ACIT-5(1)(1), MUMBAI V. M/S. ESSAR SHIPPING LTD., MUMBAI

ITA 87/MUM/2023

AI Insights

The case involves an appeal by the Revenue against the order of the Ld. Commissioner of Income-tax (Appeals)-56, Mumbai, concerning the assessment year 2014-15. The primary issues revolved around the classification of interest income from inter corporate deposits and bank deposits, the allowance of interest expenditure, and the set off of business losses against special rate tonnage business income. The Tribunal examined precedents and statutory provisions, particularly focusing on whether the income should be classified under 'business income' or 'income from other sources', and whether losses could be set off against specific types of income under the Income Tax Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123437 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2023
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: E
• Next Hearing Date: 23-07-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 10-01-2023
• Other Referred Cases: Swami Spices (P) Ltd., Goetze India Ltd. V CIT, Tata Motors Ltd. vs. DCIT, Jute Corporation of India Ltd. (supra), National Thermal Power Company Ltd. (supra), Pruthvi Brokers & Shareholders (P) Ltd. (supra)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASSESSEE INR
• Keywords: Presumptive income; Business income; Business expenditure; Opportunity of being heard; Source of fund; Wholly owned subsidiary; Revised return; Capital Gains; CHAPTER IV
• Section: 68; 56; 69C; 43B; 143(3); 14A; 13; 119

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 87/MUM/2023 Assessment Year: 2014-15 ACIT Circle 5(1)(1), R. No. 568, Aayakar Bhavan, M.K. Road, Mumbai-400020. Vs. M/s Essar Shipping Ltd., Essar House, 11, K K Marg, Mahalaxmi, Mumbai-400034. PAN NO. AACCE 3707 D Appellant Respondent Assessee by : Mr. Rishav Patawari Revenue by : Mr. Mudit Nagpal, CIT-DR Date of Hearing : 24/07/2023 Date of pronouncement : 31/07/2023 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 28.11.2022 passed by the Ld. Commissioner of Income-tax (Appeals)-56, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2014-15, raising following grounds: 1. "Whether on the facts and circumstances of the case and in law and in view of the judgement of Bombay High Court in Swami Spices (P) Ltd., the Id. CIT(A) was right in holding that the income of Rs. 88,50,65,272/- received in the nature of interest out of inter corporate deposits advanced to subsidiary companies and interest from bank deposits is in the nature of business income and not from other sources moreover when the assessee itself has declared the same as income under the head "Income from Other Sources" in the Return of Income filed". 2. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the interest expenditure Rs. 165,86,54, 753/ expenditure u/s 36(1) itt) of the I. T. 3. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) failed to appreciate the fact that loan obtained by the assessee company from LIC was used for advancing ID to subsidiary w purpose of earning interest income which is taxed under the head other sources and the interest expenses claimed are not allowable us 36(1)(i) of the Act". 4. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) er compute the disallowance of Rs.23,69,58,913/ common interest expenditure by allocating it in the ratio of assets employed between the tonnage and non tonnage activities instead of in the ratio of turnover of tonnage and 5. "Whether on the facts and circumstances of the case and in law, the Id. CIT( current year business loss against the special rate tonnage business income u/s 115VG of the Act without considering the general exclusion of deduction and set off u/s 115VL and u/s 115VM of the Act against the special rate tonnage income moreover when the assessee in the Return of Income itself has computed tax on tonnage income as tax payable". 5.1 On the facts and circumstances of the case, whether the Id. CIT(A) has not erred in admitting the additional ground raised erroneous act of not filing revised return of income even after having ample time and raising an issue at the appeal stage? bank deposits is in the nature of business income and not from other sources moreover when the assessee itself ed the same as income under the head "Income from Other Sources" in the Return of Income 2. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the interest expenditure Rs. 165,86,54, 753/- as business xpenditure u/s 36(1) itt) of the I. T. Act, 1961". 3. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) failed to appreciate the fact that loan obtained by the assessee company from LIC was used for advancing ID to subsidiary which is for the purpose of earning interest income which is taxed under the head other sources and the interest expenses claimed are not allowable us 36(1)(i) of the Act". 4. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in directing the AO to re compute the disallowance of Rs.23,69,58,913/ common interest expenditure by allocating it in the ratio of assets employed between the tonnage and non tonnage activities instead of in the ratio of turnover of tonnage and non-tonnage activities "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the set off of current year business loss against the special rate tonnage business income u/s 115VG of the Act without considering the general exclusion of deduction and set off u/s 115VL and u/s 115VM of the Act against the special ate tonnage income moreover when the assessee in the Return of Income itself has computed tax on tonnage income as tax payable". On the facts and circumstances of the case, whether CIT(A) has not erred in admitting the additional ground raised by the assessee in spite of the assessee's erroneous act of not filing revised return of income even after having ample time and raising an issue at the appeal stage? M/s Essar Shipping Ltd. 2 ITA No. 87/Mum/2023 bank deposits is in the nature of business income and not from other sources moreover when the assessee itself ed the same as income under the head "Income from Other Sources" in the Return of Income 2. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the interest as business 3. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) failed to appreciate the fact that loan obtained by the assessee company from LIC was hich is for the purpose of earning interest income which is taxed under the head other sources and the interest expenses claimed 4. "Whether on the facts and circumstances of the case red in directing the AO to re- compute the disallowance of Rs.23,69,58,913/- from common interest expenditure by allocating it in the ratio of assets employed between the tonnage and non- tonnage activities instead of in the ratio of turnover of "Whether on the facts and circumstances of the case A) erred in allowing the set off of current year business loss against the special rate tonnage business income u/s 115VG of the Act without considering the general exclusion of deduction and set off u/s 115VL and u/s 115VM of the Act against the special ate tonnage income moreover when the assessee in the Return of Income itself has computed tax on tonnage On the facts and circumstances of the case, whether CIT(A) has not erred in admitting the additional by the assessee in spite of the assessee's erroneous act of not filing revised return of income even after having ample time and raising an issue at the 5.2 On the facts and circumstances of the case, whether the Ld. CIT(A) has not erred in a ground raised by the assessee in spite of the objection of the Assessing Officer and disregarding the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd. V CIT 284 IT 323 wherein it is clear that there is no provision in the Act to make amendment in the return of income by modifying an application of the assessement stage without revising the return? 5.3 On the facts and circumstances of the case, whether the Ld. CIT(A) has not erred in allowing the claim of the assessee not made through the revised return and instead made through addition ground б. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the set off of foreign dividend income of Rs.35,30,86 the current year's loss". 6.1 "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in not appreciating the legal position that the foreign dividend income is taxable u/s 115BBD and no adjustment against curre loss is allowable in view of the sub section 115BBD". 6.2 "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the set off of foreign dividend income of Rs. 35,30,86,193/ the current year's loss without appreciating the fact that the CIT(A) is not empowered to admit any new claim of the assessee not claimed earlier in original return or revised return". 6.3 On the facts and circumstances of the case, whether the Id. CIT(A) has ground raised by the assessee in spite of the objection of the Assessing Officer and disregarding the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd. V CIT 284 ITR 323 wherein it is clear that t provision in the Act to make amendment in the return of income by modifying an application of the assessment stage without revising the return? On the facts and circumstances of the case, whether CIT(A) has not erred in admitting the additional ground raised by the assessee in spite of the objection of the Assessing Officer and disregarding the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd. V CIT 284 IT 323 wherein it is clear that there is no sion in the Act to make amendment in the return of income by modifying an application of the assessement stage without revising the return? On the facts and circumstances of the case, whether CIT(A) has not erred in allowing the claim of the assessee not made through the revised return and instead made through addition ground at appeal stage? "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the set off of foreign dividend income of Rs.35,30,86, 193/- the current year's loss". "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in not appreciating the legal position that the foreign dividend income is taxable u/s 115BBD and no adjustment against current year's loss is allowable in view of the sub-section (2) of the section 115BBD". "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the set off of foreign dividend income of Rs. 35,30,86,193/- current year's loss without appreciating the fact that the CIT(A) is not empowered to admit any new claim of the assessee not claimed earlier in original return or revised return". On the facts and circumstances of the case, whether CIT(A) has not erred in admitting the additional ground raised by the assessee in spite of the objection of the Assessing Officer and disregarding the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd. V CIT 284 ITR 323 wherein it is clear that there is no provision in the Act to make amendment in the return of income by modifying an application of the assessment stage without revising the return? M/s Essar Shipping Ltd. 3 ITA No. 87/Mum/2023 On the facts and circumstances of the case, whether dmitting the additional ground raised by the assessee in spite of the objection of the Assessing Officer and disregarding the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd. V CIT 284 IT 323 wherein it is clear that there is no sion in the Act to make amendment in the return of income by modifying an application of the assessement On the facts and circumstances of the case, whether CIT(A) has not erred in allowing the claim of the assessee not made through the revised return and at appeal stage? "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the set off of against "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in not appreciating the legal position that the foreign dividend income is taxable nt year's section (2) of the "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the set off of against current year's loss without appreciating the fact that the CIT(A) is not empowered to admit any new claim of the assessee not claimed earlier in original return or On the facts and circumstances of the case, whether not erred in admitting the additional ground raised by the assessee in spite of the objection of the Assessing Officer and disregarding the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd. V here is no provision in the Act to make amendment in the return of income by modifying an application of the assessment 2. Briefly stated, facts of the case are that consideration, assessee was engag the ships and other shipping related activities along with operation of oil fields. For the year under consideration, the assessee filed return of income on 29.11.2013 declaring total loss of Rs.8,85,83,159/-. The return selected for scrutiny Act, 1961 (in short ‘the Act’) were issued and complied with. The assessment order u/s 143(3) of the Act was 22.12.2016, wherein Rs.143,23,15,280/-. 3. On further appeal, the Ld. CIT(A) allowed part relief to the assessee. 4. Aggrieved, the Revenue is in appeal before the Tribunal by way of raising grounds as reproduced above. 5. Before us, the assessee h Tribunal for earlier years relied upon in support of various grounds. 