The Tax Publishers2020 TaxPub(DT) 2229 (Coch-Trib) : (2020) 183 ITD 0621

INCOME TAX ACT, 1961

Section 14A Rule 8D

Rule 8D was introdced with effect from 24-3-2008 which was prospective in operation and could not be applied retrospectively in the concerend assessment year 2006-07 and, therefore, AO was directed to disallow only 2% of expenses incurred towards exempted income under section 14A.

Disallowance under section 14A - Expenditure against exempt income - Applicability of rule 8D -

Assessee earned tax free dividend income but claimed no disallowance under section 14A. AO invoked rule 8d and worked out disallowance.Held: Rule 8D was introduced with effect from 24-3-2008 which was prospective in operation and could not be applied retrospectively in the concerned asst.yr. 2006-07. Accordingly, AO was directed to disallow only 2% of expenses incurred towards exempted income.

Relied:Madopp Investment Ltd. v. CIT (2011) 347 ITR 272 (Del) : 2011 TaxPub(DT0 2171 (Del-HC) and Simpson and Company Ltd. T.C. No. 26212/2006, dated 15-10-2012.

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2006-07 & 2012-13

INCOME TAX ACT, 1961

Section 2(1A)

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT