Bombay HC restricts Section 14A Disallowance to Actual Exempt Income

PCIT Vs HSBC Invest Direct (India) Ltd. (Bombay High Court)

Bombay High Court has dismissed an appeal by the Income Tax Department against HSBC Invest Direct (India) Ltd., ruling that the disallowance of expenditure under Section 14A of the Income Tax Act, 1961, read with Rule 8D, cannot exceed the actual exempt income earned by an assessee. This decision, for Assessment Year 2009-10, provides clarity on the scope of tax disallowances related to non-taxable income.

The case arose from a dispute over expenses claimed by HSBC Invest Direct (India) Ltd. While the company offere

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