Chennai Metro Rail Limited Vs DCIT (ITAT Chennai)
The appeal was filed before the Income Tax Appellate Tribunal, Chennai, against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 26.06.2025 for Assessment Year 2018-19. The Tribunal first addressed a delay of 100 days in filing the appeal. After considering the reasons provided by the assessee, the Tribunal found the explanation satisfactory, condoned the delay, and admitted the appeal for adjudication.
The assessee is a government company and a Special Purpose Vehicle jointly owned by the Government of India and the Government of Tamil Nadu with equal shareholding, established for implementing the Chennai Metro Rail Project. For Assessment Year 2018-19, the assessee filed its return of income on 30.10.2018 declaring a loss of ₹791,60,31,085 and claiming a refund of ₹8,39,53,709. The return was processed under Section 143(1) and an intimation dated 12.05.2020 resulted in a refund of ₹9,21,25,241 including interest under Section 244A.
Subsequently, assessment proceedings were initiated through notice under Section 143(2) dated 22.09.2019 under the e-assessment mechanism. Notices under Section 142(1) along with questionnaires were issued and responses were submitted by the assessee. During the assessment proceedings, the Assessing Officer proposed certain adjustments. One such adjustment related to disallowance of gratuity amounting to ₹37,58,066 under Section 40A(7). The Assessing Officer observed that the gratuity amount was reported in the Tax Audit Report in Form 3CD but had not been disallowed in the income tax return. The assessee submitted that the amount had already been disallowed under Section 43B in the return and therefore the proposed adjustment would result in double disallowance of the same amount.
