Issues: Whether assignment by sale and transfer of long-term leasehold rights in land and building is liable to GST.

Analysis: The assignment transfers the benefits arising from immovable property from the existing lessee to the assignee, who replaces the original lessee. Such a transaction falls outside the scope of taxable supply under Section 7(1)(a), Schedule II and Schedule III; consequently, GST under Section 9 is not attracted. The challenge was covered by the earlier binding decision, whose challenge before the Supreme Court had been dismissed.

Conclusion: Assignment of long-term leasehold rights in land and building is not liable to GST; the action under Section 73 was quashed.

Issues: (i) Arm's-length interest on foreign-currency loans to associated enterprises; (ii) Characterisation and pricing of corporate and performance guarantees; (iii) Benchmarking of BPO services, including tested-party selection, comparability and scope of adjustment; (iv) Separate-undertaking eligibility under section 10A despite common STPI licences and earlier consolidated claims; (v) Treatment of foreign-currency expenditure and data-link charges in computing export and total turnover; (vi) Validity and computation of expenditure disallowance under section 14A; (vii) Deductibility of year-end mark-to-market losses on export-hedging forward contracts; (viii) Treatment of TDS credit and the related income addition concerning deferred revenue.

Issue (i): Arm's-length interest on foreign-currency loans to associated enterprises.

Analysis: Transfer-pricing benchmarking of an outbound foreign-currency loan must reflect the market interest rate applicable to the currency concerned, rather than domestic prime lending rates. The loan examined was advanced in GBP, whereas the adjustment used an Indian bank's prime lending rate with an additional risk spread. The applicable GBP LIBOR was 3.72%. Even using a 400-basis-point spread for comparison, the resulting benchmark of 7.72% remained below the interest of 9.50% charged by the assessee. The spread was used illustratively and was not prescribed as an invariant benchmark.

Conclusion: The interest charged was accepted as arm's length, and the challenged interest adjustments were deleted in favour of the assessee.

Issue (ii): Characterisation and pricing of corporate and performance guarantees.

Analysis: Guarantees supporting subsidiary financing, contractual performance, leased premises and acquisitions constituted indirect long-term financing within section 92B. The absence of an immediate expenditure or an actual guarantee fee did not remove the transactions from transfer-pricing scrutiny. Commercial benefits accruing to the holding company and the asserted shareholder character of the activities did not eliminate the continuing risk undertaken until the guaranteed obligations were concluded. Nevertheless, bank-derived notional commission rates supplemented by an additional 200-basis-point markup were inappropriate. The adopted benchmark was 0.50% of outstanding guarantees.

Conclusion: Characterisation of the guarantees as international transactions was decided against the assessee. The guarantee-fee adjustment was restricted to 0.50% of total guarantees outstanding at the end of each relevant year, granting partial relief to the assessee.

Issue (iii): Benchmarking of BPO services, including tested-party selection, comparability and scope of adjustment.

Analysis: Under the transactional net margin method and the functional-comparability framework of Rule 10B, the foreign associated enterprises were not accepted as tested parties in the circumstances presented. Their BPO segments reported negative results, and they operated in different economic zones with differing currency risks and risk profiles. However, the domestic benchmarking also required correction. Accentia Technologies and iGate Global Solutions were unsuitable because of abnormal restructuring events and other comparability deficiencies. Infosys BPO and both TCS E-Serve entities were excluded on scale and functional grounds. Cosmic Global remained eligible. Inclusion of e4e Healthcare and Fortune Infotech depended on obtaining and sharing appropriate financial and segmental information; ICRA Techno Analytics required separately identifiable IT-enabled-services data. The abnormal commercial conditions affecting the assessee's operating results and its functions, assets and risks also required consideration. Benchmarking could not simply absorb the entire amount retained by the associated enterprises without evaluating the services performed and costs incurred.

Conclusion: Rejection of the foreign associated enterprises as tested parties was sustained against the assessee. Fresh benchmarking was directed with the specified comparable exclusions, conditional inclusions and functional analysis, granting relief to the assessee against the existing adjustment.

Issue (iv): Separate-undertaking eligibility under section 10A despite common STPI licences and earlier consolidated claims.

Analysis: Entitlement under section 10A depends on satisfaction of the statutory requirements, rather than the assessee's earlier treatment of its units. The adopted principle of no estoppel against statute permitted a claim based on separate undertakings even though deductions had previously been computed on consolidated, licence-wise figures. Earlier treatment could not itself foreclose examination of the claim. Whether the 51 units actually constituted separate eligible undertakings remained a factual matter requiring verification.

Conclusion: Examination of the separate-undertaking claim on its merits was directed in favour of the assessee. Actual eligibility of the individual units was left for verification by the Assessing Officer.

Issue (v): Treatment of foreign-currency expenditure and data-link charges in computing export and total turnover.

Analysis: The adopted findings concerning tax-holiday deductions granted relief against the reduction of foreign-currency technical-service expenditure from export turnover and required corresponding treatment of data-link charges in export and total turnover. Excluding delivery-related charges from export turnover alone would distort the deduction formula. The same turnover-parity approach governed the materially identical claims under the relevant tax-holiday provisions.

Conclusion: Relief concerning the foreign-currency expenditure adjustment was granted in favour of the assessee. Data-link charges excluded from export turnover must also be excluded from total turnover.

Issue (vi): Validity and computation of expenditure disallowance under section 14A.

Analysis: The assessment discussion sufficiently recorded dissatisfaction with the assessee's voluntary disallowance for purposes of section 14A(2); a separately worded formula of dissatisfaction was unnecessary on these facts. The direct expenditure voluntarily disallowed remained sustainable under Rule 8D(2)(i). For interest expenditure under Rule 8D(2)(ii), sufficient interest-free funds attracted the presumption that investments were made from those funds. The assessee had demonstrated substantial interest-free resources, warranting deletion of the interest component. Administrative expenditure under Rule 8D(2)(iii) was to be computed at 0.50% only on investments that actually yielded exempt income, rather than indiscriminately on all investments.

Conclusion: The satisfaction challenge was rejected against the assessee, and the direct-expenditure disallowance was sustained. The interest component was deleted in favour of the assessee, while the administrative component was directed to be recomputed using only investments yielding exempt income.

Issue (vii): Deductibility of year-end mark-to-market losses on export-hedging forward contracts.

Analysis: The forward contracts hedged foreign-exchange exposure arising from existing and anticipated export receipts and were incidental to the regular business, rather than speculative dealings. They related to revenue receipts and not acquisition of capital assets. Binding contractual obligations, adverse exchange movements at the balance-sheet date, and the regularly followed mercantile system of accounting supported recognition of the loss notwithstanding that payment had not occurred. The accounting treatment was consistently followed, and corresponding mark-to-market gains in other years had been accepted for taxation.

Conclusion: The year-end mark-to-market loss on the export-hedging forward contracts was allowable as a revenue deduction, in favour of the assessee.

Issue (viii): Treatment of TDS credit and the related income addition concerning deferred revenue.

Analysis: The adopted framework under section 199(3) and Rule 37BA(3)(ii) links TDS credit to the years in which the corresponding income is assessable, in the same proportion. The dispute involved both credit claimed against deferred revenue and a separate income addition equal to the disputed TDS amount. Application of that framework and the associated claim required factual verification.

Conclusion: The TDS-credit claim and related income-addition issue were remitted for factual verification and determination according to law.

Final Conclusion: The substantive tax computations must reflect currency-based loan pricing, limited guarantee remuneration, turnover symmetry, protection for investments supported by sufficient interest-free funds, and recognition of genuine accrued hedging losses. Separate-unit eligibility and unresolved benchmarking and credit questions remain dependent on the prescribed factual examination.

Ratio Decidendi: Arm's-length interest on an outbound foreign-currency loan is determined by the market interest rate applicable to the currency in which the loan is repayable, rather than the domestic lending rate prevailing in the lender's country.

Issues: Whether depreciation is allowable on goodwill arising from a court-approved amalgamation, where the excess purchase consideration over net assets acquired is supported by an independent valuation.

Analysis: Goodwill arose from the excess of independently determined purchase consideration over the net assets acquired under an amalgamation approved by the NCLT. The valuation report and audited financial statements established that the goodwill was acquired through a genuine commercial transaction, rather than being self-generated, fictitious, or a mere accounting adjustment. Goodwill falling within business or commercial rights is a depreciable intangible asset, and mere excess consideration over net assets does not displace the claim absent material showing that the amalgamation or valuation was a sham or legally untenable.

Conclusion: Depreciation on the goodwill arising from the amalgamation is allowable; the finding is in favour of the assessee.

Issues: Validity of penalty for delayed filing of TDS returns where the penalty proceedings were initiated after a prolonged delay and without an order determining default.

Analysis: The penalty was imposed nine years after the belated TDS returns were filed. Applying the coordinate-bench precedent on materially similar facts, the Tribunal found that penalty proceedings initiated without an order under section 201(1) or section 201(1A), coupled with the inordinate delay, rendered the penalty unsustainable.

Conclusion: The penalty was illegal and was set aside, in favour of the assessee.

Issues: (i) Whether financial assistance received for development and setting-up of a water infrastructure project was a capital receipt or taxable revenue receipt; (ii) Whether the excess project cost over financial assistance could be claimed as deferred revenue expenditure by amortisation over the concession period.

Issue (i): Whether financial assistance received for development and setting-up of a water infrastructure project was a capital receipt or taxable revenue receipt.

Analysis: The assistance was granted under the concession arrangement for construction and development of the water infrastructure project. Applying the purpose test and following the consistent decisions in the assessee's own earlier assessment years, assistance intended to set up or complete a project retained capital character rather than constituting operational revenue.

Conclusion: The financial assistance was a capital receipt and not taxable as revenue; the addition was deleted, in favour of the assessee.

Issue (ii): Whether the excess project cost over financial assistance could be claimed as deferred revenue expenditure by amortisation over the concession period.

Analysis: The accounting treatment of amortising net expenditure incurred in developing the infrastructure facility over the concession period was consistent with Circular No. 9/2014 dated 23.04.2014 and the prior decision concerning the assessee. The contrary adjustment was therefore unsustainable.

Conclusion: The amortised deferred revenue expenditure was allowable and the related addition was deleted, in favour of the assessee.

Final Conclusion: The project assistance and the corresponding amortised net project expenditure were required to receive capital and deferred-revenue treatment respectively.

Ratio Decidendi: Financial assistance granted for setting up or completing an infrastructure project is capital in character, and net infrastructure-development expenditure may be amortised over the concession period where the applicable circular and accounting treatment so permit.

Issues: Whether penalty for misreporting of income could be sustained under Section 270A where deduction claimed under Section 80GGC was disallowed in reassessment proceedings.

Analysis: The deduction claim and donation were disclosed in the return. A disallowance based on doubts regarding the genuineness or eligibility of the donation did not, without material showing false evidence, suppression of facts, fabricated documents, or deliberate misrepresentation, establish misreporting. Penalty proceedings are independent of assessment proceedings, and non-challenge to the quantum addition does not amount to an admission of misreporting. The specified conditions for misreporting were not established.

Conclusion: The penalty levied for misreporting of income under Section 270A was deleted in favour of the assessee.

Issues: (i) Whether DEPB benefits could be availed simultaneously with 7% brand rate drawback on the bus-body portion under the continuing simplified drawback dispensation, without duty-paid documents; (ii) Whether departmental authorities had jurisdiction to reopen drawback already granted; (iii) Whether recovery under the Drawback Rules was barred by the limitation applicable to customs-duty recovery.

Issue (i): Whether DEPB benefits could be availed simultaneously with 7% brand rate drawback on the bus-body portion under the continuing simplified drawback dispensation, without duty-paid documents.

Analysis: The 1988 circular deliberately adopted an average 7% drawback rate because independent bus-body builders could not provide detailed consumption particulars or duty-paid documents. Its reaffirmation in 2003 established that the special dispensation continued after introduction of the DEPB Scheme. The DEPB circular permitted brand rate drawback in specified circumstances and did not create an absolute prohibition on simultaneous benefits. The benefits could not be treated as duplicative without material proving that both compensated the identical duty element. Clarificatory communications could not impose conditions inconsistent with an unwithdrawn beneficial circular.

Conclusion: In favour of the assessee: simultaneous DEPB benefit and 7% brand rate drawback were not impermissible on the stated facts, duty-paid documents could not be insisted upon under the continuing special dispensation, and the impugned communications and denial of drawback were legally unsustainable.

Issue (ii): Whether departmental authorities had jurisdiction to reopen drawback already granted.

Analysis: Proceedings concerned determination of whether drawback had been wrongly granted, rather than revision or re-fixation of the brand rate. The Drawback Rules empowered adjudicating authorities to examine and reopen grants alleged to be contrary to law.

Conclusion: Against the assessee: the adjudicating authorities had jurisdiction to reopen the drawback grants in accordance with the Drawback Rules.

Issue (iii): Whether recovery under the Drawback Rules was barred by the limitation applicable to customs-duty recovery.

Analysis: Rule 16 provides an independent mechanism for recovery of wrongly paid drawback, and the limitation regime for recovery of customs duty does not automatically govern such proceedings. Though Rule 16 prescribes no specific period, recovery must be initiated within a reasonable time; the initiation here was within such time.

Conclusion: Against the assessee: the recovery proceedings were not barred by limitation.

Final Conclusion: The denial and recovery founded on the unproved allegation of duplication of duty benefits could not stand for the period during which the petitioner acted under the unwithdrawn and reaffirmed 1988 circular; the ruling does not govern claims relating to subsequent exports.

Ratio Decidendi: An unwithdrawn beneficial circular providing a simplified drawback method cannot be nullified by a later clarification, and simultaneous export incentives cannot be denied as double benefit without proof that they reimburse the same duty incidence.

Issues: (i) Whether the High Court should, under Article 227, determine at the first instance the NCLT's jurisdiction and the maintainability or executability of the execution petitions; (ii) Whether execution proceedings before the NCLT should be stayed pending disposal of the civil appeals before the Supreme Court.

Issue (i): Whether the High Court should, under Article 227, determine at the first instance the NCLT's jurisdiction and the maintainability or executability of the execution petitions.

Analysis: The objection founded on Section 424(3) of the Companies Act, 2013, including the contention that an NCLAT order could not be executed by the NCLT, required consideration by the Tribunal before which the execution petitions were instituted. The supervisory jurisdiction under Article 227 could not be exercised to pre-empt the Tribunal's decision on jurisdiction, maintainability, or executability.

Conclusion: The jurisdictional and maintainability objections must be determined by the NCLT in the first instance, and no intervention under Article 227 was warranted.

Issue (ii): Whether execution proceedings before the NCLT should be stayed pending disposal of the civil appeals before the Supreme Court.

Analysis: The civil appeals were pending before the Supreme Court, which had considered the parties' interim applications and stayed only the remand direction. The petitioners' request for broader interim protection had not been granted. Any stay of the subsequently instituted execution proceedings could appropriately be sought in the pending civil appeals before the Supreme Court, rather than through Article 227 proceedings.

Conclusion: Stay of the execution proceedings was declined.

Final Conclusion: The petitioners were relegated to pursue their objections before the NCLT and any interim relief before the Supreme Court in the pending civil appeals.

Ratio Decidendi: Supervisory jurisdiction under Article 227 should not be used to decide or pre-empt questions of jurisdiction, maintainability, or executability that fall for initial determination by the competent Tribunal, particularly where cognate appellate proceedings and interim-relief remedies are pending before the Supreme Court.

Issues: Whether the extended period of limitation could be invoked for recovery of service tax on weighbridge-service receipts.

