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2024 (2) TMI 217 - AT - Income TaxDisallowance u/s 14A - second round of appeal - AO in second round who held that the assessee company was liable for disallowance u/s 14A r.w. Rule 8D for the reason mainly that the assessee has made investments in shares and investment in foreign subsidiary company - In the first round, the Tribunal decided the appeal of the Revenue against it. On appeal by the Revenue before the Hon’ble Delhi High Court, the matter has been remitted back to the Tribunal for hearing and disposal afresh in the light of the directions of the Hon’ble Delhi High Court. This is how, the matter is before the Tribunal once again - HELD THAT:- It is an admitted position that the assessee has not incurred any interest expenditure, directly or indirectly for the earning of exempt income. The finding of the Ld. AO that for investing in mutual funds, the assessee must have incurred some expenditure is not based on facts. It is nothing but conjecture and surmise. No actual expenditure could be identified by the Ld. AO. Hon’ble Supreme Court in Maxopp Investment Ltd. [2018 (3) TMI 805 - SUPREME COURT] has held that the expression “expenditure incurred” in section 14A means “actual expenditure and not to some imagined expenditure”. If no expenditure is incurred in relation to the exempt income, no disallowance can be made. The decision (supra) of the Hon’ble Supreme Court squarely applies to the facts of the assessee’s case. In our humble opinion, the order of the Ld. CIT(A) is still maintainable de-hors his finding on strategic investment. We, therefore, hold that on the facts and in law as set out above, the Ld. CIT(A) was perfectly justified in deleting the impugned disallowance under section 14A r.w. Rule 8D. The remanded matter is disposed of accordingly. Decided against revenue.
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