S. 37(1) : Business expenditure-Compensation for not complying with terms of contract-Civil consequence for not complying with certain terms of contract and had nothing to do with any offence- No violation of law–No disallowances can be made by applying the explanation 1.

S.45: Capital gains- Capital loss- Assignement of loan- Capital asset – Allowable as capital loss. [ S. 2(14)(a) , 2 (47), Wealth tax Act , 1957 S. 2( e ). ]

S. 14A : Disallowance of expenditure – Exempt income – Recording of satisfaction – AO needs to record his non-satisfaction having regard to the sou motu disallowances claimed by the assessee in the context of its accounts. It is only thereafter, the occasion to apply rule 8D of the Rules for apportionment of expenses can arise- AO discussing and not accepting is not sufficient -Order of Tribunal is affirmed . [S.14A(2) , R.8D ]

S. 80P : Co-operative societies -CBDT – Binding precedent – Clarificatory circulars for guidance of Government Officers is not binding on Tribunal- Circulars issued by a Government Department cannot have any primacy over the decision of the jurisdictional High Court-Not entitle to deduction . [ S.80P(2) ,119 ]