INCOME TAX ACT, 1961

Section 14A Rule 8D(2)(iii)

Disallowance under section 14A - Expenditure against exempt income - Invocation of rule 8D(2)(iii) - AO having considered all investments made by assessee to arrive at average value of investments

Assessee earned tax free dividend income on certain investments in shares. AO invoked section 14A read with rule 8D(2) and considered all investments made by assessee for calculating average investment for disallowance under rule 8D(2)(iii).Held: Only those investments which yielded exempt income had to be considered for disallowance under rule 8D(2)(iii). Therefore, AO was directed to make fresh computation of average investments by taking into consideration only those investments which yielded exempt income.

Relied:Asstt. CIT v. Vireet Investments P Ltd. (2017) 58 ITR(T) 313 (Del-SB) : (2017) 165 ITD 27 (Del) : 2017 TaxPub(DT) 1760 (Del-Trib) and Piramal Enterprises v. ACIT (2018) 97 Taxmann.com 352 (Mum) : 2018 TaxPub(DT) 5273 (Mum-Trib).

REFERRED :

FAVOUR : Partly in assessee's favour (by way of remand)

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 56(2)(viia)

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