Section 14A Disallowance Cannot Exceed Exempt Income Earned: ITAT Delhi

Pragati Automotive Engineers Private Limited Vs ITO (ITAT Delhi) The appeal before the Income Tax Appellate Tribunal (ITAT) related to Assessment Year 2017-18 and challenged the confirmation of a disallowance of ₹7,54,396 under Section 14A of the Income-tax Act, 1961 read with Rule 8D of the Income-tax Rules, 1962. The assessee had filed its return declaring a total income of ₹200. The case was selected for limited scrutiny under CASS on the issue of expenses incurred for earning exempt income. During the relevant year, the assessee earned exempt income comprising dividend income of ₹2,0...