KLSR Infratech Limited Vs DCIT (ITAT Hyderabad)
Diary Notings Are Not Proof, Book Reversals Are Not Fresh Cash
₹1 Lakh Deduction Under Section 80GGC Denied
The Ahmedabad Tribunal has upheld the disallowance of a ₹1 lakh political donation claimed under Section 80GGC, holding that payment through banking channels and production of a donation receipt could not overcome the search material supporting the finding of an accommodation entry.
The Tribunal also rejected the assessee’s challenges to the validity of reassessment, including objections concerning limitation, the competent sanctioning authority, electronic authentication and the use of Section 148A.
The appeal was dismissed both on jurisdictional grounds and on the merits of the deduction.
Reopening Challenged on Several Grounds
For AY 2019-20, the assessee argued that the Section 148 notice had been issued after expiry of three years from the end of the assessment year.
According to him, the reopening therefore attracted Section 149(1)(b). Since the alleged escaped income was below ₹50 lakh, he contended that the notice could not legally be issued.
He further argued that approval should have been obtained from the Principal Chief Commissioner, rather than the Principal Commissioner. Additional objections concerned an allegedly unsigned approval and the procedure adopted for reopening based on third-party search information.
These objections required the Tribunal to examine the applicable computation of limitation and the conditions governing the reopening route.
Reply Period Excluded from Limitation
The Tribunal held that the time granted to the assessee to respond to the Section 148A(b) notice had to be excluded under the applicable proviso to Section 149(1).
After that exclusion, it found that the Section 148 notice fell within the computed three-year period. Consequently, Section 149(1)(b) did not apply.
Under Section 149(1)(a), reopening could be initiated even where the escaped income was below ₹50 lakh. The assessee’s threshold objection therefore failed.
The order mentions 4 May 2023 in paragraph 3 and 5 April 2023 in paragraph 4 as the notice date. This inconsistency should be kept in view when examining the chronology; the Tribunal’s conclusion expressly rests on exclusion of the reply period.
Principal Commissioner’s Approval Upheld
Since the Tribunal treated the reopening as falling within the applicable three-year period, it held that the Principal Commissioner was the correct specified authority under Section 151.
The approval form’s reference to Section 149(1)(b) was treated as a clerical error or procedural irregularity. The Tribunal considered that the form had to be read in its entirety, rather than allowing that reference alone to determine the validity of sanction.
It also rejected the authentication objection. The electronic approval displayed the name, office and designation of the sanctioning authority, satisfying the requirements relied upon by the Tribunal under Rule 127A.
Third-Party Search Did Not Automatically Displace Section 148A
The assessee contended that the search-related deeming provisions made the Section 148A procedure inapplicable.
The Tribunal held that the deeming fiction under Explanation 2(iv) to Section 148 operated only upon satisfaction of its prescribed conditions.
There was nothing on record establishing satisfaction of the necessary prior-approval condition for invoking that fiction. The Assessing Officer was therefore required to follow Section 148A, including granting the assessee an opportunity.
Since that procedure had been followed, the Tribunal found no jurisdictional defect on this ground.
Documentary Form Could Not Establish Genuineness
On merits, the Tribunal held that bank payment and a donation receipt were insufficient in the face of contrary investigation material.
It followed decisions concerning similar political donations, including Mihir Bipinbhai Parekh, Milind Pankajbhai Shroff, Ritesh Sugan Jain, Rajen Jayantilal Merchant and Kanal Sanatkumar Raval.
The discussion of those decisions described a mechanism involving receipt of donations through bank accounts, transfer through intermediary entities and generation of cash for return to donors after commission.
In the present appeal, the Tribunal concluded that the assessee had failed to establish a genuine contribution eligible under Section 80GGC, while the findings of the authorities below were supported by search material.
Surrounding Circumstances Matter
The reasoning adopted also referred to CIT v. Durga Prasad More, 82 ITR 540 (SC) and Sumati Dayal v. CIT, 214 ITR 801 (SC).
These authorities recognise that tax authorities may examine the surrounding circumstances and human probabilities when determining the real nature of a transaction.
The Tribunal accordingly upheld the ₹1 lakh disallowance and dismissed the appeal.
Author’s Comments
The decision reinforces that evidence of payment establishes the movement of money, while the genuineness of the donation remains a separate question. A receipt does not conclusively answer investigation material suggesting that the transaction formed part of an accommodation arrangement.
Equally, the order should not be read as holding that every donation to a political party subjected to search is automatically disallowable. Its conclusion rests on the material supporting the findings and the assessee’s failure to establish genuineness.
The limitation discussion also shows why the statutory exclusions must be examined before applying the ₹50 lakh threshold.
A bank entry proves payment. Eligibility for deduction requires the transaction to withstand examination of its substance.
Cases Discussed
- ASR Engineering & Projects Ltd. v. DCIT, Central Circle-1(3), Hyderabad, ITA Nos. 1132/Hyd/2019 & Ors., dated 30.08.2019
- CIT v. Lubtec India Ltd. (2009) 311 ITR 175 (Delhi)
- CIT v. Anil Bhalla (2010) 322 ITR 191 (Delhi)
- D.N. Singh v. CIT, (2023) 150 taxmann.com 301 (SC)
- Pandian Chemicals Ltd. v. CIT (2003) 262 ITR 278 (SC)
- CIT v. Chinna Nachimuthu Constructions (2008) 297 ITR 70 (Karn.)
- CIT v. Govinda Choudhury and Sons
- CIT v. Shah Alloys Ltd. (2017) 396 ITR 711 (Guj.)
- Jaypee DSC Ventures Ltd.
- AVM Cine Products Vs. Deputy Commissioner of Income tax (2020) 421 ITR 431 (Mad.)
- Gateway Terminals India Pvt. Ltd. Vs. Deputy Commissioner of Income Tax (2025) 479 ITR 726 (Bom.)
- CIT Vs. Shree Rama Multi Tech Ltd. (2018) 403 ITR 426 (SC)
- DCIT, Circle 5, Ahmedabad Vs. Rajkamal Builders Infrastructure Pvt. Ltd., ITA 118/Ahd/2009 & Ors., dated 13/05/2022
- Vijay M. Mistry Construction Pvt. Ltd. Vs. ACIT, Circle 8, Ahmedabad, ITA No. 2938/Ahd/2011, dated 23/12/2022
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT HYDERABAD
The present appeals filed by the assessee company are directed against the respective orders passed by the Commissioner of Income Tax (Appeals)-11, Hyderabad (for short, “CIT(A)”), which in turn arise from the respective orders passed by the Assessing Officer (for short, “AO”), as under;
| ITA 2321/Hyd/2025 (AY 2015-16) | CIT(A) order, dated 20/11/2025 (against order u/s 143(3), dated 20/12/2017) |
| ITA 2322/Hyd/2025 (AY 2015-16) | CIT(A) order, dated 20/11/2025 (against order u/s 153A, dated 17/09/2021) |
| ITA 2323/Hyd/2025 (AY 2016-17) | CIT(A) order, dated 20/11/2025 (against order u/s 153A, dated 17/09/2021) |
| ITA 1808/Hyd/2025 (AY 2017-18) | CIT(A) order, dated 22/09/2025 (against order u/s 153A, dated 17/09/2021) |
| ITA 1809/Hyd/2025 (AY 2018-19) | CIT(A) order, dated 23/07/2025 (against order u/s 153A, dated 17/09/2021) |
| ITA 1810/Hyd/2025 (AY 2019-20) | CIT(A) order, dated 30/08/2025 (against order u/s 143(3), dated 17/09/2021) |
| ITA 1811/Hyd/2025 (AY 2020-21) | CIT(A) order, dated 16/08/2025 (against order u/s 143(3), dated 23/03/2022) |
As the issues involved in the captioned appeals are inextricably interlinked and interwoven, the same are being taken up and disposed of vide a consolidated order. We shall first take up the appeal for the Assessment Year (AY) 2017-18 in ITA No.1808/Hyd/2025 and the order therein passed shall, to the extent of common issues involved, apply mutatis mutandis for the purpose of disposing of the other appeals. The assessee company has assailed the impugned order on the following grounds of appeal before us:
“1) The order of the learned CIT (A) is erroneous to the extent it is prejudicial to the appellant herein;
2) The learned CIT (Appeals) ought to have held that the Assessing Officer has no jurisdiction either to issue notice or to pass the assessment order as the orders transferring the jurisdiction were not served on the appellant.
3) (i) The learned CIT (A) erred in holding that the amounts found in the Diary marked A/KLSR/RES/07 represent the unexplained expenditure relating to the appellant herein;
(ii) The learned CIT (Appeals) ought to have considered the fact that the material was found at the premises of Sri K.L. Sridhar Reddy and without invoking the provisions of Sec. 153C the said material cannot be used in the assessment of the appellant herein.
(iii) The learned CIT (A) erred in confirming addition to an extent of Rs.1,03,19,000/- out of the total addition of Rs.2,60,19,000/- made by the Assessing Officer without properly considering the explanation submitted by the appellant;
(iv) The learned CIT (A) ought to have considered the fact that payments recorded in the said diary are explained by the appellant herein and that all the transactions are reconciled as payments made for the purpose of business. The learned CIT (Appeals) should have accepted the reconciliation submitted; held that such payments are recorded in the books of account and deleted the entire addition made.
4) “The learned CIT (Appeals) is not justified in confirming the addition made by the Assessing officer of Rs.2,98,54,070/- by invoking the provisions of Sec.69A of the I.T. Act.
“The learned CIT(Appeals) ought to have seen that the said amount is a reversal entry made by crediting “additional income account” by an amount of Rs.2,98,54.070/- which is included in the “other income” and debited to the cash account. The said amount does not represent unexplained cash as the equal amount was already admitted as additional income in the return of income filed.” (Modified ground of appeal)
5) The learned CIT (Appeals) erred in holding that interest received of Rs.95,21,198/- represent the interest on fixed deposits made for providing bank guarantee which does not form part of the gross total income for the purposes of Sec.80IA of the I.T. Act.
6) As an alternate, the learned CIT (Appeals) ought to have found that the deposits were made out of the loan funds and the proportionate interest paid to the bank is to be reduced from interest received.
7) Any other ground/grounds that may be urged at the time of hearing.”
2. Succinctly stated, the assessee company, which is executing infrastructure-related contracts and projects, filed its original return of income for the AY 2017-18 on 20/07/2017, declaring its income at Rs. NIL (after claiming deduction under section 80IA(4) of the Act of Rs. 22,36,66,331/-).
3. Search and seizure operation was carried out on the assessee company on 27.09.2018, as a result whereof notice under section 153A of the Act, dated 03/09/2019 was served upon it. In response, the assessee company filed its return of income for AY 2017-18 on 16/02/2021, declaring NIL income (after claiming deduction under section 80IA(4) of the Act of Rs. 22,36,66,331/-). Thereafter, the AO issued notice under section 143(2) of the Act, dated 04/03/2021.
4. As is discernible from the record, the AO, vide his order passed under section 153A of the Act, dated 17/09/2021, made certain additions/disallowances in the hands of the assessee company, which thereafter were partly sustained by the CIT(A).
5. The assessee company, aggrieved with the order of the CIT(A) to the extent he has sustained the additions made by the AO, carried the matter in appeal before us.
6. We have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.
7. We find that the issues involved in the present appeal primarily pertain to three material aspects, viz., (i) addition under section 69C of the Act on account of notings/scribblings in the diary seized in the course of the search proceedings from the residential premises of Shri KL Sreedhar Reddy, Managing Director of the assessee company to the extent the same had been confirmed by the CIT(A): Rs.1,03,19,000/- (before telescoping); (ii) declining of the inclusion of interest income on Fixed Deposits (FDRs) in the eligible income of the assessee company for computing deduction under section 80IA(4) of the Act: Rs.95,21,198/-; and (iii) the recharacterization by the authorities below of the additional income surrendered by the assessee company in the course of survey proceedings on withdrawal of its claim of labour expenditure as the unexplained money of the assessee company under Section 69A of the Act: Rs. 2,98,54,070/-.
8. We shall first deal with the grievance of the assessee company that the CIT(A) has erred in law and facts of the case in making/sustaining the addition of Rs.1,03,19,000/- (reduced after telescoping to Rs. 14,07,218/-) on account of unexplained expenditure under Section 69C of the Act, on the basis of the entries found in the diary seized in the course of the search proceedings from the residential premises of Shri KL Sreedhar Reddy, Managing Director of the assessee company
9. During the course of the search conducted on the assessee company on 27.09.2018, a diary marked as Annexure A/KLSR/RES/07 was found and seized from the residential premises of Sri KL Sreedhar Reddy, Managing Director of the assessee company. The AO, in the course of the assessment proceedings, observed that the diary contained various rough entries of amounts and names of some persons. In the statement recorded during the course of search proceedings on 27.09.2018, Shri K.L. Sreedhar Reddy, Managing Director of the assessee company, in his reply to Q No. 28, stated that it was an old diary about 8 to 10 years old. It was further stated that he had written in the diary payments to site expenses, such as labor payments, which he did not recall, and that the entries related to payments towards site expenses, including labor payments.
10. During the assessment proceedings, the AO examined various entries in the diary and worked out the total amounts on a year-wise basis. For the year under consideration, the entries in the diary were initially taken at Rs. 2,60,19,000/-. On being queried, the assessee company explained that Shri K.L. Sreedhar Reddy (supra) maintained the diary as a personal record of cash disbursements made at various sites. It was submitted that the cash was withdrawn from the bank accounts and handed over to meet site expenses, payments to labor, suppliers, business-related persons, sub-contracts, etc., and that, after the expenditure was incurred, the relevant amount was accounted for in the regular books of account.
11. However, the AO did not accept the explanation and treated the entire amount of Rs.2,60,19,000/- as unexplained expenditure under Section 69C of the Act.
12. On appeal, the CIT(A) observed that the contents of the seized diary revealed that an amount of Rs.1,57,00,000/- represented cheque payments which were duly reflected in the books of account of the assesseee company and supported by ledger accounts and payment vouchers. Accordingly, the CIT(A) accepted the explanation to that extent and sustained the addition made by the AO of the balance unexplained expenditure.
13. However, the CIT(A) thereafter considered another aspect of the assessment. It was observed that the AO had also considered cash withdrawals of Rs. 17,82,35,640/- from the sub-contractor’s bank accounts and alleged that the assessee company had booked bogus sub-contract expenses in the names of non-existent sub-contractors. Thereafter, the CIT(A), following the decision in ASR Engineering & Projects Ltd. v. DCIT, Central Circle-1(3), Hyderabad, ITA Nos. 1132/Hyd/2019 & Ors., dated 30.08.2019, sustained an addition of 5% on such cash withdrawals which worked out at Rs. 89,11,782/- (5% of Rs. 17,82,35,640/- ). The CIT(A) observed that, as the amount of Rs. 89,11,782/- (supra) was available with the assessee company, the same, to that extent, could safely be held to have sourced the cash expenditure of Rs. 1,03,19,000/- (supra) reflected in the seized diary. Accordingly, the CIT(A) reduced the unexplained expenditure by Rs. 89,11,782/- and sustained the addition of balance amount of Rs. 14,07,218/-, which was calculated as under:
| Cash entries in diary | : Rs. 1,03,19,000/- |
| Less: Amount treated as available | : Rs. 89,11,782/- |
| Balance addition sustained | : Rs. 14,07,218/- |
14. Aggrieved, the assessee company has assailed the addition under Section 69C sustained by the CIT(A) before us.
15. We have heard the Ld. Authorized Representatives of both parties, perused the orders of the authorities below and considered the material available on record.
16. As observed hereinabove, the controversy in hand arises from the contents of the diary marked as A/KLSR/RES/07 seized from the residential premises of
17. Shri K.L. Sreedhar Reddy, Managing Director of the assessee company. We find that the addition that finally survives before us is only Rs. 14,07,218/-, and our indulgence has been sought to adjudicate whether the said can be sustained in the hands of the assessee company under section 69C of the Act. In our view, the issue has to be examined in two stages, viz. (i) whether the Revenue has established that the assessee company had actually incurred unexplained expenditure; and (ii) if the aforesaid foundational fact, i.e., the incurring of unexplained expenditure, is established, does the question of explaining the source of such expenditure arise?
18. We find in the present case before us that the AO has proceeded principally on the basis of the entries/notings in the diary and the statement of Shri K.L. Sreedhar Reddy(supra). Although the statement of Shri K.L. Sreedhar Reddy(supra) is certainly relevant, but his statement that the diary contained notings relating to site expenses does not by itself establish that every cash entry therein mentioned represented additional expenditure of the assessee company which was not recorded in its books.
19. We find that the assessee company had explained before the authorities below that the cash used for business payments was withdrawn from its disclosed bank accounts and was available in its regular books. We further find that the assessee company had filed before the authorities below complete details of the cash transactions recorded in the seized diary, viz., Annexure A/KLSR/RES/07 for the subject year aggregating to Rs.1,03,19,000/- which were stated to have been sourced from its books of accounts, Page 151-158 of APB. However, we find that the authorities below rejected the assessee company’s explanation and held the entire cash expenditure as unexplained expenditure incurred by the assessee company under section 69C of the Act. We may observe that the AO has not established that the corresponding cash withdrawals were not available to the assessee company to fund the subject cash outflow.
