ACIT, CENTRAL CIRCLE- 30, NEW DELHI V. KUBER GRAINS & SPICES PVT. LTD., NEW DELHI

MA 59/DEL/2021

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The case involves the Income Tax Department (revenue) seeking to recall a Tribunal order dated 09.11.2020 based on a CBDT Circular which allegedly changed the tax effect threshold for appeals. The revenue argued that the tax effect in the case exceeded the new threshold, thus warranting a recall. The assessee countered by citing a High Court decision that supported their position of no disallowance under section 14A, as no exempt income was earned. The Tribunal agreed with the assessee, noting that recalling the order would not change the outcome and would waste judicial resources.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121437 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-05-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 02-03-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 15-03-2021
• Other Referred Cases: PCIT vs. Delhi International Airport Pvt. Ltd., Cheminvestment Ltd. vs. CIT, PCIT Central-2 vs. M/s Era Infrastructure (India) Ltd.
• Laws Referred To: Income Tax Act, CBDT Circular No. 17/2019, CBDT Circular No. 05/2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect; Earning of tax free income; Tax effect; Rule 8D
• Section: 14A; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC’, NEW DELHI BEFORE SH. C.M. GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER MA No.59/Del/2021 ITA No.6452/Del/2019 (Assessment Year 2016-17) The ACIT, Central Circle-30, New Delhi Vs. M/s. Kuber Grain & Spices Pvt. Ltd., Khasra No. 1281-1282, Kapashere Village, New Delhi 110037 PAN AABCK 0599 G (APPELLANT) (RESPONDENT) Assessee by Shri P C Yadav, Adv. Revenue by Shri Kanav Bali, Sr. D.R. Date of hearing: 28.04.2023 Date of Pronouncement: 23.05.2023 PER C.M. GARG, JM : This miscellaneous application u/s. 254(2) of the Act, has been filed by the revenue seeking recall of order of this bench dated 09.11.2020 in ITA no. 6452/Del/2019 for AY 2016-17, in view of CBDT Circular No. 17/2019 dated 08.08.2019 on account of low tax effect. 2. The learned Senior DR submitted that the tax effect in the relevant revenue appeal was of Rs. 70,03,308/- therefore the CBDT circular dated 08.08.2019 does not apply to the present appeal hence, the Tribunal order dated 09.11.2020 may kindly be recalled and appeal may kindly be fixed for hearing on merits. The learned Senior DR, also submitted that the CBDT Circular no. 05/2014 dated 11.02.2014 clarifies that the Rule 8D of I.T. Rules r.w.s 14A of the Act, provides that the disallowance of expenditure has to be made even where taxpayer has not earn any exempt income. Therefore the learned DR submitted that the Tribunal order may kindly be recalled. 3. Replying to the above the learned counsel considered that the tax effect in the revenue appeal is higher than the prescribed limit of Rs. 50 lakh as has been enhanced MA No.59/Del/2021 2 by CBDT Circular dated 08.08.2020. However, submitting copy of the order of Hon’ble Jurisdictional High Court of Delhi dated 06.10.2022 in the case PCIT vs. Delhi International Airport Pvt. Ltd., in ITA 380/2022, wherein after considering the CBDT Circular No. 5/2014 dated 11.02.2014 and taking into cognizance of its orders in the cases of Cheminvestment Ltd. vs. CIT [2015] 61 Taxmann.com 118 (Delhi) and PCIT Central-2 vs. M/s Era Infrastructure (India) Ltd. in ITA No. 204/2022 Hon’ble High Court held that the amendment to the section 14A of the Act is “ for removal of doubt” cannot be presume to be retrospective even where such language is used, if it alters or changes the law at it earlier stood”. 4. The learned counsel also submitted that in such a situation, if the appeal order is recalled, on account of tax effect more than Rs. 50 lakh, then also it would be a futile exercise as in para 7 of first appellate order, under challenge by the revenue, the ld. CIT(A) has noted that assessee not earned any exempt income from the subject investment therefore, in view of judgment of Hon’ble jurisdictional High Court in the case of Cheminvestment Ltd. vs. CIT (supra) the appeal of the assessee deserves to be allowed and he deleted the addition u/s. 14A of the Act r.w.Rule 8D of the Rules. Therefore, the recalling of Tribunal order on account of high tax effect and again dismissing the appeal of revenue in the light of various prepositions of Hon’ble High Court of Delhi including judgment in the case of PCIT vs. Delhi Airport Pvt. Ltd. (supra). The Tribunal will have to again dismiss the appeal of the revenue, resulting into a futile exercise by the Tribunal 5. On careful consideration of above submissions, we are of the considered view that the Tribunal dismissed the appeal of revenue on account of low tax effect by referring to the CBDT Circular dated 08.08.2020(supra) and in fact, tax effect was more than Rs. 50 lakh and therefore, dismissal of revenue appeal was not in accordance with the said circular and there is apparent mistake in the Tribunal order. At the same time, we may also point out that, as has not been controverted by the ld. Senior DR, that there was no exempt income earned by the assessee from the impugned investment therefore in view of judgment of Hon’ble jurisdictional High Court in the case of Cheminvestment Ltd. vs. CIT(supra) no disallowance u/s. 14A of the Act, r.w.r. 8D could have been made in the hands of assessee. It is also pertinent to mention that the Hon’ble High Court of Delhi in the case of PCIT vs. Delhi International Airport Pvt. Ltd. (supra) has held that the amendment to section 14A cannot be presumed to be retrospective, if it alters or changes the law as it earlier stood. The Hon’ble High Court has also referred to the CBDT Circular No. 5/2014 dated 11.02.2014 to conclude in favour of the assessee. Therefore, we are inclined to agree with the contention of the ld. counsel of the assessee that if the Tribunal order is recalled for hearing of revenue appeal on merits then also the same would fail as assessee has not earned and claimed MA No.59/Del/2021 3 any exempt income from the investments under consideration and thus, recalling of order would be a futile exercise wasting valuable judicial time of this bench. 6. In view of above noted findings, the miscellaneous application of revenue is disposed of as having become infructuous. 7. In the result, the miscellaneous application is dismissed. Order pronounced in the open court on 23.05.2023 Sd/- Sd/- (DR. B.R.R. KUMAR) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 23.05.2023 NV* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI