Case Law Details
PCIT Vs Bhilwara Energy Ltd (Delhi High Court)
ntroduction: Delve into the recent judgment by the Delhi High Court in the case of PCIT Vs Bhilwara Energy Ltd, focusing on the crucial aspect of Section 14A disallowance. The court’s decision highlights a significant precedent regarding the inadmissibility of such disallowance in the absence of exempt income during the relevant period.
Detailed Analysis: The Delhi High Court addressed several applications related to the condonation of delays in filing appeals. After a detailed consideration of the appellant’s submissions, the court granted condonation, paving the way for an examination of the substantive issues in the appeals (ITAs 409/2023, 410/2023, 411/2023 & 412/2023).
The core issue revolved around the deletion of disallowance under Section 14A of the Income Tax Act, 1961, as challenged by the appellant/revenue. The court noted that the crux of the matter was whether the Tribunal erred in upholding the deletion of disallowance when no income exempt from tax had been earned during the relevant period.
The legal counsel for the appellant, Mr. Abhishek Maratha, argued the case, contending that the Tribunal’s decision warranted scrutiny. The court, however, observed that the issue had already been addressed in previous judgments, citing specific cases such as Cheminvest Limited v. Commissioner of Income Tax-VI, Commissioner of Income-tax, Central 1, Chennai v. Chettinad Logistics (P.) Ltd., and an order dated 30.05.2023 in ITA Nos. 316/2023 and 317/2023.
Notably, the court referenced its own involvement in the Chettinad Logistics (P.) Ltd. case, where a Special Leave Petition (SLP) was dismissed by the Supreme Court, solidifying the decision.
Conclusion: Concluding its analysis, the Delhi High Court determined that no substantial question of law emerged in the appeals. Given the precedent set by previous judgments and the absence of exempt income during the relevant period, the court dismissed the appeals (ITAs 409/2023, 410/2023, 411/2023 & 412/2023). This judgment establishes a clear stance on Section 14A disallowance, emphasizing its inapplicability when no income falls under the tax exemption category.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
CM APPL. 38119/2023 in ITA 409/2023
CM APPL. 38122/2023 in ITA 410/2023
CM APPL. 38125/2023 in ITA 411/2023
CM APPL. 38128/2023 in ITA 412/2023
1. Allowed, subject to just exceptions.
CM APPL. 38117/2023 in ITA 409/2023
CM APPL. 38120/2023 in ITA 410/2023
CM APPL. 38123/2023 in ITA 411/2023
CM APPL. 38126/2023 in ITA 412/2023 [Application filed on behalf of the appellant/revenue seeking condonation of delay of 11 days in filing ITAs 409/2023 & 411/2023 and 02 days in filing ITAs 410/2023 & 412/2023]
2. These are the applications moved on behalf of the appellant/revenue seeking condonation of delay in filing the appeal.
2.1 According to the appellant/revenue, there is a delay of 2 days in filing ITAs 410/2023 & 412/2023, while in ITAs 409/2023 & 411/2023, there is a delay of 11 days.
3. For the reasons, mentioned in the applications, the delay is condoned.
4. The applications are disposed of, in the aforesaid terms.
CM APPL. 38118/2023 in ITA 409/2023
CM APPL. 38121/2023 in ITA 410/2023
CM APPL. 38124/2023 in ITA 411/2023
CM APPL. 38127/2023 in ITA 412/2023 [Applications filed on behalf of the appellant/revenue seeking condonation of delay of 118 days in re-filing]
5. These are the applications moved on behalf of the appellant/revenue seeking condonation of delay in re-filing the appeal.
5.1 According to the appellant/revenue, there is a delay of 118 days.
6. For the reasons given in the applications, the delay is condoned.
7. The applications are disposed of, in the aforesaid terms.
ITAs 409/2023, 410/2023, 411/2023 & 412/2023
8. These appeals concern Assessment Years (AYs) 2014-15 (ITA 409/2023), 2015-16 (ITA 410/2023), 2017-18 (ITA 411/2023) and 2016-17 (ITA 412/2023).
9. Via these appeals, the appellant/revenue seeks to assail the common order of the Income Tax Appellate Tribunal [in short, “Tribunal”] dated 02.08.2022.
10. Mr Abhishek Maratha, senior standing counsel, who appears on behalf of the appellant/revenue, submits that the issue that arises for consideration is whether the Tribunal was right in sustaining the deletion of disallowance under Section 14A of the Income Tax Act, 1961 [in short, “Act”] in view of the fact that no income exempt from tax had been earned during the relevant period.
11. According to us, the issue is covered by the following decisions:
(i) judgement dated 02.09.2015 passed in ITA 749/2014, titled Cheminvest Limited v. Commissioner of Income Tax-VI.
(ii) Commissioner of Income-tax, Central 1, Chennai v. Chettinad Logistics (P.) Ltd. [2017] 80 com 221 (Madras).
(iii) Order dated 30.05.2023 passed in ITA Nos. 316/2023 and 317/2023, titled Principal Commissioner of Income Tax Delhi 4 v. IL And FS Energy Development Co Ltd.
12. Insofar as Chettinad Logistics (P.) Ltd. is concerned, one of us [i.e., Rajiv Shakdher, J.] was a member of the Bench.
12.1 Mr Maratha does not dispute that a Special Leave Petition (SLP) was preferred against the said judgment, which was dismissed via order dated 02.07.2018; which is reported in [2018] 95 taxmann.com 250 (SC). The order passed by Supreme Court reads as follows:
“1. The Special Leave petition is dismissed on the ground of delay as well as on merits.”
13. Therefore, according to us, no substantial question of law arises for our consideration in the above-captioned appeals.
14. The appeals are, accordingly, dismissed.
