Section 14A disallowance restricted to exempt income earned during the year

GMR Enterprises Pvt. Ltd. Vs DCIT (ITAT Bangalore) Facts- The appellant has claimed that the suo moto disallowance under section 14A should be restricted to exempt income earned for the relevant assessment year. The appellant collected share premium of INR 2,58,24,26,100. During the assessment proceedings, AO noticed that the value of share adopted for the subsidiary company didn’t match with the balance sheet. AO made addition of INR 2,57,87,32,783 u/s 56(2)(viib) of IT Act. Conclusion- It is settled position of law that disallowance cannot exceed the amount of dividend income earned dur...