S. 56 : Income from other sources-Only two share holders husband and wife–lifting corporate veil- On demises of husband shares devolved on daughter-Unrealistic premium paid by mother for allotment of shares -Benefit only passed on to daughter -Provisions of S. 56(2)(viib) cannot be invoked in the hands of the company when cash or asset is transferred by a mother to her daughter. [S. 56(2)(vi), 56(2)(viib), 56 (2) (x) ]

S. 56 : Income from other sources-Fair market value (FMV) of shares issued at premium- Discount cash flow method (DCF)–Net valuation method–Option to choose the method of valuation is with assesses-Determined Fair Market Value of shares issued at premium on basis of Discount Cash Flow method as per guidelines given by ICAI-Assessing Officer cannot change the method of valuation of shares at premium to Net Asset Value method.(NAV) [ S.56(2)(Viib), R.11UA(2)(b)]

S. 56 : Income from other sources-Interest is received under S. 28 of Land Acquisition Act, then same is not taxable in hands of assessee and in case interest is received under section 34 of Land Acquisition Act, same is taxable in hands of assessee-Matter remanded. . [ S.56 (2) (vii), 57,Land Acquisition Act, 1894 S. 28, 34]

S. 54F : Capital gains-Investment in a residential house– Invested in reconstruction of house another house property belong to husband where she was residing–Entitle to exemption-Development expenditure was not allowed on facts. [S. 45]

S. 54F : Capital gains-Investment in a residential house–Entire net consideration had been invested-Entitle to exemption in respect of whole of capital gains-Valuation determined by stamp authority is relevant for determination u/s.50C however it cannot be considered as consideration received or accrued to the assessee for the purpose of S.54F of the Act. [S. 45, 48, 50C]

S. 50C : Capital gains-Full value of consideration-Stamp valuation –Property sold for Rs 50 lakhs–Stamp valuation was Rs 90.20 lakhs-DVO estimated at Rs 81.68 lakhs-location of property, potential development in near future, availability and accessibility to infrastructure facility such as road, airport, educational institutions, etc. were not properly considered either by Approved Valuer or by Departmental Valuation Officer, while valuing property sold by assessee- Tribunal estimated the value at Rs. 69 lakhs. [S. 45]

S. 37(1) : Business expenditure–Interest paid on loan taken on land for purchase of land is held to be not allowable as business expenditure as commission is the main source of income and not the sale of land.

S. 37(1) : Business expenditure–Vehicle expenses and insurance on vehicle-Personal expenses–Disallowance of 10% of expenses is held to be justified.

S. 37(1) : Business expenditure–Provision for warranty- Marketing of software products-Authorities were justified in restricting amount of allowable provision at 2.14 per cent of sale as adopted in earlier years, as there was no reversal after expiry of relevant period based on actual utilisation. [S. 145]

S. 37(1) : Business expenditure-Illegal payments-Interest-Bogus purchases–Survey by Maharashtra VAT Authorities-Interest paid under S. 30(2) of MVAT Act, 2002 was not penal in nature hence allowable ; however, interest paid under S. 30(4) of MVAT Act, 2002 which was in addition to interest payable under section 30(2) was penal in nature and could not be allowed in view of provision of Explanation 1 to S.37(1) [ MVAT Act, 2002, S. 25, 29(3), 30(2), 30(4)]