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

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:

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bank deposits is in the nature of business income and bank deposits is in the nature of business income and bank deposits is in the nature of business income and not from other sources moreover when the assessee itself not from other sources moreover when the assessee itself not from other sources moreover when the assessee itself has declared the same as income under the head ed the same as income under the head ed the same as income under the head "Income from Other Sources" in the Return of Income "Income from Other Sources" in the Return of Income "Income from Other Sources" in the Return of Income filed". 2. "Whether on the facts and circumstances of the case 2. "Whether on the facts and circumstances of the case 2. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the interest and in law, the Id. CIT(A) erred in allowing the interest and in law, the Id. CIT(A) erred in allowing the interest expenditure expenditure Rs. Rs. 165,86,54, 165,86,54, 753/- 753/ as as business business expenditure u/s 36(1) itt) of the I. T. xpenditure u/s 36(1) itt) of the I. T. Act, 1961". 3. "Whether on the facts and circumstances of the case 3. "Whether on the facts and circumstances of the case 3. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) failed to appreciate the fact that and in law, the Id. CIT(A) failed to appreciate the fact that and in law, the Id. CIT(A) failed to appreciate the fact that loan obtained by the assessee company from LIC was loan obtained by the assessee company from LIC was loan obtained by the assessee company from LIC was used for advancing ID to subsidiary w used for advancing ID to subsidiary which is for the hich is for the purpose of earning interest income which is taxed under purpose of earning interest income which is taxed under purpose of earning interest income which is taxed under the head other sources and the interest expenses claimed the head other sources and the interest expenses claimed the head other sources and the interest expenses claimed are not allowable us 36(1)(i) of the Act". are not allowable us 36(1)(i) of the Act". 4. "Whether on the facts and circumstances of the case 4. "Whether on the facts and circumstances of the case 4. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) er and in law, the Id. CIT(A) erred in directing the AO to re red in directing the AO to re- compute the disallowance of Rs.23,69,58,913/ compute the disallowance of Rs.23,69,58,913/ compute the disallowance of Rs.23,69,58,913/- from common interest expenditure by allocating it in the ratio common interest expenditure by allocating it in the ratio common interest expenditure by allocating it in the ratio of assets employed between the tonnage and non of assets employed between the tonnage and non of assets employed between the tonnage and non- tonnage activities instead of in the ratio of turnover of tonnage activities instead of in the ratio of turnover of tonnage activities instead of in the ratio of turnover of tonnage and tonnage and non-tonnage activities 5. "Whether on the facts and circumstances of the case "Whether on the facts and circumstances of the case "Whether on the facts and circumstances of the case and in law, the Id. CIT( and in law, the Id. CIT(A) erred in allowing the set off of A) erred in allowing the set off of current year business loss against the special rate current year business loss against the special rate current year business loss against the special rate tonnage business income u/s 115VG of the Act without tonnage business income u/s 115VG of the Act without tonnage business income u/s 115VG of the Act without considering the general exclusion of deduction and set off considering the general exclusion of deduction and set off considering the general exclusion of deduction and set off u/s 115VL and u/s 115VM of the Act against the special u/s 115VL and u/s 115VM of the Act against the special u/s 115VL and u/s 115VM of the Act against the special rate tonnage income moreover when the assessee in the ate tonnage income moreover when the assessee in the ate tonnage income moreover when the assessee in the Return of Income itself has computed tax on tonnage Return of Income itself has computed tax on tonnage Return of Income itself has computed tax on tonnage income as tax payable". income as tax payable". 5.1 On the facts and circumstances of the case, whether On the facts and circumstances of the case, whether On the facts and circumstances of the case, whether the Id. CIT(A) has not erred in admitting the additional CIT(A) has not erred in admitting the additional CIT(A) has not erred in admitting the additional ground raised ground raised by the assessee in spite of the assessee's by the assessee in spite of the assessee's erroneous act of not filing revised return of income even erroneous act of not filing revised return of income even erroneous act of not filing revised return of income even after having ample time and raising an issue at the after having ample time and raising an issue at the after having ample time and raising an issue at the appeal stage? appeal stage?

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5.2 On the facts and circumstances of the case, whether On the facts and circumstances of the case, whether On the facts and circumstances of the case, whether the Ld. CIT(A) has not erred in a CIT(A) has not erred in admitting the additional dmitting the additional ground raised by the assessee in spite of the objection of ground raised by the assessee in spite of the objection of ground raised by the assessee in spite of the objection of the Assessing Officer and disregarding the decision of the the Assessing Officer and disregarding the decision of the the Assessing Officer and disregarding the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd. V Hon'ble Supreme Court in the case of Goetze India Ltd. V Hon'ble Supreme Court in the case of Goetze India Ltd. V CIT 284 IT 323 wherein it is clear that there is no CIT 284 IT 323 wherein it is clear that there is no CIT 284 IT 323 wherein it is clear that there is no provision in the Act to make amendment in the return of sion in the Act to make amendment in the return of sion in the Act to make amendment in the return of income by modifying an application of the assessement income by modifying an application of the assessement income by modifying an application of the assessement stage without revising the return? stage without revising the return? 5.3 On the facts and circumstances of the case, whether On the facts and circumstances of the case, whether On the facts and circumstances of the case, whether the Ld. CIT(A) has not erred in allowing the claim of the CIT(A) has not erred in allowing the claim of the CIT(A) has not erred in allowing the claim of the assessee not made through the revised return and assessee not made through the revised return and assessee not made through the revised return and instead made through addition ground instead made through addition ground at appeal stage? at appeal stage? б. "Whether on the facts and circumstances of the case "Whether on the facts and circumstances of the case "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the set off of and in law, the Id. CIT(A) erred in allowing the set off of and in law, the Id. CIT(A) erred in allowing the set off of foreign dividend income of Rs.35,30,86 foreign dividend income of Rs.35,30,86, 193/- against the current year's loss". the current year's loss". 6.1 "Whether on the facts and circumstances of the case "Whether on the facts and circumstances of the case "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in not appreciating the and in law, the Id. CIT(A) erred in not appreciating the and in law, the Id. CIT(A) erred in not appreciating the legal position that the foreign dividend income is taxable legal position that the foreign dividend income is taxable legal position that the foreign dividend income is taxable u/s 115BBD and no adjustment against curre u/s 115BBD and no adjustment against current year's nt year's loss is allowable in view of the sub loss is allowable in view of the sub-section (2) of the section (2) of the section 115BBD". section 115BBD". 6.2 "Whether on the facts and circumstances of the case "Whether on the facts and circumstances of the case "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the set off of and in law, the Id. CIT(A) erred in allowing the set off of and in law, the Id. CIT(A) erred in allowing the set off of foreign dividend income of Rs. 35,30,86,193/ foreign dividend income of Rs. 35,30,86,193/- against the current year's loss without appreciating the fact that current year's loss without appreciating the fact that current year's loss without appreciating the fact that the CIT(A) is not empowered to admit any new claim of the CIT(A) is not empowered to admit any new claim of the CIT(A) is not empowered to admit any new claim of the assessee not claimed earlier in original return or the assessee not claimed earlier in original return or the assessee not claimed earlier in original return or revised return". revised return". 6.3 On the facts and circumstances of the case, whether On the facts and circumstances of the case, whether On the facts and circumstances of the case, whether the Id. CIT(A) has CIT(A) has not erred in admitting the additional not erred in admitting the additional ground raised by the assessee in spite of the objection of ground raised by the assessee in spite of the objection of ground raised by the assessee in spite of the objection of the Assessing Officer and disregarding the decision of the the Assessing Officer and disregarding the decision of the the Assessing Officer and disregarding the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd. V Hon'ble Supreme Court in the case of Goetze India Ltd. V Hon'ble Supreme Court in the case of Goetze India Ltd. V CIT 284 ITR 323 wherein it is clear that t CIT 284 ITR 323 wherein it is clear that there is no here is no provision in the Act to make amendment in the return of provision in the Act to make amendment in the return of provision in the Act to make amendment in the return of income by modifying an application of the assessment income by modifying an application of the assessment income by modifying an application of the assessment stage without revising the return? stage without revising the return?

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other sources, by the A by the Assessing Officer. The facts qua the issue in ssessing Officer. The facts qua the issue in dispute are that the assessee has two income dispute are that the assessee has two income streams; streams; firstly, shipping operations for which income is declared under the shipping operations for which income is declared under the shipping operations for which income is declared under the ‘tonnage tax scheme scheme’ i.e. a scheme for computation of profits and i.e. a scheme for computation of profits and gains of business of operating qualifying ships under the provisions gains of business of operating qualifying ships under the provisions gains of business of operating qualifying ships under the provisions of chapter XII-G of the Act G of the Act and, secondly, the business activity of oil the business activity of oil field business, logistics and other income from shipping operations, field business, logistics and other income from shipping operation field business, logistics and other income from shipping operation for which income is computed computed under the head ‘profit and gains from profit and gains from business and profession business and profession, . The shipping and logistics business is . The shipping and logistics business is carried on by the assessee itself whereas the oil field business is carried on by the assessee itself whereas the oil field business is carried on by the assessee itself whereas the oil field business is carried by assessee through its subsidiary namely M/s E assessee through its subsidiary namely M/s E assessee through its subsidiary namely M/s Essar Oilfield Services India Ltd. (EOSIL). During the previous year Oilfield Services India Ltd. (EOSIL). During the previous year Oilfield Services India Ltd. (EOSIL). During the previous year relevant to AY 2010-11, the assessee borrowed money from LIC and 11, the assessee borrowed money from LIC and 11, the assessee borrowed money from LIC and had given inter corporate deposits (ICDs) of Rs.418 crores to its had given inter corporate deposits (ICDs) of Rs.418 crores to its had given inter corporate deposits (ICDs) of Rs.418 crores to its wholly owned subsidiary EOSIL is carrying out the business of oil wholly owned subsidiary EOSIL is carrying out the busines wholly owned subsidiary EOSIL is carrying out the busines drilling operations. Further, in AY 2011 drilling operations. Further, in AY 2011-12 and 2012 12 and 2012-13, the assessee advanced further sum to EOSIL as ICDs. The assessee assessee advanced further sum to EOSIL as ICDs. The assessee assessee advanced further sum to EOSIL as ICDs. The assessee earned interest on the said ICDs and the same was offered to tax earned interest on the said ICDs and the same was offered to tax earned interest on the said ICDs and the same was offered to tax under the head ‘profit ‘profit and gain of business/ profession. and gain of business/ profession. The breakup of the interest income for the year under consideration as breakup of the interest income for the year under consideration as breakup of the interest income for the year under consideration as under: (i) Interest from ICDs to wholly owned subsidiaries Interest from ICDs to wholly owned subsidiaries INR 74,69,84,689/- which undertake Oil Drilling for assessee which undertake Oil Drilling for assessee (ii) Interest from BID deposits with ESIL Interest from BID deposits with ESIL INR11,59,94,035/- (iii) Interest from banks Interest from banks INR1,56,66,283/- (iv) Interest on IT refund Interest on IT refund INR64,20,265/-

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6.1 The Ld. CIT(A) following the finding of the Tribunal in The Ld. CIT(A) following the finding of the Tribunal in The Ld. CIT(A) following the finding of the Tribunal in assessee’s own case for AY 2013 assessee’s own case for AY 2013-14 upheld the interest income 14 upheld the interest income of Rs. 1.57 crores received from bank and received from bank and Rs. 86.29 crores from rores from group companies companies companies as as as to to to be be be business business business income income income except except except amount amount amount of of of Rs.64,20,265/- received on account of income received on account of income-tax refund. Before tax refund. Before us, the Ld. Counsel of the assessee has referred to para 28 of the us, the Ld. Counsel of the assessee has referred to para 28 of the 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. order of the Tribunal in the assessee’s own case in ITA order of the Tribunal in the assessee’s own case in ITA 7371/Mum/2017 for AY 2013 7371/Mum/2017 for AY 2013-14. The Ld. Counsel of the assessee he Ld. Counsel of the assessee also submitted that order of the Tribunal in assessment year 2013- also submitted that order of the Tribunal in assessment year 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 14 has been further followed in ITA No. 821/Mum/2022 for AY 14 has been further followed in ITA No. 821/Mum/2022 for AY 2015-16 and ITA No. 2014/Mum/ 16 and ITA No. 2014/Mum/2022, ITA No. ITA No. 1510 and 1802/Mum/2022 for AY 2016 2 for AY 2016-17, AY 2017-18 and 18 and AY 2018-19 respectively. The relevant part of the decision of the ITAT for AY respectively. The relevant part of the decision of the ITAT for AY respectively. The relevant part of the decision of the ITAT for AY 2015-16 is reproduced as under: 16 is reproduced as under:

“18. After considering the findings given in the impugned 18. After considering the findings given in the impugned 18. After considering the findings given in the impugned orders as well as ITAT orders placed before us, we find orders as well as ITAT orders placed before us, we find orders as well as ITAT orders placed before us, we find that the business of the assessee has two income that the business of the assessee has two income that the business of the assessee has two income streams; one of Shipping operations for which income is streams; one of Shipping operations for which income is streams; one of Shipping operations for which income is declared under the tonnage scheme and declared under the tonnage scheme and the other is the the other is the business activity of Oil field Business, Logistic Business business activity of Oil field Business, Logistic Business business activity of Oil field Business, Logistic Business and other income from shipping operation for which and other income from shipping operation for which and other income from shipping operation for which income is declared under the head Profit and Gains from income is declared under the head Profit and Gains from income is declared under the head Profit and Gains from Business and Profession. The Shipping and logistic Business and Profession. The Shipping and logistic Business and Profession. The Shipping and logistic business is carried on business is carried on by the assessee itself whereas the by the assessee itself whereas the oil field business is carried by the assessee through its oil field business is carried by the assessee through its oil field business is carried by the assessee through its subsidiary namely M/s Essar Oilfield Services India Ltd. subsidiary namely M/s Essar Oilfield Services India Ltd. subsidiary namely M/s Essar Oilfield Services India Ltd. (EOSIL). During the previous year relevant to A.Y. 2010 (EOSIL). During the previous year relevant to A.Y. 2010 (EOSIL). During the previous year relevant to A.Y. 2010- 11, the assessee borrowed money from LIC and had 11, the assessee borrowed money from LIC and had 11, the assessee borrowed money from LIC and had given inter corporate deposits (ICDs) of Rs. 418 crores to given inter corporate deposits (ICDs) of Rs. 418 crores to given inter corporate deposits (ICDs) of Rs. 418 crores to its wholly owned subsidiary EOSIL who is carrying out its wholly owned subsidiary EOSIL who is carrying out its wholly owned subsidiary EOSIL who is carrying out the business of oil drilling operations. Further, in A.Y. the business of oil drilling operations. Further, in A.Y. the business of oil drilling operations. Further, in A.Y. 2011-12 and 2012 12 and 2012-13, the assessee advanced further advanced further

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sum to EOSIL as ICDs. The assesse sum to EOSIL as ICDs. The assessee earned interest on e earned interest on the said ICDs and the same was offered to tax. It has the said ICDs and the same was offered to tax. It has the said ICDs and the same was offered to tax. It has been stated that the facts and circumstances are been stated that the facts and circumstances are been stated that the facts and circumstances are identical to the preceding years, wherein it has been held identical to the preceding years, wherein it has been held identical to the preceding years, wherein it has been held as business income by Hon'ble ITAT. The break up of as business income by Hon'ble ITAT. The break up of as business income by Hon'ble ITAT. The break up of interest income is as interest income is as under: - (i) Interest from ICDs to wholly owned subsidiaries (i) Interest from ICDs to wholly owned subsidiaries (i) Interest from ICDs to wholly owned subsidiaries which undertake Oil Drilling for assessee - INR which undertake Oil Drilling for assessee which undertake Oil Drilling for assessee 82,23,73,747/ 82,23,73,747/- (ii) Interest from BID deposits with ESIL for getting (ii) Interest from BID deposits with ESIL for getting (ii) Interest from BID deposits with ESIL for getting the shipping business under contract - INR the shipping business under contract the shipping business under contract 1,46,69,324/ 1,46,69,324/- (iii)Interest from (iii)Interest from banks - INR 1,98,73,696/- (iv)Interest on IT refund (iv)Interest on IT refund -INR 3,10,47,500/- 19. The Tribunal has held this issue in favour of the 19. The Tribunal has held this issue in favour of the 19. The Tribunal has held this issue in favour of the assessee in the following manner: assessee in the following manner:- 28.From the record, we found that the business 28.From the record, we found that the business 28.From the record, we found that the business activities of the assessee comprises of shipping activities of the assessee comprises of shippi activities of the assessee comprises of shippi business, logistics business and oilfield business. business, logistics business and oilfield business. business, logistics business and oilfield business. The shipping and logistics business is being The shipping and logistics business is being The shipping and logistics business is being carried out by the assessee itself whereas the carried out by the assessee itself whereas the carried out by the assessee itself whereas the oilfield business is being carried out by the oilfield business is being carried out by the oilfield business is being carried out by the assessee through its subsidiary. We had also gone assessee through its subsidiary. We had also gone assessee through its subsidiary. We had also gone through the M through the Memorandum of Association of the emorandum of Association of the assessee and found that the main object of the assessee and found that the main object of the assessee and found that the main object of the assessee is “to enter into and conduct the business assessee is “to enter into and conduct the business assessee is “to enter into and conduct the business of owning and/ or leasing and/ or hiring and/ or of owning and/ or leasing and/ or hiring and/ or of owning and/ or leasing and/ or hiring and/ or operating all types of onshore and offshore drilling operating all types of onshore and offshore drilling operating all types of onshore and offshore drilling rings.” Thus, it is cle rings.” Thus, it is clear that even as per the ar that even as per the memorandum, it was main memorandum, it was main objection of the objection of the assessee. The assessee was carrying out business assessee. The assessee was carrying out business assessee. The assessee was carrying out business of drilling oil rigs through its subsidiary for this of drilling oil rigs through its subsidiary for this of drilling oil rigs through its subsidiary for this purpose the assessee borrowed money and purpose the assessee borrowed money and purpose the assessee borrowed money and advanced the same as ICDs to its subsidiary to advanced the same as ICDs to its subsidiary to advanced the same as ICDs to its subsidiary to carry out the drilling business. Thus, the business rry out the drilling business. Thus, the business rry out the drilling business. Thus, the business so carried out by the subsidiary was as per the so carried out by the subsidiary was as per the so carried out by the subsidiary was as per the main objects of the assessee company. The main objects of the assessee company. The main objects of the assessee company. The assessee had not given ICD to its subsidiary for assessee had not given ICD to its subsidiary for assessee had not given ICD to its subsidiary for

