Revisionary jurisdiction requires an assessment order to be both erroneous and prejudicial to Revenue. Allowance of bad debts was not amenable to revision where the Assessing Officer had examined supporting particulars and ledger material, and the debts were written off as irrecoverable in the accounts; actual proof of irrecoverability was unnecessary. Allowance of employees' PF/ESI contributions paid after statutory due dates was likewise not revisable where it followed binding jurisdictional precedent prevailing at assessment. A subsequent Supreme Court ruling taking a different view does not retrospectively make that assessment erroneous. Neither ground satisfied the conditions for revision.

Revision under Section 263 cannot be invoked merely because a subsequent Supreme Court ruling adopts a view different from the jurisdictional High Court precedent governing when the assessment was made. Where the Assessing Officer allowed deduction of belated employees' provident fund and ESI contributions in accordance with the then-binding jurisdictional High Court ruling on materially identical facts, the assessment was not erroneous and prejudicial to Revenue interests. The later Supreme Court interpretation did not retrospectively invalidate that assessment for revision purposes, and the revisionary orders were set aside.

Compensation paid to an existing tenant for surrendering tenancy rights may be deducted as business expenditure where property letting forms part of the taxpayer's business and rental receipts are taxed as business income. Securing vacant possession to let the premises to a new tenant at higher rent can arise from business necessity and commercial expediency. Where the payment does not acquire the property or create an enduring capital advantage, it is allowable under Section 37(1) of the Income-tax Act, 1961.

Annual membership and subscription expenditure could not be disallowed during return processing merely because of an inadvertent mismatch in the tax audit report. The expenditure was certified as wholly and exclusively incurred for business, not capital or personal, and was supported by expense-wise particulars, invoices and bills. Determining its nature and business nexus required examination of evidence, which the limited processing mechanism under section 143(1) could not mechanically replace. The disallowance was therefore unjustified and deleted.

Deduction under Section 80-IAC should not be denied solely because Form 10CCB was not filed with the return where the audit report was furnished before processing and issuance of intimation under Section 143(1). The requirement to furnish the report with the return was treated as directory, as the report remained available before completion of processing. Pandemic-related staff absence and technical issues explained the delayed filing. The Assessing Officer was directed to consider Form 10CCB and allow the otherwise eligible deduction.

Interest earned by a co-operative society from investments with co-operative societies or banks registered under Kerala co-operative societies law qualifies for the statutory deduction, even though it is assessable as income from other sources. Accordingly, interest received from a District Co-operative Bank is eligible for deduction in favour of the co-operative society.

Life-insurance policy surrender or maturity proceeds are taxable under section 10(10D) only where the premium payable in any policy year exceeds 20% of the sum assured. Assessment of such proceeds requires verification of the policy terms and the applicable premium-to-sum-assured ratio. Where the assessment does not establish that the statutory threshold was crossed, the receipt's nature and taxability require fresh factual determination. The assessment was set aside for reconsideration by the Assessing Officer in accordance with law.

Interest earned by a co-operative society from investments with a District Co-operative Bank registered as a co-operative society under Kerala co-operative law falls within the deduction for interest or dividend derived from investments with another co-operative society. The interest is not deductible under the business-income clause, but qualifies under the specific deduction provision for investments with co-operative societies. Accordingly, the interest is deductible under Section 80P(2)(d) of the Income-tax Act, 1961.

Rental income from property settled in favour of family transferees is not assessable in the settlor's hands merely because the settlor holds a power of attorney for property management. The transferees held ownership and offered the rental income to tax, while no clubbing provision applied. A management-focused power of attorney does not transfer title or alter ownership. Consequently, rental income from the settled portions falls outside the settlor's assessment under income from house property, and the related addition is deleted.

Deduction available to a cottage industry was denied to a co-operative society operating a printing press because no material established that it satisfied the applicable cottage-industry criteria. The determination denying the claimed deduction therefore remained undisturbed, and the society was not entitled to the deduction.

Deduction under Section 80P requires a claim in a valid return of income under Section 80A(5). Filing a valid return is a mandatory statutory precondition for Chapter VI-A relief, and deductions or exemptions under taxing statutes are strictly construed. Where no return is filed under Section 139 or in response to a notice under Section 142(1), the statutory condition remains unmet and deduction under Section 80P is unavailable.

Deduction under Section 80P requires a primary agricultural credit co-operative society to make the claim in a return of income recognised under the Income-tax Act, 1961. Section 80A(5) makes filing a valid return within the applicable statutory period, including a return filed under Section 139 or in response to a notice under Section 142(1), a precondition for claiming a Chapter VI-A deduction. Where no such valid return is filed, the deduction cannot be entertained. Tax deductions and exemptions are subject to strict construction, and failure to meet this return-filing requirement cannot be condoned.

Ex-gratia compensation received from a former employer in connection with termination of employment falls within profits in lieu of salary under Section 17(3) of the Income-tax Act, 1961. Such termination-related compensation is taxable as salary income. A precedent predating insertion of the relevant statutory provision does not govern the tax treatment of the payment.

Interest received by a primary agricultural credit co-operative society from deposits of surplus profits with a District Co-operative Bank and the Treasury qualifies for deduction under Section 80P(2)(d). Depositing surplus funds with a permitted bank or financial institution, where regulated or permitted by co-operative-societies law, does not alter the income's connection with the society's credit-facility business. Prudent deployment of surplus profits instead preserves and enhances profits arising from that principal business, supporting the deduction for the interest income.

Delayed digital filing of Form 10B was treated as directory rather than mandatory where the form was available to the CPC during processing under Section 143(1), the returned income was accepted, and exemption under Section 11 was granted. No prejudice to the Department arose from the delay. Suo motu rectification under Section 154 to withdraw the exemption, without an opportunity of hearing, was considered contrary to natural justice and beyond the limited scope of rectification. The rectification denying exemption was invalid, and the original intimation granting exemption was restored.

Freight expenditure incurred for transporting goods purchased at Mumbai from Delhi-based dealers importing and selling goods at Mumbai Port was subject to an ad hoc disallowance. The available record did not support sustaining a higher disallowance. Given the stated factual circumstances, the disallowance was restricted to 5% of the claimed freight expenditure, and the balance disallowance was deleted in favour of the assessee.

Explanation 2(1) to Section 147 applies only where an assessee has not furnished a return despite having taxable income above the maximum amount not chargeable to tax. Where the assessment record shows that a return was filed for the relevant assessment year, invoking that Explanation is inapplicable. Reliance on an inapplicable provision renders the recorded reasons for reopening and the consequential reassessment jurisdictionally defective, resulting in the reassessment being void ab initio and liable to be quashed.

Revision under section 263 cannot rest on a different view where the Assessing Officer conducted enquiries, issued statutory notices, obtained replies and examined relevant material; inadequate enquiry differs from complete absence of enquiry. For the relevant assessment years, the Finance Act 2022 Explanation to section 14A applied prospectively, and section 14A read with Rule 8D did not permit disallowance where no exempt income was earned. Consequently, assessment orders allowing no such disallowance were neither erroneous nor prejudicial to Revenue interests, rendering the revisionary orders invalid and liable to be quashed.

Revision under section 263 was valid where assessment records showed receipt of an unsecured cash loan and the assessee's assertion that no cash transaction occurred lacked documentary support. Verification was required to determine whether the loan had been received through banking channels and whether penalty proceedings for a possible violation of section 269SS were warranted. The revisionary direction appropriately required the Assessing Officer to conduct the enquiry while allowing the assessee an opportunity to substantiate the claim.

Capital gains arise when a bank sells an assessee's mortgaged immovable property under the SARFAESI Act, even if the sale proceeds are applied to discharge secured loan dues. Where the assessee owns the property, capital gains are computed on the full sale consideration realised on sale, rather than only any amount retained or received by the assessee. Appropriation of proceeds towards credit facilities secured by the mortgage does not negate the transfer or reduce the consideration for capital-gains computation, subject to admissible deductions.