Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: due date for vat payment :: list of goods taxed at 4% :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: empanelment :: articles on VAT and GST in India :: cpt :: ACCOUNTING STANDARD :: VAT Audit :: form 3cd :: TAX RATES - GOODS TAXABLE @ 4%
 
 
From the Courts »
 Pr. Commissioner Of Income Tax Vs. B. C. Management Services Pvt. Ltd.
 Commissioner Of Income Tax Vs. M/s International Tractor Ltd.
 Maharaj Garage & Company vs. CIT (Bombay High Court)
 Amira Pure Foods Pvt. Ltd vs. Pr CIT (ITAT Delhi)
 Hindustan Coca Cola Beverages Pvt. Ltd vs. CIT (Rajasthan High Court)
 Pr CIT vs. Baisetty Revathi (Andhra Pradesh High Court)
  Pr CIT vs. Paradise Inland Shipping Pvt. Ltd (Bombay High Court)
 Ambience Hospitality Pvt. Ltd vs. DCIT (Delhi High Court)
 DCIT vs. Studio Aethletic Health & Hospitality Pvt. Ltd (ITAT Mumbai)
 Nilesh Janardan Thakur vs. ITO (ITAT Mumbai)
 Pr CIT vs. Paradise Inland Shipping Pvt. Ltd (Bombay High Court)

ACIT vs. Iqbal M. Chagala (ITAT Mumbai)
August, 20th 2014

S. 14A & Rule 8D cannot be applied in a mechanical manner. Disallowance cannot exceed expenditure claimed as a deduction

In AY 2009-10, the assessee was assessed to income of Rs. 12.62 crore. The assessee had investments of Rs. 32.71 crore. The investment transactions were managed by investment advisers and the assessee paid portfolio management services (PMS) fees which were debited to his capital account. The demat expenses and security transaction tax (STT) was also debited to the capital account. The assessee claimed that the expenses relating to salary, telephone and other administrative expenses were incurred by him for his professional income and not for earning tax-free income. However, the AO rejected the claim and made a disallowance of Rs. 16.35 lakhs, being 0.5% of the average investments under Rule 8D(2)(iii). The CIT(A) deleted the disallowance on the ground that it was without establishing any nexus. On appeal by the department to the Tribunal HELD dismissing the appeal:

The assessee had debited direct expenses on account of dematerialization and STT in the capital account and not in the Profit and loss account. The AO had presumed that the assessee had must have incurred some expenditure under the heads salary, telephone and other administrative charges for earning the exempt income. It is further found that the total expenditure claimed by the assessee for the year is about 13 lakhs and the AO had made a disallowance of about Rs.16 lakhs. He has just adopted the formula of estimating expenditure on the basis of investments. But, the justification for calculating the disallowance is missing. The assessee had not claimed any expenditure in its P&L account and so the onus was on the AO to prove that out of the expenditure incurred under various heads were related to earning of exempt income. Not only this he had to give the basis of such calculation. In any manner disallowance of Rs.16.35 lakhs as against the total expenditure of Rs.13 lakhs claimed by the assessee in P&L account is not justified. Rule 8D cannot and should not be applied in a mechanical way. Facts of the case have to be analyzed before invoking them. Consequently the disallowance is deleted (Justice Sam P. Bharucha 53 SOT 192 (Mum) referred).

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - About Us

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions