Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2020 (12) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (12) TMI 262 - DELHI HIGH COURTDisallowance u/s 14A r/w Rule 8D(2)(iii) - expenditure incurred in relation to income not includible in the total income - CIT (A) restricted to 0.5% of the average investment income - HELD THAT:- CIT(A) deleted the disallowance of interest under Section 14 A r/w Rule 8D (2)(ii), considering the factual position and the fact that the Respondent-Assessee had interest-free funds in the form of share capital and reserves & surplus. As regards the disallowance under Rule 8D(2)(iii), it was observed that Respondent-Assessee’s claim that no expenditure was incurred is not correct - expenditure was to be estimated under Rule 8D(2)(iii) being 0.5% of the average investment income which is exempt. It was noticed that value of average investment had been calculated as the average of total investments, mentioned in Schedule F. CIT (A) noted that since all the investments mentioned in Schedule F do not yield exempt income, disallowance under Section 14A read with Rule 8D(2)(iii) has been restricted only to 0.5% of the average investment income which is exempt, irrespective of whether such exempt income was received during AY 2011-12. This approach has been upheld by the learned ITAT. We do not find any perversity in the same or find any reason to entertain the present appeal to interfere with this finding that is based on facts. Addition with respect to the prior period income - HELD THAT:- As noticed that the profit and loss account of the Respondent-Assessee shows that it has neither taken the prior period income in its taxable profit, nor has considered the prior period expenses i.e. the prior period adjustments have been made by the Respondent-Assessee on below the line profit. On this issue, since factual aspects have to be verified, the learned ITAT has remanded back this issue with a direction to the AO to net off prior period income and the prior period expenditure and tax only the net income. This direction calls for no interference by this Court. No substantial question of law.
|