The interpretation of Section 14A does not depend on earning exempt income, as affirmed by the court in relation to previous judgments.

Headnote:(A) Income Tax Act - Section 14A and Circular No. 5 of 2014 - Appeal against order of Income Tax Appellate Tribunal regarding financial assessment of the respondent for AY 2009-2010 - Court affirmatively noted that ITAT's interpretation of Section 14A and its applicability was consistent with precedent. (Para 3)

(B) Substantial Questions of Law - Court concluded that the questions raised by the revenue were already addressed in prior decisions and thus, could not be reconsidered. (Para 3.1)

Facts of the case:
The appeal arose from an assessment year concerning the ITAT’s prior judgment which involved interpretation of taxation provisions and the nature of expenses claimed by the respondent.

Findings of Court:
The court found the questions of law raised by the revenue to be covered by existing judgments and therefore not entertainable.

Issues: The core issue revolved around the appropriate interpretation of Section 14A concerning exempt income and related expenditures, as well as the nature of the expenses claimed by the respondent.

Ratio Decidendi: The court reasoned that prior rulings on Section 14A already affirmed the ITAT's stance, hence the revenue's appeal was dismissed without the need for additional assessment.

Result: Appeal dismissed.

Table of Content
1. background of the case concerning income tax assessment. (Para 1)
2. substantial questions of law presented by the appellant. (Para 2)
3. court's observations on the inability to entertain raised questions of law. (Para 3)
4. final dismissal of the appeal. (Para 4)

JUDGMENT

Rajiv Shakdher, J. (Oral)--This appeal is directed against the order dated 16.10.2019 passed by the Income Tax Appellate Tribunal [hereafter referred to as the "Tribunal"] rendered in ITA 4807/Del/2016 concerning the assessment year (in short `AY') 2009-2010.

2. The substantial questions of law suggested by the revenue for being framed and adjudicated upon by this Court are as follows:

"a) Whether in the facts and circumstances of the case and in law. ITAT misinterpreted the scope of Section 14A(1) of the Act and errored in holding that Section 14(A) can only be invoked if the Respondent has earned exempted income during the assessment year ignoring the fact that Section 14A doesn't lay down such requirement and the only precondition for invoking Section I4A is that there must be "expenditure incurred in relation to such income which does not form part of the total income under this Act"?

b) Whether in the facts and circumstances of the case and in law, ITAT erred in interpreting the Circular No. 5 of 2014 of the CBDT which clarifies the true scope and meaning of Section 14 A of the Act?

c) Whether in the facts and circumstances of the case and in law, ITAT failed to appreciate that the AO, having regard to the accounts of the Respondent, was not justified with the correctness of such claim of the Respondent in respect of such expenditure in relation to income which does not form part of the total income under this Act?

d) Whether in the facts and circumstances of the case and in law, ITAT erred in deciding upon the true nature of the license fee paid to the Department of telecommunication by the assessee, which clearly established that the expenditure was a capital expenditure and wrongly relied upon the decision in CIT V Bharti Hexacom Limited, 221 Taxman 323(Delhi)?

e) Whether in the facts and circumstances of the case and in law. ITAT errored in holding that the exemption under section 10A of the Act should not be computed after excluding telecommunication expenses and foreign currency expenditure from the export turnover?"

3. In view of the decision rendered in ITA No.81/2021 today i.e., 24.03.2021, these questions of law as suggested by the revenue cannot be entertained. The reasons qua the same are given in the judgment rendered in ITA No.81/2021.

3.1. In brief, the questions of law as suggested by the revenue stand covered by various judgments of either this Court or the Supreme Court.

4. The appeal is, accordingly, dismissed.

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IN THE HIGH COURT OF DELHIRajiv Shakdher, Talwant Singh, JJ.Pr. Commissioner of Income Tax - AppellantVersusHCL Comnet Systems and Services Ltd. - RespondentITA 66 of 2021Decided On : 24-03-2021

The interpretation of Section 14A does not depend on earning exempt income, as affirmed by the court in relation to previous judgments.

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IN THE HIGH COURT OF DELHI
Rajiv Shakdher, Talwant Singh, JJ.
Pr. Commissioner of Income Tax - Appellant
Versus
HCL Comnet Systems and Services Ltd. - Respondent
ITA 66 of 2021
Decided On : 24-03-2021