The Tax Publishers2020 TaxPub(DT) 3802 (Ahd-Trib)

INCOME TAX ACT, 1961

Section 14A

Disallowance of expenditure under section 14A cannot exceed the amount of exempted income.

Disallowance under section 14A - Expenditure against exempt income - Disallowance in excess of tax free income earned by assessee -

Assessee earned tax-free dividend income on investments in shares. AO made disallowance under section 14A in excess of tax-free income earned by assessee. Held: The term used under section 14A 'amount of expenditure incurred in relation to such income' implies that expenditure cannot exceed the amount of exempted income. Accordingly, disallowance of expenditure could not exceed the amount of exempted income. AO was directed accordingly.

Relied:Joint Investments Private Ltd. v. CIT (2015) 372 ITR 694 (Delhi) : 2015 TaxPub(DT) 1375 (Del-HC) CIT v. Vision Finstock Stock Ltd. in Tax Appeal No. 486 of 2017 vide Order, dated 31-7-2017 CIT v. State Bank of Patiala (2018) 99 taxmann.com 286 (SC) : 2019 TaxPub(DT) 0976 (SC)

REFERRED :

FAVOUR : Partly in assessee's favour

A.Y. : 2015-16

INCOME TAX ACT, 1961

Section 37(1)

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