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2022 (1) TMI 226 - AT - Income TaxDisallowance u/s 14A r.w.r.8D - expenditure "incurred by the assessee in relation to the tax exempt income" - HELD THAT:- We find that in the case of Joint Investments Pvt. Ltd. [2015 (3) TMI 155 - DELHI HIGH COURT] has held that Section 14A r.w. Rule 8D of the IT Rules 1962 cannot be interpreted so as to mean that the entire tax exempt income is to be disallowed. It is further held that the window for disallowance is indicated in Section 14A, and was only to the extent of disallowing expenditure "incurred by the assessee in relation to the tax exempt income". The portion of the tax exempt income cannot swallow the entire amount considering the facts of the present case in line with the aforesaid decision of Hon’ble Delhi High Court. No interference with the order of CIT(A) is called on this aspect. Disallowance of indirect expenses - CIT(A) after considering the details of the expense has come to a finding that the entire operating expenses shown by the assessee cannot be considered to have been incurred for earning exempt income as there were certain expenses in the nature of rent or its remuneration etc which was assessee was required to incur whether it had earned any income from dividend or not. Before us, no fallacy has been pointed out by the Learned DR in the aforesaid findings of CIT(A). In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed. Correct head of income - sale consideration received by the assessee from redemption of preference shares including the premium- capital income or income from other sources - CIT-A deleted the addition - HELD THAT:- CIT(A) has given a finding that the investment in redemption of preference shares was clearly based on the condition that the assessee was entitled to receive redemption fair market value of shares apart from premium amount and therefore the receipt of premium was part of full value of consideration received on redemption of shares. Before us, no fallacy in the findings of CIT(A) has been pointed by the Revenue. We further find that Hon’ble Apex Court in the case of Anarkali Sarabhai [1997 (1) TMI 5 - SUPREME COURT] after considering and distinguishing the decision of Vania Silk Millls Ltd. [1991 (8) TMI 2 - SUPREME COURT] which has been relied upon by the AO, has held that redemption of preference shares is a sale and is also a transfer by relinquishment of asset by shareholder and accordingly the same is to be subject to tax under the head capital gains. Before us, no contrary binding decision has been placed by the Revenue to support its case. We therefore find no reason to interfere with the order of CIT(A). Thus the ground of Revenue is dismissed.
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