Section 14A disallowance cannot be made where no exempt income was earned during the relevant year; the Finance Act, 2022 amendment applies prospectively from 1 April 2022 and does not alter that position for earlier years. Independently, where interest-free own funds exceed investments in wholly owned subsidiaries, the investments are presumed to be funded from own funds, so proportionate interest expenditure cannot be disallowed. On both grounds, the section 14A disallowance was deleted in full.

Transfer-pricing benchmarking of back-office support services must apply functional comparability, reliable financial information, and material margin differences. IT-enabled/BPO comparables were included or retained, while entities with unavailable data, royalty-driven abnormal profitability, merger-distorted results, KPO functions, or specialised information-security services were excluded. Working-capital differences affecting profitability require verification of the assessee's shorter collection period before granting adjustment. Interest on outstanding receivables must be reconsidered after verifying debt-free status, collection periods, and the effect of working-capital adjustment; no receivables adjustment applies if the assessee is debt-free. The benchmark is to be recomputed using the revised comparables and verified adjustments.

A valid modified return filed by a successor under a business-reorganisation order must be verified and, if valid, used to recompute total income and book profit. Transfer pricing adjustments under normal provisions cannot be added to book profit unless specifically authorised by the statutory minimum alternate tax computation rules; any computational excess also requires verification. Closely linked software sales and marketing support services may be aggregated under the Transactional Net Margin Method where commercially integrated and consistently benchmarked. Documented intra-group services cannot be assigned a nil arm's length price merely for perceived lack of necessity or benefit. The foreign associated enterprise may be selected as the tested party where it is less complex.

Reassessment based on information showing mutual-fund investments disproportionate to returned income was valid because such information provided a prima facie basis to believe income had escaped assessment; conclusive proof was unnecessary at the reopening stage. UTI unit proceeds credited to the taxpayer were taxable as receipts without consideration under Section 56(2)(vii) because the taxpayer failed to substantiate historical investments, savings, agricultural income, joint ownership, or the source of the credited proceeds through reliable financial records. Shares and securities constituted property for that provision, and transmission was not excluded. The additions remained taxable as income from other sources.

Delayed receivables from associated enterprises constitute a separately benchmarkable international transaction because credit beyond the normal period provides a distinct financing benefit, even where the underlying software-development services are at arm's length. A debt-free taxpayer with no interest-bearing borrowings may not warrant a notional interest adjustment; the asserted debt-free period requires factual verification. For foreign-currency receivables, the benchmark should use a currency-linked international rate rather than a domestic rupee lending rate. The adjustment is to be recomputed using LIBOR plus 200 basis points after a sixty-day credit period from the invoice date.

Section 68 additions for trade advances, sundry creditors and unsecured loans were deleted where accepted books, confirmations, tax records, financial statements and bank evidence established identity, source and genuineness; a brought-forward loan balance was not a credit of the relevant year. Cash deposits and recorded search cash were explained through cash books, withdrawals and accepted turnover, defeating section 69A additions. Verified bank-funded credit-card payments and reconciled GST purchase differences did not constitute unexplained expenditure under section 69C. Gold and jewellery not owned by the assessee, or attributable to a jointly residing family member, could not be treated as unexplained investment under section 69B.

A disallowed deduction under Section 80GGC does not by itself establish misreporting of income where the donation and claim were disclosed in the return. Misreporting requires material showing false evidence, suppression of facts, fabricated documents, or deliberate misrepresentation; doubts about the donation's genuineness or eligibility are insufficient. Penalty proceedings remain independent of assessment proceedings, and failure to challenge the underlying addition does not constitute an admission of misreporting. As the specified conditions for misreporting were not established, the penalty was deleted.

Financial assistance granted under a concession arrangement for construction and development of a water infrastructure project is capital in character when its purpose is to set up or complete the project, rather than to support operational revenue. Such assistance is not taxable as revenue. Net project-development expenditure exceeding the assistance may be treated as deferred revenue expenditure and amortised over the concession period where the accounting treatment is consistent with the applicable circular. This permits deduction of the amortised expenditure and rejects a contrary adjustment.

Penalty for delayed filing of TDS returns was considered unsustainable where proceedings were initiated nine years after the returns were filed and no order had determined default under sections 201(1) or 201(1A). Applying coordinate-bench precedent on materially similar facts, the Tribunal treated the absence of a default-determination order and the inordinate delay as rendering the penalty illegal. The penalty was therefore set aside in favour of the assessee.

Depreciation is allowable on goodwill arising from a court-approved amalgamation where independently determined purchase consideration exceeds the net assets acquired. The valuation report and audited financial statements support that the goodwill was acquired in a genuine commercial transaction, rather than being self-generated, fictitious, or a mere accounting adjustment. Goodwill qualifying as a business or commercial right constitutes a depreciable intangible asset. Excess consideration over net assets does not defeat depreciation unless material establishes that the amalgamation or valuation was a sham or otherwise legally untenable.

Transfer-pricing analysis requires foreign-currency intra-group loans to be benchmarked against the market rate for the repayment currency; GBP LIBOR plus an appropriate margin supported arm's-length pricing where the charged rate exceeded that benchmark. Corporate guarantees constitute international transactions, but a corporate-guarantee rate rather than bank-guarantee pricing applies. Overseas associated enterprises operating across different economic conditions could not jointly serve as BPO tested parties, requiring fresh functional, asset and risk-based benchmarking. Separate STPI centres may qualify as independent section 10A undertakings if they have distinct capital, workforce, infrastructure, output and profits. Export-turnover exclusions must correspondingly reduce total turnover, while investment income deductions depend on eligible units' internal accruals and verification.

Website development expenditure treated as software-related may qualify for depreciation at 60% where supported by applicable precedent. Payment gateway charges paid to banks for secure payment-settlement services are not commission or brokerage when banks do not act as agents in the underlying sale, so tax deduction at source and consequential disallowance do not arise. Advertisement, marketing and publicity costs incurred to promote business are revenue expenditure despite incidental enduring benefit. Cost-to-cost ticket reimbursements payable to foreign airlines, not claimed or debited as business expenditure, cannot be disallowed for non-deduction of tax at source.

Foreign tax credit is available for overseas tax withheld on professional legal-service receipts where the gross foreign income is included in taxable income in India. Professional receipts from Japanese clients are characterised under Article 12(4) of the India-Japan DTAA rather than the independent personal services provision, which applies to individuals. Credit may be claimed where the taxpayer has rendered the services abroad, filed Form 67, and furnished authenticated foreign tax-deduction certificates. Where the foreign receipts and corresponding withholding are undisputed, Rule 128 does not impose a restriction denying credit.

Interest on staff advances and statutory or bank deposits is treated as not derived from an eligible undertaking and therefore does not qualify for deductions under sections 80-IB/80-IE, whereas interest on overdue bills and the Sikkim unit's eligible profits qualify on the stated prior-year position. Section 14A disallowance requires verification of sufficient interest-free own funds; only administrative expenditure is recomputed. Assignment of LLP partnership rights is a capital transfer, but any claimed loss requires reliable valuation and financial evidence. For book profit, a statutory debenture redemption provision is an ascertained liability, and exempt bond interest credited to profit and loss account is reducible despite omission in the return.

Reassessment requires prior disposal of an assessee's objections to recorded reopening reasons through a separate speaking order. Where objections are filed but no independent speaking order is issued before reassessment is completed, discussion of those objections in the reassessment proceedings or a show-cause notice does not satisfy this mandatory procedural safeguard. The defect affects the assumption of reassessment jurisdiction and cannot be cured by remanding the matter for a fresh assessment. The reassessment was therefore treated as invalid and quashed.

Restoration of a dismissed writ petition was considered to permit a challenge to Section 147-A and related reassessment proceedings. The review application was allowed, the prior dismissal was set aside, and the writ petition was restored with liberty to amend. Reassessment proceedings were stayed while the restored writ petition remains pending, preserving the challenge to the reassessment process for further consideration.

Prosecutions for wilful failure to furnish returns pursuant to search-assessment notices cannot be quashed through inherent jurisdiction where the accused's alleged requests for seized material, the Department's receipt and supply of that material, and the ability and intention to file returns within time remain disputed. The record did not prima facie establish a request for material before expiry of the prescribed period. Inherent jurisdiction cannot be used to assess contested evidence, determine factual defences, or resolve wilful default and mens rea, which require adjudication at trial. The disputed defences must therefore be determined by the Trial Court.

Rule 34 requires the Income Tax Appellate Tribunal to pronounce orders within 60 days where no pronouncement date is fixed after hearing, with an extension up to an outer limit of 90 days only in exceptional and extraordinary circumstances that make timely pronouncement impracticable. Repeatedly releasing argued and reserved matters without judgment causes unjustified litigation hardship. The Tribunal must fix a pronouncement date and comply with the prescribed timeline. The pending appeal was directed to be decided by the specified date, and all Income Tax Appellate Tribunals were directed to scrupulously follow Rule 34.

Reassessment beyond four years of a completed scrutiny assessment requires a failure to make full and true disclosure of material facts. Where the shareholding pattern, transactions and lender-company details were disclosed during the original assessment, reopening lacks legal foundation. The alternative-remedy rule does not bar writ jurisdiction where the assessment disregards binding precedent raised in objections and acts contrary to settled law. Deemed-dividend provisions do not apply to a loan received by a non-registered shareholder merely through statutory fiction; the common shareholder's holding was also below the prescribed threshold. The reassessment proceedings and consequential fiscal demands were therefore invalid.

TDS on External Development Charges received by HUDA from private persons or builders was addressed under sections 194C and 194I. Where tax had not been deducted on those charges, the Supreme Court dismissed the special leave petition by following its earlier order in DLF Homes Panchkula Pvt. Ltd. The dismissal leaves the earlier approach governing TDS treatment of such External Development Charges applicable to the parties.