Article
Disallowance under Section 14A proposed even in absence of exempt income: Tax net tightened in Budget 2022?
By Janane G
The Finance Bill, 2022 has proposed to insert an explanation to Section 14A of the Income-tax Act, 1961 to state that bereft exempt income being earned in any year, disallowance under Section 14A will still be attracted. The article in this issue of Direct Tax Amicus, in this regard, elaborately discusses various issues that may crop up once the provisions are enacted. The author seeks answers to various questions like, should disallowance be restricted to exempt income even after the amendment; can disallowance be litigated where no exempt income is received at all from an investment; is recording of satisfaction still mandatory; and whether the provisions of Section 14A will have retroactive application. According to the author, Budget 2022 has brought in such an amendment with a seeming intent to provide clarity to the controversies surrounding Section 14A but, has it really put a stop to the storm is something that one has to wait and observe...
Notifications & Circulars
- Deduction of tax from salaries, under Section 192, during FY 2021-22 clarified
Ratio decidendi
- Expenses incurred by pharmaceutical company for gifting freebies to medical practitioners not allowed as deduction under Section 37(1) – Supreme Court
- Due diligence and legal expenses for unmaterialised business expansion allowable as deduction under Section 37 – ITAT Chennai
- Receipts under sub-contract for coordination with Ford’s technical personnel, not FTS under India-US DTAA – ITAT Delhi
- Change in shareholding of ultimate parent company cannot lead to denial of set-off of brought forward losses – ITAT Delhi
- Prosecution – Mere omission to file correct return and maintain proper books lacks mens rea for initiation of prosecution – Madras High Court
