Several prior posts have discussed the decision of the Special Bench of the Mumbai Income Tax Appellate Tribunal in Daga Capital, on the appropriate interpretation of section 14A of the Income Tax Act. It was also observed that the problem was not so much with the provision per se, as with Rule 8D of the Income Tax Rules, which laid down the computation mechanism for the amount to be considered non-deductible under section 14A. It appears that a Writ Petition (No. 50 of 2010, Indian Exporters Grievances Forum v. CIT) has been admitted today in the Bombay High Court, challenging the constitutional validity of Rule 8D. The hearing on the matter is scheduled for 15th February.
Another report on this is available here, and good summaries of the position under section 14A and Rule 8D are available here and here.
