NLC India Limited vs. The Deputy Commissioner of Income Tax

Parties Involved

Facts Summary

NLC India Limited (NLCIL), a Central Government Public Sector Undertaking, engaged in mining of lignite and power generation, filed its return of income for Assessment Year 2018-19. The company earned dividend income of Rs. 19,47,35,738/- from NLC Tamilnadu Power Limited (NTPL) during FY 2017-18. The Assessing Officer issued a notice under section 143(2) of the Income Tax Act, 1961, and further notices under section 142(1) of the Act. A Draft Assessment Order was passed making several additions, including a disallowance under section 14A of the Act. The assessee appealed against the order, and the Commissioner of Income Tax (Appeals) partly upheld the disallowance. The assessee then filed an appeal before the Income Tax Appellate Tribunal.…

Legal Issues

• 1. Whether the disallowance under section 14A of the Act is permissible when the assessee has sufficient interest-free own funds?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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