[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (ii)]
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF DIRECT TAXES
New Delhi, the 02nd June, 2016
S.O. 1949(E)- In exercise of the powers conferred by section 295 read with subsection (2) of section 14A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. (1) These rules may be called the Income–tax (14th Amendment) Rules, 2016.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Income-tax Rules 1962, in rule 8D,-
(I) for sub-rule (2), the following sub-rule shall be substituted, namely:- “(2) The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts, namely:—
(i) the amount of expenditure directly relating to income which does not form part of total income; and
(ii) an amount equal to one per cent of the annual average of the monthly averages of the opening and closing balances of the value of investment, income from which does not or shall not form part of total income:
Provided that the amount referred to in clause (i) and clause (ii) shall not exceed the total expenditure claimed by the assessee.”;
(II) sub-rule (3) shall be omitted.
[Notification No. 43/2016] [F.No. 370142/7/2016-TPL]
(Dr. T.S. Mapwal)
Under Secretary to Government of India
Note:- The principal rules were published vide Notification S.O. 969 (E), dated 26th March, 1962 and last amended by Income-tax (13th Amendment) Rules, 2016 vide Notification S.O.1923(E), dated 31.05.2016.
- Section 14A Disallowance applies to Deductions also
- Nexus between the investments and interest bearing funds need to be established for disallowance under Section 14A
- Section 14A / Rule 8D cannot be automatically invoked : High Court
- No section 14A disallowance when assessee had not shown any exempt income
- Proportionate interest is disallowable under Section 14A
- section 14A Expenditure incurred for exempt income
- No Dis allowance under Section 14 on the basis of Common pool of Funds
- No common interest expenditure than no portion of interest allocation under Rule 8D(2)(ii)