Income Tax, Issue Update

Disallowance of expenditure under Section 14A: Applicability to Insurance business

Case: Max New York Life Insurance Company Ltd. vs. DCIT, Delhi ITAT

Outcome: Partial


  • The ground raised in the appeal was with respect to the exemption of claim by the Assessee under section 10(34) of the Act and with respect to dividend income earned by the Assessee and allowance of expenditure on the same.

Key Points

  • The Tribunal placed reliance on the decision laid down by the co-ordinate bench in Assessee’s own case, wherein it was concluded that since section 44 created a specific exception to the applicability of section 28 to section 43B, therefore purpose object & purview of section 14A had no applicability to profits and gains of an insurance business.
  • Therefore, following the same in the present facts of the case, the exemption under section 10(34) was allowed to the Assessee and expenditure incurred in order to earn the same could not be disallowed.

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