Section 199 of the Income Tax Act

Interest earned during the pre-commencement period of a project, on advances made to contractors or on unutilized borrowed funds, if inextricably linked to the setting up of the plant, constitutes a capital receipt. Such interest is not taxable as income but can be reduced from the capital work-in-progress.

Income is diverted by an overriding charge, and thus not taxable, when it never truly accrues to the assessee due to a prior obligation. Conversely, income that first accrues to the assessee and is then applied to discharge an obligation out of that income is taxable.

Income is taxable only if it has genuinely accrued to the assessee, based on the principle of real income, regardless of the accounting method followed. Tax can only be levied on real, not hypothetical or imaginary, income.

Tax assessments must be made according to the law in existence during the relevant assessment year. A new statutory explanation or amendment, even if effective retrospectively, does not apply to pending assessments of prior years if it takes away the vested rights of the assessees.

Disallowance for delayed deposit of employees' provident fund contributions can be made during the processing of an income tax return under Section 143(1), particularly when the tax audit report under Section 44AB indicates such delays.

The Assessing Officer must record objective satisfaction, based on objective analysis and cogent reasons, before invoking Section 14A and applying Rule 8D for disallowing expenditure related to exempt income. Furthermore, disallowance under Section 14A applies only to investments that have actually yielded exempt income during the relevant assessment year.

The case elucidates the meaning of 'management services', detailing its components and considering whether such services qualify as 'technical services' for income tax purposes, particularly in relation to fees for technical services.

An assessee is entitled to credit for TDS even if the certificate is issued in the name of a joint venture or related party, provided the income to which the TDS relates is offered by the assessee. This principle emphasizes looking at the substance of the transaction over strict adherence to the name on the TDS certificate.

An assessee's consistently followed accounting method, if previously accepted by the Department, cannot be rejected by the tax authorities unless they establish that it distorts the true profits. The doctrine of consistency applies.

Once tax has been deducted at source (TDS), the bar of section 205 applies, preventing the deductee from being asked to pay the tax again, even if the deductor fails to deposit the tax or issue TDS certificates.