ASSISTANT COMMISSIONER OF INCOME TAX - CIRCLE 5(3)(1), MUMBAI, MUMBAI vs. TRITON TRADING COMPANY PRIVATE LIMITED, MUMBAI

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: E BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND HON’BLE SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA Nos. 9394/MUM/2025 and 484/MUM/2026 िनधा�रण वष�/Assmt. Year: 2017-18 and 2018-19) TRITON TRADING ASSISTANT COMMISSIONER COMPANY PRIVATE OF INCOME TAX - CIRCLE LIMITED 5(3)(1), MUMBAI 9 TEMPLE TERRACE ,55 ROOM NO 573 AAYKAR FORJETT STREET NANA BHAWAN MARINES LINES Vs. CHOWK MUMBAI 400036 CHRUCHGATE MUMBAI, ,MAHARASHTRA INDIA MUMBAI-400020, MUMBAI-400036, MAHARASHTRA MAHARASHTRA (अपीलाथ� Appellant) (��थ� Respondent) Permanent Account Number of AAACC1480H Assessee: िनधा�रती �ारा/Assessee represented by: Shri Dhaval Shah, Advocate राज� व �ारा/Revenue represented Shri Hemanshu Joshi, Sr. by: DR

सुनवाई की तारीख / Date of conclusion of hearing: 16-Apr-2026 घोषणा की तारीख / Date of pronouncement: 17.06.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: These two appeals are filed by the Department against the orders of ld. CIT vide DIN: ITBA/NFAC/S/250/2025-26/1081471870(1) dated 06.10.2025 for the Assessment Year 2017-18 and ITBA/NFAC/S/250/2025-26/1082297330(1) dated 04.11.2025 for the Assessment Year 2018-19.

ITA No. 9394/MUM/2025 1) Whether the Ld. CIT (A) erred in law in restricting the disallowance u/s. 14A of the Income-tax Act, 1961 to the amount of exempt income, despite clear findings during the assessment that the assessees claim of non- incurrence of expenditure was not found to be convincing 2) Whether the Ld. CIT (A) was justified in disregarding the Rule 8D(2)(ii) of the Income-tax Rules, 1962 computation recorded in assessment proceedings, particularly when the Assessing Officer had computed disallowance strictly as per the prescribed method 3) Whether the Ld. CIT (A) was correct in holding that disallowance computed u/s. 14A of the Act cannot be added to book profit u/s. 115JB, despite the explicit language of clause (f) of Explanation 1 to section 115JB of the Act requiring addition of expenditure relatable to exempt income. ITA No. 484/MUM/2026 1) Whether, on the facts and in the circumstances of the case and in law, the learned CIT(A) was justified in restricting the disallowance u/s. 14A of the Income-tax Act, 1961 to the amount of exempt income earned during the year, ignoring the mandatory computation mechanism prescribed under the amended Rule 8D applicable from Assessment Year 2017-18 onwards? 2) Whether the learned CIT(A) erred in law in holding that the disallowance u/s. 14A read with Rule 8D is subject to a cap of exempt income, when no such limitation is provided under the amended Rule 8D 3) The AO may please be allowed to add additional ground and amend , alter, delete OR withdraw the existing ground from time to time during the proceedings of this appeal in the future. 4) The order of the CIT(A) is contrary to facts and law and deserves to be set aside.

4.1. Ld. Assessing Officer noted that assessee has earned exempt dividend income of Rs.1,19,963/- during the year. In this regard, he observed that assessee has not disallowed any expenditure u/s.14A r.w.r. 8D2(ii) for earning this exempt income. He applied the provisions of rule 8D2(ii) to work out the disallowance of Rs.2,71,56,617/- and added it to the total loss reported by the assessee in its revised return. He also made the addition to book profit u/s. 115JB.

4.2. In the first appeal before the ld. CIT(A), the moot point contested by the assessee was that the disallowance made by ld. Assessing Officer ought to have been restricted to the extent of dividend income received by the assessee in the year under consideration. Also, in respect of addition made to the book profit for the disallowance made u/s. 14A r.w.r. 8D2(ii), it was contended that such an addition is bad in law. For both the above contentions, reliance was placed on the decision of Hon’ble Special Bench of ITAT, Delhi in the case of ACIT vs. Vireet Investment (P) Ltd. 188 TTJ 1 (Del) (SB). On this, ld. CIT(A) observed that assessee had suo moto made a disallowance of Rs.60,000/- while computing its total income. Ld. CIT(A) after making a detailed deliberations both, on facts and judicial precedents, concluded that disallowance made is to be restricted to the amount of exempt income earned by the assessee during the year. Since assessee has earned dividend income of Rs.1,19,963/-, the disallowance u/s. 14A was restricted to this amount as against what was disallowed by ld. Assessing Officer of Rs.2,71,56,617/-. In respect of addition made to the book profit u/s. 115JB for the disallowance made u/s. 14A r.w.r. 8D2(ii), ld. CIT(A) by following the judicial precedents in the case of Vireet Investment (P) Ltd. (supra) as well as by placing reliance on the decision of Hon’ble High Court of Karnataka in the case of Sobha Developers Ltd. vs. DCIT 125 taxmann.com 72 (Kar) held that no adjustment can be made to book profit on account of disallowance u/s.14A. Thus, the additions so made, while computing book profit u/s.115JB was deleted.

5.1. Our observations and findings apply mutatis mutandis to the appeal for Assessment Year 2018-19.

Order is pronounced in the open court on 17 June, 2026

Sd/- Sd/- (Sandeep Gosain) (Girish Agrawal) Judicial Member Accountant Member Dated: 17 June, 2026 MP, Sr.P.S. Copy to: 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai