M/S JSW INFRASTRUTURE LIMITED,MUMBAI vs. DCIT CIRCLE-5(2)(1), MUMBAI

On the facts Learned CIT(A) Assessing Offic the Income Ta Rules, 1962, w case. 2. On the facts Learned CIT(A Assessing offic appreciating th Appellant durin 2. Briefly stated, domestic company w running infrastructu relevant assessment return of income o Rs.58,80,66,950/-. T was selected for scru the Income-tax Act, complied with. Duri Officer observed inve income, but no disal of the Act. The Asses 14A(2) of the Act and Act shall be made e relation to income w Accordingly, the Ass the investments and annual average of su M/s JS ITA s and circumstances of the case as well as in ) has erred in confirming the action of the cer disallowing sum of Rs.4,74,31,032/ - u/ ax Act 1961 by invoking the rule 8D of Inc without considering the facts and circumstanc s and circumstances of the case as well as in A) has erred in confirming the action of cer in making disallowance u/s.14A of the Ac he fact that no exempt income was earne ng the year under consideration. facts of the case are that th as engaged in the business of d ure project including port etc year under consideration, the on 28.11.2018 declaring tota The return of income filed by utiny assessment and statutory 1961 (in short ‘the Act’) wer ing assessment proceedings, t estment in shares yielding exem llowance was made by the asse ssing Officer referred to provisio d concluded that disallowance u even no expenditure has been which does not form part of essing Officer computed month d thereafter made addition for t uch investments, which was w SW Infrastructure Ltd. 2 No. 6015/MUM/2024 n law, the Learned /s.14A of come Tax ces of the n law, the Learned ct without d by the he assessee a eveloping and c. During the assessee filed al income at the assessee notices under re issued and the Assessing mpted dividend essee u/s 14A ons of section u/s 14A of the n incurred in total income. hly average of the 1% of the worked out to Rs.4,74,31,032/- and assessee. In the asse on 08.03.2021, the Rs.4,74,31,032/- u/s Rules, 1962. 3. On further appe brought by the Finan 14A of the Act shall income earned in th decision of the Hon Infrastructure Ltd. (s the Ld. CIT(A) is repr “(iii) Though, it brought out by substantial litig contrary opinio is retrospective Court in the Infrastructure Delhi Internati taxmann.com 8 However, it is t of law, which and which see statute, would by Hon'ble Sup judgment dated UNIVERSITY of NO. 3752 OF 2 amendment to application to b clearly ignored the Explanato unequivocally s the amendmen The judicial f M/s JS ITA d added to the total income ret essment order passed u/s 143 e Assessing Officer made dis s 14A of the Act r.w.r. 8D of th eal, the Ld. CIT(A) referred to th nce Act, 2022 to hold that disa be operative even when there he particular year. The Ld. CI n’ble Delhi High Court in the supra) as per incurium. The relev oduced as under: t is fairly admitted that the above said am y the Finance Act 2022 has been subject gation and various Tribunals and Courts ha ons as to whether the applicability of the am e or prospective. It is noted that the Hon'ble D case of Commissioner of Income Tax (India) Ltd. (2022) 448 ITR 674 (Del) and ional Airport Pvt. Ltd. (Delhi High Court) (2 80 (Del) has held the amendment to be pro trite that any legislation or instrument having is clarificatory or explanatory in nature and ks to clear doubts or correct an obvious omis generally be retrospective in operation, as r preme Court from time to time including in i d 16.05.2023 in the case of SREE SANKARA f Sanskrit & Ors. Vs. Dr. Manu & An in CIVIL 2023. The various case laws interpreting sec o be prospective based only on the stated be w.e.f. 01-04-2022 have been hyper techn d that the substantive wordings of the amendm ory Memorandum to the Finance Ac shows intention of the legislature in favour o nt clarificatory in nature and retrospective in o forums holding the amendment to be pros SW Infrastructure Ltd. 3 No. 6015/MUM/2024 turned by the 3(3) of the Act sallowance