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

ITA 2880/MUM/2025

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The case involves the JSW Steel Employees Welfare Trust, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, confirming a disallowance of Rs. 10,00,000 made under Section 14A read with Rule 8D of the Income Tax Act for the Assessment Year 2018-19. The primary issue was whether the disallowance was justified when the assessee had not claimed any expenditure related to earning exempt income. The Tribunal examined the income and expenditure accounts of the assessee and found that the only exempt income claimed was under Section 10(34) read with Section 115BBDA, and no related expenditure was claimed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633533 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA P. KAUSHIK; DR
• Assessee Lawyers: RAKESH JOSHI; AR
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

" | आयकर अपीलीय अिधकरण ा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 2880/Mum/2025 Assessment Year: 2018-19 JSW Steel Employees Welfare Trust 5-A, Jindal Mansion Dr. G. Deshmukh Marg Mumbai - 400026 [PAN: AABTJ3861D] Vs The Deputy Commissioner of Income Tax अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Rakesh Joshi, A/R Revenue by : Ms. Kavita P. Kaushik, Sr. D/R सुनवाई की तारीख/Date of Hearing : 09/06/2025 घोषणा की तारीख /Date of Pronouncement: 11/06/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 04/03/2025 by NFAC, Delhi [hereinafter “the ld. CIT(A)”] pertaining to AY 2018-19. 2. The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in confirming the disallowance of Rs. 10,00,000/- made u/s 14A r.w.r. 8D. 3. Briefly stated the facts of the case are that the assessee filed its return of income on 31/07/2018 declaring total income of Rs. 3,17,44,860/-. The return was revised on 28/03/2019 declaring total income of Rs. 3,17,44,860/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. I.T.A. No. 2880/Mum/2025 2 4. During the course of scrutiny assessment proceedings, the AO noticed that the assessee has claimed exempt income from investments and furnished that the assessee has made suo moto disallowance and further claimed that it has not incurred any expenses for earning this exempt income. The AO was of the firm belief that provisions of Section 14A of the Act squarely apply with Rule 8D and went on to compute the disallowance at Rs.10,00,000/-. Surprisingly, the AO also computed the expenditure as per Rule 8D when the assessee has not incurred any expenditure. 4.1. Assessee carried the matter before the ld. CIT(A) but without any success. 5. Before us, the ld. Counsel for the assessee drew our attention to the computation of income and pointed out that the assessee has not claimed any exemption insofar as dividend is concerned and the only exempt income is the claim u/s 10(34) r.w.s. 115BBDA of the Act. Per contra, the ld. D/R strongly supported the findings of the AO. 6. We have carefully considered the orders of the authorities below. It would be pertinent to refer to the computation of total income which is as under:- ***This space has been left blank intentionally; P.T.O*** I.T.A. No. 2880/Mum/2025 3 I.T.A. No. 2880/Mum/2025 4 I.T.A. No. 2880/Mum/2025 5 7. It can be seen from the above that the assessee has loss of Rs. 3,80,787/- which it did not set off from any other income. In fact, the dividend of Rs. 3,27,44,858/- is offered for taxation and only Rs.10,00,000/- has been claimed as exempt u/s 10(34) r.w.s. 115BBDA of the Act. The income and expenditure account of the assessee is as under:- I.T.A. No. 2880/Mum/2025 6 7.1. From the above, it can be seen that the assessee has not claimed any expenditure and the loss of Rs. 3,80,787/- has also been not set off and resultantly disallowed. 8. As no expenditure has been claimed by the assessee, we do not find any reason for disallowance of any expenditure u/s 14A r.w.r. 8D. We accordingly direct the AO to delete the impugned disallowance of Rs. 10,00,000/-. 9. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 11th June, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 11/06/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs आदेश की \u0014ितिलिप अ\u0019ेिषत /Copy of the Order forwarded to : 1. अपीलाथ\u001b / The Appellant 2. \u0014 थ\u001b / The Respondent 3. संबंिधत आयकर आयु! / Concerned Pr. CIT 4. आयकर आयु! ) अपील ( / The CIT(A)- 5. िवभागीय \u0014ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड% फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "