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2016 (9) TMI 1150 - AT - Income TaxDisallowance u/s 14A - correctness of the claim - expenditure or no-expenditure for earning exempt income - Held that:- sub-section (2) deals with cases where the assessee specifies a positive amount of expenditure in relation to income which does not form part of the total income under the said Act and sub-section (3) applies to cases where the assessee asserts that no expenditure had been incurred in relation to exempt income. In both cases, the Assessing Officer, if satisfied with the correctness of the claim of the assessee in respect of such expenditure or no expenditure, as the case may be, cannot embark upon a determination of the amount of expenditure in accordance with any prescribed method, as mentioned in sub-section (2) of Section 14A of the said Act. It is only if the Assessing Officer is not satisfied with the correctness of the claim of the assessee, in both cases, that the Assessing Officer gets jurisdiction to determine the amount of expenditure incurred in relation to such income which does not form part of the total income under the said Act in accordance with the prescribed method. Since, no expenses were incurred by the assessee for earning the exempt income, therefore, there is no question of making any disallowance. Even otherwise, no disallowance can be made by the Assessing Officer more than the exempt income, thus, appeal of the assessee is allowed. The Assessing Officer is directed to delete the disallowance. - Decided in favour of assessee
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