Section 14A disallowance upheld where computed amount stayed within exempt income and no rebuttal evidence was produced.

Disallowance under section 14A read with Rule 8D was sustained where the assessee had earned exempt income and the computed disallowance did not exceed that income. The assessee's plea that its self-disallowance barred any further addition was rejected because no material was produced to rebut the revenue authorities' findings. The operative effect was that the Tribunal accepted the disallowance as within permissible limits and declined to delete it.

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Issues: Whether the disallowance made under section 14A read with Rule 8D, having regard to the exempt income earned by the assessee, was liable to be deleted or sustained.

Analysis: The assessee challenged the disallowance on the basis that it had already made a self-disallowance and that no further disallowance could be made beyond the exempt income. The appellate authority and the Tribunal noted that the assessee had earned exempt income and that the disallowance worked out under section 14A did not exceed such exempt income. In the absence of any material to rebut the findings of the revenue authorities, the Tribunal accepted the view that the disallowance was within permissible limits.

Conclusion: The disallowance under section 14A read with Rule 8D was upheld and the challenge failed.

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