While calculating capital gains on a depreciable asset, there is no option available to assessment to substitute fair market value of the asset as on 11.1.54 (or 1.1.64) as the cost of acquisition in place of written down value. But where no depreciation is allowed then such option will be available.

(i) A claim of deduction has to be put up before the ITO. ITAT is wrong in allowing the claim under section 35B put up before it for time by the assessee as no particulars of the claim were furnished before ITO. The onus of providing the facts and getting the benefits lay on the assessee. The ITAT could not allow the claim on assumption of facts.
(ii) Expenditure which qualifies for deduction under section 35B (1) (b) (iii) is an expenditure incurred outside India in connection with distribution, supply or provision outside India of such goods services or facilities. Where commission is paid to an agent in India being a middleman who purchased goods from him in India on behalf of a foreign buyer, then such commission is not entitled to weighted deduction.
(iii)Customs duty paid for transfer of goods by the company to its branches abroad is also not entitled to weighted deduction.
(iv)Similarly, expenditure incurred by foreign branches on repairs and reassembly, clearing and storage are also not entitled to deduction under section 35B.
[Followed/ Applied in - 232 ITR 259 (Del); 233 ITR 23 (Del); 233 ITR 433 (Del); 234 ITR 767 (Del); 236 ITR 912 (Del); 237 ITR 542 (Del); 237 ITR 544(P & H); 237 ITR 640 (P & H); 237 ITR 832 (P&H); 237 ITR 867(P & H); 238 ITR 83 (Del); 238 ITR 85 (P&H); 0238 ITR 770 (P&H); 28 ITR 901 (Del); 238 ITR 927 (Mad); 239 ITR 153 (Mad); 239 ITR 346 (Mad); 242 ITR 112(Mad); 243 ITR 5(SC); 244 ITR 576(Mad); 246 ITR 581 (Mad); 248 ITR 316 (J&K);254 ITR 666 (P&H); 259 ITR 111 (Del); 259 ITR 236 (Mad)]

"Assessment" - Process of assessment starts from the stage of filling of return under section 139 or issuance of notice under section 142(1) till making of order of assessment under section143(3) or section 144.

Commission was paid to a partner in the firm. that partner represented his HUF in the firm. It was held that commission or salary is paid to the individual, which is hit by section40(b). if he is representing HUF, then profits may be given to HUF. So far as firm is connected it does not recognize any other capacity except individual. Hence commission / salary etc is covered under section 40(b)
[Followed in - 239 ITR 636 (Bom); 242 ITR 124 (SC); (held Obiter) 253 ITR 496 (Guj); 256 ITR 289 (Mad);]

Fines /penalties for infringement of law is not allowable. If a sum is paid by an assessment because in conducting his business he had infringed a law - it cannot be claimed as a deduction. Infraction of law is not a normal incidence of business. Expenses incurred for evading the provisions of some Act also penalty levied there under for such evasion could not be allowed as deduction under income tax Act. It would be against public policy to allow under one statute deduction of fines/ penalty or expenses imposed on the assessee in violation of provisions, of another statute.
[Followed - 241 ITR 62(Mad)]

Transfer of amount from Development Rebate to some Capital account, or capital reserve, does not involve any disbursement of money by the company. Where bonus shares are issued out of share Capital reserve, it does not amount to distribution of money to share holders out of accumulated profits.
Hence development rebate granted earlier cannot be withdrawn on the ground that bonus shares have been issued out of capital reserve being accumulated profits.

ITAT HAS POWER TO DECIDE QUESTIONS RAISED FOR THE FIRST TIME BEFORE IT.
Under section 254, the ITAT has powers to pass such order as it thinks fit. The powers of ITAT o deal with appeals is thus expressed in widest possible terms. Thus, so long as the relevant facts are on records, there are no reasons why the assessee should be prevented from raising an issue before the ITAT, if such issue involves taxability of items and thus helps in determining correct taxable income. Thus ITAT has powers to decide issues raised before it for the first time, so long as all the facts are on record.
[Followed / Applied in - 238 ITR 268 (Del); 250 ITR 856 (Del); 253 ITR 425 (Mad); 259 ITR 318 (Mad)]

PAYMENT OF LOAN TO A SHARE HOLDER BY A COMPANY IN WHICH SHE HAD SUBSTANTIAL INTEREST AMOUNTED TO DEEMED DIVIDEND.
Assessee was a major shareholder in a company in which public was not substantially interested. She had a running account with the company. Out of which she withdrew curtains sum. She did not have any credit balance in the company. But the company had accumulated profits. The money was withdrawn from time to time during the accounting period. Before the ITAT a letter was produced showing that one 'M' who owed money to assessee had directed company to make payment to the assessee. But it was found that while payment was made to assessee, account of 'M' was not debited at all. Entire credit balance stood as it was till the very last day of accounting year.
Thus, subsequent adjustment of account would not alter the position that assessee received notional dividend (deemed dividend) on various dates when she withdrew different amount from the company.
[Applied in - 229 ITR 444 (Mad)]

If as on the date of filing an application u/s. 226(4) for recovery of tax dues of a defaulter whose money was lying with the court, money was not disbursed to the decree holders, being creditors of the company, then such an application would not become in fructuous.

An order granting waiver or reduction of interest under section 220 (2A) to be passed by CBDT is a quasi-judicial order and it must be supported by reasons. Such an order is subject to judicial review under Article 226 of the constitution, hence it is imperative that some reasons are given by the authority disposing of the application.