S. 37(1) : Business expenditure –Business loss-Write-off of a trade advance based on commercial expediency is an allowable deduction. [S. 28(i), 28(iv), 260A]

S. 36(1)(vii) : Bad debt-Provision for bad and doubtful debts-Scheduled bank-Bad debt written off to be reduced by opening balance of provision, not current year’s provision; deduction for current provision also allowable. [S. 36(2)(v) 36(1)(viia)]

S. 36(1)(iii) :Interest on borrowed capital-Mixed funds-Interest-free advances are deemed to be given out of interest-free funds-Order of Tribunal deleting the disallowance is affirmed.[S. 260A]

S. 36(1)(iii) : Interest on borrowed capital-Interest-free advances-Mixed funds-Where assessee possessed sufficient interest-free funds from sundry creditors, it is presumed that advances are made from such funds; disallowance of interest deleted. [S. 260A]

S. 32 : Depreciation-Lease transactions-For an assessee in the business of leasing, letting out an owned asset constitutes its use for the purpose of business, entitling it to depreciation.[S. 260A]

S. 32 : Depreciation-Optional claim-Claim for depreciation was optional prior to insertion of Explanation 5 to Section 32(1)-Order of Tribunal affirmed. [S. 260A]

S. 28(iv) : Business income-Value of any benefit or perquisite-Converted into money or not-Cash advances not taxable under said section-CIT(A) had merely re-evaluated the same material that was before the Assessing Officer. It was thus held that no violation of Rule 46A(3) had occurred. [S. 37(1), S. 250, Rule 46A of the Income-tax Rules, 1962]

S. 28(i) : Business loss-Share transactions-The Assessing Officer failed to examine the supporting contract notes, which were in the department’s own custody-Order of Tribunal affirmed.[S. 260A]

S.14A : Disallowance of expenditure-Exempt income-Mixed funds-Where both interest-free and interest-bearing funds are available with an assessee, it is to be presumed that investments are made from the interest-free funds-no disallowance of interest was warranted under either section 14A or section 36(1)(iii). [S. 36(1)(iii), 115JB]

S. 14A : Expenditure in relation to exempt income-AO’s satisfaction-Disallowance without recording reasons for dissatisfaction with assessee’s suo motu disallowance is invalid-Order of Tribunal affirmed.[S. 260A, R. 8D]