Section 14A of the Income Tax Act

Income-tax Act, 2025: s.14

Section 14A of the Income-tax Act, 1961 corresponds to section 14 (Income not forming part of total income and expenditure in relation to such income) of the Income-tax Act, 2025.

Read section 14 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 14A is CIT v. Reliance Petroproducts Pvt. Ltd. (322 ITR 158), cited in 2,228 of the 15,875 judgments on BharatTax that turn on this section.

Leading authorities on Section 14A

CIT v. Reliance Petroproducts Pvt. Ltd.
322 ITR 158 · 2010 · Supreme Court
2,228
citing judgments

Penalty under Section 271(1)(c) for furnishing inaccurate particulars or concealment of income is not automatically leviable if the assessee has made a full disclosure of all particulars and the addition or disallowance arises from a difference of opinion.

CIT v. Reliance Utilities & Power Ltd.
313 ITR 340 · 2009 · High Court
2,118
citing judgments

Where an assessee claims that investments were made out of own funds, interest disallowance under Section 14A read with Rule 8D may not apply if the assessee demonstrates the availability of sufficient interest-free funds to cover such investments.

Goetze (India) Ltd. v. CIT
284 ITR 323 · 2006 · Supreme Court
1,842
citing judgments

An assessee cannot raise a new claim or a claim not made in the original or revised return of income for the first time directly before the Assessing Officer during assessment proceedings.

Radhasoami Satsang v. CIT
193 ITR 321 · 1992 · Supreme Court
1,695
citing judgments

The principle of consistency applies in tax matters, meaning a fundamental aspect found to be true in one assessment year should not be changed in a subsequent year if the order was not challenged.

Maxopp Investment Ltd. v. CIT
402 ITR 640 · 2018 · Supreme Court
1,596
citing judgments

Disallowance under Section 14A is not automatic and requires the Assessing Officer to record satisfaction before applying Rule 8D. Only investments yielding exempt income are considered for disallowance, irrespective of their strategic nature.

Cheminvest Ltd. v. CIT
378 ITR 33 · 2015 · High Court
1,569
citing judgments

A disallowance under Section 14A of the Income-tax Act, 1961, for expenditure incurred in relation to exempt income cannot be made if the assessee has not earned any exempt income during the relevant previous year.

S.A. Builders Ltd. v. CIT
288 ITR 1 · 2007 · Supreme Court
1,484
citing judgments

Interest paid on borrowed funds cannot be disallowed merely because the assessee made interest-free advances, provided those advances were made for business purposes and commercial expediency. The Revenue cannot dictate a businessman's commercial decisions, but the assessee bears the onus to prove the business expediency.

CIT v. HDFC Bank Ltd.
366 ITR 505 · 2014 · High Court
1,261
citing judgments

When an assessee possesses interest-free funds sufficient to cover investments yielding tax-free income, it is presumed that such investments were made from these interest-free funds, precluding disallowance of interest expenditure under Section 14A.

Godrej & Boyce Mfg. Co. Ltd. v. DCIT
328 ITR 81 · 2010 · High Court
1,183
citing judgments

Rule 8D, for computing disallowance under Section 14A for expenses related to exempt income, applies from Assessment Year 2008-09 onwards; for prior years, a reasonable disallowance must be made. The disallowance under Section 14A cannot exceed the actual exempt income earned.

CIT v. Woodward Governor India Pvt. Ltd.
312 ITR 254 · 2009 · Supreme Court
968
citing judgments

Foreign exchange fluctuations, whether gains or losses, are inextricably linked to the underlying business transaction and must be accounted for under the mercantile system. The Supreme Court also affirmed the standard accounting principle of valuing stock at cost or net realisable value, whichever is lower.

Judgments on Section 14A

Dy CIT, Circle -2(1), Gwalior vs. Sh. Saurabh Garg, Morena

The appeals stand dismissed

ITA 366/AGR/2017[2010-11]Status: DisposedITAT Agra22 Apr 2025AY 2010-11

Bench: Hon’Ble Shri Satbeer Singh Godara, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am 1. आयकरअपीलसं./ Ita No.364/Agr/2017 (िनधा"रणवष" / Assessment Year:2008-09) & 2. आयकरअपीलसं./ Ita No.365/Agr/2017 (िनधा"रणवष" / Assessment Year:2009-10) & 3. आयकरअपीलसं./ Ita No.366/Agr/2017 (िनधा"रणवष" / Assessment Year:2010-11) बनाम/ Dcit, Circle-2(1), Shri Saurabh Garg Gwalior. Tilak Road, Jiwaji Ganj, Morena. Vs. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Acopg-5549-C (अपीलाथ"/Appellant) : (" थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Dr. Arun Kumar Yadav – Ld. Cit-Dr " थ"कीओरसे/Respondent By : Sh. Sanjay Kumar, Ca – Ld. Ar सुनवाईकीतारीख/Date Of Hearing : 19-02-2025 घोषणाकीतारीख /Date Of Pronouncement : 22.04.2025 आदेश / O R D E R Manoj Kumar Aggarwal () 1. Aforesaid Appeals By Revenue For Assessment Years (Ay) 2008-09 To 2010-11 Having Common Issues Arises Out Of Separate Orders Of First Appellate Authority. First, We Take Up Appeal For Ay 2008-09 Wherein The Grievance Of The Revenue Is – (I) Disallowance U/S 14A; (Ii) Profit Earned From Out Of Books Investments; (Iii) Unexplained Gifts Of Shares. The Impugned Order Has Been Passed By Learned Commissioner Of Income Tax (Appeals), Gwalior [Cit(A)] On 05-06-2017 In The Matter Of An Assessment Framed By Ld. Assessing Officer [Ao] U/S 143(3) R.W.S. 153A

For Appellant: Dr. Arun Kumar Yadav – Ld. CIT-DRFor Respondent: Sh. Sanjay Kumar, CA – Ld. AR
Section 132Section 143(3)Section 14ASection 56

Dy CIT, Circle-2(1), Gwalior vs. Sh Saurabh Gagh, Morena

The appeals stand dismissed

ITA 365/AGR/2017[2009-10]Status: DisposedITAT Agra22 Apr 2025AY 2009-10

Bench: Hon’Ble Shri Satbeer Singh Godara, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am 1. आयकरअपीलसं./ Ita No.364/Agr/2017 (िनधा"रणवष" / Assessment Year:2008-09) & 2. आयकरअपीलसं./ Ita No.365/Agr/2017 (िनधा"रणवष" / Assessment Year:2009-10) & 3. आयकरअपीलसं./ Ita No.366/Agr/2017 (िनधा"रणवष" / Assessment Year:2010-11) बनाम/ Dcit, Circle-2(1), Shri Saurabh Garg Gwalior. Tilak Road, Jiwaji Ganj, Morena. Vs. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Acopg-5549-C (अपीलाथ"/Appellant) : (" थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Dr. Arun Kumar Yadav – Ld. Cit-Dr " थ"कीओरसे/Respondent By : Sh. Sanjay Kumar, Ca – Ld. Ar सुनवाईकीतारीख/Date Of Hearing : 19-02-2025 घोषणाकीतारीख /Date Of Pronouncement : 22.04.2025 आदेश / O R D E R Manoj Kumar Aggarwal () 1. Aforesaid Appeals By Revenue For Assessment Years (Ay) 2008-09 To 2010-11 Having Common Issues Arises Out Of Separate Orders Of First Appellate Authority. First, We Take Up Appeal For Ay 2008-09 Wherein The Grievance Of The Revenue Is – (I) Disallowance U/S 14A; (Ii) Profit Earned From Out Of Books Investments; (Iii) Unexplained Gifts Of Shares. The Impugned Order Has Been Passed By Learned Commissioner Of Income Tax (Appeals), Gwalior [Cit(A)] On 05-06-2017 In The Matter Of An Assessment Framed By Ld. Assessing Officer [Ao] U/S 143(3) R.W.S. 153A

For Appellant: Dr. Arun Kumar Yadav – Ld. CIT-DRFor Respondent: Sh. Sanjay Kumar, CA – Ld. AR
Section 132Section 143(3)Section 14ASection 56

