APCOTEX INDUSTRIES LIMITED,TALOJA vs. DCIT - CIRCLE 15(1)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A”, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER ITA No.839/Mum/2026 (Assessment year: 2014-15) ITA No.840/Mum/2026 (Assessment year: 2015-16) ITA No.841/Mum/2026 (Assessment year: 2016-17) ITA No.842/Mum/2026 (Assessment year: 2017-18) ITA No.843/Mum/2026 (Assessment year: 2017-18) ITA No.844/Mum/2026 (Assessment year: 2021-22) ITA No.6024/Mum/2025 (Assessment year: 2018-19)

Apcotex Industries Ltd. vs DCIT Circle-15(1)(1), Mumbai MIDC Taloja, Raigad, Maharshi Karve Rd, New Marine Maharashtra-410208 Lines, Churchgate, Mumbai- 400020 PAN:AAACA3427G APPELLANT RESPONDENT Assessee by : Shri Piyush Chhajed Revenue by : Shri Surendra Mohan (Sr. DR) Date of hearing : 22/04/2026 Date of pronouncement : 09/06/2026 O R D E R Per Bench : A bunch of appeals pertains to the same assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Years 2014-15 to

2 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited 2018-19 and A.Y.2021-22, date of order 24.07.2025 for A.Y. 2018-19 and date of order 20.11.2025 for the rest of the orders. The impugned orders emanated from the order of the National Faceless Assessment Centre (for brevity the ‘Ld. AO’) order passed under section 143(3) r.w.s. 144B date of order 03.09.2021 for A.Y. 2018-19, order of the Assessment Unit Income Tax Department passed u/sec. 147 r.w.s. 144B date of order 29.05.2023 for A.Y. 2014-15 and 2015-16, orders passed by Ld. Assistant Commissioner of Income Tax Circle 15(1)(1), Mumbai, passed u/sec. 147 r.w.s. 144 date of order 30.05.2023 for A.Y. 2017-18 and orders by Assessment Unit Income Tax Department order passed u/sec. 143(3) date of order 30.12.2022 for A.Y. 2021-22 of the Act.

3 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited A.Y2021-22, the addition was duly confirmed by the Ld. AO by order passed u/s 143(3) of the Act. The aggrieved assessee filed an appeal before the Ld. CIT(A). the Ld. CIT(A) uphold the impugned assessment orders. Being aggrieved assessee filed the appeals before us. (i) ITA No.6024/Mum/2025 for A.Y. 2018-19 4. The assessee has taken the following grounds:- “1. On the facts and circumstances of the case, the learned Commissioner of Income L Tax (Appeal) erred in upholding the disallowance of Rs. 13,43,220/- u/s 14A without appreciating that appellant had not incurred any direct or indirect expenses, nor any satisfaction to that effect was recorded by assessing officer and, the appellant had already suo moto disallowed direct expenses in return of income. 2. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) erred in upholding disallowance of depreciation of Rs. 6,19,915/- on the office premises without appreciating that the office premises was part of the block of assets and used for business therefore depreciation ought to have been allowed. 3. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) erred in treating the sale consideration received from the office premises sold during the year under the head capital gains without appreciating that it was a business asset and forming part of WDV and therefore the assesse had rightly reduced the sale consideration from block of asset. 4. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) erred in further not allowing depreciation in case the asset was treated as a capital asset then the consideration which has been reduced from the WDV and to the extent depreciation has been claimed short, needs to be allowed. 5. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) erred in determining capital gains at Rs. 1,05,10,257/- resorting to section 50C based on stamp duty value. 6. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) erred in making addition of Rs.2,62,286/- on account of realized trading liability of earlier years without appreciating that the income is already offered for tax.

4 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited The Appellant craves the leave to add, amend, alter and/or delete any of the above grounds of appeal at/or before the time of hearing.” 5. The Ld. AR argued and filed the paper book comprising pages 1 to 279 which has been kept on record. The Ld. AR advanced his argument groundwise which is as follows:- Disallowance u/s. 14A Rs. 13,43,220/- 6. The Ld. AR contended that the disallowance was made u/s 14A read with Rule 8D of the Income tax Rule, 1962 [in short, the ‘Rules’] amount to Rs. 13,43,220/- . It is submitted that the assessee had not incurred any direct of indirect expenses to earn the exempted income. The Ld. AR submitted a brief note. The relevant part of the note is reproduced as below:- “The appellant company had invested in equity-oriented MF's and equity instruments, which yield an exempt income via dividend of Rs.66,01,250/- and Long-Term Capital Gain of Rs.5,54,04,703/-. The direct expenses incurred in earning the exempt income were suo-moto disallowed by the appellant in its return of income by way of portfolio management services fees of Rs.61,85,879/- and STT of Rs.1,22,915/-. Apart from the said expenses, the appellant had not incurred any other direct or indirect expense to earn the said exempt income. At the outset, there is no long term capital gains earned. the amount reported is only in respect of amounts recorded in profit and loss on account of revaluation due to fair value accounting as per IndAS as required by Companies Act 2013, which is evident from Note No 27 of financial statements placed at Page No. 57 of the paper book. Thus, exempt income is claimed only at Rs. 66,01,250/- as dividend against which disallowance is made at Rs.63,08,794/-. In any case, therefore the disallowance could not have been more than the exempt income as held by various judicial precedents. The appellant hereby submits that the Honorable Income Tax Appellate Tribunal in its own care for AY 2006-07 to AY 2011-12 decided vide ITA No: 3031/Mum/2016 held that no further disallowance other than the PMS fee's which is already disallowed by the appellant suo-moto. In Para 4. it has been held, since disallowance as per Rule BD is less than Suo Moto expenses disallowed by the assessee towards direct expenses no further disallowance is required to be made.

5 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited Hence, the amount of PMS fees of Rs. 63,03,077/-, disallowed by the appellant is just and proper and no further disallowance of any other expenses ought to be done. It would be further appreciated that most investments have continued since previous assessment years and no disallowance has been made u/s 14A in assessment proceeding U/s 143(3) from AY 2013-14 till AY 2016-17. Therefore, the disallowances proposed u/c.14A read with Rule 8D(2) of the Act is without any basis and supporting. Therefore, the disallowances only based on assumption that the indirect cost has incurred is totally irrelevant. Thus we request your honour to delete the addition made u/s 14A amounting to Rs.13,43,220/-“ 7. The Ld. DR argued and stands in favour of the orders of the revenue authorities. The Ld. DR has drawn our attention is relevant paragraphs of the impugned assessment order which are reproduced as below:- “4d. It is pertinent here to mention that the proposed disallowance is in respect of indirect expenses only, such as proportionate expenses related to fixed overheads which cannot be allocated to any particular head of income and are incurred for running the business as a whole including the investment activity. As stated earlier, the assessee on its own has not made any disallowance of these expenditure, though the same would have been incurred definitely towards investment activities. 4e. As the assessee has not correctly apportioned expenses as having been incurred for earning this exempt income, I am not satisfied with regard to the correctness of the claim of expenditure made by the assessee and provisions of Rule 8D of Income Tax Rules are being invoked. Accordingly, the disallowance u/s.14A is computed as under: Xxxxxxxxxxxxxxxxxxxxx 4i. The contention of the assesse that since it had hired a portfolio manager who manages equity portfolios on behalf of clients instead of clients managing it themselves, the assesse company is not required to manage the portfolios on its own and thus, such portfolios entail no cost except that of the PMS fees is not acceptable as discussed in detail in para 4b. Moreover, in para 4d of the Order it is made clear that the proposed disallowance is in respect of indirect expenses only such as proportionate expenses related to fixed overheads which cannot be allocated to any particular head of income and are incurred for running the business as a whole including the investment activity which has not been disallowed by the assesse on its own.

6 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited Hence, Rs.13,43,220/- is being disallowed u/s.14A read with Rule 8D(2) of the Act and added to the total income of the asessee for the A.Y.2018-19.” 8. We have heard the rival submissions and perused the material available on record. The assessee earned exempt income in the form of dividend and had suo motu disallowed the PMS fees and STT aggregating to Rs.63,08,794/-. The assessee contended that no further direct or indirect expenditure was incurred for earning the exempt income and also relied upon the orders of the Coordinate Bench in its own case for earlier assessment years. However, we find that the Ld. AO invoked the provisions of section 14A read with Rule 8D after recording dissatisfaction regarding the correctness of the assessee’s claim. At the same time, it is not discernible from the assessment order whether the computation under Rule 8D(2)(ii) and Rule 8D(2)(iii) has been carried out after considering only those investments which yielded exempt income during the relevant previous year and after excluding the expenditure already disallowed by the assessee. Further, the assessee has also raised the contention that a substantial part of the amount considered by the Ld. AO did not represent exempt income but merely fair-value adjustments under Ind AS. Considering the entirety of the facts and in the interest of justice, we deem it appropriate to restore this issue to the file of the Ld. AO for fresh adjudication. The Ld. AO shall recompute the disallowance, if any, strictly in accordance with section 14A read with Rule 8D(2)(ii) and Rule 8D(2)(iii) of the Rules, after duly considering the assessee’s suo motu disallowance, the judicial precedents applicable to the issue, and only those investments which have yielded exempt income during the relevant year. The assessee shall be afforded a reasonable opportunity of being heard and to furnish all relevant details in support of its claim. Accordingly, this ground of appeal is

7 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited allowed for statistical purposes, and the matter is set aside to the file of the Ld. AO for limited purposes of recomputation under Rule 8D(2)(ii) and Rule 8D(2)(iii) of the Rules. Accordingly, the Ground No. 1 of the assessee’s appeal is allowed for statistical purposes. Depreciation on assets Rs. 6,19,915/-: 9. The Ld. AR argued and stated that the depreciation is disallowed on Office Premises without appreciating that the office premises was part of block of assets and used for business. The Ld. AR submitted the written note. The relevant paragraphs of the note are reproduced as below:- “We would like to state that the said properties are part of the Block of assets. At the time of purchase was eligible for Deprecation. As per the Income Tax provisions. the appellant added the raid property to the Block of assets and claimed deprecation It needs to be appreciated that once the property is included in the block of assets, it loses its own identity. The Income Tax Act 1961 defines in Section 2 (11) the term "Block of Assets" to mean a group of assets falling within a class of assets comprising (a) tangible assets, being buildings, machinery, plant or furniture; and (b) intangible assets, being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature. Further part of this definition indicates that these blocks of assets comprising as above in respect of which same percentage of depreciation is prescribed, can be understood as block of assets. Section 32 of Income Tax Act enables claiming deductions in respect of depreciation on the tangible and intangible assets owned, wholly or partly, by the appellant and used for the purpose of business or profession. One of the aspects in respect of any block of assets is that such a percentage of the written down value thereof, as prescribed, can be claimed. The said immoveable property being "Building" forms a part of the Block of Assets. Therefore, as per Income Tax provisions, once an asset is included in a block of assets, it loses its identity, and the WDV or the value of a single asset cannot be identified.

8 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited Under the Block concept, the whole block is considered as a single asset even if there are several assets. The 'use' and "asset" must be ascertained based on the block and not individual asset which has lost its identity. Thus, office premises once form a part of Block of Assets, it is not possible to bifurcate this Block of Asset and depreciation is to be allowed on the entire Block of Assets under the Act as individual asset loses its identity. It needs to be appreciated that the first immovable property was purchased by appellant in AY 1987-88 and there are only four immovable properties in Block of Assets which were let out by appellant. The other properties in Block of Assets were not let out, and these properties were used for business purposes. Further attention is invited to Section 43(6)(c) of the Income-tax Act which definer "Written down value" as under 43(6)(c) in the case of any block of assets- (i) in respect of any previous year relevant to the assessment year commencing on the 1st day of April 1988, the aggregate of the written down values of all the assets falling within that block of assets at the beginning of the previous year and adjusted- (A) by the increase by the actual cost of any asset falling within that block, acquired during the previous year (B) by the reduction of the moneys payable in respect of any asset falling within that block, which is sold or discarded or demolished or destroyed during that previous year together with the amount of the scrap value if any, so, however, that the amount of such reduction does not exceed the written down value as so increased, and [(C) in the case of a slump sale, decrease by the actual cost of the asset falling within that block as reduced- As per the above section, the written down value of a block of asset can only be adjusted in case of acquisition of asset during the year, sale of asset or slump sale, which is not the fact in the present case. The appellant has duly followed the applicable provisions of the Income-tax Act, 1961. Thus, action of disturbing WDV by disallowing depreciation is beyond the provision of law. The appellant place reliance on following judicial pronouncement - Hon'ble Delhi High Court in the case Oswal Agro Mills Ltd./[2012] 341 ITR 467 (Delhi) / [2011] 238 CTR 113 (Delhi)

9 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited "Section 32 of the Income-tax Act, 1961-Depreciation - Allowance/Rate of-Assessment year 1998-99-Whether after amendment of section 32 by Taxation Laws (Amendment) Act, 1986, depreciation is allowed on block of assets, and revenue cannot segregate a particular asset therefrom on ground that it was not put to use - Held, yes-For relevant assessment year, assessee claimed depreciation on its various assets which included claim of depreciation in respect of a closed unit-According to assessee, depreciation was to be allowed as assets of that unit remained part of block of assets and were ready for passive use, which was as good as real use - Assessing Officer disallowed depreciation on closed unit Commissioner (Appeals) upheld disallowance On second appeal Tribunal however, accepted assessee's claim and allowed depreciation on said unit-Whether when aforesaid unit remained nonfunctional for a number of years and there was no sign of that unit becoming functional, principle of 'passive user’ could be extended to said unit – Held, no -Whether, however, as it was a case of depreciation on block of assets, assets of aforesaid closed unit could not be segregated for purpose of allowing depreciation and depreciation had to be allowed on entire block of assets-Held, yes" Hon'ble Delhi High Court in the case of Ansal Properties & Infrastructure Limited [2012] 20 taxmann.com 770 (Delhi)/[2012] 207 Taxman 61 (Delhi) "Section 50, read with section 2(11), of the Income-tax Act. 1961 Capital gains Computation of in case of depreciable assets - Assessment years 1989-90 and 1990-91 Whether section 2(11), which defines term 'block of assets, does not make any distinction between different units or different type of businesses, which may be carried on by an assessee only requirement is that in respect of assets which form block of assets, same percentage of depreciation should be prescribed-Held, yes - Whether therefore, all assets. which may be of different types, but in respect of which same percentage of depreciation is prescribed, are to be treated and form part of block of assets Held, yes - Whether Appendix to 1962 Rules which prescribes rate of depreciation is not a unit/division specific but is rate of depreciation specific, as all assets which have been prescribed same rate of depreciation are clubbed and are a part of same block of assets Held, yes During relevant assessment year, assessee had sold entire plant and machinery of its paper division and had stopped and ceased to carry on business in its paper division - Gain arising on such transfer was shown as chargeable under section 50-Assessing Officer held that section 50 was not applicable as entire division, Le, plant and machinery belonging to paper division, had been sold, and that it did not matter if assessee had a block of assets relating to other units/divisions-Whether 'block of assets' for purpose of section 50 would mean assets of all units of assessee having same rate of depreciation and not assets of only one unit Held, yes Whether since in instant case, there was no finding of Assessing Officer or appellate authorities that block of assets carrying same rate of depreciation ceased to exist or that after adding three elements mentioned in section 50, there was surplus on full value of consideration received or

10 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited accruing as a result of transfer of plant and machinery or building, short-term capital gains tax was not payable as per section 50 -Held, yes [In favour of assessee)" Unitex Products Ltd. [2008] 22 SOT 430 (Mum.) "Section 32 of the Income-tax Act, 1961-Depreciation Allowance/rate of-Assessment years 1996-97 and 1997-98 Whether once asset was part of block of asset and depreciation was granted on that block it cannot be denied in subsequent year on ground that one of asset was not used by assessee in some of years; user of assets has to apply upon block as a whole instead of an individual asset-Held, yes Bharat Aluminium Co. Ltd. [2010] 187 Taxman 111 (Delhi) "Section 32, read with section 2(11), of the Income-tax Act, 1961 depreciation Allowance/Rate of Assessment year 1995-96-Whether though as per section 32(1), in order to be entitled to claim depreciation, asset is to be owned by assessee and it is also to be used for purpose of business or profession, but expression used for the purpose of business, when applied to block of assets, would mean use of block of assets and not any specific building, machinery, plant or furniture in said block of assets as individual assets lose their identity after becoming inseparable part of block of assets-Held, yes" Swati Synthetics Ltd. [2010] 38 SOT 208 (Mum.) Section 32 of the Income-tax Act, 1961-Depreciation-Allowance Rate of-Assessment year 2001- 02-Whether in case of block of assets, in order to allow assessee's claim under section 32(1), use of individual asset for purpose of its business can be examined only in first year when asset is purchased and, in subsequent years use of whole block of assets is to be examined-Held, yes- Whether existence of an individual asset in block of assets itself amounts to use for purpose of business and therefore, depreciation is allowable on it, even though said asset is not actually used in course of business during relevant assessment year - Held, yes - Assessee was carrying on business at two units, namely, division 'D' and division - Division 'S' was closed two/three years back Assessee, however, claimed depreciation on assets lying at division 'S' for assessment year in question Revenue authorities rejected assessee's claim on ground that those assets had not been used during relevant accounting period-On instant appeal it was noticed that assessee's division at 'S had been closed, but block of assets of closed unit had been used for purpose of business in earlier years - It was also noted that year under consideration was not first year of assets - acquired - Whether, on facts and having regard to aforesaid legal position, it could be assumed that block of assets lying at division 'S was used for purpose of business during relevant year and, therefore, assessee's claim for depreciation was to be allowed - Held. yes

11 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited The above judicial precedence lays down that once depreciation has been allowedeven in care of 'no business use' subsequently for whatever reason, it does not mean that it ceases to be a business asset Thus, even when an asset for many years has ceased to be used for the purpose of the business, it still forms part of the 'Block of Assets only because at some point of time in the past, it was used for the purpose of the business Further, an asset cannot move out of the "Block of Asset', if depreciation was allowed to the asset sometime in the past. We also draw your honour attention to the Hon'ble High Court opined that the definition of the term 'block of assets' as appearing in section 2(11) of the Act means a group of assets falling within the class of assets and comprising both-tangible and intangible assets, in respect of which same percentage of depreciation is prescribed. Section 32 of the Act. which provides for claiming depreciation, enables an appellant to claim it and in the case of any block of assets, on such percentage of written down value thereof as may be prescribed. Thus, an asset cannot move out of the block of assets once depreciation is allowed on that particular asset. Once depreciation has been granted and even if business operations were not carried out on the asset, it does not cease to be a business asset. Wherein held that once an asset is a part of a block of asset and depreciation is granted on that block, it cannot be denied in its subsequent years on the ground that one of the assets is not used by the appellant in some of years; user of assets must apply depreciation upon block as a whole instead of an individual asset Once an asset has been treated as a block of assets, then, irrespective of its disposal and in the manner done by the appellant, it would continue to be treated as such Once it is treated on its initial introduction in the block as block of asset', then, that treatment continues and that is how the law has been understood throughout In such a case, depreciation is granted to the entire block of assets, whether an individual item therein has been used during the subject assessment year or business purpose. The individual asset loses its identity for the purpose of depreciation, and the user test is to be satisfied at the time the purchased machinery becomes a part of the block of assets for the first time. Thus, we request your honour to delete the addition of Rs. 6,19,915/-made in the assessment order. 10. The Ld. DR argued and relied on the orders of the revenue authorities. The Ld. DR invited our attention in impugned appellate order pages 31 & 33. The relevant paragraph is reproduced as below:-

12 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited “5.3. I have given my careful consideration to the submissions, perused the material on record and duly considered the factual matrix of the case as also the applicable legal position. Further the appellant during the A.Y 2018-19 received rental income form Property-1: Unit no 3, 15 lbs, first floor, phoenix market city, kurla, Tenant - Aqua Fine Investments; Property-2: Ist floor, bldg no 28, raghuvanshi mills parel, Tenant - Mountain Media; Property-3: Flat no 1702 & 1502, chaturbhuj, plot no 61 &62, sector no 21, kharghar, Tenant - Brajesh Shukla /Anant Shinha; Property-4: Office no 49 to 52, mahavir centre, sector 17, vashi, Tenant - Sbi Life Insurance Co Ltdand disclosed total rental income amounting to Rs.36,99,847/- under the head ‘Income from House Property’. The relevant extracts are reproduced below: xxxxxxxxxxxxxxxxxxxxxxxxxxx Thus, the act of the appellant claiming depreciation u/s 32 of Rs.6,19,915/- on the let-out property and at the same time claiming deduction u/s 24 @ 30% under the head ‘Income from House Property’ resulting in double deduction which is impermissible. Further the condition for claiming depreciation u/s32 is that the asset in question must have been used forthe purpose of business of the appellant during the concerned financial year. Further the concept of block of assets is applicable only to the assets used for business purposes and not for let out properties income from which is taxable under the head Income from House Property. None of the case laws relied upon by the appellant dealt with a case where buildings were let out, rental income was earned and depreciation also was claimed. Hence, they are not applicable to the instant case. Thus, the addition made by the AO by disallowing depreciation claimed u/s 32 amounting to Rs.6,19,915/-is upheld. Hence, the Ground no.3 raised by the appellant is hereby dismissed.” 11. We have heard the rival submissions and perused the material available on record. The undisputed facts are that the assessee had claimed depreciation of Rs.6,19,915/- on certain immovable properties forming part of the block of assets, while the rental income from such properties was offered to tax under the head “Income from House Property” and deduction under section 24 of the Act was also claimed thereon. We find that the concept of “block of assets” introduced under the Act provides that once an asset forms part of a block of assets, the individual asset loses its separate identity and depreciation is allowable on the block as a whole. The judicial precedents relied upon by the assessee, including the decisions in Oswal Agro Mills Ltd.(supra), Ansal Properties & Infrastructure

13 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited Ltd.(supra), Unitex Products Ltd., Bharat Aluminium Co. Ltd. (supra), and Swati Synthetics Ltd. (supra), lay down the principle that depreciation cannot be denied merely because a particular asset forming part of the block was not individually used during the relevant previous year, so long as the block of assets continues to exist and is used for the purposes of business. However, in the present case, the controversy is not merely with regard to the concept of block of assets or user of an individual asset. The properties in question have admittedly been let out and the rental income there from has been assessed under the head “Income from House Property”, against which the assessee has already availed the statutory deduction under section 24 of the Act. The assessee has not demonstrated that these very properties were simultaneously used for its business purposes during the relevant previous year. The concept of block of assets cannot be extended to permit depreciation on assets whose income has been assessed under the head “Income from House Property” and on which the assessee has already claimed the benefit of deduction under section 24, as the same would effectively result in a double deduction, which is not permissible under the Act. We further find that the authorities below have recorded a categorical finding that the impugned properties were let out during the year and generated rental income assessable under the head “Income from House Property”. The assessee has not brought any material on record to controvert this factual finding or to establish that the properties were used for the purposes of its business during the relevant year. Therefore, the judicial precedents relied upon by the assessee are distinguishable on facts and do not advance its case. In view of the foregoing facts and circumstances, we find no infirmity in the order of the Ld. CIT(A) sustaining the

14 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited disallowance of depreciation amounting to Rs.6,19,915/-. Accordingly, this ground of appeal of the assessee is dismissed. So, the Ground Nos. 2 of assessee’s appeal is dismissed. Business Asset forming part of WDV:- 12. The Ld. AR contended that issue related to sale of Block Asset. The assessee reduced the sales consideration from WDV. But revenue has treated as capital gain u/s 50C. The assessee sold the property in 5crore. The agreement entered for the sale of the property is attached at APB pages 224 to 270. Further. Valuation report dated 11.01.2018 has been enclosed at pages 271 to 272 of the APB. On perusal of the same, the said property has a market value of Rs. 4.81 Crore as per the valuation report. The Ld. AO had taken higher valuation of the property without considering the submission of the assessee. The written note is duly submitted by the Ld. AR in support of his argument. The relevant part is reproduced as below:- “The appellant had purchased Unit No.3. 1st Floor. Centrium. CS. No.124/A. 15. LBS Marg, Kurla (West), Mumbai. The said property was acquired by the appellant for the purpose of use as office premises and was accordingly added to the block of assets and has been subject to depreciation since AV 2013-14 and allowed in assessment proceeding U/s 143 (3) for all the years. It is submitted that the said property has been used primarily for business purposes. In AY 2016- 17, the appellant had let out mere 100 sq. feet equivalent to 2.70% of the total area of the said property to Aquamarine Investment Manager LLP, on need basis and not on permanent occupation. The rent agreement has been placed on Page No. 60-65 of Paperbook for AY 2017- 18 along with electricity bills, telephone bills and property tax bills at Pages 66-109. Infact the complete 100% of the property continued to be used solely for business purposes. It needs to be appreciated that once the property is included in the block of assets, it loses its own identity. The asset ceases to have a standalone existence and is governed by the block concept in its entirety.

15 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited Upon the sale of the said Property, the Appellant has correctly and in accordance with the provisions of Section 50 of the Act, reduced the net sale consideration from the Written Down Value (WDV) of the block of assets. It is submitted that Section 50 operates as a special provision overriding the general provisions of Sections 48 and 49 of the Act, and the computation of capital gains must necessarily be undertaken in the manner prescribed thereunder, as correctly accounted by the appellant. At the outset it needs to be appreciated that the depreciation on the said property has been consistently allowed by the Learned Assessing Officer since AY 2013-14. including during scrutiny assessments as well as reassessment proceedings initiated for AY 2013-14 to AY 2017- 18. The Learned Assessing Officer, having examined the nature of the property during such proceedings, has accepted the property as a business asset eligible for depreciation under Section 32 of the Act. We hereby reiterate that section 50 overrides the general provisions of section 48 and 49 of the acts, thereby rendering the other provisions, viz., section 48, 49, 50C of the act not invocable. Without Prejudice to above 4. Long term capital Gains U/s. 48 r.w.s. 50C: In respect of the property Sold i.e. office premise at office no 3, label 2, the centrum, Phoenix market city LBS margKurla Mumbai, we would like to state that during the year under consideration the appellant had sold the said property for Rs.5,00,00,000/-. The agreement entered for the sale of the property is attached at Pages 224 to 270 of the paper book. Further. Valuation report dated 11.01.2018 has been enclosed at Pages 271 to 272 of the paper book. On perusal of the same, your honour will appreciate that the said property has a market value of Rs. 4.81 Crore (as per the valuation report). However, the Sale proceeds from the said property is Rs. 5 Crores In the case of the appellant, where the Block of asset does not cease to exist the capital gain is required to be calculated as per section u/s 50(2). As per IT Act Depreciation on WDV is charged only when 2 conditions are conditions-1st there has to be asset in the Block after sale of asset from the Block and 2nd there has to be WDV after reducing the net consideration received from sale of such asset from the written down value of the block of such asset. And in such cases no profit or capital gain arises. Therefore, in our case the sale proceeds are less from the WDV of the block therefore the sale proceeds of Rs. 5 Crore is deducted from the WDV of the block of assets.

16 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited Thus, the proposed addition made in the head capital gain does not arise in our case as the capital asset is part of the block of assets and the short-term capital gain can only arise when the sale proceed is more than WDV of the block.The Learned Assessing Officer has further failed to appreciate that Section 50 specifically provides that upon transfer of a depreciable asset forming part of a block of assets. the sale consideration received or accruing it to be reduced from the Written Down Value of the block. The Ld. Assessing Officer has erred in invoking the provisions of section 50C and considering the fair market on a depreciable asset. In support of this submission, the appellant places reliance upon the following decisions (1) Cable Corporation of India Ltd. [2011] 13 taxmann.com 51 (Bom.), wherein the Honorable Bombay High held that. "For purpose of calculating depreciation allowable on a block of fixed assets, written down value of all assets falling within that block of assets at beginning of previous year has to be adjusted by amount at which, an asset falling within that block is actually sold and not by fair market value of that asset" (2) 3A Composites India (P.) Ltd. [2024] 169 taxmann.com 72 (Mumbai-Trib.) wherein the Honorable Tribunal held that. "Where assessee sold a factory building which was appearing as part of block of assets in its books of account and claimed depreciation on said block of building, Assessing Officer could not have substituted sole consideration received by stamp duty valuation of property while computing WDV for claiming depreciation on block of assets" Without prejudice to above, Even if Your Honours were to accept the Learned Assessing Officer's contention that the property does not qualify as a business asset, then the capital gain would be computed accordingly. However, the learned Assessing Officer has erred in computing long term capital gain by considering the stamp duty value as sale consideration by invoking the provisions of section 50C without appreciating the fact that the DVO report is factually incorrect and arithmetically erroneous. The DVO had valued the property suited at Office no. 03, 1st Floor. The Centrium. Phoenix Market City, Kurla West. LBS Mard. Mumbai-400070 at Rs. 7,25,30,747/-After perusal of Annexure I & II of the DVO report, we can see that the rate per sq. meter considered by the DVO for valuing the property is Re. 1,75,632/-. The said rate (i.e. Rs. 1,75,632/-) is calculated by taking average of 3 sales instances are reflected in Annexure II of the DVO report.

17 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited However, when we calculate the average rate of 3 sales instances it is coming Re. 1,39,937/- i.e. [(131881+131881+150651)/3]. Thus, the average rate Rs. 1,75,632/-calculated by the DVO is wrong. Thus, the value of property after considering the right average rate amounts to Rs. 5,77,90,000/-. Thus, we request your honour to consider the fair value of property at Re. 5,77,90,00/-as per the instances given in the valuation report instead of Rs. 7,25,30,747/- In view of the above, the fair market value of the property as correctly determined will be Rr. 5,77,90,000/- It needs to be appreciated that the cost incurred by the Appellant at the time of acquisition of the said property amounts to Rs. 5,49,04,095. The capital gain would be calculated as under - Particulars Amount Sale Consideration 5,77,90,000/- Less: Indexed Cost of Acquisition 7,46,69,569/- (54904095*272/200) Long Term Capital Loss (1,68,79,569) It is further submitted that the sale consideration of Rs. 5,00,00,000/- was reduced from the Written Down Value of the block of assets by the Appellant in the year of sale. Consequent to the treatment of the property as a capital asset (as contended by the Assessing Officer), the said amount of Rs. 5,00,00,000/- ought to be added back to the block of assets. The Appellant would accordingly be entitled to claim depreciation on the revised WDV of the block, arrived at after adding back the said sum of Rs. 5 Crore for the current Assessment Year as well as for all subsequent Assessment Years. 13. The Ld. DR argued and stands in favour of the order of the revenue authorities. The Ld. DR invited our attention in relevant paragraphs of the impugned assessment order which are reproduced as below:- “7e. From the above facts discussed above it is clear that the immovable property situated at the aforementioned address, which was sold during the F.Y.2017-18, was never put to use for the business purpose at least for the last three consecutive F.Y.s viz., 2015-16, 2016-17 & 2017- 18. Hence, the claim of depreciation on the property which is not put to use for business purpose is not allowable. Further, as the said property had been utilized since last three years to earn income which is chargeable to tax u/s.22, and the property sold being a capital asset, its subsequent sale does attract Capital Gain which is chargeable to tax u/s.45. Further, as stated

18 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited above, as per records, the consideration received by the assessee on sale of the property was less than the value adopted by the Sub Registrar. Hence, provisions of Section 50C are attracted in respect of this transaction. The relevant portion of the Sale Deed is reproduced below: xxxxxxxxxxxxxx 7f. Accordingly, the long term capital gain accrued to the assessee in respect of the sale of the aforementioned property during the F.Y.2017-18 is computed as under: Particulars Amount in Rs. Sale consideration as per section 50C 7,84,97,337 Less Indexed Cost of Acquisition 4,99,90,500 x 6,79,87,080 272/200 Long Term Capital Gain 1,05,10,257 The Long Term Capital Gain of the assessee for the A.Y.2018-19 is determined as Rs.1,05,10,257/- and the same was proposed to be added to its total Income. 7g. In the Show Cause Notice issued on 23.04.2021 the assesse was intimated of the above disallowance and was requested to file objections to the same.” 14. We have heard the rival submissions and perused the material available on record. The primary dispute relates to the taxability arising on the sale of Office No. 3, 1st Floor, The Centrium, Phoenix Market City, Kurla (West), Mumbai. The assessee contends that the property formed part of the block of assets on which depreciation had been consistently allowed since A.Y. 2013-14 and, therefore, upon its transfer, the provisions of section 50 relating to depreciable assets were applicable and the sale consideration was rightly reduced from the Written Down Value (WDV) of the block. The revenue, on the other hand, held that the property was not used for business purposes during the relevant years, treated the same as a capital asset assessable under the head “Capital Gains”, and invoked the provisions of section 50C for adopting the stamp duty valuation. The assessee has placed reliance upon various judicial precedents to contend that once an asset forms part of a block of assets, its individual identity is lost and the computation

19 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited mechanism under section 50 alone would apply. At the same time, the revenue has recorded a finding that the property had been let out and was not used for business purposes for the preceding years. Further, the assessee has raised an alternate ground that even if the property is held to be a capital asset liable to tax under the head “Capital Gains”, the valuation adopted by the Departmental Valuation Officer suffers from factual and arithmetical errors and that the indexed cost of acquisition as well as the fair market value require fresh examination. We also find merit in the alternate plea of the assessee that, in the event the transaction is ultimately assessed under the head “Capital Gains”, the correctness of the valuation adopted under section 50C, the computation of indexed cost of acquisition. These aspects have not been comprehensively examined by the revenue authorities. Considering the totality of the facts and in the interest of substantial justice, we deem it appropriate to set aside the impugned issue to the file of the Ld. AO. The Ld. AO must treat the income as “Capital Gains” & the Ld. AO shall re-examine the valuation adopted under section 50C, verify the objections raised by the assessee regarding the DVO’s computation, determine the correct fair market value, and recompute the capital gains after granting due consideration to the indexed cost of acquisition and all consequential benefits available under the Act. The Ld. AO shall afford adequate opportunity of hearing to the assessee and consider all supporting documents, valuation reports, and judicial precedents relied upon by the assessee. Further the property is treated as “Capital Assets” so the consideration which was reduced from the WDV and to the extent of depreciation was claimed short shall be allowed. Accordingly, these grounds of appeal are allowed for statistical purposes and restored to the file of the Ld. AO for fresh adjudication in terms of the above directions.

20 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited Accordingly, the Ground No. 3 of assessee’s appeal is dismissed & Ground Nos. 4 & 5 of the assessee’s appeal are allowed for statistical purposes. Income u/s 41(1)(a) Rs. 2,62,286/- 15. The Ld. AR argued and stated that the trading liability realized of earlier years amount to Rs. 2,62,286/- is added back in alleged year. The Ld. AR narrated the argument in written note which is reproduced as below:- “During the year under consideration, the appellant realized the trading liability of earlier years totaling Rs. 2,62,286/- which is credited to the profit and loss account and accordingly paid the taxes on said receipts. The amount of Rs.2,62,286 is included in Other Income of Rs. 6.59 lacs as reported in Note 27 to the financial statement placed at Page No. 57 of the paper book. The Ld. Assessing officer without appreciating the fact that the income is already offered for tax relying upon C1.25 of Form 3CD and added to same to the business income u/s. 41(1)(a). It needs to be appreciated that if the said income is added to the return income, then the same will be taxed twice. Thus, we request your honour to delete the addition made u/s 41(1)(a) amounting to Rs. 2,62,286/-.” 16. The Ld. DR argued and invited our attention in impugned appellate order in paragraph 8 which is reproduced as below:- “8. Income u/s.41(1)(a): As per Cl.25 of Form 3CD during the F.Y.2017-18 the assessee had realized the trading liability of earlier years totaling to Rs.2,62,286/- which is deemed to be the income of the assessee as per the provisions of Sec.41(1)(a). However, as per Sch: BP the same is not offered for tax. Hence, Rs.2,62,286/- is being added to the business income of the assessee for the F.Y.2017-18 u/s.41(1)(a). In the Show Cause Notice issued on 23.04.2021 the assesse was intimated of the above disallowance and was requested to file objections to the same. In response the Show Cause Notice the assesse filed a detailed letter on 27.04.2021. No objection to the above addition has been raised by the assesse. Penalty Proceedings u/s.270A are being initiated separately for under-reporting of income in consequence of misreporting. (Addition:Rs.2,62,286/-)”

21 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited 17. We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the amount of Rs.2,62,286/- representing realization of trading liability of earlier years was duly credited to the Profit & Loss Account and offered to tax by the assessee as part of its income for the year. The revenue has not brought any material on record to demonstrate that the said amount had escaped taxation. Once the income has already been credited in the books and included in the taxable income, a further addition under section 41(1)(a) of the Act would result in double taxation of the same amount, which is impermissible in law. The addition appears to have been made merely on the basis of the disclosure in Clause 25 of Form 3CD without appreciating that the corresponding income had already been accounted for and offered to tax. Accordingly, we find merit in the contention of the assessee and direct the Assessing Officer to delete the addition of Rs.2,62,286/- made under section 41(1)(a) of the Act. Thus, this ground of appeal is allowed in favour of the assessee. Accordingly, Ground No.6 of the assessee’s appeal is allowed.

22 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited

The Ld. AR submitted that with effect from 01.04.2021, section 151 of the Act was substantially amended and, therefore, any approval for issuance of notice under section 148 or proceedings under section 148A after 01.04.2021 was required to be obtained strictly in accordance with the amended statutory provisions. It was contended that where more than three years have elapsed from the end of the relevant assessment year, the sanction must be accorded by the Principal Chief Commissioner, Principal Director General, Chief Commissioner, or Director General, whereas approval by a Principal Commissioner is permissible only in cases falling within the period of three years. The Ld. AR submitted that the impugned notice pertains to A.Y. 2014-15 and was issued after the amended provisions had already come into force. Since more than three years had elapsed from the end of the relevant assessment year, the competent authority for granting sanction was an authority not below the rank of Chief Commissioner. However, the approval was admittedly granted by the PCIT, Mumbai-6, who was

23 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited not the competent authority under the amended provisions. Therefore, the very assumption of jurisdiction is invalid and the notice issued under section 148 deserves to be quashed. Accordingly, the Ld. AR submitted that the sanction granted under section 151 is invalid on account of lack of jurisdiction of the approving authority. Consequently, the notice issued under section 148 and all subsequent proceedings are liable to be quashed as being without lawful authority. The Ld. AR therefore prayed that the reassessment proceedings initiated under sections 148/148A be declared void ab initio and be dropped in limine.

24 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited

25 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited issuance of notice under section 148 of the Act. On examination of the notice dated 28.06.2021 and the subsequent order passed under section 148A(d) of the Act, it is evident that the approval for initiation of reassessment proceedings beyond three years from the end of the relevant assessment year was granted by the Principal Commissioner of Income Tax-17, Mumbai. The legal position with regard to the competent authority for granting sanction under section 151 of the Act, prior to its amendment by the Finance Act, 2023, is now well settled. The Hon’ble Bombay High Court in Alag Property Construction Pvt. Ltd. reported in (2025) 179 taxmann.com 578 (Bom) has categorically held that where the period of three years from the end of the relevant assessment year has expired, sanction under section 151(i) could not have been accorded by the Principal Commissioner, and such sanction renders the reassessment proceedings void ab initio. The said judgment, being rendered by the Jurisdictional High Court, is binding on us. We further find that the Co-ordinate Bench of the ITAT, Mumbai, in Shabbir Taheri v. ITO, ITA No. 1574/Mum/2025, pronounced on 15.10.2025, after an exhaustive analysis of sections 149 and 151 of the Act, has reiterated that prior to 01.04.2023, sanction for issuance of notice under section 148 after expiry of three years could be granted only by the authority specified under section 151(ii) of the Act, namely the Principal Chief Commissioner or Chief Commissioner, and that the proviso inserted by the Finance Act, 2023 has no retrospective application. In the present case, it is undisputed that the sanction for issuance of notice under section 148 and for passing the order under section 148A(d) of the Act was granted by the Pr. CIT-17, Mumbai, who was not the competent authority prescribed under section 151(ii) of the Act. Consequently,

26 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited the assumption of jurisdiction by the Assessing Officer is bad in law and vitiates the entire reassessment proceedings. In view of the binding judicial precedents and the settled legal position, we hold that the notice issued under section 148 of the Act, the order passed under section 148A(d) of the Act, and all proceedings consequential thereto are invalid and unsustainable in law. Accordingly, the reassessment proceedings are hereby quashed. As the reassessment itself is held to be invalid on legal grounds, the issues raised on merits do not survive for adjudication. So, all three appeals of the assessee stand allowed.

ITA No.840/Mum/2026, A.Y. 2015-16:- 23. The Ld. AR filed a paper book containing pages 1 to 108 which has been kept on record. The Ld. AR submitted that the notice issued under section 148A(b) of the Act on 31/05/2022, annexed at pages 3 to 5 of the written submissions is void ab initio, in view of the judgment of the Hon’ble Supreme Court in UOI v. Rajiv Bansal (2024) 469 ITR 46 (SC). The Ld. AR further placed reliance on the decision of the Hon’ble Bombay High Court in Spicy Sangria Hotels Pvt. Ltd. v. Income Tax Officer, Ward-13(2)(1), Mumbai; Writ Petition No. 1325 of 2023, wherein the Court has duly considered and applied the ratio of the aforesaid Hon’ble Supreme Court judgment in UOI v. Rajiv Bansal (supra). The relevant observations of the Hon’ble Bombay High Court at paragraphs 3 to 5 are reproduced below:— “3. Admittedly in the facts of the present case, the Notice issued under Section 148 is after 1st April 2021 (namely, on 28th July 2022). This being the case, we find that in the facts of the

27 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited present case, the Notice issued under Section 148 dated 28th July 2022 would have to be dropped and cannot be proceeded with further. 4. We accordingly quash and set aside the said notice dated 28th July 2022 issued under Section 148 of the IT Act. 5. Rule is accordingly made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.”

28 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited Petitioner was governed by the decision of this Court in Hexaware Technologies Limited v. ACIT (supra) and that the Jurisdictional Assessing Officer (Respondent No. 1) could not issue any Notice under Section 148 in light of the provisions of Section 151A. This aspect was not the subject matter of dispute before the Hon'ble Supreme Court in Union of India Vs. Rajeev Bandal (supra). Accordingly, even in the light of the decision of this Court in the case of Hexaware Technologies Limited v. ACIT (supra), the re-assessment proceedings could not continue.

29 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited after 1st April 2021 for A.Y.2015-16 would be bad in law. In this regard he relied upon the following judgments: (a) ITO vs. Venkatlal Iyyappa Rajana [2025] 178 taxmann.com 410 (Karnataka) [05-08-2025] (b) Pratishtha Garg Vs. Assistant Commissioner of Income-tax Central [2025] 171 taxmann.com 264 (Delhi) [19-12-2024] (c) Lalit Gulati vs. Assistant Commissioner of Income-tax [2025] 174 taxmann.com 273 (Delhi) [02-05-2025].”

30 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited inception. The Ld. DR, despite relying on the orders of the revenue authorities, was unable to produce any contrary decision to rebut the judicial precedents cited by the Ld. AR. In view of the above, the legal ground pertaining to the validity of the reassessment notice goes to the root of jurisdiction and is sufficient to vitiate the entire proceedings. Once the notice itself is void ab initio, the consequent reassessment order cannot survive. Accordingly, the additions made on deemed late out property amount to Rs. 41,50,749/- and depreciation amount to Rs. 44,47,232/- become purely academic and need not be adjudicated on merits. We therefore hold that the reassessment proceedings initiated under section 148A(b) are invalid, and the reassessment order passed pursuant thereto is liable to be quashed. As the issue is decided on the jurisdictional legal ground, the grounds on merits are rendered academic and are not adjudicated. So, the appeal of the assessee is allowed.

ITA No.841/Mum/2026, A.Y. 2016-17 27. The Ld. AR argued and filed a paper book comprising pages 1 to 58 which has been kept on record. It is contended that notices under Section 148 of the Act were originally issued under the old regime. Pursuant to the directions of Hon’ble Supreme Court in Ashish Agarwal v. Union of India reported in (2022) 138 Taxmann.com 64 (SC), such notices are deemed to be issued under Section 148A(b) of the Act. Accordingly, the Ld. AO issued fresh notices under Section 148A(b) on 30/05/2022 and passed orders under Section 148A(d) on 27/07/2022, before the expiration of the statutory timeline.

31 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited The Ld. AR contended that the Ld. AO erroneously extended the time limit for issuing notices under the new regime by adding "surviving days" from the old regime, calculated at seven days. For AY 2016-17, the Ld. AR argued that the notice issued under the new regime exceeded the prescribed limitation period. Reference was made to Union of India v. Rajeev Bansal, (2024) 167 Taxmann.com 70 (SC), which clarified that any notice issued beyond the surviving time limit is time-barred.

32 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May 2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on 18 August 2022. 113. In Ashish Agarwal (supra), this Court allowed the assesses to avail all the defenses, including the defence of expiry of the time limit specified under section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018. To assume jurisdiction to issue notices under section 148 with respect to the relevant assessment years, an assessing officer has to: (i) issue the notices within the period prescribed under section 149(1) of the new regime read with TOLA; and (ii) obtain the previous approval of the authority specified under section 151. A notice issued without complying with the preconditions is invalid as it affects the jurisdiction of the assessing officer. Therefore, the reassessment notices issued under section 148 of the new regime, which are in pursuance of the deemed notices, ought to be issued within the time limit surviving under the Income-tax Act read with TOLA. A reassessment notice issued beyond the surviving time limit will be time-barred.” 29. We consider the ruling and calculated the limitation for issuance notice U/s 148 of the Act which is as follows: -

33 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited The issue was duly followed by the order of the Hon’ble High Court of Delhi in the case of IBIBO group Pvt Ltd vs ACIT W.P.(C) 17639/2022, date of order 13/12/2024 and allowed in favour of the assessee.

34 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited appellant has contended that since the notice was issued after statutory limitation as per [he provisions of the act, the assessment order passed by the AO is illegal and against the law and facts of the case. In support of his contention, the appellant has relied upon the decision of Hon'ble Jurisdictional High Court in the case of Hexaware Technologies Ltd. v/s. ACIT [2024J 162 taxmann.com 225 (Bombay)in and contended that facts of the case law are squarely covered the facts of the present case. As such, requested the appellate authority to quash the assessment order passed by the AO. 7.1.1. In the said submission, it is contended that notice u/s.148 of the IT Act, 1961 dated 23-6-2021 was beyond the stipulated period of three year and therefore barred by limitation as per the amended provision of the section 149 of the Act w.e.f. 01/04/2021. The contention of the appellant cannot be accepted as it is seen that the appellant has compiled with amended provisions of the section consequent to the Hon'ble Apex court decision in the case of Ashish Agarwal Vs. UOI. Moreover, it is seen that prima facie escaped income as per the order u/s. 148A(d) is Rs. 72,96,383/- which is more than 50 lakhs. As such, it is held that no such protection for the appellant against the reassessment proceedings is available as per the provisions of the section 149(1)(b) of the Act. Further, the case law relied upon by the appellant have been perused and it is seen facts of the case are distinguishable to the facts of the case law. In the instant case, the AO in compliance to Hon'ble Apex Court's decision in the case of Ashish Agarwal Vs. UOI has issued the notice as per the provisions of the Act. In view of the above discussion, this argument of the appellant is therefore rejected.

35 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited (supra), we hold that the notice issued under Section 148 for AY 2016-17 is invalid, rendering the subsequent assessment proceedings null and void. Accordingly, the legal Ground raised by the assessee for AY 2016-17 is allowed. Since we have adjudicated the issue of limitation in favor of the assessee, the remaining grounds of appeal are rendered academic and do not require further deliberation.

ITA No.844/Mum/2026 A.Y. 2021-22 32. The Ld. AR contended that the Ld. AO has framed the order u/s 143(3) r.w.s.144B and following additions are confirmed. 1) Deemed Rental Income – Rs. 4,20,000/- 2) Depreciation on Deemed rented property – 30,000/- In the assessment order, the Ld. AO has added a deemed rental income of Rs.25,000/- per month for the properties at Flat No. 1702 and 1502 Chaturbhuj, Plot No.61 and 62, SectorNo.21, Kharghar, Navi Mumbai, 19-Maharashtra, Pin code No.410210. Thus, Income from House Property of the assessee has been increased by Rs.4,20,000/-. The properties under consideration were originally used as an office when purchased initially. Thus, the same were added to the block of assets and deprecation on the same is being claimed since then. Thereafter, when the offices shifted, the assessee rented out the vacant properties for earning additional income. During the year under consideration, the properties at Khargarh were used by the assessee-company for lodging of guests and visitors and sometimes, even employees of the assessee. The assessee previously lodged the guests or certain employees at Hotels/other facilities however, due to higher cost of the same, the appellant company decided to use

36 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited the properties which it had rented out previously for the purpose of lodging as a cost reduction measure. Unfortunately, the assessee did not deem it necessary and has hence not maintained any lodging records as to who stayed in the properties and for what duration, this being the 1st year it started doing so. It needs to be appreciate that the assessee is a company where the assets are used for the business purpose only and the depreciation on the same is claimed. This is not a case where the properties are vacant to attract the provision deemed let out property. If the intention of the legislature was to take these properties as Deemed Let Out, then it would have specifically added a proviso to section 22 to include vacant buildings that form a part of block of assets to be classified as deemed let out property. Thus it needs to be appreciated that the said properties were being used for business purpose and therefore the addition made for deemed rental needs to be delete. Further, the assessee treated it as block of assets & the benefit of depreciation is taken in return. The Ld. AR made his objection related valuation of the deemed let out by the Ld. AO which is higher sided.

37 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited accordance with the provisions of the Act. Therefore, the assessee cannot avail both benefits without substantiating the nature and use of the property.

38 ITA No.839 to 844/Mum/2026 IT No.6024/Mum/2025 Apcotex Industries Limited company. The Ld. AO shall also verify whether any income, directly or indirectly arising from the said properties, has been earned and offered to tax by the assessee. Thereafter, the issue relating to the addition of deemed rental income and the consequential claim of depreciation shall be adjudicated afresh in accordance with law after providing a reasonable opportunity of being heard to the assessee. Accordingly, this Grounds of appeal is allowed for statistical purposes. 35. In the result, the appeals of the assessee bearing ITA No.839 to 843/Mum/2026 are allowed, ITA No.6024/Mum/2025 is partly allowed for statistical purposes and ITA No. 844/Mum/2026 is allowed for statistical purposes. Order pronounced in the open court on 09th day of June 2026. Sd/- Sd/- (OM PRAKASH KANT) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 09/06/2026 SAUMYASr.PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI