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 made disallowance with return to non-dividend bearing investments also

Assessee earned tax-free dividend income on certain shares. AO invoked rule 8D(2)(iii) and worked out disallowance considering non-dividend bearing investments also. Assessee challenged this Tribunal directed AO to restrict disallowance under section 14A read with rule 8D(2)(iii) only to 0.5% of the average investment income which was exempt. Revenue challenged this by way of appeal before High Court. Held: Disallowance under rule 8D(2)(iii) was rightly restricted to 0.5% of average investment income from which was exempt.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 143(3)

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