Williamson Financial Services ... vs Assistant Commissioner Of Income Tax, ... on 2 January, 2023
(D.2) Whether the aforesaid explanation to section 14A of the Act is
retrospective or prospective has been considered by various Hon'ble High
Courts in the cases reported as Pr. CIT vs. Era Infrastructure (India) Ltd.
[2022] 141 taxmann.com 289 (Delhi), Williamson Financial Services Ltd. vs.
CIT [2024] 166 taxmann.com 607 (Gauhati) and Pr. CIT vs. Avantha Realty
Ltd. [2024] 164 taxmann.com 376 (Calcutta). In these decisions, Hon'ble
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High Courts have held that the amendment to section 14A of the Income
Tax Act, whereby the aforesaid explanation was inserted, is prospective in
nature, and not retrospective. Respectfully following the aforesaid decisions
of Hon'ble High Courts, it is held that explanation to section 14A of the Act,
inserted by amendment brought about by Finance Act, 2022, with effect
from 01/04/2022, is prospective in nature and has no application to the
assessment year 2016-17 to which this appeal pertains. Accordingly, it is
held that the assessee is not hit by the aforesaid explanation to section 14A
of the Act in so far as assessment year 2016-17 is concerned. Further, in
respectful consideration of precedents mentioned in foregoing paragraphs
(D.1.1) and (D.1.1.1) of this order; it is held that no disallowance is
attracted u/s 14A of IT Act in assessment year 2016-17. In view of the
foregoing, we decline to interfere with the order of learned CIT(A) on this
issue.