Issues: Whether the sanction order issued for prosecution under the Income-tax Act, 1961 was sustainable when the assessee's reply to the show-cause notice was not properly considered, and whether the matter required interference under writ jurisdiction.

Analysis: The sanction order was found to have been passed in a perfunctory manner without proper consideration of the reply dated 29.4.2025 and without recording reasons for rejecting the explanation furnished by the assessee. In these circumstances, the case was treated as one warranting interference under Article 226 of the Constitution of India. The order also failed to reflect proper adjudication of the explanation offered in response to the notice, making it vulnerable on the ground of non-application of mind and absence of reasons.

Conclusion: The sanction order under Section 279(1) of the Income-tax Act, 1961 was quashed and set aside, and the matter was remitted for fresh consideration of the assessee's reply and for passing of a reasoned order after hearing the assessee.

Issues: Whether the assessee's pending appeal against the assessment order should be revived, whether additional grounds including legality and limitation could be raised, and whether interim protection should operate pending disposal of the revived appeal.

Analysis: The assessment dispute had earlier been dealt with in writ proceedings on the issue of notice under Section 148 of the Income-tax Act, 1961 and compliance with Section 151A of that Act. In the present order, the Court did not adjudicate the merits of the reassessment challenge. Instead, it recorded the parties' stand that the appellate proceedings should be restored so that the assessee could pursue all grounds before the Commissioner (Appeals). The Court also directed that the assessee be heard on advance notice and that the assessment order not be acted upon during pendency of the appeal.

Conclusion: The appeal was directed to be revived, the assessee was permitted to raise additional grounds including limitation, interim protection was granted against enforcement of the assessment order, and the writ petition was disposed of accordingly.

Issues: Whether the ex parte adjudication order could be sustained when the petitioner claimed that the change of address had been intimated to the department and service was effected at the old address, thereby denying a fair opportunity of hearing.

Analysis: The order was passed ex parte and the petitioner remained unrepresented at the hearing. The dispute centered on whether proper service had been effected at the correct address after the alleged intimation of change of address. Since service at the correct address went to the root of the matter, denial of an effective hearing rendered the adjudication vulnerable.

Conclusion: The impugned order could not be sustained and was quashed and set aside. The matter was directed to be reconsidered afresh after affording the petitioner an opportunity of hearing and passing a reasoned order in accordance with law.

Issues: Whether ocean freight and air freight collected by a freight forwarder on a principal-to-principal basis can be subjected to Service Tax under the category of Business Support Service.

Analysis: The freight forwarder's transactions with shipping lines and airlines, and its onward allotment of cargo space to customers, were treated as independent principal-to-principal arrangements. The circular issued by the Board recognized that where a freight forwarder acts on its own account and assumes the contractual responsibility and risk for transportation, the activity is not to be treated as an intermediary service. The Tribunal also followed its earlier decisions, including decisions in the assessee's own cases, which held that ocean freight collected in such transactions is not liable to Service Tax under Business Support Service.

Conclusion: The ocean freight and air freight collected on principal-to-principal basis are not taxable as Business Support Service, and the demand, interest, and penalties cannot be sustained.

Issues: (i) whether the 95% freight share received by the appellant under the railway participative investment arrangement was consideration for taxable Business Support Service; and (ii) whether the extended period of limitation and penalties were invocable on the allegation of suppression.

Issue (i): whether the 95% freight share received by the appellant under the railway participative investment arrangement was consideration for taxable Business Support Service.

Analysis: The arrangement was held to be a revenue-sharing model under which the appellant financed and built the railway infrastructure at its own cost, while the railways operated the line and shared freight revenue. The appellant was treated as stepping into the shoes of the railways for the project, and the receipt termed as user fee was found to be return on investment rather than consideration for a service. The requisite service provider-service recipient relationship and quid pro quo were found absent, and the arrangement was treated as akin to a joint venture or partnership.

Conclusion: The receipt was not taxable as Business Support Service, and the demand on merits failed in favour of the assessee.

Issue (ii): whether the extended period of limitation and penalties were invocable on the allegation of suppression.

Analysis: The appellant's stand was found to be supported by the nature of the agreement, the policy framework, and comparable tribunal decisions on similar participative railway projects. In that backdrop, the appellant's belief that no service tax was payable was held to be bona fide, and no suppression with intent to evade tax was established.

Conclusion: Invocation of the extended period and the consequential penalties was not sustainable, and this issue was decided in favour of the assessee.

Final Conclusion: The demand and penalties could not be sustained either on merits or on limitation, and the appeal succeeded with consequential relief as admissible in law.

Ratio Decidendi: A revenue-sharing receipt under a participative infrastructure arrangement is not taxable as a service unless a clear service provider-service recipient relationship and quid pro quo are established; absent suppression and in the presence of bona fide belief, the extended period cannot be invoked.

Issues: Whether the applicants were entitled to discharge on the ground that they had been exonerated in departmental proceedings concerning excise duty and VAT evasion, and whether the material collected in investigation disclosed a prima facie case for offences of criminal conspiracy, cheating, forgery and corruption.

Analysis: The departmental proceedings were confined to the validity of the excise and VAT demands and resulted in dropping of the notices for want of cogent evidence. Those proceedings did not hold that the allegations were false in criminal law. The criminal prosecution rested on a wider factual foundation, including investigation material, bogus bills, forged transport documents and witness statements, and also involved public servants as co-accused. The scope, purpose and evidentiary standards of adjudication and criminal prosecution were different, and the CBI was not a party to the departmental adjudication. On the material placed before the Special Court, the charge-sheet disclosed a prima facie case and the charges could not be said to be groundless at the threshold.

Conclusion: The plea for discharge was rejected and the revision application failed.

Ratio Decidendi: Exoneration in departmental adjudication on a limited revenue demand does not, by itself, bar criminal prosecution where the investigation discloses independent material making out a prima facie case for cognizable offences.

Issues: Whether the FIR, charge-sheet, cognizance order and charge framing order were liable to be quashed in exercise of inherent jurisdiction on the ground that the dispute arose out of alleged VAT irregularities, that the statutory procedure under the fiscal enactment was not followed, and that the material collected during investigation did not disclose offences under the penal law.

Analysis: The allegations, if taken at face value, disclosed a prima facie case of cheating and forgery based on allegedly bogus sales invoices, discrepant turnover figures, wrongful availment of input tax credit by others, and loss to the State exchequer. The Court reiterated that quashing jurisdiction is to be exercised sparingly and that it cannot undertake a mini trial, assess the truthfulness of witness statements, or decide disputed questions of fact at the threshold. The existence of remedies under the VAT regime did not, by itself, bar prosecution where the material indicated cognizable offences. The plea of delay in filing the charge-sheet and the contention that reassessment or prior sanction was a condition precedent were treated as matters for trial and not grounds for quashment on the available record.

Conclusion: The petition for quashing was not made out, and the criminal proceedings were held to be maintainable to proceed before the trial court.

Issues: Whether the concurrent conviction and sentence for dishonour of cheque under Section 138 of the Negotiable Instruments Act, 1881 deserved interference in revision, and whether the compensation awarded was excessive.

Analysis: The accused admitted issuance and signature on the cheque, dishonour for insufficient funds, and receipt of statutory notice, but led no evidence to rebut the presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881. Mere denial in the statement under Section 313 of the Code of Criminal Procedure, 1973, and the plea that the cheque was issued as security, did not displace the statutory presumption of a legally enforceable debt. The revisional court's scope was limited to correcting patent illegality, jurisdictional error, or perversity, and there was no basis to reappreciate evidence or upset the concurrent findings. The compensation awarded was also found to be within permissible limits and not excessive in the circumstances.

Conclusion: The conviction under Section 138 of the Negotiable Instruments Act, 1881 and the sentence including compensation were upheld, and no revisional interference was warranted.

Ratio Decidendi: In revision against concurrent findings in a cheque dishonour case, the High Court will not reappreciate evidence unless there is perversity or patent illegality, and once issuance and signature on the cheque are admitted, the statutory presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881 operate until rebutted by defence evidence.

Issues: Whether the assessee was entitled to deduction under section 36(1)(vii) of the Income-tax Act, 1961 where the disputed debt was debited in the profit and loss account and reflected in the ledger as irrecoverable, though not closed by a formal write-off entry, and whether such treatment amounted to a valid write-off after the insertion of the Explanation to section 36(1)(vii).

Analysis: The governing principle is that, after 1 April 1989, a mere provision for bad and doubtful debts does not qualify for deduction, but a genuine write-off is still allowable if the debt is treated as irrecoverable in substance. The entries made by the assessee, coupled with the pending recovery litigation, showed that the amount was in effect treated as a bad debt and not as a mere provision. The earlier and later Supreme Court authorities on the manner of write-off were applied to hold that the absence of a formal closure of the debtor's individual account was not decisive where the accounts otherwise reflected an actual write-off and any later recovery would be taxable under section 41(4).

Conclusion: The assessee's claim for deduction was allowable, and the substantial question of law was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: For deduction under section 36(1)(vii), the decisive test is whether the debt has been written off as irrecoverable in substance; a mere provision is insufficient, but a write-off shown by accounting treatment that reduces the debt as irrecoverable is valid even without a formal closure of every individual debtor account.

Issues: (i) Whether reassessment under section 147 of the Income-tax Act, 1961, initiated after expiry of four years from the end of the relevant assessment year, was valid in the absence of failure by the assessee to disclose fully and truly all material facts; (ii) Whether the reasons recorded for reopening were legally sustainable on the questions of ownership of the eligible enterprise and existence of a new infrastructure facility for deduction under section 80-IA(4).

Issue (i): Whether reassessment under section 147 of the Income-tax Act, 1961, initiated after expiry of four years from the end of the relevant assessment year, was valid in the absence of failure by the assessee to disclose fully and truly all material facts.

Analysis: The assessment had originally been completed under section 143(3), and the notice under section 148 was issued after the expiry of four years from the end of the relevant assessment year. In such a situation, reopening could be sustained only if income had escaped assessment because of the assessee's failure to disclose fully and truly all material facts necessary for assessment. The record showed that the nature of the business, the licence arrangement, the corporate structure, the tax audit disclosures, and the transfer pricing disclosures were all placed before the Assessing Officer in the return, annual report, audit report, and during scrutiny proceedings. The reasons recorded for reopening did not identify any material fact that had been withheld. The allegation therefore amounted to no more than a reappraisal of the same material.

Conclusion: The reopening was invalid and bad in law.

Issue (ii): Whether the reasons recorded for reopening were legally sustainable on the questions of ownership of the eligible enterprise and existence of a new infrastructure facility for deduction under section 80-IA(4).

Analysis: The Court read section 80-IA(4) to require that the infrastructure facility be owned by a company registered in India and that the eligible business relate to development, operation, or maintenance of a qualifying infrastructure facility. The reasons recorded proceeded on an incorrect premise by treating the assessee company itself as the enterprise and by attributing ownership to a Mauritius entity. The enterprise was in fact the port undertaking carried on by the Indian company. The Court also found that the reasons overlooked the setting up of major equipment and the substantial investment made in the terminal, and ignored the fact that earlier assessment orders had accepted the business as involving development of the container terminal.

Conclusion: The recorded reasons were unsustainable.

Final Conclusion: The impugned notice, order, and show cause notice were quashed and the writ petition was allowed.

Ratio Decidendi: Where reassessment is initiated beyond four years after a completed scrutiny assessment, it cannot stand unless the Revenue shows a specific failure by the assessee to disclose fully and truly all material facts, and reopening on an incorrect appreciation of the disclosed facts is impermissible.

Issues: Whether the royalty actually taxable in India in the hands of the non-resident assessee was the full amount originally received from the Indian associated enterprise or only the reduced amount retained after repayment made pursuant to an Advance Pricing Agreement.

Analysis: The relevant treaty provision taxed only royalties "paid" to the non-resident. The Advance Pricing Agreement determined a lower arm's length royalty and required the excess to be repaid by the non-resident to the Indian associated enterprise. The repayment was made bona fide in implementation of the agreement, and the amount repaid was also reflected as income in the hands of the Indian enterprise through a modified return. The transfer pricing provisions did not justify taxing the gross amount originally received, because the adjustment under the agreement did not involve a transfer pricing recomputation under the statutory provisions invoked by the Revenue. The principle of real income also supported taxation only of the amount finally retained.

Conclusion: The royalty chargeable to tax in India was the amount finally retained after repayment under the agreement, not the gross amount initially received.

Ratio Decidendi: Where a treaty taxes only amounts actually "paid" and an excess royalty is bona fide repaid pursuant to a binding Advance Pricing Agreement, only the net amount ultimately retained constitutes taxable income in the hands of the recipient.

Issues: Whether the amounts paid by the assessee to its faculty members were salary, attracting deduction of tax at source under section 192 of the Income-tax Act, 1961, or professional fees, attracting deduction under section 194J of the Income-tax Act, 1961, and whether the assessee could be treated as an assessee in default under section 201(1) and section 201(1A) of the Income-tax Act, 1961.

Analysis: The faculty members were engaged as consultants/visiting teachers, were paid remuneration with a variable component linked to lectures, were not extended statutory employee benefits, and the surrounding terms of engagement did not establish a true contract of service. The decisive test was the nature of the relationship as a whole, namely whether the engagement was one of employment or of independent professional service. Applying the distinction between a contract of service and a contract for service, and following the reasoning accepted in comparable professional engagement cases, the mere existence of working-hour restrictions, attendance requirements, leave conditions, and non-compete restraints did not by itself create an employer-employee relationship. The Court also noted that the recipients had offered the income as professional receipts under section 44ADA and the Revenue had accepted such treatment.

Conclusion: The payments were professional fees and not salary, tax was deductible under section 194J, and the assessee could not be treated as an assessee in default under section 201(1) or made liable for interest under section 201(1A).

Final Conclusion: The demand raised for alleged short deduction of tax at source was unsustainable and the assessee's appeal succeeded.

Ratio Decidendi: For determining tax deduction at source, the substance of the engagement must be tested to see whether it is a contract of service or a contract for service, and administrative or regulatory controls by themselves do not convert an independent professional engagement into employment.

Issues: (i) Whether the satisfaction recorded for invoking section 153C of the Income-tax Act, 1961 was valid in law. (ii) Whether the proceedings under section 153C were barred by the sunset clause in section 153C(3) of the Income-tax Act, 1961.

Issue (i): Whether the satisfaction recorded for invoking section 153C of the Income-tax Act, 1961 was valid in law.

Analysis: For invoking section 153C, the Assessing Officer of the other person must record a jurisdictional satisfaction that the seized books of account, documents, assets, or information contained therein have a bearing on the determination of the total income of such other person. A mere reproduction of the forwarding letter or a summary list, without independent examination of the seized material and without linking the material to the assessee's income, does not satisfy the statutory requirement.

Conclusion: The satisfaction recorded was held to be invalid, and the assumption of jurisdiction under section 153C was held not to be legally sustainable.

Issue (ii): Whether the proceedings under section 153C were barred by the sunset clause in section 153C(3) of the Income-tax Act, 1961.

Analysis: The first proviso to section 153C(1) deems the relevant date for the other person to be the date on which the seized material is received by that person's Assessing Officer. Since the material was received after 01.04.2021, the statutory bar in section 153C(3) applied. On that footing, the provision could not be invoked and the proceedings were without jurisdiction.

Conclusion: The proceedings were held to be barred by section 153C(3) and the assessment was quashed.

Final Conclusion: The assessment orders passed under section 153C were set aside on jurisdictional grounds, and the substantive additions were left unadjudicated.

Ratio Decidendi: A valid invocation of section 153C requires independent jurisdictional satisfaction based on seized material having a bearing on the other person's total income, and the provision cannot be invoked where the deemed date of receipt of such material falls after the statutory cutoff in section 153C(3).

Issues: Whether penalty under section 270A of the Income-tax Act, 1961 could be sustained where the addition was made on estimated basis and the penalty order did not specify whether the case was one of underreporting or misreporting of income.

Analysis: Section 270A contemplates two distinct defaults, namely underreporting of income and underreporting as a consequence of misreporting, attracting different consequences. In penalty proceedings, it was incumbent on the authority to identify the specific default. The addition in the present case was made on estimation of short turnover without rejection of books of account, which could not form a foundation for penalty for underreporting. The penalty order also did not bring the case within any specified category of misreporting under section 270A(9).

Conclusion: The penalty was not legally sustainable and was directed to be deleted.

Issues: (i) whether the appellant's turnkey construction activities were classifiable as Consulting Engineer's Service and whether the Revenue could vivisect the composite contract to tax only the so-called consultancy fee; (ii) whether the extended period of limitation was invocable on the facts of the case.

Issue (i): whether the appellant's turnkey construction activities were classifiable as Consulting Engineer's Service and whether the Revenue could vivisect the composite contract to tax only the so-called consultancy fee.

Analysis: The contracts showed execution of construction projects on EPC/turnkey basis, with the appellant responsible for the work end-to-end, including materials, labour, subcontracting, quality and completion. The consideration was structured as cost plus fee, but the fee represented profit margin for execution of the composite project and not consultancy charges. The Revenue relied on a partial attribution of value, but the nature of the agreement and the documentary record showed a composite works contract. A composite contract cannot be split to isolate a portion and classify it under Consulting Engineer's Service when the dominant nature of the transaction is construction.

Conclusion: The demand under Consulting Engineer's Service was not sustainable and the issue was decided in favour of the assessee.

Issue (ii): whether the extended period of limitation was invocable on the facts of the case.

Analysis: The appellant's activities were construction works of the kind which were treated as exempt or outside the alleged levy on the Revenue's own case. The records were available in the books and financial statements, the tax was not collected from customers, and no specific material showed wilful suppression, fraud or intent to evade. Mere non-registration or non-payment, without positive evidence of suppression with intent, was insufficient to sustain invocation of the extended period.

Conclusion: The extended period of limitation was not invocable and the issue was decided in favour of the assessee.

Final Conclusion: The impugned demand and order were unsustainable both on classification and on limitation, so the appeal succeeded with consequential relief as permissible in law.

Ratio Decidendi: A composite turnkey works contract cannot be vivisected to tax a notional consultancy component under a different service entry, and the extended period cannot be invoked without positive evidence of suppression or intent to evade.

Issues: Whether the interim release of cash to the Income Tax Department, pending determination of its source, tax liability and title, warranted interference under Articles 226 and 227 of the Constitution of India.

Analysis: The release was expressly an interim arrangement, secured by an indemnity bond and a direction to retain the amount in an auto-renewable fixed deposit with a nationalised bank. The source of the cash, possible tax liability and entitlement to it remained to be determined in the pending income-tax proceedings. The arrangement preserved the amount and did not determine the petitioner's rights or create an adverse final finding against her.

Conclusion: Interference with the interim arrangement was declined; all claims regarding the cash remain open for adjudication in the appropriate proceedings.

