Sec. 14A disallowance couldn't exceed exempt income earned during the year

Section 14A of the Income-tax Act, 1961, read with rule 8D of the Income-Tax Rules, 1962 - Expenditure incurred in relation to income not included in total income (Rule 8D) - Assessment year 2009-10 - Whether upper disallowance cannot exceed exempt income of relevant year - Held, yes - Whether where for year in question, finding of fact was that assessee had not earned any tax free income, corresponding expenditure could not be worked out for disallowance - Held, yes - Whether for computing disallowance under clause (ii) of rule 8D(2), numerical B in clause (ii) refers only to average value of entire investment that does not form part of total income - Held, yes [Paras 25 and 26] [In favour of assessee]

Refer:[2019] 101 taxmann.com 167 (Delhi)