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Facts
The Revenue filed appeals against the orders of the CIT(A) which deleted the additions made by the Assessing Officer (AO) under section 14A r.w.r.8D of the Income Tax Act. The AO had disallowed expenditure related to exempt income, even though the assessee had not earned any exempt income during the assessment years.
Held
The Tribunal held that Section 14A of the Income Tax Act cannot be invoked to disallow expenditure if no exempt income has been earned by the assessee in the relevant assessment year. The amendment made by the Finance Act, 2022, inserting an Explanation to Section 14A, is effective from April 1, 2022, and cannot be applied retrospectively.
Key Issues
Whether disallowance under Section 14A can be made when no exempt income has been earned by the assessee.
Sections Cited
14A, 10(34), 270A, 115JB
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Income Tax Appellate Tribunal, Hyderabad “A” Bench, Hyderabad
आदेश की प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:-
ननधधाऩरती/The : M/s Engenrin Hydro Power Limited, 810- 811,JMD Megapolis, Gurgaon, South City II, Assessee S.O., Gurgaon, Haryana 2. रधजस्व/ : The Assistant Commissioner of Income The Tax, Circle-5(1), Room No.224, 2B, IT Revenue Towers, A.C.Guards, Hyderabad 3. The Principal Commissioner of Income Tax, Hyderabad 4. नवभधगीयप्रनतनननध, आयकर अपीलीय अनधकरण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file
आदेशधनुसधर / BY ORDER LOKIREDDI RAMA cn=LOKIREDDI RAMA c=IN o=INCOME TAX APPELLATE TRIBUNAL ou=INCOME TAX APPELLATE TRIBUNAL 2026-02-17 14:59+05:30 Sr. Private Secretary ITAT, Hyderabad