2023 (2) TMI 1412

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....sessee prays for deletion of the addition made U/S. 14A r.w.r 8D amounting Rs. 43,32,540/- in full. 2. That on the facts, and in the circumstances of the case and in law, Ld.CIT(A)-NFAC,Delhi grossly erred in confirming the addition made by the AO under section 14A r.w.r 8D amounting to Rs. 43,32,540/- in the assessment order dated 15/12/2019 passed u/s. 143(3) under the assumption that amendment made by Finance Act, 2022 to section 14A by inserting a non-obstante clause and Explanation is applicable retrospectively where as the said amendment is applicable to the assessment year 2022-23 and subsequent assessment years and the was categorically mentioned in the Memorandum of the Finance Bill, 2022 and confirmed by the decision of the jurisdictional Delhi High Court in the case of " Pr.CIT Vs. Era Infrastructure (India) Ltd (2022) 141 taxmann.com 289 (Del.HC)", thus assessee prays for deletion of the addition made u/s. 14A r.w.r 8D amounting Rs. 43,32,540/- in full. 3. That on the facts, and in the circumstances of the case and in law, Ld.CIT(A)-NFAC, Delhi further grossly erred in not following the binding judicial precedents relied upon by the assessee in the written submissio....

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....14A of the Act is reproduced here-in-below:- "Amendment of section 14A. In section 14A of the Income-tax Act, - (a) in sub-section (1), for the words "For the purposes of", the words "Notwithstanding anything to the contrary contained in this Act, for the purposes of" shall be substituted; (b) after the proviso, the following Explanation shall be inserted, namely:- "[Explanation.--For the removal of doubts, it is hereby clarified 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 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 an 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.]" 5. However a perusal of the Memorandum of the Finance Bill, 2022 reveals that it explicitly stipulates that the amendment made to Section 14A will take effect from 1st April, 2022 and will apply in relation to the assessment year 2022-23 and subsequent assessment years. The r....

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....w that assessment has to be made with reference to the law which is in existence at the relevant time. The mere fact that the assessments in question has (sic) somehow remained pending on 1-4-1979, cannot be cogent reason to make the Explanation applicable to the cases of the present assessees. This fortuitous circumstance cannot take away the vested rights of the assessees at hand." 11. The reasoning of the Gauhati High Court was expressly affirmed by this Court in CIT v. Goslino Mario [(2000) 10 SCC 165 : (2000) 241 ITR 312] . These decisions are thus authorities for the proposition that the 1983 Explanation expressly introduced with effect from a particular date would not effect the earlier assessment years. 12. In this state of the law, on 27-2-1999 the Finance Bill, 1999 substituted the Explanation to Section 9(1)(ii) (or what has been referred to by us as the 1999 Explanation). Section 5 of the Bill expressly stated that with effect from 1-4-2000, the substituted Explanation would read: "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 ....

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.... income earned in India. 5.3 This amendment will take effect from 1-4-2000, and will accordingly, apply in relation to Assessment Year 2000-2001 and subsequent years." 16. The departmental understanding of the effect of the 1999 Amendment even if it were assumed not to bind the respondents under Section 119 of the Act, nevertheless affords a reasonable construction of it, and there is no reason why we should not adopt it. 17. As was affirmed by this Court in Goslino Mario [(2000) 10 SCC 165 : (2000) 241 ITR 312] a cardinal principle of the tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication. (See also Reliance Jute and Industries Ltd. v. CIT [(1980) 1 SCC 139 : 1980 SCC (Tax) 67] .) An Explanation to a statutory provision may fulfil the purpose of clearing up an ambiguity in the main provision or an Explanation can add to and widen the scope of the main section [See Sonia Bhatia v. State of U.P., (1981) 2 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 tim....