Section 88 — the law in short
What the courts have decided on section 88, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Statutory position — s.115D: no expenditure or allowance against investment income, no Chapter VI-A deduction, and the disapplication of the SECOND proviso to s.48 only
CBDT Circulars & InstructionsCuts both ways
My NRI client has interest income from debentures of an Indian public company acquired in foreign exchange, taxed under section 115E. The assessing officer has disallowed his collection charges, his section 80C deduction and his indexation. Is all of that correct, and what exactly is he allowed to lose?
Broadly yes, but the third disallowance needs care. Section 115D(1) denies any deduction for expenditure or allowance under any provision of the Act in computing investment income; s.115D(2)(a) denies Chapter VI-A deductions altogether where the gross total income consists ONLY of investment income or long-term capital gains or both, and in that case also disapplies the second proviso to s.48, which is the indexation proviso. The section does NOT disapply the FIRST proviso to s.48, and it has not referred to that proviso since 1 April 1993.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
