Expenditure Not Includible in Total Income

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Contents

CHAPTER 1: Evolution of Section 14A & Rule 8D
-Background
-Memorandum Explaining the Introduction of Section 14A
-Objective behind insertion of section 14A
-Objective behind insertion of section 14A with retrospective effect
-The purpose for introduction of section 14A
-Position prior to the introduction of section 14A
-Legislative’history
-15 Key Takeaways from Supreme Court ruling in Godrej Boyce on Section 14 A-disallowance
-Disallowance under Section 14A on Non-Accrual of Exempt Income.
-Analysis of Section 14A
-Conditions where section 14A cannot be invoked
-CBDT’s clarification regarding disallowance of expenses under section 14A in cases where corresponding exempt income has not been earned during the financial year
-Method for determining amount of expenditure in relation to income not included in total income [Rule 8D]
-Evolution of Section 14A & Rule 8D

CHAPTER 2: Scope of Section 14A
-Logic for introduction of section 14A
-Position prior to the introduction of section 14A
-Scope and applicability of Section 14A
-Agricultural income

CHAPTER 3: Expenditure Incurred
-Definition of the term “expenditure” and ‘incurred’
-Nexus between the income earned and the expense occured
-Expenditure incurred in relation to exempt income
-Expenditure to be incurred actually and not notionally

CHAPTER 4: Expenditure Incurred “in Relation to” Income not Includible in Total Income

Relevance of the words “in relation to
Expenditure incurred in relation to income which does not form part of the total income [Section 14A(1)]
Meaning – Expenditure inCurred
Relevance of the words ‘expenditure incurred’
Determination of expenditure incurred in relation to exempt income by the Assessing Officer [Section TAA(2)]
Determination of expenditure incurred in relation to exempt income by the Assessing Officer when assessee claims that no expenditure has been incurred [SECTION 14A(3)]

CHAPTER 5
-Applicability of Section 14A
-Expectations from the Assessing OffiCer
-Assessing Officer failed to satisfy himself about correctness of assessee’s claim, impugned -disallowance was to be deleted
-Rule 8D is Applicable from Assessment Year 2008-09 Only
-Exemption and Deduction Provisions cannot be Treated as Same in applying Section 14A
-Disallowance Can be Made on Same Reasonable Basis

CHAPTER 6
Applicability of Section 14A to Tax-free Income

CHAPTER 7
Recording of Satisfaction by Assessing Officer for Making Disallowance Under Section 14A [Section 14(2)]

CHAPTER 8: Applicability of Rule 8D

-Logic for introduction of Rule 8D
-Background
-Prior to the introduction of Rule 8D
-Prescribed method of determining the quantum of expenditure incurred for earning exempt income [Rule BD]
-Amendment to the method of determining the quantum of expenditure incurred for earning exempt income [Rule 8D]
-Comparison of New Rule 8D with the old provisions of Rule 8D
-Points to be kept in mind while calculating disallowance under Rule 8D

CHAPTER 9: Method To Determine Expenditure Incurred In Relation To Exempt Income [Rule 8D]
-What is exempted Income
-Method for determining amount of expenditure in relation to exempt income
-Methods of calculation of disallowance under section 14A — When there is a direct nexus of expenses incurred
-Methods of calculation of disallowance under section 14A — When there is no direct nexus of expenses incurred
-Illustration on Rule 8D Computation

CHAPTER 10: Allowability of Expenditure Incurred for Earning Exempt Income
-Establishment of nexus between the exempt income and related expenditure

CHAPTER 11: Investment to Earn Exempt Income out of the Borrowed Funds vis-a-vis out of Owned Funds
-Own funds exceed investment, no disallowance of interest can be made under section 14A

CHAPTER 12: Section 14A and Insurance Business
A- Life insurance business
B- Other insurance business
C – Other Provisions

CHAPTER 13 Provisions of Section 14A and Set off of loss

CHAPTER 14: Applicability of Section 14A to Chapter VI-A Deductions

CHAPTER 15: Applicability of Section 14A while Computing Book Profits Under Section 115JB

CHAPTER 16: Section 14A and Reassessment Under Section 148

CHAPTER 17: Applicability of Section 14A in Case of Income from Firm .

CHAPTER 18: Section 14A and Revision of Assessment Under Section 263

CHAPTER 19: Applicability of Section 14A in Case of Shares Held as Stock-in-Trade

CHAPTER 20: Applicability of Section 14A to Strategic Investment Held for Control Purpose
-What is strategic investment?

CHAPTER 21: Cases where Disallowance Under Section 14A Held Justified

CHAPTER 22: Cases where Disallowance Under Section 14A Held not Justified

CHAPTER 23: Cases where Section 14A is Applicable
-Applicability of Section 14A

CHAPTER 24: Cases where Section 14A is not Applicable

CHAPTER 25: Penalty — Section 14A, read with Section 271(1)(c) of the Income-tax Act, 1961

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