ACIT CENTRAL CIRCLE 1(4), MUMBAI V. ESSEL MINING & INDUSTRIES LTD, WEST BENGAL

ITA 6996/MUM/2025

AI Insights

The case involves Essel Mining & Industries Ltd., which appealed against the order of the Ld. Commissioner of Income-tax-47, Mumbai, concerning the assessment year 2020-2021. The primary issues revolved around the disallowance of expenses under Rule 8D related to exempt income and the addition to book profit under Section 115JB. The Assessing Officer had initially made these additions, which were later contested and partially overturned by the Ld. CIT(A). The Tribunal's decision leaned heavily on judicial precedents, particularly the ITAT Special Bench's decision in Vireet Investment (P) Ltd., which influenced the interpretation and application of Section 14A and Rule 8D in relation to Section 115JB.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847732 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Mumbai
• Assessment Year: 2020-2021
• Appeal Filed On: 30-10-2025
• Other Referred Cases: Vireet Investment (P) Ltd. vs. ACIT, CIT v. Goetze (India) Ltd., Bombay Oxygen Investments Ltd. vs. CIT, Cheminvest Ltd. vs. CIT, Holcim India (P) Ltd. vs. CIT, Pragati Krishna Gramin Bank vs. Joint Commissioner of Income-tax, Nirved Traders Pvt. Ltd. vs. CIT, Redington (India) Ltd. vs. CIT, M/s. Nirved Traders Pvt. Ltd. vs. CIT, Commissioner of Income-tax-1 vs. Cor Tech Energy (P.) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RITESH MISRA
• Assessee Lawyers: SUKANYA JAYARAM
• Keywords: Question of law; Tax effect; Earning of tax free income; Rule 8D; CHAPTER IV
• Section: 14A; 115JB

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 6996/MUM/2025 Assessment Year: 2020-21 ACIT Central Circle 1(4) 902, 9th Floor, Pratishtha Bhavan, Old CGO Bldg, M.K. Road, Mumbai- 400020 Vs. Essel Mining & Industries Ltd Industry house 10, camac street, park avenue, S.O Kolkata, Kolkata- 700017 PAN NO. AAACE 6607 L Appellant Respondent Assessee by : Ms. Sukanya Jayaram Revenue by : Mr. Ritesh Misra, CIT. DR Date of Hearing : 05/03/2026 Date of pronouncement : 23/03/2026 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 14.08.2025 passed by the Ld. Commissioner of Income-tax- 47, Mumbai [in short ‘the Ld.CIT(A)] for assessment year 2020-2021, raising following grounds:- “Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO to delete the addition on account of disallowance of 14A under Rule 8D without appreciating that disallowance under rule BD was required to be made as per the provisions of 14A r.w.r.8D which has specified the method of working out disallowance under rule 8D? Printed from counselvise.com 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of 12,22,44,817/ made by the Assessing Officer to the book profit under Se 115JB of the income exempt income, without appreciating that such adjustment is specifically mandated by clause (1) of Explanation 1 to Section 115JB(2) of the Act? 3. Whether on the facts and circumstan the Ld. CIT(A) failed to appreciate that the expression \"expenditure relatable to any income which does not form part of the total income\" under clause (1) to Explanation I is analogous in intent and scope to the expression \"exp income under Section 144, both embodying the same accounting principle that such expenditure cannot be allowed to reduce taxable or book profits? 4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in relying on the decision of the ITAT Special Bench in Vireet Investment (P) Ltd. (82 taxmann.com 415), ignoring the binding ratio of the Hon'ble Delhi High Court in CIT v. Goetze (India) Ltd. [361 ITR 505), which upheld the addition of expenditure while computing book profit under Section 115JB? 5. Whether on the facts and circumstances of the case and in law, the reliance placed by the Ld. CIT(A) on the decision in Bombay Oxygen Investments Ltd. u. CIT (ITA No. 4406/Mum/2024) is misplaced, as no further appeal was filed in that case merely on account of low tax effect, and the Department has not accepted the said decision on merits; the issue continues to be contested in other cases of higher tux effect?\" 2. Briefly stated facts in the business of Trading of Iron Ore, Generation of Electricity, Railway Siding for captive use etc. For the year under consideration return of income on 13.10.2018 declaring total income under normal provisions of the Income Tax Act, 1961 [in short ‘ the Act’] at Rs. 89,81,54,100/- and book profit u/s 115 JB of the Act at Rs. Essel Mining & Industries Ltd. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of 12,22,44,817/ made by the Assessing Officer to the book profit under Se 115JB of the income-tax Act, 1961, being expenditure relatable to exempt income, without appreciating that such adjustment is specifically mandated by clause (1) of Explanation 1 to Section 115JB(2) of the Act? 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the expression \"expenditure relatable to any income which does not form part of the total income\" under clause (1) to Explanation I is analogous in intent and scope to the expression \"expenditure incurred in relation to exempt income under Section 144, both embodying the same accounting principle that such expenditure cannot be allowed to reduce taxable or book profits? 4. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) erred in relying on the decision of the ITAT Special Bench in Vireet Investment (P) Ltd. (82 taxmann.com 415), ignoring the binding ratio of the Hon'ble Delhi High Court in CIT v. Goetze (India) Ltd. [361 ITR 505), which upheld the addition of expenditure while computing book profit under Section 115JB? 5. Whether on the facts and circumstances of the case and in law, the reliance placed by the Ld. CIT(A) on the decision in Bombay Oxygen Investments Ltd. u. CIT (ITA No. 4406/Mum/2024) is isplaced, as no further appeal was filed in that case merely on account of low tax effect, and the Department has not accepted the said decision on merits; the issue continues to be contested in other cases of higher tux effect?\"” Briefly stated facts of the case are that the assessee is engaged in the business of mining ore, Manufacturing of Ferro Alloys, Trading of Iron Ore, Generation of Electricity, Railway Siding for or the year under consideration, the assessee filed come on 13.10.2018 declaring total income under normal provisions of the Income Tax Act, 1961 [in short ‘ the Act’] at and book profit u/s 115 JB of the Act at Rs. Essel Mining & Industries Ltd. 2 ITA No. 6996/MUM/2025 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of 12,22,44,817/- made by the Assessing Officer to the book profit under Section tax Act, 1961, being expenditure relatable to exempt income, without appreciating that such adjustment is specifically mandated by clause (1) of Explanation 1 to Section ces of the case and in law, the Ld. CIT(A) failed to appreciate that the expression \"expenditure relatable to any income which does not form part of the total income\" under clause (1) to Explanation I is analogous in intent and enditure incurred in relation to exempt income under Section 144, both embodying the same accounting principle that such expenditure cannot be allowed to reduce taxable 4. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) erred in relying on the decision of the ITAT Special Bench in Vireet Investment (P) Ltd. (82 taxmann.com 415), ignoring the binding ratio of the Hon'ble Delhi High Court in CIT v. Goetze (India) Ltd. [361 ITR 505), which upheld the addition of such expenditure while computing book profit under Section 115JB? 5. Whether on the facts and circumstances of the case and in law, the reliance placed by the Ld. CIT(A) on the decision in Bombay Oxygen Investments Ltd. u. CIT (ITA No. 4406/Mum/2024) is isplaced, as no further appeal was filed in that case merely on account of low tax effect, and the Department has not accepted the said decision on merits; the issue continues to be contested in other of the case are that the assessee is engaged mining ore, Manufacturing of Ferro Alloys, Trading of Iron Ore, Generation of Electricity, Railway Siding for the assessee filed come on 13.10.2018 declaring total income under normal provisions of the Income Tax Act, 1961 [in short ‘ the Act’] at and book profit u/s 115 JB of the Act at Rs. Printed from counselvise.com 12,80,67,28,026/-. selected for scrutiny and statutory notice issued and duly served proceedings, the ld Assessing O earned exempted income of Rs. 2,14,325/ consideration and the assessee also disallowed expenses to that extend for earning such exempted income but the Ld.AO satisfied with the expenditure shown by the dividend income from the investment made by the assessee. According to the ld AO must have incurred f expense etc. Accordingly the assessee of the expenses for earning exempted income and invoking Rule 8D of Income computed disallowance at Rs. 12,24,59,142/ suo-mottu disallowances of Rs. 2,14,3 Rs. 12,22,44,817/-. The Ld.AO also made addition to the book profit computed u/s 1 disallowed u/s 14A rule 2.1 On further appeal Ld. CIT(A) deleted the said addition in view of the various precedence on the issue and dispute and restricted the disallowance to the exempted is in appeal, before us raising the ground Essel Mining & Industries Ltd. . Subsequently, the return of income rutiny and statutory notices under issued and duly served upon the assessee. During the , the ld Assessing Officer(AO) observed that assessee earned exempted income of Rs. 2,14,325/- during the year under consideration and the assessee also disallowed expenses to that extend for earning such exempted income but the Ld.AO satisfied with the expenditure shown by the assessee for earning dividend income from the investment made by the assessee. ld AO for earning exempted income the assessee must have incurred for remuneration of the director etc. Accordingly, he recorded dissatisfaction the assessee of the expenses for earning exempted income and of Income-tax Rules, 1962 ( in short the ‘Rules’) computed disallowance at Rs. 12,24,59,142/-and after reducing the disallowances of Rs. 2,14,325/-, made the net addition of . The Ld.AO also made addition to the book profit computed u/s 115JB of the Act for such expenditure disallowed u/s 14A rule 8D of the Act. On further appeal Ld. CIT(A) deleted the said addition in view of the various precedence on the issue and dispute and restricted disallowance to the exempted income. Aggrieved is in appeal, before us raising the grounds which relates mainly to Essel Mining & Industries Ltd. 3 ITA No. 6996/MUM/2025 return of income was under the Act were . During the scrutiny observed that assessee during the year under consideration and the assessee also disallowed expenses to that extend for earning such exempted income but the Ld.AO was not assessee for earning dividend income from the investment made by the assessee. for earning exempted income the assessee or remuneration of the director and the staff faction on the claim of the assessee of the expenses for earning exempted income and tax Rules, 1962 ( in short the ‘Rules’) and after reducing the made the net addition of . The Ld.AO also made addition to the book ct for such expenditure On further appeal Ld. CIT(A) deleted the said addition in view of the various precedence on the issue and dispute and restricted income. Aggrieved, the Revenue which relates mainly to Printed from counselvise.com the disallowances deleted under the rule 8D and the disa deleted to book profit of 115 JB of the Act. 3. As far as ground related to disallowances of expenses under rule 8D is concerned the Ld. CIT(A) has deleted the addition observing as under: “7. The issue involved in these grounds relates to disal of the Act. During the relevant previous year, the appellant had claimed exempt income u/s 10(34) of the Act of Rs. 2,14,325/ had suo motu offered disallowance u/s 14A of Rs. 2,14,325,/ has worked out 12,24,59,142/-. Considering the disallowance already offered by the appellant, the net disallowance of Rs. 12,22,44,817/ returned income u/s 14A r.w.r. 8D of the Act. The appellant has contended that disallowance u/s 14A of the Act cannot exceed the claim of exempt income claimed in the return of income for which it has relied on various judicial decisions. 7.1 It is observed that on the issue of extent of disallowance u/s 14A which can be made if the dividend income earned during the relevant year is either nil or less than the amount of disallowance computed under section 14A, has been subjected to substantial debate. However, this issue is settled by the recent decision of the Hon'ble Supr 02.07.2018 in the case of Chettinad Logistics P. Ltd. 250) wherein the Revenue SLP against the decision of the Ho Madras High Court (80 taxmann.com 221) has not been dismissed. In this case, the Hon'ble Madras High Court the provisions of sec. 14A. The Hon'ble Madras Court held that if provisions of sec 14A itself are not applicable, then there is no question of invoking. Rule BD and computing the disallowance. It was noted by the Hon'ble High Court that the language used in the provisions of sec. 14A makes it abundantly clear that the same is triggered only when there is an income which does not form part of the total income under the Act. It was held by the Hon'ble High be invoked if no exempt income has been earned for the relevant year. The Hon'ble High Court granted relief to the said assessee on the disallowance made by the AO u/s. 14A on the ground that no exempt/dividend Income was earne Essel Mining & Industries Ltd. the disallowances deleted under the rule 8D and the disa deleted to book profit of 115 JB of the Act. As far as ground related to disallowances of expenses under rule 8D is concerned the Ld. CIT(A) has deleted the addition 7. The issue involved in these grounds relates to disal During the relevant previous year, the appellant had claimed exempt income u/s 10(34) of the Act of Rs. 2,14,325/- had suo motu offered disallowance u/s 14A of Rs. 2,14,325,/ has worked out disallowance U/s 14A of the Act r.w.r. 8D at Rs. . Considering the disallowance already offered by the appellant, the net disallowance of Rs. 12,22,44,817/- returned income u/s 14A r.w.r. 8D of the Act. The appellant has nded that disallowance u/s 14A of the Act cannot exceed the claim of exempt income claimed in the return of income for which it has relied on various judicial decisions. 7.1 It is observed that on the issue of extent of disallowance u/s 14A ade if the dividend income earned during the relevant year is either nil or less than the amount of disallowance computed under section 14A, has been subjected to substantial debate. However, this issue is settled by the recent decision of the Hon'ble Supr 02.07.2018 in the case of Chettinad Logistics P. Ltd. 250) wherein the Revenue SLP against the decision of the Ho Madras High Court (80 taxmann.com 221) has not been dismissed. In this case, the Hon'ble Madras High Court held that Rule 8D cannot over the provisions of sec. 14A. The Hon'ble Madras Court held that if provisions of sec 14A itself are not applicable, then there is no question of invoking. Rule BD and computing the disallowance. It was noted by the e High Court that the language used in the provisions of sec. 14A makes it abundantly clear that the same is triggered only when there is an income which does not form part of the total income under the Act. It was held by the Hon'ble High Court that the provisions of sec be invoked if no exempt income has been earned for the relevant year. The Hon'ble High Court granted relief to the said assessee on the disallowance made by the AO u/s. 14A on the ground that no exempt/dividend Income was earned during the relevant year. The Essel Mining & Industries Ltd. 4 ITA No. 6996/MUM/2025 the disallowances deleted under the rule 8D and the disallowances As far as ground related to disallowances of expenses under rule 8D is concerned the Ld. CIT(A) has deleted the addition 7. The issue involved in these grounds relates to disallowance U/s 14A During the relevant previous year, the appellant had claimed - and the appellant had suo motu offered disallowance u/s 14A of Rs. 2,14,325,/-. The AO disallowance U/s 14A of the Act r.w.r. 8D at Rs. . Considering the disallowance already offered by the - was made to the returned income u/s 14A r.w.r. 8D of the Act. The appellant has nded that disallowance u/s 14A of the Act cannot exceed the claim of exempt income claimed in the return of income for which it has relied 7.1 It is observed that on the issue of extent of disallowance u/s 14A ade if the dividend income earned during the relevant year is either nil or less than the amount of disallowance computed under section 14A, has been subjected to substantial debate. However, this issue is settled by the recent decision of the Hon'ble Supreme Court dated 02.07.2018 in the case of Chettinad Logistics P. Ltd. 95 taxmann.com 250) wherein the Revenue SLP against the decision of the Hon’ble Madras High Court (80 taxmann.com 221) has not been dismissed. In this held that Rule 8D cannot over-ride the provisions of sec. 14A. The Hon'ble Madras Court held that if provisions of sec 14A itself are not applicable, then there is no question of invoking. Rule BD and computing the disallowance. It was noted by the e High Court that the language used in the provisions of sec. 14A makes it abundantly clear that the same is triggered only when there is an income which does not form part of the total income under the Act. It rovisions of sec. 14A cannot be invoked if no exempt income has been earned for the relevant year. The Hon'ble High Court granted relief to the said assessee on the disallowance made by the AO u/s. 14A on the ground that no d during the relevant year. The Printed from counselvise.com relevant portion of the decision of the Hon'ble Madras High Court in the case of Chettinad Logistics P. Ltd. is reproduced as under: \"8. According to us, this exercise, in the given facts which emerge from the record, was returned the finding of fact that no dividend had been earned in the relevant assessment year, with which, we are concerned, in the present appeal. 9. In our opinion Section 14 A of the Act, can only be triggered, if Assessee seeks to square off expenditure against income which does not form part of the 9.1 The legislature, in order to do away with the pernicious practice adopted by the Assessees', to claim expenditure, against incom exempt from tax, 10. In the instant case, there is no dispute that no income i.e., dividend, which did not form part of total income of the Assessee was earned 10.1 Therefore, to our mind Officer by relying upon Section 14 A of the Act, was completely contrary to the provisions of the said Section. 10.2 Mr. Senthil Kumar, who appears for the Revenue, submitted that the Revenue could disallow the expend circumstance by taking recourse to Rule 8D. 10.3 According to us, Rule 8D, only provides for a method to determine the amount of expenditure incurred in relation to income, which does not form part of the total income of the Assessee. 10.4 Rule BD, in our view, cannot go beyond what is provided in Section 14 A of the Act. 11. Furthermore, we may note that a similar argument was sought to be advanced by the Revenue in the matter concerning (India) Ltd. v. Addl 11.1 A Co- 23.12.2016, rejected the plea of the Revenue advanced in that behalf. Essel Mining & Industries Ltd. relevant portion of the decision of the Hon'ble Madras High Court in the case of Chettinad Logistics P. Ltd. is reproduced as under: \"8. According to us, this exercise, in the given facts which emerge from the record, was clearly unnecessary, as the CIT(A) had returned the finding of fact that no dividend had been earned in the relevant assessment year, with which, we are concerned, in the present appeal. 9. In our opinion Section 14 A of the Act, can only be triggered, if Assessee seeks to square off expenditure against income which does not form part of the total income under the Act. 9.1 The legislature, in order to do away with the pernicious practice adopted by the Assessees', to claim expenditure, against incom exempt from tax, Introduced the said provision. 10. In the instant case, there is no dispute that no income i.e., dividend, which did not form part of total income of the Assessee in the relevant assessment year. 10.1 Therefore, to our minds, the addition made by the Assessing Officer by relying upon Section 14 A of the Act, was completely contrary to the provisions of the said Section. 10.2 Mr. Senthil Kumar, who appears for the Revenue, submitted that the Revenue could disallow the expenditure even in such a circumstance by taking recourse to Rule 8D. 10.3 According to us, Rule 8D, only provides for a method to determine the amount of expenditure incurred in relation to income, which does not form part of the total income of the Assessee. 10.4 Rule BD, in our view, cannot go beyond what is provided in Section 14 A of the Act. 11. Furthermore, we may note that a similar argument was sought to be advanced by the Revenue in the matter concerning (India) Ltd. v. Addl. T.C.A.No.520 of 2016. of -ordinate Bench of this Court, vide judgment dated 23.12.2016, rejected the plea of the Revenue advanced in that Essel Mining & Industries Ltd. 5 ITA No. 6996/MUM/2025 relevant portion of the decision of the Hon'ble Madras High Court in the case of Chettinad Logistics P. Ltd. is reproduced as under:- \"8. According to us, this exercise, in the given facts which emerge clearly unnecessary, as the CIT(A) had returned the finding of fact that no dividend had been earned in the relevant assessment year, with which, we are concerned, in the 9. In our opinion Section 14 A of the Act, can only be triggered, if, the Assessee seeks to square off expenditure against income which total income under the Act. 9.1 The legislature, in order to do away with the pernicious practice adopted by the Assessees', to claim expenditure, against income 10. In the instant case, there is no dispute that no income i.e., dividend, which did not form part of total income of the Assessee s, the addition made by the Assessing Officer by relying upon Section 14 A of the Act, was completely 10.2 Mr. Senthil Kumar, who appears for the Revenue, submitted iture even in such a 10.3 According to us, Rule 8D, only provides for a method to determine the amount of expenditure incurred in relation to income, which does not form part of the total income of the Assessee. 10.4 Rule BD, in our view, cannot go beyond what is provided in 11. Furthermore, we may note that a similar argument was sought to be advanced by the Revenue in the matter concerning, Redington ordinate Bench of this Court, vide judgment dated 23.12.2016, rejected the plea of the Revenue advanced in that Printed from counselvise.com 11.2 As a matter of fact, a perusal of the judgment would show that the Revenue had sought to argue that because be earned in future years, therefore, recourse could be taken to the provisions of Section 14A of the Act, to disallow expenditure. In other words the stand taken by the Revenue was irrespective of the fact whether or not income was ea year expenditure under Section 14A could be disallowed against anticipated income. 11.3 Pertinently, the Division Bench in Redington (India) Ltd. (supra) case has repelled this precise argument. 12. The Division Bench, in computation of total income, in terms of Section 5 of the Act, is made qua real income and not, vis 12.1 The Division Bench went on to hold that Section 4 of the Act brings to tax, that inc in issue. The Division Bench, thus, held that where no exempt income is earned in the previous year, relevant to the assessment year in issue, provisions of Section 14 A of the Act, read with Rule 8 D could not be invoked. 12.2 While coming to this conclusion, the Division Bench also took note of the aforementioned Circular, issued by the Board.\" 7.2 The Hon'ble Bombay High Court in the case of M/s. Nirved Traders Pvt. Ltd. (ITA No. 149 of 2017) in their approved the claim that the disallowance under section 14A was to be restricted to the tax observed that: 3. This Appeal is filed by the Assessee to challenge the Judgment of the Income Tax Appellate Tribunal (the Tribunal', for URS 1 of 7 2 3 ITXA 149-17.odt short). The Appellant company and a non Year 2008-2009, the Assessee Rs. 6,87,57,951. During the same period relevant to the Assessment Year in question, the Assessee had earned dividend income of Rs 1,13,72,545/ which was exempt from tax. The Assessing Officer disallowed the interest expenditure of Rs.3,79,83,5 Essel Mining & Industries Ltd. 11.2 As a matter of fact, a perusal of the judgment would show that the Revenue had sought to argue that because exempt income could be earned in future years, therefore, recourse could be taken to the provisions of Section 14A of the Act, to disallow expenditure. In other words the stand taken by the Revenue was irrespective of the fact whether or not income was earned in the concerned assessment year expenditure under Section 14A could be disallowed against anticipated income. 11.3 Pertinently, the Division Bench in Redington (India) Ltd. (supra) case has repelled this precise argument. 12. The Division Bench, in our view, quiet correctly held that, the computation of total income, in terms of Section 5 of the Act, is made qua real income and not, vis-a-vis, notional income. 12.1 The Division Bench went on to hold that Section 4 of the Act brings to tax, that income, which is relatable to the assessment year in issue. The Division Bench, thus, held that where no exempt income is earned in the previous year, relevant to the assessment year in issue, provisions of Section 14 A of the Act, read with Rule 8 t be invoked. 12.2 While coming to this conclusion, the Division Bench also took note of the aforementioned Circular, issued by the Board.\" 7.2 The Hon'ble Bombay High Court in the case of M/s. Nirved Traders Pvt. Ltd. (ITA No. 149 of 2017) in their decision dated 23.04.2019 approved the claim that the disallowance under section 14A was to be restricted to the tax-exempt income earned during the year. The High Court 3. This Appeal is filed by the Assessee to challenge the Judgment of he Income Tax Appellate Tribunal (the Tribunal', for URS 1 of 7 2 3 17.odt short). The Appellant - Assessee is a private limited company and a non-banking financial company. In the Assessment 2009, the Assessee had claimed interest expen Rs. 6,87,57,951. During the same period relevant to the Assessment Year in question, the Assessee had earned dividend income of Rs 1,13,72,545/ which was exempt from tax. The Assessing Officer disallowed the interest expenditure of Rs.3,79,83,539/-, He further disallowed Essel Mining & Industries Ltd. 6 ITA No. 6996/MUM/2025 11.2 As a matter of fact, a perusal of the judgment would show that exempt income could be earned in future years, therefore, recourse could be taken to the provisions of Section 14A of the Act, to disallow expenditure. In other words the stand taken by the Revenue was irrespective of the fact rned in the concerned assessment year expenditure under Section 14A could be disallowed against 11.3 Pertinently, the Division Bench in Redington (India) Ltd. (supra) our view, quiet correctly held that, the computation of total income, in terms of Section 5 of the Act, is made vis, notional income. 12.1 The Division Bench went on to hold that Section 4 of the Act ome, which is relatable to the assessment year in issue. The Division Bench, thus, held that where no exempt income is earned in the previous year, relevant to the assessment year in issue, provisions of Section 14 A of the Act, read with Rule 8 12.2 While coming to this conclusion, the Division Bench also took note of the aforementioned Circular, issued by the Board.\" 7.2 The Hon'ble Bombay High Court in the case of M/s. Nirved Traders decision dated 23.04.2019 approved the claim that the disallowance under section 14A was to be exempt income earned during the year. The High Court 3. This Appeal is filed by the Assessee to challenge the Judgment of he Income Tax Appellate Tribunal (the Tribunal', for URS 1 of 7 2 3- Assessee is a private limited banking financial company. In the Assessment had claimed interest expenditure of During the same period relevant to the Assessment Year in question, the Assessee had earned dividend income of Rs 1,13,72,545/- which was exempt from tax. The Assessing Officer disallowed the , He further disallowed Printed from counselvise.com administrative expenditure and made a total disallowance of Rs. 4,22,72.425/ Act, for short) read with Rule BD of the Rules. The Tribunal, by the impugned Judgment, confirmed s Assessee has filed this Appeal. 