Word Annual Denotes 12 Months: ITAT Clarifies Rule 8D(2)(ii) Calculation Methodology

Radiant Life Care Pvt. Ltd. Vs DCIT (ITAT Mumbai) In the case of Radiant Life Care Pvt. Ltd. Vs DCIT, the assessee challenged the disallowance of ₹1.5 crore under Section 14A of the Income Tax Act. The Assessing Officer (AO) applied Rule 8D(2)(ii) to calculate disallowance, dividing the monthly averages of the opening and closing balances of investments by six, as the securities were held for only six months. The assessee, however, argued that the annual average should be computed by dividing the aggregate of the monthly averages by twelve, consistent with the standard interpretation of the ...