August 2019

Section 14A of ITA, 1961 r.w.r. 8D(2)(iii) of ITR, 1962 Exempt income Disallowance of expenditure relating to exempt income Voluntary disallowance by assessee of expenditure incurred to earn exempt income AO cannot disallow expenditure far in excess of what has been disallowed by assessee

K. B. BHUJLE
Advocate

33.  Principal CIT vs. DSP Adiko Holdings Pvt. Ltd.; 414 ITR 555 (Bom.)

Date of order: 3rd June, 2019

A.Y.: 2009-10

 

Section 14A of ITA, 1961 r.w.r. 8D(2)(iii) of ITR, 1962 Exempt income Disallowance of expenditure relating to exempt income Voluntary disallowance by assessee of expenditure incurred to earn exempt income AO cannot disallow expenditure far in excess of what has been disallowed by assessee

 

The assessee was in investment business. It earned interest income from investment in mutual funds. It claimed total expenses of Rs. 24.19 lakhs and voluntarily disallowed an amount of Rs. 7.79 lakhs as expenditure relatable to earning tax-free income u/s 14A of the Income-tax Act, 1961. The AO rejected such working and applied Rule 8D(2)(iii) of the Income-tax Rules, 1962 and made a disallowance of Rs. 2.19 crores.

 

The Commissioner (Appeals) restricted the disallowance to Rs. 24.19 lakhs, the amount which was claimed as total expenses. The Tribunal r

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