This case deals with the disallowance of expenditure u/s 14A of ...

Income Tax Act Section 14A: Expenses Disallowed for Exempt Income, Limited to Exempt Income Earned.

August 30, 2024

Case Laws Income Tax HC

This case deals with the disallowance of expenditure u/s 14A of the Income Tax Act, which pertains to expenditure incurred in relation to exempt income. The key points are: Section 14A mandates disallowance of expenditure incurred in earning exempt income to prevent the assessee from claiming dual benefit of exempt income and deduction of related expenditure against taxable income. The disallowance is restricted to the extent of exempt income earned during the year. Existence of exempt income is a prerequisite for invoking Section 14A. The court affirmed the principle of apportionment and identification of expenditure related to exempt income. Expenditure can be claimed as deductible only if incurred to earn taxable income. Section 14A(2) and Rule 8D reinforce this principle. The Explanation appended to Section 14A, seeking to apply the provision irrespective of exempt income earned, is prospective and applies from Assessment Year 2022-23 onwards, as clarified in the Memorandum to the Finance Bill, 2022. Consequently, the court upheld the Tribunal's view that disallowance u/s 14A is restricted to the extent of exempt income earned during the year for the relevant assessment years.

View Source

← Previous Next →

This case deals with the disallowance of expenditure u/s 14A of ...

Income Tax Act Section 14A: Expenses Disallowed for Exempt Income, Limited to Exempt Income Earned.

August 30, 2024

Case Laws Income Tax HC

You may also like:

Assessee held shares as stock-in-trade for trading purposes, not to earn dividend income. HC held provisions of Section 14A disallowing expenses relatable to exempt...

The assessee claimed deduction of brokerage expenses u/s 57(iii) against income from other sources. The Assessing Officer disallowed part of the expenses in proportion...

Deduction claimed u/s 36(1)(viii) for interest income from housing finance for non-residential purposes was disallowed, excluding such amounts from computing eligible...

Various issues related to allowability of expenses, deductions, transfer pricing adjustments, and other income tax matters for a pharmaceutical company. Key points are:...

Penalty levied u/s 274 read with Section 270A - assessee computed tax on disallowed depreciation amount at maximum marginal rate and levied 200% penalty on payable tax -...

No exempt income earned, hence no disallowance u/s 14A permissible up to AY 2021-22; however, from AY 2022-23 onwards, disallowance relating to exempt income allowable...

Addition u/s 14A - expenses towards exempted income - Disallowance had to be made only on an estimated basis with regard to the expenditure incurred for the purpose of...

The ITAT held that expenses claimed u/s 57(iii) lacked nexus with interest income earned on fixed deposits. The interest expenditure was for liquidation expenses, not...

Disallowance u/s 14A - Whether there is no tax free income earned during the year ? - To attract the provisions of Section 14A of the Act, 1961, it is necessary that the...

The assessee, engaged in the business of shares and securities, claimed administration expenses, including Portfolio Management Service (PMS) expenses, against capital...

Revision u/s 263 - disallowance u/s 14A r.w.r. 8D - the assessee has not incurred any indirect expenses to earn the exempt income and ld. PCIT has not brought any...

Disallowance u/s 14A r.w.r. 8D - The object of Section 14A is to curb the practice to claim deduction of expenses incurred in relation to exempt income against taxable...

Disallowance u/s 14A read with Rule 8D - In any case, as per section 14A(3) whether or not the assessee has incurred any expenditure for earning exempt income, a part of...

Disallowance of claim of interest expenses u/s. 57(iii) - The Assessing Officer (AO) had disallowed a portion of the interest expenses based on the difference between...

Disallowance u/s 14A r.w.r 8D - AO observed that exempt income cannot be earned without making any expenses - the assessee has only tried to explain that no expense was...

Quick Updates: