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Facts
The Revenue filed two appeals challenging the deletion of disallowance made under Section 14A of the Income Tax Act, 1961. The assessee did not claim any exempt income during the assessment years 2014-15 and 2015-16. The CIT(A) deleted the disallowance, which was upheld by the Tribunal.
Held
The Tribunal held that the disallowance under Section 14A cannot be made in the absence of any exempt income, even considering the Explanation added to Section 14A by the Finance Act, 2022. The Tribunal noted that the Explanation has prospective effect and does not apply retrospectively to the assessment years in question.
Key Issues
Whether disallowance under Section 14A is leviable in the absence of exempt income, and if the Explanation added by Finance Act, 2022 has retrospective effect.
Sections Cited
14A, Rule 8D
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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI SATBEER SINGH GODARA & SHRI OMKARESHWAR CHIDARA
Income Tax Officer 14(3)(1), M/s. Supreme Realty Room No.554, Pvt. Ltd., Aayakar Bhawan, Gr Floor, HDIL Tower, Vs. New Marine Lines, Anant Kanekar Marg, Mumbai – 400 020 Mumbai Maharashtra-400051 PAN: AALCS0761J (Appellant) (Respondent) Present for: Assessee by : None Revenue by : Dr. Kishor Dhule, CIT DR & Shri Manish Ajudiya, Sr. AR. Date of Hearing : 18 . 07 . 2024 Date of Pronouncement : 24 . 07 . 2024 O R D E R Per : Satbeer Singh Godara, Judicial Member: These Revenue’s twin appeals & 2068/M/2024, for assessment years 2014-15 & 2015-16 arise against the National Faceless Appeal Centre(NFAC) Delhi’s as many DIN & order No.ITBA/ NFAC/S/250/2023- 24/1061253799(1) & No.ITBA/NFAC/S/250/2023-24/ 1061253141(1) both dated 21.02.2024, in proceedings under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).
Case called twice. None appears at assessee’s behest. It is accordingly proceeded ex-parte.
The Revenue’s former lead appeal for A.Y. 2015-16 raises the following sole substantive ground:
“Whether on the facts & circumstances of case and in law the CIT(A) erred in deleting the disallowance made u/s.14A ignoring the fact that the disallowance has to be made even if there is no exempt income during the year considering the Explanation added to section 14A which makes it mandatory even when there is no exempt income and language of Explanation makes it clear that it is applicable retrospectively.”
The Revenue’s latter appeal also appears to be raising the very substantive grievance since the only exception herein is that of the quantum of section 14A r.w.Rule 8D disallowance of Rs.1,84,27,407/-.
We proceed further and put the Revenue to the clinching question of the quantum of assessee’s exempt income derived in both these assessment years. The Revenue is indeed more than fair; that the assessee has not derived any such exempt income in these twin assessment years. That being the case, we find no merit in the Revenue’s instant identical sole Ltd. (2017) 85 taxmann.com 13 (Bom.) that the impugned disallowance does not apply in absence of any exempt income.
The Revenue at this stage quotes the statutory Explanation to section 14A inserted by the Finance Act, 2022 w.e.f. 01.04.2022. This Revenue’s last argument is found to be devoid of any merit in light of Principal Commissioner of Income-tax v. Keti Construction Ltd. (2024) 162 taxmann.com 278 (MP) and PCIT vs. Era Infrastructure (India) Ltd. (2022)
144 taxmann.com 289 (Delhi) that the same carries only prospective than retrospective effect. We reiterate that our instant adjudication is confined to 2014-15 and 2015-16 only.
We accordingly reject the Revenue’s instant identical sole substantive grievance in very terms.
These Revenue’s twin appeals i.e. & 2070/M/2024 are dismissed in above terms. A cop of this common order be placed in the respective case files.
Order pronounced in the open court on 24.07.2024.