The Tax Publishers2020 TaxPub(DT) 4039 (Del-Trib)

INCOME TAX ACT, 1961

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

Disallowance under rule 8D(2)(ii) was to be computed after reducing interest income from the gross interest expenses.

Disallowance under section 14A - Expenditure against exempt income - Interest expenses under rule 8D(2)(ii) - Assessee sought for netting off against interest income

Assessee earned tax free dividend income on investments in shares but claimed no disallowance of interest expenses under section 14A. AO invoked rule 8D(2)(ii) and made disallowance. Assessee submitted that net interest was to be considered for disallowance under section 14A. Held: AO was directed to reduce interest income from the gross interest expenses and thereafter to compute disallowance under rule 8D(2)(ii).

Relied:Pr. CIT v. Morgan Stanley India Securities (P.) Ltd. 2020 TaxPub(DT) 973 (Bom-HC)<.i> and ITO v. Karnavati Petrochmem (P) Ltd. 2013 TaxPub(DT) 2366 (Ahd-Trib).

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2012-13


INCOME TAX ACT, 1961

Section 48

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