EXTENSIVE TRADING PRIVATE LIMITED,DELHI vs. INCOME TAX OFFICER, WARD -9(1), DELHI, DELHI

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ITA 625/DEL/2025Status: DisposedITAT Delhi14 May 2025AY 2018-19Bench: SHRI M. BALAGANESH (Accountant Member), SHRI YOGESH KUMAR U.S. (Judicial Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that following the decision of the Delhi High Court in PCIT vs Era Infrastructure (India) Ltd, amendments made by the Finance Act, 2022, to Section 14A are not retrospective. Therefore, no disallowance can be made under Section 14A if no exempt income was earned by the assessee.

What were the facts?

The appeal arose from an order confirming a disallowance made by the Assessing Officer under Section 14A of the Income Tax Act, 1961, for the Assessment Year 2018-19. The disallowance was made in the absence of any exempt income.

What were the issues?

Whether disallowance under Section 14A can be made in the absence of exempt income, considering the non-retrospective nature of recent amendments to the section.

Which sections of the Income-tax Act were involved?

Section 144,Section 144B,Section 14A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI

Before: SHRI M. BALAGANESH & SHRI YOGESH KUMAR U.S.

For Respondent: Shri Rajesh Kumar Dhanesta, Sr. DR
Hearing: 14/05/2025Pronounced: 14/05/2025

O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in AY 2018-19, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. NFAC’, in short] in Appeal No. ITBA/NFAC/S/250/2024-25/1066721206(1) dated 15.07.2024 against the order of assessment passed u/s 144 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 21.04.2021 by the Assessing Officer, NeAC, Delhi (hereinafter referred to as ‘ld. AO’).

2.

The only effective issue involved in this appeal is as to whether the Learned NFAC was justified in confirming the disallowance made by the Learned AO under section 14A of the Act in the absence of any exempt income. Page | 1

3.

None appeared on behalf of the assessee. We have heard the Learned DR and perused the materials available on record. The Learned DR fairly submitted that there was no exempt income derived by the assessee in the year under consideration, but however, the disallowance of expenses under section 14A of the Act would still operate in view of the CBDT Circular No. 5/2014. We find that the recent decision of Hon’ble Delhi High Court in the case of PCIT vs Era Infrastructure (India) Ltd reported in 141 taxmann.com 289 (Del HC) had held that amendment made by Finance Act, 2022 to section 14A of the Act by inserting a non-obstante clause and Explanation will take effect from 1-4- 2022 and cannot be presumed to have retrospective effect and further held that no disallowance could be made under section 14A of the Act if no exempt income was earned by assessee. Respectfully following the same, the grounds raised by the assessee are allowed.

4.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 14/05/2025.

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