“Section 58(3)”

Where purchases are found to be non-genuine or fictitious, a reasonable disallowance of 25% of such purchases or the peak credit, whichever is higher, can be made. This is applied to address unexplained expenditure under Section 69C when actual goods are likely procured from the grey market.

When an assessee makes alleged bogus or hawala purchases but subsequently makes genuine sales from those purchases, the addition to income should be restricted only to the estimated profit embedded in such transactions, not the entire purchase value.

The test of enduring benefit for classifying expenditure as capital or revenue is not absolute; expenditure incurred for an enduring advantage may nonetheless be on revenue account, as the test can break down depending on the facts.

An assessee is eligible to claim depreciation on a road constructed and operated on a Build-Operate-Transfer (BOT) basis, treating it as an intangible asset under section 32(1)(ii) of the Income-tax Act.

Expenditure is deductible under section 37 only if it is incurred wholly and exclusively for the purpose of business. The mere fact that a payment is made under a contract does not conclusively establish it as a business expense.

The Supreme Court confirmed the Gujarat High Court's view in Avani Exports, regarding the exclusion of the profit element within DEPB income when calculating deductions under Section 80HHC of the Income Tax Act.

Interest earned by a cooperative society from deposits with cooperative banks and nationalized banks is eligible for deduction under Section 80P(2)(a) of the Income Tax Act. Such interest is considered attributable to the business of the cooperative society, especially when deposits are statutorily required.

Expenditure incurred for the purpose of making or earning income from 'other sources' is deductible if there is a nexus between the expenditure and the income earned. The expenditure must be linked to the income earned, not just the activity that generates the income.