“disallowance u/s 14A”

DisallowancesSection 14ASection 14A2,938 judgments

The decision most relied on for disallowance u/s 14A is CIT v. Corrtech Energy (P.) Ltd. (223 Taxmann 130), cited in 579 judgments on BharatTax.

Leading authorities on disallowance u/s 14A

CIT v. Corrtech Energy (P.) Ltd.

223 Taxmann 130 · 2014 · High Court

579

citing judgments

Disallowance under Section 14A read with Rule 8D is not warranted if the assessee has not earned any exempt income in the relevant assessment year.

CIT v. Gem Plus Jewellery India Ltd.

330 ITR 175 · 2011 · High Court

207

citing judgments

Disallowances made under various sections, such as for PF/ESIC contributions, result in an increase in business profits, and these enhanced profits are eligible for deduction under Sections 10A and 10AA. Similarly, gains from foreign exchange fluctuations directly linked to export sales are also eligible for deduction under Section 10A.

Cargo Motors (P.) Ltd. v. DCIT

145 Taxmann.com 641 · 2022 · High Court

citing judgments

The disallowance under Section 14A read with Rule 8D, particularly Rule 8D(iii) for administrative expenses, should only consider investments that have actually yielded exempt income during the relevant assessment year. Section 14A empowers the Assessing Officer to determine expenditure related to income not forming part of total income.

Sobha Developers Ltd. v. DCIT

125 Taxmann.com 72 · 2021 · High Court

citing judgments

Disallowance under section 14A is a notional disallowance and cannot be added back while computing Book Profits under section 115JB for Minimum Alternate Tax purposes.

Tata Industries Ltd. v. ITO

181 TTJ 600 · 2016 · ITAT

citing judgments

Disallowance under Section 14A cannot exceed the exempt income earned by the assessee. Even if interest expenditure is considered, it cannot be solely attributed to earning exempt dividend income as investors also consider potential capital gains.

PCIT v. J.J. Glastronics (P.) Ltd.

139 Taxmann.com 375 · 2022 · High Court

citing judgments

Additions made under Section 14A of the Income-tax Act, read with Rule 8D, cannot be considered for computing book profit under Section 115JB of the Act.

M/s.Bajaj Allianz General Insurance Co. Ltd. v. ACIT

38 DTR 282 · 2010 · Reported

citing judgments

Section 14A of the Income-tax Act is not applicable to insurance businesses governed by specific provisions of Section 44 and Schedule 1. Profit on sale of investments by insurance companies is not taxable, especially after the deletion of sub-rule (b) of Rule 5 of the First Schedule.

PCIT v. Dipesh Lalchand Shah

143 Taxmann.com 419 · 2022 · High Court

citing judgments

Disallowance under section 14A cannot be made if the assessee has not earned any exempt income in the relevant assessment year. This applies even if the assessee has made investments in shares or has income from a partnership that is negative.

Judgments citing disallowance u/s 14A

Security Printing & Minting Corporation of India Ltd., New Delhi vs. Addl. CIT, New Delhi

In the result both the appeals of the assessee are allowed

ITA 3685/DEL/2017[2012-13]Status: DisposedITAT Delhi16 Sept 2021AY 2012-13

Bench: Shri Amit Shukla & Shri N.K. Billaiya

For Appellant: Shri Y.K. Madan, CAFor Respondent: Shri Prakash Dubey, Sr. DR

Section 143(3)Section 14ASection 37

order, therefore, our aforesaid decision will apply mutatis mutandis. This expenditure of Rs. 4,36,40,497/- is allowed. 13. Coming to the disallowance u/s 14A of Rs. 49,82,319/-, we find that in assessment year 2013-14, the Ld. CIT(A) has deleted the said addition on merits ... fund. Ld. AO without examining the assessee’s explanation having regard to the nature of expenditure debited has simply proceeded to make the disallowance u/s 14A read with Rule 8D of Rs. 49,82,310/- which was worked out under rule 8D by deducting 0.5% of the average investment

M/S Wel Intertrade Pvt. Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeal of the assessee is allowed

