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2013 (4) TMI 36 - ITAT AHMEDABADDisallowance made u/s. 14A r.w.r. 8D - Held that:- From the copy of the computation of income and balance sheet placed it is find that the assessee has earned dividend income and the same has been considered as part of the total income for the purpose of tax. As per the provisions of Sec.10 (38) dividend income is exempt. It is a settled law that income can only be taxed as per the provisions of Income Tax Act if an income is specifically excluded for the purpose of taxation the same cannot be considered while computing the tax. See Chokshi Metal Refinery vs. CIT (1976 (3) TMI 35 - GUJARAT HIGH COURT) wherein relying on the decision Navnitlal Zaveri vs. K.K. Sen (1964 (10) TMI 16 - SUPREME COURT) stated that it is incumbent on ITOs to follow the circular No.14 (XL-35) of 1955 and draw the attention of the assessee concerned to all the reliefs and refunds to which the assessee seems to be entitled on the facts of the case even though the assessee might have omitted to claim refund or relief. In the present case, though the assessee has considered the dividend income as taxable and offered it to tax though the same is exempt u/s.10(38), relying on the aforesaid decision assessee should be granted the benefit of exemption. Accordingly direct the A.O. to treat the dividend as exempt u/s. 10(38). So far as taxing of dividend is concerned, since the assessee is eligible to claim the dividend as exempt u/s.10(38) and for which the A.O. directed to grant the exemption to assessee but so as far as the matter of disallowance u/s. 14A is concerned, the issue is remitted to the file of A.O. so that he can consider the disallowance under Sec. 14A in the light of the decision of Godrej & Boyce Mfg.Co.Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT). Thus the appeal of the assessee is allowed for statistical purposes.
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