2026 (8) TMI 275

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....Act') dated 24.09.2022 issued by the Income Tax Department for A.Y. 2020-21. 2. Grounds of appeal filed by the assessee are as under : 1. Without prejudice, the Ld. CIT(A) has failed to appreciate that the assessee's own funds and reserves substantially exceeded the investments in shares of its wholly owned subsidiaries, and hence no part of the interest expenditure could be attributed to such investments. A reference regarding own funds and investments are as follows: Particulars As on 31^st March'2020 (Rs. In Crore) As on 31st March 2019 (Rs. In Crore) Net Worth 1452.77 1152.42 Investments in wholly owned subsidiaries (100% subsidiaries) 267.60 157.60 2. "Further and without....

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....rrides the provisions of section 14A of the income tax act 1961 and Rule 8D of the income tax rules. Circulars issued by the CBDT are not binding upon the taxpayer/Courts. 3. The brief fact of the case is that the assessee Satin Creditcare Network Ltd. ('Company') is a public limited company and a leading microfinance institution In India and is registered with Reserve Bank of India as Non-Banking Finance Company-Micro Finance Institution ('NBFC-MFI') since November 2013. The company filed the income tax return for the AY: 2020-21 declaring a net taxable income of Rs. 2,22,52,78,700/- on dated 14-02-2021. 4. The Ld AO while completing the assessment under section 143(3), invoked the provisions of section 14A read with ....

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....xempt income was received/accrued from the wholly owned subsidiaries during the year under consideration, has not been rebutted. Therefore, following the decision of hon'ble Delhi Court in Cheminvest Ltd. vs. CIT (378 ITR 33) (Del) and Era Infrastructure (India) Ltd (2022) 141 taxmann.com 289(Delhi) wherein it was held that no disallowance can be made in absence of exempt income, the disallowance u/s 14A is deleted. The hon'ble Delhi Court has also held in Era Infrastructure (India) Ltd (supra) that amendment made in Finance Act 2022 to section 14A will take effect from 01.04.2022 and does not have retrospective effect. Ground 4 and 5 are allowed. 8. We further find that the assessee has claimed that its Net Worth (Paid up capital + free....