TMI Tax Updates - e-Newsletter
May 6, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise

TMI Short Notes

1. Exemption from Income Tax Return Filing for Non-Resident Indians : Clause 216 of Income Tax Bill, 2025 Vs. Section 115G of Income-tax Act, 1961

  Bills:

2. Taxation of Foreign Exchange Asset Transfers by NRIs : Clause 215 of the Income Tax Bill, 2025 Vs. Section 115F of the Income-tax Act, 1961

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3. Transitioning NRI Taxation : Clause 214 of Income Tax Bill, 2025 Vs. Section 115E of Income Tax Act, 1961

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4. Special provisions that govern the computation of total income for non-resident Indians (NRIs) : Clause 213 of Income Tax Bill, 2025 Vs. Section 115D of Income Tax Act, 1961

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5. Special taxation regime applicable to non-residents and foreign companies : Clause 212 of Income Tax Bill, 2025 Vs. Section 115C of Income-tax Act, 1961

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6. Reforming of Taxation of Specified Income of Non-Profit Organisations (NPOs) : Clause 337 of the Income Tax Bill, 2025 Vs. Section 115BBI of the Income-tax Act, 1961

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7. Evolution of the digital economy "Taxation of winnings from online games" : Clause 194 (S. No. 5) of Income Tax Bill, 2025 Vs. Section 115BBJ of Income-tax Act, 1961

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8. Development in the taxation of income arising from the transfer of virtual digital assets (VDAs) : Clause 194 (Table: S. No. 4) of Income Tax Bill, 2025 Vs. Section 115BBH of Income Tax Act, 1961

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Articles

1. Difference Between 12A and 80G & Their Online Registration Processes

   By: Ishita Ramani

2. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

3. DEFAULT IN PAYMENT OF SETTLEMENT AGREEMENT – OPERATIONAL DEBT?

   By: DR.MARIAPPAN GOVINDARAJAN

4. How to Avoid Penalties on Late OPC Annual Return Filing

   By: Ishita Ramani

5. Cyber Insurance Against Cyber Attacks: A Vital Safeguard for Modern Businesses

   By: YAGAY andSUN

6. Cyber Insurance Against Cyber Attacks: A Vital Safeguard for Modern Businesses.

   By: YAGAY andSUN

7. How Corporates can reduce both Logistics Cost and carbon footprints by opting green supply chain! (Green Logistics and Green Supply Chain)

   By: YAGAY andSUN

8. 🚛 Correlation Between Logistics Infrastructure and Reduction in Logistics Cost: A Path to Improving India's Logistic Performance Index(LPI).

   By: YAGAY andSUN

9. 🌿 Zero Waste Living: A Green Legacy for Generations to Come!

   By: YAGAY andSUN

10. Composting: A Natural Solution to Tackle Landfill Overflow from Biodegradable Waste.{Green Good Deeds}(Environment Protection and Healing Climate Change)

   By: YAGAY andSUN

11. 🌿 From Grey to Green: Why Municipal Corporations Must Rethink Footpaths for a Greener Future.(Environment Protection and Healing Climate Change).

   By: YAGAY andSUN

12. Green Footpaths vs. Concrete Footpaths. Complete Analysis. Tabular Comparison which one is eco-friendlier?{Environment Protection and Healing Climate Change}

   By: YAGAY andSUN

13. Why it is important to Ditch using car once in a week and using a Bicycle or public transport for commuting for a cleaner and greener environment?​​​​​​​{Environment Protection & Healing Climate Change}

   By: YAGAY andSUN

14. How using a cloth bag by Indians can stop polythene pollution in the Environment?{Environment Protection & Healing Climate Change}

   By: YAGAY andSUN

News

1. Small-scale industrialists from Marathwada demand competitive power tariff, GST tribunal

2. Sitharaman meets ADB chief and Italian FM, discusses economic issues; no mention of Pakistan

3. RBI adds 25 tonne of gold in second half of FY25

4. RBI may effect cumulative rate cut of 125-150 bps in FY26, says SBI study

5. Strengthening India-Belgium Partnership: Shri Piyush Goyal Meets Belgian Minister of Foreign Trade Mr. Theo Francken and Minister-President of Flanders Mr. Matthias Diependaele

6. APEDA mulls Export Growth Strategy for Agri and Processed Foods, calls stakeholders for a Chintan Shivir

7. Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman to attend ADB’s Annual Meeting in Milan, Italy, from 4th to 7th May 2025

8. Government Prohibits Import of All Goods Originating in or exported from Pakistan to India

9. India's 'MICE' industry set to be major economic driver, generate high-quality jobs: Shekhawat

10. SC reconstitutes three-judge bench to hear pleas against 2022 verdict upholding ED powers

11. Monitor top advance tax payers, check fake claims: CBDT to I-T dept

Notifications

GST - States

1. G.O,Ms.No.109 - dated 28-3-2025 - Andhra Pradesh SGST

The Andhra Pradesh Goods and Services Tax, Act & Rules, 2017 – To appoint notified dates for certain amendments made to rules in G.O.Ms.No.174, Revenue (CT-II) Department, dated 30.08.2024

2. 6556- FIN-CT1 -TAX-0002-2025 - dated 27-2-2025 - Orissa SGST

Notification on date of effectuation of certain rules under OGST (Amendment) Rules, 2024

3. 4332- FIN-CT1 -TAX-0002-2025 - dated 7-2-2025 - Orissa SGST

Odisha Goods and Services Tax (Amendment) Rules, 2025

4. 4236- FIN-CT1 -TAX-0001-2025 - dated 7-2-2025 - Orissa SGST

State Tax Notification for waiver of the late fee

Income Tax

5. 43/2025 - dated 3-5-2025 - IT

CBDT has notified the ITR-2 Form for Assessment Year 2025–26 under the Income-tax (Fifteenth Amendment) Rules, 2025.

Circulars / Instructions / Orders

Customs

1. Instruction No. 08/2025 - dated 5-5-2025

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

2. Instruction No. 07/2025 - dated 3-5-2025

Prohibition on import or transit of all goods originating in or exported from Pakistan – Insertion of Para 2.20A of Foreign Trade Policy (FTP), 2023

3. PUBLIC NOTICE NO. 06/2025 - dated 17-4-2025

Procedure for import/export through Personal Carriage - reg.

Highlights / Catch Notes

GST

• CBIC Introduces Streamlined GST Registration Grievance Resolution Process with Clear Communication Protocols

  Circulars : The CBIC issued Instruction No. 04/2025-GST establishing a comprehensive grievance redressal mechanism for GST registration applications. The mechanism mandates Zonal Principal Chief Commissioners/Chief Commissioners to: (1) publicize dedicated email addresses for applicants to submit grievances, (2) forward state jurisdiction grievances to relevant authorities, (3) ensure timely resolution of complaints, and (4) submit monthly reports to DGGST. Applicants can submit grievances with Application Reference Number (ARN), jurisdiction details, and brief issue description, enabling a structured approach to addressing registration application concerns and providing transparent communication channels between taxpayers and tax administration.
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• Procedural Defect Leads to Invalidation of Tax Assessment Order, Mandating Proper Signature and Identification Number

  Case-Laws - HC : HC invalidated the assessment order due to absence of assessing officer's signature and DIN number. Following precedential decisions in prior cases involving similar procedural defects, the court set aside the impugned order in Form GST DRC-07 and notice in Form GST DRC-16. The 1st respondent was granted liberty to conduct a fresh assessment, with mandatory requirement to issue a properly signed order containing a DIN number and providing prior notice to the petitioner.
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• Judicial Resolution Enables Export Tax Refund Despite Minor GST Number Discrepancy in Shipping Bill Documentation

  Case-Laws - HC : HC adjudicated a dispute concerning IGST refund involving an inadvertent GST number error in a Shipping Bill. The court found that despite the initial mismatch in exporter details, documentary evidence supported the petitioner's claim. The HC directed respondent No. 2 to amend the Shipping Bill in the EDI system and respondent No. 3 to make corresponding modifications in the GST portal to facilitate the refund of Rs. 12,26,862/- within twelve weeks. The procedural discrepancy was resolved through judicial intervention, enabling the petitioner to claim the rightful export-related tax refund.
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• High Court Validates Arbitral Award, Confirms Arbitrator's Reasoning and Upholds Section 34 Principles of Arbitration Act

  Case-Laws - HC : HC upheld the arbitral award, finding no grounds for interference under Section 34 of the Arbitration and Conciliation Act, 1996. The court determined that the arbitrator's reasoning was legally sound and based on available evidence. The award did not demonstrate patent illegality or violation of public policy. The court emphasized its limited review role, noting it cannot re-appreciate evidence or modify the arbitral award. Consequently, the petition challenging the arbitral award was dismissed, affirming the arbitrator's decision on contractual terms and GST liabilities.
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• Interim Relief Granted: GST Tariff Dispute Halts Recovery Proceedings with Directives for Procedural Review

  Case-Laws - HC : HC order grants interim relief in tax classification dispute. Petitioner challenged GST reclassification from 12% to 18% tariff item, alleging procedural impropriety and violation of natural justice. Court found merit in submissions regarding jurisdictional concerns and arbitrary order issuance. Interim order stayed recovery proceedings, directing respondents to file counter-affidavit within four weeks. Based on CBIC circular and similar precedent from Karnataka HC, court provided temporary relief pending comprehensive review of tax classification and procedural compliance.
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• Legal Heir Wins Challenge to GST Tax Liability Order After Procedural Fairness Violation Under Natural Justice Principles

  Case-Laws - HC : HC allowed the writ petition, setting aside the impugned GST tax liability order against the legal heir. The court emphasized principles of natural justice, requiring issuance of a fresh notice and providing an opportunity for personal hearing to the successor proprietor. The decision aligns with precedent established in a prior Division Bench ruling involving similar circumstances of tax proceedings against legal heirs of a proprietorship firm, ensuring procedural fairness in tax assessment processes.
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• Tax Assessment Order Invalidated: Procedural Delays Breach Statutory Timelines and Compromise Fairness of Judicial Process

  Case-Laws - HC : HC invalidated an ex parte service tax assessment order due to procedural irregularities. The court found that the order-in-original was passed five years after the show cause notice, significantly exceeding the prescribed statutory time limits under Section 73(4B) of the Finance Act. Despite Section 73(4B) not mandating a strict time frame, the court held that prolonged delays without substantive justification render the assessment and accompanying penalties void. The petitioner's challenge was upheld, with the impugned order set aside, emphasizing the importance of adhering to reasonable adjudication timelines in tax proceedings.
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• Tax Evasion Challenge Rejected: Delayed Response and Procedural Lapses Undermine Writ Petition Against GST Proceedings

  Case-Laws - HC : HC dismissed the writ petition challenging tax proceedings related to GST evasion and bogus invoices. The court found the petitioners were not diligent, having delayed their response to the show cause notice for six months and only raising objections when personal hearing was imminent. The HC held this was not a fit case for extraordinary writ jurisdiction under Article 226, directing petitioners to pursue appellate remedies. The court granted a 30-day window to file an appeal with pre-deposit, ensuring merit-based consideration without limitation bar, while explicitly noting that the order's observations would not prejudice the appellate proceedings.
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• Tax Demand Order Nullified: Procedural Flaws and Official Misconduct Expose Critical Violations in Seizure Process

  Case-Laws - HC : HC invalidated tax demand order due to procedural irregularities in inspection and seizure. The court found the seizure order was improperly prepared without independent witnesses, and documents were admittedly tampered by a tax official. The court set aside the demand order dated 09.05.2024, admonished the Deputy Commissioner against future document manipulation, and warned of potential disciplinary action. The writ petition was allowed, rendering the original tax assessment null and void based on violations of BGST/CGST Act, 2017 and CrPC procedural requirements.
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Income Tax

• New ITR-5 Form Unveiled for AY 2025-26 with Updated Tax Reporting Guidelines Under Sections 139 and 295

  Notifications : CBDT notified ITR-5 Form for Assessment Year 2025-26 through Income-tax (Fourteenth Amendment) Rules, 2025, effective from 1st April, 2025. The notification amends the Income-tax Rules, 1962 by substituting Form ITR-5 in Appendix-II. The amendment was issued under sections 139 and 295 of the Income-tax Act, 1961, with an explanatory memorandum certifying no adverse impact on taxpayers. The rules were published by the tax policy and legislation under secretary, with formal administrative implementation through standard governmental notification procedures.
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• Statutory Interpretation Limits Compound Interest Claim Under Section 244A(1)(b), Rejecting Applicant's Cumulative Interest Argument

  Case-Laws - HC : HC rejected the applicant's claim for compound interest under s.244A(1)(b) r.w.s.132B(4)(b), which explicitly provides only for simple interest. The Court clarified that its prior order did not mandate cumulative or compound interest calculation. No statutory provision was identified supporting the interpretation of "cumulative interest" as compound interest. Consequently, the opposite parties cannot be held liable for willful disobedience, as no definitive legal framework exists for computing cumulative interest beyond simple interest prescribed by the statutory provision.
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• Depreciation on Securities and Pension Fund Contributions Upheld, Revenue Appeal Dismissed Under Section 14A and Rule 8D

  Case-Laws - HC : HC dismissed the revenue appeal, rejecting the disallowance of depreciation on securities and pension fund contributions. The court found no merit in the revenue's contention under Section 14A and Rule 8D, particularly noting that the shares were held as stock in trade, rendering the provisions inapplicable. The decision aligned with prior judicial precedent from the coordinate bench, effectively upholding the assessee's position on depreciation and pension fund contributions.
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• Tax Dispute Resolved: Stock Conversion, Commissions, and Share Transactions Validated Without Adverse Tax Consequences

  Case-Laws - AT : ITAT adjudicated a multi-issue tax dispute involving conversion of stock-in-trade into capital assets, commission payments, and share transfer transactions. The tribunal held that conversion of stock-in-trade into capital assets is permissible without tax implications, particularly before 2018 legislative amendments. Commission payments made through banking channels with appropriate TDS were validated. Regarding share transactions, ITAT rejected revenue's challenge to short-term capital loss, finding the share purchases through stock exchange as genuine, notwithstanding SEBI inquiries. The tribunal ultimately allowed the assessee's appeal, granting long-term capital gains treatment with indexation benefit and accepting commission and share transaction claims.
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• Tax Regime Option Upheld: Assessee's Previous Year's Form Validates New Regime Without Fresh Filing Requirement

