Issues: Whether imported STPP was food grade or otherwise and, consequently, whether anti-dumping duty, confiscation and penalties were sustainable.

Analysis: The anti-dumping regime applied only to STPP other than food grade, so the Revenue had to prove that the imports fell outside the excluded category. The record showed that the goods were tested by an FSSAI-recognised laboratory, the authorised FSSAI officer granted clearance, and the laboratory's later clarification stated that the analysis was from a food-safety angle. Two other laboratories declined testing for want of facilities, while the Customs-reliance laboratory gave an opinion that the parameters for food grade and industrial grade overlapped and did not identify any specific toxic or disqualifying parameter. The evidence therefore did not establish with certainty that the goods were industrial grade or not food grade. In a matter affecting chargeability to duty and penal consequences, the burden lay on the Revenue, and that burden was not discharged by cogent and legally reliable evidence.

Conclusion: The imported goods were held to be food grade, and the demand of anti-dumping duty, confiscation and penalties were unsustainable.

Ratio Decidendi: Where the levy depends on a disputed product classification and the material on record does not conclusively show that the goods fall within the dutiable description, the burden on the Revenue is not discharged and the assessee is entitled to relief.

Issues: (i) Whether the importer and the foreign supplier were related persons having mutuality of interest for customs valuation purposes; (ii) Whether the declared value of the Palladium system imported in 2006 and the later imports could be rejected and enhanced by adding a notional profit margin.

Issue (i): Whether the importer and the foreign supplier were related persons having mutuality of interest for customs valuation purposes.

Analysis: The valuation of imported goods was governed by section 14 of the Customs Act, 1962 and the applicable valuation rules. The importer was a wholly owned subsidiary of the foreign supplier, and the relationship fell within the statutory concept of related persons. On that basis, the relationship of one having control over the other, and the associated business interest between parent and subsidiary, satisfied the requirement of relatedness for customs valuation.

Conclusion: The importer and the foreign supplier were related persons and mutuality of interest was established.

Issue (ii): Whether the declared value of the Palladium system imported in 2006 and the later imports could be rejected and enhanced by adding a notional profit margin.

Analysis: For the 2006 import, the materials on record showed that the price reflected cost plus representative profit and that the relationship did not influence the sale price. The declared value was therefore acceptable and no further loading was justified for that item. For the later imports, the commercial invoices were stated to be for customs valuation only and did not include any profit margin. In such circumstances, the department was justified in determining value by adding a reasonable profit element based on the supplier's own profitability data, and the 14.2% loading was sustained.

Conclusion: The loading was unsustainable for the Palladium system imported in 2006, but was valid for the later imports.

Final Conclusion: The appeal succeeded only in part. The enhancement of value for the 2006 Palladium system was set aside, while the remainder of the valuation order was affirmed.

Ratio Decidendi: In customs valuation of related-party imports, transaction value may be accepted where the relationship does not influence price, but where later imports are shown by the supplier's own documents to exclude profit margin, the proper value may be redetermined by adding a reasonable profit element.

Issues: (i) whether the import declaration involved misdeclaration and suppression of facts attracting confiscation under the Customs Act, 1962; (ii) whether penalty under Section 114A and the original redemption fine were liable to be restored.

Issue (i): whether the import declaration involved misdeclaration and suppression of facts attracting confiscation under the Customs Act, 1962.

Analysis: The goods were found, on examination, to include substantial undeclared items and excess quantities over the declared import. The declared valuation was also found to be substantially lower than the re-determined assessable value. The explanation that the discrepancy was a supplier's mistake was not supported by cogent evidence. In these circumstances, the finding of deliberate misdeclaration and suppression was treated as established, and confiscability under the Customs Act, 1962 was upheld.

Conclusion: The issue is decided in favour of Revenue and against the importer.

Issue (ii): whether penalty under Section 114A and the original redemption fine were liable to be restored.

Analysis: Once misdeclaration and suppression resulting in short-paid duty were found to exist, the statutory basis for penalty under Section 114A was attracted. The appellate reduction of redemption fine and setting aside of penalty was found inconsistent with the upheld confiscation and the admitted duty short payment. The original adjudication was therefore considered to have correctly imposed the penal consequences.

Conclusion: The issue is decided in favour of Revenue and against the importer.

Final Conclusion: The appellate order was set aside and the original adjudication, including confiscation, redemption fine, and penalty, stood restored.

Ratio Decidendi: Where imported goods are found to be materially misdeclared and duty is short-paid due to suppression of facts, confiscation and the consequential penal provisions under the Customs Act, 1962 are attracted.

Issues: Whether a claim founded on an Area Enforcement Report and filed after commencement of the corporate insolvency resolution process, without crystallisation of liability under the provident fund regime, could be admitted.

Analysis: The claim was based on an Area Enforcement Report prepared after commencement of CIRP and after the moratorium had come into force. The liability under Section 7A had not been crystallised before the claim was lodged, and the application was also filed belatedly. In these circumstances, the Tribunal applied the earlier view that proceedings initiated during the moratorium could not be pursued for admission of such a claim, and relied on its prior decision on the same class of claim founded on an AEOR report.

Conclusion: The claim was not liable to be admitted, and interference with the impugned order was declined.

Issues: Whether the appellant was entitled to a refund or set-off on account of tariff revision reflected in revised bills after approval of the resolution plan, and whether any relief could be granted contrary to the amounts fixed under the approved plan.

Analysis: The revised bills issued after the tariff orders were found to be for adjustment of the respondent's internal accounts and for determining the reduced receivable or bad debt position, not for raising a fresh demand against the appellant. The approved resolution plan had already fixed and confined the pre-CIRP liability, and claims not forming part of the plan stood extinguished on approval. Reduction in tariff could at best affect the accounting of the outstanding dues and could not create a refundable amount in favour of the appellant. The appellant also did not show any enforceable demand beyond the amount settled under the plan.

Conclusion: The appellant was not entitled to any refund or further relief on the basis of tariff revision, and the rejection of the application was .

Final Conclusion: The approved resolution plan remained binding, the revised tariff entries did not confer a refundable claim on the appellant, and the appeal failed.

Ratio Decidendi: Once a resolution plan is approved, pre-CIRP claims stand confined to the plan and cannot be reopened or converted into a refund claim on the basis of later accounting adjustments or tariff revisions.

Issues: Whether the Section 9 insolvency application was liable to be rejected on account of a pre-existing dispute and a disputed Information Utility record.

Analysis: The work order and invoices were found to have been specifically disputed by the corporate debtor in its reply to the demand notice, including objections as to the quality and performance of work, excess billing, supporting documents, set-offs, statutory compliance, and reconciliation of accounts. The record also showed that the default reported in the Information Utility was disputed. Applying the statutory scheme under Sections 8 and 9 of the Insolvency and Bankruptcy Code, 2016 and the principle that the adjudicating authority need only see whether a plausible contention requiring further investigation exists, the dispute was held to be real and not spurious, hypothetical, or illusory. In that view, the operational debt was not treated as having crystallised for the purpose of admission of the Section 9 application.

Conclusion: The Section 9 application was not maintainable in the presence of a genuine pre-existing dispute, and rejection of the insolvency petition was upheld.

Issues: (i) Whether amounts recovered as reimbursed expenses in the course of providing Custom House Agent services were includible in the taxable value under the valuation rules and Section 67. (ii) Whether commission or incentive received on booking and sale of cargo space was taxable as Business Auxiliary Service. (iii) Whether invocation of the extended period of limitation was sustainable.

Issue (i): Whether amounts recovered as reimbursed expenses in the course of providing Custom House Agent services were includible in the taxable value under the valuation rules and Section 67.

Analysis: The valuation of taxable services for the relevant period was governed by Section 67 of the Finance Act, 1994, and the attempt to include reimbursable expenditure rested on Rule 5(1) and Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006. The decision relied on the settled position that such rules cannot enlarge the charging provision. The amendment to Section 67 making reimbursable expenditure includible operated only prospectively from 14 May 2015, whereas the dispute related to an earlier period. The amounts claimed as reimbursable expenses therefore could not form part of the taxable value.

