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

The Braithwaite Burn & Jessop Construction Company Ltd., Kolkata vs. ITO, Ward - 11(1), Kolkata

Appeal is allowed

ITA 985/KOL/2018[2012-13]Status: DisposedITAT Kolkata14 Nov 2018AY 2012-13

Bench: Shri S.S, Godaraassessment Year:2012-13 The Braithwaite Burn & Income Tax Officer, बनाम / Jessop Construction Co. Ward-11(1), Aayakar V/S. Ltd. [In The Case Of Bharat Bhawan, P-7, Bhari Udyog Nigam Ltd. Chowringhee Square, Amalgamating Co.] 27, Kolkata-69 R.N. Mukherjee Road, Kolkata-700 001 [Pan No.Aaact 9760B] .. अपीलाथ" /Appellant ""यथ" /Respondent Miss. Ananya Rath, Advocate अपीलाथ" क" ओर से/By Appellant Shri Saurav Kumar, Addl. Cit-Dr ""यथ" क" ओर से/By Respondent 06-11-2018 सुनवाई क" तार"ख/Date Of Hearing 14-11-2018 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R This Assessee’S Appeal For Assessment Year 2012-13 Is Directed Against The Commissioner Of Income-Tax (Appeals)-4, Kolkata’S Order Dated 13.02.2018 Passed In Case No.744/Cit(A)-4/W-11(1)/15-16 Involving Proceedings U/S. 143(3) Of The Income Tax Act, 1961; In Short ‘The Act’. Heard Both The Parties. Case File Perused. 2. The Assessee’S First Former Substantive Ground On Merits Seeks To Challenge Both The Lower Authorities’ Action Disallowing 0.5% Of Average Investments Under Rule 8D(2)(Iii) Of The Income Tax Rule, 1962 R.W.S 14A Of The Act. As Per Assessment Order Dated 30.03.2015 The Revenue’S Case Is That Assessee Had Invested An Amount Of ₹45,84,51,220/- In The Relevant Previous Year For Earning Exempt Income. If Fails To Dispute That There Is No Exempt Income Recorded To Have Been Derived In The Relevant Previous Year In Assessment Order. I Therefore Follow Hon'Ble Jurisdictional High

Section 139(1)Section 143(3)Section 14ASection 36(1)(iv)

M/S. Swaransathi Vyapaar Pvt. Ltd., Kolkata vs. ITO, Ward - 5(1), Kolkata

In the result, appeal of the assessee is allowed in part

ITA 767/KOL/2018[2012-13]Status: DisposedITAT Kolkata09 Nov 2018AY 2012-13

Bench: Sri J. Sudhakar Reddy & Sri S.S. Viswanethra Ravi) Assessment Year: 2012-13 M/S. Swaransathi Vyapaar Pvt. Ltd...….……...........…………..……………….…...……..….…….......Appellant 51, Nalini Seth Road 4Th Floor Kolkata – 700 001 [Pan : Aaqcs 8852 D] Vs. Income Tax Officer, Ward-5(1), Kolkata.……........…………………………..………….…............Respondent Appearances By: Shri Soumitra Choudhury, Advocate & Joydeep Chakraborty, Advocate, Appeared On Behalf Of The Assessee. Shri C.J. Singh, Sr. D/R. Appearing On Behalf Of The Revenue. Date Of Concluding The Hearing : October 31Th, 2018 Date Of Pronouncing The Order : November 9Th , 2018 Order Per J. Sudhakar Reddy, Am :- This Appeal Filed By The Revenue Is Directed Against The Order Of The Learned Commissioner Of Income Tax (Appeals)-19, Kolkata, (Hereinafter The ‘Ld. Cit(A)’), Dt. 24/01/2018, Passed U/S 250 Of The Income Tax Act, 1961 (Hereinafter The ‘Act’), Relating To Assessment Year 2012-13. 3. The Assessee Is A Company & During The Previous Year It Has Raised Share Capital Amounting To Rs. 27,09,500/-. The Share Premium Was Worth Rs. 5,46,40,500/-. The Assessing Officer Made An Addition U/S 68 Of The Act, Of An Amount Of Rs.5,73,50,000/-. Aggrieved The Assessee Carried The Matter In Appeal. The Ld. First Appellate Authority Upheld The Order Of The Assessing Officer & Confirmed The Addition. Aggrieved The Assessee Is In Appeal Before Us. 4. We Have Heard Rival Contentions. On Careful Consideration Of The Facts & Circumstances Of The Case, Perusal Of The Papers On Record, Orders Of The Authorities Below As Well As Case Law Cited, We Hold As Follows:-

Section 131Section 142(1)Section 250Section 68