JSW STEEL EMPLOYEES WELFARE TRUST,MUMBAI vs. THE DEPUTY COMMISSIONER OF INCOME TAX , MUMBAI

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ITA 2880/MUM/2025Status: DisposedITAT Mumbai11 June 2025AY 2018-19Bench: SHRI SAKTIJIT DEY, HON'BLE VICE PRESIDENT\n&\nSHRI NARENDRA KUMAR BILLAIYA, HON'BLE ACCOUNTANT MEMBER\nI.T.A. No. 2880/Mum/2025\nAssessment Year: 2018-19\nJSW Steel Employees Welfare Trust\n5-A, Jindal Mansion\nDr. G. Deshmukh Marg\nMumbai - 400026\n[PAN: AABTJ3861D]\nअपीलार्थी/ (Appellant)\nVs\nThe Deputy Commissioner\nof Income Tax\nप्रत्यर्थी/ (Respondent)\nAssessee by:\nShri Rakesh Joshi, A/R\nRevenue by :\nMs. Kavita P. Kaushik, Sr. D/R\nसुनवाई की तारीख/Date of Hearing\n:\n09/06/2025\n6 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer erred in confirming the disallowance of Rs. 10,00,000. The Tribunal observed from the assessee's computation of total income and the Income and Expenditure Account that the assessee had not claimed any expenditure for earning the dividend income. It specifically noted that the loss of Rs. 3,80,787 was not set off and that only Rs. 10,00,000 of the dividend income of Rs. 3,27,44,858 was claimed as exempt under Section 10(34) read with Section 115BBDA. Since no expenditure was claimed by the assessee, the Tribunal found no reason for disallowing any expenditure under Section 14A read with Rule 8D. The Tribunal directed the Assessing Officer to delete the impugned disallowance of Rs. 10,00,000. The ratio decidendi is that disallowance under Section 14A read with Rule 8D is not sustainable when no expenditure has been incurred by the assessee for earning exempt income.

What were the facts?

The assessee, JSW Steel Employees Welfare Trust, filed its return for AY 2018-19 declaring a total income of Rs. 3,17,44,860. The Assessing Officer (AO) noticed that the assessee claimed exempt income from investments and made a suo motu disallowance, stating it had not incurred any expenses for earning this exempt income. The AO, however, computed a disallowance of Rs. 10,00,000 under Section 14A read with Rule 8D, even though the assessee claimed no expenditure. The assessee appealed to the National Faceless Appeal Centre (NFAC), Delhi, which confirmed the disallowance. The assessee then appealed to the Income Tax Appellate Tribunal (ITAT), Mumbai.

What were the issues?

1. Whether the Tribunal had to decide if the Assessing Officer erred in confirming the disallowance of Rs. 10,00,000 made under Section 14A read with Rule 8D, when the assessee claimed no expenditure for earning exempt income. Assessee's contention: The assessee argued that it had not claimed any exemption concerning dividend income, and the only exempt income was claimed under Section 10(34) read with Section 115BBDA of the Act. The assessee also pointed out from its computation of income that it had not claimed any expenditure. The Income and Expenditure Account showed no expenditure claimed against dividend income, and a loss of Rs. 3,80,787 was not set off. Revenue's contention: The learned Departmental Representative strongly supported the findings of the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 14A,Section 10(34),Section 115BBDA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “F” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY, HONBLE & SHRI NARENDRA KUMAR BILLAIYA, HONBLE

For Appellant: Shri Rakesh Joshi, A/R
Hearing: 09/06/2025Pronounced: 11/06/2025

ORDER \nPER NARENDRA KUMAR BILLAIYA, AM:\nThis appeal by the assessee is preferred against the order\ndated 04/03/2025 by NFAC, Delhi [hereinafter “the ld. CIT(A)"]\npertaining to AY 2018-19.\n2.\nThe sum and substance of the grievance of the assessee is that the\nld. CIT(A) erred in confirming the disallowance of Rs.10,00,000/- made\nu/s 14A r.w.r. 8D.\n3. Briefly stated the facts of the case are that the assessee filed its\nreturn of income on 31/07/2018 declaring total income of Rs.\n3,17,44,860/-. The return was revised on 28/03/2019 declaring total\nincome of Rs.3,17,44,860/-. The return was selected for scrutiny\nassessment and accordingly statutory notices were issued and served\nupon the assessee.\n4. During the course of scrutiny assessment proceedings, the AO\nnoticed that the assessee has claimed exempt income from investments\nand furnished that the assessee has made suo moto disallowance and\nfurther claimed that it has not incurred any expenses for earning this\nexempt income. The AO was of the firm belief that provisions of Section\n14A of the Act squarely apply with Rule 8D and went on to compute\nthe disallowance at Rs.10,00,000/-. Surprisingly, the AO also computed\nthe expenditure as per Rule 8D when the assessee has not incurred any\nexpenditure.\n4.

1. Assessee carried the matter before the ld. CIT(A) but without any\nsuccess.\n5. Before us, the ld. Counsel for the assessee drew our attention to\nthe computation of income and pointed out that the assessee has not\nclaimed any exemption insofar as dividend is concerned and the only\nexempt income is the claim u/s 10(34) r.w.s.115BBDA of the Act.\nPer contra, the ld. D/R strongly supported the findings of the AO.\nWe have carefully considered the orders of the authorities below.\n6. It would be pertinent to refer to the computation of total income which\nis as under:-\nJSW STEEL EMPLOYEES WELFARE TRUST\nPREVIOUS YEAR ENDED: 31ST MARCH, 2018\n ASSESSMENT YEAR: 2018-19\nCOMPUTATION OF TOTAL INCOME\n1. PROFITS & GAINS OF BUSINESS OR PROFESSION:\nIncome as per Income and Expenditure Account\nAdd: Items inadmissible/considered separately\nLoss on sale of investments\nLess: Items inadmissible/considered separately:\nDividend received\nLoss of Business or Profession:\nII. INCOME FROM CAPITAL GAINS\nFor Shares sold to Employees:\nFull Value of Consideration\nLess: Indexed cost of acquisition\nLong Term Capital Loss to be carried forward\nIII. INCOME FROM OTHER SOURCES\nDividend\nLess: Exempt u/s 10(34) r.w.s.115BBDA\nTaxable Dividend\nIncome from Other Sources\nGross Total Income:\nTotal Income:\nTotal Income Round off:\nNotes: 1. Long Term capital Gains to be Carry Forward\n Assessment Year Amount\n2014-15\n61,62,64,425\n2015-16\n42,22,36,660\n2016-17\n8,67,85,290\n2017-18\n18,88,09,017\n2018-19\n20,50,20,565\n(Rs.)\n58,31,396\n2,65,32,675\n3,23,64,071\n3,27,44,858\n(3,80,787)\n46,64,72,300\n67,14,92,865\n(20,50,20,565)\n3,27,44,858\n10,00,000\n3,17,44,858\n3,17,44,858\n3,17,44,858\n3,17,44,858\n3,17,44,860\n1,51,91,15,957\n(Rs.)\nJSW STEEL EMPLOYEES WELFARE TRUST\nPREVIOUS YEAR ENDED: 31ST MARCH, 2018\n ASSESSMENT YEAR: 2018-19\nCOMPUTATION OF TAX PAYABLE\n[A] TAX PAYABLE ON NORMAL TOTAL INCOME:\nTax Payable on Dividend Income @ 10%\nTax Payable on Other Income @ 30%\nAdd:\nSurcharge @ 15%\nTax Payable (including Surcharge)\nAdd: Education Cess @ 3%\nTax Payable (including Education Cess)\n[B] TAX PAYABLE ON ADJUSTED TOTAL INCOME AS PER SECTION 115JC:\nTax Payable on Adjusted Total Income\nAdd:\nSurcharge @ 15%\nTax Payable (including Surcharge)\nAdd:\nEducation Cess @ 3%\nTax Payable (including Education Cess)\nTax Payable [Higher of (A) or (B)] i.e.\nAdd: Interest\nTotal Tax Payable (including Interest)\nLess:\nPrepaid taxes:\n(1) Advance tax paid:\n(a) 14.06.2017\n(b) 14.09.2017\n(c) 14.12.2017\n(d) 14.03.2018\nTotal Advance tax\n(2) Self assessment tax paid on\nBalance Payable/(Refundable):\n10.00%\n30.00%\n(Rs.)\n3,17,44,860\n31,74,486\n31,74,486\n4,76,173\n34.50%\n36,50,659\n1,09,520\n35.54%\n37,60,179\n18.50%\n21.275%\n21.91%\n3,17,44,860\nU/s 234B\nU/s 234C\n1,502\n37,60,179\n1,502\n37,61,681\n6,00,000\n12,00,000\n13,00,000\n5,10,000\n36,10,000\n36,10,000\n1,51,681\n7. It can be seen from the above that the assessee has loss of Rs.\n3,80,787/- which it did not set off from any other income. In fact, the\ndividend of Rs.3,27,44,858/- is offered for taxation and only\nRs.10,00,000/- has been claimed as exempt u/s 10(34) r.w.s.115BBDA\nof the Act. The income and expenditure account of the assessee is as\nunder:-\nJSW STEEL EMPLOYEES WELFARE TRUST\nINCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2018\n5\nA. INCOME:\nDividend (Gross)\nB. EXPENDITURE:\nLoss on sale of investments\nAudit fees\nDemat charges\nProfessional fees\nOther expenses\nTOTAL:\nTOTAL:\nSurplus/ (Deficit) for the year before tax\nLess (Add): Tax expense\nSurplus/(Deficit) for the year after tax\nAdd (Less): Credit balance as per last balance sheet\nBALANCE CARRIED TO BALANCE SHEET\nSignificant accounting policies and notes forming part of the account - Schedule 'B'\nExamined and found to be in agreement with books of account produced before us.\nFor and on behalf of\nAMJ & CO.\nFRN 128550W\nChartered Accountants\n(M. A. GOHEL)\nPartner\nMembership No.: 038487\nMUMBAI,\nDATED: 30 JUL 2018\nRupees\n3,27,44,858\n3,27,44,858\n2,65,32,675\n12,100\n3,55,645\n11,800\n1,242\n2,69,13,462\nPrevious\nYear\nRupees\n99,85,613\n99,85,613\n3,05,00,421\n11,500\n2,00,047\n11,500\n2,375\n3,07,25,843\n58,31,396\n(2,07,40,230)\n37,70,000\n35,335\n20,61,396\n(2,07,75,565)\n7,83,15,192\n9,90,90,757\n8,03,76,588\n7,83,15,192\nCERTIFIED TRUE\nCA VINITA S. SA\nM. No. 129661\nTRUSTEES\nMUMBAI,\nDATED:\n30 JUL 2018\n7.

1.

From the above, it can be seen that the assessee has not claimed\nany expenditure and the loss of Rs.3,80,787/- has also been not set off\nand resultantly disallowed.\n8. As no expenditure has been claimed by the assessee, we do not\nfind any reason for disallowance of any expenditure u/s 14A r.w.r. 8D.\nWe accordingly direct the AO to delete the impugned disallowance of\nRs.10,00,000/-.\n9. In the result, appeal of the assessee is allowed.\nOrder pronounced in the Court on 11th June, 2025 at Mumbai.\nSd/-\n(SAKTIJIT DEY)\nVICE PRESIDENT\nMumbai, Dated 11/06/2025\n*SC SPS\nSd/-\n(NARENDRA KUMAR BILLAIYA)\nACCOUNTANT MEMBER\nआदेश की प्रतिलिपि अग्रेषित/

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