ACIT-6(1)(1), MUMBAI, MUMBAI vs. ESSEL UTILITIES DISTRIBUTION COMPANY LTD., MUMBAI

1 During the cours Officer observed tha tune of ₹82.80 crore disallowance under S the assessee. In resp income had been ea therefore, no disallow 2.2 The Assessing O tendered, proceeded the Act read with Ru disallowance was ma income under the re computation of book 2.3 Aggrieved, the CIT(A), who, relying u Tribunal (hereinafter the preceding assessm 2.4 The Revenue, order, preferred the question arising for under Section 14A o assessee has not ea assessment year. Essel Utilities se of the assessment proceeding at the assessee had made inve es in shares of related entitie Section 14A of the Act was offer ponse, the assessee submitted arned during the relevant prev wance under Section 14A was wa Officer, not being satisfied with to disallow expenditure under ule 8D of the Income Tax Rules, ade not only for the purpose of egular provisions of the Act, b profit under Section 115JB the assessee preferred an appeal upon the decision of the Incom r “the Tribunal”) in the assessee ment year, deleted the disallowa in turn, being dissatisfied wit present appeal before the Trib r consideration is whether an of the Act is permissible in a arned any exempt income duri Distribution Company Ltd 3 s, the Assessing estments to the es. However, no red suo-motu by that no exempt vious year and, arranted. the explanation Section 14A of 1962. The said f computation of but also for the reof. l before the ld me Tax Appellate e’s own case for ance so made. th the appellate unal. The short ny disallowance case where the ing the relevant

We have heard r the relevant materia grounds raised is wh can be made when n under consideration submitted that thos available share capita was no utilization of those investments. T assessee is reproduce Particulars SND Limited (8, Rs.10 each) Utilities Grid Solu ‘Essel Adi Smart equity shares of R Last Mile VAS Ma shares of Rs.10 e Total Non-Curre 3.1 The Learned CIT the Tribunal’s decisi Year 2014–15 (ITA N in the absence of ac the relevant previous be sustained. Essel Utilities rival submission of the parties a al on record. The issue in disp hether any disallowance under no exempted income is earned n. Before the ld CIT(A) th se investments were mainly ma al as on 31.03.2015 and argued borrowed funds for the purpos The detail of investments provi ed as under:- As at 31/03/2 ,17,64,250 equity shares of 81,76,42,500 ution Limited (formerly as Grid Solutions Ltd’) (9,89,994 Rs.10 each) 98,99,940 anagement Ltd (50,000 equity each) 5,00,000 ent Investments 82,80,42,440 T(A), in adjudicating the issue, on in the assessee’s own case No. 4707/Mum/2018), wherein tual exempt income earned or s year, disallowance under Sect Distribution Company Ltd 4 and perused pute in the section 14A in the year he assessee ade from the d that there e of making ided by the 2015 0 has relied upon for Assessment it was held that received during tion 14A cannot

2. The Tribunal ha Hon’ble Delhi High C 33 (Del)], wherein it does not form part o envisages that ther includible in the tot Accordingly, in the ab Section 14A does not 3.3 This legal posi Bombay High Court 51 of 2016, dated absence of any exem 14A does not arise finding that no exem and held that the pro a scenario. It was fu law arose from the fin 3.4 In the present c has not earned or re previous year. In vi juri ictional High disallowance under S Essel Utilities ad, in turn, followed the pronou Court in Cheminvest Ltd. v. CIT was held that the expression of the total income" in Section re must be actual receipt o tal income, for the provision t bsence of any such income, disa t arise. ition has also been affirmed in Pr. CIT v. Ballarpur Industri 13.10.2016], wherein it is he mpt income, the question of in . The Hon’ble High Court no mpt income had been earned b ovisions of Section 14A would no urther observed that no substan ndings of the lower authorities. case, it is an undisputed fact th eceived any exempt income dur iew of the binding precedent Court and the settled lega Section 14A of the Act can be su Distribution Company Ltd 5 uncement of the [(2015) 378 ITR "income which 14A of the Act of income, not to be attracted. allowance under by the Hon’ble ies Ltd. [ITA No. eld that in the nvoking Section oted the factual by the assessee ot apply in such ntial question of hat the assessee ring the relevant of the Hon’ble al position, no ustained.

5 We, therefore, Learned CIT(A), whic Hon’ble Bombay High the decision of the Tr the grounds raised by 4. The appeal filed by Order pronoun (SANDEEP G JUDICIAL M Mumbai; Dated: 30/06/2025 Dragon Legal/Rahul Sharma, Sr. P.S.