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2016 (7) TMI 257 - AT - Income TaxAllowability of interest on share application money - interest expenditure incurred on share application money received from shareholders - Held that:- We are of the view that the share application money per se cannot be characterized and equated with share capital. The obligation to return the money is always implicit in the event of non-allotment of shares in lieu of the share application money received. Allotment of share are subject to certain regulations and restrictions as provided under the Companies Act. Therefore, receipt by way of share application money is not receipt held towards share capital before its conversion. Therefore, payment of interest of share application money cannot be treated differently in the Income-tax Act. Once the contention of the assessee that the money has been utilized for the purpose of business remains un-disputed, there is no justification to hold the issue against the assessee. Accordingly, the claim of interest expenditure on share application money as revenue expenditure deserves to be allowed. AO is directed to delete the addition on merits. See Rohit Exhaust Systems Pvt. Ltd. [2012 (10) TMI 1101 - ITAT PUNE] - Decided in favour of assessee
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