NATIONAL ENGINEERING INDUSTRIES LTD.,KOLKATA vs. DCIT, CIRCLE 5(1), KOLKATA

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ITA 1329/KOL/2025Status: DisposedITAT Kolkata27 April 2026AY 2018-193 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal directed the Assessing Officer to re-examine the cost aspect of investments as per ICDS and recompute the disallowance under Section 14A read with Rule 8D, following the decision of a coordinate bench.

What were the facts?

The assessee's appeal concerns the computation of disallowance under Section 14A, specifically whether investments should be valued at fair market value or original cost. This issue was previously decided by a coordinate bench in the assessee's own case.

What were the issues?

The primary issue is the correct method of valuing investments for the purpose of computing disallowance under Section 14A, considering fair market value versus original cost as per ICDS.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, KOLKATA

Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA

For Appellant: Shri Akkal Dudhewala, CA
For Respondent: Shri Sandeep Kumar Mehta, Addl. CIT- Sr. DR
Hearing: 27.04.2026Pronounced: 27.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No.1329/Kol/2025 Assessment Year: 2018-19 National Engineering DCIT, Circle-5(1), Kolkata Industries Limited Vs 9/1, R N Mukherjee Road, Birla Building, Kol-1. (PAN: AAACN9969L) (Appellant) (Respondent)

Assessee by : Shri Akkal Dudhewala, CA Revenue by : Shri Sandeep Kumar Mehta, Addl. CIT- Sr. DR Date of Hearing : 27.04.2026 Date of Pronouncement : 27.04.2026

ORDER Per George Mathan, JM: This is an appeal filed by the assessee against the order of the National Faceless Appeal Centre [hereinafter referred to as the ‘CIT(A)’] in appeal no.NFAC/2017-18/10042793 dated 23.05.2025.

2.

Shri Akkal Dudhewala, CA, represented on behalf of the assessee and Shri Sandeep Kumar Mehta, Sr. DR represented on behalf of the revenue.

3.

It was submitted by the ld. AR that the only issue in the assessee’s appeal is regarding the computation of disallowance u/s 14A. It was the submission that the issue was that the investments were to be valued at

ITA No.1329/Kol/2025

fair market value or the original cost. It was the submission that the issue is squarely covered by the decision of the Coordinate Bench of this Tribunal in assessee’s own case in ITA No.982/Kol/2025 dated 13.10.2025 wherein in para 5, the Coordinate Bench has held as follows:

“5. Regarding the issue of disallowance u/s 14A of the Act, it is worth considering that as a corporate entity, the assessee is legally bound as per the Companies Act, 2013 to follow Ind-AS in preparing its accounts. IndAS-109, read with Ind-AS-113 clearly direct that investments have to be valued at a fair or market valuation, which was done by the assessee. Incidentally, suo moto disallowance was made on that basis only. However, subsequently the assessee filed a revised computation before the Ld. AO after adopting the cost price of such investments, in line with ICDS-1 principles. In this context, the relevant portion from CBDT’s Circular No. 10/2017 (supra) deserves to be extracted as under: CBDT Circular number 10/2017 dated 23.3.2017 “Question 8 : Para 4(H) of ICDS-I provides that Market to Market ( MTM) loss or an expected loss shall not be recognized unless the recognition is in accordance with the provisions of any other ICDS. Whether similar consideration applies to recognition of MTM gain or expected incomes? Answer : Same principle as contained in ICDS-I relating to MTM losses or an expected loss shall apply mutatis mutandis to MTM gains or an expected profit.” 4. It was prayed that the decision of the Coordinate Bench in assessee’s own case is applicable in the impugned assessment year.

5.

In reply, the ld. Sr. DR vehemently supported the orders of the Assessing Officer and ld. CIT(A).

6.

We have considered the rival submissions. A perusal of the facts of the present case clearly shows that the issue as to whether the investments are to be valued at fair market value or cost-wise has already been adjudicated in assessee’s own case for the assessment year 2020-21 in ITA No.982/Kol/2025 dated 13.10.2025 which is extracted above. This being so, respectfully following the decision of Coordinate Bench, the Assessing Officer is directed to examine the correctness of the

ITA No.1329/Kol/2025

claim about the cost aspect of investments as per ICDS and recompute the disallowance u/s 14A r.w.s. 8D. This direction is identical to the direction given by the Coordinate Bench in assessee’s own case for the assessment year 2020-21.

7.

In the result, the appeal of the assessee is partly allowed for statistical purposes.

Order pronounced in the open court on 27/04/2026. Sd/- Sd/- [Rakesh Mishra] [George Mathan] लेखा सदस्य/Accountant Member न्याययक सदस्य/Judicial Member

Dated: 27/04/2026 RS Copy of the order forwarded to: 1. Appellant - 2. Respondent – 3. CIT(A)- 4. CIT- , 5. CIT(DR),

//True copy// By order Assistant Registrar, Kolkata Benches

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