S. 41(1) : Profits chargeable to tax-Remission or cessation of trading liability-No addition can be made if AO has not brought any evidence to show that liability has ceased to exist–No additions can be made unless liability has not been written off in books of accounts.[S. 145]

S. 40A(3) : Expenses or payments not deductible-Cash payments exceeding prescribed limits-Exceptions-Rule 6DD(k)-Payments during non-banking hours and at weekends for urgent hotel bookings and hotel staff refusing to accept cheque-AO has not considered the factual aspects -Matter remanded.[R. 6DD(k)]

S. 40(b)(ii) : Amounts not deductible–Partner–Remuneration-Partnership Deed mentioning maximum amount payable but payment to individual partner left undecided-Payments to be decided mutually between them- No disallowance made in preceding years-Principle of consistency applied. [S. 40(b)(v)]

S. 40(a)(i) : Amounts not deductible-Deduction at source-Non-resident– Fees for Technical Services–Commission agents providing services outside India-Commission payments to non-residents not be treated as income deemed to accrue or arise in India-No disallowance could be made.

S. 40(a)(i): Amounts not deductible-Deduction at source-Non-resident– Royalty-Payment for purchase of copyrighted software-Not royalty- ‘Royalty’ originally defined in double taxation avoidance agreement not amended-Assessee is not liable to deduct tax for payments made for purchase of off-the-shelf software. [S. 9(1)(vi), 195]

S. 40(a)(i) : Amounts not deductible-Deduction at source-Non-resident– Interest – Royalty-Fes for technical services-DTAA-India-Switzerland. [S.9(1)(vi), 195, Art.14]

S. 37(1) : Business Expenditure–Advertisement expenses-Assessee not confronted with fact that notices to parties to whom expenses claimed to have been paid returned unserved-Matter Remanded–AO to decide afresh after confronting assessee and after hearing assessee.

S. 37(i) : Business Expenditure-Provisions for gratuity and leave encashment made with reasonable certainty on basis of independent actuarial valuation same is allowable. [S. 145]

S. 37(1) : Business expenditure-Not commenced business operations-lease rentals is allowed to be set off against lease rentals paid as well as excess expenditure allowable for capitalization.

S. 37(1) : Business expenditure-Accrual of liability-Payment of countervailing duty on imported goods-Claim to refund not a ground for treating liability as not accrued-Liability is held to be allowable as deduction. [S. 145]