Tax amendments are generally prospective, applying from the first day of the relevant assessment year. Additionally, for bad debt deductions, debiting the profit and loss account while simultaneously reducing the debtor's balance in the balance sheet constitutes an 'actual write-off' rather than a mere provision.

O R D E R

PER R.K. PANDA, VP:

The above 2 appeals filed by the assessee are directed against the separate orders dated 27.03.2025 of the Ld. CIT(A) / NFAC, Delhi relating to assessment years 2016-17 and 2017-18 respectively. Since identical grounds have been raised by the assessee in both the appeals, therefore, for the sake of convenience, these were heard together and are being disposed of by this common order.

ITA No.1387/PUN/2025 ( A.Y. 2016-17):

2. Grounds raised by the assessee are as under:

1. The learned CIT(A) erred in confirming disallowance of INR 68,28,934 in respect of expenses incurred in relation to exempt income under section 14A of the Act by invoking rule 8D income-tax Rules 1962 (the Rules). In doing so, the learned CIT(A):

a. failed to objectively examine the Appellant’s claim that there was no nexus between general or administrative expenses incurred and the exempt income earned by the Appellant.

b. erred in concluding that the learned AO had objectively recorded his dissatisfaction about the amount of disallowance under section 14A of the Act, suo motu offered by the Appellant in its return of Income.

c. erred in equating the working of disallowance under section 14A of the Act read with rule 8D of the Rules (submitted by the Appellant to the learned AO on "without prejudice” basis) with acceptance of applicability of rule 8D of the Rules by the Appellant.

d. erred in simply brushing aside the judicial precedents relied on by the Appellant as "of no relief to the Appellant", without any rationale for such an opinion.

2. The learned CIT(A) erred in confirming that the amount of disallowance under clause (1) of Explanation 1 to section 115JB(2) of the Act would be equal to the amount of disallowance under section 14A of the Act considered by the learned AO in the computation of income as per the normal provisions of the Act in the assessment order.

3. The learned CIT(A) erred in confirming disallowance of the weighted deduction of INR 1,21,500 claimed by the Appellant under section 35(2AB) of the Act, without appreciating that the Appellant was entitled to reagitate the claim, originally given up during the assessment proceedings under misapprehension of law, as held amongst others by the Hon'ble Supreme Court in Kamala Mills Ltd. v. State of Bombay Interveners KS. Venkataraman & Co (P.) Ltd. (57 ITR 643) and in its 65 report dated 23 March, 1978 by the Public Accounts Committee of the Ministry of Law

4. The appellant craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing shove grounds of appeal at or before the hearing of the appeal.

3. The Ld. Counsel for the assessee at the time of hearing did not press ground of appeal No.3 for which the Ld. DR has no objection. Hence, the said ground of appeal is dismissed as ‘not pressed’. Ground of appeal No.4 being general in nature, is dismissed.

4. In ground of appeal No.1 the assessee has challenged the order of the Ld. CIT(A) / NFAC in confirming the disallowance of Rs.68,28,934/- made by the Assessing Officer u/s 14A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) r.w.s. Rule 8D of the Income Tax Rules, 1962 (hereinafter referred to as ‘the Rules’).

5. Facts of the case, in brief, are that the assessee is a limited company in which public is substantially interested and is engaged in the business of manufacturing brake system aggregates primarily for passenger cars and multi passen