2024 (12) TMI 505 - AT - Income Tax

ITAT Delhi Overturns PCIT's Order Due to Lack of Inquiry on Disallowance, Rules Explanation to Section 14A Inapplicable.

The ITAT Delhi ruled in favor of the assessee, overturning the PCIT's order for the assessment year 2019-20. The decision was based on the absence of ... Revision u/s 263 - as per CIT there was no inquiry or verification carried out so as to invoke disallowance u/s 14A - HELD THAT:- We find no merit in the Revenue’s arguments supporting the PCIT’s action invoking his section 263 revision jurisdiction regarding section 14A read with Rule 8D disallowance. This is for the precise reason that in case of Era Infrastructure (India) Ltd [2022 (7) TMI 1093 - DELHI HIGH COURT] and Williamson Financial Services Ltd. [2024 (9) TMI 1571 - GAUHATI HIGH COURT] and Avantha Realty Ltd. [2024 (6) TMI 987 - CALCUTTA HIGH COURT] have already settled the instant issue in assessee’s favour and against the department whilst concluding that section 14A Explanation does not apply in absence of any exempt income with retrospective effect. There is no material in the case file indicating the assessee to have derived any exempt income in the relevant previous year. We thus reverse the learned PCIT’s impugned revisional directions in very terms. Decided in favour of assessee. The ITAT Delhi allowed the assessee's appeal against the PCIT's order for assessment year 2019-20, citing lack of inquiry for disallowance under section 14A. The ITAT ruled in favor of the assessee, stating that section 14A Explanation does not apply if no exempt income is derived. The appeal was allowed on 6th December, 2024.