RELIANCE INDUSTRIAL INVESTMENTS AND HOLDINGS LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3(3)(1), MUMBAI, AAYAKAR BHAVAN, MUMBAI

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ITA 3235/MUM/2026Status: DisposedITAT Mumbai24 June 2026AY 2017-185 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that in the absence of any exempt income earned by the assessee, the disallowance under Section 14A is not permissible. Therefore, the addition made and sustained by the CIT(A) was set aside.

What were the facts?

The assessee filed its return of income and later revised it. The assessment was completed with a disallowance under Section 14A. The assessee's appeal before the CIT(A) was dismissed for non-prosecution.

What were the issues?

Whether disallowance under Section 14A is permissible in the absence of exempt income, and whether the CIT(A) erred in dismissing the appeal for non-prosecution without adjudicating on merits.

Which sections of the Income-tax Act were involved?

Section 14A,Section 115JB,Section 154,Section 250(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH: MUMBAI

Before: SHRI VIKRAM SINGH YADAV & SHRI SIDDHARTHA NAUTIYAL

Hearing: 17.06.2026Pronounced: 24.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH: MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No. 3235/Mum/2026 (Assessment Year: 2017-18)

Reliance Industrial Deputy Commissioner of Investments and Holdings Income Tax, Circle 3(3)(1), Limited vs. Mumbai 1stFloor, Building 4NA, Maxer 6thFloor, Aayakar Bhavan, Maxity, Bandra Kurla Complex, Maharishi Karve Road, Mumbai, Mumbai, Maharashtra, 400051 Maharashtra, 400020

PAN: AAACR5053R (Appellant) (Respondent) For Assessee : Shri Nimesh Vora & Ms. Moksha Mehta For Revenue : Shri Sandeep Lakra CIT DR. Date of Hearing : 17.06.2026 Date of Pronouncement : 24.06.2026 O R D E R PER VIKRAM SINGH YADAV, A.M.:

This is an appeal filed by the Assessee against the order of the Learned Commissioner of Income Tax (Appeals), ADDL/JCIT(A)-1, Chennai [‘Ld.CIT(A)’], dated 27.01.2026, pertaining to Assessment Year (AY) 2017-18, wherein the Assessee has taken the following grounds of appeal: “On the facts and in the circumstances of the case and in law, the learned JCIT(A) – 1. erred in not quashing the assessment order as bad in law even though said assessment order has been framed in the PAN and in the name of Reliance Commercial Land & Infrastructure Limited ("RCLIL), which had ceased to exist pursuant to its amalgamation with Reliance

ITA No. 3235/Mum/2026; A.Y. 2017-18 Reliance Industrial Investments and Holdings Limited Industrial Investments and Holding Limited ("the Appellant") with effect from 01.10.2016, in terms of the Order of the Hon'ble NCLT dated 02.11.2017. 2. Without prejudice to above, erred in confirming the disallowance of Rs.64,14,706/- (rectified to Rs.5,71,384 in order passed u/s 154 of the Act) u/s 14A of the Act while computing income under normal provisions as well as book profits u/s 115JB of the Act, in the absence of any exempt income earned during the year. 3. Without prejudice to the above, failed to appreciate that formula as per Rule 8D read with section 14A cannot be applied for making disallowance while computing book profits u/s 115JB of the Act. 4. Without prejudice to the above, failed to appreciate that vide order u/s 154 dated 29.01.2020, the disallowance u/s 14A was restricted to Rs. 5,71,384 being total expenditure claimed by the appellant. 5. Without prejudice to the above, erred in dismissing the appeal for non- prosecution by the appellant, instead of adjudicating the issues raised therein on merits, which is contrary to Section 250(6) of the Act, requiring the Learned JCIT(A) to pass a reasoned order on the points arising in the appeal as per the Grounds of Appeal filed by the Appellant, especially when all the requisite details and contentions were part of the statement of facts filed with the learned JCIT(A).

2.