  Case-Laws - AT : The ITAT addressed the denial of tax regime option under section 115BAC. The tribunal held that the assessee's option to pay taxes under the new regime was valid, despite not filing Form No. 10-IE within the prescribed time. The court determined that since the assessee had previously opted for the new regime and filed the form in the preceding year, a fresh form was not required. The tribunal found the CPC's denial of the tax option was not in accordance with law and decided in favor of the assessee. Additionally, the tribunal condoned the 71-day delay in filing the appeal, considering the counsel's preoccupation as a sufficient reason.
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• Tax Tribunal Rejects Transfer Pricing Method, Upholds Income Computation Disallowance and Project Provision Ruling

  Case-Laws - AT : ITAT adjudicated multiple tax-related issues, primarily focusing on transfer pricing and income computation. The Tribunal rejected the Transfer Pricing Officer's Cost Plus Method (CPM) for benchmarking international transactions, following precedent from previous years. The Tribunal upheld the disallowance of double deduction arising from actuarial valuation gain, sustaining the Revenue's position. Regarding project provision cost, the Tribunal dismissed the Revenue's appeal, maintaining the Commissioner of Income Tax (Appeals) original finding. The decision comprehensively addressed technical tax computation matters, predominantly favoring procedural and methodological consistency in income assessment.
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• Interest Deduction Denied: Unsecured Loans Lack Credible Evidence Under Section 36(1)(iii) Fail Substantive Test

  Case-Laws - AT : ITAT held that interest on unsecured loans was correctly disallowed under section 36(1)(iii). The assessee failed to substantiate the genuineness and creditworthiness of loan transactions. Mere routing of interest through banking channels or TDS deduction does not prove loan legitimacy. The tribunal found no credible documentary evidence to establish the identity of lenders or loan authenticity. The assessee's inability to provide repayment details or demonstrate commercial substance of loans justified the disallowance of interest expenditure. The decision reinforces the principle that deduction of interest is contingent upon proving a genuine and subsisting business liability. Ultimately, the appeal was decided against the assessee, upholding the lower authorities' findings.
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• Tax Assessment Order Invalidated: Procedural Errors Void AO's Decision, Intra-Group Services Charges Upheld Under Section 144C(13)

  Case-Laws - AT : ITAT held that the final assessment order was void ab initio due to non-compliance with DRP directions under Section 144C(13). The tribunal found the Assessing Officer (AO) did not follow specific procedural requirements, rendering the assessment order invalid. Regarding intra-group services (IGS), the tribunal allowed the assessee's claim, determining that the payments were genuine, made without markup, and benchmarked appropriately. The tribunal emphasized that tax authorities cannot question expenses when transactions are legitimate and serve business purposes. The disallowance of intra-group service charges was consequently deleted, upholding the arm's length principle and rejecting the need for a strict tangible commercial benefit test.
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• Beneficial Ownership Trumps Strict Legal Formalities: Partnership Capital Sourcing Validated Through Comprehensive Financial Evidence

  Case-Laws - AT : ITAT held that beneficial ownership of funds introduced in a partnership firm supersedes strict legal ownership requirements. Despite capital being routed through partners' joint bank account, the tribunal recognized the firm's beneficial ownership based on audited financial statements. The AO's addition under Section 69 was deemed unsustainable, as the assessee successfully demonstrated the genuine source of capital through mutual fund redemptions and unsecured loans from related parties. The tribunal emphasized distinguishing between legal and beneficial ownership, particularly in partnership contexts, and allowed the assessee's appeal by deleting the unexplained investment addition.
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• Multinational Service Pricing Dispute Resolved: IGS Wins Transfer Pricing Challenge with Comprehensive Cost-Benefit Analysis

  Case-Laws - AT : ITAT adjudicated transfer pricing dispute involving Integrated Global Services (IGS) provided by Associated Enterprises. After comprehensive review of cost benefit analysis and documentary evidence across finance, accounting, HR, marketing, and technical service segments, the tribunal examined administrative support services. Referencing precedent in Corteva Agriscience case, the tribunal comprehensively evaluated service pricing methodology. Ultimately, the tribunal ruled in favor of the assessee, directing complete deletion of transfer pricing adjustment for administrative support services, thereby validating the company's transfer pricing approach and rejecting revenue's proposed additional tax assessment.
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Customs

• Gold Religious Kada Recognized as Personal Effect, Customs Detention Overturned Under Baggage Rules, 2016, Section 79

  Case-Laws - HC : HC finds gold kada constitutes personal effect under Baggage Rules, 2016, exempting Petitioner from detention. Based on photographic evidence and established precedents regarding Sikh religious jewelry, the Court determined the seized item was a personal effect. The detention of the gold kada is deemed contrary to law and consequently set aside. The Court waived the Show Cause Notice and personal hearing requirements, effectively granting relief to the Petitioner and invalidating the customs detention.
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DGFT

• Comprehensive Trade Embargo Blocks All Goods from Pakistan Under Foreign Trade Policy 2023, Sections 3 and 5

  Notifications : The GoI's DGFT issued Notification No. 06/2025-26 inserting Para 2.20A in Foreign Trade Policy 2023, comprehensively prohibiting direct or indirect import and transit of all goods originating from or exported by Pakistan. Implemented under Sections 3 and 5 of Foreign Trade (Development & Regulation) Act, 1992, the prohibition applies immediately and encompasses all goods irrespective of importability status. The measure is justified on grounds of national security and public policy, with any exceptions requiring explicit governmental approval. The notification effectively creates a comprehensive trade embargo against Pakistani goods until further governmental orders.
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SEZ

• SEZ Expansion: 88.02 Hectares Added to Jamnagar Multi-Product Zone Under SEZ Act 2005 Provisions

  Notifications : The Central Government notified an additional 88.02 hectares as part of a Multi-Product Special Economic Zone (SEZ) in Jamnagar, Gujarat, expanding the total SEZ area to 1377.4622 hectares. The notification, issued under the SEZ Act, 2005, includes land parcels from multiple villages such as Kanalus, Navagam, Kanachhikari, and Derachhikari. The additional area was proposed by an industrial entity and approved by the Central Government, effectively increasing the SEZ's geographical footprint through a formal statutory amendment.
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Corporate Law

• Corporate Dispute Dismissed: Petitioner Fails to Prove Mismanagement Claims Due to Suppressed Material Facts and Lack of Evidence

  Case-Laws - Tri : Tri dismissed the petition alleging oppression and mismanagement under Sections 397 & 398 of Companies Act, 1956. The tribunal found the petitioner suppressed material facts about initial company formation and land acquisition agreements. Documentary evidence demonstrated the petitioner was part of an original group agreement with equal capital participation. The petitioner failed to substantiate claims of misappropriation and was deemed to have approached the tribunal without clean hands. The tribunal emphasized that party conduct is crucial in equitable proceedings, ultimately rejecting the petitioner's allegations as vague and unsupported by sufficient evidence.
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IBC

• Workmen's Gratuity Claims Upheld as Legitimate Operational Debt, Corporate Debtor's Objections Rejected Under IBC Section 9

  Case-Laws - AT : NCLAT analyzed the maintainability of a Section 9 application for gratuity claims by workmen against a corporate debtor. The Tribunal held that gratuity claims constitute operational debt under IBC, and no pre-existing dispute existed to bar the application. The suits filed by the corporate debtor were deemed mala fide and not genuine disputes. The prior dismissal of a trade union's Section 9 application on procedural grounds did not operate as res judicata. The Tribunal rejected the corporate debtor's arguments regarding welfare dues and pre-existing disputes, finding the claims legitimate. Consequently, the appeal was dismissed, affirming the workmen's right to pursue their gratuity claims through the insolvency resolution process.
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• JSW Resolution Plan for Bhushan Power and Steel Invalidated Due to Significant Procedural and Substantive Irregularities Under IBC

  Case-Laws - SC : SC held that the Resolution Plan submitted by JSW for Bhushan Power and Steel Limited was fundamentally flawed, involving multiple procedural and substantive irregularities. The Court found critical non-compliance with mandatory IBC provisions, including improper implementation of the Resolution Plan, failure of the Resolution Professional to verify eligibility criteria, and dubious conduct by the Committee of Creditors. Consequently, the SC quashed the NCLT and NCLAT orders, effectively setting aside the Resolution Plan and directing a fresh resolution process, emphasizing strict adherence to Insolvency and Bankruptcy Code regulations and time-bound resolution mechanisms.
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SEBI

• SEBI Allows Stock Brokers to Establish Separate Business Units for GIFT-IFSC Securities Market Operations Under Section 11

  Circulars : SEBI circular facilitates stock brokers to undertake securities market activities in GIFT-IFSC through a Separate Business Unit (SBU) without specific prior approval. Stock brokers may establish an SBU with segregated operations, maintaining an arms-length relationship between Indian securities market and GIFT-IFSC activities. Existing subsidiaries can transition to SBU model at discretion. Key regulatory safeguards include separate accounting, ring-fenced net worth, and exclusive engagement in IFSCA-permitted activities. Notably, investor grievance mechanisms from Indian securities markets will not apply to SBU operations, emphasizing the distinct regulatory jurisdiction of GIFT-IFSC activities.
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Service Tax

• Service Tax Dispute Resolved: Reimbursable Expenses Exempt, Accounting Entries Not Taxable Under Finance Act Provisions

  Case-Laws - AT : CESTAT adjudicated a service tax dispute involving reimbursable expenses and business auxiliary services. The tribunal ruled in favor of the appellant, finding no valid basis for service tax levy on reimbursable expenses, consistent with SC precedent. The department's attempt to demand tax based on profit and loss account entries without demonstrating actual service consideration was rejected. Additionally, the tribunal found no evidence of intentional tax evasion, thereby invalidating extended limitation period and penalties. The appeal was allowed, effectively quashing the original tax demands and establishing that mere accounting entries cannot constitute taxable service under the Finance Act, 1994.
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• Skill Development Partner Wins Tax Exemption After Challenging Demand, Tribunal Validates Loan Purpose and Beneficial Interpretation

  Case-Laws - AT : CESTAT allowed the appeal, holding that the demand raised against the appellant was unsustainable. The tribunal found that the appellant qualified as a funded partner of NSDC for skill development programmes, and thus was eligible for exemption under Notification No. 25/2012-ST. The adjudicating authority's rejection based on absence of a partnership certificate was deemed incorrect. The tribunal emphasized that the loan was specifically extended for skill development programmes, and the exemption should be interpreted beneficially, consistent with the Supreme Court's guidance on interpreting beneficial notifications. The demand raised solely on discrepancies between tax returns, without independent investigation, was set aside.
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Case Laws:

• GST

• 2025 (5) TMI 310
  Rejection of writ petition filed by the appellant herein on the ground that the appellant has an alternative efficacious remedy of filing an appeal before the Tribunal - HELD THAT:- The matter should be remanded High Court for being considered afresh on its own merits. Appeal allowed. The impugned order passed by the High Court is set aside. The Civil Writ Jurisdiction Case No. 12294 of 2024 is ordered to be restored to the original file of the High Court.

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• 2025 (5) TMI 309
  Validity of garnishee proceeding - delay on the part of petitioner in payment of GST dues - no notice for demand of tax issued - violation of principles of natural justice - it was held by High Court that the action of respondent authorities in issuing the proceedings under section 73(1) of CGST Act, 2017 are in clear violation of principles of natural justice - HELD THAT:- It appears from the materials on record that this petition can be disposed of on the ground that it falls within the category of low tax effect. The Special Leave Petition is disposed of on the ground of low tax effect.

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• 2025 (5) TMI 308
  Levy of GST on the transfer of leased land rights - suppression of GST payments - HELD THAT:- Apparently, the issue as raised by the petitioner is squarely covered by the judgement in the case of Gujarat Chamber of Commerce and Industries [ 2025 (1) TMI 516 - GUJARAT HIGH COURT] . The reliance placed by the respondents on order in the case of Builders Association of Navi Mumbai [ 2018 (4) TMI 461 - BOMBAY HIGH COURT] appears to be misplaced as the same pertains to the lease deed executed by the Authority in favour of the lessee and not a case of transfer of the rights once lease has been executed by the authority in favour of the lessee. Matter requires consideration - Issue notice.

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• 2025 (5) TMI 307
  Challenge to assessment order on the ground that the said proceeding does not contain the signature of the assessing officer and also DIN number, on the impugned assessment order - HELD THAT:- The effect of the absence of the signature, on an assessment order was earlier considered by this Court, in the case of A.V. Bhanoji Row Vs. The Assistant Commissioner (ST), [ 2023 (2) TMI 1224 - ANDHRA PRADESH HIGH COURT] . A Division Bench of this Court, had held that the signature, on the assessment order, cannot be dispensed with and that the provisions of Sections-160 169 of the Central Goods and Service Tax Act, 2017, would not rectify such a defect. Following this Judgment, another Division Bench of this Court, in the case of M/s. SRK Enterprises Vs. Assistant Commissioner, [ 2023 (12) TMI 156 - ANDHRA PRADESH HIGH COURT] , had set aside the impugned assessment order. Another Division Bench of this Court by its Judgment, dated 19.03.2024, in the case of M/s. SRS Traders Vs The. Assistant Commissioner ST ors [ 2024 (4) TMI 894 - ANDHRA PRADESH HIGH COURT] following the aforesaid two Judgments, had held that the absence of the signature of the assessing officer, on the assessment order, would render the assessment order invalid and set aside the said order. In view of the aforesaid judgments and the circular issued by the C.B.I.C., the non-mention of a DIN number and absence of the signature of the assessing officer, in the impugned assessment order would have to be set aside. This Writ Petition is disposed of setting aside the impugned assessment order in Form GST DRC-07, dated 10.10.2023, and the notice in Form GST DRC-16 dated 18.03.2025, issued by the 1st respondent, with liberty to the 1st respondent to conduct fresh assessment, after giving notice and by assigning Din number and signature to the said order.

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• 2025 (5) TMI 306
  Violation of principles of natural justice - order passed without granting an opportunity of personal hearing - HELD THAT:- There is no bar for entertaining the writ petition despite availability of the alternative remedy. However, it is for this Court to entertain or not to entertain the same looking to the facts and circumstances of the case. Admittedly, in the case in hand, the impugned order is appealable under section 107 of the Chhattisgarh Goods and Service Tax, Act, 2017 which requires pre-deposit of 10%. The ground which has been agitated before this Court can very well be agitated by the petitioner before the Appellate Authority which may decide the same in accordance with law. Therefore, at this stage this Court is not inclined to entertain this writ petition and the writ petition is dismissed. However liberty is reserved in favour of the petitioner to avail the alternative remedy as per law. Petition disposed off.

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• 2025 (5) TMI 305
  Scope of terms of contract between parties - GST liabilities for the job-work - Interpretation of clause 12 of the agreement dated 05.02.2018 - applicable GST Charges to be paid by the exporter to the processor - HELD THAT:- Section 34 of the Arbitration and Conciliation Act provides a limited scope for judicial interference with arbitral awards. Court can set aside an award only on specific ground such as patent illegality or it violates public policy. The award must be demonstrably illegal on its face, such as being contrary to a fundamental provisions of law or the terms of the contract. The award must be in violation of the fundamental policy of the Indian law or against justice and immorality and this includes situations were the award is induced by fraud or corruption - The Court reviewing the award under Section 34 of the Arbitration and Conciliation Act, 1996 is not an appellate body. It cannot re-appreciate the evidence. The Court s limited role is only to ensure that arbitral award is not fundamentally flawed or perverse. In the impugned arbitral award, the arbitrator has only directed the petitioners to give indemnity bond in favour of the respondent. The law, as on date, is also well settled, as this Court under Section 34 of the Arbitration and Conciliation Act cannot modify an arbitral award. The reasons given by the arbitrator, for arriving at the conclusion in his arbitral award, are justifiable reasons. The view taken by the arbitrator is also a legal and plausible view. Therefore, there is no scope for interference by this Court under Section 34 of the Arbitration and Conciliation Act, 1996, as the arbitrator has passed the award only based on the evidence available on record and in accordance with the law. Conclusion - This Court is of the considered view that the petitioners have not satisfied any of the grounds available under Section 34 of the Arbitration and Conciliation Act, 1996 for challenging the award. The impugned arbitral award does not suffer from any perversity or patent illegality. There is no merit in this petition and the same is dismissed.

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• 2025 (5) TMI 304
  Imposition of penalty under Section 129(3) of the U.P. GST Act, 2017 - Non-filling of part-B of the e-way bill - tax evasion - violation of provisions of Rule 138 of the G.S.T. Rules 2017 - HELD THAT:- A perusal of the order impugned passed by State Tax Officer, Ghaziabad would reveal that except for noticing violation of provisions of Rule 138 on account of non-filling up of part-B of eway bill, not a word has been indicated pertaining to any attempt to evade tax. In view of the series of orders passed by this Court laying down that unless an attempt is made to evade tax and a finding in this regard is recorded, mere non-filling of part-B of e-way bill would not attract penalty under Section 129 of the Act, the order impugned passed by the respondents cannot be sustained. Consequently, the petition is allowed . The order dated 20.01.2025 passed by the State Tax Officer, Ghaziabad is set aside.

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• 2025 (5) TMI 303
  Jursidcition to issue order - it is contended that the order is wholly without jurisdiction and has been passed in an arbitrary manner by invoking extended period of limitation - reclassification of the petitioner s products from tariff item 2106 90 99 (extruded or expanded products savoury or salted) attracting 12% GST to tariff item 1905 90 30 attracting 18% GST - pleas raised by the petitioner in reply to the show cause notice, have not at all been considered and the order impugned has been passed by replicating the show cause notice - violation of principles of natural justice - HELD THAT:- Having considered the submissions made by counsel for the parties and the fact that the CBIC had issued specific circular indicating the applicable rate, which alone has formed the basis for issuing the notice under Section 74 of the Act and the GST Council has required the Fitment Committee to look into the matter pertaining to the past period, as noticed and the fact that in similar circumstances, Karnataka High Court has granted interim order, the respondents may file their counter affidavit within a period of four weeks. In the meanwhile and till further orders, recovery pursuant to the order dated 03.02.2025 (Annexure No. 1) shall remain stayed.

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• 2025 (5) TMI 302
  Manifest error in affirming the order passed by the Assessing Authority as to the conduct of the petitioner in availing the input tax credit - Petitioner submits that since no Tribunal as contemplated under the Goods and Services Tax, 2017 has been constituted under the Act, petitioner has no other forum but to approach this Court seeking appropriate writ invoking its extraordinary jurisdiction under Article 226 of the Constitution - HELD THAT:- Matter requires consideration - Let counter affidavit by filed by learned Standing Counsel within four weeks . Rejoinder affidavit, if any, may be filed within two weeks thereafter. List this case on 8th July, 2025.

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• 2025 (5) TMI 301
  Seeking grant of regular bail, during the pendency of trial - passing on fradulent Input Tax Credit (ITC) and during search the said firm was found to be non-existent - reliability of the applicant s confession recorded under Section 70 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- This Court finds that the case of the prosecution is based upon documentary material or the statement of accused recorded under Section 70 of Central Goods and Services Tax Act, 2017 - Further, no documentary evidence connecting the applicant with 232 firms has been collected and the reliance has been placed upon the confession of applicant recorded during his custodial interrogation, but in the considered opinion of this Court, the truthfulness of the same or its evidentiary value would be tested during trial which is yet to commence. Admittedly, the offence alleged in the complaint are triable by Magistrate and the same provides for maximum punishment of 5 years. The investigation in the case is complete as the complaint/charge-sheet dated 07.03.2024 already stands filed before the trial court and the charges against the applicant has not been framed so far. During the course of hearing, it is not disputed by Mr. Parv Agarwal, learned counsel that though the case is fixed for recording of pre-charge evidence under Section 244 Cr.P.C., but no prosecution witnesses has been examined till date. Thus, it is clear that the conclusion of trial would consume considerable time, and further detention of the applicant behind the bars would not be justified keeping in view the period of more than a year and three months already undergone by him. The applicant is ordered to be released on regular bail in the above case subject to his furnishing the requisite bail bond and surety bond to the satisfaction of the trial court. Conclusion - The conclusion of trial would consume considerable time and further detention of the applicant behind bars would not be justified keeping in view the period of more than a year and three months already undergone by him. Bail application allowed.

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• 2025 (5) TMI 300
  Blocking of Input Tax Credit (ITC) under Rule 86A of the Central Goods and Services Tax Rules, 2017 beyond the period of one year from the date of imposition - HELD THAT:- The blocking of the ITC shall be lifted in view of the fact that it has been more than one year. This is however independent of any other action that the adjudicating authority may have taken, in accordance with law, against the Petitioner. Petition disposed off.

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• 2025 (5) TMI 299
  Challenged the imposition of GST tax liability on legal heir of the deceased - prayer to issue a fresh notice and give opportunity of personal hearing to the successor proprietor/petitioner and to pass a fresh order thereafter - principles of natural justice - HELD THAT:- The discussion has the benefit of good authorities in point. A Division Bench of this Court while examining with the consequences of the death of a proprietor of a proprietorship firm and proceedings taken out under the GST Act against legal heirs of the said proprietorship firm this Court in M/S Upmanyu Kattha Industries Vs State of U.P. and another [ 2025 (1) TMI 593 - ALLAHABAD HIGH COURT] . The case at hand is covered by the holding of this Court in M/S Upmanyu Kattha Industries. Thus, the impugned order dated 21.08.2024 is liable to be set aside and is set aside. The writ petition is allowed.

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• 2025 (5) TMI 298
  Validity of ex parte assessment order passed u/s 73(2) of the Finance Act, 1994, along with penalties and interest - HELD THAT:- This Court has got occasion to consider the identical issue in its recent judgment in the case of M/s Power Spectrum Sarbidipur [ 2025 (4) TMI 1468 - PATNA HIGH COURT] . This Court has agreed with the submission of learned Senior Standing Counsel for the CGST and CX in the said case that Section 73(4B), Clause (b) does not provide a mandatory period within which the order determining the Service Tax liability is to be passed, but it is the view of this Court that time frame of six months/one year as mentioned in Section 73(4B) cannot be extended for an inordinate period. There is no contest to the submission of learned counsel for the petitioner that in this case the order-in-original has been passed after five years from the date of issuance of the SCN (Annexure P/3 ). The counter affidavit as well as the additional counter affidavit are completely silent and no reason at all has been shown that why it was not possible to pass the order-in-original within prescribed period. Taking note of the views expressed by learned Coordinate Bench of this Court and the judgment of this Court in M/s Power Spectrum, the impugned order-in-original is liable to be set aside. The present case would be covered by the afore-mentioned judgment of this Court. Conclusion - The statutory time limits for adjudication under Section 73(4B) of the Finance Act must be respected, and inordinate delays without justification render the assessment and penalties void. The impugned order is set aside - petition allowed.

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• 2025 (5) TMI 297
  Maintainability of petition - availability of alternative remedy - evasion of GST - issuance of bogus invoices to various firms, which were either non-existent or non-operational, in respect of packaging material/laminates - Opportunity of cross-examine not provided - violation of principles of natural justice - HELD THAT:- The chronology of events in this case would show that the SCN itself was issued on 30th July, 2024, however, the first time a request was made for the RUDs is only on 16th December, 2024 i.e., five months later. The SCN itself relates to the period 2017-18 onwards and in terms of the various notifications, which have been issued by the Department, the last date for passing the final order was 5th February, 2025 in respect of the period 2017-18, which was well within the knowledge of the Petitioners and the Department. A perusal of the reply filed by the Petitioner, would show that the Petitioners all along had all the requisite information to reply to the SCN, however, it chose not to file the same for almost six months. It was only when the personal hearing notice was given, due to the imminent expiry of the limitation period for passing the order, that the Petitioners have chosen to file a reply. The Petitioner only then raised objections in respect of RUDs and non-grant of opportunity for cross-examination. The Petitioners have, clearly, not been diligent in this matter. Moreover, Mr. Ojha, ld. SCC for the Department, also submits that the insolvency proceedings have also been fraudulently initiated against the companies from whom the recoveries were to be made by the Department. Thus, this is not a fit case for exercising extraordinary writ jurisdiction of this Court under Article 226 of the Constitution. The Petitioners are free to avail of their appellate remedies in accordance with law. If the appeal is filed within a period of 30 days from now along with the requisite pre-deposit, the same shall be entertained on merits and not be dismissed on the ground of limitation. The observations made in this order shall not affect the adjudication of the appeal before the Appellate Authority.

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• 2025 (5) TMI 296
  Validity of inspection/seizure in law - Order of seizure tampered/interpolated - inspection carried out without any independent witnesses - challenged the demand of tax, interest and penalty issued under Section 74 (9) of BGST/CGST Act, 2017 - violation of the provision contained in Section 67(10) of BGST/CGST Act, 2017 read with Section 100(4) of the Code of Criminal Procedure, 1973 - HELD THAT:- As observed, the order of seizure appears to have been prepared not on the spot on 18.01.2024 but later only to cover up the serious lacunas existing in the inspection report wherein the presence of the two independent witnesses was not recorded which made the inspection/seizure unsustainable in law. Further, taking note of the fact that the order of seizure had been admittedly tampered/interpolated by Ms. Kumari Anu Soni who is the maker of the said document, further makes the order of seizure totally invalid and unreliable. Thus, we find that the inspection was carried out without any independent witnesses and even the order of seizure is invalid due to tampered/ interpolated documents, on both these counts they are against the provision as contained under Section 67 of the BGST/CGST Act, 2017 read with Section 100 of the Code of Criminal Procedure, 1973. Hence, we set-a-side the demand order dated 09.05.2024 (Annexure P-4 to the writ application) which is based on the inspection said to have been carried out on 18.01.2024, and we admonish Ms. Kumari Anu Soni, Deputy Commissioner of State Tax to not to tamper with any departmental/court record in future, failing which disciplinary authority or this court will be constrained to order for disciplinary action to be taken against her. The writ petition stands allowed and all pending Interlocutory Applications shall stand disposed of.

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• 2025 (5) TMI 295
  Wrongful availment of Input Tax Credit (ITC) linked to a fake ITC generation network - seeking an opportunity of hearing before the adjudicating authority - delivery of personal hearing notice - HELD THAT:- In so far as the delivery of personal hearing notice is concerned, a perusal of the hearing notices and the dispatch dates, would show that the same was dispatched after the hearing was held by the Adjudicatory Authority, CGST West. The Petitioner s replies which have been placed on record show that the Petitioner has raised grounds to dispute the demand and the liability. The Petitioner deserves to be heard before the Adjudicating authority. Accordingly, the demand and the penalty qua the Petitioner are set aside - Petition allowed.

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• 2025 (5) TMI 294
  Challenge to assessment order on the ground of violation of principles of natural justice - HELD THAT:- It appears that the show cause notice dated 26.10.2023 was issued covering one issue, for which, the petitioner had submitted its reply on 24.11.2023 and the respondent also afforded an opportunity of personal hearing to the petitioner, however, while passing the impugned order, the respondent covered two issues and in respect of second issue, no opportunity of personal hearing was afforded to the petitioner. As rightly pointed out by the learned counsel for the petitioner that the show cause notice was issued covering one issue and the impugned order dated 04.12.2024, which covered two issues, inasmuch as it is beyond the scope of the demand proposed in the show cause notice issued to the petitioner. Taking into consideration the facts and circumstances of the case and considering the submissions made by the learned counsel on either side as well as the instructions from the respondent Department, this Court is of the view that the impugned order was passed without application of mind and in violation of principles of natural justice and therefore the impugned order dated 04.12.2024 be treated as show cause notice and the petitioner shall submit their reply. The order impugned herein is set aside and the matter is remanded to the respondent for fresh consideration.

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• 2025 (5) TMI 293
  Refund of IGST - inadvertent error in the GST number entered in the Shipping Bill - obligation to amend the Shipping Bill details in the Electronic Data Interchange (EDI) system and the GST portal to reflect the correct exporter s name - HELD THAT:- Since there was an error due to mismatch in the Shipping Bill, the petitioner wrote a letter to the respondent on 02.11.2022 to amend the Shipping Bill details in the order for the petitioner to claim the refund of Rs. 12,26,862/-. In response to the above letter, the respondent issued a Certificate dated 08.12.2022 wherein, the respondent stated that the petitioner had erroneously entered the details of the sister concern and the details of the Exporter were verified by verifying GSTR-1 and GST 3B. The respondent also stated that the Certificate was issued after scrutiny of the documentary evidence for export and further acknowledged that the correction as requested by the petitioner could not be carried out in the EDI Shipping Bill in the EDI system after completion of export and hence, the Certificate was issued at the request of the petitioner. Conclusion - The respondent No. 2 is directed to amend the Shipping Bill in EDI System and the respondent No. 3 thereafter shall make necessary amendments in the GST Portal so as to grant refund to the petitioner for Shipping Bill No. 1208102. Such exercise shall be completed within a period of twelve weeks from the date of receipt of copy of this order. Petition disposed off.

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• Income Tax

• 2025 (5) TMI 292
  Interest as awarded to the applicant u/s 244A(1)(b) r.w.s.132B(4)(b) which provides only for payment of simple interest - HELD THAT:- The observation of the Court in the order [ 2021 (10) TMI 1464 - ALLAHABAD HIGH COURT] that it had provided for interest payment at the rate of one and a half percent (cumulatively) is not a part of the order dated 06.10.2021. The order dated 18.11.2022 was passed on an application filed by the opposite parties for correction of the order and the Court in its order dated 18.11.2022 states that the order does not require any correction on the aforesaid count. No provision under the Income Tax Act has been brought to the notice of the Court showing the formula for computing cumulative interest. It is the plea of the applicant that cumulative interest means compound interest. There is no statutory provision from which any inference can be drawn that cumulative interest means compound interest. In any case, the lack of any statutory provision regarding payment of cumulative interest or the formula to calculate the same leads to the conclusion that the opposite parties cannot be held liable for willful disobedience of the order of this Court.

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• 2025 (5) TMI 291
  Validity of reassessment proceedings - period of limitation - reciprocity of Sections 148, 149, 153A, and 153C - HELD THAT:- Although the provisions of Section 153C of the Act are inapplicable in respect of searches conducted after 31.03.2021, it is relevant to consider whether a notice under Section 153C of the Act could be issued for the relevant AY 2015-16 for the purposes of determining whether a notice under Section 148 of the Act could be issued in view of the proviso to Section 149 (1) of the Act. Since there is no mandatory requirement for an assessing officer of a searched person to record his satisfaction that the assets or documents found during the search belong to a person other than the one searched or contained information regarding such other person. Thus, for the purposes of considering the limitation under Section 153C of the Act, it is apposite to consider the date on which the decision is taken by the AO to take steps for initiating re-assessment proceedings as the relevant date. Block of ten assessment years is required to be reckoned from the end of AY 2025-26 being the assessment year relevant to the financial year in which the impugned notice under Section 148 was issued. Concededly, the issue involved in the present case is covered by the earlier decisions of this court in Dinesh Jindal [ 2024 (6) TMI 75 - DELHI HIGH COURT] , KAD Housing Private Limited [ 2024 (11) TMI 433 - DELHI HIGH COURT] and Pankaj Jain [ 2025 (1) TMI 1534 - DELHI HIGH COURT] Revenue concurs with the aforesaid proposition. present petition is allowed. The impugned notice is set aside as being barred by limitation.

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• 2025 (5) TMI 290
  Reopening of assessment against company under insolvency - Jurisdiction or authority to reopen or assess income for any period prior to the approval of the Resolution Plan - HELD THAT:- As management of the Petitioner was taken over by M/s Alankit Finsec Limited. As under the principle of the Clean Slate Theory , any dues or liabilities not contemplated in the resolution plan cannot be enforced. Admittedly, the question raised by the Petitioner is covered in Petitioner s favour by the earlier decisions of this Court in Ireo Fiveriver Pvt. Ltd. [ 2024 (4) TMI 665 - DELHI HIGH COURT ] and Asian Colour Coated Ispat Ltd [ 2024 (8) TMI 563 - DELHI HIGH COURT ] Present petition is allowed and the impugned order passed u/s 148A (d) and any further proceedings initiated or any orders passed in respect of AY 2017-18 are hereby set aside.

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• 2025 (5) TMI 289
  AO jurisdiction to pass a fresh order u/s 250/143(3) disregarding the CIT(A) order and relying on a subsequent Supreme Court judgement to confirm addition - Delay in depositing the Employees State Insurance [ESI]/Provident Fund [PF] u/s 36 (1) (va) - CIT(A) deleted addition - HELD THAT:- There is no ambiguity in the order passed by the CIT(A) and it is crystal clear that the CIT(A) had allowed the petitioner s appeal in regard to disallowance towards EPF contribution. After the said appellate order, the AO was required to recompute the demand and pass an order in compliance of the aforementioned appellate order. However, under the guise of giving effect to the said order, the AO has passed the impugned order holding that no change in the assessment is required in view of the subsequent judgment in M/s Checkmate Services P. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] AO has decided to review the order passed by the CIT(A) and passed a fresh order on the contentious issue that was settled in favour of the petitioner by the CIT(A). It is clear that the AO is not in agreement with the decision of the CIT(A) as according to him, the Hon ble Supreme Court has taken a different view in another case. AO had no jurisdiction to disregard the appellate order in the manner as he had done. The jurisdiction of the AO is limited to give effect to the CIT(A) appellate order passed by the CIT(A). In the event the Revenue finds that the order passed by the CIT(A) is not acceptable, the Revenue is required to avail its remedy of an appeal before ITAT. It would be debilitating to the Rule of law, if the AO is permitted to sit as an appellate authority over the decision rendered by the appellate authority and review the appellate order passed by the CIT(A) instead of giving effect to it. Revenue submits that the petitioner has a statutory remedy of appeal. However, since the impugned order has been passed without jurisdiction, we are not persuaded to refrain from entertaining the present petition. Matter restored back to AO for fresh adjudication.

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• 2025 (5) TMI 288
  Disallowance of depreciation of securities - assessee contention that depreciation is claimed in accordance with the guidelines of the RBI - Disallowance of the contribution to Punjab Sind Bank Employee s Pension Fund Trust - whether above contribution were neither the ordinary annual contribution nor the initial contribution of the pension fund? - HELD THAT :- Issues covered by the decision of the coordinate bench of this court [ 2017 (9) TMI 1528 - DELHI HIGH COURT] titled Principal Commissioner of Income Tax-07 vs Punjab Sind Bank. Disallowance u/s 14A read with under Rule 8D (2) (ii) and 8D (2) (iii) - As decided in [ 2019 (11) TMI 342 - DELHI HIGH COURT] there appears to be no dispute that subject shares were held as stock in trade by the respondent/assessee. Therefore, in any event, recourse to Section 14A could not have been taken which is concerned with investments. Revenue appeal dismissed.

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• 2025 (5) TMI 287
  Assessment of income of any other person u/s 153C - period of limitation - HELD THAT:- In terms of proviso to Section 153C in respect of such other person (a person other than the searched person) the date of the search is required to be construed in reference to the date of receiving the books of account or documents or assets seized or requisitioned by the AO having jurisdiction over such other person (person other than the one searched). The main body of Section 153C (1) of the Act and the proviso do not contemplate a hiatus between the handing over of the documents by the AO having jurisdiction over such person and receipt of the same by the AO having jurisdiction over person other than the searched person. In terms of Section 153B (1) of the Act read with third proviso to said Section, in case of the search executed during the financial year commencing on or after 01.04.2019, the period of limitation for assessment or reassessment under Section 153C of the Act has been specified as twelve months from the end of financial year during which the last authorisation to search under section 132 of the Act or requisition under section 132A of the Act, was executed. In terms of proviso to Section 153C of the Act, the date of receiving of the documents or material by the AO having jurisdiction over the other person [the person other than the one searched] from the AO having jurisdiction over the searched person is required to be considered as the date of initiation of search u/s 132 of the Act or the date of requisition u/s 132A of the Act. In the present case, the said date is required to be considered as 24.06.2022. Thus, the period available for making an assessment pursuant to the impugned notice had lapsed on the expiry of twelve months from the end of the financial year in which the documents were handed over, that is, on 31.03.2024, the twelve months from the end of the FY 2022-23.

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• 2025 (5) TMI 286
  Assessment u/s 153C - whether a notice u/s 153C can be issued in respect of an assessment year in respect of which no incriminating material is found? HELD THAT:- AO does not have any jurisdiction to issue a notice under Section 153C of the Act if the search on which the said notice is premised, has not yielded any incriminating material having a bearing on the assessment of income of the assessee. The jurisdiction of the AO to issue a notice u/s 153C of the Act is predicated on the search u/s 132 of the Act or a requisition under Section 132A of the Act, yielding any incriminating material and the AO of the searched person being satisfied that the assets so unearthed, documents, books of accounts or other material found during the search conducted u/s 132 of the Act or pursuant to a requisition made u/s 132A of the Act, belongs to or pertains to the assessee (other than the searched person) or contains any information relating to the assessee. Once this condition is satisfied, the AO can assume jurisdiction subject to being satisfied that the material has a bearing on the income of the assessee. In the present case, the said jurisdictional condition is not satisfied as the search has not yielded any incriminating material, which could confer jurisdiction to the AO to issue a notice under Section 153C of the Act in respect of AY 2018-19. Since no incriminating material whatsoever was found in respect of Assessee s income for FY 2017-18 relevant to AY 2018-19, the impugned notice as well as the impugned assessment order are set aside.

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• 2025 (5) TMI 285
  Reopening of assessment u/s 147 - reason to believe - tangible material for the AO to conclude that the petitioner had a PE in India or not? - HELD THAT:- As reasons were undated; survey report findings and the statements recorded were not supplied; and a valid sanction was not taken for issuance of notice u/s 148 of the Act. More importantly, the petitioner also objected to initiation of the reassessment proceedings on the ground that there was no tangible material for the AO to conclude that the petitioner had a PE in India. However, the objections raised by the petitioner were rejected. A plain reading of the reasons as recorded clearly indicates that there was no tangible material in respect of the petitioner for forming a belief that the petitioner had a dependent PE or a Fixed Place PE in India during the previous years relevant to the said assessment years in respect of which the impugned notices u/s 148 of the Act were issued. Concededly, the question involved in the present petitions is covered in favour of the petitioner. See Grid Solutions OY (Ltd.) [ 2025 (1) TMI 911 - DELHI HIGH COURT ]

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• 2025 (5) TMI 284
  Initiation of proceedings u/s 147/148 due to non compliance of the statutory provision - Allegation of non independent application of mind - case of the assessee that assessment proceeding is a product of non-application of mind; the reasons recorded was only on the basis of the statement recorded of one person who was not a director of the appellant company at the time of recording of his statement during the course of survey. Also allegation leveled against the assessee to this effect that all material facts necessary for assessment u/s 143(3) have not been fully and truly disclosed, is not sustainable in the eyes of law in view of the facts that during the course of assessment proceedings the entire details, as asked for, were duly furnished HELD THAT:- As perused the report of the Investigation Wing, it appears that the reasons recorded by AO is the replica of the observations made by the Investigation Wing. Independent application of mind by the AO while recording reasons is, thus, totally absent. We also note that claiming the reasons so recorded by the AO was upon perusal of the ITR and assessment records of the assessee is found to be an incorrect statement keeping in view the reply of the RTI application filed by the assessee. On this score the reason recorded since found to be non application of mind, the entire reassessment proceedings is vitiated and thus quashed. Satisfaction recorded by PCIT - Mere perusal of the reasons recorded and expressing satisfaction without recording any observation as to how the Ld. PCIT has come to the level of satisfaction on the reasons recorded by AO that the assessee has failed to disclose fully and truly all material facts necessary for the assessment, the satisfaction is found to be a mechanical one and liable to be quashed. Thus on both the grounds raised by the assessee as narrated above are adjudicated in favour of the assessee. The order of assessment is, thus, quashed with the above observations. Decided in favour of assessee.

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• 2025 (5) TMI 283
  Business profit vs. Capital gains - conversion of stock in trade into capital asset - benefit of indexation - HELD THAT:- There is no specific bar for conversion of stock in trade into investment and vice versa in view of the decision of the Hon ble Supreme Court in the case of Sir Kikabhai Premchand [ 1953 (10) TMI 5 - SUPREME COURT ] The act of the assessee in converting the stock in trade into capital asset is not against any law prevailing at the relevant time. This view is also getting strength from the Memorandum of Financial Bill, 2018 through which the provision relating to taxation at the time of conversion of stock in trade into capital assets brought into statute. As the assessee has acted in bonafide manner and in the interest of business for safeguard of future losses, it cannot be termed as colorable device developed to avoid tax liability. Since prior to the above amendment there was no provision in the Act to tax the conversion of stock-in-trade into capital assets thus the action of the assessee should not be doubted. It is settled law that every action cannot be doubted as being taken to avoid the tax liability. In view of these facts and circumstances of the case, we hold that the income arisen from the sale of both the properties is to be charged to tax as long term capital gains and assessee is eligible for benefit of indexation as per the provisions of the Act. Payment of Commission - We find that a sum was paid to the director of the assessee company and the payment was made after deduction of tax at source through banking channel. The necessary confirmation of the director was also submitted before the lower authorities which is available. Further the copies of the Ledger accounts of other two persons namely Shri Ram Singh and Shri Muni Singh to whom Commission of Rs. 5.00 lacs each paid after TDS were also filed. From the perusal of the same, it is evident that the payments were made to them through banking channel and TDS was also deducted and the copy of TDS certificates containing their PAN details were also filed by the assessee, therefore, the payments made to these persons as Commission cannot be disallowed. Accordingly, we direct to allow the same to the assessee. Disallowance of capital loss claimed on the transfer of shares - sham transaction of bogus short terms capital loss In the instant case on the basis of the enquiries conducted by the SEBI against the company - HELD THAT:- As the assessee company has purchased shares of Ashutosh Paper Mills Ltd. which is a company listed with stock exchange limited and these shares were purchased through a member broker via online system portal of stock exchange. It is a genuine transaction and no contrary evidence whatsoever was brought on record by the AO excepting referring to SEBI enquiry wherein nowhere assessee was alleged as one of the beneficiaries. Therefore, the short terms loss suffered by the assessee cannot be treated as bogus. Appeal of the assessee is allowed.

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• 2025 (5) TMI 282
  Validity of the assessment proceedings u/s 143(3) as no valid issue of notice u/s 143(2) - notice was issued by the AO Ward 33(1) Delhi, the authority having no jurisdiction over the appellant - HELD THAT:- It is crystal clear that notice by non-jurisdictional ITO, Ward 33(1), Delhi was issued. The impugned order was completed by the Ld. AO, Ward 33(1), Delhi having jurisdiction without issuing any notice. ITRs for the assessment years 2015-16, 2016-17 and 2017-18, jurisdiction of the appellant/assessee was with AO, Ward 26(1), Delhi. As such, assessment under appeal is the outcome of a jurisdictional notice issued by non-jurisdictional Ld. AO. Therefore, assessment needs to be quashed. As per the ratio of judgment of Lalitkumar Bardia [ 2017 (7) TMI 695 - BOMBAY HIGH COURT] it is well settled law the assessment order has to be passed by the only authority having jurisdiction over an assessee. It is held that mere participation in proceedings or acquiescence would not confer jurisdiction upon the AO who otherwise was not the Ld.AO of the assessee. Validity of transfer of jurisdiction from one authority to another within the same State/City, as per section 127 requires recording of reasons and affording a reasonable opportunity of being heard. As decided in Ajanta Industries [ 1975 (12) TMI 1 - SUPREME COURT] observed that requirement of recording of reasons u/s 127(1) is a mandatory direction under the Law. Addition u/s 69A - The source cash deposit being sale of property on 30.01.2015 in cash. Copy of Registered Sale Deed is available. AO did not dispute receipt of sales consideration in cash as is evident from the acceptance of fact that cash deposit of Rs. 8,00,000/- on 01.10.2015 was not deposited and the cash of Rs. 5,00,000/- on 12.08.2016 from the source was accepted. Ld. AO had no apparent reason for not accepting same source of deposit of Rs. 15,47,000/- made during the demonetization. Thus addition is not sustainable.

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• 2025 (5) TMI 281
  LTCG - exemption u/s 54 on the expenses incurred for making the flat habitable - Claim denied on the ground that the date of sale of property is 05.07.2021 whereas the possession of the DLF Flat (in respect of which exemption u/s 54 is claimed) was handed over to the assessee on 01.03.2021 -DRP held that it cannot be said that the condition in section 54 of construction of one residential house within a period of three years from the date of sale is satisfied in case of the assessee as the construction was completed and possession was handed over on 01.03.2021 i.e., before the date of sale. HELD THAT:- We find that the coordinate Bench of ITAT, Delhi in assessee s own case for A.Y 2020-21 had, following in the case of CIT Vs Bharati Mishra [ 2014 (1) TMI 446 - DELHI HIGH COURT] ] held that in section 54 there is no stipulation that the construction must begin after the date of sale of old assets. It further held that the assessee can not be denied the benefit of deduction under section 54 on the ground that construction of house had commenced before the sale of old assets. The coordinate bench of the ITAT further held that the expenditure incurred to make the flat habitable (within the three year period of the date of sale of old property) as also the payments made to the builder towards cost of flat before date of sale, is eligible for benefit u/s 54 of the Act. We also find that the Revenue went in appeal before the Hon ble Jurisdictional High Court [ 2024 (4) TMI 55 - DELHI HIGH COURT ] and another in assessee s own case against the order of the Tribunal. We are of the considered opinion that the expenditure incurred to make the flat habitable as also the payments towards cost of the flat is eligible for benefit u/s 54 of the Act. We, therefore, direct the Assessing Officer to deleted the impugned addition. We, therefore, allow ground no. 2 and its sub-grounds of appeal.

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• 2025 (5) TMI 280
  Denial of the option exercised as per section 115BAC - as contended that the assessee had opted for the new regime and computed its income and paid taxes in accordance with the provisions of section 115BCA - as pointed out that the assessee had opted for the new regime in the preceding year also and had deposited the prescribed Form No. 10-IE in the said year Whether the assessee despite having opted to pay taxes under the new regime as prescribed under section 115BCA of the Act in its income tax return, was rightfully denied the same by the CPC, Bangalore? - HELD THAT:- As individuals and HUF have been given option for paying taxes at the rates prescribed in section 115BAC of the Act w.e.f. 1st April, 2021 subject to the condition that their income is computed as prescribed under sub-section (2), which says that the income is to be computed without claiming any exemption or deductions, loss or depreciation as specified in the said sub-section. As is evident from the literal reading of the section itself, the assessee s option is treated as invalid only if it does not fulfil the conditions prescribed under sub-section (2) of section 115BAC of the Act, which is of computing its income without claiming any exemption, deduction, loss or depreciation specified in sub-section (2). The failure to file Form No.10-IE within the prescribed due date as per sub-section (5) does not invalidate the assessee s claim of the option. The mandate of filing the Form No. 10-IE is only directory. What invalidates the exercise of option has been clearly mentioned in the first proviso to section 115BAC of the Act. Therefore, when the assessee had filed Form No. 10-IE while exercising its option of paying taxes as per the new regime, the option was not invalidated as per sub section (2) to section 115BAC of the Act. The option though was denied to the assessee for the reason that the Form No. 10-IE was not filed within the prescribed time, clearly the assessee s exercise of option in the preceding year was not invalid. That therefore, when the assessee again opted paying taxes under the new regime in the impugned year, there was no requirement for the assessee to file a fresh Form No. 10-IE at all, as per sub section (5) to section 115BAC of the Act. It is only if the earlier option is treated as invalid that the assessee has to go about exercising the option afresh in the succeeding years. In view of the fact that the assessee had filed Form No. 10-IE in the preceding year, when it exercised its option of paying taxes under the new regime for the first time, the denial of exercise of this option in the impugned year for failure to file Form No. 10-IE, we hold, is not accordance with law. Decided in favour of assessee. Short payment of appeal filing fees and the delay in filing the appeals before the Tribunal - Defect of short payment of filing fees of Rs. 9,500/- noted by the Registry is accordingly treated as no defect. Delay of 71 Days in filing of the present appeal before the Tribunal - We find that the assessees have established the existence of sufficient cause for the delay in the filing of the present case. The delay, we have noted, in any case is not attributable to the assessee, the fault lying at the door of the counsel of the assessee, who being preoccupied with work was unable to file the appeal in time. We consider it good and sufficient reason for condoning the delay of filing of the present appeals and accordingly delay of 71 days is condoned.

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• 2025 (5) TMI 279
  Assessment u/s 153C - Unaccounted receipts - Estimation of income - CIT(A) granted relief by holding that 10% of the total receipts will be taxed as unaccounted income - HELD THAT:- The seized materials and evidence are fair indication and have rational nexus with the unaccounted income of the assessee based on estimation of unaccounted sales turnover for the entire year. We find that the assessee has no objection to the unaccounted sales turnover being calculated on the basis of suppression factor that has been arrived at by the AO. In such a situation, the legal jurisprudence would dictate that the estimation of income should have clear nexus with the material on the basis of which estimation is being made. We are of the opinion that it is legally permissible for making the estimate for the whole year on the basis of evidences and material found for a part of the year and we find support from the decision of H.M.Esufali H.M. Abdulai [ 1973 (4) TMI 49 - SUPREME COURT ] on the subject of estimating income CIT(A) has applied a scientific view gathered from the seized materials found in the course of search for arriving at the suppressed unaccounted turnover/receipts of the assessee. We are also inclined to accept that the net profit of 75% from such business is not a probable proposition from the business of renting space and catering. We are of the considered view that adopting the net profit ratio of 10% of turnover is a rational basis as it is based on the seized materials itself. CIT(A) has referred to the seized documents in the case of M/s Fourstar Hospitalities, a group concern, where the data as contained in Annexure A-12 and A-13 shows a working of profit and loss account for a period of FY 2017-18 and FY 2018-19, that the concern has had an average net profit of about 10% of the receipts outside the books of account. We also find that the CIT(A) has taken cognizance of the fact that the AO himself has accepted the profit rate of 10% on the unaccounted receipts in the case of Tristar Hospitalities and Kohli Tent House. Therefore, under these facts we are inclined to agree with the CIT(A) that the net profit of 10% of unaccounted receipts is based on relevant facts emerging out of the seized materials during the course of search. We therefore are of the opinion that the additions sustained by the CIT(A) are based on seized materials/documents which remains uncontested by the assessee and hence such additions are sustainable. The above conclusions are supported by the decisions of TDI Infrastructure Ltd [ 2024 (12) TMI 44 - DELHI HIGH COURT ] where, dealing with the assessment made u/s 153C, it held that if no incriminating material was found during the course of the search in respect of an issue, then no addition in respect of such an issue could be made in assessment under sections 153A and 153C that is to say that additions u/s 153C can only be made on the basis of incriminating materials. Delhi High Court referred to the other decisions in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] and Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] in the context of assessment u/s 153A where it has laid down the principles that the additions in the cases of search should be based on the basis of seized materials and it can not be arbitrary or made without any relevance or nexus with the seized material. No reason to interfere with the decisions of the CIT(A) and accordingly uphold the addition sustained by him. The grounds of the appeal of the assessee is dismissed. We have upheld the decision of the CIT(A) and consequently, the Revenue appeal is dismissed.

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• 2025 (5) TMI 278
  Disallowance on account of gain on actuarial valuation - assessee has deducted the gain from the computation of income without offering the same in the P L A/c first, which has resulted in double deduction - HELD THAT:- Revenue deserves to succeed on ground regarding disallowance made on account of gain on actuarial valuation, accepting that the assessee has inadvertently claimed double deduction. Therefore, disallowance is sustained and ground of appeal raised by the Revenue is allowed. TP Adjustment - rejecting Cost Plus method (CPM) adopted by the TPO for calculating the ALP of the international transaction relating to export of traded spares to the Associated Enterprises - HELD THAT:- Since the goods manufactured in India are exported to AE as well as sold in the domestic market, ld. TPO was of the view that Cost Plus method is the most appropriate method for benchmarking the international transaction relating to export of equipments to AE. We further observe that ld. CIT(A) granted relief to the assessee following the decision of this Tribunal taken in assessee s own case for past years. The latest one for A.Y. 2013-14 [ 2019 (6) TMI 1738 - ITAT PUNE] deals with the very same issue and this Tribunal has held that the claim of the assessee of adopting TNMM for calculating the ALP for the international transaction deserves to be allowed in light of the settled legal proposition in favour of the assessee and also observing that the comparison of profit margin of export market segment with that of domestic market segment is not proper. Thus, respectfully following the same, we hold that Cost Plus method adopted by the TPO deserves to be rejected and held to be unsustainable. Therefore no interference is called for in the finding of CIT(A). Disallowance of project provision cost - CIT(A) who has deleted the disallowance made by the TPO for the claim of reversal of provision of project cost - HELD THAT:- The above finding of CIT(A) remains uncontroverted by the ld. DR and we therefore fail to find any infirmity in the same since the AO has not disputed the adding back of the provision of project cost but has only questioned the reversal of provision of project cost. Ground No.3 raised by the Revenue is dismissed.

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• 2025 (5) TMI 277
  Disallowance of interest on unsecured loans - loans were either unexplained or not genuine - AO treated certain unsecured loans as unexplained u/s 68 and disallowed proportionate interest thereon - CIT(A) deleted the addition of principal amounts u/s 68 for the reason that the loans did not pertain to the year under consideration, the interest claimed on such loans was disallowed on the ground that the assessee failed to substantiate the genuineness and creditworthiness of the loan transactions. HELD THAT:- It is settled law that the deletion of an addition u/s 68 on technical grounds-namely, that the credit pertains to an earlier year and is carried forward as opening balance-does not automatically confer legitimacy upon the transaction. CIT(A) has specifically recorded that the loan amounts reflected in the opening balances pertain to earlier years which were not subject to scrutiny assessment, and therefore the principle of res judicata is inapplicable. The non-examination of those credits in the past does not ipso facto prove their genuineness in the present year. Allowability of interest u/s 36(1)(iii) is a fresh claim each year and is contingent upon the existence of a genuine and subsisting liability. In the present case, the assessee has not brought on record any credible documentary evidence to substantiate the identity and creditworthiness of the parties or the genuineness of the loan transactions. As during the course of the hearing before us, the Bench specifically asked AR whether any material has been placed on record to show that the loans in question, on which interest has been claimed, have been repaid in subsequent years, or that interest thereon has actually been paid AND AR fairly admitted that such details had not been brought on record and further submitted that he does not consider such evidence relevant to his contention that interest should be allowed solely because no addition u/s 68 has been made in the year under consideration. In our considered view, this argument is misconceived and contrary to the settled legal position. Deduction of interest expenditure is governed by section 36(1)(iii) of the Act, which allows deduction only where the capital has been genuinely borrowed and used for the purposes of business. If the assessee fails to establish the genuineness of the underlying loan, the interest payable or paid thereon cannot be allowed. Mere routing of interest through banking channels or deducting TDS is not conclusive proof of allowability. Assessee s failure to bring on record evidence of repayment of the loans, even years after their receipt, reinforces the Revenue s contention that the alleged loans lack commercial substance. A genuine business liability is typically reflected in either repayment schedules, confirmations, or servicing of debt - none of which have been demonstrated in the present case. Assessee has relied on various decisions to argue that non-compliance with notices u/s 133(6) or 131 of the Act by third parties should not automatically lead to adverse inferences, particularly when other documentary evidence exists on record. We have perused the said decisions and find them to be factually distinguishable from the case at hand. In those cases, there existed tangible and corroborative evidence in the form of confirmations, repayment details, PANs, TDS deduction, business necessity, and historical assessments, which are conspicuously absent in the present case. Here, the assessee not only failed to discharge the initial onus but also failed to bring on record any evidence of repayment or genuine subsistence of the loan liability, thereby justifying the disallowance of interest by the lower authorities. Thus, the reasoning adopted by the Ld. CIT(A) in both years namely, that the assessee failed to discharge its burden to prove the genuineness and creditworthiness of the lenders, and that interest cannot be allowed on an unverified or fictitious liability is sound and supported by settled judicial principles. We find no justification to interfere with the findings so recorded. Decided against asseessee.

