Sec. 14A of Income-tax Act, 1961— Expenditure incurred in relation to income not forming part to total income —If there is no exempt income earned by the assessee, provisions of s. 14A cannot be applied and no disallowance can be made.

Facts: CIT(A) erred in confirming the disallowance made by AO invoking provisions of s. 14A r/w rr. 8D(2)(ii) and (iii). The disallowance made by AO and confirmed by CIT(A) is arbitrary, baseless and unjustified.

Held, that it is settled that if there is no exempt income earned by the assessee, provisions of s. 14A cannot be applied and no disallowance can be made. Keeping in view all the above facts and the position of law disallowance under s. 14A made by AO is not justified and CIT(A) erred in confirming the same. Therefore, we accept the grievance of the assessee as justified and delete the disallowance made under s. 14A. - VINOD KUMAR JAIN V/s DEPUTY CIT - [2020] 205 TTJ 527 (ITAT-RAIPUR)