JT. CIT (OSD) , CENTRAL CIRCLE 1(1), MUMBAI vs. EDEL FINANCE COMPANY LIMITE , MUMBAI

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ITA 978/MUM/2026Status: DisposedITAT Mumbai23 September 2026AY 2015-1614 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal upheld the deletion of the transfer pricing adjustment of ₹20,77,95,113, finding no material factual distinction to render the principles in the cited decisions inapplicable to the benchmarking controversy. The Revenue's grounds 1 and 2 were dismissed. Regarding Section 14A and Rule 8D, the Tribunal held that the statutory requirement of examination and objective dissatisfaction by the Assessing Officer under Section 14A(2) precedes the invocation of Rule 8D. The AO's satisfaction was not adequately demonstrated with reference to the assessee's accounts. The Tribunal noted that the assessee's own funds (net worth) exceeded its investments in equity shares, as evidenced by figures for March 31, 2014, and March 31, 2013. Consequently, the additional disallowance made by invoking Section 14A read with Rule 8D was not sustained and was restricted to the suo motu disallowance of ₹5,66,656 made by the assessee. The assessee's appeal (ITA No. 1061/Mum/2026) was allowed on this ground. As the invocation of Rule 8D was not sustained, the grounds relating to its computation (Revenue's grounds 3 to 7) did not require separate adjudication and were dismissed. The adjustment under Section 115JB (Revenue's ground 8) was also upheld based on the finding on Section 14A and the CIT(A)'s order. The Revenue's appeals were dismissed. The cross-objection concerning limitation was dismissed as not requiring adjudication, with the issue kept open.

What were the facts?

The assessee, Edel Finance Company Limited, filed appeals and cross-objections against the order of the Ld. Commissioner of Income-tax (Appeals) for Assessment Years 2014-15 and 2015-16. These appeals arose from orders passed by the Assessing Officer (AO) under Section 143(3) r.w.s. 144C(3) of the Income Tax Act, 1961. The dispute primarily concerns transfer pricing adjustments and disallowances under Section 14A read with Rule 8D. The Revenue is the respondent, and the assessee is the appellant in its own appeals and cross-objections. The amount in dispute for transfer pricing is ₹20,77,95,113. The procedural history involves appeals to the CIT(A) and subsequent appeals and cross-objections to the ITAT.

What were the issues?

1. Whether the Tribunal erred in deleting the transfer pricing adjustment of ₹20,77,95,113 made by the AO/TPO on account of excessive interest paid on Non-Convertible Debentures, considering the assessee's benchmarking and the TPO's analysis under Section 92C of the Income-tax Act, 1961. - Assessee's contention: Not recorded. - Revenue's contention: The assessee's single external comparable was unreliable, and the TPO's benchmarking using Bloomberg was rejected by the CIT(A) without appreciating that the Supreme Court's dismissal of the SLP was on delay, not merits, and that res-judicata does not apply to income tax proceedings. 2. Whether the Tribunal erred in confirming the AO's action in passing the assessment order after the expiry of the limitation period under Section 153 of the Income-tax Act, 1961. - Assessee's contention: The assessment order is barred by limitation and should be quashed. - Revenue's contention: Not recorded. 3. Whether the Tribunal erred in restricting the disallowance under Rule 8D(2)(ii) and deleting the disallowance under Rule 8D(2)(iii) for investments generating exempt income, and whether the AO's satisfaction under Section 14A(2) was validly recorded before invoking Rule 8D. - Assessee's contention: The invocation of Rule 8D itself is invalid due to lack of valid satisfaction by the AO under Section 14A(2). The assessee's own funds were sufficient to cover investments, and the disallowance under Section 115JB should not be made on a notional basis. - Revenue's contention: The CIT(A) erred in restricting the disallowance under Rule 8D(2)(ii) and deleting it under Rule 8D(2)(iii), ignoring the Supreme Court ruling in Maxopp Investment Ltd. and the mechanical application of Rule 8D(2)(iii) as per CBDT Circular No. 11/2014. The AO's recording of specific reasons and dissatisfaction was mandatory, and the assessee did not provide fund-flow statements. The addition to book profits under Section 115JB was wrongly deleted as notional.

Which sections of the Income-tax Act were involved?

Section 92C,Section 14A,Section 14A(2),Section 153,Section 115JB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI ANIKESH BANERJEE & MS.RATNA DASGUPTA

Heard together (5 matters)

ITA1061/MUM/2026
ITA 1062/MUM/2026
ITA 977/MUM/2026
ITA 978/MUM/2026
CO 153/MUM/2026

Read from the judgment's own cause title. This page is filed under one of them.

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: K BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND MS.RATNA DASGUPTA, ACCOUNTANT MEMBER ITA1061/MUM/2026 िनधा�रणवष�/Assessment Year: 2014-15) ITA 1062/MUM/2026 िनधा�रणवष�/Assessment Year: 2015-16) EDEL FINANCE COMPANY DEPUTY COMMISSIONER OF LIMITED (SUCCESSOR OF INCOME TAX, CENTRAL CIRCLE EDELWEISS FINVEST LIMITED) - 1(1) Edelweiss House, Off CST Road, Room No. 903, 9th Floor, Old Vs. Kalina, Santacruz (East), CGO Building Annex, Maharshi Mumbai., Mumbai-400098, Karve Road, Churchgate Maharashtra Mumbai-400020, Maharashtra अपीलाथ� Appellant ��थ� Respondent ITA 977/MUM/2026 िनधा�रणवष�/Assessment Year: 2014-15)

ITA 978/MUM/2026 िनधा�रणवष�/Assessment Year: 2015-16) DEPUTY COMMISSIONER EDEL FINANCE COMPANY LIMITED OF INCOME TAX, CENTRAL (SUCCESSOR OF EDELWEISS FINVEST CIRCLE - 1(1) LIMITED) Room No. 903, 9th Floor, Edelweiss House, Off CST Road, Vs. Kalina, Santacruz (East), Mumbai., Old CGO Building Annex, Mumbai-400098, Maharashtra Maharshi Karve Road, Churchgate Mumbai-400020,

ITA 1061, 1062, 977 & 978/MUM/2026 CO 153, 154/MUM/2026 EDEL FINANCE COMPANY LTD Maharashtra अपीलाथ� Appellant ��थ� Respondent CO 153/MUM/2026 (Arising out of ITA 977/MUM/2026) िनधा�रणवष�/Assessment Year: 2014-15) CO 154/MUM/2026 (Arising out of ITA 978/MUM/2026) िनधा�रणवष�/Assessment Year: 2015-16) EDEL FINANCE COMPANY DEPUTY COMMISSIONER OF LIMITED (SUCCESSOR OF INCOME TAX, CENTRAL CIRCLE EDELWEISS FINVEST LIMITED) - 1(1) Edelweiss House, Off CST Road, Room No. 903, 9th Floor, Old Vs. Kalina, Santacruz (East), CGO Building Annex, Maharshi Mumbai., Mumbai-400098, Karve Road, Churchgate Maharashtra Mumbai-400020, अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of Assessee: AAFCA9652C

अपीलाथ��ारा/Assessee represented by: Shri Madhur Agarwal & Shri Ravikant Pathak ��थ��ारा/Revenue represented by: Shri Ajay Uke, Sr. AR सुनवाईकीतारीख/ Date of conclusion of hearing: 17-Sept-2026 घोषणाकीतारीख/ Date of pronouncement: 23-Sept-2026 आदेश / ORDER PER BENCH

A bunch of appeal and cross objection pertaining to the same assessee filed against the order of the Ld. Commissioner of Income Tax – 56, Mumbai

ITA 1061, 1062, 977 & 978/MUM/2026 CO 153, 154/MUM/2026 EDEL FINANCE COMPANY LTD [for brevity “Ld. CIT(A)”], order passed under Section 250 of the Income Tax Act, 1961 (for brevity ‘the Act’), for Assessment Year 2014-15 & 2015-16, date of order 10.11.2025. The impugned order emanated from the order of the Ld. ACIT Circle 3(1)(1), Mumbai & Ld. ACIT Circle 3(1)(2), Mumbai (for brevity ‘Ld. AO’), order passed under Section 143(3) r.w.s. 144C(3) of the Act, date of order 31.01.2018 & 28.01.2019 for Assessment Year 2014-15 & 2015-16 respectively.

2.

All the appeals pertain to the same assessee and arising out from a common issue. All the appeals are taken together and heard together and disposed of by a common order. ITA 1061/MUM/2026, ITA 977/MUM/2026 and C.O. 153/MUM/2026 are taken as lead case and the decision rendered therein shall be applied mutatis mutandis to the other appeals.

3.

Grounds

3.1. ITA No. 977/Mum/2026 — Revenue’s appeal

The Revenue has raised the following grounds:

“1. Whether, On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income-tax (Appeals) erred in deleting the transfer pricing adjustment of 20,77,95,113/- made by the Assessing Officer/TPO on account of excessive interest paid by the assessee on issuance of Non-Convertible Debentures (NCDs), without appreciating that the benchmarking carried out by the assessee by adopting a single external comparable was neither reliable nor sufficient to establish the arm's length nature of the transaction under section 92C of the Income-tax Act, 1961. 2. Whether, On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income-tax (Appeals) erred in holding that the benchmarking analysis carried out by the TPO using Bloomberg database was unreliable, and in relying upon the decision of the Hon'ble Bombay High Court in the case of PCIT v. India Debt Management (P) Ltd. (417 ITR 103), (a) without appreciating that the dismissal of the Department's SLP by the Hon'ble Supreme Court was on account of delay and not on merits, and therefore the said decision had not attained finality so as to be binding for rejecting the TPO's independent

ITA 1061, 1062, 977 & 978/MUM/2026 CO 153, 154/MUM/2026 EDEL FINANCE COMPANY LTD comparability analysis. (b) without appreciating the fact that the principle of res-judicata does NOT apply to income tax proceedings-every year is an independent assessment year- and the search for appropriate comparables to a transaction has to be made independently and afresh for every transaction every year and merely because of a database was not found appropriate in the case of an assessee for some particular transaction for a particular year the entire database in the case of all assessees can not be discarded for transfer pricing purposes. 3. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in restricting the disallowance under Rule 8D(2)(ii) to investments actually generating exempt income, despite the Assessing Officer having recorded his dissatisfaction under section 14A and Rule 8D regarding the assessee's limited suo-moto disallowance of Rs. 5,66,656/- against total exempt income of Rs. 3,16,59,165/-? 4. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance under Rule 8D(2)(iii) by directing verification only on dividend- yielding investments, ignoring the Supreme Court ruling in Maxopp Investment Ltd. vs. CIT (402 ITR 640 SC) which supports invocation of Rule 8D for all investments capable of yielding exempt income, and the mechanical application of Rule 8D(2)(iii) to average investments as per CBDT Circular No. 11/2014? 5. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in disregarding the AO's recording of specific reasons and dissatisfaction, which is mandatory before invoking Rule 8D as per judicial precedents including Godrej & Boyce Mfg. Co. Ltd. vs. DCIT (394 ITR 449 SC), thereby overlooking the fact-specific examination of the assessee’s substantial investments and administrative overheads? 6. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in partially allowing the appeal on Ground No. 3, resulting in deletion of Rs. 21,12,512/- addition under section 14A read with Rule 8D (tax effect Rs. 7,18,043/-), and on Ground No. 4 by deleting the same addition to book profits u/s 115JB (tax effect Rs. 4,42,793/-), causing substantial revenue loss above CBDT's monetary limit per Circular No. 09/2024, thereby justifying the filing of appeal before the ITAT? 7. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance under Rule 8D(2)(ii) of Rs. 2,66,547/- by holding that the assessee's own funds (net worth exceeding investments) were sufficient to cover investments, relying on CIT vs. Reliance Industries Ltd. (410 ITR 466 SC), without the assessee furnishing any fund-flow statements or documentary evidence establishing a direct nexus between interest-free own funds and investments in exempt income-yielding assets?

ITA 1061, 1062, 977 & 978/MUM/2026 CO 153, 154/MUM/2026 EDEL FINANCE COMPANY LTD 8. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 21,12,512/- under section 14A to book profits u/s 115JB by holding it as notional disallowance, relying on group company ITAT orders and cases like Sobha Developers (278 Taxman 338 Kar) and Gokaldas Images Pvt Ltd (429 ITR 526 Kar), ignoring clause (f) of Explanation 1 to section 115JB which mandates adding back expenditure relatable to exempt income excluded from book profits?” 3.2. CO No. 153/Mum/2026 — Assessee’s Cross Objection

The assessee has raised the following grounds:

“1. The Commissioner of Income Tax (Appeals) – 56, Mumbai (‘CIT(A)’) erred in confirming the action of the AO in passing the assessment order u/s 143(3) of the Income Tax Act, 1961 (‘Act’) after the expiry of limitation period provided u/s 153 of the Act. The Appellant submits that the assessment order passed by the AO is barred by limitation provided u/s 153 of the Act; therefore, the assessment order passed u/s 143(3) of the Act shall be quashed. The Appellant crave leaves to amend, alter, delete, modify above grounds of cross objections.” 3.3. ITA No. 1061/Mum/2026 — Assessee’s appeal

The assessee has raised the following ground:

“1. The Commissioner of Income Tax (Appeals)-56, Mumbai [hereinafter referred as CIT(A)] erred in confirming the action of the Assistant Commissioner of Income Tax-3(1)(1), Mumbai [hereinafter referred as AO] in making disallowance u/s 14A of Income Tax Act, 1961 (Act) r.w. Rule 8D of the Income Tax Rules, 1962 (Rules) without recording his dis-satisfaction having regard to its books of accounts. The Appellant submits that it has made suo moto disallowance of Rs.5,66,656/- u/s 14A r.w.r 8D of the Rules, hence, the disallowance in excess of Rs.5,66,656/- made by the AO shall be deleted. The Appellant craves leave to add, amend, modify, substitute the above grounds of appeal hereinabove and to submit such statements, documents and papers as may be considered necessary either at or before the hearing of this appeal as per law.”

ITA 1061, 1062, 977 & 978/MUM/2026 CO 153, 154/MUM/2026 EDEL FINANCE COMPANY LTD 4. The assessee-company is registered with the Reserve Bank of India as a Non-Banking Financial Company and is primarily engaged in financing and corporate lending. For the year under consideration, the assessee entered into certain international transactions with its Associated Enterprises, which were reported in Form No. 3CEB and referred to the Ld. TPO for determination of the arm’s length price. The Ld. TPO proposed an upward adjustment of Rs.20,77,95,113/- in relation to interest paid by the assessee on NCDs issued to its AE. The adjustment represented the difference between interest computed at 17% amounting to Rs.46,70,78,794/- and interest determined by the TPO at 9.437% amounting to Rs.25,92,83,681/-. The Ld. AO incorporated the adjustment in conformity with the TPO's order. The assessee had also earned dividend income of Rs.3,16,59,165/-, claimed as exempt under sections 10(34) and 10(35) of the Act, and had made a suo motu disallowance of Rs.5,66,656/- under section 14A. The Ld. AO, however, proceeded to compute further disallowance by applying section 14A read with Rule 8D. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), inter alia, deleted the transfer-pricing adjustment and granted relief on the computation of disallowance under section 14A and the corresponding adjustment under section 115JB, while not accepting the assessee’s challenge to the validity of the satisfaction recorded for invoking section 14A. Consequently, both sides are in appeal, and the assessee has also filed the Cross Objection challenging the assessment on limitation.

5.

