DCIT Vs Edel Finance Company Ltd (ITAT Mumbai)
ITAT Mumbai held that the Finance Act, 2022 amended section 14A of the Income Tax Act doesn’t have retrospective effect. The said amended provisions are effective from 1st April 2022.
Facts- The assessee is a public limited company registered with the Reserve Bank of India (RBI) as a Systematically important non deposit accepting non-banking financial company. The assessee is engaged in the business of corporate credit and retail group. During the impugned assessment year, the assessee invested in current and non-current assets and earned the dividend amount to Rs.76,21,48,735/- and claimed exemption u/s. 10(34) and 10(35) of the Act. The assessee during filing of return measly sum of Rs.42,31,712/- is offered to tax u/s. 14A read with rule 8D of the Income-tax Rules, 1962. The assessee briefly declared that the dividend earned from the non-current investment was to finally accepted that the dividend earned mostly from the stock in trade. The assessee invested Rs.2657 crores in current ,non-current and stock in trade for earning the dividend income from equity and from mutual fund. The assessee has a noninterest bearing fund of Rs.838 crores. It is fine to highlight that the dominant purpose for which investment in shares is made by the assessee is mostly in stock in trade. AO calculated the movement of the fund and accordingly calculated the quantum by disallowance of Rs.1,28,45,137/- u/s. 14A of the Act. The assessee already disallowed a sum of Rs.42,31,712/- suo motu, so the balance amount of Rs.86,13,425/- was added back under section 14A of the Act.
