2024 (7) TMI 1528 - HC - Income Tax

Disallowance u/s 14A - explanation inserted to Section 14A by Finance Act, 2022 applied Retrospectively or prospectively - HELD THAT - As per final judgment rendered inter partes and where while dealing with an identical issue, the Court in Pr. CIT vs. Era Infrastructure (India) Ltd. 2022 (7) TMI 1093 - DELHI HIGH COURT held that the amendment made to section 14A will take effect from 1st April, 2022 and will apply in relation to the assessment year 2022-23 and subsequent assessment years. Also Supreme Court in SedcoForex International Drill. Inc. 2005 (11) TMI 25 - SUPREME COURT has held that a retrospective provision in a tax Act which is for the removal of doubts cannot be presumed to be retrospective, even where such language is used, if it alters or changes the law as it earlier stood. Following the aforesaid judgment, we dismiss the instant appeal.

Summary

Issues:
1. Interpretation of a retrospective provision in a tax Act.
2. Application of the principles laid down in previous judgments to the present case.

Analysis:
The High Court of Delhi, comprising Hon'ble Mr. Justice Yashwant Varma and Hon'ble Mr. Justice Ravinder Dudeja, considered the interpretation of a retrospective provision in a tax Act in the case at hand. The appellant's counsel referred to a final judgment in a similar matter, highlighting the importance of the Supreme Court's decision in SedcoForex International Drill. Inc. v. CIT [2005] 279 ITR 310 (SC). The court noted that a retrospective provision "for the removal of doubts" cannot be presumed to be retrospective if it alters or changes the law as it previously stood. The court emphasized that the law to be applied is that in force in the relevant assessment year unless expressly provided otherwise. The judgment further cited the Supreme Court's decision in M. M. Aqua Technologies Ltd. v. CIT [2021] 436 ITR 582 (SC), reinforcing the principle that a retrospective provision altering the existing law is not presumed to be retrospective, regardless of the language used.

In the case at hand, the court applied the principles laid down in the aforementioned judgments and dismissed the appeal. The court's decision was based on the understanding that a retrospective provision that changes the law cannot be assumed to have retrospective effect. By referencing previous judgments and legal principles, the court provided a comprehensive analysis of the issue at hand, emphasizing the importance of interpreting tax laws in a manner consistent with established legal principles. The judgment serves as a significant precedent in cases involving the interpretation of retrospective provisions in tax legislation, ensuring clarity and consistency in legal interpretation.