Analysis: The assessee was registered, regularly filed service-tax returns, discharged tax on other taxable services, and recorded the weighbridge receipts in its financial records. No material established that the non-payment arose from anything other than a bona fide mistake or that it involved suppression of facts with intent to evade tax. The matter was detected during audit, and the dispute involved legal interpretation.

Conclusion: Invocation of the extended limitation period was invalid; the demand was time-barred.

Issues: Whether income receivable under the sole trust declared by will was taxable at the maximum marginal rate notwithstanding the proviso to section 164(1).

Analysis: The trust was created under the deceased's only will. Proviso (ii) to section 164(1) applies where relevant income is receivable under a trust declared by will and that trust is the only trust so declared. This statutory exception, read with section 167B and the applicable CBDT clarification, excludes maximum marginal-rate taxation of such testamentary family trust income.

Conclusion: The trust income is not taxable at the maximum marginal rate; it is taxable as the total income of an association of persons under proviso (ii) to section 164(1).

Issues: (i) Whether the purchaser was liable to deduct tax under section 194-IA on acquisition of agricultural land and could consequently be treated as an assessee in default for short deduction under section 201(1) read with section 206AA; (ii) Whether interest under section 201(1A) could be sustained.

Issue (i): Whether the purchaser was liable to deduct tax under section 194-IA on acquisition of agricultural land and could consequently be treated as an assessee in default for short deduction under section 201(1) read with section 206AA.

Analysis: Section 194-IA applies only to transfers of immovable property other than agricultural land. The registered sale deed consistently described the transferred property as agricultural land, and no material established that it fell within an excluded category of agricultural land. Section 206AA prescribes an enhanced deduction rate only where tax is otherwise deductible and does not independently create a deduction obligation. The cancellation of the sale deed and non-encashment of the payment cheques further supported the unsustainability of the demand, though the inapplicability of section 194-IA was dispositive.

Conclusion: Section 194-IA did not apply to the transfer of agricultural land; consequently, section 206AA could not be invoked and the assessee could not be treated as an assessee in default under section 201(1). The conclusion is in favour of the assessee.

Issue (ii): Whether interest under section 201(1A) could be sustained.

Analysis: Interest under section 201(1A) was consequential to the principal demand for failure or shortfall in deduction under section 201(1). As no statutory obligation to deduct tax arose under section 194-IA, the principal demand failed.

Conclusion: The consequential interest under section 201(1A) was unsustainable and was deleted. The conclusion is in favour of the assessee.

Final Conclusion: The demand for alleged short deduction and the consequential interest cannot be maintained where the transferred property is agricultural land outside the scope of section 194-IA.

Ratio Decidendi: An enhanced withholding rate for non-furnishing of PAN operates only where an independent statutory obligation to deduct tax exists; it cannot apply where the underlying transfer is outside the charging provision for tax deduction at source.

Issues: (i) Whether land consumed for non-saleable roads and gardens was required to be included in closing stock; (ii) Whether rent claimed as agricultural income was substantiated; (iii) Whether disallowance under section 14A was sustainable where no exempt income was earned.

Issue (i): Whether land consumed for non-saleable roads and gardens was required to be included in closing stock.

Analysis: The land used for roads and gardens was not capable of sale and had nil net realisable value. The assessee had consistently excluded such non-saleable land from closing stock, and the opening stock and assessments for other years had not been disturbed. Under section 145A, inventory is to be valued at lower of cost or net realisable value.

Conclusion: The addition towards alleged undervaluation of closing stock was deleted in favour of the assessee.

Issue (ii): Whether rent claimed as agricultural income was substantiated.

Analysis: No evidence supporting the claim that agricultural land had been leased to farmers and that the rent constituted agricultural income was produced before the assessing or appellate authorities.

Conclusion: The addition on account of the claimed agricultural income was confirmed against the assessee.

Issue (iii): Whether disallowance under section 14A was sustainable where no exempt income was earned.

Analysis: It was admitted that the assessee earned no exempt income during the relevant year. In the absence of exempt income, no disallowance under section 14A could be made.

Conclusion: The disallowance under section 14A was deleted in favour of the assessee.

Final Conclusion: The assessment stands modified by deletion of the closing-stock and section 14A additions, while the agricultural-income addition remains sustained.

Ratio Decidendi: Non-saleable land having nil net realisable value need not be included in closing stock, and disallowance for expenditure relating to exempt income cannot be made where no exempt income is earned.

Issues: (i) Whether diamond grading and certification charges paid to non-residents constitute fees for technical services under section 9(1)(vii) of the Income-tax Act, 1961; (ii) Whether the payments satisfy the fees for included services test under Article 12(4) of the India-USA and India-UK Double Taxation Avoidance Agreements; (iii) Whether payments to entities situated in Thailand and Hong Kong were chargeable to tax in India.

Issue (i): Whether diamond grading and certification charges paid to non-residents constitute fees for technical services under section 9(1)(vii) of the Income-tax Act, 1961.

Analysis: Grading involved examination of diamonds and issuance of reports recording their cut, colour, clarity and carat weight. The service was an independent evaluation and certification of an existing product; it involved no managerial function, technical advice, consultancy, manufacturing assistance, technical solution, or transfer of grading methodology and know-how. Use of specialised personnel or scientific equipment by the service provider did not by itself make the service a technical service rendered to the recipient.

Conclusion: Diamond grading and certification charges are not fees for technical services under section 9(1)(vii) of the Income-tax Act, 1961, in favour of the assessee.

Issue (ii): Whether the payments satisfy the fees for included services test under Article 12(4) of the India-USA and India-UK Double Taxation Avoidance Agreements.

Analysis: Article 12(4) requires that technical knowledge, experience, skill, know-how or processes be made available so as to enable the recipient to apply them independently in future. A grading report does not impart the provider's methodology, scientific standards, processes or specialised expertise. The assessee would have to obtain fresh certification for each subsequent diamond.

Conclusion: The grading and certification payments do not satisfy the make available requirement and are not fees for included services or fees for technical services under Article 12(4), in favour of the assessee.

Issue (iii): Whether payments to entities situated in Thailand and Hong Kong were chargeable to tax in India.

Analysis: Once the grading and certification activity was found not to be managerial, technical or consultancy service, the identity or location of the non-resident recipient could not change the character of the consideration. No other charging provision, business connection, or taxable nexus in India was established. In respect of treaty recipients, the receipts were business profits not taxable in India absent a permanent establishment; consequently, the prerequisite of chargeability for deduction under section 195 was absent.

Conclusion: Payments to the Thailand and Hong Kong entities were not sums chargeable to tax in India, and no tax-deduction obligation arose, in favour of the assessee.

Final Conclusion: The assessee could not be treated as an assessee in default, and consequential interest was not exigible, for non-deduction of tax on diamond grading and certification remittances.

Ratio Decidendi: Consideration for independent product grading and certification is not fees for technical services where it supplies only a factual certification and neither renders managerial, technical or consultancy services nor makes technical knowledge or capability available to the payer.

Issues: (i) Whether depreciation was allowable on goodwill arising from a slump sale transaction; (ii) Whether depreciation was allowable on non-compete fees.

Issue (i): Whether depreciation was allowable on goodwill arising from a slump sale transaction.

Analysis: Goodwill representing the excess of consideration over the net value of assets and liabilities acquired arose upon the slump sale and was not an asset transferred from, or forming part of the depreciable block of, the predecessor concern. The restrictions in the sixth proviso to section 32(1), Explanation 7 to section 43(1), and Explanation 2 to section 43(6) apply where a depreciable asset or block existing with the predecessor is transferred to the successor; they did not govern goodwill newly arising from the transaction. Goodwill qualified as a business or commercial right of similar nature. The Finance Act, 2021 exclusion of goodwill from depreciation applied prospectively from assessment year 2021-22 and did not apply to assessment year 2018-19.

Conclusion: Depreciation on goodwill arising from the slump sale was allowable; this issue was decided in favour of the assessee.

Issue (ii): Whether depreciation was allowable on non-compete fees.

Analysis: Non-compete fees were treated as revenue expenditure allowable under section 37(1), rather than as a depreciable capital intangible asset. The claim for depreciation was therefore unsustainable.

Conclusion: Depreciation on non-compete fees was not allowable; this issue was decided against the assessee.

Final Conclusion: The goodwill component of the intangible-asset claim was restored as eligible for depreciation, while the non-compete-fee component was denied.

Ratio Decidendi: Restrictions governing depreciation on assets transferred in an amalgamation or succession do not apply to goodwill newly generated as the excess of consideration over net assets in a slump sale; such goodwill was depreciable for periods before the prospective statutory exclusion of goodwill.

Issues: Whether additions made by enhancement through a rectification order without prior notice and opportunity of hearing were valid.

Analysis: Section 154(3) requires prior notice and a reasonable opportunity of hearing before any rectification that enhances an assessment or increases liability. The record did not establish that a notice proposing rectification or enhancement had been issued, or that an opportunity of hearing had been afforded. An order made in breach of this mandatory requirement and of principles of natural justice is unsustainable.

Conclusion: The enhanced additions made through the rectification order were invalid and were directed to be deleted, in favour of the assessee.

Issues: (i) Whether receipts from engineering and ground handling services provided to other airlines in India qualified for exemption under Article 8 of the India-United Kingdom Double Taxation Avoidance Agreement; (ii) Whether the deletion of the addition for cash deposits made during the demonetisation period was justified.

Issue (i): Whether receipts from engineering and ground handling services provided to other airlines in India qualified for exemption under Article 8 of the India-United Kingdom Double Taxation Avoidance Agreement.

Analysis: Article 8 exempts profits from operation of aircraft in international traffic and extends to qualifying participation in pools. The earlier decisions concerning the same assessee had consistently determined that engineering and ground handling services supplied to other airlines were organised commercial activities, not activities directly connected with the assessee's own international transportation, and did not constitute qualifying pool participation under Article 8. The India-United Kingdom agreement was materially narrower than the treaties considered in the decisions concerning other airlines. The assessee accepted the intervening position, while reserving its challenge before higher forums.

Conclusion: The engineering and ground handling receipts are taxable in India and are not eligible for Article 8 treaty benefit. The conclusion is against the assessee.

Issue (ii): Whether the deletion of the addition for cash deposits made during the demonetisation period was justified.

Analysis: The cash deposit slips and accounts established that the deposits represented ordinary cash collections at airport counters from passengers and cargo agents for airline services. The receipts were recorded in the books, no defect in those records was identified, and the cash collections during and after demonetisation were not abnormal when compared with earlier months. The airline's relevant airport-counter activities were also covered by the demonetisation circular.

Conclusion: The cash deposits were satisfactorily explained as regular business receipts, and deletion of the addition was upheld. The conclusion is in favour of the assessee.

Final Conclusion: The treaty claim fails, whereas the deletion of the unexplained-cash-deposit addition remains undisturbed.

Ratio Decidendi: Receipts from services rendered to other airlines fall outside an air-transport treaty exemption where they are independent commercial services and do not constitute qualifying pool participation or activities directly connected with the taxpayer's own international transportation.

Issues: (i) Whether the 111-day delay in filing the first appeal should be condoned; (ii) Whether additions for alleged unexplained investment in the property and registration charges were sustainable; (iii) Whether the difference between stamp-duty value and purchase consideration was taxable under Section 56(2)(vii)(b).

Issue (i): Whether the 111-day delay in filing the first appeal should be condoned.

Analysis: The assessee was a small taxpayer with returned income substantially lower than the additions made, had no demonstrated history of prior tax disputes, and lacked professional guidance concerning appellate time limits. The explanation for delay had to be assessed in the context of these surrounding circumstances, and substantial justice prevailed over technical procedural delay.

