Issues: (i) Whether rejection of the revision application for want of proof of the petitioner's status as legal heir was sustainable without considering the documents furnished by her; (ii) Whether the ex parte reassessment order and consequential penalty actions should remain operative pending fresh consideration of the revision application.

Issue (i): Whether rejection of the revision application for want of proof of the petitioner's status as legal heir was sustainable without considering the documents furnished by her.

Analysis: Section 264 of the Income-tax Act, 1961 permits revision of an assessment. The documents supporting the petitioner's status as legal representative were supplied to the Assessing Officer shortly before the revision order was made, but were not considered while the revision application was rejected as not maintainable. Recognition of the petitioner as legal heir was necessary for effective consideration of the revision application, and a personal hearing was directed before its fresh determination.

Conclusion: The rejection of the revision application was unsustainable and was set aside in favour of the assessee.

Issue (ii): Whether the ex parte reassessment order and consequential penalty actions should remain operative pending fresh consideration of the revision application.

Analysis: The reassessment order under Sections 147 and 144 of the Income-tax Act, 1961 was passed ex parte because notices issued to the deceased's email address remained unanswered before the petitioner became aware of the proceedings. In the bona fide circumstances, preservation of the subject matter pending revision was warranted.

Conclusion: Operation, implementation and execution of the assessment order and consequential penalty actions were stayed until disposal of the revision application and for four weeks thereafter, in favour of the assessee.

Final Conclusion: The petitioner must first be brought on record as legal heir, following which the revision application must be decided afresh on merits and in accordance with law after a personal hearing.

Ratio Decidendi: A revision application cannot be rejected for want of proof of legal-heir status where material furnished for that purpose was not considered; the legal representative must be recognised and afforded an effective opportunity before a fresh merits determination.

Issues: (i) Whether the final assessment order was barred by limitation following retrospective insertion of section 144C(13A); (ii) Whether cost-to-cost recovery of tax paid on employee stock options should be included in the assessee's operating margin; (iii) Whether the disputed ITeS comparables were functionally comparable to the assessee; (iv) Whether delayed trade receivables warranted a separate notional-interest adjustment.

Issue (i): Whether the final assessment order was barred by limitation following retrospective insertion of section 144C(13A).

Analysis: Section 144C(13A), inserted retrospectively from 01.04.2009 by the Finance Act, 2026, governed the limitation computation. Under that provision, the final assessment order fell within the prescribed period.

Conclusion: The assessment order was not barred by limitation. Against the assessee.

Issue (ii): Whether cost-to-cost recovery of tax paid on employee stock options should be included in the assessee's operating margin.

Analysis: The recovered amount represented withholding tax payable by the associated enterprises in relation to employee stock options, paid by the assessee and recovered on a cost-to-cost basis. It had no connection with the ITeS rendered and was therefore non-operating for computation of the operating profit-to-operating cost margin.

Conclusion: The tax recovery must be excluded from operating income while computing the operating margin. In favour of the assessee.

Issue (iii): Whether the disputed ITeS comparables were functionally comparable to the assessee.

Analysis: Functional comparability was determined from the actual service profiles. Voice-based call-centre, routine BPO, information-technology service, and intellectual-property consultancy functions were materially different from the assessee's technical documentation, statistical analysis, regulatory, analytics, and reporting services. A knowledge-processing concern engaged in patent analysis, technical editing, and indexing was, however, functionally similar to the assessee's technical ITeS functions.

Conclusion: Four functionally dissimilar comparables must be excluded, while the functionally similar knowledge-processing comparable must be retained. Partly in favour of the assessee.

Issue (iv): Whether delayed trade receivables warranted a separate notional-interest adjustment.

Analysis: Deferred payment or receivables fall within the definition of an international transaction. However, the outstanding receivables arose solely from the ITeS transaction and were closely linked to it. Rules 10B(3)(ii) and 10B(1)(e) require reasonably accurate adjustments for material differences in applying the Transactional Net Margin Method. A working capital adjustment captures the profitability impact of such receivables.

Conclusion: Delayed receivables are an international transaction, but a working capital adjustment must be granted under the combined-transaction approach and no separate notional-interest adjustment is warranted thereafter. In favour of the assessee.

Final Conclusion: The ITeS transfer-pricing computation must be revised by excluding the non-operating tax recovery, applying the directed comparable set, and granting working capital adjustment, while the assessment remains within limitation.

Issues: Whether abnormal idle costs arising from COVID-19-induced underutilisation of a captive service provider's manpower and infrastructure required a capacity-utilisation adjustment while determining its arm's length margin under TNMM.

Analysis: Rule 10B(3) of the Income-tax Rules, 1962 permits reasonably accurate adjustments to eliminate material differences affecting profits; it does not require identical capacity-utilisation or idle-cost data of comparable companies to be publicly available. Transfer-pricing analysis permits reasonable economic estimation rather than mathematical precision. Extraordinary underutilisation materially depressed the assessee's operating margin because fixed employee and infrastructure costs continued despite reduced activity. The abnormal idle costs, their business nexus, and the methodology for their computation were not found to be fictitious, non-business, unreliable, or incorrect. The absence of confidential internal data of independent comparables could not by itself justify rejecting a demonstrated and reasonably quantified adjustment.

Conclusion: The COVID-19-related abnormal idle costs had to be neutralised through an appropriate capacity-utilisation adjustment. The adjusted operating margin of 14.25% exceeded the comparable median margin of 11.84%; therefore, the international transactions were at arm's length and no transfer-pricing adjustment was warranted.

Issues: (i) Whether inclusion of comparables failing the related-party-transaction filter was valid; (ii) Whether a wholly Government-owned company could be retained as a comparable for sourcing support services; (iii) Whether a company operating on a commission-based revenue model was comparable to a cost-plus service provider; (iv) Whether entities rendering infrastructure project-management services and sectoral consultancy services were functionally comparable to sourcing support services.

Issue (i): Whether inclusion of comparables failing the related-party-transaction filter was valid.

Analysis: The directions required exclusion of entities failing the related-party-transaction filter. Despite this, Mudra Online Technologies Private Limited was retained although it failed that filter. The final restoration direction also sets aside inclusion of ERM India Private Limited.

Conclusion: Inclusion of the entities failing the related-party-transaction filter was invalid, in favour of the assessee.

Issue (ii): Whether a wholly Government-owned company could be retained as a comparable for sourcing support services.

Analysis: EdCIL (India) Limited was under the control of the Ministry of Education and was wholly Government-owned. Its Government undertaking status rendered it unsuitable for the comparable set.

Conclusion: EdCIL (India) Limited must be excluded from the comparable set, in favour of the assessee.

Issue (iii): Whether a company operating on a commission-based revenue model was comparable to a cost-plus service provider.

Analysis: Adbur Private Limited earned revenue from purchase or sale of advertising space or time on a commission basis, whereas the tested services were compensated on a cost-plus basis. The differing revenue models produced materially different profit profiles and impaired comparability.

Conclusion: Adbur Private Limited must be excluded as a comparable, in favour of the assessee.

Issue (iv): Whether entities rendering infrastructure project-management services and sectoral consultancy services were functionally comparable to sourcing support services.

Analysis: Artefact Projects Limited derived its revenue from project-management and consultancy services for infrastructure projects, including engineering and architectural services. Infollion Research Services Private Limited provided consultancy across distinct industry sectors. Their functions were dissimilar to sourcing support services.

Conclusion: Artefact Projects Limited and Infollion Research Services Private Limited must be excluded as comparables, in favour of the assessee.

Final Conclusion: The transfer-pricing benchmarking is to be redetermined by the Transfer Pricing Officer after exclusion of the invalid comparables and after affording the assessee an opportunity of hearing.

