“Section 3(26)”

An order imposing penalty for failure to carry out a statutory obligation results from quasi-criminal proceedings. Penalty is not ordinarily imposed unless the party acted deliberately in defiance of law, was guilty of contumacious or dishonest conduct, or acted in conscious disregard of their obligation.

Income is taxable only when it represents real income, not notional income. It accrues only when there is a vested right to receive it, typically upon the occurrence of a transfer or event, rather than merely on a time basis.

Income tax additions cannot be made based on mere suspicion, surmises, or presumptions; the assessing officer must rely on concrete proof and material evidence. Suspicion, however strong, cannot take the place of legal proof.

Foreign Tax Credit (FTC) is allowable even if no tax is paid in India on the corresponding income due to deductions under sections 10A or 10AA, or losses in other units. The scope of income eligible for deduction under Section 10AA includes interest on deposits and realized gains on forward contracts.

Revenue expenditure incurred after a business is set up and ready to commence, but before its actual commencement, is allowable as a deduction even if no income is earned in that period. The previous year for a business begins from the date it is set up.

Reassessment proceedings cannot be initiated solely for the purpose of making a protective addition. Such proceedings are not valid in the eyes of law.

The definition of 'business' is of wide import, encompassing any trade, commerce, manufacture, or adventure in the nature of trade. Even a single and isolated transaction can constitute an 'adventure in the nature of trade' if it bears the clear indicia of trade, and no fixed formula can be evolved to determine the character of such isolated transactions.

Income must be charged only once, preventing double taxation. If income is mistakenly assessed in the hands of individual members instead of the Association of Persons or Hindu Undivided Family, or vice versa, the Income Tax Officer must make appropriate adjustments for the tax already realized.