PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2 vs. M/S BHARAT HOTELS LTD.

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ITA/272/2023HC DelhiDLHC01018119202312 May 2023Bench: HON'BLE MR. JUSTICE RAJIV SHAKDHER,HON'BLE MR. JUSTICE GIRISH KATHPALIA3 pages
AI SummaryDismissed

What did the High Court hold?

The Delhi High Court held that no substantial question of law arose for consideration. The Court noted that the issue concerning the deletion of disallowance under Section 14A, when no exempt income is earned, is covered by existing judicial pronouncements. Specifically, the Court referred to Cheminvest Ltd. v. CIT, CIT v. M/s Chettinad Logistics Pvt. Ltd., and its own recent judgment in ITA 250/2023 titled Principal Commissioner of Income Tax – 4 Delhi v. M/s Modern Info Technology Pvt. Ltd. The Court highlighted that the Special Leave Petition (SLP) filed against the Chettinad Logistics decision was dismissed by the Supreme Court. Consequently, the High Court found no merit in the Revenue's appeal, deeming it to be concluded by precedent. The appeal was accordingly closed, and the operative direction was to close the appeal.

What were the facts?

The Revenue, represented by the Pr. Commissioner of Income Tax (Central)-2, filed an appeal before the Delhi High Court challenging an order dated August 30, 2022, passed by the Income Tax Appellate Tribunal (Tribunal). The appeal pertains to Assessment Year 2017-18. The Revenue sought to assail the Tribunal's decision to delete a disallowance of Rs. 3,24,69,741/- made under Section 14A of the Income Tax Act, 1961. The Revenue's contention was based on the fact that the assessee, M/s Bharat Hotels Ltd., had not earned any exempt income. The High Court was also seized of an application for condonation of delay of 60 days in re-filing the appeal, which was not opposed by the assessee.

What were the issues?

1. Whether the Tribunal was right in deleting the disallowance amounting to Rs.3,24,69,741/- under Section 14A of the Income Tax Act, 1961, given that the respondent/assessee had not earned any exempt income? (Question of law) Assessee's Contention: The judgment does not record any specific arguments made by the assessee. However, the Tribunal's deletion of the disallowance implies acceptance of the assessee's position that no disallowance under Section 14A was warranted in the absence of exempt income. Revenue's Contention: The Revenue argued that the disallowance under Section 14A was justified, implying that the mere incurring of expenditure that could potentially lead to exempt income necessitates a disallowance, irrespective of whether exempt income was actually earned. The Revenue relied on the fact that the disallowance was made under Section 14A.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

ITA 272/2023 Page 1 of 3

$~25 * IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of Decision: 12.05.2023

+ ITA 272/2023 & CM Nos.24777-78/2023

PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2

..... Appellant Through: Mr Sanjay Kumar, Sr Standing Counsel.

versus

M/S BHARAT HOTELS LTD.

..... Respondent Through: Ms Ananya Kapoor, Mr Salil Kapoor and Mr Sumit Lalchandani, Advs.

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER

HON'BLE MR. JUSTICE GIRISH KATHPALIA [Physical Hearing/Hybrid Hearing (as per request)]

RAJIV SHAKDHER, J. (Oral): CM No.24778/2023[Application filed on behalf of the appellant seeking condonation of delay of 60 days in re-filing the appeal] 1. This is an application moved on behalf of the appellant/revenue seeking condonation of delay in re-filing the appeal. 1.1 According to the appellant/revenue, there is a delay of 60 days. 2. Ms Ananya Kapoor, who appears on behalf of the respondent/assessee, says that she does not oppose the prayer made in the application. Digitally Signed By:TARUN RANA Signing Date:26.06.2023 15:40:53 Signature Not Verified

ITA 272/2023 Page 2 of 3

3.

Accordingly, the delay is condoned. 4. The application is disposed of, in the aforesaid terms. CM No.24777/2023 5. Allowed, subject to just exceptions. ITA 272/2023 6. This appeal concerns Assessment Year (AY) 2017-18. 7. The appellant seeks to assail the order dated 30.08.2022 passed by the Income Tax Appellate Tribunal [in short, “Tribunal”]. 8. The only issue which arises for consideration is: whether the Tribunal was right in deleting the disallowance amounting to Rs.3,24,69,741/- under Section 14A of the Income Tax Act, 1961 [in short, “Act”] given the fact that the respondent/assessee had not earned any exempt income. 9. This issue stands covered by the following decisions: (i) Cheminvest Ltd. v. CIT(2015) 378 ITR 33 (ii) CIT v. M/s Chettinad Logistics Pvt. Ltd. [2017] 80 taxmann.com 221 (Madras) (iii) Judgment dated 03.05.2023 passed in ITA 250/2023 titled Principal Commissioner of Income Tax – 4 Delhi v. M/s Modern Info Technology Pvt. Ltd. 10. Insofar as Chettinad Logistics is concerned, which included one of us i.e., Rajiv Shakdher, J., the SLP filed against it was dismissed by the Supreme Court via order dated 02.07.2018 reported in [2018] 95 taxmann.com 250 (SC). 11. According to us, no substantial question of law arises for our consideration. Digitally Signed By:TARUN RANA Signing Date:26.06.2023 15:40:53 Signature Not Verified

ITA 272/2023 Page 3 of 3

12.

The appeal is, accordingly, closed.

RAJIV SHAKDHER, J

GIRISH KATHPALIA, J

MAY 12, 2023

Digitally Signed By:TARUN RANA Signing Date:26.06.2023 15:40:53 Signature Not Verified

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