Applicability of Section 14A

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Querist : Anonymous

Querist : Anonymous (Querist)

30 April 2011 I want to know the applicability of section 14A in the following cases:
The source of fund for all the cases is loan. So is the interest a disallowed expenditure?

1. Shares held as stock in trade.

2. Share application money paid and allotment is pending.

srinivasan

srinivasan (Expert)
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30 April 2011 14A is applicable to cases where the expenditure is incurred for earning an exempt income. In the instant case, it is not clear whether the shares held in stock in trade will qualify for exemption or not. If the stock qualifies for and exempt income the related expenditure will have to be disallowed u/s 14A otherwise it is not required

In the case of share application money pending for allotment. It cannot be treated as investment unitl the same is alloted and accordinly the disallowance u/s 14A need not take place.

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Querist : Anonymous

Querist : Anonymous (Querist)

02 May 2011 Thank u sir..

If we get dividend on shares held as stock in trade, the interest expended will be disallowed?

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srinivasan

srinivasan (Expert)
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02 May 2011 Yes that's the starting point for Sec.14A into the statue

srinivasan

srinivasan (Expert)
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02 May 2011 Yes that's the starting point for Sec.14A in the statue