DCIT, CC-1(1), CHENNAI vs. M/S. ABAN INVESTMENTS LTD., CHENNAI

आयकर अपील सं./ITA No.: 830/CHNY/2020 िनधा�रण वष� /Assessment Year: 2016-17 The DCIT, M/s. Aban Investments Pvt. Corporate Circle 1(1), v. Ltd., Chennai. 113, Janpriya Crest, Pantheon Road, Egmore, Chennai – 600 008. PAN: AAACA 2926J (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellant by : Shri P. Sajit Kumar, JCIT ��यथ� क� ओर से/Respondent by : Shri R. Vijayaraghavan, Advocate सुनवाई क� तार�ख/Date of Hearing : 19.09.2022 घोषणा क� तार�ख/Date of Pronouncement : 19.09.2022 आदेश /O R D E R

PER MAHAVIR SINGH, VICE PRESIDENT:

3. The ld.CIT(A) failed to appreciate the factual aspect that in the absence of business activity in the relevant assessment year business loss cannot be allowed?

3 invoking the provisions of section 14A of the Act, disallowed direct interest expenses towards earning of exempt income of Rs.1,56,40,436/- and as a result, net expenditure incurred by assessee towards earning of interest income was Rs.1,60,23,224/-. Therefore, the AO added interest earned of Rs.1,18,41,893/- and assessed the same as income from other sources and disallowed business loss claimed by assessee amounting to Rs.1,68,55,901/-. Aggrieved, assessee preferred appeal before CIT(A).

3.1 The CIT(A) deleted the disallowance of business loss by observing in para 7.1 to 7.3 by following assessee’s own case for assessment year 2010-11 by observing as under:- 7.1 The Assessing Officer disallowed the claim of business loss of Rs.1,68,55,901/- on the ground that there was no income under the head Income from business or profession' and did not allow carry forward of the loss.

7.2 In the written submission the A.R stated that the assessee is in the business of investments and lending money and hence the income as wel1 as the expenditure incurred including interest on borrowings utilized for the purpose of investment and lending should be considered as part of the business operation of the company as held by the CIT(A) in assessee's own case for the A. Y 2010-11.

7.3 Respectfully following the decision of the CIT(A) in assessee's own case for the A.Y 2010-11, disallowance of business loss is deleted.

4 4. Now, before us, the ld.counsel for the assessee filed copy of Tribunal’s order in assessee’s own case for assessment years 2010- 11 to 2012-13 I 934 & 935/Chny/2017, order dated 31.03.2022 and stated that the issue is squarely covered wherein the Tribunal vide para 3.2 has dismissed all the three appeals of Revenue on identical issue by observing as under:- “3.2 We have considered the rival contentions and perused the orders of authorities below. In this case, the admitted facts are that the assessee is engaged in the business of investment and finance and has obtained loan from Industrial Finance Corporation of India (IFCI) and was utilized fully to fund M/s. Aban Offshore Ltd. by way of loan and the interest income earned was fully offered to tax. Moreover, the Assessing Officer has not disputed the total interest expenditure incurred by the assessee. However, the Assessing Officer has no justification by reducing the same from earning of except income by reckoning the direct interest expenditure for the purposes of section 14A of the Act. Therefore, the ld. CIT(A) has held that the disallowance does not have any merit and accordingly directed the Assessing Officer to delete the addition. Under the above facts and circumstances, we find no reason to interfere with the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed for all the assessment year under appeal.”

5 6. We have heard rival contentions and gone through facts and circumstances of the case. We noted that the Tribunal has already considered the issue and held that the AO has not justified by reducing the total interest expenditure from earning of exempt income by reckoning the direct interest expenditure. Respectfully following the Co-ordinate Bench decision in assessee’s own case, we dismiss this appeal of Revenue.

Order pronounced in the open court on 19th September, 2022 at Chennai.