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2017 (3) TMI 1832 - AT - Income TaxDisallowance u/s 14A read with Rule 8D(2)(iii) - indirect expenditure for earning exempt income - HELD THAT:- Calculation of disallowance as per Rule 8D(2)(iii) is erroneous, as the AO without assigning any reason did not reduce the investment in mutual funds and group concern which does not quire incurrence of major expenditure.We restore this ground back to the file of A.O. for fresh consideration. As we have restored the appeals of the Assessee, we also restore the appeals of the revenue to the file of the Assessing Officer who shall consider the submissions of the Assessee that the dividend income from the investments in HDFC Mutual Fund (Growth Plan) is taxable when the dividend is received and also the capital gains is attracted for the gain received on sale of these investments. AO should also consider as to whether investment in foreign subsidiary company is also taxable or not. In case, the return from these investments are taxable, the question of applying disallowance under section 14A does not arise. The Assessing Officer should examine all these aspects and decide the issue in accordance with law after providing adequate opportunity to the Assessee.
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