JSW Infrastructure Limited Vs PCIT (ITAT Mumbai)
Section 263 Revision Cannot Rest on a Deemed Dividend Addition That Cannot Be Made in the Borrower’s Hands
The Mumbai Bench of the Income Tax Appellate Tribunal quashed a revisionary order under section 263 concerning JSW Infrastructure Ltd. The Principal Commissioner of Income Tax (PCIT) had directed a fresh assessment on four matters: an employee stock option plan (ESOP) expense of ₹7.27 crore, a ₹494 crore loan from a group company, interest paid on that loan, and an alleged section 14A adjustment of ₹4.53 crore to book profit. The Tribunal held that none of these matters justified revision and restored the assessment order.
Background: Four Grounds for Revision
For assessment year 2020–21, JSW Infrastructure filed a return declaring income of ₹55.40 crore. The Assessing Officer completed scrutiny assessment on 27 September 2023, determining income at ₹55.92 crore.
The PCIT subsequently questioned the allowance of ₹7,27,74,000 claimed as ESOP expenditure under section 37(1). He also proposed to treat a ₹494 crore loan received from JSW Techno Projects Management Ltd. (JTPML) as deemed dividend under section 2(22)(e), and to disallow interest paid at 7% on that loan. His final order further directed an addition of ₹4,53,38,476 to book profit under section 115JB, on the premise that the Assessing Officer had disallowed that amount under section 14A.
