COURT: |
|
CORAM: |
|
SECTION(S): |
|
GENRE: |
|
CATCH WORDS: |
|
COUNSEL: |
|
DATE: |
(Date of pronouncement) |
DATE: |
February 22, 2013 (Date of publication) |
AY: |
|
FILE: |
|
CITATION: |
|
|
S. 14A & Rule 8D: Expense specifically relatable to taxable income cannot be disallowed
For AY 2008-09, the AO computed the s. 14A disallowance under Rule 8D by excluding from the total general expenditure of Rs.1,16,94,912, an amount of Rs.19,96,228 being expenses related to house property income, interest expenditure and demat charges. The balance expenses were allocated as relating to tax exempt income in the ratio of tax exempt receipts to total receipts. On this basis, 46.68% of the balance expenditure was disallowed u/s 14A read with Rule 8D. In appeal before the CIT (A), the assessee claimed that an amount of Rs. 57,14,450 was incurred exclusively on building maintenance and service expenses and as no part of these expenses could be attributed to tax exempt income, it had to be taken out of computation of 14A disallowance. This was upheld by the CIT (A). On appeal by the department to the Tribunal, HELD dismissing the appeal:
Once it is found that an expense is specifically relatable to a taxable income, no portion of such an expense can be disallowed u/s 14A. The allocation of general expenses vis-à-vis tax exempt income and taxable income can only be made in respect of expenditure which cannot either be wholly allocated to taxable income, then or which can not be wholly allocated to tax exempt income; the allocation can be made, even on the basis of formula set out in Rule 6D (iii) (should be Rule 8D (2)(iii)), in respect of such expenses which do not fall within any of these categories.
See also
ACIT vs. Champion Commercial Co Ltd (ITAT Kolkata) where it was held that interest incurred on taxable income has also to be excluded under Rule 8D(2)(ii) by modifying the prescribed formula
Related Posts:
- DCIT vs. Comet Investment Pvt. Ltd (ITAT Mumbai) The broker, through whom the assessee carried on share transactions, were also not imposed any penalty. No co-relation between the assessee on the one hand and the other parties on the other hand has been brought on record to co-relate that the parties to whom the alleged profits or loss…
- Ratanlal C. Bafna vs. JCIT (ITAT Pune) Considering the totality of the facts involved in the present case and in view of the decisions cited hereinabove, we are of the view that in the present case since the appeal against the order of the Tribunal has already been admitted and a substantial question of law has been…
- Neha Chowdhary vs. ITO (ITAT Kolkata) It emerges that from a perusal of these case files that although the assessee has produced her documentary evidence before the lower authorities about the impugned sums to be in the nature of income derived from the sales of shares, the fact remains that her detailed explanation tendered in the…
- United Investments vs. ACIT (ITAT Kolkata) If one carefully analyzes various sub-sections of Section 10 then it is evident that each sub-section enlists specific specie of receipt to which exemption from tax is granted if certain conditions are fulfilled. We therefore find that Section 10 enlists various species of receipts which are otherwise revenue in nature…
- Chandra Prakash Jhunjhunwala vs. DCIT (ITAT Kolkata) The insertion of third proviso (noted above) to Section 50C of the Act is declaratory and curative in nature. That is, the third provisoto Section 50C of the Act relates to computation of value of property as explained by us above, hence it is not a substantive amendment, it is…
- Keva Industries Pvt. Ltd vs. ITO (ITAT Mumbai) We hold that since the shares of a foreign company were acquired by the assessee company in the instant case, the ld AO ought to have relied on the balance sheet as audited by the auditor appointed under the Indian Companies Act. In the instant case, the ld AO had…
Leave a Reply