Section 115U of the Income Tax Act

Club membership fees, including both entrance fees and annual subscriptions, are not considered capital expenditure if the membership's continuance depends on regular payments, and therefore are allowable as revenue expenditure under Section 37(1).

Expenditure incurred by an assessee in relation to income not forming part of the total income is not deductible under Section 14A(1). The disallowance must be restricted to direct and indirect expenses having an approximate connection with the earning of such exempt income, and Rule 8D applies from Assessment Year 2008-09.

Expenditure incurred on the issuance of debentures, including convertible debentures like Compulsorily Convertible Debentures (CCDs) or Foreign Currency Convertible Bonds (FCCBs), is revenue in nature and thus deductible. This is because a debenture constitutes a loan at the time of its issue, regardless of its future convertibility into equity.

The 20% tax rate under Section 112 applies to capital gains arising from the transfer of a depreciable asset, even if it is deemed a short-term capital gain under Section 50, provided the asset was held for more than 36 months. The fiction created by Section 50 for treating such gains as short-term does not alter the long-term nature of the asset for applying the tax rate under Section 112.

The third proviso to Section 50C(1) of the Income-tax Act, 1961, which provides a tolerance band of 10% between the sale consideration and the stamp duty value, is retrospective. This curative and declaratory amendment applies from the date of the insertion of Section 50C.

Corporate club membership fees paid by an assessee-company for a limited period, when intended for running the business and producing benefits for the company, are deductible as a business expense and not considered personal expenses.

Disallowance under Section 14A read with Rule 8D is attracted even when no exempt income is actually earned from investments in the relevant year, as long as the income from such investments does not or shall not form part of the total income.

The Assessing Officer must record their dissatisfaction with the correctness of an assessee's claim regarding expenditure in relation to exempt income, providing cogent reasons, before invoking Section 14A and Rule 8D for disallowance.

The fiction created by Section 50(1) and (2) of the Income Tax Act, 1961, applies only to the computation of capital gains under Sections 48 and 49, and not to other provisions. Section 54E is available for exemption irrespective of whether the asset is depreciable or not.