| The Tax Publishers2019 TaxPub(DT) 1851 (Pune-Trib) INCOME TAX ACT, 1961
Section 14A Rule 8D
Where assessee did not earn any exempt income in the relevant year, there could not be any disallowance under section 14A read with rule 8D, as disallowance under section 14A could not exceed the exempt income of the relevant year.
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Disallowance under section 14A - Expenditure against exempt income - No exempt income earned -
AO noticed that assessee had investments in shares of various companies, which were purchased in earlier years. Assessee submitted that it did not earn any exempt income from the aforesaid investments and therefore, there could not be any disallowance under section 14A read with rule 8D. However, AO was of the view that even if assessee did not earn any exempt income, disallowance under section 14A read with rule 8D was required to be made in terms of CBDT Circular No. 5, dt. 11-2-2014. And accordingly, he made the disallowance under section 14A read with rule 8D. Held: It was an undisputed fact that assessee incurred expenditure on account of interest etc., for making investment in shares of various companies and did not earn any exempt income from the same. It is well settled that disallowance under section 14A cannot exceed exempt income of the relevant year. In the subject case, since assessee did not earn any exempt income, there could not be any disallowance under section 14A read with rule 8D.
Relied:Maxopp Investment Ltd. v. CIT, New Delhi and Pr. CIT-I v. D.B. Corp Ltd. (2018) 402 ITR 640 (SC): 2018 TaxPub(DT) 1403 (SC) Pr. CIT-2 v. M/s. Caraf Builders & Constructions (P) Ltd. in (ITA 1260/2018, dt. 13-11-2018): 2018 TaxPub(DT) 7786 (Del-HC) Pr. CIT, Patiala v. State Bank of Patiala in (ITA No. 359 of 2017, dt. 14-11-2017): 2018 TaxPub(DT) 6816 (P&H-HC) Cheminvest Limited v. CIT-VI (2015) 378 ITR 33 (Del): 2015 TaxPub(DT) 3520 (Del-HC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
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