S. 37(1) : Business expenditure-Capital or revenue expenditure-Brand relaunch expenses spread over three years-Activity not enlarging profit-making apparatus nor new line of business-Substantially revenue expenditure though benefit accruing over years-Not capital merely because benefit flows over more than one year-No enduring advantage in capital field-Expenditure allowable-Disallowance of expenditure relating to exempt income-No exempt income earned during year-Explanation introduced by Finance Act, 2022 prospective, not applicable-No disallowance called for-Accrual of liability-Expenditure disallowed as prior period expenses-Ascertained and crystallised during the year-No deduction claimed in earlier years-Allowable in year of crystallisation-Deduction only on actual payment-Delayed payment of employees’ contribution to provident fund and employees’ State insurance-Not allowable. Payments to foreign agencies for services rendered abroad-Payees having no permanent establishment in India-Payments not taxable in hands of non-residents under Double Taxation Avoidance Agreements-Cannot be disallowed for failure to deduct tax at source. Commissioner (Appeals) directing Assessing Officer to reconcile difference between interest receipts and bad debts-Mere directions for verification-No interference called for. [S. 2(24)(x), 9(1)(vii), 14A , 40(a)(i) , 43B , 250 , 254(1)]

S. 36(1)(iii) : Interest on borrowed capital-Interest-free loans given to related concerns-Nexus between borrowed funds and loans advanced not established-Presumption that funds advanced first out of interest-free funds available-Disallowance not justified.

S. 40(a)(i): Amounts not deductible-Deduction at source-Non-resident –Fees for technical services or royalty-Simple rendering of services not sufficient, technical know-how must be “made available”-Services of Singapore and Hong Kong companies utilised to deliver services to clients in Vietnam-Services rendered outside India for income from source outside India-Not taxable in India-Disallowance unjustified-Reimbursement of salary expenses to foreign companies-No income element-Not chargeable to tax in India-No obligation to deduct tax at source-Disallowance deleted-Payments for management and consulting support services rendered and utilised outside India-Exclusionary provision applies-Not taxable in India-Disallowance deleted-Royalty-Payments for use of trademarks and training materials of foreign universities utilised for business outside India-Exclusionary provision applies-Not taxable in India-Disallowance deleted-“Make available” clause-Payments to foreign institutions for training, accreditation and consultancy services-No technical knowledge, experience or skill made available-Not fees for technical services-Not taxable in India-Disallowance unsustainable-Independent personal services-Payment to non-resident individual professional for services rendered abroad-No fixed base or stay exceeding 90 days in India-Income taxable only in country of residence-Not chargeable to tax in India-No obligation to deduct tax at source-Disallowance deleted-DTAA-India-UK , USA. [S. 9(1)(vi), 9(1)(vii)(b) 195, Art. 12 , 15]

S. 9(1)(i): Income deemed to accrue or arise in India-Business connection-Non-resident-Permanent establishment-Service permanent establishment-Employees required to be physically present and furnish services in India exceeding 90 days (or 30 days for related enterprises) in a fiscal year-Services furnished only for 44 days after excluding vacation, business development and common days-No service permanent establishment-Business profits not taxable in India.-Virtual service permanent establishment-Concept not provided under Double Taxation Avoidance Agreement or officially endorsed in India-Requirement of physical rendition of service alone to be applied-Return-Delay in filing-Interest-Assessee contending return filed within extended due date-Matter remanded for verification-Interest-Advance tax-Income received after deduction of tax at source-Levy of interest for failure to pay advance tax not called for-Income-Accrual-Amounts appearing in Form 26AS cannot automatically be treated as income-Assessing Officer to verify and grant corresponding credit of tax deducted at source if payments not actually received. DTAA-India-Singapore. [S. 4, 5 , 234A , 234B Art. 5(6) , Form No 26AS]

S. 263: Commissioner-Revision of orders prejudicial to revenue–Real estate business-Change in method of accounting from percentage-of-completion to completed-contract method-Change revenue-neutral, following Accounting Standards, verified by auditors and accepted in subsequent years-No loss to exchequer-Principal Commissioner’s directions to reconsider financial expenses, depreciation, current liabilities, deduction under section 80-IAB, house property income, loans and advances to related parties, etc.-Matters already examined by Assessing Officer-No indication of how order erroneous-Revision amounting to fishing and roving enquiries-Assessment order not prejudicial to Revenue-Revision quashed. [S. 2(22)(e), 80-IAB, 145]

S. 80P : Co-operative societies –Interest income from fixed deposits with scheduled banks, personal loans to employees and house building loans not attributable to business of providing credit facilities to members-Deduction rightly denied-Commission, miscellaneous and sundry receipts not attributable to business of providing credit facilities-Deduction rightly denied. Income-Method of accounting-Overdue interest on non-performing assets-Income recognition-Matter remanded to exclude interest only if supported by statutory guidelines or accounting standards-Assessment-Income from other sources-Expenses against interest income-No further expenses allowable beyond those already claimed in computation of income-Disallowance confirmed Principles of natural justice-Alleged lack of opportunity before Commissioner (Appeals)-Appellate order passed after considering submissions-No violation was found.[S.4, 80P(2)(a)(1), 80P(2(d) 143(3), 250]

S. 9(1)(ii) : Income deemed to accrue or arise in India-Salaries-
Non-resident-Salary income-Services rendered outside India while on deputation from Indian company-Assessee non-resident in India and tax resident of Australia-Salary received in India for employment exercised in Australia-Australian tax return accepted as evidence of residency-Tax residency certificate filed at appellate stage accepted-Exemption allowable-Scope of total income-Salary received in India for services rendered abroad-Not taxable in India when employment exercised outside India-DTAA-India-Australia. [S. 9(1)(ii), 15, 90, Art 15]

S. 80GGC: Contribution-Any person-Political parties-Political party not genuine, not existing online, not responding to official notices, not filing required financial reports to the Election Commission for several years, and its own return showing nil contributions received-No certified documents furnished-Political party an unrecognised political party-Deduction rightly disallowed. [S. 133(6)]

S. 10AA: Special Economic Zones-Computation of export turnover-Foreign currency expenditure not to be excluded from export turnover for computing deduction-Appeal to Appellate Tribunal-Failure by Commissioner (Appeals) to render finding on certain issues-Application pending before Commissioner (Appeals)-Direction to dispose of application.-Rectification of mistake-Order giving effect to Tribunal’s order-Assessing Officer’s failure to grant relief on several issues-Direction to dispose of pending rectification applications.-Deduction of tax at source-Credit for-Credit granted in original proceedings but not fully given in order giving effect to Tribunal’s order-Assessing Officer directed to verify and grant full credit.[S. 154 ,199, 254(1)]

S. 92C: Transfer pricing-Arm’s length price-Avoidance of tax-International transaction-Manufacturing of power distribution equipment-Import of raw materials-Transactional net margin method-No defect pointed out-Contract manufacturing not a proper comparable-No adjustment required-Information technology services from associated enterprise-Transfer Pricing Officer’s simultaneous use of comparable uncontrolled price and nil valuation contradictory-Assessee’s transfer pricing study acceptable-No adjustment called for.-Reimbursement of travel, lodging and employee cost on cost basis-Cost incurred without benefit improbable-Transfer Pricing Officer’s benchmarking proper. [S. 92]