ITA No.4866 & 4867/Mum/2026

Parties Involved

Facts Summary

M/s. JSW Cement Limited filed its return of income for Assessment Year 2021–22 on 08.03.2022, declaring nil income. The return was selected for scrutiny and, after issuance of statutory notices and consideration of the material and explanations furnished by the assessee, the assessment was completed under section 143(3) read with sections 144C(3) and 144B vide order dated 31.01.2024, determining the total income at ₹25,22,73,030. Thereafter, the learned Principal Commissioner of Income-tax issued show-cause notices dated 24.12.2024 and 08.10.2025 proposing revision of the assessment order, inter alia, on the ground that the deduction claimed towards ESOP expenditure was not allowable under section 37(1) and that the disallowance purportedly made under section 14A ought to have been considered while computing book profit under section 115JB. By a further notice dated 06.02.2026, the learned Principal Commissioner of Income-tax also raised the issue of loans of ₹80 crore and ₹15 crore received by the assessee from South West Mining Limited (“SWML”) and JSW Dharamtar Port Private Limited (“JDPPL”), respectively, and proposed to examine their taxability as deemed dividend under section 2(22)(e). The learned Principal Commissioner of Income-tax further questioned the corresponding interest expenditure of ₹1,47,28,767 and ₹7,46,801 paid on the said loans. The assessee furnished detailed replies explaining the nature and accounting treatment of the ESOP expenditure, the shareholding…

Legal Issues

• 1. On the facts and in the circumstances of the case and in law, the learned Principal Commissioner of Income-tax has erred in initiating proceedings under section 263 of the Income-tax Act, 1961, vide show-cause notice dated 24.12.2024 and in passing the impugned order without properly considering the facts and circumstances of the case.
• 2. On the facts and in the circumstances of the case and in law, the learned Principal Commissioner of Income-tax has erred in revising the assessment order passed under section 143(3) read with sections 144C(3) and 144B of the Act, even though the said assessment had been completed by the Assessing Officer after making adequate enquiries and due application of mind.
• 3. On the facts and in the circumstances of the case and in law, the learned Principal Commissioner of Income-tax has erred in holding that the assessment order passed under section 143(3) read with sections 144C(3) and 144B of the Act was erroneous and prejudicial to the interests of the Revenue, without appreciating the facts and circumstances of the case.
• 4. On the facts and in the circumstances of the case and in law, the learned Principal Commissioner of Income-tax has erred in directing the Assessing Officer to disallow staff-welfare expenditure of ₹44,97,00,000 incurred on account of ESOP under section 37(1) of the Act.
• 5. On the facts and in the circumstances of the case and in law, the learned Principal Commissioner of Income-tax has erred in directing the Assessing Officer to disallow branding-fee expenditure of ₹5,02,00,000 under section 37(1) of the Act.
• 6. On the facts and in the circumstances of the case and in law, the learned Principal Commissioner of Income-tax has erred in directing the Assessing Officer to add an amount of ₹4,53,38,476, disallowed under section 14A, while computing book profit under section 115JB, without appreciating that a disallowance computed under Rule 8D cannot be mechanically imported into the computation of book profit.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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