Issues: (i) Whether reimbursement of incremental GST under the contractual tax-variation clause requires certification from GST authorities. (ii) Whether the quantified claim for reimbursement of incremental tax could be allowed in writ jurisdiction without verification of proof of payment.

Issue (i): Whether reimbursement of incremental GST under the contractual tax-variation clause requires certification from GST authorities.

Analysis: The contractual clause permitted consideration of reimbursement for increased taxes upon proper certification. However, the GST enactments provide no mechanism for certification by GST authorities. Returns, challans and other relevant documents establishing actual payment of incremental tax are sufficient to support a reimbursement claim.

Conclusion: GST-authority certification is not necessary where the contractor otherwise establishes payment of incremental tax through relevant documents; this issue is in favour of the assessee.

Issue (ii): Whether the quantified claim for reimbursement of incremental tax could be allowed in writ jurisdiction without verification of proof of payment.

Analysis: The record did not disclose the basis on which the awarded amount was computed or evidence establishing that it represented incremental tax paid beyond the tax embedded in the contract price. The claim requires examination of the supporting material and determination of disputed factual matters by the competent municipal authority.

Conclusion: The quantified reimbursement claim could not be granted without verification of the supporting evidence; this issue is in favour of the Revenue.

Final Conclusion: The contractor may substantiate its claim before the Commissioner, who must decide it after examining the documents, without insisting on GST-authority certification; further remedies, including arbitration, remain available.

Ratio Decidendi: A contractual claim for reimbursement of tax increased after tender submission must be supported by evidence of actual incremental tax payment, and cannot be conditioned on a certification unavailable under the applicable GST regime.

Issues: (i) Whether the sales commission paid to the associated enterprise for sales support and representation services could be benchmarked at nil and disallowed; (ii) Whether a separate transfer-pricing adjustment for notional interest on delayed receivables from associated enterprises was warranted.

Issue (i): Whether the sales commission paid to the associated enterprise for sales support and representation services could be benchmarked at nil and disallowed.

Analysis: The payment was made under a written inter-company agreement and was linked to tangible sales generated through the associated enterprise rather than paid as a lump sum. Customer purchase orders, supply instructions, export invoices and shipping documents established the associated enterprise's involvement in procuring and coordinating export orders. The associated enterprise fetched orders from global markets, without whose support the assessee would not have entered into the relevant business transactions.

Conclusion: The sales commission paid to the associated enterprise was justified; the transfer-pricing adjustment was deleted in favour of the assessee.

Issue (ii): Whether a separate transfer-pricing adjustment for notional interest on delayed receivables from associated enterprises was warranted.

Analysis: The receivables arose from the principal sale transactions with associated enterprises, which had been benchmarked under TNMM and whose operating margin was accepted. The assessee charged no interest on receivables from either associated enterprises or unrelated parties. The working-capital adjustment already neutralised the impact of delayed realisation, and the Revenue produced no contrary material showing differential credit terms or an undue benefit to the associated enterprises. No real or determinable notional income arose.

Conclusion: No separate adjustment for notional interest on outstanding receivables was warranted; the adjustment was deleted in favour of the assessee.

Final Conclusion: Both disputed transfer-pricing additions were unsustainable, and the assessee's declared transfer-pricing position prevailed.

Ratio Decidendi: Where the principal transactions are accepted as arm's length under TNMM with working-capital adjustment, and no differential credit benefit to associated enterprises is established, a separate notional-interest adjustment on trade receivables is unwarranted; commission linked to actual sales is allowable where evidence establishes the associated enterprise's role in procuring and coordinating those sales.

Issues: (i) Whether the delay in filing the appeals was liable to be condoned; (ii) Whether interest received under Section 28 of the Land Acquisition Act, 1894 on enhanced compensation for compulsory acquisition of agricultural land was taxable as income from other sources under Section 56(2)(viii) read with Section 145A(b) of the Income-tax Act, 1961.

Issue (i): Whether the delay in filing the appeals was liable to be condoned.

Analysis: The affidavits established bona fide reasons for the delayed appeals, as the assessees were unaware of the appellate orders until recovery proceedings commenced. Preference was given to adjudication on merits over rejection on limitation where the delay was not deliberate.

Conclusion: The delay was condoned and the appeals were admitted for adjudication, in favour of the assessees.

Issue (ii): Whether interest received under Section 28 of the Land Acquisition Act, 1894 on enhanced compensation for compulsory acquisition of agricultural land was taxable as income from other sources under Section 56(2)(viii) read with Section 145A(b) of the Income-tax Act, 1961.

Analysis: The acquired lands and the assessing officers were within the territorial jurisdiction of the Bombay Bench of the Bombay High Court. The applicable jurisdictional view, followed in coordinate Tribunal decisions concerning Panvel and Raigad, treats interest awarded under Section 28 of the Land Acquisition Act, 1894 as an accretion to and part of enhanced compensation, rather than interest chargeable under the statutory provisions for income from other sources. The contrary view associated with the Aurangabad Bench was inapplicable having regard to the relevant territorial jurisdiction.

Conclusion: Interest received under Section 28 of the Land Acquisition Act, 1894 on enhanced compensation for compulsory acquisition of the assessees' land was not taxable under Section 56(2)(viii) of the Income-tax Act, 1961, in favour of the assessees.

Final Conclusion: The additions representing fifty per cent of the interest on enhanced compensation were unsustainable and stood deleted in all connected matters.

Ratio Decidendi: Where the applicable territorial jurisdiction requires following the Bombay Bench view, interest awarded under Section 28 of the Land Acquisition Act, 1894 is part of enhanced compensation and is not assessable as income from other sources under Section 56(2)(viii) read with Section 145A(b) of the Income-tax Act, 1961.

Issues: (i) Whether works contract tax paid under the composition scheme and irrecoverable VAT refund claims written off were allowable deductions; (ii) Whether employees' PF and ESI contributions deposited after the prescribed due dates were deductible, including whether the subsequent provision under the Income-tax Act, 2025 applied retrospectively and whether the due date ran from actual salary disbursement.

Issue (i): Whether works contract tax paid under the composition scheme and irrecoverable VAT refund claims written off were allowable deductions.

Analysis: The works contract tax was paid at the prescribed composition rate on contract receipts during the pre-GST period, and neither its payment nor its business purpose was disputed. It constituted expenditure incurred wholly and exclusively for the contracting business. The VAT refund claims were carried as receivables and were bona fide written off when recovery became impossible after the GST transition. A debt need not be independently proved irrecoverable once it is written off in the accounts.

Conclusion: The works contract tax was allowable as business expenditure and the VAT refund write-off was allowable as a bad debt, in favour of the assessee.

Issue (ii): Whether employees' PF and ESI contributions deposited after the prescribed due dates were deductible, including whether the subsequent provision under the Income-tax Act, 2025 applied retrospectively and whether the due date ran from actual salary disbursement.

Analysis: The governing position for the relevant assessment year remained that employees' contributions paid after the due date under the respective welfare enactments were not deductible, notwithstanding payment before the return-filing due date. The later provision under the Income-tax Act, 2025 was expressly effective from 01.04.2026 and was neither curative nor clarificatory. The prescribed period for deposit was determined with reference to the month in which wages became due, and could not be extended by reference to the employer's actual date of salary disbursement. The tax audit report also recorded delayed deposits.

Conclusion: The employees' PF and ESI contributions were disallowable, against the assessee.

Final Conclusion: The deductions for works contract tax and written-off VAT receivables were sustained, while the disallowance relating to delayed employees' welfare contributions remained undisturbed.

Ratio Decidendi: A bona fide business levy and a receivable written off as irrecoverable are deductible where their payment or write-off is established; employees' welfare contributions paid beyond the statutory due date remain disallowable under the law applicable to the assessment year, and a later prospective amendment cannot alter that position.