PR. COMMISSIONER OF INCOME TAX vs. M/S RELIGARE ENTERPRISES LTD

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ITA/209/2023HC DelhiDLHC01012703202312 April 2023Bench: HON'BLE MR. JUSTICE RAJIV SHAKDHER,HON'BLE MS. JUSTICE TARA VITASTA GANJU3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the disallowance under Section 14A cannot exceed the amount of exempted dividend income. This was based on a previous judgment of the same court.

What were the facts?

The Revenue filed an appeal against an ITAT order concerning AY 2014-15. The core issue was whether the disallowance under Section 14A could exceed the exempted dividend income.

What were the issues?

Whether disallowance under Section 14A can exceed the exempted dividend income earned by the assessee.

Which sections of the Income-tax Act were involved?

Section 14A

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2023:DHC:3160-DB

ITA No.209/2023 Page 1 of 3

$~24 * IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 12.04.2023

+ ITA 209/2023 & CM Nos.17389-90/2023

PR. COMMISSIONER OF INCOME TAX ..... Appellant Through: Mr Sunil Agarwal, Sr Standing Counsel with Mr Shivansh B. Pandy, Jr Standing Counsel along with Mr Utkarsh Tiwari, Adv.

versus

M/S RELIGARE ENTERPRISES LTD ..... Respondent Through: Mr Rohit Jain and Mr Aniket D. Agrawal, Advs.

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER

HON'BLE MS. JUSTICE TARA VITASTA GANJU

O R D E R %

12.04.2023 [Physical Hearing/Hybrid Hearing (as per request) RAJIV SHAKDHER,J.: (ORAL) CM No.17389/2023 [Application filed on behalf of the appellant seeking condonation of delay of 49 days in filing the appeal] 1. This is an application moved on behalf of the appellant/revenue seeking condonation of delay in filing the appeal. 1.1 According to the appellant/revenue, there is a delay of 49 days. 2. Mr Rohit Jain, who appears on behalf of the respondent/assessee, says that he does not oppose the prayer made in the application. 3. Accordingly, the delay is condoned. 4. The application is disposed of.

Digitally Signed By:ATUL JAIN Signing Date:09.05.2023 22:26:05 Signature Not Verified

2023:DHC:3160-DB

ITA No.209/2023 Page 2 of 3

CM No.17390/2023 5. Allowed, subject to just exceptions. ITA 209/2023 6. This appeal concerns Assessment Year (AY) 2014-15. 7. The appeal is directed against the order dated 29.08.2022 passed by the Income Tax Appellate Tribunal [in short, “Tribunal”]. 8. Broadly, the issue raised in the present appeal is as to whether disallowance under Section 14A of the Income Tax Act, 1961 [in short, “Act”] can exceed the amount of exempted dividend earned by the respondent/assessee. 9. This issue is covered against the appellant/revenue by the judgment rendered by this court in Joint Investments Pvt. Ltd. v. Commissioner of Income Tax, (2015) 372 ITR 694 (Delhi) wherein, inter alia, the following observations have been made : “9. .... The third, and in the opinion of this court, important anomaly which we cannot be unmindful is that whereas the entire tax exempt income is Rs.48,90,000/-, the disallowance ultimately directed works out to nearly 110 per cent of that sum, i.e., Rs.52,56,197. By no stretch of imagination can Section 14A or rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A and is only to the extent of disallowing expenditure "incurred by the assessee in relation to the tax exempt income". This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case.”

10.

In this case as well, the admitted position is that the dividend income, exempt under Section 10(34) Act, earned by the respondent/assessee, was Rs.45,06,37,556/-. The respondent/assessee had itself made a disallowance under Section 14A of the Act amounting to Rs.1,93,75,05,498/-. 11. Over and above the aforesaid amount, the Assessing Officer (AO) had Digitally Signed By:ATUL JAIN Signing Date:09.05.2023 22:26:05 Signature Not Verified

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ITA No.209/2023 Page 3 of 3

sought to disallow the amount equivalent to Rs.28,63,13,621/-. Clearly, the disallowance sought to engulf the exempt dividend income earned by the respondent/assessee. 12. The ratio of the aforementioned judgment therefore, applies on all fours. 13. According to us, no substantial question of law arises for our consideration in the present appeal. 14. The appeal is, accordingly, closed. 15. Parties will act based on the digitally signed copy of the order.

RAJIV SHAKDHER, J

TARA VITASTA GANJU, J

APRIL 12, 2023

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Digitally Signed By:ATUL JAIN Signing Date:09.05.2023 22:26:05 Signature Not Verified

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