2023 (3) TMI 483 - HC - Income Tax

Condonation of delay of 180 days in re-filing the appeal - HELD THAT - The reason given is that certain information was required from the Income Tax Department to remove the defects. Although the reason is not satisfactory, given the fact that the impugned order was passed around the time when Corona Virus was raging in the city we are inclined to take a benevolent view. According the delay is condoned. Disallowance u/s 14A read with Rule 8D - appellant made investment in subsidiary/associated companies for strategic purposes - HELD THAT - As a matter of fact, in the decision rendered in M/S MMTC LTD 2022 (12) TMI 651 - DELHI HIGH COURT the Court even dealt with the amendment brought about u/s 14A of the Finance Act, 2022 - Given these circumstances, we are of the view that, insofar as this case is concerned, no substantial question of law arises for consideration. We are informed that appellant/revenue has filed a Special Leave Petition vis-a-vis the judgment in PCIT v. IL FS Energy Development Company Ltd 2018 (5) TMI 2126 - SC ORDER In case, appellant/revenue were to succeed, it would then have liberty to approach the court to re-open the appeal.

Summary

Issues:
Delay in re-filing the appeal seeking condonation, Disallowance under Section 14A of the Income Tax Act, 1961

Delay in re-filing the appeal seeking condonation:
An application was filed by the appellant seeking condonation of a 180-day delay in re-filing the appeal. The reason provided was the requirement of information from the Income Tax Department to rectify defects. Despite the unsatisfactory reason, considering the impact of the Covid-19 pandemic, the delay was condoned, and the application was disposed of accordingly.

Disallowance under Section 14A of the Income Tax Act, 1961:
The appeal was against an order by the Income Tax Appellate Tribunal regarding a disallowance made by the Assessing Officer under Section 14A of the Income Tax Act, 1961. The issue revolved around an amount disallowed under Rule 8D of the Income Tax Rules, 1962. The Commissioner of Income Tax Appeals found that the appellant made investments for strategic purposes and had not earned any exempted dividend income. The Tribunal upheld these findings, which were also affirmed in a previous judgment. The appellant's counsel acknowledged that the issue was not in favor of the revenue based on a judgment by a coordinate bench. The court referred to various judgments, including one ruling that an amendment to Section 14A would not operate retrospectively. Given the circumstances and absence of any substantial question of law, the appeal was closed, with the appellant having the option to re-open the appeal if successful in a pending Special Leave Petition related to another case.

This detailed analysis covers the issues of delay in re-filing the appeal seeking condonation and the disallowance under Section 14A of the Income Tax Act, 1961, providing a comprehensive overview of the judgment delivered by the Delhi High Court.