2025:BHC-OS:24380-DB

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

INCOME TAX APPEAL NO. 3292 OF 2018

The Pr. Commissioner of Income Tax-6,

Aayakar Bhawan, M.K. Road,

Mumbai – 400 020 … Appellant

V/s.

Essel Corporate Resources Pvt. Ltd.,

18^th Floor, A Wing, Marathon Futurex,

N.M. Joshi Marg, Lower Parel,

Mumbai – 400 013 … Respondent

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Mr. Akhileshwar Sharma for the Appellant - Revenue Mr. Jay Nilesh Bhansali for the Respondent - Assessee

_______________________________________

CORAM : R.I. CHAGLA AND

FARHAN P. DUBASH, JJ.

RESERVED ON : 04^TH DECEMBER 2025

PRONOUNCED ON : 11^TH DECEMBER 2025

ORDER (Per Farhan P. Dubash, J.) :

1. This is an Income Tax Appeal filed under Section 260-A of the Income Tax Act, 1961 (the Act) by the Appellant – Revenue impugning the order dated 16^th June 2017 (impugned order) passed by the Income Tax Appellate Tribunal (Tribunal) in Cross Appeals filed against the order of the Pr. Commissioner of Income Tax (A)-12, Mumbai (PCIT) dated 10^th February 2017 exercising powers under Section 263 of the Act with Appeal No.

1835/MUM/2017 filed by the Assessee and Appeal No. 3364/MUM/2017 filed by the Revenue. By the impugned order, the Assessee’s Appeal was partly allowed for statistical purposes whilst the Revenue’s Appeal was dismissed.

2. In the cross appeals before the Tribunal, the Assessee had raised two grounds of appeal whilst the Revenue had raised three grounds. Insofar as the present Income Tax Appeal is concerned, the same only deals with the third ground raised by the Revenue which relates to deleting the disallowance by the PCIT of Rs.2,09,73,983/- under Section 14A of the Act r/w. Rule 8D of the Income Tax Rules (Rules). The impugned order rejects the ground raised by the Revenue and has upheld the order passed by the PCIT, by holding that the Assessing Officer/Income Tax Officer (ITO) had not recorded any dissatisfaction whilst disagreeing with the Assessee in respect of the expenditure incurred by it, relating to the income forming part of the total income, as required under Section 14A(2) of the Act, before rejecting the claim of the Assessee. In doing so, the Tribunal also relied on and followed the decision of the Supreme Court in Godrej Boyce Mfg. Co. Ltd.

which had confirmed the order of this Court reported in 328 ITR 81.

3. Prior thereto, in exercise of the power under Section 263 of the Act, the PCIT had considered and recorded his findings on four grounds of appeal that were raised before him from the Assessment Order dated 30^th March 2016 (AO) passed under Section 143(3) of the Act. As already stated above, for the purposes of the present Income Tax Appeal, we are called upon to consider ground no. 3 raised in the said appeal which related to the disallowance of Rs.2,09,73,983/- by the ITO under Section 14A of the Act r/w. Rule 8D of the Rules. After considering the arguments of both parties, the PCIT recorded a finding in favour of the Assessee and allowed the said ground of appeal no. 3. The reasons for allowing this ground of appeal found favour with the Tribunal as can be seen from the impugned order. Accordingly, by the said order dated 10^th February 2017, the PCIT had partly allowed the Appeal filed by the Assessee.

4. Mr. Ashileshwar Sharma, learned Counsel for the Appellant – Revenue relied on the impugned order and submitted that the same is bad in law and liable to be quashed and set aside. He invited our attention to the following substantial question of law that is proposed in paragraph 4 of the present Income Tax Appeal viz. :

“A. Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT was justified in deleting disallowance made under Section 14A r/w. Rule 8D stating that the AO has not recorded any satisfaction when AO has recorded his satisfaction in the order and has discussed the issue and then applied Rule 8D ?”

5. Per contra, Mr. Jay Bhansali, learned Counsel for the Respondent – Assessee s