Home Forum Income Tax Month 12 2011 2011 (12) This
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Section 14A of the Income Tax Act read with Rule 8D - Income TaxExtract If interest has been paid on loan taken which was invested in shares and dividend income were earned on such investment. Then as per section 14A the interest amount shall be disallowed. As per rule 8D calculation is make by using following formula if interest not directly related to exempted income. Interest paid X average investment / average total assets The average figures shall be taken as average of opening balance of total assets and investment and closing balance of total asset and investment. My query is that if there is no opening balance of investment i.e. if investment made in current year say in the month of july then how we calculate average amount of investment for the purpose of above formula however investment have closing value. Example : Investment made in shares Rs. 60 lakhs. (18-07-2009) Interest Rs. 8 Lakhs Average Total Assets Rs. 1 Crore. Closing balance of Investment of Rs. 500000
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