Until and unless there was actual expenditure for earning the exempted income there could not be any disallowance under sec 14A

Last updated: 11 January 2012

Court :
HIGH COURT OF DELHI

Brief :
The short issue involved in these appeals is: whether common expenses incurred by an assessee can be allocated towards taxable and non-taxable income under the provisions of Section 14A of the Income Tax Act, 1961 (hereinafter referred to as the „I.T. Act‟) as it stood at the relevant point in time. It is important to note that this court has passed orders from time to time in ITA No.1367/2008, which has been virtually treated as the lead case. On perusal of the order-sheets pertaining to ITA No.1367/2008, it is found that on the very first date when the said appeal was moved i.e., 03.12.2008, it was pointed out to the Revenue that since the impugned judgment of the Tribunal was based on its own decision, rendered on the same issue, for Assessment Year 1994-1995; which was in favour of the assessee – whether the Revenue had preferred an appeal against the said decision. Since then, several adjournments for the past three years have been taken on this ground alone.

Citation :
COMMISSIONER OF INCOME TAX …APPELLANT VS.WIMCO SEEDLINGS LTD. …RESPONDENT