Reversal of opening accrued or unbilled revenue is allowable where revenue was consistently recognised on the mercantile basis according to work performed, offered to tax on accrual, and retained as an asset until billing. Amounts reversed on subsequent billing, including earlier-year billing adjustments, do not create fresh taxable income where they were already recognised and taxed. Professional fees paid to non-resident member firms do not attract withholding-based disallowance where the payments are not consideration for protected rights, know-how, or information constituting royalty under the applicable tax treaties, and the recipients have no permanent establishment in India. Consequently, disallowance for non-deduction of tax is not sustainable.

Recurring trademark fees paid under a non-exclusive, time-bound licence are allowable as revenue expenditure where the licensor retains exclusive ownership and the user acquires only a limited contractual right to use the mark. Annual fees calculated as a percentage of gross profit, coupled with an obligation to stop using the trademark on termination, do not create proprietary rights, exclusive commercial rights, or an enduring capital asset. The payments are operational expenses deductible under Section 37(1) of the Income-tax Act, 1961.

Penalty for under-reporting of income under section 270A cannot be sustained where the notice and penalty order fail to identify the specific clause of section 270A(2) allegedly breached. General references to under-reporting create ambiguity and invalidate the penalty proceedings. Penalty is also unwarranted where relevant receipts were disclosed and non-taxability was claimed on a bona fide legal position. A rejected claim or addition arising from debatable questions concerning royalty, business income, permanent establishment or profit attribution does not justify penalty absent concealment or non-disclosure of material facts.

Section 153C requires the Assessing Officers of both the searched person and the other person to record jurisdictional satisfaction. Assessment limitation runs from handover of seized material, and a later satisfaction record does not invalidate proceedings absent breach of a prescribed timeline or demonstrated prejudice. Cross-examination and supply of a third party's statement are required only when the statement underpins an adverse addition; seized spreadsheet evidence and corroborating transaction data may instead support the addition. A satisfaction note need not finally quantify undisclosed income. Where electronic records support cash consideration for jointly acquired property, the addition requires recomputation according to the assessee's verified ownership share.

Failure to satisfy the conditions for the concessional corporate tax regime under Section 115BAA requires computation at the applicable normal rate. Where a company's turnover in the relevant preceding financial year did not exceed the prescribed threshold, its income is taxable at the normal corporate rate of 25%, rather than 30%. Denial of the concessional rate does not itself trigger the higher normal rate; the applicable ordinary rate remains determined by the turnover-based condition.

Comparable Uncontrolled Price (CUP) Method may benchmark exports to associated enterprises where independent purchases provide reliable comparables and material differences can be adjusted; unsubstantiated objections based on geography, volume or timing do not displace CUP. TNMM may be unreliable for a first-year producer without meaningful capacity-utilisation adjustments. Foreign-currency borrowings require currency-specific arm's length benchmarking that accounts for tenure, security, credit and market risks; a uniform LIBOR spread without comparables is insufficient. Delayed foreign-currency receivables constitute a separate international transaction, with interest benchmarked at LIBOR plus 200 basis points after a 60-day credit period rather than domestic deposit rates. Transfer-pricing relief applies to export sales and external commercial borrowings.

Reassessment notices issued more than three years after the relevant assessment year require material revealing escaped income of at least Rs. 50 lakh and prior sanction from the higher specified authority. These conditions are mandatory for assuming reassessment jurisdiction. Where the alleged escaped income was below that threshold and approval came from the Principal Commissioner rather than the authority prescribed for delayed notices, jurisdiction was not validly assumed. The reassessment notice was invalid, and the consequential assessment was quashed.

Professional banking education provided to an identifiable section of the public constitutes educational charitable activity for Section 2(15); the general-public-utility proviso does not apply, and refusal of approval under Section 10(23C)(vi) does not determine entitlement to Section 11 exemption. Interest on tax-free bonds is consequently governed by the charitable-institution computation regime under Section 11 rather than Section 10(15). Section 11(6) cannot support a depreciation disallowance where no depreciation was claimed. Accumulation under Section 11(2) is permissible where Form No. 10 identifies definite purposes, including premises, e-learning facilities, and testing, learning and data centres, rather than merely repeating general institutional objects.

Unexplained-income addition based on alleged share-sale proceeds requires assessee-specific evidence linking identified transactions to unaccounted income, sham trades, or accommodation entries. Gross sale consideration cannot be treated as taxable profit without reconciling transaction-wise records and examining the actual income component. Books of account, contract notes, bank statements and broker records supported the reported transactions, while general penny-stock investigation material did not establish a nexus with them. No exempt long-term capital-gains claim had been made. The unsupported addition was deleted, with consequential interest to be recomputed on finally determined income.

Section 14A(2) requires the Assessing Officer to examine the accounts and record cogent, objective dissatisfaction with the assessee's expenditure claim before invoking Rule 8D. Rule 8D is not an automatic computation merely because exempt income exists. A reasoned suo motu disallowance based on proportionate employee and communication costs cannot be increased through general references to common accounts, intermingled funds, transactions or interest expenditure without identifying defects or expenditure with a proximate nexus to exempt income. Unrebutted explanations on interest and interest-free own funds must be addressed. The additional disallowance was deleted, while the voluntary disallowance remained intact.

Unexplained unsecured loans may be accepted where confirmations, ledger accounts, bank statements, tax returns and financial statements establish creditor identity, creditworthiness and transaction genuineness, particularly when the material remains unverified or undiscredited during remand. Low returned income alone does not disprove creditworthiness. Alleged accommodation-entry loans require corroborated evidence linking funds to unaccounted cash; unauthenticated, undated third-party messages without a cash trail or bank evidence are insufficient. Disallowance of expenditure relating to exempt income under the prescribed computation mechanism requires recorded dissatisfaction with the taxpayer's accounts; without it, the disallowance is unsustainable.

Section 12AB registration depends on the charitable nature of a trust's objects and the genuineness of its proposed activities, not on whether charitable activities have already commenced. Where the objects are undisputedly charitable and proposed activities align with them, the absence of activity in relevant years does not by itself demonstrate non-genuineness or a specified violation. Registration does not automatically confer income-tax exemption; actual application of income and the genuineness of an exemption claim remain subject to scrutiny during assessment proceedings. Registration therefore cannot be refused solely because charitable activities have not begun.

Rectification under Section 154 is limited to mistakes apparent from the record and cannot determine disputed questions requiring factual investigation or legal interpretation. A claim that part of purchased land was compulsorily retained by a development authority on conversion to non-agricultural use required examination of the conversion order, the legal effect of statutory surrender, and attribution of acquisition cost. Reduction of indexed acquisition cost on that basis therefore lay outside rectification jurisdiction. The rectification order was quashed, and the addition for alleged excess indexed cost was deleted.

Cash exclusivity compensation received when negotiations to transfer subsidiary shares fail is capital in character where exclusivity prevents dealings with other buyers but does not restrict business activity. It is therefore outside business-income taxation under Sections 28(iv) and 28(va) and excluded from book-profit computation under Section 115JB. Section 14A disallowance does not arise for a year with no exempt income; the Finance Act 2022 Explanation applies from assessment year 2022-23 and does not govern an earlier year.

A society filing its income-tax return as an association of persons or body of individuals is taxable at normal rates where that status applies; maximum marginal rate treatment is unwarranted. Where the society's total income is below the taxable limit, no tax liability arises and the returned income is to be accepted without applying the maximum marginal rate. The relevant distinction is between the entity's declared taxable status and an unsupported application of the higher rate.

Accepted sales, maintained quantitative records and unrejected books of account preclude addition of the entire value of alleged bogus purchases merely because suppliers or purchases remain insufficiently substantiated. In those circumstances, tax is confined to the profit element embedded in the non-genuine purchases, rather than the full purchase amount. Applying that approach, the disputed purchase addition was restricted to 10% of the alleged bogus purchases.

Reasonable and bona fide cause under Section 273B protects an assessee from penalty for delayed furnishing of a tax audit report. The accountant's illness and medical treatment prevented timely preparation of accounts, while the audit report was furnished before scrutiny proceedings commenced. These circumstances support deletion of penalty imposed for delayed submission of the tax audit report under Section 271B.

Section 115BBE's enhanced 60% rate, effective from 1 April 2017, applies from assessment year 2018-19 and not to assessment year 2017-18. Unexplained money assessed under Section 69A for financial year 2016-17, corresponding to assessment year 2017-18, is taxable at the then-applicable 30% rate. The tax on the addition must therefore be computed at 30%, rather than 60%.

Reassessment proceedings cannot be validly initiated through a Section 148 notice issued in the name of a person who had died before its issuance. Section 159 permits continuation against a legal representative only where proceedings began during the deceased person's lifetime; where fresh proceedings are permissible after death, the jurisdictional notice must be issued to the legal representative. Revenue's lack of knowledge of the death, or a later assessment in the legal heir's name, does not cure the defect. Where the legal heir promptly objects and does not submit to jurisdiction, reassessment founded on the notice to the deceased is legally unsustainable.

A domestic company that validly exercised the section 115BAA option through Form No. 10-IC remains eligible for the 22% concessional tax rate in subsequent assessment years. Section 115BAA(5) gives continuing effect to an option exercised in the prescribed manner. Acknowledgement of the form, prior acceptance of the option, and disclosure in the relevant return establish compliance. Processing at the normal rate under section 143(1), or failure to produce supporting documents before the first appellate authority, does not nullify a subsisting statutory option demonstrated on record.