TMI Blog2011 (9) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... Justice Sambuddha Chakrabarti, JJ. For the Appellant: Mr. J.P. Khaitan, Mr. Agnibesh Sengupta, Mr. A.K. Dey. For the Respondent: Mr. Dipak Kumar Shome, Mr. Aniket Mitra. Bhaskar Bhattacharya, J.: This appeal under Section 260A of the Income-tax Act, 1961 ( Act ) is at the instance of an assessee and is directed against an order dated 29th May, 2002 passed by the Income-tax Appellate Tribunal, C Bench, Kolkata, in Income-tax Appeal being ITA No.349 (Kol) of 2002 for the Assessment Year 1998-99 by which the Tribunal allowed the appeal preferred by the Revenue and set aside the order passed by the CIT (Appeals). Being dissatisfied, the assessee has come up with the present appeal. The facts giving rise to filing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in computing the total income of a previous year of any person. e) During the previous year relevant to the Assessment Year 1998-99 the appellant received dividend of Rs.41,38,854/- in respect of shares held by it on which the tax was paid by the company concerned under Section 115 O of the Act. The appellant filed its return of income for the Assessment Year 1998-99 and in the said return, the appellant claimed that the entire interest expenditure of Rs.3,69,36,637/- incurred by it under Section 36(1)(iii) of the Act should be deducted. f) In course of assessment proceedings, the Assessing Officer required the appellant to furnish the breakup of the cost relating to earning of the dividend when it was explained by the appellant th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Warehousing Corporation s vs. CIT, reported in (2000) 242 ITR page 450 which supported the claim of the assessee. Being dissatisfied, the assessed has come up with the present appeal. A Division Bench of this Court while admitting the appeal formulated the following substantial question of law: Whether on the facts and in the circumstances of the case in view of the provisions of sections 115 O (5) and/or 14A of the Income Tax Act, 1961 and/or the Circular dated July 23, 2001, issued by the Central Board of Direct Taxes the appellant is entitled to deduction or interest amounting to Rs.19,14,940? Mr. Khaitan, the learned Senior Advocate appearing on behalf of the appellant, strenuously contended before us that the entire interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in Section 14A of the Act which was inserted in the Act with retrospective effect from 1st April, 2002. The said provision is quoted below: 14-A. Expenditure incurred in relation to income not includible in total income. For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act: Provided that nothing contained in this section shall empower the Assessing Officer either to reassess under Section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under Section 154, for any assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said materials on record, we find that at the time of passing the order of assessment on March 1, 2001 by the Assessing officer, according to the law as it then stood by virtue of the decisions of the Supreme Court in the cases of CIT vs. Maharashtra Sugar Mills Ltd. reported in (1971) 82 ITR 452 and Rajasthan State Warehousing Corporation vs. CIT reported in (2000) 242 ITR 450, where there is one indivisible business giving rise to taxable income as well as exempt income, the entire expenditure in relation to that business would have to be allowed even if a part of the income earned from the business is exempt from tax and thus, the Assessing officer erroneously disallowed a part of the expenditure by acting contrary to those decisions. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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