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

City Holdings Ltd., Kolkata vs. DCIT, Circle-3, Kolkata

In the result, assessee’s appeal stands allowed

ITA 1626/KOL/2016[2011-12]Status: DisposedITAT Kolkata05 Jan 2018AY 2011-12

Bench: Shri Waseem Ahmed & Shri S.S.Viswanethra Raviassessment Year:2011-12 City Holdings Ltd., Dcit, Circle-3, बनाम / C/O D.J. Shah & Co. Kalyan P-7, Chowringhee V/S. Bhavan, 2 Elgin Road, Square, Kolkata-69 Kolkata-20 [Pan No.Aabcc 1071 B] .. अपीलाथ" /Appellant ""यथ" /Respondent Shri Miraj D Shah, Advocate अपीलाथ" क" ओर से/By Appellant Shri Arindam Bhattarcharjee, Addl. Cit-Dr ""यथ" क" ओर से/By Respondent 02-01-2018 सुनवाई क" तार"ख/Date Of Hearing 05-01-2018 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R Per Waseem Ahmed:- This Appeal By The Assessee Is Directed Against The Order Of Commissioner Of Income Tax (Appeals)-I, Kolkata Dated 29.06.2016. Assessment Was Framed By Dcit,Circle-3 Kolkata U/S 143(3) Of The Income Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) Vide His Order Dated 05.03.2014 For Assessment Year 2011-12. The Grounds Raised By The Assessee Per Its Appeal Are As Under:- “1. For That In The Facts & Circumstances Of The Case The Appellate Order Passed Was In Violation Of Principals Of Natural Justice Hence Is Bad In Law & Be Quashed. 2. For That In The Facts & Circumstances Erred In Adding Rs.1,73,967/- By Invoking Provisions Of Section14A Of The It Act 1961 Red With Rule 8D Of The It Rules 1962 Despite The Assessee Providing Detailed Working Regarding Disallowance Made Suo Moto By The Assessee.

Section 10(34)Section 143(3)Section 14A

ITO, WD-31(4), Kolkata vs. Shri Shyama Devi Dalmia, Kolkata

In the result, the appeal of the revenue is dismissed

ITA 1422/KOL/2016[2009-10]Status: DisposedITAT Kolkata05 Jan 2018AY 2009-10

Bench: Shri P.M. Jagtap] I.T.A. No. 1422/Kol/2016 Assessment Year 2009-10 Income Tax Officer.............................…………………………………………………..Appellant 31(4), Kolkata 10B, Middleton Row, Kolkata – 700 71 Shyama Devi Dalmia....................……………………………………………Respondent Dalmia Mansion, 5, A.J.C. Bose Road, Kolkata – 700 020 [Pan: Agbpd 5911 E] Appearances By: Shri Sailen Samaddar, Addl. Cit, Sr. Dr Appearing On Behalf Of The Revenue. Shri Ravi Tulsiyan, Fca Appearing On Behalf Of The Assessee. Date Of Concluding The Hearing : November 28, 2017 Date Of Pronouncing The Order : January 05, 2018 Order This Appeal Is Preferred By The Revenue Against The Order Of Ld. Cit (A) – 9, Kolkata 31.03.2016. 2. The First Issue Involved In This Case Relating To The Claim Of The Assessee For Loss Of Rs. 23,40,887/- From Mutual Fund Transactions Is Raised By The Revenue In Ground No 1 & 2 As Under: “1. That On The Facts & Circumstances Of The Case & On Law, The Ld. Cit(A) Is Not Justified In Allowing Set Off Of Loss Of Rs. 23,40,887/- From Mutual Fund Transactions With The Profit Out Of Transactions In Shares, Securities Etc., Without Considering The Fact That The Assessee Has Treated These Under The Head “Investments” & Did Not Audit Her Accounts As Prescribed In Section 44Ab Of The I.T. Act, 1961 For Claiming The Transactions As Business Transactions. 2. That On The Facts & Circumstances Of The Case & On Law, The Ld. Cit(A) Is Not Justified In Holding That Provisions Of Section 94(7)/94(8) Of The I.T. Act, 1961 Is Not Applicable In This Case For Earning Exempt Income

Section 44ASection 94(7)Section 94(8)

ITO, WD -3(1)(1), Mumbai vs. Arandi Investments Pvt. Ltd., Mumbai

In the result, the appeal by the Revenue is partly allowed for statistical purpose

ITA 2330/MUM/2016[2011-12]Status: DisposedITAT Mumbai05 Jan 2018AY 2011-12

Bench: Shri Shamim Yahya, Am & Shri Sandeep Gosain, Jm आयकर अपील सं./I.T.A. No. 2330/Mum/2016 ("नधा"रण वष" / Assessment Year: 2011-12) Ito, Ward-3(1)(1), M/S. Arandi Investments Pvt. Ltd. बनाम/ Room No. 666, 6Th Floor, 408, Tulsiyani Chambers, Aayakar Bhavan, M. K. Road, Nariman Point, Mumbai-400 021 Vs. Mumbai-400 020 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aabca 1755 C (अपीलाथ" /Appellant) (""यथ" / Respondent) : अपीलाथ" क" ओर से / Appellant By : Shri M. V. Rajguru ""यथ" क" ओर से/Respondent By : None सुनवाई क" तार"ख / : 24.10.2017 Date Of Hearing घोषणा क" तार"ख / : 05.01.2018 Date Of Pronouncement आदेश / O R D E R Per Shamim Yahya, A. M.: This Appeal By The Revenue Is Directed Against The Order By The Commissioner Of Income Tax (Appeals) Dated 19.01.2016 & Pertains To The Assessment Year (A.Y.) 2011-12. 2. The Grounds Of Appeal Read As Under: 1. "On The Facts & Circumstances Of The Case & In Law, The Ld. Cit(A) Erred In Directing That The Loss Of Rs.2,46,31,762/- On Account Of Derivative Trading Cannot Be Treated As Speculation Loss & Failed To Appreciate That The Case Of The Assessee Squarely Falls Within Ambit Of Explanation To S.73 Of The I.T. Act"

For Appellant: Shri M. V. RajguruFor Respondent: None
Section 14ASection 2Section 43(5)(d)Section 72Section 73