2009 (6) TMI 331

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....al filed by him against the assessment order, the first appellate authority reversed the order of the assessing authority by applying the decision of the Supreme Court reported in CIT v. Rajendra Prasad Moody [1978] 115 ITR 519. The Revenue took up the matter in second appeal before the Income-tax Appellate Tribunal, hereinafter called as "the Tribunal" in short. The Tribunal reversed the decision of the first appellate authority and restored the order of the assessing authority. Being aggrieved by the same, the assessee is before us by filing this appeal framing substantial questions of law and urged the grounds in support of the same. 3. Smt. Anuradha, learned counsel for the appellant relied upon the decision reported in CIT v. Rajend....

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....napplicable to the facts on hand by distinguishing the decision of the hon'ble Supreme Court, which is squarely applicable ?" 4. With reference to the contentions urged, we have perused the orders passed by the assessing authority, the first appellate authority and the Tribunal with a view to find out as to whether the substantial questions of law framed in this appeal would arise for consideration of this court. It is not in dispute that the assessee had borrowed loans and invested the same in shares. Deduction is claimed by him of the interest amount paid on the borrowed loans. The amounts borrowed by the appellant were invested in shares and dividend is earned. When deduction for the interest paid is claimed, the dividend earned canno....

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....ve relevant factor and disallowed the claim of the assessee. 7. The first appellate authority reversed the order of the assessing authority by applying the decision in Rajendra Prasad Moody's case [1978] 115 ITR 519 (SC), referred to supra, which was rendered prior to introduction of section 14A of the Act and which has no application to the fact situation. The Tribunal has rightly set aside the order of the first appellate authority. It cannot be disputed that dividend income is exempted under section 10(33) of the Act from the tax liability and the same cannot be computed for income under the head "Other sources". Exempted income is not allowable for deduction in view of section 14A of the Act. In view of these two provisions, the clai....