Limited Scrutiny confines assessment to the notified CASS issue. A deduction for donations for scientific research is legally distinct from an eligible company's expenditure on an approved in-house research and development facility, although both arise under section 35. Examination of the latter claim required credible tax-evasion information, recorded reasons and prior administrative approval. A section 142(1) questionnaire, taxpayer participation, Form 3CL, or curative provisions could not expand jurisdiction. The resulting disallowance was invalid.

Unexplained-investment additions require credible material establishing that the assessee actually made the alleged payment. An unsigned agreement to sell, particularly where its stated execution predates purchase of the stamp paper, lacked evidentiary reliability. The seller's affidavit and disputed agreement were insufficient without independent corroboration of funds flowing from the assessee, especially where the property was conveyed to another person and the assessee denied the transaction. The unexplained-investment addition was therefore deleted.

Failure to examine the difference between purchase consideration and stamp-duty value of immovable property may trigger Section 56(2)(vii)(b). Under Explanation 2(a) to Section 263(1), an assessment made without inquiries or verification that should have been undertaken is erroneous and prejudicial to Revenue interests. Where no material shows that the Assessing Officer consciously examined the issue or adopted a sustainable view, limited revision directing fresh inquiry on that issue does not amount to substituting the Assessing Officer's opinion.

Section 69A requires an unexplained-money addition to rest on reasoned evaluation and enquiry; agricultural-income and landholding evidence, together with acknowledged cash withdrawals and redeposits, cannot be rejected on surmise alone. Although self-serving material need not be accepted fully, inconsistencies may justify an ad hoc addition. The addition was confined to 10% of the aggregate amount and made taxable at normal rates rather than under the special unexplained-income rate.

Completed or unabated assessments under Section 153A may be disturbed only for additions linked to incriminating material found during the search. Material already available to the Assessing Officer that is unconnected with search discoveries cannot support unrelated additions, including unexplained cash credits or related interest expenditure. Where no incriminating material supports a proposed addition, reassessment may instead be pursued under Sections 147 and 148, subject to their statutory conditions.

Section 80P deduction available to a primary co-operative society is not to be denied solely because its income-tax return was filed after the due date, including beyond the extended filing period. Section 80AC links deductions to timely return filing, but Section 119(2)(b) and the applicable CBDT circular permit Chief Commissioners to consider condonation of delay for delayed returns claiming this deduction. The delayed return may be accepted and the assessment revised to allow the deduction, subject to compliance with the stipulated deposit condition imposed for the delay.

Tax deducted by an employer from salary remains credit available to the employee even where the employer does not deposit the deducted amount. The employer-deductor's default cannot be attributed to the employee or used to deny tax-deducted-at-source credit. Demands raised solely because that credit was not granted, including demands generated through return processing or rectification, cannot be sustained and must be quashed to that extent.

Discount on shares issued under an employee stock option plan is deductible as revenue expenditure under Section 37(1) where it is incurred wholly and exclusively to secure and incentivise employee services for earning profits. The discount, being the difference borne between the share price and market value, constitutes a business outgo or loss rather than a short receipt of capital. Liability arises as a definite business liability when the options vest; subsequent exercise affects quantification rather than the character of the expenditure. The discount is therefore allowable as a revenue deduction.

Comparable selection for determining arm's length price under Rule 10B requires functional comparability and is a factual, data-driven exercise. Accurate Data Converters Limited was properly excluded because it outsourced a major part of its work and was not functionally comparable to the assessee. No material established perversity, reliance on irrelevant material, or exclusion of relevant material in the factual basis supporting exclusion. The arm's length price analysis therefore excluded that company as a comparable.

One-time, non-refundable time-share membership fees may be recognised over the membership period where a consistent accounting method apportions receipts over the period of membership benefits, rather than taxed wholly on collection. A statutory clarification treating computer-software licences as royalty applies prospectively from 1 April 2012; resident software-licence renewal payments for assessment year 2008-09 therefore did not require tax deduction or trigger disallowance. Payments to non-resident suppliers do not establish equivalent taxability for resident suppliers. For disallowance purposes, "payable" encompasses sums already paid as well as outstanding amounts.

Reassessment requires a jurisdictional fact showing that income has prima facie escaped assessment. Where the entire payment was already disallowed in the earlier assessment, no income prima facie remained to have escaped assessment. Notice was issued and reassessment proceedings were stayed pending final hearing, as the jurisdictional fact appeared absent.

Eligibility for approval under Section 10(23C)(via) depends on whether a hospital exists solely for philanthropic purposes rather than on annual matching of receipts and expenditure. Incidental surpluses do not establish a profit motive where funds are applied to medical infrastructure, equipment and services; capital expenditure and depreciation must be considered in assessing the real financial position. Treatment of paying patients, consultants' fees and facility charges do not alone demonstrate commercial activity or private benefit. No statutory minimum for free or concessional treatment applies. Governance restricting funds to medical objects, barring profit distributions and dedicating residual assets to charity, together with statutory care for indigent patients, supports philanthropic status. Prior charitable recognition requires consistent tax treatment absent material change.

Approval under section 10(23C)(via) depends on whether a hospital exists solely for philanthropic purposes and not for profit. Financial position should account for capital expenditure on medical equipment and facilities, actual application of funds, and depreciation, rather than excess receipts over revenue expenditure alone. Capital application and depreciation have distinct functions. Consultant-fee arrangements do not alone show profit distribution where retained sums pay for hospital facilities and services. Medical relief to paying patients may be philanthropic; no minimum ratio of free or concessional treatment is prescribed. Philanthropic character depends on objects, medical activities, application of income and assets, charitable-hospital obligations, and absence of unrelated commercial activity or private diversion.

Computer software licence payments fall within the royalty clarification only prospectively from 1 April 2012. Tax deducted on payments to foreign suppliers does not, by itself, establish taxability of comparable payments to domestic suppliers, which require independent examination; consequently, the stated software licence renewals attracted no tax-deduction disallowance. For tax-deduction disallowance, "payable" includes amounts already paid. One-time non-refundable membership fees are recognised over the membership period, supporting apportioned recognition rather than immediate treatment in full.

Functional comparability in transfer pricing is a factual, data-driven assessment that must conform to Rule 10B. The High Court upheld the exclusion of an outsourced-service provider from the comparable set because outsourcing a major portion of its work made it functionally dissimilar to the assessee. The Revenue produced no contrary material and failed to establish perversity, reliance on irrelevant material, or exclusion of relevant material in the Tribunal's factual finding. The substantial questions of law were answered for the assessee, and the Revenue's appeal was dismissed.

Limited Scrutiny confines the Assessing Officer's enquiry to the CASS issue notified to the assessee unless prescribed safeguards permit examination of an additional issue. A deduction for donations for scientific research and expenditure on an assessee's own in-house R&D facility are distinct statutory claims, notwithstanding their connection with section 35. The notified donation issue could not be expanded to review the in-house R&D deduction without credible specific information, recorded reasons, prior approval and required intimation. Participation in proceedings, a questionnaire, Form No. 3CL, or curative provisions could not create jurisdiction. The resulting disallowance under section 35(2AB) was deleted.

Reassessment is not a change of opinion where original scrutiny records contained relevant material but the agricultural-land reinvestment claim and actual sales commission were never examined. Agricultural-land reinvestment may qualify for deduction where an agreement to sell provides for instalment consideration and proportionate possession, and replacement land is acquired from consideration received before execution of the final sale deed. A differential commission addition is unwarranted where Form 26AS and the profit and loss account reconcile the actual commission received, including its treatment through evaporation loss.

Penalty for unexplained fixed-deposit credits is not warranted merely because an addition is sustained under the deeming provision for unexplained credits when deposits were accepted under a public fixed-deposit scheme. Depositor particulars, supporting records, and an explanation that certain deposits were renewals supported the bona fides of the explanation. Without independent material establishing that the deposits represented undisclosed income, the addition alone did not justify concealment penalty. The penalty was deleted, while remaining grounds were left open as academic.

For interest on excess refund, a reassessment is a regular assessment only if it is the first assessment in the case. Where reassessment follows a scrutiny assessment, it does not meet that condition. Interest under section 234D therefore cannot be levied on an excess refund in those circumstances, and the charge is deleted.

Section 80GGC deduction depends on proving that a payment to a political party was a genuine contribution. Payment through banking channels and the recipient's registration are relevant but not conclusive. Genuineness may be assessed through the test of human probabilities, including evidence that the donee issued false receipts or returned donations, inconsistencies in the claim, incomplete bank records, failure to provide requested information, and non-response to enquiries. On such cumulative material, a deduction may be disallowed without relying solely on third-party statements. A challenge limited to the initiation of penalty proceedings is premature.