section 14A read with rule 8D

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Querist : Anonymous

Querist : Anonymous (Querist)

07 September 2010 IF AN ASSESSEE IS INVESTOR IN SHARES AND ALSO TRADING IN SHARES AND DECLARING REGULAR INCOME ON TRADING OF SHARES AND CAPITAL GAIN AND SALE OF SHARES SEPARATELY . THE ASSSESE IS HAVING DIVIDEND INCOME FROM INVESTMENT IN SHARES AND ALSO DIVIDEND INCOME IN TRADING OF SHARES.FOR BOTH THE TRANSACTIONS ACCOUNTS ARE KEPT SEPARATELY.

THE QUERY IS WHETHER THE DISALLOWANCE IS ONLY AGAINST DIVIDEND INCOME ONLY ON INVESTMENT IN SHARES OR ALSO ON TRADING OF SHARES. IF DIVIDEND EARNED ON TRADING OF SHARES IS ALSO ELIGIBLE FOR DISALLOWANCE U/s 14A THEN HOW DISALLOWANCE HAS TO BE WORKED OUT.

Aditya Maheshwari

Aditya Maheshwari (Expert)

07 September 2010 S. 14A applies where shares are held as investment and the only benefit derived is dividend. S. 36(1)(iii) deduction allowable if shares held as stock-in-trade CIT vs. Leena Ramachandran (Kerala High Court)

link https://itatonline.org/archives/index.php/cit-vs-leena-ramachandran-kerala-high-court-s-14a-applies-where-shares-are-held-as-investment-and-the-only-benefit-derived-is-dividend-s-361iii-deduction-allowable-if-shares-held-as-stock-in-tr

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Querist : Anonymous

Querist : Anonymous (Querist)

07 September 2010 thanks for reply . My query is regarding disallowance of business expenditure u/s 14A in respect of trading in shares. The expenditure is in the nature of office and administrative overheads other than interest. Kindly clarify with judgements. repls asap.

Aditya Maheshwari

Aditya Maheshwari (Expert)

07 September 2010 Then refer hero cycles given in the link also and also godrejs case
https://itatonline.org/archives/index.php/godrej-boyce-vs-dcit-bombay-high-court-rule-8d-r-w-s-14a-2-is-not-arbitrary-or-unreasonable-but-can-be-applied-only-if-assessees-method-not-satisfactory-rule-8d-is-not-retrospective-and-applies

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