The assessee made investments in tax-free bonds and had sufficient free reserves and interest-free...

The assessee made investments in tax-free bonds and had sufficient free reserves and interest-free capital. The Supreme Court held that if the assessee has sufficient interest-free funds, no disallowance u/s 14A can be made. For subsequent assessment years until Rule 8D was introduced, the disallowance u/s 14A was deleted, and the disallowance cannot exceed 1% of the total exempt income. The expenditure incurred for vacating premises given to a tenant is allowable as revenue expenditure. The guarantee commission received in advance should be recognized as income over the life of the guarantee, not in the year of receipt. The expenditure incurred on separation/termination of employees is fully deductible u/s 37 as it was not part of a volunt..... .....

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