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TMI Blog2022 (11) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... no merits and the same are dismissed. Appeal filed by the Revenue is dismissed. - ITA No. 290/Ahd/2020 - - - Dated:- 4-11-2022 - Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Appellant : Shri Biren Shah, A.R. For the Respondent : Shri James Kurian, CIT-DR ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Revenue against order dated 13.02.2020 passed by the Commissioner of Income Tax (Appeals)-1, Ahmedabad, as against the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) relating to the Assessment Year (A.Y) 2015-16. 2. The Registry has noted that there is a delay of 47 days in filing the above appeal. The appeal is filed on 03.06.2020. This period falls under COVID-Pandemic situation, thus following Hon ble Supreme Court judgment dated 23.3.2020 in suo moto Writ Petition (Civil) No.3 of 2020, vide Hon ble Supreme Court has extended time limit for filing appeals w.e.f. 15.3.2020. Thus, there is no delay in filing the above appeal and we take the appeal of the assessee for adjudication 2.1. The brief facts of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 5/2014 dated 11/02/2014 which clarified that Rule 8D read with section 14A of the Act is applicable where the assessee has not earned any exempt income. Thus the assessing officer disallowed u/s. 14A of Rs. 21,07,73,322/- comprising of interest disallowance of Rs. 46,12,522/- and administrative expenditure of Rs. 20,61,60,800/- and demanded tax thereon. Similar adjustment is also made while computing book profit u/s. 115JB of the Act. 3. Aggrieved against the assessment order, the assessee filed an appeal before the Ld. Commissioner of Income Tax(Appeals). During the appellate proceedings, the assessee contended that the disallowance cannot be made under Rule 8D as it has not earned any dividend income in the year under consideration and there was sufficient own funds for such investments and relied upon various case laws. Further the assessee contended that it has earned higher interest income than interest expenditure and as such income should be netted off against interest expenditure. The assessee further submitted that no such adjustment of Section 14A disallowance can be made u/s. 115JB and relied upon decision of the Jurisdictional Tribunal. After considering the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -12 - Whether section 14A can only be triggered, if, assessee seeks to square off expenditure against income which does not form part of total income under Act; rule 8D only provides for a method to determine amount of expenditure incurred in relation to income, which does not form part of total income of assessee and it cannot go beyond what is provided in section 14A - Held yes - Whether where no exempt income i.e., dividend, was earned in relevant assessment year by assessee, section 14A could not be invoked - Held yes [Para 8] [Matter remanded] The SLP fried by Revenue against the said decision is dismissed by Supreme Court on 02/07/2018 [2018] 95 taxmann.com 250 (SC). (iv) Hon'ble Supreme Court of Indie in case of PCIT Vs Oil Industry Development Board [2019] 103 taxmann.com 326 Section 14Aofthe Income-tax Act, 1961 - Expenditure incurred in relation to income not includible in total income (Applicability of) - In course of appellate proceedings, Tribunal held that in absence of any exempt income, disallowance under section 14-A of any amount was not permissible - High Court upheld order passed by Tribunal -Whether, on facts, SLP filed against decision of Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bench followed assessee s own case for the assessment year 2013-14 and restricted the disallowance u/s. 14A of the Act to the actual dividend income earned of Rs. 50,000/- following Jurisdictional High Court Judgment in the case of Vision Finstock Ltd. in Tax Appeal No. 486 of 2017. Thus the Ld. A.R. pleaded that the deletion made by the Ld. CIT(A) does not require any interference and dismiss the Revenue appeal. 6. We have heard the arguments of both sides and also perused the relevant materials available on record. It is an admitted fact that there is no dividend income earned by the assessee during this financial year. It is also not in dispute that the assessee had made investments out of its own funds during the assessment year. The Jurisdictional High Court in the case of CIT vs. Corrtech Energy Pvt. Ltd. [45 Taxmann.com 116] held that when the assessee has not claimed any exempt income in this year, no question of disallowance u/s. 14A to be made, following the judgment of the Hon ble High Court of Punjab Haryana in the case of Winsome Textile Industries Ltd. [319 ITR 204]. 6.1. Similarly Delhi High Court in the case of Cheminvest Ltd. vs. CIT [234 Taxmann.com 761] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, - (a) in sub-section (1), for the words For the purposes of , the words Notwithstanding anything to the contrary contained in this Act, for the purposes of shall be substituted; (b) after the proviso, the following Explanation shall be inserted, namely:- '[Explanation. -For the removal of doubts, it is hereby clarified that notwithstanding anything to the contrary contained in this Act, the provisions of this section shall apply and shall be deemed to have always applied in a case where the income, not forming part of the total income under this Act, has not accrued or arisen or has not been received during the previous year relevant to an assessment year and the expenditure has been incurred during the said previous year in relation to such income not forming part of the total income.] 5. However a perusal of the Memorandum of the Finance Bill, 2022 reveals that it explicitly stipulates 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. The relevant extract of Clauses 4, 5, 6 7 of the Memorandum of Finance Bill, 2022 are reprod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in existence at the relevant time. The mere fact that the assessments in question has (sic) somehow remained pending on 1-4-1979, cannot be cogent reason to make the Explanation applicable to the cases of the present assessees. This fortuitous circumstance cannot take away the vested rights of the assessees at hand. 11. The reasoning of the Gauhati High Court was expressly affirmed by this Court in CIT v. Goslino Mario [(2000) 10 SCC 165 : (2000) 241 ITR 312] . These decisions are thus authorities for the proposition that the 1983 Explanation expressly introduced with effect from a particular date would not effect the earlier assessment years. 12. In this state of the law, on 27-2-1999 the Finance Bill, 1999 substituted the Explanation to Section 9(l)(ii) (or what has been referred to by us as the 1999 Explanation). Section 5 of the Bill expressly stated that with effect from 1-4-2000, the substituted Explanation would read: Explanation.-For the removal of doubts, it is hereby declared that the income of the nature referred to in this clause payable for- (a) service rendered in India; and (b) the rest period or leave period which is preceded and succe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Assessment Year 2000-2001 and subsequent years. 16. The departmental understanding of the effect of the 1999 Amendment even if it were assumed not to bind the respondents under Section 119 of the Act, nevertheless affords a reasonable construction of it, and there is no reason why we should not adopt it. 17. As was affirmed by this Court in Goslino Mario [(2000) 10 SCC 165 : (2000) 241 ITR 312] a cardinal principle of the tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication. (See a/so Reliance Jute and Industries Ltd. v. CIT [(1980) 1 SCC 139 : 1980 SCC (Tax) 67] .) An Explanation to a statutory provision may fulfil the purpose of clearing up an ambiguity in the main provision or an Explanation can add to and widen the scope of the main section [See Sonia Bhatia v. State of U.P., (1981) 2 SCC 585, 598 : AIR 1981 SC 1274, 1282 para 24]. If it is in its nature clarificatory then the Explanation must be read into the main provision with effect from the time that the main provision came into force [See Shyam Sunder v. Ram Kumar, (2001) 8 SCC 24 (para 44); Brij Mohan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o as to include with effect from 1979, income payable for service rendered in India . 19. When the Explanation seeks to give an artificial meaning to earned in India and brings about a change effectively in the existing law and in addition is stated to come into force with effect from a future date, there is no principle of interpretation which would justify reading the Explanation as operating retrospectively. 8. Consequently, this Court is of the view that the amendment of Section 14A, which is for 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. 7.1. Respectfully following the above judicial principles the insertion of Explanation to Section 14A by the Finance Act, 2022 is operative only from the Assessment Year 2022-23 onwards and not applicable for the earlier Assessment Years and therefore the argument of the Ld. D.R. is hereby rejected. 7.2. The decision relied by Ld. A.R. in assessee s own case in ITA No. 162/Ahd/2020 for the Assessment Year 2014-15 is clearly distinguishable, wherein dividend income has been earned by the assessee during the financial year ..... X X X X Extracts X X X X X X X X Extracts X X X X
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