NEW INDIA EXPORTS PRIVATE LIMITED ,MUMBAI vs. INCOME TAX OFFICER WARD 7(1)(1), MUMBAI

PER OM PRAKASH KANT, AM

These two appeals by the assessee are directed against two separate orders, both dated 19.02.2025 passed by the Ld.
Commissioner of Income-tax (Appeals) – National Faceless Appeal
Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2016-17
and 2020-21 respectively.

ue in dispute are involved in bot were heard together and dispos der for the sake of convenience.
e up the appeal of the assessee grounds raised by the assessee d. CIT(A) erred in confirming the disa st expenses of Rs.69,73,933/-
Ld. CIT(A) further erred in holding t ses are more than interest income by n ct that the Appellant is partner in MG ures Café LLP and is required to con l of Rs. 2,25,00,000/-.
d. CIT(A) further erred in confirming the d tablishment expenses under the var nting to Rs.31,82,243/- which are neces nce of the company and are incurred for business of the company, details of w
Advertisement Expenses - Rs.15,000/
071/-, Travelling & Conveyance- Rs laneous Expenses - Rs. 2,738/-, Servic
64/-, Audit Fees - Rs. 34,350/-,Telephon harges - Rs. 61,587/-, Profession Tax e and Filing fees - Rs.10,482/-, Sales P
03/-, Printing and Stationery - Rs.1,04
enance
-
Rs.28,489/-,
Motor
Car
95,877l-, Repairs and Maintenance to O
082/-, Total - Rs. 31,82,243/-.
he Ld. CIT(A) further erred in con wance of administrative expenses of Rs ding that there were no business operat ess revenue, therefore, claiming the exp etext that it was incurred for conducting m truth.
Ld. CIT(A) further erred in not apprecia here is a temporary lull in the business, amount to non-carrying out business dering the nature of expenses, the same a New India Exports Pvt. Ltd
2
. 2655 & 2656/MUM/2025
th these appeals sed off by way of for assessment are reproduced allowance of that interest not accepting
G New India ntribute fixed disallowance rious heads ssary for the r the purpose which are as /-, Insurance s.9,91,660/-, ce Tax - Rs.
ne and Trunk
-Rs.2,500/-,
Promotion-Rs.
0/-, General
Expenses
- ther Assets - nfirming the .31,82,243/- tions and no enses under g business is ating the fact which does s activities.
are allowable expens essent the bu
India F
Rs.15,2
7. The has no that th
8. The ground
4. Briefly stated, assessee-company is allied activities. For t its return of income
₹94,11,873/-. The r scrutiny assessment
Income-tax Act, 196
issued and duly comp
4.1 During the cou
Officer observed tha carried out by the as assessee had disclos rental income, leave balances written bac
No revenue from op account. The Assessi assessment year also N
ITA No.

ses since these were incurred by th tially on a day-to-day basis to maintain th usiness i.e. Renting of premises, Partner
Furnitures Café LLP and investment i
23,32,392l-.
Ld. CIT(A) further erred in holding that t ot submitted any documentary proof to hey are running the business and intend t
Appellant craves leave to add to, alter or d before or at the time of hearing.
the material facts of the cas engaged in the business of exp the year under consideration, th on 10th October, 2016 declarin return was duly processed an . Statutory notices under the p
61 (hereinafter referred to as plied with.
urse of scrutiny proceedings, at no active business operat ssessee during the relevant pre sed only passive or incidental r e and licence fees, interest, di ck, and profit on investments in perations was credited in the ing Officer further noticed that i o, the assessee had declared inc
New India Exports Pvt. Ltd
3
. 2655 & 2656/MUM/2025
he Appellant he running of r in MG New in shares of the Appellant substantiate to do it.
r amend any se are that the port trading and he assessee filed ng a total loss of nd selected for provisions of the “the Act”) were the Assessing tions had been evious year. The receipts such as ividend, sundry n mutual funds.
profit and loss in the preceding come only under the head “Income fr
Property”. The dividen
4.2 Upon perusal of that the assessee ha to related concerns w the view that the bor of business, the Asse under section 36(1)(ii
4.3 Further, obse administrative and ₹31,82,243/- despite
Officer disallowed th
Act. The assessmen
143(3) of the Act by o
5. Aggrieved, the a Commissioner of Inc consideration, uphel
Officer. The assessee matter in appeal befo
6. At the outset, before us a Paper Boo submissions and evi
N
ITA No.

from Other Sources” and “Inco nd income was claimed as exem f the balance sheet, the Assessin ad borrowed certain funds whic without charging any interest th rrowed capital was not utilised f essing Officer disallowed a sum ii) of the Act.
erving that the assessee establishment expenses a e having no business activity, he said expenditure under secti nt was accordingly completed order dated 23rd December, 201
assessee preferred an appeal bef come-tax (Appeals) [Ld. CIT(A)], ld the disallowances made by e, being further aggrieved, has ore this Tribunal.
the Learned Counsel for the a ok running from pages 1 to 269
idences tendered before the low
New India Exports Pvt. Ltd
4
. 2655 & 2656/MUM/2025
me from House mpt ng Officer found ch were diverted hereon. Being of for the purposes of ₹69,73,933/- had claimed aggregating to , the Assessing ion 37(1) of the under section 18. fore the Learned who, after due y the Assessing now carried the assessee placed
9, containing the wer authorities.

The Learned Departm order of the authoriti
7. We have careful record. As far as grou disallowance of Rs disallowance of ₹69
debited interest of ₹
₹22,48,687/-. It was crores had been adva
Furnitures Café LLP, benefit. The plea o assessee was found operations were carr
Ld. CIT(A) is reprodu
“4(a). I have c have also co facts of the c income of Rs charges of Rs analyse the d
From the ana utilised borro the group con
In this regard investment w
However, dur revenue from except divers was no real in since the cap current busin the disallowa
N
ITA No.

mental Representative (Ld. DR) ies below.
lly heard the rival submissions a und Nos. 1 and 2 of the appeal
.69,73,933/- , the Ld. CIT(
9,73,933/- observing that the ₹97,82,036/- while earning int found that borrowed funds amo anced to a related concern, M/s without deriving any commens of commercial expediency ad d unsubstantiated inasmuch a ied on during the year. The rel ced as under:
considered the facts & circumstances of t onsidered the assessee's submissions.
ase, it is seen that the assessee declare s. 22,48,687/- and the assessee debite s. 97,82,036/-. In this regard, the AO pro details of borrowed funds and investmen alysis of financials, it is known that the wed funds of Rs. 2,25,00,000/- to inves ncerns by name MG New India Furnitures d, the assessee further contended that was done as a part of commercial ex ring the current AY, the assessee did not business operations, which clearly indi sion of borrowed funds to group conce ncome generated out of business operatio pital borrowed was not utilized for the p ess but only invested in group concerns, ance made by the AO on account of New India Exports Pvt. Ltd
5
. 2655 & 2656/MUM/2025
R) supported the and perused the l concerning the (A) upheld the e assessee had erest income of ounting to ₹2.25
s. MG New India surate business vanced by the as no business levant finding of the case. I
From the ed interest ed interest oceeded to ts thereof.
assessee t in one of Café LLP.
the above xpediency.
show any icates that rns, there ons. Thus, purpose of therefore, f relatable interest expe under the pro there was no year. Financi was only hav income, purch disallowance and the sam appeal raise dismissed.”
7.1 The Ld. Departm assessee has failed extending the loan
Furnitures Care LLP.
7.2 Before us, also, material to justify th exigency or that the advantage. The mere ipso facto establish b
36(1)(iii) of the Act. I the finding of the accordingly uphold assessee’s appeal sta
8. We next advert disallowance of ₹3
administrative exp advertisement, trave expenses. The autho
N
ITA No.

nses amounting to Rs. 69,73,933/- cle ovisions of section 36(1) (iii) of the IT Ac o revenue from business operations in th ials, clearly reveals that the assessee ving other income such as interest income hase & sale of investments. Thus, the prop of interest made by the AO is found to b me is hereby upheld. Accordingly, the g ed by the assessee in this regard i mental Representative (DR) sub d to explain the commercial to partnership concern M/s the assessee has failed to addu hat the advances were made o ey yielded any direct or indir e assertion of business relatio business purpose within the me
In these circumstances, we find
Ld. CIT(A) sustaining the di the same, and Ground Nos.
and dismissed.
to ground Nos. 3 to 7 of the ap
1,82,243/- representing esta enses under various hea elling, insurance, audit fee, orities below were of the view
New India Exports Pvt. Ltd
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. 2655 & 2656/MUM/2025
early falls t. Further, he current company e, dividend portionate be in order grounds of is hereby bmitted that the expediency of MG New India uce any credible out of business rect commercial onship does not eaning of section d no infirmity in sallowance. We
1 and 2 of the ppeal concerning ablishment and ds, such as and motor-car w that since no business operations expenditures could n exclusively for the pu
Ld. CIT(A) on the issu
“5(b). I have c have also co facts of the establishmen heads such a and conveyan
Particu
Adverti
Insuran
Travelli
Miscella
Service
Audit F
Telepho
Profess
License
Sales P
Printing
Genera
N
ITA No.

s were carried out during th not be said to have been incur urpose of business. The relevan ue in dispute is reproduced as u considered the facts & circumstances of t onsidered the assessee's submissions.
case, it is known that the assesse t expenses of RS. 31,82,243/- under th as advertisement expenses, insurance, nce etc which are as under:- ulars
Amount isement Expenses
15,000
nce
97,071
ing & Conveyance :
9,91,660
aneous Expenses
2,738
Tax
1,23,564
Fees
34,350
one 8s Trunk call charges
61,587
sion Tax
2,500
e & Filing fees
10,482
Promotion Expenses
1,46,803
g & Stationery
1,040
al Maintenance
28,489
New India Exports Pvt. Ltd
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. 2655 & 2656/MUM/2025
he year, these rred wholly and nt finding of the under:
the case. I
From the e debited he various travelling

Motor C
Repair
Total
From the peru not shown an the above ex section 37(1) allowable if it of business op business ope therefore, deb incurred for c since the ab purposes, the the action o
Accordingly, t
8.1 Before us, th contended that the e maintaining the corp that there was mer adverse market cond cessation of business even where busine expenses incurred to The Ld. counsel sub earlier years and th incurred.
N
ITA No.

Car Expenses
15,95,877
& Maintenance to Other Assets 71,082
31,82,243
usal of financials, it is seen that the ass ny business revenue during the year bu xpenses which is not correct. As men
) of the IT Act, business expenditure t was incurred wholly & exclusively for th perations. However, during the year, the erations and there was no business biting the expenses under the pretext th conducting business is far from truth.
bove expenses were not spent for the e same was disallowed by the AO. I co of the AO and the same is hereby the assessee's grounds are hereby dismi e Learned Counsel for the expenses were minimal and we porate existence of the assesse ely a temporary lull in the b ditions, and such a lull does s. Reliance was placed upon th ess operations are temporar o preserve the business structur bmitted that similar expenses w here is no change in the natu
New India Exports Pvt. Ltd
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. 2655 & 2656/MUM/2025
essee has ut debited ntioned in e is only he purpose re was no revenue, hat it was Therefore, business oncur with y upheld.
issed.”
assessee has ere incurred for ee. It was urged business due to not amount to he principle that rily suspended, re are allowable.
were allowed in ure of expenses

