Section 10(2A) of the Income Tax Act

Expenditure is deductible in the year it is determined and crystallised as a liability, even if it relates to a transaction of an earlier year, provided accounts are maintained on a mercantile basis.

A new industrial undertaking is not considered a reconstruction of an existing business for tax deduction purposes if it is a separate, independent production unit manufacturing commercially tangible products that can operate without losing its identity in the old business. The transfer and substantial use of assets and manpower from an old business to a new one may indicate reconstruction.

Section 2(22)(e) of the Income Tax Act, which addresses deemed dividends, does not apply to loans or advances provided by a company to its shareholders if these transactions occur in the normal course of business, are driven by business expediency, or are made in consideration of a benefit conferred upon the company by the shareholder. Conversely, gratuitous loans or advances given to shareholders fall within the purview of this section.

Incentive provisions in the Income-tax Act, particularly those granting deductions for new industrial undertakings, must be construed liberally to achieve their legislative purpose. This principle guides the interpretation of conditions such as what constitutes a 'new undertaking' versus a 'splitting up or reconstruction' of an existing business for claiming deductions.

Advertisement and brand promotion expenses are revenue in nature; merely improving brand recognition or deriving an enduring benefit does not automatically convert them into capital expenditure.

To levy a penalty under Section 271(1)(c), the Assessing Officer must clearly specify whether it is for concealment of income or for furnishing inaccurate particulars, and an ambiguous or unspecified charge renders the penalty invalid.

Discounts allowed to customers constitute a lesser realization of the sale price and are not to be treated as an expenditure.

For computing book profits under Section 115JB, the Assessing Officer cannot make disallowance under Section 14A, as the power to adjust net profit is limited to what is explicitly provided in the Explanation to Section 115J/115JB.

Salary paid to a partner is merely a mode of sharing profits and retains the character of the firm's income. The payment is an adjustment of the amount the partner is entitled to receive based on their contribution of human capital, skill, and toil.

Depreciation on fixed assets used for business purposes cannot be disallowed under Section 14A of the Income-tax Act.