2026 (3) TMI 1702

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.... CIT(A) in upholding the disallowance of 60,06,137/- made by the Assessing Officer under Section 14A of the Income-tax Act, 1961 (in short 'the Act') read with Rule 8D(ii) of the Income-tax Rules, 1962 (in short 'the Rules'). The assessee has raised following grounds of appeal"- 1. That on the facts and circumstances of the case and in law, the order dated 25.09.2025 passed by the Commissioner of Income-tax (Appeals) ["CIT(A)] upholding the assessment order passed under section 143(3) of the Income-tax Act, 1961 ("the Act"), assessing income of the Appellant at Rs. 50,27,86,300 is bad in law, unsustainable and invalid. 2. That the CIT(A) erred on facts and in law in upholding the action of the assessing officer in making d....

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....a invocation of section 14A in its case, who dismissed the appeal with the following observations:- "......5.2.3 I have gone through the submission of the appellant, the assessment order and the judicial pronouncements. As per section 14A of the Act no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to such income which does not form part of the total income. In the present case, the AO has made disallowance as per Rule 8D(2)(iii) holding that investment made for earning exempt income are to comprise for calculating the average investment under the said clause. The appellant has however claimed that only those investments are to be taken from which actual exempt income has been received dur....

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....obstante clause to provide that no deduction shall be allowed in relation to exempt income, notwithstanding anything contrary contained in the Act. It is also held that this Explanation is clarificatory in nature and will therefore, be applicable retrospectively...." 4. The ld. Counsel for the assessee argued that the invocation of section-14A in its case is totally wrong. It was submitted that the appellant has not earned any exempt income so as to attract invocation of section 14A r.w.r. 8D in its case. The Ld. Counsel vehemently argued that the explanation to section 14A referred by ld. CIT(A) is prospective and not retrospective in nature and hence no case for any addition was made out in this case. In support of its contentions, the....