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The Tax PublishersI.T.(TP).A. No. 10/Chny/2020
2021 TaxPub(DT) 5449 (Chen-Trib) : (2022) 197 ITD 0196INCOME TAX ACT, 1961
Section 14A Rule 8D
Disallowances under rule 8D read with section 14A can never exceed exempt income earned by assessee during particular assessment year.
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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 but did not make any suo motu disallowance under section 14A. AO invoked rule 8D and made disallowance in excess of tax free income earned by assessee. Held: Disallowances under rule 8D read with section 14A can never exceed exempt income earned by assessee during particular assessment year. Accordingly, AO was directed to restrict disallowance under section 14A to the extent of exempt income earned for concerned assessment year.
Followed:Marg Ltd. v. CIT (2020) 120 Taxmann.com 84 (Mad-HC) : 2020 TaxPub(DT) 4041 (Mad-HC).
REFERRED :
FAVOUR : Partly in assessee's favour.
A.Y. : 2015-16
INCOME TAX ACT, 1961
Section 36(1)(ii) Section 43B(C)
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