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TMI Blog2023 (7) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... .Y. 2018-19 wherein the Revenue has taken the following grounds of appeal: 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the disallowance of Rs.81,03,223/- made u/s 14A r.w.s 8D where the assessee has not claimed exempt income? 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in ignoring the amendment made by the Finance Act, 2022 thereby inserting an explanation below section 14A which is read as under: 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 any 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. 3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in holding that disallowance u/s 14A of the Act will n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Circular. It was accordingly submitted that the appeal filed by the Revenue therefore deserve to be heard on merits. In this regard, it was submitted that the Ld. CIT(A) was not justified in holding that the disallowance under section 14A will not exceed the total tax exempt income earned by the assessee thereby implicitly holding CBDT Circular No. 5/2014 dt. 11/02/2014 to be illegal. 5. It was further submitted that the Ld. CIT(A) has ignored the amendment brought in by the Finance Act, 2022 wherein an explanation has been inserted to Section 14A wherein it has been clarified that 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 has not accrued or arisen or has not been received during the previous year and the expenditure has been incurred during the said previous year in relation to such income not forming part of the total income. It was accordingly submitted that the decision of the Ld. CIT(A) is against the law as per the amendment made by the Finance Act, 2022 and also interpreted by the Coordinate Guwahati Bench in case of ACIT Vs. Williamson Financial Services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yet there is no stay of the said judgment till date. Consequently, in view of the judgments passed by the Supreme Court in Kunhayammed and Others vs. State of Kerala and Another, (2000) 6 SCC 359 and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras (1992) 3 SCC 1, the present appeal is dismissed being covered by the judgment passed by the learned predecessor Division Bench in PCIT vs. J L FS Energy Development Company Ltd (supra) and Chem invest Limited vs. Commissioner of Income Tax-VI, (2015) 378 ITR 33. 10. Accordingly, the appeal and application are dismissed. However, it is clarified that the order passed in the present appeal shall abide by the final decision of the Supreme Court in the SLP filed in the ease of PCIT vs. IL FS Energy Development Company Ltd (supra). 8. Regarding contention of the ld DR that SLP has been admitted by the Hon ble Supreme Court, it was submitted that mere admittance of an SLP is no bar on applicability of the decision of the Hon ble High Courts and more so, where there are decisions of the jurisdictional High Court and the Tribunal in assessee s own case. 9. We have heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly doesn t fall under the exception 10(b) of the CBDT s Circular No. 3 of 2018 as so contended by the ld DR before us and we are unable to accede to the said prayer so made on behalf of the Revenue and given that the tax effect involved is Rs. 25,03895/- which is below the prescribed threshold of filing appeal before the Tribunal, we are of the considered view that the appeal so filed by the Revenue deserve to be dismissed on account of low tax effect. 11. Our view is fortified by the decision of Hon ble Punjab Haryana High Court in case of Pr. CIT-1 Vs. Sukhwant Singh (in ITA No. 283 of 2019 dt. 20/02/2020) wherein an identical matter relating to the appeal filed by the Revenue as to whether it falls under exception carved out under para 10(b) of CBDT Circular No. 3 of 2018 was under consideration and the Hon ble High Court has dismissed the appeal filed by the Revenue holding that even the Tribunal has no jurisdiction to declare a CBDT circular ultra vires and therefore, the case does not fall in the exception clause and the contents of the decision read as under: The revenue is in appeal under Section 260A of the Income Tax Act, 1961 (for short, 'the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Rule? (vi) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT has erred in not upholding disallowance of Rs. 11,82,978/- u/s 14A of the Income Tax Act on the ground that disallowance made cannot exceed exempt income without appreciating the fact that applicability of Section 14A or Rule 8D does not depend on earning of income as held by Supreme Court in the case of CIT vs. Rajender Prasad Moody (1978), 115 ITR 519? (vii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT has erred in not upholding disallowance of Rs. 11,82,978/- u/s 14A of the Income Tax Act on the ground that disallowance made cannot exceed exempt income without appreciating the fact that there is no such restriction in Section 14A or in rule 8D and further clarified by CBDT Circular No. 5 of 2014? (viii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT has erred in ignoring the 3 of 7 ITA No. 283 of 2019 [4] legislative intent expressed in CBDT's Circular No. 5/2014 dated 11.2.2014, which explicitly states that expenses relatable to earning of exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid down by Hon'ble Supreme Court decision in CIT v. Walfori Share and Stock Brothers P. Ltd., 326 ITR 1(SC), which has been confirmed in 91 Taxman.com 154 (SC) and thus legislation relying on Winsome Textiles Industries Ltd. stands superceded? The brief facts are that the assessment year involved is 2013- 14. The income tax return was filed claiming deduction under Chapter VI-A of the Act. The case was selected for scrutiny. The Assessing Officer treated the loan received from M/s Acme Builders Private Limited as deemed dividends and made additions under the head income from other sources . Further disallowance under Section 14A of the Act was also made vide order dated 29.1.2016. The first appeal filed was dismissed on 14.12.2016. The Tribunal allowed the appeal vide order dated 29.10.2018, hence the present appeal of the revenue. In the appeal, it is pleaded that the tax effect is ₹ 46,91,541/-, however it is argued that the case falls under the exception carved out in para 10(b) of CBDT Circular No.3 of 2018 dated 11.7.2018. The same is reproduced below: 10. Adverse judgments relating to the following issues should be contested on merits notwithst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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