S. 37(1) : Business expenditure-Stock-in-trade -Conversion and development expenses-AO disallowed expenditure treating same as capital expenditure-Assessee demonstrated that amount was included in closing stock -Adjustment was revenue neutral -Addition was unjustified.

S. 36(1)(viii): Eligible business-Special reserve-Interest on FDRs and project loan bonds -Eligible business income -Deduction available.

S. 36(1)(va): Employees’ contribution to PF/ESI -Prima facie adjustment under section 143(1) -Matter remanded for verification of employees’ and employer’s contributions. [S. 43B, 139(1), 143(1)(a)(iv)]

S.28(i): Business income-Application fees, front-end fees and processing fees -Recognition on realization basis –Addition on an accrual basis was deleted.[S. 4, 5, 145]

S. 14A: Disallowance of expenditure relating to exempt income -Recording of satisfaction by Assessing Officer is mandatory-Business loss -Allowable as deduction. [S. 28(i), 37(1)]

S.14A: Disallowance of expenditure-Exempt income-Disallowance cannot exceed exempt income. [R.8D]

S.14A: Disallowance of expenditure-Exempt income-Expenditure incurred in relation to income not includible in total income-Assessee’s own funds were much higher than investments that yield exempt income-Addition was deleted. [S.10(34), R.8D(2)(ii)]

S. 11: Property held for charitable purposes-Accumulation of income -Investment in prescribed mode -Delay of a few days in converting bank balance into fixed deposit does not disentitle exemption. [S. 11(2),11(5), 12AA, Form No.10, Rule 17]

S. 10(23C): Educational institution -Registration -Wrong provision mentioned in application -Technical mistake by counsel -Genuine institution already in existence -Final approval cannot be denied on hyper-technical ground. [First proviso cls. (iii), (iv)]

S. 9(1)(vi) : Income deemed to accrue or arise in India-Royalty -Software licence fee -Not royalty-Receipts for services, not fees for technical services or included services -Addition was deleted-DTAA-India -USA [Art. 7, 12(4)(b)]