2024 (9) TMI 39 - SCH - Income Tax

Allowable deduction of interest paid on the borrowings - Application of Section 14A and Section 36(1)(iii) - AO disallowed the interest holding that no deduction is to be allowed in respect of expenditure incurred in relation to income which does not form part of the total income under the Income Tax Act - As decided in HC 2024 (3) TMI 254 - BOMBAY HIGH COURT if expenditure is incurred on earning the dividend income, that much of the expenditure which is attributable to the dividend income has to be disallowed and cannot be treated as business expenditure. As the dividend income from the two companies is not taxable and in that scenario the expenditure incurred on interest paid on funds borrowed in respect of investment in shares of two operating companies is hit by Section 14A of the Act inasmuch as the dividend received on such shares does not form part of the total income. HELD THAT - Permission to appear and argue the matter in person is granted. Heard the learned counsel appearing for the petitioner. We are not inclined to interfere with the impugned judgment passed by the High Court. Hence, the Special Leave Petition is dismissed.

Summary

The Supreme Court dismissed the Special Leave Petition as they were not inclined to interfere with the impugned judgment passed by the High Court. Permission to appear and argue in person was granted.