Conclusion: The delay was supported by sufficient cause and was condoned, in favour of the assessee.

Issue (ii): Whether additions for alleged unexplained investment in the property and registration charges were sustainable.

Analysis: Bank records established receipt of funds from the assessee's husband, whose identity and financial capacity were corroborated by his income-tax return. The remaining purchase consideration was supported by banking entries, donor documentation, and records of premature encashment of fixed deposits. The registration expenditure was reasonably attributable to cash generated from the assessee's disclosed business income.

Conclusion: The sources of the entire purchase consideration and registration expenditure stood satisfactorily explained; the addition for unexplained investment was deleted, in favour of the assessee.

Issue (iii): Whether the difference between stamp-duty value and purchase consideration was taxable under Section 56(2)(vii)(b).

Analysis: A valuation reference had already been made to the Departmental Valuation Officer because the assessee disputed that the uniform DLC rate reflected the fair market value of a basement property. In the absence of the valuation report, the assessing authority could not treat the DLC value as fair market value without addressing the explanation for the lower consideration.

Conclusion: The addition based on the difference between the stamp-duty value and actual consideration was deleted, in favour of the assessee.

Final Conclusion: The first appellate authority's refusal to condone delay was set aside, and both substantive additions relating to the property transaction were removed; the challenge to assessment validity was left open.

Ratio Decidendi: Where the taxpayer establishes property investment through credible bank records, donor evidence, and fixed-deposit encashment records, unexplained-investment additions cannot survive; further, a disputed stamp-duty valuation cannot be adopted as fair market value while a pending valuation reference remains unresolved.

Issues: Whether credit for tax deducted at source on salary relating to January and February 2012 was allowable in Assessment Year 2012-13 where that salary was returned and assessed in that year, although the salary was received and tax was deducted in the succeeding financial year.

Analysis: Section 199 of the Income-tax Act, 1961 read with Rule 37BA(3)(i) of the Income-tax Rules, 1962 requires TDS credit to be granted for the assessment year in which the corresponding income is assessable. The salary for January and February 2012 had been included in the salary income returned for Assessment Year 2012-13. The timing of receipt of salary, deduction of tax, and its reflection in Form 26AS in the succeeding year did not displace the entitlement to credit in the year in which that salary income was assessed.

Conclusion: The assessee was entitled to TDS credit of Rs. 19,215 in Assessment Year 2012-13.

Issues: (i) Whether the assessee's subcontract payments could be benchmarked under the other method based on Common Schedule of Rates and an asserted internal comparable; (ii) Whether the transfer-pricing benchmarking under the Transactional Net Margin Method was founded on functionally comparable companies.

Issue (i): Whether the assessee's subcontract payments could be benchmarked under the other method based on Common Schedule of Rates and an asserted internal comparable.

Analysis: The Common Schedule of Rates material was technical and did not demonstrate how the basic rates and premiums were applied to the respective subcontracted works. The work allocation to the associated enterprise and the unrelated contractor could not be reliably linked to those rates. The asserted internal comparable was therefore not established.

Conclusion: The other method was not accepted; the transactions are to be benchmarked under the Transactional Net Margin Method. This issue is against the assessee.

Issue (ii): Whether the transfer-pricing benchmarking under the Transactional Net Margin Method was founded on functionally comparable companies.

Analysis: The concession agreement covered operation, maintenance and transfer of the existing road together with construction of ancillary facilities. The selected comparables were based on build, maintain and transfer functions, although the assessee's contract was an operation, maintenance and transfer arrangement. This functional mismatch rendered the comparability selection flawed.

Conclusion: The benchmarking must be redone by selecting comparables having operation, maintenance and transfer functions, after affording the assessee an opportunity of hearing. This issue is in favour of the assessee.

Final Conclusion: The arm's-length determination requires fresh benchmarking using functionally appropriate comparables under the Transactional Net Margin Method.

Ratio Decidendi: Transfer-pricing benchmarking under the Transactional Net Margin Method must employ comparables that are functionally aligned with the tested transaction.