INCOME TAX ACT, 1961

Section 14A Rule 8D

Disallowance under section 14A - Expenditure against exempt income - No exempt income earned -

Revenue filed appeal against the order of Tribunal directing AO to delete the disallowance as to exempted income earned by the assessee on the ground that as per CBDT Circular No. 5/ 2014 disallowance under section 14A read with rule 8D has to be made even if the tax payer has, in a particular year, not earned by any exempt income. Held: In the case of Marg Ltd. [(2020) 120 Taxmann.com 84 (Mad)], it was held that the disallowance under rule 8D of the IT Rules, 1962 read with section 14A could never exceed exempted income earned by the assessee during the particular assessment year and that the same could be computed as per rule 8D of the said Rules only after recording satisfaction by the Assessing Authority. Following the same, appeal filed by revenue was required to be deleted.

REFERRED :

FAVOUR : In favour of assessee.

A.Y. : 2013-14 & 2012-13.

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