INCOME TAX ACT 1961

Section 14A read with Rule 8D Rule 8D

Disallowance under section 14A - Expenditure against exempt income - No exempt income received or receivable -

Revenue filed appeal against the order of Tribunal deleting the addition made by the AO under section 14A in holding that no disallowance can be made under section 14A read with rule 8D in the case wherein no exempt income has been earned during the year under consideration. Held: This Court was of the view that the present case was covered by the Division Bench judgment in Cheminvest Ltd. [(2015) 61 taxmann.com 118 (Delhi) : 2015 TaxPub(DT) 3520 (Del-HC)] wherein it has been held that the expression 'does not form part of the total income' in section 14A means that there should be an actual receipt of income which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. In other words, section 14A will not apply if no exempt income is received or receivable during the relevant previous year. Also amendment of section 14A, which is 'for removal of doubts', cannot be presumed to be retrospective even where such language is used, if it alters or changes the law as it earlier stood. Thus, following the judgment in Cheminvest Ltd. (supra) disallowance made under section 14A was deleted, as no exempt income was is received or receivable during the relevant previous year.

Followed:Cheminvest Ltd. [(2015) 61 taxmann.com 118 (Delhi) : 2015 TaxPub(DT) 3520 (Del-HC)]

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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