Issues: (i) The tariff classification of the five storage-server models under Heading 8471; (ii) Eligibility of imported inputs used to manufacture the storage servers for Basic Customs Duty exemption under Serial No. 39 read with Serial No. 8 of Notification No. 24/2005-Customs dated 01.03.2005.

Issue (i): The tariff classification of the five storage-server models under Heading 8471.

Analysis: Under Rules 1 and 6 of the General Rules for Interpretation and Note 6 to Chapter 84, the Crestone models are disk-storage enclosures without a central processing unit. They are dependent on a host automatic data-processing system, connectable to its central processing unit, and accept and deliver usable data. The La Jolla, Coronado and Mlk Mavericks models incorporate server modules with central processing units and system memory, enabling them to satisfy the functions of automatic data-processing machines under Note 6(A).

Analysis: The CPU-integrated models are not classifiable under subheadings 8471 41 or 8471 49 because they are not presented with the requisite input and output units. They are processing units combined with storage units and fall under tariff item 8471 50 00.

Conclusion: Crestone Model-1 and Crestone Model-2 are classifiable under tariff item 8471 70 90. La Jolla, Coronado and Mlk Mavericks are classifiable under tariff item 8471 50 00. The claimed classification under tariff item 8471 70 90 is accepted only for the two Crestone models.

Issue (ii): Eligibility of imported inputs used to manufacture the storage servers for Basic Customs Duty exemption under Serial No. 39 read with Serial No. 8 of Notification No. 24/2005-Customs dated 01.03.2005.

Analysis: Serial No. 8 covers all goods of Heading 8471 without restriction to a particular tariff item. Each of the five finished storage servers falls within that heading. The assembly, programming and testing processes transform the imported components into finished storage servers having a distinct name, character and use, and consequently amount to manufacture. Serial No. 39 is an end-use exemption, subject to exclusion of goods of Chapter 74 and specified solar glass, actual use in manufacture, and compliance with the prescribed concessional-duty procedure.

Conclusion: Qualifying imported inputs actually used to manufacture the five storage servers are eligible for exemption from Basic Customs Duty under Serial No. 39, subject to the stated exclusions and compliance with the prescribed end-use procedure. The exemption does not extend to integrated tax or other duties, taxes or cesses.

Final Conclusion: The differing tariff-item classification of the server models does not affect their coverage under Heading 8471 or the availability of the heading-level end-use exemption for qualifying inputs.

Ratio Decidendi: Storage-server goods incorporating a central processing unit capable of the functions prescribed for automatic data-processing machines are processing units rather than external storage units, while a heading-level end-use exemption applies to qualifying manufacture inputs irrespective of the tariff item within the covered heading.

Issues: Whether an additional director has standing to challenge authorisation of search and seizure directed against the company.

Analysis: The challenged search was directed against the company. An additional director did not thereby acquire a personal cause to contest the authorisation or invoke writ jurisdiction; any grievance concerning the search or its authorisation had to be pursued by the affected company.

Conclusion: An additional director lacks standing to challenge the search and seizure authorisation issued against the company.

Issues: (i) Whether the refund for Assessment Year 2024-25 could be adjusted against demands for Assessment Years 2016-17 to 2018-19 despite subsisting unconditional stay of demand; (ii) Whether refund adjustment against the Assessment Year 2021-22 demand was permissible before disposal of the pending stay application and the permissible extent of recovery.

Issue (i): Whether the refund for Assessment Year 2024-25 could be adjusted against demands for Assessment Years 2016-17 to 2018-19 despite subsisting unconditional stay of demand.

Analysis: The Assessing Officer had recorded that the demands for the three years were likely to be reduced to nil after set-off of brought-forward losses and unabsorbed depreciation. The demand for Assessment Year 2018-19 was also treated as not enforceable because depreciation on goodwill had been decided in the assessee's favour in earlier years. These findings constituted an unconditional stay and established that there was no collectible demand.

Conclusion: In favour of the assessee: adjustment of the Assessment Year 2024-25 refund against the stayed demands for Assessment Years 2016-17 to 2018-19 was impermissible and was reversed with applicable statutory interest.

Issue (ii): Whether refund adjustment against the Assessment Year 2021-22 demand was permissible before disposal of the pending stay application and the permissible extent of recovery.

Analysis: Adjustment of refund is a coercive recovery measure. No coercive recovery could be made while the stay application remained undisposed of. Since the refund had already been adjusted, the recovery guidelines warranted retention only to the extent of 20% of the demand raised in the notice of demand, with reversal of the excess adjustment and stay of the balance demand pending appeal.

Conclusion: Partly in favour of the assessee: the adjustment for Assessment Year 2021-22 was sustained only to the extent of 20% of the demand, and the excess adjustment was directed to be refunded with applicable statutory interest.

Final Conclusion: Subsisting stay of demand barred recovery from the refund for the earlier assessment years, while recovery for Assessment Year 2021-22 was restricted to the prescribed 20% level pending disposal of the appeal.

Ratio Decidendi: Adjustment of a tax refund constitutes coercive recovery and cannot be effected against a demand protected by a subsisting stay or while a pending stay application remains undisposed of.

Issues: (i) Deductibility as bad debts of amounts made good by a chit foreman upon subscribers' default; (ii) Allowability of interest on security deposits, commissions and gifts paid to closely associated entities; (iii) Whether turnover-based royalty for a non-exclusive, non-transferable licence to use a logo is revenue expenditure; (iv) Allowability of OD interest where interest-free advances were made from available surplus funds.

Issue (i): Deductibility as bad debts of amounts made good by a chit foreman upon subscribers' default.

Analysis: The foreman's obligation to make good subscriber defaults under Sections 21 and 22 of the Chit Funds Act, 1982 made the advances integral to the chit business. Following the post-amendment rule under Section 36(1)(vii) of the Income-tax Act, 1961, a debt written off as irrecoverable need not be independently proved irrecoverable. The unrecovered sums also arose in the ordinary course of business and were allowable as business loss.

Conclusion: The amounts paid on default by chit subscribers were allowable as bad-debt deduction, in favour of the assessee.

Issue (ii): Allowability of interest on security deposits, commissions and gifts paid to closely associated entities.

Analysis: Identical claims had been accepted in earlier and subsequent assessment years, with no material change in facts, the legal position, or the assessee's operating arrangement. Consistency and uniformity in tax assessments required the same treatment.

Conclusion: The disallowance of interest on security deposits, commissions and gifts was not sustainable, in favour of the assessee.

Issue (iii): Whether turnover-based royalty for a non-exclusive, non-transferable licence to use a logo is revenue expenditure.

Analysis: The licence conferred only a restricted, non-exclusive and non-transferable right to use the logo; ownership remained with the licensor, and the licence was terminable and subject to renewal. The recurring turnover-based royalty did not transfer an intellectual-property asset or confer an enduring benefit. The payment consequently fell in the revenue field under Section 37(1), rather than constituting a depreciable intangible asset under Section 32(1)(ii) of the Income-tax Act, 1961.

Conclusion: The royalty payment was revenue expenditure fully deductible by the assessee.

Issue (iv): Allowability of OD interest where interest-free advances were made from available surplus funds.

Analysis: Available surplus funds of Rs. 18.58 crores exceeded the interest-free advances of about Rs. 7.78 crores. The advances could therefore be attributed to sufficient own funds rather than diversion of interest-bearing borrowings.

Conclusion: The OD interest was allowable, in favour of the assessee.

Final Conclusion: The deductions and allowance claimed for bad debts, associated-entity payments, royalty and OD interest were sustained.

Issues: (i) Whether the assessee was eligible for deduction under section 80-IA(4) for the infrastructure projects; (ii) Whether disallowance under section 14A read with Rule 8D was warranted where investments were made and redeemed during the year; (iii) Whether the section 14A disallowance was required to be added in computing book profit under section 115JB; and (iv) Whether the deduction claimed for CSR-related donations under section 80G required verification of the donee funds and other statutory conditions.

Issue (i): Whether the assessee was eligible for deduction under section 80-IA(4) for the infrastructure projects.

Analysis: The prior coordinate-bench decision had found eligibility after reviewing the tender documents and the nature of the activities. The projects in the relevant years were materially identical, while no changed contractual terms, rights, obligations, or other distinguishing circumstances were established. The earlier decision remained unstayed and unreversed. Judicial consistency required the same treatment.

Conclusion: The assessee was eligible for deduction under section 80-IA(4) for the infrastructure projects, in favour of the assessee.

Issue (ii): Whether disallowance under section 14A read with Rule 8D was warranted where investments were made and redeemed during the year.

Analysis: Rule 8D requires computation with reference to the prescribed monthly-average investment method. The absence of investments in the opening or closing balance sheet did not preclude the computation where the investments were both acquired and redeemed during the year. The deletion based solely on the absence of opening and closing balances was therefore unsustainable.

Conclusion: The disallowance under section 14A read with Rule 8D was sustainable, in favour of Revenue.

Issue (iii): Whether the section 14A disallowance was required to be added in computing book profit under section 115JB.

Analysis: Clause (f) of Explanation 1 to section 115JB requires book profit to be increased by the disallowance made under section 14A.

Conclusion: The section 14A disallowance was required to be included in the computation of book profit under section 115JB, in favour of Revenue.

Issue (iv): Whether the deduction claimed for CSR-related donations under section 80G required verification of the donee funds and other statutory conditions.

Analysis: Donations to Swachh Bharat Kosh and Clean Ganga Fund are ineligible under the specified provisions, whereas other donations may qualify if the conditions under section 80G are fulfilled. The record did not identify the donee funds or establish satisfaction of the remaining statutory conditions, requiring factual verification.

Conclusion: The donation claim was remanded for verification; deduction may be allowed only if the donations were not made to the specified ineligible funds and the other conditions under section 80G are satisfied.

Final Conclusion: The infrastructure-project deduction remains available on materially identical facts, while the exempt-income disallowance and corresponding book-profit adjustment stand sustained; the donation claim awaits statutory verification.

Issues: (i) Scope of the Adjudicating Authority's discretion on a CoC-approved CIRP-restoration application under Section 33(1A); (ii) Sustainability of refusal based on possible monetisation of unabsorbed losses; (iii) Sufficiency of the proposition that the arbitral claim could continue in liquidation to deny restoration; (iv) Effect of unexplained departure from the prior extension order; (v) Whether the liquidation order met the standard of a reasoned speaking order.

Issue (i): Scope of the Adjudicating Authority's discretion on a CoC-approved CIRP-restoration application under Section 33(1A).

Analysis: Section 33(1A) requires consideration of a restoration application supported by at least 66% voting share where a ground for liquidation exists, but uses discretionary language permitting restoration for up to 120 days. The discretion is neither a merely mechanical compliance review nor an unfettered power to prefer a different commercial outcome. It must be exercised judicially on relevant considerations bearing on value maximisation and the resolution-first objective. A unanimous and deliberative CoC decision, untainted by procedural infirmity or mala fides, requires cogent and specific reasons before restoration may be declined.

Conclusion: The discretion under Section 33(1A) was judicially constrained, and the refusal to restore the CIRP lacked cogent justification on the record, in favour of the appellant.

Issue (ii): Sustainability of refusal based on possible monetisation of unabsorbed losses.

Analysis: The apprehension concerning monetisation of carried-forward losses was neither raised by the parties nor supported by material identifying the alleged mechanism, prejudice to the public exchequer, fraud, or abuse of process. No opportunity was afforded to address that consideration. The availability and permissible treatment of such losses are matters governed by substantive tax law and for examination by the competent tax authorities. A conjectural concern unsupported by the record could not override the unanimous CoC decision consistently with the principles of natural justice.

Conclusion: Possible monetisation of unabsorbed losses was an unsustainable ground for declining restoration, in favour of the appellant.

Issue (iii): Sufficiency of the proposition that the arbitral claim could continue in liquidation to deny restoration.

Analysis: Resolution, rather than liquidation, remains the primary objective, with liquidation operating as a last resort. The ability to pursue an arbitral receivable during liquidation does not, without a comparative assessment of realisable value, timelines, costs, litigation risk, and market response, establish that restoration has no independent purpose. The substantial prior and fresh market interest, and the invitation of plans on a going-concern basis, supported the CoC's commercially reasoned assessment that resolution could yield superior value.

Conclusion: The bare availability of liquidation to pursue the arbitral claim was not a legally sufficient basis to reject restoration, in favour of the appellant.

Issue (iv): Effect of unexplained departure from the prior extension order.

Analysis: The earlier extension order did not bind the Adjudicating Authority by res judicata or issue estoppel because it arose at a different statutory stage under Section 12(2). Nevertheless, a departure from its earlier assessment on substantially the same underlying facts required a reasoned explanation. The absence of any engagement with that earlier assessment was a significant indicator of inadequate consideration when read with the other deficiencies.

Conclusion: The unexplained departure materially reinforced the unsustainability of the refusal of restoration, in favour of the appellant.

Issue (v): Whether the liquidation order met the standard of a reasoned speaking order.

Analysis: A quasi-judicial order overriding a unanimous CoC decision must disclose intelligible reasons and application of mind to the material record. The liquidation order did not engage with the prior expressions of market interest, the CoC's deliberations and rejection of liquidation, the earlier extension order, or any comparative value assessment between resolution and liquidation. Its brief reasoning was insufficient for the consequence of consigning the corporate debtor to liquidation.

Conclusion: The liquidation order did not satisfy the standard of a reasoned speaking order, in favour of the appellant.

Final Conclusion: A restoration request under Section 33(1A), supported by a compliant and unanimous CoC decision, may be declined only through a reasoned, record-based exercise of discretion directed to genuine value maximisation and the resolution-first object of the Code.

Ratio Decidendi: Under Section 33(1A), the Adjudicating Authority retains judicial discretion over a CoC-approved restoration request, but unsupported apprehensions or the bare possibility that an asset may be realised in liquidation cannot displace a unanimous, statutorily compliant CoC decision without cogent, relevant, and reasoned grounds.

Issues: Whether the jurisdictional service-tax authority had statutory power to issue a clarification on the petitioner's service-tax liability in response to a representation.

Analysis: Chapter VA of the Finance Act, 1994 provides an advance-ruling mechanism only for a qualifying applicant. No provision authorises a person to seek, or the jurisdictional service-tax authority to issue, a clarification on service-tax liability. Taxability and registration require quasi-judicial adjudication, and a clarification issued without statutory authority would bypass that process and the opportunity of hearing. Determination of the petitioner's liability for the relevant period required examination of the underlying agreements, contractual relationships and statutory amendments, and was therefore not adjudicated in the writ proceedings.

Conclusion: The jurisdictional service-tax authority has no statutory power to issue clarifications regarding service-tax liability; the impugned communication could not bind the parties or the statutory authorities.

Issues: Whether promotional and market-survey services performed in India for a foreign principal constituted export of services and entitled the service provider to refund of service tax.

Analysis: Rule 3(2)(a) of the Export of Service Rules, 2005 requires that the service be provided from India and used outside India. Circular No. 111/5/2009-ST clarifies that, for Category III services, the relevant consideration is the location of the service recipient and whether the benefit of the service accrues outside India, rather than the place where activities are performed. The promotional activities were performed exclusively for the foreign entity, which received the business benefit of promotion of its goods, notwithstanding that its products were ultimately sold to Indian buyers. The settled treatment of Business Auxiliary Services involving promotion of a foreign principal's market in India also recognises such services as export of services.

Conclusion: The promotional services constituted export of services, and the appellant was entitled to consequential refund relief.

Issues: Whether transportation of goods by road without issuing consignment notes is taxable as a service rendered by a goods transport agency.

Analysis: Section 65B(26) of the Finance Act, 1994 defines a goods transport agency as a person providing road-transport services who issues a consignment note. Section 66D(p)(i) places transportation of goods by road in the negative list, except services provided by a goods transport agency or courier agency. The transportation activity was undertaken without issuance of consignment notes and therefore did not satisfy the statutory definition of a goods transport agency.

Conclusion: The road-transport services fell within the negative list and were not liable to service tax; the issue is decided in favour of the assessee. The tax demand and consequential interest and penalty do not survive.

Issues: (i) Whether Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 can be read down for a bona fide purchaser; (ii) Whether the recipient proved that the suppliers paid tax and whether non-compliance with Circular No. 183/15/2022-GST dated 27.12.2022 caused prejudice; (iii) Whether the recipient established actual movement and receipt of the goods; (iv) What tax, interest, and penalty are payable.

Issue (i): Whether Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 can be read down for a bona fide purchaser.

Analysis: Input tax credit is a statutory entitlement subject to cumulative conditions. Section 16(2)(c) requires actual payment of tax to the Government, while Section 155 places the burden of proof on the claimant. The subsequently declared binding position under Article 141 of the Constitution of India requires the provision to be applied as enacted; payment to the supplier does not itself establish payment to the Government.

Conclusion: Section 16(2)(c) cannot be read down for a bona fide purchaser; the issue is against the assessee.

Issue (ii): Whether the recipient proved that the suppliers paid tax and whether non-compliance with Circular No. 183/15/2022-GST dated 27.12.2022 caused prejudice.

Analysis: A mismatch between FORM GSTR-3B and FORM GSTR-2A alone does not establish non-payment by a supplier. The Circular prescribes verification of the invoice, receipt, and payment to the supplier, followed, for a supplier-wise difference below Rs. 5 lakh, by a supplier certificate confirming tax payment. No supplier certificate, supplier return, accountant certificate, or other reliable evidence of actual payment of tax was produced. Any initial failure to follow the Circular caused no procedural prejudice because repeated opportunities to furnish the prescribed proof were available.

Conclusion: The recipient failed to prove actual payment of tax by the suppliers, and Section 16(2)(c) remains unsatisfied; the issue is against the assessee.

Issue (iii): Whether the recipient established actual movement and receipt of the goods.

Analysis: For the inter-State supply in question, Rule 138 of the Central Goods and Services Tax Rules, 2017 required an e-way bill. Absence of an e-way bill does not by itself deny input tax credit, but where it is unavailable, proof of movement of goods must be supplied through other reliable contemporaneous records. No e-way bill, transport document, freight record, goods-receipt note, or stock record was produced, and the export documentation did not reliably link the goods exported with the goods stated to have been purchased.

Conclusion: Actual movement and receipt of the goods were not established; the issue is against the assessee.

Issue (iv): What tax, interest, and penalty are payable.

Analysis: The disallowed input tax credit follows from failure to meet Section 16(2)(c). Interest under Section 50(3) is compensatory and arises only on credit wrongly availed and utilised; its computation must conform to Rule 88B(3) of the Central Goods and Services Tax Rules, 2017. The penalty under Section 73(9), read with Section 122(2)(a), is a mandatory statutory penalty independent of fraud or intent to evade.

Conclusion: Tax of Rs. 1,35,231 and penalty of Rs. 33,266 are sustained. Interest liability is sustained only upon computation of wrongly availed and utilised credit under Rule 88B(3); the issue is against the assessee.

Final Conclusion: Input tax credit remains unavailable without proof that the suppliers paid tax to the Government, while recoverable interest must be confined to the statutory computation of credit actually utilised.

Ratio Decidendi: A claimant of input tax credit bears the burden of proving actual payment of tax by the supplier under Section 16(2)(c); an invoice, bank payment, or GSTR-2A mismatch alone is insufficient, though a mismatch cannot by itself establish supplier default.

Issues: Whether interest paid to a statutory corporation established under a Central Act was subject to tax deduction at source under section 194A of the Income-tax Act, 1961, thereby rendering the payer an assessee in default under sections 201(1) and 201(1A).

Analysis: Section 194A(3)(iii)(f) of the Income-tax Act, 1961 excludes payments to institutions notified by the Central Government. Notification No. S.O. 3489 dated 22.10.1970 covers every corporation established by a Central, State or Provincial Act. As the National Highways Authority of India was established under section 3 of the National Highways Authority of India Act, 1988, it fell within the notified category. CBDT Circular No. 18/2017 dated 29.05.2017, concerning entities with unconditional income-tax exemption, could not restrict the separate statutory exemption under the notification or render it redundant.

Conclusion: The interest payment was not liable to tax deduction at source under section 194A of the Income-tax Act, 1961. The payer could not be treated as an assessee in default, and the demand under section 201(1) with consequential interest under section 201(1A) was deleted.

Issues: Whether the enhanced 60% tax rate under Section 115BBE of the Income-tax Act, 1961 applied to additional income declared for Financial Year 2016-17, corresponding to Assessment Year 2017-18.

Analysis: The amendment enhancing the rate under Section 115BBE from 30% to 60% took effect from 01.04.2017. For Financial Year 2016-17, the applicable law was that in force on 01.04.2016; the enhanced rate operated prospectively from Financial Year 2017-18.

Conclusion: The enhanced 60% rate under Section 115BBE was inapplicable to the declared additional income for Assessment Year 2017-18; tax was required to be levied at the normal applicable rates.

Issues: Whether books of account could be rejected under Section 145(3) of the Income-tax Act, 1961 and income estimated at 8% solely because the turnover reported in GSTR-9C exceeded the turnover reflected in the books, where part of the GST turnover represented agency sales of a Kachha Arhatia.

Analysis: Rejection of books under Section 145(3) of the Income-tax Act, 1961 requires defects affecting their correctness or completeness. The audited books contained no identified defects in purchases, sales, stock, expenses, vouchers, or ledgers. The turnover reconciliation separately identified agency sales and reconciled the balance with trading sales, commission income, and intra-day trading profit. CBDT Circular No. 452 dated 17.03.1986 recognises that sales effected by a Kachha Arhatia on behalf of principals do not constitute the agent's turnover, with only gross commission being relevant. Further, the 8% profit rate lacked support from comparable cases, past results, or other material.

Conclusion: The rejection of books and consequential 8% income estimation were unsustainable; the returned income was required to be accepted.

Issues: Whether the sale proceeds received on transfer of shares could be treated as unexplained cash credit.

Analysis: The assessee substantiated ownership and sale of the shares through the share-purchase agreement, signed share certificate, register and annual-return records, dematerialisation records, demat statements, foreign inward-remittance certificate, and banking-channel receipt from the purchaser. These materials established both the source and nature of the credit. The unsigned share certificate initially produced did not displace the corroborative documentary evidence. Once the assessee discharged the primary onus, the assessing authority could not invoke the unexplained-credit provision without conducting independent verification of the evidence.

Conclusion: The sale consideration was explained and could not be assessed as unexplained cash credit; the deletion of the addition was sustained in favour of the assessee.

Issues: Whether penalty for delayed furnishing of the statement of financial transactions could be sustained without examining the statutory defence of reasonable cause.

Analysis: Delayed furnishing of the statement of financial transactions may attract Section 271FA of the Income-tax Act, 1961, but Section 273B of the Income-tax Act, 1961 requires examination of whether reasonable cause existed. The delayed filing alone does not conclusively determine the applicability of the penalty provision. As no explanation or supporting evidence concerning the delay had been examined on merits, a reasonable opportunity to establish reasonable cause was necessary.

Conclusion: The dismissal without a merits examination cannot stand; reasonable cause must be adjudicated before determining the penalty. The issue is decided in favour of the assessee.

Issues: Whether penalty for under-reporting of income in consequence of misreporting was sustainable where the reassessment accepted the income returned by the assessee and the penalty order did not establish the applicability of any clause of section 270A(9).

Analysis: Section 270A differentiates under-reporting from misreporting and permits the enhanced penalty only where the case falls within a specified circumstance under section 270A(9). The reassessment accepted the income declared in the return filed in response to notice under section 148 without any addition or variation. The penalty order did not identify the applicable clause of section 270A(9) or demonstrate satisfaction of its ingredients. Mere withdrawal of a deduction claim during reassessment, without further material establishing misrepresentation or suppression, does not conclusively establish misreporting.

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

Issues: Whether disallowance of expenditure relating to exempt income under Section 14A read with Rule 8D could exceed the exempt income earned for Assessment Year 2018-19, and whether the Finance Act, 2022 amendment applied retrospectively.

Analysis: The exempt income was Rs. 24,000, against which an equivalent suo motu disallowance had already been made. The established position limits disallowance under Section 14A read with Rule 8D to the exempt income earned. The Finance Act, 2022 amendment took effect from 1 April 2022 and applied from Assessment Year 2022-23 onwards; it did not apply to Assessment Year 2018-19.

Conclusion: No further disallowance under Section 14A read with Rule 8D was warranted beyond Rs. 24,000 already disallowed by the assessee.

Issues: Whether interest paid on overdrafts obtained against fixed deposits was deductible while computing income from other sources.

Analysis: Section 57(iii) permits deduction of expenditure incurred wholly and exclusively for earning income assessable under the head income from other sources. The claimed interest expenditure required a direct nexus with the interest income. Although interest income was earned on fixed deposits, the purpose for which the overdraft funds were utilised and their linkage with earning such income were not substantiated.

Conclusion: The interest expenditure was not deductible under Section 57(iii) of the Income-tax Act, 1961.