Possession granted under a joint development agreement solely for development, without conveyance, title transfer, monetary advance or part performance, does not constitute a taxable transfer. Capital gains arise on receipt of constructed flats under the special regime, with stamp-duty value of the built-up area forming consideration; the flats may qualify as residential-house investment for exemption. On subsequent flat sales, acquisition cost should match the value adopted at the first stage, and the holding period runs from the occupancy certificate. Deemed rental income provisions do not apply to unsold flats held as capital assets rather than stock-in-trade.

Rectification under section 254(2) extends to patent omissions and manifest inconsistencies, not a review on merits. Where an order records material on residential status and consequential foreign income but leaves those grounds undecided, and gives inconsistent foreign-tax-credit directions, the issues may be restored for fresh adjudication. Residential status is central to determining whether foreign income is chargeable in India and the eligible credit. Foreign tax credit cannot be denied solely because Form No. 67 was filed with a belated return before processing; the filing requirement is treated as directory, with Rule 128(9)'s amendment regarded as clarificatory. Eligible credit requires re-examination after determining residential status and taxable income.

An appeal must be filed before the Tribunal Bench having territorial jurisdiction over the appellant's registered office. As the registered office fell within the Cuttack Bench's jurisdiction, filing before the Hyderabad Bench was not maintainable. No statutory provision permitted the Hyderabad Bench or its Registry to transfer the appeal to the competent Bench. The stated delay was also unsupported by sufficient cause for condonation.

Section 80JJAA permits a deduction of 30% of additional employee cost for three assessment years, including the year in which eligible employment is provided, subject to prescribed conditions. A third-year deduction claim cannot be disallowed solely because employee strength did not increase during the relevant previous year, particularly where the deduction was allowed in the preceding years and adjusted for employees who left employment. Eligibility nonetheless requires verification of the statutory conditions, supporting report and relevant earlier appellate finding. The claim was remitted for limited verification, with deduction to be allowed if eligibility is established.

Reassessment initiated on the incorrect premise that no return was filed is invalid where the return disclosed the property transaction and the Department had already examined it through AIR information. Explanation 2(a) to section 147 could not apply on those facts, and reassessment required fresh material rather than a renewed examination of the same transaction. Section 50C substitutes stamp-duty value for declared consideration but does not independently establish income escaping assessment. The section 148 notice was therefore void ab initio, and the reassessment failed.

Completed unsold units held as stock-in-trade may attract notional rental income under section 23(5) after the prescribed vacancy period where completion and occupation certificates have been obtained and the units are not work-in-progress. Identified units for which advances have been received, without final possession, may be excluded from the notional-rent base subject to verification of supporting details; where such material is first filed in appeal, Rule 46A verification is required. Annual letting value should be based on municipal ratable value rather than an ad hoc percentage of the cost of unsold stock.

The first proviso to Section 149(1) bars reassessment notices for assessment years beginning on or before 1 April 2021 if they were already time-barred under the erstwhile limitation regime. For assessment year 2015-16, the former six-year limitation expired on 31 March 2022, making the Section 148 notice issued thereafter invalid. Compliance with Section 148A procedures and exclusions or extensions under the erstwhile third and fourth provisos to Section 149(1) cannot override the first proviso or revive a barred notice. The reassessment order was therefore quashed.

Interest attributable to admitted bogus accommodation loans is not allowable because the underlying loans are non-genuine and their principal amounts were offered as income. Tax deducted at source from the interest payment is not itself interest expenditure and must be excluded from the disallowance. An estimated addition for commission on accommodation entries requires corroborative evidence of actual payment and quantum; it cannot be based solely on a presumption that commission would have been paid. Accordingly, interest is disallowed subject to exclusion of tax deducted at source, while the commission additions are deleted for all relevant assessment years.

Agricultural land demonstrably used for cultivation until transfer retained its agricultural character despite tenancy-law permission before sale and the purchaser obtaining non-agricultural permission later; gains on transfer were therefore not taxable as capital gains. Agricultural receipts supported by undisputed bills, recorded in the books and consistent with earlier disclosures could not be treated as unexplained income merely because they were omitted from the return. Share-sale profit remained taxable as long-term capital gain because the assessee did not hold the controlling stake or management of the company, defeating the basis for characterising the sale as a business venture. All three additions were deleted.

Cash payments towards credit-card dues were explained by frequent bank withdrawals and income returned from contract business under presumptive taxation. Where cash availability throughout the year is established and no specific mismatch or alternative use of withdrawn funds is shown, a direct date-wise correlation between each withdrawal and payment is unnecessary. Acceptance of presumptive business income also prevents rejection of the explanation that bank credits and withdrawals arose from that business, as taxing payments sourced from already taxed receipts would cause double taxation. The addition for unexplained money under Section 69A was deleted.

