Case Law Details
Century Real Estate Holdings Pvt. Ltd. Vs ACIT (ITAT Bangalore)
The issue under consideration is whether the disallowance u/s 14A can exceed exempt income?
ITAT states that, the assessee argued that dis-allowance under section 14A cannot exceed amount of exempt income. ITAT find that the Hon’ble Delhi High Court in the case of Joint Investments (P.) Ltd. (supra) held that the window for disallowance is indicated in section 14A and is only to the extent of disallowing expenditure incurred by the assessee in relation to tax exempt income. This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. There can be no dis allowance under section 14A in the absence of exempt income. The rationale behind these judgments is that the amount of dis allowance cannot exceed exempt income. In this case, on perusal of the facts, ITAT find that the assessee has earned exempt income of Rs. 24,138, whereas the assessing officer disallowed an amount of Rs. 3,36,28,000. Therefore, considering the facts and circumstances of the case and also following the ratios of the case laws discussed above, ITAT are of the view that disallowance under section 14A cannot exceed the exempt income. Hence, ITAT direct the assessing officer to restrict disallowance under section 14A to the extent of exempt income earned by the assessee.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal and stay petition have been filed by the assessee and they relate to assessment year 2014-15. The appeal is directed against order dated 11.2.2020 passed by Ld. CIT(A)- 11, Bengaluru. The grounds of appeal urged by the assessee read as under:
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