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2021 (2) TMI 1366 - KARNATAKA HIGH COURTDisallowance u/s 14A - AO recording of dissatisfaction as regards the disallowance voluntarily made by the Appellant - HELD THAT:- As decided in [2020 (1) TMI 1473 - KARNATAKA HIGH COURT] From perusal of Section 14A of the Act, it is evident that for the purposes of computing the total income under this chapter, no deduction shall be allowed in respect of the expenditure incurred by the assessee in relation of the income which does not form part of his total income under the Act. The expenditure, the return of investment and cost of requisition are distinct concepts. Therefore the word ‘incurred’ in Section 14A of the Act have to be read in the context of the scheme of the Act and if so read, it is clear that it disallows certain expenditures incurred to earn exempt income from being deducted from other incomes which is includable in the total income for the purposes of chargeability to the tax. It is equally well settled that expenditure is a pay out. In order to attract applicability of section 14A of the Act, there has to be a pay out and return of investment or a pay back is not such a debit item. [See: WALFORT SHARE AND STOCK BROKERS (P) LTD [2010 (7) TMI 15 - SUPREME COURT] as well as MAXOP INVESTMENTS LTD [2018 (3) TMI 805 - SUPREME COURT]. In the instant case, the assessee has admittedly not incurred any expenditure. This case pertains to income on dividend, which by no stretch of imagination can be treated to be an expenditure to attract the provisions of Section 14A. MAT applicability - The provisions of Section 115JA do not apply to the banking companies
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