ITAT limits disallowance under Sec 14A, allows appeal, condones delay, follows Finance Act 2022 amendments

The ITAT allowed the appeal, limiting the disallowance under section 14A of the Income Tax Act to the exempt income received during the year. The delay in filing the appeal was condoned by the ITAT, considering the reasons provided. Regarding the applicability of Finance Act 2022 amendments, the ITAT followed the judgment of the Hon'ble Delhi High Court, partly allowing the appeal of the assessee while awaiting the final decision of the Supreme Court in a related case.

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Issues:
1. Disallowance under section 14A of the Income Tax Act.
2. Condonation of delay in filing the appeal.
3. Applicability of Finance Act 2022 amendments.

Detailed Analysis:
1. Disallowance under section 14A of the Income Tax Act:
The appellant challenged the disallowance of Rs. 81,67,657 made under section 14A r.w. Rule 8D of the Act by the Assessing Officer (AO). The AO applied section 14A as the appellant had investments in associates and received exempt dividend income. The CIT(A) upheld the AO's decision, leading to the appeal before the ITAT. The appellant argued that section 14A disallowance cannot exceed the exempt income earned, citing the Pragathi Krishna Gramin Bank case. The ITAT found merit in this argument and allowed the appeal, limiting the disallowance to the exempt income received during the year.

2. Condonation of delay in filing the appeal:
The appellant faced a delay in filing the appeal before the ITAT, which was explained with reasons. The ITAT, after considering the explanation, condoned the delay, citing the judgment of the Hon'ble Supreme Court in the case of Collector, Land Acquisition Vs. MST. Katiji and Others. The ITAT found the delay to be due to reasonable and sufficient cause, justifying its decision to condone the delay in filing the appeal.

3. Applicability of Finance Act 2022 amendments:
Both parties debated the applicability of the amendments made by the Finance Act 2022. The ITAT noted conflicting decisions from different benches on the retrospective nature of the amendments. While the ITAT Gauhati Bench considered the amendments retrospective, the Hon'ble Delhi High Court clarified the non-retrospective effect of the amendments in a recent judgment. Considering the later judgment of the Hon'ble Delhi High Court, the ITAT allowed the appeal of the assessee subject to the specific para of the judgment, awaiting the final decision of the Supreme Court in a related case. The ITAT relied on the judgment of the Hon'ble Delhi High Court to resolve the issue of the Finance Act 2022 amendments, ultimately partly allowing the appeal of the assessee.

In conclusion, the ITAT addressed the issues of disallowance under section 14A, condonation of delay, and the applicability of Finance Act 2022 amendments in a detailed and thorough manner, providing a comprehensive analysis of each issue leading to the partial allowance of the appeal by following relevant legal precedents and judgments.

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