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the the the purpose purpose purpose of of of earning earning earning interest interest interest income. income. income. Accordingly, the income on Accordingly, the income on such ICD has to be such ICD has to be treated as business income only, since it has been treated as business income only, since it has been treated as business income only, since it has been earned in the course of the business of the earned in the course of the business of the earned in the course of the business of the assessee and forms part of the business of the assessee and forms part of the business of the assessee and forms part of the business of the company. company. 29.From the record, we found that during the 29.From the record, we found that during the 29.From the record, we found that during the previous year relevant to assessment year under previous year relevant to assessment yea previous year relevant to assessment yea consideration, the assessee has earned interest consideration, the assessee has earned interest consideration, the assessee has earned interest income from ICDs of Rs. 60.16 crores and from income from ICDs of Rs. 60.16 crores and from income from ICDs of Rs. 60.16 crores and from banks of Rs. 1.81 crores. The break up of the banks of Rs. 1.81 crores. The break up of the banks of Rs. 1.81 crores. The break up of the interest income is as under: interest income is as under:-

The money advanced to companies at Sr. No. 1 to 4 The money advanced to companies at Sr. No. 1 to 4 The money advanced to companies at Sr. No. 1 to 4 are group/ subsidiary comp are group/ subsidiary companies and the money anies and the money has been given for has been given for business purpose of assessee. business purpose of assessee. The A.O. has not brought any material on record to The A.O. has not brought any material on record to The A.O. has not brought any material on record to suggest that the assessee had given intercorporate suggest that the assessee had given intercorporate suggest that the assessee had given intercorporate deposit to subsidiaries for earning interest income. deposit to subsidiaries for earning interest income. deposit to subsidiaries for earning interest income. It is also not the case of AO th It is also not the case of AO that the assessee had at the assessee had given its surplus funds to subsidiary for earning given its surplus funds to subsidiary for earning given its surplus funds to subsidiary for earning interest income. Thus, the income on ICD is to be interest income. Thus, the income on ICD is to be interest income. Thus, the income on ICD is to be assessed under the head „business income.‟ assessed under the head „business income. assessed under the head „business income. Similar view has been taken by the Coordinate Similar view has been taken by the Coordinate Similar view has been taken by the Coordinate Bench of the ITAT, Mumbai in the case of Tolani Bench of the ITAT, Mumbai in the case of Tolani Bench of the ITAT, Mumbai in the case of Tolani Private Limited in ITA No. 5562/Mum/2013, order Private Limited in ITA No. 5562/Mum/2013, order Private Limited in ITA No. 5562/Mum/2013, order dated 04/01/2018 wherein the assessee was dated 04/01/2018 wherein the assessee was dated 04/01/2018 wherein the assessee was engaged in operation of ships had advanced engaged in operation of ships had advanced engaged in operation of ships had advanced loan/ICD to its subsidiary for acquiring ship, it loan/ICD to its subsidiary for acquiring ship, it loan/ICD to its subsidiary for acquiring ship, it was held that even on the basis of commercial was held that even on the basis of commercial was held that even on the basis of commercial

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expediency, the assessee w expediency, the assessee was bound to assist its as bound to assist its subsidiary, the interest income earned on such subsidiary, the interest income earned on such subsidiary, the interest income earned on such loans/ICD is liable to be assessed as income under loans/ICD is liable to be assessed as income under loans/ICD is liable to be assessed as income under the head “business income” and not under the the head “business income” and not under the the head “business income” and not under the head “income from other sources”. head “income from other sources”. 30. With regard to bank interest income amounting 30. With regard to bank interest income amounting 30. With regard to bank interest income amounting to Rs. 1,81,44,909/ . 1,81,44,909/-, the same has been received , the same has been received on margin money which the assessee was required on margin money which the assessee was required on margin money which the assessee was required to keep with banks as per terms of sanction, hence to keep with banks as per terms of sanction, hence to keep with banks as per terms of sanction, hence the same is also for purpose of business. The the same is also for purpose of business. The the same is also for purpose of business. The money so kept with the bank as margin money money so kept with the bank as margin money money so kept with the bank as margin money was out of business com was out of business compulsion and not as per the pulsion and not as per the sweet will of the assessee, therefore, the interest sweet will of the assessee, therefore, the interest sweet will of the assessee, therefore, the interest earned on such margin money is also liable to be earned on such margin money is also liable to be earned on such margin money is also liable to be taxed as business income. taxed as business income. 20. Thus, following the aforesaid order of the Tribunal, 20. Thus, following the aforesaid order of the Tribunal, 20. Thus, following the aforesaid order of the Tribunal, we hold that interest on ICDs received from s we hold that interest on ICDs received from subsidiary ubsidiary company is to be assessed under the head business company is to be assessed under the head business company is to be assessed under the head business income and not income from other sources. Accordingly, income and not income from other sources. Accordingly, income and not income from other sources. Accordingly, the order of Ld. CIT(A) is confirmed and this grounds the order of Ld. CIT(A) is confirmed and this grounds the order of Ld. CIT(A) is confirmed and this grounds raised by the revenue are dismissed. raised by the revenue are dismissed.” The issue in dispute raised by the Revenue in the year under 6.2 The issue in dispute raised by the Revenue in the year under The issue in dispute raised by the Revenue in the year under consideration being identical to the decision of the Tribunal in the consideration being identical to the decision of the Tribunal in the consideration being identical to the decision of the Tribunal in the case of the assessee for AY 2015 case of the assessee for AY 2015-16, therefore respectfully following therefore respectfully following the same, the ground No. 1 of the appeal of the Revenue the ground No. 1 of the appeal of the Revenue is the ground No. 1 of the appeal of the Revenue dismissed.

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7371/Mum/2017 , held that expenditure in respect of loans which held that expenditure in respect of loans which held that expenditure in respect of loans which are utilized for investment subsidiaries, aircraft lease, giving ICDs are utilized for investment subsidiaries, aircraft leas are utilized for investment subsidiaries, aircraft leas to subsidiaries is allowable expenditure u/s 36(1)(iii) of the Act. s allowable expenditure u/s 36(1)(iii) of the Act. s allowable expenditure u/s 36(1)(iii) of the Act.

7.1 We have heard rival submissions of the parties on the issue in We have heard rival submissions of the parties on the issue in We have heard rival submissions of the parties on the issue in dispute and perused the relevant material on record. As far as ispute and perused the relevant material on record. As far as ispute and perused the relevant material on record. As far as borrowed funds utilized for ICDs to subsidiaries, we have also held borrowed funds utilized for ICDs to subsidiaries, we have also held borrowed funds utilized for ICDs to subsidiaries, we have also held the interest income received as business income while dealing the interest income received as business income while dealing the interest income received as business income while dealing ground No. 1 of the appeal of the Revenue and therefore any ground No. 1 of the appeal of the Revenue and therefore any ground No. 1 of the appeal of the Revenue and therefore any expenditure on interest related to the business nditure on interest related to the business income income is allowable as business expenditure. However, borrowed fund as business expenditure. However, borrowed fund if any if any utilized for investment in subsidiaries investment in subsidiaries would be in the nature of the investment in the nature of the investment and any income arising from there would be liable either any income arising from there would be liable either any income arising from there would be liable either as dividend income in the hands of the assessee or capital gain and dividend income in the hands of the assessee or capital gain and dividend income in the hands of the assessee or capital gain and therefore, expenditure therefore, expenditure connected thereon cannot be held to be cannot be held to be related to the business of the assessee related to the business of the assessee. This appears to be a appears to be a factual error on the part of the Ld. CIT(A) n the part of the Ld. CIT(A) , hence proper inve , hence proper investigation of facts is required. Therefore, we feel it appropriate to restore this herefore, we feel it appropriate to restore this herefore, we feel it appropriate to restore this issue back to the file of the Ld. CIT(A) for identifying interest issue back to the file of the Ld. CIT(A) for identifying interest issue back to the file of the Ld. CIT(A) for identifying interest expenditure proportionate to the ICDs to subsidiaries and interest expenditure proportionate to the ICDs to subsidiaries a expenditure proportionate to the ICDs to subsidiaries a of aircraft taken on of aircraft taken on lease vis-à-vis interest on borrowed funds borrowed funds utilized for investment in subsidiaries which is an issue which utilized for investment in subsidiaries which is an issue which utilized for investment in subsidiaries which is an issue which could be examined while disallowance u/s 14A of the Act . The Ld. could be examined while disallowance u/s 14A of the Act . The Ld. 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 shall decide the issue in dispute in accordance with law shall decide the issue in dispute in accordance with law after allowing adequate opportunity of allowing adequate opportunity of being heard to the assessee. The being heard to the assessee. The

M/s Essar Shipping Ltd. 11 ITA No. 87/Mum/2023

ground Nos. 2 and 3 of the appeal of the Revenue are accordingly . 2 and 3 of the appeal of the Revenue are accordingly . 2 and 3 of the appeal of the Revenue are accordingly allowed for statistical purposes. allowed for statistical purposes.

“8.3 Decision: I have considered the order of the AO, 8.3 Decision: I have considered the order of the AO, 8.3 Decision: I have considered the order of the AO, submissions of the appellant vis submissions of the appellant vis-à-vis the decisions of the vis the decisions of the Appellate Authorities. Similar issue has been decided by Appellate Authorities. Similar issue has been decided by Appellate Authorities. Similar issue has been decided by the Hon'ble Tribunal in the appellant's own case the Hon'ble Tribunal in the appellant's own case the Hon'ble Tribunal in the appellant's own case vide its order for A.Y. 2013 order for A.Y. 2013-14 in /TA No.7371/Mum/2017, 14 in /TA No.7371/Mum/2017, holding that interest expenditure is periodic cost of holding that interest expenditure is periodic cost of holding that interest expenditure is periodic cost of borrowing incurred for the purpose of financing business borrowing incurred for the purpose of financing business borrowing incurred for the purpose of financing business activities. Further, my predecessor in the appellate orders activities. Further, my predecessor in the appellate orders activities. Further, my predecessor in the appellate orders for AY 2012 for AY 2012-13, 2015-16 and 2016-17 has followed the 17 has followed the order of the Hon'ble ITAT supra. Therefore, common order of the Hon'ble ITAT supra. Therefore, common order of the Hon'ble ITAT supra. Therefore, common interest expenses are to be apportioned on the basis of interest expenses are to be apportioned on the basis of interest expenses are to be apportioned on the basis of cost of financing i.e., on the value of assets and not on cost of financing i.e., on the value of assets and not on 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 the basis of turnover. In the present A.Y. the AO has the basis of turnover. In the present A.Y. the AO has allocated the common interest expenses on the basis of e common interest expenses on the basis of e common interest expenses on the basis of turnover and added interest of Rs23,69,58,913/ turnover and added interest of Rs23,69,58,913/ turnover and added interest of Rs23,69,58,913/-as income of the non income of the non-tonnage activity of the appellant. tonnage activity of the appellant. Respectfully following the orders of the Appellate Respectfully following the orders of the Appellate Respectfully following the orders of the Appellate Authorities, as highlighted above, it is held that the Authorities, as highlighted above, it is held that the Authorities, as highlighted above, it is held that the

M/s Essar Shipping Ltd. 12 ITA No. 87/Mum/2023

addition is not tenable. The Appellant has claimed that it tion is not tenable. The Appellant has claimed that it tion is not tenable. The Appellant has claimed that it has apportioned the common interest on the basis of has apportioned the common interest on the basis of has apportioned the common interest on the basis of value of assets. The ground is allowed, subject to value of assets. The ground is allowed, subject to value of assets. The ground is allowed, subject to verification of the Appellant's claim by the AO, at the time verification of the Appellant's claim by the AO, at the time verification of the Appellant's claim by the AO, at the time of giving effect to this order. of giving effect to this order.” 8.1 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that the Ld. CIT(A) has followed the binding precedent on the issue in the Ld. CIT(A) has followed the binding precedent on the issue in the Ld. CIT(A) has followed the binding precedent on the issue in dispute in the case of the assessee itself dispute in the case of the assessee itself , therefore, we do therefore, we do not find any error in the order of the Ld. CIT(A) any error in the order of the Ld. CIT(A) on the issue in dispute on the issue in dispute .Accordingly, we uphold the same. we uphold the same. The ground No. 4 of the appeal is The ground No. 4 of the appeal is accordingly dismissed. accordingly dismissed.

“14.6 Decision on Admission of Additional Grounds: Decision on Admission of Additional Grounds: Decision on Admission of Additional Grounds: The Appellant has raised the additional grounds on the The Appellant has raised the additional grounds on the The Appellant has raised the additional grounds on the issue of payment of income issue of payment of income-tax on tonnage business tax on tonnage business income and foreign dividend income when income and foreign dividend income when these were these were actually set off against current year's losses. I have actually set off against current year's losses. I have actually set off against current year's losses. I have

M/s Essar Shipping Ltd. 13 ITA No. 87/Mum/2023

considered the submissions of the Appellant as also the considered the submissions of the Appellant as also the considered the submissions of the Appellant as also the comments of the AO in this regard. While requesting for comments of the AO in this regard. While requesting for comments of the AO in this regard. While requesting for admission of the additional grounds, it has been admission of the additional grounds, it has been admission of the additional grounds, it has been submitted that the appellant submitted that the appellant inadvertently missed out inadvertently missed out these grounds while filling the Form no. 35 and that the these grounds while filling the Form no. 35 and that the these grounds while filling the Form no. 35 and that the new AR noticed the omission. Such omission was neither new AR noticed the omission. Such omission was neither new AR noticed the omission. Such omission was neither willful nor unreasonable. On perusal, I find that grounds willful nor unreasonable. On perusal, I find that grounds willful nor unreasonable. On perusal, I find that grounds are legal and basic facts are already on records. The AO are legal and basic facts are already on records. The AO are legal and basic facts are already on records. The AO has objected to the admission of these grounds stating objected to the admission of these grounds stating objected to the admission of these grounds stating that the appellant should have filed revised return of that the appellant should have filed revised return of that the appellant should have filed revised return of income correcting its claim of refund. Also, the AO has income correcting its claim of refund. Also, the AO has income correcting its claim of refund. Also, the AO has relied on the decision of Hon'ble Supreme Court in the relied on the decision of Hon'ble Supreme Court in the relied on the decision of Hon'ble Supreme Court in the case of, Goetze India Ltd vs CIT 284 case of, Goetze India Ltd vs CIT 284 ITR 323. The additional grounds relate to error on the part of the The additional grounds relate to error on the part of the The additional grounds relate to error on the part of the appellant while filing the return of income in calculating appellant while filing the return of income in calculating appellant while filing the return of income in calculating tax on tonnage income and foreign dividend income at tax on tonnage income and foreign dividend income at tax on tonnage income and foreign dividend income at special rate when it was already set off against other special rate when it was already set off against other special rate when it was already set off against other current losses of the s current losses of the same year and total income as per ame year and total income as per return of income was NIL. It is stated that the claim has return of income was NIL. It is stated that the claim has return of income was NIL. It is stated that the claim has been made immediately after realization of omission. The been made immediately after realization of omission. The been made immediately after realization of omission. The issue before Hon'ble Supreme Court in the case of Goetze issue before Hon'ble Supreme Court in the case of Goetze issue before Hon'ble Supreme Court in the case of Goetze India (supra) was limited to the powers of the AO. India (supra) was limited to the powers of the AO. India (supra) was limited to the powers of the AO. The Hon'ble Supreme Court has discussed the powers of Hon'ble Supreme Court has discussed the powers of Hon'ble Supreme Court has discussed the powers of appellate authorities to allow additional ground in Jute appellate authorities to allow additional ground in Jute appellate authorities to allow additional ground in Jute Corporation of India Ltd 187 IT 688 (SC) and National Corporation of India Ltd 187 IT 688 (SC) and National Corporation of India Ltd 187 IT 688 (SC) and National Thermal Power Co Lid 229 /7R 383 (SC). Än additional Thermal Power Co Lid 229 /7R 383 (SC). Än additional Thermal Power Co Lid 229 /7R 383 (SC). Än additional ground can be urged before the appella ground can be urged before the appellate authorities te authorities provided. evidence is on record. Further, the Hon'ble provided. evidence is on record. Further, the Hon'ble provided. evidence is on record. Further, the Hon'ble jurisdictional High Court in the case of CIT vs Pruthvi jurisdictional High Court in the case of CIT vs Pruthvi jurisdictional High Court in the case of CIT vs Pruthvi Brokers & Shareholders Pvt. Brokers & Shareholders Pvt. Ltd. 349 IT 336 on) as held Ltd. 349 IT 336 on) as held as under - PARTIME PARTIME "An assessee is entitled to raise not merely additional "An assessee is entitled to raise not merely additional "An assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is legal submissions before the appellate authorities but is legal submissions before the appellate authorities but is also entitled to raise additional claims before them. The also entitled to raise additional claims before them. The also entitled to raise additional claims before them. The appellate authorities have the discretion to permit such appellate authorities have the discretion to permit such appellate authorities have the discretion to permit such additional claims to be raised. additional claims to be raised. The appellate authorities The appellate authorities have jurisdiction to deal have jurisdiction to deal not merely with additional not merely with additional grounds, which became available on account of change of grounds, which became available on account of change of grounds, which became available on account of change of circumstances or law, but with additional grounds which circumstances or law, but with additional grounds which circumstances or law, but with additional grounds which were available when the retum was filed. The words were available when the retum was filed. The words were available when the retum was filed. The words "could not have been raised" must be construed liberally "could not have been raised" must be construed liberally "could not have been raised" must be construed liberally

M/s Essar Shipping Ltd. 14 ITA No. 87/Mum/2023

and not strictly. There may be several factors justifying strictly. There may be several factors justifying strictly. There may be several factors justifying the raising of a new plea in an appeal and each case the raising of a new plea in an appeal and each case the raising of a new plea in an appeal and each case must be considered on its own facts. must be considered on its own facts. Held, dismissing the appeal, that the orders of the Held, dismissing the appeal, that the orders of the Held, dismissing the appeal, that the orders of the Commissioner Commissioner Commissioner (Appeals) (Appeals) (Appeals) and and and the the the Tribunal Tribunal Tribunal clearly clearly clearly indicated that b indicated that both the appellate authorities had oth the appellate authorities had exercised their jurisdiction to consider the additional exercised their jurisdiction to consider the additional exercised their jurisdiction to consider the additional claim. The conclusion that the error in not claiming the claim. The conclusion that the error in not claiming the claim. The conclusion that the error in not claiming the deduction in the return of income was inadvertent could deduction in the return of income was inadvertent could deduction in the return of income was inadvertent could not be faulted for more than one reason. It was a fin not be faulted for more than one reason. It was a fin not be faulted for more than one reason. It was a finding of fact which could not be termed perverse. of fact which could not be termed perverse. There was There was nothing on record that militated against the finding. The nothing on record that militated against the finding. The nothing on record that militated against the finding. The Revenue had not Revenue had not suggested much less established that suggested much less established that the omission was deliberate or mala fide. Both the the omission was deliberate or mala fide. Both the the omission was deliberate or mala fide. Both the appellate authorities had themselve appellate authorities had themselves considered the s considered the additional claim and allowed it. They had not remanded additional claim and allowed it. They had not remanded additional claim and allowed it. They had not remanded the matter to the Assessing Officer to consider it. Both the the matter to the Assessing Officer to consider it. Both the the matter to the Assessing Officer to consider it. Both the orders expressly directed the Assessing Officer to allow orders expressly directed the Assessing Officer to allow orders expressly directed the Assessing Officer to allow the deduction of Rs. 40 lakhs under section 43B of the the deduction of Rs. 40 lakhs under section 43B of the the deduction of Rs. 40 lakhs under section 43B of the Income-tax tax Act, 1961. The Assessing Officer had, Act, 1961. The Assessing Officer had, therefore, now only to compute the assessee's tax liability therefore, now only to compute the assessee's tax liability therefore, now only to compute the assessee's tax liability which he must do in accordance with the orders allowing which he must do in accordance with the orders allowing which he must do in accordance with the orders allowing the assessee a deduction of Rs. 40 lakhs tinder the assessee a deduction of Rs. 40 lakhs tinder the assessee a deduction of Rs. 40 lakhs tinder-section 43B". In Siva Equipment Pvt. Ltd. 119 taxmann. In Siva Equipment Pvt. Ltd. 119 taxmann.com 472. the com 472. the Hon'ble Jurisdictional High Court has held that the CIT(A) Hon'ble Jurisdictional High Court has held that the CIT(A) Hon'ble Jurisdictional High Court has held that the CIT(A) has jurisdiction to deal with an additional ground which has jurisdiction to deal with an additional ground which has jurisdiction to deal with an additional ground which was available when return of income was filed. was available when return of income was filed. It is observed that my predecessor had allowed similar It is observed that my predecessor had allowed similar It is observed that my predecessor had allowed similar additional grounds to be additional grounds to be raised for AY 2012-13, 2015 13, 2015-16 and 2016-17. Following the available judicial precedents 17. Following the available judicial precedents 17. Following the available judicial precedents and the decisions of Ld. CIT(A) in the case of the and the decisions of Ld. CIT(A) in the case of the and the decisions of Ld. CIT(A) in the case of the appellant on the subject, I find the additional grounds of appellant on the subject, I find the additional grounds of appellant on the subject, I find the additional grounds of appeal to be admissible. appeal to be admissible.” 9.1 Since, the Ld. CIT(A) has fo Since, the Ld. CIT(A) has followed the binding precedent llowed the binding precedents on the issue in dispute the issue in dispute , therefore, we do not find any error in the therefore, we do not find any error in the

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 order of the Ld. CIT(A) and accordingly the ground No order of the Ld. CIT(A) and accordingly the ground No the Revenue are dismissed. the Revenue are dismissed.

9.2 As far as ground No. 5 As far as ground No. 5 is concerned, the Ld. CIT(A) has concerned, the Ld. CIT(A) has allowed the set off of losses under the other heads against the allowed the set off of losses under the other heads against the allowed the set off of losses under the other heads against the income from the tonnage income from the tonnage tax scheme observing as under: scheme observing as under:

“14.7 Decision on Merits on Grounds of AppealNos. 13 14.7 Decision on Merits on Grounds of AppealNos. 13 14.7 Decision on Merits on Grounds of AppealNos. 13 and 14: I have considered the submissions of the apPellant I have considered the submissions of the apPellant I have considered the submissions of the apPellant de merits and also considered the merits and also considered the AO's report. In Para IV of AO's report. In Para IV of its letter filing additional grounds, the Appellant has its letter filing additional grounds, the Appellant has its letter filing additional grounds, the Appellant has explained how the discrepandy has occurred. The explained how the discrepandy has occurred. The explained how the discrepandy has occurred. The tonnage business income of Rs 8,40,72,255/ tonnage business income of Rs 8,40,72,255/- has been has been included in while arriving at the tot included in while arriving at the total business income al business income and the business income was set off against losses and the business income was set off against losses and the business income was set off against losses under the head income from other sources in the relevant under the head income from other sources in the relevant under the head income from other sources in the relevant schedule of the return ofincome. However, While schedule of the return ofincome. However, While schedule of the return ofincome. However, While computing tax liability in Schedule Part B computing tax liability in Schedule Part B - TTI, the TTI, the Appellant has apparently co Appellant has apparently considered the tonnage income nsidered the tonnage income s spèciar ralecincome and calculated tay of R$ 2,86,76, s spèciar ralecincome and calculated tay of R$ 2,86,76, s spèciar ralecincome and calculated tay of R$ 2,86,76, 1601-thereof. The refund claim has been accordingly, thereof. The refund claim has been accordingly, thereof. The refund claim has been accordingly, reduced. In its submission, the Appellant has referred to reduced. In its submission, the Appellant has referred to reduced. In its submission, the Appellant has referred to provision of sub section 70(1) and 71(1) which provides provision of sub section 70(1) and 71(1) which provides provision of sub section 70(1) and 71(1) which provides for set off of loss from one source against income from et off of loss from one source against income from et off of loss from one source against income from another source under the same head of income and another source under the same head of income and another source under the same head of income and losses under one head of income against the income losses under one head of income against the income losses under one head of income against the income under other head of income to explain its claim that no under other head of income to explain its claim that no under other head of income to explain its claim that no tax was leviable separately on tonnage business i tax was leviable separately on tonnage business i tax was leviable separately on tonnage business income, once it was set off against losses. once it was set off against losses. The Appellant has offered its shipping income under The Appellant has offered its shipping income under The Appellant has offered its shipping income under provisions of Chapter XII provisions of Chapter XII-G of the Act. As per section G of the Act. As per section 115VA, income from business of operating qualifying 115VA, income from business of operating qualifying 115VA, income from business of operating qualifying ships can be computed in accordance with the provision ships can be computed in accordance with the provision ships can be computed in accordance with the provisions of the said chapter and such income shall be considered of the said chapter and such income shall be considered of the said chapter and such income shall be considered profits and gains from such business chargeable under profits and gains from such business chargeable under profits and gains from such business chargeable under the head "profits and gains of business or profession", the head "profits and gains of business or profession", the head "profits and gains of business or profession", notwithstanding anything to the contrary contained in notwithstanding anything to the contrary contained in notwithstanding anything to the contrary contained in

M/s Essar Shipping Ltd. 16 ITA No. 87/Mum/2023

sections in sections 28 to 43C. In sections in sections 28 to 43C. Income from business of come from business of operating qualifying ships is one of the sources of income operating qualifying ships is one of the sources of income operating qualifying ships is one of the sources of income under the head "profits and gains of business or under the head "profits and gains of business or under the head "profits and gains of business or profession". It is liable to be set off against losses from profession". It is liable to be set off against losses from profession". It is liable to be set off against losses from other sources of income under the same head /other sources of income under the same head /other sources of income under the same head /other heads of income heads of income as per the provisions of section 70/71 of as per the provisions of section 70/71 of the Act. Further, it is seen that the Ld. CIT(A) allowed the Act. Further, it is seen that the Ld. CIT(A) allowed the Act. Further, it is seen that the Ld. CIT(A) allowed similar issue vide his order dated 07.09.2022 for AY similar issue vide his order dated 07.09.2022 for AY similar issue vide his order dated 07.09.2022 for AY 2012-13. The issue is therefore allowed, subject to 13. The issue is therefore allowed, subject to 13. The issue is therefore allowed, subject to verification and re verification and re-computation by AO of income/los computation by AO of income/loss from various sources under the head 'profits and gains of from various sources under the head 'profits and gains of from various sources under the head 'profits and gains of business', 'other sources' etc. in the light of decisions at business', 'other sources' etc. in the light of decisions at business', 'other sources' etc. in the light of decisions at paras 5.3 and 7.3.2 of this order. The additional ground paras 5.3 and 7.3.2 of this order. The additional ground paras 5.3 and 7.3.2 of this order. The additional ground of appeal no. 1 of appeal no. 1 "(ground no. 13) is thus allowed. The "(ground no. 13) is thus allowed. The additional ground of app additional ground of appeal no. 2 (ground no. 14) is a 14) is a statement about CIT(A's powers and does not need statement about CIT(A's powers and does not need statement about CIT(A's powers and does not need specific adjudication. specific adjudication.” 9.3 Before us, the Ld. Counsel of the assessee submitted that Before us, the Ld. Counsel of the assessee submitted that Before us, the Ld. Counsel of the assessee submitted that identical issue is involved in assessment year 2012 identical issue is involved in assessment year 2012-13. 13.

9.4 We have heard rival submissio We have heard rival submission of the parties on the issue in n of the parties on the issue in dispute and perused the relevant material on record. As far as dispute and perused the relevant material on record. As far as dispute and perused the relevant material on record. As far as provisions of section 71(2) of the Act of section 71(2) of the Act are concerned, net result of the computation under any head computation under any heads of the income other than the “Capital of the income other than the “Capital Gain”, is a loss and t Gain”, is a loss and the assessee has income assessable u he assessee has income assessable under the head “Capital Gains”, such loss may be set off head “Capital Gains”, such loss may be set off against income for against income for that assessment year under any head of income including the head that assessment year under any head of income including the head that assessment year under any head of income including the head ‘ capital Gain. In the case income from qualifying ships has been In the case income from qualifying ships has been In the case income from qualifying ships has been computed under the presumptive taxation scheme of tonnage tax the presumptive taxation scheme of tonnage tax the presumptive taxation scheme of tonnage tax scheme, which has been deemed to be the profit and gains of such scheme, which has been deemed to be the profit and gains of such 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 chargeable to tax under the head “ profit and gains of the business chargeable to tax under the head “ profit and gains of the business or profession’ as per the provisions of section 115VA of the business or profession’ as per the provisions of section 115VA of the business or profession’ as per the provisions of section 115VA of the

M/s Essar Shipping Ltd. 17 ITA No. 87/Mum/2023

Act. Therefore income computed under tonnage tax scheme for the herefore income computed under tonnage tax scheme for the herefore income computed under tonnage tax scheme for the year under consideration is available for set off against losses under year under consideration is available for set off against losses under year under consideration is available for set off against losses under any other head except capital gain as per the provisions of section any other head except capital gain as per the provisions of section any other head except capital gain as per the provisions of section 71(2) of the Act. Since, Since, in the case of the current year lo current year losses under the head ‘income from head ‘income from other sources’ have been set have been set off against the income under the head of business or profession, w head of business or profession, w head of business or profession, we do not find any error in the order of the Ld. CIT(A). any error in the order of the Ld. CIT(A). Accordingly Accordingly, this ground of appeal of the Revenue is dismissed. appeal of the Revenue is dismissed.

