Income Tax : Clarification in respect of disallowance under section 14A in absence of any exempt income during an assessment year Section 14A o...
Income Tax : The issue before the Hon’ble Supreme Court (SC) was whether section 14A of the Income-tax Act, 1961 (the Act) enables the Depart...
Income Tax : The ever debatable ‘Disallowance under section 14A’ (read with Rule 8D (2) now has again found a different horizon whe...
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 Incom...
Income Tax : Section 14A of the Income Tax Act, 1961 (‘the Act’) provides that no deduction shall be allowed of any expenditure incurred in...
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 whethe...
Income Tax : As earlier intimated to you, Writ Petition bearing No. 50 of 2010 (Indian Exporters Grievances Forum & Other vs. CIT) challenging ...
Income Tax : ITAT Delhi held that disallowance u/s. 14A of the Income Tax Act unjustified as sufficient interest free funds were available for ...
Income Tax : Read the detailed judgment of Bombay High Court in ACIT Vs Sociedade de Fomento Industrial Pvt Ltd regarding TDS deduction on retr...
Income Tax : Gujarat High Court grants Alembic Ltd Rs. 4 crore income tax deduction under Section 80IA for their captive power plant. Read the ...
Income Tax : ITAT Cuttack rules replacement of gear boxes in Surface Furnace Kiln as current repairs under Section 31(1) for Sponge Tata Iron L...
Income Tax : Read the detailed analysis of Zodiac Ventures Ltd. vs. ITO case by Mumbai ITAT regarding income tax disallowance based on presumpt...
Income Tax : Circular No. 5/2014-Income Tax Central Board of Direct Taxes, in exercise of its powers under section 119 of the Act hereby clari...
Income Tax : INCOME TAX NOTIFICATION NO-45/2008, DT: March 24, 2008 Method for determining amount of expenditure in relation to income not incl...
Mitsutor Shipping Agency Pvt Ltd Vs DCIT (ITAT Mumbai)- The assessee was owner of the premises in which it was carrying on business. The assessee paid maintenance charges to the society of Apartment Owners. According to the AO the assessee ought to have deducted tax at source on the payment of maintenance charges to the society as the payment by the assessee to the society was in the nature of contract and, therefore, the provisions of section 194C was applicable.
Mid-Day Multimedia Ltd Vs Dy. CIT (ITAT Mumbai)- The provisions of rule 8D of the Rules which have been notified with effect from March 24, 2008, would apply with effect from assessment year 2008-09. Even prior to assessment year 2008-09, when rule 8D was not applicable, the AO had to enforce the provisions of sub-section (1) of section 14A. For that purpose, the AO is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The AO must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record.
The AO can not apply Rule 8D without pointing out any inaccuracy in the method of apportionment or allocation of expenses as adopted by the assessee. Rule 8D r.w.s. 14A(2) can be invoked only if the AO “having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of expenditure incurred” in relation to tax-free income.
This Article summarizes recent decisions Bombay and Kerala High Courts on the issue of disallowance of expenditure incurred in relation to exempt income by way of dividend on shares.
Godrej & Boyce Mfg. Co. Ltd. Vs DCIT,, ITA 626/2010 and W.P. 758/2010 dated 12 August 2010, – Bombay High Court rules on prospective operation of Rule 8D and upholds the constitutional validity of sub-sections (2) and (3) of section 14A and Rule 8D.
CIT vs. Leena Ramachandran (Kerala High Court):-I-T- Sec 14A – assessee can claim deduction of interest paid on borrowed funds utilised for acquisition of shares only if shares are held as stock-in-trade and not investment: HC
Wallfort Shares & Stock Brokers, a Five Member Special Bench of the Tribunal (96 ITD 1 (Mum) (SB)) and the Bombay High Court (310 ITR 421 (Bom)) held that the ‘loss’ incurred by an assessee in ‘dividend-stripping’ transactions cannot be disallowed on the ground that it was ‘tax-planning‘. The department’s SLP against the said judgement has been dismissed by the Supreme Court today, 6th July 2010.
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.
Whether for the purpose of disallowance under Section 14A of the Act:-(a) Rule 8D is to be considered as retrospective; Whether before application of Rule 8D the Assessing Officer should give a holding that he is not satisfied for the basis or quantum of expenses disallowed by the Assessee; b) Whether disallowance is to be made if Investment is held as stock-in-trade?
CIT Vs. Hero Cycles Ltd. (Punjab & Haryana High Court) Disallowance under Section 14A requires finding of incurring of expenditure where it is found that for earning exempted income no expenditure has been incurred, disallowance under Section 14A cannot stand.
