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Income Tax Appellate Tribunal, DELHI BENCH “H” NEW DELHI
Before: SHRI SHAMIM YAHYA & SHRI CHALLA NAGENDRA PRASAD
आदेश / O R D E R PER C. N. PRASAD, J.M.
This appeal is filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals)-22 [hereinafter referred to CIT (Appeals)] New Delhi, dated 22.01.2019 for assessment year 2015-16.
The Revenue has raised the following subastantive grounds of appeal:-
“1. Whether on the facts and in the circumstances of the case and in law, the ld. CIT (A) has erred in deleting the addition of Rs.22,82,93,129/- made by the AO u/s 14A of the I.T. Act on the basis of CBDT Circular No. 5/2014 dated 11.02.2014 which clearly states that disallowance u/s 14A r.w. Rule 8D shall be made even in cases where no exempt income was earned during the year by the assessee.
2. Whether on the facts and in the circumstances of the case and in law, the ld. CIT (A) has erred in ignoring the fact that the issue of disallowance u/s 14A has not attained finality.”
At the outset, the ld. Counsel for the assessee submits that during the assessment year the assessee did not receive any exempt income and the ld. CIT (Appeals) deleted the disallowance following the decision of the Hon’ble Delhi High Court in the case of Cheminvest Limited Vs. CIT (378 ITR 33). The ld. Counsel further submits that in a recent decision, the jurisdictional High Court in the case of PCIT Vs. Era Infrastructure (India) Ltd. In ITA. 204/Del/2022 dated 20.07.2022 held that the Amendment brought in by the Finance Act, 2022 to the provisions of section 14A of the Act clarifying even if there is no exempt income the provisions of section 14A read with Rule 8D have application was held to be applicable only prospectively.
The ld. DR supported the order of the Assessing Officer.
Heard rival submissions perused the orders of the authorities below. We observe that the ld. CIT (Appeals) deleted the disallowance 2 made under section 14A of the Act for the reason that the assessee did not receive any exempt income during the assessment year under consideration. The ld. CIT (Appeals) followed the decision of the Hon’ble Delhi High Court in the case of Cheminvest Limited Vs. CIT (supra).
6. We further observe that recently the Hon’ble Delhi High Court in the case of PCIT Vs. Era Infrastructure (India) Ltd. (supra) following the decisions of Apex court in the case of Sedco Forex International Drill. Inc Vs. CIT (2005) 12 SCC 717 and the decision in the case of M.M. Aqua Technologies Ltd. Vs. CIT in Civil Appeal Nos. 4742 and 4743 of 2021 (dated 11.08.2021) held that the Amendment to section 14A of the Act inserted for removal of doubts cannot be presumed to be retrospective. Thus, we do not see any infirmity in the order passed by the ld. CIT (Appeals) in deleting the disallowance made under section 14A read with Rule 8D of the Act for the year under consideration. Grounds raised by the Revenue are rejected.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 26/10/2022.