4. At the outset, learned Counsel for the Appellant Assessee submitted that several High Courts have held that disallowance under Section 14A of the Act read with Rule BD of the Rules, exceed the exempt income earned by the Assessee during the relevant year. She submitted that if such disallowance, therefore, is restricted to Rs. 1,13,72,545/ the Assessee, the Assessee would accept the same. 5. Having heard the lea perused the documents on record, consistently different High Courts in the country have taken a view that the disallowance under Section 14A of the Act read with Rule 8D of the Rules cannot exceed the Assessee's exempt income. The Delhi Cheminvest Ltd. Vs. Commissioner of Income Tax 1, has held that when the Assessee has not earned any income which was exempt from tax, 'disallowance of the expenditure under Section Rules would not be permissible. 7.3 The Hon'ble Karnataka High Court, in the case of Pragati Krishna Gramin Bank Vs. Joint Commissioner of Income expenditure in relation to income not includable in the total income cannot exceed such income. \"14. We make it clear that the expenditure for earning exempted income has to have a reasonable proportion to the income, so earned, going by the common financial prudence. Therefore, even if the Assessing Authority has to make of such an expenditure incurred to earn exempted income, it has to have a rational nexus with the amount of income earned itself. Disallowance under Section 14A of Rs.2,48,85,000/ earn exempted Dividend income of Rs. 1,80,30,965 absurd and hypothetical. The disallowance under Section BD cannot exceed the expenses claimed by assessee under the Proviso to Rule 8D. Therefore, where the assessee claimed that assessee did incur any such expenditure during the year in q Dividends of Rs. 1.80.30.965/ Essel Mining & Industries Ltd. administrative expenditure and made a total disallowance of Rs. 4,22,72.425/- under Section 14A of the Income Tax Act, 1961 (the Act, for short) read with Rule BD of the Rules. The Tribunal, by the impugned Judgment, confirmed such disallowance upon which, the Assessee has filed this Appeal. 4. At the outset, learned Counsel for the Appellant Assessee submitted that several High Courts have held that disallowance under Section 14A of the Act read with Rule BD of the Rules, exceed the exempt income earned by the Assessee during the relevant year. She submitted that if such disallowance, therefore, is restricted to Rs. 1,13,72,545/- which is exempt income ea the Assessee, the Assessee would accept the same. aving heard the learned Counsel for the parties and having perused the documents on record, consistently different High Courts in the country have taken a view that the disallowance under Section 14A of the Act read with Rule 8D of the Rules cannot exceed the Assessee's exempt income. The Delhi High Court, in the case of invest Ltd. Vs. Commissioner of Income Tax 1, has held that when the Assessee has not earned any income which was exempt from tax, 'disallowance of the expenditure under Section Rules ould not be permissible. 7.3 The Hon'ble Karnataka High Court, in the case of Pragati Krishna Gramin Bank Vs. Joint Commissioner of Income-tax2, has held that expenditure in relation to income not includable in the total income cannot exceed such income. It was observed as under. \"14. We make it clear that the expenditure for earning exempted income has to have a reasonable proportion to the income, so earned, going by the common financial prudence. Therefore, even if the Assessing Authority has to make of such an expenditure incurred to earn exempted income, it has to have a rational nexus with the amount of income earned itself. Disallowance under Section 14A of Rs.2,48,85,000/ earn exempted Dividend income of Rs. 1,80,30,965 absurd and hypothetical. The disallowance under Section BD cannot exceed the expenses claimed by assessee under the Proviso to Rule 8D. Therefore, where the assessee claimed that assessee did incur any such expenditure during the year in q Dividends of Rs. 1.80.30.965/-, the burden was upon the assessing Essel Mining & Industries Ltd. 7 ITA No. 6996/MUM/2025 administrative expenditure and made a total disallowance of Rs. under Section 14A of the Income Tax Act, 1961 (the Act, for short) read with Rule BD of the Rules. The Tribunal, by the uch disallowance upon which, the 4. At the outset, learned Counsel for the Appellant Assessee submitted that several High Courts have held that disallowance under Section 14A of the Act read with Rule BD of the Rules, cannot exceed the exempt income earned by the Assessee during the relevant year. She submitted that if such disallowance, therefore, is which is exempt income earned by the Assessee, the Assessee would accept the same. ed Counsel for the parties and having perused the documents on record, consistently different High Courts in the country have taken a view that the disallowance under Section 14A of the Act read with Rule 8D of the Rules cannot exceed High Court, in the case of invest Ltd. Vs. Commissioner of Income Tax 1, has held that when the Assessee has not earned any income which was exempt from tax, 'disallowance of the expenditure under Section Rules 7.3 The Hon'ble Karnataka High Court, in the case of Pragati Krishna tax2, has held that expenditure in relation to income not includable in the total income cannot \"14. We make it clear that the expenditure for earning exempted income has to have a reasonable proportion to the income, so Therefore, even if the Assessing Authority has to make an estimate of such an expenditure incurred to earn exempted income, it has to have a rational nexus with the amount of income earned itself. Disallowance under Section 14A of Rs.2,48,85,000/- as expenses to earn exempted Dividend income of Rs. 1,80,30,965/- is per se absurd and hypothetical. The disallowance under Section BD cannot exceed the expenses claimed by assessee under the Proviso to Rule 8D. Therefore, where the assessee claimed that assessee did not incur any such expenditure during the year in question to earn , the burden was upon the assessing Printed from counselvise.com authority to compute the interest on such borrowed funds which were dedicatedly used for investment in securities to earn such exempled Dividend income. The disallowance unde cannot be wild guesswork bereft of ground realities. It has to have a reasonable and close nexus with the factually incurred expenses. It is not deemed disallowance under Section 14A of the act but an enabling provision for assessing authorit the given facts and figures in the regularly maintained Books of Accounts. The assessing authority also could not have called upon the Assessee himself to undertake the exercise of computing the disallowance under Section AD of the is not permissible in law. Since: no such exercise has been undertaken by the assessing authority, the case calls for a remand.\" 7.4 The Hon'ble Gujarat High Court, in the case of Commissioner of Income-tax-1 Vs. Cor under: \"4. Counsel for the Revenue submitted that enue submitted that the Assessing Officer as well as CIT (Appeals) had applied formula of rule 8D of the Income Tax Rules, since this case arose after the assessment year 2009 concerned with the assessment year 2009 correctly applied by the Revenue. We however, notice that sub section (1) of section 14A provides that for the purpose of computing total income under chapter IV of 3 [2015] 372 ITR 97 URS 4 of 7 5.3 ITXA 149-17 odt the Act, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. In the case, the tribunal has recorded the finding of fact that the assessee did not make any claim for exemption of any income from payment of tax. It was on this basis that the tribunal under section 14A of the Act could not be m tribunal relied on the decision of Division Bench of Punjab and Haryana High Court in case of CIT v Winsome Textile Industries Ltd. [2009] 319 ITR 204 in which also the Court had observed as under: \"7. We do not find any merit in this submission. The judgement of this court in Abhishek Industries Ltd. (2006) 286 ITR 1 was on the issue of allowability of interest paid on loans given to sister concerns, without interest. It was held that deduction for was permissible when loan was taken for business purpose and not for diverting the same to sister concern without having nexus with Essel Mining & Industries Ltd. authority to compute the interest on such borrowed funds which were dedicatedly used for investment in securities to earn such exempled Dividend income. The disallowance unde cannot be wild guesswork bereft of ground realities. It has to have a reasonable and close nexus with the factually incurred expenses. It is not deemed disallowance under Section 14A of the act but an enabling provision for assessing authority to compute the same on the given facts and figures in the regularly maintained Books of Accounts. The assessing authority also could not have called upon the Assessee himself to undertake the exercise of computing the disallowance under Section AD of the Rules. Such abdication of duty is not permissible in law. Since: no such exercise has been undertaken by the assessing authority, the case calls for a remand.\" 7.4 The Hon'ble Gujarat High Court, in the case of Commissioner of 1 Vs. Corrtech Energy (P.) Ltd. 3, has held and observed as \"4. Counsel for the Revenue submitted that enue submitted that the Assessing Officer as well as CIT (Appeals) had applied formula of rule 8D of the Income Tax Rules, since this case arose after the ment year 2009-2010. Since in the present case, we are concerned with the assessment year 2009-2010, such formula was correctly applied by the Revenue. We however, notice that sub section (1) of section 14A provides that for the purpose of computing income under chapter IV of 3 [2015] 372 ITR 97 URS 4 of 7 5.3 17 odt the Act, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. In the case, the tribunal has recorded the finding of fact that the assessee did not make any claim for exemption of any income from payment of tax. It was on this basis that the tribunal held that disallowance under section 14A of the Act could not be made. In the process tribunal relied on the decision of Division Bench of Punjab and Haryana High Court in case of CIT v Winsome Textile Industries Ltd. [2009] 319 ITR 204 in which also the Court had observed as under: \"7. We do not find any merit in this submission. The judgement of this court in Abhishek Industries Ltd. (2006) 286 ITR 1 was on the issue of allowability of interest paid on loans given to sister concerns, without interest. It was held that deduction for was permissible when loan was taken for business purpose and not for diverting the same to sister concern without having nexus with Essel Mining & Industries Ltd. 8 ITA No. 6996/MUM/2025 authority to compute the interest on such borrowed funds which were dedicatedly used for investment in securities to earn such exempled Dividend income. The disallowance under Section 14A cannot be wild guesswork bereft of ground realities. It has to have a reasonable and close nexus with the factually incurred expenses. It is not deemed disallowance under Section 14A of the act but an y to compute the same on the given facts and figures in the regularly maintained Books of Accounts. The assessing authority also could not have called upon the Assessee himself to undertake the exercise of computing the Rules. Such abdication of duty is not permissible in law. Since: no such exercise has been undertaken by the assessing authority, the case calls for a remand.\" 7.4 The Hon'ble Gujarat High Court, in the case of Commissioner of nergy (P.) Ltd. 3, has held and observed as \"4. Counsel for the Revenue submitted that enue submitted that the Assessing Officer as well as CIT (Appeals) had applied formula of rule 8D of the Income Tax Rules, since this case arose after the 2010. Since in the present case, we are 2010, such formula was correctly applied by the Revenue. We however, notice that sub- section (1) of section 14A provides that for the purpose of computing income under chapter IV of 3 [2015] 372 ITR 97 URS 4 of 7 5.3- 17 odt the Act, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. In the present case, the tribunal has recorded the finding of fact that the assessee did not make any claim for exemption of any income from payment eld that disallowance ade. In the process tribunal relied on the decision of Division Bench of Punjab and Haryana High Court in case of CIT v Winsome Textile Industries Ltd. [2009] 319 ITR 204 in which also the Court had observed as under: \"7. We do not find any merit in this submission. The judgement of this court in Abhishek Industries Ltd. (2006) 286 ITR 1 was on the issue of allowability of interest paid on loans given to sister concerns, without interest. It was held that deduction for interest was permissible when loan was taken for business purpose and not for diverting the same to sister concern without having nexus with Printed from counselvise.com the business. The observations made therein have to be read in that context. In the present case, admittedly the as any claim for exemption. In such a situation section 14A could have no application. 5. We do not find any question of law arising. Appeal is therefore dismissed.\" 7.5 The Hon'ble Bombay High Court, in a decision dated 4th February, 2019, in the case of The Pr. Commissioner of Income Tax Invest Direct (India) Ltd. had observed as under. \"4. Having heard learned Counsel for the parties and perused documents on record, we notice that in Cheminvest Ltd. (supra) Delhi High Court had referred to and relied upon its earlier decision in the case of CIT Vs. Holcim India (P) Ltd. (I.T.A. No.486 of 2014, decided on 5 th September 2014). we further notice that this Court in Income Tax Appeal No.693 of 2015 by an order dated 21 st Novem while dismissing the Revenue's appeal on similar issue had noted that the decision of Delhi High Court in case of Holcim India )P) Ltd. (supra) had adopted the same principles. In the present case, Counsel for the Revenue however, points out that where the assessee had eamed no income which was exempt from tax. However, in our opinion, the ratio of the above noted decisions in the cases of Cheminvest Ltd. and Holcim India (P) Ltd. (supra) would include a facet where the assessee is not NIL but has earned exempt income which is larger than the expenditure incurred by the assessee in order to earn such income. In such a situation that disallowance cannot exceed the exempt income so earned by the assessee du consideration. We do not find any error in the view of the Tribunal. We record that the assessee had offered voluntary the Tribunal. record that the assessee had offered voluntary expenditure of Rs.1.30 crores, which Tribunal. 5. The tax appeal is dismissed.\" 7.6 The Hon'ble Punjab & Patiala, 393 ITR 476) held that disallowance under section 14A cannot exceed exempt income, a view also supported by the Hon'ble Delhi High Court (Cheminvest Limited vs. CIT, 378 ITR 33). The appellant refers to the ITAT Mumbai's decision in its own case for AY 2015 Essel Mining & Industries Ltd. the business. The observations made therein have to be read in that context. In the present case, admittedly the assessee did not make for exemption. In such a situation section 14A could have no application. 5. We do not find any question of law arising. Appeal is therefore 7.5 The Hon'ble Bombay High Court, in a decision dated 4th February, 19, in the case of The Pr. Commissioner of Income Tax Invest Direct (India) Ltd. had observed as under. \"4. Having heard learned Counsel for the parties and perused documents on record, we notice that in Cheminvest Ltd. (supra) Delhi t had referred to and relied upon its earlier decision in the case of CIT Vs. Holcim India (P) Ltd. (I.T.A. No.486 of 2014, decided on 5 th September 2014). we further notice that this Court in Income Tax Appeal No.693 of 2015 by an order dated 21 st Novem while dismissing the Revenue's appeal on similar issue had noted that the decision of Delhi High Court in case of Holcim India )P) Ltd. (supra) had adopted the same principles. In the present case, Counsel for the Revenue however, points out that where the assessee had eamed no income which was exempt from tax. However, in our opinion, the ratio of the above noted decisions in the cases of Cheminvest Ltd. and Holcim India (P) Ltd. (supra) would include a facet where the assessee's income exempt from tax is not NIL but has earned exempt income which is larger than the expenditure incurred by the assessee in order to earn such income. In such a situation that disallowance cannot exceed the exempt income so earned by the assessee during the year under consideration. We do not find any error in the view of the Tribunal. We record that the assessee had offered voluntary the Tribunal. record that the assessee had offered voluntary expenditure of Rs.1.30 crores, which is not been disturbed by 5. The tax appeal is dismissed.\" 7.6 The Hon'ble Punjab & Haryana High Court (CIT vs. State Bank of Patiala, 393 ITR 476) held that disallowance under section 14A cannot exceed exempt income, a view also supported by the Hon'ble Delhi High Court (Cheminvest Limited vs. CIT, 378 ITR 33). The appellant refers to he ITAT Mumbai's decision in its own case for AY 2015 Essel Mining & Industries Ltd. 9 ITA No. 6996/MUM/2025 the business. The observations made therein have to be read in that sessee did not make for exemption. In such a situation section 14A could have 5. We do not find any question of law arising. Appeal is therefore 7.5 The Hon'ble Bombay High Court, in a decision dated 4th February, 19, in the case of The Pr. Commissioner of Income Tax-10 Vs. HSBC \"4. Having heard learned Counsel for the parties and perused documents on record, we notice that in Cheminvest Ltd. (supra) Delhi t had referred to and relied upon its earlier decision in the case of CIT Vs. Holcim India (P) Ltd. (I.T.A. No.486 of 2014, decided on 5 th September 2014). we further notice that this Court in Income Tax Appeal No.693 of 2015 by an order dated 21 st November, 2017 while dismissing the Revenue's appeal on similar issue had noted that the decision of Delhi High Court in case of Holcim India )P) Ltd. (supra) had adopted the same principles. In the present case, Counsel for the Revenue however, points out that this is not a case where the assessee had eamed no income which was exempt from tax. However, in our opinion, the ratio of the above noted decisions in the cases of Cheminvest Ltd. and Holcim India (P) Ltd. (supra) 's income exempt from tax is not NIL but has earned exempt income which is larger than the expenditure incurred by the assessee in order to earn such income. In such a situation that disallowance cannot exceed the exempt ring the year under consideration. We do not find any error in the view of the Tribunal. We record that the assessee had offered voluntary the Tribunal. We record that the assessee had offered voluntary disallowance of is not been disturbed by the Haryana High Court (CIT vs. State Bank of Patiala, 393 ITR 476) held that disallowance under section 14A cannot exceed exempt income, a view also supported by the Hon'ble Delhi High Court (Cheminvest Limited vs. CIT, 378 ITR 33). The appellant refers to he ITAT Mumbai's decision in its own case for AY 2015-16 (ITA No. Printed from counselvise.com 705/Mum/2021, dated 27/06/2022), confirming that disallowance under section 14A should not surpass dividend income received. The relevant excerpt follows: \"9. As discussed in the preceding assessee company has earned exempt dividend income of Rs. 9,94,784/- during the year under assessment and has offered suo moto disallowance of Rs. 17,67,345/ being part of the salary of three employee expenses, deletion of addition of Rs. 35,88,82,480/ CIT(A) does not require any interference by the Tribunal. Moreover, it is settled consideration. So we find no scope to interfere in the impugned order passed by cannot e the assessee du 7.7 Based on legal precedent and the Hon'ble jurisdictional Tribunal's earlier decision for AY 2015 is restricted to the exempt incom Accordingly, disallowance u/s 14A r.w.r. 8D is restricted to Rs. 2,14,325/-. The grounds of appeal are Allowed. 4. Before us learned counsel for the assessee filed a containing page no. 1 5. We have considered the rival submission of parties and perused the relevant material on record. the legal precedents disallowance to the extent of exempted income earned, w find any infirmity in the order of the Ld. CIT(A) on the issue and dispute and accordingly 6. As far as the deletion of the addition o concerned, before us the ld. counsel for the assessee relied on decision of the Special B Essel Mining & Industries Ltd. 705/Mum/2021, dated 27/06/2022), confirming that disallowance under section 14A should not surpass dividend income received. The relevant excerpt follows: \"9. As discussed in the preceding paragraphs when admittedly assessee company has earned exempt dividend income of Rs. during the year under assessment and has offered suo moto disallowance of Rs. 17,67,345/-under section 14A of the Act being part of the salary of three employees and other overhead expenses, deletion of addition of Rs. 35,88,82,480/ CIT(A) does not require any interference by the Tribunal. Moreover, it is settled consideration. So we find no scope to interfere in the impugned order passed by cannot exceed the dividend earned by the assessee during the year under Id. CIT(A).” 