ITAT Mumbai: Sec 14A Disallowance Cannot Exceed Exempt Income-Addition Restricted

Dani Shares & Stock Private Limited Vs DCIT (ITAT Mumbai) The Mumbai ITAT held that disallowance under Section 14A read with Rule 8D cannot exceed the amount of exempt income earned during the year. In this case, the Assessing Officer made a disallowance of ₹48.86 lakh under Section 14A, which was affirmed by the CIT(A). The assessee contended that such disallowance should be restricted to the extent of exempt income. The Tribunal accepted the contention and relied on the jurisdictional High Court ruling, which clearly lays down that Section 14A disallowance is capped at exempt income. A...