Issues: (i) Whether the resolution professional could appoint a transaction auditor and file an avoidance application without approval of the committee of creditors, and whether non-joinder of the transferee companies vitiated the proceedings; (ii) Whether the transfers of Rs. 39,00,000/- to M/s K Sera Sera Miniplex Ltd. and Rs. 8,92,646/- to M/s K Sera Sera Digital Cinema Ltd. were preferential transactions, or were protected by the ordinary course of business exception.

Issue (i): Whether the resolution professional could appoint a transaction auditor and file an avoidance application without approval of the committee of creditors, and whether non-joinder of the transferee companies vitiated the proceedings?

Analysis: The statutory duties of the resolution professional include appointing professionals and filing avoidance applications. The governing regulations permit appointment of professionals by the resolution professional when such services are required, and the Code does not require prior approval of the committee of creditors for either appointment of a transaction auditor or filing of an application under the avoidance provisions. As to non-joinder, the proceedings under the Code are summary in nature and are based on the corporate debtor's records for identifying avoidable transactions. The absence of the transferee companies did not prevent effective adjudication, and the objection was also not raised before the adjudicating authority.

Conclusion: The objections based on lack of committee approval and non-joinder were rejected.

Issue (ii): Whether the transfers of Rs. 39,00,000/- to M/s K Sera Sera Miniplex Ltd. and Rs. 8,92,646/- to M/s K Sera Sera Digital Cinema Ltd. were preferential transactions, or were protected by the ordinary course of business exception?

Analysis: A preferential transaction under Section 43 requires a transfer for the benefit of a creditor, surety, or guarantor on account of antecedent debt or liability, with the effect of placing that person in a better position than under Section 53. For related parties, the look-back period is two years. The transfer to M/s K Sera Sera Digital Cinema Ltd. was made to a related party that had admitted creditor status, within the relevant period, and on the material before the tribunal it was not shown to be in the ordinary course of business. The transfer to M/s K Sera Sera Miniplex Ltd., though made to a related party, was not shown to be a payment to a creditor, surety, or guarantor for antecedent debt or liability, and therefore did not satisfy the essential ingredients of Section 43(2).

Conclusion: The Rs. 8,92,646/- transfer was held preferential, while the Rs. 39,00,000/- transfer was not.

Final Conclusion: The appeal succeeded only in part: the finding of preference was confined to one transfer, and the refund direction was reduced accordingly.

Ratio Decidendi: For a related-party transfer to be avoided as preferential, all ingredients of Section 43 must be satisfied, including the existence of a creditor, surety, or guarantor relationship tied to antecedent debt or liability, and the ordinary course of business exception must be established on record; a resolution professional may appoint professionals and pursue avoidance applications without committee approval.

Issues: Whether the section 9 application was maintainable in view of the alleged pre-existing dispute regarding quality of goods, delay in delivery, and reconciliation of accounts, and whether the corporate debtor's communications constituted an admission of liability.

Analysis: The dispute had to be tested on the basis of materials showing whether it was real and pre-existing, or merely asserted to defeat insolvency proceedings. The record showed contemporaneous correspondence concerning delivery delays, defects, deductions, and a consequence sheet prepared by the corporate debtor, but the Tribunal found that the amounts ultimately acknowledged in that sheet and the subsequent communication dated 01.11.2023 established an admitted unpaid operational debt above the statutory threshold. The Tribunal further held that the corporate debtor could not rely on quality and delay objections after itself working out and communicating the payable amount, and that the alleged dispute was not bona fide enough to bar admission of the section 9 petition.

Conclusion: The section 9 application was held maintainable and the plea of pre-existing dispute was rejected.

Ratio Decidendi: A section 9 petition is maintainable where the creditor establishes an unpaid operational debt and the debtor's objections do not amount to a genuine, pre-existing dispute supported by contemporaneous material.

Issues: Whether the unsold inventory and subject property in the real estate project could be excluded from the valuation of the corporate debtor and from the Information Memorandum on the ground that the collaboration agreement had ceased to operate.

Analysis: The project had been undertaken under a collaboration agreement under which the corporate debtor had developed the project and made allotments to numerous allottees. Regulatory orders under the real estate authority treated the landowner and the corporate debtor as promoters and directed both to complete the project, which showed that the collaboration arrangement was still being acted upon. The arbitral award relied on by the appellant did not grant a declaration that the collaboration agreement had been lawfully terminated by the landowner, and it also rejected the prayer seeking transfer of the project land. In these circumstances, the argument that the corporate debtor had no continuing interest so as to justify exclusion of the unsold inventory from CIRP valuation was not accepted.

