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| The Tax Publishers2020 TaxPub(DT) 3827 (Mum-Trib) INCOME TAX ACT, 1961
Section 14A
Since no fresh investments were made by assessee during concerned years and all investments outstanding in the relevant year were investments made in earlier years, therefore, no disallowance under rule 8D(2)(ii) was called for. Also, disallowance under rule 8D(2)(ii) was restricted @ 5% of the dividend income earned by assessee as against 0.5% of average investments disallowed by AO.
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Disallowance under section 14A - Expenditure against exempt income - Invocation of rules 8D(2)(ii) and 8D(2)(iii) - No fresh investments made by assessee during concerned year
Assessee earned tax free dividend income but claimed no disallowance of interest expenses under section 14A. AO invoked rule 8D(2)(ii) and disallowed interest expenses. Also, AO disallowed 0.5% of average investments under rule 8D(2)(iii). Held: There was no change in investments in the year under consideration vis-a-vis investments in the assessment year 2011-12 and it stood at Rs. 1.51 crores since 31-3-2010. No fresh investments were made by assessee during concerned years and all investments outstanding in the relevant year were investments made in earlier years. Accordingly, no disallowance under rule 8D(2)(ii) was called for. Also, disallowance under rule 8D(2)(iii) was restricted @ 5% of the dividend income earned by assessee.
REFERRED :
FAVOUR : Partly in assessee's favour.
A.Y. : 2013-14
INCOME TAX ACT, 1961
Section 14A , 115JB
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