1.   SHRI PAWAN KUMAR PARMESHWARLAL V. ACIT,   ITA NO. 530/MUM/2009, (ITAT- MUMBAI) (BENCH- “C”) 

U/S 14A read with Rule 8D - Expenditure claimed in the business of share dealings cannot be correlated to the incomes earned in personal capacity that too on dividend, PPF interest and tax free interest on RBI bonds.

The assessee, a stock broker & Member of BSE, earned tax-free income by way of dividend, interest on RBI bonds and PPF interest and maintaining separate books of account for the purpose of business and for these investments which are in his personal capacity. He claimed that no disallowance u/s 14A could be made as no expenditure was incurred by him to earn the tax-free income as the shares were in the demat account for a long time and dividend was automatically credited to the bank account. The AO disallowed a sum of Rs. 20,000 u/s 14A. In appeal, the CIT (A), instead of examining the issue on factual basis, directed that Rule 8D should be applied. On appeal to the Tribunal, HELD allowing the appeal.

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2.   [Contribution by  CA. Amarpal and contributor is available at email-id : amar.p.ca1@gmail.com ]

CBEC instruction:

Enforcement of penal provisions for non-submission of returns under Central Excise Law and Service Tax Law

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