S. 44C: Non-residents-Head office expenditure-Broad and inclusive-No indication that “exclusive expenditure”-expenditure exclusively incurred for branch in India, to be excluded from its ambit-“Attributable to”-Encompasses both shared expenses allocated to India branches and exclusive expenses incurred for India branches-Expense was common expense or exclusively for Indian branch not material so long as expense incurred for business or profession-Allowable as deduction-Expenditure incurred outside India-Authorities have not recorded factual finding-Matters remanded to the Tribunal-“Attributable”-“Exclusive”-“Attributable to”-“Derived from”-Interpretation of taxing statues-Strict interpretation-DTAA-India-United States of America. [S.37(1), Art. 7(3),]

S. 41(1): Profits chargeable to tax-Remission or cessation of trading liability-Sales tax liability treated as a loan under State Government Scheme-Liability assigned to another party at net present value of sum payable after twelve years-Not cessation of liability-Entire liability to pay stood discharged on assignment. [S. 260A]

S.37(1) : Business expenditure-Capital or revenue-Compete fees paid to keep erstwhile partner from doing competing business for seven years. Arrangement to endure for a substantial period, i.e., seven years certain position in the market by keeping the erstwhile partner out-Payment was Capital expenditure.

S.37(1): Business expenditure-Capital or revenue-Payment to employees under voluntary retirement scheme-Revenue expenditure-Advertisement of newly launched products-Tribunal restricting allowance to 10 per cent. Of claim-Order of Tribunal affirmed. [S. 260A]

S.37(1): Business expenditure-Commercial expediency-Mutual fund-Fund manager-Assessing Officer cannot put himself in the armchair of the assessee and decide whether to incur expenses or not-Order of Tribunal affirmed. [S. 260A]

S. 37(1): Business expenditure –Capital or revenue-Advantage for enduring benefit-Non-compete fee –No monopoly achieved-Allowable as revenue expenditure.

S. 36(1)(viii) : Eligible business-Special reserve-Forty per cent. of “profits derived from such business of providing long-term finance”-Amendment brought by Finance Act, 1995-Concept of an integrated business cannot be invoked to expand scope of benefit to cover income not strictly satisfying definition-Dividend does not qualify as profits derived from business of providing long-term finance or loans Not eligible for deduction-Interest earned from bank deposits attributable to business, but not derived from activity of providing long-term finance-Not eligible for deduction-Service charges received for Sugar Development Fund loans Funds belonged to Government of India-Receipts were charges paid by Government for administrative tasks of monitoring and disbursement Proximate source was agency agreement with Government, not lending activity-Could not be equated with “profits derived from business of providing long-term finance” Not eligible for deduction-“Derived from”-Interpretation of taxing statutes-Strict interpretation-Precedent-Judgment based on old, broader law cannot be used to interpret new, stricter provision.[S.80IB, Art. 136]

S. 36(1)(iii): Interest on borrowed capital-Advance to subsidiary-investment made for acquiring controlling interest in associate concern-Commercial expediency-Allowable as deduction.

S. 32 : Depreciation-Intangible asset-Non-compete agreement-Right in personam-Not an intangible asset-Depreciation not allowable on non-compete fees.[S. 32(1)(ii)]

S. 28(i) : Business income-Capital gains-Two provisions operate in distinct and independent fields-Mere receipt not sufficient to attract charge Commercial realisability required-Shares received on amalgamation-Shares held as stock-in-trade Nature of stock-in-trade wholly different from investment-No exception contemplated in case of business assets-Shares received on amalgamation-Shares held as stock-in-trade-Profit taxable as business profits-Burden on department to establish and Tribunal to apply the principles to evidence on record-Charge attracted only upon allotment of new shares-Not on appointed date or date of court sanction. [S. 2(1B), 2(14), 2(47), 28, 45(1), 47(vii) Art. 136]