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2024 (3) TMI 537 - AT - Income TaxRevision u/s 263 - disallowance u/s 14A not made by AO - as per assessee disallowance u/s. 14A cannot exceed the amount of exempt income and also the fact that the appellant has actually not incurred any expenses towards earning exempt income and hence the provisions of Section 14A r.w.r. 8D have no application - HELD THAT:- We observe that various Courts have consistently taken a position that no disallowance can be made u/s 14A in case the assessee has not earned any exempt income. The Hon’ble Supreme Court in the case of State Bank of Patiala [2018 (11) TMI 1565 - SC ORDER] held that where High Court took a view that amount of disallowance under Section 14A could be restricted to amount of exempt income only, SLP filed against said order was to be dismissed. Also in the case of Corrtech Energy (P.) Ltd. [2014 (3) TMI 856 - GUJARAT HIGH COURT] held that where assessee did not make any claim for exemption of any income from payment of tax, disallowance under Section 14A could not be made. Disallowance under Section 14A cannot exceed exempt income earned by assessee; thus where assessee had suo motu disallowed total exempt income under Section 14A, no further disallowance could be made by invoking Section 14A of the Act. See ABCI Infrastructure (P.) Ltd.[2023 (4) TMI 527 - ITAT GUWAHATI] Accordingly, in light of the aforesaid decisions, and the plain language of the Finance Act, 2022, which has held that the amendment shall apply from 01.04.2022, in our view, it cannot be held that while passing the assessment order, the Assessing Officer took a view which is contrary to the law thereby making the order erroneous and prejudicial to the interest of the Revenue. Further, notably, the decision of Williamson Financial Services Ltd. [2022 (7) TMI 451 - ITAT GAUHATI] on which reliance has sought to be placed by the D.R. had not been passed even on the date of passing of assessment order (30.12.2019) and also on the date passing of 263 order (02.02.2022). Further, the view taken by the Assessing Officer finds direct support from the decisions rendered by Hon’ble Supreme Court on this issue and therefore, in our considered view, the assessment order cannot be held to be erroneous and prejudicial to the interest of the Revenue. Accordingly, we direct that the order passed under Section 263 of the Act may be set-aside. Decided in favour of assessee.
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