Conclusion: The prayer to exclude the unsold inventory and subject property from valuation and the Information Memorandum was rightly rejected, and the appeal failed.

Final Conclusion: The project assets remained part of the corporate debtor's estate for insolvency purposes, and the impugned order declining exclusion of the unsold inventory was sustained.

Ratio Decidendi: Where a collaboration agreement has not been lawfully terminated and the project continues to be recognised by the regulatory authority as jointly attributable to the landowner and developer, the unsold inventory forming part of the project cannot be excluded from the corporate debtor's valuation or Information Memorandum in CIRP.

Issues: (i) Whether the appellant was entitled to be treated as a secured creditor for its VAT dues and CST dues; (ii) whether the statutory charge created by section 48 of the Gujarat Value Added Tax Act, 2003 had to be proved through registration or disclosure in the claim form for recognition in liquidation; (iii) whether the appellant, by not exercising the option under section 52(1)(b) of the Insolvency and Bankruptcy Code, 2016, was to be treated as having relinquished its security interest and therefore entitled to distribution under section 53.

Issue (i): Whether the appellant was entitled to be treated as a secured creditor for its VAT dues and CST dues.

Analysis: The appellant's VAT dues were backed by a statutory first charge under section 48 of the Gujarat Value Added Tax Act, 2003, which attached by operation of law on assessment. That charge made the appellant a secured creditor in respect of the VAT component. The CST component stood on a different footing, because the Central Sales Tax Act, 1956 did not itself create an equivalent first charge, and section 9(2) of that Act could not be used to import the Gujarat statute's charge so as to elevate CST dues to secured status. Governmental dues may enjoy priority as crown debt, but not over prior secured debt in the manner claimed here.

Conclusion: The appellant was a secured creditor for VAT dues only, and not for CST dues.

Issue (ii): Whether the statutory charge created by section 48 of the Gujarat Value Added Tax Act, 2003 had to be proved through registration or disclosure in the claim form for recognition in liquidation.

Analysis: Regulation 21 of the IBBI (Liquidation Process) Regulations, 2016 permits proof of security interest by several modes, but it does not confine proof of a statutory charge to registration under section 77(3) of the Companies Act, 2013. A charge created by operation of law is different from a contractual charge created by the company. The statutory charge under section 48 arose on assessment itself and did not depend on registration with the Registrar of Companies or CERSAI. Non-disclosure of particulars in the claim form did not by itself destroy the charge where the liquidator had contemporaneous notice of the statutory basis of the claim.

Conclusion: Registration under section 77(3) of the Companies Act, 2013 was not indispensable for the appellant's statutory VAT charge, and the omission in the claim form did not defeat the claim.

Issue (iii): Whether the appellant, by not exercising the option under section 52(1)(b) of the Insolvency and Bankruptcy Code, 2016, was to be treated as having relinquished its security interest and therefore entitled to distribution under section 53.

Analysis: A secured creditor who does not opt to realise the security interest in liquidation is treated as having relinquished that security for purposes of the liquidation distribution scheme. The appellant had asserted its secured status but did not elect to realise the security interest under section 52(1)(b). Accordingly, for the VAT component it fell within the class of secured creditors who share in distribution under section 53(1)(b)(ii). The liquidation distribution already made required adjustment to the extent necessary to recognise the appellant's VAT-secured position.

Conclusion: The appellant was to be treated as having relinquished the security interest for liquidation distribution purposes and was entitled to share in the waterfall under section 53 for its VAT dues.

Final Conclusion: The appellant succeeded only in part: its VAT dues had secured status and were to be accounted for in liquidation distribution, while its CST dues remained unsecured operational government dues.

Ratio Decidendi: A statutory first charge created by operation of law may constitute security interest in liquidation without contractual registration, but it confers secured status only to the extent the underlying statute creates that charge, and a secured creditor who does not exercise the realisation option in liquidation is relegated to the distribution waterfall under the Code.

