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2012 (12) TMI 409 - AT - Income Tax
Disallowance of expenditure incurred to earn tax free income – Whether Sec. 14A read with rule 8D comes into play when the assessee has not incurred or claimed any expenditure for earning the exempt income – Held that:- For making any disallowance u/s. 14A AO is to, firstly, examine the assessee's claim of having incurred some expenditure or no expenditure in relation to exempt income, If the AO gets satisfied with the same, then there is no need to compute disallowance as per Rule 8D. It is only when the AO is not satisfied with the correctness of the claim of the assessee in respect of such expenditure or no expenditure having been incurred in relation to exempt income, that the mandate of Rule 8D will operate. Appeal decides in favour of assessee