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TMI Blog2024 (2) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. Disallowance of administration expenditure u/s 14A of the Act r.w.r 8D(2)(iii) of the Income Tax Rules, 1962, the Hon ble Delhi High Court in the case of Joint Investments Private Ltd. vs. CIT [ 2022 (7) TMI 1093 - DELHI HIGH COURT ] and further in the case of ACB India Limited [ 2015 (4) TMI 224 - DELHI HIGH COURT ] has held that for computing the disallowance u/s 14A of the Act r.w.r. 8D(2)(iii) of the Income Tax Rules, 1962, the average value of only the investments yielding non-taxable income have to be considered and not the entire investment. An Amendment has been brought to section 14A of the Act by Finance Act 2022, whereby, an Explanation to section 14A has been inserted, wherein, it has been clarified that notw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stified in confirming the disallowance of Rs. 68,65,91 7/- made by the A.O. by invoking the provisions of sec. 14A r.w. Rule 8D which is over and above the suo-moto disallowance of Rs. 9,39,667/- made by the assessee itself. 2. Without prejudice to the above, Ld. CIT(A) ought to have restricted the disallowance to the extent of Rs. 26,63,953/-, being calculated on the basis of the average value of investment after considering only those investments which had yielded dividend income during the relevant year. 3. For that the Ld. CIT(A) ought to have considered that Amendment brought in by the Finance Act, 2022 in relation to disallowance u/s. 14A r.w. Rule 8D is applicable prospectively w.e.f. AY 2022-23. 4. Without prejudice t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Coordinate Guwahati Bench of the Tribunal in the case of ACIT vs. Williamson Financial Services Ltd. reported in [2022] 140 taxmann.com 164 (Guwahati-Trib.) 5. We have heard the rival contentions and gone through the record. It has to be observed that earlier as per decisions of the various High Courts of the country, the proposition was laid down that where the assessee has not derived any tax exempt income from investments, then no disallowance is attracted u/s 14A of the Act. Reliance in this respect can be placed on the following case laws: Cheminvest Ltd. vs. CIT 378 ITR 33 (Del). CIT vs. M/s. Holcim India Pvt. Ltd. (2015) 57 taxmann.com 28(Delhi) CIT v. Shivam Motors (P.) Ltd. [2015] 230 Taxman 63(Allahabad) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oses of] computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act.] ************************ *********************** [Explanation. For the removal of doubts, it is hereby clarified that notwithstanding anything to the contrary contained in this Act, the provisions of this section shall apply and shall be deemed to have always applied in a case where the income, not forming part of the total income under this Act, has not accrued or arisen or has not been received during the previous year relevant to an assessment year and the expenditure has been incurred during the said prev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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