M/S HIMUDA,SHIMLA vs. ACIT, CIRCLE, SHIMLA
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that Section 14A of the Income Tax Act is not attracted as the assessee did not make any investment capable of earning tax-exempt income, nor did they earn any such income. Consequently, the additions made by the lower authorities were unsustainable.
What were the facts?
The assessee appealed against the disallowance of Rs. 1,22,77,245/- under Section 14A for expenditure deemed to be incurred for earning tax-exempt income. The assessee argued that they had no investments capable of earning tax-exempt income, and their only investment in FDRs yielded taxable interest.
What were the issues?
Applicability of Section 14A when no tax-exempt income is earned and no investments are made for such purpose.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
( HYBRID HEARING ) "नधा"रती क" ओर से/Assessee by : Shri Rajeev Sood, CA राज"व क" ओर से/ Revenue by : Shri Anil Sharma, Sr.DR सुनवाई क" तार"ख/Date of Hearing : 02.04.2024 उदघोषणा क" तार"ख/Date of Pronouncement : 03.04.2024 आदेश/Order Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 15.12.2022 of the Ld. Commissioner of Income Tax (Appeals), [hereinafter referred to as’ CIT(E)’], National Faceless Appeal Centre (NFAC), Delhi, for the Assessment Year 2017-18. HIMUDA, Shimla 2 2. The sole issue raised in this appeal is relating to the disallowance made by the Assessing Officer of Rs. 1,22,77,245/- u/s 14A of the Income Tax Act, 1961 (in short 'the Act') in respect of proportionate expenditure deemed to have been incurred for earning of tax-exempt income.
At the outset, the ld. Counsel for the Assessee, pointing out to the records, stated that the Assessee during the year did not make any investment which was capable of earning of tax exempt income. That the only investment made by the Assessee was in the shape of FDRs, the interest from which was offered as income for taxation. Therefore, the provisions of Section 14A of the Act are not applicable in this case.
The ld. DR could not rebut the aforesaid contention of the Assessee.
Since in this case neither the Assessee made any investment which was capable of earning of tax-exempt income nor any tax- exempt income was earned by the Assessee during the year, therefore, the provisions of section 14A of the Act are not attracted in this case. The impugned additions made by the lower authorities are not sustainable in the eyes of law and the same are ordered to be deleted. -Chd-2023 HIMUDA, Shimla 3 In the result, the appeal of the Assessee stands allowed.
More judgments on Section 14A
- Blacksoil Capital Private Limited (As… vs DCIT, Circle-1(1), HyderabadITA 2217/HYD/2026[2017-18]Status: Disposed9 Oct 2026AY 2017-18
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- The Dy DIT (It) 1(2), Mumbai vs M/S Citi Bank N.A, MumbaiITA 4981/MUM/2007[2002-2003]Status: Disposed8 Oct 2026AY 2002-2003
- M/S. Citi Bank N.A., Mumbai vs The Addl DIT (It) RG-1, MumbaiITA 4970/MUM/2007[2002-2003]Status: Disposed8 Oct 2026AY 2002-2003
- M/S American Express Bank Ltd., Mumbai vs The Jt DIT (It)1(1), MumbaiITA 9414/MUM/2004[2000-2001]Status: Disposed8 Oct 2026AY 2000-2001
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