Income Tax Appellate Tribunal

DCIT vs. Minda Investment Ltd.

MANU/ID/1456/2023

10.10.2023

Direct Taxation

For computing the disallowance under Section 14A of the IT Act, only the investments which yielded exempt income to the assessee should be considered

The assessee is engaged in the business of lease, finance and investments. The only issue to be decided in present appeal is as to whether the learned CIT(A) was justified in considering only those investments which had yielded exempt income earned by the assessee while computing the disallowance under Section 14A of the Income Tax Act,1961 read with Rule 8D(2) of the Income Tax Rules.

The Hon'ble Supreme Court in the case of Maxopp Investment Ltd Vs CIT had already held that for the purpose of computing the disallowance under Section 14A of the Act read with Rule 8D(2) of the Rules, only those investments which had yielded exempt income to the assessee should be considered. Further, High Court in the case of PCIT Vs. Era Infrastructure India Ltd held that amendment made by the Finance Act, 2022 to section 14A inserting a non obstante clause and explanation will take effect from 01.04.2022 and cannot be given retrospective effect.

In view of judicial precedents, present Tribunal do not find any infirmity in the order passed by the learned CIT(A). Accordingly, grounds raised by the revenue are dismissed.

Tags : Assessment Disallowance Computation

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