MAHESHWARI FINANCIAL SERVICES LTD,UDAIPUR V. PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), DELHI-2, NEW DELHI

ITA 2249/DEL/2024

AI Insights

The case involves Maheshwari Financial Services Ltd., the appellant, contesting an order from the Principal Commissioner of Income Tax (Central), Delhi-2, the respondent, which revised the regular assessment made by the Assessing Officer under sections 143(3) r.w.s. 263 of the Income-tax Act, 1961. The revision was based on the grounds that the original assessment did not include inquiries or verifications necessary to invoke disallowance under section 14A of the Act. The Tribunal heard arguments from both parties, with the appellant's counsel arguing that no exempt income was derived in the relevant previous year, and the respondent's counsel supporting the revision order. The Tribunal, referencing decisions from the jurisdictional High Court and other High Courts, concluded that the PCIT's revisional directions were erroneous and reversed them.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473567 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 03-12-2024
• Assessment Year: 2019-2020
• Appeal Filed On: 08-05-2024
• Other Referred Cases: Era Infrastructure (India) Ltd (2022) 141 taxmann.com 289 (Del. HC), Williamson Financial Services Ltd. v. Commissioner of Income-tax [2024] 166 taxmann.com 607 (Gauhati), PCIT Vs. Avantha Realty Ltd. (2024) 64 taxmann.com 376 (Calcutta)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILESH KUMAR YADAV
• Assessee Lawyers: ROHAN MITTAL
• Keywords: Retrospective amendment; Earning of tax free income; Rule 8D
• Section: 143(3); 64; 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘E’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No.2249/Del/2024 Assessment Year: 2019-20 Maheshwari Financial Services Ltd., PI-1, River View Apartment, Patho Ki Magri, Rajasthan Vs. PCIT(Central), Delhi-2, New Delhi PAN :AAACM9185B (Appellant) (Respondent) ORDER PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2019-20 is directed against the Principal Commissioner of Income Tax (Central) [in short, the “PCIT”], Delhi’s order dated 13.03.2024 passed in case no. ITBA/REV/F/REV5/2023-24/1062530408(1), Assessee by Sh. Rohan Mittal, Adv. Department by Sh. Akhilesh Kumar Yadav, Sr. DR Date of hearing 03.12.2024 Date of pronouncement 06.12.2024 ITA No.2249/Del/2024 2 | P a g e involving proceedings under sections 143(3) r.w.s. 263 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. Heard both the parties at length. Case file perused. 3. We find during the course of hearing that the learned PCIT(Central)’s, Delhi-2, impugned revision direction under section 263 of the Act have held the Assessing Officer’s section 143(3) regular assessment framed in assessee’s case on 18.09.2021, as an erroneous one causing prejudice to interest of the Revenue, on the ground that there was no inquiry or verification carried out so as to invoke disallowance under section 14A of the Act. 4. Mr. Yadav vehemently supports the impugned revision order that the PCIT herein has only restored the assessment back to the Assessing Officer on the issue of section 14A read with Rule 8D disallowance and therefore, the assessee does not suffer any prejudice. 5. The assessee’s case on the other hand is that it has not derived any exempt income in the relevant previous year so as to be exigible to the foregoing disallowance. 6. Faced with this situation, learned departmental representative quotes section 14A’s Explanation inserted by the ITA No.2249/Del/2024 3 | P a g e Finance Act, 2022 w.e.f. 01.04.2022 that whether any actual exempt income is derived or not in the relevant previous year is no more a relevant factor. 7. We have given our thoughtful consideration to the foregoing rival submissions and find no merit in the Revenue’s arguments supporting the PCIT’s action invoking his section 263 revision jurisdiction regarding section 14A read with Rule 8D disallowance. This is for the precise reason that hon’ble jurisdictional high court in case of Era Infrastructure (India) Ltd (2022) 141 taxmann.com 289 (Del. HC) and Williamson Financial Services Ltd. v. Commissioner of Income-tax Citation [2024] 166 taxmann.com 607 (Gauhati) and PCIT Vs. Avantha Realty Ltd. (2024) 64 taxmann.com 376 (Calcutta) have already settled the instant issue in assessee’s favour and against the department whilst concluding that section 14A Explanation (supra) does not apply in absence of any exempt income with retrospective effect. We further deem it appropriate to clarify that there is no material in the case file indicating the assessee to have derived any exempt income in the relevant previous year. We thus reverse the learned PCIT’s impugned revisional directions in very terms. Ordered accordingly. ITA No.2249/Del/2024 4 | P a g e 8 This assessee’s appeal is allowed. Order pronounced in the open court on 6th December, 2024 Sd/- Sd/- (M. BALAGANESH) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 6th December, 2024. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "