Section 40A(2)(a) of the Income Tax Act

The Supreme Court in CIT v. Krishna SSK establishes principles for de novo assessment of co-operative sugar factories concerning the tax implications of sugar sales to members, acknowledging that such sales are regulated under Section 79(A) of the Maharashtra Co-operative Societies Act, 1960. These principles guide the computation of total income from these regulated transactions.

Expenditure incurred for exploring the feasibility of expanding or extending an existing business by setting up a new unit in the same line of business is revenue expenditure, not capital expenditure. Such expenditure, including obtaining project reports or legal opinions on desirability or feasibility, does not constitute the setting up of a new business.

Expenditure incurred for starting a new business is capital in nature, irrespective of whether the project materializes. The essential purpose for which an expenditure is incurred determines its character as capital or revenue under Section 37(1).

Donations eligible for deduction under Section 80G can be remitted back to the Assessing Officer for verification of receipts and eligibility.

Disallowance under Section 40A(2)(b) is not maintainable when both the payer and payee are assessed at the maximum marginal rate, as it results in a revenue-neutral situation.

Interest paid on delayed remittances of service tax is compensatory in nature and not a penalty hit by the Explanation to Section 37(1) of the Income Tax Act, 1961, making it a allowable business expenditure.

Interest chargeable under section 201(1A) of the Income Tax Act is not penal in nature and therefore cannot be waived on the basis of intentional default or other grounds.

A mere change of opinion by the Assessing Officer, without any new material coming on record, is not a valid ground for reopening an assessment under section 147 of the Income-tax Act, especially after the expiry of four years from the end of the relevant assessment year.