Issues: Whether the deduction claimed by an export-oriented unit under Section 10B could be reduced by a turnover-based allocation of expenditure between export-oriented and non-export-oriented units.

Analysis: The export-oriented unit maintained separate audited accounts, registration, factory facilities and production arrangements. Its product mix, fixed-asset base, manufacturing process, power consumption, interest burden and tax incidence differed from those of the other units. No discrepancy in the unit-wise allocation was identified. The profitability of the export-oriented unit was also broadly consistent with the preceding year, and the earlier concern relating to senior-management salary allocation had been addressed through allocation based on turnover. A pro-rata allocation of all expenditure solely by reference to sales turnover was therefore unsupported.

Conclusion: No substantial question of law arose from the findings sustaining the deduction under Section 10B as claimed.

Issues: Whether a fresh scrutiny proceeding under Section 143(2) of the Income-tax Act, 1961 could be initiated on the basis of a modified return furnished under Section 170A(2)(a), where the original return had been processed under Section 143(1) and no assessment or reassessment proceeding was pending.

Analysis: Section 170A distinguishes between a completed assessment and a pending assessment. Under Section 170A(2)(a), the exercise is confined to modifying the total income already determined to give effect to the business-reorganisation order and the modified return; Section 170A(2)(b), in contrast, permits assessment or reassessment where proceedings remain pending. A modified return derives its existence from Section 170A and is not deemed to be a return under Section 139 for initiating a fresh scrutiny. Section 170A(3) cannot be used to override this specific statutory distinction or to confer a jurisdiction otherwise absent. Limited information may be sought to verify whether effect has correctly been given to the business reorganisation, but a de novo assessment is impermissible. Since no assessment proceeding was pending when the modified return was furnished, the transfer-pricing proceedings founded on the invalid scrutiny proceeding had no independent jurisdictional basis.

Conclusion: In the absence of pending assessment or reassessment proceedings, Section 170A(2)(a) did not permit initiation of fresh scrutiny under Section 143(2); the consequential transfer-pricing proceedings were also without jurisdiction.

Issues: (i) Whether additions under section 68 for unsecured loans were sustainable; (ii) Whether interest disallowances under section 36(1)(iii) for alleged non-business diversion of borrowings were sustainable; (iii) Whether borrowing-related brokerage, commission, professional and loan-processing expenditure could be disallowed as non-business expenditure; (iv) Whether additional disallowance under section 14A read with rule 8D was validly determined; (v) Whether receipts shown in Form No. 26AS were taxable again as unreconciled income.

Issue (i): Whether additions under section 68 for unsecured loans were sustainable.

Analysis: Section 68 of the Income-tax Act, 1961 requires a satisfactory explanation of the nature and source of a credit by establishing the lender's identity and creditworthiness and the genuineness of the transaction. Confirmations, ledger accounts, bank records, financial information and repayment through banking channels supported the loans. In one case, the lender's official corporate records established its active status and financial capacity. Non-response or delayed response to a verification notice, without defects in the documentary evidence or material showing routing of the assessee's funds, was insufficient to treat the loans as unexplained.

Conclusion: The additions under section 68 were rightly deleted, in favour of the assessee.

Issue (ii): Whether interest disallowances under section 36(1)(iii) for alleged non-business diversion of borrowings were sustainable.

Analysis: Interest-free funds exceeded the amounts deployed in interest-free advances, investments, personal assets and other alleged non-business applications, while business and interest-bearing lending deployment exceeded the interest-bearing funds. No direct nexus was established between any specific borrowing and a non-business use. A refinancing borrowing used to discharge an earlier liability could not be treated as personal merely because the earlier lender was a relative; its character depended on the use of the original borrowing, for which no personal use was established.

Conclusion: The interest disallowances under section 36(1)(iii) were unsustainable and were deleted, in favour of the assessee.

Issue (iii): Whether borrowing-related brokerage, commission, professional and loan-processing expenditure could be disallowed as non-business expenditure.

Analysis: The proportional allocation of borrowing costs based only on a comparison of incremental borrowings with incremental loans and advances did not establish a nexus between a particular borrowing or expenditure and a non-business purpose. The expenditure was not found to be bogus, unsupported or excessive. Loan-processing charges incurred for obtaining a borrowing connected with the financing business did not create a capital asset or enduring advantage.

Conclusion: The proportionate and consequential disallowances of borrowing-related expenditure were deleted, in favour of the assessee.

Issue (iv): Whether additional disallowance under section 14A read with rule 8D was validly determined.

Analysis: Sections 14A(2) and 14A(3) of the Income-tax Act, 1961 require examination of the accounts and objective dissatisfaction with the assessee's claim before rule 8D of the Income-tax Rules, 1962 may be invoked. For the earlier years, general observations and mere non-conformity of the assessee's working with rule 8D were inadequate, but the basis of the assessee's own disallowance also required verification. For the later year, the recorded dissatisfaction was sufficient, and the applicable rule 8D computation contained no separate interest component. However, only investments that actually yielded positive exempt income during the year could be included. Capital balances of partnership firms not yielding positive exempt income had to be excluded, while a share of loss from one firm could not be set off against positive exempt income from other firms for limiting the disallowance.

Conclusion: The section 14A matters were remitted for limited recomputation using only investments yielding exempt income. The earlier-year computations require examination of the assessee's workings and objective satisfaction before invocation of rule 8D; for the later year, the applicability of section 14A and the recorded satisfaction remain undisturbed. The restriction of the investment base is partly in favour of the assessee.

Issue (v): Whether receipts shown in Form No. 26AS were taxable again as unreconciled income.

Analysis: The entries in Form No. 26AS reflected interest receipts in the names of proprietors, whereas the books recorded the same receipts in the names of their proprietary concerns. The reconciliation established that the receipts had already been accounted for and offered to tax.

Conclusion: A further addition would result in double taxation; the addition was rightly deleted, in favour of the assessee.

Final Conclusion: The loan additions and non-business borrowing disallowances do not survive, and the Form No. 26AS reconciliation stands accepted. The section 14A computations require fresh determination within the defined limits.

Issues: (i) Whether additions for alleged unexplained cash loans or receipts under Section 69 of the Income-tax Act, 1961 and undisclosed interest income could rest on third-party electronic records and a retracted statement without independent corroboration and cross-examination; (ii) Whether alleged unaccounted cash consideration from flat sales could be assessed through a median-rate estimate and extrapolation despite unrejected books of account and absence of transaction-specific evidence.

Issue (i): Whether additions for alleged unexplained cash loans or receipts under Section 69 of the Income-tax Act, 1961 and undisclosed interest income could rest on third-party electronic records and a retracted statement without independent corroboration and cross-examination.

Analysis: The electronic records were recovered from the possession of a third party, were neither authored nor acknowledged by the assessee, and had no supporting evidence of cash movement, loan documentation, confirmation from the alleged counterparty, or corresponding records found during the search. The presumptions under Sections 132(4A) and 292C of the Income-tax Act, 1961 operate against the person from whose possession or control the material is recovered and cannot, without an independently established nexus, be extended to another person merely named in the material.

Analysis: The requested cross-examination of the person from whose possession the electronic material was recovered was not afforded, impairing the evidentiary use of the disputed entries. The retracted statement did not establish the nature, direction, quantum, or year-wise occurrence of the alleged transactions and lacked independent corroboration. The foundational fact of an unrecorded investment, required for invoking Section 69 of the Income-tax Act, 1961, was therefore not established; nor was the alleged accrual or receipt of interest independently proved.

Conclusion: The additions for alleged cash loans or receipts and undisclosed interest income were unsustainable; the issue is decided in favour of the assessee.

Issue (ii): Whether alleged unaccounted cash consideration from flat sales could be assessed through a median-rate estimate and extrapolation despite unrejected books of account and absence of transaction-specific evidence.

Analysis: No customer confirmation, buyer-wise cash receipt, parallel book, unaccounted cash, or other evidence directly established receipt of consideration beyond that recorded in registered sale deeds, customer agreements, ERP records, and banking channels. The employee statements had been retracted and were not supported by independent verification. WhatsApp communications, loose papers, and internal records did not establish completed cash transactions or a nexus with particular sales.

Analysis: The median selling rate was an inferred benchmark rather than evidence of the actual consideration in concluded transactions. The books of account were not rejected under Section 145(3) of the Income-tax Act, 1961, yet the recorded sale values were selectively substituted with estimated prices. The project-wide extrapolation and allocation were unsupported by transaction-specific seized material. The identical evidentiary foundation and methodology had also been rejected in a decision concerning another group entity, requiring consistent application in the absence of distinguishing evidence.

Conclusion: The median-rate based additions for alleged unaccounted cash receipts from flat sales were unsustainable; the issue is decided in favour of the assessee.

Final Conclusion: The disputed additions lacked reliable evidence of actual unrecorded transactions and could not displace the recorded and supported financial results.

Ratio Decidendi: Tax additions require reliable and corroborated evidence of actual transactions; unverified third-party records, retracted statements, and estimated benchmarks cannot displace accepted books of account without an established nexus to the assessee and the alleged income or investment.

Issues: (i) Whether the Revenue's 13-day delay in filing the appeal should be condoned; (ii) Whether the addition of Rs. 1,00,00,000 could be sustained under section 69C of the Income-tax Act, 1961 or, alternatively, section 69A of the Income-tax Act, 1961 on the basis of a third-party loose sheet and statement; (iii) Whether the first appellate authority could delete the addition on the material already on record without granting the Assessing Officer a further opportunity.

Issue (i): Whether the Revenue's 13-day delay in filing the appeal should be condoned.

Analysis: The short delay was supported by an explanation found to be bona fide and not deliberate, mala fide, or attributable to gross negligence. A liberal and pragmatic construction of sufficient cause was warranted to enable adjudication on merits without prejudice to the assessee.

Conclusion: The 13-day delay was condoned, in favour of the Revenue.

Issue (ii): Whether the addition of Rs. 1,00,00,000 could be sustained under section 69C of the Income-tax Act, 1961 or, alternatively, section 69A of the Income-tax Act, 1961 on the basis of a third-party loose sheet and statement.

Analysis: Section 69C requires the Revenue first to establish that the assessee actually incurred the alleged expenditure; the question of explaining its source arises only thereafter. Section 69A requires that the assessee be found to be the owner of unrecorded money or other specified valuable article. Neither foundational fact could be presumed merely from a loose sheet recovered from a third party and that person's statement.

Analysis: The presumptions under sections 132(4A) and 292C of the Income-tax Act, 1961 operate in relation to the person from whose possession or control the document is found. They could not be transposed against the assessee without credible material establishing a nexus. The alleged cash carrier was unidentified; no source, withdrawal, cash trail, corresponding document, parallel books, utilisation, or admission by the assessee was established. The contemporaneous denial by the assessee's managing director was not disproved, and the third-party statement was not subjected to cross-examination. The third-party material could furnish a lead for investigation but could not, without corroboration, prove the alleged expenditure or ownership in the assessee's hands.

Conclusion: The addition was unsustainable under both section 69C and section 69A, in favour of the assessee.

Issue (iii): Whether the first appellate authority could delete the addition on the material already on record without granting the Assessing Officer a further opportunity.

Analysis: No specific additional evidence, document, statement, or factual material admitted at the appellate stage was identified. The deletion resulted from an independent appraisal of the assessment record and the evidentiary sufficiency of the material relied upon for the addition; such appraisal did not amount to admission of fresh evidence or adoption of a new methodology.

Conclusion: The first appellate authority was entitled to delete the addition upon appraisal of the existing record, in favour of the assessee.

Final Conclusion: The statutory foundations for treating the disputed amount as unexplained expenditure or unexplained money were absent, and the appellate evaluation of the existing evidence was valid.

Ratio Decidendi: A third-party seized document and statement, unsupported by independent evidence establishing nexus with the assessee, cannot satisfy the foundational requirements of actual expenditure under section 69C or ownership of money under section 69A; statutory presumptions arising from possession cannot automatically be extended to another person.

Issues: (i) Whether revision under Section 263 was sustainable where the Assessing Officer had specifically examined the exemption claimed for interest received under Section 28 of the Land Acquisition Act, 1894 and adopted a plausible view; (ii) Whether interest received under Section 28 of the Land Acquisition Act, 1894 on compulsory acquisition of agricultural land was taxable as income from other sources or exempt as capital gains.

