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2021 (5) TMI 1004 - HC - Income TaxDisallowance u/s 14A r.w.r. 8D - Whether Tribunal is right in remanding back the issue to assessing authority with a direction to allow the relief as the assessee do not have exempt income and as such no disallowance can be made under Section 14A read with Rule 8D contrary to provisions of Section 14A and Rule 8D and Circular No.5/2014 dated 11.2.2014 ? - HELD THAT:- The object of Section 14A is to curb the practice to claim deduction of expenses incurred in relation to exempt income against taxable income and at the same time avail of the tax incentive by way of exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income. The High Court of Madras in M/S. CHETTINAD LOGISTICS PVT. LTD. [2017 (4) TMI 298 - MADRAS HIGH COURT] has relied on the decision of in COMMISSIONER OF INCOME TAX VS. WALFORT SHARE AND STOCK BROKERS [2020 (10) TMI 518 - KARNATAKA HIGH COURT] wherein it has been held that Section 14A is relatable to income of actual income or not notional or anticipated income. Therefore, the conclusion arrived at by us in M/S NOVEL SOFTWARE INDIA (P) LTD.[2021 (2) TMI 145 - KARNATAKA HIGH COURT] is affirmed but for different reasons. As also clarified by us that while recording the conclusion in KINGFISHER FINVEST LTD. [2020 (10) TMI 518 - KARNATAKA HIGH COURT] that disallowance under Section 14A has to be made even taxpayer has not earned any exempt income, this court has misread the ratio of the decision of the Supreme Court in MAXOPP INVESTMENT LTD [2018 (3) TMI 805 - SUPREME COURT] and therefore, the aforesaid view being contrary to the law laid down by the Supreme Court is not a binding precedent. - Decided in favour of assessee.
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