Residential status must be determined by applying the statutory test for the period of stay in India to passport material. Cash withdrawals from a disclosed business account cannot be treated as unexplained expenditure without clear findings on the alleged expenditure and proper consideration of the stated business use and supporting evidence; the related special-rate taxation also requires verification. The residential-status determination, cash-withdrawal addition and consequential taxation were set aside for fresh adjudication. Housing-loan interest, specified investment and savings-bank interest deductions also required consideration against supporting evidence and were restored for verification. All disputed assessment issues require de novo determination through a reasoned order after adequate opportunity to the assessee.

Unexercised vested employee stock options are rights to subscribe to shares and do not constitute specified securities for salary-perquisite valuation, which applies when options are exercised and shares are allotted or transferred. Where no exercise or allotment occurs, repurchase consideration does not create a taxable perquisite. The vested option is a capital asset, and its repurchase is a transfer; the resulting gain is taxable as long-term capital gains. Form 16, tax deducted at source and indicative tax treatment in the repurchase offer do not determine the employee's statutory tax liability.

A deduction claim for a political donation, transparently disclosed in the return, does not amount to misreporting merely because it is disallowed on doubts about genuineness or admissibility. Misreporting requires material showing false evidence, suppression, or deliberate misrepresentation, and penalty proceedings remain independent of assessment proceedings. The Assessing Officer must also identify the specific statutory limb relied upon to classify under-reported income as misreported income. In the absence of both proof of misreporting and specification of the applicable limb, the penalty at the misreporting rate was unsustainable and deleted.

A bona fide delayed claim for a statutory exemption may be admitted in appellate proceedings where the taxpayer was unaware of the relief, had offered the compensation to tax after employer tax deduction, and identically placed employees received similar relief. Compensation under BSNL VRS-2019 qualifying under Section 10(10B) is stated to be exempt from tax, with taxable income to be recomputed after allowing the exemption and any due refund granted in accordance with law.

An educational trust assessed as an Association of Persons may carry forward and set off brought-forward excess expenditure against current-year income under the statutory rules applicable to that status. Lack of registration under section 12A and ineligibility for exemption under section 10(23C)(iiiad) do not, by themselves, deny those benefits. The set-off remains available subject to compliance with the conditions governing carry-forward and set-off of losses under section 72.

Interest earned by a credit co-operative society on deposits made from funds not immediately required for lending is attributable to its business of providing credit facilities to members. Such interest is treated as business income, rather than income from other sources, and is eligible for deduction under section 80P(2)(a)(i). The discussion distinguishes claims under section 80P(2)(a)(i) from those under section 80P(2)(d), finding that authorities concerning the latter do not govern a deduction claimed for profits attributable to the credit-facility business.

A computation sheet and notice of demand under section 156 must strictly implement the liability determined in the assessment order and cannot independently create tax, additions, adjustments or interest. Where the assessment order accepts returned income without additions or variations and contains no direction to levy interest, no demand can arise through consequential documents. Interest under sections 234A, 234B and 234C likewise cannot be demanded without a supporting direction in the assessment order. The demand was therefore invalid and liable to be deleted.

Subcontract payments could not be benchmarked under the other method because the Common Schedule of Rates did not reliably show the application of basic rates and premiums to the relevant works, and the claimed internal comparable was not established. Benchmarking was therefore required under the Transactional Net Margin Method. Under that method, comparables selected for build, maintain and transfer functions were not functionally aligned with an operation, maintenance and transfer arrangement. The arm's-length analysis must be redone using functionally appropriate operation, maintenance and transfer comparables after providing an opportunity of hearing.

TDS credit on salary must be granted in the assessment year in which the corresponding income is assessable under section 199 read with Rule 37BA(3)(i). Where salary for January and February 2012 was included in the income returned for Assessment Year 2012-13, the taxpayer was entitled to claim the related TDS credit in that year. Receipt of the salary, deduction of tax and its appearance in Form 26AS during the succeeding financial year did not alter the year of credit entitlement.

Property-investment additions were unsustainable where bank records, donor evidence, the spouse's verified financial capacity, and fixed-deposit encashment records explained the purchase consideration, while disclosed business income reasonably explained registration expenses. The delay in filing the first appeal was supported by sufficient cause in light of the taxpayer's circumstances and lack of professional guidance. A disputed stamp-duty valuation could not be treated as fair market value while a Departmental Valuation Officer reference remained unresolved and the explanation for lower consideration had not been addressed. The appellate delay was condoned, and additions for unexplained investment and stamp-duty value difference were deleted; the assessment-validity challenge remained open.

Article 8 of the India-United Kingdom tax treaty exempts profits from operating aircraft in international traffic and qualifying pool participation, but not independent engineering and ground-handling services supplied to other airlines. Such services are organised commercial activities unconnected with the airline's own international transportation and therefore remain taxable in India. Cash deposits during demonetisation were treated as explained where deposit slips and accounts showed ordinary airport-counter collections from passengers and cargo agents, the receipts were recorded in the books, no defects were found, and collection patterns were not abnormal. The treaty exemption claim fails, while deletion of the unexplained cash-deposit addition remains undisturbed.

Rectification that enhances an assessment or increases liability requires prior notice and a reasonable opportunity of hearing under section 154(3). Where the record does not establish that notice proposing rectification or enhancement was issued, or that the affected person received an opportunity to be heard, the rectification breaches this mandatory requirement and principles of natural justice. Enhanced additions made through such a rectification order are therefore invalid and must be deleted.

Goodwill arising in a slump sale as the excess of consideration over the net value of acquired assets and liabilities was treated as a newly generated business or commercial right, rather than an asset transferred from the predecessor's depreciable block. Accordingly, restrictions applicable to transferred depreciable assets did not govern the claim, and goodwill remained eligible for depreciation for assessment year 2018-19 because the later statutory exclusion applied prospectively. Non-compete fees were characterised as revenue expenditure allowable as such, not as a depreciable capital intangible asset; depreciation on those fees was therefore unavailable.

Independent diamond grading and certification that provides factual reports on cut, colour, clarity and carat weight does not constitute managerial, technical or consultancy services merely because the provider uses specialised personnel or equipment. Such services do not transfer grading methodology, scientific standards, processes or know-how to the payer and therefore fail the "make available" requirement for fees for included services under the India-USA and India-UK tax treaties. Payments to non-resident grading entities are consequently not taxable as fees for technical services; where no other Indian taxable nexus exists, no tax deduction obligation arises and consequential interest is not payable.

Non-saleable land used for roads and gardens, having nil net realisable value, may be excluded from closing stock where the taxpayer has consistently followed that treatment and the inventory is valued at lower of cost or net realisable value under section 145A. Agricultural rent claimed as agricultural income requires supporting evidence that land was leased to farmers; without such evidence, the claim is not substantiated. A disallowance for expenditure relating to exempt income cannot be made under section 14A where no exempt income was earned during the relevant year.

Section 194-IA excludes transfers of agricultural land from the purchaser's tax-deduction obligation. Where the sale deed described the property as agricultural land and no material showed it fell within an excluded category, no tax was deductible. Section 206AA increases the withholding rate only when tax is otherwise deductible; it does not create an independent obligation. Accordingly, treatment of the purchaser as an assessee in default for short deduction was unsustainable. Interest under section 201(1A), being consequential to the failed principal demand, was also unsustainable and deleted. The cancellation of the sale deed and non-encashment of payment cheques further supported the result.

Income receivable under a trust created by the deceased's sole will falls within proviso (ii) to section 164(1) where it is the only trust so declared. Read with section 167B and the applicable CBDT clarification, this exception prevents taxation of the testamentary family trust's income at the maximum marginal rate. The income is instead taxable as the total income of an association of persons under proviso (ii) to section 164(1).

Reassessment notices issued beyond three years from the end of the relevant assessment year require prior approval from the authority specified under Section 151(ii). Approval by a Principal Commissioner alone does not satisfy this mandatory jurisdictional requirement where approval from the Principal Chief Commissioner or other specified authority is required. A notice issued without such valid approval is without jurisdiction and must be invalidated. The stated analysis confirms that the reassessment notice was invalid for failure to obtain approval from the appropriate authority.

Business-promotion expenditure claimed as secret commission is deductible under Section 37(1) only where the taxpayer proves its nature, genuineness and business purpose through primary particulars and supporting evidence. Failure to provide recipients' identities and addresses, payment dates, payment mode, or documentary proof justifies disallowance, irrespective of whether recipients were private persons or public servants. Where the Tribunal's findings rest on the record and are neither perverse nor unsupported by relevant material, no substantial question of law arises for interference under Section 260A. The claimed expenditure was therefore not allowable as a business deduction.

Reassessment cannot be reopened merely because investigation information shows subsequent cash withdrawals by a payment recipient where the assessee had disclosed and substantiated the underlying purchase transactions in the original scrutiny assessment. Invoices for cotton purchases had already been examined under Section 143(3), while the recipient proprietor's cash withdrawals did not provide new tangible material showing that the assessee's income had escaped assessment. Such reopening constitutes a fishing and roving inquiry and an impermissible change of opinion. The reassessment notice was quashed.