TaxTMI 
TaxTMI 
2023 (7) TMI 398
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.... this section shall apply and shall be deemed to have always applied in a case where the income, not forming part of the total income under this Act, has not accrued or arisen or has not been received during the previous year relevant to any assessment year and the expenditure has been incurred during the said previous year in relation to such income not forming part of the total income. 3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in holding that disallowance u/s 14A of the Act will not exceed the total exempt income earned by the assessee. thereby implicitly holding CBDT Circular No. 05/2014 dated 11.02.2014 to be illegal whereas Circular No.5 of 2014 propounds that section 14A is triggered for disallowance of expenditure incurred which is relatable to tax exempt income even though no tax exempt income under the Act has been earned during a particular year? 4. The appellant craves leave to add. amend, modify, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of appeal. 2. Briefly the facts of the case are that the assessment in case of the assessee was completed u/s 143....
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....ways applied in a case where the income not forming part of the total income has not accrued or arisen or has not been received during the previous year and the expenditure has been incurred during the said previous year in relation to such income not forming part of the total income. It was accordingly submitted that the decision of the Ld. CIT(A) is against the law as per the amendment made by the Finance Act, 2022 and also interpreted by the Coordinate Guwahati Bench in case of ACIT Vs. Williamson Financial Services Limited in ITA Nos. 154 to 156/Gau/2019 dt. 06/07/2022. It was further submitted that the SLP against the decision of the Hon'ble Karnataka High Court decision in case of PCIT vs Delhi International Airport (P) Ltd wherein it was held that no disallowance can be made u/s 14A in absence of exempt income has been admitted by the Hon'ble Supreme Court on 11/03/2022 as reported in [2022] 138 taxmann.com 113 and similarly, the SLP in case of PCIT vs Karnataka State Financial Corporation Ltd has been admitted by the Hon'ble Supreme Court on 07/02/2022 as reported in [2022] 137 taxmann.com 195. 6. Per contra, the ld AR submitted that the tax effect involved in the present....
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.... final decision of the Supreme Court in the SLP filed in the ease of PCIT vs. IL & FS Energy Development Company Ltd (supra)." 8. Regarding contention of the ld DR that SLP has been admitted by the Hon'ble Supreme Court, it was submitted that mere admittance of an SLP is no bar on applicability of the decision of the Hon'ble High Courts and more so, where there are decisions of the jurisdictional High Court and the Tribunal in assessee's own case. 9. We have heard the ld DR and perused the material available on the record. On going through the CBDT Circular No. 3 of 2018 (supra) and in particular Para 10 of the said Circular, the contents thereof read as under: "10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect: (a) Where the Constitutional validity of the provisions of an Act or Rule is under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or ....
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....nder para 10(b) of CBDT Circular No. 3 of 2018 was under consideration and the Hon'ble High Court has dismissed the appeal filed by the Revenue holding that even the Tribunal has no jurisdiction to declare a CBDT circular ultra vires and therefore, the case does not fall in the exception clause and the contents of the decision read as under: "The revenue is in appeal under Section 260A of the Income Tax Act, 1961 (for short, 'the Act') against the order dated 29.10.2018 passed by the Income Tax Appellate Tribunal, Chandigarh (for short, 'the Tribunal'). Following substantial questions of law have been claimed: "i). Whether on the facts and in the circumstances of the case the Ld. Income Tax Appellate Tribunal is right in law in holding that even if a Company advances loans to its Member(s)/Share-holder(s)/Director(s) holding more than 10% of shares therein, and where admittedly such lending is 1 of 7 ITA No. 283 of 2019 [2] not in the usual course of its business, even then, the amounts so advanced, would not be covered under the definition of "dividends" as stated in section 2(22)(e) of the Income Tax Act, 1961 which is clearly contrary to the unambiguous lang....
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.... there is no such restriction in Section 14A or in rule 8D and further clarified by CBDT Circular No. 5 of 2014? (viii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT has erred in ignoring the 3 of 7 ITA No. 283 of 2019 [4] legislative intent expressed in CBDT's Circular No. 5/2014 dated 11.2.2014, which explicitly states that expenses relatable to earning of exempt income have to be considered for disallowance irrespective of the fact whether any such income has been earned during the F.Y. or not as confirmed by Apex Court in Maxopp Investment Ltd. v. CIT, 91 Taxman.com 154 (SC)? (ix) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT has erred in holding that disallowance u/s 14A cannot be made where there is no exempt income, when Supreme Court has upheld the principles of apportionment and department is in SLP on the same issue in the cases of Moderate Leasing and Capital Services Pvt. Ltd. In ITA No. 102 of 2018, A. Y. 2009-10 and Matrix Cellullar Service (P) Ltd. In ITA No. 484 of 2017 and Nilgiri Infrastructure Development Ltd. In ITA No. 135 of 2016 and Instant Holding Ltd. in ITA ....