Conclusion: The demand on reimbursed expenses was not sustainable and was held in favour of the assessee.

Issue (ii): Whether commission or incentive received on booking and sale of cargo space was taxable as Business Auxiliary Service.

Analysis: The activity was treated as purchase and resale of cargo space on a principal-to-principal basis, with the surplus arising from trading in space and not from promotion or marketing of a client's service. The commission or incentive received from airlines or shipping lines was not shown to be consideration for any service rendered to them. Applying the earlier coordinate bench decisions on identical facts, the receipt could not be classified as Business Auxiliary Service.

Conclusion: The demand on commission and incentive from cargo space transactions was not sustainable and was held in favour of the assessee.

Issue (iii): Whether invocation of the extended period of limitation was sustainable.

Analysis: The record showed that the Department had earlier investigated the same receipts and had already issued an earlier notice covering an earlier period. In the absence of any proved suppression, wilful misstatement, or intent to evade tax, the ingredients for the extended period were not satisfied. The longer limitation period could not be invoked merely because the Department later sought to recharacterise the same receipts.

Conclusion: Invocation of the extended period of limitation was unsustainable and was held in favour of the assessee.

Final Conclusion: The impugned demand, penalty, and appellate confirmation were set aside in entirety, and the assessee obtained full relief on the disputed tax liability.

Ratio Decidendi: For the relevant pre-14 May 2015 period, reimbursable expenditure cannot be added to the taxable value by subordinate valuation rules, trading surplus from principal-to-principal cargo space transactions is not taxable as Business Auxiliary Service, and the extended period requires proved suppression or wilful misstatement with intent to evade tax.

Issues: Whether the hiring of dredgers, vessels and allied equipment from foreign owners under bareboat charter arrangements amounted to supply of tangible goods service or declared service so as to attract service tax, interest and penalties.

Analysis: The arrangement was examined as a whole and the charter terms showed delivery of the vessel to the charterer, full possession and absolute control during the charter period, responsibility for operation, maintenance, fuel, crew-related obligations, insurance and redelivery after expiry. On that basis, the transfer was held to be one of right to possession and effective control, with ownership remaining unchanged. Such a transaction falls within the exclusion from service tax applicable to supply of tangible goods, and the same legal position continued to apply for the post-01.07.2012 period despite the declared service entry, because the core character of the arrangement did not change. The prior final decision in the appellant's own case was also treated as conclusively covering the dispute between the parties.

Conclusion: The hiring arrangements were not liable to service tax under supply of tangible goods service or as a declared service, and the demand, interest and penalties were unsustainable.

Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief in law.

Ratio Decidendi: A bareboat charter that transfers possession and effective control of the vessel or dredger to the charterer is outside the scope of taxable supply of tangible goods and does not become taxable merely because the owner retains title or imposes operational restrictions consistent with the charter.

Issues: (i) Whether Rule 6(3) of the Cenvat Credit Rules, 2004 applied to services provided to Special Economic Zone units during the relevant period, (ii) whether credit on rent a cab service and insurance service was admissible as input service credit, and (iii) whether penalties were sustainable.

Issue (i): Whether Rule 6(3) of the Cenvat Credit Rules, 2004 applied to services provided to Special Economic Zone units during the relevant period.

Analysis: The relevant amendment inserted Rule 6(6A) with effect from 01.03.2011, and Section 144 of the Finance Act, 2012 gave retrospective effect to the exclusion of Rule 6(1), (2), (3) and (4) for taxable services provided without payment of tax to SEZ units or developers for authorised operations. The retrospective and prospective operation together showed that the restriction under Rule 6(3) did not apply to the SEZ-related services in dispute.

Conclusion: The demand under Rule 6(3) in respect of services provided to SEZ was not sustainable and was rightly set aside.

Issue (ii): Whether credit on rent a cab service and insurance service was admissible as input service credit.

Analysis: The appellant explained that the transport service was used for employee pickup and drop in remote factory locations and that the insurance service was required under contractual and statutory obligations. In the absence of any allegation or evidence of personal use, employee consumption, or inclusion in employees' cost to company, and in view of the authorities relied on, the services were treated as sufficiently connected with provision of output services.

