S. 14A disallowance applies to partner’s share of profits. Depreciation is not “expenditure” & cannot be disallowed u/s 14A

Vishnu Anant Mahajan vs. ACIT (ITAT Ahmedabad Special Bench)

The Special Bench had to consider two issues: (i) given that a firm pays tax on its profits, whether the share of profit received by a partner from the firm, which is exempt in his hands u/s 10(2A), can be said to be altogether “tax-free” so as to attract s. 14A & (ii) whether depreciation can be said to be “expenditure” so as to be disallowable u/s 14A. HELD by the Special Bench: