S. 45 : Capital gains–Business income–Selling three flats and parking lot-Flats appearing in the balance sheet as investments–Assessable as capital gains and not as business income.[S. 28 (i)]

S. 43B : Deductions on actual payment-Employees’ contribution to provident fund and employees’ state insurance fund-Payment was made before due date of filing of return–Entitle to deduction. [S. 139(1)]

S. 40A(3) : Expenses or payments not deductible-Cash payments exceeding prescribed limits–Cash paid for labour charges and purchases-Business in a remote area-Disallowance is held to be not valid-Machine hire charges–less than Rs. 20000 per day–AO is directed to verify and decide. [S. 40(a)(ia)]

S. 40(b)(iii) : Amounts not deductible-Working partner– Remuneration–Interest-Rejection of books of account and assessment adopting 8 Per cent. of gross turnover as net profit-Separate deduction towards interest on partner’s capital account and remuneration to partner is to be allowed, when net profit is estimated from gross receipts. [S. 133A]

S. 40(a)(ia) : Amounts not deductible-Deduction at source–Service rendered by foreign agent–Contradictory finding–New workmen-Should be regular workmen employed in financial year relevant to assessment year–Matter remanded to the AO. [S. 80JJA, 195,254(1)]

S. 37(1) : Business expenditure-Consultancy fee-Failure to submit original bills cannot be a ground for making disallowance– Disallowances cannot be made on ad-hoc basis. [S. 145]

S. 36(1)(iii) : Interest on borrowed capital-Share application money is capital borrowed for purpose of business or profession until shares are allotted-Allowable as deduction. Consulting charges-Matter remanded to AO. [S. 37(1)]

S. 36(1)(iii) : Interest on borrowed capital-Advances for construction of factory building-No disallowance can be made-Reimbursement of expenses–Matter remanded. [S. 40(a)(ia)]

S. 36(1)(iii) : Interest on borrowed capital-Interest free loans and advances to related party-Free funds available-Presumption that investments from interest-free funds available-No disallowances can be made.

S. 32 : Depreciation-Not in business of running vehicles on hire-Not entitled to depreciation at higher rate.