AMARA RAJA ENERGY AND MOBILITY LIMITED,TIRUPATI vs. DCIT., CIRCLE-1(1), TIRUPATI

आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘A’ Bench, Hyderabad

BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT
AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER

आ.अपी.सं /ITA No.791/Hyd/2025
Assessment Year 2021-2022

Amara Raja Energy and Mobility Limited,
TIRUPATI – 517 520. PAN AABCA9264E vs.

The DCIT, Circle-1(1),
TIRUPATI
(Appellant)

(Respondent)

िनधाŊįरतीȪारा /Assessee by: CA E Phalguna Kumar
राज̾ वȪारा /Revenue by:
Sri Pavan Kumar Beerla, CIT-DR

सुनवाई की तारीख/Date of hearing:
10.11.2025
घोषणा की तारीख/Pronouncement:
19.12.2025

आदेश/ORDER

PER VIJAY PAL RAO, VICE PRESIDENT :

This appeal by the Assessee is directed against the revision order dated 26.03.2025 of Principal Commissioner of Income Tax, Tirupati, passed u/sec.263 of the Income Tax Act [in short "the Act"], 1961, for the assessment year 2021-2022. 2
ITA.No.791/Hyd./2025

3
ITA.No.791/Hyd./2025

permission of the Hon'ble Tribunal at any time either before or on the date of hearing.”

4
ITA.No.791/Hyd./2025

proceedings and assessment order was passed without making proper enquiries or verification which should have been done in the course of assessment proceedings.
Accordingly, the learned Pr. CIT issued a show cause notice u/sec.263 of the Act dated 20.02.2025 to the assessee to explain as to why the assessment order dated
27.12.2022 passed u/sec.143(3) r.w.s.144B of the Act should not be revised u/sec.263 of the Act. In response to the show cause notice, the assessee company has filed its detailed reply and explained that there was a difference of Rs.4,86,576/- on account of re-valuation of mutual funds due to difference in the accounting treatment followed by the assessee company for computation of book profit and computation of income under the normal provisions of the Act. The assessee further explained that description of property in capital gain schedule is wrongly typed as immovable property, but the asset sold is a mutual fund. Therefore, there is a typographical mistake in the return of income which 5
ITA.No.791/Hyd./2025

would not attract any tax liability when the asset actually transferred is mutual fund. On the third aspect, the assessee explained that the asset sold during the year resulting profit/loss are depreciable assets and, therefore, as per the provisions of sec.43(6) r.w.s.32 of the Act, the same is required to be reduced from the block of asset and not to be declared any income or loss under the Income Tax Act. After considering the reply of the assessee, the learned Pr. CIT observed that the assessee is taking contrary stands in respect of the capital gain arising from the sale of mutual fund as well as re- valuation of the mutual fund and, therefore, these aspects are very much required to be verified with reference to the books of accounts along with other supporting documents. Similarly, the profit on sale of asset claimed as transfer of depreciable assets and required to be reduced from block of asset, the Pr. CIT noted that necessary details of assets sold, profit earned, block of asset, treatment of adjustment, were not given

6
ITA.No.791/Hyd./2025

and, therefore, the same also required to be verified.
Thus, the learned Pr. CIT set-aside the assessment order partially with a direction to the Assessing Officer to verify the issue as discussed in the impugned order in accordance with law, after affording reasonable opportunity of being heard to the assessee.

7
ITA.No.791/Hyd./2025

cause notice vide letter dated 17.11.2022 placed at page-
120 of the paper book. The learned Authorised
Representative of the Assessee, then referred to the computation of income and submitted that an amount of Rs.16,35,74,851/- is shown under the short-term capital gain from securities are charitable under the Head
“capital gain”. He has further pointed out capital expenditure debited to the P & L A/c on account of asset written-off and loss on sale of fixed assets were added back to the income of the assessee in the statement of income. Thus, the issues taken up by the learned Pr. CIT are already verified and examined by the Assessing
Officer while completing the assessment and, therefore, there was no error in the assessment order amenable for revision u/sec.263 of the Act on account of lack of enquiry on the part of the Assessing Officer. The learned
Authorised Representative of the Assessee has submitted that the assessee in the books of accounts has recognized the notional gain/loss by re-valuing the mutual fund for 8
ITA.No.791/Hyd./2025

NAV as on the date of balance-sheet. This notional income is neither accrued nor arise on transfer of capital asset as on the date of balance-sheet and, therefore, the same is not a taxable transaction. The assessee has declared the gain or loss by reducing the actual cost from the sale value receipt and, therefore, there is no loss of revenue, and the assessee has properly offered it’s income to tax. The learned Authorised Representative of the Assessee has further submitted that every unexempt part of assessment does not result in assessment being erroneous and prejudicial to the interests of revenue.
Further, the profit or loss on sale of depreciable asset, on which, depreciation was already claimed and allowed, is not an income on sale of asset, but the sale value is reduced from the block of assets as the block of assets did not cease to exist. Thus, the learned Authorised
Representative of the Assessee has submitted that once the entire record was available before the Assessing
Officer and the Assessing Officer was satisfied with the 9
ITA.No.791/Hyd./2025

details and explanation of the assessee, then, a detailed reasoning was not required to be recorded on such issues. The learned Authorised Representative of the Assessee further contended that once the Assessing
Officer has conducted a proper enquiry and was satisfied with the claims, then, an elaborate finding is not required to be recorded in the assessment order and, therefore, the same cannot be a ground to hold that the order of the Assessing Officer is erroneous for lack of enquiry or inadequate enquiry. In support of his contention, the learned Authorised Representative of the Assessee has relied upon the following decisions:

i. Pr. CIT vs. M/s. V Con Integrated Solutions Pvt. Ltd.,
Punjab & Haryana High Court – [TS-6567-HC-2024]
(Punjab & Haryana HC-O); ii. Pr. CIT vs. M/s. V Con Integrated Solutions Pvt. Ltd., -
[TS-5067-SC-2025-O]; iii. CIT vs. Armenian Church – [TS-5061-SC-2025-O]; iv. Malabar Industrial Co. Ltd., vs. CIT [2000] 243 ITR 83
(SC);

10
ITA.No.791/Hyd./2025

v. CIT vs., Vellore Institute of Technology [2025] 142 TLC
119 (Mad.-HC).
vi. Order of ITAT, Mumbai in the case of KPMG Assurance and Consulting Services LLP, Mumbai vs., Pr. CIT-8,
Mumbai in ITA.No.2396/Mum./2025, dated
28.08.2025. 5. On the other hand, the learned DR has referred to the impugned order of the learned Pr. CIT and submitted that the learned Pr. CIT has pointed-out various discrepancies in the claim of the assessee in respect of the capital gain on sale of investment, capital gain on re-valuation and capital gain on sale of immovable property. However, the Assessing Officer has not verified a single item as to how the assessee is reporting some of the transactions as sale of immovable property which is claimed before the Pr. CIT as a typographical mistake. Further, it was also noted that the assessee has though reduced the profit on sale of asset from the business income but has not added the loss on sale of asset while computing the total income as per the 11
ITA.No.791/Hyd./2025

statement of income. Therefore, all these aspects including admitted mistakes in the computation of income are required to be verified. The learned DR has relied upon the impugned order of the learned Pr. CIT.
The learned DR has also relied upon the Judgment of Hon’ble Supreme Court in the case of Daniel Merchants
(P.) Ltd., vs., ITO [2018] 95 taxmann.com 366 (SC).

12
ITA.No.791/Hyd./2025

भारतसरकार
Ĥधान आयकर आयताकाया[लय
ǓतǽपǓतनात[भवन आयकर,के. Ǒट.
माग[ ǓतǽपǓत-५१७५०७
टेͧलफोन०८७७-२२८०५४१
फैÈस ०८७७-२२८७५३१

Government of India
Office of the Pr. Commissioner of Income Tax
Tirupati Charge
Aayakar Bhavan, KT Road,
Tirupati - 517 507
Telephone 0877-2287541
Fax No 0877-2287531

F.No.263/PCIT/TPT/2024-25 Date: 20.02 2025
PAN-AABCA9264E
DIN-ITBA/REV/M/REV1/2024-25/1073542295(1)

To M/s. Amara Raja Batteries Limited,
Amara Raja Campus.
Renigunta-Cuddapah Road,
Karakambadi, Tirupati - 517520

Sir

Sub Show cause notice u/s 263 of the Income Tax Act. 1961-Reg

Ref: Order passed u/s 143(3) rws 1448 of the IT Act, 1961
dated 27 12 2022 for the A.Y.2021-22

******

The assessee-company filed return of income for the AY 2021-22 on 14.02.2022 declaring a total income of Rs.9.10,50,74,140/- and the case was selected for complete scrutiny The assessment was completed u/s 143(3) r.w.s.
144B of the Income Tax Act, 1961 on 27.12.2022 by determining the income at Rs.9,27,76,95,193/-

2
Nevertheless, on examination of records, it is seen that the assessment was completed without carrying out the necessary and relevant enquiries as discussed below:

“It was noticed from ITR (vide pg No 27/99) that assessee offered capital gains of Rs.14.1736,848/- from sale of mutual funds As per the statement of income of the assessee it was reduced from net profit of business income (vide schedule-8) to be considered separately However it was not offered to tax separately under the head income from capital gains. Additionally, the fair valuation gain on investment in mutual funds amounting to Rs.2,23,24,579/-

13
ITA.No.791/Hyd./2025

and profit from sale of assets amounting to Rs.9,05,785/- which had been subtracted from the net profit from business were also not admitted as income under any other head of income."

भवदȣय/Yours faithfully, Sunithe b

(सुनीता ǒबãला, भा.रा.से) / (SUNITA BILLA, IRS)
Ĥधान आयकर आयुÈत/ Pr. Commissioner of Income Tax
ǓतǽपǓत Ĥभार, ǓतǽपǓत / Tirupati Charge, Tirupati.”

14
ITA.No.791/Hyd./2025

“3. From the perusal of your financials for the year, it is noted that you have made significant amount of investments in your balance sheet as on 31.03.2021. In this context, you are required to state as to why should the disallowance not be made under Section 14A as per Rule 8D of the Income-tax
Rules. In relation to this, the details of the investments made.

15
ITA.No.791/Hyd./2025

appears as part of assets in your balance sheet are to be submitted in following format:

Sr.
No.

Name and PAN of the No which investment is made.

Country of residence of the entity

Amount of investment as on 01.04.2020

Amount of investment made during the year

Amount of investment as on 31.03.2021

Source of investment made

Nature of income likely to accrcue out of investments.
Whether such income will be taxable under Income-tax
Act, 1961
Whether disallowance as per Section 14A is made while computing the taxable income, if yes, specify the amount and calculation of the amount of disallowance.
If No, kindly state the reasons.

To THE LEARNED ASSESSING OFFICER
Assessment Unit/Verification Unit/Technical Unit/Review Unit
National Faceless Assessment Centre, Income Tax Department
DELHI

Dear Sir,

Sub:
Response to Notice under Sec 142(1)

Ref:
1. Notice under Sec 142(1) with No. ITBA/AST/F/
142(1)/2022-23/1046267355(1) dated
12/10/2022
2. Our PAN: AABCA9264E, AY: 2021-22

* * *

With respect to above-mentioned notice, we are herewith submitting the point-wise replies as follows

Point No. 3: Investments and Sec 14A Disallowance

The summary of investments as on 31st March 2021 and 31st March
2020 are given below. The detailed schedules of both current and non-current investments are given in attachment to this submission.

17
ITA.No.791/Hyd./2025

S.No.
Particulars
As on 31st
March 2022
As on 31st
March 2021
1. Non-current investments.
7,11,85,185
13,91,51,527
2. Current investments.
273,42,42,040
142,25,41,624

Grand Total
280,54,27,225
156,16,93,151

Non-current investments refer to investment in other companies.
Current Investments refer to investment in Mutual Funds. We would like to bring to your notice the following points in this regard.

1" April 2020. The exemption given in Sec 10(34) of the Income
Tax Act 1961 is withdrawn for dividends received after 1
April 2020, as the taxability under Sec 115-0 is withdrawn from 1 April 2020. Similarly, both long-term and short-term capital gains form part of total income of the assessee- company, as and when they arise from non-current investments.

mutual funds is notional and hence the same is added back in computing the profits. The current investments are revalued due to mandatory requirement under Companies Act 2013 to follow Ind-AS which requires revaluation as at each Balance
Sheet date. The valuation methodology is FVTPL which means Fair Value Through Profit and Loss. The amount reduced from income is mentioned above.

20
ITA.No.791/Hyd./2025

that there were some typographical mistakes for reporting the capital gain from sale of immovable property as well as the details of the sale of assets which is claimed as depreciable assets and, therefore, to be reduced from the block of assets. Further, the Assessing
Officer in the assessment order has also recorded the description of the issue involved in Para-3.1 as under:

“3.1 Description of issues involved

The Assessee has not submitted the details of foreign remittances made. Same are to be considered vis-à-vis the consequent tax liability.

Assessee has claimed expenses on account of outward freight and handling charges expense amounting to Rs.203,74,00,000/-. The taxability of same has to be adjudicated upon.”

21
ITA.No.791/Hyd./2025

learned Authorised Representative of the Assessee will not help the case of the assessee. There is a complete lack of enquiry on the part of the Assessing Officer on these aspects. There may be a case of Bonafide mistake and resulting no revenue loss, but the factual aspects as pointed out by the learned Pr. CIT are very crucial and undisputed facts so far as reporting the capital gain from sale of immovable property as well as the profit or loss of revaluation of mutual funds as on the date of balance- sheet. Therefore, the Assessing Officer was required to ensure that there is no tax incident transaction happened due to re-valuation of the mutual fund as on the date of balance-sheet and due effect has been given while calculating the capital gain on sale of mutual fund.
Accordingly, in the facts and circumstances of the case, we do not find any error or illegality in the impugned order of the learned Pr. CIT and, therefore, the same is upheld.

23
ITA.No.791/Hyd./2025

Order pronounced in the open Court on 19.12.2025. [MADHUSUDAN SAWDIA]

[VIJAY PAL RAO]
ACCOUNTANT MEMBER VICE PRESIDENT

Hyderabad, Dated 19th December, 2025

VBP

Copy to :

BY ORDER
////