KU Power Projects Limited Vs ITO (ITAT Delhi)
Wrong Year, No Exempt Income: ITAT Delhi Deletes Section 68 & 14A Additions
The Delhi ITAT (SMC), in KU Power Projects Ltd. v. ITO (ITA No. 7096/Del/2025, AY 2017-18; order dated 24.12.2025), has allowed the Assessee’s appeal in full, deleting both the addition u/s 68 and the disallowance u/s 14A r.w. Rule 8D.
The AO had made an addition of ₹13.55 lakh u/s 68 by applying a 2% rate on an alleged investment of ₹6.77 crore, and also disallowed ₹28.79 lakh u/s 14A. The Tribunal found that the entire investment pertained to FY 2015-16 (AY 2016-17) and not to the year under appeal, i.e., AY 2017-18. Since the addition related to the wrong assessment year, it was held to be unsustainable and was deleted outright.
On the issue of section 14A, the ITAT noted that the Assessee had not earned any exempt income during the relevant previous year. Relying on the binding Delhi High Court rulings in Cheminvest Ltd. v. CIT and PCIT v. Era Infrastructure (I) Ltd., the Tribunal reiterated that no disallowance u/s 14A can be made in absence of exempt income, and that the Explanation inserted by the Finance Act, 2022 cannot be applied retrospectively.
Accordingly, both the additions were deleted and the Assessee’s appeal was allowed in entirety, granting complete relief.
FULL TEXT OF THE ORDER OF ITAT DELHI
This assessee’s appeal ITA no. 7096/Del/2025 for assessment year 2017-18 arises against CIT(A)/ NFAC, Delhi’s order dated 29.11.2023 (DIN & Order No. ITBA/NFAC/S/250/2023-24/1058317335(1), in proceedings u/s 144 of the Income-tax Act, 1961, hereinafter referred to as the ‘Act’.
