ITAT MUMBAI BENCH ‘G’
Great Eastern Shipping Co. Ltd.
Versus
Additional Commissioner of Income-tax
IT Appeal Nos. 4507 & 4992 (Mum.) of 2011
SEPTEMBER 14, 2012
ORDER
P.M. Jagtap, Accountant Member.
These two appeals being I.T.A. No. 4507/Mum/2011 and I. T. A. No. 4992/Mum/2011 are cross-appeals which are directed against the order of the learned Commissioner of Income-tax (Appeals)-9, Mumbai dated March 15, 2011. First we shall take up the appeal of the Revenue being I.T.A. No. 4992/Mum/2011.
2. In the solitary ground as originally raised in this appeal, the Revenue has challenged the action of the learned Commissioner of Income-tax (Appeals) in directing the Assessing Officer to allow the interest expenses of Rs. 4,52,82,241.
3. The assessee in the present case is a company which is engaged in the business of shipping, property development and finance. The return of income for the year under consideration was filed by it on November 21, 2006 declaring total income of Rs. 71,06,56,632 and book profit of Rs.303,33,26,270 under section 115J. In the said return, interest expenditure to the extent of Rs. 11,32,79,905 was claimed by the assessee as deduction against income from non-tonnage activities. During the course of assessment proceedings, the assessee was called upon by the Assessing Officer to furnish a fund flow statement, details of the loans taken and the interest expenditure incurred on such loans. The assessee vide its letter dated December 5, 2008 furnished the details required by the Assessing Officer including particulars of loan-wise interest expenditure incurred, the purpose for which the loan was availed of the rate and amount of interest paid and the reasons for treating such interest expenditure as part of the non-tonnage activities. On verification of these details furnished by the assessee, the Assessing Officer was of the opinion that out of interest expenditure of Rs. 11,32,79,905 claimed by the assessee as deduction against the income from non-tonnage activities, an amount of Rs. 4,52,88,241 was attributable to tonnage activities, i.e., shipping of the assessee- company. The reasons given by him for coming to this conclusion are extracted below from pages 3 and 4 of the assessment order :
