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2022 (10) TMI 497 - HC - Income TaxDisallowance u/s 14A r.w.r. 8D - expenditure incurred for earning dividend income from an overseas company in Oman - as submitted assessee is effectively not paying any tax on the said income either in the source country or in India and thus, dividend income for all purposes is exempted from tax - HELD THAT:- This Court is of the opinion that in view of Section 14A(1), no deduction is to 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. As per Section 2(45) of the Act, “total income” means the total amount of income referred to in Section 5, computed in the manner laid down in the Act. Therefore, Section 14A pertains to disallowance of deduction in respect of income which does not form part of the total income. Since the dividend received by the assessee from OMIFCO, Oman is chargeable to tax in India under the head "Income from other sources" and forms part of the total income, the same is included in taxable income in the computation of income filed by the assessee. However, rebate of tax has been allowed to the assessee from the total taxes in terms of Section 90(2) of the Income Tax Act read with Article 25 of the Indo Oman, DTAA and thus, the dividend earned can be said to be in the nature of excluded income and, therefore, the provisions of Section 14A would not be attracted in this case. This Court in the case of CIT vs. M/s Kribhco [2012 (7) TMI 591 - DELHI HIGH COURT] has held that provisions of Section 14A are inapplicable as far as deductions, which are permissible and allowed under Chapter VIA are concerned. No substantial question of law arises.
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