Issues: (i) Whether profit from sale of a depreciable business asset, credited to the profit and loss account but assessable as short-term capital gain under Section 50, is includible in book profit for partners' remuneration under Section 40(b)(v); (ii) Whether revenue neutrality and taxation of remuneration in the partners' hands supported the claim.

Issue (i): Whether profit from sale of a depreciable business asset, credited to the profit and loss account but assessable as short-term capital gain under Section 50, is includible in book profit for partners' remuneration under Section 40(b)(v).

Analysis: Explanation 3 to Section 40(b) adopts the net profit shown in the profit and loss account, computed in the manner laid down in Chapter IV-D, with the specified adjustment for partners' remuneration. It does not direct exclusion of every receipt assessable under a head other than business income. Section 50 creates a deeming fiction confined to computation of capital gains and does not require removal of commercial profit credited in the profit and loss account for determining book profit. Head-wise computation of total income cannot be conflated with the distinct computation of book profit. Allowable interest payable to partners was deductible in arriving at the relevant book profit, whereas the profit on sale of the shop was to remain included.

Conclusion: The sale profit was includible in book profit; the claimed partners' remuneration was within the statutory ceiling and fully allowable, in favour of the assessee.

Issue (ii): Whether revenue neutrality and taxation of remuneration in the partners' hands supported the claim.

Analysis: Revenue neutrality cannot independently permit a deduction barred by statute. However, where the remuneration was otherwise permissible under Section 40(b)(v), its actual payment and taxation in the partners' hands supported the bona fide nature of the claim and avoided effective double taxation arising from the disallowance.

Conclusion: Revenue neutrality did not independently create entitlement but supported allowance of the otherwise statutorily permissible remuneration, in favour of the assessee.

Final Conclusion: Book profit for Section 40(b)(v) includes commercial profit credited to the profit and loss account from transfer of a depreciable business asset, notwithstanding its treatment as short-term capital gain under Section 50.

Ratio Decidendi: The deeming fiction in Section 50 is confined to capital-gains computation and cannot, absent express language, exclude from Section 40(b) book profit an amount forming part of net profit shown in the profit and loss account.

Issues: Whether the addition of Rs. 1,76,50,000 under section 68 of the Income-tax Act, 1961, representing receipts from an investor, could be sustained on the existing record.

Analysis: For assessment year 2011-12, the assessee was required to establish the identity, creditworthiness and genuineness of the credit under section 68. Section 56(2)(viib) and the subsequently inserted proviso to section 68 imposing a source-of-source requirement were inapplicable. Bank entries, corporate records and corresponding audited accounts were relevant evidence, but did not by themselves establish commercial substance; equally, nominal taxable income, a high share premium or an unusual banking pattern could not alone establish non-genuineness. Suspicion could not substitute a finding based on verified facts.

Analysis: The aggregate receipt comprised share capital, share premium, share application money and stated consideration for sale of an investment, but the authorities had treated it wholly as share capital and premium without transaction-wise examination. The record prima facie supported the investor's identity and movement of funds, but left material questions unresolved regarding the investor's real financial capacity, antecedent bank credits, independent investment decision, contemporaneous valuation, commercial rationale, objects and activities of both companies, and the genuineness and value of the assessee's underlying investments. A proper determination required third-party and statutory-record verification, with disclosure of adverse material and effective opportunity of rebuttal.

Conclusion: The addition could not be conclusively sustained or deleted on the existing record; its validity must be determined afresh under section 68 of the Income-tax Act, 1961, without retrospective application of section 56(2)(viib) or the later proviso to section 68.

Issues: Whether non-supply of relied-upon documents denied the appellant a fair opportunity of hearing and vitiated the attachment-confirmation proceedings.

Analysis: The record established service of the envelope containing the notice and relied-upon documents while the appellant was in custody, acknowledged by the appellant's endorsement. The subsequent denial, raised after a substantial delay without any complaint against the serving official, was not accepted. Inspection of documents was also permitted, and adequate time was available to file a reply; the later request for further copies and time was treated as an attempt to delay completion of the proceedings.

Conclusion: No breach of principles of natural justice or denial of a fair hearing was established; the confirmation of the provisional attachment was not liable to interference.

Issues: Whether the challenge to the notification substituting Serial No. 60 of Schedule B required adjudication when the petitioner's claim that Digital Still Image Cameras were IT products remained unaffected by the substituted entry.

Analysis: The unamended and substituted entries both retained the expression "IT Products". The petitioner's claim to concessional tax treatment rested exclusively on Digital Still Image Cameras being IT products, rather than on any specifically enumerated item in either entry. The substitution therefore did not affect the basis of its claim.

Conclusion: The challenge to the notification was academic and was not adjudicated; the eligibility of Digital Still Image Cameras as IT products was not determined.

Issues: Whether service-tax liability could be sustained without examining whether turnover from trading in farm products was taxable and without affording the petitioner an effective opportunity to respond.

Analysis: The impugned adjudication recorded non-filing of a response and non-attendance at hearings. However, the material question whether the stated turnover from trading in farm products was exigible to service tax had not been considered. A sustainable liability required due consideration of taxability after affording an opportunity to place a response and supporting documents.

Conclusion: The liability could not be sustained without fresh consideration of the taxability of the turnover after providing a fair opportunity of hearing.

Issues: Whether cancellation of GST registration for continuous non-filing of returns should be set aside and the registration restored.

Analysis: The cancellation was founded solely on non-filing of returns, with no allegation of any dubious process for tax evasion. Continued cancellation would prevent the taxpayer from conducting business and raising invoices, thereby impairing recovery of tax. A pragmatic course was therefore warranted, since the final tax liability could be determined only upon filing of returns.

Conclusion: The cancellation order and the consequential appellate order were set aside, with restoration of registration upon filing of pending returns and payment of the applicable tax, interest, fine and penalty within the stipulated period.

Issues: (i) Whether the accepted Transactional Net Margin Method could be disregarded to separately benchmark the markup on IT support services; (ii) Whether a transfer-pricing adjustment for notional interest on overdue receivables was warranted where the assessee was debt-free; (iii) Whether capital expenditure on scientific research was deductible under Section 35(1)(iv) despite the assessee having opted for the concessional regime under Section 115BAA.

Issue (i): Whether the accepted Transactional Net Margin Method could be disregarded to separately benchmark the markup on IT support services.

Analysis: The IT support cost, including the associated enterprise's markup, formed part of the manufacturing and service segment margins that had been accepted as being at arm's length under the Transactional Net Margin Method. The services were closely linked to the assessee's core business. Once that method was accepted for the aggregated transactions, an isolated component could not be carved out and tested through another method without justification.

Conclusion: The downward adjustment towards the markup on IT support services was unsustainable and was directed to be deleted, in favour of the assessee.

Issue (ii): Whether a transfer-pricing adjustment for notional interest on overdue receivables was warranted where the assessee was debt-free.

Analysis: The assessee remained debt-free during the relevant year and did not incur significant interest cost. The earlier decisions on identical facts treated a notional interest adjustment on overdue associated-enterprise receivables as unwarranted, and no distinguishing material was produced for the year under consideration.

Conclusion: The adjustment for notional interest on overdue receivables was unwarranted and was directed to be deleted, in favour of the assessee.

Issue (iii): Whether capital expenditure on scientific research was deductible under Section 35(1)(iv) despite the assessee having opted for the concessional regime under Section 115BAA.

Analysis: Section 115BAA(2)(i) excludes the deduction under Section 35(2AB), but does not restrict deduction under Section 35(1)(iv). Form 3CM was not a statutory condition for deduction under Section 35(1)(iv), being relevant to the deduction under Section 35(2AB). The expenditure was capital expenditure on scientific research related to the assessee's business, and neither depreciation nor weighted deduction was claimed on it.

Conclusion: The scientific research deduction under Section 35(1)(iv) was allowable and was directed to be granted, in favour of the assessee.

Final Conclusion: The transfer-pricing adjustments for IT support services and overdue receivables were eliminated, and the capital scientific-research expenditure remained eligible for deduction under the applicable statutory provision.

Issues: (i) Whether the statutory preconditions for seizure of equivalent domestic assets under Section 37A(1) on suspicion of contravention of Section 4 were satisfied; (ii) Whether Section 37A could be invoked in respect of foreign-exchange profits arising from transactions undertaken before its commencement; (iii) Whether the deceased and the estate could be treated as persons resident in India for the alleged contravention.

Issue (i): Whether the statutory preconditions for seizure of equivalent domestic assets under Section 37A(1) on suspicion of contravention of Section 4 were satisfied.

Analysis: Information emerging from the Panama Papers investigation and the Singapore proceedings disclosed that five BVI entities, in which the deceased had predominant ownership and control, generated substantial profits through resale of iron ore sourced from India. The Singapore decree recognised the estate's acquisition of the relevant shares and profits, and the foreign exchange continued to be held abroad. These materials provided a prima facie basis to suspect a contravention of Section 4 and to record reasons to believe for seizure under Section 37A(1). A pending appeal against the Singapore decree did not negate the acquisition or ownership recorded by that decree. Section 37A(4) also characterises the seizure as a temporary protective measure pending adjudication.

Conclusion: The requirements for seizure under Section 37A(1) were satisfied; the issue is decided in favour of Revenue.

Issue (ii): Whether Section 37A could be invoked in respect of foreign-exchange profits arising from transactions undertaken before its commencement.

Analysis: Although the trading activities occurred between 2004 and 2012, the foreign exchange and assets were found to have remained held abroad when Section 37A came into force and continued to be held after the Singapore decree in 2023. The relevant conduct under Section 4 is the continuing acquisition, holding, ownership, possession or transfer of foreign exchange or foreign assets outside India. Application of Section 37A to an existing and continuing holding after its commencement is prospective and does not amount to retrospective operation.

Conclusion: Section 37A was validly invoked for the continuing suspected contravention; the issue is decided in favour of Revenue.

Issue (iii): Whether the deceased and the estate could be treated as persons resident in India for the alleged contravention.

Analysis: Employment permits issued abroad, without evidence of the deceased's yearly stay in India or of departure with an intention to remain abroad for an uncertain period, did not displace the statutory test of residence under Section 2(v). The administratrix acted for the estate, whose status was material, and the administratrix's individual residential status was irrelevant. The estate could not be treated as a person resident outside India on the material available.

Conclusion: The deceased was not established to be a person resident outside India, and the estate could not claim that status; the issue is decided in favour of Revenue.

Final Conclusion: The confirmation of seizure of the estate's domestic shares as equivalent assets was legally sustained pending FEMA adjudication.

Ratio Decidendi: A seizure mechanism operating upon a continuing post-enactment holding of suspected foreign exchange or foreign assets is prospective, and may be invoked on recorded reasons to believe of a contravention of the prohibition on such holding by a person resident in India.

Issues: Whether an SEZ unit was entitled to exemption and refund of stamp duty and registration fee on a lease deed executed before promulgation of the Gujarat Special Economic Zone Ordinance, 2004, where the State's SEZ policy had already promised those fiscal benefits.

Analysis: The State policy dated 19.07.2002 extended complete exemption from stamp duty and registration fee to SEZ units and induced investment for industrial development. The Ordinance promulgated on 10.02.2004 gave formal statutory shape to that pre-existing policy. Denial of the promised fiscal benefit solely because the lease deed pre-dated the Ordinance would defeat the policy's object and differentiate without justification between similarly placed SEZ units based only on the date of execution. A lease transfers an interest in land and falls within the policy's intended fiscal benefit.

Conclusion: The exemption and consequential refund of stamp duty and registration fee were rightly available to the SEZ unit notwithstanding that the lease deed was executed before 10.02.2004.

Outcome: Appeal dismissed for want of prosecution without examining the merits.

Issues: (i) Whether statutory price controls limited anti-profiteering liability to HIG units and what ITC benefit remained payable; (ii) Whether interest was payable on the profiteered amount; (iii) Whether penalty was leviable for the contravention.

Issue (i): Whether statutory price controls limited anti-profiteering liability to HIG units and what ITC benefit remained payable.

Analysis: Section 171 of the Central Goods and Services Tax Act, 2017 requires additional ITC benefit to be passed on through a commensurate reduction in price. The LIG and MIG sale prices were statutorily capped and confined to direct costs, without permitting recovery of overheads, administrative expenses or attributable indirect tax costs. This pricing regime was materially different from that applicable to HIG units and could not be equated with a regulated cinema-ticket pricing regime. The nine units sold after the occupancy certificate fell for consideration under Paragraph 5 of Schedule III to the Central Goods and Services Tax Act, 2017, and the five unsold units were not taxable supplies for quantifying profiteering. Excess benefit given to one recipient could not be adjusted against another recipient's shortfall.

Conclusion: No profiteering was attributable to the LIG and MIG units. Profiteering was confined to the HIG category, and ITC benefit of Rs. 70,58,488 inclusive of GST was required to be passed on to eligible HIG homebuyers. This issue was partly in favour of the assessee.

Issue (ii): Whether interest was payable on the profiteered amount.

Analysis: Rule 133(3)(b) of the Central Goods and Services Tax Rules, 2017 provides for return of the amount not passed on with interest at 18% per annum from collection of the higher amount until its return. Interest was treated as compensatory and restitutive of the time value of money due to recipients.

Conclusion: Interest at 18% per annum was payable from the respective dates of collection of the excess amount until actual refund. This issue was against the assessee.

Issue (iii): Whether penalty was leviable for the contravention.

Analysis: Section 171(3A) of the Central Goods and Services Tax Act, 2017 came into force on 01.01.2020, during the period of contravention. The statutory provision imposes a penalty of 10% of the profiteered amount, while providing for waiver where the amount is passed on within the prescribed period.

Conclusion: Penalty of 10% of the profiteered amount was leviable, subject to statutory waiver upon timely passing on of the entire amount. This issue was against the assessee.

Final Conclusion: The statutory direct-cost pricing restriction excluded LIG and MIG units from anti-profiteering computation; liability was confined to the determined HIG ITC benefit, with consequential interest and penalty.

Ratio Decidendi: Where statutory price control limits sale consideration to direct costs and excludes recovery of overheads and indirect tax components, additional ITC benefit cannot be attributed as profiteering to those regulated supplies; any anti-profiteering computation must be confined to supplies having a relevant price component capable of commensurate reduction.

Outcome: Revenue appeal dismissed summarily under the statutory monetary threshold.

Issues: (i) Whether prosecution for willful non-production of accounts and false verification could continue after the original assessment underlying the complaints was set aside and a fresh assessment made; (ii) Whether separate complaints against the directors alone were maintainable for the same alleged offences; (iii) Whether parallel penalty proceedings barred criminal prosecution on the ground of double jeopardy.

Issue (i): Whether prosecution for willful non-production of accounts and false verification could continue after the original assessment underlying the complaints was set aside and a fresh assessment made.

Analysis: Sections 276D and 277 of the Income-tax Act, 1961 concern willful failure to produce accounts or comply with statutory directions, and knowingly making a false verification or delivering a false statement. The appellate order set aside the original assessment after addressing the assessee's grievance regarding opportunity to reconcile accounts and directed a fresh determination. The subsequent assessment materially reduced the assessed income. Where appellate adjudication on merits removes the factual basis of concealment, falsity, or willful non-compliance underlying prosecution, the criminal case cannot rest on the superseded assessment findings.

Conclusion: The prosecutions founded on the original assessment and its findings could not continue and were liable to be quashed, in favour of the assessee.

Issue (ii): Whether separate complaints against the directors alone were maintainable for the same alleged offences.

Analysis: Section 278B of the Income-tax Act, 1961 permits prosecution of persons responsible for the conduct of a company's business where the company commits an offence. A complaint impleading the company along with its responsible directors may proceed. However, separate complaints against directors individually for the company's alleged offence, without arraigning the company, do not satisfy the requirement of corporate arraignment for vicarious liability.

Conclusion: The separate director-only complaints were not maintainable and were liable to be quashed, in favour of the assessee.

Issue (iii): Whether parallel penalty proceedings barred criminal prosecution on the ground of double jeopardy.

Analysis: Penalty proceedings under Sections 271(1)(b) and 271(1)(c) of the Income-tax Act, 1961 are civil in character, whereas prosecution is criminal and may proceed independently. The mere institution of penalty proceedings does not amount to double jeopardy or by itself preclude prosecution.

Conclusion: Parallel penalty proceedings did not bar prosecution on the ground of double jeopardy, against the assessee.

Final Conclusion: The assessment-based allegations and the director-only complaints lacked a sustainable legal foundation, although civil penalty proceedings do not by themselves create a bar against criminal prosecution.

Ratio Decidendi: Criminal prosecution founded on alleged concealment, falsity, or non-compliance cannot survive where appellate adjudication on merits has displaced the factual foundation of those allegations.

Issues: Whether pre-charge evidence in a complaint under the Central Goods and Services Tax Act could be recorded without a formal cognizance or summoning order and without compliance with Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023.

Analysis: Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023 mandates the prescribed pre-cognizance procedure, including the accused's opportunity of hearing. Cognizance requires judicial application of mind and cannot be treated as a merely ministerial step. The absence of a formal order summoning the petitioners as accused, followed by recording of pre-charge evidence, was contrary to that mandatory procedure and the fair-trial safeguards governing cognizance.

Conclusion: Recording of pre-charge evidence without a formal cognizance or summoning order and compliance with Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023 was impermissible; the impugned pre-charge evidence orders were set aside.

Issues: (i) Whether the demand determined in the adjudication order could exceed the amount specified in the show-cause notice, contrary to Section 75(7). (ii) Whether the petitioner should be relegated to the Appellate Tribunal despite the jurisdictional defect in the adjudication order.

Issue (i): Whether the demand determined in the adjudication order could exceed the amount specified in the show-cause notice, contrary to Section 75(7).

Analysis: Section 75(7) confines a demand of tax, interest and penalty to the amount and grounds stated in the show-cause notice. The notice specified a demand of Rs. 9,38,898, whereas the determination in Form GST DRC-07 was Rs. 10,27,788. The determination therefore travelled beyond the quantified demand in the notice.

Conclusion: The determination exceeding the show-cause notice was jurisdictionally erroneous and invalid, in favour of the assessee.

Issue (ii): Whether the petitioner should be relegated to the Appellate Tribunal despite the jurisdictional defect in the adjudication order.

Analysis: Although an appellate remedy before the Appellate Tribunal was available, the appellate authority had rejected the appeal solely on limitation without examining merits. The established jurisdictional defect in the original demand made recourse to the Tribunal futile.

Conclusion: The petitioner was not required to pursue the alternative appellate remedy, in favour of the assessee.

Final Conclusion: The impugned original and appellate orders cannot stand; the show-cause proceedings require fresh adjudication after notice and an opportunity of hearing.

Ratio Decidendi: A tax demand cannot exceed the amount specified in the show-cause notice; a demand beyond that limit is jurisdictionally invalid and warrants writ intervention notwithstanding an available statutory appellate remedy.

Issues: Whether a writ challenge to a tax determination under Section 74 could be entertained despite an available statutory appellate remedy where the objections raised involved disputed factual questions.

Analysis: The alleged defects concerning signatures on statutory forms, specificity and consolidation of show-cause notices, the identity of the hearing officer, and consideration of objections involved factual matters. The materials indicated that the demand summaries identified the taxable periods and that the hearing and determination were undertaken by a proper officer. The statutory scheme provides a multi-tiered appellate mechanism against determinations under Sections 73 and 74, with prescribed pre-deposit safeguards. The petitioner had earlier withdrawn its challenge to the show-cause notices with liberty only to submit a reply and participate in adjudication, and could not bypass the appellate process merely to avoid the statutory pre-deposit.

Conclusion: The challenge was required to be pursued before the statutory appellate forum; against the assessee.

Issues: Whether cancellation of GST registration for continuous non-filing of returns should be set aside to enable compliance and recovery of tax.

Analysis: The cancellation was based solely on non-filing of returns, without any allegation of a dubious process for tax evasion. Continued cancellation would prevent business operations and issuance of invoices, thereby impairing determination and recovery of tax liability. A pragmatic course required allowing compliance through filing of pending returns and payment of the consequential statutory dues.

Conclusion: The cancellation of registration was set aside in favour of the assessee, conditional upon filing returns for the entire default period and payment of tax, interest, fine and penalty within the stipulated time; upon compliance, the registration is to be restored.

Issues: Whether an adjudication under Section 74(9) is sustainable where the taxpayer was not notified of the specific date, time and venue for personal hearing as required by Section 75(4).

Analysis: Section 75(4) mandates an opportunity of personal hearing before an adverse determination is made, irrespective of whether the person chargeable with tax seeks such hearing. Although the adjudication recorded that an opportunity had been afforded, the record did not demonstrate that any specific date, time and venue of personal hearing had been notified before the determination. The recorded hearing also pre-dated the show-cause notice.

Conclusion: The adjudication was unsustainable for breach of the mandatory hearing requirement; the taxpayer was entitled to a fresh adjudication after filing a response and being afforded a duly notified personal hearing, in favour of the assessee.