Section 14A

Amendment in Section 14A ‘Retrospective or Prospective’

Income Tax - Recently, ITAT Gauhati in ‘ACIT vs. William Financial Services Ltd‘ held amendment in Section 14A was applicable Retrospectively, while ITAT Mumbai in ‘ACIT vs. Bajaj Capital Ventures Pvt. Ltd’ held it was applicable Prospectively i.e. from AY 2022-23 onwards. Amendment in Sec. 14A In section 14A of the Income-tax ...

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Disallowance of Expenditure incurred in relation to income exempt from tax

Income Tax - Section 14A, which pertaining to Expenditure incurred in relation to income not includible in total income, was introduced with effect from 1st April, 2062 by the Finance Act 2001, with retrospective effect. There after circular No 11/2001 dated 23/07/2001 (past assessments not to be reopened) and circular no 5/2014 dated 11/02/2014 (Disa...

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Section 14A disallowance even in absence of any exempt income

Income Tax - Clarification in respect of disallowance under section 14A in absence of any exempt income during an assessment year Section 14A of the Act provides that no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income that does not form part of the total income as per the provisions […]...

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Section 14A disallowance- South Indian Bank Ltd Vs. CIT (Supreme Court)

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 Department to make disallowance on expenditure incurred for earning tax-free income, where the assessee does not maintain separate accounts for the investments and other expenditure incurred for earning the tax-free ...

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Land Mark Judgement: No section 14A disallowance if assessee had sufficient interest free own fund

Income Tax - In the landmark judgement the Hon’ble Supreme Court of India allowed the appeal of the South Indian Bank by settling the long drawn battle between the assessee and the department on whether proportionate disallowance of interest paid by the banks is called for under section 14A of the Income Tax Act for investments made in tax free bond...

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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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AO cannot invoke rule 8D(2)(ii) of Income Tax Rules without examining claim made by assessee

Principal Commissioner of Income Tax Vs Century Enka Limited (Calcutta High Court) - Calcutta High Court held that invocation of provisions of rule 8D(2)(ii) of the Income Tax Rules by AO without examining the accounts of the assessee and without examining the claim made by the assessee is unjustified....

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Amendment to section 14A by Finance Act, 2022 applies Prospectively w.e.f AY 2022-23

AVH Resources India Pvt. Ltd. Vs ACIT (ITAT Delhi) - n this case addition was made u/s.14A r.w. Rule 8D by AO and confirmed by CIT (A) holding that Amendment  in Finance Act, 2022 in relation to disallowance u/s.14A r.w. Rule 8D is applicable retrospectively even if no exempted income was earned by assessee....

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Disallowance of interest u/s 14A r.w rule 8D unsustainable as borrowed funds not utilized for making investment

DCIT Vs Indian Farmers Fertiliser Cooperative Limited (ITAT Delhi) - ITAT Delhi held that disallow of any interest expenditure u/s 14A r.w. Rule 8D of the Act unsustainable as the interest bearing funds borrowed by the assessee have not been utilized for making the investments....

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Disallowance u/s 14A cannot be subject matter of disallowance under 115JB

Adani Properties Pvt. Ltd Vs DCIT (ITAT Ahmedabad) - ITAT Ahmedabad held that the disallowances made under section 14A read with rule 8D cannot be the subject matter of disallowances while determining the net profit u/s 115JB of the Income Tax Act....

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Reopening of assessment for mere change of opinion untenable in law

Shahlon Silk Industries Pvt Ltd Vs ACIT (Gujarat High Court) - Gujarat High Court held that issued raised in reopening assessment was already considered during assessment proceedings u/s 143(3) of the Income Tax Act. Accordingly, mere change of opinion by the Assessing Officer cannot be ground for reopening of assessment....

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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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Section 14A’s Popular Posts

Recent Posts in "Section 14A"

AO cannot invoke rule 8D(2)(ii) of Income Tax Rules without examining claim made by assessee

Principal Commissioner of Income Tax Vs Century Enka Limited (Calcutta High Court)

Calcutta High Court held that invocation of provisions of rule 8D(2)(ii) of the Income Tax Rules by AO without examining the accounts of the assessee and without examining the claim made by the assessee is unjustified....

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Amendment to section 14A by Finance Act, 2022 applies Prospectively w.e.f AY 2022-23

AVH Resources India Pvt. Ltd. Vs ACIT (ITAT Delhi)

n this case addition was made u/s.14A r.w. Rule 8D by AO and confirmed by CIT (A) holding that Amendment  in Finance Act, 2022 in relation to disallowance u/s.14A r.w. Rule 8D is applicable retrospectively even if no exempted income was earned by assessee....

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Disallowance of interest u/s 14A r.w rule 8D unsustainable as borrowed funds not utilized for making investment

DCIT Vs Indian Farmers Fertiliser Cooperative Limited (ITAT Delhi)

ITAT Delhi held that disallow of any interest expenditure u/s 14A r.w. Rule 8D of the Act unsustainable as the interest bearing funds borrowed by the assessee have not been utilized for making the investments....

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Disallowance u/s 14A cannot be subject matter of disallowance under 115JB

Adani Properties Pvt. Ltd Vs DCIT (ITAT Ahmedabad)

ITAT Ahmedabad held that the disallowances made under section 14A read with rule 8D cannot be the subject matter of disallowances while determining the net profit u/s 115JB of the Income Tax Act....

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Reopening of assessment for mere change of opinion untenable in law

Shahlon Silk Industries Pvt Ltd Vs ACIT (Gujarat High Court)

Gujarat High Court held that issued raised in reopening assessment was already considered during assessment proceedings u/s 143(3) of the Income Tax Act. Accordingly, mere change of opinion by the Assessing Officer cannot be ground for reopening of assessment....

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Disallowance u/s 14A restricted to amount of exempt income

United Breweries Limited Vs DCIT (ITAT Bangalore)

ITAT Bangalore held that disallowance under section 14A of the Income Tax Act is restricted to the amount of exempt income earned by the assessee....

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Expense reduced from export turnover should also be reduced from total turnover for calculating deduction u/s 10AA

Infosys Ltd Vs ACIT (ITAT Bangalore)

Infosys Ltd Vs ACIT (ITAT Bangalore) ITAT Bangalore held that expenditure reduced from export turnover should also be reduced from total turnover while computing deduction under section 10AA of the Income Tax Act. Facts- During the relevant previous year, the assessee had incurred brand building expenses of Rs.81,79,53,112/-. The brand bu...

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Shares can be hold as both investment and stock-in-trade

Dipakbhai Harishchandra Shah Vs ITO (ITAT Ahmedabad)

ITAT Ahmedabad held that as per CBDT circular no. 4/2007 dated 15.6.2007 and 6/2016 dated 29-2-2016, person can hold shares as both investment and stock-in-trade Accordingly income will be taxable based on the type in which share is hold....

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Interest on funds borrowed for business project is allowable u/s 36(1)(iii)

Keystone Realtors Pvt. Ltd. Vs DCIT (ITAT Mumbai)

ITAT Mumbai held that the interest paid on such borrowing is allowable under section 36(1)(iii) of the Income Tax Act as the funds were borrowed for the purpose of construction project....

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Proportionate disallowance u/s. 14A unwarranted for investments made in tax free bonds

Sarva Haryana Gramin Bank Vs ACIT (ITAT Delhi)

ITAT Delhi held that proportionate disallowance of interest is not warranted, under Section 14A of Income Tax Act for investments made in tax free bonds or securities which yield tax free dividend and interest....

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