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| The Tax Publishers2020 TaxPub(DT) 3118 (Ahd-Trib) INCOME TAX ACT, 1961
Section 14A
For earning exempt income, assessee was bound to incur Demat Charges, Bank Charges, expenses on post and time of management, etc., and contention of assessee that no administrative expenditure was incurred was beyond acceptance. Therefore, disallowance of administrative expenses was restricted on ad hoc basis @ 1% of exempt income as per clause (f) to Explanation 1 of section 115JB.
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Disallowance under section 14A - Expenditure against exempt income - Administrative expenses - Assessee claimed no expenses incurred
Assessee earned tax free dividend income on investments in shares but claimed no disallowance of administrative expenses under section 14A. AO invoked rule 8D(2)(iii) and worked out disallowance. Assessee contended that no administrative expenditure was incurred by it in relation to concerned investments.Held: For earning exempt income, assessee was bound to incur Demat Charges, Bank Charges, expenses on post and time of management, etc., and contention of assessee that no administrative expenditure was incurred was beyond acceptance. Therefore, disallowance of administrative expenses was restricted on ad hoc basis @ 1% of exempt income as per clause (f) to Explanation 1 of section 115JB.
REFERRED :
FAVOUR : Partly in assessee's favour.
A.Y. : 2011-12
INCOME TAX ACT, 1961
Section 116JB
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