No Section 14A Disallowance If Assessee Has No Exempt Income in the Year

Reliance Power Ltd Vs DCIT (ITAT Mumbai) 

Introduction: The case of Reliance Power Ltd vs. DCIT (ITAT Mumbai) revolves around the interpretation of disallowance under Section 14A of the Income Tax Act. The dispute primarily concerns the computation of disallowance relating to investments yielding exempt income and the applicability of Rule 8D.

Detailed Analysis:

1. Background: Reliance Power Ltd, engaged in power generation projects, filed its return for the assessment year 2015-16, reporting a business loss. The assessing officer made disallowances under Section 14A, partly upheld by the CIT-A.

2. Disallowance Calculation: The assessing officer disallowed Rs. 705,409,746 under Section 14A, which was partly sustained by the CIT-A. The dispute includes whether disallowance should align with exempt income and the applicability of Rule 8D.

Please become a Premium member. If you are already a Premium member, login here to access the full content.