The Income Tax Appellate Tribunal, Bangalore Bench, has recently, in an appeal filed before it, held that no disallowance under section 14A shall be made, when no exempt income is earned by the assesse.
The aforesaid observation was made by the Tribunal when an appeal was preferred before it by the assessee UKN Properties Pvt. Ltd, as against the order of CIT(Appeals)-7, Bangalore dated 18.3.201, for the assessment year 2013-14.
The issue involved in the appeal being the disallowance made by the A.O u/s. 14A r.w.s Rule 8D, the submission of Shri Narendra Sharma, the Advocate for the assesseewas that since the assessee is not having any exempt income that is offered to tax, the question of disallowance u/s. 14A does not arise, while Shri V S Chakrapani, the CIT(DR), supported the orders of the lower authorities.
Hearing the opposing contentions of both the sides and perusing the materials available on record, the Tribunal consisting of N V Vasudevan, the Vice President and Padmavathy S, the Accountant Member, however, ruled as follows:
“Considering the fact that the assessee has not earned any exempt income during the year under consideration and respectfully following the decision of the Hon’ble Delhi High Court in the case of Era Infrastructure India Ltd., we hold that no disallowance is warranted u/s.14A and delete the disallowance made in this regard”
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