+ Ita 244/2025 & Cm Appl v. Hindustan Power Projects Pvt. Ltd

$~19 IN THE HIGH COURT OF DELHI AT NEW DELHI+ITA 244/2025 & CM APPL. 44576/2025PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2, DELHIPR. COMMISSIONER OF INCOME TAX (CENTRAL)-2, DELHI .....Appellant Through:Mr. Sanjay Kumar, SSC with Ms.Monica Benjamin, JSC, Ms. Easha,JSC, Advs.Monica Benjamin, JSC, Ms. Easha,JSC, Advs. Versus HINDUSTAN POWER PROJECTS PVT. LTD. .....RespondentThrough:Mr. Sachit Jolly, Sr Adv with Mrs.ManshaAnand,Mr.AbhyudayaShankar Bajpai, Mr. Sohum Dua,Advs.ManshaAnand,Mr.AbhyudayaShankar Bajpai, Mr. Sohum Dua,Advs. % CORAM:HON'BLE MR. JUSTICE V. KAMESWAR RAOHON'BLE MR. JUSTICE VINOD KUMARO R D E R25.07.2025 1.This appeal has been filed by the Revenue under Section 260A of theIncome Tax Act, 1961 (the Act) impugning the order dated 31.12.2024whereby the Income Tax Appellate Tribunal (ITAT) has decided twoappeals. The same being ITA 2747/Del/2024 and 2748/De1/2024 whichwere for the Assessment Years 2018-19 and 2019-20. 2.It has been informed by the learned counsel for the parties that theappeal under Section 260A challenging the same order being 30.12.2024 inITA No.2747/Del/2024 was decided by this Court in Pr. Commissioner ofIncome Tax (Central)-2 v. Hindustan Power Projects Pvt. Ltd : Neutral Citation : 2025: DHC: 5559-DB whereby this Court has dismissed theappeal filed by the Revenue being on ITA 227/2025 on 14.07.2025.3.Forparityofreasons,thisappealwhicharisesfromITA2748/De1/2024 and relates to assessment year 2019-20 is also dismissed.The relevant paragraphs of the order dated 14.07.2025 in ITA 227/2025 arethe following 6.“It is also the Assessee’s contention that all investments weremade from surplus funds and, therefore, in any event, there wouldbe no occasion of disallowing any expenditure in respect of anyexempt income that such an investment could possibly have yielded.Notwithstanding the said submission, the learned PCIT found thatthe disallowance under Section 14A of the Act was required to bemade. 7.The ITAT noted that there were decisions of various HighCourts supporting the view as expressed by the Assessee. It alsonoted that this Court in the case of Pr. Commissioner of IncomeTax-04 v. IL & FS Energy Development Company Limited :Neutral Citation : 2017:DHC: 4465-DB and Pr. Commissioner ofIncome Tax (Central)-2 v. M/s Era Infrastructure (India) Limited: Neutral Citation : 2022:DHC: 2690-DB has also accepted theview and those decisions were ignored. 8.The paragraph 5 of the impugned order which encapsulatesthe ITAT’s decision in this regard is set out below: “5. Heard rival submissions, perused the orders ofthe authorities below. On perusal of the balancesheet of the assessee which is placed at pages 72and the schedule of other income which is placed atpage 91 of the Paper Book suggests that theassessee had not received any dividend/exemptincome.We also observed that in course ofassessmentproceedingstheAssessingOfficerissued a questionnaire along with notice u/s 142 ofthe Act which is placed at pages 128 & 129requiring the assessee to submit the details ofdeductions claimed under chapter VIA and section10 of the Act. The assessee also furnished its replystating that the assessee has not claimed anydeduction under chapter VI and also u/s 10 of the 8.The paragraph 5 of the impugned order which encapsulatesthe ITAT’s decision in this regard is set out below: “5. Heard rival submissions, perused the orders ofthe authorities below. On perusal of the balancesheet of the assessee which is placed at pages 72and the schedule of other income which is placed atpage 91 of the Paper Book suggests that theassessee had not received any dividend/exemptincome.We also observed that in course ofassessmentproceedingstheAssessingOfficerissued a questionnaire along with notice u/s 142 ofthe Act which is placed at pages 128 & 129requiring the assessee to submit the details ofdeductions claimed under chapter VIA and section10 of the Act. The assessee also furnished its replystating that the assessee has not claimed anydeduction under chapter VI and also u/s 10 of the Act.On perusal of the order passed by the Ld.PCIT it is observed that according to Ld. PCITdisallowance u/s 14A of the Act to be made evenwhen no exempt income is earned during therelevant year.He placed reliance on variousdecisions which are cited at page 19 of his order.Perusal decision of page 19 of the Ld. PCIT order itis observed that various decisions have been citedare all non jurisdictional High Court decisions andthe binding decision of the jurisdictional HighCourt in the case of PCIT Vs. IL & FS EnergyDevelopment Company Ltd. (supra) and PCIT Vs.Era Infrastructure (I) Ltd. (supra) were ignored. Inthese two cases the jurisdictional High Court hadclearly held that where the assessee had not earnedany exempt income in the relevant assessment yearthere could be no disallowance in terms of section14A read with Rule 8D the decision rendered byjurisdictional High Court in the case of PCIT Vs. IL& FS Energy Development Company Ltd. (supra)was in August 16, 2017 which decision wasrenderedmuchpriortothecompletionofassessment by the Assessing Officer on 27.09.2021u/s 153A for the AY 2018-19.Therefore, in ourconsidered view since the assessee had not earnedanyexemptincometherecannotbeanydisallowanceu/s14Aandweholdthattheassessment orders passed by the Assessing Officeru/s 153A for the assessment years 2018-19 and2019-20 are not erroneous and prejudicial to theinterest of the Revenue as the twin conditions arenot satisfied for invoking the provision of section263 of the Act. In the circumstances, we quash theorders passed by the Ld. PCIT u/s 263 of the Act forthe assessment years 2018-19 and 2019-20.” 9.It is not disputed that the decisions of this Court in the caseofPr. Commissioner of Income Tax-04 v. IL & FS EnergyDevelopment Company Limited (supra) and Pr. Commissioner ofIncome Tax (Central)-2 v. M/s Era Infrastructure (India) Limited(supra) support the view of the Assessee. Clearly, in this view, theassessment order cannot be held as erroneous and prejudicial tothe interest of the Revenue. In any event, the view in this regardwould be a plausible view and does not warrant any interferenceunder Section 263 of the Act. 10.In view of the above, we do not find any infirmity with theimpugned order. No substantial question of law arises forconsideration of this Court. The appeal is, accordingly, dismissed.”impugned order. No substantial question of law arises forconsideration of this Court. The appeal is, accordingly, dismissed.” 4.The appeal is dismissed along with pending application. V. KAMESWAR RAO, J JULY 25, 2025Tg VINOD KUMAR, J