Cost-to-cost recovery of salary and travel expenses for employees temporarily seconded to associated enterprises constitutes expense reimbursement rather than consideration for margin-bearing services where recovered exactly at cost. Accordingly, the transfer-pricing mark-up adjustment was deleted, supported by consistent treatment in other years and a bilateral Advance Pricing Agreement allowing recovery at cost. Amalgamation expenditure incurred after approval is amortised over five years beginning in the assessment year relevant to the year of expenditure, not the appointed amalgamation date. The fifth annual deduction was allowed because the claim had been accepted for the prior four years without changed facts.

TNMM functional comparability requires reliable evidence of the proposed comparable's activities during the relevant year. Entity-level margins of a diversified provider cannot support comparison with software development services where undated website descriptions and financial records do not establish segmental revenue or results; the comparable was excluded and the adjustment required recomputation, subject to the safe-harbour limit. Comparable margins must also be recomputed in line with DRP directions. For delayed foreign-currency receivables, arm's length interest cannot be fixed mechanically at a standard LIBOR spread; it requires analysis of the transaction, the associated enterprise's creditworthiness, and comparable uncontrolled rates. Domestic associated-enterprise receivables require verification before interest adjustment.

Closely linked technical know-how fee and poultry feed premix purchase transactions may be aggregated for transfer-pricing purposes under Rules 10AD(d) and 10B. Where know-how fees are netted against premix purchase costs and the associated enterprise's invoice prices are accepted under the CUP method, the resulting reduction in net purchase cost supports arm's length treatment; the separate adjustment for know-how fees was deleted. Related-party performance incentives to directors cannot be disallowed merely because of the relationship. Disallowance requires material showing that expenditure is excessive or unreasonable against fair market value, legitimate business needs, or benefits derived. In the absence of findings or comparables, the incentive provision disallowance was deleted.

Prior-period expenditure is allowable where the liability, including its particulars and quantum, became known and ascertainable only in the relevant year; invoices may be recorded on crystallisation notwithstanding that the underlying expenditure relates to an earlier period. Transfer-pricing analysis must separately benchmark functionally distinct consulting and captive back-office divisions where their functions, methods and economic profiles differ. Entity-level aggregation is unsustainable in those circumstances, supporting deletion of the related adjustment.

Computer resources supporting hospital, laboratory, imaging and blood bank management systems, along with associated dependencies, are declared protected systems as Critical Information Infrastructure. Access is confined to designated employees authorised in writing, authorised contractual managed service provider or third-party vendor personnel requiring need-based access, and consultants, regulators, Government officials, auditors and stakeholders authorised in writing on a case-by-case basis. The designation takes effect upon publication in the Official Gazette.

Manufacturing scrap generated in the ordinary manufacturing process and directly connected with goods produced by eligible undertakings qualifies for profit-linked deduction. Additional exempt-income expenditure cannot be disallowed through a mechanical formula without recorded dissatisfaction, having regard to the accounts, with the voluntary disallowance; no further disallowance was warranted where it exceeded exempt dividend income. Corporate guarantees to associated enterprises are international transactions, with guarantee commission restricted to 0.35% under consistent prior-year treatment; consistency also precluded notional interest on unchanged equity contributions. Common-expense allocation under an established incremental approac.....

Settlement under the Direct Tax Vivad Se Vishwas Scheme, 2020 was confined to the dispute from the original assessment, as confirmed by the declaration, Form No. 5 and Assessing Officer verification. Subsequently initiated reassessment proceedings did not fall within that settlement, so dismissal on the premise that the reassessment dispute stood settled was set aside. The reassessment addition for alleged bogus purchases was deleted because the identities of suppliers, transaction-wise details, invoices and supporting material were not disclosed, leaving no clear factual basis for the addition.

Arm's-length benchmarking of business-support and general-management services rendered to an associated enterprise must focus on the specific controlled transaction and the functions performed, assets employed and risks assumed. TNMM does not remove the requirement for functional comparability; hospital or healthcare entities cannot be selected merely because the taxpayer operates fertility clinics without demonstrating similarity to the services benchmarked. Inadequate examination or production of the agreement, invoices and contemporaneous evidence concerning actual service rendition required fresh determination. The transfer-pricing adjustment was set aside and remitted for arm's-length price determination after FAR analysis and selection of functionally comparable entities.

Omission of clause (i) of section 92BA rendered transfer-pricing references and consequential adjustments for covered specified domestic transactions unsustainable, making the alternative dispute over the most appropriate method academic. Mark-to-market losses from equity and currency futures remained allowable because no material factual or legal distinction from the earlier decision was established. Where audited statements showed own funds exceeded investments generating exempt income, no interest disallowance applied. Administrative expenditure disallowance was confined to investments relevant to exempt income after crediting the taxpayer's self-disallowance. The Revenue's appeals were dismissed, while the taxpayer's alternate challenge did not survive.

Advance Pricing Agreement methodology may guide transfer-pricing benchmarking for an assessment year outside the agreement's term if the FAR analysis and underlying activities do not materially differ from covered years. Where Revenue challenges reliance on that methodology, it must establish the relevant factual distinction. A Transfer Pricing Officer who rejects the taxpayer's benchmarking in favour of the Other Method should apply that method and determine an arm's length price, rather than fixing a nil price on an ad hoc basis.

Unutilised MAT credit and taxes of amalgamating companies may accrue to the transferee where a sanctioned amalgamation scheme so provides. The limited exclusion under section 115JAA for conversion of a private or unlisted public company into an LLP does not extend by implication to amalgamation. Absence of an express enabling provision for amalgamation therefore does not itself prevent succession to MAT credit. The claimed credit remains subject to verification of its quantum and availability under law, with related refund, demand, and interest requiring consequential recomputation.

Advertisement and publicity expenditure paid to third-party vendors does not constitute a separate international transaction of brand-promotion services merely because group communication standards exist or an associated enterprise obtains an incidental benefit; an underlying arrangement or understanding must be established. The related transfer-pricing adjustment was deleted. Where an assessment order and computation sheet show differing carry-forward loss figures, the eligible loss requires verification against assessed income or loss and applicable law; limited recomputation was remanded. TDS/TCS credit after amalgamation depends on the transferee offering or being assessed on the corresponding income, subject to verification of amalgamation records, tax credit and supporting evidence; that claim was remanded.

Income of a substantially State-funded educational university was exempt under section 10(23C)(iiiab), removing the requirement for a tax audit under section 44AB. As the audit obligation did not apply, penalty under section 271B for failure to obtain an audit was inapplicable. Tax-audit penalties for both assessment years were therefore deleted.

INR non-deliverable derivative contracts offered by Authorised Dealers to non-resident users are restricted to hedging purposes. Authorised Dealers must maintain a Foreign Exchange Risk Reserve for INR foreign exchange derivative contracts undertaken to hedge the currency risk of their own assets and liabilities where foreign currency is purchased against INR. The reserve must equal 20 per cent of the INR equivalent of each contract's notional amount and be maintained as daily cash with the Reserve Bank until contract termination. The requirements apply prospectively.

Transfer-pricing adjustments for notional interest on delayed trade receivables may not be warranted where the taxpayer is completely debt-free and bears no interest cost on borrowings. The taxpayer's debt-free position requires verification from financial records before the adjustment can be removed. Verification is limited to that factual status; once established, the adjustment for interest on outstanding trade receivables is to be deleted. The matter is remitted for this limited verification, with consequential relief dependent on confirmation of the debt-free status.

Functional, asset and risk analysis requires comparables for a captive software development service provider to reflect its limited-risk, cost-plus operating model. Diversified technology companies with broad service portfolios, substantial brand value and intangibles, significant research and development, goodwill, patents, and different risk profiles are functionally dissimilar. The absence of standalone segmental information further impairs reliable comparison. Infosys Ltd., Wipro Ltd. and LTI Mindtree Ltd. are therefore unsuitable comparables, requiring recomputation of any transfer-pricing adjustment after their exclusion.

Retraction of a search surrender, when satisfactorily explained and unsupported by corroborative evidence, cannot alone sustain an undisclosed-income addition; the related addition was deleted. No section 14A disallowance arises where no exempt income was earned for the relevant year, and the later Explanation was prospective. Seizure of incriminating material permits assessment of total income under section 153A for completed years, including other issues. Interest for delayed remittance of tax deducted at source is compensatory and allowable as business expenditure. Depreciation on trucks used for own-goods transport must be computed at the lower prescribed rate on year-wise written-down value.

Cancellation of charitable-trust registration under section 12AA(3) depends on whether activities are non-genuine or conducted contrary to charitable objects. Registration proceedings assess the institution's charitable character and overall conduct, while alleged irregular receipts or income application in specified years are matters for assessment proceedings. Alleged capitation fees supported only by uncorroborated material recovered from third parties do not, without evidence of institutional receipt, establish that the trust's activities as a whole are non-genuine. Continuing educational and medical services, scholarships, and free treatment remain relevant to the genuineness inquiry.

Cash is movable property capable of being held benami. Where a beneficial owner supplies demonetised cash to a third party, who deposits it in that person's bank account and retransfers the funds through banking channels, the third party lends their name and holds the resulting bank balance for the provider's benefit. The cash constitutes consideration for the bank balance, and the retransfer evidences beneficial ownership; the duration of holding is immaterial. The transaction was treated as benami, with attachment limited to the remaining balance and the amount held in an interest-free bond, subject to tracing unavailable funds.

Rectification of a mistake apparent from the record is confined to patent, self-evident errors and cannot reopen the merits or adopt another possible view. Challenges to the effect of show cause notices, adjudication findings, penal provisions and statutory consequences required reconsideration of the concluded penalty finding for facilitative conduct. As no accidental omission or apparent error was shown, the rectification applications were rejected and the penalty order remained unchanged.