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TMI Blog2020 (10) TMI 1381X X X X Extracts X X X X X X X X Extracts X X X X ..... this case. We are of the view that the disallowance made U/s 14A of the Act cannot exceed the exempt income, hence, we direct the A.O. to restrict the disallowance U/s 14A of the Act to the extent of exempt income earned by the assessee. With this direction, we partly allow this ground of appeal. X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A), who after considering the facts and submissions available on record, confirmed the action of the A.O. Against which, the assessee is in further appeal before the ITAT. 5. The only effective ground raised by the assessee is challenging the order of the ld. CIT(A) in sustaining disallowance of Rs. 5,18,894/- U/s 14A of the Act. The ld AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and before the Bench, he has submitted as under: "That the assessee is a public Limited company engaged in the business of manufacturing of Barley Malt. That during the course of assessment the Ld. Income Tax Officer has wrongly and arbitrary made the disallowance U/s 14A of Rs.5,18,894/. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UO (Kol) (UO) 73 6. We would also like to draw your kind attention that the Delhi High Court in the case of Joint Investments Pvt. Ltd vs. CIT, 2015 held that The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure "incurred by the assessee in relation to the tax exempt income". This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. Later on the above view was also accepted by the Mumbai Tribunal in the case of Daga Global Chemicals Pvt Ltd V/s ACIT From the above it is clear that if any disallowances could be made, that is to be restricted to exempt income. 7. Later on the above view is also accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, as per the revenue authorities, the assessee had shown dividend income of Rs. 85,898/- as exempt. However, no separate account was maintained for these investments. There was no direct nexus between the borrowed funds and investments and therefore, the revenue authorities were not satisfied with correctness of the claim of the assessee in respect of expenditure incurred in relation to income which does not form part of the total income under the Act. Therefore, on this premises, the disallowance U/s 14A of the Act was determined at Rs. 5,18,894/-. The Hon'ble Delhi High court in the case of Joint Investments Pvt. Ltd vs. CIT (supra) had categorically held that: The window for disallowance is indicated in Section 14A, and is only to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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