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2014 (4) TMI 358 - AT - Income TaxNature of expenses Capital OR Revenue GPA registration charges - Held that:- CIT(A) rightly held that the AO has failed to appreciate the legitimate expenditure incurred on registration of GPA for commencing the works in the site - The expenditure incurred to facilitate rights to the firm for commencing the work and is wholly incurred for the business which is not a capital expenditure since it is intimately related to the construction activity in which the firm is engaged - The entire expenditure is completely revenue in nature since it is incurred for carrying out the development activity of the construction project in which the firm is engaged - the entire amount spent was claimed in earlier years also and the one claimed in this is the remaining amount thus, CIT(A) correctly allowed the expenditure as revenue expenditure there is no reason to interfere with the order of the CIT(A) Decided against Revenue. Deletion of interest on loan Loans granted to related persons Violation of section 40(a)(2b) of the Act Held that:- CIT(A) rightly was of the view that, it has become inevitable to consider the request for temporary advance, on which no interest was charged - The transaction has a business nexus and business connection amount advanced was in view of commercial expediency, that too after examining the assessees submissions and remand report from AO, there is no reason to interfere with the decision AO should have invoked the provisions of section 36(i)(iii), if there are any diversion of borrowed funds but cannot bring notional interest to tax on the so-called advances made, without establishing that the borrowed funds are diverted for non-business purposes - The entire addition made by the AO itself is bad in law - thus, charging of notional interest is not warranted and he AO is directed to delete Decided against Revenue.
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