ACIT, CIRCLE- 3.3.1, MUMBAI, MUMBAI vs. WALUJ COMPONENTS PRIVATE LIMITED, MUMBAI

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ITA 2765/MUM/2025Status: DisposedITAT Mumbai20 June 2025AY 2018-19Bench: SHRI SAKTIJIT DEY, HON'BLE (Vice President), SHRI NARENDRA KUMAR BILLAIYA, HON'BLE (Accountant Member)3 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 dismissed the revenue's appeal, affirming that Section 14A read with Rule 8D cannot be invoked when the assessee has not earned any exempt income during the relevant assessment year. This decision was based on binding precedents from the Hon'ble Madras High Court, upheld by the Supreme Court, and the Hon'ble Delhi High Court regarding the prospective nature of the explanation to Section 14A.

What were the facts?

The revenue appealed against the order of the NFAC, Delhi, which deleted the disallowance made under Section 14A read with Rule 8D by the Assessing Officer for Assessment Year 2018-19. The revenue also challenged the CIT(A)'s decision regarding Section 14A disallowance in relation to book profits under Section 115JB.

What were the issues?

Whether disallowance under Section 14A read with Rule 8D can be made when no exempt income is earned, and the applicability of Section 14A in relation to book profits under Section 115JB.

Which sections of the Income-tax Act were involved?

Section 14A,Section 115JB

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE

Hearing: 18/06/2025Pronounced: 18/06/2025

O R D E R

PER NARENDRA KUMAR BILLAIYA, AM:

1.

This appeal by the revenue is preferred against the order dt. 04/03/2025 by NFAC, Delhi [hereinafter “the ld. CIT(A)”] pertaining to AY 2018-19.

2. The grievance of the assessee reads as under:- “1. Whether on the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeal) was justified in deleting the disallowance made u/s.14A without appreciating that the disallowance u/s. 14A was required to be determined according to Rule 8D of Income Tax Rules 1962 as had been done by the Assessing officer?

2.

Whether on the facts and in the circumstances 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 clarifications of legislature intent?

3.

The Appellant craves leave to add, amend and/or vary grounds of Appeal before or during the course of hearing.

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