Delhi High Court
Principal Commissioner Of Income ... vs M/S Delhi International Airport ... on 6 October, 2022
$~S-57
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 380/2022
PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL
CIRCLE ..... Appellant
Through: Mr.Zoheb Hossain, Sr.Standing
Counsel with Mr.Vipul Agrawal and
Mr.Parth Semwal, Jr.Standing
Counsel.
versus
M/S DELHI INTERNATIONAL AIRPORT PVT. LTD .
..... Respondent
Through: None.
% Date of Decision: 06th October, 2022
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
JUDGMENT
CM APPL.43156/2022
1. Keeping in view the averments in the application, the delay in re-
filing the appeal is condoned.
2. Accordingly, the application stands disposed of.
ITA 380/2022
3. Present Income Tax Appeal has been filed challenging the Impugned
Order dated 31st January, 2018 passed by the Income Tax Appellate
Tribunal ('ITAT') in ITA No. 3707/Del/2013 & ITA No.4203/Del/2013 for
the Assessment Year 2010-11.
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:07.10.2022
4. Learned Counsel for the Appellant states that the ITAT has erred in
not disallowing the interest expenses amounting to Rs.10,07,34,000/-, being
expenditure incurred in relation to exempt income, under the provisions of
Section 14A of the Income Tax Act, 1961 ('the Act'). He submits that ITAT
has erred in holding that earning of exempt income during the year under
consideration is a sin qua non for application of Section 14A of the Act.
5. He states that the term 'in relation to' as used in Section 14A of the
Act contemplates direct and/or proximate nexus between 'expenditure
incurred' and 'earning of exempt income'.
6. He further states that the ITAT has erred in deleting the disallowance
under Section 14A of the Act without considering the legislative intent of
Section 14A of the Act which has been further clarified by CBDT Circular
No.5/2014 dated 11th February, 2014.
7. A perusal of the paper book 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. The relevant extract of the
ITAT order is reproduced hereinbelow:-
"76.The facts qua the disallowance are that the assessee
submitted before the Assessing Officer that no dividend income
was earned by the assessee during the relevant year, thus no
disallowance was called for but the Assessing Officer rejected
the contention of the assessee and invoking section 14A of the Act
read with Rule 8D of Income-tax Rules, 1962 (in short 'the
Rules') made disallowance of Rs.10,07,34,000/-.
xxx xxx xxx
81. Before us, there is no dispute on the fact that no dividend
income was earned by the assessee during the relevant year and
therefore respectfully following the finding of the Hon'ble Delhi
High Court, we hold that no disallowance is required to made in
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:07.10.2022
terms of section 14A of the Act in the case of the assessee as no
exempt income is received or receivable during the relevant year.
Accordingly, we allow the ground No.1 of the appeal of the
assessee and dismiss the ground No. 5 of the appeal of the
Revenue.
82. The ground No. 2 of the appeal of the assessee is regarding
adding the amount of disallowance made under section 14A of
the Act to the cost of the mutual fund units. This ground has been
raised without prejudice to the ground No. 1 of the appeal of the
assessee. Since the ground No. 1 has already been allowed in
favour of the assessee, the ground No. 2 is rendered infructuous
and accordingly dismissed."
8. In the opinion of this Court, the present case is covered by the
Division Bench judgment 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 means 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.
9. Furthermore, this Court in Pr. Commissioner of Income Tax
(Central)-2 Vs. M/s Era Infrastructure (India) Ltd. in ITA
No.204/2022 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
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:07.10.2022
presumed to be retrospective even where such language is used,
if it alters or changes the law as it earlier stood."
10. Consequently, this Court is of the view that no substantial question of
law arises for consideration in the present appeal. Accordingly, the same is
dismissed.
MANMOHAN, J
MANMEET PRITAM SINGH ARORA, J
OCTOBER 6, 2022
TS
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:07.10.2022
