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2012 (12) TMI 568 - AT - Income TaxDisallowance of expense incurred in relation exempt income u/s 14A r.w Rule 8D – Whether provision of Sec. 14A attracts on expense incurred to earn tax free income from SEZ unit – Held that:- As the similar issue has a been considered by the Tribunal in assessee’s own case for AY 2007-08 that the investment or expenses incurred to earn income from SEZ, do not merit reckoning in computing disallowance u/s 14A. Therefore, AO is not justified for making the disallowance u/s.14A r.w. Rule 8D to consider the investment made in SEZ unit whose income is not includible in the total income of the assessee. Issue decides in favour of assessee Disallowance of interest u/s 14A in respect of dividend income – Held that:- The assessee has earned dividend which is not includible in the total income of the assessee as it is exempt as per sec 10(34/35). To earn the said dividend from the investment, it is a fact that assessee must have incurred some administrative cost to maintain portfolio. Therefore issue remand back to AO for making a reasonable disallowance u/s.14A.
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