Most important Delhi HC batch appeals-section 14A decision

Enclosed is the much awaited recent decision of the Delhi High Court deciding the batch appeals in resepct of 14A issue. The Court in its elaborated order has, broadly, held as under:

·         The term ‘in relation to’ u/s 14A would not be limited to the direct expenditure incurre. It means all those expenditure which are incurred “in connection’ with earning of exempt income.

·         The term ‘expenditure incurred’ means the ‘actual’ expenditure incurred. In other words, if no expenditure is actually incurred for earing exempt income, then no disallowance u/s 14A could be made.

·         Rule-8D would apply prospectively,i.e., from the inception of the rule.

 ·         Before invoking Rule-8D, the assessing officer has to record his ‘satisfaction’ in terms of section 14A(2) & (3) of the Act.

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By,

 

Rohit Garg

 

B.Com(H), ACA,LLB

section 14A_delhi HC.pdf