TaxTMI 
TaxTMI 
2012 (2) TMI 384
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....from which is not includible in the total income. Therefore, the assessee was required to show cause as to why disallowance should not be made in view of the provisions contained in sec. 14A of the Act read with Rule 8D of the Income-tax Rules, 1962. It was submitted that the assessee has not incurred any expenditure in earning taxfree income and, therefore, no disallowance has been made under aforesaid provisions. The Assessing Officer did not accept this submission. She was of the view that in a case where the assessee is carrying on business, the income from which is liable to be taxed and at the same time earns income which is not includible in the total income, disallowance has to be made under the aforesaid provisions by applying the ....
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....ly owned subsidiary company. Thus, the investments at the end of the year stood at Rs. 3,50,24,988/-. 2.1 The case of the learned counsel is that the assessee had not disallowed any amount as expenditure incurred in earning tax-free income. The lower authorities have not recorded any reason to show that this assertion was wrong. Without doing so, they could not have disallowed any portion of the expenditure debited in profit & loss account. For this purpose, reliance has been placed on the decision of Hon'ble Delhi High Court in the case of Maxopp Investments Ltd. vs. CIT in ITA 687/2009 dated 18.11.2011 and DCIT vs. Jindal Photo Ltd. in ITA No.814(Del)2011 dated 23.09.2011 decided by `D' Bench of Delhi Tribunal, copies of which have been ....
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....duction of expenditure laid out or expended wholly or exclusively for the purpose of earning the income. Thus, where investment has been made in shares, which did not yield any dividend in the year under consideration, the expenditure incurred for earning the income is deductible notwithstanding the fact that no such income has been earned. We are of the view that ratio of these cases will apply mutatis mutandis under sec. 14A of the Act also while ascertaining the expenditure incurred for earning tax-free income from investment. 3.1 Coming to the interpretation of expression "expenditure incurred by the assessee in relation to income", used in sec. 14A, it is clear that some nexus, direct or indirect, will have to be found between the inc....