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TMI Blog2025 (1) TMI 1337X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 14A of the Act the tax liability computed under the normal provisions of the Act would be much more than liability under Section 115JB of the Act, and the Assessee would be assessed under normal provisions of the Act. Therefore, Ground No.2 raised by the Revenue has been rendered academic in nature. X X X X Extracts X X X X X X X X Extracts X X X X ..... 32,96,815/- after making addition of INR.7,98,56,915/- under Section 14A read with Rule 8D of the Income Tax Rules, 1961 (for short 'IT Rules') to the returned income of INR.154,34,39,900/- [as per return filed under Section 153A of the Act]. The Assessee was assessed under normal provisions of the Act. However, the Assessing Officer also computed the Book Profits under Section 115JB of the Act by increasing the profits as per Profit and Loss Account by the aforesaid amount of INR.7,98,56,915/-. 4. Being aggrieved, the Assessee preferred appeal against the Assessment Order which was disposed off as partly allowed by the CIT(A) vide order, dated 08/08/2023. Taking note of the fact that the Assessee did not erred any exempt income during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Rules, 1962 (hereinafter referred to as 'the Rules') to INR 7,43,185/- being the amount of exempt income earned by the Assessee during the relevant previous year. 4. The Learned Department Representative appearing before us submitted that the CIT(A) had granted relief to the Assessee by following the decision of Hon'ble Bombay High Court in the Case of Nirved Traders Pvt. Ltd. [ITA No. 149 of 2017, decided on 23.04.2019]. However, in view of the amendments introduced by the Finance Act 2022, the aforesaid judgment no longer hold good as the law stands amended retrospectively. While laying emphasis on the expression "shall be deemed to have always applied" used in the Explanation to Section 14A of the Act inserted by the Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative submitted that the order passed by the CIT(A) be set aside and addition made by the Assessing Officer be restored as the provisions contained in Section 14A of the Act do not provide that the disallowance under Section 14A of the Act is to be restricted to the amount of exempt income earned by an assessee during the relevant previous year. 5. Per contra, the Ld. Authorised Representative for the Assessee submitted that the amendments to Section 14A introduced by the Finance Act 2022 have prospective application. He submitted that the Hon'ble Bombay High Court and the Hon'ble Supreme Court have a number of cases held that the disallowance under Section 14A of the Act cannot exceed the amount of exempt income earned during the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed' does not lead to a conclusion that the amendments are to applied to be applied retrospectively. He submitted that the CIT(A) has correctly granted relief to the Assessee by following the judgment of the jurisdictional High Court. 6. We have considered the rival submissions and perused the material on record. It is admitted position that the Hon'ble Bombay High Court and the Hon'ble Supreme Court have clearly held that disallowance under Section 14A of the Act cannot exceed the amount of exempt income earned by the Assessee during the relevant previous year. The stand of the Revenue is that amendments to Section 14A introduced by the Finance Act 2022 apply retrospectively and therefore, the aforesaid judgments no longer hold good. Wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issue. Ground No.1 raised by the Revenue is, therefore, dismissed. Ground No.2 9. As regards Ground No.2 raised by the Revenue is concerned, we find that the Assessee was assessed under normal provisions of the Act. Even after deletion of disallowance made under Section 14A of the Act the tax liability computed under the normal provisions of the Act would be much more than liability under Section 115JB of the Act, and the Assessee would be assessed under normal provisions of the Act. Therefore, Ground No.2 raised by the Revenue has been rendered academic in nature. In any case we find that the CIT(A) had granted relief to the Assessee by following the decision of the Special Bench of the Tribunal in the case of Vireet Investments Privat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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