Latest judgements on section 14a
This query is : Resolved
25 August 2011
Kindly give the names of latest important judgements on the section 14A/rule 8D in last 8 months.
CA. Anoop Gadia
(Expert)
25 August 2011
S. 14A : Business Expenditure – Exempted Income – Interest on Borrowed Funds used to buy shares for trading purposes.
In case of assessee, engaged in trading and investment of shares and received tax-free dividend income of in A.Y. 2004-05. It was held by Tribunal that Rule 8D does not apply prior to A.Y. 2008-09 (Godrej & Boyce Mfg. Co. Ltd. (2010) 328 ITR 81 (Bom.) followed). It was further observed that the expression “in relation to” in section 14A means dominant and immediate connection or nexus with the exempt income. In order to disallow expenditure under section 14A, there must be a live nexus between the expenditure incurred and the tax-free income. Disallowance cannot be made on presumptions and estimation by the Assessing Officer. When it is possible to determine the actual expenditure “in relation to” the exempt income or where no expenditure is incurred “in relation to” the exempt income, the principle of apportionment embedded in section 14A has no application.
In case of assessee, engaged in trading and investment of shares and received tax-free dividend income of in A.Y. 2004-05. It was held by Tribunal that Rule 8D does not apply prior to A.Y. 2008-09 (Godrej & Boyce Mfg. Co. Ltd. (2010) 328 ITR 81 (Bom.) followed). It was further observed that the expression “in relation to” in section 14A means dominant and immediate connection or nexus with the exempt income. In order to disallow expenditure under section 14A, there must be a live nexus between the expenditure incurred and the tax-free income. Disallowance cannot be made on presumptions and estimation by the Assessing Officer. When it is possible to determine the actual expenditure “in relation to” the exempt income or where no expenditure is incurred “in relation to” the exempt income, the principle of apportionment embedded in section 14A has no application.
26 August 2011
For want of focused issue certain general decisions are cited hereunder.
i) ACIT v. Citicorp Finance (India) Ltd., 108 ITD 457 (Mum.)
(ii) Kalpataru Construction Overseas (P) Ltd. v. DCIT, 13 SOT 194 (Mum.)
(iii) DCIT v. Seksaria Biswar Sugar Factory Ltd., 14 SOT 66 (Mum.)
(iv) Prakash Heat Treatment & Industries (P) Ltd. v. ITO, 14 SOT 348 (Mum.)
(v) DCIT v. Smita Conductors Ltd., 16 SOT 251 (Mum.)
(vi) Narotamdas Bhau v. ACIT, 15 SOT 629 (Mum.)
(vii) Conwood Agencies (P) Ltd. v. ITO, 15 SOT 308 (Mum.)
(viii) Vidyut Investments Ltd. v. ITO, 10 SOT 284 (Delhi)
i) ACIT v. Citicorp Finance (India) Ltd., 108 ITD 457 (Mum.)
(ii) Kalpataru Construction Overseas (P) Ltd. v. DCIT, 13 SOT 194 (Mum.)
(iii) DCIT v. Seksaria Biswar Sugar Factory Ltd., 14 SOT 66 (Mum.)
(iv) Prakash Heat Treatment & Industries (P) Ltd. v. ITO, 14 SOT 348 (Mum.)
(v) DCIT v. Smita Conductors Ltd., 16 SOT 251 (Mum.)
(vi) Narotamdas Bhau v. ACIT, 15 SOT 629 (Mum.)
(vii) Conwood Agencies (P) Ltd. v. ITO, 15 SOT 308 (Mum.)
(viii) Vidyut Investments Ltd. v. ITO, 10 SOT 284 (Delhi)
26 August 2011
One latest decision is
CIT Vs. Dhanalakshmy Bank Ltd (2011)40(1) ITCL 219 (Ker-HC).
CIT Vs. Dhanalakshmy Bank Ltd (2011)40(1) ITCL 219 (Ker-HC).
26 August 2011
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