TaxTMI 
TaxTMI 
TaxTMI 
2022 (7) TMI 1450
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....owance of Rs. 35,56,906/- relatable to exempt income by invoking the provisions of section 14A of the Act. For this, assessee has raised the following grounds:- 1) Disallowance under Section 14A -Rs. 35,56,906/-: The Appellant has not earned any dividend income during the relevant Previous Year In this regard, the appellant relies upon the decision of M/s. Chettinad Logistics Private Limited Vs Commissioner of Income Tax, Madras High Court vide T.C.A. No. 24 of 2017 dated 13.03.2017 wherein it has been held that the disallowance under section 14A does not arise if there is no exempt income. The Special Leave petition filed in the case of M/s. Chettinad Logistics Private Limited Vs Commissioner of Income Tax has been dismissed by the Hon'ble Supreme Court. The same issue has already been allowed in the Appellanť's own case by the Hon'ble CIT Appeals - 8 vide ITA Nos. 51 &249/2016-17 dated 08.05.2017 for Assessment year 2013-14 &2014-15. The CIT Appeal has ignored the same and confirmed the order of the Assessing Officer. 3. At the outset, the ld. counsel for the assessee stated that the assessee has not earned any exempt income and has not claimed any incom....
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....6,906/- u/s 14A is sustained. The grounds are rejected. Aggrieved, assessee is in appeal before the Tribunal. 4. Before us, ld.counsel for the assessee stated that the issue is covered by the decision of Jurisdictional High Court in the case of CIT v. Chettinad Logistics (P) Ltd., (2017) 80 taxmann.com 221, wherein the Hon'ble High Court considering the decision of Coordinate Bench of Hon'ble Madras High Court in the case of Redington (India) Ltd., vs. Addl.CIT, (2017) 77 taxmann.com 257 held as under:- 11. Furthermore, we may note that a similar argument was sought to be advanced by the Revenue in the matter concerning, M/s. Redington (India) Limited Vs. The Additional Commissioner of Income Tax, which was, subject matter of T.C.A. No. 520 of 2016. 11.1. A Co-ordinate Bench of this Court, vide judgment dated 23.12.2016, rejected the plea of the Revenue advanced in that behalf. 11.2. As a matter of fact, a perusal of the judgment would show that the Revenue had sought to argue that because exempt income could be earned in future years, therefore, recourse could be taken to the provisions of Section 14A of the Act, to disallow expenditure. In other words the stand taken by t....
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....able, in terms of sub section (1) thereof to income 'under the act' and not 'of the year' and a disallowance under s. 14A r.w.Rule 8D can thus be effected even in a situation where a tax payer has not earned any taxable income in a particular year. 9. We are unable to subscribe to the aforesaid view. The provisions of section 14A were inserted as a response to the judgments of the Supreme Court in Commissioner of Income Tax Vs. Maharashtra Sugar Mills Limited (1971) (82 ITR 452) and Rajasthan State Ware Housing Corporation Vs. Commissioner of Income Tax ((2002) 242 ITR 450) in terms of which, expenditure incurred by an assessee carrying on a composite business giving rise to both taxable as well as non-taxable income, was allowable in entirety without apportionment. It was thus that s.14A was inserted providing that no deduction shall be allowable in respect of expenditure incurred in relation to the earning of income exempt from taxation. As observed by the Supreme Court in the judgment in the case of Commissioner of Income Tax vs. Walfort Share and Stock Brokers (P) Ltd (2010) 326 ITR 1 '.... The mandate of s.14A is clear. It desires to curb the practice t....
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.... provision has always been a subject matter of litigation and one such point that has been often debated is regarding the disallowance of expenditure in the absence of exempt income. Finally, the Finance Act, 2022 has inserted an explanation to section 14A to clarify that bereft exempt income being earned in any year, the disallowance u/s. 14A of the Act will still be attracted. The Act further proposes to apply the amendment retroactively thereby changing the positions laid down by the courts taken in favour of taxpayers to date. The ld.Senior DR stated that the Guwahati Bench of this Tribunal has held Explanation inserted by the Finance Act, 2022 as retrospective and according to Guwahati Bench, the Explanation seeks to clarify the position that the disallowance of expenditure relatable to exempt income is not dependent upon actual earning of exempt income. 6. Today, during the course of hearing it was brought to the notice of the ld. Senior DR that this issue has been adjudicated by the Hon'ble High Court of Delhi in the case of PCIT vs. Era Infrastructure (India) Ltd., in ITA 204/2022 & CM Appl. 31445/2022, order dated 20.07.2022, considering the amendment brought in by the Fi....