Section 14A

Section 14A, 36(1)(iii) and 36(1)(va) of Income Tax Act,1961

Income Tax - Section 14A of Income Tax Act,1961 Legislative History Section 14A was inserted by Finance Act ,2001 with retrospective effect from April 1,1962. The object was to disallow expenditure that had been incurred in relation to income which did not form part of the total income under the Act (Sec 10 ) and to overcome certain […]...

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Section 14A (Read with Rule 8D) – Conundrum for Assessee’s

Income Tax - The time for completion of Income Tax assessments for A.Y 2016-17 is coming and Sec- 14A is one of the reason of scrutiny assessment of assesse, therefore here I am discussing some topics relating to sec – 14A read with rule 8D to resolve issues....

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All about Disallowance under Section 14A with Judicial Pronouncements

Income Tax - 1 Legislative History 1.1 Section 14A was first inserted by the Finance Act, 2001. However, same was inserted with retrospective effect from 1-4-1962. The inserted section reads as under:- ‘14A. Expenditure incurred in relation to income not includible in total income. – For the purposes of computing the total income under this Chapte...

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Dividend Stripping Transactions – Income tax provisions

Income Tax - Dividend stripping refers to transacting in shares or securities linked to shares of a company on which dividend is payable. Typically, a dividend stripping transaction can be explained with an illustration....

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Section 14A – Surplus own funds, no disallowance U/s. 14A? Borrowed Money Vs. Own Money

Income Tax - The people of the largest democracy in India, expected in the Union Budget 2018 to introduce some amendments to section 14A of the Income Tax Act, 1961 (Act), to reduce tax litigations on account of section 14A and to bring in certainty and clarity in the disallowance under Section 14A....

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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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Section 14A Disallowance cannot surpass quantum of exempt income

Shri Harish M. Kukreja Vs ITO (ITAT Ahmedabad) - Shri Harish M. Kukreja Vs ITO (ITAT Ahmedabad) The solitary issue involved in the present appeal is towards extent of disallowance permissible under s.14A of the Act. We find merit in the plea raised on behalf of the assessee that the disallowance under s.14A of the Act cannot surpass the quantum of...

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In absence of claim of exempt Income disallowance U/s 14A not warranted

Pr. CIT Vs Harsha Engineerings Ltd. (Gujarat High Court) - Pr. CIT Vs Harsha Engineerings Ltd. (Gujarat High Court) Section 14A of the Act can be invoked only if the assessee seeks to square off the expenditure against the income which does not form the part of the total income under the Act and in such circumstances, section 14A of the Act could not have [...

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Consider Net Interest expenses for section 14A disallowance: ITAT Delhi

DCIT Vs M/s. DLF Assets Pvt. Ltd. (ITAT Delhi) - DCIT Vs M/s. DLF Assets Pvt. Ltd. (ITAT Delhi) On the aspect of disallowance made by the Ld. AO by invoking the provisions u/s 14A of the Act r/w Rule 8D (2) (ii) of the Rules, it is the submission of the Ld. AR that the interest expenses net of interest income may be considered […]...

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Rule 8D not applicable if AO not recorded satisfaction

Pr. CIT Vs Vedanta Limited (Delhi High Court) - Pr. CIT Vs Vedanta Limited (Delhi High Court) It is apparent that the Assessing Officer without examining, commenting and rejecting the disallowance made by the respondent-assessee had applied Rule 8D as compulsory and universally applicable rule where the assessee has earned exempt income. However,...

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Section 14A disallowance when Expenditure incurred against earning of exempted income disallowed voluntarily by Assessee

Pr. CIT Vs M/s. Lee & Murihead Pvt Ltd (Bombay High Court) - Pr. CIT Vs M/s. Lee & Murihead Pvt Ltd (Bombay High Court) Sub-section (2) of section 14A of Income Tax Act, 1961  provides that Assessing Officer would determine the amount of expenditure incurred in relation to income which not forms part of total income if he is not satisfied with the correc...

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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"

Section 14A Disallowance cannot surpass quantum of exempt income

Shri Harish M. Kukreja Vs ITO (ITAT Ahmedabad)

Shri Harish M. Kukreja Vs ITO (ITAT Ahmedabad) The solitary issue involved in the present appeal is towards extent of disallowance permissible under s.14A of the Act. We find merit in the plea raised on behalf of the assessee that the disallowance under s.14A of the Act cannot surpass the quantum of exempt income in […]...

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In absence of claim of exempt Income disallowance U/s 14A not warranted

Pr. CIT Vs Harsha Engineerings Ltd. (Gujarat High Court)

Pr. CIT Vs Harsha Engineerings Ltd. (Gujarat High Court) Section 14A of the Act can be invoked only if the assessee seeks to square off the expenditure against the income which does not form the part of the total income under the Act and in such circumstances, section 14A of the Act could not have […]...

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Consider Net Interest expenses for section 14A disallowance: ITAT Delhi

DCIT Vs M/s. DLF Assets Pvt. Ltd. (ITAT Delhi)

DCIT Vs M/s. DLF Assets Pvt. Ltd. (ITAT Delhi) On the aspect of disallowance made by the Ld. AO by invoking the provisions u/s 14A of the Act r/w Rule 8D (2) (ii) of the Rules, it is the submission of the Ld. AR that the interest expenses net of interest income may be considered […]...

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Rule 8D not applicable if AO not recorded satisfaction

Pr. CIT Vs Vedanta Limited (Delhi High Court)

Pr. CIT Vs Vedanta Limited (Delhi High Court) It is apparent that the Assessing Officer without examining, commenting and rejecting the disallowance made by the respondent-assessee had applied Rule 8D as compulsory and universally applicable rule where the assessee has earned exempt income. However, Rule 8D cannot be invoked and applied u...

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Section 14A disallowance when Expenditure incurred against earning of exempted income disallowed voluntarily by Assessee

Pr. CIT Vs M/s. Lee & Murihead Pvt Ltd (Bombay High Court)

Pr. CIT Vs M/s. Lee & Murihead Pvt Ltd (Bombay High Court) Sub-section (2) of section 14A of Income Tax Act, 1961  provides that Assessing Officer would determine the amount of expenditure incurred in relation to income which not forms part of total income if he is not satisfied with the correctness of claim of […]...

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Rule 8D not applies automatically on mere existence of mixed fund to disallowance u/s 14A

Pr. CIT Vs. Gujarat State Petronet Limited (Gujarat High Court)

Pr. CIT Vs Gujarat State Petronet Limited (Gujarat High Court) The language of Section 14A of the Act is plain and clear. Before invoking Rule 8D, the Assessing Officer is obliged to indicate that having regard to the accounts of the assessee, he is not satisfied with the correctness of the claim of the assessee […]...

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Section 14A- Invocation of rule 8D without recording satisfaction

Pr. CIT Vs DLF Home Developers Ltd (Delhi High Court)

Invocation of rule  8D of Income Tax Rules without recording satisfaction as to non-correctness of assessee’s claim of suo motu disallowance under section 14A of Income Tax Act, 1961, was in contravention of provisions of section 14A(2), therefore, additional disallowance was deleted....

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Disallowance u/s 14A cannot be made in absence of exempt income

DCIT  Vs Sarita Synthetics & Industries Ltd. (ITAT Visakhapatnam)

No disallowance u/s 14A was called for in case of no exempt income earned by assessee in the relevant assessment years...

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Section 14A, 36(1)(iii) and 36(1)(va) of Income Tax Act,1961

Section 14A of Income Tax Act,1961 Legislative History Section 14A was inserted by Finance Act ,2001 with retrospective effect from April 1,1962. The object was to disallow expenditure that had been incurred in relation to income which did not form part of the total income under the Act (Sec 10 ) and to overcome certain […]...

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Posted Under: Income Tax |

No expenditure against exempt income to be disallowed in absence of exempt income

GVK Power & Infrastructure Ltd. Vs  ACIT (ITAT Visakhapatnam)

Where there was no dividend income earned during the relevant assessment year, there was no case for disallowing the expenditure relatable to dividend income....

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