7.7 Based on legal precedent and the Hon'ble jurisdictional Tribunal's earlier decision for AY 2015-16, in the assessee's own case, disallowance is restricted to the exempt income claimed i.e. Rs. 2,14,325/ Accordingly, disallowance u/s 14A r.w.r. 8D is restricted to Rs. . The grounds of appeal are Allowed.” Before us learned counsel for the assessee filed a containing page no. 1-98. We have considered the rival submission of parties and perused the relevant material on record. Since, Ld. CIT(A) s on the issue on dispute, has restricted the extent of exempted income earned, w find any infirmity in the order of the Ld. CIT(A) on the issue and dispute and accordingly, we uphold the same. As far as the deletion of the addition of the book profit is efore us the ld. counsel for the assessee relied on the Special Bench of ITAT in the case of ACIT Essel Mining & Industries Ltd. 10 ITA No. 6996/MUM/2025 705/Mum/2021, dated 27/06/2022), confirming that disallowance under section 14A should not surpass dividend income received. The paragraphs when admittedly assessee company has earned exempt dividend income of Rs. during the year under assessment and has offered suo- under section 14A of the Act s and other overhead expenses, deletion of addition of Rs. 35,88,82,480/- made by Id. CIT(A) does not require any interference by the Tribunal. Moreover, it is settled consideration. So we find no scope to interfere in the xceed the dividend earned by 7.7 Based on legal precedent and the Hon'ble jurisdictional Tribunal's 16, in the assessee's own case, disallowance e claimed i.e. Rs. 2,14,325/-. Accordingly, disallowance u/s 14A r.w.r. 8D is restricted to Rs. Before us learned counsel for the assessee filed a paper book We have considered the rival submission of parties and Since, Ld. CIT(A), following has restricted the extent of exempted income earned, we do not find any infirmity in the order of the Ld. CIT(A) on the issue and f the book profit is efore us the ld. counsel for the assessee relied on the ACIT V/s. Vireet Printed from counselvise.com Investment (P.) Ltd. 82 reproduced as under: “9. I have considered the facts of the case and submissions of the appellant. Any adjustments to determine th Act can be done strictly in accordance with Explanation 1 to the said section. The Hon'ble Special Bench of ITAT, Delhi in the case of Vireet Investment (P.) Ltd. (82 taxmann.com 415), held that computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to computation as contemplated under section 14A read with Rule 8D. Relevant extract of the said decision is reproduced hereunder; \"the computation under clause (f) of Explanation 1 to se be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income judgement has been quoted by the Hon’ble Mumbai Tribunal in the case of Bombay Oxygen Invest held that question of increasing book profit on account of disallowance under section 14A of the Act read with Rule 8D will not arise. Following the decision of Special Bench of Hon’ble Delhi Tribunal and jur Tribunal, it is held that the AO is not justified in adding disallowance computed u/s 14A to the book profits. The ground of appeal is allowed 6. 1 Accordingly, the findings of the Ld. CIT(A) in respect of the deletion of the addition grounds related to the addition to the book profit are accordingly deleted 7. In the result, the Order pronounced in the open Court on Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 23/03/2026 Disha Raut, Stenographer Essel Mining & Industries Ltd. 82 taxmann.com 415, relevant part of which reproduced as under: 9. I have considered the facts of the case and submissions of the appellant. Any adjustments to determine the book profit u/s 115JB of the Act can be done strictly in accordance with Explanation 1 to the said section. The Hon'ble Special Bench of ITAT, Delhi in the case of Vireet Investment (P.) Ltd. (82 taxmann.com 415), held that computation under f Explanation 1 to section 115JB(2), is to be made without resorting to computation as contemplated under section 14A read with Rule 8D. Relevant extract of the said decision is reproduced hereunder; \"the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962\" 9.2 The said judgement has been quoted by the Hon’ble Mumbai Tribunal in the case of Bombay Oxygen Investments Ltd. vs. CIT in ITA no. 4406/Mum/2024 and held that question of increasing book profit on account of disallowance under section 14A of the Act read with Rule 8D will not arise. Following the decision of Special Bench of Hon’ble Delhi Tribunal and jur Tribunal, it is held that the AO is not justified in adding disallowance computed u/s 14A to the book profits. The ground of appeal is allowed the findings of the Ld. CIT(A) in respect of the addition to book profit is accordingly upheld. grounds related to the addition to the book profit are accordingly the appeal of the Revenue is dismissed Order pronounced in the open Court on 23/0 Sd/ SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Essel Mining & Industries Ltd. 11 ITA No. 6996/MUM/2025 , relevant part of which is 9. I have considered the facts of the case and submissions of the e book profit u/s 115JB of the Act can be done strictly in accordance with Explanation 1 to the said section. The Hon'ble Special Bench of ITAT, Delhi in the case of Vireet Investment (P.) Ltd. (82 taxmann.com 415), held that computation under f Explanation 1 to section 115JB(2), is to be made without resorting to computation as contemplated under section 14A read with Rule 8D. Relevant extract of the said decision is reproduced hereunder; ction 115JB(2), is to be made without resorting to the computation as contemplated under tax Rules, 1962\" 9.2 The said judgement has been quoted by the Hon’ble Mumbai Tribunal in the case of ments Ltd. vs. CIT in ITA no. 4406/Mum/2024 and held that question of increasing book profit on account of disallowance under section 14A of the Act read with Rule 8D will not arise. Following the decision of Special Bench of Hon’ble Delhi Tribunal and jurisdictional Tribunal, it is held that the AO is not justified in adding disallowance computed u/s 14A to the book profits. The ground of appeal is allowed.” the findings of the Ld. CIT(A) in respect of the accordingly upheld. The grounds related to the addition to the book profit are accordingly dismissed. /03/2026. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Printed from counselvise.com Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Essel Mining & Industries Ltd. Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Essel Mining & Industries Ltd. 12 ITA No. 6996/MUM/2025 BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "