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2015 (12) TMI 972 - HC - Income TaxDisallowance under section 14A - ITAT held no disallowance can be made under section 14A unless a clear cut nexus is established between the expenses disallowed and income earned ignoring the fact that both direct and indirect expenses are attributable to such investment - Held that:- The Tribunal after considering the matter held that no part of interest expenditure could be considered for the purpose of computing disallowance under Section 14A of the Act. Further, in the absence of any proximate nexus having been established by the lower authorities between the administrative and other expenses and the exempt income, no disallowance under section 14A of the Act could have been made for the assessment year under consideration. Learned counsel for the appellant-revenue has not been able to show any illegality or perversity in the approach of the Tribunal or that the findings recorded by it are erroneous. Adverting to the judgment relied upon by the learned counsel for the appellant-revenue, it may be noticed that in Walfort Share and Stock Brokers P. Limited's case (2010 (7) TMI 15 - SUPREME COURT ), it held that the assessee was entitled to set off loss from transactions against its other Income chargeable to tax. The said view was affirmed by the High Court. The question before the Apex Court was whether loss arising in the course of dividend stripping transaction taking place prior to 1.4.2002 was disallowable on the ground that such loss was artificial as the dividend stripping transaction was not a business transaction. After examining the legal and factual position therein, it was held that in cases arising before 1.4.2002, losses pertaining to exempted income could not be disallowed. Such is not the position in the present case. - Decided against the revenue
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