9911796707
TMI Blog2016 (4) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... company which is involved in the business of real estate and infrastructure development filed its return of income on 29.10.2005, declaring loss of Rs. 3,07,18,605/-. The return of income was selected for scrutiny and while making the assessment the A.O. besides other disallowance/addition disallowed a sum of Rs. 6.27 lacs u/s. 14A in the assessment order dated 09.12.2007. The assessee carried the matter before the CIT(A). The CIT(A) deleted the disallowance u/s. 14A and set aside/deleted the addition and directed the A.O. to determine the amount of expenditure incurred in relation to exempt income in accordance with the direction given by CIT(A) dated 24.2.2010 in respect of assessee's own case for A.Ys. 2003-04, 2004-05 and 2005-06 ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia Investment Corporation Ltd 113 ITR 778 and CIT Vs Devenport & Co Pvt Ltd 158 ITR 348 in support of the proposition that once it is not possible to attribute any particular item of expenditure having been incurred solely for the purpose of earning dividend income, the expenditure, including the interest, has to be allowed in computing the business income. Their Lordships further held that it is only for the purpose of income tax assessment that the dividend is required to be shown under a different head, but it continues to be in the nature of business income and no part of expenditure can be apportioned under the head income from other sources. These observations were made in a case where shares were held as stock in trade but then as c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact remains that income generated out of investment is in the form of dividends which is not taxable. The issue then is whether any expenditure has been incurred in relation to such exempt income. Rule 8D has been notified u/s. 14A. This Rule applies either when the assessee claims that no expenditure has been incurred or when the AO and the assessee disagree on the amount of such expenditure. This rule provides a uniform and standard method for determining the amount of expenditure incurred in relation to exempt income. The operation of this rule has been declared as retrospective by the Spl. Bench of the ITAT in Daga Capital Management (117 ITD 169). It has also been held in the same case that expenditure has to be disallowed even if no ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