The Ld. DR relied upon the orders of the Ld. AO/TPO and assailed the relief granted by the Ld. CIT(A). In relation to the transfer-pricing adjustment, the Ld. DR submitted that the benchmarking adopted by the assessee on the basis of a single external comparable could not be treated as sufficiently reliable for establishing the arm’s length character of the transaction. 6

ITA 1061, 1062, 977 & 978/MUM/2026 CO 153, 154/MUM/2026 EDEL FINANCE COMPANY LTD According to the Revenue, the TPO was justified in conducting an independent search through the Bloomberg database and determining the arm’s length interest rate at 9.437%.

6.

The Ld. DR further submitted that the decision in PCIT v. India Debt Management (P.) Ltd. reported in [2019] 417 ITR 103 (Bom.) would not dispense with the requirement of examining the comparability analysis independently for the year under consideration. The Revenue’s grounds specifically contend that each assessment year is separate and the selection of comparables requires examination with reference to the transaction concerned.

7.

Regarding section 14A, the Ld. DR submitted that the Ld. AO had recorded sufficient reasons for rejecting the assessee’s suo motu disallowance. It was contended that the assessee had substantial investments and incurred administrative as well as interest expenditure; therefore, recourse to Rule 8D was justified. The Ld. DR accordingly supported the Revenue’s grounds relating to Rule 8D(2)(ii), Rule 8D(2)(iii) and section 115JB.

8.

The Ld. AR supported the findings of the Ld. CIT(A) deleting the transfer- pricing adjustment. It was submitted that the assessee had benchmarked the interest transaction under the CUP method after considering comparable debt instruments. The mere substitution of such benchmarking by a fresh search through Bloomberg, without establishing proper comparability of the instruments selected by the TPO, could not sustain the adjustment.

9.

The Ld. AR placed reliance on the decision of the Co-ordinate Bench in Mahindra Homes (P.) Ltd. v. ITO reported in [2022] 145 taxmann.com 95 (Mumbai-Trib.), concerning A.Y. 2014-15. In that case, the Tribunal dealt with

ITA 1061, 1062, 977 & 978/MUM/2026 CO 153, 154/MUM/2026 EDEL FINANCE COMPANY LTD benchmarking of interest paid on CCDs where the assessee had used BSE, NSE and NSDL data whereas the TPO conducted a fresh search using Bloomberg. The Tribunal accepted the assessee’s benchmarking after examining the filters adopted and deleted the TP adjustment. The decision also followed the principles emerging from India Debt Management (P.) Ltd. (supra).

10.

The Ld. AR further relied upon the judgment of the Hon’ble jurisdictional High Court in India Debt Management (P.) Ltd. (supra). The High Court dealt with an adjustment to interest paid on debentures and declined interference with the Tribunal’s findings. In that case, the Court noted, inter alia, the impropriety of mechanically applying USD corporate bond rates where the relevant debt and repayment were INR denominated and emphasized benchmarking with reference to appropriate economic and market circumstances.

11.

It was accordingly submitted that the factual approach adopted by the Ld. CIT(A) was consistent with the aforesaid judicial principles and that no interference with the deletion of Rs.20,77,95,113/- was warranted.

12.

On the assessee’s appeal, the Ld. AR confined the argument to the jurisdictional requirement of recording proper satisfaction under section 14A(2) before invoking Rule 8D. It was submitted that the assessee had already made a suo motu disallowance of Rs.5,66,656/-, and the Ld. AO was therefore required first to examine the assessee’s accounts and record an objective dissatisfaction with the correctness of that computation.

13.

The Ld. AR contended that a general observation that the suo motu disallowance was not in accordance with Rule 8D does not satisfy the statutory requirement. Though the assessment order states that the Ld. AO was “not

ITA 1061, 1062, 977 & 978/MUM/2026 CO 153, 154/MUM/2026 EDEL FINANCE COMPANY LTD satisfied with the correctness of the claim”, the reasons thereafter refer generally to administrative expenses, legal fees, employees’ salary and investment decisions taken by the Board. Reliance was placed upon the judgment of the Hon’ble Bombay High Court in PCIT v. Bombay Stock Exchange Ltd. reported in [2020] 113 taxmann.com 303 (Bom.), wherein the Court held that before resorting to Rule 8D, dissatisfaction with the assessee’s suo motu disallowance must be arrived at having regard to the accounts and on an objective basis; merely stating that the assessee’s computation is not in accordance with Rule 8D is insufficient.

