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2021 (2) TMI 112 - HC - Income TaxEntitled to deduction u/s 35(2AB) - expenses eligible for deduction under the said provisions pertained to unit entitled for deduction under Section 10B of the Act - HELD THAT:- ITAT relied upon case of this Court in YOKOGAWA INDIA LTD [2011 (8) TMI 845 - KARNATAKA HIGH COURT] held that Section 10B of the Act is in the nature of the exemption provision and therefore, the Assessing Officer was right in reducing the profits of the units eligible for deduction under Section 10B to the extent of additional 50% deduction available under Section 35(2AB) - subsequently the decision of this Court in YOKOGAWA INDIA LTD insofar as it pertains to nature of provision of Section 10B of the Act is concerned, was reversed by the Supreme Court in CIT VS. YOKOGAWA[2016 (12) TMI 881 - SUPREME COURT] and it was held that Section 10B of the Act is in the nature of deduction provision. It is also pertinent to mention here that Section 10B is a provision which deals with deduction of income whereas Section 35(2AB) deals with deduction on expenditure. The restriction contained in sub-Section (6) of Section 10B of the Act operate only upto 1st day of April 2001. Therefore, the restrictions contained in sub-Section (6) of Section 10B of the Act have no application to the obtaining factual matrix of the case as the Assessment Year is subsequent to 1st April 2001. It is also noteworthy that the bar contained in Section 35(2AB)(2) does not apply to the fact situation of the case as the same provides that no deduction shall be allowed in respect of expenditure mentioned in clause(1) under any provisions of the Act. As stated supra, the deduction under Section 10B of the Act is on the income and not on the expenditure. Disallowance u/s 14A - whether assessee has not determined the expenditure incurred in relation to exempt income and Assessing Authority has rightly held that even though there is no dividend income from the investment? - HELD THAT:- Supreme Court in 'CIT VS. WALFORT SHARE AND STOCK BROKERS (P). LTD', [2010 (7) TMI 15 - SUPREME COURT] has held that mandate of Section 14A is clear and the same is aimed to curb the practice to claim deduction of expenses incurred in relation to exempt income against taxable income and at the same time, avail of the tax incentive by way of exemption of exempt income without making apportionment of expenses incurred in relation to exempt income. In the instant case, no exempt income has accrued to the assessee, therefore, the provisions of Section 14A of the Act are not attracted.
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