In the Income Tax rules
1962, in rule 8D sub- rule (2) shall substituted and sub-rule (3) shall be omitted
.
Prior to the amendment the
rule was read as
“8D.
(1) Where the Assessing Officer, having regard to the accounts of the assessee
of a previous year, is not satisfied with—
(a) the
correctness of the claim of expenditure made by the assessee; or
(b) the
claim made by the assessee that no expenditure has been incurred,
in
relation to income which does not form part of the total income under the Act
for such previous year, he shall determine the amount of expenditure in
relation to such income in accordance with the provisions of sub-rule (2).
(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;
(ii) in
a case where the assessee has incurred expenditure by way of interest during
the previous year which is not directly attributable to any particular income
or receipt, an amount computed in accordance with the following formula, namely
:—
A
× B
C
Where A = amount
of expenditure by way of interest other than the amount of interest included in
clause (i) incurred during the previous year ;
B
= the average of value of investment,
income from which does not or shall not form part of the total income, as
appearing in the balance sheet of the assessee, on the first day and the last
day of the previous year ;
C
= the average of total assets as
appearing in the balance sheet of the assessee, on the first day and the last
day of the previous year ;
(iii) an
amount equal to one-half per cent of the average of the value of investment,
income from which does not or shall not form part of the total income, as
appearing in the balance sheet of the assessee, on the first day and the last
day of the previous year.
(3)
For the purposes of this rule, the “total assets” shall mean, total assets as
appearing in the balance sheet excluding the increase on account of revaluation
of assets but including the decrease on account of revaluation of assets.]”
After the amendment the rule
read as
“8D.
(1) Where the Assessing Officer, having regard to the accounts of the assessee
of a previous year, is not satisfied with—
(a) the
correctness of the claim of expenditure made by the assessee; or
(b) the
claim made by the assessee that no expenditure has been incurred,
in
relation to income which does not form part of the total income under the Act
for such previous year, he shall determine the amount of expenditure in
relation to such income in accordance with the provisions of sub-rule (2).
(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;
(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”
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