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The Tax PublishersITA No. 1823, 1858/Mum/2017
2019 TaxPub(DT) 6399 (Mum-Trib)INCOME TAX ACT, 1961
Section 14A
Investments were made by assessee out of sufficient interest free funds available with it and, therefore, no disallowance of interest expenditure under rule 8D(2)(ii) was called for. Further, disallowance of administrative expenses offered by assessee suo moto was quite reasonable considering average rate of investment by excluding from total investments all investments, the income from which was subject to tax and investments in subsidiary companies, accordingly, no disallowance under rule 8D(2)(iii) was callef for.
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Disallowance under section 14A - Expenditure against exempt income - Invocation of rule 8D - Assessee having sufficient own funds
Assessee earned tax free dividend on investments and claimed suo moto disallowance on account of proportionate employee cost related to investment activity. However, AO invoked rule 8D and worked out disallowance as per rule 8D(2)(ii) and 8D(2) (iii).Held: Investments were made by assessee out of sufficient interest-free funds available with it and, therefore, no disallowance of interest expenditure under rule 8(2)(ii) was called for. Further, disallowance of administrative expenses offered by assessee suo moto was quite reasonable considering average rate of investment by excluding from total investments all investments, the income from which was subject to tax and investment in subsidiary companies, accordingly, no disallowance under rule 8D(2)(iii) was callef for.
Supported by:CIT v. HDFC Bank Ltd., (2014) 366 ITR 505 (Bom) : 2014 TaxPub(DT) 3351 (Bom-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
INCOME TAX ACT, 1961
Section 14A Section 115JB
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