Section 14A also applies to investment with dividend income held as stock in trade

Controversy whether the disallowance is to be made under section 14A of the Act in relation to those shares which are held as stock in trade has been settled by the Hon’ble Calcutta High Court in the case of Dhanuka & Sons Vs. CIT(2011) reported in 339 ITR 319. The relevant extract of the order is reproduced below : “The object of s. 14A is to disallow the direct and indirect expenditure incurred in relation to income which does not form part of the total income. There is no dispute that part of the income of the assessee from its business is from dividend which is exempt from tax wher...