DCIT v. DLF Universal Ltd. - Taxpublishers.in

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The Tax Publishers2021 TaxPub(DT) 0602 (Del-Trib)

INCOME TAX ACT, 1961

Section 14A

High Court in the case of Cheminvest Ltd. v. CIT [(2015) 378 ITR 33 (Del) : 2015 TaxPub(DT) 3520 (Del-HC)] had held that if there was no exempt income, there can be no question of making any disallowance under section 14A, therefore, disallowance under section 14A gets restricted to the extent of exempt income, even if the provisions of the section are attracted.

Disallowance under section 14A - Expenditure incurred against earning of exempted income - No exempted income earned by assessee -

Assessee was engaged in carrying out the business of real estate development as stated in the Memorandum of Articles of the assessee-company. AO made addition/disallowance under section 14A read with rule 8D. Assessee-company had itself offered for assessing a sum on account of direct expenses attributable to earning of tax free dividend income. Held: High Court in the case of Cheminvest Ltd. v. CIT [(2015) 378 ITR 33 (Del) : 2015 TaxPub(DT) 3520 (Del-HC)] had held that if there was no exempt income, there can be no question of making any disallowance under section 14A. Similar view was taken by High Court in CIT v. Holcim India P. Ltd. [(2014) 90 CCH 81 (Del) : 2014 TaxPub(DT) 3780 (Del-HC)]. Therefore, disallowance under section 14A gets restricted to the extent of exempt income, even if the provisions of the section are attracted.

Followed:Cheminvest Ltd. v. CIT [(2015) 378 ITR 33 (Del) : 2015 TaxPub(DT) 3520 (Del-HC)] and CIT v. Holcim India P. Ltd. [(2014) 90 CCH 81 (Del) : 2014 TaxPub(DT) 3780 (Del-HC)].

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14

IN THE ITAT, DELHI BENCH