merit, in the submission of th orporate entity requires cer maintenance expenses to be bo e. The true test is whether the e ning the corporate structure an nce business when circumstanc s of justice, therefore, we resto ssing Officer with a direction to ry evidence and vouchers, whet was genuinely required for m of the assessee. The Assessin portunity of hearing to the asse accordance with law. Grounds N r statistical purposes.
o the appeal for Assessment Yea herein are substantially sim ssessee’s appeal for A.Y. 2016-1
est, administrative expenses, de
The grounds raised by the :
d. CIT(A) erred confirming the disallo ess expenses as mentioned below amo
78,91,348-.
Details of Expenses d ases - Rs. 70,172l-, Employee Benefit E
7,97,154l-, Interest - Rs. 2,33,94,844/-, In 53,988-,
Rent
- Rs.
2,76,000,
Trav
New India Exports Pvt. Ltd
9
. 2655 & 2656/MUM/2025
he assessee. The rtain statutory, orne irrespective expenditure was nd enabling the ces so permit.
ore this issue to o verify, on the ther each of the maintaining the ng Officer shall essee and decide
Nos. 3 to 7 are, ar 2020-21. The milar to those
17, pertaining to epreciation, and e assessee are owance of ounting of isallowed:
Expenses - nsurance - velling &

Convey
Charge
91,576
7,55,2
7,85,73
Income
3,78,9
2. The Ld of the d that de of total of Sche profess
3. The Ld of the E
House that ex total in Schedu profess
4. The Ld income even v the sta
Sr. no.
5. The Ld held th and th activiti same a by the order t
10.1 As the facts an findings for A.Y. 20
Assessing Officer with for this year also stan
11. In the result, partly allowed for N
ITA No.

yance- Rs. 30,72,345/-, Legal & Pr es - Rs.3,90,900/-, Sales Promotion Expe
6/-, Repairs & Maintenance Buildin
19/-, Loss on shares -Rs. 360/-, Dep
730/-, Expenses considered under othe e under other heads- Rs. (74,672l-), T
1,348-.
d. CIT(A) further erred confirming the dis depreciation of Rs. 7,85,730 without even epreciation is already disallowed in the l income and in income tax return in Sr.
edule BP - Computation of income from bu sion.
d. CIT(A) further erred confirming the dis
Expenses considered under the head Inc property of Rs. 32,77,732 without even xpenses are already disallowed in the sta ncome and in income tax return in Sr. no ule BP - Computation of income from bu sion.
d. CIT(A) further erred confirming the a e considered under other heads Rs. 48,40
erifying that the same has been already atement of total income and in income tax
2 and 4 of Schedule EI-Details of Exempt d. CIT(A) failed to appreciate and ough hat: a. there was a temporary lull in the hat does not amount to non-carrying of ies; b. considering the nature of expe are allowable expenses since these were e Appellant essentially on a day-to-day to run the business.
nd issues are pari materia, we
016-17, restore the matter to h identical directions. According nd allowed for statistical purpos the appeal for Assessment Y statistical purposes, and New India Exports Pvt. Ltd
10
. 2655 & 2656/MUM/2025
rofessional enses - Rs.
ng - Rs.
preciation- er heads,
Total - Rs.
allowance n verifying statement no. A - 11
usiness or allowance come from n verifying atement of o. A - 7 of usiness or addition of 05 without offered in x return in t Income.
ht to have e business f business enses, the e incurred y basis in e, following our the file of the gly, the grounds ses.
ear 2016-17 is the appeal for Assessment Year 20
terms of our aforesaid
Order pronounced in (NARENDER KUMA
JUDICIAL M
Mumbai;
Dated: 27/10/2025
Rahul Sharma, Sr. P.S.

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

////

N
ITA No.

020-21 is allowed for statistic d observations.
n the open Court on 27/10/20
/-
S
AR CHOUDHRY)
(OM PRAK
MEMBER
ACCOUNTA ded to :

BY ORDER

(Assistant Re

ITAT, Mu

New India Exports Pvt. Ltd
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. 2655 & 2656/MUM/2025
cal purposes in 025. d/-
KASH KANT)
ANT MEMBER
R, gistrar) umbai