High Court held that income had to be disallowed on actual basis and not on ad hoc estimate basis. Accordingly, the finding rendered by the Assessing Officer was to be set aside and the matter remanded to the Assessing Officer to disallow only the actual expenditure incurred in connection with the earning of exempted dividend income. The court granted liberty to the assessee to raise the contention with regard to the jurisdiction of the Assessing Officer to invoke section 14A(2) and if it was raised it was to be considered by the Assessing Officer along with other points in accordance with law. (AY. 2001-02, 2002-03)
Polaris Consulting and services Ltd v. DCIT (2019) 417 ITR 441/( 2020) 113 taxmann.com 325 (Mad) (HC)
S. 14A : Disallowance of expenditure – Exempt income -Remand by the Tribunal is held to be valid- Ad hoc disallowances cannot be made – The court granted liberty to the assessee to raise the contention with regard to the jurisdiction of the Assessing Officer to invoke section 14A(2) .[ S.254(1) , R.8D ]