M/s Essar Shipping Ltd. 18 ITA No. 87/Mum/2023

amended to not allow set off of any loss while computing such amended to not allow set off of any loss while computing such amended to not allow set off of any loss while computing such income. Similar restriction is not provided is not provided u/s income. Similar restriction is not provided is not provided u/s income. Similar restriction is not provided is not provided u/s 115BBD of the Act for taxing dividend from specified foreign 115BBD of the Act for taxing dividend from specified foreign 115BBD of the Act for taxing dividend from specified foreign company. Thus, set off of business company. Thus, set off of business loss against dividend i loss against dividend income is allowable. The Ld. Counsel further submitted that issue in dispute allowable. The Ld. Counsel further submitted that issue in dispute allowable. The Ld. Counsel further submitted that issue in dispute is covered in assessee’s own case for assessment year 2015-16. is covered in assessee’s own case for assessment year 2015 is covered in assessee’s own case for assessment year 2015 Further, same has been followed for assessment year 2016-17 and Further, same has been followed for assessment year 2016 Further, same has been followed for assessment year 2016 2018-19. The relevant finding of the Tribunal in asse 19. The relevant finding of the Tribunal in assessment year 19. The relevant finding of the Tribunal in asse 2015-16 is reproduced as under: 16 is reproduced as under:

“33. We have heard both the parties at length on the have heard both the parties at length on the have heard both the parties at length on the issue, whether the foreign dividend income can be set off issue, whether the foreign dividend income can be set off issue, whether the foreign dividend income can be set off against the current year loss or not. The contention of Ld. against the current year loss or not. The contention of Ld. against the current year loss or not. The contention of Ld. DR was that the foreign dividend income is taxable u/s DR was that the foreign dividend income is taxable u/s DR was that the foreign dividend income is taxable u/s 115BBD and no adjustment against the 115BBD and no adjustment against the current year current year losses is allowable in view of sub losses is allowable in view of sub-section (2) of section section (2) of section 115BBD. On the other hand, Ld. Counsel strong relied on 115BBD. On the other hand, Ld. Counsel strong relied on 115BBD. On the other hand, Ld. Counsel strong relied on the order of Tribunal in the case of Tata Motors Ltd. vs. the order of Tribunal in the case of Tata Motors Ltd. vs. the order of Tribunal in the case of Tata Motors Ltd. vs. DCIT (supra). In so far as Ld. CIT (A) admitted the DCIT (supra). In so far as Ld. CIT (A) admitted the DCIT (supra). In so far as Ld. CIT (A) admitted the additional ground, additional ground, we find that it was purely a legal we find that it was purely a legal claim made before Ld. CIT (A) based on the provision of claim made before Ld. CIT (A) based on the provision of claim made before Ld. CIT (A) based on the provision of law that, foreign dividend income has to be set off law that, foreign dividend income has to be set off law that, foreign dividend income has to be set off against the current year loss. In support of, Ld. CIT (A) against the current year loss. In support of, Ld. CIT (A) against the current year loss. In support of, Ld. CIT (A) has relied on the judgment of Hon’ble Bombay High has relied on the judgment of Hon’ble Bombay High has relied on the judgment of Hon’ble Bombay High Court in the case of Pruthvi Brokeers & Shareholders Pvt. in the case of Pruthvi Brokeers & Shareholders Pvt. in the case of Pruthvi Brokeers & Shareholders Pvt. Ltd. 349 ITR 336 and held that there is no fetters on the Ltd. 349 ITR 336 and held that there is no fetters on the Ltd. 349 ITR 336 and held that there is no fetters on the powers of CIT (A) to entertain the claim which has not powers of CIT (A) to entertain the claim which has not powers of CIT (A) to entertain the claim which has not been claimed in the return of income been claimed in the return of income. 34. It is an undisputed fact that assessee 34. It is an undisputed fact that assessee had declared had declared loss of Rs. 103,44,94,701/ loss of Rs. 103,44,94,701/- in the return of income. It has in the return of income. It has also also also shown shown shown foreign foreign foreign dividend dividend dividend income income income of of of Rs. Rs. Rs. 10,98,56,941/ 10,98,56,941/- u/s 115BBD, which relates to taxing of u/s 115BBD, which relates to taxing of dividend dividend dividend income income income received received received from from from specified specified specified foreign foreign foreign companies at a lower rate of 15%. Sect companies at a lower rate of 15%. Section 115BBD reads ion 115BBD reads as under:-

M/s Essar Shipping Ltd. 19 ITA No. 87/Mum/2023

"115BBD. (1) Where the total income of an assesses, "115BBD. (1) Where the total income of an assesses, "115BBD. (1) Where the total income of an assesses, being an Indian company, includes any income by way of being an Indian company, includes any income by way of being an Indian company, includes any income by way of dividends declared, distributed or paid by a specified dividends declared, distributed or paid by a specified dividends declared, distributed or paid by a specified foreign company, the income foreign company, the income-tax payable shall be the tax payable shall be the aggregate of aggregate of— (a) the amount of income (a) the amount of income-tax calculated on the income by tax calculated on the income by way of such dividends, at the rate of fifteen per cent; and way of such dividends, at the rate of fifteen per cent; and way of such dividends, at the rate of fifteen per cent; and (b) the amount of income (b) the amount of income-tax with which the assesses, tax with which the assesses, would have been chargeable had its total income been would have been chargeable had its total income been would have been chargeable had its total income been reduced by the aforesaid inco reduced by the aforesaid income by way of dividends. me by way of dividends. (2) Notwithstanding anything contained in this Act, no (2) Notwithstanding anything contained in this Act, no (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance, deduction in respect of any expenditure or allowance, deduction in respect of any expenditure or allowance, shall be allowed to the assessee under any provision of shall be allowed to the assessee under any provision of shall be allowed to the assessee under any provision of this Act in computing its income by way of dividends this Act in computing its income by way of dividends this Act in computing its income by way of dividends referred to in subsection (1). n subsection (1). (3) In this section, (3) In this section,— (i) "dividends" shall have the same meaning as is given to (i) "dividends" shall have the same meaning as is given to (i) "dividends" shall have the same meaning as is given to "dividend" in clause (22) of section 2 but shall not include "dividend" in clause (22) of section 2 but shall not include "dividend" in clause (22) of section 2 but shall not include sub clause (e) thereof; sub clause (e) thereof; (ii) "specified foreign company" means a foreign company (ii) "specified foreign company" means a foreign company (ii) "specified foreign company" means a foreign company in which the in which the Indian company holds twenty-six per cent or six per cent or more in nominal value of the equity share capital of the more in nominal value of the equity share capital of the more in nominal value of the equity share capital of the company." 35. The above section clearly provides that where the 35. The above section clearly provides that where the 35. The above section clearly provides that where the ‘total income’ of the assessee includes income by way of ‘total income’ of the assessee includes income by way of ‘total income’ of the assessee includes income by way of dividend declared, distributed or dividend declared, distributed or paid by a specified paid by a specified foreign company, then such dividend income shall be foreign company, then such dividend income shall be foreign company, then such dividend income shall be subject to tax at 15% (plus applicable surcharge, and subject to tax at 15% (plus applicable surcharge, and subject to tax at 15% (plus applicable surcharge, and cess) and balance part of the total income, that is, as cess) and balance part of the total income, that is, as cess) and balance part of the total income, that is, as reduced by foreign dividend income would be subjected reduced by foreign dividend income would be subjected reduced by foreign dividend income would be subjected to tax at the prevai to tax at the prevailing rate of taxes. 36. The ‘total income’ is defined in section 2(25) of the 36. The ‘total income’ is defined in section 2(25) of the 36. The ‘total income’ is defined in section 2(25) of the Act, which reads as under: Act, which reads as under:-

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“Total income" means the total amount of income referred “Total income" means the total amount of income referred “Total income" means the total amount of income referred to in section 5, computed in the manner laid down in this to in section 5, computed in the manner laid down in this to in section 5, computed in the manner laid down in this Act” Thus, the total income encom Thus, the total income encompasses income of the passes income of the assessee which is received or deemed to be received, assessee which is received or deemed to be received, assessee which is received or deemed to be received, accrued or arises or is deemed to accrue or arise or accrued or arises or is deemed to accrue or arise or accrued or arises or is deemed to accrue or arise or accrues outside India as provided in section 5 of the Act. accrues outside India as provided in section 5 of the Act. accrues outside India as provided in section 5 of the Act. The total income is required to be computed in the The total income is required to be computed in the The total income is required to be computed in the manner laid down in manner laid down in the Act and it is to be computed the Act and it is to be computed independently, as per the provisions guiding the same as independently, as per the provisions guiding the same as independently, as per the provisions guiding the same as per Chapter IV of the Act. The set off and carry forward of Chapter IV of the Act. The set off and carry forward of Chapter IV of the Act. The set off and carry forward of losses are required to be computed as provided under losses are required to be computed as provided under losses are required to be computed as provided under Chapter VI of the Act before setting off any deducti Chapter VI of the Act before setting off any deducti Chapter VI of the Act before setting off any deductions from the total income as provided under Chapter VIA of from the total income as provided under Chapter VIA of from the total income as provided under Chapter VIA of the Act. 37. Section 71 provides set off of losses from one head 37. Section 71 provides set off of losses from one head 37. Section 71 provides set off of losses from one head against income from another head other than the capital against income from another head other than the capital against income from another head other than the capital gains. Thus, section 71 provides set gains. Thus, section 71 provides set-off of business loss off of business loss even from ‘income even from ‘income from other sources’ including dividend from other sources’ including dividend income. It does not provide any restriction on set income. It does not provide any restriction on set income. It does not provide any restriction on set-off of business loss against any dividend income which is business loss against any dividend income which is business loss against any dividend income which is taxable u/s 56 of the Act. The total income of the taxable u/s 56 of the Act. The total income of the taxable u/s 56 of the Act. The total income of the assessee includes income by way of dividend paid by the assessee includes income by way of dividend paid by the assessee includes income by way of dividend paid by the foreign company. However, section 115BBD, then foreign company. However, section 115BBD, then foreign company. However, section 115BBD, then provides that income tax calculated on such dividend provides that income tax calculated on such dividend provides that income tax calculated on such dividend shall be at a lower rate of 15% on gross basis. As per the shall be at a lower rate of 15% on gross basis. As per the shall be at a lower rate of 15% on gross basis. As per the said section, the other income forming part of the total said section, the other income forming part of the total said section, the other income forming part of the total income (i.e. other than foreign dividend income (i.e. other than foreign dividend) will be paid at a ) will be paid at a normal rate of tax. normal rate of tax. 28. Sub section (2) of section 115BBD begins with a non 28. Sub section (2) of section 115BBD begins with a non 28. Sub section (2) of section 115BBD begins with a non- obstante clause which provides that no deduction in obstante clause which provides that no deduction in obstante clause which provides that no deduction in respect of any expenditure or allowance shall be allowed respect of any expenditure or allowance shall be allowed respect of any expenditure or allowance shall be allowed to the assessee under any to the assessee under any provision of this Act in provision of this Act in computing its income by way of foreign dividend. This computing its income by way of foreign dividend. This computing its income by way of foreign dividend. This inter-alia means that Legislature has provided lower rate alia means that Legislature has provided lower rate alia means that Legislature has provided lower rate of tax @ 15% on foreign dividend and therefore, no of tax @ 15% on foreign dividend and therefore, no of tax @ 15% on foreign dividend and therefore, no deduction towards in respect of any expenditure will be deduction towards in respect of any expenditure will be deduction towards in respect of any expenditure will be allowed from that income. However, n allowed from that income. However, nowhere there is owhere there is any restriction or curb provided in sub section (2) that any restriction or curb provided in sub section (2) that any restriction or curb provided in sub section (2) that foreign dividend income cannot be set off against the foreign dividend income cannot be set off against the foreign dividend income cannot be set off against the

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current year loss while computing the total income. As current year loss while computing the total income. As current year loss while computing the total income. As stated above, in the total income, the assessee has made stated above, in the total income, the assessee has made stated above, in the total income, the assessee has made computation for v computation for various streams of income separately. arious streams of income separately. Out of the said total income, if there is any foreign Out of the said total income, if there is any foreign Out of the said total income, if there is any foreign dividend income, the same shall be taken into account dividend income, the same shall be taken into account dividend income, the same shall be taken into account while computing the total income and if there is a loss, while computing the total income and if there is a loss, while computing the total income and if there is a loss, then the same shall be set off in accordance with sect then the same shall be set off in accordance with sect then the same shall be set off in accordance with section 71 of the Act. 71 of the Act. 39. On the contrary, there is another section 115BBDA, 39. On the contrary, there is another section 115BBDA, 39. On the contrary, there is another section 115BBDA, which deals with dividend received from domestic which deals with dividend received from domestic which deals with dividend received from domestic companies. In this section there is a specific restriction companies. In this section there is a specific restriction companies. In this section there is a specific restriction not only for allowance of expenditure deduction in respect not only for allowance of expenditure deduction in respect not only for allowance of expenditure deduction in respect of any expendi of any expenditure or allowance but also restriction on ture or allowance but also restriction on set off of loss. For the sake of ready reference, section set off of loss. For the sake of ready reference, section set off of loss. For the sake of ready reference, section 115BBDA is reproduced as under: 115BBDA is reproduced as under:- 115BBDA. (1) Notwithstanding anything contained in this 115BBDA. (1) Notwithstanding anything contained in this 115BBDA. (1) Notwithstanding anything contained in this Act, where the total income of (a specified assessee) Act, where the total income of (a specified assessee) Act, where the total income of (a specified assessee) resident in I resident in India, includes any income in aggregate ndia, includes any income in aggregate exceeding ten lakh rupees, by way of dividends declared, exceeding ten lakh rupees, by way of dividends declared, exceeding ten lakh rupees, by way of dividends declared, distributed or paid by a domestic company or companies distributed or paid by a domestic company or companies distributed or paid by a domestic company or companies (on or before the 31st day of March 2020), the income tax (on or before the 31st day of March 2020), the income tax (on or before the 31st day of March 2020), the income tax payable shall be the aggregate of payable shall be the aggregate of a) the amount a) the amount of income tax calculated on the income by of income tax calculated on the income by way of such dividends in aggregate exceeding ten lakh way of such dividends in aggregate exceeding ten lakh way of such dividends in aggregate exceeding ten lakh rupees, at the rate of ten per cent and rupees, at the rate of ten per cent and b) the amount of income tax with which the assessee b) the amount of income tax with which the assessee b) the amount of income tax with which the assessee would have been chargeable had the total income of the would have been chargeable had the total income of the would have been chargeable had the total income of the assessee been reduced by the amount of income by way en reduced by the amount of income by way en reduced by the amount of income by way of dividends. of dividends. (2) No deduction in respect of any expenditure or (2) No deduction in respect of any expenditure or (2) No deduction in respect of any expenditure or allowance or set off of loss shall be allowed to the allowance or set off of loss shall be allowed to the allowance or set off of loss shall be allowed to the assessee under any provision of this Act in computing the assessee under any provision of this Act in computing the assessee under any provision of this Act in computing the income by way of dividends referred to income by way of dividends referred to in clause (a) of in clause (a) of sub section (1). sub section (1). ------------- --------. 40. If sub section (2) of 115BBD and sub section (2) of 40. If sub section (2) of 115BBD and sub section (2) of 40. If sub section (2) of 115BBD and sub section (2) of section 115BBDA are juxtaposed, then it is clear that in section 115BBDA are juxtaposed, then it is clear that in section 115BBDA are juxtaposed, then it is clear that in so far as dividend received from a domestic company, not so far as dividend received from a domestic company, not so far as dividend received from a domestic company, not only there is restriction only there is restriction for not allowing the deduction of for not allowing the deduction of

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any expenditure or allowance but also the set off of loss any expenditure or allowance but also the set off of loss any expenditure or allowance but also the set off of loss is also not allowable. On the contrary, there is no such is also not allowable. On the contrary, there is no such is also not allowable. On the contrary, there is no such restriction in set off of loss in sub section (2) of section restriction in set off of loss in sub section (2) of section restriction in set off of loss in sub section (2) of section 115BBD. Thus, it clearly shows the intention o 115BBD. Thus, it clearly shows the intention o 115BBD. Thus, it clearly shows the intention of the Legislature in putting restrictions in both the sections is Legislature in putting restrictions in both the sections is Legislature in putting restrictions in both the sections is different. One of the reasons is that, domestic dividend different. One of the reasons is that, domestic dividend different. One of the reasons is that, domestic dividend (before 31st March 2020) was exempted from tax, that is, (before 31st March 2020) was exempted from tax, that is, (before 31st March 2020) was exempted from tax, that is, domestic dividend was not forming part of the total domestic dividend was not forming part of the total domestic dividend was not forming part of the total income. Whereas, foreign income. Whereas, foreign dividend income was never dividend income was never exempted from tax and was treated as part of the total exempted from tax and was treated as part of the total exempted from tax and was treated as part of the total income. Ostensibly, if domestic dividend does not form income. Ostensibly, if domestic dividend does not form income. Ostensibly, if domestic dividend does not form part of the total income or is exempted from tax, then part of the total income or is exempted from tax, then part of the total income or is exempted from tax, then there is no question of allowing any deduction of there is no question of allowing any deduction of there is no question of allowing any deduction of expenses or se expenses or set off of loss while computing the total t off of loss while computing the total income. It is precisely for this reason that, this distinction income. It is precisely for this reason that, this distinction income. It is precisely for this reason that, this distinction has been made by the Legislature between the foreign has been made by the Legislature between the foreign has been made by the Legislature between the foreign dividend income and domestic dividend income. dividend income and domestic dividend income. 41. Wherever Legislature has provided that no deducti 41. Wherever Legislature has provided that no deducti 41. Wherever Legislature has provided that no deduction or set off of loss shall be allowed then the same has been or set off of loss shall be allowed then the same has been or set off of loss shall be allowed then the same has been specifically provided in the statute, for instance, section specifically provided in the statute, for instance, section specifically provided in the statute, for instance, section 115BBE which is tax on income referred to section 68, 115BBE which is tax on income referred to section 68, 115BBE which is tax on income referred to section 68, 69, 69A, 69B, 69C or 69D, the Legislature has provided 69, 69A, 69B, 69C or 69D, the Legislature has provided 69, 69A, 69B, 69C or 69D, the Legislature has provided tax rate of 60% and furth tax rate of 60% and further in sub section (2), it has er in sub section (2), it has provided that no deduction in respect of any expenditure provided that no deduction in respect of any expenditure provided that no deduction in respect of any expenditure allowance or set off of any loss shall be allowed to the allowance or set off of any loss shall be allowed to the allowance or set off of any loss shall be allowed to the assessee under any assessee under any provision of this Act in computing the provision of this Act in computing the income referred to section 68 to 69D. Again this goes income referred to section 68 to 69D. Again this goes income referred to section 68 to 69D. Again this goes to show that there is a specific bar or restriction for allowing show that there is a specific bar or restriction for allowing show that there is a specific bar or restriction for allowing of any set off of any loss from any part of stream of of any set off of any loss from any part of stream of of any set off of any loss from any part of stream of income. This bar and restriction is completely absent in income. This bar and restriction is completely absent in income. This bar and restriction is completely absent in sub section (2) of section 115BBD. If we take this analogy sub section (2) of section 115BBD. If we take this analogy sub section (2) of section 115BBD. If we take this analogy of section 115BBDA an of section 115BBDA and Section 115BBE, then it d Section 115BBE, then it indicates that, whenever Legislature has intended not to indicates that, whenever Legislature has intended not to indicates that, whenever Legislature has intended not to allow deduction or set off of loss, it has been clearly allow deduction or set off of loss, it has been clearly allow deduction or set off of loss, it has been clearly provided in the statute and wherever only restriction is provided in the statute and wherever only restriction is provided in the statute and wherever only restriction is for not allowing the deduction in respect of any for not allowing the deduction in respect of any for not allowing the deduction in respect of any expenditure or allowance, then same has to be confined or allowance, then same has to be confined to the language given in the statute and nothing can be to the language given in the statute and nothing can be to the language given in the statute and nothing can be inferred or read into to import any other restriction in the inferred or read into to import any other restriction in the inferred or read into to import any other restriction in the said provision, i.e., the set off of loss should also be read said provision, i.e., the set off of loss should also be read said provision, i.e., the set off of loss should also be read into. Section 115BBD is similar t into. Section 115BBD is similar to section 115BBF, which o section 115BBF, which is tax on income on patent and there only restriction is tax on income on patent and there only restriction is tax on income on patent and there only restriction

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provided provided provided in in in sub sub sub section section section (2) (2) (2) is is is with with with regard regard regard to to to nonallowability of non nonallowability of non-deduction in respect of any deduction in respect of any expenditure or allowance. No amendment has been expenditure or allowance. No amendment has been expenditure or allowance. No amendment has been brought in section 115BBD in sub brought in section 115BBD in sub section (2) as was section (2) as was brought in sub section (2) of section 115BBE w.e.f. brought in sub section (2) of section 115BBE w.e.f. brought in sub section (2) of section 115BBE w.e.f. 01.04.2017. 42. Further, whenever income is proposed to be taxed on 42. Further, whenever income is proposed to be taxed on 42. Further, whenever income is proposed to be taxed on gross basis at a specified rates without grant of any gross basis at a specified rates without grant of any gross basis at a specified rates without grant of any deduction towards expenditure allowance or any set off deduction towards expenditure allowance or any set off deduction towards expenditure allowance or any set off of loss, then it is expressly provided in statute which in then it is expressly provided in statute which in then it is expressly provided in statute which in the case of foreign dividend income u/s 115BBD, no such the case of foreign dividend income u/s 115BBD, no such the case of foreign dividend income u/s 115BBD, no such restriction has been provided for not allowing the set off restriction has been provided for not allowing the set off restriction has been provided for not allowing the set off of loss, albeit the only restriction is for allowability of any of loss, albeit the only restriction is for allowability of any of loss, albeit the only restriction is for allowability of any expenditure or allowance. expenditure or allowance. 43. Ergo, from a plain reading of the Section 115BBD, it 43. Ergo, from a plain reading of the Section 115BBD, it 43. Ergo, from a plain reading of the Section 115BBD, it is seen that the language of the statute is absolutely is seen that the language of the statute is absolutely is seen that the language of the statute is absolutely clear and there is no ambiguity in such provision. clear and there is no ambiguity in such provision. clear and there is no ambiguity in such provision. Nowhere the section speaks that dividend income Nowhere the section speaks that dividend income Nowhere the section speaks that dividend income received from specified foreign company cann received from specified foreign company cannot be set ot be set-off from the business losses while computing the total from the business losses while computing the total from the business losses while computing the total income which is computed as per the Act and set off is income which is computed as per the Act and set off is 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 allowed as per section 71 of the Act. It is trite and well allowed as per section 71 of the Act. It is trite and well settled law that the construction of the statute must be settled law that the construction of the statute must be settled law that the construction of the statute must be taken from the bare taken from the bare words of the Act. One should not look words of the Act. One should not look what could have been the intention of the legislature what could have been the intention of the legislature what could have been the intention of the legislature behind the legislating section and if a legislature did behind the legislating section and if a legislature did behind the legislating section and if a legislature did intend in this way, then it has to be expressed clearly in intend in this way, then it has to be expressed clearly in intend in this way, then it has to be expressed clearly in the language of the Section. The Courts cannot in the language of the Section. The Courts cannot in the language of the Section. The Courts cannot invent something which something which is not there in the statute nor should try is not there in the statute nor should try to gauge the intention of the Legislature. It is only where to gauge the intention of the Legislature. It is only where to gauge the intention of the Legislature. It is only where the language of the statute in its ordinary meaning and the language of the statute in its ordinary meaning and the language of the statute in its ordinary meaning and grammatical grammatical grammatical construction, construction, construction, leads leads leads to to to a a a manifest manifest manifest contradiction of the apparent contradiction of the apparent purpose of the enactment, purpose of the enactment, or to some inconvenience or absurdity, hardship or or to some inconvenience or absurdity, hardship or or to some inconvenience or absurdity, hardship or injustice, presumably not intended, then a construction injustice, presumably not intended, then a construction injustice, presumably not intended, then a construction may be given which modifies the meaning of the words may be given which modifies the meaning of the words may be given which modifies the meaning of the words and even the structure of the sentence. In such and even the structure of the sentence. In such and even the structure of the sentence. In such circumstances, the Cou circumstances, the Courts while interpreting the provision rts while interpreting the provision probable can go what was the purpose of bringing that probable can go what was the purpose of bringing that probable can go what was the purpose of bringing that legislation. Here we have already discussed the various legislation. Here we have already discussed the various legislation. Here we have already discussed the various provisions of sections in the statute where different set of provisions of sections in the statute where different set of provisions of sections in the statute where different set of

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limitation and restriction has been provided whi limitation and restriction has been provided whi limitation and restriction has been provided while computing different kinds of income and hence restriction computing different kinds of income and hence restriction computing different kinds of income and hence restriction applicable for one source of income cannot be applied to applicable for one source of income cannot be applied to applicable for one source of income cannot be applied to other source of income nor can same be imported and other source of income nor can same be imported and other source of income nor can same be imported and read into other section. Here, there no such ambiguity or read into other section. Here, there no such ambiguity or read into other section. Here, there no such ambiguity or contradiction in the languag contradiction in the language used in the section to e used in the section to import any such fetters. import any such fetters. 44. Thus, we hold that there is no restriction or bar in set 44. Thus, we hold that there is no restriction or bar in set 44. Thus, we hold that there is no restriction or bar in set off of foreign dividend of income from the current year off of foreign dividend of income from the current year off of foreign dividend of income from the current year loss while computing the total income. Accordingly, the computing the total income. Accordingly, the computing the total income. Accordingly, the order of Ld. CIT (A) is order of Ld. CIT (A) is confirmed. In any case similar view confirmed. In any case similar view has been taken by the Coordinate Bench in the case of has been taken by the Coordinate Bench in the case of has been taken by the Coordinate Bench in the case of Tata Motors Ltd. vs. DCIT (supra) which has been Tata Motors Ltd. vs. DCIT (supra) which has been Tata Motors Ltd. vs. DCIT (supra) which has been followed by the Ld. CIT (A), hence we do not find any followed by the Ld. CIT (A), hence we do not find any followed by the Ld. CIT (A), hence we do not find any infirmity in following the principle laid down therein. infirmity in following the principle laid down therein. infirmity in following the principle laid down therein. Accordingly, ground nos. 6.1 to 6.3 raised by the revenue ngly, ground nos. 6.1 to 6.3 raised by the revenue ngly, ground nos. 6.1 to 6.3 raised by the revenue is dismissed. is dismissed.” 10.1 As the issue in dispute involved in the year under As the issue in dispute involved in the year under As the issue in dispute involved in the year under consideration is identical to the issue involved for AY 2015-16 consideration is identical to the issue involved for AY 2015 consideration is identical to the issue involved for AY 2015 therefore respectfully following the finding of the Tribunal (supra), therefore respectfully following the finding of the Tribunal (supra), therefore respectfully following the finding of the Tribunal (supra), we allow set off of the business losses against dividend income and we allow set off of the business losses against dividend income and we allow set off of the business losses against dividend income and reject the grounds of appeal of the Revenue. of appeal of the Revenue. The ground Nos. 6 to The ground Nos. 6 to 6.3 of the appeal are accordingly dismissed. 6.3 of the appeal are accordingly dismissed.

Order pronounced in the open Court on nounced in the open Court on 31/07/2023. /07/2023. Sd/ Sd/- Sd/ Sd/- (KAVITHA RAJAGOPAL KAVITHA RAJAGOPAL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai;

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Dated: 31/07/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai