LAWS(KER)-2020-3-555

COMMISSIONER OF INCOME TAX Vs. FEDERAL BANK LTD.

Decided On March 18, 2020
COMMISSIONER OF INCOME TAX Appellant
V/S
FEDERAL BANK LTD. Respondents

JUDGEMENT

(1.) The batch of review Petitions have been filed against the deletion of disallowance made under Section 14A of the Income Tax Act, 1961 (For brevity, 'the Act of 1961). This Court, in the appeals, filed by both the Revenue and the assessee, found that, as per the binding precedent of the Hon'ble Supreme Court in Commissioner of Income Tax V. Essar Teleholdings Ltd . [(2018) 401 ITR 445 (SC), such dis- allowance could be made only from the assessment year 2007-2008. This was held to be so for reason of the incorporation of the machinery provisions under Rule 8D of the Income Tax Rules in the year 2006, the Explanatory Notes in the Finance Bill 2006, clarification in the Circular dated 28.12.2006 and the methodology having been changed in the year 2016, which was expressly stated to be prospective.

(2.) Learned Standing Counsel appearing for the Revenue submitted that the decision in Essar Teleholdings (supra) itself finds that Section 14A of the Act is fully workable without there being any mechanism provided for computing the expenditure as noticed in para 36.

(3.) We have to immediately notice that it is not the dictum of the decision and their Lordships expressed otherwise in paragraphs 36, 37 & 40, all of which we extract hereunder: