TMI Blog2011 (4) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... payable by the assessee for acquiring those old shares. In the absence of any such materials placed by the assessee, the assessing authority took a most reasonable approach in assessment - proportionate amount should be disallowed having regard to the total income and the income from the exempt source - Decided against the assessee - I.T.A. No.633 of 2004 - - - Dated:- 19-4-2011 - Mr. Justice Bhaskar Bhattacharya, Justice Sambuddha Chakrabarti, JJ. For the Appellant: Mr. J.P. Khaitan, Mr. Sanjoy Bhawmick. For the Respondent: Mr. R.N. Bandopadhyay, Mr. Shekhar B. Saraf. Bhaskar Bhattacharya, J.: 1. This appeal under Section 260A of the Income-tax Act, 1961 is at the instance of an assessee and is directed ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orked out the disallowable amount on the basis of documentary evidence on record. c) Being dissatisfied, the assessee preferred an appeal before the Tribunal below and the Tribunal, by the order impugned herein has dismissed the appeal. 3. Being dissatisfied, the assessee has come up with the present appeal. 4. At the time of admission of this appeal, a Division Bench of this Court admitted this appeal on the following questions of law: i) Whether the Tribunal was justified in law upholding the action of the Assessing Officer in notionally working out for the purpose of disallowance a part of the interest expenditure as relatable to investment in shares/dividend received thereon and its purported findings in that behalf are arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . vs. Deputy Commissioner of Income-tax Anr., reported in (2010) 328 ITR Page 81 (Bom). 6. Mr. Khatan submits that Section 14A of the Income-tax Act clarifies that expenses incurred can be allowed only to the extent they are relatable to the earning of taxable income and in many cases, the nature of expenses incurred by the assessee may be relatable partly to exempt income and partly to taxable income and in the absence of Section 14A, the expenditure incurred in respect of exempt income was being claimed against taxable income. Mr. Khaitan submits the mandate of Section 14A is clear and it desires to curb the practice of claiming deduction of expenses incurred in relation to exempt income against taxable income and at the same time, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from tax, Section 14A of the Act was enacted to overcome those judicial pronouncements. The object of Section 14A of the Act is to disallow the direct and indirect expenditure incurred in relation to income which does not form part of the total income. 9. In the case before us, there is no dispute that part of the income of the assessee from its business is from dividend which is exempt from tax whereas the assessee was unable to produce any material before the authorities below showing the source from which such shares were acquired. Mr. Khaitan strenuously contended before us that for the last few years before the relevant previous year, no new share has been acquired and thus, the loan that was taken and for which the interest is pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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