Income Tax Dept warns public against cash dealings of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.

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] 101 167 (Delhi)

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