Issues: Whether the ITAT could reject a rectification application under Section 254(2) of the Income-tax Act, 1961 by introducing new grounds and reappreciating matters beyond a mistake apparent from the record.

Analysis: Section 254(2) confines rectification jurisdiction to correcting a mistake apparent from the record and does not permit a review on merits or reappreciation of the matter. The rejection relied on new considerations concerning distributor confirmations and patterns of cash receipts, which did not form the basis of the rectification grounds or the original appellate order.

Conclusion: The ITAT exceeded its rectification jurisdiction under Section 254(2) in rejecting the application on new grounds, in favour of the assessee.

Issues: (i) Whether the IT segment's AE and non-AE transactions could be separately benchmarked; (ii) Whether the transfer-pricing adjustment could be computed at entity level rather than confined to AE international transactions; (iii) Whether an upper turnover filter of Rs. 200 crore had to be applied in selecting IT comparables; and (iv) Whether the disallowance under section 14A read with rule 8D was correctly computed.

Issue (i): Whether the IT segment's AE and non-AE transactions could be separately benchmarked.

Analysis: Under the TNMM, rule 10B(1)(e)(i) requires comparison of the net profit margin from the international transaction with the AE, while rule 10B(2) requires consideration of functions, assets and risks. The segmental profit and loss account formed part of the transfer-pricing study and was subsequently certified. Audit of segmental accounts is not mandatory, and the absence of audit did not justify rejection of the segmentation. The AE and non-AE segments had materially different risk profiles and margins; a blended margin distorted the tested international transaction. The same segmentation had also been accepted for the ITeS segment and in other years without any identified change in facts.

Conclusion: Segmentation of the AE and non-AE IT transactions must be accepted for benchmarking purposes, in favour of the assessee.

Issue (ii): Whether the transfer-pricing adjustment could be computed at entity level rather than confined to AE international transactions.

Analysis: Arm's length price determination concerns income arising from international transactions with AEs. An entity-level margin and adjustment that include domestic and other non-AE transactions do not measure the margin of the controlled international transaction.

Conclusion: Any transfer-pricing adjustment must be confined to AE international transactions and cannot be computed at entity level, in favour of the assessee.

Issue (iii): Whether an upper turnover filter of Rs. 200 crore had to be applied in selecting IT comparables.

Analysis: Turnover materially affects assets, risks, scale and operating margins. Large enterprises with substantially higher turnover are not comparable to a smaller captive service provider merely because they operate in the same broad software-services field.

Conclusion: An upper turnover filter of Rs. 200 crore must be applied while selecting comparables and recomputing the arm's length price, in favour of the assessee.

Issue (iv): Whether the disallowance under section 14A read with rule 8D was correctly computed.

Analysis: The assessee's shareholder funds substantially exceeded its investments; therefore, interest expenditure was not liable to disallowance under rule 8D(2)(ii). For rule 8D(2)(iii), only investments capable of yielding exempt income may be included, rather than all investments indiscriminately.

Conclusion: The interest-component disallowance is not warranted, and the indirect-expense component must be recomputed using only exempt-income-yielding investments after verification, in favour of the assessee.

Final Conclusion: The arm's length price and the exempt-income expenditure disallowance require fresh computation on the stated segmental, comparability and investment bases.

Ratio Decidendi: Under the TNMM, benchmarking and any consequential transfer-pricing adjustment must be based on the AE international transaction, not on a blended entity-level margin that includes non-AE transactions having materially different functional and risk profiles.

Issues: Whether an ECIR under the Prevention of Money Laundering Act, 2002 can survive against the petitioners after quashing of the sole predicate FIR.

Analysis: The ECIR was founded solely on the FIR alleged to constitute the scheduled offence. Under Sections 2(1)(u) and 3 of the Prevention of Money Laundering Act, 2002, proceeds of crime must arise from criminal activity relating to a subsisting scheduled offence. Where the scheduled-offence case is quashed by a competent court, no money-laundering action can continue against the person in relation to property allegedly linked to that offence. Since the FIR had been quashed and no scheduled offence remained against the petitioners, the Enforcement Directorate lacked jurisdiction to continue proceedings under the ECIR against them.

