PG FOILS LIMITED,AHMEDABAD vs. THE DY.CIT, CIRCLE-3(1)(1), AHMEDABAD

These two appeals are filed by the assessee against the separate order of NFAC [hereinafter referred to as ‘CIT(A)’], both dated 09.07.2025 for the Assessment Years (AY) 2016-17 and 2018-19 in the proceedings u/s 143(3) of the Act.

As the issue involved and the grounds taken by the assessee in the two appeals were identical, both the matters were heard together and are being disposed off vide this common order for the sake of convenience. We will first take up the appeal in AY 2018- 19.

The brief facts of the case are that the assessee had filed its return of income for AY 2018-19 on 10.10.2018 declaring total income of Rs.19,04,38,060/- under normal provisions and Rs.16,75,71,092/- under MAT provisions. The case was selected for scrutiny under CASS. In the course of assessment, the AO had made various additions and the assessment was completed u/s 143(3) on 08.05.2021 at total income of Rs. 20,48,60,563/-.

Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was partly allowed.

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

The appellant craves liberty to add, amend, alter or modify all or any grounds of appeal

Per Contra, Shri Yogesh Mishra, the Ld. Sr. DR relied upon the order of the lower authorities on this issue.

We have considered rival submissions. There is no dispute to the fact that no exempt income was earned by the assessee during the year. It is a settled position that for the year under consideration, no disallowance u/s 14A was called for if no exempt income was earned by the assessee. Hon’ble Supreme Court in the case of CIT Vs. Chettinad Logistics (P.) Ltd. 95 taxmann.com 250 (SC) has upheld the decision of Hon’ble Delhi High Court that where no exempt income was earned in the relevant assessment year by the assessee, the provision of Section 14A of the Act could not be invoked. Further, Hon’ble Gujarat High Court in the case of Corrtech Energy (P.) Ltd. 45 taxman.com 116 (Gujarat) has held that if the assessee did not make any claim for exemption of any income, disallowance u/s 14A of the Act could not be made. It is found from the and 1581/AHD/2025 PG Foils Ltd. Vs. DCIT Asst. Years: 2016-17 & 2018-19 4 audited accounts as well as the computation of income brought on record in the paper book filed by the assessee, that no exempt income was earned by the assessee during the current year. In view of this fact and respectfully following the decisions referred above, no disallowance u/s 14A of the Act was called for in the current year. Accordingly, the addition as made by the AO is deleted. The ground taken by the assessee is allowed

In the result, the appeal of the assessee is allowed.

The grounds taken by the assessee in this appeal are as under: “1. The order passed by the learned A.O. is against the law, equity and justice. 2. The Ld. A.O. has erred in law and on facts in making disallowance of deduction U/S 80IA of Rs.30,44,833/-. 3. The Ld. A.O. erred in law and on facts in making disallowance of Rs.4003808/-u/s 14A. 4. The Ld. A.O. erred in law and on facts in making addition of Rs. 40,03,808/- being disallowance made u/s 14A while calculating book profit for MAT. 5. The Ld. A.O. has erred in law and facts in disallowing expenses incurred for employees of Rs. 40,45,000/-. 6. The appellant craves liberty to add, amend, alter or modify all or any grounds of appeal

In the result, the appeal of the assessee is partly allowed.