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CIT vs. Lakhani Marketing (P&H High Court)

COURT:
CORAM:
SECTION(S):
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CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: June 5, 2014 (Date of publication)
AY:
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CITATION:

Click here to download the judgement (lakhani_14A_no_income.pdf)


S. 14A disallowance cannot be made if the assessee has no tax-free income in the year

From the reading of s. 14A of the Act, it is clear that before making any disallowance the following conditions are to exist:- a) That there must be income taxable under the Act, and b) That this income must not form part of the total income under the Act, and c) That there must be an expenditure incurred by the assessee, and d) That the expenditure must have a relation to the income which does not form part of the total income under the Act. Therefore, unless and until, there is receipt of exempted income for the concerned assessment years (dividend from shares), s. 14A of the Act cannot be invoked (Hero Cycles 323 ITR 518 (P&H) and Winsome Textile 319 ITR 204 (P&H) followed)

Note: See also Cortech Energy (Guj High Court), Shivam Motors (Allahabad High Court) & M/s. Delite Enterprises (Bombay High Court) where the same view was taken. The contrary view in Cheminvest 121 ITD 318 (Delhi) (SB) is no longer good law

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