Currency seized as evidence in an investigation into fabricated customs-scheme claims, illegal gratification and hawala transactions falls within the category of a "thing" under Section 110(3) of the Customs Act, 1962, rather than confiscable goods under Section 110(1), unless the currency itself is the subject of a customs violation. The notice-and-return requirement under Section 110(2) therefore does not apply. Writ jurisdiction under Article 226 should not direct release while connected economic-offence investigations remain pending, as premature release could impede effective investigation. The currency may be retained as evidentiary material and kept in an interest-bearing deposit with a nationalised bank until investigation concludes.

Provisional release of goods seized under customs law is governed by the statutory mechanism requiring bond, security and any necessary conditions pending adjudication. Where investigation is complete and a show-cause notice has been issued, the competent Adjudicating Authority must decide the pending release application expeditiously. Invoice-related disputes and valuation must be determined within that authority's adjudicatory jurisdiction through a reasoned order in accordance with law. The same process applies to the connected seized vehicle.

Confiscation of Indian currency as sale proceeds of smuggled goods under the Customs Act was addressed alongside the evidentiary value of statements recorded during customs inquiry. Such statements were treated as substantive evidence, while a subsequent retraction was rejected as an afterthought. Possession of smuggled goods attracted penalty consequences, and the statutory burden required proof that the goods were not smuggled. The Supreme Court found no ground to interfere with the High Court's common order.

Stock-exchange share sale proceeds supported by broker records, banking channels, contract notes, demat statements, clearing delivery and securities transaction tax cannot be treated as unexplained money merely on uncorroborated penny-stock allegations. In the absence of evidence linking the assessee to cash circulation, collusion, entry operators or manipulation, suspicion cannot displace documentary evidence; the addition under Section 69A was deleted. Reassessment was nevertheless valid because substantial long-term capital gains had not been disclosed through a return, and their claimed exempt status did not remove the disclosure obligation.

Indexed cost of improvement claimed on sale of flats received under a joint development arrangement requires reliable proof of actual expenditure. Where the development agreement placed construction costs on the developer and the flats were sold as semi-furnished, quotations and proposed-work estimates did not establish further improvement costs. Evidence such as material purchase records, labour-payment proof, or other documentation of expenditure was required. The proportionate NALA payment claim also required supporting evidence. In the absence of substantiation, the indexed cost of improvement and related NALA claim were disallowable in computing long-term capital gains.

Sufficient interest-free funds supported security deposits and government liabilities incurred for contracts, so proportionate interest disallowance was unsustainable, particularly where bank charges were not attributable to the advances. Ad hoc disallowance of cash expenses could not stand because it rested on general concerns about profitability and cash payments without identified defects in expenditure records or supporting evidence. Specified bank note deposits during demonetisation were satisfactorily explained by regular cash collections from mining, royalty and toll-plaza operations, supported by cash books, cash-sale summaries and deposit records; the audited books were not rejected and no evidence rebutted the business source. All three additions were deleted.

Penalty for concealment or furnishing inaccurate particulars cannot be sustained where income offered during survey is included in the return and the assessment accepts that return without variation. For assessment year 2015-16, the enhanced tax rate under Section 115BBE, applicable prospectively from assessment year 2018-19, cannot be used to compute penalty. Penalty proceedings are also vulnerable where the notice under Section 274 read with Section 271(1)(c) fails to specify whether concealment or furnishing inaccurate particulars is alleged, notwithstanding satisfaction recorded in the assessment order. On these grounds, no penalty liability survives.

Profits from captive consumption of wind-generated electricity qualify for deduction under Section 80IA. Eligible profits must be computed using the rate at which the Electricity Board supplies electricity to consumers, rather than the lower rate at which generating companies supply electricity to the Board. Expenditure cannot be disallowed merely because payment recipients could not be produced more than two years later or because payments increased over earlier years. Further, payments below the tax-deduction-at-source threshold do not attract disallowance for non-deduction of tax. The claimed captive-power deduction and deletion of the expenditure disallowance follow.

Long-term capital gain from listed-share sales cannot be treated as unexplained cash credit solely on a general investigation report alleging penny-stock transactions. Where the report does not identify or implicate the taxpayer, and purchases and sales occur through banking channels, shares are credited to a demat account, and trading occurs on a recognised stock exchange, adverse inference requires independent material linking the taxpayer to accommodation entries. Absence of inquiry with the stock exchange or counterparties further prevents rejection based on presumption or surmise. The addition was directed to be deleted.

Employee-welfare payments to educational institutions and club expenditure for employees qualify as business expenditure where incurred for efficient business operations and not barred by the restriction on contributions to specified funds. Expenditure on enabling facilities is revenue expenditure if it creates no capital asset. Receipts directly and inextricably connected with project setup are capital receipts deductible from capital work-in-progress. Business-related bad debts, advances and claims may be written off where arising from supplies, shortages or stock transfers. Premiums on foreign-currency hedging contracts are amortisable as ascertained, non-speculative liabilities. Mineral-oil survey expenditure is deductible where permitted by the applicable production-sharing framework. Consistent prior treatment applies where facts and law remain unchanged.

Escrow adjustment deducted from slump-sale consideration forms part of the capital-gains computation and cannot be disallowed under the business-expenditure provision. Deductions under provisions governing business income apply only to income assessable as profits and gains of business or profession. As no business-income deduction was claimed for the disputed adjustment, that provision does not apply. The proposed addition is therefore unjustified and deleted.

Prior approval under section 151 is a jurisdictional condition for issuing a reassessment notice under section 148 after four years. The competent authority must record satisfaction on the reasons before the notice is issued. Approval recorded after issuance cannot cure the defect, because subsequent sanction does not validate a notice issued without the required prior authority. Consequently, the reassessment notice and consequential reassessment are invalid for want of jurisdiction.

Brought-forward unabsorbed depreciation under Section 32(2) of the Income-tax Act assumes the character of current-year depreciation. It may therefore be adjusted against taxable income under other heads, including income from house property, and is not restricted to business profits where no positive business income arises in the relevant year. The set-off is available because the carried-forward depreciation is treated as current depreciation for the relevant year.

Section 87A rebate is available against income-tax payable on short-term capital gains taxable at the special rate under Section 111A. Section 87A grants a rebate from income-tax, while Section 111A prescribes the applicable special tax rate for gains from transfer of listed equity shares. Neither provision contains an express statutory restriction excluding tax on such short-term capital gains from the rebate. The rebate can therefore be set off against tax payable on income taxable under Section 111A.

Commission expenditure paid to agents for procuring business from pharmaceutical companies qualifies for deduction under Section 37(1) where it is incurred wholly and exclusively for business purposes. The required business nexus was supported by the linkage between the payments and commission income earned, verification of recipients' identities, payment through banking channels, tax deducted at source, and recipients' disclosure of the income in their tax returns. In the absence of material showing fictitious payments, non-existent recipients, or return of funds to the payer, the expenditure is treated as genuine and allowable as a business deduction.

Reassessment initiated and completed against a dissolved partnership firm after its business succession to a proprietorship concern is legally unsustainable where the Department had accepted the succession and assessed the relevant transactions in the successor's hands. Assessing the same income again in the dissolved firm's hands would cause impermissible double taxation. Reopening jurisdiction also fails where the recorded reasons merely refer to financial transactions and cash deposits without identifying the relevant bank account, specific transaction, or material indicating income escapement by the erstwhile firm. The reassessment and consequential addition were therefore invalid.

Interest earned by a primary agricultural credit society on deposits of surplus profits qualifies for deduction as profits attributable to providing credit facilities to members where the deposits are connected with, permitted by, or required for its lending business. Interest from members' funds or deposits lacking a business nexus is distinguishable, and entitlement requires factual verification. Disallowances for failure to deduct tax at source and the taxability of miscellaneous income require fresh examination where relevant expenditure, tax-deduction and income particulars were not furnished and an effective opportunity to provide them was allegedly unavailable. The relevant records must be examined in accordance with natural justice.

Alleged bogus purchases supported by books, banking channels, GST records, invoices, delivery challans, stock registers and accepted corresponding sales should not ordinarily result in disallowance of the entire purchase value where the books are not rejected. Supplier-related adverse material and discrepancies in transport documents may justify taxing the embedded profit attributable to unverifiable purchases. The profit element was estimated at 12.5%, with the remaining purchase disallowance deleted. The governing principle is that accepted sales and corroborative accounting and tax records support a profit-based addition rather than full purchase disallowance.

Section 54F treats the cost of a new residential asset as extending beyond the purchase consideration where genuine post-purchase reconstruction, renovation, alterations and improvements are incurred to make the house suitable for residential use. The cost of land and construction may be aggregated, and the prior habitability of the purchased house or the scale of improvement expenditure does not by itself disqualify the expenditure. However, expenses for personal comfort rather than construction do not qualify. Genuine reconstruction and renovation expenditure, together with the purchase cost, is eligible for the full Section 54F deduction.

Penalty under Section 271DA for alleged cash receipt contrary to Section 269ST cannot survive where the sole quantum addition was deleted because the assessee was not involved in the underlying transaction. Establishing an actual cash receipt by the assessee is essential. Presumptions relating to seized material do not apply where the material was recovered from another entity's premises, did not refer to the assessee, and lacked supporting admission. A pending further appeal against the quantum deletion does not alter the operative effect of existing appellate findings without a stay. The penalty was therefore unsustainable and deleted.