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

Section 14A disallowance under Rule 8D does not produce excess deduction beyond expenditures unrelated to dividend or LTCG. Rule 8D does not create disallowances beyond proper allocation: expenses are claimable as business expenses when incurred in a business or adventure in the nature of trade or commerce, or for holding and carrying inventory, investment trading or capital assets; such expenditures are not expenses for earning dividend income or long term capital gains and thus are not to be treated as attributable to exempt income under disallowance rules.