Conclusion: The credit on rent a cab service and insurance service was admissible and the disallowance was unsustainable.

Issue (iii): Whether penalties were sustainable.

Analysis: Once the substantive demands failed, the basis for penalty also failed. The order also noted the approach that penalties were not warranted in the circumstances of the case.

Conclusion: The penalties were rightly set aside.

Final Conclusion: The assessee succeeded on the substantive issues, while the Department's challenge failed. The common order was set aside to the extent contested, with relief granted to the assessee and the Departmental appeal rejected.

Ratio Decidendi: Services provided to SEZ units for authorised operations are excluded from the operation of Rule 6(3) of the Cenvat Credit Rules, 2004 by virtue of Rule 6(6A) as retrospectively reinforced by Section 144 of the Finance Act, 2012, and input service credit is allowable where the services are shown to have a nexus with the output service and are not established to be for personal use.

Issues: (i) Whether the appellants, being government-created societies performing citizen-centric statutory functions, were governmental authorities or local authorities entitled to exemption from service tax under the relevant notification; (ii) Whether the demand was time-barred and the penalties were sustainable.

Issue (i): Whether the appellants, being government-created societies performing citizen-centric statutory functions, were governmental authorities or local authorities entitled to exemption from service tax under the relevant notification.

Analysis: The appellants were found to be instruments of the State created and controlled by the Government of Haryana to discharge public functions such as issuance of licences and certificates. The fee collected was treated as a statutory fee and not commercial consideration. The services were held to be in relation to functions entrusted to municipalities and panchayats, and the exemption entries in Notification No. 25/2012-ST, as amended by Notification No. 02/2014-ST, were construed to cover such governmental authorities. The denial of exemption was held unsustainable.

Conclusion: The issue was decided in favour of the assessee.

Issue (ii): Whether the demand was time-barred and the penalties were sustainable.

Analysis: The dispute was held to be interpretational, with no material establishing suppression, fraud, collusion, or intent to evade tax. The appellants' activities were in the public domain, subject to governmental supervision and audit, and their bona fide belief that the services were exempt negatived invocation of the extended period. For the same reasons, penalties under the Finance Act, 1994 were also held to be unsustainable.

Conclusion: The issue was decided in favour of the assessee.

Final Conclusion: The impugned demand, interest and penalties were set aside and the connected appeals were allowed with consequential relief.

Ratio Decidendi: Government-controlled bodies performing statutory public functions for a prescribed fee, without commercial character, fall within the exemption framework for governmental authorities, and an interpretational dispute on such taxability does not by itself justify extended limitation or penalties absent suppression with intent to evade tax.

Issues: (i) Whether the impugned input services, namely housekeeping/gardening, vehicle repair, tour and travel, outward courier, interior decoration, construction, surface colouring/coating, fabrication and insurance, qualify as input services for Cenvat credit under the relevant definition; (ii) whether the demand was barred by limitation and whether interest and penalty could survive.

Issue (i): Whether the impugned input services, namely housekeeping/gardening, vehicle repair, tour and travel, outward courier, interior decoration, construction, surface colouring/coating, fabrication and insurance, qualify as input services for Cenvat credit under the relevant definition.

Analysis: The definition of input service for the relevant period contained a broad means clause covering services used, directly or indirectly, in relation to manufacture and clearance, together with an inclusive clause covering business-related activities. For most of the disputed period, the services were availed before the 01.04.2011 amendment, and the wider pre-amendment interpretation applied. Gardening and housekeeping were treated as admissible where factory maintenance and pollution-control compliance were involved. Vehicle repair was treated as eligible because the vehicles supported business operations. Tour and travel, outward courier, and insurance services were found to have business nexus and were not hit by the post-01.04.2011 exclusion for the relevant period. Interior decoration and construction of the factory shed were linked to renovation, proper functioning, and manufacturing use. Surface colouring/coating and fabrication were connected with repair and maintenance of machinery and structures necessary for production.

Conclusion: All the impugned services were held eligible for Cenvat credit, and the denial was unsustainable.

