Assessee claimed deduction on interest paid on borrowed capitals for investing in shares of his two companies.\u00a0 Assessing Officer disallowed interest, by holding that purpose of investment was to earn income in form of dividend from two companies and same being not taxable, therefore, deductions were not permissible for expenses related to income not forming part of total income under Act. CIT(A) and Tribunal affirmed the disallowance. On appeal the Tribunal held that\u00a0\u00a0 since dividend income from two companies was not taxable, in that scenario expenditure incurred on interest paid on funds borrowed in respect of investment in shares of two operating companies was hit by section 14A inasmuch as dividend received on such shares did not form part of total income. Therefore, interest paid on borrowings is\u00a0 not allowable as deduction.\u00a0 Followed\u00a0 Maxopp Investment Ltd v. CIT (2018) 254 Taxman 325 \/ 402 ITR 640 (SC). \u00a0High Court affirmed the order of Tribunal. SLP of assessee is dismissed. \u00a0\u00a0(AY. 1998-99)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 14A : Disallowance of expenditure-Exempt income-Borrowed capitals-Investing in shares to earn income from dividend-Expenditure incurred on interest paid on borrowed funds is not allowable as deduction-SLP of assessee is dismissed [S.10(33), 36(1)(iii), Art. 136] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-49186","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-cNk","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/49186","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=49186"}],"version-history":[{"count":2,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/49186\/revisions"}],"predecessor-version":[{"id":51615,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/49186\/revisions\/51615"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=49186"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=49186"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=49186"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}