u/s 14a

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minal

minal (Querist)
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05 December 2009 what is income tax u/s 14a of rule 8d?
whatis calculation for avg invt ?

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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05 December 2009 There is no income tax u/s 14A (A is capital; not in small).

In simple terms; Section 14A says that no expenditure shall be allowable in relation to exempted income. It is logical. Since expenditure is not related to taxable income.

Provisions of Rule 8D (D is also capital):-

The total of following expenses are not allowable while calculating provisions of Section 14A:-

1. All those expenses which are directly related to earn exempted income.

+

2. If interest has been paid and it is difficult to calculate which part relates to taxable income and exempted income then it will be calculated as follows:

Interest paid * Average of Value of Investment/Average of Value Total Assets

(average in both the cases is calculated by opening bal.+ closing bal./2).

+

one half percent of average of value of investment
(average means opening bal.+ closing bal./2 of investment)

The aggregate of all the above three items shall be disallowed from the expenditure and shall be added to the total income while making assessment by the Assessing Officer.

CA Rakhecha,Surat

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