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2014 (11) TMI 172 - ITAT LUCKNOWDisallowance u/s 14A - Investment in assets related to exempted income under Rule 8D(2)(ii) and (iii) – Held that:- The assessee has earned the dividend income for which it has claimed expenditures - the quantum of expenditures does not commensurate with the exempted income claimed by the assessee - the AO has every reason to doubt the correctness of the expenditures claimed by the assessee for earning the exempted income - the AO has to re-compute the expenditures relating to the dividend income which does not form part of total income under this Act and for computing the expenditures, the AO has no other option but to adopt the formula laid down under rule 8D of the Rules and he did the same – the AO has not determined the amount of expenditures directly related to the income which does not form part of the total income of the assessee as per sub-rule (2) (i) of rule 8D - the order of the CIT(A) restricting the disallowance cannot be upheld – thus, the order of the CIT(A) is to be set aside and the matter is remitted back to the AO for re-verification of the calculation of disallowance of expenditures as per rule 8D – Decided in favour of revenue.
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