| COURT: | P&H High Court |
| CORAM: | Ajay Kumar Mittal J, Raj Rahul Garg J |
| SECTION(S): | 14A, Rule 8D |
| GENRE: | Domestic Tax |
| CATCH WORDS: | Disallowance u/s 14 & Rule 8D, exempt income |
| COUNSEL: | Urvashi Dhugga |
| DATE: | January 12, 2016 (Date of pronouncement) |
| DATE: | February 28, 2016 (Date of publication) |
| AY: | 2009-10 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| S. 14A/ Rule 8D: The disallowance of expenditure cannot exceed the amount of tax-free dividend | |
The income from dividend had been shown at Rs. 1,11,564/- whereas disallowance under Section 14A read with Rule 8D of the Rules worked out by the Assessing Officer came to Rs. 4,09,675/-. Thus, the Assessing Officer disallowed the entire tax exempt income which is not permissible as per settled position of law. The window for disallowance is indicated in section 14A, and is only to the extent of disallowing expenditure “incurred by the assessee in relation to the tax exempt income”. The disallowance under section 14A read with Rule 8D as worked out by the Assessing officer is not in accordance with law and as such working is not sustainable
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