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TMI Blog2012 (2) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... short) confirming the order of the Commissioner of Income Tax (Appeals) deleting penalty under Section 271(1)(c) of the Income Tax Act, 1961 (Act, for short). 2. The Assessing Officer imposed penalty, inter alia, recording that the Assessing Officer had disallowed expenses to the extent of Rs. 1,07,34,968/- (from interest expenses) and Rs. 5,12,401/- (from administrative costs) under Section 14A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression ?in relation to? has to be read in a broader sense. The words ?in relation to? signify or imply a direct and proximate relationship between expenditure and income. It cannot cover any expenditure relating to the source but not attributable to exempt income. It is submitted that in a case of one indivisible business, Section 14A does not have any applicability. As was explained, the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure has been incurred by the company to earn dividend income. At the sake of repetition, it is once again stated that the shares are held by the company as a part of the promoters stake and are therefore, are the tools through which the company conducts its business of acquiring / retaining management control over the investee companies. Expenditure for the purpose of business merits to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed, the justification and explanation why the assessee had made the claim, is to be examined. Disallowance under the said Section have been subject matter of debate and different views have been expressed. A legal contention which was plausible and merited consideration was raised. Accordingly, the appellate authorities have applied the explanation to Section 271(1)(c) of the Act. Looking at th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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