2022 (7) TMI 1093 - HC - Income Tax

Disallowance u/s 14A r.w.r. 8D - ITAT deleted the addition - scope of amendment made by the Finance Act, 2022 to Section 14A - Amendment is retrospective or prospective in nature - Whether ITAT erred in relying on the decision of this Court in PCIT vs. IL & FS Energy Development Company Ltd., [2017 (8) TMI 732 - DELHI HIGH COURT] wherein it has been held that no disallowance under Section 14A of the Act can be made if the assessee had not earned any exempt income? - HELD THAT:- 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 Supreme Court in Sedco Forex International Drill. Inc. v. CIT, (2005 (11) TMI 25 - SUPREME COURT] 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 such language is used, if it alters or changes the law as it earlier stood.

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.

Though the judgment of this Court has been challenged and is pending adjudication before the Supreme Court, yet there is no stay of the said judgment till date. Consequently, in view of the judgments passed by the Supreme Court in Kunhayammed and Others vs. State of Kerala and Another, [2000 (7) TMI 67 - SUPREME COURT] and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras (1992 (4) TMI 183 - SUPREME COURT] the present appeal is dismissed being covered by the judgment passed by the learned predecessor Division Bench in PCIT vs. IL & FS Energy Development Company Ltd (2017 (8) TMI 732 - DELHI HIGH COURT] and Cheminvest Limited [2015 (9) TMI 238 - DELHI HIGH COURT].

As clarified that the order passed in the present appeal shall abide by the final decision of the Supreme Court in the SLP filed in the case of PCIT vs. IL & FS Energy Development Company Ltd .