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Rule 8D

Started by CA.BHUPENDRASHAH, December 01, 2008, 10:37:02 PM

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:o :o
can disallowance exceed expenses!!!!!!!!!!!!!!!!!!!!!!!!!!??????????????
this is being blinldy done!!!!!!!!!!!!!!!!!@ asst!!!!!!!!!


You are right.......they are just blindly applying the provisions of Rule 8D even if it results in the additions in excess of the expenditure????

ashutosh majumdar

I think we must have some sort of "commando action" against such arbitrariness. This is another kind of "Aatank", Wot say?

Just Joking!  ;) ;)


If the Rule is interpreted this way it would be ultra vires s. 14A. A Rule cannot go beyond the ambit of the statutory provision. There are lots of authorities in support of this.


If Rule 8D leads to an absurd result, then of course it can't be followed.
Can we apply B.C. Srinivasa Shetty 128 ITR which says that once the computational provision fails then the substantive procedure will not apply?
So once Rule 8D fails then 14A itself will not apply.

bhavesh savla
Keep smiling,


Although Rule 8D has been applied and held to be retrospective, we may still have a chance to argue that (2) and (3) require the satisfaction of the AO on incorrectness of the claim made by the assessee before Rule 8D is invoked. Similar requirement is also found in Rule 8D(1). Hence, the AO has to cross this hurdle at least.


as per the rule in clause ii we have to take average of investment income from which does not or shall not form part of the total income, as appearing in the Balance Sheet of the assessee, on the first day and the last day of the previous year.

can some one pl help as to wat does dat invest mean ??? does it mean investment earning exempt income or all investments as appearing in the balancesheet????



It covers only the investments earning tax-free income.
This is explained in the explanations given in Rule 8D

Bhavesh Savla
Keep Smiling.