6. We have heard rival submission of the parties and perused the relevant material on record. In Ground No. 1 raised the issue Rs.88,50,65,272/- received from subsidiary companies been held by the Ld. CIT(A) as gains from business and profession’ Briefly stated, facts of the case are that during the year under assessee was engaged in the business of operation of the ships and other shipping related activities along with operation . For the year under consideration, the assessee filed return of income on 29.11.2013 declaring total loss of . The return of income filed by the assessee was selected for scrutiny and statutory notices under the Income Act, 1961 (in short ‘the Act’) were issued and complied with. The assessment order u/s 143(3) of the Act was wherein the total income has been assessed at . On further appeal, the Ld. CIT(A) allowed part relief to the the Revenue is in appeal before the Tribunal by way of raising grounds as reproduced above. Before us, the assessee has filed a copy of the decisions of the Tribunal for earlier years relied upon in support of various grounds. We have heard rival submission of the parties and perused the relevant material on record. In Ground No. 1, the raised the issue of taxability of interest amount of received from subsidiary companies been held by the Ld. CIT(A) as taxable under the head ‘profit and gains from business and profession’ as against held as M/s Essar Shipping Ltd. 4 ITA No. 87/Mum/2023 during the year under ed in the business of operation of the ships and other shipping related activities along with operation . For the year under consideration, the assessee filed return of income on 29.11.2013 declaring total loss of of income filed by the assessee was statutory notices under the Income-tax Act, 1961 (in short ‘the Act’) were issued and complied with. The assessment order u/s 143(3) of the Act was completed on ome has been assessed at On further appeal, the Ld. CIT(A) allowed part relief to the the Revenue is in appeal before the Tribunal by way as filed a copy of the decisions of the Tribunal for earlier years relied upon in support of various grounds. We have heard rival submission of the parties and perused the , the Revenue has interest amount of received from subsidiary companies, which has taxable under the head ‘profit and as against held as ‘income from other sources, by the A dispute are that the assessee has two income shipping operations for which income is declared under the ‘tonnage tax scheme gains of business of operating qualifying ships under the provisions of chapter XII-G of the Act field business, logistics and other income from shipping operation for which income is computed business and profession carried on by the assessee itself whereas the oil field business is carried by assessee through its subsidiary namely M/s E Oilfield Services India Ltd. (EOSIL). During the previous year relevant to AY 2010-11, the assessee borrowed money from LIC and had given inter corporate deposits (ICDs) of Rs.418 crores to its wholly owned subsidiary EOSIL is carrying out the busines drilling operations. Further, in AY 2011 assessee advanced further sum to EOSIL as ICDs. The assessee earned interest on the said ICDs and the same was offered to tax under the head ‘profit breakup of the interest income for the year under consideration as under: (i) Interest from ICDs to wholly owned subsidiaries which undertake Oil Drilling for assessee (ii) Interest from BID deposits with ESIL (iii) Interest from banks (iv) Interest on IT refund by the Assessing Officer. The facts qua the issue in dispute are that the assessee has two income streams; shipping operations for which income is declared under the scheme’ i.e. a scheme for computation of profits and gains of business of operating qualifying ships under the provisions G of the Act and, secondly, the business activity of oil field business, logistics and other income from shipping operation computed under the head ‘profit and gains from business and profession, . The shipping and logistics business is carried on by the assessee itself whereas the oil field business is assessee through its subsidiary namely M/s E Oilfield Services India Ltd. (EOSIL). During the previous year 11, the assessee borrowed money from LIC and had given inter corporate deposits (ICDs) of Rs.418 crores to its wholly owned subsidiary EOSIL is carrying out the busines drilling operations. Further, in AY 2011-12 and 2012 assessee advanced further sum to EOSIL as ICDs. The assessee earned interest on the said ICDs and the same was offered to tax ‘profit and gain of business/ profession. breakup of the interest income for the year under consideration as Interest from ICDs to wholly owned subsidiaries which undertake Oil Drilling for assessee Interest from BID deposits with ESIL Interest from banks Interest on IT refund M/s Essar Shipping Ltd. 5 ITA No. 87/Mum/2023 ssessing Officer. The facts qua the issue in streams; firstly, shipping operations for which income is declared under the i.e. a scheme for computation of profits and gains of business of operating qualifying ships under the provisions the business activity of oil field business, logistics and other income from shipping operations, profit and gains from . The shipping and logistics business is carried on by the assessee itself whereas the oil field business is assessee through its subsidiary namely M/s Essar Oilfield Services India Ltd. (EOSIL). During the previous year 11, the assessee borrowed money from LIC and had given inter corporate deposits (ICDs) of Rs.418 crores to its wholly owned subsidiary EOSIL is carrying out the business of oil 12 and 2012-13, the assessee advanced further sum to EOSIL as ICDs. The assessee earned interest on the said ICDs and the same was offered to tax and gain of business/ profession. The breakup of the interest income for the year under consideration as INR 74,69,84,689/- INR11,59,94,035/- INR1,56,66,283/- INR64,20,265/- 6.1 The Ld. CIT(A) following the finding of the Tribunal in assessee’s own case for AY 2013 Rs. 1.57 crores received from bank and companies as to be business income except amount of Rs.64,20,265/- received on account of income us, the Ld. Counsel of the assessee has referred to para 28 of the order of the Tribunal in the assessee’s own case in ITA 7371/Mum/2017 for AY 2013 also submitted that order of the Tribunal in assessment year 2013 14 has been further followed in ITA No. 821/Mum/2022 for AY 2015-16 and ITA No. 2014/Mum/ 1802/Mum/2022 for AY 2016 respectively. The relevant part of the decision of the ITAT for AY 2015-16 is reproduced as under: “18. After considering the findings given in the impugned orders as well as ITAT orders placed before us, we find that the business of the assessee has two income streams; one of Shipping operations for which income is declared under the tonnage scheme and business activity of Oil field Business, Logistic Business and other income from shipping operation for which income is declared under the head Profit and Gains from Business and Profession. The Shipping and logistic business is carried on oil field business is carried by the assessee through its subsidiary namely M/s Essar Oilfield Services India Ltd. (EOSIL). During the previous year relevant to A.Y. 2010 11, the assessee borrowed money from LIC and had given inter corporate deposits (ICDs) of Rs. 418 crores to its wholly owned subsidiary EOSIL who is carrying out the business of oil drilling operations. Further, in A.Y. 2011-12 and 2012 The Ld. CIT(A) following the finding of the Tribunal in assessee’s own case for AY 2013-14 upheld the interest income received from bank and Rs. 86.29 crores from companies as to be business income except amount of received on account of income-tax refund. Before us, the Ld. Counsel of the assessee has referred to para 28 of the order of the Tribunal in the assessee’s own case in ITA 7371/Mum/2017 for AY 2013-14. The Ld. Counsel of the assessee also submitted that order of the Tribunal in assessment year 2013 14 has been further followed in ITA No. 821/Mum/2022 for AY 16 and ITA No. 2014/Mum/2022, ITA No. 2 for AY 2016-17, AY 2017-18 and respectively. The relevant part of the decision of the ITAT for AY 16 is reproduced as under: 18. After considering the findings given in the impugned orders as well as ITAT orders placed before us, we find that the business of the assessee has two income streams; one of Shipping operations for which income is declared under the tonnage scheme and the other is the business activity of Oil field Business, Logistic Business and other income from shipping operation for which income is declared under the head Profit and Gains from Business and Profession. The Shipping and logistic business is carried on by the assessee itself whereas the oil field business is carried by the assessee through its subsidiary namely M/s Essar Oilfield Services India Ltd. (EOSIL). During the previous year relevant to A.Y. 2010 11, the assessee borrowed money from LIC and had given inter corporate deposits (ICDs) of Rs. 418 crores to its wholly owned subsidiary EOSIL who is carrying out the business of oil drilling operations. Further, in A.Y. 12 and 2012-13, the assessee advanced further M/s Essar Shipping Ltd. 6 ITA No. 87/Mum/2023 The Ld. CIT(A) following the finding of the Tribunal in 14 upheld the interest income of rores from group companies as to be business income except amount of tax refund. Before us, the Ld. Counsel of the assessee has referred to para 28 of the order of the Tribunal in the assessee’s own case in ITA No. he Ld. Counsel of the assessee also submitted that order of the Tribunal in assessment year 2013- 14 has been further followed in ITA No. 821/Mum/2022 for AY ITA No. 1510 and 18 and AY 2018-19 respectively. The relevant part of the decision of the ITAT for AY 18. After considering the findings given in the impugned orders as well as ITAT orders placed before us, we find that the business of the assessee has two income streams; one of Shipping operations for which income is the other is the business activity of Oil field Business, Logistic Business and other income from shipping operation for which income is declared under the head Profit and Gains from Business and Profession. The Shipping and logistic by the assessee itself whereas the oil field business is carried by the assessee through its subsidiary namely M/s Essar Oilfield Services India Ltd. (EOSIL). During the previous year relevant to A.Y. 2010- 11, the assessee borrowed money from LIC and had given inter corporate deposits (ICDs) of Rs. 418 crores to its wholly owned subsidiary EOSIL who is carrying out the business of oil drilling operations. Further, in A.Y. advanced further sum to EOSIL as ICDs. The assesse the said ICDs and the same was offered to tax. It has been stated that the facts and circumstances are identical to the preceding years, wherein it has been held as business income by Hon'ble ITAT. The break up of interest income is as (i) Interest from ICDs to wholly owned subsidiaries which undertake Oil Drilling for assessee 82,23,73,747/ (ii) Interest from BID deposits with ESIL for getting the shipping business under contract 1,46,69,324/ (iii)Interest from (iv)Interest on IT refund 19. The Tribunal has held this issue in favour of the assessee in the following manner: 28.From the record, we found that the business activities of the assessee comprises of shippi business, logistics business and oilfield business. The shipping and logistics business is being carried out by the assessee itself whereas the oilfield business is being carried out by the assessee through its subsidiary. We had also gone through the M assessee and found that the main object of the assessee is “to enter into and conduct the business of owning and/ or leasing and/ or hiring and/ or operating all types of onshore and offshore drilling rings.” Thus, it is cle memorandum, it was main assessee. The assessee was carrying out business of drilling oil rigs through its subsidiary for this purpose the assessee borrowed money and advanced the same as ICDs to its subsidiary to carry out the drilling business. Thus, the business so carried out by the subsidiary was as per the main objects of the assessee company. The assessee had not given ICD to its subsidiary for sum to EOSIL as ICDs. The assessee earned interest on the said ICDs and the same was offered to tax. It has been stated that the facts and circumstances are identical to the preceding years, wherein it has been held as business income by Hon'ble ITAT. The break up of interest income is as under: - (i) Interest from ICDs to wholly owned subsidiaries which undertake Oil Drilling for assessee 82,23,73,747/- (ii) Interest from BID deposits with ESIL for getting the shipping business under contract 1,46,69,324/- (iii)Interest from banks - INR 1,98,73,696/- (iv)Interest on IT refund -INR 3,10,47,500/- 19. The Tribunal has held this issue in favour of the assessee in the following manner:- 28.From the record, we found that the business activities of the assessee comprises of shippi business, logistics business and oilfield business. The shipping and logistics business is being carried out by the assessee itself whereas the oilfield business is being carried out by the assessee through its subsidiary. We had also gone through the Memorandum of Association of the assessee and found that the main object of the assessee is “to enter into and conduct the business of owning and/ or leasing and/ or hiring and/ or operating all types of onshore and offshore drilling rings.” Thus, it is clear that even as per the memorandum, it was main objection of the assessee. The assessee was carrying out business of drilling oil rigs through its subsidiary for this purpose the assessee borrowed money and advanced the same as ICDs to its subsidiary to rry out the drilling business. Thus, the business so carried out by the subsidiary was as per the main objects of the assessee company. The assessee had not given ICD to its subsidiary for M/s Essar Shipping Ltd. 7 ITA No. 87/Mum/2023 e earned interest on the said ICDs and the same was offered to tax. It has been stated that the facts and circumstances are identical to the preceding years, wherein it has been held as business income by Hon'ble ITAT. The break up of (i) Interest from ICDs to wholly owned subsidiaries which undertake Oil Drilling for assessee - INR (ii) Interest from BID deposits with ESIL for getting the shipping business under contract - INR 19. The Tribunal has held this issue in favour of the 28.From the record, we found that the business activities of the assessee comprises of shipping business, logistics business and oilfield business. The shipping and logistics business is being carried out by the assessee itself whereas the oilfield business is being carried out by the assessee through its subsidiary. We had also gone emorandum of Association of the assessee and found that the main object of the assessee is “to enter into and conduct the business of owning and/ or leasing and/ or hiring and/ or operating all types of onshore and offshore drilling ar that even as per the objection of the assessee. The assessee was carrying out business of drilling oil rigs through its subsidiary for this purpose the assessee borrowed money and advanced the same as ICDs to its subsidiary to rry out the drilling business. Thus, the business so carried out by the subsidiary was as per the main objects of the assessee company. The assessee had not given ICD to its subsidiary for the purpose of earning interest income. Accordingly, the income on treated as business income only, since it has been earned in the course of the business of the assessee and forms part of the business of the company. 29.From the record, we found that during the previous year relevant to assessment yea consideration, the assessee has earned interest income from ICDs of Rs. 60.16 crores and from banks of Rs. 1.81 crores. The break up of the interest income is as under: The money advanced to companies at Sr. No. 1 to 4 are group/ subsidiary comp has been given for The A.O. has not brought any material on record to suggest that the assessee had given intercorporate deposit to subsidiaries for earning interest income. It is also not the case of AO th given its surplus funds to subsidiary for earning interest income. Thus, the income on ICD is to be assessed under the head „business income. Similar view has been taken by the Coordinate Bench of the ITAT, Mumbai in the case of Tolani Private Limited in ITA No. 5562/Mum/2013, order dated 04/01/2018 wherein the assessee was engaged in operation of ships had advanced loan/ICD to its subsidiary for acquiring ship, it was held that even on the basis of commercial the purpose of earning interest income. Accordingly, the income on such ICD has to be treated as business income only, since it has been earned in the course of the business of the assessee and forms part of the business of the company. 29.From the record, we found that during the previous year relevant to assessment yea consideration, the assessee has earned interest income from ICDs of Rs. 60.16 crores and from banks of Rs. 1.81 crores. The break up of the interest income is as under:- The money advanced to companies at Sr. No. 1 to 4 are group/ subsidiary companies and the money has been given for business purpose of assessee. The A.O. has not brought any material on record to suggest that the assessee had given intercorporate deposit to subsidiaries for earning interest income. It is also not the case of AO that the assessee had given its surplus funds to subsidiary for earning interest income. Thus, the income on ICD is to be assessed under the head „business income. Similar view has been taken by the Coordinate Bench of the ITAT, Mumbai in the case of Tolani Private Limited in ITA No. 5562/Mum/2013, order dated 04/01/2018 wherein the assessee was engaged in operation of ships had advanced loan/ICD to its subsidiary for acquiring ship, it was held that even on the basis of commercial M/s Essar Shipping Ltd. 8 ITA No. 87/Mum/2023 the purpose of earning interest income. such ICD has to be treated as business income only, since it has been earned in the course of the business of the assessee and forms part of the business of the 29.From the record, we found that during the previous year relevant to assessment year under consideration, the assessee has earned interest income from ICDs of Rs. 60.16 crores and from banks of Rs. 1.81 crores. The break up of the The money advanced to companies at Sr. No. 1 to 4 anies and the money business purpose of assessee. The A.O. has not brought any material on record to suggest that the assessee had given intercorporate deposit to subsidiaries for earning interest income. at the assessee had given its surplus funds to subsidiary for earning interest income. Thus, the income on ICD is to be assessed under the head „business income.‟ Similar view has been taken by the Coordinate Bench of the ITAT, Mumbai in the case of Tolani Private Limited in ITA No. 5562/Mum/2013, order dated 04/01/2018 wherein the assessee was engaged in operation of ships had advanced loan/ICD to its subsidiary for acquiring ship, it was held that even on the basis of commercial expediency, the assessee w subsidiary, the interest income earned on such loans/ICD is liable to be assessed as income under the head “business income” and not under the head “income from other sources”. 30. With regard to bank interest income amounting to Rs. 1,81,44,909/ on margin money which the assessee was required to keep with banks as per terms of sanction, hence the same is also for purpose of business. The money so kept with the bank as margin money was out of business com sweet will of the assessee, therefore, the interest earned on such margin money is also liable to be taxed as business income. 20. Thus, following the aforesaid order of the Tribunal, we hold that interest on ICDs received from s company is to be assessed under the head business income and not income from other sources. Accordingly, the order of Ld. CIT(A) is confirmed and this grounds raised by the revenue are dismissed. 6.2 The issue in dispute raised by the Revenue in the year under consideration being identical to the decision of the Tribunal in the case of the assessee for AY 2015 the same, the ground No. 1 of the appeal of the Revenue dismissed. 7. The ground Nos the allowance of interest expenditure of Rs.165,86,54,753/ business expenditure u/s 36(1)(iii) of the Act. The Assessing Officer disallowed the interest on borrowed funds borrowed funds were Ld. CIT(A) followed the finding of the ITAT for AY 2013 expediency, the assessee was bound to assist its subsidiary, the interest income earned on such loans/ICD is liable to be assessed as income under the head “business income” and not under the head “income from other sources”. 30. With regard to bank interest income amounting . 1,81,44,909/-, the same has been received on margin money which the assessee was required to keep with banks as per terms of sanction, hence the same is also for purpose of business. The money so kept with the bank as margin money was out of business compulsion and not as per the sweet will of the assessee, therefore, the interest earned on such margin money is also liable to be taxed as business income. 20. Thus, following the aforesaid order of the Tribunal, we hold that interest on ICDs received from subsidiary company is to be assessed under the head business income and not income from other sources. Accordingly, the order of Ld. CIT(A) is confirmed and this grounds raised by the revenue are dismissed.” The issue in dispute raised by the Revenue in the year under consideration being identical to the decision of the Tribunal in the case of the assessee for AY 2015-16, therefore respectfully following the ground No. 1 of the appeal of the Revenue s. 2 and 3 of the appeal of the Revenue relate the allowance of interest expenditure of Rs.165,86,54,753/ business expenditure u/s 36(1)(iii) of the Act. The Assessing Officer disallowed the interest on borrowed funds on the ground borrowed funds were not used for the purpose of the business. The Ld. CIT(A) followed the finding of the ITAT for AY 2013 M/s Essar Shipping Ltd. 9 ITA No. 87/Mum/2023 as bound to assist its subsidiary, the interest income earned on such loans/ICD is liable to be assessed as income under the head “business income” and not under the 30. With regard to bank interest income amounting , the same has been received on margin money which the assessee was required to keep with banks as per terms of sanction, hence the same is also for purpose of business. The money so kept with the bank as margin money pulsion and not as per the sweet will of the assessee, therefore, the interest earned on such margin money is also liable to be 20. Thus, following the aforesaid order of the Tribunal, ubsidiary company is to be assessed under the head business income and not income from other sources. Accordingly, the order of Ld. CIT(A) is confirmed and this grounds The issue in dispute raised by the Revenue in the year under consideration being identical to the decision of the Tribunal in the therefore respectfully following the ground No. 1 of the appeal of the Revenue is he appeal of the Revenue relate to the allowance of interest expenditure of Rs.165,86,54,753/- as business expenditure u/s 36(1)(iii) of the Act. The Assessing Officer on the ground that used for the purpose of the business. The Ld. CIT(A) followed the finding of the ITAT for AY 2013-14 in ITA No. 7371/Mum/2017 , held that expenditure in respect of loans which are utilized for investment subsidiaries, aircraft leas to subsidiaries is allowable expenditure u/s 36(1)(iii) of the Act. 7.1 We have heard rival submissions of the parties on the issue in dispute and perused the relevant material on record. As far as borrowed funds utilized for ICDs to subsidiaries, we have also held the interest income received as business income while dealing ground No. 1 of the appeal of the Revenue and therefore any expenditure on interest related to the business as business expenditure. However, borrowed fund investment in subsidiaries and any income arising from there would be liable either dividend income in the hands of the assessee or capital gain and therefore, expenditure related to the business of the assessee error on the part of the Ld. CIT(A) facts is required. Therefore, we feel it appropriate to restore this issue back to the file of the Ld. CIT(A) for identifying interest expenditure proportionate to the ICDs to subsidiaries a of aircraft taken on utilized for investment in subsidiaries which is an issue which could be examined while disallowance u/s 14A of the Act . The Ld. CIT(A) shall decide the issue in dispute in accordance with law allowing adequate opportunity of held that expenditure in respect of loans which are utilized for investment subsidiaries, aircraft leas s allowable expenditure u/s 36(1)(iii) of the Act. We have heard rival submissions of the parties on the issue in ispute and perused the relevant material on record. As far as borrowed funds utilized for ICDs to subsidiaries, we have also held the interest income received as business income while dealing ground No. 1 of the appeal of the Revenue and therefore any nditure on interest related to the business income as business expenditure. However, borrowed fund if any investment in subsidiaries would be in the nature of the investment any income arising from there would be liable either dividend income in the hands of the assessee or capital gain and therefore, expenditure connected thereon cannot be held to be related to the business of the assessee. This appears to be a n the part of the Ld. CIT(A) , hence proper inve herefore, we feel it appropriate to restore this issue back to the file of the Ld. CIT(A) for identifying interest expenditure proportionate to the ICDs to subsidiaries a of aircraft taken on lease vis-à-vis interest on borrowed funds utilized for investment in subsidiaries which is an issue which could be examined while disallowance u/s 14A of the Act . The Ld. shall decide the issue in dispute in accordance with law allowing adequate opportunity of being heard to the assessee. The M/s Essar Shipping Ltd. 10 ITA No. 87/Mum/2023 held that expenditure in respect of loans which are utilized for investment subsidiaries, aircraft lease, giving ICDs s allowable expenditure u/s 36(1)(iii) of the Act. We have heard rival submissions of the parties on the issue in ispute and perused the relevant material on record. As far as borrowed funds utilized for ICDs to subsidiaries, we have also held the interest income received as business income while dealing ground No. 1 of the appeal of the Revenue and therefore any income is allowable if any utilized for in the nature of the investment any income arising from there would be liable either as dividend income in the hands of the assessee or capital gain and cannot be held to be appears to be a factual , hence proper investigation of herefore, we feel it appropriate to restore this issue back to the file of the Ld. CIT(A) for identifying interest expenditure proportionate to the ICDs to subsidiaries and interest borrowed funds utilized for investment in subsidiaries which is an issue which could be examined while disallowance u/s 14A of the Act . The Ld. shall decide the issue in dispute in accordance with law after being heard to the assessee. The ground Nos. 2 and 3 of the appeal of the Revenue are accordingly allowed for statistical purposes. 