of R-22 gas and has imposed penalties on the grounds that the appellant along with Shri Bhavesh Thakkar was the mastermind and chief strategist; Shri Vipan Kumar Garg stated that the appellant came up with the offer of sale of R-22 gas during the meeting and that he was physically present when the impugned goods were loaded. The role of the appellant was confirmed on the basis of the allegations that he along with Shri Bhavesh Thakkar was the mastermind. However, we find that CESTAT vide Final Order No. 70593-70596/2024 has set aside the penalty on Shri Bhavesh Thakkar. If Shri Bhavesh Thakkar, who along with the appellant was alleged to be the mastermind of the illegally import of R-22 gas, was not held liable for penalty, it is difficult to believe that the appellant is liable for penalty. Conspiracy alleged to have been entered into two persons cannot be now restricted to one person. It is a matter of common sense that no conspiracy will be possible with one conspirator. Therefore, the moment penalty imposed on one of the two-conspirators has been set aside, it would not be possible to sustain the same on the other. The case against the appellant is based on the statements, of different persons involved in the case, including the above. Therefore, denying the cross examination violates principles of natural justice, more so looking into the fact that the adjudicating authority has also not examined the said persons under the provisions of Rule 9D of Central Excise Act. Conclusion - i) Revenue has not made out any case for imposition of penalty on the appellant under Section 112(a)(i) of CA, 1962. ii) The appellant having not filed any declaration/form under the provisions of Customs Act cannot be fastened with the penalty under Section 114AA. Appeal allowed.

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• 2025 (5) TMI 559
  Levy of penalty on Custom Broker - no proper allegations in the SCN as to which of the regulations has been violated - HELD THAT:- There is a requirement in terms of the judgment in Prabhat Zarda Factory Co. and Ors. v. Commissioner of Central Excise, [ 2018 (5) TMI 1670 - DELHI HIGH COURT ] which followed Kranti Associates P. Ltd. v. Masood Ahmed Khan [ 2010 (9) TMI 886 - SUPREME COURT ] that facts have to be dealt with by CESTAT. A perusal of the extraction from the impugned order would reveal that there is no discussion on facts in the therein. The Court would have been inclined to entertain this appeal only on the ground of the impugned order lacking any discussion on merits. However, considering the following i.e., - (i) the total amount alleged to have been wrongly availed by the Respondent by way of drawback is only Rs. 57,201/-; and (ii) the penalty is imposed in the Order-in-Original is Rs.50,000/-, while the Respondent may have committed violations in principle, having regard to the negligible quantum involved, the Court is not inclined to entertain the present appeal. Appeal disposed off.

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• Corporate Laws

• 2025 (5) TMI 584
  Transfer of winding up petition from the High Court to the National Company Law Tribunal (NCLT) under Section 434(1)(c) of the Companies Act - HELD THAT:- As would appear from the substituted sub section 434(1)(c), the original sub section has undergone several changes between 7th December, 2016 and 17th August, 2018. The first proviso to Section 434(1)(c) after the substitution in 2016 clarified transfer of pending proceedings by the phrase only such proceedings relating to winding up the companies as may be prescribed by the Central Government - The stage at which such pending proceeding relating to the winding up of companies needs to be transferred has been prescribed and laid down by the Companies (Transfer of Pending Proceedings) Rules, 2016. The facts in Action Ispat and Power Pvt. Ltd. [ 2020 (12) TMI 535 - SUPREME COURT ] were that winding up application was filed under Section 433(e) and (f), 434 and 439 of the Companies Act against the company seeking winding up and it was alleged that for the goods supply Action Ispat had failed to pay a sum of Rs. 4.55 crores. The Company Judge in Delhi High Court passed an order on 27th August, 2018 admitting the winding up petition and appointed the official liquidator attached to the Supreme Court as the liquidator of the Company with further direction to take over all the assets, books of accounts and records of the Company forthwith. An application was then filed before the Company Judge by SBI being the secured creditor of Action Ispat seeking transfer of the winding up petition to the NCLT in view of the fact that the SBI had filed an application under Section 7 of the IBC Code 2016 which was pending before NCLT. The issue before the Hon ble Supreme Court was whether the discretion exercised by the Company Court in transferring the winding up proceeding to NCLT was liable to be set aside - The Hon ble Supreme Court observed that prime focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting it from its own management and from a corporate death by liquidation. The IBC Code was held to be a beneficial piece of legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors. Adverting to the facts in the present case, there is nothing that can be said to have irretrievable in the instant case in the sense mentioned in para 25 of the Action Ispat Judgment, wherein it was clarified that So long as no actual sales of the immovable or movable properties had taken place, nothing irreversible is done which would warrant a Company Court staying its hands on a transfer application made to it by a creditor or any party to the proceedings - only where a company is winding up or near corporate death and no transfer or winding up proceedings would then take place to the NCLT to be tried as a proceedings under IBC. Short of an irresistible conclusion that corporate death is inevitable, every effort should be made to resuscitate the corporate debtor in the larger public interest, which includes not only the workmen of the corporate debtor, but also its creditors and the goods it produces in the larger interest of the economy of the country. Conclusion - The Court is convinced that the companies to suffer inevitable corporate death, the first choice would be to make an all out attempts to revive the company and this procedure has been elaborately laid in the IBC. The Companies Act, 2013 is clearly not suited for such situation and this is clearly reflected in amended and substituted Section 434 of the Act read with Sections 7 and 8 of the IBC and objects and reasons of both the statutes. Moreover there is no conflict between the two proceedings. Appeal dismissed.

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• Insolvency & Bankruptcy

• 2025 (5) TMI 583
  Entitlement to the emoluments and perks in capacity as a Director of the Respondent - relinquishment of the position of CFO - Contractual nature of dispute - Appellant contends that the documents of the Respondent, which were filed by the Respondent before various statutory authorities indicate that the Appellant was receiving the salary in dual capacity as the Whole-Time Director and Chief Financial Officer - HELD THAT:- The Appellant was appointed as Chief Financial Officer (CFO) w.e.f. 01.05.2014 by an employment contract dated 10.03.2014. Later on the Appellant was appointed as the Whole Time Director (WTD) of the Respondent by way of Board Resolution dated 28.09.2015 along with the Annual General Meeting (AGM) dated 29.09.2015. It is to be noted that the Appellant was appointed as WTD because he was working as the CFO. The employment of the Appellant was terminated as per Clause 8.1 of the employment contract between the two parties. All the dues, which included three months notice or salary in lieu of the notice were paid to the Appellant. Once he ceases to be CFO, it is inconceivable that he could have continued as a WTD. It is worth noticing that the Appellant was not appointed as a WTD and there is no material to show any separate remuneration was payable to the Appellant for the position as a WTD. Further, from the materials on records, it is noted that there are no documents which suggest that the Appellant was being paid in the exclusive capacity as a WTD - It is inclined to agree with the contention of the Respondent for the reasons that he was appointed as a CFO and designated as WTD for being along with CFO and we cannot rely on the declarations on MR-1 for payment of salary exclusively as a WTD. Furthermore, Article 48 of Articles of Association of the Company provides that if Appellant had to be paid as a WTD, it had to be approved by a resolution passed by the Board of Directors and there was no such resolution passed by the board. There is nothing on record to demonstrate that the board had approved payment of remuneration to the Appellant for his position as a director - it is required to agree with the contention of the Respondent that since Article 48 provides that the remuneration to a Director has to be approved by the board and no such board resolution was passed, the Respondent is not liable to pay any amount to the Appellant. The Respondent was not a WTD exclusively but was CFO-cum-WTD. There was no obligation on the Respondent to pay the same emoluments to him, which were admissible to him in his capacity as CFO. The Appellant has not been able to provide any additional documents for us to determine as to whether after relinquishment of the position of CFO, the Appellant was entitled to the same emoluments and perks in his capacity as a Director of the Company - Also there are no documents on record, which substantiate the claim of the Appellant that he was liable to be paid the same emoluments as a CFO for the short period, till his appointment as a WTD was formally revoked as per the Act. There is a pre-existing dispute between the parties and this could not have been resolved by the NCLT under the Code. The law is very clear that as per Section 9(5)(ii)(d) of the Code, on an existence of pre-existing dispute, the Application is not maintainable. Conclusion - The Appellant was initially appointed as a CFO. Later on, being a CFO he was designated as WTD. On his termination, all terminal benefits were paid to him. The required formalities to remove him as a Director of the Company needed some approvals of the board as well as AGM which took time. During this interim period from 01.03.2019 till 20.05.2019, he was not working as CFO and therefore Appellants claim that he was working as a WTD is not based any material on record. Therefore, his claim for same emoluments and perks in his capacity as a Director of the Company is devoid of any basis. The claim of the Respondent that he is liable to be paid as a Director of the Company, cannot be accepted. The present dispute arises out of the employment contract and is contractual in nature and cannot be raised under the Code. Accordingly, the Appeal is dismissed.

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• 2025 (5) TMI 582
  Approval of Resolution Plan - primary objection of the Appellant on the conduct of the RP was that the claims admitted in respect of the two Financial Creditors were not in conformity with their respective financial records and that the RP had manipulatively allowed them to artificially balloon their claims - HELD THAT:- It was only reasonable on the part of the Adjudicating Authority to infer that the apprehensions of the TDB in respect of the claim filed by ISARC stood allayed. We are also inclined to agree with the RP that when there were only two Financial Creditors in the CoC and they had settled their doubts and ambiguities about each other s claim and there was no inter se dispute between them on the quantum of claim, they had actually opted and chosen to put a quietus to the matter. That being the ground situation, the suspended management of the Corporate Debtor has no locus to raise unfounded allegations about the quantum of claims claimed by the Financial Creditors and admitted by the RP. When TDB was fully satisfied about the fairness and reasonableness of the claim filed by the other Financial Creditor, there are no reasons to disagree with the findings returned by the Adjudicating Authority that merely because the Appellant was the personal guarantor of the ex-management, they cannot be seen to unduly persist with their allegations that the claims of the Financial Creditor were inflated and exaggerated to the detriment of the Corporate Debtor. RP failed to effectively discharge his statutory responsibilities under the IBC in not having disclosed crucial material information in the RFRP document with regard to the land on which the hospital of the erstwhile Corporate Debtor was running, in that it was a leased property, the lease having been granted by the Government of Odisha on 02.11.2000 - HELD THAT:- Perusal of the contents of the communication does not in any manner manifest that the RP had committed any breach of the Lease Deed. All that the Government of Odisha had communicated in the said letter to the RP was to take adequate safeguards and precaution that the terms and conditions of Lease Deed were not deviated from or get overrun in any manner. Material placed on record also show that the RP had sent a reply on 29.08.2022 and 18.11.2022 to the Government of Odisha that all the points contained in their letter of 03.09.2022 had been taken cognisance of. There are no material on record which substantiates that the Lessor-Government of Odisha had raised any such objection that the land lease deed has been violated. No permission was either necessary from Government of Odisha since there was no change in the purpose of the use of the land. Neither was the land being put for sale. The business activity of the SRA pursuant to approval of resolution plan was for the same purpose for which Lease Deed had been granted to the suspended management. Furthermore, as to whether the terms of conditions of the Lease Deed had been breached or not is an issue to be examined and determined by the Government of Odisha, the latter being the Lessor - there are no infirmity in the finding returned by the Adjudicating Authority that no breach of the lease deed had been pointed out by the Government of Odisha and that the RP had scrupulously complied to the suggestions and directions of the Government of Odisha which was the Lessor. The approval of the valuation of Corporate Debtor is an exercise which falls under the purview of commercial wisdom undertaken by the CoC. The scope of interference by the Adjudicating Authority in the commercial wisdom exercised by the CoC is minimal. Since the Appellant had no right to vote in the meeting of the CoC, they cannot be said to have suffered from any prejudice for not being provided with the valuation report. Whether the detailed valuation report was placed before the Appellant or not is immaterial and irrelevant since it is only the members of the CoC who were required to exercise the commercial wisdom on the valuation reports placed before them and not the Appellant who did not have the right to exercise their vote. Non-sharing of the valuation reports, as per the CIRP regulations - HELD THAT:- The confidential nature of the fair value and liquidation value of the Corporate Debtor is highlighted in Regulation 35(2) of the CIRP Regulations and the RP is not obligated to share these reports with anyone but for the members of the CoC. The RP had not violated the statutory construct of the IBC in not acceding to the request of the Appellant to provide them with the valuation report. There are no merit in the contention of the Appellant that by not getting access to the valuation reports, they were denied their due - It is settled law that the collective business decision of the CoC cannot be interfered with either by the RP or the Adjudicating Authority. Hence the complaint of the Appellant that their settlement offer did not receive deserve due regard is misplaced and cannot be sustained. The resolution plan was approved with 100% vote share in the 9th CoC meeting on 06.06.2022. The plan having been approved by full majority, the Adjudicating Authority did not commit any error while approving the resolution plan after noting its satisfaction about the plan being compliant to the provisions of the IBC in terms of Section 30(2) of the IBC. Law is now well settled that the jurisdiction of the Adjudicating and Appellate Authorities to interfere with approval of the resolution plan is limited. The scope of judicial review is confined to the provisions contained in Section 30(2) of the IBC for the Adjudicating Authority and Section 61(3) for the Appellate Authority. There is only limited review which can be exercised by the Adjudicating Authority or the Appellate Authority. Conclusion - As long as the statutory provisions of the IBC and the CIRP Regulations framed thereunder are complied with, it is the commercial wisdom of the requisite majority of the CoC which is to negotiate and accept a resolution plan. Once all the mandatory requirements have been duly complied with and taken care of, the Adjudicating Authority cannot deal with the merits of Resolution Plan unless it is found it to be contrary to the express provisions of law and against the public interest. There is neither any material irregularity nor contravention of any provision of law by the CoC which has been justifiably substantiated by the Appellant. In the present case when no valid grounds have been made out to challenge the approval of the resolution plan, the legislative fiat of the IBC that the Adjudicating Authority cannot trespass upon the business decision of the CoC holds ground. The plan has been rightly approved by the Adjudicating Authority on having successfully passed the muster of commercial wisdom of CoC - Appeal dismissed.

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• 2025 (5) TMI 581
  Withdrawal of consent by Financial Creditor, to a resolution plan after its approval by the Committee of Creditors (CoC) but before the approval by the Adjudicating Authority under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - direction for liquidation of corporate debtor - HELD THAT:- Apparently, the decision of Respondent No. 2 defies commercial wisdom and probably for this reason no other financial creditor had supported its position qua the withdrawal of consent. Admittedly the resolution plan offered a resolution value of Rs. 77.98 Cr whereas the Liquidation Value of the Corporate Debtor was Rs. 23.45 Cr as per the valuation report. Further the subject Girgaon property is valued at only Rs. 90 lacs, which was only 1.5% of the resolution value and the appellants had already offered to replace the said property and to file a fixed deposit receipt of Rs. 1 crore to justify its capacity to honour the resolution value. Therefore, it makes commercial sense to proceed with the resolution plan, rather than to liquidate the Corporate Debtor. The facts, prima facie, does not suggest any intention to defraud the respondents as admittedly the Appellant had a registered sale deed to substantiate his title over the subject property. Can there be an allegation of malafide intent, especially when the subject property has been mortgaged with Respondent No. 2/SBI since 2014 itself and regular title search was taking place. Even the SBI was not aware of the alleged title dispute which has been fraudulently created by the erstwhile vendor(s) of the flat apparently purchased legally by Appellant No. 3. The impugned order shows the ld. NCLT did not adjudicate upon allegations of fraud made by the Respondent No. 2/SBI against the Appellants and gave no notice to the appellants and further no reasons are given by the ld. NCLT to send the Corporate Debtor to liquidation. Further certain issues viz. (a) Whether liquidation could have been ordered by Ld. Adjudicating Authority at the instance of Financial Creditor, without any formal application by the Resolution Professional and/or without an approval by the Committee of Creditors; and (b) Whether the Financial Creditor can withdraw its consent given to Resolution Plan, pending its approval by the Ld. Adjudicating Authority; The Law discussed in EBIX Singapore Pvt Ltd Vs. Committee of Creditors of Educomp Solutions and others 2022(2) SCC 401; Express Resorts and Hotels Ltd Vs Amit Jain and others [ 2021 (9) TMI 672 - SUPREME COURT] ; Deccan Value Investors LP and Another Vs Dinkar Venkatasubranian and Another [ 2024 (4) TMI 569 - SC ORDER] was never discussed or adjudicated upon by Ld. Adjudicating Authority. Matter remanded to the Ld. Adjudicating Authority to look into the issues above and to decide the matter afresh through a reasoned order - petition allowed by way of remand.

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• 2025 (5) TMI 580
  Admission of Section 7 application - no financial debt owed by the Corporate Debtor - HELD THAT:- For a transaction to be treated as financial debt within the meaning of Section 5 Sub-section (8) of I B Code, the law is well settled. The Hon ble Supreme Court in Anuj Jain IRP for Jaypee Infratech Ltd. vs. Axis Bank Limited, [ 2020 (2) TMI 1259 - SUPREME COURT ] while dealing with Section 5(8) of the I B Code has laid down that a debt to be financial debt needs to be disbursed for time value of money. The question to be answered in the present case is as to whether the transaction amount claimed in Section 7 application can be accepted as financial debt within the meaning of Section 5 (8). On looking into the real nature of transaction, it is amply clear that the transaction was for sale and purchase of assets of the Corporate Debtor; plot at Surajpur Industrial Area and amounts were paid by the Respondent only for purchase of assets. The present is thus transaction for sale and purchase of plot of Corporate Debtor and the amount transferred to the Corporate Debtor was towards part payment of consideration and the mere fact that agreement between the parties contain a stipulation for 2% p.m. interest cannot make the transaction to be a financial debt. The amount disbursed by the Respondent No.1 was towards part consideration of sale of asset. Amount admittedly was paid to the account of the Corporate Debtor - It is not necessary to answer the question as to whether the transaction was entered with the approval of the Corporate Debtor or not. Suffice it to say that amounts having transferred to the Corporate Debtor which amounts were basis for Section 7 application, the nature of transaction need to be looked into for ascertaining whether there was any financial debt or not. Conclusion - The amounts were transferred by the Respondent No.1 to the Corporate Debtor towards sale consideration, which was fixed in the agreement dated 08.02.2016, the amount cannot be held disbursement for time value of money. The amount transferred for purchase of assets cannot be treated to be a financial debt. Thus, the Adjudicating Authority committed error in admitting Section 7 application filed by Respondent No.1. The order of the Adjudicating Authority admitting Section 7 application dated 27.05.2022 is not upheld. The CIRP against the Corporate Debtor is stand closed - appeal disposed off.

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• 2025 (5) TMI 579
  Determination of the appropriate threshold limit for filing an application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 (IBC) by a Financial Creditor against a Personal Guarantor of a Corporate Debtor (CD) - threshold is Rs.1 crore as provided in Section 4 or it is Rs.1000/- as provided in Section 78 of the IBC - HELD THAT:- Sub-section (1) begun with the expression subject to the provision of Section 60, the Adjudicating Authority, in relation to insolvency matters of individuals and firms shall be the Debt Recovery Tribunal. The Notification dated 15.11.2019 came for consideration before the Hon ble Supreme Court in Lalit Kumar Jain vs. Union of India and Ors. [ 2021 (5) TMI 743 - SUPREME COURT ] where different aspects of insolvency resolution of Personal Guarantor have been examined and gone into. In Anita Goyal vs. Vistra ITCL (India) Ltd. Anr. [ 2025 (1) TMI 1452 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI ] one of the question raised by the Personal Guarantor was that with regard to insolvency resolution process of Personal Guarantor, the Adjudicating Authority is the Debt Recovery Tribunal and not the NCLT. This Tribunal in the said Appeal vide its judgment dated 23.02.2025 examined the aspect of the matter while relying on the judgment of the Hon ble Supreme Court in Lalit Kumar Jain has come to the conclusion that Adjudicating Authority for Personal Guarantors of the CD is the NCLT. There is one more aspect, which cannot be ignored. Initiation of insolvency resolution process against the Personal Guarantor has serious consequences. Accepting the submission that on default of a debt of Rs.1000/-, personal insolvency against the Personal Guarantor should be permitted to be initiated, shall lead to innumerable cases of insolvency against Personal Guarantors, which shall frustrate the purpose, for which exception was carved for Personal Guarantors of Corporate Debtors. Conclusion - The submission of the Appellant that for insolvency resolution against the Personal Guarantor, threshold of only Rs.1000/- needs to be fulfilled is rejected. Appeal dismissed.

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• 2025 (5) TMI 578
  Rejection of Section 9 application filed by the Appellants on the ground that Appellants do not fulfill the threshold for filing the application - HELD THAT:- Section 4 of the I B Code provides that matter relating to insolvency of corporate debtors where the minimum amount of the default is one lakh rupees which now has been specified as Rs. 1 Crore by Notification dated 24.03.2020 by the Central Government. The purpose of keeping a threshold of default for initiating Corporate Insolvency Resolution Process against a Corporate Debtor has its own statutory object. The debts of lesser amount cannot be basis for initiating any CIRP against the Corporate Debtor. Coming to the case of workmen/ employees as submitted by learned counsel for the Appellants which according to the Appellants has to be read as exception with regard to other Operational Creditors. Debt or default of each employee may arise at different period and may have different amount. Demand Notice as contemplated under Section 8 gives an opportunity to the Corporate Debtor to make the payment within 10 days. Thus, in event there are employees who have given notice under Section 8, the Corporate Debtor is entitled to avail the provision by making payment within 10 days. Each employee is a different Operational Creditor and are required to give separate notice under Section 8(1) and any clubbing of operational debts cannot be done to complete threshold for Corporate Debtor to make payment within 10 days. In the present case, copy of demand notice dated 11.03.2022 has been brought on record as Annexure-O to the appeal, which gives details of dues of all Appellants individually. Perusal of said details indicate that dues of Appellant No.1 Mr. Kavindra Kumar is Rs.35,26,000/- and similarly the dues of all other Appellants are less than amount of Rs.1 Crore individually. Thus, none of the Appellants fulfill the threshold of Rs.1 Crore for initiating CIRP. Judgment of Hon ble Supreme Court in JK Jute Mill Mazdoor Morcha Vs. Juggilal Kamlapat Jute Mills Company Ltd. through its Director Ors., [ 2019 (5) TMI 236 - SUPREME COURT ] has been noticed by this Tribunal in Sadashiv Nomaya Nayak s Case also, where it was held by the Hon ble Supreme Court that a Trade Union falls within the definition of person under Section 3(23) of the I B Code. Conclusion - i) The minimum threshold of default prescribed under Section 4 of the Code is mandatory and debts of lesser amount cannot be basis for initiating any CIRP against the Corporate Debtor. ii) The Adjudicating Authority did not commit any error in rejecting Section 9 application filed by the Appellants. The Adjudicating Authority did not commit any error in rejecting Section 9 application filed by the Appellants - Appeal dismissed.

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• Law of Competition

• 2025 (5) TMI 577
  Anti-competitive practices - abuse of dominant position - identification of relevant market by the CCI - legal standards for effect based analysis - Commission has conducted any effect analysis in its decision or not - Appellant by requiring app developers to mandatory use of Google Play (GPBS) have imposed a discriminatory condition in sale of goods and services and violation of Section 4(2)(a)(i) or not - requirement of payment of commission/fee by the app developers to the extent of 15-30%, which fee is not being paid by the YouTube for which payment processor is engaged by Google on payment of 2.3% is discriminatory and violates Section 4(2)(a)(ii) - Google restrictions for mandatorily using of GPBS - Google has abused its dominant position in the app store market and indulged in practices resulting in denial of market access - dominance in market for licensable mobile OS and app stores for Android OS - charging of commission/ service fee from 15% to 30% is discriminatory or not - ex ante regulation for undefined gatekeepers beyond the CCI power - mention of directions contained in paragraph 395 are ultra vires, overboard and disproportionate remedial directions or not - penalty imposed by CCI on entire turnover of the Google. Whether identification of relevant market by the CCI insofar as market for apps facilitating payment through UPI in India is wrong and whether all digital modes of payment, i.e. wallets, UPI net banking, credit and debit card are substitutable both from customer and market perspective? - HELD THAT:- The CCI while considering the question of substitutability between UPI, digital payments and other payments has also noticed the evidence, which were on the record, i.e. evidence of Amazon Pay Pvt. Ltd., Paytm, PhonePe, Xiaomi. The observations and findings of the CCI were recorded noting that there is no substitutability between UPI enabled payment system and other payment system, i.e. Wallets, credit and debit cards and net banking - the findings entered by the CCI while determining the relevant market and holding the relevant markets, i.e. market for Apps facilitating payment through UPI in India has been correctly determined. The said product market is not interchangeable or substitutable by the consumer by other payment system, i.e. payment by credit or debit cards, Wallet and net banking. Thus, there are no infirmity in such determination of product market by the CCI. What are the legal standards for effect based analysis. Whether effect based analysis means both proof of conduct leading to actual restriction as well as conduct which is capable of restricting competition? - HELD THAT:- It is clear that in effect analysis assessment , the conduct of dominant entity which has caused anti- competitive effect or it is likely to have an adverse effect on the competition, both need to be looked into. Effect analysis cannot only confine to conduct which has caused actual anti-competitive effect. If an effect is likely to have effect on the restricting competition by the dominant undertaking that can very well also be examined by Competition Authority to find out abuse by dominant entity - the submission made by the Commission that effect analysis need to include both conduct leading to actual harm and also conduct that was capable of causing such harm has to be accepted. Whether Commission has conducted any effect analysis in its decision or not? - HELD THAT:- The order of the Commission cannot be read to mean that the Commission has held that merely because Appellant is dominant any of its act shall lead to contravention - Both the conduct which has caused actual harm i.e. anti-competitive conduct which is capable of causing anti- competitive effect contravention can be proved. It is not persuaded to accept the submission of the Appellant that the Commission in its order has not conducted any effect analysis rather Commission in various paragraphs have noticed the Report of the DG, the response given by the Appellant and its conclusion and finding. Thus, there are substance in the submission of the Counsel for the Commission that effect analysis was conducted by the Commission. Whether the Appellant by requiring app developers to mandatory use of Google Play (GPBS) have imposed a discriminatory condition in sale of goods and services and violation of Section 4(2)(a)(i) was proved? - HELD THAT:- To take out a discriminatory condition out of the provision under Section 4(2)(a)(i), it has to be proved that the condition has been adopted to meet the competition. There is no material or pleadings on behalf of the Google to satisfy that condition of mandatory requirement of use of GPBS has been adopted to meet the competition. The Commission after noticing the report of DG and the plea taken by the Commission has already recorded its concurrence with finding and observations of the DG that Google has imposed unfair and discriminatory condition which finding of the Commission is contained in paragraph 312 which we have already extracted above. The conclusion drawn by the Commission that there is breach of Section 4(2)(a)(i) of the Act is based on materials on record. The decision of the Commission insofar as it held that Appellant has violated provision of Section 4(2)(a)(i) upheld. Whether requirement of payment of commission/fee by the app developers to the extent of 15-30% which fee is not being paid by the YouTube for which payment processor is engaged by Google on payment of 2.3% is discriminatory and violates Section 4(2)(a)(ii)? - HELD THAT:- The revenue generated by YouTube is a revenue of the Google and no elements of sale on goods or services with regard to revenue of YouTube is involved nor Google is fixing a price for sale of goods or service with respect to YouTube. Thus, alleged discrimination with regard to not claiming 15-30% fee from YouTube is wholly unfounded and without any basis. It is satisfying that no allegation of discrimination with regard to condition by which Google claims fee of 15-30% from its app developers who host their paid app and that of engaging a payment processor on lesser payment for its payment in YouTube can be held. The Commission has not adverted to this important aspect of the matter and has erroneously came to the conclusion that there is violation of Section 4(2)(a)(ii) i.e. by imposing discriminatory as Google s own app i.e. YouTube in not paying service fee as being imposed on the other app. The above conclusion is wholly incorrect and cannot be sustained. Thus, no violation of Section 4(2)(a)(ii) has been established and the finding and decision of the Commission to that extent deserves to be set aside. Whether Google restrictions for mandatorily using of GPBS have significant negative effect on the improvements and innovative solutions that third party payment processors/ aggregators would be able to bring to the market and is in violation of Section 4(2)(b)(ii) of the Act? - HELD THAT:- It is relevant to notice that Google is not a payment processor or payment aggregator. Google s GPay is an UPI app for making payment with regard to paid app and in-app payments and with regard to different apps hosted by developers in Google Play. Payments through the UPI market has been growing upwardly, which is reflected from pleas made and materials provided by the Appellant before the DG. Growth in the sector having increased upwardly, the observation and finding of the Commission that Google s requirement for mandatorily using of GPBS have limited or restricted technical or scientific development relating to goods or services to the prejudice of consumers, are unsustainable. The payments under Google Play under GPBS being less than 1%, the finding of the Commission that Google has restricted or limited technical or scientific development relating to market of payment processors/ aggregators, cannot be sustained. When more than 99% market of payment through UPI is open and available, it does not appeal to reason that Google has limited or restricted technical or scientific development. It is further relevant to notice that three markets, which were determined, on which entire investigation was conducted by the DG and findings have been returned by the DG, the market of payment processors/ aggregators, was not determined as relevant market. The market of payment processors/ aggregators, having not been established as relevant market, nor relevant facts have been evidenced regarding payment processors/ aggregators, the findings of violation of Section 4(2)(b)(ii), cannot be sustained - there are no violation of Section 4(2)(b)(ii) of the Act proved before the Commission. Whether Google has abused its dominant position in the app store market and indulged in practices resulting in denial of market access, which is violative of Section 4(2)(c) of the Act? - HELD THAT:- Google is a buyer of payment processing service and is actually facilitating market access for payment processors. Google s choice of payment processors reflects Google s right to choose its service, to service provider. The CCI has failed to identify the market, where the alleged denial of access has taken place and further failed to establish anti-competitive effect in that market. Reduction of market share by less than 1%, cannot be read to mean denial of market access. Payment under Google Play constitute only miniscule, which is less than 1% of the wider digital payment ecosystem in India, which continues to flourish. The Appellant has also pleaded that in the year 2021-22, share of transactions through GPay on Play has decreased. The market definition as determined by the Commission has been noted. The market of payment processors/ aggregators is not being determined as relevant market. In paragraph 234 of the Commission s order only three markets have been referred, i.e., market for licensable OS for smart mobile devises in India; market for app store for Android smart mobile OS in India; and market for Apps facilitating payment through UPI in India. Google share payment in Google s Play account is less than 1% of the payments made through UPI. Hence, it cannot be said that Google has abused its dominant position in the app store market to cause denial of payment processing. Thus, no violation of Section 4(2)(c) was proved and the Commission s finding that Appellant being dominant in app store market has caused denial of market access to the payment processors and aggregators is unsustainable. Whether practices followed by Google making developers dependent on Google to access the users on its platform, result in leveraging its dominance in market for licensable mobile OS and app stores for Android OS, to protect its position in the downstream markets, is in violation of the provisions of Section 4(2)(e) of the Act? - HELD THAT:- The dominance in first two markets has been used to leverage to promote and protect its position in the market for UPI enabled digital payment apps. Thus, violation of Section 4(2)(e) stands proved. Whether the CCI found charging of commission/ service fee from 15% to 30% discriminatory? - HELD THAT:- The DG has returned its observation in paragraph 319.9 that charging of 15% to 30% fee is excessive and therefore, unfair in terms of Section 4(2)(a)(ii) of the Act. The above question need no elaboration, since the Commission itself has returned its finding in paragraph 327 that information available on record is not sufficient to give a finding on the monetization model, as followed by Google. Thus, the Commission did not give any finding on violation of Section 4(2)(a)(ii), with regard to charging of 15% to 30% fees - no violation on the basis of charging fee of 15% to 30% of Section 4(2)(a)(ii) has been proved. Whether directions in paragraphs 395.2 to 395.8 of the impugned order amounts to form of ex ante regulation for undefined gatekeepers beyond the CCI power under Section 4 and 27 of the Act? - HELD THAT:- The Commission observation are that as gatekeeper, the Appellant has special responsibility. As per the statutory regime existing on the date, violation of Section 4 has to be proved for issuing any directions and penalty under Section 27(b). By terming the Appellant as gatekeeper, the observation that certain special responsibilities are on there on the Appellant, cannot be the basis for reaching to any conclusion for violation of Section 4. Violation of Section 4 has to be specifically pleaded and proved for imposing any penalty under Section 27. We, thus, are of the view that the Commission could not have issued any ex-ante directions. The correctness of directions 395.2 to 395.8 shall be considered hereinafter. Whether directions contained in paragraph 395 are ultra vires, overboard and disproportionate remedial directions? - HELD THAT:- Directions under paragraph 395.4 and 395.5 related to the finding of violation of Section 4(2)(e), which directions are sustained. Directions under paragraph 395.6 and 395.7 are general and insofar as price related condition, the commission itself found no discrimination with regard to fee and commission. Hence, direction under paragraph 395.6 and 395.7 are not sustained. Directions under paragraph 395.8 are sustained. Whether penalty imposed by CCI on entire turnover of the Google is unsustainable and the CCI could have imposed penalty only on the relevant turnover, i.e., turnover of Play Store and the penalty imposed is unsustainable? - HELD THAT:- Appellant has abused its dominant position and has violated Section 4(2)(a)(i) and 4(2)(e), the Commission could have very well imposed the penalty. Although, it is held that violations under Section 4(2)(a)(ii), 4(2)(b), and 4(2)(c) not proved, but penalty was still leviable on proof of violation under Section 4(2)(a)(i) and 4(2)(e). The penalty imposed by the Commission is modified and is substituted by the relevant turnover as reflected in Table-1, 2, 3 and 4, as submitted by the Appellant vide its letter dated 06.10.2022 - penalty @ 7% of the relevant turnover, as per the turnover of last three preceding Financial Year i.e. 2018-19, 2019-20 and 2020-21 imposed - Penalty @ 7% of the average turnover comes in INR 2,16,69,12,773 (USD: 2,98,89,312.39). The order passed by the Commission imposing penalty under paragraph 460-470 is modified and substituted accordingly. Conclusion - i) The decision of the Commission holding contravention of provision of Section 4(2)(a)(i) and 4(2)(e) are upheld. ii) The finding and decision of the Commission of contravention of Section 4(2)(a)(ii), 4(2)(b(ii) and 4(2)(c) are not upheld. iii) The directions issued in paragraphs 395.1, 395.2, 395.3 and 395.8 are upheld. Directions issued in paragraphs 395.4, 395.5, 395.6 and 395.7 are set aside. iv) The penalty imposed on the Google is modified as per computation contained in paragraph 105 of this order. Thus, the penalty imposed on the Google for relevant turnover of last three preceding year of Rs.936.44 crores, is modified to the amount of INR 2,16,69,12,773 (USD : 2,98,89,312.39). The Appellant having deposited 10% of the penalty in the present Appeal, rest of the amount of penalty shall be deposited by the Appellant within 30 days from today. Appeal allowed in part.

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• PMLA

• 2025 (5) TMI 576
  Money Laundering - Right to Copies of Documents Relied Upon in Complaint under Section 44(1)(b) PMLA and Sections 207/208 CrPC - Right to Documents Not Relied Upon by the Prosecution-Stage of Entitlement - Right to seek copies of documents not relied upon by prosecution-framing of charge - Right to seek documents not relied upon by prosecution at the stage of entering upon defence - Right to Seek Documents During Bail Proceedings under Section 45(1)(ii) PMLA. Right of an accused to get copies of the documents relied upon in the complaint u/s 44(1)(b) of PMLA and the documents produced along with the complaint - HELD THAT:- Both Sections 207 and 208, on the face of it, do not specifically apply to a complaint under Section 44(1)(b) of the PMLA. But, there is no reason why the principles laid down under Sections 207 and 208 should not be applied to a complaint under Section 44(1)(b) of the PMLA. The provisions are consistent with the principles of fair play. The object of the provisions is to protect the rights of accused persons. An accused is entitled to a fair trial as he has the right to defend himself. That is the essence of Article 21 of the Constitution. Therefore, once cognizance is taken on the basis of a complaint under Section 44(1)(b) of the PMLA, the learned Special Judge must direct that along with the process, a copy of the complaint and the following documents must be provided to the accused - After cognizance is taken on the basis of the complaint, the ED cannot be heard to say that a document has been produced with the complaint or in the proceedings of the complaint, but it is not a relied upon document. The copies of documents must be supplied along with a copy of the complaint as required by sub- section (3) of Section 204 of the CrPC (sub-section (3) of Section 227 of the BNSS). Right to Documents Not Relied Upon by the Prosecution-Stage of Entitlement - HELD THAT:- The accused has the right to ask for the supply of documents not relied upon by the prosecution by making an application to the Court. The question is at what stage the accused can demand copies of the documents. Right to seek copies of documents not relied upon by prosecution-framing of charge - HELD THAT:- The entitlement of the accused to seek an order under Section 91 of the CrPC for the production of the documents that are not relied upon would ordinarily not come till the stage of defence. These observations are in the context of what constitutes the record of the case for the purposes of Section 227 of the CrPC. Even this judgment recognizes the right of the accused to seek documents at the time of leading defence evidence by invoking Section 91 of the CrPC. We may note here that what is observed by this Court is that there is no absolute prohibition on an accused making an application under Section 91 of CrPC, before the stage of entering upon defence. It is held that ordinarily, the entitlement of the accused to apply under Section 91 will not arise till the stage of defence. At the time of hearing for framing of charge, reliance can be placed only on the documents forming part of the chargesheet. In case of the PMLA, at the time of framing charge, reliance can be placed only on those documents which are produced along with the complaint or supplementary complaint. Though the accused will be entitled to the list of documents, objects, exhibits etc. that are not relied upon by the ED at the stage of framing of charge, in ordinary course, the accused is not entitled to seek copies of the said documents at the stage of framing of charge. Right to seek documents not relied upon by prosecution at the stage of entering upon defence - HELD THAT:- At the stage of entering upon defence, an accused can apply for the issue of process for the production of any document or thing. At this stage, he can also apply for the production of a document or a thing that is in the custody of the prosecution but has not been produced. A fair trial is a part of the right guaranteed to an accused under Article 21 of the Constitution. The right to a fair trial of the accused includes the right to defend. The right to defend consists of the right to lead the defence evidence by examining the witnesses and producing the documents. Therefore, the accused is entitled to exercise his right at the stage of entering upon defence by compelling the prosecution or a third party to produce a document or a thing in their possession or custody. The Court can decline the request of the accused for issuing process for the production of documents only on the limited grounds set out in sub-section (3) of section 233 of the CrPC. The power under sub-section (1) of Section 91 can be exercised by a Court when the production of any document or any other thing is necessary or desirable for the purposes of any investigation, inquiry, trial or other proceedings under the CrPC. The consistent line of judgments of this Court hold that at the stage of framing of charge, the accused is ordinarily not entitled to apply under Section 91 of the CrPC for producing the documents which are not relied upon by the complainant. For the purposes of his defence, the accused has a right to seek production of a document or a thing at the stage of leading defence evidence as Section 233 of CrPC will apply to the trial of an offence under the PMLA, due to the fact that Chapter XVIII of the CrPC is made applicable to such trial in view of clause (d) of Section 44(1) of the PMLA. As compared to traditional penal statutes, at the time of trial of the offence under the PMLA, there is a huge negative burden put on the accused. Therefore, it is all the more necessary that sub-section (3) of Section 233 of CrPC (Sub-section (3) of Section 256 of the BNSS) should be liberally construed in favour of the accused. The reason is that the constitutional validity of Section 24 has been upheld on the ground that the accused has a full opportunity to show that he has not violated the provisions of the PMLA. He is entitled to rebut the presumption. Therefore, if the Special Court refuses the prayer made by the accused in terms of Sub-section (3) of Section 233 for compelling the attendance of any witness or for production of a document in custody of ED or a third party, the accused will not be in a position to discharge the onerous burden on him under Section 24 of the PMLA. Hence, the valuable right of the accused under Section 233(3) of the CrPC needs to be protected. Right to Seek Documents During Bail Proceedings under Section 45(1)(ii) PMLA - HELD THAT:- When the Legislature has felt a need to bring out a legislation like the PMLA, it is the duty of the Court to interpret Article 21 in such a way that the right of a fair trial available to the accused is not affected. The object of the provisions of Section 24 or 45(1)(ii) is not to take away the fundamental right of fair trial conferred on the accused. These provisions are different in the sense that they put a burden on the accused. When such a burden is put on the accused, it is all the more necessary that the right of fair trial guaranteed under Article 21 to the accused is protected by permitting the accused to lead defence evidence by seeking the production of witnesses and documents not relied upon by the prosecution. Similarly, for discharging the burden under Section 45(1)(ii), the accused has the right to invoke Section 91 of CrPC (Section 94 of the BNSS) for seeking production of documents at the stage of hearing of bail application. Conclusion - i) When records, instruments or documents of title of the property are seized along with the property under Sections 17 and 18 of the PMLA, the accused from whom the same are seized is entitled to true copies thereof. ii) When records, instruments or documents of title of the property are seized along with the property under Sections 17 and 18 of the PMLA, the accused from whom the same are seized is entitled to true copies thereof - a) Statements recorded by the learned Special Judge of the complainant and the witnesses, if any, before taking cognizance b) The documents including the copies of the Statements under Section 50 of the PMLA produced before the Special Court, along with the complaint, and the documents produced subsequently by the ED till the date of taking cognizance c) Copies of the supplementary complaints and the documents, if any, produced with supplementary complaints. iii) A copy of the list of statements, documents, material objects and exhibits that are not relied upon by the investigating officer must also be furnished to the accused. As held by this Court, the object is to ensure that the accused has knowledge of the documents, objects, etc. in the custody of the investigating officer which are not relied upon so that at the appropriate stage, the accused can apply by invoking the provisions of Section 91 of the CrPC (Section 94 of the BNSS) for providing copies of the documents which are not relied upon by the prosecution. iv) At the time of hearing for framing of charge, reliance can be placed only on the documents forming part of the chargesheet. In case of the PMLA, at the time of framing charge, reliance can be placed only on those documents which are produced along with the complaint or supplementary complaints. Though the accused will be entitled to a list of documents, objects, exhibits etc. that are not relied upon by the ED at the stage of framing of charge, in ordinary course, the accused is not entitled to seek copies of the said documents at the stage of framing of charge. v) At the stage of entering upon defence, an accused can apply for the issue of process for the production of any document or thing in accordance with Section 233(3) of the CrPC (Section 256(3) of the BNSS). At this stage, he can also apply for the production of a document or a thing that is in the custody of the prosecution but has not been produced. A fair trial is a part of the right guaranteed to an accused under Article 21 of the Constitution. The right to a fair trial of the accused includes the right to defend. The right to defend consists of the right to lead the defence evidence by examining the witnesses and producing the documents. Therefore, the accused is entitled to exercise his right at the stage of entering upon defence by compelling the prosecution or a third party to produce a document or a thing in their possession or custody. The Court can decline the request of the accused for issuing process for the production of documents only on the limited grounds set out in sub-section (3) of section 233 of the CrPC. vi) When at the stage of defence evidence of the accused, documents are produced on the prayer of the accused and the accused desires to cross-examine any of the prosecution witnesses based on the said documents, it is always open for the accused to apply under Section 311 of the CrPC (Section 348 of the BNSS) to recall a prosecution witness already examined for further cross-examination. The reason is that the right to effectively cross-examine the prosecution witnesses is also a part of the right to have a fair trial. The accused can exercise this right even if evidence of both sides is closed. vii) As compared to traditional penal statutes, at the time of trial of the offence under the PMLA, there is a huge negative burden put on the accused. Therefore, it is all the more necessary that sub-section (3) of Section 233 of CrPC (Sub- section (3) of Section 256 of the BNSS) should be liberally construed in favour of the accused. The reason is that the constitutional validity of Section 24 has been upheld on the ground that the accused has a full opportunity to show that he has not violated the provisions of the PMLA. He is entitled to rebut the presumption. Therefore, if the Special Court refuses the prayer made by the accused in terms of Sub- section (3) of Section 233 for compelling the attendance of any witness or for production of a document in custody of ED or a third party, the accused will not be in a position to discharge the onerous burden on him under Section 24 of the PMLA. Hence, the valuable right of the accused under Section 233(3) of the CrPC needs to be protected. viii) At the time of hearing of an application for bail governed by Section 45(1)(ii) in connection with the offences under Section 3 of the PMLA, an accused is entitled to invoke Section 91 of the CrPC (Section 94 of the BNSS) seeking production of unrelied upon documents. If investigation or further investigation in progress, the ED is entitled to raise objection to production of documents sought by the accused on the ground that if the documents are disclosed at this stage to the accused, it may prejudice the investigation. Only if the Court after perusing the documents is satisfied that the disclosure of the documents at that stage may prejudice the ongoing investigation, it can deny the prayer for the production of such documents. Appeal allowed.

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• Service Tax

• 2025 (5) TMI 575
  Refund of service tax paid on works contract services under Notification No. 09/2016-ST dated 01.03.2016 and Section 102 of the Finance Act, 2016 - time limitation - contract was awarded on 11.03.2015, i.e., after the stipulated cut-off date of 01.03.2015 - HELD THAT:- The limiting factor for finalizing the contract in this case is the date 01.03.2015. The argument of the appellant has no force that the last date for filing tender was 10.02.2015 and they have filed the tender before that date and therefore, they have fulfilled the conditions of Notification number 09/2016-ST dated 01.03.2016 read with Section 102 of the Finance Act, 2016. In fact the contract was awarded to the appellant on 11.03.2015, therefore, they are not eligible to get the benefit of Notification No. 9/2016-ST dated 01.03.2016 as prescribed in the notification. The argument of the appellant also cannot be accepted that their financial bid was qualified on 19.02.2015 therefore, it can be treated as deemed contract and it can be considered having been allotted to them on 19.02.2015 which is earlier to 01.03.2015. There is also no substance in the plea of the appellant that the contract falls under the provisions of Notification No. 09/2016-ST dated 01.03.2016. Accordingly, the learned adjudicating authority has rightly rejected the refund claim filed by the appellant and the appeal has been rightly dismissed by the learned Commissioner (Appeals). Therefore, the impugned order passed by the learned Commissioner is liable to be upheld and the appeal is liable to be dismissed. Conclusion - The appellant s refund claim is correctly rejected as the contract was awarded on 11.03.2015, beyond the prescribed date of 01.03.2015. Appeal dismissed.

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• 2025 (5) TMI 574
  Rejection of refund claim of 50% of service tax paid by the service recipient - appellant has not produced any evidence to the effect of payment of said service tax by the service recipient - HELD THAT:- The appellant produced the work orders showing that the service tax inclusive of the payment of service rendered by the appellant and the service recipient had deducted 50% of the service tax which is payable by the service recipient under reverse charge mechanism from the running bill of the appellant and it is a fact on record that the activity undertaken by the appellant is not liable to service tax and service tax paid by the appellant by mistake of law, therefore, time limit prescribed under Section 11B of the Central Excise Act, 1944 is not applicable to the facts of the case as held by the Hon ble Karnataka High Court in the case of Commissioner of Central Excise versus KVR Construction [ 2012 (7) TMI 22 - KARNATAKA HIGH COURT ] . In that circumstances, the Cross Objections filed by Revenue are contrary to the law, therefore, the said are not acceptable. Rate of interest - HELD THAT:- The said issue has examined by the Tribunal in the case of Gajendra Singh Sankhla versus Commissioner of CGST, Jodhpur (Raj.) [ 2025 (5) TMI 482 - CESTAT NEW DELHI ] . In view of the decision of this Tribunal in the case of Gajendra Singh Sankhla, wherein this Tribunal observed the appellant are entitled interest @ 12% on delayed refunds. Conclusion - The appellants are entitled for refund of service tax paid by them was under mistake of law, therefore, the appellants are entitled for refund claim along with interest @ 12% as provisions of Section 11B and 11BB of the Act are not applicable. Appeal allowed.

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• 2025 (5) TMI 573
  Time barred SCN or not - suppression of facts or not - liability of appellant to discharge service tax under the reverse charge mechanism (RCM) on Manpower Recruitment Services and Rent-a-Cab Services, despite the service providers having already paid service tax - HELD THAT:- The learned Commissioner (Appeals) has considered each of the demands raised in the show cause notice and has given categorical, reasoned findings based on the law and the case laws. Learned Commissioner (Appeals) finds that extended period is not invokable as no evidence has been adduced in the show cause notice to substantiate the allegation of suppression of facts which intend to evade payment of service tax; the entire demand was raised on the basis of records maintained by the appellant which were provided to the audit. The learned Commissioner (Appeals) has rightly observed, relying on the Hon ble Supreme Court s decision in the case of Chemphor Drugs [ 1989 (2) TMI 116 - SUPREME COURT] , that mere inaction are failure on the part of the assessee does not suffice to invoke the extended period; a conscious are deliberate withholding the information, which the appellants were aware of, was required. As the appeal fails squarely on limitation, the other issues on merit do not require any discussion and findings, more so, when we have endorsed findings, of the impugned order in this regard. The appeal is rejected.

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• Central Excise

• 2025 (5) TMI 572
  Levy of penalty under Rule 26(1) of Central Excise Rules, 2002 - case of duty evasion of the main party settled under SVLDRS, 2019 - HELD THAT:- The Tribunal in the case of Vipinbhai Kantilal Patel vs. CCE, Ahmedabad [ 2024 (5) TMI 412 - CESTAT AHMEDABAD] in which the Tribunal has held that appellant has been penalized under Rule 26(1) of Central Excise Rules, 2002. The main case of M/s. Phenix Construction Technologies has been settled under SVLDRS 2019 and the appeal was disposed by this Tribunal vide order dated 10.06.2021 hence the penalty imposed on the appellant is not sustainable in view of the decision that when the main case of duty evasion is settled under SVLDRS, 2019, penalty on the co-noticee/ appellant shall not survive and the penalty is set-aside and the appeal is allowed. The matter is covered by the judgment passed in the case of Vipinbhai Kantilal Patel. Therefore, when the case of duty evasion of the main party M/s. Narendra Plastics Pvt. Limited has been settled under SVLDRS 2019, the penalty on the co-noticee/ appellant cannot survive. The penalty is set-aside and the appeal is allowed.

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• 2025 (5) TMI 571
  Reversal of cenvat credit taken on Special Additional Duty of Customs (SAD) on clearance of input as such to their other unit - extended period of limitation - levy of penalty - HELD THAT:- In the present case, the appellant has discharged central excise duty and education cess on clearance of their inputs as such from one unit to another, but failed to discharge appropriate SAD on the said inputs. Before the adjudicating authority, it was argued that they are not required to reverse cenvat credit on the inputs cleared as such being an LTU, therefore, even though they had paid central excise duty and cess on the inputs cleared as such, no liability accrues for not discharging appropriate SAD on the said inputs. A simple reading of the letter reveals that the appellant in the said letter made it very clear that the 4S units will continue as LTUs and the 3S units be permitted to go out of the LTU, Bangalore w.e.f. 01.04.2010. Thus, it cannot be said that the 4S units came to be registered under LTU w.e.f. 01.04.2010. Thus, at the relevant time, the appellant continued to be operating as an LTU and accordingly registered with the Department. Therefore, the finding of the Commissioner that the appellant became LTU w.e.f. 01.04.2010 only is contrary to the facts; hence, cannot be sustained. Regarding the alternate argument of the appellant that since there was no mechanism under Rule 3(5) of the CCR, 2004 to recover credit (SAD) under Rule 14 of CCR, 2004 on inputs cleared as such under Rule 3(5), the demand of the credit cannot be sustained, we find that this Tribunal in the cases of Ericsson India Pvt. Ltd. CCE, Jaipur [ 2019 (3) TMI 776 - CESTAT NEW DELHI] and GKN Driveline (India) Ltd. Vs. CCE, Delhi-III [ 2023 (9) TMI 1131 - CESTAT CHANDIGARH] observed that recovery of credit under Rule 3(5), (5A) and (5B) prior to 01.03.2013 is bad in law. There are no merit in the impugned order; consequently, the same is set aside and appeal is allowed.

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• CST, VAT & Sales Tax

• 2025 (5) TMI 570
  Effect of delegated legislation of amendment to Rule 20 (2) (n) vide, G.O.Ms.No.2201, Rev. (CT-II) Dept. dated 29.12.2005, introduced under section 13 (1) of the VAT act denying the ITC for coolers - retrospective effect or not - ITC on tax paid on breakages of glass bottles, which occur in the manufacturing process and are sold as scrap. Input Tax Credit (ITC) on purchases of coolers and refrigerators made during the year 2004-05, in light of the retrospective amendment - HELD THAT:- The Hon ble Apex Court in a case of Union of India and another Vs. Pradeep Kumari and others [ 1995 (3) TMI 489 - SUPREME COURT ], inter alia held that in relation to beneficial legislation, the law is well-settled that while construing the provisions of such a legislation, the Court should adopt a construction which advances, the policy of the legislation to extend the benefit rather than a construction which has the effect of curtailing the benefit conferred by it. The Hon ble Apex Court in Girdhari Lal Sons Vs. Balbir Nath Mathur Others [ 1986 (2) TMI 253 - SUPREME COURT] relying on the other decisions of the Hon ble Apex Court held that the object and purpose of the amendment to remove the mischief and defect for which the amendment was necessitated is required to be considered and borne in mind and the Parliament s intention is ascertained and the object and purpose of the legislation is known, it then becomes the duty of the Court to give the statute a purposeful or a functional interpretation. According to a plain reading of Rule 20 (2) of the AP VAT Rules, 2005, the revision petitioner, M/s Pearl Beverages, is entitled to and eligible for the Input Tax Credit (ITC) on refrigerators, coolers, and deep freezers purchased by manufacturers of soft drinks and ice cream. This is because the right was taken away due to an amendment made under Section 37 of the AP VAT Act, which introduced provision (n) to the negative list without providing any justification. The amendment is not clarifying, and since a vested cannot be taken away retrospectively, it is unfair, and arbitrariness applies. The right accrued to the revision petitioner/Assessee/Pearl Beverages Limited on the date when they paid tax cannot be taken away by way of amendment. As held by the apex court in several decisions that a rule cannot be applied retrospectively removing the accrued or vested right, as the amendment has not given any reason for effecting retrospectively. ITC of tax paid on breakages of glass bottles, which occur in the manufacturing process and are sold as scrap - HELD THAT:- An Input Tax Credit can be claimed when a manufacturer buys a raw material and pays a certain amount of tax on those purchases. They can deduct that tax amount from the tax they need to pay when selling their finished products. Where in the case on hand the petitioner/ assessee who purchased glass bottles for not to use for manufacture to produce some other product by using the product purchased and petitioner is not the manufacturer of the bottles. The petitioner / assessee has purchased the bottles for storing of the liquid which does not fall under the manufacturing of another product. The contention of the petitioner / assessee is that FIFO (First in First out) method would be applicable. FIFO method is generally used to determine the value of any item moving out of a stock account and those remaining in stock at any point of time. When applied to an account holding dematerialised stock, it implies that, out of the existing holdings, the item that first entered into the account is deemed to be the first to be sold out. There is no evidence the product moved of stock those remaining in stock and they are invoiced - the issue is answered against to the revision petitioner. Conclusion - The amount paid by the revision petitioner is refundable to the extent of input tax credit on the coolers and refrigerators. The revision petitioner is entitled to the input tax credit for the coolers and refrigerators, while the rest of the claim is rejected. The Tax Revision Case is, therefore, allowed partly.

