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

Durga Projects Incorporation, Kolkata vs. A.C.I.T., Circle-34, Kolkata

Appeal is allowed for statistical purposes in above terms

ITA 158/KOL/2020[2015-16]Status: DisposedITAT Kolkata19 Jun 2020AY 2015-16

Bench: Shri P.M. Jagtap, V.P & Shri S. S. Godara, Jm आयकर अपीलसं./I.T.A No.158/Kol/2020 ("नधा"रण वष" / Assessment Year: 2015-16) Durga Project Incorporation, Vs. Acit, Circle-34, Kolkata Kolkata 16/1A, Abdul Hamid Street, 5Th Floor, Kolkata-1. "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aaffd0572M (Appellant) .. (Respondent) Appellant By : Shri Manish Tiwari, Ca Respondent By : Shri Supriyo Pal, Jcit सुनवाईक"तार"ख/ Date Of Hearing : 08/06/2020 घोषणाक"तार"ख/Date Of Pronouncement : 19/06/2020 आदेश / O R D E R Per Shri S. S. Godara: This Assessee’S Appeal For Assessment Year 2015-16 Arises Against The Commissioner Of Income Tax (A) - 10, Kolkata Dated 13.12.2017 Passed In Case No.Cit(A), Kolkata-10/10441/2017-18 Involving Proceedings U/S 143(3) Of The Income Tax Act, 1961; In Short ‘The Act’. Heard Both The Parties. Case File Perused. 2. We Notice At The Outset That Both The Learned Lower Authorizes Have Invoked Section 14A Disallowance Involving Proportionate Interest & Administrative Expenses Head(S) Of Rs.6,27,824/- & Rs.75,000/-; Respectively Under 2Nd & 3Rd Limb Of Rule 8D(Ii) Of The Income Tax Rules. The Assessee’S Only Case Is That The Impugned Disallowance Does Not Come Into Play In Absence Of Exempt Income Derived In The Relevant Previous Year. Hon’Ble Jurisidicitonal High Court’S Decision In Cit Vs. Ashika Global Securities Ltd. Ita 100 Of 2014 Ga No.2122 Of 2014 Decided On 11.06.2018 Holds That Section 14A R.W.R. 8D Does Not Apply In Absence

For Appellant: Shri Manish Tiwari, CAFor Respondent: Shri Supriyo Pal, JCIT
Section 143(3)Section 14A

Kesoram Industries Ltd., Kolkata vs. D.C.I.T., Circle-5(1), Kolkata

Appeals are dismissed

ITA 370/KOL/2019[2013-14]Status: DisposedITAT Kolkata19 Jun 2020AY 2013-14

Bench: Shri J. Sudhakar Reddy, Am & Shri S. S. Godara, Jm आयकर अपीलसं./I.T.A No.1196&370/Kol/2019 ("नधा"रण वष" / Assessment Years: 2012-13&2013-14) Kesoram Industries Limited Vs. Dcit, Circle-5(1), Kolkata 5/1, Clive Row, 4Th Floor, Room No.125, Kol-1. "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aabck2417P (Appellant) .. (Respondent) Appellant By : Shri Akkal Dudhewala, Ca Respondent By : Smt. Ranu Biswas, Addl. Cit सुनवाईक"तार"ख/ Date Of Hearing : 16/06/2020 घोषणाक"तार"ख/Date Of Pronouncement : 19/06/2020 आदेश / O R D E R Per Shri S. S. Godara: These Assessee’S Two Appeals For Assessment Year 2012-13 & 2013-14 Arise Against The Commissioner Of Income Tax (A) – 7, Kolkata & Commissioner Of Income Tax (A) - 22, Kolkata’ Separate Orders Dated 29.03.2019 & 31.12.2018 Passed In Case No.1007/Cit(A)-7/Circle-5(1)/Kol/15-16 & No.53/Cit(A)-22/13- 14/18-19/Kol Involving Proceedings U/S 143(3) And144C Of The Income Tax Act, 1961 (In Short ‘The Act’), Respectively. Heard Both The Parties. Case Files Perused. 2. It Transpires At The Outset During The Course Of Hearing That The Assessee’S Sole Identical Grievance In Both These Appeals Challenges Correctness Of The Lower Authorities’ Action Invoking Section 14A R.W.R 8D(2)(Iii) Administrative Expenditure Disallowance Of Rs.33,04,500/- & Rs.33,18,000/- Relating To Its Exempt Income Of Rs.6,09,11,055/- & Rs.5,61,76,040/- Assessment Year Wise; Respectively. Suffice To Say, The Assessing Officer Went By 0.5% Of The Average Value Of Investments In The Corresponding Assessments Framed On 20.03.2015 &

For Appellant: Shri Akkal Dudhewala, CAFor Respondent: Smt. Ranu Biswas, Addl. CIT
Section 143(3)Section 14A

Kesoram Industries Limited, Kolkata vs. DCIT, Circle-5(1), Kolkata

Appeals are dismissed

ITA 1196/KOL/2019[2012-13]Status: DisposedITAT Kolkata19 Jun 2020AY 2012-13

Bench: Shri J. Sudhakar Reddy, Am & Shri S. S. Godara, Jm आयकर अपीलसं./I.T.A No.1196&370/Kol/2019 ("नधा"रण वष" / Assessment Years: 2012-13&2013-14) Kesoram Industries Limited Vs. Dcit, Circle-5(1), Kolkata 5/1, Clive Row, 4Th Floor, Room No.125, Kol-1. "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aabck2417P (Appellant) .. (Respondent) Appellant By : Shri Akkal Dudhewala, Ca Respondent By : Smt. Ranu Biswas, Addl. Cit सुनवाईक"तार"ख/ Date Of Hearing : 16/06/2020 घोषणाक"तार"ख/Date Of Pronouncement : 19/06/2020 आदेश / O R D E R Per Shri S. S. Godara: These Assessee’S Two Appeals For Assessment Year 2012-13 & 2013-14 Arise Against The Commissioner Of Income Tax (A) – 7, Kolkata & Commissioner Of Income Tax (A) - 22, Kolkata’ Separate Orders Dated 29.03.2019 & 31.12.2018 Passed In Case No.1007/Cit(A)-7/Circle-5(1)/Kol/15-16 & No.53/Cit(A)-22/13- 14/18-19/Kol Involving Proceedings U/S 143(3) And144C Of The Income Tax Act, 1961 (In Short ‘The Act’), Respectively. Heard Both The Parties. Case Files Perused. 2. It Transpires At The Outset During The Course Of Hearing That The Assessee’S Sole Identical Grievance In Both These Appeals Challenges Correctness Of The Lower Authorities’ Action Invoking Section 14A R.W.R 8D(2)(Iii) Administrative Expenditure Disallowance Of Rs.33,04,500/- & Rs.33,18,000/- Relating To Its Exempt Income Of Rs.6,09,11,055/- & Rs.5,61,76,040/- Assessment Year Wise; Respectively. Suffice To Say, The Assessing Officer Went By 0.5% Of The Average Value Of Investments In The Corresponding Assessments Framed On 20.03.2015 &

For Appellant: Shri Akkal Dudhewala, CAFor Respondent: Smt. Ranu Biswas, Addl. CIT
Section 143(3)Section 14A