K.P.T. Thangal, Vice President. - These appeals are by the revenue and the assessee, pertaining to assessment year 2001-02.

2. The first ground of objection by the revenue is against the order of the CIT(A) in deleting the expenditure incurred for earning dividend income under section 14A of the Income-tax Act, 1961.

3. The assessee filed the return declaring income at Nil on 30-10-2001 along with tax payable under section 115JB at Rs. 68,10,396. While framing the assessment order under scrutiny assessment, Assessing Officer noticed that the assessee received dividend income of Rs. 4,49,731 but it was claimed exempt under section 10(33) of the Act. Assessee was asked why the interest income and 1 per cent of managerial expenses attributable to earning of exempt dividend income should not be disallowed. In reply, the assessee stated that the entire receipt of exempt income was dividend received from UTI amounting to Rs. 3.30 lakhs. These investments in UTI were made years back and were made out of assessee’s own funds and not out of the borrowed funds. Hence, it was submitted that no portion of interest expenditure incurred during the year could be attributed to the investment m