INCOME TAX ACT, 1961

Section 14A

Disallowance under section 14A - Expenditure incurred against earning of exempted income - No exempted income earned by assessee -

Case of the assessee was selected for scrutiny and during the course of assessment proceedings, AO, after verifying the details filed by the assessee, concluded the assessment and determined the total income of assessee as against the revised income which was mentioned by assessee by making certain additions and disallowances. AO also made a disallowance under section 14A and under rule 8D(2)(iii) of the IT Rules, 1962 being 0.5%. CIT(A) partly allowed the appeal and deleted such additions and disallowances made and sustained the disallowance under rule 8D(2)(ii) as against the original calculation made by AO. Held: It was an admitted position that no dividend or exempt income was claimed by assessee during the relevant previous year. It is well settled in law that if no exempted income had accrued to the assessee, provisions of section 14A do not apply to the fact situation of the case by following the case of 'Pr. CIT & Anr. v. Novell Software Development (India) Pvt. Ltd.' ITA No.271/2017 decided on 16-1-2021 : 2021 TaxPub(DT) 0718 (Karn-HC).

Followed:Pr. CIT v. Novell Software Development (India) Pvt. Ltd. ITA No.271/2017 decided on 16-1-2021 : 2021 TaxPub(DT) 718 (Karn-HC), CIT v. Kingfisher Finvest India Ltd. (2020) 121 TAXMANN.COM 233 (Karn-HC) : 2020 TaxPub(DT) 4295 (Karn-HC), Sterling Developers Pvt. Ltd. v. Jt. CIT (OSD) [ITA No. 1417/Bang/2012, ITA No. 168/Bang/2013, dt. 23-6-2015].

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10

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