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2023 (11) TMI 346 - HC - Income TaxDisallowance u/s 14A r.w.r.8D - in the period in issue assessee had not earned any exempt income - HELD THAT - Issue concerning whether Section 14A r.w.r. 8D could not be triggered where no exempt income has been earned as decided in Bhilwara Energy Ltd. case 2023 (7) TMI 1316 - DELHI HIGH COURT as relying on Cheminvest Limited 2015 (9) TMI 238 - DELHI HIGH COURT , Chettinad Logistics (P.) Ltd.. 2017 (4) TMI 298 - MADRAS HIGH COURT and IL And FS Energy Development Co Ltd 2023 (5) TMI 1266 - DELHI HIGH COURT . Also Special Leave Petition (SLP) was preferred against Cheminvest Limited, which was dismissed 2018 (7) TMI 567 - SC ORDER . Also whether the Finance Act, 2022 could have retrospective effect, the said aspect also stands covered by the judgment rendered in Principal Commissioner of Income Tax (Central)-2 v. M/s Era Infrastructure (India) Ltd . 2022 (7) TMI 1093 - DELHI HIGH COURT - Decided against revenue.
Issues involved: Condonation of delay in filing and re-filing the appeal, Disallowance under Section 14A of the Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962, Applicability of Rule 8D where no exempt income has been earned, Retrospective effect of the Finance Act, 2022.
Condonation of Delay: The appellant/revenue sought condonation of delay of 31 days in filing and 136 days in re-filing the appeal. The delay was condoned based on the reasons provided in the applications, and the applications were disposed of accordingly. Disallowance under Section 14A: The appeal pertained to Assessment Year 2015-16 and aimed to challenge the order passed by the Income Tax Appellate Tribunal regarding the disallowance under Section 14A of the Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962. The appellant argued that expenses would have been incurred in managing investments due to substantial investments made. However, it was noted that the respondent had not earned any exempt income during the relevant period. The court referred to previous judgments to establish that the issue was already covered and dismissed the appeal as no substantial question of law arose for consideration. Applicability of Rule 8D where no Exempt Income: The court held that the issue of whether Section 14A of the Income Tax Act read with Rule 8D of the Income Tax Rules could be triggered in the absence of exempt income was already settled by previous judgments. The court referred to specific cases and highlighted that the issue was not debatable. The court emphasized that the position was clarified by Finance Act, 2022, and concluded that the appeal would not be entertained as no substantial question of law was identified. Retrospective Effect of Finance Act, 2022: The court ruled that the retrospective effect of the Finance Act, 2022 was already addressed in a judgment by a coordinate bench of the court. Consequently, the appeal was closed as no substantial question of law was found to be raised. Parties were instructed to act based on the digitally signed copy of the judgment.
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