PCIT Vs Man Infraprojects Ltd. (Bombay High Court)
Bombay High Court has dismissed an appeal filed by the Principal Commissioner of Income Tax against Man Infraprojects Ltd., reiterating that no disallowance under Section 14A of the Income Tax Act, 1961, is warranted when the assessee has not received or is not receivable of any exempt income during the relevant previous year.
The case for Assessment Year 2009-10 involved the Assessing Officer’s attempt to apply Section 14A despite the undisputed fact that Man Infraprojects Ltd. earned no exempt income. The High Court referenced the Delhi High Court’s judgment in Cheminvest Ltd. Vs. Commissioner of Income Tax (378 ITR 33), which explicitly held that disallowance under Section 14A is not permissible in such scenarios. The court noted that the Revenue’s appeal against the Cheminvest Ltd. decision was dismissed by the Supreme Court. Following this judicial precedent, the Bombay High Court has consistently dismissed similar appeals, including The Principal Commissioner of Income Tax-10 Vs. HSBC Invest Direct (India) Ltd. (Income Tax Appeal No.1672/16, dated February 4, 2019). Consequently, the revenue’s appeal was dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. This Appeal is filed by the revenue against the judgment of Income Tax Appellate Tribunal. Following question is presented for our consideration;
“Whether on the facts and circumstance of the case and in law, the ITAT, Mumbai was justified in deleting the disallowance of Rs.76,16,530/ made u/s 14A of the I.T. Act, by holding that no disallowance u/s 14A of the I.T. Act, is called for, once there is no exempt income received or receivable by the assessee during the relevant previous year?”
2. Undisputed facts are that the Respondent Assessee had not received any exempt income during the period relevant to the assessment year 200910, despite which Assessing Officer sought to invoke the provisions of section 14A of the Income Tax Act 1961 and made disallowance of the expenditure. Delhi High Court in case of Cheminvest Ltd. Vs. Commissioner of Income Tax (378 ITR 33), held that in such a situation, disallowance of the expenditure under section 14A of the Act would not be permissible. This decision was carried in Appeal filed by the Revenue before the Supreme Court. SLP has been dismissed. This Court, following the said decision in several cases, e.g. in Income Tax Appeal No.1672/16 in case of The Principal Commissioner of Income Tax10 Vs. HSBC Invest Direct (India) Ltd. under order dated 04/02/2019 has dismissed the Revenue’s Appeal.
