|The Tax Publishers2020 TaxPub(DT) 5196 (Del-Trib)
INCOME TAX ACT, 1961
Section 14A Rule 8D
As there was no exempt income attributable in the hands of assessee during the year, the CIT (A) was justified in deleting the disallowance made under section 14A read with rule 8D.
Disallowance under section 14A - Expenditure against exempt income - No exempt income earned by assessee -
AO made disallowance under section 14A read with rule 8D, which was deleted by CIT(A). Revenue submitted that the CIT(A) erred in deleting the disallowance under section 14A read with rule 8D by ignoring the fact that the assessee incurred huge expenses in relation to huge investment in shares and mutual funds. Assessee submitted that no exempt income was earned during the year and no expenditure was incurred in relation to same, thus the CIT(A) rightly deleted the said disallowance. Held: It is clear from the records that there was no exempt income attributable in the hands of assessee during the year. Therefore, applying section 14A read with rule 8D was not appropriate on part of AO. Further, CIT (A) held that no expenditure could be disallowed against 'NIL' exempt income and accordingly, he was justified in deleting the disallowance made under section 14A read with rule 8D.
REFERRED : Maxopp Investment Ltd. v. CIT (2018) 402 ITR 640 (SC) : 2018 TaxPub(DT) 1403 (SC), Cheminvest Ltd. v. CIT-VI (2015) 371 ITR 23 (Del) : 2015 TaxPub(DT) 3520 (Del-HC) and CIT v. Holcim India P. Ltd. (2014) 272 CTR 282 (Del) : 2014 TaxPub(DT) 3780 (Del-HC).
FAVOUR : In assessee's favour.
A.Y. : 2013-14
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