Tuesday, February 15, 2011

ADMINISTRATIVE EXPENSES CAN NOT BE DISALLOWED UNDER SECTION 14A - KERALA HIGH COURT

The Kerala High Court has held that in the absence of no precise formula for proportionate
dis allowance of administrative expenditure, no dis allowance is called for, for proportionate
administrative expenditure attributable to earning of Tax free Income until rule 8D come into force.
The proportionate dis allowance under Section 14A should be limited to only interest liability and not
overheads or administrative expenditure; which should be considered for dis allowance under Rule
8D from 2007-2008 on wards. The High Court remanded all the assessment back to the AO for
reworking dis allowance under section 14A in case of each assessee for each assessment year.

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