Without receipt of exempted income, Section 14A cannot be invoked

Assessee engaged in the business of real estate and construction had filed its return for AY; 2009-10 declaring an income of Rs. 55,45,092/-and for AY: 2010-11 and an income of Rs. 8,07,253/-. During the course of assessment proceedings, it was noted by the AO that the assessee had investments worth Rs. 77,57,63,341/-in the form of  shares in various companies and investment of Rs. 12,07,42,035/- in a partnership firm. These investments which were made during the previous year relevant to AY: 2009-10 continued without change for AY : 2010-11 also. AO sought explanation from the assessee why a...