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2010 (12) TMI 949 - HC - Income TaxProviso to section 14 A - whether does not apply to the revisionary powers under section 263 - Jurisdiction of CIT(A) - Held that:- Section 14-A deals with the expenditure incurred in relation to income not includable in total income. However, the proviso has come into existence only with effect from 11.5.2001 but section 14-A was brought in by Finance Act of 2001 with retrospective effect 1.4.62. In that view of the matter, the Income Tax Commissioner while exercising powers tender section 263 of the Act was justified in saying the expenditure attributed to taxable income is allowable and what is attributable to non-taxable income cannot be allowed as deduction. The CIT(A) was right in directing the assessing officer to compute the interest, which could not be allowed as against the exempted income being a share in the profit on the capital investment by the individual partners. Even after remand by the High Court, the appellants-assessees were not able to bring on record the facts clarifying the position. Therefore, the Tribunal was justified in saying that the facts have to be clarified before the assessing officer while proceeding with the matter as directed by CIT. All cases relied upon by the appellants doesnot applies to the facts of the present case and the Tribunal has appreciated the case on hand in accordance with the provisions of section 14-A including the proviso to section 14-A. Accordingly, the substantial questions of law are answered in favour of the revenue.
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