ACIT Vs Bajaj Resources Pvt. Ltd. (ITAT Agra)
In this case before the Income Tax Appellate Tribunal, the Revenue challenged the order of the Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre dated 30.12.2025 for Assessment Year 2017-18. The dispute related to deletion of disallowance made under Section 14A of the Income Tax Act read with Rule 8D(2) of the Income Tax Rules.
The assessee had filed its return of income on 27.11.2017 declaring income under normal provisions as well as under Section 115JB. During assessment proceedings, the Assessing Officer noticed that the assessee had earned dividend income of Rs. 76,32,40,625 and claimed exemption under Section 10(34) of the Act. No disallowance under Section 14A had been made by the assessee in its return of income.
The Assessing Officer applied the computation mechanism prescribed under Rule 8D(2) and made a disallowance of Rs. 4,72,29,284. The CIT(A) deleted the disallowance on the ground that the Assessing Officer had mechanically applied Rule 8D without recording objective dissatisfaction as required under Section 14A(2) of the Act. The CIT(A) also noted that no expenditure relatable to earning exempt dividend income had been specifically identified. Reliance was placed on the Tribunal’s decision in the assessee’s own case for Assessment Year 2014-15.
