Trustworthy Security Services Private Limited Vs PCIT (ITAT Delhi)
ITAT Delhi held that revisionary order passed under section 263 of the Income Tax Act is liable to be quashed as no disallowance under section 14A of the Income Tax Act is permissible if no exempt income is earned. Accordingly, appeal allowed.
Facts- The assessee, a private limited company filed its return of income on 29.03.2019 declaring total income at Rs.26,55,680/- for the year under consideration assessment whereof was completed u/s. 143(3) of the Act upon accepting the same. Subsequently, show cause notice dated 26.02.2024 was issued by the PCIT on the issue that though the assessee made investment in equity shares as reflected from the balance sheet but not deducted any expenses related to such income and AO has not disallowed any expense related to such exempt income u/s. 14A of the Act, reply whereto were submitted by the assessee. However, the same was found to be not acceptable by the PCIT. PCIT enhanced the income of the assessee to Rs.79,34,636/- for the year under consideration and further directed the AO to recompute the total income of the assessee which is impugned before us.
Conclusion- Hon’ble Supreme Court in the case of Principal Commissioner of Income tax, Patiala v State Bank of Patiala [2018] 99 taxmann.com 286 (SC) has held that in the absence of any exempt income no disallowance u/s 14A of the Income-tax Act, 1961.
