Sec. 14A r.w Rule 8D

[Guest]

Is it true that Rule 8D could render an assessee face more disallowances than the amount of exempt income? if yes, can anyone give an example to describe such a situation?

 Thank you,

 

Venkatesan.K

[DEV KUMAR KOTHARI]

No .

Expenses should be claimed as business expenses for business of adventure in nature of trade or commerce and expenses for  holding and carrying inventory or investment- trading or capital assets of business.

 

Such expenses are not expenses for earning dividend or LTCG.

AI Summary

Rule 8D Cannot Lead to Disallowances Exceeding Exempt Income; Expenses Must Relate to Business or Investment Activities. A participant in a discussion forum inquired whether Rule 8D could result in disallowances exceeding the amount of exempt income for an assessee. The response clarified that this is not the case. It was explained that expenses should be claimed as business expenses related to trade, commerce, or holding inventory or investment as trading or capital assets. These expenses are not associated with earning dividends or long-term capital gains.