Revenue's appeal on ITAT's Section 14A order dismissed; CBDT circular not retroactive.

The High Court dismissed the Revenue's appeal against the ITAT's order regarding the deletion of a disallowance under Section 14A of the Income Tax Act. The Court rejected the Revenue's request for reconsideration by a larger Bench, emphasizing that a circular from CBDT cannot override a binding court decision. It concluded that the circular could not be applied retroactively to alter the outcome based on a previous court judgment. Therefore, the Court found no substantial question of law and dismissed the appeal.

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Issues:
- Appeal by Revenue against ITAT order
- Deletion of disallowance under Section 14A of the Act
- Reliance on previous court decision
- Request for reconsideration by a larger Bench
- Validity of Circular No. 5/2014 of CBDT
- Court's decision and dismissal of appeal

Analysis:
The High Court heard an appeal by the Revenue against an order of the Income Tax Appellate Tribunal (ITAT) for the Assessment Year 2009-10. The main issue revolved around the deletion of a disallowance of &8377;1,36,94,050 under Section 14A of the Income Tax Act read with Rule 8D of the Income Tax Rules, 1962. The ITAT based its decision on a previous court judgment in CIT v. Holcim India (P) Ltd. The Revenue argued for a reconsideration by a larger Bench, citing Circular No. 5/2014 of the Central Board of Direct Taxes dated 11th February 2014.

The Court, after hearing the arguments, found no merit in the Revenue's plea for reconsideration. It noted that the judgment in CIT v. Holcim India (P) Ltd. was not challenged by the Revenue and that a circular from CBDT cannot override a binding court decision. The Court emphasized that the decision in question was delivered before the circular and, therefore, the circular could not be applied retroactively to change the outcome. Ultimately, the Court concluded that no substantial question of law arose for determination in this case and dismissed the appeal accordingly.

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