Disallowance U/s. 14A cannot exceed expenditure claimed as a deduction

We find from the audit report that the expenses in respect of exempt income was shown at Rs. Nil,that the assessee had debited direct expenses on account of dematerialisation and STT in the capital account and in the profit and loss account,that AO had presumed that the assessee had must have incurred some expenditure under the heads salary,telephone and other administrative charges for earning the exempt income.

It is further found that the total expenditure claimed by the assessee for the year is about 13 lakhs and the AO ha

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