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Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the assessee against the order of CIT(A) – 12, Mumbai dated 01/09/2016 for A.Y.2012-13 in the matter of order passed u/s.143(3) of the IT Act.
The following grounds have been taken by the assessee:- "The learned Commissioner of Income Tax (Appeals) 12, Mumbai (hereinafter referred to as the CIT(A) erred on facts and in law in confirming the disallowance of Rs 24,43,886 being interest claimed by your appellants as the business expenditure. The CIT (A) failed to appreciate the submission made by your appellant vide letter dated 22nd August, 2016. The CIT (A) failed to appreciate that the investment made by your appellant was not for the purpose of earning dividend but the same was trade investment based on the term sheet signed with Flexenclosure AB and accordingly a Joint Venture Company was formed to carry on the business of the Company.
M/s. Artheon Televentures Pvt. Ltd., The CIT(A) failed to consider the submissions made by your appellant that the interest expenditure was incurred for the purpose of business and not for the purpose of investment. Your appellants submit that the expenditure by way of interest is allowable as business expenditure and the Assessing Officer be directed to allow the same as claimed by your appellant. Ground No. 2 "The learned CIT(A) erred on facts and in law in confirming the disallowance of Rs 23,967 being demat charges claimed by your appellants as the business expenditure. Your appellants submit that the expenditure by way of demat charges is allowable as business expenditure and the Assessing Officer be directed to allow the same as claimed by your appellant. Your appellants crave leave to add, alter, amend the ground as may be advised before or at the time of hearing the appeal.
Rival contentions have been heard and record perused. Facts in brief are that assessee is Private Limited Company engaged in the business as advisors and consultants to other businesses, commerce, industry, Government(s) local and statutory bodies, including in respect of the infrastructure sector. Assessee borrowed from the Directors of the Company a sum of Rs 6,25,00,000 and paid interest of Rs 24,43,886 and claimed the same as business expenditure. The A. O has disallowed the same on the plea that expenditure on account of interest is capital in nature.
By the impugned order, CIT(A) confirmed the action of the AO.
I have considered rival contentions and found from record that assessee had made an investment in acquiring shares of Flexenclosure AB with a view to distribute the products manufactured by them which are used in Telecom Towers and Solar based Power Plants. The CIT(A) has confirmed the disallowance by observing that assessee has taken loan and made investment in purchase of shares. There is no business of purchase and