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

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 voluntary separation scheme. For a deputed employee's salary, 50% disallowance should be restricted proportionately to 11 months. Nominal time spent by employees on overseas branches should not be disallowed. Expenses for mobilizing NRI deposits are allowable u/s 37, not section 44C. The increased provision towards the pension fund deficit is allowable u/s 37. No transfer pricing adjustment is warranted for correspondent banking activity and services provided to associated enterprises. For marketing derivative services, the TPO's approach is incorrect, and the CIT(A)'s findings should be upheld. The term.

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