S. 40(a)(i) : Amounts not deductible-Deduction at source-Non-resident-Reinsurance premium ceded to non-resident reinsurers (NRRs) is not taxable in India under the Income Tax Act or the applicable DTAA; therefore, disallowance under S. 40(a)(i) for non-deduction of TDS under S. 195 does not arise. [S.195]

S. 40(a)(i): Amounts not deductible-Deduction at source-Non-resident-Business profits-Canvassing orders and facilitating export transactions-Business income accruing outside India-Not liable to deduct tax at source-No disallowance can be made.[S.9(1)(i), 195, Article 7 of the OECD Model Convention]

S.37(1): Business expenditure-Commission-Allowable as deduction.

S.37(1): Business expenditure-Marketing support expenses-Director’s remuneration-Allowable as business expenditure.

S. 36(1)(va): Any sum received from employees-Delayed employees’ PF/ESI contributions on ground that figures in Form 3CD included both employer’s and employees’ portions-Matter was remanded to the file of CIT(A) to verify actual delay, segregate employer’s and employees’ contributions, and restrict disallowance only to employees’ share deposited after statutory due dates.[S.43B, 143(1)]

S. 36(1)(iii): Interest on borrowed capital-Advances to group concerns at lower interest-No disallowance if assessee’s own funds exceed interest-free advances-Nexus established between borrowings and business use-Ad hoc disallowance based on average rate unjustified-Addition is deleted. [S. 40A(2)(b)]

S. 36(1)(iii): Interest on borrowed capital-Commercial expediency-Disallowance is deleted.[S.37(1)]

S. 36(1)(iii): Interest on borrowed capital-Addition was based on mere guesswork and surmises, and the same was deleted.

S. 36(1)(iii): Interest on borrowed capital-Commercial expediency-Interest allowed in earlier year-The principle of commercial expediency applied mutatis mutandis to the corresponding portion, and such disallowance was not warranted.[S. 251]

S. 35AC: Expenditure on eligible projects or schemes-Donations-Had valid approval at the time of payment-Information from Investigation wing-No evidence that donation was bogus or returned cash-Subsequent withdrawal of approval or cancellation of registration under section 12AA(3) could not justify disallowance of deduction under section 35AC of the Act. [S.12AA(3), 35AC(6), 131, 132, 143(3),147, 148]