Paradip Port Authority Vs DCIT (ITAT Cuttack)
The appeal was filed by the assessee, Paradip Port Authority, against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi dated October 13, 2025, for the Assessment Year (AY) 2023-24. The Income Tax Appellate Tribunal (ITAT) Cuttack Bench delivered its order on June 22, 2026, adjudicating multiple grounds raised by the assessee.
On the first issue concerning the disallowance under Section 14A of the Income-tax Act, 1961, read with Rule 8D, the Assessing Officer (AO) had made an addition of ₹4,76,36,626. The assessee argued that the AO had not recorded satisfaction and that disallowance should be restricted to investments that yielded exempt income during the year. The Tribunal held that the AO had duly recorded satisfaction in the assessment order. However, on the second aspect, the Tribunal accepted the assessee’s submission that disallowance under Section 14A read with Rule 8D must be calculated only on average investments that yielded exempt income during the year. Based on the details provided, the annual average of such investments (in Dredging Corporation of India Ltd. Bonds and Kamarajar Port Ltd. Bonds) was ₹28,75,00,000. Applying 1%, the Tribunal restricted the disallowance to ₹28,75,000 and set aside the CIT(A)’s confirmation of the full addition, partly allowing the ground.
