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S. 14A: ITAT cannot remand to apply Daga Capital if AO has not made disallowance
In assessment proceedings, the AO raised a query about disallowance of expenditure attributable to exempted dividend income u/s 14A. After considering the assessee’s reply, no disallowance was made u/s 14A, though interest expenditure was disallowed on the ground that it was not for business purposes. This was confirmed by the CIT (A). On appeal by the assessee, the Tribunal remanded the matter to the AO by observing that the AO should reconsider the matter in the light of Daga Capital Management 199 TTJ 289 (SB) (Mum). On appeal by the assessee, HELD:
As the AO had not made any disallowance u/s 14A, the Tribunal could not have not touched the question of s. 14A and made observations prejudicial to the assessee while remanding the matter. It had no jurisdiction to issue directions to the AO decide afresh on the touchstone of s. 14A and Daga Capital Management Pvt. Ltd. Accordingly, the order of the Tribunal to the extent it directed consideration of applicability of s. 14A was quashed & set aside.
Related Judgements
- ACIT vs. Indexport Ltd (ITAT Mumbai)
Where the AO made a disallowance u/s 14A by estimating 10% of the expenses as being attributable to the tax free receipts and in the appeal before the Tribunal the department argued that in view of the judgement of the Special Bench of the ITAT in Daga Capital…
- GE Capital Services vs. DCIT (ITAT Delhi)
Although at the time of hearing, the initial impression was to write a reference to the President for constituting a larger Bench the fact that an appeal has been filed in the Bombay and Delhi High Courts against Daga Capital mean that (as per the decision of the President…
- DCIT vs. Citizen Hotels (ITAT Mumbai)
As the assessee had earned tax-free dividend income, s.14A was applicable. The question of determination of the disallowable amount has to be worked out by the AO as per Rule 8D as held the Special Bench judgement in ITO Vs. Daga Capital Management Pvt. Ltd. (2008) 119 TTJ (Mum)…
