No Exempt Income , No Dis-allowance u/s 14A . In any case Restricted to Expenditure on Exempt Income

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Section 14A of the Income Tax Act has been one of the most applied provision in scrutiny assessment by the assessing officers. Many a time without appreciating the true intent of legislature for inserting the provision or even examining if the provision is actually applicable in the facts of an assessee. The result was many bizzare dis-allowance. Fortunately , the present government did solve problem and the rest is done by High courts . This post is on following two issues :

  1. Whether dis-allowance by invoking the Rule 8D can be done if no expenditure related to exempt income earned was debited by an assessee ?
  2. Whether dis-allowance by invoking the Rule 8D can be done if no exempt income was earned by an assessee during the year?

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