TaxTMI 
TaxTMI 
2025 (11) TMI 92
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....issued to the assessee company for submission of documents through departmental ITBA portal. From the record, it is seen that the assessee had not suo moto disallowed any sum under section 14A in its computation of total income. However, the assessee is engaged in activities of investment, income from which is exempt in nature. The resources of assessee company are expended for carrying on such investing activities, either directly or indirectly. The assessee submitted that no exempt income was earned during the financial year 2016-17 and the same no expenses relating to the exempt income is charged to profit & loss account. It further submitted that the investments are made in debt mutual fund which does not attract 14A. The assessee failed to appreciate that the expenditure incurred on such activities are not dependent on the amount of exempt income received. There is difference in income from sale of debt mutual fund and income from debt mutual fund. Ld. Assessing Officer determined the disallowance under section 14A of the Act at Rs. 47,43,027/- read with Rule 8D and added back to the total income of the assessee. Finally, ld. Assessing Officer assessed the total income of the ....
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.... CIT -vs.- Ashika Global Securities Ltd. (ITAT 100 of 2014, GA 2122 of 2014) and in the case of Pr. CIT - vs.- Shalimar Pelleet Feeds Ltd. (2022) 138 taxmann.com 124/287 taxman 134. Ld. counsel also relied on the judgment of the Hon'ble Calcutta High Court in the case of Pr. CIT (Central) vs.- Avantha Realty Ltd. reported n (2024) 164 taxmann.com 376 (Calcutta). He, therefore, pleaded to set aside the order passed by the ld. CIT(Appeals). 5. On the other hand, ld. Departmental Representative pleaded to uphold the order passed by the ld. CIT(Appeals). 6. We have duly considered the rival contentions and gone through the record carefully. The ld. CIT(Appeals) has deleted the disallowance by observing that there is no exempt income in this year. This aspect is squarely covered by the decision of the Hon'ble Delhi High Court, wherein it has been held that if no exempt income is being earned by the assessee, then, no disallowance is to be made. We take note of the decision of the Hon'ble Delhi High Court in the case of Pr. CIT -vs.- M/s. Era Infrastructure (India) Ltd. in ITA 204/2022 & AM APPL. 31445/2022. The discussion made by the Hon'ble High Court reads as under:- "3....
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.... 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 amendment will take effect from 1st April, 2022 and will accordingly apply in relation to the assessment year 2022-23 and subsequent assessment years." (emphasis supplied) 6. Furthermore, the Supreme Court in Sedco Forex International Drill. Inc. v. CIT, (2005) 12 SCC 717 has held that a retrospective provision in a tax act which is "for the removal of doubts" cannot be presumed to be retrospective, even where....
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....ed the Bill incorporated the substituted Explanation to Section 9(1)(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(1)(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(1)(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 period. 14. In the appeal preferred from the decision by the Revenue before this Court, the Revenue did not question this reading of the Explanation by the Kerala High Court, but restricted itself to a question of fact viz. whether the Tribunal had correctly found that the salary of the assessee was paid by a foreign company. This Court dismissed the appeal holding that it was a question of fact. (CIT v. S.R. Patton [(....
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.... 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-III, 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 [(2000) 10 SCC 165] 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].) 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 wide....