Pr. Commissioner Of Income Tax-7, Delhi v. Telecommunications Consultants India Limited

$~S-17 IN THE HIGH COURT OF DELHI AT NEW DELHI+ITA 293/2022 PR. COMMISSIONER OF INCOME TAX-7, DELHI..... Appellant Through:Mr.Puneet Rai, Sr.Standing Counsel withMs.Adeeba Mujahid, Jr.Standing Counseland Mr.Nikhil Jain, Advocate. versus TELECOMMUNICATIONS CONSULTANTS INDIA LIMITED ..... Respondent Through:Mr.Rahul Yadav, Advocate. %Date of Decision: 31[st]August, 2022 CORAM:HON’BLE MR. JUSTICE MANMOHANHON’BLE MS. JUSTICE MANMEET PRITAM SINGH ARORAJ U D G M E N T MANMOHAN, J: (ORAL) 1.Present Income Tax Appeal has been filed challenging the Order dated16[th]July, 2021 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITANo.3609/Del/2017 for the Assessment Year 2011-12. 2.Learned counsel for the Appellant states that the ITAT has erred indeleting the addition of Rs.3,96,75,870/- made under Section 14A of the IncomeTax Act, 1961 (‘the Act’) ignoring the fact that there is direct and proximatenexus between exempted income, which the investment shall generate and theexpenditure directly or indirectly involved in earning the said income. 3.Learned counsel for the petitioner also submits that in view of theamendment made by the Finance Act, 2022 to Section 14A of the Act by inserting a non-obstante clause and an explanation after the proviso, a change inlaw has been brought about. 4.He further states that the ITAT has erred in restricting the addition ofRs.8,17,696/- to Rs.2,87,351/- resulting in deletion of Rs.5,30,345/- made onaccount of prior period expenses ignoring the fact that the prior period expenseshad to be debited in the profit and loss account of the relevant year. 5.A perusal of the paperbook reveals that the authorities below have givenconcurrent finding of fact that the assessee did not earn any exempt incomeduring the year under consideration. Consequently, the present case is coveredby the judgment of this Court in Cheminvest Ltd. vs. CIT, [2015] 61Taxmann.com 118 (Delhi), wherein this Court has held that the expression'does not form part of the total income' in Section 14A of the Act that thereshould be an actual receipt of income, which is not includible in the totalincome, during the relevant previous year for the purpose of disallowing anyexpenditure incurred in relation to the said income. In other words, Section 14Awill not apply if no exempt income is received or receivable during the relevantprevious year. 6.Furthermore, this Court in Pr.Commissioner of Income Tax (Central)-2Vs. M/s Era Infrastructure (India) Ltd. in ITA 2014/2022 vide judgment andorder dated 20[th]July, 2022 has dealt with the issue of amendment made by theFinance Act, 2022 to Section 14A of the Act. The relevant portion of the saidjudgment is reproduced hereinbelow: “8. Consequently, this Court is of the view that the amendment ofSection 14A, which is “for removal of doubts” cannot be presumedto be retrospective even where such language is used, if it alters orchanges the law as it earlier stood.” 7.This Court also finds that ITAT and CIT(A) have given concurrentfinding of fact on the issue relating to prior period expenses. The relevantportion of the impugned order is reproduced hereinbelow: 6.Furthermore, this Court in Pr.Commissioner of Income Tax (Central)-2Vs. M/s Era Infrastructure (India) Ltd. in ITA 2014/2022 vide judgment andorder dated 20[th]July, 2022 has dealt with the issue of amendment made by theFinance Act, 2022 to Section 14A of the Act. The relevant portion of the saidjudgment is reproduced hereinbelow: “8. Consequently, this Court is of the view that the amendment ofSection 14A, which is “for removal of doubts” cannot be presumedto be retrospective even where such language is used, if it alters orchanges the law as it earlier stood.” 7.This Court also finds that ITAT and CIT(A) have given concurrentfinding of fact on the issue relating to prior period expenses. The relevantportion of the impugned order is reproduced hereinbelow: “We have heard rival submission of the parties of the issue indispute. The Ld.CIT(A) has allowed relief in respect of expenses ofstore and spares amounting to Rs.1,55,855/- and expenses inrespect of the contract of Rs.3,74,490/- holding that same werecrystallised in the year under consideration. The assessee hasdemonstrated that liability has been crystallised in the year underconsideration and therefore, the Learned CIT(A) is justified indeleting the disallowance. Further, we find that identical issue ofprior period Expenses on contract has been allowed in favour of theassessee by the Tribunal (supra) in assessment year 2005-06”dispute. The Ld.CIT(A) has allowed relief in respect of expenses ofstore and spares amounting to Rs.1,55,855/- and expenses inrespect of the contract of Rs.3,74,490/- holding that same werecrystallised in the year under consideration. The assessee hasdemonstrated that liability has been crystallised in the year underconsideration and therefore, the Learned CIT(A) is justified indeleting the disallowance. Further, we find that identical issue ofprior period Expenses on contract has been allowed in favour of theassessee by the Tribunal (supra) in assessment year 2005-06” 8.In fact the ITAT in the impugned order relying upon the order of theCoordinate Bench in assessee’s own case for the assessment year 2005-06restricted addition to Rs.2,87,251/- made on account of prior period expenses. 9.Though the appellant in the appeal memo has not mentioned the status ofthe appeal in assessee’s own case for the assessment year 2005-06, yet duringthe course of hearing, learned counsel for the appellant-revenue admitted that noappeal had been filed against the said order. 10.Consequently, this Court is of the view that no substantial question of lawarises for consideration in the present appeal. Accordingly, the present appeal isdismissed. MANMOHAN, J AUGUST 31, 2022/TS MANMEET PRITAM SINGH ARORA, J