INCOME TAX ACT, 1961

Section 14A Rule 8D

Disallowance under section 14A - Expenditure against exempt income - Assessee claimed to have sufficient own interest free funds for making investments -

Assessee-company suo motu made disallowance under section 14A read with rule 8D in respect of exempt income earned by it. However, AO recomputed such disallowance, which was over and above the suo moto disallowance made by the assessee. Before Tribunal, the assessee submitted that it had sufficient own interest free funds for making the investments and accordingly, prayed for deleting the disallowance under section 14A read with rule 8D, including the suo moto disallowance made by it. Held: Assessee contended before Tribunal that no disallowance in respect of interest expenditure should be made as it had sufficient own interest free funds for making investments, and thus, interest bearing funds were not utilized for the purpose of investments. Further, the assessee referred to its Balance Sheet to show that its own funds were much more than the investments made. However, since the said contention was made for the first time before the Tribunal; the matter was remanded to AO to examine the availability of own funds of the assessee for investments.

REFERRED :

FAVOUR : Matter remanded

A.Y. : 2013-14

INCOME TAX ACT, 1961

Section 37(1)

SUBSCRIBE FOR FULL CONTENT