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

Goyal & Co. (Construction) Pvt.Ltd., Ahmedabad vs. The ACIT, Central Circle-1(2), Now the Dcitcircle-2(1) (1), Ahmedabad

In the result, appeal preferred by the assessee is allowed

ITA 307/AHD/2023[2020-21]Status: DisposedITAT Ahmedabad05 Feb 2024AY 2020-21

Bench: Shri Waseem Ahmed & Ms. Madhumita Royआयकर अपील सं./I.T.A. Nos. 306 & 307/Ahd/2023 ("नधा"रण वष" / Assessment Years : 2017-18 & 2020-21) Goyal & Co. Dcit बनाम/ Circle-2(1)(1), Ahmedabad (Construction) Pvt. Ltd. Vs. 10Th Floor, Commerce House Iv, Beside Reliance Petrol Pump, 100Ft. Road, Satellite, Ahmedabad "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aabcg5459R (Appellant) .. (Respondent) Assessee By : Shri Biren Shah & Shri Dhrunal Bhatt, A.Rs. Revenue By : Shri Rajdeep Singh, Sr. Dr सुनवाई क" तार"ख / Date Of 09/11/2023 Hearing घोषणा क" तार"ख /Date Of 05/02/2024 Pronouncement O R D E R Per Ms. Madhumita Roy - Jm: The Instant Appeals Have Been Filed At The Instance Of The Assessee Are Directed Against The Orders Dated 07.03.2023 & 09.03.2023 Passed By Ld. Commissioner Of Income Tax (Appeals)-11, Ahmedabad (In Short ‘Cit(A)’) Arising Out Of The Orders Dated 12.12.2019 & 29.03.2022 Passed By The Dcit, Circle-2(1)(1), Ahmedabad & Acit, Central Circle 1(2), Ahmedabad, Respectively; Under Section 143(3) Of The Income Tax Act, 1961, (Hereinafter Referred To As ‘The Act’) For Assessment Years 2017-18 & 2020-21. Ita Nos. 306 & 307/Ahd/2023 (Goyal & Co. (Construction) Pvt. Ltd. Vs. Dcit) A.Y.– 2017-18 & 2020-21 - 2 - 2. Since Both The Appeals Filed By The Same Assessee Relate To Similar Issue, These Are Heard Analogously & Are Being Disposed Of By A Common Order For The Sake Of Convenience. We Take Ita No.306/Ahd/2023 For A.Y. 2017-18 As A Lead Case.

For Appellant: Shri Biren Shah & Shri DhrunalFor Respondent: Shri Rajdeep Singh, Sr. DR
Section 143(3)Section 14A

Goyal & Co. (Construction) Pvt.Ltd., Ahmedabad vs. The DCIT Circle-2(1) (1), Ahmedabad

In the result, appeal preferred by the assessee is allowed

ITA 306/AHD/2023[2017-18]Status: DisposedITAT Ahmedabad05 Feb 2024AY 2017-18

Bench: Shri Waseem Ahmed & Ms. Madhumita Royआयकर अपील सं./I.T.A. Nos. 306 & 307/Ahd/2023 ("नधा"रण वष" / Assessment Years : 2017-18 & 2020-21) Goyal & Co. Dcit बनाम/ Circle-2(1)(1), Ahmedabad (Construction) Pvt. Ltd. Vs. 10Th Floor, Commerce House Iv, Beside Reliance Petrol Pump, 100Ft. Road, Satellite, Ahmedabad "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aabcg5459R (Appellant) .. (Respondent) Assessee By : Shri Biren Shah & Shri Dhrunal Bhatt, A.Rs. Revenue By : Shri Rajdeep Singh, Sr. Dr सुनवाई क" तार"ख / Date Of 09/11/2023 Hearing घोषणा क" तार"ख /Date Of 05/02/2024 Pronouncement O R D E R Per Ms. Madhumita Roy - Jm: The Instant Appeals Have Been Filed At The Instance Of The Assessee Are Directed Against The Orders Dated 07.03.2023 & 09.03.2023 Passed By Ld. Commissioner Of Income Tax (Appeals)-11, Ahmedabad (In Short ‘Cit(A)’) Arising Out Of The Orders Dated 12.12.2019 & 29.03.2022 Passed By The Dcit, Circle-2(1)(1), Ahmedabad & Acit, Central Circle 1(2), Ahmedabad, Respectively; Under Section 143(3) Of The Income Tax Act, 1961, (Hereinafter Referred To As ‘The Act’) For Assessment Years 2017-18 & 2020-21. Ita Nos. 306 & 307/Ahd/2023 (Goyal & Co. (Construction) Pvt. Ltd. Vs. Dcit) A.Y.– 2017-18 & 2020-21 - 2 - 2. Since Both The Appeals Filed By The Same Assessee Relate To Similar Issue, These Are Heard Analogously & Are Being Disposed Of By A Common Order For The Sake Of Convenience. We Take Ita No.306/Ahd/2023 For A.Y. 2017-18 As A Lead Case.

For Appellant: Shri Biren Shah & Shri DhrunalFor Respondent: Shri Rajdeep Singh, Sr. DR
Section 143(3)Section 14A

Soyuz Trading Co. Ltd., Kolkata vs. DCIT, Cir-7(1), Kolkata.

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

ITA 1130/KOL/2023[2012-13]Status: DisposedITAT Kolkata05 Feb 2024AY 2012-13

Bench: Shri Sanjay Garg & Shri Girish Agrawali.T.A. No.1130/Kol/2023 Assessment Year : 2012-13 Soyuz Trading Co. Ltd (Now Merged With Concenate Advest Advisory (P) Ltd).…………....Appellant C/O Subash Agarwal & Associates, Advocates, Siddha Gibson, 1, Gibson Lane, Suite 213, 2Nd Floor, Kolkata – 700069. [Pan: Aagcs3371K] Vs. Dcit, Circle-7(1), Kolkata……..........................................…..…..... Respondent Appearances By: Shri Siddharth Agarwal, Advocate, Appeared On Behalf Of The Appellant. Shri S. Datta, Cit-Sr. Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : February 01, 2024 Date Of Pronouncing The Order : February 05, 2024 आदेश / Order संजय गग", "या"यक सद"य "वारा / Per Sanjay Garg: The Present Appeal Has Been Preferred By The Assessee Against The Order Dated 22.09.2023 Of The National Faceless Appeal Centre [Hereinafter Referred To As The ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. The Assessee In This Appeal Has Taken The Following Grounds Of Appeal: “1. For That The Ld. Cit(A) Was Not Justified In Confirming The Disallowance Of Rs.68,65,91 7/- Made By The A.O. By Invoking The Provisions Of Sec. 14A R.W. Rule 8D Which Is Over & Above The Suo-Moto Disallowance Of Rs.9,39,667/- Made By The Assessee Itself.

Section 14ASection 250

Arthada Commerce Pvt. Ltd., Kolkata vs. DCIT, Cir-13(1), Kolkata.

In the result, the appeal of the stands allowed

ITA 936/KOL/2023[2017-18]Status: DisposedITAT Kolkata02 Feb 2024AY 2017-18

Bench: Shri Sanjay Garg & Shri Girish Agrawali.T.A. No.936/Kol/2023 Assessment Year : 2017-18 Arthada Commerce Pvt. Ltd.….…......................…...……………....Appellant Chandimara, Sapuipara, P.O. Sapuipara, P.S.Nischinda, Howrah-711206. [Pan: Aanca4546P] Vs. Dcit, Circle-13(1), Kolkata……..........................................…..…..... Respondent Appearances By: Shri Sourabh Gupta, Ar, Appeared On Behalf Of The Appellant. Shri B. K. Singh, Jcit-Sr. Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : February 01, 2024 Date Of Pronouncing The Order : February 02, 2024 आदेश / Order संजय गग", "या"यक सद"य "वारा / Per Sanjay Garg: The Present Appeal Has Been Preferred By The Assessee Against The Order Dated 11.08.2023 Of The National Faceless Appeal Centre [Hereinafter Referred To As The ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. The Sole Grievance Raised By The Assessee In This Appeal Is Relating To The Action Of The Ld. Cit(A) In Disallowing A Sum Of Rs.12,82,633/- Made By The Assessing Officer By Invoking The Provisions Of Section U/S 14A Of The Act. 3. The Ld. Ar Of The Assessee Has Submitted That The Assessee Did Not Earn Any Tax Exempt Income During The Year Under Consideration. He In This Respect Has Relied Upon The Following Case Laws: Cheminvest Ltd. Vs. Cit 378 Itr 33 (Del).

Section 14ASection 250