Outcome: Delay condoned and the Special Leave Petition stood disposed of without interference, with the question of interpretation of Section 56(2)(x) read with Section 43-B of the Income-tax Act, 1961 kept open for an appropriate case.

Outcome: Special Leave Petition disposed of with the Court declining to interfere and leaving the petitioner at liberty to raise permissible objections in the assessment proceedings.

Issues: Whether the final assessment order and consequential penalty notice were liable to be set aside because a draft assessment order was passed but not supplied to the assessee before completion of the assessment.

Analysis: The proceedings were distinguished from cases where no draft assessment order had been passed at all. Here, a draft assessment order had been made, but the assessee was not furnished a copy before the final assessment order was issued. The defect lay in the Assessing Officer's act of finalising the assessment without first serving the draft order and affording the assessee the statutory opportunity to object before the Dispute Resolution Panel. That procedural lapse rendered the final assessment order contrary to law. The Court also noted that the draft order had been passed with time still available within limitation, and directed exclusion of the period during which the assessee was deprived of the statutory opportunity.

Conclusion: The final assessment order and consequential penalty notice were set aside, and the assessee was granted the opportunity to proceed under the draft assessment regime in accordance with law.

Issues: (i) Whether the interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016 is triggered only upon registration of a petition under Section 95 and not by mere filing; (ii) Whether the Debts Recovery Tribunal could reject the borrowers' interim applications solely because intimation of the insolvency petition was not given to the secured creditor; (iii) Whether procedural irregularities in the National Company Law Tribunal registry in scrutiny and refiling of the insolvency petition could defeat the effect of the interim moratorium.

Issue (i): Whether the interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016 is triggered only upon registration of a petition under Section 95 and not by mere filing.

Analysis: The statutory scheme was read along with the binding directions previously issued regarding scrutiny and registration of petitions under Sections 94 and 95. The Court held that the interim moratorium is a legal consequence of a validly filed and registered petition, and that mere uploading or filing without completion of the prescribed scrutiny and registration process is not sufficient. On the facts, the petition stood registered on 04.11.2025, and the moratorium operated from that date.

Conclusion: The interim moratorium operated from the date of registration and not from the date of initial filing.

Issue (ii): Whether the Debts Recovery Tribunal could reject the borrowers' interim applications solely because intimation of the insolvency petition was not given to the secured creditor.

Analysis: The Court held that commencement and operation of the statutory moratorium cannot depend upon notice being furnished to the secured creditor. The Debts Recovery Tribunal had focused on the absence of proper intimation, rather than examining the legal effect of the moratorium that had already come into force by operation of law. Since the applications were decided after the moratorium had commenced, that approach was held to be erroneous.

Conclusion: The rejection of the interim applications on that ground was unsustainable.

Issue (iii): Whether procedural irregularities in the National Company Law Tribunal registry in scrutiny and refiling of the insolvency petition could defeat the effect of the interim moratorium.

Analysis: The Court found serious procedural lapses in the registry process and noted that the prescribed scrutiny mechanism and refiling discipline were not followed. However, it held that those irregularities could not be used to dilute the effect of a petition that had in fact been registered. The petitioners could not be made to suffer for the registry's error, while any grievance based on alleged collusion or abuse could be examined by the National Company Law Tribunal in appropriate proceedings.

Conclusion: The registry irregularities did not negate the operation of the interim moratorium.

Final Conclusion: The impugned orders of the Debts Recovery Tribunal were set aside and the writ petition succeeded. The respondents were left at liberty to seek appropriate relief before the National Company Law Tribunal regarding the applicability of the moratorium.

Ratio Decidendi: For purposes of Section 96 of the Insolvency and Bankruptcy Code, 2016, the interim moratorium arises by operation of law upon valid registration of a petition under Section 94 or Section 95, and its effect cannot be defeated by failure to intimate the secured creditor or by procedural lapses in registry scrutiny after registration.

Issues: Whether the assessment was barred by limitation for failure to pass the final assessment order within the time prescribed after receipt of the Dispute Resolution Panel directions under the income-tax scheme.

