JSW Infrastructure Limited vs. Principal Commissioner of Income Tax Officer, Mumbai

Parties Involved

Facts Summary

The assessee, JSW Infrastructure Limited, filed its return of income for Assessment Year 2020-21 on 30.03.2021, declaring a total income of ₹55,40,14,300. The return was selected for scrutiny and, after issuance of statutory notices under sections 143(2) and 142(1) and consideration of the material and explanations furnished by the assessee, the assessment was completed under section 143(3) read with section 144B vide order dated 27.09.2023, determining the total income at ₹55,92,21,720. Thereafter, the learned Principal Commissioner of Income-tax issued a show-cause notice dated 24.12.2025 proposing to revise the assessment order on the ground that ESOP expenditure amounting to ₹7,27,74,000 claimed under section 37(1) represented a notional expenditure arising on account of issue of shares at a discount and was, therefore, not allowable. By a further notice dated 06.02.2026, the learned Principal Commissioner of Income-tax also raised an issue concerning a loan of ₹494 crore received by the assessee from JSW Techno Projects Management Limited (“JTPML”) and proposed to examine its taxability as deemed dividend under section 2(22)(e). The learned Principal Commissioner of Income-tax further questioned the allowability of interest paid on the said loan and, in the final order, also directed an adjustment of ₹4,53,38,476 while computing book profit under section 115JB on the premise that the said amount had been disallowed under section 14A.…

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 24.12.2025 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 section 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 section 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 modify the assessment order by disallowing staff-welfare expenditure of ₹7,27,74,000 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 modify the assessment order by making an addition of ₹494,00,00,000 as deemed dividend under section 2(22)(e) of the Act on account of the loan received from JSW Techno Projects Management Limited, by proceeding upon assumptions and presumptions and by incorrectly interpreting the provisions of section 2(22)(e).
• 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 disallow interest expenditure paid at the rate of 7% on the aforesaid loan received from JSW Techno Projects Management Limited.

Judgment Outcome

Decided in favour of Assessee.

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