8. The ground No. 4 of the appeal of the Revenue relates to interest expenditure of Rs.23,69,58,913/ apportioned common interest of Rs.31,91,09,601/ revenue earned from on the basis of turnover which was based on the ratio of value of assets involved activities. The Ld. CIT(A) deleted the addition following ITAT decision in assessee’s own case for assessme apportioned the common interest based on cost of financing and not on the basis of turnover. The r reproduced as under: “8.3 Decision: I have considered the order of the AO, submissions of the appellant vis Appellate Authorities. Similar issue has been decided by the Hon'ble Tribunal in the appellant's own case order for A.Y. 2013 holding that interest expenditure is periodic cost of borrowing incurred for the purpose of financing business activities. Further, my predecessor in the appellate orders for AY 2012 order of the Hon'ble ITAT supra. Therefore, common interest expenses are to be apportioned on the basis of cost of financing i.e., on the value of assets and not on the basis of turnover. In the present A.Y. the AO has allocated the common interest expenses on the basis of turnover and added interest of Rs23,69,58,913/ income of the non Respectfully following the orders of the Appellate Authorities, as highlighted above, it is held that the . 2 and 3 of the appeal of the Revenue are accordingly allowed for statistical purposes. The ground No. 4 of the appeal of the Revenue relates to terest expenditure of Rs.23,69,58,913/-. The Assessing Office common interest of Rs.31,91,09,601/ evenue earned from ‘tonnage scheme’ and ‘non-tonnage activities on the basis of turnover and rejected the assessee’s apportionment which was based on the ratio of value of assets involved activities. The Ld. CIT(A) deleted the addition following ITAT decision in assessee’s own case for assessment year 2013 the common interest based on cost of financing and not on the basis of turnover. The relevant finding of the reproduced as under: 8.3 Decision: I have considered the order of the AO, submissions of the appellant vis-à-vis the decisions of the Appellate Authorities. Similar issue has been decided by the Hon'ble Tribunal in the appellant's own case order for A.Y. 2013-14 in /TA No.7371/Mum/2017, holding that interest expenditure is periodic cost of borrowing incurred for the purpose of financing business activities. Further, my predecessor in the appellate orders for AY 2012-13, 2015-16 and 2016-17 has followed the order of the Hon'ble ITAT supra. Therefore, common interest expenses are to be apportioned on the basis of cost of financing i.e., on the value of assets and not on the basis of turnover. In the present A.Y. the AO has e common interest expenses on the basis of turnover and added interest of Rs23,69,58,913/ income of the non-tonnage activity of the appellant. Respectfully following the orders of the Appellate Authorities, as highlighted above, it is held that the M/s Essar Shipping Ltd. 11 ITA No. 87/Mum/2023 . 2 and 3 of the appeal of the Revenue are accordingly The ground No. 4 of the appeal of the Revenue relates to e Assessing Officer common interest of Rs.31,91,09,601/- in respect of tonnage activities’ and rejected the assessee’s apportionment which was based on the ratio of value of assets involved in those activities. The Ld. CIT(A) deleted the addition following ITAT nt year 2013-14 and the common interest based on cost of financing and elevant finding of the Ld. CIT(A) is 8.3 Decision: I have considered the order of the AO, vis the decisions of the Appellate Authorities. Similar issue has been decided by the Hon'ble Tribunal in the appellant's own case vide its 14 in /TA No.7371/Mum/2017, holding that interest expenditure is periodic cost of borrowing incurred for the purpose of financing business activities. Further, my predecessor in the appellate orders 17 has followed the order of the Hon'ble ITAT supra. Therefore, common interest expenses are to be apportioned on the basis of cost of financing i.e., on the value of assets and not on the basis of turnover. In the present A.Y. the AO has e common interest expenses on the basis of turnover and added interest of Rs23,69,58,913/-as tonnage activity of the appellant. Respectfully following the orders of the Appellate Authorities, as highlighted above, it is held that the addition is not tenable. The Appellant has claimed that it has apportioned the common interest on the basis of value of assets. The ground is allowed, subject to verification of the Appellant's claim by the AO, at the time of giving effect to this order. 8.1 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that the Ld. CIT(A) has followed the binding precedent on the issue in dispute in the case of the assessee itself any error in the order of the Ld. CIT(A) .Accordingly, we uphold the same. accordingly dismissed. 9. The ground No business income computed under current year losses. The ground No admitting the additional ground on the issue in dispute CIT(A) has admitted the additional ground of appeal following binding precedent of the Hon’ble Supreme Court in the case of Jute Corporation of India Ltd. (supra), National Thermal Power Company Ltd. (supra) and decision of the Hon’ble Bombay High Court in the case of Pruthvi Brokers relevant finding of the Ld. CIT(A) is reproduced as under: “14.6 Decision on Admission of Additional Grounds: The Appellant has raised the additional grounds on the issue of payment of income income and foreign dividend income when actually set off against current year's losses. I have tion is not tenable. The Appellant has claimed that it has apportioned the common interest on the basis of value of assets. The ground is allowed, subject to verification of the Appellant's claim by the AO, at the time of giving effect to this order.” We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that the Ld. CIT(A) has followed the binding precedent on the issue in dispute in the case of the assessee itself , therefore, we do any error in the order of the Ld. CIT(A) on the issue in dispute we uphold the same. The ground No. 4 of the appeal is accordingly dismissed. The ground Nos. 5 to 5.3 of the appeal relate business income computed under tonnage tax scheme current year losses. The ground Nos. 5.1 to 5.3 relate admitting the additional ground on the issue in dispute CIT(A) has admitted the additional ground of appeal following ding precedent of the Hon’ble Supreme Court in the case of Jute Corporation of India Ltd. (supra), National Thermal Power Company Ltd. (supra) and decision of the Hon’ble Bombay High Court in the case of Pruthvi Brokers & Shareholders (P) Ltd. (supra). The relevant finding of the Ld. CIT(A) is reproduced as under: Decision on Admission of Additional Grounds: The Appellant has raised the additional grounds on the issue of payment of income-tax on tonnage business income and foreign dividend income when these were actually set off against current year's losses. I have M/s Essar Shipping Ltd. 12 ITA No. 87/Mum/2023 tion is not tenable. The Appellant has claimed that it has apportioned the common interest on the basis of value of assets. The ground is allowed, subject to verification of the Appellant's claim by the AO, at the time We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that the Ld. CIT(A) has followed the binding precedent on the issue in therefore, we do not find on the issue in dispute The ground No. 4 of the appeal is s. 5 to 5.3 of the appeal relate to set off of tax scheme against relate mainly to admitting the additional ground on the issue in dispute. . The Ld. CIT(A) has admitted the additional ground of appeal following ding precedent of the Hon’ble Supreme Court in the case of Jute Corporation of India Ltd. (supra), National Thermal Power Company Ltd. (supra) and decision of the Hon’ble Bombay High Court in the & Shareholders (P) Ltd. (supra). The relevant finding of the Ld. CIT(A) is reproduced as under: Decision on Admission of Additional Grounds: The Appellant has raised the additional grounds on the tax on tonnage business these were actually set off against current year's losses. I have considered the submissions of the Appellant as also the comments of the AO in this regard. While requesting for admission of the additional grounds, it has been submitted that the appellant these grounds while filling the Form no. 35 and that the new AR noticed the omission. Such omission was neither willful nor unreasonable. On perusal, I find that grounds are legal and basic facts are already on records. The AO has objected to the admission of these grounds stating that the appellant should have filed revised return of income correcting its claim of refund. Also, the AO has relied on the decision of Hon'ble Supreme Court in the case of, Goetze India Ltd vs CIT 284 The additional grounds relate to error on the part of the appellant while filing the return of income in calculating tax on tonnage income and foreign dividend income at special rate when it was already set off against other current losses of the s return of income was NIL. It is stated that the claim has been made immediately after realization of omission. The issue before Hon'ble Supreme Court in the case of Goetze India (supra) was limited to the powers of the AO. Hon'ble Supreme Court has discussed the powers of appellate authorities to allow additional ground in Jute Corporation of India Ltd 187 IT 688 (SC) and National Thermal Power Co Lid 229 /7R 383 (SC). Än additional ground can be urged before the appella provided. evidence is on record. Further, the Hon'ble jurisdictional High Court in the case of CIT vs Pruthvi Brokers & Shareholders Pvt. as under - PARTIME "An assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them. The appellate authorities have the discretion to permit such additional claims to be raised. have jurisdiction to deal grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the retum was filed. The words "could not have been raised" must be construed liberally considered the submissions of the Appellant as also the comments of the AO in this regard. While requesting for admission of the additional grounds, it has been submitted that the appellant inadvertently missed out these grounds while filling the Form no. 35 and that the new AR noticed the omission. Such omission was neither willful nor unreasonable. On perusal, I find that grounds are legal and basic facts are already on records. The AO objected to the admission of these grounds stating that the appellant should have filed revised return of income correcting its claim of refund. Also, the AO has relied on the decision of Hon'ble Supreme Court in the case of, Goetze India Ltd vs CIT 284 ITR 323. The additional grounds relate to error on the part of the appellant while filing the return of income in calculating tax on tonnage income and foreign dividend income at special rate when it was already set off against other current losses of the same year and total income as per return of income was NIL. It is stated that the claim has been made immediately after realization of omission. The issue before Hon'ble Supreme Court in the case of Goetze India (supra) was limited to the powers of the AO. Hon'ble Supreme Court has discussed the powers of appellate authorities to allow additional ground in Jute Corporation of India Ltd 187 IT 688 (SC) and National Thermal Power Co Lid 229 /7R 383 (SC). Än additional ground can be urged before the appellate authorities provided. evidence is on record. Further, the Hon'ble jurisdictional High Court in the case of CIT vs Pruthvi Brokers & Shareholders Pvt. Ltd. 349 IT 336 on) as held PARTIME "An assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them. The appellate authorities have the discretion to permit such additional claims to be raised. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the retum was filed. The words "could not have been raised" must be construed liberally M/s Essar Shipping Ltd. 13 ITA No. 87/Mum/2023 considered the submissions of the Appellant as also the comments of the AO in this regard. While requesting for admission of the additional grounds, it has been inadvertently missed out these grounds while filling the Form no. 35 and that the new AR noticed the omission. Such omission was neither willful nor unreasonable. On perusal, I find that grounds are legal and basic facts are already on records. The AO objected to the admission of these grounds stating that the appellant should have filed revised return of income correcting its claim of refund. Also, the AO has relied on the decision of Hon'ble Supreme Court in the The additional grounds relate to error on the part of the appellant while filing the return of income in calculating tax on tonnage income and foreign dividend income at special rate when it was already set off against other ame year and total income as per return of income was NIL. It is stated that the claim has been made immediately after realization of omission. The issue before Hon'ble Supreme Court in the case of Goetze India (supra) was limited to the powers of the AO. The Hon'ble Supreme Court has discussed the powers of appellate authorities to allow additional ground in Jute Corporation of India Ltd 187 IT 688 (SC) and National Thermal Power Co Lid 229 /7R 383 (SC). Än additional te authorities provided. evidence is on record. Further, the Hon'ble jurisdictional High Court in the case of CIT vs Pruthvi Ltd. 349 IT 336 on) as held "An assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them. The appellate authorities have the discretion to permit such The appellate authorities not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the retum was filed. The words "could not have been raised" must be construed liberally and not strictly. There may be several factors justifying the raising of a new plea in an appeal and each case must be considered on its own facts. Held, dismissing the appeal, that the orders of the Commissioner (Appeals) and the Tribunal clearly indicated that b exercised their jurisdiction to consider the additional claim. The conclusion that the error in not claiming the deduction in the return of income was inadvertent could not be faulted for more than one reason. It was a fin of fact which could not be termed perverse. nothing on record that militated against the finding. The Revenue had not the omission was deliberate or mala fide. Both the appellate authorities had themselve additional claim and allowed it. They had not remanded the matter to the Assessing Officer to consider it. Both the orders expressly directed the Assessing Officer to allow the deduction of Rs. 40 lakhs under section 43B of the Income-tax therefore, now only to compute the assessee's tax liability which he must do in accordance with the orders allowing the assessee a deduction of Rs. 40 lakhs tinder 43B". In Siva Equipment Pvt. Ltd. 119 taxmann. Hon'ble Jurisdictional High Court has held that the CIT(A) has jurisdiction to deal with an additional ground which was available when return of income was filed. It is observed that my predecessor had allowed similar additional grounds to be and 2016-17. Following the available judicial precedents and the decisions of Ld. CIT(A) in the case of the appellant on the subject, I find the additional grounds of appeal to be admissible. 9.1 Since, the Ld. CIT(A) has fo the issue in dispute strictly. There may be several factors justifying the raising of a new plea in an appeal and each case must be considered on its own facts. Held, dismissing the appeal, that the orders of the Commissioner (Appeals) and the Tribunal clearly indicated that both the appellate authorities had exercised their jurisdiction to consider the additional claim. The conclusion that the error in not claiming the deduction in the return of income was inadvertent could not be faulted for more than one reason. It was a fin of fact which could not be termed perverse. There was nothing on record that militated against the finding. The Revenue had not suggested much less established that the omission was deliberate or mala fide. Both the appellate authorities had themselves considered the additional claim and allowed it. They had not remanded the matter to the Assessing Officer to consider it. Both the orders expressly directed the Assessing Officer to allow the deduction of Rs. 40 lakhs under section 43B of the tax Act, 1961. The Assessing Officer had, therefore, now only to compute the assessee's tax liability which he must do in accordance with the orders allowing the assessee a deduction of Rs. 40 lakhs tinder In Siva Equipment Pvt. Ltd. 119 taxmann.com 472. the Hon'ble Jurisdictional High Court has held that the CIT(A) has jurisdiction to deal with an additional ground which was available when return of income was filed. It is observed that my predecessor had allowed similar additional grounds to be raised for AY 2012-13, 2015 17. Following the available judicial precedents and the decisions of Ld. CIT(A) in the case of the appellant on the subject, I find the additional grounds of appeal to be admissible.” Since, the Ld. CIT(A) has followed the binding precedent the issue in dispute , therefore, we do not find any error in the M/s Essar Shipping Ltd. 14 ITA No. 87/Mum/2023 strictly. There may be several factors justifying the raising of a new plea in an appeal and each case Held, dismissing the appeal, that the orders of the Commissioner (Appeals) and the Tribunal clearly oth the appellate authorities had exercised their jurisdiction to consider the additional claim. The conclusion that the error in not claiming the deduction in the return of income was inadvertent could not be faulted for more than one reason. It was a finding There was nothing on record that militated against the finding. The suggested much less established that the omission was deliberate or mala fide. Both the s considered the additional claim and allowed it. They had not remanded the matter to the Assessing Officer to consider it. Both the orders expressly directed the Assessing Officer to allow the deduction of Rs. 40 lakhs under section 43B of the Act, 1961. The Assessing Officer had, therefore, now only to compute the assessee's tax liability which he must do in accordance with the orders allowing the assessee a deduction of Rs. 40 lakhs tinder-section com 472. the Hon'ble Jurisdictional High Court has held that the CIT(A) has jurisdiction to deal with an additional ground which It is observed that my predecessor had allowed similar 13, 2015-16 17. Following the available judicial precedents and the decisions of Ld. CIT(A) in the case of the appellant on the subject, I find the additional grounds of llowed the binding precedents on therefore, we do not find any error in the order of the Ld. CIT(A) and accordingly the ground No the Revenue are dismissed. 9.2 As far as ground No. 5 allowed the set off of losses under the other heads against the income from the tonnage “14.7 Decision on Merits on Grounds of AppealNos. 13 and 14: I have considered the submissions of the apPellant merits and also considered the its letter filing additional grounds, the Appellant has explained how the discrepandy has occurred. The tonnage business income of Rs 8,40,72,255/ included in while arriving at the tot and the business income was set off against losses under the head income from other sources in the relevant schedule of the return ofincome. However, While computing tax liability in Schedule Part B Appellant has apparently co s spèciar ralecincome and calculated tay of R$ 2,86,76, 1601-thereof. The refund claim has been accordingly, reduced. In its submission, the Appellant has referred to provision of sub section 70(1) and 71(1) which provides for set off of loss from one source against income from another source under the same head of income and losses under one head of income against the income under other head of income to explain its claim that no tax was leviable separately on tonnage business i once it was set off against losses. The Appellant has offered its shipping income under provisions of Chapter XII 115VA, income from business of operating qualifying ships can be computed in accordance with the provision of the said chapter and such income shall be considered profits and gains from such business chargeable under the head "profits and gains of business or profession", notwithstanding anything to the contrary contained in order of the Ld. CIT(A) and accordingly the ground No the Revenue are dismissed. As far as ground No. 5 is concerned, the Ld. CIT(A) has allowed the set off of losses under the other heads against the income from the tonnage tax scheme observing as under: 14.7 Decision on Merits on Grounds of AppealNos. 13 I have considered the submissions of the apPellant merits and also considered the AO's report. In Para IV of its letter filing additional grounds, the Appellant has explained how the discrepandy has occurred. The tonnage business income of Rs 8,40,72,255/- has been included in while arriving at the total business income and the business income was set off against losses under the head income from other sources in the relevant schedule of the return ofincome. However, While computing tax liability in Schedule Part B - TTI, the Appellant has apparently considered the tonnage income s spèciar ralecincome and calculated tay of R$ 2,86,76, thereof. The refund claim has been accordingly, reduced. In its submission, the Appellant has referred to provision of sub section 70(1) and 71(1) which provides et off of loss from one source against income from another source under the same head of income and losses under one head of income against the income under other head of income to explain its claim that no tax was leviable separately on tonnage business i once it was set off against losses. The Appellant has offered its shipping income under provisions of Chapter XII-G of the Act. As per section 115VA, income from business of operating qualifying ships can be computed in accordance with the provision of the said chapter and such income shall be considered profits and gains from such business chargeable under the head "profits and gains of business or profession", notwithstanding anything to the contrary contained in M/s Essar Shipping Ltd. 15 ITA No. 87/Mum/2023 order of the Ld. CIT(A) and accordingly the ground Nos. 5.1 to 5.3 of concerned, the Ld. CIT(A) has allowed the set off of losses under the other heads against the scheme observing as under: 14.7 Decision on Merits on Grounds of AppealNos. 13 I have considered the submissions of the apPellant de AO's report. In Para IV of its letter filing additional grounds, the Appellant has explained how the discrepandy has occurred. The has been al business income and the business income was set off against losses under the head income from other sources in the relevant schedule of the return ofincome. However, While TTI, the nsidered the tonnage income s spèciar ralecincome and calculated tay of R$ 2,86,76, thereof. The refund claim has been accordingly, reduced. In its submission, the Appellant has referred to provision of sub section 70(1) and 71(1) which provides et off of loss from one source against income from another source under the same head of income and losses under one head of income against the income under other head of income to explain its claim that no tax was leviable separately on tonnage business income, The Appellant has offered its shipping income under G of the Act. As per section 115VA, income from business of operating qualifying ships can be computed in accordance with the provisions of the said chapter and such income shall be considered profits and gains from such business chargeable under the head "profits and gains of business or profession", notwithstanding anything to the contrary contained in sections in sections 28 to 43C. In operating qualifying ships is one of the sources of income under the head "profits and gains of business or profession". It is liable to be set off against losses from other sources of income under the same head /other heads of income the Act. Further, it is seen that the Ld. CIT(A) allowed similar issue vide his order dated 07.09.2022 for AY 2012-13. The issue is therefore allowed, subject to verification and re from various sources under the head 'profits and gains of business', 'other sources' etc. in the light of decisions at paras 5.3 and 7.3.2 of this order. The additional ground of appeal no. 1 additional ground of app statement about CIT(A's powers and does not need specific adjudication. 9.3 Before us, the Ld. Counsel of the assessee submitted that identical issue is involved in assessment year 2012 9.4 We have heard rival submissio dispute and perused the relevant material on record. As far as provisions of section 71(2) of the Act computation under any head Gain”, is a loss and t head “Capital Gains”, such loss may be set off that assessment year under any head of income including the head ‘ capital Gain. In the case income from qualifying ships has been computed under the presumptive taxation scheme of tonnage tax scheme, which has been deemed to be the profit and gains of such business chargeable to tax under the head “ profit and gains of the business or profession’ as per the provisions of section 115VA of the sections in sections 28 to 43C. Income from business of operating qualifying ships is one of the sources of income under the head "profits and gains of business or profession". It is liable to be set off against losses from sources of income under the same head /other heads of income as per the provisions of section 70/71 of the Act. Further, it is seen that the Ld. CIT(A) allowed similar issue vide his order dated 07.09.2022 for AY 13. The issue is therefore allowed, subject to verification and re-computation by AO of income/los from various sources under the head 'profits and gains of business', 'other sources' etc. in the light of decisions at paras 5.3 and 7.3.2 of this order. The additional ground of appeal no. 1 "(ground no. 13) is thus allowed. The additional ground of appeal no. 2 (ground no. 14) is a statement about CIT(A's powers and does not need specific adjudication.” Before us, the Ld. Counsel of the assessee submitted that identical issue is involved in assessment year 2012-13. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. As far as of section 71(2) of the Act are concerned, computation under any heads of the income other than the “Capital Gain”, is a loss and the assessee has income assessable u head “Capital Gains”, such loss may be set off against income for that assessment year under any head of income including the head In the case income from qualifying ships has been the presumptive taxation scheme of tonnage tax scheme, which has been deemed to be the profit and gains of such business chargeable to tax under the head “ profit and gains of the business or profession’ as per the provisions of section 115VA of the M/s Essar Shipping Ltd. 16 ITA No. 87/Mum/2023 come from business of operating qualifying ships is one of the sources of income under the head "profits and gains of business or profession". It is liable to be set off against losses from sources of income under the same head /other as per the provisions of section 70/71 of the Act. Further, it is seen that the Ld. CIT(A) allowed similar issue vide his order dated 07.09.2022 for AY 13. The issue is therefore allowed, subject to computation by AO of income/loss from various sources under the head 'profits and gains of business', 'other sources' etc. in the light of decisions at paras 5.3 and 7.3.2 of this order. The additional ground "(ground no. 13) is thus allowed. The 14) is a statement about CIT(A's powers and does not need Before us, the Ld. Counsel of the assessee submitted that 13. n of the parties on the issue in dispute and perused the relevant material on record. As far as net result of the of the income other than the “Capital he assessee has income assessable under the against income for that assessment year under any head of income including the head In the case income from qualifying ships has been the presumptive taxation scheme of tonnage tax scheme, which has been deemed to be the profit and gains of such business chargeable to tax under the head “ profit and gains of the business or profession’ as per the provisions of section 115VA of the Act. Therefore income computed under tonnage tax scheme for the year under consideration is available for set off against losses under any other head except capital gain as per the provisions of section 71(2) of the Act. Since, the head ‘income from income under the head of business or profession, w any error in the order of the Ld. CIT(A). appeal of the Revenue is dismissed. 10. The ground Nos set off of foreign dividend income of Rs.35,30,86,193/ current year losses. It was submitted that the assessee company earned dividend income u/s 115BBD of Rs.35,30,86,193/ However, due to assessee at the rate of 15% (plus surcharge at the rate of 10% and cess at the rate of 3%) for Rs.6,00,06,700/ income even after setting off the same against loss under the head income from other sources of Rs.43,20,98,387/ of the assessee submitted that sub begins with non-obstante clause restricting allowability of only expenditure or allowance and thus in the absence of any express provision for restriction on allowability of loss the said business loss of current year is allowable to be set off against such foreign dividend income. Moreover, section 115BBE of the Act relating to levy of tax on income from undisclosed sources was sp herefore income computed under tonnage tax scheme for the year under consideration is available for set off against losses under any other head except capital gain as per the provisions of section Since, in the case of the current year lo head ‘income from other sources’ have been set head of business or profession, w any error in the order of the Ld. CIT(A). Accordingly appeal of the Revenue is dismissed. s. 6 to 6.3 of the appeal of the Revenue relate set off of foreign dividend income of Rs.35,30,86,193/ . It was submitted that the assessee company earned dividend income u/s 115BBD of Rs.35,30,86,193/ e to assessee inadvertent, the assessee calculated tax (plus surcharge at the rate of 10% and cess at for Rs.6,00,06,700/- on this non- income even after setting off the same against loss under the head come from other sources of Rs.43,20,98,387/-. The Ld. Counsel of the assessee submitted that sub-section (2) of section 115BBD, obstante clause restricting allowability of only expenditure or allowance and thus in the absence of any express provision for restriction on allowability of loss the said business loss of current year is allowable to be set off against such foreign dividend income. Moreover, section 115BBE of the Act relating to levy of tax on income from undisclosed sources was sp M/s Essar Shipping Ltd. 17 ITA No. 87/Mum/2023 herefore income computed under tonnage tax scheme for the year under consideration is available for set off against losses under any other head except capital gain as per the provisions of section current year losses under have been set off against the head of business or profession, we do not find Accordingly, this ground of he appeal of the Revenue relate to set off of foreign dividend income of Rs.35,30,86,193/- against . It was submitted that the assessee company earned dividend income u/s 115BBD of Rs.35,30,86,193/-. inadvertent, the assessee calculated tax (plus surcharge at the rate of 10% and cess at -existing divided income even after setting off the same against loss under the head . The Ld. Counsel section (2) of section 115BBD, obstante clause restricting allowability of only expenditure or allowance and thus in the absence of any express provision for restriction on allowability of loss the said business loss of current year is allowable to be set off against such foreign dividend income. Moreover, section 115BBE of the Act relating to levy of tax on income from undisclosed sources was specifically amended to not allow set off of any loss while computing such income. Similar restriction is not provided is not provided u/s 115BBD of the Act for taxing dividend from specified foreign company. Thus, set off of business allowable. The Ld. Counsel further submitted that issue in dispute is covered in assessee’s own case for assessment year 2015 Further, same has been followed for assessment year 2016 2018-19. The relevant finding of the Tribunal in asse 2015-16 is reproduced as under: “33. We have heard both the parties at length on the issue, whether the foreign dividend income can be set off against the current year loss or not. The contention of Ld. DR was that the foreign dividend income is taxable u/s 115BBD and no adjustment against the losses is allowable in view of sub 115BBD. On the other hand, Ld. Counsel strong relied on the order of Tribunal in the case of Tata Motors Ltd. vs. DCIT (supra). In so far as Ld. CIT (A) admitted the additional ground, claim made before Ld. CIT (A) based on the provision of law that, foreign dividend income has to be set off against the current year loss. In support of, Ld. CIT (A) has relied on the judgment of Hon’ble Bombay High Court in the case of Pruthvi Brokeers & Shareholders Pvt. Ltd. 349 ITR 336 and held that there is no fetters on the powers of CIT (A) to entertain the claim which has not been claimed in the return of income 34. It is an undisputed fact that assessee loss of Rs. 103,44,94,701/ also shown foreign dividend income of Rs. 10,98,56,941/ dividend income received from specified foreign companies at a lower rate of 15%. Sect as under:- amended to not allow set off of any loss while computing such income. Similar restriction is not provided is not provided u/s 115BBD of the Act for taxing dividend from specified foreign company. Thus, set off of business loss against dividend i allowable. The Ld. Counsel further submitted that issue in dispute is covered in assessee’s own case for assessment year 2015 Further, same has been followed for assessment year 2016 19. The relevant finding of the Tribunal in asse 16 is reproduced as under: have heard both the parties at length on the issue, whether the foreign dividend income can be set off against the current year loss or not. The contention of Ld. DR was that the foreign dividend income is taxable u/s 115BBD and no adjustment against the current year losses is allowable in view of sub-section (2) of section 115BBD. On the other hand, Ld. Counsel strong relied on the order of Tribunal in the case of Tata Motors Ltd. vs. DCIT (supra). In so far as Ld. CIT (A) admitted the additional ground, we find that it was purely a legal claim made before Ld. CIT (A) based on the provision of law that, foreign dividend income has to be set off against the current year loss. In support of, Ld. CIT (A) has relied on the judgment of Hon’ble Bombay High in the case of Pruthvi Brokeers & Shareholders Pvt. Ltd. 349 ITR 336 and held that there is no fetters on the powers of CIT (A) to entertain the claim which has not been claimed in the return of income. 34. It is an undisputed fact that assessee had declared loss of Rs. 103,44,94,701/- in the return of income. It has also shown foreign dividend income of Rs. 10,98,56,941/- u/s 115BBD, which relates to taxing of dividend income received from specified foreign companies at a lower rate of 15%. Section 115BBD reads M/s Essar Shipping Ltd. 18 ITA No. 87/Mum/2023 amended to not allow set off of any loss while computing such income. Similar restriction is not provided is not provided u/s 115BBD of the Act for taxing dividend from specified foreign loss against dividend income is allowable. The Ld. Counsel further submitted that issue in dispute is covered in assessee’s own case for assessment year 2015-16. Further, same has been followed for assessment year 2016-17 and 19. The relevant finding of the Tribunal in assessment year have heard both the parties at length on the issue, whether the foreign dividend income can be set off against the current year loss or not. The contention of Ld. DR was that the foreign dividend income is taxable u/s current year section (2) of section 115BBD. On the other hand, Ld. Counsel strong relied on the order of Tribunal in the case of Tata Motors Ltd. vs. DCIT (supra). In so far as Ld. CIT (A) admitted the we find that it was purely a legal claim made before Ld. CIT (A) based on the provision of law that, foreign dividend income has to be set off against the current year loss. In support of, Ld. CIT (A) has relied on the judgment of Hon’ble Bombay High in the case of Pruthvi Brokeers & Shareholders Pvt. Ltd. 349 ITR 336 and held that there is no fetters on the powers of CIT (A) to entertain the claim which has not had declared in the return of income. It has also shown foreign dividend income of Rs. u/s 115BBD, which relates to taxing of dividend income received from specified foreign ion 115BBD reads "115BBD. (1) Where the total income of an assesses, being an Indian company, includes any income by way of dividends declared, distributed or paid by a specified foreign company, the income aggregate of (a) the amount of income way of such dividends, at the rate of fifteen per cent; and (b) the amount of income would have been chargeable had its total income been reduced by the aforesaid inco (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance, shall be allowed to the assessee under any provision of this Act in computing its income by way of dividends referred to in subsection (1). (3) In this section, (i) "dividends" shall have the same meaning as is given to "dividend" in clause (22) of section 2 but shall not include sub clause (e) thereof; (ii) "specified foreign company" means a foreign company in which the more in nominal value of the equity share capital of the company." 35. The above section clearly provides that where the ‘total income’ of the assessee includes income by way of dividend declared, distributed or foreign company, then such dividend income shall be subject to tax at 15% (plus applicable surcharge, and cess) and balance part of the total income, that is, as reduced by foreign dividend income would be subjected to tax at the prevai 36. The ‘total income’ is defined in section 2(25) of the Act, which reads as under: "115BBD. (1) Where the total income of an assesses, being an Indian company, includes any income by way of dividends declared, distributed or paid by a specified foreign company, the income-tax payable shall be the aggregate of— (a) the amount of income-tax calculated on the income by way of such dividends, at the rate of fifteen per cent; and (b) the amount of income-tax with which the assesses, would have been chargeable had its total income been reduced by the aforesaid income by way of dividends. (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance, shall be allowed to the assessee under any provision of this Act in computing its income by way of dividends n subsection (1). (3) In this section,— (i) "dividends" shall have the same meaning as is given to "dividend" in clause (22) of section 2 but shall not include sub clause (e) thereof; (ii) "specified foreign company" means a foreign company in which the Indian company holds twenty-six per cent or more in nominal value of the equity share capital of the 35. The above section clearly provides that where the ‘total income’ of the assessee includes income by way of dividend declared, distributed or paid by a specified foreign company, then such dividend income shall be subject to tax at 15% (plus applicable surcharge, and cess) and balance part of the total income, that is, as reduced by foreign dividend income would be subjected to tax at the prevailing rate of taxes. 