20. Admittedly, it is a matter of fact borne from the record that the seized diary was written by Shri K.L. Sreedhar Reddy, Managing Director of the assessee company. However, the entries/notings therein mentioned, as discussed by the authorities below, do not clearly identify the exact nature of each expenditure, the project to which the expenditure relates, the person for whom the payment was made or, most importantly, whether the payment represented expenditure of the assessee-company or expenditure incurred in the course of execution of the work entrusted to the dependent sub-contractors. For the sake of clarity, we deem it apposite to extract a part of the contents of the seized diary, viz. Annexure A/KLSR/RES/07, as under:
21. We may herein observe that the assessee company, in the course of the proceedings before the CIT(A), had, vide its submissions dated 12/12/2024, rebutted the adverse inferences drawn by the AO based on which he had observed that the entry/notings recorded in the seized diary, viz., Annexure A/KLSR/RES/07, referred to the unexplained expenditure incurred by the assessee company. For the sake of clarity, we deem it apposite to cull out the submissions made by the assessee company rebutting/negating the adverse inferences drawn by the AO, as under:
9. The Assessing officer rejected the contention for the following reasons and they are all rebutted in the explanation submitted.
| Assessing Officer’s Observation | Assessee’s Explanation / Rebuttal |
|---|---|
| The assessee failed to explain as to why company’s cash was kept with Sri K.L. Sreedhar Reddy for safe custody | Sri K.L. Sreedhar Reddy is the Managing Director of the company and he is responsible for the activities carried on by the company. It is his responsibility to pay for expenses and also to protect the cash belonging to the company. Therefore, it is not correct for the Assessing Officer to raise such a doubt. |
| Cashier of the company is required to maintain cash and not the MD of the company | The duty of the cashier is to record cash transactions. It is also the duty of the cashier to keep petty cash with him. But the huge cash cannot be kept with the cashier who is only an employee of the company. The doubt expressed by the Assessing Officer is baseless and appears without having knowledge of business activities. |
| On verification of the cash book of the company there is no mention of imprest money given to Sri K.L. Sreedhar Reddy | The appellant submits that the Assessing officer cannot treat Sri K.L. Sreedhar Reddy and the company as two different and separate. The company is the legal entity and acts through the MD. He is acting on behalf of the company. The amount of the company is kept with the M.D. It is not paid to the MD. When paid entries are made in the personal account of the MD. |
| It is submitted that the amount was ultimately sent to the site through persons whose names are mentioned in the diary. | |
| The assessee failed to furnish vouchers from the recipients whose names are mentioned in the diary. | The amounts were not paid to the persons whose names are appearing in the diary. They were also acting on behalf of the company as the company is a legal person and cannot pay itself except through persons. The vouchers towards expenditure were obtained from the ultimate recipients. The entire process from the moment the money is taken and the voucher is submitted back to the company has been explained before the Assessing officer. The same is submitted in the annexure. The respective vouchers towards the expenditure were submitted before the Assessing Officer. Therefore, the AO’s objection in this regard is not justified. |
| The assessee has not furnished the vouchers or bills for the amount spent for business. | This is not correct. The assessee has furnished details and the relevant vouchers. The same are now submitted once again for verification. |
| Apart from the name of ASR (who is a director of the company), there is no mention of other names in the diary. The relationship has not been provided by the assessee. | The assessee submitted the relationship already and the same is furnished once again in the annexure. All the persons are directly related to the company and acted on behalf of the company. |
| On verification of the reconciliation statement, it is noticed that the amount was
spent towards labour, salaries, etc. and there is a contravention of Sec.40A(3) of the I.T. Act. |
It is submitted that the amounts have been sent to the site in lump sum. The amount
was paid towards salaries and wages, each payment to any person is less than Rs.20,000/-. Therefore, the provisions of Sec.40A(3) have no application. Further, payments have been made at the site in the villages where neither the assessee company nor the employee or the wage earner has a bank account. Therefore, the assessee is governed by the exceptions mentioned in Rule 6DD of the I.T Rules. The Assessing Officer did not find any discrepancy in the reconciliation statement except stating that cash payments were made. |
| The assessee is utilising the cash balance shown in the cash book to explain away the notings in the diary. | The assessee submits that the presumption of the Assessing Officer is not proper. The amount is drawn from the bank to meet the business expenses. The assessee company with the help of the MD did the same. The assessee submitted details of expenditure incurred with the cash drawn from the company. The Assessing Officer did not find any discrepancy in the reconciliation statement. The seized material also shows to which site the amount was sent. |
| Sri K.L. Sreedhar Reddy in the statement stated that the transactions related to the business. The assessee could not produce any documentary evidence to this effect. | This allegation of the Assessing officer is not factually true. The assessee drew the reconciliation. The Assessing officer did not point out any omission or mistake in the reconciliation except mentioning about the provisions of Sec.40A(3). The cash book was produced, the amount sent to the site from out of money drawn by the MD and the details of spending have been explained. Therefore, the Assessing officer is not correct to mention that no documentary evidence is provided. |
| Mere submission that the transactions in the diary was done for some expenses, labour payment cannot be accepted for proper explanation. | This is also not correct as the appellant furnished all the details with regard to the amounts drawn from the company and utilised for the purpose of business. The appellant furnished proper explanation including reconciliation of the amounts drawn. The Assessing Officer could not find any discrepancy in the reconciliation statement. |
| The transactions are not co related with bank accounts, books of account and returns of income. | This is also not correct. The expenditure is already recorded in the books of account. In so far as the cash transactions are concerned, the cash was available in the cash book at the time of drawal; when it was spent, the same is recorded in the respective expenditure account. To this effect reconciliation was drawn and was submitted before the Assessing officer. The Assessing officer did not find fault with the reconciliation. |
| The payments made to employees towards salary, labour payments are to be reconciled with the books of account. | Reconciliation statement was already submitted before the Assessing Officer and the Assessing Officer did not find any discrepancy. |
| The assessee is required to explain the purpose for which the payments were made and whether payments were accounted for or not. The nexus between the person who received payment and the assessee company in terms of the business is to be established. | In so far as diary is concerned, it is written by the MD. The cash was taken from the company by the MD. The amounts were paid to either directors of the company or the employees of the company, the details of the persons and their relationship are separately submitted. All of them are related to the assessee’s business activity. Further, the cash was taken to the site and payments were made towards wages to labours and other expenses, salaries etc. and the vouchers have been submitted to the head office which are recorded in the books of account. The reconciliation was already submitted. It is clear that the cash entirely was accounted for by the persons concerned. The observation is not justified. |
| Summons u/s 131 dated 22.2.2021 were issued to Sri K.L. Sreedhar Reddy and he failed to appear till date. | It is submitted that the explanations have been submitted in writing; statement of Sri K.L. Sreedhar Reddy was already recorded; search and seizure operations were conducted; the information was available with the Assessing officer, reconciliation was filed, no discrepancy is pointed out by the Assessing office from the reconciliation statement. Therefore, the Assessing officer is not justified in mentioning that Sri K.L. Sreedhar Reddy did not appear. |
| The assessee claimed that the expenditure in the diary includes bank payments of Rs.10,19,30,000/- and furnished the journal vouchers for payments but dates are not matched. | The Assessing officer did not point out any specific amount. The amounts have been paid through cheques; entry in the cash book was made and the dates of issue of cheque in the bank account it would be entered on the date when the cheque was encashed. In the diary it is entered afterwards. Therefore, the dates may not exactly tally but the cheque Nos. and the amounts are all tallying and the Assessing officer did not point out any omission. When the cheques are tallying with the entries in the books of account the Assessing Officer’s findings are not justified. |
10. In view of the above, the presumption of the Assessing officer that the payments mentioned in the diary are not recorded in the books of account is not justified. They were all recorded in the books of account. The entries in the diary have been made for the following purpose and are related to the business transactions which were all accounted for.
a) Even the seized material (copies enclosed) show that the amounts were sent to the site through the Corporate Office’s personnel.
b) Cash was available with the appellant;
c) It is necessary to incur expenditure at site found during search to some extent in cash.
d) the MD identified the persons to be kept Incharge for each of the site, the MD makes payment to the person Incharge for at the site.
e) The said amount is recorded in a rough diary;
f) the amount so drawn was paid towards salaries, wages and other expenses at the site by the person In-charge
g) vouchers have been obtained from the ultimate recipients and are recorded in the books as expenditure.
h) Reconciliation is drawn to this effect and was filed before the Assessing officer who did not find error in the reconciliation.
i) The Assessing officer did not find fault with the reconciliation.
The material based on which addition is made cannot be considered as incriminating material.
Therefore, all the amounts noted in the diary have already been recorded in the books of account and no addition should have been made by the Assessing Officer.
Sd/-
COUNSEL FOR APPELLANT
Date:12-12-2024
22. We are further of the view that as the CIT(A) accepted cheque payments of Rs. 1,57,00,000/- recorded in the very same diary as duly accounted for in the books; therefore, the diary cannot be regarded as a document which, by its very nature, recorded unaccounted expenditure. In our view, the mere fact that the assessee company could not establish a one-to-one correlation between each cash entry in the diary and a corresponding entry in its books of account does not establish that the assessee company actually incurred additional expenditure outside the books. We say so because the AO was required to bring on record material showing that the particular cash payments represented expenditure actually incurred by the assessee company but not recorded in its books. Also, the
claim of the assessee company that Shri KL Sreedhar Reddy, MD, would make the payments/disburse the cash that would be withdrawn from the bank accounts of the assessee company to the persons in charge of the various sites and record the said payments in his diary under their names, which, thereafter on the incurring of the expenditure by the said persons towards site expenses, salaries etc. would be duly recorded in the books of account of the assessee company, had neither been disproved nor dislodged by both the authorities below. However, we are afraid that the AO has not identified any specific expenditure corresponding to the disputed cash entries, which were incurred by the assessee company but were omitted from the assessee company’s books of account. Accordingly, no independent corroborative material has been brought on record to irrefutably establish that the cash entries/notings/scribblings in the seized diary totaling Rs. 1,03,19,000/- represented additional expenditure incurred by the assessee company outside its books of account. We may herein observe that the Hon’ble High Court of Delhi in CIT v. Lubtec India Ltd. (2009) 311 ITR 175 (Delhi), has held that tax authorities cannot invoke Section 69C of the Income Tax Act to make additions for unexplained expenditure unless there is a clear, factual finding that the assessee actually incurred that expenditure. For the sake of clarity, we herein cull out Section 69C of the Act, as under:
“It is quite clear that what is postulated in Section 69C of the Act is that first of all the assessee must have incurred that expenditure and thereafter, if the explanation offered by the assessee about the source of such expenditure is not found satisfactory by the Assessing Officer, the amount may be added to his income.”
