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2018 (6) TMI 212 - AT - Income TaxAddition u/s 14A - Disallowance of direct expenses paid for paid towards security transaction tax in relation to exempt dividend income - Applicability of Section 14A with regard to dividend income on which tax is paid u/s 115-O - Held that:- The dividend income had been assessed to tax at lower rate u/s 115-O - following the judgement in case of GODREJ & BOYCE MANUFACTURING COMPANY LIMITED VERSUS DY. COMMISSIONER OF INCOME-TAX & ANR. [2017 (5) TMI 403 - SUPREME COURT OF INDIA] it is held that Section 14A of the Act would operate to disallow deduction of all expenditure incurred in earning the dividend income u/s 115-O which is not includible in the total income of the assessee. Addition u/s 14A r.w.r. 8D - Held that:- Assessee had derived interest income of ₹ 1.12 crores as against interest expenditure of ₹ 64.10 lakhs - following the decision of Gujarat high court’s decision in DCIT vs. Nirma Credit and Capital Pvt Ltd. [2018 (4) TMI 872 - ITAT AHMEDABAD] - we hold that that such a disallowance is not sustainable in case of net surplus interest income based on netting method - thus not sustainable. Administrative expenditure disallowance u/s.14A - Held that:- Taken as average value of opening and closing value of investments leads to administrative expenditure disallowance of ₹ 1,76,352/- only as against that of ₹ 2,17,750/- taken in the course of assessment. We therefore modify the instant disallowance figure to ₹ 1,76,352/- only. Rent received as treated as income from house property than from "other" sources - Held that:- Relevant rent agreement has been correctly appreciated in the course of lower appellate proceedings - receipts as rent stand accepted as rent income in preceding assessment years - thus CIT(A) has rightly held the assessee’s rent sums of ₹ 147,27,864/- as income from house property - Decided in favor of assessee.
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