Tribunals and Commissions judgments

CESTAT Chennai rules that service tax cannot be levied on construction of standalone dwellings for tsunami survivors, police housing, or NGOs, as these do not qualify as 'residential complexes' under the Finance Act. This clarifies the scope of commercial construction taxation and protects non-profit and humanitarian housing projects from misapplied service tax demands.

CESTAT Ahmedabad holds that bagasse, generated as agricultural waste during sugar production, cannot be classified as an exempted good under Rule 6 of the Cenvat Credit Rules, 2004, rendering circulars demanding credit reversal unlawful. This clarifies that waste by-products not intentionally manufactured for sale do not trigger input credit reversal obligations, benefiting sugar mills and agro-industries nationwide.

The Securities Appellate Tribunal ruled that personal WhatsApp messages of a former employee cannot be used to impose liability on a registered investment adviser firm, emphasizing that penalties under the SEBI Act must be strictly proportionate to the adviser’s own conduct. This sets a critical precedent for digital evidence attribution and limits regulatory overreach in adviser misconduct cases.

The Securities Appellate Tribunal struck down a ₹5.69 crore penalty imposed on M. Prasad & Co. for reversal trades with its sister concern, ruling that penalizing both gross profit and gross loss sides without proving intent constitutes double punishment. This sets a critical precedent for brokers and NBFCs: penalties must be calculated on net gains, not aggregate transaction volumes, ensuring fairness under securities regulation.

CESTAT Ahmedabad has ruled that exported sugar is exempt from sugar cess under Notification SO.585(E) dated 30.07.1993, invalidating a Rs.77.50 lakh demand based on a conflicting CBIC circular. This clarifies that statutory exemptions prevail over departmental circulars, offering critical relief to sugar exporters and setting a precedent for tax compliance in agro-industrial supply chains.

When equipment is rented with full possession, control, and risk transferred to the customer, the transaction qualifies as a deemed sale under VAT/CST, not a service, thereby excluding service tax liability. This clarifies the boundary between taxable services and taxable sales in equipment leasing, impacting manufacturers and rental firms nationwide.

The Securities Appellate Tribunal ruled that a director who has properly resigned cannot be penalized for post-resignation misconduct unless they retained de facto control or actively participated in the violations. This clarifies the boundary of accountability for former directors and protects compliant exiters from retrospective liability under SEBI’s enforcement regime.

The Securities Appellate Tribunal has ruled that SEBI cannot impose penalties without personally serving the show cause notice, invalidating reliance on email or postal alternatives when direct service is feasible. This sets a binding precedent for all SEBI adjudications, ensuring procedural fairness and protecting regulated entities from ex parte penalties based on defective notice.

The ITAT Delhi ruled that when the CPC condones a delay in e-verification of an income tax return, the tax department cannot deny a TDS refund on technical grounds. This upholds Article 265 of the Constitution, ensuring no tax can be levied or refunded without legal authority, and protects taxpayers who face genuine personal hardships beyond their control.

ITAT Delhi has ruled that delays of nearly five years in filing income tax appeals may be condoned under Section 249(3) if denying relief would result in a miscarriage of justice, emphasizing that technical limitations must yield to substantive fairness. This sets a critical precedent for taxpayers facing prolonged administrative delays, reinforcing that procedural rigidity cannot override equitable outcomes in tax adjudication.

ITAT Kolkata holds that any income tax assessment framed by an Assessing Officer beyond their prescribed pecuniary jurisdiction under CBDT Instruction 1/2011 is null and void from the outset, regardless of substantive correctness. This reinforces that jurisdictional compliance is a mandatory precondition for validity, affecting all assessees and tax authorities navigating delegated powers under the Income Tax Act.

ITAT Delhi ruled that taxpayers cannot claim interest deductions under Section 36(1)(iii) if they fail to prove borrowed funds were exclusively used for business purposes, especially when those funds were also deployed in exempt income-generating assets. The ruling reinforces that Section 14A disallowance cannot be assumed - it must be substantiated with clear allocation evidence, impacting all businesses with mixed-use borrowings and exempt income streams.

The ITAT Kolkata has ruled that a faceless assessment under Section 151A is jurisdictionally void if the statutory notification empowering the National Faceless Assessment Centre was issued only after the assessment order was framed. This sets a critical precedent: procedural compliance with notification timelines is not optional but foundational to the validity of faceless assessments, affecting all taxpayers subject to centralized scrutiny under the Income Tax Act.

The ITAT Kolkata has ruled that the Centralized Processing Centre cannot make tax adjustments under Section 143(1) without first issuing a show-cause notice to the assessee, violating the foundational principle of natural justice. This sets a critical precedent for all taxpayers whose returns are processed automatically, ensuring procedural fairness in AI-driven tax assessments.

ITAT Agra quashed a Rs.16.28 lakh addition under Section 69 after ruling that revenue cannot rely solely on unauthenticated Excel data from a third-party search without corroboration or opportunity for cross-examination. This reinforces that digital evidence, however voluminous, must meet basic standards of natural justice to justify tax additions - a critical safeguard for taxpayers facing algorithmic or bulk data-driven assessments.

The ITAT Kolkata has ruled that income tax authorities cannot unilaterally add the difference between stamp duty valuation and purchase price under Section 56(2)(x) without first referring the matter to the District Valuation Officer. This reinforces procedural fairness in property-based income assessments and protects taxpayers from arbitrary valuations by revenue officials.

The ITAT Cochin has ruled that to claim deduction under Section 80-IB(10), a housing project must be developed on a plot of at least one acre, with no portion allocated to personal residence or non-housing structures. This clarifies a critical eligibility criterion for developers seeking tax incentives, impacting project planning and land consolidation strategies across residential real estate.

The ITAT Kolkata has ruled that invoking Section 263 to revise a previously scrutinized assessment is impermissible unless the revenue demonstrates actual prejudice, not just a technical error. This clarifies that scrutiny under Section 143(3) does not waive the twin-condition test, protecting taxpayers from arbitrary revisionary orders and reinforcing procedural fairness in income tax administration.

ITAT Kolkata rules that when a donee institution’s approval under Section 35(1)(ii) is cancelled retrospectively, donations made by taxpayers while the approval was active and in good faith remain deductible. This protects legitimate claimants from being penalized for administrative actions taken after the fact, reinforcing legal certainty for corporate philanthropy in scientific research.

The ITAT Pune has ruled that once an assessee selects either the Net Asset Value (NAV) or Discounted Cash Flow (DCF) method under Rule 11UA to determine the fair market value of unlisted shares, the Assessing Officer has no authority to substitute it with another valuation approach or question its realism. This reinforces taxpayer autonomy in valuation and curbs arbitrary tax additions, directly impacting startups, private equity deals, and closely held companies.

The ITAT Cochin ruled that teachers paid hourly by coaching institutes without statutory benefits like PF, ESI, or appointment letters are independent professionals, not employees. This means TDS must be deducted under Section 194J for professional fees, not Section 192 for salary - a critical clarification for edtech firms and coaching centers nationwide.

ITAT Kolkata has ruled that once cash deposits are accepted as part of business turnover, they cannot be doubly taxed under Section 68 as unexplained income. This ensures consistent profit computation and prevents arbitrary double assessment, directly benefiting small businesses and traders who rely on cash-based accounting. The decision reinforces the principle that tax treatment must align with the nature of income already disclosed and verified.

The ITAT Agra has ruled that income tax assessments cannot be framed directly against a legal heir unless they are formally recognized as the legal representative under Section 159 of the Income Tax Act. This clarifies that succession rights alone do not confer statutory authority to represent a deceased assessee, impacting how tax authorities must proceed in estate-related assessments and protecting heirs from procedural overreach.

The ITAT Delhi has ruled that corporate social responsibility (CSR) donations meeting Section 80G conditions qualify for tax deduction, rejecting the Revenue’s attempt to disallow them under Section 37(1). This clarifies that Chapter VI-A benefits are independent of business expense disallowances, protecting companies that fulfill statutory CSR obligations while seeking legitimate tax incentives.