Issues: Whether the proposed import of WD989/RLB989 tyres, marketed as WORRIOR/DOUBLECOIN tyres, is classifiable under Heading 4011 80 00 as tyres of a kind used on construction, mining or industrial handling vehicles and machines, or under Heading 4011 20 10 as new pneumatic tyres of a kind used on buses or lorries.

Analysis: Classification under the Customs Tariff is to be determined by the terms of the headings and the relevant Chapter or Section Notes, applying the General Rules for Interpretation. The nature, design, construction and technical characteristics of the goods are material, while claimed end-use by itself is not decisive. The product literature and manufacturer categorisation showed that RLB 989 and WD 989 are treated as TBR tyres, not OTR tyres. The tyres were found to share the essential attributes of truck tyres, including their commercial classification, design features and speed symbols, and the material also showed that tyres marketed for mining or construction use on trucks do not become OTR tyres unless specifically engineered for construction or mining machinery. The claimed OTR classification was therefore inconsistent with the manufacturer's own product description and the trade identification of the goods.

Conclusion: The tyres are classifiable under Heading 4011 20 10 and not under Heading 4011 80 00.

Issues: (i) Whether the delay in filing the civil appeal should be condoned; (ii) Whether the appeal should be allowed on merits challenging the decisions of the Appellate Authority and the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Regional Bench, Mumbai.

Issue (i): Whether the delay of 278 days in filing the civil appeal ought to be condoned.

Analysis: The Court examined the record and submissions and considered the reasons for delay alongside the view taken by the Appellate Authority and CESTAT. The Court found no sufficient ground to take a different view from the authorities below and thus did not find reasons to condone the delay.

Conclusion: In favour of Assessee.

Issue (ii): Whether the appeal is maintainable on merits against the concurrent conclusions of the Appellate Authority and CESTAT.

Analysis: Upon perusal of the materials on record and submissions, the Court found no reason to disagree with the conclusions reached by the Appellate Authority and CESTAT. The Court examined the merits and adopted the same view as the authorities below.

Conclusion: In favour of Assessee.

Final Conclusion: The appeal is dismissed both on the ground of delay and on merits, leaving intact the decisions of the Appellate Authority and CESTAT in favour of the respondent.

Outcome: Delay condonation application and Special Leave Petition dismissed.

Issues: Whether the disallowance by the Assessing Officer and the confirmation by the Commissioner (Appeals) of deduction claimed under Section 80IAC of the Income-tax Act, 1961 on the ground of delayed uploading of Form 10CCB (supporting audit report) is sustainable where the form was uploaded before completion of processing under Section 143(1) of the Act.

Analysis: The appeals concern claim of deduction under Section 80IAC of the Income-tax Act, 1961 supported by Tax Audit Report filed under Section 44AB of the Act and Form 10CCB. The return declared the deduction and the specified audit form (Form 10CCB) was uploaded after filing but prior to completion of processing under Section 143(1). The Tribunal examined whether delayed uploading of the supporting Form 10CCB constitutes a substantive bar to the deduction or is a procedural/technical lapse that can be remedied by filing before completion of the assessment/processing. The Tribunal considered governing statutory framework requiring support for the deduction, the timing of filing/uploading of Form 10CCB vis-a -vis processing under Section 143(1), and binding precedents which hold that where the required form/document is filed before completion of assessment/processing, the claim of deduction should be allowed notwithstanding earlier non-filing at the time of return submission. The Tribunal found no prejudice to revenue from the belated filing and treated the omission as a procedural lapse remediable by filing prior to completion of assessment proceedings.

Conclusion: The confirmation of disallowance of the deduction under Section 80IAC by the First Appellate Authority is set aside and the appeals are allowed; the deduction claimed is accepted as valid where Form 10CCB was uploaded before completion of processing under Section 143(1), favouring the assessee.

Issues: Whether the Assessing Officer can make estimated additions by estimating gross profit/income without first rejecting the books of account under Section 145(3) and proceeding under Section 144 of the Income-tax Act, 1961.

Analysis: The Court examined Section 145(3) which empowers the Assessing Officer, if not satisfied about correctness or completeness of accounts, to make assessment in the manner provided in Section 144. The Court reviewed the factual position that the AO did not record any rejection of the books of account yet made an estimated addition by applying a gross profit rate to unrecorded sales. The Court relied on settled precedents establishing that rejection of books of account is a prerequisite before invoking best judgment/estimation under Section 144; absent such rejection the books must be accepted for computation and selective estimation over entries recorded in books is impermissible. Applying this legal framework to the present facts, the Court found the AO did not follow the statutory precondition in Section 145(3) and therefore the estimation made without rejecting books was not legally sustainable.

Conclusion: The appeal is allowed and the estimated addition made by the Assessing Officer without rejecting the books of account under Section 145(3) read with Section 144 of the Income-tax Act, 1961 is set aside in favour of the assessee.

Issues: (i) Whether the appeal before the Commissioner (Appeals) was barred by limitation and whether delay beyond the statutory condonable period could be excused; (ii) Whether royalty paid for mining rights was liable to service tax under the reverse charge mechanism and whether the appellant was entitled to threshold exemption.

Issue (i): Whether the appeal before the Commissioner (Appeals) was barred by limitation and whether delay beyond the statutory condonable period could be excused.

Analysis: The statutory scheme under Section 85(3A) of the Finance Act, 1994 permits filing of the appeal within two months and confers power to condone delay only up to one further month. The record showed that the appeal was filed long after expiry of the prescribed period and the explanation offered for the delay was unsupported by material evidence. The alleged absence of knowledge of the order was not accepted, and the service of the adjudication order was treated as the relevant point for limitation. The first appellate authority had also recorded that personal hearing had been granted. In view of the limited statutory power to condone delay, the appellate authority could not entertain the appeal beyond the permissible period.

Conclusion: The appeal was time-barred and the refusal to condone delay was upheld against the appellant.

Issue (ii): Whether royalty paid for mining rights was liable to service tax under the reverse charge mechanism and whether the appellant was entitled to threshold exemption.

Analysis: Royalty paid to the Government for assignment of rights to use natural resources was treated as consideration for a taxable service under the then applicable service tax notifications and circular. The service recipient was held liable under reverse charge mechanism by virtue of the relevant notifications governing services provided by Government or a local authority. The plea for threshold exemption was rejected because the appellant failed to produce adequate documentary material establishing entitlement to the exemption.

Conclusion: The service tax demand and the consequential tax liability were sustained against the appellant.

Final Conclusion: The appeal failed both on limitation and on merits, and the adjudication confirming service tax, interest and penalties was left undisturbed.

Ratio Decidendi: Where a special fiscal statute prescribes a fixed appeal period with a limited condonable extension, the appellate authority cannot enlarge that period on equitable grounds, and royalty paid for mining rights may be taxed as consideration for a Government-provided service when the governing notifications so provide.

Issues: Whether the appellate authority applied independent mind and properly considered the appellant's explanations and documents in the appeal under Section 107 read with Section 73 of the WBGST Act, 2017 / CGST Act, 2017.

Analysis: The appellate order reproduces the adjudicating authority's findings and records that "no further explanation and supporting documents have been furnished" but does not address or assess the explanations contained in the grounds of appeal nor the documents already on record. Such omission shows non-application of mind because the appellate authority failed to examine the explanations, weigh their merit, or record reasons for rejecting them. Where explanations and documentary material are before the appellate authority, a reasoned assessment of those explanations and documents is required; absence of such assessment renders the appellate order susceptible to judicial review.

Conclusion: The appellate order dated June 17, 2025 is set aside and the matter is remanded to the appellate authority for fresh consideration on merits in the light of the documents on record and the petitioner's contentions. The conclusion is in favour of the petitioner (assessee).

Ratio Decidendi: An appellate authority must apply independent mind and record reasoned conclusions after assessing the explanations and documentary evidence on record; failure to do so warrants setting aside the appellate order and remanding the matter for fresh consideration.

Issues: Whether the adjudication order dated 14.12.2023, passed under the WBGST Act, 2017/CGST Act, 2017, is vitiated for want of opportunity of hearing in terms of Section 75(4) and principles of natural justice.

Analysis: The impugned order was alleged to have been passed without affording the petitioners any personal hearing. The material before the Court shows no physical notice was served and the only asserted mode of notice was an online ACES-GST application which has been withdrawn since June 2025, leaving no record, screenshot, or proof of service. Section 75(4) of the said Act of 2017 mandates grant of opportunity of hearing before adverse orders are passed; this statutory requirement gives effect to the audi alteram partem principle. In the absence of satisfactory proof that the petitioners were afforded such an opportunity, the adjudication cannot be sustained on grounds of compliance with Section 75(4) or the principles of natural justice.

Conclusion: The adjudication order dated 14.12.2023 is set aside for failure to afford the petitioners an opportunity of hearing in terms of Section 75(4) and the principles of natural justice; the matter is remitted to the Proper Officer for fresh adjudication with liberty to the petitioners to file replies within two weeks and with a mandatory opportunity of hearing if any adverse order is contemplated.

Outcome: Delay was condoned and the Special Leave Petition was dismissed. The respondent's challenge to the fresh notice was left to be considered by the High Court in accordance with law.

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

Issues: Whether the addition of Rs. 3,90,09,960/- as unexplained cash credits under Section 68 of the Income-tax Act, 1961 is sustainable where the assessee has shown only the profit amount (Rs. 3,33,960/-) arising from commodity transactions and has produced contract notes, broker ledgers and bank statements.

Analysis: The Tribunal examined the factual material and documentary evidence pertaining to the commodity transaction (purchase Rs. 1,93,38,000 and sale Rs. 1,96,71,960) and noted that the assessee had offered the profit component of Rs. 3,33,960 as income. The Tribunal observed that for transactions of the nature involved (commodity trading / spot arbitrage), the relevant tax consequence arises from the profit on the transaction rather than treating the whole turnover amounts as credits for the purpose of Section 68. The Tribunal also took into account that the factual position is identical to the subsequent assessment year where the Tribunal had earlier given a decision in the assessee's favour and that the assessee had produced contract notes, broker ledgers and bank statements as supporting evidence.

Conclusion: The addition of Rs. 3,90,09,960/- under Section 68 is not justified; the appeal is partly allowed insofar as the addition is concerned and the matter is decided in favour of the assessee on the issue of applicability of Section 68 to the turnover amounts in the present commodity transaction.

Issues: Whether penalty under section 271(1)(c) and section 270A of the Income-tax Act, 1961 was leviable when the assessee had deposited back the excess refund with interest before issue of notice under section 148 and the return disclosed the correct income in substance.

Analysis: The assessee was a salaried employee whose original return, prepared through a tax consultant, contained excess claims under the head income from house property and Chapter VI-A, resulting in a refund. Before the reassessment notice under section 148 was issued, the assessee repaid the entire excess refund along with interest to the Government Treasury and also furnished revised computation showing the correct income. The Tribunal followed its earlier coordinate bench decisions on similar facts and held that the pre-notice repayment and the surrounding circumstances negatived the basis for penalty. The penalty under section 271(1)(c) was found unsustainable on the same factual matrix, and the penalty under section 270A was also held not leviable.

Conclusion: The penalty orders were liable to be deleted and the assessee succeeded.

Final Conclusion: The impugned penalties for both assessment years were set aside, and the appeals were allowed.

Ratio Decidendi: Where excess refund is voluntarily repaid with interest before reassessment notice and the assessee's conduct does not show deliberate concealment or culpable underreporting, penalty for concealment or underreporting cannot be sustained.

Issues: (i) Whether CENVAT credit of Rs.27,28,645/- on disputed input services is admissible under Rule 2(l) of the Cenvat Credit Rules, 2004 as amended w.e.f. 01.04.2011; (ii) Whether the disputed services satisfy the "nexus with manufacture" test or are barred by post-2011 exclusionary clauses; (iii) Whether credit can be allowed in absence of invoices and supporting documentary evidence or requires remand for verification; (iv) Whether waiver/quashing of interest and penalties can be considered at this stage.

Issue (i): Whether CENVAT credit of Rs.27,28,645/- on disputed input services is admissible under Rule 2(l) of the Cenvat Credit Rules, 2004 as amended w.e.f. 01.04.2011.

Analysis: The Tribunal examined categories of services claimed (pest control/housekeeping, gardening and cleaning, construction-related services, plant civil work, manpower services for factory maintenance, and membership services) against the inclusive limb and exclusionary clauses of Rule 2(l) as amended. Reliance was placed on Supreme Court and Tribunal precedents establishing a broad nexus test, and on prior Tribunal decisions including the appellant's earlier order. For multiple service categories the Bench found admissibility in principle but noted absence of invoices and supporting documents to finally quantify or allow credit; rent-a-cab services were specifically excluded under Rule 2(l)(B) and held inadmissible.

Conclusion: Credit on the disputed services is admissible in principle under Rule 2(l) of the Cenvat Credit Rules, 2004 subject to verification; credit on rent-a-cab services is inadmissible.

Issue (ii): Whether the disputed services satisfy the "nexus with manufacture" test or are barred by post-2011 exclusionary clauses.

Analysis: The Tribunal applied the nexus test and the explicit exclusionary provisions in Rule 2(l)(A) and Rule 2(l)(B). It held that pest control, housekeeping, cleaning, gardening (where for statutory compliance/green belt), repair/maintenance construction (if repair/renovation and not barred construction), plant civil work (depending on factual nature), manpower for factory maintenance, and corporate membership for business purposes may satisfy the nexus test and not fall within exclusions; rent-a-cab and clear construction services aimed at building/foundations fall within exclusion.

Conclusion: The services identified are capable of meeting the nexus test and not being hit by exclusions in principle; specific applicability of exclusionary clauses depends on factual verification (except rent-a-cab which is excluded).

Issue (iii): Whether credit can be allowed in absence of invoices and supporting documentary evidence or requires remand for verification.

Analysis: The Tribunal noted absence of invoices, work contracts and other supporting documents before both appellate and tribunal records. It held that CENVAT credit cannot be finally allowed without documentary verification of receipt, nexus and non-applicability of exclusions; while Commissioner (Appeals) remand powers are curtailed, the Tribunal may remit for limited factual verification where record is incomplete.

Conclusion: Credit cannot be finally allowed without documentary verification; the matter is remanded to the adjudicating authority for limited verification of invoices, nexus and eligibility strictly under Rule 2(l), 2004.

Issue (iv): Whether waiver/quashing of interest and penalties can be considered at this stage.

Analysis: Interest and penalty consequences depend on final factual finding on inadmissible credit and statutory provisions governing recovery and penalty (Sections 11A, 11AA/11AB and 11AC of the Central Excise Act, 1944). In absence of final adjudication the Tribunal declined to adjudicate waiver requests and remitted relevant aspects for verification.

Conclusion: Waiver or quashing of interest and penalties is not considered at this stage and stands remitted for decision by the adjudicating authority after verification.

Final Conclusion: The disputed input services (except rent-a-cab) are held admissible in principle under Rule 2(l) of the Cenvat Credit Rules, 2004 subject to documentary verification of receipt, nexus with manufacture/business and non-applicability of exclusion clauses; the matter of Rs.27,28,645/- is remanded to the adjudicating authority for limited verification and consequential determination of credit, interest and penalty within three months.

Ratio Decidendi: Services that have a direct or indirect nexus with manufacture or business and are not specifically excluded by the post-01.04.2011 clauses of Rule 2(l) of the Cenvat Credit Rules, 2004 are admissible in principle as input services, but final allowance requires documentary verification of receipt, nexus and non-applicability of exclusionary provisions.

Issues: (i) Whether duty demand for the period prior to 15.05.2014 is sustainable in view of Board Circular No.924/14/2010-CX dated 19.05.2010; (ii) Whether duty demand for the period 15.05.2014 to July 2014 survives within the limitation period; (iii) Whether penalties under Section 11AC and Rule 26 are justified; (iv) Whether demand under Section 11D for amounts collected but not deposited survives and requires any further action.

Issue (i): Whether duty demand for the period prior to 15.05.2014 is sustainable in view of Board Circular No.924/14/2010-CX dated 19.05.2010.

Analysis: The Appellant classified goods under Heading 8437 relying on the Board circular dated 19.05.2010 which remained operative until rescission on 15.05.2014. Established legal principles treat Board circulars as binding on departmental authorities while operative. Precedents recognizing that beneficial circulars apply retrospectively and that revenue cannot repudiate its own operative clarification are applied to the facts. Identical tribunal and apex court rulings treating the same classification issue as covered by the operative circular are relied upon.

Conclusion: Demand for the period prior to 15.05.2014 is unsustainable and is set aside.

Issue (ii): Whether duty demand for the period 15.05.2014 to July 2014 survives within the limitation period.

Analysis: The show cause notice was issued on 24.06.2016. The normal limitation under Section 11A(1) had expired for the period 15.05.2014 to July 2014. Extended limitation under Section 11A(4) requires proof of fraud, suppression or wilful misstatement; here the facts show bona fide reliance on Board circulars and an interpretational classification dispute. Applicable authorities and the Board's own master circular on disputed interpretation indicate extended period is not invocable in such cases.

Conclusion: Demand for the period 15.05.2014 to July 2014 is barred by limitation and is set aside.

Issue (iii): Whether penalties under Section 11AC and Rule 26 are justified.

Analysis: Penalties are consequential on a sustainable duty demand. Where the underlying demand fails on merits and limitation, and the conduct stems from bona fide reliance on binding circulars in an interpretational dispute, imposition of penalties for deliberate or contumacious conduct is not justified. Authorities requiring more than lawful non-payment for penalty imposition are applied.

Conclusion: Penalties under Section 11AC and personal penalty under Rule 26 are not justified and are set aside.

Issue (iv): Whether demand under Section 11D for amounts collected but not deposited survives and requires further action.

Analysis: Records indicate amounts claimed deposited but the challans and breakup do not reconcile with sums confirmed. The need for verification and appropriation is confined to determining any unpaid shortfall; if full deposit including interest is established no further penal consequence arises. Recovery, if any, and any penalty must be limited to unpaid amounts found due after verification.

Conclusion: The Section 11D issue is remanded for limited verification and appropriation; any recovery or penalty shall be confined to any unpaid amount found due.

Final Conclusion: The appeals are allowed in part by setting aside the confirmed duty, interest and penalties to the extent indicated, and remanding only the limited Section 11D verification issue; consequential relief shall follow as per law.

Ratio Decidendi: Where a departmental board circular remains operative, revenue cannot raise retrospective demands contrary to that circular; adverse circulars affecting liability operate prospectively and extended limitation for recovery under fraud or suppression cannot be invoked in pure interpretational disputes where the assessee acted bona fide on a binding circular.

Issues: (i) Whether the clearances of the two manufacturers from the same factory were liable to be clubbed under Para 2(vi) of Notification No. 08/2003-CE, (ii) whether invocation of the extended period under Section 11A(4) of the Central Excise Act, 1944 was sustainable, and (iii) whether the penalties under Rule 25 of the Central Excise Rules, 2002 and Section 11AC of the Central Excise Act, 1944 were justified.

Issue (i): Whether the clearances of the two manufacturers from the same factory were liable to be clubbed under Para 2(vi) of Notification No. 08/2003-CE.

Analysis: Para 2(vi) of the SSI notification provides that where specified goods are cleared by one or more manufacturers from the same factory, the exemption is available only on the aggregate value of clearances and not separately to each manufacturer. Both manufacturers cleared the same excisable goods from the same premises during the relevant financial year, so separate exemption limits were not available.

Conclusion: Clubbing of clearances was correctly applied and the exemption claim on a separate basis failed.

Issue (ii): Whether invocation of the extended period under Section 11A(4) of the Central Excise Act, 1944 was sustainable.

Analysis: The extended period was found to be attracted because one manufacturer did not obtain registration, file returns, or discharge duty, while the other did not disclose the leasing arrangement and continued clearances from the same premises. The omission was not treated as a mere inadvertence or as a case of full disclosure; instead, it was treated as non-compliance detected only through investigation, which justified invocation of the longer limitation period.

Conclusion: The extended period under Section 11A(4) was held to be sustainable.

Issue (iii): Whether the penalties under Rule 25 of the Central Excise Rules, 2002 and Section 11AC of the Central Excise Act, 1944 were justified.

Analysis: Penalty under Section 11AC follows where duty is not paid by reason of suppression of facts or contravention with intent to evade duty. Clearing excisable goods without registration and without duty payment was treated as conscious non-compliance rather than a procedural lapse, and the ingredients for penalty were held to be present.

Conclusion: The penalties under Rule 25 and Section 11AC were held to be justified.

Final Conclusion: The common order was upheld in full, with the duty demands, limitation finding, and penalty confirmation all sustained against the appellants.

Ratio Decidendi: Where SSI exemption conditions require aggregate treatment of clearances from the same factory, separate exemption cannot be claimed by different manufacturers operating from the same premises, and non-registration with non-payment of duty may justify extended limitation and penalty for suppression-related contravention.

Issues: Whether the impugned cancellation of GST registration is sustainable where the cancellation order does not record reasons and does not advert to the reply and request for personal hearing submitted by the registrant.

Analysis: The order cancelling registration was issued without assignment of reasons and contains no reference to the petitioner's email-reply, request for extension of time, or request for personal hearing. Evidence was placed before the Court that explanations and documents had been produced to show business activity at the declared place and that a fresh registration had been subsequently obtained. The matter therefore requires fresh adjudication which takes into account the petitioner's submissions and any application for cancellation of the earlier registration in view of the subsequent registration.

Conclusion: The cancellation order is unsustainable and the matter is to be reconsidered after affording the petitioner an opportunity of hearing; any application for cancellation of the earlier registration arising from the subsequent registration shall also be considered before deciding on the show-cause notice dated 26.09.2023.

Issues: Whether the petitioners were entitled to regular bail in a GST prosecution alleging fraudulent availment of input tax credit, having regard to the nature of the allegations, the stage of investigation and filing of complaint, the maximum punishment prescribed, and the absence of any demonstrated need for further custodial detention.

Analysis: The petition was for regular bail in proceedings arising from alleged fraudulent availment and utilisation of input tax credit under the GST enactments. The allegations were that the petitioners, as directors or partners of the concerned firms, had availed credit on invoices issued by non-genuine or cancelled suppliers. The Court noted that the complaint had already been filed, the petitioners had been in custody since 17.09.2025, and the prosecution evidence was substantially documentary and electronic in nature. It was also observed that the precise tax liability and exact extent of evasion were yet to be determined through assessment or adjudication, and no material was shown to justify further detention. While considering the settled principles that bail is the rule and jail the exception, especially where custodial interrogation is not required, the Court balanced the seriousness of the allegations against the nature of evidence and the stage of the case.

Conclusion: The petitioners were held entitled to regular bail, subject to conditions.

Final Conclusion: The proceedings were finally disposed of by granting regular bail to the petitioners on terms designed to secure their presence, prevent interference with evidence, and safeguard the trial process.

Ratio Decidendi: In prosecutions for alleged GST tax evasion, where investigation is complete, complaint has been filed, custody is no longer required for inquiry, and the material is chiefly documentary or electronic, continued incarceration is not justified merely because the offence is serious, if the statutory maximum punishment is limited and the likelihood of tampering or absconding is not shown.

Issues: Whether interest payable to a bank that is included in the Second Schedule to the Reserve Bank of India Act, 1934 (Punjab and Maharashtra Co-operative Bank) for Assessment Year 2017-18 is disallowable under Section 43B of the Income-tax Act, 1961 when not paid on or before the due date of filing the return of income.

Analysis: The statutory text of clause (e) of Section 43B provides that interest payable to a scheduled bank shall be allowed only when actually paid for computing income under section 28. Explanation 4 to Section 43B refers to the meaning of "scheduled bank" as given in the Explanation to clause (iii) of sub-section (5) of Section 11, which includes banks listed in the Second Schedule to the Reserve Bank of India Act, 1934. For AY 2017-18, the bank in question was included in the Second Schedule and therefore qualified as a scheduled bank for that year. The amendment by Finance Act, 2017 that expressly added cooperative banks into clause (e) w.e.f. 01-04-2018 does not exclude banks already qualifying as scheduled banks by inclusion in the Second Schedule for earlier years. Where interest was not paid on or before the due date of filing the return, and the bank qualified as a scheduled bank for the year under consideration, clause (e) applies and disallowance under Section 43B is attracted regardless of later amendments specifically addressing cooperative banks.

Conclusion: Interest payable to the bank which was included in the Second Schedule to the Reserve Bank of India Act, 1934 for the year under consideration is disallowable under Section 43B of the Income-tax Act, 1961 if not paid on or before the due date of filing the return; the appellate order deleting the disallowance is set aside and the revenue appeal is allowed.

Ratio Decidendi: For an assessment year, clause (e) of Section 43B applies to interest payable to any bank that qualifies as a scheduled bank by being included in the Second Schedule to the Reserve Bank of India Act, 1934, and such interest is deductible only when actually paid on or before the due date of filing the return of income.

Issues: Whether, for computing deduction under section 54F of the Income-tax Act, 1961, the assessee is entitled to claim the entire amount deposited in the Capital Gains Account Scheme as cost of the new asset for deduction purposes, or only a proportionate deduction computed by applying the statutory formula in section 54F(1).

Analysis: Section 54F prescribes that the deduction equals the capital gain multiplied by the ratio of the cost of the new asset to the net consideration; section 54F(4) permits deposit in the Capital Gains Account Scheme to preserve eligibility for exemption but does not alter the computation method under section 54F(1). The figures in dispute are undisputed: net consideration, capital gain, actual construction expenditure and amount deposited in the Capital Gains Account Scheme. The disputed excess arises from arithmetic application of the statutory formula. The assessee produced no material to show that the deposit in the Capital Gains Account Scheme had been actually utilized or irrevocably committed to construction such that the entire claimed amount would form part of the cost of the new asset for computation purposes. Relevant authorities uphold that preservation of exemption by deposit does not waive the requirement to compute the deduction by the formula when the entire net consideration is not invested.

Conclusion: The deduction must be computed by applying the statutory formula in section 54F(1); the deposit in the Capital Gains Account Scheme preserves eligibility but does not automatically entitle the assessee to the entire claimed amount. The proportionate disallowance of Rs. 3,91,661/- is justified and the appeal is dismissed.