TMI Blog2014 (4) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee’s submissions and remand r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Ld. CIT(A) gave substantial relief on all the issues. Assessee is not in appeal whereas Revenue is aggrieved on only three items, which are contended as under : 2. The Ld. CIT(A) erred in allowing the expenditure of capital nature as revenue expenditure in spite of the provisions of section 37(1) of I.T. Act which clearly specifies the nature of expenditure that has to be allowed under revenue head. 3. The Ld. CIT(A) erred in deleting the interest on loans granted to related persons from the funds taken on loans on interest violating the provisions of section 40(a)(2b). 4. The Ld. CIT(A) erred in relying on the judgment given by its office for a completely different transaction and different findings in the survey while deletin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also and the one claimed in this is the remaining amount. It is also observed that such claims of the appellant which were not allowed by the A.O. were allowed in appeals. Thus, given the facts and circumstances of expenditure, in my opinion, the A.O. could have allowed the same and hence, he is accordingly directed to allow the same now. 4.2. Since the Ld. CIT(A) correctly allowed the expenditure as revenue expenditure, we do not see any reason to interfere with the order of the CIT(A). Ground is accordingly rejected. 5. Ground No.3 pertains to the issue of bringing to tax an amount of Rs.2,73,732/- as income. A.O. in his brief order considered assessee s objection on not charging intereat on advances by extracting in para 36 and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st was charged. The impugned transaction has a business nexus and business connection and hence, in my humble opinion, charging of notional interest is not warranted and accordingly, the AO is directed to delete the same . 5.2. Since there is finding that amount advanced was in view of commercial expediency, that too after examining the assessee s submissions and remand report from AO, we do not see any reason to interfere with such decision. Moreover, it is noticed that A.O. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO from the same slip found during the course of survey, which the CIT(A)-III, Hyderabad in the order in ITA No. 0215/CIT(A)-1I1/0B-09, dated 26.03.2009 has deleted. A copy of the said order filed was perused and placed on record. Hence, it is contended that the same should be true for the impugned assessment year also. Point two relates to the information furnished by the AR during the appellate proceedings, i.e., the -transaction referred to in the slip had in fact taken place in the month of February,2007 pertaining to the asst year 2007 -08 and cannot be brought in the current assessment year at all. During February 2007 the appellant along with others entered into an agreement (MOU) with Landlords of the property at Manikonda adme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the CIT(A) in earlier year on the same document is upheld by the ITAT, there is no merit in the Revenue s contention. 6.3. We have considered the issue and perused the said document on the basis of which addition was made and also statement of Mr. K. Gopalakrishna dated 11.01.2008 placed on record by the learned D.R. After considering the same, we do not see any reason to interfere with the order of the CIT(A) as Ld. CIT(A) has considered the issue factually. As far as the legal proposition is concerned, same document on which addition was made in earlier year was also held by the ITAT as a dumb document. In view of this, we do not see any reason to interfere with the order of the CIT(A). Accordingly, this ground is rejected. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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