36. The ‘total income’ is defined in section 2(25) of the Act, which reads as under:- M/s Essar Shipping Ltd. 19 ITA No. 87/Mum/2023 "115BBD. (1) Where the total income of an assesses, being an Indian company, includes any income by way of dividends declared, distributed or paid by a specified tax payable shall be the tax calculated on the income by way of such dividends, at the rate of fifteen per cent; and tax with which the assesses, would have been chargeable had its total income been me by way of dividends. (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance, shall be allowed to the assessee under any provision of this Act in computing its income by way of dividends (i) "dividends" shall have the same meaning as is given to "dividend" in clause (22) of section 2 but shall not include (ii) "specified foreign company" means a foreign company six per cent or more in nominal value of the equity share capital of the 35. The above section clearly provides that where the ‘total income’ of the assessee includes income by way of paid by a specified foreign company, then such dividend income shall be subject to tax at 15% (plus applicable surcharge, and cess) and balance part of the total income, that is, as reduced by foreign dividend income would be subjected 36. The ‘total income’ is defined in section 2(25) of the “Total income" means the total amount of income referred to in section 5, computed in the manner laid down in this Act” Thus, the total income encom assessee which is received or deemed to be received, accrued or arises or is deemed to accrue or arise or accrues outside India as provided in section 5 of the Act. The total income is required to be computed in the manner laid down in independently, as per the provisions guiding the same as per Chapter IV of the Act. The set off and carry forward of losses are required to be computed as provided under Chapter VI of the Act before setting off any deducti from the total income as provided under Chapter VIA of the Act. 37. Section 71 provides set off of losses from one head against income from another head other than the capital gains. Thus, section 71 provides set even from ‘income income. It does not provide any restriction on set business loss against any dividend income which is taxable u/s 56 of the Act. The total income of the assessee includes income by way of dividend paid by the foreign company. However, section 115BBD, then provides that income tax calculated on such dividend shall be at a lower rate of 15% on gross basis. As per the said section, the other income forming part of the total income (i.e. other than foreign dividend normal rate of tax. 28. Sub section (2) of section 115BBD begins with a non obstante clause which provides that no deduction in respect of any expenditure or allowance shall be allowed to the assessee under any computing its income by way of foreign dividend. This inter-alia means that Legislature has provided lower rate of tax @ 15% on foreign dividend and therefore, no deduction towards in respect of any expenditure will be allowed from that income. However, n any restriction or curb provided in sub section (2) that foreign dividend income cannot be set off against the “Total income" means the total amount of income referred to in section 5, computed in the manner laid down in this Thus, the total income encompasses income of the assessee which is received or deemed to be received, accrued or arises or is deemed to accrue or arise or accrues outside India as provided in section 5 of the Act. The total income is required to be computed in the manner laid down in the Act and it is to be computed independently, as per the provisions guiding the same as Chapter IV of the Act. The set off and carry forward of losses are required to be computed as provided under Chapter VI of the Act before setting off any deducti from the total income as provided under Chapter VIA of 37. Section 71 provides set off of losses from one head against income from another head other than the capital gains. Thus, section 71 provides set-off of business loss even from ‘income from other sources’ including dividend income. It does not provide any restriction on set business loss against any dividend income which is taxable u/s 56 of the Act. The total income of the assessee includes income by way of dividend paid by the foreign company. However, section 115BBD, then provides that income tax calculated on such dividend shall be at a lower rate of 15% on gross basis. As per the said section, the other income forming part of the total income (i.e. other than foreign dividend) will be paid at a normal rate of tax. 28. Sub section (2) of section 115BBD begins with a non obstante clause which provides that no deduction in respect of any expenditure or allowance shall be allowed to the assessee under any provision of this Act in computing its income by way of foreign dividend. This alia means that Legislature has provided lower rate of tax @ 15% on foreign dividend and therefore, no deduction towards in respect of any expenditure will be allowed from that income. However, nowhere there is any restriction or curb provided in sub section (2) that foreign dividend income cannot be set off against the M/s Essar Shipping Ltd. 20 ITA No. 87/Mum/2023 “Total income" means the total amount of income referred to in section 5, computed in the manner laid down in this passes income of the assessee which is received or deemed to be received, accrued or arises or is deemed to accrue or arise or accrues outside India as provided in section 5 of the Act. The total income is required to be computed in the the Act and it is to be computed independently, as per the provisions guiding the same as Chapter IV of the Act. The set off and carry forward of losses are required to be computed as provided under Chapter VI of the Act before setting off any deductions from the total income as provided under Chapter VIA of 37. Section 71 provides set off of losses from one head against income from another head other than the capital off of business loss from other sources’ including dividend income. It does not provide any restriction on set-off of business loss against any dividend income which is taxable u/s 56 of the Act. The total income of the assessee includes income by way of dividend paid by the foreign company. However, section 115BBD, then provides that income tax calculated on such dividend shall be at a lower rate of 15% on gross basis. As per the said section, the other income forming part of the total ) will be paid at a 28. Sub section (2) of section 115BBD begins with a non- obstante clause which provides that no deduction in respect of any expenditure or allowance shall be allowed provision of this Act in computing its income by way of foreign dividend. This alia means that Legislature has provided lower rate of tax @ 15% on foreign dividend and therefore, no deduction towards in respect of any expenditure will be owhere there is any restriction or curb provided in sub section (2) that foreign dividend income cannot be set off against the current year loss while computing the total income. As stated above, in the total income, the assessee has made computation for v Out of the said total income, if there is any foreign dividend income, the same shall be taken into account while computing the total income and if there is a loss, then the same shall be set off in accordance with sect 71 of the Act. 39. On the contrary, there is another section 115BBDA, which deals with dividend received from domestic companies. In this section there is a specific restriction not only for allowance of expenditure deduction in respect of any expendi set off of loss. For the sake of ready reference, section 115BBDA is reproduced as under: 115BBDA. (1) Notwithstanding anything contained in this Act, where the total income of (a specified assessee) resident in I exceeding ten lakh rupees, by way of dividends declared, distributed or paid by a domestic company or companies (on or before the 31st day of March 2020), the income tax payable shall be the aggregate of a) the amount way of such dividends in aggregate exceeding ten lakh rupees, at the rate of ten per cent and b) the amount of income tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the amount of income by way of dividends. (2) No deduction in respect of any expenditure or allowance or set off of loss shall be allowed to the assessee under any provision of this Act in computing the income by way of dividends referred to sub section (1). 40. If sub section (2) of 115BBD and sub section (2) of section 115BBDA are juxtaposed, then it is clear that in so far as dividend received from a domestic company, not only there is restriction current year loss while computing the total income. As stated above, in the total income, the assessee has made computation for various streams of income separately. Out of the said total income, if there is any foreign dividend income, the same shall be taken into account while computing the total income and if there is a loss, then the same shall be set off in accordance with sect 71 of the Act. 39. On the contrary, there is another section 115BBDA, which deals with dividend received from domestic companies. In this section there is a specific restriction not only for allowance of expenditure deduction in respect of any expenditure or allowance but also restriction on set off of loss. For the sake of ready reference, section 115BBDA is reproduced as under:- 115BBDA. (1) Notwithstanding anything contained in this Act, where the total income of (a specified assessee) resident in India, includes any income in aggregate exceeding ten lakh rupees, by way of dividends declared, distributed or paid by a domestic company or companies (on or before the 31st day of March 2020), the income tax payable shall be the aggregate of a) the amount of income tax calculated on the income by way of such dividends in aggregate exceeding ten lakh rupees, at the rate of ten per cent and b) the amount of income tax with which the assessee would have been chargeable had the total income of the en reduced by the amount of income by way of dividends. (2) No deduction in respect of any expenditure or allowance or set off of loss shall be allowed to the assessee under any provision of this Act in computing the income by way of dividends referred to in clause (a) of sub section (1). ------------- --------. 40. If sub section (2) of 115BBD and sub section (2) of section 115BBDA are juxtaposed, then it is clear that in so far as dividend received from a domestic company, not only there is restriction for not allowing the deduction of M/s Essar Shipping Ltd. 21 ITA No. 87/Mum/2023 current year loss while computing the total income. As stated above, in the total income, the assessee has made arious streams of income separately. Out of the said total income, if there is any foreign dividend income, the same shall be taken into account while computing the total income and if there is a loss, then the same shall be set off in accordance with section 39. On the contrary, there is another section 115BBDA, which deals with dividend received from domestic companies. In this section there is a specific restriction not only for allowance of expenditure deduction in respect ture or allowance but also restriction on set off of loss. For the sake of ready reference, section 115BBDA. (1) Notwithstanding anything contained in this Act, where the total income of (a specified assessee) ndia, includes any income in aggregate exceeding ten lakh rupees, by way of dividends declared, distributed or paid by a domestic company or companies (on or before the 31st day of March 2020), the income tax of income tax calculated on the income by way of such dividends in aggregate exceeding ten lakh b) the amount of income tax with which the assessee would have been chargeable had the total income of the en reduced by the amount of income by way (2) No deduction in respect of any expenditure or allowance or set off of loss shall be allowed to the assessee under any provision of this Act in computing the in clause (a) of 40. If sub section (2) of 115BBD and sub section (2) of section 115BBDA are juxtaposed, then it is clear that in so far as dividend received from a domestic company, not for not allowing the deduction of any expenditure or allowance but also the set off of loss is also not allowable. On the contrary, there is no such restriction in set off of loss in sub section (2) of section 115BBD. Thus, it clearly shows the intention o Legislature in putting restrictions in both the sections is different. One of the reasons is that, domestic dividend (before 31st March 2020) was exempted from tax, that is, domestic dividend was not forming part of the total income. Whereas, foreign exempted from tax and was treated as part of the total income. Ostensibly, if domestic dividend does not form part of the total income or is exempted from tax, then there is no question of allowing any deduction of expenses or se income. It is precisely for this reason that, this distinction has been made by the Legislature between the foreign dividend income and domestic dividend income. 41. Wherever Legislature has provided that no deducti or set off of loss shall be allowed then the same has been specifically provided in the statute, for instance, section 115BBE which is tax on income referred to section 68, 69, 69A, 69B, 69C or 69D, the Legislature has provided tax rate of 60% and furth provided that no deduction in respect of any expenditure allowance or set off of any loss shall be allowed to the assessee under any income referred to section 68 to 69D. Again this goes show that there is a specific bar or restriction for allowing of any set off of any loss from any part of stream of income. This bar and restriction is completely absent in sub section (2) of section 115BBD. If we take this analogy of section 115BBDA an indicates that, whenever Legislature has intended not to allow deduction or set off of loss, it has been clearly provided in the statute and wherever only restriction is for not allowing the deduction in respect of any expenditure to the language given in the statute and nothing can be inferred or read into to import any other restriction in the said provision, i.e., the set off of loss should also be read into. Section 115BBD is similar t is tax on income on patent and there only restriction any expenditure or allowance but also the set off of loss is also not allowable. On the contrary, there is no such restriction in set off of loss in sub section (2) of section 115BBD. Thus, it clearly shows the intention o Legislature in putting restrictions in both the sections is different. One of the reasons is that, domestic dividend (before 31st March 2020) was exempted from tax, that is, domestic dividend was not forming part of the total income. Whereas, foreign dividend income was never exempted from tax and was treated as part of the total income. Ostensibly, if domestic dividend does not form part of the total income or is exempted from tax, then there is no question of allowing any deduction of expenses or set off of loss while computing the total income. It is precisely for this reason that, this distinction has been made by the Legislature between the foreign dividend income and domestic dividend income. 41. Wherever Legislature has provided that no deducti or set off of loss shall be allowed then the same has been specifically provided in the statute, for instance, section 115BBE which is tax on income referred to section 68, 69, 69A, 69B, 69C or 69D, the Legislature has provided tax rate of 60% and further in sub section (2), it has provided that no deduction in respect of any expenditure allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing the income referred to section 68 to 69D. Again this goes show that there is a specific bar or restriction for allowing of any set off of any loss from any part of stream of income. This bar and restriction is completely absent in sub section (2) of section 115BBD. If we take this analogy of section 115BBDA and Section 115BBE, then it indicates that, whenever Legislature has intended not to allow deduction or set off of loss, it has been clearly provided in the statute and wherever only restriction is for not allowing the deduction in respect of any or allowance, then same has to be confined to the language given in the statute and nothing can be inferred or read into to import any other restriction in the said provision, i.e., the set off of loss should also be read into. Section 115BBD is similar to section 115BBF, which is tax on income on patent and there only restriction M/s Essar Shipping Ltd. 22 ITA No. 87/Mum/2023 any expenditure or allowance but also the set off of loss is also not allowable. On the contrary, there is no such restriction in set off of loss in sub section (2) of section 115BBD. Thus, it clearly shows the intention of the Legislature in putting restrictions in both the sections is different. One of the reasons is that, domestic dividend (before 31st March 2020) was exempted from tax, that is, domestic dividend was not forming part of the total dividend income was never exempted from tax and was treated as part of the total income. Ostensibly, if domestic dividend does not form part of the total income or is exempted from tax, then there is no question of allowing any deduction of t off of loss while computing the total income. It is precisely for this reason that, this distinction has been made by the Legislature between the foreign 41. Wherever Legislature has provided that no deduction or set off of loss shall be allowed then the same has been specifically provided in the statute, for instance, section 115BBE which is tax on income referred to section 68, 69, 69A, 69B, 69C or 69D, the Legislature has provided er in sub section (2), it has provided that no deduction in respect of any expenditure allowance or set off of any loss shall be allowed to the provision of this Act in computing the income referred to section 68 to 69D. Again this goes to show that there is a specific bar or restriction for allowing of any set off of any loss from any part of stream of income. This bar and restriction is completely absent in sub section (2) of section 115BBD. If we take this analogy d Section 115BBE, then it indicates that, whenever Legislature has intended not to allow deduction or set off of loss, it has been clearly provided in the statute and wherever only restriction is for not allowing the deduction in respect of any or allowance, then same has to be confined to the language given in the statute and nothing can be inferred or read into to import any other restriction in the said provision, i.e., the set off of loss should also be read o section 115BBF, which is tax on income on patent and there only restriction provided in sub section (2) is with regard to nonallowability of non expenditure or allowance. No amendment has been brought in section 115BBD in sub brought in sub section (2) of section 115BBE w.e.f. 01.04.2017. 42. Further, whenever income is proposed to be taxed on gross basis at a specified rates without grant of any deduction towards expenditure allowance or any set off of loss, then it is expressly provided in statute which in the case of foreign dividend income u/s 115BBD, no such restriction has been provided for not allowing the set off of loss, albeit the only restriction is for allowability of any expenditure or allowance. 43. Ergo, from a plain reading of the Section 115BBD, it is seen that the language of the statute is absolutely clear and there is no ambiguity in such provision. Nowhere the section speaks that dividend income received from specified foreign company cann from the business losses while computing the total income which is computed as per the Act and set off is allowed as per section 71 of the Act. It is trite and well settled law that the construction of the statute must be taken from the bare what could have been the intention of the legislature behind the legislating section and if a legislature did intend in this way, then it has to be expressed clearly in the language of the Section. The Courts cannot in something which to gauge the intention of the Legislature. It is only where the language of the statute in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent or to some inconvenience or absurdity, hardship or injustice, presumably not intended, then a construction may be given which modifies the meaning of the words and even the structure of the sentence. In such circumstances, the Cou probable can go what was the purpose of bringing that legislation. Here we have already discussed the various provisions of sections in the statute where different set of provided in sub section (2) is with regard to nonallowability of non-deduction in respect of any expenditure or allowance. No amendment has been brought in section 115BBD in sub section (2) as was brought in sub section (2) of section 115BBE w.e.f. 42. Further, whenever income is proposed to be taxed on gross basis at a specified rates without grant of any deduction towards expenditure allowance or any set off then it is expressly provided in statute which in the case of foreign dividend income u/s 115BBD, no such restriction has been provided for not allowing the set off of loss, albeit the only restriction is for allowability of any expenditure or allowance. 43. Ergo, from a plain reading of the Section 115BBD, it is seen that the language of the statute is absolutely clear and there is no ambiguity in such provision. Nowhere the section speaks that dividend income received from specified foreign company cannot be set from the business losses while computing the total income which is computed as per the Act and set off is allowed as per section 71 of the Act. It is trite and well settled law that the construction of the statute must be taken from the bare words of the Act. One should not look what could have been the intention of the legislature behind the legislating section and if a legislature did intend in this way, then it has to be expressed clearly in the language of the Section. The Courts cannot in something which is not there in the statute nor should try to gauge the intention of the Legislature. It is only where the language of the statute in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, then a construction may be given which modifies the meaning of the words and even the structure of the sentence. In such circumstances, the Courts while interpreting the provision probable can go what was the purpose of bringing that legislation. Here we have already discussed the various provisions of sections in the statute where different set of M/s Essar Shipping Ltd. 23 ITA No. 87/Mum/2023 provided in sub section (2) is with regard to deduction in respect of any expenditure or allowance. No amendment has been section (2) as was brought in sub section (2) of section 115BBE w.e.f. 42. Further, whenever income is proposed to be taxed on gross basis at a specified rates without grant of any deduction towards expenditure allowance or any set off then it is expressly provided in statute which in the case of foreign dividend income u/s 115BBD, no such restriction has been provided for not allowing the set off of loss, albeit the only restriction is for allowability of any 43. Ergo, from a plain reading of the Section 115BBD, it is seen that the language of the statute is absolutely clear and there is no ambiguity in such provision. Nowhere the section speaks that dividend income ot be set-off from the business losses while computing the total income which is computed as per the Act and set off is allowed as per section 71 of the Act. It is trite and well settled law that the construction of the statute must be words of the Act. One should not look what could have been the intention of the legislature behind the legislating section and if a legislature did intend in this way, then it has to be expressed clearly in the language of the Section. The Courts cannot invent is not there in the statute nor should try to gauge the intention of the Legislature. It is only where the language of the statute in its ordinary meaning and grammatical construction, leads to a manifest purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, then a construction may be given which modifies the meaning of the words and even the structure of the sentence. In such rts while interpreting the provision probable can go what was the purpose of bringing that legislation. Here we have already discussed the various provisions of sections in the statute where different set of limitation and restriction has been provided whi computing different kinds of income and hence restriction applicable for one source of income cannot be applied to other source of income nor can same be imported and read into other section. Here, there no such ambiguity or contradiction in the languag import any such fetters. 44. Thus, we hold that there is no restriction or bar in set off of foreign dividend of income from the current year loss while computing the total income. Accordingly, the order of Ld. CIT (A) is has been taken by the Coordinate Bench in the case of Tata Motors Ltd. vs. DCIT (supra) which has been followed by the Ld. CIT (A), hence we do not find any infirmity in following the principle laid down therein. Accordingly, ground nos. 6.1 to 6.3 raised by the revenue is dismissed. 10.1 As the issue in dispute involved in the year under consideration is identical to the issue involved for AY 2015 therefore respectfully following the finding of the Tribunal (supra), we allow set off of the business losses against dividend income and reject the grounds of appeal of the Revenue. 6.3 of the appeal are accordingly dismissed. 11. In the result, the appeal of the Revenue is allowed partly for statistical purposes. Order pronounced in the open Court on Sd/ (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; limitation and restriction has been provided whi computing different kinds of income and hence restriction applicable for one source of income cannot be applied to other source of income nor can same be imported and read into other section. Here, there no such ambiguity or contradiction in the language used in the section to import any such fetters. 44. Thus, we hold that there is no restriction or bar in set off of foreign dividend of income from the current year computing the total income. Accordingly, the order of Ld. CIT (A) is confirmed. In any case similar view has been taken by the Coordinate Bench in the case of Tata Motors Ltd. vs. DCIT (supra) which has been followed by the Ld. CIT (A), hence we do not find any infirmity in following the principle laid down therein. ngly, ground nos. 6.1 to 6.3 raised by the revenue is dismissed.” As the issue in dispute involved in the year under consideration is identical to the issue involved for AY 2015 therefore respectfully following the finding of the Tribunal (supra), we allow set off of the business losses against dividend income and of appeal of the Revenue. The ground Nos. 6 to 6.3 of the appeal are accordingly dismissed. In the result, the appeal of the Revenue is allowed partly for nounced in the open Court on 31/07/2023. Sd/- Sd/ KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER M/s Essar Shipping Ltd. 24 ITA No. 87/Mum/2023 limitation and restriction has been provided while computing different kinds of income and hence restriction applicable for one source of income cannot be applied to other source of income nor can same be imported and read into other section. Here, there no such ambiguity or e used in the section to 44. Thus, we hold that there is no restriction or bar in set off of foreign dividend of income from the current year computing the total income. Accordingly, the confirmed. In any case similar view has been taken by the Coordinate Bench in the case of Tata Motors Ltd. vs. DCIT (supra) which has been followed by the Ld. CIT (A), hence we do not find any infirmity in following the principle laid down therein. ngly, ground nos. 6.1 to 6.3 raised by the revenue As the issue in dispute involved in the year under consideration is identical to the issue involved for AY 2015-16 therefore respectfully following the finding of the Tribunal (supra), we allow set off of the business losses against dividend income and The ground Nos. 6 to In the result, the appeal of the Revenue is allowed partly for /07/2023. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Dated: 31/07/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai M/s Essar Shipping Ltd. 25 ITA No. 87/Mum/2023 BY ORDER, (Assistant Registrar) ITAT, Mumbai