DCIT Vs HDB Financial Services Limited (ITAT Ahmedabad)
Revenue appealed against CIT(A)’s deletion of disallowance of ₹17,93,76,718 u/s 14A r.w. Rule 8D(2)(ii). AO had applied 1% of annual average investments towards administrative expenses, holding that Assessee had substantial investments yielding exempt income. CIT(A) deleted the disallowance on the ground that no exempt income was earned during the year.
Before Tribunal, Revenue argued that Rule 8D was correctly invoked. Assessee submitted that the issue was already covered in its favour by Tribunal’s own order in ITA No.1507/Ahd/2025 dated 16.10.2025. Tribunal examined the earlier order & reiterated that when no exempt income is earned, section 14A disallowance cannot be made, relying on Gujarat High Court in PCIT Vs Adani Wilmar Ltd 133 taxmann.com 443 (Guj). Tribunal further noted that the Explanation inserted by Finance Act 2022 is prospective as held by Gauhati High Court in Williamson Financial Services Ltd 166 taxmann.com 607 & cannot apply to AY 2021-22. Finding identical facts in the current year, Tribunal upheld CIT(A)’s deletion & dismissed Revenue’s appeal.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal is filed by the Revenue against the order of the National Faceless Appeal Centre (NFAC), Delhi (in short “the CIT(A)”) dated 10.07.2025 for the Assessment Year (A.Y.) 2021-22 in the proceeding under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
