ACIT CIRCLE-7, JAIPUR, SIDDHNATH BHAWAN vs. M/S GVK JAIPUR EXPRESSWAY P LTD, TELENGANA

P a g e | 1 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “B” BENCH, JAIPUR BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & SHRI RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER ITA Nos.1342, 1343 &1345/JPR/2025 (Assessment Years:2018-19,2020-21, 2021-22) ACIT Vs. M/s GVK Jaipur Central Circle 7, Jaipur Expressway P. Ltd 156-159 Paigah House, Sardar Patel, Secunderabad, Telangana �थायीलेखासं./जीआइआरसं./PAN/GIR No:AABCG5541J Appellant .. Respondent

ITA Nos.1369 & 1367/JPR/2025 (Assessment Years:2018-19 & 2020-21) M/s GVK Jaipur Vs. ACIT Expressway P. Ltd Central Circle 7, Jaipur 156-159 Paigah House, Sardar Patel, Secunderabad, Telangana �थायीलेखासं./जीआइआरसं./PAN/GIR No:AABCG5541J Appellant .. Respondent

Appellant by : Sh. Tarun Mittal, CA & Sh. Harshit Agrawal, CA Respondent by : Mrs. Alka Gautam, CIT

Date of Hearing 23.03.2026

P a g e | 2 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited Date of Pronouncement 01.06.2026

O R D E R Per:Ratnesh Nandan Sahay, Accountant Member 1. The present cross appeals have been preferred both by the revenue and the assessee against the order of National Faceless Appeal Centre (NFAC)/Ld. Commissioner of Income Tax Appeal (hereinafter referred to as “Ld. CIT(A)”) dated10.07.2025 u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “Act”). In all these appeals and cross appeals, facts and grounds are common except some variation of additions/disallowances made by the Assessing Officer. Therefore, with the consent of parties, all these appeals were clubbed and heard together and are being disposed of by this common order. As a lead case, we take up ITA No.1367/JP/2025 for Assessment Year 2018-19. Following grounds of appeal have been raised by the assessee: - "1. On the facts and in this circumstances of the case, the Ld. CIT(A) grossly erred in confirming the disallowance of interest of Rs. 89,42,24,331/- u/s 36(1)(iii) of the Act. 2. On the facts and in the circumstances of the case the Ld. CIT(A) grossly erred in confirming the action of Ld. AO in treating the Interest income on FDR of Rs. 3,36,13,023/- as Income from other source head instead of Income from Business & Profession arbitrarily. 3. On the facts and in the circumstances of the case the Ld. CIT(A) grossly erred in giving direction to ld. AO to verify and delete the double addition of Interest on IT Refund of Rs. 10,21,98,628/- and Income from sale of investment of Rs. 1,44,75,664/-and considered the same once in Income from other source head (though all the facts were duly furnished before the Ld. CIT(A)). 4. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal."

P a g e | 3 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited

"Assessee’sground of Appeal No. 2:

In this ground of appeal, theassessee has challenged the action of ld. CIT(A) in confirming the order of the AO in treating the interest income of ₹ 3,36,13,023/- earned on FDRs as ‘Income from other sources’ instead of Income from Business & Profession as offered by assessee in its return of income. In this regard, it is submitted that issue of treatment of Interest income as ‘Income from other sources’ arose in preceding years also, wherein Hon'ble ITAT vide its order dated 22.12.2020 for Α.Υ.2010-11 to 2015- 16 allowed the appeal of the assessee on this ground (refer to para 8 to 9 of ITAT order Common Paper Book APB 124-125) as under: "8. We have heard the rival contentions and perused the material available on record. During the course of hearing, the assessee has sought permission to raise the modified ground of appeal in place of existing grounds of appeal stating that the assessee has itself disallowed the interest receipt while working out the deduction w/s 801A of the Act. Where the assessee has suo moto disallowed the interest receipt while working out the deduction u/s 801A of the Act, we find that principally, both the parties are in agreement that such interest receipts should not qualify for deduction under section 801A of the Act and the matter is no more in dispute. The fact that assessee has suo moto disallowed the interest receipt for the purposes of deduction u/s 801A is a matter of record which can be verified from the return of income filed by the assessee for the respective assessment years. We accordingly allow the modification in the ground of appeal so taken by the assessee company and the matter is

P a g e | 4 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited set aside to the file of the Assessing Officer to carry out the necessary verification and where on such verification, it is so found that the assessee has suo moto disallowed the interest receipts while working out the deduction u/s 801A of the Act, no further addition is sustainable in the eyes of law and the addition made by the Assessing Officer is hereby directed to be deleted. 9. In the result, the existing grounds of appeal are treated as withdrawn as per request of the assessee and modified ground of the appeal for the respective assessment years ie, A.Y 2010-11 to A.Y 2015-16 so taken by the assessee are admitted and allowed for statistical purposes." On perusal of aforesaid para, it is evident that Hon'ble ITAT, has already given a direction to the AO to verify whether the Interest receipt is excluded while working out deduction u/s 801A of the Act. The assessee in the present case has confirmed that the assessee company has already Suo-moto disallowed the interest while computing the deduction u/s 801A at the time of filing return of Income. The assessee, therefore, has contended in its written submission that the action of the AO and the Ld. CIT(A) in treating Interest income as ‘Income from other source” deserves to be ignored.” Assessee’s ground of Appeal No. 3:- In this ground of appeal, the assessee company has challenged the action of ld. CIT(A) in giving direction to ld. AO to verify and delete the addition on account of‘Interest on IT Refund & Income from sale of Investment’ even though all the facts were duly furnished before the ld. CIT(A). In this regard the assessee has submitted that subsequently, it is found that the assessee company has received the appeal effect order on

P a g e | 5 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited 19.02.2026, wherein Ld. AO has deleted the double addition, thus, this ground of appeal is not pressed." Thus, the only ground of appeal left to be adjudicated in appellant’s appeal is ‘disallowance of interest of Rs. 89,42,24,331/- u/s 36(1)(iii) of the Act.’

"i)Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the addition made on account of disallowance of the interest expenditure amounting to Rs. 89,42,24,331/- relating to investments made in the shares of group companies AO u/s 14A of the Act, while directing that the said disallowance be made u/s 36(1)(iii) of the Act and the said disallowance cannot be added back to the assessee's income computed under the provision of the section 115JB of the Act? ii) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 28,31,500/- made u/s 14A of the Act on account of investments which were made, to earn exempt income and further holding that the said disallowance cannot be added back to the assessee's income computed under the provision of the section 115JB of the Act? iii) Whether on the facts and in the circumstances of the case, and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 30,35,81,900/- made by the AO on account of disallowance of periodic overlay expenses of Rs. 30,35,81,900/-ignoring the fact that the assessee did not furnish any scientific documentary evidences which could fix the liability? 4. The facts of the case, in brief, are that the assessee company is engaged in construction, operations and maintenance of highways. During the period under consideration, it declared a net profit of Rs.1,28,33,39,976/- on a total turnover of

P a g e | 6 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited Rs.3,50,72,78,207/- The books of the assessee are duly audited as required u/s 44AB of the IT Act and the assessee has furnished audit report and other necessary details as required under the Act. The Assessing officer, after considering the audited final accounts, return of income and other relevant information furnished by the assessee, made followingadditions: - 4.1 Disallowance of interest u/s. 36(1)(iii) given to subsidiary company as interest free advance- The Assessing Officer, on perusal of Balance Sheet for the year under consideration, noticed that an investment of Rs.9,40,80,00,000/- was made by the assessee, however, the same amount was to be given till AY 2015-16 as share application money to one of its group companies and thus, the income from that investment should be exempt income u/s 10 of the IT Act. However, it was found by the AO that during the immediately preceding year the said investment was diverted by the assessee to its other group company i.e. M/s Sutara Roads & Infra Ltd in the shape of interest free advance. During the year under consideration, further advance was given by the assessee and thus, total interest free advance comes to Rs.10,52,92,50,000/-. On the other hand, the Assessing officer noted that the assessee has claimed interest expenses (on fixed loans and to others) of Rs.92,98,58,499/- debited in its Profit & Loss Account which was paid to banks and others against loans taken for

P a g e | 7 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited making above investments. The AO, thus, observed that the Assessee’s investment with M/s Sutara Roads & Infra Ltd is much more than all borrowings of assessee shown at Rs.6,10,21,50,448/-.The Assessing Officer, therefore, show caused the assessee vide notice u/s 142(1) to furnish nature, amount, source and calculation of investments relating to disallowance u/s 14A.In reply, the assessee submitted that as no exempt income is there, the details may be treated as ‘Nil’. The AO, however, was not convinced with the reply of the assessee and thus, sent a draft assessment order to the assessee company proposing to disallow the interest expenses of Rs.92,98,58,499/- In response to that the assessee stated that similar additions were made by the AO against which this issue was raised in appeal and was finalized by Hon’ble ITAT, Jaipur vide its common order for A.Y. 2012-13 to 2015-16 dated 22.12.2020. The Hon’ble ITAT has concluded that no disallowance could be made u/s. 14A on above issue and further held that disallowance if any, the same should be added u/s. 36(1)(iii) of the I.T. Act. According to the Assessing Officer, the decision of the Hon’ble ITAT was duly accepted by the assessee as under: - “In the light of the above, it is submitted that your proposal for invoking the provisions of section 14A on such interest free advance is unwarranted and disallowance if any required to be made the same should be made u/s. 36(1)(iii) of the Act. Moreover, as submitted above

P a g e | 8 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited as against your proposal of disallowance of entire interest of Rs.92,98,58,499/- the amount of interest paid on this IDFC consortium loan of Rs.89,42,24,331/- should have been considered for making the necessary calculation.” Considering the judgment of the Hon’ble ITAT in assessee’s own case for A.Y. 2012-13 to 2015-16 and assessee’s reply to the show cause letter, the Assessing Officer, concluded that it is proved that assessee has diverted its interest-bearing fund to interest free advances to its associate concerns. Accordingly, as accepted by the assessee, Rs.89,42,24,331/- is disallowed out of interest expenses claimed and added back to the total income of the assessee. It is also considered for the purpose of adjustments in the amount of book profit for the purpose of Section 115JB as provided in explanation 1(f) to section 115JB (2) of the Income Tax Act, 1961. Accordingly, Book Profit is to be increased with this amount, in the computation.

4.2 Aggrieved by the order of the Assessing Officer, the assessee company filed appeal before the Ld. CIT(A) who, vide the impugned order confirmed the addition by holding as under: -

“17. In view of the above discussion, following the orders of my learned predecessor in the case of the appellant for A.Ys. 2016-17 and 2017-18, I hold that the interest paid on the borrowed funds utilized by the appellant company for making investments in the group company, through its subsidiary as discussed above, is disallowable u/s. 36(1)(iii) of the Act. Accordingly, the

P a g e | 9 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited disallowance of interest expenses of Rs.89,42,24,331/- made u/s. 36(1)(iii) of the Act in the impugned assessment order is confirmed. Grounds No. 1 & 1.1 taken by the appellant are, accordingly, DISMISSED.” 4.3 Aggrieved by the order of Ld. CIT(A), both the assessee as well as the revenue challenged the order of Ld. CIT(A) before this Tribunal. The ground of appeal raised by the assessee company is given as under: - “On the facts and in these circumstances of the case, the Ld. CIT(A) grossly erred in confirming the disallowance of interest of Rs. 89,42,24,331/- u/s 36(1)(iii) of the Act.” The Department, on the other hand, has raised following ground of appeal: - “Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the addition made on account of disallowance of the interest expenditure amounting to Rs. 89,42,24,331/- relating to investments made in the shares of group companies AO u/s 14A of the Act, while directing that the said disallowance be made u/s 36(1)(iii) of the Act and the said disallowance cannot be added back to the assessee's income computed under the provision of the section 115JB of the Act?” Since both the above grounds are common in both the appeals, these are taken up together for adjudication.

4.4 During the course of hearing before us, the appellant company has submitted as under: -

“Brief facts are that during the year under consideration assessee company has paid total interest of Rs. 92,98,58,499/- on various borrowings which includes the project loan taken at the time of construction of toll road which is to be payable during the toll period. Besides this, in the year 2011, further securitized loan was taken from IDFC Consortium and was utilized for making payment of share application money for applying shares of M/s GVK Airport Developers (P) Ltd. In FY 2015-16 relevant to AY 2016-17, assessee transferred such shares to its subsidiary company M/s Sutara Roads & Infra Ltd. and the consideration payable

P a g e | 10 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited was shown as interest free advance to the subsidiary company. During the year under consideration, assessee has made certain more advances and at the end of the previous year total amount of Rs. 10,59,92,50,000/- was outstanding which was shown under Note 5 to Balance Sheet (APB-37). Out of the total interest payment of Rs. 92,98,58,499/- a sum of Rs. 89,42,24,331/- was paid on such loans and the balance amount pertain to the project loans. During the course of assessment proceedings, it was submitted before the Ld.AO that advance was made to M/s Sutara Roads & Infra Limited in the normal course of business as any holding company would make to its subsidiary company thus the provisions of section 36(1)(iii) are not applicable.” With regard to the application of provisions of section 14A, it was explained that the section 14A come into play only in respect of expenses incurred in respect of investments, income from which does not or shall not form part of the total income. Since in the case of the appellant company, advance has been made to its subsidiary and the same does not represent any investment in shares thus, no income was received which could be claimed as exempt income from such advances nor it is a case where advances would ever yield any exempt income in future. It was also submitted that the disallowance of interest paid having similar nature was made in preceding assessment years by invoking the provisions of section 14Aon the advances given to M/s Sutara Roads and Infra Ltd. and the matter travelled upto the Hon’ble ITAT, Jaipur Bench, Jaipur who vide its common order for A.Ys 2011-12 to 2015-16 dated 22.12.2020 has held that no disallowance could be made u/s 14A and further held that disallowance, if any, the same should be made u/s 36(1) (iii) of the Income Tax Act, 1961. The relevant observation of the Hon’ble Bench is reproduced herein below for sake of ready reference (APB 229-232): “75. We therefore find that it is an admitted fact that there is a direct nexus between the funds borrowed from IDFC Bank and the utilization of these funds in deposit towards share application with M/s GVK Airport Developers Pvt. Ltd. and the aforesaid interest expenditure debited in the profit/loss account relates to loan funds so taken from IDFC Bank which has been utilized for making investment in the share application of M/s GVK Airport Developers Pvt. Ltd. It is

P a g e | 11 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited also a fact that the assessee company is in the business of maintaining and operating of highways and the investment by way of share application money in M/s GVK Airport Developers Pvt. Ltd., a group company which is in business of development, construction and operation of domestic and international airports is not part of the regular business activity of the assessee company. More so, it is clearly a case where the funds have been mobilized on the strength of assessee’s balance sheet and in substance, given interest free to a group company for period commencing right from time of payment of share application money in A.Y 2012-13 right upto time of allotment of shares in A.Y 2015-16. There is nothing on record which should reasonably justify such a long-time gap of almost four years between the placing of share application money and allotment of shares, more so, where the transactions are within the same group of companies. Though the transaction in form has been structured by way of issue of preference shares, in substance, it is in nature of interest free advancement of funds to the group company. Though there is no dispute that business rationale and expediency for entering into such transaction is best left to the assessee company to decide, at the same time, the Revenue authorities are well within their jurisdiction to examine as to how the test of business expediency has been satisfied in the given case more so where the borrowed funds have been advanced to the group company for a reasonable long period of time without anything tangible benefit in return. In the instant case, only explanation which has been given simpliciter is that the investment so made is for strategic purposes and to our mind, the said explanation without elaborating as to how the same is strategic and in furtherance of business interest of the assessee company is not sufficient enough to satisfy the test of business expediency. Therefore, where the interest bearing borrowed funds have been invested in another group company which is not part of regular business activity of the assessee company or in any way in furtherance of its business activity, the ld CIT(A) has rightly invoked the provisions of section 36(1)(iii) of the Act by holding that interest paid on such advances and claimed in the Profit & Loss Account against the income from toll operation may not be considered as laid out for the business purposes of the assessee company. Similar finding has been recorded

P a g e | 12 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited by the ld CIT(A) for A.Y 2013-14. We therefore do not find any infirmity in the said findings of the ld CIT(A) and the same are hereby confirmed for both the years and the contentions so advanced on behalf of the Revenue cannot be accepted. 76. The assessee has not disputed the said findings of the ld CIT(A) and is not in appeal before us for A.Y 2012-13 and A.Y 2013-14. In its appeal for A.Y 2014-15 and A.Y 2015-16, the assessee has rather pleaded to follow the decision of ld CIT(A) for A.Y 2012-13 and A.Y 2013-14 as can seen from its ground of appeal where it contends that the ld. CIT(A) has erred in not following the principle of consistency as in the immediate two preceding assessment years, wherein his predecessor CIT(A) had invoked the provisions of sec 36(1)(iii) for making disallowance of interest on the amount employed in making share application money out of the funds so borrowed and hence the facts are same as in the preceding years. 77. For A.Y 2014-15 and A.Y 2015-16, the ld CIT(A) has again recorded a similar finding that the assessee had raised an amount of Rs. 950 crores as loan and the entire loan amount was invested in the group concern of the assessee and therefore, there is no doubt that the loan was raised with the sole intention of investing in the group company which has a business object different to that of the assessee company and on such borrowings, the assessee has incurred interest expenditure of Rs 1,15,92,95,718/- for A.Y 2014-15 and Rs 1,11,92,41,369/- for A.Y 2015-16. Having recorded such findings, we find that the ld CIT(A) was not correct in not following the earlier orders so passed by his ld. predecessor for A.Y 2012-13 and A.Y 2013-14 in terms of invocation of provisions of section 36(1)(iii) of the Act instead of section 14A of the Act. Given that there are no changes in the facts and circumstances of the case, following the principle of consistency which applies equally to the assessee and the Revenue as laid down by the Hon’ble Supreme Court in case of Godrej & Boyce Manufacturing Company Ltd (Supra), we reverse the said findings of the ld CIT(A) and uphold the applicability of provisions of section 36(1)(iii) of the Act for the purposes of making the disallowance of interest expenses debited in the

P a g e | 13 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited profit/loss account for these two assessment years, i.e, A.Y 2014-15 and A.Y 2015-16. 78. In light of aforesaid discussions and in the entirety of facts and circumstances of the case and following the decisions referred supra, in the instant case, we set-aside the invocation of provisions of section 14A and uphold the invocation of provisions of section 36(1)(iii) for the purposes of making the disallowance of interest expenses debited in the profit/loss account for each of the respective assessment years i.e, A.Y 2012-13 to A.Y 2015-16 under appeal before us. 4.5 Thus, respectfully following the decision of the Hon’ble ITAT, Jaipur Bench, Jaipur (supra.) dated 22.12.2020 passed for A.Ys 2011-12 to 2015-16 we also hold that there is no infirmity in the impugned order of the Ld. CIT (A) and thereby confirm its order that the interest paid on the borrowed funds amounting to Rs.89,42,24,331/- utilized by the appellant company for making investments in the group company through its subsidiary is disallowed u/s 36(1) (iii) of the Act. Thus, the ground of appeal raised by the appellant company is dismissed andthe ground of appeal raised by the Revenue is allowed to the extent that the provisions of section 14A cannot be invoked in disallowance of the interest expenditure amounting to Rs.89,42,24,331/- relating to investments made in the shares of group companies. 4.6 Further, on the issue of whether disallowance can be made while computing the book profit under the provision of section 115JB of the Act, Hon’ble Tribunal, Jaipur Bench,

P a g e | 14 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited Jaipur in the Assessment Years 2010-11 to 2015-16 has already held as under:

“79. Now coming to the second issue as to whether resort to disallowances made under section 14A can be made while computing the books profits u/s 115JB of the Act. In the instant case, as we have held that provisions of section 14A cannot be invoked for the impugned assessment years and thus, no disallowance can be made u/s 14A of the Act, the question of resorting to disallowances made under section 14A doesn’t arise at first place while computing the books profits u/s 115JB of the Act. 80. Further, we find that the matter is squarely covered in favour of the assessee company by the decision of the Special Bench of the Tribunal in case of Vireet Investments Pvt Ltd (supra) wherein it was held that computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D. The said view is further fortified by the decision of Hon’ble Bombay High Court in case of CIT vs. M/s Bengal Finance & Investment Pvt. Ltd. (supra) wherein the Hon’ble High Court was pleased to held as under: - “4. So far as Question (b) is concerned, the impugned order of the Tribunal followed its decision in M/s Essar Teleholdings Ltd. vs. DCIT in ITA No. 3850/Mum/2010 to held that an amount disallowed under Section 14-A of the Act cannot be added to arrive at book profit for purposes of Section 115JB of the Act. The Revenue’s Appeal against the order of the Tribunal in M/s Essar Teleholdings (supra) was dismissed by this Court in Income Tax Appeal No. 438 of 2012 rendered on 7th August, 2014. In view of the above, question (b) does not raise any substantial question of law.”

P a g e | 15 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited complete code in itself and resort need not and cannot be made to section 14A of the Act. 82. Now, coming to the third and connected issue as to whether there could be any independent adjustment to book profits by applying clause (f) of explanation under section 115JB of the Act. 83. In this regard, the ld CIT/DR has referred to the findings of the ld CIT(A) in A.Y 2014-15 where he has referred to the decision of the Tribunal in case of ACIT vs Ridhi Portfolio Pvt Ltd (IT(SS) No. 106 to 109/Kol/2016 dated 16.02.2018). It was submitted that though the ld CIT(A) has followed the said decision of the Tribunal however, failed to appreciate that in the said decision, the Tribunal has also referred to the decision of the Hon’ble Kolkata High Court in case of CIT vs Jayshree Tea Industries Ltd (ITA No. 47 of 2014 dated 19.11.2014) wherein it was held that computation of amount of expenditure relatable to exempt income must be made independently by applying clause (f) of explanation under section 115JB of the Act and our reference was drawn to findings of the Hon’ble High Court where it was pleased to held as under: "we find computation of the amount of expenditure relatable to exempted income of the assessee must be made since the assessee has not claimed such expenditure to be Nil. Such computation must be made by applying clause (f) of Explanation 1 under section 115JB of the Act. We remand the matter for such computation to be made by the learned Tribunal. We accept the submission of Mr. Khaitan, learned Senior Advocate that the provision of section 115JB in the matter of computation is a complete code in itself and resort need not and cannot be made to section 14A of the Act." 84. Further, the ld. CIT/DR referred to the Co-ordinate Bench decision in case of ACIT, Kolkata vs Jay Shree Tea & Industries Ltd. (ITA No. 37/Kol/2017 dated 08.06.2018) wherein following the aforesaid decision of the Hon’ble High Court, it was held that though the disallowance made under provisions of section 14A cannot be applied to the provisions of section 115JB of the Act, at the same time, the Assessing Officer is still required to work out the disallowance in terms explanation (1) clause (f) independently after considering the expenses debited in the profit & loss account and the matter was remanded back to the file of AO

P a g e | 16 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited to work out the disallowances under clause (f) of explanation 1 to section 115JB independently of provisions of section 14A of the Act. It was submitted that against the aforesaid decision of the Hon’ble High Court, the SLP filed by the assessee has since been dismissed by the Hon’ble Supreme Court (SLP (C) No. 9191/2015 dated 26.02.2020). It was accordingly submitted that appropriate directions may be issued to the Assessing officer to compute the amount of expenditure relatable to exempt income must be made independently by applying clause (f) of explanation under section 115JB of the Act. 85. Per contra, the ld AR submitted that the ground of appeal taken by the Revenue is limited to whether the Ld. CIT(A) was justified in holding that the computation under clause (f) of Explanation 1 to Section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A r.w. Rule 8D and therefore, the contention so advanced by the ld CIT D/R is not emerging from the ground of appeal so taken by the Department. It was further submitted that the decision of the Hon’ble Kolkata High Court in case of CIT vs Jayshree Tea Industries Ltd (supra) has also been considered by the Ahmedabad Benches of the Tribunal in case of Deputy Commissioner of Income-tax, Ahmedabad vs. Asian Grantio India Ltd [2020] 113 taxmann.com 445 (Ahmedabad - Trib.) and the relevant findings read as under: “7.7 Regarding the disallowance under MAT, we note that the AO in the instant case has made the disallowance u/s 14A r.w.r. 8D of the Income Tax Rules for Rs. 6,15,723/- while determining the income under normal computation of income. Further, the AO while determining the income under Minimum Alternate Tax (MAT) as per the provisions of section 115JB of the Act, has also added the disallowance made under the normal computation of Income under section 14A r.w.r. 8D of Income Tax Rule for Rs. 6,15,723/- in pursuance to the clause (f) of explanation 1 to section 115JB of the Act.

7.8 However, we note that in the recent judgment of Special Bench of Hon'ble Delhi Tribunal in the case of Asstt. CIT v. Vireet Investment (P.) Ltd. [2017] 82 taxmann.com 415/165 ITD 27 has held that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of

P a g e | 17 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited disallowances while determining the net profit u/s 115JB of the Act. The relevant portion of the said order is reproduced below: "In view of above discussion, the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962."

7.9 The ratio laid down by the Hon'ble Tribunal is squarely applicable to the facts of the case on hand. Thus it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expenses as mentioned under clause (f) to explanation 1 to section 115JB of the Act. 7.10 However, it is also pertinent to note that the disallowance needs to be made with respect to the exempted income in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. In holding so, we draw support from the judgment of Hon'ble Calcutta High Court in the case of CIT v. Jayshree Tea Industries Ltd. in GO No.1501 of 2014 [ITAT No.47 of 2014, dated 19-11-14] wherein it was held that the disallowance regarding the exempted income needs to be made as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. The relevant extract of the judgment is reproduced below: —

"We find computation of the amount of expenditure relatable to exempted income of the assessee must be made since the assessee has not claimed such expenditure to be Nil. Such computation must be made by applying clause (f) of Explanation 1 under section 115JB of the Act. We remand the matter for such computation to be made by the learned Tribunal.

We accept the submission of Mr. Khaitan, learned Senior Advocate that the provision of section 115JB in the matter of computation is a complete code in itself and resort need not and cannot be made to section 14A of the Act."

7.11 Given above, we hold that the disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction of the Hon'ble Calcutta High Court in the case of Jayshree Tea Industries Ltd. (Supra).

P a g e | 18 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited 7.12 Now the question arises to determine the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. In this regard, we note that there is no mechanism/ manner given under the clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/ determine the expenses with respect to the exempted income. However, we find that there are judgments on the issue which mandates that the disallowance of the expenses cannot exceed the exempt income i.e. Vision Finstock Ltd. (supra) or only those investments should only be considered for the purpose of the disallowance which have resulted the dividend income. However, we are also conscious to the fact that the above judgments were rendered in connection with the income determined under normal computation of income but to our mind the same principles can also be applied to the case on hand. It is because, the provisions of section 115JB of the Act require to make the disallowance of the expenditure related to any income to which section 10 applies other than section 10(38) of the Act. Accordingly, we hold that the expenses incurred in connection with the exempted income cannot exceed the amount of such exempted income under the provisions of section 115JB of the Act. Accordingly, we limit the disallowance of the expenses to the extent of exempt income which is NIL in the case on hand. Thus, no disallowance of the expense is warranted under section 115JB of the Act. Hence the ground of appeal of the Revenue is dismissed.” 86. It was accordingly submitted that after considering the decision of the Hon’ble Kolkata High Court and taking into consideration the fact that there was no exempt income, it was held that no disallowance was warranted even independently u/s 115JB of the Act and the said decision squarely applies in the instant case and therefore, there should not be any disallowance u/s 115JB on a standalone basis even independent of section 14A of the Act.

