Income Tax – Amalgamation – Shares held as Stock-in-Trade vs Capital Asset – Taxability under Section 28 – Assessees, promoter investment companies, received shares of amalgamated company in lieu of shares of amalgamating company under a court-sanctioned scheme – Assessing Officer treated shares as stock-in-trade and taxed notional gains as business income – Tribunal held no income accrued in absence of sale or transfer – High Court remanded matter holding that if shares were stock-in-trade, gains would be taxable under Section 28 – Supreme Court examined whether substitution of shares itself constitutes taxable business income – Held: Mere substitution of shares on amalgamation does not automatically give rise to taxable business income – What is relevant is real commercial realisation and not notional appreciation – Taxability depends on whether shares received are immediately realisable, freely tradable, and of ascertainable market value – Matter remitted for factual determination by Tribunal [Paras 8–11, 15–18, 39–40].

Income Tax – Section 28 – Scope and Interpretation – Real Income Doctrine – Section 28 is a wide charging provision taxing real profits and gains of business whether received in cash or kind – However, income must be real, accrued or received, and commercially realisable – Hypothetical or notional gains cannot be taxed unless expressly deemed by statute – In amalgamation, unless assessee receives a real, immediately disposable commercial benefit, no income accrues at the stage of substitution – Principle of real income reiterated [Paras 13–15, 18–19].

Amalgamation – Legal Nature – Not a Sale or Exchange per se – Amalgamation results in statutory substitution of one corporate holding by another – Amalgamating company ceases to exist and shareholders receive shares by operation of law – Not a bilateral exchange in strict legal sense – However, amalgamation constitutes “transfer” for purposes of capital gains as held in Grace Collis – Distinction maintained between capital gains taxation and business income taxation [Paras 16–18].

Capital Gains – Section 47(vii) – Limited to Capital Assets – Exemption under Section 47(vii) applies only where shares are held as capital assets – If shares are stock-in-trade, exemption under Section 47(vii) is unavailable – Determination of nature of holding is foundational to deciding taxability – Tribunal directed to decide nature of holding afresh [Paras 12–13, 26].

Section 260A – High Court Jurisdiction – Incidental Questions of Law – Contention that High Court exceeded jurisdiction by addressing Section 28 rejected – Issue of business income taxability was incidental and arose directly from Tribunal’s findings – Parties were fully heard and no prejudice caused – High Court empowered to consider such incidental questions even if not formally framed – Distinguished Shiv Raj Gupta [Paras 9–9.6].

Preliminary Inquiry vs Final Tax Liability – Role of Tribunal – Tribunal erred in declining to decide whether shares were capital assets or stock-in-trade – Such determination is mandatory before applying charging provisions – High Court justified in remanding matter for fresh adjudication – Tribunal to examine commercial realisability, marketability, and nature of shares received [Paras 8.3, 11, 18.4–18.6].

Decision: Appeals dismissed – High Court judgment upheld – Matters remanded to Income Tax Appellate Tribunal to determine whether shares were held as stock-in-trade or capital assets and whether substitution on amalgamation resulted in real, taxable business income under Section 28 – No automatic taxability on mere substitution of shares.

Civil Law – Dismissal for Default – Conditional Restoration – Appeal dismissed for non-prosecution – High Court restored appeal subject to deposit of costs within stipulated time – Failure to deposit costs within time resulted in refusal to process restoration – Subsequent deposit made belatedly without leave of Court – Recall application rejected – Held: In peculiar facts, rigid adherence to procedural condition defeated substantial justice – Appeal deserved to be restored [Paras 3–5, 9].

Civil Procedure Code – Section 151 CPC – Inherent Powers – Recall of Orders – High Court declined to exercise inherent powers to recall order refusing restoration on ground of non-compliance with conditional cost order – Supreme Court held that inherent powers exist to prevent miscarriage of justice where default is technical and not deliberate [Paras 5–9].

Procedural Law – Handmaid of Justice – Technical Lapses – Supreme Court reiterated that procedure should not override merits – Dispute pending since long and dismissal on technical ground led to unnecessary multiplicity of proceedings – Matter should be decided on merits rather than non-suiting parties for procedural lapses [Paras 9–11].

Discretionary Jurisdiction – Supreme Court – Balancing Equity – While restoring appeal, Supreme Court deprecated laxity on part of appellants – Respondents unnecessarily dragged to Supreme Court – To balance equities, costs imposed payable to Supreme Court Middle Income Legal Aid Society [Paras 11–12].

Costs – Deterrent and Compensatory – Appellants directed to deposit Rs.50,000/- with Supreme Court Middle Income Legal Aid Society within two weeks – Restoration made subject to such deposit – Ensuring accountability of litigants while advancing justice [Para 12].

Direction to High Court – Expeditious Disposal – Restored appeal directed to be heard and decided by High Court within four weeks – Respondents granted liberty to file counter affidavit – Emphasis on early resolution of long-pending litigation [Paras 9–10, 12].

Decision: Appeal allowed – Order dated 15.09.2025 passed by the High Court of Rajasthan, Bench at Jaipur set aside – Civil First Appeal restored to its original file – Appellants directed to deposit Rs.50,000/- with Supreme Court Middle Income Legal Aid Society – High Court directed to decide the appeal on merits within four weeks – Pending applications disposed of.

Criminal Law – Culpable Homicide – Distinction between Murder and Culpable Homicide not amounting to Murder – Sections 299, 300 and 304 Part II IPC – Appellant convicted for causing death of deceased by a single lathi blow on head during a sudden group clash – No premeditation or common object established – Incident arose out of a sudden quarrel and free fight between rival parties – Both sides sustained injuries – Held: Act attributable to appellant showed knowledge that injury was likely to cause death but no intention to cause death – Conviction rightly altered from Section 302 IPC to Section 304 Part II IPC [Paras 5–5.6].

Unlawful Assembly – Common Object – Sections 147, 148 and 149 IPC – Prosecution failed to establish existence of unlawful assembly with common object to cause death – Evidence disclosed a sudden free fight with no prior meeting of minds – Accused persons could not be held vicariously liable – Charges under Sections 147, 148 and 149 IPC not made out [Paras 5.2–5.2.1].

Evidence Appreciation – Ocular Evidence and Medical Corroboration – Eyewitnesses consistently stated that appellant struck deceased with lathi on head – Medical evidence confirmed single blunt force injury on head resulting in fracture and death – Ocular and medical evidence found consistent and reliable to fix individual liability of appellant [Paras 3.6–3.9, 5.3].

Single Blow Case – Knowledge vs. Intention – Use of lathi and injury on vital part (head) sufficient to infer knowledge of likelihood of death – Absence of intention to cause death and lack of premeditation excluded offence from Section 302 IPC – Offence squarely falls under Section 304 Part II IPC [Paras 5.4–5.5].

Sentence – Reduction on Grounds of Advanced Age and Period Undergone – Appellant more than 80 years of age – Had already undergone about six years and three months of imprisonment – Sending appellant back to prison at advanced age held harsh and unwarranted – Sentence reduced to period already undergone while maintaining conviction under Section 304 Part II IPC [Paras 6–6.1].

Decision: Appeal dismissed on merits – Conviction under Section 304 Part II IPC affirmed – Sentence modified to imprisonment already undergone considering advanced age of appellant – Bail bonds discharged – Interlocutory applications disposed of.

Prevention of Corruption Act – Registration of FIR – Preliminary Inquiry – Not Mandatory in Every Case – FIRs registered by Karnataka Lokayukta Police on directions of Superintendent of Police without conducting preliminary inquiry – High Court quashed FIRs holding action to be without jurisdiction – Held: Issue no longer res integra in view of judgment in State of Karnataka v. T.N. Sudhakar Reddy – Preliminary inquiry not mandatory where source information is detailed and prima facie discloses commission of cognizable offence – High Court erred in quashing FIRs on this ground [Paras 3–6, 12].

Section 17, PC Act – Power of Superintendent of Police – Authorization of Investigation – Challenge raised that Superintendent of Police could not authorize Deputy Superintendent of Police to investigate offences under PC Act – Held: Superintendent of Police is competent to direct registration of FIR and simultaneously authorize investigation, subject to restrictions under Section 17 PC Act – Registration of FIR governed by CrPC and not fettered by Section 17 – Law settled by T.N. Sudhakar Reddy and followed in State of Karnataka v. Channakeshava H.D. [Paras 4–6, 12].

Writ Jurisdiction – FIR under PC Act – Adjudication on Merits – High Court allowed writ petitions solely on preliminary jurisdictional issues without examining other grounds touching upon merits including lack of foundational material for disproportionate assets cases – Held: Respondent deprived of adjudication on remaining grounds – Matter remitted to High Court for fresh consideration limited to grounds not earlier adjudicated [Paras 7–14].

Remand – Scope – Filing of Chargesheet During Pendency of Appeal – During pendency of appeal, chargesheets filed against respondent – Held: Respondent permitted to assail chargesheets in revived writ petitions post-remand – Liberty limited to challenge chargesheets filed during pendency of appeal – Remedies under CrPC/BNSS remain unaffected [Paras 15–16].

Interim Protection – Continuance on Remand – Respondent had interim protection during pendency of writ petitions – Held: No coercive steps to be taken against respondent till disposal of writ petitions by High Court post-remand [Para 17].

Decision: Appeal allowed – Impugned order of the High Court set aside – Writ petitions restored to file of High Court of Karnataka for fresh adjudication on merits confined to grounds not earlier decided – Interim protection to continue till disposal – Pending applications disposed of.

POCSO Act – Bail – Cancellation – Heinous Sexual Offences against Minor – Grant of Bail by High Court set aside – Accused granted bail by High Court in a case involving allegations of repeated aggravated penetrative sexual assault, gang rape, abduction and intimidation of a minor girl aged about 14 years – Charges attracted punishment of life imprisonment and death under BNSS and POCSO Act – Victim’s statement under Section 183 BNSS disclosed repeated sexual assault under threat with firearm and recording of acts for blackmail – Medical and counselling reports corroborated trauma and gravity of offence – Held: Grant of bail was manifestly perverse and legally unsustainable – High Court ignored material evidence and statutory rigour of POCSO Act – Bail cancelled [Paras 11–17].

Bail Jurisprudence – Relevant Factors Ignored – Miscarriage of Justice – High Court failed to consider nature and gravity of offence, severity of punishment, vulnerability of minor victim, and likelihood of witness intimidation – Undue reliance placed on delay in FIR and speculative observations regarding victim’s age – Bail order suffered from material non-consideration and misdirection in law warranting interference by Supreme Court [Paras 12–16].

Consent – Minor Victim – Irrelevance under POCSO Act – Victim’s date of birth established through school records and medical opinion – Victim undisputedly a minor at the time of offence – Statutory presumption under POCSO Act applies – Plea of consensual relationship wholly untenable in law and liable to be rejected at threshold [Paras 5.3–5.4, 11].

Delay in FIR – Sexual Offences against Children – Not Fatal – Delay in lodging FIR sufficiently explained by intimidation, threats and psychological trauma suffered by minor victim – Delay by itself cannot dilute seriousness of offence or justify grant of bail in POCSO cases at the bail stage [Paras 13, 16].

Cancellation of Bail – Principles Reiterated – Bail can be cancelled not only on proof of supervening circumstances but also where the order granting bail is perverse, ignores relevant material or results in miscarriage of justice – Absence of misuse of liberty is not decisive where bail order itself is legally infirm [Paras 16–17].

Witness Protection – Victim Safety – Paramount Consideration – Victim and accused residing in same locality – Post-bail intimidation alleged, resulting in victim discontinuing school due to fear – In offences involving sexual assault on children, protection of victim and preservation of fair trial assume overriding importance [Paras 9.2, 15].

Decision: Criminal appeal allowed – Impugned order dated 09.04.2025 granting bail set aside – Bail granted to Respondent No. 2 cancelled – Accused directed to surrender within two weeks, failing which coercive steps to be taken – Trial Court directed to conduct trial expeditiously [Paras 17–19].

Negotiable Instruments Act – Section 138 – Multiple Cheques – Same Underlying Transaction – Distinct Causes of Action – Complainant entered into Agreement to Sell with accused firm – On failure to execute sale deed, multiple cheques issued by firm and proprietor from different accounts on different dates – Each cheque presented separately and dishonoured independently – High Court quashed one complaint holding parallel prosecution impermissible – Held: Each dishonour of a cheque gives rise to an independent cause of action – Merely because cheques arise from same transaction does not bar multiple complaints – Quashing amounted to premature adjudication of disputed facts – Complaint restored [Paras 33–35].

Criminal Procedure Code – Section 482 – Inherent Powers – Limits on Quashing – Mini Trial Impermissible – High Court examined whether personal cheques were issued in substitution of firm’s cheques – Determination involved disputed questions of fact regarding intention and understanding between parties – Held: High Court exceeded jurisdiction by evaluating factual controversies – Such issues must be left for trial – Quashing at threshold not justified where ingredients of offence are disclosed [Paras 26–29, 34–35].

Cheque Dishonour – Presumption of Legally Enforceable Debt – Section 139 NI Act – Accused contended that no liability subsisted and excess amounts were claimed – Statutory presumption operates once issuance and dishonour of cheque established – Burden lies on accused to rebut presumption during trial – High Court rightly refused to quash remaining complaints – Defence cannot be examined under Section 482 CrPC [Paras 40–44].

Multiplicity of Proceedings – Estoppel – Not Applicable at Threshold – Argument that complainant exhausted remedy by presenting one set of cheques rejected – Presentation of different cheques drawn on different accounts does not attract estoppel – Whether cheques were alternative securities or supplementary assurances is a mixed question of fact – To be adjudicated in evidence [Paras 34–35].

Decision – Appeal by complainant allowed – High Court order quashing Complaint Case No. 3298 of 2019 set aside – Complaint restored for trial – Appeals by accused dismissed – All complaints under Section 138 NI Act to proceed independently – Observations not to prejudice trial [Paras 45–46].

Taxation - Motor Vehicles Act – Section 2(28) – Definition of “Motor Vehicle” – Construction Equipment Vehicles – Exclusion Clause – Dumpers, loaders, excavators, dozers, surface miners and similar heavy earth moving machinery used exclusively within factory or enclosed premises – Though mechanically propelled and capable of movement, vehicles designed and adapted only for off-road industrial use – Second part of Section 2(28) expressly excludes vehicles of special type adapted for use only in factory or enclosed premises – Held: Such construction equipment vehicles stand excluded from definition of “motor vehicle” [Paras 36–39].

Constitution of India – Entry 57, List II – Power to Tax Vehicles – “Suitable for Use on Roads” – Taxing power confined to vehicles suitable for use on public roads – Vehicles not plying on roads and not deriving benefit from public road infrastructure cannot be subjected to motor vehicle tax – Gujarat Tax Act cannot travel beyond constitutional limitation under Entry 57 – Levy on off-road vehicles held unconstitutional [Paras 26–31, 44–45].

Gujarat Motor Vehicles Tax Act, 1958 – Section 3 – Charging Provision – Schedule I – Though Section 3 authorises levy on “all motor vehicles”, Schedule I does not prescribe any rate of tax for construction equipment vehicles – Absence of charging rate indicates legislative intent not to tax such vehicles – Tax demand unsustainable in absence of statutory rate [Paras 42–44].

Construction Equipment Vehicles – Rule 2(cab), Central Motor Vehicles Rules, 1989 – Statutory recognition of construction equipment vehicles as a distinct class – Designed for off-highway operations in mining, industrial and construction activities – Merely having “on or off highway capability” does not convert them into ordinary motor vehicles – Nature, design and actual use decisive [Paras 40–41].

Motor Vehicle Tax – Registration under MV Act – No Estoppel Against Law – Mere registration of vehicles under Motor Vehicles Act does not create liability to pay road tax – If vehicles are otherwise excluded from tax under statute and Constitution, registration cannot validate illegal levy [Paras 45–46].

Precedent – Bolani Ores Ltd. v. State of Orissa – Continued Applicability – Phrase “adapted for use upon roads” interpreted as “suitable for use on roads” – Vehicles used exclusively within enclosed premises not taxable – Principle reaffirmed – Later decisions distinguished for failure to consider exclusionary clause in Section 2(28) MV Act [Paras 45–52].

Distinction from Contrary Authorities – Decisions in Natwar Parikh, Western Coalfields, Jagannath Area etc. distinguished – Those cases did not examine statutory exclusion for special-type vehicles adapted for factory or enclosed premises – Not applicable to pure off-road construction equipment vehicles [Paras 47–53].

Decision – Appeals allowed – Judgments of Gujarat High Court set aside – Heavy earth moving machinery and construction equipment vehicles used exclusively within factory/enclosed premises held not liable for registration or road tax – Liberty reserved to authorities if such vehicles are found plying on public roads [Paras 55–56].

Service Law – Appointment to Public Post – Ayurvedic Staff Nurse – Legitimate Expectation – Mere admission to training course not conferring right to appointment – Respondents completed Ayurvedic Nursing Training from Government institutions and claimed appointment as a matter of right based on past practice – High Court directed consideration of candidature on doctrine of legitimate expectation – Held: Advertisement and Government Orders never assured automatic appointment – Bond condition applied only if candidate was selected and appointed – No vested right accrued merely on completion of training [Paras 19–21].

Service Jurisprudence – Policy Change – Expansion of Training Institutions – Increased availability of candidates – Initially only one Government institution with 20 seats and appointments were given due to surplus vacancies – Subsequent policy change permitting private institutions resulted in exponential rise in trained candidates – Held: Past practice based on old factual matrix cannot create enforceable expectation after substantial policy shift [Paras 18, 20–21].

Doctrine of Legitimate Expectation – Scope and Limitations – Legitimate expectation is not a legal right but an expectation based on consistent promise or practice – To succeed, claimant must establish legitimacy of expectation and violation of Article 14 – Respondents failed to show any promise of appointment or discriminatory treatment – Doctrine held inapplicable in changed policy regime [Paras 21, 25–27].

Equality Clause – Article 14 – No Discrimination Established – No candidate admitted after 2010–11 was granted appointment under old system except pursuant to court orders – Respondents unable to point out any similarly situated person appointed directly – Held: No unequal treatment of equals and no arbitrariness by State [Paras 22, 27].

Recruitment Process – Statutory Rules and Selection Authority – Post of Ayurvedic Staff Nurse brought under UPSSSC after notification dated 15.12.2014 – Statutory service rules notified only in 2021 – Recruitment thereafter to be only through prescribed selection process – Direct appointment without selection impermissible [Paras 8, 22, 27].

Precedent – Distinction from N. Suresh Nathan Case – Earlier decision dealt with interpretation of service rules based on consistent departmental practice – Present case involved absence of statutory rules earlier and complete policy shift – Reliance held misplaced [Paras 23–24].

Decision: Appeals allowed – Impugned judgments of the High Court set aside – No direction for appointment – Respondents may participate in future selection subject to eligibility – Pending applications disposed of [Para 28–29].

Criminal Law - Preventive Detention – Drug Offender – Public Order vs. Law and Order – Detention based on three criminal cases under NDPS Act alleging possession and peddling of Ganja – Mere registration of offences and pendency of bail applications insufficient to establish disturbance of “public order” – Absence of material showing harm, danger, alarm or widespread impact on public health – Held: Activities at best affect “law and order” and not “public order” as required under Section 2(a) of the Act [Paras 8, 10].

Preventive Detention – Subjective Satisfaction – Requirement of Relevant Material – Detaining authority relied upon criminal antecedents from 2016–2023 and apprehension of future offences upon grant of bail – No analysis as to insufficiency of bail conditions or actual breach thereof – Mechanical reproduction of statutory language without demonstrating nexus to public order – Detention order vitiated for non-application of mind [Paras 8–10].

Preventive Detention – Bail – Detention Not Substitute for Cancellation of Bail – Detention order passed primarily due to apprehension that detenu would be released on bail and continue illegal activities – Failure of State to seek cancellation of bail or show violation of bail conditions – Preventive detention cannot be used to circumvent ordinary criminal law or frustrate bail orders [Paras 8–9].

Extraneous Considerations – Intention to Detain “At Any Cost” – Detention order revealed predisposition of detaining authority to keep detenu in custody irrespective of available remedies under ordinary law – Reliance on antecedents without proximate live link to public order – Consideration of extraneous factors renders detention illegal [Paras 8–9].

Preventive Detention – Strict Construction – Exceptional Nature of Power – Law of preventive detention being a hard and extraordinary law must be strictly construed – Liberty cannot be curtailed unless case squarely falls within statutory framework – Ordinary criminal law to be preferred where sufficient to deal with alleged conduct [Paras 9–10].

Precedents – Application – Principles in Rekha v. State of Tamil Nadu and Ameena Begum v. State of Telangana applied – Preventive detention cannot be invoked merely because prosecution under ordinary law may not secure continued custody – Detention to be quashed where ordinary law remedies exist [Paras 5–6, 9].

Decision – Appeal allowed – Order of detention dated 10.03.2025 quashed – Judgment of Telangana High Court dated 28.10.2025 set aside – Detenu directed to be released forthwith unless required in any other case [Para 11].