Issue (i): Whether revision under Section 263 was sustainable where the Assessing Officer had specifically examined the exemption claimed for interest received under Section 28 of the Land Acquisition Act, 1894 and adopted a plausible view.

Analysis: The assessment record showed that the Assessing Officer raised a specific query regarding the receipt of interest on enhanced compensation, received the supporting material and explanation, and accepted the claim. Revision under Section 263 requires the cumulative existence of an erroneous assessment order and prejudice to the interests of the Revenue. Where, after enquiry, the Assessing Officer adopts one legally plausible view, the Principal Commissioner cannot invoke revision merely by substituting another view.

Conclusion: The assessment order was neither erroneous nor prejudicial to the interests of the Revenue; invocation of Section 263 was invalid. This issue is in favour of the assessee.

Issue (ii): Whether interest received under Section 28 of the Land Acquisition Act, 1894 on compulsory acquisition of agricultural land was taxable as income from other sources or exempt as capital gains.

Analysis: Interest awarded under Section 28 is an accretion to the compensation for compulsory acquisition and partakes the character of the principal compensation, rather than interest distinct from compensation. Such receipt is chargeable under the head capital gains and, where the land satisfies the conditions for agricultural-land exemption, is excluded under Section 10(37). The provisions governing income from other sources and the statutory deduction for interest on compensation do not apply where the amount retains the character of compensation.

Conclusion: The Section 28 receipt was not taxable as income from other sources and was eligible for exemption as capital gains arising from compulsory acquisition of agricultural land. This issue is in favour of the assessee.

Final Conclusion: The assessment accepting the exemption for the enhanced-compensation receipt was sustained, and the revisionary order was rendered ineffective.

Ratio Decidendi: Revision under Section 263 is unavailable where the Assessing Officer, after making enquiry, adopts a legally plausible view; interest awarded under Section 28 of the Land Acquisition Act, 1894 is an accretion to compensation and retains its capital character.

Issues: (i) Whether reassessment was an impermissible change of opinion; (ii) Whether approval for reopening under Section 151 was validly granted; (iii) Whether the addition for alleged bogus purchases could be sustained on the supplier's statement and the available material.

Issue (i): Whether reassessment was an impermissible change of opinion.

Analysis: Reassessment cannot rest on a reconsideration of material already assessed, but may be founded on subsequent tangible material having a rational nexus with the belief of escaped income. Though purchase details had been furnished in the original assessment, later investigation information alleging that the supplier was an accommodation-entry provider was not shown to have been available during that assessment.

Conclusion: The reopening was not invalid on the ground of change of opinion (against the assessee).

Issue (ii): Whether approval for reopening under Section 151 was validly granted.

Analysis: Prior approval under Section 151 is a mandatory jurisdictional safeguard requiring the approving authority's independent satisfaction upon the recorded reasons and supporting material. A common forwarding letter transmitting individual approvals did not itself establish mechanical approval. However, the bare pro forma endorsement that the case was a "fit case", without any indication of independent consideration of the reasons or material, failed to demonstrate the requisite application of mind.

Conclusion: The approval under Section 151 was mechanical and invalid; consequently, the reassessment proceedings were without valid jurisdiction (in favour of the assessee).

Issue (iii): Whether the addition for alleged bogus purchases could be sustained on the supplier's statement and the available material.

Analysis: An addition based on alleged accommodation purchases must rest on material of rational probative value. The assessee produced purchase bills, stock records, payment and transportation details, while the corresponding sales and quantitative records were not disproved. The third-party statement was neither tested through effective cross-examination nor supported by adequate independent corroboration. Cash withdrawals by the supplier, without a demonstrated nexus to the assessee's transactions, were insufficient. The estimation of only a profit element also indicated that actual procurement of goods was not entirely disputed, without cogent material proving the extent of suppressed profit.

Conclusion: The addition for alleged bogus purchases was unsupported by sufficient corroborative material and could not be sustained (in favour of the assessee).

Final Conclusion: The reassessment failed for want of a valid statutory sanction, and the impugned purchase addition was independently unsustainable on the evidentiary record.

