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TMI Blog2019 (6) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... peals, was answered. The answer to the question of law framed by this Court, therefore, has to be in the affirmative. It is apparent from a reading of the facts in the appeal that the CIT(A) formed an opinion based upon diverse reasoning, having regard to the facts of each case, regarding the nature of expenditure and especially whether it was a one-time investment opportunity availed of by the assessee. This is relevant in the context of assessee s assertion that in fact no expenditure was incurred while investing in the mutual funds that yielded substantial income. As to whether in fact no expenditure was incurred or attributable at all, in these circumstances, it becomes a factual controversy requiring further hearing and scrutiny. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings, it was contended that no expenditure was actually incurred on earning exempt income. The assessee also revealed that sums invested in mutual funds and in its subsidiary companies were initially brought in through Foreign Direct Investment (FDI) route and were awaiting use, for the purpose of township development. The assessee had to obtain several statutory and other clearances to launch this business activity. In the meanwhile, it had invested substantial amounts in mutual funds. The explanation offered by the assessee to the Assessing Officer (AO) that amounts were invested in subsidiary companies in each of which it had substantial stakes was taken into consideration by the AO who held that dividend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred in relation to the income which is includible in total income that has to be disallowed. If an expenditure incurred has no causal connection with the exempted income, then such an expenditure would obviously be treated as not related to the income that is exempted from tax, and such expenditure would be allowed as business expenditure. To put it differently, such expenditure would then be considered as incurred in respect of other income which is to be treated as part of the total income. XXXXXX XXXXXX XXXXXX 43. Having clarified the aforesaid position, the first and foremost issue that falls for considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich 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 14-A. XXXXXX XXXXXX XXXXXX 36. The theory of apportionment of expenditure between taxable and non-taxable (sic income) has, in principle, been now widened under section 14 A. XXXXXX XXXXXX XXXXXX 50. It is to be kept in mind that in those cases where shares are held as stock-in-trade‟, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmative. The findings and observations made by the Court, however, are not entirely dispositive of this appeal. It is apparent from a reading of the facts in the appeal that the CIT(A) formed an opinion based upon diverse reasoning, having regard to the facts of each case, regarding the nature of expenditure and especially whether it was a one-time investment opportunity availed of by the assessee. This is relevant in the context of assessee s assertion that in fact no expenditure was incurred while investing in the mutual funds that yielded substantial income. As to whether in fact no expenditure was incurred or attributable at all, in these circumstances, it becomes a factual controversy requiring further hearing and scrutiny. On this asp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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