BIOPHORE INDIA PHARMACEUTICALS PRIVATE LIMITED,HYDERABAD vs. DCIT., CIRCLE-1(1), HYDERABAD

ITA 729/HYD/2025Status: DisposedITAT Hyderabad26 September 2025AY 2020-21Bench: SHRI VIJAY PAL RAO (Vice President), SHRI MANJUNATHA G (Accountant Member)20 pages
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What did the Tribunal hold?

The Tribunal held that the PCIT erred in invoking Section 263 and setting aside the assessment order. It relied on High Court decisions stating that Section 14A disallowance cannot be made if no exempt income is earned, and amendments to Section 14A are prospective.

What were the facts?

The assessee filed its return of income, which was accepted by the Assessing Officer. Subsequently, the Principal Commissioner of Income Tax (PCIT) initiated revision proceedings under Section 263, proposing a disallowance under Section 14A read with Rule 8D for expenses related to investments, even though no exempt income was earned.

What were the issues?

Whether disallowance under Section 14A can be made in the absence of exempt income, and whether amendments to Section 14A are retrospective.

Which sections of the Income-tax Act were involved?

Section 14A,Section 263

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Income Tax Appellate Tribunal, HYDERABAD “A” BENCH: HYDERABAD

Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G

Hearing: 23.09.2025Pronounced: 26.09.2025

PER MANJUNATHA G. :

The above appeal has been filed by the assessee against the Order dated 27.02.2025 of the learned Principal Commissioner of Income Tax, Hyderabad-1, Hyderabad, relating to the assessment year 2020-2021. 2. The assessee has raised the following grounds in the instant appeal :

2 ITA.No.729/Hyd./2025 1. “The disallowance of Rs.32,50,783 made by the Learned PCIT under section 144 of the Income Tax Act, read with Rule (20d for the AY 2020-21 is erroneous, bad in law, and contrary to the facts and circumstances of the case.

2.

The provisions of Section 14A of the Income Tax Act, read with Rule BD of the Income Tax Rules, are not applicable to this case as the disallowanc

The order continues below.

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