INCOME TAX ACT, 1961

Section 14A Rule 8D

Disallowance under section 14A - Expenditure against exempt income - AO made additional disallowance over and above suo moto disallowance made by assessee - Suo moto disallowance being more than exempt income

Assessee-company was engaged in business of managing hotels and resorts. It earned dividend income and claimed the same as exempt. It also disallowed certain amount under section 14A while computing the total income. AO took the view that the assessee had not computed the disallowance as per rule 8D. Accordingly, he computed the disallowance as per rule 8D and accordingly made additional disallowance under section 14A read with rule 8D over and above the suo moto disallowance made by the assessee. Held: It was found that the disallowance made by the assessee voluntarily under section 14A was more than the amount of exempt income. Thus, the disallowance voluntarily made by the assessee would meet the requirements of section 14A. Accordingly, the additional disallowance made by AO under section 14A read with rule 8D over and above the suo moto disallowance made by the assessee, was not warranted in the facts and circumstances of the case. Hence, the AO was directed to delete further addition made by him under section 14A read with rule 8D.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

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