14.

The Ld. AR further relied upon the decision of the Co-ordinate Bench in the case of the group concern ECL Finance Ltd., ITA Nos. 5283, 5285, 5707 & 5711/Mum/2024, order dated 31.12.2024. In that decision, the Tribunal held that mere computation based on averages would not constitute the satisfaction contemplated by section 14A and deleted the additional disallowance where the AO had not recorded the requisite satisfaction with reference to the accounts.

15.

We have heard the rival submissions and perused the material available on record. Grounds Nos. 1 and 2 of the Revenue concern deletion of the transfer-pricing adjustment of Rs.20,77,95,113/-. The controversy essentially concerns benchmarking of the interest paid on debt instruments issued to the AE. The TPO determined interest at 9.437% against the rate of 17% paid by the assessee and consequently proposed the adjustment of Rs.20,77,95,113/-. The judicial principles relied upon by the Ld. AR are relevant to the methodology adopted for benchmarking such debt transactions. In India Debt Management (P.) Ltd. (supra), the Hon’ble jurisdictional High Court declined to interfere with the Tribunal's factual findings concerning the appropriate interest benchmark.

ITA 1061, 1062, 977 & 978/MUM/2026 CO 153, 154/MUM/2026 EDEL FINANCE COMPANY LTD The underlying consideration was that the benchmarking must have regard to the currency, borrower’s creditworthiness and relevant market conditions rather than proceed on a blanket application of an external foreign-currency bond rate.

16.

We also find that the Co-ordinate Bench in Mahindra Homes (P.) Ltd. (supra), for the same assessment year, considered a substantially similar controversy concerning benchmarking of interest on CCDs. The Tribunal accepted benchmarking undertaken on the basis of BSE/NSE/NSDL data after examining the filters and rejected the adjustment arising from the TPO's Bloomberg search.

17.

On consideration of the material placed before us, we find no basis requiring interference with the findings of the Ld. CIT(A) on this issue. The Revenue has not demonstrated any material factual distinction which would render the principles in the aforesaid decisions inapplicable to the benchmarking controversy before us. Accordingly, the order of the Ld. CIT(A) deleting the transfer-pricing adjustment of Rs.20,77,95,113/- is upheld.

Ground Nos. 1 and 2 of the Revenue are dismissed.

18.

We next take up the substantive ground of assessee’s appeal challenging the very invocation of Rule 8D for want of valid satisfaction under section 14A(2). The assessee earned exempt dividend income of Rs.3,16,59,165/- and had itself disallowed Rs.5,66,656/-. The assessment order records that the suo motu disallowance was not in accordance with section 14A read with Rule 8D and thereafter proceeds to apply Rule 8D. The statutory requirement, however, is not fulfilled merely because the Assessing Officer considers that the amount offered by the assessee does not correspond to the amount that would result

ITA 1061, 1062, 977 & 978/MUM/2026 CO 153, 154/MUM/2026 EDEL FINANCE COMPANY LTD from mechanical application of Rule 8D. The examination contemplated under section 14A(2) precedes invocation of Rule 8D. The Assessing Officer is required to examine the correctness of the assessee's claim having regard to its accounts and record an objective dissatisfaction.

19.

The Hon’ble Bombay High Court in PCIT v. Bombay Stock Exchange Ltd. reported in [2020] 113 taxmann.com 303 (Bom.) has specifically held that non- satisfaction with the assessee’s disallowance has to be arrived at on the basis of the accounts submitted by the assessee and that Rule 8D comes into operation only thereafter. Further the Ld. CIT(A) in his order had considered the assessee’s own fund utilization for investment in share which is noted in impugned appellate order page-31. The details are reproduced as below:-

Particular Amount 31.03.2014 Amount 31.03.2013 Own Funds: Net Worth: Shareholder 570,82,52,755 531,10,44,037 Funds (Share Capital + Reserves) Less:- Investments in equity share 96,50,48,240 40,22,63,039 Excess Own Funds 474,32,04,515 490,87,80,998

20.

