S. 37(1) : Business expenditure — Expenses prohibited by law — Grants — Assessee receiving grants on annual basis and grants used in accordance with directions of Government — AO allowing salary expenses in preceding year — AO should not have taken a different stand in current year — Salary paid to all old employees who worked for Assessee and expenses genuine — Expenses wholly and exclusively for purpose of business, hence expenses are deductible.

S.37(1): Business expenditure – adhoc addition on account of weight and rate difference – No evidence to establish basis of arriving the amount debited in P&L Account — Addition justified.

S. 32 : Depreciation — Cost of construction of office Block – Compensation paid for easement rights not accepted by Tribunal in earlier years — High Court admitting Assessee’s appeal against Tribunal not a reason to take a view in favour of Assessee — Assessee not entitled to depreciation.

S. 32 : Depreciation – Capital or Revenue expenditure — Expenditure on leasehold premises – Nature of expenditure to be examined before applying provision relating to ownership of asset

S. 28(i) Business Income — Benefit or amenity arising from business — Remission or cessation of trading liability — Assessee introducing gold left behind by his father into his business and showing trade liability in his name and in name of other family as a whole or individual legal heir — AO accepting purchase of gold and approving trading results — Not a case of Assessee introducing unaccounted or unexplained money into capital or of a trade liability ceasing to exist. [S.41(1) ]

S. 15 : Salaries — Director Of Company — Assessable on accrual basis and not on receipt basis — Even if higher salary proposed by employer Not approved By Central Government — AO to examine factually if what is claimed by employer as deduction has been offered to tax by Director.

S. 14A : Disallowance of expenditure – Exempt income – Investments Not generating any exempt income – Disallowance of interest on borrowed funds utilized for making investments cannot be made [R.8D ]

S. 92C : Transfer pricing – Arm’s length price – The OECD guidelines recognise that barring exceptional cases, the tax administration should not disregard the actual transaction or substitute other transactions for them- The examination of a controlled transaction should ordinarily be based on the transaction as it has been actually undertaken and structured by the associated enterprises- adoption of TNMM as the Most Appropriate Method of arriving at ALP cannot be termed as perverse or contrary to the evidence on record.- Difference of opinion as to the appropriateness of one or the other method cannot be gone into in an appeal [ S.92CA ,260A ]

S. 276CC : Offences and prosecutions – Failure to furnish return of income – Finding that delay was not willful – Conviction is held to be not valid . [ S.132 , 153A ]

S. 276C : Offences and prosecutions – Wilful attempt to evade tax –
Compounding of offences —Compounding fees to be computed on basis of tax evaded and not income sought to be evaded [ S. 132 , 271 , 276(1) 278 278B ]