Revision under section 263 requires both an erroneous assessment order and prejudice to Revenue. Where scrutiny records show that the taxpayer supplied relevant financial, deduction, banking and transaction details, the absence of detailed reasoning in the assessment order does not by itself establish inadequate enquiry. A revisionary authority cannot disregard an earlier coordinate-bench ruling in the taxpayer's own matter that treated loss on sale of non-performing assets as business loss, substitute a capital-loss view, or order fresh enquiry without a demonstrable prejudicial error. Revisionary jurisdiction was therefore invalid, and the loss remained allowable as business loss.

Additional deduction claimed on the basis of a prior-year disallowance requires material establishing that disallowance and the resulting eligibility. Where the preceding computation reflects disallowances under other provisions rather than the asserted tax-withholding disallowance, the additional deduction is unavailable. Exemption under section 10(46) requires the prescribed notification, and its absence prevents the exemption. A pending writ petition does not halt adjudication unless a specific stay operates. The additional deduction and statutory exemption were therefore denied.

Interest earned by a co-operative society from deposits held with a co-operative bank registered as a co-operative society falls within the deduction for income derived from investments with another co-operative society under section 80P(2)(d). Primary agricultural credit co-operative societies may therefore claim the deduction where the deposit-taking co-operative bank has that registered status. Interest income meeting these conditions is deductible, and additions made in respect of such interest are not sustainable.

Post-search assessments initiated after 1 April 2021 must follow the special reassessment procedure; regular scrutiny cannot continue as an alternative, and third-party seized material requires recorded satisfaction that it pertains to the assessee and prior approval. Unsecured-loan additions require rebuttal of evidence establishing lender identity, creditworthiness and transaction genuineness, while undisclosed-cash allegations require corroboration and cross-examination where witness statements are relied on. Corporate guarantee pricing must be supported by appropriate benchmarking, and notional interest on delayed associated-enterprise receivables cannot duplicate working-capital pricing within the primary transaction. Exempt-income disallowance requires recorded statutory satisfaction. Business-use guest-house rent and manufacturing-linked receipts may qualify as deductible business expenditure and eligible manufacturing profits respectively.

Section 154 rectification is confined to mistakes apparent from the record and cannot sustain a further goodwill disallowance where the amount was already added back by the taxpayer and again disallowed in the original assessment, causing a double addition. Ambiguity over whether rectification concerned goodwill or consequential depreciation cannot prejudice the taxpayer when the record establishes duplication; the additional disallowance is therefore deleted. Set-off of brought-forward business losses requires verification of the losses' quantum and eligibility from prior-year departmental records, and the claim is remitted for determination in accordance with law.

Transfer-pricing benchmarking requires functional comparability and reliable segmental evaluation. Engineering consultancy, architectural, procurement, agency, technical, outsourcing and knowledge-process outsourcing entities may be unsuitable comparables for administrative/marketing support or IT-enabled services where their functions differ. Mixed operations without segmental information cannot support reliable comparison, while a different accounting year alone need not require rejection if suitable adjustment is possible. Proposed comparables, service-income data and margin corrections require verification of supporting financial material. Risk-profile differences may justify an economic adjustment only upon substantiation under the applicable comparability rule. The arm's length price requires recomputation after comparable selection, verification and risk-adjustment review.

Rule 13 confines rectification of apparent mistakes to suo motu action or applications by the eligible assessee or Assessing Officer. Rectified DRP directions initiated on an application by the Commissioner of Income-tax (Departmental Representative) were therefore invalid, and replacing the original benchmarking method with intensity-adjusted TNMM was an impermissible review rather than rectification. The consequential assessment order and protective addition could not stand, including because they conflicted with binding DRP directions. Transfer-pricing adjustments for advertisement, marketing and promotion expenditure based on the Bright Line Test and intensity-adjusted TNMM were also unsustainable and were deleted.

Pure third-party expenditure reimbursements recovered from group entities at cost, without value addition or services to associated enterprises, are not subject to a transfer-pricing mark-up; deletion remains subject to verification. Overseas salary and wage cross-charges may attract adjustment where service-sharing evidence, including records or log sheets, is inadequate. Licence-fee payments for television distribution rights require Comparable Uncontrolled Price benchmarking using functionally comparable licence agreements rather than software or IT-distributor comparables, with identified agreements requiring consideration. Foreign taxes ineligible for credit may be claimed as a deduction subject to verification of supporting foreign-tax-credit particulars, Form 67 and withholding-tax certificates under applicable law.

Long-term capital gain from stock-exchange share sales cannot be treated as unexplained income merely because of abnormal price appreciation, investigation material, or alleged price manipulation. Contemporaneous evidence of purchase, banking-channel payment, dematerialisation, exchange-based sale, and receipt of consideration supports transaction genuineness unless cogent material links the taxpayer to manipulation, accommodation entries, or conversion of unaccounted money. Suspicion arising from regulatory action concerning the company or investigation reports does not override that evidentiary record. A binding jurisdictional view on comparable facts prevails over a conflicting non-jurisdictional approach based on preponderance of probabilities; consequential unexplained-income and alleged commission additions are unsustainable.

