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2014 (8) TMI 241 - AT - Income TaxDisallowance u/s 14A - Average rate of investment under Rule 8D(2)(iii) disallowed @ 0.50% - Held that:- The disallowance u/s 14A read with Rule 8D is to be made not only in respect of income which does not form part of the total income but also in respect of income which shall not form part of the total income that the section 14A(1) is enacted to ensure that the expenses incurred can be allowed only to the extent they are relatable to the earning of taxable income, which means that the expenses which are not incurred not for the purpose of earning of taxable income cannot be allowed for the computation of net income - Relying upon CIT., Mumbai Versus M/s. Walfort Share & Stock Brokers P. Ltd. [2010 (7) TMI 15 - SUPREME COURT] - even if from the investments made, no exempt income has resulted but the expenditure cannot be said to be incurred for earning of taxable income, it cannot be allowed while computing the taxable income - Where there is a hotchpotch of funds and the expenditure both for investments and business purposes are incurred from the common pool and cannot be segregated, the principle of apportionment of expenses as provided under section 14A of the Act is upheld – Decided against Assessee. Stock in trade – Disallowance under Rule 8D(2)(iii) – Held that:- The issue relating to the disallowance u/s 14A in relation to shares held in stock in trade was decided in Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] - section 14A is attracted even in the case of dividend income from shares held as stock in trade – Decided against Assessee.
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