PRINCIPAL COMMISSIONER OF INCOME TAX DELHI- 04 vs. NTPC LTD

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ITA/506/2024HC DelhiDLHC01084268202321 October 2024Bench: CASES PERTAINING TO SPL.DIVISION BENCHES2 pages
AI SummaryDismissed

What did the High Court hold?

The Delhi High Court dismissed the Revenue's appeal, following similar dismissals in related appeals for other assessment years. The court found no substantial question of law arising from the ITAT's order.

What were the facts?

The Revenue appealed against an ITAT order that allowed the assessee's appeal concerning disallowance under Section 14A. The assessee had exempt income from tax-free bonds and dividends, and the AO sought to disallow expenditure proportionally.

What were the issues?

Whether the disallowance of expenditure under Section 14A is warranted when exempt income arises from investments made through a one-time settlement or from a subsidiary, and if a substantial question of law arises from the ITAT's decision.

Which sections of the Income-tax Act were involved?

Section 14A,Section 10

AI-generated summary — verify with the full judgment below

$~4 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 506/2024 PRINCIPAL COMMISSIONER OF INCOME TAX DELHI- 04 .....Appellant Through: Mr. Abhishek Maratha, Sr. Adv. with Mr. Apoorv Agarwal, Mr. Parth Samwal, Ms. Nupur Sharma, Mr. Gaurav Singh, Mr. Bhanukaran Singh Jodha, Ms. Muskaa Goel & Mr. Himanshu Gaur, Advs. Versus NTPC LTD .....Respondent Through: Mr. Ved Kumar Jain, Mr. Nischay Kantoor & Mr. Govind Gupta, Advs. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MS. JUSTICE TARA VITASTA GANJU O R D E R % 21.10.2024 CM Nos.56662/2024 & 56663/2024 1. For the reasons stated in the applications, the delay in filing and re- filing the present appeal is condoned. 2. The applications are disposed of. ITA 506/2024 3. The Revenue has filed the present appeal impugning the common order dated 05.08.2022 passed by the learned ITAT in a batch of appeals / cross appeals including the assessee’s appeal being ITA No.7063/Del/2014 in respect of the assessment year (AY) 2010-11. The Revenue has filed the present appeal in respect of the impugned order insofar as it allowed the assessee’s appeal (ITA No.7063/Del/2014 for AY 2010-11). 4. The principal question projected by the Revenue relates to the addition of ₹4,40,76,00,000/- on account of disallowance under Section 14A of the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/10/2024 at 12:02:43

Income Tax Act, 1961 (hereafter the Act). The assessee’s exempt income for the relevant assessment year (AY 2010-11) comprised of interest amounting to ₹999.12 crores on tax free bonds and dividend of ₹77.70 crores. These incomes were not chargeable to tax by virtue of Section 10 of the Act. The AO had sought to make a disallowance of expenditure under Section 14A of the Act in proportion to the income exempt from tax. 5. Admittedly, the assessee had not borrowed any funds for making an investment in the interest free bonds. The bonds were issued as a result of a One Time Settlement Scheme whereby, amounts due from other accumulated debtors were converted into the said investment. The dividend earned by the assessee was in respect of its own subsidiary joint venture company. 6. This Court is informed that the appeal preferred by the Revenue in respect of the common order impugned in the present petition in respect of other assessment years [being ITA Nos.502/2024 and 503/2024] have been dismissed by the Coordinate Bench of this Court on the ground that no substantial question of law arises in the present appeal. 7. Concededly, a similar order is required to be passed in this appeal as well. 8. Accordingly, the present appeal is dismissed. VIBHU BAKHRU, J TARA VITASTA GANJU, J OCTOBER 21, 2024 ‘gsr’ Click here to check corrigendum, if any This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/10/2024 at 12:02:43

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