INCOME TAX ACT, 1961

Section 14A read with Rule 8D

Disallowance under section 14A - Expenditure against exempt income - Assessee made suo-moto disallowance - AO worked out disallowance over and above exempt income earned by assessee during the year

Assessee-company received exempt income during the year and accordingly, it made a suo-moto disallowance under section 14A. AO did not accept the disallowance made by the assessee and proceeded to compute disallowance by applying provisions rule 8D and worked out disallowance over and above the exempt income earned by the assessee during the year. However, CIT (A) restricted the disallowance under section 14A to the extent of exempt income earned by the assessee during the year. Aggrieved, Revenue was in appeal. Held: It is settled principle that disallowance under section 14A cannot exceed the exempt income earned by assessee during the year. Therefore, in instant case, the CIT (A) was justified in restricting the disallowance under section 14A to the extent of exempt income earned by the assessee during the year.

REFERRED : Nirved Traders Pvt. Ltd. v. DCIT Income Tax Appeal No. 149 of 2017 dated, 23-4-2019 : 2020 TaxPub(DT) 1188 (Bom-HC), Pr. CIT v. HSBC Invest Direct (India) Ltd. Income Tax Appeal No. 1672 of 2016 dated 4-2-2019 : 2019 TaxPub(DT) 1070 (Bom-HC)

FAVOUR : In assessee's favour

A.Y. : 2013-14

INCOME TAX ACT, 1961

Section 115JB

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