ADDL CIT 2(3), MUMBAI vs. TATA INDUSTRIES LTD, MUMBAI

ITA 4109/MUM/2012Status: DisposedITAT Mumbai19 November 2025AY 2006-0736 pages
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What did the Tribunal hold?

The Tribunal addressed the issue concerning exemption under Section 10(23G). The assessee contended that it qualifies as an 'infrastructure capital company' by investing in an enterprise engaged in infrastructure facilities, citing precedents like Jammu & Kashmir Bank Ltd. v. ACIT and DCIT v. ICICI Bank Ltd. The Tribunal, respectfully following these decisions, found no infirmity in the CIT(A)'s order allowing the exemption under Section 10(23G). Consequently, Ground No. 2(a) & (b) of the revenue in ITA No. 4109/Mum/2012 were dismissed, and ITA No. 4109/Mum/2012 of the revenue was dismissed. For ITA No. 5690/MUM/2015, which dealt with penalty, the Tribunal noted that since the substantial quantum additions were being dealt with in other appeals, the penalty being consequential needed to be revisited by the AO. Thus, the matter was restored to the AO for fresh adjudication based on the decisions in the main appeals. The Tribunal did not explicitly decide on all the grounds raised by the assessee in ITA No. 3157/MUM/2012, but the overall result indicates a partial allowance for the assessee.

What were the facts?

The appeals and cross-objection relate to Assessment Year 2006-07 and arise from orders passed by the Commissioner of Income Tax (Appeals) and the Assessing Officer. The assessee, Tata Industries Ltd., is challenging various disallowances and additions made by the revenue authorities. The revenue, represented by ACIT and DCIT, is also in appeal against certain reliefs granted by the CIT(A). The matters involve challenges to the allocation of interest and administrative expenses under Section 14A, treatment of capital expenditure, classification of sub-license fees, computation of income from house property, disallowance of brokerage and legal/professional fees, disallowance of interest and overseas taxes, and addition for unrealized foreign exchange loss. A separate appeal by the revenue concerns penalty imposed under Section 271(1)(c).

What were the issues?

1. Whether the CIT(A) erred in allocating proportionate interest expenditure of Rs. 41.70 Crores and administrative/establishment expenses of Rs. 11.69 Crores under Section 14A for computing income from business/profession and adjusted book profit under Section 115JB. The assessee argued that the disallowance should be made in proportion to investments yielding dividend income or based on the ratio of loan funds to total funds, and that administrative expenditure disallowance requires a precise formula, citing CIT v. Dhanalakshmy Bank Ltd. The revenue's contentions are not explicitly detailed for this issue. 2. Whether the CIT(A) erred in confirming Rs. 28,38,00,000 as capital expenditure, considering the assessee's main activity as acquiring controlling interest in companies, thus disallowing related interest and expenses. The assessee contended that such expenditure is revenue in nature and should be allowable, or at least limited to the Project and Investment division's expenditure. 3. Whether the CIT(A) erred in treating sub-license fees of Rs. 1,39,38,000 as income from other sources. The assessee's arguments are not detailed. 4. Whether the CIT(A) erred in directing that a flat owned by the assessee and temporarily occupied by sportsmen be considered for computing income from house property. The assessee's arguments are not detailed. 5. Whether the CIT(A) erred in confirming the disallowance of Rs. 20,75,457 as brokerage expenses and Rs. 1,99,50,893 and Rs. 18,51,209 as legal & professional fees, and Rs. 38,84,420 as capital expenditure. The assessee argued for deductibility of these expenses. The revenue's contentions are not detailed. 6. Whether the CIT(A) erred in confirming the disallowance of interest expenditure of Rs. 12,62,87,403 under Section 40(a)(ia) for non-deduction of TDS. The assessee's arguments are not detailed. 7. Whether the CIT(A) erred in confirming the disallowance of Rs. 10,01,707 of Overseas Taxes paid under Section 37. The assessee's arguments are not detailed. 8. Whether the CIT(A) erred in confirming the addition of Rs. 24,75,371 for unrealized foreign exchange loss. The assessee's arguments are not detailed. 9. Whether the assessee qualifies for exemption under Section 10(23G) as an 'infrastructure capital company' by making investments in an enterprise engaged in infrastructure facilities. The assessee argued it meets the definition and cited Jammu & Kashmir Bank Ltd. v. ACIT and DCIT v. ICICI Bank Ltd. The revenue's contentions are not detailed.

Which sections of the Income-tax Act were involved?

Section 14A,Section 115JB,Section 10(23G),Section 40(a)(ia),Section 37,Section 271(1)(c),Section 143(3)

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Heard together (4 matters)

ITA Nos.3157/MUM/2012
CO No. 144/MUM/2016
ITA No. 4109/MUM/2012
ITA No. 5690/MUM/2015

Read from the judgment's own cause title. This page is filed under one of them.

IN THE INCOME TAX APPELLATE TRIBUNAL, `E' BENCH MUMBAI BEFORE: SHRI SAKTIJIT DEY, VICE PRESIDENT & SHRI ARUN KHODPIA, ACCOUNTANT MEMBER

ITA Nos.3157/MUM/2012 (AY: 2006-07) Vs. ACIT -2(3), Aayakar Bhavan, M. K. Road, Mumbai-400 020 (Respondent) Tata Industries Ltd Bombay House, 24 Homi Mody Stree, Fort Mumbai-400001 (Appellant) PAN: AAACT4058L ..

CO No. 144/MUM/2016 (ITA No. 4109/MUM/2012 & ITA No. 3157/MUM/2012) Vs. Tata Industries Ltd Bombay House, 24 Homi Mody Street, Fort Mumbai-400001 (Respondent) ACIT-2(3)(1) Aayakar Bhavan, M. K Road, Mumbai-400 020 (Appellant) PAN: AAACT4058L .. Vs. Tata Industries Ltd Bombay House, 24 Homi Mody Street, Fort Mumbai-400001 (Respondent) DCIT 2(3)(1), Room No. 552, 5th Floor, Aayakar Bhavan, M. K Road, Mumbai-400 020 (Appellant) PAN: AAACT4058L ..

Assessee by Revenue by Date of Hearing Date of Pronouncement Ms. Aarti Vissanji Shri Ritesh Misra, CIT DR 23.09.2025 19.11.2025

2 ITA No. 3157/MUM/2012, ITA No. 4109/MUM/2012 ITA No.5690/MUM/2015 & CO No. 144/MUM/2016

Order PER ARUN KHODPIA, ACCOUNTANT MEMBER:

The captioned appeals and cross objection are filed at the inst

The order continues below.

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