TRIL ROADS PRIVATE LIMITED,MUMBAI vs. DY COMM. OF INCOMET TAX, CIRCLE 1(3)(1), MUMBAI

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: E BEFORE HON’BLESHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND HON’BLE SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 6532/MUM/2024 निर्धारणवर्ा/Assmt. Year:2018-19) Permanent Account Number: AACCN6123G TRIL ROADS PRIVATE DEPUTY COMMISSIONER LIMITED OF INCOME TAX-1(3)(1) 2ND FLOOR, ELPHISTONE, AAYAKAR BHAWAN, BUILDING, VEER NARIMAN Vs. MUMBAI, MAHARASHTRA ROAD FORT, MUMBAI, 400020 400001, MAHARASHTRA (प्रत्यर्थीRespondent) (अपीलार्थीAppellant)

निर्धाऩितीद्वधिध/Assessee represented Shri Nitesh Joshi a/w Amey by: Wagle, Advocates िधजस्विद्वधिध/Revenue represented by: Shri Ritesh Misra, CIT DR

सुिवधईकीतधिीख/Date of conclusion of hearing: 15.04.2026 घोषणधकीतधिीख/Date of pronouncement: 13.07.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal is filed by the assessee against the order of ld. Commissioner of Income Tax, Appeal ADDL/JCIT vide DIN: ITBA/APL/S/250/2024-25/1069790548(1) dated 18.10.2024 passed against the intimation issued by the Centralized Processing Centre (CPC) of the Income-tax Department, Bengaluru u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 23.02.2020 for the Assessment Year 2018-19.

1) The Appellant submits that in the present case, since the notice under section 143(2) of the Income Tax Act selecting the return for scrutiny had been issued on 22nd September 2019, the intimation order dated 23rd February 2020 passed thereafter is illegal and bad in law.

2) The Appellant submits that since the adjustments as made in the Intimation passed under section 143(1) have, after inquiry during the assessment proceedings not been discussed and commented upon in the order under section 143(3) dated 27th May 2021, the said adjustments cannot survive and needs to be deleted.

2.2. According to the assessee, these additional grounds goes to the root of the matter and therefore, needs to be admitted for adjudication.

Ld. CIT DR has submitted a report from the ld. AO on the additional grounds so raised by the assessee vide submission dated 30.01.2025. Ld. CIT DR has strongly objected on the admission of the additional grounds as they lack merit and assessee has failed to follow the correct procedural channels for challenging the same.

2.3. Having considered the submissions made by both the parties, we find that the additional grounds raise legal issues which could be taken up at any stage of the proceedings more particularly, when the relevant facts in this regard are already on record and nothing new is to be considered. Accordingly, we find it appropriate to admit the same for adjudication.

(i) For an amount of Rs. 36,41,00,000/- being Ind AS adjustment on account of gain on fair valuation of financial liabilities; (ii) For an amount of Rs. 22,84,00,000/- on account of loss on fair valuation of financial assets. 4. Ld. CIT(A) confirmed the adjustments so made before us. Ground nos. 1 to 3 relates to the first adjustment mentioned in 3(i) and ground nos. 4 to 6 are in respect of adjustment made as referred in 3(ii) above.

important to note that even though the reporting made by the assessee in the return form is not in the correct columns/schedules yet the impact on total income is the same if correct reporting was done. Before we delve on both the issues, we first take note of the nature of transactions and its accounting effect reflected by the assessee while complying with the mandatory accounting standards.

6.1. In the tax audit report, assessee made prior disclosures in this regard in clause no. 13(d) and clause no. 13(e) wherein the said amount is shown as “decrease in profit”.In the return filed by the assessee on 16.10.2018 wherein it had originally reported total income as loss of Rs. 1,64,29,085/-, this gain was reported in Part A, P & L Ind AS at serial no. 2(x)(2) as „any other income‟. This got reflected in Schedule BP- point A at serial no. 2(c) being “income/receipts credited to P and L account” considered under other head of “income chargeable under section 115 BBF/115 BBG”.

6.2. The correct disclosure in this regard ought to have been in the Schedule ICDS at serial no. (IV) which gets auto populated into Part A - OI „other income‟ at serial no. 3(b) as decrease in profit and increase in loss due to ICDS.Also, correct reporting in Schedule BP at serial no. 34 as decrease in profit on account of ICDS adjustment would get auto populated from Part A-OI which in turn would go into the computation of profits and gains from business or profession.

6.3. In this regard, the undisputed position is that this gain is only on accounting entry made in order to comply with the mandatory accounting standards requirement which does not alter the quantum of liability which the assessee is required to discharge at the time of redemption of the OCDs.The difference arisen as a gain on account of fair valuation as on the balance sheet date for the relevant year does not represent real income chargeable to tax under the provisions of the Act.

in the above paragraph, assessee was required to value these CCDs also at their fair value to be in compliance with requirements of Ind AS 109. The fair valuation at the balance sheet data for the relevant year resulted into a loss which has been accounted for by the assessee and accordingly, reported in its audited financial statements without having any bearing on the future inflows at the time of redemption. This loss of Rs. 22.84 Crores arisen on account of fair valuation of its assets namely CCDs is reflected as net loss in note no. 22 “other expenses schedule” of the profit and loss account.

7.1. While computing income chargeable to tax under the Act, the said loss does not represent deductible loss. In the tax audit report, relevant disclosure is made in clause no. 21(a) as capital expenditure and therefore, not to be allowed as the deduction. In the return filed by the assessee, it has been reflected in Part A-P&Lat serial no. 38 sub point 7 as „any other expense‟. Since it was reflected in Schedule BP – point A at serial no. 7(c) as expenses debited to profit and loss account consider other heads of “income which related to income chargeable under section 115BBF/115BBG as other source”, this has the effect of income having already increased by this on account of disallowance though made under the wrong head.

7.2. CPC while processing the return has made upward adjustment of this amount of Rs. 22.84 crores which the assessee has already reported at serial no. 7(c) as an increase to its total income.This adjustment has resulted into double addition of the same amount.

correct disclosures were made by it in other regulatory compliances. Assessee has corroboratively demonstrated the mistake committed by it and the effect of its rectification with no change in the total income reported by it. These adjustments for which addition/disallowance has been made by the CPC while processing the original return are on account of notional gain/loss arising on account of fair valuation in compliance with mandatory accounting standard and does not result into any real income chargeable to tax under the provisions of the Act. In the conspectus of the aforesaid factual position with detailed explanation placed on record and in terms of our observations above, the adjustments so made by the CPC while processing the original return of the assessee are not justified. The same are deleted. Accordingly, ground nos. 1 to 6 are allowed. We observe and point out that assessee being a corporate set up has all the where Wittle to avail best of the professional support in furnishing the details correctly while filling in the statutory forms, more particularly its return form. The present pitfalls at the end of the assessee in not filling the data at the relevant rows and columns of the return form has led to this litigation putting an avoidable load on the already overburdened system for which the assessee ought to be more diligent.

assessee, since the return of income was a loss return, there is no obligation on the assessee to pay any advance tax.Liability to pay interest under section 234C arises only when there is a shortfall in the payment of installments of advance tax which is based on income reported in the return by the assessee. There being a loss, reported by the assessee in its return, liability to pay interest under section 234C does not arise and therefore, levy of interest under section 234C is uncalled for. Accordingly, interest so levied is deleted. Ground no. 8 and 9 are allowed.

Order pronounced in the open court on 13.07.2026

Sd/- Sd/- (Sandeep Gosain) (Girish Agrawal) Judicial Member Accountant Member ANKIT, PS Mumbai Dated: 13.07.2026 Copy to: TRIL ROADS PRIVATE LIMITED 2ND FLOOR, ELPHISTONE, 1 BUILDING, VEER NARIMAN ROAD FORT, MUMBAI, 400001, MAHARASHTRA DEPUTY COMMISSIONER OF INCOME TAX-1(3)(1) 2 AAYAKAR BHAWAN, MUMBAI, MAHARASHTRA 400020 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAIBENCH 5 GUARD FILE