2018 (1) TMI 1386 - HC - Income Tax

Disallowance u/s 14A - Held that - The assessee for AY 2010-11 had filed its return and thereafter revised it. AO was of the opinion that the assessee had shown dividend income to the tune of ₹ 142.5 crores which was exempt from taxation. Upon his determination, a sum of ₹ 4,90,88,000/- was added under Section 14A as the expenditure involved exempt income although the CIT(A) and the ITAT found that as a matter of fact, the exempt income of ₹ 142.5 crores had not been obtained and that it was only a proposed dividend. Having regard to these findings, the question of application of Section 14A of the 1961 Act could not have arisen. There is no substantial question of law.

Summary

The High Court dismissed the appeal by the Revenue against the order of the ITAT and CIT(A) regarding the cancellation of disallowance under Section 14A of the Income Tax Act for an amount of Rs. 4,90,88,000. The court found that the exempt income of Rs. 142.5 crores was only a proposed dividend and not obtained, hence Section 14A did not apply.