https://www.taxtmi.com/forum/issue?id=5044 Disallowance under section 14A denies deduction for expenses related to exempt income, including interest on borrowed funds used to buy dividend paying shares. Expenses may be disallowed even if exempt receipts are not realized, provided the purpose of the investment was to earn exempt income. The assessing officer must establish a clear connection and identify specific expenditures attributable to the exempt income purpose; absent such specificity, presumptive disallowance is improper. On the facts, the advisor advises total disallowance of the interest as the investment purpose was to earn exempt income. en-us Fri, 14 Dec 2012 10:41:43 +0530 Thu, 23 Jan 2025 15:57:48 +0530 TaxTMI RSS Generator https://www.taxtmi.com/forum/issue?id=5044 Disallowance under section 14A denies deduction for expenses related to exempt income, including interest on borrowed funds used to buy dividend paying shares. Expenses may be disallowed even if exempt receipts are not realized, provided the purpose of the investment was to earn exempt income. The assessing officer must establish a clear connection and identify specific expenditures attributable to the exempt income purpose; absent such specificity, presumptive disallowance is improper. On the facts, the advisor advises total disallowance of the interest as the investment purpose was to earn exempt income. Discussion-Forum Income Tax Fri, 14 Dec 2012 10:41:43 +0530 https://www.taxtmi.com/forum/issue?id=5044