Issue (ii): Whether the demand was barred by limitation and whether interest and penalty could survive.

Analysis: The show cause notice was issued after the disputed period on the basis of an audit, while the credit availed had been reflected in returns. No material was brought to establish the ingredients required to invoke the extended period. Since the demand itself could not be sustained, the ancillary levy of interest and penalty could not stand.

Conclusion: The substantial demand was held barred by limitation, and interest and penalty were held not leviable.

Final Conclusion: The appeal succeeded, the denial of Cenvat credit was set aside, and consequential relief followed in law.

Ratio Decidendi: For the relevant pre-amendment period, services having a direct or indirect nexus with manufacture or business operations, including those connected with factory maintenance, infrastructure, and employee/business support, fall within the ambit of input service; where no suppression or wilful misstatement is shown, the extended period cannot be invoked.

Issues: (i) Whether corporate guarantees executed by the corporate debtor constituted financial debt under the Insolvency and Bankruptcy Code, 2016. (ii) Whether the appellants' claims were liable to be rejected for non-submission or improper verification of documents. (iii) Whether the concurrent findings of the tribunals warranted interference in second appeal.

Issue (i): Whether corporate guarantees executed by the corporate debtor constituted financial debt under the Insolvency and Bankruptcy Code, 2016.

Analysis: A liability arising from a guarantee for money borrowed against payment of interest falls within the concept of financial debt, and a guarantor incurs coextensive liability with the principal borrower. The execution of the corporate guarantees was admitted by the corporate debtor, and the record showed that the guarantees were publicly disclosed and remained available to the lenders. The guarantees were executed before the account was treated as NPA on the relevant reckoning under the RBI prudential norms, so their timing did not invalidate the claim.

Conclusion: The corporate guarantees constituted financial debt, and the appellants were entitled to be recognised as financial creditors.

Issue (ii): Whether the appellants' claims were liable to be rejected for non-submission or improper verification of documents.

Analysis: The resolution process regulations permitted the insolvency professional to seek substantiating material and verify claims. The corporate debtor had admitted execution of the guarantees, the security trustee had confirmed custody of the executed and stamped guarantees, and the resolution professional had inspected them at New Delhi. The later production of the guarantees before the appellate tribunal could be taken into account in continuation of the original proceedings. The objection based on stamping also failed because non-stamping or improper stamping is a curable defect and does not by itself render the instrument void or unenforceable.

Conclusion: The rejection of the appellants' claims on the grounds of non-submission, verification, or stamping was unsustainable.

Issue (iii): Whether the concurrent findings of the tribunals warranted interference in second appeal.

Analysis: Interference in second appeal is justified where the findings are perverse. The tribunals had rejected the claims notwithstanding the admitted execution of the guarantees, the supporting material, and the applicable legal position on financial debt and stamping. Those findings were held to be manifestly perverse and legally unsustainable.

Conclusion: The impugned findings warranted interference.

Final Conclusion: The impugned orders were set aside, the appellants were recognised as financial creditors, and the matter was directed to proceed with reconstitution of the committee of creditors in accordance with law.

Ratio Decidendi: A corporate guarantee securing a borrowing can constitute financial debt, and objections based on non-disclosure, verification, or insufficient stamping do not defeat enforcement where execution is admitted and the defect is curable; perverse concurrent findings may be interfered with in second appeal.

Issues: (i) Whether reassessment was valid without service of the statutory notice; (ii) whether reassessment was valid where the recorded belief of escaped income rested on an incorrect factual premise.

Issue (i): Whether reassessment was valid without service of the statutory notice.

Analysis: Sections 148 and 282 of the Income-tax Act, 1961 require valid service of the notice; issuance alone is insufficient. The Revenue bears the burden of establishing service. The assessing officer acknowledged that the notice was returned undelivered.

Conclusion: The reassessment was invalid and was quashed, in favour of the assessee.

Issue (ii): Whether reassessment was valid where the recorded belief of escaped income rested on an incorrect factual premise.

