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2017 (9) TMI 1583 - AT - Income TaxDisallowance u/s 14A - no expenditure was incurred to earn exempt income - Held that:- The appellant has not made any fresh investment during the year. He has received interest only on the investments made in earlier years. The appellant is engaged in the banking business activities. The investments held by the banking concerns are treated as a part of its business income. Therefore, income arising from such investments is treated as part of business income falling under the head profit and gains of business. The appellant contended that no expenditure was incurred for earning above exempt income which does not form part of the total income. The Assessing Officer has disallowed total exempted interest earned without any basis. It is undisputed fact that the assessee company has earned tax exempt income. The provisions of section 14A states that no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income, which does not form part of the total income under the Act. The AO has not given any finding as to how the claim of the assessee bank that no expenditure was incurred to earn exempt income was incorrect. Furthermore, it is undisputed fact that exempt income is earned from securities, which were invested in the earlier years. No any fresh investments have been made. - Decided in favour of assessee.
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