Section 14A

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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No disallowance u/s 14A if assessee does not have tax-free income

Income Tax - Section 14A has been inserted in Chapter IV of the Income tax Act by the Finance Act, 2001, with retrospective effect from 1-4-1962. This Section provides for disallowance of expenditure incurred in relation to income which is not included in the total income of the assessee (i.e. exempt income). The operative part of this Section reads a...

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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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Section 14A disallowance 14A & Reporting in Tax Audit Report

Income Tax - Clause 17(l) - Amount of deduction inadmissible in terms of section 14A in respect of the expenditure incurred in relation to income which does not form part of the total income; This clause was inserted by the notification number 208/2006 dated 10th August 2006. Section 14A was inserted in Chapter IV – Computation of total income by t...

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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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6 Suggestions for Amendments in Income Tax Act by BCAS

Income Tax - Bombay Chartered Accountants' Society has made a Representation on 'Suggestions for Amendments in the Income Tax Act', on 24th May, 2019, to the Joint Secretary TPL, Central Board of Direct Taxes, Ministry of Finance, Government of India....

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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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Easwar Committee Recommendations For Income Tax Reforms Through Administrative Instructions

Income Tax - 1. IMPLEMENTATION OF IND-AS AND THEIR IMPACT ON TAXABLE INCOME IND-AS (Indian version of IFRS) accounting standards are being implemented with effect from previous year commencing on 1st April, 2015 based on fair value, permitting recognition of unrealised income and anticipated unrealised losses and various other implications on book pro...

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Simplify Section 14A to remove ambiguity

Income Tax - Amendments to Section 14A to provide that (i) dividend received after suffering dividend-distribution tax and share income from firm suffering tax in the firm’s hands will not be treated as exempt income and no expenditure will be disallowed as relatable to them; (ii) expenditure disallowed shall not exceed the amount claimed. Recom...

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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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Expenditure on R&D for manufacture of aircrafts to be sold allowable U/s. 37

Hindustan Aeronautics Limited Vs ACIT (Karnataka High Court) - Hindustan Aeronautics Limited Vs ACIT (Karnataka High Court) The fact that a certain payment constitutes income or capital receipt in the hands of the recipient is not material in determining whether the payment is revenue or capital disbursement qua the payer. It has further been held that whether ...

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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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Section 14A disallowance not sustainable if AO fails to records satisfaction about correctness of claim of assessee

Ambuja Housing & Urban Infrastructure Co. Ltd Vs DCIT (ITAT Kolkata) - Ambuja Housing & Urban Infrastructure Co. Ltd Vs DCIT (ITAT Kolkata) It appears that while invoking Rule 8D of the I.T Rules, 1962 the AO has not pointed out/identified any specific infirmity in the disallowance so offered by the appellant/ assessee. A single sentence ‘explanation of the a...

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Section 14A Disallowance cannot exceed exempt income: ITAT Pune

Santosh Mohanlal Rathi Vs DCIT (ITAT Pune) - Santosh Mohanlal Rathi Vs DCIT (ITAT Pune) ITAT followed Hon’ble Bombay High Court decision in the case of M/s. Nirved Traders Pvt. Ltd., Vs. DCIT (ITA No.149/2017 dated 23.04.2019) wherein the Jurisdictional High Court held that the disallowance under Section 14A of the Act read with Rule 8D(2) o...

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Deduction u/s 36(1)(ii) Allowed for Bonus Paid to Directors who are Shareholder of Company 

Mehta Equities Ltd. Vs DCIT (ITAT Mumbai) - The issue under consideration is whether the CIT(A) is correct in upholding the action of the Assessing Officer in making a disallowance under section 36(l)(ii) of the Act; being bonus paid to the Directors of the Company by holding that such payments are in lieu of dividend or profits?...

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Section 14A disallowance cannot exceed total expense: CBDT

Notification No. 43/2016-Income Tax - (02/06/2016) - 2) The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts, namely:- (i) the amount of expenditure directly relating to income which does not form part of total income; and (ii) an amount equal to one per cent of the annual aver...

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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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Proceedings U/s. 144A & 144B of Income Tax Act, 1961- Procedural Instructions

DOMS-CIRCULAR NO. 11 - (31/12/1977) - The provisions of Sections 144-A and 144-B of the Income-tax Act have come into force with effect from 1st January 1976. Instructions explaining the legal provisions contained in these sections have been issued already in Board’s Instruction No.907, dated the 24th December 1975. The following furt...

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Recent Posts in "Section 14A"

Expenditure on R&D for manufacture of aircrafts to be sold allowable U/s. 37

Hindustan Aeronautics Limited Vs ACIT (Karnataka High Court)

Hindustan Aeronautics Limited Vs ACIT (Karnataka High Court) The fact that a certain payment constitutes income or capital receipt in the hands of the recipient is not material in determining whether the payment is revenue or capital disbursement qua the payer. It has further been held that whether a transaction is capital expenditure wou...

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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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Section 14A disallowance not sustainable if AO fails to records satisfaction about correctness of claim of assessee

Ambuja Housing & Urban Infrastructure Co. Ltd Vs DCIT (ITAT Kolkata)

Ambuja Housing & Urban Infrastructure Co. Ltd Vs DCIT (ITAT Kolkata) It appears that while invoking Rule 8D of the I.T Rules, 1962 the AO has not pointed out/identified any specific infirmity in the disallowance so offered by the appellant/ assessee. A single sentence ‘explanation of the assessee was considered, but not acceptab...

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

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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Section 14A Disallowance cannot exceed exempt income: ITAT Pune

Santosh Mohanlal Rathi Vs DCIT (ITAT Pune)

Santosh Mohanlal Rathi Vs DCIT (ITAT Pune) ITAT followed Hon’ble Bombay High Court decision in the case of M/s. Nirved Traders Pvt. Ltd., Vs. DCIT (ITA No.149/2017 dated 23.04.2019) wherein the Jurisdictional High Court held that the disallowance under Section 14A of the Act read with Rule 8D(2) of the Rules cannot exceed the Assessee&#...

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Deduction u/s 36(1)(ii) Allowed for Bonus Paid to Directors who are Shareholder of Company 

Mehta Equities Ltd. Vs DCIT (ITAT Mumbai)

The issue under consideration is whether the CIT(A) is correct in upholding the action of the Assessing Officer in making a disallowance under section 36(l)(ii) of the Act; being bonus paid to the Directors of the Company by holding that such payments are in lieu of dividend or profits?...

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Section 14A Disallowance r.w. Rule 8D cannot exceed Exempt Income

Ramalinga Mills Ltd. Vs ACIT (ITAT Chennai)

Ramalinga Mills Ltd. Vs ACIT (ITAT Chennai) The issue under consideration is whether disallowance of expenditure in relation to exempt income u/s.14A read with Rule 8D of I.T. Rules, 1962 is justified in law? ITAT states that, the facts borne out from records clearly indicate that the assessee has earned dividend for the impugned assessme...

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ITAT deletes Addition of sales tax incentive receipt in case of RIL

Reliance Industries Ltd. Vs ACIT (ITAT Mumbai)

Reliance Industries Ltd. Vs ACIT (ITAT Mumbai) The issue under consideration is whether deletion of addition of sales tax incentive/ subsidy as capital in nature is justified in law? In the present case, the assessee in this case is engaged in the business of oil and gas exploration, refining of crude oil, manufacturing of and […]...

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Interest disallowance Justified if Commercial Expediency not established

DCIT Vs Alok Industries Limited (ITAT Mumbai)

DCIT Vs Alok Industries Limited (ITAT Mumbai) Issue raised is with respect to disallowance under Section 36(1)(iii) of the Act. The Revenue contends that assessee did not have adequate interest free funds, and that assessee could not establish commercial expediency. The disallowance in this regard has been done on the same reasoning as in...

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Revenue to establish proximate relationship between expenditure & exempt income for section 14A disallowance

CIT Vs Sociedade De Fomento Industrial Pvt. Ltd (Bombay High Court at Goa)

CIT Vs Sociedade De Fomento Industrial Pvt. Ltd (Bombay High Court) Here, on facts, the Tribunal noted that the AO only discussed the provisions of section 14A(l) but has not justified how the expenditure the Assessee incurred during the relevant year related to the income not forming part of its total income. The AO, according […]...

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