Disallowance under Section 14A of Income TAx Act, 1961
Income Tax : Understanding the retrospective and prospective application of amendment in Section 14A of the Income-tax Act....
Income Tax : Section 14A, which pertaining to Expenditure incurred in relation to income not includible in total income, was introduced with ef...
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 : In the landmark judgement the Hon’ble Supreme Court of India allowed the appeal of the South Indian Bank by settling the long dr...
Income Tax : Bombay Chartered Accountants' Society has made a Representation on 'Suggestions for Amendments in the Income Tax Act', on 24th May...
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 : 1. IMPLEMENTATION OF IND-AS AND THEIR IMPACT ON TAXABLE INCOME IND-AS (Indian version of IFRS) accounting standards are being impl...
Income Tax : Amendments to Section 14A to provide that (i) dividend received after suffering dividend-distribution tax and share income from fi...
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 Pune held that the DTAA does not get triggered at all when a domestic company pays DDT u/s. 115O of the Income Tax Act. In nu...
Income Tax : The assessee had filed return of income of Rs.92,06,590 which was selected for complete scrutiny and during the course of assessme...
Income Tax : ITAT Ahmedabad held that disallowance of interest under section 14A unjustified as assessee’s own funds are far in excess of the...
Income Tax : ITAT Hyderabad held that as per the provisions of section 115VG of the Income Tax Act, once the assessee opts for the Tonnage Tax ...
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 : 2) The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts,...
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...
Income Tax : The provisions of Sections 144-A and 144-B of the Income-tax Act have come into force with effect from 1st January 1976. Instructi...
In this case, assessee has earned by way of dividends a sum of Rs.5,45,58,685/-, which is exempt u/s 10(38) of the Act and thus the same does not form part of the total income under the Act. In the computation of income, assessee having regard to section 14A of the Act
Recently, the Punjab and Haryana High Court has rendered a very significant judgement, regarding disallowance under section 14A of the Income-Tax Act, 1961 (the Act), r.w.r.8D of the Income-Tax Rules 1962 (the Rules), in the case of CIT Vs Deepak Mittal [2014] 361 ITR 131 (P&H) : [2013] 219 Taxman 314 (P&H). This judgement is really a landmark judgement, in regard to the disallowance under section 14A of the Act,
It was held had held that Disallowance u/s 14A for the period before AY 2008-09 i.e pre-Rule 8D period, should be restricted to 2% of the dividend income. Shakuntaladevi Trade & Investments Pvt. Ltd. Vs. ITO (ITAT Mumbai)
In this case only interest of Rs 2,96,731/- was paid on funds utilized for making investments on which exempted income was receivable. Further it was observed that in respect of investment of Rs. 6,07,775,000/- made in subsidiary companies , they are attributable to commercial expediency, because as per submission made by the assessee,
That mere incorporation and receipt of share application money cannot be said to be commencement of the business. Neither any interest income has been earned from against advances nor any goods or services been obtained.
From the above discussion, it transpires that the objective satisfaction of the AO as to the correctness of the assessee’s claim was not recorded in the instant case. However, even if Rule 8D cannot be applied, the AO is obliged to ascertain the expenditure which had been incurred to earn the tax-free income.
During the year only an amount of 4 lakh was invested out of the total investment of 3.39 crores. In the earlier years the assessment of the assessee were completed u/s 143(3) and the AO did not make any disallowance u/s 14A. The term loan taken by the assessee was for specific purposes and it cannot be alleged without proof that the term loan granted by the bank for specific purposes,
Assessee-company is a dealer and trader in shares and securities. Its various business segments are: Futures & Options (F&O) in shares and securities, shares transactions in the cash and derivative markets, speculation business therein (the above classifications may bear some overlapping).
During the course of assessment proceedings, Assessing Officer noticed that Assessee has made investment in shares amounting to Rs. 95,45,400/-. Assessing Officer was of the view that the investment would generate exempt income and therefore provisions of section 14A becomes applicable.
Here in the present case, there is no linkage or nexus between the funds borrowed by assessee and the impugned investments, hence, no interest expenditure can be disallowed by mechanically applying the Provisions of Rule 8D of the Rules.
