Sec 14A is applicable on all Expenditure of Investment in share of operating Company for controlling interest and new introduced rule can not be applicable on the pending proce

Last updated: 21 November 2011

Court :
HIGH COURT OF DELHI

Brief :
Whether expenditure (including interest paid on funds borrowed) in respect of investment in shares of operating companies for acquiring and retaining a controlling interest therein is hit by section 14A of the Income tax Act, 1961 inasmuch as the dividend received on such shares does not form part of the total income and Whether the provisions of sub-section (2) and sub-section (3) of section 14A inserted by the Finance Act, 2006 with effect from 01/04/2007, would apply retrospectively to all pending proceedings and Whether Rule 8D inserted by the Income -tax (Fifth Amendment) Rules, 2008 with effect from 24/03/2008 was procedural in nature and hence would apply retrospectively to all pending proceedings Decision taken on the above question and form a justification that the expenditure made on investment of Share of Operating Co for Controlling Interest is covered by Sec 14A and newly introduced Sec are not applicable on the pending proceeding.

Citation :
MAXOPP INVESTMENT LTD … Appellant - versus – COMMISSIONER OF INCOME-TAX, NEWDELHI......Respondent