Section 14A - Page 31

Section 14A of I.T.Act,: Certain critical issues

As per well settled law and also according to canons of taxation only that expenditure which is relatable to taxable income should be deducted in computing the total income. Expenditure which has a bearing on exempt income should not be considered in the computation of total income as otherwise this would result in double advantage to the...

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High court will hear Writ Petition challenging the constitutional validity of Rule 8D and matters related to interpretation of section 14A

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 submission accepted by AO can not be sent back to AO for reconsideration by tribunal

Topstar Mercantile Pvt. Ltd Vs. ACIT (Bombay High Court)

The Bombay High Court ruled that once the taxpayer’s submissions with respect to section 14A was accepted by a tax officer, the Tribunal cannot send back the same matter for the tax officer’s re¬consideration. Recently, the Bombay High Court in the case of Topstar Mercantile Pvt. Ltd v. ACIT (2009-TIOL-458-HC-MUM-IT) has held that t...

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Section 14A of and date of applicability of Rule 8D, allowability on interest on investment held as stock in trade

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 Investm...

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Expenditure related to exempt income to be disallowed even if assessee has not earned any tax-free income

Cheminvest Ltd. (ITAT Delhi)

Special Bench of the Income Tax Appellate Tribunal, New Delhi in the case of Cheminvest Ltd. (ITA Nos.87Del//2008, 4788/Del/2007 and 233/Ahd/ 2006) holds that expenditure relating to exempt income to be disallowed even if assessee has not earned any tax-free income....

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Disallowance u/s 14A is to be made even when exempt income is not earned or received during the year

Cheminvest Ltd. Vs ITO (ITAT Delhi)

Special Bench of the Income Tax Appellate Tribunal, New Delhi holds that expenditure relating to exempt income to be disallowed even if assessee has not earned any tax-free income....

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Cost accountants may not be treated at par with chartered Accountants

Officials at Icwai have been lobbying the government to include cost accountants under the definition accountant as defined in the subsection 2 of Section 288 of the Income-tax Act. The finance ministry has ignored calls by cost accountants that they be treated at par with chartered accountants and be allowed to sign off on the financial ...

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Section 14A of IT Act applicable in respect of share of profit from partnership firm

Mr Dharmasingh M Popat Vs ACIT 11(2) (ITAT Mumbai)

A partnership firm is a separate entity than that of its partners under the Income-tax Act and therefore, partners vis-à-vis partnership firm would stand on the same footing of shareholders vis-à-vis company; accordingly , income charged in the hands of partnership firm cannot be treated as being a non-exempt income in the hands of a pa...

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Section 14A disallowance cannot be made if no expenditure found to be incurred to earn exempt income

CIT Vs. Hero Cycles Ltd. (Punjab & Haryana High Court), ITA No.331 of 2009 (O&M), 04/11/2009

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. ...

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Satisfaction of the AO and determination of Expenditure in relation to income which is not includible in total income

PTC India Ltd. Vs. DCIT (ITAT Delhi)

A perusal of section 14A (2)(supra), evinces that the amount of expenditure incurred in relation to income not includible in the total income shall be determined by the AO if the AO is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income not includible in the total income. ...

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