Section 94(7) of the Income Tax Act

Income-tax Act, 2025: s.175

Section 94(7) falls under section 94 of the Income-tax Act, 1961, which corresponds to section 175 (Avoidance of tax by certain transactions in securities) of the Income-tax Act, 2025.

Read section 175 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 94(7) is CIT v. Walfort Share & Stock Brokers (P.) Ltd. (326 ITR 1), cited in 543 of the 130 judgments on BharatTax that turn on this section.

Leading authorities on Section 94(7)

CIT v. Walfort Share & Stock Brokers (P.) Ltd.
326 ITR 1 · 2010 · Supreme Court
543
citing judgments

For attracting Section 14A disallowance, there must be a proximate cause relating the expenditure to actual tax-exempt income, and such disallowance is not automatic but requires positive material. Additionally, Section 94(7) on dividend stripping only ignores losses to the extent of dividend received for assessment years post-April 1, 2002, allowing the remaining loss.

Gramaphone Co. of India Ltd. v. Birendra Bahadur Pandey
132 Taxmann 373 · 2003 · Supreme Court
146
citing judgments
CIT v. Walfort Share & Stockbrokers (P) Ltd.
233 CTR 42 · 2010 · Supreme Court
19
citing judgments

Disallowance of expenditure under Section 14A requires a proximate cause establishing the relationship between the expenditure and the exempt income. The expenditure must have a real, dominant, and immediate relationship with income not forming part of the total income.

Calcutta in Eveready Industries India Ltd. v. CIT & Anr.
334 ITR 413 · 2011 · High Court
15
citing judgments

The court examines a transaction involving the purchase and sale of UTI units with a short holding period, highlighting the cum-dividend purchase in relation to a booking closing date.

Karan Maheshwari v. ACIT
176 Taxmann.com 700 · 2025 · Reported
8
citing judgments
McDowell & Co\nLtd v. CTO
47 CTR 126 · 1985 · Reported
8
citing judgments
Agencies Rajasthan (P) Ltd. v. ITO
109 Taxmann.com 139 · Reported
5
citing judgments
Income Tax Officer, Income Tax v. Sumitra Rajeshbhai Jain, Mumbai
2025 SCC OnLine ITAT 1859 · 2025 · Reported
3
citing judgments
434 ITR 1 (Bom.) (FB), Mohd. Farhan A. Shaikh v. DCIT
462 ITR 307 · High Court
3
citing judgments

Judgments on Section 94(7)

Harish Kumar HUF, New Delhi vs. DCIT, Circle-34(1), New Delhi

In the result, the appeal filed by the Assessee stands partly allowed

ITA 1469/DEL/2019[2015-16]Status: DisposedITAT Delhi19 Aug 2019AY 2015-16

Bench: Shri H.S. Sidhu & Dr. B.R.R. Kumara.Y. : 2015-16

For Appellant: Sh. Naveen ND Gupta, CA & Sh. AshuFor Respondent: Sh. Amit Katoch, Sr. DR
Section 10Section 142(1)Section 143(1)Section 143(2)Section 271(1)(c)Section 288ASection 94(7)

Deputy Commissioner of Income Tax CC-3(4), Central Range-3, Mumbai vs. Shri Kamal Khetan, Mumbai

In the result the appeal of the revenue is dismissed

ITA 4767/MUM/2018[2014-15]Status: DisposedITAT Mumbai06 Aug 2019AY 2014-15

Bench: Shri Shamim Yahya & Shri Pawan Singhdcit Cc - 3(4) , Shri Kamal Khetan, Central Range-3, Room No. 78, Khetan Bhavan, J.B. Nagar, Vs. 1923, 19Th Floor, Air India Andheri (East), Building, Nariman Point, Mumbai-400005. Mumbai-400021 Pan: Aahpk4505D Appellant Respondent Appellant By : Shri Manoj Kumar Singh (Sr Dr) Respondent By : Shri Rishabh Shah (Ar)

For Appellant: Shri Manoj Kumar Singh (Sr DR)For Respondent: Shri Rishabh Shah (AR)
Section 251(1)Section 254(1)Section 94(7)

Tecnotree Convergence Lt D, Bangalore vs. Deputy Commissioner of Income Tax Circle-7(1)(1), Bangalore

In the result, Revenue’s appeal for Assessment Year 2011-12 is dismissed

ITA 1520/BANG/2017[2011-12]Status: DisposedITAT Bangalore03 Jul 2019AY 2011-12

Bench: Shri N. V. Vasudevan & Shri Jason P Boaz

For Respondent: Shri. Pradeep Kumar, CIT
Section 10ASection 10A(3)Section 115JSection 143(1)Section 143(3)Section 155Section 40Section 94(7)

Tecnotree Convergence Lt D, Bangalore vs. Deputy Commissioner of Income Tax Circle-7(1)(1), Bangalore

In the result, Revenue’s appeal for Assessment Year 2011-12 is dismissed

ITA 1519/BANG/2017[2010-11]Status: DisposedITAT Bangalore03 Jul 2019AY 2010-11

Bench: Shri N. V. Vasudevan & Shri Jason P Boaz

For Respondent: Shri. Pradeep Kumar, CIT
Section 10ASection 10A(3)Section 115JSection 143(1)Section 143(3)Section 155Section 40Section 94(7)

Deputy Commissioner of Income Tax Circle-7(1)(1), Bangalore vs. M/S Tecnotree Convergence Ltd, Gurgaon

In the result, Revenue’s appeal for Assessment Year 2011-12 is dismissed

ITA 1448/BANG/2017[2011-12]Status: DisposedITAT Bangalore03 Jul 2019AY 2011-12

Bench: Shri N. V. Vasudevan & Shri Jason P Boaz

For Respondent: Shri. Pradeep Kumar, CIT
Section 10ASection 10A(3)Section 115JSection 143(1)Section 143(3)Section 155Section 40Section 94(7)

Deputy Commissioner of Income Tax Circle-7(1)(1), Bangalore vs. M/S Tecnotree Convergence Ltd, Gurgaon

In the result, Revenue’s appeal for Assessment Year 2011-12 is dismissed

ITA 1447/BANG/2017[2010-11]Status: DisposedITAT Bangalore03 Jul 2019AY 2010-11

Bench: Shri N. V. Vasudevan & Shri Jason P Boaz

For Respondent: Shri. Pradeep Kumar, CIT
Section 10ASection 10A(3)Section 115JSection 143(1)Section 143(3)Section 155Section 40Section 94(7)

Mr. Chandershekhar Kapur, Mumbai vs. I.T.O. Ward - 16(1)(1), Mumbai

In the result, appeal of the assessee is allowed

ITA 1118/MUM/2018[2009-10]Status: DisposedITAT Mumbai30 Apr 2019AY 2009-10

Bench: Shri G.S. Pannu, Vice- & Shri Pawan Singhmr Chandershekhar Kapur Ito, Ward 16(1)(1), A-5, Beach House, Aayakar Bhavan, M.K. Road, Gandhi Gram Road, Mumbai-400020 Juhu, Mumbai-400001. Vs. Pan: Aacpk9387Q Appellant Respondent Appellant By : Shri Nitesh Joshi & Vipul Mody (Ar) Respondent By : Shri Pramod Nikalje (Dr) Date Of Hearing : 23.04.2019 Date Of Pronouncement : 30.04.2019 Order Under Section 254(1)Of Income Tax Act Per Pawan Singh; 1. This Appeal By Assessee Under Section 253 Of Income-Tax Act (‘Act’) Is Directed Against The Order Of Ld. Commissioner Of Income-Tax

For Appellant: Shri Nitesh Joshi & Vipul Mody (AR)For Respondent: Shri Pramod Nikalje (DR)
Section 10(38)Section 143(3)Section 253Section 254(1)Section 271(1)(c)Section 94(7)

The Commissioner of Income Tax, Cochin vs. Harrisons Malayalam Ltd

ITA/1534/2009HC Kerala28 Jan 2019
Section 10(15)Section 94Section 94(4)

Smt. Rekha Bhandari, Jaipur vs. Deputy Commissioner of Income Tax, Circle-7, Jaipur

In the result, appeal of the assessee is allowed for statistical purposes

ITA 1268/JPR/2018[2014-15]Status: DisposedITAT Jaipur23 Jan 2019AY 2014-15

Bench: Cit (A) & Sought For Adjournment.

For Appellant: Shri P.C. Parwal (CA)For Respondent: Smt. Anuradha (JCIT)
Section 143(3)Section 14ASection 94(7)

Shri Kantimal Bhandari, Jaipur vs. Deputy Commissioner of Income Tax, Circle-7, Jaipur

In the result, appeal of the assessee is allowed for statistical purposes

ITA 1267/JPR/2018[2014-15]Status: DisposedITAT Jaipur23 Jan 2019AY 2014-15

Bench: Cit (A) & Sought For Adjournment.

For Appellant: Shri P.C. Parwal (CA)For Respondent: Smt. Anuradha (JCIT)
Section 143(3)Section 14ASection 94(7)

The Commissioner of Income Tax - I, Kochi vs. M/S.Muthoot Finance Pvt.Ltd

ITA/231/2012HC Kerala08 Jan 2019
Section 14ASection 94Section 94(7)Section 94(7)(a)

Samir Rajnikant Haji, Mumbai vs. Asst CIT Cir 4(2), Mumbai

The appeal of the assessee is allowed

ITA 1199/MUM/2017[2010-11]Status: DisposedITAT Mumbai12 Oct 2018AY 2010-11

Bench: Shri G.S Pannu & Shri Ravish Sood

For Appellant: Ms. Dinkle Hariya, A.RFor Respondent: Shri Abdul Hakeem, D.R
Section 143(2)Section 143(3)Section 154Section 271(1)(c)Section 94(7)

ACIT Cir. 6 (3) (2), Mumbai vs. Khandelwal Laboratories Pvt. Ltd., Mumbai

In the result, the appeal filed by the revenue is hereby ordered to be dismissed

ITA 6034/MUM/2016[2009-10]Status: DisposedITAT Mumbai03 Aug 2018AY 2009-10

Bench: Shri G.S. Pannu, Am & Shri Amarjit Singh, Jm आयकर अपील सं/ I.T.A. No.6034/Mum/2016 (निर्धारण वर्ा / Assessment Year: 2009-10) Acit, Cir, 6(3)(2), R. No. बिधम/ M/S. Khandelwal 522, 5Th Floor, Aayakar Laboratories Pvt. Ltd., Vs. Bhavan, M.K. Road, 79/78, Lal Path, Mumbai-400020. Chinchpokli, Mumbai- 400033. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaack4225E (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) Revenue By: Shri Ram Tiwari (Sr. Ar) Assessee By: Shri Dhaval Shah सुनवाई की तारीख / Date Of Hearing: 09.05.2018 घोषणा की तारीख /Date Of Pronouncement: 03.08.2018 आदेश / O R D E R Per Amarjit Singh, Jm: The Revenue Has Filed The Present Appeal Against The Order Dated 20.07.2016 Passed By The Commissioner Of Income Tax (Appeals) -12, Mumbai [Hereinafter Referred To As The “Cit(A)”] Relevant To The A.Y.2009- 10. 2. The Revenue Has Raised The Following Grounds: - “1. "The Learned Cit(A) Has Grossly Erred On The Facts & In The Circumstances Of The Case To Allow Relief To The Assesses By Relying Upon The Order Of The Itat Dated 23.06.2016, In The Appeal Filed By The Assessee Against The A.Y.2009-10

For Appellant: Shri Dhaval ShahFor Respondent: Shri Ram Tiwari (Sr. AR)
Section 115JSection 143(1)Section 143(3)Section 14ASection 263Section 94

Jt CIT (OSD) 6(2)(1), Mumbai vs. Dharti Investments and Holdings Ltd, Mumbai

In the result, appeal of the Revenue is dismissed whereas appeal of the assessee is allowed in part in terms indicated hereinabove

ITA 3272/MUM/2016[2008-09]Status: DisposedITAT Mumbai12 Jun 2018AY 2008-09

Bench: Shri R.C.Sharma, Am & Shri Ram Lal Negi, Jm Jt. Commissioner Of Income Vs. M/S. Dharti Investments & Tax (Osd-6(2)(1), Holding Ltd., 1St Floor, Jai Centre R.No.563, Aayakar Bhavan M.K.Road, Churchgate 34, P.D.Mello Road Mumbai – 400 020 Opp. Red Gate Masjid, Mumbai - 400098 Pan/Gir No. Aaccd2509C Appellant) .. Respondent) M/S. Dharti Investments & Vs. Additional Commissioner Of Holding Ltd., Income Tax – 6(2) 1St Floor, Jai Centre Mumbai 34, P.D.Mello Road Opp. Red Gate Masjid, Mumbai - 400098 Pan/Gir No. Aaccd2509C Appellant) .. Respondent) Revenue By Shri Rajat Mittal Assessee By Shri Madhur Agarwal Date Of Hearing 07/06/2018 Date Of Pronouncement 12/06/2018

Section 143(3)Section 14ASection 94(7)

Rsp Capital Markets Pvt. Ltd., Kolkata vs. DCIT, Cir-1, Kolkata

In the result, the appeal of the assessee is partly allowed

ITA 53/KOL/2016[2006-07]Status: DisposedITAT Kolkata23 Mar 2018AY 2006-07

Bench: Hon’Ble Shri Aby. T. Varkey, Jm & Shri M.Balaganesh, Am ] I.T.A No. 53/Kol/2016 Assessment Year : 2006-07 Rsp Capital Markets Pvt. Ltd. -Vs- Dcit, Circle-1, Kolkata [Pan: Aabcr 6142 G] (Appellant) (Respondent)

For Appellant: Shri M. Satnaliwala, ARFor Respondent: Shri Saurabh Kumar, Addl. CIT, Sr. DR
Section 10(34)Section 143(3)Section 14A

Angel Broking P.Ltd, Mumbai vs. DCIT 4(1)(1), Mumbai

In the result, the appeal filed by the assessee, is allowed

ITA 5433/MUM/2016[2009-10]Status: DisposedITAT Mumbai28 Feb 2018AY 2009-10

Bench: Shri C. N. Prasad, Jm &Dr. A.L.Saini, Am आयकरअपीऱसं./Ita No.5433/M/2016 (निर्धारणवषा / Assessment Year: 2009-10) M/S Angle Broking P. Ltd. Vs. Dcit Cen Cir.7(3), Mumbai G-1, Akruti Trade Centre, Rood Room No.640, Aaykarbhavan, M.K. No.7, Midc, Andheri(East), Road, Mumbai – 400 020. Mumbai – 400 093. स्थायीऱेखासं./ जीआइआरसं./ Pan/Gir No. : Aaacm6094 R (Appellant) .. (Respondent) Appellant By :Shriadityamaheswari, Ar Respondent By :Shri V. Vidhyadhar, Dr सुनवाईकीतारीख/ Date Of Hearing : 21/02/2018 घोषणाकीतारीख/Date Of Pronouncement : 28/02/2018 आदेश / O R D E R Per Dr. Arjunlalsaini, Am: The Captioned Appeal Filed By The Assessee, Pertaining To Assessment Year 2009-10, Is Directed Against An Order Passed By The Commissioner Of Income Tax-(Appeals)-9, Mumbai, In Appeal No.Cit(A)- 9/Cir-4(1)/284/2015-16, Dated, 24.06.2016, Which In Turn Arises Out Of A Penaltyorder Passed By The Assessing Officer U/S 271(1)(C) Of The Income Tax Act, 1961 (Hereinafter Referred To As The ‘Act’), Dated 30.03.2015. 2.The Solitary Grievance Of The Assessee In This Appeal Is That The Ld. Commissioner Of Income Tax(Appeals) Was Erred In Confirming Penalty U/S 271(1)(C) Of Rs.4,03,895/-. 3.The Brief Facts Apropos This Issue Are That While Completing Assessment U/S 143(3) Of The Act, The Ao Made Disallowance Of Rs.11,88,275/- U/S 94(7) Of The Act & Also Made Disallowance Of Speculation Loss Of Rs.27,62,83,681/- . In Pursuance Of The Disallowance Made By The Ao In His

For Appellant: ShriAdityaMaheswari, ARFor Respondent: Shri V. Vidhyadhar, DR
Section 143(3)Section 271(1)(c)Section 45Section 94(7)

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)

Dharti Investment & Holdings P.Ltd, Mumbai vs. DCIT Cir 6(2), Mumbai

The appeal of the assessee is allowed

ITA 5629/MUM/2015[2007-08]Status: DisposedITAT Mumbai03 Nov 2017AY 2007-08

Bench: Shri Joginder Singh & Shri Rajesh Kumarassessment Year: 2007-08 Dharti Investment & Holdings Dcit, Pvt. Ltd. Circle-6(2), बनाम/ Jai Centre, 1St Floor, P.D. Mello Aayakar Bhavan, Vs. Road, Opp. Red Gate, Masjid, M.K. Road, Mumbai-400009 Mubmai-400020 ("नधा"रती /Assessee) (राज"व /Revenue) Pan. No.Aaccd2509C

Section 143(3)Section 271(1)(c)Section 94(7)

The ACIT, (OSD), Circle-9, Ahmedabad vs. Shri Pareshkumar Ramanlal Jani, Ahmedabad

In the result, the appeal of the revenue and the cross objection of the assessee are dismissed

ITA 3022/AHD/2014[2010-11]Status: DisposedITAT Ahmedabad10 Oct 2017AY 2010-11
For Appellant: Shri S.N. Soparkar, A.RFor Respondent: Shri K. Madhusudan, Sr. D.R
Section 139Section 143(2)Section 143(3)Section 54Section 54F

Sarah Faisal Hawa, Mumbai vs. Asst CIT 21(3), Mumbai

In the result the appeal of the assessee is partly allowed

ITA 589/MUM/2017[2005-06]Status: DisposedITAT Mumbai11 Sept 2017AY 2005-06

Bench: Sh. P.K. Bansal & Shri Pawan Singh

Section 143(3)Section 253Section 254(1)Section 45(2)Section 68