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• 2025 (5) TMI 276
  Disallowance of Franchisee fee and the intra-group services u/s 37(1) - As argued that the final assessment is void ab initio as the Ld. AO has not followed the specific direction issued by the Ld. DRP by contravening the provision of Section 144C(13) - HELD THAT:- contravening of section 144C(13) of the Act the impugned final assessment order is bad in law and void as same has not been passed in confirmatory with the direction of the Ld. DRP. The issue is covered by the order of the coordinate bench of ITAT-Mumbai, Bench-J in assessee s own case [ 2025 (5) TMI 193 - ITAT MUMBAI] wherein as relied on the ruling of ESPN Star Sports Mauritius S.N.C. ET Compagnie [ 2016 (4) TMI 45 - DELHI HIGH COURT ] and Olympus Medical Systems Pvt Ltd. [ 2022 (1) TMI 886 - ITAT DELHI ], Global One India (P.) Ltd. [ 2019 (12) TMI 503 - ITAT DELHI ] and Software Paradigms Infotech (P.) Ltd. [ 2018 (1) TMI 1550 - ITAT BANGALORE ] find that the Ld. AO is required to pass the final assessment order in conformity with the DRP directions. In the present case, since the final assessment order passed by the Ld. AO is not in conformity with the DRP directions the same is bad in law and therefore should be quashed. Disallowance of payment of Intra-group services [IGS] - assessee is one of the largest players in the premium pet food market in India and heavily relies on its AEs for a range of services essential to its business operations. HELD THAT:- We find that the assessee has sufficiently demonstrated the availing and actual receipt of intra-group services through supporting documentation including invoices, agreements, and cost allocation statements. The payments made towards intra-group services were made without any markup and have been benchmarked alongside other international transactions, which collectively meet the arm s length principle. It is settled law that the necessity or commercial benefit of an expense cannot be questioned by the tax authorities when the transactions are genuine and undertaken for business purposes. The requirement of establishing a tangible commercial benefit (Benefit Test) does not emanate from the statutory provisions under the Act or under Transfer Pricing Regulations. We respectfully relied on EKL Appliances Ltd. [ 2012 (4) TMI 346 - DELHI HIGH COURT ] and Lumax Industries Ltd. [ 2008 (3) TMI 679 - DELHI HIGH COURT ] that the expenditures are genuine and fully related on the business purpose. The adjustment made on account of disallowance of payment of intra-group charges by the AO is unsustainable in law and on facts. In view of the above discussion, the adjustment made on account of disallowance of payment of intra-group charges is hereby directed to be deleted.

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• 2025 (5) TMI 275
  Unexplained cash credits u/s 68 - Unsecured loans - Onus to prove - HELD THAT:- CIT(A) grossly erred in overlooking the submission made by the assessee in so far as providing the proof and evidence with regard to the loan availed from Smt. Seema Sharma. Assessee also drew our attention on the ledger account copy of Moti Industries as well as confirmation letter of Smt. Seema Sharma filed before the ld. CIT(A). Further, before us, assessee also submitted that the ITR-V of Smt. Seema Sharma for 3 years were also filed before the AO. Therefore, in our opinion, the assessee has primarily discharged his duty by providing the financial statement, confirmation letter, Ledger A/c Copy along with the income tax returns by providing the identity, creditworthiness and genuineness of the loan transactions. Once the assessee furnishes the details of the loan creditor and the transaction, the onus shifts to the AO to prove that the transaction is not genuine. In view of the above, we delete the addition confirmed by the CIT(A) of Smt. Seema Sharma u/s 68 of the Act. In the result, this ground of appeal is also allowed. Excess contribution to provident fund, superannuation fund or gratuity fund - assessee vehemently submitted that assessee can contribute up to 27% - HELD THAT:- The annual contribution by the employer to a fund in respect of employee shall not exceed 27% of his salary for each year as reduced by the employer s contribution. Rule does not make any difference in so far as payment of salary is concerned i.e. whether the salary is claimed as revenue expenditure or treated as capital in nature. The annual contribution to PF any other fund by the employer always depend upon the Salary paid to the employees. The annual contribution to PF any other fund by the employer are to be restricted to 27% of the salary each year irrespective of the fact that how the employer treats the Salary for their accounting purposes. AO has observed that salary and wages paid for the year were only to the tune of Rs. 4,33,616/ -. Further the AO has also observed that the salary capitalized is Rs. 8,07,000/- being paid towards the building supervision. AO invoked the provisions of Rule 87 of the I.T. Rules and thereby restricted the total contribution to 27% of the salaries which are revenue in nature. We are of the considered opinion that even the provisions of the provident fund Act do not make any difference so far as how the employer treats the salary i.e. whether revenue or capital in nature in their books of accounts. The provisions of Rule 87 also do not restrict that the salary which are capitalized shall not be treated as Salary for the purposes of Rule 87 of IT Rules. The Rule only emphasize that annual contribution in respect of any particular employee shall not exceed 27% of his salary for each year. The emphasis is on his Salary i.e. Employees s Salary. In view of the above, we are of the opinion that the assessee has not contravene the provisions of Rule 87 and accordingly we direct the AO to delete this addition as made by him by invoking Rule 87 of the I.T. Rules. Accordingly, this ground of appeal of the assessee is allowed.

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• 2025 (5) TMI 274
  TDS u/s 195 - payment made to non-resident entity - Whether payments made by the assessee to its USA-based subsidiary for technical services attract taxation under Article 12(4)(b) of the India-USA DTAA particularly whether such services constitute making available technical knowledge or designs, thereby mandating tax deduction at source? HELD THAT:- As this Tribunal in M/S IRUNWAY INDIA PRIVATE LIMITED [ 2022 (5) TMI 670 - ITAT BANGALORE ] in respect of regular Income tax assessment proceedings held that the disallowance made u/s 40(a)(ia) of the Act in respect of the above cannot be sustained and is directed to be deleted and therefore, we are of the opinion that assessee company cannot be treated as assessee in default and therefore, we direct to delete total demand as raised by the AO u/s 201(1) 201(1A) of the Act r.w.s. 206AA of the Act and accordingly, we dismiss the appeal of the revenue.

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• 2025 (5) TMI 273
  Capital introduction by the assessee into the partnership firm - concept of beneficial ownership versus legal ownership - funds were routed through a joint bank account held by the partners and not through a bank account in the firm s own name - Addition u/s 69 - unexplained investment - onus to prove - assessee claimed that the capital introduced in the firm came from mutual fund redemptions and unsecured loans received from family members and other related parties. HELD THAT:- As the concept of beneficial ownership, while the bank and DEMAT accounts may be in the legal names of individual partners, the beneficial owner of the funds and securities therein is the partnership firm. The assessee has demonstrated that the amounts credited in the joint bank account were introduced in the books of the firm as capital, which were accepted and disclosed in the audited financials. Further, the firm s audited accounts for three consecutive years reflect the said bank account as belonging to the firm. There is no material on record brought by the AO to rebut this treatment or to establish that the said funds were used for personal purposes of the individual account holders. The identity and creditworthiness of the creditors, and genuineness of the transactions, remain unchallenged by the Revenue. Thus, the fact that the firm used the partner s bank account as a conduit for receiving capital does not, in our view, vitiate the nature of the transaction. The law recognizes the distinction between legal and beneficial ownership, particularly in the context of partnerships, where the firm is not a separate juristic person distinct from its partners. Assessee has duly discharged the onus of proving the nature and source of the capital introduced in the firm. The addition made by the AO, and sustained by the CIT(A), is based on a narrow interpretation of ownership and overlooks the reality of beneficial ownership and the practical constraints faced by partnership firms. Therefore, the addition made u/s 69 is not sustainable and is liable to be deleted. Assessee appeal allowed.

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• 2025 (5) TMI 272
  Denial of claim of exemption u/s 12AA as well as u/s 80G on account of non-compliance by the assessee - HELD THAT:- The Bench was of the view that the Ld. CIT(A) had denied the claim of exemption u/s 12AA as well as u/s 80G of the Act on account of non-compliance by the assessee. Therefore, in the interest of justice, it was considered imperative that the assessee may be granted another opportunity to file its submission in response to the notice issued by the Ld. CIT (Exemption) for justifying the genuineness of the activities and claim of approval. Appeals filed by the assessee are allowed for statistical purposes.

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• 2025 (5) TMI 271
  TP Adjustment - Project Technical and Marketing Services, Accounting and Financial Services, Sourcing/Logistics/HR Services and Business Support Services ( IGS ) availed by the company from its Associated Enterprises (AEs) - addition on account of administrative and business support services availed - HELD THAT:- From examination of record it is crystal clear that learned Authorized Representative for the assessee submitted the Cost benefit analysis and relevant documentary evidence of these services with regard to Finance and Accounting services, HR/Sourcing, Marketing Services and Product Technical Services and Business support services. As relying on Tribunal in assessee s case titled as Corteva Agriscience India Pvt. Ltd. [ 2024 (12) TMI 1566 - ITAT DELHI] the entire Transfer Pricing Adjustment made by the revenue on account of administrative support services segment deserves to be deleted. Decided in favour of assessee.

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• Customs

• 2025 (5) TMI 270
  Seeking exemption from detention - gold kada seized from the Petitioner at the airport constitutes a personal effect under the Baggage Rules, 2016 or not - Petitioner has requested not to receive the Show Cause Notice and personal hearing - HELD THAT:- Clearly, a perusal of the photographs and the fact that it is one Kada which is usually worn by persons like the Petitioner who are Sikhs, leaves no doubt in the mind of the Court that the same was a personal effect of the Petitioner. Moreover, in the cases of Mr Makhinder Chopra vs. Commissioner of Customs, New Delhi [ 2025 (3) TMI 19 - DELHI HIGH COURT] ] and Amit Kumar v. The Commissioner of Customs [ 2025 (2) TMI 385 - DELHI HIGH COURT ] this Court has discussed various issues arising in such cases where the goods have been detained from a tourist by the Customs Department, including the issue of personal jewellery being part of personal effects under the Baggage Rules, 2016 and waiver of SCN and personal hearing by way of a preprinted waiver form. Conclusion - Considering the fact that the gold kada seized is merely a personal effect of the Petitioner, in the opinion of this Court, the detention itself would be contrary to law. The detention of the gold kada is set aside. Petition disposed off.

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• Corporate Laws

• 2025 (5) TMI 269
  Oppression and mismanagement - Section 397 398 of the Companies Act, 1956 - Illegal appointment of Respondents 2 3 as Directors - Misappropriation of amounts invested/ deposited by the petitioners and other investors - Non-convening of the General meetings - Irregular allotment of further shares - HELD THAT:- The Respondents No. 5 has placed on record certain handwritten documents which were drawn on 23.08.1987 and 05.10.1987. These documents clearly evidence that the three groups had agreed to form a company with a paid-up capital of Rupees 60,000/- owned equally by each group, which thereafter came to be formed as Respondent No. 1, wherein Shri Y J Barrara and Shri N S Gandhi were agreed as First directors and the Petitioners was to take up the registration job. The Petitioner and N S Gandhi jointly were forming a group and each of them was to collect 4.5 lakhs to be utilised to acquire the land for development thereof. The facts stated in the petition are in corroboration with these noting duly signed by the Petitioner, i.e. the Petitioner was part of NS group, whose share was 1/3rd in the company s capital for all group members taken together. The Petitioner was allotted 60 shares of Rs. 1000 each and was liable to contribute Rs. 3,00,000/- to the company towards the land, and another Rs. 1,50,000/- towards 50% of N B Avadh share which came in the ownership of the Petitioner. Accordingly, the petitioner paid 4.50 lakhs rupees towards cost of land to the company as loan. The petitioner nominated some persons to hold his shares in the plot of land and such nominated person of each group were given loan by the company for acquisition of land in their name - It is relevant to note here that the Petitioner has not disowned these notes, yet has questioned the relevance of these to the petition and has also asserted in his pleadings relying on these writings itself that the said writings records about the rights in respect of the lands proposed to be purchased shall not be saleable and transferable. The petitioner has suppressed the actual understanding amongst the parties and has tried to take advantage of demise of original directors i.e. his brother N. S. Gandhi and Mr. Y. J. Barara for challenging the sale of plots of land owned by various persons in their name or in name of their nominees. The Respondent Company was merely a facilitator in whole of exercise and the Petitioners have been paid, to their own admission as evidenced from documents placed on record by the Respondent No. 5, the sale proceeds due from sale of their share of plots - The allegations are vague and are merely conjectures. The jurisdiction of this Tribunal under Section 241/242 of the Companies Act, 2013 is an equitable jurisdiction. It was held in case of Jiwan Mehta v. Emmbros Metals P. Ltd. [ 2007 (11) TMI 716 - COMPANY LAW BOARD PRINCIPAL BENCH, NEW DELHI ] that It is a settled proposition of law that the conduct of the parties is a very relevant factor to be considered in the equitable proceedings under Sections 397/398 of Companies Act, 2013. Conclusion - The Petitioner had not come with clean hands and had failed to provide sufficient evidence to support his claims of oppression and mismanagement. Petition dismissed.

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• Insolvency & Bankruptcy

• 2025 (5) TMI 268
  CIRP proceedings - Resolution Plan of the JSW in the matter of Bhushan Power and Steel Limited- Maintainability of appeals filed by erstwhile promoters, operational creditors, and government authorities under Section 62 of the Insolvency and Bankruptcy Code, 2016 - persons aggrieved or not - Mandatory requirement u/s 29A - Non-compliance of mandatory provisions and on EBITDA. Maintainability of appeals - aggrieved persons - HELD THAT:- The use of the phrase any person aggrieved indicates that there is no rigid locus requirement to institute an Appeal challenging the order of NCLT before the NCLAT, or an order of NCLAT before this Court. Any person who is aggrieved by the order may institute an Appeal. Once the Corporate Insolvency Resolution Process is initiated, the proceedings are no longer restricted to any individual Applicant Creditor or to the Corporate Debtor, but rather they become collective proceedings in rem, where all the creditors and the Ex- Directors would be necessary stakeholders. Therefore, the Appellants who are the operational creditors, and the erstwhile Promoters, being important stakeholders, and whose Company Appeals have been dismissed by the NCLAT vide the impugned judgment, would certainly be the persons aggrieved entitled to file Appeals before this Court under Section 62 of the IBC. Moreover, they have also raised number of questions of law in the instant appeals, which although will be considered in the later part of this judgment, nonetheless, they being the persons aggrieved, the Appeals at their instance are certainly maintainable. In the instant case, indubitably, the NCLT vide the order dated 05.09.2019 had allowed the Application of the Resolution Professional, seeking approval of the Resolution Plan of JSW as approved by the CoC. Hence, JSW as such, could not be said to be the person aggrieved by the order of NCLT approving the Resolution Plan of JSW itself. It seems that JSW was aggrieved by some of the conditions imposed by the NCLT while approving its plan, however, for filing such an Appeal under Section 61, the grounds specified in sub-section (3) thereof must exist. Mandatory requirement u/s 29A - HELD THAT:- Since, the eligibility/ineligibility of the Resolution Applicant to submit the Resolution Plan goes to the root of the matter, it was incumbent on the part of the Resolution Professional to verify and certify that the contents of the mandatory affidavit, filed by the Resolution Applicant-JSW in respect of Section 29A were in order. The same having not been stated in the Application filed by the Resolution Applicant before the NCLT, it has raised serious doubt in the mind of the Court with regard to the very eligibility of the JSW to submit the Resolution Plan - the doubt is further fortified by the observations made and justification given by the NCLAT for the non-disclosure and suppression made in the Resolution Plan by JSW, with regard to the Joint Venture Agreement dated 05.03.2008 entered into by and between the JSW, BPSL and Jai Balaji. Power of NCLAT to review the decision of statutory authority under PMLA - HELD THAT:- In view of the settled proposition of law, when the NCLT could not exercise the powers of judicial review falling outside the purview of the IBC, or falling within the purview of public law, the NCLAT also, being an Appellate Authority under Section 61 over the orders passed by the NCLT, could not exercise any power or jurisdiction beyond Section 61 of IBC - a person aggrieved by an order of the Adjudicating Authority can prefer an Appeal to the NCLAT under Section 61(1), and that an Appeal against the order approving a Resolution Plan under Section 31 could be filed only on the grounds mentioned in clauses (i) to (v) of sub-section (3) of Section 61. Hence, for filing an Appeal under Section 61, there has to be an order passed by the NCLT so far as sub-section (1) is concerned, and if the Appeal is filed against the order of NCLT approving the Resolution Plan under Section 31, it could be filed only on the grounds mentioned in sub-section (3) of Section 61. In the instant case, after the approval of Resolution Plan of JSW by the NCLT on 05.09.2019, subject to the conditions mentioned therein, the PAO came to be passed by the ED on 10.10.2019 under Section 5 of the PMLA - The PMLA being a Public Law, the NCLAT did not have any power or jurisdiction to review the decision of the Statutory Authority under the PMLA. Apart from the fact that the said issue was pending before this Court in respect of the same PAO dated 10.10.2019 and therefore the NCLAT should not have decided the said issue, it was beyond the jurisdiction of the NCLAT to decide the said issue in the Company Appeal filed by JSW under Section 61 of IBC. The observations made and the findings recorded by the NCLAT in the impugned judgment with regard to the PAO dated 10.10.2019 passed by the Directorate of Enforcement under the PMLA, being without any authority of law and without jurisdiction, were coram non judice. Non-compliance of mandatory provisions and on EBITDA - HELD THAT:- There is nothing on record to show as to how, when and by whom the Effective date as contemplated in the Resolution Plan was extended. If the Effective date was surreptitiously extended by some lenders, claiming to be part of CoC which had become functus officio and which had no authority to do so, any payment made or Equity infused by JSW under the garb of such decision, cannot be vindicated by the Court. When the SRA-JSW, CoC and Resolution Professional are being represented by very eminent Advocates, non-production of such relevant material with regard to infusion of Equity and extension of Effective date, to substantiate their submissions, cannot be without any purpose. It therefore raises serious doubts about the legality of such actions and genuineness of the so-called compliance of Resolution Plan, pending these Appeals. It has been reiterated time and again by this Court that one of the main objects for enacting the IBC is to complete the entire CIR Proceedings in a time bound manner, and that is the reason, a time-line is set out in the Code and its Resolutions for every stage of the proceedings. As well settled, time is a crucial factor of the scheme under IBC. To allow the proceedings to lapse into indefinite delay will frustrate the very object of the Code. The provision contained in Section 12(1) is mandatory in nature as the expression shall be completed is used. Sub-section (3) further makes it clear that the duration of 180 days may be extended further but not exceeding 90 days , meaning thereby a maximum of 270 days time limit is statutorily laid down. The proviso to Section 12 also further clarifies that the extension of period of CIRP under the said Section shall not be granted more than once. Therefore, there remains no shadow of doubt that prior to insertion of two provisos by way of amendment in Section 12 which came into force w.e.f 16.08.2018, the entire CIRP proceedings had to be completed within maximum period of 270 days from the date of admission of the Application to initiate such process. The CIRP Regulations, 2016 have been made by the Insolvency and Bankruptcy Board of India in exercise of the powers conferred under Section 5, 7, 9, 14, 15, 17, 18, 21, 24, 25, 29, 30, 196 and 208 read with Section 240 of the IPC. The said Regulations being subordinate legislation having statutory force, have the same binding effect as the Code itself. Therefore, the mandates given in the said Regulations to carry out the provisions of the Code have to be strictly complied with by all the stakeholders as well as by the Authorities under the Code. However, in the instant case, the Resolution Applicant - JSW had submitted the Resolution Plan in complete contravention of the mandates given in the Code as well as in the Regulations. There are much substance in the submissions of the learned Senior Advocate for the Ex-Promoters that apart from the fact that there was gross non- compliance of the mandatory provisions of the IBC and the Regulations, there was a dishonest and fraudulent attempt made by JSW, misusing the process of the Court by not making the upfront payments as committed by it for about two and a half years and thereby enriching itself unjustly, and thereafter considering the rising prices of steel in the market, JSW sought to comply with the terms of Resolution Plan at a very belated stage, in collusion with the CoC and the Resolution Professional. The changing stance of CoC in the present proceedings also smacks of its bona fides and raises serious doubts about the exercise of its so- called commercial wisdom. Though the commercial wisdom of the CoC should have been given the primacy in any adjudicatory proceedings, the changing stance of CoC from time to time during the course of proceedings right from the holding of meetings for approving the Resolution Plan of JSW till the final hearing of the present Appeals, has led this Court to believe that the CoC also has played a very dubious role in the entire CIRP. It was stated by the CoC on affidavit before this Court that because of the delaying tactics adopted by JSW and deferring the implementation of the Resolution Plan, the CoC was entitled to the compensation and interest on the said amount of Rs.19,350 Crores for causing loss of crores of rupees per day. It is very pertinent to note that the upfront payments and commitment with regard to infusion of Equity into the company was one of the main criteria on which JSW had scored the highest in the evaluation matrix determined by the CoC. Thus, after obtaining the approval of its Resolution Plan from CoC by presenting a rosy picture, misguiding the CoC, and defeating the rights of other Resolution Applicants, JSW did not respect and honor the said commitments, and on the contrary tried its level best to delay the implementation of the Resolution Plan without any cogent reason or justification. This is nothing but a misuse of process of law and a fraud committed by JSW with the CoC and other stakeholders. Thus, it is quite clear that merely because the Code is silent with regard to the phase of implementation of the Resolution Plan by the Successful Resolution Applicant, neither the Tribunal nor the Courts should give excessive leeway to the Successful Resolution Applicant to act in flagrant violation of the terms of the Resolution Plan or in a lackadaisical manner. In the instant case, SRA/JSW did not implement the Resolution Plan for about two years since its approval by the NCLAT, though there was no legal impediment in implementing the same. Such flagrant violation of the terms of the Resolution Plan, has frustrated the very object and purpose of the Code. Conclusion - i) The Resolution Professional had utterly failed to discharge his statutory duties contemplated under the IBC and the CIRP Regulations during the course of entire CIR proceedings of the Corporate Debtor- BPSL. ii) The CoC had failed to exercise its commercial wisdom while approving the Resolution Plan of the JSW, which was in absolute contravention of the mandatory provisions of IBC and CIRP Regulations. The CoC also had failed to protect the interest of the Creditors by taking contradictory stands before this Court, and accepting the payments from JSW without any demurer, and supporting JSW to implement its ill-motivated plan against the interest of the creditors. iii) The SRA-JSW after securing the highest score in the Evaluation matrix in the 18th meeting of CoC, submitted the revised consolidated Resolution Plan with addendum under the garb of complying with the amendments made in the CIRP Regulations, 2016, and got the same approved from the CoC. However, JSW even after the approval of its Plan by the NCLAT, willfully contravened and not complied with the terms of the said approved Resolution Plan for a period of about two years, which had frustrated the very object and purpose of the IBC, and consequently had vitiated the CIR proceedings of the Corporate Debtor-BPSL. iv) The Resolution Plan of JSW as approved by the CoC did not confirm the requirements referred to in sub- section (2) of Section 30, the same being in flagrant violation and contravention of the expressed provisions of the IBC and the CIRP Regulations. The said Resolution Plan therefore was liable to be rejected by the NCLT under sub-section (2) of Section 31, at the very first instance. v) The impugned judgment passed by the NCLAT in allowing the Company Appeal of JSW and issuing the directions without any authority of law and without jurisdiction is perverse, coram non judice and liable to be set aside. The judgments and orders dated 05.09.2019 and 17.02.2020 passed by the NCLT and NCLAT respectively are quashed and set aside - appeal allowed.

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• 2025 (5) TMI 267
  Nature of debt - financial debt or other creditors - appellant entered into a Definitive Agreement with the Corporate Debtor and the claim was reflected in the Corporate Debtor s financial statements - Admission of claim filed by the Appellant after the approval of the Resolution Plan by the Committee of Creditors (CoC) - HELD THAT:- The present is a case where Section 9 application was filed by the Appellant which was rejected holding that debt cannot constitute operational debt and thereafter Appellant had filed Commercial Suit in Delhi High Court in 2019 and the CIRP of the Corporate Debtor commenced on 19.05.2023 and after due publication although several other creditors have filed their claims, Appellant choose not to file its claim. Appellant cannot contend that he was not aware of the CIRP since in the proceedings filed by the Appellant itself in Delhi High Court the initiation of the CIRP has been noticed as has been noted by the Adjudicating Authority in its impugned order. Appellant was well aware of the initiation of the CIRP and had chosen not to file any claim. Resolution Plan has already been approved by the CoC. When Appellant chose not to file any claim before approval of the plan by CoC, it is not open for the Appellant to claim that his claim needs to be accepted as financial debt. This Tribunal in Deputy Commissioner, UTGST, Daman vs. Rajeev Dhingra [ 2023 (9) TMI 1688 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI] has dismissed the Appeal filed by an Appellant challenging the order approving the Resolution Plan on the ground that their claim was submitted and claim was required to be considered in the CIRP. The claim submitted by the Appellant after approval of the Resolution Plan has rightly not been accepted by the Resolution Professional and we are of the view that the Adjudicating Authority also did not commit any error in rejecting IA No.507 of 2025 filed by the Appellant where direction was sought to Resolution Professional to condone the delay in filing the claim and further direction to the Resolution Professional to accept the claim. The Resolution Professional also cannot be said to have committed any breach of CIRP Regulations 2016 since he has noticed in the Information Memorandum that no claim has been filed by the Appellant although financial statement mentioned receipt of the amount from the Appellant. Conclusion - i) The Appellant s claim was rightly classified as other creditor by the Resolution Professional given the absence of a timely filed claim and prior rejection of the claim as operational debt. ii) The claim filed after the approval of the Resolution Plan by the CoC could not be admitted or considered in the CIRP. There are no error in the order of the Adjudicating Authority allowing the Resolution Plan - appeal dismissed.

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• 2025 (5) TMI 266
  Admission of section 9 application - payment of gratuity claimed by the operational creditor - operational debt or not - existence of pre-existing dispute or not - Section 9 Application filed by JK Jute Mazdoor Morcha shall operate res judicata against R-1, Devi Prasad or not, in view of the affidavit filed by Devi Prasad in said company appeal praying that claim of Devi Prasad be also considered in the said proceeding - doctrine of merger. Whether the payment of gratuity claim by operational creditor constitute an operational debt within meaning of the IBC? - HELD THAT:- All sums due to any workmen from the gratuity fund or any other fund for the welfare of the workmen is maintained by the company is specifically included in workman dues. Learned counsel for the appellant has relied on the judgment of this Tribunal in Kishore K. Lonkar Vs. Hindustan Antibiotics Ltd. [ 2022 (5) TMI 493 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI ] to submit that this Tribunal held that welfare dues do not constitute and cannot be treated to be service benefits due and payable - The claim which was pressed before this Tribunal was on the ground of LTC and Earned Leave and Encashment. This Tribunal held that for seeking to initiate CIRP on the ground of LTC and EL Encashment has not been paid, which fall within the ambit of welfare benefit cannot be said to be the intent and objective of the code . Thus, this Tribunal noticing the fact that gratuity amount was paid and question of interest could not be gone into in Section 9 proceeding has affirmed the order of the adjudicating authority rejecting Section 9 application. The above judgment is clearly distinguishable from the facts of the present case. The claim of gratuity with interest was fully included in operational debt and application under Section 9 was fully maintainable. Whether Section 9 application deserves rejection by the adjudicating authority on ground of pre-existing dispute on the absence of Suit No. 500/2017 (filed on 19.05.2017) and Suit No. 2506/2017 (filed on 15.12.2017)? - HELD THAT:- Suit No. 500/2017 was filed on May, 2017. The said suit cannot be said to be raising any dispute regarding the claim of the workmen. The prayer was with regard to compromise proposal by the corporate debtor, which was claimed that should not be treated any admission of the claim against the company or management. The said suit cannot constitute any pre-existing dispute with regard to claim of the workmen. The next suit which has been relied by the appellant is Suit No. 2506/2017. The date of filing of the said suit is relevant which is 15.12.2017, why the said date is relevant is noticed hereinafter. Thus on 06.12.2017, the counsel for the company (corporate debtor) categorically submitted before the Delhi High Court that workmen can invoke their jurisdiction under Sections 8 9 and the Suit No. 2506/2017 was filed on 15.12.2017 immediately thereafter, when the High Court has permitted with the consent of the company/corporate debtor to initiate proceeding under Sections 8 9. The filing of suit on 15.12.2017 cannot be said to be bona fide nor that can be treated to be pre-existing dispute with regard to the claim of workmen - Along with the suit, a list of retired workmen was annexed in which the R-1 Devi Prasad was also mentioned as serial number 425. When the company before the Delhi High Court agreed that workers can file their claim under Sections 8 9 and 06.12.2017, on which stand the Writ Petition was disposed of, filing of suit of 15.12.2017, restraining the workmen regarding their dues is mala fide on part of the company/corporate debtor and cannot be termed to be raising a dispute regarding the claim. There is one more reason due to which the plea of pre-existing dispute raised by the appellant has to be rejected. The notice under Section 8 regarding claims of all 3000 workmen was given on 14.03.2017 on basis of which the Section 9 application was filed by workmen on 20.03.2017, which came to be dismissed on 28.04.2017 by the NCLT. Even Suit No. 500/2017 was filed much after the said date, i.e., on 19.05.2017. Notice on behalf of the claim of workmen on behalf of the by JK Jute Mazdoor Morcha was given much before filing of the Suit Nos. 500/2017 and 2506/2017. The plea of the appellant that there was pre-existing dispute with respect to claim of the workmen deserves to be rejected. The plea raised is wholly frivolous and moonshine defense. Whether order passed in Section 9 Application filed by JK Jute Mazdoor Morcha shall operate res judicata against R-1, Devi Prasad, in view of the affidavit filed by Devi Prasad in said company appeal praying that claim of Devi Prasad be also considered in the said proceeding? - HELD THAT:- What was stated by R-1 that his claim may also be adjudicated in the appeal and he authorises JK Jute Mazdoor Morcha to represent his case. It is noticed the judgment of this Tribunal in JK Jute Mazdoor Morcha. Judgment of this Tribunal dated 17.03.2023, where this Tribunal dismissed the appeal filed by JK Jute Mazdoor Morcha holding that application filed under Section 9 by JK Jute Mazdoor Morcha was premature since it was filed within 10 days from delivery of demand notice. Date of delivery was held on 21.03.2017 and petition was filed on 28.03.2017, hence it was held as premature. The order passed by the adjudicating authority rejecting Section 9 application by JK Jute Mazdoor Morcha shall be merged with order dated 17.03.2023 of this Tribunal, where the only finding returned was that the application was premature - The said order was also affirmed by the Hon ble Supreme Court in JK JUTE MILL MAZDOOR MORCHA VERSUS JUGGILAL KAMLAPAT JUTE MILLS COMPANY LTD. [ 2023 (5) TMI 1439 - SC ORDER] . In the appeal, no such issue was decided on basis of which the appellant can contend that claim of R-1 is barred by res judicata - the submission of the appellant that claim of the R 1 was barred by res judicata is rejected. Conclusion - i) The gratuity claim with interest awarded by the Labour Commissioner constitutes an operational debt under Section 5(21) of the IBC. ii) There was no pre-existing dispute that barred the application, as the suits filed by the corporate debtor did not contest the gratuity claim and were filed after the demand notice. iii) The dismissal of the prior Section 9 application by the trade union on prematurity grounds does not operate as res judicata against the present claim. Appeal dismissed.

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• Service Tax

• 2025 (5) TMI 265
  Invocation of extended period of limitation in terms of proviso to Sub-Section (1) of Section 73 of the Act of 1994 - requriement to determine the tax liability either within the prescribed period of one year in terms of clause (b) of Sub-Section (4B) of Section 73 or the Authority was required to show at least prima-facie that it was not possible for him to determine the liability within the said prescribed period - HELD THAT:- In the present case, there is no dispute on facts that the determination of liability has been done after almost three and half years. In the counter affidavit, there is no whisper even to prima-facie satisfy this Court that it was not possible for the Taxing Authority to determine the tax liability within prescribed period of one year at first instance. Conclusion - The impugned order determining service tax liability after a delay of over three years without any justification was liable to be quashed. Application allowed.

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• 2025 (5) TMI 264
  Short payment of service tax - Calculation of liability in terms of Rule 2A(i) of Service Tax (Determination of Value) Rules, 2006, where the value in property of goods transferred while rendering the services was determinable - tax calculated as per Rule 2A(ii) of Valuation Rules, in respect to paint job executed by the appellant. HELD THAT:- If the service provider uses the goods in execution of work contract, the property of which is transferred, it qualifies as work of contract. However if the service provider only provides the specific services without transferring any goods, the services will not be considered as works contract. When this observation about the works contract is read in light of Rule 2A above it becomes clear that Rule 2A(i) has to be invoked where value of goods transferred while rendering the service is determinable/quantified/separately demanded for rendering Works Contract Service. Whereas Rule 2A(ii) has to be invoked when while rendering the service the value of consumable cannot be vivisected and it cannot be determined separately. The another concept which is relevant to be taken into consideration the Article 366 (29A) of Constitution of India as has been incorporated vide 46th Amendment of Constitution. By virtue of said provision, the transfer of property in goods is deemed to be the sale of the goods involved in execution of work contract by the person making the transfer and the purchase of those goods by the person to whom such transfer is made. Thus, by virtue of the legal fiction introduced by Article 366 (29)A (b), there is the deemed sale of the goods which are involved in execution of work contracts even if a contract is a single and indivisible works contract. Such a deemed sale has all the incidence of the sale of goods involved in the execution of works contract where the contract is divisible into one for the sale of the goods and the other for supply of labour and services. This Article 366 29A(b) serves to bring transaction where essential ingredients of sale defined in sale of goods at 1930 are absent within the ambit of sale or purchase for the purposes of levy of sales tax. Thus, it becomes clear that the agreements for composite contracts involving the goods as well as service can always be bifurcated into those where value of goods involved in rendering Works Contract Service is separately quantified from the service element and another where goods are so consumed while rendering service that the value thereof cannot be separately determined like in case of paint job in the present case - From the invoices in question, it is apparent that the value of goods/spare parts while rendering the services of the motor vehicles by the appellant has been separately earmarked hence has been bifurcated from the value of the charges of labour incurred for rendering the services. However, vis- -vis the service of painting there is no bifurcation of amount of paint consumed and the labour charges. The painting job becomes nothing but works contract where the value of goods is not determinable. Hence, there are no error committed by the appellant while calculating the tax liability vis- -vis painting charges in terms of Rule 2(A)(ii). The Hon ble High Court of Madhya Pradesh in the case of Agarwal Colour Advance Photo System Vs. Commissioner of Central Excise [ 2020 (4) TMI 799 - MADHYA PRADESH HIGH COURT] has held that it is permissible to bifurcate the contract and levy sales tax of the value of the material involved in execution of the works contract. Irrespective that transfer of goods consumed while rendering service also amounts to transfer of property in goods and are covered under the definition of deemed sale of Article 366 29(A). But the mere fact that in case the value of such consumable is not determinable it is Rule 2(A)(ii) of Valuation Rules which is applicable. Conclusion - There are no justification when the impugned order has denied the bifurcation of the composite contract and has disallowed the computation of such part of contract where the value of goods and service rendered indivisible unquantifiable. As a result, the demand has wrongly been confirmed. Appeal allowed.

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• 2025 (5) TMI 263
  Levy of service tax on reimbursable expenses - reimbursable expenses incurred by the appellant in the course of providing Customs House Agent (CHA) services and other related services form part of the taxable value under Section 67(1) of the Finance Act, 1994, and Rule 5 of the Service Tax (Determination of Value) Rules, 2006 - pure agent expenses under Rule 5(2) and its Explanation 1 or not - suppression of facts - Profit sharing and commissions/incentives qualify as consideration for Business Auxiliary Services - extended period of limitation - penalty. Levy of service tax on reimbursable expenses - HELD THAT:- The issue on levy of service tax on reimbursable expenses is no more res-integra in view of the decision of the Honourable Supreme Court in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd, [ 2018 (3) TMI 357 - SUPREME COURT] which has considered the issue of liability to pay service tax on reimbursable expenses received by the service provider in the course of rendering services for the client, apart from the consideration received for rendering the services on which the client has discharged the liability to pay service tax. The Honourable Supreme Court affirmed the decision of the Delhi High Court in Intercontinental Consultants Technocrats Pvt Ltd v UOI, [ 2012 (12) TMI 150 - DELHI HIGH COURT] , wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections - the impugned order in appeal, upholding the demands of service tax as confirmed in the impugned orders in original on this count, cannot sustain. Business Auxiliary Services - HELD THAT:- The Department has proceeded to demand Service Tax only on the figures taken from the financial statements (profit and loss account) and not from the invoices raised by the appellant. No evidence has been let in that these are consideration received for services provided to a client. That the demand of service tax made merely based on income reported in the P L account, without it being shown that such income amounts to consideration received for services provided, has been held to be untenable. The decisions of the Tribunal in Greenwich Meridian Logistics (I) Pvt Ltd v CST, Mumbai [ 2016 (4) TMI 547 - CESTAT MUMBAI] in M/s. New Era Travel Cargo Agencies v The Commissioner of GST Central Excise, [ 2024 (5) TMI 1520 - CESTAT CHENNAI (LB)] in the case of M/s. International Clearing Shipping Agency v CST [ 2023 (11) TMI 104 - CESTAT CHENNAI] are on these lines. The nomenclature under which the appellant books profit in its account cannot be the basis for slotting the appellant as providing a particular taxable service under section 65(105). Determination of taxability based on such entries and assessing it to tax on this count on an empirical basis, is alien to the Finance Act 1994. The demand under Business Auxiliary Services made vide the impugned orders in original, which has been upheld in its entirety by the impugned OIA, cannot sustain. Extended period of limitation - penalties - HELD THAT:- There is no evidence let in of any positive act of suppression or wilful misstatement with intent to evade payment of service tax on the part of the appellant, and thus the ingredients required to invoke extended period of limitation has not been established by the Department - there are force in the contentions of the learned counsel for the appellant that the issues involved were of interpretational nature and therefore the allegation of malafides made to invoke the extended period of limitation and impose penalties are untenable. Conclusion - i) The appellant s exclusion of reimbursable expenses from taxable value is legally correct for the periods in question, in light of the Supreme Court s authoritative ruling. ii) The demand on account of Business Auxiliary Services receipts is unsustainable due to lack of evidence linking such receipts to taxable services. iii) The extended period of limitation and penalties imposed are unjustified due to the absence of suppression or malafide intent. Appeal allowed.

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• 2025 (5) TMI 262
  Demand raised invoking proviso to Section 73(1) of the Finance Act 1994 - demand raised solely on the basis of a discrepancy between income reflected in Income Tax Returns/Form 26AS and Service Tax Returns (ST-3), without independent investigation or corroborative evidence establishing the provision of taxable service - eligibility for the exemption entry no. 9A of the Notification No. 25/2012-ST dated 20.06.2012 - HELD THAT:- NSDC is primarily a public private partnership organisation dedicated to skill development and it has been envisaged as financing and administrative organisation to support creation of skillable and profitable vocational training institutions. As a part of their core functions they are also engaged in lending business also whereby they help build training capacity through private sector participation. They are also engaged in implementation and facilitation of Central and State Government Schemes including the schemes of other institutions, Central Government and State Government, including Ministry of Urban Development and Improvement (MUDI). The Adjudicating Authority has denied this exemption on the basic ground that they have not been able to produce any certificate of their being an approved training partner of NSDC and that their name is not appearing in the list of approved partners, therefore, a plain reading of notification would debar them from the benefit of said notification at serial no. 9A - it is not in dispute that NSDC is providing, interalia, soft loans at concessional rate of interest only for the purpose of skill development or building training capacity consistent with their objective to partner with Central and State Governments for creating and developing favourable eco system for skill development. In the present appeal, from the loan agreement itself it is apparent that the soft loan has been extended, for specific skill development programmes to be conducted by the appellant. Various other documents submitted, including the one where the order is from the State Government of Bihar, show that they were imparting skill upgradation training as a part of NULM. It is also observed that NSDC is engaged in implementing the skill development component of various schemes run by different ministries. Thus, holistically considering the objective for creation of NSDC and it s role, it would be obvious that the loan was provided for skill development programme only and was in relation to schemes being implemented by other Central Government Ministries and State Governments. Plain reading of the notification would show that the intention is to exempt all the services provided by NSDC or by sector skill council approved by NSDC or by a training partner approved by the NSDC, in relation to, inter alia, any scheme implemented by NSDC. The rationale adopted by the Adjudicating Authority that since they do not have a certificate and that their name is not figuring in the list of partner shown on the website of the NSDC, it would in itself be a sufficient to treat them as not being an approved training partner is not correct when there is a provision for both types of partners, funded and non-funded. In this case, we find that the funding has been done by the NSDC by way of concessional loan for specified end purpose and therefore they would be in the nature of funded partner. Hon ble Supreme Court in the case of Government of Kerala Vs Mother Superior Adoration Convent [ 2021 (3) TMI 93 - SUPREME COURT ] interalia, considered this argument for strict construction and for allowing the benefit to the Revenue in terms of Dilip Kumar case, [ 2018 (7) TMI 1826 - SUPREME COURT (LB)] , and held that in the case of beneficial notification, the exemption contained must be given full effect - placing reliance on this judgment in the present appeal, the benefit of entry no. 9A of notification can be extended to the appellant in the given factual matrix. Therefore, on this ground also the demand will not sustain. It is not required to examine other grounds including the plea of limitation taken by the appellant. Conclusion - i) The demand raised solely on the basis of differences between Income Tax Returns/Form 26AS and Service Tax Returns without independent investigation or valuation is unsustainable and must be set aside. ii) The appellant qualifies for exemption under Serial No. 9A of Notification No. 25/2012-ST as a funded or non-funded partner of NSDC in relation to skill development programmes implemented or supported by NSDC and various government schemes. Appeal allowed.

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• Central Excise

• 2025 (5) TMI 261
  CENVAT Credit availed on inputs denied on the ground that it was taken in violation of Rule 6(1) as the final goods were said to have been cleared claiming the exemption under Notification No. 30/2004-CE - CENVAT Credit on capital goods denied on the ground that it was taken in violation of Rule 6(4) which prohibits taking of Cenvat credit on capital goods used exclusively for manufacture of exempted goods - penalties imposed under section 11AC of the Central Excise Act, 1944 and Rule 26 of the Central Excise Rules, 2002. CENVAT Credit on inputs - HELD THAT:- The assessee had applied for this refund as the consequential relief of an order of the Tribunal. The Assistant Commissioner had sanctioned part of this refund by way of credit to the Cenvat account. Therefore, the appellant was entitled to this Cenvat credit and this does not violate Rule 6(1) of the Cenvat credit Rules. The Commissioner had, clearly erred in denying the Cenvat credit to this extent. CENVAT Credit on capital goods - HELD THAT:- Rule 6(4) prohibits it only if the capital goods are used exclusively for manufacture of exempted goods for a period of two years from installation. The appellant s submission is that it had also paid duty on some of the goods and claimed full exemption only on some goods. In paragraph 7 of the impugned order, the details of the duty paid are given in a table. Evidently, the capital goods were also used to manufacture certain goods on which duty was paid and they were not used exclusively for manufacture of exempted goods. Therefore, the Cenvat credit on capital goods is not taken in violation of Rule 6(4) of Cenvat Credit Rules - the denial of Cenvat credit to the assessee in the impugned order is not correct and it cannot be sustained. Penalties - HELD THAT:- The orders of recovery and the penalties imposed on the assessee also cannot be sustained. Conclusion - i) The appellant is entitled to Cenvat credit on inputs and this does not violate Rule 6(1) of the Cenvat credit Rules. ii) The Cenvat credit on capital goods is not taken in violation of Rule 6(4) of Cenvat Credit Rules. iii) The orders of recovery and the penalties imposed on the assessee also cannot be sustained. The impugned order is set aside and all three appeals are allowed.

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