Similarly, the Hon’ble High Court of Delhi, in CIT vs. Anil Bhalla (2010) 322 ITR 191 (Delhi), considered additions based on notings found on loose sheets seized during search proceedings and emphasized the requirement of material to establish that such notings represented the assessee’s undisclosed transactions.
23. Applying the above principles, we are of the view that the Revenue has not established beyond doubt the foundational fact that the cash entries of Rs. 1,03,19,000/- represented additional expenditure actually incurred by the assessee company outside its books. Consequently, the question of treating any part thereof as unexplained expenditure under section 69C does not arise.
24. We may also observe that the CIT(A)’s approach of treating Rs. 89,11,782/- (supra) as funds available with the assessee company though explains the source aspect only, but the same does not establish the factum of expenditure. In our view, even after reducing Rs. 1,03,19,000/- by Rs. 89,11,782/-, the balance amount of Rs. 14,07,218/- could be sustained only if the Revenue first established that the assessee company had actually incurred unexplained expenditure to that extent.
25. We are of the view that since the foundational fact that the assessee company had actually incurred unexplained expenditure has not been established, therefore, the balance amount of Rs. 14,07,218/- sustained by the CIT(A) also cannot be sustained under section 69C of the Act.
26. Without prejudice to our aforesaid finding, we may also examine the issue from another angle. Shri K.L. Sreedhar Reddy, Managing Director of the assessee-company, in his statement recorded under Section 132(4) of the Act on 27.09.2018, in reply to Questions No. 19 & 20, 21 & 22, 23 & 24 and 25 & 26, had stated that the entries in the old diary (seized diary), which was 8 to 10 years old, related to payments made to sub-contractors, business-related persons, etc.
27. We may herein observe that the CIT(A), while dealing with the issue regarding the cash withdrawals from the bank accounts of the dependent sub-contractors, observed that the cheque book counterfoils of such sub-contractors were found and seized during the course of the search proceedings from the residence of Shri K.L. Sreedhar Reddy, Managing Director of the assessee-company. The CIT(A), taking cognizance of the aforesaid fact, observed that it could safely be concluded that Shri K.L. Sreedhar Reddy (supra) was facilitating cash withdrawals from the aforesaid sub-contractors’ bank accounts. Thereafter, CIT(A) held that 95% of such cash withdrawals could be regarded as having been utilized for the sub-contract work, while only 5% was presumed to have been retained by the assessee.
28. In the aforesaid factual background, the possibility that Shri K.L. Sreedhar Reddy (supra) was handling the cash withdrawals from the bank accounts of the dependent sub-contractors and disbursing the said amounts at their respective sites cannot be ruled out. Once the Managing Director’s statement is read together with the aforesaid finding of the CIT(A), the possibility that the payments made to the sub-contractors were also recorded in the seized diary cannot be ruled out. Therefore, merely because the diary was maintained by the Managing Director of the assessee company, the entire amount recorded therein cannot, without further corroboration, be treated as expenditure incurred by the assessee-company. This alternative factual consideration also supports our conclusion that the addition of Rs.. 1,03,19,000/- (reduced after telescoping to Rs. 14,07,218/-) sustained by the CIT(A) under Section 69C of the Act cannot be upheld.
29. We accordingly delete the addition of Rs. 14,07,218/- sustained by the CIT(A). The Ground of appeal No. 3 is allowed in terms of our aforesaid observations.
30. We shall now deal with the grievance of the assessee company that the AO has erred in treating the amount of Rs. 2,98,54,070/- offered by the assessee company as additional income during the course of survey proceedings, as unexplained money under Section 69A of the Act and consequently, subjecting the same to tax under Section 115BBE(1)(b) of the Act.
31. Briefly stated, a survey under Section 133A of the Act was conducted at the business premises of the assessee company on 03.10.2016. During the survey proceedings, the statement of Shri K.L. Sreedhar Reddy, Managing Director of the assessee company, was recorded on 16.09.2016, wherein he was confronted with the year-wise discrepancies in the labor charges, as under:
| Financial Year | Amount |
|---|---|
| 2014-15 | Rs. 51,08,991/- |
| 2015-16 | Rs. 1,50,36,939/- |
| 2016-17 | Rs. 2,99,54,230/- |
| Total | Rs. 5,01,00,160/- |
Upon being queried, he stated that the requisite supporting evidence was not available to substantiate the aforesaid labour charges and agreed to offer the aforesaid amounts aggregating to Rs. 5,01,00,160/- as the additional income of the assessee company. Thereafter, Shri K.L. Sreedhar Reddy (supra), vide his statement recorded under Section 131 of the Act, dated 03.10.2016, confirmed the admission of additional income of Rs. 5,01,00,160/- arising from discrepancies in labour payments. We may herein observe the manner in which the aforesaid disclosure was thereafter accounted for by the assessee company in its books of accounts, as under:
(A). AY 2015-16: The disclosure of additional income of Rs. 51,08,991/- related to labor expenditure pertaining to FY 2014-15. However, as the books of account for FY 2014-15 had already been closed, the assessee company offered the amount of Rs.51,08,991/- as additional income in the return of income for the said assessment year, but made the corresponding accounting adjustment in respect of the cash in the books of FY 2015-16, as those books were open. Thus, the debit to the cash account in the books of FY 2015-16, to the extent of Rs.51,08,991/-, was not a fresh receipt of cash in that year and represented the accounting adjustment made in the subsequent year’s books for reversing the earlier cash outflow relating to the labour expenditure of FY 2014-15, which had already been offered as additional income in the return of income for AY 2015-16.
(B). AY 2016-17: The disclosure of additional income of Rs. 1,50,36,939/- related to labour expenditure pertaining to FY 2015-16, which was dealt with by offering additional income arising from discrepancies in labour payments, and thus, reversing the earlier cash outflow by debiting the cash account in the books of FY 2015-16.
(C). AY 2017-18: The disclosure of additional income of Rs. 2,98,54,070/- related to labour expenditure pertaining to FY 2016-17, which was dealt with by offering additional income arising from discrepancies in labour payments, and thus, reversing the earlier cash outflow by debiting the cash account in the books of FY 2016-17.
32. Before proceeding further, we may herein observe that it will be relevant to point out the accounting entries that were passed by the assessee company both when the labour expenditure was booked during the respective years, as well as that passed when the additional income arising from discrepancies in labor payments was offered in the aforesaid respective years, as under:
First Entry: The accounting entry passed when the labor expenditure was originally booked and recorded in the books of account of the assessee company was as under:
(A). Labor Expenses A/c (Dr).
To Cash A/c (Cr).
Second Entry: The accounting entry passed for reversing the earlier cash outflow when the expenditure was subsequently withdrawn was as under:
(B). Cash A/c (Dr).
To Additional income declared A/c
(arising from discrepancies in labor payments) (Cr).
Thus, the first entry reduced the cash balance by recording cash spent on labour. However, when the assessee company, pursuant to the admission of discrepancies in labor payments, withdrew the claim for such expenditure and offered additional income on the said count, cash was correspondingly debited to reverse the earlier cash outflow. The subsequent entry, therefore, did not bring any new cash into the books; it merely nullified the effect of the earlier entry.
33. However, we find that on appeal the CIT(A) observed that if the labour expenditure had not actually been incurred at the time of booking such expenditure by the assessee company, then it would have utilized the same for some other purpose and would not have kept it idle. On this reasoning, the CIT(A) treated the cash brought back into the books as sourced from the assessee’s unexplained money under section 69A of the Act and upheld the AO’s view.
34. We have given thoughtful consideration and are unable to agree with the above reasoning. We say so because the CIT(A)’s observation that the assessee company would not have allowed the cash to remain idle and would have utilized it elsewhere is only an assumption drawn by him, and he did not bring any material on record to support the same.
35. We are of the view that now when the labour expenditure was not actually incurred, then the earlier entry showing the cash spent towards labour expenditure had to be reversed, and that is what the assessee company precisely did, i.e., the cash was debited and the additional income arising from discrepancies in labour payments was credited, thereby nullifying the earlier entry by which the labour expenditure had been debited and the cash had been credited.
36. We find that the accounting genesis of the cash appearing after the reversal entry is identifiable from the books themselves. It is not a case where the assessee company received an amount from an undisclosed or unexplained source and thereafter introduced that amount into its books. Rather, the increase in the cash balance results from reversing an earlier recorded cash outflow.
37. For the sake of clarity, we deem it apposite to cull out Section 69A of the Act, which reads as under:
“Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or other valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year”
(emphasis supplied by us)
We may herein observe that the Hon’ble Supreme Court in D.N. Singh v. CIT, (2023) 150 taxmann.com 301 (SC), while explaining the requirements of section 69A of the Act, observed that the provision applies, inter alia, where the assessee is found to be the owner of money which is not recorded in the books of account and the assessee either does not offer an explanation regarding its nature and source or the explanation offered is not found satisfactory. However, in the present case, the assessee company has given a specific explanation for the increase in the cash balance. The assessee company’s explanation is directly supported by the accounting entries. As observed hereinabove, the earlier entry recorded the cash outflow for labor expenditure, and the subsequent entry reversed that outflow. Thus, the accounting trail of the amount is identifiable from the books themselves.
38. Admittedly, it is a matter of fact borne from record that the labour expenditure could not be substantiated, but the same is a separate matter, and the assessee company, in respect of the discrepancies in labor payments, had credited corresponding additional income in its profit & loss accounts for the respective years. Shri K.L. Sreedhar Reddy, Managing Director of the assessee company, admitted in his statements recorded during the course of survey under Section 133A, and thereafter under Section 131 of the Act, that the labour expenditure could not be supported by the requisite bills/vouchers and agreed to offer the identified amounts as additional income in the hands of the assessee company.
39. However, he did not state that the assessee company had received an equivalent amount of cash from any undisclosed or unexplained source.
40. In our view, the aforesaid two entries passed by the assessee company have to be read together. The first entry reduced the cash balance because the books recorded payment of labour expenditure. The second entry increased the cash balance because the earlier expenditure was withdrawn by offering the corresponding amount as additional income in the respective years. We are of firm conviction that the second entry, therefore, cannot, by itself, be treated as a fresh receipt of money.
41. We, therefore, find that the accounting genesis of the cash based on the second entry is identifiable from the books of accounts themselves. The amount did not enter the books of account as a fresh receipt from an unexplained or undisclosed source, but was reflected in the cash account because the previously recorded cash outflow for labour expenditure was reversed.
42. In our view, the offering of the additional income arising from discrepancies in labour payments may have the effect of increasing the taxable income of the assessee company. However, that fact alone does not establish that the assessee company acquired an equivalent amount of unexplained money, as the two issues are separate and distinct.
43. We, thus, in the facts and circumstances of the present case, are of the view that the consequent increase in the cash balance, which finds its genesis in the reversal of the earlier cash outflow for labor expenditure, cannot, by itself, be treated as the assessee’s unexplained money under section 69A of the Act.
44. Accordingly, we are unable to persuade ourselves to subscribe to the recharacterization of the additional income offered by the assessee company in its profit & loss account, which in turn finds its genesis in the discrepancies in labor payments, as its income from other sources under Section 69A of the Act, which, thereafter, has been subjected to tax under section 115BBE of the Act, and thus, vacate the same.
45. In the result, the ground raised by the assessee company is allowed in terms of our aforesaid observations. The Ground of appeal No. 4 is allowed in terms of our aforesaid observations.
46. We shall now deal with the assessee’s grievance that the CIT(A) had wrongly observed that the interest of Rs. 95,21,198/- it had received on Fixed Deposits (FDRs) made for providing bank guarantees to the bank cannot be brought within the meaning of profits derived from business of developing or operating and maintaining or developing, operating and maintaining of an infrastructure facility, and thus, would not qualify for deduction under section 80IA(4) of the Act.
47. The Ld. AR submitted that the aforesaid FDRs were not made out of surplus funds with an independent intention of earning interest. It was submitted that the assessee company was required to furnish bank guarantees in the course of obtaining and executing its infrastructure projects and that, for the purpose of obtaining such bank guarantees, the assessee company was required to place funds with the bank by way of Fixed Deposits/margin money. It was, accordingly, submitted that as the FDRs were maintained as a business necessity and were inextricably connected with the assessee’s eligible infrastructure business, therefore, the interest earned thereon constituted business income having a direct nexus with the eligible business and consequently qualified for deduction under Section 80IA(4) of the Act.
48. Per Contra, the Ld. CIT-DR supported the exclusion of the aforesaid interest income from the profits eligible for deduction under Section 80IA(4) of the Act. It was submitted that the immediate source of the interest was the FDRs maintained with the bank and not the business of developing or operating the infrastructure facility. The Ld. CIT-DR, in support of his contention, relied on the judgment of the Hon’ble Supreme Court in the case of Pandian Chemicals Ltd. v. CIT, 262 ITR 278 (SC), for the proposition that the expression “derived from” requires a direct and immediate nexus between the income and the eligible undertaking.
49. We have heard the Ld. Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements pressed into service by them on the subject issue.
50. Admittedly, it is a matter of fact borne from the record that the assessee company is engaged in the business of execution of infrastructure projects and has claimed deduction under Section 80IA(4) in respect of profits derived from eligible infrastructure projects. The controversy before us, is not merely whether the immediate source of the interest is the FDRs. Rather, the more fundamental question is whether the FDRs themselves were maintained as an independent investment of surplus funds, or as a business necessity to obtain bank guarantees required to carry on the eligible infrastructure business. In our view, the said distinction assumes significance because, where an assessee places surplus funds in an FDR merely with a view to earn interest, such interest would ordinarily have no direct nexus with the eligible business. However, the position would be materially different where the FDR is maintained as margin/security to obtain a bank guarantee, which is itself required to secure or execute the infrastructure contract. In such a situation, the Fixed Deposit cannot be viewed as an independent investment divorced from the business activity, as it constitutes a step necessitated by the carrying on of the business itself. We find that the aforesaid distinction has been recognized by the Hon’ble High Court of Karnataka in CIT v. Chinna Nachimuthu Constructions (2008) 297 ITR 70 (Karn.). In the said case, the assessee, being a contractor, was required to furnish a bank guarantee for obtaining a contract. The assessee, for obtaining the bank guarantee, had placed money in Fixed Deposits with the bank and earned interest thereon. The Hon’ble High Court held that the investment in Fixed Deposits was made solely to secure the bank guarantee required to acquire the contract, and that the interest earned thereon was business income rather than income from other sources. For the sake of clarity, we deem it apposite to cull out the observations of the Hon’ble High Court in CIT v. Chinna Nachimuthu Constructions (supra), as under:
“3. Heard learned Counsel for both the parties. It is not in dispute that the assessee being a contractor in order to secure a contract work was required to offer a bank guarantee to the KPTCL. It is not in dispute that in order to avail of the bank guarantee, certain amounts, were invested in fixed deposits, which had accrued interest. The assessee has shown the interest accrued on the fixed deposits as business interest. But the Assessing Officer treated the interest, considering the same as income from other sources and called upon the assessee to show cause, which order has been further confirmed by the Income-tax Appellate Tribunal. This appear is filed against the concurrent findings of the courts below.
4. Having heard counsel for both sides, we have noticed that the investment of amount in fixed deposits by the assessee was only to secure a bank guarantee to be offered to M/s. KPTCL in order to acquire a contract work. Therefore, it cannot be treated as an income from other sources and interest accrued on such fixed deposits has to be treated as business income only. Our view is also supported by the judgment of the Supreme Court in the case of CIT v. Govinda Choudhury and Sons .
5. In the result the appeal is dismissed. The question of law is answered against the Revenue.
(emphasis supplied by us)”
We find that the aforesaid decision seizes the issue involved in the present case before us., i.e., where the FDRs were not maintained for the purpose of making an investment or earning interest as an independent source of income, but the Fixed Deposits were maintained to obtain the bank guarantees required in the course of executing the assessee’s infrastructure projects, then, there is a direct and proximate connection between the FDRs and the assessee’s business activity.
51. We further find that the subject issue has also been examined by the Hon’ble High Court of Gujarat in the case of CIT v. Shah Alloys Ltd. (2017) 396 ITR 711 (Guj.), wherein the question of eligibility of interest earned on margin money/FDRs maintained for business purposes for deduction under Section 80IA was considered. The Hon’ble High Court upheld the assessee’s claim, recognizing that where Fixed Deposits (FDRs) were maintained for business purposes and in compliance with financial institution requirements, the interest could not be divorced from the assessee’s business activity merely because the immediate source of the interest was the bank deposit. Also, the Hon’ble High Court of Madras in AVM Cine Products Vs. Deputy Commissioner of Income tax (2020) 421 ITR 431 (Mad) has also taken a similar view. In the said case, it was observed that the interest income earned by the assessee on margin money deposits with interest on short-term loans and advances in the form of belated payments made by customers was profits and gains of business of the assessee; therefore, the assessee was entitled to deduction under section 80IA in respect of such interest income. We further find that in the case before the Hon’ble High Court of Bombay in Gateway Terminals India Pvt. Ltd. Vs. Deputy Commissioner of Income Tax (2025) 479 ITR 726 (Bom), interest was earned from fixed deposits maintained with banks for the purpose of the business and related to the business of the assessee appellant. The Hon’ble High Court had, after relying on the judgment of the Hon’ble Supreme Court in CIT Vs. Shree Rama Multi Tech Ltd. (2018) 403 ITR 426 (SC), observed that if there is any surplus money which is lying idle, and it has been deposited in the bank for the purpose of earning interest, then it is liable to be taxed as income from other sources, but if the income accrued is merely incidental and not the primary purpose of doing the act in question which resulted into accrual of some additional income, then the income is not liable to be taxed and is eligible to be claimed as a deduction under section 80IA of the Act. The Hon’ble High Court, referring to the facts involved in the case before them, observed, viz. (i). the placement of fixed deposits was imperative for the purpose of carrying on the eligible business of the appellant; (ii). the placement of fixed deposits is not for parking surplus funds which are lying idle; and (iii). there is a direct nexus between the fixed deposits and the eligible business of the assessee appellant. It was observed that, under the aforesaid circumstances, the assessee-appellant was entitled to a deduction under Section 80IA on the interest income earned from fixed deposits placed by the assessee-appellant for his business purposes. Also, we find that the aforesaid principle has been followed by the coordinate Benches of the Tribunal in cases of assessee’s carrying on infrastructure businesses, in the case of DCIT, Circle 5, Ahmedabad Vs. Rajkamal Builders Infrastructure Pvt. Ltd., ITA 118/Ahd/2009 & Ors., dated 13/05/2022. In the said case, the Tribunal had considered interest earned on Fixed Deposits maintained as security/margin money for obtaining bank guarantees in connection with infrastructure projects. It was observed that furnishing Fixed Deposits to obtain bank guarantees and security deposits was a necessity in the regular course of the assessee’s business, and, as these deposits had a direct nexus with the assessee company’s business activities, thus, the interest earned thereon was eligible for deduction under Section 80IA of the Act. Similarly, in Vijay M. Mistry Construction Pvt. Ltd. Vs. ACIT, Circle 8, Ahmedabad, ITA No. 2938/Ahd/2011, dated 23/12/2022, the Tribunal considered interest earned on Fixed Deposits maintained to obtain bank guarantees and security deposits required under the tender conditions for the execution of infrastructure projects. The Tribunal followed the judgment of the Hon’ble High Court of Gujarat in CIT Vs. Shah Alloys Ltd. (supra), and held that such interest income had a direct nexus with the assessee company’s business activity and was eligible for deduction under Section 80IA of the Act.
52. We are conscious of the judgment of the Hon’ble Supreme Court in Pandian Chemicals Ltd. v. CIT (2003) 262 ITR 278 (SC), relied upon by the Revenue. In that case, the assessee company had earned interest on deposits made with the Electricity Board and had claimed the same as income derived from the industrial undertaking. The Hon’ble Supreme Court held that the interest did not have the requisite direct nexus with the industrial undertaking and consequently was not eligible for deduction under Section 80HH of the Act. However, in our considered view, the ratio of Pandian Chemicals Vs. CIT (supra) cannot be applied mechanically to every case where interest is earned on a deposit. The nature and purpose of the deposit, and its connection to the eligible business, have to be examined. In a case, the FDRs were not independent deposits made with an outside authority as a condition merely incidental to the business, but were maintained with the bank as margin/security to obtain bank guarantees, which were themselves required for the execution of the infrastructure contracts; then, such factual matrix materially distinguishes it from the facts that were considered by the Hon’ble Supreme Court in Pandian Chemicals Vs. CIT (supra). Our view is supported by the judgment of the Hon’ble High Court of Gujarat in CIT v. Shah Alloys Ltd. (2017) 396 ITR 711 (Guj), wherein the Hon’ble High Court, in the context of the issue at hand, distinguished the judgment of Pandian Chemicals Vs. CIT (supra), observing as under:
“15. In view of the exercise already undertaken by the Delhi High Court in the case of Jaypee DSC Ventures Ltd (supra), we may not separately refer to in detail the facts and ratio of the various decisions of the Supreme Court, noted above. Suffice it to conclude, in the present case also, the assessee was compelled to park a part of its funds in fixed deposits under the insistence of the financial institutions. On such funds, the assessee received interest. Such income cannot be treated as income from other sources and must be seen as part of the assessee’s business of manufacturing and selling of chemicals. The decision of the Apex Court in the case of Pandian Chemicals Ltd. (supra) would not be applicable. In the said case, the Apex Court was interpreting the phrase ‘derived from’ used in section 80HH of the Act. It was in this background that the Apex Court held that the words ‘derived from’ must be understood as something which has a direct or immediate nexus with the assessee’s industrial undertaking. It was on that basis that the Apex Court held that interest derived by the industrial undertaking of the assessee on deposits made with the Electricity Board for the supply of electricity for running the industrial undertaking could not be said to flow directly from the industrial undertaking.
10. Thus, it is clear that the income earned from fixed deposit placed for business purpose cannot be treated as income from other source but must be seen as part of the assessees business income. In the present case also the assessee was compelled to park a part of its funds in fixed deposits under the insistence of the financial institutions and therefore the income received thereupon cannot be termed to be income from other sources.”
Also, the judgment of the Hon’ble High Court of Karnataka in CIT Vs. Chinna Nachimuthu Constructions (supra) assumes particular significance, since the facts therein involved a contractor who had maintained FDRs to obtain a bank guarantee required to secure the contract. Accordingly, the said judgment directly supports the proposition that interest arising from such FDRs constitutes business income.
53. We are, therefore, of the considered view that the character of the receipt cannot be determined merely by looking at the immediate source of the interest income, without examining the purpose for which the FDRs were maintained. In our view, where the FDRs are maintained from surplus funds with the sole object of earning interest income, the resulting interest would stand on a different footing. However, where the FDRs are maintained as margin/security for bank guarantees required for carrying on the eligible infrastructure business, the interest income has a direct and proximate nexus with the eligible business and cannot be divorced from the business activity merely because the immediate source of the interest is the bank deposit.
54. We thus, in the facts and circumstances of the present case, direct the AO to include the interest income of Rs.95,21,198/- earned on the Fixed Deposits (FDRs), which, as stated by the Ld. AR have been maintained by the assessee company for furnishing bank guarantees relating to the eligible infrastructure projects, while computing the deduction admissible to the assessee company under Section 80IA(4) of the Act, subject to verification that the Fixed Deposits in question were in fact maintained as margin/security for bank guarantees pertaining to the eligible infrastructure projects and were not independent investments of surplus funds. The Ground of appeal No. 5 is allowed in terms of our aforesaid observations.
55. The Ground of appeal No. 2, as per the concession of the Ld. AR is dismissed as withdrawn.
56. The Grounds of appeal Nos. 1, 6 & 7 being general are dismissed as not pressed.
57. In the result, the appeal filed by the assessee company is allowed in terms of our aforesaid observations. The Grounds of appeal Nos. 1, 6 & 7 being general are dismissed as not In the result, the appeal filed by the assessee company is allowed in terms
ITA No.2321/Hyd/2025
AY: 2015-16
58. We shall now take up the appeal filed by the assessee company against the order passed by the CIT(A)-11, Hyderabad, dated 20/11/2025, which in turn arises from the order passed by the AO under section 143(3) of the Act, dated 20/12/2017 for AY 2015-16. The assessee company has assailed the impugned order on the following grounds of appeal before us:
“1) The order of the learned CIT (A) is erroneous to the extent it is prejudicial to the appellant herein;
2) The learned CIT (Appeals) is not justified in holding that the amount of Rs.1,12,54,650/- representing interest on the fixed deposits does not form part of the gross total income for the purposes of deduction u/s 801A (4) of the I.T. Act.
3) The learned CIT (Appeals) ought to have considered the fact that the said amount represents business income as the fixed deposits were made for the purposes of providing bank guarantee.
4) As an alternative, the learned CIT (Appeals) ought to have held that the expenditure on payment of interest to the extent of the deposits made against which the interest is received could be allowed as a deduction and only the net amount could have been reduced for the purposes of claiming deduction u/s 801A (4) of the I.T. Act.
5) Any other ground/grounds that may be urged at the time of hearing.”
59. The Learned Authorized Representatives of both parties at the threshold of hearing of the appeal, submitted that the impugned order passed by the CIT(A) 60. wherein he has observed that the interest on the fixed deposits (FDRs) is not forming part of the gross total income for the purpose of computing the assessee’s claim of deduction under section 80IA(4) of the Act remains the same as was there before us in ground of appeal No.5 in ITA No.1808/Hyd/2025 for AY 2017-18.
60. Considering the fact that the issue involved in the present appeal, based on which the impugned order of the CIT(A) has been assailed before us, remains the same as had been adjudicated while deciding the ground of appeal No.5 in the assessee’s appeal in ITA No.1808/Hyd/2025 for AY 2017-18, the order therein passed shall apply mutatis mutandis for the purpose of disposing of the grounds 40 of appeal Nos. 2 to 4 of the present appeal.
61. Accordingly, we, on the same terms, direct the AO to include the interest income of Rs.1,12,54,650/- earned on the Fixed Deposits (FDRs), which, as stated by the Ld. AR have been maintained by the assessee company for furnishing bank guarantees relating to the eligible infrastructure projects, while computing the deduction admissible to the assessee company under Section 80IA(4) of the Act, subject to verification that the Fixed Deposits in question were in fact maintained as margin/security for bank guarantees pertaining to the eligible infrastructure projects and were not independent investments of surplus funds. The Grounds of appeal Nos. 2 to 4 are allowed in terms of our aforesaid observations.
62. Grounds of appeal No.1 and 5 being general are dismissed as not pressed.
63. Grounds of appeal No.1 and 5 being general are dismissed as not pressed. of our aforesaid observations.
ITA No.2322/Hyd/2025
AY: 2015-16
64. We shall now take up the appeal filed by the assessee company against the order passed by the CIT(A)-11, Hyderabad, dated 20/11/2025, which in turn arises from the order passed by the AO under section 153A of the Act, dated 17/09/2021 for AY 2015-16. The assessee company has assailed the impugned order on the following grounds of appeal before us:
“1) The order of the learned CIT (A) is erroneous to the extent it is prejudicial to the appellant herein;
2) (i) The learned CIT (Appeals) erred in holding that the contents of the diary found at the residential premises of the Managing Director of the company can be treated as material papers while completing the assessment u/s 153A of 1.T. Act in the case of the appellant company.
3) The learned CIT (Appeals) is not justified in holding that the amount of payments found in the diary aggregating to Rs.2,03,50,000/- represents unexplained expenditure.
4) The learned CIT (Appeals) ought to have considered the fact that the amount of Rs.2,03,50,000/- represents expenditure incurred by the company through its Managing Director and the notings. represent rough workings made by the Managing Director while incurring the expenditure.
5) The learned CIT (Appeals) ought to have accepted the explanation of the appellant and directed deletion of the addition made.
6) The learned CIT (Appeals) is not justified in holding that the amount of Rs.1,12,54,650/- representing interest on the fixed deposits does not form part of the gross total income for the purposes of deduction u/s 801A (4) of the 1.T. Act.
7) The learned CIT (Appeals) ought to have considered the fact that the said the purposes of providing bank guarantee. amount represents business income as the fixed deposits were made for
8) As an alternative, the learned CIT (Appeals) ought to have held that the expenditure on payment of interest to the extent of the deposits made against which the interest is received could be allowed as a deduction and only the net amount could have been reduced for the purposes of claiming deduction u/s 801A (4) of the I.T. Act.
9) Any other ground/grounds that may be urged at the time of hearing.”
65. The Learned Authorized Representatives of both parties submitted that the core issues involved in the present appeal, viz., (i) addition of unexplained expenditure under section 69C of the Act: Rs.2,03,50,000/- (reduced after telescoping to Rs. 1,15,78,856/-); and (ii) the exclusion of the interest income on fixed deposits (FDRs) of Rs.1,12,54,650/- from the gross total income of the assessee company for the purpose of computing deduction under section 80IA(4) of the Act, as had been upheld by the CIT(A) remains the same as were there in the appeal filed by the assessee company y in ITA No.1808/Hyd/2025 for AY
66. We have given thoughtful consideration and perused the orders of the authorities below.
67. Admittedly, it is a matter of fact borne from record that both the aforementioned issues based on which the impugned order of the CIT(A) has been assailed before us, viz., (i) addition of unexplained expenditure under section 69C of the Act: Rs.2,03,50,000/- (reduced after telescoping to Rs. 1,15,78,856/-); and (ii) the exclusion of the interest income on fixed deposits (FDRs) of Rs.1,12,54,650/- from the gross total income of the assessee company for computing deduction under section 80IA(4) of the Act, on the first principle regarding the subject issue remains the same as had been deliberated upon and adjudicated by us while disposing of the appeal filed by the assessee company for AY 2017-18 in ITA No.1808/Hyd/2025 vide grounds of appeal No. 3 and 5, therefore, our order therein passed on the aforementioned issues shall apply mutatis mutandis for the purpose of disposing of the present appeal.
68. Accordingly, in terms of our observations recorded in the context of the addition made under section 69C of the Act while disposing of the appeal of the assessee company for the AY 2017-18 in ITA No.1808/Hyd/2025, we, on the same terms, direct the AO to vacate the addition of Rs.2,03,50,000/-(reduced after telescoping to Rs. 1,15,78,856/-) as had been sustained by the CIT(A). The Grounds of appeal Nos. 2 to 5
69. Apropos the CIT(A)’s observation that the interest income of Rs.1,12,54,650/- earned by the assessee company on fixed deposits (FDRs) maintained for furnishing bank guarantee relating to the eligible infrastructure projects while computing the deduction admissible to the assessee company under Section 80IA(4) of the Act, we direct the AO to include the interest income of Rs.1,12,54,650/- earned on the Fixed Deposits (FDRs), which, as stated by the Ld. AR have been maintained by the assessee company for furnishing bank guarantees relating to the eligible infrastructure projects, while computing the deduction admissible to the assessee company under Section 80IA(4) of the Act, subject to verification that the Fixed Deposits in question were in fact maintained as margin/security for bank guarantees pertaining to the eligible infrastructure projects and were not independent investments of surplus funds. The Grounds of appeal Nos. 6 to 8 are allowed in terms of our aforesaid observations.
70. Grounds of appeal Nos.1 and 9 being general are dismissed as not pressed.
71. Resultantly, the appeal filed by the assessee company is allowed in terms of our aforesaid observations.
ITA No.2323/Hyd/2025
AY: 2016-17
72. We shall now take up the appeal filed by the assessee company against the order passed by the CIT(A)-11, Hyderabad, dated 06/10/2025, which in turn arises for AY 2016-17. The assessee company has assailed the impugned order on the following grounds of appeal before us:
“1. The order of the Learned Commissioner of Income Tax (Appeals) is erroneous both on facts and in law to the extent it is prejudicial to the appellant here in.
2. The DCIT Central Circle (1) (2) Hyderabad has no jurisdiction to issue the notice and to make an assessment and accordingly the notice is invalid.
3. The Id. CIT(A) erred in holding that an amount of Rs. 1,49,11,000/- out of Rs.2,24,41,000/- is not explained and further erred in confirming the addition made u/s 69C of the I.T. Act.
4. The Ld. CIT(A) ought to have considered the fact that the dairy represents the distribution expenses of bonafide genuine expenses incurred by the company and is recorded in the books of account.
5. The CIT(A) ought to have held that no part of the amount represents unexplained expenditure
6. The Ld CIT(A) is erred in confirming addition of Rs.2,01.44,930/- as unexplained money. The appellant accepted for disallowance of Rs.02,01,45,930/- and made an entry in the books of account by crediting the expenses account and debiting the cash account.
7. The Ld. CIT(A) is not justified in holding the interest on Fixed deposits amounting to Rs.1,20,58,579/- would not qualify for deduction u/s 801(A)(4). The Id. CIT(A) ought to have considered the fact that the interest aroused on the Fixed deposits made against bank guarantees and therefore ought to have held that the interest represents business income As an alternate the CIT(A) ought to have deducted the proportionate interest payable from the interest received.
8. Any other ground that may be urged at the time of hearing.”
73. The Learned Authorized Representatives of both parties at the threshold of hearing of the appeal submitted that the three issues involved in the present appeal, viz., (i) the part sustaining by the CIT(A) of the addition made by the AO of corresponding expenditure under section 69C of the Act: Rs.1,49,11,000/- made by the AO under section 69A of the Act, which thereafter has been upheld by the CIT(A): Rs.2,01,44,930/-; and (ii) the CIT(A)’s observation that the interest on fixed deposits (FDRs) earned by the assessee company would not qualify for deduction under section 80IA(4) of the Act, remains the same as were involved in the appeal filed by the assessee company in ITA No.1808/Hyd/2025 for AY 2017-18.
74. We have given thoughtful consideration and perused the record and are of the view that the subject issues involved in the present appeal remain the same as had been looked into and adjudicated by us while disposing of the appeal filed by the assessee company for AY 20-17-18 in ITA No.1808/Hyd/2025.
75. We thus, in terms of our aforesaid observations recorded while disposing of the appeal filed by the assessee company in ITA No.1808/Hyd/2025 for AY 2017-18, direct the AO to vacate the addition of Rs.1,49,11,000/- (reduced after telescoping to Rs. 57,13,248/-) as had been upheld by the CIT(A) under section 69C of the Act on the same terms as had been recorded by us while disposing of the grounds of appeal No.3 in the abovementioned ITA No.1808/Hyd/2025 for AY 2017-18. The Grounds of appeal Nos. 3 to 5 are allowed in terms of our aforesaid observations.
76. Apropos the addition made by the AO of unexplained money under section 69A of the Act of Rs.2,01,44,930/- as had been upheld by the CIT(A), we find the ground of appeal No.4 in the assessee’s appeal in ITA No.1808/Hyd/2025 for AY 2017-18. Accordingly, the AO is on the same terms directed to vacate the addition of Rs.2,01,44,930/- made by him under section 69A of the Act. The Ground of appeal No. 6 is allowed in terms of our aforesaid observations.
77. Coming to the observation of the CIT(A) wherein he had directed that the interest on fixed deposits of Rs.1,20,58,579/- would not qualify for deduction under section 80IA(4) of the Act, we find that the said issue had been adjudicated by us while disposing of the ground of appeal No. 5 in ITA No.1808/Hyd/2025 for AY 2017-18. Accordingly, the AO is on the same terms directed to include the interest income of Rs. 1,20,58,579/- earned on the Fixed Deposits (FDRs), which, as stated by the Ld. AR have been maintained by the assessee company for furnishing bank guarantees relating to the eligible infrastructure projects, while computing the deduction admissible to the assessee company under Section 80IA(4) of the Act, subject to verification that the Fixed Deposits in question were in fact maintained as margin/security for bank guarantees pertaining to the eligible infrastructure projects and were not independent investments of surplus funds. The Ground of appeal No. 7 is allowed in terms of our aforesaid observations.
78. The Grounds of appeal Nos. 1, 2 and 8 being general are dismissed as not pressed.
79. In the result, the appeal filed by the assessee company is allowed in terms
ITA No.1809/Hyd/2025
AY: 2018-19
80. We shall now take up the captioned appeal filed by the assessee company against the order passed by the CIT(A)-11, Hyderabad, dated 23/07/2025, which in turn arises from the order passed by the AO under section 153A of the Act, dated 17/09/2021 for AY 2018-19. The assessee company has assailed the impugned order on the following grounds of appeal before us:
1) The order of the learned CIT (A) is erroneous to the extent it is prejudicial to the appellant herein;
2) The learned CIT (A) is not justified in holding that the Assessing Officer, i.e. ACIT, Central Circle-1(2) has proper jurisdiction to make assessment when the order transferring the proceedings were not served on the appellant.
3) (i) The learned CIT (A) erred in confirming the action of the Assessing Officer in making addition of Rs.19,58,500/- based on the dumb documents.
(ii) The learned CIT (Appeals) ought to have considered the fact that no addition could be made by the Assessing Officer based on a slip of paper without any corroborative evidences;
(iii) The learned CIT (A) ought to have considered the detailed explanation submitted and deleted the addition made of Rs.19,58,500/-.
4) (i) The learned CIT (Appeals) erred in holding that interest received of Rs.1,20,80,055/- represent the interest on fixed deposits made for providing bank guarantee which does not form part of the gross total income for the purposes of Sec.80IA of the I.T. Act.
(ii) As an alternate, the learned CIT (Appeals) ought to have found that interest paid to the bank is to be reduced from interest received. the deposits were made from out of the loan funds and the proportionate
(iii) The learned CIT (A) ought to have considered the fact that the said amount represent the business receipt as the same was received on the deposits made for the purposes of obtaining bank guarantee and the appellant is entitled for deduction u/s 80IA (4) even in respect of the said amount;
5) Any other ground/grounds that may be urged at the time of hearing.”
81. The Learned Authorized Representatives of both parties, at the threshold of appeal, viz., (i) the addition made by the AO under section 69C of the Act to the extent principally sustained by the CIT(A): Rs. 19,58,500/- (reduced after telescoping to Rs. Nil); and (ii) the CIT(A)’s observation that the interest income received by the assessee company on fixed deposits made for providing bank guarantee would not form part of its gross total income for the purpose of computing deduction under section 80IA(4) of the Act remains the same as were there involved in the appeal filed by the assessee company in ITA No.1808/Hyd/2025 for AY 2017-18.
82. We have given thoughtful consideration and concur with the Learned Authorized Representatives of both parties that the aforesaid issues involved in the present appeal remain the same as had been looked into and adjudicated by us while disposing of the appeal in ITA No.1808/Hyd/2025 for AY 2017-18.
83. We thus, in terms of our aforesaid observations recorded while disposing of the ground of appeal No.3 in ITA No.1808/Hyd/2025 for AY 2017-18, on the same terms direct the AO to vacate the impugned addition of Rs.19,58,500/-(reduced after telescoping to Nil). The Ground of appeal No.3 is allowed in terms of our aforesaid observations.
84. Coming to the direction of the CIT(A) that the interest on fixed deposits (FDRs), though made for providing bank guarantee, is not to form part of the gross total income of the assessee company for computing the deduction under section disposing of the ground of appeal No.5 in ITA No.1808/Hyd/2026. We thus, on the same terms, direct the AO to include the interest income of Rs.1,20,80,055/- earned on the Fixed Deposits (FDRs), which, as stated by the Ld. AR have been maintained by the assessee company for furnishing bank guarantees relating to the eligible infrastructure projects, while computing the deduction admissible to the assessee company under Section 80IA(4) of the Act, subject to verification that the Fixed Deposits in question were in fact maintained as margin/security for bank guarantees pertaining to the eligible infrastructure projects and were not independent investments of surplus funds. The Ground of appeal No. 4 is allowed in terms of our aforesaid observations.
85. The Grounds of appeal Nos.1, 2 and 5 being general in nature are dismissed as not pressed.
86. Resultantly, the appeal filed by the assessee company is allowed in terms of our aforesaid observations.
ITA No.1810/Hyd/2025
AY: 2019-20
87. We shall now take up the captioned appeal filed by the assessee company against the order passed by the CIT(A)-11, Hyderabad, dated 30/08/2025, which in turn arises from the order passed by the AO under section 143(3) of the Act, dated 17/09/2021 for AY 2018-19. The assessee company has assailed the
“1) The order of the learned CIT (A) is erroneous to the extent it is prejudicial to the appellant herein;
2) The learned CIT (A) is not justified in holding that the Assessing Officer, i.e. ACIT, Central Circle-1(2) has proper jurisdiction to make assessment when the order transferring the proceedings were not served on the appellant.
3) (i) The learned CIT (Appeals) erred in holding that interest received of Rs.70,33,248/- represent the interest on fixed deposits made for providing bank guarantee which does not form part of the gross total income for the purposes of Sec.801A of the I.T. Act.
(ii) As an alternate, the learned CIT (Appeals) ought to have found that the deposits were made from out of the loan funds and the proportionate interest paid to the bank is to be reduced from interest received.
(iii) The learned CIT (A) ought to have considered the fact that the said amount represent the business receipt as the same was received on the deposits made for the purposes of obtaining bank guarantee and the appellant is entitled for deduction u/s 80IA (4) even in respect of the said amount;
4) Any other ground/grounds that may be urged at the time of hearing.”
88. The Learned Authorized Representatives of both parties at the threshold of hearing of the appeal submitted that the solitary issue involved in the present appeal, i.e., the sustainability of the CIT(A)’s observation that that interest on fixed deposits received by the assessee company for providing bank guarantee is not to be included in the gross total income of the assessee company for the purpose of computing deduction under section 80IA(4) of the Act remains the same as was there in the assessee’s appeal in
ITA No.1808/Hyd/2025 for
AY 2017-18.
89. We have given thoughtful consideration to the aforesaid contentions of the
90. Admittedly, it is a matter of fact borne from record that the solitary issue involved in the present appeal, i.e., the sustainability of the CIT(A)’s view that the interest income received by the assessee company on fixed deposits made for providing bank guarantees is not to be included in the gross total income of the assessee company for the purpose of computing the deduction under section 80IA(4) of the Act has been looked into and adjudicated by us while disposing of the ground of appeal No.5 in ITA No.1808/Hyd/2025.
91. We thus, in terms of our aforesaid observations on the same terms, direct the AO to include the interest income of Rs. 70,33,248/- earned on the Fixed Deposits (FDRs), which, as stated by the Ld. AR have been maintained by the assessee company for furnishing bank guarantees relating to the eligible infrastructure projects, while computing the deduction admissible to the assessee company under Section 80IA(4) of the Act, subject to verification that the Fixed Deposits in question were in fact maintained as margin/security for bank guarantees pertaining to the eligible infrastructure projects and were not independent investments of surplus funds. The Ground of appeal No. 3 is allowed in terms of our aforesaid observations.
92. The Grounds of appeal Nos. 1, 2 and 4 being general in nature are dismissed as not pressed.
93. In the result, the appeal filed by the assessee company is allowed in terms
ITA No.1811/Hyd/2025
AY: 2020-21
94. We shall now take up the captioned appeal filed by the assessee company against the order passed by the CIT(A)-11, Hyderabad, dated 16/08/2025, which in turn arises from the order passed by the AO under section 143(3) of the Act, dated 23/03/2022 for AY 2020-21. The assessee company has assailed the impugned order on the following grounds of appeal before us:
“1) The order of the learned CIT (A) is erroneous to the extent it is prejudicial to the appellant herein;
2) The learned CIT (A) is not justified in holding that the Assessing Officer, i.e. ACIT, Central Circle-1(2) has proper jurisdiction to make assessment.
3) (i) The learned CIT (Appeals) erred in holding that interest received of Rs.84,65,808/- does not qualify for deduction u/s 801A when it represents the interest on fixed deposits made for providing bank guarantee which does not form part of the gross total income for the purposes of Sec.801A of the I.T. Act.
(ii) As an alternate, the learned CIT (Appeals) ought to have found that the deposits were made from out of the loan funds and the proportionate interest paid to the bank is to be reduced from interest received.
(iii) The learned CIT (A) ought to have considered the fact that the said amount represent the business receipt as the same was received on the deposits made for the purposes of obtaining bank guarantee and the appellant is entitled for deduction u/s 801A (4) even in respect of the said amount;
4. Any other ground/grounds that may be urged at the time of hearing.” 95.
95. The Learned Authorized Representatives of both parties at the threshold of hearing of the appeal submitted that the solitary issue involved in the present appeal, i.e., the CIT(A)’s observation that the interest income received on the fixed deposits (FDRs) made for providing bank guarantees is not to be included the same as had been looked into and adjudicated by us while disposing of the appeal in ITA No.1808/Hyd/2025 for AY 2017-18.
96. We have given thoughtful consideration and concur with the Learned Authorized Representatives that the solitary issue involved in the present appeal, i.e., the sustainability of the CIT(A)’s view that the interest earned on fixed deposits (FDRs) made for providing bank guarantees is not to be included in the total income of the assessee company for the purpose of computing deduction under section 80IA(4) of the Act had been deliberated upon and adjudicated by us while disposing of the ground of appeal No.5 in ITA No.1808/Hyd/2025 for AY 2017-18.
97. We thus, on the same terms, direct the AO to include the interest income of Rs.84,65,808/- earned on the Fixed Deposits (FDRs), which, as stated by the Ld. AR have been maintained by the assessee company for furnishing bank guarantees relating to the eligible infrastructure projects, while computing the deduction admissible to the assessee company under Section 80IA(4) of the Act, subject to verification that the Fixed Deposits in question were in fact maintained as margin/security for bank guarantees pertaining to the eligible infrastructure projects and were not independent investments of surplus funds. The Ground of appeal No. 3 is allowed in terms of our aforesaid observations.
98. The Grounds of appeal Nos. 1, 2 and 4 being general in nature are
99. Resultantly, the appeal filed by the assessee company is allowed in terms of our aforesaid observations.
100. In the result, all the appeals filed by the assessee company in ITA Nos. 2321 to 2323/Hyd/2025, ITA Nos. 1808 to 1811/Hyd/2025 for AY(s) 2015-16, 2015- 16, 2016-17, 2017-18, 2018-19, 2019-20 & 2020-21 are allowed in terms of our aforesaid observations.
Order pronounced in the open court on 30/09/2026.
