PR. COMMISSIONER OF INCOME TAX CENTRAL - 1 vs. M/S PEPSICO INDIA HOLDING PVT. LTD.,

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ITA/1261/2018HC DelhiDLHC01259472201805 December 2018Bench: HON'BLE MR. JUSTICE SANJIV KHANNA,HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises for consideration in the present appeal. The Court referred to the Supreme Court's decision in Maxopp Investment Limited versus Commissioner of Income Tax, New Delhi, (2018) 402 ITR 640 (SC) and its own prior decision in ITA No. 725/2018, Principal Commissioner of Income Tax-6, New Delhi versus McDonald’s India Private Limited, decided on 22nd October, 2018, which dealt with the issue of disallowance under Section 14A. The Court was not inclined to admit the appeal, noting that doing so might be disadvantageous to the Revenue. The appeal was dismissed on the grounds that it did not raise a substantial question of law. No specific finding was made on the merits of the disallowance itself, as the appeal was not admitted.

What were the facts?

The appellant, Principal Commissioner of Income Tax Central-1, filed an appeal against an order of the Income Tax Appellate Tribunal (ITAT). The respondent is M/s PepsiCo India Holding Pvt. Ltd. The assessment year(s) are not explicitly stated. The appeal concerns a disallowance made under Section 14A of the Income Tax Act, 1961. The exempt income in the form of dividend earned by the assessee was Rs. 42,701/-. The disallowance sustained by the ITAT was Rs. 1.17 crores. The High Court noted that admission of the appeal would be disadvantageous to the Revenue if a cross-objection was filed by the assessee.

What were the issues?

1. Whether a substantial question of law arises for consideration regarding the disallowance made under Section 14A of the Income Tax Act, 1961, where the exempt income was Rs. 42,701/- and the disallowance sustained by the ITAT was Rs. 1.17 crores. Assessee's Contentions: The judgment does not record any specific contentions made by the assessee. However, the High Court's decision implies that the assessee would likely rely on the Supreme Court's decision in Maxopp Investment Limited versus Commissioner of Income Tax, New Delhi, (2018) 402 ITR 640 (SC) and the Delhi High Court's decision in ITA No. 725/2018, Principal Commissioner of Income Tax-6, New Delhi versus McDonald’s India Private Limited, decided on 22nd October, 2018, which dealt with similar issues under Section 14A. Revenue's Contentions: The Revenue, through its counsel, argued the appeal. The counsel stated that he had instructions not to withdraw the appeal.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

$~1. * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA No. 1261/2018

PR. COMMISSIONER OF INCOME TAX CENTRAL - 1 ..... Appellant Through Mr. Zoheb Hossain, Sr. Standing Counsel.

versus

M/S PEPSICO INDIA HOLDING PVT. LTD. ..... Respondent Through Mr. Deepak Chopra, Ms. Rashi Khanna & Mr. Yojit Pareek, Advocates.

CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI

O R D E R %

05.12.2018

CM No. 46987/2018 Delay in re-filing of the appeal is condoned for reasons explained and stated in the application. Application is allowed. ITA No. 1261/2018 Having heard learned counsel for the Revenue, we are not inclined to admit the present appeal as the issue of disallowance under Section 14A of the Income Tax Act, 1961 has been adjudicated and decided by the Supreme Court in Maxopp Investment Limited versus Commissioner of Income Tax, New Delhi, (2018) 402 ITR 640 (SC) and by the Delhi High Court in ITA No. 725/2018, Principal Commissioner of Income Tax-6, New Delhi versus McDonald’s India Private Limited, decided on 22nd October, 2018.

In the present case, the exempt income in the form of dividend earned by the respondent-assesee was Rs.42,701/-. The disallowance under Section 14A sustained by the Income Tax Appellate Tribunal is Rs.1.17 crores. 2. In fact, we may observe that admission of the present appeal would be to the disadvantage of the Revenue in case a cross-objection is filed by the respondent-assessee. However, counsel for the Revenue states that he has been instructed not to withdraw the appeal. 3. The appeal is dismissed, as no substantial question of law arises for consideration.

SANJIV KHANNA, J.

ANUP JAIRAM BHAMBHANI, J. DECEMBER 05, 2018 VKR

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