The Tax Publishers2020 TaxPub(DT) 5053 (Mum-Trib)

INCOME TAX ACT, 1961

Section 14A Rule 8D(iii)

Only those investments, which actually yielded exempt income, should be considered for the purpose of working out disallowance under rule 8D(2)(iii). Thus, the AO was directed to re-compute the disallowance under section 14A by considering only those investments, which actually yielded exempt income under rule 8D(2)(iii).

Disallowance under section 14A - Expenditure against exempt income - AO considered all the investments made by assessee for working out disallowance under rule 8D(iii) -

Assessee-NBFC was engaged in business of financing of bill discounting. It earned dividend income and made voluntary disallowance under section 14A towards expenses incurred for earning such dividend income. However, AO was dissatisfied by the suo-moto disallowance made by the assessee. Therefore, AO worked out the disallowance under section 14A by applying rule 8D(2)(iii) by considering all the investments. Held: In view of Tribunal decision in the case of Asstt. CIT v. Vireet Investment (P.) Ltd. (2017) 165 ITD 27 (Del) : 2017 TaxPub(DT) 1760 (Del-Trib), only those investments, which actually yielded exempt income, should be considered for the purpose of working out disallowance under rule 8D(2)(iii). In the instant case, the assessee furnished the workings for the same. Thus, AO was directed to go through the same and re-compute the disallowance under section 14A by considering only those investments, which actually yielded exempt income under rule 8D(2)(iii).

Followed:Asstt. CIT v. Vireet Investment (P.) Ltd. (2017) 165 ITD 27 (Del) : 2017 TaxPub(DT) 1760 (Del-Trib).

REFERRED :

FAVOUR : Matter remanded

A.Y. : 2012-13


INCOME TAX ACT, 1961

Sections 250 & 37(1)

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT

TaxPublishers.in

'Kedarnath', 7, Avadh Vihar, Near Nirali Dhani,

Chopasni Road

Jodhpur - 342 008 (Rajasthan) INDIA

Phones : 9785602619 (11 am - 5 pm)

E-Mail : mail@taxpublishers.in / mail.taxpublishers@gmail.com