Royalty and technical-fee payments to an associated enterprise may be benchmarked by reference to a unilateral advance pricing agreement accepted by CBDT where its methodology is applicable; the payments were benchmarked at 1.9% of net sales rather than reduced to nil. Related-party manufacturing expenditure covered by section 40A(2)(b), once excluded from specified domestic transactions under section 92BA, cannot support a transfer-pricing adjustment. The manufacturing adjustment was therefore deleted, and the appeal was partly allowed.

Valid exercise of a domestic company's option under section 115BAB for its first eligible assessment year continues for later years and cannot be withdrawn. Absence of income or tax computation under that provision in the initial year neither withdraws nor cancels the option, since the provision does not require tax to have been payable in that year. Continuing validity of the option does not by itself secure the concessional corporate tax rate; the company must satisfy the statutory eligibility conditions for each relevant year. Eligibility for the later year requires verification of the conditions under section 115BAB(2).

Revision under section 263 is not sustainable where the Assessing Officer has made specific inquiries, considered supporting material, and adopted a permissible view; a brief assessment order alone does not show lack of inquiry or permit substitution of the Commissioner's view. Administrative and finance expenses remained connected with the taxpayer's continuing business and retained loans, notwithstanding transfer of stock to an LLP. Capital loss on the sale of rented investment property and cost of improvement were supported by audited accounts, construction records and loan documents. Fixed-asset adjustments reflecting transfers between branches at book cost, without change in ownership or fresh capital expenditure, also did not justify revision. The revisionary order was quashed and the original assessment restored.

Compliance with binding interim judicial directions requiring a bank not to treat foreign-leg Leave Fare Concession reimbursement as income for tax deduction at source prevents a later declaration of substantive taxability from creating a retrospective deductor default. The reimbursement's taxability and the bank's liability as deductor are distinct. The bank therefore could not be treated as an assessee in default under section 201(1), and consequential interest under section 201(1A) did not survive; the contrary orders were set aside.

The statutory notification exempting interest payments to corporations established under Central, State or Provincial Acts applies to the National Highways Authority of India as a Central Act corporation. CBDT Circular No. 18/2017, which concerns entities with unconditionally exempt income, cannot add conditions to or narrow that statutory notification. Accordingly, interest paid on mobilisation advances to the Authority is not subject to tax deduction at source, and the payer cannot be treated as an assessee-in-default or charged consequential interest.

Section 115BBE's enhanced 60% rate, effective from 1 April 2017, operates prospectively and does not govern income surrendered during survey in Financial Year 2016-17. Tax liability for that year is determined under the law in force on 1 April 2016, when the provision prescribed a 30% rate. The later enhanced rate therefore cannot be imposed on the surrendered income; the declared income is taxable at the normal applicable rates. Application of the higher rate depends on transactions undertaken on or after 1 April 2017.

For a Kachha Arhatia, sales made for principals in commission transactions are not the agent's turnover; only gross commission is relevant. A GST turnover figure therefore cannot be mechanically compared with income-tax-return turnover where reconciliation identifies own trading sales, commission income and intra-day trading profit. Rejection of audited books requires a specific defect affecting their correctness or completeness, and no such defect was identified. Gross-profit estimation without comparable cases, past history, or supporting material is arbitrary. The rejection of books and consequential profit estimation were unsustainable, and returned income was directed to be accepted.

Delayed furnishing of a statement of financial transactions may attract penalty, but belated filing alone does not exclude the statutory defence of reasonable cause. Penalty should not be sustained without examining the taxpayer's explanation and supporting evidence for the delay. Where the first appellate authority has dismissed the matter without deciding the grounds on merits or considering reasonable cause, it should provide due opportunity, examine that defence, and determine the penalty afresh in accordance with law.

The Finance Act, 2022 amendment to section 14A applies prospectively from assessment year 2022-23 and does not govern assessment year 2018-19. Disallowance of expenditure relating to exempt income under section 14A read with rule 8D cannot exceed the exempt income earned during the relevant year. Where the taxpayer's voluntary disallowance already equalled the exempt income, no additional disallowance was warranted. The deletion of the further disallowance was sustained and the Revenue's appeal was dismissed.

Interest paid on overdrafts secured against fixed deposits is deductible under section 57(iii) only where the taxpayer establishes a direct nexus between the borrowing cost and interest income taxable as income from other sources. Failure to prove the purpose for which overdraft funds were used, or their connection with the fixed-deposit interest income, prevents deduction of the interest expenditure. On the stated facts, the claimed interest expenditure was disallowed because the required nexus was not established.

Income arising from the sale of property gifted by a husband is ordinarily assessable in the husband's hands under the clubbing provisions. A belated clubbing claim may fail where the recipient spouse neither filed a return nor raised the claim in response to reassessment proceedings, but asserted it only after the limitation for reassessing the husband had expired. Where the husband also filed no return enabling assessment of that income, the delayed claim can be treated as an attempt to avoid assessment in either spouse's hands. Capital gains were consequently sustained in the recipient spouse's assessment.

Employee stock-option discount is revenue expenditure where the liability accrues during the vesting period, notwithstanding the absence of cash outflow. Royalty benchmarking requires satisfaction of both associated-enterprise conditions and prefers reliable internal comparable uncontrolled price transactions, supported by examination of contractual, functional and consistency factors. Trading, IT support and digital marketing comparables must match the tested party's functions; entities with materially different activities, significant intangibles, unavailable segmental data or exceptional circumstances are unsuitable. The other method may use gross margin as a profit level indicator where purchase-to-sale price comparison is justified, capacity-utilisation differences affect direct-cost recovery, and TNMM adjustment data is unavailable.

Interest-free own funds substantially exceeding an advance to a fellow subsidiary, where the advance predated interest-bearing debentures, negate any presumption that borrowed funds financed the advance; the related interest disallowance was deleted. Share-premium credits require an independent investor-wise examination of financial statements, bank records, available funds and transaction evidence to establish the statutory conditions for unexplained credits. Alternative Investment Fund status does not remove that verification requirement. A pre-amendment approach was inapplicable for AY 2023-24, and the share-premium issue was remitted for fresh adjudication after allowing an effective hearing.

Limited-scrutiny assessment confines the Assessing Officer's inquiry to issues selected for scrutiny unless the prescribed procedure converts it into complete scrutiny. Where scrutiny concerned high liabilities relative to income and agricultural income, loss on sale of assets lacked a nexus to those issues, and no conversion was shown. The deeming rule for inadequate inquiry or verification applies only to matters within the lawful assessment scope. Consequently, failure to examine the asset-sale loss did not render the assessment erroneous and prejudicial to Revenue; the revisional order was set aside and the assessment restored.

Loan advanced in the ordinary course of business may generate an allowable revenue loss when waived under a settlement, provided it formed part of the taxpayer's commercial activities and neither acquired a capital asset nor represented a long-term capital investment. Financial participation through a shareholder-financier arrangement, repayable from business surplus, can retain its business character. The waiver was treated as incidental to business, distinguishable from an advance made to acquire immovable property, and the deduction was allowed.

General insurance income computed under the special statutory scheme preserves statutory depreciation after book depreciation is withdrawn, consequential fixed-asset sale adjustments, and later deduction of expenditure once tax deduction and deposit conditions are met, preventing permanent double disallowance. Profit on sale of investments is excluded after omission of Rule 5 clause (b), while dividend exemption remains available and Section 14A adjustments not specified in Rule 5 do not apply. AMP spending alone does not establish an international transaction absent an arrangement with an associated enterprise. Co-insurance fees in a principal-to-principal relationship are not commission for tax withholding; hardware consumables without an independent capital asset are revenue expenditure.

Procedural and curative 2016 Benami amendments, including attachment, adjudication and appellate mechanisms, apply to transactions predating their enforcement, while newly created or enhanced penalties remain prospective, with a specific exception concerning confiscation proceedings. An unretracted sworn statement affirmed as voluntary may be relied upon where coercion is unsupported. A relative's registered title does not prevent benami characterisation where another person funded acquisition and loan repayments, exercised control and beneficial use, and evidence of independent funds or rent is unreliable. Recorded reasons to believe need not be supplied where the show-cause notice and provisional attachment set out the factual basis. The flat remained subject to confirmed provisional attachment as benami property.

Gold seizure requires a pre-existing, objectively sustainable reasonable belief that goods are liable to confiscation; a statutory burden to establish licit acquisition cannot retrospectively cure the absence of that foundation. Foreign origin and illicit importation require reliable evidence beyond concealment, missing documents at interception, or general smuggling intelligence; traceable stock, purchase, inheritance and melting records must be properly tested. A retracted customs statement cannot substantively establish smuggling without corroboration and applicable procedural safeguards, especially where investigative material contradicts it. Penalty requires independent proof of each person's conscious act or omission and the requisite knowledge or intent.

Re-import duty exemption for repairs or reconditioning requires the very re-imported goods to be re-exported after the work. Exporting freshly manufactured goods, even if similar in description or quality, does not meet that condition. Shipping documentation must identify exported goods as the re-imported goods after rework, enabling Customs to verify their identity. Because substituted goods were exported and the shipping bill did not establish identity, the exemption conditions remained unmet; the duty demand, confiscation and penalty were sustained and the appeal dismissed.

Interest on delayed IGST payment under the Advance Authorisation Scheme for the period preceding legislative amendment lacked a specific statutory basis. The applicable High Court view is to be followed under judicial discipline despite contrary Tribunal views and a pending Larger Bench reference. Interest paid without statutory authority is characterised as a deposit rather than duty. Accordingly, the two-year limitation applicable to duty-refund claims does not govern recovery of that deposit.