Briefly, the facts of the case are that the assessee e-filed its return of income on 30.10.2017, declaring loss at Rs. 52,30,202/- under normal provisions and book loss u/s. 115JB of the Act at Rs.51,19,350/-. Thereafter, the return of income was revised on 25.03.2019, declaring current year loss of Rs.5,87,414/- and book loss u/s. 115JB of the Act at Rs.4,77,852/-. The case of the assessee was selected for scrutiny and subsequently, the assessment proceedings were completed u/s.143(3) of the Act vide order dated 26.12.2019, wherein the assessee’s income was determined at Rs. 58,27,290/-by making disallowance u/s. 14A amounting to Rs. 64,14,706/- under normal provisions; and book profit u/s. 115JB were computed at Rs. 59,36,854/- by doing adjustment on account of disallowance u/s. 14A amounting to Rs. 64,14,706/-. Thereafter, the assessee moved a rectification application u/s. 154 of the Act, dated 22.01.2020 and pursuant thereto, the quantum of disallowance u/s. 14A was reduced

ITA No. 3235/Mum/2026; A.Y. 2017-18 Reliance Industrial Investments and Holdings Limited to Rs. 5,71,384/- and corresponding adjustment u/s 11JB to the book profits was also reduced to Rs 5,71,384. The assessee thereafter carried the matter in appeal before the ld. CIT(A) against the said disallowance so made by the Assessing Officer and the appeal so filed by the assessee was dismissed for want of prosecution. Against the said order, the assessee is in appeal before us.

3.

During the course of hearing, the ld. AR submitted that it is an admitted position that the assessee has not earned any exempt income during the year under consideration. It was submitted that the said fact is evident from the contents of the assessment order itself, wherein the assessee’s submissions have been taken note of by the Assessing Officer and inspite of that, the Assessing Officer has gone ahead and made a disallowance u/s. 14A of the Act. In this regard, our reference was also drawn to the submissions dated 11.12.2019, filed by the assessee before the Assessing Officer, explaining the fact that no exempt income has been earned by the assessee and copy of the return of income as well as computation of income have been duly furnished. In support, reliance was also placed on the decision of Coordinate Mumbai Benches in case of Vodafone West Ltd. vs. Deputy Commissioner of Income-tax [2025] 181 taxmann.com 795 (Mumbai - Trib.)[11-12-2025], wherein it was held that in absence of any exempt income, disallowance u/s. 14A was not permissible. It was accordingly submitted that the disallowance so made and sustained by the ld. CIT(A) be set aside.

4.

The ld. DR has been heard, who has relied on the order passed by the Assessing Officer.

5.

We have heard the rival contentions and perused the material available on record. The matter pertains to assessment year 2017-18 prior to the amendment in section 14A brought in by the Finance Act, 2022 which have been held to be applicable prospectively. Admittedly,

ITA No. 3235/Mum/2026; A.Y. 2017-18 Reliance Industrial Investments and Holdings Limited the assessee has not earned any exempt income during the year under consideration and therefore, no exempt income has been claimed while filing its return of income. It is a settled position that in absence of any exempt income, disallowance u/s. 14A is not called for and the decision so relied on by the ld. AR in case of Vodafone West Ltd. (supra) also lays down the same proposition.

6.

In the result, the addition so made and sustained by the ld. CIT(A) is hereby set aside and Ground no. 2 and 3 of the assessee’s appeal are allowed.

7.

In view of our finding on the merits of the case, the ground no. 1 is left open and the ground no. 5 of the assessee’s appeal has become infructuous.

8.

In the result, the appeal filed by the assessee is partly allowed.

Order pronounced in the open court on 24.06.2026

Sd/- Sd/- SIDDHARTHA NAUTIYAL VIKRAM SINGH YADAV (JUDICIAL MEMBER) (ACCOUNTANT MEMBER)

Mumbai, Dated: 24.06.2026 Karishma J. Pawar, SR. PS

Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file

ITA No. 3235/Mum/2026; A.Y. 2017-18 Reliance Industrial Investments and Holdings Limited By Order

Dy./Asst. Registrar I.T.A.T, Mumbai

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