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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: Sh. Satbeer Singh Godara&
Asstt. Year: 2018-19 Raunaq EPC International Ltd., Vs PCIT(Central), K.M. Mathur Road, Delhi-1, Faridabad, Haryana-121003 New Delhi-110001 (APPELLANT) (RESPONDENT) PAN No. AAACR5747C Assessee by : Sh. M. K. Madan, CA Revenue by : Sh. Sunil Yadav, CIT-DR Date of Hearing: 18.03.2025 Date of Pronouncement: 18.03.2025 ORDER
Per Satbeer Singh Godara, Judicial Member:
This assessee’s appeal for Assessment Year 2018-19, arises against the PCIT(Central), Delhi-1’s DIN & order No. ITBA/REV/F/REV5/2023-24/1062361782(1) dated 11.03.2024, in proceedings u/s 263 of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case file perused.
This assessee’s appeal raises the following substantive grounds: “Ground 1:(a) That the PCIT erred in law in passing order under sec. 263 enhancing income of Rs. 19,04,090/- of the average investments despite the fact that no Raunaq EPC International Ltd. expenses have been incurred by the assessee during the year for managing the investments made in the earlier years in the related entities. (b) That the PCIT erred in law in adding Rs. 19,04,090/- by applying explanation to sec 14A without considering the fact mentioned by the assessee that there was no movement in the shares invested by the assessee during the said AY 2018-19 and hence no expense incurred by the assessee. Ground 2 :(a) That the PCIT erred in law in passing the revision order under sec 263 and disallowing the employees contribution under sec 36(1)(va) of Rs.46,20,366/- by not considering the fact that LD. AO had passed the order under sec 143(3) dtd. 03.06.2021 considering the legal position and merits prevailing at that time. (b) That the PCIT erred in law in reactivating the issue of disallowance of employees contribution under sec. 36(1)(va) that had been accepted and had reached finality at the time of original assessment proceedings under sec 143(3).”
Coming to the first and foremost issue of section 14A r.w. rule 8D disallowance between the parties forming subject matter of learned PCIT’s impugned revision directions, it transpires during the course of hearing that there is no exempt income in the relevant previous year declared in the assessee’s corresponding books of accounts.
That being the case, the Revenue seeks to buttress the point in light of section 14A Explanation inserted by the Finance Act, 2022 w.e.f. 01.04.2022 that such an actual exempt income no more forms the decisive factor. We find no merit in the Raunaq EPC International Ltd. Revenue’s instant arguments supporting the learned PCIT’s revision directions purposing section 14A r.w. rule 8D disallowance even in absence of actual exempt income in light of the fact that the assessment year 2018-19 involved before us only whereas the above amendment came much latter vide Finance Act, 2022 only. Case law PCIT Vs. Era Infrastructure (I) Ltd. (2022) 448 ITR 674 (Del.) has already settled the issue in assessee’s favour and against the department that the above amendment carries prospective effect only. We thus accept the assessee’s instant first and foremost substantive ground to reverse the ld. PCIT’s impugned action proposing section 14A r.w. rule 8D disallowance in very terms. Ordered accordingly.
Next comes the second issue between the parties qua applicability of section 36(1)(va) disallowance of Rs.46,20,366/- forming subject matter of adjudication in the PCIT’s revision directions. Learned counsel very fairly submits that the same has already been decided against the assessee and in favour of the department in the CIT(A)’s order dated 21.03.2022. That being the case, the assessee seeks not to press for it’s instant latter substantive ground subject to all just exceptions. Rejected in very terms.
This assessee’s appeal is partly allowed in above terms. Order Pronounced in the Open Court on 18/03/2025.