Milestone-based financial assistance received during development of water-supply infrastructure under a BOT concession is capital in character where it is linked to construction milestones and intended to establish or complete the project. Applying the purpose test, the assistance is not taxable as revenue and reduces capital work-in-progress. Capital work-in-progress expenditure supported by sub-contractor invoices cannot be disallowed on an ad hoc basis merely because every item cannot be verified. An estimated disallowance requires identified defects or evidence that expenditure is inflated, excessive, or non-genuine. Both additions were deleted.

Deduction for interest and dividend income from investments with co-operative banks and societies is addressed under Section 80P(2)(d), where investments are treated as funded from own capital, reserves and surplus exceeding the investment amount. The balance of additional depreciation on eligible new machinery used for less than 180 days in the acquisition year is treated as allowable in the immediately succeeding year. Milk cans and related equipment used integrally in milk-processing and cattle-feed operations are treated as plant and machinery, supporting both normal and additional depreciation.

Section 54F permits exemption where a new residential house is constructed within three years after transfer of the original capital asset; it does not require construction to begin only after that transfer. Documentary evidence supported demolition of the existing structure and construction of a new house, with no identified deficiency. As the claim concerned new construction rather than renovation or extension, and section 54F is a beneficial provision requiring liberal interpretation, deduction remained available despite construction commencing before the asset transfer.

Revisionary jurisdiction cannot be used to alter the tax treatment of disallowed agricultural income where the same addition is pending before the first appellate authority. Explanation 1(c) to Section 263 excludes matters that are the subject of an appeal from revision. The assessment record also showed that the Assessing Officer had examined the genuineness of the agricultural income during limited scrutiny and made an addition as income from other sources after finding the evidence unsatisfactory. A differing view on the applicable charging provision or head of income does not by itself establish the error and prejudice required for revision. The revisionary order was therefore without jurisdiction and quashed.

Reassessment beyond four years after a scrutiny assessment requires recorded reasons showing escaped income caused by the assessee's failure to fully and truly disclose material facts. Where complete share-transaction particulars had already been furnished, the reasons incorrectly alleged exempt long-term capital gains that were never claimed and disclosed no independent enquiry or omission by the assessee. Such factually incorrect reasons reflected non-application of mind and failed to meet the jurisdictional conditions for reopening. The reassessment was therefore invalid for want of jurisdiction.

Deduction for a donation to an approved research institution under Section 35(1)(ii) remains available where the donee's approval is cancelled after payment, as the statutory explanation protects the donor's entitlement. Allegations of accommodation entries do not justify denial without material establishing the donor's connection to the arrangement or proof that the donated amount was returned. Regulatory monitoring of the donee institution lies with the approving authorities, and donors are not required to verify the donee's operations. The donation claim was therefore allowable.

Reassessment jurisdiction fails where the Revenue cannot establish timely service of mandatory notice under section 143(2), furnish the recorded reasons for reopening, or dispose of objections through a separate speaking order. A later notice or supply of investigation material does not cure those defects. Reopening sanction is also unsustainable where approving authorities give consolidated, formulaic endorsements without independent application of mind to the assessee's facts, and the Assessing Officer relies on unverified investigation information rather than forming an independent reasoned belief. Such procedural and jurisdictional failures invalidate the reopening notice, reassessment proceedings and consequential assessment.

Rectification for non-consideration of a precedent under Section 254(2) is confined to the apparent mistake and does not permit fresh adjudication of all issues. Where an appellate order is recalled solely to examine an omitted coordinate-bench decision, the rehearing is limited to that decision's applicability. Depreciation is not allowable on shares acquired from promoters of a company holding iron-ore purchase rights because the rights belong to the company, while the shares remain an investment. Capitalising the share-acquisition cost after merger does not convert it into a depreciable intangible asset unless the shares embody a distinct and exclusive business or occupancy right.

Corporate guarantee commission earned by a Mauritius resident was treated as residual income under Article 22 of the India-Mauritius tax treaty because no specific distributive article governed it. Before Article 22(3) became effective, Article 22(1) allocated exclusive taxing rights to the residence State unless the permanent-establishment or fixed-base exception in Article 22(2) applied. The later source-State taxing right could not apply to income from an earlier period. Accordingly, the commission was taxable only in Mauritius, not India, and the transfer-pricing adjustment was deleted.

Member-based co-operative credit societies that accept deposits and provide loans only to members, without an RBI licence for banking business, fall outside the exclusion for co-operative banks and qualify for deduction under section 80P(2)(a)(i). Cash deposits collected through regular member collections, including a deposit scheme, are not unexplained cash credits where they are recorded in the books, supported by satisfactory evidence, and subject to internal and co-operative audit. The stated outcome sustained both the statutory deduction and deletion of the cash-credit addition.

