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2021 (4) TMI 652 - HC - Income TaxDisallowance u/s 14A r.w.r. 8D - investment in the form of share application money by the company would only result in exempt income - HELD THAT:- As decided in M/S.QUEST GLOBAL ENGINEERING SERVICES PVT. LTD. [2021 (3) TMI 434 - KARNATAKA HIGH COURT] only expenses proportionate to earning of exempt income could be disallowed under Section 14A of the Act and the decision of MAXOPP INVESTMENT LTD [2018 (3) TMI 805 - SUPREME COURT] is an authority for the aforesaid proposition that the provision is relatable to earning of actual income. The object of Section 14A is to curb the practice to claim deduction of expenses incurred in relation to exempt income against taxable income and at the same time avail of the tax incentive by way of exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income. It is also clarified by us that while recording the conclusion in KINGFISHER FINVEST LTD. [2020 (10) TMI 518 - KARNATAKA HIGH COURT]that disallowance under Section 14A has to be made even taxpayer has not earned any exempt income, this court has misread the ratio of the decision of the Supreme Court in MAXOPP INVESTMENT LTD supra and therefore, the aforesaid view being contrary to the law laid down by the Supreme Court is not a binding precedent. - Decided in favour of assessee.
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