The Tax Publishers2020 TaxPub(DT) 5507 (Karn-HC)

INCOME TAX ACT, 1961

Section 14A

Ad hoc disallowance of 2.5% of dividend income as expenditure incurred on exempt income, could not be made when assessee identified expenditure to be disallowed.

Disallowance under section 14A - Expenditure against exempt income - Ad hoc disallowance of 2.5% of dividend income -

Assessee challenged order of Tribunal making an adhoc disallowance of 2.5% of dividend income as expenditure incurred on exempt income, when assessee identified expenditure to be disallowed. Held: Substantial question of law was no longer res integra and was already answered in favour of the assessee by Supreme Court in Godrej and Boyce Manufacturing Company. In view of aforesaid enunciation of law, substantial question of law was answered in favour of the assessee and against the revenue.

Followed:Godrej & Boyce Manufacturing Company Ltd. v. Dy. CIT & Anr. (2017) 394 ITR 449 (SC) : 2017 TaxPub(DT) 968 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2006-07


INCOME TAX ACT, 1961

Section 70 Section 10A/10AA

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