S. 14A & Rule 8D Disallowance Cannot Exceed Total Expenditure: ITAT Delhi

Gillette Group India Pvt.Ltd. vs. ACIT (ITAT Delhi)

S. 14A & Rule 8D Disallowance Cannot Exceed Total Expenditure

In AY 2008-09, the assessee earned tax-free dividend income. Its’ total expenditure as per the P&L A/c was Rs. 49 lakhs. The AO applied Rule 8D and made a disallowance u/s 14A of Rs. 2.37 crores which was reduced by the CIT (A) to Rs. 1.78 crores. Before the Tribunal, the assessee claimed that even assuming that the entire expenditure had been incurred to earn the dividend, the disallowance u/s 14A & Rule 8D could not exceed the expenditure incurred. HELD accepting the plea:

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