INCOME TAX ACT, 1961

Section 14A

Disallowance under section 14A - Expenditure incurred against earning of exempted income - AO made detailed discussion on the applicability of section 14A -

Assessee formed subsidiary companies and partnership firms to execute various projects. Accordingly, it made investments in the above said concerns. Assessee had received 'share income from partnership firm. However, the assessee did not make any disallowance as required under section 14A, even though it had received exempt income in assessment years 2013-14 to 2015-16. However, in assessment year 2016-17, the assessee had made disallowance under section 14A. Hence, AO computed the disallowance under section 14A read with Rule 8D.Held: Assessee contended that AO had not recorded satisfaction before invoking the provisions of rule 8D. However, a perusal of assessment order would show that AO discussed the applicability of the provisions of section 14A by duly considering the letters filed by the assessee before him. Hence, it was not a case of non-recording of dissatisfaction over the claim made by the assessee, as contended by assessee. It is pertinent to mention here that the Act does not prescribe any particular method for recording satisfaction/dissatisfaction. AO made detailed discussion in all the years under consideration on the applicability of section 14A, that too, after considering the letter filed by the assessee. Thus, disallowance under section 14A was sustained.

Applied:MAK Data (P) Ltd. v. CIT (2014) 1 SCC 674 : 2013 TaxPub(DT) 2358 (SC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2013-14 to 2016-17

INCOME TAX ACT, 1961

Section 14A

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