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2016 (1) TMI 574 - AT - Income TaxDisallowance u/s 14A - whether presence of exempt income is necessary for disallowance of expenditure u/s 14A? - Held that:- As far as the exemption for the years under consideration were concerned, it was an admitted factual position that the AO has not mentioned any such amount. Meaning thereby, there was no exempt income earned by the assessee for the years under consideration. In reply to one of our questions, the learned AR, Mr. K. P. Dewani has also made a statement at Bar that no dividend was declared, hence, there was no earning of exempted dividend income. He has also clarified that for the purpose of invocation of the provisions of section 14A of the IT Act, the AO has applied the formula only in respect of disallowance of proportionate interest expenditure. There was no allegation of the AO that the exempt income was earned by the assessee. Thus Section 14A will not apply if no exempt income is received or receivable during the relevant previous year as decided in Cheminvest Limited Versus Commissioner of Income Tax-VI [2015 (9) TMI 238 - DELHI HIGH COURT] - Decided in favour of assessee
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