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2013 (1) TMI 187 - HC - Income TaxDisallowance u/s 14A - assessee contested that as almost 99% of the assessee's income and activity pertains to tax free income/interest generated in these circumstances the quantum of disallowance i.e. 33% of the total expense was inadequate - Held that:- Disallowance to be 33% which works out to Rs.38 lakhs i.e. a substantial mark-up of nearly Rs.34 lakhs over and above the disallowance reported by the assessee, the Court is of the opinion that having regard to the nature of activity engaged in by the assessee, the method adopted of apportioning 33% of the expenditure towards earning of tax free income cannot be considered to be erroneous. It is not the revenue's case that an entirely different set of employees or establishment was kept or necessitated for earning such income that income was part of the composite income reported by the assessee which included other heads as sale of investments, sale of securities etc. Applicability of Section 79 - Held that:- As during the earlier period 98% of the assessee's shares were held by IIPL. The holding company was amalgamated with the assessee company. However, the shareholders of that holding company i.e. IIPL continued to be shareholders of the assessee company itself. The shareholders beneficially entitled to 98% of the shares continued to be the same. In these circumstances, the prohibition from carrying forward the losses, placed by Section 79 does not operate, on the other hand Section 79(a) makes the provision consequently inapplicable. The conclusions of the Tribunal in this regard are unexceptionable - no substantial question of law can be determined by the Court.
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