TaxTMI 
TaxTMI 
2022 (11) TMI 422
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....e above appeal and we take the appeal of the assessee for adjudication 2.1. The brief facts of the case is that the assessee is a company engaged in the business of generation and sale of electricity. For the Assessment Year 2015-16, the assessee filed its Return of Income declaring income of Rs. 3,27,23,22,660/-. The return was selected for scrutiny assessment. On verification of the books of accounts, profit and loss account by the Assessing Officer, it is noticed that the assessee has made investment in shares and claimed expenditure on account of interest payment on loans. The assessee was requested to explain whether provisions of section 14A read with Rule 8D is applicable in its case. 2.2. The assessee replied that the investments made by it, were strategic in nature and were for the purposes of its business, made in its subsidiaries, concerned with the Power Sector in which the assessee Company itself is engaged. Thus the intention of the assessee Company was not to earn exempt income. As it can be clearly seen from the Balance Sheet that the assessee Company's own funds were invested, i.e. Share Capital and Reserves and Surplus, are significantly high, as compared to....
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....an be made u/s. 115JB and relied upon decision of the Jurisdictional Tribunal. After considering the above submissions, the Ld. CIT(A) deleted the addition as follows: 5.5 On perusal of relevant facts on record, it is found that Appellant has not earned any exempt in year under consideration and various Courts including jurisdictional High Court and Hon'ble Supreme Court has taken a consistent stand that once no exempt income is earned by Appellant, disallowance under Section 14A cannot be made. Reliance is placed on following decisions: (i) Hon'ble Gujarat High Court in case of CIT v. Corrtech Energy Pvt. Ltd. [45 Taxmann.com 116] [Vide Para 3] .....The Id. AR submitted that this finding of Id. CIT(A) is containing to the law settled by various judicial pronouncements. We have given our thoughtful consideration to the facts and the decision relied upon by the Id. AR. The Hon'ble Punjab & Haryana High Court in the case of CIT v. Winsome Textile Industries Ltd. [2009j 319 ITR 204 has held that in the present case, admittedly, the appellant did not make any claim for exemption. In such a situation, section 14A could have no application In this c....
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....r section 14-A of any amount was not permissible - High Court upheld order passed by Tribunal -Whether, on facts, SLP filed against decision of High Court was to be dismissed - Held, yes [Para 3] [In favour of assessee] Considering the above judicial pronouncements and the facts of the case on hand, it is held that, in the year under consideration as the appellant has not earned any exempt income, disallowance under Section 14A made by AO for Rs.21,07,73,322/- is not justified. Therefore, the disallowance for Rs.21,07,73,322/- u/s 14A of the act in the case of appellant is deleted in normal provision of the act as well as in the book profit u/s. 115JB of the Act. The grounds no. 2 & 3 of appeal are allowed. 4. Aggrieved against this order, the Revenue is in appeal before us raising the following Grounds of Appeal: (1) The CIT(A) has erred in law and facts in deleting the addition of Rs.21,07,73,322/- made as per the provisions of section 14A r.w. Rule 8D of the Act. (2) The CIT(A) has erred in law and facts in deleting the addition of Rs.21,07,73,322/- made while computing book profit u/s.115JB of the Act. (3) It is, therefore, prayed....
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....Haryana in the case of Winsome Textile Industries Ltd. [319 ITR 204]. 6.1. Similarly Delhi High Court in the case of Cheminvest Ltd. vs. CIT [234 Taxmann.com 761] held that Section 14A envisages that there should be an actual receipt of income which is not includible in total income; hence, section 14A will not apply, where no exempt income is received or receivable during the relevant previous year. It is seen from the appellate order that the Ld. CIT(A) has followed the above Rulings of the various High Courts and also followed Hon'ble Madras High Court Judgment in the case of CIT vs. Chettinad Logistics (P.) Ltd. [2017] 80 Taxmann.com 221 wherein SLP filed by the Revenue was also dismissed by the Hon'ble Supreme Court on 02/07/2018 which is reported in [2018] 95 Taxmann.com 250. The Ld. CIT(A) also followed dismissal of SLP on disallowance of Section 14A in the case of PCIT vs. Oil Industry Development Board [2019] 103 Taxmann.com 326. Respectfully following the above judicial pronouncements and facts of the assessee's case, the Ld. CIT(A) deleted the disallowance of Rs. 21,07,73,322/- made u/s. 14A of the Act and also in the Book Profit u/s. 115JB of the Act. Therefore the s....
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.... April, 2022 and will apply in relation to the assessment year 2022-23 and subsequent assessment years. The relevant extract of Clauses 4, 5, 6 & 7 of the Memorandum of Finance Bill, 2022 are reproduced hereinbelow: "4. In order to make the intention of the legislation clear and to make it free from any misinterpretation, it is proposed to insert an Explanation to section 14A of the Act to clarify 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 exempt income has not accrued or arisen or has not been received during the previous year relevant to an assessment year and the expenditure has been incurred during the said previous year in relation to such exempt income. 5. This amendment will take effect from 1st April, 2022, 6. It is also proposed to amend sub-section (1) of the said section, so as to include a non-obstante clause in respect of other provisions of the Income-tax Act and provide that no deduction shall be allowed in relation to exempt income, notwithstanding anything to the contrary contained in this Act. 7. This a....
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....Explanation.-For the removal of doubts, it is hereby declared that the income of the nature referred to in this clause payable for- (a) service rendered in India; and (b) the rest period or leave period which is preceded and succeeded by services rendered in India and forms part of the service contract of employment, shall be regarded as income earned in India." The Finance Act, 1999 which followed the Bill incorporated the substituted Explanation to Section 9(l)(ii) without any change. 13. The Explanation as introduced in 1983 was construed by the Kerala High Court in CIT v. S.R. Patton [(1992) 193 ITR 49 (Ker)] while following the Gujarat High Court's decision in S.G. Pgnatale [(1980) 124 ITR 391 (Guj)] to hold that the Explanation was not declaratory but widened the scope of Section 9(l)(ii). It was further held that even if it were assumed to be clarificatory or that it removed whatever ambiguity there was in Section 9(l)(ii) of the Act, it did not operate in respect of periods which were prior to 1-4-1979. It was held that since the Explanation came into force from 1-4- 1979, it could not be relied on for any purpose for an anterior peri....
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.... SCC 585, 598 : AIR 1981 SC 1274, 1282 para 24]. If it is in its nature clarificatory then the Explanation must be read into the main provision with effect from the time that the main provision came into force [See Shyam Sunder v. Ram Kumar, (2001) 8 SCC 24 (para 44); Brij Mohan Das Laxman Das v. CIT, (1997) 1 SCC 352, 354; CIT v. Podar Cement (P) Ltd., (1997) 5 SCC 482, 506]. But if it changes the law it is not presumed to be retrospective, irrespective of the fact that the phrases used are "it is declared" or "for the removal of doubts". (emphasis supplied) 7. The aforesaid proposition of law has been reiterated by the Supreme Court in M.M Aqua Technologies Ltd. V. Commissioner of Income Tax, Delhi-Ill, 2021 SCC Online SC 575. The relevant portion of the said judgment is reproduced hereinbelow:- "22. Second, a retrospective provision in a tax act which is "for the removal of doubts" cannot be presumed to be retrospective, even where such language is used, if it alters or changes the law as it earlier stood. This was stated in Sedco Forex International Drill. Inc. v. CIT, (2005) 12 SCC 717 as follows: 17. As was affirmed by this Court in Goslino Mario....