Case Law Details
Standard Chartered Grindlays Bank-Tax Department Vs DCIT (ITAT Delhi)
The issue under consideration is whether CIT(A) is correct in disallowing managerial and administrative expenses for earning dividend income by treating this as tax free income?
ITAT states that, the basic principle of taxation is to tax the net income, i.e., gross Income minus expenditure. On the same analogy, exemption is also in respect of net income. The theory of apportionment of expenditure between taxable and non-taxable has, in principle, been now widened under section 14A. ITAT find that the AO has disallowed the amount invoking the provisions of Section 14A. While there is no dispute regarding the disallowance of expenditure incurred in relation to exempt income under both the heads, the Act prescribes proper procedure of computing such disallowance u/s 14A(2). ITAT find that the revenue has not invoked the procedure as specified under the said section wherein the AO has to record his dissatisfaction as to the correctness of the claim with regard to the accounts of the assessee. Owing to the procedural tumble, ITAT hereby delete the disallowance made by the Assessing Officer.
FULL TEXT OF THE ITAT JUDGEMENT
The present appeals have been filed by assessee the and the revenue against the orders of the ld. CIT(A)-XXIX, New Delhi dated 11.07.2008.
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