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The Tax PublishersITA No. 1590/Bang/2017, ITA No. 1589/Bang/2017 and Co No. 34/Bang/2019, ITA No. 1592/Bang/2017
2021 TaxPub(DT) 5440 (Bang-Trib)INCOME TAX ACT, 1961
Section 14A
Disallowance under section 14A could not exceed tax-free income earned by assessee.
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Disallowance under section 14A - Expenditure against exempt income - AO made disallowance in excess of tax-free income earned by assessee -
Assessee earned tax free dividend income but claimed no disallowance under section 14A. AO invoked rule 8D and worked out disallowance in excess of tax-free income earned by assessee. Held: Disallowance under section 14A could not exceed tax free income earned by assessee. Accordingly, AO was directed to restrict disallowance to the extent of exempt income earned by assessee.
Supported by:Biocon Ltd. v. Dy. CIT (2021) 431 ITR 326 (Karn) : 2021 TaxPub(DT) 676 (Karn-HC).
REFERRED :
FAVOUR : Partly in assessee's favour.
A.Y. : 2010-2011 & 2011-2012
IN THE ITAT, BANGALORE BENCH
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