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| The Tax Publishers2019 TaxPub(DT) 0889 (Del-Trib) : (2019) 069 ITR (Trib) 0416 INCOME TAX ACT, 1961
Section 14A
As assessee has not earned any exempt dividend income during the year under assessment, disallowance under section 14A could not be made. Therefore, invocation of rule 8D in a mechanical manner without recording any satisfaction as to non-correctness of assessee's claim that assessee had not earned any dividend income was invalid.
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Disallowance under section 14A - Expenditure against exempt income - Invocation of rule 8D - No exempt income earned during the year
AO noticed investment in shares in assessee\s balance-sheet and required assessee to explain as to why disallowance under section 14A could not be made. Assessee submitted that no exempt income was earned during the relevant year.Held: As assessee had not earned any exempt dividend income during the year under assessment, disallowance under section 14A could not be made. Therefore, invocation of rule 8D in a mechanical manner without recording any satisfaction as to non-correctness of assessee's claim that assessee had not earned any dividend income was invalid.
Relied:Cheminvest Ltd. v. CIT (2015) 378 ITR 33 (Del-HC) : 2015 TaxPub(DT) 3520 (Del-HC) : 2015 TaxPub(DT) 3520 (Del-HC) and Godrej & Boyce Manufacturing Co. Ltd. v. Dy. CIT (2017) 394 ITR 449 (SC) : 2017 TaxPub(DT) 0968 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
IN THE ITAT, DELHI 'D' BENCH
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