Reassessment cannot support additions unrelated to the income alleged to have escaped assessment in the recorded reasons when no addition is made on that foundational issue. Recorded reasons concerned alleged capital gains from land sale, but the reassessment added unexplained money. Reliance solely on Insight Portal information without independent verification was insufficient, particularly where underlying receipts and statements were unavailable, not supplied to the assessee, and could not be cross-examined. Inconsistent versions of the alleged sale consideration further undermined the material. The reassessment was therefore quashed.

Reassessment proceedings initiated after three years from the end of the relevant assessment year required approval from the authorities specifically listed in section 151(ii), not a Principal Commissioner. For AY 2018-19, approval for the section 148A(d) order and section 148 notice was granted in April 2022 by an unauthorised authority. The Finance Act 2023 proviso allowing the three-year period to account for exclusions and extensions under section 149(1) applied only from 1 April 2023 and could not retrospectively cure the defect. As section 151 sanction is a jurisdictional condition precedent, the reassessment proceedings were void from inception.

Capital-gains valuation disputes involving stamp-duty value are governed by the specific valuation mechanism rather than the residuary valuation provision. A valuation reference for computing capital gains must therefore be treated under that specific mechanism and does not extend the ordinary assessment limitation period. Assessment must be completed within the prescribed period, while a subsequent valuation-based adjustment may be made through the statutory rectification mechanism. Where no valuation report is available at assessment and the taxpayer has submitted an approved valuer's report, a stamp-duty valuation addition cannot be sustained through a time-barred assessment.

Satellite transponder payments are analysed as consideration for communication services rather than royalty where the service provider retains ownership, possession, operational control, management and commercial risk over the satellite infrastructure. A customer that merely uplinks and receives retransmitted signals, without rights to operate, configure, manage, exclude others from, or commercially exploit the transponder or its processes, does not use equipment or a process independently. Dedicated capacity and outage-credit terms may therefore remain consistent with a service arrangement. The discussion states that retrospective domestic-law amendments cannot expand the more beneficial treaty definition of royalty, and, absent an Indian permanent establishment, such remittances are not chargeable to tax or subject to withholding.

Interest paid by an Indian permanent establishment to its head office or overseas branches may be deductible in attributing profits under the applicable treaty, although domestic law treats it as a payment to self and does not tax the corresponding receipt separately. Transactions between a foreign enterprise and its Indian permanent establishment may require arm's-length analysis where transfer-pricing conditions are met. A guarantee-fee adjustment is confined to the shortfall from the arm's-length price after crediting commission received. Gains from forward contracts directly hedging capital investments retain capital character. Tax-refund interest not effectively connected with the permanent establishment may be taxed under the treaty interest article. A treaty-capped tax rate cannot be increased by surcharge or education cess.

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.