2014 (7) TMI 44 - PUNJAB AND HARYANA HIGH COURT

Allowability of deduction u/s 14A of the Act – Interest liability out of other income – Held that:- Unless and until, there is receipt of exempted income for the concerned AYs (dividend from shares) - Section 14A of the Act cannot be invoked - revenue has not dispelled the findings of the CIT(A), nor the statement of the assessee before AO that assessee is not in receipt of any dividend income - the AO has erred in invoking Section 14A of the Act, to disallow various interest payments on capital account, security deposits and unsecured loans – Relying upon Joint Commissioner of Income Tax v. Holland Equipment Co. B.V. [2005 (4) TMI 514 - ITAT MUMBAI] - Section 14A is applicable only when any part of the income is not to be included in the total income of the assessee and the expenditure relating to that part of income is claimed by the assessee as deduction - In such cases only, the expenditure relating to the exempted income can be disallowed and not otherwise - the entire income is found to be taxable, no disallowance can be made u/s 14A of the Act – Decided against Revenue.