Delhi High Court
Pr. Commissioner Of Income Tax-7, ... vs Telecommunications Consultants ... on 31 August, 2022
$~S-17
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 293/2022
PR. COMMISSIONER OF INCOME TAX-7, DELHI ..... Appellant
Through: Mr.Puneet Rai, Sr.Standing Counsel with
Ms.Adeeba Mujahid, Jr.Standing Counsel
and Mr.Nikhil Jain, Advocate.
versus
TELECOMMUNICATIONS CONSULTANTS INDIA LIMITED
..... Respondent
Through: Mr.Rahul Yadav, Advocate.
% Date of Decision: 31st August, 2022
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
JUDGMENT
MANMOHAN, J: (ORAL)
1. Present Income Tax Appeal has been filed challenging the Order dated
16th July, 2021 passed by the Income Tax Appellate Tribunal ('ITAT') in ITA
No.3609/Del/2017 for the Assessment Year 2011-12.
2. Learned counsel for the Appellant states that the ITAT has erred in
deleting the addition of Rs.3,96,75,870/- made under Section 14A of the Income
Tax Act, 1961 ('the Act') ignoring the fact that there is direct and proximate
nexus between exempted income, which the investment shall generate and the
expenditure directly or indirectly involved in earning the said income.
3. Learned counsel for the petitioner also submits that in view of the
amendment made by the Finance Act, 2022 to Section 14A of the Act by
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:02.09.2022
inserting a non-obstante clause and an explanation after the proviso, a change in
law has been brought about.
4. He further states that the ITAT has erred in restricting the addition of
Rs.8,17,696/- to Rs.2,87,351/- resulting in deletion of Rs.5,30,345/- made on
account of prior period expenses ignoring the fact that the prior period expenses
had to be debited in the profit and loss account of the relevant year.
5. A perusal of the paperbook reveals that the authorities below have given
concurrent finding of fact that the assessee did not earn any exempt income
during the year under consideration. Consequently, the present case is covered
by the judgment of this Court in Cheminvest Ltd. vs. CIT, [2015] 61
Taxmann.com 118 (Delhi), wherein this Court has held that the expression
'does not form part of the total income' in Section 14A of the Act that there
should be an actual receipt of income, which is not includible in the total
income, during the relevant previous year for the purpose of disallowing any
expenditure incurred in relation to the said income. In other words, Section 14A
will not apply if no exempt income is received or receivable during the relevant
previous year.
6. Furthermore, this Court in Pr.Commissioner of Income Tax (Central)-2
Vs. M/s Era Infrastructure (India) Ltd. in ITA 2014/2022 vide judgment and
order dated 20th July, 2022 has dealt with the issue of amendment made by the
Finance Act, 2022 to Section 14A of the Act. The relevant portion of the said
judgment is reproduced hereinbelow:
"8. Consequently, this Court is of the view that the amendment of
Section 14A, which is "for 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."
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:02.09.2022
7. This Court also finds that ITAT and CIT(A) have given concurrent
finding of fact on the issue relating to prior period expenses. The relevant
portion of the impugned order is reproduced hereinbelow:
"We have heard rival submission of the parties of the issue in
dispute. The Ld.CIT(A) has allowed relief in respect of expenses of
store and spares amounting to Rs.1,55,855/- and expenses in
respect of the contract of Rs.3,74,490/- holding that same were
crystallised in the year under consideration. The assessee has
demonstrated that liability has been crystallised in the year under
consideration and therefore, the Learned CIT(A) is justified in
deleting the disallowance. Further, we find that identical issue of
prior period Expenses on contract has been allowed in favour of the
assessee by the Tribunal (supra) in assessment year 2005-06"
8. In fact the ITAT in the impugned order relying upon the order of the
Coordinate Bench in assessee's own case for the assessment year 2005-06
restricted addition to Rs.2,87,251/- made on account of prior period expenses.
9. Though the appellant in the appeal memo has not mentioned the status of
the appeal in assessee's own case for the assessment year 2005-06, yet during
the course of hearing, learned counsel for the appellant-revenue admitted that no
appeal had been filed against the said order.
10. Consequently, this Court is of the view that no substantial question of law
arises for consideration in the present appeal. Accordingly, the present appeal is
dismissed.
MANMOHAN, J
MANMEET PRITAM SINGH ARORA, J
AUGUST 31, 2022/TS
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:02.09.2022