Analysis: The directions issued by the Dispute Resolution Panel under Section 144C(5) triggered the statutory obligation under Section 144C(13) to pass the final assessment order within one month from the end of the month in which such directions were received. The record showed that no such final order had been passed, either on the system or manually, even after the extended outer limit had expired. In these circumstances, the pending assessment could not survive beyond the statutory time limit.

Conclusion: The assessment was held to be time barred and the impugned assessment proceedings were quashed.

Issues: Whether reopening of the completed assessment was invalid as a mere change of opinion, where the original assessment under section 143(3) had examined the assessee's trading results and the reassessment was initiated on the basis of alleged suppression of sales.

Analysis: The original assessment had been completed after scrutiny of the books, month-wise purchase and sales details, bank statements, sundry debtors and creditors, and comparative trading results. No adverse finding had been recorded on the sales or purchase price of milk, and no addition was made towards suppression of sales. The reassessment was founded on a fresh computation of average milk price and the resultant estimated difference in sales, but the same material had already been available during the original proceedings. In these circumstances, the reopening did not rest on new tangible material and amounted only to a review of an issue already examined, which is impermissible in law.

Conclusion: Reopening was held invalid as a change of opinion, and the assessee succeeded on this issue.

Issues: (i) Whether the protective additions on account of unaccounted purchases, unaccounted sales, cash expenditure, and cash found could be sustained in the assessee's hands when the substantive additions stood assessed in the firm's hands; (ii) whether the substantive addition for cash found at the assessee's residential premises was justified; (iii) whether the additions relating to excess stock and estimated profit on short stock could be sustained.

Issue (i): Whether the protective additions on account of unaccounted purchases, unaccounted sales, cash expenditure, and cash found could be sustained in the assessee's hands when the substantive additions stood assessed in the firm's hands.

Analysis: The additions were protective in nature and were founded on the same seized material and same business stream that had already been assessed substantively in the hands of the partnership firm. The reasoning accepted that the unaccounted purchases and sales had a direct nexus, that the cash collections and related outgoings were part of the same chain of transactions, and that once the substantive assessment was made in the firm's hands, the parallel protective additions in the assessee's hands could not independently survive.

Conclusion: The protective additions were deleted and the issue was decided in favour of the assessee.

Issue (ii): Whether the substantive addition for cash found at the assessee's residential premises was justified.

Analysis: The cash found at the premises was explained by reference to the cash book of the retail business, which showed availability of cash, and the stated source was the same business whose transactions were already under assessment. The reasoning also accepted telescoping against the estimated additions arising from the business activity, thereby discharging the assessee's burden to explain the cash found.

Conclusion: The addition for cash found was deleted and the issue was decided in favour of the assessee.

Issue (iii): Whether the additions relating to excess stock and estimated profit on short stock could be sustained.

Analysis: The stock discrepancies were found to be minor, with excess in some brands and shortage in others, and the differential was treated as susceptible to reconciliation or computational error rather than as a distinct taxable concealment. On that footing, no separate addition could be maintained.

Conclusion: The additions relating to stock differences and estimated profit were deleted and the issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded in full, with all impugned additions set aside.

Ratio Decidendi: Where the same unaccounted business activity has already been brought to tax substantively in one entity's hands, parallel protective additions in another's hands cannot survive absent independent justification, and explained business cash with corroborative cash books and minor stock discrepancies do not warrant separate additions.

Issues: Whether the exemption claim under section 10(23C)(vi) could be denied solely because the assessee filed Form 10B instead of Form 10BB, and whether the procedural lapse required the matter to be examined for substantive compliance.

Analysis: The assessee was an approved educational institution, had filed its return within time, and had obtained an audit report within the prescribed period, though in the wrong form. The Tribunal treated the filing of the incorrect form as a procedural mistake and relied on the principle that a genuine claim should not be rejected for a technical lapse when the substantive conditions for exemption are otherwise met. It also noted that the assessee had filed the correct form later and had sought condonation, while the revenue had not disputed the institution's approved status, the audit itself, or timely filing of the return. Applying the principle that procedural law is meant to aid justice, the Tribunal held that the denial of exemption only on this technical ground was not justified. The matter was therefore sent back for verification of the remaining substantive conditions, with a direction that, if satisfied, the exemption be allowed.

Conclusion: The procedural error in filing Form 10B instead of Form 10BB could not by itself justify denial of exemption under section 10(23C)(vi); the assessee was entitled to have its substantive eligibility verified and, if fulfilled, to receive the exemption.

Final Conclusion: The appeal was allowed in part, with the denial of exemption on a purely technical ground set aside and the matter remitted for verification of substantive compliance.

Ratio Decidendi: A statutory exemption cannot be denied merely for an inadvertent procedural lapse in filing the wrong audit-report form when the assessee has otherwise satisfied the substantive conditions and the required audit compliance is demonstrably in place.

Issues: Whether section 43CA of the Income-tax Act, 1961 applies to transfer of transferable development rights (TDRs) and justifies substitution of stamp duty value for the stated sale consideration.

Analysis: Section 43CA applies to transfer of an asset being land or building or both held as stock-in-trade. TDR is a development right and not land or building per se. Deeming provisions cannot be extended beyond the purpose for which they were enacted. The transfer of TDRs is distinct from transfer of land or building, and the provision cannot be invoked merely because the rights are connected with immovable property.

Conclusion: Section 43CA does not apply to transfer of TDRs. The addition made by substituting the stamp duty value was not sustainable, and the deletion of the addition was in law.

Issues: Whether section 50C of the Income-tax Act, 1961 could be invoked to tax the impugned land transaction as long-term capital gain when the land was held and reflected as stock-in-trade in the course of the assessee's land development and trading business.

Analysis: The record showed that the assessee was engaged in property dealing and land development, and the relevant land was consistently reflected as project inventory or stock-in-trade in the books. The development agreement, power of attorney and revenue records indicated that title never passed to the assessee in the manner assumed by the lower authorities. The property relied upon by the Assessing Officer to infer ownership was a different parcel of land and had no nexus with the land actually sold in the year under consideration. The addition was therefore founded on incorrect identification of the asset and an erroneous assumption that the transaction involved a capital asset. Section 50C applies only to transfers of a capital asset, and stock-in-trade falls outside the definition of capital asset under section 2(14). Since the business receipts from the sale had already been offered under the head profits and gains of business or profession and the books had not been rejected, the same receipt could not be taxed again as capital gains.

Conclusion: Section 50C was held to be inapplicable, and the addition made as long-term capital gain was directed to be deleted in favour of the assessee.

Ratio Decidendi: Section 50C cannot be applied to a transaction involving land held as stock-in-trade or business inventory, because the deeming fiction operates only where the transferred asset is a capital asset.

Issues: (i) whether the writ petitions were maintainable despite the alternate statutory remedy under the Customs Act; (ii) whether non-communication of an extension of time for adjudication under Section 28(9) of the Customs Act vitiated the proceedings; and (iii) whether the challenge based on Section 28BB and the corrigendum to the show cause notice disclosed any jurisdictional defect warranting writ interference.

Issue (i): whether the writ petitions were maintainable despite the alternate statutory remedy under the Customs Act.

Analysis: The ordinary rule is that writ jurisdiction is not exercised where an efficacious statutory appeal is available, save in recognised exceptions such as patent lack of jurisdiction or other exceptional grounds. The impugned order was an appealable adjudication order, and the petitioners' objections, though framed as jurisdictional, substantially turned on issues that could be examined in appeal.

Conclusion: The writ petitions were not maintainable on this ground and the petitioners were to be relegated to the statutory remedy.

Issue (ii): whether non-communication of an extension of time for adjudication under Section 28(9) of the Customs Act vitiated the proceedings.

Analysis: The governing legal position is that Section 28(9) permits extension of the adjudication period, but the provision does not make communication of the extension to the noticee a condition precedent to validity. While communication may be desirable as a matter of prudence, its absence does not by itself nullify the adjudication.

Conclusion: Non-communication of the extension did not invalidate the adjudication and no writ interference was warranted on this ground.

