|The Tax Publishers2021 TaxPub(DT) 0868 (Mad-HC) : (2021) 436 ITR 0298
INCOME TAX ACT, 1961
Where there was absence of tax-free/dividend income earned by assessee, no disallowance could be made under section 14A as the provisions of section 14A read with rule 8D cannot be made applicable in vacuum i.e., in the absence of exempt income.
Disallowance under section 14A - Expenditure against exempt income - Absence of tax-free/dividend income -
Assessee filed appeal against applying the provisions of section 14A for maintaining tax free portfolio/investments in the absence of tax-free/dividend income from such investments. Held: The issue was decided in case of Celebrity Fashion Ltd., Chennai-45. [T.C.A. No. 26 of 2018 dated 21-9-2020 : 2020 TaxPub(DT) 3894 (Mad-HC)] wherein it was held that to apply the provisions of section 14A AO should have recorded a finding as to how sub-section (1) of Section 14A would stand attracted. In the absence of any such finding, the disallowance made was not justifiable.
Followed:Celebrity Fashion Ltd. [T.C.A. No. 26 of 2018 dated 21-9-2020 : 2020 TaxPub(DT) 3894 (Mad-HC)].
FAVOUR : In favour of assessee.
A.Y. : 2014-15
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