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The Tax Publishers2020 TaxPub(DT) 0672 (Bom-HC) : (2020) 425 ITR 0700 : (2021) 276 TAXMAN 0180 INCOME TAX ACT, 1961
Section 14A Rule 8D
Where assessee had not claimed any exempt income during relevant assessment year, disallowance under section 14A was not warranted because in the absence of any tax-free income the corresponding expenditure could not be taken into consideration for disallowance.
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Disallowance under section 14A - Expenditure against exempt income - No exempt dividend income claimed by assessee -
Assessee earned exempt dividend income during the relevant assessment year. AO had made disallowance under section 14A read with rule 8D without appreciating the facts that the assessee had not earned any exempt income during the period relevant to the assessment year Held: Section 14A can be invoked only if assessee seeks to square off the expenditure against the income which does not form the part of the total income and in such circumstances, section 14A could not have been invoked, more particularly, when no exempt income claim was earned in the relevant assessment years. Therefore, no disallowance under section 14A was to be made in the absence of any exempt income
REFERRED : PCIT (Central) v. Man Infraprojects Ltd. [Income Tax Appeal No. 259 OF 2017, dt. 9-4-2019] Cheminvest Limited v. CIT-VI (2015) 378 ITR 33(Delhi) : 2015 TaxPub(DT) 3520 (Del-HC) CIT v. Shivam Motors (P) Ltd. (2015) 55 taxman.com 262 (Allahabad) : 2014 TaxPub(DT) 4333 (All-HC) and CIT v. Lakhani Marketing Incl (2014) 49 taxman.com 257 (P&H) : 2014 TaxPub(DT) 2458 (P&H-HC)
FAVOUR : In assessee's favour
A.Y. :
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