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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI SANDEEP SINGH KARHAIL, HONBLEShri Sudesh Garg Shri Mirza Azhar Beig
O R D E R PER NARENDRA KUMAR BILLAIYA (AM)
This appeal by the revenue is preferred against order of the Learned Commissioner of Income-Tax (Appeals) – 54, Mumbai [hereinafter in short “Ld. CIT(A)”] dated 04.12.2023 pertaining to A.Y.2020-2021.
(A.Y: 2020-21) M/s. Anant Raj Limited 2. The sum and substance of the grievance of the revenue is that the Ld. CIT(A) erred in deleting the addition made under section 14A of Income-tax Act, 1961 (in short “Act”) ignoring the clarificatory Explanation of disallowance under section 14A(1) inserted vide the Finance Act, 2022 wherein it has been mentioned that the provisions of section 14A shall apply and shall be deemed to have always applied even in a case when exempt income has not accrued or arisen or has not been received during the previous year but expenditure has been incurred during the said previous year in relation to earning of such exempt income.
The facts of the case in hand are that during the year under consideration the assessee did not earn any income claimed exempt from tax. Therefore, assessee strongly contended that no disallowance need to be made under section 14A of the Act. Whereas the case of the revenue revolves around the Explanation introduced to Section 14A of the Act vide the Finance Act, 2022. The Hon’ble Delhi High Court in the case of Era Infrastructure (India) Ltd., [141 taxmann.com 289] has held that the application of the said Explanation to be prospective in nature effective from 01.04.2022. Therefore, respectfully following the decision of the Hon’ble Delhi High Court, no disallowance could be made under Page No. 2
(A.Y: 2020-21) M/s. Anant Raj Limited section 14A of the Act if there is no exempt income earned during the year under consideration, we decline to interfere with the findings of the Ld. CIT(A).
In the result, appeal filed by the revenue is dismissed.
Order pronounced in the open court on 22nd May, 2024.