IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER &

SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER (Assessment Year :2017-18 Robust Transportation Vs. Income Tax Officer, Pvt. Ltd., Ward 15(3)(1), Mumbai B-426, 4^th Floor NBC Complex, Plot No.43, Sector-11 CBD Belapur, Navi Mumbai- 400 614 PAN/GIR No.AAECR0046G (Appellant) .. (Respondent Assessee by Shri Ashwani Kumar CA and Ms. Deepali Agarwal Revenue by Shri Annavaran Kosuri, Sr.

AR Date of Hearing 25/11/2025 Date of Pronouncement 11/12/2025 / O R D E R आदेश PER AMIT SHUKLA (J.M):

This appeal, being ITA No. 4803/Mum/2025, has been filed by the assessee against the order dated 16 June 2025 passed by the National Faceless Appeal Centre, Delhi, arising from the assessment framed under section 143(3) of the Income-tax Act, 1961 for Assessment Year 2017–18. The solitary and central grievance of the assessee is against the sustenance of an addition of ₹1,73,68,000 made by the Assessing Officer by way of notional interest @ 8% on aggregate loans and advances of ₹21,71,00,000 given by the assessee-company to certain entities during the relevant previous year. According to the assessee, the impugned addition seeks to tax a purely hypothetical income which has neither arisen nor been received nor is deemed to accrue under the Act, and therefore is contrary to the scheme of the statute and the doctrine of real income as settled by the higher judiciary.

2. The assessee is a company incorporated with broad and ambitious objects of engaging in the business of transportation across all modes land, air, water and even space for carriage of passengers, goods, articles and commodities, both within India and overseas. It is common ground that the principal business activities for which the company was incorporated had not yet commenced during the previous year relevant to Assessment Year 2017–18. In this interregnum, the assessee was, inter alia, engaged in making investments in shares and in preliminary corporate and financial arrangements ancillary to its long-term business vision.

3. For the year under consideration, the assessee e-filed its return of income on 30 October 2017 declaring total income at nil. The return was processed under section 143(1) of the Act. Subsequently, the case was selected for limited scrutiny under CASS, the two flagged issues being: (i) verification of expenditure debited in relation to exempt income, and (ii) examination of low returned income vis-à-vis the substantial balances of loans and advances appearing in the balance sheet. In pursuance thereof, notices under section 143(2) and section 142(1) along with a detailed questionnaire were issued. The assessee appeared through its authorised representative, filed written submissions and produced such details and documents as were called for, which now stand forming part of the assessment record.

4. In the course of the assessment proceedings, the Assessing Officer noticed that, as on 31 March 2017, the assessee had reflected in its balance sheet interest-free loans and advances aggregating to ₹21,71,00,000 given to four companies. These comprised an advance of ₹21,68,00,000 to M/s Tremendous Minerals and Mining Pvt. Ltd. and three smaller advances of ₹1,00,000 each to M/s Zip Minerals & Mining Pvt. Ltd., M/s Luminous Cement Pvt. Ltd. and M/s Coalition Agency Pvt. Ltd. Being of the view that such large balances ought ordinarily to yield interest income, the Assessing Officer required the assessee to explain why proportionate interest should not be brought to tax on the footing that the funds so advanced represented deployment of borrowed capital.

5. In response, the assessee submitted that the funds were not advanced as ordinary commercial loans but were intrinsically connected with proposed acquisitions of unquoted shares and corporate arrangements for possible equity participation in the aforesaid entities. The advances, it was explained, were made in the context of negotia