“Section 55(2)(a)(iii)”
The decision most relied on for Section 55(2)(a)(iii) is Khatau Junkar Ltd. v. K S Pathania (196 ITR 55), cited in 103 judgments on BharatTax.
Leading authorities on Section 55(2)(a)(iii)
A claim made by an assessee which requires further inquiry cannot be disallowed under section 143(1)(a)(iii) without giving the assessee an opportunity to be heard and submit supporting proof. The phrase 'prima facie inadmissible' means the claim is not admissible on the face of it and does not require further inquiry for disallowance.
Expenditure incurred towards the purchase of shares is a capital expenditure and therefore, interest expenditure incurred on such purchases is not eligible for deduction under Section 36(1)(iii) of the Income Tax Act.
The Assessing Officer can apply Rule 8D for disallowance under Section 14A only if they are not satisfied with the correctness of the assessee's claim regarding expenditure in relation to exempt income, after considering the assessee's accounts. Invocation of Rule 8D is not automatic.