Analysis: Reopening under sections 147 and 148 requires independent application of mind to information supporting a belief that income escaped assessment. The recorded premise relied on a cash deposit supposedly reflected in Form 26AS, but the form did not show that deposit and no supporting evidence was furnished.

Conclusion: The notice was void ab initio and the reassessment was quashed, in favour of the assessee.

Final Conclusion: The consequential proceedings have no legal effect, and the remaining grounds are academic.

Ratio Decidendi: Reassessment requires a factually supported belief that income escaped assessment and valid service of the statutory notice.

Issues: Whether the reassessment initiated beyond three years from the end of the relevant assessment year was valid when the income ultimately assessed as having escaped assessment was below Rs.50 lakh.

Analysis: Reopening was initiated after three years from the end of the relevant assessment year. The applicable condition for such reopening required income chargeable to tax that had escaped assessment to amount to, or likely amount to, Rs.50 lakh or more. Although the order under Section 148A(d) proceeded on alleged escaped income exceeding that threshold, the reassessment ultimately made additions aggregating only Rs.7,81,703. The jurisdictional condition for reopening beyond three years was therefore not met.

Conclusion: The reassessment notice and the consequential assessment order were barred by limitation and were quashed.

Issues: Whether a recovery certificate for fees collected through unregistered investment advisory services could be sustained where the appellant had refunded only the sole complainant and no further claims were received pursuant to public notices.

Analysis: The quantification of fees collected through the unregistered activity had been determined in the earlier order and was not challenged, and therefore attained finality. The refund directions required repayment of amounts received from complainants or investors and a certified completion report. Refund to only one complainant did not permit retention of the remaining fees collected through unauthorised advisory activity; the recovery certificate accorded with that binding determination and the settled position that illegally collected fees cannot be retained.

Conclusion: The recovery certificate was valid notwithstanding the absence of further refund claims following publication of notices.

Issues: Whether the assessment treating credit entries as unexplained money should be set aside and restored to the stage of replying to the notice under Section 148A(b) of the Income-tax Act, 1961, so that the assessee may explain the deposits and substantiate its claimed deduction under Section 80P(2).

Analysis: The assessment had been completed on available material after the assessee did not furnish the requested particulars, resulting in the credit entries being treated as unexplained money under Section 69A of the Income-tax Act, 1961. The assessee proposed to establish that the deposits were received from farmers and to produce material supporting its claimed deduction as a credit co-operative society. In view of the nature of its activities and the proposed explanation, an opportunity to respond at the notice stage was found appropriate. No finding was made on the explanation of deposits or on eligibility for the deduction.

Conclusion: The assessment, demand and consequential proceedings were set aside and restored to the stage of reply to the notice under Section 148A(b); the recovery attachment instructions were also directed to be rescinded.

Issues: Whether a reassessment notice issued before communication of the competent authority's approval is valid.

Analysis: Sections 147, 148 and 151 of the Income-tax Act, 1961 require the Assessing Officer to issue a reassessment notice only after obtaining and receiving the requisite approval from the competent authority. Although the approval bore the same date as the notice, it was communicated to the Assessing Officer only subsequently. An internal approval not communicated to the officer issuing the notice could not authorise issuance of the notice.

Conclusion: The reassessment notice was invalid; consequently, the reopening and the assessment framed pursuant to it were quashed.

Issues: Whether income of a securitisation trust funded through Security Receipts is taxable in the hands of the trust or in the hands of the Security Receipt holders, and whether the trust can be assessed as an Association of Persons.

Analysis: The trust was constituted under the statutory securitisation framework and governed by the applicable regulatory guidelines. Its contributors retained a contractual right to revoke their contributions. Applying Sections 61 to 63 of the Income-tax Act, 1961, the trust was treated as revocable, so that income arising from the transferred assets was assessable in the hands of the contributors. The coordinate-bench ruling on materially identical facts was followed, there being no distinguishing feature or contrary higher precedent. Since the Security Receipt holders had no inter se agreement to join in a common purpose, the trust could not be characterised as an Association of Persons; consequently, Section 164 of the Income-tax Act, 1961 was inapplicable.