We further find that the Co-ordinate Bench in ECL Finance Ltd. (supra) considered the same requirement and held that mere computation or general observations cannot substitute the satisfaction required under section 14A(2). The Tribunal consequently deleted the additional disallowance. Examining the satisfaction recorded in the present assessment order in the light of these principles, we find that the Ld. AO has referred generally to administrative expenses, legal fees, employees’ salary and the involvement of the Board in investment decisions, but has not demonstrated, with reference to the assessee’s accounts and its actual computation, why the suo motu disallowance of Rs.5,66,656/- was incorrect. The statutory precondition for

ITA 1061, 1062, 977 & 978/MUM/2026 CO 153, 154/MUM/2026 EDEL FINANCE COMPANY LTD proceeding to Rule 8D therefore remains unfulfilled. Accordingly, the additional disallowance made by invoking section 14A read with Rule 8D cannot be sustained. The disallowance is consequently restricted to the suo motu disallowance of Rs.5,66,656/- made by the assessee.

The ground raised by the assessee in ITA No.1061/Mum/2026 is allowed.

21.

Ground Nos. 3 to 7 of the Revenue relate to the computation of the disallowance under different limbs of Rule 8D. Once the invocation of Rule 8D itself does not survive for want of the requisite satisfaction under section 14A(2), the disputes concerning the manner of computation under Rule 8D do not call for separate adjudication.

22.

Ground No.8 relates to the corresponding adjustment under section 115JB. We also note that the Co-ordinate Bench in ECL Finance Ltd. (supra) upheld deletion of an addition to book profit arising from a notional disallowance computed under section 14A and held that such Rule 8D computation could not automatically be imported into clause (f) of Explanation 1 to section 115JB. In view of our finding on section 14A and after considering the order of the Ld. CIT(A), we find no reason to interfere with the relief granted on the corresponding issues.

Accordingly, Ground Nos. 3 to 8 of the Revenue are dismissed. Consequently, ITA No.977/Mum/2026 filed by the Revenue stands dismissed.

23.

The solitary ground raised in the Cross Objection challenges the assessment order as barred by limitation under section 153 of the Act. Since the Revenue’s appeal has been dismissed and the assessee has obtained relief in its substantive appeal on the issue pressed before us, adjudication of the

ITA 1061, 1062, 977 & 978/MUM/2026 CO 153, 154/MUM/2026 EDEL FINANCE COMPANY LTD legal ground raised in the Cross Objection is not required for disposal of the present proceedings. We therefore keep the legal issue raised in the Cross Objection open, without expressing any opinion on its merits.

Accordingly, CO No.153/Mum/2026 is dismissed as not requiring adjudication, with the issue kept open.

24.

In the net result:-

SL ASSESSMENT APPEAL/ CO NO. APPEAL/CO GROUNDS GROUNDS RESULT NO YEARS FILED BY ALLOWED DISMISSED 1 CO 153/Mum/2026 Assessee Nil 1 dismissed 2 2014-15 ITA 977/Mum/2026 Revenue Nil 1 to 8 dismissed 3 ITA 1061/Mum/2026 Assessee 1 Nil allowed 4 CO 154/Mum/2026 Assessee Nil 1 dismissed 5 2015-16 ITA 978/Mum/2026 Revenue Nil 1 to 7 dismissed 6 ITA 1062/Mum/2026 Assessee 1 Nil allowed

Order pronounced in the open court on 23rd day of September 2026. Sd/- Sd/- (RATNA DASGUPTA) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 23/09/2026 Soumili, PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file.

ITA 1061, 1062, 977 & 978/MUM/2026 CO 153, 154/MUM/2026 EDEL FINANCE COMPANY LTD BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI

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