INCOME TAX ACT, 1961

Section 14A Rule 8D

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 shares. AO while applying rule 8D made disallowance under section 14A at 80 lakhs, though assessee made suo moto disallowance of Rs. 54 lakhs which was the entire exempt income earned by assessee and claimed as deduction. Held: Disallowance under section 14A read with rule 8D could not exceed the exempt income. Accordingly, AO was directed to restrict the disallowance to the exempt income earned, i.e., Rs. 54 lakhs.

Followed:Shiva Industries Holdings Ltd. v. Asstt. CIT (2011) 11 Taxmann.com 404 (Chen)(Mag) : 2011 TaxPub(DT) 2152 (Chen-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

INCOME TAX ACT, 1961

Section 139(5)

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