BIFR rehabilitation scheme concessions remain binding despite improved net worth, and denial on that ground alone was unsustainable.

Concessions granted under a sanctioned BIFR rehabilitation scheme cannot be denied merely because the company's net worth later becomes positive or the SICA reference is discharged. The remaining obligations under the scheme continue to bind the Income-tax Department unless there is a separate lawful basis to refuse compliance. In this matter, the rejection of the claim on the sole ground of improved net worth was found unsustainable, and the impugned communication was set aside with a fresh decision directed in accordance with law and the sanctioned scheme.

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Issues: Whether the Income-tax Department could reject the petitioner's claim for concession under the BIFR-sanctioned scheme merely because the company's net worth had become positive and the reference under SICA had been discharged.

Analysis: The claim was rejected solely on the ground that the petitioner's net worth had turned positive after sanction of the scheme and after the operative period had expired. The legal position applied was that concessions forming part of a sanctioned rehabilitation scheme cannot be resiled from merely because the company's net worth later becomes positive or the reference is discharged. The scheme, to the extent remaining unimplemented, continues to bind the Department unless there is a separate lawful basis to deny or enforce compliance. The impugned communication did not consider the matter in light of the sanctioned scheme and the governing legal position.

Conclusion: The rejection on the stated ground was unsustainable. The communication was set aside and the matter was remitted for fresh decision in accordance with law and the observations governing the sanctioned scheme.

Ratio Decidendi: Concessions granted under a sanctioned BIFR rehabilitation scheme cannot be denied by the Department merely because the company's net worth subsequently becomes positive or the reference is discharged; the remaining obligations under the sanctioned scheme continue to bind the Department until lawfully dealt with otherwise.

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