KRISHNAPRABHU INFRATRANS PRIVATE LIMITED,LUCKNOW V. DCIT CENTRAL CIRCLE (1), MUMBAI, MUMBAI

CO 87/MUM/2025

AI Insights

The case involves an appeal by the revenue against the decision of the CIT(A) which had deleted the disallowance made under section 14A r.w.r 8D of the Income Tax Act, 1961. The disallowance was initially made by the Assessing Officer (AO) based on the presumption that the investments made by the assessee could yield exempt income. However, the CIT(A) found that no exempt income was actually earned by the assessee during the relevant assessment year, leading to the deletion of the disallowance. The Tribunal upheld the CIT(A)'s decision, referencing judicial precedents and the fact that the amendment to section 14A applicable from A.Y 2021-22 is prospective.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714556 (ITAT-MUMBAI)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2021-2022
• Other Referred Cases: Chem Investment Ltd Vs. ITO, PCIT Vs. Keti Constructions Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: MAHENDRA KUMAR
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH MUMBAI BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & HON’BLE SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No. 1856/Mum/2025 (Assessment Year: 2021-22) DCIT, Central Circle (1) Kautilya Bhavan, BKC, Mumbai – 400051. Vs. Krishnaprabhu Infratrans Pvt Ltd., B-9, Vibhuti Khand, Gomtinagar, Lucknow, UP – 226010. PAN/GIR No. AAHCK8608E (Applicant) (Respondent) CO. No. 87/Mum/2025 (Assessment Year: 2021-22) Krishnaprabhu Infratrans Pvt Ltd., B-9, Vibhuti Khand, Gomtinagar, Lucknow, UP – 226010. Vs. DCIT, Central Circle - 5(1) Kautilya Bhavan, BKC, Mumbai – 400051. PAN/GIR No. AAHCK8608E Assessee by Shri Mahendra Kumar, CA Revenue by Shri Hemanshu Joshi, Sr. DR Date of Hearing 15.05.2025 Date of Pronouncement 04.08.2025 आदेश / ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the revenue and CO has been filed by the assessee challenging the Printed from counselvise.com 2 ITA No. 1856/Mum/2025 & CO. No. 87/Mum/2025 impugned order dt. 18.01.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi / CIT(A), for the A.Y 2021-22. First of all we take up revenue appeal in ITA No. 1856/Mum/2025. ITA No. 1856/Mum/2025, A.Y 2021-22 2. Both the grounds raised by the revenue are interrelated and interconnected and relates to challenging the order of Ld. CIT(A) in deleting the disallowance made u/s 14A of the Act. Therefore we have decided to take all the grounds together and to adjudicate the same through the present consolidated order. 3. As per the facts of the case, in the balance sheet, it was noticed that assessee had made investments in books account, which has closing value of Rs. 3758.50 lakhs for the year ended 31.03.2021, further as per the balance sheet it was noticed that reserve and surplus is of Rs. 178.59 lakhs and borrowings is of Rs. 4395.00 lakhs and also the assessee has claimed finance cost of Rs. 441.20 lakhs. 4. Since as per AO there was investment in the books of account and the balance sheet reflects reserves and surplus and also borrowings. Therefore presuming that investment can yield exempt income and hence considering the circular No. 5 of 2014 issued by CBDT and also relying Printed from counselvise.com 3 ITA No. 1856/Mum/2025 & CO. No. 87/Mum/2025 upon the decision of ITAT in the case of Chem Investment Ltd Vs.ITO, 314 ITR 86, made disallowance u/s 14A r.w.r 8D of the Act. 5. However, Ld. CIT(A) deleted the disallowance, the operative portion of its order is at para 7.3 is as under: 7.3. In view of the facts of the case and judicial precedence, since no exempt income has been earned by the assessee, provisions of section 14A r.w.r 8D does not apply in the case of assessee. Therefore, the disallowance of Rs. 4,47,80,000/- made by the AO u/s. 14A r.w.r 8D is deleted. Accordingly, grounds of appeal are Allowed. 6. We are of the view that the order relied upon by AO of ITAT in the case of Chem Investment Ltd (supra) was reversed by Hon’ble Delhi High Court and since there was admittedly ‘no exempt income’ earned by assessee during the year under consideration and also the fact that the amendment in Sec. 14A of the Act itself is applicable prospectively from the A.Y 1.04.2022 as held by Hon’ble Madhya Pradesh High Court in the case of PCIT Vs. Keti Constructions Ltd, [2024] 162 taxman.com 278 (MP). 7. Even no new facts, circumstances or documents have been placed before us during the course of proceedings in orders to controvert or rebut the lawful findings so recorded by Ld. CIT(A). Therefore we find no reasons to interfere into or to deviate from the well reasoned finding Printed from counselvise.com 4 ITA No. 1856/Mum/2025 & CO. No. 87/Mum/2025 recorded by Ld.CIT(A). Thus we dismiss the grounds raised by the revenue. 8. In the result appeal filed by the revenue stands dismissed. CO No. 87/Mum/2025, A.Y 2021-22. 9. Since we have dismissed the appeal filed by the revenue and upheld the order of Ld. CIT(A), thereby deleting the additions. Therefore the CO filed by the assessee has not been adjudicated as the same become academic. 10. In the result the appeal filed by the revenue and assessee are stands dismissed Order pronounced in the open court on 04.08.2025. Sd/- Sd/- (PRABHASH SHANKAR) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 04/08/2025 KRK, Sr. PS Printed from counselvise.com 5 ITA No. 1856/Mum/2025 & CO. No. 87/Mum/2025 आदेश की \bितिलिप अ\u000eेिषत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. \u000eथ / The Respondent. 3. संबंिधत आयकर आयु\u0019 / The CIT(A) 4. आयकर आयु\u0019(अपील) / Concerned CIT 5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, मु\u0003बई / DR, ITAT, Mumbai 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, स\u000eािपत ित //True Copy// 1. उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु\u0003बई मु\u0003बई मु\u0003बई मु\u0003बई / ITAT, Mumbai Printed from counselvise.com "