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2012 (7) TMI 19 - AT - Income TaxDis-allowance u/s 14A - premium paid on redemption of premium notes - assessee being an investment and trading companies issued unsecured optionally convertible premium notes and invested the same in the purchase of shares of Reliance Utilities and Power Ltd (RUPL), income of which is exempt u/s 10(23G) - Held that:- Proceeds of premium notes (OCPN) on which the impugned redemption premium was paid by the assessee had been invested in the shares/debentures of RUPL and although the dividend income and income from long term capital gain from the said investment was exempt from tax u/s 10(23G), however the same was exempt only for the specific period i.e. AY 1999-2000 to 2001-2002, extended upto AY 2004-05. Further, said investment had the potential of generating taxable income viz short term capital gain, income from stock lending, income by way of fees for providing of shares, as collateral etc. Therefore, such premium paid can not be regarded as expenditure incurred exclusively in relation to earning of exempt income so as to invoke the provisions of section 14A - Decided in favor of assessee.
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