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

M/S. Jagadamba Dealcom Pvt. Ltd., Kolkata vs. ITO, Ward-6(2), Kolkata

Appeal is allowed for statistical purpose

ITA 983/KOL/2017[2008-09]Status: DisposedITAT Kolkata13 Jun 2018AY 2008-09

Bench: Shri S.S.Godara & Dr. A.L. Sainiassessment Year :2008-09 M/S Jgadamba Dealcom V/S. Income Tax Officer, Pvt. Ltd., 3/1A, Alipore Ward-6(2), Aayakar Park Road, 4Th Floor, Bhawan, P-7, Suite-4A, Kolkata-27 Chowringhee Square, [Pan No.Aabcj 9653 Q] Kolkata-69 .. अपीलाथ" /Appellant ""यथ"/Respondent Shri Ravi Tulsiyan, Advocate अपीलाथ" क" ओर से/By Appellant G. Hangshing, Cit-Dr ""यथ" क" ओर से/By Respondent 06-06-2018 सुनवाई क" तार"ख/Date Of Hearing 13-06-2018 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R Per S.S.Godara:- This Assessee’S Appeal For Assessment Year 2008-09 Arises Against Commissioner Of Income Tax (Appeals)-6, Kolkata’S Order Dated 09.03.2017 Passed In Case No.298/Cit(A)-6/Kol/2015-16, Ex Parte Affirming Assessing Officer’S Action Adding Unexplained Share Capital Amount Of ₹7,65,00,000/- In Assessment Order Dated 19.03.2014 Involving Proceedings U/S. 144/263 Of The Income Tax Act, 1961; In Short ‘The Act’. Heard Both The Parties. Case File Perused. 2. We Come To The Relevant Facts Pertaining To Above Sole Issue Of Section 68 Unexplained Share Capital Addition Of ₹7,65,00,000/- Lakh. This Assessee Is A Company Engaged In Investment & Share Trading Business. It Filed Its Return On 25.03.2009 Stating Nil Income. The Same Stood Processed. The Assessing Officer Thereafter Formed Reasons To Believe That Assessee’S

Section 131Section 133(6)Section 144Section 148Section 14ASection 263Section 68