Challenge on Disallowance u/s 14A of Income Tax Act to be restricted to exempt Income Earned: SC Condones delay in SLP filed by Income Tax Dept [Read Oder]

The Supreme Court condoned delay in special leave petition ( SLP ) filed by Income Tax Department in the matter regarding a challenge on disallowance under Section 14A of the Income Tax Act, 1961 to be restricted to exempt income earned.

The SLP arose out of the impugned final judgment and order dated 13-03-2023 in ITA No. 175/2022 passed by the High Court of Karnataka at Bengaluru.

While dealing with the issue of “Whether on the facts and in the circumstances of the case, the Tribunal is right in law holding that the disallowance made under section 14A of the Income Tax Act has to be restricted to the exempt income earned ignoring the laws laid down in judicial pronouncements of the Apex Court in case of Maxopp Investments Ltd V/s CIT wherein it was held that investments in subsidiary companies also attract disallowance under section 14A of the Income Tax Act and further in case of Godrej & Boyce Mfg Co.Ltd V/s DCIT has held that no deduction shall be allowed in respect of expenditure incurred by assessee in relation to such income which does not from part of the total income under the Income Tax Act” the revenue appeal was dismissed by the Karnataka High Court.

A Two-Judge Bench of Justice Abhay S Oka and Justice Ujjal Bhuyan observed that “Application seeking exemption from filing certified copy of the impugned order is allowed. Delay condoned. Issue notice.”

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