daga capital

The decision in Godrej & Boyce v. DCIT, has not provided as much of a reprieve to assessees as would have been hoped- only holding that the dubious Rule 8D of the Income Tax Rules is to be applied prospectively, while upholding its constitutionality and that of section 14A of the Income Tax Act. Full Article

Section 14A and Daga Capital can not put assessee in worse position. In other words section 14A disallowance under Rule 8D can not exceed original disallowance made at the time of assessment. Full Article

As earlier intimated to you, Writ Petition bearing No. 50 of 2010 (Indian Exporters Grievances Forum & Other vs. CIT) challenging the constitutional validity of Rule 8D has been admitted on 12.1.2010 by Hon’ble Shri Justice Dr. D.Y. Chandrachud and Hon’ble Shri Justice J.P. Devadhar of the Bombay High Court. Full Article

Section 14A was introduced in the Income Tax Act, 1961 by the Finance Act 2001 with retrospective effect from 1st April 1962. The intent of introducing this section was reiteration of the well settled legal principle that when an assessee incurs any expenditure in relation to income which is not liable to tax under the Act, he would ideally not be allowed the benefit of claiming such expenditure. The need for introduction of this section had arisen to negate the decision.. Full Article

The assessee earned dividend income on shares which was exempt from tax. The AO took the view that the investment in shares was made out of borrowed funds on which interest expenditure was incurred and consequently made a disallowance u/s 14A. This was partly upheld by the CIT (A). On further appeal by the assessee, the Tribunal deleted the disallowance by noting that the assessee had proved that the investment in shares was made out of non-interest bearing funds. Full Article

CASE LAW DETAILS Decided by: Mumbai High Court, In The case of: Topstar Mercantile Pvt. Ltd. (Formerly, Urvi Chemicals & Allied Industries Ltd) (Appellant)  V/s. The Asstt. Commissioner of Income Tax (Respondent), Appeal No.:, 1460 of 2009, Decided on:  26.08.2009 SUMMARY OF CASE LAW In assessment proceedings, the AO raised a query about disallowance of expenditure [...] Full Article