ACIT, CIRCLE - 3 3 1, MUMBAI vs. JAMNAGAR UTILITIES AND POWER PVT LTD, MUMBAI

ITA 5312/MUM/2024Status: DisposedITAT Mumbai04 December 2025AY 2019-2051 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that CSR expenditure, while disallowed under Section 37(1) of the Income Tax Act, 1961, can still be eligible for deduction under Section 80G if paid to institutions registered under that section. The disallowance under Section 37(1) does not create a bar for deduction under other provisions. The Tribunal noted that the Explanatory Memorandum to the Finance (No. 2) Act, 2014, clarifies this. Regarding MTM losses and fair value adjustments on RPS, the Tribunal noted that the CIT(A) deleted these additions, and the Revenue's grounds of appeal were dismissed. The Tribunal upheld the CIT(A)'s deletion of the addition related to fair value adjustment on RPS, stating that the CIT(A) followed binding precedents. The Tribunal also noted that the AO had made a disallowance under Section 14A of Rs. 65,63,50,056, but this was restricted to Rs. 7,622/- by the CIT(A) based on the assessee not earning any exempt income and relying on various High Court decisions which held that Section 14A cannot be applied in the absence of exempt income. The Tribunal upheld this restriction. The operative direction was to allow the Revenue's appeals partly.

What were the facts?

The Revenue filed appeals against orders of the CIT(A) for assessment years 2019-2020 and 2020-21, concerning Jamnagar Utilities and Power Pvt. Ltd. The appeals were consolidated due to common issues. The Revenue's appeals were filed with a delay, which the Tribunal condoned. The Assessing Officer (AO) made additions including disallowance of deduction under Section 80G, addition for Mark To Market (MTM) losses on currency swap contracts, and addition to book profits under Section 115JB for fair value adjustment on redeemable preference shares. The CIT(A) deleted all these additions. The Revenue's grounds of appeal challenge these deletions.

What were the issues?

1. Whether contribution or donation made to discharge a legal obligation under Section 135 of the Companies Act, read with Schedule VII, is a voluntary contribution eligible for deduction under Section 80G read with Sections 11 & 12 of the Income Tax Act, 1961? 2. Whether MTM losses arising from currency swap contracts fall within the purview of Section 43AA of the Act, subject to Section 43A relating to taxation of foreign exchange fluctuation? 3. Whether the CIT(A) rightly confirmed the assessee's treatment of MTM losses on currency swap, disregarding the AO's findings? 4. Whether the amount paid by the assessee to Shrimad Rajchandra Sarvamangal Trust and Reliance Foundation is eligible spending within the meaning of Section 135 read with Rule 7 of the Companies Act, 2013? 5. Whether the CIT(A) was justified in deleting the addition of fair value adjustment on redeemable preference shares (RPS) in book profit, given the assessee valued RPS at NIL arbitrarily and MTM loss is not applicable due to lack of market? 6. Whether the CIT(A) was justified in deleting the addition of fair value adjustment on RPS in book profit, considering revaluation of RPS as a provision for diminution? Assessee's contentions (implied from CIT(A)'s order and grounds): CSR expenditure, though disallowed under Section 37(1), is eligible for deduction under Section 80G if paid to eligible institutions. MTM losses on currency swaps are not taxable under Section 43AA. Fair value adjustment on RPS in book profit should not be added back under Section 115JB. Revenue's contentions (implied from grounds): CSR expenditure is mandatory and not voluntary, thus not eligible for Section 80G. MTM losses on currency swaps are taxable under Section 43AA. Fair value adjustment on RPS is a provision for diminution and should be added back.

Which sections of the Income-tax Act were involved?

Section 135,Section 80G,Section 11,Section 12,Section 43AA,Section 43A,Section 37(1),Section 115JB,Section 14A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(11)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN

For Appellant: Mr. Nimesh Vora/, Ms. Moksha Mehta
For Respondent: Mr. Vivek Perampurna, CIT-DR
Hearing: 17/09/2025Pronounced: 04/12/2025

PER BENCH These two appeals by the Revenue are directed against, two separate orders, dated 06.08.2024 and 02.08.2024, passed by the Ld. Commissioner of Income-tax (Appeals) National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)'] for assessment year 2019-2020 and 2020-21 respectively.

2.

As these appeals are having common issue in dispute permeating from same set of facts, therefore, same were heard together and disposed off by way of this consolidated order for the sake of convenience and avoid repetition of facts.

3.

At the outset, the Ld. Depart

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 135

All 205 judgments and leading authorities on Section 135 →

Recent GST High Court judgments

Search GST case law →