Disallowances u/s.14A cannot exceed amount of exempt income

Hyundai Motor India Ltd Vs ACIT (ITAT Chennai) Conclusion: Disallowances u/s.14A could not exceed amount of exempt income, therefore, AO was directed to restrict disallowances u/s.14A to the extent of exempt income earned for the impugned assessment year. Held:  During the year under consideration, assessee had earned dividend income from mutual funds, which was exempt from tax amounting to Rs.57,826/-, however, did not made any suo-motu disallowance of expenditure relatable to exempt income. Therefore, AO had invoked provisions of Rule 8D of Income Tax Rules, 1962, and determined disallowanc...