2022 (12) TMI 651 - HC - Income Tax

Disallowance u/s 14A - respondent/assessee had not earned income which was exempt from imposition of tax - Scope of amendment which was brought about in Section 14A - HELD THAT - Revenue as fairly placed before us a judgment M/s Era Infrastructure (India) Ltd 2022 (7) TMI 1093 - DELHI HIGH COURT which has ruled on the amendment which was brought about in Section 14A of the Act via Finance Act 2022. The coordinate bench has ruled that the amendment will not operate retrospectively. It appears that the coordinate bench in judgment has referred to judgments passed by other coordinate benches rendered in PCIT v. IL FS Energy Development Company Ltd. 2017 (8) TMI 732 - DELHI HIGH COURT and Cheminvest Limited 2015 (9) TMI 238 - DELHI HIGH COURT As informed that the decision rendered by the Division Bench of this court in PCIT v. IL FS Energy Development Company Ltd. has been assailed by the appellant/revenue by instituting a special leave petition (SLP), which is pending adjudication. Given these circumstances, since no substantial question of law arises in the present case, at this juncture, the appeal is, accordingly, disposed of.

Summary

Issues:
1. Application for condonation of delay in re-filing the appeal.
2. Controversy regarding disallowance under Section 14A of the Income Tax Act.
3. Interpretation of the amendment in Section 14A of the Act.
4. Reference to judgments by coordinate benches.
5. Pending special leave petition (SLP) challenging a judgment.

Analysis:
1. The judgment begins with an application (CM No.52418/2022) filed by the appellant seeking condonation of an 80-day delay in re-filing the appeal. The respondent does not oppose the application, and the delay is condoned, leading to the disposal of the application.

2. The appeal (ITA 505/2022) is against an order by the Income Tax Appellate Tribunal concerning Assessment Year 2010-2011. The controversy revolves around whether disallowance under Section 14A of the Income Tax Act can be made if the assessee has not earned exempt income. The Tribunal ruled in favor of the assessee.

3. The appellant relies on a judgment by a coordinate bench regarding an amendment in Section 14A brought about by the Finance Act 2022. The coordinate bench held that the amendment does not have retrospective effect. Reference is made to judgments in other cases, and it is noted that a decision by the Division Bench is being challenged in a pending special leave petition.

4. Due to the absence of a substantial question of law arising in the present case, the appeal is disposed of. It is stated that parties will abide by the decision of the Supreme Court if the appellant succeeds in the pending special leave petition. The appeal is finally disposed of in accordance with the mentioned terms.

In conclusion, the judgment addresses the delay in re-filing the appeal, the controversy over disallowance under Section 14A, the interpretation of the amendment in the Act, references to judgments by coordinate benches, and the mention of a pending special leave petition challenging a judgment. The decision is made based on the circumstances presented and the absence of a substantial legal question in the current case.