Case Number: ITA 5178/DEL/2019
Appellant: DCIT Circle-25(2), New Delhi
Respondent: Transcend Infrastructure Pvt. Ltd., Gurgaon
Assessment Year: 2014-15
Order Type: Final Tribunal Order
Date of Order: June 29, 2022
Case Filed on: June 6, 2019
Pronounced on: June 29, 2022
The case involves the challenge by the DCIT against the order of the CIT(A)-28, New Delhi, which provided relief to Transcend Infrastructure Pvt. Ltd. regarding disallowances under Section 14A of the Income Tax Act for the assessment year 2014-15.
The Revenue appealed against the CIT(A)’s decision that deleted a significant disallowance made by the Assessing Officer (AO) under Section 14A related to investments made by the assessee. The primary contention was whether expenses related to earnings exempt from tax should be disallowed even if no such income was actually earned during the year.
The tribunal noted that the assessee did not earn any exempt income during the year in question and thus found the application of Section 14A’s disallowances as inapplicable. This was supported by various judicial precedents, including those of the jurisdictional High Court, which have consistently held that no disallowance under Section 14A is warranted if no exempt income is earned during the year.
The tribunal dismissed the Revenue’s appeal, affirming the decision of the CIT(A) that the disallowance under Section 14A was unjustified due to the lack of any exempt income during the year. This upheld the principles of taxing only the net income and not allowing deductions for expenses tied to non-taxable income.
This case reaffirms the legal principle that expenses linked to the generation of exempt income can only be disallowed under Section 14A if such income is actually realized. It underscores the importance of actual income receipt in applying tax laws and highlights the tribunal’s role in adjudicating disputes based on established judicial decisions.
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform