My client is a Category III Alternative Investment Fund. It filed its own return, overstated a section 14A disallowance by more than a crore, and the Assessing Officer and the Commissioner (Appeals) both refused to correct it, citing Goetze. Is a revised computation before the Assessing Officer really worthless?
No. The Mumbai Tribunal set aside the appellate order and restored the issue to the Assessing Officer, holding that Goetze (India) is confined to the powers of the Assessing Officer while the Bombay High Court in Pruthvi Brokers & Shareholders has held that the appellate authorities are competent to entertain a legitimate claim even if it was not made through a revised return. It did not decide the merits: because the nature and quantum of the exempt income, the applicability of section 115BBDA and the consequential section 14A disallowance all required verification from the assessment records, the matter went back with all contentions open. Note what the case also shows on the facts — a Category III AIF is assessed in its own name, on its own income, under the ordinary provisions; the section 115UB pass-through has nothing to do with it.
Decided by the ITAT (Shri Anikesh Banerjee (Judicial Member) and Shri Bijayananda Pruseth (Accountant Member), Income Tax Appellate Tribunal, Mumbai, Bench A) on 2026-08-06, reported as ITA No. 9151/MUM/2025, Assessment Year 2020-21 (ITAT Mumbai); date of conclusion of hearing 28 July 2026; order pronounced 6 August 2026. It bears on section 14A, section 10(34), section 115BBDA, section 154, section 143(1), section 143(3), section 144B, section 250, section 139(5), section Rule 8D of the Income Tax Act 1961, in Assessment & Scrutiny, Appeals and Capital Gains Exemptions matters.
Two things are worth taking from this order, and they are of different weight. The first is the point actually decided: where a taxpayer's own return contains a self-inflicted error — here a section 14A read with rule 8D disallowance of Rs.14,89,18,556 where the Tax Audit Report in Form 3CD, filed before the return, correctly reported Rs.10,00,000 — the fact that no further revised return was filed is not the end of the matter, because Goetze restricts the Assessing Officer and not the appellate authorities. That is a general proposition, not a fund-specific one, and it is the ground on which this appeal succeeded. The second is what the facts establish rather than what the order holds: this fund, described in its own submissions as a Category III Alternative Investment Fund registered under the SEBI (Alternative Investment Funds) Regulations, 2012 and set up to pool money on a private placement basis for investment through recognised stock exchanges in equity derivatives, options and futures, filed its own return declaring total income of Rs.19,01,65,190 with a business loss, claimed exemption under section 10(34) and paid at the special rate under section 115BBDA — that is, it was assessed as an entity in its own hands. A Category III AIF is outside section 115UB, which by clause (a) of Explanation 1 reaches only a fund registered as a Category I or Category II Alternative Investment Fund, and it is therefore outside section 10(23FBA), section 10(23FBB), section 194LBB and rule 12CB as well. A practitioner who assumes a pass-through for a Category III fund will get the identity of the assessee, the head of income and the withholding all wrong. The order does not decide that point — it simply proceeds on it — but it is the clearest recent illustration of the position on the record of a real assessment.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee, described in its submissions as a Category III Alternative Investment Fund registered under the SEBI (Alternative Investment Funds) Regulations, 2012 and set up to pool investors' money on a private placement basis for investment substantially through recognised stock exchanges in equity derivatives, options and futures, filed its return under section 139(1) on 13 February 2021 declaring total income of Rs.19,01,65,190, a business loss of Rs.77,74,44,048 and a refund claim of Rs.47,31,94,810, and filed a revised return under section 139(5) on 31 March 2021. It had earned dividend of Rs.19,11,65,190, of which only Rs.10,00,000 was claimed exempt under section 10(34) read with section 115BBDA. Its Form 3CD, uploaded on 21 December 2020, reported the section 14A disallowance at Rs.10,00,000 in clause 21(h). In both the original and the revised returns, however, the assessee disallowed Rs.14,89,18,556 under section 14A computed in accordance with rule 8D. On realising the discrepancy it filed a revised computation before the Assessing Officer on 24 December 2021 restricting the disallowance to Rs.10,00,000, leaving total income and the refund claim unchanged and altering only the business loss, to Rs.5,76,79,243. The Assessing Officer rejected the recomputation, treated Rs.19,01,65,190 as special income under section 115BBDA and computed tax accordingly, by order dated 27 September 2022 under section 143(3) read with section 144B. The Commissioner (Appeals), National Faceless Appeal Centre, dismissed the appeal by order dated 3 October 2025, relying on Goetze (India) v. CIT for the proposition that a new claim cannot be accepted otherwise than by a revised return. The assessee relied before the Tribunal on PCIT v. Tata Industries Ltd., Nirved Traders Pvt. Ltd. v. DCIT and CIT v. Prithvi Brokers and Shares Pvt. Ltd.
The appeal was allowed for statistical purposes. The Tribunal held that the appellate authorities are competent to entertain a legitimate claim even where it was not made through a revised return, the Supreme Court's decision in Goetze (India) Ltd. being confined to the powers of the Assessing Officer (para 6). It nevertheless declined to decide the claim, holding that the factual correctness of the assessee's claim — including the nature and quantum of the exempt income, the applicability of section 115BBDA and the consequential disallowance under section 14A — required proper verification from the assessment records and supporting documents. It set aside the impugned order on that issue and restored the matter to the Assessing Officer for the limited purpose of verifying the claim on the basis of the Form 3CD, the revised computation and other relevant records, directing a speaking order after a reasonable opportunity of hearing, expressing no opinion on the merits and keeping all contentions of both parties open (para 6). The appeal was accordingly allowed for statistical purposes (para 7).
The Tribunal took as an admitted position that the assessee, in filing both returns, had inadvertently treated the entire dividend income as exempt and had made the section 14A read with rule 8D disallowance on that footing, while the Form 3CD filed before the return reported the disallowance at Rs.10,00,000 corresponding to the exempt income claimed under section 10(34), and while a revised computation seeking correction had been furnished at the earliest opportunity during the assessment proceedings. Against those facts it set the two authorities relied on against each other: the jurisdictional High Court in Pruthvi Brokers & Shareholders holds the appellate authorities competent to entertain a legitimate claim not made through a revised return, whereas Goetze (India) is confined to the powers of the Assessing Officer. Having resolved the legal objection that way, the Tribunal declined to substitute its own view on the figures, holding that the nature and quantum of the exempt income, the applicability of section 115BBDA and the consequential section 14A disallowance were matters for verification against the record, and remitted them accordingly (para 6).
The Hon'ble Jurisdictional High Court in Pruthvi Brokers & Shareholders Pvt. Ltd. (supra) has held that the appellate authorities are competent to entertain a legitimate claim even if the same was not made through a revised return, whereas the decision of the Hon'ble Supreme Court in Goetze (India) Ltd. (supra) is confined to the powers of the Assessing Officer.
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Handle my notice → Ask a CA on WhatsAppNo. The Mumbai Tribunal set aside the appellate order and restored the issue to the Assessing Officer, holding that Goetze (India) is confined to the powers of the Assessing Officer while the Bombay High Court in Pruthvi Brokers & Shareholders has held that the appellate authorities are competent to entertain a legitimate claim even if it was not made through a revised return. It did not decide the merits: because the nature and quantum of the exempt income, the applicability of section 115BBDA and the consequential section 14A disallowance all required verification from the assessment records, the matter went back with all contentions open. Note what the case also shows on the facts — a Category III AIF is assessed in its own name, on its own income, under the ordinary provisions; the section 115UB pass-through has nothing to do with it. This was decided by the ITAT (Shri Anikesh Banerjee (Judicial Member) and Shri Bijayananda Pruseth (Accountant Member), Income Tax Appellate Tribunal, Mumbai, Bench A) and bears on section 14A, section 10(34), section 115BBDA, section 154, section 143(1), section 143(3), section 144B, section 250, section 139(5), section Rule 8D of the Income Tax Act 1961. It is reported as ITA No. 9151/MUM/2025, Assessment Year 2020-21 (ITAT Mumbai); date of conclusion of hearing 28 July 2026; order pronounced 6 August 2026. Two things are worth taking from this order, and they are of different weight. The first is the point actually decided: where a taxpayer's own return contains a self-inflicted error — here a section 14A read with rule 8D disallowance of Rs.14,89,18,556 where the Tax Audit Report in Form 3CD, filed before the return, correctly reported Rs.10,00,000 — the fact that no further revised return was filed is not the end of the matter, because Goetze restricts the Assessing Officer and not the appellate authorities. That is a general proposition, not a fund-specific one, and it is the ground on which this appeal succeeded. The second is what the facts establish rather than what the order holds: this fund, described in its own submissions as a Category III Alternative Investment Fund registered under the SEBI (Alternative Investment Funds) Regulations, 2012 and set up to pool money on a private placement basis for investment through recognised stock exchanges in equity derivatives, options and futures, filed its own return declaring total income of Rs.19,01,65,190 with a business loss, claimed exemption under section 10(34) and paid at the special rate under section 115BBDA — that is, it was assessed as an entity in its own hands. A Category III AIF is outside section 115UB, which by clause (a) of Explanation 1 reaches only a fund registered as a Category I or Category II Alternative Investment Fund, and it is therefore outside section 10(23FBA), section 10(23FBB), section 194LBB and rule 12CB as well. A practitioner who assumes a pass-through for a Category III fund will get the identity of the assessee, the head of income and the withholding all wrong. The order does not decide that point — it simply proceeds on it — but it is the clearest recent illustration of the position on the record of a real assessment. If it applies to you, the first step is this: Where the error is in the taxpayer's own return and the correct figure is already in a document filed earlier — the Form 3CD is the obvious one — put that document at the front of the appeal and frame the ground as a request to the appellate authority, not to the Assessing Officer, so that Goetze does not answer it.
The assessee, described in its submissions as a Category III Alternative Investment Fund registered under the SEBI (Alternative Investment Funds) Regulations, 2012 and set up to pool investors' money on a private placement basis for investment substantially through recognised stock exchanges in equity derivatives, options and futures, filed its return under section 139(1) on 13 February 2021 declaring total income of Rs.19,01,65,190, a business loss of Rs.77,74,44,048 and a refund claim of Rs.47,31,94,810, and filed a revised return under section 139(5) on 31 March 2021. It had earned dividend of Rs.19,11,65,190, of which only Rs.10,00,000 was claimed exempt under section 10(34) read with section 115BBDA. Its Form 3CD, uploaded on 21 December 2020, reported the section 14A disallowance at Rs.10,00,000 in clause 21(h). In both the original and the revised returns, however, the assessee disallowed Rs.14,89,18,556 under section 14A computed in accordance with rule 8D. On realising the discrepancy it filed a revised computation before the Assessing Officer on 24 December 2021 restricting the disallowance to Rs.10,00,000, leaving total income and the refund claim unchanged and altering only the business loss, to Rs.5,76,79,243. The Assessing Officer rejected the recomputation, treated Rs.19,01,65,190 as special income under section 115BBDA and computed tax accordingly, by order dated 27 September 2022 under section 143(3) read with section 144B. The Commissioner (Appeals), National Faceless Appeal Centre, dismissed the appeal by order dated 3 October 2025, relying on Goetze (India) v. CIT for the proposition that a new claim cannot be accepted otherwise than by a revised return. The assessee relied before the Tribunal on PCIT v. Tata Industries Ltd., Nirved Traders Pvt. Ltd. v. DCIT and CIT v. Prithvi Brokers and Shares Pvt. Ltd. The matter was decided on 2026-08-06 by the ITAT (Shri Anikesh Banerjee (Judicial Member) and Shri Bijayananda Pruseth (Accountant Member), Income Tax Appellate Tribunal, Mumbai, Bench A). On those facts the ITAT held as follows. The appeal was allowed for statistical purposes. The Tribunal held that the appellate authorities are competent to entertain a legitimate claim even where it was not made through a revised return, the Supreme Court's decision in Goetze (India) Ltd. being confined to the powers of the Assessing Officer (para 6). It nevertheless declined to decide the claim, holding that the factual correctness of the assessee's claim — including the nature and quantum of the exempt income, the applicability of section 115BBDA and the consequential disallowance under section 14A — required proper verification from the assessment records and supporting documents. It set aside the impugned order on that issue and restored the matter to the Assessing Officer for the limited purpose of verifying the claim on the basis of the Form 3CD, the revised computation and other relevant records, directing a speaking order after a reasonable opportunity of hearing, expressing no opinion on the merits and keeping all contentions of both parties open (para 6). The appeal was accordingly allowed for statistical purposes (para 7).
The Tribunal took as an admitted position that the assessee, in filing both returns, had inadvertently treated the entire dividend income as exempt and had made the section 14A read with rule 8D disallowance on that footing, while the Form 3CD filed before the return reported the disallowance at Rs.10,00,000 corresponding to the exempt income claimed under section 10(34), and while a revised computation seeking correction had been furnished at the earliest opportunity during the assessment proceedings. Against those facts it set the two authorities relied on against each other: the jurisdictional High Court in Pruthvi Brokers & Shareholders holds the appellate authorities competent to entertain a legitimate claim not made through a revised return, whereas Goetze (India) is confined to the powers of the Assessing Officer. Having resolved the legal objection that way, the Tribunal declined to substitute its own view on the figures, holding that the nature and quantum of the exempt income, the applicability of section 115BBDA and the consequential section 14A disallowance were matters for verification against the record, and remitted them accordingly (para 6). In the words reproduced by the source cited on this page: "The Hon'ble Jurisdictional High Court in Pruthvi Brokers & Shareholders Pvt. Ltd. (supra) has held that the appellate authorities are competent to entertain a legitimate claim even if the same was not made through a revised return, whereas the decision of the Hon'ble Supreme Court in Goetze (India) Ltd. (supra) is confined to the powers of the Assessing Officer." The decision followed or applied CIT, Central-1, Mumbai v. Prithvi Brokers and Shares Pvt Ltd — relied on; the Bombay High Court passage at its paragraphs 22 to 26 is reproduced in the Tribunal's record of the assessee's argument at para 4; Goetze (India) Ltd. v. CIT [(2006) 284 ITR 323 (SC)] — distinguished as confined to the powers of the Assessing Officer.
It was decided by the ITAT on 2026-08-06 and is reported as ITA No. 9151/MUM/2025, Assessment Year 2020-21 (ITAT Mumbai); date of conclusion of hearing 28 July 2026; order pronounced 6 August 2026. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 14A, section 10(34), section 115BBDA, section 154, section 143(1), section 143(3), section 144B, section 250, section 139(5), section Rule 8D, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed for statistical purposes. The Tribunal held that the appellate authorities are competent to entertain a legitimate claim even where it was not made through a revised return, the Supreme Court's decision in Goetze (India) Ltd. being confined to the powers of the Assessing Officer (para 6). It nevertheless declined to decide the claim, holding that the factual correctness of the assessee's claim — including the nature and quantum of the exempt income, the applicability of section 115BBDA and the consequential disallowance under section 14A — required proper verification from the assessment records and supporting documents. It set aside the impugned order on that issue and restored the matter to the Assessing Officer for the limited purpose of verifying the claim on the basis of the Form 3CD, the revised computation and other relevant records, directing a speaking order after a reasonable opportunity of hearing, expressing no opinion on the merits and keeping all contentions of both parties open (para 6). The appeal was accordingly allowed for statistical purposes (para 7). It arises in Assessment & Scrutiny, Appeals and Capital Gains Exemptions matters, on section 14A, section 10(34), section 115BBDA, section 154, section 143(1), section 143(3), section 144B, section 250, section 139(5), section Rule 8D of the Income Tax Act 1961, and was decided by Shri Anikesh Banerjee (Judicial Member) and Shri Bijayananda Pruseth (Accountant Member), Income Tax Appellate Tribunal, Mumbai, Bench A. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Cite Pruthvi Brokers & Shareholders on the competence of the appellate authorities and confine Goetze expressly to the Assessing Officer's power; that is the distinction the Tribunal accepted here at paragraph 6. Expect verification rather than immediate relief. The Tribunal restored the issue for the Assessing Officer to examine the nature and quantum of the exempt income, the applicability of section 115BBDA and the consequential section 14A disallowance, and expressed no opinion on the merits, so be ready to prove the figures again. Run the section 14A ceiling argument on the facts: the disallowance was said to be confined to the exempt income actually earned, here Rs.10,00,000 claimed under section 10(34). The Tribunal did not decide it, so do not cite this order as authority for the ceiling. For any Category III Alternative Investment Fund, compute and return at fund level under the ordinary provisions applicable to its legal form, and do not issue Form 64C or claim section 10(23FBB) for its investors — the fund is not an 'investment fund' within Explanation 1(a) to section 115UB.
Validity check could not be completed. Validity check could not be completed. No search for later treatment of this order was carried out, and none is claimed. The order is recent — 6 August 2026 — and the issue it remitted is still open before the Assessing Officer, so it settles nothing on the merits of the section 14A claim. Its value as authority is confined to the Goetze/Pruthvi Brokers distinction at paragraph 6. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order was read in full through indiankanoon's plain document URL, on a request opening with the fact that an Indian tribunal order is a government work excluded from copyright by s.52(1)(q) of the Copyright Act 1957 and demanding a verbatim transcription from paragraph 1 to the final disposal. The transcription runs continuously from the header through paragraphs 1 to 7 and ends with the signature block and the Assistant Registrar's endorsement, so the disposal was reached and this is not a truncated read. The last numbered paragraph is 7. Two things in the report do not sit together and the reader should know: paragraph 2 records the original return as filed on 13.02.2021 and then, later in the same paragraph, says "the original return filed 13.12.2021", and the same paragraph gives the dividend as Rs.19,11,65,190 while the declared total income is Rs.19,01,65,190 and the amount treated as special income under section 115BBDA is Rs.19,01,65,190. The Rs.10,00,000 difference is the amount claimed exempt under section 10(34), which reconciles those two figures; the two return dates do not reconcile and no view is taken on which is right. The case name is spelt "Prithvi Brokers and Shares Pvt Ltd" in the Tribunal's summary of the assessee's argument at paragraph 4 and "Pruthvi Brokers & Shareholders Pvt. Ltd." in the Tribunal's own reasoning at paragraph 6; the key quote follows paragraph 6. The description of the fund as a Category III Alternative Investment Fund appears in the Tribunal's record of the authorised representative's submission at paragraph 3 and is not a finding; it is treated here as a fact on the record, not as a holding. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed for statistical purposes. The Tribunal held that the appellate authorities are competent to entertain a legitimate claim even where it was not made through a revised return, the Supreme Court's decision in Goetze (India) Ltd. being confined to the powers of the Assessing Officer (para 6). It nevertheless declined to decide the claim, holding that the factual correctness of the assessee's claim — including the nature and quantum of the exempt income, the applicability of section 115BBDA and the consequential disallowance under section 14A — required proper verification from the assessment records and supporting documents. It set aside the impugned order on that issue and restored the matter to the Assessing Officer for the limited purpose of verifying the claim on the basis of the Form 3CD, the revised computation and other relevant records, directing a speaking order after a reasonable opportunity of hearing, expressing no opinion on the merits and keeping all contentions of both parties open (para 6). The appeal was accordingly allowed for statistical purposes (para 7).
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