Section 14A of the Act provided that For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act.]
Further Ahmedabad Special Bench in case of Vishnu Anant Mahajan v/s ACIT, Circle 5, Baroda [2012] 22 taxmann.com 88) has held that as share income of a partner from firm has to excluded from total income liable to tax, in such a situation section 14A will come into operation and any expenditure incurred in earning said share income has to be disallowed.
The Hon’ble Mumbai Tribunal in case of Hoshang D. Nanavati v/s ACIT,[2012] 25 taxmann.com 141 (Mumbai - Trib.) has held that where assessee has earned income from profit share as also from remuneration from same firm, expenses incurred by assessee in ratio which profit share in firm bore to total receipts from firm, i.e. on account of profit share as also remuneration, were to be disallowed under section 14A.
The assessee filed its return of income for the A. Y. 2012-13 on 09-09-2012 declaring income of Rs. 8087310 after calming a deduction of Rs. 1208093 as income from other sources against income from partnership firm. The assessment u/s 143(3) was completed on 30-01-2015 at income of Rs. 8160700.
Scrutiny of records (computation of income) revealed that main source of income of assessee is interest remuneration and profit from two partnerships firms. Assessee has received total income of Rs. 55151564 from two partnership firm out of which Rs. 45655976 is profit from these firm which has been claimed exempt u/s 10(2A) of the Act. Against this total income of Rs. 55151564, asseesse has claimed interest expenses of Rs. 1208093.
Thus in view of provision of 14A and Judgment quoted above an amount of Rs. 1000092(45655976/55151564*1208093) was required to be disallowed and added back to the total income of assessee.
Further Ahmedabad Special Bench in case of Vishnu Anant Mahajan v/s ACIT, Circle 5, Baroda [2012] 22 taxmann.com 88) has held that as share income of a partner from firm has to excluded from total income liable to tax, in such a situation section 14A will come into operation and any expenditure incurred in earning said share income has to be disallowed.
The Hon’ble Mumbai Tribunal in case of Hoshang D. Nanavati v/s ACIT,[2012] 25 taxmann.com 141 (Mumbai - Trib.) has held that where assessee has earned income from profit share as also from remuneration from same firm, expenses incurred by assessee in ratio which profit share in firm bore to total receipts from firm, i.e. on account of profit share as also remuneration, were to be disallowed under section 14A.
The assessee filed its return of income for the A. Y. 2012-13 on 09-09-2012 declaring income of Rs. 8087310 after calming a deduction of Rs. 1208093 as income from other sources against income from partnership firm. The assessment u/s 143(3) was completed on 30-01-2015 at income of Rs. 8160700.
Scrutiny of records (computation of income) revealed that main source of income of assessee is interest remuneration and profit from two partnerships firms. Assessee has received total income of Rs. 55151564 from two partnership firm out of which Rs. 45655976 is profit from these firm which has been claimed exempt u/s 10(2A) of the Act. Against this total income of Rs. 55151564, asseesse has claimed interest expenses of Rs. 1208093.
Thus in view of provision of 14A and Judgment quoted above an amount of Rs. 1000092(45655976/55151564*1208093) was required to be disallowed and added back to the total income of assessee.
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