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2011 (9) TMI 106 - AT - Income TaxIncome u/s 2(24)(a) read with section 36(1)(va) - disallowance u/s 43B - The assessee filed its return of income, on 9.2.2007, declaring income at Rs. 21,57,43,610/-. The assessee is in the business of running hotel. The AO passed the assessment order u/s 143(3) of the Act, on 26.12.2008, assessing the income of the assessee at Rs. 21,65,07,307/-. The Revenue has taken the following grounds of appeal against the order of CIT(A): Deletion addition made by the AO by treating employees contribution towards EPF. - held that:- all the deposits of EPF have been made within the grace period allowed for deduction. Appeal decided in favour of Assessee. Deletion of addition of Rs. 15,55,616/- made by the AO by disallowance the interest paid. - Held that:- Interest paid before the asset was put to use is not eligible for deduction u/s 36(1)(iii) of the Act, being merely expansion of the existing business. decided against Assessee. Deletion addition of Rs. 1,60,277/- on account of disallowance of interest expenses debited to the profit and loss account for using the funds for non business purpose and also for the purpose advances for the purchase of fixed assets. - Held that:- Assessee was not entitled to claim deduction of the interest on the borrowings to the extent those were diverted to sister concerns or other persons without interest.Appeal of Revenue has been allowed. Deletion addition of Rs. 2,64,480/- by disallowing the expenses incurred on the market survey got conduct from MDRA. - Held that:- In the instant case, the appellant had conducted survey only to improve existing business. The expenditure is thus held to be revenue in nature. The addition of Rs. 264,480/- on this ground is deleted, allowing assessee's appeal. decided in favour of Assessee.
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