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2021 (1) TMI 581 - HC - Income TaxDisallowance u/s 14A - whether disallowance u/s 14A could exceed the income not includable in the total income ? - HELD THAT:- It is not disputed that the issue involved in this case is squarely covered by the decision of the Hon'ble Division Bench of this Court in the case of Marg Ltd. [2020 (10) TMI 102 - MADRAS HIGH COURT] as relying on M/S. TIDEL PARK LIMITED [2020 (7) TMI 339 - MADRAS HIGH COURT] held that the mandate of s.14A is clear. It desires 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 an exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income.' The provision this is clearly relatable to the earning of actual income and not notional or anticipated income. The submission of the Department to the effect that s.14A would be attracted even to exempt income 'includable' in total income would entail the assessment of notional income, assumed to be exempt in the future, in the present assessment year. The computation of total income in terms of s.5 of the Act is on real income and there is no sanction in law for the assessment of admittedly notional income, particularly in the context of effecting a disallowance in connection therewith. The computation of disallowance in terms of Rule 8D is by way of a determination involving direct as well as indirect attribution. Thus, accepting the submission of the Revenue would result in the imposition of an artificial method of computation on notional and assumed income.- Decided in favour of assessee.
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