Conclusion: The ECIR was quashed insofar as it concerned the petitioners, their directors, partners, employees and shareholders.

Outcome: The special leave petition was dismissed on the grounds of delay and merits.

Issues: Whether an appeal against an advance ruling may determine the classification of a materially different product on the basis of revised packaging and a post-ruling test report that were not before the original Authority.

Analysis: The scope of appellate jurisdiction under Sections 100(1) and 101(1) is confined to the advance ruling and the factual foundation on which it was rendered; it does not permit a new case at appellate stage or an original determination on a materially altered factual matrix. The subsequently produced soap differed in physical appearance, description and packaging from the product originally presented as laundry soap. The later test report did not identify the relevant batch, manufacture details or other particulars establishing that the tested sample was the original product. No contemporaneous technical or manufacturing material established identity or equivalence between the two products.

Conclusion: No. The subsequently presented product and later test report could not be substituted for the product and record underlying the advance ruling, and its classification was not determined in the appeal.

Outcome: Delay condoned and the Special Leave Petition dismissed; the question of law was kept open.

Issues: Whether reassessment may be initiated on the same transfer-pricing material after the Assessing Officer failed to pass a final assessment order within the statutory period following a draft assessment order.

Analysis: The draft assessment order had proposed a transfer-pricing adjustment after detailed scrutiny, and the assessee had communicated that it would not approach the Dispute Resolution Panel. The Assessing Officer did not pass the consequential final assessment order within the period prescribed under the statutory framework. The subsequent proceedings under sections 148A and 148 were founded on the identical transfer-pricing adjustment and material already considered in the scrutiny proceedings; no fresh material was shown to have emerged. Reassessment cannot be used to overcome or indirectly extend the limitation resulting from failure to complete the original assessment.

Conclusion: Reassessment on the same material, after the original assessment proceedings lapsed for want of a final assessment order within limitation, was impermissible.

Issues: Whether respondents to customs appeals could be excluded from participation at the admission stage and denied an opportunity to raise the appeals' maintainability despite their prior admission.

Analysis: The appeals had already been admitted before the scheduled admission hearing, while no interim relief had been granted. Procedural fairness required that the affected respondents be permitted to participate in the appellate proceedings and raise all legally permissible contentions, including the objection to maintainability. Admission of the appeals did not preclude an expeditious consideration of their maintainability.

Conclusion: The petitioners are entitled to participate in the High Court appeals and raise the issue of maintainability, which must be considered expeditiously notwithstanding admission of the appeals.

Issues: Whether assessment orders could stand where show-cause notices were uploaded only on the GST portal, the taxpayer did not respond, and no personal hearing was afforded.

Analysis: Section 169(1) of the GST Act recognises portal uploading as a valid mode of service. However, where repeated portal notices elicit no response, the officer must explore other prescribed modes, preferably registered post, to ensure effective service rather than merely complete a procedural formality. Confirmation of the show-cause proposals without a personal hearing in those circumstances denied an effective opportunity to respond.

Conclusion: The ex parte assessment orders were invalid for want of effective service and an opportunity of personal hearing.

Issues: (i) Whether writ jurisdiction could be exercised despite the alternative remedy before the GST Appellate Tribunal when ineffective communication and breach of natural justice were alleged; (ii) Whether rejection of the statutory appeal as time-barred was sustainable where the adjudication order was uploaded under the "Additional Notices and Orders" tab and the delay explanation was not addressed.

Issue (i): Whether writ jurisdiction could be exercised despite the alternative remedy before the GST Appellate Tribunal when ineffective communication and breach of natural justice were alleged.

Analysis: Article 226 of the Constitution of India permits exercise of writ jurisdiction notwithstanding an alternative remedy where breach of natural justice is alleged. The challenge concerned the effective communication of the adjudication order and the appellate rejection of the appeal on limitation, warranting consideration under writ jurisdiction.

Conclusion: The existence of a further appellate remedy did not bar writ jurisdiction in the circumstances alleged.

Issue (ii): Whether rejection of the statutory appeal as time-barred was sustainable where the adjudication order was uploaded under the "Additional Notices and Orders" tab and the delay explanation was not addressed.

Analysis: Section 107(1) of the CGST and MGST Acts makes limitation run from communication of the decision. Communication requires sufficient knowledge of the decision to enable an effective statutory remedy. Uploading the order under a tab not designated for notices and orders did not establish such communication; routine filing of returns through the portal could not establish knowledge of an order placed there. The appellate order also failed to disclose reasons for rejecting the explanation for delay.

Conclusion: The limitation dismissal could not stand; the delay was condoned and the statutory appeal was restored for a merits decision after personal hearing.

Final Conclusion: The statutory appeal must receive adjudication on merits upon application of the communication requirement under section 107(1), without any pronouncement on the underlying tax demand or the alleged denial of hearing.

Ratio Decidendi: For limitation under section 107(1), an order uploaded on a non-designated portal tab is not effectively communicated unless it imparts sufficient knowledge to enable effective pursuit of the statutory remedy; routine portal use for filing returns cannot substitute for such communication.

Issues: Whether sufficient cause was shown for condoning the 20-day delay in filing the appeal.

Analysis: Section 260A(2A) of the Income-tax Act, 1961 permits admission of an appeal filed beyond the prescribed period where sufficient cause is established. A justice-oriented and pragmatic approach applies to short delays, while considering the conduct of the applicant and the need to advance substantial justice. The delay was short, arose in the governmental approval process, and the appeal was filed promptly after approval; the circumstances did not disclose lethargy or dilatory conduct.

Conclusion: Sufficient cause was established, and the 20-day delay in filing the appeal was condoned.

Issues: Whether a deduction for a provision made towards an approved gratuity fund was allowable under Section 40A(7)(b) of the Income-tax Act, 1961, and whether revision under Section 263 could be invoked by applying the actual-payment requirement under Section 43B(b).

Analysis: Section 40A(1) contains a non obstante clause, and Section 40A(7)(a) disallows provisions for gratuity except where the provision falls within Section 40A(7)(b), which specifically covers contributions towards an approved gratuity fund. Section 43B(b) applies generally to gratuity-related deductions on an actual-payment basis. Since Section 40A(7)(b) specifically addresses approved gratuity funds whereas Section 43B refers generally to gratuity funds, the provisions are reconcilable and the specific provision prevails over the general provision. The contrary disallowance view therefore involved a debatable issue and could not sustain revisionary jurisdiction.

Conclusion: The provision towards contribution to an approved gratuity fund was deductible under Section 40A(7)(b), and revision under Section 263 on the basis of Section 43B(b) was not sustainable. The issue was resolved in favour of the assessee.

Issues: Whether receipts from structured online executive and professional courses provided by an educational institution to Indian students and corporate employees were excluded from Fees for Included Services as consideration for teaching in or by an educational institution.

Analysis: Article 12(4) defines Fees for Included Services by reference to technical or consultancy services that, among other conditions, make available technical knowledge, skill, know-how or processes. Article 12(5)(c), introduced by a notwithstanding clause, specifically excludes amounts paid for teaching in or by educational institutions and therefore operates even where a course may impart technical knowledge or skills. The exclusion is not limited to degree-granting, credit-bearing, campus-based or long-duration programmes. The Technical Explanation confirms that technical and professional education imparted to employees of a commercial enterprise remains teaching, and that customised courses or teaching at locations other than the institution's campus do not alter that character. Structured courses in recognised academic and professional disciplines, including cohort-based programmes for corporate employees, retained their educational character; their description as training, their customisation, and the non-credit nature of the programmes did not convert them into technical consultancy services. Payment of Equalisation Levy under another fiscal regime did not determine the character of the receipts under the treaty. Consequently, the make available test was not determinative.

Conclusion: The course receipts fell within the educational exclusion under Article 12(5)(c) and were not taxable in India as Fees for Included Services.

Issues: (i) Whether cash deposits and credit entries in a bank account could be assessed as unexplained money in the hands of a partnership firm that had been dissolved before the relevant previous year; (ii) Whether penalty for failure to furnish a return could be sustained against the dissolved firm for the relevant assessment year.

Issue (i): Whether cash deposits and credit entries in a bank account could be assessed as unexplained money in the hands of a partnership firm that had been dissolved before the relevant previous year.

Analysis: Section 69A of the Income-tax Act, 1961 permits assessment of unexplained money in the hands of the person to whom the money is properly attributable, while Section 115BBE governs its tax treatment. The dissolution deed showed that the firm had ceased to exist and that its assets and liabilities were taken over by a former partner, who continued the business as a proprietorship. The bank certificate linked the disputed accounts with that individual's PAN, and the individual had accounted for the transactions in the return and balance sheet. The remand verification also supported these facts. Mere continuance of an account number formerly used by the firm did not establish that post-dissolution transactions belonged to the firm. The assessment had to be made in the correct hands.

Conclusion: The cash deposits and credit entries could not be assessed in the hands of the dissolved firm and the additions were deleted.

Issue (ii): Whether penalty for failure to furnish a return could be sustained against the dissolved firm for the relevant assessment year.

Analysis: Section 271F of the Income-tax Act, 1961 concerns penalty for failure to furnish a return of income. The firm had been dissolved before the relevant year and had no assessable income during that year; the business and banking transactions belonged to the former partner in the individual proprietorship capacity.

Conclusion: The penalty for failure to furnish a return was unsustainable and was deleted.

Final Conclusion: Post-dissolution banking transactions attributable to the former partner's proprietorship could not be taxed, nor could return-filing default be penalised, in the hands of the erstwhile firm.

Ratio Decidendi: A dissolved partnership firm cannot be assessed or penalised merely because a bank account previously used by it continued, where reliable evidence establishes that the account and its post-dissolution transactions belonged to and were accounted for by a former partner in an individual capacity.

Issues: Whether the addition for unexplained investment under Section 69B of the Income-tax Act, 1961, based on the valuation of shares, was sustainable.

Analysis: Section 69B permits application of its Deeming Fiction only where actual investment exceeding the amount recorded in the books is established. The investment was recorded at the contracted price, and no material established payment of consideration beyond that recorded amount. A valuation report determining a higher Fair Market Value, without proof of excess expenditure, could not discharge the burden of proof required for invoking Section 69B. The valuation was also founded on an incorrect treatment of the franchise fee as a capital asset, although it was revenue expenditure, and the royalty-relief method was inapplicable because the relevant brand could not be sublicensed. Further, Section 56(2)(viia) of the Income-tax Act, 1961 had only prospective operation from 01.06.2010 and did not apply to the relevant assessment year.

Conclusion: The deletion of the addition under Section 69B of the Income-tax Act, 1961 was sustained in favour of the assessee.

Issues: Whether consideration received for assignment of Indian trademark rights constituted royalty taxable in India or gains from alienation taxable only in the State of residence under the India-Switzerland Double Taxation Avoidance Agreement.

Analysis: Article 12(3) distinguishes consideration for use of, or the right to use, intellectual property from consideration for transfer of its ownership. Paragraph 6 of the Protocol separately recognises gains from alienation of intellectual property, except where consideration is contingent upon profits, productivity or use. Article 13(6) allocates gains from alienation of property not covered by the preceding paragraphs to the State of which the alienator is resident.

Analysis: The assignment deeds transferred all right, title, interest, goodwill, registration, use and enforcement rights in the specified Indian trademarks to the purchasers absolutely and perpetually, while extinguishing the transferor's rights in India. Territorial restrictions, product-related covenants, trade-dress exclusions and protective remedies defined the scope of the Indian property transferred or safeguarded contractual boundaries; they did not reserve proprietorship in the Indian marks. Registry records recognising the purchasers as proprietors corroborated the transfer of ownership. The fixed consideration was not contingent on future profits, productivity or use. The absence of an acquisition cost for self-generated marks and prior commercial arrangements did not alter the character of the assignments.

Conclusion: The consideration arose from alienation of trademark rights, not from use of or a right to use trademarks, and therefore was not royalty taxable in India. The resulting gains fell under Article 13(6) and were taxable only in Switzerland.

Issues: (i) Whether bonus under clause 2A was payable after accounting for the 138-day extension under clause 5.2. (ii) Whether the arbitral award of interest on Claim No. 2, which had not been claimed, was valid and severable. (iii) Whether the direction to reimburse GST actually payable or paid on the awarded amount warranted interference.

Issue (i): Whether bonus under clause 2A was payable after accounting for the 138-day extension under clause 5.2.

Analysis: Clause 2A makes early-completion bonus payable where work is completed before the stipulated or justified extended completion date. Clause 5.2 covers delays arising from force majeure and similar events and only bars a claim for damages arising from extension of time; it does not prohibit bonus. The acknowledged hindrance period under clause 5.2 therefore affected the completion deadline for determining whether the work was completed early. Interpretation of contractual terms falls within the arbitral domain, and interference under Section 34 of the Arbitration and Conciliation Act, 1996 is unavailable where the interpretation is plausible and does not disclose patent illegality, public-policy violation, absence of evidence, or absence of reasons.

Conclusion: The bonus awarded under Claim No. 1 was valid; the challenge to that component failed.

Issue (ii): Whether the arbitral award of interest on Claim No. 2, which had not been claimed, was valid and severable.

Analysis: Interest had been sought only in relation to Claim No. 1. The grant of interest on Claim No. 2 consequently travelled beyond the scope of the arbitral reference. Under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, an invalid component may be severed from an otherwise valid award where it is separable.

Conclusion: The interest awarded on Claim No. 2 was invalid and was set aside as a severable part of the award.

Issue (iii): Whether the direction to reimburse GST actually payable or paid on the awarded amount warranted interference.

Analysis: Tax consequences of arbitral awards depend upon the character of each awarded component. Amounts constituting consideration for additional work, escalation, or revision of contract value may attract GST, whereas compensation for breach, delay, loss, or damages may not constitute a supply. The direction was limited to reimbursement of GST only where it was actually payable or paid.

Conclusion: The GST reimbursement direction under Claim No. 7 was retained; the challenge to that component failed.

Final Conclusion: Only the severable interest component relating to unclaimed Claim No. 2 was annulled; the early-completion bonus and the direction for reimbursement of GST, if payable, remain operative.

Ratio Decidendi: Under Section 34, a severable arbitral-award component granting relief outside the arbitral reference may be set aside without disturbing valid components founded on a plausible contractual interpretation.

Issues: Whether reassessment of an assessee, based exclusively on incriminating material found during a search of third parties, could be initiated under Sections 147 and 148 of the Income-tax Act, 1961 instead of Section 153C of that Act.

Analysis: The statutory scheme for search assessments treats Section 153C as the special mechanism where material relating to an other person is found during a search. Its invocation requires the prescribed satisfaction to be recorded by the Assessing Officer of the searched person and communicated to the jurisdictional Assessing Officer. The general reassessment provisions under Sections 147 and 148 are unavailable where the sole basis is such transmitted search material; they may apply only where independent material from another source indicates escaped income. The reassessment here rested solely on search material, without a satisfaction note or independent material.

Conclusion: The reopening under Section 148 was without jurisdiction. Assessment or reassessment founded solely on the search material could proceed, if at all, under Section 153C upon compliance with its satisfaction requirement, while Sections 147 and 148 could be invoked only on independent material.

Ratio Decidendi: Where search material concerning an other person is the exclusive basis for reassessment, the special procedure under Section 153C, subject to recorded satisfaction, excludes recourse to Sections 147 and 148 unless independent material supports such reassessment.