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| The Tax Publishers2019 TaxPub(DT) 3323 (Mum-Trib) : (2019) 177 ITD 0327 INCOME TAX ACT, 1961
Section 14A
Rule 8D was not applicable during the year under consideration. As apparent, AO on an ad hoc basis had disallowed 5% out of exempt income towards expenditure attributable to earning such income which could not be sustained and thus disallowance under section 14A was restircted to 1% of exempt income earned during the year.
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Disallowance under section 14A - Expenditure against exempt income - Applicability of rule 8D -
Assessee earned tax free dividend income but claimed no disallowance under section 14A. AO invoked rule 8D and disallowed 5% of exempt income towards expenditure for earning such income. Held: Rule 8D was not applicable during the year under consdieration. As apparent, AO on an ad hoc basis had disallowed 5% out of exempt income towards expenditure attributable to earning such income which could not be sustained and thus disallowance under section 14A was restircted to 1% of exempt income earned during the year.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2007 -- 08
INCOME TAX ACT, 1961
Section 234C
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