GROWMORE LEASING AND INVESTMENTS LTD,MUMBAI V. DCIT, CC-4(1) (ERSTWHILE DCIT-31, MUMBAI

ITA 452/MUM/2023

AI Insights

The case involves Growmore Leasing & Investment Ltd., which appealed against the orders of the CIT(A) confirming various additions made by the Assessing Officer related to unexplained investments, estimated dividend and interest income, and disallowed expenses for the Assessment Year 1993-94. The Tribunal examined whether the additions were justified, considering the legal ownership of shares and the nature of the income assessed. The Tribunal found that the assessee was not the registered shareholder and thus not entitled to the dividends, and that the interest income was incorrectly estimated based on unsubstantiated claims.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472741 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 1993-1994
• Other Referred Cases: CIT vs. Aatur Holdings Pvt. Ltd. [302 ITR 92], CIT vs. Jagmohandas J. Kapadia [1966] 61 ITR 663 (Bom.), Seth R. Dalmia vs. CIT [1977] 110 ITR 644 (SC), CIT vs. H.H. Maharani Vijaykuverba Saheb of Morvi [1975] 100 ITR 67 (Bom), CIT vs. Smt. Sushila Devi Khadaria [2009] 319 ITR 413 (Bom.)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P. DANIEL; SPL. COUNSEL
• Assessee Lawyers: DHARMESH SHAH; AR; WAY OF ENHANCEMENT WHILE DISPOSING OF
• Keywords: Business expenditure; Question of law; Unexplained investment; Capital Gains; TDS
• Section: 144; 251

Judgement Text

" | आयकर अपीलीय अिधकरण \fा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 Growmore Leasing & Investment Ltd. 32, Madhuli Dr. Annie Beasant Road Worli Mumbai - 400018 [PAN: AAACG4937C] Vs DCIT, Central Circle – 4(1), Mumbai अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Dharmesh Shah, A/R Revenue by : Shri Dr. P. Daniel, Spl. Counsel सुनवाई की तारीख/Date of Hearing : 05/03/2025 घोषणा की तारीख /Date of Pronouncement: 17/03/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: I.T.A. No. 452 & 660/Mum/2023, are two separate appeals by the assessee preferred against two separate orders of the ld. CIT(A) – 52, Mumbai, dated 09/01/2023 pertaining to AY 1993-94. 2. The issues raised in the captioned appeals are interlinked. Therefore, both the appeals were heard together and are disposed off by this common order for the sake of convenience and brevity. 3. We first take up I.T.A. No. 452/Mum/2023. The assessee has raised the following grounds of appeal:- “1. The Ld. CIT(A) erred in law and in facts in rejecting books of accounts and holding that the same do not stand admitted. 2. The Ld. CIT(A) has erred in law and in facts in confirming theaddition of Rs. 15,82,185/- on account of gross dividend and Rs. 25,31,015/- on account of gross interest, thus aggregating to Rs. 41,13,200/-. I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 2 3. The Ld. CIT(A) has erred in law and in facts in confirming the addition of Rs. 1,16,640/- out of the aggregate addition of Rs. 4,45,170/- made by the Ld. A.O. on account of unexplained investment in shares. 4. The Ld. CIT(A) has erred in law and in facts in confirming the addition to the tune of Rs. 55,220/- on account of alleged profit on sale of shares on estimated basis. 5. The Ld. CIT(A) has erred in law and in facts in confirming the addition of Rs. 6,19,229/- on account of alleged interest income without considering and appreciating the submissions of the appellant. 6. The Ld. CIT(A) has erred in law and in facts in disallowing the various expenses claimed by the appellant in connection with the various income offered and assessed by the Ld. A.O. a. The Ld. CIT(A) ought to have allowed deduction of interest on shares/debenture call money payable by the appellant of Rs. 16,16,148/- b. The Ld. CIT(A) ought to have allowed trading loss on sale of shares of 1,79,28,290/-. c. The Ld. CIT(A) ought to have allowed other expenses to the tune of Rs. 1,01,589/-. 7. The Ld. CIT(A) has erred in law and in facts in not granting deduction on account of the interest expense claimed by the appellant for Rs. 10,44,95,801/- 8. The Ld. CIT(A) has erred in law and in facts in not considering the deduction on account of the expenditure to the tune of Rs. 8,56,500/- without appreciating the fact that the said claim was allowed to the appellant while assessing income of the appellant u/s. 144 r.w.s. 147 of the Act dated 04.03.2003. 9. The Ld. CIT(A) has erred in law and in facts in enhancing the income of the appellant without complying with the provisions of s. 251 of the Act. The enhancement of the following income is therefore incorrect, unjustified and untenable in law. a. Interest on term deposit of Rs. 5,52,935/- b. Income from rights renunciation of Rs. 4,08,625/ c. Interest on share debenture application money of Rs. 3,27,856/- d. Income from long term capital gain of Rs. 5,35,03,912, e. Income from short term capital gain of Rs. 97,81,190/- f. Dividend and interest income on estimated basis determined at Rs. 1,48,82,992/- 10. The Ld. CIT(A) has erred in law and in facts in disallowing the expenses to the tune of Rs. 1,84,943/- out of the aggregate expense of Rs. 8,56,500/ - which were allowed by the Ld. A.O. and were not disputed in appeal before the Hon'ble CIT(A). 11. The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal.” I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 3 4. Representatives were heard at length, case records carefully perused and the relevant documentary evidences brought on record, duly considered in the light of Rule 18 (6) of the ITAT Rules, 1963. 5. Briefly stated the facts of the case are that the assessee is engaged in the business of dealing in shares and securities. While scrutinising the return of income and on going through the bank account maintained with ANZ Grindlays, the AO noticed credit of Rs.66,83,019/-. The assessee explained that the credit was on account of interest received on Reliance Petro C. Debenture. Applying the rate of TDS of 20%, the AO computed the interest accrued at Rs.83,53,773/- and taxed as gross interest on Reliance C Debentures. The assessee further explained that it has received dividend of Rs.2,663/- from Jindal Iron & Steel and Swaraj Mazda. The AO further observed that he collected particulars of dividend and interest income from the office of the Custodian and came to the conclusion as under:- (a) Accrued Gross Dividend for F.Y. 1992-93 - Rs.15,82,185/- (b) Accrued Interest - Rs.20,24,812/- (c) Gross Interest for F.Y. 1992-93 [2024812 \u00010.80] – Rs.25,31,015/- Total Rs. 41,13,200/- I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 4 5.1. For the above calculation, the AO took TDS rate of 20% and made additions accordingly. 6. The assessee challenged the additions before the ld. CIT(A). It was strongly contended that the shares purchased were not registered, therefore, the assessee did not receive any dividend as the same is paid only to the registered shareholders. The ld. CIT(A) compared the dividend accounted for by the group entities of the assessee and found that the assessee has not accounted for the dividend and observed that the computation made by the AO and the income being offered by the assessee is to be decided whether the same is reasonable and judicious. The ld. CIT(A) was of the opinion that the dividend yield of the Indian stock market is around 1 to 2% while the return of securities by way of compounded capital appreciation (capital gains) is far in excess of 15% and in the case of assessee, the dividend yield offered is 0.31% which is itself disproportionate when compared to the dividend received by the other group entities. Dismissing the claim of the assessee that the dividend is paid only on registered shares, the ld. CIT(A) was of the opinion that the assessee has not led any evidence to show as to how many shares have been registered and there is gross inconsistency and contradiction in the computation of dividend by the assessee itself. Insofar as the interest on debentures is concerned, the ld. CIT(A) observed that the assessee has not given the exact holding of debentures. The ld. CIT(A) further observed that the assessee has applied debentures of Reliance Industries but no interest income is seen to be accrued and accordingly dismissed the ground taken by the assessee. I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 5 7. Before us, ld. Counsel for the assessee strongly contended that both the AO and the ld. CIT(A) has made addition on estimating the amount of dividend received compared to the dividend received by the group entities. Per contra, the ld. D/R strongly supported the findings of the AO. 8. We have carefully perused the orders of the authorities below. The undisputed fact is that the ld. CIT(A) and the AO have estimated the gross dividend and interest on debentures by making comparison with the group entities. There is no denying of the fact that the dividend is received only by the registered shareholders. Assessee may have purchased shares and the shares must be lying for registration with the companies and, therefore, there is no question of receiving any dividend on any unregistered shares. It is an admitted fact that Harshad Mehta group was notified person and, therefore, the shares belong to a notified person and were in the custody of the Special Court. It is also a fact that some of the shares had not been received by the notified party. We are of the considered view that such dividend in the hands of the owner of shares which were not registered in the name of the assessee could not be assessed as income in the hands of the assessee. 9. On similar circumstances, the Hon’ble Bombay High Court in the case of CIT vs. Aatur Holdings Pvt. Ltd. [302 ITR 92], has considered the following substantial question of law:- “(i) Whether, on the facts and in the circumstances of the case and in law, the Income- tax Appellate Tribunal was right in law in holding that the de jure owner of the shares alone is entitled to the dividend declared by a company, though the assessee-company might be de facto owner of shares but had no right to receive the dividend from the company unless it is the registered shareholder of the company?. I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 6 (ii) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the dividend of Rs. 16,84,150 has not accrued to the assessee and thereby holding that such dividend income could not form part of the total income of the assessee? (iii) Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal was right in law, in accepting the assessee's submission, that even though the amounts were paid for acquiring the shares, shares have not been delivered to the assessee- company and the change in ownership of the shares have not been registered and notified and, therefore, the assessee's name did not appear in the share registers of the respective companies on the record date and, therefore, it could not have received the dividend at all?\" 9.1. And, the Hon’ble Court, interalia held as under:- “Nothing has been brought to our attention to show that under the provisions of the Companies Act and the provisions of the Securities Contracts (Regulation) Act that there is any other standard or statutory rules under the Income-tax Act by which such dividend can be taxed in the hands of the assessee. The other aspect of the matter which needs to be considered is that the burden of proving that an amount was taxable because it was received in the year of account lies upon the Department. This proposition has been reiterated in CIT v. Bikaner Trading Co. Ltd. reported in [1970] 78 ITR 12 (SC). Income of the assessee has to be received by the assessee as income-tax is levied on income. For this purpose, we may refer the judgment of the Supreme Court in CIT v. Shoorji Vallabhdas and Co. reported in [1962] 46 ITR 144 which was reiterated in Godhra Electricity Co. Ltd. v. CIT reported in [1997] 225 ITR 746 (SC). The Supreme Court summed up the law as under (headnote) : \"Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a hypothetical income, which does not materialise.\" It is thus clear that merely because a person may have purchased or in receipt of shares, in the absence of the shares being registered in his name in the books of account of the company, such a person is not entitled to receive the dividend. The dividend has to be paid by the company in the name of the registered shareholders and it is the registered shareholders alone who can claim the dividend under section 27 of the Securities Contracts (Regulation) Act. On the facts on record, the Assessing Officer in respect of the shares as reflected in the balance-sheet has shown it under the four heads: (a) Non-delivered shares; I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 7 (b) Shares handed over to the custodian but remaining to be registered ; (c) Shares forming a part of Shri Harshad S. Mehta's affidavit in the case of benami shares ; (d) Shares which are lost or stolen. The Assessing Officer has further set out that in respect of all these categories the ownership of the assessee has not been recognised by any person or any authority. The Assessing Officer has recorded a finding that the dividend income has not been received by the custodian in respect of the shares referred to above. The dividend also has been received by some other person. There is also nothing brought on record to indicate that the assessee in terms of section 27(1) of the Securities Contracts (Regulation) Act has lodged the shares for transfer. Considering these circumstances, in our opinion, we find no reason to interfere with the findings recorded by the Commissioner (Appeals) and as confirmed by the Appellate Tribunal. The questions of law therefore, as raised would not arise and consequently, the appeal dismissed.” 10. Finding parity of facts, we direct the AO to delete the additions on account of dividend and interest. In fact, most of the debentures were convertible debentures and have been converted into shares, therefore, there is no question of estimating any interest on the same. Accordingly, Ground No. 2 is allowed. 11. Ground No. 3 relates to the addition of Rs. 1,16,640/- out of the aggregate addition of Rs.4,45,170/-. While scrutinising the return of income, the AO observed that the assessee has purchased five shares of ACC and 1172 shares of Ranbaxy. The assessee was asked to explain the source of acquisition. In its reply, the assessee explained that it is holding only 550 shares and does not know the whereabouts of the balance of shares. The assessee further explained that there was bonus and right issue but could not furnish the details. The AO treated the purchase of shares as unexplained investment and made the addition of Rs.4,45,170/-. I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 8 11.1. When the addition was challenged before the ld. CIT(A), it was explained that the AO found that the holding as per the assessee as on 31/03/1993, is more than the quantity determined by the AO as on 31/03/1992 and, therefore, the difference has been treated as unexplained investment. It was further explained that it is incorrect to compare the quantity determined by the AO as on 31/03/1992 and the holding as per the assessee as on 31/03/1993. 11.1.1. It was explained that during the year, the assessee has acquired much larger quantity of shares of ACC Ltd. and furnished copies of the evidence pertaining to the purchase of shares. As regards Ranbaxy, the assessee had pending balance of 1400 shares. 448 shares were received on conversion of 112 debentures making the aggregate holding at 1848 shares. After considering the facts and the submissions, the ld. CIT(A) confirmed the addition in respect of the shares of Ranbaxy to the extent of Rs.1,16,640/-. 12. Before us, the ld. Counsel for the assessee reiterated that the shares received on bonus have not been considered in the increase in the holding of shares. The details have been furnished. Considering the bonus shares, in the impugned shares, we do not find any merit in the additions sustained by the ld. CIT(A) and the same is hereby directed to be deleted. Accordingly, Ground No. 3 is allowed. 14. Ground No. 4 has not been pressed and the same is dismissed as not pressed. 15. Ground No. 5 relates to the addition on account of alleged interest income of Rs.6,19,229/-. I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 9 15.1. The AO has made addition of Rs.83,53,773/- on account of interest of Reliance Industries Debentures. The assessee explained that it has received on 10/04/1992, Rs. 64,49,923/- and on 28/04/1992, Rs. 2,33,096/- totalling to Rs. 66,83,019/- being interest income on the debentures of Reliance Industries. It was further explained that due to limitation of resources and in view of the fact that the books of accounts were being completed by obtaining the details from the Custodian and Income Tax department, the assessee could gather the information as mentioned hereinabove. It was further explained that the balance amount is the difference of refund of the debentures application money paid by the assessee. After considering the facts and the submissions, the ld. CIT(A) observed that the addition of Rs. 64,49,923/- is based on the submissions of the assessee before the AO. The ld. CIT(A) further observed that the assessee has made an application before the Special Court seeking permission to subscribe to the right debentures of Reliance Industries Ltd. and after seeking permission, the assessee applied for debentures and invested an amount of Rs.74,05,950/- from which it got refund of Rs.61,97,475/-, along with the interest on debentures application amounting to Rs.2,52,449/-, the assessee received Rs. 64,49,924/- which has been erroneously considered as debentures interest. After finding the truthness in the facts submitted by the assessee, the ld. CIT(A) restricted the addition to Rs.6,19,226/-. 15.2. Before us, the ld. Counsel for the assessee accepted the addition of Rs.3,27,856/- and has disputed only Rs.2,33,096/- which is nothing but an estimated figure. Before us, the ld. Counsel strongly contended that this amount of Rs.2,33,096/- was not received by it. We are of the I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 10 considered view that since all the documents including bank statements of the assessee were in possession of either of the Income-tax Department or the Custodian, it would be a futile exercise to expect the assessee to furnish evidence and since no evidence has been brought on record by the revenue, the addition is directed to be deleted. Ground No. 5, is allowed. 16. Ground No. 6, relates to the disallowance of various expenses recorded in the books of accounts. The assessee has claimed various expenditure including interest on share debenture call money, loss of shares and other expenses. It was brought to the notice of the ld. CIT(A) that the AO has already allowed Rs. 8,56,500/- while framing reassessment order u/s 144 r.w.s. 147 of the Act and, therefore, the same should also be allowed. After considering the facts and the submissions, the ld. CIT(A) observed that while provision has been made for payments till 31/03/1993, income has been accounted for only till 30/09/1992. The ld. CIT(A) was of the opinion that there are too many inconsistencies in the claim of the assessee and the documentary evidence filed by the assessee are not sufficient to overcome the inconsistencies. The ld. CIT(A) disallowed the claim of interest on share debenture call money at Rs.16,16,148/- and further disallowed the claim of loss of Rs.1,79,28,290/-. Other expenses of Rs.1,01,589/- was also disallowed. 17. Before us, the ld. Counsel for the assessee stated that difference in interest received is because of the conversion of debentures during the year under consideration into equity shares and on shares the assessee has accounted dividend income. Insofar as, other expenses are I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 11 concerned, it is the say of the ld. Counsel for the assessee that the same pertains to the accounting expenses and auditor’s fees. Per contra, the ld. DR strongly supported the findings of the AO. 18. We have carefully perused the orders of the authorities below and have carefully considered the chart exhibited at page 57 and 58 of the order of the ld. CIT(A). We find that on conversion of debentures, the assessee received shares on which it received dividends. Therefore, any difference in the claim of interest expenses qua the interest received on debentures is due to the conversion of debentures into shares. Therefore, the basis on which the interest has been disallowed itself is faulty. Therefore, the addition to the extent of Rs.16,16,148/- cannot be sustained. Insofar as share trading loss is concerned, the assessee has furnished copies of the contract notes of purchase of shares which are placed on record. Considering the same, the share trading loss cannot be disallowed and insofar as the other expenses are concerned, which are mainly related to the accounting and auditing expenses, were incurred for the purpose of business and the same deserve to be allowed. Considering the totality of facts we do not find any merit in the addition and the same is directed to be deleted. 19. Ground No. 7 relates to the disallowance of interest expenditure of Rs. 10,44,95,850/-. On identical set of facts, the Co-ordinate Bench in ITA No. 417/Mum/2023 in the case of Sudhir S. Mehta, vide order dated 06/02/2025, has considered the issue and decided as under:- “27. Ground No. 4, relates to the claim of interest expenditure Rs.2.04 Crores out of which the ld. CIT(A) allowed only Rs.12,93,360/-. 27.1. Similar issue came up for consideration before the Coordinate Bench in the case of Pratima H. Mehta (supra). The relevant findings read as under:- I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 12 “27. Since the issue arising in ground no.3, raised in assessee's appeal, and grounds no.2 and 3, raised in Revenue's appeal, pertains to the deduction of interest expenditure, therefore the aforesaid grounds are dealt with together. 28. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the assessment proceedings, the assessee submitted that the transactions in the capital market have been made through three broking firms belonging to the family members of the assessee. As per the details submitted by the assessee, it was submitted that the amount of interest of Rs. 2,46,33,261 are shown as payable to family run broking firms such as M/s HSM, M/s ASM and M/s JHM. The AO vide order passed under section 144 read with section 254 of the Act did not agree with the submissions of the assessee and disallowed the deduction of interest claimed for the following reasons:- (i) The liabilities were not crystallise during the year. (ii) The interest payable is tentative and provisional. (iii) There is no basis as per which the assessee has a right to pay and the creditors has are right to receive. (iv) There is no basis of computation of interest payable which has been provided by the assessee. (v) The provisions made on account of interest payable is a contingent liability and therefore, cannot be allowed as a business expenditure. (vi) It is also seen that these broking firms have not charged any interest on the amount receivable from the companies of this group with the books of accounts have been produced before the Assessing Officer. 29. The AO following the approach adopted in earlier round of litigation rejected the assessee's claim of deduction on account of interest and disallowed interest payment of Rs. 2,46,33,261. The learned CIT(A), vide impugned order, partly allowed the ground raised by the assessee on this issue and held that the main purpose of incurring the interest expenditure was not earning income from dividends and unless the interest expenditure was incurred solely for the purposes of making or earning dividend income, no deduction is possible under section 57 of the Act. The learned CIT(A) further held that in the acquisition of shares for capital gains, the dividend income is incidental and not a major factor, and it is thus clear that the sole purpose of borrowing by the assessee @12% per annum cannot be for the purpose of earning dividend income. Accordingly, the interest expenditure was held to be not allowable against dividend income. The learned CIT(A), however, allowed the interest expenditure only to the tune of Rs. 15,73,548 which is the share trading profit. Being aggrieved, both assessee and Revenue are in appeal before us. 30. We have considered the submissions of both sides and perused the material available on record. From the perusal of the computation of total income, forming part of the paper book on pages 464-466, we find that the assessee claimed interest on bank loans of Rs. 2,46,33,261 against the income under the head \"income from other sources\". It is evident from the record that the learned CIT(A) placed reliance upon the decision of the Hon'ble jurisdictional High Court in CIT v/s Jagmohandas J. Kapadia, [1966] 61 ITR 663 (Bom.), in order to support the conclusion that unless the interest expenditure was incurred solely for the purposes of making or earning dividend income, no deduction as possible under section 57 of the Act. The relevant findings of the Hon'ble jurisdictional High Court in the aforesaid decision, as relied upon in the impugned order, are as under:- \"It would be noticed that what is allowable as expenditure under the said sub- section is only the expenditure incurred solely for the purpose of making or earning dividend income. Emphasis thus appears to be on the object or purpose of incurring of the expenditure. The exclusive object of incurring the expenditure has to be the making or earning of the dividend income. The mere fact that income by way of dividend has accrued and that the expenditure incurred is in some manner or other related to the accrual of the dividend income is not sufficient.\" I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 13 31. We find that the Hon'ble Supreme Court in Seth R. Dalmia v/s CIT, [1977] 110 ITR 644 (SC) agreed with the view taken by the Hon'ble jurisdictional High Court in CIT v/s H.H. Maharani Vijaykuverba Saheb of Morvi [1975] 100 ITR 67 (Bom), wherein it was held that the connection between the expenditure and the earning of income need not be direct, and even an indirect connection could prove the nexus between the expenditure incurred and the income. We further find that in CIT v/s Smt. Sushila Devi Khadaria, [2009] 319 ITR 413 (Bom.), in a similar factual matrix, i.e. wherein the AO denied the deduction claimed under section 57(iii) of the Act on the basis that the expenditure was not incurred wholly for the purpose of earning income as the taxpayer was engaged in selling shares in the stock market and the dividend income had accrued as a by-product, the Hon'ble jurisdictional High Court by placing reliance upon the aforesaid decision of the Hon'ble Supreme Court in Seth R. Dalmia (supra), upheld the allowance of finance expenditure as deduction under section 57(iii) of the Act against the income by way of dividends, finance charges and interest which were shown as income from other sources by the taxpayer. Therefore, respectfully following the aforesaid decision of the Hon'ble Supreme Court in Seth R. Dalmia (supra), we are of the considered view that the assessee is entitled to claim a deduction of interest expenditure under section 57 of the Act since receipt of dividend is merely due to the shareholding of the assessee and the interest expenditure has nexus with the income under the head \"income from other sources\" including dividend income even though not direct. Accordingly, the AO is directed to allow the interest expenditure claimed by the assessee under section 57 of the Act. As a result, ground No. 3 raised in assessee's appeal is allowed, while ground No. 2 and 3 raised in Revenue's appeal is dismissed.” 27.2. Similarly in the case of Jyoti H. Mehta vs. ACIT in ITA No. 436/Mum/2023 and ITA No. 1186/Mum/2023, the Tribunal has considered similar grievance, which reads as under:- “41. Ground no 6 pertains to sustaining the addition on account of interest disallowed. The Ld. CIT (A) has granted partial relief, by allowing on proportionate basis, the interest expenditure only to the extent of Rs. 11, 49,540/- as against the total claim of Rs. 1, 02, 00,000/- made by the assessee.” 27.2.1. And the Co-ordinate Bench following the order of the case of Pratima H. Mehta (supra), held as under:- “44. It is apparent that the reasons given for not allowing the interest expenditure claimed by the assessee u/s 57 of the Act are not tenable in view of the decision of the Apex Court in the case of Seth R. Dalmia (supra) which is duly followed by the co-ordinate bench of the Tribunal in the case of Smt. Pratima Mehta (supra). Respectfully following these judicial precedents, we allow this ground of appeal in favour of the assessee and direct the A.O. to allow interest expenditure claimed by the assessee while computing the taxable income. In the result, ground no. 6 raised by the assessee is allowed.” 28. In assessee’s own case for AY 1991-92, the Coordinate Bench in ITA No. 5966/Mum/2017 and 635/Mum/2018, has allowed the claim of interest. On finding parity of facts, respectfully following the decision of the Coordinate Bench (supra), we direct the AO to allow the entire claim of interest. Accordingly, Ground No. 4 is allowed.” 20. Finding parity of facts, the AO is directed to allow the interest expenditure. Ground No. 7 is allowed. 21. Ground No. 8 relates to non-consideration of the deduction of expenditure to the tune of Rs.8,56,500/-. We find that the same has been I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 14 considered and allowed while framing the assessment u/s 144 r.w.s 147 of the Act vide order dated 04/03/2003 and the same deserves to be allowed here also. 22. Other grounds have not been pressed and the same are dismissed as not pressed. 23. In the result, appeal of the assessee is partly allowed. 24. Coming to ITA No. 660/Mum/2023, the grievance of the assessee read as under:- “1. The Ld. CIT(A) erred in law and in facts in not appreciating that the reopening of the HI assessment u/s. 147 of the Act was invalid and bad in law. 2. The Ld. CIT(A) has erred in law and in facts in confirming the addition on account of estimated dividend income of Rs. 1,28,58,180/-. 3. The Ld. CIT(A) ought to have appreciated that the said income of Rs. 1,28,58,180/-was added and enhanced by him in the appeal against the order u/s. 144 of the Act dated 19.03.1996 simultaneously disposed of by him and therefore even to that extent it constituted double additions. 4. The Ld. CIT(A) has erred in law and in facts in confirming the addition of Rs. 2,663/-on account of dividend income determined by the Ld. A.O. in the original assessment order passed by him u/s. 144 of the Act dated 19.03.1996. 5. The Ld. CIT(A) has erred in law and in facts in confirming the addition on account of interest and debenture of Rs. 1,08,84,788/- made by the Ld. A.O. in the original. assessment order u/s. 144 of the Act dated 19.03.1996. 6. The Ld. CIT(A) has erred in law and in facts in confirming the addition on account of capital against assessed by the Ld. A.O. at Rs. 6,65,25,291/- without appreciating that the said income was computed incorrectly and also that the same was added in the hands of the appellant by way of enhancement while disposing of the appeal against the assessment order u/s. 144 of the Act dated 19.03.1996. 7. The Ld. CIT(A) has erred in law and in facts in confirming the addition on account of investments of Rs. 4,45,170/- without appreciating that the said addition was incorrectly made by the Ld. A.O. and that the same was also added by way of enhancement in the appeal against the order u/s. 144 of the dated 19.03.1996. 8. The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal.” 25. At the very outset, the ld. Counsel for the assessee stated that he is not pressing Ground Nos. 1, 4 & 6. These grounds are dismissed as not pressed. I.T.A. No. 452 & 660/Mum/2023 Assessment Year: 1993-94 15 26. The grievance raised vide other grounds of appeal are identical to those considered by us while adjudicating ITA No. 452/Mum/2023 (supra). For our detailed discussion therein, these grounds are allowed. 27. In the result, both the appeals of the assessee are allowed. Order pronounced in the Court on 17th March, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE-PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 17/03/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs आदेश की \u0015ितिलिप अ\u001aेिषत /Copy of the Order forwarded to : 1. अपीलाथ\u001c / The Appellant 2. \u0015\u001dथ\u001c / The Respondent 3. संबंिधत आयकर आयु\" / Concerned Pr. CIT 4. आयकर आयु\" ) अपील ( / The CIT(A)- 5. िवभागीय \u0015ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड& फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "