While dismissing the appeal of the assessee, the Income Tax Appellate Tribunal recently declared that Section 14A cannot be invoked when there is no Exempt Income. This appeal is preferred by the assessee against the order of CIT (A)-7, Bengaluru.
During the course of the hearing, the counsel for the assessee has invited the attention of tribunal to the fact that there was no exempt income earned by the assessee during the impugned assessment year and thereby provisions of section 14A cannot be invoked.
On counterpart, the revenue had placed his reliance on AO’s order. While hearing the rival submission, the tribunal found that undisputedly the assessee has not earned any exempted income.
The bench including judicial member Shri Sunil Kumar Yadav and accountant member Shri Inturi Rama Rao was declared that the instant case was settled position of law that whenever assessee did not earn any exempt income, no disallowance could be made u/s. 14A of the Act.
The tribunal bench called for the judgment of High Court in the case of Cheminvest Ltd. v. CIT, 378 ITR 33 (Del) has categorically held that Wherever there is no exempt income includible in the total income of the assessee, the provisions of section 14A cannot be invoked.
In the light of the aforesaid judgment, the provisions of section 14A cannot be invoked as there is no exempt income in the hands of the assessee.
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