Section 14A

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NAVIN CHOUDHARY

NAVIN CHOUDHARY (Querist)
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09 December 2009 please guide on this section 14A read with rule 8D

CA Balram Sharma

CA Balram Sharma (Expert)
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09 December 2009 setion 14A provide that expenses on exempted income will not allowed the deduction in come tax act,

CA Balram Sharma

CA Balram Sharma (Expert)
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09 December 2009 Problem is arise that incase where assessee has both taxable income and exempted income,

normally he claim that he inccured on experses on expempted in come and or claime less exp. in case of exempted income

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CA Balram Sharma

CA Balram Sharma (Expert)
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09 December 2009 so to cover this matter Rule 8D come in force,

rule 8D provide the manner of calculation of expenses in case of exempted in come,

and this expense will not allowed as income

CA Balram Sharma

CA Balram Sharma (Expert)
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09 December 2009 Method is very simple,

1st take the avg of exempted assests and total assests,

Expeses will be

1. directly related to expempted income,

2. Proportionate exp. on the bases of avg (in case of commen exp)

3. 1/2% of avg of investment in exempted investment or assests