Conclusion: The income is not taxable in the hands of the assessee trust and is taxable in the hands of the Security Receipt holders; the assessee cannot be assessed as an Association of Persons, and the additions were deleted.

Issues: (i) Whether a transfer-pricing adjustment for notional interest could be made on investment in OFCDs despite uncertainty of recovery; (ii) Whether notional interest could be imputed on amounts due from associated enterprises where recovery was improbable, including a payment under an invoked corporate guarantee and an advance to a dissolved enterprise; (iii) Whether closing stock could be revalued at average purchase cost despite the assessee's net realisable value valuation; (iv) Whether fair market value could replace actual consideration for computing capital loss for AY 2015-16; (v) Whether corporate-guarantee commission should be benchmarked above 0.5%.

Issue (i): Whether a transfer-pricing adjustment for notional interest could be made on investment in OFCDs despite uncertainty of recovery.

Analysis: The OFCDs carried a 2% coupon and an option for conversion into equity, giving the instrument the character of quasi-equity. Recovery was uncertain, interest was not recognised in accordance with recognised accounting principles, and the investment was subsequently written off. The real income doctrine and the arm's length principle did not permit taxation of hypothetical interest where income had not accrued in real terms; the agreed rate was also above the relevant LIBOR rate.

Conclusion: No notional interest adjustment was warranted on the OFCDs, and the addition was deleted in favour of the assessee.

Issue (ii): Whether notional interest could be imputed on amounts due from associated enterprises where recovery was improbable, including a payment under an invoked corporate guarantee and an advance to a dissolved enterprise.

Analysis: The payment under the corporate guarantee arose after the associated enterprise had entered bankruptcy and was not a lending transaction. The other advance was made from own funds, recovery was uncertain, and the associated enterprise subsequently ceased to exist. In both cases, the amounts were treated as irrecoverable. Transfer-pricing provisions could not be applied to impute interest on income that had not accrued and was commercially incapable of recovery.

Conclusion: No transfer-pricing adjustment for notional interest was warranted on either amount, and both additions were deleted in favour of the assessee.

Issue (iii): Whether closing stock could be revalued at average purchase cost despite the assessee's net realisable value valuation.

Analysis: Inventory must be valued at cost or net realisable value, whichever is lower, and a consistently followed valuation method cannot be displaced unless shown to be incorrect. The assessee demonstrated depressed market conditions, stock deterioration and reduced realisability, while the Revenue produced no contrary evidence disproving the adopted net realisable value.

Conclusion: The revaluation at average purchase cost was unsustainable, and the closing-stock addition was deleted in favour of the assessee.

Issue (iv): Whether fair market value could replace actual consideration for computing capital loss for AY 2015-16.

Analysis: Section 50CA of the Income-tax Act, 1961 was not applicable to AY 2015-16. No enabling provision then authorised substitution of actual sale consideration with fair market value for the share transfer; consequently, the assessee was entitled to compute the capital loss using the actual consideration.

Conclusion: Fair market value could not replace the actual consideration, and the disallowance of long-term and short-term capital losses was deleted in favour of the assessee.

Issue (v): Whether corporate-guarantee commission should be benchmarked above 0.5%.

Analysis: A corporate guarantee issued by a parent company is not comparable to a bank guarantee. The 0.5% benchmark had consistently been adopted in earlier orders concerning the same assessee, while the higher rate relied on by the Revenue rested on distinguishable facts.

Conclusion: The 0.5% corporate-guarantee commission rate was upheld, deciding the issue in favour of the assessee and against the Revenue.

Final Conclusion: The substantive additions for notional interest, inventory valuation and capital losses lacked a sustainable legal or factual basis, while the 0.5% benchmark for corporate-guarantee commission remained valid.

Issues: Whether the writ petition challenging the adjudication and appellate orders should be entertained despite an available statutory appeal before the Appellate Tribunal.

Analysis: A further appellate remedy was available, and the extended period for filing that appeal had not expired. The challenge that the adjudication travelled beyond the show-cause notice was left open for consideration by the Appellate Tribunal.

Outcome: The writ petition was not entertained and was disposed of, leaving the petitioners to pursue the statutory appellate remedy.