Disallowance u/s 14A is to be made even when exempt income is not earned or received during the year

Special Bench of the Income Tax Appellate Tribunal, New Delhi holds that expenditure relating to exempt income to be disallowed even if assessee has not earned any tax-free income.   Background Section 14A of the Income-tax Act, 1961 (“Act?), inserted by the Finance Act, 2001 with retrospective effect from 1 April 1962, provides that no deduction shall be allowed in respect of expenditure incurred in relation to exempt income. Facts Cheminvest Ltd. („assessee?) deals in portfolio investment of shares on capital account as well as trading account. The assessee utilized borrowed funds fo...