No Further Section 14A Disallowance After Reasoned Suo-Motu Adjustment

DCIT Vs Symphony Ltd. (ITAT Ahmedabad)

Own funds & suo-motu disallowance enough: ITAT Ahmedabad rejects fresh 14A hit on Symphony

The Ahmedabad Bench of the ITAT, in  dismissed the Revenue’s appeal and upheld deletion of disallowance of ₹3.11 crore u/s 14A r.w. Rule 8D.

The Assessing Officer had made an additional disallowance u/s 14A despite the Assessee having sufficient own funds far in excess of investments and having already made a suo-motu, reasoned disallowance towards exempt income. The CIT(A), NFAC deleted the disallowance, which was challenged by the Revenue.

The Tribunal noted that the issue was squarely covered in the Assessee’s own cases for earlier years, including AYs 2009-10, 2011-12 and 2017-18, where it was consistently held that no further disallowance is warranted when investments are made out of own funds and a rational suo-motu disallowance is made. Reliance was placed on the Supreme Court judgment in PCIT vs. Sintex Industries Ltd.

Finding no change in facts or law, the ITAT held that invocation of Rule 8D was unjustified and affirmed the order of the CIT(A). Consequently, the Revenue’s appeal was dismissed.

Since the Cross Objection filed by the Assessee merely supported the CIT(A)’s order and the same was upheld, the Cross Objection was dismissed as infructuous.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

This appeal has been filed by the Revenue and the corresponding Cross Objection has been filed by the assessee against the order dated 25.06.2025, passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “Ld. CIT(A)”] under section 250 of the Income-tax Act, 1961 [“the Act”] for the Assessment Year (AY) 2020–21.