ACIT Vs. Dalmia Cement Bharat Ltd. (ITAT Delhi)
14A, 115JB, 32(1)(iia) & Amalgamation—ITAT’s All-in-One Verdict- Big Relief on 14A & Depreciation, Partial Setback under MAT
In ACIT Vs. Dalmia Cement Bharat Ltd. & connected matters, ITA Nos.3157 & 3158/Chny/2017; ITA Nos.5416 & 5417/Del/2017; CO Nos.63 & 64/Chny/2018, AYs 2013-14 & 2014-15, order dated 31.12.2025, Delhi ITAT passed a comprehensive composite order partly allowing appeals of both sides & disposing of cross-objections.
On disallowance u/s 14A r.w. Rule 8D, Tribunal held that where interest-free own funds far exceeded investments, no disallowance of interest u/s 14A r.w. Rule 8D(2)(ii) could be made, relying on South Indian Bank Ltd. (SC). Consequently, ₹5.99 crore interest disallowance was deleted. However, Revenue’s plea on Rule 8D(2)(iii) failed for absence of objective satisfaction by AO, following Godrej & Boyce (SC).
On capital subsidy, Tribunal upheld CIT(A)’s finding that sales tax subsidy, power subsidy & fuel surcharge subsidy received under Andhra Pradesh Industrial Policy (Mega Project incentives) were capital receipts under normal provisions, applying purpose test of Ponni Sugars (SC). However, for MAT u/s 115JB, Tribunal held that such capital subsidies cannot be excluded from book profit, following Apollo Tyres (SC), thereby sustaining inclusion under MAT.
On additional depreciation u/s 32(1)(iia), Tribunal affirmed that claim is not restricted only to first year, approving allowance in subsequent years also, relying on Gloster Jute Mills (ITAT Kolkata) & rejecting Revenue’s “one-time benefit” argument.
On provision for bad & doubtful debts, Tribunal upheld deletion of disallowance both under normal provisions & MAT, holding that netting off from debtors amounts to actual write-off, in line with Vijaya Bank (SC) & Yokogawa India (Kar HC).
On carry forward & set-off of long-term capital loss of amalgamating company, Tribunal upheld CIT(A)’s view that LTCL of amalgamating company devolves on amalgamated company, relying on Capgemini Technology Services (ITAT Pune) & T. Veerabhadra Rao (SC).
Certain grounds of Assessee were not pressed, some Revenue grounds were dismissed, & cross-objections were held infructuous. Overall, appeals were partly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
