TMI Blog2011 (7) TMI 1197X X X X Extracts X X X X X X X X Extracts X X X X ..... y incorporation of Section 14A. It was further noticed that the expression expenses incurred occurring in Section 14A referred to tax, salary, interest etc. in respect of which allowances are provided for under Sections 30 to 37. In all fairness to assessee, section 14A as incorporated by Finance Act 2001, with effect from 1.4.1962, was not under consideration and, therefore, the same do not come to the rescue of the assessee - Decision against Assessee. - Income Tax Appeal No. 565 of 2006 - - - Dated:- 18-7-2011 - MR. ADARSH KUMAR GOEL MR. AJAY KUMAR MITTAL JJ. For the Appellant: Ms. Urvashi Dhugga, Senior Standing Counsel For the Respondent: Mr. Sanjay Bansal, Sr. Advocate with Mr. Robin Jarial, Advocate AJAY KUMAR MITTAL, J. This order will dispose of Income Tax Appeal Nos. 565, 567, 568 and 569 of 2006 as identical questions have been claimed by the Revenue in all the four appeals. The facts are being referred from Income Tax Appeal No. 565 of 2006. 2. This appeal under Section 260A of the Income-Tax Act, 1961 (for short the Act ) has been filed by the revenue against the order dated 24.4.2006, passed by the Income Tax Appellate Tribunal Spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had debited an expenditure of ₹ 5,22,435/- on the preparation of survey reports but no income was shown by it on account of sale of survey reports. It was further observed that since no survey report was sold during the year, the whole of the expenditure of ₹ 5,22,435/- formed stock-intrade of the assessee and thus, an addition of the said amount was made by the assessing officer. Besides the aforesaid, the assessee had received dividend income of ₹ 7,94,18,337/- and claimed deduction @ 60% of the gross dividend under Section 80M of the Act. The net dividend after deducting expenses @ 92.85% was calculated to be ₹ 56,76,083/- on which deduction of ₹ 34,05,650/- was allowed under Section 80M of the Act by the assessing officer. Further, the profit of ₹ 3,52,52,583/- on account of sale of shares was assessed as business income as against claim of the assessee to be income from capital gains . 6. In the appeal carried against the order of the Assessing Officer, the plea raised on its behalf found favour with the Commissioner of Income-tax (Appeals) {in short the CIT(A) }, relating to disallowance of expenditure on preparation of survey repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was gathered from the decision of the Rajasthan High Court in Shekhavati General Traders Ltd. vs. Commissioner of Income Tax (1987) 167 ITR 116 and the judgment of this Court in Income Tax Appeal No. 530 of 2006 (The Punjab State Cooperative Milk Producer s Federation Ltd. vs. Commissioner of Income Tax-II and another) decided on 28.3.2011 and of the Apex Court in Commissioner of Income Tax 12. Controverting the aforesaid submission, learned counsel for the assessee relied upon the decision of the Calcutta High Court in Commissioner of Income Tax vs. United Collieries Ltd. (1993) 203 ITR 857 (Calcutta). Learned counsel also relied upon Commissioner of Income Tax vs. Central Bank of India (2003) 264 ITR 522 (Bombay) and State Bank of Indore vs. Commissioner of Income Tax (2005) 275 ITR 23 (MP). It was contended that it was only the actual expense incurred for earning dividend which was to be deducted from the dividend income for calculating the admissible deductions under Section 80M of the Act. It was urged that the plea of the Revenue that proportional expenses should also be reduced, was against the statute. 13. We have given our thoughtful consideration to the respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the same analogy the exemption is also in respect of net income. Expenses allowed can only be in respect of earning of taxable income. This is the purport of Section 14A. In Section 14A, the first phrase is for the purposes of computing the total income under this Chapter which makes it clear that various heads of income as prescribed under Chapter IV would fall within Section 14A. The next phrase is, in relation to income which does not form part of total income under the Act . It means that if an income does not form part of total income, then the related expenditure is outside the ambit of the applicability of Section 14A. Further, Section 14 specifies five heads of income which are chargeable to tax. In order to be chargeable, an income has to be brought under one of the five heads. Sections 15 to 59 lay down the rules for computing income for the purpose of chargeability to tax under those heads. Sections 15 to 59 quantify the total income chargeable to tax. The permissible deductions enumerated in Sections 15 to 59 are now to be allowed only with reference to income which is brought under one of the above heads and is chargeable to tax. If an income like dividend income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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