ITA 3999/DEL/2016[2010-11]Status: DisposedITAT Delhi16 Sept 2021AY 2010-11

Bench: Shri N.K. Billaiya & Shri Amit Shukla

For Appellant: Shri C.S. Agarwal, Sr.AdvFor Respondent: Shri Prakash Dubey, Sr.D.R

Section 143(3)Section 14A

consideration for making the disallowance. 3.3 Without prejudice and in the alternative, learned CIT(A) has grossly erred in failing to appreciate that disallowance u/s 14A of the Act cannot exceed the exempt income as such, sustainence of disallowance of Rs. 41,29,095/- in excess of the exempt income

ACIT, New Delhi vs. M/S. Krishak Bharati Cooperative Ltd., New Delhi

The appeal of the assessee stands allowed

ITA 1469/DEL/2017[2009-10]Status: DisposedITAT Delhi13 Sept 2021AY 2009-10

Section 143(1)Section 14A

appreciate that the AO has not 4. brought on record any material to show nexus between expenditure and earning of exempt income. No disallowance u/s 14A r.w.r. 8D can be made. The CIT(A) has failed to appreciate that Rule 8D can be 5. invoked only when the A.O. from ... expenditure has been incurred for earning tax free income. Rule 8D has been mechanically invoked by A.O. without establishing such nexus. Consequently, the disallowance u/s 14A r.w.r. 8D of Rs.50,53,792/- should be deleted. The above grounds are independent and without prejudice 6. to one and another.” Krishak Bharti

M/S. Krishak Bharti Cooperative Ltd., New Delhi vs. ACIT, New Delhi

The appeal of the assessee stands allowed

ITA 1006/DEL/2017[2009-10]Status: DisposedITAT Delhi13 Sept 2021AY 2009-10

Section 143(1)Section 14A

Addl. CIT, Special Range- 03, New Delhi vs. Dlf Ltd., New Delhi

ITA 5941/DEL/2017[2012-13]Status: DisposedITAT Delhi10 Sept 2021AY 2012-13

Bench: Shri Amit Shukla & Prashant Maharishi

For Appellant: Shri Surender Pal, CIT-DRFor Respondent: S/Shri R.S. Singhvi & Satyajeet Goel

Section 14A

coordinate bench may be followed. Further, the Ld. DR advanced arguments in respect of Ground 6,11 and 15 involving issue of disallowance u/s 14A, disallowance of expense on personal nature and transfer pricing adjustment u/s 92C respectively. With regard, to ground no. 13, he relied upon the assessment order ... u/s 14A read with Rule 8D of the Income Tax Act, 1961. The assessee in its return of income made suo moto disallowance u/s 14A to the extent of Rs. 6,61,871/-. However, the assessing officer enhanced disallowance u/s 14A on the basis of Rule

Exlservices.Com (India) Pvt. Ltd., New Delhi vs. DCIT, Ltu, Circle- 1, New Delhi

In the result, appeal of the assessee is partly allowed

ITA 7392/DEL/2018[2014-15]Status: DisposedITAT Delhi06 Sept 2021AY 2014-15

Bench: Sh. Anil Chaturvedi & Sh. Kul Bharat(Through Video Conferencing) Exlservices.Com (India) Vs. Acit Pvt. Ltd., Large Taxpayer Unit, 414, 4Th Floor, Plot No.10 Circle – 1, Nbcc Plaza & 11, Dlp Jasola Tower-B, Pushp Vihar, Dda District Centre, Saket, New Delhi New Delhi - 110025 Pan No. Aaace 5174 C (Appellant) (Respondent) Assessee By Shri Ajay Vohra, Sr. Adv. Shri Neeraj Jain, Adv. Shri Saksham Singhal, Adv. Revenue By Ms. Rinku Singh, Sr. D.R. Date Of Hearing: 31.08.2021 Date Of Pronouncement: 06.09.2021 Order Per Anil Chaturvedi, Am: This Appeal Filed By The Assessee Is Directed Against The Order Dated 31.08.2018 Passed By The Commissioner Of Income Tax (Appeals)-22, New Delhi Relating To Assessment Year 2014-15. 2. The Relevant Facts As Culled From The Material On Records Are As Under :

Section 143(3)Section 14ASection 155JSection 271(1)(c)

grounds relates to the issue of disallowance of depreciation on Goodwill and the Ground No.3 and its sub grounds relates to disallowance u/s 14A r.w.r 8D of the Act. 7. We first take up Ground No.2 and sub grounds relating to disallowance of deprecation on Goodwill. 8. During the course ... delete the disallowance of depreciation. Thus the ground of assessee is allowed. 14. Ground No.3 and its sub grounds are with respect to disallowance u/s 14A of the Act. 15. During the course of assessment proceedings, AO on perusing the details furnished by the assessee noted that assessee had earned

Paliwal Gdr Homestyles (P) Ltd., New Delhi vs. DCIT, Circle- 10(1), New Delhi

In the result, the appeal of the assessee is partly allowed

ITA 6712/DEL/2017[2014-15]Status: DisposedITAT Delhi03 Sept 2021AY 2014-15

Bench: Shri Kul Bharat & Dr.B.R.R.Kumarassessment Year : 2014-15 Paliwal Gdr Homestyles (P.) Ltd., Vs Dcit, 38, Functional Indl. Estate, Circle-10(1), Paharganj, New Delhi-110092 New Delhi. Pan-Aaccp3904F Appellant Respondent Appellant By Ms. Monika Aggarwal, Ca Respondent By Ms. Mrinalini Sapra, Sr.Dr Date Of Hearing 26.08.2021 Date Of Pronouncement 03.09.2021

Section 143(3)Section 14A

case of ClT v. HDFC Bank Limited (ITA No. 330 of 2012), Bombay High Court where it was held that no disallowance u/s 14A can be made in respect of interest paid on borrowing if assessee's own funds and non-interest bearing funds exceeds investment in tax-free securities

DCIT, Circle- 2(1), New Delhi vs. Akc Retailers Pvt. Ltd., New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 3262/DEL/2018[2014-15]Status: DisposedITAT Delhi31 Aug 2021AY 2014-15

Bench: Shri Kul Bharat & Shri Anadee Nath Misshraassessment Year : 2014-15 Dcit, Vs Akc Retailer Pvt.Ltd., Circle-2(1), 305, 3Rd Floor, Bhanot Corner, New Delhi. Pamposh Enclave, Greater Kailash- 1, New Delhi-110048. Pan-Aabcu0112B Appellant Respondent Appellant By Sh. Mahesh Thakur, Sr.Dr Respondent By Sh. M.P.Rastogi, Adv. & Sh. Rajeev, Ca Date Of Hearing 12.08.2021 Date Of Pronouncement 31.08.2021

Section 143(3)Section 14A

rival contentions and perused the material available on record. We find that Ld.CIT(A) has deleted the addition made on account of disallowance u/s 14A of the Act, by observing as under:- “I have considered the submission of the appellant and observation of the AO made in the assessment order ... issue. The AO computed disallowance u/s 14A of the Act read with Rule 8D at Rs.2,94,81,452/-. The Ld. AR has stated that since no dividend income was earned, the provisions of section 14A are not applicable. He relied on a number of judicial precedents approving the proposition

Hindustan Associated Engineers Pvt. Ltd., New Delhi vs. ITO, Ward- 11(3), New Delhi

In the result, the appeal of the assessee is partly

ITA 3758/DEL/2018[2014-15]Status: DisposedITAT Delhi27 Aug 2021AY 2014-15

Bench: Shri R.K. Panda & Shri Vijay Pal Rao

For Appellant: Sh. Rajnish Aggarwal, CAFor Respondent: Ms. Anima Barnwal, Sr. DR

Section 143(3)Section 14A

assessee to explain the working of adhoc disallowance of Rs. 15,000/- made u/s 14A and also to explain as to why the disallowance u/s 14A read with Rule 8D will not be made in investment which has yielded an exempt income. In response the assessee has revised

DCIT, Circle- 12(1), New Delhi vs. Indian Sugar Exim Corporation Ltd., New Delhi

ITA 3476/DEL/2018[2010-11]Status: DisposedITAT Delhi27 Aug 2021AY 2010-11

Bench: Shri Anil Chaturvedi & Shri Kuldip Singh

For Appellant: Shri Sumit Jain, CAFor Respondent: Ms. Anima Barnwal, Senior DR

Section 143Section 14ASection 254Section 271(1)(c)

business loss, total income was assessed at Rs.5,25,522/- by making additions viz. depreciation on building, foreign travelling expenditure, provident fund payment, disallowance u/s 14A, interest on late payment of TDS, derivative loss & prior period expenses to the tune of Rs.19,32,804/-, Rs.4,85,583/-, Rs.28

Ht Media Ltd., New Delhi vs. Addlcit, Range-4, New Delhi

In the result, the assessee’s appeal is partly

ITA 1876/DEL/2018[2013-14]Status: DisposedITAT Delhi26 Aug 2021AY 2013-14

Bench: Shri R.K. Panda & Shri Vijay Pal Rao

For Appellant: Sh. V.P. Gupta, AdvFor Respondent: Ms. Sunita Singh, CIT DR

Section 115JSection 14ASection 14A(1)

earned dividend income of Rs. 7.04 crores which is exempt from tax. The AO further noted that the assessee has made suo moto disallowance u/s 14A of Rs. 9,75,000/-. The AO asked the assessee to explain the basis of the suo moto 3 ITA.No.1876 & 1920/Del./2018 ... explained the basis as to how this figure of Rs. 9,75,000/- has arrived. Accordingly, the AO proceeded to make the disallowance u/s 14A as per the formula of apportionment of the indirect expenses provided under Rule 8D of Income Tax Rules, 1962. The AO consequently computed the disallowance

DCIT, Circle-10(1), New Delhi vs. Genesis Color Pvt. Ltd., New Delhi

In the result, the appeal of the Revenue is partly allowed for statistical purposes

ITA 4019/DEL/2018[2014-15]Status: DisposedITAT Delhi25 Aug 2021AY 2014-15

Bench: Shri R.K. Panda & Shri Vijay Pal Rao

For Appellant: Ms. Anima Barnwal, Sr.D.RFor Respondent: Shri Ved Jain, CA and Shri Ashish

Section 14ASection 14A(1)Section 40

exempt income”? 4. Whether on the facts and circumstances of the case in law, Ld. CIT (A) has erred in not upholding disallowance u/s 14A of the Act without considering legislative intent of introducing section 14A by the without considering legislative intent of introducing section 14A by the Finance

DCIT, Circle-12(1), New Delhi vs. Il & Fs Energy Development Co. Ltd., New Delhi

In the result, both the appeals of the Revenue are dismissed

ITA 3851/DEL/2018[2014-15]Status: DisposedITAT Delhi25 Aug 2021AY 2014-15

Bench: Sh. Anil Chaturvedi & Sh. Kuldip Singh(Through Video Conferencing) Ita Nos. 3479 & 3851/Del/2018 (Assessment Years : 2013-14 & 2014-15) Dcit Vs. Il & Fs Energy Circle – 12(1) Development Co. Ltd., New Delhi A-268, 1St Floor, Bhishm Pitamah Marg & Defence Colony, New Delhi Pan No. Aabci 6885 K (Appellant) (Respondent) Assessee By --None-- Revenue By Shri Sarwan Kumar Gautam, Cit-D.R. Date Of Hearing: 18.08.2021 Date Of Pronouncement: 25.08.2021

Section 143(3)Section 14ASection 14A(1)

nexus between "expenditure incurred" and "earning of exempt income"? 4. Whether the CIT(A) is correct in law and circumstance in not upholding disallowance u/s 14A of the IT Act without considering legislative intent of introducing section 14A by the Finance Act, 2001 as clarified by CBDT Circular No. 5/2014 ... Rs.12,50,66,466/- as being inadmissible in terms of section 14A. The assessee was asked to justify as to why no disallowance u/s 14A be made to which assessee inter alia submitted that since no exempt income has been earned, no disallowance u/s 14A is warranted. It was further