Issues: (i) Whether the order directing liquidation of the corporate debtor called for interference, particularly in view of the attempted settlement and the plea to keep liquidation in abeyance under section 12A of the Insolvency and Bankruptcy Code, 2016. (ii) Whether dismissal of the application seeking to keep the liquidation proceedings in abeyance was justified.

Issue (i): Whether the order directing liquidation of the corporate debtor called for interference, particularly in view of the attempted settlement and the plea to keep liquidation in abeyance under section 12A of the Insolvency and Bankruptcy Code, 2016.

Analysis: The Committee of Creditors had unanimously resolved to liquidate the corporate debtor, and the resolution professional moved the liquidation application under section 33(2) of the Insolvency and Bankruptcy Code, 2016. The attempt to rely on section 12A was rejected because withdrawal under that provision is not available once liquidation has commenced. The proper post-liquidation route for settlement is a scheme under section 230 of the Companies Act, 2013, as contemplated by regulation 2B of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The earlier interim restraint on auction did not alter the legal position once the governing issue was settled.

Conclusion: The liquidation order did not warrant interference and the corporate debtor was rightly directed to continue in liquidation.

Issue (ii): Whether dismissal of the application seeking to keep the liquidation proceedings in abeyance was justified.

Analysis: The application seeking to freeze the liquidation proceedings was found to disclose no sustainable ground for the relief sought. The adjudicating authority had already held that the Supreme Court order in the related matter did not bar progress in the present case, and the appellant's non-appearance did not vitiate the decision because Rule 48 of the National Company Law Tribunal Rules, 2016 permits the Tribunal either to dismiss for default or to decide on merits. The appellate tribunal found no infirmity in that approach and noted that the application was also inconsistent with the legal position that section 12A is inapplicable during liquidation.

Conclusion: The dismissal of the abeyance application was and no interference was called for.

Final Conclusion: The appeal fails, the liquidation process is permitted to continue, and all connected applications stand dismissed.

Ratio Decidendi: Withdrawal under section 12A of the Insolvency and Bankruptcy Code, 2016 is not permissible after commencement of liquidation, and any settlement at that stage must proceed only through the statutory route under section 230 of the Companies Act, 2013 read with regulation 2B of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

Issues: Whether the 193-day delay in refiling the appeal was liable to be condoned.

Analysis: Condonation of refiling delay is to be approached with liberality, but the applicant must still furnish a coherent, defect-wise and date-wise explanation showing sufficient cause. The explanation offered for the major period of delay was found unsatisfactory because the defects noticed by the Registry were generic and illustrative, the applicant was already aware of the handwritten and vernacular documents filed with the appeal, and repeated opportunities to cure the defects were not used with due diligence. The attempt to reduce the delay by excluding the seven-day curing period from each round of defects was also rejected as an incorrect method of computation. The stated reasons did not establish that the delay was caused by circumstances beyond the applicant's control.

Conclusion: The delay was not sufficiently explained and the application for condonation of refiling delay was rejected, with the appeal memo also rejected.

Issues: (i) whether a former statutory auditor could be compelled under Section 19(1) of the Insolvency and Bankruptcy Code, 2016 to furnish information and documents for CIRP purposes; (ii) whether such a direction could stand when the auditor denied possession or custody of the material sought; (iii) whether the direction to complete pending audit work and to tender resignation with a no-objection certificate was sustainable.

Issue (i): whether a former statutory auditor could be compelled under Section 19(1) of the Insolvency and Bankruptcy Code, 2016 to furnish information and documents for CIRP purposes.

Analysis: Section 19(1) requires assistance and cooperation from the personnel of the corporate debtor, its promoters, or other persons associated with its management. The provision is directed to assistance needed for managing the corporate debtor as a going concern and for protecting its assets. A statutory auditor is an external professional whose role is to audit and report on the company's financial position and is not ordinarily a person associated with the management of the corporate debtor. The scope of Section 19(1) cannot be expanded to treat such an auditor as part of the management merely because the RP sought information from him.

Conclusion: The auditor could not, on the facts, be compelled under Section 19(1) to furnish the information as if he were a person associated with the management.

Issue (ii): whether such a direction could stand when the auditor denied possession or custody of the material sought.

Analysis: The obligation to share information presupposes that the person from whom disclosure is sought actually possesses or has access to the material. The record indicated that the auditor had communicated that the relevant records were with the corporate debtor and that documents had already been acknowledged by the RP's auditor. In the absence of proof that the appellant still held the sought material, no effective coercive direction could be issued to compel production of documents not shown to be in his custody.

Conclusion: The direction to produce documents and information could not be sustained without proof of possession or access.

Issue (iii): whether the direction to complete pending audit work and to tender resignation with a no-objection certificate was sustainable.

Analysis: The insolvency process had already progressed substantially, with the information memorandum prepared, plans received, and a plan approved by the CoC. In that setting, the statutory basis for compelling further audit action or insisting upon resignation with a no-objection certificate was not made out. The impugned order also proceeded without adequately examining the auditor's role, the availability of the information with him, or the acknowledgment of receipt by the RP's auditor.

Conclusion: The further directions to complete the audit and to resign with a no-objection certificate were unsustainable.

Final Conclusion: The impugned order was set aside and the appeal succeeded, leaving no surviving direction against the appellant.

Ratio Decidendi: Section 19(1) of the Insolvency and Bankruptcy Code, 2016 authorises directions only to persons associated with the management of the corporate debtor, and only in respect of information actually within their possession or access and necessary for CIRP administration as a going concern.

Issues: Whether, in liquidation under the Insolvency and Bankruptcy Code, 2016, statutory VAT dues claimed by the State could be treated as secured debt on the basis of a first charge under the State VAT law so as to rank with secured financial creditors, and whether the liquidation proceeds had to be distributed in accordance with the Code's waterfall mechanism in favour of the secured financial creditor that had relinquished its security interest.

Analysis: The appeal arose from a dispute over distribution of liquidation sale proceeds. The decisive question was whether the Excise and Taxation Department could be placed on par with secured creditors merely because the State VAT statute created a charge on the defaulter's property. The Tribunal held that the earlier decision relied upon by the liquidator did not govern the present stage of proceedings, since the corporate debtor had already entered liquidation and the priorities had to be worked out under the Insolvency and Bankruptcy Code. It further held that the State VAT charge could not override the Code because Section 238 gives the Code overriding effect over inconsistent laws. On that basis, the State department could not be treated as a secured financial creditor for liquidation distribution, and the withheld sale proceeds had no basis to be diverted away from the appellant secured creditor.

Conclusion: The claim of the State tax department was not entitled to priority as a secured creditor in liquidation, and the liquidator was directed to distribute the entire sale proceeds in accordance with Section 53 of the Insolvency and Bankruptcy Code, 2016 in favour of the secured financial creditor that had relinquished its security interest.

Ratio Decidendi: In liquidation under the Insolvency and Bankruptcy Code, a State tax charge created by local VAT law does not by itself displace the Code's waterfall mechanism or confer secured-creditor status for distribution of liquidation proceeds where the Code contains an overriding provision.

Issues: (i) Whether the statutory charge under the Gujarat Value Added Tax Act entitled the appellant to be treated as a secured creditor only in respect of the VAT component of its composite tax claim, and not the CST component; (ii) Whether the appellant's disclosure of "N.A." in Form B and the resolution professional's reliance on that disclosure precluded recognition of the statutory charge.

Issue (i): Whether the statutory charge under the Gujarat Value Added Tax Act entitled the appellant to be treated as a secured creditor only in respect of the VAT component of its composite tax claim, and not the CST component.

Analysis: The statutory charge created by Section 48 of the Gujarat Value Added Tax Act operated only in relation to the VAT dues. The claim filed by the appellant was composite and included VAT, CST and interest, and the statutory protection could not be extended to the CST component. The resolution framework under the Insolvency and Bankruptcy Code therefore did not justify treating the entire claim as secured.

Conclusion: The appellant was entitled to secured status only for the VAT component and not for the full composite claim.

Issue (ii): Whether the appellant's disclosure of "N.A." in Form B and the resolution professional's reliance on that disclosure precluded recognition of the statutory charge.

Analysis: A statutory charge is not waived merely because the claimant failed to assert security in the claim form. Waiver requires intentional abandonment with knowledge, and the existence of a statutory charge cannot be defeated by conduct alone. At the same time, the resolution professional is expected to collate and verify claims from available records and cannot ignore material information such as a lien already known in the proceedings. The appellant's incorrect disclosure did not extinguish the statutory charge, though the limited secured status remained confined to the VAT component.

Conclusion: The appellant's Form B disclosure did not amount to waiver of the statutory charge.

Final Conclusion: The resolution plan was not to be set aside, but the appellant had to be recognised as a secured operational creditor only to the extent of the VAT dues under the State tax statute, with the balance claim continuing to be dealt with under the approved plan.

Ratio Decidendi: A statutory charge under a State VAT law secures only the dues to which the charge attaches, and an incorrect claim-form disclosure does not by itself waive that statutory charge; the resolution professional must verify and collate claims from available records.

Outcome: The Special Leave Petition was dismissed on the ground of delay as well as merits.

Issues: (i) Whether the addition of alleged commission income, made only on the basis of retracted statements, third-party tally data and WhatsApp communications, was sustainable; (ii) Whether reassessment initiated beyond three years under section 149(1)(b) of the Income-tax Act, 1961 was valid in the absence of material showing escapement of income of fifty lakh rupees or more; (iii) Whether the addition of gross profit on alleged unaccounted cash sales, based on third-party tally data, was sustainable or required factual verification; (iv) Whether the disallowance of commission expenditure as non-genuine was justified on the material available.

Issue (i): Whether the addition of alleged commission income, made only on the basis of retracted statements, third-party tally data and WhatsApp communications, was sustainable.

Analysis: The addition was founded on statements recorded during search and on third-party electronic material. Those statements were subsequently retracted, and the material relied upon did not show any direct or specific evidence of receipt of commission by the assessee. The electronic material also lacked the statutory certificate contemplated under section 65B of the Indian Evidence Act, 1872. In the absence of an unbroken chain of corroboration, the revenue failed to establish actual receipt of commission income.

Conclusion: The addition of alleged commission income was unsustainable and stood deleted.

Issue (ii): Whether reassessment initiated beyond three years under section 149(1)(b) of the Income-tax Act, 1961 was valid in the absence of material showing escapement of income of fifty lakh rupees or more.

Analysis: The notice under section 148 was issued after the expiry of three years from the end of the relevant assessment year. For such reopening, the Assessing Officer had to possess books, documents or evidence revealing escapement of income represented in the specified form and amounting to, or likely to amount to, fifty lakh rupees or more. The material on record did not satisfy this jurisdictional threshold, since the proposed addition itself was far below the statutory limit.

Conclusion: The reassessment proceedings for the concerned year were without jurisdiction and liable to be quashed.

Issue (iii): Whether the addition of gross profit on alleged unaccounted cash sales, based on third-party tally data, was sustainable or required factual verification.

Analysis: The impugned addition rested on parallel tally data recovered from third parties and on statements later retracted. The record indicated that the same transactions may already have been assessed in the hands of the Sunrise Group entities, but that factual aspect required verification. Since the addition could not safely be sustained without checking duplication and the evidentiary basis of the ledger attribution, the matter required a fresh factual examination.

Conclusion: The issue was restored to the Assessing Officer for de novo adjudication and the addition was not finally sustained at this stage.

Issue (iv): Whether the disallowance of commission expenditure as non-genuine was justified on the material available.

Analysis: The assessee had produced invoices, ledger accounts, bank statements and tax deduction records in support of the expenditure. The revenue did not identify any specific defect in those documents, and the disallowance was mainly based on an accountant's statement and WhatsApp chats. As the actual rendering of services by the commission agents had not been properly verified, the matter required further enquiry rather than outright disallowance.

Conclusion: The disallowance was set aside and the issue was remanded for fresh adjudication.

Final Conclusion: The appeals were disposed of with substantial relief to the assessee in respect of the commission additions and with remand on the cash-sales and commission-expenditure issues, while the reassessment was held invalid for the relevant year where the jurisdictional threshold was not met.

Ratio Decidendi: A retracted statement or third-party electronic material, without independent corroborative evidence and statutory compliance for electronic records, cannot by itself sustain an income addition; likewise, reopening beyond three years must satisfy the statutory fifty-lakh jurisdictional threshold under section 149(1)(b).

Issues: Whether deduction under section 54F of the Income-tax Act, 1961 could be denied merely because the unutilised capital gain was not deposited in the Capital Gain Account Scheme before the due date under section 139(1), when the entire amount was invested in the residential house within the statutory period.

Analysis: The statutory purpose of section 54F is to encourage investment in a residential house and it is to be construed liberally as a beneficial provision. Once the substantive condition of investing the capital gain in acquisition or construction of the residential property within the prescribed time is satisfied, failure to deposit the unutilised amount in the Capital Gain Account Scheme is only a procedural lapse. The Revenue did not controvert the genuineness of the investment, and the earlier objection regarding the flat description was treated as explained on the basis of authenticated documents.

Conclusion: The deduction under section 54F could not be denied on the ground of non-deposit in the Capital Gain Account Scheme, and the disallowance was unsustainable.

Ratio Decidendi: A beneficial exemption for residential investment cannot be defeated by a mere technical non-compliance with the Capital Gain Account Scheme requirement where the assessee has otherwise made the qualifying investment within the prescribed period.

Issues: Whether the addition made as unexplained money could be sustained when the assessee had produced documentary evidence of the loan transaction, repaid the amount with interest in the same year, and the statement relied upon by the Revenue was used without granting cross-examination.

Analysis: The assessee furnished income-tax returns, audited financial statements, confirmations and bank statements to support the transaction. The addition was founded mainly on the statement of a third party, but no opportunity of cross-examination was given despite a specific request. Such reliance, without affording confrontation of the witness, was held to offend the principles of natural justice. The repayment of the full amount with interest within the same financial year, together with the documentary trail, further supported the genuineness of the transaction. Minor discrepancies in address details were treated as insufficient to displace the substantive evidence on record.

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

Issues: Whether penalty under Section 271D of the Income-tax Act, 1961 could be sustained when the assessment order contained no recorded satisfaction for initiation of penalty proceedings and the returned income was accepted without any quantum addition.

Analysis: The penalty under Section 271D is attracted only when there is contravention of Section 269SS, but the initiation of such penalty proceedings must rest on satisfaction recorded in the assessment order. Where the assessment order accepts the returned income and does not record any satisfaction for penalty initiation, the Assessing Officer cannot later issue a separate show-cause notice and impose penalty independently. The provision operates in the backdrop of the assessment proceedings, and the absence of foundational satisfaction deprives the penalty order of valid jurisdiction. The decision follows the binding principle that, in the absence of recorded satisfaction in the assessment order, penalty proceedings for breach of Section 269SS cannot be validly sustained.

Conclusion: The penalty under Section 271D was not sustainable and the appeal succeeded in favour of the assessee.

Final Conclusion: The assessment having been accepted without any quantum addition and without the requisite satisfaction for penalty initiation, the impugned penalty order was liable to be set aside.

Ratio Decidendi: Penalty under Section 271D of the Income-tax Act, 1961 cannot be validly imposed unless the assessment order records the requisite satisfaction for initiating such proceedings.

Issues: (i) Whether additions for Assessment Years 2017-18 to 2019-20 could be sustained under section 153A in the absence of incriminating material found during search; (ii) Whether capital gains arising from the joint development agreement could be taxed in Assessment Year 2020-21 by applying section 45(5A) to an agreement executed before its commencement.

Issue (i): Whether additions for Assessment Years 2017-18 to 2019-20 could be sustained under section 153A in the absence of incriminating material found during search.

Analysis: The additions for the searched years were founded on occupancy certificates, joint development agreements, and statements that had already been disclosed before search. The Tribunal treated the issue as covered by its earlier decision in the assessee's spouse's case on the same search material and held that no fresh incriminating material had been unearthed. In such circumstances, the jurisdictional basis for making additions in concluded assessments under section 153A did not survive, and the Tribunal also noted that the additions failed even on merits.

Conclusion: The additions for Assessment Years 2017-18 to 2019-20 were not sustainable and the Revenue's appeals on those years failed.

Issue (ii): Whether capital gains arising from the joint development agreement could be taxed in Assessment Year 2020-21 by applying section 45(5A) to an agreement executed before its commencement.

Analysis: The Tribunal held that the joint development agreement was executed in 2012 and possession had already been handed over long before section 45(5A) came into force on 01.04.2018. It applied the settled principle that the deeming provision is prospective and cannot be used to shift taxation of an already completed transfer to a later year merely because the completion certificate was issued later. Following the binding coordinate-bench decision in the spouse's case, and the law on transfer under a development agreement, the Tribunal found no basis to sustain the proposed taxation in Assessment Year 2020-21.

Conclusion: The capital-gain addition for Assessment Year 2020-21 was not sustainable and the Revenue's appeal on that year also failed.

Final Conclusion: The Revenue's four appeals were rejected, and the assessee succeeded on both the search-based additions and the capital-gains issue under the development agreement.

Ratio Decidendi: Additions in concluded search assessments under section 153A require incriminating material found during search, and section 45(5A) applies prospectively only to development agreements within its temporal scope, not to transfers already completed before its commencement.

Issues: Whether the assessee was entitled to registration under section 12A read with section 12AB of the Income-tax Act, 1961, and whether the rejection on the grounds of alleged commercial activity, use of ITR-6, TDS deduction, and filing under the stated limb was sustainable.

Analysis: The assessee's objects were held to fall within the charitable limb relating to environmental protection and allied educational awareness, and not within the residuary limb of general public utility. The proviso to section 2(15) was therefore found inapplicable on the facts. The presence of fee receipts, deduction of tax at source, and filing of ITR-6 were treated as insufficient by themselves to negate charitable character or genuineness at the registration stage. The objection that the application was moved under the wrong limb was treated as a technical defect that could not justify outright rejection.

Conclusion: The rejection of registration was set aside and the assessee was held entitled to registration under section 12A.

Ratio Decidendi: At the registration stage, charitable status cannot be denied merely on the basis of fee-based receipts or return-filing form if the stated objects are charitable and the record does not establish that the entity falls within the proviso to section 2(15); a technical error in the chosen registration limb does not by itself justify rejection.

Issues: (i) Whether the addition under section 68 on account of issue of redeemable non-convertible debentures was sustainable; (ii) Whether the disallowance of interest under section 40A(2)(b) was justified; (iii) Whether the proportionate disallowance of interest on capital work-in-progress under section 36(1)(iii) could be sustained; (iv) Whether the ad hoc disallowance of business promotion and other expenses under section 37(1) was valid; (v) Whether the CSR disallowance was correct.

Issue (i): Whether the addition under section 68 on account of issue of redeemable non-convertible debentures was sustainable.

Analysis: The assessee produced material to establish the lender's identity, the flow of funds, bank statements, debenture and mortgage deeds, confirmation, return of income, and the source of funds traced to redemption proceeds and unitholder contributions. The lender was a SEBI-registered Category II AIF, and its NIL income return was not, by itself, a valid basis to deny creditworthiness in view of the pass-through treatment of investment funds.

Conclusion: The addition was not finally sustained and the issue was restored to the Assessing Officer for verification, with opportunity to the assessee.

Issue (ii): Whether the disallowance of interest under section 40A(2)(b) was justified.

Analysis: The lender was only a debenture holder and creditor and had no equity, profit-sharing, or other nexus bringing it within the class of specified persons. The revenue also gave no cogent basis for substituting the contractual interest rate with a lower rate as unreasonable.

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

Issue (iii): Whether the proportionate disallowance of interest on capital work-in-progress under section 36(1)(iii) could be sustained.

Analysis: The borrowing was for working capital and not for acquisition of any capital asset, and the revenue did not show that the borrowed funds were used for acquiring an asset. The proviso to section 36(1)(iii) therefore had no application on the facts.

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

Issue (iv): Whether the ad hoc disallowance of business promotion and other expenses under section 37(1) was valid.

Analysis: The assessee had furnished extensive material including books, ledgers, bank statements, invoices and audit-related records. The disallowance was made on a blanket percentage basis without identifying specific unverifiable expenditure or establishing that the expenses were not wholly and exclusively for business purposes.

Conclusion: The matter was restored for fresh verification and the issue was partly in favour of the assessee.

Issue (v): Whether the CSR disallowance was correct.

Analysis: The CSR amount had been debited in the books but had not been excluded in the computation of income, and the lower authorities' treatment was found unobjectionable.

Conclusion: The disallowance was confirmed and the issue was decided against the assessee.

Final Conclusion: The appeal succeeded on the principal interest and financing issues, was remanded on the section 68 and expense-verification matters, and failed on the CSR disallowance.

Issues: (i) whether Cenvat credit on capital goods and inputs used for setting up and operating a captive power plant was admissible when part of the electricity generated was used captively in manufacturing dutiable final products; (ii) whether invocation of the extended period of limitation and imposition of penalty were sustainable.

Issue (i): whether Cenvat credit on capital goods and inputs used for setting up and operating a captive power plant was admissible when part of the electricity generated was used captively in manufacturing dutiable final products.

Analysis: The disputed items were held to satisfy the definition of capital goods and inputs under the Cenvat Credit Rules, 2004 because they were received in the factory and used for manufacturing activity. The fact that the assembled power plant became a fixed structure did not disentitle credit, since the relevant test under the rules is use in the factory by a manufacturer of final products. The reliance on excisability of the plant as a whole and on the circular and authorities concerning turnkey projects was held to be misplaced, as those authorities did not govern admissibility of credit on duty-paid capital goods and inputs. The reasoning in earlier decisions recognizing credit where captive power generation supports manufacture of dutiable goods was followed.

Conclusion: Credit was admissible and the denial of Cenvat credit was unsustainable, in favour of the assessee.

Issue (ii): whether invocation of the extended period of limitation and imposition of penalty were sustainable.

Analysis: The material showed regular filing of ER-1 returns and disclosure of the credit position, with the demand arising from audit verification. No positive act of suppression or intent to evade duty was established. In a dispute turning on interpretation of complex credit provisions, bona fide belief and full disclosure negatived the foundation for extended limitation and penal action.

Conclusion: The extended period and penalty were not sustainable, in favour of the assessee.

Final Conclusion: The impugned demand, interest, limitation invocation, and penalty were set aside, and the appeal succeeded with consequential relief.

Ratio Decidendi: Cenvat credit cannot be denied merely because duty-paid capital goods and inputs are used to erect a power plant that becomes a fixed structure if those goods are used in the factory of the manufacturer and the plant supports manufacture of dutiable final products; absent suppression or intent to evade, extended limitation and penalty are not available.

Issues: Whether commission and perquisites paid by a company to its whole-time directors constituted consideration for a taxable service so as to attract service tax.

Analysis: The directors were shown in the company records as whole-time or working directors, and the payments were reflected in Form 16 with tax deducted at source in the salary framework. Section 65B(44)(b) of the Finance Act, 1994 excludes service by an employee to an employer in the course of employment from the definition of service. The remuneration was treated as salary under Section 17(1) of the Income Tax Act, 1961, and the settled view in prior Tribunal decisions was that variable pay, commission, or perquisites paid to whole-time directors in the course of employment do not lose their character as salary merely because they are not fixed monthly wages.

Conclusion: The payments were held to arise from an employer-employee relationship and did not constitute a taxable service; the service tax demand could not be sustained.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief according to law.

Ratio Decidendi: Remuneration paid to a whole-time director in the course of employment, including commission or perquisites treated as salary for income-tax purposes, is excluded from the definition of service and is not liable to service tax.

Issues: (i) whether the appellant's multilevel marketing activity amounted to a taxable service under Business Auxiliary Service and whether the demand based on Form 26AS and income-tax data was sustainable on merits; (ii) whether the extended period of limitation could be invoked on the basis of the material relied upon by the Revenue.

Issue (i): whether the appellant's multilevel marketing activity amounted to a taxable service under Business Auxiliary Service and whether the demand based on Form 26AS and income-tax data was sustainable on merits.

Analysis: The demand was founded on third-party income-tax material, but the Tribunal found that the taxable value had been enhanced mechanically and without statutory basis. The record showed that the Revenue had not established the service element through independent corroboration. Relying on the earlier decisions dealing with similar multilevel marketing arrangements, the Tribunal treated the activity as sale-linked business activity rather than a taxable service, and held that demand cannot be confirmed merely from income-tax figures without proof of rendition of taxable service.

Conclusion: The demand was not sustainable on merits and was set aside.

Issue (ii): whether the extended period of limitation could be invoked on the basis of the material relied upon by the Revenue.

Analysis: The notice was issued long after the relevant period, yet the Revenue relied only on income-tax data and Form 26AS. The Tribunal held that such material, by itself, did not establish suppression of facts or intent to evade tax. In the absence of cogent evidence showing concealment, the extended period was held to be unavailable.

Conclusion: The extended period of limitation could not be invoked and the demand was hit by limitation.

Final Conclusion: The impugned order was unsustainable on both merits and limitation, and the appeal was allowed with consequential relief according to law.

Ratio Decidendi: Service tax demand cannot be sustained merely on the basis of Form 26AS or income-tax data without independent corroborative evidence of a taxable service, and limitation cannot be extended absent proof of suppression or wilful misstatement.