S. 37(4) : Business expenditure-Guest house expenses-Held to be not allowable.

S. 45 : Capital gains-Sale of shares-Entry operator-Bogus long term capital gains- Produced sufficient material-Addition cannot be made as cash credits. [S. 10(38), 68]

S. 37(1) : Business expenditure–Expenditure incurred on earning on term deposit is allowable as deduction.

S. 37(1) : Business expenditure–Illegal expenses-Distribution of ball pens, medical gifts etc. with logo of the company to doctors and hospitals–Allowable as business expenditure-Explanation 1 to S. 37(1) is not applicable.

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.