2026 (10) TMI 669

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....rounds of appeal:- "1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the disallowance of Rs. 3,38,56,490/- made under Section 14A of the Act read with Rule 8D, without considering that the Assessing Officer had correctly invoked the computation mechanism. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in relying on the decision of the Hon'ble Delhi High Court in Joint Investments Pvt. Ltd. Vs CIT, as the principle that disallowance cannot exceed the exempt income earned during the year is contrary to the clarification provided by the Finance Act, 2022, which confirms that disallowance under Section 14A is attracted even if no exempt income is e....

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....Scientific Research 5. Notices u/ss 143(2) and 142(1) of the Act were issued and served upon the assessee. After duly considering the assessee's submissions, the Ld. AO passed the assessment order u/s 143(3) r.w.s. 144B of the Act dated 30.09.2021 determining the total income/loss at Rs. 107,86,10,641/-, after making an addition of Rs. 2,19,07,998/- towards duty drawback and disallowance of Rs. 3,38,56,490/- u/s 14A of the Act. Aggrieved, the assessee was in appeal before the first appellate authority, who, vide order dated 28.10.2025, allowed the appeal filed by the assessee against which the Revenue is in appeal before us on the issue of disallowance u/s 14A of the Act r.w.r 8D of the IT Rules, 1962 ('the Rules', for short). 6. We h....

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....ked the provisions of Rule 8D(2)(ii) of the Rules and made a disallowance of 1% of the annual average of the total investment of Rs. 338,56,49,080/- and made a total disallowance of Rs. 3,38,56,490/-. The Ld. CIT(A) deleted the impugned disallowance on the ground that the disallowance u/s 14A cannot exceed the exempt income earned during the year under consideration and placed reliance on the decision of the jurisdictional High Court in the case of Joint Investment Pvt. Ltd. Vs. CIT, ITA 117/2015 dated 25.02.2015. 7. The ld. DR for the Revenue contended that even in case where there is no exempt income, disallowance u/s 14A can be made as per the amendment brought about by the Finance Act, 2022. The Ld. DR further contended that the said....