PCIT Vs Jindal Saw Ltd. (Delhi High Court)
HC Rejects Revenue Challenge to Section 14A Disallowance Without Exempt Income; HC Upholds ITAT Order on Section 115JB Book Profit Adjustment Under Section 14A; HC Holds Section 40(a)(ia) Disallowance Unsustainable After Tribunal Sets Aside Default Order
The Delhi High Court considered the Revenue’s appeal raising questions regarding the deletion of disallowances under Sections 14A and 40(a)(ia) of the Income-tax Act, 1961, and the computation of book profit under Section 115JB.
On the issue of disallowance under Section 14A, the assessee submitted that the matter had already been decided against the Revenue by the Delhi High Court in CIT vs. Caraf Builders & Constructions Pvt. Ltd., and that the Special Leave Petition filed against that decision had also been dismissed by the Supreme Court.
With respect to the disallowance of 3,31,95,556 under Section 40(a)(ia), the assessee submitted that the Assessing Officer had made the disallowance solely because tax had been deducted under Section 194C instead of Section 194I. It was further submitted that the order dated 28.03.2011 passed under Sections 201(1) and 201(1A), on which the Assessing Officer had relied, had already been set aside by the Tribunal. Since the Tribunal had reversed the finding that the assessee had deducted tax under the wrong provision, there was no basis for disallowing the expenditure.
