Case law on section 14a

This query is : Resolved 

Querist : Anonymous (Querist) 19 April 2012


Yogesh Agarwal (Expert)
19 April 2012

There are several case laws. I am citing the gist of the latest one available with me.

" [2012] 18 333 (Delhi - Trib.)
Relaxo Footwears Ltd.
Additional Commissioner of Income-tax, Range-15, New Delhi*

Section 14A of the Income-tax Act, 1961, read with rule 8D of the Income-tax Rules, 1962 - Expenditure incurred in relation to income not includible in total income - Assessment year 2008-09 - Whether earning of an income in a particular year is not a sine qua non for allowing an expenditure; and, thus, income may be 'nil', yet expenditure incurred in pursuit of earning such income is deductible - Held, yes - Whether similar proposition will apply while interpreting provision contained in section 14A(1) - Held, yes - Whether, therefore, in absence of an income which is not includible in total income, provision of section 14A can still be invoked to disallow expenditure relatable to income not includible in total income - Held, yes - Whether, however, there cannot be an assumption of some kind of in-built expenditure; some facts must be there on record to show that expenditure was actually incurred in relation to earning of exempt income - Held, yes - Assessee had made certain investments, income wherefrom was exempt - Assessing Officer disallowed expenditure incurred for earning said income under section 14A - Assessee claimed that no expenditure had been incurred for earning exempt income - Commissioner (Appeals), however, upheld order of Assessing Officer on assumption that whenever exempt income is earning, there will be some expenditure incurred in relation thereto - Whether such an assumption by Commissioner (Appeals) could not form basis for making disallowance under rule 8D - Held, yes - Whether both Assessing Officer and Commissioner (Appeals) had not examined assessee's claim at all and had not followed provisions of section 14A(1) - Held, yes - Whether, therefore, disallowance under section 14A could not be upheld - Held, yes [In favour of assessee]"

Some more citation

Dy. CIT v. Jindal Photo Ltd. [IT Appeal No. 814 (Delhi) of 2011, dated 23-9-2011]; Maxopp Investment Ltd. v. CIT [2011] 203 Taxman 364/15 390 (Delhi) and Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT [2010] 194 Taxman 203 (Bom.),

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