Gross-profit estimation was considered where survey material revealed missing bank entries, unverifiable purchases, absent bills and transport records, dealings with non-filers or stop-filers, and no stock registers. Declared gross-profit rates of 4.84% and 4.85%, after classifying specified export-related expenditure as indirect expenses, were broadly comparable with industry standards. However, the assessee had only partly established the correctness of its books and gross-profit ratio. As a 5% gross-profit estimate on total turnover was also not fully justified, deletion of the entire addition was modified and a lump-sum addition of 5% of gross profit was sustained for both assessment years.

Functional comparability under the Transactional Net Margin Method requires alignment of services, functions, risks and available segmental data. Tata Elxsi was unsuitable for benchmarking technical testing and resource-deployment support services because its design, engineering, digital-content and research activities, software-development revenue and substantial intangibles created a different functional and risk profile. TTEC India was functionally different due to its business-process outsourcing, technology-solution and AI-enhanced services. Cheers Interactive was also unsuitable because it undertook diversified IT-enabled and other services without segmental information. All three entities were excluded from the final comparable set.

Transfer-pricing provisions and the arm's length principle apply only to transactions between associated enterprises, not to royalty payments under an agreement with an unrelated foreign licensor. A deemed associated-enterprise relationship requires independent material establishing a qualifying prior agreement or arrangement involving an independent third party; no such material was established. Section 37 does not permit tax authorities to substitute royalty rates agreed between independent parties merely because a royalty database suggests lower rates. Accordingly, transfer-pricing benchmarking and royalty-expenditure disallowance were unsustainable.

Section 153C cannot be invoked against an other person where the jurisdictional satisfaction is recorded after 1 April 2021, even if the underlying search occurred earlier. Recording satisfaction is the relevant jurisdictional event. Where it arose after the Finance Act 2021 reassessment framework became applicable, reassessment action had to comply with Sections 147 and 148. Notices issued and consequential proceedings commenced under Section 153C in those circumstances lacked jurisdiction and could not be sustained.

Section 56(2)(vii)(b) applies only where the acquired property is a capital asset. Agricultural land that falls outside the definition of a capital asset is therefore outside the scope of the provision, even where its stamp-duty value exceeds the purchase consideration. As the land's agricultural character was undisputed, the difference between the purchase price and stamp-duty value was not taxable as income from other sources. The addition based on that difference was deleted.

Short-term capital loss on the sale of unlisted shares cannot be disallowed merely because it reduces tax liability where the underlying transactions are genuine. Banking records, share-transfer documents and company registration established the purchase and sale, while no material showed a pre-arranged arrangement or lack of commercial substance. The sale price to a related party exceeded the price paid for comparable shares acquired by another family member. Genuine tax planning remains distinct from tax evasion; consequently, the loss disallowance and corresponding addition were deleted.

Section 249(4)(b) requires a non-filer to pay an amount equal to advance tax payable before pursuing an appeal, unless the Commissioner (Appeals) grants exemption on good and sufficient reason. Advance-tax liability under Section 209(1) depends on computation by the assessee or Assessing Officer. Where neither has computed advance tax, a claim of no taxable income and therefore no advance-tax liability cannot be summarily rejected. The assessee must have an opportunity to establish that Section 249(4)(b) does not apply or to seek exemption under its proviso. Dismissal for non-compliance was set aside for reconsideration of admissibility and, where appropriate, merits.

Interest on refunds of excess self-assessment tax is a substantive, non-discretionary statutory entitlement when appellate exclusion of gains creates the excess payment. Where the refund is not within specifically enumerated refund categories, interest runs from the date the excess tax was paid under the applicable refund-interest framework. The later amendment concerning self-assessment tax does not negate entitlement for the earlier period. Interest is payable from the payment date until 1 June 2016, with interest thereafter already paid.

Rule 11UA permits valuation of unquoted preference shares through a report from either an accountant or a merchant banker; an independent valuer's report is not exclusively required. A valuation certificate already furnished during first appellate proceedings is not additional evidence for Rule 46A purposes merely because it is relied upon before the Tribunal. Fair market value under Section 56(2)(viia) must follow the prescribed statutory valuation method. An isolated third-party share transaction cannot displace valuation evidence based on audited financial statements and applicable redemption terms. Statutory valuation evidence supported the stated preference-share consideration within the applicable fair-market-value parameters.

Revision under Section 263 requires an assessment order to be both erroneous and prejudicial to Revenue interests. Inquiry and verification by the Assessing Officer into depreciation, foreign-agent commission and employment-deduction claims, including verification supported by Form 10DA, showed application of mind. In the absence of an identified flaw in the taxpayer's explanations or in the verification undertaken, alleged inadequacy of inquiry did not satisfy the conditions for revision. The Section 263 revision was therefore unsustainable, with no substantial question of law arising.

Revisionary jurisdiction under section 263 requires an assessment order to be both erroneous and prejudicial to the interests of the Revenue. Where the assessee has disclosed material relevant to capital-gains computation and the Assessing Officer verifies that material before consciously accepting the explanation, revision cannot be based solely on a different view of the inquiry required or computation preferred. The assessment view must be unsustainable in law for revision to apply. On these principles, invocation of section 263 was impermissible and the issue was resolved in the assessee's favour.