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• 2025 (5) TMI 569
  Challenge to assessment order - addition of 40% to the Contractual Transfer Price (CTP) and making an assessment on the same and levying tax - HELD THAT:- In the assessment order, after setting out the stand taken by the writ petitioner in their written submission dated 19th June, 2018, the Assessing Officer has pointed out that the petitioner/dealer has deviated from the practise, which they had followed in the earlier years without any explanation if a dealer is undoubtedly entitled to resort to tax planning, but not tax avoidance. One more aspect, which is conspicuously missing in the assessment order is to the basis of addition of 40%. No explanation is forthcoming, as could be seen from the assessment order. Therefore, we are of the view that the matter should be re-examined by the Assessing Officer after affording an opportunity to the petitioner to produce documents and particulars and after affording an opportunity of personal hearing to the authorised representative either virtually or in person, the fresh assessment order be passed on merits and in accordance with law. Considering the fact that the Assessing Officer has made certain observations in the assessment order dated 27th June, 2018 on which the petitioner/dealer had no opportunity to put forth the case, those observations shall be treated as a show-cause notice and the petitioner is directed to submit his reply alongwith supportive documents within a period of three weeks from the date of receipt of server copy of this order, after which an opportunity of personal hearing shall be afforded to the authorised representative of the writ petitioner/dealer either virtually or in person and a fresh assessment order be passed on merits and in accordance with law. Conclusion - The addition of 40% to the Contractual Transfer Price is not adequately explained or justified and reassessment is directed on merits after affording the petitioner a fair opportunity to be heard and produce relevant documents. Petition disposed off.

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• Indian Laws

• 2025 (5) TMI 568
  Encashment of a bank guarantee - Rejection of prayer for ex parte ad interim injunction made in an application under Order XXXIX Rule 3 and Section 151 of the Code of Civil Procedure, 1908 - no order of injunction could be passed without affording an opportunity of hearing to the opposite parties - High Court while exercising its supervisory jurisdiction under Article 227 of the Constitution of India, can decide a matter on merits - exercise of extraordinary jurisdiction under Article 227 in a matter pertaining to the encashment of an unconditional bank guarantee - interim order passed under Order XXXIX Rule 3 CPC accompanying a Section 9 Petition under the Arbitration and Conciliation Act, 1996, ought to be treated as an order passed under Section 9 proceedings or not - initiation of parallel proceedings by approaching the High Court under Article 227 of the Constitution, while simultaneously invoking arbitration, thereby causing delay in the arbitral process - an interlocutory order arising out of the rejection of ex parte interim stay under Order XXXIX Rule 3 CPC accompanying a Section 9 Petition under the Arbitration Act, is appealable under Section 37 of the Arbitration and Conciliation Act or not - interlocutory order passed on an Order XXXIX Rule 3 application by the Commercial Court, in a Section 9 arbitration petition is barred from challenge by virtue of the specific bar under Order XLIII Rule l(r) read with Section 104 CPC, and is not appealable under Section 37 of the Arbitration Act thereby permitting recourse only under Article 227 of the Constitution. HELD THAT:- It is the established legal principle that the Courts should refrain from interfering with the invocation of a bank guarantee except in cases of fraud of an egregious nature or in cases where allowing encashment would result in irretrievable injustice. This Court in Hindustan Construction Co. Ltd v. State of Bihar and others [ 1999 (10) TMI 760 - SUPREME COURT ], emphasized that bank guarantees serve as the backbone of commercial transactions and must be honoured in accordance with their terms. \ However, it cannot be disputed that after hearing both sides and with the consent of the parties, the High Court disposed of the writ petition by the order impugned herein, inter alia stating that if the appellants were permitted to invoke the bank guarantee, the prayer made in the Section 9 arbitration petition would likely become infructuous. Furthermore, the High Court clearly observed that the Commercial Court shall proceed in accordance with law and adjudicate upon the prayers made in the arbitration petition on its own merits, considering the pleadings and documents placed on record, without being influenced by any of the observations made therein. Ultimately, it was directed that the interim order restraining the appellants from encashing the bank guarantee shall remain in force until the disposal of the arbitration petition pending before the Commercial Court, subject to Respondent No. 1 extending the validity of the bank guarantee - the order passed by the High Court is merely an interim measure intended to protect the interests of both parties. Admittedly, Respondent No. 1 initiated arbitration proceedings to resolve the disputes with the appellants. In the Section 9 arbitration petition filed by them, the arguments on behalf of Respondent No. 1 and Respondent No. 2 have already been concluded, and the matter stands partly heard, pending further arguments on behalf of the appellants - in view of the ongoing arbitration proceedings concerning the bank guarantee, it is imperative to maintain the existing position regarding the bank guarantee until the final outcome of the Section 9 arbitration petition. Since the Section 9 arbitration petition is now ripe for arguments before the Commercial Court on behalf of the appellants, the parties are directed to advance all their contentions along with necessary documents, and the Commercial Court shall pass appropriate orders within a period of eight weeks thereafter. Until such time, the bank guarantee shall be kept alive and shall be subject to the outcome of the Section 9 arbitration petition. Conclusion - i) Bank guarantees are independent contracts and generally enforceable without regard to underlying disputes. ii) The High Court s supervisory jurisdiction under Article 227 is extraordinary and should be exercised sparingly, primarily to prevent grave injustice. iii) Interim orders restraining invocation of bank guarantees pending arbitration are permissible to protect the efficacy of arbitration proceedings. Appeal disposed off.

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• 2025 (5) TMI 567
  Power and authority of an arbitral tribunal to implead or join a non-signatory to the arbitration agreement as a party to the arbitration proceedings. - Group of companies doctrine - Same Management Whether the Arbitral Tribunal has the power to Implead / Join Non- Signatories to the Arbitration Agreement? - HELD THAT:- Owing to the intrinsic character of the test being one that entails a fact- intensive inquiry involving a mixed question of fact and law and further, given the extensive standard it demands, requiring a comprehensive and holistic appraisal of all material facts and attendant circumstances, it may be safely concluded that the arbitral tribunal is the more appropriate and competent forum to adjudicate upon the issue of whether a non-signatory is bound by the arbitration agreement, as the arbitral as it has the innate advantage of going through all the relevant evidence and pleadings in greater depth and detail than the referral court at the pre-reference stage, and as such is uniquely positioned to undertake such a nuanced determination. Determining the existence viz- -viz the intention of parties from express words of an Arbitration Agreement - HELD THAT:- There runs no umbilical cord between the exercise of determining the existence of the arbitration agreement and determining its existence qua the non-signatory . The latter is an independent and substantive determination that falls outside the narrow and circumscribed domain of the referral court s singular obligation under Section 11 sub-section (6A) of the Act, 1996 and as such cannot be conflated to be one pertaining to or attacking the existence of an arbitration. Even if it is assumed for a moment that the referral court in its jurisdiction under Section 11 of the Act, 1996 has the discretion to determine whether a non-signatory is a veritable party to the arbitration agreement or not, by virtue of Cox and Kings (I) [ 2023 (12) TMI 427 - SUPREME COURT (LB) ], the referral court should only refrain but rather loathe the exercise of such discretion. Any discretion which is conferred upon any authority, be it referral courts must be exercised reasonably and in a fair manner. Fairness in this context does not just extend to a non-signatory s rights and its apprehension of prejudice, fairness also demands that the arbitration proceedings is given due time to gestate so that the entire dispute is holistically decided. Any determination even if prima-facie by a referral court on such aspects would entail an inherent risk of frustrating the very purpose of resolution of dispute, if the referral courts opine that a non-signatory in question is not a veritable party. On the other hand, the apprehensions of prejudice can be properly mitigated by leaving such question for the arbitral tribunal to decide, as such party can always take recourse to Section 16 of the Act, 1996 and thereafter in appeal under Section 37, and where it is found that such party was put through the rigmarole of arbitration proceedings vexatiously, both the tribunal and the courts, as the case may be, should not only require that all costs of arbitration insofar as such non- signatory is concerned be borne by the party who vexatiously impleaded it, but the arbitral tribunal would be well within its powers to also impose costs. Decision of Cox and Kings (II) and Ajay Madhusudan and the scope of Section 11 of the Act, 1996 for joinder of non-signatories to arbitration proceedings - HELD THAT:- The only thing the arbitral tribunal needs to be mindful of when deciding such an issue is that it adheres to the principles of natural justice by affording the non-signatory a fair opportunity to raise objections with regard to the jurisdiction of the arbitral tribunal, earnestly makes an endeavour to determine this issue at the earliest possible stage to prevent any grave prejudice being occasioned to such non-signatory, makes all possible efforts whether by way of imposition of costs or through other appropriate measures to mitigate and deter the possibility of any abuse by the signatories who might seek to coerce or arm twist the non-signatory by frivolously or vexatiously subjecting it to arbitration, and lastly, that its decision is grounded in the factors and threshold requirements laid down in Cox and Kings (I) (supra) as explained. There is no inhibition in the scheme of Act, 1996 which precludes the Arbitral Tribunal from impleading a Non-Signatory on its own accord. Doctrine of Kompetenz-Kompetenz and the Jurisdictional Reach of an Arbitral Tribunal - HELD THAT:- The jurisdiction of an arbitral tribunal is not created by the mere subjective intent or volition of the parties. Rather, it is the arbitration agreement a legally cognisable and objective instrument that operates as the foundational source of jurisdiction in the eyes of the law. Just as the creation of a property automatically vests jurisdiction in the territorial courts competent to adjudicate over such property, the conclusion of an arbitration agreement ipso jure brings into existence the jurisdiction of the arbitral tribunal. This jurisdiction exists in a de jure sense from the moment the arbitration agreement is validly executed, regardless of whether the tribunal has been formally constituted. Requirement of Notice of Invocation under Section 21 of the Act, 1996 - HELD THAT:- The High Court in its impugned judgment while upholding the Arbitrator s Orders, has rightly held that ABPL, BCSPL and AISPL fall under the same management, and it appears that the substitution in the contract, took place merely for convenience . Further, all the correspondence is in respect of the contract with ASF and ASF Group of Companies. There is no differentiation between BCSPL, AISPL, or ABPL, all of which are part of the ASF Group. . In arriving at its conclusion, the High Court correctly applied the test laid down in Cox and Kings Ltd. (I), taking note of the communications exchanged, conduct of the ASF Group officials, active involvement of the appellant with contractual obligations, intertwined nature of the agreements involving BCSPL, AISPL, and ABPL and the composite business operations. Conclusion - The Arbitration Act was the first legislative enactment that dealt with arbitration that came into force in 1940. Fifty years, later, the aforesaid legislation was replaced by the Arbitration and Conciliation Act, 1996. It has been almost, thirty-years, since the Act, 1996 has remained in force. Various amendments to the Act, 1996 have been made over the years so as to ensure that arbitration proceedings are conducted and concluded expeditiously. It is indeed very sad to note that even after these many years, procedural issues such as the one involved in the case at hand, have continued to plaque the arbitration regime of India. The Department of Legal Affairs has now, once again proposed to replace the existing legislation on arbitration with the Arbitration and Conciliation Bill, 2024. Unfortunately, even the new Bill has taken no steps whatsoever, for ameliorating the position of law as regards the power of impleadment or joinder of an arbitral tribunal. What is expressly missing in the Act, 1996 is still missing in the Arbitration and Conciliation Bill, 2024, despite a catena of decisions of this Court as-well as the various High Courts, highlighting the need for statutory recognition of such power in order to obviate all possibilities of confusion. As observed in Gayatri Balasamy [ 2024 (2) TMI 1549 - SC ORDER ], any uncertainty in the law of arbitration would be an anathema to business and commerce. The Department of Legal Affairs, Ministry of Law and Justice is urged to take a serious look at the arbitration regime that is prevailing in India and bring about necessary changes while the Arbitration and Conciliation Bill, 2024 is still being considered. It is convinced that no error, not to speak of any error of law, could be said to have been committed by the High Court in passing the impugned judgment and order. This appeal fails and is hereby dismissed.

