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2023 (6) TMI 617 - HC - Income TaxDisallowance u/s 14A - whether addition can exceed the amount of exempted dividend earned by the respondent/assessee? - HELD THAT:- This issue is covered against the appellant/revenue by the judgment rendered by this court in Joint Investments Pvt. Ltd. v. Commissioner of Income Tax [2015 (3) TMI 155 - DELHI HIGH COURT] as held window for disallowance is indicated in Section 14A and is only to the extent of disallowing expenditure "incurred by the assessee in relation to the tax exempt income". This proportion or portion of the tax exempt income surely cannot swallow the entire amount. In this case as well, the admitted position is that the dividend income, exempt u/s 10(34) Act, earned by the assessee, was Rs.45,06,37,556/-. and assessee had itself made a disallowance u/s 14A of the Act amounting to Rs.1,93,75,05,498/-. Over and above the aforesaid amount, AO had sought to disallow the amount equivalent to Rs.28,63,13,621/-. Clearly, the disallowance sought to engulf the exempt dividend income earned by the respondent/assessee.
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