Ratio Decidendi: A bare stereotyped approval under Section 151 that does not disclose independent application of mind to the reopening proposal is not a valid statutory sanction for reassessment.

Issues: Whether reassessment initiated after four years from the end of the relevant assessment year was valid where the original assessment had been completed under Section 143(3) and the recorded reasons did not allege failure to disclose fully and truly all material facts.

Analysis: The first proviso to Section 147 bars reassessment after four years where an assessment under Section 143(3) has been made, unless income escaped assessment due to the assessee's failure to make the required disclosure. Complete particulars of the share-sale transactions had been furnished during the original scrutiny assessment, and the recorded reasons contained no charge of failure to disclose fully and truly all material facts.

Conclusion: The statutory condition for reopening beyond four years was absent; the reassessment notice and reopening were invalid and quashed.

Issues: (i) Whether mens rea or absence of monetary benefit is relevant to imposing penalty for contraventions of Section 9(1)(b) and Section 9(1)(d) of FERA; (ii) Whether the reduction of the penalty as disproportionate was legally sustainable.

Issue (i): Whether mens rea or absence of monetary benefit is relevant to imposing penalty for contraventions of Section 9(1)(b) and Section 9(1)(d) of FERA.

Analysis: Penalty for a contravention under FERA arises from breach of a civil statutory obligation. Once the contravention is established, proof of guilty intention is not required. The absence of personal gain or compensation from the transaction does not displace the statutory liability to penalty.

Conclusion: Mens rea and absence of monetary benefit are irrelevant to liability for penalty for the established FERA contraventions. The issue is decided against the respondent.

Issue (ii): Whether the reduction of the penalty as disproportionate was legally sustainable.

Analysis: Judicial review of penalty on proportionality grounds is confined to penalties that are grossly excessive, unduly harsh, or so disproportionate as to shock the conscience. Section 50 of FERA permitted a penalty up to five times the value of the contravention. In light of the contravention amount, the original penalty was not of such character, and the Tribunal gave no legally sustainable reasons to treat it as outrageous or irrational.

Conclusion: The reduction of penalty was not legally sustainable. The issue is decided against the respondent.

Final Conclusion: The Tribunal's reduced penalty could not stand, and the penalty determined in the adjudication remained operative.

Ratio Decidendi: For civil penalties under FERA, mens rea is not an essential ingredient once statutory contravention is established, and interference with the quantum of penalty is warranted only where it is so disproportionate as to shock the conscience.

Issues: (i) Whether consideration received by a builder after issuance of the completion certificate is liable to Service Tax under the declared-service provision; (ii) Whether proceedings founded on a show-cause notice served after expiry of the limitation period are sustainable.

Issue (i): Whether consideration received by a builder after issuance of the completion certificate is liable to Service Tax under the declared-service provision.

Analysis: Section 66E(b) excludes construction intended for sale from the declared-service category where the entire consideration is received after issuance of the completion certificate by the competent authority. The occupancy certificate was issued before receipt of the disputed consideration.

Conclusion: Consideration received after issuance of the occupancy certificate was not liable to Service Tax; in favour of the assessee.

Issue (ii): Whether proceedings founded on a show-cause notice served after expiry of the limitation period are sustainable.

Analysis: The show-cause notice was served after the limitation period had expired.

Conclusion: Proceedings initiated on the time-barred show-cause notice were unsustainable in law; in favour of the assessee.

Final Conclusion: The Service Tax demand based on post-completion-certificate receipts and the belated show-cause notice could not be sustained.

Ratio Decidendi: Construction intended for sale falls outside the declared-service levy when the entire consideration is received after the competent authority issues the completion certificate, and proceedings founded on a notice issued beyond limitation are unsustainable.

Issues: Whether reassessment is valid where the assessee's objections to reopening are addressed only in the reassessment order, without first being decided by a separate speaking order.

Analysis: Upon issuance of a notice for reassessment, the assessee is entitled to receive the recorded reasons and file objections. Those objections must be disposed of by a separate speaking order before the Assessing Officer proceeds with reassessment. Addressing the objections for the first time within the reassessment order does not satisfy this mandatory jurisdictional requirement. No separate order disposing of the objections had been passed in either assessment year. The defect was jurisdictional and could not be cured by remanding the matter for fresh disposal of objections after completion of the reassessment.

Conclusion: The reassessment proceedings for both assessment years were without jurisdiction and the corresponding assessment, appellate, and Tribunal orders were set aside. The issue was decided in favour of the assessee.

Ratio Decidendi: Failure to dispose of objections to reopening by a separate speaking order before reassessment is completed vitiates the assumption of reassessment jurisdiction.

Issues: (i) Eligibility of consignments for assessment under Heading 98.01 where the project contract was registered after the purchase orders but before importation; (ii) Availability of post-clearance revision of the Bills of Entry under Section 18A notwithstanding Section 149.

Issue (i): Eligibility of consignments for assessment under Heading 98.01 where the project contract was registered after the purchase orders but before importation.

Analysis: Regulations 4 and 5 of the Project Import Regulations, 1986 require registration of the relevant contract in relation to importation and before clearance for home consumption. A purchase order is only a commercial arrangement and does not amount to importation. The date of importation, understood as bringing goods into India, is determinative for Project Import Assessment. The contract was registered before the importation of the two consignments covered by Bills of Entry dated 13.08.2025, whereas the other three consignments had been imported before registration.

Conclusion: The two consignments imported after registration are eligible to seek assessment under Heading 98.01, subject to the remaining prescribed requirements; the three consignments imported before registration are not eligible. The conclusion is in favour of the assessee only in respect of the former consignments.

Issue (ii): Availability of post-clearance revision of the Bills of Entry under Section 18A notwithstanding Section 149.

Analysis: Section 149 contains a general restriction on amendment of a Bill of Entry after clearance for home consumption. Section 18A, introduced with a Non Obstante Clause, specifically permits an importer to revise an entry after clearance in the prescribed manner and subject to statutory conditions. The specific post-clearance revision mechanism therefore prevails over the general restriction in Section 149.

Conclusion: The Bills of Entry dated 13.08.2025 may be considered for post-clearance revision under Section 18A, subject to fulfilment of the applicable statutory and prescribed requirements. This conclusion is in favour of the assessee.

Final Conclusion: The project-import benefit and the statutory route for post-clearance revision are available only for the consignments imported after registration of the project contract; no such entitlement arises for the consignments imported earlier.

Ratio Decidendi: For project-import assessment, eligibility is governed by the date of actual importation after contract registration rather than the date of an antecedent purchase order, and the specific power of post-clearance revision overrides the general bar on amendment.

Issues: Whether the continued operation of Look Out Circulars against petitioners cooperating in a pending money-laundering investigation was justified.

Analysis: A Look Out Circular is a coercive restraint on the right to travel and cannot be continued routinely merely because an investigation remains pending. Its issuance and continuance require material indicating a genuine risk of evasion, non-compliance, abscondence, or obstruction of the investigation. The petitioners had complied with summonses, furnished information, remained available to the investigating agency, and had undertaken foreign travel without hindering the investigation. No travel restriction had been imposed by the trial court, and no material established that either petitioner posed a flight risk.

Conclusion: The continued Look Out Circulars were unwarranted and were quashed, subject to safeguards requiring travel-intimation, provision of contact details, and continued cooperation with the investigation.

Issues: (i) Whether royalty payments for use of technology, aggregated with manufacturing activity under TNMM, could be separately benchmarked and recharacterised as a cost contribution arrangement; (ii) Whether XS CAD India Pvt. Ltd. was a valid comparable for benchmarking engineering and design services; (iii) Whether the disallowance of expenditure relating to exempt income was properly made under Section 14A read with Rule 8D.

Issue (i): Whether royalty payments for use of technology, aggregated with manufacturing activity under TNMM, could be separately benchmarked and recharacterised as a cost contribution arrangement.

Analysis: Under the arm's-length framework, TNMM had been accepted as the most appropriate method for the manufacturing segment, including the royalty transaction. On identical facts, the royalty payment was inextricably linked with manufacturing activity and had consistently been benchmarked on an aggregated basis. Selectively applying another method to royalty after accepting TNMM for the segment would distort the arm's-length determination, particularly where no material change in facts was shown.

Conclusion: The royalty transaction must be accepted as benchmarked under the aggregated TNMM approach, and the transfer-pricing adjustment is deleted in favour of the assessee.

Issue (ii): Whether XS CAD India Pvt. Ltd. was a valid comparable for benchmarking engineering and design services.

Analysis: Comparable-company analysis requires functional similarity and reliable segmental information. XS CAD India Pvt. Ltd. earned revenue from varied streams, including CAD services, training and coaching, manpower recruitment, and website design and development, without reliable segmental data. Its business model was functionally dissimilar and was also affected by an extraordinary acquisition event.

Conclusion: XS CAD India Pvt. Ltd. must be excluded from the comparable set, and the engineering and design services margin must be recomputed; the related adjustment must be deleted if the assessee's margin exceeds the recomputed mean, in favour of the assessee.

Issue (iii): Whether the disallowance of expenditure relating to exempt income was properly made under Section 14A read with Rule 8D.

Analysis: Section 14A read with amended Rule 8D permits disallowance after the Assessing Officer records dissatisfaction with the correctness of the assessee's claim. The Assessing Officer had found that the suo motu disallowance did not account for expenditure attributable to personnel involved in investment activities. The identical issue for an earlier year had been decided on the same basis, and the pre-amendment approach was inapplicable.

Conclusion: The disallowance under Section 14A read with Rule 8D is sustained against the assessee.

Final Conclusion: The royalty adjustment is removed, the engineering and design services transaction requires fresh benchmarking after exclusion of the unsuitable comparable, and the disallowance relating to exempt income remains sustained.

Ratio Decidendi: Once TNMM is accepted as the most appropriate method for aggregated manufacturing transactions including royalty, the royalty component cannot selectively be subjected to a different transfer-pricing method in the absence of a material change in facts.

Issues: (i) Whether the authorised signatories, as power-of-attorney holders exercising effective control, could be made liable after the sole proprietor's death for obligations arising from lifetime imports; (ii) Whether the declared transaction value could lawfully be rejected and the assessable value enhanced by reference to NIDB data; (iii) Whether the valuation finding concerning the live consignments could support reassessment of the 14 earlier consignments; (iv) Whether the live and earlier consignments were liable to confiscation; (v) Whether the penalties imposed under the Customs Act, 1962 were sustainable.

Issue (i): Whether the authorised signatories, as power-of-attorney holders exercising effective control, could be made liable after the sole proprietor's death for obligations arising from lifetime imports.

Analysis: Sections 2(26) and 2(3A) of the Customs Act, 1962 extend the concept of importer to a beneficial owner or a person exercising effective control over imported goods. Documentary material establishing the authorised signatories as power-of-attorney holders, corroborated by the recorded statements, showed that they exercised such control over the proprietary concern and its imports.

Conclusion: The authorised signatories were liable for duty, interest, penalty and fine in respect of imports effected during the sole proprietor's lifetime; against the assessee.

Issue (ii): Whether the declared transaction value could lawfully be rejected and the assessable value enhanced by reference to NIDB data.

Analysis: Section 14 of the Customs Act, 1962 adopts the price actually paid or payable as the transaction value, subject to the valuation rules. Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 requires a sustainable basis to doubt the declared value. NIDB data, without reliable evidence that it concerned comparable goods or that the declared invoice price was inaccurate, did not justify rejection. The admitted underdeclaration of quantity nevertheless required duty on the undeclared 31,000 and 21,000 watch movements at the declared unit value of Rs. 9.89.

Conclusion: The declared transaction value could not be rejected or enhanced on the available NIDB data; duty remained payable only on the admitted undeclared quantities at the declared value; partly in favour of the assessee.

Issue (iii): Whether the valuation finding concerning the live consignments could support reassessment of the 14 earlier consignments.

Analysis: In the absence of evidence establishing undervaluation in the live consignments, their declared unit value could not furnish a basis to enhance the value of earlier consignments. The earlier goods had also been cleared before the reassessment exercise.

Conclusion: The enhanced valuation and corresponding differential-duty demand for the 14 earlier consignments were set aside; in favour of the assessee.

Issue (iv): Whether the live and earlier consignments were liable to confiscation.

Analysis: The confiscation directions rested upon the unsustainable enhancement of value. As the valuation findings failed and the earlier consignments had already been cleared, the foundation for confiscation did not survive.

Conclusion: The confiscation orders for the live and earlier consignments were set aside; in favour of the assessee.

Issue (v): Whether the penalties imposed under the Customs Act, 1962 were sustainable.

Analysis: The substantial admitted discrepancy between the declared and actual quantities excluded a bona fide explanation for the declaration and supported the retained penalty for false declaration. The operative directions preserved the penalty under Section 114AA of the Customs Act, 1962.

Conclusion: The penalty under Section 114AA of the Customs Act, 1962 was upheld, while the remaining penalty directions were set aside; partly against the assessee.

Final Conclusion: The reassessment-based fiscal consequences founded on enhanced values and the confiscation directions failed, while liability survived for duty on the unreported quantities at the declared unit price and for the retained penalty for false declaration.

Ratio Decidendi: Transaction value cannot be rejected merely on NIDB data unless cogent evidence establishes that the declared price is inaccurate or that the relied-upon data concerns comparable goods.

Issues: Whether DHA algae oil comprising DHA and other saturated and unsaturated fatty acids was classifiable under CTH 15159090 rather than CTH 29161590 or CTH 2106, and was consequently eligible for exemption under Notification No. 50/2017-CUS dated 30.06.2017.

Analysis: Classification is governed primarily by the terms of the tariff headings and relevant Chapter Notes under Rule 1 of the General Rules for Interpretation, with the Harmonized System of Nomenclature and its explanatory notes providing authoritative guidance. Chapter 15 covers vegetable oils, whereas Chapter 29 applies to separate chemically defined organic compounds. Fatty acids of the stipulated purity alone may fall under CTH 2916; an oil containing a mixture of fatty acids does not become a separate chemically defined fatty acid merely because DHA is one of its constituents.

Analysis: The test reports showed that the imported product contained approximately 55% DHA along with palmitic acid and other saturated and unsaturated fatty acids. Its character remained that of edible algae oil derived from plant sources, not pure DHA or another chemically defined fatty acid. End use in the food industry was immaterial to classification. CTH 1515 was the specific applicable entry for the product, while CTH 2916 and CTH 2106 did not describe oils of this nature.

Conclusion: DHA algae oil is classifiable under CTH 15159090 and not under CTH 29161590 or CTH 2106. The claimed exemption under Notification No. 50/2017-CUS dated 30.06.2017 was unavailable, and the consequential differential duty, interest, confiscation-related redemption fine, penalties, and bank-guarantee appropriation were sustained.

Issues: Whether a duplicate amount deposited as mandatory appellate pre-deposit is refundable with interest, and whether the refund procedure under Section 11B of the Central Excise Act, 1944 applies to such deposit.

Analysis: Section 11B concerns refund claims for excise duty and interest paid on that duty. A statutory pre-deposit made for exercising the right of appeal under Section 35F is not payment of duty. Therefore, retention of the duplicate pre-deposit could not be justified by requiring recourse to the procedure under Section 11B. The admitted duplicate credit and the absence of a bona fide basis for withholding it warranted refund with interest and costs.

Conclusion: The duplicate pre-deposit of Rs.1,24,175/- is refundable to the petitioner with interest at 12% per annum from the date of the second receipt until payment, along with litigation costs of Rs.25,000/-.

Issues: Whether the applicant was entitled to bail pending trial for alleged offences under Section 132 of the Central Goods and Services Tax Act, 2017.

Analysis: Pre-conviction detention is not punitive, and the presumption of innocence, personal liberty, and the right to a speedy trial require assessment of whether custody is necessary to secure attendance at trial. The alleged offences carry a maximum sentence of five years and are triable by a Magistrate. Investigation was complete, the complaint had been filed, and the evidence was documentary. The applicant had remained in custody since 17.04.2026, had no criminal antecedents, and no material established a risk of absconding, witness intimidation, evidence tampering, repetition of offences, or subversion of justice. No exceptional circumstance justified continued detention when the trial was unlikely to conclude within a reasonable period.

Conclusion: The applicant made out a case for bail and was ordered to be released on bail subject to conditions.