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• 2025 (5) TMI 566
  Scope of judicial powers under the Arbitration and Conciliation Act, 1996 - powers of the Court under Sections 34 and 37 of the Arbitration and Conciliation Act 1996 to modify an arbitral award - such power can be exercised only where the award is severable, and a part thereof can be modified - power to set aside an award under Section 34 of the Act - power to modify an award can be read into the power to set aside an award under Section 34 of the Act - the judgement in Project Director NHAI vs. M. Hakeem and others [ 2021 (7) TMI 1343 - SUPREME COURT] , correctly laid down the law on the modification of arbitral awards or not - five bench decision. As per CJI. (SANJIV KHANNA), J. (B.R. GAVAI), J. (B.R. GAVAI) and J. (AUGUSTINE GEORGE MASIH) HELD THAT:- The questions of law referred to by Gayatri Balasamy [ 2024 (2) TMI 1549 - SC ORDER] are answered by stating that the Court has a limited power under Sections 34 and 37 of the 1996 Act to modify the arbitral award. This limited power may be exercised under the following circumstances: I. when the award is severable, by severing the invalid portion from the valid portion of the award, as held in Part II of our Analysis. II. by correcting any clerical, computational or typographical errors which appear erroneous on the face of the record, as held in Part IV and V of our Analysis; III. post award interest may be modified in some circumstances as held in Part IX of our Analysis; and/or IV. Article 142 of the Constitution applies, albeit, the power must be exercised with great care and caution and within the limits of the constitutional power as outlined in Part XII of our Analysis. As per K. V. VISWANATHAN, J. HELD THAT:- i) While exercising power under Section 34 of the A C Act and consequently the Courts in the appellate hierarchy do not have the power to modify the arbitral award. ii) Modification and severance are two different concepts while modification is not permitted under Section 34, severance of the award falling foul of Section 34 is permissible in exercise of powers under Section 34. Such a power of severance is also available to the courts in the appellate hierarchy to the Section 34 Court. iii) The power to set aside will not include the power to modify since the power to modify is not a lesser power subsumed in the power to set aside and, as held hereinabove, the power to set aside and power to modify do not emanate from the same genus and are qualitatively different powers in the context of the A C Act. iv) The judgment in Hakeem, insofar as it holds that a Section 34 Court has no power to modify the award, lays down the correct law. The only exception made in this judgment is with regard to the power to carry out corrections in computational errors, clerical errors or typographical errors and any other errors of similar nature. This is based on the principle of actus curiae neminem gravabit (act of court shall prejudice no one). Reference disposed off.

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• 2025 (5) TMI 565
  Permission to NRI residing abroad, to participate in an ongoing criminal investigation through audio-video electronic means - issuance of Non-Bailable Warrant (NBW) on request to cooperate via video conferencing - HELD THAT:- The record reveals that upon becoming aware in the UAE that his passport was being withheld at the behest of the EOW, the petitioner promptly addressed a letter dated 13 February 2025 to the EOW. In this letter, the petitioner voluntarily offered to cooperate with the ongoing investigation and expressed his readiness to have his statement recorded through audio-video electronic means. Despite this, the EOW did not respond to the petitioner s communication. In the absence of any reply, the petitioner was constrained to file an application (Exh.55) before the learned Special MPID Court, wherein he sought permission to renew his passport and requested leave to participate in the investigation through audio-video electronic means. However, the said application came to be rejected by order dated 9 April 2025. The petitioner now seeks the indulgence of this Court to permit him to appear before the investigating officer via audio video electronic means and to cooperate fully with the investigation. It is pertinent to note that the statutory framework under the CrPC, particularly the proviso to Section 161, as well as the corresponding provisions under Section 180 of the BNSS, expressly recognises and facilitates the conduct of trial related procedures and examination of witnesses through audio video electronic means. The petitioner shall appear before the investigating officer through audio-video electronic means on 7 May 2025 between 2:00 p.m. and 4:00 p.m., for the purpose of recording his statement in connection with the investigation. Conclusion - The Court allowed the petitioner s prayer to appear before the investigating officer through video conferencing, thereby facilitating his cooperation with the investigation while upholding the rule of law and procedural fairness. Petition allowed.

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• 2025 (5) TMI 564
  Dishonour of Cheque - insufficient funds - vicarious liability of Director under Section 141 N.I. Act - director at the time of issuance of cheque or not. Whether the Petitioner was a Director of the accused Company at the time of issuance of the cheques in question? - HELD THAT:- The Apex Court in the case of Adhiraj Singh vs. Yograj Singh and Ors. [ 2024 (12) TMI 1570 - SUPREME COURT ] while considering a similar situation wherein post-dated cheques were issued on 12.07.2019 after the resignation of the Director, it was held that Once the facts are plain and clear that when the cheques were issued by the Company, the appellant had already resigned and was not a director in the Company and was not connected with the company, he cannot be held responsible for the affairs of the Company in view of the provisions as contained in Section 141 of the NI Act. In the present case, the two cheques bearing No. 521021 and 521020 totalling to Rs. 22,53,968 were dated 04.10.2016 and 20.12.2016, respectively, while the Petitioner had already resigned as Director on 14.05.2015 i.e. prior to the dates on which the impugned cheques were issued. Further, from the perusal of the Complaint, it is evident that the Appellant was neither a signatory to the dishonoured cheques nor the promissory note. There are general averments regarding the accused directors who had knowledge of the legally enforceable debt but the Complaint conspicuously lacks any specific averment articulating the precise manner in which the Petitioner bore the responsibility of the two dishonoured cheques - the Petitioner cannot be held vicariously liable under Section 141 N.I. Act. Conclusion - The Petitioner, having resigned as Director prior to the issuance of the dishonoured cheques, cannot be held liable under Section 141 of the N.I. Act. Petition allowed.

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• 2025 (5) TMI 563
  Seeking grant of Regular bail - recovery of contraband substances i.e., psychotropic and controlled substances, 250 kgs. of Pseudo Ephedrine Hydrochloride - HELD THAT:- In Mohd. Muslim v. State (NCT of Delhi), [ 2023 (5) TMI 321 - SUPREME COURT] the Supreme Court held that undue delay in trial can be a ground for grant of bail under the Narcotic Drugs and Psychotropic Substances (NDPS) Act, despite Section 37 of the Act putting heavy limitations on the grant of bail. Considering the totality of the circumstances as narrated above and also, in the last nine years, the testimony of only 17 prosecution witnesses has been recorded, out of 53 prosecution witnesses and the trial may take a long time; and the petitioner was earlier granted interim bail and the conditions thereof were not flouted by him in any manner, the present petition is allowed and the petitioner is admitted to regular bail. Bail application allowed.

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