rule 8D

Disallowance under section 14A: Another instance where section is not invoked

Income Tax - The ever debatable ‘Disallowance under section 14A’ (read with Rule 8D (2) now has again found a different horizon wherein the disallowance is not attracted (partially). The below mentioned case depicts a situation where interest free funds obtained by the assessee, a real estate developer, far exceeds the investments made by ...

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No applicability of section 14A on LTCG exemption of Rs.1 Lakh

Income Tax - No applicability of section 14A on exemption of Rs.1,00,000/- (One Lakh) Long Term Capital Gain (LTCG) under Section 112A of Income Tax Act, 1961. Section 14A shall not be applicable on LTCG income earned u/s 112A. The answer to the questions of applicability of section 14A for LTCG u/s 112A, as income covered under section […]...

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Analysis of Section 14A read with Rule 8D

Income Tax - Section 14A of the Income Tax Act, 1961 (‘the Act’) provides that no deduction shall be allowed of any expenditure incurred in relation to income not includible in total income i.e. expenditure related to exempt income is not tax deductible....

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Whether section 14A disallowance is related to Income Earning

Income Tax - Whether disallowance under section 14A of the income tax act, 1961 is related with earning of actual income or notional/anticipated income? Most of taxpayers under Income tax act, 1961 afraid to file appeal against additions made by assessing officers due to fear of departmental procedures/penalty/bar/attachment in  the thought process o...

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Section 14A of Income Tax r.w. Rule 8D – Supreme Court upheld no income tax in absence of exempt income

Income Tax - Section 14A of Income Tax Act, 1961 r.w. Rule 8D of Income Tax Rules: Supreme Court standpoint – No tax in the absence of any exempt income The much debated and extensively litigated issue has been resolved by the Supreme Court in 2018 & 2019. The article below summarises issues encountered by the assessee’s prior […]...

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Stop Mechanical disallowance of expenditure u/s 14A r.w. Rule 8D: ICAI

Income Tax - The mechanical disallowance u/s 14A r.w. Rule 8D is also being added to the book profit by the AO irrespective of the fact whether assessee has actually debited any such expenditure in its P&L Account which is against the pronouncements given by various Judicial authorities in the recent past....

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Bombay high court to hear petition challenging Constitutional validity of Rule 8D

Income Tax - 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. ...

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Disallowance under section 14A cannot exceed exempt income

DLF Universal Ltd Vs DCIT (ITAT Delhi) - DLF Universal Ltd Vs DCIT (ITAT Delhi) Ld AO has applied 0.5% of investment of Rs. 53.51 crores whereas the ld CIT(A) restricting 0.5% only Rs. 30.84 holding that balance investment of approximately Rs. 22 crores was made in the subsidiary companies and there was no intention of earning any dividend...

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Allowability of membership fee paid to MCX Exchange Ltd.

Unifi Capital Pvt. Ltd. Vs Income Tax Officer (ITAT Chennai) - Unifi Capital Pvt. Ltd. Vs Income Tax Officer (ITAT Chennai) Admittedly, membership fee paid to any stock exchange including MCX Exchange Ltd., is for acquiring a right in membership of exchanges for trading in shares and securities. Further membership rights in any stock exchange including MCX Exch...

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Rule 8D is not retrospective & applicable from AY 2008-09 onwards

Hero Motocorp Ltd. Vs ACIT (ITAT Delhi) - Hero Motocorp Ltd. Vs ACIT (ITAT Delhi) In the present year, the Assessing Officer has made disallowance under section 14A by invoking provisions of Rule 8D of the Income Tax Rules, 1962. Since Rule 8D is not retrospective, the same is not applicable in the present assessment year and accordingly, w...

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Suo-motto disallowance by Assessee cannot be disregarded by AO without recording his Satisfaction

Greatship (India) Ltd. Vs DCIT (ITAT Mumbai) - Greatship (India) Ltd. Vs DCIT (ITAT Mumbai) The assessee has further assailed the disallowance worked out by the A.O under Sec. 1 4A r.w Rule 8D, on the ground that there was no recording of an objective satisfaction by the A.O that the suo-motto disallowance offered by the assessee under Sec. 14A ...

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AO not recorded satisfaction- Section 14A disallowance invalid

Hindustan Aeronautics Limited Vs ACIT (Karnataka High Court) - Where AO did not record any satisfaction with regard to genuineness of the claim of the assessee before invoking the powers under section 14A read with rule 8D, disallowance was invalid because recording of satisfaction by AO is sine qua non for invocation of power under section 14A read with rule...

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CBDT Circular No. 5/2014 Dated: 11.02.2014

Circular No. 5/2014-Income Tax - (11/02/2014) - Circular No. 5/2014-Income Tax Central Board of Direct Taxes, in exercise of its powers under section 119 of the Act hereby clarifies that Rule 8D read with section 14A of the Act provides for disallowance of the expenditure even where taxpayer in a particular year has not earned any exempt income....

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Notification No. 45/2008-Income Tax Dated: March 24, 2008 on Section 14A

Notification No. 45/2008-Income Tax - (24/03/2008) - INCOME TAX NOTIFICATION NO-45/2008, DT: March 24, 2008 Method for determining amount of expenditure in relation to income not includible in total income. 8D(1) Where the Assessing Officer, having regard to the accounts of the assessee of a previous year, is not satisfied with-(a) the correctness of ...

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rule 8D’s Popular Posts

Recent Posts in "rule 8D"

Disallowance under section 14A cannot exceed exempt income

DLF Universal Ltd Vs DCIT (ITAT Delhi)

DLF Universal Ltd Vs DCIT (ITAT Delhi) Ld AO has applied 0.5% of investment of Rs. 53.51 crores whereas the ld CIT(A) restricting 0.5% only Rs. 30.84 holding that balance investment of approximately Rs. 22 crores was made in the subsidiary companies and there was no intention of earning any dividend income. The ld CIT(A) […]...

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Disallowance under section 14A: Another instance where section is not invoked

The ever debatable ‘Disallowance under section 14A’ (read with Rule 8D (2) now has again found a different horizon wherein the disallowance is not attracted (partially). The below mentioned case depicts a situation where interest free funds obtained by the assessee, a real estate developer, far exceeds the investments made by ...

Read More
Posted Under: Income Tax |

Allowability of membership fee paid to MCX Exchange Ltd.

Unifi Capital Pvt. Ltd. Vs Income Tax Officer (ITAT Chennai)

Unifi Capital Pvt. Ltd. Vs Income Tax Officer (ITAT Chennai) Admittedly, membership fee paid to any stock exchange including MCX Exchange Ltd., is for acquiring a right in membership of exchanges for trading in shares and securities. Further membership rights in any stock exchange including MCX Exchange Ltd., is a transferable right. Ther...

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Rule 8D is not retrospective & applicable from AY 2008-09 onwards

Hero Motocorp Ltd. Vs ACIT (ITAT Delhi)

Hero Motocorp Ltd. Vs ACIT (ITAT Delhi) In the present year, the Assessing Officer has made disallowance under section 14A by invoking provisions of Rule 8D of the Income Tax Rules, 1962. Since Rule 8D is not retrospective, the same is not applicable in the present assessment year and accordingly, we hold that the assessing […]...

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Suo-motto disallowance by Assessee cannot be disregarded by AO without recording his Satisfaction

Greatship (India) Ltd. Vs DCIT (ITAT Mumbai)

Greatship (India) Ltd. Vs DCIT (ITAT Mumbai) The assessee has further assailed the disallowance worked out by the A.O under Sec. 1 4A r.w Rule 8D, on the ground that there was no recording of an objective satisfaction by the A.O that the suo-motto disallowance offered by the assessee under Sec. 14A was not correct. […]...

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AO not recorded satisfaction- Section 14A disallowance invalid

Hindustan Aeronautics Limited Vs ACIT (Karnataka High Court)

Where AO did not record any satisfaction with regard to genuineness of the claim of the assessee before invoking the powers under section 14A read with rule 8D, disallowance was invalid because recording of satisfaction by AO is sine qua non for invocation of power under section 14A read with rule 8D...

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Section 14A provisions cannot be imported into MAT provisions

Sobha Developers Ltd. Vs DCIT (Karnataka High Court)

Sobha Developers Ltd. Vs DCIT (Karnataka High Court) From perusal of the relevant extract of Section 115JB, it is evident that Sub-Section (1) of Section 115JB provides the mode of computation of the total income of the assessee and tax payable on the assessee under Section 115JB of the Act. Sub-Section (5) of Section 115JB […]...

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ITAT deletes Section 14A disallowance as AO not recorded Satisfaction

Prism Cement Ltd. Vs DCIT (ITAT Mumbai)

Prism Cement Ltd. Vs DCIT (ITAT Mumbai) We observed that assessee has earned exempt income of Rs. 12,62,95,486/- and made a suo moto disallowance of Rs. 29,87,943/-. After careful consideration of the assessment order passed by the AO and the order passed by Ld. CIT(A), it is fact on record that AO has not recorded […]...

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ITAT deletes Section 14A disallowance made without recording Satisfaction

Asian Paints Ltd Vs Add. CIT (ITAT Mumbai)

Asian Paints Ltd Vs ACIT (ITAT Mumbai) We have considered rival submissions in the light of decisions relied upon and perused material on record. Undisputedly, the assessee in its computation of income has computed disallowance under section 14A of the Act at Rs.23,98,769 by applying certain principles of apportionment. Therefore, it is n...

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ITAT restricts Section 14A Disallowance to the extent of exempt income

DCIT Vs DLF Universal Ltd. (ITAT Delhi)

Disallowance u/s 14A got restricted to the extent of exempt income, even if the provisions of the section 14A were attracted....

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