AO cannot invoke Section 14A provision in absence of any direct nexus between expenditure claimed to exempt income

Leena Kasbekar Vs ACIT (ITAT Mumbai)

The assessing officer invoked provisions of Rule 8D(2)(iii) and disallowed 0.5% of average value of investments towards expenditure in relation to earning exempt income. According to the assessing officer, from assessment year 2008-09 onwards, in view of specific provisions provided by way of Rule 8D(2) to determine the disallowance of expenditure incurred in relation to exempt income, the assessee cannot take a stand that there is no expenditure

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