of he Income-tax he amendment allowance u/s is no exempt M/s JS ITA ntly not discussed on record decisions of tion of Statute, hence the concerned orde are found to be subsilentio and hence r , thus not laying any law. Furthermore, th y on the issue yet. Post-amendment SLP of the as been admitted by the Hon'ble Apex Court i onal Airport (P.) Ltd. [2022] 142 taxmann.com ng adjudication. Therefore, in the absence he Hon'ble Supreme Court or the Juri ictio issue post the amendment vide Finance A attention by the appellant and in view language of the amendment brought out by tion 14A is hereby held to be applicable ev y exempt income earned during the year.” d the rival submissions of the ed the relevant material on etermination in the present matt r Section 14A Act can be made e rned any exempt income during consideration. Upon examinati ue , we note that the Hon’ble f PCIT v. Ballarpur Industries L (Bombay), categorically hel Section 14A can be made in th ned by the assessee. Similarly Cheminvest Ltd. 378 ITR 33, a plicable when no exempt inco t assessment year. Further, , in Chettinad Logistics (P.) Lt choed this position, a finding wh missal of the Special Leave Peti SW Infrastructure Ltd. 4 No. 6015/MUM/2024 f Hon SC ers, with rendered here is no e revenue in case of m 328 (SC) e of any onal High Act 2022 w of the y Finance ven in the e parties and record. The ter is whether even when the g the relevant ion of various Bombay High td., [2017] 85 ld that no he absence of , the Hon’ble also ruled that me is earned the Hon’ble td. [2018] 95 hich was later ition (SLP) by Hon’ble Supreme Co introduced an amend 2022, stipulating th apply even if no exe crux of the matte prospective applicati deliberated upon b Infrastructure Ltd.,(20 amendment is prosp CIT(A) in impugned o High Court is sub-si our consideration be justified in his findin Court as per incuria 14A is prospective or 4.1 The doctrine o higher courts are consistency and pre the exceptions to th are equally critical. A is delivered in igno binding authority. C when a particular le consciously adjudica M/s JS ITA ourt. Subsequently, the Financ dment to Section 14A, effective f hat disallowance under this pr empt income is earned during er revolves around the retr ion of this amendment. This y the Hon’ble Delhi High C 022) 448 ITR 674, wherein it is pective in nature. But, we find order has held that said decisi ilentio and per incurium. Thus, efore us is firstly, whether the ng of holding the order of Hon’b am and secondly, the amendme r retrospective ? f stare decisis mandates that binding on lower courts dictability in the judicial proce is doctrine—per incuriam and A judgment is considered per inc rance of a relevant statutory onversely, a decision is deeme gal issue is neither expressly a ated by the court. A balanced a SW Infrastructure Ltd. 5 No. 6015/MUM/2024 ce Act, 2022, from 1st April rovision shall the year. The rospective or question was Court in Era held that the d that the Ld. ion of Hon’ble the issue for e ld CIT(A) is ble Delhi High ent to section t decisions of and ensures ess. However, sub silentio— curiam when it provision or d sub silentio addressed nor application of stare decisis and its is both consistent an 4.2 Thus, normally higher court as per court or larger bench Hon’ble Supreme C (2013) 9 SCC 245, cannot be deemed inadequacies in a Furthermore, in Sou Credit Society Emplo 727, it was unequivo the binding decisions per incuriam. Additio Panchaxari Shidrama Samithi (ILR 1998 KA cannot declare a hi relevant finding is rep 12. Re: Question No of stare decisis can precedents, some, li applied only in reg same Court, and no or the Apex Court. coordinate Bench a lower tier (Sma decided of a deci M/s JS ITA exceptions fosters a judicial fra nd legally robust. a lower court should not hold t incuriam unless a direct decis h on the issue has not been co Court, in Ravinder Singh v. S clarified that a Supreme Cou per incuriam merely due argument, consideration, or uth Central Railway Employees oyees Union v. B. Yashodabai ( ocally held that High Courts can s of Hon’ble Supreme Court by onally, the Hon’ble Karnataka H appa Yeligar v. Shiggaon Taluk AR 3748), decisively opined that gher court's decision as per i produced as under: o (iii) 12.1. While some of the exceptio be applied to all decisions which can ke the exception based on per incuriam gard to decisions of Co-ordinate Bra ot to decisions of larger Benches of th While a decision rendered per in may not be binding as a preceden ller Bench) can not refuse to foll ision rendered by the Court in a SW Infrastructure Ltd. 6 No. 6015/MUM/2024 amework that he decision of sion of higher nsidered. The Sukhbir Singh urt judgment to perceived r reasoning. s Cooperative (2015) 2 SCC nnot disregard terming them High Court, in ka Shikshana a lower court incuriam. The ons to the rule n be called as m Rule can be anches of the he same Court ncuriam by a nt, a Court in ow the ratio a higher tier

It is also proposed include a non-obs the Income-tax Act relation to exempt contained in this Act 7. This amendmen accordingly apply subsequent assessm (emphasis supplied) 6. Furthermore, the v. CIT, (2005) 12 SC act which is "for t retrospective, even the law as it earlier reproduced herein b "9. The High Court d inclusion of salary f the employees of the point before us. 10. In our view the years for the simple introducing the 1 Pgnatale [(1980) 12 Bench of the Gauha 314 (Gau)] . It foun from 1-4-1979 wher and said: (ITR p. 318) "[I]t is reference to the law fact that the asse pending on 1-4-197 applicable to the circumstance canno hand." M/s JS ITA d to amend sub-section (1) of the said stante clause in respect of other and provide that no deduction sha income, notwithstanding anything t. nt will take effect from 1st April, in relation to the assessment yea ment years." ) Supreme Court in Sedco Forex Interna CC 717 has held that a retrospective p the removal of doubts" cannot be p where such language is used, if it a r stood. The relevant extract of the s below: did not refer to the 1999 Explanation for the field break periods in the asses e appellant. However, the respondents e 1999 Explanation could not apply e reason that it had not come into effe 999 Explanation, the decision i 24 ITR 391 (Guj)] was followed in 198 ati High Court in CIT v. Goslino Mario nd that the 1983 Explanation had b reas the year in question in that cas settled law that assessment has to w which is in existence at the relevan ssments in question has (sic) som 79, cannot be cogent reason to make cases of the present assessees. ot take away the vested rights of th SW Infrastructure Ltd. 10 No. 6015/MUM/2024 section, so as to r provisions of all be allowed in to the contrary 2022 and will ar 2022-23 and ational Drill. Inc. provision in a tax presumed to be alters or changes aid judgment is in upholding the ssable income of s have urged the y to assessment fect then. Prior to in CIT v. S.G. 89 by a Division [(2000) 241 ITR been given effect se was 1976-77 o be made with t time. The mere mehow remained the Explanation This fortuitous he assessees at 11. The reasoning o this Court in CIT v. 312] . These decisio 1983 Explanation ex would not effect the 12. In this state o substituted the Expl to by us as the 199 that with effect from "Explanation.--For th income of the nature (a) service rendered (b) the rest period o services rendered i employment, shall b The Finance Act, substituted Explana 13. The Explanation High Court in CIT v the Gujarat High Co (Guj)] to hold that th scope of Section 9(1 to be clarificatory in Section 9(1)(ii) of were prior to 1-4-19 force from 1-4-1979 anterior period. 14. In the appeal pr Court, the Revenue the Kerala High Co whether the Tribuna was paid by a foreig that it was a questio 15. Given this legis that it was delibe M/s JS ITA of the Gauhati High Court was expres Goslino Mario [(2000) 10 SCC 165 : ons are thus authorities for the prop xpressly introduced with effect from a earlier assessment years. of the law, on 27-2-1999 the Fina lanation to Section 9(1)(ii) (or what h 9 Explanation). Section 5 of the Bill e m 1-4-2000, the substituted Explanatio he removal of doubts, it is hereby d e referred to in this clause payable for in India; and or leave period which is preceded an in India and forms part of the ser be regarded as income earned in India 1999 which followed the Bill in ation to Section 9(1)(ii) without any ch n as introduced in 1983 was construe . S.R. Patton [(1992) 193 ITR 49 (Ker) ourt's decision in S.G. Pgnatale [(198 he Explanation was not declaratory b 1)(ii). It was further held that even if i or that it removed whatever ambig f the Act, it did not operate in respect 979. It was held that since the Explan 9, it could not be relied on for any referred from the decision by the Rev did not question this reading of the ourt, but restricted itself to a ques al had correctly found that the salary gn company. This Court dismissed the on of fact. (CIT v. S.R. Patton [(1998) 8 lative history of Section 9(1)(ii), we c rately introduced with effect from SW Infrastructure Ltd. 11 No. 6015/MUM/2024 ssly affirmed by : (2000) 241 ITR position that the a particular date ance Bill, 1999 as been referred expressly stated on would read: declared that the r-- d succeeded by rvice contract of a." ncorporated the hange. ed by the Kerala )] while following 80) 124 ITR 391 but widened the it were assumed guity there was of periods which nation came into purpose for an venue before this e Explanation by tion of fact viz. y of the assessee e appeal holding 8 SCC 608] .) can only assume 1-4- 2000 and therefore intended t Ltd., (1995) 4 SCC 4 (1995) 215 ITR 165 issued Circular No. on the provisions of taxes. It said in para "5.2 The Act has e salary paid for serv earned in India, so the rest period or le service in India and also be regarded as 5.3 This amendmen apply in relation to A 16. The departmenta even if it were assum the Act, nevertheles no reason why we s 17. As was affirmed (2000) 241 ITR 312] be applied is that unless otherwise p also Reliance Jute SCC (Tax) 67] .) An purpose of clearing Explanation can a [See Sonia Bhatia v 1274, 1282 para Explanation must b time that the main p Kumar, (2001) 8 SC (1997) 1 SCC 352, 3 506] . But if it chan irrespective of the fa or "for the removal of M/s JS ITA to apply prospectively [See CIT v. Pa 485, 494 (para 18) : 5] . It was also understood as such 779 dated 14-9-1999 containing Ex f the Finance Act, 1999 insofar as it as 5.2 and 5.3. expanded the existing Explanation w vices rendered in India shall be rega as to specifically provide that any sa ave period which is both preceded an d forms part of the service contract of income earned in India. nt will take effect from 1-4-2000, and Assessment Year 2000-2001 and subs al understanding of the effect of the 1 med not to bind the respondents unde s affords a reasonable construction of should not adopt it. d by this Court in Goslino Mario [(200 ] a cardinal principle of the tax law is which is in force in the relevant a rovided expressly or by necessary i and Industries Ltd. v. CIT [(1980) 1 n Explanation to a statutory provisio g up an ambiguity in the main p add to and widen the scope of th v. State of U.P., (1981) 2 SCC 585, 59 24] . If it is in its nature clarific be read into the main provision with provision came into force [See Shyam CC 24 (para 44); Brij Mohan Das Lax 354; CIT v. Podar Cement (P) Ltd., (19 nges the law it is not presumed to b act that the phrases used are "it is dec of doubts"." SW Infrastructure Ltd. 12 No. 6015/MUM/2024 atel Bros. & Co. by CBDT which xplanatory Notes related to direct which states that arded as income alary payable for nd succeeded by employment will will accordingly, sequent years." 999 Amendment er Section 119 of of it, and there is 00) 10 SCC 165 : s that the law to assessment year implication. (See SCC 139 : 1980 on may fulfil the provision or an he main section 98 : AIR 1981 SC catory then the h effect from the m Sunder v. Ram man Das v. CIT, 997) 5 SCC 482, be retrospective, clared"