| |
| The Tax Publishers2020 TaxPub(DT) 5348 (Karn-HC) : (2020) 427 ITR 0158 INCOME TAX ACT, 1961
Section 14A
Where there was absence of any mechanism in the assessment year 2002-03 to compute the disallowance for expenditure incurred for earning exempt income, addition made by AO was required to be deleted.
|
Disallowance under section 14A - Expenditure against exempt income - Absence of mechanism to compute disallowance in relevant assessment year -
Assessee-company filed its return for the assessment year 2002-03. AO while considering the claim for exemption in respect of dividend income under section 10(33) assumed an estimated expenditure at 5 per cent. of the dividend income and made disallowance under section 14A accordingly. Held: Sub-sections (2) and (3) of section 14A, were incorporated by the Finance Act, 2006 with effect from 1-4-2007 and prior to it, there was no mechanism to compute the disallowance on the expenditure for earning exempt income. Sub-sections (2) and (3) are prospective in nature and have to be utilized for computing expenditure for the assessment year 2007-08 and onwards. Hence, in the absence of any mechanism in the assessment year 2002-03 to compute the disallowance for expenditure incurred for earning exempt income, addition made by AO was required to be deleted.
REFERRED :
FAVOUR : In favour of assessee
A.Y. : 2000-01, 2001-02, 2002-03
INCOME TAX ACT, 1961
Section 37(1)
 SUBSCRIBE FOR FULL CONTENT
|