2023 (12) TMI 1319 - HC - Income Tax

Addition u/s 14A - Expenditure incurred on exempt income - whether expenditure can exceed the exempt income earned by the respondent/assessee? - HELD THAT - There is no dispute that the issue raised hereinabove is covered by the following judgments in Cheminvest Limited 2015 (9) TMI 238 - DELHI HIGH COURT and Chettinad Logistics (P.) Ltd. 2017 (4) TMI 298 - MADRAS HIGH COURT also confirmed by SC 2018 (7) TMI 567 - SC ORDER as held that Section 14A will not apply if no exempt income is received or receivable during the relevant previous year. No substantial question of law arises.

Summary

Issues involved:
The appeal concerns Assessment Year 2015-16, specifically addressing whether disallowance made u/s 14A of the Income-tax Act, 1961 can exceed the exempt income earned by the respondent/assessee.

Judgment Details:

Issue 1: Disallowance under Section 14A
The appellant/revenue sought to challenge the order passed by the Income Tax Appellate Tribunal regarding the disallowance made u/s 14A. The key question was whether such disallowance can surpass the exempt income earned by the assessee. This issue was found to be settled by previous judgments, including Cheminvest Limited v. Commissioner of Income Tax-VI and Commissioner of Income-tax, Central 1, Chennai v. Chettinad Logistics (P.) Ltd. Notably, one of the judges was part of the bench that decided the latter case, and a Special Leave petition filed against it was dismissed by the Supreme Court on both delay and merits grounds.

Conclusion:
Given the precedents and the dismissal of the SLP by the Supreme Court, the High Court found no substantial question of law to consider. Therefore, the appeal was closed, and the pending applications were deemed infructuous and closed as well.