Documented listed-share transactions through recognised stock exchanges, registered brokers, demat accounts and banking channels cannot be treated as unexplained cash credits merely because the scrip is alleged to be a penny stock or a general investigation report raises suspicion. Denial of long-term capital gains exemption requires cogent assessee-specific material linking the taxpayer to price manipulation, entry operators, exit providers or unaccounted cash circulation; human-probability reasoning alone cannot displace supporting records. An estimated commission addition for alleged accommodation entries has no basis where the underlying share transaction is accepted as genuine and explained.

Form 26A furnished during assessment proceedings established that the payees had filed returns, included the payments in income and paid the tax due. Under the proviso to section 40(a)(ia), read with the first proviso to section 201(1), these conditions treat the payer as having deducted and paid tax. Non-electronic filing of Form 26A in the manner prescribed by Rule 31ACB was treated as a procedural lapse that did not negate substantive compliance. Consequently, the disallowance of expenditure under section 40(a)(ia) was deleted.

Reassessment based on unverified third-party information containing materially incorrect transaction figures lacks the Assessing Officer's independent reason to believe that income escaped assessment. Information from another officer may justify inquiry, but the Assessing Officer must verify the taxpayer's existing records, establish a factual nexus, and apply independent judgment before issuing a reopening notice. Failure to dispose of detailed objections to reopening before completing reassessment also breaches a mandatory requirement. The reopening notice, recorded reasons, reassessment proceedings, and reassessment order were treated as void from inception and quashed.

Reassessment notices for Assessment Year 2015-16 had to be issued by 31 March 2022 under the applicable limitation framework. A notice issued on 31 July 2022 was beyond that outer date. Applying the Revenue's concession recorded in the governing Supreme Court ruling, post-1 April 2021 notices for that assessment year were required to be dropped where reassessment could not be completed within the period preserved by the relevant extension regime. The time-barred notice was invalid, and the consequential reassessment order was quashed.

Addition based on stamp duty value under section 43CA requires consideration of the valuation report obtained on the Assessing Officer's accepted reference. The assessment had been completed due to limitation, expressly subject to modification upon receipt of that report, but the subsequently determined fair market value was not considered. A fresh determination after considering the valuation report and providing the assessee a reasonable opportunity was required. The assessment was remanded for fresh adjudication, and the addition was not sustained for final determination.

Reassessment jurisdiction requires the officer completing the assessment to hold valid authority through a transfer of jurisdiction or to issue the statutory reassessment notice. Where one Assessing Officer issued the notice under Section 148 and another completed the reassessment without a demonstrated transfer order under Section 127 or a fresh notice, the latter lacked jurisdiction to frame the assessment. The reassessment was therefore invalid and quashed. A contrary precedent concerning PAN-based jurisdiction and restructuring of charges was distinguishable on its facts.

Reassessment requires the officer completing it to hold validly transferred jurisdiction and to issue the statutory notice initiating reassessment. Where proceedings are initiated by one Assessing Officer but concluded by another, a valid transfer order is necessary; absence of such authority is a jurisdictional defect that cannot be waived and renders the reassessment void. Issuance of notice under section 148 by the officer assuming reassessment jurisdiction is also an indispensable precondition. Consequently, reassessment completed without a traceable transfer order and without notice issued by the completing officer is void ab initio; consequential proceedings do not survive, and merits issues become academic.

For reassessment notices issued after three years from the end of the relevant assessment year, the competent sanctioning authority must be identified as of the notice date. Approval for an earlier show-cause notice does not replace the distinct statutory approval required for the reassessment notice and resulting assessment order. Where approval was obtained from the Principal Commissioner rather than the Principal Chief Commissioner, the reassessment notice was invalid and the assessment based on it was liable to be quashed.

Reassessment notices for Assessment Year 2015-16 issued on or after 1 April 2021 were barred by limitation where the applicable period under Section 149 had expired. The extended period preserved by TOLA did not permit completion of reassessment proceedings beyond that limitation. Proceedings initiated under Section 148A(b) after expiry of the six-year period were likewise time-barred. Consequently, a notice issued under Section 148 for that assessment year was invalid.

The Tribunal's refusal to recall its appellate order was upheld because the disputed grounds had already been considered and rejected in the original order. The High Court found that the Tribunal had addressed the allegation of non-adjudication by referring to the relevant portions of its prior decision, and no basis for appellate interference was established. The issue was therefore decided against the assessee.