GHANASHYAM MISRA & OTHERS (HUF),A.C.I.T., CIRCLE - 1, BURDWAN vs. A.C.I.T., CIRCLE - BURDWAN, BURDWAN

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ITA 4/KOL/2023Status: DisposedITAT Kolkata23 February 2023AY 2014-20154 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the explanation inserted to Section 14A, which clarifies its retrospective applicability, is prospective based on a Delhi High Court decision. Since the assessee did not earn any tax-exempt income, the disallowance was not attracted.

What were the facts?

The assessee claimed a deduction for expenses related to income that did not form part of the total income. The Assessing Officer disallowed this deduction under Section 14A. The CIT(A) upheld the disallowance.

What were the issues?

Whether the explanation to Section 14A is retrospective or prospective in its application, and if disallowance under Section 14A is attracted when no tax-exempt income is earned.

Which sections of the Income-tax Act were involved?

Section 14A

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Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA

Before: Shri Sanjay Garg & Dr. Manish Borad

order : February 23, 2023 आदेश / ORDER संजय गग�, �या�यक सद�य �वारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 30.11.2022 of the National Faceless Appeal Centre [hereinafter referred to as the ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).

2.

The sole grievance raised by the assessee in this appeal is relating to the action of the ld. CIT(A) in disallowing a sum of Rs.7,71,873/- made by the Assessing Officer by invoking the provisions of section u/s 14A of the Act. Assessment year: 2014-15 Ghanashyam Misra & Others (HUF)

3.

The ld. AR of the assessee has submitted that the assessee did not earn any tax exempt income during the year under consideration. He in this respect has relied upon the following case laws:

1.

Cheminvest Ltd. vs. CIT 378 ITR 33 (Del). CIT vs. M/s. Holcim India Pvt. Ltd. in and ITA no. 299/2014; Judgment dt. 5-9-2014 CIT v. Shivam Motors (P.) Ltd. [2015] 230 Taxman 63 CIT vs. Ashika Global Securities Ltd. (G.A. No. 2122 of 2014) dt. 11/06/2018 In these case laws, Hon’ble High Courts have been unanimous to hold that where the assessee has not derived any tax exempt income from investments, then no disallowance is attracted u/s 14A of the Act.

4.

The ld. D/R, however, has relied upon the newly inserted explanations to Section 14A of the Act, which is extracted for the sake of ready reference:- “14A. [(1)] [Notwithstanding anything to the contrary contained in this Act, for the purposes of] computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act.] ************************ *********************** [Explanation.—For the removal of doubts, it is hereby clarified that notwithstanding anything to the contrary contained in this Act, the provisions of this section shall apply and shall be deemed to have always applied in a case where the income, not forming part of the total income under this Act, has not accrued or arisen or has not been received during the previous year relevant to an assessment year and the expenditure has Assessment year: 2014-15 Ghanashyam Misra & Others (HUF)

been incurred during the said previous year in relation to such income not forming part of the total income.]”

The ld. D/R has further relied on the decision of the Co-ordinate Bench of ITAT Guwahati in the case of ACIT vs. Williamson Financial Services Ltd. reported in [2022] 140 taxmann.com 164 (Guwahati - Trib.). (Judicial Member herein being party to the said decision), to submit that the said explanation to Section 14A of the Act is retrospectively applicable.

5.

However, the ld. A/R, has relied upon the recent decision of the Hon’ble Delhi High Court in the case of PCIT Vs. Era Infrastructure (India) Ltd. (ITA 204/2022) judgment dt. 20/07/2022, wherein, it has been held that the aforesaid explanation inserted to Section 14A of the Act is applicable prospectively.

6. Respectfully abiding by the principle of judicial hierarchy, the Hon’ble Delhi High Court being a Higher Court, and as no decision of the Hon’ble Jurisdictional High Court or Hon’ble Supreme Court is available on this issue as yet, hence applying the said decision of the Hon’ble Delhi High Court, we allow the appeal of the assessee.

6.

In the result, the appeal of the stands allowed. Kolkata, the 23rd February, 2023. Sd/- Sd/- [डॉ�टर मनीष बोरड /Dr. Manish Borad] [संजय गग� /Sanjay Garg] लेखा सद�य /Accountant Member �या�यक सद�य /Judicial Member Dated: 23.02.2023. RS Assessment year: 2014-15 Ghanashyam Misra & Others (HUF)

Copy of the order forwarded to: 1. Ghanashyam Misra & Others (HUF) 2. ACIT, Circle-1, Burdwan 3. CIT(A)- 4. CIT- , 5. CIT(DR),

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