Disallowance u/s. 14A of Income Tax Act cannot exceed exempt income

Royal Twinkle Star Club Pvt. Ltd. Vs DCIT (ITAT Mumbai)

ITAT Mumbai held that disallowance made under section 14A of the Income Tax Act cannot extent exempt income earned by the assessee. Accordingly, AO is directed to restrict the disallowance u/s. 14A to the extent of exempt income.

Facts- During the assessment proceedings, it was observed that the assessee has earned a dividend income of Rs.5,25,985, which was claimed as exempt. It was also observed that the assessee in

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