TaxTMI 
TaxTMI 
2023 (7) TMI 557
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....isallowance of Rs. 5,72,606/- made under section 14A r/w Rule 8D, contrary to the provisions of the Income Tax Act, 1961 therefore, the said order is bad in law, unwarranted and deserves to be deleted. 2. On the facts and circumstances of the case, the order of the Ld. CIT(A) is bad, both in the eyes of Law and on facts, having been passed without abiding by the judicial precedents of the Hon'ble Apex Court/High Court which categorically state that disallowance under section 14A should not be invoked when no exempt income was earned during the year and moreover the disallowance, if any, at best ought to be restricted to amount of exempt income for the said assessment year. 3. On the facts and circumstances of the case,....
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.... of income an amount of Rs. 2990/- was put as exempted income i.e. dividend from shares, therefore, even if a disallowance is made the same may kindly be restricted to Rs. 2990/- only. To support his contentions, ld. AR relied on the following case laws :- i) Pr.CIT Vs. Oil Industry Development Board, [2019] 103 taxmann.com 326 (SC), wherein the Hon'ble Supreme Court has held as under: Section 14A of the Income-tax Act, 1961 - Expenditure incurred in relation to income not includible in total income (Applicability of) - In course of appellate proceedings, Tribunal held that in absence of any exempt income, disallowance under section 14-A of any amount was not permissible - High Court upheld order passed by Tribunal - Wheth....
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....cannot exceed exempt income - Held, yes [Para 5] [In favour of assessee] iv) Pr.CIT Vs. Empire Package (P.) Ltd., [2017] 81 taxmann.com 198 (Punjab & Haryana), wherein the Hon'ble High Court has held as under :- Section 14A of the Income-tax Act, 1961 - Expenditure incurred in relation to income not includible in total income (Extent of disallowance) - Assessment year 2009-10 - Disallowance of entire tax exempt income under section 14A is not permissible [In favour of assessee] 6. On the other hand, ld. Sr. DR vehemently supported the orders of the authorities below. 7. We have considered the rival submissions and perused the relevant material available on record. Since the similar issue was dealt with by the coordin....
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....14A read with rule 8D was not in accordance with law and therefore, the same is liable to be deleted, however, since, the assessee has gained an exempt income of Rs. 46,500/- during the relevant earlier year which was taken as Rs. 1,94,593/- by the ld. AO, this fact needs verification and thus, we restore the issue to the files of ld. AO, for the limited purpose to verify the amount of exempted income earned by the assessee during the year, with direction to restrict the disallowance made u/s 14A read with rule 8D to the amount of actual exempted income earned by the assessee during the year. Needless to say that assessee should cooperate with the ld. AO in verification of the issue remand back to the files of AO. 8. Respectfully followi....