Section 14A of Income Tax Act

This query is : Resolved

Kamleshwar Tyagi (Querist)
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20 June 2008 I want to know about section- 14A of Income Tax Act & Rule-8D of Income Tax Rules. Is this section applies to Bonus Shares also. If yes, then what would be the value of such shares.

The fact is: Assessee: NBFC Company.

AO has re-opened the case for AY: 01-02 u/s 147, the grounds on which AO has re-opened the case is- he wants to disallow company's total expenditure in properation of dividend income(Exempeted Income) as per Section- 14A & Rule-8D

Is AO is correct or not?

pls reply me asap.

thanks

CA Anand Sarda

CA Anand Sarda (Expert)
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20 June 2008 Yes AO is correct. He can reopen the above mentioned case u/s.147.(Income escaping assessment)
Meaning of income escaped-
-No return is filed though income exceeds the basic exemption limit.
-Return is furnished but no assessment has been made & the A.O. notices that the assessee has understated the income or claimed excessive loass, deduction, etc
-where an assessment has been made
- The income chargeable has been under assessedor
- Such income is assessed at too low rate
- Excessive relief was given
- excessive loss, dep or other allowances has been computed.