|What is the implication of section 14A vis-a vis holding of shares, if
(i) No tax free dividend is received at all during the year.
(ii) Shares are held as stock-in-trade
(iii) Shares are held solely and exclusively as a promoter and for controlling interest.
(iv) The assessee had obtained loan but the funds are mixed.
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|CA. H. N. Motiwalla
|disallowance, dividend income, exempt income
(i) In Shankar Chemicals Works vs. DCIT [47 SOT 121], the Ahmedabad Tribunal has held that, if any expenditure has been incurred for earning exempt income, same has to be disallowed even if there is no actual earning of any exempt income. If interest bearing borrowed funds are utilised for purpose of investment in shares and there is no receipt of dividend income or if there is only meagre dividend income, even then whole amount of interest expenditure incurred for this purpose will be subject to disallowance under section 14A because the same has been incurred for earning exempt income.