Corporate guarantees issued to wholly owned associated enterprises should be benchmarked at 0.5%, as bank guarantee charges and external borrowing rates are not comparable to lower-risk group guarantees. Outstanding cross-border receivables denominated in foreign currency should be benchmarked using the market rate for the repayment currency, namely LIBOR plus 200 basis points, after a normal 60-day interest-free credit period. Transfer-pricing adjustments for corporate guarantee commission and delayed associated-enterprise receivables are consequently recomputed using these arm's length parameters.

Assessment under section 153C for an extended assessment year requires a jurisdictional satisfaction that seized material reveals escaped income represented by an asset meeting the prescribed threshold. For a person other than the searched person, the six-year period is reckoned from the assessment year relevant to the financial year in which the material is received by that person's Assessing Officer. Where the relevant year falls outside that period, a satisfaction note referring only to alleged cash transactions, without recording the mandatory asset-based satisfaction, cannot support section 153C jurisdiction. The assessment is therefore void ab initio and consequential additions cannot survive.

Transfer-pricing benchmarking confines adjustments in the manufacturing segment to controlled international transactions with associated enterprises, rather than total segment turnover. Functionally dissimilar software-product, R&D-intensive and intangible-owning companies should be excluded, while companies predominantly providing software development, implementation, testing, support or maintenance services may be included where comparable. Working-capital, capacity-utilisation and non-cenvatable customs-duty adjustments require examination of material cost or profit differences; capacity data may be obtained from comparables where necessary. Foreign-exchange fluctuations linked to import-intensive operations are operating items, while acquisition-related goodwill amortisation is non-operating. Licence or royalty payments incurred in ordinary business and scientifically estimated warranty provisions supported by historical experience qualify as revenue deductions.

Depreciation claimed by a power-generating undertaking under Appendix I may validly exercise the option available under the second proviso to rule 5(1A), where the claim is made in the return and supported by the Form 3CD depreciation computation. Full disclosure of asset cost, use and depreciation particulars, coupled with a revised computation submitted before any specific depreciation query, supports the bona fides of the correction. A dispute over the applicable depreciation method or rate, without false, erroneous or fictitious particulars or an unsubstantiated explanation, does not attract penalty under section 271(1)(c); Explanation 1 does not apply.

Prior approval obtained for a survey-based assessment under section 143(3) lacked statutory basis because section 153D applies only to assessments arising from search or requisition proceedings under sections 153A and 153C. Obtaining supervisory approval where none is required improperly interferes with the Assessing Officer's independent quasi-judicial discretion and amounts to decision-making under external dictation. The assessment order was therefore invalid and quashed.

Disallowance of expenditure relating to exempt income under section 14A read with Rule 8D cannot exceed the exempt income earned for the relevant year. For assessment years preceding 1 April 2022, the Explanation inserted into section 14A by the Finance Act, 2022 is prospective and does not alter the pre-amendment position. Accordingly, the disallowance must be restricted to the exempt income actually earned, and the later Explanation does not apply to assessment year 2018-19.

Deductibility of a genuine compensatory patent-settlement payment is examined under section 37(1), with the payment characterised as revenue expenditure where it resolves foreign patent litigation, protects business interests, and involves no proven guilt or prohibited purpose under the applicable law. Related financing interest is treated as consequential to the settlement's allowability. The material also addresses transfer-pricing treatment of captive-power transfers and associated-enterprise transactions; the cap on section 14A disallowance at exempt income and exclusion from book-profit computation; business-promotion expenditure; foreign-tax credit verification; research-and-development deductions; and wealth-tax provisions in book-profit computation. Software expenditure remains capital where depreciation has been claimed and allowed.

Amortisation of goodwill arising from a business acquisition or merger is characterised as a non-operating expense for computing the profit level indicator under the Transactional Net Margin Method. Because goodwill amortisation stems from an exceptional acquisition event rather than ordinary business operations, it should be excluded from operating costs to ensure that the taxpayer's operating margin is comparable with uncontrolled entities. Accordingly, the Assessing Officer or Transfer Pricing Officer must exclude goodwill amortisation when determining the profit level indicator for transfer-pricing adjustments.

Reassessment based solely on a suspicious transaction report was invalid where audited financial statements, capital accounts and tax-audit material showed that the questioned receipts were capital infusion or withdrawal by a partner under the partnership arrangement. Withdrawal of a partner's capital balance did not itself demonstrate income escaping assessment, and the reassessment order failed to address the taxpayer's explanation and supporting evidence. In the absence of third-party statements, incriminating material, or evidence that the bank transactions were bogus or accommodation entries, mere suspicion could not justify reopening. The reassessment notices and orders were quashed.

Reassessment requires material giving reason to believe that taxable income has escaped assessment. A suspicious transaction report concerning transactions between an assessee and related partnership or proprietary concerns does not, by itself, meet that standard where the transactions are recorded in the books and supported by audit reports, financial statements, bank records, cash books and ledgers. Incorrectly treating supporting details as unsubmitted, without independent material, third-party statements or seized evidence showing bogus or accommodation entries, cannot establish escapement of income. Inter se loans must also be linked to taxable income alleged to have escaped assessment. Mere suspicion based on transaction patterns is insufficient; reassessment initiated solely on that basis is invalid.