Ratio Decidendi: Comparable entities must satisfy applicable related-party-transaction filters and functional comparability; entities with materially different ownership characteristics, functions, or revenue models cannot be retained in the comparable set.

Issues: Whether Bulk Drugs/Active Pharmaceutical Ingredients imported for manufacture of pharmaceutical formulations or for testing, clinical research, bioavailability or bioequivalence studies qualify for the 5% IGST rate under Sl. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025.

Analysis: IGST on imported articles is governed by Section 3(7) of the Customs Tariff Act, 1975, read with the applicable IGST rate notification. The expression "drug" is not defined in the rate notification; its meaning was therefore determined with reference to Section 3(b) of the Drugs and Cosmetics Act, 1940, which inclusively covers substances intended for use as components of a drug. The definition of active pharmaceutical ingredient or bulk drug under the Drugs (Price Control) Order, 2013 also covers pharmaceutical substances used as such or as ingredients in formulations. APIs regulated and licensed as pharmaceutical substances consequently fall within the expression "drugs and medicines".

Analysis: Sl. No. 226 is a description-based entry applicable to goods under Chapter 30 or any Chapter. Its reference to "all drugs and medicines" and separately to "formulations manufactured from bulk drugs" cannot be confined to finished dosage forms, as that would render part of the entry redundant. The specific entry for drugs and medicines prevails over the general chemical entries for Chapters 28 and 29. The notification is a taxing rate notification, and any ambiguity in its scope is resolved in favour of the taxpayer. The nil-rate exclusion under Sl. No. 113 of Notification No. 10/2025-Integrated Tax (Rate) dated 17.09.2025 remains subject to verification for each individual API at import.

Conclusion: Bulk Drugs/APIs described in the application qualify as "All Drugs and medicines" under Sl. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025 and attract IGST at 5%, provided the particular API is not covered by the stated nil-rate exclusion.

Ratio Decidendi: A pharmaceutical API that is a component of a drug and satisfies the regulatory requirements for drugs falls within a description-based entry for "all drugs and medicines", notwithstanding its tariff classification under a general chemical chapter.

Issues: Whether bulk drugs or active pharmaceutical ingredients, classifiable under Chapters 28 or 29 and imported for pharmaceutical formulations, testing, clinical research, bioavailability or bioequivalence studies, qualify for IGST at 5% under Sl. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025.

Analysis: IGST on imports is chargeable under Section 3(7) of the Customs Tariff Act, 1975 at the rate applicable to like domestic supplies. The expression "drugs" in the rate notification was interpreted with reference to Section 3(b) of the Drugs and Cosmetics Act, 1940, which inclusively covers substances intended for use as components of a drug. The definition of active pharmaceutical ingredients or bulk drugs in the Drugs (Price Control) Order, 2013 confirms their pharmaceutical character and use as ingredients in formulations. APIs imported for testing, clinical trials, bioavailability or bioequivalence studies are not excluded merely because they are not directly used as finished therapeutic formulations.

Analysis: Sl. No. 226 is a description-based entry covering drugs and medicines falling under Chapter 30 or any Chapter. Its reference to formulations manufactured from bulk drugs does not confine "all drugs and medicines" to finished dosage forms; such a construction would render parts of the entry redundant. The specific entry for drugs and medicines prevails over the general Chapter 28 and Chapter 29 entries for inorganic and organic chemicals. As the notification is a taxing rate notification rather than an exemption notification, any ambiguity is to be resolved in favour of the taxpayer. The applicability of the nil-rate exclusion under Sl. No. 113 must be verified for the particular API at import.

Conclusion: Yes. Bulk drugs/APIs qualifying as drugs or medicines are eligible for IGST at 5% under Sl. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025, provided the particular API is not covered by the exclusion under Sl. No. 113 of Notification No. 10/2025-Integrated Tax (Rate) dated 17.09.2025. The ruling is in favour of the assessee.

Issues: Whether threshing, cleaning, sieving and sizing dried broken raw tobacco leaves, followed by bulk packing, amounts to manufacture or deemed manufacture attracting Central Excise duty.

Analysis: Central Excise duty under Section 3 applies only to goods produced or manufactured in India. Under Section 2(f), manufacture ordinarily requires emergence of a new commodity with a distinct name, character and use; it also includes processes specifically deemed to be manufacture. Chapter Note 3 of Chapter 24 treats labelling or relabelling, repacking from bulk packs to retail packs, or other treatment undertaken to render tobacco marketable to the consumer as manufacture. The mechanical processes involved no addition, chemical treatment, flavouring, blending, branding or retail packing. The tobacco retained its essential identity, and the incoming dried broken tobacco was already capable of being bought and sold. Bulk-to-bulk packing was not repacking into retail packs, and the processing did not confer marketability on an otherwise unmarketable product.

Conclusion: The stated activities do not amount to manufacture or deemed manufacture under Section 2(f) of the Central Excise Act, 1944; consequently, no Central Excise duty is payable merely for undertaking them.

Issues: Whether the assessment complied with the faceless assessment procedure and principles of natural justice where additions were made without prior specific enquiries, without proper consideration of the assessee's replies, and without an effective personal hearing.

Analysis: The prescribed procedure required the show-cause notice to be issued only after necessary enquiries, verification and collection of relevant information. The assessment was preceded by only one notice under Section 142(1), while material particulars concerning bank receipts, the alleged capital nature of partnership-firm receipts, Category III AIF redemption proceeds, and the sale of unlisted shares had either not been specifically sought or were not properly addressed after the replies were furnished. The addition concerning AIF redemption was made on a basis not raised in the show-cause notice, and the addition of sale proceeds as unexplained credits relied on the purchaser's source of funds although that information had not been sought. The hearing notice allowed only a few hours for appearance, and no fresh hearing was provided after the video-conference link failed. These defects demonstrated arbitrariness, non-application of mind, and denial of a meaningful opportunity to respond.

Conclusion: The assessment order, consequential demand notice, and penalty show-cause notices could not be sustained for breach of the prescribed procedure and principles of natural justice. The assessment proceedings are to recommence from the show-cause-notice stage, with specific further queries where required, proper consideration of the assessee's submissions, and an effective personal hearing before any adverse decision.

Issues: (i) Whether the additional legal ground challenging extended search-assessment jurisdiction was admissible; (ii) Whether notices and assessments for years beyond six assessment years were valid where the alleged escaped income was not represented in the form of an asset.

Issue (i): Whether the additional legal ground challenging extended search-assessment jurisdiction was admissible.

Analysis: The ground was purely legal, went to the root of the assessment, required no fresh facts, and could be determined from the assessment record. A general challenge to the validity of the search assessment had also been raised earlier.

Conclusion: The additional ground was admitted in favour of the assessee.

Issue (ii): Whether notices and assessments for years beyond six assessment years were valid where the alleged escaped income was not represented in the form of an asset.

Analysis: The fourth proviso to Section 153A(1) permits action beyond six assessment years only where material in the Assessing Officer's possession reveals escaped income represented in the form of an asset and meeting the prescribed monetary threshold. The additions were based solely on alleged on-money receipts. The assessment orders did not identify any escaped income represented by an asset of the specified nature.

Conclusion: The extended-period notices and consequent assessments were invalid and void ab initio, in favour of the assessee.

Final Conclusion: The assessments for all relevant years stood quashed; the remaining grounds became academic.

Issues: Whether a reassessment is valid where the recorded reasons for reopening were not supplied to the assessee despite a request.

Analysis: The legal framework governing reopening requires that, upon request, the recorded reasons be furnished to enable the assessee to raise objections. The assessment records and the factual report confirmed that no evidence existed of the recorded reasons having been communicated or supplied during the reassessment proceedings.

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

Issues: Whether the assessee could be denied taxation under the new tax regime merely because the return of income was filed after the due date under section 139(1), despite timely filing of Form 10-IE.

Analysis: The requirement concerning the timing of Form 10-IE and the return for opting for the new tax regime was treated as directory rather than mandatory. The timely filing of Form 10-IE, together with the principle that delay in filing the return or Form 10-IE may be condoned, supported acceptance of the tax-regime option.

Conclusion: The assessee was entitled to be taxed under section 115BAC notwithstanding the delayed filing of the return; the issue was decided in favour of the assessee.

Issues: Whether Foreign Tax Credit can be denied solely because Form 67 was filed beyond the prescribed time.

Analysis: The foreign income had been offered to tax in India, taxes had been paid abroad, and eligibility for credit of those foreign taxes was undisputed. The delay in furnishing Form 67 was treated as incapable of prejudicing the assessee's substantive entitlement to Foreign Tax Credit.

Conclusion: Foreign Tax Credit shall be granted to the assessee and the requisite rectification shall be carried out.

Issues: Whether commission paid to non-resident agents for procuring export orders, where services were rendered outside India and the agents had no permanent establishment or business operations in India, was chargeable to tax in India so as to require tax deduction at source and justify disallowance.

Analysis: Commission earned by non-resident agents for services rendered outside India does not accrue or arise in India merely because export orders were obtained for an Indian payer. Tax deduction at source is required only where the payment is chargeable to tax in India. No material established that the agents rendered services in India or had a permanent establishment or business operations in India; the mere connection of commission with export orders executed in India was insufficient to make the income taxable in India.

Conclusion: The foreign-agent commission was not chargeable to tax in India; no tax was deductible at source, and the disallowance was deleted in favour of the assessee.

Issues: Whether the notice for reassessment issued after expiry of three years from the end of the relevant assessment year was valid when approval under Section 151 was granted by the Principal Commissioner instead of the competent Principal Chief Commissioner.

Analysis: For assessment year 2019-20, more than three years had elapsed when approval was obtained and the notice was issued. The approval recorded applicability of the extended limitation provision, but was granted by the Principal Commissioner, whereas the competent authority in the circumstances was the Principal Chief Commissioner. The sanction was consequently invalid and could not confer jurisdiction for reassessment.

Conclusion: The reassessment notice and the consequential assessment were invalid and were quashed, in favour of the assessee.

Issues: Whether reassessment initiated under Sections 147 and 148 pursuant to sanction under Section 151 was valid.

Analysis: The sanction proforma and recorded reasons omitted the earlier assessment completed under Section 143(3). The sanctioning authority merely endorsed that it was a fit case for notice under Section 148, without referring to any material or record, and the approval was undated. These circumstances established that the sanction was granted mechanically and without application of mind. A sanction under Section 151 is a statutory safeguard and must reflect meaningful satisfaction based on the relevant facts and applicable law.

Conclusion: The sanction under Section 151 was invalid; consequently, the notice under Section 148, assumption of reassessment jurisdiction under Section 147, and consequential reassessment were quashed in favour of the assessee.

Issues: (i) Whether the Business Auxiliary Services provided to a foreign recipient qualified as export of services; (ii) Whether refund of accumulated Cenvat credit could be denied by treating the services as non-exported without initiating service-tax recovery proceedings.

Issue (i): Whether the Business Auxiliary Services provided to a foreign recipient qualified as export of services.

Analysis: Category III services under Rule 3(1)(iii) of the Export of Services Rules, 2005 are to be assessed with reference to the location of the service recipient rather than the place of performance. The applicable clarification treated services provided in relation to business or commerce to a recipient outside India as export, notwithstanding that the underlying activities were performed in India, where the benefit accrued to the foreign business.

Conclusion: The services qualified as export of services, in favour of the assessee.

Issue (ii): Whether refund of accumulated Cenvat credit could be denied by treating the services as non-exported without initiating service-tax recovery proceedings.

Analysis: Treating the services as taxable domestic services for denying Rule 5 refund would necessarily require recovery proceedings for service tax under Section 73 of the Finance Act, 1994. In the absence of such proceedings, Revenue could not accept the services as exports for service-tax purposes while taking the contrary position in refund proceedings.

Conclusion: Refund could not be denied on the ground that the services were not exported, in favour of the assessee.

Final Conclusion: The rejection of refund claims based on denial of export status was unsustainable.

Ratio Decidendi: Revenue cannot deny Rule 5 refund by treating services as non-exported while not initiating proceedings to recover service tax on the same services; Category III services are determined principally by the foreign location of the service recipient.

Issues: Whether the taxable value of construction services provided to existing occupants under a redevelopment scheme could be determined by adopting the sale value of flats sold to independent buyers under the same project.

Analysis: Section 67 of the Finance Act, 1994 and Rule 3(a) of the Service Tax (Determination of Value) Rules, 2006 permit valuation by reference to similar services where consideration is not ascertainable. The existing occupants receiving reconstructed flats under redevelopment and independent purchasers buying flats for monetary consideration constituted distinct categories of service recipients. Their transactions could not be treated as comparable merely because the flats formed part of the same project. The assessee had discharged service tax on flats sold to independent buyers, and the impugned demand was founded on assumed value for flats handed over to existing occupants.

Conclusion: The sale value of flats sold to independent buyers could not be adopted to value services provided to existing occupants; the service-tax demand, consequential interest, and penalty were set aside in favour of the assessee.

Issues: (i) Whether differential income reflected in income-tax returns could be subjected to service-tax demand as service income in relation to ocean freight; (ii) Whether invocation of the extended period of limitation for the relevant periods was valid.

Issue (i): Whether differential income reflected in income-tax returns could be subjected to service-tax demand as service income in relation to ocean freight.

Analysis: A binding jurisdictional High Court ruling governing ocean-freight liability was followed. No stay of that ruling was shown.

Conclusion: The service-tax demand was not sustainable on merits, in favour of the assessee.

Issue (ii): Whether invocation of the extended period of limitation for the relevant periods was valid.

Analysis: The notice for the periods 2015-16 and 2016-17 invoked the extended period despite the prevailing controversy on the issue.

Conclusion: The demand was barred by limitation, in favour of the assessee.

Final Conclusion: The disputed service-tax liability does not survive.

Ratio Decidendi: A binding jurisdictional High Court ruling remains applicable unless stayed by a competent court.

Issues: Whether CENVAT credit on half-cut pipes and waste and scrap of pipes used for repair of pollution-control equipment could be denied on the ground that they were not inputs.

Analysis: Rule 9 of the Cenvat Credit Rules, 2004 recognised the duty-paid invoices containing the value of goods and excise duty as proper credit documents. The Rules do not require one-to-one correlation between inputs and finished goods. Where the goods are used within the factory producing dutiable finished goods, and their receipt and credit are recorded in statutory records and returns, credit is not deniable.

Conclusion: CENVAT credit on the goods is admissible; the issue is decided in favour of the assessee.

Issues: Whether the petitioner was entitled to bail in prosecution for alleged fraudulent availment of input tax credit.

Analysis: The alleged offence carried a maximum sentence of five years; the petitioner had remained in custody for about four months and had no criminal antecedents. The evidence was substantially documentary, and no material indicated a likelihood of tampering with evidence, influencing witnesses, absconding, or failing to participate in the trial. Continued pre-trial detention was not justified where the trial was unlikely to conclude shortly, consistently with the presumption of innocence, bail being the rule, and the right to speedy trial under Article 21 of the Constitution of India.

Conclusion: The petitioner was entitled to bail, in favour of the assessee.