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

Sanghavi Land Developers Pvt. Ltd, Mumbai vs. ACIT 8 (1)(2), Mumbai

The appeal stand allowed for statistical purposes

ITA 1692/MUM/2019[2013-14]Status: DisposedITAT Mumbai14 Jan 2021AY 2013-14

Bench: Hon’Ble Shri Mahavir Singh, Vp & Hon’Ble Shri Manoj Kumar Aggarwal, Am (Hearing Through Video Conferencing Mode) आयकरअपील सं./ I.T.A. No.1692/Mum/2019 (िनधा"रण वष" / Assessment Year: 2013-14) & आयकरअपील सं./ I.T.A. No.1693/Mum/2019 (िनधा"रण वष" / Assessment Year: 2014-15) Sanghavi Land Developers Pvt. Ltd. Acit-8(1)(2) बनाम 98/2, K.R.Mahatre Marfg Aaykar Bhawan Reay Road (W) M.K.Marg / Vs. Mumbai – 400 010 Mumbai-400 020 "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aafcs-7731-J (अपीलाथ"/Appellant) (""थ" / Respondent) : Assessee By : Shri Satish Mody-Ld. Ar Revenue By : Shri T.S. Khalsa- Ld. Sr.Dr सुनवाई की तारीख/ : 14/01/2021 Date Of Hearing घोषणा की तारीख / : 14/01/2021 Date Of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal () 1. Aforesaid Appeals By Assessee For Assessment Years 2013- 14 & 2014-15 Contest Separate Orders Of Ld. First Appellate Authority. Both The Appeals Are Being Disposed-Off By Way Of This Common Order For The Sake Of Convenience & Brevity. 2.1 The Appeal For Ay 2013-14 Contest The Action Of Ld. Commissioner Of Income Tax (Appeals)-14, Mumbai Order Dated

For Appellant: Shri Satish Mody-Ld. ARFor Respondent: Shri T.S. Khalsa- Ld. Sr.DR
Section 143(3)Section 14A

Shaila J. Parikh, Mumbai vs. ITO -Ward- 17(3)(3), Mumbai

In the result, both the appeals of the assessee are allowed

ITA 6285/MUM/2018[2012-13]Status: DisposedITAT Mumbai13 Jan 2021AY 2012-13

Bench: Shri Rajesh Kumar & Shri Amarjit Singhassessment Year: 2012-13 & Assessment Year: 2011-12 Mrs. Shaila J. Parikh, Income Tax Officer, Oricon House, 2Nd Floor, Ward 17(3)(3) 12K, Dubhash Marg, Vs. Aayakar Bhavan, Fort, Mumbai, M.K. Road, Maharashtra- 400 023 Mumbai - 400020 Pan: Aghpp7039B (Appellant) (Respondent) Present For: Assessee By : Shri Chetan Jain, A.R. Revenue By : Shri T.S. Khalsa, D.R. Date Of Hearing : 16.12.2020 Date Of Pronouncement : 13.01.2021 O R D E R Per Rajesh Kumar: The Above Titled Appeals Have Been Preferred By The Assessee Against The Order Dated 29.08.2018 Of The Commissioner Of Income Tax (Appeals) [Hereinafter Referred To As The Cit(A)] Relevant To Assessment Year 2012-13 & 2011-12. Ita No.6286/M/2018 A.Y. 2011-12 2. The Only Issue Raised By The Assessee In The Various Grounds Of Appeal Is Against The Confirmation Of Disallowance Of Rs.8,56,829/- By Ld. Cit(A) As Made By The Ao Under Section 14A Read With Rule 8D. Mrs. Shaila J. Parikh 3. The Ld. Counsel At The Outset Submitted That The Issue Is Squarely Covered By The Decision Of The Co-Ordinate Bench Of The Tribunal In Assessee’S Own Case In Ita No.3185/M/2013 Vide Order Dated 16.10.2016 Wherein The Co-Ordinate Bench Of The Tribunal Has Deleted The Disallowance Under Section 14A Read With Rule 8D By Holding That Assessee Has Not Claimed Any Expenditure & Therefore No Disallowance Can Be Made. The Ld. Counsel Stated That The Said Decision Of The Co-Ordinate Bench Of The Tribunal Was Reproduced By The Ld. Cit(A) At Para 4.2. Of The Appellate Order. The Ld. Counsel Submitted That Since In The Current Year Also No Claim Of Expenses Have Been Made While Computing The Income Of The Assessee. Therefore Following The Said Decision Of The Tribunal The Disallowance Of Rs.8,56,829/- May Kindly Be Deleted.

For Appellant: Shri Chetan Jain, A.RFor Respondent: Shri T.S. Khalsa, D.R
Section 14A