DCIT CIRCLE 2(3)(1), MUMBAI vs. TATA REALTY AND INFRASTRUCTURE LIMITED, MUMBAI

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ITA 295/MUM/2026Status: DisposedITAT Mumbai17 June 2026AY 2018-194 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that Section 14A disallowance is not applicable when the assessee has not earned any exempt income during the year. They followed the jurisdictional High Court's decision in Ballarpur Industries Ltd.

What were the facts?

The Assessing Officer made a disallowance under Section 14A read with Rule 8D, but the assessee contended that no exempt income was earned during the year. The CIT(A) granted relief to the assessee based on this contention.

What were the issues?

Whether Section 14A disallowance is applicable when no exempt income is earned by the assessee. Whether CBDT Circular No. 5/2014 needs to be considered irrespective of exempt income earned.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLE SHRI SANDEEP GOSAIN & HON’BLE SHRI GIRISH AGRAWAL

For Respondent: Shri Ritesh Misra, CIT DR
Pronounced: 17.06.2026

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 295/MUM/2026 िनधा�रण वष�/Assmt. Year: 2018-19 TATA REALTY AND INFRASTRUCTURE LIMITED DCIT CIRCLE 2(3)(1) E BLOCK, VOLTAS 552 5TH FLOOR, AAYKAR COMPOUND ,T.B KADAM BHAWAN, M K ROAD, Vs. MARG CHINCHPOKLI MUMBAI-400020, MAHARASHTRA 40003 MUMBAI-400033, MAHARASHTRA (अपीलाथ� Appellant) (��थ� Respondent) Permanent Account Number of AACCT6242L Assessee: िनधा�रती �ारा/Assessee Shri Sukhsagar Syal, Advocate represented by: राज� व �ारा/Revenue represented by: Shri Ritesh Misra, CIT DR

सुनवाई की तारीख / Date of conclusion of hearing: 21-Apr-2026 घोषणा की तारीख / Date of pronouncement: 17.06.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal is filed by the Department against the order of Ld. CIT(A)/NFAC vide DIN: ITBA/NFAC/S/250/2025-26/1082436528(1) dated 10.11.2025 for the Assessment Year 2018-19.

2.

Department has raised the following grounds of appeal:

1) Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in holding that the provision of section 14A will not be applicable when there is no exempt income earned by the assessee during the year failing to appreciate the clarification in Board's Circular No. 5/2014 dated 11.02.2014 wherein it is clearly laid down that expenses which are relatable to earning of exempt income have to be considered for disallowance irrespective of the fact whether any such income has been earned during the Financial Year OR not? 2) Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) was correct in not noticing CBDT Circular No. 5/2014 when it is judicially acknowledged that CBDT Circulars Constitute important clarification of legislative intent? 3. The only issue involved is in respect of disallowance made by the ld. Assessing Officer u/s. 14A r.w.r. 8D for which ld. CIT(A) has granted the relief by placing reliance on the decision of Hon’ble jurisdictional High Court of Bombay in the case of PCIT vs. Ballarpur Industries Ltd. in ITA No. 51/2016, dated 13.10.2016 as assessee had not earned any exempt income during the year under consideration.

4.

We perused the records and orders of the authorities below. Brief factual matrix are that assessee filed its revised return of income on 30.03.2019, reporting total loss at Rs.149,33,77,732/- under the normal provisions of the Act. Ld. Assessing Officer computed disallowance u/r. 8D2(ii) of Rs.18,16,67,906/- and added it to determine total income under the normal provisions of the Act.

5.

Claim of the assessee is that provisions of section 14A r.w.r. 8D2(ii) are not applicable in its case since it has not earned any exempt income during the year under consideration. To buttress its contention, assessee placed reliance on several judicial precedents wherein it has been held that when there is no dividend income earned during the year, there cannot be any disallowance u/s.14A. Assessee laid emphasis on the decision of the Hon’ble jurisdictional High Court of Bombay in the case of Ballarpur Industries Ltd.(supra), for its contention. Relevant paragraphs from the judgement are extracted below for ready reference: "...it appears that both the Authorities have recorded a clear finding of fact that there was no exempt income earned by the assessee. 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 14A 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. Since no substantial question of law arises in this income tax appeal, the income tax appeal is dismissed...

5.1. Ld. CIT(A) also took cognizance of the decisions of Coordinate Bench in assessee’s own case for Assessment Year 2012-13, 2013-14 and 2014-15 wherein findings given by ld. CIT(A) were affirmed that when there is no exempt income earned by the assessee during the year, no disallowance is called for u/s.14A. In the present case before us, it is the question of fact which remains undisputed and uncontroverted that assessee has not earned any exempt income during the year.

6.

Before us, nothing has been brought on record to demonstrate and evidently establish otherwise that assessee has in fact earned any exempt income during the year. This being the fact, respectfully following the judicial precedents in the case of Ballarpur Industries Ltd. (supra), we do not find any reason to interfere with the findings arrived at by ld. CIT(A) in this regard, more so when the Coordinate Bench in assessee’s own case for preceding three assessment Years in ITA Nos. 173 and 171/Mum/2017, dated 22.06.2018 for Assessment Years 2012-13 and 2013-14 had on similar factual matrix given relief to the assessee. Accordingly, grounds raised by the Revenue are dismissed.

7.

In the result, appeal filed by the Revenue is dismissed.

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

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