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| The Tax Publishers2020 TaxPub(DT) 4477 (Guj-HC) INCOME TAX ACT, 1961
Section 14A
Amount of disallowance under section 14A read with rule 8D cannot exceed amount of disallowance made by assessee in return of income. However, it was clarified that in some cases, applying formula laid down in rule 8D, disallowance under section 14A may exceed suo motu disallowance made by assessee.
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Disallowance under section 14A - Expenditure against exempt income - Amount of disallowance under section 14A read with rule 8D cannot exceed amount of disallowance made by assessee in return of income -
Issue was as regards disallowance made under section 14A read with rule 8D(2)(ii). Held: The issue raised by revenue is no longer res integra and it is settled that amount of disallowance under section 14A read with rule 8D cannot exceed amount of disallowance made by assessee in return of income. However, same should be looked into in the context and the facts available. It should not be construed or understood to mean that disallowance cannot exceed suo motu disallowance made by the assessee in the return of income. In some cases, applying the formula laid down in rule 8D, disallowance may exceed such suo motu disallowance made by the assessee.
Followed:CIT v. Vision Fintok Limited, Tax Appeal No.486 of 2017 (Guj-HC) : 2018 TaxPub(DT) 4820 (Guj-HC), CIT v. Vision Finstok Ltd., S.L.P (Civil) No.13152 of 2018 (SC) : 2018 TaxPub(DT) 5001 (SC) and Pr. CIT v. Gujarat Fluorochemicals Limited, Tax Appeal No.11 of 2019 (Guj-HC) : 2019 TaxPub(DT) 5201 (Guj-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14
IN THE GUJARAT HIGH COURT
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