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Rule 8d with sec14a

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(Querist)
27 December 2011 Hello Sir/Madam,

My query is that a construction company which has current account with bank OD facility and has made investment to other group companies during the year and not receiving any income which is exempt from the total taxable income, but interest has been paid on OD facility and other bank loans taken for the business purpose so, whether Sec 8D with sec 14A is applicable to this or not.

AO has applied sec8D to this.
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CA Parth Shah

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CA Parth Shah (Expert)
28 December 2011 Hi,
Sec 14A is for disallowance of expense incurred in relation to the income which is exempt from tax. And to calculate proportionate expenditure Rule 8D is there.
In your case, your client has not received any income hence Sec 14A cant be invoked at all.
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Vishal D Shah

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Vishal D Shah (Expert)
31 December 2011 Go for appeal.
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