Summary and Review of Case Laws Decided by Income Tax Appellate Tribunals
Friday, 30 October 2015 15:26

Section 14A - In the absence of any exempt income during the year there is no question of any disallowance u/s 14A - Delhi Tribunal

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1. When the assessee did not earn any exempt income during the year, there is no question of making any disallowance u/s 14A

2. Addition on account of lower scrap sale can not be made as a percentage of turnover when the assessee has shown increase in the Gross Profit rate


1. Assessee made investment of Rs.18.95 crore in unquoted equity shares. However, no dividend was received during the year. Applying the provisions of section 14A read with Rule 8D, the AO computed disallowance at Rs.1,40,28,358/-

2. The ld. CIT(A) reduced the disallowance to Rs.74,15,767/-, thereby allowing part relief

3. Assessee moved to the Tribunal and the issue was decided in assessee's favour by the ITAT


In view of the fact that the assessee did not admittedly earn any exempt income during the year, there can be no question of making any disallowance u/s 14A of the Act in terms of the aforestated precedents from the Hon’ble jurisdictional High Court. We, therefore, order for the deletion of the entire addition. The ground taken by the assessee is allowed and that of the Revenue fails.

Cases referred to

1. CIT vs. Holcim India P. Ltd. (2014) 90 CCH 081 DEL-HC

2. Joint Investment Pvt. Ltd. Vs. CIT (2015) 372 ITR 694 (Del)

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