DCIT Vs NHPC Ltd (ITAT Delhi)
Delhi ITAT trims Revenue’s case, revamping only the 14A calculation
The disputes arose from CIT(A) orders that had set aside disallowances made by the AO for AY 2017‑18 & AY 2018‑19. The decision was pronounced on 29 Oct 2025.
80‑IA deduction – no interference
AO had denied a portion of the 80‑IA deduction claimed by NHPC. The Tribunal noted that it had already allowed similar claims in the company’s earlier assessment years. Citing its own decision in ITA No. 3650/Del/2015 for AY 2010‑11, the Bench dismissed this ground.
Section 14A disallowance – re‑worked
Large disallowances under s. 14A/Rule 8D were contested. NHPC argued that MAT under s. 115JB is a self‑contained code & that no actual expenditure was incurred. While recognising favourable precedents, the Tribunal held that the amended Rule 8D applies to these years. It sent the issue back to the AO to recompute the disallowance at 1 % of average investments that generated exempt income.
Leave encashment & amortization of land – Revenue fails
For AY 2017‑18 the AO added Rs 49.25 crore on account of leave encashment provision. NHPC relied on the Punjab & Haryana High Court’s decision in ITA No. 385/2009, which held that actuarial provisions for gratuity, leave encashment & post‑retirement medical benefits are not contingent liabilities. The Tribunal dismissed the Revenue’s ground. Disallowances for depreciation on land while computing MAT were also deleted, as identical additions had been rejected in earlier years.
