INCOME TAX ACT, 1961

Section 14A Rule 8D(2)(iii)

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

Assessee earned exempt income aggregating to Rs. 112.72 lakhs during impugned assessment year, which called for disallowance under section 14A. AO applying rule 8D, computed aggregate disallowance of Rs. 5.42 lakhs on account of indirect expenditure under rule 8D(2)(iii), being 0.5% of average investments.Held: Only exempt income yielding investments had to be considered to arrive at disallowance under rule 8D(2)(iii).

Relied: