S. 92C : Transfer pricing – Arm’s length price -Management group cost – Some services received from associated enterprises and the applicability of the benefit test could not be countenanced -International transactions should be bench marked separately – Comparable uncontrolled price method most appropriate method – For determination of management group cost, matter was remitted to the AO for a fresh determination of the arm’s length price .

S. 92C : Transfer pricing – Arm’s length price —Margins of assessee with its associated enterprises is higher than margins of assessee with third parties hence no adjustment on account of Arm’s length price is warranted. International Transactions of information technology services availed of to be aggregated with other Transactions and to be benchmarked applying internal transactional net margin method. Order of TPO in taking value of International transactions of information technology services availed at nil was to be reversed and the adjustment made was to be deleted .

S. 81C : Undertakings – Special category states – Manufacture of vibration testing system for the defence, aerospace and automobile industries-Merely on the basis of report of the inspector without giving an opportunity to challenge the same such a report cannot be used as evidence against the assessee – Matter remanded to the AO to re -decide in accordance with law.

S. 56 : Income from other sources -Receipt of shares without adequate consideration or for inadequate consideration — Assessee Filing Reply Before Assessing Officer supported by documentary evidence with certificate of Chartered Accountant and report of registered Valuer — AO was directed to decide issue a fresh [ S.56(2) viib)]

S. 50C : Capital gains – Full value of consideration – Stamp valuation -Property was tenanted and Court cases were pending , certain portion to be taken over by authority for road widening -Objections of the assessee was not dealt with authorities – Addition on account of difference in stamp valuation and sale deed is held to be not valid .[ S.45 ]

S. 40A(2): Expenses or payments not deductible – Excessive or unreasonable -Payment of interest on unsecured loans at rates between 15 % an 18% can not be held to be excessive.

S.40(a)(ia):Amounts not deductible – Deduction at source – Payee in its return disclosing payment received, no disallowance can be made for failure to deduct tax at source – Second proviso to S.40(a) of the Act is to be read as applicable with retrospective effect.

S.37(1): Business expenditure- Lease hold premises – Repairs and maintenance – Order of CIT(A) lacked quasi -Judicial investigation and analysis fair to both the assessee as well as the department- Repair and maintenance expenses and business promotion expenses- Matter was remanded to CIT(A) for fresh adjudication .

S. 36(1)(iii) :Interest on borrowed capital – Own funds more than investment- Disallowance of interest cannot be made.

S.32: Depreciation — Additional depreciation — Lab Equipment and Electrical Items is essential for manufacturing process which is entitled to additional depreciation [ S.32(1)(iii) ]