P a g e | 19 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited Explanation-1 of Sec. 115JB of the Act to workout/ determine the expenses with respect to the exempted income, and drawing support from the principles laid down under normal provisions further held that the disallowance of the expenses cannot exceed the exempt income and limited the disallowance of the expenses to the extent of exempt income which was NIL in that case. Following the said proposition, in the instant case as well, given that there is no income which is claimed exempt in any of the years under consideration, no disallowance of the expense is warranted under Section 115JB of the Act even in terms of clause (f) to Explanation-1 of Sec. 115JB of the Act in respect of all the impugned assessment years. 88. In the result, the respective grounds of appeal taken by the Revenue are dismissed and grounds of appeal taken by the assessee are allowed in light of aforesaid directions." 4.7 Since the issues are identical in the impugned assessment years also, respectfully following the decision of the Hon’ble ITAT, Jaipur Bench, Jaipur (supra.) we also hold that no disallowance of the expense is warranted under Section 115JB of the Act in terms of clause (f) to Explanation-1 of Sec. 115JB of the Act in respect of all the impugned assessment years. In the result, the respective grounds of appeal taken by the Revenue are dismissed with aforesaid directions.

“Whether on the facts and in the circumstances of the case and in law, ld. CIT (A) was justified in deleting the addition of Rs. 28,31,500/- made u/s 14A of the Income Tax Act on account of investments which were made to earn

P a g e | 20 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited and further holding that that the said disallowance cannot be added back to the assessee’s income computed under the provision of section 115JB of the Act?” 5.1 The facts of the case, in brief, as mentioned in the Assessment order for the A.Y. 2018-19, are that the A.O. on perusal of the balance sheet of the assessee noticed that the assessee has made investment of Rs.5,00,000/- as share capital in one of the group companies i.e. M/s Sutara Roads and Infra Limited, investment of Rs.1,70,00,000/- and Rs.11,26,50,000/- in M/s GVK Development Projects Pvt. Limited. The AO, thus, found that as the investments were made to earn exempt income, it attracts the provisions of Section 14A of the IT Act and for many years, on similar issues, substantial amounts were calculated for disallowance under Section 14A but the assessee still filed ‘NIL’ amount. The AO, therefore, held that as the assessee’s investment with equity is related to exempt income only, disallowance of expenditure, in relation to income which does not form part of the total income under Section 14A of the IT Act, 1961 r.w. Rule 8D (2) of the IT Rules, 1962 is liable to be calculated at Rs.28,31,500/- @ 1% on average value of the total investments and accordingly, added the same to the total income of the assessee. The AO, further, increased the book profit for the

P a g e | 21 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited purpose of computation of profit under Section 115JB(2) 1(f) of the Act.

5.2 Aggrieved by the order of the A.O., the assessee company filed appeal before the ld. CIT(A), who vide the impugned order held as under:

“I find that the issue of disallowance u/s 14A read with Rule 8Dhad come up for consideration before Hon’ble ITAT, Jaipur, in appellant’s own case for AYS 2012-13 T0 2015-16. The Hon’ble ITAT, vide order dated 22/12/2020, decided the issue observing as under:

“70.We have heard the rival contentions and perused the material available on record. During the F.Y 2011-12 relevant to A.Y 2012-13, the assessee company has made an application for allotment of 13.30% Non-cumulative redeemable preference shares of M/s GVK Airport Developers (P) Ltd., a group companyand has paid an amount of Rs. 940.80 crores by way of shares application money. The shares were finally allotted during the financial year 2014-15 relevant to A.Y 2015-16 and therefore, till such time the shares were not allotted, the amount so paid continues as share application money pending allotment and it cannot be regarded as an investment in shares or any asset which is capable of yielding any dividend income. Given that the shares were allotted only during the financial year 2014-15 relevant to A.Y 2015-16, there was no question of any dividend been declared/accrued and/or received by the assessee company right through the financial years relevant to A.Y 2012-13 to A.Y 2014-15 and even during the financial year 2014-15 relevant to Α.Υ 2015-16, no dividend was actually declared/accrued and/or received by the assessee company. Accordingly, in the return of income filed for the respective assessment years, it is an admitted and undisputed position that no dividend income has been claimed as exempt from tax. It is a settled legal position that no disallowance can be made u/s 14A in a year where no exempt income has been earned or received by the assessee. The

P a g e | 22 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited id AR has relied on the decision of the Hon'ble Delhi High Court in case of Cheminvest Ltd vs CIT (supra) where similar substantial question of law had arisen for consideration as to "Whether disallowance under Section 144 of the Act can be made in a year in which no exempt income has been earned or received by the Assessee?" And the Hon'ble Delhi High Court, while disposing off the said ground, was pleased to held as under: "23. In the context of the facts enumerated hereinbefore the Court answers the question framed by holding that the expression 'does not form part of the total income' in Section 144 of the envisages that there should be an actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. In other words, Section 144 will not apply if no exempt income is received or receivable during the relevant previous year."

71.We also note that similar view has been taken by the Hon'ble Delhi High Court in its subsequent decision in case of PCIT vs OIL Industries Development Board [2019] 103 taxmann.com 325 (Delhi) wherein it was pleased to held as under:

"3. The ITAT relied upon the ruling of this Court in Cheminvest Ltd. v. CIT [2015] 378 ITR 33 which ruled in the absence of any exempt income, disallowance under Section 14-A of the Act of any amount was not permissible. Since the decision in Cheminvest Ltd. (supra) was followed, there is no substantial question of law that requires consideration."

And the SLP filed by the Revenue against the said decision of the Hon'ble Delhi High Court has since been dismissed by the Hon'ble Supreme Court in case of PCIT vs OIL Industries Development Board (2019) 262 Taxman 102(SC). Similar view has been taken by the Hon'ble Mumbai High Court in case of PCIT vs Ballarpur Industries Limited (ITA No. 51 of 2016 dated 13.10.2016) wherein the Hon'ble Mumbai High Court was pleased to held as under:

P a g e | 23 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited “On hearing the learned Counsel for the Department and on a perusal of the impugned orders, it appears that both the Authorities have recorded a clear finding of fact that there was no exempt income earned by the assessee. While holding so, the Authorities relied on the judgment of the Delhi High Court in Income Tax Appeal No. 749/2014, which holds that the expression "does not form part of the total income" in Section 144 of the Income Tax Act, 1961 envisages that there should be an actual receipt of the income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. The Income Tax Appellate Tribunal held that the provisions of Section 14A of the Income Tax Act, 1961 would not apply to the facts of this case as no exempt income was received or receivable during the relevant previous year. It is not the case of the Assessing Officer that any actual income was received by the assessee and the same was includible in the total income. In the facts of the case, the Authorities held that since the investments made by the assessee in the sister concerns were not the actual income received by the assessee, they could not have been included in the total income. The findings of facts recorded by both the Authorities do not give rise to any substantial question of law. Since no substantial question of law arises in this income tax appeal, the income tax appeal is dismissed with no order as to costs." 72.We therefore find that there is a convergence of view among the various Hon'ble High Courts on the matter and following the aforesaid decisions of the Hon'ble High Courts, it is a consistent position taken by the various Benches of the Tribunal as well including Jaipur Benches in case of Deepak Vegpro (P) Ltd vs ACIT (supra) and Mumbai Benches in case of DCIT vs JSW Limited (supra) that no disallowance can be made /s 14A in a year where no exempt income has been earned or received by the assessee Therefore, respectfully following the decisions referred supra, in the instant case, where the facts are on a stronger footing in the sense that there was no investment by way of shares which were capable of even yielding any dividend income and the amount remain invested as share application money for A.Y 2012-13 to A.Y 2014-15 and even for A.Y 2015- 16 where the shares were finally allotted, there was no dividend income which

P a g e | 24 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited has accrued and claimed exempt, the provisions of section 14A cannot be invoked. In the result, the findings, of the Assessing officer for all the years under consideration as well as of the Id CIT(A) for A.Y 2014-15 & 2015-16, in so far as invocation of section 14A is concerned, are set-aside.” 5.3 The ld. CIT(A), therefore, held as under: “As mentioned above, the appellant has submitted that it had not earned any dividend income on the above-mentioned investments during the year under consideration. There is also no finding given by the AO in the assessment order that any dividend income had been received or had accrued to the appellant on the above investments, during the year under consideration. Under the circumstances and in view of the decision of Hon’ble ITAT, Jaipur in appellant’s own case for earlier years and the judicial pronouncements discussed therein, I hold that no disallowance can be made U/s 14A read with Rule 8D in the instant case for the year under consideration. Accordingly, the AO is directed to delete the disallowance of Rs. 28,31,500/- made u/s 14A r.w. Rule 8D and Grounds No. 2 and 2.1 to 2.3 are allowed” 5.4 Further aggrieved by the order of the ld. CIT(A), the revenue has filed appeal before this Tribunal. 5.5 During the course of hearing before us, the ld. CIT-DR strongly supported the order of the A.O. 5.6 The ld. Counsel for the assessee company, in its submission, stated as under: “In this regard, it is submitted that disallowance on identical lines was also made in preceding years, which have been deleted by hon'ble Jaipur ITAT. Therefore, for the sake of convenience of hon'ble bench, relevant extracts of latest decision of hon'ble ITAT dated 19.08.2025 as

P a g e | 25 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited delivered in assessee's own case for A.Y. 2016-17 and 2017-18 (after considering decision dated 22.12.2020 for A.Y.2010-11 to 2015-16), wherein disallowance made under identical circumstances was deleted is reproduced as under (para 15 to 17 of ITAT order Common Paper Book APB 225): "15. Now coming to ground No. 2 for A.Y. 2016-17 (and ground No. 1 for A.Y. 2017-18), it is seen that in the period relevant to A.Y. 2016-17, there is investment of Rs. 6,19,00,000/- in the share of M/s GVK Development Projects Pvt. Ltd. and of Rs. 5,00,000/- in M/s Sutara Roads & Infra Ltd., totaling to Rs. 6,24,00,000/- The AO held that these investments were made to earn exempt income and disallowed Rs. 6,24,000/- being 1% of average investment by invoking section 144. It was submitted before AO and also ld. CIT(A) that there is no dividend income earned on these investments. Moreover, these investments are out of self-generated funds. The ld. CIT(A), on considering the fact that no dividend income has been earned on such investment which have been claimed as exempt and further that AO has not controverted the argument of appellant that these investment have not been made out of self-generated funds and further also considering the discussion made in detail in respect of earlier ground of disallowance u/s 14A, has held that no disallowance u/s 14A is called for 16. Now the revenue is in appeal before us. The ld. DR has placed relied upon the order of AO and facts mentioned therein. The ld AR in its common written submission has broadly submitted that these investments have not been made out of borrowed funds. Moreover, during both the years under consideration, no any

P a g e | 26 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited exempt income by way of dividend or otherwise has been earned from such investment. Accordingly, in view of the decision of various High Courts namely Cheminvest Ltd. Vs. CIT reported in 378 ITR 33 (Delhi), no disallowance should be made in the year when no exempt income has been earned. The ld. AR has also referred to other decisions more particularly decision of Hon'ble Apex Court in the case of Max opp Investment Ltd. Vs. CIT.

P a g e | 27 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited Further, with respect to the issue raised by the department that disallowance u/s 14A deserves to be made while computing book profit as per section 115JB also, it is submitted that said issue is also covered by decision of Hon'ble Jaipur ITAT in assessee's own case in preceding years. Relevant extracts of common order dated 19.08.2025 passed by Hon'ble ITAT for A.Y.2016-17 and 2017-18 are reproduced as under (Pages 222 to 225 of Common Paper Book): "11. Now coming to the issue particularly taken by the department in ground No. 1 for A.Y. 2016-17 (and ground No. 2 for A.Y. 2017- 18) that, this disallowance so made u/s 14A by the AO should have been considered for computing income ws 115JB and Ld.CIT(A) has erred in directing not to consider this disallowance to compute the income u/s 115.JB. 12. We have considered the ground so taken by the department and also perused the relevant part of the order of AO and Ld. CIT(A). The Ld. CIT(A) has held that impugned disallowance of interest so made u/s 14A considering it to be expenditure required for earning exempt income is unjustified and deleted the same. We have also held in the earlier paras that the disallowance of interest could not have been made u/s 14A and this can be made u/s 36(1)(iii). 13. Since the interest expenditure has been considered to be not related to disallowance u/s 14A and thus not being expenditure for earning exempt income, accordingly provisions of expenditure 1(f) to section 115JB(2) will not apply in respect of aforesaid interest expenditure. Moreover, as relied in the written submission that the issue on that aspect is discussed by the Special Bench in the case

P a g e | 28 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited of Vireet Investment Pvt. Ltd. In that case the Special Bench has dealt following two important questions of law: (i) Whether the expenditure incurred to earn exempt income computed u/s 14A could not be added while computing book profits u/s 115JB of the Act? And (ii) Whether investments which did not yield any exempt income should enter into the computation under Rule 8D while arriving at the average value of investment, income from which does not form part of the total income? It is HELD by the Special Bench deciding both issues in favour of the assessee: (i) We answer the question referred to us in favour of the assessee by holding that the computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income tax Rules 1962. (ii) Only those investments are to be considered for computing the average value of investment which yielded exempt income during the year. 14. Moreover, in the case of assessee company itself, the Co-ordinate Bench of ITAT Jaipur Bench vide its common order dated 22.12.2020 has upheld the action of Ld.CIT(A) of not considering such expenditure for the purpose of computation of deemed income u/s 115JB. The relevant para is reproduced as below: "87. We have heard the rival contentions and perused the material available on record. The Hon'ble Kolkata High Court in case of CIT vs Jayshree Tea industries Ltd (supra) has held that the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act is required to be determined independently as the same is a complete code in itself and considering the said decision, the Coordinate Ahmedabad Benches of the Tribunal in case of Asian Grantio India Ltd (supra) has held that there is

P a g e | 29 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited no mechanism/ manner give under the clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/determine the expenses with respect to the exempted income, and drawing support from the principles laid down under normal provisions further held that the disallowance of the expenses cannot exceed the exempt income and limited the disallowance of the expenses to the extent of exempt income which was NIL in that case. Following the said proposition, in the instant case as well, given that there is no income which is claimed exempt in any of the years under consideration, no disallowance of the expense is warranted under Section 115JB of the Act even in terms of clause (f) to Explanation-1 of Sec. 115JB of the Act in respect of all the impugned assessment years." As the issue as decided by ITAT Jaipur bench in case of the assessee as well as by the special bench in the case of Vireet Investments Pvt. Ltd. we see no reason to deviate from the decision of ITAT in the case of assessee itself in the preceding years. In the light of these facts accordingly, ground No. 1 for A.Y. 2016-17 and ground No. 2 for A.Y. 2017-18 of the revenue are dismissed." It is therefore submitted that the addition of Rs. 28,31,500/- made by ld.AO by invoking the provision of section 14A of the Income Tax Act, 1961 to the book profit u/s 115JB explanation (1) clause (f) has been rightly deleted by Ld.CTT(A) from the book profit so computed, which order deserves to be upheld.”

5.7 We have considered the rival submissions and also went through the orders of the Hon’ble Tribunal, Jaipur in assessee’s own case for A.Y. 2016-17 and A.Y. 2017-18 wherein this issue has already been decided in favour of the

P a g e | 30 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited assessee’s company. Thus, in the light of these facts,we see no reason to deviate from the decisions of Hon’ble ITAT. Accordingly, the second ground of appeal raised by the revenue is dismissed. 6. Departmental Ground of Appeal No. 3: “Whether on the facts and in the circumstances of the case, and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 30,35,81,900/- made by the AO on account of disallowance of periodic overlay expenses of Rs. 30,35,81,900/-ignoring the fact that the assessee did not furnish any scientific documentary evidences which could fix the liability?” 6.1 While making assessment under Section 143(3), the Assessing Officer on perusal of the Profit and Loss account of the assessee, noticed that the assessee had debited an amount of ₹ 30,35,81,900/- on account of "provisions for periodic wearing course overlay". The Assessing Officer has noted in the impugned assessment order that this was a provision and not an expense and therefore, was not admissible to the assessee. When the Assessing Officer asked the assessee-company to show cause as to why the same should not be disallowed and added back to the total income of the assessee, it was submitted by the assessee company that ‘periodic overlay expense’ was made in terms of concession agreement as per which the assessee has to carry out the overlay on the toll highway in every five years period compulsorily. It is a simple provision made but rather it is an expenditure which has to be incurred and thus, the assessee company has obtained the report of the independent consultant

P a g e | 31 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited towards the expenses to be incurred on such overlay. The assessee-company further stated that it is an ascertained liability, therefore, the same should be allowed. Not convinced with the reply of the assessee company, the Assessing Officer, disallowed the provisions on account of periodic overlay claimed by the assessee at ₹30,35,81,900/- and added the same to the total income of the assessee. 6.2 Aggrieved by the order of the Assessing Officer, the assessee- company filed appeal before the ld. CIT(A), who vide the impugned order, deleted the addition on this count and allowed the appeal of the assessee by holding as under: "32. I find that this issue has also been decided by Hon'ble ITAT in favour of the appellant in the earlier years. Vide the aforesaid common order dated 22/12/2020 for A.Ys.2010-11 to 2015-16, the Hon'ble ITAT, Jaipur Bench, had decided the issue by observing as under: "50. In the instant case, case, the assessee company has a present obligation arising out of the concessionaire agreement executed with NHAI to maintain the highway in traffic worthy condition through regular and preventive maintenance of the highway and which mandatorily requires it to maintain the pavement riding quality by way of roughness meeting the minimum standards throughout the service life of the pavement, the settlement of which is expected to result in an outflow of resources and in respect of which a reliable estimate has been made based on report of an independent consultant. Our view is further fortified by the decision of the Hon'ble Rajasthan High Court in case of Udaipur Mineral Development Syndicate (P.) Ltd. Vs Deputy

P a g e | 32 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited Commissioner of Income-tax [2003] 129 Taxman 728 (Rajasthan) wherein the Hon'ble Rajasthan High Court was pleased to held as follows: 5. Heard learned counsel for the parties. The submissions made before the CIT(A) in writing reads as under- "It is submitted that the assessee-company is engaged in open cast mining of soapstone crude. The lease for the exploration of mines has been granted by the Govt. of Rajasthan. From the terms and conditions of the lease agreement, it is obligatory on the part of the assessee-company to restore the land as far as possible to its original shape. An extract from clause 2 of part-V of the lease agreement is reproduced as below: As far as possible the lessee shall restore the surface land so used to its original condition. During the year under consideration, the company had dug new pits in the mining lease area for the purpose of excavating soapstone crude out of which some of the pits dug had no economic value and the land damaged by digging the land was required to be restored. Dimensions of the pit dug which were uneconomic were to the extent of 7568 Cub. mtr. and the estimated cost of their re- filling comes to Rs. 1,51,360 and therefore, the liability in respect of the same had been provided for as per the clause 2 of part-V of lease agreement. Thus the cost of refilling of above ascertained liability and is eligible for deduction because the assessee-company observes mercantile system of accounting." 6. It has also been brought to our notice that even in the year 1993-94 though the actual expenditure has been made, but that has been denied on the ground that CIT(A) has allowed this expenditure in the year 1991-92. Thus in both the years, the claim of the assessee has been disallowed. 7. Considering the clause in the agreement i.e. as far as possible the lessee shall restore the surface land so used

P a g e | 33 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited to its original condition, the moment assessee digs pits, he is bound under the agreement to fill those pits and liability does accrue on the date when the pits are digged. Therefore, in our view, the Tribunal has committed error in disallowing the claim of the assessee in the year in hand i.e. 1991-92. We agree with the view taken by CIT(A) that the moment assessee digs the pits, liability does arise and he is entitled for deduction of the expenses which he is supposed to incur for filling those pits, as assessee is following the Mercantile System of Accounting. It can claim the expenses incurred as soon as it digs the pits. 8. In the result, we restore the view taken by CIT(A). The appeal stands allowed." 51. In light of aforesaid discussions and in the entirety of facts and circumstances of the case, the matter is decided in favour of the assessee and against the Revenue. In the result, ground of Revenue's appeal for A.Y 2013-14 and A.Y 2014-15 are dismissed and ground of assessee's appeal for A. Y 2015-16 is allowed." 33. In view of the above decision of Hon'ble ITAT in appellant's own case, the AO is directed to delete the addition of Rs. 30,35,81,900/- made on account of disallowance of provisions for periodic overlay expenses. Grounds No. 4, 4.1 & 4.2 are, accordingly, ALLOWED." 6.3 Further aggrieved by the order of the ld. CIT(A), the revenue has filed appeal before this Tribunal. 6.4 During the course of hearing before us, the ld. CIT-Departmental Representative supported the order of the Assessing Officer on the ground that the provisions of any kind cannot be allowed being unascertained liability. 6.5 On the other hand, the ld. AR of the assessee company submitted as under:

P a g e | 34 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited “Under these grounds of appeal, the department has challenged the action of Ld.CIT(A) in deleting the addition of Rs. 30,35,81,900/- made by Ld.AO on account of disallowance of mandatory periodic overlay expenses by alleging the same. In this regard, at the outset it is submitted that disallowance the disallowance of similar nature was firstly made in AY 2014-15 and thereafter such disallowance was made in all the preceding years. On appeal, the same stood allowed by the Ld. CIT(A) and such deletion was further confirmed by hon'ble ITAT vide its common order for AY 2010-11 to 2015-16 dt. 22.12.2020 (Common Paper Book APB 108203). It is noteworthy to mention here that in the appeals filed by department before Hon'ble High Court against the order passed by Hon'ble ITAT, the only question of law admitted is w.r.t. issue of disallowance of interest expenditure. Relevant extracts of such ground raised by the revenue for A.Y.2015-16 is as under: "(1) Whether in the facts and circumstances of the case, the ITAT was right in deleting the disallowance of the interest expenditure amounting to Rs. 1,11,92,41,369/- relating to investments made in the shares of group companies made by the AO u/s 14A of the Act, while directing that the said disallowance be made u/s 36(1)(iii) of the Act and further holding that the said disallowance cannot be added back to the assessee's income computed under the provisions of section 115JB of the Act." Hon'ble High Court has further observed that the other two substantial questions of law, as they are framed, do not constitute any substantial question of law. Further, for the sake of convenience of hon'ble bench, relevant extracts of latest decision of hon'ble ITAT dated 19.08.2025 passed for A Y 2016-17 and 2017-18(after considering common order dated 22.12.2020 for 2010- 11 to 2015-16) are also reproduced as under (Common Paper Book APB 240-242):

P a g e | 35 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited 23. We have seen that facts and circumstances for both the years under consideration are same as that of preceding years. It is also seen by us that concession agreement dated 08.05.2002 is quite a detailed one and as part of the maintenance requirements, periodic maintenance of payment has been specifically provided at para 4.5, 4.5.1, 4.5.2 and so on. Clause 4.5.1 is reproduced below for the sake of easy reference:

4.5.1 Pavement Riding Quality

The riding quality of the pavement shall be ensured by satisfying the minimum requirements given herein under. i) Surface roughness of the Project Highway on completion of construction shall be 2500 mm/km as measured by the 5th wheel Bump Integrator. ii) Surface roughness shall not exceed 3500 mm/km during the service life of pavement at any time. A renewal coat of 25 mm of bituminous concrete shall be laid every 5 years after initial construction or where the roughness value reaches 3500 mm/km whichever is earlier to bring it to initial value of 2500 mm/km. As seen from the above, as per clause 4.5.1(ii) of Schedule 'L' under the head "Pavement Riding Quality", the concessioner is required to lay a renewal coat of 25 mm of bituminous concrete at the end of every five years after the initial construction or even earlier than five years, if the roughness value reaches 3500mm per KM, so as to bring it to the initial value of 2500mm per KM. Thus it is a case where the expenditure is required to be incurred on laying the renewal coat which has to be in any case laid by assessee company at the end of every five year [and even before that if the roughness quality has gone down]. 24. We therefore find that the assessee company has to maintain the riding quality of the pavement in terms of roughness not exceeding 3500 mm per

P a g e | 36 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited KM and in case it exceeded 3500 mm then bring it back to initial value of 2500 mm per KM. In any case the renewal coat is to be applied after every five year irrespective of whether riding quality has gone down or not. In view of the aforesaid fact it cannot be said that the expenditure incurred on this periodic overlay is not an ascertained liability. 25. Now coming to the basis of estimation of such expenditure, it has been explained by the ld. AR that the assessee company used to obtain and rely upon the report of independent consultant, which are expert in the field. These consultant, after detailed examination and may be by conducting survey of the toll road and taking into consideration the standards to be maintained as per the concession agreement furnish its report about the expenditure required to be incurred on such re-laying of road. Accordingly, it cannot be said that estimation of expenditure is not based on rational and scientific basis. 26. Considering the overall facts and in the circumstances of the case and the legal position of the issue under consideration and also considering the main fact that this issue has already been decided in favour of assessee in the earlier years by the Co-ordinate Bench of ITAT and facts for both the years under consideration being same as that of earlier years, we see no reason to differ from the decision taken by the Bench in earlier years in favour of assessee. In light of these facts, ground No. 3 of the revenue for both the years [ie A.Y.2016-17 & 2017-18] are dismissed. It is thus submitted that the issue is squarely covered in favour of the assessee by the order of hon'ble ITAT in preceding assessment years (Common Paper Book APB 108246) whereby the disallowance made by ld.AO on account of the provision for periodic overlay has been deleted, it could be inferred that the Hon'ble ITAT has held the provision to be of ascertained nature and the liability out of such expenses is allowed. Therefore, it is an established position of law pertaining to the disallowance of provision for periodic overlay to be of ascertained nature and thus, excluded from the provisions of section 115JB, Explanation-1(c) and the disallowance made by Ld.AO deserves to be deleted.”

P a g e | 37 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited

6.6 We have carefully considered the facts and circumstances of the case, rival submissions and the orders of the Coordinate Bench of the ITAT as stated above. It is found that this issue has been considered in earlier years for the A.Y. 2016-17 and 2017-18 and followed the Hon'ble ITAT’s order for the A.Y. 2010-11 to A.Y. 2015-16 on the issue of this provision for periodic overlay and decided this issue in favour of the assessee and against the revenue. It was also found that the appeal filed against the order of the Tribunal by the Income Tax Department before the Hon'ble High Court but the same was not admitted by the Hon'ble High Court, therefore, the order of the Hon'ble Tribunal has become final. Thus, considering the same, we also hold that the addition made by the AO is unjustified and thus, deleted and the assessee-company is allowed to claim this provision as an expenditure as held by the Hon'ble Tribunal in the case of the assessee company in last several years. 6.7 In the result, appeal of the revenue is dismissed and the appeal of the assessee is allowed. 7. Now we take up Revenue's appeals in ITA No. 1342/JPR/2025 and ITA No. 1345/JPR/2025 for the A.Y. 2020-21 and 2021-22 and the assessee's appeal in ITA No. 1369/JPR/2025 for the A.Y. 2020-21. Since the facts, grounds and submissions of both the parties of these appeals are identical to the facts and grounds and submissions of

P a g e | 38 ITA Nos.1367,1342-1343,1345 &1369/JPR/2025 GVK Jaipur Expressway limited assessee's appeal in ITA No. 1367/JPR/2025 and revenue's appeal in ITA No. 1343/JPR/2025 for the A.Y. 2018-19, therefore our finding given in assessee's appeal in ITA No. 1367/JPR/2025 and revenue's appeal in ITA No. 1343/JPR/2025 for the A.Y. 2018-19 shall apply mutatis mutandis in these appeals also. 8. In the result, all the appeals of the assessee are allowed and all the appeals of the revenue are dismissed. Order is pronounced under the provisions of Rule 34 of the ITAT Rules, 1963 on 01.06.2026

Sd/- Sd/- (Sanjay Garg) (Ratnesh Nandan Sahay) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 01.06.2026 Mittali/Ranjan, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order,

Asst. Registrar ITAT, Jaipur