Issue (iii): whether the challenge based on Section 28BB and the corrigendum to the show cause notice disclosed any jurisdictional defect warranting writ interference.

Analysis: The original show cause notice had been issued within the two-year period counted from the search, and the corrigendum was treated as incorporating additional material without altering the fact of timely issuance of the notice. The objection founded on Section 28BB therefore did not establish a patent illegality going to the root of jurisdiction, and the Court held that this contention could be pursued before the appellate authority under the Customs Act.

Conclusion: No writ-worthy jurisdictional defect was made out on this ground, and the issue was left to be agitated in appeal.

Final Conclusion: The Court declined to interfere with the impugned customs adjudication, left the merits open, and directed the petitioners to pursue the ordinary appellate remedy.

Ratio Decidendi: Where an appealable customs adjudication does not disclose a patent jurisdictional error, the writ court will ordinarily not interfere merely because the noticee disputes limitation, a corrigendum, or the non-communication of an extension order under Section 28(9) of the Customs Act, 1962.

Issues: Whether penalty under Section 112(a) of the Customs Act, 1962 was sustainable against the appellants.

Analysis: Penalty under Section 112(a) requires a clear showing of an act or omission, or abetment in relation to the goods, supported by material establishing the person's culpable involvement. The record did not disclose a specific role of the appellants in the alleged attempt to clear the consignments, nor any positive evidence of mala fide intention or abetment. The reasoning applied to the appellants was found insufficient, especially where similar circumstances had earlier been held not to justify penal action against a CHA absent such evidence.

Conclusion: The levy of penalty under Section 112(a) of the Customs Act, 1962 was unsustainable and was set aside; the appeals succeeded.

Issues: (i) Whether the successful resolution applicant could undertake fresh scrutiny or verification of homebuyers' claims after the time contemplated in the approved resolution plan had expired. (ii) Whether the appellants had established entitlement to allotment and possession of the flats on the basis of the record already accepted in the insolvency process.

Issue (i): Whether the successful resolution applicant could undertake fresh scrutiny or verification of homebuyers' claims after the time contemplated in the approved resolution plan had expired.

Analysis: The approved resolution plan contained a verification mechanism, but the admitted claims were already collated by the resolution professional and reflected in the creditors' list. The statutory scheme places verification and determination of claims primarily with the resolution professional, who may make a best estimate where records are incomplete and revise claims when additional information emerges. A resolution applicant cannot assume an open-ended power to re-verify claims indefinitely, particularly after the period stipulated in the plan has lapsed and the claims have already been acted upon in the insolvency process.

Conclusion: Fresh scrutiny by the successful resolution applicant at a belated stage was not justified and the appellants could not be relegated to an indefinite re-verification process.

Issue (ii): Whether the appellants had established entitlement to allotment and possession of the flats on the basis of the record already accepted in the insolvency process.

Analysis: The record showed payment through banking channels, subsequent settlement documentation, allotment letter or builder-buyer agreement, and admission of the claims by the resolution professional in the list of creditors. The Monitoring Committee had also verified the claims to the extent of payments made and supported by the corporate debtor's books and records. On that material, the appellants' status as homebuyer-financial creditors stood sufficiently established, and the impugned direction sending them back for further verification was inconsistent with the existing record and the resolution process already undertaken.

Conclusion: The appellants were entitled to allotment of the flats and consequential possession in terms of the approved resolution plan.

Final Conclusion: The impugned order was set aside, the appeals were allowed, and implementation of the resolution plan was directed by recognising the appellants' claims and ensuring allotment and possession of the flats.

Ratio Decidendi: Where homebuyers' claims have already been provisionally admitted and verified within the insolvency framework, a successful resolution applicant cannot exercise an indefinite or belated power of re-verification to defeat those claims; the statutory function of claim verification remains primarily with the resolution professional, and admitted claims supported by record cannot be reopened contrary to the approved resolution plan and the time limit fixed therein.

Issues: Whether the Respondent No. 1 was entitled to receive its contractual share of lease rentals from the amount paid by the lessee to the Corporate Debtor, and whether the impugned direction to release that share was liable to be interfered with.

Analysis: The lease deed fixed separate monthly entitlements for the Corporate Debtor and the Respondent No. 1. The lessee had also remitted advance amounts separately to both. The record showed that the outstanding rent for the relevant period was paid by the lessee after adjusting the security deposit in terms of the lease deed, and the payment intimation with break-up reflected the respective shares. The earlier order directing payment of the rent claimed for that period had not been challenged and had attained finality. On the material placed, the amount paid to the Corporate Debtor included the Respondent No. 1's contractual share, and no basis was shown to deny release of that share.

Conclusion: The impugned direction to release the Respondent No. 1's fair share was upheld and the challenge by the Appellant failed.

Final Conclusion: The appeal was found to be without merit and the dismissal left the direction in favour of the Respondent No. 1 undisturbed.

Issues: (i) Whether the Adjudicating Authority exceeded its limited jurisdiction under section 31 of the Insolvency and Bankruptcy Code, 2016 by reappraising the commercial decision of the Committee of Creditors and rejecting the resolution plan on matters of feasibility, viability, valuation, and revival strategy. (ii) Whether, on the facts, the resolution process was vitiated by incomplete disclosure, unexplained depletion of assets and liabilities, non-initiation of audit or avoidance proceedings, and circumstances suggesting misuse of the insolvency process, justifying rejection of the plan and confirmation of liquidation.

Issue (i): Whether the Adjudicating Authority exceeded its limited jurisdiction under section 31 of the Insolvency and Bankruptcy Code, 2016 by reappraising the commercial decision of the Committee of Creditors and rejecting the resolution plan on matters of feasibility, viability, valuation, and revival strategy.

Analysis: The statutory scheme assigns primacy to the commercial wisdom of the Committee of Creditors, and the Adjudicating Authority is confined to ensuring statutory compliance, procedural fairness, and the absence of material irregularity or fraud. Decisions on viability, feasibility, haircut, and commercial attractiveness are ordinarily non-justiciable. However, that restraint does not bar scrutiny where the resolution process itself is shown, on tangible material, to be opaque, incomplete, or used as a mask for improper objectives. Judicial review remains narrow, but it is not extinguished where the integrity of the process is demonstrably called into question.

Conclusion: The Adjudicating Authority did not act in excess of jurisdiction merely by examining whether the plan rested on a trustworthy and transparent resolution process. Its scrutiny was permissible to the extent it was directed at statutory compliance and process integrity.

Issue (ii): Whether, on the facts, the resolution process was vitiated by incomplete disclosure, unexplained depletion of assets and liabilities, non-initiation of audit or avoidance proceedings, and circumstances suggesting misuse of the insolvency process, justifying rejection of the plan and confirmation of liquidation.

Analysis: The material showed a sustained fall in asset values over successive financial years, unexplained disappearance of substantial liabilities, absence of audit scrutiny, no meaningful assessment of potential preferential, undervalued or fraudulent transactions, and deficiencies in the Information Memorandum and disclosure architecture. These factors, taken together and not in isolation, were treated as undermining the transparency and reliability of the resolution process. The plan was also viewed against the backdrop of a large statutory claim and the concern that the process might be leveraged to secure an unintended advantage under the clean slate mechanism. In that setting, the CoC's approval could not be treated as insulated from scrutiny because the commercial decision was not shown to rest on complete and reliable information.

Conclusion: The resolution process was held to be defective and the rejection of the plan, along with liquidation of the corporate debtor, was sustained.

Final Conclusion: The appeals failed because the resolution plan was found to have emerged from a compromised process lacking sufficient transparency and credibility, and the liquidation order was therefore upheld.

Ratio Decidendi: While the commercial wisdom of the Committee of Creditors is ordinarily beyond judicial substitution, the Adjudicating Authority may refuse approval where tangible material shows that the insolvency resolution process is opaque, materially irregular, or used to mask misuse of the Code.

Issues: (i) Whether the petitioner's receipts from healthcare services rendered through its hospital and diagnostic centre were exempt from service tax under Notification No. 25/2012-Service Tax dated 20.06.2012, and whether receipts such as bank interest, directors' remuneration and legal expenses could be brought to tax on the basis of Form 26AS and financial statements. (ii) Whether the invocation of the extended period under Section 73(1) of the Finance Act, 1994, together with interest and penalty, was sustainable in the absence of a conclusive finding of fraud, collusion, wilful misstatement, suppression of facts or intent to evade tax.

Issue (i): Whether the petitioner's receipts from healthcare services rendered through its hospital and diagnostic centre were exempt from service tax under Notification No. 25/2012-Service Tax dated 20.06.2012, and whether receipts such as bank interest, directors' remuneration and legal expenses could be brought to tax on the basis of Form 26AS and financial statements.

Analysis: The exemption notification issued under Section 93 of the Finance Act, 1994 exempts healthcare services by a clinical establishment, and the petitioner's establishment was found to be a hospital and diagnostic centre engaged in healthcare services. The demand was raised principally from Form 26AS and financial statements without a proper examination of the nature of the receipts or a finding that the services were taxable. The Court held that tax liability cannot be imposed by inference or analogy, and that receipts which are exempt or otherwise not chargeable to service tax cannot be treated as taxable merely because they appear in income-tax records. Receipts by way of bank interest, as well as directors' remuneration and legal expenses, did not establish taxable service liability on the facts of the case.

Conclusion: The petitioner's healthcare services were covered by the exemption, and the impugned demand could not be sustained on the basis adopted by the revenue.

Issue (ii): Whether the invocation of the extended period under Section 73(1) of the Finance Act, 1994, together with interest and penalty, was sustainable in the absence of a conclusive finding of fraud, collusion, wilful misstatement, suppression of facts or intent to evade tax.

Analysis: The proviso to Section 73(1) permits the extended period only on proof of the specified culpable conduct, and such conditions must be affirmatively found before the extraordinary period of limitation can be invoked. The impugned order proceeded substantially on non-furnishing of documents and non-filing of ST-3 returns, but did not record the requisite conclusive finding that the petitioner had wilfully evaded tax by fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade. Since the assumption of jurisdiction itself under the extended period was not supported by the statutory preconditions, the consequential levy of interest and penalty could not stand. The availability of an appellate remedy did not bar writ interference because the challenge went to jurisdiction.

Conclusion: The extended period was wrongly invoked, and the demand, interest and penalty were unsustainable.

Final Conclusion: The impugned show cause notice and order-in-original were set aside, and the writ petition was allowed.

Ratio Decidendi: Service tax cannot be demanded on exempt or non-taxable receipts merely from income-tax data without a statutory finding that the receipts are taxable, and the extended limitation under Section 73(1) can be invoked only upon a clear finding of the specific culpable conduct prescribed by the proviso.

Issues: (i) Whether service tax could be levied on the petitioner's receipts merely on the basis of Form 26AS without examining whether the underlying works contracts were exempt under the relevant exemption notification; (ii) Whether the extended period of limitation under Section 73(1) of the Finance Act, 1994 could be invoked in the absence of a conclusive finding of fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade tax; (iii) Whether the writ petition was entertainable despite the availability of the statutory appellate remedy.

Issue (i): Whether service tax could be levied on the petitioner's receipts merely on the basis of Form 26AS without examining whether the underlying works contracts were exempt under the relevant exemption notification.

Analysis: Liability to tax must arise from the charging provision and cannot be imposed by inference, analogy, or presumption. The receipts reflected in Form 26AS only evidenced tax deduction at source and did not, by themselves, establish that the underlying transactions were taxable under the Finance Act, 1994. The record also disclosed the petitioner's claim that the contracts were works contracts rendered to Government entities and fell within the exemption under Notification No. 25/2012-Service Tax dated 20.06.2012. The adjudicating and appellate authorities failed to examine the exempt character of the services and instead proceeded only on the basis of third-party income-tax data.

Conclusion: The levy of service tax on the petitioner's entire receipts on the basis of Form 26AS was unsustainable and was set aside.

Issue (ii): Whether the extended period of limitation under Section 73(1) of the Finance Act, 1994 could be invoked in the absence of a conclusive finding of fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade tax.

Analysis: The extended limitation period is an exception and can be used only when the jurisdictional facts specified in the proviso to Section 73(1) are established. Mere non-furnishing of documents or the absence of voluntary payment is not enough. The impugned order did not record a clear and conclusive finding that the petitioner had acted with the requisite intent to evade tax, and the invocation of the extended period was founded on an assumption rather than on the statutory preconditions. In such circumstances, the assumption of jurisdiction itself was unauthorized.

Conclusion: Invocation of the extended period of limitation was invalid and the demand was barred by limitation.

Issue (iii): Whether the writ petition was entertainable despite the availability of the statutory appellate remedy.

Analysis: The availability of an alternative remedy is a rule of policy and discretion, not an absolute bar to writ jurisdiction. Where the impugned action is without jurisdiction, contrary to law, or vitiated by a failure to satisfy statutory preconditions for assumption of power, the High Court may interfere under Article 226 notwithstanding the appellate remedy. Since the core challenge went to the very jurisdiction to invoke Section 73(1), the writ court was justified in entertaining the petition.

Conclusion: The writ petition was maintainable and could be entertained despite the statutory appeal remedy.

Final Conclusion: The tax demand, penalty, interest, and the appellate affirmation could not stand because the levy was founded on an improper evidentiary basis and the extended limitation was invoked without the necessary jurisdictional findings.

Ratio Decidendi: A taxing authority cannot impose tax by presumption from third-party data, and the extended limitation under Section 73(1) can be invoked only upon a conclusive finding of the specific statutory ingredients showing deliberate evasion.

Issues: (i) Whether, for computing deduction under section 80-IA, the electricity duty component embedded in the tariff of the State Electricity Board could be excluded from the transfer price of power supplied by a captive unit; (ii) whether deduction allowed under section 80-IA could be reduced while computing profits eligible for deduction under section 80HHC; (iii) whether sales tax remission subsidy received under the incentive scheme was capital or revenue in nature; (iv) whether such sales tax remission could be included in book profits under section 115JB.

Issue (i): Whether, for computing deduction under section 80-IA, the electricity duty component embedded in the tariff of the State Electricity Board could be excluded from the transfer price of power supplied by a captive unit.

Analysis: The transfer price had to be determined with reference to the market value of electricity supplied by the State Electricity Board to industrial consumers in the open market. The tariff was a composite price and included statutory levies forming part of the actual market price. Once the open market benchmark was adopted, no artificial exclusion of the electricity duty component was permissible.

Conclusion: The exclusion of electricity duty was erroneous and the issue was answered in favour of the assessee.

Issue (ii): Whether deduction allowed under section 80-IA could be reduced while computing profits eligible for deduction under section 80HHC.

Analysis: The power undertakings and export business were distinct and independent, with separate accounts and no overlap of income. Section 80-IA(9) operates only to prevent double deduction in respect of the same profits and does not authorize reduction where the deductions arise from different sources of income. Since the power profits were not export profits, there was no question of double deduction.

Conclusion: The reduction of section 80-IA profits from section 80HHC profits was unjustified and the issue was answered in favour of the assessee.

Issue (iii): Whether sales tax remission subsidy received under the incentive scheme was capital or revenue in nature.

Analysis: The character of the subsidy depended on its purpose. The incentive scheme was designed to induce fresh capital investment and expansion of industrial capacity in a backward area. The subsidy was linked to expansion and fixed capital investment, and not to assistance in carrying on trade more profitably.

Conclusion: The subsidy was capital in nature and the issue was answered in favour of the assessee.

Issue (iv): Whether such sales tax remission could be included in book profits under section 115JB.

Analysis: Once the receipt was held to be capital in nature, it did not partake the character of income for book profit computation. Adjustments to book profit can be made only as specifically permitted by the statute, and the routing of the receipt through the profit and loss account did not alter its character.

Conclusion: The sales tax remission could not be included in book profits and the issue was answered in favour of the assessee.

Final Conclusion: The appeal succeeded on all substantial questions of law, resulting in complete relief to the assessee.

Ratio Decidendi: For section 80-IA valuation, the open-market tariff of the State Electricity Board is the proper benchmark for captive power transfer pricing, section 80-IA(9) prevents only duplication of deduction on the same profits, and subsidies granted for capital expansion are capital receipts that do not form part of book profit under section 115JB.

Issues: (i) Whether the transfer price of captively consumed power for deduction under Section 80-IA had to be computed without excluding the electricity duty component; (ii) whether deduction allowed under Section 80-IA was required to be reduced while computing profits eligible for deduction under Section 80HHC; (iii) whether, while computing book profit under Section 115JB, only 80% of the profit computed under Section 80HHC(3) could be excluded instead of 100%; (iv) whether sales tax remission granted for expansion in a backward area was capital or revenue in nature; and (v) whether the sales tax incentive could be excluded while computing book profit under Section 115JB.

Issue (i): Whether the transfer price of captively consumed power for deduction under Section 80-IA had to be computed without excluding the electricity duty component.

Analysis: The applicable market value for power transferred to the assessee's captive units was held to be the rate at which the State Electricity Board supplied power to industrial consumers in the open market. The electricity duty formed part of that consumer tariff and could not be carved out while quantifying deduction under Section 80-IA. The Tribunal's approach was consistent with the settled rule that market value is to be taken as the consumer-side tariff and not the lower surplus-sale rate.

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

Issue (ii): Whether deduction allowed under Section 80-IA was required to be reduced while computing profits eligible for deduction under Section 80HHC.

Analysis: The profits eligible for deduction under Section 80HHC were held not to suffer any reduction merely because deduction had been allowed under Section 80-IA. The two provisions operate on their own fields, and the computation of export profits for Section 80HHC does not require a diminution of business profits on account of Section 80-IA deduction.

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

Issue (iii): Whether, while computing book profit under Section 115JB, only 80% of the profit computed under Section 80HHC(3) could be excluded instead of 100%.

Analysis: The exclusion under Explanation (iv) to Section 115JB(2) was held to extend to the full profits eligible for deduction under Section 80HHC(3), subject to satisfaction of the statutory conditions. The phased restriction contained in Section 80HHC(1B) was not imported into the MAT computation under Section 115JB, which is a self-contained code for book profits.

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

Issue (iv): Whether sales tax remission granted for expansion in a backward area was capital or revenue in nature.

Analysis: Applying the purpose test, the subsidy was held to be linked to the setting up or expansion of industrial units in a backward area and, on the facts, retained the character of a capital receipt rather than revenue income. Its object was to promote industrial investment and not to meet operational expenses.

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

Issue (v): Whether the sales tax incentive could be excluded while computing book profit under Section 115JB.

Analysis: Since the incentive was treated as a capital receipt and not as income within the meaning of Section 2(24) as applicable to the relevant year, it was not liable to be included in book profit under Section 115JB. The mode of grant of the subsidy did not alter its capital character.

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

Final Conclusion: The appeal succeeded in full, and the assessee obtained relief on all substantial questions of law.

Issues: Whether the protective addition of capital gains on sale of land was sustainable when the registered sale deed had been declared void and no evidence of receipt of sale consideration by the assessee was brought on record.

Analysis: The sale deed forming the basis of the addition had already been declared void by the civil court on the ground of fraud, forged power of attorney and absence of payment of consideration. In such circumstances, the revenue authority was required to verify whether any sale consideration had in fact been received by the assessee before taxing capital gains. No inquiry was made from the buyers and no material was brought to show receipt of consideration by the assessee. The mere pendency of the buyers' appeal did not justify taxing the assessee on a protective basis, especially when the transaction itself stood judicially declared void. The addition was also unsustainable on merits because the entire alleged sale consideration was treated as capital gain without examining cost of acquisition.

Conclusion: The protective addition of Rs. 3,41,26,500 was not sustainable and was deleted.

Ratio Decidendi: A capital gains addition cannot be sustained on a protective basis where the underlying sale transaction has been declared void and the revenue has not established receipt of consideration by the assessee through cogent evidence or inquiry.