INCOME TAX ACT, 1961

Section 14A Rule 8D

Disallowance under section 14A - Expenditure against exempt income - Invocation of provisions of rule 8D(2)(iii) -

AO made disallowance under section 14A by invoking provisions of rule 8D(2)(iii). However, CIT (A) restricted the disallowance under section 14A to the exempt income earned during the year by assessee. Aggrieved, Revenue was in appeal. Held: It is well settled that disallowance under section 14A read with rule 8D cannot exceed the quantum of exempt income earned during the year. Therefore, the CIT(A) was justified in directing the AO to restrict the disallowance under section 14A to the exempt income earned by the assessee.

REFERRED : Cheminvest v. CIT, (2015) 378 ITR 33 (Del): 2015 TaxPub(DT) 3520 (Del-HC); Joint Investments (P) Ltd. v. CIT, (2015) 372 ITR 694 (Del): 2015 TaxPub(DT) 1375 (Del-HC) PCIT v. Caraf Builders and Constructions (P) Ltd., 101 taxmann.com 167 (Del): 2018 TaxPub(DT) 7786 (Del-HC) DCIT v. Mahindra CIE Automotive Ltd., ITA No. 6659/Mum. /2014, dated 11-4-2018

FAVOUR : In assessee's favour

A.Y. : 2013-14 & 2014-15

INCOME TAX ACT, 1961

Section 115JB

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