Does the 2022 Explanation to s.14A help the department on an old year outside Delhi?
Not in Madhya Pradesh either. The High Court held that because the assessment before it was for AY 2013-14, the amendment made to s.14A would not be applicable and the Revenue's contention founded on it was not relevant. The Revenue's appeal was dismissed.
Decided by the High Court (Sushrut Arvind Dharmadhikari J and Gajendra Singh J) on 2024-04-29, reported as ITA No. 193 of 2023 (High Court of Madhya Pradesh, Bench at Indore). It bears on section 14A, section Rule 8D, section 260A of the Income Tax Act 1961, in Deductions & Disallowances, How Tax Law Is Read, Appeals and Evidence & Burden of Proof matters.
The value of this decision is that it is a second High Court, outside Delhi, refusing to read the Explanation backwards, which matters when an officer says Era Infrastructure is a Delhi judgment that does not bind him. Take it for that and no more: the reasoning is compressed into a single paragraph, the Court does not analyse the removal-of-doubts language, and the s.14A point was one of five questions in an appeal mostly concerned with ad hoc disallowance of expenses and the admission of additional evidence. It is a useful makeweight, not a substitute for Era Infrastructure or the Alchemist and Uno Minda judgment.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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A Revenue appeal against the deletion of additions made in the assessment of a construction company for AY 2013-14. The Assessing Officer had disallowed operating and material expenses, made an addition on account of discrepancies in liabilities, and made a disallowance under s.14A. The Commissioner (Appeals) allowed the assessee's appeal by order dated 3 June 2022 and the Tribunal dismissed the Revenue's appeal by order dated 30 May 2023. Among the questions the Revenue proposed was whether a disallowance under s.14A could be made notwithstanding that no exempt income had been earned, the Revenue relying on the amendment made to s.14A by the Finance Act 2022.
The appeal was dismissed. The Revenue's contention founded on the amendment to s.14A was held irrelevant to the case because the assessment was for the year 2013-14, so the amendment would not be applicable, and the prayer to quash the orders of the Commissioner (Appeals) and the Tribunal was rejected (para 16).
The Court proceeded on the effective date of the amendment. Having set out the amendment made to s.14A and the position that it takes effect from 1 April 2022 and applies in relation to AY 2022-23 and subsequent assessment years, it held that the assessment before it being for AY 2013-14, the amendment did not govern it and the submission built on it did not arise. On the substantive additions the Court upheld the concurrent findings, the Assessing Officer having made the disallowances without recording findings on the documents that had in fact been furnished.
From the above discussion, it is clear that the contention of appellant in respect of question no.3 (a) is not relevant in this case as the assessment is for the year 2013-14, therefore, the amendment proposed in Section 14 (A) of the Act as discussed hereinabove would not be applicable in the present case and the submission of the appellant in respect of Section 14 (A) of the Act is not relevant in light of the amendment, therefore, the contention of the appellant to this effect that order of CIT appeal as well as an order of ITAT may be quashed is hereby rejected.
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Handle my notice → Ask a CA on WhatsAppNot in Madhya Pradesh either. The High Court held that because the assessment before it was for AY 2013-14, the amendment made to s.14A would not be applicable and the Revenue's contention founded on it was not relevant. The Revenue's appeal was dismissed. This was decided by the High Court (Sushrut Arvind Dharmadhikari J and Gajendra Singh J) and bears on section 14A, section Rule 8D, section 260A of the Income Tax Act 1961. It is reported as ITA No. 193 of 2023 (High Court of Madhya Pradesh, Bench at Indore). The value of this decision is that it is a second High Court, outside Delhi, refusing to read the Explanation backwards, which matters when an officer says Era Infrastructure is a Delhi judgment that does not bind him. Take it for that and no more: the reasoning is compressed into a single paragraph, the Court does not analyse the removal-of-doubts language, and the s.14A point was one of five questions in an appeal mostly concerned with ad hoc disallowance of expenses and the admission of additional evidence. It is a useful makeweight, not a substitute for Era Infrastructure or the Alchemist and Uno Minda judgment. If it applies to you, the first step is this: Cite it alongside Era Infrastructure when the officer or the departmental representative argues that the prospectivity view is confined to the Delhi High Court.
A Revenue appeal against the deletion of additions made in the assessment of a construction company for AY 2013-14. The Assessing Officer had disallowed operating and material expenses, made an addition on account of discrepancies in liabilities, and made a disallowance under s.14A. The Commissioner (Appeals) allowed the assessee's appeal by order dated 3 June 2022 and the Tribunal dismissed the Revenue's appeal by order dated 30 May 2023. Among the questions the Revenue proposed was whether a disallowance under s.14A could be made notwithstanding that no exempt income had been earned, the Revenue relying on the amendment made to s.14A by the Finance Act 2022. The matter was decided on 2024-04-29 by the High Court (Sushrut Arvind Dharmadhikari J and Gajendra Singh J). On those facts the High Court held as follows. The appeal was dismissed. The Revenue's contention founded on the amendment to s.14A was held irrelevant to the case because the assessment was for the year 2013-14, so the amendment would not be applicable, and the prayer to quash the orders of the Commissioner (Appeals) and the Tribunal was rejected (para 16).
The Court proceeded on the effective date of the amendment. Having set out the amendment made to s.14A and the position that it takes effect from 1 April 2022 and applies in relation to AY 2022-23 and subsequent assessment years, it held that the assessment before it being for AY 2013-14, the amendment did not govern it and the submission built on it did not arise. On the substantive additions the Court upheld the concurrent findings, the Assessing Officer having made the disallowances without recording findings on the documents that had in fact been furnished. In the words reproduced by the source cited on this page: "From the above discussion, it is clear that the contention of appellant in respect of question no.3 (a) is not relevant in this case as the assessment is for the year 2013-14, therefore, the amendment proposed in Section 14 (A) of the Act as discussed hereinabove would not be applicable in the present case and the submission of the appellant in respect of Section 14 (A) of the Act is not relevant in light of the amendment, therefore, the contention of the appellant to this effect that order of CIT appeal as well as an order of ITAT may be quashed is hereby rejected."
It was decided by the High Court on 2024-04-29 and is reported as ITA No. 193 of 2023 (High Court of Madhya Pradesh, Bench at Indore). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 14A, section Rule 8D, section 260A, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was dismissed. The Revenue's contention founded on the amendment to s.14A was held irrelevant to the case because the assessment was for the year 2013-14, so the amendment would not be applicable, and the prayer to quash the orders of the Commissioner (Appeals) and the Tribunal was rejected (para 16). It arises in Deductions & Disallowances, How Tax Law Is Read, Appeals and Evidence & Burden of Proof matters, on section 14A, section Rule 8D, section 260A of the Income Tax Act 1961, and was decided by Sushrut Arvind Dharmadhikari J and Gajendra Singh J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Confirm the assessment year in your own case is 2021-22 or earlier before relying on it at all. Do not use it for anything beyond prospectivity — its findings on the expense additions turn on the officer's failure to record findings on documents produced, which is fact-specific. Read the paragraph itself before quoting it; the printed text refers to the section as 'Section 14 (A)'.
Still good law. citedby:173367259 returns nothing, but a content search for "Keti Construction" with "14A" returns 38 documents; the judgment is cited as 2024 (5) TMI 168 (MPHC) and [2024] 166 taxmann. The application is confirmed in M/s Texmo Pipes and Products Ltd v DCIT (Income Tax Appellate Tribunal, Indore, 8 September 2026), which follows it as the jurisdictional High Court and dismisses the revenue's s.14A grounds. Nothing overruling, doubting or confining it was found and no Supreme Court matter surfaced. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This is the thinnest judgment in the batch and the note should be read before the entry is relied on. Two ?type=print passes on one day returned summarised prose rather than the printed judgment; a later pass on the same URL returned the printed header, the whole of paragraph 16 and the disposal, which is what is reproduced here, including the judgment's own reference to 'Section 14 (A)'. Paragraph 16 is still the only paragraph of the judgment that has been read in the original words, and the figures for the three additions have never been confirmed from a verbatim reading. The court, date and the names of the two judges were identical across both passes. The appeal number (ITA No. 193 of 2023) and the figures for the three additions appeared only in a rendering that was not verbatim and should be confirmed before they are cited. The disposal — appeal dismissed, no substantial question of law — appeared consistently in both passes. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was dismissed. The Revenue's contention founded on the amendment to s.14A was held irrelevant to the case because the assessment was for the year 2013-14, so the amendment would not be applicable, and the prayer to quash the orders of the Commissioner (Appeals) and the Tribunal was rejected (para 16).
TaxSphere, “PCIT v Keti Construction Ltd”, https://taxnotice.vittsphere.com/caselaw/case/pcit-v-keti-construction-14a-explanation-2022-not-for-ay-2013-14/ (validity last checked 2026-09-08)
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The officer went straight to the Rule 8D formula without saying what was wrong with my own s.14A working. Is that a good ground?
The officer relies on CBDT Circular 5/2014 to disallow under s.14A although I earned no exempt income at all in the year. Does the Circular carry it?
Can the Rule 8D figure be added back to book profit under clause (f) of the Explanation to s.115JB?
The officer says the 2022 Explanation to s.14A is clarificatory and applies to my old years. Is there High Court authority against that?
