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 considered non-dividend bearing investments also for computation of average value of investments

Assessee earned tax-free dividend income on investments in shares. AO invoked rule 8D(2)(iii) and considered non-dividend bearing investments also for computation of average value of investments and accordingly, worked out disallowance. Held: Only those investments which yielded exempt income were liable to be considered to assess expenditure towards exempt income under section 14A read with rule 8D and thus, AO was directed to assess the expenses to earn exempt income by excluding investment which did not yield exempt income.

Followed:Vireet Investment (2017) 82 taxmann.com 415 (Del) : 2017 TaxPub(DT) 1760 (Del-Trib)

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2015-16

INCOME TAX APPELLATE TRIBUNAL RULES, 1963

Rule 34(5)(c)

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