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2016 (9) TMI 390 - AT - Income TaxDisallowance of expenditure incurred on renovation of showroom - Allowability of revenue expenditure - Held that:- We hold that expenditure was not incurred on any capital outlay. Therefore, the expenditure is revenue in nature. Even the provisions of Explanation 1 to section 32 cannot be invoked in the present case as there was no construction of any structure, extension, improvement to the building as involved. Therefore, we direct the AO to allow the same as revenue expenditure. Deemed dividend u/s. 2(22)(e) - Held that:- Condition precedent that advances were not received by shareholders is not satisfied. Therefore, the amount cannot be brought to tax as deemed dividend in the hands of the assessee-firm. However, we make it clear that it is open to the department to initiate appropriate action to bring to tax dividend in the hands of the registered shareholder by the process known to law. Deduction under section 80IA - Held that:- For the purpose of computing eligible profits under section 80IA, losses incurred prior to commencement of initial year should not be reckoned. We hold that since loss incurred prior to the initial year of eligible business need not be deducted for the purpose of computing amount of allowance under section 80IA(5)
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