S. 44B: Shipping business-Non-residents-Computation-Taxability in India-Presumptive tax-Business of operation of ships for international carriage-Goods and services tax collected as statutory levy and shown separately in invoice-Not part of gross receipts-Tribunal, in assessee’s own case for earlier years, consistently holding service tax excludable from gross receipts-GST not includible in computing income under section 44B-Addition deleted-Income offered to tax under section 44B read with section 90(2)-Section 115JB not applicable-Book profit computation deleted-DTAA-India-Hong Kong. [S. 90(2), 115JB(1), Expln. 4A,145A], Art.8]

S. 43B: Deductions on actual payment-Goods and services tax shown as unpaid as of the date of the audit report but paid before the due date for filing return of income-Goods and services tax not routed through profit and loss account-Section 43B not applicable. [S. 44AB]

S. 40(a)(ia): Amounts not deductible-Deduction at source-TDS on land purchase-Seller having offered consideration to tax-No disallowance in buyer’s hands-Non-deposit of TDS only precludes buyer’s credit. [S. 132(4), 201(1)]

S. 37(1) : Business expenditure-Expenditure on movie tickets provided to staff of clients for chairman’s film-Incurred for maintaining good relations with clients-Deduction allowable.

S. 36(1)(viii): Eligible business-Special reserve-Financial corporation engaged in long-term housing finance-Deduction applicable only to profits from long-term finance for construction or purchase of house for residential purpose-Interest income from loans of term under five years not to be excluded, being from core business-Loans for non-residential purpose not integral part of residential loans-Not eligible for deduction-Income must emanate from eligible undertaking with direct nexus-Surplus funds from housing finance business parked in approved Government securities yielding interest-Direct nexus with core business-Income “derived from” business-Eligible for deduction-Expenditure relating to income not includible in total income-Own funds in excess of investment for earning dividend-Interest cost not to be adjusted against dividend income-Administrative expenditure to be reallocated based on ratio of exempt-income-yielding investments to total average assets-Disallowance of expenditure relating to exempt income-Exemption on interest from tax-free bonds-Own funds in excess of investment-No disallowance warranted.[S. 10(33), 14A, R.8D]

S. 36(1)(va): Any sum received from employees-Deduction only on actual payment-Belated payment of employees’ contribution to provident fund and employees’ State insurance-Disallowance upheld. [S. 2(24)(x), 43B]

S. 35: Expenditure on scientific research-Weighted deduction-Clinical trial expenditure necessarily incurred outside an in-house facility due to the requirement of cooperation from doctors, hospitals, volunteers and patients-Approval granted by DSIR in Form 3CL-Entitled to weighted deduction. [S. 35(2AB) R. 6(7A)]

S. 32(1): Depreciation-Goodwill-Amalgamation of companies-Excess purchase consideration over net assets recorded as goodwill-Fallacy of Assessing Officer in treating goodwill as transferred from amalgamating to amalgamated company-Goodwill generated only as result of amalgamation, not asset transferred-Statutory provisions relied on inapplicable-Goodwill created as result of amalgamation allowable for depreciation-Appellate Tribunal-Scheme of amalgamation-National Company Law Tribunal’s order approving amalgamation attaining finality-Revenue ought to redress grievance before appropriate forum-Having failed to do so, cannot raise ground before Tribunal. [S. 254(1)]

S. 28(i): Business loss-Foreseeable losses-Construction Contracts-Percentage of competition method-loss can be claimed in the manner provided under Accounting Standard 7 ‘Construction Contract’-For quantification of loss, the ITAT directed the AO to quantify the claim and allow it in accordance with the law. [S.37(1), AS 7]

S.14A: Disallowance of expenditure-Exempt income-Book profits-Computation-Assessee’s suo motu disallowance-Further disallowance in computation of book profits under section 115JB unjustified-Addition deleted-Disallowance where entire investment made out of interest-free own funds-No disallowance warranted-CBDT Circular No. 5 of 2014 cannot override express provisions of section 14A-Disallowance not legally tenable-Effect of Explanation inserted by Finance Act, 2022 with effect from 1-4-2022-Amendment prospective, not retrospective-Disallowance for earlier year not tenable-Suo motu disallowance-Assessee’s own interest-free funds in excess of investment-No disallowance warranted-Assessing Officer required to record dissatisfaction with correctness of suo motu disallowance-Non-recording of satisfaction precluding recourse to rule 8D-No further disallowance warranted. [S. 115JB, R. 8D]