TMI Blog2020 (2) TMI 1438X X X X Extracts X X X X X X X X Extracts X X X X ..... placed by revenue does not refer to rule 8D(1) at all. but only refers to the word includible occurring in the title to rule 8D as well as the title to section 14A. Circular concludes that it is not necessary that exempt income should necessarily be included in a particular year's income for the disallowance to be triggered. The Court held that the process of interpretation adopted by the CBDT will be a truncated reading of section 14A and rule 8D particularly when rule 8D(1) uses the expression 'such previous year'. Further, it does not account for the concept of 'real income'. It does not note that under section 5, the question of taxation of 'notional income' does not arise. For all of the aforementioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly relating to income which does not form part of total income NIL (ii) Interest expenses not directly attributable of any particular income or receipt then A X B / C* 2,69,28,714 (iii) 1/2 % of the average of the value of investments, income from which does not or shall not form part of the total income. 26,32,400 Disallowance as per Rule 8D 2,95,61,114 4. With regard to the contention of assessee that in absence of earning any dividend income, there can be no disallowance u/s. 14A, the AO referred to Circular No.5/2014 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 14A. The Circular concludes that it is not necessary that exempt income should necessarily be included in a particular year's income for the disallowance to be triggered. The Court held that the process of interpretation adopted by the CBDT will be a truncated reading of section 14A and rule 8D particularly when rule 8D(1) uses the expression 'such previous year'. Further, it does not account for the concept of 'real income'. It does not note that under section 5, the question of taxation of 'notional income' does not arise. For all of the aforementioned reasons, the Court held that the CBDT Circular dated 11.5.2014 cannot override the express provisions of section 14A, read with rule 8D. 8. For the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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