Purshottam G. Budhwani & Ors. v. Asstt. CIT & Ors.

INCOME TAX ACT, 1961

--Disallowance under section 14A--Expenditure against exempt income Applicability of rule 8D--Held: The provisions of rule 8D shall be applicable prospectively from assessment year 2008-09 onwards only. Since the instant assessment year was assessment year 2007-08, provisions of rule 8D were not applicable for making disallowance under section 14A.

Income Tax Act, 1961, Section 14A

Income Tax Rules, 1962, Rule 8D

Followed:Godrej and Boyce Mfg Co. Ltd. v. DCIT (2010) 328 ITR 81 (Bom)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2007-08

INCOME TAX ACT, 1961

--Disallowance under section 14A --Expenditure against exempt income Interest expenditure --Held: Assessee had incurred interest expenditure of Rs. 53,16,962, but claimed a sum of Rs. 41,92,785 only in the Profit and Loss account. The assessee had debited the balance amount of Rs. 11,24,177 to his capital account with the narration that it related to the investment. Therefore, there was no requirement of making any further disallowance out of interest expenditure.

Income Tax Act, 1961, Section 14A

Income Tax Rules, 1962, Rule 8D

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2007-08

INCOME TAX ACT, 1961

--Disallowance under section 14A--Expenditure against exempt income Administrative expenses --Held: Following the decision of jurisdictional High Court in case of CIT v. M/s. Godrej Agrovet Ltd. in ITA No. 934 of 2011, dated 8-1-2013, the AO was directed to make disallowance of 2 per cent of the exempt income towards administrative expenses.

Income Tax Act, 1961, Section 14A

Income Tax Rules, 1962, Rule 8D

Followed:CIT v. M/s. Godrej Agrovet Ltd. in Income Tax Appeal No. 934 of 2011, dated 8-1-2013

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2007-08

IN THE ITAT, C BENCH, MUMBAI

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