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The Tax Publishers2019 TaxPub(DT) 3994 (Mum-Trib) INCOME TAX ACT, 1961
Section 14A
Disallowance under section 14A read with rule 8D could not exceed the amount of exempt income. Accordingly, AO was not correct in making disallowance in excess of exempt income earned.
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Disallowance under section 14A - Expenditure against exempt income - Extent of disallowance -
Assessee earned exempt income by way of dividend. AO noted that assessee made investments in shares, whereas no disallowance of expenses attributable to exempt income was made. Assessee submitted that disallowance under section 14A could not exceed the amount of exempt income. However, AO made disallowance in excess of exempt income earned. Held: Disallowance under section 14A read with rule 8D could not exceed the amount of exempt income. Accordingly, AO was directed to restrict the disallowance under section 14A read with rule 8D(iii) to the extent of exempt income earned.
Followed:Pr. CIT v. Ballarpur Industries Ltd. [Income Tax Appeal No. 51 of 2016, dt. 13-10-2016]
REFERRED : CIT v. Reliance Utilities & Power Ltd. (2009) 313 ITR 340 (Bom) : 2009 TaxPub(DT) 1275 (Bom-HC)
FAVOUR : In assessee's favour
A.Y. : 2014-15
INCOME TAX ACT, 1961
Section 115JB
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