Category Archives: Section 14A application

Costs Apportionment against Exempted Incomes


This article is a reminder to all assessee’s to consider the effect of section 14A in their tax computations and suo motu disallow a portion out of direct and indirect costs that are incurred in relation to exempted incomes. The Calcutta bench decision clearly point out to such need irrespective of the nature of business activity of the assessee.

Section 14A Mandate

The assessing officer apportion a part out of total expenses to the exempted incomes and for this purpose also invoke the provisions of section 14A of the Income tax Act, 1961.He also uses such authority even in the case of an investment company that actually carried on the composite business of both trading and investment in shares and