ITAT restricts disallowance u/s 14A for earning exempt dividend to 1% of dividend

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INCOME TAX APPELLATE TRIBUNAL, KOLKATA

ITA Nos. 2270 & 2271 (Kol) of 2010 -Assessment Years 2006-07 & 2007-08

DCIT Vs The Ashoka Trading Co. Pvt. Ltd.

Date of Pronouncement: 23 /03/2012

On the issue of disallowance u/s. 14A, this Bench of the Tribunal has been taking a consistent view that this disallowance should be restricted to 1% of dividend income. Following the same, in this appeal also we hold that the disallowance u/s 14A for earning exempt dividend income should be restricted to 1% of dividend income. The Assessing Officer is accordingly directed to do so and work out the quantum of disallowance. This ground of appeal of the assessee is allowed as directed above.