Issues: (i) Whether interest paid to a related party and notional interest on a separate trade-account debit balance could be disallowed or added under Section 40A(2)(b); (ii) Whether disallowance of delayed employees' PF/ESI contributions was sustainable; (iii) Whether software services and maintenance expenditure was proved as genuine business expenditure; (iv) Whether brokerage paid to a related party for procuring unsecured loans was proved as genuine expenditure.

Issue (i): Whether interest paid to a related party and notional interest on a separate trade-account debit balance could be disallowed or added under Section 40A(2)(b).

Analysis: Section 40A(2)(b) permits disallowance only of expenditure incurred with a related party to the extent it exceeds fair market value. There was no finding that the interest paid on the unsecured loan exceeded an arm's-length or fair-market rate. The loan account and the current account recording purchase and sale transactions were separate transactions and could not be consolidated merely because the current account reflected a debit balance. The provision does not authorise an income adjustment, and the proposed interest on the trade advance constituted impermissible notional income rather than taxable real income.

Conclusion: The disallowance and addition of Rs. 6,56,987 were deleted in favour of the assessee.

Issue (ii): Whether disallowance of delayed employees' PF/ESI contributions was sustainable.

Analysis: The issue was covered against the assessee by the binding decision in Checkmate Services Pvt. Ltd.; the assessee conceded the position.

Conclusion: The disallowance of delayed employees' PF/ESI contributions was sustained against the assessee.

Issue (iii): Whether software services and maintenance expenditure was proved as genuine business expenditure.

Analysis: The bill merely described software services and maintenance without identifying the software or services supplied. No supporting material explained the nature of the services, and the assessee's computer asset had negligible written-down value. The assessee failed to discharge the burden of proving the genuineness of the expenditure.

Conclusion: The disallowance of Rs. 1,00,000 was sustained against the assessee.

Issue (iv): Whether brokerage paid to a related party for procuring unsecured loans was proved as genuine expenditure.

Analysis: The brokerage paid was disproportionate to the loans allegedly procured, including commission paid in excess of the stated rate for the loan obtained in August. Apart from loan details and ledger entries, no evidence established the basis or genuineness of the brokerage payment.

Conclusion: The disallowance of Rs. 1,11,224 was sustained against the assessee.

Final Conclusion: Relief was granted only in respect of the interest-related addition; the remaining substantive disallowances were upheld.

Ratio Decidendi: A related-party expenditure may be disallowed under Section 40A(2)(b) only upon a finding that it exceeds fair market value, and that provision cannot support addition of notional income from separate commercial transactions.

Issues: Whether disallowance of the assessee's bad-debt claim based on third-party information not supplied to it could be sustained, and the permissible scope of enquiry under the statutory provisions governing bad debts.

Analysis: Third-party replies obtained under Section 133(6) of the Income-tax Act, 1961 constituted the substantial basis of the disallowance, but the record did not establish that the replies and supporting material had been furnished to the assessee. Reliance on such unconfronted material denied an effective opportunity to explain or rebut the alleged discrepancies and violated principles of natural justice. The remand report also contained inconsistencies concerning receipt of replies from certain parties, requiring proper factual verification.

Analysis: For a deduction under Section 36(1)(vii) of the Income-tax Act, 1961, read with Section 36(2) of the Income-tax Act, 1961, the enquiry is confined to whether the debt has been written off in the books and whether the statutory conditions are met. The deduction cannot be refused merely because the Assessing Officer considers that the debt had not become commercially irrecoverable.

Conclusion: The disallowance could not be sustained on the existing record; the claim requires fresh adjudication after disclosure of the material relied upon and opportunity to the assessee to reconcile the discrepancies, with the enquiry confined to the statutory requirements for bad-debt deduction.

Issues: Whether a reassessment can sustain a disallowance on an issue unrelated to the recorded reasons where no addition is made on the issue forming the basis for reopening.

Analysis: Reassessment was initiated on information concerning cash deposits. The assessment accepted the explanation regarding those deposits and made no addition on that basis, but disallowed cash payments under Section 40A(3) on a separate issue. Where the foundational issue for reopening does not result in an addition, the reassessment jurisdiction cannot be used to assess a distinct issue not covered by the recorded reasons.

Conclusion: The reassessment and the disallowance were void ab initio, in favour of the assessee.

Issues: Whether the additional evidence tendered in support of the explanation for cash deposits should be considered, and whether the addition for unexplained cash credit required fresh adjudication.

Analysis: The first appellate authority declined the additional evidence under Rule 46A and sustained the addition without adjudicating the matter on merits. Since the evidence comprised material relevant to the source of the cash deposits and the first appellate authority possessed powers co-terminous with those of the Assessing Officer, a further opportunity to produce documentary evidence was necessary to comply with principles of natural justice.

Conclusion: The issue was restored to the Assessing Officer for a de novo assessment after admitting and considering the additional evidence; the matter was decided in favour of the assessee.

Issues: (i) Whether execution of the joint development agreement and grant of possession to the developer constituted a transfer taxable in the relevant assessment year; (ii) Whether the developer's cost of construction could be adopted as the landowner's consideration for computing capital gains; (iii) Whether the assessee was entitled to exemption under section 54/54F for all 23 flats receivable under the joint development agreement.

Issue (i): Whether execution of the joint development agreement and grant of possession to the developer constituted a transfer taxable in the relevant assessment year.

Analysis: For section 2(47)(v), transfer of legal title is not determinative; it is sufficient that possession is allowed to be taken or retained in part performance within section 53A of the Transfer of Property Act. The developer was permitted under the acted-upon agreement to enter the land, undertake development, and the assessee became entitled to constructed area while receiving a non-refundable advance. The contractual recital that possession was not delivered could not override the substantive rights and possession granted under the agreement. Subsequent receipt or sale of constructed flats was a distinct taxable stage and did not defer the transfer of land/development rights.

Conclusion: Transfer under section 2(47)(v) was completed in the assessment year in which the joint development agreement was executed and possession was handed over, against the assessee.

Issue (ii): Whether the developer's cost of construction could be adopted as the landowner's consideration for computing capital gains.

Analysis: The developer's construction cost represents its expenditure in discharging its obligation and is not consideration received or accruing to the landowner. The consideration received by the assessee was in kind, namely the constructed flats. The stamp duty value of the built-up area received by the assessee was the appropriate measure for determining consideration, with consequential allowance of expenses, indexed cost of acquisition, and indexed cost of improvement where applicable.

Conclusion: The developer's construction cost cannot be adopted as consideration; capital gains must be computed using the stamp duty value of the built-up area and allowable indexed deductions, in favour of the assessee.

Issue (iii): Whether the assessee was entitled to exemption under section 54/54F for all 23 flats receivable under the joint development agreement.

Analysis: Under the applicable pre-amendment legal position, multiple flats received in the same residential project pursuant to a joint development arrangement could constitute a residential house. The assessee's entire allotment of 23 flats was therefore to be treated as investment in a residential house for the purposes of the claimed exemption.

Conclusion: The assessee is entitled to exemption under section 54/54F in respect of the entire 23 flats, and no capital-gains addition is chargeable on the transfer under the joint development agreement, in favour of the assessee.

Final Conclusion: Although the development arrangement gave rise to a taxable transfer in the relevant year, the prescribed valuation method and the full residential-house exemption eliminate the resulting capital-gains addition.

Ratio Decidendi: Where a joint development agreement is acted upon and possession enabling development is granted, it effects a deemed transfer; however, the landowner's consideration cannot be measured by the developer's construction expenditure, and multiple flats received in the same project may qualify collectively as a residential house under the applicable exemption provisions.

Issues: (i) Whether TDS credit reflected in the purchaser's Form 26AS owing to an inadvertent wrong PAN entry in Form 26QB could be rectified and consequential relief granted; (ii) Whether the reassessment notice was valid where its recorded reasons proceeded on the erroneous premise that the assessee had sold, rather than purchased, the property.

Issue (i): Whether TDS credit reflected in the purchaser's Form 26AS owing to an inadvertent wrong PAN entry in Form 26QB could be rectified and consequential relief granted.

Analysis: The tax was admittedly deducted and deposited in respect of the property purchase. The credit was reflected in the purchaser's Form 26AS solely because its PAN was entered in the seller's PAN field in Form 26QB. There was no finding of non-deposit of tax or of a competing or double claim to the credit. The error was treated as a bona fide clerical and procedural error requiring verification and correction of departmental records.

Conclusion: The issue is remitted for verification and manual rectification, with consequential TDS relief to be granted in accordance with law if the stated facts are verified, in favour of the assessee.

Issue (ii): Whether the reassessment notice was valid where its recorded reasons proceeded on the erroneous premise that the assessee had sold, rather than purchased, the property.

Analysis: The recorded reasons described the assessee as having sold the property, while the undisputed transaction was a purchase by the assessee. The factual premise underlying the notice was therefore incorrect.

Conclusion: The reassessment notice is invalid, in favour of the assessee.

Final Conclusion: The erroneous PAN reporting is to be corrected after factual verification so that the tax deposit is appropriately accounted for, and the reassessment proceedings cannot rest on a factually incorrect premise.

Ratio Decidendi: A bona fide clerical error in TDS reporting, absent non-payment or double credit, warrants verification and rectification rather than denial of consequential relief; a reassessment notice founded on an incorrect material fact is invalid.

Issues: Whether the claimed exempt long-term capital gain from sale of shares was genuine or constituted undisclosed income.

Analysis: The documentary material showed that the share transactions were routed through banking channels, demat accounts and a recognised stock exchange. However, the investigation findings concerning the group connected with the scrip, together with the abnormal volatility and rise in its price, warranted looking beyond the apparent documentation. The surrounding facts and evidence supported the inference that the claimed capital gain was not genuine.

Conclusion: The claimed long-term capital gain was bogus and was rightly treated as undisclosed income, against the assessee.

Issues: (i) Whether a Souharda co-operative society registered under the Karnataka Souharda Sahakari Act, 1997 is eligible for deduction on income from providing credit facilities to its members under section 80P; (ii) Whether interest earned on bank deposits of surplus funds qualifies for deduction under section 80P(2)(a)(i); (iii) Whether cash deposits in specified bank notes received from members during demonetisation could be added under section 68; (iv) Whether the amended 60% tax rate under section 115BBE applies for assessment year 2017-18.

Issue (i): Whether a Souharda co-operative society registered under the Karnataka Souharda Sahakari Act, 1997 is eligible for deduction on income from providing credit facilities to its members under section 80P.

Analysis: Section 2(19) includes a society registered under any State law for registration of co-operative societies. The jurisdictional High Court decision establishes that societies registered under the Karnataka Souharda Sahakari Act, 1997 fall within that definition; the benefit under section 80P cannot be denied on a hyper-technical construction of the registration law.

Conclusion: The assessee is eligible for deduction under section 80P in respect of income from extending credit facilities or loans to its members, in favour of the assessee.

Issue (ii): Whether interest earned on bank deposits of surplus funds qualifies for deduction under section 80P(2)(a)(i).

Analysis: The deposits represented surplus profits and gains not immediately required for lending to members, and not monies payable to members or shown as liabilities. Interest on such short-term deployment of surplus funds is attributable to the business of providing credit facilities; the expression "attributable to" has a wider scope than "derived from".

Conclusion: Interest earned from the bank deposits qualifies for deduction under section 80P(2)(a)(i), in favour of the assessee.

Issue (iii): Whether cash deposits in specified bank notes received from members during demonetisation could be added under section 68.

Analysis: Receipt of specified bank notes from members in the ordinary course of the assessee's deposit-taking and lending business, followed by deposit in scheduled-bank accounts, does not by itself justify an addition merely because the notes ceased to be legal tender. The assessee must, however, establish the identity of the members from whom the notes were received through complete KYC particulars; creditworthiness need not be separately established in these circumstances.

Conclusion: The issue is restored to the Assessing Officer to verify members' KYC details and delete the section 68 addition for verified receipts, in favour of the assessee to that extent.

Issue (iv): Whether the amended 60% tax rate under section 115BBE applies for assessment year 2017-18.

Analysis: The amendment raising the tax rate for income referred to, inter alia, in section 68 came into effect from 01.04.2017 and applies from assessment year 2017-18.

Conclusion: The amended 60% rate under section 115BBE applies to any section 68 addition sustained upon verification, against the assessee.

Final Conclusion: The deductions claimed on business income and eligible bank-deposit interest are available, while the cash-credit issue requires verification of member identities and any sustained addition attracts the amended rate of tax.

Ratio Decidendi: A Souharda society registered under a State law is a co-operative society for section 80P purposes, and interest from temporary bank deployment of surplus business funds is attributable to its credit-facility business where the funds are not members' liabilities.

Issues: (i) Whether the Assessing Officer's estimation of the cost of acquisition and cost of improvement for computing long-term capital gains was sustainable; (ii) Whether exemption under section 54F was available where the new residential property was acquired within the prescribed period but the unutilised capital gain was not deposited in the Capital Gains Account Scheme, and where investment was made beyond that period.

Issue (i): Whether the Assessing Officer's estimation of the cost of acquisition and cost of improvement for computing long-term capital gains was sustainable.

Analysis: The Assessing Officer reduced the claimed costs by applying rates for land and construction without disclosing any evidentiary or rational basis for those rates. Although the assessees also lacked documentary evidence supporting their claimed figures, an unsupported and arbitrary estimation could not be sustained.

Conclusion: The disallowance arising from the reduced indexed cost of acquisition and indexed cost of improvement was deleted in favour of the assessees.

Issue (ii): Whether exemption under section 54F was available where the new residential property was acquired within the prescribed period but the unutilised capital gain was not deposited in the Capital Gains Account Scheme, and where investment was made beyond that period.

Analysis: Acquisition of the new property within two years from transfer of the original asset fulfilled the substantive investment condition. Deposit of the unutilised amount in the specified account before the return-filing due date was procedural where the investment was ultimately made within the statutory period. In the case where the investment itself was beyond the prescribed period, the substantive condition was not fulfilled.

Conclusion: Exemption under section 54F was allowable to the three assessees who acquired the new property within the prescribed period, but was rightly denied to the assessee whose investment was beyond that period.

Final Conclusion: The computation of long-term capital gains must not rest on unsupported estimates, and section 54F relief remains available upon timely substantive investment notwithstanding non-compliance with the intervening deposit requirement; no such relief arises from an out-of-time investment.

Ratio Decidendi: Where a new residential asset is acquired within the period prescribed under section 54F, failure to deposit unutilised capital gains in the Capital Gains Account Scheme is procedural and does not defeat the exemption; assessment estimates must have a rational evidentiary basis.

Issues: (i) Whether the delay of 437 days in filing the appeal warranted condonation; (ii) Whether penalty for under-reporting or misreporting of income was sustainable where a charitable society, after full disclosure, claimed 100% exemption of donations instead of the admissible 50%.

Issue (i): Whether the delay of 437 days in filing the appeal warranted condonation.

Analysis: The delay was supported by affidavit and arose from bureaucratic delay in taking a decision. The explanation was bona fide, beyond the assessee's control, and did not indicate a deliberate attempt to obtain an undue advantage. Substantial justice prevailed over a technical dismissal.

Conclusion: The delay was condoned in favour of the assessee.

Issue (ii): Whether penalty for under-reporting or misreporting of income was sustainable where a charitable society, after full disclosure, claimed 100% exemption of donations instead of the admissible 50%.

Analysis: Penalty proceedings are separate from assessment, and a rejected claim does not by itself establish inaccurate particulars or misreporting. The claim resulted from a bona fide mistake; all relevant facts had been disclosed, and no material established mala fides or a false claim. An inadvertent error in claiming a higher exemption could not attract penal consequences.

Conclusion: The penalty was unsustainable and was deleted in favour of the assessee.

Final Conclusion: The assessee obtained relief from the penal liability after condonation of delay and adjudication on merits.

Ratio Decidendi: A fully disclosed but bona fide and inadvertent erroneous claim does not constitute inaccurate particulars or misreporting sufficient to sustain a penalty.

Issues: Whether rejection of the rectification application was sustainable where the reassessment order did not consider binding jurisdictional precedent on taxing unrecorded business receipts.

Analysis: Rectification is confined to an error apparent from the record and cannot ordinarily be used to reopen matters requiring fresh factual investigation or to substitute an appeal against reassessment. However, the original assessment had already addressed the difference between receipts reflected in Form 26AS and the books by applying a net-profit rate. The reassessment instead added the entire difference. The binding jurisdictional precedent provided that undisclosed sales receipts cannot, without a finding of undisclosed investment, be treated wholly as income and that only an appropriate profit element may be assessed. Non-consideration of a binding jurisdictional precedent constitutes a mistake apparent from the record.

Conclusion: The rejection of the rectification application was unsustainable; the application must be reconsidered by applying the binding jurisdictional precedent. The finding is in favour of the assessee.

Issues: Whether the addition of Rs. 7 lakh as unexplained source of cash loan advanced by the assessee was sustainable.

Analysis: The assessee substantiated the source of Rs. 5.30 lakh through loans from six creditors by furnishing their identities, addresses, affidavits and land records evidencing creditworthiness. A prior inconsistent explanation during investigation, without any infirmity being found in the subsequently furnished evidence, could not justify rejection of the explained source. The balance Rs. 3.70 lakh claimed as personal savings was supported by evidence of recurring dairy and agricultural income over preceding years and agricultural landholding. Restricting available savings to Rs. 2 lakh lacked any stated basis and was arbitrary.

Conclusion: The entire cash loan of Rs. 9 lakh stood explained; the addition of Rs. 7 lakh was unsustainable and was deleted in favour of the assessee.

Issues: (i) Whether the assessee's appeal before the first appellate authority was filed within the extended limitation period; (ii) Whether the adjustment under section 143(1) for impairment provision and provision for capital advances was unsustainable as the amounts had already been disallowed in the returned computation.

Issue (i): Whether the assessee's appeal before the first appellate authority was filed within the extended limitation period.

Analysis: The statutory relaxation under the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 and Notification No. S.O. 2033(E) extended the prescribed period for filing appeals falling in the notified period up to 31.03.2021. The appeal filed on 29.07.2020 was consequently within time. The COVID-19 limitation-extension directions were also binding on judicial and quasi-judicial authorities. There was thus no delay requiring condonation.

Conclusion: The appeal before the first appellate authority was within limitation; the contrary finding was set aside. This issue was decided in favour of the assessee.

Issue (ii): Whether the adjustment under section 143(1) for impairment provision and provision for capital advances was unsustainable as the amounts had already been disallowed in the returned computation.

Analysis: The computation, Schedule BP, reconciliation and contemporaneous response to the processing authority established that the impairment provision and capital-advance provision were integral to the aggregate additions already voluntarily made in computing taxable income. A further processing adjustment of the same amounts duplicated the disallowance and reduced the returned loss twice. No material contradicted the reconciliation or the factual findings accepting it.

Conclusion: The duplicate adjustment was rightly deleted. This issue was decided in favour of the assessee.

Final Conclusion: The extended limitation regime validated the first appeal and preserved adjudication on merits, while the deletion of the duplicated processing adjustment remained undisturbed.

Ratio Decidendi: An appeal filed within a statutorily extended limitation period cannot be treated as delayed, and a return-processing adjustment cannot duplicate an amount already disallowed by the assessee in its computation of income.

Issues: (i) Whether impleadment of the secured creditor in the pending avoidance-transaction application was valid; (ii) Whether the reserved order in that application could be de-reserved for hearing the newly impleaded party.

Issue (i): Whether impleadment of the secured creditor in the pending avoidance-transaction application was valid.

Analysis: The impleadment was founded on findings in a separate order concerning the secured creditor's status, rights over the property, and conduct during the corporate insolvency resolution process. That separate order remained unchallenged. Since those findings formed the basis for requiring the secured creditor's participation in proceedings seeking avoidance of transactions, the challenge to impleadment could not effectively succeed without challenging that foundational order.

Conclusion: The impleadment of the secured creditor was valid and is against the appellant.

Issue (ii): Whether the reserved order in that application could be de-reserved for hearing the newly impleaded party.

Analysis: Once the secured creditor was properly added as a necessary party, adjudication without affording it a hearing would not resolve the dispute effectively. The Adjudicating Authority possesses inherent power to de-reserve an order and reopen the matter for hearing where necessary to secure an effective adjudication and comply with the interest of justice.

Conclusion: De-reservation of the pending application for a fresh hearing after impleadment was valid and is against the appellant.

Final Conclusion: The challenge to the procedural orders fails; the pending avoidance application is to be adjudicated after hearing all necessary parties, with an expeditious determination requested.

Ratio Decidendi: An unchallenged order furnishing the basis for impleadment cannot be collaterally assailed through a challenge to the consequential impleadment order; a tribunal may de-reserve a reserved matter under its inherent powers where hearing a necessary party is required for effective adjudication.

Issues: Whether rejection of the application for condonation of delay in filing Form 10DA and claiming deduction was sustainable under Section 119(2)(b).

Analysis: The power to admit a belated claim exists to avoid genuine hardship and requires a justice-oriented consideration of the explanation for delay and the merits of the claim. Genuine hardship cannot be rejected merely because the assessee is a financially capable body corporate. Nor can the absence of a complaint against the auditor discredit an undisputed certificate acknowledging that the claim and Form 10DA were omitted inadvertently. The authority must not reject a potentially meritorious claim perfunctorily or enter into considerations outside the scope of the condonation power.

Conclusion: The rejection of condonation was unsustainable and was set aside; the application must be reconsidered on merits. This is in favour of the assessee.

Issues: (i) Whether the contractual arrangement between the contractor and the government employer could alter the contractor's statutory liability to pay GST; (ii) whether directions permitting revised GST returns, waiving interest and penalty, or relaxing statutory limitation could be issued contrary to the GST enactments; (iii) whether reimbursement of differential GST could be directed against the tax authorities or the concerned government employer.

Issue (i): Whether the contractual arrangement could alter the contractor's statutory GST liability.

Analysis: Liability to levy, assessment, recovery and enforcement of GST is governed by the applicable GST statutes. The works contracts and any alleged failure by the government employer to reimburse the differential tax could not modify the statutory incidence or payment obligation imposed on the contractor under the Central Goods and Services Tax Act, 2017, the Karnataka Goods and Services Tax Act, 2017 or the Integrated Goods and Services Tax Act, 2017.

Conclusion: The contractor's GST liability must be determined strictly under the applicable GST statute and cannot be altered by the terms of the private contract.

Issue (ii): Whether revised returns could be permitted and interest, penalty or limitation could be waived contrary to the GST enactments.

Analysis: Directions permitting revised or amended returns in a manner contrary to the statutory scheme, waiving interest or penalty, and relaxing the limitation applicable to filing returns cannot be issued without statutory authority.

Conclusion: The directions permitting such statutory departures are unsustainable.

Issue (iii): Whether reimbursement of differential GST could be directed against the tax authorities or the concerned government employer.

Analysis: Any entitlement to reimbursement of incremental tax arises from the contractual relationship between the contractor and the employer. The tax authorities are not liable to reimburse the differential amount, although the direction for reimbursement may operate against the concerned employer in accordance with the contractual and applicable legal framework.

Conclusion: Reimbursement directions are confined to the concerned government employer and do not extend to the tax authorities or the State in its taxing capacity.

Final Conclusion: The statutory GST liability and related assessment process remain governed by the GST enactments, while any contractual reimbursement dispute is confined to the contractor and the government employer.

Ratio Decidendi: Contractual terms cannot alter statutory GST liability, and writ directions cannot waive or relax statutory requirements in the absence of authority under the applicable GST enactments.

Issues: (i) Whether the cost of acquisition of the two properties could be taken as nil while computing long-term capital gains. (ii) Whether interest under section 234A could be levied for the period during which the assessee could not legally furnish a valid return before issuance of notice under section 148.

Issue (i): Whether the cost of acquisition of the two properties could be taken as nil while computing long-term capital gains.

Analysis: Under sections 45 and 48 of the Income-tax Act, 1961, capital gains must be computed after allowing the cost of acquisition, cost of improvement and transfer expenditure. Section 55 of the Income-tax Act, 1961 permits adoption of fair market value as on the applicable statutory base date for qualifying old assets. The properties were identifiable and supported by sale deeds recording their earlier acquisition or release in favour of the society. The absence of complete historical records did not establish that the properties had no cost. The reverse indexation or time-gap method could not be rejected at the threshold where direct evidence of historical fair market value was unavailable, but the guidance value, acquisition year, Cost Inflation Index, property particulars, enhancement and computation required factual verification.

Conclusion: The adoption of nil cost of acquisition was unsustainable. The issue was restored to the Assessing Officer for determining the correct cost of acquisition, indexation and allowable expenditure in accordance with law.

Issue (ii): Whether interest under section 234A could be levied for the period during which the assessee could not legally furnish a valid return before issuance of notice under section 148.

Analysis: Interest under section 234A of the Income-tax Act, 1961 is compensatory and may be charged only for a legally attributable delay in furnishing the return. After expiry of the periods under sections 139 and 139(4) of the Income-tax Act, 1961 and before issuance of notice under section 148, the assessee had no statutory mechanism to furnish a valid return for the relevant assessment year. The principle of lex non cogit ad impossibilia therefore applied, and the assessee could not be treated as being in continuing default during that intervening period.

Conclusion: Interest under section 234A was not leviable for the period during which filing of a valid return was legally impermissible. The Assessing Officer was directed to recompute the interest after excluding that period and grant consequential relief.

Final Conclusion: The nil-cost computation was set aside for fresh determination, and the challenge to interest under section 234A succeeded to the extent of excluding the legally impermissible intervening period.

Ratio Decidendi: Capital gains cannot be computed by treating the cost of an identifiable capital asset as nil merely because old acquisition records are unavailable; and interest for delayed filing cannot be imposed for a period during which the assessee had no legal means to furnish a valid return.

Issues: (i) Whether the ad hoc disallowance of 1% of advertisement and business promotion expenses was sustainable; (ii) Whether deduction under section 80G was allowable on the basis of the donation receipts and bank statement produced.

Issue (i): Whether the ad hoc disallowance of 1% of advertisement and business promotion expenses was sustainable.

Analysis: The assessee did not furnish the basic particulars required to substantiate the expenditure, including the names, addresses, PAN details and nature of services rendered, despite specific queries. The disallowance was also restricted only to 1% of the aggregate expenditure, and no material was shown to establish that the finding of the lower authorities was perverse.

Conclusion: The disallowance of advertisement and business promotion expenses was upheld and this issue was decided against the assessee.

Issue (ii): Whether deduction under section 80G was allowable on the basis of the donation receipts and bank statement produced.

Analysis: The assessee produced receipts for the donations and the corresponding bank statement showing the cheque-based payments. The documentary evidence was sufficient to establish the genuineness of the donations, and the aggregate donation of Rs. 23,50,000 supported entitlement to 50% deduction under Chapter VI-A.

Conclusion: Deduction under section 80G was allowed and this issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded only in respect of the donation claim, while the disallowance of advertisement and business promotion remained undisturbed, resulting in partial relief to the assessee.

Ratio Decidendi: A deduction claim is to be allowed when the assessee substantiates the transaction with reliable documentary evidence, whereas an expenditure disallowance may be sustained where the assessee fails to discharge the primary onus of providing basic supporting particulars.

Issues: Whether, in the facts of the case, the petitioner was required to make the statutory pre-deposit of 10% while preferring an appeal before the Goods and Services Tax Appellate Tribunal under the Central Goods and Services Tax Act, 2017.

Analysis: The disputed liability was found to relate to the nature of supply and the consequent tax treatment under CGST and SGST, whereas the petitioner had already paid tax under IGST. The controversy did not concern excess availment of input tax credit. In these circumstances, and having regard to the petitioner's proposed appeal before the Tribunal, insistence on the statutory pre-deposit was not warranted.

Conclusion: The petitioner was permitted to file the appeal before the Tribunal without depositing 10% tax as pre-deposit.

Issues: (i) whether a charitable hospital engaged in medical relief could be denied renewal of registration under section 12AB of the Income-tax Act, 1961 on the basis of its receipts, patient statistics, treatment costs, salary expenditure and alleged profit motive; (ii) whether the Commissioner could independently hold that the assessee violated section 41AA of the Maharashtra Public Trusts Act, 1950 and the Indigent Patients' Fund Scheme in the absence of any adverse determination by the competent authority; and (iii) whether retrospective cancellation of the existing registration from the date of original grant was sustainable in renewal proceedings.

Issue (i): whether a charitable hospital engaged in medical relief could be denied renewal of registration under section 12AB of the Income-tax Act, 1961 on the basis of its receipts, patient statistics, treatment costs, salary expenditure and alleged profit motive

Analysis: Medical relief was held to be an independent charitable head under section 2(15) of the Income-tax Act, 1961, and the proviso relating to advancement of any other object of general public utility could not be mechanically imported into such a case. The scale of hospital operations, charging of fees, maintenance of infrastructure, employment of staff, average revenue per bed and accumulation of funds did not by themselves establish a profit motive or negate genuineness. The statute did not prescribe any affordability benchmark, cap on receipts or fixed model of healthcare delivery for renewal under section 12AB.

Conclusion: The denial of renewal on the ground of commerciality and non-genuineness was unsustainable and was set aside in favour of the assessee.

Issue (ii): whether the Commissioner could independently hold that the assessee violated section 41AA of the Maharashtra Public Trusts Act, 1950 and the Indigent Patients' Fund Scheme in the absence of any adverse determination by the competent authority

Analysis: The jurisdiction under section 12AB did not permit the Commissioner to assume the role of the authority entrusted with enforcing the Maharashtra Public Trusts Act, 1950. In the absence of any order, direction or adverse finding by the competent authority under that enactment, the Commissioner could not independently declare a violation of section 41AA or the Indigent Patients' Fund Scheme and use it as a basis to reject renewal. A lower actual percentage of indigent or weaker section patients treated, without proof that eligible patients were refused admission or treatment, was also held insufficient to establish non-compliance.

Conclusion: The finding of violation of section 41AA of the Maharashtra Public Trusts Act, 1950 and the scheme was rejected in favour of the assessee.

Issue (iii): whether retrospective cancellation of the existing registration from the date of original grant was sustainable in renewal proceedings

Analysis: Retrospective cancellation carried serious civil and fiscal consequences and could not be ordered merely because renewal was rejected. There was no finding of fraud, misrepresentation, concealment or voidness at inception. Proceeding on an application for renewal could not be converted into a proceeding for annulment of the original registration from its inception.

Conclusion: The retrospective cancellation of registration was held to be unsustainable and was quashed in favour of the assessee.

Final Conclusion: The impugned order was set aside, the rejection of renewal and the retrospective cancellation were quashed, and the registration was directed to continue and be renewed in accordance with law.

Ratio Decidendi: For institutions providing medical relief, charitable status under section 2(15) and renewal under section 12AB cannot be denied merely on the basis of receipts or operational scale, and the Commissioner cannot independently enforce another statute or order retrospective cancellation absent a legally established violation by the competent authority.