BLACKSOIL CAPITAL PRIVATE LIMITED (AS SUCCESSOR OF CASPIAN IMPACT INVESTMENTS PRIVATE LIMITED),MUMBAI vs. DCIT, CIRCLE-1(1), HYDERABAD

ITA 2217/HYD/2026Status: DisposedITAT Hyderabad09 October 2026AY 2017-189 pages
AI SummaryAllowed

What were the facts?

The assessee, Blacksoil Capital Private Limited, is appealing an order dated 17.02.2026 passed by the Learned Addl/JCIT(A)-5, Kolkata, for Assessment Year 2017-18. The appeal was filed with a delay of 63 days, attributed by the assessee to a merger and post-merger compliances, and the order being sent to a former email address. The Revenue opposed the condonation of delay. The Assessing Officer had made a disallowance of Rs. 61,03,186/- under Section 14A of the Income-tax Act, 1961, which was upheld by the First Appellate Authority. The assessee's return declared a total income of Rs. 5,29,13,930/-, and the final assessed income was Rs. 5,90,17,116/-.

What did the Tribunal hold?

The Tribunal condoned the delay of 63 days in filing the appeal, subject to the assessee depositing Rs. 5,000/- with the Prime Minister’s National Relief Fund within 30 days, as a cost. The Tribunal found that the explanation concerning the merger and communication to a former email address reasonably accounted for the delay. On the substantive issue, the Tribunal held that the disallowance of Rs. 61,03,186/- under Section 14A of the Act cannot be sustained. The Tribunal noted that there was no dispute that the assessee earned no exempt income during the year. It further held that the Explanation inserted in Section 14A by the Finance Act, 2022, cannot be presumed to operate retrospectively. Relying on decisions of the Delhi High Court in PCIT Vs. Era Infrastructure (India) Ltd., and its own coordinate bench's decision in ITO Vs. NSL Nagapatnam Power Ventures Private Limited (which followed the Delhi High Court and Supreme Court decisions), the Tribunal concluded that in the absence of exempt income, no disallowance under Section 14A is warranted. Accordingly, the order of the Ld. First Appellate Authority was set aside, and the Assessing Officer was directed to delete the disallowance. The issue of retrospective application of the Explanation to Section 14A was decided against the revenue.

What were the issues?

1. Whether the appeal filed by the assessee is to be admitted for adjudication on merits, considering the delay of 63 days? (Mixed law and fact, concerning condonation of delay under Section 253 of the Income-tax Act, 1961). 2. Whether the disallowance of Rs. 61,03,186/- under Section 14A of the Act read with Rule 8D of the Income-tax Rules, 1962, is sustainable in law and on facts, particularly in the absence of any exempt income earned by the assessee during the assessment year 2017-18? (Mixed law and fact, concerning Section 14A and Rule 8D). Assessee's arguments: The assessee argued that the delay was due to a merger and communication issues. Regarding the disallowance, the assessee contended that it had earned no exempt income during the year. The assessee further argued that the Explanation inserted to Section 14A by the Finance Act, 2022, does not apply retrospectively to AY 2017-18, and relied on decisions of the Tribunal in its own case for earlier years and the cases of Biophore India Pharmaceuticals Pvt. Ltd. and ITO Vs. NSL Nagapatnam Power Ventures Private Limited. The assessee also cited decisions of the Supreme Court and High Courts holding that disallowance under Section 14A is not warranted in the absence of exempt income. Revenue's arguments: The Revenue opposed the condonation of delay, stating insufficient cause was shown. The Ld. DR relied on the orders of the lower authorities regarding the disallowance.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad

Before: Shri Vijay Pal Rao, Vice-Shri Madhusudan Sawdia

Hearing: 24/09/2026

Per Madhusudhan Sawdia, A.M:. This appeal is filed by Blacksoil Capital Private Limited (“the assessee”), feeling aggrieved by the order passed by the Learned Addl/JCIT(A)-5, Kolkata (“Ld. First Appellate Authority”) dated 17.02.2026 for the A.Y. 2017-18. ITA No 2217 of 2026 Blacksoil Capital Private Limited

2.

At the outset, we note that the appeal has been filed with a delay of 63 days. The assessee has filed a petition

The order continues below.

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