Uflex Limited Vs DCIT (ITAT Delhi)
No Satisfaction, No 14A— Rule 8D Can’t Be Invoked Mechanically: Disallowance Under 115JB Also Fails-
Delhi ITAT ‘E’ Bench in Uflex Ltd vs DCIT, Central Circle-2, Noida (ITA No.5157/Del/2025, AY 2016-17, order dated 24-12-2025) allowed the assessee’s appeal and deleted disallowance of ₹23.38 lakh u/s 14A, holding that in the absence of mandatory satisfaction u/s 14A(2), no disallowance can be made either under normal provisions or while computing book profit u/s 115JB.
Assessee had earned exempt dividend income but claimed that no expenditure was incurred in relation thereto. AO nevertheless invoked Rule 8D(2)(iii) and made a disallowance of ₹23.38 lakh, which was partly sustained by CIT(A), including a corresponding MAT adjustment.
ITAT noted that in assessee’s own cases for AYs 2010-11 to 2014-15, identical disallowances were deleted on the ground that AO had failed to record dissatisfaction with the assessee’s claim, a jurisdictional pre-condition under section 14A(2). Despite this settled position, AO repeated the same error for AY 2016-17.
Tribunal further held that MAT computation u/s 115JB is a self-contained code, and disallowance computed u/s 14A under normal provisions cannot be imported into book-profit computation, following the Special Bench ruling in Vireet Investment (P) Ltd.
Accordingly, ITAT deleted the entire disallowance under normal provisions as well as the MAT addition, and allowed the assessee’s appeal in full.
Recording satisfaction u/s 14A(2) is non-negotiable. Without it, Rule 8D collapses, and no parallel MAT adjustment is permissible—a settled issue reaffirmed yet again by ITAT Delhi.
FULL TEXT OF THE ORDER OF ITAT DELHI
The appeal filed by the assessee is against order dated 12.08.2025 of Learned Commissioner of Income Tax-3, Noida (hereinafter referred to as “Ld. CIT(A)”) arising out of assessment order dated 27.12.2018 of the Learned Assessing Officer/Learned Assistant Commissioner of Income Tax (hereinafter referred to as “Ld. AO”) under Section 143(3) of the Income Tax Act, 1961 ((hereinafter referred to as “the Act”)) Act for assessment year 2016-17.
