|The Tax Publishers2021 TaxPub(DT) 0535 (Mad-HC) : (2021) 431 ITR 0221
INCOME TAX ACT, 1961
Section 14A Rule 8D
Disallowance under section 14A could not go beyond the extent of exempted income itself.
Disallowance under section 14A - Expenditure against exempt income - Invocation of rule 8D - Non-correctness of assessee's claim
Assessee earned tax free dividend income but claimed no disallowance under section 14A. AO invoked rule 8D and worked out disallownace in excess of tax free income earned by assessee. Assessee challenged this. Tribunal restricted disallowance to the extent of exempt income earned by assessee. Revenue challenged this by way of appeal before High Court. Held: Disallowance under section 14A could not go beyond the extent of exempted income itself. AO was directed accordingly.
Followed:Marg Ltd. v. CIT ((2020) 120 Taxmann.com 84 (Mad-HC) : 2020 TaxPub(DT) 4041 (Mad-HC).
FAVOUR : In assessee's favour.
A.Y. : 2015-16
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