INCOME TAX ACT, 1961

Section 14A

Disallowance under section 14A - Exempted income earned by assessee - Validity of -

Assessee received dividend income during the year was claimed to be exempt by assessee from tax. No disallowance on account of expenditure incurred in relation to the said exempt income however was offered by assessee. AO, therefore, worked out such expenditure by applying rule 8D and since the disallowance so worked out was more than the actual exempt dividend income received by assessee, disallowance under section 14A was restricted by AO. CIT(A) confirmed the said disallowance made by AO. Held: Contention raised by assessee was that actual dividend income earned by him during the year was only Rs. 9,687 and, therefore, disallowance under section 14A should be restricted to Rs. 9,687. However, as pointed out from the order of AO, amount of exempt income was mentioned by AO as Rs. 1,49,519. Thus, AO was directed to verify the actual amount of exempt income earned by assessee and restrict the disallowance under section 14A to that extent.

REFERRED :

FAVOUR : In assessee's favour by way of remand

A.Y. :

INCOME TAX ACT, 1961

Section 68

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