S. 37(1) : Business expenditure-Interest bearing loans–Charged interest at 9% – Disallowance of interest at 12% is held to be not justified. [S. 36(1)(iii)]

S. 37(1) : Business expenditure-Commission-ad hoc disallowance of 50% – Furnished details of payment-Ad-hoc disallowance is held to be not justified.

S. 37(1) : Business expenditure–Illegal payments-Fee paid for registration of product in Iraq- Cannot be said to be payment of kickbacks to Iraqi regime for doing business-Allowable as deduction.

S. 36(1)(iii) : Interest on borrowed capital-Interest free loan to subsidiary from interest bearing funds- Proportionate interest payment is disallowable.

S. 36(1)(iii) : Interest on borrowed capital–Provision for interest liability–Held to be allowable as deduction-Rule of consistency- It is not open to revenue to accept a judgment in the case of one assessee, and appeal, against the identical judgment in the case of another. It was held that such a differential treatment on the same set of facts was not permissible in law. [S. 43B]

S. 32 : Depreciation-Investment depreciation reserve-co-operative society-Bound by the Reserve Bank of India directives-Business of banking-Matter remanded.

S. 28(i) : Business income-trading in shares-Professionally managed Portfolio Management Services (PMS)-large number of scrips were traded and period of holding at times was as short as few days- Assessable as business income and not capital gains. [S. 2(13), 2(14), 45]

S. 28(i) : Business income-Maintenance charges from tenants were not received-Addition is deleted. [S. 23]

S. 14A : Disallowance of expenditure-Exempt income– Disallowance cannot exceed in excess of actual expenditure. [R. 8D]

S. 14A : Disallowance of expenditure – Exempt income – Investment in tax free bonds – No nexus between interest bearing funds and investment made in tax free bonds- Exemption cannot be denied. [S. 10(15)(iv)]