iTunes shows App Updates Badge, but no updates are available
The common cause of this is when you have purchases in one library that belong to two Apple ID's. You will have to sign in to that second Apple ID to download those updates. This means iTunes is working as it was designed (although it is confusing since the Apple ID for each purchase is "hidden" in the info and not easily displayed.

A less common instance is when there is a problem with either the on line store or your local files that store the apps.

Here are two articles that will help if you simply have more than one account making purchases:


Which account did I use to make a specific purchase?
iOS: Changing the signed-in iTunes Store account