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

Hbs Realtors Private Limited, Mumbai vs. DCIT 7(1)(2), Mumbai

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 3949/MUM/2023[2013-14]Status: DisposedITAT Mumbai18 Apr 2024AY 2013-14

Bench: Shri Amarjit Singh & Shri Sandeep Singh Karhailhbs Realtors Pvt. Ltd. Vs. Dy. Commissioner Of 505 Ceejay House, Dr. Income Tax- 7(1)(2) Annie Besant Road, Worli Aaykar Bhavan Mumbai – 400018 Mumbai – 400020 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaacc1641C Appellant .. Respondent Appellant By : Mandar Vaidya Respondent By : P.D. Chougule Date Of Hearing 16.04.2024 Date Of Pronouncement 18.04.2024 आदेश / O R D E R Per Amarjit Singh (Am): This Appeal Filed By The Assessee Is Directed Against The Order Passed By The Ld. Cit(A) Nfac For A.Y. 2013-14. The Assessee Has Raised The Following Grounds Before Us: “1. The Ld. Cit(A) Erred In Treating The Appellant'S Appeal As 'Delayed Solely Because The Appeal, In The First Instance, Was Filed Manually & Not Electronically. 2. The Ld. Cit(A) Misdirected Himself In Not Appreciating That Failure To File The Appeal Electronically, In The First Instance Is, At Best, A Procedural Defect & The Difference Between 'Manual' & 'Electronic' Is, Merely Of Form. 3. The Ld. Cit(A) Was Not, In The Given Circumstances, Justified In Declining To Condone The Delay In Filing The Appeal 4. The Ld. Cit(A) Fell In Error In Not Appreciating That Plurality Of Objects Was Not Precluded In The Purposes Contemplated U/S.11(2) Of The Act.

For Appellant: Mandar VaidyaFor Respondent: P.D. Chougule
Section 11(2)Section 143(2)Section 143(3)Section 14A

Sai Service Private Limited, Pune vs. The Deputy Commissioner of Income Tax, Circle-10, Pune

In the result, appeal of the assessee partly allowed

ITA 1076/PUN/2023[2020-21]Status: DisposedITAT Pune16 Apr 2024AY 2020-21

Bench: Shri S.S.Godara & Dr. Dipak P. Ripoteआयकर अपील सं. / Ita No.1076/Pun/2023 िनधा"रण वष" / Assessment Year : 2020-21 Sai Service Private Limited, Dcit, Circle-10, Mumbai Pune Road, Vs Pune Phugewadi, Pune 411 012 Maharashtra Pan : Aabcs4998M Appellant/ Assessee Respondent /Revenue Assessee By Smt. Deepa Khare – Ar Revenue By Shri Sourabh Nayak - Dr Date Of Hearing 22/02/2024 Date Of Pronouncement 16/04/2024 आदेश/ Order Per Dr. Dipak P. Ripote, Am: This Appeal Filed By Assessee Is Against The Order Of Ld.Commissioner Of Income-Tax(Appeals) In The National Faceless Appeal Centre, Delhi Passed U/S.250 Of The Income-Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) On 04.09.2023 For Assessment Year 2020-21. The Grounds Of Appeal Raised By The Assessee For A.Y. 2020-21 Are As Under : “The Appellant Being Aggrieved By The Order & Decision Of The Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, Vide Order Dated 04/09/2023 Bearing Din & Order No. Itba/Nfac/S/250/2023-24/1055706047(1) Is Filing This Appeal On The Following Grounds Of Appeal. 1. The Commissioner Of Income Tax (Appeals) Erred In Confirming The Additional Disallowance Of Rs.78,20,410/-

Section 10Section 14ASection 14A(2)Section 250Section 270A(1)