S.36(1)(iii): Interest on borrowed capital – Upfront interest paid – Interest on debentures – Allowable in the first year or to be spread over a period of five years – Method of accounting – Held, entire expenditure to be allowed in the year in which interest expenditure is incurred and paid – Held, treatment in the books of account not determinative –Matching concept not to be applied in such a case [S. 35D, 37(1), 43, 145]

S. 36(1)(iii) : Interest on borrowed capital- Interest free loans and advances given to subsidiary – Interest-free funds available with assessee are sufficient to meet investment/ advances – Presumption is that investments in subsidiaries were out of interest free funds – No disallowance can be made under section 14A. [S. 14A]

S. 35D: Amortisation of preliminary expenses – Capital or revenue – Expenditure incurred on public issue of shares is revenue or capital expenditure – Debatable issue – Judgement of jurisdictional High Court on the issue – Issue cannot be said to be debatable – Held, issue can be considered in proceedings under section 143(1) of the Act.

S. 35AC : Expenditure on eligible projects-Schemes–Promissory estoppel is not available to an assessee against the exercise of legislative power nor any vested right accrues to an assessee in the matter of grant of any tax concession to him-In a taxing statute, a plea based on equity or/and hardship is not legally sustainable-Withdrawal of exemption is valid. S. 35AC(7) is prospective in nature-Provision is valid in law. [S. 35AC(7), Art. 142, 226]

S. 28(iv): Business income – Waiver of loan – Remission or cessation of trading liability – S. 28(iv) does not apply if the receipts are in the nature of cash or money; but will apply if the benefits are received in some other form – Loan waiver amounts to benefit/ receipt in the form of cash – Held, waiver of loan cannot be assessed u/s 28(iv) of the Act.

S. 41(1) : Profits chargeable to tax – Remission or cessation of trading liability – Waiver of loan – Section 41(1) apply to a trading liability; in respect of which either an allowance or deduction is claimed by the assessee –Loan is not a trading liability and no deduction is claimed in respect of the interest expense – Held, no addition can be made u/s 41(1) of the Act in respect of waiver of loan. [S. 4, 36(1)(iii), 28(iv)]

S. 28(i) : Business income -Professional fees – Cash method of accounting – Outstanding fee of professional work done by assessee, who kept his accounts on cash basis, after close of his profession was not taxable either under head of professional income or under residuary head of income- Income which is chargeable under a particular head cannot be taxed under the residuary head [ S. 2 (45) 4, 5 , 14 ,56 ,145 and of the Indian Income- tax Act , 1922, S.2(15), 3, 4, 5, 10, 12 ]

.S.28(i): Business income – Adventure in nature-of-trade – Division of land into plots and sale to various purchasers – Test to be applied for considering the nature of trade [S.2(13), Indian Income-tax 1922, S. 10(1)]

S. 22: Income from house property-Business income-The objects clause is not determinative- Income earned from sub-licenses is required to be taxed under the head “Income from House Property”. [S. 27(iii)(b),28(i), 269UA(f)]

S. 14A : Disallowance of expenditure – Exempt income – Stock in trade – Controlling interest – Principle of apportionment – Only that expenditure which is “in relation to” earning dividends can be disallowed – AO has to record proper satisfaction on why the claim of the assessee as to the quantum of suo moto disallowance is not correct. [S. 36(1)(iii), Rule. 8D]

S. 11: Property held for charitable purposes – Application of income – Any excess expenditure incurred by the trust/charitable institution in earlier assessment year could be allowed to be set off against income of subsequent years. [S.11(1)(a)]