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2017 (1) TMI 941 - AT - Income TaxDisallowance made u/s 14A read with Rule 8D - as the assessee made the investment in equity shares - Held that:- at the stage of enquiry u/s 14A, the Assessing Officer is free to independently consider the matter for admissibility of interest on borrowings and its extent. In the present appeal, we note that no exempt income was earned by the assessee from the strategic investment made in group companies, therefore, no disallowance was required to be made u/s 14A of the Act. The expression “does not form part of the total income” in section 14A of the Act, envisage that there should be an actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the income. In other words, section 14A will not apply if no exempt income is received or receivable during the relevant previous year. Since, no exempt income was earned by the assessee and since the genuineness of the expenditure, incurred by the assessee, was not in doubt, no disallowance could be made u/s 14A of the Act. - Decided in favour of assessee
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