Dy CIT, Circle -2(1), Gwalior vs. Sh Saurabh Garg, Morena

The appeals stand dismissed

ITA 364/AGR/2017[2008-09]Status: DisposedITAT Agra22 Apr 2025AY 2008-09

Bench: Hon’Ble Shri Satbeer Singh Godara, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am 1. आयकरअपीलसं./ Ita No.364/Agr/2017 (िनधा"रणवष" / Assessment Year:2008-09) & 2. आयकरअपीलसं./ Ita No.365/Agr/2017 (िनधा"रणवष" / Assessment Year:2009-10) & 3. आयकरअपीलसं./ Ita No.366/Agr/2017 (िनधा"रणवष" / Assessment Year:2010-11) बनाम/ Dcit, Circle-2(1), Shri Saurabh Garg Gwalior. Tilak Road, Jiwaji Ganj, Morena. Vs. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Acopg-5549-C (अपीलाथ"/Appellant) : (" थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Dr. Arun Kumar Yadav – Ld. Cit-Dr " थ"कीओरसे/Respondent By : Sh. Sanjay Kumar, Ca – Ld. Ar सुनवाईकीतारीख/Date Of Hearing : 19-02-2025 घोषणाकीतारीख /Date Of Pronouncement : 22.04.2025 आदेश / O R D E R Manoj Kumar Aggarwal () 1. Aforesaid Appeals By Revenue For Assessment Years (Ay) 2008-09 To 2010-11 Having Common Issues Arises Out Of Separate Orders Of First Appellate Authority. First, We Take Up Appeal For Ay 2008-09 Wherein The Grievance Of The Revenue Is – (I) Disallowance U/S 14A; (Ii) Profit Earned From Out Of Books Investments; (Iii) Unexplained Gifts Of Shares. The Impugned Order Has Been Passed By Learned Commissioner Of Income Tax (Appeals), Gwalior [Cit(A)] On 05-06-2017 In The Matter Of An Assessment Framed By Ld. Assessing Officer [Ao] U/S 143(3) R.W.S. 153A

For Appellant: Dr. Arun Kumar Yadav – Ld. CIT-DRFor Respondent: Sh. Sanjay Kumar, CA – Ld. AR
Section 132Section 143(3)Section 14ASection 56

Pankaj Agarwal, Kanpur vs. Jt.CIT Circle-1(1)(1), Kanpur

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

ITA 267/LKW/2023[2012-13]Status: DisposedITAT Lucknow22 Apr 2025AY 2012-13

Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudharya.Y. 2012-13 Pankaj Agarwal, 7/151, Ratan Vs. The Jt. Commissioner Of Majestic, Opp. Sony World, Income Tax, Circle 1(1)(1), Swaroop Nagar, Kanpur-208002 Kanpur-208001 Pan:Abjfs4912R (Appellant) (Respondent) Assessee By: Sh. Rakesh Garg, Adv Revenue By: Sh. Sanjeev Krishna Sharma Sr Dr & Sh Sunil Kumar Rajwanshi, Addl Cit Dr Date Of Hearing: 10.02.2025 Date Of Pronouncement: 22.04.2025 O R D E R Per Nikhil Choudhary, A.M.: This Is An Appeal Filed By The Assessee Against The Order Passed By The Ld. Cit(A), Nfac Under Section 250 Of The Income Tax Act, 1961 On 21.08.2023. The Grounds Of Appeal Are As Under:- “1. Because The Cit (A) Has The Erred On Facts & In Law In Upholding The Disallowance Of Rs.2,47,02,865/- On Account Of Loss In Trading In Derivatives Business Treating The Same As Capital Loss, As Against Assessee'S Claim Of Business Loss, To Be Set Off Against Other Business Income, Which Order Is Contrary To Facts, Bad In Law, The Disallowance Made By The Ao & Upheld Be Deleted. 2. Because On A Proper Consideration Of The Facts & Circumstances Of The Case & Also On The Interpretation Of The Provisions Of Sec 43(5), It Would Be Found The Loss Of Rs.2,47,02,865/- On Account Of Trading In Derivative Is Neither A Speculative Loss Nor A Capital Loss, The Same Should Ought To Be Set Off Against Other Business Income, The Cit (A) Has Erred, In Treating The Same As Short Term Capital Loss.

For Appellant: Sh. Rakesh Garg, AdvFor Respondent: Sh. Sanjeev Krishna Sharma Sr DR & Sh
Section 14ASection 250Section 43(5)Section 72

M/S L.B.Wines Private Limitted, Ludhiana vs. Pr.CIT-1, Ludhiana

The appeal stands allowed in terms of our above order

ITA 84/CHANDI/2021[2015-16]Status: DisposedITAT Chandigarh21 Apr 2025AY 2015-16

Bench: Hon’Ble Shri Rajpal Yadav & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपीलसं./ Ita No.84/Chandi/2021 (िनधा"रणवष" / Assessment Year: 2015-16) M/S L.B.Wines Private Ltd. Pr Cit-I B-1, 1446/13A Aaykar Bhawan, बनाम/ Chhoti Haibowal Rishi Nagar Vs. Ludhiana-141001. Ludhiana-141001 "थायीलेखासं./जीआइआरसं./Pan/Gir No. Jldlo-0809-E (अपीलाथ"/Appellant) (""थ" / Respondent) : अपीलाथ"कीओरसे/ Appellant By : S/Shri Ashwani Kumar&Aditya Kumar (Ca) & Ms. Muskan Garg (Ca) – Ld. Ars ""थ"कीओरसे/Respondent By : Shri Rohit Sharma – Ld. Cit-Dr सुनवाईकीतारीख/Date Of Hearing : 13-03-2025 घोषणाकीतारीख /Date Of Pronouncement : 21-04-2025 आदेश / O R D E R Manoj Kumar Aggarwal () 1. By Way Of This Appeal, The Assessee Assails Invocation Of Revisionary Jurisdiction U/S 263 By Ld. Pr. Commissioner Of Income Tax, Ludhiana-1 (Pr.Cit) For Assessment Year (Ay) 2015-16 Vide Impugned Order Dated 23-03-2021 In The Matter Of An Assessment Framed By Ld. Ao U/S.143(3) Of The Act On 22-12-2017. 2. The Ld. Ar Advanced Arguments & Made Out A Case Of One Of The Possible Views. The Ld. Cit-Dr Also Advanced Arguments & Submitted That Ld. Ao Failed To Make Requisite Enquiries On The Issues

For Appellant: S/Shri Ashwani Kumar&Aditya Kumar (CA) and Ms. Muskan Garg (CA) – Ld. ARsFor Respondent: Shri Rohit Sharma – Ld. CIT-DR
Section 142(1)Section 143(3)Section 14ASection 194ISection 263

TDS Management Consultants P.Ltd., Mohali vs. Pr.CIT-1, Chandigarh

The appeal stand allowed in terms of our above order

ITA 62/CHANDI/2021[2016-17]Status: DisposedITAT Chandigarh21 Apr 2025AY 2016-17

Bench: Hon’Ble Shri Rajpal Yadav & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपीलसं./ Ita No.62/Chandi/2021 (िनधा"रणवष" / Assessment Year: 2016-17) Tds Management Consultant Pvt. Ltd. Pr. Cit E-193, Phase 8-B, Mohali, Aaykar Bhawan, बनाम/ Vs. Punjab - 160071 Sector 17, Chandigarh-1. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aacct-5653-K (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Sh. Parikshit Aggarwal, (Ca) & Ms. Shruti Khandelwal(Adv) – Ld. Ars ""थ"कीओरसे/Respondent By : Smt. Kusum Bansal(Cit)– Ld. Dr सुनवाईकीतारीख/Date Of Hearing : 26-03-2025 घोषणाकीतारीख /Date Of Pronouncement : 21-04-2025 आदेश / O R D E R Manoj Kumar Aggarwal () 1. By Way Of This Appeal, The Assessee Assails Invocation Of Revisionary Jurisdiction U/S 263 By Ld. Pr. Commissioner Of Income Tax, Chandigarh-1 (Pr.Cit) For Assessment Year (Ay) 2016-17 In The Matter Of An Assessment Framed By Ld. Ao U/S 143(3) Of The Act On 22-12- 2018. The Ld. Ar Advanced Arguments With The Help Of Various Documents As Placed On Record. The Ld. Cit-Dr Justified Impugned Revision Of The Assessment Order.

For Appellant: Sh. Parikshit Aggarwal, (CA) and Ms. Shruti Khandelwal(Adv) – Ld. ARsFor Respondent: Smt. Kusum Bansal(CIT)– Ld. DR
Section 142(1)Section 143(3)Section 14ASection 194JSection 263