INCOME TAX ACT, 1961

Section 14A

Disallowance under section 14A - Expenditure against exempt income - AO made disallowance in excess of tax-free income earned by assessee -

Assessee earned tax free dividend income on investments in shares amounting to Rs. 28,500. AO invoked rule 8D and made disallowance under section 14A of Rs. 1,70,01,211. Held: Disallowance under section 14A could not exceed the amount of exempt/dividend income, therefore, disallowance was restricted to the extent of exempt income.

Followed:Jt. Investments (P) Ltd. (2015) 59 Taxmann.com 295 (Del-HC) : 2015 TaxPub(DT) 1375 (Del-HC), Cheminvest Ltd. v. ITO (2009) 378 ITR 33 (De-HCl) : 2015 TaxPub(DT) 3520 (Del-HC), Maxopp Investemnt Ltd. CIT 2018 (2018) 402 ITR 640 (SC) : (2018) 91 Ttaxmann.com 154 (SC) : 2018 TaxPub(DT) 1403 (SC) and Kotak Securities Ltd. [ITA No. 6666/Mum/2015, dated 19-9-2018] : 2018 TaxPub(DT) 6324 (Mum-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2016-17

INCOME TAX ACT, 1961

Sections 14A & 115JB

SUBSCRIBE FOR FULL CONTENT