Please inform about the applicability of sec 14A and Rule 8D in case of a doctor who has professional receipt from his personal clinical practices of Rs. 25,00,000/- and tax free interest from PPF of Rs. 1,70,000/- and dividend of Rs. 75,000/-. He has not actually incurred any expenditure to earn tax free income. Whether any disallowance is required to be made u/s 14A read with Rule- 8D in his case?
04 February 2012
On earning interest on PPF and dividend income, as you have mentioned that he has not incurred any expenses.. then no disallowance shall be attracted..
06 February 2012
But as per Rule 8D, the disallowance is also attracted when the assessee claims that he has not incurred any expenditure in relation to earn a income which does not form part of your income. and as per rule 8d, the disallowance is 1/2% of average investments. Please clarify....
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