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2013 (10) TMI 1129 - ITAT MUMBAIDisallowance u/s 14A of the Income Tax Act – Held that:- Assessee had made investment of Rs. 22. 58 lacs for purchasing shares of Barak Valley Cheents Ltd. and Reliance enterprises Ltd - On 1. 11. 2007 closing balance of the HDFC bank account was Rs. 12. 9 lacs - If the said amount is considered along with the balance available with the Corporation Bank it can be safely held that assessee had his own funds to make investment in the shares purchased - if borrowed funds have no proximate connection with the investment in shares proportionate disallowance should not have been made. Provisions of Rule 8D (2)(ii) of the Rules have to be invoked in certain eventualities only - AO/FAA has not mentioned such eventualities. If the assessee has not claimed any expenditure for earning exempt income, it cannot always be held that there were always a cost involved. Reliance has been placed upon the judgment in the case of Hero Cycles Ltd.[ 2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT], wherein Hon’ble Punjab & Haryana High Court has held that contention of the Revenue that directly or indirectly some expenditure is always incurred which must be disallowed under section 14A and the impact of expenditure so incurred cannot be allowed to be set off against the business income which may nullify the mandate of section 14A, cannot be accepted. Disallowance under section 14A requires finding of incurring of expenditure where it is found that for earning exempted income no expenditure has been incurred, disallowance under section 14A cannot stand – Decided in favor of Assessee.
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