GFL LIMITED,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX,CIRCLE 1(1)(1), VADODARA

PDF · subscribers
ITA 1788/AHD/2026Status: DisposedITAT Ahmedabad03 August 2026AY 2015-166 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that interest under Section 234C is not leviable on capital gains if the advance tax is paid within the financial year, especially if the capital gains arose late in the year. The matter was remanded to the AO for verification.

What were the facts?

The assessee filed its return of income declaring a loss. During assessment, the AO made disallowances under Section 14A and for late payment of employee PF contributions. The CIT(A) partly allowed the assessee's appeal.

What were the issues?

Whether interest under Section 234C is leviable on capital gains that arose late in the financial year, and whether the proviso to Section 234C applies in such cases.

Which sections of the Income-tax Act were involved?

Section 14A,Section 234C,Section 10(38)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri S N Soparkar, Sr. Advocate
For Respondent: Shri Arvind Kumar Namdeo, SR-DR
Hearing: 20.07.2026Pronounced: 03.08.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the Assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 13.03.2026 for the Assessment Year (A.Y.) 2015-16 in the proceeding u/s 143(3) of the Income Tax Act [hereinafter referred as “The Act”].

2.

The brief facts of the case are that the assessee had filed its return of income for A.Y. 2015-16 on 28.11.2015 declaring loss of Rs.15,80,73,858/- under the normal provisions and book profit of Rs.4,15,61,91,575/-. Thereafter, a revised return was filed on 27.03.2017 but there was no change in the income declared therein. The case was

ITA No. 1788/Ahd/2026 GFL Limited Vs ACIT, AY- 2015-16 2

selected for scrutiny and the assessment was completed u/s. 143(3) of the Act on 26.12.2017 at loss of Rs. 11,88,92,509/- and book profit of Rs.4,19,53,31,478/- u/s. 115JB of the Act. The AO had made disallowance of Rs. 3,91,39,903/- u/s. 14A read with Rule 8D and of Rs.41,446/- in respect of late payment of employees contribution to provident fund (PF), while completing the assessment.

3.

Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was partly allowed.

4.

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

1.

Ground 1-Ground of Appeal pertaining to disallowance under Section 14A of the Act (Addition INR 58,59,113) 1.1. The learned AO/CTT(A) has erred in lew and on facts in confirming the disallowance amounting to INR 58,59,113 under section 14A read with Rule RD(2)(iii) towards administrative expenses, despite the appellant having already made a suo motu disallowance of INR 81,46,666- 2. Ground 2-Ground of Appeal pertaining to levy of interest under Section 234C of the Act (Addition-INR 2,84,22,382) 2.1 The learned Assessing Officer has erred in law and on facts in levying interest of INR 2,84,22.382 under section 234C of the Income-tax Act, 1961 for the entire year, and the learned Commissioner of Income-tax (Appeals) has further erred in confirming the said levy, without appreciating that no interest under section 234C is leviable in respect of capital gains which arose on 31.03.2015, as the appellant could neither have anticipated nor estimated such capital gains during the relevant instalments of advance tax. 2.2 The learned Comunissioner failed to appreciate that section 234C does not apply where the failure to pay advance tax is on account of non-estimation or under-estimation of capital gains arising on the last day of the previous year, and therefore, the levy of interest under section 234C to that extent is bad in law, unjustified and liable to be deleted.

ITA No. 1788/Ahd/2026 GFL Limited Vs ACIT, AY- 2015-16 3 The Appellant craves leave to add, alter, vary, omit, substitute or amend one or more of the above Grounds of Appeal as they or their representative may think fit at any time before, or at the time of, hearing of the appeal, so as to enable the Honorable Panel to decide this appeal according to law.

5.

The First Ground pertains to disallowance u/s. 14A of the Act. In the course of hearing Shri S.N. Soparkar, the Ld. Sr. Counsel appearing for the assessee did not press this ground. Hence this ground is dismissed.

6.

Ground No. 2 pertains to levy of interest u/s. 234C of the Act. The AO while completing the assessment has raised total demand of Rs.91,79,97,292/- on the book profit which included interest of Rs.2,84,22,382/- u/s. 234C of the Act. Shri S.N. Soparkar, the Ld. Sr. Counsel, explained that the company had accounted for profit of Rs.3,02,71,62,753/- on account of capital gain on transfer of investment in shares of subsidiary viz. Inox Wind Ltd (IWL) in Initial Public Offer by IWL on 30.03.2015. He explained that the said transaction was exempt u/s. 10(38) of the Act but was included in profit while computing the book profit. According to the Ld. Sr. Counsel, this capital gain arose on 30.03.2015 and by that time, the due date of payment of instalments of advance tax was already over. However, the assessee had paid the advance tax within financial year itself on 31.03.2015 and, thus, there was no default on the part of the assessee in payment of advance tax. Under the circumstances, the levy of interest u/s. 234C of the Act was not called for. The Ld. Sr. Counsel has drawn our attention to proviso to section 234C of the Act in this regard. He submitted that the Ld. CIT(A) was not correct in dismissing the appeal of the assessee without correctly appreciating the facts of the case as well as the provisions of the Act.

ITA No. 1788/Ahd/2026 GFL Limited Vs ACIT, AY- 2015-16 4 7. Per contra, Shri Arvind Kumar Namdeo, the Ld. Sr. DR supported the order of the lower authorities.

8.

We have considered the rival submissions. It is found that the Ld. CIT(A) had decided the matter in a mechanical manner by holding that the interest under the provision of section 234C of the Act was statutory and arose automatically, where there was non-payment/short payment of any of the instalments of the advance tax. However, he did not examine as to when the capital gain liability arose in the present case and how the advance tax instalment was payable thereon by the assessee. It will be relevant here to reproduce the relevant proviso below section 234C(1)(b) of the Act, which reads as under:

Provided that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of under-estimate or failure to estimate— (a) the amount of capital gains; or (b) income of the nature referred to in sub-clause (ix) of clause (24) of section 2, and the assessee has paid the whole of the amount of tax payable in respect of income referred to in clause (a) or clause (b), as the case may be, had such income been a part of the total income, as part of the remaining instalments of advance tax which are due or where no such instalments are due, by the 31st day of March of the financial year: [Emphasis supplied.]

9.

As per this proviso, the interest u/s. 234C of the Act, is not chargeable in respect of capital gains, if the assessee has paid the advance tax in the remaining instalments or where no instalment is due, then by the 31st day of March of the financial year. According to the assessee, the capital gain liability had arisen in the present case on 30.03.2015 and by that time the due date of payment of all the instalment of advance tax was over. As explained by the assessee, it had paid the advance tax on the capital gain on 31st March 2015, i.e. within the

ITA No. 1788/Ahd/2026 GFL Limited Vs ACIT, AY- 2015-16 5 financial year itself. Thus, the case of the assessee is found to be covered by the proviso to section 234C(1)(b) of the Act, subject to verification of capital gains being accrued on 30.03.2015 and payment of advance tax thereon on 31st March, as contended by the assessee. It transpires that the interest u/s. 234C of the Act was computed by the systems without actual verification of date on which the capital gains had arisen and whether the assessee had made payment of advance tax on this capital gain within the remainder of the financial year. We, therefore, deem it proper to set aside the matter to the file of Jurisdictional AO with a direction to verify the date of accrual of capital gains and date of payment of advance tax thereon. The assessee is also directed to produce the evidence of crystallization of capital gains on 30.03.2015 and the payment of advance tax on 31.03.2015, before the AO. In case the entire advance tax liability on the capital gain was duly paid within the financial year, then no interest should be levied u/s. 234C of the Act. In case of any deficit, the levy of penalty u/s. 234C of the Act should be proportionately worked out by the AO, after allowing an opportunity of being heard to the assessee. The ground taken by the Assessee is allowed for statistical purpose.

10.

In the result, the appeal of the Assessee is partly allowed for statistical purpose.

Order pronounced in the Court on 03/08/2026 at Ahmedabad.

Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 03rd August, 2026 Neelesh, Sr. PS (True Copy)

ITA No. 1788/Ahd/2026 GFL Limited Vs ACIT, AY- 2015-16 6

आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप/सहायक उप सहायक पंजीकार उप उप सहायक सहायक पंजीकार पंजीकार आयकर अपीलीय आयकर अपीलीय अिधकरण अिधकरण, अहमदाबाद अहमदाबाद / ITAT, Ahmedabad आयकर आयकर अपीलीय अपीलीय अिधकरण अिधकरण अहमदाबाद अहमदाबाद

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →